2003-2005 LONG-TERM INCENTIVE PLAN DESCRIPTION



 



SUMMARY PLAN DESCRIPTION



2003 - 2005

LONG-TERM INCENTIVE PLAN



Goodrich Corporation



January 2003



 






 





SUMMARY PLAN DESCRIPTION



2003 - 2005 Long-Term Incentive Plan



THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING

SECURITIES THAT HAVE BEEN REGISTERED UNDER THE SECURITIES

ACT OF 1933.



The Long-Term Incentive Plan is designed to provide long-term incentive
compensation to key executives who are in positions to influence the
performance of 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
executives (base salary, Management Incentive Program, stock options and
benefits).


The following is a summary of the main provisions of the Long-Term Incentive
Plan. The official and controlling provisions of the Plan are contained in the
text of the 2001 Stock Option Plan. In case of any discrepancies between this
summary plan description and the plan document for the 2001 Stock Option Plan,
the plan document will govern. In this summary, Goodrich Corporation is
referred to as the “Company”, and the Long-Term Incentive Plan is referred to
as the “LTIP” or the “Plan”.


The benefits described in this summary have been structured to be in compliance
with current tax law. Any change in legislation or the interpretation of tax
laws which affect the tax nature of the benefits provided may necessitate
revisions in the Plan.


The Company reserves the right to amend, modify, suspend or partially or
completely terminate the Plan at any time, unless there has been a Change in
Control.


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PLAN OVERVIEW




	•	 	Participation in the LTIP will be approved by the Compensation
Committee of the Board of Directors.
	 
	•	 	The LTIP will provide for annual grants of Performance Shares with
multi-year overlapping cycles. Every year, a separate multi-year
performance cycle will begin.
	 
	•	 	At the beginning of each Plan cycle, a grant of Performance Shares
will be made to each participant. Grants will be credited as phantom
Performance Shares in a book-entry account for each participant. Each
phantom Performance Share will be equivalent to one share of Goodrich
common stock.
	 
	•	 	With respect to each Plan cycle, the Compensation Committee of the
Board of Directors will establish multi-year performance goals for the
Company and each segment. The performance goals applicable to each
participant will be set forth in his or her award agreement.
	 
	•	 	During the Plan cycle, dividend equivalents will be accrued on all
phantom Performance Shares. Such dividend equivalents will be
credited to each participant’s account in the form of additional
phantom Performance Shares at the same time and in the same amount as
actual dividend payments on Goodrich common stock.
	 
	•	 	Participants will be entitled to a payout of shares at the end of each
Plan cycle only if a threshold performance standard is met. The
number of shares to be received free of further restrictions will
range from 0% to 200% of the total phantom Performance Share account
(including shares credited through dividend equivalents), based on
attainment against goals set by the Committee.
	 
	•	 	Payments from the Plan, if any, at the end of the Plan cycle, will be
made in actual shares of Goodrich common stock, less the number of
shares to satisfy applicable withholding taxes.
	 
	•	 	Participants may elect to defer all or a portion of their award until
termination of employment as described in the Performance Share
Deferred Compensation Plan.



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	•	 	The Compensation Committee of the Board of Directors retains the right
in its sole discretion to reduce any award which would otherwise be
payable, unless there has been a Change in Control, as defined in the
2001 Stock Option Plan.



PLAN PROVISIONS



ELIGIBILITY


Eligibility to participate in the LTIP will be determined by the Compensation
Committee of the Board of Directors.


AWARD GRANTS


The LTIP rewards financial performance for multi-year overlapping cycles.
Every year, a separate multi-year performance cycle will begin.


At the beginning of each Plan cycle, a grant of Performance Shares will be made
to each participant. Grants will be credited as phantom Performance Shares in
a book-entry account for each participant. Each phantom Performance Share will
be equivalent to one share of Goodrich common stock.


The Company will maintain a phantom Performance Share account for each
participant for each separate Plan cycle. The account will be used solely for
record keeping purposes. No actual Goodrich common shares will be registered
in participants’ names.


DIVIDENDS


Dividend equivalents will be accrued on all phantom Performance Shares in each
participant’s account for each Plan cycle. Such dividend equivalents will be
credited to each participant’s account in the form of additional phantom
Performance Shares at the same time and in the same amount as actual dividend
payments on Goodrich common stock.


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PERFORMANCE GOALS


With respect to each Plan cycle, the Compensation Committee of the Board of
Directors will establish multi-year performance goals for the Company and each
segment. The performance goals applicable to each participant will be set forth
in his or her award agreement.


The determination of whether the performance goals have been met will be made
by the Compensation Committee following the end of the plan cycle.


