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EXHIBIT 10.6
THE GOODYEAR TIRE & RUBBER COMPANY
GRANT AGREEMENT
PERFORMANCE EQUITY GRANT
[NAME AND ADDRESS OF GRANTEE]
Dear __________________:
The Directors of The Goodyear Tire & Rubber Company (the "Company")
desire to encourage and facilitate ownership of the Common Stock of the Company
(the "Common Stock") by key employees and to provide for additional compensation
based on the appreciation of the Common Stock, thereby providing incentive to
promote the continued growth and success of the Company's business. Accordingly,
the 1989 Goodyear Performance and Equity Incentive Plan was adopted effective
April 10, 1989 (the "Plan"). A copy of the Plan is attached.
At the December 3, 1996 meeting of the Compensation Committee of the Board
of Directors, you were awarded a Performance Equity Grant (each Unit equivalent
in value to one share of Common Stock) as follows:
Date of Grant 12-3-96
Number of Equity Units Granted
Performance Period 1-1-97 through 12-31-99
The number of Performance Equity Grant Units specified above (the
"Units") which you will earn at the end of the three-year Performance Period
specified above (the "Performance Period") will be determined by and contingent
upon the extent to which Performance Goals are achieved. The number of Units
actually earned may be adjusted between 0 and 150% of the number of Units stated
above, depending on the level of achievement of Performance Goals. Payment of
the Units earned will be made as provided under the General Terms and
Conditions. The Performance Goals and earn out criteria for the Performance
Period for your Performance Equity Grant are described at Annex A.
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The Goodyear Tire & Rubber Company
December 3, 1996
Grant Agreement received and agreed to:
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Grantee
Date:
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GRANT AGREEMENT
(Continued)
GENERAL TERMS AND CONDITIONS
1. The Performance Equity Grant for the number of Units specified above is
granted to you under, and governed by the terms and conditions of, the Plan and
this Grant Agreement. Your execution and return of the enclosed copy of this
Grant Agreement constitutes your agreement to, and acceptance of, all terms and
conditions of the Plan and this Grant Agreement. You also agree that you have
read and understand the provisions of the Plan, this Grant Agreement and Annex
A.
2. All rights conferred upon you under the provisions of this Grant
Agreement are personal to you and, except under the provisions of paragraph 14
of the Plan, no assignee, transferee or other successor in interest shall
acquire any rights or interests whatsoever under this Grant Agreement, which is
made exclusively for the benefit of you and the Company.
3. As further consideration for the Units granted to you hereunder, you
must remain in the continuous employ of the Company or one or more of its
subsidiaries until December 31, 1999, the end of the Performance Period. Any
Units earned will be prorated in the event of your death, Retirement (as defined
in the Plan) or Disability (as defined in the Plan) or layoff prior to
completion of the Performance Period. Any proration is based on the last day you
worked. Nothing contained herein shall restrict the right of the Company or any
of its subsidiaries to terminate your employment at any time, with or without
cause.
4. You will forfeit the right to receive any distribution or payment under
this Grant if you enter into a relationship either as an employee, consultant,
agent or in any manner whatsoever with an entity that sells products in
competition with products sold by the Company and its subsidiaries within six
months after the earlier of (1) the date you receive your distribution of Units
earned or (2) the date you cease to be an employee of the Company or one of its
subsidiaries.
5. The number of Units earned will be paid as follows:
(a) Each Unit earned will be valued at a dollar amount equal to the Fair
Market Value of the Common Stock (as defined below) on Xxxxxxxx 00, 0000,
(xxx "Xxxx Xxxxx").
(x) The Company will pay to you an amount equal to 50% of the Unit Value
multiplied by the total number of Units earned, less such withholding and
payroll taxes as the Company shall determine to be necessary or
appropriate, in cash in February of 2000; provided, however, that
notwithstanding the foregoing, you may elect, by delivering a written
notice of your election to the Company not later than December 31, 1998,
to defer receipt of all or a specified whole percentage of the aforesaid
50% of Units earned until the Optional Deferral Date (as defined below),
in which event the amount you elect to defer (which shall be equal to the
product of UE x .5UV x PDE, where UE equals the number of Units earned, UV
equals the Unit Value and PDE equals the percentage, expressed as a
decimal, of the Units earned you elect to defer) will be credited in
February of 2000 to an account maintained in the records of the Company
(the "Optional Deferred Amount") and will be converted into Deferral
Units. The num ber of Deferral Units will be determined by dividing the
Optional Deferred Amount by the Fair Market Value of the Common Stock (as
defined below) on December 31, 1999. The amount of such deferral will be
reduced, if necessary, to pay such tax, payroll and other withholding
obligations as the Company shall determine to be necessary or appropriate.
