Exhibit (10)b
KIMBERLY-CLARK CORPORATION
EXECUTIVE SEVERANCE PLAN
As
Amended and Restated
As of June 8, 2000
1. Preamble and Statement of Purpose. The purpose of this Plan is to
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assure the Corporation that it will have the continued dedication of, and the
availability of objective advice and counsel from, key executives of the
Corporation notwithstanding the possibility, threat or occurrence of a bid to
take over control of the Corporation.
In the event the Corporation receives any proposal from a third person
concerning a possible business combination with the Corporation, or
acquisition of the Corporation's equity securities, the Board of Directors
(the "Board") believes it imperative that the Corporation and the Board be
able to rely upon key executives to continue in their positions and be
available for advice, if requested, without concern that those individuals
might be distracted by the personal uncertainties and risks created by such a
proposal.
Should the Corporation receive any such proposals, in addition to their
regular duties, such key executives may be called upon to assist in the
assessment of proposals, advise management and the Board as to whether such
proposals would be in the best interest of the Corporation and its
stockholders, and to take such other actions as the Board might determine to
be appropriate.
2. Definitions. As used in this Plan, the following terms shall have
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the following respective meanings:
(a) Agreement: An Executive Severance Agreement in
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substantially the form approved by the Board and attached hereto as Exhibit A.
(b) Cause: The term "Cause" shall mean any of the
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following:
(i) the commission by he Participant of a felony;
(ii) the Participant's dishonesty, habitual neglect
or incompetence in the management of the affairs of the Corporation; or
(iii) the refusal or failure by the Participant to
act in accordance with any lawful directive or order of the Corporation, or an
act or failure to act by the Participant which is in bad faith and which is
detrimental to the Corporation.
(c) Change of Control: A "Change of Control" shall be
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deemed to have taken place if: (i) a third person, including a "group" as
defined in Section 13(d)(3) of the Securities Exchange Act of 1934, acquires
shares of the Corporation having 20% or more of the total number of votes
that may be cast for the election of Directors of the Corporation; or (ii)
as the result of any cash tender or exchange offer, merger or other business
combination, sale of assets or contested election, or any combination of
the foregoing transactions (a "Transaction"), the persons who were directors
of the Corporation before the Transaction shall cease to constitute a majority
of the Board of Directors of the Corporation or any successor to the
Corporation.
(d) Corporation: Kimberly-Clark Corporation.
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(e) Eligible Executive: Those key executives of the
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Corporation and its Subsidiaries who are from time to time designated by the
Board as, or who pursuant to criteria established by the Board or its
Compensation Committee are, eligible to receive an Agreement.
(f) Good Reason: Termination by the Participant for "Good
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Reason" shall mean the occurrence (without the Participant's express written
consent) of any one of the following acts by the Corporation, or failures by
the Corporation to act, unless, in the case of any act or failure to act
described below, such act or failure to act is corrected prior to the
Participant's termination date:
(i) the assignment to the Participant of any
duties inconsistent with the Participant's status as a key executive officer
of the corporation or a substantial adverse alteration in the nature or status
of the Participant's responsibilities from those in effect immediately prior
to the Change of Control other than such alteration primarily attributable
to the fact that the Corporation may no longer be a public company;
(ii) a reduction by the Corporation of the
Participant's annual base salary by five percent or more as in effect
immediately prior to the Change of Control, except for across-the-board salary
reductions similarly affecting all key executives of the Corporation;
(iii) the Corporation requiring the Participant to
be based at a location more than 50 miles from the location of the Participant's
office as of the date of the Change of Control except for required travel on the
Corporation's business to an extent substantially consistent with the
Participant's business travel obligations as of the date of the Change of
Control;
(iv) the failure of the Corporation to pay as soon
as administratively feasible, after notice from the Participant, any portion of
the Participant's current compensation;
(v) the failure of the Corporation to continue in
effect any compensation plan in which the Participant participates immediately
prior to the Change of Control which is material to the Participant's
total compensation, but including but not limited to the Corporation's stock
option, incentive compensation, and bonus plans, or any substitute plans adopted
prior to the Change of Control, unless an equitable arrangement (which is
embodied in an ongoing substitute or alternative plan but which need not
provide the Participant with equity-based incentives) has been made with
respect to such plan, or the failure by the Corporation to continue the
Participant's participation therein (or in such substitute or alternative plan)
on a basis not materially less favorable than the benefits provided to other
participants; or
(vi) the failure by the Corporation to continue to
provide the Participant with benefits substantially similar to those enjoyed by
the Participant under any of the Corporation's pension, life insurance, medical,
health and accident, or disability plans in which the Participant was
participating at the time of the Change of Control, the taking of any action
by the Corporation which would directly or indirectly materially reduce any of
such benefits or deprive the Participant of any material fringe benefit
enjoyed by the Participant at the time of the Change of Control, or the
failure by the Corporation to provide the Participant with the number of paid
vacation days to which the Participant is entitled on the basis of years of
service with the Corporation in accordance with the Corporation's normal
vacation policy in effect at the time of the Change of Control.
