AMERICAN STANDARD INC.
LONG-TERM INCENTIVE COMPENSATION PLAN
(As Amended and Restated as of February 3, 1995)
Section 1. Definitions
Whenever used herein, the following terms shall have the
meanings set forth below. Except when otherwise indicated by the
context, words in the masculine gender when used in the Plan shall also
indicate the feminine and neuter genders, the singular shall include the
plural, and the plural shall include the singular.
A. ASCI means American Standard Companies Inc., a Delaware
corporation, which is the successor in interest to ASI Holding
Corporation.
B. Award Opportunity or Long-Term Award Opportunity means,
(i) with respect to any Performance Period in the case of a Participant
who is not a Prior Participant, his Compensation Multiple for such Period,
provided that, if such Participant is a Qualified Participant,
(a) his Award Opportunity for each of the 1990-1992, 1991-
1993, 1992-1994 and 1993-95 Performance Periods shall not be less than his Total
Compensation Level for such Period, and
(b) his Award Opportunity for any Performance Period beginning
after December 31, 1992 shall not be less than his Total Compensation Level for
the 1992-1994 Performance Period;
(ii) with respect to any Performance Period beginning before Jan uary
1, 1992 in the case of a Prior Participant, his Award opportunity for any such
Period shall be his Total Compensation Level for such Period.
C. Beneficiary means any one person or trust appointed by a
Participant in an unrevoked writing filed with the Committee directing
that, in the event of such Participant's death, payments to which such
Participant shall become entitled hereunder shall be paid to such
Beneficiary; provided that a Participant's Beneficiary shall be deemed
to be the estate or legal representative of such Participant if such
written appointment is revoked and not replaced by another such written
appointment filed with the Committee, or if the Beneficiary appointed by
a Participant fails to survive him.
D. Board means the Board of Directors of the Company.
E. Committee means the Management Development Committee of the Board
of Directors or such other committee appointed by the Board which shall
consist of three or more members of the Board or the Board of Directors
of ASCI each of whom is not eligible to participate in the Plan.
F. Company means American Standard Inc., a Delaware corporation.
G. Compensation Multiple of a Participant (other than a Prior
Participant) means his Performance Period Compensation Rate, multiplied
by 1.7 in the case of the Chief Executive Officer, by 1.3 in the case of
senior officers, and by 1.2 in the case of all other officers.
H. Employee means any person who is employed by ASCI, the Company or
a Subsidiary on a full-time basis.
I. Maximum Goal means, with respect to any Performance Period, such
measure or measures of performance of the Company and Subsidiaries
relative to and exceeding the Target Goal for such Period as the Com
mittee shall select.
J. Maximum Payout means the percentage of the Award Opportunities for
a Performance Period specified by the Committee pursuant to Section 4(a)
as the value of such Award opportunities in the event of attainment of the
Maximum Goal for such Period. K. Minimum Goal means, with respect to any
Performance Period, such measure or measures of performance of the Company and
Subsidiaries relative to and below the Target Goal for such Period as the
Committee shall select. L. Minimum Payout means the percentage of the Award
Opportunities for a Performance Period specified by the Committee pursuant to
Section 4(a) as the value of such Award Opportunities in the event of attainment
of the Minimum Goal for such Period. M. Participant means a duly elected officer
of the Company or ASCI who is also an Employee and any officer of any Subsidiary
who is designed by the Committee as eligible to participate in the Plan. N.
Performance Period or Period means a period which shall start at the beginning
of each calendar year, commencing with the year 1989, and which shall extend for
the number of consecutive calendar months (which shall be no less than 24 and no
more than 48) fixed by the Committee pursuant to Section 4(a). O. Performance
Period Compensation Rate of a Participant (other than a Prior Participant) for
any Performance Period means his average annualized compensation rate during
such Period, determined by multiplying by twelve the result obtained by dividing
(x) the aggregate of all base salary payments (including contributions pursuant
to Sec. 401(k) and deductions pursuant to Sec. 125 of the Internal Revenue Code)
received by such Participant during his participation in such Perform ance
Period by (y) the number of whole and partial months of such Participant's
participation in such Performance Period.
P. Plan means this American Standard Inc. Long-Term Incentive
Compensation Plan.
Q. Prior Participant means a former Participant who was not an
Employee after December 31, 1991.
R. Subsidiary means any corporation a majority of the outstanding
voting stock or voting power of which is beneficially owned directly or
indirectly by the Company.
