Exhibit 99.2
AMENDED AND RESTATED
PACCAR INC
RESTRICTED STOCK AND DEFERRED COMPENSATION PLAN
FOR NON-EMPLOYEE DIRECTORS
1. PURPOSE OF THE PLAN
The Company has established this Plan to provide Non-Employee Directors with financial incentives
to promote the success of the Company’s long-term business objectives, and to encourage qualified
persons to accept nominations as a Non-Employee Director. The Plan is unfunded and benefits are
payable in the form of shares of PACCAR Common Stock or cash. The Plan was last amended and
restated in December 2006.
The Company amends and restates the Plan effective as of December 4, 2007. The deferral feature of
the Plan is intended to satisfy the requirements of section 409A of the Internal Revenue Code of
1986, as amended (“the Code”), with respect to compensation deferred after December 31, 2004 (and
subsequent earnings thereon). The balance in the Deferred Accounts as of December 31, 2004 (and
subsequent earning thereon) shall be governed by the distribution rules in effect on December 31,
2004.
2. DEFINITIONS
(a) Board of Directors means the Board of Directors of PACCAR Inc.
(b) Committee means the Nominating and Governance Committee of the Board of Directors or any
successor to such committee.
(c) Common Stock means common shares of PACCAR Inc with $1.00 par value and any class of
common shares into which such common shares hereafter may be converted.
(d) Company means PACCAR Inc, a Delaware corporation.
(e) Deferred Accounts means either the unfunded Stock Unit Account or Income Account
maintained by the Company into which a Non-Employee Director may defer payment of his or her cash
compensation (retainer and fees) or elect to receive a credit to the Stock Unit Account in lieu of
a grant of Restricted Stock for service as a Company director. The Company also shall establish
subaccounts under a Non-Employee Director’s Deferred Accounts in order to separately account for
the amounts in such Deferred Accounts that are, and that are not, subject to section 409A of the
Code.
(f) Fair Market Value means the closing price of the Common Stock on NASDAQ reported for the
date specified for determining such value.
(g) Grant Date means the date that Non-Employee Directors receive a grant of Restricted Stock.
(h) Grantee means the Non-Employee Director receiving the Restricted Stock or his legal
representative, legatees, distributees, alternate payees, or trustees as the case may be.
(i) Mandatory Retirement means retirement as a Non-Employee Director at age seventy-two (72)
or at such other age as may be specified in the bylaws for the Board of Directors in effect at the
time of a Non-Employee Director’s Termination.
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Amended December 4, 2007
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Exhibit 99.2
(j) Non-Employee Director means a member of the Company’s Board of Directors who is not a
current employee of the Company.
(k) Plan means this PACCAR Inc Restricted Stock and Deferred Compensation Plan for
Non-Employee Directors as it may be amended from time to time, or any successor plan that the
Committee or Board of Directors may adopt from time to time with respect to the grant of Director
Restricted Stock or other stock-based grants.
(l) Restricted Stock means Common Stock that may not be sold, transferred, or otherwise
disposed of by the Grantee except under such circumstances as may be specified by the Committee.
(m) Termination means a “separation from service” within the meaning of section 409A of the
Code.
3. PARTICIPATION
Each Non-Employee Director of the Company shall be eligible to participate in the Plan during his
tenure as a Director.
4. GRANTS OF RESTRICTED STOCK
(a) Except as set forth in Section 7, on the first business day of each calendar year for the
duration of the Plan (the Grant Date), each person who is a Non-Employee Director shall receive a
grant of Restricted Stock in an amount equal to the number of shares of Common Stock that the “Base
Amount” could have purchased at the Fair Market Value on such Grant Date (rounded up to the nearest
whole share). The “Base Amount” shall be $90,000 as of January 1, 2006. The Board of Directors,
in its sole discretion, may adjust the Base Amount for any Grant Date; provided, that the adjusted
Base Amount is established no later than the December 31 immediately prior to the Grant Date on
which such Base Amount shall be effective.
