OCCIDENTAL PETROLEUM CORPORATION 2005 LONG-TERM INCENTIVE PLAN
The purposes of this Plan are (i) to furnish a significant incentive to the
employees and non-employee Directors of the Company and its subsidiaries by
making available to them the benefits of increased ownership of Shares (ii) to
promote the alignment of the interests of employees and non-employee Directors
on the one hand and stockholders on the other hand and (iii) to assist in the
recruitment and retention of employees and non-employee Directors.
"BOARD" means the Board of Directors of the Company.
"BUSINESS COMBINATION" means a merger, consolidation, or other reorganization,
with or into, or the sale of all or substantially all of the Company's business
and/or assets as an entirety to, one or more entities that are not subsidiaries
or other affiliates of the Company.
"CHANGE IN CONTROL" means the occurrence of any of the following events:
(a) Approval by the stockholders of the Company of the dissolution or
liquidation of the Company, other than in the context of a transaction that does
not constitute a Change in Control under clause (b) below;
(b) Consummation of a Business Combination, unless (1) as a result of the
Business Combination, more than 50 percent of the outstanding voting power of
the Successor Entity immediately after the reorganization is, or will be, owned,
directly or indirectly, by persons who were holders of the Company's voting
securities immediately before the Business Combination; (2) no "person" (as such
term is used in Sections 13(d) and 14(d) of the Exchange Act), excluding the
Successor Entity or an Excluded Person, beneficially owns, directly or
indirectly, more than 20 percent of the outstanding shares or the combined
voting power of the outstanding voting securities of the Successor Entity, after
giving effect to the Business Combination, except to the extent that such
ownership existed prior to the Business Combination; and (3) at least 50 percent
of the members of the board of directors of the entity resulting from the
Business Combination were Directors at the time of the execution of the initial
agreement or of the action of the Board approving the Business Combination;
(c) Any "person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act, but excluding any Excluded Person) is or becomes the beneficial
owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities of the Company representing 20 percent or more of the combined
voting power of the Company's then outstanding voting securities, other than as
a result of (1) an acquisition directly from the Company; (2) an acquisition by
the Company; or (3) an acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or a Successor Entity; or
(d) During any period not longer than two consecutive years, individuals who at
the beginning of such period constituted the Board cease to constitute at least
a majority thereof, unless the election, or the nomination for election by the
Company's stockholders, of each new Director was approved by a vote of at least
two-thirds (2/3) of the Directors then still in office who were Directors at the
beginning of such period (including for these purposes, new members whose
election or nomination was so approved), but excluding, for this purpose, any
such individual whose initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the election or removal of
Directors or other actual or threatened solicitation of proxies or consents by
or on behalf of a person other than the Board.
"CODE" means the Internal Revenue Code of 1986, as amended from time to time.
"COMMITTEE" means the Executive Compensation and Human Resources Committee of
the Board or its successor, which shall be composed of not less than two members
of the Board, each of whom shall be a "non-employee director" within the meaning
of Rule 16b-3 and an "outside director" within the meaning of Section 162(m).
"COMPANY" means Occidental Petroleum Corporation, a Delaware corporation.
"DIRECTOR" means a member of the Board.
"DISABILITY" means permanent and total disability as defined in Section 22(e)(3)
of the Code.
"EFFECTIVE DATE" means May 6, 2005, or such later date as this Plan is approved
by the stockholders of the Company.
"ELIGIBLE PERSON" means any person who is an officer or employee of the Company
or any of its subsidiaries and any person who is a non-employee Director;
provided, however that a non-employee Director shall not be an Eligible Person
for purposes of awarding of ISOs.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended from time
"EXCLUDED PERSON" means any employee benefit plan of the Company and any trustee
or other fiduciary holding securities under a Company employee benefit plan or
any person described in and satisfying the conditions of Rule 13d-1(b)(i) of the
"FAIR MARKET VALUE" means the last reported sale price of a share of Common
Share on the New York Stock Exchange - Composite Transactions on the relevant
date or, if there are no reported sales on such date, then the last reported
sales price on the next preceding day on which such a sale is transacted.
"ISO" means an incentive stock option qualified under Section 422 of the Code.
