(2)
| Reflects the number of shares (including dividend equivalents) received by Messrs. Elisman, Fenwick, Tedford, Monko and Buchenroth, respectively, upon the vesting of PSUs and RSUs and exercise of NQSOs during 2018. The PSUs that vested on December 31, 2018 were settled on March 6, 2019. | | | | | | | | | | Name | | NQSO Awards Number of Shares Acquired on Exercise (1) (#) | | NQSO Awards Value Realized on Exercise (1) ($) | | Stock Awards Number of Shares Acquired on Vesting (2),(3) (#) | | Stock Awards Value Realized on Vesting (2),(3) ($) | Boris Elisman | | 47,600 | | 233,272 | | 331,817 | | 2,742,934 | Neal V. Fenwick | | 31,400 | | 92,316 | | 74,467 | | 622,322 | Thomas W. Tedford | | 164,228 | | 946,468 | | 104,254 | | 871,249 | Cezary Monko | |
| |
| |
| |
| Pamela R. Schneider | | 0 | | 0 | | 60,209 | | 496,296 |
| | (1) | For Mr. Elisman, the value represents the difference between the strike price of $8.93 and $13.83, the fair market value of the Company’s common stock on February 16, 2018 when 47,600 NQSOs were exercised. For Mr. Fenwick, the value represents the difference between the exercise price of $8.93 and $11.87, the fair market value of the Company’s common stock on May 14, 2018 when 31,400 NQSOs were exercised. For Mr. Tedford, the value represents the difference between the strike price of $12.17 and $13.53, the fair market value of the Company’s common stock on February 15, 2018, the date of exercise for 19,231 NQSOs, and the difference between the strike price of $8.93 and $13.53, the fair market value of the Company’s common stock on February 15, 2018, the date of exercise for 28,600 NQSOs, and the difference between the strike price of $7.64 and $13.53, the fair market value of the Company’s common stock on February 15, 2018, the date of exercise for 48,921 NQSOs, and the difference between the strike price of $6.12 and $13.53, the fair market value of the Company’s common stock on February 15, 2018, the date of exercise for 67,476 NQSOs. |
| | (2) | The number of shares and values shown for Messrs. Elisman, Fenwick, and Tedford, and Ms. Schneider include 84,023, 20,006, 28,008, and 15,005 RSUs, respectively, which vested on March 4, 2018. The realized value was $1,062,891, $253,076, $354,301, and $189,813, respectively, calculated based upon the fair market value of the Company's common stock of $12.658, 2020. The realized value was based upon the fair market value of the Company’s common stock of $7.65 per share on the vesting date. |
| | (3) | The number of shares and values shown for Messrs. Elisman, Fenwick, Tedford, and Ms. Schneider also include 247,794, 54,461, 76,246, and 45,204 PSUs, respectively, from the three-year 2016-2018 LTIP PSU cycle that were earned and vested on December 31, 2018. The amounts of $1,680,043, $369,246, $516,948, and $306,483, respectively, represent the value as calculated based on the $6.78 closing price of the Company’s common stock on December 31, 2018. |
CEO PAY RATIO
Pursuant to the rules adopted by the SEC, we are required to disclose the ratio of the median of the annual total compensation of all our employees, other than our CEO, to the annual total compensation of our CEO, which we refer to as the "Pay Ratio."
CEO PAY RATIO Pursuant to the rules adopted by the SEC, we are required to disclose the ratio of the median of the annual total compensation of all our employees, other than our CEO, to the annual total compensation of our CEO, which we refer to as the “Pay Ratio.” The Pay Ratio is intended to be a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K. The table below reflects the Pay Ratio: CEO Annual Total Compensation | | | $4,456,783 | | Median Employee Annual Total Compensation | | | $40,736 | | Pay Ratio of CEO to Median Employee Compensation | | | 109:1 | |
We undertook the following steps to estimate the median annual compensation of each of our employees and identify a median employee: | | | CEO Annual Total Compensation | $4,682,019 | Median Employee Annual Total Compensation | $46,589 | Pay Ratio of CEO to Median Employee Compensation | 100:1 |
We undertook the following steps to estimate the median of the annual compensation of our employees and identify a median employee:
First, we determined our employee population as of October 1, 2018. On this date, without taking into account any adjustments, our employee population consisted of 6,805 employees, of which 2,447 were U.S. employees and 4,358 were non-U.S. employees. From this number, we excluded a total of 570 employees based upon the following approved SEC exceptions:First, we determined our employee population as of October 1, 2020. On this date, without taking into account any adjustments, our employee population consisted of 6,276 employees, of which 1,903 were U.S. employees and 4,373 were non-U.S. employees. From this number, we excluded employees based upon the following approved SEC exception:
• |
5% De Minimis Exception. We excluded a total of 328311 employees comprising all of the employees from the following countries: Czech Republic (128(123 employees), Greece (3 employees), Hungary (7 employees), Malaysia (17 employees), Portugal (110(99 employees), Romania (6 employees), Russia (20 employees), and Italy (90Turkey (36 employees). The excluded employees represent less than 5% of our total employee population. |
This resulted in 5,965 employees from 30 countries considered for purposes of determining our median employee. Second, for this employee population, we selected their 2020 base salary as our consistently-applied compensation measure. For a permanent employee, we used the hourly rate of pay and his or her regularly scheduled weekly hours of work to establish the annual salary. For a temporary employee, we used the hourly rate of pay and his or her regularly scheduled weekly hours of work measured as of October 1, 2020, and the anticipated number of weeks worked during 2020 to estimate an annual base salary. We then converted all foreign currency salaries to U.S. dollar equivalents using the closing market spot rates on October 1, 2020. From this calculation, we determined our representative median employee. We then calculated the annual total compensation for the representative median employee using the same methodology we use for our named executive officers in the 2020 Summary Compensation Table in this Proxy Statement. With respect to the annual total compensation of our CEO, we used the amount reported in the “Total” column of our 2020 Summary Compensation Table in this Proxy Statement. Our Pay Ratio has been calculated using selected assumptions, estimates and adjustments as permitted under Item 402(u) of Regulation S-K, and is a reasonable estimate calculated in a manner consistent with the Regulation. Other companies may use different methodologies, assumptions, estimates and adjustments, and therefore a comparison of our Pay Ratio to that of other companies will be limited in value. Acquisition Exception. We excluded 242 individuals employed by two affiliated companies of GOBA Internacional, S.A. de C.V. since we completed this acquisition in July 2018.
This resulted in 6,235 employees from 34 countries considered for purposes of determining our median employee.
Second, for this employee population, we selected their 2018 base salary as our consistently-applied compensation measure. For a permanent employee, we used the hourly rate of pay and his or her regularly scheduled weekly hours of work to establish the annual salary. For a temporary employee, we used the hourly rate of pay and his or her regularly scheduled weekly hours of work measured as of October 1, 2018, and the anticipated number of weeks worked during 2018 to estimate an annual base salary. We then converted all foreign currency salaries to U.S. dollar equivalents using the closing market spot rates on October 1, 2018. From this calculation, we determined our representative median employee.
We then calculated the annual total compensation for the representative median employee using the same methodology we use for our named executive officers in the 2018 Summary Compensation Table in this proxy statement. With respect to the annual total compensation of our CEO, we used the amount reported in the “Total” column of our 2018 Summary Compensation Table in this proxy statement.
Our Pay Ratio has been calculated using selected assumptions, estimates and adjustments as permitted under Item 402(u) of Regulation S-K, and is a reasonable estimate calculated in a manner consistent with the Regulation. Other companies may use different methodologies, assumptions, estimates and adjustments, and therefore a comparison of our Pay Ratio to that of other companies will be limited in value.
PENSION BENEFITS
The Pension Benefits table provides information regarding the number of years of credited service, the present value of accumulated benefits, and any payments made during the fiscal year ended December 31, 2020 with respect to the ACCO U.S. Pension, the ACCO U.K. Pension, and the Polish retirement plan for each of the named executive officers. Boris Elisman | | | ACCO U.S. Pension | | | 4 | | | 152,000 | | | — | | Neal V. Fenwick | | | ACCO U.K. Pension | | | 22 | | | 7,677,359 | | | — | | | | | ACCO U.S. Pension | | | 3 | | | 122,000 | | | — | | Thomas W. Tedford | | | N/A | | | | | | | | | | | Cezary Monko | | | Polish Retirement Pension | | | N/A | | | 134,000 | | | — | | Patrick H. Buchenroth | | | N/A | | | | | | | | | | |
(1)
| Years of Credited Service for the ACCO U.S. Pension are shown through March 6, 2009, the date on which the ACCO U.S. Pension plan was frozen. Mr. Fenwick participated in the ACCO U.K. Pension until April 1, 2006. Vesting service, which determines vesting and eligibility for early retirement benefits, continues to grow. As of December 31, 2020, vesting service is 11.75 years greater (absent any break-in-service or termination) than credited service shown in the table above. Years of credited service are not applicable under the Polish Retirement Plan. |
(2)
| Amounts reported above as the actuarial present value of accumulated benefits and any payments made during the fiscal year ended December 31, 2018 with respect tounder the ACCO U.S. Pension are computed using the ACCO U.K. Pension,interest and mortality assumptions that the Polish retirementCompany applies to amounts reported in its financial statements, and are assumed to be payable at age 65. Despite the plan for eachbeing frozen, the value of the named executive officers. | | | | | | | | | | Name | | Plan Name | | Years of Credited Service (1) (#) | | Present Value of Accumulated Benefit (2) ($) | | Payments During Last Fiscal Year ($) | Boris Elisman | | ACCO U.S. Pension | | 4 | | 96,000 | | 0 | Neal V. Fenwick | | ACCO U.K. Pension | | 22 | | 5,460,609 | | 0 | | ACCO U.S. Pension | | 3 | | 79,000 | | 0 | Thomas W. Tedford | | N/A | |
| |
| |
| Cezary Monko | | Polish Retirement Plan | |
| | 103,000 | | 0 | Pamela R. Schneider | | N/A | |
| |
| |
|
| | (1) | Years of Credited Service for the ACCO U.S. Pension are shown through March 6, 2009, the date on which the ACCO U.S. Pension plan was frozen. Mr. Fenwick participated in the ACCO U.K. Pension until April 1, 2006. Vesting service, which determines vesting and eligibility for early retirement benefits, continues to grow. As of December 31, 2018, vesting service is 9.75 years greater (absent any break-in-service or termination) than credited since shown in the table above. |
| | (2) | Amounts reported above as the actuarial present value of accumulated benefits under the ACCO U.S. Pension are computed using the interest and mortality assumptions that the Company applies to amounts reported in its financial statements, and are assumed to be payable at age 65. Despite the plan being frozen, the value of the benefit changes due to the assumptions utilized in these calculations. For 2018, the present value of the accumulated pension benefit decreased since the prior year is directly related to an increase in the discount rate. The interest rate assumption is 4.38%benefit changes due to the assumptions utilized in these calculations. For 2020, the present value of the accumulated pension benefit increased since the prior year is directly related to a decrease in the discount rate. The interest rate assumption is 2.59%. The mortality table assumption for the ACCO U.S. Pension is based upon the Aggregate RP-2006 Mortality Table projected using the Projection Scale MP-2018. Amounts reported above as the actuarial present value of accumulated benefit for Mr. Fenwick under the ACCO U.K. Pension assumes an interest rate of 2.8%, an inflation rate of 3.2%, an exchange rate (as of December 31, 2018) of $1.2705 to one British Pound and utilizes the SAPS S2 Tables using CMI 2017 future improvements, subject to an underpin of 1.25% per annum. Amounts reported above as the actuarial present value of accumulated benefit for Mr. Monko under the Poland Statutory Retirement Obligation assumes an interest rate of 3.05%, a salary increase assumption (for projection purposes) of 3.0%, and a Polish Zloty exchange rate on December 31, 2018 of $0.2661. |
ACCO U.S. Pension
The ACCO U.S. Pension is a broad-based, tax-qualified defined benefit pension plan, which provides a monthly cash benefit upon retirement to eligible employees of the Company, including the participating named executive officers. Historically, eligible employees included all salaried and certain hourly paid employees (regularly scheduled to work at least twenty hours per week) of the Company, except leased employees, independent contractors, certain collectively-bargained employees, and employees accruing benefits under an affiliated company foreign pension plan. Employees must have completed one year of service to participate in the ACCO U.S. Pension and five years of service to vest in the benefit. The determination of benefits under the ACCO U.S. Pension is based upon yearsthe Aggregate PRI-2012 Mortality Table projected using the Projection Scale MP-2020. Amounts reported above as the actuarial present value of credited service with the Company and its participating U.S. subsidiaries and the average of the highest five consecutive years of earnings within the last ten years of vesting service. "Eligible Earnings" include base pay and certain regularly occurring bonuses, but do not include amounts that have been deferred and, for years of credited service prior to 2002, annual bonuses. All benefit service and accruals for benefits under the ACCO U.S. Pension were frozen on March 6, 2009. As a result, no additional benefits will accrue from that date for any of the named executive officers unless action is taken to reinstate any such benefits.
Benefits under the ACCO U.S. Pension are calculated in the following manner: A participant’saccumulated benefit for credited service accrued prior to January 1, 2002 equals the product of (A) his years of credited service multiplied by (B) the sum of (i) 0.75% of Eligible Earnings up to the participant’s applicable Social Security-covered compensation amount, plus (ii) 1.25% of the participant’s final Eligible Earnings in excess of the participant’s applicable Social Security-covered compensation amount (up to a maximum of thirty years). The participant’s benefit for credited service accrued since January 1, 2002 equals the product of (C) his years of credited service multiplied by (D) 1.25% of the participant’s final average Eligible Earnings, except that for years of credited service since January 1, 2007, the annual benefit accrual rate is 1.00% instead of 1.25%. As described above, Eligible Earnings and credited service will be determined as of March 6, 2009 unless subsequent action to reinstate benefit accruals is taken. Participants are fully vested in benefits after five years of service, with no vesting prior to that date. None of the named executive officers are entitled to additional credited service other than that which has been earned during employment.
Several forms of benefit payments are available under the ACCO U.S. Pension. The regular form of payment under the ACCO U.S. Pension is a single life annuity for single participants and a qualified joint and survivor annuity for married participants.
Optional forms of payment include 5 and 10-year period certain and life annuity options, 50%, 75% and 100% joint and contingent beneficiary options, and a Social Security benefit adjustment option. The payout option must be elected by the participant before benefit payments commence. For a participant who is no longer an active employee of the Company, an automatic lump-sum distribution of benefits occurs if his or her pension value is less than or equal to $1,000, and in 2015, the Company established an automatic lump-sum rollover feature if his or her pension value is greater than $1,000 but less than or equal to $5,000. Each option available under the ACCO U.S. Pension is actuarially equivalent.
Normal retirement benefits commence at age 65. Under the ACCO U.S. Pension, early retirement benefit payments are available in a reduced amount to participants upon attainment of age 55 and completion of at least five years of vesting service. For vesting purposes, the ACCO U.S. Pension recognizes prior service with Fortune Brands, Inc. and other companies previously related to the Company for periods before the spin-off of the Company from Fortune Brands, Inc. on August 16, 2005.
ACCO U.K. Pension
Mr. Fenwick is also entitled to a pension benefit under the ACCO U.K. Pension assumes an interest rate of 1.4%, an inflation rate of 3.0%, an exchange rate (as of December 31, 2020) of $1.3622 to one British Pound and utilizes the SAPS S2 Tables using CMI 2019 future improvements, subject to an underpin of 1.25% per annum. Amounts reported above as the actuarial present value of accumulated benefit for Mr. Monko under the Poland Statutory Retirement Obligation assumes an interest rate of 1.10%, a salary increase assumption (for projection purposes) of 3.0% per annum, and a Polish Zloty exchange rate on December 31, 2020 of $0.2688. |
ACCO U.S. Pension The ACCO U.S. Pension is a broad-based, tax-qualified defined benefit pension plan, which provides a monthly cash benefit upon retirement to eligible employees of the Company, including the participating named executive officers. Historically, eligible employees included all salaried and hourly paid employees (regularly scheduled to work at least twenty hours per week) of the Company, except leased employees, independent contractors, and employees accruing benefits under an affiliated company foreign pension plan. Employees must have completed one year of service to participate in the ACCO U.S. Pension and five years of service to vest in the benefit. The determination of benefits under the ACCO U.S. Pension is based upon years of credited service with the Company and its participating U.S. subsidiaries and the average of the highest five consecutive years of earnings within the last ten years of vesting service. “Eligible Earnings” include base pay and certain regularly occurring bonuses, but do not include amounts that have been deferred and, for years of credited service prior to 2002, annual bonuses. All benefit service and accruals for benefits under the ACCO U.S. Pension were frozen on March 6, 2009. As a result, no additional benefits will accrue from that date for any of the named executive officers unless action is taken to reinstate any such benefits. Benefits under the ACCO U.S. Pension are calculated in the following manner: A participant’s benefit for credited service accrued prior to January 1, 2002 equals the product of (A) his years of credited service multiplied by (B) the sum of (i) 0.75% of Eligible Earnings up to the participant’s applicable Social Security-covered compensation amount, plus (ii) 1.25% of the participant’s final Eligible Earnings in excess of the participant’s applicable Social Security-covered compensation amount (up to a maximum of thirty years). The participant’s benefit for credited service accrued since January 1, 2002 equals the product of (C) his years of credited service multiplied by (D) 1.25% of the participant’s final average Eligible Earnings, except that for years of credited service since January 1, 2007, the annual benefit accrual rate is 1.00% instead of 1.25%. As described above, Eligible Earnings and credited service will be determined as of March 6, 2009 unless subsequent action to reinstate benefit accruals is taken. Participants are fully vested in benefits after five years of service, with no vesting prior to that date. None of the named executive officers are entitled to additional credited service other than that which has been earned during employment. Several forms of benefit payments are available under the ACCO U.S. Pension. The regular form of payment under the ACCO U.S. Pension is a single life annuity for single participants and a qualified joint and survivor annuity for married participants. Optional forms of payment include 5 and 10-year period certain and life annuity options, 50%, 75% and 100% joint and contingent beneficiary options, and a Social Security benefit adjustment option. The payout option must be elected by the participant before benefit payments commence. For a participant who is no longer an active employee of the Company, an automatic lump-sum distribution of benefits occurs if his or her pension value is less than or equal to $1,000, and in 2015, the Company established an automatic lump-sum rollover feature if his or her pension value is greater than $1,000 but less than or equal to $5,000. Each option available under the ACCO U.S. Pension is actuarially equivalent. Normal retirement benefits commence at age 65. Under the ACCO U.S. Pension, early retirement benefit payments are available in a reduced amount to participants upon attainment of age 55 and completion of at least five years of vesting service. For vesting purposes, the ACCO U.S. Pension recognizes prior service with Fortune Brands, Inc. and other companies previously related to the Company for periods before the spin-off of the Company from Fortune Brands, Inc. on August 16, 2005. ACCO U.K. Pension Mr. Fenwick is also entitled to a pension benefit under the ACCO U.K. Pension in which he participated until April 1, 2006. The ACCO U.K. Pension is a broad-based, defined benefit pension plan which provides a benefit upon retirement to eligible employees of ACCO U.K. Limited and certain other European subsidiaries of the Company. Mr. Fenwick was eligible to participate in the ACCO U.K. Pension based on his prior European employment with the Company. Benefits are payable upon retirement at or after age 62 with twenty years of credited service, as a single life annuity, in an amount equal to two-thirds (2/3) of Mr. Fenwick’s final Pensionable Earnings while a participant in this plan. Under the ACCO U.K. Pension, early retirement benefit payments are available in an actuarially reduced amount to participants upon attainment of age 55. The reduction is 5% per year if retiring before age 62. Pensionable Earnings are defined as Mr. Fenwick’s base salary for the preceding full year prior to April 1, 2006 together with the average annual bonus paid for the preceding three years. Benefits under this plan are based on the higher of (1) Pensionable Earnings for the full year immediately prior to April 1, 2006, or (2) the average of any three consecutive years of Pensionable Earnings in the last ten years prior thereto. Mr. Fenwick is fully vested in this benefit. Polish Retirement Plans Defined Benefit - Mr. Monko is entitled to a pension benefit under the Company’s Polish broad-based defined benefit pension plan upon retirement on or after age 65. The plan provides for a one time lump sum payment in an amount equal to three times the employee’s monthly average base salary in effect over the last three months of his or her employment, subject to taxation. There are no service requirements or early retirement provisions for this benefit. Mr. Monko must be working for the Company at the time of his retirement in order to receive this benefit. For more information, see “2020 Summary Compensation Table”. Defined Contribution - In November 2019, Mr. Monko became a participant in the Polish Private Employee Capital Plan, known as a PPK, which is a private long-term saving system established by the Polish government. For employees aged 55-70, participation in the program is voluntary, however matching retirement contributions by the employer are mandatory. Mr. Monko, whose age is above 55 voluntarily contributed to the PPK and, in turn, received an obligatory employer contribution as well. The amount of benefits provided to Mr. Monko in the form of PPK employer contributions is included in the “All Other Compensation” column of the 2020 Summary Compensation Table and related footnotes. POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL The Company does not have written employment agreements with its executive officers, including the named executive officers, unless it is common practice to provide an individual employment contract, such as in select international markets where we have executive officers. Only Mr. Monko, whose employment is based in Poland, has an employment contract. All of our executive officers, including all of our named executive officers, were covered by the Company’s ESP at December 31, 2020 and continue to be so covered as of the date of this Proxy Statement. The Company’s ESP in effect as of December 31, 2020 provides the named executive officers the following payments and benefits upon (i) an involuntary termination without “cause,” (ii) voluntary termination for “good reason” or (iii) involuntary termination without “cause” within 6 months before or 24 months after a change-in-control as defined in the ESP, the values of which are summarized in tables set forth below: Involuntary Termination: 24 months of base salary and two years of target bonus for Mr. Elisman; 21 months of base salary and one year of target bonus for Messrs. Fenwick, Tedford, Monko and Buchenroth; 18 months of base salary and one year of target bonus for all other executive officers. Change-in-Control Termination: 2.99 times base salary plus 2.99 times target bonus for the year of separation for Mr. Elisman; 2.25 times base salary plus 2.25 times target bonus for the year of separation for Messrs. Fenwick, Tedford, Monko and Buchenroth; 2 times base salary plus 2 times target bonus for the year of separation for all other executive officers. The executive would also receive a pro-rata annual bonus for the year of the executive’s termination up through and including the termination effective date calculated based upon actual performance as approved by the Compensation Committee. Outplacement services in a value commensurate with the level of the position. Any amounts payable under the ESP are reduced by amounts payable to a named executive officer under any other severance plan applicable to the named executive officer or agreement that has been entered into between the Company and the named executive officer. In accordance with Section 4999 of the Code, if the severance calculation is subject to an excise tax, the Company will calculate two severance payment alternatives and determine which alternative results in the highest net amount of severance payment for each executive officer, commonly referred to as the best-net approach. Either the aggregate of all severance payments for an executive officer will be paid as calculated and subject to regular payroll income tax and excise tax, or the aggregate of all severance payments for an executive officer shall be reduced prior to payment to a gross amount that results in the largest net amount for that executive officer so as to remain subject to regular payroll income tax but not subject to excise tax. Mr. Monko is not subject to Section 4999 of the Code. Medical and other welfare benefits continue for the named executive officer’s severance period on the same cost-sharing basis as if employment had not terminated. No severance or change-in-control payments would be made until the named executive officer executes a release waiving any and all claims the executive may have against the Company. No benefits would be provided to a named executive officer if a termination was for “cause” or voluntary (other than in the case of a retirement) except where required by law or at the discretion of the Board of Directors. In addition, certain equity grants awarded to the named executive officers may accelerate upon death, disability, retirement, termination without cause and in the event of a change-in-control as defined in the Incentive Plan. For additional details, see the Outstanding Equity Awards at Fiscal Year-End table and related footnotes. The tables below reflect the estimated payments and other benefit amounts that would have been received by each named executive officer or his estate on December 31, 2020, under the following circumstances: a change-in-control without termination of employment; termination of employment by the executive officer for retirement; termination of employment by the Company without cause; following (or in certain circumstances preceding) a change-in-control, a termination of employment by the Company without “cause” or by the executive officer for “good reason”; or termination of employment as a result of death or disability. In preparing the tables, it is assumed that each of the named executive officers has no earned but unpaid salary or accrued and unused vacation benefits at the time of his termination and that the values reflect compensation in addition to what he would have earned had the described event not occurred. The notes accompanying these tables appear at the end of this section. Messrs. Elisman, Fenwick and Monko are retirement eligible. Boris Elisman Payments and Benefits Compensation:
| | | | | | | | | | | | | | | | | | | | Cash Severance(1) | | | — | | | — | | | 4,312,000 | | | 6,446,440 | | | — | | | — | | Annual Incentive(1) | | | — | | | — | | | — | | | 1,176,000 | | | — | | | — | | Benefits:
| | | | | | | | | | | | | | | | | | | | Continuation of Benefits(2) | | | — | | | — | | | 33,296 | | | 49,777 | | | — | | | — | | Outplacement Services | | | — | | | — | | | 60,000 | | | 60,000 | | | — | | | — | | Additional 401(k) Plan Contributions(3) | | | — | | | — | | | — | | | 51,129 | | | — | | | — | | Long-Term Incentive Awards Acceleration:
| | | | | | | | | | | | | | | | | | | | Value of Non-Qualified Stock Options(4)(7) | | | 41,174 | | | — | | | — | | | 41,174 | | | 11,393 | | | 11,393 | | Value of Restricted Stock Units(5)(7) | | | 4,110,973 | | | 1,381,442 | | | 1,381,442 | | | 4,110,973 | | | 2,061,045 | | | 2,061,045 | | Value of Performance Stock Units(6)(7) | | | 1,702,712 | | | 738,768 | | | 738,768 | | | 1,702,712 | | | 926,824 | | | 926,824 | | Change-in-Control Compensation Reduction(8) | | | — | | | | | | | | | — | | | | | | | | Total | | | 5,854,859 | | | 2,120,210 | | | 6,525,506 | | | 13,638,205 | | | 2,999,262 | | | 2,999,262 | |
See accompanying notes at the end of this section.
