Exhibit 10.9
THE LUBRIZOL CORPORATION
2005 Deferred Compensation Plan For Directors
(As Amended)
1. Purpose. The purpose of this 2005 Deferred Compensation Plan For Directors
(the "Plan") is to continue to permit any member of the Board of Directors (the
"Participant") of The Lubrizol Corporation (the "Company"), to defer all or a
portion of the compensation earned as a director in calendar years beginning on
or after January 1, 2005, until after the Participant separates from service as
a director, all as provided in the 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 this Plan shall be binding and conclusive. In the event that a Participant is
a member of the Committee, such Participant shall not participate in any
decision of the Committee relating to that Participant's participation in this
Plan.
3. Right to Defer Compensation.
(a) Any director of the Company may, at any time prior to January 1 of a
given calendar year, elect to defer under this Plan all, or such portion as the
director may designate, of (i) that director's annual retainer fee, (ii) the
attendance fees for attending directors' meetings or committees thereof and/or
(iii) stock compensation under The Lubrizol Corporation 2005 Stock Incentive
Plan. All compensation deferred shall be deferred on the day that such
compensation would otherwise have been paid to the director.
(b) The election described in paragraph (a) shall be made by written notice
delivered to the Vice President, Human Resources, of the Company specifying (i)
the portion of designated compensation to be deferred for such year, (ii) time
of distribution, and (iii) if applicable, the payment option.
(c) The election under this Section 3 shall take effect on the first day of
the calendar year following the year in which the election is made. A new
election must be made for each calendar year.
(d) Notwithstanding paragraphs (a), (b) and (c), where a director first
becomes eligible to participate in the Plan, the newly eligible director may
make the election under this Section 3 to defer the specified compensation for
services to be performed subsequent to the election and for the remainder of the
calendar year in which the election under this Section 3 is made provided such
election is made within 30 days after the date the director first becomes
eligible.
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4. Deferral of Cash Compensation.
(a) On the date the cash compensation deferred under the Plan would have
become payable to the Participant in the absence of an election under the Plan
to defer payment thereof, the amount of such deferred compensation shall be
credited to a Stock Deferral Account and/or any of the Cash Deferral Account
investment portfolios designated as available by the Committee from time to
time. All Deferral Accounts shall be established and maintained for each
Participant in the Company's accounting books and records and the Company shall
be under no obligation to purchase any investments designated by the
Participant.
(b) Participant's Cash Deferral Accounts shall be credited with any gains
or losses equal to those generated as if the Participant's Cash Deferral Account
balances had been invested in the applicable investment portfolio(s) selected by
the Participant
(c) A Participant's deferred cash compensation credited to a Participant's
Stock Deferral Account shall be used to determine the number of full and
fractional units ("Units") representing Company Common Shares ("Shares") which
the deferred amount would purchase at the closing price for the Shares on the
New York Stock Exchange ("NYSE") composite transactions reporting system on the
date that the deferred amount is credited pursuant to paragraph (a) and if
Shares were not traded on that date on the NYSE, then such computation shall be
made as of the first preceding day on which Shares were so traded. The Company
shall credit the Participant's Stock Deferral Account with the number of full
and fractional Units so determined. A Participant's Stock Deferral Account shall
be administered in accordance with Section 5(b) through (e).
(d) A Participant may elect pursuant to rules established by the Committee
to transfer a portion or all of the balance of any Deferral Account established
under this Section 4 to any other such Deferral Account.
5. Deferral of Stock Compensation.
(a) At the time that Shares are distributable to a Participant, who has
elected to defer the receipt thereof under Section 3, in lieu of Shares being
issued, there shall be credited to a separate Stock Deferral Account for the
Participant, full stock equivalent units ("Units") which shall be established
and maintained on the Company's records. One Unit shall be allocated to the
Stock Deferral Account for each such Share. The balance of a Stock Deferral
Account established under this Section 5(a) pursuant to deferrals under Section
3 may not be transferred to any other Deferral Account.
(b) 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 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
Stock Deferral Account of a Participant as of such payment date;
divided by
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(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.
(c) 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 of a
Participant and the Participant shall not be a shareholder nor have any of the
rights of a shareholder with respect to the Units credited to the Participant's
Stock Deferral Accounts.
(d) 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 in each separate Stock Deferral Account of a Participant shall be
appropriately adjusted to take into account any such event.
6. Payment of Deferred Compensation.
(a) In the event a Participant separates from service prior to commencing
to receive schedule withdrawal payments of the Participant's Deferral Accounts,
such scheduled withdrawal payments, if any, that have not commenced pursuant to
Section 7, and the amount selected by Participant to be paid upon a separation
from service, shall be to the Participant in: (i) a single lump sum; (ii)
periodic installments over such period, not exceeding twenty (20) years; or
(iii) a lump sum followed by periodic installments over such period, not
exceeding twenty (20) years, as the Participant shall have selected pursuant to
Section 3(b). Such periodic payments shall begin or the lump sum payment shall
be made, as the case may be, from the Participant's Deferral Accounts, at such
time, not less than six (6) nor more than twelve (12) months after the
Participant's separation from service, as the Participant shall have selected
pursuant to Section 3(b); provided, however, that if Participant has not
selected a payment option with respect to payment upon a separation from
service, such amounts shall be paid in a lump sum six (6) months after
Participant's separation from service. Notwithstanding the foregoing, a
Participant may elect not less than twelve (12) months prior to the
Participant's separation from service, to change the time or form of
distribution of the Participant's Deferral Accounts upon a separation from
service; provided, however that any such change shall be invalid if the effect
of such change is to accelerate distribution; provided, further that upon any
such change, the distribution shall occur five (5) years after the date
originally selected pursuant to Section 3(b).
