Exhibit 10.4
 
 
 
 
 
     
 
  
 
 
 
 
 
 
  
SUPERIOR INDUSTRIES INTERNATIONAL, INC.
 
EXECUTIVE CHANGE IN CONTROL SEVERANCE PLAN
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(As approved by the compensation and benefits Committee of
 
the Board of Directors on March 18, 2011)
 
 
 
 
 
 
 
        

 

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SUPERIOR INDUSTRIES INTERNATIONAL, INC.
EXECUTIVE CHANGE IN CONTROL SEVERANCE PLAN
 
ARTICLE 1
PURPOSE AND TERM
 
1.1    Purpose. Superior Industries International, Inc. (the “Company”)
established this Superior Industries International, Inc. Executive Change in
Control Severance Plan (the “Plan”) in order to provide transitional income to
certain executive officers who are involuntarily terminated in connection with a
Change in Control (as defined herein). The Company intends that this Plan
qualify as and come within the various exceptions and exemptions under the
Employee Retirement Income Security Act of 1974 (“ERISA”), as amended, for an
unfunded plan maintained primarily for a select group of management or highly
compensated employees, and any ambiguities in this Plan shall be construed to
effect that intent.
 
1.2    Term. The Plan shall be effective as of the Effective Date, subject to
amendment from time to time in accordance with Section 7.2. The Plan shall
continue until terminated pursuant to Article 7 of the Plan.
 
ARTICLE 2
DEFINITIONS
 
As used herein, the following words and phrases shall have the following
meanings:
    
2.1    “Affiliate” means any corporation or entity (including, but not limited
to, a partnership or a limited liability company) that is affiliated with the
Company through stock or equity ownership or otherwise, and is designated as an
Affiliate for purposes of this Plan by the Committee.
 
2.2    “Base Salary” means the amount a Participant is entitled to receive as
wages or salary on an annualized basis as in effect from time to time, without
reduction for any pre-tax contributions to benefit plans. Base Salary does not
include bonuses, commissions, overtime pay or income from stock options, stock
grants or other incentive compensation.
 
2.3    “Board” means the Board of Directors of the Company.
 
2.4    “Cause” means, as a reason for a Participant's termination of employment,
a determination by the Board that the Participant has committed or engaged in
any of the following:
(i)    any act that constitutes, on the part of the Participant, fraud,
dishonesty, breach of fiduciary duty, misappropriation, embezzlement or gross
misfeasance of duty;
 
(ii)    willful disregard of published Company policies and procedures or codes
of ethics; or
 
(iii)    conduct by the Participant in his or her office with the Company that
is grossly inappropriate and demonstrably likely to lead to material injury to
the Company, as determined by the Board acting reasonably and in good faith.
 
 
Notwithstanding the foregoing, in the case of conduct described in clause (ii)
or (iii) above, such conduct shall not constitute “Cause” unless the Board shall
have delivered to the Participant notice setting forth with specificity (A) the
conduct deemed to qualify as “Cause,” (B) reasonable action that would remedy
such objection, and (C) a reasonable time (not less than thirty (30) days)
within which the Participant may take such remedial action, and the Participant
shall not have taken such specified remedial action within the specified time.
 
2.5    “Change in Control” means any transaction or series of transactions
qualifying as a “change in control” under Section 409A of the Code
 
2.6    “Change in Control Severance Benefits” means the benefits payable in
accordance with Section 4.2 of the Plan.
 
2.7    “Code” means the Internal Revenue Code of 1986, as amended from time to
time, and includes a reference to the underlying proposed or final regulations.
 
2.8    “Committee” means the Compensation and Benefits Committee of the Board.
 

 

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2.9    “Company” means Superior Industries International, Inc., or its successor
as provided in Section 9.6.
 
2.10    “Disability” shall mean any physical or mental condition which would
qualify a Participant for a disability benefit under the long-term disability
plan maintained by the Company and applicable to that particular Participant, or
if no such disability plan exists, “Disability” means Permanent and Total
Disability as defined in Section 22(e)(3) of the Code.
 
2.11    “Effective Date” means March 18, 2011.
 
2.12    “Employee” means any regular, full-time or part-time employee of the
Company or any Affiliate.
 
