Document:

exv4w2w5

 

Exhibit 4.2.5

TOP

PERFORMANCE

PLAN

PERFORMANCE SHARES

AWARD

sept-06

 

 

Top Performance Plan (TPP)

CNH Case New Holland (“CNH”, “the Company”) is providing a performance based equity incentive
plan, named the Top Performance Plan (“Plan”), to selected individuals of the Company. The awards
of the Top Performance Plan described in this document are subject to the terms of the CNH Global
N.V. Equity Incentive Plan, (as amended and restated on July 21, 2006).

Plan Highlights:

	 	•	 	Performance share award, with cliff vesting upon attainment of CNH 2008 fiscal year
financial objectives:

	 	•	 	Operating Income of [omitted] or greater.

	 	•	 	Operating Income is after restructuring and gain/loss of sale of
investments and before financial income/(expense), profit from Other Subsidiaries
and income taxes.

	 	•	 	Trading profit cash flow of [omitted] or greater.

	 	•	 	Trading Cash Flow:

	 	•	 	Industrial company’s Operating Income adjusting for:

	 	•	 	Depreciation and change in provisions/operating reserves
	 
	 	•	 	Investments in fixed assets
	 
	 	•	 	Changes in gross working capital

	 	•	 	Thresholds are 100% of target results
	 
	 	•	 	All selected participants will be individually notified of their incentive award
opportunity
	 
	 	•	 	Participants must maintain an acceptable Leadership Assessment score (mapping of
Performance and Leadership assessments) during the performance period.

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How the Plan Works:

Timing:

The Top Performance Plan is for the performance cycle ending December 2008. Performance shares
are granted in 2006 and vest when performance criteria for fiscal year 2008 are met. Subsequent
performance cycles and plan awards will be in effect when and as announced.

Eligibility:

Participants will be individually notified of their participation in the plan. Selected
participants must sign an individual award letter for official acceptance of the award and terms.

Selected participants must be on the payroll at the determination date of the award and not on
notice, except in the case of approved leave of absence, retirement, total disability, involuntary
layoff not due to performance, or death after the plan year ends on December 31, 2008 and before
the determination date of the award.

Eligibility for a partial reward for transfers to an entity which is a member of the Parent group
and for certain retirements is defined in the award agreement letter.

Top Performance Plan Criteria:

Key Performance Measures: Operating Income and Trading Cash Flow

The CNH consolidated Operating Income and the Trading Cash Flow, both for the fiscal year 2008,
measured under International Financial Reporting Standards (IFRS) and as applied by CNH are the
company performance criteria for the Top Performance Plan.

Operating income of [omitted] or greater. Operating income is after restructuring and
gain/loss of sale of investments and before financial income/(expense), profit from Other
Subsidiaries and income taxes.

Trading profit cash flow of [omitted] or greater,
Trading profit cash flow is defined as:

	 	•	 	Industrial company’s Operating Income adjusting for:

	 	•	 	Depreciation and change in provisions/operating reserves
	 
	 	•	 	Investments in fixed assets
	 
	 	•	 	Changes in gross working capital

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Thresholds

100% of the targeted results must be met for both performance criteria for any payout.

Additionally, to be eligible to receive any payout, individuals must achieve an acceptable
Leadership Assessment (the combined assessment of performance results and demonstrated leadership
ability) during the performance period, in the sole discretion of the Corporate Governance and
Compensation Committee of the CNH Global N.V. Board of Directors.

Top Performance Plan Payout Opportunity:

If the performance criteria are met as set forth in this Plan document, the eligible participants
will vest in their full target incentive opportunity defined in their award agreement letters.

Awards will be paid out in Company shares that will vest immediately upon issue.

Any payout for the Top Performance Plan will be made by the 1st half of 2009. During
the performance cycle period, there is no ownership right to the shares, meaning no dividends or
voting rights apply to the award until the shares are issued to the individuals.

In most countries, the share award is considered compensation income at the time the award vests
and full ownership shares are issued. The employee is subject to income and social contribution
taxes. The Company may be required to withhold all applicable taxes and social contributions from
the employees. The Company, in its sole discretion, may withhold shares of Common Shares to
satisfy any applicable withholding taxes.

