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o Preliminary Proxy Statement | ||
o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | ||
þ Definitive Proxy Statement | ||
o Definitive Additional Materials | ||
o Soliciting Material Under Rule 14a-12 |
þ | No fee required. |
o | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
(1) | Title of each class of securities to which transaction applies: |
(2) | Aggregate number of securities to which transaction applies: |
(3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): |
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o | Fee paid previously with preliminary materials. |
o | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
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1. | To elect Directors; | |
2. | To approve the PolyOne Corporation Senior Executive Annual Incentive Plan; | |
3. | To approve the PolyOne Corporation 2005 Equity and Performance Incentive Plan; and | |
4. | To consider and transact any other business that may properly come before the meeting. |
For the Board of Directors | |
Wendy C. Shiba | |
Vice President, Chief Legal Officer and Secretary |
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J. Douglas Campbell Director since 1993 Age — 63 | Chairman and Chief Executive Officer of ArrMaz Custom Chemicals, Inc., a specialty mining and asphalt additives and reagents producer, since December 2003. Served as President and Chief Executive Officer and was a Director of Arcadian Corporation, a nitrogen chemicals and fertilizer manufacturer, from December 1992 until the company was sold in 1997. | |
Carol A. Cartwright Director since 1994 Age — 63 | President of Kent State University, a public higher education institution, since 1991. Ms. Cartwright serves on the Boards of Directors of KeyCorp, FirstEnergy and The Davey Tree Expert Company. |
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Gale Duff-Bloom Director since 1994 Age — 65 | Served as President of Company Communications and Corporate Image of J.C. Penney Company, Inc., a major retailer, from June 1999 until her retirement in April 2000. From 1996 to June 1999, Ms. Duff-Bloom served as President of Marketing and Company Communications and from 1995 to 1996 as Senior Executive Vice President and Director of Personnel and Company Communications of J.C. Penney. | |
Wayne R. Embry Director since 1990 Age — 67 | Senior Advisor to the General Manager of the Toronto Raptors, a professional basketball team, since June 2004. Mr. Embry served as President and Chief Operating Officer, Team Division, of the Cleveland Cavaliers from 1986 until his retirement in 2000. Mr. Embry serves on the Board of Directors of Kohl’s Corporation. | |
Richard H. Fearon Director since 2004 Age — 49 | Executive Vice President — Chief Financial and Planning Officer of Eaton Corporation, a global manufacturing company, since April 2002. Mr. Fearon served as Partner of Willow Place Partners LLC from 2001 to 2002. From 1995 to 2000, Mr. Fearon was the Senior Vice President — Corporate Development for Transamerica Corporation. | |
Robert A. Garda Director since 1998 Age — 66 | Executive-in-Residence of The Fuqua School of Business, Duke University, since 1997. Mr. Garda served as an independent consultant from 1995 to 1997. Mr. Garda served as President and Chief Executive Officer of Aladdin Industries from 1994 to 1995. Prior to that, Mr. Garda was a Director at McKinsey & Company, Inc. Mr. Garda serves on the Boards of Directors of Insect Biotechnology, Inc. and GED, Inc. | |
Gordon D. Harnett Director since 1997 Age — 62 | Chairman, President and Chief Executive Officer of Brush Engineered Materials Inc., an international supplier and producer of high performance engineered materials, since 1991. Mr. Harnett serves on the Boards of Directors of The Lubrizol Corporation and EnPro Industries, Inc. | |
William F. Patient Director since 2003 Age — 70 | Chairman of the Board since November 2003. Served as the Chairman of the Board and Chief Executive Officer of The Geon Company from 1993 until his retirement in 1999. | |
Thomas A. Waltermire Director since 1998 Age — 55 | Chief Executive Officer and President of PolyOne since August 31, 2000 and Chairman of the Board from August 2000 until November 2003. Prior to the formation of PolyOne at the end of August 2000, Mr. Waltermire served as Chairman of the Board of The Geon Company from August 1999 and Chief Executive Officer and President of Geon from May 1999. From February 1998 to May 1999, Mr. Waltermire served as President and Chief Operating Officer of Geon. Earlier, Mr. Waltermire held various positions with Geon, including Chief Financial Officer. Mr. Waltermire serves on the Board of Directors of Nucor Corporation. | |
Farah M. Walters Director since 1998 Age — 60 | Served as President and Chief Executive Officer of University Hospitals Health System and University Hospitals of Cleveland from 1992 until her retirement in June 2002. Ms. Walters serves on the Boards of Directors of Kerr-McGee Corporation and Alpharma Inc. |
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• | Business or professional experience; | |
• | Knowledge and skill in certain specialty areas such as accounting and finance, international markets, physical sciences and technology or the polymer or chemical industry; |
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• | Personal characteristics such as ethical standards, integrity, judgment, leadership and the ability to devote sufficient time to PolyOne’s affairs; | |
• | Substantial accomplishments with demonstrated leadership capabilities; | |
• | Freedom from outside interests that conflict with the best interests of PolyOne; | |
• | The diversity of backgrounds and experience each member will bring to the Board of Directors; and | |
• | The needs of PolyOne from time to time. |
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Number of | Right to | Total | ||||||||||
Shares | Acquire | Beneficial | ||||||||||
Name | Owned(1) | Shares(3) | Ownership | |||||||||
J. Douglas Campbell | 83,498 | (2) | 60,000 | 143,498 | ||||||||
Carol A. Cartwright | 57,732 | (2) | 39,000 | 96,732 | ||||||||
Gale Duff-Bloom | 66,846 | (2) | 60,000 | 126,846 | ||||||||
Wayne R. Embry | 21,649 | (2) | 39,000 | 60,649 | ||||||||
Richard H. Fearon | 1,085 | 15,000 | 16,085 | |||||||||
Robert A. Garda | 49,616 | (2) | 61,500 | 111,116 | ||||||||
Gordon D. Harnett | 72,750 | (2) | 61,500 | 134,250 | ||||||||
William F. Patient | 62,718 | 288,000 | 350,718 | |||||||||
Thomas A. Waltermire | 245,950 | 1,193,388 | 1,439,338 | |||||||||
Farah M. Walters | 61,923 | (2) | 54,000 | 115,923 | ||||||||
V. Lance Mitchell | 90,635 | 385,136 | 475,771 | |||||||||
W. David Wilson | 111,505 | 428,776 | 540,281 | |||||||||
Wendy C. Shiba | 43,030 | 124,890 | 167,920 | |||||||||
Michael L. Rademacher | 32,846 | 192,644 | 225,490 | |||||||||
16 Directors and executive officers as a group | 1,095,486 | 3,256,552 | 4,352,038 |
(1) | Except as otherwise stated in the notes below, beneficial ownership of the shares held by each individual consists of sole voting power and sole investment power, or of voting power and investment power that is shared with the spouse of the individual. It includes the approximate number of shares credited to the named executives’ accounts in The PolyOne Retirement Savings Plan, a tax-qualified defined contribution plan. The number of shares of common stock allocated to these individuals is provided by the savings plan administrator in a statement for the period ending December 31, 2004, based on the market value of the applicable plan units held by the individual. Additional shares of common stock may have been allocated to the accounts of participants in the savings plan since the date of the last statements received from the plan administrator. No Director, nominee or executive officer beneficially owned, on March 21, 2005, more than 1% of PolyOne’s outstanding common shares, except Mr. Waltermire, who owned 1.55%. As of that date, the Directors and executive officers as a group beneficially owned approximately 4.58% of the outstanding common shares. |
(2) | With respect to the Directors, except Mr. Waltermire, who is not eligible to participate in the Directors’ Deferred Compensation Plan, beneficial ownership includes shares held under the Directors’ Deferred Compensation Plan as follows: J.D. Campbell, 81,442 shares; C.A. Cartwright, 48,642 shares; G. Duff-Bloom, 66,348 shares; W.R. Embry, 11,102 shares; R.A. Garda, 28,074 shares; G.D. Harnett, 55,939 shares; and F.M. Walters, 60,867. |
(3) | Includes shares the individuals have a right to acquire on or before May 20, 2005. |
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Number | % of | |||||||
Name and Address | of Shares | Shares | ||||||
FMR Corp. | 11,698,786 | (1) | 12.7 | % | ||||
82 Devonshire Street | ||||||||
Boston, Massachusetts 02109 | ||||||||
New York Life Trust Company, | ||||||||
as Trustee for The PolyOne Retirement Savings Plan | 7,015,886 | (2) | 7.6 | % | ||||
51 Madison Avenue | ||||||||
New York, New York 10010 | ||||||||
Barrow, Hanley, Mewhinney & Strauss, Inc. | 4,844,820 | (3) | 5.3 | % | ||||
One McKinney Plaza | ||||||||
3232 McKinney Avenue, 15th Floor | ||||||||
Dallas, TX 75204-2429 |
(1) | As of February 14, 2005, based upon information contained in a Schedule 13G/A filed with the Commission. FMR Corp., as a holding company reporting on behalf of its subsidiaries, has sole voting power with respect to 502,360 of these shares and has sole dispositive power with respect to all of these shares. |
(2) | As of February 15, 2005, based upon information contained in a Schedule 13G/A filed with the Commission. New York Life Trust Company, as Trustee for The PolyOne Retirement Savings Plan and for various collective investment funds for employee benefit plans and other index accounts, as a bank, has sole voting power and sole dispositive power with respect to all of these shares. |
(3) | As of February 8, 2005, based upon information contained in a Schedule 13G filed with the Commission. Barrow, Hanley, Mewhinney & Strauss, Inc. has sole voting power with respect to 2,193,700 of these shares and has sole dispositive power with respect to all of these shares. |
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THE COMPENSATION AND | |
GOVERNANCE COMMITTEE | |
OF THE BOARD OF DIRECTORS | |
Farah M. Walters, Chairperson | |
J. Douglas Campbell | |
Carol A. Cartwright | |
Gale Duff-Bloom | |
Wayne R. Embry | |
Robert A. Garda | |
Gordon D. Harnett |
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Annual Compensation | Long Term Compensation | |||||||||||||||||||||||||||||||
Awards | Payouts | |||||||||||||||||||||||||||||||
Other | Options/ | LTIP | All | |||||||||||||||||||||||||||||
Annual | Restricted | SARs | Payouts | Other | ||||||||||||||||||||||||||||
Name and | Compen- | Stock | (# of | (# of | Compen- | |||||||||||||||||||||||||||
Principal Position | Year | Salary($)(1) | Bonus($) | sation($)(2) | Awards($) | Shares) | Shares) | sation($) | ||||||||||||||||||||||||
Thomas A. Waltermire | 2004 | 678,681 | 933,476 | (2) | –0– | –0– | –0– | 70,258 | (3) | |||||||||||||||||||||||
President and | 2003 | 630,808 | –0– | (2) | –0– | 509,740 | –0– | 90,586 | (3) | |||||||||||||||||||||||
Chief Executive Officer | 2002 | 690,000 | 168,900 | (2) | –0– | 299,200 | –0– | 58,008 | (3) | |||||||||||||||||||||||
V. Lance Mitchell | 2004 | 339,027 | 228,508 | (2) | –0– | –0– | –0– | 26,252 | (4) | |||||||||||||||||||||||
Group Vice President | 2003 | 320,889 | –0– | (2) | –0– | 174,160 | –0– | 34,373 | (4) | |||||||||||||||||||||||
2002 | 335,000 | 27,700 | (2) | –0– | 96,800 | –0– | 27,269 | (4) | ||||||||||||||||||||||||
W. David Wilson | 2004 | 329,200 | 266,348 | (2) | –0– | –0– | –0– | 31,416 | (5) | |||||||||||||||||||||||
Vice President and | 2003 | 311,754 | –0– | (2) | –0– | 169,260 | –0– | 40,659 | (5) | |||||||||||||||||||||||
