PERFORMANCE UNIT AWARD
AGREEMENT
THIS
AGREEMENT CONSTITUTES PART OF THE PROSPECTUS COVERING SECURITIES
REGISTERED UNDER THE SECURITIES ACT OF 1933.
THIS PERFORMANCE
UNIT AWARD AGREEMENT (hereinafter, the “Agreement”)
made as of the _______ day of _____, _______, between Goodrich
Corporation, a New York corporation (the “Company”),
and _________ (the “Employee”). For purposes of this
Agreement, all capitalized terms not defined herein shall have the
meanings ascribed thereto under the terms of the Goodrich
Corporation 2001 Equity Compensation Plan (as amended, the
“Plan”), unless otherwise noted.
WHEREAS, the
Employee is employed by the Company or its subsidiaries;
and
WHEREAS, the
Company wishes to grant to the Employee an award of performance
units under the Plan, subject to the conditions and restrictions
set forth in the Plan and this Agreement.
NOW THEREFORE, in
consideration of the mutual covenants contained in this agreement,
the Company and the Employee agree as follows:
|
1.
|
|
Grant of Units
.
The Company hereby
grants to the Employee _________ performance units (the
“Units”). If the Company declares a dividend payment on
the Company’s common stock, par value $5.00 per share
(“Common Stock”) during the Term, as defined below,
then the number of Units covered by this Agreement shall be
increased as of the dividend payment date by the number of shares,
if any, of the Common Stock that could be purchased on such date by
such dividend payment. For purposes of determining the number of
shares of the Common Stock that could be purchased by such dividend
payment as of the dividend payment date, the amount of
shares
of the Common Stock that could be purchased shall be determined by
reference to the fair market value of the Common Stock, as
calculated pursuant to Section 14 of the Plan, as of such
date.
|
|
2.
|
|
Term of Units
. The term of the Units
(the “Term”) will begin on January 2, 2007 and
will end on December 31, 2009.
|
|
3.
|
|
Unit Value
Measurement . The aggregate value of the
Participant’s Units (the “Benefit Amount”) shall
be determined as of the last day of the Term, and shall be equal to
the product of the number of Units then covered under this
Agreement and the fair market value of one share of the Common
Stock, as calculated pursuant to Section 14 of the Plan, as of
the last day of the Term.
|
|
4.
|
|
Earned Percentage
.
Except as otherwise
provided in Section 6 below, the Employee shall be entitled to
a benefit payment under this Agreement equal to the specified
percentage (the “Earned Percentage”) of the Benefit
Amount. The Earned Percentage of an amount equal to one-half of the
Units covered by this Agreement (the “ROIC Units”)
shall be determined in accordance with the provisions of subsection
(a) of this Section 4, and the Earned Percentage of an
amount equal to the other one-half of the Units covered
|
|
|
|
by this
Agreement (the “RTSR Units”) shall be determined in
accordance with the provisions of subsection (b) of this
Section 4.
|
(a) Return
on Invested Capital . The Earned Percentage of the ROIC
Units shall be determined by reference to the Return on Invested
Capital (as defined below) and will be calculated in accordance
with the following schedule:
|
|
|
|
|
|
|
2007-2009 Goals
|
|
Return On Invested
Capital
|
|
Earned Percentage
|
|
Threshold
|
|
TBD
|
|
0 %
|
|
Target
|
|
TBD
|
|
100 %
|
|
Maximum
|
|
TBD
|
|
200 %
|
With respect to
levels of the Company’s Return on Invested Capital that fall
within the threshold, target and maximum levels specified above,
the Earned Percentage of the ROIC Units will be interpolated on a
straight line basis. For purposes of this Agreement, the term
“Return on Invested Capital” means “Earnings
Before Interest and Taxes (“EBIT”) after tax”
excluding Special Items (as defined below) divided by average
invested capital (determined at the total Company level). EBIT
shall be equal to the EBIT amount used for the Goodrich Corporation
Management Incentive Program and the Goodrich Corporation Senior
Executive Management Incentive Plan calculations. The tax rate
applied to EBIT shall be the Company’s effective tax rate,
except when management determines that certain discrete items
should be excluded from the tax rate. In those instances, the
effective tax rate shall be the Company’s effective tax rate
excluding the impact of the discrete items. Invested capital is
defined as the sum of: accounts receivable (excluding accounts
receivable securitization); inventory (net); deferred tax assets
(current and noncurrent); goodwill; other intangible assets (net of
accumulated amortization); property, plant & equipment (net of
accumulated depreciation); other current assets (including
prepaids); and other noncurrent assets minus the sum of:
accounts payable; accrued expenses; other current liabilities;
taxes payable; deferred tax liabilities (current and noncurrent);
other noncurrent liabilities; and the cumulative translation
account. Special Items include all items deemed by management to
have occurred during the Term that are not representative of the
true underlying results of the Term. Examples of Special Items
include, but are not limited to, significant tax
litigation/settlements; debt issuance/exchange costs; and gains and
losses from the sale of a business. In all cases, the exclusion of
Special Items will be subject to the approval of the Compensation
Committee.
(b) Relative
Total Shareholder Return . The Earned Percentage of the
RTSR Units shall be determined by reference to the Relative Total
Shareholder Return (as defined below) and will be calculated in
accordance with the following schedule:
|
|
|
|
|
Relative Total Shareholder Return
Percentile
|
|
Earned Percentage
|
|
25 th or
Less
|
|
0 %
|
|
50 th
|
|
100 %
|
|
95 th or
Higher
|
|
200 %
|
2
With respect to
levels of Relative Total Shareholder Return that fall within the
percentiles specified above, the Earned Percentage of the RTSR
Units will be interpolated on a straight line basis. For purposes
of this Agreement, the term “Relative Total Shareholder
Return” means the percentage calculated using the Total
Shareholder Return (“TSR”) for Common Stock for each
year of the Term (using the dividend reinvestment approach to
calculating shareholder return) divided by the Total Shareholder
Return for the Aerospace Peer Group (as defined below) (using the
dividend reinvestment approach to calculating shareholder return).
TSR is calculated for each year of the Term and then used to
calculate TSR for the Term as follows: (1+TSR
1 )(1+TSR 2 )(1+TSR 3 ) 1/3 .
The TSR for Goodrich is then divided by the TSR for the Aerospace
Peer Group, the product of which will be the Relative Total Stock
Value for the Term. The overall performance of the Aerospace Peer
Group is then analyzed to identify the 25 th ,
50 th
and 75 th percentile performance. The Earned Percentage of
RTSR Units will be determined based on the Company’s Relative
Total Stock Value and its placement between the three identified
performance points.
(c)
Aerospace Peer Group . The Aerospace Peer Group is a
group of aerospace companies selected, from time to time, by the
Company̵
|
