NEW JERSEY RESOURCES CORPORATION 2007 Stock Award and Incentive Plan Performance Shares Agreement – TSR
Exhibit 10.1
NEW JERSEY RESOURCES CORPORATION
2007 Stock Award and Incentive Plan
Performance Shares Agreement – TSR
2007 Stock Award and Incentive Plan
Performance Shares Agreement – TSR
This Performance Shares Agreement (the “Agreement”), which includes the attached “Terms and
Conditions of Performance Shares” (the “Terms and Conditions”) and the attached Exhibit A captioned
“Performance Goal and Earning of Performance Shares”, confirms the grant on (the “Grant
Date”) by NEW JERSEY RESOURCES CORPORATION, a New Jersey corporation (the “Company”), to
(“Employee”), under Sections 6(e), 6(i) and 7 of the 2007 Stock Award and Incentive
Plan (the “Plan”), of Performance Shares (the “Performance Shares”), including rights to Dividend
Equivalents as specified herein, as follows:
Target Number Granted: Performance Shares (“Target Number”)
How Performance Shares are Earned and Vest: The Performance Shares, if not
previously forfeited, (i) will be earned, if and to the extent that the Performance
Goal defined on Exhibit A to this Agreement is achieved, with the corresponding number
of Performance Shares earned (ranging from 0% to 150% of the Target Number) as
specified on Exhibit A, on the date set forth on Exhibit A (the “Earning Date”) and
(ii) will vest as to the number of Performance Shares earned if Employee remains
employed by the Company or a Subsidiary from the Grant Date through the Earning Date
(the “Stated Vesting Date”). To the extent vested, all earned Performance Shares
shall be settled within 60 days of the Stated Vesting Date. In addition, if not
previously forfeited, upon a Change in Control, the Performance Shares will be earned
in an amount equal to the greater of the Target Number or the number of Performance
Shares that would have been earned based upon the actual level of achievement if the
performance period had ended at the date of the Change in Control and will become
immediately vested with respect to the earned performance shares and will be settled
within 60 days thereafter, if Employee remains employed by the Company or a subsidiary
from the Grant Date through the Change in Control and, if (and only if) the stock of
the Company remains publicly traded after the Change in Control, any Performance
Shares not earned and vested on the Change in Control will remain potentially payable
in accordance with the terms of this Agreement. In addition, if not previously
forfeited, the Performance Shares will become earned and/or vested upon the occurrence
of certain events relating to Termination of Employment to the extent provided in
Section 4 of the attached Terms and Conditions. The terms “vest” and “vesting” mean
that the Performance Shares have become non-forfeitable in relation to Employee’s
employment but continue to be subject to a substantial risk of forfeiture based on the
Performance Goal to the extent provided in Section 4 of the attached Terms and
Conditions. If the Performance Goal is not met (or not fully met) to the extent
provided in Section 4 of the attached Terms and Conditions, the Performance Shares (or
the unearned portion of the Performance Shares) will be immediately forfeited (whether
vested or not). If Employee has a Termination of Employment prior to a Stated Vesting
Date and the Performance Shares are not otherwise vested by that date, the Performance
Shares will be immediately forfeited except as otherwise provided in Section 4 of the
attached Terms and Conditions. Forfeited Performance Shares cease to be outstanding
and in no event will thereafter result in any delivery of shares of Stock to Employee.
Performance Goal and Earning Date: The Performance Goal and Earning Date, and the number of
Performance Shares earned for specified levels of performance at the Earning Date,
shall be as specified in Exhibit A hereto.
Settlement: Performance Shares that are to be settled hereunder, including Performance
Shares credited as a result of Dividend Equivalents, will be settled by delivery of
one share of Stock, for each Performance Share being settled. Settlement shall occur
at the time specified above and in Section 6 of the attached Terms and Conditions.
The Performance Shares are subject to the terms and conditions of the Plan and this Agreement,
including the Terms and Conditions of Performance Shares attached hereto and deemed a part hereof.
