EXHIBIT 10.31
LEAR CORPORATION
EXECUTIVE SUPPLEMENTAL SAVINGS PLAN
AMENDED AND RESTATED DECEMBER 31, 2002
FOREWORD
Effective as of January 1, 1997, Lear Corporation adopted the Lear Corporation
Executive Supplemental Savings Plan (the "Plan") for the benefit of certain of
its key executives. Effective as of January 1, 2002 and January 1, 2003, except
as otherwise provided, Lear Corporation has again amended and restated the Plan
to reflect permitted changes that may be made to deferred compensation elections
and certain other changes.
The purposes of the Plan are (a) to permit certain key executives to elect to
defer payment of a portion of current compensation until a later year, and (b)
to provide participants and their beneficiaries under the Lear Corporation
Salaried Pension Plan (the "Pension Plan"), the Lear Corporation Salaried
Retirement Savings Plan (the "Savings Plan") and the Lear Corporation Pension
Equalization Program (the "SERP") with the amount of retirement income that is
not provided under the Pension Plan, Savings Plan or SERP by reason of the
participant having elected to defer compensation under this Plan or under
Section 8.2 of the Lear Corporation Long Term Stock Incentive Plan.
It is intended that the Plan be an unfunded deferred compensation plan for "a
select group of management or highly compensated employees," as that term is
used in the Employee Retirement Income Security Act of 1974, as amended.
SECTION ONE
Definitions
1.1 Except to the extent otherwise indicated herein, and except to the
extent otherwise inappropriate in the context, the definitions
contained in the Pension Plan and Savings Plan are applicable under the
Plan.
1.2 "Actuarial Equivalent" means, with respect to any specified annuity or
benefit, another annuity or benefit, commencing at a different date
and/or payable in a different form than the specified annuity or
benefit, but which has the same present value as the specified annuity
or benefit, when measured using the Applicable Interest Rate and
Applicable Mortality Table as specified in the Pension Plan.
1.3 "Benefits Committee" means the Benefits Committee of the Corporation,
as appointed by the Board of Directors.
1.4 "Board of Directors" means the Board of Directors of the Corporation.
1.5 "Code" means the Internal Revenue Code of 1986, as amended. Any
reference to any Code Section shall also mean any successor provision
thereto.
1.6 "Corporation" means Lear Corporation and any successor to such
corporation by merger, purchase or otherwise.
1.7 "Deferred Account" means the bookkeeping account established under
Section 3.1 established on behalf of a participant, and includes any
deemed earnings credited thereon.
1.8 "Deferred Compensation" means the amount of a Key Executive's
compensation that such Key Executive has deferred until a later year
pursuant to an election under Section 2.2 of this Plan.
1.9 "Key Executive" means an executive employed by the Corporation who is
entitled to participate in the Plan under Section 2.1.
1.10 "Long Term Stock Incentive Plan" means the Lear Corporation Long Term
Stock Incentive Plan.
1.11 "Management Stock Purchase Program" or "MSPP" means the election to
defer compensation for purposes of purchase of Company stock in
accordance with Section 8.2 of the Lear Corporation Long Term Stock
Incentive Plan.
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1.12 "Pension Plan" means the Lear Corporation Pension Plan.
1.13 "Pension Make-up Amount" means the pension benefits established under
Section 3.2 on behalf of a participant.
1.14 "Plan" means the Lear Corporation Executive Supplemental Savings Plan
as from time to time in effect.
1.15 "Savings Plan" means the Lear Corporation Salaried Retirement Savings
Plan. For 1997, Savings Plan shall also include the Masland Associates
Security Plan.
1.16 "Savings Make-up Account" means the bookkeeping account established
under Section 3.3 established on behalf of a participant, and includes
any deemed earnings credited thereon.
1.17 "SERP" means the Lear Corporation Pension Equalization Program.
SECTION TWO
Participation and Deferral Election
2.1 Eligibility
Participation in the Plan shall be limited to employees of the
Corporation, and any affiliated company participating in the Lear
Corporation Pension Plan and/or the Lear Corporation Salaried
Retirement Savings Plan, who are designated by the Senior Vice
President of Human Resources of the Corporation and approved for
participation in the Plan by the Benefits Committee ("Key Executives").
