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EXHIBIT 10.5
GRANT AGREEMENT
(As Amended December 3, 1996)
THE GOODYEAR TIRE & RUBBER COMPANY
PERFORMANCE EQUITY GRANT
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Reference is made to that certain Grant Agreement - Performance Equity
Grant dated January 9, 1996, whereunder you were granted Performance Equity
Grant Units (the "Units"). The Grant Agreement is hereby amended to provide as
follows:
The Directors of The Goodyear Tire & Rubber Company (the "Company") desire
to encourage and facilitate ownership of the Common Stock of the Company (the
"Common Stock") by key employees and to provide for additional compensation
based on the appreciation of the Common Stock, thereby providing incentive to
promote the continued growth and success of the Company's business. Accordingly,
the 1989 Goodyear Performance and Equity Incentive Plan was adopted effective
April 10, 1989 (the "Plan"). A copy of the Plan is attached.
At the January 9, 1996 meeting of the Compensation Committee of the Board
of Directors, you were awarded a Performance Equity Grant (each Unit equivalent
in value to one share of Common Stock) as follows:
Date of Grant 1-9-96
Number of Equity Units Granted
Performance Period 1-1-96 through 12-31-98
The number of Performance Equity Grant Units specified above (the "Units")
which you will earn at the end of the three-year Performance Period specified
above (the "Performance Period") will be determined by and contingent upon the
extent to which Performance Goals are achieved. The number of Units actually
earned may be adjusted between 0 and 150% of the number of Units stated above,
depending on the level of achievement of Performance Goals. In accordance with
actions taken by the Compensation Committee on November 5, 1996 and December 3,
1996, payment of the Units earned will be made as provided below. The
Performance Goals and earn out criteria for the Performance Period for your
Performance Equity Grant are described at Annex A.
The Performance Equity Grant for the number of Units specified above is
granted to you under, and governed by the terms and conditions of, the Plan and
this Grant Agreement. Your execution and return of the enclosed copy of this
Grant Agreement acknowledging receipt of the Units granted herewith constitutes
your agreement to, and acceptance of, all terms and conditions of the Plan and
this Grant Agreement. You also agree that you have read and understand the
provisions of the Plan, this Grant Agreement and Annex A.
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All rights conferred upon you under the provisions of this Grant Agreement
are personal to you and, except under the provisions of paragraph 14 of the
Plan, no assignee, transferee or other successor in interest shall acquire any
rights or interests whatsoever under this Grant Agreement, which is made
exclusively for the benefit of you and the Company.
As further consideration for the Units granted to you hereunder, you must
remain in the continuous employ of the Company or one or more of its
subsidiaries until December 31, 1998, the end of the Performance Period. Any
Units earned will be prorated in the event of your death, Retirement (as defined
in the Plan) or Disability (as defined in the Plan) or layoff prior to
completion of the Performance Period. Any proration is based on the last day you
worked. Nothing contained herein shall restrict the right of the Company or any
of its subsidiaries to terminate your employment at any time, with or without
cause.
You will forfeit the right to receive any distribution or payment under
this Grant if you enter into a relationship either as an employee, consultant,
agent or in any manner whatsoever with an entity that sells products in
competition with products sold by the Company and its subsidiaries within six
months after the earlier of (1) the date you receive your distribution of Units
earned or (2) the date you ceased to be an employee of the Company or one of its
subsidiaries.
The number of Units earned will be paid as follows:
(a) Each Unit earned will be valued at a dollar amount equal to the Fair
Market Value of the Common Stock (as defined below) on December 31, 1998,
(the "Unit Value").
(b) The Company will pay to you an amount equal to 50% of the Unit Value
multiplied by the total number of Units earned, less such withholding and
payroll taxes as the Company shall determine to be necessary or
appropriate, in cash in February of 1999; provided, however, that
notwithstanding the foregoing, you may elect, by delivering a written
notice of your election to the Company not later than December 31, 1997,
to defer receipt of all or a specified whole percentage of the aforesaid
50% of Units earned until the Optional Deferral Date (as defined below),
in which event the amount you elect to defer (which shall be equal to the
product of UE x .5UV x PDE, where UE equals the number of Units earned, UV
equals the Unit Value and PDE equals the percentage, expressed as a
decimal, of the Units earned you elect to defer) will be credited in
February of 1999 to an account maintained in the records of the Company
(the "Optional Deferred Amount") and will be converted into Deferral
Units. The number of Deferral Units will be determined by dividing the
Optional Deferred Amount by the Fair Market Value of the Common Stock (as
defined below) on December 31, 1998. The amount of such deferral will be
reduced, if necessary, to pay such tax, payroll and other withholding
obligations as the Company shall determine to be necessary or appropriate.
