Annual Report — [x] Reg. S-K Item 405 — Form 10-K
Filing Table of Contents
Document/Exhibit Description Pages Size
1: 10-K405 Annual Report -- [x] Reg. S-K Item 405 16 82K
2: EX-10 Exhibit 10.03 7 20K
3: EX-10 Exhibit 10.07A 1 7K
4: EX-10 Exhibit 10.18 16 29K
5: EX-10 Exhibit 10.19 7 29K
6: EX-12 Statement re: Computation of Ratios -- exhibit12-1 1 7K
7: EX-13 Exhbit 13.01 59± 266K
8: EX-21 Exhibit 21.01 4 22K
9: EX-23 Exhibit 23.01 1 7K
EX-10 — Exhibit 10.19
| EX-10 | 1st Page of 7 | TOC | ↑Top | Previous | Next | ↓Bottom | Just 1st |
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PRAXAIR, INC.
PLAN FOR DETERMINING PERFORMANCE-BASED AWARDS UNDER SECTION 162(M)
Adopted by the Board: February 21, 2001
Approved by Shareholders: April 24, 2001
PRAXAIR, INC. PLAN FOR DETERMINING PERFORMANCE-BASED AWARDS UNDER
SECTION 162(M)
Section 1. Purpose. The purpose of the Praxair, Inc. Plan for Determining
Performance-Based Awards Under Section 162(m) (the "Plan") is to establish a
process and criteria for administering and determining awards to be made to
certain of Praxair, Inc.'s (the "Company") senior executives by the Company
under the Company's long term incentive and variable compensation plans or
otherwise so that such awards qualify as "performance-based compensation" within
the meaning of IRS Code Section 162(m).
Section 2. Eligible Employees. Any Executive Officer of the Company, as
such term is defined for purposes of Section 16 of the Securities and Exchange
Act of 1934, shall be eligible for designation as a Participant for Performance
Awards determined under this Plan.
Section 3. Definitions. The following terms utilized in this Plan shall
have the following meanings:
"Committee" shall mean the Compensation and Management Development
Committee of the Board of Directors of the Company or any other Committee
designated by the Board for the purpose of administering this Plan so long
as each of the members comprising the Committee is an "outside director"
within the meaning of Section 162(m).
"Long Term Incentive Plan" shall mean any Praxair, Inc. long term incentive
plan, or other long term incentive program adopted by the Board of
Directors of the Company.
"Participant" shall mean for a Performance Award related to a calendar year
or Performance Period, each eligible employee who is designated as a
Participant for such a year or period by the Committee in accordance with
Section 9 herein.
"Performance Award" shall mean either an Annual Performance Award (Section
5 herein) or payment pursuant to Long Term Performance Opportunities
(Section 6 herein) or both as the context indicates.
"Performance Measures" shall mean for a calendar year or Performance Period
one or more of the business criteria set forth in Section 7 herein.
"Performance Period" shall mean a period longer than one year over which
performance is to be measured for purposes of Long Term Performance
Opportunities in accordance with Section 6 herein.
"Section 162(m)" shall mean Section 162(m) of the Internal Revenue Code of
1986, and the regulations promulgated thereunder, all as amended from time
to time.
"Variable Compensation Plan" shall mean any Praxair, Inc. variable
compensation plan, or other annual award program adopted by the Board of
Directors of the Company.
Section 4. Term. The Plan shall be effective as of January 1, 2002, and
shall be applicable for all future fiscal years of the Company unless amended or
terminated by the Committee pursuant to Section 12. Notwithstanding the
foregoing, the material terms (as defined in Section 162(m)) of this Plan shall
be subject to re-approval by the stockholders of the Company no later than the
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first meeting of stockholders to take place in 2006, if such approval is
required by Section 162(m) at the time, and if such terms have not been earlier
modified and submitted for stockholder approval.
Section 5. Annual Performance Awards.
