EXHIBIT 10(iii)(r)
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INGERSOLL-RAND COMPANY
EXECUTIVE DEFERRED COMPENSATION AND STOCK BONUS PLAN
1. Statement of Purpose
The purpose of the Ingersoll-Rand Company Executive Deferred
Compensation and Stock Bonus Plan (the "Plan") is to further
increase the mutuality of interest between Ingersoll-Rand
(the "Company"), the employees and stockholders by providing
certain of the Company's highly compensated employees the
opportunity to elect to defer receipt of cash compensation,
and to have the deferred amounts treated as if invested in
Company stock.
2. Definitions
2.1 Beneficiary - "Beneficiary" means the person or
persons designated as such in accordance with Section
8.
2.2 Change in Control - "Change in Control" shall have
the same meaning as a "change in control of the
Company" (as set forth in the Company's Incentive Stock
Plan of 1995), unless a different definition is used
for purposes of any severance of employment agreement
or change of control arrangement between the Company
and a Participant, in which event such definition shall
apply.
2.3 Class Year - "Class Year" means such calendar year
for which Compensation may be deferred pursuant to the
Plan.
2.4 Committee - "Committee" means the Compensation and
Nominating Committee of the Board of Directors of the
Company, which will administer the Plan pursuant to the
provisions of Section 3 of the Plan.
2.5 Compensation - "Compensation" means the
Participant's annual cash bonus award.
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2.6 Declining Balance Installments - "Declining
Balance Installments" means a series of annual payments
such that each payment is determined by taking the
number of units in the Participant's Deferred
Compensation Account as of the Distribution Date and
dividing by the number of years of distributions
remaining.
2.7 Deferral Amount - "Deferral Amount" means the
amount of Elective Deferred Compensation actually
deferred by the Participant.
2.8 Deferred Compensation Account - "Deferred
Compensation Account" means the account maintained on
the books of account of the Company for each
Participant pursuant to Section 6.
2.9 Disability - "Disability" means the Participant is
eligible to receive benefits under a long term
disability plan maintained by the Company.
2.10 Distribution Date - "Distribution Date" means the
date on which the Company makes distributions from the
Participant's Deferred Compensation Account.
2.11 Election Form - "Election Form" means the form or
forms attached to this Plan and filed with the
Committee by the Participant in order to participate in
the Plan. The terms and conditions specified in the
Election Form(s) are incorporated by reference herein
and form a part of the Plan.
2.12 Eligible Employee - "Eligible Employee" means
Elected Officers of the Company, Division General
Managers, and those other employees of the Company who
have been selected by the Chief Executive Officer of
the Company.
2.13 IR Stock - "IR Stock" means the common stock of
Ingersoll-Rand Company.
2.14 Normal Retirement - "Normal Retirement" means
termination of employment by a Participant after he/she
has attained age 65 (62 for Elected Officers).
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2.15 Participant - "Participant" means an Eligible
Employee participating in the Plan in accordance with
the provisions of Section 4.
2.16 Supplemental Contribution - "Supplemental
Contribution" means an additional amount to be credited
to a Participant's Deferred Compensation Account equal
to twenty percent (20%) of the Participant's Deferral
Amount for a Class Year.
2.17 Valuation Date - "Valuation Date" means the date
on which the value of a Participant's Deferred
Compensation Account for each Class Year is determined
as provided in Section 6 hereof.
3. Administration of the Plan
This Plan shall be administered by the Committee (or any
successor committee) of the Board of Directors of the
Company. The primary responsibility of the Committee is to
administer the Plan for the exclusive benefit of the
Participants and their Beneficiaries, subject to the
specific terms of the Plan. The Committee shall administer
the Plan in accordance with its terms to the extent
consistent with applicable law, and shall have the power to
determine all questions arising in connection with the
administration, interpretation, and application of the Plan.
