Exhibit 10.1
PPG INDUSTRIES, INC.
INCENTIVE COMPENSATION
AND
DEFERRED INCOME PLAN
FOR
KEY EMPLOYEES
Effective: February 15, 1995
As Amended 4/17/96; 2/18/98; 1/1/99
As Further Amended April 19, 2000
Table of Contents
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Section I Definitions
Section II Awards
Section III Capital Enhancement
Account
Section IV Withdrawal Provisions
Section V Specific Provisions Related
to Benefits
Section VI Administration & Claims
Section VII Amendment & Termination
Section VIII Miscellaneous
Section IX Change in Control
i
SECTION I - DEFINITIONS
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1.01 Administrator means an officer or officers of the Company appointed by the
Committee, and any person(s) designated by such Administrator to assist in
the administration of the Plan.
1.02 Award means a grant of incentive compensation.
1.03 Beneficiary means the person or persons designated by a Participant to
receive benefits hereunder following the Participant's death, in
accordance with section 5.02; provided, however, in the event a
Participant fails to designate a Beneficiary in accordance with Section
5.02, his/her Beneficiary shall be the Beneficiary designated under the
Deferred Compensation Plan. For purposes of this Section 1.05, "person
or persons" is limited to an individual, a Trustee or a Participant's
estate.
1.04 Board means the Board of Directors of PPG Industries, Inc.
1.05 Capital Enhancement Account or Account means a bookkeeping account or
accounts maintained for a Participant who, for such period or periods as
the Committee may establish or permit, elects to defer all or any part of
an Award in the form of cash or Salary, as provided in Section 3.01.
1.06 CEA-1 means all funds contributed to the Capital Enhancement Account
during the period August 1, 1985 thru July 31, 1986, and earnings thereon.
1.07 CEA-2 means all funds contributed to the Capital Enhancement Account
during the period November 1, 1987 thru December 31, 1988, and earnings
thereon.
1.08 CEBC means the Compensation and Employee Benefits Committee of the
Company.
1.09 Code means the Internal Revenue Code of 1986, as amended.
1.10 Committee means the Officers-Directors Compensation Committee (or any
successor) of the Board.
1.11 Company or PPG means PPG Industries, Inc.
1.12 Conversion Formula means dividing an amount by the average of the closing
sale prices for PPG Stock reported on the New York Stock Exchange-
Composite Tape for all days in the month of January during which the New
York Stock Exchange is open during the year following the Plan Year to
which the Award relates.
- Page 1.1 -
1.13 Corporation means PPG and any Subsidiary Corporation designated by the
Committee as eligible to participate in the Plan, and which, by proper
authorization of the Board of Directors or other governing body of such
Subsidiary Corporation, elects to participate in the Plan.
1.14 Deferred Compensation Plan means the PPG Industries, Inc. Deferred
Compensation Plan.
1.15 Disability means any long-term disability. The Administrator, in his
complete and sole discretion, shall determine a Participant's Disability;
provided, however, that a Participant who is approved to receive Long-Term
Disability benefits pursuant to the PPG Industries, Inc. Long-Term
Disability Plan shall be considered to have a Disability. The
Administrator may require that a Participant submit to an examination from
time to time, but no more often than annually, at the expense of the
Company, by a competent physician or medical clinic, selected by the
Administrator, to confirm Disability. On the basis of such medical
evidence, the determination of the Administrator as to whether or not a
condition of Disability exists or continues shall be conclusive.
1.16 Employee means any full-time, or permanent part-time employee (including
any officer) of the Corporation.
1.17 ERISA means the Employee Retirement Income Security Act of 1974, as
amended.
1.18 Financial Hardship means an unexpected need for cash arising from an
illness, casualty loss, sudden financial reversal, or other such
unforeseeable occurrence, as determined by the Administrator, in his
complete and sole discretion.
1.19 Former Participant means a Participant who becomes ineligible to receive
an Award but who continues to have an Account hereunder.
1.20 Insider means a Participant or a Former Participant who at any time within
the prior six (6) months was a person subject to Section 16 of the
Securities Act of 1934.
1.21 Minimum Rate - means the average of the daily closing yields during
November of 10-year Treasury Notes.
1.22 Participant means an Employee who is approved by the CEBC, or the
Committee, as appropriate, to participate. Participants shall be limited
to key Employees of the Corporation who contribute the most to the growth
and profitability of the Company.
- Page 1.2 -
1.23 Plan Year means the calendar year.
1.24 Pre-tax Earnings means the consolidated earnings of the Company and its
consolidated Subsidiaries and equity affiliates before the deduction of
income taxes, minority interest and the amount to be set aside in the
Reserve as provided in Section 2.01. The Reserve shall not be adjusted
for any restatements of prior years' earnings.
1.25 PPG Stock means Common Stock of the Company.
1.26 Reserve means the aggregate of the amounts available for the making of
Awards as provided in Section 2.01.