Chief Financial Officer | 2002 | 325,000 | 46,900 | (2) | –0– | 94,000 | –0– | 24,102 | (5) | |||||||||||||||||||||||
Wendy C. Shiba | 2004 | 320,192 | 259,060 | (2) | –0– | –0– | –0– | 15,443 | (6) | |||||||||||||||||||||||
Vice President, | 2003 | 286,188 | –0– | (2) | –0– | 128,200 | –0– | 32,122 | (6) | |||||||||||||||||||||||
Chief Legal Officer | 2002 | 300,000 | 63,200 | (2) | –0– | 67,700 | –0– | 12,000 | (6) | |||||||||||||||||||||||
and Secretary | ||||||||||||||||||||||||||||||||
Michael L. Rademacher | 2004 | 269,231 | 233,753 | (2) | –0– | –0– | –0– | 16,359 | (7) | |||||||||||||||||||||||
Vice President and | 2003 | 238,496 | 64,500 | (2) | –0– | 106,780 | –0– | 27,619 | (7) | |||||||||||||||||||||||
General Manager, | 2002 | 250,000 | 93,000 | 36,462 | (8) | –0– | 56,400 | –0– | 9,506 | (7) | ||||||||||||||||||||||
Distribution |
(1) | A portion of the 2004 annual salary includes the twenty-seventh payment as described in the last paragraph of the Base Salaries section of the Report of the Compensation and Governance Committee on Executive Compensation. |
(2) | Indicates perquisites and other personal benefits did not exceed the lesser of $50,000 or 10% of the total salary and bonus for the year shown. |
(3) | Amounts under “All Other Compensation” for Mr. Waltermire include PolyOne’s cash contributions to PolyOne’s qualified savings plan in the amounts of $16,913 for 2004, $24,000 for 2003 and $11,000 for 2002 and amounts accrued under PolyOne’s non-qualified retirement plan providing for benefits in excess of the amounts permitted to be contributed under the qualified savings plan in the amounts of $53,345 for 2004, $66,586 for 2003 and $47,008 for 2002. |
(4) | Amounts under “All Other Compensation” for Mr. Mitchell include PolyOne’s cash contributions to PolyOne’s qualified savings plan in the amounts of $13,838 for 2004, $21,000 for 2003 and $11,000 for 2002 and amounts accrued under PolyOne’s non-qualified retirement plan providing for benefits in excess of the amounts permitted to be contributed under the qualified savings plan in the amounts of $12,414 for 2004, $13,373 for 2003 and $16,269 for 2002. |
(5) | Amounts under “All Other Compensation” for Mr. Wilson include PolyOne’s cash contributions to PolyOne’s qualified savings plan in the amount of $13,888 for 2004, $24,000 for 2003 and $11,000 for 2002 and amounts accrued under PolyOne’s non-qualified retirement plan providing for benefits in excess of the amounts permitted to be contributed under the qualified savings plan in the amounts of $17,528 for 2004, $16,659 for 2003 and $13,102 for 2002. |
(6) | Amounts under “All Other Compensation” for Ms. Shiba include PolyOne’s cash contributions to PolyOne’s qualified savings plan in the amount of $7,110 for 2004, $11,934 for 2003 and $4,250 for 2002 and amounts accrued under PolyOne’s non-qualified retirement plans providing for benefits in excess of the amounts permitted to be contributed under the qualified savings plan in the amount of $8,333 for 2004, $20,188 for 2003 and $7,750 for 2002. |
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(7) | Amounts under “All Other Compensation” for Mr. Rademacher includes PolyOne’s cash contributions to PolyOne’s qualified savings plan in the amount of $6,050 for 2004, $12,427 for 2003 and $5,131 for 2002 and amounts accrued under PolyOne’s non-qualified retirement plans providing for benefits in excess of the amounts permitted to be contributed under the qualified savings plan in the amount of $10,309 for 2004, $15,192 for 2003 and $4,375 for 2002. |
(8) | Amount under “Other Annual Compensation” for Mr. Rademacher in 2002 includes tax gross-ups on personal benefits in the amount of $11,572, car allowance in the amount of $12,000 and financial planning expenses in the amount of $10,755. |
Value of Unexercised | ||||||||||||||||
Number of Unexercised | In-The-Money Options/ | |||||||||||||||
Options/SARs at FY-End | SARs At FY-End | |||||||||||||||
Shares Acquired | (# of Shares) | ($)(2) | ||||||||||||||
on Exercise | Value Realized | |||||||||||||||
Name | (# of Shares) | ($)(1) | Exercisable/Unexercisable | Exercisable/Unexercisable | ||||||||||||
T. A. Waltermire | –0– | –0– | 1,034,593/338,275 | 936,484/670,027 | ||||||||||||
V. L. Mitchell | 12,039 | 107,147 | 332,471/113,485 | 153,099/228,947 | ||||||||||||
W. D. Wilson | –0– | –0– | 377,791/110,305 | 309,444/222,541 | ||||||||||||
W. C. Shiba | 9,098 | 81,973 | 82,355/82,168 | 94,313/168,590 | ||||||||||||
M. L. Rademacher | –0– | –0– | 157,209/68,395 | 194,536/140,303 |
(1) | Represents the difference between the fair market value of the securities underlying the options or SARs and the exercise or base price of the option or SAR at exercise. Fair market value is calculated as the average of the high and low prices for the date of exercise. |
(2) | Based on the closing price of a common share of PolyOne of $9.06 as reported on the New York Stock Exchange on December 31, 2004. The ultimate realization of profit, if any, on the sale of common shares underlying the option is dependent upon the market price of the shares on the date of sale. |
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Final | Years Of Credited Service(1) | |||||||||||||||||||||
Average | ||||||||||||||||||||||
Earnings ($) | 10(2) | 15(2) | 20(2) | 25 | 30 | |||||||||||||||||
400,000 | 87,115 | 118,228 | 149,340 | 155,563 | 186,675 | |||||||||||||||||
500,000 | 109,515 | 148,628 | 187,740 | 195,563 | 234,675 | |||||||||||||||||
600,000 | 131,915 | 179,028 | 226,140 | 235,563 | 282,675 | |||||||||||||||||
700,000 | 154,315 | 209,428 | 264,540 | 275,563 | 330,675 | |||||||||||||||||
800,000 | 176,715 | 239,828 | 302,940 | 315,563 | 378,675 | |||||||||||||||||
900,000 | 199,115 | 270,228 | 341,340 | 355,563 | 426,675 | |||||||||||||||||
1,000,000 | 221,515 | 300,628 | 379,740 | 395,563 | 474,675 | |||||||||||||||||
1,100,000 | 243,915 | 331,028 | 418,140 | 435,563 | 522,675 | |||||||||||||||||
1,200,000 | 266,315 | 361,428 | 456,540 | 475,563 | 570,675 |
(1) | As of December 31, 2004, the following executives had the following years of credited service under the Plan or subsidiary plans or supplemental agreements: T.A. Waltermire, 28 years, 6 months; V.L. Mitchell, 13 years, 7 months; and W.D. Wilson, 24 years, 11 months. Ms. Shiba and Mr. Rademacher do not participate in a pension plan. |
(2) | Includes an additional 4 years of service applicable to pre-January 1, 1990 employees. |
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• | any person becomes the beneficial owner of 25% or more of the combined voting power of PolyOne’s outstanding securities (subject to certain exceptions); | |
• | there is a change in the majority of the Board of Directors of PolyOne; |
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• | certain corporate reorganizations occur where the existing shareholders do not retain more than 60% of the common shares and combined voting power of the outstanding voting securities of the surviving entity; or | |
• | there is shareholder approval of a complete liquidation or dissolution of PolyOne. |
• | compensation for a period of up to three years, commencing at the individual’s base salary rate in effect at the time of the termination; | |
• | a payment of up to three times the “target annual incentive amount” (as defined in the Continuity Agreements) in effect prior to the change in control; | |
• | the continuation of all employee health and welfare benefits for up to three years; | |
• | financial planning services for one year; | |
• | a payment based on the incremental cash value of counting for purposes of certain retirement plans up to three additional years of covered compensation; and | |
• | a tax gross-up for any excise tax due under the Internal Revenue Code for any payments or distributions made under the agreements. |
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8/31/00 | 12/31/00 | 12/31/01 | 12/31/02 | 12/31/03 | 12/31/04 | |||||||
PolyOne Corporation | $100 | $70.8 | $121.3 | $49.8 | $81.2 | $115.1 | ||||||
S&P 500 | $100 | $87.3 | $77.0 | $60.0 | $77.1 | $85.5 | ||||||
S&P Mid Cap Chemicals | $100 | $107.5 | $122.8 | $112.0 | $132.3 | $173.2 |
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• | any eligible employee who the Committee determines is not a covered employee (a “covered employee” is an officer who the Committee deems likely to have compensation in a given plan year which would be non-deductible by PolyOne under Section 162(m) if PolyOne did not comply with the provisions of such section); and | |
• | newly hired or promoted executives. |
• | Profits(e.g., operating income, EBIT, EBT, net income, earnings per share, residual or economic earnings — these profitability metrics could be measured before special items and/or subject to GAAP definition); | |
• | Cash Flow(e.g., EBITDA, operating cash flow, total cash flow, cash flow in excess of cost of capital or residual cash flow or cash flow return on investment); | |
• | Returns(e.g., profits or cash flow returns on: assets, invested capital, net capital employed, and equity); | |
• | Working Capital(e.g., working capital divided by sales, days’ sales outstanding, days’ sales inventory, and days’ sales in payables); | |
• | Profit Margins(e.g., profits divided by revenues, gross margins and material margins divided by revenues, and material margin divided by sales pounds); | |
• | Liquidity Measures(e.g., debt-to-capital, debt-to-EBITDA, total debt ratio); |
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• | Sales Growth, Cost Initiative and Stock Price Metrics(e.g., revenues, revenue growth, stock price appreciation, total return to shareholders, sales and administrative costs divided by sales, and sales and administrative costs divided by profits); and | |
• | Strategic Initiative Key Deliverable Metricsconsisting of one or more of the following: product development, strategic partnering, research and development, market penetration, geographic business expansion goals, cost targets, customer satisfaction, employee satisfaction, management of employment practices and employee benefits, supervision of litigation and information technology, and goals relating to acquisitions or divestitures of subsidiaries, affiliates and joint ventures. |
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• | Plan Limits. Total awards under the Plan are limited to 5,000,000 shares, of which no more than 1,500,000 may be issued in the form of awards other than stock options or SARs (after taking into account forfeitures, expirations and cancellations). The Plan also limits the aggregate number of stock options and SARs that may be granted to any one participant in a calendar year to 500,000 and the aggregate number of restricted shares and restricted stock units subject to the achievement of Management Objectives, performance shares or other equity-based awards under Section 10 of the Plan that may be granted to any one participant in a calendar year to 400,000. And, under the Plan, no participant will receive performance units in any calendar year having a value in excess of $3,000,000. | |
• | No Liberal Recycling Provisions. The Plan provides that only shares covering awards that expire or are forfeited will again be available for issuance under the Plan. The following shares will not be added back to the aggregate plan limit: (1) shares tendered in payment of the option price; (2) shares withheld by PolyOne to satisfy the tax withholding obligation; and (3) shares that are repurchased by PolyOne with option right proceeds. Further, all shares covered by a SAR, to the extent that it is exercised and settled in shares, and whether or not shares are actually issued to the participant upon exercise of the right, shall be considered issued or transferred pursuant to the Plan. |
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• | Minimum Vesting Periods. The Plan provides that: |
