EX-10.19






Exhibit
10.19




BORGWARNER INC.




2005 EXECUTIVE INCENTIVE PLAN




 









 




 

BORGWARNER INC.




2005 EXECUTIVE INCENTIVE PLAN

(as amended and restated effective January 1, 2009)




ARTICLE 1.     Establishment, Objectives, and Duration




          1.1 Establishment of the Plan. BorgWarner Inc., a Delaware corporation (the “Company”),
previously established this incentive compensation plan, known as the “BorgWarner Inc. 2005
Executive Incentive Plan” (the “Plan”), as set forth herein and as it may be amended from time to
time.



           The Plan became effective as of the date the stockholders first approved the Plan (the
“Effective Date”) on April 27, 2005, and shall remain in effect as provided in Section 1.3 hereof.
The effective date of this amendment and restatement is January 1, 2009.



           1.2 Objectives of the Plan. The primary objectives of the Plan are: (a) to attract,
motivate, and retain high-caliber individuals by providing competitive annual incentive
opportunities, (b) to provide an incentive to key Employees of the Company who have significant
responsibility for the success and growth of the Company, and (c) to satisfy the requirements of
Section 162(m) of the Internal Revenue Code.



           1.3 Duration of the Plan. The Plan shall commence on the Effective Date and shall remain
in effect, subject to the right of the Committee to amend or terminate the Plan at any time
pursuant to Article 9 hereof, for a period of ten (10) years, at which time the right to grant
Awards under the Plan shall terminate.



ARTICLE 2.     Definitions




           Whenever the following terms are used in the Plan, with their initial letter(s)
capitalized, they shall have the meanings set forth below:




           (a) “Award” means an award described in Article 5 hereof.




           (b) “Award Pool” means, with respect to a Plan Year, 2.25% of Operating Income for the Plan Year.




           (c) “Board” or “Board of Directors” means the Board of Directors of the Company.




           (d) “Code” means the Internal Revenue Code of 1986 as amended from time to time.




           (e) “Committee” means the Compensation Committee of the Board or any other committee appointed by the
Board to administer the Plan and Awards to Participants hereunder, as specified in Article 3 hereof.




           (f) “Company” means BorgWarner Inc., a Delaware corporation, and any successor thereto as provided in
Article 11 hereof.




           (g) “Director” means any individual who is a member of the Board.




           (h) “Effective Date” shall have the meaning ascribed to such term in Section 1.1 hereof.



 









 






           (i) “Employee” means any person who is expressly designated an employee by the Company or Subsidiary
by whom he or she is employed. A person who is not expressly designated an employee shall not be an employee
for purposes of this definition and the Plan, regardless of whether the Internal Revenue Service or a court
has or would designate such a person as an employee of the Company or of a Subsidiary under common law or
statutory principles. Directors who are employed by the Company or by a Subsidiary shall be considered
Employees under the Plan.




           (j) “Operating Income” means the amount reported on the Company’s Consolidated Statements of
Operations for the Plan Year.




           (k) “Participant” means a key Employee who has been selected to receive an Award or who holds an outstanding
Award.




           (l) “Performance-Based Exception” means the performance-based exception from the tax deductibility
limitation imposed by Code Section 162(m), as set forth in Code Section 162(m)(4)(C).




           (m) “Plan” means the BorgWarner Inc 2005 Executive Incentive Plan, as set forth herein and as it may
be amended from time to time.




           (n) “Plan Year” means the Company’s fiscal year, which is the calendar year.




           (o) “Subsidiary” means any corporation, partnership, john venture, or other entity in which the
Company, another entity qualifying as a Subsidiary within this definition, or a combination of any of them
has an ownership or other proprietary interest of more than fitly percent (50%).



ARTICLE 3.      Administration




           3.1 General. The Plan shall be administered by the Committee, which shall consist
exclusively of two (2) or more nonemployee directors who qualify as outside directors within the
meaning of Code Section 162(m) and the related regulations under the Code. The members of the
Committee shall be appointed from time to time by, and shall serve at the discretion of, the Board.
The Committee shall have the authority to delegate administrative duties to officers or Directors
of the Company; provided that the Committee may not delegate its authority with respect to:
(a) non-ministerial actions with respect to Awards that are intended to qualify for the
Performance-Based Exception; and (b) certifying that any performance goals and other material terms
attributable to Awards intended to qualify for the Performance-Based Exception have been satisfied.



