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EXHIBIT 10.8
PACTIV CORPORATION
DEFERRED COMPENSATION PLAN
(THE "PLAN")
1. PURPOSE
The purpose of the Plan is to provide to directors and a select group of
management or highly compensated employees of Pactiv Corporation and its
subsidiaries and affiliates (hereinafter collectively referred to as the
"Company") an opportunity to defer compensation received by them from the
Company in accordance with the terms and conditions set forth herein. This
document amends and restates the Tenneco Inc. Deferred Compensation Plan made as
of January 1, 1997 and amends, restates and incorporates the Deferred
Compensation Plan for Directors of Tenneco Inc., both as to persons whose
deferred compensation accounts are allocated to the Company under the Human
Resources Agreement between the Company and Tenneco Inc. (the "Agreement").
2. ADOPTION AND ADMINISTRATION
The plan shall be administered by the Compensation / Nominating / Governance
Committee of the Board of Directors of the Company (the "Committee"). The
Committee shall have sole and complete authority and discretion to interpret the
terms and provisions of the Plan and to adopt, alter and repeal such
administrative rules, regulations and practices governing the operation of the
Plan, and to determine facts under the Plan as it shall from time to time deem
advisable.
3. ELIGIBILITY
Directors and U.S. paid participants in the Company's Executive Incentive
Compensation Plan shall be eligible to participate in the Plan.
Any person who had an account balance in the Tenneco Inc. Deferred Compensation
Plan (or the Deferred Compensation Plan for Directors of Tenneco Inc. ) as of
the date on which the stock of the Company was distributed to the shareholders
of Tenneco Inc. and whose account balance was allocated to the Company under the
Agreement shall continue to participate in this Plan. Participation by Active
and Former Employees of the Automotive Group shall cease as of the close of
business on the Distribution Date and all interests in the Plan of (and Plan
liabilities with respect to) such employees shall be transferred to the Tenneco
Automotive Inc. Deferred Compensation Plan.
Persons eligible to participate in the Plan shall be referred to as
"Participant" or "Participants" as the case may be.
4. ELECTION TO DEFER
(a) A Participant may elect in writing to defer receipt of all or
a specified portion of his or her bonuses or incentive
compensation to be received during a calendar year ("Deferral
Election"); provided, however, that any election by a
Participant who is subject to the reporting and short swing
profits liability provisions of Section 16 of the Securities
and Exchange Act of 1934, as amended, including an election
relating
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to the form of distribution or to defer income into a "Pactiv
stock index account" pursuant to Section 6 of the Plan, shall
not be effective until such election and the transactions
contemplated thereby shall have been specifically approved by
the Committee to the extent such approval is required to avoid
liability under Section 16 of the Securities and Exchange Act
of 1934 and the regulations thereunder. Amounts deferred under
the Plan shall be referred to as the "Deferred Amounts." Once
received by the Committee, a Deferral Election cannot be
revoked.
(b) Except as provided in this Section 4(b), a Deferral Election
must be made prior to September 30 of the calendar year in
which the bonus or incentive compensation will be awarded. A
Participant must make a separate Deferral Election with
respect to each calendar year of participation in the Plan. A
new Participant in the Plan shall have 30 days following his
or her notification by the Committee of his or her eligibility
to participate in the Plan to make a Deferral Election with
respect to bonus or incentive compensation to be awarded
within that calendar year.
(c) As specified by the Participant in a Deferral Election, the
period of deferral shall be until the Participant dies,
terminates employment with Pactiv, or until a specific date
selected by the Participant in the Deferral Election.
5. ESTABLISHMENT OF DEFERRED COMPENSATION ACCOUNT
At the time of a Participant's initial Deferral Election, the Company shall
establish a memorandum account (a "Deferred Compensation Account") for such
Participant on its books. The Deferred Amount shall be credited to the
Participant's Deferred Compensation Account as of the day on which the
Participant would otherwise be entitled to receive the bonus or incentive
compensation. Any required withholding for taxes (e.g. Social Security taxes) on
the Deferred Amount shall be made from other compensation of the Participant.
Adjustments as provided below, shall be made to the Participant's Deferred
Compensation Account.
6. ADJUSTMENTS TO DEFERRED AMOUNTS
The Committee shall credit the balance of the Participant's Deferred
Compensation Account with an earnings factor. The earnings factor will equal the
amount the Participant's Deferred Compensation Account would have earned if it
had been invested in the investment options listed below. The Participant is
permitted to select the investment option used to determine the earnings factor
and may change the selection at any time. The Participant may choose more than
one investment option in increments of at least one (1) percent. The Company
reserves the right to change or amend any of the investment options at any time.
The investment options used to determine the earnings factor are:
(a) The prime rate of interest as reported by The Chase Manhattan
Bank at the first day of each calendar month.
