exv10w3





Exhibit 10.3


Lear Corporation Annual Incentive Plan




ARTICLE 1




Statement of Purpose



Lear Corporation’s compensation policies are intended to support the Company’s overall objective of
enhancing stockholder value. In furtherance of this philosophy, the Lear Corporation Annual
Incentive Plan is designed to provide incentives for business performance, reward contributions
towards goals consistent with the Company’s business strategy and enable the Company to attract and
retain highly qualified Corporate Officers, key management, and other salaried employees. It is
intended that awards under the Plan may constitute qualified performance-based compensation under
Section 162(m).




ARTICLE 2




Definitions



The terms used in this Plan include the feminine as well as the masculine gender and the plural as
well as the singular, as the context in which they are used requires. The following terms, unless
the context requires otherwise, are defined as follows:





	2.1	 	“Bonus” means the incentive compensation payable in cash, as determined by the Committee
under Section 4.4 of the Plan.
	 
	2.2	 	“Board” means the Lear Corporation Board of Directors.
	 
	2.3	 	“Code” means the Internal Revenue Code of 1986, as amended.
	 
	2.4	 	“Committee” means the Compensation Committee of the Board or any successor committee with
responsibility for compensation, or any subcommittee, as long as the number of Committee
members and their qualifications shall at all times be sufficient to meet the applicable
requirements for “outside directors” under Section 162(m) and the independence requirements of
the New York Stock Exchange or any other applicable exchange on which Lear Corporation common
equity is at the time listed, in each case as in effect from time to time.
	 
	2.5	 	“Company” means Lear Corporation and, except for purposes of Section 4.7 or where the context
indicates otherwise, any of its Subsidiaries that adopt this Plan or that have employees who
are participants under this Plan.
	 
	2.6	 	“Corporate Officer” means any Company employee who is an “executive officer” as defined in
Rule 3b-7 promulgated under the Exchange Act or who is employed in the Company’s E1 level of
band 7 (or any comparable or higher classification).
	 
	2.7	 	“Disability” means permanent and total disability as defined in the Company’s Long Term
Disability Plan or any successor plan (or if no such plan exists, as defined in Code Section
22(e)(3)).
	 
	2.8	 	“Effective Date” means November 9, 2009.
	 
	2.9	 	“Exchange Act” means the Securities Exchange Act of 1934, as amended.




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	2.10	 	“Participant” means a Corporate Officer, key management, or other salaried employee described
in Article 3 of this Plan.
	 
	2.11	 	“Performance Period” means the period for which a Bonus may be made. Unless otherwise
specified by the Committee, the Performance Period shall be a calendar year, beginning on
January 1 of any year.
	 
	2.12	 	“Plan” means the Lear Corporation Annual Incentive Plan, as it may be amended from time to
time.
	 
	2.13	 	“Retirement” means a Termination of Employment on or after (a) reaching the age established
by the Company as the normal retirement age in any unexpired employment or severance agreement
between the Participant and the Company, or, in the absence of such an agreement, the normal
retirement age under the tax-qualified defined benefit retirement plan or, if none, the
tax-qualified defined contribution retirement plan, sponsored by the Company in which the
Participant participates, or (b) reaching age fifty-five with ten years of service with the
Company.
	 
	2.14	 	“SEC” means the Securities and Exchange Commission.
	 
	2.15	 	“Section 162(m)” means Code Section 162(m) and regulations promulgated thereunder by the
Secretary of the Treasury.
	 
	2.16	 	“Section 409A” means Code Section 409A and regulations promulgated thereunder by the
Secretary of the Treasury.
	 
	2.17	 	“Subsidiary” means any corporation, partnership, limited liability company, association or
other entity of which securities or other ownership interests representing more than 50% of
the equity or more than 50% of the ordinary voting power or more than 50% of the general
partnership interests are, at the time any determination is being made, directly or indirectly
owned by Lear Corporation.
	 
	2.18	 	“Termination of Employment” means (a) the termination of the Participant’s active employment
relationship with the Company, unless otherwise expressly provided by the Committee, or (b)
the occurrence of a transaction by which the Participant’s employing Company ceases to be a
Subsidiary.





ARTICLE 3




Participation



A Corporate Officer designated by the Committee or a key management or other salaried employee of
the Company designated by the senior Human Resources executive or his or her designee, shall be a
Participant in this Plan and shall continue to be a Participant until advised or determined
otherwise.