Any such determination by the Committee shall be conclusive
and binding upon all affected parties. Any denial by the
Committee of a claim for benefits under this Plan by a
Participant or Beneficiary shall be stated in writing by the
Committee and delivered or mailed to the Participant or
Beneficiary. Such notice shall set forth the specific
reasons for the Committee's decision. In addition, the
Committee shall afford a reasonable opportunity to any
Participant or Beneficiary whose claim for benefits has been
denied for a review of the decision denying this claim.
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4. Participation
Any Eligible Employee may elect to participate in the Plan
for a given Class Year by filing a completed Election Form
for the Class Year with the Committee. The Election Form
must specify the percentage or dollar amount of any
Compensation otherwise payable during such Class Year that
will be deferred under the Plan. The minimum dollar amount
that a Participant may defer under the Plan for any Class
Year is $5,000. Any election to defer compensation is
irrevocable upon the filing of the Election Form with the
Committee, and must be completed and returned to the
Committee no later than the December 31 immediately
preceding such Class Year, or such earlier date as the
Committee may specify. If an Eligible Employee fails to
sign and return a properly completed Election Form by such
date, the executive will be ineligible to defer Compensation
under the Plan for the following Class Year.
5. Vesting of Deferred Compensation Account
5.1. Deferral Amount. A Participant shall vest
immediately in the portion of his/her Deferred
Compensation Account attributable to the Participant's
Deferral Amount and any dividend equivalents credited
thereto.
5.2. Supplemental Contribution. A Participant shall
vest in the portion of his/her Deferred Compensation
attributable to any Supplemental Contributions and any
dividend equivalents credited thereto on the earliest
of: (1) the fifth anniversary of the date the
Supplemental Contribution is credited to the
Participant's Deferred Compensation Account; (2) the
date of the Participant's Normal Retirement; (3) the
Participant's death; (4) a Change in Control; or (5) a
termination of the Plan pursuant to Section 9.2.
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6. Accounts and Valuations
6.1 Deferred Compensation Accounts. The Committee
shall establish and maintain a separate Deferred
Compensation Account for each Participant for each
Class Year. All Deferral Amounts shall be credited to
the Participant's Deferred Compensation Account on the
date when the Compensation is approved by the Company's
Board of Directors.
6.2 Account Valuation. The value of each Deferred
Compensation Account shall be based upon the value of
IR Stock. All Deferral Amounts and related
Supplemental Contributions shall be credited to a
Participant's Deferred Compensation Account in units,
or fractional units, with each unit having a value
equivalent to one share of IR Stock. The number of
such credited units shall be determined by dividing the
value of the Participant's Deferral Amount (or
Supplemental Contributions) by the mean of the high and
low prices of one share of IR Stock on the New York
Stock Exchange-Composite Tape on the date the
Compensation is credited to the Participant's Deferred
Compensation Account. Dividends paid on IR Stock shall
be reflected in a Participant's Deferred Compensation
Account by the crediting of additional units or
fractional units, equal to the value of the dividends
and based upon the mean of the high and low prices of
one share of IR Stock on the New York Stock Exchange-
Composite Tape on the date such dividends are paid.
6.3 Valuation in Event of Change in Control. In the
event of a Change in Control, the value of each
Deferred Compensation Account shall be determined by
multiplying the number of units by the Fair Market
Value of one share of Common Stock as provided in
Section 10(b) of the Company's Incentive Stock Plan of
1995 or, for those Participants with change in control
arrangements, the Company Stock Value as defined
thereunder.
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6.4 Changes in Capitalization. If there is any change
in the number or class of shares of IR Stock through
the declaration of a stock dividend or other
extraordinary dividends, or recapitalization resulting
in stock splits, or combinations or exchanges of such
shares or in the event of similar corporate
transactions, the units in each Participant's Deferred
Compensation Account shall be equitably adjusted to
reflect any such change in the number or class of
issued shares of IR Stock or to reflect such similar
corporate transaction.