The number of Performance Shares and the kind of shares deliverable in settlement and other terms
and conditions of the Performance Shares are subject to adjustment in accordance with Section 5 of
the attached Terms and Conditions and Section 11(c) of the Plan.
Employee acknowledges and agrees that (i) the Performance Shares are nontransferable, except
as provided in Section 3 of the attached Terms and Conditions and Section 11(b) of the Plan, (ii)
the Performance Shares are subject to forfeiture in the event of Employee’s Termination of
Employment in certain circumstances prior to vesting, as specified in Section 4 of the attached
Terms and Conditions, and (iii) sales of shares of Stock delivered upon settlement of the
Performance Shares will be subject to any Company policy regulating trading by employees.
Capitalized terms used in this Agreement but not defined herein shall have the same meanings
as in the Plan.
IN WITNESS WHEREOF, NEW JERSEY RESOURCES CORPORATION has caused this Agreement to be executed
by its officer thereunto duly authorized.
| NEW JERSEY RESOURCES CORPORATION | ||||||
| By: | ||||||
| Chairman & CEO | ||||||
| EMPLOYEE | ||||||
| Title | ||||||
TERMS AND CONDITIONS OF PERFORMANCE SHARES
The following Terms and Conditions apply to the Performance Shares granted to Employee by NEW
JERSEY RESOURCES CORPORATION (the “Company”) and Performance Shares resulting from Dividend
Equivalents (as defined below), if any, as specified in the Performance Shares Agreement (of which
these Terms and Conditions form a part). Certain terms of the Performance Shares, including the
number of Performance Shares granted, vesting date(s) and settlement date, are set forth on the
cover page hereto and Exhibit A, which are an integral part of this Agreement.
1. General. The Performance Shares are granted to Employee under the Company’s 2007 Stock
Award and Incentive Plan (the “Plan”), which has been previously delivered to Employee and/or is
available upon request to the Corporate Benefits Department. All of the applicable terms,
conditions and other provisions of the Plan are incorporated by reference herein. Capitalized terms
used in this Agreement but not defined herein shall have the same meanings as in the Plan. If there
is any conflict between the provisions of this document and mandatory provisions of the Plan, the
provisions of the Plan govern. By accepting the grant of the Performance Shares, Employee agrees to
be bound by all of the terms and provisions of the Plan (as presently in effect or later amended),
the rules and regulations under the Plan adopted from time to time, and the decisions and
determinations of the Leadership Development and Compensation Committee of the Company’s Board of
Directors (the “Committee”) made from time to time.
2. Account for Employee. The Company shall maintain a bookkeeping account for Employee (the
“Account”) reflecting the number of Performance Shares then credited to Employee hereunder as a
result of such grant of Performance Shares and any crediting of additional Performance Shares to
Employee pursuant to payments equivalent to dividends paid on shares of Stock under Section 5
hereof (“Dividend Equivalents”).
3. Nontransferability. Until Performance Shares are settled by delivery of shares of Stock in
accordance with the terms of this Agreement, Employee may not transfer Performance Shares or any
rights hereunder to any third party other than by will or the laws of descent and distribution,
except for transfers to a Beneficiary or as otherwise permitted and subject to the conditions under
Section 11(b) of the Plan.
4. Termination Provisions. The following provisions will govern the vesting and forfeiture of
the Performance Shares that are outstanding at the time of Employee’s Termination of Employment (as
defined below), unless otherwise determined by the Committee (subject to Section 8(a) hereof):
(a) Death. In the event of Employee’s Termination of Employment due to death the Performance
Shares will be earned at the date of the Termination of Employment due to death in an amount equal
to the greater of the Target Number or the number of Performance Shares that would have been earned
based upon the actual level of achievement if the performance period had ended at the date of the
Employee’s Termination of Employment due to death. A Pro-Rata Portion (as defined below) of the
Performance Shares earned will vest at the date of the Employee’s Termination of Employment due to
death, and such earned and vested Performance Shares will be settled in accordance with Section
6(a) hereof. Any portion of the then-outstanding Performance Shares not earned and vested at or
before the date of Employee’s Termination of Employment due to death will be forfeited.