(b) Shares of Restricted Stock shall vest in full and become unrestricted on the third
anniversary of the applicable Grant Date subject to the provisions of Section 10. Shares of
Restricted Stock may not be sold, transferred or otherwise disposed of by a Grantee until such
shares become unrestricted in accordance with the provisions of this Section 4(b).
(c) Each Restricted Stock grant shall be evidenced by a written Restricted Stock Grant
Agreement that shall be executed by the Grantee and an authorized Company representative which
shall indicate the date of the Restricted Stock award, the number of shares of Common Stock
awarded, and contain such terms and conditions as the Committee shall determine with respect to
such Restricted Stock grant consistent with the Plan.
(d) Except as set forth in Section 7, a PACCAR Non-Employee Director first elected to the
Board of Directors during a calendar year is entitled to a pro-rated grant of Restricted Stock.
The pro-rated grant of Restricted Stock shall be calculated as follows: the number of shares of
Common Stock that the Base Amount could have purchased at the Fair Market Value on the first
business day the Non-Employee Director’s Board service becomes effective (the Grant Date”) (rounded
up to the nearest whole share) pro-rated to reflect the number of calendar quarters such
Non-Employee Director will serve on the Board of Directors during the calendar year in which such
Non-Employee Director is first elected.
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Exhibit 99.2
5. SHARES OF COMMON STOCK SUBJECT TO THE PLAN
There shall be reserved for use under the Plan (subject to the provisions of Section 8 hereof) a
total of 1,096,875 shares of Common Stock, which shares may be authorized but unissued shares of
Common Stock, treasury shares, or issued shares of Common Stock that shall have been reacquired by
the Company.
6. DIVIDEND, VOTING, AND OTHER SHAREHOLDER RIGHTS
Except as otherwise provided in the Plan, each Grantee shall have all of the rights of a
shareholder of the Company with respect to all outstanding shares of Restricted Stock registered in
his name, including the right to receive dividends and other distributions paid or made with
respect to such shares and the right to vote such shares.
7. DEFERRAL OF COMPENSATION
A Non-Employee Director may elect, on or before December 31 of any year, to defer at least 25% of
the cash compensation to be paid to the Non-Employee Director for services as a Company director
during the following calendar year and/or elect to receive a credit to the Stock Unit Account in
lieu of the grant of Restricted Stock described in Section 4(a). Before the term of a new
Non-Employee Director begins, he may elect to defer payment of the cash compensation earned for the
remainder of the calendar year in which his term begins and/or elect to receive a credit to the
Stock Unit Account in lieu of the grant of Restricted Stock described in Section 4(d). Any credit
to the Stock Unit Account in lieu of the grant of Restricted Stock described in Section 4(a) or
4(d) shall be for the same number of shares of Common Stock and have the same restrictions and
vesting provisions otherwise applicable to the grant of Restricted Stock. Such credit to the Stock
Unit Account shall be evidenced by a written Deferred Restricted Stock Unit Grant Agreement that
shall be executed by the Non-Employee Director and an authorized Company representative which shall
indicate the date of the Deferred Restricted Stock Unit award, the number of units awarded, and
contain such terms and conditions as the Committee shall determine with respect to such Deferred
Restricted Stock Unit grant consistent with the Plan.
Each participating Non-Employee Director may elect to have all or a portion of his cash
compensation placed into one or both of two unfunded accounts maintained by the Company (hereafter
Deferred Accounts). At the time a Non-Employee Director makes a deferral election, such
Non-Employee Director shall specify the time and manner in which the Deferred Accounts shall be
paid, using the deferral election forms prescribed by the Committee. Payment of the Deferred
Accounts may be made (i) at the time of the Non-Employee Director’s Termination or (ii) based on a
specific date after the Non-Employee Director’s Termination (including the date the Non-Employee
Director attains a specified age). The Non-Employee Director’s deferral election form also must
specify the allocation and investment of the deferred compensation between the Stock Unit Account
and the Income Account. If a Non-Employee Director fails to specify the allocation and investment
of the deferred compensation, then it shall be allocated and invested in the Income Account.