7. Distribution of Accounts
7.1 Normal Retirement Benefits. For Participants who
terminate as a result of Normal Retirement, all
Deferred Compensation Account balances shall be
distributed in a lump sum on the later of (i) the first
business day of the sixth month following the
Participant's Normal Retirement, or (ii) the first
business day of the calendar year following the
Participant's Normal Retirement. Notwithstanding the
foregoing, the Participant may elect in writing (at
least twelve months prior to Normal Retirement) to
receive the Deferred Compensation Account balances in:
(a) a lump sum in January of the year specified by the
Participant (but no later than five years following the
Participant's Normal Retirement); or (b) in up to five
annual installments payable each January commencing
with the year following Normal Retirement. Annual
installments shall be paid in Declining Balance
Installments.
7.2 Termination of Employment Prior to Normal
Retirement. If employment with the Company terminates
prior to Normal Retirement, then the vested portion of
the Participant's Deferred Compensation Accounts shall
be distributed in a lump sum as soon as practicable
following the Participant's termination of employment,
unless the Committee, at their sole discretion, agrees
to permit distribution alternatives such as those
described in paragraph 7.l above. For purposes of this
Plan, Disability shall be deemed not to be a
termination of employment.
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7.3 Change in Control. In the event of a Change in
Control, all Deferred Compensation Account balances
shall be valued pursuant to Section 6.3, and shall be
distributed in cash in a lump sum within thirty (30)
days following Normal Retirement, unless the
Participant elects in writing (at least twelve months
prior to Normal Retirement) to receive the Deferred
Compensation Account balance in: (a) a lump sum in
January of the year specified by the Participant (but
no later than five years following the Participant's
Normal Retirement); or (b) in up to five annual
installments payable each January commencing with the
year following Normal Retirement. Annual installments
shall be paid in Declining Balance Installments.the
Change in Control.
7.4 Liquidating Distributions. Notwithstanding any
provisions of the Plan to the contrary, the Company
shall, as soon as practicable (but no later than 30
days) following the receipt of a written request from a
Participant for a Liquidating Distribution, pay to the
Participant the Participant's Liquidating Distribution
Account Balance(s) in a lump sum. "Liquidating
Distribution" shall mean a distribution requested by
the Participant in writing directed to the Committee
and specifically referencing this section and the Class
Year(s) and Deferred Compensation Account(s) to which
it applies. "Liquidating Distribution Account Balance"
means that portion of the Deferred Compensation Account
under the Plan in which the Participant is vested.
Notwithstanding any provision of the Plan or the
Participant's Election Form to the contrary, if the
Participant requesting the Liquidating Distribution is,
at the time of the request, an active employee of the
Company, then for a period of two (2) Class Years
following the year during which the request for the
Liquidating Distribution is made, the Participant shall
be ineligible to participate in the Plan with respect
to any Compensation not yet deferred. In addition, the
Participant shall forfeit any non-vested Supplemental
Contributions in any Deferred Compensation Accounts
distributed pursuant to this provision.
7.5 Hardship Benefit. In the event that the
Committee, upon written petition of the Participant
specifying the Class Year(s) and Deferred Compensation
Account(s) from which payment shall be made, determines
in its sole discretion, that the Participant has
suffered an unforeseeable financial emergency, the
Company may pay to the Participant in cash, as soon as
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practicable following such determination, an amount
appropriate under the circumstances, not in excess of
the portion of the Deferred Compensation Account(s) in
which the Participant is vested. The Deferred
Compensation Account(s) of the Participant shall
thereafter be reduced to reflect the payment of a
Hardship Benefit. In addition, the Participant shall
forfeit any non-vested Supplemental Contributions, if
any, attributable to that portion of a Deferred
Compensation Account balance distributed to the
Participant.
7.6 Form of Payments. Except as provided in Sections
7.3, 7.5, and 7.7 Aall benefits payable to a
Participant or Beneficiary under the Plan shall be paid
in IR Stock, with one share distributed for each unit.
