Term Sheet for Compensation Program for Non-Employee Directors Approved on October 21, 2009 New Stock Awards in Lieu of Stock Options
Exhibit 10.2
Term Sheet for Compensation Program for Non-Employee Directors
Approved on October 21, 2009
New Stock Awards in Lieu of Stock Options
Current Compensation Components
Directors currently receive an annual retainer of $150,000, with 50% delivered in cash and/or stock (paid quarterly) and the other 50% delivered as a stock option (annually in October).
New Equity Component
Based on Compensation Committee review and discussion with directors, management was asked to design a plan with the equity component delivered as a stock award to promote stock ownership by directors.
ANNUAL STOCK AWARDS
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| § | Beginning with grants in October 2010, directors will receive stock awards in lieu of stock option grants. |
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| § | The annual stock award for a director who joins the Board during the year will be prorated to reflect the partial year, and awarded at the same time as other director awards. |
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| § | The annual stock award for a director who retires from the Board during the year will be prorated to reflect the partial year, and awarded at the same time as other director awards. |
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| § | Awards will be vested at grant. |
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| § | Cash dividends will be paid quarterly. |
Taxation of Stock Award/Cash Dividends
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| § | Stock Award will be taxed at grant at ordinary income rates. |
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| § | Directors file on their own as self-employed persons. |
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| § | Valspar will issue a Form 1099 each January reporting the value of the grant. |
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| § | Cash dividends will be taxed at dividend income rate and Valspar’s Transfer Agent, BNY Mellon, will issue a Form 1099 for dividends each January. |
GRANTS TO NEW DIRECTORS
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| § | Upon joining the Board, a new director will be granted a restricted stock award with a value of 50% of the current annual retainer. |
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| § | This grant will be restricted for five (5) years to coincide with the target date for achieving stock ownership under corporate governance guidelines. |
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| § | Director must be serving as a member of the Board of Directors on the date the restriction lapse to receive the stock award. |
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| § | Cash dividends will be paid quarterly. |
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| § | Stock Award will be taxed at ordinary income rates when restriction lapses. |
