Form of Short-Term Incentive Program for Lennox International Inc. and its Subsidiaries
EX-10.20 6 lii-ex102020191231x10k.htm EXHIBIT 10.20 Exhibit
SHORT-TERM INCENTIVE PROGRAM
FOR LENNOX INTERNATIONAL INC. AND ITS SUBSIDIARIES
PLAN YEAR – ________
Purpose and Structure
The purpose of the Short-Term Incentive Program (“STI Program”) is to provide competitive Performance Cash compensation under the Incentive Plan to those executives and other selected key employees who contribute significantly to the growth and success of the Company and to strengthen the link between pay and performance.
“Company” means Lennox International Inc. and its subsidiaries.
“Committee” means the Compensation and Human Resources Committee of the Board of Directors of the Company.
“Disability” means permanently disabled (completely unable to perform Participant’s duties as defined in the benefit plans of the Company).
“Eligible Earnings” means the base salary paid during the Plan Year to a Participant during the period in which he or she was a Participant as shown in the payroll records of the Company. Eligible Earnings include the Participant’s regular compensation or rate of pay without regard to any commission, bonus, or other non-periodic compensation. Eligible Earnings exclude any income received while on short-term disability, unless otherwise provided in a Company policy or program.
“Incentive Plan” means the Lennox International Inc. 2019 Equity and Incentive Compensation Plan, as amended, modified and supplemented from time to time, or any successor plan.
“Participant” means any executive or key employee of the Company selected to receive a Payout Opportunity of Performance Cash under the STI Program.
“Payout Opportunity” means the target incentive amount for each Participant, expressed as a percentage of Eligible Earnings.
“Performance Cash” means any Cash Incentives Award granted pursuant to Section 8 of the Incentive Plan payable upon the attainment of the Performance Goals.
“Performance Goals” means Company financial or operational goals established by the Committee for the Plan Year. Separate Performance Goals are established for each business unit, business segment and/or the Company.
“Plan Year” means the fiscal year of the Company.
“Retirement” means a Participant who terminates for any reason, other than for cause, and who (i) is at least 65 years of age, (ii) is at least 62 years of age and has achieved at least 10 years of service with the Company or (iii) the number of years of service Participant has achieved with the Company plus Participant’s age equals at least 80.
Other terms capitalized but not defined in this STI Program are used as defined in the Incentive Plan.
The STI Program is administered by the Committee, which shall have the authority to amend, modify, suspend or terminate the STI Program at any time.
The STI Program is an LII Non-Executive Incentive Compensation Plan for the purposes of Section 1 of the Employee’s Non-executive Incentive Compensation and Non-Solicitation Agreement (the “Agreement”). In order to qualify for payments under the STI Program, Participants must sign and abide by the terms of the Agreement.
Performance Goals and Payout Opportunity
The Performance Goals and the Payout Opportunity will be set at the beginning of the Plan Year and will be communicated to all Participants on their STI opportunity statements.
Determination of Performance Cash Payment
The Committee in its reasonable discretion following the end of the Plan Year will approve the STI payout factors based on actual performance results against the Performance Goals and adjusting as appropriate for overall Company performance and market conditions. Performance Cash payments will be paid to Participants based on their Payout Opportunity with 75% of the payments based on Company performance and 25% on each Participant’s individual performance. The Company, in its sole discretion, shall determine the payment amount, if any, associated with the Participant’s individual performance. No Performance Cash payments (Company or individual) are payable if actual performance falls below the Performance Goals threshold levels . The payout details will be presented to Participants on their STI payout statements.
Employee Position Changes During Plan Year
Participants who are assigned to a new position during the Plan Year may have changes made to their Payout Opportunity and/or Performance Goals to correspond with the new position. A prorated Performance Cash payment may be given at the end of the Plan Year to Participants who are assigned to a non-STI Program eligible position during the Plan Year.
Form of Payment
All Performance Cash payments under this STI Program will be paid in cash subject to such payroll taxes and other deductions, if any, as may be in effect at the time of payment.
Timing of Payment
All Performance Cash payments under this STI Program will be paid as soon as practicable after the end of the Plan Year, but in no event later than the fifteenth day of the third month following the end of the Plan Year. The payments made under this STI Program are intended to fall within the short-term deferral exemption under Section 409A of the Internal Revenue Code.
Termination, Death, Disability or Retirement
Except as otherwise expressly provided in this STI Program, Performance Cash payments will be paid only to Participants who are employed with the Company on the last day of the Plan Year. All Participants whose employment terminates prior to the end of the Plan Year shall forfeit all Performance Cash payments from the STI Program, whether terminated by the Company or voluntarily, except a Participant whose employment terminates due to death, Disability or Retirement will be paid a pro rata portion of any Performance Cash payment based on the date of death, Disability or Retirement. Such prorated payments will be made at the time and in the form that payments are made to other Participants for the Plan Year. If a Participant is terminated by the Company for cause, as determined in the sole discretion of the Company, then, immediately after Participant’s termination, the Performance Cash payment may be cancelled in full prior to any payment being made.
Performance Cash payments for new Participants will generally be prorated from either the date of hire or the date the Participant became eligible for the STI Program. Any person joining the Company after November 1 of a Plan Year will be excluded from participating in the STI Program for that Plan Year.
No Participant shall have any lien on any assets of the Company by reason of any Payout Opportunity or Performance Cash payment made under the STI Program.
The adoption of the STI Program does not imply any commitment to continue the STI Program, or any other plan for incentive compensation for any succeeding year. Neither the STI Program, Performance Cash payment, nor Payout Opportunity made under the STI Program shall create an employment contract or relationship between the Company and any Participant.