"PERFORMANCE-BASED AWARD" means an award whose grant, vesting, exercisability or
payment depends upon on any one or more of the Performance Objectives, in each
case relative to Performance Goals, on an absolute or relative basis (including
comparisons to peer companies) or ratio with other Performance Objectives,
either as reported currency or constant currency, pre-tax or after-tax, before
or after special charges, for the Company on a consolidated basis or for one or
more subsidiaries, segments, divisions or business units, or any combination of
the foregoing. The applicable performance period may range from one to five
"PERFORMANCE GOAL" means a preestablished targeted level or levels of any one or
more Performance Objectives.
"PERFORMANCE OBJECTIVES" mean any one or more of the following business
criteria: A/R day sales outstanding, A/R to sales, debt, debt to debt plus
stockholder equity, debt to EBIT or EBITDA, EBIT, EBITDA, EPS, EVA, expense
reduction, interest coverage, inventory to sales, inventory turns, net income,
operating cash flow, pre-tax margin, return on assets, return on capital
employed, return on equity, sales, stock price appreciation, and total
stockholder return (TSR), each as defined further in Appendix A. These terms are
used as applied under generally accepted accounting principles (if applicable)
and in the Company's financial reporting.
"PLAN" means this Occidental Petroleum Corporation 2005 Long-Term Incentive
Plan, as amended from time to time.
"QUALIFYING OPTIONS" mean options and stock appreciation rights granted with an
exercise price not less than Fair Market Value on the date of grant. Qualifying
Options are Performance-Based Awards.
"RULE 16B-3" means Rule 16b-3 under Section 16 of the Exchange Act.
"SECTION 162(m)" means Section 162(m) of the Code and the applicable regulations
and interpretations thereunder.
"SECTION 162(m) AWARD" means a Performance-Based Award intended to satisfy the
requirements for "performance-based compensation" within the meaning of Section
"SHARE LIMIT" means the maximum number of Shares, as adjusted, that may be
delivered pursuant to all awards granted under this Plan.
"SHARES" mean the Company's Common Stock, par value $0.20 per share.
"SUCCESSOR ENTITY" means the surviving or resulting entity or a parent thereof
of a Business Combination.
3. SHARES SUBJECT TO THE PLAN
3.1 AGGREGATE SHARE LIMIT - Subject to adjustment as provided in or pursuant to
this Section 3 or Section 7, a total of seventeen million (17,000,000) Shares
shall be authorized for issuance pursuant to awards granted under this Plan. Any
Shares issued in connection with awards other than options and stock
appreciation rights shall be counted against the limit described above as three
(3) Shares for every one Share issued in connection with such award or by which
the award is valued by reference as three (3) Shares.
3.2 INDIVIDUAL LIMIT - No individual shall be granted options, stock
appreciation rights or other awards in any 36-month period covering more than
four million (4,000,000) Shares, and in the case of ISOs granted to any
individual who owns more than ten percent of the outstanding stock of the
Company within the meaning of Section 422 of the Code the maximum term may not
exceed five (5) years and the minimum exercise price may not be less than 110
percent of Fair Market Value on the date of grant.
3.3 REISSUE OF AWARDS AND SHARES - Awards payable in cash or payable in cash or
Shares, including restricted shares, that are forfeited, cancelled, or for any
reason do not vest under this Plan, and Shares that are subject to awards that
expire or for any reason are terminated, cancelled or fail to vest shall be
available for subsequent awards under this Plan. If an award under this Plan is
or may be settled only in cash, such award need not be counted against any of
the share limits under this Section 3, except as may be required to preserve the
status of an award as "performance-based compensation" under Section 162(m).
Shares subject to options or stock appreciation rights that are exercised shall
not be available for subsequent awards. The following transactions involving
Shares will not result in additional Shares becoming available for subsequent
awards under this Plan: (i) Shares tendered in payment of an option; (ii) Shares
withheld for taxes; and (iii) Shares repurchased by the Company using option
4. PLAN ADMINISTRATION
This Plan shall be administered by the Committee.
