LEAR CORPORATION LONG-TERM STOCK INCENTIVE PLAN FORM OF PERFORMANCE SHARE AWARD AGREEMENT
Exhibit 10.1
XXXX CORPORATION
LONG-TERM STOCK INCENTIVE PLAN
LONG-TERM STOCK INCENTIVE PLAN
PERFORMANCE SHARE AWARD AGREEMENT (the “Agreement”) dated as of ___, 2006, between Xxxx
Corporation (the “Company”) and the individual whose name appears on the signature page hereof (the
“Participant”), who is a key employee of the Company or an Affiliate. Any term capitalized herein,
but not defined, shall have the meaning set forth in the Xxxx Corporation Long-Term Stock Incentive
Plan (the “Plan”).
1. GRANT. In accordance with the terms of the Plan, the Company hereby grants to the
Participant a Performance Share Award subject to the terms and conditions set forth herein.
2. PERFORMANCE PERIOD. The Performance Period for this Award shall be the three-year period
commencing on January 1, 2006 and ending on December 31, 2008.
3. PERFORMANCE MEASURES. There shall be two performance measures, Relative Return to
Shareholders and Return on Invested Capital, as both are defined below.
a. Relative Return to Shareholders: This performance measure ranks the “Return to
Shareholders” (as defined below) for the Company over the Performance Period in relation to the
Return to Shareholders for the “S&P 500 Companies” (as defined below).
i. “Return to Shareholders” for each respective company shall mean the quotient of (I) the sum
of (a) the average closing price, as reported on the exchange where the stock of the relevant
company is traded, for the five consecutive trading days preceding January 1, 2009 and (b) the
dividends declared during the period commencing on January 1, 2006 and ending on December 31, 2008,
divided by (II) the average closing price, as reported on the exchange where the stock of the
relevant company is traded, for the five consecutive trading days preceding January 1, 2006.
ii. “S&P 500 Companies” shall mean the corporations comprising the Standard & Poor’s S&P 500
Index as of the end of the respective periods for which performance is to be measured pursuant to
the terms of the Agreement.
b. Return on Invested Capital: This performance measure is the compounded improvement on the
Company’s return on invested capital as reported to its shareholders for 2006, 2007, 2008 fiscal
years or as otherwise approved by the Compensation Committee.
4. PERFORMANCE GOALS.
a. Relative Return to Shareholders:
| i. | Threshold: The Company is ranked above the 42nd percentile of S&P 500 Companies when comparing the Company’s Return to Shareholders to the Return to Shareholders of the S&P 500 Companies during the relevant period. | ||
| ii. | Target: The Company is ranked above the 57th percentile of S&P 500 Companies when comparing the Company’s Return to Shareholders to the Return to Shareholders of the S&P 500 Companies during the relevant period. | ||
| iii. | Superior: The Company is ranked above the 85th percentile of S&P 500 Companies when comparing the Company’s Return to Shareholders to the Return to Shareholders of the S&P 500 Companies during the relevant period. |
b. Return on Invested Capital:
| i. | Threshold: 3% per year average improvement | ||
| ii. | Target: 5% per year average improvement | ||
| iii. | Superior: 7% per year average improvement |
5. PERFORMANCE SHARES.
a. The number of Performance Shares earned by a Participant with respect to each performance
measure during the Performance Period shall be determined under the following chart:
| Performance Shares | ||||||||
| Performance At | Relative Return to Shareholders | Return on Invested Capital | ||||||
Threshold |
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Target |
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Superior |
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b. In the event that the Company’s actual performance does not meet threshold for that
performance measure, Performance Shares shall not be earned with respect to that performance
measure.
c. If the Company’s actual performance for a performance measure is
between “threshold” and “target,” the Performance Shares earned shall equal the Performance Shares
for threshold plus the number of Performance Shares determined under the following formula:
| (TAS — TS) | x | AP — TP | ||||||
| TAP — TP |
| TAS = | The Performance Shares for target. | |||||
| TS = | The Performance Shares for threshold. | |||||
| AP = | The Company’s actual performance. | |||||
| TP = | The threshold performance goal. | |||||
| TAP = | The target performance goal. |
d. If the Company’s actual performance for a performance measure is between “target” and
“superior,” the Performance Shares earned shall equal the Performance Shares for target plus the
number of Performance Shares determined under the following formula:
| (SS — TAS) | x | AP — TAP | ||||||
| SP — TAP |
| SS = | The Performance Shares for superior. | |||||
| TAS = | The Performance Shares for target. | |||||
| AP = | The Company’s actual performance. | |||||
| TAP = | The target performance goal. | |||||
| SP = | The superior performance goal. |
e. If the Company’s actual performance for performance measure exceeds “superior,” the
Performance Shares earned shall equal the Performance Shares for superior.
f. As an alternative to the calculation of the amount of Performance Shares earned pursuant to
Section 4 and Sections 5(a) through 5(e) above and in order for the potential Performance Share
Award to be “banked” on a year-by-year basis, Participant shall earn an amount of Performance
Shares equal to the total of Performance Shares earned in each of the three calendar years of the
Performance Period as if the Company’s actual performance had
been measured at the end of each such year with one-third (1/3) of the Performance Shares being
earned if, and to the extent that, the respective Performance Goal has been met for such year (with
such calculations and goals herein applied as if each separate calendar year were a Performance
Period). This Section 5(f) shall operate and Performance Shares will be earned hereunder if and
only if the Participant would earn more Performance Shares as a result hereof than otherwise earned
pursuant to this Agreement.
