NATIONAL OILWELL VARCO, INC. LONG-TERM INCENTIVE PLAN Performance-Based Restricted Stock (36 Months) Agreement
EXHIBIT 10.2
NATIONAL OILWELL VARCO, INC.
LONG-TERM INCENTIVE PLAN
LONG-TERM INCENTIVE PLAN
Performance-Based Restricted Stock (36 Months) Agreement
Grantee: |
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Date of Grant: |
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Number of Restricted Shares Granted: |
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1. Notice of Grant. National Oilwell Varco, Inc. (the “Company”) is
pleased to notify you that you have been granted the above number of restricted shares of
Common Stock (“Restricted Stock”) of the Company pursuant to the National Oilwell Varco, Inc.
Long-Term Incentive Plan (the “Plan”), subject to the terms and conditions of the Plan and
this Agreement.
2. Vesting of Restricted Stock .
(a) Subject to the further provisions of this Agreement, the shares of Restricted
Stock shall become vested in full on March 26, 2010 IF the Performance Criteria (as defined
below) are satisfied during the Performance Period (as defined below). The Performance
Criteria have been established by the Compensation Committee of the Company’s Board of
Directors (the “Committee”), which shall determine and certify whether such criteria have
been satisfied.
(b) Distributions on a share of Restricted Stock (including dividends) shall be held by
the Company without interest until the Restricted Stock with respect to which the
distribution was made becomes vested or is forfeited and then paid to you or forfeited, as
the case may be. The dividends will be paid to you promptly after the date your shares of
Restricted Stock become vested.
(c) The “Performance Criteria” shall be satisfied if the Company Operating Income Growth
exceeds the Peer Group Operating Income Growth.
(d) “Operating Income Growth” shall mean the simple average of a company’s operating
income growth, in each case measured on a percentage basis, over the following three periods:
(i) from the year ended December 31, 2006 to the year ended December 31, 2007; (ii) from the
year ended December 31, 2007 to the year ended December 31, 2008; and (iii) from the year
ended December 31, 2008 to the year ended December 31, 2009.
(e) “Company Operating Income Growth” shall be the Operating Income Growth of the
Company.
(f) “Peer Group Operating Income Growth” shall be the median Operating Income Growth of
the Peer Group members.
(g) “Performance Period” shall mean from January 1, 2007 to December 31, 2009.
(h) “Peer Group” shall be comprised of the following companies: ▇▇▇▇▇ ▇▇▇▇▇▇, Inc., BJ
Services Co., Cameron International Corporation, FMC Technologies, Inc., Grant Prideco Inc.,
Hydril Co., ▇▇▇▇▇ International, Inc. and ▇▇▇▇▇▇▇▇▇▇▇ International Ltd. Any member of the
Peer Group that undergoes a “change of control event” prior to the end of the Performance
Period shall be removed from the Peer Group with respect to any year not yet completed prior
to such change of control event. A “change of control event” shall mean: (i) when a company
completes the sale of assets having a gross sales price which exceeds 50% of the consolidated
total capitalization of the company (consolidated total stockholders’ equity plus
consolidated total long-term debt as determined in accordance with generally accepted
accounting principles) as at the end of the last full fiscal quarter prior to the date such
determination is made; or (ii) any corporation, person or group within the meaning of Section
13(d)(3) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Act”), becomes
the beneficial owner (within the meaning of Rule 13d-3 under the Act) of voting securities of
the company representing more than 30% of the total votes eligible to be cast at any election
of directors of the company.
(i) Operating income for the Company and each of the members of the Peer Group to be
used to calculate Company Operating Income Growth and Peer Group Operating Income Growth
shall exclude all one-time, non-recurring, non-operational gains or charges to income taken
by the Company or any member of the Peer Group that are reported in a publicly disseminated
press release or public filing.
(j) For purposes of determining whether the shares of Restricted Stock shall become
vested, the Performance Criteria shall be deemed satisfied when the Company Operating Income
Growth exceeds the Peer Group Operating Income Growth, and the Committee certifies in writing
that such Performance Criteria has been satisfied. Notwithstanding the foregoing, in the
event of a Change of Control (as defined below) the Performance Criteria shall be deemed
satisfied and the Committee shall certify that such Performance Criteria has been satisfied.
(k) Notwithstanding anything in this Agreement to the contrary, the shares of
Restricted Stock shall become fully vested upon your Involuntary Termination. As used in
this paragraph, “Involuntary Termination” means your termination from employment with the
Company on or within twelve months following a Change of Control that is either (i) initiated
by the Company for reasons other than (a) your gross negligence or willful misconduct in the
performance of your duties with the Company or (b) your final conviction of a felony or a
misdemeanor involving moral turpitude, or (ii) initiated by you after (a) a reduction by the
Company of your authority, duties or responsibilities immediately prior to the Change of
Control (excluding for this purpose (A) an insubstantial reduction of such authorities,
duties or responsibilities or an insubstantial reduction of your offices, titles and
reporting requirements, or (B) an isolated, insubstantial and inadvertent action not taken in
bad faith and which is remedied by the Company promptly after receipt of notice thereof given
by you), (b) a reduction of your base salary or total compensation as in effect immediately
prior to the Change of Control (total compensation means for this purpose: base salary,
participation in an annual bonus plan, and participation in a long-term incentive plan), or
(c) your transfer, without your express written consent, to a location which is outside the
general metropolitan area in which your principal place of business immediately prior to the
Change of Control may be located or the Company’s requiring you to travel on Company business
to a substantially greater extent than required immediately prior to the Change of Control.
