DEF 14A 1 k83546def14a.htm DEFINITIVE PROXY STATEMENT def14a
Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.  )

        Filed by the registrant   

        Filed by a party other than the registrant   
 
        Check the appropriate box:

           Preliminary proxy statement

           Confidential, for use of the Commission only (as permitted by Rule 14a-6(e)(2))

           Definitive proxy statement
 
           Definitive additional materials
 
           Soliciting material pursuant to §240.14a-12

Visteon Corporation


(Name of Registrant as Specified in Its Charter)


(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)

      Payment of filing fee (check the appropriate box):

           No fee required.

           Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

        (1) Title of each class of securities to which transaction applies:


        (2) Aggregate number of securities to which transaction applies:


        (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):


        (4) Proposed maximum aggregate value of transaction:


        (5) Total fee paid:


           Fee paid previously with preliminary materials:


           Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing.

        (1) Amount Previously Paid:


        (2) Form, Schedule or Registration Statement No.:


        (3) Filing Party:


        (4) Date Filed:



Table of Contents

(VISTEON CORPORATION LOGO)

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

     
DATE:
  WEDNESDAY, MAY 12, 2004
TIME:
  11:00 AM EASTERN DAYLIGHT TIME
LOCATION:
  HOTEL DU PONT
11th & MARKET STREETS
WILMINGTON, DELAWARE USA

To Visteon Stockholders,

      We invite you to attend our 2004 Annual Meeting of Stockholders at the Hotel du Pont. At this meeting, you and the other stockholders will be able to vote on the following proposals, together with any other business that may properly come before the meeting:

  1.  Elect four directors to the Board of Directors for three-year terms. The Board has nominated for re-election Steven K. Hamp, Michael F. Johnston, Karl J. Krapek and Robert M. Teeter, all current directors.
 
  2.  Ratify the appointment of PricewaterhouseCoopers LLP as the company’s independent auditors for fiscal year 2004. PricewaterhouseCoopers LLP served in this same capacity in fiscal 2003.
 
  3.  Approve the Visteon Corporation 2004 Incentive Plan, as amended and restated.
 
  4.  Approve the Visteon Corporation Non-Employee Director Stock Unit Plan.
 
  5.  If presented, consideration of a shareholder proposal relating to the adoption of a stockholder rights plan.
 
  6.  If presented, consideration of a shareholder proposal relating to the adoption of a code for the company’s international operations.
 
  7.  If presented, consideration of a shareholder proposal relating to voting leverage.

      You may vote on these proposals in person or by proxy. If you cannot attend the meeting, we urge you to vote by proxy, so that your shares will be represented and voted at the meeting in accordance with your instructions. (See the attached proxy statement for details on voting by proxy.) Of course, if you attend the meeting, you may withdraw your proxy and vote your shares. Only stockholders of record at the close of business on March 15, 2004, will be entitled to vote at the meeting or any adjournment thereof.

  By order of the Board of Directors
 
  LOGO
  STACY L. FOX
  Secretary

Dearborn, Michigan

March 30, 2004


CONTENTS

           
    1  
 VOTING
    1  
      1  
      2  
      2  
      2  
      2  
      3  
      3  
    3  
      3  
      4  
      4  
    4  
      4  
      5  
      5  
      6  
      7  
      7  
      8  
    8  
      8  
      9  
      9  
    10  
      10  
      11  
      12  
      13  
      17  
    18  
    21  
    22  
    23  
    23  
    24  
    29  
    29  
    30  
    30  
    31  
    33  
    36  
    37  
    38  
    A-1  
    B-1  
    C-1  
    D-1  


Table of Contents

VISTEON CORPORATION

17000 Rotunda Drive
Dearborn, Michigan 48120


PROXY STATEMENT


March 30, 2004

INTRODUCTION

      The Board of Directors is soliciting your proxy to encourage your participation in the voting at the Annual Meeting. You are invited to attend the Annual Meeting and vote your shares directly. However, even if you do not attend, you may vote by proxy. As shown in the Notice of Annual Meeting, the Annual Meeting will be held on Wednesday, May 12, 2004, at the Hotel du Pont in Wilmington, Delaware. Directions to the Hotel du Pont can be found in Appendix D.

      There are two parts to this solicitation: the proxy card and this proxy statement. The proxy card is a means by which you may actually authorize another person to vote your shares in accordance with your instructions. As described in “Voting” below, we have provided you additional methods for voting by proxy that do not require you to use the proxy card.

      This proxy statement and accompanying proxy are being distributed on or about March 30, 2004.

VOTING

How to Vote Your Shares

      You may vote your shares at the Annual Meeting in person or by proxy. To vote in person, you must attend the Annual Meeting, and obtain and submit a ballot, which will be provided at the meeting. To vote by proxy, you must do one of the following:

  •  Complete and mail the enclosed proxy card.
 
  •  Call the toll-free telephone number listed on the enclosed proxy card and follow the instructions.
 
  •  Visit the website listed on the enclosed proxy card and follow the instructions.

      By completing and submitting your proxy by any one of these means, you will direct the designated persons (known as “proxies”) to vote your shares at the Annual Meeting in accordance with your instructions. The Board has appointed Stacy L. Fox and Peter Look to serve as the proxies for the Annual Meeting.

      Your proxy will be valid only if it is received before the polls are closed at the Annual Meeting. If you do not provide voting instructions with your proxy, then the designated proxies will vote your shares for the election of the nominated directors, for the ratification of the company’s independent auditors, for the approval of the employee and director equity compensation plans, and against the shareholder proposals presented. If any nominee for election to the Board is unable to serve, which is not anticipated, or if any other matters properly come before the meeting, then the designated proxies will vote your shares in accordance with their best judgment.

1


Table of Contents

How to Revoke Your Proxy

      Regardless of how you submit your proxy, you may revoke your proxy at any time before it is exercised by any of the following means:

  •  Notifying the company’s Secretary in writing.
 
  •  Submitting a later dated proxy by mail, toll-free number or the Internet.
 
  •  Attending the Annual Meeting and voting. Your attendance at the Annual Meeting will not by itself revoke a proxy; you must also vote your shares.

How to Vote under 401(k) Plans

      If you are a company employee participating in any of the company’s 401(k) plans, then you may be receiving this material because of shares held for you in the plan. In that case, you may use the enclosed proxy card to instruct the plan trustees how to vote those shares. The trustees will vote the shares in accordance with your instructions and the terms of the plan.

      The plan trustees may vote the shares held for you even if you do not direct them how to vote. The trustees will vote any shares for which they do not receive instructions in the same proportion as they vote the shares for which they receive instructions.

Stockholders Entitled to Vote and Ownership

      You are entitled to one vote at the Annual Meeting for each share of the company’s common stock that you owned of record at the close of business on March 15, 2004. As of March 1, 2004, the company had issued and outstanding 129,409,472 shares of common stock. Information regarding the holdings of the company’s stock by directors, executive officers and certain other beneficial owners can be found beginning on page 8.

      A list of the stockholders of record entitled to vote at the annual meeting will be available for review by any stockholder, for any purpose related to the meeting, between 9:00 a.m. and 5:00 p.m. at the principal offices of the company, located at 17000 Rotunda Drive, Dearborn, Michigan 48120, for ten days before the meeting.

Required Vote to Approve the Proposals

      The company’s By-Laws require that a majority of the company’s common stock be represented at the Annual Meeting, whether in person or by proxy, for a quorum which is needed to transact any business.

      Election of Directors. The affirmative vote of a plurality of the votes cast at the meeting is required for the election of directors. A properly executed proxy marked “Withhold authority” with respect to the election of one or more directors will not be voted with respect to the director or directors indicated, although it will be counted for purposes of determining whether there is a quorum.

      Other Proposals. For each proposal other than the election of directors, the affirmative vote of the holders of a majority of the shares represented in person or by proxy and entitled to vote on the item will be required for approval. A properly executed proxy marked “Abstain” with respect to any such matter will not be voted, although it will be counted for purposes of determining whether there is a quorum. Accordingly, an abstention will have the effect of a negative vote.

2


Table of Contents

      If you hold your shares in “street name” through a broker or other nominee and you do not give voting instructions at least ten days before the meeting to your broker or other nominee, then your broker or other nominee may exercise voting discretion only with respect to matters considered to be “routine” by the New York Stock Exchange, such as the election of directors and the ratification of the appointment of the independent auditors. On non-routine matters, such as the approval of the employee and director equity compensation plans and each of the shareholder proposals, the brokers or other nominees cannot vote your shares absent voting instructions from the beneficial holder, resulting in so-called “broker non-votes.” Broker non-votes are not deemed to be votes cast, and as a result have no effect on the outcome of any matters presented, but will be counted in determining whether there is a quorum.

Where to Find Voting Results

      The company will publish the voting results in its Form 10-Q for the second quarter of 2004, which we plan to file with the Securities and Exchange Commission on or prior to August 9, 2004. You will also find the results in the investor information section of the company’s website (www.visteon.com/investors).

Cost of Solicitation

      The company will pay for soliciting these proxies. The company’s directors, officers and employees may solicit proxies in person or by telephone, mail, e-mail, telecopy or letter. The company has also retained Georgeson Shareholder Communication, Inc. to assist it in distributing proxy solicitation materials and soliciting proxies at a cost of approximately $10,000, plus reasonable out-of-pocket expenses. The company will reimburse brokers and other nominees for their reasonable out-of-pocket expenses for forwarding proxy materials to beneficial owners.

ITEM 1.  ELECTION OF DIRECTORS

      The Board of Directors consists of ten directors divided into three classes (Class I, Class II and Class III) serving staggered three-year terms. The first proposal on the agenda for the Annual Meeting will be electing four directors to serve as Class I directors for a three-year term beginning at this Annual Meeting and expiring at the 2007 Annual Meeting of Stockholders. The nominees receiving the greatest number of votes cast will be elected.

      We expect each nominee for election as a director to be able to serve if elected. If any nominee is not able to serve, proxies will be voted in favor of the remainder of those nominated and may be voted for substitute nominees, unless the Board chooses to reduce the number of directors serving on the Board.

Nominees for Class I Directors Whose Terms Expire in 2004

      Steven K. Hamp is 55 years old, and he has been a director of the company since January 2001. Mr. Hamp is the President of The Henry Ford, a non-profit organization sponsoring historic exhibits, located in Dearborn, Michigan.

      Michael F. Johnston is 56 years old, he has been the company’s President and Chief Operating Officer since September 2000 and was elected to the company’s Board of Directors in May 2002. Before that, Mr. Johnston was the President, e-business for Johnson Controls, Inc., President-North America and Asia of Johnson Control’s Automotive Systems Group, and President of its automotive interior systems and battery operations. Mr. Johnston also serves as a director of Flowserve Corporation and Whirlpool Corporation.

      Karl J. Krapek is 55 years old, and he has been a director of the company since February 2003. Mr. Krapek is the former President and Chief Operating Officer of United Technologies Corporation, a global supplier of aerospace and building systems products, a position he held from April 1999 to January 2002. Prior to that he served as President of United Technologies’ Pratt and Whitney division since 1992. Mr. Krapek also serves as a director of Lucent Technologies Inc., Prudential Financial, Inc. and The Connecticut Bank and Trust Company.

3


Table of Contents

      Robert M. Teeter is 65 years old, and he has been a director of the company since June 2000. He is the President of Coldwater Corporation, a provider of consulting and research services, and serves as a director of the Bank of Ann Arbor, Kaydon Corporation and United Parcel Service, Inc.

      The Board of Directors Recommends that You Vote for the Election of Steven K. Hamp, Michael F. Johnston, Karl J. Krapek and Robert M. Teeter as Directors.

Continuing Class II Directors Whose Terms Expire in 2005

      Marla C. Gottschalk is 43 years old, and she has been a director of the company since March 2003. Ms. Gottschalk has been the President and Chief Operating Officer of The Pampered Chef, Inc., a direct seller of kitchen tools and products, since November 2003. Prior to that she was the Senior Vice President, Financial Planning and Investor Relations for Kraft Foods, Inc. since February 2002, and before that she served as Executive Vice President and General Manager of Kraft’s Post Division, and Vice President, Marketing and Strategy for the Kraft Cheese Division.

      William H. Gray, III is 62 years old, and he has been a director of the company since June 2000. Mr. Gray is the President and Chief Executive Officer of the United Negro College Fund, an educational assistance organization, and serves as a director of J.P. Morgan Chase Corporation, Dell Computer Corporation, Electronic Data Systems Corporation, Pfizer, Inc., The Prudential Insurance Company of America, Rockwell Automation, Inc. and Viacom, Inc. Mr. Gray has indicated his intention not to stand for re-election as a director of Electronic Data Systems Corporation and Viacom, Inc. when his current terms expire.

      Robert H. Jenkins is 61 years old, and he has been a director of the company since June 2000. Mr. Jenkins is the former Chairman of the Board and Chief Executive Officer of Sundstrand Corporation, an aerospace and industrial company. Mr. Jenkins is also a director of AK Steel Holdings Corporation, Clarcor, Inc., Jason Incorporated, Sentry Insurance and Solutia, Inc.

Continuing Class III Directors Whose Terms Expire in 2006

      Peter J. Pestillo is 66 years old, and he has been the company’s Chairman of the Board and Chief Executive Officer since the company’s formation in January 2000. Before June 30, 2000, Mr. Pestillo had been an employee of Ford Motor Company since 1980, serving most recently as Ford’s Vice Chairman and Chief of Staff and Executive Vice President, Corporate Relations. Mr. Pestillo is also a director of Sentry Insurance.

      Charles L. Schaffer is 58 years old, and he has been a director of the company since January 2001. Mr. Schaffer is the former Chief Operating Officer of United Parcel Service, Inc., a global provider of package delivery services.

      Thomas T. Stallkamp is 57 years old, and he has been a director of the company since April 2002. Mr. Stallkamp is also a director of Baxter International Inc. and is the non-executive Chairman of the Board of MSX International, Inc. Prior to December 2003, he served as the Vice Chairman and Chief Executive Officer of MSX International, Inc., a global provider of engineering and specialized staffing services, since January 2000, and Vice Chairman of DaimlerChrysler Corporation and President of Chrysler Corporation, prior thereto.

CORPORATE GOVERNANCE

Meetings

      During 2003, the Board of Directors held eleven regularly scheduled and special meetings and took action by written consent five times in lieu of additional meetings. All of the directors attended at least 75% of all meetings of the Board and Board committees on which they served during 2003. Under the company’s Corporate Governance Guidelines, directors are expected to attend all scheduled Board and committee

4


Table of Contents

meetings as well as the company’s Annual Meeting of Stockholders. All of the directors attended the 2003 Annual Meeting of Stockholders.

      Pursuant to the Corporate Governance Guidelines, the non-employee directors meet without management at every other regularly scheduled Board meeting, and the independent directors meet without management at least once per year. The presiding director at these meetings is rotated among the committee chairpersons.

Director Independence

      The Board undertook its annual review of director independence in March 2004. During this review, the Board adopted independence guidelines (attached as Appendix A), and considered transactions and relationships between each director and any member of his or her immediate family and the company and its subsidiaries and affiliates, including those reported in the “Related Party Transactions” section of this proxy statement. The purpose of this review was to determine whether any such relationships or transactions were inconsistent with a determination that a director is independent.

      As a result of this review, the Board affirmatively determined that all of the directors are independent of the company and its management under the independence guidelines adopted by the Board with the exception of Messrs. Pestillo and Johnston, who are considered inside directors because of their employment as senior executives of the company; Mr. Hamp because his brother-in-law is employed in an executive capacity by a company that exceeds the 2% business revenue threshold; and Mr. Teeter due to a consulting contract with the company.

Committees

      The Board has established four standing committees. The principal functions of each committee are briefly described on the following pages. The charters of these committees are available on the company’s website (www.visteon.com/investors), and paper copies are available upon request to the Company Secretary.

      The Board of Directors has a standing Audit Committee, currently consisting of Charles L. Schaffer (Chairman), Marla C. Gottschalk, Robert H. Jenkins and Karl J. Krapek, all of whom are considered independent under the rules of the New York Stock Exchange, SEC regulations and the independence guidelines adopted by the Board. Each of the current members of the Audit Committee are qualified as a financial expert within the meaning of applicable SEC regulations, and the Board has determined that they have accounting and related financial management expertise within the meaning of the listing standards of the New York Stock Exchange. During 2003, the Audit Committee held nine regularly scheduled and special meetings. The duties of the Audit Committee are generally:

  •  to appoint and evaluate the independent auditor;
 
  •  to approve all audit and non-audit engagement fees and terms;
 
  •  to review the activities and the reports of the company’s independent auditors;
 
  •  to review internal controls, accounting practices, financial structure and financial reporting, including the results of the annual audit and review of interim financial statements;
 
  •  to review and monitor compliance procedures; and
 
  •  to report the results of its review to the Board.

      The Audit Committee Report can be found beginning on page 22.

5


Table of Contents

      The Board also has a standing Organization and Compensation Committee, consisting of Robert H. Jenkins (Chairman), William H. Gray, III and Charles L. Schaffer, all of whom are considered independent under the rules of the New York Stock Exchange and the independence guidelines adopted by the Board. During 2003, the Organization and Compensation Committee held five regularly scheduled and special meetings. The duties of the Organization and Compensation Committee are generally:

  •  to review and approve corporate goals and objectives relative to the compensation of the Chief Executive Officer, evaluate the Chief Executive Officer’s performance and set the Chief Executive Officer’s compensation level based on this evaluation;
 
  •  to review and approve executive compensation and incentive plans;
 
  •  to approve the payment of cash performance bonuses and the granting of stock based awards to the company’s employees, including officers; and
 
  •  to review and recommend management development and succession planning.

      The Organization and Compensation Committee Report can be found beginning on page 18.

      The Board also has a standing Corporate Governance and Nominating Committee, consisting of William H. Gray, III (Chairman), Marla C. Gottschalk and Karl J. Krapek, all of whom are considered independent under the rules of the New York Stock Exchange and the independence guidelines adopted by the Board. During 2003, the Corporate Governance and Nominating Committee held five regularly scheduled and special meetings. The duties of the Corporate Governance and Nominating Committee are generally:

  •  to develop corporate governance principles and monitor compliance therewith;
 
  •  to review the performance of the Board as a whole;
 
  •  to review and recommend to the Board compensation for outside directors;
 
  •  to develop criteria for Board membership; and
 
  •  to identify, review and recommend director candidates.

      The Board also recently formed a Corporate Responsibility Committee. The first meeting of this committee is scheduled for July 2004 and its members will be appointed prior thereto. The duties of the Corporate Responsibility Committee generally will be:

  •  to review and monitor the worldwide performance of the company as it affects the environment, employees, communities and customers; and
 
  •  to develop recommendations to management to assist it in formulating and adopting policies, programs, practices and strategies concerning corporate citizenship and public policy matters.

Director Nomination Process

      The Corporate Governance and Nominating Committee assesses all candidates, whether submitted by management or stockholders, and makes recommendations for election. Recommendations for election are based upon the nominee’s intelligence, judgment, foresight, personal character, experience and achievements, and diversity of background and expertise, as compared to the present make-up of the Board. The Corporate Governance and Nominating Committee has the authority to retain independent consultants to assist with director recruitment. No independent consultants were retained during 2003, however, it is anticipated that the committee will retain such a consultant in 2004 to assist with identifying and assessing potential candidates. To date, candidates have been identified from individuals already known to the current directors or referred to the company as highly recommended candidates from other industry leaders.

6


Table of Contents

      Each year, the Corporate Governance and Nominating Committee reviews all eligible director candidates, including incumbents. The Committee then decides, based upon the pool of eligible candidates and the number of vacancies to be filled, whom to recommend to the Board to be nominated for election that year. The full Board reviews the Committee’s recommendations and approves the individuals to stand for election. This is the process that was used to identify and evaluate the current nominees standing for election that appear in this proxy statement.

      The Corporate Governance and Nominating Committee welcomes stockholder recommendations of director candidates. Stockholders may suggest candidates for the consideration of the Committee by submitting their suggestions in writing to the company’s Secretary, including the agreement of the nominee to serve as a director. In addition, the company’s By-Laws contain a procedure for the direct nomination of director candidates by stockholders (see page 38), and any such nomination will also be automatically submitted to the Corporate Governance and Nominating Committee for consideration. No individuals were proposed as director candidates for this Annual Meeting by any stockholder.

Director Compensation

      Directors who are not employees of the company receive directors’ fees of $40,000 per year plus an additional $10,000 per year for each committee on which they serve and $500 for each committee meeting they participate in. Beginning in 2004, Audit Committee members will receive $1,000 for each audit committee meeting they participate in. Non-employee directors may elect to defer their compensation under the Visteon Corporation Deferred Compensation Plan for Non-Employee Directors, a nonqualified benefit plan, into a unit account. Amounts deferred into the unit account are allocated based on the price of the company’s common stock at the time of deferral, and the value of this account is directly related to the performance of the company’s common stock. In addition, the company reimburses its directors for expenses, including travel, they incur in connection with attending board and committee meetings. Directors are also eligible to participate in the company’s Management Lease Car Program which offers favorable lease rates and includes all maintenance and insurance costs.

      Annually, non-employee directors receive a grant of 3,000 shares of restricted common stock under the Visteon Corporation Restricted Stock Plan for Non-Employee Directors. The restrictions expire for one third of the shares each year following the year of grant. At this annual meeting, the company will be seeking your approval of a Non-Employee Director Stock Unit Plan pursuant to which non-employee directors will receive an annual award of stock units valued at $10,000. Please see page 30 for additional information related to this plan.

      To further link director and stockholder interests, the company has established stock ownership guidelines for non-employee directors. Each non-employee director has a goal to own 15,000 shares of common stock within five years of their appointment as a director.

Related Party Transactions

      MSX International, Inc. provides contract staffing and master vendor services to the company. Thomas T. Stallkamp, a member of the company’s Board of Directors, had served as the Chief Executive Officer of MSX International until December 2003. Visteon paid MSX International approximately $13 million in 2003 for staffing services performed directly by MSX International. An additional $68 million was paid to MSX International on a pass-through basis in connection with MSX International’s role as master vendor on behalf of other suppliers and is not recognized as revenue by MSX International. Mr. Stallkamp currently serves as the non-executive Chairman of the Board of MSX International.

      The company has also entered into a consulting agreement with Coldwater Corporation, effective July 1, 2003. Robert M. Teeter, a member of the company’s Board of Directors, is the President and a shareholder of the Coldwater Corporation. Under this agreement, Mr. Teeter provides business planning and public policy advice. The current agreement expires June 30, 2004. The fees payable under this one-year contract are $200,000 plus expenses.

7


Table of Contents

Stockholder Communications with the Board of Directors

      Stockholders interested in communicating directly with a committee chairperson or with the non-management directors as a group may do so as described on the company’s website (www.visteon.com/investors), or by writing to the chairperson or non-management directors c/o of the Company Secretary, 17000 Rotunda Drive, Dearborn, Michigan 48120.

