EXHIBIT 10.7
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ CORPORATION
LONG-TERM STOCK INCENTIVE PLAN
PERFORMANCE SHARE AWARD AGREEMENT
PERFORMANCE SHARE AWARD AGREEMENT (the "Agreement") dated as of June 22,
2004, between ▇▇▇▇ 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 ▇▇▇▇ 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, 2004 and ending on December 31,
2006.
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
"Peer Group" (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, 2007 and (b) the dividends declared during the period
commencing on January 1, 2004 and ending on December 31, 2006,
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, 2004.
ii. "Peer Group" shall mean ▇▇▇▇▇ Meritor, ▇▇▇▇ Corp., Delphi, ▇▇▇▇▇
Corp., ▇▇▇▇▇▇▇ Controls, Inc., Magna International, Inc., and
Visteon.
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 2004, 2005, 2006 fiscal years or as otherwise
approved by the Compensation Committee.
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4. PERFORMANCE GOALS.
a. Relative Return to Shareholders:
i. Threshold: The Company is ranked above the 42nd percentile.
ii. Target: The Company is ranked above the 57th percentile.
iii. Superior: The Company is ranked above the 85th percentile.
b. Return on Invested Capital:
i. Threshold: 3%* per year average
ii. Target: 5% per year average
iii. Superior: 7% per year average
*If threshold payout is not achieved by meeting the 3% compounded
annual growth, an opportunity exists to earn threshold payout if the %
change in ROIC when compared to the Peer Group is above the 57th
percentile.
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 Capitol
--------------------- ------------------------------------ ---------------------------------------
Threshold 427 427
--------------------- ------------------------------------ ---------------------------------------
Target 853 853
--------------------- ------------------------------------ ---------------------------------------
Superior 1280 1280
--------------------- ------------------------------------ ---------------------------------------
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
---------
AP -- TP
TAS = The Performance Shares for target.
TS = The Performance Shares for threshold.
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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.
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.
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
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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, 2004
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 ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇,
Attention: ▇▇▇▇▇ ▇.
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▇▇▇▇▇▇▇ 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.
IN WITNESS WHEREOF, the Company and the Participant have duly executed this
Agreement as of the date first written above.
▇▇▇▇ CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Its: Vice President, Secretary and General Counsel
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
[Participant's Signature]
Participant's Name and Address for notices hereunder
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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