Document:

<PAGE>

                                                                    EXHIBIT 10.5

                            HOUSEHOLD INTERNATIONAL
             1996 LONG-TERM EXECUTIVE INCENTIVE COMPENSATION PLAN
                         (as amended August 31, 1999)

1.   Purpose
     -------

     The purpose of the Household International 1996 Long-Term Executive
Incentive Compensation Plan (the "Plan") is to further the long-term growth of
Household International, Inc. and its subsidiaries ("Household") by
strengthening the ability of Household to attract and retain employees of
outstanding ability, to provide an effective means for employees to acquire and
maintain ownership of Household Common Stock, to motivate such employees to
achieve long-range performance goals and objectives, and to provide incentive
compensation opportunities competitive with those of other major corporations.
Household senior executives, in particular, are charged with enhancing
shareholder value and except under extraordinary circumstances, will only
receive options under this Plan. The options, if granted, to Household senior
executives will comprise a significant portion of their total annual
compensation. In addition, the Plan provides for the issuance of options to
purchase Household Common Stock to non-employee Directors of Household in order
to facilitate ownership of Household Common Stock by Directors and to more fully
align the interests of Household's Directors with that of its Common
stockholders.

2.   Administration
     --------------

     The Plan shall be administered by the Compensation Committee of Household's
Board of Directors (the "Committee"), a committee of the Board appointed from
time to time by the Board consisting solely of two or more non-employee
directors, each of whom shall be an "outside director" as defined in Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code") and the
regulations thereunder and a "disinterested person" as defined in Rule 16b-3
under Section 16(b) of the Securities Exchange Act of 1934 (the "Exchange Act").
The Committee shall have such powers to administer the Plan as are delegated to
it by the Plan and the Board of Directors, including, to the extent permissible
under the terms of the Plan, the power to interpret the Plan and any agreements
executed thereunder, to prescribe rules and regulations relating to the Plan, to
determine the terms, restrictions, and provisions of any agreement relating to
awards granted pursuant to the Plan, and to make all other determinations
necessary or advisable for administering the Plan. Except as required by Rule
16b-3 (or any successor Rule thereto) with respect to grants of awards to
individuals who are subject

                                      -1-
<PAGE>

to Section 16 of the Exchange Act or as otherwise required for compliance with
Rule 16b-3 or other applicable law, the Committee may delegate all or any part
of its authority under the Plan to any officer of Household. All decisions made
by the Committee, or (unless the Committee has specified an appeal process to
the contrary) any other person to whom the Committee has delegated authority
pursuant to the provisions hereof, shall be final and binding on all persons.

3.   Grant of Awards; Shares Subject to Plan
     ---------------------------------------

     (a)  The Committee may grant any type of award permitted under the terms of
the Plan to employees (all such awards in the aggregate being hereinafter
referred to as "Awards"). Employees of Household and its subsidiaries may be
selected by the Committee for Awards under the Plan. In addition, non-employee
Directors of Household will receive options pursuant to the provisions of
Section 6.

     (b)  The number of shares of Common Stock of Household that may be issued
under the Plan is equal to the sum of the number of shares remaining available
under the Household International Long-Term Executive Incentive Compensation
Plan (the "1984 Plan") plus 12,000,000, all of which shares may be made subject
to options. The shares issued pursuant to an Award may consist of authorized and
unissued shares of Household's Common Stock, Common Stock held in Household's
treasury or Common Stock purchased on the open market. If any Award granted
under the Plan or the 1984 Plan shall terminate or lapse for any reason, any
shares of Common Stock subject to such Award shall again be available for grant
under the Plan. The maximum number of shares or share equivalents that may be
granted through an Award to any one participant in one year is 1,200,000 shares.

     (c)  In the event of corporate changes affecting Household's Common Stock,
this Plan or Awards granted to employees and options granted to non-employee
Directors hereunder (including, without limiting the generality of the
foregoing, stock dividends, stock splits, recapitalizations, reorganizations,
mergers, consolidations, or other relevant changes in capitalization),
appropriate adjustments in price, number and kind of shares of Common Stock or
other consideration subject to such Awards or in the terms of such Awards, shall
be made so as to prevent dilution or enlargement of rights under the Awards. In
addition, the aggregate number or remaining number or kind of shares which may
be issued under the Plan will be adjusted to equitably reflect any such
corporate changes.

     (d)  The Committee may, in its discretion and subject to such rules as it
may adopt, permit an employee to satisfy, in whole or in part, withholding tax
obligations incurred in

                                      -2-
<PAGE>

connection with Awards: (i) by electing to have Household withhold shares of
Household Common Stock (otherwise deliverable to the employee in connection with
an Award) in payment for such withholding tax obligation or (ii) by delivering
shares of Household Common Stock owned by such employee in payment for such
withholding tax obligation, or (iii) obtaining an extension of credit from
Household in payment for such withholding tax obligation. Any shares of Common
Stock surrendered by an employee in full or partial payment of withholding tax
obligations must have been held by such employee at least six months prior to
the date such shares are surrendered in payment.

     (e)  The Committee may provide that any Award to employees under the Plan
earn dividend equivalents. Such dividend equivalents may be paid currently or
may be credited to a participant's account, including during any deferral
period. Any crediting of dividend equivalents may be subject to such
restrictions and conditions as the Committee may establish, including
reinvestment in additional shares or share equivalents. However, the payment of
dividend equivalents will not be conditioned upon the employee exercising an
option.

     (f)  Except as may be provided in the agreement for any specific employee
Award or otherwise limited in this Plan, the Committee may, in its sole
discretion, in whole or in part, waive any restrictions or conditions applicable
to, or accelerate the vesting of, any Award to an employee.

