EXHIBIT 10.5
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ CORPORATION
LONG-TERM STOCK INCENTIVE PLAN
PERFORMANCE SHARE AWARD AGREEMENT
PERFORMANCE SHARE AWARD AGREEMENT (the "Agreement") dated as of
September 23, 2003, 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, 2003 and ending on December
31, 2005.
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, 2006 and (b) the dividends
declared during the period commencing on January 1, 2003 and ending on December
31, 2005, 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, 2003.
ii. "Peer Group" shall include ▇▇▇▇▇ 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 2003, 2004, 2005 fiscal years.
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:
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Performance Shares
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Performance At Relative Return to Shareholders Return on Invested Capitol
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Threshold 929 929
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Target 1858 1858
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Superior 2787 2787
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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
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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.
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
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
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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, 2003
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 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 or state, 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.
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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: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 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 Delaware, 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 Grantee have duly
executed this Agreement as of the date first written above.
▇▇▇▇ CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Its: Vice President, Secretary and General Counsel
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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[Grantee's Signature]
Grantee's Name and Address for notices
hereunder:
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