(c) The balance of the Unit Value of each Unit earned, which shall be
equal to 50% of the Unit Value, shall be multiplied by the total number
of Units earned (the "Mandatory Deferred Amount") and credited in
February of 1999 to an account maintained in the records of the Company.
The Mandatory Deferred Amount will be converted into Deferral Units (as
defined below). The number of Deferral Units will be determined by
dividing the Mandatory Deferred Amount by the Fair Market Value of the
Common Stock (as defined below) on December 31, 1998. The amount of such
deferral will be reduced, if necessary, to pay such tax, payroll and
other withholding obligations as the Company shall determine to be
necessary or appropriate.
(d) Notwithstanding the foregoing, the Compensation Committee of the Board
of Directors may, at its sole election, at any time and from time to time
require that the payment of the entire, or any portion of the, Unit Value
of any number of the Units earned shall be deferred until the Optional
Deferral Date, or such later date as it shall deem appropriate, in order
for the Company to conform to the requirements of Section 162(m) of the
Internal Revenue Code (the "Required Deferral Amount"). Any Required
Deferral Amount so deferred will be credited to an account maintained in
the records of the Company and will be con-
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verted into Deferral Units, the number of which shall be determined by
dividing each amount so deferred by the Fair Market Value of the Common
Stock on the date of such deferral.
As used herein, the term: (1) "Deferral Unit" means an equivalent to a
hypothetical share of the Common Stock; (2) "Fair Market Value of the Common
Stock" means, in respect of any date on or as of which a determination thereof
is being or to be made, the average of the high and low per share sale prices of
the Common Stock on the New York Stock Exchange Composite Transactions Tape on
such date or, if the Common Stock was not traded on such date, the next
preceding day on which the Common Stock was traded on the New York Stock
Exchange; (3) "Dividend Equivalent" means, with respect to each dividend payment
date for the Common Stock, an amount equal to the cash dividend per share of
Common Stock which is payable on such dividend payment date; (4) "Mandatory
Deferral Date" means the earlier of (x) the tenth business day of the January
next following the fifth anniversary of the last day of the Performance Period,
or (y) the Optional Deferral Date; (5) "Mandatory Deferral Unit" means each
Deferral Unit resulting from the Mandatory Deferral Amount, including Dividend
Equivalents credited in respect thereof; (6) "Optional Deferral Date" means the
later of (i) the first business day of the seventh month following the month
during which you cease to be employed by the Company, or one of its subsidiary
companies, for any reason (whether Retirement, Disability, death, layoff,
voluntary termination or otherwise) or (ii) the tenth business day of the
calendar year following the calendar year during which you ceased to be an
employee of the Company, or one of its subsidiary companies, for any reason
whatsoever; (7) "Optional Deferral Unit" means each Deferral Unit resulting from
any Optional Deferred Amount or converted from a Mandatory Deferral Unit,
including Dividend Equivalents credited in respect thereof; and (8) "Required
Deferral Unit" means each Deferral Unit resulting from any Required Deferred
Amount, including Dividend Equivalents credited in respect thereof. All
computations relating to Deferral Units, fractions of shares of Common Stock and
Dividend Equivalents will be rounded, if necessary, to the fourth decimal place.
Each Deferral Unit will be credited with one Dividend Equivalent on each
date on which cash dividends are paid on shares of the Common Stock (and each
fraction of a Deferral Unit shall be credited with a like fraction of a Dividend
Equivalent). Dividend Equivalents (and fractions thereof, if any) will be
automatically translated into Deferral Units by dividing the dollar amount of
such Dividend Equivalents by the Fair Market Value of the Common Stock on the
date the relevant Dividend Equivalents are accrued to your account. The number
of Deferral Units (and any fractions thereof) resulting will be credited to your
account (in lieu of the dollar amount of such Dividend Equivalent) and shall
continually be denominated in Deferral Units until converted for payment as
provided in this Grant Agreement.