4.1 POWERS OF THE COMMITTEE - Subject to the express provisions of this Plan,
the Committee shall be authorized and empowered to do all things necessary or
desirable in connection with the authorization of awards and the administration
of this Plan within its delegated authority, including, without limitation, the
(a) adopt, amend and rescind rules, regulations and procedures relating to
this Plan and its administration or the awards granted under this Plan and
determine the forms of awards;
(b) determine who is an Eligible Person and to which Eligible Persons, if
any, awards will be granted under this Plan;
(c) grant awards to Eligible Persons and determine the terms and
conditions of such awards, including but not limited to the number and
value of Shares issuable pursuant thereto, the times (subject to Section
5.5) at which and conditions upon which awards become exercisable or vest
or shall expire or terminate, and (subject to applicable law) the
consideration, if any, to be paid upon receipt, exercise or vesting of
(d) determine the date of grant of an award, which may be a designated
date after but not before the date of the Committee's action;
(e) determine whether, and the extent to which, adjustments are required
pursuant to Section 7 hereof;
(f) interpret and construe this Plan and the terms and conditions of any
award granted hereunder, whether before or after the date set forth in
(g) determine the circumstances under which, consistent with the
provisions of Section 8.2, any outstanding award may be amended and make
any amendments thereto that the Committee determines are necessary or
(h) acquire or settle rights under options, stock appreciation rights or
other awards in cash, stock of equivalent value, or other consideration.
All authority granted herein (except as provided in Section 6) shall remain in
effect so long as any award remains outstanding under this Plan.
4.2 SPECIFIC COMMITTEE RESPONSIBILITY AND DISCRETION REGARDING AWARDS - Subject
to the express provisions of this Plan, the Committee, in its sole and absolute
discretion, shall determine all of the terms and conditions of each award
granted under this Plan, which terms and conditions may include, subject to such
limitations as the Committee may from time to time impose, among other things,
(a) permit the recipient of such award to pay the purchase price of the
Shares or other property issuable pursuant to such award, or any applicable
tax withholding obligation upon such issuance or in respect of such award
or Shares, in whole or in part, by any one or more of the following:
(i) cash, cash equivalent, or electronic funds transfer,
(ii) the delivery of previously owned shares of capital stock of the
Company (including shares acquired as or pursuant to awards) or other
(iii) a reduction in the amount of Shares or other property otherwise
issuable pursuant to such award,
(iv) a cashless exercise, or
(v) any other legal consideration the Committee deems appropriate;
(b) qualify such award as an ISO;
(c) accelerate the receipt of benefits pursuant to an award or adjust the
exercisability, term (subject to other limits) or vesting schedule of any
or all outstanding awards, adjust the number of Shares subject to any
award, adjust the price of any or all outstanding awards or otherwise
change previously imposed terms and conditions, pursuant to a termination
of employment or an event referenced in Section 7 (in which case the
Committee's discretion shall be exercised in a manner consistent with
Section 7) or in other circumstances or upon the occurrence of other events
as deemed appropriate by the Committee, by amendment of an outstanding
award, by substitution of an outstanding award, by waiver or by other
legally valid means (which may result, among other changes, in a greater or
lesser number of shares subject to the award, a shorter or longer vesting
or exercise period, or, except as provided below, an exercise or purchase
price that is higher or lower than the original or prior award), in each
case subject to Sections 3 and 8.2; provided, however, that in no case
(other than an adjustment contemplated by Section 7.2) shall the exercise
price of any option or stock appreciation right be reduced by an amendment
to the award or a cancellation and re-grant of the award to effect a
repricing of the award to a price below the Fair Market Value of the
underlying Shares on the grant date of the original option or stock
appreciation right unless specific stockholder consent is obtained;
(d) authorize (subject to Sections 7, 8, and 10) the conversion,
succession or substitution of one or more outstanding awards upon the
occurrence of an event of the type described in Section 7 or in other
circumstances or upon the occurrence of other events as deemed appropriate
by the Committee; and
(e) determine the value of and acquire or otherwise settle awards upon
termination of employment, upon such terms as the Committee (subject to
Sections 7, 8 and 10) deems appropriate.
4.3 DELEGATION - Subject to Section 4.5, the Board may delegate different
levels of authority to different committees with administrative and grant
authority under this Plan, provided that each designated committee granting any
awards hereunder shall consist exclusively of a member or members of the Board.
