THE CLOROX COMPANY STOCK OPTION PLAN (1977)
(Amended 10/16/80, 7/21/82, 6/21/83, 10/19/83,
9/18/85, 11/20/85, 7/15/87 and 11/19/93)
ARTICLE A -- PURPOSE
The purpose of The Clorox Company Stock Option Plan (1977) is
to encourage those key employees of The Clorox Company
(the "Company") and affiliated companies who are largely
responsible for the success and development of the business
to increase their proprietary interest in the Company by
the allotment and sale to them by the Company of shares of
Clorox Common Stock as provided in this Plan.
ARTICLE B -- SALE OF SHARES
The allotment and sale of shares of Clorox Common Stock
shall be made through the granting of options to purchase
said shares in accordance with and subject to the terms
and restrictions of this Plan. Such options may or may
not qualify as "Incentive Stock Options" under Section
422A of the Internal Revenue Code (as it may hereafter
from time to time be amended). (Amended 7/21/82).
ARTICLE C -- NUMBER OF SHARES TO BE SOLD THROUGH OPTIONS
The aggregate number of shares of Clorox Common Stock
which may be issued under all options to be granted
pursuant to this Plan shall not exceed one million
nine hundred thousand (1,900,000) shares. The shares
to be delivered upon exercise of options granted under
this Plan shall be made available at the discretion of
the Board of Directors of the Company (the "Board")
out of either authorized and unissued shares or
treasury shares. (Amended 10/19/83).
ARTICLE D -- ADMINISTRATION OF PLAN
1. This plan shall be administered by the committee of
the Board (the "Committee") designated by it for that
purpose. The Committee shall be composed of three or
more members of the Board who are not officers or
employees of the Company or an affiliated company, to
be appointed by the Board from time to time and to
serve at the pleasure of the Board.
2. It shall be the duty of the Committee to administer
this Plan in accordance with its provisions, to report
thereon not less than once each year to the Board, and
to make such recommendations of amendments or otherwise
as it may deem necessary. A decision by a majority of
the Committee shall govern all actions of the Committee.
Members of the Committee shall not be eligible to receive
options under this Plan while serving, but may exercise
options previously granted in accordance with the terms
of said options.
3. Subject to the express provisions of this Plan, the
Committee shall have authority to grant options, to
construe the respective option agreements and this Plan,
to determine the terms and provisions of the respective
option agreements including the setting of the dates
when the option or parts of it may be exercised, and
to make all other determinations necessary or advisable
for administering this Plan. If an option is intended
to qualify as an Incentive Stock Option, the option
agreement shall contain those terms and conditions
necessary to so qualify said option. (Amended 7/21/82).
4. The Committee may establish from time to time such
regulations, provisions, and procedures, within the
terms of this Plan as, in its opinion, may be advisable
in the administration of this Plan.
5. The Committee may designate the Secretary of the
Company or other employees of the Company to assist
the Committee in the administration of this Plan and
may grant authority to such persons to execute
documents on behalf of the Committee.
6. The Committee shall have the authority to grant options
consistent with the terms and conditions of this Plan,
but which may contain other provisions satisfying the
conditions of any applicable law or regulation
affording the option or the optionee favorable
treatment for specified purposes.
ARTICLE E -- PARTICIPATION
The Committee shall select those key employees of the Company
and affiliated companies who, in the opinion of the Committee,
have demonstrated a capacity for contributing in a
substantial measure to the success of the Company, and
shall determine the number of shares with respect to which
options are to be granted to each.
ARTICLE F -- OPTION PRICE
The option price shall be established by the Committee as of
the date the option is granted and shall be not less than
100% of the fair market value of such shares on the day
such option is granted.
ARTICLE G -- CONDITION OF OPTIONS
The fact that an employee has been granted an option under
this Plan shall not affect or qualify the right of the
employer to terminate his employment at any time.
ARTICLE H -- NUMBER OF OPTIONS
More than one option may be granted to any employee
under this Plan.
ARTICLE I -- ADJUSTMENT
Appropriate adjustments in the number of shares which can be
issued (ARTICLE C), and in the numbers and option prices of
shares covered by outstanding options granted hereunder,
shall be made to give effect to any stock splits, stock
dividends, or other changes in the stock of the Company.
