Document:

exv4w2w3

 

	 	 	 
	

	 	Exhibit 4.2.3

2005

VARIABLE PAY

PLAN

May 2005

 

 

 

2005 Variable Pay Plan

Program Highlights:

	 	•	 	Company and individual performance drive the payout opportunity.

							
	 

	 	•
	 	Trading Profit Less Restructuring
	 	[Omitted]
	 

	 	•
	 	Trading Cash Flow
	 	[Omitted]

	 	•	 	Two separate and distinct components of reward opportunity; a fixed component and a
discretionary component.
	 
	 	•	 	Fixed nondiscretionary awards linked to CNH and Business Unit and Region results
	 
	 	•	 	Discretionary Award linked to individual contribution, consistent with company
results
	 
	 	•	 	All eligible employees will share the same Company objectives:

	 	 	 	- Trading Profit less Restructuring
	 
	 	 	 	- Trading Cash Flow

	 	•	 	To enhance team results, employees in a Business Unit will have the same Business Unit
objectives

	 	 	 	- Trading Profit less Restructuring and Trading Cash Flow for Ag & CE
	 
	 	 	 	- Profit Before Tax and Return on Equity for Capital

	 	•	 	Employees in a Business Unit Region will also have Regional objectives

	 	 	 	- Trading Profit less Restructuring and Trading Cash Flow for Ag & CE
	 
	 	 	 	- Profit Before Tax and Return on Equity for Capital

	 	•	 	No minimum threshold required to trigger overall payout

	 	 	 	- For each objective at each organization level, result is required above
90% of set target for a payout
	 
	 	 	 	- Each objective at each organization level, (CNH, Global BU, Regional BU)
allows an opportunity for payout

	 	 	 
	2
 

	 	

 

 

Eligibility:

For the purpose of the 2005 CNH Variable Pay Plan, employees have been grouped according to their
payout opportunity in the plan.

Eligible employees are assigned to award groups based on the organization they directly belong to
or directly support.

Global Staff: People who support multiple business units on a global basis, such as the GMO staff

Region Staff: People who support multiple business units within a region. For instance in North
America, NA Legal, Accounting, Comp & Benefits

Global Business Unit: Those in an AG, CE, or Capital global organization or support function.
Such as Ag or CE Product Development. Or Ag Supply Chain if role is global rather than regional.

Regional Business Unit: Those in a Region in an Ag, CE, or Capital organization or support
function. Such as NA Ag Commercial or Industrial and the Finance staff that solely supports NA AG
Commercial or Industrial

Award groups will also be based on the Employee Level:

	 	 	 	 	 
	•

	 	Executives:
	 	Directors who have been identified as executive leaders in the
Company and notified via an individual letter.
	•

	 	Directors:
	 	All other directors
	•

	 	Others
	 	Eligibility varies by country

Employees be informed individually of their award group. Human Resources will make the final
determination of assignment of employees into award groups

The above groups have specific individual bonus opportunity, as expressed as percentages of
eligible compensation. Eligible Compensation is defined at country level and is available through
local HR.

Employees must be full time employees who are not hired with a fixed term employment contract and
who are not participating in an incentive-based program (e.g. Commercial sales plan, Capital
incentive plan, etc.).

Employees must be on the payroll at the date of payment and not on notice, except in the case of
involuntary layoff, retirement, approved leave of absence or death after the plan year ends on
December 31. However, employees must have worked for CNH more than six months of the year. In case
of long periods of absence the employee is eligible only if he / she has been at work for more than
6 months of the year.

	 	 	 
	3
 

	 	

 

 

How the Program Works: 

The plan is defined for the period January 1st to December 31st 2005.

There are two separate and distinct components of reward opportunity; a fixed component and a
discretionary component.

For Directors and Executives, 75% of their total award opportunity is according to the provisions
under the fixed component and 25% is discretionary.

For Eligible Professionals, 50% % of their total award opportunity is according to the provisions
under the fixed component and 50% is discretionary.

FIXED AWARD OPPORTUNITY

The Fixed component is linked entirely to company results, at the CNH level, at the Global Business
Unit level, and at the Regional Business Unit level.

Each of the three Result levels has two Key Performance Measures (KPM’s), weighted equally in the
payout.