Once the shares are issued, there are no Company restrictions on the shares for the individuals.
However, the Company’s insider trading policy continues to apply to any shares issued under the
Plan, and guides when shares may be traded by employees.

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Final Benefit Determination:

All benefits granted under the Equity Incentive Plan and the Top Performance Plan are subject to
the final approval of the CNH Global N.V. Board of Directors’ Corporate Governance and Compensation
Committee (“the Committee”) in its sole discretion. The Committee and the Board reserve the right
to amend, suspend or terminate any or all provisions of the Equity Incentive Plan and the Top
Performance Plan for the future plan years within the sole discretion of the Board or the
Committee.

Similarly, CNH Case New Holland retains its sole and absolute discretionary authority to resolve
all questions arising in the administration, interpretation and application of the Equity Incentive
Plan and the Top Performance Plan. This authority includes construing the terms of the plans,
including any disputed and doubtful terms and determining the eligibility of an individual to
participate in the plans or to receive any benefit from them. The Company’s determination will be
conclusive and binding on all persons.

Your participation in the Equity Incentive Plan and the Top Performance Plan does not guarantee
your continued employment with the company or your continued participation in the Equity Incentive
Plan and Top Performance Plan in future years. This plan document is not a contract of employment.

5exv4w2w6

 

Exhibit 4.2.6

Leadership

Incentive

Plan

September 2006

 

 

Leadership Incentive Plan (LIP)

CNH Case New Holland (“CNH”, “the Company”) is providing an annual incentive plan that awards
in cash and equity, named the Leadership Incentive Plan (“Plan”), to selected individuals of the
Company. The awards of the Leadership Incentive Plan described in this document are subject to the
terms of the CNH Global N.V. Equity Incentive Plan, (as amended and restated on July 21, 2006).

Plan Highlights:

	 	•	 	An annual award that shares the company’s success with those in a lead role who help
create that success.

	 	•	 	Participation in this enhanced annual incentive is determined by an individual’s
performance and criticality of the individual’s role.
	 
	 	•	 	Company performance determines the payout opportunity

	 	•	 	An equity award element added to help attract and retain leadership talent, reward
performance that is aligned with company objectives and encourage sustainable company
growth.

	 	•	 	Enhanced payout: target payout enhanced by 1/3rd, paid in cash and
stock options (50/50)
	 
	 	•	 	Stock options vesting in 3 periods: 1/3rd immediately; 1/3rd
after one year; last 1/3rd after two years

	 	•	 	No longer a discretionary element to the reward opportunity; reward is completely
linked to company financial objectives.

	 	–	 	For Brands, Parts & Service, Capital, Ag Manufacturing, Ag Product Development,
CE Manufacturing and CE Product Development at the CNH level and at the Function
level
	 
	 	–	 	For Supply Chain Logistics, Strategic Sourcing, Quality and the Global Staffs
at just the CNH level for all other functions

	 	•	 	CNH objectives:

	 	–	 	Trading Profit before Restructuring: [omitted]
	 
	 	–	 	Trading Cash Flow: [omitted]

	 	•	 	No minimum threshold required to trigger overall payout

	 	–	 	Each objective allows an opportunity for payout

	 	•	 	CNH Trading Profit before Restructuring above 85% of set target
	 
	 	•	 	All other metrics above 90% of set target

2

 

How the Plan Works:

Timing:

The Leadership Incentive Plan covers the period January 1st to December 31st
each year. The award is defined at the grant date, typically at the beginning of the performance
period. Payout is after determination that the performance criteria have been met.

Eligibility:

Participation in the Leadership Incentive Plan is upon special invitation.

Invited individuals will be eligible for a payout if their performance remains acceptable during
the performance period.

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

Award groups will also be based on the Employee Level:

	 	•	 	Top Managers: As approved by the Corporate Governance and Compensation
Committee of the CNH Global NV Board of Directors
	 
	 	•	 	Executives: Directors who have been identified as executive leaders
	 
	 	•	 	Directors: Senior and Other Directors

The above groups have specific individual incentive opportunity, as expressed as percentages of
eligible compensation.