S. Qualified Participant means a Participant whose participation in
the Plan began on or before January 1, 1992 and who was an Employee on
that date.
T. Share means a share of the Common Stock, par value $0.01, of ASCI.
U. Target Goal means, with respect to any Performance Period, such
measure or measures of desired performance of the Company and the
Subsidiaries for such Period as the Committee shall select.
V. Total Compensation Level of a Qualified or Prior Participant for
any Performance Period means the product of
(i) the percentage assigned by the Company with respect to his
salary grade in effect at the beginning of such Period, multiplied by
the sum of
(ii) the midpoint of such salary grade plus the Annual Incentive
Compensation Plan Target Award last assigned to such salary grade before the
beginning of such Performance Period.
Section 2. Purpose
The purpose of this Plan is to provide Participants with the
opportunity to earn financial rewards that are commensurate with the future
success of ASCI, the Company and the Subsidiaries and are
consistent with compensation opportunities made available to similarly situated
executives in similar-sized organizations.
Section 3. Administration
The Plan shall be administered by the Committee. In addition
to such functions and responsibilities specifically assigned to the Committee
under the Plan, the Committee shall have the authority, subject to the
provisions of the Plan, to establish, adopt and revise such rules and
regulations and to make all such determinations relating to the Plan as it may
deem necessary or desirable for the administration of the Plan.
Section 4. Establishment of Performance Periods, Goals and
Long-Term Award Opportunities
(a) Performance Periods and Goals. The Committee shall fix the
duration of each Performance Period at the beginning of such Period and shall at
that time establish a Target Goal for such Period. At the same time or at any
time thereafter the Committee may establish either or both of a Minimum Goal and
a Maximum Goal for such Period. If a Minimum Goal is established, the Committee
shall at the same time specify the Minimum Payout for such Minimum Goal, and if
a Maximum Goal is established, the Committee shall at the same time specify the
Maximum Payout for such Maximum Goal.
(b) Grant of Award Opportunities. At the beginning of each
Performance Period, the Committee shall assign to each Participant an
Award Opportunity with respect to such Period.
(c) Adjustments. After the beginning of any Performance
Period, the Committee may, in its discretion, modify the Target Goal for
such Period and, if established, the Minimum and Maximum Goals for such Period
and the Minimum and Maximum Payouts with respect thereto, if any such
modification is warranted by material acquisitions, dispositions, changes in
accounting practices, changes in strategy or any other factor or event that, in
the judgment of the Committee, merits such modification.
Section 5. Valuation and Payment of Award Opportunities
(a) Determination of Award Opportunities Earned. At the end of
each Performance Period, the Committee shall determine the level of actual
performance of the Company and the Subsidiaries during such Period as measured
against the Target Goal and (if established) the Minimum and Maximum Goals for
such Period; provided, however, that such determinations may be made by the
Committee, in its discretion, before the end of such Performance Period if the
Committee determines that any such Goal has been attained before the end of such
Period. Based on such determination of actual performance level, the Committee
shall then value the Award Opportunities for such Performance Period, which
value shall be:
1 zero (in which case no payments will be made with respect to such
Award Opportunities) if (x) the Minimum Goal for such Performance Period is not
achieved or (y) the Target Goal for such Period is not achieved and no Minimum
Goal was established for such Period;
1 if a Minimum Goal was established for such Performance Period, a
percentage of such Award Opportunities (which shall be no less than the Minimum
Payout with respect to such Minimum Goal but no more than 99%) corresponding to
the performance level of the Company and the
Subsidiaries falling short of the Target Goal but achieving or exceeding
such Minimum Goal;
1 100% of such Award Opportunities if (x) the Target Goal for such
Period is achieved or (y) such Target Goal is exceeded and no Maximum Goal was
established for such Period;
1 if a Maximum Goal was established for such Performance Period, a
percentage of such Award Opportunities (which shall be more than 100% but less
than the Maximum Payout with respect to such Maximum Goal) corresponding to the
performance level of the Company and the Subsidiaries exceeding the Target Goal
but falling short of such Maximum Goal; and
1 if the Maximum Goal established for such Performance Period is
achieved, the Maximum Payout with respect to such Maximum Goal. As soon as
practicable after such performance level determination and Award Opportunity
valuation are made for a Performance Period, each Participant having an Award
Opportunity for such Period shall, subject to Section 5(b) and Section 6,
receive a payment equal to the value (if greater than zero) of such Award
Opportunity.
