EXHIBIT NUMBER 10
CATERPILLAR INC.
DIRECTORS' DEFERRED COMPENSATION PLAN, AS AMENDED
(EFFECTIVE AUGUST 15, 1996)
1. Purpose
The purpose of the Caterpillar Inc. Directors' Deferred Compensation Plan (the
"Plan") is to provide each eligible member of the Board of Directors (the
"Board") of Caterpillar Inc. (the "Company") with an opportunity to defer the
payment of the compensation (excluding expense reimbursements) payable from
time to time either for services as a Director of the Company, including but
not limited to annual fees and fees payable for attendance at meetings of the
Board and of Committees of the Board, or for others services performed for or
on behalf of the Company ("Compensation").
2. Eligibility
Any member of the Board ("Director") is eligible to participate in the Plan.
3. Election to Defer
In order to participate in the Plan, a Director must make a valid election, on
or before December 1 of any year, to defer payment of all or a stated
percentage of the Compensation (but not less than 50% of such Compensation)
that would otherwise be payable to him during the following calendar year and
each succeeding calendar year until such Director ceases to be eligible to
participate in the Plan or until such election is otherwise modified or
terminated as provided herein (any such Director being hereinafter called a
"Participant"). Any such election must be made by timely written notice
delivered to the Director, Compensation and Benefits, of the Company by use of
the Deferred Compensation Form attached hereto as Exhibit A which shall
specify the amount deferred and form and time of distribution.
Any person who shall first become a Director during any calendar year, and who
was not a Director on the preceding December 31, may elect, before his term as
a Director begins, to defer payment of all or a stated percentage of the
Compensation (but not less than 50% of such Compensation) that would otherwise
be payable to him during the remainder of such calendar year and each
succeeding calendar year until such election is otherwise modified or
terminated as provided herein. Any such election must be made by timely
written notice delivered to the Director, Compensation and Benefits, of the
Company by use of such Deferred Compensation Form.
In the event that a Participant desires to modify the amount of Compensation
that is being deferred, the Participant may do so by delivering a revised
Deferred Compensation Form to the Director, Compensation and Benefits, of the
Company. Such modified election shall be effective for each calendar year
following the year in which such Form is delivered to the Director,
Compensation and Benefits, and until such election is modified or terminated
as provided herein.
In the event that a Participant desires to change his choice as to when
payments from his account commence, as to whether distribution is made in a
lump sum or in installments or as to the number of installment payments to be
made, the Participant may do so by delivering a revised Deferred Compensation
Form to the Director, Compensation and Benefits, of the Company; provided that
such modified election (a) shall not apply to amounts deferred prior to the
effective date of such modified election unless made prior to the first day of
the calendar year specified by the Participant under paragraph 6 after the
close of which year distribution shall commence in the following month of
January; and (b) shall not accelerate the time when payments from his account
commence with respect to amounts deferred prior to the effective date of such
modified election. Such modified election shall be effective as of the
commencement of the calendar year following the year in which such Form is
delivered to the Director, Compensation and Benefits, and shall remain in
effect until such election is modified or terminated as provided herein.
In the event that a Participant should desire to terminate the deferral of his
Compensation, the Participant must elect to do so by written notice delivered
to the Director, Compensation and Benefits, of the Company. Such termination
shall become effective as of the end of the calendar year in which notice of
termination is given with respect to Compensation payable during subsequent
calendar years. An election to terminate deferral of Compensation will be
effective for all future calendar years unless a new Deferred Compensation
Form is completed and delivered to the Director, Compensation and Benefits, of
the Company. Amounts credited to the account of a Participant prior to the
effective date of termination shall not be affected by such termination
election and shall be paid only in accordance with paragraphs 6 and 7 hereof.
4. Amount of Deferral
A Participant may elect to defer all or a specified portion of the
Compensation (but not less than 50% of such Compensation) payable from time to
time as a result of his service as a Director.
