Exhibit (10)
OWENS CORNING
Long-Term Performance Incentive Plan Terms Applicable to Certain
Executive Officers
Set forth below are the Rules and Regulations of the Compensation
Committee, promulgated under the Stock Performance Incentive Plan
as amended on June 15, 1995, that constitute the long-term
performance incentive plan terms applicable to those employees of
the Company and its Subsidiaries who are executive officers of
the Company and whose remuneration for any performance period
hereunder the Committee anticipates would not be deductible by
the Company in whole or in part but for compliance with section
162(m)(4)(C) of the Internal Revenue Code of 1986 as amended
("162(m) Covered Employee"), including members of the Board of
Directors who are such employees. Such long-term performance
incentive plan terms are hereafter referred to as the "Long-Term
Performance Incentive Plan", the "Plan" or the "LTPIP".
1. All 162(m) Covered Employees shall be eligible to be
selected to participate in this Long-Term Performance
Incentive Plan. The Committee shall select the 162(m)
Covered Employees who shall participate in this Plan in any
performance period no later than 90 days after the
commencement of the performance period (or no later than
such earlier or later date as may be the applicable deadline for any
compensation payable to such 162(m) Covered Employee
hereunder for such performance period to qualify as
"performance-based" under section 162(m)(4)(C) of the
Internal Revenue Code of 1986 as amended (the "Code")).
Selection to participate in this Plan in any performance
period does not require the Committee to, or imply that the
Committee will, select the same person to participate in the
LTPIP in any subsequent performance period.
2. Being selected to participate in the Long-Term Performance
Incentive Plan in any performance period means that the
individual is being granted the opportunity to earn a cash
award equal to the Fair Market Value of up to a specified
number of shares of Company common stock if the Company
attains performance goals established by the Committee for
such performance period and the participant's employment by
the Company, its Subsidiaries and Affiliates continues
without interruption during that period ("phantom
performance shares"). Payment for each phantom performance
share that is earned shall be based on the Fair Market Value
of a share of Company common stock on the date on which the
Committee certifies (in accordance with paragraph 10 below)
that the performance goals and any other material terms
applicable to such phantom performance share were in fact
satisfied. Phantom performance shares may be redeemed only
for cash and may not be redeemed for equity securities in
lieu of cash, and are not transferable by the participant
other than by will or the laws of descent and distribution
(within the meaning of SEC Rule 16b-3(a)(2)). If (and only
if) the Committee expressly so provides at the time an
eligible employee is selected to participate in the LTPIP in
any performance period, the participant's award for such
performance period may be paid in the form of shares of
Company common stock rather than cash, in which case all
provisions of this LTPIP applicable to phantom performance
shares (other than the preceding sentence) shall likewise
apply to the participant's opportunity to earn such shares
of Company common stock.
3. No later than 90 days after the commencement of each
performance period (or than such earlier or later date as
may be the applicable deadline for compensation payable hereunder for
such performance period to qualify as "performance-based"
under section 162(m)(4)(C) of the Code), the Committee shall
establish in writing the method for computing the number of
phantom performance shares which each participant in the
Plan for such performance period will earn under the Plan
for such performance period if the performance goals
established by the Committee for such performance period are
attained in whole or in part and if the participant's
employment by the Company, its subsidiaries and affiliates
continues without interruption during that performance
period. Such method shall be stated in terms of an
objective formula or standard that precludes discretion to
increase the amount of the award that would otherwise be due
upon attainment of the goals. No provision hereof is intended
to preclude the Committee from exercising negative discretion
within the meaning of the Treasury regulations under Code
section 162(m).