• | Stock options and SARs may not vest by the passage of time sooner than one-third per year over three years unless they vest sooner by virtue of an event specified by the Board other than the passage of time; | |
• | Restricted stock and restricted stock units may not become unrestricted by the passage of time before the third anniversary of the date of grant unless restrictions lapse sooner by virtue of an event specified by the Board other than the passage of time; | |
• | The period of time within which Management Objectives relating to performance shares and performance units must be achieved will be a minimum of three years, subject to earlier lapse or modification by virtue of an event specified by the Board; and | |
• | Stock options, SARs, restricted stock and restricted stock units that vest upon the achievement of Management Objectives cannot vest sooner than one year from the date of grant, but may be subject to earlier lapse or modification by virtue of an event specified by the Board. |
• | No Repricing. PolyOne has never repriced underwater stock options, and option repricing is prohibited without shareholder approval under the Plan. | |
• | Other Features. |
• | The Plan also provides that no stock options or SARs will be granted with an exercise or base price less than the fair market value of PolyOne’s common stock on the date of grant. | |
• | The Plan is designed to allow awards made under the Plan to qualify as performance-based compensation under Section 162(m) of the Internal Revenue Code. | |
• | It is intended that PolyOne’s Board will delegate to the Compensation and Governance Committee of the Board (consisting of only independent directors) administration of the Plan if approved. Pursuant to such delegation, the Compensation and Governance Committee will have all of the powers and authority of the Board as described herein. |
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• | Profits(e.g., operating income, EBIT, EBT, net income, earnings per share, residual or economic earnings — these profitability metrics could be measured before special items and/or subject to GAAP definition); | |
• | Cash Flow(e.g., EBITDA, operating cash flow, total cash flow, cash flow in excess of cost of capital or residual cash flow or cash flow return on investment); | |
• | Returns(e.g., profits or cash flow returns on: assets, invested capital, net capital employed, and equity); | |
• | Working Capital(e.g., working capital divided by sales, days’ sales outstanding, days’ sales inventory, and days’ sales in payables); | |
• | Profit Margins(e.g., profits divided by revenues, gross margins and material margins divided by revenues, and material margin divided by sales pounds); | |
• | Liquidity Measures(e.g., debt-to-capital, debt-to-EBITDA, total debt ratio); | |
• | Sales Growth, Cost Initiative and Stock Price Metrics(e.g., revenues, revenue growth, stock price appreciation, total return to shareholders, sales and administrative costs divided by sales, and sales and administrative costs divided by profits); and |
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• | Strategic Initiative Key Deliverable Metricsconsisting of one or more of the following: product development, strategic partnering, research and development, market penetration, geographic business expansion goals, cost targets, customer satisfaction, employee satisfaction, management of employment practices and employee benefits, supervision of litigation and information technology, and goals relating to acquisitions or divestitures of subsidiaries, affiliates and joint ventures. |
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Tax Consequences to Participants |
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Tax Consequences to PolyOne or Subsidiary |
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Number of securities | ||||||||||||
remaining available for | ||||||||||||
Number of securities | Weighted-average | future issuance under | ||||||||||
to be issued upon | exercise price of | equity compensation | ||||||||||
exercise of | outstanding | plans (excluding | ||||||||||
outstanding options, | options, warrants | securities reflected in | ||||||||||
warrants and rights | and rights | column (a)) | ||||||||||
Plan Category | (a) | (b) | (c) | |||||||||
Equity compensation plans approved by security holders | 11,417,992 | $ | 11.27 | 3,789,977 | (1) | |||||||
Equity compensation plans not approved by security holders(2) | 178,489 | $ | 10.38 | 180,226 | ||||||||
Total | 11,596,481 | 3,970,203 |
(1) | In addition to options, warrants and rights, the 1993 Incentive Stock Plan, the 1995 Incentive Stock Plan, the 1998 Interim Stock Awards Plan, the 1999 Incentive Stock Plan, the Long-Term Incentive Plan and the 2000 Stock Incentive Plan each authorize the issuance of restricted stock, performance shares and/or deferred shares. The 1999 Incentive Stock Plan, the Long-Term Incentive Plan and the 2000 Stock Incentive Plan each have a separate sub-limit for the total number of shares that may be issued as one or more of these types of awards. The sub-limits are 400,000 restricted shares under the 1999 Incentive Stock Plan, 750,000 restricted and deferred shares and 1,500,000 performance shares under the Long-Term Incentive Plan, and 1,000,000 restricted, performance and deferred shares under the 2000 Stock Incentive Plan. |
(2) | The 1998 Interim Stock Award Plan was adopted by the Board of Directors of one of PolyOne’s predecessors in 1998. The Plan provides for awards in the form of stock options, restricted stock, stock equivalent units, stock appreciation rights, performance shares, and other stock and performance-based incentives. Key employees of PolyOne and its affiliates are eligible for awards. Non-employee directors are not eligible for awards. The Compensation and Governance Committee of the Board of Directors administers the Plan and selects award recipients. The maximum number of shares available for awards under the Plan is 375,574. The Compensation and Governance Committee has the authority to adjust the maximum number of shares available under the Plan and the exercise price of outstanding awards in the event of mergers, consolidations and other corporate transformations, stock dividends, stock splits and other non-cash distributions to shareholders. Unless otherwise determined by the Board of Directors, upon a change in control of PolyOne, all options and rights under the Plan become fully exercisable and all restrictions and conditions applicable to share awards are deemed satisfied. |
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THE AUDIT COMMITTEE OF | |
THE BOARD OF DIRECTORS | |
Gordon D. Harnett, Chairperson | |
Carol A. Cartwright | |
Richard H. Fearon | |
Robert A. Garda | |
William F. Patient |
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For the Board of Directors | |
PolyOne Corporation | |
Wendy C. Shiba | |
Vice President, Chief Legal Officer | |
and Secretary |
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(a) | Participation in the PolyOne SEAIP will be limited to those key executive personnel selected by the Committee who have the potential to influence significantly and positively the performance of the Company. | |
(b) | To be eligible for participation in any particular year during the term of the PolyOne SEAIP (a “Plan Year”), a key executive must have assumed the duties of an incentive-eligible position and have been selected for participation in the PolyOne SEAIP within 90 days after the commencement of the applicable Plan Year. The foregoing and other provisions of the PolyOne SEAIP notwithstanding, the Committee may select any eligible employee who the Committee determines is not a “covered employee” in a given Plan Year to receive an award under the PolyOne SEAIP without complying with the timing and other limitations set forth in Sections 3(b), 4(b), 5 and 8(b). The Committee may also make awards to newly hired or newly promoted executives without compliance with such timing and other limitations, which awards may be based on performance during less than the full Plan Year. For purposes of the PolyOne SEAIP, a “covered employee” means an officer who the Committee deems likely to have compensation for the Plan Year which would be non-deductible by the Company under Code Section 162(m) if the Company did not comply with the provisions of Code Section 162(m) and the regulations thereunder with respect to such compensation. |
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(a) | For each Plan Year, each participant will be assigned a target level of incentive opportunity (“Incentive Percentage”), stated as a percentage of base salary that will be available to the participant upon achievement of the Performance Targets (as hereinafter defined) for the respective Performance Measures (as hereinafter defined) for the applicable Plan Year. The maximum award that will be available to a participant is 200% of the participant’s target level of incentive opportunity. In the case of a covered employee, unless the Committee specifies a separate maximum award amount that may be earned, the base salary upon which the Incentive Percentage is based will be that in effect at the time the Committee establishes the Incentive Percentage. | |
(b) | Each participant’s Incentive Percentage for each Plan Year will be approved by the Compensation Committee within 90 days after the commencement of the applicable Plan Year. In determining the applicable Incentive Percentage other than for the Chief Executive Officer, the Committee will consider the recommendations of the Chief Executive Officer of the Company. |
(a) | Within 90 days after the commencement of each applicable Plan Year, the Committee shall determine the performance goal targets (“Performance Targets”) applicable to the measures of Company and/or business unit performance (“Performance Measures”) which must be achieved in order for awards to be paid under the PolyOne SEAIP. If the Committee so determines, a Performance Target may include a minimum threshold performance level, a maximum performance level, and one or more intermediate performance levels or ranges, with target award levels or ranges that will correspond to the respective performance levels or ranges included in the Performance Target. The Committee may determine that only the threshold level relating to a Performance Measure must be met for awards to be paid under the Plan, and if multiple Performance Measures are selected for any Plan year, that awards will be paid under the Plan upon achievement of threshold levels of one or more of the specified Performance Measures. The Performance Measures may be made relative to the performance of other companies. The Performance Measures will include one or more of the following, as determined by the Committee for each Plan Year: |
(i) | Profits(e.g., operating income, EBIT, EBT, net income, earnings per share, residual or economic earnings — these profitability metrics could be measured before special items and/or subject to GAAP definition); | |
(ii) | Cash Flow(e.g., EBITDA, operating cash flow, total cash flow, cash flow in excess of cost of capital or residual cash flow or cash flow return on investment); | |
(iii) | Returns(e.g., profits or cash flow returns on: assets, invested capital, net capital employed, and equity); | |
(iv) | Working Capital(e.g., working capital divided by sales, days’ sales outstanding, days’ sales inventory, and days’ sales in payables); | |
(v) | Profit Margins(e.g., profits divided by revenues, gross margins and material margins divided by revenues, and material margin divided by sales pounds); |
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(vi) | Liquidity Measures(e.g., debt-to-capital, debt-to-EBITDA, total debt ratio); | |
(vii) | Sales Growth, Cost Initiative and Stock Price Metrics(e.g., revenues, revenue growth, stock price appreciation, total return to shareholders, sales and administrative costs divided by sales, and sales and administrative costs divided by profits); and | |