Amounts deferred into the Stock Unit Account or the Income Account may not be transferred to the
other deferred account. Notwithstanding the foregoing, if a Non-Employee Director elects to
receive a credit to the Stock Unit Account in lieu of the grant of Restricted Stock described in
Section 4(a) or 4(d), such credit may not be allocated to the Income Account.
(a)
Stock Unit Account
. In the case of cash deferrals, the account will be credited with the
number of shares of Common Stock that the amount deferred could have purchased at the Fair Market
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Exhibit 99.2
Value on the date the Non-Employee Director’s cash compensation is payable. In the case of a
credit to the Stock Unit Account in lieu of the grant of Restricted Stock described in Section 4(a)
or 4(d), the account will be credited with the number of shares of Common Stock otherwise
applicable to the grant of Restricted Stock subject to the same vesting conditions otherwise
applicable to such Restricted Stock. Thereafter, any dividends earned will be treated as if those
dividends had been invested in additional shares of Common Stock at the Fair Market Value on the
date the dividend is payable. Vested amounts credited to the Stock Unit Account shall be
distributed in shares of Common Stock either in a single payment or in substantially equal annual
installments (over a period not to exceed 15 years), as specified by the Non-Employee Director on
the deferral election form. Any fractional shares will be paid in cash. If a Non-Employee
Director fails to specify the manner in which the Stock Unit Account shall be distributed, then it
shall be distributed in a single payment.
(b)
Income Account
. The account will be credited with the amount deferred, and interest shall
begin to accrue, as of the date the Non-Employee Director’s cash compensation is payable. Interest
is credited at a rate equal to the simple combined average of the monthly Aa Industrial Bond yield
averages for the immediately preceding calendar quarter as reported in Moody’s Bond Record.
Interest is compounded quarterly. Amounts credited to the Income Account shall be distributed
either in a single payment or in substantially equal quarterly, semi-annual or annual installments
(over a period not to exceed 15 years), as specified by the Non-Employee Director on the deferral
election form. If a Non-Employee Director fails to specify the manner in which the Income Account
shall be distributed, then it shall be distributed in a single payment.
Unless otherwise required by applicable law, the deferral election a Non-Employee Director makes
under the Plan shall remain in effect from year-to-year. A Non-Employee Director may, however,
increase or decrease the amount being deferred in the future by making a new deferral election no
later than the December 31 immediately preceding the calendar in which the new election is to be
effective. The amounts deferred under the new deferral election shall be distributed at the time
specified in the prior deferral election and the amounts deferred under the new deferral election
will be allocated in accordance with the prior deferral election, unless the Non-Employee Director
specifies otherwise.
A Non-Employee Director may change the time and manner in which the Deferred Accounts shall be
distributed; provided that (i) the new deferral election will become effective 12 months from the
date it is made and (ii) the new deferral election specifies a distribution date that is at least
five (5) years later than the prior distribution date. Notwithstanding the foregoing, a change in
the time and/or manner of distribution of the Deferred Accounts shall not accelerate the
distribution date of the Deferred Accounts, except as allowed by section 409A of the Code and the
Treasury regulations promulgated thereunder.
8. ADJUSTMENTS TO THE NUMBER OR VALUE OF SHARES OF COMMON STOCK
If there are any changes in the number or value of shares of Common Stock by reason of stock
dividends, stock splits, reverse stock splits, recapitalizations, mergers, consolidations, or other
events that increases or decreases the number or value of issued and outstanding shares of Common
Stock, then proportionate adjustments shall be made to the number of shares of Common Stock (i)
available for issuance under the Plan pursuant to Section 5 above, (ii) covered by an unvested
grant of Restricted Stock, and (iii) credited to each Stock Unit Account in order to prevent
dilution or enlargement of rights. This provision does not, however, authorize the delivery of a
fractional share of Common Stock under the Plan.
