Exhibit (10)(l)
THE LUBRIZOL CORPORATION
EXECUTIVE COUNCIL
DEFERRED COMPENSATION PLAN
As Amended
1. Purpose. The purpose of this Executive Council Deferred Compensation Plan
(the "Plan") is to permit a member of the Executive Council (sometimes
hereinafter referred to as the "Member" or as the "Participant") who is employed
by The Lubrizol Corporation (the "Company"), to defer a portion of such Member's
compensation as provided in this Plan.
2. Administration. The Plan shall be administered by the Organization and
Compensation Committee of the Board of Directors of the Company (the
"Committee"). The Committee's interpretation and construction of all provisions
of the Plan shall be binding and conclusive upon all Participants and their
heirs and/or successors.
3. Right to Defer Compensation.
(a) A Member may, at any time prior to January 1 of a given calendar
year, elect, for one or more future successive calendar years commencing with
the calendar year immediately following the election (each a "Participation
Year"), to defer under the Plan a pre-selected fixed dollar amount or percentage
of such Member's variable compensation, if any (the "deferred compensation"),
under The Lubrizol Corporation Performance Pay Plan ("Performance Pay Plan"),
which such Participant may thereafter be entitled to receive for services
performed during each elected Participation Year; provided, however that the
actual amount deferred will be the elected amount less any applicable
withholding taxes.
(b) The election under this Section 3 shall take effect on the first day
of the first elected Participation Year and such election shall be irrevocable
for any elected Participation Year once such Participation Year shall have
commenced.
(c) Notwithstanding paragraphs (a) and (b), when an individual Member
first becomes eligible to participate in the Plan, the newly eligible Member may
make the election under this Section 3 to defer the specified compensation for
services to be performed subsequent to the date specified in the election and
for the remainder of the calendar year in which the election under this Section
3 is made, provided that such election is made within 30 days after the date
that the Member is notified of the Member's eligibility.
(d) All elections under this Plan shall be made by written notice (on a
form provided by the Company) specifying (i) the number of calendar years, one
or more, during which the election shall apply, and (ii) the deferred
compensation, if any, determined under paragraph (a).
(e) A Participant may designate that the election under this Section 3
shall remain in effect until the Participant, on a prospective basis, withdraws
the election or changes the amount to be deferred. Any notice of the withdrawal
or change in the amount of the election shall be effective on the first day of
the calendar year next following the year on which such notice is given;
provided that, such notice shall not change, alter or terminate the deferral of
the Member's participation in the Performance Pay Plan for the year in which
such notice of withdrawal or change is given which,
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except for the deferral, would be payable in the calendar year next following
the year in which such notice of withdrawal or change is given. Notwithstanding
paragraph (b) and the first sentence of this paragraph (e), any variable
compensation earned after the end of the first month in which a Participant
under this Plan ceases to be a Member, as defined in Section 1, but continues to
be employed by the Company, shall not be deferred, provided however, the balance
in the Participant's Stock Deferral Accounts shall continue to be held and
administered pursuant to the Plan.
(f) All notices by a Participant under the Plan shall be in writing and
shall be given to the Company's Vice President, Human Resources.
4. Stock Deferral Accounts and Stock Matching Accounts.
(a) At the close of business of the day on which the Performance Pay
Plan deferred compensation would have been payable to the Participant in the
absence of the election under the Plan to defer payment thereof, there shall be
credited to a separate Stock Deferral Account and Stock Matching Account for
each Participant full and fractional stock equivalent units ("Units") which
shall be established as hereinafter provided and shall be maintained for each
Participant on the Company's records.
(b) The number of full and fractional Units that shall be credited to a
separate Stock Deferral Account for a Participant shall be equal to an amount
determined by dividing the Participant's deferred compensation for the
applicable Participation Year by the average of the closing price for Lubrizol
Common Shares ("Shares") on the New York Stock Exchange ("NYSE") composite
transactions reporting system ("composite tape") for each of the ten (10)
consecutive trading days commencing on the fourth business day following the
release of earnings for such Participation Year.
(c) The number of full and fractional Units that shall be credited to a
separate Stock Matching Account for a Participant shall be equal to an amount
determined by multiplying the number of Units determined in paragraph (b) by
..25.
(d) To the extent that, at the time Units are credited to a Stock
Deferral Account Stock Matching Account of a Participant, any federal, state or
local payroll withholding tax applies (e.g., Medicare withholding tax), the
Participant shall be responsible for the payment of such amount to the Company
and the Company shall promptly remit such amount to the proper taxing authority.