A majority of the members of the acting committee shall constitute a quorum. The
vote of a majority of the members present assuming the presence of a quorum or
the unanimous written consent of the Committee shall constitute action by the
committee. The Committee may delegate authority to grant awards under this Plan
for new employees to an officer of the Company who is also a director and may
delegate ministerial, non-discretionary functions to individuals who are
officers or employees of the Company or a subsidiary or to third parties.
4.4 BIFURCATION - Notwithstanding anything to the contrary in this Plan, the
provisions of this Plan may at any time be bifurcated by the Board or the
Committee in any manner so that provisions of any award agreement (or this Plan)
intended or required in order to satisfy the applicable requirements of Rule
16b-3, Section 162(m) or other applicable law, to the extent permitted thereby,
are applicable only to persons subject to those provisions and to those awards
to those persons intended to satisfy the requirements of the applicable legal
4.5 AWARDS TO NON-EMPLOYEE DIRECTORS - Notwithstanding any provision in this
Plan to the contrary, the Board shall have the authority, in its sole and
absolute discretion, to select non-employee Directors to receive awards other
than ISOs under this Plan. The Board shall set the terms of any such awards in
its sole and absolute discretion, and the Board shall be responsible for
administering and construing such awards in substantially the same manner that
the Committee administers and construes awards to other Eligible Persons.
5.1 TYPE AND FORM OF AWARDS - All awards shall be evidenced in writing
(including electronic form), substantially in the form approved by the
Committee. The types of awards that the Committee may grant include, but are not
limited to, any of the following, on an immediate or deferred basis, either
singly, or in tandem or in combination with or in substitution for, other awards
of the same or another type: (i) Shares, (ii) options (ISOs or nonqualified
stock options), stock appreciation rights (including limited stock appreciation
rights), restricted stock (which shall vest over a period of not less than three
years), stock units, or similar rights to purchase or acquire shares, whether at
a fixed or variable price or ratio related to the Shares, upon the passage of
time, the occurrence of one or more events, or the satisfaction of Performance
Goals or other conditions, or any combination thereof, (iii) any similar
securities with a value derived from the value of or related to the Shares or
other securities of the Company and/or returns thereon, or (iv) cash.
Share-based awards may include (without limitation) stock options, stock
purchase rights, stock bonuses, stock units, stock appreciation rights, limited
stock appreciation rights, phantom stock, dividend equivalents (independently or
in tandem with any form of stock grant), dividend rights (independently or in
tandem with any form of stock grant), Shares, any of which may be payable in
Shares or cash, and may consist of one or more of such features in any
5.2 PERFORMANCE-BASED AWARDS - Any of the types of awards listed in Section 5.1
may be granted as Performance-Based Awards.
5.2.1 SECTION 162(m) AWARDS. The Committee has discretion to determine if
any Performance-Based Award is intended to be a Section 162(m) Award. The
specific Performance Goals in respect of Section 162(m) Awards, other than
Qualifying Options, must be approved by the Committee in advance of any
applicable deadlines under Section 162(m) and while the performance
relating to those goals remains substantially uncertain within the meaning
thereof. The persons eligible for Section 162(m) Awards shall be executive
officers of the Company and its subsidiaries and, in the discretion of the
Committee, other employees of the Company or its subsidiaries who are
designated by the Committee to receive a Section 162(m) Award because they
may be executive officers of the Company or its subsidiaries by the time
their awards are exercised, vested or paid. Except as otherwise permitted
under Section 162(m), before any Section 162(m) Award is paid, the
Committee must certify that the Performance Goal and any other material
terms of the Section 162(m) Award were in fact satisfied.
5.2.2 RESERVATION OF DISCRETION - The Committee shall have discretion to
determine the conditions, restrictions or other limitations, in accordance
with the terms of this Plan and, in the case of Section 162(m) Awards, the
limitations of Section 162(m), on the payment of individual
Performance-Based Awards under this Section 5.2.