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Exhibit 99.2
9. NON-TRANSFERABILITY
Shares of Restricted Stock and the Deferred Accounts shall not be assigned, attached, or otherwise
subject to any creditor’s process or transferred except by will or the laws of descent and
distribution, or pursuant to a trust created for the benefit of the Non-Employee Director or his
family or pursuant to a qualified domestic relations order as defined by the Code, Title I of
Employee Retirement Income Security Act or the rules thereunder. The restrictions set forth in
Section 4(b) shall apply to the shares of Restricted Stock in the hands of the trustee or
Non-Employee Director’s former spouse.
10. TERMINATION OF STATUS AS A NON-EMPLOYEE DIRECTOR
(a) In the event of a Termination by reason of Mandatory Retirement, disability, or death, all
shares of Restricted Stock held by the Grantee shall become fully vested, notwithstanding the
provisions of Section 4(b) hereof, and the Grantee (or the Grantee’s estate or a person who
acquired the shares of Restricted Stock by bequest or inheritance) shall have the right to sell,
transfer or otherwise dispose of such shares at any time. In addition, in the event of such a
Termination, all vesting restrictions on the credits made to the Stock Unit Account in lieu of the
grant of Restricted Stock described in Section 4(a) or 4(d) shall lapse but the payout provisions
of such credits shall not be affected by such Termination.
(b) In the event of a Termination for any reason other than those specified in Section 10 (a)
above, any shares of Restricted Stock granted hereunder shall be forfeited and the Grantee shall
return to the Company for cancellation any stock certificates representing such forfeited shares
which shall be deemed to be canceled and no longer outstanding as of the date of Termination; and
from and after the date of Termination, the Grantee shall cease to be a shareholder with respect to
such forfeited shares and shall have no dividend, voting, or other rights with respect thereto. In
addition, in the event of such a Termination, any then unvested credits made to the Stock Unit
Account in lieu of the grant of Restricted Stock described in Section 4(a) or 4(d) shall be
forfeited.
(c) The Deferred Accounts shall be distributed (or commence to be distributed), in accordance
with the Non-Employee Director’s prior election form. If a Non-Employee Director failed to specify
the time on which the Deferred Accounts shall be distributed, then such Non-Employee Director’s
Deferred Accounts shall be distributed in the first January following the Non-Employee Director’s
Termination.
(d) Notwithstanding a Non-Employee Director’s election, if the aggregate value of the Deferred
Accounts is less than $50,000 at the time distribution is made (or is scheduled to begin), then the
Deferred Accounts shall be distributed at that time in a single payment, in shares of Common Stock
for the Stock Unit Account and in cash for the Income Account.
11. CHANGE IN CONTROL
Upon the occurrence of a change in control of the Company, all grants of Restricted Stock under the
Plan shall vest in full and become unrestricted and nonforfeitable. In addition, all vesting
restrictions on the credits made to the Stock Unit Account in lieu of the grant of Restricted Stock
described in Section 4(a) or 4(d) shall lapse but the payout provisions of such credits shall not
affected by such change in control. For purposes of this Section 11, a “change in control” shall
have the meaning given to such term under Section 16.4 of the PACCAR Inc Long Term Incentive Plan,
as approved by the shareholders of the Company on April 25, 2006. In addition, the Board or the Committee may in its sole discretion
terminate the deferral feature of the Plan within the 30 days preceding or the 12 months following
a “change in control event” (as such term is defined in the Treasury regulations promulgated
pursuant to section 409A
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Amended December 4, 2007
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Exhibit 99.2
of the Code) and pay out deferred amounts, in accordance with Section 1.409A-3(j)(ix)(B) of the
Treasury regulations promulgated pursuant to section 409A of the Code .
12. PLAN ADMINISTRATION
The Plan will be administered by the Committee. The Company will pay all costs of administration
of the Plan. The Committee shall have sole discretion to interpret the Plan, amend and rescind
rules relating to its implementation and make all determinations necessary for administration of
the Plan. Any determination, decision, or action of the Committee in connection with the
interpretation, administration, or application of the Plan shall be final, conclusive, and binding
on all persons. The Committee may employ consultants or other persons and rely upon their advice.