ARTICLE 4




Incentive Bonuses





	4.1	 	Objective Performance Goals. The Committee shall establish written, objective
performance goals for a Performance Period not later than 90 days after the beginning of the
Performance Period (but not after more than 25% of the Performance Period has elapsed). The
objective performance goals shall be stated as specific amounts of, or specific changes in,
one or more of the financial measures described in Section 4.2. Objective performance




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	 	 	goals may also include operational goals such as: productivity, safety, other strategic
objectives and individual performance goals. The objective performance goals need not be the
same for different Performance Periods and for any Performance Period may be stated: (a) as
goals for Lear Corporation, for one or more of its Subsidiaries, divisions, businesses or
organizational units, or for any combination of the foregoing; (b) on an absolute basis or
relative to the performance of other companies or of a specified index or indices, or be
based on any combination of the foregoing; and (c) separately for one or more of the
Participants, collectively for the entire group of Participants, or in any combination of
the two.
	 
	4.2	 	Financial Measures. The Committee shall use any one or more of the following
financial measures to establish objective performance goals under Section 4.1: net earnings;
operating earnings or income; earnings growth; net sales growth; net income (absolute or
competitive growth rates comparative); net income applicable to common stock; cash flow,
including operating cash flow, free cash flow, discounted cash flow return on investment, and
cash flow in excess of cost of capital; earnings per share of common stock; return on
shareholders equity (absolute or peer-group comparative); stock price (absolute or peer-group
comparative); absolute and/or relative return on common shareholders equity; absolute and/or
relative return on capital; absolute and/or relative return on assets; economic value added
(income in excess of cost of capital); customer satisfaction; quality metrics; expense
reduction; and ratio of operating expenses to operating revenues. The Committee may specify
any reasonable definition of the financial measures it uses. Such definitions may provide for
reasonable adjustments and may include or exclude items, including but not limited to:
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; effects of currency fluctuations; acquisitions, divestitures, or
financing activities; recapitalizations, including stock splits and dividends; expenses for
restructuring or productivity initiatives; discontinued operations; and other non-operating
items.
	 
	4.3	 	Performance Evaluation. Within a reasonable time after the close of a Performance
Period, the Committee shall determine whether the objective performance goals established for
that Performance Period have been met, with respect to the respective Corporate Officers. If
the objective performance goals and any other material terms established by the Committee have
been met by a Corporate Officer, the Committee shall so certify in writing with respect to
such Corporate Officer before the applicable Bonus is paid pursuant to Section 4.5. For all
Participants who are not Corporate Officers, the senior Human Resources executive or his or
her designee shall determine whether objective performance goals established for the
Performance Period have been met by the respective Participants (and shall be bound by any
determinations made by the Committee with respect to performance goals that apply both to
Corporate Officers and to other Participants) and document such determination in accordance
with the Company’s policies and procedures, as may be established from time to time.
	 
	4.4	 	Bonus. If the Committee or the senior Human Resources executive, as applicable, has
made the written certification under Section 4.3 for a Performance Period, each Participant to
whom the certification applies shall be eligible for a Bonus for the Performance Period. The
amount of the Bonus paid to each Corporate Officer shall be determined by the Committee and
the amount of the Bonus paid to every other Participant shall be determined by the senior
Human Resources executive or his or her designee. The Bonus for each such Participant shall
not exceed 250% of the Participant’s annualized base salary in effect on the




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	 	 	December 1st (or such other date as may be established by the Committee) that occurs during
the Performance Period. For any Performance Period, however, the Committee shall have sole
and absolute discretion to (i) reduce the amount of, or eliminate entirely, the Bonus to one
or more of the Participants based upon the Committee’s review of the objective performance
goals for each Participant pursuant to Section 4.3 and the individual performance of such
Participant, or (ii) increase the amount of any Bonus payable to a Participant whose
compensation, at no time during the Performance Period, is subject to Code Section 162(m),
based upon the Committee’s review of the objective performance goals for each Participant
pursuant to Section 4.3 and the individual performance of such Participant. In no event
shall a Bonus be paid to any Participant under the Plan which exceeds $4,000,000 for any
Performance Period.
	 
	4.5	 	Payment or Deferral of the Bonus.






     (a) Subject to Section 4.5(b), the Company shall pay the Bonus to the Participant after
the Committee’s or the senior Human Resources executive’s determination under Section 4.4
but within the two and one-half month period following the end of the Performance Period.
The Company shall have the right to deduct from any Bonus, any applicable income and
employment taxes, and any other amounts that the Company is otherwise required or permitted
to deduct.