(b) Termination by the Company or Voluntarily by the Employee. In the event of Employee’s
Termination of Employment by the Company for any reason other than Disability or by Employee
voluntarily (other than a Retirement), the portion of the then-outstanding Performance Shares not
earned and vested at the date of such Termination of Employment will be forfeited.
(c) Retirement or Disability. In the event of Employee’s Termination of Employment by Employee
voluntarily due to Retirement (as defined below) or by the Company for Disability (as defined
below), a Pro-Rata Portion (as defined below) of the Performance Shares that may become earned on
the Earning Date, to the extent not previously vested, will vest at the time of Employee’s
Termination of Employment, and such Performance Shares will continue to be subject to the
Performance Goal and will be eligible to be earned and settled in accordance with Section 6(a)
hereof. Any portion of the then-outstanding Performance Shares not vested at or before the date of
such Termination of Employment will be forfeited.
(d) Certain Definitions. The following definitions apply for purposes of this Agreement:
(i) “Disability” means Employee has been incapable of substantially fulfilling the positions,
duties, responsibilities and obligations of his employment because of physical, mental or emotional
incapacity resulting from injury, sickness or disease for a period of at least six consecutive
months. The Company and Employee shall agree on the identity of a physician to resolve any question
as to Employee’s disability. If the Company and Employee cannot agree on the physician to make such
determination, then the Company and Employee shall each select a physician and those physicians
shall jointly select a third physician, who shall make the determination. The determination of any
such physician shall be final and conclusive for all purposes of this Agreement. Only the Company
can initiate a Termination of Employment due to Disability.
(ii) “Pro Rata Portion” means a fraction the numerator of which is the number of days from the
Grant Date to the date of Employee’s Termination of Employment and the denominator of which is the
number of days from the Grant Date to the Earning Date.
(iii) “Retirement” means the Employee terminates employment at or after age 65, or at or after
age 55 with 20 or more years of service.
(iv) “Subsidiary” means any subsidiary corporation of the Company within the meaning of
Section 424(f) of the Code (“Section 424(f) Corporation”) and any partnership, limited liability
company or joint venture in which either the Company or Section 424(f) Corporation is at least a
fifty percent (50%) equity participant.
(v) “Termination of Employment” and “Termination” means the earliest time at which Employee is
not employed by the Company or a Subsidiary of the Company.
5. Dividend Equivalents and Adjustments.
(a) Dividend Equivalents. Dividend Equivalents will be credited on Performance Shares (other
than Performance Shares that, at the relevant record date, previously have been settled or
forfeited) and deemed reinvested in additional Performance Shares. Dividend Equivalents will be
credited as follows, except that the Company may vary the manner of crediting (for example, by
crediting cash dividend equivalents rather than additional Performance Shares) for administrative
convenience:
(i) Cash Dividends. If the Company declares and pays a dividend or distribution on shares of
Stock in the form of cash, then additional Performance Shares shall be credited to Employee’s
Account in lieu of payment or crediting of cash dividend equivalents equal to the number of
Performance Shares credited to the Account as of the relevant record date multiplied by the amount
of cash paid per share of Stock in such dividend or distribution divided by the Fair Market Value
of a share of Stock at the payment date for such dividend or distribution.
(ii) Non-Share Dividends. If the Company declares and pays a dividend or distribution on
shares of Stock in the form of property other than shares of Stock, then a number of additional
Performance Shares shall be credited to Employee’s Account as of the payment date for such dividend
or distribution equal to the number of Performance Shares credited to the Account as of the record
date for such dividend or distribution multiplied by the fair market value of such property
actually paid as a dividend or distribution on each outstanding share of Stock at such payment
date, divided by the Fair Market Value of a share of Stock at such payment date.