STOCK OWNERSHIP

      The following contains information regarding the stock ownership of the nominees for election as directors, the directors continuing in office, the company’s executive officers and beneficial owners of more than five percent of the company’s voting securities.

      Ownership of the company’s common stock is shown in terms of “beneficial ownership.” A person generally “beneficially owns” shares if he or she has either the right to vote those shares or dispose of them. More than one person may be considered to beneficially own the same shares.

      In this proxy statement, unless otherwise noted, a person has sole voting and dispositive power for those shares shown as beneficially owned by him or her. The percentages shown in this proxy statement compare the person’s beneficially owned shares with the total number of shares of the company’s common stock outstanding on March 1, 2004 (129,409,472 shares).

Nominees, Continuing Directors and Executive Officers

      The following table contains stockholding information for the nominees for election as directors, the directors continuing in office and the company’s executive officers.

                 
Common Stock
Beneficially Owned

Percent of
Name Number(1)(2) Outstanding



Directors
               
Marla C. Gottschalk
    6,131       *  
William H. Gray, III
    12,634       *  
Steven K. Hamp
    36,365       *  
Robert H. Jenkins
    12,634       *  
Michael F. Johnston
    821,055       *  
Karl J. Krapek
    10,558       *  
Peter J. Pestillo(3)
    1,182,984       *  
Charles L. Schaffer
    31,762       *  
Thomas T. Stallkamp
    6,000       *  
Robert M. Teeter
    29,683       *  
Daniel R. Coulson
    243,100       *  
James C. Orchard
    266,196       *  
Heinz Pfannschmidt
    176,414       *  
All Directors and Executive Officers as a Group (21 Persons)
    3,563,160       2.7  
   
   
 

 *   less than 1%.
 
(1)  For non-employee directors the amounts shown include shares of common stock represented by Visteon stock units credited under the Deferred Compensation Plan for Non-Employee Directors. These shares may be deliverable after termination of board service. For executive officers the amounts shown include shares of common stock represented by Visteon stock units credited under the Visteon Investment Plan, the Visteon Savings Parity Plan and the Visteon Deferred Compensation Plan and are payable following termination of employment.

8


Table of Contents

(2)  Also, included are shares of common stock which the following executive officers had a right to acquire ownership of pursuant to options granted by the company exercisable on or within 60 days after March 1, 2004: Mr. Pestillo (446,503 shares); Mr. Johnston (313,133 shares); Mr. Coulson (97,706 shares); Mr. Orchard (100,844 shares); and Dr. Pfannschmidt (76,719 shares).
 
(3)  Mr. Pestillo has reported beneficial ownership of 7,837 shares of common stock owned by a family partnership.

Other Beneficial Owners

      The company believes that the following table is an accurate representation of beneficial owners of more than 5% of any class of the company’s voting securities. The table is based upon reports on Schedules 13G filed with the Securities and Exchange Commission or other information believed to be reliable.

             
Name and Address Amount and Nature
Title of Class of Beneficial Owner of Ownership Percent of Class




Common Stock
  Donald Smith & Co., Inc.
East 80, Route 4, Suite 360
Paramus, NJ 07652
  10,336,100 shares held with sole voting and dispositive power   8.0%

Section 16(a) Beneficial Ownership Reporting Compliance

      There were no late filings during 2003.

9


Table of Contents

EXECUTIVE COMPENSATION

      This section provides summary information regarding the compensation of Peter J. Pestillo, Chairman and Chief Executive Officer; Michael F. Johnston, President and Chief Operating Officer; Daniel R. Coulson, Executive Vice President and Chief Financial Officer; James C. Orchard, Executive Vice President, Operations; and Dr. Heinz Pfannschmidt, Vice President and President, Europe and South America (the “Named Executives”).

      This group of executive officers receives medical, group life insurance and other benefits that are available generally to all of the company’s salaried employees. They also participate in the company’s salaried employees’ pension plan and receive certain other perquisites. Dr. Pfannschmidt is covered by an individual pension arrangement in Germany. In addition, these executive officers are eligible to defer their bonuses under the company’s Deferred Compensation Plan. Amounts deferred into the Visteon stock fund of the plan are allocated based on the price of the company’s common stock at the time of deferral, and the value of this account is directly related to the performance of the company’s common stock.

Summary Compensation Table

      The following table summarizes compensation information for the Named Executives for each of our past three fiscal years.

                                                               
Annual Compensation Long-Term Compensation


Awards Payouts


Other Annual Restricted Securities LTIP All Other
Salary Bonus Compensation Stock Awards Underlying Payouts Compensation
Name and Principal Position Year ($) ($) ($)(1) ($)(2) Options/SARs ($)(3) ($)(4)









Peter J. Pestillo
    2003       1,170,466     0     169,254       1,994,304       500,000       352,000       0  
 
Chairman and
    2002       1,083,333     550,000     239,069       1,812,504       255,282       187,500       0  
 
Chief Executive Officer
    2001       1,000,000     0     129,600       1,500,000       164,474       176,812       60,000  
Michael F. Johnston
    2003       856,866     0     113,644       1,050,192       316,800       209,000       0  
 
President and
    2002       791,667     400,000     137,146       1,934,281       138,644       111,400       0  
 
Chief Operating Officer
    2001       737,500     0     75,644       890,625       97,657       104,982       610,000  
Daniel R. Coulson(5)
    2003       574,833     0     37,398       397,800       119,900       69,000       0  
 
Executive Vice President
    2002       527,500     185,000     47,116       386,256       54,401       36,800       0  
 
and Chief Financial Officer
    2001       468,750     0     35,749       293,750       32,210       34,626       28,122  
James C. Orchard(6)
    2003       639,633     0     29,392       534,378       111,300       84,100       0  
 
Executive Vice President
    2002       587,500     200,000     52,517       698,624       50,616       45,000       0  
 
Operations
    2001       239,583     0     25,000       644,100       45,000       17,651       200,000  
Dr. Heinz Pfannschmidt(7)
    2003       583,749     0     81,025       267,189       80,600       72,661       0  
 
Vice President & President,
    2002       472,951     150,000     70,559       414,984       29,780       32,568       0  
 
Europe and South America
    2001       66,470     0     15,000       303,000       45,000       2,078       350,000  


(1)  The “Other Annual Compensation” column includes the amount of various reportable perquisites and other personal benefits, including personal use of company aircraft in 2003 for Mr. Pestillo ($96,883) and Mr. Johnston ($25,712), leased car payments in 2003 for Mr. Coulson ($6,311) and Dr. Pfannschmidt ($45,955), and other reimbursements made through executive, flexible perquisite accounts in 2003 for Mr. Pestillo ($34,725), Mr. Johnston ($34,725), Mr. Orchard ($16,252), Mr. Coulson ($12,792) and Dr. Pfannschmidt ($15,000). This column also includes tax payments made by the company in 2003 on behalf of each of Mr. Pestillo ($34,207), Mr. Johnston ($41,053), Mr. Orchard ($9,101) and Mr. Coulson ($13,390).
 
(2)  The shares described in the “Restricted Stock Awards” column were granted under the Visteon Corporation 2000 Incentive Plan and are listed at the market value of our common stock at the time of the award. The shares of restricted stock awarded in 2003 may not be sold or transferred for three years. As of December 31, 2003, Mr. Pestillo owned 781,278 shares of restricted stock valued at $8,133,104; Mr. Johnston owned 501,951 shares of restricted stock valued at $5,255,310; Mr. Orchard owned 162,083 shares of restricted stock valued at $1,687,284; Mr. Coulson owned 165,289 shares of restricted stock valued at $1,720,658; and Dr. Pfannschmidt owned 95,881 shares of restricted stock valued at $998,121. For this valuation, each share of restricted stock was valued at $10.41, the closing price of our common stock on December 31, 2003 as reported on the New York Stock Exchange. Holders of restricted stock received the same cash dividends as other stockholders owning common stock.
 
(3)  The “LITP Payouts” column is comprised of payments under a transition cash plan implemented for the 2001-2003 long-term incentive cycle, as discussed further below in the report of the Organization and Compensation Committee.

10


Table of Contents

(4)  The “All Other Compensation” column includes amounts for (1) matching contributions by Visteon under the Visteon Investment Plan (“VIP”) and (2) the values of certain credits provided under the Visteon Savings Parity Plan (“VSPP”). Under the VSPP, Visteon provides benefits substantially equal to benefits that could not be provided under the VIP because of limitations under the Internal Revenue Code. For 2003, no VIP matching contributions were made nor VSPP credits issued. For 2001, this column also included a one-time, lump-sum payment for each of Mr. Johnston, Mr. Orchard and Dr. Pfannschmidt of $595,000, $200,000 and $350,000, respectively.
 
(5)  Mr. Coulson has given notice of his retirement as of the close of business on March 31, 2004.
 
(6)  Mr. Orchard was appointed as of August 1, 2001.
 
(7)  Dr. Pfannschmidt was appointed as of November 1, 2001. Dollar amounts have been converted from his salary which was paid in a non-U.S. dollar denominated currency.

Stock Options

      The Visteon Corporation 2000 Incentive Plan permits grants of stock options, restricted stock and other rights relating to our common stock. In general, whether exercising stock options is profitable depends on the relationship between the common stock’s market price and the exercise price of the option. Options which are “in the money” on a given date can be “out of the money” if stock prices change on a subsequent date. We therefore believe that placing a current value on outstanding options is highly speculative and may not represent any benefit realized by the option holder.

      The following table gives more information regarding stock options granted to each of the Named Executives in 2003.

Option/ SAR Grants in Last Fiscal Year(1)

                                         
Individual Grants

Number of % of Total
Securities Options/SARs
Underlying Granted to Exercise or Grant Date
Option/SARs Employees in Base Price Expiration Present
Name Granted(#)(1) Fiscal Year ($/Sh)(2) Date Value $(3)






Peter J. Pestillo
    500,000       8.6%       6.63       2/11/2013       1,515,000  
Michael F. Johnston
    316,800       5.4%       6.63       2/11/2013       959,904  
Daniel R. Coulson
    119,900       2.1%       6.63       2/11/2013       363,297  
James C. Orchard
    111,300       1.9%       6.63       2/11/2013       337,239  
Dr. Heinz Pfannschmidt
    80,600       1.4%       6.63       2/11/2013       244,218  


(1)  All stock options are for shares of common stock of the company. No SARs were issued during the last fiscal year. In general, 33 1/3% of a stock option grant can be exercised one year after the grant date, 66 2/3% after two years, and 100% after three years. Any unexercised options expire after ten years. If an option holder retires, becomes disabled, or dies, his or her options continue to be exercisable up to the normal expiration date. In most other instances of employment termination, all rights end upon termination. Options are subject to certain conditions, including not engaging in competitive activity. Options generally cannot be transferred.
 
(2)  The exercise price of the stock options granted is the average of the high and low selling prices of our common stock on the New York Stock Exchange on the date of grant.
 
(3)  The Grant Date Present Value was determined using the Black-Scholes methodology and the following weighted average assumptions:

(i)  risk free interest rate of 5.0%;

(ii) option life equals 10 years;

(iii) volatility of 55.0%;

(iv) risk of forfeiture of 3.0%; and

(v)  dividend yield of 3.0%.

     The ultimate value of the options, if any, will depend on the future value of the common stock and the optionee’s investment decisions, neither of which can be accurately predicted.

11


Table of Contents

     The following table provides information concerning the number of securities underlying unexercised stock options, as well as the value of certain unexercised stock options (using the closing price of our common stock as reported on the New York Stock Exchange as of December 31, 2003, less the applicable exercise price or prices), held by each of the Named Executives as of December 31, 2003.

Aggregated Option/ SAR Exercises in Last Fiscal Year and

Fiscal Year-End Option/ SAR Values(1)
                                 
Value of Unexercised
Number of Securities In-The-Money
Underlying Unexercised Options/SARs at
Shares Acquired Value Options/SARs at FY-End(#) FY-End ($)
Name On Exercise(#)(1) Realized($) Exercisable/Unexercisable Exercisable/Unexercisable





Peter J. Pestillo
    0       0       194,743/725,013       0/1,890,000  
Michael F. Johnston
    0       0       161,318/441,783       0/1,197,504  
Daniel R. Coulson
    0       0        39,606/166,905       0/453,222  
James C. Orchard
    0       0        46,872/160,044       0/420,714  
Dr. Heinz Pfannschmidt
    0       0        39,926/115,454       0/304,668  


(1)  No stock options were exercised during 2003. No SARs were outstanding as of December 31, 2003.

Long-Term Incentive Plan Awards in Last Fiscal Year

      In 2003, each of the Named Executives received a performance cash award pursuant to the Visteon Corporation 2000 Incentive Plan. Performance cash awards represent the opportunity to receive a cash bonus at the end of the 2003-2005 performance cycle depending on Visteon’s achievement of target performance goals with respect to return on assets and quality ratings. If less than the target performance goals are achieved, a cash award will be payable only if either approximately 25% of the return on assets goal is achieved or approximately 80% of the quality ratings goal is achieved. In the table below, the “Threshold” amounts assume that both minimum performance goals have been achieved. Participants may also receive cash payments in excess of the target amounts if the performance goals are exceeded. In the table below, the “Maximum” amounts assume that 200% of the return on assets goal is achieved and 120% of the quality ratings goal is achieved. The plan limits the amount payable in respect of performance cash awards to any Named Executive during any calendar year to $10 million.

2003 — 2005 Performance Cycle

                                         
Estimated Future Payouts Under
Performance or Non-Stock Price-Based Plans
Other Period
Target Award Until Maturation Threshold Target Maximum
Name ($) or Payout ($) ($) ($)






Peter J. Pestillo
    3,987,500       2003-2005       1,545,156       3,987,500       7,177,500  
Michael F. Johnston
    2,100,000       2003-2005       813,750       2,100,000       3,780,000  
Daniel R. Coulson
    795,000       2003-2005       308,063       795,000       1,431,000  
James C. Orchard
    737,500       2003-2005       285,781       737,500       1,327,500  
Dr. Heinz Pfannschmidt(1)
    659,311       2003-2005       255,483       659,311       1,186,760  


(1)  Currency conversion for non-USD denominated salary based on February 12, 2004 currency exchange rate.

12


Table of Contents

Retirement Plans

      The company maintains the Visteon Corporation Pension Plan (the “VPP”), a defined benefit plan qualified under Section 401(a) of the Internal Revenue Code (the “Code”). It covers primarily salaried employees of the company not covered by another pension plan. The non-contributory feature of the VPP automatically covers all eligible employees. The non-contributory feature of the VPP provides a monthly benefit, payable in the form of a life annuity, equal to a flat rate times years of employment. The highest flat rate in effect on December 31, 2003, is $47.45. Participants who satisfy the requirements for early retirement, age 55 with 10 years of service or 30 years of service, are eligible for an additional, temporary monthly benefit payable until age 62. Following three months of employment a participant may elect to be covered by the contributory feature of the plan and receive a contributory benefit in lieu of the non-contributory benefit. The contributory benefit, payable in the form of a life annuity, is equal to 1.5% of Final Average Monthly Salary times years of employment while a contributory participant plus 0.4% of Final Average Monthly Salary in excess of the Social Security Breakpoint times years of employment (not to exceed 35 years) while a contributory participant. Final Average Monthly Salary is the highest average monthly salary paid as of any five consecutive December 31 dates during the last 120 consecutive months that an employee contributes. The Social Security Breakpoint is equal to 150% of the average of the Social Security Wage Base for the last 35 years including the current plan year. Normal retirement is age 65 and portions of early retirement benefits are available at age 62 unreduced for age. Salaried employees hired on or after January 1, 2002 participate in the VPP BalancePlus Program. The monthly benefit payable from the BalancePlus Program is based on the greater of the Cash Balance benefit or the Pension Equity benefit. The Cash Balance benefit is based on a hypothetical account which grows with 4% pay credits and interest credits based on the 30-year Treasury bond rate. The Pension Equity benefit is based on a hypothetical account at age 65 equal to 12.5% of Final Average Monthly Salary times years of service. The monthly benefit payable from the BalancePlus Program is reduced for early commencement if payment begins before age 65. Since the VPP is a qualified plan, it is subject to the rules of the Code. The Code limits the amount of benefits that may be paid by a qualified plan and it limits the amount of salary that may be recognized in computing plan benefits. In 2003, the maximum annual salary the plan may recognize is $200,000.

      Visteon also has implemented the Pension Parity Plan (“PPP”), an unfunded, non-qualified pension plan. The PPP restores any benefits lost due to the limitations on benefits and compensation imposed by the Code.

Table 1-A

Projected Total Annual Retirement Benefits
From the Visteon Corporation Pension Plan
and the Pension Parity Plan
(Salaried Employees Hired Prior to January 1, 2002)
                                             
Years of Service

Remuneration 15 20 25 30 35






$ 100,000     $ 24,500     $ 32,700     $ 40,900     $ 49,100     $ 57,300  
  200,000       52,900       70,600       88,300       106,000       123,700  
  300,000       81,300       108,500       135,700       162,900       190,100  
  400,000       109,700       146,400       183,100       219,800       256,500  
  500,000       138,100       184,300       230,500       276,700       322,900  
  600,000       166,500       222,200       277,900       333,600       389,300  
  700,000       194,900       260,100       325,300       390,500       455,700  
  800,000       223,300       298,000       372,700       447,400       522,100  
  900,000       251,700       335,900       420,100       504,300       588,500  
  1,000,000       280,100       373,800       467,500       561,200       654,900  

13


Table of Contents

Table 1-B

Projected Total Annual Retirement Benefits
From the Visteon Corporation Pension Plan BalancePlus Program
and the Pension Parity Plan
(Salaried Employees Hired On or After January 1, 2002)
                                             
Years of Service

Remuneration 15 20 25 30 35






$ 100,000     $ 17,300     $ 23,000     $ 28,800     $ 34,500     $ 40,300  
  200,000       34,500       46,000       57,500       69,000       80,500  
  300,000       51,800       69,000       86,300       103,500       120,800  
  400,000       69,000       92,000       115,000       138,000       161,100  
  500,000       86,300       115,000       143,800       172,600       201,300  
  600,000       103,500       138,000       172,600       207,100       241,600  
  700,000       120,800       161,100       201,300       241,600       281,900  
  800,000       138,000       184,100       230,100       276,100       322,100  
  900,000       155,300       207,100       258,800       310,600       362,400  
  1,000,000       172,600       230,100       287,600       345,100       402,600  

      Visteon provides a non-qualified, unfunded pension benefit under the Supplemental Executive Retirement Plan (“SERP”) to certain eligible executives. For eligible executives hired prior to January 1, 2002, the SERP provides an additional monthly benefit, in the form of a life annuity, equal to the participant’s Final Average Monthly Salary (without regard to the Code compensation limit) times years of employment times a percentage determined by job classification at retirement. The percentages range between 0.20% and 0.90%. For eligible executives hired on or after January 1, 2002, the additional monthly benefit is based upon a hypothetical account balance that is in excess of the amount calculated under the VPP BalancePlus Program and the Pension Parity Plan. The account balance from the SERP before offset is calculated under the formulas in the BalancePlus Program with the following modifications: (1) Annual Salary is calculated without regard to the Code compensation limit; (2) Final Average Monthly Salary is increased by the average of the three highest consecutive Annual Incentive amounts; and (3) a 15% benefit multiplier is used under the Pension Equity formula in lieu of the 12.5% benefit multiplier. The Pension Equity account under the SERP has its own early retirement reduction factors, which are applied at early retirement before offsetting the amount calculated under the BalancePlus Program and the Pension Parity Plan. The additional monthly benefit is payable in the same form as paid under the BalancePlus Program.

      Visteon provides a non-qualified unfunded temporary pension benefit from the Executive Separation Allowance Plan (“ESAP”) to eligible executives who separate employment under certain circumstances prior to June 30, 2004. For eligible executives hired prior to January 1, 2002, the ESAP provides a temporary monthly benefit, payable to age 65, equal to the participant’s highest base salary times a percentage, not to exceed 60% equal to the sum of (i) 15%, (ii) 6% for each year that such participant’s age at separation exceeds 55 (not to exceed 30%), and (iii) 1% for each year of service in excess of 15. This amount is offset by any payments paid or payable from any other private retirement plan of the company other than the SERP. Executives hired on or after January 1, 2002 are not eligible to participate in the ESAP.

14


Table of Contents

Table 2-A

Projected Total Annual Retirement Benefits
From The Supplemental Executive Retirement Plan
(Salaried Employees Hired Prior to January 1, 2002)
                                             
Years of Service

Remuneration 15 20 25 30 35






$ 100,000     $ 3,000     $ 4,000     $ 5,000     $ 6,000     $ 7,000  
  200,000       6,000       8,000       10,000       12,000       14,000  
  300,000       18,000       24,000       30,000       36,000       42,000  
  400,000       24,000       32,000       40,000       48,000       56,000  
  500,000       52,500       70,000       87,500       105,000       122,500  
  600,000       63,000       84,000       105,000       126,000       147,000  
  700,000       78,800       105,000       131,300       157,500       183,800  
  800,000       96,000       128,000       160,000       192,000       224,000  
  900,000       121,500       162,000       202,500       243,000       283,500  
  1,000,000       135,000       180,000       225,000       270,000       315,000  

Table 2-B

Projected Total Annual Retirement Benefits
From the Supplemental Executive Retirement Plan
(Salaried Employees Hired on or After January 1, 2002)
                                             
Years of Service

Remuneration 15 20 25 30 35






$ 100,000     $ 11,700     $ 15,700     $ 19,500     $ 23,500     $ 27,300  
  200,000       23,500       31,300       39,100       47,000       54,800  
  300,000       35,200       47,000       58,700       70,400       82,100  
  400,000       47,000       62,600       78,300       93,900       109,500  
  500,000       58,700       78,300       97,800       117,300       136,900  
  600,000       70,400       93,900       117,300       140,800       164,300  
  700,000       82,100       109,500       136,900       164,300       191,600  
  800,000       93,900       125,100       156,400       187,700       219,100  
  900,000       105,600       140,800       176,100       211,200       246,400  
  1,000,000       117,300       156,400       195,600       234,700       273,800  

Assumed Annual Incentive: 40% of Remuneration

15


Table of Contents

Table 3
Projected Total Annual Retirement Benefits
From the Executive Separation Allowance Plan
Assuming Benefits Commence at Age 55
                                             
Years of Service

Remuneration 15 20 25 30 35






$ 200,000     $ 30,000     $ 40,000     $ 50,000     $ 60,000     $ 70,000  
  300,000       45,000       60,000       75,000       90,000       105,000  
  400,000       60,000       80,000       100,000       120,000       140,000  
  500,000       75,000       100,000       125,000       150,000       175,000  
  600,000       90,000       120,000       150,000       180,000       210,000  
  700,000       105,000       140,000       175,000       210,000       245,000  
  800,000       120,000       160,000       200,000       240,000       280,000  
  900,000       135,000       180,000       225,000       270,000       315,000  
  1,000,000       150,000       200,000       250,000       300,000       350,000  

      The table below shows the years of credited service earned by the Named Executives under the Visteon retirement plans as of December 31, 2003:

         
Credited Service (years)

Peter J. Pestillo
    3.3  
Michael F. Johnston
    3.4 *
Daniel R. Coulson
    3.3  
James Orchard
    2.5  


Michael F. Johnston will also receive additional retirement benefits determined by crediting one additional year of service for each year of service credited under the terms of the VPP as shown above.