PLAN PAYOUTS


Payments from the Plan, if any, at the end of the Plan cycle, will be made in
actual shares of Goodrich common stock, less the number of shares to satisfy
applicable withholding taxes.


At the end of each Plan cycle, if a participant is still employed by the
Company, he or she will receive a payment from the Plan after the Compensation
Committee determines the final payout based upon specific financial performance
goals established for participants.


Participants will be entitled to a payout of shares at the end of each Plan
cycle only if a threshold performance standard is met. If threshold
performance is achieved, the number of shares to be received free of further
restrictions will range from 0% to 200% of a participant’s total phantom
Performance Share account (including shares credited through dividend
equivalents) for that Plan cycle, based on attainment against goals set by the
Committee.


TERMINATION OF EMPLOYMENT DUE TO DEATH, DISABILITY, RETIREMENT


If a participant dies, becomes totally disabled under the Company’s Long-Term
Disability Plan, or retires under the Company’s Retirement Program for Salaried
Employees (or a similar pension plan maintained by a subsidiary) during a Plan
cycle, the participant (or his or her estate) will receive a pro rata payout at
the end of the Plan cycle, based upon the time portion of the cycle during
which he or she was employed. The actual payout will not occur until after the
end of the Plan cycle, at which time the financial performance for the entire
Plan cycle will be used to determine the size of the award in that event.


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OTHER TERMINATION OF EMPLOYMENT


If a participant terminates employment prior to the end of a Plan cycle for
reasons other than death, disability or retirement, he or she will forfeit all
Performance Shares, unless the Compensation 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 Plan cycle which begins on the January 1
immediately following their hire or promotion date. No new Performance Share
awards or adjustments to Performance Share awards for Plan cycles that
commenced prior to a participant’s hire or promotion date will be made.


CHANGE IN POSITION


The performance factors and weightings applicable to a participant’s award vary
depending upon the participant’s position with the Company. In calculating a
participant’s award, the Compensation Committee will take into account any
changes in position during the Plan cycle.


CHANGE IN CONTROL


Generally, participants will not receive a payout under the Plan until the end
of a Plan cycle. An exception will occur, however, if there is a Change in
Control of the Company. A Change in Control is defined in the 2001 Stock
Option Plan. The effect of a Change in Control on a participant’s ability to
receive Performance Shares is described in the Long-Term Incentive Plan.
Generally, that Plan provides that, as of the date of the Change in Control, a
participant will become entitled to a prorated portion of the shares originally
awarded to him or her, based upon financial performance for the portion of the
cycle which ends on the date of the Change in Control. A participant’s
entitlement to additional shares will be based upon financial performance for
the portion of the Plan cycle that occurs after the Change in Control.


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DEFERRAL OF PAYOUTS


Participants may elect to defer all or a portion of Performance Shares that may
be earned and payable at the end of a Plan cycle as described in the
Performance Share Deferred Compensation Plan. A deferral election must be made
before the Plan cycle begins, using a form provided by the Company.


A description of the terms and conditions of the Performance Share Deferred
Compensation Plan is contained in the related Summary Plan Description, a copy
of which has been provided to each participant. Participants are encouraged to
review the Summary Plan Description before making an election to defer
Performance Shares.


PLAN ADMINISTRATION


The Plan is administered by the Compensation Committee of the Board of
Directors. The Committee has full power and authority to construe, interpret
and administer the Plan. All decisions, actions or interpretations of the
Committee shall be final, conclusive and binding on all parties.


The Committee retains the right in its sole discretion to reduce any award
which would otherwise be payable, unless there has been a Change in Control.


The Committee reserves the right to amend, modify, suspend or partially or
completely terminate the Plan, unless there has been a Change in Control.


TAX INFORMATION


Generally, participants are not taxed on Performance Shares until the date on
which they become entitled to a payout of their Performance Shares. Under
current tax law, on the date participants become entitled to receive the shares
following completion of a Plan cycle, the market value of the shares (net of
any shares deferred) at that time is considered to be ordinary income and they
will be taxed on that amount. If participants hold the shares and later sell
them, any appreciation over the market value of the shares when they received
them at the end of the Plan cycle will be taxed based on capital gains tax
rules.


At the end of the Plan cycle, the number of actual Goodrich common shares
participants will receive will be net of an amount of shares sufficient to
satisfy any federal, state and local withholding tax requirements or other
payroll tax requirements with which the Company must comply.


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The tax consequences of deferring Performance Shares under the Performance
Share Deferred Compensation Plan are described in the related Summary Plan
Description, a copy of which has been provided to each participant.


