Exhibit 10.2
United Technologies
Corporation
Long Term Incentive
Plan
Performance Share Unit
Award
Schedule of
Terms
United Technologies Corporation (the
“Corporation”) hereby awards to the recipient
Performance Share Units (an “Award”) pursuant to the
United Technologies Corporation 2005 Long Term Incentive Plan (the
“LTIP”). This Award is subject to this Schedule of
Terms and the terms and provisions of the LTIP.
A Performance Share Unit (a “PSU”)
is equal in value to one share of Common Stock of the Corporation
(“Common Stock”). PSUs are convertible into shares of
Common Stock if and to the extent corporate performance targets are
achieved (see “Vesting” below). The number of PSUs is
set forth in the Statement of Award. The recipient must acknowledge
and accept the terms and conditions of the PSU Award by signing and
returning the appropriate portion of the Statement of Award to the
Stock Plan Administrator.
Vesting
PSUs vest only if pre-established three year
performance targets are achieved. Performance targets include:
(i) diluted earnings per share; (ii) total shareowner
return; (iii) working capital and gross inventory turnover;
and (iv) revenue growth. A PSU award may be subject to a
single or multiple performance targets. The Statement of Award will
specify the applicable performance targets, the performance period
and vesting date, the minimum performance required for vesting, the
range of vesting relative to measured performance and, if multiple
performance targets apply, the relative weighting of
each.
1
No shareowner rights
A PSU is the right to receive a share of Common
Stock in the future, subject to continued employment and
achievement of performance targets. The holder of a PSU has no
voting, dividend or other rights accorded to owners of Common
Stock.
Conversion of PSUs to Shares
PSUs will be converted into shares of Common
Stock, effective as of the vesting date, when the Committee on
Compensation and Executive Development of the Corporation’s
Board of Directors (the “Committee”) determines if, and
to what extent, PSUs have vested as a result of the achievement of
performance targets. PSUs that do not vest as a result of
performance target achievement will be forfeited without value
except in the event of death or change in control, as discussed
below.
Termination of Employment
If an Award recipient terminates employment for
any reason other than death, disability, or retirement, or if the
recipient meets the “Rule of 65” (see below ), unvested
PSUs will be cancelled as of the termination date.
Retirement . Retirement eligibility includes:
(i) Attainment of age 65 as of the employment
termination date; or
(ii) Attainment of at least age 55 with 10 or
more years of service as of the employment termination
date.
Upon retirement, the unvested PSUs that have
been held for at least one year prior to the date of retirement
will remain outstanding and eligible to vest as scheduled, if and
to the extent the Committee determines that performance targets
have been achieved.
Rule of 65 : The Award recipient meets the “Rule of
65” if the Award recipient terminates employment on or after
age 50, but before age 55, and the sum of the Award
recipient’s age and years of service add up to 65 or more as
of the employment termination date. If the Award recipient retires
under the “Rule of 65”, and if the Corporation consents
to his or her retirement, PSUs held for at least one year will not
be forfeited and will remain eligible for vesting as scheduled.
Consent will be at the sole discretion of the Corporation based on
its ability to effectively transition the Award recipient’s
responsibilities and such other factors as it may deem
appropriate.
In all cases, PSUs held for less than one year
prior to retirement or termination under the Rule of 65 will be
cancelled without value.
2
Service used to determine eligibility for
retirement or the “Rule of 65” will be based on
continuous service recognized under the Award recipient’s UTC
retirement plan.
Disability . If employment terminates by reason of
disability, unvested PSUs will not be forfeited. As long as you
remain disabled under your UTC disability plan, PSUs not yet vested
will remain eligible to vest as scheduled.
Death . PSUs will vest and be converted to shares of
Common Stock effective as of the date of death. The shares will be
delivered to the estate of the Award recipient as soon as
administratively practicable.
Transfer . In the event of transfer to an Affiliate, an
Award recipient shall not be considered to have terminated
employment for purposes of a PSU.
Rehire . If a former employee is rehired before the end
of the 90 day period immediately following the date of termination,
unvested PSUs that were cancelled because of the termination of
employment will be reinstated. If a terminated employee is rehired
after the 90 day period immediately following the date of
termination, the employee will be treated as a new employee and
cancelled PSUs will not be reinstated.
Adjustments
If the Corporation effects a subdivision or
consolidation of shares of Common Stock or other capital
adjustment, the number of PSUs (and the number of shares of Common
Stock that will be issued upon conversion) shall be adjusted in the
same manner and to the same extent as all other shares of Common
Stock of the Corporation. In the event of material changes in the
capital structure of the Corporation resulting from: the payment of
a special dividend (other than regular quarterly dividends) or
other distributions to shareowners without receiving consideration
therefore; the spin-off of a subsidiary; the sale of a substantial
portion of the Corporation’s assets; in the event of a merger
or consolidation in which the Corporation is not the surviving
entity; or other extraordinary non-recurring events affecting the
Corporation’s capital structure and the value of Common
Stock, equitable adjustments shall be made in the terms of
outstanding awards, including the number of PSUs and underlying
shares of Common Stock as the Committee, in its sole discretion,
determines are necessary or appropriate to prevent the dilution or
enlargement of the rights of Award recipients.
Change of Control
In the event of a change of control or
restructuring of the Corporation, the Committee may, in its
discretion, take certain actions with respect to outstanding Awards
to assure fair and equitable treatment of LTIP participants. Such
actions may include: acceleration of