No later than 90 days after the commencement of each
performance period (or than such earlier or later date as
may be the applicable deadline for compensation payable hereunder for
such performance period to qualify as "performance-based"
under section 162(m)(4)(C) of the Code), the Committee shall
establish in writing the performance goals for such
performance period, which shall be based on any of the
following performance criteria, either alone or in any
combination, and on either a consolidated or business unit
level, as the Committee may determine: sales growth,
earnings per share growth, cash flow, cash flow from
operations, operating profit growth, net income growth,
operating margin, net income margin, return on net assets,
return on total assets, return on common equity, return on
total capital, and total shareholder return. The foregoing
criteria shall have any reasonable definitions that the
Committee may specify, which may include or exclude any or
all of the following items as the Committee may specify:
extraordinary, unusual or non-recurring items; effects of
accounting changes; effects of currency fluctuations; effects
of financing activities (e.g., effect on earnings per share
of issuance of convertible debt securities); expenses for
restructuring or productivity initiatives; other non-operating
items; spending for acquisitions; effects of divestitures;
and effects of asbestos activities and settlements. Any such
performance criterion or combination of such criteria may
apply to the participant's award opportunity in its entirety
or to any designated portion or portions of the award opportunity,
as the Committee may specify. Unless the Committee determines
otherwise at any time prior to payment of a participant's award
for any performance period hereunder, extraordinary items, such
as capital gains and losses, which affect any performance
criterion applicable to the award (including but not limited to
the criterion of net income) shall be excluded or included
in determining the extent to which the corresponding performance
goal has been achieved, whichever will produce the higher award.
4. The first performance period under the LTPIP shall be the
period commencing on July 1, 1995 and ending on December 31,
1997. New performance periods of three years' duration each
shall commence on January 1, 1996 and on each subsequent
anniversary of that date.
5. No later than 90 days after the commencement of a
performance period (or than such earlier or later date as
may be the applicable deadline for compensation hereunder for such
performance period to qualify as "performance-based" under
section 162(m)(4)(C) of the Code), the Committee shall
establish in writing the number of phantom performance
shares which each person selected to participate in the
LTPIP in such performance period shall be granted the
opportunity to earn if the performance goals applicable to
such performance period are achieved in whole or in part.
In no event shall any participant be granted the opportunity
to earn more than 50,000 shares (or the cash equivalent
thereof) with respect to any performance period hereunder.
(The foregoing amount represents the highest number of
shares (or equivalent amount of cash) which any participant
may be granted the opportunity to earn hereunder for any
performance period if the maximum performance objectives for
such performance period are attained). The foregoing amount
shall be appropriately adjusted to reflect a change in
corporate capitalization, such as a stock split or dividend,
or a corporate transaction, such as any merger,
consolidation, separation (including a spinoff or other
distribution of property), reorganization, or partial or
complete liquidation.
6. Any phantom performance shares granted under this Plan shall
be paid solely on account of the attainment of the
performance goals established by the Compensation Committee
with respect to such phantom performance shares, within the
meaning of applicable Treasury regulations. Payment of any
such phantom performance shares shall also be contingent on
continued employment by the Company, its Subsidiaries and
Affiliates during the performance period to which such
phantom performance shares relate. The only exceptions to
these rules apply in the event of termination of employment by
reason of death or Disability (within the meaning of the
Stock Performance Incentive Plan as amended by the Board of
Directors on June 15, 1995 (SPIP)), or in the event of a
Change of Control of the Company (within the meaning of the
SPIP), during a performance period, in which case the
following provisions shall apply. In the event that the
employment of a participant who has been granted phantom
performance shares with respect to a performance period
terminates by reason of death or Disability during such
performance period, the participant shall be paid the cash
value of the number of phantom performance shares, if any,
that the participant would have earned for such performance
period if the participant's employment had not terminated
prior to the end of the performance period, multiplied by a
fraction the numerator of which shall be the number of full
calendar months elapsed in the performance period prior to the
termination of employment and the denominator of which shall
be 30, in the case of the first performance period, or 36,
in the case of subsequent performance periods. Such
fractional amount shall be paid at the time payment would
have been made if the participant's employmment had not
terminated prior to the end of the performance period.
