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Exhibit 10(m)
DEFERRED COMPENSATION PLAN
FOR NON-EMPLOYEE DIRECTORS OF TRW INC.
July 1, 1997
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DEFERRED COMPENSATION PLAN
FOR NON-EMPLOYEE DIRECTORS OF TRW INC.
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TABLE OF CONTENTS
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Section 1. Effective Date................................. 1
Section 2. Purpose........................................ 1
Section 3. Eligibility.................................... 1
Section 4. Administration................................. 1
Section 5. Deferral of Compensation....................... 2
Section 6. Deferred Compensation Account.................. 3
Section 7. Hypothetical Investments....................... 3
Section 8. Value of Deferred Compensation Accounts........ 4
Section 9. Effect of Deferral Elections................... 5
Section 10. Distribution of Account Funds.................. 5
Section 11. Acceleration of Account Distribution
Due to Unforeseeable Emergency................. 6
Section 12. Death of Eligible Director;
Distribution of Account Balance................ 7
Section 13. Eligible Directors' Rights Unsecured........... 7
Section 14. Assignability.................................. 7
Section 15. Amendment...................................... 8
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Section 1. Effective Date.
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The effective date of the Deferred Compensation Plan for Non-Employee
Directors of TRW Inc. (the "Plan") is July 1, 1997 (the "Effective Date").
Section 2. Purpose.
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The purposes of the Plan are to align a significant portion of Director
compensation with creating and sustaining shareholder value and to attract and
retain a diverse and truly superior Board of Directors. The Plan is intended to
serve as the mechanism that will allow each eligible Director to defer all or a
portion of the compensation otherwise payable to him or her for his or her
services to TRW Inc. (the "Company").
Section 3. Eligibility.
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Each Director of the Company who is not an employee of the Company or
of one of its subsidiaries shall be eligible to, and shall participate in, the
Plan (the "Eligible Director"). Following the Effective Date of the Plan, (i) a
non-employee Director will be deemed an Eligible Director as of the effective
date of his or her election as a Director of the Company, and (ii) an employee
Director will be deemed an Eligible Director as of the date he or she ceases to
be an employee of the Company or of one of its subsidiaries but continues to be
a Director, in accordance with the provisions of the Directors' retirement
policy as amended from time to time. Eligibility to receive and defer
compensation pursuant to this Plan will cease upon the earlier of the Eligible
Director's termination of service as a Director of the Company or of his or her
death.
Section 4. Administration.
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The Plan shall be administered by a committee (the "Committee")
consisting of the following three officers of the Company: the Executive Vice
President and Chief Financial Officer, the Executive Vice President and General
Counsel, and the Executive Vice President of Human Resources. The Committee
shall have the power
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to (i) determine all questions of fact or interpretation regarding Plan
provisions; (ii) adopt rules, regulations and procedures deemed necessary
and appropriate to carry out the Plan's operation; and (iii) maintain or cause
to be maintained necessary and appropriate records. The Committee's
determinations on questions of fact or interpretation of Plan provisions will be
binding on all parties.
The Committee may delegate its authority to carry out specific
responsibilities given to it under the Plan.
Section 5. Deferral of Compensation.
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(a) Automatic Deferral. One-half (50 percent) of the annual retainer,
exclusive of any retainer paid for chairing a Committee of the Directors, (the
"Base Annual Retainer") otherwise payable by the Company to an Eligible Director
for his or her services to the Company on or after the Effective Date, will be
automatically deferred (the "Automatic Deferral") under the Plan.
(b) Elective Deferral. In addition to the Automatic Deferral described
above, an Eligible Director may elect to defer (the "Elective Deferral") all or
a portion of the remaining 50 percent of his or her Base Annual Retainer,
expressed either as a dollar amount or as a percentage, and any retainer that he
or she may receive for chairing one of the Commitees of the Directors of the
Company (together, the "Available Retainer").