(viii) | Strategic Initiative Key Deliverable Metricsconsisting of one or more of the following: product development, strategic partnering, research and development, market penetration, geographic business expansion goals, cost targets, customer satisfaction, employee satisfaction, management of employment practices and employee benefits, supervision of litigation and information technology, and goals relating to acquisitions or divestitures of subsidiaries, affiliates and joint ventures. |
(b) | If more than one Performance Measure is selected by the Committee for a Plan Year, the Performance Measures will be weighted by the Committee to reflect their relative importance to the Company in the applicable Plan Year. The weightings of the Performance Measures shall also be determined by the Committee within 90 days after the commencement of each applicable Plan Year. |
(a) | Awards will be paid as soon as practicable after approval by the Committee, but not later than 75 days after the end of the Plan Year to which the awards relate. | |
(b) | The Committee may determine, within 90 days after the commencement of the applicable Plan Year, that all or a portion of the participant’s award will be paid in |
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the form of restricted shares or share equivalent units. If permitted by the Committee, participants will also have the opportunity to elect, within 120 days after the commencement of the applicable Plan Year, additional optional deferrals so that they may receive up to 100% of their award, if any, as restricted shares or share equivalent units. | ||
(c) | Any award paid as restricted shares or share equivalent units will be enhanced with a 25% “premium” (i.e., for every $100 deferred, the participant will receive $125 in restricted shares or share equivalent units). Any grants of restricted shares or share equivalent units will be made under PolyOne’s current equity plan. Restrictions on the restricted shares or share equivalent units will be determined by the Committee at the time awards are approved in accordance with the provisions of the equity plan of the Company under which the shares are awarded. The number of restricted shares to be delivered or share equivalent units to be credited to a participant in respect of his or her incentive award under the PolyOne SEAIP shall be determined by dividing the dollar amount of the incentive award (after giving effect to the 25% premium) under the PolyOne SEAIP by the fair market value of one common share of the Company on the first business day of the year immediately succeeding the Plan Year in respect of which the incentive award is made. | |
(d) | For purposes of the PolyOne SEAIP, fair market value of one share shall be the mean of the high and low prices of the Company’s common shares on the relevant date (or, if no sale was made on such date, then on the next preceding date on which such a sale was made) on the composite tape reporting transactions in securities listed on The New York Stock Exchange. If the Company’s common shares are not listed on The New York Stock Exchange, the fair market value of one share of stock shall be as determined by the Committee. | |
(e) | Any portion of a participant’s award not paid as restricted shares or share equivalent units will be paid in cash. Other provisions of this Section 8 notwithstanding, the Committee may determine to pay out all or any portion of the award that otherwise would be payable as restricted shares or share equivalent units in cash (without payment of any “premium”) in any circumstance deemed appropriate by the Committee. |
(a) | No awards under the PolyOne SEAIP are to be considered earned until received. | |
(b) | Awards to participants who serve in incentive-eligible positions for less than a full year, or who within a year serve in two or more positions that are of significantly different size, may be adjusted on a pro rata basis. |
(a) | Unless otherwise provided in an individual agreement between the Company and a participant, within five days following the occurrence of a “Change in Control” (as defined in Attachment A hereto), the Company shall pay to each participant an interim lump-sum cash payment (the “Interim Payment”) with respect to his or her participation in the PolyOne SEAIP. The amount of the Interim Payment shall equal the product of the number of months, including fractional months, that have elapsed until the occurrence of the Change in Control in the calendar year in which the Change in Control occurs and one-twelfth of the target level of incentive opportunity |
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under the PolyOne SEAIP for the participant in effect prior to the Change in Control for the calendar year in which the Change in Control occurs. | ||
(b) | The Company will retain the obligation to make a final payment under the terms of the PolyOne SEAIP (if earned), but any Interim Payment made shall be offset against any later payment required to be made under the terms of the PolyOne SEAIP for the Plan Year in which a Change in Control occurs. In no event shall any participant be required to refund to the Company, or have offset against any other payment due any participant from or on behalf of the Company, all or any portion of the Interim Payment. |
(a) | The PolyOne SEAIP may be amended by the Committee to the extent required in order to comply with the provisions of Section 162(m) of the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder regarding “performance-based” compensation. | |
(b) | To the extent applicable, it is intended that the PolyOne SEAIP, and any grants of restricted shares or share equivalent units referenced in Section 8, comply with the provisions of Section 409A of the Code. The PolyOne SEAIP, and the agreements relating to any grants of restricted shares or share equivalent units referenced in Section 8, shall be administered in a manner consistent with this intent, and any provision that would cause the PolyOne SEAIP or such agreements to fail to satisfy Section 409A of the Code shall have no force or effect until amended to comply with Section 409A of the Code (which amendment may be retroactive to the extent permitted by Section 409A of the Code and may be made by the Company without the consent of participants). | |
(c) | The PolyOne SEAIP will, subject to shareholder approval at the 2005 Annual Meeting, be effective for the Plan Year beginning January 1, 2006, and will remain in effect thereafter until terminated by the Committee. |
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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 Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of voting securities of the Company where such acquisition causes such Person to own 20% 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 of Control: (A) any acquisition directly from the Company, (B) any acquisition by the Company, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (D) any acquisition by any corporation pursuant to a transaction that complies with clauses (A), (B) and (C) of sub-paragraph (iii) below; provided, further, that if any Person’s beneficial ownership of the Outstanding Company Voting Securities reaches or exceeds 20% as a result of a transaction described in clause (A) or (B) above, and such Person subsequently acquires beneficial ownership of additional voting securities of the Company, such subsequent acquisition shall be treated as an acquisition that causes such Person to own 20% or more of the Outstanding Company Voting Securities; and provided, further, that if at least a majority of the members of the Incumbent Board determines in good faith that a Person has acquired beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of the Outstanding Voting Securities inadvertently, and such Person divests as promptly as practicable a sufficient number of shares so that such Person beneficially owns (within the meaning of Rule 13d-3 promulgated under the Exchange Act) less than 20% of the Outstanding Company Voting Securities, then no Change of Control shall have occurred as a result of such Person’s acquisition; or | |
(ii) | Individuals who, as of the date hereof, constitute the Board (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 date hereof whose election, or nomination for election by the Company’s shareholders, 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; or | |
(iii) | The consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company or the acquisition of assets of another corporation (“Business Combination”) excluding, however, such |
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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 60% of, respectively, the then outstanding common shares 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 (excluding any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding common shares 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 shareholders of the Company of a complete liquidation or dissolution of the Company. |
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(a) “Appreciation Right” means a right granted pursuant to Section 5 or Section 9 of this Plan, and will include both Tandem Appreciation Rights and Free-Standing Appreciation Rights. | |
(b) “Base Price” means the price to be used as the basis for determining the Spread upon the exercise of a Free-Standing Appreciation Right and a Tandem Appreciation Right. | |
(c) “Board” means the Board of Directors of the Company and, to the extent of any delegation by the Board to a committee (or subcommittee thereof) pursuant to Section 16 of this Plan, such committee (or subcommittee). | |
(d) “Code” means the Internal Revenue Code of 1986, as amended from time to time. | |
(e) “Common Shares” means the shares of common stock, par value $0.01 per share, of the Company or any security into which such Common Shares may be changed by reason of any transaction or event of the type referred to in Section 12 of this Plan. | |
(f) “Company” means PolyOne Corporation, an Ohio corporation. | |
(g) “Covered Employee” means a Participant who is, or is determined by the Board to be likely to become, a “covered employee” within the meaning of Section 162(m) of the Code (or any successor provision). | |
(h) “Date of Grant” means the date specified by the Board on which a grant of Option Rights, Appreciation Rights, Performance Shares, Performance Units or other awards contemplated by Section 10 of this Plan, or a grant or sale of Restricted Stock, Restricted Stock Units, or other awards contemplated by Section 10 of this Plan will become effective (which date will not be earlier than the date on which the Board takes action with respect thereto). | |
(i) “Detrimental Activity” means: |
(i) Engaging in any activity, as an employee, principal, agent, or consultant for another entity that competes with the Company in any actual, researched, or prospective product, service, system, or business activity for which the Participant has had any direct responsibility during the last two years of his or her employment with the Company or a Subsidiary, in any territory in which the Company or a Subsidiary manufactures, sells, markets, services, or installs such product, service, or system, or engages in such business activity. | |
(ii) Soliciting any employee of the Company or a Subsidiary to terminate his or her employment with the Company or a Subsidiary. |
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(iii) The disclosure to anyone outside the Company or a Subsidiary, or the use in other than the Company’s or a Subsidiary’s business, without prior written authorization from the Company, of any confidential, proprietary or trade secret information or material relating to the business of the Company and its Subsidiaries, acquired by the Participant during his or her employment with the Company or its Subsidiaries or while acting as a consultant for the Company or its Subsidiaries thereafter. | |