1.27 Retired Participant means a Participant who elects to maintain an Account
in the Plan after his/her Retirement Date.
1.28 Salary means the regular base salary to be paid to a Participant by the
Corporation.
1.29 Subsidiary means any corporation of which fifty percent (50%) or more of
the outstanding voting stock or voting power is owned, directly or
indirectly, by the Company and any partnership or other entity in which
the Company has a fifty percent (50%) or more ownership interest.
1.30 Terminated Participant means a Participant who maintains an Account in the
Plan following his/her termination of employment from the Corporation.
- Page 1.3 -
SECTION II - AWARDS
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2.01 The Reserve
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(a) For purposes of establishing a Reserve, an amount shall be set aside
each year to be calculated as follows:
(1) Multiply consolidated shareholders' equity as of the beginning of
the year by 12%;
(2) Subtract the result of (1) above from Pre-tax Earnings for the
year;
(3) Multiply the result of (2) above by 5%.
(b) In no event, may the amount set aside exceed 20% of the cash dividends
paid on PPG Stock during the year.
(c) For purposes of subparagraph (a)(1) above, "shareholders' equity"
shall be exclusive of the aggregate par or stated value of preferred
stock outstanding, if any, and of any unpaid cumulative dividends
thereon.
(d) The Reserve shall be reduced by the amount of all Awards, including
any deferred amounts, first from the amount, if any, set aside for the
year to which the Awards relate, and then from the amounts which have
been in the Reserve for the longest period of time.
(e) Unawarded amounts set aside prior to the fourth preceding year shall
be automatically released from the Reserve and returned to income.
(f) The Reserve shall not be reduced by interest or dividend equivalents
on deferred amounts, dividends paid on restricted shares, negative
amounts resulting from the calculation of the amount to be set aside
each year, or the expenses of administering the Plan.
(g) Not later than the last day of the year to which the Awards relate,
the Committee may make an allocation (on the basis of estimates of the
amount to be set aside in the Reserve for such year and unawarded
amounts in the Reserve) to a group of Employees without determining
the amounts to be allocated to individuals in such group and such
allocation shall create a legal obligation upon the Company to pay
such amount to the individuals comprising such group.
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2.02 Awards
------
(a) The Committee shall determine or approve:
(1) The Participants;
(2) The maximum amount of all Awards to all Participants; and
(3) The amount and the form of the Award to each Participant.
(b) The Committee may delegate to another person(s) the authority to
determine:
(1) The Participants, other than Insiders; and
(2) The amount of Awards to such Participants.
(c) Awards may be made only from the Reserve; provided, however, that the
Committee is under no obligation to make Awards; or, if Awards are
made, to award the total amount set aside in the Reserve each year.
(d) Awards may be made in the form of cash, shares of PPG Stock, or a
combination of both.
2.03 Payment of Awards
-----------------
(a) Awards to Participants will be made in the form of cash ("cash
component"), shares of PPG Stock ("stock component"), or a combination
of both, as the Committee may determine.
(b) If all or any part of an Award is made in the form of shares of PPG
Stock, the number of such shares shall be determined by applying the
Conversion Formula. Fractional shares shall be paid in cash.
If the number of such shares is specified, the Reserve shall be
reduced on account of such shares by an amount determined by applying
the Conversion Formula in reverse.
As to shares of PPG Stock which constitute all or any part of an
Award, the Committee may impose such restrictions concerning their
transferability and/or their forfeitability as are provided for in
Section 5.05.
- Page 2.2 -
(c) Payment of Awards shall be made to Participants not later than March
15 of the year following the end of the year to which the Awards
relate.
2.04 Deferral of Awards
------------------
(a) Prior to the beginning of each Plan Year, a Participant may elect to
defer a percentage, in whole percentages only, of his/her Award, as
follows:
Minimum Deferral Maximum Deferral
---------------- ----------------
Cash component 10% 100%
Stock component 100% 100%
(b) Except as otherwise provided in paragraph (c) below, all elections
pursuant to this Section 2.04 must be filed with the Administrator no
later than the last day of the Plan Year prior to the Plan Year to
which an Award relates; and such election shall become irrevocable as
of the first day of the Plan Year to which it relates.
(c) Employees who are approved to participate during a Plan Year, may make
an election in accordance with this Section 2.04 within the 30-day
period following notice to the Participant that he/she has been
approved.
(d) Amounts deferred in accordance with this section 2.04 shall be
credited to the Participant's account in the Deferred Compensation
Plan and shall be subject to the provisions of the Deferred
Compensation Plan.
(e) Amounts deferred in accordance with this Plan prior to January 1,
1996, which have not been withdrawn by January 1, 1996, shall be
transferred to the Deferred Compensation Plan, in accordance with the
provisions of such Plan.
2.04.01 Investment Elections
--------------------
(a) At the time an election is made to defer all or a portion of
the cash component of a Award, the Participant must also
designate whether such amount is to be credited to the
Interest Account, the PPG Stock Account, or a combination of
both in the Deferred Compensation Plan.
