Each member's Guideline Incentive will be expressed in dollars computed by multiplying the member's guideline percentage (indicated in the Company compensation structure) by the member's eligible annual base salary earnings for the incentive year. MIP employees receiving overtime will have MIP based on eligible base pay and overtime earnings. Actual incentives paid may vary from Guideline Incentive amounts based on the performance of the branch, district, or corporation.

Awards to Corporate participants will be based on their Guideline Incentive (eligible salary multiplied by the applicable guideline percentage) multiplied by the Corporate Final Performance Index. The Corporate Final Performance Index shall be based on the consolidated financial performance of the Company including Graybar Corporate, districts, zones and all subsidiaries as determined from time to time in accordance with guidelines adopted by the Board.

Incentive Awards. An Eligible Employee may elect to defer any portion of an Incentive Award up to 95%, expressed as whole percentage points. In order to elect to defer an Incentive Award, an Eligible Employee shall submit an irrevocable Deferral Form with HP before the beginning of the Plan Year in which the performance period to which Incentive Award pertains begins, in accordance with procedures that HP determines in its discretion. Notwithstanding the foregoing, if HP determines that an Eligible Employee may elect to defer a portion of the Incentive Award at a later time under Code section 409A, such Employee may elect to defer a portion of the Incentive Award by filing an irrevocable Deferral Form at such later time as determined by HP in accordance with Code section 409A.

The target incentive fund is the sum of the individual target incentive awards for all eligible Participants. Once the incentive targets have been determined by the Administrator, a target incentive fund shall be established and accrued ratably by KRC and each of its segments and/or subsidiaries, as applicable. The incentive fund and accruals may be adjusted during the year.

The target incentive fund is the sum of the individual target incentive awards for all eligible Participants.

The Committee shall determine the actual Award payable to each Participant for each Year or other measurement period, taking into consideration, as it deems appropriate, the performance of the Company, Affiliate and/or a Business Unit, as the case may be, for the Year or other measurement period in relation to the Performance Goals theretofore established by the Committee, and the performance of the respective Participants during the Year or other measurement period. The fact that an Employee is selected as a Participant for any Year or other measurement period shall not mean that such Employee necessarily will receive an Award for that Year or other measurement period. The Committee may, in its discretion, increase or reduce the amount of an Award otherwise earned hereunder after considering such factors as it deems appropriate, including individual performance factors. Notwithstanding any other provisions of the Plan to the contrary, the Committee may grant discretionary Awards as it sees fit under the Plan.

Annual Incentive Awards. Subject to the terms of this Plan, the Administrator will determine all terms and conditions of an Annual Incentive Award, including but not limited to the Performance Goals, performance period, the potential amount payable, and the timing of payment, subject to the following: # the Administrator must require that payment of all or any portion of the amount subject to the Annual Incentive Award is contingent on the achievement of one or more Performance Goals during the period the Administrator specifies, although the Administrator may specify that all or a portion of the Performance Goals subject to an Award are deemed achieved upon a Participant’s death, Disability or Retirement, or such other circumstances as the Administrator may specify; and # the performance period must relate to a period of one fiscal year of the Company except that, if the Award is made in the year this Plan becomes effective, at the time of commencement of employment with the Company or on the occasion of a promotion, then the Award may relate to a period shorter than one fiscal year.

Determination of Target Awards. The Committee shall establish the Target Award for each applicable leadership level, band, division, or other group of Employees selected to participate in the Plan with respect to a Performance Period, subject to any limitations established by the Committee. The Target Award is the amount that a Participant may earn under an Award if targeted performance levels are achieved (including corporate and individual performance). Target Awards may be denominated as a percentage of base salary or a dollar amount, or a combination thereof. The fact that a Target Award is established for a Participant's leadership level, band, division or other group for a Performance Period shall not entitle such Participant to receive an Award.

Determination of Individual Awards. Subject to achievement of any applicable minimum threshold objectives established under Section 7, fulfillment of the conditions set forth in Section 13, and compliance with the eligibility requirements set forth in Section 5(b), the Committee shall, as soon as practicable following, but not later than the December 31st immediately following, the end of a Performance Period, determine the amount of each Award to be made to a Participant under the Plan for the Performance Period, which amount shall, except as otherwise provided below, be the Business Performance Factor multiplied by the Target Award determined for such Participant for such Period pursuant to Section 9. The Committee may, in its sole discretion, reduce the amount of any Award that otherwise would be awarded to any Participant for any Performance Period. In addition, the Committee may, in its sole discretion, increase the amount of any Award that otherwise would be awarded to any Participant for a Performance Period to an amount that is higher than the applicable Business Performance Factor multiplied by the Target Award based on exceptional individual, unit, division, group or Company performance. A Participant’s final Award may be adjusted up or down by their management to reflect their individual performance, except that any matters affecting Section 16 Persons or Executive Participants shall remain with the Committee. Individual Award amounts may be less than (including $0) or greater than 100% of the related Target Award. Notwithstanding anything contained in the Plan to the contrary, the Committee may determine in its sole discretion not to make an Award to a particular Participant or to all Participants selected to participate in the Plan for any Performance Period.

Determination of Target Awards. The Administrator shall establish a Target Award for each Participant for each Performance Period, and the Administrator (or its designee) shall communicate the applicable Target Award to each Participant.