     (g)  To the extent the Committee deems it necessary, appropriate or
desirable to comply with foreign law or practice and to further the purpose of
this Plan, the Committee may, without amending this Plan, (i) establish special
rules applicable to Awards granted to employees who are foreign nationals, are
employed outside the United States, or both, including rules that differ from
those set forth in this Plan and (ii) grant Awards to such employees in
accordance with those rules.

     (h)  The Committee may, in its discretion and subject to such rules as it
may adopt, authorize an extension of credit from Household to an employee
holding an award granted under this Plan (including an employee who is an
officer or director of Household) to assist the employee in exercising an option
or settling withholding tax obligations on Awards. Household may extend or
guarantee loans under this provision. Loans extended under the Plan will bear
interest at a variable rate that is adjusted annually to equal the greater of
the average annual rate for three-year U.S. Treasury notes for the calendar year
immediately preceding the year in which the adjustment is to be made and the
applicable rate in effect under Section 1274(d) of the Internal Revenue Code on
the day the loan is made. Payment terms will be established by the Committee and
may or may not

                                      -3-
<PAGE>

require periodic payments of interest and/or principal. The term of loans will
be established by the Committee, as well as provisions governing the
acceleration of maturity upon termination of employment or default. Loans
financed or guaranteed by Household will be secured by retention of the issued
stock certificates by Household and execution of an agreement with respect to
such shares. To the extent necessary to satisfy the provisions of Regulation G
or another similar regulatory restriction, other security may be required by the
Committee.

4.   Employee Options
     ----------------

     (a)  The Committee may grant to employees any type of statutory or non-
statutory option to purchase shares of Household Common Stock as is permitted by
law at the time the option is granted. The term of the initial grant of each
option shall not be more than ten years and one day from the date of grant and
may be exercised at the rate set by the Committee or as stated herein; provided,
however, that no option shall be exercised less than one year from the date of
grant, except as provided herein. The Committee may, in its discretion, extend
the expiration date of certain outstanding employee options, provided no
expiration date of any option may exceed fifteen years from the date of the
grant of that option.

     (b)  The per share purchase price of Household Common Stock which may be
acquired pursuant to an employee option shall be at least 100% of the fair
market value of one share of Common Stock of Household on the date on which the
option is granted. Within this limitation, such price shall be determined by the
Committee.

     (c)  Payment for shares purchased upon the exercise of an employee option
shall be made in cash or, in the discretion of the Committee, in shares of
Common Stock of Household valued at the then fair market value of such shares or
by a combination of cash and shares of Common Stock. Any shares of Common Stock
surrendered by an employee in full or partial payment of the exercise price of
an option must have been held by such employee at least six months prior to the
date such shares are surrendered in payment.

5.   Transfer of Employee Options; Exercise of Employee Options Following
     Termination of Employment
     --------------------------------------------------------------------

     (a)  Options may be exercised only by the employee and shall not be
transferable other than by will or the laws of descent and distribution. These
restrictions on transferability shall not apply to the extent (i) such
restrictions are not at the time required for the Plan to continue to meet the
requirements of

                                      -4-
<PAGE>

Rule 16b-3 of the Exchange Act, or any successor Rule, (ii) the Committee has
established rules concerning the transferability of employee options and (iii)
the agreement relating to an Award so specifies or the holder has received
notice from the Office of the Secretary of Household that such restrictions are
no longer applicable. If the holder of an option shall cease to be an employee
of Household or a subsidiary, and unless otherwise provided by the Committee,
all rights under such option shall immediately terminate, except:

          (i)  in the event of termination of employment of a holder to which
     Section 11(b) hereof applies, or of a holder who is retirement-eligible
     under the terms of a pension plan of Household or a subsidiary, the option
     may be exercised within five years of the date of termination of employment
     or as otherwise provided in the agreement for the Award;

          (ii)  in the event of termination of employment due to permanent and
     total disability, and the holder is not retirement-eligible under the terms
     of a pension plan of Household or a subsidiary, the option may be exercised
     within twelve months following the date of such termination of employment
     or as otherwise provided in the agreement for the Award;

          (iii)  in the event of death during employment, the option may be
     exercised by the executor, administrator, or other personal representative
     of the holder within five years succeeding death if such holder was
     retirement-eligible under the terms of a pension plan of Household or a
     subsidiary, or twelve months if such holder was not retirement-eligible
     under the terms of a pension plan of Household or a subsidiary or as
     otherwise provided in the agreement for the Award;

          (iv)  except in the event an employee is terminated for cause,
     following termination of employment other than as set forth in subsections
     (i), (ii) or (iii) above, the option may be exercised within three months
     following the date of termination, or prior to the expiration of the
     option, whichever period is shorter; or

          (v)  in the event of death of a holder of an option following
     termination of employment, the option may be exercised by the executor,
     administrator, or other personal representative of the holder,
     notwithstanding the time period specified in (i), (ii), (iii) or (iv)
     above, within a) twelve months following death or b) the remainder of the
     period in which the holder was entitled to exercise the option, whichever
     period is longer.

     If the Committee determines that the termination is for

                                      -5-
<PAGE>

cause, the option will not under any circumstances be exercisable following
termination of employment. Notwithstanding the foregoing, in the case where the
employee is a party to an employment, termination protection or similar
agreement with Household or a subsidiary which is in effect at the time of
termination of employment that defines "cause" (or words of similar import), the
Committee shall not determine such termination of employment to be for "cause"
unless a "cause" termination would be permitted under such agreement at that
time.

     (b)  An option may not be exercised pursuant to this Section after the
expiration of the term of such option and may be exercised only to the extent
that the holder was entitled to exercise such option on the date of termination
of employment.

