EXHIBIT 10(g)
THIRD AMENDMENT TO THE
EMERSON ELECTRIC CO.
1993 INCENTIVE SHARES PLAN
1. Purpose. The 1993 Incentive Shares Plan (the "Plan") of Emerson
Electric Co. (the "Company"), is a part of a continuing program of key
executive compensation authorized by the Board of Directors of the Company
("Board") on April 5, 1977. On that date the Board approved an initial
performance shares plan which anticipated that it would be supplemented by a
further similar plan or plans, and subsequently it was supplemented by the
Company's 1981 Performance Shares Bonus Plan, the 1985 Performance Shares Bonus
Plan, and the Incentive Shares Plan adopted in 1988. This Plan, a continuation
of the initial plan, the 1981 Plan, the 1985 Plan, and the 1988 Incentive
Shares Plan has, as its purpose, to benefit the Company by increasing
motivation on the part of its management personnel in senior executive
positions who are materially important to the development of the Company's
business, by creating an incentive for them to remain in the employ of the
Company and to work to the very best of their abilities for the achievement of
the Company's strategic growth objectives. This purpose is intended to be
accomplished under the Plan by granting Incentive Shares of the Company's
Common Stock ("Common Stock") to such key personnel (in addition to their
annual cash compensation, including extra salary payments) which, if
performance objectives and/or service requirements with the Company are
achieved, will permit them to share in the Company's success.
2. Participants. Participants in the Plan shall be full time
employees of the Company, its subsidiaries, or any other entities in which the
Company has a significant equity or other interest as determined by the
Committee (such other entities hereinafter referred to as "affiliates"), or of
any subsidiary of its subsidiaries or affiliates, who may, but need not be,
officers of the Company or of its subsidiaries, affiliates or divisions, who
are determined by the Compensation and Human Resources Committee (the
"Committee") of the Board, in its discretion, to be senior management personnel
important to the growth of the Company, and to whom the Committee shall make
any award under the Plan.
3. Shares Covered by the Plan. The total number of Shares covered
by the Plan shall be 2,500,000 shares of Common Stock as presently constituted,
plus up to 700,000 shares reserved but not used under the 1988 Incentive Shares
Plan. This number shall be adjusted to reflect subsequent stock dividends,
stock splits, spin-offs, reverse stock splits and similar matters affecting
outstanding shares of Common Stock. Shares not exceeding this number may be
awarded as Performance Shares or Restricted Shares, each as hereinafter
defined, in the discretion of the Committee. In the event any award of Shares
is cancelled on account of termination of a Participant's employment, failure
to meet performance objectives, or for any other reason, the Committee may
again award the Shares cancelled to an existing or new Participant, unless
dividends have been paid on such Shares, in which case such Shares may not
again be awarded under the Plan.
4. Performance Shares; Performance Period. The Committee, in its
discretion, may award all or any part of the Shares covered by the Plan as
units representing Performance Shares. Performance Shares shall not be issued
at the time of award, but the award of units shall represent the right to
receive payment (as determined by the Committee pursuant to Section 6 hereof)
if specified performance objectives are achieved. The performance objectives
may be established from time to time by the Committee. Performance objectives
need not be the same in respect of all Participants and may be established
separately for the Company as a whole or for its various groups, divisions,
subsidiaries and affiliates, all as the Committee may determine, in its
discretion. The performance objectives may include growth in the Company's
earnings per share, increases in Company sales, increases in the sale or
profitability of a division, subsidiary or affiliate or any other growth
measure the Committee may adopt. Except as provided in Section 11, hereof the
performance period for which achievement of any performance objective shall be
determined shall not be less than three years.
Awards of Performance Shares may be conditioned on the Participant's
continued employment by the Company or a subsidiary or affiliate over the
performance period or in any other manner the Committee may determine.
5. Performance Share Awards. Performance Share Awards shall be
made pursuant to performance programs as follows:
(a) Performance Programs; Initial Grants. After the approval
of this Plan by the Board, the Committee shall establish one or more
performance programs each with a specified objective and a specified
performance period over which the specified objective is targeted for
achievement. Participants may be awarded Shares in any one or more of the
performance programs. Initial awards in any program shall be made to such
number of Participants as determined by the Committee. In making its
determination of who shall be Participants in any performance program the
Committee shall take into account such factors as the Participant's level
of responsibility, job performance, potential for growth, level and types
of compensation and such other factors as the Committee deems relevant.
