Ex-10.6



 



Exhibit 10.6


ENPRO INDUSTRIES, INC.

LONG-TERM INCENTIVE PLAN



PURPOSE



     The EnPro Industries, Inc. Long-Term Incentive Plan (the “Plan”) has been
established effective as of January 1, 2003 (the “Effective Date”) to provide
long-term incentive compensation to key employees who are in a position to
influence the performance of EnPro Industries, Inc. (the “Company”), and
thereby enhance shareholder value over time. The Plan provides a significant
additional financial opportunity and complements other parts of the Company’s
total compensation program for key employees (base salary, annual performance
plan, stock options and benefits).


ELIGIBILITY AND PERFORMANCE PERIODS



     The Committee (as defined in the “Plan Administration” section of the
Plan) will determine which employees of the Company are eligible to participate
in the Plan from time to time. Participants will be selected within 90 days
after the beginning of each multi-year performance cycle (“Performance
Period”). Each Performance Period will be of two or more years duration as
determined by the Committee and will commence on January 1 of the first year of
the Performance Period. A new Performance Period will commence each year
unless the Committee determines otherwise.


TARGET AWARDS



     At the time a Participant is selected for participation in the Plan for a
Performance Period, the Committee will assign the Participant a Target LTIP
Award to be earned if the Company’s target performance levels are met for the
Performance Period (the “Target LTIP Award”). The Target LTIP Award may be
expressed as a dollar amount, a number of Performance Shares under the
Company’s Equity Compensation Plan, or a combination of a dollar amount and a
number of Performance Shares. Any portion of the Target LTIP Award made in the
form of Performance Shares will be evidenced by a Performance Shares award
agreement consistent with the provisions of the Equity Compensation Plan.


MAXIMUM AND THRESHOLD AWARDS



     At the time a Participant is selected for participation in the Plan for a
Performance Period, the Participant will be assigned maximum and threshold
award levels, expressed as a percentage of the Target LTIP Award. Maximum
award level represents the maximum percentage of the Target LTIP Award that may
be paid to a Participant for a Performance Period based on performance above
target performance levels. Threshold award level represents the minimum
percentage of the Target LTIP Award that may be paid to a Participant for a
Performance Period based on performance below target performance levels.
Performance below the threshold performance award level will earn no incentive
payments.


 






 


     Under no circumstances will any Participant earn an award for a
Performance Period expressed in dollars exceeding $2,500,000. In addition, any
award of Performance Shares hereunder shall be subject to the individual award
limit applicable under the Equity Compensation Plan.


PERFORMANCE MEASURES



     Performance measures that may be used under the Plan include Net Income,
Pretax Income, Consolidated Operating Income, Segment Operating Income, Return
on Equity, Operating Income Return on Net Capital Employed, Return on Assets,
Cash Flow (with or without regard to asbestos), Working Capital, Share
Appreciation, Total Shareholder Return relative to the manufacturing companies
within the S&P 400 index, Total Business Return (calculated utilizing Earnings
Before Interest, Taxes, Depreciation and Amortization and cash flow) and
Earnings per Share of Common Stock of the Company for the Plan Year.


PERFORMANCE GOALS



     The Committee will designate, within 90 days of the beginning of each
Performance Period:



	 	•	 	The performance measures and calculation methods to be
used for the Performance Period;
	 
	 	•	 	A schedule for each performance measure relating
achievement levels for the performance measure to incentive
award levels as a percentage of Participants’ Target LTIP
Awards; and
	 
	 	•	 	The relative weightings of the performance measures
for the Performance Period.



     The performance goals established by the Committee for a Performance
Period are intended to satisfy the “objective compensation formula”
requirements of Treasury Regulations Section 1.162-27(e)(2).


PERFORMANCE CERTIFICATION



     As soon as practicable following the end of each Performance Period and
prior to any award payments for the Performance Period, the Committee will
certify the Company’s performance with respect to each performance measure used
for that Performance Period.


AWARD CALCULATION AND PAYMENT



     For each Performance Period, individual incentive awards will be
calculated and paid to each Participant who is still employed with the Company
(subject to the special provisions below for employees who terminate employment
due to death, disability or retirement) as soon as practicable following the
Committee’s certification of performance for the Performance Period. The
amount of a Participant’s incentive award to be paid based on each individual
performance measure will be calculated based on the following formula:


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	Participant’s
Target LTIP Award	 	
X
	 	Percentage of
target award to be
paid based on
performance measure
results
	 	X
	 	Relative weighting
of performance
measure
	 	=
	 	Amount of incentive
award based on
performance measure
results



The incentive amounts to be paid to the Participant based on each performance
measure will be summed to arrive at the Participant’s total incentive award
payment for the Performance Period.