6.   Non-Employee Director Options
     -----------------------------

     (a)  Each non-employee Director of Household will be granted an option for
8,000 shares of Household Common Stock annually on the same date grants are made
to employees.  The Committee will have no discretion to select which non-
employee Directors will be granted options or to determine the number of option
shares, price, vesting schedule or any other term of the options granted to non-
employee Directors.  All options granted to non-employee Directors will be non-
qualified stock options.

     (b)  The per share purchase price of Common Stock which may be acquired
pursuant to a non-employee Director option shall be 100% of the fair market
value of one share of Common Stock on the date the option is granted.  For
purposes of establishing the fair market value of Household's Common Stock on
any day under Section 6 of this Plan, such value shall be the average of the
highest and lowest sales prices per share of the Common Stock as reported in the
NYSE-Composite Transactions in The Wall Street Journal for such date.  However,
if the NYSE is not open for trading on a given day, the fair market value will
be the average of the highest and lowest sales prices per share on the next
succeeding business day.

     (c)  Subject to Section 11 of this Plan, each option granted to a non-
employee Director vests and shall be fully exercisable beginning six months from
the date the option was granted. Each such option expires ten years and one day
from the date of the grant. However, if a non-employee Director ceases to be a
Director of Household, outstanding vested options are exercisable as follows:

          (i)  in the event service on the Board of Directors terminates due to
     permanent and total disability, outstanding options may be exercised within
     twelve months following the date such service terminates or prior to the

                                      -6-
<PAGE>

     expiration of the outstanding options, whichever period is shorter;

          (ii)  in the event of death of a non-employee Director whether during
     service as a Director of Household or after ceasing such service,
     outstanding options may be exercised by the executor, administrator, or
     other personal representative of such Director within twelve months after
     the death of the Director or prior to the expiration of the outstanding
     options, whichever period is longer;

          (iii)  in the event a non-employee Director's service on the Board of
     Directors terminates because such Director has reached the mandatory
     retirement age of 70 (or age 72 if a Director was serving on the Board as
     of January 1, 1989) or if a non-employee Director retires from the Board
     prior to reaching the mandatory retirement age but after having served on
     the Board of Directors continuously for at least fifteen years, outstanding
     options may be exercised at any time prior to the expiration of the
     outstanding options; and

          (iv)  in the event service on the Board of Directors terminates other
     than as set forth in subsections (i), (ii) or (iii) above, outstanding
     options may be exercised within three months following the date such
     service terminates or prior to the expiration of the outstanding options,
     whichever period is shorter.

     (d)  Payment for shares purchased upon exercise of a non-employee Director
option shall be made in cash, in shares of Household Common Stock valued at the
then fair market value of such shares or by a combination of cash and shares of
Common Stock.  Any shares of Common Stock surrendered in full or partial payment
of the exercise price of an option must have been held by such Director at least
six months prior to the date such shares are surrendered in payment.

     A non-employee Director may also satisfy, in whole or in part, income tax
obligations incurred in connection with the exercise of an option by (i)
electing to have Household withhold shares of Common Stock (otherwise
deliverable to the Director in connection with the exercise of an option) in
payment for such income tax obligation or (ii) by delivering shares of Household
Common Stock owned by such Director in payment for such income tax obligation.
Any shares of Common Stock surrendered in full or partial payment of income tax
obligations must have been held by such Director at least six months prior to
the date such shares are surrendered.

     (e)  Non-employee Director options are not transferable other than by will
and the laws of descent and distribution.

                                      -7-
<PAGE>

7.   Restricted Stock Rights
     -----------------------

     (a)  Upon such terms as it deems appropriate, the Committee from time to
time may grant Restricted Stock Rights ("RSRs") to any employee selected by the
Committee, which entitle such employee to receive a stated number of shares of
Common Stock of Household. The RSRs are subject to forfeiture if the employee
fails to remain continuously employed by Household or any subsidiary for the
period(s) stipulated by the Committee (each, a "Restricted Period").

     (b)  RSRs shall be subject to the following restrictions and limitations:
(i) the RSRs may not be transferred except by will or the laws of descent and
distribution; and (ii) except as otherwise provided in Paragraphs (d) and (e) of
this Section 7, an RSR and the shares subject to an RSR shall be forfeited and
all rights of a holder of an RSR shall terminate without any payment of
consideration by Household if such employee fails to remain continuously
employed by Household or any subsidiary for the Restricted Period.  A holder of
an RSR shall remain continuously employed if such holder leaves the employ of
Household or any subsidiary for immediate reemployment with Household or any
subsidiary.

     (c)  Other than as may be specified pursuant to Section 3(e), the holder of
an RSR shall not be entitled to any of the rights of a holder of the Common
Stock with respect to the shares subject to such RSR prior to the issuance of
such shares pursuant to the Plan.

     (d)  The Committee in its sole discretion may accelerate the payment of
Household Common Stock under an RSR prior to the termination of the Restricted
Period if the holder of an RSR has achieved certain performance levels
established by the Committee at the time an RSR is granted. The Committee in its
sole judgment may revise such performance levels as it deems appropriate to
reflect significant, unforeseen events or changes.

     (e)  In the event that the employment of a holder of an RSR terminates by
reason of death or permanent and total disability or as a result of Section
11(b) hereof, such holder shall be entitled to receive the number of shares
subject to the RSR multiplied by a fraction (x) the numerator of which shall be
the number of full months between the date of grant of each such RSR and the
date of such termination of employment, and (y) the denominator of which shall
be the number of full months in the respective Restricted Period; provided,
however, no fractional share shall be awarded. A holder of an RSR whose
employment terminates for reasons other than those listed in this paragraph will
forfeit all rights under any outstanding RSR. This

                                      -8-
<PAGE>

automatic forfeiture may be waived in whole or in part by the Committee in its
sole discretion.