(iv) The failure or refusal to disclose promptly and to assign to the Company upon request all right, title and interest in any invention or idea, patentable or not, made or conceived by the Participant during employment by the Company and any Subsidiary, relating in any manner to the actual or anticipated business, research or development work of the Company or any Subsidiary or the failure or refusal to do anything reasonably necessary to enable the Company or any Subsidiary to secure a patent where appropriate in the United States and in other countries. | |
(v) Activity that results in Termination for Cause. For the purposes of this Section, “Termination for Cause” shall mean a termination: |
(A) due to the Participant’s willful and continuous gross neglect of his or her duties for which he or she is employed, or | |
(B) due to an act of dishonesty on the part of the Participant constituting a felony resulting or intended to result, directly or indirectly, in his or her gain for personal enrichment at the expense of the Company or a Subsidiary. |
(vi) Any other conduct or act determined to be injurious, detrimental or prejudicial to any significant interest of the Company or any Subsidiary unless the Participant acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Company. |
(j) “Director” means a member of the Board of Directors of the Company. | |
(k) “Evidence of Award” means an agreement, certificate, resolution or other type or form of writing or other evidence approved by the Board that sets forth the terms and conditions of the awards granted. An Evidence of Award may be in an electronic medium, may be limited to notation on the books and records of the Company and, with the approval of the Board, need not be signed by a representative of the Company or a Participant. | |
(l) “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder, as such law, rules and regulations may be amended from time to time. | |
(m) “Free-Standing Appreciation Right” means an Appreciation Right granted pursuant to Section 5 or Section 9 of this Plan that is not granted in tandem with an Option Right. | |
(n) “Incentive Stock Options” means Option Rights that are intended to qualify as “incentive stock options” under Section 422 of the Code or any successor provision. | |
(o) “Management Objectives” means the measurable performance objective or objectives established pursuant to this Plan for Participants who have received grants of Performance Shares or Performance Units or, when so determined by the Board, Option Rights, Appreciation Rights, Restricted Stock, Restricted Stock Units, dividend credits and other awards pursuant to this Plan. Management Objectives may be described in terms of Company-wide objectives or objectives that are related to the performance of the individual Participant or |
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of the Subsidiary, division, department, region or function within the Company or Subsidiary in which the Participant is employed. The Management Objectives may be made relative to the performance of other companies. The Management Objectives applicable to any award to a Covered Employee will be based on specified levels of or growth in one or more of the following criteria: |
(i) Profits(e.g., operating income, EBIT, EBT, net income, earnings per share, residual or economic earnings — these profitability metrics could be measured before special items and/or subject to GAAP definition); | |
(ii) Cash Flow(e.g., EBITDA, operating cash flow, total cash flow, cash flow in excess of cost of capital or residual cash flow or cash flow return on investment); | |
(iii) Returns(e.g., profits or cash flow returns on: assets, invested capital, net capital employed, and equity); | |
(iv) Working Capital(e.g., working capital divided by sales, days’ sales outstanding, days’ sales inventory, and days’ sales in payables); | |
(v) Profit Margins(e.g., profits divided by revenues, gross margins and material margins divided by revenues, and material margin divided by sales pounds); | |
(vi) Liquidity Measures(e.g., debt-to-capital, debt-to-EBITDA, total debt ratio); | |
(vii) Sales Growth, Cost Initiative and Stock Price Metrics(e.g., revenues, revenue growth, stock price appreciation, total return to shareholders, sales and administrative costs divided by sales, and sales and administrative costs divided by profits); and | |
(viii) Strategic Initiative Key Deliverable Metricsconsisting of one or more of the following: product development, strategic partnering, research and development, market penetration, geographic business expansion goals, cost targets, customer satisfaction, employee satisfaction, management of employment practices and employee benefits, supervision of litigation and information technology, and goals relating to acquisitions or divestitures of subsidiaries, affiliates and joint ventures. |
(p) “Market Value per Share” means, as of any particular date, the fair market value of the Common Shares as determined by the Board. | |
(q) “Non-Employee Director” means a person who is a “non-employee director” of the Company within the meaning of Rule 16b-3 of the Securities and Exchange Commission promulgated under the Exchange Act. | |
(r) “Optionee” means the optionee named in an Evidence of Award evidencing an outstanding Option Right. |
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(s) “Option Price” means the purchase price payable on exercise of an Option Right. | |
(t) “Option Right” means the right to purchase Common Shares upon exercise of an option granted pursuant to Section 4 or Section 9 of this Plan. | |
(u) “Participant” means a person who is selected by the Board to receive benefits under this Plan and who is at the time an officer, or other key employee of the Company or any one or more of its Subsidiaries, or who has agreed to commence serving in any of such capacities within 90 days of the Date of Grant, and will also include each Non-Employee Director who receives Common Shares or an award of Option Rights, Appreciation Rights, Restricted Stock, Restricted Stock Units or other awards under this Plan. The term “Participant” shall also include any person who provides services to the Company or a Subsidiary that are equivalent to those typically provided by an employee. | |
(v) “Performance Period” means, in respect of a Performance Share or Performance Unit, a period of time established pursuant to Section 8 of this Plan within which the Management Objectives relating to such Performance Share or Performance Unit are to be achieved. | |
(w) “Performance Share” means a bookkeeping entry that records the equivalent of one Common Share awarded pursuant to Section 8 of this Plan. | |
(x) “Performance Unit” means a bookkeeping entry awarded pursuant to Section 8 of this Plan that records a unit equivalent to $1.00 or such other value as is determined by the Board. | |
(y) “Plan” means this PolyOne Corporation 2005 Equity and Performance Incentive Plan. | |
(z) “Restricted Stock” means Common Shares granted or sold pursuant to Section 6 or Section 9 of this Plan as to which neither the substantial risk of forfeiture nor the prohibition on transfers has expired. | |
(aa) “Restriction Period” means the period of time during which Restricted Stock Units are subject to restrictions, as provided in Section 7 or Section 9 of this Plan. | |
(bb) “Restricted Stock Unit” means an award made pursuant to Section 7 or Section 9 of this Plan of the right to receive Common Shares or cash at the end of a specified period. | |
(cc) “Spread” means the excess of the Market Value per Share on the date when an Appreciation Right is exercised, or on the date when Option Rights are surrendered in payment of the Option Price of other Option Rights, over the Option Price or Base Price provided for in the related Option Right or Free-Standing Appreciation Right, respectively. | |
(dd) “Subsidiary” means a corporation, company or other entity (i) more than 50 percent of whose outstanding shares or securities (representing the right to vote for the election of directors or other managing authority) are, or (ii) which does not have outstanding shares or securities (as may be the case in a partnership, joint venture or unincorporated association), but more than 50 percent of whose ownership interest representing the right generally to make decisions for such other entity is, now or hereafter, owned or controlled, directly or indirectly, by the Company except that for purposes of determining whether any person may be a Participant for purposes of any grant of Incentive Stock Options, “Subsidiary” means any corporation in which at the time the Company owns or controls, directly or indirectly, more than 50 percent of the total combined voting power represented by all classes of stock issued by such corporation. |
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(ee) “Tandem Appreciation Right” means an Appreciation Right granted pursuant to Section 5 or Section 9 of this Plan that is granted in tandem with an Option Right. |
(a) Subject to adjustment as provided in Section 12 of this Plan, the number of Common Shares that may be issued or transferred (i) upon the exercise of Option Rights or Appreciation Rights, (ii) as Restricted Stock and released from substantial risks of forfeiture thereof, (iii) as Restricted Stock Units, (iv) in payment of Performance Shares or Performance Units that have been earned, (v) as awards to Non-Employee Directors, (vi) as awards contemplated by Section 10 of this Plan, or (vii) in payment of dividend equivalents paid with respect to awards made under the Plan will not exceed in the aggregate 5,000,000 Common Shares, plus any shares relating to awards that expire or are forfeited or are cancelled. Common Shares covered by an award granted under the Plan shall not be counted as used unless and until they are actually issued and delivered to a Participant. Without limiting the generality of the foregoing, upon payment in cash of the benefit provided by any award granted under the Plan, any Common Shares that were covered by that award will be available for issue or transfer hereunder. Notwithstanding anything to the contrary contained herein: (A) shares tendered in payment of the Option Price of a Option Right shall not be added to the aggregate plan limit described above; (B) shares withheld by the Company to satisfy the tax withholding obligation shall not be added to the aggregate plan limit described above; (C) shares that are repurchased by the Company with Option Right proceeds shall not be added to the aggregate plan limit described above; and (D) all shares covered by an Appreciation Right, to the extent that it is exercised and settled in Common Shares, and whether or not shares are actually issued to the participant upon exercise of the right, shall be considered issued or transferred pursuant to the Plan. Such shares may be shares of original issuance or treasury shares or a combination of the foregoing. | |
(b) If, under this Plan, a Participant has elected to give up the right to receive compensation in exchange for Common Shares based on fair market value, such Common Shares will not count against the number of shares available in Section 3(a) above. | |
(c) Notwithstanding anything in this Section 3, or elsewhere in this Plan, to the contrary and subject to adjustment as provided in Section 12 of this Plan: (i) the aggregate number of Common Shares actually issued or transferred by the Company upon the exercise of Incentive Stock Options will not exceed 3,000,000 Common Shares; (ii) no Participant will be granted Option Rights or Appreciation Rights, in the aggregate, for more than 500,000 Common Shares during any calendar year; (iii) no Participant will be granted Restricted Stock or Restricted Stock Units that specify Management Objectives, Performance Shares or other awards under Section 10 of this Plan, in the aggregate, for more than 400,000 Common Shares during any calendar year; and (iv) the number of shares issued as Restricted Stock, Restricted Stock Units, Performance Shares and Performance Units and other awards under Section 10 of this Plan (after taking into account any forfeitures and cancellations) will not during the life of the Plan in the aggregate exceed 1,500,000 Common Shares. | |