(e) The amount of deferred compensation used in the formulae set forth
in paragraphs (b) and (c) shall not constitute sums due and owing to
Participant. Such amounts shall be used solely as part of the formulae to
determine the number of full and fractional Units.
(f) As of each dividend payment date established by the Company for the
payment of cash dividends with respect to its Shares, the Company shall credit
each separate Stock Deferral Account and Stock Matching Account of a Participant
with an additional number of whole and/or fractional Units equal to:
(i) the product of (x) the dividend per Share which is payable
with respect to such dividend payment date, multiplied by (y)
the number of whole and fractional Units credited to the
separate
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Stock Deferral Account and Stock Matching Account,
respectively, of the Participant as of such payment date;
divided by
(ii) the closing price of a Share on the dividend payment date (or
if Shares were not traded on that date, on the next preceding
day on which Shares were so traded), as reported on the NYSE-
composite tape.
(g) At no time prior to actual delivery of Shares pursuant to the Plan
shall the Company be obligated to purchase or reserve Shares for delivery to any
Participant and a Participant shall not be a shareholder or have any of the
rights of a shareholder with respect to the Units credited to each separate
Stock Deferral Account Stock Matching Account of a Participant.
5. Payment of Deferred Compensation.
(a) All Units credited to a separate Stock Deferral Account and Stock
Matching Account of Participant, including dividend equivalents thereon, shall
be payable to the Participant at the end of three years from the first date
Units were credited to such separate Stock Deferral Account and Stock Matching
Account of the Participant under Section 4(a); provided, however, that a
Participant may elect once for any calendar year of deferral, to change the date
of distribution to another in-service year or upon retirement; provided further,
that any such modification must be made in writing at least twelve (12) months
prior to the original date of distribution; provided further, that if a
Participant's employment is terminated for any reason other than retirement or
death, the Units credited to each separate Stock Deferral Account and Stock
Matching Account of a Participant as of the Participant's termination of
employment date, including all dividend equivalents thereon, shall be payable to
the Participant within 30 days of such termination of employment.
(b) All distributions or payments of Units to a Participant in the
Participant's Stock Deferral Account shall be made in Shares equal to the number
of whole Units credited to the separate Stock Deferral Account(s) of the
Participant which become payable in accordance with Section 5(a). Any fractional
number of Units shall be paid in cash in lieu of Shares.
(c) All distributions or payments of Units to a Participant in the
Participant's Stock Matching Account shall be made in cash equal to the number
of whole Units credited to the separate Stock Matching Account(s) of the
Participant, which become payable in accordance with Section 5(a) multiplied by
the closing price for Share on the NYSE composite tape on the date the Stock
Matching Account(s) become payable.
(d) To the extent that, at the time Shares are distributed to a
Participant, any federal, state or local payroll withholding tax applies, the
Participant shall be responsible for the payment of such amount to the Company
and the Company shall promptly remit such amount to the proper taxing authority.
Such payment may be made in cash, in Shares, or in any combination of cash and
Shares, at the election of the Participant. All elections must be made in
writing and be submitted to the Vice President - Human Resources. If the
Participant elects to satisfy tax withholding with Shares, then such withholding
shall be from those Shares otherwise issuable pursuant to paragraph (b) above,
and shall be such number of Shares that will provide for the federal, state
and/or
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local income tax at the rates then applicable for supplemental wages, unless
otherwise requested by the Participant, but in no event less than the statutory
minimums for tax withholding. If no election is made prior to the first
distribution of Shares, the Company shall withhold a sufficient number of Shares
to pay the withholding taxes at the highest marginal tax rate in effect for such
Participant. In no event shall the withholding be less than the statutory
minimum for tax withholding.
(e) In the event a Participant dies prior to receiving payment of the
entire amount in each separate Stock Deferral Account and Stock Matching Account
of the Participant, the unpaid balance shall be paid to such beneficiary as the
Participant may have designated in writing to the Vice President, Human
Resources, of the Company as the beneficiary to receive any such post-death
distribution under the Plan or, in the absence of such written designation, to
the Participant's legal representative or to the beneficiary designated in the
Participant's last will as the one to receive such distributions. Distributions
subsequent to the death of a Participant may be made either in accordance with
Section 5(a) or earlier, as determined by the Committee.