(iii) Share Dividends and Splits. If the Company declares and pays a dividend or distribution
on shares of Stock in the form of additional shares of Stock, or there occurs a forward split of
shares of Stock, then a number of additional Performance Shares shall be credited to Employee’s
Account as of the payment date for such dividend or distribution or forward split equal to the
number of Performance Shares credited to the Account as of the record date for such dividend or
distribution or split multiplied by the number of additional shares of Stock actually paid as a
dividend or distribution or issued in such split in respect of each outstanding share of Stock.
(iv) Additional Credits. Prior to settlement in accordance with Section 6(a) hereof,
additional Dividend Equivalents will be credited to the Employee’s Account to the extent
Performance Shares in excess of the Target Number are settled so that Employee is credited for
Dividend Equivalents on the excess Performance Shares on the same basis they would have been had
the excess Performance Shares been credited to Employee’s Account as of the relevant earlier date.
(b) Adjustments. The number of Performance Shares credited to Employee’s Account shall be
appropriately adjusted in order to prevent dilution or enlargement of Employee’s rights with
respect to Performance Shares or to reflect any changes in the number of outstanding shares of
Stock resulting from any event referred to in Section 11(c) of the Plan, taking into account any
Performance Shares credited to Employee in connection with such event under Section 5(a) hereof. In
furtherance of the foregoing, in the event of an equity restructuring, as defined in FAS 123R,
which affects the shares of Stock, Employee shall have a legal right to an adjustment to Employee’s
Performance Shares which shall preserve without enlarging the value of the Performance Shares, with
the manner of such adjustment to be determined by the Committee in its discretion. All adjustments
will be made in a manner as to maintain the Performance Share’s exemption from Code Section 409A
or, to the extent Code Section 409A applies, to comply with Code Section 409A. Any adjustments
shall be subject to the requirements and restrictions set forth in Section 11(c) of the Plan.
(c) Risk of Forfeiture and Settlement of Performance Shares Resulting from Dividend
Equivalents and Adjustments. Performance Shares which directly or indirectly result from Dividend
Equivalents on or adjustments to a Performance Share granted hereunder shall be subject to the same
risk of forfeiture and other conditions as apply to the granted Performance Shares with respect to
which the Dividend Equivalents related and will be settled at the same time as such related
Performance Shares.
6. Settlement and Deferral.
(a) Settlement Date. Performance Shares granted hereunder that have become earned and vested,
together with Performance Shares credited as a result of Dividend Equivalents with respect thereto,
shall be settled by delivery of one share of Stock for each Performance Share being settled.
Settlement of a vested Performance Share granted hereunder shall occur at the Earning Date (with
shares to be delivered within 60 days after the Earning Date); provided, however, that settlement
shall occur earlier (i) within 60 days after the date of death of Employee, or (ii) within 60 days
after a Change in Control; and provided further, that settlement shall be deferred if so elected by
Employee in accordance with Section 6(b) hereof subject to Section 6(c) hereof. Settlement of
Performance Shares which directly or indirectly result from Dividend Equivalents on Performance
Shares granted hereunder shall occur at the time of settlement of the related Performance Share.
(b) Elective Deferral. The Committee may determine to permit Employee to elect to defer
settlement (or redefer) if such election would be permissible under Section 11(k) of the Plan and
Code Section 409A. In addition to any applicable requirements under Code Section 409A, any such
deferral election shall be made only while Employee remains employed and at a time permitted under
Code Section 409A. The form under which an election is made shall set forth the time and form of
payment of such amount deferred. Any amount deferred shall be subject to a 6 month delay upon
payment if required under Section 11(k)(i)(F) of the Plan. Any elective deferral will be subject
to such additional terms and conditions as the Vice President — Corporate Services, or the officer
designated by the Company as responsible for administration of the Agreement, may reasonably
impose.