2.13    “Good Reason” means, as a reason for a Participant's resignation from
employment, the occurrence of any of the following without the consent of the
Participant:
 
(i)    a diminution in the Participant's Base Salary;
 
(ii)    a diminution in the Participant's authority, duties, or
responsibilities; or
 
(iii)    a change in the geographic location at which the Participant must
perform services (it being agreed that for purposes of this Plan, a required
relocation of more than fifty (50) miles shall be material).
 
A termination by the Participant shall not constitute termination for Good
Reason unless the Participant shall first have delivered to the Company written
notice setting forth with specificity the occurrence deemed to give rise to a
right to terminate for Good Reason (which notice must be given no later than 90
days after the initial occurrence of such event), and there shall have passed a
reasonable time (not less than 30 days) within which the Company may take action
to correct, rescind or otherwise substantially reverse the occurrence supporting
termination for Good Reason as identified by the Participant. Good Reason shall
not include the Participant's death or Disability. The parties intend, believe
and take the position that a resignation by the Participant for Good Reason as
defined above effectively constitutes an involuntary separation from service
within the meaning of Section 409A of the Code and Treas. Reg. §1.409A-1(n)(2).
    
2.14    “Participant” means any Employee designated by the Committee as a
participant in the Plan.
 
2.15    “Plan” means this Superior Industries International, Inc. Executive
Change in Control Severance Plan.
 
2.16    “Target Annual Bonus” means, with respect to any Participant, the
Participant's target bonus opportunity under the annual corporate incentive plan
applicable to the Participant.
 
2.17    “Termination Date” means the date of the termination of a Participant's
employment with the Company as determined in accordance with Article 6.
 
ARTICLE 3
ELIGIBILITY
 
3.1    Participation. The Committee shall designate from time to time those
Employees who are Participants in the Plan. Exhibit A, attached hereto and made
a part hereof, sets forth the Participants as of the Effective Date, which may
be amended by the Committee at any time prior to a Change in Control to add or
remove individual Participants; provided, however, that the removal of
individual Participants from the Plan shall not be effective for at least
twenty-four (24) months after notification to the Participants of such Committee
action. If a Change in Control occurs during such 24-month period, any such
action to remove individual Participants shall be null and void.
 
3.2    Duration of Participation. Subject to Article 7, an Employee shall cease
to be a Participant in the Plan if (i) his or her employment is terminated under
circumstances in which he or she is not entitled to Change in Control Severance
Benefits under the terms of this Plan, or (ii) prior to a Change in Control, he
or she is removed as a Participant. Notwithstanding the foregoing, a Participant
who has terminated employment and is entitled to Change in Control Severance
Benefits under Article 4 shall remain a Participant in the Plan until the full
amount of the Change in Control Severance Benefits have been paid to such
Participant.
 
 
 
 

 

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ARTICLE 4
CHANGE IN CONTROL SEVERANCE BENEFITS
 
4.1    Right to Change in Control Severance Benefits.
 
(a)    A Participant shall be entitled to the Change in Control Severance
Benefits in the amount provided in Section 4.2 if, within the two-year period
following a Change in Control, (i) the Participant's employment with the Company
or any Affiliate is terminated by the Company without Cause (other than by
reason of the Participant's death or Disability) or (ii) the Participant's
employment is terminated by the Participant for Good Reason within a period of
160 days after the occurrence of the event giving rise to Good Reason.
 
(b)    If a Change in Control occurs and (i) a Participant's employment with the
Company or any Affiliate was terminated by the Company without Cause (other than
by reason of the Participant's death or Disability) prior to the date of the
Change in Control or (ii) an action was taken with respect to the Participant
prior to the date of the Change in Control that would have constituted Good
Reason if taken after a Change in Control, and the Participant can reasonably
demonstrate that such termination or action, as applicable, occurred at the
request of a third party who had taken steps reasonably calculated to effect the
Change in Control, then the termination or action, as applicable, will be
treated for all purposes of this Plan as having occurred immediately following
the Change in Control and such former Participant shall be entitled to the
benefits of the Plan accordingly.
 
(c)    Notwithstanding anything to the contrary, no Change in Control Severance
Benefits shall be provided to a Participant unless the Participant has executed
and not revoked a release of claims in a form satisfactory to the Company.
 