(c) The balance of the Unit Value of each Unit earned, which shall be
equal to 50% of the Unit Value, shall be multiplied by the total
number of Units earned (the "Mandatory Deferred Amount") and credited in
February of 2000 to an account maintained in the records of the Company.
The Mandatory Deferred Amount will be converted into Deferral
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Units (as defined below). The number of Deferral Units will be determined
by dividing the Mandatory Deferred Amount by the Fair Market Value of the
Common Stock (as defined below) on December 31, 1999. The amount of such
deferral will be reduced, if necessary, to pay such tax, payroll and other
withholding obligations as the Company shall determine to be necessary or
appropriate.
(d) Notwithstanding the foregoing, the Compensation Committee of the Board
of Directors may, at its sole election, at any time and from time to time
require that the payment of the entire, or any portion of the, Unit Value
of any number of the Units earned shall be deferred until the Optional
Deferral Date, or such later date as it shall deem appropriate, in order
for the Company to conform to the requirements of Section 162(m) of the
Internal Revenue Code (the "Required Deferral Amount"). Any Required
Deferral Amount so deferred will be credited to an account maintained in
the records of the Company and will be converted into Deferral Units, the
number of which shall be determined by dividing each amount so deferred by
the Fair Market Value of the Common Stock on the date of such deferral.
6. As used herein, the term: (1) "Deferral Unit" means an equivalent to a
hypothetical share of the Common Stock; (2) "Fair Market Value of the Common
Stock" means, in respect of any date on or as of which a determination thereof
is being or to be made, the average of the high and low per share sale prices of
the Common Stock on the New York Stock Exchange Composite Transactions Tape on
such date or, if the Common Stock was not traded on such date, the next
preceding day on which the Common Stock was traded on the New York Stock
Exchange; (3) "Dividend Equivalent" means, with respect to each dividend payment
date for the Common Stock, an amount equal to the cash dividend per share of
Common Stock which is payable on such dividend payment date; (4) "Mandatory
Deferral Date" means the earlier of (x) the tenth business day of the January
next following the fifth anniversary of the last day of the Performance Period,
or (y) the Optional Deferral Date; (5) "Mandatory Deferral Unit" means each
Deferral Unit resulting from the Mandatory Deferral Amount, including Dividend
Equivalents credited in respect thereof; (6) "Optional Deferral Date" means the
later of (i) the first business day of the seventh month following the month
during which you cease to be employed by the Company, or one of its subsidiary
companies, for any reason (whether Retirement, Disability, death, layoff,
voluntary termination or otherwise) or (ii) the tenth business day of the
calendar year following the calendar year during which you ceased to be an
employee of the Company, or one of its subsidiary companies, for any reason
whatsoever; (7) "Optional Deferral Unit" means each Deferral Unit resulting from
any Optional Deferred Amount or converted from a Mandatory Deferral Unit
pursuant to Section 8 of this Grant Agreement, including Dividend Equivalents
credited in respect thereof; and (8) "Required Deferral Unit" means each
Deferral Unit resulting from any Required Deferred Amount, including Dividend
Equivalents credited in respect thereof. All computations relating to Deferral
Units, fractions of shares of Common Stock and Dividend Equivalents will be
rounded, if necessary, to the fourth decimal place.
7. Each Deferral Unit will be credited with one Dividend Equivalent on
each date on which cash dividends are paid on shares of the Common Stock (and
each fraction of a Deferral Unit shall be credited with a like fraction of a
Dividend Equivalent). Dividend Equivalents (and fractions thereof, if any) will
be automatically translated into Deferral Units by dividing the dollar
amount of such Dividend Equivalents by the Fair Market Value of the Common
Stock on the date the relevant Dividend Equivalents are accrued to your
account. The number of Deferral Units (and any fractions thereof) resulting
will be credited to your account (in lieu of the dollar amount of such Dividend
Equivalent) and shall continually be denominated in Deferral Units until
converted for payment as provided in this Grant Agreement.