(b) At the time an election is made to defer the stock component
of an Award, such deferral shall be credited to the PPG
Stock Account in the Deferred Compensation Plan.
- Page 2.3 -
(c) Amounts credited to the PPG Stock Account in the Deferred
Compensation Plan shall be credited in the form of whole and
fractional Stock Account Shares determined according to the
Conversion Formula.
2.04.02 In-Service Withdrawal Elections
-------------------------------
(a) Subject to the provisions of this Section 2.04.02, at the
time an election is made to defer all or a portion of the
cash component of an Award, a Participant may designate all
or a portion of the cash component of such deferred amount,
not including any earnings thereon, to be paid during a
specified quarter/year.
(b) Withdrawal elections made pursuant to this Section may not
specify a year which is any sooner than the fourth Plan Year
after the Plan Year in which the deferred amount is credited
to the Participant's Account.
(c) Any amount subject to withdrawal pursuant to this Section,
must be invested in the Interest Account in the Deferred
Compensation Plan.
(d) Any election made in accordance with this subjection 2.04.02
shall be irrevocable.
- Page 2.4 -
SECTION III - CAPITAL ENHANCEMENT ACCOUNT
-----------------------------------------
3.01 Deferrals of Salary to Capital Enhancement Account
--------------------------------------------------
(a) Subject to any minimum/maximum limits established by the Committee,
each prospective Participant, or such prospective Participant as the
Committee deems appropriate, may be given an opportunity to make an
election to defer payment of all or any part of his/her Salary and/or
Award, to be credited to the Capital Enhancement Account.
(b) (1) Subject to subparagraph (2) below, interest equivalents shall be
credited on amounts deferred to the Capital Enhancement Account
as follows:
CEA-1
----
Minimum Rate
plus 5%
(2) Except as otherwise provided in subparagraph (3) below, when a
Participant's employment terminates prior to age 62, interest
equivalents shall be recalculated at the Minimum Rate for CEA-1
for the total period such amounts were invested in the Capital
Enhancement Account, unless:
(i) with respect to any Participant who is an Insider, the
Committee, in its sole discretion, specifically determines
such Participant is entitled to the interest rate described
in subparagraph (1) above; or
(ii) with respect to any Participant who is not an Insider, the
Compensation and Employee Benefits Committee, in its sole
discretion, specifically determines such Participant is
entitled to the interest rate described in subparagraph (1)
above.
(3) In the case of a Participant whose termination of employment
prior to age 62 is the result of retirement or a divestiture,
such Participant shall be entitled to the interest rate described
in subparagraph (1) above.
(c) Designations to credit a deferred amount to the Capital Enhancement
Account shall be made in such terms on such bases as the Administrator
may prescribe.
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3.02 Payment of Deferrals from the Capital Enhancement Account
---------------------------------------------------------
Payments from the Capital Enhancement Account shall be made in cash.
3.03 Pre-Retirement Death Benefit
----------------------------
If a Participant dies prior to retirement, the Company shall pay a pre-
retirement death benefit to such Participant's Beneficiary equal to:
(a) For a Participant who had a balance in his/her CEA-2 account at the
time of death, the balance in the CEA-2 account; and
(b) For Participants who had a balance in his/her CEA-1 account at the
time of death, and who provided evidence of insurability at the time
of enrollment in CEA-1, the pre-retirement death benefit shall be
equal the greater of:
(1) The CEA-1 account balance; or
(2) The original amount deferred into the CEA-1 account (not
including interest equivalents credited thereon) times the
applicable factor in the following TABLE:
TABLE
-----
Attained Age on
August 1, 1985 Factor
-------------- ------
44 and under 15
45 to 54 9
55 and older 8
3.04 Termination of Capital Enhancement Account - 2 ("CEA-2")
--------------------------------------------------------
(a) Notwithstanding any other provision of Section III or Section IV
herein, CEA-2 shall be terminated effective December 31, 1998.
(b) Participants whose Account contains amounts credited under CEA-2 as of
January 1, 1998, shall be required to make an election regarding the
payout of all amounts credited under CEA-2 to be effective on January
1, 1999.
(1) An active Participant may elect:
- Page 3.2 -
(A) To receive the full amount of his/her CEA-2 Account paid in
a lump sum in January, 1999; or
(B) To have such amount credited to his/her Account in the PPG
Industries, Inc. Deferred Compensation Plan.
(2) A terminated or retired Participant may elect:
(A) To receive the full amount of his/her CEA-2 Account balance
paid in a lump sum in January, 1999; or
(B) To have his/her Account balance credited to his/her Account
in the PPG Industries, Inc. Deferred Compensation Plan. A
Participant who makes an election in accordance with this
subparagraph must further elect to receive his/her CEA-2
Account balance paid in accordance with the election filed
at the time of his/her termination or retirement for
payments from:
His/her Deferred Compensation Plan Account; or
His/her CEA-2 Account.