For 1997, an Eligible Director may elect to defer all or any portion of
the Available Retainer for services to be performed on or after the Effective
Date, by completing a deferral election form prescribed by the Secretary of the
Company (the "Secretary") and returning it to the Secretary by June 30, 1997. An
Eligible Director who (i) is elected a Director of the Company following the
Effective Date of the Plan or (ii) ceases to be an employee of the Company or
one of its subsidiaries but continues to be a Director may choose to defer all
or any portion of the Available Retainer for his or her subsequent services to
the Company, provided that the prescribed deferral election form is delivered to
the Secretary within 30 days after the
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effective date of the Eligible Director's (i) election as a Director of the
Company or (ii) change in employment status.
For years subsequent to 1997, an Eligible Director who elects to defer
all or a portion of the Available Retainer must execute the prescribed election
form and deliver it to the Secretary prior to the first day of the calendar year
for which the election is to be effective.
Section 6. Deferred Compensation Account.
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The Company shall establish a deferred compensation account (the
"Account") for each Eligible Director that will set forth both the value of the
Automatic Deferral and the Elective Deferral, if any. As of the date
compensation would have been paid to the Eligible Director if it had not been
either automatically or electively deferred, the Company shall credit his or her
Account with the dollar amount of the deferred compensation.
Section 7. Hypothetical Investments.
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The Automatic Deferral portion of the Eligible Director's Account will
be credited with the amount that portion of the Account would have earned based
on the performance of the TRW Stock Fund of The TRW Employee Stock Ownership and
Stock Savings Plan (the "Stock Savings Plan"), had that portion of the Account
actually been invested in the TRW Stock Fund.
The Elective Deferral portion of the Eligible Director's Account will
be credited with the amount that portion of the Account would have earned based
on the Eligible Director's election to allocate his or her Elective Deferral
portion to one or more of the following funds established under the Stock
Savings Plan:
(a) Bond Index Fund;
(b) Equity Fund;
(c) Insured Return Fund;
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(d) Small Company Equity Fund; or
(e) TRW Stock Fund.
Allocation of the Elective Deferral portion of the Eligible Director's Account
to any of the investment funds set forth above must be made in increments of 25
percent. The Eligible Director's allocation choices shall be implemented as soon
as administratively feasible, in the sole discretion of the Committee.
Subject to any restrictions imposed by Section 16(b) of the Securities
Exchange Act of 1934, the Eligible Director may, at any time, (i) change his or
her allocation choices with respect to future Elective Deferrals or (ii)
reallocate the hypothetical investment earnings in the existing Elective
Deferral portion of his or her Account. Changes or reallocations so made must
also be in increments of 25 percent.
Notwithstanding the foregoing provisions of this Section, the Committee
shall have the right to substitute from time to time, without adversely
affecting existing accruals in the Eligible Directors' Accounts, other fund
choices for the Elective Deferral portion of the Accounts.
Hypothetical investment earnings shall continue to accrue until the
Eligible Director's Account is fully distributed.
Section 8. Value of Deferred Compensation Accounts.
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The value of each Eligible Director's Account shall reflect all amounts
deferred, including gains and losses from the hypothetical investments, and
shall be determined on the last day of each month (the "Valuation Date"). The
value of hypothetical investments in the Stock Savings Plan shall be based upon
the valuation date under the Stock Savings Plan coincident with or immediately
preceding such Valuation Dates.
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The amount in an Eligible Director's Account as of each Valuation Date
that has not been previously deemed invested shall be deemed invested in a
hypothetical investment on such date, based on the value of the hypothetical
investment on such date.
Section 9. Effect of Deferral Elections.
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Deferral elections, expressed either as a dollar amount or as a
percentage, made under this Plan with respect to any calendar year may not be
amended or revoked after the beginning of the calendar year with respect to
compensation to be received for services performed during that calendar year.
Section 10. Distribution of Account Funds.
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No distributions may be made from an Eligible Director's Account,
except as provided in this Section and Sections 11 and 12.