4.2    Amount of Change in Control Severance Benefits. If a Participant's
employment is terminated in circumstances entitling him or her to Change in
Control Severance Benefits as provided in Section 4.1, then the Company shall
pay to the Participant in a single lump sum cash payment within sixty (60) days
after the Termination Date (or such later date as may be required by Article 8
hereof), a severance payment equal to two (2) times the sum of (x) the
Participant's then-current Base Salary (or, if higher, the Participant's Base
Salary as in effect immediately prior to the Change in Control) and (y) the
higher of the Participant's Target Annual Bonus for the year in which the Change
in Control occurs or the Participant's Target Annual Bonus for the year in which
the Termination Date occurs.
 
4.3    Equity Awards. All of the Participant's equity awards outstanding on the
Termination Date shall be governed by the plans under which they were granted
and the agreements evidencing such awards.
 
4.4    Non-Duplication of Benefits. In the event that a Participant becomes
entitled to receive benefits under this Plan and any such benefit duplicates a
benefit that would otherwise be provided under any other plan, program,
arrangement or agreement as a result of the Participant's termination of
employment, then the Participant shall be entitled to receive the greater of the
benefit available under the Plan, on the one hand, and the benefit available
under such other plan, program, arrangement or agreement, on the other.
 
4.5    Full Settlement; No Mitigation. The Company's obligation to make the
payments provided for under this Plan and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Participant or others. In no event shall the Participant be obligated to seek
other employment or take any other action by way of mitigation of the amounts
payable to the Participant under any of the provisions of this Plan and such
amounts shall not be reduced whether or not the Participant obtains other
employment.
    
ARTICLE 5
REDUCTION OF PAYMENTS
    
5.1    Mandatory Reduction of Payments in Certain Events.
 
(a)    Notwithstanding anything in this Plan to the contrary, in the event it
shall be determined that any payment or distribution by the Company to or for
the benefit of the Participant (whether paid or payable or distributed or
distributable pursuant to the terms of this Plan or otherwise) (a “Payment”)
would be subject to the excise tax imposed by Section 4999 of the Code (the
“Excise Tax”), then, prior to the making of any Payment to the Participant, a
calculation shall be made comparing (i) the net benefit to the Participant of
the Payment after payment of the Excise Tax, to (ii) the net benefit to the
Participant if the Payment had been limited to the extent necessary to avoid
being subject to the Excise Tax. If the amount calculated under (i) above is
less than the amount calculated under (ii) above, then the Payment shall be
limited to the extent necessary to avoid being subject to the Excise Tax (the
“Reduced Amount”). The reduction of the Payments due hereunder, if applicable,
shall be made by first reducing cash Payments and then, to the extent necessary,
reducing those Payments having the next highest ratio of Parachute Value to
actual

 

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present value of such Payments as of the date of the change of control, as
determined by the Determination Firm (as defined in subsection (b) below). For
purposes of this Section 5.1, present value shall be determined in accordance
with Section 280G(d)(4) of the Code. For purposes of this Section 5.1, the
“Parachute Value” of a Payment means the present value as of the date of the
change of control of the portion of such Payment that constitutes a “parachute
payment” under Section 280G(b)(2) of the Code, as determined by the
Determination Firm for purposes of determining whether and to what extent the
Excise Tax will apply to such Payment.
 
(b)    The determination of whether an Excise Tax would be imposed, the amount
of such Excise Tax, and the calculation of the amounts referred to
Section 5.1(a)(i) and (ii) above shall be made at the expense of the Company by
an independent, nationally recognized accounting firm or compensation consulting
firm mutually acceptable to the Company and the Participant (the “Determination
Firm”) which shall provide detailed supporting calculations. Any determination
by the Determination Firm shall be binding upon the Company and the Participant.
As a result of the uncertainty in the application of Section 4999 of the Code at
the time of the initial determination by the Determination Firm hereunder, it is
possible that Payments which the Participant was entitled to, but did not
receive pursuant to Section 5.1(a), could have been made without the imposition
of the Excise Tax (“Underpayment”). In such event, the Determination Firm shall
determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Participant but no later than March 15 of the year after the year in which the
Underpayment is determined to exist, which is when the legally binding right to
such Underpayment arises.
 
(c)    In the event that the provisions of Code Section 280G and 4999 or any
successor provisions are repealed without succession, this Section 5.1 shall be
of no further force or effect.
 
ARTICLE 6
NOTICE; TERMINATION DATE
 
6.1    Written Notice Required. Any purported termination of employment, whether
by the Company or by the Participant, shall be communicated by written notice to
the other (a “Notice of Termination”). The failure by the Participant or the
Company to set forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not waive any right of
the Participant or the Company, respectively, hereunder or preclude the
Participant or the Company, respectively, from asserting such fact or
circumstance in enforcing Executive's or the Company's rights hereunder.
 