     Visteon Holdings GmbH, an indirect, wholly owned subsidiary of the company, has agreed to provide Dr. Pfannschmidt with a pension payable as a 60% joint and survivor annuity commencing at age 65 equal to 0.5% of final five year average annual base compensation up to the Final Average Social Security Contribution Ceiling (“SSCC”), plus 1.5% of final five year average annual base compensation in excess of SSCC times years of pensionable service. Early retirement benefits are payable commencing after age 55, reduced by 4.8% for every year before age 62. In the event of disability, the pension would be calculated by projecting service to age 65 and applying the early retirement reduction factors. In addition to the 60% survivor annuity, ancillary orphan’s benefits are also provided. As of December 31, 2003, Dr. Pfannschmidt had earned 2.167 years of pensionable service.

Table 4

Projected Annual Retirement Benefits
for Dr. Heinz Pfannschmidt
                                             
Years of Service

Remuneration 5 10 15 20 25






  125,000       6,300       12,600       18,900       25,100       31,400  
  150,000       8,200       16,300       24,500       32,600       40,800  
  175,000       10,000       20,100       30,100       40,100       50,200  
  200,000       11,900       23,800       35,700       47,600       59,600  
  225,000       13,800       27,600       41,400       55,100       68,900  
  250,000       15,700       31,300       47,000       62,600       78,300  
  300,000       19,400       38,800       58,200       77,600       97,100  
  400,000       26,900       53,800       80,700       107,600       134,600  
  450,000       30,700       61,300       92,000       122,600       153,300  
  500,000       34,400       68,800       103,200       137,600       172,100  

16


Table of Contents

Employment and Other Agreements

      The company has entered into an employment agreement with Daniel R. Coulson that provides certain terms of employment, compensation, benefits and perquisites, as well as deferred compensation payments. Mr. Coulson may terminate the agreement at any time upon 30 days advance written notice. Visteon also may terminate the agreement at any time, with or without cause, without advance notice, provided that if Visteon provides less than 30 days advance notice of its election to so terminate, then it will pay Mr. Coulson his base pay for such 30-day period. On February 27, 2004, Mr. Coulson notified the company of his intention to terminate the agreement and retire as of March 31, 2004.

      The company has entered into an employment agreement with Michael F. Johnston that provides terms of employment, compensation, incentive plan compensation, benefits and perquisites, pensions, employment termination, non-competition and confidentiality, and “change in control” provisions. Mr. Johnston’s agreement expires on September 15, 2005. Thereafter, his agreement will be extended automatically each year unless, not later than ninety days prior to each such date, the company or Mr. Johnston shall have given notice not to extend the term. The agreement also may be terminated under certain specified circumstances including the termination by either party upon 90 days notice. Mr. Johnston is also entitled to receive twelve months salary, his target annual bonus award for the applicable fiscal year, the immediate vesting of all his stock options, restricted shares and other long term incentives and the continuation of certain health and welfare insurance coverage if he elects to terminate his employment following the affirmative determination of the Board of Directors that Mr. Johnston will not succeed the current Chief Executive Officer to such position.

      In addition, a wholly-owned subsidiary of the company has entered into a service agreement with Dr. Heinz Pfannschmidt that provides terms of his appointment, compensation, incentive plan compensation, benefits and perquisites, employment termination, non-competition and confidentiality. Dr. Pfannschmidt’s agreement is subject to termination by either party upon at least 24 months notice. In the event of the termination of the agreement, Dr. Pfannschmidt is entitled to amounts that would have otherwise been payable under the agreement over the 24 month period following notice of termination, either in a lump sum or in installments.

      The “Change in Control” provisions of Mr. Johnston’s employment agreement and other agreements with Messrs. Pestillo, Coulson and Orchard, and certain other officers, specify two triggering events: (i) a change in control and (ii) within three years (executive officers) or two years (certain other officers) after the change in control one of the following events occurs: participant’s employment is terminated without cause; a negative material change in made in participant’s duties and responsibilities; participant’s compensation or benefits are decreased and such decrease is unrelated to company performance; participant is required to materially relocate his or her residence or principal office location against his or her will; or the participant is not offered a comparable position with the successor entity. Each of the executive officers and certain other officers also has 30 days at the end of the first year after a change in control to terminate his or her employment for any reason and still receive the benefits under the agreement.

17


Table of Contents

      Each participant is entitled to the following benefits upon occurrence of the triggering events: base salary, pro-rated annual bonus and any accrued vacation pay through date of termination; a severance payment in the amount of three times (executive officers) or one and one-half times (certain other officers) base salary plus target bonus; all unvested options and restricted stock will vest and become immediately exercisable, all awards under the Visteon Corporation 2000 Incentive Plan become payable immediately on a pro-rated basis; any compensation previously deferred, together with accrued interest or earnings, will be distributed as a lump sum payout; participant’s Supplemental Executive Retirement Program benefits will be funded through a trust or other mechanism which is protected from the persons controlling the company after the occurrence of the change in control; and health, dental and life insurance will remain in force over the cash severance benefit period. Change in control payments for executive officers will be grossed up for the payment, if any, of additional federal taxes (Code Section 280(G) “Excess Parachute Payment”). Other officers will not be grossed up; however, any officer whose contractual entitlements would be greater if such entitlements were to reduce the officer’s safe harbor level under the golden parachute excise tax provisions of the Code (thereby avoiding the imposition of the excise tax), will have his or her payment so reduced. An officer in this group whose contractual entitlements after payment of applicable excise taxes would be greater than his or her safe harbor amount would not incur such a reduction.

ORGANIZATION AND COMPENSATION COMMITTEE REPORT

WITH RESPECT TO EXECUTIVE COMPENSATION REPORTED
FOR THE LAST COMPLETED FISCAL YEAR

      The Organization and Compensation Committee of the Board of Directors, which is composed entirely of non-employee, independent (consistent with the listing standards of the New York Stock Exchange) directors, oversees the company’s programs for compensating executive officers and other key management employees and approves the salaries and other incentive awards to senior executives. During 2003, the Committee held five meetings.

Policies and Objectives

      The Committee believes that Visteon’s executive compensation plans support the company’s strategic objectives and provide strong alignment of the interests of its executives with these objectives as well as the creation of stockholder value.

      Visteon’s executive compensation plans are designed to:

  •  Pay for performance;
 
  •  Provide competitive compensation opportunities;
 
  •  Align the compensation of its executive officers with its business objectives and the creation of stockholder value; and
 
  •  Retain a strong executive team and allow the company to attract talent to the organization.

      A major portion of each executive’s compensation is delivered through annual and long-term incentives tied to corporate and individual performance as well as the performance of the company’s common stock. Annual and long-term incentives are provided under the Visteon Corporation 2000 Incentive Plan (the “Plan”), which was approved by stockholders in 2001 and amended in 2004, subject to stockholder approval (see Item 3, beginning on page 23).

18


Table of Contents

Program Components

      In 2003, the executive officers’ compensation was composed of a base salary, an annual bonus opportunity and long-term incentive award opportunities. For each executive officer, compensation was reviewed in relation to job responsibilities, skills, experience and competitive industry practice, as well as considering Visteon’s organization structure, internal relationships and other factors. The competitive compensation assessment was based on executive positions in other comparably sized auto supply, technology and general industry companies. The company uses several executive compensation surveys, conducted by leading independent consulting firms, rather than a specific list of comparator companies. These compensation surveys include many of the companies in the Peer Group Index (see “Stock Performance Graph” on page 21), subject to their participation. Visteon’s compensation plans are targeted to deliver compensation at the median of the competitive market when performance is at expected levels.

 
Annual Incentive Compensation

      The measures for determining annual incentive awards were corporate performance measured through profit before tax, and modified for safety, quality and cash flow performances. Individual awards are modified by achievement of specified individual goals in the areas of business results, leadership behavior and development of people. For fiscal 2003 performance, the company did not meet the threshold performance requirements necessary for annual incentive awards to be paid.

 
Long-Term Incentive Compensation

      The fiscal 2003 long-term incentive award opportunity consisted of stock options, restricted stock and cash awards earned over a three-year performance cycle. The earning of cash awards is dependent on attainment of specified goals for return on assets and quality ratings over a three-year performance period (2003 to 2005).

      A transition cash plan was implemented for the 2001-2003 long-term incentive cycle to facilitate the transition from the former incentive plans which focused primarily on annual performance to a plan with greater emphasis on long-term incentives. To address the significant reduction in annual cash opportunities from the prior plan, interim goals were implemented in the long-term component of the 2000 Incentive Plan. The interim goals were based on the achievement of return on equity and quality targets and provided the opportunity for a pro rata cash payout during the initial two years of the plan. For 2003, as in 2002 and 2001, the company achieved the quality goal and made a cash payout under the plan.

      The 2004 long-term incentive award opportunity, subject to stockholder approval of the proposed amendments to the Plan, will reflect market conditions. Performance measures will be aligned to stockholder and business objectives comparably to the 2003 awards. To minimize the potential equity dilution of our stockholders and to facilitate the efficient and effective use of the requested additional share reserve, the following changes for the fiscal 2004 awards are contemplated:

  •  Stock options: granted with a term of 5 years instead of 10 years;
 
  •  Restricted stock units (settled in cash), instead of restricted stock; and
 
  •  Cash awards: no changes other than the performance goals.

19


Table of Contents

Chairman and Chief Executive Officer Compensation

      The Chairman and Chief Executive Officer’s compensation for the year 2003 was reviewed in the same manner as the other executive officers, as described above, and consisted of base salary of $1.15 million and a long-term cash award of $352,000. The Chairman and Chief Executive Officer also received a stock option grant of 500,000 shares and a restricted stock award of 300,800 shares with restrictions lapsing on the third anniversary of the date of grant. In 2003, the Chairman and Chief Executive Officer also received a target long-term cash incentive award opportunity of $3,987,500, which can be earned based on the achievement of specified return on assets and quality rating goals over a three-year performance period. The Chairman and Chief Executive Officer did not receive an annual cash incentive award for 2003.

Stock Ownership Requirements

      The company has adopted stock ownership goals for officers at the vice president level and above. The goal for these officers is to own common stock worth a multiple of salary, ranging from one times salary up to seven times salary for the Chairman and Chief Executive Officer, within three years from adoption or hire date, if later. All of the Named Executives employed by the company for three years or more are in compliance with the stock ownership guidelines.

Tax Deductibility of Compensation

      The Committee has also considered the company’s ability to deduct from taxable income certain performance based compensation under section 162(m) of the Code. The Committee intends that all compensation paid by the company be deductible, which includes awards earned/granted under the amended Plan. The Committee, however, reserves the right to pay nondeductible compensation if, in its sole discretion, it deems it necessary or desirable.

  Organization and Compensation Committee
 
  Robert H. Jenkins (Chairman)
  William H. Gray, III
  Charles L. Schaffer

20


Table of Contents

STOCK PERFORMANCE GRAPH

      The following graph compares the cumulative total return on the company’s common stock with the cumulative total return on the S & P 500 Composite Index and a Peer Group Index that Visteon has developed. The Peer Group Index is composed of ArvinMeritor, Inc., American Axle & Manufacturing Holdings, Inc., Borg-Warner Automotive, Inc., Dana Corporation, Delphi Corporation, Johnson Controls, Inc., Lear Corporation and Magna International, Inc.

      The graph assumes an initial investment of $100 and reinvestment of cash dividends. The comparisons in this table are required by the Securities and Exchange Commission and are not intended to forecast or be indicative of possible future performance of the common stock or the referenced indices.

Comparison of Cumulative Total Return

for the Period from June 29, 2000 to December 31, 2003

(PERFORMANCE GRAPH)

                                         
6/29/00 12/29/00 12/31/01 12/31/02 12/31/03





Visteon Corporation
  $ 100     $ 84.29     $ 112.01     $ 53.02     $ 82.17  
S & P 500 Index
  $ 100     $ 92.06     $ 81.12     $ 63.19     $ 81.11  
Peer Group Index
  $ 100     $ 87.24     $ 128.17     $ 113.31     $ 177.25  

21


Table of Contents

AUDIT COMMITTEE REPORT

      The Audit Committee operates under a written charter adopted by the Board of Directors. Visteon management has the primary responsibility for the company’s internal controls and the financial reporting process. The independent auditors are responsible for performing an independent audit of the company’s consolidated financial statements and issuing an opinion on the conformity of those audited financial statements with accounting principles generally accepted in the United States of America. The Audit Committee oversees and monitors these processes and reports to the Board of Directors on its findings. During 2003, the Audit Committee held nine meetings.

Audit Fees

      The Audit Committee selects, subject to stockholder approval, our independent auditors for each fiscal year. During the year ended December 31, 2003, PricewaterhouseCoopers LLP was employed principally to perform the annual audit and to provide other services. Fees paid to PricewaterhouseCoopers LLP for each of the past two years are listed in the following table:

                                 
Audit Audit
Services Related All Other
Year Ended December 31, Fees Fees Tax Fees Fees





2003
  $ 3,724,000     $ 1,475,000     $ 3,185,000     $ 221,000  
2002
  $ 3,176,000     $ 2,917,000     $ 3,644,000     $ 613,000  

      Audit services fees include fees for services performed to comply with Generally Accepted Auditing Standards (“GAAS”), including the recurring audit of the company’s consolidated financial statements. This category also includes fees for audits provided in connection with statutory filings or services that generally only the principal auditor reasonably can provide to a client, such as procedures related to the audit of income tax provisions and related reserves, and consents, assistance, and review of documents filed with the Securities and Exchange Commission.

      Audit-related fees include fees associated with assurance and related services that are reasonably related to the performance of the audit or review of the company’s financial statements. This category includes fees related to assistance in financial due diligence related to mergers and acquisitions, consultations regarding Generally Accepted Accounting Principles (“GAAP”), reviews and evaluations of the impact of new regulatory pronouncements, initial readiness and documentation assistance with Sarbanes-Oxley Section 404, and audit services performed related to benefit/pension plans.

      Tax fees primarily include fees associated with tax compliance, as well as domestic and international tax planning. This category also includes fees for services rendered related to comprehensive tax compliance and planning for international service employees and customs and duty consulting.

      All other fees primarily pertain to administrative services for international service employees and access to marketing data (Autofacts).

Audit Committee Pre-Approval Process and Policies

      The Audit Committee has adopted procedures for pre-approving all audit and non-audit services provided by the independent auditor. These procedures include reviewing and approving a budget for audit and permitted non-audit services by category. Audit Committee pre-approval is also required to engage the independent auditor for any additional service that is not included in the approved budget. The Audit Committee considers whether such services are consistent with the SEC’s rules on auditor independence. The Audit Committee also considers whether the independent auditor is best positioned to provide the most effective and efficient service, for reasons such as its familiarity with the company’s business, people, culture, accounting systems, risk profile, and whether the services enhance the company’s ability to manage or control risks and improve audit quality. The Audit Committee may delegate pre-approval authority to one or more members of the Audit Committee. Lastly, the Audit Committee periodically monitors the services rendered and actual fees paid and commitments to be paid to the independent auditors.

22


Table of Contents

Auditor Independence

      During the year, the Audit Committee met and held discussions with Visteon management and PricewaterhouseCoopers LLP. The Audit Committee reviewed and discussed with Visteon management and PricewaterhouseCoopers LLP the audited financial statements contained in the company’s Annual Report on Form 10-K for the year ended December 31, 2003. The Audit Committee also discussed with PricewaterhouseCoopers LLP the matters required to be discussed under the Statement on Auditing Standards No. 61 (Communications with Audit Committees). Based on these reviews and discussion, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the company’s Annual Report on Form 10-K for the year ended December 31, 2003, and filed with the SEC.

      PricewaterhouseCoopers LLP submitted to the Audit Committee the written disclosures and the letter required by Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees). The Audit Committee discussed with PricewaterhouseCoopers LLP the firm’s independence and considered whether the provision of non-audit services by PricewaterhouseCoopers LLP to the company is compatible with maintaining the independence of PricewaterhouseCoopers LLP. The Audit Committee concluded that the independence of PricewaterhouseCoopers LLP is not compromised by the provision of such non-audit services.

  Audit Committee
 
  Charles L. Schaffer (Chairman)
  Marla C. Gottschalk
  Robert H. Jenkins
  Karl J. Krapek

ITEM 2. APPROVAL OF INDEPENDENT AUDITORS

      The next proposal on the agenda for the Annual Meeting will be ratifying the appointment of PricewaterhouseCoopers LLP by the Audit Committee as the company’s independent auditors for fiscal year 2004.

      PricewaterhouseCoopers LLP served in this capacity for fiscal year 2003, and has reported on the company’s 2003 consolidated financial statements.

      Representatives of PricewaterhouseCoopers LLP, the company’s independent auditors, are expected to be present at the Annual Meeting. They will have the opportunity to make a statement at the meeting if they desire to do so and are expected to be available to respond to appropriate questions. For information regarding fees paid to PricewaterhouseCoopers LLP, see the Audit Committee Report on page 22.

      The Board of Directors Recommends that You Vote for the Ratification of PricewaterhouseCoopers LLP as the Company’s Independent Auditors for Fiscal Year 2004.

ITEM 3. APPROVAL OF THE VISTEON CORPORATION 2004 INCENTIVE PLAN,

AS AMENDED AND RESTATED

      The next proposal on the agenda for the Annual Meeting will be to approve the Visteon Corporation 2004 Incentive Plan, as amended and restated (the “Incentive Plan”). The Incentive Plan was originally adopted effective as of June 28, 2000 as the 2000 Incentive Plan, and approved by stockholders on May 9, 2001. The Board of Directors, following the approval and recommendation of the Organization and Compensation Committee, adopted amendments to the Incentive Plan on March 16, 2004, subject to stockholder approval at the Annual Meeting.

23


Table of Contents

      The amended and restated Incentive Plan includes the following changes from the original plan:

  •  increase the maximum number of shares of common stock that may be issued under the Incentive Plan by 1,800,000 shares to 14,800,000 shares;
 
  •  decrease the maximum number of shares of common stock that may be awarded under the Incentive Plan pursuant to stock rights, restricted stock, restricted stock units (but only to the extent that each such restricted stock unit may be settled by the delivery of shares of common stock) and other stock-based awards to 5,171,383 shares from 6,500,000 shares;
 
  •  increase the maximum number of shares of common stock subject to options and/or stock appreciation rights that may be granted under the Incentive Plan to certain executive officers during any calendar year by 500,000 shares to 1,000,000 shares;
 
  •  increase the maximum number of shares of common stock that may be issued under the Incentive Plan pursuant to performance-based restricted stock, stock rights and restricted stock units to certain executive officers during any calendar year by 500,000 shares to 1,000,000 shares;
 
  •  increase the maximum number of shares that may be issued under the Incentive Plan as authorized and unissued shares by 1,000,000 shares to 2,000,000 shares;
 
  •  change the maximum term of an option or stock appreciation right awarded under the plan after the effective date of the amendment to five years from ten years;
 
  •  extend the term of the plan to May 11, 2014 from June 27, 2010;
 
  •  permit awards to certain non-employees who provide services to Visteon and its subsidiaries;
 
  •  rename the plan as the Visteon Corporation 2004 Incentive Plan;
 
  •  provide greater clarity regarding the award of restricted stock units; and
 
  •  permit the reduction of certain payments under the plan that would constitute “excess parachute payments.”

      As of December 31, 2003, without taking into account any increase in the number of shares available under the Incentive Plan, there were approximately 97,500 shares not subject to outstanding awards under the Incentive Plan. Subject to the overall plan limit, approximately 150,000 shares would be available for awards of stock rights, restricted stock, restricted stock units (only to the extent that each such restricted stock unit may be settled by the delivery of common stock) and other stock-based awards pursuant to the Incentive Plan, as amended.

      Our Organization and Compensation Committee believes that increasing the total number of shares available for awards under the plan is necessary to ensure that a sufficient number of shares will be available to fund our employee compensation programs over the next two to three years. Our Organization and Compensation Committee believes that making a significant portion of the compensation of certain employees, whose efforts can affect the value of Visteon depend upon the long-term performance of our common stock, encourages those employees to work in a way that maximizes stockholder value. The Incentive Plan is also designed to help retain and attract key employees and consultants.

Summary of the Incentive Plan

      The following is only a summary of the Incentive Plan, as amended and restated, and is qualified in its entirety by reference to its full text, a copy of which is attached as Appendix B to this proxy statement.

24


Table of Contents

      The Incentive Plan is administered by the Organization and Compensation Committee of the Board of Directors. The Incentive Plan provides for the payment of performance cash awards and the grant of incentive and nonqualified stock options, stock appreciation rights, performance stock rights (“stock rights”), restricted stock, restricted stock units and various other rights based on stock (individually, an “award” or collectively, “awards”). Salaried employees, as well as certain non-employees, of Visteon with potential to contribute to the future success of Visteon or its subsidiaries will be eligible to receive awards under the Incentive Plan. The Organization and Compensation Committee has the discretion to select the employees to whom awards will be granted, to determine the type, size and terms and conditions applicable to each award and the authority to interpret, construe and implement the provisions of the Incentive Plan. The Organization and Compensation Committee’s decisions will be binding. The Organization and Compensation Committee also may delegate to a committee of Visteon officers the selection of eligible employees and the determination of the amount of individual awards for employees and certain non-employees who are not executive officers of Visteon, within limitations prescribed by the Organization and Compensation Committee.

 
Limits on Plan Awards

      The total number of shares of our common stock that may be subject to awards under the Incentive Plan, referred to as the “overall limit,” is 14,800,000, subject to adjustment as provided in the Incentive Plan. For calendar years after 2003, no more than 1,000,000 shares of our common stock may be subject to stock options (with or without any related stock appreciation rights) or to stand-alone stock appreciation rights awarded to any “covered employee,” which generally means our chief executive officer and the next four most highly paid executive officers, in any one calendar year. Common stock issued under the Incentive Plan may be either authorized but unissued shares (subject to a maximum limit of 2,000,000 shares), treasury shares or any combination thereof. For calendar years after 2003, no more than 1,000,000 shares of common stock may be available as awards pursuant to performance-based stock rights, restricted stock and restricted stock units granted under the Incentive Plan to any covered employee in any one calendar year, and no more than 5,171,383 shares in total may be issued pursuant to stock rights, restricted stock, restricted stock units (only to the extent that each such restricted stock unit may be settled by the delivery of common stock) and other stock-based awards. Any shares of common stock subject to an award that lapses, expires or is otherwise terminated without the issuance of such shares may become available for future awards.