Neal V. Fenwick Payments and Benefits Compensation:
| | | | | | | | | | | | | | | | | | | | Cash Severance(1) | | | — | | | — | | | 1,421,093 | | | 2,238,221 | | | — | | | — | | Annual Incentive(1) | | | — | | | — | | | — | | | 426,328 | | | — | | | — | | Benefits:
| | | | | | | | | | | | | | | | | | | | Continuation of Benefits(2) | | | — | | | — | | | 21,459 | | | 27,590 | | | — | | | — | | Outplacement Services | | | — | | | — | | | 30,000 | | | 30,000 | | | — | | | — | | Additional 401(k) Plan Contributions(3) | | | — | | | — | | | — | | | 38,475 | | | — | | | — | | Long-Term Incentive Awards Acceleration:
| | | | | | | | | | | | | | | | | | | | Value of Non-Qualified Stock Options(4)(7) | | | 13,671 | | | — | | | — | | | 13,671 | | | 3,783 | | | 3,783 | | Value of Restricted Stock Units(5)(7) | | | 907,378 | | | 304,051 | | | 304,051 | | | 907,378 | | | 454,485 | | | 454,485 | | Value of Performance Stock Units(6)(7) | | | 572,616 | | | 252,551 | | | 252,551 | | | 572,616 | | | 314,993 | | | 314,993 | | Change-in-Control Compensation Reduction (8) | | | — | | | | | | | | | — | | | | | | | | Total | | | 1,493,665 | | | 556,602 | | | 2,029,154 | | | 4,254,279 | | | 773,261 | | | 773,261 | |
See accompanying notes at the end of this section.
Thomas W. Tedford Payments and Benefits Compensation:
| | | | | | | | | | | | | | | | | | | | Cash Severance(1) | | | — | | | — | | | 1,428,060 | | | 2,249,195 | | | — | | | — | | Annual Incentive(1) | | | — | | | — | | | — | | | 428,418 | | | — | | | — | | Benefits:
| | | | | | | | | | | | | | | | | | | | Continuation of Benefits(2) | | | — | | | — | | | 28,495 | | | 36,636 | | | — | | | — | | Outplacement Services | | | — | | | — | | | 30,000 | | | 30,000 | | | — | | | — | | Additional Poland PPK Contributions(3) | | | — | | | — | | | — | | | 38,475 | | | — | | | — | | Long-Term Incentive Awards Acceleration:
| | | | | | | | | | | | | | | | | | | | Value of Non-Qualified Stock Options(4)(7) | | | 16,084 | | | — | | | — | | | 16,084 | | | 4,451 | | | 4,451 | | Value of Restricted Stock Units(5)(7) | | | 987,018 | | | — | | | — | | | 987,018 | | | 481,031 | | | 481,031 | | Value of Performance Stock Units(6)(7) | | | 644,837 | | | — | | | — | | | 644,837 | | | 356,522 | | | 356,522 | | Change-in-Control Compensation Reduction (8) | | | — | | | | | | | | | — | | | | | | | | Total | | | 1,647,939 | | | — | | | 1,486,555 | | | 4,430,663 | | | 842,004 | | | 842,004 | |
See accompanying notes at the end of this section.
Cezary Monko Payments and Benefits Compensation:
| | | | | | | | | | | | | | | | | | | | Cash Severance(1) | | | — | | | — | | | 1,449,353 | | | 2,282,731 | | | — | | | — | | Annual Incentive(1) | | | — | | | — | | | — | | | 434,806 | | | — | | | — | | Benefits:
| | | | | | | | | | | | | | | | | | | | Continuation of Benefits(2) | | | — | | | — | | | 3,649 | | | 4,691 | | | 289,871 | | | 144,935 | | Outplacement Services | | | — | | | — | | | 30,000 | | | 30,000 | | | — | | | — | | Additional 401(k) Plan Contributions(3) | | | — | | | — | | | — | | | 40,397 | | | — | | | — | | Long-Term Incentive Awards Acceleration:
| | | | | | | | | | | | | | | | | | | | Value of Non-Qualified Stock Options(4)(7) | | | 11,259 | | | — | | | — | | | 11,259 | | | 3,115 | | | 3,115 | | Value of Restricted Stock Units(5)(7) | | | 827,737 | | | 304,051 | | | 304,051 | | | 827,737 | | | 427,938 | | | 427,938 | | Value of Performance Stock Units(6)(7) | | | 500,395 | | | 222,049 | | | 222,049 | | | 500,395 | | | 273,470 | | | 273,470 | | Change-in-Control Compensation Reduction (8)
| | | — | | | | | | | | | — | | | | | | | | Total | | | 1,339,391 | | | 526,100 | | | 2,009,102 | | | 4,132,016 | | | 994,394 | | | 849,458 | |
See accompanying notes at the end of this section. Mr. Monko’s employment contract contains a six-month notice provision prior to termination of employment. The table above assumes notice was provided on June 30, 2020 resulting in termination on December 31, 2020. Mr. Monko’s LTIP values are quoted in U.S. dollars; all other values were converted from Polish Zloty to U.S. dollars using the 2020 year-end conversion rate of 0.2688. See accompanying notes at the end of this section.
Patrick H. Buchenroth Payments and Benefits Compensation:
| | | | | | | | | | | | | | | | | | | | Cash Severance(1) | | | — | | | — | | | 1,198,615 | | | 1,887,819 | | | — | | | — | | Annual Incentive(1) | | | — | | | — | | | — | | | 359,585 | | | — | | | — | | Benefits:
| | | | | | | | | | | | | | | | | | | | Continuation of Benefits(2) | | | — | | | — | | | 29134 | | | 37458 | | | — | | | — | | Outplacement Services | | | — | | | — | | | 30,000 | | | 30,000 | | | — | | | — | | Additional 401(k) Plan Contributions(3) | | | — | | | — | | | — | | | 38,475 | | | — | | | — | | Long-Term Incentive Awards Acceleration:
| | | | | | | | | | | | | | | | | | | | Value of Non-Qualified Stock Options(4)(7) | | | 8,846 | | | — | | | — | | | 8,846 | | | 2,448 | | | 2,448 | | Value of Restricted Stock Units(5)(7) | | | 577,066 | | | — | | | — | | | 577,066 | | | 287,370 | | | 287,370 | | Value of Performance Stock Units(6)(7) | | | 372,321 | | | — | | | — | | | 372,321 | | | 207,153 | | | 207,153 | | Change-in-Control Compensation Reduction (8) | | | — | | | | | | | | | (232,118) | | | | | | | | Total | | | 958,233 | | | — | | | 1,257,749 | | | 3,079,452 | | | 496,971 | | | 496,971 | |
Notes to Potential Payments Upon Termination or Change-in-Control Tables (1)
| Represents 2020 base salary and annual incentive opportunity at target performance, calculated according to the terms of the ESP. |
(2)
| Represents the approximate value of the employer subsidy to broad-based health and welfare employee benefit plans for the named executive officer’s benefit during the severance period. For Mr. Monko, the Company’s disability policy for employees in Poland provides for a one time lump sum payment from the Company in an amount equal to two-thirds (2/3) of Mr. Fenwick’s final Pensionable Earnings while a participant in this plan. Underthree times the ACCO U.K. Pension, early retirement benefit payments are available in an actuarially reduced amount to participants upon attainment of age 55. The reduction is 5% per year if retiring before age 62. Pensionable Earnings are defined as Mr. Fenwick’s base salary for the preceding full year prior to April 1, 2006 together with the average annual bonus paid for the preceding three years. Benefits under this plan are based on the higher of (1) Pensionable Earnings for the full year immediately prior to April 1, 2006, or (2) the average of any three consecutive years of Pensionable Earnings in the last ten years prior thereto. Mr. Fenwick is fully vested in this benefit.
Polish Retirement Plan
Mr. Monko is entitled to a pension benefit under the Company's Polish broad-based defined benefit pension plan upon retirement on or after age 65. The plan provides for a one-time lump sum payment in an amount equal to three-times the employee'semployee’s monthly average base salary in effect over the last three months of his or her employment, subject to taxation. There are no vesting service requirements or early retirement provisions for this benefit. Mr. Monko must be working for the Company at the time of his retirement in order to receive this benefit. For more information, see "2018 Summary Compensation Table" and "Pension Benefits."
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL
The Company does not have written employment agreements with its executive officers, including the named executive officers, unless it is common practice to provide an individual employment contract, such as in select international markets where we have executive officers. Only Mr. Monko, whose employment is based in Poland, has an employment contract. All of our executive officers, including all of our named executive officers, were covered by the Company’s ESP at December 31, 2018 and continue to be so covered as of the date of this Proxy Statement.
The Company’s ESP in effect as of December 31, 2018 provided the named executive officers the following payments and benefits upon (i) an involuntary termination without "cause," (ii) voluntary termination for "good reason" or (iii) involuntary termination without "cause" within 24 months after (and in certain circumstances preceding) a change-in-control as defined in the ESP, the values of which are summarized in tables set forth below:
Involuntary Termination: 21 months of base salary and one year of target bonus for Messrs. Elisman, Fenwick, Tedford and Monko; 18 months of base salary and one year of target bonus for Ms. Schneider.
Change-in-Control Termination: 2.25 times base salary plus 2.25 times bonus for the year of separation for Messrs. Elisman, Fenwick, Tedford and Monko; 2 times base salary plus 2 times bonus for the year of separation for Ms. Schneider. The bonus amount is based on the greater of: (i) a target bonus for the year of the named executive officer’s termination, or (ii) the bonus that would be paid using the Company’s most recent financial performance outlook report that is available as of the named executive officer’s termination date. The executive wouldPolish law also receive a pro-rata annual bonus for the year of the executive’s termination up through and including the termination effective date calculated in the manner described in the preceding sentence.
Outplacement services in an amount not to exceed $30,000.
A gross-up payment for any "golden parachute" excise tax that may be payable by the named executive officer under Section 4999 of the Code, plus any income and employment taxes on the gross-up payment, with respect to the severance payments and other benefits due to them (whether under the ESP or otherwise), unless the amount of any "excess parachute payments" paid or payable by them does not exceed 330% of the executive’s "base pay" as determined pursuant to Section 280G of the Code, in which case the gross-up payment is not paid and the severance and other golden parachute payments would be reduced so that no amount would constitute an "excess parachute payment" for purposes of Sections 280G and 4999 of the Code. Mr. Monko is not subject to Sections 280G and 4999 of the Code.
Any amounts payable under the ESP are reduced by amounts payable to a named executive officer under any other severance plan applicable to the named executive officer or agreement that has been entered into between the Company and the named executive officer.
Medical and other welfare benefits continue for the named executive officer’s severance period on the same cost-sharing basis as if employment had not terminated. No severance or change-in-control payments would be made until the named executive officer executes a release waiving any and all claims the executive may have against the Company. No benefits would be provided to a named executive officer if a termination was for "cause" or voluntary (other than in the case of a retirement) except where required by law or at the discretion of the Board of Directors. In addition, certain equity grants awarded to the named executive officers may accelerate upon death, disability, retirement, termination without cause andrequires, in the event of a change-in-control as defined in the Incentive Plan. For additional details, see the Outstanding Equity Awards at Fiscal Year-End table and related footnotes.
The tables below set forth, for each named executive officer, the estimated payments and other benefit amounts that would have been received by the named executive officer or his or her estate on December 31, 2018, under the following circumstances:
a change-in-control without termination of employment;
termination of employment by the executive officer for retirement;
termination of employment by the Company without cause;
following (or in certain circumstances preceding) a change-in-control, a termination of employment by the Company without "cause" or by the executive officer for "good reason"; or
termination of employment as a result of death, or disability.
In preparingfor the tables, it is assumed that each ofCompany to make a one-time lump sum payment in an amount equal to six-times the named executive officers has no earned but unpaidemployee’s monthly average base salary or accrued and unused vacation benefits atin effect over the timelast six months of his or her termination and thatemployment, subject to taxation.
|
(3)
| Represents the values reflect compensation in additionmaximum annual Company contribution to what he or she would have earned had the described event not occurred. The notes accompanying these tables appear at the end of this section. Messrs. Elisman, Fenwick and Monko, and Ms. Schneider, are retirement eligible.
Boris Elisman
| | | | | | | | | | | | | | | | | | | | | | Change in Control without Termination ($) | | Termination by Executive for Retirement ($) | | Termination by Company without Cause ($) | | Termination by the Company without Cause or by the Executive for "Good Reason" Following a Change in Control ($) | | Death ($) | | Disability ($) | Payments and Benefits Compensation: | | | | | | | | | | | | | Cash Severance(1) | | 0 |
| | 0 |
| | 2,802,500 |
| | 4,702,500 |
| | 0 |
| | 0 |
| Annual Incentive(1) | | 0 |
| | 0 |
| | 0 |
| | 1,140,000 |
| | 0 |
| | 0 |
| Benefits: | | | | | | | | | | | | | Continuation of Benefits(2) | | 0 |
| | 0 |
| | 25,833 |
| | 33,214 |
| | 0 |
| | 0 |
| Outplacement Services | | 0 |
| | 0 |
| | 30,000 |
| | 30,000 |
| | 0 |
| | 0 |
| Additional 401(k) Plan Contributions(3) | | 0 |
| | 0 |
| | 0 |
| | 37,125 |
| | 0 |
| | 0 |
| Long-Term Incentive Awards Acceleration: | | | | | | | | | | | | | Value of Non-Qualified Stock Options(4)(7) | | 0 |
| | 0 |
| | 0 |
| | 0 |
| | 0 |
| | 0 |
| Value of Restricted Stock Units(5)(7) | | 1,179,595 |
| | 743,530 |
| | 743,530 |
| | 1,179,595 |
| | 823,639 |
| | 823,639 |
| Value of Performance Stock Units(6)(7) | | 2,104,084 |
| | 686,150 |
| | 686,150 |
| | 2,104,084 |
| | 1,044,436 |
| | 1,044,436 |
| Change-in-Control Compensation Reduction or Federal Excise Tax and Gross-up/Forfeiture(8) | | 0 |
| | | | | | 0 |
| | | | | Total | | 3,283,679 |
| | 1,429,680 |
| | 4,288,013 |
| | 9,226,518 |
| | 1,868,075 |
| | 1,868,075 |
|
See accompanying notes at the end of this section.
Neal V. Fenwick
| | | | | | | | | | | | | | | | | | | | | | Change in Control without Termination ($) | | Termination by Executive for Retirement ($) | | Termination by Company without Cause ($) | | Termination by the Company without Cause or by the Executive for "Good Reason" Following a Change in Control ($) | | Death ($) | | Disability ($) | Payments and Benefits Compensation: | | | | | | | | | | | | | Cash Severance(1) | | 0 |
| | 0 |
| | 1,338,592 |
| | 2,089,842 |
| | 0 |
| | 0 |
| Annual Incentive(1) | | 0 |
| | 0 |
| | 0 |
| | 382,455 |
| | 0 |
| | 0 |
| Benefits: | | | | | | | | | | | | | Continuation of Benefits(2) | | 0 |
| | 0 |
| | 19,005 |
| | 24,435 |
| | 0 |
| | 0 |
| Outplacement Services | | 0 |
| | 0 |
| | 30,000 |
| | 30,000 |
| | 0 |
| | 0 |
| Additional 401(k) Plan Contributions(3) | | 0 |
| | 0 |
| | 0 |
| | 37,125 |
| | 0 |
| | 0 |
| Long-Term Incentive Awards Acceleration: | | | | | | | | | | | | | Value of Non-Qualified Stock Options(4)(7) | | 0 |
| | 0 |
| | 0 |
| | 0 |
| | 0 |
| | 0 |
| Value of Restricted Stock Units(5)(7) | | 332,266 |
| | 184,022 |
| | 184,022 |
| | 332,266 |
| | 212,321 |
| | 212,321 |
| Value of Performance Stock Units(6)(7) | | 487,053 |
| | 155,945 |
| | 155,945 |
| | 487,053 |
| | 240,324 |
| | 240,324 |
| Change-in-Control Compensation Reduction or Federal Excise Tax and Gross-up/Forfeiture(8) | | 0 |
| | | | | | 0 |
| | | | | Total | | 819,319 |
| | 339,967 |
| | 1,727,564 |
| | 3,383,176 |
| | 452,645 |
| | 452,645 |
|
See accompanying notes at the end of this section.
Thomas W. Tedford
| | | | | | | | | | | | | | | | | | | | | | Change in Control without Termination ($) | | Termination by Executive for Retirement ($) | | Termination by Company without Cause ($) | | Termination by the Company without Cause or by the Executive for "Good Reason" Following a Change in Control ($) | | Death ($) | | Disability ($) | Payments and Benefits Compensation: | | | | | | | | | | | | | Cash Severance(1) | | 0 |
| | 0 |
| | 1,338,592 |
| | 2,089,842 |
| | 0 |
| | 0 |
| Annual Incentive(1) | | 0 |
| | 0 |
| | 0 |
| | 382,455 |
| | 0 |
| | 0 |
| Benefits: | | | | | | | | | | | | | Continuation of Benefits(2) | | 0 |
| | 0 |
| | 25,194 |
| | 32,393 |
| | 0 |
| | 0 |
| Outplacement Services | | 0 |
| | 0 |
| | 30,000 |
| | 30,000 |
| | 0 |
| | 0 |
| Additional 401(k) Plan Contributions(3) | | 0 |
| | 0 |
| | 0 |
| | 37,125 |
| | 0 |
| | 0 |
| Long-Term Incentive Awards Acceleration: | | | | | | | | | | | | | Value of Non-Qualified Stock Options(4)(7) | | 0 |
| | 0 |
| | 0 |
| | 0 |
| | 0 |
| | 0 |
| Value of Restricted Stock Units(5)(7) | | 441,316 |
| | 0 |
| | 176,432 |
| | 441,316 |
| | 288,593 |
| | 288,593 |
| Value of Performance Stock Units(6)(7) | | 623,446 |
| | 0 |
| | 0 |
| | 623,446 |
| | 311,776 |
| | 311,776 |
| Change-in-Control Compensation Reduction or Federal Excise Tax and Gross-up/Forfeiture(8) | | 0 |
| | | | | | 0 |
| | | | | Total | | 1,064,762 |
| | — |
| | 1,570,218 |
| | 3,636,577 |
| | 600,369 |
| | 600,369 |
|
See accompanying notes at the end of this section.
Cezary Monko
| | | | | | | | | | | | | | | | | | | | | | Change in Control without Termination ($) | | Termination by Executive for Retirement ($) | | Termination by Company without Cause ($) | | Termination by the Company without Cause or by the Executive for "Good Reason" Following a Change in Control ($) | | Death ($) | | Disability ($) | Payments and Benefits Compensation: | | | | | | | | | | | | | Cash Severance(1) | | 0 |
| | 0 |
| | 1,312,627 |
| | 2,049,305 |
| | 0 |
| | 0 |
| Annual Incentive(1) | | 0 |
| | 0 |
| | 0 |
| | 375,036 |
| | 0 |
| | 0 |
| Benefits: | | | | | | | | | | | | | Continuation of Benefits(2) | | 0 |
| | 0 |
| | 4,153 |
| | 5,339 |
| | 267,883 |
| | 133,942 |
| Outplacement Services | | 0 |
| | 0 |
| | 30,000 |
| | 30,000 |
| | 0 |
| | 0 |
| Additional 401(k) Plan Contributions(3) | | 0 |
| | 0 |
| | 0 |
| | 0 |
| | 0 |
| | 0 |
| Long-Term Incentive Awards Acceleration: | | | | | | | | | | | | | Value of Non-Qualified Stock Options(4)(7) | | 0 |
| | 0 |
| | 0 |
| | 0 |
| | 0 |
| | 0 |
| Value of Restricted Stock Units(5)(7) | | 160,763 |
| | 49,299 |
| | 49,299 |
| | 160,763 |
| | 71,069 |
| | 71,069 |
| Value of Performance Stock Units(6)(7) | | 393,552 |
| | 132,554 |
| | 132,554 |
| | 393,552 |
| | 197,461 |
| | 197,461 |
| Change-in-Control Compensation Reduction or Federal Excise Tax and Gross-up/Forfeiture(8) | | 0 |
| | | | | | 0 |
| | | | | Total | | 554,315 |
| | 181,853 |
| | 1,528,633 |
| | 3,013,995 |
| | 536,413 |
| | 402,472 |
|
See accompanying notes at the end of this section. Mr. Monko's employment contract contains a six-month notice provision prior to termination of employment. The table above assumes notice was provided on June 30, 2018 resulting in termination on December 31, 2018. Mr. Monko's LTIP values are quoted in U.S. dollars; all other values are converted from Polish Zloty to U.S. dollars using the 2018 year-end conversion rate of 0.2661.
Pamela R. Schneider
| | | | | | | | | | | | | | | | | | | | | | Change in Control without Termination ($) | | Termination by Executive for Retirement ($) | | Termination by Company without Cause ($) | | Termination by the Company without Cause or by the Executive for "Good Reason" Following a Change in Control ($) | | Death ($) | | Disability ($) | Payments and Benefits Compensation: | | | | | | | | | | | | | Cash Severance(1) | | 0 |
| | 0 |
| | 952,537 |
| | 1,451,485 |
| | 0 |
| | 0 |
| Annual Incentive(1) | | 0 |
| | 0 |
| | 0 |
| | 272,153 |
| | 0 |
| | 0 |
| Benefits: | | | | | | | | | | | | | Continuation of Benefits(2) | | 0 |
| | 0 |
| | 0 |
| | 0 |
| | 0 |
| | 0 |
| Outplacement Services | | 0 |
| | 0 |
| | 30,000 |
| | 30,000 |
| | 0 |
| | 0 |
| Additional 401(k) Plan Contributions(3) | | 0 |
| | 0 |
| | 0 |
| | 33,000 |
| | 0 |
| | 0 |
| Long-Term Incentive Awards Acceleration: | | | | | | | | | | | | | Value of Non-Qualified Stock Options(4)(7) | | 0 |
| | 0 |
| | 0 |
| | 0 |
| | 0 |
| | 0 |
| Value of Restricted Stock Units(5)(7) | | 269,829 |
| | 152,932 |
| | 152,932 |
| | 269,829 |
| | 174,703 |
| | 174,703 |
| Value of Performance Stock Units(6)(7) | | 389,650 |
| | 129,955 |
| | 129,955 |
| | 389,650 |
| | 194,862 |
| | 194,862 |
| Change-in-Control Compensation Reduction or Federal Excise Tax and Gross-up/Forfeiture(8) | | 0 |
| | | | | | 0 |
| | | | | Total | | 659,479 |
| | 282,887 |
| | 1,265,424 |
| | 2,446,117 |
| | 369,565 |
| | 369,565 |
|
See accompanying notes at the end of this section.
