Exhibit 10-p-1
For Persons With a Change of Control
Agreement
ROCKWELL COLLINS, INC.
PERFORMANCE UNIT
AGREEMENT
[Date]
Target Payment:
PERSONAL AND CONFIDENTIAL
[Name]
Identification # (SSN or Employee #)
Dear [Nickname]:
We are pleased to confirm that, as a key
employee of Rockwell Collins, Inc. and its subsidiaries
(“Rockwell Collins” or the “Company”), you
have been granted a performance unit award payable in a lump sum
amount in cash and/or in stock (as defined in paragraph 4) under
the Rockwell Collins 2001 Long-Term Incentives Plan (the
“Plan”). Any payout of your performance unit is based
on the achievement by Rockwell Collins of the goals for Cumulative
Sales and Return on Sales for its fiscal years of
through
[covering three fiscal years] (the “Performance
Period”) as set forth in the matrix attached as Exhibit A
(the “Matrix”). Any payout based on performance
pursuant to the Matrix is to be further adjusted based on
Shareowners Return as specified below. The terms and conditions of
your award are as set forth in more detail below.
1. Confirmation of Award .
Together with any letter transmitting this document to you, this
performance unit agreement (this “Agreement”) confirms
your award in accordance with the terms as set forth
herein.
2. Amount Payable Pursuant to
Award . Subject to the provisions of paragraphs 5 through 12,
the amount payable to you pursuant to your award shall be
determined as follows:
(a) The percentage of target award
earned will be the percentage found at the intersection in the
Matrix of the final results achieved for Cumulative Sales and for
Return on Sales for the Performance Period (as determined pursuant
to paragraph 3).
(b) If the final results achieved
for the Performance Period fall between the levels of performance
specified in the Matrix, the percentage of target award payable
will be interpolated consistent with the range in which the
Cumulative Sales and Return on Sales falls as conclusively
determined by the Committee (as defined below).
(c) No amount shall be payable for
the Performance Period if the Cumulative Sales or Return on Sales
(as determined pursuant to paragraph 3) for the Performance Period
is less than the minimum level for the Performance Period as
indicated in the Matrix.
(d) The payment as determined for
achievement against goals for Cumulative Sales and for Return on
Sales for the Performance Period will be further adjusted for the
Company’s Total Shareowners Return performance (as determined
pursuant to paragraph 3) relative to the 10 peer companies listed
on Exhibit B. If relative performance is among the top 3 of the
peer companies, the payment will be adjusted upward by 20%. If
relative performance is among the middle 4 of the peer companies,
there will be no adjustment to the payment. If relative performance
is among the lowest 3 of the peer companies, the payment will be
reduced by 20%. If the relative performance is not one of the top 3
companies or one of the lowest 3 companies, it will be deemed to be
in the middle group of companies.
Subject to the provisions of
paragraphs 5 through 12, the amount payable to you pursuant to this
performance award with respect to the Performance Period shall be
paid in a lump sum, less applicable taxes, by Rockwell Collins as
soon as practicable after the end of the Performance Period and
after receipt of the accountants’ letter for the Performance
Period pursuant to paragraph 13.
3. Definitions and Determination
of Financial Performance . “Cumulative Sales”
means, for the Performance Period, the total Sales as reported by
the Company in its audited financial statements. “Return on
Sales” means, for the Performance Period, the rate determined
by dividing Net Income by Sales. Both Net Income and Sales will be
the three year cumulative values as reported in the Company’s
audited financial statements after adjusting for extraordinary
income and expense items. The foregoing definitions and measures
will exclude major acquisitions and divestitures, however, they
will include post-acquisition growth.
“Shareowners Return” is measured by
adding (i) the total stock price growth for the Performance Period,
measured by comparing the average stock price during October 20
to the average stock price during
September 20 , and (ii) dividends
paid, measured as if reinvested in stock at the payment date. In
the event of substantial changes causing an inability to calculate
Shareowners Return for one or more of the peer companies listed on
Exhibit B (or in the event of spinoffs or similar transactions
causing a peer company to split into two or more peer companies),
the list of peer companies shall be adjusted accordingly to take
such events into account and the new group of peer companies shall
for purposes of paragraph 2(d) be divided into a top, middle and
lowest third; provided, however, that if such new group of peer
companies is not equally divisible into three parts, then the
excess number of peer companies shall be assigned to the middle
third.
In connection with the receipt of the
accountants’ letter for the Performance Period pursuant to
paragraph 13, the committee of the Board of Directors of Rockwell
Collins administering the Plan (which committee is herein called
the “Committee” and which, on the date hereof, is the
Compensation Committee) shall determine the Cumulative Sales,
Return on Sales and the Shareowners Return results and ranking for
the Performance Period after taking into account any adjustment as
contemplated in paragraph 10.
4. Payment of Award . The
award is payable in cash and/or in Common Stock of the Company. The
Committee will determine whether payment will be made in stock and
whether such payment in Common Stock will be automatic or elected
at the discretion of each recipient. The number of shares of Common
Stock of the Company to be issued pursuant to the payment made in
the form of Common Stock is to be determined by dividing (1) the
payment amount, net of income tax withholdings (which are to be
paid in cash), to be paid in the form of Common Stock of the
Company by (2) the Fair Market Value (as defined in the Plan) of
the Common Stock of the Company on the day immediately preceding
the payout date for the Performance Unit.
5. Transferability of Award .
This performance award shall not be transferable by you except by
will or by the laws of descent and distribution.
6. Termination of Employment for
Death, Disability, Retirement or Elimination of Position . If
your employment by the Company terminates during the Performance
Period by reason of your death, disability, retirement under a
retirement plan of the Company or the elimination of your position,
you will be entitled to receive as soon as practicable after the
end of the Performance Period and after receipt of the
accountants’ letter for the Performance Period pursuant to
paragraph 13 a payment, if any, that would otherwise be payable
pursuant to paragraph 2, but such amount shall be pro rated for the
portion of the Performance Period that elapsed prior to this
termination of employment.
7. Termination of Employment for
Other Reasons . Except as otherwise provided in paragraphs 9
through 12, if your employment by the Company terminates during the
Performance Period other than by reason of your death, disability,
retirement under a retirement plan of the Company or the
elimination of your position, you will not be entitled to any
payment pursuant to paragraph 2 with respect to the Performance
Period.
8. Forfeiture of Award for
Detrimental Activity . If you engage in detrimental activity
(as defined in this paragraph 8) at any time (whether
before