 
Stock Options

      Options to purchase shares of our common stock, which may be incentive or nonqualified stock options, may be granted under our Incentive Plan at an exercise price (the “option price”) at least equal to the average of the highest and lowest prices at which Visteon common stock was traded on the New York Stock Exchange on the date of grant. Each option represents the right to purchase one share of common stock at the specified option price.

      Options granted after December 31, 2003 will expire not later than five years after the date on which they are granted. Options granted on or prior to December 31, 2003 will expire not later than 10 years after the date on which they are granted. Options become exercisable at such times and in such installments as determined by the Organization and Compensation Committee. Payment of the option price can either be made in full at the time of exercise by check or wire transfer, or, if the Organization and Compensation Committee so determines and the participant so elects, in installments. Unless the Organization and Compensation Committee determines otherwise, payment in full or in part may also be made by tendering to Visteon shares of our common stock (if owned at least six months) having a fair market value equal to the option price (or such portion thereof).

25


Table of Contents

 
Stock Appreciation Rights

      An award of a stock appreciation right may be granted under the Incentive Plan. Generally, one stock appreciation right is granted with respect to one share of our common stock. The stock appreciation right entitles the participant, upon the exercise of the stock appreciation right, to receive an amount equal to the appreciation in the underlying share of common stock. The appreciation is equal to the difference between (1) the “base value” of the stock appreciation right (i.e., the option price on the date the stock appreciation right is granted), and (2) the average of the highest and lowest prices at which Visteon common stock was traded on the New York Stock Exchange on the date the stock appreciation right is exercised. Upon the exercise of a vested stock appreciation right, the exercising participant will be entitled to receive the appreciation in the value of one share of common stock as so determined, payable at the discretion of the Organization and Compensation Committee in cash, shares of common stock, or some combination thereof, subject to the availability of our shares of common stock.

      Stock appreciation rights granted after December 31, 2003 will expire not later than five years after the date on which they are granted. Stock appreciation rights granted on or prior to December 31, 2003 will expire not later than 10 years after the date on which they are granted. Stock appreciation rights become exercisable at such times and in such installments as determined by the Organization and Compensation Committee.

 
Tandem Options/ Stock Appreciation Rights

      An option and a stock appreciation right may be granted “in tandem” with each other. An option and a stock appreciation right are considered to be in tandem with each other because the exercise of the option aspect of the tandem unit automatically cancels the right to exercise the stock appreciation right aspect of the tandem unit, and vice versa. The option may be an incentive stock option or a nonqualified stock option, as determined by the Organization and Compensation Committee. Descriptions of the terms of the option and the stock appreciation right aspects of a tandem option/stock appreciation right are provided above.

 
Material U.S. Federal Income Tax Consequences of Options

      Awards granted under the Incentive Plan may result in federal income tax consequences to Incentive Plan participants and Visteon. Some of those federal income tax consequences with respect to options are generally set forth in the following summary.

      An employee who is granted an incentive stock option that qualifies under Section 422 of the Code will not recognize income at the time of grant or exercise of such option. Visteon will not be entitled to a federal income tax deduction upon the grant or exercise of an incentive stock option. However, upon the exercise of an incentive stock option, any excess in the fair market price of the common stock over the option price constitutes a tax preference item that may have alternative minimum tax consequences for the employee. When the employee sells the shares more than one year after the date of transfer of the shares and more than two years after the date of grant of the incentive stock option, the employee will normally recognize a long-term capital gain or loss equal to the difference, if any, between the sales price of the shares and the aggregate option price. In such event, Visteon will not be entitled to a federal income tax deduction with respect to the exercise of the incentive stock option or the sale of the shares. If the employee does not hold the shares for the required period, when the employee sells the shares, the employee will recognize ordinary compensation income and possibly capital gains or losses in such amounts as are prescribed by the Code and Visteon will generally be entitled to a federal income tax deduction in the amount of such ordinary compensation income.

26


Table of Contents

      An employee who is granted a nonqualified stock option will not recognize income at the time of grant of the option. In general, when the employee exercises a nonqualified stock option, the employee will recognize ordinary compensation income equal to the difference, if any, between the option price paid and the fair market value, as of the date of option exercise, of the shares of common stock the employee receives. The tax basis of the shares to the employee will be equal to the option price paid, plus the amount includible in the employee’s gross income, and the employee’s holding period for such shares will commence on the date of exercise. Subject to the Code, Visteon will generally be entitled to a federal income tax deduction in respect of a nonqualified stock option in an amount equal to the ordinary compensation income recognized by the employee upon the exercise of the nonqualified stock option.

 
Restricted Stock and Restricted Stock Units

      Subject to the limits discussed above, the Organization and Compensation Committee may authorize the award of restricted stock and restricted stock units to employees under the Incentive Plan. Restricted stock awards are issuances of our common stock to employees that are subject to restrictions on transfer and forfeiture if one or more specified performance goals or minimum periods of service are not attained. Restricted stock units may also be awarded in lieu of, or in addition to, restricted stock awards and consist of a unit credited to a hypothetical account, valued based on the fair market value of our common stock, and subject to forfeiture if one or more specified performance goals or minimum periods of service are not attained. Prior to the expiration of the restriction period, a grantee that has received a restricted stock award generally has the rights of a stockholder of Visteon, including the right to vote and to receive cash dividends on the shares subject to the award. If the Organization and Compensation Committee so determines, the holder of a restricted stock unit may receive cash payments equivalent in value to dividends paid on our common stock, either at the time the dividends are otherwise payable or upon the payment of the final award relating to such restricted stock unit. The Organization and Compensation Committee will determine in advance of each award the terms and conditions applicable to each award of restricted stock and restricted stock units, including the applicable performance criteria or minimum periods of service required, and whether awards of restricted stock units will be settled in cash or in shares of common stock, and may make certain adjustments to the performance criteria and the amount of final awards.

 
Performance Stock Rights and Other Stock Awards

      Subject to the limits discussed above, the Organization and Compensation Committee may authorize the award of performance stock rights to employees under the Incentive Plan. Performance stock rights represent the right to receive shares of our common stock if one or more specified performance goals are attained. If the Organization and Compensation Committee so determines, the holder of a performance stock right may receive cash payments equivalent in value to dividends paid on our common stock, either at the time the dividends are otherwise payable or upon the payment of the final award relating to such performance stock right. The Organization and Compensation Committee will determine in advance of each award the terms and conditions applicable to each award of performance stock right, including the applicable performance criteria, and whether awards of performance stock rights may be settled in cash or other stock equivalents, and may make certain adjustments to the performance criteria and the amount of final awards.

      The Organization and Compensation Committee also may grant other stock-based awards to such employees as it may select. These awards may include awards of restricted stock, stock units, “phantom stock” and options not otherwise specifically addressed above. The Organization and Compensation Committee may determine the time or times at which these awards will be made, the number of shares of common stock or stock units and the like to be granted or covered pursuant to such awards, including, whether such awards will be payable or paid in cash, common stock or otherwise, and whether the awards will be granted as a bonus for no consideration other than services rendered.

27


Table of Contents

 
Performance Cash Awards

      The Organization and Compensation Committee may award or authorize performance cash awards to such employees as it may select, and in such amounts as it may designate, subject to the terms of the Incentive Plan. The Organization and Compensation Committee determines the performance period and performance criteria for a performance cash award. Within 90 days of the beginning of a performance period, the Organization and Compensation Committee decides the targeted performance level at which a target award may be earned. The Organization and Compensation Committee decides the target award based on the employee’s level of responsibility and other factors. The target award, designated as a percentage of base salary, is based on achieving 100% of the performance goals established by the Organization and Compensation Committee for the performance period. The Organization and Compensation Committee also decides any minimum performance level below which no cash award would be paid. The maximum amount that may be granted to a covered employee as a final award with respect to one or more performance cash awards during any calendar year is $10,000,000.

      As soon as practicable following the completion of the performance period, the Organization and Compensation Committee determines the extent to which the participant achieved the performance goals and the amount of compensation to be awarded as a final award by applying the applicable performance formula against the accomplishment of the related performance goals. The Organization and Compensation Committee may, in its sole discretion, reduce the amount of any final award to any participant or increase the amount of any final award to any participant who is not a covered employee. In making such adjustments, the Organization and Compensation Committee shall take into account the extent to which the performance goals were achieved, individual performance, and such other factors as the Organization and Compensation Committee may deem relevant, such as a change in circumstances or unforeseen events during the performance period.

 
Additional Information

      Under the Incentive Plan, in the event of a merger, consolidation, reorganization, stock split, stock dividend or other event affecting our common stock, such adjustments as may be necessary (as determined by the Organization and Compensation Committee) to reflect such change will be made to prevent dilution or enlargement of the rights with respect to the overall limit, the option limit, the annual and aggregate stock right limits, the number of shares of common stock covered by each outstanding award, any other references in the Incentive Plan to a number of shares and the price per share in respect thereof.

 
Conditions

      Unless otherwise determined by the Organization and Compensation Committee, an individual’s rights under the Incentive Plan may not be assigned or transferred (except in the event of death). An individual’s rights under the Incentive Plan are subject to forfeiture for competitive activity or activity that is not in our best interest.

 
Funding

      All administrative expenses of the Incentive Plan will be paid for by the company and its participating subsidiaries.

 
Amendment and Termination of Plan

      Unless terminated earlier by the Board of Directors, the Incentive Plan will terminate on May 11, 2014. The Board of Directors may at any time terminate, modify or amend the Incentive Plan; provided, however, that the Board may not, without the approval of the stockholders, (1) increase the overall limit, the option limit, the performance cash limit or the annual and aggregate limits applicable to stock rights, restricted stock, restricted stock units and other stock-based awards, (2) extend the term of the plan, (3) permit a member of the Organization and Compensation Committee to participate, or (4) decrease the grant price of any outstanding option or stock appreciation right.

28


Table of Contents

      The Incentive Plan provides for acceleration of vesting and distribution of some plan awards in the event of a change of control of the company.

Other Information

      Since it is within the discretion of the Organization and Compensation Committee to determine which employees will receive grants under the Incentive Plan and the type and amount thereof, these matters cannot be specified at present. While nearly all of the approximately 17,000 salaried employees of Visteon and its subsidiaries are eligible under the literal terms of the Incentive Plan to receive grants under the plan, it is presently contemplated (and has been the Organization and Compensation Committee’s practice in the past) that grants of stock options and stock appreciation rights, and to a lesser extent if at all, grants of restricted stock and restricted stock units, would be made primarily to senior and middle managers, including the Named Executives, which currently includes approximately 820 employees. For stock option and restricted stock grants as well as other benefits awarded to our Named Executives in 2003 under our Incentive Plan see “Executive Compensation” beginning on page 10.

      On March 15 2004, the New York Stock Exchange reported a closing price of $9.33 for our common stock.

      The Board of Directors recommends that you vote FOR the approval of the Visteon Corporation 2004 Incentive Plan, as amended and restated.

Equity Compensation Plans

      The following table summarizes information as of December 31, 2003 relating to our equity compensation plans pursuant to which grants of stock options, stock appreciation rights, stock rights, restricted stock, restricted stock units and other rights to acquire shares of our common stock may be made from time to time.

Equity Compensation Plan Information

                         
Number of securities
Number of securities Weighted-average remaining available for
to be issued upon exercise price of future issuance under
exercise of outstanding equity compensation plans
outstanding options, options, warrants (excluding securities
warrants and rights and rights reflected in column(a))
Plan category (a)(1) (b) (c)(2)




Equity compensation plans approved by security holders
    13,642,436     $ 11.22       470,084  
Equity compensation plans not approved by security holders
                 
   
         
 
Total
    13,642,436               470,084  
   
         
 


(1)  Excludes 5,021,383 shares of restricted common stock issued pursuant to the Visteon Corporation 2000 Incentive Plan.
 
(2)  Excludes an indefinite number of securities that may be awarded under the Visteon Corporation Restricted Stock Plan for Non-Employee Directors. Such Plan provides for an annual, automatic grant of 3,000 restricted shares or stock units to each non-employee director of Visteon. There is no maximum number of securities that may be issued under this Plan, however, the Plan will terminate on May 9, 2011 unless earlier terminated by the Board of Directors. This Plan was approved by stockholders on May 9, 2001.

29


Table of Contents

ITEM 4. APPROVAL OF VISTEON CORPORATION

NON-EMPLOYEE DIRECTOR STOCK UNIT PLAN

      The next proposal on the agenda for the Annual Meeting will be to approve the adoption of the Visteon Corporation Non-Employee Director Stock Unit Plan (the “Directors Plan”). The Board of Directors, following the approval and recommendation of the Corporate Governance and Nominating Committee of the Board of Directors, adopted the Directors Plan on February 11, 2004, subject to stockholder approval at the Annual Meeting.

      The Corporate Governance and Nominating Committee, which is responsible for establishing non-employee director compensation, reviewed trends and practices with respect to director compensation, including a study performed by an outside consultant, and determined that the adoption of the Directors Plan is in the best interests of the company and its stockholders. By maintaining non-employee director compensation that is competitive with its peers, the company will be better able to retain and attract qualified directors. Also, we believe that awarding stock units that must be held until service on the Board ends will further align the economic interests of the directors with long-term stockholders of the company.

Summary of the Directors Plan

      The following is only a summary of the Directors Plan and is qualified in its entirety by reference to its full text, a copy of which is attached as Appendix C to this proxy statement.

 
Plan Administration

      The Directors Plan is intended to be self-administering. However, an administrative committee composed of the non-participating members of the Board has the authority (i) to interpret and administer the Directors Plan; (ii) establish, amend, suspend or waive rules of regulations of the Directors Plan; and (iii) take any other action it deems necessary for administration of the Directors Plan. Also, the Organization and Compensation Committee has discretion to determine if distributions under the Directors Plan will be made in common stock or cash.

      All administrative expenses of the Directors Plan will be paid for by the company.

 
Participants

      Under the Directors Plan, a participant is defined as each member of the board who is not an officer or employee of the company or any of its subsidiaries and who has a book-entry account under the plan. There are currently eight eligible participants under the Directors Plan, and each participant will receive an award as of the day after the Annual Meeting.

 
Stock Unit Awards and Dividend Equivalents

      Under the Directors Plan, as of the day immediately after the date of the company’s annual stockholders meetings, each participant will have credited to a book-entry account of the company a number of Visteon stock units equal to the result obtained by dividing (A) $10,000 by (B) the average of the high and low prices of a share of our common stock sold on the New York Stock Exchange on such date.

      Each month each participant will have credited to a book-entry account of the company a number of Visteon stock units determined by dividing the participant’s deemed dividends for such month by the average of the high and low prices a share of our common stock sold on the New York Stock Exchange on the last trading day of such month.

30


Table of Contents

 
Distributions

      Each participant remains 100% vested in all amounts credited to his or her account under the Directors Plan. Distributions of amounts in a participant’s account will be made either in a single sum or ten annual installments, at the advance election of the participant, commencing on or about January 15th of the calendar year following the calendar year in which the participant terminates service as a non-employee director of the company.

 
Term

      The Directors Plan will terminate on May 12, 2014, unless terminated earlier by the Board of Directors. No amendment or termination of the Directors Plan will adversely affect the rights of any participant or beneficiary to benefits then accrued without the written consent of the affected participant or beneficiary.

      The Board of Directors recommends that you vote FOR the adoption of the Visteon Corporation Non-Employee Director Stock Unit Plan.

ITEM 5. SHAREHOLDER PROPOSAL RELATING TO THE ADOPTION OF

A STOCKHOLDER RIGHTS PLAN

      The next proposal on the agenda for the Annual Meeting will be a shareholder proposal relating to the adoption of a stockholder rights plan by the company. In accordance with SEC rules, the text of the shareholder proposal is printed exactly as it was submitted. John Chevedden, 2215 Nelson Avenue, Redondo Beach, California 90278, has informed the company that he intends to present for consideration at the Annual Meeting the following proposal and has furnished the following statement in support of the proposal:

5 — Shareholder Input on Poison Pills

RESOLVED: Shareholders request that our Directors increase shareholder rights and submit the adoption, maintenance or extension of any poison pill to a shareholder vote as a separate ballot item at the earliest possible shareholder election. Also once this proposal is adopted, any dilution or removal of this proposal is requested to be submitted to a shareholder vote as a separate ballot item at the earliest possible shareholder election.

We as shareholders voted in support of this topic:

             
Year Yes Vote


  2002       63%  
  2003       65%  

These percentages are based on yes and no votes cast. The 35% vote for our Directors’ objection to this proposal topic in 2003 was only 20% of Visteon shares outstanding. The Council of Institutional Investors www.cii.org formally recommends adoption of this proposal topic and also proposals which are supported by a majority of votes cast (both points apply to Visteon). Institutional investors in general owned 63% of our stock in 2003.

This topic also won an overall 60% yes-vote at 79 companies in 2003. I do not see how our Directors could object to this proposal because it gives our Directors the flexibility to ignore our shareholder input if our Directors seriously believe they have a good reason.

Ray T. Chevedden, 5965 S. Citrus Ave., Los Angeles, Calif. 90043 and Jack Leeds submitted this proposal.

31


Table of Contents

     Pills Entrench Current Management

Poison pills entrench the current management, even when it’s doing a poor job. Pills water down shareholders’ votes and deprive them of a meaningful voice in corporate affairs.
      From “Take on the Street” by Arthur Levitt, SEC Chairman, 1993-2001

     Poison Pill Negative

The key negative of poison pills is that pills can preserve management deadwood.
      Source: Morningstar.com

     The Potential of a Tender Offer Can Motivate Our Directors

Hectoring directors to act more independently is a poor substitute for the bracing possibility that shareholders could sell the company out from under its present management.
      Source: Wall Street Journal, Feb. 24, 2003

     Diluted Stock

An anti-democratic management scheme [poison pill] to flood the market with diluted stock is not a reason that a tender offer for our stock should fail.
      Source: The Motley Fool

     Like a Dictator

Poison pills are like a dictator who says, “Give up more of your freedom and I’ll take care of you.
      T.J. Dermot Dunphy, CEO of Sealed Air (NYSE) for 25 years

A response by our directors, which could still allow our directors to give a poison pill with not even a shareholder vote, would not substitute for this proposal.

     Director Confidence in their Oversight

I believe that a Board of Directors, which takes all steps within its power to adopt this proposal topic, is sending a powerful signal of confidence in its own oversight skill and strategy.

Shareholder Input on Poison Pills

Yes on 5
 
The Board of Directors Recommends that You Vote Against this Proposal for the Reasons Set Forth Below:

      Visteon has never had a shareholders rights plan and currently has no present intention of implementing one. That being said, the proposal as drafted is overly restrictive and could prevent the Board in certain circumstances from fully exercising its fiduciary duties as required by law. By way of example, if due to unexpected circumstances the company ever faced a takeover attempt, the Board of Directors would be duty bound to consider the alternatives, and determine the course that would be in the best interests of the stockholders. If such takeover attempt were determined by the Board to be unfair or abusive, it is possible that the Board could recommend a rights plan as the preferred approach under those circumstances to best protect the interests of the stockholders. Again, while such circumstances are not anticipated, we believe it is essential for the Board to retain the flexibility to make such a decision expeditiously in order to fulfill its legal duties.

32


Table of Contents

      At the same time, we also strongly believe that stockholders should have a meaningful ability to participate in fundamental decisions that affect corporate viability, and are mindful of the fact that our stockholders have voiced their desire to be involved in any future decision to adopt a rights plan. For this reason, the Board of Directors has recently adopted a policy statement on poison pills which addresses this interest of the stockholders, and also ensures that the Board can fulfill its duties. The policy statement provides that adoption of a future poison pill or rights plan would require prior stockholder approval unless the Board of Directors, including a majority of its independent members, in its exercise of its fiduciary responsibilities, deems it to be in the best interests of the company’s stockholders to adopt a poison pill without the delay in adoption that would come from the time reasonably anticipated to be necessary to seek stockholder approval. In that case, the plan must be ratified by stockholders or expire, without being renewed or replaced, within one year. The Board’s decision to adopt this policy statement was based on, among other things, the recommendation of the Corporate Governance and Nominating Committee, which is comprised solely of independent directors. This Committee will review the policy statement at least annually and report to the Board of Directors with its recommendations.

      We believe this policy meets the objective of this shareholder proposal while preserving the Board’s flexibility to act expeditiously in extraordinary circumstances. The full text of the policy statement is available on our website at www.visteon.com.

  For these Reasons, the Board of Directors Recommends that You Vote Against this Proposal.

ITEM 6. SHAREHOLDER PROPOSAL RELATING TO A CODE FOR

INTERNATIONAL OPERATIONS

      The next proposal on the agenda for the Annual Meeting will be a shareholder proposal relating to the adoption of a code for the company’s international operations. In accordance with SEC rules, the text of the shareholder proposal is printed exactly as it was submitted. Three stockholders, Congregation of the Benedictine Sisters, P.O. Box 28037, San Antonio, Texas 78228; Congregation of the Sisters of Charity of the Incarnate Word, 6510 Lawndale, Houston, Texas 77223; and the Christus Health Fund, 2600 North Loop West, Houston, Texas 77092, have informed the company that they intend to jointly present for consideration at the Annual Meeting the following proposal and have furnished the following statement in support of their proposal:

        PROPOSAL FOR A GLOBAL SET OF CORPORATE STANDARDS  
 
        Whereas, Visteon, as a global corporation, faces increasingly complex economic problems as the international social and cultural context within which Visteon operates changes.  
 
        A poll on corporate social responsibility found that 60% of U.S. shareowners say that a company’s record on its broader social responsibilities influenced their decision to purchase or sell shares. Respondents ranked “equal and fair treatment of all employees” more highly than “providing quality products at the lowest possible price” as a key expectation of corporate behavior. (Environics International, 2/2001)  
 
        Companies are faced with ethical and legal concerns arising from diverse cultures and political and economic contexts. Today, management must address issues that include human rights, workers’ right to organize and bargain collectively, non-discrimination in the workplace and sustainable community development. Some major corporations that are Visteon customers have adopted codes that they are using to apply to their suppliers.  

33


Table of Contents

        We believe global companies need to implement comprehensive codes of conduct, such as those found in the “Principles for Global Corporate Responsibility: Bench Marks for Measuring Business Performance,” developed by an international group of religious investors. (April 2003, www.bench-marks.org) Companies need to formulate policies to reduce reputational risks in the global marketplace. One practical application of such policy is to encourage local and national maquiladora associations and appropriate civil authorities to apply resources toward solving murders and disappearances of the hundreds of women, including maquiladora workers, in the Juarez, Mexico area.  
 