Notes to Potential Payments Upon Termination or Change-in-Control Tables
| | (1) | Represents 2018 base salary and annual incentive opportunity at target performance, calculated according to the terms of the ESP. |
| | (2) | Represents the approximate value of the employer subsidy to broad-based health and welfare employee benefit plans for the named executive officer's benefit during the severance period. For Mr. Monko, the Company's disability policy for employees in Poland provides for a one-time lump sum payment from the Company in an amount equal to three-times the employee's monthly average base salary in effect over the last three months of his or her employment, subject to taxation. Polish law also requires, in the event of termination of employment as a result of death, for the Company to make a one-time lump sum payment in an amount equal to six-times the employee's monthly average base salary in effect over the last six months of his or her employment, subject to taxation. |
| | (3) | Represents the maximum annual Company contribution to the named executive officer's account under the Company's 401(k) Plan during the severance period. Mr. Monko is not eligible to participate in the Company's 401(k) Plan. |
| | (4) | Reflects the excess of the fair market value as of December 31, 2018 of the underlying shares over the exercise price of all unvested options, the vesting of which accelerates in connection with the specified event. The amounts shown reflect the value as calculated based on the $6.78 closing price of the Company’s common stock on December 31, 2018.
|
| | (5) | Reflects the fair market value as of December 31, 2018 of the shares underlying all unvested RSUs which vest in connection with the specified event. The amounts shown reflect the value as calculated based on the $6.78 closing price of the Company’s common stock on December 31, 2018.
|
| | (6) | Reflects the unvested fair market value as of December 31, 2018 of the shares underlying unvested PSUs which would vest in connection with the specified event. This value does not include the 2016-2018 LTIP PSU award which vested on December 31, 2018. The amounts shown reflect the value as calculated based on the $6.78 closing price of the Company’s common stock on December 31, 2018.
|
| | (7) | For RSUs and PSUs granted as of 2016 and NQSOs granted as of 2017, under a change-in-control without termination, if the award is replaced with an award of the same or greater value and with the same or not less favorable terms and conditions, the award is subject to double-trigger vesting. If the RSU or PSU award is not replaced, the award shall vest in full at target performance or greater and is paid out in cash or shares of stock of equivalent cash value. If the NQSO is not replaced, it shall become immediately exercisable. The value in the table assumes the awards are not replaced upon a change-in-control and reflect the full vesting of the award, with the PSU awards vesting at target performance. |
| | (8) | Upon a change-in-control of the Company, the named executive officer may be subject to a reduction in compensation or may incur certain excise taxes pursuant to Section 4999 of the Code, as described above. Mr. Monko is not subject to Sections 280G and 4999 of the Code. |
ADVISORY VOTE ON EXECUTIVE COMPENSATION
(Proxy Item 3)
We are providing our stockholders with an opportunity to vote to approve, on an advisory, non-binding basis, the compensation of oureach named executive officers, as required pursuant to Section 14A of the Securities and Exchange Act of 1934. The proposal, commonly known as a "Say-on-Pay" proposal, is designed to give our stockholders the opportunity to endorse or not endorse our executive compensation program through the following resolution:
"RESOLVED, that the stockholders approve, on an advisory basis, the compensation ofofficer’s account, except for Mr. Monko, under the Company’s named executive officers as disclosed in401(k) Plan during the Company’s Proxy Statement forseverance period. For Mr. Monko, the 2019 Annual Meeting of Stockholders, including in the Compensation Discussion and Analysis, the executive compensation tables and other related disclosures contained herein."
As discussed in the Compensation Discussion and Analysis, we have designed our executive compensation program to attract, retain and motivate highly skilled executive officers, link pay to performance, and build sustainable value for our stockholders. When you cast your vote, we urge you to consider the description of our executive compensation program contained in this Proxy Statement, including under the heading "Compensation Discussion and Analysis" and the accompanying executive compensation tables and related footnotes.
Because your vote is advisory, it will not be binding upon our Board of Directors, it will not overrule any decision by the Board of Directors and it will not create or imply any additional fiduciary duties on the Board of Directors or any member thereof. However, the Compensation Committee and our Board of Directors will take into account the outcome of the vote when considering future executive compensation arrangements.
The Board of Directors recommends that you vote FOR Proxy Item 3.
In keeping with the preference expressed by our stockholders at our 2017 Annual Meeting of Stockholders, we will continue to hold the advisory say-on-pay vote annually until the next required stockholder vote on the frequency of holding the say-on-pay vote, which will occur not later than the 2023 Annual Meeting of Stockholders.
PROPOSAL TO APPROVE AMENDMENT TO THE RESTATED CERTIFICATE
OF INCORPORATION TO AFFIRM THE COMPANY'S MAJORITY VOTING STANDARD
FOR UNCONTESTED ELECTIONS
(Proxy Item 4)
The Board of Directors has unanimously approved an amendment to our Restated Certificate of Incorporation to eliminate a provision requiring the election of directors to be by plurality vote. The proposed amendment, which is subject to the approval of our stockholders, would conform the Restated Certificate of Incorporation to our By-laws, which were previously amended to provide for the election of directors by majority vote in uncontested elections.
Description of Proposed Amendment
Article VII of our Restated Certificate of Incorporation currently provides that the successors of directors whose terms expire at an annual meeting are to be elected by a plurality vote of all votes cast for the election of directors at that annual meeting.
On December 9, 2015, the Board approved the amendment and restatement of Article III, Section 3 of the By-laws to provide for election of directors by majority vote in uncontested elections. Since that time, director elections have been effected in compliance with the majority voting requirement of our By-laws.
If the proposed amendment to the Restated Certificate of Incorporation is approved by our stockholders, the language in Article VII of our Restated Certificate of Incorporation providing for election of directors by plurality vote would be eliminated. The proposed amendment would not change how directors are currently elected to the Board. Directors would continue to be elected in compliance with Article III, Section 3 of the By-laws, which provides that a nominee for director will be elected to the Board if the votes cast for the nominee exceed the votes cast against the nominee's election (with abstentions not counted as a vote for or against the nominee).
The Board of Directors recommends that you vote FOR Proxy Item 4.
Reasons for Proposed Amendment
The Board believes that it is in-line with best corporate governance practices and in the best interests of the Company and its stockholders that directors be elected by majority vote in uncontested elections, as required by the By-laws. The proposed amendment conforms the Restated Certificate of Incorporation to that standard and ensures consistency between the Restated Certificate of Incorporation and the By-laws.
As required by Article IX of our Restated Certificate of Incorporation, the affirmative vote of the holders of at least 80% of the outstanding shares of our common stock is required to approve the proposed amendment to the Restated Certificate of Incorporation. The Board of Directors recommends that you vote “FOR” proxy Item 4. In the event this proposal fails to receive the required vote for approval, the Company intends to continue to elect directors by majority vote in uncontested elections.
The full text of the proposed amendment to our Restated Certificate of Incorporation is attached as Annex A to this Proxy Statement. Also included as Annex B is the text of Article VII as marked to show the proposed changes to be made to the current Article VII as contemplated by the proposed amendment. If approved by stockholders, the proposed amendment will be effective when we file a Certificate of Amendment to our Restated Certificate of Incorporation with the Secretary of State of the State of Delaware.
PROPOSAL TO APPROVE THE 2019 ACCO BRANDS
CORPORATION INCENTIVE PLAN
(Proxy Item 5)
At the Annual Meeting, stockholders will vote on a proposal to approve a new incentive plan, the 2019 ACCO Brands Corporation Incentive Plan (the “Plan”).
The Company currently maintains the ACCO Brands Corporation Incentive Plan (As Amended and Restated Effective May 12, 2015). This plan is referred to as the “Existing Plan.” The Compensation Committee, with the assistance of the Compensation Committee's independent compensation consultant, reviewed the Existing Plan and determined that an insufficient number of shares of common stock was available under the Existing Plan to enable the Company to provide future grants of stock options and other equity-based awards to non-employee directors and employees. As a result of this review, the Compensation Committee recommended to the Board of Directors that it adopt a new plan.
On March 18, 2019, the Company’s Board of Directors approved the Plan, subject to stockholder approval at the Annual Meeting, based upon a recommendation of the Compensation Committee and management.
The total number of shares of common stock available for awards under the Plan may not exceed the sum of (i) 11,775,000 shares plus (ii) the number of shares subject to outstanding awards as of the effective date under the Existing Plan that on or after the effective date of the Plan cease for any reason to be subject to such awards (other than in connection with the exercise or settlement of the awards, including shares withheld to satisfy the exercise price or tax withholding obligations associated with the exercise, vesting or settlement of such awards) on the basis of: (A) one share for each share subject to a stock option, and (B) 2.06 shares for each share subject to a full-value award. No shares from the Existing Plan that are not subject to outstanding awards as of the effective date will be available for awards under the Plan.
The Board of Directors recommends that you vote FOR Proxy Item 5.
Rationale for Implementing Proposed Plan
The Board believes that the adoption of the Plan is in the best interests of the Company and its stockholders because the continued ability to offer our employees equity and performance-based compensation is a critical factor in attracting, motivating and retaining qualified employees who will contribute to our financial success, thereby advancing the interests of the Company and its stockholders. Additionally, the Plan will provide the flexibility to grant awards to our non-employee directors. Therefore, the Board views the Plan as a key component of the Company’s compensation program.
Approval of the Plan requires the affirmative vote of a majority of the shares of ACCO Brands common stock represented in person or by proxy at the Annual Meeting and entitled to vote. If the Plan is approved by stockholders, awards will no longer be granted under the Existing Plan. Any shares subject to outstanding awards granted under the Existing Plan that would again become available for the issuance of awards pursuant to the terms of those awards and the Existing Plan will become available for use under the Plan in such amounts as described above. If the Plan is not approved by stockholders, awards will continue to be granted under the Existing Plan, but no more equity-based awards may be granted onceamount represents the maximum number of shares reserved under the Existing Plan has been reached.
The principal features of the Plan are highlighted below.
Overview
Our incentive plan is a vital component of our compensation program. The purpose of the Plan isannual Company contribution to provide incentives linked to the creation of stockholder value and the achievement of certain long-term strategic and financial goals through a variety of equity-based and cash awards designed to attract, retain and motivate the best available employees and non-employee directors. Presently, our equity award program consists of grants of performance share units (“PSUs”), restricted stock units (“RSUs”) and nonqualified stock options (“NQSOs”).
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PSUs represent the principal component of long-term equity incentive compensation for our named executive officers. These grants are indicative of our pay-for-performance philosophy, as discussed under the heading "Compensation Discussion and Analysis--Discussion and Analysis--Executive Compensation Philosophy." PSUs focus management on long-term financial performance, aligning management and stockholders' interests regarding the creation of stockholder value.
RSUs and NQSOs serve as important management retention tools and further align management with stockholders’ interests, including our stockholders’ interest in share price appreciation.
Important Features of the Plan
The Plan includes the following important features that are designed to serve our stockholders’ interests.
One-year minimum vesting. The period required for vesting under a grant of an equity-based award under the Plan may not be less than one year, other than as the Compensation Committee may otherwise specify in the case of the death or disability, or where awards have been assumed by the Company in connection with a merger or other business combination, or as otherwise may apply in the event of a change in control under the Plan. In addition, awards covering up to five percent of the shares available under the Plan may have a vesting period of less than one year. This exception is generally used to provide awards to non-employee directors which are fully vested at the time of grant.
Limited discretionary authority to accelerate vesting. The Compensation Committee will not have discretion to accelerate the vesting of any portion of an award upon an employee’s termination of employment, except in cases of termination by reason of death or disability.
Non-employee director compensation. The value (determined under applicable accounting standards for financial reporting purposes) of a non-employee director’s total compensation from the Company in a calendar year, including awards from the Plan, may not exceed $500,000.
Dividends and dividend equivalents. Rights to dividends and dividend equivalents may be made a part of certain awards, subject to such terms, conditions and restrictions as the Compensation Committee may establish. Any crediting of dividends or dividend equivalents shall be subject to the same restrictions and conditions as the underlying award, dividends or dividend equivalents credited with respect to awards subject to the achievement of performance goals will only be paid to the extent the award vests and the performance goals are achieved, and dividends or dividend equivalents with respect to any award subject to a time-based vesting schedule will only be paid to the extent the award vests.
Fungible share ratio. The Plan contains a “fungible share ratio.” Under the ratio, full-value awards made from the Plan (i.e., awards other than stock options and stock appreciation rights (“SARs”)) are counted against the share reserve as 2.00 shares for each share of stock subject to an award, while any stock options and SARs under the Plan are counted against the share reserve on a 1:1 basis.
No liberal share recycling. Shares that are surrendered or withheld to pay an award's exercise price or withholding taxes cannot be added back to the shares available under the Plan. Likewise, any shares reacquired by the Company with the amount received from stock option exercises will not be added to the pool of available shares under the Plan. Also, shares not issued upon exercise or settlement of a stock-settled SAR will not be added back to the pool of available shares.
No repricing or cash buy-out without stockholder approval. No stock option or SAR may be re-priced or substituted or exchanged for cash or as consideration for the grant of a new award with a lower exercise price without stockholder approval, except as may be permitted in connection with an event described below under the heading "--Adjustments" or in the event of a change in control. (However, options and SARs may be settled by a cash payment that does not exceed the difference between the fair market value of the shares subject to the option or SAR and the strike price.)
No liberal change of control definition. The Plan does not have a "liberal" change-in-control definition. A change in control is deemed to occur only upon completion, rather than stockholder approval, of a transaction.
No evergreen provision. The number of shares available for grant under the Plan is capped, and there is no formula providing for any automatic increase in the number of shares available.
No discounted stock options or SARs. The Plan prohibits the granting of stock options or SARs at strike prices that are less than the fair market value of our common stock on the applicable date of grant.
Historical Grant and Governance Practice Highlights
Our historical grant and governance practices are set forth below.
Three-year vesting and performance periods. Since 2005, annual equity grants to executive officers, including our CEO, have been subject to a minimum three-year vesting period. RSUs are currently subject to a minimum three-year cliff vesting period and grants of NQSOs vest one-third per year over three years. In addition, awards of PSUs have been subject to an overall three-year performance cycle.
High proportion of CEO’s compensation subject to performance conditions. In 2017 and 2018, 60% of our CEO’s target equity-based compensation was subject to achievement of financial performance measures. In 2017 and 2018, 82% and 81%, respectively, of our CEO’s total target compensation was variable and at risk as it was subject to the achievement of financial performance measures and share price appreciation.
No hedging or pledging. Our insider trading policy, which applies to shares acquired through grants made under the Plan, prohibits our directors and employees from engaging in hedging transactions or pledging their shares. For further information on this policy, see "Compensation Discussion and Analysis--Discussion and Analysis--Prohibitions on Hedging, Pledging and Similar Transactions."
Post vesting/exercise holding requirements. Our executive officers are required to hold a specified number of shares or dollar value of equity granted to them under the Plan. Prior to attaining the required threshold level, they may liquidate no more that 50% of the net shares remaining after the exercise of a stock award or the vesting of shares granted under the Plan; after attaining the required threshold, they may sell shares, subject to our insider trading policy, so long as they maintain the required threshold number of shares or dollar value. For further information on this policy, see "Compensation Discussion and Analysis--Discussion and Analysis--Executive Stock Ownership Guidelines."
Description of the Plan
The following description of the Plan summarizes the material terms of the Plan; however, it does not purport to be complete and is qualified in its entirety by reference to the Plan attached as Annex C to this Proxy Statement.
Term and Effective Date
The Plan will become effective on the date our stockholders approve the Plan, which, if the Plan is approved at the Annual Meeting, will be May 21, 2019. No awards may be made or granted after the tenth anniversary of the Plan’s effective date.
Administration
The Plan will be administered by the Compensation Committee, which is composed entirely of directors who are "non-employee directors" under the rules adopted under Section 16 of the Exchange Act, and are independent under the rules of the NYSE. The Compensation Committee has the power and authority to construe and interpret the Plan, select the individuals who will receive awards from among eligible participants, and determine the form, amount and terms of those awards, except that the amount, form, and timing of the grant of awards to non-employee directors shall be determined by the full Board of Directors unless the Board otherwise delegates any or all of these functions to a committee or committees of the Board. The Compensation Committee has the power to delegate to one or more officers of the Company the right to designate employees (other than the employee himself or herself or executive officers of ACCO Brands) to receive awards, subject to certain restrictions and provided that the total number of shares or cash payable under such awards are determined by the Compensation Committee.
Eligibility
Employees of the Company or its subsidiaries, including executive officers, selected by the Compensation Committee as well as non-employee directors of the Company selected by the Board of Directors are eligible to receive awards under the Plan. The Compensation Committee anticipates that individuals who are vice president level or above will receive annual grants of Awards under the Plan and that the approximate number of employees in that group is 65. In addition, the Compensation Committee anticipates that discretionary grants will be made on an annual basis to certain high potential employees who are director level and above. The approximate number of employees eligible to receive a discretionary grant is approximately 200, and approximately
50 discretionary grants are made annually. The Board anticipates that all non-employee directors will be eligible to participate in the Plan as of May 21, 2019.
Plan and Award Limitations and Restrictions
Reserved shares. The total number of shares of common stock available for awards under the Plan may not exceed the sum of (i) 11,775,000 shares plus (ii) the number of shares subject to outstanding awards as of the effective date under the Existing Plan that on or after the effective date of the Plan cease for any reason to be subject to such awards (other than in connection with the exercise or settlement of the awards, including shares withheld to satisfy the exercise price or tax withholding obligations associated with the exercise, vesting, or settlement of such awards) on the basis of: (A) one share for each share subject to a stock option, an SAR or an award that serves a similar function, and (B) 2.06 shares for each share subject to a full-value award. No shares from the Existing Plan that are not subject to outstanding awards as of the effective date will be available for awards under the Plan.
Fungible share ratio. Awards made under the Plan will reduce the number of shares thereafter available for awards on the basis of (i) one share for each share issued under a stock option, an SAR or an award under the Plan that serves a similar function, and (ii) 2.00 shares for each share issued as a full-value award.
Non-employee director compensation. The value of a non-employee director’s total compensation from the Company in a calendar year, including awards from the Plan, may not exceed $500,000.
One-year minimum vesting. The period required for vesting under a grant of an equity-based award under the Plan may not be less than one year, other than as the Compensation Committee may otherwise specify in the case of the death or disability, or where awards have been assumed by the Company in connection with a merger or other business combination, or as otherwise may apply in the event of a change in control under the Plan. In addition, awards covering up to five percent of the shares available under the Plan may have a vesting period of less than one year. This exception is generally used to provide awards to non-employee directors which are fully vested at the time of grant.
No repricing or cash buy-out without stockholder approval. No stock option or SAR may be re-priced or substituted or exchanged for cash or as consideration for the grant of a new award with a lower exercise price without stockholder approval, except as may be permitted in connection with an event described below under the heading "--Adjustments" or in the event of a change in control. (However, options and SARs may be settled by a cash payment that does not exceed the difference between the fair market value of the shares subject to the option or SAR and the strike price.)
Clawback and cancellation. All awards made under the Plan, and shares of common stock issued thereunder, are subject to applicable ACCO Brands’ clawback or recoupment policies as in effect from time-to-time and any similar policies required by law or regulation. Unless otherwise provided in an award agreement, a participant’s award or payments thereunder will be subject to cancellation or recoupment in instances where the participant is terminated for cause or has violated certain policies or codes of conduct, has breached a restrictive covenant applicable to the participant or has engaged in misconduct or conduct that is detrimental to the business or reputation of the Company. The Company’s current clawback policy provides that an executive officer may be required to forfeit or reimburse the Company for incentive compensation paid or payable to the executive officer if either the payment was based on the achievement of financial results that were subsequently restated (regardless of whether the officer was responsible for the restatement) and a lower amount would have been paid to the executive officer based on the restated results, or if the Board determines the officer engaged in willful or intentional misconduct. For further information regarding the clawback policy, see "Compensation Discussion and Analysis--Discussion and Analysis-- Recoupment or Forfeiture of Incentive Payments Policy."
Share Recycling Provisions and Limitations
The Plan contains the following provisions and limitations with respect to shares that may again become available for awards:
Any shares of common stock covered by an award that are not issued or are cancelled because the award expires or is forfeited or terminated (for example, for a failure to vest or to achieve applicable performance conditions) will again be available for award and will not be considered as having been made subject to an award.
Any shares surrendered or withheld as payment for all or a portion of the exercise price of a stock option, or surrendered or withheld in satisfaction of withholding taxes with respect to an award, will not be again available for award.
The exercise or settlement of an SAR will reduce the shares available under the Plan by the total number of shares to which the exercise or settlement relates, and not just the net amount of shares actually issued upon exercise or settlement. Shares not issued upon exercise or settlement of an SAR will not again be available for award.
Any shares that are reacquired by the Company with the amount received upon the exercise of stock options will not be added to the pool of shares available for awards under the Plan.
Awards partially or wholly settled in cash will only reduce the number of shares available for issuance under the Plan to the extent shares are issued.
Shares of common stock issued in connection with awards that are assumed, converted or substituted pursuant to a merger or other business combination will not reduce the number of shares available for issuance under the Plan.
The number of shares reserved for issuance under the Plan and the limitations described above may be adjusted by the events described below under the headings "--Adjustments" and "--Change in Control".
Award Forms
Under the Plan, the Compensation Committee may grant various types of awards, including the following:
Stock options. Stock option awards may be either incentive stock options (“ISOs”) or NQSOs. Stock options are exercisable in whole or in part following the completion of a required employment period (or service period for a non-employee director) and the satisfaction of any performance objectives as specified in the discretion of the Compensation Committee. Stock options expire no later than the tenth anniversary of the date of grant, and the exercise price of stock options may not be less than the fair market value of a share of our common stock on the date of grant. As of March 29, 2019, the market value of a share of our common stock, based on the average of the high and low sales price as reported on the NYSE on that date, was $[.] per share.
Stock appreciation rights. SARs may be granted independently of any stock option or in tandem with all or any part of a stock option. SARs are exercisable in whole or in part following the completion of a required employment period (or service period for a non-employee director) and the satisfaction of any performance objectives as specified in the discretion of the Compensation Committee. Generally, upon exercise, an SAR entitles a participant to receive (in cash, shares of common stock or a combination thereof)
| Reflects the excess of the fair market value as of a share of common stock on the date the SAR was exercised over its exercise price. SARs will expire no later than the tenth anniversaryDecember 31, 2020 of the date of grant, andunderlying shares over the exercise price of an SAR may not be less thanall unvested options, the vesting of which accelerates in connection with the specified event. The amounts shown reflect the value as calculated based on the $8.45 closing price of the Company’s common stock on December 31, 2020. |
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| Reflects the fair market value as of a shareDecember 31, 2020 of our common stock on the date of grant.
Restricted stock and performance shares. Shares of common stock that are subject to restrictions on transfer or other incidents of ownership as established by the Compensation Committee, including, in the case of performance shares, the satisfaction of performance criteria, may be awarded under the Plan. For restricted stock, a “restriction period” will apply during which time the shares are subject to forfeiture byunderlying all unvested RSUs which vest in connection with the participant if, for example,specified event. The amounts shown reflect the participant’s employment or service terminates. During a restricted stock’s restriction period, the holder will be entitled to exercise full voting rights.
