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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, September 1,
1999 and September 9, 2003.
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. Any
compensation deferred pursuant to an
election made after March 28, 2003 can only
be credited to the Cash Component of the
participant's Account.
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
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subsequent to January 1 of any calendar
year, such newly 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) prior to
March 28, 2003, if the compensation was to be placed
in the Stock Component, the amount elected to be deferred was
used to purchase units of Company Stock (including fractional
shares) using the fair market value of such Company Stock on
the date the compensation would otherwise have been paid. As
of March 28, 2003, the units of Company Stock have been
converted from units of Household International, Inc. common
stock to a
right to receive HSBC Holdings plc ordinary shares
and therefore Company Stock refers to either common stock of
Household or ordinary shares of HSBC as appropriate. After
March 28, 2003, the Cash Component will be credited on each
dividend payment date for the Company Stock with the aggregate
cash dividend which would have been paid if the existing units
of Company Stock were actual shares of the Company Stock. For
purposes of the Plan, the "fair market value" of one share or
unit of Company Stock shall be the closing price on the London
Stock Exchange of a share of such stock for the trading date
preceding 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
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the value of the phantom Common Stock units
being the fair 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
Company Stock 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. A
participant may choose to receive an
equivalent number of HSBC American
depositary shares instead of Company Stock
and any fraction of a share will be
paid in cash. 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