For purposes of participation as of January 1, 1997, this includes all
Vice Presidents of the Corporation and its domestic subsidiaries, as
well as all employees earning base pay of at least the "Base Salary
Threshhold" as of November 15, 1996. As of November 15, 1996, the Base
Salary Threshhold is $125,000.
If first employed after November 15, 1996, an employee shall be
eligible to participate as of the first of the month following one full
calendar month of employment if he or she is a Vice President of the
Corporation and its domestic subsidiaries, or his or her base salary as
of date of employment is at least five sixths of the annual limit (as
of such date of employment) under Code Section 401(a)(17), rounded to
the nearest dollar, subject to approval of the Senior Vice President of
Human Resources of the Corporation.
For years beginning January 1, 2001 and thereafter, an employee shall
be eligible to participate as of the first of the month following one
full calendar month of employment if he or she is a Vice President of
the Corporation and its domestic subsidiaries, and any affiliated
company participating in the Lear Corporation Pension Plan and/or the
Lear Corporation Salaried Retirement Savings Plan, or his or her base
salary as of date of employment is at least five sixths of the annual
limit (as of such date of employment) under Code Section 401(a)(17),
rounded to the nearest dollar, subject to approval of the Senior Vice
President of Human Resources of the Corporation. An employee will
automatically be eligible to participate if he or she is designated as
an Eligible Employee for the MSPP for the coinciding Plan Year, even if
that person is not otherwise eligible for this Plan in accordance with
this paragraph.
As of each November 15, the Base Salary Threshhold shall be
redetermined as five sixths of the annual limit (as of such November
15) under Code Section 401(a)(17), rounded to the nearest dollar.
Employees who have never participated under the Plan but who are Vice
Presidents of the Corporation and its domestic subsidiaries, and any
affiliated company participating in the Lear Corporation Pension Plan
and/or the Lear Corporation Salaried Retirement Savings Plan, or
earning base pay of at least the "Base Salary Threshhold" shall be
eligible to participate as of the following January 1.
Employees who elect to participate in the Plan shall continue to be
eligible to participate in the Plan in future years, notwithstanding
their base salary as of a November 15 falling below the Base Salary
Threshhold for employees who have never participated in the Plan.
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2.2 Deferral Election
Elections of Deferred Compensation shall be made only by Key Executives
and shall be on forms furnished by the Benefits Committee. A Deferred
Compensation election shall apply only to compensation (as defined
below) for the particular year specified in the election. Key
Executives shall specify the percentage of such compensation to be
deferred under the election, which percentage may not exceed the
maximum rate of Employee Tax-deferred Contributions permitted under the
Savings Plan for the year. For purposes of the preceding sentence, the
term "compensation" means base pay plus short-term incentive bonuses as
paid prior to reduction for (a) his or her Deferred Compensation
election under this Plan, (b) pre-tax contributions under the Savings
Plan and (c) any pre-tax contributions toward health care under Code
Section 125, which is in excess of Limited Compensation. "Limited
Compensation" is the smaller of (A) the limit on pensionable
compensation specified by Code Section 401(a)(17) (including
adjustments for changes in the cost of living as prescribed by the
Code), or (B) compensation earned prior to the time the employee
reaches the limit on Employee Tax-deferred Contributions specified by
Code Section 402(g) (including adjustments for changes in the cost of
living as prescribed by the Code).
Except as provided in the following paragraph, a Deferred Compensation
election with respect to compensation for a particular calendar year
(i) must be made before January 1 of such calendar year (or prior to
participation in the Plan if the Key Executive becomes eligible to
participate during the calendar year), (ii) must specify (from the
available alternatives) the date such Deferred Compensation is to be
paid (or commence to be paid) and, if such date is at termination of
employment, the number of installments (not to exceed 10 years) in
which such Deferred Compensation is to be paid, and (iii) once made,
cannot be changed or revoked.
