Exhibit 10.23

ALLISON TRANSMISSION HOLDINGS, INC.

Non-Employee Director Deferred Compensation Plan

1. General. The Non-Employee Director Deferred Compensation Plan (the “Plan”),
as set forth herein, has been adopted under the Allison Transmission Holdings,
Inc. 2011 Equity Incentive Award Plan (the “Equity Plan”) by the Board of
Directors (the “Board”) of Allison Transmission Holdings, Inc. (the “Company”).
The purpose of the Plan is to promote the success and enhance the value of the
Company by linking the personal interests of the members of the Board to those
of Company stockholders and by providing such members with an incentive for
outstanding performance to generate superior returns to Company stockholders.
Capitalized but undefined terms used herein shall have the meanings provided for
in the Equity Plan.

2. Administration. The Plan will be administered by the Administrator subject to
the provisions of the Equity Plan and the Company’s Non-Employee Director
Compensation Policy as in effect from time to time (the “Director Compensation
Policy”) and subject to applicable law. The Administrator will have full power
and authority to supervise the administration and interpret the provisions of
the Plan and to authorize and supervise any crediting of Deferred Stock or
issuance or payment of Common Stock hereunder. Any determination or action of
the Administrator in connection with the interpretation or administration of the
Plan will be final, conclusive and binding on all parties. The Administrator
(and each member thereof) will not be liable for any determination made, or any
decision or action taken, with respect to the Plan.

3. Eligibility. Each member of the Board who is eligible to receive compensation
under the Director Compensation Policy (each a “Non-Employee Director”) shall be
eligible to receive Deferred Stock in accordance with the Plan. Each such
eligible Non-Employee Director who elects to participate in the Plan will be
referred to herein as a “Participant.”

4. Non-Employee Director Compensation Generally. The amount and kind of
compensation paid to each Participant for services as a Non-Employee Director
(the “Director Compensation”) and the amount and kind of compensation eligible
for a deferral election will be determined from time to time in accordance with
the Director Compensation Policy, as such policy may be amended by the Board
from time to time. In the event of any conflict between the terms of this Plan
and the Director Compensation Policy, the terms of the Director Compensation
Policy shall control except to the extent otherwise required to comply with
Section 409A of the Code. Notwithstanding any provision of the Plan to the
contrary, a Non-Employee Director shall be permitted to make a Deferral Election
with respect to Director Compensation only to the extent permitted by the
Director Compensation Policy.

 

  5. Deferral Elections.

(a) To the extent permitted by the Director Compensation Policy or as otherwise
permitted by the Board, a Non-Employee Director may make an irrevocable deferral
election (a “Deferral Election”) to defer payment of all or a portion of his or
her Director Compensation in accordance with the terms of the Plan.

(b) In order to make a Deferral Election pursuant to Section 5(a) of the Plan, a
Non-Employee Director must deliver to the Company a written notice in a form
prescribed by the Company (the “Deferral Election Form”) setting forth and
clearly identifying the Director Compensation subject to the Deferral Election
and the percentage of such Director Compensation that the Non-Employee Director
elects to be deferred and paid in Deferred Stock in accordance with the Plan.

(c) The Deferral Election Form must be delivered no later than (and shall be
irrevocable as of) the last business day of the calendar year prior to the year
for which such Director Compensation is to be paid (the “Service Year”) and will
be effective with respect to Director Compensation earned for such Service Year,
provided that an eligible Director who is initially elected to the Board may
deliver the Deferral Election Form within 30 days of the date on which such
Director becomes a Director, and such Deferral Election Form will be irrevocable
as of the close of business on the date it is delivered and will be effective
with respect to Director Compensation earned after the date it is delivered for
the remainder of the Service Year in which such Director becomes a Director.1

 

1  Note: In order for Director Compensation for newly-elected Directors to be
deferred under Section 409A, a Deferral Election Form must be submitted before
such person begins service as a Director. If the Deferral Election Form is
delivered after the commencement of service as a Director, all Director
Compensation for the period before the form is delivered must be paid currently.
Because the Director Compensation Policy generally provides for payments to be
made up front in a lump sum, elections for first year deferrals generally will
need to be made prior to commencement of service.

--------------------------------------------------------------------------------

(d) For purposes of the Plan, the “Deferred Payment Date” means the earlier of
(i) the Participant’s Separation from Service on the Board within the meaning of
Treasury Regulation Section 1.409A-1(h) (a “Separation from Service”) or (ii) a
Change in Control. For the avoidance of doubt, an event or transaction shall
only constitute a Change in Control for purposes of this Plan if the event or
transaction also constitutes a “change in control event,” as defined in Treasury
Regulation §1.409A-3(i)(5).

(e) Notwithstanding the foregoing, a Participant may revoke or modify a Deferral
Election, subject to proof of an “unforeseeable emergency” (within the meaning
of Treasury Regulation 1.409A-3(i)(3)), as determined by the Administrator, and
any other limitations and restrictions as the Administrator may prescribe in its
sole discretion, by delivering a revised Deferral Election Form, which must be
approved by the Administrator. If a Participant is allowed to discontinue a
deferral election during a calendar year, he or she will not be permitted to
elect a new deferral until the next calendar year.

 

  6. Deferred Stock Accounts.

(a) If a Participant elects to receive Deferred Stock under Section 5 of the
Plan, notional shares of Deferred Stock will be credited to a bookkeeping
account in the Participant’s name as of the day the Director Compensation to
which the Deferred Stock relates would have been paid. The number of notional
shares of Deferred Stock credited to a Participant’s account will be as
determined by the Director Compensation Policy and such notional shares of
Deferred Stock may be subject to vesting and forfeiture as provided in the
Director Compensation Policy. Each notional share in a Participant’s bookkeeping
account (“Deferred Stock”) shall represent the right to receive one share of
Common Stock, or an equivalent amount of cash, at such time as is provided in
Section 7 below.