Eligible Compensation: The participant’s base salary at the end of the performance period
(December 31), prorated for time worked during the year if not employed with CNH or a Fiat member
entity for the entire performance period, will be the basis of applying the incentive percentage of
pay earned under this plan.

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

Employees must be on the payroll at the date of payment and not on notice, except in the case of
retirement, approved leave of absence, involuntary termination not due to performance, or death
after the plan year ends on December 31 to remain eligible to receive a Leadership Incentive Plan
award.

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Weighting of Results:

The funding and distribution of the total plan award is linked to company results at the CNH level
and the Brand/Business level. All participants share in the CNH results.

Weighting of results for Brands, Capital, Parts & Service, Product Development and Manufacturing:

	 	•	 	50% linked to CNH results to ensure alignment of goals across the organization and
	 
	 	•	 	50% specific to their operating unit to recognize their specific unit’s
contribution to the success of CNH

For Strategic Sourcing, Supply Chain Logistics, Quality and Global Staffs, the reward is based on
100% of CNH results as these units support each of the operations.

Performance Criteria:

Results of two (2) Key Performance Measures (KPMs) at each level (CNH and Brand/Business) determine
the total award. The KPMs are weighted equally with independent thresholds to be exceeded for
payout. The KPM’s are Trading Profit before Restructuring and Trading Cash Flow, with the
exception of the Capital Business which has Return on Equity instead of Trading Cash Flow.

Each 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.

The CNH financial objectives which every participant shares in are:

	 	 	 	 	 
	 

	 	CNH Trading Profit Before Restructuring:
	 	[omitted]
	 

	 	CNH Trading Cash Flow:
	 	[omitted]

The payout is a mathematical calculation per the weightings and results of each KPM at each
organization level. There is no discretion in the payout. Those in the same award group all
receive same % payout, e.g.:

	 	•	 	all CaseIH Directors globally will have same payout % of salary based on CNH and
CaseIH Global results
	 
	 	•	 	all Capital Executives globally will have same payout % based on CNH and Capital
Global results
	 
	 	•	 	All Global Staff have same payout % for their group (Top Managers, Executives,
Directors) based solely on CNH results.

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	 	•	 	Staff directly supporting one specific Brand or Business will have the same payout
% as the Brand or Business they support.
	 
	 	•	 	Regional Staff not directly supporting one specific Brand or Business will be based
on CNH results the same as Global Staff.

Payout Matrix

	•	 	There is no minimum threshold required to trigger overall payout. Each KPM pays out independently and each requires a
minimum result before paying a fixed award:

	 	o	 	CNH Trading Profit before Restructuring above 85% of set target
	 
	 	o	 	All other KPMs above 90% of set target

	•	 	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.

	 	 	 	 	 	 	 	 	 
	 	 	% of Target Payout
	Results vs.	 	CNH Trading	 	 	All Other
	Objective	 	Profit	 	 	objectives
	85%
	 	 	0	%	 	 	0	%
	86%
	 	 	6.7	%	 	 	0	%
	90%
	 	 	33.3	%	 	 	0	%
	91%
	 	 	40.0	%	 	 	10	%
	95%
	 	 	66.7	%	 	 	50	%
	100%
	 	 	100.0	%	 	 	100	%
	110%
	 	 	130.0	%	 	 	130	%
	130%
	 	 	190.0	%	 	 	190	%
	150%
	 	 	250.0	%	 	 	250	%
	160%
	 	 	250.0	%	 	 	250	%

e.g., CNH Trading Profit: 95% result is 2/3rds (two thirds) between Threshold (85%) and
Target (100%) result; that pays 2/3rds (two thirds) or 66.7% of target payout for that KPM’s
portion of total target payout.

For the other objectives where the Threshold is 90%, a result of 95% of target is half way between
Threshold and Target and therefore payouts at 50% of target incentive.

5

 

e.g., on all KPM’s: 100% result pays 100% target payout. 110% of target results pay 130% of
target award. Maximum award is capped at 150% of target results, paying out 250% of target award.

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

Determination of Total Award:

This plan has enhanced the target payout by 1/3rd since an element of risk is added with
the equity award. Once CNH final results are known, the earned payout will be determined. The
payout of the bonus will be split 50% Cash and the remaining 50% in Equity.