The Participant's right to terminate the Participant's employment
for Good Reason shall not be affected by the Participant's incapacity due to
physical or mental illness. The Participant's continued employment shall not
constitute consent to, or a waiver of rights with respect to, any act or
failure to act constituting Good Reason hereunder.
(g) Participant: An Eligible Executive who is a party to an
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Agreement which has not been terminated in accordance with the terms of this
Plan prior to the time when the Corporation has knowledge that any third
person has taken steps reasonably calculated to effect a Change of Control of
the Corporation.
(h) Qualified Termination of Employment: The termination of
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a Participant's employment with the Corporation and/or its Subsidiaries within
the two (2) year period following a Change of Control of the Corporation for
any reason (whether voluntary or involuntary) unless such termination is by
reason of death or disability or, to the extent specifically provided in the
Participant's Agreement, unless such termination is (i) by the Corporation for
Cause or (ii) by the Participant without Good Reason. Subject to subparagraph
2(f), transfers of employment for administrative purposes among the
Corporation and its Subsidiaries shall not be deemed a Qualified Termination
of Employment.
(i) Subsidiary: Any domestic or foreign corporation at
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least twenty percent (20%) of whose shares normally entitled to vote in
electing directors is owned directly or indirectly by the Corporation or
by other Subsidiaries.
3. Participation. Eligible Executives shall be proffered an
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Agreement and upon execution and delivery thereof by the Eligible Executive
evidencing such Eligible Executive's agreement not to voluntarily leave the
employ of the Corporation and its Subsidiaries and to continue to render
services during the pendency of any threatened Change of Control of the
Corporation, such Eligible Executive shall become a Participant. A
Participant shall cease to be a Participant in the Plan when notified by the
Board that it has determined that such Participant has ceased to be a key
executive for purposes of this Plan or upon termination of employment with the
Corporation or its Subsidiaries prior to a Change of Control in which case the
Agreement shall terminate and be of no further force and effect, except that,
no such determination that a Participant has ceased to be a key executive
shall be made, and if made shall have no effect, during any period of time
when the Corporation has knowledge that any third person has taken steps
reasonably calculated to effect a Change of Control of the Corporation until,
in the opinion of the Board, the third person has abandoned or terminated his
efforts to effect a Change of Control. Any decision by the Board that the
third person has abandoned or terminated his efforts to effect a Change of
Control shall be conclusive and binding on the Participants.
4. Termination of Employment of Participants. Nothing in this Plan
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shall be deemed to entitle a Participant to continued employment with the
Corporation and its Subsidiaries and the rights of the Corporation to
terminate the employment of a Participant shall continue as fully as though
this Plan were not in effect, provided that any Qualified Termination of
Employment within two years following a Change of Control shall entitle the
Participant to the benefits herein provided. In addition, nothing in this
Plan shall be deemed to entitle a Participant under this Plan to any rights,
or to payments under this Plan, with respect to any plan in which the
Participant was not a participant prior to a Qualified Termination of
Employment.