(3) Elections filed in accordance with this paragraph (b) must be
received by the Administrator no later than June 20, 1998.
In the event an active Participant fails to make an election in
accordance with section (b)(1) above, his/her CEA-2 amount shall
be credited to his/her Account in the PPG Industries, Inc.
Deferred Compensation Plan.
In the event a retired or terminated Participant fails to make an
election in accordance with section (b)(2) above, his/her CEA-2
amount shall be credited to an account in the PPG Industries,
Inc. Deferred Compensation Plan and the Participant shall be
deemed to have elected to receive his/her CEA-2 Account balance
paid in accordance with the election filed at the time of his/her
termination or retirement for payments from his/her CEA-2
Account.
(c) Elections made in accordance with subparagraph (b) above shall
supersede any other elections on file with the Administrator which
were made in accordance with Section IV.
(d) Section 4.02 shall apply to any Participant whose employment is
terminated notwithstanding any election filed in accordance with this
Section 3.04.
- Page 3.3 -
SECTION IV - WITHDRAWAL PROVISIONS
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4.01 Withdrawals at/after a Participant's Retirement Date
----------------------------------------------------
(a) A Participant may elect a payment schedule applicable to his/her
Account provided such election is filed with the Administrator:
(1) Prior to the Participant's Retirement Date; and
(2) In the year prior to the year the first payment is to be made
and, in all cases, at least six months/ten days prior to the time
the first payment is to be made.
(b) Participants may elect:
(1) One lump-sum payment; or
(2) Quarterly, semiannual or annual installments - to be made over a
period of up to a maximum of ten years.
(c) A Participant may delay the first payment; provided, however, that, in
all cases, payments must be completed no later than the month
preceding the month in which the Participant's 75th birthday occurs.
(d) The payment schedule elected by the Participant shall apply to his/her
entire Account.
Annual installments shall be each year on the first of the month
selected by the Participant as the month for such payments to
commence.
Semiannual installments shall be paid twice each year with the first
yearly payment paid the first of the month selected by the
Participant as the month for such payments to commence, and the
second yearly payment paid the first of the month which is six month
later.
Quarterly installments shall be paid four times each year with the
first yearly payment paid the first of the month selected by the
Participant as the month for such payments to commence, and the
second, third and fourth payments following with three month between
each such payment.
- Page 4.1 -
Each installment payment shall be calculated by dividing the
Participant's account balance, increased by the projected rate of
interest to be earned during the period of the payment schedule, by
the remaining number of installments -(e.g.: Ten annual installments
----
shall be paid: 1st installment = 1/10 of Account as adjusted; 2nd
installment = 1/9; 3rd installment = 1/8, etc.).
(e) In the event a Participant fails to file a payment schedule election
with the Administrator prior to his/her Retirement Date, his/her
Account shall be paid in one lump sum in the year following the year
of such Retirement Date and shall be paid during the first month in
such year which is at least six months/ten days following such
Retirement Date.
4.02 Withdrawals following Termination
---------------------------------
Participants shall receive their entire Account balance, paid in a lump sum
as soon as possible following their termination of employment.
4.03 Withdrawals in the event of Disability
--------------------------------------
(a) In the event a Participant becomes disabled, he/she shall receive
payments in accordance with the election filed with the Administrator
at the time the deferral election was filed.
(b) As provided in such election, the Participant shall receive:
(1) One lump-sum payment; or
(2) Quarterly, semiannual or annual installments - to be made over a
period of up to a maximum of ten years.
(c) The payment schedule elected by the Participant shall apply to his/her
entire Account.
Annual installments shall be each year on the first of the month
selected by the Participant as the month for such payments to
commence.
Semiannual installments shall be paid twice each year with the first
yearly payment paid the first of the month selected by the
Participant as the month for such payments to commence, and the
second yearly payment paid the first of the month which is six month
later.
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Quarterly installments shall be paid four times each year with the
first yearly payment paid the first of the month selected by the
Participant as the month for such payments to commence, and the
second, third and fourth payments following with three months between
each such payment.
Each installment payment shall be calculated by dividing the
Participant's account balance, increased by the projected rate of
interest to be earned during the period of the payment schedule, by
the remaining number of installments -(e.g.: Ten annual installments
----
shall be paid: 1st installment = 1/10 of Account as adjusted; 2nd
installment = 1/9; 3rd installment = 1/8, etc.).
4.04 Withdrawals following a Participant's death
-------------------------------------------
(a) Death prior to the Participant's Payment Election
-------------------------------------------------
In the event of a Participant's death prior to the time he/she files
an irrevocable payment election in accordance with section 4.01 or
4.03, the Participant's entire Account shall be paid to the
Participant's Beneficiary as soon as possible following the
Participant's death.
(b) Death on or after a Participant's Payment Election
--------------------------------------------------
In the event of a Participant's death on or after the time he/she
files an irrevocable payment election in accordance with section 4.01
or 4.03, the Participant's Beneficiary shall receive the remaining
balance of the Participant's Account in accordance with the payment
schedule filed by the Participant.