(b) Subsequent Awards. During the term of the Plan additional
Performance Shares may be awarded (subject to the maximum number provided
for above) in the discretion of the Committee, either (i) to new
Participants in the Plan or (ii) if circumstances of significant promotion
or additional responsibility so warrant, to any one or more of the initial
Participants in the Plan. In respect of such additional awards the
Committee may make such adjustments therein as it may deem reasonable on
account of any lesser period of participation in the program by the holder
of any subsequent award.
(c) Notice of Awards. Upon the making of any award by the
Committee the Participant shall be advised of the number of Performance
Shares awarded and of the terms of the award.
6. Performance Share Payment. The payment amount which a holder of
Performance Shares shall be entitled to receive if the applicable targeted
performance objective is met shall be an amount equal to the market value of
one share of Common Stock on the date of the expiration of the applicable
performance period multiplied by the number of Performance Shares held. For
the purposes hereof market value as of any date shall be the value as of said
date as reasonably determined by the Committee.
Notwithstanding the provisions of the foregoing paragraph, the
Committee, in its discretion, may establish, at the time it establishes the
targeted performance objective, a minimum performance target and may provide
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for payment on a reduced scale if the targeted performance objective is not
achieved but the minimum performance target is met or exceeded. The Committee
may not increase the amount of payment that would otherwise be paid upon
attainment of a performance objective.
Payment amounts may be paid in shares of Common Stock, in cash, or any
combination thereof as determined by the Committee; provided, however, that in
no event shall the aggregate number of shares of Common Stock issued in respect
of Performance Shares plus the number of Restricted Shares issued under the
Plan exceed the number specified in Section 3 (or as said number may be
adjusted as hereinabove provided).
7. Time of Payment. Subject to the provisions of the following
paragraphs of this Section 7, distribution of amounts to which a Participant is
entitled, because the applicable targeted performance objective is met, shall
be made as soon as practicable after the holder of the Performance Shares
becomes entitled thereto, unless payment of the Performance Shares is subject
to specified vesting conditions after attainment of the performance objective,
in which case payment shall be delayed until such vesting conditions have been
satisfied.
Prior to receipt of any award of Performance Shares under the Plan, a
Participant shall be advised of the award proposed to be made and at such time
may make an election to have distribution of any amount such Participant may be
entitled to receive in respect of such Shares (whether in cash, in Common
Stock, or a combination thereof) deferred until such year as the Participant
may elect, after the year in which the amount would otherwise be paid, up to
and including the year of retirement, and at the same time (prior to the time
the award is made) may elect to have such amount paid in such deferred annual
installments over such years as the Participant shall then specify. If a
Participant elects any such deferral, the following rules shall apply to the
deferred payment:
(a) Such election shall be irrevocable.
(b) The right to such deferred payment shall be fully vested
and nonforfeitable but shall be nonassignable, and any attempted transfer
or assignment, or any pledge or other hypothecation of such right, shall
be void and of no effect.
(c) In the event of the death during the deferral period of a
Participant who has elected a deferred payment, the unpaid balance of the
deferred amount owing to such Participant at the time of death shall be
distributed to the Participant's estate within six months of the date of
death, irrespective of whether or not the deferral period elected has
expired.
(d) Until payment is made to a Participant of the full deferred
payment to which such Participant is entitled, the Company will accrue for
the account of the Participant during the period of deferral an amount
equal to the dividends per share paid on Common Stock during such period
multiplied by the number of Shares still unpaid and held for such
Participant's account in accordance with the deferred payment election.
At the time the Participant is entitled to receive any amount under the
Plan, in accordance with the election, there shall also be paid to such
Participant the accrued dividend equivalent amount, either in a lump sum
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or in deferred annual installments as specified by such Participant at the
time of the original deferral election.
Notwithstanding any election of any Participant to receive payment
under the Plan on a deferred basis as above provided, the Committee, in its
sole discretion, may, at any time, in respect of all or any one or more
Participants who have made such election, terminate such election and make
immediate distribution of the amount to which the Participant is entitled; and
the Committee, in its discretion, may amend the foregoing provisions hereof
relating to the election of deferred payments and the rules applicable thereto
if, in its judgment, the tax benefits intended by such provisions and rules
will not be adversely affected.
