Form of Performance Share Award Agreement between Haynes International, Inc. of certain of its officers, issued pursuant to the Haynes International, Inc. 2016 Incentive Compensation
HAYNES INTERNATIONAL, INC.
PERFORMANCE SHARE AWARD AGREEMENT
This Performance Share Award Agreement is entered into by and between Haynes International, Inc., a Delaware corporation ("Company"), and «Participant», an officer of the Company ("Grantee"), effective as of «Date_of_Grant» ("Effective Date").
The Company wishes to provide incentives to recognize and reward the Grantee, whose performance, contributions and skills will be critical to the Company's success, by aligning his/her interests more closely with those of the Company's stockholders. For this purpose, the Compensation Committee of the Company's Board of Directors ("Committee") has granted the Grantee the opportunity to earn Performance Shares pursuant to the terms and conditions of this Performance Share Award Agreement ("Agreement") and the Haynes International, Inc. 2020 Incentive Compensation Plan (the "Plan").
In consideration of the premises, the Company and the Grantee agree as follows:
AWARD OF PERFORMANCE SHARES
This Agreement evidences the grant by the Company of Performance Shares subject to the attainment of certain performance targets as set forth herein, all in accordance with the provisions of the Plan, as amended from time to time. The number of Performance Shares that will ultimately be earned under this Agreement, as well as the number of Shares that will be distributed in settling those earned Performance Shares, which will not be determined until the end of the Performance Period, will depend on the calculated Total Shareholder Return (defined below) of the Company at the end of the Performance Period, as compared to the Total Shareholder Return of the TSR Peer Group (defined below) at the end of the Performance Period. This grant shall become effective only if the Grantee electronically acknowledges the Agreement and/or signs and returns to the Company a copy of this Agreement evidencing the Grantee's understanding of the terms and conditions of the Performance Shares. To the extent that the Grantee is a "covered employee" within the meaning of Code Section 162(m), the Agreement will be administered in accordance with the performance-based compensation exception under Code Section 162(m) to the maximum extent possible.
"Target Number of Performance Shares" Awarded to Grantee:«Number_of_Shares»__
"Performance Period" for the Award: through
As soon as practicable (but not later than 60 days) following the end of the Performance Period (as defined above) and the completion of all other conditions to payment set forth in this Agreement and the Plan, the Committee shall calculate Total Shareholder Return (as defined below) for the Company and Total Shareholder Return for each member of the TSR Peer Group (as defined below) and determine the extent to which the Target Number of Performance Shares (as defined above) awarded under this Agreement have been earned. Except as otherwise provided herein or in the Plan, if the Grantee is employed by the Company as of the last day of the Performance Period, the Grantee shall earn as Performance Shares that percentage of his or her Target Number of Performance Shares determined by comparing the Company’s Total Shareholder Return to each member of the TSR Peer Group’s Total Shareholder Return on a percentile basis:
Haynes TSR Peer Group Ranking
Percentage of Target Number of
Performance Shares Earned
< 30th Percentile
30th Percentile but < 50th Percentile
50th Percentile but < 100th Percentile
The Company's TSR Peer Group Ranking shall be determined by the Committee following the end of the Performance Period and no Performance Shares shall be considered earned prior to the Committee certifying such results.
If the Company’s TSR Peer Group Ranking for the Performance Period is between the 30th percentile and 50th percentile per the above table, the number of Performance Shares earned shall be determined by interpolation between the corresponding percentiles as the sum of:
the difference between the actual percentile performance and the 30th percentile is multiplied by 2.5, plus
If the Company’s percentile ranking for the Performance Period is between the 50th percentile and 100th percentile per the above table, the number of Performance Shares earned shall be determined by interpolation between the corresponding percentiles as the product of 2.0 multiplied by the actual percentile performance.
Exhibit A hereto sets forth a chart clarifying the above calculations.
“Total Shareholder Return” shall be calculated as follows:
Total Shareholder Return = (SPE – SPB + DIV)/SPB
“SPB” shall mean the average closing price of a share of the Company’s Common Stock (or the common stock of the applicable member of the TSR Peer Group) for a period of twenty (20) trading days ending on the last day immediately prior to the start of the Performance Period.
“SPE” shall mean the average closing price of a share of the Company’s Common Stock (or the common stock of the applicable member of the TSR Peer Group) for a period of twenty (20) trading days ending on the last day immediately prior to the end of the Performance Period.
“DIV” shall mean the total amount of dividends paid by the Company (or the applicable member of the TSR Peer Group) during the Performance Period, assuming reinvestment thereof in the Company’s Common Stock (or the TSR Peer Group member’s common stock) on the date of the payment of such dividends.
The “TSR Peer Group” shall consist of the following companies: Arconic, Inc.; Allegheny Technologies Incorporated; Carpenter Technology Corporation; Commercial Metals Company; Insteel Industries Inc.; Kaiser Aluminum Corporation; Materion Corporation; Olympic Steel, Inc; and Universal Stainless & Alloy Products, Inc. Notwithstanding the foregoing, (i) in the event a member of the TSR Peer Group is acquired by a third party, ceases to be publicly traded or files for bankruptcy or reorganization protection during the Performance Period, that member shall be excluded from the TSR Peer Group for purposes of calculating Total Shareholder Return; (ii) in the event a member of the TSR Peer Group spins off a portion of its business during the Performance Period, SPB shall be adjusted for the value of the spinoff; and (iii) in the event a member of the TSR Peer Group sells or otherwise disposes of a portion of its assets or operations to a third party during the Performance Period, no adjustments shall be made.
The "TSR Peer Group Ranking" shall be calculated as the percentage that the Company’s TSR bears to the TSR of each of the members of the TSR Peer Group.
TERMS AND CONDITIONS
IN WITNESS WHEREOF the Company and the Grantee have executed this Agreement as of the date first above written.
HAYNES INTERNATIONAL, INC.
PERFORMANCE SHARES EARNED