Restricted and performance stock units. RSUs and PSUs are fixed or variable share denominated units subject to such terms and conditions, including vesting, time of payment and, in the case of PSUs, the satisfaction of performance criteria,value as the Compensation Committee may determine. RSUs and PSUs are valued in whole or in part by reference to, or otherwisecalculated based on the fair market value$8.45 closing price of the Company's common stock, and may be paid in shares of common stock, cash or a combination of both.
Dividends and dividend equivalents. Rights to dividends and dividend equivalents may be made a part of certain awards, subject to such terms, conditions and restrictions as the Compensation Committee may establish. Any crediting of dividends or dividend equivalents shall be subject to the same restrictions and conditions as the underlying award, dividends or dividend equivalents credited with respect to awards subject to the achievement of performance goals will only be paid to the extent the award vests and the performance goals are achieved, and dividends or dividend equivalents with respect to any award subject to a time-based vesting schedule will only be paid to the extent the award vests.
Cash-based awards. Awards denominated in cash may be granted under the Plan, or under other multi-year bonus plans or other incentive plans established under the Plan, that may be earned and payable based on the satisfaction of performance criteria designated by the Compensation Committee.
Other incentive awards. The Compensation Committee may grant other types of awards under the Plan whose value, in whole or in part, is based on the Company’s common stock or other factors.on December 31, 2020.
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See accompanying notes at the end of this section.
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Performance Criteria
Performance awards, such
| Reflects the unvested fair market value as performance shares and PSUs, represent the right to receive shares of common stock, cash or a combination thereof, contingent on the achievement of performance or other objectives during a specified period as the Compensation Committee may determine. Awards intended to be "performance-based compensation" will be conditioned on the achievement of criteria, measures or standards established by the Compensation Committee. The Compensation Committee has the sole discretion to adjust the determinationsDecember 31, 2020 of the shares underlying unvested PSUs which would vest in connection with the specified event. This value and degree of attainment ofdoes not include the performance goals including2018-2020 LTIP PSU award which vested on December 31, 2020. The amounts shown reflect the discretion to reduce the amount of an award that would otherwise vest or be paidvalue as calculated based on the achievement$8.45 closing price of the performance goals. The Committee also retains the sole discretion to adjust such performance goals to reflect changesCompany’s common stock on December 31, 2020. |
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| For RSUs, PSUs and NQSOs granted in circumstances that occur after the goals are established, or to reduce or increase the amount of the payment and/or vesting of an award relative to the performance goals.Participant Termination Provisions
Each participant’s award agreement will specify the treatment of the award2016 and thereafter, in the event of the participant’sa change-in-control without termination, of employment (or service as a non-employee director), as determined by the Compensation Committee at the time of grant. Generally, awards will be forfeited and will not be paid if the awardsaward is replaced with an award of the same or portions thereof remain unvestedgreater value and with the same or not less favorable terms and conditions, the award is subject to restrictiondouble-trigger vesting. If the RSU or forfeiture as of the date a participant’s employment or service as a non-employee director with the Company ceases. Except as otherwise determined by the Compensation Committee inPSU award is not replaced, the award agreement, if a participant’s employment or service as a non-employee director with the Company ends due to death, disability, retirement or due to a divestiture (as defined below) that is not a change in control (as defined in the Plan), then any awards then held by a participant will vest as follows:
Death or Disability:
all options and SARs held by the participant will immediately become vested and exercisable, and will continue to be exercisable for the lesser of five years or the remaining term of the options and SARs, unless death occurs in the final year of the term, in which case the exercise of such options or SARs can occur for up to one additional year from the date of death;
all restricted stock or RSUs held by the participant will become unrestricted or nonforfeitable and payable; and
performance shares and PSUs held by the participant will become unrestricted or nonforfeitable and payable, as applicable, with respect to the number of performance shares or PSUs that could have become earned and vested based on the deemed attainment of performance at the target level, with such number of performance shares or PSUs prorated based on the portion of the performance period that elapsed through the date of the participant’s termination; and
Retirement:
all options and SARs held by the participant will continue to vest and be exercisable in accordance with its original vesting terms (as if the termination of employment or service had not occurred) and shall remain exercisable until the expiration of the term of the option or SAR; and
all restricted stock or RSUs held by the participant will continue to vest in accordance with its original vesting terms (as if the termination of employmentfull at target performance or service had not occurred);greater and
performance shares and PSUs held by the participant will become unrestricted or nonforfeitable and payable, as applicable, with respect to the number of performance shares or PSUs that would have become earned based on based on the actual attainment of performance objectives set forth in the award over the applicable performance period, with such number of performance shares or PSUs prorated based on the portion of the performance period that elapsed through the date of the participant’s termination; and
Divestiture:
on termination due to a divestiture occurring after the first anniversary of the date of grant, all options and SARs held by a participant will become immediately vested and exercisable with respect to a prorated portion of the number of shares subject to the options or SARs, and will remain exercisable until the expiration of the term of the option or SAR, with such proration based on the portion of the restriction period that elapsed through the date of the participant’s termination; and
on termination due to a divestiture occurring after the first anniversary of the date of grant, all restricted stock and RSUs held by a participant will become unrestricted or nonforfeitable with respect to a prorated portion of the number
of Shares subject to the restricted stock awards and RSUs and payable, respectively, with such proration based on the portion of the restriction period that elapsed through the date of the participant’s termination; and
on termination due to a divestiture occurring after the first anniversary of the date of grant, performance shares and PSUs held by the participant will become unrestricted or nonforfeitable and payable, as applicable, based on the deemed attainment of performance at the target level, with such number of performance shares or PSUs prorated based on the portion of the performance period that elapsed through the date of the participant’s termination.
Generally, a “divestiture” is a transaction (that is not a change in control) by which the subsidiary of the Company that is the participant’s principal employer or service recipient ceases to be a subsidiary of the Company.
Involuntary Termination Without Cause
For an employee who incurs an involuntary termination of employment without cause during the six-month period preceding the specified vesting date (but after the first anniversary of the grant date), a prorated portion of any restricted stock and RSUs held by the employee will become unrestricted or nonforfeitable and payable, respectively, based on the period of restriction elapsed through the date of the participant’s termination.
For an employee who incurs an involuntary termination of employment without cause during the last six months of a performance period (but after the first anniversary of the grant date), a prorated portion of any performance shares and PSUs held by the employee will become unrestricted or nonforfeitable and payable, as applicable, with the proration based on the portion of the performance period elapsed through the date of the participant��s termination and the number of performance shares and PSUs that could have become earned and vested based on the actual attainment of performance goals.
The Plan provides that the Compensation Committee is not authorized to waive or accelerate vesting of any award except in cases of termination by reason of death or disability.
Adjustments
In the event of a corporate transaction involving the Company, such as an extraordinary cash dividend, recapitalization, reorganization, merger, consolidation or spin-off, the Compensation Committee may adjust outstanding awards as it deems appropriate in order to prevent dilution or enlargement of participants’ rights under the Plan.
Change in Control
Replacement awards-no immediate vesting. Awards will not vest upon a change in control of the Company (as defined in Section 2(j) of the Plan) if a "Replacement Award" as defined under Section 17.1(a)(ii) of the Plan (which may include the original award) is issued in substitution for the award. Where Replacement Awards are issued, vesting will be accelerated where a participant incurs an involuntary termination other than due to cause or disability, or resigns for good reason (as defined in the Plan) during the 24 months following the change in control.
Vesting if no replacement award. To the extent a Replacement Award is not provided to a participant, or if a participant incurs an involuntary termination other than due to cause or disability within 180 days prior to a change in control, upon a change in control, all outstanding stock options and SARs will become immediately exercisable; all restricted shares will become unrestricted; all RSUs will become fully vested and paid out in cash or common stock;shares of stock of equivalent cash value. If the NQSO is not replaced, it shall become immediately exercisable. The value in the table assumes the awards are not replaced upon a change-in-control and all performance-based awards will become payable inreflect the full vesting of the award, with the performance objectives applicable to such award deemed satisfiedPSU awards vesting at target level of performance for the entire performance period (orperformance.
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| Upon a greater amount if determined by the Compensation Committee to have been earned based on performance through the datechange-in-control of the change in control).
Individual award agreementsCompany, the named executive officer may provide for different treatment on a change in control.
Amendment and Termination
Our Board of Directors may, at any time and from time to time, alter, amend, modify, suspend or terminate the Plan, subject to the receipt of stockholder approval for certain types of amendments. No amendment, suspension, modification or termination of the Plan may materially adversely affect any award previously granted under the Plan without the written consent of the participant holding such award.
U.S. Federal Tax Consequences
The following is a brief summary of the principal United States federal income tax consequences of stock option and SAR awards that may be granted under the Plan. The summary is based on current U.S. federal income tax laws and interpretations thereof, all of which are subject to change at any time, possibly with retroactive effect. The summary is not intended to be exhaustive.
Non-qualified stock options and SARs. A participant who receives an NQSO or SAR does not recognize taxable income upon the grant of the NQSO or SAR, and the Company is not entitled to a tax deduction on the date of grant. The participant will recognize ordinary income upon the exercise of the NQSO or SAR in an amount equal to the excess of the fair market value of the NQSO or SAR shares on the exercise date over the NQSO or SAR exercise price stated in the award. Such income will be treated as compensation to the participant subject to applicable tax withholding requirements. The Company generally is entitled to a tax deduction in an amount equal to the amount that is taxable to the participant as ordinary income in the year that the income is taxable to the participant, subject to the discussion below. Any appreciation in value of the shares after the time of exercise will be taxable to the participant as capital gain upon sale of the shares and will not result in a deduction by the Company.
Incentive stock options. An employee who receives an ISO does not recognize taxable income upon the grant or exercise of the ISO, unless the ISO is exercised more than three months after termination of employment (one year in cases of disability) and the Company is not entitled to a tax deduction on the date of grant. The difference between the ISO exercise price and the fair market value of the ISO shares on the date of exercise, however, will be treated as a tax preference item for purposes of determining the alternative minimum tax liability, if any, of the employee in the year of exercise. The Company will not be entitled to a deduction with respect to any item of tax preference.
An employee will recognize gain or loss upon the disposition of shares acquired from the exercise of an ISO. The nature of the gain or loss depends on how long the ISO and the ISO shares were held. If the ISO shares are not disposed of pursuant to a disqualifying disposition, the employee will recognize long-term capital gain or capital loss depending on the selling price of the shares. A "disqualifying disposition" is a disposition that occurs within two years from the date the ISO was granted or one year from the date of ISO exercise. If ISO shares are sold or disposed of as part of a disqualifying disposition, the employee must recognize ordinary income in an amount equal to the lesser of the amount of gain recognized on the sale, or the difference between the fair market value of the ISO shares on the date of exercise and the ISO price. Any additional gain will be taxable to the employee as a long-term or short-term capital gain, depending on how long the shares were held after exercise of the ISO. The Company generally is entitled to a deduction in computing its federal income taxes for the year of disposition in an amount equal to any amount taxable to the employee as ordinary income, subject to the discussion below.
Restricted stock, Performance shares, RSUs and PSUs. A participant who receives shares of restricted stock or performance shares will generally be taxed on the value of the shares at the time they either are no longer subject to a substantial riskreduction in compensation as a result of forfeiture, or are transferable. A participant may instead electexcise tax calculations under Section 83(b) of the Code to be taxed on the value of the shares at the time the award is issued, but in such case will not be entitled to an offsetting deduction if the shares are subsequently forfeited. A participant who receives an RSU or PSU will be subject to income tax on the value of the shares issued in settlement of the RSU or PSU at the time the shares are issued (or the amount of cash issued in lieu of shares). When a participant sells or otherwise disposes of shares received, the difference between the proceeds received for the shares and the amount of income realized as described above will generally constitute a capital gain or loss. The Company will generally be entitled to a deduction for the amount of ordinary income realized by a participant as described above (including any income realized upon making a Section 83(b) election), subject to the discussion below.
Pursuantbest-net severance approach pursuant to Section 162(m)4999 of the Code, as amended by the Tax Cuts and Jobs Act of 2017 (the “Act”), the Company willdescribed above. Mr. Monko is not be entitledsubject to deduct compensation paid to any “covered employee” - generally any person who either is, or at any time has been, a named executive officer - to the extent the total compensation paid to the covered employee in any year exceeds $1,000,000.
Equity Compensation Plan Information
The following table gives information, as of December 31, 2018, about our common stock that may be issued upon the exercise of options and other equity awards under all compensation plans under which equity securities are reserved for issuance.
| | | | | | | | | | | | Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | | Weighted-average exercise price of outstanding options, warrants and rights (b) | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a) (c) | | Equity compensation plans approved by security holders | 4,125,067 | | | $ | 9.46 | | | 2,913,102 | | (1) | Equity compensation plans not approved by security holders | 0 | | | 0 | | | 0 | | | Total | 4,125,067 | | | $ | 9.46 | | | 2,913,102 | | (1) | | | | | | | |
| | (1) | These are shares available for grant as of December 31, 2018 under the Existing Plan pursuant to which the Compensation Committee of the Board of Directors or the Board of Directors may make various stock-based awards, including grants of stock options, stock-settled appreciation rights, restricted stock, restricted stock units and performance stock units. In addition to these shares, shares covered by outstanding awards under the Existing Plan that were forfeited or otherwise terminated may become available for grant under the Existing Plan and, to the extent such shares have become available as of December 31, 2018, they are included in the table as available for grant. If the Plan is approved by stockholders, awards will no longer be granted under the Existing Plan. |
SUBMISSION OF STOCKHOLDER PROPOSALS AND NOMINATIONS
Stockholders interested in submitting a proposal for inclusion in our proxy statement for the 2020 annual meeting must follow the procedures and meet the other requirements outlined in Rule 14a-8Section 4999 of the Securities Exchange Act of 1934, and we must receive such proposal at our principal executive offices on or before December 6, 2019. Article II of our By-Laws requires that we be given advance written notice of director nominations and other matters that an eligible stockholder wishes to present for action at an annual meeting other than those included in our proxy statement pursuant to Rule 14a-8. To be timely, our Corporate Secretary must receive such notice at our principal executive offices not earlier than the close of business on January 22, 2020 and not later than the close of business on February 21, 2020. Any such notice and accompanying proposal or director nomination also must be in proper form and meet the detailed disclosure and other requirements specified in Article II of our By-Laws.Code.
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Any proposals, notices or nominations must be sent to the Office of the Corporate Secretary, ACCO Brands Corporation, Four Corporate Drive, Lake Zurich, Illinois 60047. A copy of our By-laws is available upon written request to the Corporate Secretary at the address noted above, or may be accessed under the Investor Relations section of our website, www.accobrands.com. Additionally, a copy of our By-laws, which we included as an exhibit to our Current Report on Form 8-K filed with the SEC on December 14, 2015, can be accessed through the SEC’s website at www.sec.gov.
MISCELLANEOUS
Cost of Soliciting Proxies
The Company will bear the expense of soliciting proxies for this meeting, including mailing costs of the Notice, except for some costs associated with individual stockholders' use of the Internet or telephone. In addition to solicitation by mail, directors, officers and other employees may also solicit proxies personally or by telephone or other means of electronic communication but will not receive specific compensation for any such solicitation. We have retained MacKenzie Partners, Inc. to aid us in soliciting proxies for a fee not to exceed $15,000 plus their reasonable out-of-pocket expenses. We may reimburse brokerage firms and others holding stock in their names or in names of nominees for their reasonable out-of-pocket expenses in sending proxy materials to principals and beneficial owners.
In addition to mailing copies of the Notice and mailing or making available the related proxy materials to stockholders, we will request that persons who hold stock in their names or custody, or in the name of nominees, for the benefit of others, to forward copies of these materials to the beneficial owners of our stock, and to request the authority to execute the proxies. Stockholders who do not intend to be present at the meeting are urged to send in their proxies without delay or vote their proxies by telephone or through the Internet. Your prompt response is greatly appreciated.
Multiple Stockholders Having the Same Address
We are sending only one Notice of Internet Availability of Proxy Materials or one Proxy Statement and Annual Report to the address of multiple stockholders unless we have received contrary instructions from any stockholder at that address. This practice, known as “householding,” reduces duplicate mailings, saving paper and reducing printing costs. Any stockholder residing at such an address who would like to receive an individual copy of the materials, or who is receiving multiple copies of our Proxy Statement and Annual Report and would prefer to receive a single copy in the future, may contact Broadridge, Householding Department by mail at 51 Mercedes Way, Edgewood, New York 11717 or by telephone at (866) 540-7095.
See accompanying notes at the end of this section.
ADVISORY VOTE ON EXECUTIVE COMPENSATION (Proxy Item 3) We are providing our stockholders with an opportunity to vote to approve, on an advisory, non-binding basis, the compensation of our named executive officers, as required under Section 14A of the Exchange Act. The proposal, commonly known as a “Say-on-Pay” proposal, is designed to give our stockholders the opportunity to endorse or not endorse our executive compensation program through the following resolution: “RESOLVED, that the stockholders approve, on an advisory basis, the compensation of the Company’s named executive officers as disclosed in the Company’s Proxy Statement for the 2021 Annual Meeting of Stockholders, including in the Compensation Discussion and Analysis, the executive compensation tables and other related disclosures contained therein.” As discussed in the Compensation Discussion and Analysis, we have designed our executive compensation program to attract, retain and motivate highly skilled executive officers, link pay to performance, and build sustainable value for our stockholders. When you cast your vote, we urge you to consider the description of our executive compensation program contained in this Proxy Statement, including under the heading “Compensation Discussion and Analysis” and the accompanying executive compensation tables and related footnotes. Because your vote is advisory, it will not be binding upon our Board of Directors, it will not overrule any decision by the Board of Directors and it will not create or imply any additional fiduciary duties on the Board of Directors or any member thereof. However, the Compensation Committee and our Board of Directors will take into account the outcome of the vote when considering future executive compensation arrangements. The Board of Directors recommends that you vote FOR Proxy Item 3. In keeping with the preference expressed by our stockholders at our 2017 Annual Meeting of Stockholders, we will continue to hold the advisory say-on-pay vote annually until the next required stockholder vote on the frequency of holding the say-on-pay vote, which will occur not later than the 2023 Annual Meeting of Stockholders. SUBMISSION OF STOCKHOLDER PROPOSALS AND NOMINATIONS Stockholders interested in submitting a proposal for inclusion in our proxy statement for the 2022 annual meeting must follow the procedures and meet the other requirements outlined in Rule 14a-8 of the Exchange Act, and we must receive such proposal at our principal executive offices on or before December 2, 2021. Article II of our By-Laws requires that we be given advance written notice of director nominations and other matters that an eligible stockholder wishes to present for action at an annual meeting other than those included in our proxy statement pursuant to Rule 14a-8. To be timely, our Corporate Secretary must receive such notice at our principal executive offices not earlier than the close of business on January 18, 2022 and not later than the close of business on February 17, 2022. Any such notice and accompanying proposal or director nomination also must be in proper form and meet the detailed disclosure and other requirements specified in Article II of our By-Laws. Any proposals, notices or nominations must be sent to the Office of the Corporate Secretary, ACCO Brands Corporation, Four Corporate Drive, Lake Zurich, Illinois 60047. A copy of our By-laws is available upon written request to the Corporate Secretary at the address noted above, or may be accessed under the Investor Relations section of our website, www.accobrands.com. Additionally, a copy of our By-laws, which we included as an exhibit to our Current Report on Form 8-K filed with the SEC on December 14, 2015, can be accessed through the SEC’s website at www.sec.gov. MISCELLANEOUS Cost of Soliciting Proxies The Company will bear the expense of soliciting proxies for this meeting, including mailing costs of the Notice, except for some costs associated with individual stockholders’ use of the Internet or telephone. In addition to solicitation by mail, directors, officers and other employees may also solicit proxies personally or by telephone or other means of electronic communication but will not receive specific compensation for any such solicitation. We may reimburse brokerage firms and others holding stock in their names or in names of nominees for their reasonable out-of-pocket expenses in sending proxy materials to principals and beneficial owners. In addition to mailing copies of the Notice and mailing or making available the related proxy materials to stockholders, we will request that persons who hold stock in their names or custody, or in the name of nominees, for the benefit of others, forward copies of these materials to the beneficial owners of our stock, and request the authority to execute the proxies. Stockholders who do not intend to be present at the meeting are urged to send in their proxies without delay or vote their proxies by telephone or through the Internet. Your prompt response is greatly appreciated. Multiple Stockholders Having the Same Address We are sending only one Notice of Internet Availability of Proxy Materials or one Proxy Statement and Annual Report to the address of multiple stockholders unless we have received contrary instructions from any stockholder at that address. This practice, known as “householding,” reduces duplicate mailings, saving paper and reducing printing costs. Any stockholder residing at such an address who would like to receive an individual copy of the materials, or who is receiving multiple copies of our Proxy Statement and Annual Report and would prefer to receive a single copy in the future, you can notify us by sending a written request to ACCO Brands Corporation, c/o Broadridge Householding Department, 51 Mercedes Way, Edgewood, NY 11717, or by calling Broadridge at 1-866-540-7095, and we will promptly deliver additional materials as requested. Other Matters
The Company knows of no other matters to be submitted to the stockholders at the Annual Meeting. If any other matters properly come before the meeting, the people named in the accompanying proxy will vote the shares they represent in accordance with the recommendation of the Board of Directors. April 1, 2021
| | April [.], 2019 | | | By order of the Board of Directors |
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| | | Pamela R. Schneider | | | | Senior Vice President, General Counsel | | | | and Corporate Secretary
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Financial and Other Information
The Company has made available to you its Annual Report, which can be accessed by following the instructions contained in the Notice of Internet Availability of Proxy Materials. The Annual Report contains the Company's Annual Report on Form 10-K for the year ended December 31, 2018. The Company's Annual Report on Form 10-K for the year ended December 31, 2018 can also be accessed online at the Investor Relations section of the Company's website at www.accobrands.com. The Annual Report and Proxy Statement are also available without charge by request made in writing to Ms. Jennifer Rice, Vice President-Investor Relations at ACCO Brands Corporation, Four Corporate Drive, Lake Zurich, IL 60047 or by telephone at (847) 796-4320. Additionally, the Company's Audit Committee Charter, Compensation Committee Charter, Corporate Governance and Nominating Committee Charter, Finance and Planning Committee Charter, Executive Committee Charter, Code of Business Conduct and Ethics and Corporate Governance Principles are available without charge at the Investor Relations section of the Company's website at www.accobrands.com or in print upon request by any stockholder to Ms. Rice at the address noted above.
ANNEX A
CERTIFICATE OF AMENDMENT
OF THE
RESTATED CERTIFICATE OF INCORPORATION
OF
ACCO BRANDS CORPORATION
ACCO Brands Corporation, a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, does hereby certify:
FIRST: The name of the Corporation is ACCO Brands Corporation (hereinafter referred to as the “Corporation”).
SECOND: The Restated Certificate of Incorporation of the Corporation is hereby amended by deleting the following sentence in the second paragraph of Article VII:
Successors of the directors whose terms expire at an annual meeting shall be elected by a plurality vote of all votes cast for the election of directors at such meeting.
THIRD: Pursuant to a resolution of the Board of Directors of the Corporation, an annual meeting of the stockholders of the Corporation was duly called and held upon notice in accordance with Section 222 of the General Corporation Law of the State of Delaware at which meeting the necessary number of shares as required by statute were voted in favor of the amendment.
FOURTH: This Certificate of Amendment of the Restated Certificate of Incorporation herein certified has been duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware.
Executed on this [____] day of May, 2019.
| | | | | | ACCO BRANDS CORPORATION | | | | | | | | | | | By: | | | | | Name: Pamela R. Schneider | | | | Title: Senior Vice President, General Counsel and Corporate Secretary
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ANNEX B
ARTICLE VII
Subject to the rights of the holders of any series of Preferred Stock to elect additional directors under specified circumstances, the number of directors of the Company shall be fixed from time to time exclusively by the Board of Directors pursuant to a resolution adopted by a majority of the whole Board. A director need not be a stockholder. The election of directors of the Company need not be by ballot unless the By-laws so require.