8. Conditions to Payments. Except as otherwise herein provided or
determined by the Committee, a Participant, in order to be entitled to receive
any payment on Performance Shares awarded, must be in the employ of the Company
or a subsidiary or affiliate of the Company (or a subsidiary of a subsidiary or
affiliate) on the expiration of the relevant performance period and must have
been continuously in the employ of the Company or a subsidiary or affiliate (or
a subsidiary of a subsidiary or affiliate) from the time of the award of the
Performance Shares except for leaves of absence which may be approved by the
Committee. No vested interest in any payment under the Shares shall accrue
during the term of the performance period and no payment in respect of the
Shares shall be required to be made to any Participant whose employment with
the Company or a subsidiary or affiliate (or a subsidiary of a subsidiary or
affiliate) is terminated, with or without cause, prior to the time such
Participant is entitled to receive a distribution hereunder; provided, however,
(a) that if a Participant in the Plan retires upon the attainment of age 65
prior to the time such Participant is to receive distribution on any
Performance Shares awarded, the amount of payment to such Participant shall be
pro-rated in such manner as the Committee shall reasonably determine, and
(b) that the Committee, in its absolute discretion, may make such pro-rata or
other payment (or no payment), as it may determine, to a Participant whose
employment terminates (on account of death, disability or otherwise) prior to
the time the Participant is entitled to receive distribution on Performance
Shares and prior to the Participant's retirement at age 65. If termination is
on account of death, the Committee may make payment of any distribution it
authorizes to the Participant's surviving spouse, heirs or estate, as the
Committee may determine.
9. Other Incentive Shares. In addition to Performance Shares the
Committee may grant to eligible Participants shares covered by the Plan which
are not subject to performance programs or performance objectives. Such other
share grants shall be Restricted Shares, forfeitable if the holder resigns or
is discharged from the employ of the Company (or a subsidiary or affiliate, or
a subsidiary of a subsidiary or affiliate, as the case may be) during a
Restriction Period specified by the Committee, which shall be not less than
three years from the date of the award. Such shares shall be forfeitable on
such other terms and conditions as may be specified by the Committee in an
award agreement which shall be signed by the Participant at the time of the
award. After the grant of any such award the Committee, in its discretion, may
waive any of the terms and conditions thereof and may reduce the Restriction
Period applicable thereto; provided, however, that the Committee shall not
reduce such period to less than three years; and provided further, however,
that in the event any Change of Control (as hereinafter defined) shall occur
the Restriction Period applicable to all Restricted Shares then outstanding
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shall be accelerated and be deemed to be satisfied so that the holders of such
Restricted Shares shall immediately, and without any action by the Committee,
hold said Shares fully vested and without any continuing restrictions thereon,
excepting, however, such restrictions, if any, as may then be applicable under
state or federal securities laws.
10. Committee Membership; Authority. The Plan shall be administered
by the members of the Committee so long as it qualifies under the plan
administration requirements of Rule 16b-3 under the Securities Exchange Act of
1934, as amended (the "1934 Act"), as in effect from time to time. The
Committee shall have plenary authority to interpret the Plan, to determine
awards and the terms thereof, to establish any rules or regulations relating to
the Plan which it determines to be appropriate, and to make any other
determination which it believes necessary or advisable for the proper
administration of the Plan. Its decisions in matters relating to the Plan
shall be final and conclusive on the Company and all Participants. In the
event the Committee, by reason of changes in its membership, shall no longer be
so qualified, the Board shall appoint a new committee to administer the Plan,
whose members shall cause the committee to qualify under the plan
administration requirements of Rule 16b-3.
11. Determination of Achievement of Objectives. The Committee, in
regard to any performance program adopted by it, shall determine whether any
performance objective of any program has been met. In making this
determination, the Committee shall apply the accounting results, as audited at
the end of any fiscal year by the Company's independent certified accountants,
but shall adjust such results for unusual, nonrecurring or extraordinary items
to the extent such adjustments were preestablished by the Committee under
Section 4. Prior to making a Performance Share payment, the Committee shall
certify in writing the achievement of the applicable performance objective(s)
and the amount of payments to be made to each Participant.
In the event of a Change in Control (as hereinafter defined)
Participants then holding awards of Performance Shares shall be entitled to
receive such Shares (or equivalent value), free of any conditions and as if the
specified performance periods had elapsed and the performance objectives
relating thereto had been fully achieved; and in this event the holders of
Performance Shares shall be entitled to full payment therefor, 50% in Common
Stock and 50% in cash, or in such other combination of stock and cash as
determined by the Committee. For the purpose hereof the date of the expiration
of the applicable performance period shall be deemed to be the date as of which
any Change of Control shall occur.