Effective with elections with respect to deferrals of compensation for
calendar years beginning with 2003, Key Executives may change their
elections made in prior years with regard to the payment date and
number of installments, under the following conditions:
a. such re-election shall be made on forms furnished by the
Benefit Committee;
b. such re-election shall be made from the available alternate
dates and forms in effect at the time of such re-election; and
c. such re-election shall only take effect if the Key Executive
terminates employment on or after the second January 1
following such re-election, with the latest effective election
or re-election on file determining the date and form of
distribution if the Key Executive terminates employment prior
to such second January 1 following the re-election.
In the case of an employee who is eligible under Section 2.1 as of one
month following his or her date of employment, any Deferred
Compensation election must be made within 30 days of employment, and it
will apply to compensation earned from date of eligibility for the
Savings Plan through the end of that calendar year.
2.3 Deferral Suspension
If a Key Executive makes a withdrawal of his or her 401(k)
contributions under the Savings Plan and thereby becomes subject to a
suspension of contributions under the Savings Plan, his or her Deferred
Compensation under this Plan shall also be suspended for the same
period required under the Savings Plan.
SECTION THREE
Accounts
3.1 Deferred Account
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The aggregate of the amounts of Deferred Compensation and deemed
earnings on such amounts shall be paid to the participant or his or her
beneficiary, as applicable, from the general assets of the Corporation
in accordance with this Plan and related election forms. Deemed
earnings with respect to Deferred Compensation shall be credited
monthly at the monthly compound equivalent of the Prime Rate plus 1% in
effect at the beginning of each calendar quarter. Effective January 1,
1998, the interest rate will be credited at the Prime Rate in effect at
the beginning of each calendar quarter. The Prime Rate shall be the
prime rate as published in the Wall Street Journal Midwest edition
showing such rate in effect as of the first business day of each
calendar quarter. A bookkeeping account shall be maintained for each
affected participant to record the amount of such Deferred Compensation
and deemed earnings thereon. Participants are always 100 percent vested
in their Deferred Accounts.
The Plan Administrator may also maintain separate bookkeeping accounts
for Deferred Compensation for each participant for each calendar year
plus deemed earnings with respect to such Deferred Compensation, to
facilitate calculation upon distribution.
3.2 Pension Make-up Amount
A bookkeeping account shall be established on behalf of each
participant in the Plan which, at any time, shall yield a benefit equal
to the benefit as of such date that would have accrued under the
Pension Plan and/or the SERP had the participant not elected to defer
compensation under Section 2.2 of this Plan and not elected to defer
compensation under the MSPP.
A participant shall be vested in his or her Pension Make-up Amount
after three years of Service (as defined in the Pension Plan).
3.3 Savings Make-up Account
A bookkeeping account shall be established on behalf of each
participant in the Plan, which shall be credited with the excess, if
any, of (i) the amount of employer matching contributions which would
have been made on behalf of a participant had the participant's
Deferred Compensation been contributed to the Savings Plan (without
regard to any refunds of participant contributions required under the
Code, or the effects of Code Sections 401(a)(17), 402(g) or 415), over
(ii) actual employer matching contributions under the Savings Plan. The
Savings Make-up Account shall be credited monthly with deemed
investment earnings at the monthly compound equivalent of the Prime
Rate plus 1% in effect at the beginning of each calendar quarter.
Effective January 1, 1998, the interest rate will be credited at the
Prime Rate in effect at the beginning of each calendar quarter. The
Prime Rate shall be the prime rate as published in the Wall Street
Journal Midwest edition showing such rate in effect as of the first
business day of each calendar quarter. A participant is vested in his
or her Savings Make-up Account after three years of Service (as defined
in the Pension Plan).