	 	•	 	CNH:

	 	•	 	Trading Profit less Restructuring
	 
	 	•	 	Trading Cash Flow

	 	•	 	Global Business Unit:

	 	 	 	AG/CE:
	 
	 	•	 	Trading Profit less Restructuring
	 
	 	•	 	Trading Cash Flow

	 
	 	Capital:
	 
	 	•	 	Profit Before Tax
	 
	 	•	 	Return on Equity (PBT)

	 	•	 	Regional Business Unit

	 	 	 	AG/CE:
	 
	 	•	 	Trading Profit less Restructuring
	 
	 	•	 	Trading Cash Flow

	 
	 	Capital:
	 
	 	•	 	Profit Before Tax
	 
	 	•	 	Return on Equity (PBT)

Each CNH KPM will be measured under International Financial Reporting Standards (IFRS), as applied
by CNH, for the Variable Pay Plan. At the end of this plan document, the definitions of the KPM’s
are available for your reference.

Each of the 6 performance measures is independently measured and can generate a payout. Payout
will begin after achieving 90% of set target result for any objective at any level.

	 	 	 
	4
 

	 	

 

 

The key performance measures for the 3 levels are the same for all eligible employees, but the
weighting of payout opportunity varies by group. The payout for the fixed component is a
mathematical calculation per the weightings and results of each KPM at each organization level.
There is no discretion in payout. Those in same group all receive same % payout, e.g.:

	 	•	 	all CE European Professionals will have same payout % per CNH, CE Global and CE
Europe results
	 
	 	•	 	all Capital North American Directors will have same payout % based on CNH, Capital
Global and Capital North American results
	 
	 	•	 	All Global Staff have same payout % for their group (Executives, Directors, or
Professionals) based on CNH results.
	 
	 	•	 	Regional staff not specific to one BU will have the same payout % for their group
based on the sum of Ag and CE results in the region.

	 	 	 
	5
 

	 	

 

 

Weighting of Results

Each Level contributes to the overall payout based on the weightings shown below:

WEIGHTING OF RESULTS

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	BUSINESS	 	 	 	BUSINESS	 	 	 	TOTAL	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	UNIT	 	 	 	UNIT	 	 	 	FIXED	 	 	 	 	 	 	 	 	 	 	 	TOTAL
	GROUP	 	CNH	 	 	 	GLOBAL	 	 	 	REGION	 	 	 	PAYOUT	 	 	 	INDIVIDUAL	 	 	 	 	 	PAYOUT
	BUSINESS UNIT REGIONS:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Leaders
	 	 	25	%	 	+	 	 	25	%	 	+	 	 	30	%	 	=	 	 	80	%	 	+	 	 	20	%	 	 	=	 	 	 	100	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Other Executives /Directors
	 	 	20	%	 	+	 	 	25	%	 	+	 	 	30	%	 	=	 	 	75	%	 	+	 	 	25	%	 	 	=	 	 	 	100	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	Professionals/Salaried
	 	 	10	%	 	+	 	 	20	%	 	+	 	 	20	%	 	=	 	 	50	%	 	+	 	 	50	%	 	 	=	 	 	 	100	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	BUSINESS UNIT GLOBAL:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Leaders
	 	 	40	%	 	+	 	 	40	%	 	+	 	 	0	%	 	=	 	 	80	%	 	+	 	 	20	%	 	 	=	 	 	 	100	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Other Executives
/Directors
	 	 	35	%	 	+	 	 	40	%	 	+	 	 	0	%	 	=	 	 	75	%	 	+	 	 	25	%	 	 	=	 	 	 	100	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	Professionals/Salaried
	 	 	10	%	 	+	 	 	40	%	 	+	 	 	0	%	 	=	 	 	50	%	 	+	 	 	50	%	 	 	=	 	 	 	100	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	GLOBAL STAFF:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Leaders
	 	 	80	%	 	+	 	 	0	%	 	+	 	 	0	%	 	=	 	 	80	%	 	+	 	 	20	%	 	 	=	 	 	 	100	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Other Executives /Directors
	 	 	75	%	 	+	 	 	0	%	 	+	 	 	0	%	 	=	 	 	75	%	 	+	 	 	25	%	 	 	=	 	 	 	100	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	Professionals/Salaried
	 	 	50	%	 	+	 	 	0	%	 	+	 	 	0	%	 	=	 	 	50	%	 	+	 	 	50	%	 	 	=	 	 	 	100	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

 

			
	•	 	Staffs which support Business Units will have the same payout opportunity as their
Business Units by Region.
	 