     Payments from the Plan to a Participant, if any, will be made in cash
(less any amount necessary to satisfy applicable withholding taxes); provided,
however, that (i) if any portion of the award is in the form of Performance
Shares, the applicable Performance Shares award agreement will specify whether
the award will be settled in cash, shares of the Company’s common stock or a
combination of cash and stock; and (ii) at the Participant’s election, receipt
of all or part of an award may be deferred under the terms of the EnPro
Industries, Inc. Deferred Compensation Plan (or other deferred compensation
plan of the Company).


TERMINATION OF EMPLOYMENT DUE TO DEATH, DISABILITY, RETIREMENT


     If a Participant becomes totally disabled under the Company’s Long-Term
Disability Plan, or retires (or is deemed to retire) under the Company’s
Salaried Retirement Plan during a Performance Period, the Participant will
receive a pro rata payout at the end of the Performance Period, based upon the
time portion of the Performance Period during which he or she was employed.
The actual payout will not occur until after the end of the Performance Period,
at which time the financial performance for the entire Performance Period will
be used to determine the amount of the award prior to proration.


     If a Participant dies during a Performance Period, the Participant will
receive a pro rata payout based upon financial results calculated for the
portion of the Performance Period through the end of the fiscal quarter
following the Participant’s death.


OTHER TERMINATION OF EMPLOYMENT



     If a Participant’s employment terminates prior to the end of a Performance
Period for any reason (whether voluntary or involuntary) other than death,
disability or retirement, the Participant will forfeit all rights to
compensation under the Plan, unless the Committee determines otherwise.


NEW HIRES OR PROMOTIONS INTO ELIGIBLE POSITIONS



     Participants will become eligible for participation in the Plan at their
new position level beginning with the Performance Period which begins on the
January 1 immediately following their hire or promotion date. No new
performance awards or adjustments to awards for Performance Periods that
commenced prior to a Participant’s hire or promotion date will be made.


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PAYMENT UPON CHANGE IN CONTROL



     Anything to the contrary notwithstanding, if a Change in Control occurs
prior to the end of a Performance Period, within five days following the
occurrence of the Change in Control each Participant will receive a pro rata
payout of the Participant’s award for that Performance Period based upon the
portion of the Performance Period completed through the date of the Change in
Control and the performance results calculated for that period (the “Interim
LTIP Payment”). The Participant shall also remain entitled to a payout upon
completion of the Performance Period based on performance results for the
entire Performance Period, such payout to be offset be the amount of the
Interim LTIP Payment (if any); provided, however, that the Participant will not
be required to refund to the Company, or have offset against any other payment
due to the Participant from or on behalf of the Company, in the event the
amount of the Interim LTIP Payment exceeds the amount of the payout upon
completion of the Performance Period.


     For purposes of the Plan, a “Change in Control” shall mean:



		
	 	     (i) The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)),
of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 20% or more of either (A)
the then outstanding shares of common stock of the Company (the
“Outstanding Company Common Stock”) or (B) the combined voting
power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the
“Outstanding Company Voting Securities”); provided, however, that
the following acquisitions shall not constitute a Change in
Control: (A) any acquisition directly from the Company (other
than by exercise of a conversion privilege), (B) any acquisition
by the Company or any of its subsidiaries, (C) any acquisition by
any employee benefit plan (or related trust) sponsored or
maintained by the Company or any of its subsidiaries or (D) any
acquisition by any company with respect to which, following such
acquisition, more than 70% of, respectively, the then outstanding
shares of common stock of such company and the combined voting
power of the then outstanding voting securities of such company
entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior
to such acquisition in substantially the same proportions as their
ownership, solely in their capacity as shareholders of the
Company, immediately prior to such acquisition, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities, as
the case may be; or
	 
	 	     (ii) individuals who, as of the Effective Date, constitute
the Board of Directors (the “Incumbent Board”) cease for any
reason to constitute at least a majority of the Board of
Directors; provided, however, that any individual becoming a
director subsequent to the Effective Date whose election, or
nomination for election