ARTICLE J -- EXERCISE OF OPTIONS
1. Any stock option granted by the committee shall have a
maximum life of ten (10) years from the date of grant.
2. No option granted under this Plan shall be exercisable
within one (1) year from the date of grant.
3. In case an optionee ceases to be an employee of the
Company or any of its affiliated companies while
holding an unexercised option:
(a) Any unexercisable portions of the option are then
void except in case of death of the optionee.
(b) Except in case of death or retirement of the
optionee, any exercisable portions of an option
shall terminate and be no longer exercisable
unless exercised before the expiration date
of the option or within three (3) months of
the date of such cessation, whichever is earlier.
(Amended 10/16/80).
4. When an employee retires, in accordance with the
provisions of any appropriate profit sharing or
retirement plan of the Company or any of its
affiliated companies, any options shall become
immediately exercisable at any time prior to the
expiration date of the options or within a period
following the employee's retirement date specified
from time to time by the Committee, whichever
period is shorter. Termination of employment
under the permanent disability settlement
provision of any such plan shall be deemed the
same as retirement. (Amended 11/17/93)
If the Compensation Committee changes the time
period following Retirement in which an Option
may be exercised, the change will not (i) have the
effect of shortening the exercise period of Options
held by persons who retired before the effective
date of the Compensation Committee's action, to (ii)
make exercisable any Option which had expired pursuant
to an exercise time period previously set by the
Compensation Committee. (Added 11/17/93)
5. Options are not transferable otherwise than by will
or by the laws of descent and distribution.
6. In case of the death of the optionee while an employee
of the Company or any of its affiliated companies,
the persons to whom the options have been transferred
by will or by the laws of descent and distribution
shall have the privilege of exercising remaining
options or parts thereof (whether or not exercisable
on the date of the death of such employee) at any
time prior to the expiration date of the option or
within one (1) year of the date of death of the
optionee, whichever is earlier. Otherwise, any option
may be exercised only by the optionee personally or
by his legal representative.
7. The Committee may, in its sole discretion, permit an
option which is being exercised either (a) by an
optionee who has retired due to permanent disability or
(b) after the death of the optionee, as provided in
paragraphs 4 and 6 above, to be surrendered, in lieu
of exercise, for an amount equal to the difference
between the option price and the fair market value,
if higher, of shares of Clorox Common Stock on the
day the option is surrendered, payment to be made
in shares of Clorox Common Stock valued at their
fair market value on such date, cash or a combination
thereof, in such proportion and upon such other terms
and conditions as shall be determined by the Committee.
The difference between the number of shares subject to
options so surrendered and the number of shares,
if any, issued upon exercise shall represent shares
which shall not be available for granting future options
under this Plan.
8. The Committee may, in its sole discretion, permit an
option which is being exercised by an optionee who is
subject to the provisions of Section 16(b) of the
Securities Exchange Act of 1934, as amended, to be
surrendered in part in lieu of exercise and exercised
in part as follows: not less than 50% of the number
of shares being exercised must be paid for at the
option price; and the remaining number of shares
may be surrendered for an amount per share equal
to the difference between the option price and the
fair market value of shares of Clorox Common Stock
on the day the option is so surrendered, payable by
the Company in cash but in no event shall the amount
paid per share exceed 100% of the option price of the
shares so surrendered. The number of shares so
surrendered, as well as the shares issued, shall
represent shares which shall not be available for
granting future options under this Plan.
9. Notwithstanding the foregoing, time spent on leave of
absence shall be considered as employment for the
purposes of this Plan. Leave of absence means any
period of time away from work granted to an employee
by the employer because of illness or injury or
because of other reasons satisfactory to the employer.
10. A certificate or certificates for the shares purchased
through the exercise of options will be issued in
regular course after exercise of the option and
payment therefore The Company reserves the right
from time to time to suspend the exercise of any
option for a period not to exceed thirty (30) days
where such suspension is required for corporate
purposes. No such suspension shall extend the
life of the option beyond its expiration date and,
in no event, will there be a suspension in the five
calendar days immediately preceding the expiration
date.
11. On exercise of an option, payment of the option price
may be made (a) in cash or (b) in shares of Clorox
Common Stock valued at their fair market value on
the date of such payment, or a combination thereof.