6. TIMING AND FORM OF PAYOUT. Except as hereinafter provided, after the end of the
Performance Period, the Participant shall be entitled to receive a number of shares of the
Company’s common stock, par value $.01 per share (“Common Stock”), equal to his total number of
Performance Shares determined under Section 5. Delivery of such shares of Common Stock shall be
made as soon as administratively feasible after the Committee certifies the actual performance of
the Company during the Performance Period. Notwithstanding the foregoing, any delivery of shares
of Common Stock under this Section may be irrevocably deferred by the Participant with the
Committee’s consent; provided, that the Participant’s election to defer occurs prior to the
expiration of the second year of the Performance Period. Notwithstanding anything herein to the
contrary, the Committee may defer delivery of any shares of Common Stock to the Participant under
this Section if the delivery of such shares of Common Stock would constitute compensation to the
Participant that is not deductible by the Company or an Affiliate due to the application of Code
Section 162(m); provided, that such shares of Common Stock deferred pursuant to this sentence shall
be delivered to the Participant on or before the January 15 of the first year in which the
Participant is no longer a “covered employee” of the Company (within the meaning of Code Section
162(m)) following the end of the Performance Period or, if later, the deferred delivery date
elected by the Participant in accordance with the preceding sentence. Notwithstanding anything in
this Section 6 to the contrary, an election to defer hereunder shall comply with the requirements
of Section 409A of the Code or it will not be a valid election.
7. TERMINATION OF EMPLOYMENT DUE TO DEATH, RETIREMENT, OR DISABILITY. If a Participant ceases
to be an employee prior to the end of the Performance Period by reason of death, retirement or
disability, the Participant (or in the case of the Participant’s death, the Participant’s
beneficiary) shall be entitled to receive shares of Common Stock equal to the number of shares of
Common Stock the Participant would have been entitled to under Section 6 if he or she had remained
employed until the last day of the Performance Period multiplied by a fraction, the numerator of
which shall be the number of full calendar months during the period of January 1, 2006 through the
date of the Participant’s employment terminated and the denominator of which shall be thirty-six.
The delivery of such shares of Common Stock shall be made as soon as administratively feasible
after the end of the Performance Period, whether or not the Participant had elected under Section 6
above to defer receipt of Common Stock deliverable under this Award.
Any distribution made with respect to a Participant who has died shall be paid to the
beneficiary designated by the Participant pursuant to Article 11 of the Plan to receive the
Participant’s shares of Common Stock under this Award. If the Participant’s beneficiary predeceases
the Participant or no beneficiary has been properly designated, distribution of the Participant’s
shares of Common Stock under this Award shall be made to the Participant’s
surviving spouse and if none, to the Participant’s estate.
8. TERMINATION OF EMPLOYMENT FOR ANY OTHER REASON. Except as provided in Section 7, the
Participant must be an employee of the Company and/or an Affiliate continuously from the date of
this Award until the last day of the Performance Period to be entitled to receive any shares of
Common Stock with respect to any Performance Shares he may have earned hereunder.
9. ASSIGNMENT AND TRANSFERS. The rights and interests of the Participant under this Award may
not be assigned, encumbered or transferred except, in the event of the death of the Participant, by
will or the laws of descent and distribution.
10. WITHHOLDING TAX. The Company and any Affiliate shall have the right to retain shares of
Common Stock that are distributable to the Participant hereunder to the extent necessary to satisfy
the minimum required withholding taxes, whether federal, state or local, triggered by the
distribution of shares of Common Stock under this Award.
11. NO LIMITATION ON RIGHTS OF THE COMPANY. The grant of this Award shall not in any way
affect the right or power of the Company to make adjustments, reclassification, or changes in its
capital or business structure, or to merge, consolidate, dissolve, liquidate, sell or transfer all
or any part of its business or assets.
12. PLAN AND AGREEMENT NOT A CONTRACT OF EMPLOYMENT. Neither the Plan nor this Agreement is a
contract of employment, and no terms of employment of the Participant shall be affected in any way
by the Plan, this Agreement or related instruments except as specifically provided therein.
Neither the establishment of the Plan nor this Agreement shall be construed as conferring any legal
rights upon the Participant for a continuation of employment, nor shall it interfere with the right
of the Company or any Affiliate to discharge the Participant and to treat him or her without regard
to the effect that such treatment might have upon him or her as a Participant.
13. PARTICIPANT TO HAVE NO RIGHTS AS A STOCKHOLDER. The Participant shall not have any rights
as a stockholder with respect to any shares of Common Stock subject to this Award prior to the date
on which he or she is recorded as the holder of such shares of Common Stock on the records of the
Company.
14. NOTICE. Any notice or other communication required or permitted hereunder shall be in
writing and shall be delivered personally, or sent by certified, registered or express mail,
postage prepaid. Any such notice shall be deemed given when so delivered personally or, if mailed,
three days after the date of deposit in the United States mail, in the case of the Company to 00000
Xxxxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxx, 00000, Attention: General Counsel and, in the case of the
Participant, to its address set forth on the signature page hereto or, in each case, to such other
address as may be designated in a notice given in accordance with this Section.
15. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with, and governed by, the laws of the State of Michigan, determined without regard to
its conflict of law rules.
16. PLAN DOCUMENT CONTROLS. The rights herein granted are in all respects subject to the
provisions set forth in the Plan to the same extent and with the same effect as if set forth fully
herein. In the event that the terms of this Agreement conflict with the terms of the Plan document,
the Plan document shall control.
[signature page follows]
IN WITNESS WHEREOF, the Company and the Participant have duly executed this Agreement as of the
date first written above.
| XXXX CORPORATION | ||||
| By: | ||||
| Its: Senior Vice President, Human Resources | ||||
| Participant’s Name and Address for notices hereunder | ||||
