UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): January 15, 2014 (January 15, 2014)

 

 

TENNECO INC.

(Exact Name of Registrant as Specified in Charter)

 

 

 

Delaware   1-12387   76-0515284

(State or Other Jurisdiction

of Incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

 

500 NORTH FIELD DRIVE, LAKE FOREST, ILLINOIS   60045
(Address of Principal Executive Offices)   (Zip Code)

Registrant’s telephone number, including area code: (847) 482-5000

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


ITEM 5.02 DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS.

On January 15, 2014, Tenneco Inc. (the “Company”) adopted the Tenneco Inc. Executive Bonus Plan (the “Plan”). The purpose of the Plan is to enable the Company to structure its annual cash incentives to executives as performance-based compensation for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), and thereby exclude these payments from the limitations on the deductibility of certain executive compensation otherwise imposed by Section 162(m). Prior to adoption of the Plan, all executive employees participated in the Company’s Value Added Incentive Compensation Plan, which was not intended to be performance-based compensation under Section 162(m) of the Code. Under the Plan, a committee of outside directors (with the meaning set forth in Section 162(m)) determine the executives who are eligible to participate, the target and actual bonus awards (including the performance targets upon which the bonus awards will be based), the level of satisfaction of the performance targets and the actual amount of the bonus award that will be paid to Plan participants upon satisfaction of the performance targets. The Company intends that annual incentive awards under the new Plan will be determined in a manner consistent with the Company’s historical philosophy regarding the payment of annual cash incentives. A copy of the Plan is filed as Exhibit 99.1 to this Form 8-K and is incorporated herein by reference.

The Company also adopted a new form of Long-Term Performance Unit Award Agreement under the Company’s 2006 Long-Term Incentive Plan, reflecting minor changes from the prior form, which is filed as Exhibit 99.2 to this Form 8-K and is incorporated herein by reference.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

 

Exhibit No.

  

Description

99.1    Tenneco Inc. Executive Bonus Plan
99.2    Form of Long-Term Performance Unit Award Agreement under the Tenneco Inc. 2006 Long-Term Incentive Plan (grants after January 14, 2014)


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    TENNECO INC.
Date: January 15, 2014     By:   /s/ James D. Harrington
      James D. Harrington
      Senior Vice President, General Counsel
      and Corporate Secretary

Exhibit 99.1

TENNECO INC. EXECUTIVE BONUS PLAN

1. Purpose . The purpose of this Tenneco Inc. Executive Bonus Plan (the “Bonus Plan”) is to set forth the terms and conditions of the annual cash incentive program of Tenneco Inc. (the “Company”) as it applies to the executives participating herein and to assist the Company and its affiliates in attracting, retaining, motivating and rewarding employees of the Company and its affiliates by providing for awards that will incentivize performance by employees who contribute to the success of the Company and its affiliates. The Bonus Plan authorizes annual cash incentive awards that are intended to qualify as “performance-based compensation” that is tax deductible without limitation under section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”) (“Performance-Based Compensation”); provided, however, that awards that are not Performance-Based Compensation may also be awarded hereunder. To the extent that any Bonus Awards granted hereunder are intended to constitute Performance-Based Compensation, such Bonus Awards shall be considered to be Cash Incentive Awards granted pursuant to the Tenneco Inc. 2006 Long-Term Incentive Plan (the “Incentive Plan”).

2. Definitions . In addition to the terms defined in Section 1 above and elsewhere in the Bonus Plan, the following capitalized terms used in the Bonus Plan have the following meanings:

(a) “Board” means the Company’s Board of Directors.

(b) “Bonus Award” means, with respect to any Participant, for any Performance Year, the amount of the Target Award Opportunity for that Participant for the Performance Year that has been earned and that is payable with respect to the Participant in accordance with the terms of the Bonus Plan.

(c) “Committee” means the Compensation and Nominating Committee of the Board (the “CNG”) or such other committee designated by the CNG or the Board; provided, however, that with respect to any award under the Plan that is intended to constitute Performance-Based Compensation, the Committee shall consist solely of two or more “outside directors” within the meaning of Section 162(m) of the Code. The Committee shall have the same authorities and duties with respect to this Bonus Plan as it has with respect to the Incentive Plan.