5.1 For each calendar year, each Participant may be entitled to receive a
payment ("Annual Performance Award") pursuant to a Variable Compensation Plan in
an amount determined by the Committee as provided in this Plan. To the extent
permitted by the Variable Compensation Plan, the payment of Annual Performance
Awards may be made in cash, common stock or restricted stock of the Company, or
a combination thereof.
5.2 In no event shall any award amount determined by the Committee as
provided in this Plan, when aggregated with all other awards made pursuant to
the applicable Variable Compensation Plan in the calendar year, exceed any
applicable calendar year or other applicable aggregate limit set forth in that
Variable Compensation Plan.
5.3 The maximum Annual Performance Award paid, in cash or stock, to a
Participant for a calendar year may not exceed the lesser of: (i) three times
(3X) the annual rate of salary paid to the Participant as of the last day of the
preceding calendar year; and (ii) the applicable per-participant limit, if any,
set forth in the applicable Variable Compensation Plan.
Section 6. Long Term Performance Opportunities.
6.1 For any performance period designated by the Committee and having a
duration longer than one year (a "Performance Period"), the Committee may
establish the terms and conditions of award opportunities ("Long Term
Performance Opportunities") entitling the Participant to receive payments
pursuant to a Long Term Incentive Plan at the end of the Performance Period. The
amount of such payments shall be determined according to the conditions of the
Long Term Performance Opportunities established by the Committee as provided in
this Plan. To the extent permitted by the applicable Long Term Incentive Plan,
Long Term Performance Opportunities may consist of stock or other grants that
are valued in whole or in part by reference to, or are otherwise based on, the
market value of the common stock, restricted stock or other securities of the
Company, and may be paid in common stock, restricted stock or other securities
of the Company, cash or any other form of property as the Committee shall
determine.
6.2 A Participant shall not be permitted to sell, assign, transfer, pledge
or otherwise encumber shares received as Long Term Performance Opportunities
prior to the date on which any applicable restriction or Performance Period
established by the Committee lapses.
6.3 In no event shall any award amount determined by the Committee as
provided in this Plan, when aggregated with all other awards made pursuant to
the applicable Long Term Incentive Plan in the calendar year, exceed any
applicable calendar year or other applicable aggregate limit set forth in that
Long Term Incentive Plan.
6.4 The total aggregate payments, in cash or stock, made to a Participant
for a Performance Period pursuant to Long Term Performance Opportunities for
such period shall not exceed the lesser of: (i) $4,000,000 times the length of
the Performance Period in years; and (ii) the applicable per-participant limit,
if any, set forth in the applicable Long Term Incentive Plan.
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6.5 The Committee shall have the discretion, at the time Performance Goals
are established for a Long Term Performance Opportunity pursuant to Section 9
herein, to establish terms for payment on such Long Term Performance Opportunity
in the event a Change-in-Control (as defined in the applicable Long Term
Incentive Plan) occurs prior to the end of the applicable Performance Period;
provided, however, that in no event shall any such payment be in excess of the
maximums set forth in this Section 6.
Section 7. Performance Measures.
7.1 For any calendar year or Performance Period, the Committee may
designate one or more of the business criteria ("Performance Measures") set
forth in this Section 7 for use in determining the amount of a Performance Award
for an individual in relation to such year or period; provided that such
designation would not subject any Performance Award to the deduction limitations
of Section 162(m). Performance Measures designated for any Participant in a
calendar year or Performance Period may be different from those designated for
other Participants in said year or period as the Committee may determine. To the
extent applicable to any Performance Measure, the Committee may specify a
Performance Measure in relation to total Company performance or in relation to
the performance of identifiable business unit(s) of the Company.
7.2 Net Income. "Net Income" shall mean net income before the after-tax
effect of any special charge or gain or cumulative effect of a change in
accounting as reported in a statement of income for a year or period.
7.3 Operating Profit. "Operating Profit" shall mean operating profit before
any special charges or gains as reported in a statement of income for a year or
period.
7.4 SG&A. "SG&A" shall mean selling, general and administrative ("SG&A")
costs as reported in a statement of income for a year or period.