           3.2 Authority of the Committee. Except as limited by law or by the Certificate of
Incorporation or Bylaws of the Company, and subject to the provisions hereof, the Committee shall
have the power in its discretion to select key Employees who shall participate in the Plan;
determine the sizes and types of Award and the terms and conditions of Awards in a manner
consistent with the Plan; construe and interpret the Plan and any Award, document, or instrument
issued under the Plan; establish, amend, or waive rules and regulations for the Plan’s
administration; and (subject to the provisions of Article 9 hereof) amend the terms and conditions
of any outstanding Award as provided in the Plan. Further, the Committee shall make all other
determinations that may be necessary or advisable for the administration of the Plan.



           3.3 Decisions Binding. All determinations and decisions made by the Committee pursuant
to the provisions of the Plan and all related orders and resolutions of the Committee shall be
final, conclusive, and binding on all persons, including the Company, its stockholders, Directors,
Employees, Participants, and their estates and beneficiaries.



 









 





           3.4 Performance-Based Awards. For purposes of the Plan, it shall be presumed, unless the
Committee indicates to the contrary, that all Awards are intended to qualify for the
Performance-Based Exception. If the Committee does not intend an Award to qualify for the
Performance-Based Exception, the Committee shall reflect its intent in its records in such manner
as the Committee determines to be appropriate.



ARTICLE 4.     Eligibility and Participation




           4.1 Eligibility. All Employees who are determined by the Committee to be key employees
are eligible to participate in the Plan.



           4.2 Actual Participation. Subject to the provisions of the Plan, the Committee may, from
time to time, select from all eligible key Employees those to whom Awards shall be granted and
shall determine the nature and amount of each Award.



ARTICLE 5.     Covered Employee Annual Incentive Award



           5.1 Grant of Awards. All Awards under the Plan shall be granted upon terms approved by
the Committee. However, no Award shall be inconsistent with the terms of the Plan or fail to
satisfy the requirements of applicable law. Each Award shall relate to a designated Plan Year.



           5.2 Award Pool Limitation. The sum of the Awards for a single Plan Year shall not exceed
one hundred percent (100%) of the amount in the Award Pool for that Plan Year.



           5.3 Individual Maximum Awards. For any given Plan Year, no one Participant shall receive
an Award which is in excess of fifty percent (50%) of the Award Pool.



           5.4 Limitations on Committee Discretion. The Committee may reduce, but may not increase,
any of the following:




           (a) The maximum Award for any Participant; and




           (b) The size of the Award Pool.



           5.5 Payment, Payment of Awards shall be subject to the following:




           (a) Unless otherwise determined by the Committee in its sole discretion,
a Participant shall have no right to receive a payment under an Award for a
Plan Year unless the Participant is employed by the Company or a Subsidiary at
all times during the Plan Year.




           (b) As soon as possible after the determination of the Award Pool for a
Plan Year, the Committee shall calculate each Participant’s allocated portion
of the incentive pool based upon the percentage established at the beginning of
the Plan Year. Each Participant’s incentive award then shall be determined by
the Committee based on the Participant’s allocated portion of the incentive
pool subject to Section 5.3 and any downward adjustment, such downward
adjustment to be in the sole discretion of the Committee. In no event may the
portion of the incentive pool allocated to a Participant be increased in any
way, including as a result of the reduction of any other Participant’s
allocated portion. The Committee shall retain the discretion to adjust such
Awards downward.




           (c) Payments of Awards shall be wholly in cash no later than March 15 of
the calendar year following the



 









 





          calendar year for which the Award is made.




           (d) Each Award shall be paid on a date prescribed by the Committee,
unless the Participant has elected to defer payment in accordance with the
rules and regulations established by the Committee.



ARTICLE 6.     Beneficiary Designation




           Each Participant may, from time to time, name any beneficiary or beneficiaries (who may
be named contingently or successively) to whom any benefit under the Plan is to be paid in case of
the Participant’s death before the Participant receives any or all of such benefit. Each such
designation shall revoke all prior designations by the same Participant with respect to such
benefit, shall be in a form prescribed by the Company, and shall be effective only when filed by
the Participant in writing with the Company during the Participant’s lifetime. In the absence of
any such designation, any benefits remaining unpaid under the Plan at the Participant’s death shall
be paid to the Participant’s estate.