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	 	by the Company’s shareholders, was
approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result
of either an actual or threatened election contest; or
	 
	 	     (iii) consummation of a reorganization, merger or
consolidation, in each case, with respect to which all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior
to such reorganization, merger or consolidation, do not, following
such reorganization, merger or consolidation, beneficially own,
directly or indirectly, solely in their capacity as shareholders
of the Company, more than 70% of, respectively, the then
outstanding shares of common stock and the combined voting power
of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the
company resulting from such reorganization, merger or
consolidation in substantially the same proportions as their
ownership, immediately prior to such reorganization, merger or
consolidation of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be; or
	 
	 	     (iv) consummation of (A) a complete liquidation or
dissolution of the Company or (B) a sale or other disposition of
all or substantially all of the assets of the Company, other than
to a company, with respect to which following such sale or other
disposition, more than 70% of, respectively, the then outstanding
shares of common stock of such company and the combined voting
power of the then outstanding voting securities of such company
entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities, solely in their
capacity as shareholders of the Company, who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such
sale or other disposition in substantially the same proportion as
their ownership, immediately prior to such sale or other
disposition, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be.



PLAN ADMINISTRATION



     The Plan will be administered by the Compensation and Human Resources
Committee of the Company’s Board of Directors (or a subcommittee of that
committee consisting only of those members of that committee who are “outside
directors” within the meaning of Section 162(m) of the Internal revenue Code if
any members of the committee are not “outside directors”) (the “Committee”).
In administering the Plan, the Committee shall be empowered to interpret the
provisions of the Plan and to perform and exercise all of the duties and powers
granted to it under the terms of the Plan by action of a majority of its
members in office from time to time. The Committee is empowered to set
preestablished performance targets, measure the results and determine the
amounts payable according to the Formula. While the Committee may not increase
the amounts payable under the Plan formula for a Performance Period, it retains


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discretionary authority to reduce the amount of compensation that would
otherwise be payable
to the Participants if the goals are attained. The Committee may also adopt
such rules and regulations for the administration of the Plan as are consistent
with the terms hereof and shall keep adequate records of its proceedings and
acts. All interpretations and decisions made (both as to law and fact) and
other action taken by the Committee with respect to the Plan shall be
conclusive and binding upon all parties having or claiming to have an interest
under the Plan. Not in limitation of the foregoing, the Committee shall have
the discretion to decide any factual or interpretative issues that may arise in
connection with its administration of the Plan (including without limitation
any determination as to claims for benefits hereunder), and the Committee’s
exercise of such discretion shall be conclusive and binding on all affected
parties as long as it is not arbitrary or capricious.


MISCELLANEOUS



     (i)  Amendment and Termination. The Board of Directors of the Company may
amend, modify, or terminate the Plan at any time, provided that no amendment,
modification or termination of the Plan shall reduce the amount payable to a
Participant under the Plan as of the date of such amendment, modification or
termination.


     (ii)  Shareholder Approval. No amounts shall be payable hereunder unless
the material terms of the Plan are first approved by the shareholders of the
Company consistent with the requirements of Section 162(m) of the Internal
Revenue Code. In accordance with Section 162(m)(4)(C)(ii) of the Internal
Revenue Code, the continued effectiveness of the Plan is subject to its
approval by the shareholders of the Company at such other times as required by
Section 162(m)(4)(C)(ii).


     (iii)  Coordination With Other Company Benefit Plans. Any income
participants derive from Plan payouts will not be considered eligible earnings
for Company or subsidiary pension plans, savings plans, profit sharing plans or
any other benefit plans.


     (iv)  Participant’s Rights. A Participant’s rights and interests under the
Plan may not be assigned or transferred by the Participant. To the extent the
Participant acquires a right to receive payments from the Company under the
Plan, such right shall be no greater than the right of any unsecured general
creditor of the Company. Nothing contained herein shall be deemed to create a
trust of any kind or any fiduciary relationship between the Company and the
Participant. Designation as a Participant in the Plan for a Performance Period
shall not entitle or be deemed to entitle the Participant to be designated as a
Participant for any subsequent Performance Periods or to continued employment
with the Company.


     (v)  Applicable Law. The Plan shall be governed and construed in
accordance with the laws of the State of North Carolina, except to the extent
such laws are preempted by the laws of the United States of America.


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