5. Payments Upon Qualified Termination of Employment. In the event of
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a Qualified Termination of Employment of a Participant, a lump sum cash
payment or payments shall be made to such Participant as compensation for
services rendered, in an amount or amounts (subject to any applicable
payroll or other taxes required to be withheld) equal to the sum of the
amounts specified in subparagraphs (i) through (vi) below, such payments to
be made within 10 days following the last day of employment of the Participant
with the Corporation except to the extent not yet calculable, in which case
such portions shall be paid as soon as practicable following the ability to
calculate the amount.
(i) Salary Plus Incentive Compensation. An amount
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equal to three times the sum of (a) the Participant's annual base salary at the
rate in effect immediately prior to the Change of Control and (b) the maximum
award payable to the Participant for the year in which the Change of Control
occurred (or, if not then established, for the preceding year) under the
Kimberly-Clark Corporation Management Achievement Award Program or any
successor or additional plan;
(ii) Equity Participation Plan - Participation
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Shares.
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An amount equal to the payment to which the Participant would have been
entitled had all Participation Shares awarded to the Participant under the
Kimberly-Clark Corporation 1992 Equity Participation Plan (or any successor or
additional plan) and which had not matured as of the date of termination of
employment and which will not mature as a result of the termination of
employment, matured, such payment to be the higher of (a) the payment
determined as though such award had matured and its book value at maturity
been determined on the last day of the year preceding the Change of Control,
or (b) the payment determined as though such award had matured and its book
value at maturity been determined on the last day of the calendar quarter
preceding the date of termination of the Participant's employment;
(iii) Equity Participation Plan - Option Shares.
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With respect to stock options granted to the Participant under the
Kimberly-Clark Corporation 1992 Equity Participation Plan (or any successor
or additional plan) which are not exercisable on or after the date of the
termination of the Participant's employment or, if exercisable, on the date
of termination of employment, not thereafter exercised, an amount equal to
the higher of the excess of (a) the value on the date preceding the Change
of Control of all shares of common stock of the Corporation optioned to the
Participant pursuant to such options, or (b) such value on the date of
termination of employment, over the option price;
(iv) Restricted Stock. With respect to restricted
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stock granted to the Participant under the Kimberly-Clark Corporation 1999
Restricted Stock Plan (or any successor or additional plan) which are not
vested on the date of the termination of the Participant's employment, an
amount equal to the higher of (a) the value on the date preceding the
Change of Control of an equivalent number of shares of common stock of the
Corporation, or (b) such value on the date of termination of employment;
(v) Incentive Investment Plan. An amount equal to
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the excess of (a) the benefits under the Kimberly-Clark orporation Salaried
Employees Incentive Investment Plan (or any successor or additional plan) to
which the Participant would be entitled if he were fully vested in all of his
benefits under the Plan at the date of termination of employment, over (b) the
value of the benefits to which the Participant is actually entitled at the
date of termination of employment; and
(vi) Retirement Contribution Plan. An amount equal to
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(a) the Participant's annual Retirement Contributions under the Kimberly-Clark
Corporation Retirement Contribution Plan (or any successor or additional
plans) and the Kimberly-Clark Corporation Retirement Contribution Excess
Benefit Program (or any successor or additional plans) (collectively the
"Retirement Contribution Plan") to which the Participant would have been
entitled if he had remained employed by the Corporation for an additional
period of three years at the rate of annual compensation specified in
subparagraph (i) of Paragraph 5 above except that the Management Achievement
Award Program element shall be treated as earned for the year in which
termination occurred and the two subsequent years and no award actually earned
in, and paid for, the year in which termination occurred shall be considered,
plus (b) the excess of (I) the benefits under the Retirement Contribution Plan
to which the Participant would be entitled if he were fully vested in all of
his benefits under the Retirement Contribution Plan at the date of termination
of employment, over (II) the value of the benefits to which the Participant is
actually entitled at the date of termination of employment.