(d) “Covered Employee” means a person who is a “covered employee,” within the meaning of section 162 of the Code.

(e) “Participant” means a person who has been granted a Target Award Opportunity or Bonus Award under the Bonus Plan which remains outstanding.

(f) “Performance Measures” has the meaning specified in the Incentive Plan.

(g) “Performance Year” means the Company’s fiscal year or such other period of twelve months which is the measurement period for determining the Target Award Opportunity.


(h) “Target Award Opportunity” means, with respect to any Participant, the amount of a Bonus Award that the Participant potentially may earn in respect of a specified Performance Year determined by the Committee in accordance with Section 162(m) of the Code. A Target Award Opportunity constitutes a conditional right to receive a Bonus Award.

3. Granting of Target Award Opportunities and Earning of Bonus Awards.

(a) Granting of Target Award Opportunities . The Committee shall select the executive employees of the Company and its affiliates who will be eligible to participate in the Bonus Plan for each Performance Year. The intent is that, for each Performance Year, the Company’s Chief Executive Officer, any other executive employee of the Company who is reasonably expected to be or become a Covered Employee for the Performance Year and any other executive employee of the Company who the Committee selects for participation in the Plan for the Performance Year will participate in the Bonus Plan for such Performance Year. No later than the date which is the earlier of (i) ninety (90) days after the beginning of the applicable Performance Year or (ii) the time twenty-five percent (25%) of such Performance Year has elapsed (as scheduled in good faith at the time the Target Award Opportunity is established), and in any event provided that the outcome is substantially uncertain at the time the Target Award Opportunity is established, the Committee will specify, for each Participant, the Participant’s Target Award Opportunity. Target Award Opportunities will be denominated in cash and Bonus Awards will be payable in cash.

(b) Additional Participants and Granting of Target Award Opportunity During a Performance Year . At any time during a Performance Year, the Committee may select a new employee or a newly promoted employee to participate in the Bonus Plan for that Performance Year and/or grant to any such Participant a Target Award Opportunity (or additional Target Award Opportunity) for such Performance Year or a future Performance Year. In determining the amount of the Target Award Opportunity for such Participant under this subsection 3(b), the Committee, in its sole and absolute discretion, may take into account the portion of the Performance Year already elapsed, the performance achieved during such elapsed portion of the Performance Year, and such other considerations as the Committee may deem relevant.

(c) Determination of Bonus Award . During the year following a Performance Year, within a reasonable time after the end of such Performance Year and after financial results for the Performance Year have become available (but not later than March 15 th of the year following the Performance Year for any portion of a Bonus Award for which the substantial risk of forfeiture lapsed during the Performance Year), the Committee will determine the extent to which each Participant’s Target Award Opportunity for the Performance Year has been earned and the amount of the Bonus Award payable with respect to such Participant related to the Target Award Opportunity for such Performance Year. The Committee may, in its sole and absolute discretion, reduce the amount of a Bonus Award or cancel a Bonus Award, but may not exercise discretion to increase any such amount payable to a Covered Employee if such increase would cause the amount payable under the related Target Award Opportunity to exceed the amount actually earned based on the performance of the applicable Performance Measures and satisfaction of performance targets applicable to such Target Award Opportunity. Unless otherwise specifically determined by the


Committee (or as otherwise specifically provided under a separate agreement, plan or policy conferring rights on the Participant), the Bonus Award shall be deemed earned and vested only at the time, and to the extent, that the Committee makes the determination pursuant to this subsection 3(c) and only with respect to a Participant who remains employed by the Company or any of its affiliates at the time of the determination, and no Participant has a legal right to receive a Bonus Award until such determination has been made.