     (b) Subject to Section 7.11 (regarding Section 409A) and subject to the Committee’s
approval and applicable law, Participants may request that payments of a Bonus be deferred
under a deferred compensation arrangement maintained by the Company by making a deferral
election prior to or, as permitted, during the Performance Period pursuant to such rules and
procedures as the Committee may establish from time to time with respect to such
arrangement.




	4.6	 	Eligibility for Payments.






     (a) Except as otherwise provided in this Section 4.6, a Participant shall be eligible
to receive a Bonus for a Performance Period only if such Participant is employed by the
Company continuously from the beginning of the Performance Period through the last day of
the Performance Period.




     (b) Under Section 4.6(a), a leave of absence that lasts less than three months and that
is approved in accordance with applicable Company policies (including without limitation,
Company policies regarding treatment of vacation and short term leave and disability) is
not a break in continuous employment. In the case of a leave of absence of three months or
longer, the senior Human Resources executive (or in the case of a Corporate Officer, the
Committee) shall determine whether the leave of absence constitutes a break in continuous
employment.




     (c) The senior Human Resources executive (or in the case of a Corporate Officer, the
Committee) may determine, in its sole discretion, that (1) a Bonus will be payable pro-rata
for a Participant who either becomes eligible to participate during the Performance Period
or terminates his employment with the Company during the Performance Period due to his
death, Retirement or Disability, and (2) a Bonus will be adjusted to reflect a Participant’s
increase or decrease in annualized salary during the Performance Period in both cases, with
respect to a Participant whose compensation is subject to Code Section 162(m), only to the
extent permissible under Code 
Section 162(m).



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	4.7	 	Change in Control. Upon the effective date of any Change in Control of the Company,
all potential Bonuses payable hereunder attributable to a Performance Period in which the
Change in Control occurs will vest and be paid on a pro-rata basis based on the target level
of such potential Bonus. Such payment will be made as soon as practicable (and no more than
21/2 months) following the Change in Control, without regard to whether such payments would be
deductible under Code Section 162(m). A “Change in Control” will have the same meaning given
to such term in the Company’s 2009 Long-Term Stock Incentive Plan, as amended.





ARTICLE 5




Administration





	5.1	 	General Administration. This Plan shall be administered by the Committee, subject to
such requirements for review and approval by the Board as the Board may establish. Subject to
the terms and conditions of this Plan and Section 162(m), the Committee is authorized and
empowered in its sole discretion to select or approve Participants and to award potential
Bonuses in such amounts and upon such terms and conditions as it shall determine.
	 
	 	 	Except to the extent provided in the following sentence, the Committee may delegate to the
senior Human Resources executive (or his or her designee) any of the Committee’s duties and
authority under the Plan with respect to Bonuses that may be payable to Participants who are
not Corporate Officers, including but not limited to such duties and authority as are set
forth in Articles 3 and 4. With respect to Bonuses that may be payable to Participants who
are Corporate Officers during the Performance Period, the Committee may delegate any of the
Committee’s duties and authority to the extent the Committee determines that such delegation
would not cause a Bonus intended to be performance-based compensation under Section 162(m)
to fail to qualify as such.
	 
	5.2	 	Administrative Rules. The Committee shall have full power and authority to adopt,
amend and rescind administrative guidelines, rules and regulations pertaining to this Plan and
to interpret this Plan and rule on any questions respecting any of its provisions, terms and
conditions.
	 
	5.3	 	Committee Members Not Eligible. No member of the Committee shall be eligible to
participate in this Plan.
	 
	5.4	 	Committee Members Not Liable. The Committee and each of its members shall be
entitled to rely upon certificates of appropriate officers of the Company with respect to
financial and statistical data in order to determine if the objective performance goals for a
Performance Period have been met. Neither the Committee nor any member shall be liable for any
action or determination made in good faith with respect to this Plan or any Bonus made
hereunder.
	 
	5.5	 	Decisions Binding. All decisions, actions and interpretations of the Committee
concerning this Plan shall be final and binding on Lear Corporation and its Subsidiaries and
their respective boards of directors, and on all Participants and other persons claiming
rights under this Plan.
	 
	5.6	 	Application of Section 162(m). Bonuses payable under this Plan are intended to
satisfy the applicable requirements for the performance-based compensation exception for any
Participant’s whose compensation is subject to Section 162(m). It is intended that the Plan




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	 	 	be administered, interpreted and construed so that Bonus payments remain tax deductible to
the Company.