(vii) Successor or Additional Stock Option, Stock
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Appreciation Right, Incentive Compensation, and Bonus Plan. An amount equal
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to the payment to which the Executive would have been entitled had all
amounts awarded or granted to the Executive, vested or matured, under any
stock option, stock appreciation right, incentive compensation, and bonus plans
which are adopted after the effective date of the Executive's Agreement
and in which the Executive participates immediately prior to the Change of
Control, which is material to the Executive's total compensation, but including
any substitute plans adopted prior to the Change of Control, (or any successor
or additional plan), which had not vested or matured as of the date of
termination of employment and will not vest or mature as a result of the
termination of the Executive's employment, such payment to be the higher
of (a) the payment determined as though such award or grant had vested or
matured on the day of the Change of Control, or (b) the payment determined as
though such award or grant had vested or matured on the date of termination
of the Executive's employment;
6. Salaried Retirement Plan. In the event of a Qualified Termination
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of Employment, a Participant shall be paid a monthly retirement benefit, in
addition to any benefits received under the Supplemental Benefit Plan to the
Kimberly-Clark Corporation Salaried Employees' Retirement Plan (or any
successor or additional plans) and the Second Supplemental Benefit Plan to the
Kimberly-Clark Corporation Salaried Employees' Retirement Plan (or any
successor or additional plans) (collectively the "Supplemental Plan") and the
Kimberly-Clark Corporation Salaried Employees' Retirement Plan (or any
successor or additional plans) (the "Salaried Retirement Plan"), such benefit
to commence on the commencement of payment of benefits under the Salaried
Retirement Plan, but not prior to three years following the date of Qualified
Termination of Employment, such benefit to be in the form of a straight life
annuity without level income option and in an amount equal to the excess of
(a) the benefits under the Salaried Retirement Plan and the Supplemental Plan
to which the Participant would have been entitled in the form of a straight
life annuity without level income option if such Participant had remained
employed by the Corporation for an additional period of three years, at the
rate of annual compensation specified in subparagraph (i) of Paragraph 5 above
except that the Management Achievement Award Program element shall be treated
as earned for the year in which termination occurred and the two subsequent
years and no award actually earned in, and paid for, the year in which
termination occurred shall be considered, over (b) the benefits to which the
Participant would actually have been entitled under the Salaried Retirement
Plan and the Supplemental Plan, had such benefit been paid in the form of a
straight life annuity without level income option.
7. Other Terms and Conditions. The Agreement to be entered into
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pursuant to this Plan shall contain such other terms, provisions and
conditions not inconsistent with this Plan as shall be determined by the
Board. Where appearing in this Plan or the Agreement, the masculine shall
include the feminine and the plural shall include the singular, unless the
context clearly indicates otherwise.
8. Non-Assignability. Each Participant's rights under this Plan
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shall be non-transferable except by will or by the laws of descent and
distribution.
9. Unfunded Plan. The Plan shall be unfunded. Neither the
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Corporation nor the Board shall be required to segregate any assets that may
at any time be represented by benefits under the Plan. Neither the
Corporation or the Board shall be deemed to be a trustee of any amounts to be
paid under the Plan. Any liability of the Corporation to any Participant with
respect to any benefit shall be based solely upon any contractual obligations
created by the Plan and the Agreement; no such obligation shall be deemed to
be secured by any pledge or any encumbrance on any property of the
Corporation.
10. Certain Reduction of Payments by the Corporation.
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(a) For purposes of this paragraph 10, (i) a Payment shall mean
any payment or distribution in the nature of compensation to or for the
benefit of a Participant, whether paid or payable pursuant to this Plan or
otherwise; (ii) Separation Payment shall mean a Payment paid or payable
pursuant to this Plan (disregarding this paragraph); (iii) Net After Tax
Receipt shall mean the Present Value of a Payment net of all taxes imposed on
an Participant with respect thereto under Sections 1 and 4999 of the Internal
Revenue Code of 1986, as amended (the "Code"), determined by applying the
highest marginal rate under Section 1 of the Code which applied to the
Participant's taxable income for the immediately preceding taxable year; (iv)
"Present Value" shall mean such value determined in accordance with Section
280G(d)(4) of the Code; and (v) "Reduced Amount" shall mean the greatest
aggregate amount of Separation Payments which (a) is less than the sum of all
Separation Payments and (b) results in aggregate Net After Tax Receipts which
are equal to or greater than the Net After Tax Receipts which would result if
the Participant were paid the sum of all Separation Payments.