All fractional shares shall be payable in cash.
7.7 Taxes; Withholding. To the extent required by
law, the Company shall withhold from payments made
hereunder an amount equal to at least the minimum taxes
required to be withheld by the federal or any state or
local government.
8. Beneficiary Designation
If a Participant dies prior to receiving all Deferred
Compensation Account balances, then the Participant's
Beneficiary shall receive any unpaid amounts. The
Participant's Beneficiary under this Plan shall be the
Participant's beneficiary under the Ingersoll-Rand Company
Savings and Stock Investment Plan, unless the Participant
designates another Beneficiary in writing, and such written
designation has been received by the Committee. A
Participant may change the designated Beneficiary under this
Plan at any time by providing such designation in writing to
the Committee.
If the Company is unable to determine a Participant's
Beneficiary or if any dispute arises concerning a
Participant's Beneficiary, the Company may pay benefits to
the Participant's estate. Upon such payment, the Company
shall have no further liability hereunder.
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If any distribution to a Beneficiary is to be made in
installments, and the primary Beneficiary dies before
receiving all installments, the remaining installments, if
any, shall be paid to the estate of the primary Beneficiary.
9. Amendment and Termination of Plan
9.1 Amendment. The Plan may, at any time and from
time to time, be amended without the consent of any
Participant or Beneficiary, (a) by the Board of
Directors of the Company, or (b) in the case of
amendments which do not materially modify the
provisions hereof, the Committee; provided, however,
that no such amendment shall reduce any benefits
accrued under the terms of this Plan prior to the date
of amendment.
9.2 Termination of Plan
a. Company's Right to Terminate. The Board
of Directors of the Company may terminate the Plan
at any time and for any reason.
b. Payments Upon Termination. Upon any
termination of the Plan under this section,
Compensation shall prospectively cease to be
deferred and, with respect to Compensation
previously deferred, the Company shall pay to the
Participant, in a lump sum, the value of his/her
Deferred Compensation Accounts.
10. Miscellaneous
10.1 Unsecured General Creditor. Benefits under the
Plan shall be payable by the Company out of its general
funds. The Company shall have the right to establish a
reserve or make any investment for the purposes of
satisfying its obligations hereunder for payment of
benefits at its discretion, provided, however, that no
Participant or Beneficiary shall have any interest in
such investment or reserve. To the extent that any
person acquires a right to receive benefits under this
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Plan, such rights shall be no greater than the
right of any unsecured general creditor of the Company.
No Participant shall have any of the rights or
privileges of a stockholder of the Company under the
Plan, including as a result of the crediting of units
to a Deferred Compensation Account, except at such time
as IR Stock is actually delivered in settlement of a
Deferred Compensation Account.
10.2 Entire Agreement; Successors. This
Plan, including the Election Form and any subsequently
adopted amendments to the Plan or Election Form, shall
constitute the entire agreement or contract between the
Company and any Participant regarding this Plan. There
are no convenants, promises, agreements, conditions or
understandings, either oral or written, between the
Company and any Participant relating to the subject
matter hereof, other than those set forth herein. This
Plan and any amendment hereof shall be binding on the
Company and the Participants and their respective
heirs, administrators, trustees, successors and
assigns, including but not limited to, any successors
of the Company by merger, consolidation or otherwise by
operation of law, and on all designated Beneficiaries
of the Employee.
10.3 Non-Assignability. To the extent permitted by
law, the right of any Participant or any Beneficiary in
any benefit hereunder shall not be subject to
attachment or any other legal process for the debts of
such Participant or Beneficiary; nor shall any such
benefit be subject to anticipation, alienation, sale,
transfer, assignment or encumbrance.
10.4 No Contract of Employment. The establishment of
this Plan or any modification hereof shall not give any
Participant or other person the right to remain in the
service of the Company or any of its subsidiaries, and
all Participants and other persons shall remain subject
to discharge to the same extent as if the Plan had
never been adopted.