        Visteon should be in a position to assure shareholders that its employees are treated fairly and paid a sustainable living wage wherever they work in the global economy. One element of ensuring compliance is the utilization of independent monitors made up of respected local human rights, religious and other non-governmental organizations that know the local culture. A number of global companies are developing credible code enforcement mechanisms that include independent monitoring.  
 
        Improving the quality of life for employees and their communities can lead to increased productivity, consumer confidence, enhancing the bottom line for the company.  
 
        RESOLVED, the shareholders request the Board of Directors to review or amend, where applicable, its code or standards for its international operations and report a summary of this review to shareholders by October 2004.  

Supporting Statement

        We recommend the review include:  

        1. A description of policies designed to protect human rights — civil, political, social, cultural and economic — based on internationally recognized human rights standards, including the International Labor Organizations’ core labor standards.  
 
        2. A report of efforts to ensure that the company does not employ children under the age of fifteen, or younger than the age of completing compulsory education in the country of manufacture where such age is higher than fifteen.  
 
        3. A report of company policies ensuring that there is no use of forced labor, whether in the form of prison labor, indentured labor or bonded labor.  
 
        4. Establishment of consistent standards for workers’ health and safety, practices for handling hazardous wastes and protection of the environment, as well as promoting a fair and dignified quality of life for workers and their communities.  

 
The Board of Directors Recommends that You Vote Against this Proposal for the Reasons Set Forth Below:

      The cornerstone of Visteon’s mission to be the supplier, employer and community citizen of choice lies in its unwavering commitment to corporate ethics and compliance. Immediately after becoming an independent, public company, a comprehensive ethics and compliance program that directly touches the issues raised in this proposal, as well as other issues that the company feels are essential to realizing our mission, was implemented.

34


Table of Contents

      Visteon’s ethics and compliance program is based on our ethics policy, entitled “A Pledge of Integrity”, a copy of which is available on the company’s website (www.visteon.com). This policy describes the company’s expectations regarding the standards of behavior and conduct of employees, and underscores our dedication, at all levels of the organization, to our core values and ethical standards. This past year, we amended certain sections of “A Pledge of Integrity” to address some of the specific issues which are most important to the shareholder proponent in this case. For example, while we have certainly always supported the principle of prohibiting forced labor and child labor, our original policy did not specifically call out this particular issue. At the suggestion of this shareholder proponent, however, we have added this point to our “Pledge of Integrity”.

      Visteon’s ethics and compliance program includes several elements that ensure our employees thoroughly understand the policy, effectively communicate it throughout the organization, and adhere to it in all of their business dealings. The policy is translated into 9 different languages and is distributed to our employees throughout the world. Senior leadership (approximately 4,000 employees) has been taken through an interactive ethics awareness training session and has, in turn, trained their own organizations. To date, approximately 13,000 employees throughout the world have had the training and certified compliance with the policy by signing a certificate. This senior leadership team is required to re-certify every other year. The policy is also presented to new employees during orientation. Other elements of our ethics and compliance program include a bi-annual update of our compliance plan, which identifies additional training for specific groups of employees in ethics areas relevant to the work they perform, on-line tools to reinforce the basic compliance training, and an appointed Director of Compliance who is responsible for overseeing the program and ensuring Visteon’s ethics and compliance activities remain on the leading edge of good corporate governance practices. Training material is regularly refreshed and updated. Last year, a series of ethics videos entitled, “Ethics Quest”, was designed and produced by Visteon for use in our on-going training programs. This video series won a prestigious communications award last year for demonstrating Visteon’s “dedication to enriching the quality of life for people through the communication medium.” As part of our overall program, the company also maintains a “hotline” and encourages employees to report any concerns or failures in compliance. Further, the company has a compliance committee, supported by the internal audit function, that audits compliance on an on-going basis, investigates potential issues, and provides a summary of its findings to the Audit Committee of the Board of Directors on a regular basis. Finally, Visteon has implemented a process under which employees can bring any concerns regarding matters of ethics and compliance to the direct attention of our Audit Committee.

      As an extension of our ethics program, the company has adopted the Global Sullivan Principles of Corporate Responsibility (the “Principles”), a code of conduct that provides a framework by which socially responsible companies commit to align their policies toward promoting equal opportunity and development of employees, environmental responsibility and community involvement wherever it conducts business. Through an annual report presented to the Audit Committee, the company describes its activities and compliance within our ethics areas as well as the policies included in the Principles. The company has also recently formed a new Board committee, the Corporate Responsibility Committee, to give the appropriate level of visibility and oversight to this very important area of corporate citizenship and responsibility.

      We feel the strength and breadth of our ethics and compliance program, as well as our commitment to the Principles, clearly demonstrates our sincere commitment to the values and principles set forth in our “Pledge of Integrity” booklet, and to those included in this proposal.

For these Reasons, the Board of Directors Recommends that You Vote Against this Proposal.

35


Table of Contents

ITEM 7. SHAREHOLDER PROPOSAL RELATING TO VOTING LEVERAGE

      The next proposal on the agenda for the Annual Meeting will be a shareholder proposal relating to voting leverage. In accordance with SEC rules, the text of the shareholder proposal is printed exactly as it was submitted. Mark Latham, 177 Telegraph Road, Bellingham, Washington 98226, has informed the company that he intends to present for consideration at the Annual Meeting the following proposal and has furnished the following statement in support of the proposal:

Voting Leverage Proposal

      WHEREAS shareowners should have the right to vote any way they want (except for buying and selling votes);

      WHEREAS many individual shareowners lack the time and expertise to make the best voting decisions themselves, yet prefer not to always follow directors’ recommendations, because of possible conflicts of interest;

      WHEREAS several institutional investors now publish their voting decisions more than one week before each company’s voting deadline;

      THEREFORE BE IT RESOLVED that Visteon Corporation shareowners request the Board of Directors to study and report on the feasibility of enabling shareowners to conveniently imitate an institutional investor’s voting decisions, on all matters put to shareowner vote except director elections. (Director elections are excluded here to satisfy SEC rule 14a-8(i)(8).). So for example, besides being offered a convenient choice of voting the entire proxy as the Board recommends, perhaps shareowners could be offered a similarly convenient choice of voting the entire proxy (except director elections) the same way the Domini Social Investments votes its shares.

     Supporting Statement:

      Institutional investors that publish their voting decisions on the worldwide web include:

  •  CalPERS (California Public Employees’ Retirement System) at www.calpers-governance.org/alert/proxy
 
  •  Calvert Group at www.calvert.com/planning ____2627.html
 
  •  Domini Social Investments at www.domini.com/shareholder-advocacy/ Proxy-Voting
 
  •  MMA Praxis Mutual Funds at www.mmapraxis.com/corporate/proxy ____voting ____set.html
 
  •  Ontario Teachers’ Pension Plan at www.otpp.com/web/proxyvot.nsf/proxyvotes?openform
 
  •  Pax World Fund at www.paxfund.com/proxyvote4.htm

      In particular, Domini Social Investments published voting decisions for last year’s Visteon Corporation proxy.

      In the proponent’s opinion:

  •  One of the main reasons for having shareowner voting at all is that there would be conflicts of interest inherent in leaving all decisions to the Board.
 
  •  Simply following the Board’s voting recommendations does little to counterbalance such conflicts.
 
  •  Introducing competing sources of convenient guidance for individual shareowners could help make voting more independent of the Board.

      Example of shareowners’ lack of time and expertise:

      http://boards.fool.com/ Message.asp?mid=19682916: “I tried to read the proxy statement, but I still don’t understand whether the change is shareholder friendly or not.”

36


Table of Contents

      Example of shareowners’ mistrust of boards:

      Harris Poll, September 2003, at www.sec.gov/rules/proposed/s71903/gmcentee092403.pdf: “Support for corporate management nominees is also mixed with majorities of shareholders having withheld support from a management nominee.”

      The conflicts of interest among managers, directors and shareowners are described in Robert Monks’ and Nell Minow’s 1996 book Watching the Watchers, along with shareowners’ “free rider” and “rational ignorance” problems.

      The potential benefits of this proposal are discussed in the article “Vote Your Stock” on the web at www.corpmon.com/publications.htm.

 
The Board of Directors Recommends that You Vote Against this Proposal for the Reasons Set Forth Below:

      In our proxy statements, the Board of Directors provides Visteon’s stockholders with voting recommendations and information on which to make voting decisions based on the Board’s knowledge of the company and its strategic plans as well as input from management and outside advisers. The proposal described above requests that the Board study and report on the feasibility of enabling stockholders to imitate an unspecified institutional investor’s voting decisions through the proxy process. For the following reasons, we do not believe that there is sufficient usefulness to stockholders to justify the time or expense of conducting the requested study and report. Further, we believe, as a matter of law, that the rules and regulations which govern proxy matters would likely preclude ever utilizing the mechanism which we are being requested to study.

      As noted in the proposal itself, various institutional investors publish their voting decisions on the Internet more than a week before the company’s voting deadline. The proposal even lists the specific websites where stockholders can easily access those voting decisions. Besides these websites, there are dozens of other sources with research data, analyses, and other information regarding the company to assist the stockholders in making their voting decisions. We believe that stockholders typically want to read and understand the relevant information before making their voting decisions. Accordingly, for those stockholders who may be inclined to imitate any or all of the voting decisions of a particular institutional investor, we suggest the most convenient and appropriate means would be to simply access the relevant website and then complete the proxy as recommended by that preferred investor. This process is simple, expedient, and would give the stockholder any additional background it may need or want to make an informed decision. Given this very convenient means that already exists to be able to imitate an institutional investor’s voting, we believe incurring company time and expense to study the issue cannot be justified.

      Because of its direct involvement in the oversight of the company, the Board of Directors believes it is in the best position to make informed recommendations to the company’s stockholders with respect to the matters to be voted on. That being said, to the extent any stockholder wishes to vote its shares in line with a particular institutional investor, there already exists a very convenient means of doing so that does not require further diversion of corporate resources.

 
For these Reasons, the Board of Directors Recommends that You Vote Against this Proposal.

Other Matters

      Neither the company nor its directors intend to bring before the Annual Meeting any matters other than the election of the four directors, the ratification of the company’s independent auditors, the approval of two equity-based plans and the consideration of three shareholder proposals. Also, they have no present knowledge that any other matters will be presented by others for action at the meeting.

2005 STOCKHOLDER PROPOSALS AND NOMINATIONS

      Stockholder proposals that are intended to be included in the company’s proxy materials for the 2005 Annual Meeting must be presented pursuant to Securities and Exchange Commission Rule 14a-8 and received by the Secretary of the company no later than December 1, 2004.

37


Table of Contents

      A stockholder that intends to present business at the 2005 Annual Meeting other than pursuant to Rule 14a-8, which may not be included in the company’s proxy materials, must comply with the requirements set forth in the company’s By-Laws. Among other things, a stockholder must give written notice of its intent to bring business before the 2005 Annual Meeting to the company no later than December 1, 2004. However, if the date for the 2005 Annual Meeting is more than 30 calendar days prior to, or after, May 12, 2005, then such written notice must be received no later than the tenth day following the day on which we announce the annual meeting date to the public. This written notice must contain specified information as set forth in the company’s By-Laws.

      You may recommend any person to be a director by writing to the Secretary of the company. The deadlines for submitting written notice nominating a director is the same as that set forth above for other matters proposed to be presented at the 2005 Annual Meeting. This notice also must include, among other things, the name, age, address, occupations and stockholdings of the proposed nominee.

      To the extent permitted, the company may exercise discretionary voting authority under proxies it solicits to vote in accordance with its best judgment on any such stockholder proposal or nomination.

MISCELLANEOUS

      The company has adopted a code of business conduct and ethics entitled, “A Pledge of Integrity”, which is applicable to the directors and all employees of the company, including the principal executive officer, the principal financial officer and the principal accounting officer. A copy of the ethics policy is available on our website at www.visteon.com, by contacting our Shareholder Relations department in writing at 17000 Rotunda Drive, Dearborn, MI 48120; by phone (877) 367-6092; or via email at vcstock@visteon.com.

      Visteon’s 2003 Annual Report, including consolidated financial statements, is being mailed to you with this proxy. Stockholders may obtain, at no charge, a copy of our Annual Report on Form 10-K for the year ended December 31, 2003, including exhibits thereto, by contacting our Shareholder Relations department in writing at 17000 Rotunda Drive, Dearborn, MI 48120; by phone (877) 367-6092; or via email at vcstock@visteon.com. Our periodic and current reports, including our Annual Report on Form 10-K, and any amendments thereto are also available through our internet website at www.visteon.com.

      Securities and Exchange Commission rules allow us to send a single set of our annual report and proxy statement to any household at which two or more stockholders reside if we believe the stockholders are members of the same family. These rules benefit both you and Visteon. It reduces the volume of duplicate information received at your household and helps to reduce Visteon’s printing and mailing expenses. Each stockholder will continue to receive a separate proxy card or voting instruction card.

      If your household received a single set of disclosure documents for this year, but you would prefer to receive your own copy, please contact our transfer agent, The Bank of New York, by calling their toll free number, (877) 881-5962.

      If you would like to receive your own set of Visteon’s annual disclosure documents in future years, follow the instructions described below. Similarly, if you share an address with another Visteon stockholder and together both of you would like to receive only a single set of Visteon’s annual disclosure documents, follow these instructions:

      If your Visteon shares are registered in your own name, please contact our transfer agent, The Bank of New York, and inform them of your request by calling them at (877) 881-5962, writing to them at Visteon Shareholder Services, c/o The Bank of New York, P.O. Box 11258, New York, NY 10286 or by email at vcshareholder@bankofny.com.

      If a broker or other nominee holds your Visteon shares, please contact ADP and inform them of your request by calling them at (888) 603-5847 or writing to them at Householding Department, 51 Mercedes Way, Edgewood, NY 11717. Be sure to include your name, the name of your brokerage firm and your account number.

38


Table of Contents

APPENDIX A

Visteon Director Independence Guidelines

      A director will be deemed “independent,” and to have no direct or indirect material relationship with the company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the company), if he/she meets all of the following criteria:

        1. Has not been an employee of Visteon or its subsidiaries within the last three years.
 
        2. Has not been affiliated with or employed by Visteon’s present or former independent auditor within the last three years.
 
        3. Has not been employed by a company in which, concurrently with such employment, an executive officer of Visteon served on the compensation committee of such company within the last three years.
 
        4. Has not received more than $100,000 per year in direct compensation from Visteon or its subsidiaries within the last three years, other than director or committee fees and pensions or other forms of deferred compensation for prior service (and not contingent on continued service).
 
        5. Is not currently an executive officer or employee of a company that, within the past three years, has made payments to, or received payments from, Visteon or its subsidiaries for property or services in an amount which, in any single fiscal year, exceeded the greater of $1 million or 2% of such other company’s consolidated gross revenues for such year.
 
        6. Has no immediate family member(1) who (i) has been employed by Visteon as an officer, (ii) has been employed by Visteon’s independent auditor as a partner, principal or manager, (iii) has been employed as a an officer of another company where a Visteon executive officer served on the compensation committee of that company, (iv) received more than $100,000 per year in direct compensation from Visteon or its subsidiaries other than pensions or other forms of deferred compensation for prior service (and not contingent on continued service), or (v) is currently an officer of a company that has made payments to, or received payments from, Visteon or its subsidiaries for property or services in an amount which, in any single fiscal year, exceeded the greater of $1 million or 2% of such other company’s consolidated gross revenues for such year, in each case, within the last three years.
 
        7. Is not currently an executive officer of a charitable organization that has received, within the preceding three years, contributions from Visteon or its subsidiaries in any single fiscal year in excess of the greater of $1 million or 2% of such charitable organization’s consolidated gross revenues for such year.

March 16, 2004


(1)  A director’s immediate family shall include his or her spouse, parents, children, siblings, mothers and fathers-in-law, sons and daughters-in-law and brothers and sisters-in-law and anyone (other than domestic employees) who shares such director’s home.

A-1


Table of Contents

APPENDIX B

VISTEON CORPORATION 2004 INCENTIVE PLAN

(formerly, the Visteon Corporation 2000 Incentive Plan, as amended and restated
effective as of May 12, 2004)
 
Section 1.      Purpose and Definitions

      (a) Purpose. This Plan, known as the “Visteon Corporation 2004 Incentive Plan”, is intended to provide an incentive to certain employees and certain non-employees who provide services to Visteon Corporation and its subsidiaries, in order to encourage them to remain in the employ of the Company and its subsidiaries and to increase their interest in the Company’s success. It is intended that this purpose be effected through awards or grants of stock options and various other rights with respect to shares of the Company’s common stock, and through performance cash awards, as provided herein, to such eligible employees.

      (b) Definitions. The following terms shall have the following respective meanings unless the context requires otherwise:

        (1) The term “Affiliate” or “Affiliates” shall have the meaning set forth in Rule 12b-2 promulgated under Section 12 of the Exchange Act.
 
        (2) The term “Beneficial Owner” shall mean beneficial owner as set forth in Rule 13d-3 under the Exchange Act.
 
        (3) The term “Board” shall mean the Board of Directors of Visteon Corporation.
 
        (4) The term “Change in Control” shall mean the occurrence of any one of the following:

        (A) any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its Affiliates) representing 40% or more of the combined voting power of the Company’s then outstanding securities, excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in clause (i) of paragraph (C) below;
 
        (B) within any twelve (12) month period, the following individuals cease for any reason to constitute a majority of the number of directors then serving: individuals who, on the effective date of this Plan, constitute the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Board or nomination for election by the Company’s stockholders was approved or recommended by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors on the date hereof or whose appointment, election or nomination for election was previously so approved or recommended;
 
        (C) there is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation, other than (i) a merger or consolidation which results in the directors of the Company immediately prior to such merger or consolidation continuing to constitute at least a majority of the board of directors of the Company, the surviving entity or any parent thereof or (ii) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities Beneficially Owned by such Person any securities acquired directly from the Company or its Affiliates) representing 40% or more of the combined voting power of the Company’s then outstanding securities;

B-1


Table of Contents

        (D) the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement for the sale or disposition by the Company of more than 50% of the Company’s assets, other than a sale or disposition by the Company of more than 50% of the Company’s assets to an entity, at least 50% of the combined voting power of the voting securities of which are owned by stockholders of the Company in substantially the same proportions as their ownership of the Company immediately prior to such sale; or
 
        (E) any other event that the Board, in its sole discretion, determines to be a Change in Control for purposes of this Plan.

        Notwithstanding the foregoing, a “Change in Control” shall not be deemed to have occurred by virtue of the consummation of any transaction or series of integrated transactions immediately following which the record holders of the common stock of the Company immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns all or substantially all of the assets of the Company immediately following such transaction or series of transactions.
 
        (5) The term “Code” shall mean the Internal Revenue Code of 1986, or any successor thereto, as the same may be amended and in effect from time to time.
 
        (6) The term “Committee” shall mean the committee appointed pursuant to Section 2 to administer the Plan.
 
        (7) The term “Company” shall mean Visteon Corporation.
 
        (8) The term “Covered Executive” shall mean the Chief Executive Officer and the other four highest compensated officers of the Company or any Subsidiary at year-end whose compensation is required to be reported in the Summary Compensation Table of the Company’s Proxy Statement.
 
        (9) The term “Employee” shall mean an employee of the Company or any Subsidiary. The term “Employee” shall also be deemed to include any person who is an employee of any joint venture corporation or partnership, or comparable entity, in which the Company or Subsidiary has a substantial equity interest, provided such person was an employee of the Company or Subsidiary immediately prior to becoming employed by such entity, and designated non-employees who provide services to the Company or a Subsidiary.
 
        (10) The term “Exchange Act” shall mean the Securities Exchange Act of 1934, or any successor thereto, as the same may be amended and in effect from time to time.
 
        (11) The term “Fair Market Value” shall mean the average of the highest and lowest sale prices at which a share of Stock shall have been sold regular way on the New York Stock Exchange on the date of grant of any Option or Stock Appreciation Right or other relevant valuation date. In the event that any Option or Stock Appreciation Right shall be granted, or other relevant valuation date shall occur, on a date on which there were no such sales of Stock on the New York Stock Exchange, the Fair Market Value of a share of Stock shall be deemed to be the average of the highest and lowest sale prices on the next preceding day on which there were such sales.
 
        (12) The term “Final Award” shall mean the amount of compensation to be awarded finally to the Participant who holds a Performance Cash Right pursuant to Section 3, the number of shares of Stock to be awarded finally to the Participant who holds a Performance Stock Right pursuant to Section 5, the number of shares of Restricted Stock to be retained by the Participant who holds Restricted Stock pursuant to Section 6, or the number of shares of Stock or the amount of compensation to be awarded finally to a Participant who holds Restricted Stock Units pursuant to Section 6, in each case as determined by the Committee taking into account the extent to which the Performance Goals have been satisfied.

B-2


Table of Contents

        (13) The term “Option” or “Options” shall mean the option to purchase Stock in accordance with Section 7 and such other terms and conditions as may be prescribed by the Committee. An Option may be either an “incentive stock option”, as such term is defined in the Code, or shall otherwise be designated as an option entitled to favorable treatment under the Code (“ISO”) or a “nonqualified stock option” (“NQO”). ISOs and NQOs are individually called an “Option” and collectively called “Options”.
 
        (14) The term “Other Stock-Based Awards” shall mean awards of Stock or other rights made in accordance with Section 8.
 
        (15) The term “Participant” shall mean an Employee who has been designated for participation in the Plan.
 
        (16) The term “Performance Cash Right” shall mean the right to receive, pursuant to Section 3, a cash payment as described in the Participant’s award agreement, taking into account the Target Award and the Performance Formula, upon the attainment of one or more specified Performance Goals, subject to the terms and provisions of the award agreement and the Plan.
 
        (17) The term “Performance Goals” shall mean, with respect to any Performance Cash Right, Performance Stock Right, performance-based Restricted Stock or performance-based Restricted Stock Unit granted to a Participant who is a Covered Executive, a performance measure that is based upon one or more of the following objective business criteria established by the Committee with respect to the Company and/or any Subsidiary, division, business unit or component thereof: asset charge, asset turnover, return on sales, capacity utilization, capital employed in the business, capital spending, cash flow, cost structure improvements, complexity reductions, customer loyalty, diversity, earnings growth, earnings per share, economic value added, environmental health and/or safety, facilities and tooling spending, hours per component, increase in customer base, inventory turnover, market price appreciation, market share, net cash balance, net income, net income margin, net operating cash flow, operating profit margin, order to delivery time, plant capacity, process time, profits before tax, quality, customer satisfaction, return on assets, return on capital, return on equity, return on net operating assets, return on sales, revenue growth, safety, sales margin, sales volume, total stockholder return, production per employee, warranty performance to budget, variable margin and working capital. With respect to any Right granted to a Participant who is not a Covered Executive, performance goals may be based on one or more of the business criteria described above or any other criteria based on individual, business unit, group or Company performance selected by the Committee. The Performance Goals may be expressed in absolute terms or relate to the performance of other companies or to an index.
 