	•	 	Regional Staffs which support all Business Units will have a payout opportunity
determined by the sum of their Regions’ AG & CE Business Unit.
	 
	•	 	Global Staffs will have only the CNH KPM’s, determine the fixed award opportunity

	 	 	 
	6
 

	 	

 

 

Payout Matrix

	•	 	There is no minimum threshold required to trigger overall payout. For each KPM, for each organization level, a minimum
result of 90% of target is required before that KPM’s portion of the fixed award pays out.

	•	 	Target awards are set at 100% of target results.

	•	 	Maximum award is 2.5 times target award and is set at 150% of target results.

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Threshold	 	Target	 	Maximum
	Results vs Objective
	 	 	90	%	 	 	100	%	 	 	150	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	% of Target Payout
	 	 	0	%	 	 	100	%	 	 	250	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 

Where the weighted average results of the KPM’s falls between the Threshold, Target and Maximum
levels, linear interpolation will determine the fixed award.

e.g., 91% of target results pays 10% of target award; 95% of target results pays 50% of target
award; 110% of target results pays 130% of target award. Maximum award is capped at 150% of
target results, paying out 250% of target award.

	 	 	 
	7
 

	 	

 

 

DISCRETIONARY AWARD OPPORTUNITY

The discretionary component is linked to the overall assessment and ranking of individual
contribution to results & leadership/behavior.

Eligibility requires at least a Performance Assessment score above 1.5.

	•	 	Performance assessment criteria cascaded to link individual
assessments to team and overall company results for consistency in
assessments.

	•	 	No mathematical calculation of individual objectives and priority
weightings determine assessments. These are used as indicators and
references only. Overall assessment must be consistent with
company, business unit and region results.

	•	 	Executive Committee to approve overall discretionary payout.

END OF YEAR

ASSESSMENT PROCESS

	•	 	Qualitative and quantitative review of the results of each key business driver
	 
	•	 	Considers CNH performance vs. competitors
	 
	•	 	Direction provided on expected payouts given performance (e.g., selectivity,
allocation, assessment criteria)
	 
	•	 	Review of CNH and BU results used by managers to evaluate each individual’s
contribution to the overall result

	 	 	 
	8
 

	 	

 

 

Business Unit Participants:

Participants of the Business Units are defined according to the following rules:

	1.	 	Any employee who reports up through a Business Unit organization;
	 
	2.	 	Dual Business Unit plants are defined by the Business Unit the Plant Manager reports into;
	 
	3.	 	Any staff employee who primarily supports a Business Unit
	 
	4.	 	Exceptions will be clarified by HR Business Partners

Final Benefit Determination:

All benefits granted under this plan are subject to the final approval of the CNH Global N.V. Board
of Directors, Corporate Governance and Compensation Committee. The Corporate Governance and
Compensation Committee also reserves the right to amend, suspend or terminate any provisions of the
plan for the future plan years within the sole discretion of the Board or Corporate Governance and
Compensation Committee.

The Corporate Governance and Compensation Committee or the Board has the authority to deny any or
all payments, even if the company targets were met, based upon consideration of factors of such
gravity which would affect the future viability of the company.

Similarly, CNH retains its sole and absolute discretionary authority to resolve all questions
arising in the administration, interpretation and application of this plan. This authority includes
construing the terms of the plan, including any disputed and doubtful terms and determining the
eligibility of an individual to participate in the plan or to receive any benefit from it. The
Company’s determination will be conclusive and binding on all persons.

	 	 	 
	9
 

	 	

 

 

     ILLUSTRATIONS :

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Level	 	Prof 9-12	 	 	Payout as a % of eligible earnings	 
	Organization	 	Business Region	 	 	@ 91%	 	 	Target	 	 	Max	 
	BU
	 	AG	 	 	1.00	%	 	 	10.00	%	 	 	25.00	%
	REGION
	 	NAR	 	 	 	 	 	 	 	 	 	 	 	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Business	 	Key Performance	 	 	 	 	 	 	 	 	 	Payout % Opportunity
	Level	 	Measure	 	Weighting	 	Min	 	Target	 	Max
	CNH

	 	Trading Profit*
	 	 	10.0	%	 	 	50.0	%	 	 	0.05	%	 	 	0.50	%	 	 	1.25	%
	 

	 	Trading Cash Flow
	 	 	 	 	 	 	50.0	%	 	 	0.05	%	 	 	0.50	%	 	 	1.25	%
	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	subtotal:
	 	 	0.10	%	 	 	1.00	%	 	 	2.50	%
	 