(d) Notwithstanding any other provision of this Plan to the contrary, in no event will any Participant in any calendar year receive an award of Performance Units having an aggregate maximum value as of their respective Dates of Grant in excess of $3,000,000. |
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(a) Each grant will specify the number of Common Shares to which it pertains subject to the limitations set forth in Section 3 of this Plan. | |
(b) Each grant will specify an Option Price per share, which may not be less than the Market Value per Share on the day immediately preceding the Date of Grant. | |
(c) Each grant will specify whether the Option Price will be payable (i) in cash or by check acceptable to the Company or by wire transfer of immediately available funds, (ii) by the actual or constructive transfer to the Company of Common Shares owned by the Optionee for at least 6 months (or other consideration authorized pursuant to Section 4(d)) having a value at the time of exercise equal to the total Option Price, (iii) by a combination of such methods of payment, or (iv) by such other methods as may be approved by the Board. | |
(d) To the extent permitted by law, any grant may provide for deferred payment of the Option Price from the proceeds of sale through a bank or broker on a date satisfactory to the Company of some or all of the shares to which such exercise relates. | |
(e) Successive grants may be made to the same Participant whether or not any Option Rights previously granted to such Participant remain unexercised. | |
(f) Each grant will specify the period or periods of continuous service by the Optionee with the Company or any Subsidiary that is necessary before the Option Rights or installments thereof will become exercisable;provided,however, that Option Rights may not become exercisable by the passage of time sooner than one-third per year over three years. A grant of Option Rights may provide for the earlier exercise of such Option Rights in the event of a change of control, as may be defined in an Evidence of Award. | |
(g) Any grant of Option Rights may specify Management Objectives that must be achieved as a condition to the exercise of such rights;provided,however, that Option Rights that become exercisable upon the achievement of Management Objectives may not become exercisable sooner than one year from the Date of Grant. | |
(h) Option Rights granted under this Plan may be (i) options, including, without limitation, Incentive Stock Options, that are intended to qualify under particular provisions of the Code, (ii) options that are not intended so to qualify, or (iii) combinations of the foregoing. Incentive Stock Options may only be granted to Participants who meet the definition of “employees” under Section 3401(c) of the Code. | |
(i) The Board may at the Date of Grant of any Option Rights (other than Incentive Stock Options), provide for the payment of dividend equivalents to the Optionee on either a current or deferred or contingent basis, either in cash or in additional Common Shares. | |
(j) The exercise of an Option Right will result in the cancellation on a share-for-share basis of any Tandem Appreciation Right authorized under Section 5 of this Plan. | |
(k) No Option Right will be exercisable more than 10 years from the Date of Grant. | |
(l) The Board reserves the discretion at or after the Date of Grant to provide for (i) the payment of a cash bonus at the time of exercise; (ii) the availability of a loan at exercise; and (iii) the right to tender in satisfaction of the Option Price nonforfeitable, unrestricted Common Shares, which are already owned by the Optionee and have a value at the time of exercise that is equal to the Option Price. |
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(m) The Board may substitute, without receiving Participant permission, Appreciation Rights paid only in Common Shares (or Appreciation Rights paid in Common Shares or cash at the Board’s discretion) for outstanding Options;provided,however, that the terms of the substituted Appreciation Rights are the same as the terms for the Options and the difference between the Market Value Per Share of the underlying Common Shares and the Base Price of the Appreciation Rights is equivalent to the difference between the Market Value Per Share of the underlying Common Shares and the Option Price of the Options. If, in the opinion of the Company’s auditors, this provision creates adverse accounting consequences for the Company, it shall be considered null and void. | |
(n) Each grant of Option Rights will be evidenced by an Evidence of Award. Each Evidence of Award shall be subject to the Plan and shall contain such terms and provisions as the Board may approve. |
(a) The Board may authorize the granting (i) to any Optionee, of Tandem Appreciation Rights in respect of Option Rights granted hereunder, and (ii) to any Participant, of Free-Standing Appreciation Rights. A Tandem Appreciation Right will be a right of the Optionee, exercisable by surrender of the related Option Right, to receive from the Company an amount determined by the Board, which will be expressed as a percentage of the Spread (not exceeding 100 percent) at the time of exercise. Tandem Appreciation Rights may be granted at any time prior to the exercise or termination of the related Option Rights;provided,however, that a Tandem Appreciation Right awarded in relation to an Incentive Stock Option must be granted concurrently with such Incentive Stock Option. A Free-Standing Appreciation Right will be a right of the Participant to receive from the Company an amount determined by the Board, which will be expressed as a percentage of the Spread (not exceeding 100 percent) at the time of exercise. | |
(b) Each grant of Appreciation Rights may utilize any or all of the authorizations, and will be subject to all of the requirements, contained in the following provisions: |
(i) Any grant may specify that the amount payable on exercise of an Appreciation Right may be paid by the Company in cash, in Common Shares or in any combination thereof and may either grant to the Participant or retain in the Board the right to elect among those alternatives. | |
(ii) Any grant may specify that the amount payable on exercise of an Appreciation Right may not exceed a maximum specified by the Board at the Date of Grant. | |
(iii) Any grant may specify waiting periods before exercise and permissible exercise dates or periods;provided,however, that Appreciation Rights may not become exercisable by the passage of time sooner than one-third per year over three years. | |
(iv) Any grant may specify that such Appreciation Right may be exercised only in the event of, or earlier in the event of, a change of control, as may be defined in an Evidence of Award. | |
(v) Any grant may provide for the payment to the Participant of dividend equivalents thereon in cash or Common Shares on a current, deferred or contingent basis. | |
(vi) Any grant of Appreciation Rights may specify Management Objectives that must be achieved as a condition of the exercise of such Appreciation Rights; provided, however, that Option Rights that become exercisable upon the achievement of |
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Management Objectives may not become exercisable sooner than one year from the Date of Grant. | |
(vii) Each grant of Appreciation Rights will be evidenced by an Evidence of Award, which Evidence of Award will describe such Appreciation Rights, identify the related Option Rights (if applicable), and contain such other terms and provisions, consistent with this Plan, as the Board may approve. |
(c) Any grant of Tandem Appreciation Rights will provide that such Tandem Appreciation Rights may be exercised only at a time when the related Option Right is also exercisable and at a time when the Spread is positive, and by surrender of the related Option Right for cancellation. | |
(d) Regarding Free-Standing Appreciation Rights only: |
(i) Each grant will specify in respect of each Free-Standing Appreciation Right a Base Price, which will be equal to or greater than the Market Value per Share on the day immediately preceding the Date of Grant; | |
(ii) Successive grants may be made to the same Participant regardless of whether any Free-Standing Appreciation Rights previously granted to the Participant remain unexercised; and | |
(iii) No Free-Standing Appreciation Right granted under this Plan may be exercised more than 10 years from the Date of Grant. |
(a) Each such grant or sale will constitute an immediate transfer of the ownership of Common Shares to the Participant in consideration of the performance of services, entitling such Participant to voting, dividend and other ownership rights, but subject to the substantial risk of forfeiture and restrictions on transfer hereinafter referred to. | |
(b) Each such grant or sale may be made without additional consideration or in consideration of a payment by such Participant that is less than the Market Value per Share at the Date of Grant. | |
(c) Each such grant or sale will provide that the Restricted Stock covered by such grant or sale that vests upon the passage of time will be subject to a “substantial risk of forfeiture” within the meaning of Section 83 of the Code for a period of not less than three years to be determined by the Board at the Date of Grant and may provide for the earlier lapse of such substantial risk of forfeiture in the event of a change of control, as may be defined in an Evidence of Award. | |
(d) Each such grant or sale will provide that during the period for which such substantial risk of forfeiture is to continue, the transferability of the Restricted Stock will be prohibited or restricted in the manner and to the extent prescribed by the Board at the Date of Grant (which restrictions may include, without limitation, rights of repurchase or first refusal in the Company or provisions subjecting the Restricted Stock to a continuing substantial risk of forfeiture in the hands of any transferee). | |
(e) Any grant of Restricted Stock may specify Management Objectives that, if achieved, will result in termination or early termination of the restrictions applicable to such Restricted |
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Stock;provided,however, that restrictions relating to Restricted Stock that vests upon the achievement of Management Objectives may not terminate sooner than one year from the Date of Grant. Each grant may specify in respect of such Management Objectives a minimum acceptable level of achievement and may set forth a formula for determining the number of shares of Restricted Stock on which restrictions will terminate if performance is at or above the minimum level, but falls short of full achievement of the specified Management Objectives. | |
(f) Any such grant or sale of Restricted Stock may require that any or all dividends or other distributions paid thereon during the period of such restrictions be automatically deferred and reinvested in additional shares of Restricted Stock, which may be subject to the same restrictions as the underlying award. | |
(g) Each grant or sale of Restricted Stock will be evidenced by an Evidence of Award and will contain such terms and provisions, consistent with this Plan, as the Board may approve. Unless otherwise directed by the Board, all certificates representing shares of Restricted Stock will be held in custody by the Company until all restrictions thereon will have lapsed, together with a stock power or powers executed by the Participant in whose name such certificates are registered, endorsed in blank and covering such Shares. |