(b) The amount of each installment payable to a Participant from the
Participant's Cash Deferral Accounts shall be determined by dividing the
aggregate balance of such Participant's Cash Deferral Accounts by the number of
periodic installments (including the current installment) remaining to be paid.
Until a Participant's Cash Deferral Accounts has been completely distributed,
the balance thereof remaining, from time to time, shall be credited with gains
and losses on a monthly basis as provided in Section 4(b).
(c) The amount of any installment payable to a Participant from the
Participant's Stock Deferral Accounts shall be determined by dividing the
balance of the aggregate number of Units in the Participant's Stock Deferral
Accounts by the number of periodic installments (including the current
installment) remaining to be paid and the
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quotient shall be the number of Shares that are payable. If the determination of
the installment payable from the Participant's Stock Deferral Accounts results
in a fractional Share being payable, the installment payment shall exclude any
such fractional Share payment except that, in the final installment payment, any
such fractional Share shall be paid in cash in an amount as determined by the
Committee. Until the Participant's Stock Deferral Accounts have been completely
distributed, the balance in the Stock Deferral Accounts shall continue to be
credited with the dividend equivalents on such balances as provided in Section
5(b).
(d) In the event a Participant dies prior to receiving payment of the
entire amount of the Participant's Deferral Accounts, 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 in: (i) a single lump sum; (ii) periodic installments over such period, not
exceeding twenty (20) years; or (iii) a lump sum followed by periodic
installments over such period, not exceeding twenty (20) years as elected by the
Participant pursuant to Section 3(b) and the amount of each installment shall be
computed as provided in Section 6(b), and (d) as the case may be; provided,
however, that if Participant has not selected a payment option with respect to
payment upon death, such amounts shall be paid to Participant's beneficiary in a
lump sum upon the death of the Participant. Notwithstanding the foregoing, a
Participant may elect not less than twelve (12) months prior to the
Participant's death, to change the time or form of distribution of the
Participant's Deferral Accounts; provided, however that any such change shall be
invalid if the effect of such change is to accelerate distribution; provided,
further that upon any such change, the distribution shall occur five (5) years
after the date originally selected pursuant to Section 3(b).
(e) Payments from the Cash Deferral Accounts shall be made in cash and
payments from the Stock Deferral Accounts shall be made in Shares. The amount of
any distribution pursuant to Sections 6 through 8 shall reduce the balance held
in the Participant's corresponding Deferral Accounts as of the date of such
distribution. Installment payments shall be made pro-rata from a Participant's
Deferral Accounts.
7. Scheduled Withdrawal Accounts. Pursuant to Section 3, a Participant may elect
to receive part or all of the Participant's deferrals in accordance with
Participant's elections for up to three scheduled withdrawal accounts and with
respect to Participant's Stock Deferral Accounts pursuant to Section 3(a)(iii),
each of which shall commence as elected by the Participant pursuant to Section
3(b) in: (i) a single; (ii) periodic installments over such period, not
exceeding twenty (20) years; or (iii) a lump sum followed by periodic
installments over such period, not exceeding twenty (20) years and the amount of
each installment shall be computed as provided in Section 6(b), and (c) as the
case may be. Notwithstanding the foregoing, a Participant may elect not less
than twelve (12) months prior to the Participant's date of the scheduled
withdrawal, to change the time or form of distribution of the Participant's
Deferral Accounts, provided, however that any such change shall be invalid if
the effect of such change is to accelerate distribution; provided, further that
upon any such change, the distribution shall occur five (5) years after the date
originally selected pursuant to Section 3(b).
8. Unforeseen Emergency. The Committee may accelerate the distribution of part
or all of one or more of a Participant's Deferral Accounts for reasons of an
unforeseeable
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emergency that cannot be met using other resources. For purposes of the Plan, an
unforeseeable emergency shall be deemed to exist in the event the Committee
determines that a Participant needs a distribution to meet a severe hardship to
the Participant 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.
9. Non-assignability. None of the rights or interests in any of the
Participant's Deferral 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.
10. 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 accounts maintained
for purposes of the Plan merely constitute bookkeeping entries on records of the
Company, constitute the unsecured promise and obligation of the Company to make
payments as provided herein, and shall not constitute any allocation whatsoever
of any cash, shares 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.
11. 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 a Participant's accounts as they 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.
12. Plan Implementation. This Plan is adopted and effective for deferrals of
compensation earned for calendar years beginning on or after January 1, 2005.
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