3.4 MSPP Make-up Account
A bookkeeping account shall be established on behalf of each
participant in the Plan, which shall be credited with the excess, if
any, of (i) the amount of employer matching contributions which would
have been made on behalf of a participant had the participant's
deferred compensation under the MSPP been contributed to the Savings
Plan (without regard to any refunds of participant contributions
required under the Code, or the effects of Code Sections 401(a)(17),
402(g) or 415), up to, but not exceeding the rate at which the
participant contributed to the Savings Plan for such year, over (ii)
actual employer matching contributions under the Savings Plan. The MSPP
Make-up Account shall be credited monthly with deemed investment
earnings at the monthly compound equivalent of the Prime Rate plus 1%
in effect at the beginning of each calendar quarter. Effective January
1, 1998, the interest rate will be credited at the Prime Rate in effect
at the beginning of each calendar quarter. The Prime Rate shall be the
prime rate as published in the Wall Street Journal Midwest edition
showing such rate in effect as of the first business day of each
calendar quarter. A participant is vested in his or her MSPP Make-up
Account after three years of Service (as defined in the Pension Plan).
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SECTION FOUR
Payment of Benefits
4.1 Event of Payment
The vested account balances of all of a participant's Accounts are
payable as hereinafter provided. No withdrawals, including loans, may
be allowed from the Plan for any reason while the participant is still
employed by the Corporation; however, reemployment of a participant
shall not suspend the payment of any benefits hereunder.
4.2 Payment of Deferred Account
Payment of benefits from a participant's Deferred Account shall be made
in accordance with deferred compensation agreements made at the time
the participant elected to defer compensation. A separate deferred
compensation agreement shall govern each year's Deferred Compensation
and deemed earnings on such Deferred Compensation attributable to any
year. The terms of these deferred compensation agreements dealing with
the timing and form of payment may be changed from year to year by the
Benefits Committee, but once an election is made by a participant as to
the timing and form of a distribution from the Deferred Account with
respect to a particular year, such election is irrevocable, except as
provided in Section 2.2.
4.3 Payment of Savings Make-up Account
Distributions from the Savings Make-up Account shall be made in the
same form and at the same time as benefit payments made under the
Savings Plan.
Effective for terminations of employment on and after January 1, 2001,
distributions from the Savings Make-up Account shall be made in the
same form and at the same time as payments made in accordance with a
participant's latest effective deferral election; however in no event
shall payment of benefits in the form of a single lump sum be made
prior to the January 1 following the date of the participant's
termination of employment. A participant's latest deferral election
becomes effective as of the January 1 following the date of such
election, or such later date as may apply to newly-hired participants.
4.4 Payment of MSPP Make-up Account
Distributions from the MSPP Make-up Account shall be made in the same
form and at the same time as benefit payments made under the Savings
Plan.
Effective for terminations of employment on and after January 1, 2001,
distributions from the MSPP Make-up Account shall be made in the same
form and at the same time as payments made in accordance with a
participant's latest effective deferral election; however in no event
shall payment of benefits in the form of a single lump sum be made
prior to the January 1 following the date of the participant's
termination of employment. A participant's latest deferral election
becomes effective as of the January 1 following the date of such
election, or such later date as may apply to newly-hired participants.
4.5 Payment of Pension Make-up Amount
Except as provided in Section 4.6 below, distributions of the Pension
Make-up Amount shall be made in the same form and at the same time as
benefit payments made under the Pension Plan. To the extent a lump sum
is payable from this Plan in accordance with this Section 4.5, the
Actuarial Equivalence for such lump sum shall be determined in
accordance with Exhibit A, item (c) of the Pension Plan.
4.6 Other Distributions of Pension Make-up Amount
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(a) If the aggregate value of a participant's Pension Make-up
Amount (determined in accordance with Actuarial Equivalence as
determined under the Pension Plan) is less than $10,000, the
participant or his or her beneficiary shall receive benefits
under this Plan in the form of a single lump sum as soon as
practicable after termination of employment, without regard to
distribution elections made under the Pension Plan.
(b) Notwithstanding Section 4.5 or subparagraph (a) of this
Section, if an active participant is eligible to elect and so
elects, the participant may receive the present value (as
hereinafter defined) of the Pension Make-up Amount paid in a
lump sum upon termination of employment.
(i) Such election shall not be effective if termination
of employment occurs before the end of the first full
calendar year beginning after the election is made,
except if termination occurs by reason of death.
