Exhibit 10.8
THE LUBRIZOL CORPORATION
Senior Management Deferred Compensation Plan
(fna 2005 Deferred Compensation Plan For Officers)
(As Amended)
1. Purpose. The purpose of this 2005 Senior Management Deferred Compensation
Plan (the "Plan") is to permit an a person who is an officer (as identified by
the Company for Section 16 purposes under the Securities Exchange Act of 1934)
of The Lubrizol Corporation (the "Company") or, for amounts earned in 2005, who
was an officer of the Company during 2004, or effective January 1, 2006, who is
selected to participate in the Plan by the Organization and Compensation
Committee of the Board of Directors of the Company ("Committee"), (hereinafter
referred to as the "Participant"), who wishes, to defer a portion of such
Participant's compensation earned in calendar years beginning on or after
January 1, 2005, as provided in the Plan. Notwithstanding any provision to the
contrary, prior to January 1, 2006, for purposes of this Plan, an "officer" or
"Participant" does not include any employee of Noveon, Inc. or its affiliates.
2. Administration. The Plan shall be administered by 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 Participant of the Company may, at any time prior to January 1 of a
given calendar year, or at such other time as allowed under Section 409A of the
Internal Revenue Code and by the Committee, elect, for the calendar year, to
defer under the Plan a pre-selected amount of such Participant's compensation
specified in paragraph (c) below, which such Participant may thereafter be
entitled to receive for services performed during such elected calendar year.
Notwithstanding the foregoing, if allowed by the Company, at any time up to six
months prior to the payment of performance-based long-term incentive
compensation, a Participant may elect to defer under the Plan a pre-selected
amount of such compensation specified in (c)(iii) below, provided however, that
any such election shall only be made in accordance with Section 409A of the
Internal Revenue Code of 1986, as amended and the regulations thereunder.
(b) The election under this Section 3 shall take effect on the first day of
the calendar year following the date on which the election is made and such
election shall be irrevocable for any elected calendar year after such elected
calendar year shall have commenced.
(c) A Participant may elect to defer up to 90 percent of one or more of the
following:
(i) Base salary;
(ii) Annual incentive pay, if any.
(iii) Stock compensation from the long term incentive plan, if any.
(iv) Stock compensation pursuant to an employment agreement dated as
of January 1, 2003
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provided, however, that the actual amount deferred will be the elected amount
less any applicable withholding taxes.
(d) Notwithstanding paragraphs (a), (b) and (c), where a Participant first
becomes eligible to participate in the Plan, the newly eligible officer 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 Participant first becomes
eligible, if otherwise allowed under Section 409A of the Internal Revenue Code
of 1986, as amended, and the regulations thereunder.
(e) Within such periods of time as the Committee shall designate, and in
addition to the provisions of paragraphs (a) through (d), a Participant may
elect to defer that portion or all of the Participant's cash and/or stock
compensation (i) described in paragraph (c) and/or (ii) any other plan or
program that provides for cash or stock compensation, to the extent that such
amounts would otherwise be nondeductible by the Company pursuant to Section
162(m) of the Internal Revenue Code of 1986, as amended. For purposes of the
preceding sentence, the amount to be deferred with respect to any compensation
plans payable in Company shares shall be determined by taking into consideration
any fixed cash compensation to be received subsequent to the date on which
shares are distributable under such program. Notwithstanding any other provision
of this Plan, deferrals under this paragraph (e) shall be distributable only six
(6) months after the Participant separates from service in accordance with
Section 6.
(f) All elections under this Plan shall be made by written notice delivered
to the Vice President, Human Resources, of the Company specifying (i) the
portion, if any, determined under paragraph (c), of each category of the
Participant's compensation to be deferred for a year, as described above, (ii),
if applicable, the time of distribution, and (iii) the payment option as
provided in Section 6 for distributions.
(g) Notwithstanding paragraph (f), any compensation earned after the end of
the first month in which a Participant under this Plan no longer is a
Participant, 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 Deferral Accounts shall continue to be held and administered
pursuant to the Plan; provided further that the provisions of this paragraph (g)
shall not apply for amounts earned in 2005.
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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. To the extent that, at the time amounts are credited to a
Participant's Deferral Accounts, 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.
(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.
(e) Notwithstanding the foregoing, a Participant may elect to have any
portion or all of the Participant's cash deferrals credited to any of the
Deferral Accounts listed in paragraph (a) and may transfer balances in
accordance with paragraph (d) provided that the Participant is considered, in
the judgment of the Chief Executive Officer of the Company, to be on plan to
meet the Participant's Company Share ownership guideline. Otherwise, a
Participant must elect that at least 50% of any cash deferral hereunder be
credited to a Stock Deferral Account and may not transfer any portion of the
balance of the Stock Deferral Account to another 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(c) or (e), 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
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deferrals under Section 3(c)(iii) or (iv) 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
(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) To the extent that, at the time Units are credited to a Stock Deferral
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) 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 scheduled 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 the Participant to be paid upon a
separation from service, shall be paid 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(f). 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(f); provided, however, that if Participant has not
selected a payment option
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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(f).
(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 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(f) 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(f).
(e) In the event a Participant becomes disabled in accordance with Section
409A of the Internal Revenue Code of 1986, as amended, and the regulations
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thereunder, prior to receiving payment of the entire amount of the Participant's
Deferral Accounts, the unpaid balance shall be paid to the Participant in: (i) a
single lump; (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(f) 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
disability, such amounts shall be paid to Participant in a single lump sum upon
Participant's disability. Notwithstanding the foregoing, a Participant may elect
not less than twelve (12) months prior to the Participant's disability, 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(f).
(f) Tax withholding for distributions under Sections 6 and 7 of
Participant's Stock Deferral Accounts shall be made from those Shares otherwise
issuable and shall be such number of Shares that will provide for the federal,
state and/or 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.
(g) For purposes under paragraph (f) of determining the number of Shares
that are to be withheld to provide for the tax withholding, Shares shall be
valued at the closing price on the New York Stock Exchange of a Share on the
date the Shares are distributable (or if the Shares were not traded on that
date, on the next preceding day on which the Shares were so traded). If the
determination of the tax withholding would require the withholding of a
fractional Share, the Company shall withhold the nearest whole number of Shares
needed to pay the tax withholding, rounded up, and remit to the Participant in
cash the amount of the excess after the withholding taxes have been satisfied.
(h) 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 and other than for
deferrals pursuant to Sections 3(c)(iv) and 3(e), 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 long term incentive compensation deferral election
pursuant to Section 3(c)(iii), each of which shall commence as elected by the
Participant pursuant to Section 3(f) 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(f).
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8. Unforeseeable 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 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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