(d) Written Determinations . Determinations by the Committee under this Section 3, including Target Award Opportunities and the amount of any Bonus Award earned shall be recorded in writing. With regard to Bonus Awards to Covered Employees, the Committee will certify, in a manner conforming to applicable regulations and other applicable guidance under section 162(m) of the Code, prior to payment of each such Bonus Award granted to a Covered Employee, that the Bonus Award (and any related Target Award Opportunity) has been earned and other material terms upon which earning of the Bonus Award was conditioned, including the applicable Performance Measures and performance targets have been satisfied.

(e) Other Terms of Target Award Opportunities and Bonus Awards . Subject to the terms of this Bonus Plan, the Committee may specify the circumstances under which Target Award Opportunities and Bonus Awards shall be paid or forfeited in the event of a change in control, termination of employment or other event prior to the end of a Performance Year or payment of a Bonus Award, taking into account the requirements of section 162(m) of the Code, if applicable. Without limiting the generality of the foregoing, to the extent that a Bonus Award under the Plan is treated as a Cash Incentive Award under the Incentive Plan, the Plan terms shall govern the treatment of Bonus Awards in the event of a change in control, termination of employment, or other event that occurs prior to the end of a Performance Period and payment of a Bonus Award for such Performance Year and the Committee’s determination for such purposes under the Plan shall supersede any provisions of the Incentive Plan with respect thereto. All Bonus Awards under the Bonus Plan are subject to the Company’s recoupment or clawback policies as in effect from time to time.


(f) Adjustments . The Committee, in its sole and absolute discretion, is authorized to make adjustments in the terms and conditions of, and the criteria included in, Target Award Opportunities to include or exclude any of the following events that occurs during a performance period: (i) asset write-downs, (ii) litigation or claim judgments or settlements, (iii) the effect of changes in tax laws, accounting principles, or other laws or provisions affecting reported results, (iv) accruals for reorganization and restructuring programs, (v) extraordinary nonrecurring items as described in SFAS No. 144 (or successor guidance) and/or in management’s discussion and analysis of financial condition and results of operations appearing in the Company’s annual report to stockholders for the applicable year, (vi) acquisitions or divestitures, and (vii) foreign exchange gains and losses; provided, however, that no such adjustments shall be made or authorized if and to the extent that the existence or exercise of such authority would cause a Target Award Opportunity or Bonus Award under Section 4 to fail to qualify as Performance-Based Compensation.

4. Payment of Bonus Awards.

(a) Payment of Bonus Award . Any Bonus Award shall be paid by the Company or its applicable affiliate promptly after the date of determination by the Committee under subsection 3(c) hereof but in no event later than March 15 th of the year following the Performance Year to which the Bonus Award relates, except that, in the case of any Bonus Award or portion thereof subject to a substantial risk of forfeiture extending into that following year, the Bonus Award may be paid at any time during such following year. Any payment or other event which would change the time of payment of such Bonus Award from that originally specified shall be implemented in a manner such that the Bonus Award does not, solely for that reason, fail to qualify as Performance-Based Compensation.

(b) Tax Withholding . The Company and its affiliates shall deduct from any payment of a Participant’s Bonus Award or from any other payment to the Participant, including wages, any Federal, state, or local withholding or other tax or charge which is then required to be deducted under applicable law with respect to the Bonus Award.

(c) Non-Transferability . A Target Award Opportunity, any resulting Bonus Award, and any other right hereunder shall be non-assignable and nontransferable, and shall not be pledged, encumbered, or hypothecated to or in favor of any party or subject to any lien, obligation or liability of the Participant to any party other than the Company or an affiliate of the Company.

5. General Provisions.

(a) Amendment and Termination . The Committee may at any time amend, alter, suspend, discontinue or terminate this Bonus Plan, and such action shall not be subject to the approval of the Company’s stockholders or Participants; provided, however, that (i) any amendment to the Bonus Plan beyond the scope of the Compensation Committee’s authority shall be subject to the approval of the Board; (ii) any amendment to the Bonus Plan shall be subject to stockholder approval if and to the extent required so that Target Award Opportunities and Bonus Awards under Section 3 can continue to qualify as Performance-Based Compensation; and (iii) without the consent of the Participant, no such action shall materially impair the rights of a Participant with respect to a Bonus Award as to which the Committee no longer retains a right to exercise downward (negative) discretion to eliminate the payment of the Bonus Award.