	Global Business Unit	 	 	20.0	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Trading Profit*
	 	 	 	 	 	 	50.0	%	 	 	0.10	%	 	 	1.00	%	 	 	2.50	%
	 

	 	Trading Cash Flow
	 	 	 	 	 	 	50.0	%	 	 	0.10	%	 	 	1.00	%	 	 	2.50	%
	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	subtotal:
	 	 	0.20	%	 	 	2.00	%	 	 	5.00	%
	 
	Region Business Unit	 	 	20.0	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Trading Profit*
	 	 	 	 	 	 	50.0	%	 	 	0.10	%	 	 	1.00	%	 	 	2.50	%
	 

	 	Trading Cash Flow
	 	 	 	 	 	 	50.0	%	 	 	0.10	%	 	 	1.00	%	 	 	2.50	%
	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	subtotal:
	 	 	0.20	%	 	 	2.00	%	 	 	5.00	%
	 
	Total Fixed Payout Opportunity	 	 	0.0	%	 	 	=	 	 	 	0.50	%	 	 	5.00	%	 	 	12.50	%
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	Discretionary Payout Pool	 	 	50.0	%	 	 	=	 	 	 	0.50	%	 	 	5.00	%	 	 	12.50	%
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	Total Payout Opportunity	 	 	50.0	%	 	 	=	 	 	 	1.00	%	 	 	10.00	%	 	 	25.00	%
	 

	 	 	 
	10
 

	 	

 

 

ILLUSTRATIONS: Flxed Component Example 1

	 	 	 
	Assumptions:

	 	•	 	Trading Profit less Restructuring results are 100% of target for all levels
	 
	 	•	 	Trading Cash Flow results are 95% of target for each level

Total fixed payout is 3.75%.

[Ommitted]

IIIustration

Region Business Unit, Professional Level Employee

	 	 	 
	11
 

	 	

 

 

ILLUSTRATIONS: Example 2 —  Fixed and Discretionary

	 	 	 
	Assumptions:

	 	•	 	CNH

	 	•	 	Trading Profit less Restructuring results are 120% of target for all levels
	 
	 	•	 	Trading Cash Flow results are 80% of target for each level

	 	•	 	Global Business Unit

	 	•	 	Trading Profit less Restructuring results are 110% of target for all levels
	 
	 	•	 	Trading Cash Flow results are 95% of target for each level

	 	•	 	Region Business Unit

	 	•	 	Trading Profit less Restructuring results are 130% of target for all levels
	 
	 	•	 	Trading Cash Flow results are 80% of target for each level

     Total fixed payout is 4.50%.

     [Omitted]

IIIustration

Region Business Unit, Professional Level Employee

	 	 	 
	12
 

	 	

 

 

     [Omitted]

	 	 	 
	13
 

	 	

 

 

DEFINITIONS OF OBJECTIVES

Trading Profit less Restructuring:

Profit after restructuring and before financial income/(expense) and profit from
Other Subsidiaries.

Trading Cash Flow:

Industrial company’s Trading Profit adjusting for:

	 	•	 	Restructuring charge
	 
	 	•	 	Depreciation and change in provisions
	 
	 	•	 	Investments in fixed assets
	 
	 	•	 	Changes in gross working capital

Profit Before Tax (PBT):

Trading Profit after restructuring and after financial income/(expense) and income
from Other Subsidiaries but before taxes

Return on Equity (ROE):

Profit before taxes and after Minority Interest divided by a 13-point average
equity balance.

	 	 	 
	14exv10w36

 

Exhibit 10.36

Motorola Long Range Incentive Plan (LRIP) of 2006

Overview

The Plan is being implemented pursuant to the terms and conditions of the Omnibus Plan.

Eligibility

As recommended by the Chief Executive Officer and approved by the Committee, Officers of the
Company shall be eligible to participate in the Plan. The Chief Executive Officer and the Chief
Operating Officer (if any) are also eligible to participate as approved by the Committee. No
employee who is not an Officer shall be eligible to participate in the Plan.

Participation

Generally, Officers who become eligible to participate during the first three months of a
multi-year performance cycle will participate in the full performance cycle. Officers who become
eligible to participate after the first three months of a performance cycle will participate in the
performance cycle on a pro rata basis, except that Officers who become eligible to participate
during the last three months of a performance cycle will not be eligible to participate in the
performance cycle.