4.05 Withdrawals upon finding of Financial Hardship
-----------------------------------------------
(a) Upon a finding that the Participant, or Beneficiary if the Participant
is deceased, has suffered a Financial Hardship, the Administrator may,
in his sole discretion, permit the acceleration of a withdrawal under
the Plan in an amount reasonably necessary to alleviate such Financial
Hardship.
(b) The Participant shall be required to exhaust all our sources of funds,
other than the PPG Savings Plan, before the Administrator will
consider an accelerated withdrawal in accordance with this section
4.05.
- Page 4.3 -
4.06 Small Account Provision
-----------------------
(a) Each scheduled withdrawal must equal a minimum of $5,000, or 100
shares of PPG Stock.
(b) If the remaining balance in a Participant's Account is less than
$5,000, or 100 shares of PPG Stock, the Administrator may, at his
discretion, distribute the remainder of the Account.
- Page 4.4 -
SECTION V SPECIFIC PROVISIONS
-----------------------------
RELATED TO BENEFITS
-------------------
5.01 Nonassignability
----------------
(a) Except as provided in paragraph (b) below and in section 5.02, no
person shall have any power to encumber, sell, alienate, or otherwise
dispose of his/her interest under the Plan prior to actual payment to
and receipt thereof by such person; nor shall the Administrator
recognize any assignment in derogation of the foregoing. No interest
hereunder of any person shall be subject to attachment, execution,
garnishment or any other legal, equitable, or other process.
(b) Paragraph (a) above shall not apply to the extent that a Participant's
interest under the Plan is alienated pursuant to a "Qualified Domestic
Relations Order" ("QDRO") as defined in (S)414(p) of the Code.
(1) The administrator is authorized to adopt such procedural and
substantive rules and to take such procedural and substantive
actions as the Administrator may deem necessary or advisable to
provide for the payment of amounts from the Plan to an Alternate
Payee as provided in a QDRO. Such rules and actions shall be
consistent with the principal purposes of the Plan.
(2) Under no circumstances may the Administrator accept an order as a
QDRO following a Participant's death.
(3) An Alternate Payee may not establish an account in the Plan. All
amounts taken from a Participant's Account, as provided in a
QDRO, must be distributed as soon as possible following the
acceptance of an order as a QDRO.
(4) In the sole discretion of the Administrator, a Participant's
scheduled withdrawal or otherwise requested withdrawal may be
delayed for a period, not to exceed six months, if the
Administrator has notice that part or all of the Participant's
Account may be subject to alienation pursuant to a QDRO.
- Page 5.1 -
5.02 Beneficiary Designation
-----------------------
(a) The Participant shall have the right, at any time, to designate any
person(s) as Beneficiary. The designation of a Beneficiary shall be
effective on the date it is received by the Administrator, provided
the Participant is alive on such date.
(b) Each time a Participant submits a new Beneficiary designation form to
the Administrator, such designation shall cancel all prior
designations.
(c) In the case of a Participant who does not have a valid Beneficiary
designation on file at the time of his/her death, or in the case the
designated Beneficiary predeceases the Participant, the entire balance
in the Participant's Capital Enhancement Account shall be paid as soon
as possible to the Participant's estate.
5.03 Limited Right to Assets of the Corporation
------------------------------------------
The Benefits paid under the Plan shall be paid from the general funds of
the Company, and the Participants and any Beneficiary shall be no more than
unsecured general creditors of the Company with no special or prior right
to any assets of the Company for payment of any obligations hereunder.
5.04 Protective Provisions
---------------------
The Participant or Beneficiary shall cooperate with the Administrator by
furnishing any and all information requested by the Administrator in order
to facilitate the payment of benefits hereunder. If a Participant refuses
to cooperate, he/she may be deemed ineligible to receive a distribution
and/or ineligible to continue to actively participate in the Plan.
5.05 Restricted Shares of PPG Stock
------------------------------
(a) The Committee may, on such terms as it deems appropriate, restrict the
transferability of all or any number of such shares as constitute all
or any part of an Award to installments over periods not exceeding
five years and/or provide for the forfeitability of all or any number
of such shares over a period not exceeding five years. During the
period of restriction as to transferability and/or provision as to
forfeitability, Participants shall receive dividends and have voting
and other shareholders' rights as to such shares.
- Page 5.2 -
(b) No restriction on the transferability and/or provisions as to the
forfeitability of any shares of PPG Stock may be imposed so as to
obtain beyond the normal retirement date of the Participant awarded
such shares. Further, all restrictions on the transferability and/or
provisions as to the forfeitability of any shares of PPG Stock shall
be such as to terminate in the event of death, total and permanent
disability or early retirement, upon the occurrence of a Change in
Control, or upon the occurrence of the commencement of a tender offer
or an exchange offer.