Each participant should consult his or her tax advisor for a complete
explanation of the tax impact of participation in the Long-Term Incentive Plan
and the Performance Share Deferred Compensation Plan.


EARNINGS FOR BENEFIT PURPOSES


Any income participants derive from Performance Share payouts will not be
considered eligible earnings for Company or subsidiary pension plans, savings
plans, profit sharing plans or any other benefit plans.


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2003-2005

Goodrich Long-Term Incentive Plan



THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING

SECURITIES THAT HAVE BEEN REGISTERED UNDER THE SECURITIES

ACT OF 1933.



Name:


AWARD GRANT


You have been granted the following Long-Term Incentive Plan shares for the
three-year performance period 2003 through 2005:


phantom Performance Shares



Grants are credited as phantom Performance Shares in a book-entry account for
you. Each phantom Performance Share will be equivalent to one share of
Goodrich common stock.


The terms and conditions of your award are contained in the 2001 Stock Option
Plan and the 2003 – 2005 Long-Term Incentive Plan Summary Plan Description
(collectively, the “Plan Documents”). If this award agreement varies from the
terms of the Plan Documents, the Plan Documents will control.


PLAN GOALS


The number of phantom Performance Shares you earn will depend on the three-year
performance of (a) the Company or your Segment, as applicable, as measured by
Total Business Return (“TBR”), and (b) Relative Total Shareholder Return
(“RTSR”) for the Company using the manufacturing component of the S&P 500 as
the benchmark. The performance goals for the three-year period and the
relative weightings for the Plan participants are attached as Appendix A
hereto.


The determination of whether the performance goals have been met will be made
by the Compensation Committee following the end of the plan cycle. For Plan
purposes, TBR will be calculated with the following adjustments:


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	•	 	Adjust for the short-term EBITDA and TBR cash flow impact of
long-cycle investments to the Segment or the Company for those
investments that are discussed with the Board of Directors.
	 
	•	 	Exclude the EBITDA impact of externally reported special items that
are one-time events not associated with the normal operation of the
business. One-time events are defined as infrequent and not recurrent
in nature and are limited in their financial impact to a specific time
period. Special items may include, but are not limited to, accounting
principle changes, restructuring charges, merger costs, natural
disasters or discontinued operations. The TBR cash flow impact of
special items will be included in the TBR measurement.
	 
	•	 	Adjust for the EBITDA and TBR cash flow impact of significant
acquisitions and divestitures during the year of the activity in a TBR
neutral manner.



OTHER IMPORTANT INFORMATION




	•	 	Dividend equivalents will be accrued on all phantom Performance Shares
in your account during the Plan cycle. Such dividend equivalents will
be credited to your account in the form of additional phantom
Performance Shares at the same time and in the same amount as actual
dividend payments on Goodrich common stock.
	 
	•	 	You will not earn any phantom Performance Shares if the Company’s
performance during the 2003 - 2005 period is below threshold
performance.
	 
	•	 	If threshold performance is achieved, the number of shares to be
received free of further restrictions will range from 0% to 200% of
your total phantom Performance Share account (including shares
credited through dividend equivalents), based on attainment against
the performance goals.
	 
	•	 	Payments from the Plan, if any, at the end of the Plan cycle, will be
made in actual shares of Goodrich common stock, less the number of
shares to satisfy applicable withholding taxes.
	 
	•	 	If you die, become totally disabled under the Company’s Long-Term
Disability Plan or retire under the Company’s Employees’ Pension Plan
(or a similar pension plan maintained by a subsidiary) during the Plan
cycle, you (or your estate) will receive a pro rata payout at the end
of the Plan cycle, based upon the time portion of the cycle during
which you were employed. The actual



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	 	 	payout will not occur until after the end of the Plan cycle, at which time
the financial performance for the entire Plan cycle will be used to
determine the size of the award in that event.
	 
	•	 	If you terminate employment prior to the end of the Plan cycle for
reasons other than death, disability or retirement, you will forfeit
all Performance Shares.
	 
	•	 	The performance factors and weightings applicable to your award are
determined based upon your position with the Company. In calculating
your award, the Compensation Committee will take into account any
changes in your position during the Plan cycle.
	 
	•	 	The Compensation Committee retains the right in its sole discretion to
reduce any award which would otherwise be payable, unless there has
been a Change in Control, as defined in the Stock Option Plan.
	 
	•	 	Any income you derive from a payout of Performance Shares will not be
considered eligible earnings for Company or subsidiary pension plans,
savings plans, profit sharing plans or other benefit plans.



FOR MORE INFORMATION



If you have any questions about the Long-Term Incentive Plan or need additional
information, contact Kevin Heslin at (704) 423-7094.



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