8. The Mandatory Deferral Units credited to your account shall be
automatically deferred until the Mandatory Deferral Date. If the Mandatory
Deferral Date occurs before you cease to be an employee of the Company, or one
of its subsidiary companies, you may elect, by delivering a written notice of
your election to the Company not later than December 31, 2003, to defer receipt
of all or a specified whole percentage of the Mandatory Deferral Units credited
to your account until the Optional Deferral Date, whereupon such Mandatory
Deferral Units will become Optional Deferral Units.
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9. On the Mandatory Deferral Date, to the extent you have not elected to
further defer payment of all or a portion of the Mandatory Deferral Units until
the Optional Deferral Date in the manner provided above (and unless payment of
all or a portion of your Mandatory Deferral Units have been further deferred
until the Optional Deferral Date pursuant to the conversion thereof into
Required Deferral Units), the whole Mandatory Deferral Units in your account
will be converted, at your election (which election shall be made in writing on
or before the June 30, 2004), into (1) a like number of shares of the Common
Stock, (2) a dollar amount determined by multiplying the number of Deferral
Units credited to your account by the Fair Market Value of the Common Stock on
the Mandatory Deferral Date, or (3) a combination of shares of the Common Stock
and cash in accordance with your election (which shall be expressed as a
percentage of the Deferral Units to be paid in shares of the Common Stock). In
accordance with your election, within five business days following the Mandatory
Deferral Date you will be paid (a) such number of shares of the Common Stock,
(b) such amount of cash, or (c) the elected combination of shares of Common
Stock and cash, the amounts of which shall be determined in accordance with the
preceding sentence. If you did not make a timely election as to the form of
payment, you will receive payment in shares of the Common Stock. Any fraction of
a Deferral Unit will be paid to you on the relevant date in cash, the amount of
which shall be calculated in the manner specified above.
10. If you have duly elected to receive payment of all or a specified
percentage of your Deferral Units on the Optional Deferral Date (or if payment
of any of the Deferral Units has been deferred until the Optional Deferral Date
pursuant to the conversion thereof into Required Deferral Units), you may elect,
at the time and in the manner specified below, to receive such Deferral Units in
(1) a lump sum on the fifth business day following the Optional Deferral Date,
or (2) in a series of not less than five (5) or more than ten (10) annual
installments commencing on the fifth business day following the Optional
Deferral Date, or (3) a specified percentage of your Deferral Units on the fifth
business day following the Optional Deferral Date and the balance of your
Deferral Units in installments as specified in clause (2) of this sentence.
11. On the Optional Deferral Date (to the extent you have not elected to
receive payment in installments), the whole Deferral Units then in your account
(which have not been designated for payment in installments) will be converted
at your election (which election shall be made in writing on or before the last
day of the seventh month prior to the month during which the Optional Deferral
Date occurs), into (1) a like number of shares of the Common Stock, or (2) a
dollar amount determined by multiplying the number of whole Deferral Units
credited to your account by the Fair Market Value of the Common Stock on the
Optional Deferral Date, or (3) a combination of shares of the Common Stock and
cash in accordance with your election (which shall be expressed as a percentage
of the Deferral Units to be paid in shares of the Common Stock). In accordance
with your election, within five business days following the Optional Deferral
Date you will be paid (a) such number of shares of the Common Stock, (b) such
amount of cash, or (c) the elected combination of shares of Common Stock and
cash, the amounts of which shall be determined in accordance with the preceding
sentence. If you did not make an election as to the form of payment on or before
the required date, you will receive payment in shares of the Common Stock. Any
fraction of a Deferral Unit will be paid to you on the relevant date in cash,
the amount of which shall be calculated in the manner specified above.