(a) Automatic Deferral Portion. Automatic Deferral amounts and the
relevant hypothetical investment earnings credited to an Account shall be
distributed, beginning as soon as practicable, after the Eligible Director
ceases to hold office as a Director of the Company. The distribution shall be
made in shares of TRW Common Stock, valued at the fair market value of a share
of TRW Common Stock on the date of distribution. The Eligible Director may
choose to take distribution of this portion of his or her Account as follows:
(1) as a single payment, with any fractional shares being paid in
cash; or
(2) in regular installments (monthly, quarterly or annually)
payable over a period not to exceed 10 years, with fractional
shares paid in cash at the time of the final installment
payment.
(b) Elective Deferral Portion. Elective Deferral amounts and the
relevant hypothetical investment earnings credited to an Account shall be
distributed in accordance with the instructions given to the Secretary by the
Eligible Director at
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the time of his or her election to defer all or a portion of the Available
Retainer and may begin as of:
(1) the date the Eligible Director ceases to hold office as a
Director of the Company;
(2) the date the Eligible Director reaches an age at which he or
she may earn unlimited amounts without penalty under the
Social Security Act and the regulations promulgated
thereunder; or
(3) such other date specified by the Eligible Director on the
election form (at least two years from the date deferral of
compensation begins).
Distribution of Account funds may be made as a single payment or in regular
installments (monthly, quarterly or annually) over a period of not more than 10
years. The Eligible Director may change his or her Elective Deferral
distribution instructions by subsequent written notice to the Secretary.
Distribution of amounts allocated to the TRW Stock Fund will be paid in whole
shares of TRW Common Stock, valued at the fair market value of a share of TRW
Common Stock on the date of distribution. Fractional shares, also valued on
the date of distribution, will be paid in cash.
If an Eligible Director should fail to give the Secretary instructions
as to the type of distribution preferred, his or her Account funds will be
distributed as a single payment as soon as practicable following the date on
which he or she ceases to hold office as a Director of the Company.
Section 11. Acceleration of Account Distribution Due to Unforeseeable
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Emergency.
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An Eligible Director will be permitted to receive distribution of all
or a portion of his or her Account funds if the Committee determines that an
unforeseeable emergency has occurred. An unforeseeable emergency is one that is
caused by an event beyond the Eligible Director's control and that would cause
severe financial hardship to him or her if the distribution of all or a portion
of his or her
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Account funds were not approved. Any distribution approved under this
provision shall be limited to the amount deemed necessary to meet the emergency.
Section 12. Death of Eligible Director; Distribution of Account Balance.
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In the event of the death of an Eligible Director before he or she has
received full distribution of his or her Account, the value of the Account
balance remaining to be distributed shall be determined as of the Valuation Date
coincident with or immediately following the Eligible Director's death. The
Account balance shall, as soon as practicable, be distributed in a single
payment to the beneficiary or beneficiaries designated by the Eligible Director.
In the event that an Eligible Director has failed to name a beneficiary, his or
her Account balance shall be distributed to his or her estate.
Section 13. Eligible Directors' Rights Unsecured.
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This Plan is deemed unfunded for tax purposes and is not governed by
the Employee Retirement Income Security Act of 1974. Consequently, for purposes
of this Plan, no assets shall be segregated and placed beyond the reach of the
Company's general creditors. The right of an Eligible Director to receive future
installments under the provisions of this Plan shall be an unsecured claim
against the general assets of the Company. Accordingly, the Eligible Directors
will have the status of general unsecured creditors of the Company, and the Plan
constitutes a mere promise by the Company to make Account distributions in the
future.
Section 14. Assignability.
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The right of the Eligible Director, or of his or her beneficiary, to
receive distribution of Account funds pursuant to the provisions of this Plan
are not subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, attachment or garnishment by creditors of the
Eligible Director, or of his or her beneficiary, except by will or by the laws
of descent and distribution.
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Section 15. Amendment.
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This Plan may at any time or from time to time be amended, modified or
terminated by the Directors or the Executive Committee of the Directors of the
Company. No amendment, modification or termination shall adversely affect
existing accruals in an Eligible Director's Account, without his or her consent.
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