(b) Section 162(m) . Unless otherwise determined by the Committee, the provisions of this Bonus Plan shall be administered and interpreted in accordance with the applicable requirements of section 162(m) of the Code so as to provide for the deductibility by the Company of payments of Bonus Awards to Covered Employees.

(c) Nonexclusivity of the Bonus Plan . The adoption of this Bonus Plan shall not be construed as creating any limitations on the power of the Company, the Board, the Committee or any affiliate of the Company to adopt such other compensation arrangements as it may deem desirable for any Participant or employee, including authorization of annual incentives under other plans and arrangements.

(d) No Right to Continued Employment . Neither the Bonus Plan, its adoption, its operation, nor any action taken under the Bonus Plan shall be construed as giving any employee the right to be retained or continued in the employ of the Company or any of its affiliates, nor shall it interfere in any way with the right and power of the Company or any of its affiliates to dismiss or discharge any employee or take any action that has the effect of terminating any employee’s employment at any time.

(e) Severability . The invalidity of any provision of the Bonus Plan or a document hereunder shall not be deemed to render the remainder of this Bonus Plan or such document invalid.

(f) Successors . The Bonus Plan shall be binding and inure to the benefit of any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise, and whether or not the corporate existence of the Company continues) to the Company or to the successor to all or substantially all of the business and/or assets of the Company.

(g) Governing Law . The validity, construction, and effect of the Bonus Plan and any rules and regulations or document hereunder, to the extent not otherwise governed by the Code or the laws of the United States, shall be determined in accordance with the laws of the State of Illinois, without giving effect to conflict of law principles.

(h) Effective Date of Bonus Plan . The Bonus Plan is effective as of January 1, 2014.

Exhibit 99.2

TENNECO INC. THREE YEAR

LONG TERM PERFORMANCE UNIT AWARD AGREEMENT

(            -             Performance Period)

 

 

 

 

 

 

 

 

 

 

Participant

Effective as of                     , the Participant has been granted a Cash Incentive Award (the “Award”) under the Tenneco Inc. 2006 Long-Term Incentive Plan (the “Plan”) in the form of long term performance units (“Performance Units”). The Award shall be subject to the following terms and conditions (sometimes referred to as this “Award Agreement”) and the terms and conditions of the Plan as the same may be amended from time to time. Terms used in this Award Agreement are defined elsewhere in this Award Agreement; provided, however, that capitalized terms used herein and not otherwise defined shall have the meaning set forth in the Plan.

1. General Terms of the Award . The following terms and conditions apply to the Award:

 

Performance Period:   January 1, 201         to December 31, 201        
Target Value of Award:   $                    (the “Total Target Value”)
Earning of Award:   50% based on Relative TSR performance
  30% based on Cumulative EBITDA performance
  20% based on Cumulative FCF performance

Appendix A of this Award Agreement, which is incorporated herein and forms a part of this Award Agreement, sets forth the manner in which TSR performance, EBITDA performance and FCF performance are calculated for purposes of this Award Agreement for the Performance Period.

2. Earning of Award . The Participant will earn the Award based on satisfaction of performance targets as determined in accordance with the following:

 

  (a) TSR Target Value . For purposes hereof, the Participant’s “TSR Target Value” is 50% of his or her Total Target Value. The extent to which the Participant will earn his or her TSR Target Value is based on the Company TSR Percentile Ranking (calculated as described in Appendix A) for the Performance Period based on the following chart:

 

Company TSR Percentile Ranking

 

Percent of TSR Target Value Earned

> 75 th   200% (maximum)
50 th   100% (target)
40 th   50% (threshold)
<40 th   0%


  (b) EBITDA Target Value . For purposes hereof, the Participant’s “EBITDA Target Value” is 30% of his or her Total Target Value. The extent to which the Participant will earn his or her EBITDA Target Value is based on the Cumulative EBITDA (calculated as described in Appendix A) for the Performance Period against the Cumulative EBITDA Target established by the Committee for the Performance Period based on the following chart:

 

Cumulative EBITDA as Percentage of Cumulative EBITDA Target

 

Percent of EBITDA Target Value Earned

120%   200% (maximum)
100%   100% (target)
80%   50% (threshold)
<80%   0%

 

  (c) FCF Target Value . For purposes hereof, the Participant’s “ FCF Target Value ” is 20% of his or her Total Target Value. The extent to which the Participant will earn his or her FCF Target Value is based on the achievement by the Company of Cumulative FCF (calculated as described in Appendix A) for the Performance Period against the Cumulative FCF Target established by the Committee for the Performance Period based on the following chart:

 

Cumulative FCF as Percentage of Cumulative FCF Target

 

Percent of FCF Target Value Earned

120%   200% (maximum)
100%   100% (target)
80%   50% (threshold)
<80%   0%

 

  (d) Interpolation. Interpolation shall be used to determine the Percent of TSR Target Value Earned, the Percent of EBITDA Target Value Earned and/or the Percent of FCF Target Value Earned, as applicable, in the event the Company TSR Percentile Ranking, Percent of EBITDA Target Value Earned and/or Percent of FCF Target Value Earned, as applicable, does not fall directly on one of the ranks listed in the above applicable charts.

3. Form and Timing of Payments Under Award .

 

  (a) The payment of amounts earned as calculated pursuant to Paragraph 2 of this Award Agreement shall be paid to the Participant following the end of the Performance Period and no later than two and one-half months after the end of the Performance Period. Payment of such amounts shall be made subject to the following:

 

  (i) The Participant shall have no right with respect to any payments or other amounts in respect of this Award until such payments of amounts are actually paid or otherwise delivered to the Participant.

 

  (ii) If the Committee determines, in its sole discretion, that the Participant at any time has willfully engaged in any activity that the Committee determines was or is harmful to the Company or any of its Subsidiaries, any unpaid portion of the Award will be forfeited and the Participant shall have no rights with respect thereto.

 

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  (iii) Notwithstanding anything to the contrary contained herein other than Paragraph 4 hereof (subject, however, to any applicable provisions of any written employment agreement between the Participant and the Company and the provisions hereof related thereto), if the Participant’s Termination Date occurs on or before the end of the Performance Period other than as a result of Retirement, death or Total Disability, the Participant will forfeit this Award and shall have no rights with respect thereto.

 

  (b) Amounts earned as calculated pursuant to Paragraph 2 of this Award Agreement shall be paid out to the Participant in cash; provided, however, that, pursuant to the terms of the Plan, the Committee may elect to settle the Award in shares of Common Stock based on the Fair Market Value of shares of Common Stock at the time of payment.

4. Death, Total Disability and Retirement . Notwithstanding anything to the contrary contained herein or in any written employment agreement between the Company and the Participant, if the Participant’s Termination Date occurs on or before the end of the Performance Period (a) as a result of the Participant’s death or Total Disability (as defined below), the Participant will be entitled to a payment equal to 100% of the Total Target Value assigned to the Participant under this Award, which amount shall be paid to the Participant, in cash, within 60 days after the date of the Participant’s death or termination for Total Disability, or (b) as a result of Retirement (as defined below), the Participant will be entitled to a payment equal to the payment that he or she would have earned under this Award Agreement had the Participant continued to be employed by the Company and its Subsidiaries through the end of the Performance Period multiplied by a fraction, the numerator of which is the number of full months of the Participant’s employment during the Performance Period prior to his or her Retirement and the denominator of which is the number of full months in the Performance Period, which amount shall be paid to the Participant, in cash, at the time determined under Paragraph 3. For purposes hereof, the term “Retirement” means the Participant’s Termination Date which occurs after the date on which he or she attains age 65 or the date on which the Participant attains age 55 and has completed at least 10 years of service with the Company and its Subsidiaries (and is not a result of termination by the Company or any of its Subsidiaries for cause), and the term “Total Disability” means the Participant’s permanent and total disability as determined under the rules and guidelines established by the Company in order to qualify for long-term disability coverage under the Company’s long-term disability plan in effect at the time of such determination.