     (f)  When a holder shall be entitled to receive shares pursuant to an RSR,
Household shall issue the appropriate number of shares registered in the name of
the holder.

8.   Other Stock-Based Awards
     ------------------------

     The Committee may make awards of unrestricted shares of Household Common
Stock to eligible employees in recognition of outstanding achievements.

9.   Forfeiture
     ----------

     If it is determined that an employee or former employee, while employed by
Household or any subsidiary or otherwise associated with Household or any
subsidiary as a consultant, advisor or in another similar capacity, engaged at
any time in any activity in competition with any activity of Household or any
subsidiary or inimical, contrary or harmful to the interests of Household or any
subsidiary including, but not limited to: (i) conduct related to the
participant's position for which either criminal or civil penalties against the
participant may be sought, (ii) violation of Household policies, notwithstanding
Household's decision or inability to, or not to, terminate the participant for
such violation, (iii) accepting employment with or serving as a consultant,
advisor or in any other capacity to an employer that is in competition with or
acting against the interests of Household or any subsidiary, including employing
or recruiting any present employee of Household or any subsidiary for such
competitor, (iv) disclosing or misusing any confidential information or material
concerning Household or any subsidiary, or (v) participating in a hostile
takeover attempt of Household, then the Committee, in its sole discretion, may
cancel any unexpired or unpaid Award at any time.

10.  Amendment and Termination of the Plan
     -------------------------------------

     This Plan will expire on May 8, 2006. However, the Board of Directors may
terminate the Plan at any time except as provided in Section 11(d), but such
termination shall not affect Awards previously granted under the Plan. During
the Plan term, the Committee may amend the Plan or any Award granted to an
employee under the Plan at any time, except (i) the Plan may not be amended or
terminated in the circumstances set forth in Section 11(d), (ii) the Committee
may not, without shareholder approval, and except as permitted by Section 3(c),
increase the number of shares of Common Stock of Household which may be issued

                                      -9-
<PAGE>

pursuant to the Plan, change the purchase price of an Option, and (iii) the
Committee may not make any other amendment to the Plan which is required by law
to be approved by the shareholders of Household.

     Notwithstanding the preceding paragraph, the provisions of Section 6 of the
Plan relating to non-employee Directors may not be amended more than once every
six months, except to comply with changes to the Code or the rules and
regulations thereunder.

11.  Change in Control
     -----------------

     (a)  In order to protect participants in the Plan who have outstanding
Awards in the event there is a "Change in Control" (as defined below), (i) all
outstanding Awards will immediately vest or the Restricted Period with respect
thereto shall lapse and such Awards shall become exercisable or payable in full,
and (ii) the Committee, in its sole discretion (notwithstanding any contrary
provision in Section 3(f)), may:

          (i)  accelerate the time periods for exercising or realizing any
     Awards, notwithstanding any minimum holding or restricted periods set forth
     in the Plan or established by the Committee at the time of the grant of the
     Award;

          (ii)  provide for the purchase by Household of any Awards in cash
     equal to the amount that could have been received upon the exercise or
     realization of such Awards had the Awards been currently exercisable or
     payable on the day before said cash payment is made;

          (iii)  make such adjustments, including the granting of additional
     Awards, to any outstanding Award as the Committee deems appropriate to
     reflect the Change in Control; and

          (iv)  cause outstanding Awards to be assumed, or new rights of equal
     value to be substituted therefor, by any corporation that is the successor
     to Household.

     (b)  Any employee whose position with Household or any of its subsidiaries
is "Materially Changed" (as defined below) within twenty-four (24) months after
a Change in Control shall be deemed to be involuntarily terminated without
"cause" (as defined below) from Household and be entitled to exercise or receive
the payment of Awards previously granted to the employee that were outstanding
immediately prior to the event causing such termination or were awarded
subsequent to the event causing such termination, in each case, in accordance
with subsection 5(a)(i) with respect to Options or 7(e) of the Plan with respect
to any RSRs with respect to which the Restricted Period has not lapsed, without
any action by the Committee or Board of Directors.

                                      -10-
<PAGE>

     (c)  For purposes of this Section and to determine the rights of any
participant who has an outstanding Award, the term:

          (i)  "Change in Control" means:

               (1)  any "person" (as defined in Section 13(d) and 14(d) of the
                    Securities Exchange Act of 1934, as amended (the "Exchange
                    Act")), excluding for this purpose Household or any
                    subsidiary of Household, or any employee benefit plan of
                    Household, or any subsidiary of Household, or any person or
                    entity organized, appointed or established by Household for
                    or pursuant to the terms of such plan which acquires
                    beneficial ownership of voting securities of Household, is
                    or becomes the "beneficial owner" (as defined in Rule 13d-3
                    under the Exchange Act) directly or indirectly of securities
                    of Household representing twenty percent (20%) or more of
                    the combined voting power of Household's then outstanding
                    securities; provided, however, that no Change in Control
                    shall be deemed to have occurred as the result of an
                    acquisition of securities of Household by Household which,
                    by reducing the number of voting securities outstanding,
                    increases the direct or indirect beneficial ownership
                    interest of any person to twenty percent (20%) or more of
                    the combined voting power of Household's then outstanding
                    securities, but any subsequent increase in the direct or
                    indirect beneficial ownership interest of such person in
                    Household shall be deemed a Change in Control; and provided
                    further that if the Board of Directors of Household
                    determines in good faith that a person who has become the
                    beneficial owner directly or indirectly of securities of
                    Household representing twenty percent (20%) or more of the
                    combined voting power of Household's then outstanding
                    securities has inadvertently reached that level of ownership
                    interest, and if such person divests as promptly as
                    practicable a sufficient amount of securities of Household
                    so that the person no longer has a direct or indirect
                    beneficial ownership interest in twenty percent (20%) or
                    more of the combined voting power of Household's then
                    outstanding