Participants who lose their eligibility to participate as a result of the lapse of status as an
Officer after the first three months of a performance cycle will participate in the performance
cycle on a pro rata basis if they continue to be employed with the Company through the last day of
the performance cycle. Participants who lose their eligibility to participate in the first three
months of a performance cycle will not be eligible to participate in the performance cycle.

Pro rata awards will be determined on the basis of the number of completed months of employment as
an Officer during which the participant is actually working within the performance cycle.

Page 1 of 10

 

Performance
Cycle

The Plan is based upon multi-year performance cycles selected by the Committee with an initial
three-year performance cycle beginning on January 1, 2006.

Performance
Measures

Performance measures for each cycle will be determined by the Committee based on improvement in
Economic Profit and Sales Growth during each multi-year performance cycle.

Performance measures may apply to performance in each year in the performance cycle, to cumulative
performance during the entire performance cycle, or a combination of both. If performance measures
are applied to performance in each year in the performance cycle, performance to target for each
year shall be divided by the number of years in the performance cycle and added together to
determine the award for the entire performance cycle.

Awards will be subject to Committee discretion, up to and including complete forfeiture, if the
Company’s Total Shareholder Return for the entire performance cycle is not positive.

Awards may be subject to partial or complete forfeiture if the Company’s Total Shareholder Return
for the performance cycle does not meet or exceed the 55th percentile Total Shareholder
Return for the performance cycle for a defined comparator group identified by the Committee.

Participants’
Target & Maximum Award

A participant’s target award is established at the commencement of a performance cycle based on a
percentage of the participant’s base pay rate in effect at that time. If performance measures are
applied to performance in each year in the performance cycle, the target award for a Covered
Employee for any succeeding year will be adjusted at the commencement of the next year in the
performance cycle.

A participant’s maximum earned award will be two times his/her target award.

Page 2 of 10

 

The Payout Process

	 	•	 	All earned awards will be paid in Company stock. The number of shares of stock earned
by a participant shall be determined by dividing the amount of the award earned during the
performance cycle by the Certification Date Value. The shares will be issued under, and
subject to the limitations of, the Omnibus Plan or such other shareholder-approved Company
equity-based incentive plan as designated by the Committee.
	 
	 	•	 	The Chief Executive Officer may adjust the amount of the payment to be made pursuant to
this Plan to any other participant at any time prior to payment as a result of the
participant’s performance during the performance cycle; provided, however, that any such
adjustment may not result in a payment to the participant in excess of the participant’s
maximum award under the Plan and any such adjustment to a payment to a member of the
Senior Leadership Team will be subject to the approval of the Committee.
	 
	 	•	 	The Committee may reduce the amount of the payment to be made pursuant to this Plan to
any participant who is or may be a Covered Employee at any time prior to payment as a
result of the participant’s performance during the performance cycle.
	 
	 	•	 	If the Committee determines, in its sole discretion, that a participant has willfully
engaged in any activity at any time, prior to the payment of an award, that the Committee
determines was, is, or will be harmful to the Company, the participant will forfeit any
unpaid award.
	 
	 	•	 	The Company shall have the right to satisfy all federal, state and local withholding
tax requirements with respect to the award earned by reducing the number of earned shares
by the number of shares determined by dividing the amount of withholding required by the
Certification Date Value.
	 
	 	•	 	Payments will be made as soon as administratively practicable following the close of a
performance cycle. A participant has no right to any award until that award is paid.

Page 3 of 10

 

Situations Affecting The Plan

» Change in Employment

	 	•	 	Generally, a participant will be eligible for payment of an earned award only if
employment continues through the last day of the performance cycle.
	 
	 	•	 	Because employee retention is an important objective of this Plan and awards do not
bear a precise relationship to time worked within the calendar year or length of service
with the Company, Participants who separate from employment prior to the end of the
performance cycle (for reasons other than death, Total and Permanent Disability or
Retirement) shall not receive any award attributable to that performance cycle.
	 
	 	•	 	Pro rata awards may be possible, however, depending upon the type of employment
termination. In the event a participant (i) remains on payroll as an active employee at
the end of a performance cycle, but is not actually working, whether or not on a leave of
absence, (ii) Retires, dies or incurs a Total and Permanent Disability prior to the end of
the performance cycle while actively employed or on a leave of absence, the participant
will be entitled to a pro rata award based on the number of completed months of employment
within the performance cycle in which the participant was actually working as an Officer,
provided that the participant is otherwise eligible for an award. The table below
summarizes how earned awards will generally be prorated in accordance with the type of
employment termination:

Page 4 of 10

 

	 	 	 
	 
	If employment terminates due to...	 	The earned award will be...
	 