The Mandatory Deferral Units credited to your account shall be
automatically deferred until the Mandatory Deferral Date. If the Mandatory
Deferral Date occurs before you cease to be an employee of the Company, or one
of its subsidiary companies, you may elect, by delivering a written notice of
your election to the Company not later than December 31, 2002, to defer receipt
of all or a specified whole percentage of the Mandatory Deferral Units credited
to your account until the Optional Deferral Date, whereupon such Mandatory
Deferral Units will become Optional Deferral Units.
On the Mandatory Deferral Date, to the extent you have not elected to
further defer payment of all or a portion of the Mandatory Deferral Units until
the Optional Deferral Date in the manner provided above (and unless payment of
all or a portion of your Mandatory Deferral Units have been further deferred
until the Optional Deferral Date pursuant to the conversion thereof into
Required Deferral Units), the whole Mandatory Deferral Units in your account
will be converted, at your election (which election shall be made in writing on
or before the June 30, 2003), into (1) a like number of shares of the Common
Stock, (2) a dollar amount determined by multiplying the number of Deferral
Units credited to your account by the Fair Market Value of the Common Stock on
the Mandatory Deferral Date, or (3) a combination of shares of the Common Stock
and cash in accordance with your election (which shall be expressed as a
percentage of
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the Deferral Units to be paid in shares of the Common Stock). In accordance with
your election, within five business days following the Mandatory Deferral Date
you will be paid (a) such number of shares of the Common Stock, (b) such amount
of cash, or (c) the elected combination of shares of Common Stock and cash, the
amounts of which shall be determined in accordance with the preceding sentence.
If you did not make a timely election as to the form of payment, you will
receive payment in shares of the Common Stock. Any fraction of a Deferral Unit
will be paid to you on the relevant date in cash, the amount of which shall be
calculated in the manner specified above.
If you have duly elected to receive payment of all or a specified
percentage of your Deferral Units on the Optional Deferral Date (or if payment
of any of the Deferral Units has been deferred until the Optional Deferral Date
pursuant to the conversion thereof into Required Deferral Units), you may elect,
at the time and in the manner specified below, to receive such Deferral Units in
(1) a lump sum on the fifth business day following the Optional Deferral Date,
or (2) in a series of not less than five (5) or more than ten (10) annual
installments commencing on the fifth business day following the Optional
Deferral Date, or (3) a specified percentage of your Deferral Units on the fifth
business day following the Optional Deferral Date and the balance of your
Deferral Units in installments as specified in clause (2) of this sentence.
On the Optional Deferral Date (to the extent you have not elected to
receive payment in installments), the whole Deferral Units then in your account
(which have not been designated for payment in installments) will be converted
at your election (which election shall be made in writing on or before the last
day of the seventh month prior to the month during which the Optional Deferral
Date occurs), into (1) a like number of shares of the Common Stock, or (2) a
dollar amount determined by multiplying the number of whole Deferral Units
credited to your account by the Fair Market Value of the Common Stock on the
Optional Deferral Date, or (3) a combination of shares of the Common Stock and
cash in accordance with your election (which shall be expressed as a percentage
of the Deferral Units to be paid in shares of the Common Stock). In accordance
with your election, within five business days following the Optional Deferral
Date you will be paid (a) such number of shares of the Common Stock, (b) such
amount of cash, or (c) the elected combination of shares of Common Stock and
cash, the amounts of which shall be determined in accordance with the preceding
sentence. If you did not make an election as to the form of payment on or before
the required date, you will receive payment in shares of the Common Stock. Any
fraction of a Deferral Unit will be paid to you on the relevant date in cash,
the amount of which shall be calculated in the manner specified above.