                                      -11-
<PAGE>

                    securities, then no Change in Control shall be deemed to
                    have occurred;

               (2)  during any period of two (2) consecutive years (not
                    including any period prior to November 9, 1998) individuals
                    who at the beginning of such two-year period constitute the
                    Board of Directors of Household and any new director or
                    directors (except for any director designated by a person
                    who has entered into an agreement with Household to effect a
                    transaction described in subparagraph (1), above, or
                    subparagraph (3), below) whose election by the Board or
                    nomination for election by Household's stockholders was
                    approved by a vote of at least two-thirds of the directors
                    then still in office who either were directors at the
                    beginning of the period or whose election or nomination for
                    election was previously so approved, cease for any reason to
                    constitute at least a majority of the Board (such
                    individuals and any such new directors being referred to as
                    the "Incumbent Board");

               (3)  consummation of (x) an agreement for the sale or disposition
                    of Household or all or substantially all of Household's
                    assets, (y) a plan of merger or consolidation of Household
                    with any other corporation, or (z) a similar transaction or
                    series of transactions involving Household (any transaction
                    described in parts (x) through (z) of this subparagraph (3)
                    being referred to as a "Business Combination"), in each case
                    unless after such a Business Combination (I) the
                    stockholders of Household immediately prior to the Business
                    Combination continue to own, directly or indirectly, more
                    than sixty percent (60%) of the combined voting power of the
                    then outstanding voting securities entitled to vote
                    generally in the election of directors of the new (or
                    continued) entity (including, but not by way of limitation,
                    an entity which as a result of such transaction owns
                    Household, or all or substantially all of Household's former
                    assets either directly or through one or more subsidiaries)
                    immediately after such Business Combination, in
                    substantially the same proportion as their ownership of
                    Household immediately

                                      -12-
<PAGE>

                    prior to such Business Combination, (II) no person
                    (excluding any entity resulting from such Business
                    Combination or any employee benefit plan (or related trust)
                    of Household or of such entity resulting from such Business
                    Combination) beneficially owns, directly or indirectly,
                    twenty percent (20%) or more of the then combined voting
                    power of the then outstanding voting securities of such
                    entity, except to the extent that such ownership existed
                    prior to the Business Combination, and (III) at least a
                    majority of the members of the board of directors of the
                    entity resulting from such Business Combination were members
                    of the Incumbent Board at the time of the execution of the
                    initial agreement, or of the action of the Board, providing
                    for such Business Combination;

               (4)  approval by the stockholders of Household of a complete
                    liquidation or dissolution of Household;

               (5)  a tender offer is made for thirty percent (30%) or more of
                    the common stock of Household, which tender offer has not
                    been approved by the Board of Directors of Household; or

               (6)  a solicitation subject to Rule 14a-11 under the Exchange Act
                    (or any successor Rule) relating to the election or removal
                    of 50% or more of the members of the Incumbent Board is made
                    by any person other than Household.

          (ii)  "Materially Changed" means the occurrence of one or more of the
     following events:

               (1)  the termination of the employee, without cause, and other
                    than by reason of death, permanent and total disability or
                    retirement under the terms of a pension plan of Household or
                    any subsidiary;

               (2)  the employee was assigned to a position of lesser rank or
                    status;

               (3)  the employee's annual target bonus or targeted performance
                    unit awards were reduced and compensation equivalent in

                                      -13-
<PAGE>

                    aggregate value was not substituted;

               (4)  the employee's annual salary was reduced;

               (5)  the employee's benefits under the Household Retirement
                    Income Plan or any successor tax qualified defined benefit
                    plan were reduced for reasons other than to maintain its tax
                    qualified status and such reductions were not supplemented
                    in the Household Supplemental Retirement Income Plan
                    ("HSRIP"); or the employee's benefits under HSRIP, if
                    applicable, were reduced;

               (6)  the employee's other benefits or perquisites were reduced
                    and such reductions were not uniformly applied with respect
                    to all similarly situated employees; or

               (7)  the employee was reassigned to a geographical area outside
                    of the metropolitan area in which the employee was assigned
                    at the time of the Change in Control.

          (iii)  "cause" (1) in the case of an employee who is a party to an
     employment, termination protection or similar agreement that defines
     "cause" (or words of similar import), means "cause" (or words of similar
     import) as defined in such agreement, and (2) in the case of any other
     employee, means willful and deliberate misconduct, which is detrimental in
     a significant way to the interests of Household or any subsidiary thereof.

     (d)  Notwithstanding anything set forth in Section 11 hereof, with the
occurrence of a Change in Control the Plan may not be amended or terminated by
the Committee, the Board of Directors or the stockholders of Household.

12.  Miscellaneous
     -------------

     (a)  The Plan is intended to constitute an "unfunded" plan for incentive
compensation. With respect to any payments or deliveries of shares of Household
Common Stock not yet made to a participant by Household, nothing contained
herein shall give any rights to a participant that are greater than those of a
general creditor of Household. The Committee may authorize the creation of
trusts or other arrangements to meet the obligations created under the Plan to
deliver shares of Household Common Stock or payments hereunder consistent with
the foregoing.

                                      -14-
<PAGE>

     (b)  With respect to participants subject to Section 16 of the Exchange
Act, transactions under this Plan are intended to comply with all applicable
provisions of Rule 16b-3 or its successor under the Exchange Act. To the extent
any provision of the Plan or action by the Committee or its designee fails to so
comply, it shall be deemed null and void.