6.2    Termination Date. In the case of the Participant's death, the
Participant's Termination Date shall be his or her date of death. In all other
cases, the Participant's Termination Date shall be the date specified in the
Notice of Termination or any later date specified therein within 60 days after
receipt of the Notice of Termination.
 
ARTICLE 7
DURATION; AMENDMENT AND TERMINATION
 
7.1    Duration. The Plan shall become effective as of the Effective Date, and
shall continue until terminated by the Board. Subject to Section 7.2, the Board
may terminate the Plan as of any date that is at least twenty-four (24) months
after the date of the Board's action. If any Participants become entitled to any
payments or benefits hereunder during such 24-month period, this Plan shall
continue in full force and effect and shall not terminate or expire with respect
to such Participants until after all such Participants have received such
payments and benefits in full.
 
7.2    Amendment and Termination. Subject to the following sentence, the Plan
may be amended from time to time in any respect by the Board; provided, however,
that any amendment that would adversely affect the rights or potential rights of
Participants shall not be effective for at least twenty-four (24) months after
the date of the Board's action; and, provided, further, that in the event that a
Change in Control occurs within twenty-four (24) months following an amendment
to the Plan that would adversely affect the rights or potential rights of
Participants, the amendment will not be effective. In anticipation of or on or
following a Change in Control, the Plan shall no longer be subject to amendment,
change, substitution, deletion, revocation or termination in any respect which
adversely affects the rights of Participants without the consent of each
Participant so affected. For the avoidance of doubt, removal of a Participant as
a Participant (other than as a result of the Participant ceasing to be an
Employee) shall be deemed to be an amendment of the Plan which adversely affects
the rights of the Participant.
 
ARTICLE 8
CODE SECTION 409A
 
8.1    General. This Plan shall be interpreted and administered in a manner so
that any amount or benefit payable hereunder shall be paid or provided in a
manner that is either exempt from or compliant with the requirements Section
409A of

 

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the Code and applicable Internal Revenue Service guidance and Treasury
Regulations issued thereunder (and any applicable transition relief under
Section 409A of the Code). Nevertheless, the tax treatment of the benefits
provided under the Plan is not warranted or guaranteed. Neither the Company nor
its directors, officers, employees or advisers shall be held liable for any
taxes, interest, penalties or other monetary amounts owed by the Participant as
a result of the application of Section 409A of the Code.
 
8.2    Definitional Restrictions. Notwithstanding anything in this Plan to the
contrary, to the extent that any amount or benefit that would constitute
non-exempt “deferred compensation” for purposes of Section 409A of the Code
(“Non-Exempt Deferred Compensation”) would otherwise be payable or distributable
hereunder by reason of the Participant's termination of employment, such
Non-Exempt Deferred Compensation will not be payable or distributable to the
Participant by reason of such circumstance unless the circumstances giving rise
to such termination of employment meet any description or definition of
“separation from service” in Section 409A of the Code and applicable regulations
(without giving effect to any elective provisions that may be available under
such definition). This provision does not prohibit the vesting of any Non-Exempt
Deferred Compensation upon a termination of employment, however defined. If this
provision prevents the payment or distribution of any Non-Exempt Deferred
Compensation, such payment or distribution shall be made on the date, if any, on
which an event occurs that constitutes a Section 409A-compliant “separation from
service,” or such later date as may be required by Section 8.3 below.
 
8.3    Six-Month Delay in Certain Circumstances. Notwithstanding anything in
this Plan to the contrary, if any amount or benefit that would constitute
Non-Exempt Deferred Compensation would otherwise be payable or distributable
under this Plan by reason of the Participant's separation from service during a
period in which he or she is a Specified Employee (as defined below), then,
subject to any permissible acceleration of payment by the Company under Treas.
Reg. Section 1.409A-3(j)(4)(ii) (domestic relations order), (j)(4)(iii)
(conflicts of interest), or (j)(4)(vi) (payment of employment taxes):
 
(i) the amount of such Non-Exempt Deferred Compensation that would otherwise be
payable during the six-month period immediately following the Participant's
separation from service will be accumulated through and paid or provided on the
first day of the seventh month following the Participant's separation from
service (or, if the Participant dies during such period, within 30 days after
the Participant's death) (in either case, the “Required Delay Period”); and
 
(ii) the normal payment or distribution schedule for any remaining payments or
distributions will resume at the end of the Required Delay Period.
 
