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                                                                   EXHIBIT 10.16

                               FIRST AMENDMENT TO
                            TECUMSEH PRODUCTS COMPANY
                      VOLUNTARY DEFERRED COMPENSATION PLAN

         Effective January 1, 2000, Tecumseh Products Company (the "Company")
amends the Company's Management Incentive Plan as follows:


1. Section 4.6 of the Plan is amended to read:

                  4.6 Deferrals in 5% Increments. The minimum amount which may
         be deferred by an Eligible Participant for any Plan Year is 5% of
         Compensation. Deferrals in excess of the minimum amount shall be in
         further 5% increments of Compensation. Elections to convert MIP Phantom
         Shares or to defer MIP cash awards pursuant to Section 6.10 are not
         subject to this Section 4.6.


2. Section 6.10 of the Plan is amended to read:

         6.10  Election to Convert MIP Awards.

                  Phantom Shares - An Eligible Participant (including a former
         officer or Key Employee who has a Deferred Compensation Account under
         the Plan) may, upon written election, choose to convert all or part of
         his/her Account under the Tecumseh Products Company Management
         Incentive Plan (the "MIP")), attributable to phantom share allocations
         ("MIP Phantom Shares") first becoming vested at the end of a Plan Year,
         into the Phantom Share Investment Option, the Corporate Bond Investment
         Option, any other Investment Option that the Committee has made
         available, or a combination of the foregoing, under this Plan. Such
         conversion privilege is irrevocable (subject to the Participant's right
         to elect a different Investment Option under Section 6.9) and is
         subject to all provisions of this Plan. Also, any such written
         election, as well as any elections under Sections 8.1 - 8.3 with
         respect to the time, method of payment and payment period for the
         portion of the Participant's Deferred Compensation Account attributable
         to such conversion, must be made --

                  i)       at least 365 calendar days prior to the date the
                           Participant becomes vested in the MIP Phantom Shares,
                           and

                  ii)      on a Deferred Compensation Election Form, an example
                           of which is attached as EXHIBIT 1.1.

         However, the above 365-day restriction will not apply in the situation
         where --

         -        a Participant has made an election with respect to MIP Phantom
                  Shares at least 365 days before he would become vested in
                  those Shares under Article VI(a) of the MIP, and

         -        he subsequently becomes vested in those Shares under any other
                  provision of the MIP before the end of the Plan Year and
                  within 365 days of the date of the original election.

         In that situation, those MIP Phantom Shares which had been subject to
         the earlier election, and whose vesting was thereafter accelerated,
         shall be covered by the earlier election, even though they became
         vested within 365 days of the election.

                  The conversion shall be effective as of the date the
         Participant becomes vested in the applicable MIP Phantom Shares. The
         conversion value of the MIP Phantom Shares used to calculate the number
         of Phantom Share units to be allocated to the Participant's Phantom
         Share Investment Option or the dollar amount to be allocated to the
         Participant's Corporate Bond Investment Option or to any other
         Investment Option that the Committee has made available shall generally
         be the value of the applicable MIP Phantom Shares as of the date the
         Participant became vested in such MIP Phantom Shares as determined
         under the MIP. However, the number


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         of units allocated to a Participant's Phantom Share sub-account under
         this Plan as the result of a conversion pursuant to this Section 6.10
         shall not be less than A x B, where "A" represents the total number of
         MIP Phantom Shares being converted and "B" represents the percentage of
         such converted MIP Phantom Shares being allocated to the Participant's
         Phantom Share sub-account under this Plan.

                  MIP Cash Awards - Effective for Class Years (as defined in the
         MIP) beginning on and after January 1, 2000, the MIP was amended to
         provide that one-third of each annual award under the MIP would be
         fully vested as of the December 31 of each such Class Year, and paid in
         cash within 60 days thereafter. An eligible Participant who is covered
         by the MIP may elect to defer all or some portion of a MIP cash award
         (in 25% increments of the award) by completing, executing and filing
         with the Committee, before the commencement of such Class Year, the
         relevant [cash award] portion of the Deferred Compensation Election
         Form, previously attached hereto as EXHIBIT 1.1. However, for the Class
         Year that begins January 1, 2000, such election form may be filed
         within 30 days following the date on which the Board approved the MIP
         amendment which authorized cash awards under the MIP. Such deferred
         amounts shall be credited (as of the date such amount(s) would
         otherwise have been paid to the Participant) to one or more of the
         Investment Option sub-accounts which the Committee shall make available
         under the Plan.


3. Except as amended above, the Plan continues in full force and effect.


WITNESS execution of this amendment on behalf of the Company.


                                            TECUMSEH PRODUCTS COMPANY



                                            By /s/ Todd W. Herrick
                                               ------------------------------

                                                     Its President and
                                                     Chief Executive Officer


                                            Dated: January 26, 2000



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