(b) Anything in this Agreement to the contrary notwithstanding,
in the event Deloitte & Touche LLP or such other certified public accounting
firm designated by the Participant (the "Accounting Firm") shall determine
that receipt of all Payments would subject the Participant to tax under
Section 4999 of the Code, it shall determine whether some amount of Separation
Payments would meet the definition of a "Reduced Amount." If said firm
determines that there is a Reduced Amount, the aggregate Separation Payments
shall be reduced to such Reduced Amount. All fees payable to the Accounting
Firm with respect to this paragraph 10 shall be paid solely by the
Corporation.
(c) If Accounting Firm determines that aggregate Separation
Payments should be reduced to the Reduced Amount, the Corporation shall
promptly give the Participant notice to that effect and a copy of the detailed
calculation thereof, and the Participant may then elect, in his sole
discretion, which and how much of the Separation Payments shall be eliminated
or reduced (as long as after such election the present value of the aggregate
Separation Payments equals the Reduced Amount), and shall advise the
Corporation in writing of his election within ten days of his receipt of
notice. If no such election is made by the Participant within such ten-day
period, the Corporation may elect which of such Separation Payments shall be
eliminated or reduced (as long as after such election the present value of the
aggregate Separation Payments equals the Reduced Amount) and shall notify the
Participant promptly of such election. All determinations made by Accounting
Firm under this paragraph shall be binding upon the Corporation and the
Participant and shall be made within 60 days of a termination of employment of
the Participant. As promptly as practicable following such determination, the
Corporation shall pay to or distribute for the benefit of the Participant such
Separation Payments as are then due to the Participant under this Plan and
shall promptly pay to or distribute for the benefit of the Participant in the
future such Separation Payments as become due to the Participant under this
Plan.
(d) While it is the intention of the Corporation to reduce the
amounts payable or distributable to the Participants hereunder only if the
aggregate Net After Tax Receipts to a Participant would thereby be increased,
as a result of the uncertainty in the application of Section 4999 of the Code
at the time of the initial determination by Accounting Firm hereunder, it is
possible that amounts will have been paid or distributed by the Corporation to
or for the benefit of an Participant pursuant to this Plan which should not
have been so paid or distributed ("Overpayment") or that additional amounts
which will have not been paid or distributed by the Corporation to or for the
benefit of a Participant pursuant to this Plan could have been so paid or
distributed ("Underpayment"), in each case, consistent with the calculation of
the Reduced Amount hereunder. In the event that Accounting Firm, based either
upon the assertion of a deficiency by the Internal Revenue Service against the
Corporation or the Participant which Accounting Firm believes has a high
probability of success determines that an Overpayment has been made, any such
benefit of an Participant shall be treated for all purposes as a loan to the
Participant which the Participant shall repay to the Corporation together with
interest at the applicable federal rate provided for in Section 7872(f)(2) of
the Code; provided, however, that no such loan shall be deemed to have been
made and no amount shall be payable by a Participant to the Corporation if and
to the extent such deemed loan and payment would not either reduce the amount
on which the Participant is subject to tax under Section 1 and Section 4999 of
the Code or generate a refund of such taxes. In the event that Accounting
Firm, based upon controlling precedent or substantial authority, determines
that an Underpayment has occurred, any such Underpayment shall be promptly
paid by the Corporation to or for the benefit of the Participant together with
interest at the applicable federal rate provided for in Section 7872(f)(2) of
the Code.
11. Termination and Amendment of this Plan. The Board shall have
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power at any time, in its discretion, to amend, abandon or terminate this
Plan, in whole or in part; except that no amendment, abandonment or
termination shall impair or abridge the obligations of the Corporation under
any Agreements previously entered into pursuant to this Plan.
12. Effective Date. This amended and restated Plan shall become
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effective on June 8, 2000.