(ii) Eligibility to elect this form of benefit shall be
limited to employees who will be at least age 62 and
have 10 years of Service (as defined in the Pension
Plan) when benefits are to be paid, and (A) if the
employee is restricted in stock ownership trades
under Section 16b of the Security Exchange Commission
Regulations, have approval of the Compensation
Committee of the Board of Directors, or (B) if the
employee is not restricted in stock ownership trades
under Section 16b of the Security Exchange Commission
Regulations, have approval of the Chief Executive
Officer of the Corporation.
(iii) Present value shall mean the lump sum Actuarial
Equivalent as defined under Exhibit A, item (c) of
the Pension Plan.
(iv) The benefit calculation shall be made based on the
immediate benefit, reduced as in accordance with the
terms of the Pension Plan.
(v) If a participant becomes disabled, as defined in the
Pension Plan, termination of employment shall be
deemed to occur upon cessation of benefit accruals
under the Pension Plan.
(c) Notwithstanding Section 4.5 or subparagraph (a) of this
Section, if an active participant is eligible to elect and so
elects, the participant may receive the Pension Make-up Amount
paid in a series of annual installments, as elected by the
participant and not to exceed 20 years, commencing as of the
first of the month coincident with or next following
termination of employment and payable as of each anniversary
thereafter.
(i) Such election shall not be effective if termination
of employment occurs before the end of the first full
calendar year beginning after the election is made,
except if termination occurs by reason of death.
(ii) Eligibility to elect this form of benefit shall be
limited to employees who will be at least age 62 and
have 10 years of Service (as defined in the Pension
Plan) when benefits are to be paid, and (A) if the
employee is restricted in stock ownership trades
under Section 16b of the Security Exchange Commission
Regulations, have approval of the Compensation
Committee of the Board of Directors, or (B) if the
employee is not restricted in stock ownership trades
under Section 16b of the Security Exchange Commission
Regulations, have approval of the Chief Executive
Officer of the Corporation.
(iii) The amount of each annual installment shall mean the
Actuarial Equivalent, using interest only, of the
lump sum as defined under subsection 4.6(b). The
interest rate for purposes of converting the lump sum
into the level installments shall be the interest
rate used to determine the lump sum. Interest on the
unpaid portion shall be credited monthly with deemed
investment earnings at the monthly compound
equivalent of the Prime Rate plus
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1% in effect at the beginning of each calendar
quarter. Effective January 1, 1998, the interest rate
will be credited at the Prime Rate in effect at the
beginning of each calendar quarter. The Prime Rate
shall be the prime rate as published in the Wall
Street Journal Midwest edition showing such rate in
effect as of the first business day of each calendar
quarter. To the extent that the remaining unpaid
balance as of each anniversary date is different from
the scheduled amount based on the previous
anniversary date calculation, the annual installment
for that year shall be adjusted to reflect such
difference.
(iv) If a participant becomes disabled, as defined in the
Pension Plan, termination of employment shall be
deemed to occur upon cessation of benefit accruals
under the Pension Plan.
(v) If a participant in receipt of such annual
installments dies, the unpaid balance in the
participant's account shall be paid in a lump sum to
the participant's beneficiary for purposes of the
Pension Make-up Amount.
4.7 Beneficiaries
The participant's beneficiary under this Plan with respect to his or
her participant Deferred Account shall be the person or persons
designated as beneficiary by the participant by filing with the
Benefits Committee a written beneficiary designation on a form provided
by, and acceptable to, such Benefits Committee. In the event the
participant does not make an effective designation of a beneficiary
with respect to his or her participant deferred account, the
participant's beneficiary with respect to his or her participant
deferred account shall be the beneficiary of such participant's
beneficiary under the Savings Plan.
The participant's beneficiary under this Plan with respect to his or
her Pension Make-up Amount shall be the person who is entitled to
benefit payments under the Pension Plan because of the death of the
participant.
The participant's beneficiary under this Plan with respect to his or
her Savings Make-up Account shall be the person who is entitled to
benefit payments under the Savings because of the death of the
participant.
