ASHLAND INC.
1995 PERFORMANCE UNIT PLAN
(As amended January 27, 1999)
1. PURPOSE
The purpose of this Ashland Inc. 1995 Performance Unit Plan (the
"Plan") is to further the long-term profitable growth of Ashland by
offering a long-term incentive in addition to current compensation to
eligible employees who will be largely responsible for such growth to the
benefit of the Ashland shareholders. It is expected that this plan will
encourage such employees to remain with Ashland and will also encourage
qualified persons to seek and accept employment with Ashland.
2. DEFINITIONS
Terms not otherwise defined herein shall have the following
meanings:
(a) "Ashland" means Ashland Inc., its divisions and subsidiaries.
(b) "Board" means the Board of Directors of Ashland Inc.
(c) "Change in Control" shall be deemed to occur (1) upon the
approval of the shareholders of Ashland (or if such approval is not
required, upon the approval of the Board) of (A) any consolidation or
merger of Ashland in which Ashland is not the continuing or surviving
corporation or pursuant to which shares of Common Stock would be converted
into cash, securities or other property other than a merger in which the
holders of Common Stock immediately prior to the merger will have the same
proportionate ownership of Common Stock of the surviving corporation
immediately after the merger, (B) any sale, lease, exchange, or other
transfer (in one transaction or a series of related transactions) of all or
substantially all the assets of Ashland or (C) adoption of any plan or
proposal for the liquidation or dissolution of Ashland, (2) when any
"person" (as defined in Section 3(a)(9) or 13(d) of the Exchange Act),
other than Ashland Inc. or any subsidiary or employee benefit plan or trust
maintained by Ashland Inc. or any of its subsidiaries, shall become the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of more than 15% of the Common Stock outstanding at
the time, without the approval of the Board, or (3) if at any time during a
period of two consecutive years, individuals who at the beginning of such
period constituted the Board shall cease for any reason to constitute at
least a majority thereof, unless the election or the nomination for
election by Ashland's shareholders of each new director during such
two-year period was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning of such
two-year period.
(d) "Code" means the Internal Revenue Code of 1986, as amended
from time to time.
(e) "Committee" means the Personnel and Compensation Committee of
the Board.
(f) "Common Stock" means the common stock, $1.00 par value, of
Ashland Inc.
(g) "Employee" means an employee selected for participation in the
Plan as set forth in Section 5.
(h) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(i) "Fair Market Value" means, as of any specified date (or, if a
weekend or holiday, the next preceding business day), the closing price of
a share of Common Stock, as reported on the Composite Tape for New York
Stock Exchange issues.
(j) "Participant" means any Employee who receives a Performance
Unit Award under the Plan for a Performance Period.
(k) "Performance Goals" mean performance goals as may be
established in writing by the Committee which may be based on earnings,
stock price, return on equity, return on investment, total return to
shareholders, economic value added, debt rating or achievement of business
or operational goals, such as drilling or exploration targets or profit per
barrel. Such goals may be absolute in their terms or measured against or in
relationship to other companies comparably or otherwise situated. Such
performance goals may be particular to an Employee or the division,
department, branch, line of business, subsidiary or other unit in which the
Employee works and/or may be based on the performance of Ashland generally.
(l) "Performance Period" means the period of time designated by
the Committee applicable to a Performance Unit Award during which the
Performance Goals shall be measured.
(m) "Performance Unit Award" means an award made pursuant to the
provisions of this Plan, the payment of which is contingent upon attainment
of Performance Goals.
3. SHARES: ADJUSTMENTS IN THE EVENT OF CHANGES IN CAPITALIZATION
(a) Shares Authorized for Issuance. There shall be reserved for
issuance under the Plan 2,200,000 shares of Common Stock, subject to
adjustment pursuant to subsection (b) below. Such shares shall be
authorized but unissued shares of Common Stock.
(b) Adjustments in Certain Events. In the event of any change in
the outstanding Common Stock by reason of any stock split, share dividend,
recapitalization, merger, consolidation, reorganization, combination, or
exchange or reclassification of shares, split-up, split-off, spin-off,
liquidation or other similar change in capitalization, or any distribution
to common shareholders other than cash dividends, the number or kind of
shares that may be issued under the Plan shall be automatically adjusted to
that the proportionate interest of the Employees shall be maintained as
before the occurrence of such event.