(a) Each such grant or sale will constitute the agreement by the Company to deliver Common Shares or cash to the Participant in the future in consideration of the performance of services, but subject to the fulfillment of such conditions (which may include the achievement of Management Objectives) during the Restriction Period as the Board may specify. If a grant of Restricted Stock Units specifies that the Restriction Period will terminate only upon the achievement of Management Objectives, such Restriction Period may not terminate sooner than one year from the Date of Grant. Each grant may specify in respect of such Management Objectives a minimum acceptable level of achievement and may set forth a formula for determining the number of shares of Restricted Stock on which restrictions will terminate if performance is at or above the minimum level, but falls short of full achievement of the specified Management Objectives. | |
(b) Each such grant or sale may be made without additional consideration or in consideration of a payment by such Participant that is less than the Market Value per Share at the Date of Grant. | |
(c) If the Restriction Period lapses by the passage of time, each such grant or sale will be subject to a Restriction Period of not less than three years, as determined by the Board at the Date of Grant, and may provide for the earlier lapse or other modification of such Restriction Period in the event of a change of control, as may be defined in an Evidence of Award. | |
(d) During the Restriction Period, the Participant will have no right to transfer any rights under his or her award and will have no rights of ownership in the Restricted Stock Units and will have no right to vote them, but the Board may at the Date of Grant, authorize the payment of dividend equivalents on such Restricted Stock Units on either a current or deferred or contingent basis, either in cash or in additional Common Shares. | |
(e) Each grant or sale of Restricted Stock Units will be evidenced by an Evidence of Award and will contain such terms and provisions, consistent with this Plan, as the Board may approve. |
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(a) Each grant will specify the number of Performance Shares or Performance Units to which it pertains, which number may be subject to adjustment to reflect changes in compensation or other factors;provided,however, that no such adjustment will be made in the case of a Covered Employee where such action would result in the loss of the otherwise available exemption of the award under Section 162(m) of the Code. | |
(b) The Performance Period with respect to each Performance Share or Performance Unit will be such period of time (not less than three years), commencing with the Date of Grant as will be determined by the Board at the time of grant which may be subject to earlier lapse or other modification in the event of a change of control, as may be defined in an Evidence of Award. | |
(c) Any grant of Performance Shares or Performance Units will specify Management Objectives which, if achieved, will result in payment or early payment of the award, and each grant may specify in respect of such specified Management Objectives a minimum acceptable level of achievement and will set forth a formula for determining the number of Performance Shares or Performance Units that will be earned if performance is at or above the minimum level, but falls short of full achievement of the specified Management Objectives. The grant of Performance Shares or Performance Units will specify that, before the Performance Shares or Performance Units will be earned and paid, the Board must certify that the Management Objectives have been satisfied. | |
(d) Each grant will specify the time and manner of payment of Performance Shares or Performance Units that have been earned. Any grant may specify that the amount payable with respect thereto may be paid by the Company in cash, in Common Shares or in any combination thereof and may either grant to the Participant or retain in the Board the right to elect among those alternatives. | |
(e) Any grant of Performance Shares may specify that the amount payable with respect thereto may not exceed a maximum specified by the Board at the Date of Grant. Any grant of Performance Units may specify that the amount payable or the number of Common Shares issued with respect thereto may not exceed maximums specified by the Board at the Date of Grant. | |
(f) The Board may at the Date of Grant of Performance Shares, provide for the payment of dividend equivalents to the holder thereof on either a current or deferred or contingent basis, either in cash or in additional Common Shares. | |
(g) Each grant of Performance Shares or Performance Units will be evidenced by an Evidence of Award and will contain such other terms and provisions, consistent with this Plan, as the Board may approve. |
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(a) Each grant of Option Rights awarded pursuant to this Section 9 will be upon terms and conditions consistent with Section 4 of this Plan and will be evidenced by an Evidence of Award in such form as will be approved by the Board. Each grant will specify an Option Price per share, which will not be less than the Market Value per Share on the day immediately preceding the Date of Grant. Each such Option Right granted under the Plan will expire not more than 10 years from the Date of Grant and will be subject to earlier termination as hereinafter provided. Unless otherwise determined by the Board, such Option Rights will be subject to the following additional terms and conditions: |
(i) | Each grant will specify the number of Common Shares to which it pertains subject to the limitations set forth in Section 3 of this Plan. | |
(ii) | If a Non-Employee Director subsequently becomes an employee of the Company or a Subsidiary while remaining a member of the Board, any Option Rights held under the Plan by such individual at the time of such commencement of employment will not be affected thereby. | |
(iii) | Option Rights may be exercised by a Non-Employee Director only upon payment to the Company in full of the Option Price of the Common Shares to be delivered. Such payment will be made in cash or in Common Shares then owned by the optionee for at least six months, or in a combination of cash and such Common Shares. |
(b) Non-Employee Directors, pursuant to this Section 9, may be awarded, or may be permitted to elect to receive, pursuant to procedures established by the Board, all or any portion of their annual retainer, meeting fees or other fees in Common Shares in lieu of cash. | |
(c) Each grant or sale of Appreciation Rights pursuant to this Section 9 will be upon terms and conditions consistent with Section 5 of this Plan. | |
(d) Each grant or sale of Restricted Stock pursuant to this Section 9 will be upon terms and conditions consistent with Section 6 of this Plan. | |
(e) Each grant or sale of Restricted Stock Units pursuant to this Section 9 will be upon terms and conditions consistent with Section 7 of this Plan. | |
(f) Non-Employee Directors may be granted, sold, or awarded other awards as contemplated by Section 10 of this Plan. |
(a) The Board may, subject to limitations under applicable law, grant to any Participant such other awards that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, Common Shares or factors that may influence the value of such shares, including, without limitation, convertible or exchangeable debt securities, other rights convertible or exchangeable into Common Shares, purchase rights for Common Shares, awards with value and payment contingent upon performance of the Company or specified Subsidiaries, affiliates or other business units thereof or any other factors designated by the Board, and awards valued by reference to the book value of Common Shares or the value of securities of, or the performance of specified Subsidiaries or affiliates or other business units of the Company. The Board shall determine the terms and conditions of such |
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awards. Common Shares delivered pursuant to an award in the nature of a purchase right granted under this Section 10 shall be purchased for such consideration, paid for at such time, by such methods, and in such forms, including, without limitation, cash, Common Shares, other awards, notes or other property, as the Board shall determine. | |
(b) Cash awards, as an element of or supplement to any other award granted under this Plan, may also be granted pursuant to this Section 10 of this Plan. | |
(c) The Board may grant Common Shares as a bonus, or may grant other awards in lieu of obligations of the Company or a Subsidiary to pay cash or deliver other property under this Plan or under other plans or compensatory arrangements, subject to such terms as shall be determined by the Board. |
(a) Except as otherwise determined by the Board, no Option Right, Appreciation Right or other derivative security granted under the Plan shall be transferable by the Participant except by will or the laws of descent and distribution. Except as otherwise determined by the Board, Option Rights and Appreciation Rights will be exercisable during the Participant’s lifetime only by him or her or, in the event of the Participant’s legal incapacity to do so, by his or her guardian or legal representative acting on behalf of the Participant in a fiduciary capacity under state law and/or court supervision. | |
(b) The Board may specify at the Date of Grant that part or all of the Common Shares that are (i) to be issued or transferred by the Company upon the exercise of Option Rights or Appreciation Rights, upon the termination of the Restriction Period applicable to Restricted Stock Units or upon payment under any grant of Performance Shares or Performance Units or (ii) no longer subject to the substantial risk of forfeiture and restrictions on transfer referred to in Section 6 of this Plan, will be subject to further restrictions on transfer. |
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(a) This Plan will be administered by the Board, which may from time to time delegate all or any part of its authority under this Plan to the Compensation and Governance Committee of the Board (or a subcommittee thereof), as constituted from time to time. To the extent of any such delegation, references in this Plan to the Board will be deemed to be references to such committee or subcommittee. A majority of the committee (or subcommittee) will constitute a quorum, and the action of the members of the committee (or subcommittee) present at any meeting at which a quorum is present, or acts unanimously approved in writing, will be the acts of the committee (or subcommittee). | |
(b) The interpretation and construction by the Board of any provision of this Plan or of any agreement, notification or document evidencing the grant of Option Rights, Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units or other awards pursuant to Section 10 of this Plan and any determination by the Board pursuant to any provision of this Plan or of any such agreement, notification or document will be final and conclusive. No member of the Board will be liable for any such action or determination made in good faith. | |
(c) The Board or, to the extent of any delegation as provided in Section 16(a), the committee, may delegate to one or more of its members or to one or more officers of the Company, or to one or more agents or advisors, such administrative duties or powers as it may deem advisable, and the Board, the committee, or any person to whom duties or powers have been delegated as aforesaid, may employ one or more persons to render advice with respect to any responsibility the Board, the committee or such person may have under the Plan. The Board or the committee may, by resolution, authorize one or more officers of the Company to |