(c) Any restrictions on the transferability and/or provisions as to the
forfeitability of any shares of PPG Stock shall be reflected in a
legend imprinted on the certificate(s) representing such shares.
5.06 The shares of PPG Stock delivered under the Plan may be either authorized
but unissued shares or issued shares acquired by the Company and held in
its Treasury.
5.07 Withholding
-----------
The Participant or Beneficiary shall make appropriate arrangements with the
Administrator for satisfaction of any federal, state or local income tax
withholding requirements and Social Security or other employee tax
requirements applicable to the payment of benefits under the Plan. If no
other arrangements are made, the Administrator may provide for such
withholding and tax payments by any means he deems appropriate, in his sole
discretion.
5.08 Forfeiture Provision
--------------------
In the event the Company becomes aware that a Participant is engaged or
employed as a business owner, employee, or consultant in any activity which
is in competition with any line of business of the Corporation, or has
engaged in any activity otherwise determined to be detrimental to the
Company, the Administrative Subcommittee may:
(a) Terminate such Participant's participation in the Plan, and distribute
the entire amount in the Participant's Account in a lump sum;
(b) Recalculate all earnings in the Account as though all investments had
been accruing interest at the Minimum Rate for the total period such
amounts were credited in the Account;
(c) Apply both (a) and (b) above; or
- Page 5.3 -
(d) Apply any other diminution or forfeiture of benefits. which is
specifically approved by the Administrative Subcommittee.
For purposes of this Section 5.08, the Administrative Subcommittee shall
consist of the Senior Vice President, Human Resources and Administration,
the Director, Compensation and Benefits, and a representative of the Law
Department, as appointed by the General Counsel of PPG. The Administrative
Subcommittee shall report all of its activities to the Committee.
- Page 5.4 -
SECTION VI ADMINISTRATION & CLAIMS
----------------------------------
6.01 Administration
--------------
(a) The Committee, for purposes of administering the Plan, shall meet and
act as necessary to determine or approve the maximum amount of Awards
to all Participants, the form of Awards to Participants and the amount
of Awards to Insiders and such other Participants as the Committee
deems appropriate.
(b) The Administrator shall administer the Plan and interpret, construe
and apply its provisions in accordance with its terms. The
Administrator shall have the complete authority to:
(1) Determine eligibility for benefits;
(2) Construe the terms of the Plan; and
(3) Control and manage the operation of the Plan.
(c) The Administrator shall have the authority to establish rules for the
administration and interpretation of the Plan and the transaction of
its business. The determination of the Administrator as to any
disputed question shall be conclusive. All actions, decisions and
interpretations of the Administrator shall be performed in a uniform
and nondiscriminatory manner.
(d) The Administrator may employ counsel and other agents and may procure
such clerical, accounting and other services as the Administrator may
require in carrying out the provisions of the Plan.
(e) The Administrator shall not receive any compensation from the Plan for
his services.
(f) The Corporation shall indemnify and save harmless the Administrator
against all expenses and liabilities arising out of the
Administrator's service as such, excepting only expenses and
liabilities arising from the Administrator's own gross negligence or
willful misconduct, as determined by the Committee.
- Page 6.1 -
6.02 Claims
------
(a) Every person receiving or claiming benefits under the Plan shall be
conclusively presumed to be mentally and physically competent and of
age. If the Administrator determines that such person is mentally or
physically incompetent or is a minor, payment shall be made to the
legally appointed guardian, conservator, or other person who has been
appointed by a court of competent jurisdiction to care for the estate
of such person, provided that proper proof of such appointment is
furnished in a form and manner suitable to the Administrator. Any
payment made under the provisions of the paragraph (a) shall be a
complete discharge of any liability therefor under the Plan. The
Administrator shall not be required to see to the proper application
of any such payment.
(b) Claims Procedure
----------------
Claims for benefits by a Participant or Beneficiary shall be filed, in
writing, with the Administrator. If the Administrator denies the
claim, in whole or in part, the Administrator shall furnish a written
notice to the claimant setting forth a statement of the specific
reasons for the denial of the claim, references to the specific
provisions of the Plan on which the denial is based, a description of
any additional material or information necessary to perfect the claim
and an explanation of why such material or information is necessary,
and an explanation of the review procedure. Such notice shall be
written in a way calculated to be understandable by the claimant.
The written notice from the Administrator shall be furnished to the
claimant within ninety (90) days following the date on which the claim
was filed, except that if special circumstances require an extension
of time, the Administrator shall notify the claimant of this need
within such 90-day period. Such notice shall inform the claimant the
nature of the circumstances necessitating the need for additional time
and the date by which the claimant will be furnished with the decision
regarding the claim. Such extension may provide for up to an
additional 90 days.
