2004 Deferred Compensation Plan
(As amended and Restated Effective January 1, 2009)
PURPOSE,
STATUS AND EFFECTIVE DATE
Section 1.1
Purpose of Plan . BorgWarner Inc., a Delaware corporation,
adopted the BorgWarner Inc. 2004 Deferred Compensation Plan (the
“Plan”), as set forth herein, effective July 1, 2004 as
a means of rewarding and retaining selected employees and to
provide such individuals the opportunity for capital accumulation
through elective deferrals of compensation.
The
Plan is also the successor to, amends and restates, assumes the
obligations of, and replaces the BorgWarner Inc. Executive Deferred
Compensation Plan (formerly named the Borg-Warner Automotive Inc.
Deferred Compensation Plan) (the “Prior
Plan”).
The
account balances under the Prior Plan were transferred to the Plan
as of July 1, 2004 (or shortly thereafter) and the Plan
comprises the sole source of liability of the Company and of
Employers for all obligations under the Prior Plan. The
distribution of a Participant’s Account under the Plan shall
be in complete satisfaction of the Participant’s right to a
distribution under the Prior Plan.
Section 1.2
Status of Plan . The Company has established the Plan as an
unfunded deferred compensation plan for a select group of
management and highly compensated employees within the meaning of
sections 201(2), 301(3), and 401(1) of the Employee Retirement
Income Security Act of 1974, as amended. The Plan shall at all
times be administered and interpreted in a manner that is
consistent with such status.
Section 1.3
Effective Date . The effective date of the Plan is
July 1, 2004. The effective date of this amendment and
restatement is January 1, 2009, unless otherwise specified
herein.
Under
the Plan, when capitalized, the following definitions shall
apply:
Section 2.1
Account shall mean the bookkeeping account for a Participant
that is established and maintained to record the
Participant’s interest under the Plan. The balance posted to
the record of the Account of a Participant shall consist of the sum
of the Participant’s balance transferred from the Prior Plan
(if any) and Deferrals, adjusted for earnings, losses,
appreciation, depreciation, distributions, expenses, and other
charges made against the Account pursuant to
Article 6.
Section 2.2
Administrative Committee shall mean the administrative
committee of the Company appointed by the Board of Directors to
administer the Plan, with the powers set forth in Article 9
and as elsewhere provided in the Plan, other than those powers that
the Board of Directors has reserved for itself.
1
Section 2.3
Beneficiary shall mean the person or persons or entity
designated by the Participant to receive the balance of the
Participant’s Account in the event of the Participant’s
death. The designation may be in favor of one or more
Beneficiaries, may include contingent as well as primary
designations and named or unnamed trustees under any will or trust
agreement, may apportion the benefits payable in any manner among
the Beneficiaries; provided, however, that a married
Participant’s primary Beneficiary shall be at all times,
while the Participant is married, the Participant’s current
spouse unless the spouse consents in writing, properly notarized or
witnessed by a member of the Administrative Committee or its
delegatee, to the naming by the Participant of someone other than
the spouse as a primary Beneficiary, and the consent acknowledges
the financial effect of the waiver and further acknowledges the
nonspouse beneficiary(ies), class of beneficiaries or contingent
beneficiary(ies) and the specific form of payment, if any, chosen
by the Participant. A Participant’s designation of one or
more Beneficiaries shall be made in writing in a manner designated
by the Administrative Committee and shall not be effective until
received by the Administrative Committee. If a Participant who is
unmarried at the time of his or her death fails to properly
designate a Beneficiary or if the designated beneficiaries of such
unmarried Participant shall have predeceased the Participant, the
Participant’s estate shall be the Beneficiary. If a married
Participant’s spouse has validly consented to the designation
of a Beneficiary(ies) other than such spouse and such designated
beneficiaries shall have predeceased the Participant, the
Participant’s spouse shall be the Beneficiary.
Subject
to the provisions of the preceding paragraph requiring spousal
consent to a married Participant’s designation of a
Beneficiary other than such Participant’s spouse, a
Participant may change his or her Beneficiary without the consent
of any Beneficiary by similar instrument in accordance with rules
and procedures established by the Administrative Committee. The
beneficiary designation form received and acknowledged most
recently by the Administrative Committee shall control as of any
date. If concurrent Beneficiaries are named without specifying the
proportion of benefits due each, distribution shall be made in
equal shares to those Beneficiaries.