In the case of a Change of Control during a performance period,
all phantom performance shares then outstanding shall become
fully vested, earned and payable as if maximum performance
levels were attained and shall be cashed out by the Company as
of the date the Change of Control occurs, if and to the extent
so provided in Article 8 of the SPIP. An additional exception
shall apply in the event of termination of employment by reason
of Retirement during a performance period, but only if and to the
extent it will not prevent any award payable hereunder (other than
an award payable in the event of death, Disability, Change of Control
or Retirement) from qualifying as "performance-based
compensation" under section 162(m)(4)(C) of the Code.
Subject to the preceding sentence, in the event that the
employment of a participant who has been granted phantom
performance shares with respect to a performance period
terminates by reason of Retirement during such performance
period, the participant may but need not (as the Committee
may determine) be paid the cash value of the number of phantom
performance shares, if any, that the participant would have
earned for such performance period if the participant's employment
had not terminated prior to the end of the performance period,
multiplied by a fraction the numerator of which shall be the
number of full calendar months elapsed in the performance period
prior to termination of employment and the denominator of which shall
be 30, in the case of the first performance period, or 36,
in the case of subsequent performance periods. Any such payment
shall be made at the time payment would have been made if the
participant's employment had not terminated prior to the end
of the performance period. A participant whose employment
terminates prior to the end of a performance period for any reason
not excepted above shall not be entitled to any payment for
phantom performance shares granted to such participant for that
performance period.
7. With respect to any phantom performance share granted
hereunder, in no event shall the Committee have discretion
to increase the amount of compensation payable that would
otherwise be due upon attainment of the performance goals
applicable to such phantom performance share. This
provision shall be administered in accordance with any
applicable Treasury regulations under Code section 162(m).
8. Payment and vesting of any awards granted under this LTPIP
shall be contingent upon stockholder approval at the 1996
Annual Meeting of Stockholders of the amendments to the Stock
Performance Incentive Plan that were adopted by the Board of
Directors on June 15, 1995. Unless and until such shareholder
approval is obtained, no LTPIP award shall vest or be paid.
9. Payment of any awards granted under this LTPIP shall be
contingent upon shareholder approval, prior to payment, of
the material terms of the performance goals under which such
awards are to be paid, in accordance with applicable
Treasury regulations under Code section 162(m). Unless and
until such shareholder approval is obtained, no such award
shall be paid.
10. Subject to the provisions of paragraph 6 above relating to death,
Disability, Change of Control and Retirement, payment of any award
granted under this LTPIP shall also be contingent upon the
Compensation Committee's certifying in writing that the performance
goals and any other material terms applicable to such award were in
fact satisfied, in accordance with applicable Treasury regulations
under Code section 162(m). Unless and until the Committee so
certifies, such award shall not be paid.
11. Any amount payable to a participant hereunder shall be in
addition to any other compensation to which the participant
may be contractually entitled for such performance period
pursuant to an employment agreement with the Company, unless
such employment agreement provides otherwise.
12. All phantom performance shares are intended to constitute
Stock Bonus Awards within the meaning of the SPIP, and are
granted under and subject to the terms and conditions of the
SPIP, which shall control in the event of any conflict. All
phantom performance shares shall be documented by a written
instrument issued to the participant and signed by a duly
authorized representative of the Company. The Plan is not
intended to confer any rights upon any individual to any
phantom performance share or with respect to any phantom
performance share. All such rights, if any, shall be
governed by and determined exclusively in accordance with
the written instrument issued to the participant in
accordance with the foregoing provisions of this paragraph.
13. Capitalized terms which are used but not defined in the Plan
shall have the meanings ascribed to such terms in the SPIP,
unless the context requires otherwise.
14. The Committee may amend or terminate the Plan at any time,
provided that no such amendment or termination shall
adversely affect any outstanding phantom performance share
without the written consent of the participant.
15. Any provision of this Plan to the contrary notwithstanding,
(a) awards under this Plan are intended to qualify as
performance-based compensation under Code Section
162(m)(4)(C), and (b) any provision of the Plan that would
prevent an award under the Plan from so qualifying shall be
administered, interpreted and construed to carry out such
intention and any provision that cannot be so administered,
interpreted and construed shall to that extent be
disregarded.