4. ADMINISTRATION
Subject to the express provisions of this Plan, the Committee
shall have full authority to construe, interpret and administer this Plan,
to prescribe, amend and rescind rules and regulations relating to the Plan,
to make Performance Unit Awards, to determine the terms, provisions and
conditions of the respective Performance Unit Awards (which need not be
identical) and to make all other determinations necessary or advisable for
the Plan's administration. Decisions of the Committee shall be final,
conclusive and binding upon all parties.
5. ELIGIBILITY
Performance Unit Awards may be made only to regular, full-time,
salaried employees of Ashland as selected by the Committee. Any Employee
may receive one or more Performance Unit Awards as the Committee shall from
time to time determine, and such determinations may be different as to
different Employees and may vary as to different awards. Nothing contained
in this Plan shall be construed to limit the right of Ashland to grant
other forms of incentive compensation otherwise than under this Plan. The
Plan or the receipt of a Performance Unit Award shall not confer on any
individual any right to continue in the employ of Ashland or interfere in
any way with the right of Ashland to terminate his or her employment at any
time, with or without cause, despite the fact that such termination may
have an adverse impact on the Participant's receipt of payment of a
Performance Unit Award.
6. PERFORMANCE UNIT AWARDS
(a) The Performance Goals and Performance Period applicable to a
Performance Unit Award shall be set forth in writing by the Committee no
later than 120 days after the commencement of the Performance Period and
shall be communicated to the Employee. The Committee shall have the
discretion to later revise the Performance Goals solely for the purpose of
reducing or eliminating the amount of compensation otherwise payable upon
attainment of the Performance Goals; provided that the Performance Goals
and the amounts payable upon attainment of the Performance Goals may be
adjusted during any Performance Period to reflect promotions, transfers or
other changes in an Employee's employment so long as such changes are
consistent with the Performance Goals established for other Employees in
the same or similar positions.
(b) In making a Performance Unit Award, the Committee may take
into account an Employee's responsibility level, performance, cash
compensation level, incentive compensation awards and such other
considerations as it deems appropriate. Each Performance Unit Award shall
be established in dollars or shares of Common Stock, or a combination of
both, as determined by the Committee, and shall be based on the Employee's
base salary on the date of the Performance Unit Award. The original amount
of any Performance Unit Award shall not exceed 400% of the Employee's then
annual base salary; the amount paid out upon meeting the Performance Goals
shall not exceed the amount of such Performance Unit Award; and the total
amount of all Performance Unit Awards for a Performance Period shall not
exceed 2% of shareholders' equity as shown in Ashland's Annual Report to
Shareholders at the end of the fiscal year next preceding the commencement
of such Performance Period. In determining the amount of any Performance
Unit Award made, in whole or in part, in shares of Common Stock, the value
thereof shall be based on the Fair Market Value on the first day of the
Performance Period or on such other date as the Board shall determine.
(c) A Performance Unit Award shall terminate for all purposes if
the Employee does not remain continuously employed and in good standing
with Ashland until payment of such Performance Unit Award. An Employee (or
his or her beneficiaries or estate) whose employment was terminated because
of death, disability or retirement will receive a pro rata portion of the
payment of his or her award based upon the portion of the Performance
Period during which he or she was so employed so long as the Performance
Goals are subsequently achieved.
(d) Payment with respect to Performance Unit Awards will be made
to Employees on a date or dates fixed by the Committee. The amount of such
payment shall be determined by the Committee and shall be based on the
original amount of such Performance Unit Award adjusted to reflect the
attainment of the Performance Goals during the Performance Period. Payment
may be made in one or more installments and may be made wholly in cash,
wholly in shares of Common Stock or partly in cash and partly in such
shares, all at the discretion of the Committee.