12. Amendment of Plan. The Committee shall have the authority to
make amendments and revisions of this Plan, provided that no amendments or
revisions of the Plan shall be made without the consent of the stockholders of
the Company if such amendment or revision would materially
(a) increase the benefits accruing to Participants under the
Plan, or
(b) increase the number of Shares which may be granted or
securities which may be issued under the Plan, or
(c) modify the requirements as to eligibility for participation
in the Plan.
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For the purpose of the preceding sentence, no revision shall be deemed
to effect any material increase in the benefits accruing to Participants under
the Plan unless, under rules, regulations or letter opinions of the Securities
and Exchange Commission, such amendment would cause the exemption provisions of
Rule 16b-3 under the 1934 Act to be inapplicable to the Plan.
13. Payments in Common Stock; Source of Stock. It is anticipated
that any shares of Common Stock delivered pursuant to the terms of the Plan
will be Treasury shares of the Company acquired prior to or during the term of
the Plan. The Committee, however, may instead utilize authorized but unissued
shares of Common Stock; and, subject to the approval of this Plan by the
stockholders of the Company, the Board and officers of the Company are
authorized to take such action as may be necessary to provide for the issuance
of any or all of the shares which may be necessary to satisfy the Company's
obligations hereunder and to cause said shares to be listed on the New York and
any other stock exchanges on which the Common Stock may at such time be listed.
Shares of Common Stock delivered to Participants hereunder in
satisfaction of Performance Share rights, and other Incentive Shares after the
release of any conditions applicable thereto may nonetheless thereafter be
restricted stock under the Securities Act of 1933, as presently amended, (the
"1933 Act") and the certificates for such Shares may have a legend imprinted
thereon restricting the resale, hypothecation or further transfer of said
shares except in a registered offering or pursuant to an available exemption
from registration.
14. Additional Provisions. The following additional terms and
provisions apply to the Plan:
(a) The award of Performance Shares to a Participant in the
Plan shall create no rights in such Participant as a shareholder of the
Company until such time and to the extent that the Participant is
delivered Shares of Common Stock in satisfaction of such Participant's
Performance Share units. Holders of other Incentive Shares granted
hereunder shall have such rights as are expressly provided for herein and
in the terms of the award.
(b) No adjustment shall be made in the Shares awarded on
account of cash dividends which may be paid, or other rights which may be
issued to, the holders of Common Stock during the term of the Plan except
as stated in subparagraph (c) below.
(c) In the event of stock dividends, stock splits, spin-offs,
reverse stock splits or similar matters affecting outstanding shares of
Common Stock during the term of the Plan, appropriate revision shall be
made (i) in the targeted growth objectives of performance programs, and
(ii) in the Shares awarded to reflect the effect of such stock dividend,
stock split, spin-off, reverse stock split or similar matter on the
interests of the Participants in the Plan.
(d) No Participant in the Plan shall have any right as a
Participant in the Plan to continue in the employ of the Company or of any
of its subsidiaries for any period of time, or any right to a continuation
of such Participant's present or any other rate of compensation; and such
rights and powers as the Company now has or which it may have in the
future to dismiss or discharge any Participant from employment or to
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change the assignments of any Participant are expressly reserved to the
Company.
(e) The Committee may require the Company to withhold from any
payment due to a Participant (under this Plan or otherwise) any amount
necessary to satisfy income tax withholding requirements in respect of any
payment due under this Plan; and for this purpose withhold cash and the
Shares deliverable in respect of Performance Shares. Alternatively, the
Committee may require the Participant to pay to the Company such cash
amount or additional cash amount as may be necessary to satisfy
withholding requirements in which case such Participant shall be entitled
to receive delivery of all Shares due hereunder. Notwithstanding anything
to the contrary contained herein, upon vesting of the Restricted Shares to
a Participant, the Company shall withhold sufficient shares to satisfy its
withholding obligations for federal, state and local income taxes on such
payment.