5.2.3 ADJUSTMENTS - Performance Goals or other features of an award under
this Section 5.2 may be (i) adjusted to reflect a change in corporate
capitalization, a corporate transaction (such as a reorganization,
combination, separation, merger, acquisition, or any combination of the
foregoing) or a complete or partial corporate liquidation, or (ii)
calculated either without regard for or to reflect any change in accounting
policies or practices affecting the Company and/or the Performance
Objectives or Performance Goals, or (iii) adjusted for any other
circumstances or event, or (iv) any combination of (i) through (iii), but
only to the extent in each case that such adjustment or determination in
respect of Section 162(m) Awards would be consistent with the requirements
of Section 162(m) to qualify as performance-based compensation.
5.3 CONSIDERATION FOR SHARES - Shares may be issued pursuant to an award for
any lawful consideration as determined by the Committee, including, without
limitation, services rendered by the recipient of such award, but shall not be
issued for less than the minimum lawful consideration. Awards may be payable in
cash, stock or other consideration or any combination thereof, as the Committee
shall designate in or (except as required by Section 5.2) by amendment to the
terms and conditions governing such award.
5.4 LIMITED RIGHTS - Except as otherwise expressly authorized by the Committee
or this Plan or in the applicable award terms and conditions, a participant will
not be entitled to any privilege of stock ownership as to any Shares not
actually delivered to and held of record by the participant. No adjustment will
be made for dividends or other rights as a stockholder for which a record date
is prior to such date of delivery.
5.5 OPTION/STOCK APPRECIATION RIGHT PRICING AND TERM LIMITS - The purchase price
per share of the Shares covered by any option or the base price of any stock
appreciation right shall be determined by the Committee at the time of the
grant, but shall not be less than 100 percent of the Fair Market Value of the
Shares on the date of grant. Any option, stock appreciation right, warrant or
similar right shall expire and any other award shall vest not more than 10 years
after the date of grant. An award may be converted or convertible,
notwithstanding the foregoing limits, into or payable in, Shares or another
award that otherwise satisfies the requirements of this Plan.
5.6 TRANSFER RESTRICTIONS - Unless otherwise expressly provided in or permitted
by this Section 5.6, by applicable law or by the award terms and conditions (i)
all awards are nontransferable and shall not be subject in any manner to sale,
transfer, anticipation, alienation, assignment, pledge, encumbrance or charge;
(ii) awards shall be exercised only by the holder; and (iii) amounts payable or
shares issuable pursuant to an award shall be delivered only to (or for the
account of) the holder.
5.6.1 EXCEPTIONS BY COMMITTEE ACTION - The Committee, in its sole
discretion, may permit an award to be transferred for estate and/or tax
planning purposes and on a basis consistent with the Company's lawful issue
of securities and the incentive purposes of the award and this Plan.
Notwithstanding the foregoing, awards intended as ISOs or restricted stock
awards for purposes of the Code shall be subject to any and all additional
transfer restrictions necessary to preserve their status as ISOs or
restricted shares, as the case may be, under the Code.
5.6.2 EXCLUSIONS - The exercise and transfer restrictions in this Section
5.6 shall not apply to:
(a) transfers to the Company,
(b) the designation of a beneficiary to receive benefits in the event
of the participant's death or, if the participant has died, transfers
to or exercise by the participant's beneficiary, or, in the absence of
a validly designated beneficiary, transfers by will or the laws of
descent and distribution,
(c) transfers pursuant to a domestic relations order (if approved or
ratified by the Committee), if (in the case of ISOs) permitted by the
(d) if the participant has suffered a Disability, permitted transfers
to or exercises on behalf of the holder by his or her legal
(e) the authorization by the Committee of "cashless exercise"
procedures with third parties who finance or who otherwise facilitate
the exercise of awards consistent with applicable laws and the express
authorization of the Committee.
5.7 TAX WITHHOLDING - Upon any exercise, vesting, or payment of any award, the
(a) require the recipient (or his or her heirs, personal representatives
or beneficiaries, as the case may be) to pay or provide for payment of the
amount of any taxes which the Company or any subsidiary may be required to
withhold with respect to such transaction; or
(b) deduct from any amount payable in cash the amount of any taxes that
the Company or any subsidiary may be required to withhold with respect to
such cash amount.