If you desire to receive payment of your Deferral Units or a portion
thereof in annual installments, you may elect (by delivering to the Company a
written notice of your election, which shall specify the number of annual
installments, not later than December 31 of the calendar year which is two
calendar years prior to the year during which the Optional Deferral Date occurs)
to receive all, or a specified whole percentage of, the Deferral Units in your
account (which would otherwise be scheduled for distribution on the Optional
Deferral Date) in not less than five (5) or more than ten (10) annual
installments, payable commencing on the fifth business day following the
Optional Deferral Date and thereafter on the fifth business day following each
anniversary thereof until paid in full. You may also elect (in writing on or
before the last day of the seventh month prior to the month during which the
Optional Deferral Date occurs) to receive payment in shares of the Common Stock,
cash or any combination of Common Stock and cash (expressed as a percentage of
the Deferral Units to be paid in shares of the Common Stock. Each installment
shall be in an amount equal to the total number of Deferral Units credited to
your account on the Optional Deferral Date, or on the anniversary thereof which
is the fifth business day prior to the date such installment is due and payable,
as the case may be, divided by the number of annual installments remaining
(including the annual installment then being calculated for payment) to be paid.
In respect of each installment, the number of Deferral Units payable shall, in
accordance with your election, be converted into (1) a like number of shares of
the Common Stock, (2) a dollar amount determined by multiplying the number of
whole Deferral Units credited to your account by the Fair Market Value of the
Common Stock on the relevant anniversary of the Optional Deferral Date (or the
Optional Deferral Date in the case of the first installment), or (3) the elected
combination of shares of the
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Common Stock and cash, the amounts of which shall be determined in the manner
specified above. Any fraction of Deferral Unit will be paid to you on the
relevant date in cash, the amount of which shall be calculated in the manner
specified above. You will be required to satisfy all Federal, state and local
tax and payroll withholding obligations, and any other withholding obligations,
arising in respect of any distribution of shares of the Common Stock or cash to
you. To the extent there is sufficient cash available, such withholding
obligations will be deducted from your distribution. To the extent the amount of
cash to be distributed is not sufficient to satisfy all withholding obligations,
you will be required to pay such withholding obligations as a condition to your
receipt of any distribution of shares of the Common Stock.
In the event of your death at any time prior to the Mandatory Deferral
Date, your account balance will be paid in cash in a lump sum on the later of
(a) the fifth business day following the Mandatory Deferral Date or (b) the
fifth business day of the calendar year following the calendar year during which
your date of death occurs. In the event of your death at any time following the
Mandatory Deferral Date and prior to the distribution of your account, the
entire balance of your account shall be paid in cash on the anniversary of the
Mandatory Deferral Date next following your date of death.
In the event of any stock dividend, stock split, recapitalization, merger,
split-up, spin-off or other change affecting the Common Stock of the Company,
the Deferral Units in your account shall be adjusted in the same manner and
proportion as the change to the Common Stock.
Any notice to you under this Grant Agreement shall be sufficient if in
writing and if delivered to you or mailed by registered mail directed to you at
the address on record in the Executive Compensation Department. Any notice to
the Company under this Grant Agreement shall be sufficient in writing and if
delivered to the Executive Compensation Department of the Company in Akron,
Ohio, or mailed by registered mail directed to the Company for the attention of
the Executive Compensation Department at 1144 East Market Street, Akron, Ohio
44316-0001. Either you or the Company may, by written notice, change the
address.
Dated: December 3, 1996 THE GOODYEAR TIRE & RUBBER COMPANY
Chairman, CEO & President
Grant Agreement, as amended,
received and accepted:
Date: December , 1996
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ANNEX A
PERFORMANCE GOALS
Performance Goals are based on the aggregate earnings per share of Goodyear
Common Stock for the period January 1, 1996 through December 31, 1998.
MINIMUM PERFORMANCE GOAL FOR PAYMENT
In order for there to be a distribution under this Grant, the aggregate earnings
per share shall be at least $12.25 for the three-year period beginning January
1, 1996.
PERFORMANCE UNIT DISTRIBUTION SCHEDULE
Unit distributions are payable 50 percent in shares of the Company's Common
Stock and 50 percent in cash.
Aggregate Earnings Cash Supplement
Per Share Based on % of Unit Value
1/1/96 - 12/31/98 Based on Grant
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$14.25 150 %
14.00 140
13.75 130
13.50 120
13.25 110
13.00 100
12.75 90
12.50 85
12.25 80
<12.25 0
Revised to reflect stock split on April 30,1993.
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