Equity Award:

The Equity Award will be granted as a Performance Stock Option with vesting over two years. There
will be an immediate vesting of 1/3rd upon determination date, another 1/3rd
vesting in one year from determination date and the remaining 1/3rd vesting in two years
from the determination date. The option expires five years after the determination date.

An award agreement letter specifying the performance stock option grant will be presented to all
invited upon the granting of the award, typically in the beginning of the performance period. The
number of shares subject to vesting under the option will be determined at the end of the
performance period, after performance results are known. The exercise price and the valuation
factor will be specified in the award agreement letter and used in converting the local currency
value of the equity portion of the award into the number of CNH shares subject to vesting under the
option.

Final Benefit Determination:

All benefits granted under Equity Incentive Plan and the Leadership Incentive Plan are subject to
the final approval of the CNH Global N.V. Board of Directors’ Corporate Governance and Compensation
Committee (“the Committee”) in its sole discretion. The Committee and the Board reserve the right
to amend, suspend or terminate any or all provisions of the Equity Incentive Plan and the
Leadership Incentive Plan for the future plan years within the sole discretion of the Board or the
Committee.

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

6

 

Your participation in the Equity Incentive Plan and the Leadership Incentive Plan does not
guarantee your continued employment with the company or your continued participation in the Equity
Incentive Plan and Leadership Incentive Plan in future years. This plan document is not a contract
of employment.

DEFINITIONS:

Trading Profit before Restructuring:

Profit before restructuring and 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/operating reserves
	 
	 	•	 	Investments in fixed assets
	 
	 	•	 	Changes in gross working capital

Return on Equity (ROE):

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

     Profit Before Tax (PBT):

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

Stock options:

A right to buy shares of stock at a predetermined price (the exercise price). When the stock price
increases above the purchase price, value is created for the participant.

7

 

2006 TARGETS:

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	2006 Targets
	 	 	 	 	Trading	 	Trading
	 	 	 	 	Profit	 	Cash Flow*
	Organization Level	 	Key Performance Measure	 	$ million
	CNH
	 	• CNH Trading Profit	 	 	1,025	 	 	 	725	 
	 	• CNH Trading Cash Flow	 	 	 	 	 	 	 	 
	 
	 
	FUNCTIONS
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	BRANDS:
	 	 	 	 	 	 	 	 	 	 
	-CIH AG
	 	• Brand Specific Trading Profit	 	 	249.5	 	 	 	364	 
	-NH AG
	 	 	 	 	191.5	 	 	 	344	 
	-Case Construction
	 	• Brand Specific Trading Cash Flow	 	 	214	 	 	 	212	 
	-NH Construction
	 	 	 	 	101	 	 	 	153	 
	 
	BUSINESS UNITS:
	 	 	 	 	 	 	 	 	 	 
	-Parts
	 	• Parts Trading Profit	 	 	 	 	 	 	 	 
	 
	 	• AG + CE Trading Cash Flow	 	 	536	 	 	 	1,073	 
	 
	 	 	 	 	 	 	 	 	 	 
	-Capital
	 	• Capital Trading Profit	 	 	 	 	 	 	 	 
	 

	 	• Return on Equity	 	 	290	 	 	 	18.4	%*
	 
	 	 	 	 	 	 	 	 	 	 
	AG OR CE FUNCTIONS
	 	 	 	 	 	 	 	 	 	 
	 
	-AG Manufacturing & AG Product
	 	• AG Trading Profit	 	 	441	 	 	 	708	 
	Develop
	 	• AG Trading Cash Flow	 	 	 	 	 	 	 	 
	 
	-CE Manufacturing & CE Product
	 	• CE Trading Profit	 	 	315	 	 	 	365	 
	Develop
	 	• CE Trading Cash Flow	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	SUPPORTING FUNCTIONS
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	-Supply Chain Logistics, Strategic
Sourcing, Quality
	 	• CNH Trading Profit	 	 	 	 	 	 	 	 
	 
	 	 	 	 	1,025	 	 	 	725	 
	- Global Staffs

	 	• CNH Trading Cash Flow	 	 	 	 	 	 	 	 

8

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