At each annual meeting of stockholders beginning with the 2008 annual meeting of stockholders, directors shall be elected for a term of office to expire at the next annual meeting of stockholders; provided, however, that any director who prior to the 2008 annual meeting of stockholders was elected to a term that continues beyond the date of the 2008 annual meeting of stockholders shall continue in office for the remainder of his or her elected term. Each director shall hold office until such director’s successor is duly elected and qualified or until his or her earlier death, resignation or removal. Successors of the directors whose terms expire at an annual meeting shall be elected by a plurality vote of all votes cast for the election of directors at such meeting.
Subject to the rights of the holders of any series of Preferred Stock, and unless the Board of Directors otherwise determines, newly created directorships resulting from any increase in the authorized number of directors or any vacancies on the Board of Directors resulting from death, resignation, retirement, disqualification, removal from office or other cause may be filled only by a majority vote of the directors then in office, though less than a quorum, and directors so chosen shall hold office for a term expiring at the next annual meeting of stockholders, provided, however, that a successor appointed to fill any vacancy on the Board of Directors due to the death, resignation, retirement, disqualification, removal from office or other cause of a director who prior to the 2008 annual meeting of stockholders was elected to a term that continues beyond the date of the 2008 annual meeting of stockholders shall hold office for the remainder of such term. Each director appointed to fill a vacancy or a newly created directorship shall hold office until such director’s successor is duly elected and qualified or until his or her earlier death, resignation or removal.
Subject to the rights of the holders of any series of Preferred Stock or any other series or class of stock, as provided herein or in any Preferred Stock Designation, to elect additional directors under specific circumstances, any director may be removed from office at any time, with or without cause, but only by the affirmative vote of the holders of at least 80% of the voting power of the then outstanding capital stock of the Company (the “Capital Stock”) entitled to vote generally in the election of directors (the “Voting Stock”), voting together as a single class, provided, however, that any director who prior to the 2008 annual meeting of stockholders was elected to a term that continues beyond the 2008 annual meeting of stockholders may be removed at any time during such term, but only for cause, and only by the affirmative vote of the holders of at least 80% of the voting power of the then outstanding Voting Stock, voting together as a single class.
No director of the Company shall be personally liable to the Company or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to the Company or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit. No repeal or modification of this paragraph, directly or by adoption of an inconsistent provision of this Certificate of Incorporation, by the stockholders of the Company shall be effective with respect to any cause of action, suit, claim or other matter that, but for this paragraph, would accrue or arise prior to such repeal or modification.
ANNEX C
2019 ACCO Brands Corporation Incentive Plan
Effective as of _____, 2019
Financial and Other Information The Company has made available to you its Annual Report, which can be accessed by following the instructions contained in the Notice of Internet Availability of Proxy Materials. The Annual Report contains the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. The Company’s Annual Report on Form 10-K for the year ended December 31, 2020 can also be accessed online at the Investor Relations section of the Company’s website at www.accobrands.com. The Annual Report and Proxy Statement are also available without charge by request made in writing to Ms. Christine Hanneman, Sr. Director, Investor Relations at ACCO Brands Corporation, Four Corporate Drive, Lake Zurich, IL 60047 or by telephone at (847) 796-4320. Additionally, the Company’s Audit Committee Charter, Compensation and Human Capital Committee Charter, Corporate Governance and Nominating Committee Charter, Finance and Planning Committee Charter, Executive Committee Charter, Code of Conduct and Corporate Governance Principles are available without charge at the Investor Relations section of the Company’s website at www.accobrands.com or in print upon request by any stockholder to Ms. Hanneman at the address noted above.
TABLE OF CONTENTS
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72
| Article 1. | Establishment, Purpose, and Duration....................................................... | 1 | Article 2. | Definitions……………………………………………………………….. | 1 | Article 3. | Administration…………………………………………………………… | 7 | Article 4. | Shares Subject to This Plan and Maximum Awards…………………….. | 8 | Article 5. | Eligibility and Participation....................................................................... | 10 | Article 6. | Stock Options............................................................................................. | 10 | Article 7. | Stock Appreciation Rights......................................................................... | 13 | Article 8. | Restricted Stock and Restricted Stock Units.............................................. | 15 | Article 9. | Performance Stock Units/Performance Shares.......................................... | 16 | Article 10. | Cash-Based Awards and Other Stock-Based Awards…………………… | 19 | Article 11. | Forfeiture of Awards…………………………………………………….. | 20 | Article 12. | Transferability of Awards……………………………………………….. | 22 | Article 13. | Director Awards…………………………………………………………. | 22 | Article 14. | Dividends and Dividend Equivalents……………………………………. | 22 | Article 15. | Beneficiary Designation…………………………………………………. | 22 | Article 16 | Rights of Participants……………………………………………………. | 23 | Article 17. | Change in Control……………………………………………………….. | 23 | Article 18. | Amendment, Modification, Suspension, and Termination……………… | 24 | Article 19 | Withholding………………………………………………………………. | 25 | Article 20. | Successors……………………………………………………………….. | 25 | Article 21. | General Provisions………………………………………………………. | 25 |
2019 ACCO Brands Corporation Incentive Plan
| | Article 1. | Establishment, Purpose, and Duration |
1.1Establishment. ACCO Brands Corporation, a Delaware corporation, establishes this incentive compensation plan known as the 2019 ACCO Brands Corporation Incentive Plan (this “Plan”).
This Plan permits the grant of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares, Performance Stock Units, Cash-Based Awards,and Other Stock-Based Awards.
This Plan will become effective upon initial stockholder approval on _______, 20191 (the “Effective Date”). This Plan shall remain in effect as provided in Section 1.3.
1.2Purpose of this Plan. The purpose of this Plan is to provide incentives linked to value creation for stockholders of the Company and the achievement of certain long-term strategic and financial goals through a variety of equity-based and cash Awards designed to attract, retain and motivate the best available Employees and non-employee Directors. A further purpose of this Plan is to provide a means whereby those individuals upon whom the responsibilities of the successful administration and management of the Company are dependent can acquire and maintain ownership of Shares, thereby strengthening their concern for the welfare of the Company and its stockholders.
1.3Duration of this Plan. Unless sooner terminated as provided herein or extended, this Plan shall terminate ten (10) years from the Effective Date, i.e., on the day before the tenth (10th) anniversary of the Effective Date. After this Plan is terminated, no Awards may be granted but Awards previously granted shall remain outstanding in accordance with their applicable terms and conditions and this Plan’s terms and conditions.
Whenever used in this Plan, the following terms shall have the meanings set forth below, and when the meaning is intended, the initial letter of the word shall be capitalized:
| | (a) | “Affiliate” shall mean any corporation or other entity (including, but not limited to, a partnership or a limited liability company) that is affiliated with the Company through stock or equity ownership or otherwise, and either is (i) wholly owned by the Company through stock or equity ownership or otherwise, or (ii) designated as an Affiliate for purposes of this Plan by the Committee.
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| | (b) | “Applicable Laws” means the legal requirements relating to the administration of equity plans or the issuance of share capital by a company, applicable U.S. state corporate laws, U.S. federal and applicable state securities laws, other U.S. federal and state laws, the Code, any stock exchange rules and regulations that may from time to time be applicable to the Company, and the applicable laws, rules and regulations of any other country or jurisdiction where Awards are granted under this Plan, as such laws, rules, regulations, interpretations and requirements may be in place from time to time.
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| | (c) | “Award” means, individually or collectively, a grant under this Plan of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares, Performance Stock Units, Cash-Based Awards, or Other Stock-Based Awards, in each case subject to the terms of this Plan and the applicable Award Agreement.
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| | (d) | “Award Agreement” means either: (i) a written agreement entered into by the Company and a Participant setting forth the terms and provisions applicable to an Award granted under this Plan, or (ii) a written or electronic statement issued by the Company to a Participant describing the terms and provisions of such Award, including in each case any amendment or modification thereof. The Committee may provide for the use of electronic, Internet, or other non-paper Award Agreements, and the use of electronic, Internet, or other non-paper means for the acceptance thereof and actions thereunder by a Participant.
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| | (e) | “Beneficial Owner” or “Beneficial Ownership” shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Exchange Act.
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| | (f) | “Board” or “Board of Directors” means the Board of Directors of the Company.
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1The annual meeting of stockholders is scheduled for May 21, 2019.
| | (g) | “Business Combination” means the consummation of a reorganization, merger, amalgamation or consolidation or sale or other disposition of all or substantially all of the assets of the Company.
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| | (h) | “Cash-Based Award” means an Award, denominated in cash, granted to a Participant as described in Article 10.
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| | (i) | “Cause” means if the Participant:
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| | (i) | Is a participant in the Company Executive Severance Plan on the date of the Participant’s termination of employment, the meaning ascribed to such term in the Executive Severance Plan as in effect on such date; or |
| | (ii) | Is not a participant in the Company’s Executive Severance Plan on the date of his termination of employment, such definition as is specified in the Participant’s applicable Award Agreement, or if no such definition is specified in the Participant’s applicable Award Agreement, “Cause” shall mean, (1) a material breach by the Participant of those duties and responsibilities, which breach is demonstrably willful and deliberate on the Participant’s part, is committed in bad faith or without reasonable belief that such breach is in the best interests of the Company and is not remedied in a reasonable period of time after receipt of written notice from the Company specifying such breach, (2) the conviction of the Participant of a felony, or (3) dishonesty or willful misconduct in connection with the Participant’s employment or services, including any breach of the Company’s Code of Conduct (as in effect from time to time). |
| | (j) | “Change in Control” means, unless otherwise specified in an Award Agreement or an Other Agreement,
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| | (i) | The acquisition by any individual, entity, or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of Beneficial Ownership of voting securities of the Company where such acquisition causes such Person to own thirty percent (30%) or more of the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”), provided, however, that for purposes of this paragraph (i), the following acquisitions shall not be deemed to result in a Change in Control: (A) any acquisition directly from the Company, other than an acquisition by virtue of the exercise of a conversion privilege unless the security being so converted was itself acquired directly from the Company, (B) any acquisition by the Company or a Subsidiary of the Company, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation or other legal entity controlled, directly or indirectly, by the Company, or (D) any acquisition by any corporation pursuant to a transaction that complies with clauses (A), (B), and (C) of paragraph (iii) below; |
| | (ii) | Individuals who, as of the Effective Date, constitute the Board (such individuals, the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the Effective Date whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, 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; |
| | (iii) | A Business Combination excluding, however, such a Business Combination pursuant to which (A) all or substantially all of the individuals and entities who were the Beneficial Owners of the Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than sixty percent (60%) of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation that as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their |
ownership, immediately prior to such Business Combination of the Outstanding Company Voting Securities, (B) no Person Beneficially Owns, directly or indirectly, thirty percent (30%) or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination, and (C) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or
| | (iv) | Approval by the stockholders of the Company of a complete liquidation or dissolution of the Company. |
| | (k) | “Change in Control Price” means the closing price of a Share on the last trading day before the Change in Control occurs or, if so determined by the Committee, the value of all compensation to be paid to the holder of a Share pursuant to the terms of the transaction constituting the Change in Control.
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| | (l) | “Change in Control Period” means the period commencing on the date of a Change in Control and ending on the twenty-four (24) month anniversary of such date.
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| | (m) | “Code” means the U.S. Internal Revenue Code of 1986, as amended from time to time. For purposes of this Plan, references to sections of the Code shall be deemed to include references to any applicable regulations thereunder and any successor or similar provision, as well as any applicable interpretative guidance issued related thereto.
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| | (n) | “Committee” means the Compensation Committee of the Board or such other committee designated by the Board to administer all or a portion of this Plan. The members of the Committee shall be appointed from time to time by and shall serve at the discretion of the Board. The Board may take any action under this Plan that would otherwise be the responsibility of the Committee.
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| | (o) | “Company” means ACCO Brands Corporation, a Delaware corporation, and any successor thereto as provided in Article 20.
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| | (p) | “Director” means any individual who is a member of the Board of Directors of the Company.
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| | (i) | If the Participant is a participant in the Executive Severance Plan or is a non-employee Director, “disability” as such term is defined in the Executive Severance Plan as then in effect; |
| | (ii) | If (i) does not apply, then |
| | (A) | for an Employee employed in the United States,“disability” as such term is defined in the Company’s then-current long term disability income insurance policy that applies to the Employee which continues for a period of twelve (12) consecutive months;
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| | (B) | for an Employee employed outside the United States, if there is a Company long term disability policy or program or local disability regulation applicable to the Employee, “disability” as such term is defined in such Company policy or program or local disability regulation; or |
| | (C) | if there is not a Company long term disability policy or program or local disability regulation applicable to the Employee, then a definition approved by the Committee; |
provided, however, that to the extent an amount payable under the Plan which constitutes a deferral of compensation pursuant to Section 409A would become payable upon Disability, “Disability” for purposes of such payment shall not be deemed to have occurred unless the disability also satisfies the requirements of Treasury Regulation Section 1.409A-3.
| | (r) | “Effective Date” has the meaning set forth in Section 1.1.
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| | (s) | “Employee” means any non-union individual who performs services for and is designated as an employee of the Company, Affiliate and/or Subsidiary on the payroll records thereof. An Employee shall not include any individual during any period he or she is classified or treated by the Company, Affiliate and/or Subsidiary as an independent contractor, a consultant, or any employee of an employment, consulting, or temporary agency or any other entity other than the Company, Affiliate and/or Subsidiary, without regard to whether such individual is subsequently determined to have been, or is subsequently retroactively reclassified as a common-law employee of the Company, Affiliate and/or Subsidiary during such period.
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| | (t) | “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, or any successor act thereto.
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| | (u) | “Executive Severance Plan” means the ACCO Brands Corporation Executive Severance Plan as in effect from time to time.
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| | (v) | “Fair Market Value” or “FMV” means the average of the high and low sales price of a Share on the New York Stock Exchange, Inc. composite tape (or if Shares are not then traded on the New York Stock Exchange, on the stock exchange or over-the-counter market on which Shares are principally trading), on the date of measurement, and if there were no trades on such measurement date, on the first day on which a trade occurs next succeeding such measurement date; provided that for purposes of determining the amount payable with respect to an Award in connection with a Change of Control pursuant to Article 17, the Fair Market Value of a Share shall be not less than the value of the consideration to be paid for a Share pursuant to the terms of the transaction constituting the Change of Control, as determined by the Committee. In the event Shares are not publicly traded at the time a determination of their value is required to be made hereunder, or for purposes of determining the Fair Market Value of securities or other property other than Shares, the determination of Fair Market Value shall be made by the Committee in such manner as it deems appropriate.
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| | (w) | “Full-Value Award” means an Award other than in the form of an ISO, NQSO, or SAR, and which is settled by the issuance of fully paid Shares or, to the extent provided by the Committee, settled in whole or in part in cash rather than Shares, but shall not include any Award (i) that is not denominated in Shares or stock units or (ii) for which the terms of the Award provide for settlement only in cash.
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| | (x) | “Grant Date” means the date on which the Committee approves the grant of an Award by Committee action or such later date as specified in advance by the Committee.
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| | (y) | “Grant Price” means the price used to determine whether there is any payment due upon exercise of the SAR. The Grant Price of any SAR will be at least the greater of the Fair Market Value of a Share at the time the grant is effective or the par value of a Share.
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| | (z) | “Incentive Stock Option” or “ISO” means an Option to purchase Shares granted under Article 6 to an Employee and that is designated as an Incentive Stock Option and that is intended to meet the requirements of Code Section 422, or any successor provision.
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| | (aa) | “Involuntary Termination” means the Company’s, Affiliate’s and/or Subsidiary’s termination of a Participant’s employment or service other than for Cause.
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| | (bb) | “Nonqualified Stock Option” or “NQSO” means an Option that is not intended to meet the requirements of Code Section 422, or that otherwise does not meet such requirements.
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| | (cc) | “Non-Tandem SAR” means an SAR that is granted independently of any Option, as described in Article 7.
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| | (dd) | “Option” means an Incentive Stock Option or a Nonqualified Stock Option, as described in Article 6.
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| | (ee) | “Option Price” means the price at which a Share may be purchased by a Participant pursuant to an Option. The Option Price will be at least the greater of the Fair Market Value of a Share at the time the grant is effective or the par value of a Share.
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| | (ff) | “Other Agreement” means either (i) an applicable employment or other written agreement between the Company and a Participant or (ii) an applicable employment or other written agreement between an Affiliate or a Subsidiary and a Participant which, in either case, has been approved by the Board or Committee or executed by the person who is the Chief Executive Officer, the President, the Chief Financial Officer, or the General Counsel of the Company.
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| | (gg) | “Other Stock-Based Award” means an equity-based or equity-related Award not otherwise described by the terms of this Plan, granted pursuant to Article 10.
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| | (hh) | “Participant” means any eligible individual as set forth in Article 5 to whom an Award is granted.
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| | (ii) | “Performance Measures” means measures on which the performance goals are based.
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| | (jj) | “Performance Period” means the period of time during which the performance goals must be met in order to determine the degree of payout and/or vesting with respect to an Award.
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| | (kk) | “Performance Share” means an Award under Article 9 and subject to the terms of this Plan, denominated in fully paid Shares, the value of which at the time it is payable is determined as a function of the extent to which corresponding performance criteria or Performance Measure(s), as applicable, have been achieved.
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| | (ll) | “Performance Stock Unit” means an Award under Article 9 and subject to the terms of this Plan, denominated in units (and no Shares are actually awarded to the Participant on the Grant Date), the value of which at the time it is payable is determined as a function of the extent to which corresponding performance criteria or Performance Measure(s), as applicable, have been achieved.
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| | (mm) | “Period of Restriction” means the period when Restricted Stock or Restricted Stock Units are subject to a substantial risk of forfeiture (based on the passage of time, the achievement of performance goals, or the occurrence of other events as determined by the Committee, in its discretion).
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| | (nn) | “Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d) thereof.
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| | (oo) | “Plan” means this 2019 ACCO Brands Corporation Incentive Plan.
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| | (pp) | “Plan Year” means a twelve-month period beginning with January 1 of each year.
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| | (qq) | “Replacement Award” shall have the meaning set forth in Section 17.1(a)(ii).
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| | (rr) | “Restricted Stock” means an Award under Article 8 and subject to the terms of this Plan, denominated in fully paid Shares.
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| | (ss) | “Resignation for Good Reason” means a resignation for “good reason”:
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| | (i) | If the Participant is a participant in the Company Executive Severance Plan on the date of the Participant’s “separation from service,” as defined by Section 409A, the meaning ascribed to such term in the Executive Severance Plan as in effect on such date; or |
| | (ii) | If the Participant is not on the date of such “separation from service,” as defined by Section 409A, a participant in the Company’s Executive Severance Plan, such definition as is specified in the Participant’s Award Agreement. |
If the Participant is not a participant in the Executive Severance Plan, and the Participant’s Award Agreement does not define the term “good reason”, any provision of this Plan that applies to a Resignation for Good Reason shall not apply to such Participant.
| | (tt) | “Restricted Stock Unit” means an Award under Article 8, and subject to the terms of this Plan denominated in units (and no Shares are actually awarded to the Participant on the Grant Date).
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| | (i) | the Participant’s termination of employment on or after attaining age 55 and completion of either (A) at least five years of service with the Company, an Affiliate and/or a Subsidiary without a break in service (due to a termination of employment and re-employment) of more than one year or (B) at least five years of continuous service with the Company, an Affiliate and/or a Subsidiary; provided, that Retirement shall not include a termination of employment for Cause, or |
| | (ii) | retirement from service as a member of the Board by a non-employee Director after five or more years of service as a Non-employee Director of the Company (together with any prior service as an Employee). |
For the avoidance of doubt, if a Participant has met the relevant Retirement criteria set forth above but terminates without Cause, the Participant shall remain eligible for Retirement under this Plan.
| | (vv) | “Section 16 Insider” means an individual who is, on the relevant date, an executive officer or Director of the Company as determined by the Board or Committee in accordance with Section 16 of the Exchange Act.
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| | (ww) | “Share” means a registered share of common stock of the Company, par value $.01 per share, or such other par value as may be in effect from time to time.
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| | (xx) | “Stock Appreciation Right” or “SAR” means an Award, designated as an SAR, pursuant to the terms of Article 7.
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| | (yy) | “Subsidiary” means any corporation, other than the Company, in an unbroken chain of corporations beginning with the Company, if each of the corporations other than the last corporation in the unbroken chain owns 50% or more of the voting stock in one of the other corporations in such chain, except that with respect to Incentive Stock Options, “Subsidiary” means “subsidiary corporation” as defined in Section 424(f) of the Code. For purposes of this definition of “Subsidiary”, references to a corporation and its voting stock shall also mean any other form of entity and its voting equity interests.
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| | (zz) | “Tandem SAR” means an SAR that is granted in connection with a related Option pursuant to Article 7, the exercise of which shall require forfeiture of the right to purchase a Share under the related Option (and when a Share is purchased under the Option, the Tandem SAR shall similarly be forfeited).
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3.1General. The Committee shall be responsible for administering this Plan, subject to this Article 3 and the other provisions of this Plan. The Committee shall consist of not fewer than two (2) Directors who are both non-employee directors, within the meaning of Rule 16b-3 of the Exchange Act, and independent directors, as contemplated by any rules and regulations of the New York Stock Exchange, or any similar rule or listing requirement that may be applicable to the Company from time to time. The Committee may employ attorneys, consultants, accountants, agents, and other individuals, any of whom may be an Employee, and the Committee, the Company, and its officers and Directors shall be entitled to rely upon the advice, opinions, or valuations of any such individuals. All actions taken and all interpretations and determinations made by the Committee shall be final and binding upon the Participants, the Company, and all other interested individuals.
3.2Authority of the Committee.
| | (a) | Discretionary Authority. The Committee shall have full and exclusive discretionary power to interpret the terms and the intent of this Plan and any Award Agreement or other agreement or document ancillary to or in connection with this Plan, to determine eligibility for Awards and to adopt such rules, regulations, forms, instruments, and guidelines for administering this Plan as the Committee may deem necessary or proper. Such authority shall include, but not be limited to, selecting Award recipients, establishing all Award terms and conditions (including the terms and conditions set forth in Award Agreements), granting Awards as an alternative to or as the form of payment for grants or rights earned or due under compensation plans or arrangements of the Company, construing any provision of this Plan or any Award Agreement, and, subject to Article 18, adopting modifications and amendments to this Plan or any Award Agreement, including accelerating the vesting of any Award (subject to the limitations in Section 3.4) or extending the post-termination exercise period of an Award (subject to the limitations of Code Section 409A), and any other
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modifications or amendments that are necessary to comply with the laws of the countries and other jurisdictions in which the Company, its Affiliates, and/or its Subsidiaries operate.
| | (b) | Settlement of Awards. To the extent determined by the Committee, any Award may be settled in whole or in part in cash rather than Shares, regardless of whether the Award Agreement specified settlement in Shares. The Committee may arrange for payment to be made on the Participant’s behalf as part of an Award or otherwise.
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| | (c) | Board and Committee Action. Notwithstanding the foregoing, members of the Board or the Committee who are either eligible for Awards or have been granted Awards may vote on any and all matters, including matters affecting the administration of this Plan or the grant of Awards pursuant to this Plan. However, no such member shall act upon the granting of a specific Award to himself or herself, but any such member may be counted in determining the existence of a quorum at any meeting of the Board or the Committee during which action is taken with respect to the granting of an Award to him or her.
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| | (d) | Awards to Non-employee Directors. Notwithstanding the foregoing, the amount, form, and timing of the grant of Awards to non-employee Directors shall be determined by the Board unless the Board otherwise delegates any or all of these functions to a committee or committees of the Board.