(c) Compliance with Code Section 409A. Other provisions of this Agreement notwithstanding, if
Performance Shares constitute a “deferral of compensation” under Section 409A of the Code (“Code
Section 409A”) as presently in effect or hereafter amended (i.e., the Performance Shares are not
excluded or exempted under Code Section 409A or a regulation or other official governmental
guidance thereunder; Note: an elective deferral under Section 6(b) would cause the Performance
Shares to be a deferral of compensation subject to Code Section 409A after the deferral), such
Performance Shares shall be subject to the additional requirements set forth in Section 11(k) of
the Plan.
7. Employee Representations and Warranties Upon Settlement. As a condition to the settlement
of the Performance Shares, the Company may require Employee to make any representation or warranty
to the Company as may be required under any applicable law or regulation.
8. Miscellaneous.
(a) Binding Agreement; Written Amendments. This Agreement shall be binding upon the heirs,
executors, administrators and successors of the parties. This Agreement constitutes the entire
agreement between the parties with respect to the Performance Shares, and supersedes any prior
agreements or documents with respect to the Performance Shares. No amendment or alteration of this
Agreement which may impose any additional obligation upon the Company shall be valid unless
expressed in a written instrument duly executed in the name of the Company, and no amendment,
alteration, suspension or termination of this Agreement which may materially impair the rights of
Employee with respect to the Performance Shares shall be valid unless expressed in a written
instrument executed by Employee.
(b) No Promise of Employment. The Performance Shares and the granting thereof shall not
constitute or be evidence of any agreement or understanding, express or implied, that Employee has
a right to continue as an officer or employee of the Company for any period of time, or at any
particular rate of compensation.
(c) Governing Law. The validity, construction, and effect of this Agreement shall be
determined in accordance with the laws (including those governing contracts) of the state of New
Jersey, without giving effect to principles of conflicts of laws, and applicable federal law.
(d) Fractional Performance Shares and Shares. The number of Performance Shares credited to
Employee’s Account shall include fractional Performance Shares calculated to at least three decimal
places, unless otherwise determined by the Committee. Unless settlement is effected through a
third-party broker or agent that can accommodate fractional shares (without requiring issuance of a
fractional Share by the Company), upon settlement of the Performance Shares Employee shall be paid,
in cash, an amount equal to the value of any fractional Share that would have otherwise been
deliverable in settlement of such Performance Shares.
(e) Mandatory Tax Withholding. Unless otherwise determined by the Committee, at the time of
vesting and/or settlement the Company will withhold from any shares of Stock deliverable in
settlement of the Performance Shares, in accordance with Section 11(d)(i) of the Plan, the number
of shares of Stock having a value nearest to, but not exceeding, the amount of income and
employment taxes required to be withheld under applicable laws and regulations, and pay the amount
of such withholding taxes in cash to the appropriate taxing authorities. Employee will be
responsible for any withholding taxes not satisfied by means of such mandatory withholding and for
all taxes in excess of such withholding taxes that may be due upon vesting or settlement of
Performance Shares.
(f) Statements. An individual statement of each Employee’s Account will be issued to Employee
at such times as may be determined by the Company. Such a statement shall reflect the number of
Performance Shares credited to Employee’s Account, transactions therein during the period covered
by the statement, and other information deemed relevant by the Company. Such a statement may be
combined with or include information regarding other plans and compensatory arrangements.
Employee’s statements shall be deemed a part of this Agreement, and shall evidence the Company’s
obligations in respect of Performance Shares, including the number of Performance Shares credited
as a result of Dividend Equivalents (if any). Any statement containing an error shall not, however,
represent a binding obligation to the extent of such error, notwithstanding the inclusion of such
statement as part of this Agreement.