The term “Change of Control” shall mean: (i) the Company completes the sale of assets having
a gross sales price which exceeds 50% of the consolidated total capitalization of the Company
(consolidated total stockholders’ equity plus consolidated total long-term debt as determined
in accordance with generally accepted accounting principles) as at the end of the last full
fiscal quarter prior to the date such determination is made; or (ii)
any corporation, person or group within the meaning of Section 13(d)(3) and 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the “Act”), becomes the beneficial owner
(within the meaning of Rule 13d-3 under the Act) of voting securities of the Company
representing more than 30% of the total votes eligible to be cast at any election of
directors of the Company. For purposes of this Agreement, “employment with the Company”
shall include being an employee or a director of, or a consultant to, the Company or any of
its subsidiaries (a “Subsidiary”).
(l) The provisions of any written employment or severance agreement between you and the
Company concerning the vesting of Restricted Stock are incorporated hereby and made a part of
this Agreement. In the event of any conflict between the provisions of any such agreement
and this Agreement or the Plan, the terms and provisions of this Agreement and the Plan shall
control.
(m) All shares of Restricted Stock that are not vested on or before your termination of
employment for any reason other than as provided in subparagraph (k) above shall, upon your
termination, be automatically cancelled and forfeited without payment.
3. Custody of Restricted Stock; Ownership Rights. Upon vesting and satisfying all
applicable tax withholding obligations, the Company shall cause a certificate or certificates to be
issued without legend (except for any legend required pursuant to applicable securities laws or any
other agreement to which you are a party) in your name evidencing the shares of Restricted Stock
that have vested. Prior to the satisfaction of such vesting conditions or the occurrence of such
events, the Restricted Stock is not transferable and shall be held in trust by the Secretary of the
Company or such other depository as may be designated by the Committee as a depository for
safekeeping until the forfeiture of such Restricted Stock occurs or the vesting of the shares
pursuant to the terms of the Plan and this Agreement. In the Company’s sole discretion, the
Restricted Stock may be evidenced by an electronic book entry account in your name created by the
Company’s stock transfer agent. No physical certificates evidencing the Restricted Stock will be
issued to you until the satisfaction of all vesting conditions set forth herein and the
satisfaction of all applicable tax withholding obligations. You shall, if required by the
Committee, deliver to the Company a stock power, endorsed in blank, relating to the Restricted
Stock. Subject to the restrictions set forth herein, you are entitled to all voting and ownership
rights applicable to the Restricted Stock, including the right to receive any dividends that may be
paid on Restricted Stock, whether or not vested.
4. Nontransferability of Restricted Stock. You may not sell, transfer, pledge,
exchange, hypothecate or dispose of shares of Restricted Stock in any manner otherwise than by will
or by the laws of descent or distribution. A breach of these terms of this Agreement shall cause a
forfeiture of the shares of Restricted Stock.
5. Entire Agreement; Governing Law. These shares of Restricted Stock are granted
under and governed by the terms and conditions of the Plan and this Agreement. In the event of any
conflict between the Plan and this Agreement, the terms of the Plan shall control. Unless
otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in
this Agreement. The Plan is incorporated herein by reference. The Plan and this Agreement
constitute the entire agreement of the parties with respect to the subject matter hereof and
supersede in their entirety all prior undertakings and agreements of the Company and you with
respect to the subject matter hereof, and may not be modified adversely to your interest except by
means of a writing signed by the Company and you. This Agreement is governed by the internal
substantive laws, but not the choice of law rules, of the state of Texas.
6. Withholding of Tax. To the extent that the grant or vesting of Restricted Stock
results in the receipt of compensation by you with respect to which the Company or a Subsidiary has
a tax withholding
obligation pursuant to applicable law, unless other arrangements have been made
by you that are acceptable to the Company or such Subsidiary, which, with the consent of the
Company (or the Committee if you are subject to Section 16(b) of the Exchange Act), may include
withholding a number of Shares that would otherwise be delivered on vesting that have an aggregate
Fair Market Value that does not exceed the amount of taxes to be withheld, you shall deliver to the
Company or the Subsidiary such amount of money as the Company or the Subsidiary may require to meet
its withholding obligations under such applicable law. No delivery of unrestricted Shares shall be
made under this Agreement until you have paid or made arrangements approved by the Company or the
Subsidiary to satisfy in full the applicable tax withholding requirements of the Company or
Subsidiary.
| NATIONAL OILWELL VARCO, INC. | ||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| [NAME] | ||||
| Signature | ||||