7.5 Sales. "Sales" shall mean sales as reported in a statement of income
for a year or period.
7.6 Cash Flow. "Cash Flow" shall mean Net Income, plus depreciation and
amortization, plus income less dividends for minority interests, plus or minus
changes in working capital, minus dividends paid to Praxair shareholders.
7.7 Return on Capital. "Return on Capital" shall mean NOPAT divided by
average Capital for the year or period. "Capital" shall mean the sum of: (i)
short term debt; (ii) long term debt; (iii) current portion of long term debt;
(iv) total minority interest; and (v) shareholders equity adjusted to reverse
the effect of 1992 accounting changes (FAS106 and 112), all as reported in or
determined from a balance sheet at the end of a year or period. " NOPAT" shall
mean Operating Profit after tax plus equity income.
7.8 Return on Equity. "Return On Equity" shall mean Net Income divided by
average shareholders' equity for the year or period.
7.9 Total Shareholder Return. "Total Shareholder Return" shall mean the
percent increase over a year or period in the value of an investor's holdings in
the Company's common stock assuming reinvestment of dividends.
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7.10 Debt to Capital Ratio. "Debt to Capital Ratio" shall mean Debt divided
by Capital. "Debt" shall mean the sum of short term debt, the current portion of
long term debt, and long term debt, all as reported in or determined from a
balance sheet at the end of a year or period.
7.11 EVA. "EVA" shall mean economic value added calculated as NOPAT (less
South American minority share) less the cost of average Capital (less South
American minority capital) for the year or period.
Section 8. Performance Goals.
8.1 For each Performance Measure designated by the Committee, the Committee
shall designate a specific, measurable target, schedule or threshold
("Performance Goal") against which actual performance is to be measured for
purposes of determining the amount of any Performance Award; provided that any
such designation would not subject any Performance Award to the deduction
limitations of Section 162(m).
8.2 A Performance Goal may be expressed in any form as the Committee may
determine including, but not limited to: (1) percentage growth; (2) absolute
growth; (3) cumulative growth; (4) performance in relation to an index; (5)
performance in relation to peer company performance; (6) a designated absolute
amount; (7) percent of sales; and (8) per share of common stock outstanding.
Section 9. Determination and Payment of Awards.
9.1 No later than ninety (90) days after the commencement of a calendar
year or Performance Period, the Committee shall designate or approve for the
Performance Awards relating to such year or period: (i) the individuals who will
be Participants, if any; (ii) the Performance Measures; (iii) if there is more
than one Performance Measure, the weighting of the Performance Measures in
determining the Performance Award; (iv) the Performance Goals and payout matrix
or formula for each Performance Measure; and (v) the target Performance Award
for each Participant.
9.2 Following the end of a calendar year or Performance Period, the
Committee shall determine the Performance Award for each Participant by:
(1) comparing actual performance for each measure against the payout
matrix approved for such year or period,
(2) multiplying the payout percentage from the payout matrix for each
Performance Measure by the appropriate weighting factor, and
(3) summing the weighted payout percentages and multiplying their
overall payout percentage by the Participant's target Performance Award.
9.3 Notwithstanding anything contained in this Plan to the contrary, the
Committee in its sole discretion may reduce any Performance Award for any
Participant to any amount, including zero, prior to the certification by
resolution of the Committee of the amount of such Performance Award.
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9.4 As a condition to the right of a Participant to receive a Performance
Award, the Committee shall first certify, by resolution of the Committee, that
the Performance Award has been determined in accordance with the provisions of
this Plan.
9.5 If, during a calendar year or Performance Period, a Participant
terminates employment for any reason, the Committee, in its discretion, may
provide that the Participant (or his or her beneficiary) receive, after the end
of such year or period, all or any portion of the Performance Award related to
such year or period to which the Participant would otherwise have been entitled.