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3.3Delegation. The Committee may delegate to one or more of its members or to one or more officers or committees of the Company, and/or its Subsidiaries and Affiliates, or to one or more agents or advisors such administrative duties or powers as it may deem advisable, and the Committee or any individuals to whom it has delegated duties or powers as aforesaid may employ one or more individuals to render advice with respect to any responsibility the Committee or such individuals may have under this Plan. The Committee may, by resolution, authorize one or more officers of the Company to do one or both of the following on the same basis as can the Committee: (a) designate Employees to be recipients of Awards; and (b) determine the size of any such Awards; provided, however, (i) the Committee shall not delegate such responsibilities to any such officer for Awards granted to an Employee who is considered an Section 16 Insider; (ii) the resolution providing such authorization shall set forth the total number of Shares, the total dollar value, or a combination of both, with respect to which such officer(s) may grant Awards; and (iii) the officer(s) shall report periodically to the Committee regarding the nature and scope of the Awards granted pursuant to the authority delegated.
3.4One-Year Minimum Vesting; Limitation on Acceleration. Notwithstanding any provision of this Plan, any Award Agreement or any Other Agreement to the contrary, no portion or installment of an Award shall vest until one year from the date of grant, except (a) for Awards, in the aggregate, for such number of Shares not to exceed 5% of the available Shares for award under this Plan on the Effective Date, (b) as the Committee shall otherwise specify in the Award Agreement in the case of a termination of an Employee’s employment due to death or Disability, (c) respecting Awards assumed by the Company pursuant to Section 4.3(c), or (d) as otherwise may apply pursuant to Article 17 in the event of a Change in Control. Notwithstanding Section 3.2, the Committee shall not have discretion to accelerate the vesting of any portion of an Award except in cases of termination by reason of death or Disability.
3.5No Repricing. Notwithstanding anything herein to the contrary, the Committee shall have no authority to reduce the exercise price of any Option (including any ISO) or any SAR. No Option (including any ISO) or SAR granted under this Plan may be surrendered to the Company for cancellation or as consideration for the grant of a new Option or SAR with a lower exercise price than the Option or SAR so surrendered or exchanged without the approval of the Company’s stockholders, and no repricing of an Option or SAR shall be permitted without the approval of the Company’s stockholders if such approval otherwise is required under the rules of any stock exchange on which Shares are listed, except in accordance with Section 4.3 and Article 18 related to an adjustment in the number of Shares and Article 17 in the event of a Change in Control. No Option (including any ISO) or SAR granted under this Plan may be exchanged or surrendered for cash or other consideration that exceeds the excess of the Option Price or Grant Price over the FMV of the Shares at the time of the transaction.
| | Article 4. | Shares Subject to This Plan and Maximum Awards |
4.1Number of Shares Available for Awards
| | (a) | Subject to adjustment as provided in Section 4.3, the maximum number of Shares available for grant to Participants under this Plan (the “Share Authorization”) shall be: |
| | (i) | 11,775,000 Shares; plus |
| | (ii) | the number of Shares subject to outstanding awards as of the Effective Date under the ACCO Brands Corporation Incentive Plan (As Amended and Restated Effective May 12, 2015) that on or after the Effective Date cease for any reason to be subject to such awards (other than in connection with the exercise or settlement of the awards including shares withheld to satisfy the exercise price or tax withholding obligations) on the basis of: (A) one share for each such share issued as an Option or SAR and (B) 2.06 Shares for each such Share issued as a Full-Value Award. |
| | (b) | All Shares of the Share Authorization may be granted as Full-Value Awards. |
| | (c) | The maximum number of Shares of the Share Authorization that may be issued pursuant to ISOs under this Plan shall be 11,775,000 Shares. |
4.2Share Usage. Shares covered by an Award shall only be counted as used to the extent they are actually issued and delivered to a Participant. Any Shares related to Awards which terminate by expiration, forfeiture, cancellation, or otherwise without the issuance and delivery of such Shares, are settled in cash in lieu of Shares, or are exchanged with the Committee’s permission, prior to the issuance and delivery of Shares, for Awards not involving Shares, shall be available again for grant under this Plan and shall be added back to the limits described in this Plan on the basis of (i) one Share for each such Share subject to an Option or SAR and (ii) 2.00 Shares for each such Share subject to a Full-Value Award. In addition, the following principles shall apply in determining the number of Shares under any applicable limit:
| | (a) | Shares tendered or attested to in payment of the Exercise Price of an Option shall not be added back to the applicable limit; |
| | (b) | Any Shares withheld by the Company to satisfy the tax withholding obligation shall not be added back to the applicable limit (without implying that the withholding of Shares is a permissible way to satisfy the obligation), and if an amount is withheld for payment of taxes from an Award settled partly in Shares and partly in cash, a number of Shares with a value equal to the portion of the withholding that corresponds to the portion of the Award settled in Shares shall be treated as issued and shall not be added back to the applicable limit; |
| | (c) | Shares that are reacquired by the Company with the amount received upon the exercise of an Option shall not be added back to the applicable limit; and |
| | (d) | The aggregate Shares with respect to which an SAR settled in Shares is exercised, rather than the number of Shares actually issued, shall reduce the applicable limit. |
The Company will issue new Shares either based on the Company’s conditional or authorized capital or it may, in its full discretion, deliver treasury Shares, Shares available on the open market, or otherwise existing Shares.
4.3Adjustments in Authorized Shares.
| | (a) | In the event of any corporate event or transaction (including, but not limited to, a change in the authorized number of Shares of the Company or the capitalization of the Company) such as an amalgamation, a merger, consolidation, reorganization, recapitalization, separation, partial or complete liquidation, stock dividend, stock split, reverse stock split, split up, spin-off, division, consolidation or other distribution of stock or property of the Company, combination of Shares, exchange of Shares, dividend in kind, or other like change in capital structure, number of issued Shares or distribution (other than normal cash dividends) to stockholders of the Company, or any similar corporate event or transaction, the Committee, in its sole discretion, in order to prevent dilution or enlargement of Participants’ rights under this Plan, shall substitute or adjust, as applicable, the number and kind of Shares that may be issued under this Plan or under particular forms of Awards, the number and kind of Shares subject to outstanding Awards, the Option Price or Grant Price applicable to outstanding Awards, and other value determinations applicable to outstanding Awards. |
| | (b) | The Committee, in its sole discretion, may also make appropriate adjustments in the terms of any Awards that are otherwise permissible under this Plan to reflect, or related to, such changes or distributions and to modify any other terms of outstanding Awards, including modifications of performance goals and changes in the length of Performance Periods. The determination of the Committee as to the foregoing adjustments, if any, |
shall be conclusive and binding on Participants under this Plan. Notwithstanding the foregoing, all Awards will be subject to the minimum vesting requirement of one year as described in Section 3.4.
| | (c) | Subject to the provisions of Article 18 and notwithstanding anything else herein to the contrary, without affecting the number of Shares reserved or available hereunder, the Committee may authorize the issuance or assumption of benefits under this Plan in connection with any amalgamation, merger, consolidation, acquisition of property or stock, or reorganization upon such terms and conditions as it may deem appropriate (including, but not limited to, a conversion of equity awards into Awards under this Plan in a manner consistent with paragraph 53 of FASB Interpretation No. 44 or subsequent accounting guidance), subject to compliance with the rules under Code Sections 422 and 424, as and where applicable. The Committee shall provide to Participants reasonable written notice (which may include, without limit, notice by electronic means) within a reasonable time of any such determinations it makes, but the failure to give such notice shall not preclude any such action from taking effect. |
| | Article 5. | Eligibility and Participation |
5.1Eligibility. Individuals eligible to participate in this Plan include all Employees and non-employee Directors.
5.2Actual Participation. Subject to the provisions of this Plan, the Committee may, from time to time, select from all eligible individuals, those individuals to whom Awards shall be granted and shall determine, in its sole discretion, the nature of any and all terms permissible by law, and the amount of each Award.
5.3Leaves of Absence. Notwithstanding any other provision of this Plan to the contrary, for purposes of determining Awards granted hereunder, a Participant shall not be deemed to have incurred a termination of employment if such Participant is placed on military or sick leave or such other leave of absence which is treated by the Company as continuing intact the employment relationship with the Company, any Subsidiary or any Affiliate. In such a case, the employment relationship shall be deemed to continue until the date when a Participant’s right to reemployment shall no longer be guaranteed either by law or contract.
5.4Transfer of Service. Notwithstanding any other provision of this Plan to the contrary, for purposes of determining Awards granted hereunder, a Participant shall not be deemed to have incurred a termination of employment if the Participant’s status as an Employee or non-employee Director terminates and the Participant is then, or immediately thereafter becomes, an eligible individual due to another status or relationship with the Company, any Subsidiary or any Affiliate.
5.5Termination of Employment. The Committee shall have the discretion to determine whether any corporate event or transaction that results in the sale, spinoff or transfer of a Subsidiary, Affiliate, business group, operating unit, division, or similar organization constitutes a termination of employment (or services), and, if so, the effective date of such termination, for purposes of Awards granted under this Plan.
6.1Grant of Options. Subject to the terms and provisions of this Plan, Options may be granted to Participants in such number, and upon such terms, and at any time and from time to time as shall be determined by the Committee, in its sole discretion; provided that ISOs may be granted only to eligible Employees of the Company or of any parent or subsidiary corporation (as permitted and defined under Code Sections 422 and 424).
6.2Award Agreement. Each Option grant shall be evidenced by an Award Agreement that shall specify the Option Price, the maximum duration of the Option, the number of Shares to which the Option pertains, the conditions upon which the Option shall become vested and exercisable, and such other provisions as the Committee shall determine which are not inconsistent with the terms of this Plan. The Award Agreement also shall specify whether the Option is intended to be an ISO or a NQSO.
6.3Option Price. The Option Price for each grant of an Option under this Plan shall be determined by the Committee in its sole discretion and shall be specified in the Award Agreement; provided, however, the Option Price must be at least equal to one hundred percent (100%) of the FMV of the Shares as determined on the Grant Date. With respect to a Participant who owns, directly or indirectly, more than ten percent (10%) of the total combined voting power of all classes of the stock of the Company, any Subsidiary, or any Affiliate, the Option Price of Shares subject to an ISO shall be at least equal to one hundred and ten percent (110%) of the Fair Market Value of such Shares on the ISO’s Grant Date. In any event, the Option Price shall not be less than the aggregate par value of the Shares covered by the Option.
6.4Term of Options. Each Option granted to a Participant shall expire at such time as the Committee shall determine when the Committee approves the grant; provided, however, no Option shall be exercisable later than the day before the tenth (10th) anniversary of the Grant Date except as otherwise provided in Section 6.8(a). Notwithstanding the foregoing, with respect to ISOs, in the case of a Participant who owns, directly or indirectly, more than ten percent (10%) of the total combined voting power of all classes of stock of the Company, any Subsidiary, or an Affiliate, no such ISO shall be exercisable later than the day before the fifth (5th) anniversary of the Grant Date.
6.5Exercise of Options. Options granted under this Article 6 shall be exercisable at such times and be subject to such restrictions and conditions as the Committee shall in each instance approve, which terms and restrictions need not be the same for each grant or for each Participant. Notwithstanding the foregoing, the Fair Market Value of Shares, determined as of the Grant Date, as to which ISOs are exercisable for the first time by any Participant during any calendar year shall not exceed one hundred thousand dollars ($100,000). The portion of any ISOs that become exercisable in excess of such amount, or that are exercised by a Participant more than three months (12 months in the case of Disability) after the Participant has ceased to be an Employee of the Company or of any parent or subsidiary corporation (as permitted under Code Sections 422 and 424) shall be deemed Nonqualified Stock Options.
6.6Payment. Options granted under this Article 6 shall be exercised by the delivery of a notice of exercise to the Company or an agent designated by the Company in a form specified or accepted by the Committee or its delegate, or by complying with any alternative procedures which may be authorized by the Committee or its delegate, setting forth the number of Shares with respect to which the Option is to be exercised, accompanied by full payment for the Shares.
A condition of the issuance of the Shares as to which an Option shall be exercised shall be the payment of the Option Price. The Option Price of any Option shall be payable, in full, to the Company, under any of the following methods as determined by the Committee or its delegate, in its sole discretion: (a) in cash or its equivalent; (b) by tendering (either by actual delivery or attestation) to the Company previously acquired Shares having an aggregate Fair Market Value at the time of exercise equal to the Option Price; (c) by a simultaneous exercise of the Option and sale of the Shares issuable upon such exercise pursuant to a broker-assisted transaction or other similar arrangement, and use of the proceeds from such sale as payment of the purchase price of such Shares (and withholding taxes) in accordance with the cashless exercise program adopted by the Committee or its delegate pursuant to Section 220.3(e) (4) of Federal Reserve Board Regulation T; (d) by a combination of (a), (b), and/or (c); or (e) any other method approved or accepted by the Committee or its delegate in its sole discretion.
Subject to any governing rules or regulations, as soon as practicable after receipt of written notification of exercise and full payment (including satisfaction of any applicable tax withholding), the Company shall deliver to the Participant evidence of book entry Shares in an appropriate amount based upon the number of Shares purchased under the Option(s).
Unless otherwise determined by the Committee or its delegate, all payments under all of the methods indicated above shall be paid in United States dollars.
6.7Other Restrictions. The Committee may impose such restrictions on any Shares acquired pursuant to the exercise of an Option granted under this Article 6 as it may deem advisable, including, without limitation, minimum holding period requirements, restrictions under applicable federal securities laws, under the requirements of any stock exchange or market upon which such Shares are then listed and/or traded, or under any blue sky or state securities laws applicable to such Shares.
6.8Termination of Employment, Service as a Non-employeeDirector. Each Participant’s Award Agreement shall set forth the extent to which the Option will vest and Participant shall have the right to exercise the Option following termination of the Participant’s employment or services to the Company, its Affiliates, and/or its Subsidiaries, as the case may be, subject to Sections 3.4, 5.3, 5.4, and 11.2. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with each Participant, need not be uniform among all Options issued pursuant to this Article 6, and may reflect distinctions based on, among other things, the reasons for termination, or reasons relating to breach or threatened breach of restrictive covenants to which the Participant is subject, if any. Subject to Article 17, in the event a Participant’s Award Agreement does not set forth such provisions, the following provisions shall apply:
| | (a) | Death or Disability. These termination events apply to all Participants. In the event that a Participant’s employment or service as a non-employee Director with the Company, Affiliate and/or any Subsidiary terminates by reason of death or Disability before the specified vesting date in the Award Agreement, to the extent that an Option is not then exercisable, the Option shall immediately become vested and exercisable with respect to all Shares covered by the Participant’s Option, and the Option shall remain exercisable until
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the earlier of (i) the expiration of the term of the Option, or (ii) 5 years after the date of such termination; provided, however that an Option (other than an ISO) may be exercised within one year following the date of death even if later than the expiration of the term of such Option. In the case of the Participant’s death, the Participant’s beneficiary or estate may exercise the Option.
| | (b) | Retirement. This termination event applies to all Participants. In the event that a Participant’s employment or service as a non-employee Director terminates by reason of Retirement from the Company, Affiliate and/or any Subsidiary before the specified vesting date in the Award Agreement, to the extent an Option is not then exercisable, the Option shall continue to vest and become vested and exercisable in accordance with the original vesting terms of the Award Agreement (as if the termination of employment or service had not occurred) and shall remain exercisable until the expiration of the term of the Option.
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| | (c) | Divestiture. This termination event applies to all Participants. In the event that a Participant’s employment or service as a non-employee Director with any Subsidiary terminates upon the occurrence of a transaction, other than a Change in Control, by which the Subsidiary that is the Participant’s principal employer or service recipient ceases to be a Subsidiary of the Company (“Divestiture”) after the first anniversary of the Grant Date but before the specified vesting date in the Award Agreement, the Option shall become vested and exercisable with respect to a number of Shares (rounded up to the next integer) equal to the fraction the numerator of which is the number of days that the Participant was continuously employed or continuously providing services from the Grant Date through the date of the Divestiture and the denominator of which is the number of days from the Grant Date through such vesting date, and shall remain exercisable until the expiration of the term of the Option.
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| | (d) | Other Termination. These termination events apply to all Participants. In the event that a Participant’s employment or service as a non-employee Director with the Company, Affiliate and/or any Subsidiary terminates for any reason other than those set forth in subsections (a), (b) and (c) above, all then vested and exercisable Options shall remain exercisable from the date of such termination until the earlier of (i) the expiration of the term of the Option, or (ii) 90 days after the date of such termination. Such Options shall only be exercisable to the extent that they were exercisable as of such termination date and all unvested Options shall be immediately forfeited.
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6.9Notification of Disqualifying Disposition. If any Participant shall make any disposition of Shares issued pursuant to the exercise of an ISO under the circumstances described in Code Section 421(b) (relating to certain disqualifying dispositions), such Participant shall notify the Company of such disposition within ten (10) calendar days thereof.
| | Article 7. | Stock Appreciation Rights |
7.1Grant of SARs. Subject to the terms and conditions of this Plan, SARs may be granted to Participants at any time and from time to time as shall be determined by the Committee. The Committee may grant Non-Tandem SARs, Tandem SARs, or any combination of these forms of SARs.
Subject to the terms and conditions of this Plan, the Committee shall have complete discretion in determining the number of SARs granted to each Participant and, consistent with the provisions of this Plan, in determining the terms and conditions pertaining to such SARs.
The Grant Price for each grant of an SAR shall be determined by the Committee and shall be specified in the Award Agreement. Notwithstanding the foregoing, the Grant Price of a Non-Tandem SAR on the Grant Date shall be at least equal to the greater of one hundred percent (100%) of the FMV of the Shares as determined on the Grant Date or the par value of the Shares. The Grant Price of a Tandem SAR on the Grant Date shall equal the Option Price of the related Option.
7.2SAR Agreement. Each SAR Award shall be evidenced by an Award Agreement that shall specify the Grant Price, the term of the SAR, the conditions upon which the SAR shall become vested and exercisable, and such other provisions as the Committee shall determine.
7.3Term of SAR. The term of an SAR granted under this Plan shall be determined by the Committee, in its sole discretion, and no SAR shall be exercisable later than the day before the tenth (10th) anniversary of the Grant Date, except as otherwise provided in Section 7.7(a).
7.4Exercise of Tandem SARs. Tandem SARs may be exercised for all or part of the Shares subject to the related Option upon the surrender of the right to exercise the equivalent portion of the related Option. A Tandem SAR may be exercised only with respect to the Shares for which its related Option is then exercisable, and has not yet been exercised. Notwithstanding the foregoing: (i) a Tandem SAR granted in connection with an ISO shall expire no later than the expiration of the underlying ISO; (ii) the value of the payout with respect to the Tandem SAR may be for no more than one hundred percent (100%) of the difference between the Option Price of the underlying Option and the Fair Market Value of the Shares subject to the underlying Option at the time the Tandem SAR is exercised; and (iii) the Tandem SAR may be exercised only when the Fair Market Value of the Shares covered by the Option exceeds the Option Price of the Option.
7.5Exercise of Non-Tandem SARs. Non-Tandem SARs may be exercised upon whatever terms and conditions the Committee, in its sole discretion, imposes.
7.6Settlement of SARs. Upon the exercise of an SAR, a Participant shall be entitled to receive payment from the Company in an amount determined by multiplying:
| | (a) | The excess of the Fair Market Value of a Share on the date of exercise over the Grant Price; by |
| | (b) | The number of Shares with respect to which the SAR is exercised. |
At the discretion of the Committee, the payment upon SAR exercise may be in cash, fully paid Shares, or any combination thereof, or in any other manner approved by the Committee in its sole discretion.
7.7Termination of Employment, Service as a Non-employee Director. Each Award Agreement shall set forth the extent to which the SAR will vest and the Participant shall have the right to exercise the SAR following termination of the Participant’s employment with or services to the Company, its Affiliates, and/or its Subsidiaries, as the case may be, subject to Sections 3.4, 5.3, 5.4, and 11.2. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with Participants, need not be uniform among all SARs issued pursuant to this Plan, and may reflect distinctions based on, among other things, the reasons for termination, or reasons relating to breach or threatened breach of restrictive covenants to which the Participant is subject, if any. Subject to Article 17, in the event a Participant’s Award Agreement does not set forth such provisions, the following provisions shall apply:
| | (a) | Death or Disability. These termination events apply to all Participants. In the event that a Participant’s employment or service as a non-employee Director with the Company, Affiliate and/or any Subsidiary terminates by reason of death or Disability before the specified vesting date in the Award Agreement, to the extent that an SAR is not then exercisable, the SAR shall immediately become vested and exercisable, and the SAR shall remain exercisable until the earlier of (i) the expiration of the term of the SAR, or (ii) 5 years after the date of such termination; provided, however that the SAR may be exercised within one year following the date of death even if later than the expiration of the term of such SAR. In the case of the Participant’s death, the Participant’s beneficiary or estate may exercise the SAR.
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| | (b) | Retirement. This termination event applies to all Participants. In the event that a Participant’s employment or service as a non-employee Director terminates by reason of Retirement from the Company, Affiliate and/or any Subsidiary before the specified vesting date in the Award Agreement, to the extent an SAR is not then exercisable, the SAR shall continue to vest and become vested and exercisable in accordance with the original vesting terms of the Award Agreement (as if the termination of employment or service had not occurred) and shall remain exercisable until the expiration of the term of the SAR.
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| | (c) | Divestiture. This termination event applies to all Participants. In the event that a Participant’s employment or service as a non-employee Director with any Subsidiary terminates upon the occurrence of a transaction, other than a Change in Control, by which the Subsidiary that is the Participant’s principal employer or service recipient ceases to be a Subsidiary of the Company (“Divestiture”) after the first anniversary of the Grant Date but before the specified vesting date in the Award Agreement, the SAR shall become vested and exercisable with respect to a number of Shares (rounded up to the next integer) equal to the fraction the numerator of which is the number of days that the Participant was continuously employed or continuously providing services from the Grant Date through the date of the Divestiture and the denominator of which is the number of days from the Grant Date through such vesting date, and shall remain exercisable until the expiration of the term of the SAR.
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| | (d) | Other Termination. These termination events apply to all Participants. In the event that a Participant’s employment or service as a non-employee Director with the Company, Affiliate and/or any Subsidiary terminates for any reason other than those set forth in subsections (a), (b) and (c) above, all then vested and exercisable SARs shall remain exercisable from the date of such termination until the earlier of (i) the expiration of the term of the SAR, or (ii) 90 days after the date of such termination. Such SARs shall only be exercisable to the extent that they were exercisable as of such termination date and all unvested SARs shall be immediately forfeited.
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7.8Other Restrictions. The Committee may impose such restrictions on any Shares acquired pursuant to the exercise of an SAR granted under this Article 7 as it may deem advisable or desirable including, without limitation, minimum holding period requirements, restrictions under applicable federal securities laws, under the requirements of any stock exchange or market upon which such Shares are then listed and/or traded, or under any blue sky or state securities laws applicable to such Shares.
| | Article 8. | Restricted Stock and Restricted Stock Units |
8.1Grant of Restricted Stock or Restricted Stock Units. Subject to the terms and provisions of this Plan, the Committee, at any time and from time to time, may grant Restricted Stock and/or Restricted Stock Units to Participants in such amounts as the Committee shall determine. Restricted Stock Units shall be similar to Restricted Stock except that no Shares are actually issued until the expiration of the Period of Restriction. Upon the expiration of the Period of Restriction with respect to an Award of Restricted Stock Units, one fully paid Share shall be issued with respect to each vested Restricted Stock Unit, which shall fully settle and satisfy the Company’s obligations with respect to such Restricted Stock Unit, subject to the authority of the Committee in its discretion to settle all or a portion of vested Restricted Stock Units by a cash payment equal to the Fair Market Value of a Share.
8.2Restricted Stock or Restricted Stock Unit Agreement. Each Restricted Stock and/or Restricted Stock Unit grant shall be evidenced by an Award Agreement that shall specify the Period(s) of Restriction, the number of Shares of Restricted Stock or the number of Restricted Stock Units granted, and such other provisions as the Committee shall determine.