     (c)  This Plan and each agreement with respect to an Award shall be
construed and administered in accordance with the laws of the State of Delaware
without giving effect to principles relating to conflict of laws.

     (d)  Neither the adoption of the Plan nor any Award granted hereunder shall
confer upon any participant any right to continued employment or service with
Household or any subsidiary thereof, nor shall the Plan or any Award interfere
in any way with the right of Household or a subsidiary to terminate the
employment or relationship of any of the participants at any time.

                                      -15-
<PAGE>

                               AMENDMENT TO THE
                         HOUSEHOLD INTERNATIONAL, INC.
             1996 LONG-TERM EXECUTIVE INCENTIVE COMPENSATION PLAN
                               NOVEMBER 11, 1997

On November 11, 1997 the Household International Board of Directors, upon the
recommendation of the Board's Compensation Committee, adopted an amendment to
the 1996 Long-Term Executive Incentive Compensation Plan (the "Plan") relating
to the transferability of options granted under the Plan.

Transferability of Options Granted to Nonemployee Directors and Senior Managers
-------------------------------------------------------------------------------

This amendment only applies to Nonemployee Directors and Senior Managers
(defined under this amendment as the Chief Executive Officer and employees with
a direct reporting relationship to the Chief Executive Officer) who have
received or in the future receive options to purchase Household Common Stock
under the Plan. This section modifies Plan Section 5(a) as regards the
transferability of options granted to Nonemployee Directors and Senior Managers;
all other provisions continue to apply.

Who is Eligible

This provision only applies to Nonemployee Directors and Senior Managers
("Eligible Persons").

Transfer of Options; Minimum Number

Options granted under the Plan may be transferred by will or through the laws of
descent and distribution. In addition, Eligible Persons may transfer their
options only to family members, family trusts, and family partnerships
(collectively, "Transferees"). Transferees may not retransfer any options except
by will or through the laws of descent and distribution. Any option transferred
to a single Transferee must represent the right to purchase a minimum of 100
shares.

Which Options May be Transferred

Eligible Persons may transfer any option, including vested and unvested portions
of any award granted under the Plan. Options granted under previous benefit
plans are not covered by this amendment.

Exercise

Options will vest in accordance with applicable Plan provisions. A Transferee
may only exercise vested options, and only as

                                      -16-
<PAGE>

provided in the Plan.

Taxation of Options

The Eligible Person remains liable for any income tax related to the exercise of
transferred options. Income tax will be calculated as of the exercise date. The
Eligible Person is solely responsible for tax liability related to any options
gifted to a Transferee.

Law and Regulation

In addition to laws and regulations that apply to the Plan, the Transfer of
options must be completed in accordance with securities registration and
disclosure regulations applicable at the time of transfer. Eligible Persons and
Transferees may be subject to certain waiting periods limiting transfer or
exercise. Eligible Persons, or their agents agree to notify the Corporation at
least five days before any option they own or control is exercised.

                                      -17-<PAGE>

                                                                    EXHIBIT 10.7
                            HOUSEHOLD INTERNATIONAL

                        DEFERRED FEE PLAN FOR DIRECTORS

     Section 1.  Purpose.  The purpose of the Household International Deferred
Fee Plan (the "Plan") is to provide non-management directors (the "Directors")
of Household International, Inc. (the "Company") the opportunity to defer
receipt of cash compensation paid by the Company to such person in their role as
a Director. The Plan is designed to aid the Company in attracting and retaining
as members of its Board of Directors persons whose abilities, experience and
judgment can contribute to the well-being of the Company.

     Section 2.  Effective Date.  The effective date of this Plan is January 10,
1995. The Plan was subsequently amended on September 8, 1997 and September 1,
1999.

     Section 3.  Eligibility.  Any Director of the Company who is not deemed to
be an employee of the Company or any subsidiary thereof is eligible to
participate in the Plan.

     Section 4.  Deferred Compensation Account.  Except as may be required in
accordance with Section 11 hereof, an unfunded deferred compensation account
(the "Account") shall be established for each Director who elects to participate
in the Plan.

     Section 5.  Amount of Deferral.  A participant may elect to defer receipt
of all or a specified part of the compensation payable to the participant for
serving on the Board of Directors or committees of the Board of Directors of the
Company or any of its subsidiaries. An amount equal to the compensation
deferred, as reflected in the election referred to in Section 6 hereof, will be
credited to the participant's Account, in the form of cash (the "Cash
Component") or phantom Company Common Stock units (the "Stock Component"), on
the date such compensation would otherwise be initially payable.

     Section 6.  Time of Election of Deferral.  Except as set forth herein, an
election to defer compensation shall be made on an annual basis on or before
December 15th of each year on forms approved for that purpose and shall be
effective when filed with the Secretary of the Company with respect to all
compensation, or any part thereof so elected to be deferred, that is paid in the
calendar year following the calendar year in which the election is made. For the
year 1995, the election shall be made prior to January 30, 1995, and shall be
effective when made with respect to any compensation to be paid in the period
January 30, 1995 through December 31, 1995. In the case of newly elected
Directors who first become eligible to participate in the Plan subsequent to
January 1 of any calendar year, such newly

                                      -1-
<PAGE>

eligible participant shall be entitled to make an election to defer compensation
for services to be performed subsequent to the election provided such election
is made within 30 days after the date such Director becomes eligible. In this
case, such election shall be effective when made with respect to any
compensation to be paid during the period beginning with the date following the
date of the election through December 31 of the same initial year of
participation.