9.6 Performance Awards for a calendar year or Performance Period shall be
determined as soon as practicable after such year or period and shall be paid no
later than 75 days following such year or period unless deferred as provided in
Section 9.7 hereof.
9.7 The Committee may in its discretion elect to defer payment of any
Performance Award until such date before or after retirement as a Participant
may request upon such terms and conditions as may be approved or established by
the Committee in its sole judgment. Such terms may include the payment of
interest or dividend equivalents on deferred amounts.
9.8 The Company shall withhold from any Performance Award or payments
determined under this Plan any amount of withholding taxes due in respect of a
Performance Award, its deferral or payment. Such taxes shall be withheld or paid
in the manner provided by the Variable Compensation Plan or Long Term Incentive
Plan pursuant to which the award or payment is made.
9.9 Participation in this Plan does not preclude Participants from
participation in any other benefit or compensation plans or arrangements of the
Company.
Section 10. Administration and Interpretation. The Plan shall be
administered by the Committee, which shall have the sole authority to make rules
and regulations for the administration of the Plan. The interpretations and
decisions of the Committee with regard to the Plan shall be final and
conclusive. The Committee may request advice or assistance or employ such
persons (including, without limitation, legal counsel and accountants) as it
deems necessary for the proper administration of the Plan.
Section 11. Administrative Expenses. Any expense incurred in the
administration of the Plan shall be borne by the Company out of its general
funds.
Section 12. Amendment or Termination. The Committee may from time to time
amend the Plan in any respect or terminate the Plan in whole or in part,
provided that no such action shall increase the amount of any Performance Award
for which Performance Goals have been established but which has not yet been
earned or paid: and provided further that such action will not cause a
Performance Award to become subject to the deduction limitations contained in
Section 162(m).
Section 13. No Assignment. The rights hereunder, including without
limitation rights to receive a Performance Award, shall not be pledged,
assigned, transferred, encumbered or hypothecated by an employee of the Company,
and during the lifetime of any Participant any payment of a Performance Award
shall be payable only to such Participant. A Participant, however, may designate
in writing at any time and from time to time one or more beneficiaries to
receive, in the event of the Participant's death, the payment of any award
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determined pursuant to Section 9 herein or any deferred Performance Award;
provided that such designation is received by the Company prior to such death.
Section 14. The Company. For purposes of this Plan, the "Company" shall
include the successors and assigns of the Company, and this Plan shall be
binding on any corporation or other person with which the Company is merged or
consolidated.
Section 15. Stockholder Approval. This Plan shall be subject to approval by
a vote of the stockholders of the Company at the 2001 Annual Meeting of
Shareholders.
Section 16. No Right to Employment. The designation of an employee as a
Participant, the determination of the amount of any Performance Award, or the
establishment of the terms of any Long Term Performance Opportunity shall not be
construed as giving a Participant the right to be retained in the employ of the
Company or any affiliate or subsidiary of the Company.
Section 17. Governing Law. The validity, construction and effect of the
Plan and any rules and regulations relating to the Plan shall be determined in
accordance with the laws of the State of Connecticut and applicable federal law.
Section 18. No Trust Neither the Plan nor any Performance Award nor any
Long Term Performance Opportunity shall create or be construed to create a trust
or separate fund of any kind or a fiduciary relationship between the Company or
any Participant. To the extent any Participant acquires a right to receive
payments from the Company in respect to any Performance Award or Long Term
Performance Opportunity, such right shall be no greater than the right of any
unsecured general creditor of the Company.
Section 19. Section 162(m). It is the intention of the Company that all
awards determined in accordance with this Plan be excluded from the deduction
limitations contained in Section 162(m). Therefore, if any Plan provision is
found not to be in compliance with the "performance-based" compensation
exception contained in Section 162(m), that provision shall be deemed amended so
that the Plan does so comply to the extent permitted by law and deemed advisable
by the Committee, and in all events the Plan shall be construed in favor of its
meeting the "performance-based" compensation exception contained in Section
162(m).
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Dates Referenced Herein and Documents Incorporated by Reference
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