	 
	 	 	 	 
	Death

	 	Pro rated based on the number
of completed months of
employment within the
performance cycle.
	 
	 	 
	Total and Permanent Disability

	 	Pro rated based on the number
of completed months of
employment within the
performance cycle.
	 
	 	 
	Retirement

	 	Pro rated based on the number
of completed months of
employment within the
performance cycle.
	 
	 	 
	Termination of Employment Because of
Serious Misconduct

	 	Forfeited.
	 
	 	 
	Change in Employment in Connection with a

Divestiture

	 	Forfeited.
	 
	 	 
	Termination of Employment for any Other
Reason than Described Above

	 	Forfeited.
	 
	 	 	 	 
	For purposes of determining a prorated payout, completed months of employment
will include only those months in which the participant is actually working and is an Officer.

	 	

	 

	 	 	 	A prorated payout will be based on final performance results and paid as soon as
administratively practicable after the end of a performance cycle.
	 
	 	•	 	In the event a participant is reclassified from a higher Officer level to a lower
Officer level (i.e., from Executive Vice President to either Senior Vice President or
Corporate Vice President or from Senior Vice President to Corporate Vice President), the
participant’s target award will be recalculated to reflect (a) the higher target award for
the actual number of months completed within the performance cycle while employed in the
higher Officer level and (b) the lower target award level for the actual number of months
completed within the performance cycle while employed in the lower Officer level.
	 
	 	•	 	In the event a participant (other than a Covered Employee) is reclassified from a lower
Officer level to a higher Officer level (i.e., from Corporate Vice President to Senior
Vice President or Executive Vice President or from Senior Vice President to Executive Vice
President), the participant’s target award will be recalculated to reflect (a) the lower
target award level for the actual number of months completed within the performance cycle
while employed in the lower Officer level and (b) the higher target award for the actual
number of months completed within the

Page 5 of 10

 

	 	 	 	performance cycle while employed in the higher
Officer level.

» Change in Control

	 	 	 	If the Company undergoes a Change in Control as defined in the Omnibus Plan, the treatment of
outstanding awards under this Plan shall be determined by the terms of the Omnibus Plan in
effect at the time of the commencement of the performance cycle.

Reservation And Retention Of Company Rights

	 	•	 	The selection of any employee for participation in the Plan will not give that
participant any right to be retained in the employ of the Company.
	 
	 	•	 	The Committee’s decision to make an award in no way implies that similar awards may be
granted in the future.
	 
	 	•	 	Anyone claiming a benefit under the Plan will not have any right to or interest in any
awards unless and until all terms, conditions, and provisions of Plan that affect that
person have been fulfilled as specified herein.
	 
	 	•	 	No employee will at any time have a right to be selected for participation in a future
performance period for any fiscal year, despite having been selected for participation in
a previous performance period.

Administration

It is expressly understood that the Committee has the discretionary authority to administer,
construe, and make all determinations necessary or appropriate to the administration of the Plan,
all of which will be binding upon the participant.

Page 6 of 10

 

General Provisions

	 	•	 	Award opportunities may not be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated, other than by will or by the laws of descent and distribution.
	 
	 	•	 	To the extent permitted by law, amounts paid under the Plan will not be considered to
be compensation for purposes of any benefit plan or program maintained by the Company.
	 
	 	•	 	All obligations of the Company under the Plan with respect to payout of awards, and the
corresponding rights granted thereunder, will 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 other acquisition of all or substantially all of the business
and/or assets of the Company.
	 
	 	•	 	In the event that any provision of the Plan will be held illegal or invalid for any
reason, the illegality or invalidity will not affect the remaining parts of the Plan, and
the Plan will be construed and enforced as if the illegal or invalid provision had not
been included.
	 
	 	•	 	No participant or beneficiary will have any interest whatsoever in any specific asset
of the Company. To the extent that any person acquires a right to receive payments under
the Plan, such right will be no greater than the right of any unsecured general creditor
of the Company.
	 
	 	•	 	This Plan constitutes a legal document which governs all matters involved with its
interpretation and administration and supersedes any writing or representation
inconsistent with its terms.