(b) Participants shall be entitled to Dividend Equivalents with respect to each
notional share in the Participant’s Deferred Stock account, such that a
Participant’s account will be credited as of the last day of each calendar month
with that number of additional notional shares of Deferred Stock equal to the
amount of cash dividends paid by the Company during that month on the number of
shares of Common Stock equivalent to the number of shares of Deferred Stock in
the Participant’s account from time to time during such month divided by the
Fair Market Value of one share of Common Stock on the last business day of such
calendar month. Such Dividend Equivalents, which will likewise be credited with
Dividend Equivalents, will be deferred until the Deferred Payment Date and shall
be subject to the same vesting and forfeiture conditions, if any, as applied to
the Deferred Stock in respect of which such Dividend Equivalents were credited.

(c) Subject to Section 7(c) of the Plan, Deferred Stock will be subject to a
deferral period beginning on the date of crediting to the Participant’s account
and ending upon the Deferred Payment Date. Unless otherwise provided by the
Administrator, during such deferral period the Participant will have no rights
as a Company stockholder with respect to his or her Deferred Stock.

 

  7. Delivery of Shares or Payment.

(a) Subject to Section 7(c) of the Plan, the number of vested shares in a
Participant’s Deferred Stock account as of the Deferred Payment Date will be
delivered on or as soon as practicable, but in no event more than 60 days after,
the Deferred Payment Date. The Company will make delivery of certificates
representing the shares of Common Stock which a Participant is entitled to
receive in accordance with the terms of the Plan and the Director Compensation
Policy.

(b) Notwithstanding Section 7(a) above, at the Company’s option and discretion,
in lieu of delivering Common Stock, the Company may pay the Participant an
amount of cash (at the time set forth in Section 7(a)) equal to the Fair Market
Value of one share of Common Stock as of the day prior to the applicable date of
payment, multiplied by the number of notional shares in the Participant’s
Deferred Stock account, or a portion thereof, as determined by the
Administrator. Any portion of a Participant’s Deferred Stock account not settled
in cash shall be settled as provided in Section 7(a).

(c) Notwithstanding anything to the contrary in this Plan, if at the time of a
Director’s Separation from Service, such Director is a “specified employee” as
defined in Section 409A of the Internal Revenue Code of 1986, as amended (the
“Code”), as reasonably determined by the Company in accordance with Section 409A
of the Code, and the deferral of the commencement of any distributions otherwise
payable hereunder as a result of such Separation from Service is necessary in
order to prevent any accelerated or additional tax under Section 409A of the
Code, then the Company will defer any such distributions hereunder (without any
reduction in the amounts ultimately distributed or provided to the Director)
until the date that is at least six months following the

--------------------------------------------------------------------------------

Director’s Separation from Service with the Company (or the earliest date
permitted under Section 409A of the Code), whereupon the Company will distribute
to the Director a lump-sum amount equal to the cumulative amounts that would
have otherwise been previously distributed to the Director under this Plan
during the period in which such distributions were deferred.

 

  8. Amendment or Termination.

(a) The Company may at any time amend the Plan, provided that to the extent
necessary and desirable to comply with any applicable law, regulation or stock
exchange rule, the Company will obtain stockholder approval of any Plan
amendment in such a manner and to such a degree as required. The Company may
terminate the Plan at any time and, in connection with any such termination, may
deliver to each Participant the shares of Common Stock credited to his account
(or cash), subject to and in accordance with the requirements of Treasury
Regulation Section 1.409A-3(j)(4)(ix) (or any successor provision thereto). An
amendment or termination of the Plan will not adversely affect the right of a
Participant to receive Common Stock issuable or cash payable at the effective
date of the amendment or termination.

(b) The Plan is intended to meet the requirements of Section 409A of the Code
and will be interpreted and construed in accordance with Section 409A of the
Code and Department of Treasury Regulations and other interpretive guidance
issued thereunder, including without limitation any such regulations or other
guidance that may be issued after the effective date of this Plan.
Notwithstanding any provision of the Plan or the Director Compensation Policy to
the contrary, in the event that following the effective date of this Plan the
Administrator determines that any provision of the Plan could otherwise cause
any person to be subject to the penalty taxes imposed under Section 409A of the
Code, the Administrator may adopt such amendments to the Plan or adopt other
policies and procedures (including amendments, policies and procedures with
retroactive effect), or take any other actions, that the Administrator
determines are necessary or appropriate to comply with the requirements of
Section 409A of the Code and related Department of Treasury guidance and thereby
avoid the application of any penalty taxes under such Section.

 

  9. Miscellaneous.

(a) The rights, benefits or interests a Participant may have under this Plan are
not assignable or transferable and will not be subject in any manner to
alienation, sale or any encumbrances, liens, levies, attachments, pledges or
charges of the Participant or his or her creditors.

(b) To the extent that the application of any formula described in the Director
Compensation Policy does not result in a whole number of shares of Common Stock,
the result will be rounded down to the next whole number.

(c) The Plan has been adopted under the Equity Plan and shall be subject to all
of the terms and conditions of the Equity Plan (and/or such successor plan, as
determined by the Administrator).

(d) The adoption and maintenance of this Plan will not be deemed to be a
contract between the Company and a Participant to retain his or her position as
a Director.

*    *    *    *    *