For purposes of this Plan, the term “Specified Employee” has the meaning given
such term in Code Section 409A and the final regulations thereunder; provided,
however, that the Company's Specified Employees and its application of the
six-month delay rule of Code Section 409A(a)(2)(B)(i) shall be determined in
accordance with rules adopted by the Board or a committee thereof, which shall
be applied consistently with respect to all nonqualified deferred compensation
arrangements of the Company, including this Plan.
 
8.4    Timing of Release of Claims. Whenever in this Plan a payment or benefit
is conditioned on the Participant's execution and non-revocation of a release of
claims, such release must be executed and all revocation periods shall have
expired within sixty (60) days after the Termination Date; failing which such
payment or benefit shall be forfeited. If such payment or benefit constitutes
Non-Exempt Deferred Compensation, and if such 60-day period begins in one
calendar year and ends in the next calendar year, the payment or benefit shall
not be made or commence before the second such calendar year, even if the
release becomes irrevocable in the first such calendar year. If such payment or
benefit is exempt from Section 409A of the Code, the Company may elect to make
or commence payment at any time during such 60-day period.
 
ARTICLE 9
MISCELLANEOUS
  
9.1    Employment Status. This Plan does not constitute a contract of employment
or impose on the Participant or the Company any obligation to retain the
Participant as an Employee, to change the status of the Participant's
employment, or to change the Company's policies regarding termination of
employment.
 
9.2    Nature of Plan and Benefits. Participants and any other person who may
have rights hereunder shall be unsecured general creditors of the Company with
respect to the Change in Control Severance Benefits due hereunder, and all
amounts shall be payable from the general assets of the Company.
 
9.3    Withholding of Taxes. The Company may withhold from any amount payable or
benefit provided under this Plan such federal, state, local, foreign and other
taxes as are required to be withheld pursuant to any applicable law or
regulation.
 
9.4    No Effect on Other Benefits. Change in Control Severance Benefits, if
any, shall not be counted as compensation

 

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for purposes of determining benefits under other benefit plans, programs,
policies and agreements, except to the extent expressly provided therein or
herein.
 
9.5    Validity and Severability. The invalidity or unenforceability of any
provision of the Plan shall not affect the validity or enforceability of any
other provision of the Plan, which shall remain in full force and effect, and
any prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
 
9.6    Successors. This Plan shall bind any successor of or to the Company, its
assets or its businesses (whether direct or indirect, by purchase, merger,
consolidation or otherwise), in the same manner and to the same extent that the
Company would be obligated under this Plan if no succession had taken place. In
the case of any transaction in which a successor would not by the foregoing
provision or by operation of law be bound by this Plan, the Company shall
require such successor expressly and unconditionally to assume and agree to
perform the Company's obligations under this Plan, in the same manner and to the
same extent that the Company would be required to perform if no such succession
had taken place. The term “Company,” as used in this Plan, shall mean the
Company as hereinbefore defined and any successor or assignee to the business or
assets which by reason hereof becomes bound by this Plan.
 
9.7    Assignment. This Plan shall inure to the benefit of and shall be
enforceable by a Participant's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If a
Participant should die while any amount is still payable to the Participant
under this Plan had the Participant continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Plan to the Participant's estate. A Participant's rights under this Plan shall
not otherwise be transferable or subject to lien or attachment.
 
9.8    Enforcement. This Plan is intended to constitute an enforceable contract
between the Company and each Participant subject to the terms hereof.
 
9.9    Governing Law. The validity, interpretation, construction and performance
of the Plan shall in all respects be governed by the laws of California, without
reference to principles of conflict of law.
 
*************
    
The foregoing is hereby acknowledged as being the Superior Industries
International, Inc. Executive Change in Control Severance Plan as adopted by the
Board on March 18, 2011.
 
 
SUPERIOR INDUSTRIES INTERNATIONAL, INC.
 
 
By: __________________________
Steven J. Borick
Chairman, CEO & President
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 

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EXHIBIT A
 
 
Participants as of the Effective Date
 
Steven J. Borick
 
Michael J. O'Rourke
 
Parveen Kakar
 
Kerry A. Shiba
 
Robert A. Earnest