The participant's beneficiary under this Plan with respect to his or
her participant MSPP Make-up Account shall be the person or persons
designated as beneficiary by the participant by filing with the
Benefits Committee a written beneficiary designation on a form provided
by, and acceptable to, such Benefits Committee. In the event the
participant does not make an effective designation of a beneficiary
with respect to his or her participant deferred account, the
participant's beneficiary with respect to his or her MSPP Make-up
Account shall be the beneficiary of such participant's beneficiary
under the Savings Plan.
4.8 Termination of the Pension Plan or Savings Plan
In the event that the Pension Plan is terminated, payments of the
Pension Make-up Amount which have not previously been paid shall
continue to be paid directly by the Corporation but only to the same
extent and for the same duration as that part of the payee's benefit
from the Pension Plan, which is directly related to such Pension
Make-up Amount, is continued to be provided by the assets of the
Pension Plan.
In the event that the Savings Plan is terminated, Savings Make-up
Accounts and MSPP Make-up Accounts shall be paid directly by the
Corporation in the same manner as the distribution of the participant's
accounts under the Savings Plan.
SECTION FIVE
Administration and General Provisions
5.1 Plan Administrator
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The Benefits Committee shall be the "administrator" of the Plan within
the meaning of the Employee Retirement Income Security Act of 1974, as
amended.
5.2 Benefits Committee
The Benefits Committee shall be vested with the general administration
of the Plan. The Benefits Committee shall have the exclusive right to
interpret the Plan provisions and to exercise discretion where
necessary or appropriate in the interpretation and administration of
the Plan and to decide any and all matters arising thereunder or in
connection with the administration of the Plan. The decisions, actions
and records of the Benefits Committee shall be conclusive and binding
upon the Corporation and all persons having or claiming to have any
right or interest in or under the Plan.
The Benefits Committee may delegate to such officers, employees or
departments of the Corporation such authority, duties, and
responsibilities of the Benefits Committee as it, in its sole
discretion, considers necessary or appropriate for the proper and
efficient operation of the Plan, including, without limitation, (i)
interpretation of the plan, (ii) approval and payment of claims, and
(iii) establishment of procedures for administration of the Plan.
5.3 General Provisions
(a) The Corporation shall make no provision for the funding of any
benefits payable hereunder that (i) would cause the Plan to be
a funded plan for purposes of Code Section 404(a)(5), or Title
I of the Employee Retirement Income Security Act of 1974, as
amended, or (ii) would cause the Plan to be other than an
"unfunded and unsecured promise to pay money or other property
in the future" under Treasury Regulations section 1.83-3(e);
and shall have no obligation to make any arrangement for the
accumulation of funds to pay any amounts under this Plan.
Subject to the restrictions of the preceding sentence, the
Corporation may establish a grantor trust described in
Treasury Regulations sections 1.677(a)(-1(d) and accumulate
funds therein to pay amounts under the Plan, provided that the
assets of the trust shall be required to satisfy the claims of
the Corporation's general creditors in the event of the
Corporation's bankruptcy or insolvency.
(b) In the event that the Corporation shall decide to establish an
advance accrual reserve on its books against the future
expense of the Plan, or to establish a grantor trust (which
trust will conform to the terms of the model trust described
in Rev. Proc. 92-64) with assets subject to the claims of
creditors, such reserve or trust shall not under any
circumstances be deemed to be an asset of this Plan but, at
all times, shall remain a general asset of the Corporation,
subject to the claims of the Corporation's creditors.
(c) A person entitled to any amount under this Plan shall be a
general unsecured creditor of the Corporation with respect to
such amount.
SECTION SIX
Amendment and Termination
6.1 Amendment of the Plan
Subject to the provisions of Section 6.3, the Plan may be wholly or
partially amended or otherwise modified at any time by the Compensation
Committee of the Board of Directors.
6.2 Termination of the Plan
Subject to the provisions of Section 6.3, the Plan may be terminated at
any time by the Compensation Committee of the Board of Directors.
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6.3 No Impairment of Benefits
Notwithstanding the provisions of Sections 6.1 and 6.2, no amendment to
or termination of the Plan shall impair any rights to benefits which
have accrued hereunder.
Adopted:
By: /s/ Michael P. Miller
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Name: Michael P. Miller
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Title: Vice President Global
Compensation and Benefits
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Date: December 31, 2002
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