8.3Other Restrictions. The Committee may impose such restrictions on any Shares of Restricted Stock or Restricted Stock Units granted under this Article 8 as it may deem advisable including, without limitation, a requirement that Participants pay a stipulated purchase price for each Share of Restricted Stock or each Restricted Stock Unit, restrictions based upon the achievement of specific performance goals, time-based restrictions on vesting following the attainment of the performance goals, time-based restrictions, and/or restrictions under applicable federal securities laws, under the requirements of any stock exchange or market upon which such Shares are then listed and/or traded, or under any blue sky or state securities laws applicable to such Shares, or holding requirements or sale restrictions placed on the Shares by the Company upon vesting of such Restricted Stock or Restricted Stock Units.
8.4Voting Rights. Unless otherwise set forth in a Participant’s Award Agreement and permitted by Applicable Law, a Participant holding Shares of Restricted Stock granted hereunder shall be granted the right to exercise full voting rights with respect to those Shares during the Period of Restriction. A Participant shall have no voting rights with respect to any Restricted Stock Units granted hereunder.
8.5Termination of Employment, Service as a Non-employee Director. Each Award Agreement shall set forth the extent to which the restrictions placed on Restricted Stock and/or Restricted Stock Units shall lapse following termination of the Participant’s employment with or services to the Company, its Affiliates and/or its Subsidiaries, as the case may be, subject to Sections 3.4, 5.3, 5.4, and 11.2. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with each Participant, need not be uniform among all Shares of Restricted Stock or Restricted Stock Units issued pursuant to this Plan, and may reflect distinctions based on, among other things, the reasons for termination, or reasons relating to breach or threatened breach of restrictive covenants to which the Participant is subject, if any. Subject to Article 17, in the event a Participant’s Award Agreement does not set forth such provisions, the following provisions shall apply:
| | (a) | Involuntary Termination. This termination event applies only to Participants who are Employees. In the event that a Participant’s employment with the Company, Affiliate and/or any Subsidiary terminates by reason of an Involuntary Termination by the Participant at any time during the six month period preceding the specified vesting date in the Award Agreement but after the first anniversary of the Grant Date, a number of Shares of Restricted Stock or Restricted Stock Units, as the case may be, shall become vested (rounded up to the next integer) equal to the fraction the number of which is the number of days that the Participant was continuously
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employed from the Grant Date through the date of such Involuntary Termination and the denominator of which is the number of days from the Grant Date through such specified vesting date.
| | (b) | Death or Disability. These termination events apply to all Participants. In the event that a Participant’s employment, or service as a non-employee Director with the Company, Affiliate and/or any Subsidiary terminates by reason of death or Disability before the specified vesting date in the Award Agreement, to the extent any Shares of Restricted Stock or Restricted Stock Units, as the case may be, are not then vested, all Shares of Restricted Stock or all Restricted Stock Units, as the case may be, shall immediately become fully vested on the date of such termination and any restrictions shall lapse.
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| | (c) | Retirement. This termination event applies to all Participants. In the event that a Participant’s employment or service as a non-employee Director terminates by reason of Retirement from the Company, Affiliate and/or any Subsidiary before the specified vesting date in the Award Agreement, to the extent any Award covering Shares of Restricted Stock or Restricted Stock Units, as the case may be, are not then vested, the Award shall continue to vest and become vested in accordance with the original vesting terms of the Award Agreement (as if the termination of employment or service had not occurred).
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| | (d) | Divestiture. This termination event applies to all Participants. In the event that a Participant’s employment or service as a non-employee Director with any Subsidiary terminates upon the occurrence of a transaction, other than a Change in Control, by which the Subsidiary that is the Participant’s principal employer or service recipient ceases to be a Subsidiary of the Company (“Divestiture”) after the first anniversary of the Grant Date but before the specified vesting date in the Award Agreement, a number of Restricted Stock or Restricted Stock Units shall become vested (rounded up to the next integer) equal to the fraction the numerator of which is the number of days that the Participant was continuously employed or continuously providing services from the Grant Date through the date of the Divestiture and the denominator of which is the number of days from the Grant Date through such vesting date.
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| | (e) | Other Termination. These termination event apply to all Participants. In the event that a Participant’s employment or service as a non-employee Director with the Company, Affiliate and/or any Subsidiary terminates for any reason other than as described in subsections (a) through (d), all unvested Shares of Restricted Stock or all unvested Restricted Stock Units, as the case may be, shall be immediately forfeited to the Company.
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| | (f) | Satisfaction of Performance Goals. In any situation in which the number of Shares of Restricted Stock, or Restricted Stock Units, to which a Participant is entitled depends upon the satisfaction of performance goals, the treatment of the Award upon a termination of employment or service shall be governed by the provisions of Section 9.6.
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8.6Section 83(b) Election. The Committee may provide in an Award Agreement that the Award of Restricted Stock is conditioned upon the Participant making or refraining from making an election with respect to the Award under Code Section 83(b). If a Participant makes an election pursuant to Code Section 83(b) concerning a Restricted Stock Award, the Participant shall be required to file promptly a copy of such election with the Company.
| | Article 9. | Performance Stock Units/Performance Shares |
9.1Grant of Performance Stock Units/Performance Shares. Subject to the terms and provisions of this Plan, the Committee, at any time and from time to time, may grant Performance Stock Units and/or Performance Shares to Participants in such amounts and upon such terms as the Committee shall determine.
9.2Performance Stock Unit/Performance Shares Agreement. Each Performance Stock Unit and/or Performance Share grant shall be evidenced by an Award Agreement that shall specify the number of Performance Shares or the number of Performance Stock Units granted, the applicable Performance Period, and such other terms and provisions as the Committee shall determine.
9.3Value of Performance Stock Units/Performance Shares. Each Performance Stock Unit shall have an initial value that is established by the Committee at the Grant Date. Each Performance Share shall have an initial value equal to the Fair Market Value of a Share on the Grant Date. The Committee shall set performance goals in its discretion which, depending on the extent to which they are met, will determine the value and/or number of Performance Stock Units/Performance Shares that will be paid out to the Participant.
9.4Earning of Performance Stock Units/Performance Shares. Subject to the terms of this Plan, after the applicable Performance Period has ended, the holder of Performance Stock Units/Performance Shares shall be entitled to receive payout on the value and number of Performance Stock Units/Performance Shares earned by the Participant over the Performance Period, to be determined by the Committee, in its sole discretion, as a function of the extent to which the corresponding performance goals have been achieved. The Committee shall have the sole discretion to adjust the determinations of the value and degree of attainment of the pre-established performance goals including the discretion to reduce the amount of the Award that would otherwise vest or be paid based on the achievement of the performance goals. The Committee shall retain the sole discretion to adjust such performance goals upward, or to otherwise reduce the amount of the payment and/or vesting of the Award relative to the pre-established performance goals. The provisions of Section 9.4 shall also apply to any other Award granted pursuant to this Plan, the terms of which provide that vesting or payment is dependent upon the achievement of performance goals.
9.5Form and Timing of Payment of Performance Stock Units/Performance Shares. Payment of earned Performance Stock Units/Performance Shares shall be as determined by the Committee, in its sole discretion. Subject to the terms of this Plan, the Committee, in its sole discretion, may pay earned Performance Stock Units/Performance Shares in the form of cash or in fully paid Shares (or in a combination thereof) equal to the value of the earned Performance Stock Units/Performance Shares at the end of the applicable Performance Period, or as soon as practicable after the end of the Performance Period. Any Shares may be granted subject to any restrictions deemed appropriate by the Committee.
9.6Termination of Employment, Service as a Non-employee Director. Each Award Agreement shall set forth the extent to which the Participant shall have the right to receive payment for any Performance Stock Units and/or Performance Shares following termination of the Participant’s employment with or services to the Company, its Affiliates, and/or its Subsidiaries, as the case may be, subject to Sections 3.4, 5.3, 5.4, and 11.2. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with each Participant, need not be uniform among all Awards of Performance Stock Units or Performance Shares issued pursuant to this Plan, and may reflect distinctions based on, among other things, the reasons for termination, or reasons relating to the breach or threatened breach of restrictive covenants to which the Participant is subject, if any. Subject to Article 17, in the event that a Participant’s Award Agreement does not set forth such termination provisions, the following termination provisions shall apply:
| | (a) | Involuntary Termination. This termination event applies only to Participants who are Employees. In the event that a Participant’s employment with the Company, Affiliate and/or any Subsidiary terminates during the last six months of a Performance Period but after the first anniversary of the Grant Date by reason of an Involuntary Termination by the Participant, the Participant shall receive a payout of the Performance Stock Units and/or Performance Shares equal to the product of (i) the fraction the numerator of which is the number of days that the Participant was continuously employed from the first day of the Performance Period through the date of such termination of employment or service and the denominator of which is the number of days in the Performance Period multiplied by (ii) the number of Performance Stock Units and/or Shares that could have become earned and vested determined after the close of the Performance Period based upon the extent to which the Performance Measures or other performance goals were actually achieved, and the Participant shall forfeit any Performance Stock Units and/or Performance Shares not becoming so earned and vested.
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| | (b) | Death or Disability. These termination events apply to all Participants. In the event that a Participant’s employment or service as a non-employee Director, as the case may be, with the Company, Affiliate and/or any Subsidiary terminates by reason of death or Disability before the last day of the Performance Period, the Participant shall receive a payout of the Performance Stock Units and/or Performance Shares equal to the product of (i) the fraction the numerator of which is the number of days that the Participant was continuously employed from the first day of the Performance Period through the date of such termination of employment or service and the denominator of which is the number of days in the Performance Period multiplied by (ii) the number of Performance Stock Units and/or Shares that could have become earned and vested based on the deemed attainment of performance at the target level, and the Participant shall forfeit any Performance Stock Units and/or Performance Shares not becoming so earned and vested.
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| | (c) | Retirement. This termination event applies to all Participants.
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| | (i) | In the event that a Participant’s employment or service as a non-employee Director with the Company, Affiliate and/or any Subsidiary terminates during a Performance Period due to Retirement, the Participant shall receive a prorated payout of the Performance Stock Units and/or Performance Shares, which shall be valued and paid in accordance with paragraph (c)(ii). The |
prorated payout shall be determined as follows: (A) the total number of Performance Stock Units and/or Performance Shares, as applicable, to which the Participant would be entitled as determined under paragraph (c)(ii) times (B) the fraction the numerator of which is the number of days that the Participant was continuously employed from the first day of the Performance Period through the date of such termination of employment or service due to Retirement and the denominator of which is the number of days in the Performance Period.
| | (ii) | The number of Performance Stock Units and/or Performance Shares to which the Participant is entitled, prior to application of the proration formula described in paragraph (c)(i), shall be determined after the close of the Performance Period based upon the extent to which the Performance Measures or other performance goals were actually achieved. The Participant shall forfeit any Performance Stock Units and/or Performance Shares not becoming so earned and vested. |
| | (d) | Divestiture. This termination event applies to all Participants. In the event that a Participant’s employment or service as a non-employee Director with any Subsidiary terminates upon the occurrence of a transaction, other than a Change in Control, by which the Subsidiary that is the Participant’s principal employer or service recipient ceases to be a Subsidiary of the Company (“Divestiture”) after the first anniversary of the Grant Date but before the last day of the Performance Period, a number of Performance Stock Units and/or Performance Shares shall become vested (rounded up to the next integer) equal to (i) the fraction the numerator of which is the number of days that the Participant was continuously employed or providing services from the first day of the Performance Period through the date of the Divestiture and the denominator of which is the number of days in the Performance Period multiplied by (ii) the number of Performance Stock Units and/or Shares that could have become earned and vested based on the deemed attainment of performance at the target level, and the Participant shall forfeit any Performance Stock Units and/or Performance Shares not becoming so earned and vested.
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| | (e) | Other Termination. These termination events apply to all Participants. In the event that a Participant’s employment with the Company, Affiliate and/or any Subsidiary terminates during a Performance Period for any reason other than as described in subsections (a) through (d), all unvested Performance Stock Units and/or Performance Shares shall be immediately forfeited to the Company.
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9.7Other Restrictions. The Committee may impose such restrictions on any Performance Shares or Performance Stock Units granted under this Article 9 as it may deem advisable including, without limitation, a requirement that Participants pay a stipulated purchase price for each Performance Share or each Performance Stock Unit, restrictions based upon the achievement of specific performance goals, time-based restrictions on vesting following the attainment of the performance goals, time-based restrictions, and/or restrictions under applicable federal securities laws, under the requirements of any stock exchange or market upon which such Shares are then listed and/or traded, or under any blue sky or state securities laws applicable to such Shares, or holding requirements or sale restrictions placed on the Shares by the Company upon vesting of such Performance Share or each Performance Stock Unit.
| | Article 10. | Cash-Based Awards and Other Stock-Based Awards |
10.1Grant of Cash-Based Awards. Subject to the terms and provisions of this Plan, the Committee, at any time and from time to time, may grant Cash-Based Awards to Participants in such amounts and upon such terms as the Committee may determine.
10.2Other Stock-Based Awards. The Committee may grant other types of equity-based or equity-related Awards not otherwise described by the terms of this Plan (including the grant or offer for sale of unrestricted Shares) in such amounts and subject to such terms and conditions, as the Committee shall determine. Such Other Stock-Based Awards may involve the transfer of actual fully paid Shares to Participants, or payment in cash or otherwise of amounts based on the value of Shares and may include, without limitation, Awards designed to comply with or take advantage of the applicable local laws of jurisdictions other than the United States.
10.3Cash-Based Award or Stock-Based Award Agreement. Each Cash-Based Award or Other Stock-Based Award grant shall be evidenced by an Award Agreement that shall specify the amount of the Cash-Based Award or Other Stock-Based Award granted and such other terms and provisions as the Committee shall determine; provided that no Award Agreement shall provide for the issuance of Shares except on a fully paid basis.
10.4Value of Cash-Based and Other Stock-Based Awards. Each Cash-Based Award shall specify a payment amount or payment range as determined by the Committee. Each Other Stock-Based Award shall be expressed in terms of Shares or units based on Shares, as determined by the Committee. The Committee may establish performance goals in its discretion. If the Committee exercises its discretion to establish performance goals, the number and/or value of Cash-Based Awards or Other Stock-Based Awards that will be paid out to the Participant will depend on the extent to which the performance goals are met, and provided the cash or services received by the Company in exchange for Shares shall have a value not less than the aggregate par value of any Shares issued as part of such Other Stock-Based Award.
10.5Payment of Cash-Based Awards and Other Stock-Based Awards. Payment, if any, with respect to a Cash-Based Award or an Other Stock-Based Award shall be made in accordance with the terms of the Award, in cash or fully paid Shares as the Committee determines.
10.6Termination of Employment, Service as a Non-employee Director. The Committee shall determine the extent to which the Participant shall have the right to receive Cash-Based Awards or Other Stock-Based Awards following termination of the Participant’s employment with or provision of services to the Company, its Affiliates and/or its Subsidiaries, as the case may be, subject to Sections 3.4, 5.3, 5.4, and 11.2. Such provisions shall be determined in the sole discretion of the Committee, such provisions may be included in an agreement entered into with each Participant, but need not be uniform among all Awards of Cash-Based Awards or Other Stock-Based Awards issued pursuant to this Plan, and may reflect distinctions based on the reasons for termination, or reasons relating to the breach or threatened breach of restrictive covenants to which the Participant is subject, if any. Subject to Article 17, in the event that a Participant’s Award Agreement does not set forth such termination provisions, the following termination provisions shall apply:
| | (a) | Involuntary Termination. This termination event applies only to Participants who are Employees. In the event that a Participant’s employment with the Company, Affiliate and/or any Subsidiary terminates by reason of an Involuntary Termination by the Participant at any time during the six month period preceding the specified vesting date in the Award Agreement but after the first anniversary of the Grant Date, a portion of the Award shall become vested (rounded up to the next integer) equal to the fraction the number of which is the number of days that the Participant was continuously employed from the Grant Date through the date of such Involuntary Termination and the denominator of which is the number of days from the Grant Date through such specified vesting date.
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| | (b) | Death or Disability. These termination events apply to all Participants. In the event that a Participant’s employment or service as a non-employee Director with the Company, Affiliate and/or any Subsidiary terminates by reason of death or Disability before the specified vesting date in the Award Agreement, to the extent any portion of the Award is not then vested, the entire Award shall immediately become fully vested on the date of such termination and any restrictions shall lapse.
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| | (c) | Retirement. This termination event applies to all Participants. In the event that a Participant’s employment or service as a non-employee Director terminates by reason of Retirement from the Company, Affiliate and/or any Subsidiary before the specified vesting date in the Award Agreement, to the extent any portion of the Award is not then vested, the Award shall continue to vest and become vested in accordance with the original vesting terms of the Award Agreement (as if the termination of employment or service had not occurred).
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| | (d) | Divestiture. This termination event applies to all Participants. In the event that a Participant’s employment or service as a non-employee Director with any Subsidiary terminates upon the occurrence of a transaction, other than a Change in Control, by which the Subsidiary that is the Participant’s principal employer or service recipient ceases to be a Subsidiary of the Company (“Divestiture”) after the first anniversary of the Grant Date but before the specified vesting date in the Award Agreement, a portion of the Award shall become vested (rounded up to the next integer) equal to the fraction the numerator of which is the number of days that the Participant was continuously employed or providing services from the Grant Date through the date of the Divestiture and the denominator of which is the number of days from the Grant Date through such vesting date.
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| | (e) | Other Termination. These termination events apply to all Participants. In the event that a Participant’s employment, or service as a non-employee Director with the Company, Affiliate and/or any Subsidiary terminates for any reason other than as described in subsections (a) through (d), any unvested portion of the Award shall be immediately forfeited to the Company.
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| | (f) | Satisfaction of Performance Goals. In any situation in which the amount of the Cash-Based Award or Stock-Based Award to which a Participant is entitled depends upon the satisfaction of performance goals, the treatment of the Award upon a termination of employment or service shall be governed by the provisions of Section 9.6.
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10.7Other Restrictions. The Committee may impose such restrictions on any Shares related to Cash-Based Awards or Other Stock-Based Awards granted under this Article 10 as it may deem advisable including, without limitation, restrictions based upon the achievement of specific performance goals, time-based restrictions on vesting following the attainment of the performance goals, time-based restrictions, and/or restrictions under applicable federal securities laws, under the requirements of any stock exchange or market upon which such Shares are then listed and/or traded, or under any blue sky or state securities laws applicable to such Shares, or holding requirements or sale restrictions placed on the Shares by the Company upon vesting of such Cash-Based Awards or Other Stock-Based Awards.
| | Article 11. | Forfeiture of Awards. |
11.1General. Notwithstanding anything else to the contrary contained herein, the Committee in granting any Award shall have the full power and authority to determine whether, to what extent and under what circumstances such Award shall be forfeited, cancelled or suspended. Unless an Award Agreement includes provisions expressly superseding the provisions of this Article 11, the provisions of this Article 11 shall apply to all Awards. Any such forfeiture shall be effected by the Company in such manner and to such degree as the Committee, in its sole discretion, determines, and will in all events (including as to the provisions of this Article 11) be subject to the Applicable Laws. The Committee may specify in an Award Agreement or policy that the Participant’s rights, payments, and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture (including repurchase of Shares for nominal consideration), or recoupment upon the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions of an Award. Such events may include, but shall not be limited to: failure to remit the amounts necessary to satisfy the Participant’s tax withholding obligations; termination of employment for Cause; termination of the Participant’s provision of services to the Company, Affiliate, and/or Subsidiary; violation of Company, Affiliate, and/or Subsidiary code of conduct, conflict of interest policy, or insider trading, anti-corruption, or similar policy; breach of noncompetition, confidentiality, or other restrictive covenants that may apply to the Participant; fraudulent, illegal or other misconduct; or other conduct by the Participant that is detrimental to the business or reputation of the Company, its Affiliates, and/or its Subsidiaries.
In order to effect a forfeiture under this Article 11, the Committee may require that the Participant sell Shares received upon exercise or settlement of an Award to the Company or to such other person as the Company may designate at such price and on such other terms and conditions as the Committee in its sole discretion may require. Further, as a condition of each Award, the Company shall have, and each Participant shall be deemed to have given the Company, a proxy on each Participant’s behalf, and each Participant shall be required and be deemed to have agreed to execute any other documents necessary or appropriate to carry out this Article 11.
11.2Forfeiture Events. Unless otherwise specified by the Committee, in addition to any vesting or other forfeiture or repurchase conditions that may apply to an Award and Shares issued pursuant to an Award, each Award granted under this Plan will be subject to the following forfeiture conditions:
| | (a) | Competitive Activity. All outstanding Awards and Shares issued pursuant to an Award held by an Participant, and the proceeds of any such Shares, will be forfeited in their entirety (including as to any portion of an Award or Shares subject thereto that are vested or as to which any repurchase or resale rights or forfeiture restrictions in favor of the Company or its designee with respect to such Shares have previously lapsed) if the Participant violates any of the restrictive covenants agreed to by the Participant as part of the Award Agreement.
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| | (b) | Termination for Cause. All outstanding Awards and Shares issued pursuant to an Award held by a Participant, and the proceeds of any such Shares, will be forfeited in their entirety (including as to any portion of an Award or Shares subject thereto that are vested or as to which any repurchase or resale rights or forfeiture restrictions in favor of the Company or its designee have previously lapsed) if the Participant’s employment or service is terminated by the Company for Cause; provided, however, that in the event the Committee determines that it is necessary to establish whether grounds exist for termination for Cause, the Award will be suspended during any period required to conduct such determination, meaning that the vesting, exercisability and/or lapse of restrictions otherwise applicable to the Award will be tolled and if grounds for such termination are determined to exist, the forfeiture specified by this subsection (b) will apply as of the date of suspension, and if no such grounds are determined to exist, the Award will be reinstated on its original terms.
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| | (c) | Failure to Timely Accept Award Agreement. If the terms of an Award Agreement provide that a Participant must execute and return an Award Agreement (or otherwise indicate its acceptance of the Award Agreement) within a specified period of time in order for the Award to be effective, and if the Participant fails to do so within the time period specified, such Award will be forfeited in its entirety unless otherwise determined by the Committee. For the avoidance of doubt, all Awards are made as of their Grant Date.
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| | (d) | Recoupment and Clawback Policies. All Awards are subject to recoupment and clawback policies of the Company, its Affiliates and/or its Subsidiaries in effect from time to time, which policies may require reduction, cancellation, or forfeiture (including repurchase of Shares for nominal consideration).
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11.3Forfeiture and Right of Repurchase. In the event that any Shares are required to be forfeited under any circumstances set forth in this Plan or an Award Agreement and such Shares cannot be outright forfeited under current Applicable Law, then the Company shall have the right (but not the obligation) to repurchase any or all of such forfeited Shares for $0.001 per Share repurchased. The Company shall have 90 days from the date of any event giving rise to forfeiture within which to effect a repurchase of any or all of the Shares subject to such forfeiture conditions. The Company’s right to repurchase the Shares is assignable by the Company, in its sole discretion, to a Subsidiary, Affiliate or other party to whom such rights can be assigned under Applicable Laws.
| | Article 12. | Transferability of Awards |
12.1Transferability. Except as provided in Section 12.2 below, during a Participant’s lifetime, his or her Awards shall be exercisable only by the Participant or the Participant’s legal representative. Except as permitted by the Committee, Awards shall not be transferable other than by will or the laws of descent and distribution; no Awards 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. The Committee may establish such procedures as it deems appropriate for a Participant to designate a beneficiary to whom any amounts payable or Shares deliverable in the event of, or following, the Participant’s death, may be provided.