Certificate(s) for such shares tendered in payment
shall be in a form for good delivery and the optionee
must have held the tendered shares for at least one
year. In addition, after July 1, 1983, (i) only an
optionee who is not at the time subject to the
provisions of Section 16(b) of the Securities Exchange
Act of 1934, as amended, may pay the option price in
shares receivable upon exercise of the option being
exercised, valued at their fair market value on the
date of such payment plus cash for any resulting
fraction of a share, and only with respect to options
outstanding on June 30, 1983; and (ii) no option
granted will be exercisable in the manner described in
(i) hereof. (Amended 6/21/83).
12. The Company shall have the power to withhold, or require
an optionee to remit to the Company, an amount sufficient
to satisfy any federal, state, local or foreign
withholding tax requirements on any non-qualified stock
option exercised pursuant to the Plan.
To the extent permissible under applicable tax,
securities, and other laws, the Company may, in its
sole discretion, permit the optionee to satisfy a tax
withholding requirement by directing the Company to
apply shares of stock to which the optionee is entitled
as a result of the exercise of an option other than an
Incentive Stock Option, to satisfy such requirement.
(Added 7/15/87).
ARTICLE K -- ADDITIONAL PROVISIONS
1. The Board may at any time repeal this Plan and may
amend it from time to time. The optionee and the
Company shall be bound by any such amendments as of
their effective dates, but if any outstanding options
are affected, notice thereof shall be given to the
holders of such options and such amendments shall not
be applicable to any option without the consent of the
optionee. If this Plan is repealed in its entirety,
any unexercised option shall continue to be exercisable
in accordance with its terms.
2. Should any option expire, cease to be exercisable or
be otherwise canceled without being fully exercised,
the number of shares as to which the option has not
been exercised shall thereupon continue to be reserved
for, and be subject to, the granting of options under
this Plan. Such shares may be optioned again to the
employee who had been granted such canceled option
or to other employees at an option price, determined
in accordance with Article F, which may be lower than,
the option price of such canceled option.
3. No shares shall be issued or delivered upon the
exercise of any option unless and until, in the opinion
of Counsel for the Company, any applicable registration
requirements of the Securities Act of 1933, as amended,
any applicable listing requirements of any national
securities exchange on which stock of the same class
is then listed and any other requirements of law or of
any regulatory body having jurisdiction over such
issuance or delivery shall have been fully complied
with.
4. "Affiliated company" means any company controlling,
controlled by or under common control with the Company.
ARTICLE L -- CONSENT OF OPTIONEE
Every optionee shall be bound by the terms and restrictions
of this Plan and his acceptance of an option shall constitute
an agreement between him and the Company or an affiliated
company and any successors in interest to any of them.
ARTICLE M -- PERFORMANCE UNITS (Add 10/16/80)
1. The Committee may from time to time, and subject to the
provisions of this Plan and such other terms and
conditions as the Board or the Committee may prescribe,
grant one or more performance units to any optionee
under the 1977 Plan with respect to options granted
thereunder at any time or to any optionee under the
1968 Plan with respect to outstanding options granted
thereunder and outstanding as of October 17, 1980.
Performance units shall be related (on a one-for-one
basis and with the effect herein set forth) to shares
which are subject to an option granted on or after
October 17, 1980 and to shares which are subject to
an option granted under either Plan outstanding as
of October 17, 1980 but only to the extent then
unexercised.
2. Upon the exercise of any option to which performance
units have been related by grant of the Committee,
there shall be canceled that number of performance
units equal to the sum of the shares issued on
exercise plus the number of shares surrendered in lieu
of exercise.
3. The value of a performance unit and the method of
assigning the value shall be determined by the Committee
at the time of the granting of the performance unit.
The value to be paid shall be based upon the achievement
of criteria of performance over an award period, such
criteria and period to be determined by the Committee
at the time of grant. In its administration of this
Plan, the Committee shall have full discretion to
change from time to time the criteria of performance
with respect to outstanding performance units in
recognition of conditions, events or transactions not
foreseen at the time of grant.