5.8 POSSIBLE SHARE OFFSET - In any case where a tax is required to be withheld
in connection with the delivery of Shares under this Plan, the Committee may
require or may permit the holder the right to offset, pursuant to such rules and
subject to such conditions as the Committee may establish, the number of shares
to be delivered by (or otherwise reacquire) the appropriate number of shares
valued at their then Fair Market Value, to satisfy the minimum statutory
withholding taxes with respect thereto.
5.9 CASH AWARDS - The Committee shall have the express authority to pay awards
in cash under this Plan, whether in lieu of, in addition to or as part of
5.10 TERMINATION OF EMPLOYMENT OR SERVICE - If an Eligible Person's employment
with or service to the Company or to any parent or subsidiary terminates for any
reason, his or her outstanding awards may thereafter be exercised (if at all) to
the extent provided in the agreement evidencing such award, or as otherwise
determined by the Committee.
6. TERM OF PLAN
No award shall be granted under this Plan after the tenth anniversary of the
Effective Date of this Plan. After that date, this Plan shall continue in effect
as to then outstanding awards. Any then outstanding award may be amended
thereafter in any manner that would have been permitted earlier, except that no
such amendment shall increase the number of Shares subject to, comprising or
referenced in the award or reduce the exercise or base price of an option or
stock appreciation right or permit cash payments in an amount that exceeds the
limits of Section 3 (as adjusted pursuant to Section 7.2).
7. ADJUSTMENTS; CHANGE IN CONTROL
7.1 CHANGE IN CONTROL; ACCELERATION AND TERMINATION OF AWARDS - Unless prior to
a Change in Control, the Committee determines that, upon its occurrence,
benefits under any or all awards will not accelerate or determines that only
certain or limited benefits under any or all awards will be accelerated and the
extent to which they will be accelerated, or establishes a different time in
respect of such Change in Control for such acceleration, then upon the
occurrence of a Change in Control:
(a) each option and stock appreciation right shall become immediately
(b) restricted stock shall immediately vest free of restrictions,
(c) each award under Section 5.2 shall become payable to the participant,
(d) the number of Shares covered by each stock unit account shall be
issued to the participant, and
(e) any other rights of a participant under any other award will be
accelerated to give the participant the benefit intended under any such
The Committee may override the limitations on acceleration in this Section 7.1
by express provision in the award agreement and may accord any Eligible Person a
right to refuse any acceleration, whether pursuant to the award agreement or
otherwise, in such circumstances as the Committee may approve. Any acceleration
of awards shall comply with applicable legal and regulatory requirements.
Without limiting the generality of the foregoing, the Committee may deem an
acceleration to occur immediately prior to or up to 30 days before the
applicable event and/or reinstate the original terms of an award if an event
giving rise to an acceleration does not occur.
If any option or other right to acquire Shares under this Plan has been fully
accelerated as required or permitted by this Plan but is not exercised prior to
(i) a dissolution of the Company, or (ii) an event described in this Section 7.1
that the Company does not survive, or (iii) the consummation of an event
described in Section 7.2 involving a Change in Control approved by the Board,
such option or right will terminate, subject to any provision that has been
expressly made by the Committee or the Board through a plan of reorganization
approved by the Board or otherwise for the survival, substitution, assumption,
exchange or other settlement of such option or right.
7.2 ADJUSTMENTS - The following provisions will apply if any extraordinary
dividend or other extraordinary distribution occurs in respect of the Shares
(whether in the form of cash, Shares, other securities, or other property), or
any reclassification, recapitalization, stock split (including a stock split in
the form of a stock dividend), reverse stock split, reorganization, merger,
combination, consolidation, split-up, spin-off, repurchase, or exchange of
Shares or other securities of the Company, or any similar, unusual or
extraordinary corporate transaction (or event in respect of the Shares) or a
sale of substantially all the assets of the Company as an entirety occurs. The
Committee will, in such manner and to such extent (if any) as it deems
appropriate and equitable:
(a) proportionately adjust any or all of (i) the number and type of Shares
(or other securities) that thereafter may be made the subject of awards
(including the specific maxima and numbers of shares set forth elsewhere in
this Plan), (ii) the number, amount and type of shares (or other securities
or property) subject to any or all outstanding awards, (iii) the grant,
purchase, or exercise price of any or all outstanding awards, (iv) the
securities, cash or other property
deliverable upon exercise of any outstanding awards, or (v) the Performance
Goals or Performance Objectives appropriate to any outstanding awards, or
(b) in the case of an extraordinary dividend or other distribution,
recapitalization, reclassification, merger, reorganization, consolidation,
combination, sale of assets, split-up, exchange, or spin-off, make
provision for a cash payment or for the substitution or exchange of any or
all outstanding awards or the cash, securities or property deliverable to
the holder of any or all outstanding awards based upon the distribution or
consideration payable to holders of the Shares of the Company upon or in
respect of such event.
