Exhibit 10.36
UNITED TECHNOLOGIES
CORPORATION
LTIP PERFORMANCE SHARE UNIT
DEFERRAL PLAN
ARTICLE
I—PREAMBLE
The United Technologies Corporation
LTIP Performance Share Unit Deferral Plan (the
“Plan” ) was adopted pursuant to
Section 13(f) of the United Technologies Corporation 2005 Long
Term Incentive Plan (the “LTIP” ) approved by
the shareholders in April 2005. The purpose of this Plan is to
provide eligible Participants with the opportunity to defer receipt
of shares of Common Stock in respect of Performance Share Units
(“PSUs”) awarded under the LTIP. In addition to the
terms and conditions set forth below, the Plan is subject to the
provisions of the LTIP, which are incorporated herein by this
reference.
This Plan incorporates the
requirements of Section 409A of the Internal Revenue Code.
From January 1, 2007 through December 31, 2008, the Plan
has been operated in good faith compliance with Section 409A
in accordance with guidance provided by the Internal Revenue
Service.
ARTICLE
II—DEFINITIONS
Except as defined in this Article
II, terms used in this Plan have the definitions of the terms as
set forth in Section 2 of the LTIP:
a) Beneficiary means the
person, persons or entity designated on an electronic or written
form by the Participant to receive the value of his or her Plan
Account in the event of the Participant’s death. If the
Participant fails to designate a Beneficiary, or the Beneficiary
(and any contingent Beneficiary) does not survive the Participant,
the value of the Participant’s Plan Account will be paid to
the estate of the Participant.
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b) Code means the Internal
Revenue Code of 1986, as amended from time to time, and any
successor thereto. References to any section of the Internal
Revenue Code shall include any final regulations or other published
guidance interpreting that section.
c) Committee means the
Committee on Compensation and Executive Development of the
Corporation’s Board of Directors, except to the extent that
said Committee has delegated authority to administer this Plan to
the Corporation’s Deferred Compensation Committee.
d) Corporation means United
Technologies Corporation.
e) Deferral Period means the
period designated (or deemed to be designated) by the Participant
in accordance with this Plan that ends on the Participant’s
Retirement Date or on a Specific Deferral Date.
f) Deferred Share Units means
PSUs which have been deferred pursuant to the terms of this Plan,
and dividend equivalents that are credited and invested pursuant to
Section 7.1.
g) Default Deferral Period
means the minimum Deferral Period of five (5) years following
the date on which the Performance Cycle Account is
established.
h) Default Distribution means
payment in a lump sum distribution.
i) Disability means permanent
and total disability as determined under the Corporation’s
long-term disability plan applicable to the Participant, or if
there is no such plan applicable to the Participant,
“Disability” means a determination of total disability
by the Social Security Administration; provided that, in either
case, the Participant’s condition also qualifies as a
“disability” for purposes of Section 409A(a)(2)(C)
of the Code.
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j) Distribution Date means
the date on which distributions commence following the Valuation
Date.
k) Election Form means the
enrollment form provided to Participants electronically or in paper
form for the purpose of deferring PSUs under the Plan. Each
Participant’s Election Form must specify the percentage of
the Award to be deferred with respect to the applicable Performance
Cycle, the form of distribution elected, and the distribution start
date ( see also Default Deferral Period and Default
Distribution). There will be a separate Election Form for each
Performance Cycle.
l) Participant means an
executive of a UTC Company who is paid from a U.S. payroll, files a
U.S. income tax return, has been awarded PSUs and elects to defer a
portion of such PSUs pursuant to the terms of this Plan.
m) Performance Cycle
means the three-year performance
measurement period during which the pre-established performance
targets are measured for each PSU Award.
n) Performance Cycle Account
means the account established for each Participant for each
Performance Cycle for which PSUs have been deferred under the Plan.
The Performance Cycle Account shall be established on the date when
the PSUs vest.
o) Plan means the United
Technologies Corporation LTIP Performance Share Unit Deferral Plan,
as amended from time to time hereafter.
