Exhibit 10.1
LEAR CORPORATION
LONG-TERM STOCK INCENTIVE PLAN
FORM OF PERFORMANCE UNIT AWARD AGREEMENT
          PERFORMANCE UNIT AWARD AGREEMENT (the “Agreement”) dated as of ___,
between Lear Corporation (the “Company”) and the individual whose name appears
on the signature page hereof (the “Participant”), who is a key employee of the
Company or an Affiliate. Any term capitalized herein, but not defined, shall
have the meaning set forth in the Lear Corporation Long-Term Stock Incentive
Plan (the “Plan”).
          1. GRANT. In accordance with the terms of the Plan, the Company hereby
grants to the Participant a Performance Unit Award subject to the terms and
conditions set forth herein. Each Performance Unit shall have a notional value
of $30.00, provided, however, that no amounts will be paid or payable hereunder
unless the Participant earns Performance Units pursuant to Section 5 hereof.
          2. PERFORMANCE PERIOD. The Performance Period for this Award shall be
the three-year period commencing on January 1, 2008 and ending on December 31,
2010.
          3. PERFORMANCE MEASURE. There shall be two performance measures,
Earnings Growth and Return on Invested Capital, as both are defined below.
          a. “Earnings Growth” shall mean the compounded annual growth rate of
the Company’s annual operating income during the 3-year Performance Period.
Operating income shall mean the Company’s pretax income excluding the North
American Interior business, interest expense, impairments, restructurings and
other special items such as, among others: investment gains and losses;
extraordinary, unusual or non-recurring items; gains or losses on the sale of
assets; effects of changes in accounting principles or the application thereof;
asset impairment charges; acquisitions, divestitures, or financing activities;
recapitalizations, including stock splits and dividends; expenses for
restructuring or productivity initiatives; and other non-operating items.
          b. Return on Invested Capital: This performance measure is the
compounded improvement on the Company’s return on invested capital as reported
to its shareholders for 2008, 2009, 2010 fiscal years or as otherwise approved
by the Compensation Committee.
          4. PERFORMANCE GOALS.

  a.   Earnings Growth:

  i.   Threshold: 5% per year average growth     ii.   Target: 10% per year
average growth

 

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  iii.   Superior: 15% per year average growth

  b.   Return on Invested Capital:

  i.   Threshold: 3% per year average improvement     ii.   Target: 5% per year
average improvement     iii.   Superior: 7% per year average improvement

          5. PERFORMANCE UNITS.
               a. The number of Performance Units earned by a Participant with
respect to the performance measure during the Performance Period shall be
determined under the following chart:

                      Number of Performance Units   Performance At   Earnings
Growth     Return on Invested Capital  
Threshold
               
Target
               
Superior
               

               b. In the event that the Company’s actual performance does not
meet threshold for that performance measure, Performance Units shall not be
earned with respect to that performance measure.
               c. If the Company’s actual performance for a performance measure
is between “threshold” and “target,” the Performance Units earned shall equal
the Performance Units for threshold plus the number of Performance Units
determined under the following formula:

         
(TAS — TS)
  x   AP — TP
 
      TAP — TP
 
        TAS =   The Performance Units for target.
 
        TS =   The Performance Units for threshold.
 
        AP =   The Company’s actual performance.
 
        TP =   The threshold performance goal.

 

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        TAP =   The target performance goal.

               d. If the Company’s actual performance for a performance measure
is between “target” and “superior,” the Performance Units earned shall equal the
Performance Units for target plus the number of Performance Units determined
under the following formula:

         
(SS - TAS)
  x   AP - TAP
 
      SP - TAP
 
        SS =   The Performance Units for superior.
 
        TAS =   The Performance Units for target.
 
        AP =   The Company’s actual performance.
 
        TAP =   The target performance goal.
 
        SP =   The superior performance goal.