- Page 6.2 -
(c) Review Procedure
----------------
Within sixty (60) days of the date the Administrator denies a claim,
in whole or in part, the claimant, or his/her authorized
representative, may request that the decision be reviewed. Such
request shall be in writing, shall be filed with the Administrator,
and shall contain the following information:
(1) The date on which the denial was received by the claimant;
(2) The date on which the claimant's request for review was filed
with the Administrator;
(3) The specific portions of the denial which the claimant requests
the Administrator to review;
(4) A statement setting forth the basis on which the claimant
believes that a review of the decision is required;
(5) Any written material which the claimant desires the Administrator
to take into consideration in reviewing the claim.
The Administrator shall afford the claimant, or his/her authorized
representative, an opportunity to review documents pertinent to the
claim, and shall conduct a full and fair review of the claim and its
denial. The Administrator's decision on such review shall be
furnished to the claimant in writing, and shall be written in a manner
calculated to be understandable to the claimant. Such decision shall
include a statement of the specific reason(s) for the decision,
including references to the specific provision(s) of the Plan relied
upon.
The written notice from the Administrator shall be furnished to the
claimant within sixty (60) days following the date on which the
request for review was received by the Administrator, except that if
special circumstances require an extension of time, the Administrator
shall notify the claimant of this need within such 60-day period.
Such notice shall inform the claimant the nature of the circumstances
necessitating the need for additional time and the date by which the
claimant will be furnished with the decision regarding the claim.
Such extension may provide for up to an additional 60 days.
- Page 6.3 -
SECTION VII AMENDMENT AND TERMINATION
-------------------------------------
7.01 Amendment of the Plan
---------------------
(a) Except as provided in paragraph (b) below, the Board or the Committee
may amend the Plan, in whole or in part, at any time.
(b) The Plan shall not be amended, without shareholder approval, so as to
increase the percentage of Pre-tax Earnings to be set aside in the
Reserve each year or extend the period of time after which unawarded
amounts are automatically released from the Reserve and returned to
income.
7.02 Termination of the Plan
-----------------------
The Board or the Committee may terminate the Plan at any time. Upon a
termination pursuant to this Section 7.02, the Committee has the sole
discretion to determine distribution schedules for any or all Accounts,
notwithstanding a Participant's previous distribution schedule.
7.03 Company Action.
---------------
The Company's power to amend or terminate the Plan shall be exercisable by
the Board or by the Committee, or by any individual authorized by the Board
to exercise such powers.
7.04 Constructive Receipt
--------------------
In the event the Administrator determines that amounts deferred under the
Plan have been constructively received by Participants and must be
recognized as income for federal income tax purposes, distributions shall
be made to Participants, as determined by the Administrator. The
determination of the Administrator under this section 7.04 shall be binding
and conclusive.
- Page 7.1 -
SECTION VIII MISCELLANEOUS
--------------------------
8.01 Successors of the Company
-------------------------
The rights and obligations of the Company under the Plan shall inure to the
benefit of, and shall be binding upon, the successors and assigns of the
Company.
8.02 ERISA Plan
----------
The Plan is intended to be an unfunded plan maintained primarily to provide
deferred compensation benefits for "a select group of management or highly
compensated employees" within the meaning of Sections 201, 301 and 401 of
ERISA and therefore to be exempt from Parts 2, 3 and 4 of Title I of ERISA.
8.03 Trust
-----
The Company shall be responsible for the payment of all benefits under the
Plan. At its discretion, the Company may establish one or more grantor
trusts for the purpose of providing for payment of benefits under the Plan.
Such trust(s) may be irrevocable, but the assets thereof shall be subject
to the claims of the Company's creditors. Benefits paid to the Participant
from any such trust shall be considered paid by the Company for purposes of
meeting the obligations of the Company under the Plan.
8.04 Employment Not Guaranteed
-------------------------
Nothing contained in the Plan nor any action taken hereunder shall be
construed as a contract of employment or as giving any Participant any
right to continued employment with the Corporation.
8.05 Gender, Singular and Plural
---------------------------
All pronouns and variations thereof shall be deemed to refer to the
masculine, feminine, or neuter, as the identity of the person(s) requires.
As the context may require, the singular may be read as the plural and the
plural as the singular.
8.06 Headings
--------
The headings of the Sections, subsections and paragraphs of the Plan are
for convenience only and shall not control or affect the meaning or
construction of any of its provisions.
- Page 8.1 -
8.07 Validity
--------
If any provision of the Plan is held invalid, void or unenforceable, the
same shall not affect, in any respect, the validity of any other
provision(s) of the Plan.
8.08 Waiver of Breach
----------------
The waiver by the Company of any breach of any provision of the Plan by a
Participant or Beneficiary shall not operate or be construed as a waiver of
any subsequent breach.
8.09 Applicable Law
--------------
The Plan is intended to conform and be governed by ERISA. In any case
where ERISA does not apply, the Plan shall be governed and construed in
accordance with the laws of the Commonwealth of Pennsylvania.
8.10 Notice
------
Any notice required or permitted to be given to the Administrator under the
Plan shall be sufficient if in writing and either hand-delivered, or sent
by first class mail to the principal office of the Company at One PPG
Place, Pittsburgh, PA 15272, directed to the attention of the
Administrator. Such notice shall be deemed given as of the date of
delivery.