(b) Elective Deferral. At the request of a Participant, the
Committee may, in its discretion, provide for the deferral of payments due
hereunder to such Participant on such terms and conditions, and subject to such
procedures, as the Committee may establish.
Section 6. Prorations and Forfeitures
(a) Death, Disability, Good Reason and Retirement. Except
as otherwise provided in Section 6(c),
(i) if a Participant ceases to be an Employee during any
Performance Period due to Disability, death, termination for Good Reason or
retirement under any retirement plan of ASCI, the Company or a Subsidiary, or
(ii) if an Employee becomes a Participant with respect to any
Performance Period after the beginning of such Performance Period, such
Participant or former Participant (or, in the event of the latter's death, his
Beneficiary) shall receive, if and when payments with respect to Award
Opportunities for such Performance Period are made, a payment equal to a
fraction of the value, as determined by the Committee pursuant to Section 5(a),
of such Participant's or former Participant's Award Opportunity (if any) with
respect to such Performance Period. The numerator of such fraction shall be the
number of days that such Participant or former Participant was a Participant
during such Period and the denominator shall be the total number of days in such
Period.
(b) Other Terminations. Except as otherwise provided in
Section 6(c), if a Participant ceases to be an Employee during any Performance
Period otherwise than due to Disability, death, termination for Good Reason or
retirement under any retirement plan of ASCI, the Company or a Subsidiary, such
Participant shall forfeit all rights to any and all of his Award Opportunities
the values of which had not yet been paid, provided that the Committee, in its
discretion, may waive such forfeiture in whole or in part.
(c) Cause. A Participant who ceases to be an Employee due
to termination for Cause shall forfeit all rights to any and all of his
Award Opportunities, the values of which had not yet been paid,
notwithstanding that such Participant may be eligible to retire under a
retirement plan of ASCI, the Company or a Subsidiary.
(d) Definitions. For purposes of Sections 6(a), (b) and (c),
the terms "Cause," "Good Reason" and "Disability" have the meanings set forth in
Annex A to this Plan.
Section 7. Form of Payments and Withholdings
All payments hereunder shall, at the discretion of the
Committee, be in cash, Shares or a combination of such Shares and cash, net of
any federal, state, local or foreign tax and social security withholdings that
the Company or ASCI, in its sole judgment, shall deem appropriate, with any
Shares included in any such payment subject to such terms, conditions and
restrictions as shall be adopted by the Board on the Committee's recommendation.
Section 8. Non-Transferability
None of a Participant's rights or interests (including any
amounts payable) hereunder, may be assigned or pledged, nor may any such right
or interest be transferred except, in the event of a Participant's death, to his
Beneficiary.
Section 9. Beneficiaries
Any payments due under this Plan to a deceased Participant
shall be paid to his Beneficiary. A Beneficiary appointment may be changed or
revoked by a Participant at any time, provided that the change or revocation is
in writing and filed with the Committee.
Section 10. Rights of Employment
Participation in the Plan shall not confer upon any
Participant any right to continue to be an officer of the Company, ASCI or any
Subsidiary or to continue to be an Employee, nor shall participation in the Plan
interfere in any way with the right of ASCI, the Company or a Subsidiary at any
time to terminate a Participant's employment.
Section 11. Expenses
All expenses of administering the Plan shall be borne by the
Company and ASCI and shall not be charged to any pension, retirement, profit
sharing, group insurance, or other benefit plan of the Company or ASCI.
Section 12. Relationship to Other Benefits
No payment under the Plan shall be taken into account in
determining any payments, benefits, coverage levels or participation rates under
any other incentive compensation plan of the Company or ASCI, or under any
pension, retirement, profit sharing, group insurance or other benefit plan of
ASCI, the Company or any Subsidiary.
Section 13. Effective Date; Amendments and Termination;
Governing Law
(a) The Plan shall become effective upon its adoption by
the Board.
(b) The Board, upon recommendation of the Committee, shall
have the right to amend, suspend, or terminate the Plan at any time; however, no
such action of the Board shall diminish, reduce, alter, or
impair a Participant's rights with respect to any Award Opportunities assigned
to him before the date of such amendment, suspension, or termi nation of the
Plan without the consent of such Participant.
(c) This Plan and all rights and obligations hereunder shall
be construed in accordance with and governed by the laws of the State of
Delaware, without reference to any principles of conflict of laws.