        (18) The term “Performance Formula” shall mean a formula to be applied in relation to the Performance Goals in determining the amount of cash earned under a Performance Cash Right granted pursuant to Section 3, the number of shares of Stock earned under a Performance Stock Right granted pursuant to Section 5, performance-based Restricted Stock granted pursuant to Section 6, or the amount of cash or shares of Stock earned under performance-based Restricted Stock Units granted pursuant to Section 6, in each case expressed as a percentage of the Target Award.
 
        (19) The term “Performance Period” shall mean the period of time for which performance with respect to one or more Performance Goals with respect to any Performance Cash Right, Performance Stock Right, Restricted Stock or Restricted Stock Unit award is to be measured, with such period commencing not earlier than 90 days prior to the date of grant of such Right.
 
        (20) The term “Performance Stock Right” shall mean the right to receive, pursuant to Section 5 and without payment to the Company, up to the number of shares of Stock described in the Participant’s award agreement upon the attainment of one or more specified Performance Goals, subject to the terms and provisions of the award agreement and the Plan.

B-3


Table of Contents

        (21) The term “Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (A) the Company or any of its subsidiaries, (B) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, (C) an underwriter temporarily holding securities pursuant to an offering of such securities, or (D) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of Stock of the Company.
 
        (22) The term “Plan” shall mean this Visteon Corporation 2004 Incentive Plan (formerly known as the Visteon Corporation 2000 Incentive Plan) as the same may be amended and in effect from time to time.
 
        (23) The term “Plan Awards” shall mean awards of cash or grants of Performance Stock Rights, Restricted Stock, Restricted Stock Units, Options, Stock Appreciation Rights and various other rights with respect to shares of Stock.
 
        (24) The term “Restricted Stock” means Stock issued to a Participant pursuant to Section 6 that is subject to forfeiture if one or more specified Performance Goals or minimum periods of service are not attained.
 
        (25) The term “Restricted Stock Unit” means an award granted pursuant to Section 6 consisting of a unit credited to a hypothetical account, valued based on the Fair Market Value of Visteon Stock, and is subject to forfeiture if one or more specified Performance Goals or minimum periods of service are not attained.
 
        (26) The term “Right” shall mean a Performance Cash Right, Performance Stock Right, a Restricted Stock award, or a Restricted Stock Unit, as required by the context.
 
        (27) The term “Stock Appreciation Right” shall mean the right to receive, without payment to the Company, an amount of cash or Stock as determined in accordance with Section 7, based on the amount by which the Fair Market Value of a share of Stock on the relevant valuation date exceeds the grant price.
 
        (28) The term “Subsidiary” shall mean (A) any corporation a majority of the voting stock of which is owned directly or indirectly by the Company or (B) any limited liability company a majority of the membership interest of which is owned, directly or indirectly, by the Company.
 
        (29) The term “Stock” shall mean shares of the Company’s common stock, par value $1.00 per share.
 
        (30) The term “Target Award” shall mean the amount of compensation to be earned by a Participant under a Performance Cash Right or the number of shares of Stock, subject to adjustment pursuant to Section 13, to be earned by a Participant under a Performance Stock Right, if all of the Performance Goals with respect to such Right are achieved.

B-4


Table of Contents

 
Section 2.      Administration

      (a) Committee. The Plan shall be administered by the Organization & Compensation Committee of the Board consisting of not less than two (2) members of the Board who meet the “outside” director requirements of Section 162(m) of the Code and the “non-employee director” requirements of Rule 16b-3(b)(3) of the Exchange Act, or by any other committee appointed by the Board, provided the members of such committee meet such requirements. The Committee shall administer the Plan and perform such other functions as are assigned to it under the Plan. The Committee is authorized, subject to the provisions of the Plan, from time to time, to establish such rules and regulations as it may deem appropriate for the proper administration of the Plan, and to make such determinations under, and such interpretations of, and to take such steps in connection with, the Plan and the Plan Awards as it may deem necessary or advisable, in each case in its sole discretion. The Committee’s decisions and determinations under the Plan need not be uniform and may be made selectively among Participants, whether or not they are similarly situated. Any authority granted to the Committee may also be exercised by the Board, except to the extent that the grant or exercise of such authority would cause any qualified performance based award to cease to qualify for exemption under Section 162(m) of the Code. To the extent that any permitted action taken by the Board conflicts with any action taken by the Committee, the Board action shall control.

      (b) Delegation of Authority. The Committee may delegate any or all of its powers and duties under the Plan, including, but not limited to, its authority to make awards under the Plan or to grant waivers pursuant to Section 10, to one or more other committees (including a committee consisting of two or more corporate officers) as it shall appoint, pursuant to such conditions or limitations as the Committee may establish; provided, however, that the Committee shall not delegate its authority to (1) act on matters affecting any Participant who is subject to the reporting requirements of Section 16(a) of the Exchange Act, or the liability provisions of Section 16(b) of the Exchange Act (any such Participant being called a “Section 16 Person”) or (2) amend or modify the Plan pursuant to the provisions of Section 16(b). To the extent of any such delegation, the term “Committee” when used herein shall mean and include any such delegate.

      (c) Eligibility of Committee Members. No person while a member of the Committee or any other committee of the Board administering the Plan shall be eligible to hold or receive a Plan Award.

 
Section 3.      Performance Cash Rights

      (a) Grant of Performance Cash Rights. The Committee, at any time and from time to time while the Plan is in effect, may grant or authorize the granting of Performance Cash Rights to such officers of the Company and any Subsidiary and other Employees, whether or not members of the Board, as it may select and in such amount as it shall designate, subject to the provisions of this Section 3.

      (b) Maximum Awards. The maximum amount granted to a Covered Executive as a Final Award with respect to all Performance Cash Rights granted during a calendar year shall be $10 million.

      (c) Terms and Provisions of Performance Cash Rights. Prior to the grant of any Performance Cash Right, the Committee shall determine the terms and provisions of such Right, including, without limitation (1) the Target Award; (2) one or more Performance Goals to be used to measure performance under such Right, and the Performance Formula to be applied against the Performance Goals in determining the amount of compensation earned under such Right as a percentage of the Target Award; (3) the Performance Period, and (4) the effect of the Participant’s termination of employment, death or disability. Within 90 days of commencement of a Performance Period, the Committee may establish a minimum threshold objective for any Performance Goal for such Performance Period which, if not met, would result in no Final Award being made to any Participant with respect to such Performance Goal for such Performance Period. During and after the Performance Period, but prior to the Committee’s final determination of the Participant’s Final Award as provided in subsection (d), the Committee may adjust the Performance Goals, Performance Formula and Target Award and otherwise modify the terms and provisions of a Right granted to a Participant who is not a Covered Executive, subject to the terms and conditions of the Plan. Each Right shall be evidenced by an award agreement or notification in such form as the Committee may determine.

B-5


Table of Contents

      (d) Final Awards. As soon as practicable following the completion of the Performance Period relating to any Performance Cash Right, but not later than 12 months following such completion, the Committee shall determine the extent to which the Performance Goals have been achieved and the amount of compensation to be awarded as a Final Award to the Participant who holds such Right. In making such determination, the Committee shall apply the applicable Performance Formula for the Participant for the Performance Period against the accomplishment of the related Performance Goals. The Committee may, in its sole discretion, reduce the amount of any Final Award that otherwise would be awarded to any Participant for any Performance Period. In addition, the Committee may, in its sole discretion, increase the amount of any Final Award that otherwise would be awarded to any Participant who is not a Covered Executive. Any such determination shall take into account (A) the extent to which the Performance Goals provided in such Right were, in the Committee’s sole opinion, achieved, (B) the individual performance of such Participant during the related Performance Period and (C) such other factors as the Committee may deem relevant, including, without limitation, any change in circumstances or unforeseen events, relating to the Company, the economy or otherwise, since the date of grant of such Right. The Committee shall notify such Participant of such Participant’s Final Award as soon as practicable following such determination.

      (e) Following the determination of each Final Award, unless the Participant has elected to defer all or a portion of the Final Award in accordance with the procedures set forth in the Visteon Corporation Deferred Compensation Plan, the Final Award will be payable to the Participant in cash.

 
Section 4.      Stock Available for Plan Awards

      (a) Stock Subject to Plan. The Stock that may be issued under the Plan may be either authorized and unissued (subject to a maximum of 2,000,000 shares) or held in the treasury of the Company. The maximum number of shares of Stock that may be issued with respect to Plan Awards, subject to adjustment in accordance with the provisions of Section 13, shall be 14,800,000. Notwithstanding the foregoing, (1) the aggregate number of shares that may be issued upon exercise of ISOs shall not exceed 10,280,000 shares, subject to adjustment in accordance with the provisions of Section 13; (2) the maximum number of shares subject to Options, with or without any related Stock Appreciation Rights, or Stock Appreciation Rights (not related to Options) that may be granted pursuant to Section 7 to any Covered Executive during any calendar year prior to 2004 shall be 500,000, and for calendar years after 2003 shall be 1,000,000, subject to adjustment in accordance with the provisions of Section 13; (3) the maximum number of shares of Stock that are issued or may be issued with respect to all Performance Stock Rights, Restricted Stock Awards, Restricted Stock Units and Other Stock-Based Awards granted pursuant to Sections 5, 6 and 8 shall be 5,171,383, subject to adjustment in accordance with the provisions of section 13; and (4) the maximum number of shares of Stock that may be issued pursuant to such Performance Stock Rights and performance-based Restricted Stock Awards when combined with the number of performance-based Restricted Stock Units granted pursuant to Section 6 (whether such Restricted Stock Units are settled in cash or in Stock), to any Covered Executive during any calendar year prior to 2004 shall be 500,000 shares, and for calendar years after 2003 shall be 1 million shares and/or units, subject to adjustment in accordance with the provisions of Section 13.

B-6


Table of Contents

      (b) Computation of Stock Available for Plan Awards. For the purpose of computing the total number of shares of Stock remaining available for Plan Awards at any time while the Plan is in effect, and for the purpose of determining the maximum number of shares of Stock that remain available to be issued with respect to Performance Stock Rights, Restricted Stock Awards, Restricted Stock Units, and Other Stock-Based Awards under clause (3) of subsection (a) there shall be debited against the total number of shares determined to be available pursuant to subsections (a) and (c) of this Section 4, (1) the maximum number of shares of Stock subject to issuance upon exercise of Options or Stock Appreciation Rights granted under this Plan, (2) the maximum number of shares of Stock issued or issuable under Performance Stock Rights, Restricted Stock Awards and Restricted Stock Units granted under this Plan, and (3) the number of shares of Stock related to Other Stock-Based Awards granted under this Plan, as determined by the Committee in each case as of the dates on which such Plan Awards were granted, provided, however, that a Restricted Stock Unit or Other Stock-Based Award that is or may be settled only in cash shall not be counted against any of the share limits under this Section 4, except as required by Section 162(m) of the Code to preserve the status of an award as “performance-based compensation” as set forth under clause (4) of subsection (a) above.

      (c) Terminated, Expired or Forfeited Plan Awards. The shares involved in the unexercised, undistributed or unvested portion of any terminated, expired or forfeited Plan Award shall be made available for further Plan Awards. Any shares of Stock made available for Plan Awards pursuant to this subsection (c) shall be in addition to the shares available pursuant to subsection (a) of this Section 4. Notwithstanding the foregoing, in the event any Option or Stock Appreciation Right granted to a Covered Executive is canceled, the number of shares of Stock subject to such canceled Option or Stock Appreciation Right shall continue to count against the individual limit specified in subsection (a), in accordance with the requirements of Code Section 162(m).

 
Section 5.      Performance Stock Rights

      (a) Grant of Performance Stock Rights. The Committee, at any time and from time to time while the Plan is in effect, may grant, or authorize the granting of, Performance Stock Rights to such officers of the Company and any Subsidiary, and other Employees, whether or not members of the Board, as it may select and for such numbers of shares as it shall designate, subject to the provisions of this Section 5 and Section 4.

      (b) Terms and Provisions of Performance Stock Rights. Prior to the grant of any Performance Stock Right, the Committee shall determine the terms and provisions of each Right, including, without limitation (1) the Target Award; (2) one or more Performance Goals to be used to measure performance under such Right, and the Performance Formula to be applied against the Performance Goals in determining the number of shares of Stock earned under such Right as a percentage of the Target Award; (3) the Performance Period; (4) the period of time, if any, during which the disposition of shares of Stock issuable under such Right shall be restricted as provided in subsection (a) of Section 11, provided, however, that the Committee may establish restrictions applicable to any Right at the time of or at any time prior to the granting of the related Final Award rather than at the time of granting such Right; and (5) the effect of the Participant’s termination of employment, death or disability. Within 90 days of commencement of a Performance Period, the Committee may establish a minimum threshold objective for any Performance Goal for such Performance Period which, if not met, would result in no Final Award being made to any Participant with respect to such Performance Goal for such Performance Period. During and after the Performance Period, but prior to the Committee’s final determination of the Participant’s Final Award as provided in subsection (d), the Committee may adjust the Performance Goals, Performance Formula and Target Award and otherwise modify the terms and provisions of a Right granted to a Participant who is not a Covered Executive, subject to the terms and conditions of the Plan. Each Right shall be evidenced by an award agreement or notification in such form as the Committee may determine.

B-7


Table of Contents

      (c) Dividend Equivalents on Rights. If the Committee shall determine, each Participant to whom a Right is granted shall be entitled to receive payment of the same amount of cash that such Participant would have received as cash dividends if, on each record date during the Performance Period relating to such Right, such Participant had been the holder of record of a number of shares of Stock equal to 100% of the related Target Award (as adjusted pursuant to Section 13). Any such payment may be made at the same time as a dividend is paid or may be deferred until the date that a Final Award is determined, as determined by the Committee in its sole discretion. Such cash payments are hereinafter called “dividend equivalents”.

      (d) Final Awards.

        (1) As soon as practicable following the completion of the Performance Period relating to any Performance Stock Right, but not later than 12 months following such completion, the Committee shall determine the extent to which the Participant achieved the Performance Goals and the number of shares of Stock to be awarded as a Final Award to the Participant who holds such Right. Each Final Award shall represent only full shares of Stock, and any fractional share that would otherwise result from such Final Award calculation shall be disregarded. In making such determination, the Committee shall apply the applicable Performance Formula for the Participant for the Performance Period against the accomplishment of the related Performance Goals. The Committee may, in its sole discretion, reduce the amount of any Final Award that otherwise would be awarded to any Participant for any Performance Period. In addition, the Committee may, in its sole discretion, increase the amount of any Final Award that otherwise would be awarded to any Participant who is not a Covered Executive. Any such determination shall take into account (A) the extent to which the Performance Goals provided in such Right was, in the Committee’s sole opinion, achieved, (B) the individual performance of such Participant during the related Performance Period and (C) such other factors as the Committee may deem relevant, including, without limitation, any change in circumstances or unforeseen events, relating to the Company, the economy or otherwise, since the date of grant of such Right. The Committee shall notify such Participant of such Participant’s Final Award as soon as practicable following such determination.
 
        (2) Following the determination of each Final Award, the Company shall issue or cause to be issued certificates for the number of shares of Stock representing such Final Award, registered in the name of the Participant who received such Final Award. Such Participant shall thereupon become the holder of record of the number of shares of Stock evidenced by such certificates, entitled to dividends, voting rights and other rights of a holder thereof, subject to the terms and provisions of the Plan, including, without limitation, the provisions of this subsection (d) and Sections 10, 11 and 13. The Committee may require that such certificates bear such restrictive legend as the Committee may specify and be held by the Company in escrow or otherwise pursuant to any form of agreement or instrument that the Committee may specify. If the Committee has determined that deferred dividend equivalents shall be payable to a Participant with respect to any Performance Stock Right pursuant to subsection (c) of this Section 5, then concurrently with the issuance of such certificates, the Company shall deliver to such Participant a cash payment or additional shares of Stock in settlement of such dividend equivalents. Notwithstanding the foregoing, the Committee, in its sole discretion, may permit a Participant to defer receipt of a Final Award and to instead receive stock units under the Visteon Corporation Deferred Compensation Plan that represent hypothetical shares of Stock of the Company, or such other deemed investment made available by the Committee for this purpose. Any such election, if permitted by the Committee, must be made at such time and in such form as prescribed by the Committee, and is subject to such other terms and conditions as the Committee, in its sole discretion, may prescribe.

B-8


Table of Contents

        (3) Notwithstanding the provisions of this subsection (d) or any other provision of the Plan, the Committee may specify that a Participant’s Final Award shall not be represented by certificates for shares of Stock but shall be represented by rights approximately equivalent (as determined by the Committee) to the rights that such Participant would have received if certificates for shares of Stock had been issued in the name of such Participant in accordance with subsection (d) (such rights being called “Stock Equivalents”). Subject to the provisions of Section 13 and the other terms and provisions of the Plan, if the Committee shall so determine, each Participant who holds Stock Equivalents shall be entitled to receive the same amount of cash that such Participant would have received as dividends if certificates for shares of Stock had been issued in the name of such Participant pursuant to subsection (d) covering the number of shares equal to the number of shares to which such Stock Equivalents relate. Notwithstanding any other provision of the Plan to the contrary, the Stock Equivalents representing any Final Award may, at the option of the Committee, be converted into an equivalent number of shares of Stock or, upon the expiration of any restriction period imposed on such Stock Equivalents, into cash, under such circumstances and in such manner as the Committee may determine.

Section 6.     Restricted Stock and Restricted Stock Units

      (a) Grant of Restricted Stock. The Committee, at any time and from time to time while the Plan is in effect, may grant, or authorize the granting of, Restricted Stock to such officers of the Company and any Subsidiary, and other Employees, whether or not members of the Board, as it may select. In lieu of, or in addition to, such Restricted Stock, the Committee may grant, or authorize the granting of, awards denominated in the form of Restricted Stock Units to such eligible Employees.

      (b) Terms and Provisions of Restricted Stock and Restricted Stock Units. Subject to the provisions of the Plan, the Committee shall have the authority to determine the time or times at which Restricted Stock or Restricted Stock Units shall be granted and the number of shares of Restricted Stock or the number of Restricted Stock Units to be granted (subject to the provisions of Section 4). Prior to the grant of any Restricted Stock or Restricted Stock Units, the Committee shall determine such time-based or performance-based restrictions as the Committee shall deem appropriate, and all other terms and conditions of such Restricted Stock and Restricted Stock Units, including, without limitation (1) the number of shares of Restricted Stock or Restricted Stock Units to be issued; (2) in the case of time-based Restricted Stock or Restricted Stock Units, the minimum period of service required for the Participant to receive a Final Award; (3) in the case of performance-based Restricted Stock or performance-based Restricted Stock Units, one or more Performance Goals to be used to measure performance with respect to such Restricted Stock or Restricted Stock Units; (4) the Performance Period applicable to any such performance-based award; (5) whether Final Awards pursuant to such Restricted Stock Units shall be payable in Stock, cash or otherwise; (6) the period of time, if any, during which the disposition of the Restricted Stock or Final Award pursuant to a Restricted Stock Unit is restricted as provided in subsection (a) of Section 10, provided, however, that the Committee may establish restrictions applicable to Restricted Stock or Restricted Stock Units at the time of or at any time prior to the granting of the related Final Award rather than at the time of granting such Right; and (7) the effect of the Participant’s termination of employment, death or disability. Within 90 days of commencement of a Performance Period, the Committee may establish a minimum threshold objective for any Performance Goal for such Performance Period which, if not met, would result in no Final Award being made to any Participant with respect to such Performance Goal for such Performance Period. During and after the Performance Period, but prior to the Committee’s final determination of the Participant’s Final Award as provided in subsection (d), the Committee may adjust the Performance Goals and otherwise modify the terms and provisions of the Restricted Stock grant or Restricted Stock Unit to a Participant who is not a Covered Executive, subject to the terms and conditions of the Plan. Each grant of Restricted Stock or Restricted Stock Units shall be evidenced by an award agreement or notification in such form as the Committee may determine.

B-9


Table of Contents

      (c) Dividend and Dividend Equivalents.

        (1) During any period that Restricted Stock has been issued to the Participant and remains outstanding, the Participant shall be entitled to receive all dividends and other distributions paid with respect to the Restricted Stock. If any such dividends or distributions are paid in Stock and such distribution occurs when the restrictions applicable to such shares are still in effect, such shares shall be subject to the same restrictions as the Restricted Stock with respect to which they were paid.
 
        (2) If the committee shall determine, each Participant to whom a Restricted Stock Unit is granted and remains outstanding shall be entitled to receive payment of the same amount of cash that such Participant would have received as cash dividends as if, on each record date during the minimum period of service or the Performance Period related to the Restricted Stock Unit, such Participant had been the holder of record of a number of shares of Stock equal to 100% of the Restricted Stock Units (as adjusted pursuant to Section 13). Any such payment may be made at the same time as a dividend is paid, or may be deferred until the date that a Final Award is determined, as determined by the Committee in its sole discretion. Such cash payments are hereinafter called “dividend equivalents.”

      (d) Voting Rights. Subject to the restrictions established by the Committee pursuant to the Plan, Participants shall be entitled to vote Restricted Shares granted under this Section 6, unless and until such shares are forfeited pursuant to subsection (e) below. Participants shall have no voting rights with respect to Restricted Stock Units.

      (e) Final Awards. As soon as practicable following the completion of the Performance Period relating to any Restricted Stock or Restricted Stock Unit, but not later than 12 months following such completion, the Committee shall determine (1) the extent to which the Participant achieved the minimum period of service, with respect to time-based awards, or the applicable Performance Goals, with respect to performance-based awards, (2) the number of shares of Restricted Stock to be retained as a Final Award by the Participant who holds such Restricted Stock, (3) the number of shares of Restricted Stock to be forfeited by such Participant, (4) the number of shares of Stock or amount of other compensation to be issued as a Final Award to the Participant who holds Restricted Stock Units, and (5) the number of Restricted Stock Units to be forfeited by such Participant. Each Final Award shall represent only full shares of Stock and any fractional share that would otherwise result from such Final Award calculation shall be forfeited. In making such determination, the Committee shall apply the applicable minimum period of service or Performance Goals that the Committee had established. The Committee may, in its sole discretion, increase the amount of any Final Award that otherwise would be awarded to any Participant who is not a Covered Executive by determining that the Participant should be allowed to retain some or all of the Restricted Stock that would otherwise be forfeited, or should receive Stock or other consideration for Restricted Stock Units that would otherwise be forfeited, notwithstanding the fact that the minimum period of service or Performance Goals were not satisfied in full. Any such determination shall take into account (A) the extent to which the Performance Goals that relate to such Restricted Stock or Restricted Stock Units were, in the Committee’s sole opinion, achieved, (B) the individual performance of such Participant during the related period of service or Performance Period and (C) such other factors as the Committee may deem relevant, including, without limitation, any change in circumstances or unforeseen events, relating to the Company, the economy or otherwise, since the date of grant of such Restricted Stock. The Committee shall notify such Participant of such Participant’s Final Award as soon as practicable following such determination.