5. Payment of Fair Market Value in Certain Cases . If the Participant is entitled to receive payment for the fair market value of this Award pursuant to Article 6 of the Plan (relating to Change in Control), that fair market value will be equal to the amount the Participant would have received hereunder as if (a) his or her service had continued through the end of the Performance Period and (b) he or she had earned 100% of his or her Total Target Value.

6. Withholding . All distributions under the Plan, including any distribution in respect of this Award, are subject to withholding of all applicable taxes, and the delivery of any cash or other benefits under the Plan or this Award is conditioned on satisfaction of the applicable tax withholding obligations. The Company shall be entitled to withhold from any payment due hereunder (whether or not those amounts are then payable to the Participant) an amount sufficient to satisfy any federal, state, local or other withholding taxes with respect to this Award.

 

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7. Transferability . This Award is not transferable except as designated by the Participant by will or by the laws of descent and distribution or pursuant to a qualified domestic relations order.

8. Heirs and Successors . If any benefits deliverable to the Participant under this Award Agreement have not been delivered at the time of the Participant’s death, such rights shall be delivered to the Participant’s estate.

9. Administration . The authority to administer and interpret this Award Agreement shall be vested in the Committee, and the Committee shall have all the powers with respect to this Award Agreement as it has with respect to the Plan. Any interpretation of the Award Agreement by the Committee and any decision made by it with respect to the Award Agreement is final and binding on all persons.

10. Adjustment of Award . This Award may be adjusted by the Committee in accordance with the terms of the Plan to reflect certain corporate transactions which affect the number, type or value of the Performance Share Units.

11. Notices . Any notice required or permitted under this Award Agreement shall be deemed given when delivered personally, or when deposited in a United States Post Office, postage prepaid, addressed, as appropriate, to the Company at its principal offices, to the Participant at the Participant’s address as last known by the Company or, in either case, such other address as one party may designate in writing to the other.

12. Governing Law . The validity, construction and effect of this Award Agreement shall be determined in accordance with the laws of the State of Illinois and applicable federal law.

13. Amendments . The Board may, at any time, amend or terminate the Plan, and the Committee may amend this Award Agreement, provided that, except as provided in the Plan, no amendment or termination may, in the absence of written consent to the change by the affected Participant (or, if the Participant is not then living, the affected beneficiary), adversely affect the rights of any Participant or beneficiary under this Award Agreement prior to the date such amendment or termination is adopted by the Board or the Committee, as the case may be. Without limiting the generality of the foregoing, the Committee may amend or terminate this Award at any time in its sole discretion to exercise downward discretion in the amount payable under this Award if the Committee determines that the payout yielded or that would be yielded by this Award for the Performance Period does not accurately reflect the Company’s performance for the Performance Period because the payout is too great.

14. Award Not Contract of Employment . The Award does not constitute a contract of employment or continued service, and the grant of the Award will not give the Participant the right to be retained in the employ or service of the Company or any Subsidiary, nor any right or claim to any benefit under the Plan or this Award Agreement, unless such right or claim has specifically accrued under the terms of the Plan and this Award Agreement.

15. Severability . If a provision of this Award Agreement is held invalid by a court of competent jurisdiction, the remaining provisions will nonetheless be enforceable according to their terms. Further, if any provision is held to be overbroad as written, that provision shall be amended to narrow its application to the extent necessary to make the provision enforceable according to applicable law and enforced as amended.

 

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16. Plan Governs / Other Terms . The Award evidenced by this Award Agreement is granted pursuant to the Plan, and the Performance Units and this Award Agreement are in all respects governed by the Plan and subject to all of the terms and provisions thereof, whether such terms and provisions are incorporated in this Award Agreement by reference or are expressly cited. Additionally, all Awards are subject to the Company’s recoupment or clawback policies as applicable and as in effect from time to time.

17. Counterparts . This Award Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original and all of which together shall constitute one and the same instrument.