     Section 7.  Hypothetical Investment.  Each Account may have a Cash
Component, a Stock Component or a combination of both and will be credited on
each date compensation is to be paid to Directors with:

     (1)  if the compensation is to be placed in the Cash Component, the amount
          elected to be deferred plus interest from the date on which the
          deferred compensation that is credited to the Cash Component would
          initially have been payable, until payment, at a rate equal to the
          United States five-year treasury rate plus HFC's borrowing spread over
          that rate on the first day of each calendar quarter in which such
          interest is credited to the participant's Account with interest
          compounded quarterly, or

     (2)  if the compensation is to be placed in the Stock Component, the amount
          elected to be deferred will be used to purchase phantom units of the
          Company's Common Stock (including fractional shares) using the fair
          market value of such Common Stock on the date the compensation would
          otherwise be paid. The Stock Component will be credited on each
          dividend payment date for the Company's Common Stock with additional
          phantom Common Stock units determined by dividing the aggregate cash
          dividend which would have been paid if the existing phantom Common
          Stock units were actual shares of the Company's Common Stock by the
          fair market value of the Company's Common Stock as of the dividend
          payment date, computed to four decimal places. For purposes of the
          Plan, the "fair market value" of one share or unit of the Company's
          Common Stock shall be the average of the high and low sale prices for
          a share of such Common Stock as published in The Wall Street Journal
          for the respective determination date.

     Section 8.  Value of Deferred Compensation Accounts.  The value of each
participant's Account shall include compensation deferred and interest or
dividends credited thereon, pursuant to Section 7 of the Plan. All deferred
amounts to be paid to a participant pursuant to the Plan are to be paid as soon
as practicable following the payment date, with the value of the phantom Common
Stock units being the fair

                                      -2-
<PAGE>

market value of an equal number of shares of the Company's Common Stock on the
date of payment.

     Section 9.  Payment of Deferred Compensation.  No withdrawal may be made
from the participant's Account prior to the date specified by the participant in
his or her election to defer compensation except as provided in Section 10. At
the participant's election, deferral of compensation may be made to a specific
date, to immediately after the end of the calendar year in which the participant
terminates service as a Director, or to the earlier of either one of such dates.
Any deferral must be for a period of at least two years following the year for
which the compensation is earned, unless service as a Director terminates
earlier. Deferred compensation and interest or dividends (including appreciation
or loss) thereon will be payable in cash from the Cash Component or shares of
Household Common Stock, $1.00 par value, from the Stock Component either in a
lump sum or in such number of quarterly or annual installments as the
participant chooses, subject to the participant's right to change such method of
distribution no later than twelve months prior to the first date deferred
compensation is to be paid. If a participant elects to receive payment from his
or her Account in installments, the participant's Account will continue to
accrue interest or dividends (and appreciation or loss) during the installment
period. Payments made from the Account shall first be made from the Stock
Component of the Account until such Component has been reduced to zero, and then
from the Cash Component. Interest or dividends credited to a participant's
Account during the installment period will be paid on the next installment
payment date.

     Section 10.  Hardship.  In the event of a substantial, unforeseen hardship,
a participant may file a notice with the Secretary of the Company to be
presented to the Compensation Committee of the Board of Directors, advising the
Committee of the circumstances of the hardship, and requesting a withdrawal of
previously deferred amounts, or, where a former Director is receiving annual
installment payments, requesting accelerated payment. The Committee, in its sole
discretion, may agree to accelerate distribution of all or a part of amounts
previously deferred. Should the Committee agree, such distribution shall occur
on a date set by the Committee (the "Hardship Distribution Date") that is at
least six (6) months from the date the Committee approves the hardship
withdrawal request. The Committee shall determine, in its sole discretion, how a
current participant's Cash Component and Stock Component shall be charged for
the withdrawal. No member of the Committee may vote on, or otherwise influence a
decision of the Committee concerning his or her request for a hardship
withdrawal. A hardship withdrawal by a participant shall have no effect on any
amounts remaining in the participant Account, and shall not have any effect on
any current or future deferral election after the

                                      -3-
<PAGE>

hardship withdrawal.

     For purposes of this paragraph, a substantial unforeseen hardship is a
severe financial hardship resulting from extraordinary and unforeseeable
circumstances arising as a result of one or more recent events beyond the
participant's control. To the extent such hardship is or may be relieved (i)
through reimbursement or compensation by insurance or otherwise, (ii) by
liquidation of the participant's assets, to the extent the liquidation of such
assets would not itself cause a financial hardship, and (iii) by cessation of
deferrals under the Plan, accelerated payment may not be made. Withdrawals of
amounts because of an unforeseen hardship may only be permitted to the extent
reasonably necessary to satisfy the hardship. Examples of what are not
considered to be unforeseeable hardships include the need to send a
participant's child to college, or the desire to purchase a home.

     Section 11.  Change in Control.  A "Change in Control" shall be deemed to
occur when and it:

     (a)  Any "person" (as defined in Section 13(d) and 14(d) of the Securities
          Exchange Act of 1934, as amended (the "Exchange Act")), excluding for
          this purpose the Company and any subsidiary of the Company, or any
          employee benefit plan of the Company or any subsidiary of the Company,
          or any person or entity organized, appointed or established by the
          Company for or pursuant to the terms of such plan which acquires
          beneficial ownership of voting securities of the Company, is or
          becomes the "beneficial owner" (as defined in Rule 13d-3 under the
          Exchange Act) directly or indirectly of securities of the Company
          representing twenty percent (20%) or more of the combined voting power
          of the Company's then outstanding securities; provided, however, that
          no Change in Control shall be deemed to have occurred as the result of
          an acquisition of securities of the Company by the Company which, by
          reducing the number of voting securities outstanding, increases the
          direct or indirect beneficial ownership interest of any person to
          twenty percent (20%) or more of the combined voting power of the
          Company's then outstanding securities, but any subsequent increase in
          the direct or indirect beneficial ownership interest of such a person
          in the Company shall be deemed a Change in Control; and provided
          further that if the Board of Directors of the Company determines in
          good faith that a person who has become the beneficial owner directly
          or indirectly of securities of the Company representing twenty percent
          (20%) or more of the combined voting power of the Company's then
          outstanding securities has inadvertently reached that level of
          ownership interest, and if such person