In each case, with respect to awards of ISOs, no such adjustment will be made
that would cause this Plan to violate Section 422 or 424 of the Code or any
successor provisions without the written consent of holders materially adversely
affected thereby. In any of such events, the Committee may take such action
sufficiently prior to such event if necessary or deemed appropriate to permit
the participant to realize the benefits intended to be conveyed with respect to
the underlying shares in the same manner as is available to stockholders
8. PLAN AMENDMENT AND TERMINATION
8.1 AUTHORITY OF THE BOARD - Subject to Sections 8.2 and 8.3 and New York Stock
Exchange Rules applicable to companies listed on such Exchange, the Board may
amend or terminate this Plan at any time and in any manner.
8.2 RESTRICTIONS - No amendment or termination of this Plan or change in or
affecting any outstanding award shall deprive in any material respect the
holder, without the consent of the holder, of any of his or her rights or
benefits under or with respect to the award. Adjustments contemplated by Section
7 shall not be deemed to constitute a change requiring such consent.
8.3 STOCKHOLDER APPROVAL - Stockholder approval shall be required for any
amendment to this Plan that would:
(a) materially increase the benefits accruing to participants under this
(b) materially increase the number of securities which may be issued under
this Plan, or
(c) materially modify the requirements as to eligibility for participation
in this Plan.
9. LEGAL MATTERS
9.1 COMPLIANCE AND CHOICE OF LAW; SEVERABILITY - This Plan, the granting and
vesting of awards under this Plan and the issuance and delivery of Shares and/or
the payment of money under this Plan or under awards granted hereunder are
subject to compliance with all applicable federal and state laws, rules and
regulations and to such approvals by any listing, regulatory or governmental
authority as may, in the opinion of counsel for the Company, be necessary or
advisable in connection therewith. This Plan, the awards, all documents
evidencing awards and all other related documents shall be governed by, and
construed in accordance with the laws of the state of Delaware. If any provision
shall be held by a court of competent jurisdiction to be invalid and
unenforceable, the remaining provisions of this Plan shall continue in effect.
9.2 NON-EXCLUSIVITY OF PLAN - Nothing in this Plan shall limit or be deemed to
limit the authority of the Board or the Committee to grant awards or authorize
any other compensation, with or without reference to the Shares, under any other
plan or authority.
9.3 NO EMPLOYMENT CONTRACT - Nothing contained in this Plan (or in any other
documents relating to this Plan or to any award) shall confer upon any Eligible
Person or other participant any right to continue in the employ or other service
of the Company or any subsidiary or constitute any contract or agreement of
employment or other service, nor shall interfere in any way with the right of
the Company or any subsidiary to change such person's compensation or other
benefits or to terminate the employment of such person, with or without cause.
10.1 UNFUNDED PLAN - Unless otherwise determined by the Committee, this Plan
shall be unfunded and shall not create (or be construed to create) a trust or a
separate fund or funds. This Plan shall not establish any fiduciary relationship
between the Company or any subsidiary and any participant or other person. To
the extent any person holds any rights by virtue of awards granted under this
Plan, such rights shall be no greater than the rights of an unsecured general
creditor of the Company.
10.2 AWARDS NOT COMPENSATION - Unless otherwise determined by the Committee,
settlements of awards received by participants under this Plan shall not be
deemed a part of a participant's regular, recurring compensation for purposes of
calculating payments or benefits from any Company benefit plan, severance
program or severance pay law of any country.