Section 2.4
Board of Directors shall mean the Board of Directors, as
constituted from time to time, of BorgWarner Inc. If the Board of
Directors has delegated any of its authority under the Plan to a
committee or to an individual, the term “Board of
Directors” shall also include such committee or
individual.
Section 2.5
BW Stock Unit shall mean a measure of participation under
the Plan which has a value based on Common Stock. Each BW Stock
Unit credited to a Participant’s Account represents an
obligation of the Company or relevant Employer to make a payment of
cash equal to the fair market value of a share of Common Stock to
such Participant at such time as the Participant’s Account
shall become distributable to him or her under the terms of the
Plan. In the event of any Company stock split, stock dividend,
recapitalization, reorganization, merger, consolidation,
combination, exchange of shares, liquidation, spin-off or other
similar change in capitalization or event, or any distribution to
holders of Common Stock other than a regular cash dividend, the
number of BW Stock Units credited to Participants’ Accounts
under the Plan shall be appropriately adjusted by the Board of
Directors. The decision of the Board of Directors regarding any
adjustment shall be final, binding, and conclusive.
2
Section 2.6
Business Day shall mean a day on which the New York Stock
Exchange is open for trading.
Section 2.7
Change in Control shall mean the happening of any of the
following events:
A.
The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act )(a
“Person “) of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of stock of
the Company that, together with stock held by such person or group,
constitutes more than 50% of either (i) the total fair market value
of the stock of the Company (the “Outstanding Company
Stock”) or (ii) the total voting power of the then
outstanding voting securities of the Company entitled to vote
generally in the election of directors (the “Outstanding
Company Voting Securities”); provided, however, that for
purposes of this Section 2.7, the following acquisitions shall
not constitute a Change in Control: (w) any acquisition
directly from the Company, (x) any acquisition by the Company,
(y) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation
controlled by the Company, or (z) any acquisition by any
corporation pursuant to a transaction which complies with clauses
(i), (ii) and (iii) of subsection (D) of this
Section 2.7; or
B.
A majority of the members of the Board is replaced during any
12-month period by directors whose appointment or election is not
endorsed by a majority of the members of the Board before the date
or appointment or election; or
C.
Any Person acquires (or has acquired) during the 12-month period
ending on the date of the most recent acquisition by such Person,
ownership of 30 percent or more of the Outstanding Company
Voting Securities.
D.
Any Person acquires (or has acquired) during the 12-month period
ending on the date of the most recent acquisition by such Person
assets from the Company that have a total gross fair market value
equal to or more than 40 percent of the total gross fair
market value of all of the assets of the Company immediately before
such acquisition or acquisitions. For this purpose, gross fair
market value means the value of the assets of the Company or the
value of the assets being disposed of, determined without regard to
any liabilities associated with such assets, excluding however,
acquisitions by (i) a shareholder of the Company (immediately
before the asset transfer) in exchange for or with respect to such
shareholder’s stock of the Company; (ii) an entity, 50%
of more of the total value or total voting power of which is owned
directly or indirectly by the Company; (iii) a Person that
owns directly or indirectly, 50% or more of the Outstanding Company
Stock or Outstanding Company Voting Securities, or an entity, at
least 50% of the total value or voting power of which is owned
directly or indirectly by a Person described in clause (iii) of
this paragraph.
Section 2.8
Claimant shall mean the Participant or Beneficiary or his or
her representative submitting a claim for benefits under the
Plan.
3
Section 2.9
Code shall mean the Internal Revenue Code of 1986, as
amended, or as it may be amended from time to time.
Section 2.10
Common Stock shall mean common stock, $0.01 par value, of
BorgWarner Inc.
Section 2.11
Company shall mean BorgWarner Inc., a Delaware corporation,
and any successor thereto which continues the Plan.
Section 2.12
Compensation shall mean the definition of compensation for
the Plan Year announced in writing by the Administrative Committee
on or before the due date for the Administrative Committee’s
receipt of Participants’ Deferral Elections for such Plan
Year. Unless and until superseded, the definition of compensation
announced by the Administrative Committee for a Plan Year shall
remain in effect for subsequent Plan Years.