                                      -4-
<PAGE>

          divests as promptly as practicable a sufficient amount of securities
          of the Company so that the person no longer has a direct or indirect
          beneficial ownership interest in twenty percent (20%) or more of the
          combined voting power of the Company's then outstanding securities,
          then no Change in Control shall be deemed to have occurred; or

     (b)  During any period of two (2) consecutive years (not including any
          period prior to September 1, 1999), individuals who at the beginning
          of such two-year period constitute the Board of Directors of the
          Company and any new director or directors (except for any director
          designated by a person who has entered into an agreement with the
          Company to effect a transaction described in subparagraph (a), above,
          or subparagraph (c), below) whose election by the Board or nomination
          for election by the Company's shareholders was approved by a vote of
          at least two-thirds of the directors then still in office who either
          were directors at the beginning of the period or whose election or
          nomination for election was previously so approved, cease for any
          reason to constitute at least a majority of the Board (such
          individuals and any such new directors being referred to as the
          "Incumbent Board"); or

     (c)  Consummation of (1) an agreement for the sale or disposition of the
          Company or all or substantially all of the Company's assets, (2) a
          plan of merger or consolidation of the Company with any other
          corporation, or (3) a similar transaction or series of transactions
          involving the Company (any transaction described in parts (1) through
          (3) of this subparagraph (c) being referred to as a "Business
          Combination"), in each case unless after such a Business Combination
          (x) the shareholders of the Company immediately prior to the Business
          Combination continue to own, directly or indirectly, more than sixty
          percent (60%) of the combined voting power of the then outstanding
          voting securities entitled to vote generally in the election of
          directors of the new (or continued) entity (including, but not by way
          of limitation, an entity which as a result of such transaction owns
          the Company or all or substantially all of the Company's former assets
          either directly or through one or more subsidiaries) immediately after
          such Business Combination, in substantially the same proportion as
          their ownership of the Company immediately prior to such Business
          Combination, (y) no person (excluding any entity resulting from such
          Business Combination or any employee benefit plan (or related trust)
          of the Company or of such entity resulting from such Business
          Combination) beneficially

                                      -5-
<PAGE>

          owns, directly or indirectly, twenty percent (20%) or more of the then
          combined voting power of the then outstanding voting securities of
          such entity, except to the extent that such ownership existed prior to
          the Business Combination, and (z) at least a majority of the members
          of the board of directors of the entity resulting from such Business
          Combination were members of the Incumbent Board at the time of the
          execution of the initial agreement, or of the action of the Board,
          providing for such Business Combination; or

     (d)  A tender offer is made for thirty percent (30%) or more of the
          Company's Common Stock, which tender offer has not been approved by
          the Board of Directors of the Company; or

     (e)  Approval by the shareholders of the Company of a complete liquidation
          or dissolution of the Company.

     Notwithstanding any other provision of the Plan, if a Change of Control
occurs, then the Company shall create a trust or take such other actions as are
appropriate to protect each participant's Account.

     Section 12.  Designation of Beneficiary.  A participant may designate a
beneficiary or beneficiaries which shall be effective upon filing written notice
with the Secretary of the Company on the form provided for that purpose. If no
beneficiary is designated, the beneficiary will be the participant's estate. If
more than one beneficiary statement has been filed, the beneficiary or
beneficiaries designated in the statement bearing the most recent date will be
deemed the valid beneficiary or beneficiaries.

     Section 13.  Death of Participant or Beneficiary.  In the event of a
participant's death before he or she has received the full value of his or her
Account, the then current value of the participant's Account shall be determined
as of the day immediately following death and such amount shall be paid to the
beneficiary or beneficiaries of the deceased participant as soon as practicable
thereafter in cash in a lump sum. If no designated beneficiary has been named or
survives the participant, the beneficiary will be the participant's estate.

     Section 14.  Participant's Rights Unsecured.  The right of any participant
or beneficiary to receive payment under the provisions of the Plan shall be an
unsecured claim against the general assets of the Company, and no provisions
contained in the Plan shall be construed to give any participant or beneficiary
at any time a security interest in the Account or any other assets of the
Company.

     Section 15.  Statement of Account.  Statements will be sent to participants
following the end of each year as to the

                                      -6-
<PAGE>

value of their Accounts as of December 31 of such year.

     Section 16.  Assignability.  No right to receive payments hereunder shall
be transferable or assignable by a participant or a beneficiary, except by will
or by the laws of descent and distribution.

     Section 17.  Administration of the Plan.  The Plan shall be administered
by the Compensation Committee of the Board of Directors of the Company. The
Committee shall conclusively interpret the provisions of the Plan and shall make
all determinations under the Plan. The Committee shall act by vote or written
consent of a majority of its members.

     Section 18.  Amendment or Termination of Plan.  This Plan may at anytime or
from time to time be amended, modified or terminated by the Board of Directors
of the Company. No amendment, modification or termination shall, without the
consent of a participant, adversely affect such participant's accruals on his or
her prior elections.

     Section 19.  Governing Law.  This Plan shall be governed by and construed
in accordance with the laws of the State of Illinois.

                                      -7-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00004-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00004-of-00352.parquet"}]]