In addition, Employees may be offered the opportunity to defer the
receipt of payment of a Performance Unit Award. Common Stock may be granted
(i) as a bonus for deferral, or (ii) as a bonus for retaining for a
specified period of time, Common Stock received in payment of a Performance
Unit Award, all under such terms as may be established by the Committee
from time to time. Notwithstanding, in no event shall the value of the
Common Stock granted as a bonus for deferral or retention exceed 20% of the
value of the Performance Unit Award so deferred or retained. Any and all
payments made under the Plan shall be subject to the applicable federal,
state or local taxes required by law to be withheld.
If payment of a Performance Unit Award established in dollars is
to be made in shares of Common Stock or partly in such shares, the number
of shares of Common Stock to be delivered to an Employee on any payment
date shall be determined by dividing (x) the amount payable by (y) the Fair
Market Value on the date the Board approves the Committee's decision to pay
the Performance Unit Award or on such other date as the Board shall
determine.
If payment of a Performance Unit Award established in shares of
Common Stock is to be made in cash or partly in cash, the amount of cash to
be paid to an Employee on any payment date shall be determined by
multiplying (x) the number of shares of Common Stock to be paid in cash on
such payment date with respect to such Performance Unit Award, by (y) the
Fair Market Value on the date the Board approves the Committee's decision
to pay the Performance Unit Award or on such other date as the Board shall
determine. Any payment may be subject to such restrictions and conditions
as the Committee may determine.
7. NONTRANSFERABILITY AND NO SHAREHOLDER RIGHTS
The right to receive payment of a Performance Unit Award shall not
be assigned or transferred in whole or in part, either directly or by
operation of law or otherwise (except by will or the laws of descent and
distribution) including, but not by way of limitation, execution, levy,
garnishment, attachment, pledge, bankruptcy or any other manner. The holder
of a Performance Unit Award payable in whole or in part in shares of Common
Stock shall have none of the rights of a shareholder with respect to such
award until shares of Common Stock shall have been registered in the name
of the person or persons receiving payment of such award on the transfer
books of Ashland upon such payment.
8. CHANGE IN CONTROL
Upon a Change in Control, in order to maintain a Participant's
rights under the Plan, there shall be an acceleration of any Performance
Period relating to any Performance Unit Award, and payment of any
Performance Unit Award shall be made in cash as soon as practicable after
such Change in Control based upon achievement of the Performance Goals
applicable to such award up to the date of the Change in Control. If such
Performance Unit Award was established in shares of Common Stock, the
amount of cash to be paid to an Employee with respect to the Performance
Unit Award shall be determined by multiplying (x) the number of shares of
Common Stock relating to such Performance Unit Award, by (y) the Fair
Market Value on the date of the Change in Control. Further, Ashland's
obligation with respect to such Performance Unit Award shall be assumed, or
new obligations substituted therefor, by the acquiring or surviving
corporation after such Change in Control. In addition, prior to the date of
such Change in Control, the Committee, in its sole judgment may make
adjustment to any Performance Unit Award as may be appropriate to reflect
such Change in Control.
9. GOVERNING LAW
The provisions of this Plan shall be interpreted and construed in
accordance with the laws of the Commonwealth of Kentucky.
10. AMENDMENT AND TERMINATION
The Plan shall be submitted to the shareholders for approval and
adoption on January 26, 1995 or such other date fixed for the next meeting
of shareholders or any adjournment or postponement thereof. Upon
shareholder approval, the Plan will become effective as of October 1, 1994.
Unless terminated sooner by the Committee, to the extent necessary to
ensure that Performance Unit Award payments be deductible under the Code,
this Plan shall terminate on, and no Performance Unit Awards shall be
granted after, the first meeting of shareholders occurring in calendar year
2000. Termination of the Plan shall not affect any awards made hereunder
which are outstanding on the date of termination and such awards shall
continue to be subject to the terms of the Plan notwithstanding its
termination. The Committee may amend, alter or terminate this Plan at any
time without the prior approval of the Board; provided, however, that the
Committee may not, without approval by the Board and the shareholders:
(i) increase the amount of securities that may be issued under the
Plan (except as provided in Section 3(b));
(ii) materially modify the requirements as to eligibility for
participation in the Plan; or
(iii) otherwise materially increase the benefits accruing the
Employees under the Plan.