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(b) Pactiv stock index account -- amount of deferral will be
invested in Pactiv stock equivalent unit account. Any
investment in this account will be measured solely by the
performance of the Company's common stock (including dividends
that will be reinvested).
(c) The return for selected Mutual Funds currently offered in the
Company's qualified thrift plan for salaried employees:
(1) Fidelity Growth Company Fund
(2) Barclays U.S. Debt Index Fund (Bond)
(3) Barclays Daily Equity Index Fund
The Company is under no obligation to acquire or provide any of the investments
designated by a Participant, and any investments actually made by the Company
will be made solely in its name and will remain its property.
The crediting of an earnings factor shall occur so long as there is a balance in
the Participant's Deferred Compensation Account regardless of whether the
Participant has terminated employment.
7. PAYMENT OF DEFERRED AMOUNTS
(a) Except as otherwise provided in subsection (b) or (c) below, a
Participant's Deferred Amount shall be paid, or commence to be
paid, to the Participant, or the Participant's beneficiary, as
soon as practicable after:
(i) the Participant's death,
(ii) the termination of the Participant's employment or
service as a director, or
(iii) the date specified in the applicable Deferral
Election made by the Participant.
In the event of the Participant's death, payment of the
balance in the Participant's Deferred Compensation Account
shall be made, either (i) in a lump sum or (ii) in a number of
annual installments, not to exceed five, as soon as
administratively feasible to the Participant's designated
beneficiary, or if none, to the Participant's estate.
(b) Prior to his separation from service, the Participant may
elect to receive payment of the balance of his or her Deferred
Compensation Account either (i) in a lump sum upon termination
or (ii) in a single payment at a specified date prior to
termination or (iii) in a number of post termination annual
installments, not to exceed five, as the Participant shall
elect. If no election is made, a lump sum payment will be made
upon the Participant's termination.
(c) Anything contained in this Section 7 to the contrary
notwithstanding, in the event a Participant incurs a severe
financial hardship, the Committee, in its sole discretion
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and upon written application of such Participant, may direct
immediate payment of all or a portion of the then current
value of such Participant's Deferred Compensation Account;
provided that such payment shall in no event exceed the amount
necessary to alleviate such financial hardship; and provided
further that in the case of such payment, the Participant's
Deferred Compensation Account shall be reduced by 110% of the
amount of such payment.
8. PARTICIPANT REPORTS
The Committee shall provide a statement to the Participant quarterly concerning
the status of his or her Deferred Compensation Account.
9. TRANSFERABILITY OF INTERESTS
During the period of deferral, all Deferred Amounts shall be considered as
general assets of the Company for use as it deems necessary and shall be subject
to the claims of its creditors.
The rights and interests of a Participant during the period of deferral shall be
those of a general unsecured creditor except that such Participant's rights and
interests may not be reached by the creditors of the Participant or the
Participant's beneficiary, or anticipated, assigned, pledged, transferred or
otherwise encumbered except in the event of the death of the Participant, and
then only by will or the laws of descent and distribution.
10. AMENDMENT, SUSPENSION AND TERMINATION
The Company at any time may amend, suspend or terminate the Plan or any portion
thereof in such manner and to such extent as it may deem advisable and in its
best interests. No amendment, suspension and termination shall reduce the amount
then credited to a Participant's Deferred Compensation Account.
11. UNFUNDED OBLIGATION
The Plan shall not be funded; no trust, escrow or other provisions shall be
established to secure payments due under the Plan; and the Plan shall be
regarded as unfunded for purposes of the Employee Retirement Income Security Act
of 1974, as amended, and the Internal Revenue Code. A Participant shall be
treated as a general, unsecured creditor at all times under the Plan, and shall
have no rights to any specific assets of the Company. All amounts credited to
the memorandum accounts of the Participants will remain general assets of the
Company and shall be payable solely from the general assets of the Company.
12. NO RIGHT TO EMPLOYMENT OR OTHER BENEFITS
Nothing contained herein shall be construed as conferring upon any Participant
the right to continue in the employ of the Company. Any compensation deferred
and any payments made under this Plan
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shall not be included in creditable compensation in computing benefits under any
employee benefit plan of the Company except to the extent expressly provided
therein.
13. DISPUTE RESOLUTION
By participating in the Plan, the Participant agrees that any dispute arising
under the Plan shall be resolved by binding arbitration in Lake Forest, Illinois
under the rules of the American Arbitration Association and that there will be
no remedy besides the disputed deferred compensation amount in issue.
14. EFFECTIVE DATE
The effective date of this Plan is the date on which the stock of the Company is
distributed to the shareholders of Tenneco Inc.
IN WITNESS WHEREOF, the Company has caused the Plan to be
executed on its behalf by its respective officers thereunder duly authorized, on
the day and year set forth below.
PACTIV CORPORATION
Date: November 1, 1999 By: /S/ John Potempa
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Its: Vice President Employee
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Relations and Administration
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