ARTICLE 7.     Deferrals




           The Committee may permit or require a Participant to defer such Participant’s receipt of
the payment of cash that would otherwise be due to such Participant in connection with any Awards.
If any such deferral election is required or permitted, the Committee shall establish rules and
procedures for such payment deferrals, which rules and procedures shall satisfy the requirements of
Code section 409A.



ARTICLE 8.     No Right to Employment or Participation




           8.1 Employment. The Plan shall not interfere with or limit in any way the right of the
Company or of any Subsidiary to terminate any Participant’s employment at any time, and the Plan
shall not confer upon any Participant the right to continue in the employ of the Company or of any
Subsidiary.



           8.2 Participation. No Employee shall have the right to be selected to receive an Award
or, having been so selected, to be selected to receive a future Award.



ARTICLE 9.     Amendment, Modification, and Termination




           9.1 Amendment, Modification, and Termination. Subject to the terms of the Plan, the
Committee may at any time and from time to time, alter, amend, suspend, or terminate the Plan in
whole or in part; provided that unless the Committee specifically provides otherwise, any revision
or amendment that would cause the Plan to fail to comply with any requirement of applicable law,
regulation, or rule if such amendment were not approved by the stockholders of the Company shall
not be effective unless and until stockholder approval is obtained.



           9.2 Adjustment of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events.
The Committee may make adjustments in the terms and conditions of, and the criteria included in,
Awards in recognition of unusual or nonrecurring events affecting the Company or the financial
statements of the Company or of changes in applicable laws, regulations, or accounting principles,
whenever the Committee determines that such adjustments are appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be made available under
the Plan; provided that the Committee shall not be authorized to adjust an Award that the Committee
intends to qualify for the Performance-Based Exception if such adjustment (or the authority to make
such adjustment) would prevent the Award from qualifying for the Performance-Based Exception.



 









 





           9.3 Awards Previously Granted. Notwithstanding any other provision of the Plan to the
contrary (but subject to Section 1.1 hereof), no termination, amendment, or modification of the
Plan shall cause any previously granted Awards to be forfeited. After the termination of the Plan,
any previously granted Award shall remain in effect and shall continue to be governed by the terms
of the Plan and the Award.



ARTICLE 10.     Withholding




           The Company and its Subsidiaries shall have the power and the right to deduct or
withhold, or to require a Participant to remit to the Company or to a Subsidiary, an amount that
the Company or a Subsidiary reasonably determines to be required to comply with federal, state,
local, or foreign tax withholding requirements.



ARTICLE 11.     Successors




           All obligations of the Company under the Plan with respect to Awards granted hereunder
shall be binding on any successor to the Company, whether the existence of such successor is the
result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or
substantially all of the business and assets of the Company.



ARTICLE 12.     Legal Construction




           12.1 Gender and Number. Except where otherwise indicated by the context, any masculine
term used herein also shall include the feminine, any feminine term used herein also shall include
the masculine, and the plural shall include the singular and the singular shall include the plural.



           12.2 Severability. If any provision of the Plan shall beheld illegal or invalid for any
reason, such illegality or invalidity shall not affect the remaining parts of the Plan, and the
Plan shall be construed and enforced as if the illegal or invalid provision had not been included.



           12.3 Requirements of Law. The granting of Awards under the Plan shall be subject to all
applicable laws, rules, and regulations, and to such approvals by any governmental agencies as may
be required.



           12.4 Governing Law. The Plan and all Awards shall be construed in accordance with and
governed by the laws of the state of Delaware (without regard to the legislative or judicial
conflict of laws rules of any state), except to the extent superseded by federal law.



           12.5 Code Section 409A. Although the Company does not guarantee to the Participants any
particular tax treatment relating to Awards under the Plan, it is intended that the Awards be
exempt from Section 409A of Code and the regulations and guidance promulgated thereunder
(collectively, “Code Section 409A”), and the Plan shall be construed in a manner consistent with
the requirements for avoiding taxes or penalties under Code Section 409A. Notwithstanding anything
herein to the contrary, in no event whatsoever shall the Company be liable for any additional tax,
interest or penalties that may be imposed on a Participant by Code Section 409A or any damages for
failing to comply with Code Section 409A.