All actions taken and all determinations made by the Committee in good faith shall be final and
binding upon all Non-Employee Directors, the Company, and all interested persons. No member of the
Committee shall be personally liable for any action, determination, or interpretation made in good
faith with respect to the Plan.
The Committee may make such amendments or modifications in the terms and conditions of any grant of
Restricted Stock as it may deem advisable, or cancel or annul any grant of Restricted Stock;
provided, however, that no such amendment, modification, cancellation or annulment may, without the
consent of the Grantee, adversely affect his rights with respect to such grant. In addition, the
Committee may amend or modify the deferral feature, provided that any such amendment or
modification (i) is made in accordance with section 409A of the Code and the Treasury regulations
promulgated thereunder, (ii) does not adversely affect the Non-Employee Director’s rights
thereunder without such Non-Employee Director’s written consent, and (iii) is not a “material
modification” that would result in the loss of grandfather treatment with respect to the balance in
the Deferred Accounts as of December 31, 2004 (and earnings thereon).
13. TAX WITHHOLDING
To the extent required by law, the Non-Employee Director (or Grantee, if applicable) shall make
such arrangements satisfactory to the Company to satisfy any tax withholding or employment tax
obligations due with respect to Restricted Stock or the Deferred Accounts. The Company shall have
the right to withhold or deduct from any payment under the Plan in order to satisfy any applicable
tax withholding obligations.
14. AMENDMENT AND TERMINATION OF THE PLAN
The Board of Directors or the Committee may at any time suspend, terminate, modify or amend the
Plan in any respect; provided, however, shareholder approval of any Plan amendment shall be
obtained only if required by law or the requirements of any stock exchange on which the Common
Stock is listed or quoted and provided, further, that any termination shall be subject to the
requirements of section 409A of the Code. No suspension, termination, modification, or amendment
of the Plan may, without the consent of the Non-Employee Director (or Grantee, if applicable),
adversely affect his rights with respect to the Restricted Stock or his Deferred Accounts.
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Amended December 4, 2007
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Exhibit 99.2
15. BENEFICIARY DESIGNATION
Each Non-Employee Director may designate a beneficiary for each outstanding grant of Restricted
Stock and for payment of his Deferred Accounts in the event of his death. If no beneficiary is
designated or the beneficiary does not survive the Non-Employee Director, the award shall be made
to the Non-Employee Director’s surviving spouse or, if there is none, to his estate.
16. SECTION 409A 6-MONTH DELAY
Notwithstanding anything contained in this Plan to the contrary, if a Non-Employee Director is
deemed by the Company at the time of the Non-Employee Director’s “separation from service” to be a
“specified employee,” each within the meaning of Section 409A of the Code, any compensation or
benefits subject to Section 409A of the Code to which the Non-Employee Director becomes entitled
under this Plan (or any agreement or plan referenced in this Plan) in connection with such
separation shall not be made or commence until the date which is six (6) months after the
Non-Employee Director’s “separation from service” (or the Non-Employee Director’s death, if
earlier). Such deferral shall only be effected to the extent required to avoid adverse tax
treatment to the Non-Employee Director, including (without limitation) the additional twenty
percent (20%) tax for which the Non-Employee Director would otherwise be liable under Section
409A(a)(1)(B) of the Code in the absence of such deferral. Upon the expiration of the applicable
deferral period, any compensation or benefits which would have otherwise been paid during that
period (whether in a single sum or in installments) in the absence of this Section 17 shall be paid
to the Non-Employee Director or his or her beneficiary in one lump sum.
17. EFFECTIVE DATE OF THE PLAN AND DURATION
This Plan, as amended and restated, is effective December 4, 2007 and will remain in effect until
terminated by the Committee or the Board of Directors as provided herein.
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Amended December 4, 2007
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