4. At the expiration of the award period determined by
the Committee for each performance unit, the
performance unit value, if any, shall be credited
to an account for the benefit of the optionee who
shall thereafter have a fully vested interest in
that value, with payment deferred as hereafter
provided. Interest shall be credited to that
account at a rate fixed from time to time by the
Committee. Thereafter, if the option to purchase
the related shares is exercised or if the related
shares are surrendered in lieu of exercise, there
shall be charged to the optionee's account the
value of that number of performance units (plus
any interest accrued thereon) equal to the sum of
the shares issued on exercise plus the number of
shares surrendered in lieu of exercise.
5. Payment of the vested performance unit values
(plus any interest accrued thereon) shall be
deferred until the earliest of the following dates
and be made in the manner respectively set forth:
(a) At the expiration of the original term of the
option to purchase the related shares, in the
discretion of the Committee, the value may be
paid up to approximately one-half in full shares of
Clorox Common Stock valued at their fair market
value on the date of such payment and the balance
in cash, or all in cash.
(b) In case an optionee ceases to be an employee of
the Company or any of its affiliated companies,
except in case of death or retirement of the
optionee, in five equal annual cash payments
commencing on the date of such cessation unless
the Committee, in its sole discretion, fixes a
shorter term;
(c) On retirement of the optionee, in cash at any
time elected by the optionee within one (1) year
of the date of retirement;
(d) On death of the optionee, in cash at anytime
elected by the optionee's legal representative
within one (1) year of the date of death.
If vested performance unit values are paid as above,
the number of shares subject to related stock options
shall represent shares which shall not be available for
granting future options under this Plan.
ARTICLE N -- DURATION OF PLAN
This Plan will terminate on October 31, 1987 unless an earlier
termination date is fixed by action of the Board, but any
options granted prior thereto may be exercised in accordance
with their terms.
ARTICLE O -- INCENTIVE STOCK OPTIONS (Add 7/21/82)
1. The provisions of this Article O shall govern all
options granted after July 1, 1982 and designated
by the Committee as "Incentive Stock Options" as defined
in Section 422A of the Internal Revenue Code.
2. Shares acquired pursuant to exercise of an Incentive
Stock Option will be entitled to treatment as such
only if:
(a) no disposition of such shares is made by the
optionee within two (2) years from the date of
granting such option nor within one (1) year
from the date of exercising such option
(i.e., the date shown on the stock certificate;
and (Added 11/20/85)
(b) except in the case of total and permanent
disability, as defined in Article J.4, and
in the case of death, the optionee, at all times
during the period beginning on the date of granting
such option and ending on the day three (3)
months before the date of exercising such
option, was an employee of the company or of an
affiliated company; and (Added 11/20/85)
(c) in the case of total and permanent disability,
the three (3) months period is extended to one
(1) year; and (Added 11/20/85)
(d) in the case of death, the provisions of
Article J.6 apply. (Added 11/20/85)
3. "Incentive Stock Option" means an option designated
as such by the Committee and granted to an employee of
the Company or an affiliated company, provided:
(a) such option is granted under this Plan, as amended;
(b) such option is granted on or before August 8, 1987;
(c) such option by its terms is not exercisable after
the expiration of ten (10) years from the date
such option is granted;
(d) the option price under such option conforms to
Article F hereof;
(e) such option by its terms is not transferable by
the optionee otherwise than by will or the laws
of descent and distribution, and is exercisable
during the optionee's lifetime only by the
optionee;
(f) the optionee at the time such option is granted
does not own stock possessing more than ten (10)
percent of the total combined voting power of all
classes of stock of the Company or of an
affiliated company;
(g) such option by its terms is not exercisable while
there is outstanding any Incentive Stock Option
which was granted before the granting of such
option to the optionee; and
(h) the aggregate fair market value (as of the date
such option is granted) of Clorox Common Stock
covered by all Incentive Stock Options granted in
any calendar year to any optionee shall not
exceed $100,000 plus any unused limit carryover to
such year as defined in Section 422A(c) (4) of the
Internal Revenue Code.
4. In the event that the optionee acquires any shares of
stock pursuant to the exercise of an Incentive Stock
Option, the optionee shall notify the Company within
30 days of any disposition (whether by sale, exchange,
gift, or any other transfer of legal title) which he
shall make of any such shares within the one (1) year
period beginning on the day after the day of exercise
or within the two (2) year period beginning on the day
after the day of granting such option.
5. If any provision of this plan is in conflict with this
Article O, the provision of this Article O shall prevail
with respect to Incentive Stock Options.
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