- Page 8.2 -
SECTION IX CHANGE IN CONTROL
----------------------------
9.01 Change in Control
-----------------
(a) Upon, or in reasonable anticipation of, a Change in Control (as
defined in section 9.02):
(1) Awards in the form of cash shall be made for the year during
which the Change in Control occurs, and then paid immediately to
a trustee on such terms as the Senior Vice President, Human
Resources and Administration and the Senior Vice President,
Finance, or either of them, or their successors, shall deem
appropriate (including such terms as are appropriate to cause
such payment, if possible, not to be a taxable event to
Participants) in order to cause the Awards so paid to be paid
either not later than the end of the first calendar quarter
following the end of the year to which the Awards relate or on a
deferred basis in accordance with the elections of Participants
then in effect as to the timing of the receipt of Awards for such
year.
(2) Participants who are eligible to receive an Award for the Plan
Year in which a Change in Control occurs shall be eligible to
receive an Award for the Plan Year following the Change in
Control.
(3) The amount of the Award payable to each Participant shall be:
one-half of the regular Award if the Change in Control occurs
during the first six months of the year; or
the full regular Award, if the Change in Control occurs during
the second six months of the year
either calculated at a rating of 12 for all performance
categories.
(4) All deferred amounts credited to the Capital Enhancement Account
shall be paid immediately to a trustee on such terms as the
Senior Vice President, Human Resources and Administration and the
Senior Vice President, Finance, or either of them, or their
successors shall deem appropriate (including such terms as are
appropriate to cause such payment, if possible, not to be a
taxable event to Participants) in order to give effect to the
elections of Participants with respect to the timing of the
receipt of such deferred amounts.
- Page 9.1 -
(b) By way of example of the operation of paragraph (a) above:
If the Change in Control occurred on August 1 of a Plan Year, a
Participant in a position with 1000 total points and an incentive
award value of $1.75 per point would receive an Award of no less than
$21,000 calculated as follows: 1000 x 1.75 x 12 = $21,000.
If the Change in Control occurred on April 1 of a Plan Year, such
Participant would receive $10,500.
If the Plan were to be continued to the end of the year, and
performance exceeded the 12 rating, a higher Award would be paid.
(c) Notwithstanding any other provision of this section, if an Award
ultimately made for such Plan Year is greater than the Award made
pursuant to this section, the Participant shall be entitled to the
difference between such Awards.
If the Participant has elected his/her Award to be deferred, payment
of such difference shall be made to a trustee in accordance with the
provisions set forth in subparagraph (a)(4) above.
(d) For purposes of this section, the fair market value of a share of PPG
Stock on any date shall be the closing sale price as reported for such
date (or, if no price is reported for such date, for the next
preceding date for which a price is reported) on the New York Stock
Exchange-Composite Tape.
9.02 Definition: Change in Control
------------------------------
A "Change in Control" shall mean:
(a) The acquisition by any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) (a "Person") of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of either (i) the then outstanding shares
of common stock of the Company (the "Outstanding Company Common
Stock") or (ii) the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the
election of directors (the "Outstanding Company Voting Securities").
- Page 9.2 -
For purposes of this subsection (a) the following acquisitions shall
not constitute a Change in Control:
Any acquisition directly from the Company;
Any acquisition by the Company;
Any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation controlled
by the Company; or
Any acquisition by any corporation pursuant to a transaction which
complies with clauses (i), (ii) and (iii) of paragraph (c) of this
section 9.02.
(b) Individuals who, as of September 20, 1995, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming
a director subsequent to such date whose election, or nomination for
election by the Company's shareholders, was approved by a vote of at
least a majority of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such individual
whose initial assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or
(c) Approval by the shareholders of the Company of a reorganization,
merger or consolidation or sale or other disposition of all or
substantially all of the assets of the Company (a "Business
Combination"), in each case, unless, following such Business
Combination:
(i) All or substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 60% of, respectively, the then
outstanding shares of common stock and the combined voting power
of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of
the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result
of such transaction owns the Company or all or substantially all
of the Company's assets either directly or through one or more
- Page 9.3 -
subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be;
(ii) No Person (excluding any employee benefit plan (or related
trust) of the Company or such corporation resulting from such
Business Combination) beneficially owns, directly or
indirectly, 20% or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such
Business Combination or the combined voting power of the then
outstanding voting securities of such corporation except to the
extent that such ownership existed prior to the Business
Combination; and
(iii) At least a majority of the members of the board of directors
of the corporation resulting from such Business Combination were
members of the Incumbent Board at the time of the execution of
the initial agreement, or of the action of the Board, providing
for such Business Combination; or
(d) Approval by the shareholders of the Company of a complete liquidation
or dissolution of the Company; or
(e) A majority of the Board otherwise determines that a Change in Control
shall have occurred.
- Page 9.4 -