5. Status of Accounts
All deferred Compensation shall be held in the general funds of the Company,
but the Company will establish an individual bookkeeping account for each
Participant to which the deferred Compensation for that Participant will be
credited. Deferred Compensation will be credited to the individual account of
a Participant at the same time that it would otherwise have been paid to the
Director in the absence of a deferral election. The Company will credit
interest to the individual account of a Participant on a quarterly basis. The
interest rate will be equal to the base corporate lending rate (sometimes
referred to as the "prime rate") applicable to commercial lending customers of
Citibank, N.A., New York, New York (or any successor thereto) on the last
business day of each calendar quarter. The annual interest rate will be
divided by four and applied effective the last day of each quarter to the
total average daily amount (deferred Compensation and accrued interest) in
each Participant's account in that quarter. In any calendar quarter in which
a Participant does not have deferred amounts credited to his account for the
entire period of that quarter, interest will be credited pro rata based on the
number of business days that amounts are credited to his account in that
quarter compared to the total number of business days in that quarter.
The deferral of Compensation and the establishment of individual bookkeeping
accounts shall not be deemed to have created a trust, and no Participant shall
have any ownership interest in any and interest thereon under this Plan shall
not be transferrable or assignable. Each Participant will receive an annual
report showing the status of his account at the close of each calendar year.
As an alternative to the crediting of interest to the individual account
("interest election"), each Participant may elect to have all or a specified
percentage of his Compensation treated as though it were invested in Company
common stock ("stock election"). Pursuant to Rule 16b-3(d)(1) under the
Securities Exchange Act of 1934, any stock election or amendment thereto must
be approved by the Compensation Committee of the Board prior to taking effect.
If a Participant makes a stock election, dividend equivalents will accrue to
the account quarterly and will be reinvested and a Participant's account will
in all other respects reflect share ownership for events such as a stock split
but no voting rights will exist. The number of shares of stock equivalents
shall be determined by dividing the amount of Compensation (deferred into
stock equivalents) or dividends credited by the average of the high and low
prices of Company common stock on the New York Stock Exchange on the date of
such deferral or dividend credit (or the next succeeding trading day if there
is no trading on that date). A Participant's account will be valued based on
the average of the high and low prices for Company common stock on the New
York Stock Exchange as of (a) the last trading day in December prior to the
January of the year(s) in which distribution occurs or (b) the date of the
Participant's death (or the next succeeding trading day if there is no trading
on that date). Distribution of account balances shall be in cash. All such
elections must be made on forms approved by the Director, Compensation and
Benefits.
A director may elect to switch previously deferred amounts between the stock
equivalent and interest accounts provided that an election to switch amounts
from the stock equivalent account to the interest account does not occur
within six months of an election to switch from the interest account to the
stock equivalent account, and vice versa. Any such election shall be made by
written notice to the Director, Compensation & Benefits, and will become
effective on the first month following the month in which the election was
made.
6. Disbursement Schedules
Each Participant shall elect on the Deferred Compensation Form one of the
following options under which deferred Compensation and interest thereon will
be payable:
a) A lump sum payment, or
b) Annual installments for a period of up to 10 years
Each Participant shall elect on the Deferred Compensation Form one of the
following options as to when the payment of installments will commence, or a
lump sum payment will be made:
In January of the first calendar year following:
a) the year in which the Participant ceases to be a Director, or
b) the year in which the Participant reaches age 72, or
c) the year in which the Participant retires from his principal occupation.
7. Death of a Participant
Upon the death of a Participant, the balance in the Participant's account
(including interest for the elapsed portion of the year of death) shall be
determined as of the date of death and such balance shall be paid as soon as
reasonably possible thereafter in a lump sum payment to such beneficiary as
the Participant shall have designated in writing to the Company and filed with
its Director, Compensation and Benefits, or in the absence of such
designation, to the Participant's estate.
8. Amendment or Termination of the Plan
The Board of Directors may at any time amend or terminate this Plan, but no
amendment or termination will have the effect of reducing the amount that any
Participant is entitled to receive prior to such amendment or termination nor
accelerating the distribution of any amount theretofore credited to a
Participant's account; provided, however, that in the event a Participant (or,
if applicable, the designated beneficiary) incurs a severe financial hardship
caused by an accident, illness, or other event beyond the control of the
Participant (or, if applicable, designated beneficiary) the Stock Option and
Officers' Compensation Committee of the Company, in its sole discretion, may
revise such Participant's (or, if applicable, designated beneficiary) payment
schedule for distribution from the interest account (but not from the stock-
equivalent account) to the extent reasonably necessary to eliminate such
financial hardship.
9. Administration
Except as otherwise expressly provided herein, the Plan shall be administered
under the direction of the Director, Compensation and Benefits, of the
Company.