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p) Plan Account means the
aggregate value of all Performance Cycle Accounts.
q) Retirement means
Separation From Service on or after age 50 and attainment of age
65; Separation From Service on or after age 50 and attainment of at
least age 55 and a minimum of 10 or more years of “continuous
service” (as defined in the UTC Employee Retirement Plan as
in effect on January 1, 2008); or a “Rule of 65”
Termination.
r) Retirement Date means the
date of a Participant’s Retirement.
s) “Rule of 65”
Termination means Separation From Service on or after age 50
and before age 55, with a combination of age and years of
“continuous service” (as defined in the UTC Employee
Retirement Plan as in effect on January 1, 2008) equal to at
least 65.
t) Separation from Service
means a Participant’s Termination of Employment with all UTC
Companies, other than by reason of death or Disability that
qualifies as a “separation from service” for purposes
of Section 409A of the Code. A Separation from Service will be
deemed to occur where the Participant and the UTC Company that
employs the Participant reasonably anticipate that the bona fide
level of services the Participant will perform (whether as an
employee or as an independent contractor) for UTC Companies will be
permanently reduced to a level that is less than thirty-seven and a
half percent (37.5%) of the average level of bona fide
services the Participant performed during the immediately preceding
36 months (or the entire period the Participant has provided
services if the Participant has been providing services to UTC
Companies for less than 36 months.) A Participant shall not be
considered to have had a Separation from Service as a result of a
transfer from one UTC Company to another UTC Company.
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u) Specific Deferral Date
means a specified date, not less than five (5) years following
the date on which the Performance Cycle Account is
established.
v) Specified
Employee means each of the 50 highest-paid executives of the
Corporation and its Subsidiaries, effective annually as of
March 31 st , based on annual salary and
incentive compensation paid in the prior year. The term includes
both U.S. and non-U.S. employees.
w) Share means a share of UTC
Common Stock.
x) UTC Common Stock means the
common stock of United Technologies Corporation.
y) UTC Company means United
Technologies Corporation or any entity controlled by or under
common control with United Technologies Corporation within the
meaning of Section 414(b) or (c) of the Code (but
substituting “at least 20 percent” for “at least
80 percent” as the control threshold used in applying
Sections 414(b) and (c)).
z) Valuation
Date means the date on which Deferred Share Units included in a
Participant’s Performance Cycle Account are valued prior to
distribution. If the distribution is made because of the
Participant’s Separation from Service prior to attaining age
50, the Valuation Date for the lump sum distribution will be the
date of Separation from Service. If the distribution is made
because of the Participant’s Retirement, or attainment of
Separation from Service after attaining age 50, and the
distribution is a lump sum, the Valuation Date will be the date of
Separation from Service. If the distribution is made because of the
Participant’s Retirement, or attainment of Separation from
Service after attaining age 50, and the distribution is
installments, the Valuation Date will be the July 31
st
following the
Separation from Service Date and each subsequent
July 31 st thereafter for the remaining
installments. If the distribution is made because the
Deferral
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Period has ended on
a Specific Deferral Date, the Valuation Date for the lump sum or
initial installment distribution will be the July 31
st
following the
Specific Deferral Date and each subsequent July 31
st
thereafter. If the
distribution is made as a result of the death of the Participant,
the Valuation Date will be the date of death. In the event that the
New York Stock Exchange is closed on any of the foregoing days, the
Valuation Date will be the next business day.
ARTICLE III—ELIGIBILITY
AND PARTICIPATION
Section 3.1—Eligibility
Each employee of a UTC Company who
is classified as an eligible Participant at the time of the
deferral election will be eligible to participate in the Plan in
respect of that Performance Cycle in accordance with the terms of
the Plan.
Section 3.2—Participation
Each eligible Participant may elect
to participate in the Plan with respect to any Performance Cycle
for which he/she receives an award of PSUs, and for which the
opportunity to defer PSUs is offered, by timely filing an Election
Form, properly completed in accordance with Section 4.1.
Participation in the Plan is entirely voluntary.
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ARTICLE IV—PARTICIPANT ELECTIONS AND
DESIGNATIONS
Section 4.1—Election
An eligible Participant who has been
awarded PSUs may, on or before the election deadline established by
the Committee, make an electronic or written election on the
Election Form provided by the Committee to defer the
Participant’s vested PSUs.
Section 4.2—Election
Amount
An eligible Participant must
designate in the Election Form the percentage of vested PSUs
(rounded down to the nearest whole share) that will be deferred
under the Plan for the Performance Cycle. The minimum percentage of
vested PSUs that a Participant may defer under the Plan for any
Performance Cycle is 10% and the maximum is 100%.