Section 2.13
Deferral Election shall mean the election or elections filed
by the Participant with the Company to defer Compensation under the
Plan.
Section 2.14
Deferrals shall mean the amounts credited to a
Participant’s Deferrals Account as Deferrals pursuant to the
Participant’s Deferral Elections.
Section 2.15
Disability shall mean, with reference to a Participant:
(i) the Participant is unable to engage in any substantial
gainful activity by reason of any medically determinable physical
or mental impairment that can be expected to result in death or can
be expected to last for a continuous period of not less than
12 months, or (ii) the Participant is, by reason of any
medically determinable physical or mental impairment that can be
expected to result in death or can be expected to last for a
continuous period of not less than 12 months, receiving income
replacement benefits for a period of not less than three months
under an accident and health plan covering employees of the
Participant’s employer. Additionally, a Participant will be
disabled if determined to be totally disabled by the Social
Security Administration or if determined to be disabled in
accordance with a disability insurance program, provided that the
definition of disability applied under such disability insurance
program complies with the requirements of this
definition.
Section 2.16
Effective Date shall mean the date set forth in
Section 1.3.
Section 2.17
Eligible Employee shall mean an Employee who satisfies the
requirements for eligibility under Article 3 of the
Plan.
Section 2.18
Employee shall mean any common law employee of the Company
or a subsidiary who is expressly designated as an employee. Any
person who is not expressly designated as an employee by the
Company (or by the subsidiary of the Company for whom the person
performs services) shall not be an Employee for purposes of the
Plan, notwithstanding that such person may be later determined by
the Internal Revenue Service or by a court of competent
jurisdiction to be a common law employee.
4
Section 2.19
Employer shall mean, with respect to any Participant, the
Company or, if applicable, a subsidiary of the Company (that is
participating in the Plan with the consent of the Board of
Directors) that employs such Participant.
Section 2.20
ERISA shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time.
Section 2.21
Investment Option shall mean a security, mutual fund, common
or collective trust, insurance company pooled separate account, or
other benchmark for measuring the income, gain or loss recorded for
a Participant’s Account.
Section 2.22
Participant shall mean an Employee who satisfies the
eligibility and participation criteria in Article 3 and shall
include an Employee whose account balance under the Prior Plan has
been transferred to this Plan.
Section 2.23
Plan shall mean this BorgWarner Inc. 2004 Deferred
Compensation Plan, as herein set out or as duly amended, which is
the successor to and which amends and restates, the BorgWarner Inc.
Executive Deferred Compensation Plan (formerly known as the
Borg-Warner Automotive, Inc. Executive Deferred Compensation
Plan).
Section 2.24
Plan Year shall mean the calendar year, except that the
initial Plan Year shall commence on July 1, 2004.
Section 2.25
Pre-2005 Account Balance shall mean the Deferrals credited
to a Participant’s Account for Plan Years ending prior to
January 1, 2005, and earnings thereon.
Section 2.26
Post-2004 Account Balance shall mean the Deferrals credited
to a Participant’s Account for Plan Years beginning on or
after January 1, 2005, and earnings thereon.
Section 2.27
Retirement shall mean the Participant’s termination of
employment with the Company and all Employers (i) on or after
the last day of the calendar month coincident with or immediately
following the day on which the Participant attains age 65, or
(ii) age 60 if the Participant has been credited with at least
15 years of service as determined under the RSP.
Section 2.28
RSP shall mean the BorgWarner, Inc. Retirement Savings
Plan.
Section 2.29
Scheduled Withdrawal shall mean a distribution of all or a
portion of the Deferrals credited to a Participant’s Account
in the year elected by the Participant for such
distribution.
Section 2.30
Unforeseeable Emergency The term “Unforeseeable
Emergency” means a severe financial hardship to the
Participant resulting from an illness or accident of the
Participant, the Participant’s spouse, the
Participant’s dependent (as defined in Code Section 152,
without regard to Section 152(b)(1), (b)(2), and (d)(1)(B)),
or a Beneficiary; loss of the Participant’s property due to
casualty (including the need to rebuild a home following damage to
a home not otherwise covered by insurance, for example, as a result
of a natural disaster); or other similar extraordinary and
unforeseeable circumstances arising as a result of events
beyond
5
the
control of the Participant. The types of events which may qualify
as an Unforeseeable Emergency may be limited by the
Committee.
