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EXHIBIT 10-B-7
CHRYSLER CORPORATION
LONG-TERM PERFORMANCE PLAN
(BEING THE TERMS AND CONDITIONS OF THE PERFORMANCE STOCK UNIT PROVISIONS
OF THE CHRYSLER CORPORATION 1991 STOCK COMPENSATION PLAN)
EFFECTIVE MAY 16, 1991
(AS AMENDED THROUGH MAY 15, 1997)
1. PURPOSE
The purpose of the Chrysler Corporation Long-Term Performance Plan (below
called the Plan) is to provide an incentive to the officers and other key
salaried employees (below called collectively Employees) of Chrysler Corporation
(below called Chrysler), its subsidiaries and its Related Entities (as defined
in the Stock Compensation Plan) (Chrysler, its subsidiaries and Related Entities
collectively below called the Corporation) by enabling them to earn shares of
common stock of Chrysler (below called the Chrysler Common Stock) as a reward
for the achievement of long-term goals and objectives of the Corporation. The
Plan sets forth the terms and conditions of performance stock unit awards
granted by the Committee (as defined below) under the Stock Compensation Plan
(as defined below). All capitalized terms used below shall have the meanings
ascribed to them in Section 2 below.
2. DEFINITIONS
"Board" -- means the Board of Directors of Chrysler.
"Change in Control" -- has the meaning set forth in the Stock Compensation
Plan.
"Committee" -- means the Stock Option Committee of the Board, being the
committee appointed by the Board to administer the performance stock unit
provisions of the Stock Compensation Plan.
"Fair Market Value" -- means for purposes of Performance Shares, the mean
of the high and low trading prices of Chrysler Common Stock on the date on which
it is to be valued hereunder, as reported on the New York Stock Exchange, or if
the Exchange is closed on such day, the next preceding day on which the Exchange
was open for trading.
"Participant" -- means an Employee who is selected by the Committee to
receive an award of Performance Shares under the Stock Compensation Plan.
"Performance Cycle" or "Cycle" -- means the period of years determined by
the Committee during which the performance of the Corporation is measured for
the purpose of determining the extent to which an award of Performance Shares
has been earned.
"Performance Goals" -- means one or more corporate objectives established
by the Committee for a Performance Cycle, for the purpose of determining the
extent to which Performance Shares which have been contingently awarded for such
Cycle are earned. Such objectives shall relate to: quality, customer
satisfaction, profitability, net margin as a percentage of revenue, return on
sales, return on capital, breakeven, productivity, and/or debt to
capitalization.
"Performance Share" -- means an award expressed as one share of Chrysler
Common Stock contingently awarded under the Stock Compensation Plan (also
termed, under the Stock Compensation Plan, a Performance Stock Unit), the terms
and conditions of which award are governed by this Plan.
"Stock Compensation Plan" -- means the Chrysler Corporation 1991 Stock
Compensation Plan.
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3. STOCK OPTION COMMITTEE
The Plan shall be administered by the Committee, composed of not less than
two nonemployee directors, each of whom shall be a "Non-Employee Director"
within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as
amended from time to time (the "Exchange Act"), or meet any other applicable
standard for administrators under that or any similar rule which may be in
effect from time to time. Each member of the Committee shall be appointed by
the Board and serve at the pleasure of the Board. The Committee shall have
authority, in its discretion, to amend the terms of this Plan and to prescribe,
amend, and rescind rules and regulations relating to this Plan.
4. ELIGIBILITY
All Eligible Employees (as defined in the Stock Compensation Plan) are
eligible to be Participants under this Plan.
5. PERFORMANCE CYCLES
During 1991 the Committee shall establish Performance Cycles for the years
1991 through 1993. During each of the years 1992 and thereafter the Committee
may, but shall not be required to, establish a new Performance Cycle with
respect to a future period, which shall not be less than two nor more than five
years. The Committee shall have sole and complete authority to determine the
duration of each Performance Cycle. More than one Performance Cycle may be in
effect at any one time, and the duration of one Performance Cycle may differ
from another.
6. PERFORMANCE GOALS
The Committee shall establish one or more Performance Goals for each
Performance Cycle consisting of such criteria and for the accomplishment of such
corporate objectives as the Committee may designate. If a Performance Share
award for a given Performance Cycle is intended to be qualified
performance-based compensation under Section 162(m) of the Internal Revenue
Code, then the related Performance Goal shall be established no later than the
90th day of the first year of such Performance Cycle. During any Cycle, the
Committee may adjust the Performance Goals for such Cycle as it deems equitable
in recognition of unusual or non-recurring events affecting the Corporation or
changes in applicable tax laws or accounting principles.