(f) To the extent the Committee deems necessary, the Shares distributed
to a Participant pursuant to Section 5(a) or 6(a) or to a successor pursuant to
Section 5(e) may contain such restrictions on the right of immediate transfer as
the Committee may reasonably determine.
6. Acceleration of Payments.
(a) The Committee may accelerate the distribution of part or all of one
or more of a Participant's separate Stock Deferral Accounts and Stock Matching
Accounts for reasons of severe financial hardship. For purposes of the Plan,
severe financial hardship shall be deemed to exist in the event the Committee
determines that a Participant needs a distribution to meet immediate and heavy
financial needs resulting from a sudden or unexpected illness or accident of the
Participant or a member of the Participant's family, loss of the Participant's
property due to casualty, or other similar extraordinary and unforeseeable
circumstance arising as a result of events beyond the control of the
Participant. A distribution based on financial hardship shall not exceed the
amount required to meet the immediate financial need created by the hardship.
7. Non-assignability. None of the rights or interests in any of the
Participant's separate Stock Deferral Accounts and Stock Matching Accounts
shall, at any time prior to actual payment or distribution pursuant to the Plan,
be assignable or transferable in whole or in part, either voluntarily or by
operation of law or otherwise, and such rights and interest shall not be subject
to payment of debts by execution, levy, garnishment, attachment, pledge,
bankruptcy or in any other manner; provided that, upon the occurrence of any
such assignment or transfer or the attempted assignment or transfer, all
payments under Section 5 shall be payable in the sole and unrestricted judgment
and discretion of the Committee, as to time and amount, and shall be
distributable to the person who would have received the payment but for this
Section 7 only at such time or times and in such amounts as the Committee, from
time to time, and in its sole and unrestricted judgment and discretion, shall
determine. Should an event covered by this Section 7 occur prior to the death of
a Participant, the balance, if any, in each of the Participant's Stock Deferral
Accounts and Stock Matching Accounts shall, after such death, be thereafter
distributed as provided in Section 5(e) subject to the provisions of this
Section 7.
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8. Interest of Participant. The Company shall be under no obligation to
segregate or reserve any funds or other assets for purposes relating to the Plan
and, except as set forth in this Plan, no Participant shall have any rights
whatsoever in or with respect to any funds or other assets held by the Company
for purposes of the Plan or otherwise. Each Participant's separate Stock
Deferral Accounts and Stock Matching Accounts maintained for purposes of the
Plan merely constitutes a bookkeeping entry on records of the Company,
constitutes the unsecured promise and obligation of the Company to make payments
as provided herein, and shall not constitute any allocation whatsoever of any
cash or other assets of the Company or be deemed to create any trust or special
deposit with respect to any of the Company's assets. Notwithstanding the
foregoing provisions, nothing in this Plan shall preclude the Company from
setting aside Shares or funds in trust pursuant to one or more trust agreements
between a trustee and the Company. However, no Participant shall have any
secured interest or claim in any assets or property of the Company or any such
trust and all Shares or funds contained in such trust shall remain subject to
the claims of the Company's general creditors.
9. Miscellaneous. In the event of any change in the number of outstanding Shares
by reason of any stock dividend, stock split up, recapitalization, merger,
consolidation, exchange of shares or other similar corporate change, the number
of Units credited to each separate Stock Deferral Account and Stock Matching
Account of a Participant shall be appropriately adjusted to take into account
any such event.
10. Amendment. The Board of Directors of the Company, or the Organization and
Compensation Committee, may, from time to time, amend or terminate the Plan,
provided that no such amendment or termination of the Plan shall adversely
affect any Stock Deferral Account or Stock Matching Account of a Participant as
it existed immediately before such amendment or termination or the manner of
distribution thereof, unless such Participant shall have consented thereto in
writing. Notice of any amendment or termination of the Plan shall be given
promptly to all Participants.
11. Plan Implementation. This Plan is adopted and effective as of the 1st day of
January, 1997, amended effective November 23, 1998, amended effective September
27, 1999, amended effective February 29, 2000, amended effective March 11, 2000,
amended effective February 26, 2001 and amended effective January 1, 2004.
12. Plan Termination. This Plan is terminated with respect to deferrals of
variable compensation earned in Participation Years that begin after December
31, 2004. Amounts deferred for variable compensation earned in Participation
Years prior to January 1, 2005 shall continue to be administered in accordance
with the terms of this Plan.
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