(f) "Change of Control" as used in this Plan shall mean:
(i) The purchase or other acquisition (other than from the
Company) by any person, entity or group of persons,
within the meaning of Section 13(d) or 14(d) of the
1934 Act, (excluding, for this purpose, the Company or
its subsidiaries or any employee benefit plan of the
Company or its subsidiaries), of beneficial ownership
(within the meaning of Rule 13d-3 under the 1934 Act)
of 20% or more of either the then-outstanding shares
of Common Stock or the combined voting power of the
Company's then-outstanding voting securities entitled
to vote generally in the election of directors; or
(ii) Individuals who, as of the date hereof, constitute the
Board (as of the date hereof, the "Incumbent Board")
cease for any reason to constitute at least a majority
of the Board, provided that any person who becomes a
director subsequent to the date hereof whose election,
or nomination for election by the Company's
stockholders, was approved by a vote of at least a
majority of the directors then comprising the
Incumbent Board (other than an individual whose
initial assumption of office is in connection with an
actual or threatened election contest relating to the
election of directors of the Company, as such terms
are used in Rule 14a-11 of Regulation 14A under the
1934 Act) shall be, for purposes of this section,
considered as though such person were a member of the
Incumbent Board; or
(iii) Approval by the stockholders of the Company of a
reorganization, merger or consolidation, in each case
with respect to which persons who were the
stockholders of the Company immediately prior to such
reorganization, merger or consolidation would not,
immediately thereafter, own more than 50% of,
respectively, the common stock and the combined voting
power entitled to vote generally in the election of
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directors of the reorganized, merged or consolidated
corporation's then-outstanding voting securities, or
of a liquidation or dissolution of the Company or of
the sale of all or substantially all of the assets of
the Company.
15. Term of Plan; Approval by Stockholders. The term of the Plan
shall be for the period from the date of its approval by the Board until such
time as the Board, in its discretion, elects to terminate the Plan or replace
the Plan with a successor Plan. During the term of the Plan awards of
Performance Shares may be made under performance programs with performance
periods extending beyond the end of the term of the Plan and other Incentive
Shares may be granted with conditions or restrictions extending beyond the end
of the term of the Plan; but no new award of any Incentive Shares shall be made
after the end of the term of the Plan. Restrictions in respect of Incentive
Shares granted during the term of the Plan shall continue in effect after the
termination of the Plan until they shall be satisfied or forfeited in
accordance with their terms. This Plan shall be submitted for approval by the
stockholders of the Company and unless so approved within one year from the
date of approval of the Plan by the Board, this Plan shall not be effective for
any purpose. Prior to the approval of the Plan by the stockholders of the
Company, the Committee may make awards of Performance Shares or Restricted
Shares to Participants but all such awards shall be conditioned upon
stockholder approval of the Plan and if such approval is not obtained within
the time herein provided such awards shall be void and of no effect.
16. Non-Assignability. Rights under the Plan and in respect of
Shares granted under the Plan are not transferable and may not be assigned or
pledged by any Participant at any time, and no recognition shall be required to
be given by the Company to any attempted assignment of any rights hereunder or
of any attempted assignment of the Shares. This non-assignability shall not
apply to any shares of the Common Stock delivered to Participants hereunder
after such Shares shall be fully vested in the holder thereof, except as
follows:
(a) Shares of Common Stock issued in payment of Performance
Shares to any Participant who is subject to Section 16 of the 1934 Act may
not be assigned for a period of six (6) months after issuance.
(b) The resale of shares of Common Stock may be restricted by
reason of the 1933 Act as set forth in Section 13 hereof.
If payment of Shares to a Participant is accelerated prior to vesting pursuant
to Section 4, and if the Participant is subject to Section 16 of the 1934 Act,
such Shares shall be non-transferable for a period of six (6) months after they
became fully vested.
17. Plan a Part of Continuing Compensation Program. This Plan is a
part of a continuing program of incentive compensation for senior managerial
personnel of the Company and is expected to be supplemented or continued in
effect after the term hereof by an additional plan or plans as approved by the
Board or stockholders of the Company.
18. Separability of Provisions. With respect to Participants subject
to Section 16 of the 1934 Act, this Plan and transactions hereunder are
intended to comply with all applicable provisions of Rule 16b-3 or its
successors. To the extent that any provision of the Plan or action of the
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Committee fails to so comply, it shall be deemed null and void to the extent
permitted by law and deemed advisable by the Committee.
* * *
The foregoing is the full text of the Third Amendment to the Emerson
Electric Co. 1993 Incentive Shares Plan, as approved by the Compensation and
Human Resources Committee of the Board of Directors of Emerson Electric Co.
effective as of the date the Plan was originally adopted.
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