B-10


Table of Contents

      (f) Election of Deferred Stock Units. The Committee, in its sole discretion, may permit a Participant to defer or otherwise exchange receipt of a Final Award relating to Restricted Stock or Restricted Stock Units and to instead receive stock units under the Visteon Corporation Deferred Compensation Plan that represent hypothetical shares of Stock of the Company, or such other deemed investment made available by the Committee for this purpose. Any such election, if permitted by the Committee, must be made at such time and in such form as prescribed by the Committee. If the Committee so permits and a Participant makes an appropriate election, the Participant’s right to receive a benefit from the Visteon Corporation Deferred Compensation Plan based on such stock units is contingent upon attainment of the applicable minimum period of service or Performance Goals and such other terms and conditions as the Committee, in its sole discretion, may prescribe.

Section 7.     Options and Stock Appreciation Rights

      (a) Grant of Options.

        (1) The Committee, at any time and from time to time while the Plan is in effect, may authorize the granting of Options to such officers of the Company and any Subsidiary and other Employees, whether or not members of the Board, as it may select, and for such numbers of shares as it shall designate, subject to the provisions of this Section 7 and Section 4. Each Option granted pursuant to the Plan shall be designated at the time of grant as either an ISO or an NQO.
 
        (2) The date on which an Option shall be granted shall be the date of authorization of such grant or such later date as may be determined by the Committee at the time such grant is authorized. Any individual may hold more than one Option.

      (b) Price. In the case of each Option granted under the Plan the option price shall be the Fair Market Value of Stock on the date of grant of such Option; provided, however, that the Committee may in its discretion fix an option price in excess of the Fair Market Value of Stock on such date.

      (c) Grant of Stock Appreciation Rights.

        (1) The Committee, at any time and from time to time while the Plan is in effect, may authorize the granting of Stock Appreciation Rights to such officers of the Company and any Subsidiary and other Employees, whether or not members of the Board, as it may select, and for such numbers of shares as it shall designate, subject to the provisions of this Section 7 and Section 4. Each Stock Appreciation Right may relate to all or a portion of a specific Option granted under the Plan and may be granted concurrently with the Option to which it relates or at any time prior to the exercise, termination or expiration of such Option (a “Tandem SAR”), or may be granted independently of any Option, as determined by the Committee. If the Stock Appreciation Right is granted independently of an Option, the grant price of such right shall be the Fair Market Value of Stock on the date of grant; provided, however, that the Committee may, in its discretion, fix a grant price in excess of the Fair Market Value of Stock on such grant date.

B-11


Table of Contents

        (2) Upon exercise of a Stock Appreciation Right, the Participant shall be entitled to receive, without payment to the Company, either (A) that number of shares of Stock determined by dividing (i) the total number of shares of Stock subject to the Stock Appreciation Right being exercised by the Participant, multiplied by the amount by which the Fair Market Value of a share of Stock on the day the right is exercised exceeds the grant price (such amount being hereinafter referred to as the “Spread”), by (ii) the Fair Market Value of a share of Stock on the exercise date; or (B) cash in an amount determined by multiplying (i) the total number of shares of Stock subject to the Stock Appreciation Right being exercised by the Participant, by (ii) the amount of the Spread; or (C) a combination of shares of Stock and cash, in amounts determined as set forth in clauses (A) and (B) above, as determined by the Committee in its sole discretion; provided, however, that, in the case of a Tandem SAR, the total number of shares which may be received upon exercise of a Stock Appreciation Right for Stock shall not exceed the total number of shares subject to the related Option or portion thereof, and the total amount of cash which may be received upon exercise of a Stock Appreciation Right for cash shall not exceed the Fair Market Value on the date of exercise of the total number of shares subject to the related Option or portion thereof.

      (d) Terms and Conditions.

        (1) Each Option and Stock Appreciation Right granted under the Plan shall be exercisable on such date or dates, during such period, for such number of shares and subject to such further conditions as shall be determined pursuant to the provisions of the award agreement with respect to such Option and Stock Appreciation Right; provided, however, that a Tandem SAR shall not be exercisable prior to or later than the time the related Option could be exercised; and provided, further, that in any event no Option or Stock Appreciation Right granted prior to 2004 shall be exercised beyond ten years from the date of grant, and no Option or Stock Appreciation Right granted after 2003 shall be exercised beyond five years from the date of grant.
 
        (2) The Committee may impose such conditions as it may deem appropriate upon the exercise of an Option or a Stock Appreciation Right, including, without limitation, a condition that the Stock Appreciation Right may be exercised only in accordance with rules and regulations adopted by the Committee from time to time.
 
        (3) With respect to Options issued with Tandem SARs, the right of a Participant to exercise the Tandem SAR shall be cancelled if and to the extent the related Option is exercised, and the right of a Participant to exercise an Option shall be cancelled if and to the extent that shares covered by such Option are used to calculate shares or cash received upon exercise of the Tandem SAR.
 
        (4) If any fractional share of Stock would otherwise be payable to a Participant upon the exercise of an Option or Stock Appreciation Right, the Participant shall be paid a cash amount equal to the same fraction of the Fair Market Value of the Stock on the date of exercise.

      (e) Award Agreement. Each Option and Stock Appreciation Right shall be evidenced by an award agreement or notification in such form and containing such provisions not inconsistent with the provisions of the Plan as the Committee from time to time shall approve.

      (f) Payment for Option Shares.

        (1) Payment for shares of Stock purchased upon exercise of an Option granted hereunder shall be made, either in full or, if the Committee shall so determine and at the election of the Participant, in installments, in such manner as is provided in the applicable award agreement.

B-12


Table of Contents

        (2) Unless the Committee shall provide otherwise in any award agreement, any payment for shares of Stock purchased upon exercise of an Option granted hereunder may be made in cash, by delivery of shares of Stock beneficially owned by the Participant, or by a combination of cash and Stock, at the election of the Participant or through a cashless exercise executed through a broker; provided, however, that any shares of Stock so delivered shall have been beneficially owned by the Participant for a period of not less than six months prior to the date of exercise. Any such shares of Stock so delivered shall be valued at their Fair Market Value on the date of such exercise. The Committee shall determine whether and if so the extent to which actual delivery of share certificates to the Company shall be required.

Section 8.  Stock and Other Stock-Based Awards

      (a) Grants of Other Stock-Based Awards. The Committee, at any time and from time to time while the Plan is in effect, may grant Other Stock-Based Awards to such officers of the Company and its Subsidiaries and other Employees, whether or not members of the Board, as it may select. Such Plan Awards pursuant to which Stock is or may in the future be acquired, or Plan Awards valued or determined in whole or part by reference to, or otherwise based on, Stock, may include, but are not limited to, awards of restricted Stock (in addition to or in lieu of Restricted Stock under Section 6) or Plan Awards denominated in the form of “stock units” (in addition to or in lieu of Restricted Stock Units under Section 6), grants of so-called “phantom stock” and options containing terms or provisions differing in whole or in part from Options granted pursuant to Section 7. Other Stock-Based Awards may be granted either alone, in addition to, in tandem with or as an alternative to any other kind of Plan Award, grant or benefit granted under the Plan or under any other employee plan of the Company, including a plan of any acquired entity.

      (b) Terms and Conditions. Subject to the provisions of the Plan, the Committee shall have the authority to determine the time or times at which Other Stock-Based Awards shall be made, the number of shares of Stock or stock units and the like to be granted or covered pursuant to such Plan Awards (subject to the provisions of Section 4) and all other terms and conditions of such Plan Awards, including, but not limited to, whether such Plan Awards shall be payable or paid in cash, Stock or otherwise.

      (c) Consideration for Other Stock-Based Awards. In the discretion of the Committee, any Other Stock-Based Award may be granted as a Stock bonus for no consideration other than services rendered.

Section 9. Cash Awards to Employees of Foreign Subsidiaries or Branches or Joint Ventures

      In order to facilitate the granting of Plan Awards to Participants who are foreign nationals or who are employed outside of the United States of America, the Committee may provide for such special terms and conditions, including without limitation substitutes for Plan Awards, as the Committee may consider necessary or appropriate to accommodate differences in local law, tax policy or custom. Such substitutes for Plan Awards may include a requirement that the Participant receive cash, in such amount as the Committee may determine in its sole discretion, in lieu of any Plan Award or share of Stock that would otherwise have been granted to or delivered to such Participant under the Plan. The Committee may approve any supplements to, or amendments, restatements or alternative versions of the Plan as it may consider necessary or appropriate for purposes of this Section 9 without thereby affecting the terms of the Plan as in effect for any other purpose, and the Secretary or other appropriate officer of the Company may certify any such documents as having been approved and adopted pursuant to properly delegated authority; provided, however, that no such supplements, amendments, restatements or alternative versions shall include any provision that is inconsistent with the terms of the Plan as then in effect. Participants subject to the laws of a foreign jurisdiction may request copies of, or the right to view, any materials that are required to be provided by the Company pursuant to the laws of such jurisdiction.

B-13


Table of Contents

Section 10.     Payment of Plan Awards and Conditions Thereon

      (a) Effect of Competitive Activity. Anything contained in the Plan to the contrary notwithstanding, if the employment of any Participant shall terminate, for any reason other than death, while any Plan Award granted to such Participant is outstanding hereunder, and such Participant has not yet received the Stock or cash covered by such Plan Award or otherwise received the full benefit of such Plan Award, such Participant, if otherwise entitled thereto, shall receive such Stock, cash or benefit only if, during the entire period from the date of such Participant’s termination to the date of such receipt, such Participant shall have (1) made himself or herself available, upon request, at reasonable times and upon a reasonable basis, to consult with, supply information to and otherwise cooperate with the Company or any Subsidiary with respect to any matter that shall have been handled by him or her or under his or her supervision while he or she was in the employ of the Company or of any Subsidiary, and (2) refrained from engaging in any activity that is directly or indirectly in competition with any activity of the Company or any Subsidiary.

      (b) Nonfulfillment of Competitive Activity Conditions: Waivers Under the Plan. In the event of a Participant’s nonfulfillment of any condition set forth in subsection (a) of this Section 10, such Participant’s rights under any Plan Award shall be forfeited and cancelled forthwith; provided, however, that the nonfulfillment of such condition may at any time (whether before, at the time of or subsequent to termination of employment) be waived in the following manner:

        (1) with respect to any such Participant who at any time shall have been a Section 16 Person, such waiver may be granted by the Committee upon its determination that in its sole judgment there shall not have been and will not be any substantial adverse effect upon the Company or any Subsidiary by reason of the nonfulfillment of such condition; and
 
        (2) with respect to any other such Participant, such waiver may be granted by the Committee (or any delegate thereof) upon its determination that in its sole judgment there shall not have been and will not be any such substantial adverse effect.

      (c) Effect of Detrimental Conduct. Anything contained in the Plan to the contrary notwithstanding, all rights of a Participant under any Plan Award shall cease on and as of the date on which it has been determined by the Committee that such Participant at any time (whether before or subsequent to termination of such Participant’s employment) acted in a manner detrimental to the best interests of the Company or any Subsidiary.

      (d) Tax and Other Withholding. Prior to any distribution of cash, Stock or Other Stock-Based Awards (including payments under Section 5(c)) to any Participant, appropriate arrangements (consistent with the Plan and any rules adopted hereunder) shall be made for the payment of any taxes and other amounts required to be withheld by federal, state or local law.

      (e) Substitution. The Committee, in its sole discretion, may substitute a Plan Award (except ISOs) for another Plan Award or Plan Awards of the same or different type.

 
Section 11.    Non-Transferability of Plan Awards; Restrictions on Disposition and Exercise of Plan Awards

      (a) Restrictions on Transfer of Rights or Final Awards. No Performance Cash Right, Performance Stock Right, Restricted Stock Unit or, until the expiration of any restriction period imposed by the Committee, no shares of Stock acquired under the Plan, shall be transferred, pledged, assigned or otherwise disposed of by a Participant, except as permitted by the Plan, without the consent of the Committee, otherwise than by will or the laws of descent and distribution; provided, however, that the Committee may permit, on such terms as it may deem appropriate, use of Stock included in any Final Award as partial or full payment upon exercise of an Option under the Plan or a stock option under any other stock option plan of the Company prior to the expiration of any restriction period relating to such Final Award.

B-14


Table of Contents

      (b) Restrictions on Transfer of Options or Stock Appreciation Rights. Unless the Committee determines otherwise, no Option or Stock Appreciation Right shall be transferable by a Participant otherwise than by will or the laws of descent and distribution, and during the lifetime of a Participant the Option or Stock Appreciation Right shall be exercisable only by such Participant or such Participant’s guardian or legal representative.

      (c) Restrictions on Transfer of Certain Other Stock-Based Awards. Unless the Committee determines otherwise, no Other Stock-Based Award shall be transferable by a Participant otherwise than by will or the laws of descent and distribution, and during the lifetime of a Participant any such Other Stock-Based Award shall be exercisable only by such Participant or such Participant’s guardian or legal representative.

      (d) Attachment and Levy. No Plan Award shall be subject, in whole or in part, to attachment, execution or levy of any kind, and any purported transfer in violation hereof shall be null and void. Without limiting the generality of the foregoing, no domestic relations order purporting to authorize a transfer of a Plan Award, or to grant to any person other than the Participant the authority to exercise or otherwise act with respect to a Plan Award, shall be recognized as valid.

Section 12.   Designation of Beneficiaries

      Anything contained in the Plan to the contrary notwithstanding, a Participant may file with the Company a written designation of a beneficiary or beneficiaries under the Plan, subject to such limitations as to the classes and number of beneficiaries and contingent beneficiaries and such other limitations as the Committee from time to time may prescribe. A Participant may from time to time revoke or change any such designation of beneficiary. If a Participant designates his spouse as a Beneficiary, such designation automatically shall become null and void on the date of the Participant’s divorce or legal separation from such spouse. Any designation of a beneficiary under the Plan shall be controlling over any other disposition, testamentary or otherwise; provided, however, that if the Committee shall be in doubt as to the entitlement of any such beneficiary to receive any Right, Final Award, Restricted Stock, Restricted Stock Unit, Option, Stock Appreciation Right, or Other Stock-Based Award, or if applicable law requires the Company to do so, the Committee may recognize only the legal representative of such Participant, in which case the Company, the Committee and the members thereof shall not be under any further liability to anyone. In the event of the death of any Participant, the term “Participant” as used in the Plan shall thereafter be deemed to refer to the beneficiary designated pursuant to this Section 12 or, if no such designation is in effect, the executor or administrator of the estate of such Participant, unless the context otherwise requires.

Section 13.  Merger, Consolidation, Stock Dividends, Etc.

      (a) Adjustments. In the event of any merger, consolidation, reorganization, stock split, stock dividend or other event affecting Stock, an appropriate adjustment shall be made in the total number of shares available for Plan Awards and in all other provisions of the Plan that include a reference to a number of shares or units, and in the numbers of shares or units covered by, and other terms and provisions (including but not limited to the grant or exercise price of any Plan Award) of outstanding Plan Awards.

      (b) Committee Determinations. The foregoing adjustments and the manner of application of the foregoing provisions shall be determined by the Committee in its sole discretion. Any such adjustment may provide for the elimination of any fractional share which might otherwise become subject to a Plan Award.

Section 14.     Acceleration of Payment or Modification of Plan Awards

      (a) Acceleration and Modification. The Committee, in the event of the death of a Participant or in any other circumstance, may accelerate distribution of any Plan Award in its entirety or in a reduced amount, in cash or in Stock, or modify any Plan Award, in each case on such basis and in such manner as the Committee may determine in its sole discretion.

B-15


Table of Contents

      (b) Change in Control. Notwithstanding any other provision of the Plan, unless the Committee determines otherwise at the time of grant, upon the occurrence of a Change in Control, (1) any Plan Awards outstanding as of the date of such Change in Control that relate to Performance Periods that have been completed as of the date of the Change in Control, but that have not yet been paid, shall be paid in accordance with the terms of such Plan Awards, (2) any Plan Awards outstanding as of the date of such Change in Control that relate to Performance Periods that have not been completed as of the date of the Change in Control, and that are not then vested, shall become fully vested if vesting is based solely upon the length of the employment relationship as opposed to the satisfaction of one or more Performance Goals, and (3) any other Plan Awards outstanding as of the date of such Change in Control that relate to Performance Periods that have not been completed as of the date of the Change in Control, and that are not then vested, shall be treated as vested and earned pro rata, as if the Performance Goals for the Target Award associated with a Performance Cash Right or a Performance Stock Right or the Performance Goals with respect to Restricted Stock, Restricted Stock Units or Other Stock Based Awards are attained as of the effective date of the Change in Control, by taking the product of (A) the Target Award (in the case of a Performance Cash Right or a Performance Stock Right) or the number of shares of Restricted Stock, Restricted Stock Units or Other Stock Based Awards granted to the Participant, and (B) a fraction, the numerator of which is the number of full or partial months that have elapsed from the beginning of the Performance Period to the date of the Change in Control and the denominator of which is the total number of months in the original Performance Period; provided, however, that any such Plan Award shall be immediately vested and payable to the Participant to the extent of the foregoing formula, and shall be free of all restrictions and conditions that would otherwise apply to such Plan Award. The foregoing provisions are subject to the terms of any employment contract governing the employment of a Participant to the extent that such contract provides greater rights to the Participant in the event of a Change in Control.

B-16


Table of Contents

      (c) Maximum Payment Limitation. If any portion of the payments or benefits described in this Plan or under any other agreement with or plan of the Company (in the aggregate, “Total Payments”), would constitute an “excess parachute payment”, then the Total Payments to be made to the Participant shall be reduced such that the value of the aggregate Total Payments that the Participant is entitled to receive shall be one dollar ($1) less than the maximum amount which the Participant may receive without becoming subject to the tax imposed by Section 4999 of the Code or which the Company may pay without loss of deduction under Section 280G(a) of the Code; provided that this Section shall not apply in the case of a Participant who has in effect a valid employment contract providing that the Total Payments to the Participant shall be determined without regard to the maximum amount allowable under Section 280G of the Code. The terms “excess parachute payment” and “parachute payment” shall have the meanings assigned to them in Section 280G of the Code, and such “parachute payments” shall be valued as provided therein. Present value shall be calculated in accordance with Section 280G(d)(4) of the Code. Within forty (40) days following delivery of notice by the Company to the Participant of its belief that there is a payment or benefit due the Participant which will result in an excess parachute payment as defined in Section 280G of the Code, the Participant and the Company, at the Company’s expense, shall obtain the opinion (which need not be unqualified) of nationally recognized tax counsel selected by the Company’s independent auditors and acceptable to the Participant in his sole discretion (which may be regular outside counsel to the Company), which opinion sets forth (A) the amount of the Base Period Income, (B) the amount and present value of Total Payments and (C) the amount and present value of any excess parachute payments determined without regard to the limitations of this Section. As used in this Section, the term “Base Period Income” means an amount equal to the Participant’s “annualized includible compensation for the base period” as defined in Section 280G(d)(1) of the Code. For purposes of such opinion, the value of any noncash benefits or any deferred payment or benefit shall be determined by the Company’s independent auditors in accordance with the principles of Sections 280G(d)(3) and (4) of the Code, which determination shall be evidenced in a certificate of such auditors addressed to the Company and the Participant. Such opinion shall be addressed to the Company and the Participant and shall be binding upon the Company and the Participant. If such opinion determines that there would be an excess parachute payment, the payments hereunder that are includible in Total Payments or any other payment or benefit determined by such counsel to be includible in Total Payments shall be reduced or eliminated as specified by the Participant in writing delivered to the Company within thirty days of his receipt of such opinion or, if the Participant fails to so notify the Company, then as the Company shall reasonably determine, so that under the bases of calculations set forth in such opinion there will be no excess parachute payment. If such legal counsel so requests in connection with the opinion required by this Section, the Participant and the Company shall obtain, at the Company’s expense, and the legal counsel may rely on in providing the opinion, the advice of a firm of recognized executive compensation consultants as to the reasonableness of any item of compensation to be received by the Participant. If the provisions of Sections 280G and 4999 of the Code (or any successor provisions) are repealed without succession, then this Section shall be of no further force or effect.

 
Section 15.      Rights as a Stockholder

      Except with respect to shares of Restricted Stock, a Participant shall not have any rights as a stockholder with respect to any share covered by any Plan Award until such Participant shall have become the holder of record of such share.

 
Section 16.      Term, Amendment, Modification and Termination of the Plan and Agreements

      (a) Term. Unless terminated earlier pursuant to subsection (b), the Plan shall terminate on May 11, 2014.

B-17


Table of Contents

      (b) Amendment, Modification and Termination of Plan. The Board may, from time to time, amend or modify the Plan or any outstanding Plan Award, including without limitation, to authorize the Committee to make Plan Awards payable in other securities or other forms of property of a kind to be determined by the Committee, and such other amendments as may be necessary or desirable to implement such Plan Awards, or may terminate the Plan or any provision thereof; provided, however, that no such action of the Board, without approval of the stockholders, may (1) increase the total number of shares of Stock with respect to which Plan Awards may be granted under the Plan or the individual limits specified in Section 4(a), (2) increase the total amount that may be paid to an individual with respect to a Performance Cash Award, as specified in Section 3(b), (3) extend the term of the Plan as set forth in paragraph (a) of this Section 16, (4) permit any person while a member of the Committee or any other committee of the Board administering the Plan to be eligible to receive or hold a Plan Award, or (5) permit the Company to decrease the grant price of any outstanding Option or Stock Appreciation Right.

      (c) Limitation and Survival. No amendment to or termination of the Plan or any provision hereof, and no amendment or cancellation of any outstanding Plan Award, by the Board or the stockholders of the Company, shall, without the written consent of the affected Participant, adversely affect any outstanding Plan Award. The Committee’s authority to act with respect to any outstanding Plan Award shall survive termination of the Plan.

      (d) Amendments for Changes in Law. Notwithstanding the foregoing provisions, the Board shall have the authority to amend outstanding Plan Awards and the Plan to take into account changes in law and tax and accounting rules as well as other developments, and to grant Plan Awards that qualify for beneficial treatment under such rules, without stockholder approval.