Section 2.31
Unforeseeable Emergency Withdrawal shall mean a distribution
of all or a portion of a Participant’s Account by reason of
Unforeseeable Emergency.
In
addition, other capitalized terms set forth in the Plan shall have
the meanings first ascribed to them.
ELIGIBILITY
AND PARTICIPATION
Section 3.1
Eligibility .
A.
Participation in the Plan is limited to Employees who are expressly
selected for Plan participation by the Board of
Directors.
B.
In lieu of expressly selecting Employees for Plan participation,
the Board of Directors may establish eligibility criteria providing
for the participation of all Employees who satisfy such
criteria.
C.
The Board of Directors may adopt, amend or abolish a
Participant’s selection for eligibility or eligibility
criteria under Sections A and B hereof at any time, and for
any reason, by resolution, which resolutions shall be attached to
the copy of the Plan maintained by the Company and shall be
effective as of the date specified therein, or if later, the date
submitted to the Company.
Section 3.2
Participation . A Participant shall continue to participate
in the Plan with respect to amounts credited to his or her Account
until: (i) the Participant ceases to satisfy any of the
eligibility criteria for participation under Section 3.1, and
(ii) there has been a complete distribution of the
Participant’s Account.
CONTRIBUTIONS
AND CREDITS
Section 4.1
Deferrals — Plan Years Beginning on or after
January 1, 2005 and prior to January 1, 2009
.
1.
A Participant may elect to make Deferrals to his or her Account for
Compensation otherwise payable with respect to a Plan Year
beginning on or after January 1, 2005 and prior to
January 1, 2009 by timely making a Deferral Election, in such
manner as the Administrative Committee shall prescribe, on
or
6
before
the due date established by the Administrative Committee for the
Plan Year for which the Deferral Election is being made. Except as
provided in paragraph 3 of this subsection A, such due date shall
be no later than the December 31 of the Plan Year prior to the
Plan Year for which the Compensation would otherwise be
payable.
2.
Subject to Section 4.1(A)(1), the Administrative Committee may
provide for separate Deferral Elections and due dates for the
various elements of Compensation, such as base salary and
bonuses.
3.
A Participant who first becomes eligible for participation in the
Plan after January 1 of a Plan Year (including all Participants for
the initial Plan Year), who wishes to make Deferrals to his or her
Account for such Plan Year shall execute and file with the
Administrative Committee a Deferral Election within 30 days
after the date on which such Participant first becomes eligible to
participate in the Plan. Such election shall only be effective with
respect to Compensation for services performed after the Deferral
Election.
4.
Only one Deferral Election for each element of Compensation may be
made with respect to the Compensation to be earned in a single Plan
Year. Any Participant who fails to timely execute and file a
Deferral Election with the Administrative Committee for a Plan Year
shall not be permitted to make Deferrals for such Plan
Year.
5.
The Administrative Committee may establish separate minimum
deferral amounts (expressed as a whole percentage of Compensation)
for the deferral of each element of Compensation. Unless otherwise
provided by the Board of Directors, for any Plan Year, the maximum
amount of a Participant’s Deferral Election for base salary
shall be 20% of the Participant’s base salary and the maximum
amount of a Participant’s Deferral Election for his or her
annual bonus shall be 100% of the annual bonus (if any bonus is
paid). A Deferral Election shall direct the Company or the Employer
to reduce the Participant’s Compensation (or the element
thereof) by the whole percentage specified by the Participant in
the Deferral Election.
6.
The amount specified by the Participant in the Deferral Election
cannot reduce the Participant’s current Compensation for such
Plan Year below the amount necessary to satisfy any applicable
taxes and withholdings required by law, as determined by the
Administrative Committee.
7.