Section 4.3—Election
Date
An electronic or
written Election Form must be completed and submitted to the
Committee no later than the election deadline for that Performance
Cycle. If the PSUs qualify as “performance-based
compensation” for purposes of Section 409A of the Code
when they are awarded, the election deadline shall be no later than
December 31 st of the second year of the
Performance Cycle, provided that the compensation provided under
the PSUs has not become reasonably ascertainable by the election
deadline, and provided further that the Participant has performed
services continuously from the beginning of the Performance Cycle
(or, if later, the date when the performance criteria were
established if the award is made after the beginning of the
Performance Cycle) until the election deadline. The Committee
may specify an election
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deadline for any Performance Cycle that is
earlier than the latest permissible deadline described in this
paragraph, or may specify before the election deadline that
particular PSUs are not eligible for deferral. Except as provided
below in Section 4.6 (Change in Election) and Section 7.2
(Unforeseeable Emergency), the choices reflected in the
Participant’s Election Form shall become irrevocable on the
election deadline (subject, however, to the provisions of the Plan
that provide for non-elective payments in the event of death,
change in control, small account balances, and other special
circumstances). If an eligible executive fails to submit a properly
completed Election Form by the election deadline, the executive
will be ineligible to participate in the Plan for the applicable
Performance Cycle.
Section 4.4—Deferral
Period
Each Participant shall specify in
the Election Form the Deferral Period for amounts to be deferred.
Failure to specify a deferral period shall result in a deferral for
the Default Deferral Period. A Participant may elect a Deferral
Period that ends either (1) on a Specific Deferral Date that
is at least five (5) years following the date on which the
Performance Cycle Account is established (but not later than the
Participant’s 72nd birthday), or (2) on the
Participant’s Retirement Date. If the Participant’s
72nd birthday falls less than five (5) years after the date on
which the Performance Cycle Account is established, the
Participant’s Deferral Period will end on the
Participant’s Retirement Date.
Section 4.5—Distribution
Election
At the time the Participant first
elects to defer his or her vested PSUs under Section 4.1, the
Participant must further make an election to have the Performance
Cycle Account distributed
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in a lump sum or in two to fifteen annual
installments. If no distribution election is made, the
Participant’s Performance Cycle Account will be distributed
in a lump sum. If a Participant elects to receive the Performance
Cycle Account in installments, the amount of each installment shall
be determined by dividing the total Performance Cycle Account
Balance on each Valuation Date by the number of installments
remaining, rounded down to the nearest whole share.
Section 4.6—Change in
Election
A Participant who has made an
election to defer PSUs under the Plan may make a one time
irrevocable election to extend the Deferral Period and/or change
the form of distribution for a Performance Cycle Account. With
respect to each Performance Cycle Account, the extended Deferral
Period shall not be less than five (5) years following the
date on which distribution would otherwise have occurred. A
deferral extension election and/or change to the form of
distribution must meet all of the following
requirements:
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i.
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The new
election must be made at least twelve months prior to the date on
which payments will commence under the current election (and the
new election shall be ineffective if the payment commencement date
under the current election occurs within twelve months after the
date of the new election);
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ii.
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The new
election will not take effect until at least twelve months after
the date when the new election is submitted in a manner acceptable
to the Committee;
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iii.
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The new payment
commencement date must be at least five years later than the date
on which payments would commence under the current election;
and
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iv.
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In no case, may
a Participant extend the Deferral Period beyond the
Participant’s 72nd birthday. If the Participant’s 72nd
birthday falls less than five (5) years after the date on
which payments would commence under the current election, the
Participant is not eligible to extend his or her Deferral Period or
to change the form of distribution.
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Section 4.7—Designation of
Beneficiary
Each Participant shall designate a
Beneficiary for his or her Plan Account on an electronic or written
form provided by the Committee. A Participant may change such
designation on an electronic or written form acceptable to the
Committee and received by the Committee at any time before the
Participant’s death. In the event that no Beneficiary
designation is filed with the Committee, or if the Beneficiary (and
any contingent Beneficiary) does not survive the Participant, all
amounts deferred hereunder will be paid to the estate of the
Participant. If a Participant designates the Participant’s
spouse as the Participant’s Beneficiary, that designation
shall not be revoked or otherwise altered or affected by any:
(a) change in the marital status of the Participant;
(b) agreement between the Participant and such spouse; or
(c) judicial decree (such as a divorce decree) affecting any
rights that the Participant and such spouse might have as a result
of their marriage, separation, or divorce; it being the intent of
the Plan that any change in the designation of a Beneficiary
hereunder may be made by the Participant only in accordance with
the procedures set forth in this Section 4.7. In the event of
the death of a Participant, distributions shall be made in
accordance with Section 5.5.
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ARTICLE V—VALUATION &
DISTRIBUTION OF ACCOUNTS
S