 
Section 17.      Indemnification and Exculpation

      (a) Indemnification. Each person who is or shall have been a member of the Board, the Committee, or of any other committee of the Board administering the Plan or of any committee appointed by the foregoing committees, shall be indemnified and held harmless by the Company against and from any and all loss, cost, liability or expense that may be imposed upon or reasonably incurred by such person in connection with or resulting from any claim, action, suit or proceeding to which such person may be or become a party or in which such person may be or become involved by reason of any action taken or failure to act under the Plan and against and from any and all amounts paid by such person in settlement thereof (with the Company’s written approval) or paid by such person in satisfaction of a judgment in any such action, suit or proceeding, except a judgment in favor of the Company based upon a finding of such person’s lack of good faith; subject, however, to the condition that, upon the institution of any claim, action, suit or proceeding against such person, such person shall in writing give the Company an opportunity, at its own expense, to handle and defend the same before such person undertakes to handle and defend it on such person’s behalf. The foregoing right of indemnification shall not be exclusive of any other right to which such person may be entitled as a matter of law or otherwise, or any power that the Company may have to indemnify or hold such person harmless.

      (b) Exculpation. Each member of the Board, the Committee, or of any other committee of the Board administering the Plan or any committee appointed by the foregoing committees, and each officer and employee of the Company, shall be fully justified in relying or acting in good faith upon any information furnished in connection with the administration of the Plan by any appropriate person or persons other than such person. In no event shall any person who is or shall have been a member of the Board, the Committee, or of any other committee of the Board administering the Plan or of any committee appointed by the foregoing committees, or an officer or employee of the Company, be held liable for any determination made or other action taken or any omission to act in reliance upon any such information, or for any action (including the furnishing of information) taken or any failure to act, if in good faith.

B-18


Table of Contents

 
Section 18.      Expenses of Plan

      The entire expense of offering and administering the Plan shall be borne by the Company and its participating Subsidiaries; provided, that the costs and expenses associated with the redemption or exercise of any Plan Award, including but not limited to commissions charged by any agent of the Company, may be charged to the Participants.

 
Section 19.      Finality of Determinations

      Each determination, interpretation, or other action made or taken pursuant to the provisions of the Plan by the Board, the Committee or any committee of the Board administering the Plan or any committee appointed by the foregoing committees, shall be final and shall be binding and conclusive for all purposes and upon all persons, including, but without limitation thereto, the Company, the stockholders, the Committee and each of the members thereof, and the directors, officers, and employees of the Company and its Subsidiaries, the Participants, and their respective successors in interest.

 
Section 20.      No Rights to Continued Employment or to Plan Award

      (a) No Right to Employment. Nothing contained in this Plan, or in any booklet or document describing or referring to the Plan, shall be deemed to confer on any Participant the right to continue as an Employee or director of the Company or Subsidiary, whether for the duration of any Performance Period, the duration of any vesting period under a Plan Award, or otherwise, or affect the right of the Company or Subsidiary to terminate the employment of any Participant for any reason.

      (b) No Right to Award. No Employee or other person shall have any claim or right to be granted a Plan Award under the Plan. Having received an Award under the Plan shall not give a Participant or any other person any right to receive any other Plan Award under the Plan. A Participant shall have no rights in any Plan Award, except as set forth herein and in the applicable award grant.

 
Section 21.      Governing Law and Construction

      The Plan and all actions taken hereunder shall be governed by, and the Plan shall be construed in accordance with, the laws of the State of Delaware without regard to the principle of conflict of laws. Titles and headings to Sections are for purposes of reference only, and shall in no way limit, define or otherwise affect the meaning or interpretation of the Plan.

 
Section 22.      Securities and Stock Exchange Requirements

      (a) Restrictions on Resale. Notwithstanding any other provision of the Plan, no person who acquires Stock pursuant to the Plan may, during any period of time that such person is an affiliate of the Company (within the meaning of the rules and regulations of the Securities Exchange Commission) sell or otherwise transfer such Stock, unless such offer and sale or transfer is made (1) pursuant to an effective registration statement under the Securities Act of 1933 (“1933 Act”), which is current and includes the Stock to be sold, or (2) pursuant to an appropriate exemption from the registration requirements of the 1933 Act, such as that set forth in Rule 144 promulgated pursuant thereto.

B-19


Table of Contents

      (b) Registration, Listing and Qualification of Shares of Common Stock. Notwithstanding any other provision of the Plan, if at any time the Committee shall determine that the registration, listing or qualification of the Stock covered by a Plan Award upon any securities exchange or under any foreign, federal, state or local law or practice, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition of, or in connection with, the granting of such Plan Award or the purchase or receipt of Stock in connection therewith, no Stock may be purchased, delivered or received pursuant to such Plan Award unless and until such registration, listing, qualification, consent or approval shall have been effected or obtained free of any condition not acceptable to the Committee. Any person receiving or purchasing Stock pursuant to a Plan Award shall make such representations and agreements and furnish such information as the Committee may request to assure compliance with the foregoing or any other applicable legal requirements. The Company shall not be required to issue or deliver any certificate or certificates for Stock under the Plan prior to the Committee’s determination that all related requirements have been fulfilled. The Company shall in no event be obligated to register any securities pursuant to the 1933 Act or applicable state or foreign law or to take any other action in order to cause the issuance and delivery of such certificates to comply with any such law, regulation, or requirement.

B-20


Table of Contents

APPENDIX C

VISTEON CORPORATION

NON-EMPLOYEE DIRECTOR
STOCK UNIT PLAN

Section 1.     Effective Date

      The Board of Directors of Visteon Corporation has adopted this Non-Employee Director Stock Unit Plan, effective May 12, 2004, for the benefit of the non-employee directors of Visteon Corporation.

Section 2.     Definitions

      When used herein the following words and phrases shall have the meanings set forth below unless the context clearly indicates otherwise:

      (a) “Account” means the recordkeeping account maintained by the Company in the name of the Participant. An Account is established for record keeping purposes only and not to reflect the physical segregation of assets on the Participant’s behalf, and may consist of such subaccounts or balances as the Committee may determine to be necessary or appropriate, including the following:

        1. “Mandatory Deferral Subaccount” means the Visteon Stock Units that are credited to the Participant’s Account as a result of the Participant’s Mandatory Deferrals.
 
        2. “Dividend Subaccount” means the Visteon Stock Units that are credited to the Participant’s Account as a result of deemed dividends on Visteon Stock Units credited to the Participant’s Account.

      (b) “Administrative Committee” means the non-participating members of the Board.

      (c) “Board” means the Board of Directors of the Company.

      (d) “Code” means the Internal Revenue Code of 1986, as interpreted by regulations and rulings issued pursuant thereto, all as amended and in effect from time to time.

      (e) “Company” means Visteon Corporation, or any successor thereto.

      (f) “Company Stock” means the common stock of the Company, par value $1.00.

      (g) “Exchange” means the New York Stock Exchange.

      (h) “Outside Director” means a member of the Board who is not an officer or a common-law employee of the Company or any subsidiary thereof.

      (i) “Participant” means each Outside Director who has an Account under the Plan.

      (j) “Plan” means the Visteon Corporation Non-Employee Director Stock Unit Plan, as amended from time to time.

      (k) “Plan Year” means the period beginning on the effective date of the Plan and ending on December 31, 2004 and thereafter, the twelve month period beginning on January 1 and ending December 31 of each year.

      (l) “Visteon Stock Units” mean the hypothetical shares of Company Stock that are credited to a Participant’s Account in accordance with Sections 4 and 5.

C-1


Table of Contents

Section 3.     Administration

      (a) General Authority. The Administrative Committee shall have the full power and discretionary authority to: (1) interpret and administer the Plan and any instrument relating to or made under the Plan; (2) establish, amend, suspend or waive such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan; and (3) make any other determination, and take any other action, that the Administrative Committee deems necessary or desirable for the administration of the Plan. The decisions and determinations of the Administrative Committee need not be uniform and may be made differently among Participants, and shall be final, binding and conclusive on all interested parties.

      (b) Recordkeeping. The Administrative Committee shall be responsible for maintaining all Accounts; provided that the Administrative Committee may in its discretion appoint or remove a third-party recordkeeper to maintain the Accounts as provided herein.

      (c) Effectiveness of Elections. Any elections or beneficiary designations made under this Plan shall be effective only upon the delivery of the appropriate form to the Secretary of the Company and its acceptance by the Administrative Committee.

Section 4.     Mandatory Deferrals

      (a) Mandatory Deferrals. On the day after the date of each regular annual meeting of stockholders of the Company, the Mandatory Deferral Account of each Participant who is then an Outside Director shall be credited with a number of additional Visteon Stock Units equal to the result obtained by (i) dividing (A) $10,000 by (B) the average of the high and low prices at which a share of Company Stock shall have been sold regular way on the Exchange on such date and (ii) rounding the quotient to four decimal places (each, a “Mandatory Deferral”).

      (b) Vesting. Each Participant shall at all times be 100% vested in his or her Mandatory Deferral Subaccount.

Section 5.     Dividend Equivalents

      (a) Conversion to Visteon Stock Units. Any cash dividends that would have been payable in any month on the Visteon Stock Units credited to a Participant’s Account had such units been actual shares of Company Stock shall be converted, for recordkeeping purposes, into whole and fractional Visteon Stock Units, with fractional units calculated to four decimal places, with the resulting Visteon Stock Units credited to the Participant’s Dividend Subaccount. The conversion shall be accomplished by dividing the Participant’s deemed dividends for the month by the average of the high and low prices at which a share of Common Stock shall have been sold regular way on the Exchange on the last day of such month on which the Exchange is open to transact trades.

      (b) Vesting. Each Participant shall at all times be 100% vested in his or her Dividend Subaccount.

C-2


Table of Contents

Section 6.     Distributions

      (a) Distribution Election. Distribution of a Participant’s vested Account shall be made or commence to be made on or about January 15 of the calendar year following the calendar year in which the Participant terminates service as an Outside Director of the Company in the form or forms of distribution elected by the Participant. The Participant may elect to have a distribution made either in (i) a single sum, or (ii) ten (10) annual installments. With respect to Mandatory Deferrals in 2004, a Participant may make an election regarding distribution within thirty (30) days after initial stockholder approval of this Plan. Otherwise, elections shall be irrevocable with respect to deferrals (and dividends thereon) for the Plan Year for which it is made, and shall be effective on the first day of the Plan Year following its acceptance by the Administrative Committee. An election shall continue in effect for amounts deferred in subsequent Plan Years (and dividends thereon) unless modified by the Participant in accordance with this Section 6. A Participant may modify an existing election effective on the first day of the Plan Year following the date on which the revised election is accepted by the Administrative Committee, and such revised election shall apply to amounts deferred after the effective date of such election. A Participant who fails to make any distribution election shall be deemed to have elected the single sum payment option.

        1. Single Sum Distribution. If the Participant has elected the single sum distribution option, the Company, in accordance with directions from the Administrative Committee, will distribute to the Participant shares of Company Stock equal to the number of Visteon Stock Units credited to the Participant’s Account (and cash in lieu of any fractional unit) for which such election is in effect; provided that the Organization and Compensation Committee of the Board may direct that all or any part of the Participant’s distribution be satisfied in cash rather than by a distribution of Company Stock, in which case the cash payment shall be determined by multiplying the number of Visteon Stock Units in the Participant’s Account that are the subject of the cash payment by the average of the high and low prices at which a share of Company Stock shall have been sold regular way on the Exchange on the 5th trading day preceding the date on which distribution is made.
 
        2. Installment Distributions. If the Participant has elected the installment distribution option, the first installment will be paid on or about January 15 of the calendar year following the calendar year in which the Participant terminates service as an Outside Director, and each subsequent installment will be paid on or about January 15 of each succeeding year during the installment period. The annual installment distribution amount for any year shall be initially determined on a share basis by dividing the number of Visteon Stock Units credited to the Participant’s Account as of January 1 of the year for which the distribution is being made and for which such an election is in effect by the number of installment payments remaining to be made, and then rounding the quotient obtained for all but the final installment to the next lowest whole number. The Company, in accordance with directions from the Administrative Committee, will distribute to the Participant shares of Company Stock equal to the number of Visteon Stock Units that are being redeemed as part of the installment (and cash in lieu of any fractional unit); provided that the Organization and Compensation Committee of the Board may direct that all or any part of the installment distribution be satisfied in cash rather than by a distribution of Visteon Stock, in which case the cash payment shall be determined by multiplying the number of Visteon Stock Units in the Participant’s Account that are the subject of the cash payment by the average of the high and low prices at which a share of Company Stock shall have been sold regular way on the Exchange on the 5th trading day preceding the date on which distribution is made.

C-3


Table of Contents

      (b) Securities Restrictions. With respect to any shares of Company Stock distributed to a Participant, the Participant will not sell or otherwise dispose of such Company Stock except pursuant to an effective registration statement under the Securities Act of 1933, as amended (the “Act”), and applicable state securities laws, which the Company may but shall not be required to file, or in a transaction which, in the opinion of counsel for the Company, is exempt from such registration, and a legend may be placed on the certificates for the Company Stock to such effect. In addition, in the event of any underwritten public offering of the Company’s securities pursuant to an effective registration statement filed under the Act and upon the request of the Company or the underwriters managing any underwritten offering of the Company’s securities, the Participant shall not directly or indirectly sell, make any short sale of, loan, hypothecate, pledge, offer, grant or sell any option or other contract for the purchase of, or otherwise dispose of or transfer, or agree to engage in any of the foregoing transactions with respect to, any shares of Company Stock (other than those included in the registration) acquired under this Plan without the prior written consent of the Company or such underwriters, as the case may be, for such period of time (not to exceed 180 days) from the effective date of such registration as may be requested by the Company or such managing underwriters.

Section 7.     Beneficiary

      (a) Death Benefits. If a Participant dies before his or her entire Account has been distributed, then the remainder of the Participant’s Account shall be distributed in a lump sum to the Participant’s beneficiary as soon as practicable following the date of the Participant’s death.

      (b) Designation of Beneficiary. Each Participant may designate one or more beneficiaries in such form and manner specified by the Administrative Committee, which beneficiary shall be entitled to receive the balance of the Participant’s Account as provided under subsection (a) above in the event of the Participant’s death. The Participant may from time to time revoke or change the beneficiary without the consent of any prior beneficiary by filing a new designation with the Secretary of the Company. The last such designation received by the Secretary of the Company shall be controlling. If no beneficiary designation is in effect at the time the Participant dies, or if no designated beneficiary survives the Participant, the Participant’s beneficiary shall be the Participant’s estate.

Section 8.     Source of Benefits

      Benefits accumulated under the Plan shall constitute an unfunded, unsecured promise by the Company to provide such payments in the future, as and to the extent such amounts become payable. Benefits attributable to service as an Outside Director shall be paid from the general assets of the Company, and no person shall, by virtue of this Plan, have any interest in such assets, other than as an unsecured creditor of the Company.

Section 9.     Non-Alienation

      Except as otherwise expressly provided by this Plan, neither the Participant nor his or her beneficiary or beneficiaries, including, without limitation, the Participant’s executors and administrators, heirs, legatees, distributees, and any other person or persons claiming any benefits through the Participant under this Plan shall have any right to assign, transfer, pledge, hypothecate, sell, transfer, alienate and encumber or otherwise convey the right to receive any benefits hereunder, which benefits and the rights thereto are expressly declared to be nontransferable. The right to receive benefits under this Plan also shall not be subject to execution, attachment, garnishment, or similar legal, equitable or other process for the benefit of the Participant’s or beneficiary’s creditors. Any attempted assignment, transfer, pledge hypothecation or other disposition of the Participant’s or beneficiary’s rights to receive benefits under this Plan or the levy of any attachment, garnishment or similar process thereupon, shall be null and void and without effect.

C-4


Table of Contents

Section 10.     Change in Control

      In the event of a Change in Control of the Company, the value of the Participant’s Account, determined as of the date of the Change in Control, shall be immediately paid to the Participant in a single sum cash payment, notwithstanding any prior distribution election made by the Participant. For purposes of this Section 10, the term “Change in Control” has the same meaning as in the Visteon Corporation Restricted Stock Plan for Non-Employee Directors.

Section 11.     Term, Termination and Amendment

      (a) Unless terminated earlier pursuant to subsection (b) below, this Plan shall terminate on May 12, 2014.

      (b) The Board reserves the right to amend or terminate this Plan at any time; provided that the authority of the Administrative Committee to administer the Plan shall extend beyond the date of the Plan’s termination; and provided further that no amendment or termination of the Plan shall adversely affect the rights of any Participant or beneficiary to benefits then accrued without the written consent of the affected Participant or beneficiary.

Section 12.     Miscellaneous

      (a) Governing Law. This Plan shall be governed by and construed in accordance with the internal laws of the State of Delaware, without reference to the conflicts of law principles thereof.

      (b) Severability. If any provision of the Plan is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction or as to any person, or under any law deemed applicable by the Administrative Committee, such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Administrative Committee, materially altering the intent of the Plan, such provision shall be stricken as to such jurisdiction or person, and the remainder of the Plan shall remain in full force and effect.

      (c) Successors and Assigns. The Plan shall be binding upon, and inure to the benefit of, the Company and its successors and assigns, and upon any person acquiring, whether by merger, consolidation, purchase of assets or otherwise, all or substantially all of the Company’s assets and business.

C-5


Table of Contents

APPENDIX D

DIRECTIONS TO HOTEL DU PONT

From Philadelphia on I-95 South

      1. Take I-95 South through Chester to Wilmington.

      2. Follow I-95 South to Delaware Exit 7A marked “52 South Delaware Avenue”.

      3. Follow exit road (11th Street) to intersection with Delaware Avenue marked “52 South, Business District”.

      4. At the Delaware intersection, bear left, continuing on 11th Street.

      5. Follow 11th Street through four traffic lights. Hotel du Pont is on the right. Valet Parking is available at Hotel entrance. For self-parking, turn left on Orange Street, Car Park is on left.

From Baltimore on I-95 North

      1. Follow I-95 North to Wilmington, take Exit 7 marked “Route 52, Delaware Ave.”

      2. From right lane, take Exit 7 onto Addams Street.

      3. At the third traffic light on Addams Street, turn right. Follow sign marked “52 South, Business District”.

      4. At the intersection of Delaware Avenue, bear left, continuing on 11th Street.

      5. Follow 11th Street through four traffic lights. Hotel du Pont is on the right. Valet Parking is available at Hotel entrance. For self-parking, turn left on Orange Street, Car Park is on left.

D-1


Table of Contents

(VISTEON CORPORATION LOGO)

  (RECYCLED LOGO) (SOY INK LOGO)
This Proxy Statement is printed entirely on recycled and recyclable paper. Soy ink, rather than petroleum-based ink, is used.  

5859-PS-04


Table of Contents

     
(visteon logo)   YOUR VOTE IS IMPORTANT
VOTE BY INTERNET / TELEPHONE
24 HOURS A DAY, 7 DAYS A WEEK
                             
INTERNET       TELEPHONE       MAIL
 
                           
https://www.proxyvotenow.com/vc     1-866-214-3792            
 
                           
  Go to the website         Use any touch-tone telephone.         Mark, sign and date your proxy card.
  address listed above.   OR     Have your proxy card ready.   OR     Detach your proxy card.
  Have your proxy card ready.         Follow the simple recorded         Return your proxy card in the
  Follow the simple instructions that appear on your computer screen.           instructions.           postage-paid envelope provided.
     

      

            


 
 

\/ DETACH PROXY CARD HERE TO VOTE BY MAIL \/


                     
Please Vote, Sign, Date and
  x                
Return Promptly in the
  Votes must be indicated                
Enclosed Envelope.
  (x) in Black or Blue ink.                

         
 
       
1.   Elect four directors to the Board of Directors for three-year terms. The Board has nominated for re-election;
  Nominees:   01 — Steven K. Hamp, 02 — Michael F. Johnston 03 — Karl J. Krapek and 04 — Robert M. Teeter, all current directors.
                     
FOR
ALL
  o   WITHHOLD
FOR ALL
  o   EXCEPTIONS*   o

*Instructions: To withhold authority to vote for any individual nominee, mark the “Exceptions” box and write that nominee’s name on the following blank line.

     
Exceptions
   
                 
        FOR   AGAINST   ABSTAIN
2.
  Ratify the appointment of PricewaterhouseCoopers LLP as the company’s independent auditors for fiscal year 2004.   o   o   o
                 
        FOR   AGAINST   ABSTAIN
3.
  Approve the Visteon Corporation 2004 Incentive Plan, as amended and restated.   o   o   o
               
4.
  Approve the Visteon Corporation Non-Employee Director Stock Unit Plan.   o   o   o
               
5.
  A shareholder proposal relating to the adoption of a stockholder rights plan.   o   o   o
               
6.
  A shareholder proposal relating to the adoption of a code for the company’s international operations.   o   o   o
               
7.
  A shareholder proposal relating to voting leverage.   o   o   o

To change your address, please mark this box.        o



     
 
 
    S C A N   L I N E
 

 

             
 
Date
 
Share Owner sign here
 
Co-Owner sign here

 


Table of Contents

ADMISSION TICKET
Annual Meeting of Stockholders
May 12, 2004, 11a.m. E.D.T.
Hotel du Pont
Wilmington, Delaware 19801

DIRECTIONS:

1) FROM THE SOUTH: Take I-95 North to Wilmington Exit 7 marked “Route 52, Delaware Avenue”. From right lane take Exit 7 onto Adams Street. At the third traffic light on Adams Street, turn right onto 11th Street. At Delaware Avenue intersection stay left continuing on 11th Street. Follow 11th Street through four traffic lights. The Hotel du Pont is on the right at the Corner of 11th and Market St.

2) FROM THE NORTH: Follow I-95 South to exit 7A marked “Route 52, South Delaware Avenue” (11th Street). At Delaware Avenue intersection, stay left continuing on 11th Street. Follow 11th Street through four traffic lights. The Hotel du Pont is on the right at the Corner of 11th and Market St.

       


 

(visteon logo)   VISTEON CORPORATION    

Proxy solicited on behalf of the Board of Directors for the Annual Meeting of Stockholders

     The undersigned hereby appoints Stacy L. Fox and Peter Look, or either of them, proxies with power of substitution, to vote all the shares of the Common Stock which the undersigned is entitled to vote on all matters, unless the contrary is indicated on the reverse side hereof, which may come before Visteon’s Annual Meeting of Stockholders to be held at the Hotel du Pont, 11th & Market Streets, Wilmington, DE, at 11:00 a.m., eastern daylight savings time, on May 12, 2004.

     Unless a contrary direction is indicated, the proxies shall vote the shares (a) “FOR” the election as directors of all the nominees named in the Proxy Statement or any other person selected by the Board of Directors in substitution for any of the nominees (Proposal #1), (b) “FOR” Proposals #2, #3 and #4 and (c) “AGAINST” Proposals #5, #6 and #7, each of which is set forth in the Proxy Statement.

(Continued and to be signed on the reverse side)

  To include any comments, please mark this box. o VISTEON CORPORATION
P.O. BOX 11117
NEWYORK, N.Y. 10203-0117

     Comments or change of address