The Deferral Election of a Participant for base salary shall
continue in effect for each Plan Year following the effective date
of the Deferral Election until the first to occur of the following:
(i) a new Deferral Election for base salary becomes effective,
(ii) the Participant revokes the Deferral Election, or
(iii) the Participant terminates employment with the Company
and all Employers. The Participant may make a new Deferral Election
for base salary for subsequent Plan Years by timely making a new
Deferral Election, in such manner as the
7
Administrative
Committee shall prescribe, on or before the due date established by
the Administrative Committee for the Plan Year for which the
Deferral Election is being made (which due date shall not be later
than the December 31 that is immediately prior to the Plan
Year for which the Deferral Election is being made).
8.
A Deferral Election for Compensation other than base salary shall
be effective only for the Plan Year for which it is made. Once
filed with the Administrative Committee, a Deferral Election for
Compensation other than base salary shall be
irrevocable.
9.
In making a Deferral Election, a Participant consents to the
Employer’s withholding from his or her currently payable
Compensation the amount or amounts elected and the crediting of
such withheld amounts to the Participant’s Account, as
provided in the Plan.
10.
A Deferral Election for a Plan Year, whether for base salary, an
annual base or any other element of Compensation, shall be
irrevocable for such Plan Year as of the December 31 that is
immediately prior to the Plan Year for which the Deferral Election
is being made.
B.
Cancellation of Deferrals . Notwithstanding anything in the
foregoing of this Article to the contrary: (i) the Deferral
Election of a Participant who receives a hardship distribution from
a Code section 401(k) plan maintained by the Participant’s
Employer shall be cancelled and such Participant shall be
prohibited from making Deferrals to this Plan for the longer of:
(a) such Plan Year, (b) the period specified by the Code
or its regulations for the suspension of a Participant’s
election to make elective deferrals following a hardship
distribution, or (c) the period specified in such Code Section
401(k) Plan for such suspensions; and (ii) the Deferral
Election of a Participant who receives a an Unforeseeable Emergency
Withdrawal from the Plan during a Plan Year from the Plan shall be
cancelled for such Plan Year and such Participant shall prohibited
from making Deferrals to this Plan for the following Plan Year.
Upon again becoming eligible to make a Deferral Election, a
Participant who wishes to do so must make a new Deferral Election
for a Plan Year in accordance with the requirements set forth in
Section 4.1(A)(1) hereof and without regard to
Section 4.2(A)(1) hereof.
Section 4.2
Deferrals — Plan Years Beginning on or after
January 1, 2009 . No Deferrals shall be accepted or
permitted for Compensation for Plan Years beginning on or after
January 1, 2009 or for bonuses payable after December 31,
2008.
Section 5.1
Deferrals . A Participant shall at all times be 100% vested
in amounts credited to the Participant’s Account.
8
PARTICIPANT
ACCOUNTS; INVESTMENT OPTIONS
Section 6.1
Accounts . The Administrative Committee shall establish an
Account for each Participant to record the Deferrals,
distributions, adjustments for income, gain or loss, forfeitures,
and other charges and credits to the Account under the Plan. The
initial Account balance of a Participant who was a Prior Plan
participant and whose Prior Plan account balance was transferred to
the Plan pursuant to Article 1 shall include such transferred
balances. In the case of an Employee who is subject to
Section 16 of the Securities Exchange Act of 1934
(“Exchange Act”), (“Section 16
Participant”) amounts credited to such Participant’s
Account from the Prior Plan as BWA Stock Units shall continue to be
credited under the Plan as stock units (renamed herein as BW Stock
Units) until distributed to the Participant pursuant to the terms
of the Plan.
Section 6.2
Investment Options . The Company shall offer one or more
Investment Options for measuring the income, gain or loss recorded
for a Participant’s Account and may change Investment Options
at any time. Until the Board of Directors otherwise provides, the
Investment Options under the Plan shall consist of (i) those
investment options available to participants under the RSP,
excepting The BorgWarner Inc. Stock Fund, and (ii) for
Section 16 Participants whose Accounts include BWA Stock Units
transferred from the Prior Plan, BW Stock Units.
Section 6.3
Participant Allocations .
A.
A Participant shall elect on his or her Deferral Election form or
on such other form or by such other means as may be specified by
the Administrative Committee, one or more Investment Options to
which Deferrals to be credited to the Participant’s Account
shall be allocated. A Participant may change the allocation of
future Deferrals among the Investment Options and may change the
allocation of his or her Account balance among the
Investment
|