10.3 FRACTIONAL SHARES - The Company shall not be required to issue any
fractional Shares pursuant to this Plan. The Committee may provide for the
elimination of fractions or for the settlement thereof in cash.
10.4 FOREIGN PARTICIPANTS - No award shall be made to a participant who is a
foreign national or who is employed by the Company or any subsidiary outside the
United States of America if such award would violate applicable local law. In
order to facilitate the making of an award, the Committee may provide for such
special terms for awards to participants who are foreign nationals, or who are
employed by the Company or any subsidiary outside of the United States of
America, as the Committee may consider necessary or appropriate to accommodate
differences in local law, tax policy or custom. Moreover, the Committee may
approve such supplements to or amendments to this Plan as it may consider
necessary or appropriate for such purposes unless stockholder approval for any
such change would be required in accordance with the provisions of Section 8.
APPENDIX A TO 2005 LONG-TERM INCENTIVE PLAN
The Performance Objectives shall have the meanings set forth below, in each case
as reported in the financial statements of the Company or applicable subsidiary,
division, segment, or unit ("financial statements").
"A/R DAY SALES OUTSTANDING" means trade accounts receivable (A/R)(net of
reserves) divided by latest historical day Sales.
"A/R TO SALES" means the ratio of accounts receivable to Sales.
"DEBT" means all accounts classified as such in the financial statements.
"DEBT TO DEBT PLUS STOCKHOLDER EQUITY" means the ratio of Debt to Debt plus
"DEBT TO EBIT OR EBITDA" means the ratio of Debt to EBIT or EBITDA.
"EBIT" means Net Income before interest expense and taxes, which may be adjusted
for special charges, if any.
"EBITDA" means Net Income before interest expense, taxes, depreciation and
amortization, which may be adjusted for special charges, if any.
"EPS" means Net Income divided by the weighted average number of Shares
outstanding. The Shares outstanding may be adjusted to include the dilutive
effect of stock options, restricted stock and other dilutive financial
instruments as required by generally accepted accounting principles.
"EVA" means operating profit after tax (OPAT) (which is defined as Net Income
after tax but before tax adjusted interest income and expense and goodwill
amortization), less a charge for the use of capital (average total capital as
such term is used below under "Return on Capital Employed"). Net Income may be
adjusted for special charges and acquisition activity costs, if any. The charge
for capital is the percentage cost of capital times the average total capital.
The cost of capital is the weighted average cost of capital as calculated for
"EXPENSE REDUCTION" means reduction in actual expense or an improvement in the
expense to Sales ratio compared to a target or prior year actual expense to
Sales ratio, which may be adjusted for special charges, if any.
"INTEREST COVERAGE" means the ratio of EBIT or EBITDA to interest expense. Net
Income may be adjusted for special charges.
"INVENTORY TO SALES" means the ratio of total inventory to Sales.
"INVENTORY TURNS" means the ratio of total cost of goods sold on a historical
basis to average net inventory. This ratio may be adjusted for special charges,
"NET INCOME" means the difference between total Sales plus other revenues and
net total costs and expenses, including income taxes.
"OPERATING CASH FLOW" means the net cash provided by operating activities less
net cash used by operations and investing activities as shown on the statement
of cash flows. The numbers relating to the foregoing may be adjusted for special
charges, if any.
"PRE-TAX MARGIN" means the ratio of earnings before income taxes to Sales.
Earnings may be adjusted for special charges, if any.
"RETURN ON ASSETS" means the ratio of Net Income to total average assets
including goodwill. Earnings may be adjusted for special charges and goodwill
amortization for comparative purposes.
"RETURN ON CAPITAL EMPLOYED" means the ratio of Net Income plus tax-effected
interest expense to long-term Debt plus stockholder equity.
"RETURN ON EQUITY" means the ratio of Net Income to stockholder equity.
"SALES" means sales, service and rental income from third parties net of
discounts, returns and allowances.
"STOCK PRICE APPRECIATION" means an increase, or an average annualized increase,
in the stock price or market value of the Shares of the Company after purchase
of, or the date of grant of, an award or above a specified stock price.
"TOTAL STOCKHOLDER RETURN OR TSR" means the appreciation in the price of a
Common Share plus reinvested dividends over a specified period of time.