18. Special Section 409A Rules . Notwithstanding any other provision of this Award Agreement to the contrary, if any payment or benefit hereunder is subject to section 409A of the Code, and if such payment or benefit is to be paid or provided on account of the Participant’s termination of employment (or other separation from service):

 

  (a) and if the Participant is a specified employee (within the meaning of section 409A(a)(2)(B) of the Code) and if any such payment or benefit is required to be made or provided prior to the first day of the seventh month following the Participant’s separation from service or termination of employment, such payment or benefit shall be delayed until the first day of the seventh month following the Participant’s termination of employment or separation from service; and

 

  (b) the determination as to whether the Participant has had a termination of employment (or separation from service) shall be made in accordance with the provisions of section 409A of the Code and the guidance issued thereunder without application of any alternative levels of reductions of bona fide services permitted thereunder.

 

ACCEPTED:          TENNECO INC.

 

     

 

Type or Print Legal Name    (Date)       Senior Vice President Global Human Resources and Administration

 

     
Signature         

 

     
Social Security Number or National ID         

 

     
Street Address         

 

     
City/State/Zip/Country         

 

 

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APPENDIX A

DEFINITIONS AND CALCULATION METHODOLOGIES

Calculation of TSR .

 

            “TSR”            =            Change in Stock Price + Dividends Paid              
        Beginning Stock Price  

 

  (i) Beginning Stock Price shall mean the average of the Closing Prices for each of the twenty (20) trading days immediately prior to the first day of the Performance Period;

 

  (ii) Ending Stock Price shall mean the average of Closing Prices for each of the last twenty (20) trading days of the Performance Period;

 

  (iii) Change in Stock Price shall equal the Ending Stock Price minus the Beginning Stock Price;

 

  (iv) Dividends Paid shall mean the total of all dividends paid on one (1) share of stock during the Performance Period, provided that dividends shall be treated as though they are reinvested;

 

  (v) Closing Price shall mean the last reported sale price on the applicable stock exchange or market of one share of stock for a particular trading day; and

 

  (vi) In all events, TSR shall be adjusted to give effect to any stock dividends, stock splits, reverse stock splits and similar transactions.

Calculation of Company TSR Percentile Ranking.

The Company TSR Percentile Ranking is computed by (A) computing the Company’s TSR for the Performance Period and (b) computing the TSR for the Performance Period of each company that was in the S&P 500 Index as of the end of the Performance Period (the “S&P Group”), provided that if a company declares bankruptcy at any time during the Performance Period, the company will be removed from the S&P Group, and if a company does not have publicly reported stock prices for the whole Performance Period, the company will be removed from the S&P Group. The Company TSR Percentile Ranking is the percentage of TSRs of the S&P Group calculated that are lower than the Company’s TSR (e.g., if the Company’s TSR is greater than 75% of the TSRs of the members of the S&P Group, the Company TSR Percentile Ranking is the 75 th percentile).

Calculation of Cumulative EBITDA.

 

  (i) The Company’s Cumulative EBITDA means the sum of the Company’s EBITDA for each of the three fiscal years included in the Performance Period.

 

  (ii) EBITDA means the Company’s earnings before interest, taxes, depreciation, amortization and noncontrolling interests, adjusted for (a) asset write-downs, (b) litigation or claim judgments or settlements, (c) the effect of changes in tax laws, accounting principles, or other laws or provisions affecting reported results, (d) accruals for reorganization and restructuring programs, (e) extraordinary nonrecurring items as described in Accounting Principles Board Opinion No. 30 and/or in management’s discussion and analysis of financial condition and results of operations appearing in the Company’s annual report to stockholders for the applicable year, and (f) acquisitions or divestitures.


Calculation of Cumulative FCF.

 

  (i) The Company’s Cumulative FCF means the sum of the Company’s FCF for each of the three fiscal years included in the Performance Period.

 

  (ii) FCF means divisional cash flow less cash interest payments, net cash tax payments and distributions to non-controlling interest partners, excluding the impact of acquisitions and divestitures.

 

ii