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do one or both of the following on the same basis as the Board or the committee: (i) designate employees to be recipients of awards under this Plan; (ii) determine the size of any such awards;provided,however, that (A) the Board or the Committee shall not delegate such responsibilities to any such officer for awards granted to an employee who is an officer, Director, or more than 10% beneficial owner of any class of the Company’s equity securities that is registered pursuant to Section 12 of the Exchange Act, as determined by the Board in accordance with Section 16 of the Exchange Act; (B) the resolution providing for such authorization sets forth the total number of Common Shares such officer(s) may grant; and (iii) the officer(s) shall report periodically to the Board or the committee, as the case may be, regarding the nature and scope of the awards granted pursuant to the authority delegated. |
(a) The Board may at any time and from time to time amend the Plan in whole or in part;provided,however, that any amendment which must be approved by the shareholders of the Company in order to comply with applicable law or the rules of the New York Stock Exchange or, if the Common Shares are not traded on the New York Stock Exchange, the principal national securities exchange upon which the Common Shares are traded or quoted, will not be effective unless and until such approval has been obtained. | |
(b) The Board will not, without the further approval of the shareholders of the Company, authorize the amendment of any outstanding Option Right to reduce the Option Price. Furthermore, no Option Right will be cancelled and replaced with awards having a lower Option Price without further approval of the shareholders of the Company. This Section 17(b) is intended to prohibit the repricing of “underwater” Option Rights and will not be construed to prohibit the adjustments provided for in Section 12 of this Plan. | |
(c) The Board may condition the grant of any award or combination of awards authorized under this Plan on the surrender or deferral by the Participant of his or her right to receive a cash bonus or other compensation otherwise payable by the Company or a Subsidiary to the Participant. | |
(d) If permitted by Section 409A of the Code, in case of termination of employment by reason of death, disability or normal or early retirement, or in the case of unforeseeable emergency or other special circumstances, of a Participant who holds an Option Right or Appreciation Right not immediately exercisable in full, or any shares of Restricted Stock as to which the substantial risk of forfeiture or the prohibition or restriction on transfer has not lapsed, or any Restricted Stock Units as to which the Restriction Period has not been completed, or any Performance Shares or Performance Units which have not been fully earned, or any other awards made pursuant to Section 10 subject to any vesting schedule or transfer restriction, or who holds Common Shares subject to any transfer restriction imposed pursuant to Section 11(b) of this Plan, the Board may, in its sole discretion, accelerate the time at which such Option Right, Appreciation Right or other award may be exercised or the time at which such substantial risk of forfeiture or prohibition or restriction on transfer will lapse or the time when such Restriction Period will end or the time at which such Performance Shares or Performance Units will be deemed to have been fully earned or the time when such transfer restriction will terminate or may waive any other limitation or requirement under any such award. | |
(e) This Plan will not confer upon any Participant any right with respect to continuance of employment or other service with the Company or any Subsidiary, nor will it interfere in |
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any way with any right the Company or any Subsidiary would otherwise have to terminate such Participant’s employment or other service at any time. | |
(f) To the extent that any provision of this Plan would prevent any Option Right that was intended to qualify as an Incentive Stock Option from qualifying as such, that provision will be null and void with respect to such Option Right. Such provision, however, will remain in effect for other Option Rights and there will be no further effect on any provision of this Plan. | |
(g) The Board may amend the terms of any award theretofore granted under this Plan prospectively or retroactively, but subject to Section 12 above, no such amendment shall impair the rights of any Participant without his or her consent. The Board may, in its discretion, terminate this Plan at any time. Termination of this Plan will not affect the rights of Participants or their successors under any awards outstanding hereunder and not exercised in full on the date of termination. |
(a) Forfeit any award granted under the Plan then held by the Participant; | |
(b) Return to the Company, in exchange for payment by the Company of any amount actually paid therefor by the Participant, all Common Shares that the Participant has not disposed of that were offered pursuant to this Plan within a specified period prior to the date of the commencement of such Detrimental Activity, and | |
(c) With respect to any Common Shares so acquired that the Participant has disposed of, pay to the Company in cash the difference between: |
(i) Any amount actually paid therefor by the Participant pursuant to this Plan, and | |
(ii) The Market Value per Share of the Common Shares on the date of such acquisition. |
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(a) No award under this Plan may be exercised by the holder thereof if such exercise, and the receipt of cash or stock thereunder, would be, in the opinion of counsel selected by the Board, contrary to law or the regulations of any duly constituted authority having jurisdiction over this Plan. | |
(b) Absence on leave approved by a duly constituted officer of the Company or any of its Subsidiaries shall not be considered interruption or termination of service of any employee for any purposes of this Plan or awards granted hereunder, except that no awards may be granted to an employee while he or she is absent on leave. | |
(c) No Participant shall have any rights as a stockholder with respect to any shares subject to awards granted to him or her under this Plan prior to the date as of which he or she is actually recorded as the holder of such shares upon the stock records of the Company. | |
(d) If any provision of the Plan is or becomes invalid, illegal or unenforceable in any jurisdiction, or would disqualify the Plan or any award under any law deemed applicable by the Board, such provision shall be construed or deemed amended or limited in scope to conform to applicable laws or, in the discretion of the Board, it shall be stricken and the remainder of the Plan shall remain in full force and effect. |
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POLYONE CORPORATION
C/O EQUISERVE TRUST COMPANY N.A.
P.O. BOX 8694
EDISON, NJ 08818-8694
Your vote is important. Casting your vote in one of the three ways described on this instruction
card votes all common shares of PolyOne Corporation that you are entitled to vote.
Please consider the issues discussed in the Proxy Statement and cast your votes by:
Your vote is important. Please vote immediately.
Vote-by-Internet
Log on to the Internet and
go to http://www.eproxyvote.com/pol
OR
Vote-by-Telephone
Call toll-free
1-877-PRX-VOTE (1-877-779-8683)
You can vote by phone or via the Internet anytime prior to May 18, 2005 at 11:59 p.m. (EDT)
If you do so, you do not need to mail in your proxy card.
DETACH HERE IF YOU ARE RETURNING YOUR PROXY CARD BY MAIL
ZPYC31
x | Please mark votes as in this example. | #PYC |
This Proxy, when properly executed, will be voted in the manner directed. If no direction is made, this Proxy will be voted FOR all of the Director nominees listed below, FOR approval of the PolyOne Corporation Senior Executive Annual Incentive Plan and FOR the approval of the PolyOne Corporation 2005 Equity and Performance Incentive Plan.
1. | Election of Directors term to expire at next Annual Meeting. | |
Nominees: | ||
(01) J. Douglas Campbell, (02) Carol A. Cartwright, (03) Gale Duff-Bloom, (04) Wayne R. Embry, (05) Richard H. Fearon, (06) Robert A. Garda, (07) Gordon D. Harnett, (08) William F. Patient, (09) Thomas A. Waltermire, (10) Farah M. Walters. |
FOR ALL NOMINEES | o | o | WITHHELD FROM ALL NOMINEES |
o | ||
For all nominees, except as written above |
FOR | AGAINST | ABSTAIN | ||||||
2. | Proposal to approve the PolyOne Corporation Senior Executive Annual Incentive Plan. | o | o | o | ||||
3. | Proposal to approve the PolyOne Corporation 2005 Equity and Performance Incentive Plan. | o | o | o | ||||
Change of Address and/or Comments Mark Here | o | |||||||
I Will Attend the Meeting | o |
In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting or any adjournment thereof and matters incident to the conduct of the meeting.
The signer hereby revokes all Proxies previously given by the signer to vote at the meeting or any adjournments.
Please mark, sign, date and return this Proxy promptly using the enclosed envelope. Please sign exactly as the name appears on this card. When shares are held by joint tenants, both should sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by President or other authorized officer. If a partnership, please sign in partnership name by general partner.
Signature: | Date: | Signature: | Date: | |||||||||||
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March 30, 2005
To Our Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders to be held at The Forum Conference and Education Center, 1375 E. Ninth Street, Cleveland, Ohio, at 9:00 a.m. on Thursday, May 19, 2005.
The Notice of Annual Meeting of Shareholders and the Proxy Statement describe the matters to be acted upon at the meeting.
Regardless of the number of shares you own, your vote on these matters is important. Whether or not you plan to attend the meeting, we urge you to mark your choices on the attached proxy card and to sign, date and return it in the envelope provided. If you decide to vote in person at the meeting, you will have an opportunity to revoke your Proxy and vote personally by ballot.
If you plan to attend the meeting, please mark the box provided on the proxy card.
We look forward to seeing you at the meeting.
WILLIAM F. PATIENT
Chairman of the Board
DETACH HERE
ZPYC32
POLYONE CORPORATION
PROXY
ANNUAL MEETING OF SHAREHOLDERS, MAY 19, 2005
This Proxy is Solicited on Behalf of the Corporation’s Board of Directors
P R O X Y | The undersigned hereby appoints Thomas A. Waltermire and Wendy C. Shiba, and each of them jointly and severally, Proxies, with full power of substitution, to vote, as designated on the reverse side, all common shares of PolyOne Corporation held of record by the undersigned on March 21, 2005, at the Annual Meeting of Shareholders to be held on May 19, 2005, or any adjournment thereof. | |
The Board of Directors recommends a vote (1) “FOR” the election of the nominees to serve as directors, (2) “FOR” the approval of the PolyOne Corporation Senior Executive Annual Incentive Plan and (3) “FOR” the approval of the PolyOne Corporation 2005 Equity and Performance Incentive Plan. The shares represented by this Proxy will be voted as specified on the reverse side. If no direction is given in the space provided on the reverse side, this proxy will be voted “FOR” the election of the nominees specified on the reverse side, “FOR” the approval of the PolyOne Corporation Senior Executive Annual Incentive Plan and “FOR” the approval of the PolyOne Corporation 2005 Equity and Performance Incentive Plan. | ||
PLEASE VOTE, DATE AND SIGN THIS PROXY ON THE OTHER SIDE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
HAS YOUR ADDRESS CHANGED? | DO YOU HAVE ANY COMMENTS? | ||