               e. If the Company’s actual performance for performance measure
exceeds “superior,” the Performance Units earned shall equal the Performance
Units for superior.
          6. TIMING AND FORM OF PAYOUT. Except as hereinafter provided, after
the end of the Performance Period, the Participant shall be entitled to receive
a dollar amount equal to the product of (i) the value per Performance Unit of
$30 multiplied by (ii) his or her total number of Performance Units determined
under Section 5. Payment of such amount shall be made as soon as
administratively feasible after the Committee certifies the actual performance
of the Company during the Performance Period. Notwithstanding anything herein to
the contrary, the Committee may, in compliance with and to the extent
permissible under Code Section 409A, defer payment of any amount hereunder to
the Participant under this Section if the payment of such amount would
constitute compensation to the Participant that is not deductible by the Company
or an Affiliate due to the application of Code Section 162(m); provided, that
such amount deferred pursuant to this sentence shall be delivered to the
Participant on or before the January 15 of the first year in which the
Participant is no longer a “covered employee” of the Company (within the meaning
of Code Section 162(m)) following the end of the Performance Period.
          7. TERMINATION OF EMPLOYMENT DUE TO DEATH, RETIREMENT, OR DISABILITY.
If a Participant ceases to be an employee prior to the end of the Performance
Period by reason of death, an End of Service Date or disability, the Participant
(or in the case of the Participant’s death, the Participant’s beneficiary) shall
be entitled to receive a cash amount equal the product of (i) the value per
Performance Unit of $30 multiplied by (ii) the number of Performance Units the
Participant would have been entitled to under Section 6 if he or she had
remained employed until the last day of the Performance Period multiplied by a
fraction, the numerator of which shall be the number of full calendar months
during the period of

 

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January 1, 2007 through the date of the Participant’s employment terminated and
the denominator of which shall be thirty-six. The payment of such amount shall
be made as soon as administratively feasible after the end of the Performance
Period. The Participant’s “End of Service Date” is the date of his or her
retirement after attaining age 55 and completing ten years of service (as
defined in the Lear Corporation Pension Plan, regardless of whether the
Participant participates in such plan).
     Any distribution made with respect to a Participant who has died shall be
paid to the beneficiary designated by the Participant pursuant to Article 11 of
the Plan to receive amounts payable under this Award. If the Participant’s
beneficiary predeceases the Participant or no beneficiary has been properly
designated, distribution of any amounts payable to the Participant under this
Award shall be made to the Participant’s surviving spouse and if none, to the
Participant’s estate.
          8. TERMINATION OF EMPLOYMENT FOR ANY OTHER REASON. Except as provided
in Section 7, the Participant must be an employee of the Company and/or an
Affiliate continuously from the date of this Award until the last day of the
Performance Period to be entitled to receive any amounts with respect to any
Performance Units he or she may have earned hereunder.
          9. ASSIGNMENT AND TRANSFERS. The rights and interests of the
Participant under this Award may not be assigned, encumbered or transferred
except, in the event of the death of the Participant, by will or the laws of
descent and distribution.
          10. WITHHOLDING TAX. The Company and any Affiliate shall have the
right to retain any amounts that are distributable to the Participant hereunder
to the extent necessary to satisfy the minimum required withholding taxes,
whether federal, state or local, triggered by the payment of any amounts under
this Award.
          11. NO LIMITATION ON RIGHTS OF THE COMPANY. The grant of this Award
shall not in any way affect the right or power of the Company to make
adjustments, reclassification, or changes in its capital or business structure,
or to merge, consolidate, dissolve, liquidate, sell or transfer all or any part
of its business or assets.
          12. PLAN AND AGREEMENT NOT A CONTRACT OF EMPLOYMENT. Neither the Plan
nor this Agreement is a contract of employment, and no terms of employment of
the Participant shall be affected in any way by the Plan, this Agreement or
related instruments except as specifically provided therein. Neither the
establishment of the Plan nor this Agreement shall be construed as conferring
any legal rights upon the Participant for a continuation of employment, nor
shall it interfere with the right of the Company or any Affiliate to discharge
the Participant and to treat him or her without regard to the effect that such
treatment might have upon him or her as a Participant.
          13. NOTICE. Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally, or sent by
certified, registered or express mail, postage prepaid. Any such notice shall be
deemed given when so delivered

 

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personally or, if mailed, three days after the date of deposit in the United
States mail, in the case of the Company to 21557 Telegraph Road, Southfield,
Michigan, 48034, Attention: General Counsel and, in the case of the Participant,
to its address set forth on the signature page hereto or, in each case, to such
other address as may be designated in a notice given in accordance with this
Section.
          14. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with, and governed by, the laws of the State of Michigan, determined
without regard to its conflict of law rules.
          15. PLAN DOCUMENT CONTROLS. The rights herein granted are in all
respects subject to the provisions set forth in the Plan to the same extent and
with the same effect as if set forth fully herein. In the event that the terms
of this Agreement conflict with the terms of the Plan document, the Plan
document shall control.
[signature page follows]

 

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          IN WITNESS WHEREOF, the Company and the Participant have duly executed
this Agreement as of the date first written above.

         
 
  LEAR CORPORATION    
 
       
 
  By:    
 
 
 
Roger A. Jackson    
 
       
 
  Its: Senior Vice President, Human Resources    
 
       
 
 
 
[Participant’s Signature]    
 
       
 
  Participant’s Name and Address for notices hereunder