Valspar Corporation Non-Employee Director Compensation Program Term Sheet (October 2009)
This agreement outlines the compensation program for non-employee directors of The Valspar Corporation, effective October 2009. Directors receive an annual retainer of $150,000, split between cash and stock awards. Starting in October 2010, stock awards replace stock options to encourage director stock ownership. Awards are vested at grant, with cash dividends paid quarterly. New directors receive a restricted stock award equal to 50% of the annual retainer, restricted for five years. Taxation details and reporting requirements are specified. The program aims to align director interests with shareholders and ensure compliance with governance guidelines.
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. |