ARTICLE 6




Amendments; Termination



This Plan may be amended or terminated by the Board or the Committee. All amendments to this Plan,
including an amendment to terminate this Plan, shall be in writing. An amendment to this Plan
shall not be effective without the prior approval of the stockholders of Lear Corporation if such
approval is necessary: (i) to continue to qualify Bonuses as performance-based compensation under
Section 162(m); or (ii) to comply with Department of the Treasury or SEC regulations, the rules of
the New York Stock Exchange or any other applicable exchange or any other applicable law or
regulations. Unless otherwise expressly provided by the Board or the Committee, no amendment to
this Plan shall apply to potential Bonuses with respect to a Performance Period that began before
the effective date of such amendment.




ARTICLE 7




Other Provisions





	7.1	 	Duration of the Plan. This Plan is effective as of the Effective Date. This Plan
shall remain in effect until all Bonuses made under this Plan have been paid or forfeited
under the terms of this Plan, and all Performance Periods related to Bonuses made under this
Plan have expired. No Bonuses may be paid under this Plan for any Performance Period that
would end after the first meeting of Company shareholders that occurs in the fifth year
following the calendar year which includes the Effective Date, unless the Board (subject to
any shareholder approval that may then be required to continue to qualify this Plan as a
performance-based plan under Section 162(m)) extends this Plan.
	 
	7.2	 	Bonuses Not Assignable. No Bonus or any right thereto shall be assignable or
transferable by a Participant except by will or by the laws of descent and distribution. Any
other attempted assignment or alienation shall be void and of no force or effect.
	 
	7.3	 	Participant’s Rights. The right of any Participant to receive any payments under a
Bonus granted to such Participant and approved by the Committee pursuant to the provisions of
this Plan shall be an unsecured claim against the general assets of the Company. This Plan
shall not create, nor be construed in any manner as having created, any right by a Participant
to any Bonus for a Performance Period because of a Participant’s participation in this Plan
for any prior Performance Period, or because the Committee or the senior Human Resources
executive has made a written certification under Section 4.3 for the Performance Period. The
application of the Plan to one Participant shall not create, nor be construed in any manner as
having created, any right by another Participant to similar or uniform treatment under the
Plan. Solely with respect to a Participant who is party to an unexpired employment or
severance agreement with the Company, the provisions of this Plan are in all respects subject
to the terms and conditions of such agreement as if they were set forth fully herein.
	 
	7.4	 	Termination of Employment. The Company retains the right to terminate the employment
of any Participant or other employee at any time for any reason or no reason, and a Bonus is
not, and shall not be construed in any manner to be, a waiver of such right.




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	7.5	 	Exclusion from Benefits. Bonuses under this Plan shall not constitute compensation
for the purpose of determining participation or benefits under any other plan of the Company
unless specifically included as compensation in such plan.
	 
	7.6	 	Successors. Any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of Lear Corporation’s business or
assets, shall assume Lear Corporation’s liabilities under this Plan and perform any duties and
responsibilities in the same manner and to the same extent that Lear Corporation would be
required to perform if no such succession had taken place.
	 
	7.7	 	Law Governing Construction. The construction and administration of this Plan and all
questions pertaining thereto shall be governed by the laws of the State of Michigan without
giving effect to principles of conflicts of law, except to the extent that such law is
preempted by Federal law.
	 
	7.8	 	Headings Not a Part Hereto. Any headings preceding the text of the several Articles,
Sections, subsections, or paragraphs hereof are inserted solely for convenience of reference
and shall not constitute a part of this Plan, nor shall they affect its meaning, construction
or effect.
	 
	7.9	 	Severability of Provisions. If any provision of this Plan is determined to be void
by any court of competent jurisdiction, this Plan shall continue to operate and, for the
purposes of the jurisdiction of the court only, shall be deemed not to include the provision
determined to be void.
	 
	7.10	 	Offsets. To the extent permitted by law, the Company shall have the right to offset
from any Bonus payable hereunder any amount that the Participant owes to the Company or any
Subsidiary without the consent of the Participant (or his beneficiary, in the event of the
Participant’s death).
	 
	7.11	 	Section 409A. This Plan is intended to comply with Section 409A and the
interpretative guidance thereunder, including the exemption for short-term deferrals, and
shall be administered accordingly. The Plan shall be construed and interpreted with such
intent. The Company makes no representations that the Plan, the administration of the Plan,
or the amounts hereunder comply with, or are exempt from, Section 409A. If an operational
failure occurs with respect to Section 409A, any affected Participant shall fully cooperate
with the Company to correct the failure, to the extent possible, in accordance with any
correction procedure established by the Secretary of the Treasury.







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