(g) Unfunded Obligations. The grant of the Performance Shares and any provision for
distribution in settlement of Employee’s Account hereunder shall be by means of bookkeeping entries
on the books of the Company and shall not create in Employee any right to, or claim against any,
specific assets of the Company, nor result in the creation of any trust or escrow account for
Employee. With respect to Employee’s entitlement to any distribution hereunder, Employee shall be a
general creditor of the Company.
(h) Notices. Any notice to be given the Company under this Agreement shall be addressed to the
Company at its principal executive offices, in care of the Vice President – Corporate Services, or
the officer designated by the Company as responsible for administration of the Agreement, and any
notice to Employee shall be addressed to Employee at Employee’s address as then appearing in the
records of the Company.
(i) Shareholder Rights. Employee and any Beneficiary shall not have any rights with respect to
shares of Stock (including voting rights) covered by this Agreement prior to the settlement and
distribution of the shares of Stock as specified herein. Specifically, Performance Shares
represent a contractual right to receive shares of Stock in the future, subject to the terms and
conditions of this Agreement and the Plan, and do not represent ownership of shares of Stock at any
time before the settlement of this Award and actual issuance of the shares of Stock.
Exhibit A
NEW JERSEY RESOURCES CORPORATION
2007 Stock Award and Incentive Plan
Performance Goal and Earning of Performance Shares
2007 Stock Award and Incentive Plan
Performance Goal and Earning of Performance Shares
The number of Performance Shares earned by Participant shall be determined as of ,
20 (the “Earning Date”), based on the Company’s “Total Shareholder Return Performance” in the
33-month period ending at the Earning Date as compared against an established group of comparable
companies (the “Comparison Group”) selected by the Committee and shown below. The number of
Performance Shares earned will be determined based on the following grid:
Total Shareholder Return
| Company Total | ||||
| Shareholder Return | Performance Shares Earned as | |||
| Performance— | Percentage of | |||
| Percentile Achieved | Target Performance Shares | |||
Less than 27th |
0 | % | ||
27th (threshold) |
50 | % | ||
36th |
60 | % | ||
45th |
70 | % | ||
55th |
85 | % | ||
64th |
100 | % | ||
73rd |
120 | % | ||
82nd |
135 | % | ||
91st and above |
150 | % | ||
Total Shareholder Return (or “TSR”) shall be computed as follows:
TSR = (Priceend – Pricebegin + Dividends) / Pricebegin
Pricebegin = share price of common stock at , 20
Priceend = share price at end on , 20
Dividends = dividends paid to shareholders of common stock
Priceend = share price at end on , 20
Dividends = dividends paid to shareholders of common stock
Upon achievement of Total Shareholder Return at a percentile between any two specified
percentiles, the Performance Shares earned will be mathematically interpolated on a straight-line
basis.
Determinations of the Committee regarding Total Shareholder Return performance, such
performance as a percentile within the Comparison Group, the resulting Performance Shares earned
and vested and related matters will be final and binding on Participant. The Committee shall
specify a reasonable methodology for dealing with companies in the Comparison Group that cease to
be publicly traded companies engaged in a business comparable to that of the Company, subject to
compliance with Treasury Regulation § 1.162-27(e)(2). Total Shareholder Return shall be calculated
in a manner that reflects the economic return to shareholders, such that any equity restructuring
of the Company or any company in the Comparison Group shall not have the effect of enlarging or
reducing the rights of Employee except to the extent of its effects on the real economic return of
a shareholder.
Determinations of the Committee regarding Total Shareholder Return performance, in the case of
a Change in Control or Employee’s Termination due to death prior to the Earning Date, shall be made
as if the performance period had ended at the date of the Change in Control or Termination of
Employment due to death, as applicable.
The Comparison Group
AGL Resources Inc.
Atmos Energy Corporation
Laclede Group Inc.
Nicor Inc.
Northwest Natural Gas Co.
Piedmont Natural Gas Co., Inc.
South Jersey Industries, Inc.
Southwest Gas Corporation
Vectren Corporation
WGL Holdings, Inc.