Exhibit 10.6
ENPRO INDUSTRIES, INC.
LONG-TERM INCENTIVE PLAN
PURPOSE
The
EnPro Industries, Inc. Long-Term Incentive Plan (the
“Plan”) has been established effective as of
January 1, 2003 (the “Effective Date”) to provide
long-term incentive compensation to key employees who are in a
position to influence the performance of EnPro Industries, Inc.
(the “Company”), and thereby enhance shareholder value
over time. The Plan provides a significant additional financial
opportunity and complements other parts of the Company’s
total compensation program for key employees (base salary, annual
performance plan, stock options and benefits).
ELIGIBILITY AND PERFORMANCE
PERIODS
The
Committee (as defined in the “Plan Administration”
section of the Plan) will determine which employees of the Company
are eligible to participate in the Plan from time to time.
Participants will be selected within 90 days after the
beginning of each multi-year performance cycle (“Performance
Period”). Each Performance Period will be of two or more
years duration as determined by the Committee and will commence on
January 1 of the first year of the Performance Period. A new
Performance Period will commence each year unless the Committee
determines otherwise.
TARGET AWARDS
At
the time a Participant is selected for participation in the Plan
for a Performance Period, the Committee will assign the Participant
a Target LTIP Award to be earned if the Company’s target
performance levels are met for the Performance Period (the
“Target LTIP Award”). The Target LTIP Award may be
expressed as a dollar amount, a number of Performance Shares under
the Company’s Equity Compensation Plan, or a combination of a
dollar amount and a number of Performance Shares. Any portion of
the Target LTIP Award made in the form of Performance Shares will
be evidenced by a Performance Shares award agreement consistent
with the provisions of the Equity Compensation Plan.
MAXIMUM AND THRESHOLD
AWARDS
At
the time a Participant is selected for participation in the Plan
for a Performance Period, the Participant will be assigned maximum
and threshold award levels, expressed as a percentage of the Target
LTIP Award. Maximum award level represents the maximum percentage
of the Target LTIP Award that may be paid to a Participant for a
Performance Period based on performance above target performance
levels. Threshold award level represents the minimum percentage of
the Target LTIP Award that may be paid to a Participant for a
Performance Period based on performance below target performance
levels. Performance below the threshold performance award level
will earn no incentive payments.
Under no
circumstances will any Participant earn an award for a Performance
Period expressed in dollars exceeding $2,500,000. In addition, any
award of Performance Shares hereunder shall be subject to the
individual award limit applicable under the Equity Compensation
Plan.
PERFORMANCE
MEASURES
Performance
measures that may be used under the Plan include Net Income, Pretax
Income, Consolidated Operating Income, Segment Operating Income,
Return on Equity, Operating Income Return on Net Capital Employed,
Return on Assets, Cash Flow (with or without regard to asbestos),
Working Capital, Share Appreciation, Total Shareholder Return
relative to the manufacturing companies within the S&P 400
index, Total Business Return (calculated utilizing Earnings Before
Interest, Taxes, Depreciation and Amortization and cash flow) and
Earnings per Share of Common Stock of the Company for the Plan
Year.
PERFORMANCE
GOALS
The
Committee will designate, within 90 days of the beginning of
each Performance Period:
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The performance
measures and calculation methods to be used for the Performance
Period;
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A schedule for
each performance measure relating achievement levels for the
performance measure to incentive award levels as a percentage of
Participants’ Target LTIP Awards; and
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The relative
weightings of the performance measures for the Performance
Period.
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The
performance goals established by the Committee for a Performance
Period are intended to satisfy the “objective compensation
formula” requirements of Treasury Regulations
Section 1.162-27(e)(2).
PERFORMANCE
CERTIFICATION
As
soon as practicable following the end of each Performance Period
and prior to any award payments for the Performance Period, the
Committee will certify the Company’s performance with respect
to each performance measure used for that Performance
Period.
AWARD CALCULATION AND
PAYMENT
For
each Performance Period, individual incentive awards will be
calculated and paid to each Participant who is still employed with
the Company (subject to the special provisions below for employees
who terminate employment due to death, disability or retirement) as
soon as practicable following the Committee’s certification
of performance for the Performance Period. The amount of a
Participant’s incentive award to be paid based on each
individual performance measure will be calculated based on the
following formula:
2
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Participant’s Target LTIP Award
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X
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Percentage of
target award to be paid based on performance measure
results
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X
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Relative
weighting of performance measure
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=
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Amount of
incentive award based on performance measure results
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The incentive amounts to be paid
to the Participant based on each performance measure will be summed
to arrive at the Participant’s total incentive award payment
for the Performance Period.
Payments from the
Plan to a Participant, if any, will be made in cash (less any
amount necessary to satisfy applicable withholding taxes);
provided, however, that (i) if any portion of the award is in
the form of Performance Shares, the applicable Performance Shares
award agreement will specify whether the award will be settled in
cash, shares of the Company’s common stock or a combination
of cash and stock; and (ii) at the Participant’s
election, receipt of all or part of an award may be deferred under
the terms of the EnPro Industries, Inc. Deferred Compensation Plan
(or other deferred compensation plan of the Company).
TERMINATION OF EMPLOYMENT DUE
TO DEATH, DISABILITY, RETIREMENT
If
a Participant becomes totally disabled under the Company’s
Long-Term Disability Plan, or retires (or is deemed to retire)
under the Company’s Salaried Retirement Plan during a
Performance Period, the Participant will receive a pro rata payout
at the end of the Performance Period, based upon the time portion
of the Performance Period during which he or she was employed. The
actual payout will not occur until after the end of the Performance
Period, at which time the financial performance for the entire
Performance Period will be used to determine the amount of the
award prior to proration.
If
a Participant dies during a Performance Period, the Participant
will receive a pro rata payout based upon financial results
calculated for