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10.5 Authorization and Source of Shares. Shares
necessary to meet the obligations of the Plan have been
reserved and authorized pursuant to resolutions adopted
by the Board of Directors of the Company on December 4,
1996, and additional shares shall be reserved and
authorized for delivery under the Plan from time to
time. These shares may be provided from newly-issued
or treasury shares.
10.6 Gender, Singular and Plural. All pronouns and any
variations thereof shall be deemed to refer to the
masculine, feminine, or neuter, as the identity of the
person or persons may require. As the context may
require, the singular may be read as the plural and the
plural as the singular.
10.7 Captions. The captions to the articles, sections,
and paragraphs of this Plan are for convenience only
and shall not control or affect the meaning or
construction of any of its provisions.
10.8 Applicable Law. This Plan shall be governed and
construed in accordance with the laws of the State of
New Jersey.
10.9 Severability. If any provisions of this
Plan shall, to any extent, be invalid or unenforceable,
the remainder of this Plan shall not be affected
thereby, and each provision of this Plan shall be valid
and enforceable to the fullest extent permitted by law.
10.10 Notice. Any notice or filing required or
permitted to be given to the Committee shall be
sufficient if in writing and hand delivered, or sent by
registered or certified mail, to the principal office
of the Company at 200 Chestnut Ridge Road, Woodcliff
Lake, NJ 07675, directed to the attention of the Vice
President, Human Resources. Such notice shall be
deemed given as of the date of delivery or, if delivery
is made by mail, as of the date shown on the postmark
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on the receipt for registration or certification.
Any notice to the Participant shall be addressed to the
Participant at the Participant's residence address as
maintained in the Company's records. Any party may change the
address for such party here set forth by giving notice
of such change to the other parties pursuant to this
Section.
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INGERSOLL-RAND COMPANY
Executive Deferred Compensation AND Stock Bonus Plan
Election Form
Name: _______________________ Social Security No: __________
Complete Sections A and B of this Form. In order to be effective,
you must submit your completed form to the Company by
_____________, ______.
A. Deferred Compensation
To complete this Section, indicate the total amount you want
to defer (maximum 100%) from your annual cash bonus award
otherwise payable to you in ________.
I elect to defer the following amount from my annual cash
bonus award otherwise payable to me in _______ (select one):
1. [ ] ____________% of my
award otherwise payable to me in _________.
2. [ ] $____________ (minimum $5,000) of the award
otherwise payable to me in _______. If the total
amount payable to me is less than the amount
indicated, the deferral amount will be reduced to
my total award.
3. [ ] I elect to defer that portion of my award that
exceeds $____________. If the deferred amount so
determined is less than $5,000, the deferred portion will be
increased to $5,000.
4. [ ] I elect to defer that portion of my award that
exceeds $____________. If the deferred amount so
determined is less than $5,000, no amount will be
deferred.
If the total annual cash bonus award payable to me is less
than $5,000, no amount will be deferred.
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B. Acknowledgment
Sign and date this Section.
I agree to be bound by the terms and conditions of the Plan
and agree that such terms and conditions shall be binding
upon my beneficiaries and personal representatives. I
further acknowledge that the receipt of this election form
is not intended to indicate the amount of any bonus that I
will receive, or that an award will be made. I further
agree, as a condition to participate, to satisfy the
following stock ownership guidelines. (These guidelines
take into account all sources of Company stock, such as
Savings Plan accumulations, as well as stock units under
this Plan, but not unexercised stock options or Management
Incentive Units.)
Time to Achieve
Position Guideline Target Guideline Target
Chairman, CEO 5 Times Salary 5 Years
Vice Chairman, President, 4 Times Salary 5 Years
EVP, SVP
Group Presidents & 3 Times Salary 4 Years
Elected Officers
Other Participants 2 Times Salary 4 Years
________________________ ___________________
Signature of Employee Date