Page 7 of 10

 

Definitions

Certification Date Value: the closing price of one share of Motorola common stock on the New York
Stock Exchange on the day before the date on which the Committee certifies the amount of the award
earned.

Company: Motorola, Inc. and its Subsidiaries.

Committee: the Compensation and Leadership Committee of the Board of Directors.

Covered Employee: a covered employee within the meaning of Section 162(m)(3) of the Internal
Revenue Code.

Divestiture: the sale, lease, outsourcing arrangement, spin-off or similar transaction wherein a
Subsidiary is sold or whose shares are distributed to the Motorola stockholders, or any other type
of asset transfer or transfer of any portion of a facility or any portion of a discrete
organizational unit of Company or a Subsidiary.

Economic Profit: the Company’s Net Operating Profit After Tax less a charge for cost of capital
(determined by the Committee, in its discretion).

Net Operating Profit After Tax: for each year during a performance cycle, the Company’s Net
Operating Profit After Tax shall be determined in accordance with Generally Accepted Accounting
Principles but shall exclude the effect of all acquisitions with a purchase price of $250 million
or more, all gains or losses on the sale of a business, any asset impairment equal to $100 million
or more, and any other special items designated by the Committee.

Omnibus Plan: the Motorola Omnibus Incentive Plan of 2003, or any successor plan.

Officers: Corporate, Senior and Executive Vice Presidents of the Company.

Page 8 of 10

 

Plan: the Motorola Long Range Incentive Plan (LRIP) of 2006.

Retire or Retirement: means retirement from Motorola or a Subsidiary as follows:

	 	(i)	 	Retiring at or after age 55 with 20 years of service;
	 
	 	(ii)	 	Retiring at or after age 60 with 10 years of service;
	 
	 	(iii)	 	Retiring at or after age 65, without regard to years of service; or
	 
	 	(iv)	 	Retiring with any other combination of age and service, at the discretion of the Committee.

Years of service will be based on the participant’s Service Club Date.

Sales Growth: calculated as the year-over-year percentage increase in net sales. Net sales shall
be determined in accordance with Generally Accepted Accounting Principles but shall exclude the
effect of all acquisitions with a purchase price of $250 million or more, all gains or losses on
the sale of a business, any asset impairment equal to $100 million or more, and any other special
items designated by the Committee

Subsidiary: an entity of which Motorola owns directly or indirectly at least 50% and that Motorola
consolidates for financial reporting purposes.

Serious Misconduct: any misconduct that is a ground for termination under the Motorola Code of
Business Conduct, or human resources policies, or other written policies or procedures.

Total and Permanent Disability: for (a) U.S. employees, entitlement to long-term disability
benefits under the Motorola Disability Income Plan, as amended and any successor plan and (b)
non-U.S. employees, as established by applicable Motorola policy or as required by local
regulations.

Page 9 of 10

 

Total Shareholder Return or TSR: for the Company stock or for a comparator company shall be
calculated as follows:

	 	 	 	 	 
	 

	 	 	Ending share price
	 

	 	 	200-day average through last day of cycle
	 

	 	 	 
	 

	 	+
	Value of reinvested dividends
	 

	 	 	 
	 

	 	=
	Total ending value
	 

	 	 	 
	 

	 	–
	Beginning share price
	 

	 	 	200-day average through first day of cycle
	 

	 	 	 
	 

	 	=
	Total value created
	 

	 	 	 
	 

	 	÷
	Beginning share price
	 

	 	 	200-day average through first day of cycle
	 

	 	 	 
	 

	 	=
	Total shareholder return

If a term is used but not defined, it has the meaning given such term in the Omnibus Plan.

Amendment, Modification, And Termination

Except as expressly provided by law, this Plan is provided at the Company’s sole discretion and the
Committee may modify or terminate it at any time, prospectively or retroactively, without notice or
obligation for any reason; provided, however, that no such action may adversely affect a
participant’s rights under the Plan subsequent to such time as negotiations or discussions which
ultimately lead to a Change in Control have commenced. In addition, there is no obligation to
extend the Plan or establish a replacement plan in subsequent years.

Applicable Law

To the extent not preempted by federal law, or otherwise provided by local law, the Plan will be
construed in accordance with, and governed by, the laws of the state of Illinois without regard to
any state’s conflicts of laws principles. Any legal action related to this Plan shall be brought
only in a federal or state court located in Illinois.

Page 10 of 10

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