7. PERFORMANCE AWARDS
At the commencement of each Performance Cycle the Committee shall (a) award
to each Participant the number of Performance Shares that would be deliverable
to the Participant if the Performance Goals for that Cycle are fully achieved at
a 100% level of performance, which number shall be determined by dividing an
amount (expressed as a percentage -- not to exceed 150% -- of the Participant's
base salary, or the average base salary or midpoint of the salary range of a
class of Participants, at the time of the award), by the then fair market price
of Chrysler Common Stock and (b) establish a range within which greater or
lesser percentages (including a minimum and maximum percentage) of the number of
shares awarded as Performance Shares would be earned based on the actual
performance level attained. The maximum of such range shall not exceed 150% of
the number of shares awarded as Performance Shares.
When a person becomes employed by the Corporation in, or is promoted by the
Corporation to, a position that constitutes him an Employee eligible to
participate in the Plan, the Committee may, in its sole discretion, award to
such person Performance Shares for one or more Performance Cycles commenced and
then in progress.
Except as otherwise provided in Section 13 below, the Committee may, in its
sole discretion, supplement any award previously made to any Participant,
provided that such award has not yet been earned out and paid.
8. PAYMENT OF PERFORMANCE SHARES
The Committee shall determine the percentage of the Performance Shares
which were earned by each Participant with respect to each Performance Cycle.
Such determination shall be made by considering the Corporation's performance in
relation to the Performance Goals established for that Performance Cycle and
deriving therefrom a percentage of attainment of the Performance Goals. Such
percentage (but not more than 150%) multiplied by the number of shares awarded
as Performance Shares to each Participant shall be the
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number of shares of Chrysler Common Stock earned and to be delivered to such
Participant. Such shares shall be shares held by the Corporation in its
treasury.
A Participant may elect, on or after the date of grant of any award and
before the year in which such award is to be paid, to defer receipt of all or
any portion of the Performance Shares deliverable to such Participant upon
earning such award, subject to the terms and conditions contained in any
applicable deferral or similar plan or arrangement.
9. DIVIDEND EQUIVALENTS
Participants shall be entitled to receive cash payments equivalent to the
dividend payments, if any, made to the owners of Chrysler Common Stock during
the Performance Cycle, on the dates such dividend payments are made. Such
payments are payable from and after the date Performance Shares are awarded
(i.e., during the relevant Performance Cycle) without regard to the attainment
of Performance Goals.
10. TERMINATION OF EMPLOYMENT
A Participant must be an Employee at the end of a Performance Cycle in
order to be entitled to payment of Performance Shares in respect of such Cycle;
provided, however, that in the event a Participant ceases to be an Employee
prior to the end of that Cycle (a) by reason of death, disability under any
disability plan of the Corporation, or retirement at or after age 65 under a
pension plan of the Corporation, he (or the legal representative of his estate
or his legatees) shall continue to earn, as if he had not ceased to be an
Employee, any Performance Shares awarded to him for that Cycle, or (b) by reason
of layoff, or by reason of retirement before age 65 under a pension plan of the
Corporation, the Committee, in its discretion and after taking into
consideration the performance of such Participant and the performance of the
Corporation during the Cycle, may authorize payment to such Participant with
respect to some or all of the Performance Shares awarded to him for that Cycle.
No award of Performance Shares shall confer upon any Employee any right to
continued employment with the Corporation nor shall it interfere with the right
of the Corporation to terminate the employment of any Employee at any time.
11. ADJUSTMENTS FOR CHANGES IN CAPITALIZATION
In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, or other change in corporate structure or
capitalization affecting the Chrysler Common Stock, outstanding awards of
Performance Shares shall be adjusted as and to the extent provided in Section 3
of the Stock Compensation Plan.
12. CHANGE IN CONTROL
A Change in Control shall have the effects set forth in Section 12 of the
Stock Compensation Plan.
13. INTERPRETATION
The Committee shall have full power and authority to interpret and construe
this Plan and its interpreting and construing of this Plan and acts and
determinations pursuant to this Plan in good faith shall be final and
conclusive, and binding upon the Participants. This Plan sets forth the terms
and conditions of awards of Performance Shares under the Stock Compensation
Plan; the provisions of the Stock Compensation Plan and the interpretations
thereof, to the extent applicable, shall govern in the event of any conflict
with the provisions of this Plan and the interpretations thereof.
Notwithstanding anything else contained in this Plan to the contrary, if
any award of Performance Shares is intended at the time of grant to be other
performance based compensation within the meaning of Section 162(m)(4)(C) of the
Code, to the extent required to so qualify any award hereunder, the Committee
shall not be entitled to exercise any discretion otherwise authorized under this
Plan with respect to such award if the ability to exercise such discretion (as
opposed to the exercise of such discretion) would cause such award to fail to
qualify as other performance based compensation.
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Nothing in this Plan shall be interpreted to preclude Chrysler from
granting awards under, or paying compensation outside the parameters of, the
Plan including, without limitation, base salaries, awards under any other plan
of Chrysler (whether or not approved by stockholders), incentive compensation
(whether or not based on the attainment of pre-established performance
objectives) or retention or other special payments, that is not deductible for
Federal, State or local income tax purposes by reason of Section 162(m) of the
Code or otherwise, should the Board or any committee thereof (including the
Committee), whichever is applicable, determine that such action is in the best
interests of Chrysler and its stockholders.
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