12.2Committee Action. The Committee may, in its discretion, determine that notwithstanding Section 12.1, any or all Awards (other than ISOs) shall be transferable to and exercisable by such transferees, and subject to such terms and conditions, as the Committee may deem appropriate; provided, however, no Award may be transferred for value (as defined in the General Instructions to Form S-8).
| | Article 13. | Director Awards |
The terms and conditions of any grant to any non-employee Director shall be set forth in an Award Agreement and shall be otherwise subject to this Plan. The value (determined under applicable accounting standards for financial reporting purposes) of a non-employee Director’s total compensation from the Company in one Plan Year, including Awards from this Plan, may not exceed $500,000.
| | Article 14. | Dividends and Dividend Equivalents |
The Committee shall determine the extent to which a Participant who is granted Restricted Stock shall have the right to receive dividends declared on the Restricted Stock during the Period of Restriction, and the extent to which Participants who receive Restricted Stock Units, Options, SARs, Performance Shares, Performance Stock Units, or Other Stock Based Awards shall be granted the right to additional compensation (“dividend equivalents”) based on the dividends declared on Shares that are subject to any Award, to be credited as of dividend payment dates, during the period between the date the Award is granted and the date the Award is exercised, vests or expires, as determined by the Committee. Such dividends or dividend equivalents shall be paid in or converted to cash or additional Shares by such formula and at such time and subject to such limitations as may be determined by the Committee. The crediting of dividends or dividend equivalents shall be subject to the following additional rules and limitations:
| | (a) | Any crediting of dividends or dividend equivalents shall be subject to the same restrictions and conditions as the underlying Award. For avoidance of doubt, dividends or dividend equivalents with respect to any Award subject to the achievement of performance goals shall only be paid to the extent the Award vests and the performance goals are achieved, and dividends or dividend equivalents with respect to any Award subject to a time-based vesting schedule shall only be paid to the extent the Award vests. |
| | (b) | No dividend equivalent granted with respect to an Option or a Stock Appreciation Right may be conditioned, directly or indirectly, upon exercise of such Option or Stock Appreciation Right. |
| | (c) | To the extent a dividend or dividend equivalent is considered a 409A Award, as defined in Section 21.16, whether or not the underlying Award is also a 409A Award, the right to the dividend or dividend equivalent shall be treated as a separate form of Award that is subject to Section 21.16, and the time of payment of the dividend or dividend equivalent shall comply with Section 409A. |
| | Article 15. | Beneficiary Designation |
Each Participant under this Plan may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under this Plan is to be paid in case of his death before he receives any or all of such benefit. Each such designation shall revoke all prior designations by the same Participant, shall be in a form prescribed by the Committee, and will be effective only when filed by the Participant in writing with the Company during the Participant’s lifetime. In the absence of any such beneficiary designation, benefits remaining unpaid or rights remaining unexercised at the Participant’s death shall be paid to or exercised by the Participant’s spouse, executor, administrator, or legal representative, as determined by the Committee, in its sole discretion.
| | Article 16. | Rights of Participants |
16.1Employment. Nothing in this Plan or an Award Agreement shall interfere with or limit in any way the right of the Company, its Affiliates, and/or its Subsidiaries, to terminate any Participant’s employment or service on the Board or to the Company at any time or for any reason not prohibited by law, nor confer upon any Participant any right to continue his employment or service as a non-employee Director for any specified period of time.
Neither an Award nor any benefits arising under this Plan shall constitute an employment contract with the Company, its Affiliates, and/or its Subsidiaries and, accordingly, subject to Article 18, this Plan and the benefits hereunder may be terminated at any time in the sole and exclusive discretion of the Committee without giving rise to any liability on the part of the Company, its Affiliates, and/or its Subsidiaries.
16.2Participation. No individual shall have the right to be selected to receive an Award under this Plan. In addition, the receipt of any Award shall not create a right to receive a future Award.
16.3Rights as a Stockholder. Except as otherwise provided herein or in an Award Agreement, a Participant shall have none of the rights of a stockholder with respect to Shares covered by any Award until the Participant becomes the registered holder of such Shares.
| | Article 17. | Change in Control |
17.1Termination of Employment, Service as a Non-employee Director during Change in Control Period. The following provisions shall apply to all Awards in the event of a Change in Control, except as otherwise specified in an Award Agreement:
| | (a) | Replacement Awards; No Immediate Vesting. |
| | (i) | An Award shall not vest upon the occurrence of a Change in Control to the extent the Participant receives a Replacement Award as defined below with respect to such Award. |
| | (ii) | A “Replacement Award” (1) includes an outstanding Award that continues upon and after the occurrence of a Change in Control or (2) an Award provided to a Participant pursuant to Section 4.3 and Article 18 in replacement of an outstanding Award (such replaced Award, a “Replaced Award”) in connection with a Change in Control that satisfies the following conditions: |
(A) It has a value at least equal to the value of the Replaced Award;
| | (B) | It relates to publicly traded equity securities of the Company or its successor in the Change in Control or another entity that is affiliated with the Company or its successor following the Change in Control; |
| | (C) | Its other terms and conditions are not less favorable to the Participant than the terms and conditions of the Replaced Award (including the provisions that would apply in the event of a subsequent Change in Control); and |
| | (D) | Upon an Involuntary Termination (not due to Disability) or a Resignation for Good Reason occurring during the Change in Control Period the Replacement Award, to the extent not vested and unrestricted as of such Separation from Service, shall become fully vested and (if applicable) exercisable and free of restrictions, as of the later of the date of termination or the date of the Change in Control. |
The Committee as constituted immediately before the Change in Control shall have the discretion to determine whether the conditions set forth in this Section 17.1(a)(ii) are satisfied.
| | (iii) | Such Replacement Awards shall be paid in Shares or cash, in accordance with the original terms of the Award, except that the Committee has the authority to pay all or any portion of the Fair Market Value of any Award denominated in Shares in cash. |
| | (b) | Vesting if No Replacement Award. To the extent that a Replacement Award is not provided to the Participant, upon the occurrence of a Change in Control:
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| | (i) | Any and all Options and Stock Appreciation Rights granted hereunder shall become fully vested and immediately exercisable; |
| | (ii) | Any restrictions imposed on Restricted Stock shall lapse and such Restricted Stock shall become freely transferable; |
| | (iii) | all Restricted Stock Units shall become fully vested and be settled in full by a payment equal to the Fair Market Value of the Shares underlying the Restricted Stock Units, which shall be paid either in cash or, in the discretion of the Committee, in whole or in part in Shares; and |
| | (iv) | The payout opportunities attainable at target or, if greater, in the amount determined by the Committee to have been earned thereunder based on performance through the date of the Change in Control, under all outstanding Awards of Performance Stock Units or Performance Shares or other types of performance-based Awards shall be deemed to have been earned for the entire Performance Period(s) as of the effective date of the Change in Control. The vesting of all such earned Awards shall be accelerated as of the effective date of the Change in Control, and in full settlement of such Awards, there shall be paid either the earned amount of an Award denominated in cash, or the Fair Market Value of the earned Shares in the case of an Award denominated in Shares, which shall be paid either in cash or, in the discretion of the Committee, in whole or in part in Shares. |
The foregoing provisions of this Section 17.1(b) shall apply, and a Participant’s outstanding Awards shall not become Replacement Awards, upon the occurrence of a Change in Control following an Involuntary Termination (not due to Disability) occurring during the 180-day period prior to the Change in Control. Notwithstanding the foregoing, if the Fair Market Value of a Share subject to an Option or SAR, as determined by the terms of the Change in Control transaction, does not exceed the Option Price or Grant Price, such Option or SAR may be cancelled without the issuance of a Replacement Award, and the Company shall have no further obligations with respect to such Option or SAR.
| | (c) | Termination of Non-employee Directors. This termination event applies only to Participants who are non-employee Directors. In the event that a Participant’s service as a non-employee Director with the Company terminates during the Change in Control Period for any reason, all of the Participant’s Awards shall be treated in the manner described in subsections (a) and (b).
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| | Article 18. | Amendment, Modification, Suspension, and Termination |
18.1Amendment, Modification, Suspension, and Termination. Subject to Section 18.3, the Board may, at any time and from time to time, alter, amend, modify, suspend, or terminate this Plan and any Award Agreement in whole or in part, subject to any requirement of stockholder approval imposed by Applicable Law.
18.2Adjustment of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events. The Committee may make adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events (including, without limitation, the events described in Section 4.3 and 17.1) affecting the Company or the financial statements of the Company or of changes in Applicable Laws, regulations, or accounting principles, whenever the
Committee determines that such adjustments are appropriate in order to prevent unintended dilution or enlargement of the benefits or potential benefits intended to be made available under this Plan. The determination of the Committee as to the foregoing adjustments, if any, shall be conclusive and binding on Participants under this Plan. Notwithstanding the foregoing, the Committee shall not, directly or indirectly, reduce the Option Price of an Option or Grant Price of an SAR unless such reduction is permitted by Section 3.5 and satisfies the requirements of Treasury Regulation Section 1.409A-1(b)(5)(v)(D) (if applicable) or other Applicable Law.
18.3Awards Previously Granted. Notwithstanding any other provision of this Plan to the contrary (other than Section 17.1 or 18.4), no termination, amendment, suspension, or modification of this Plan or an Award Agreement shall adversely affect in any material way any Award previously granted under this Plan, without the written consent of the Participant holding such Award.
18.4Amendment to Conform to Law. Notwithstanding any other provision of this Plan to the contrary, the Committee may amend this Plan or any Award Agreement, to take effect retroactively or otherwise, as deemed necessary or advisable for the purpose of conforming this Plan or an Award Agreement to any present or future law relating to plans of this or similar nature (including, but not limited to, Code Section 409A), and to the administrative regulations and rulings promulgated thereunder. By accepting an Award under this Plan, each Participant agrees to any amendment made pursuant to this Section 18.4 to any Award granted under this Plan without further consideration or action.
19.1General. The Company shall have the power and the right to deduct or withhold, or require a Participant to remit to the Company, the amount necessary to satisfy federal, state, and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as a result of this Plan.
19.2Specific Awards. Except as otherwise provided by the Committee in the Award Agreement or otherwise (i) the deduction of withholding and any other taxes required by law shall be made from all amounts paid in cash, and (ii) in the case of the exercise of Options or payments of Awards in Shares, the Participant shall be required to pay the amount of any taxes required to be withheld in cash prior to receipt of such Shares, or alternatively, the Company may require or permit the Participant to elect to have withheld a number of Shares, or deliver such number of previously acquired Shares, the Fair Market Value of which does not exceed the maximum statutory withholding tax required be withheld from the shares to be received upon such exercise or payment.
All obligations of the Company under this Plan with respect to Awards granted hereunder shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, amalgamation, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.
| | Article 21. | General Provisions |
21.1Effect of Other Agreements. To the extent provided in an Award Agreement or otherwise determined by the Committee (regardless of the terms of the Other Agreement), and subject to Section 3.4, the terms of an Other Agreement may be deemed incorporated into the Award Agreement, and may alter the definition of Cause, Good Reason, Retirement or Change in Control, the treatment of the Award upon a termination of employment or service or a Change in Control, or any other provisions relating to vesting or lapse of forfeiture provisions, provided that Award, as so altered, could have been granted under this Plan without violating any term of this Plan or any Applicable Law
21.2Right of Offset. The Company, any Subsidiary, or an Affiliate may, to the extent permitted by Applicable Law, deduct from and set off against any amounts the Company, any Subsidiary, or an Affiliate, as the case may be, may owe to the Participant from time to time, including amounts payable in connection with any Award, owed as wages, fringe benefits, or other compensation owed to the Participant, such amounts as may be owed by the Participant to the Company, any Subsidiary, or an Affiliate, as the case may be, although the Participant shall remain liable for any part of the Participant’s payment obligation not satisfied through such deduction and setoff. By accepting any Award granted hereunder, the Participant agrees to any deduction or setoff under this Section 21.2.
21.3Legend. The certificates for Shares may include any legend which the Committee deems appropriate to reflect any restrictions on transfer of such Shares.
21.4Gender and Number. Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine, the plural shall include the singular, and the singular shall include the plural.
21.5Severability. In the event any provision of this Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of this Plan, and this Plan shall be construed and enforced as if the illegal or invalid provision had not been included.
21.6Requirements of Law. The granting of Awards and the issuance of Shares under this Plan shall be subject to all Applicable Laws, and to such approvals by any governmental agencies or stock exchange as may be required.
21.7Securities Law Compliance. With respect to Section 16 Insiders, transactions under this Plan are intended to comply with all applicable conditions of Rule 16b-3 or its successor under the Exchange Act. To the extent any provision of this Plan or action by the Committee fails to so comply, it shall be deemed null and void, to the extent permitted by law and deemed advisable by the Committee.
21.8Delivery of Title. The Company shall have no obligation to issue or deliver evidence of title for Shares issued under this Plan prior to:
| | (a) | Obtaining any approvals from governmental agencies that the Company determines are necessary or advisable; and |
| | (b) | Completion of any registration or other qualification of the Shares under any applicable national or foreign law or ruling of any governmental body that the Company determines to be necessary or advisable. |
21.9Inability to Obtain Authority. The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.
21.10Investment Representations. The Committee may require any individual receiving Shares pursuant to an Award under this Plan to represent and warrant in writing that the individual is acquiring the Shares for investment and without any present intention to sell or distribute such Shares.
21.11Employees Based Outside of the United States. Notwithstanding any provision of this Plan to the contrary, in order to comply with the laws in other countries in which the Company, its Affiliates, and/or its Subsidiaries operate or have Employees or non-employee Directors, the Committee, in its sole discretion, shall have the power and authority to:
| | (a) | Determine which Employees and/or non-employee Directors outside the United States are eligible to participate in this Plan; |
| | (b) | Modify the terms and conditions of any Award granted to Employees outside the United States to comply with applicable foreign laws; |
| | (c) | Establish subplans and modify exercise procedures and other terms and procedures, to the extent such actions may be necessary or advisable. Any subplans and modifications to Plan terms and procedures established under this Section 21.11 by the Committee shall be attached to this Plan document as appendices; and |
| | (d) | Take any action, before or after an Award is made, that it deems advisable to obtain approval or comply with any necessary local government regulatory exemptions or approvals. |
Notwithstanding the above, the Committee may not take any actions hereunder, and no Awards shall be granted, that would violate Applicable Law.
21.12Uncertificated Shares. To the extent that this Plan provides for issuance of certificates to reflect the transfer of Shares, the transfer of such Shares may be effected on a noncertificated basis, to the extent not prohibited by Applicable Laws.
21.13Unfunded Plan. Participants shall have no right, title, or interest whatsoever in or to any investments that the Company, and/or its Subsidiaries, and/or its Affiliates may make to aid it in meeting its obligations under this Plan. Nothing contained in this Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind, or a fiduciary relationship between the Company and any Participant, beneficiary, legal representative, or any other individual. To
the extent that any individual acquires a right to receive payments from the Company, its Subsidiaries, and/or its Affiliates under this Plan, such right shall be no greater than the right of an unsecured general creditor of the Company, any Subsidiary, or an Affiliate, as the case may be. All payments to be made hereunder shall be paid from the general funds of the Company, any Subsidiary, or an Affiliate, as the case may be and no special or separate fund shall be established and no segregation of assets shall be made to assure payment of such amounts except as expressly set forth in this Plan.
21.14No Fractional Shares. No fractional Shares shall be issued or delivered pursuant to this Plan or any Award. The Committee shall determine whether cash, Awards, or other property shall be issued or paid in lieu of fractional Shares or whether such fractional Shares or any rights thereto shall be forfeited or otherwise eliminated.
21.15Retirement and Welfare Plans. Neither Awards made under this Plan nor Shares or cash paid pursuant to such Awards may be included as “compensation” for purposes of computing the benefits payable to any Participant under the Company’s, any Subsidiary’s, or an Affiliate’s retirement plans (both qualified and non-qualified) or welfare benefit plans unless such other plan expressly provides that such compensation shall be taken into account in computing a Participant’s benefit.
21.16Deferred Compensation. It is the Company’s intent that any Awards granted under this Plan are structured to be exempt from Code Section 409A, including all Treasury Regulations and other guidance issuance pursuant thereto (“Section 409A”) or are structured to comply with the requirements of deferred compensation subject to Section 409A. Notwithstanding any contrary provision of this Plan or any Award, the following provisions shall apply to any Award in a manner consistent with such intent.
| | (a) | For purposes of this Section 21.16, an Award shall constitute a “409A Award” as used in this Section 21.16 only if and to the extent either: |
| | (i) | it is an Award (other than an Option, SAR, Performance Share or Restricted Stock) that (A) is not “subject to a substantial risk of forfeiture” as defined in Section 409A (by reason of the Participant having attained eligibility for Retirement or otherwise), and (B) (1) that is actually settled after March 15 of the year following the year in which the Award ceases to be subject to a substantial risk of forfeiture or (2) that the terms of this Plan or the Award provide will be settled after such March 15 or upon or after the occurrence of any event that may occur after such March 15; or |
| | (ii) | the Committee (after taking into account the definition of Resignation for Good Reason as provided in Section 2(ss), and any applicable exemptions from Section 409A), determines that the Award otherwise constitutes deferred compensation as defined in Section 409A. |
Notwithstanding the foregoing, an Award shall not be considered a 409A Award if at the time the Award is granted (or, if later, the time the Award is no longer subject to a substantial risk of forfeiture), the Participant is not subject to United States income tax on any of the Participant’s income (including such Award if it were taxable), or if the Award is otherwise covered by any of the exceptions contained in the Section 409A regulations relating to foreign plans.
| | (b) | If any amount becomes payable under any 409A Award by reason of a Participant’s termination of employment, and such Participant incurs a termination of employment as set forth in this Plan (including, without limit, Section 5.4 of this Plan) or the Award that is not a “separation from service,” as defined by Section 409A, then the Participant’s right to such payment, to the extent not already vested, shall be fully vested on the date of the termination of employment, but payment shall be deferred until the earliest of (i) the date the Participant incurs such a separation from service (or six months thereafter if and to the extent required by Section 21.16(d)), (ii) the date that a “change in control event” as defined in Section 409A occurs with respect to the Participant, (iii) the Participant’s death, or (iv) if the terms of the Award provide for payment upon a specific vesting date, such specific vesting date. Notwithstanding anything in this Plan, the Committee shall not exercise its discretion under Section 5.5 in a manner inconsistent with this Section 21.16. |
| | (c) | If any amount becomes payable under any 409A Award by reason of a Change in Control, and a Change in Control occurs as defined by this Plan or the Award that is not a “change in control event,” as defined by Section 409A, with respect to such Participant, then the Participant’s right to such payment, to the extent not already vested, shall be fully vested on the date of the Change in Control, and the amount of such payment shall be determined as of such date, but payment shall be deferred until the earliest of (i) the date on which a change in |
control event occurs with respect to the Participant, (ii) the date on which the Participant incurs a separation from service (or six months thereafter to the extent required by Section 21.16(d)), (iii) the Participant’s death, or (iv) if the terms of the Award provide for payment upon a specific vesting date, such specific vesting date.
| | (d) | No amount that becomes payable under any 409A Award by reason of a Participant’s separation from service (as determined after the application of Section 21.16(b) and (c)) will be made to a Participant who is a “specified employee” (as defined by Section 409A) until the earlier of: (i) the first day following the sixth month anniversary of the Participant’s separation from service, or (ii) the Participant’s date of death. |
| | (e) | To the extent that payment of any amount of a 409A Award is required to be deferred to a later date (the “409A Deferral Date”) by reason of Section 409A, all amounts that would otherwise have been paid prior to the 409A Deferral Date shall be paid in a single lump sum on the first business day following the 409A Deferral Date, and the Committee may, in its sole discretion (but shall in no event be required to) permit an earlier payment to a Participant to the extent necessary to alleviate a “severe financial hardship” resulting from an “unforeseeable emergency,” all as defined in Section 409A. |
| | (f) | For purposes of Section 409A, each “payment” (as defined by Section 409A) made under this Plan shall be considered a “separate payment” for purposes of Section 409A. |
| | (g) | Any payment with respect to a 409A Award that becomes payable upon a specified vesting date, as defined in this Plan or Award, shall be paid as soon as practical after such vesting date, but not later than the last day of the calendar year in which the vesting date occurs. |
| | (h) | Notwithstanding the Company’s intentions as set forth above, if any Award granted under this Plan would fail to meet the requirements of Section 409A with respect to such Award, then such Award shall remain in effect and be subject to taxation in accordance with Section 409A. Neither the Company nor any member of the Committee shall have any liability for any tax imposed on a Participant by Section 409A, and, if any tax is imposed on the Participant, the Participant shall have no recourse against the Company or any member of the Committee for payment of any such tax. |
| | (i) | Anything else contained in this Plan to the contrary notwithstanding, if a non-employee Director elects to defer payment of any Award pursuant to the Amended and Restated ACCO Brands Corporation Deferred Compensation Plan for Non-Employee Directors (the “Deferred Compensation Plan”), such Award shall be considered a 409A Award, and such Award shall be paid at the time and in the manner provided in the Deferred Compensation Plan. |
21.17Nonexclusivity of this Plan. The adoption of this Plan shall not be construed as creating any limitations on the power of the Board or Committee to adopt such other compensation arrangements as it may deem desirable for any Participant.
21.18No Constraint on Corporate Action. Nothing in this Plan shall be construed to: (a) limit, impair, or otherwise affect the Company’s, any Subsidiary’s, or an Affiliate’s right or power to make adjustments, reclassifications, reorganizations, or changes of its capital or business structure, or to amalgamate, merge or consolidate, or dissolve, liquidate, sell, or transfer all or any part of its business or assets; or (b) limit the right or power of the Company, any Subsidiary, or an Affiliate to take any action which such entity deems to be necessary or appropriate.
21.19Governing Law. This Plan and each Award Agreement shall be governed by the laws of the state of Delaware, excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Plan to the substantive law of another jurisdiction. Unless otherwise provided in the Award Agreement, recipients of an Award under this Plan are deemed to submit to the exclusive jurisdiction and venue of the federal or state courts of Delaware, to resolve any and all issues that may arise out of or relate to this Plan or any related Award Agreement.
21.20Indemnification. Subject to requirements of Delaware law, each individual who is or shall have been a member of the Board, or a Committee appointed by the Board, or an officer of the Company or any Subsidiary or member of a Company committee to whom authority was delegated in accordance with Article 3, shall be indemnified and held harmless by the Company against and from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under this Plan and against and from any and all amounts paid by him or her in settlement thereof, with the Company’s approval, or paid by him or her in satisfaction of any judgment in
any such action, suit, or proceeding against him or her, provided he or she shall give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his/her own behalf, unless such loss, cost, liability, or expense is a result of his/her own willful misconduct or except as expressly provided by statute.
The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such individuals may be entitled under the Company’s Certificate of Incorporation, by-laws or its organizational regulations, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.
| | | | | | ACCO Brands Corporation | | | | | | | | | | | By: | | | | | Name: Pamela R. Schneider | | | | Title: Senior Vice President, General Counsel and Corporate Secretary
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Parking Facility and Driving Directions
Directions from Downtown Chicago to Kemper Lakes
Take I-90/94 north toward Milwaukee
Slight left onto I-90 Kennedy Expressway to O'Hare
Take exit onto I-294 north/Tri-state Tollway towards Milwaukee
Continue onto I-94 to IL-22/Half Day Road exit
Continue west on IL-22 for approx. 8 miles
Turn right onto Corporate Drive
(First stoplight west of Old McHenry Road)
Directions from North to Kemper Lakes
Take I-94 south toward Chicago/Indiana
Exit Half Day Road/IL-22 west for approx. 8 miles
Turn right onto Corporate Drive
From West to Kemper Lakes
Take I-90 east to Chicago
Take IL-59 north for approx. 10 miles
Turn right onto IL-22/Half Day Road for approx. 5 miles
Turn left onto Corporate Drive
From South to Kemper Lakes
Take I-355 north to northwest suburbs
Merge onto I-290 west
Continue onto IL-53 north
Take Lake Cook Road exit west
Turn right onto US 12/Rand Road
Turn right onto Quentin Road
Turn right onto IL-22 east for approx. 1 mile
Turn left onto Corporate Drive
ACCO Brands Corporation
Annual Meeting of Stockholders
May 21, 2019 9:00 a.m.
Meeting Location Address
Kemper Lakes Business Center
Three Corporate Drive
Lake Zurich, IL 60047
Tel: 847.796.4340
Parking
Self-parking is available
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