12. If you desire to receive payment of your Deferral Units or a portion
thereof in annual installments, you may elect (by delivering to the Company a
written notice of your election, which shall specify the number of annual
installments, not later than December 31 of the calendar year which is two
calendar years prior to the year during which the Optional Deferral Date occurs)
to receive all, or a specified whole percentage of, the Deferral Units in your
account (which would otherwise be scheduled for distribution on the Optional
Deferral Date) in not less than five (5) or more than ten (10) annual
installments, payable commencing on the fifth business day following the
Optional Deferral Date and thereafter on the fifth business day following each
anniversary thereof until paid in full. You may also elect (in writing on or
before the last day of the seventh month prior to the month during which the
Optional Deferral Date occurs) to receive payment in shares of the Common Stock,
cash or any combination of Common Stock and cash (expressed as a percentage of
the Deferral Units to be paid in shares of the
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Common Stock. Each installment shall be in an amount equal to the total number
of Deferral Units credited to your account on the Optional Deferral Date, or on
the anniversary thereof which is the fifth business day prior to the date such
installment is due and payable, as the case may be, divided by the number of
annual installments remaining (including the annual installment then being
calculated for payment) to be paid. In respect of each installment, the number
of Deferral Units payable shall, in accordance with your election, be converted
into (1) a like number of shares of the Common Stock, (2) a dollar amount
determined by multiplying the number of whole Deferral Units credited to your
account by the Fair Market Value of the Common Stock on the relevant anniversary
of the Optional Deferral Date (or the Optional Deferral Date in the case of the
first installment), or (3) the elected combination of shares of the Common Stock
and cash, the amounts of which shall be determined in the manner specified
above. Any fraction of Deferral Unit will be paid to you on the relevant date in
cash, the amount of which shall be calculated in the manner specified above.
13. You will be required to satisfy all Federal, state and local tax and
payroll withholding obligations, and any other withholding obligations, arising
in respect of any distribution of shares of the Common Stock or cash to you. To
the extent there is sufficient cash available, such withholding obligations will
be deducted from your distribution. To the extent the amount of cash to be
distributed is not sufficient to satisfy all withholding obligations, you will
be required to pay such withholding obligations as a condition to your receipt
of any distribution of shares of the Common Stock.
14. In the event of your death at any time prior to the Mandatory Deferral
Date, your account balance will be paid in cash in a lump sum on the later of
(a) the fifth business day following the Mandatory Deferral Date or (b) the
fifth business day of the calendar year following the calendar year during which
your date of death occurs. In the event of your death at any time following the
Mandatory Deferral Date and prior to the distribution of your account, the
entire balance of your account shall be paid in cash on the anniversary of the
Mandatory Deferral Date next following your date of death.
15. In the event of any stock dividend, stock split, recapitalization,
merger, split-up, spin-off or other change affecting the Common Stock of the
Company, the Deferral Units in your account shall be adjusted in the same manner
and proportion as the change to the Common Stock.
16. Any notice to you under this Grant Agreement shall be sufficient if in
writing and if delivered to you or mailed by registered mail directed to you at
the address on record in the Executive Compensation Department. Any notice to
the Company under this Grant Agreement shall be sufficient in writing and if
delivered to the Executive Compensation Department of the Company in Akron,
Ohio, or mailed by registered mail directed to the Company for the attention of
the Executive Compensation Department at 0000 Xxxx Xxxxxx Xxxxxx, Xxxxx, Xxxx
00000-0000. Either you or the Company may, by written notice, change the
address.
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ANNEX A
PERFORMANCE GOALS
Performance Goals are based on the aggregate earnings per share of Goodyear
Common Stock for the period January 1, 1997 through December 31, 1999.
MINIMUM PERFORMANCE GOAL FOR PAYMENT
In order for there to be a distribution under this Grant, the aggregate earnings
per share shall be at least $13.25 for the three-year period beginning January
1, 1997.
PERFORMANCE UNIT DISTRIBUTION SCHEDULE
Unit distributions are payable 50 percent in shares of the Company's Common
Stock and 50 percent in cash, except as may be otherwise provided in, or as may
be otherwise elected in accordance with, the Grant Agreement.
Aggregate Earnings % of
Per Share Unit Distribution
1/1/97 - 12/31/99 Based on Grant
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$ 15.25 150 %
15.00 140
14.75 130
14.50 120
14.25 110
14.00 100
13.75 90
13.50 85
13.25 80
<13.25 0
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