KIMBERLY-CLARK CORPORATION
1976 EQUITY PARTICIPATION PLAN
(as amended as of December 19, 1991)
1. PURPOSE
This 1976 Equity Participation Plan (the "Plan") of
Kimberly-Clark Corporation (the "Corporation") is intended to
provide a means of encouraging the acquisition of an ownership
interest in the Corporation by those employees who contribute
materially by managerial, scientific, or other innovative means
to the success of the Corporation, a consolidated subsidiary or
an equity company ("Subsidiaries"), thereby increasing their
motivation for an interest in the Corporation's or
Subsidiaries' long-term success.
2. EFFECTIVE DATE
The Plan became effective as of April 29, 1976 upon (a)
approval by the Board of Directors of the Corporation (the
"Board of Directors"), and (b) approval by the shareholders of
the Corporation (the "shareholders") at the 1976 Annual
Meeting.
3. ADMINISTRATION
The Plan shall be administered by the Compensation
Committee of the Board of Directors consisting of not less than
three (3) members of the Board of Directors, provided that if
all members of the Committee are not disinterested persons, the
Plan shall be administered by a committee, all of whom are
disinterested persons, appointed by the Board of Directors and
consisting of three (3) or more directors with full authority
to act in the matter. For purposes of this section, a
disinterested person shall mean a person who, at the time
action is taken, is so defined for purposes of rule 16b-3 under
the Securities Act of 1934, or any successor provision.
The Committee shall have the power to interpret and
construe the Plan and other powers and duties as set forth in
the Plan, and any such interpretation and construction of any
provisions of this Plan shall be final. No member of the Board
of Directors or the Committee shall be liable for any action or
determination made in good faith. The Committee shall make a
report to the Board of Directors within 60 days following the
close of each calendar year that the Plan is in operation. The
report shall specify the employees who received awards under
the Plan during the prior year, the form and size of the awards
to the individual employees, and the status of prior awards.
4. ELIGIBILITY
The Committee shall from time to time select the employees
(hereafter referred to as "Participants") who are to receive
awards under the Plan, from among those employees who are
determined by the Committee to be in a position to contribute
materially to the success of the Corporation or a Subsidiary,
or to have in the past so contributed. Eligibility to
participate in the Plan shall be limited to full-time employees
(including officers and directors who are full-time employees)
of the Corporation and its Subsidiaries. The participation of
employees of a Subsidiary shall be under such conditions as the
Committee shall prescribe.
5. FORM OF AWARDS
All awards under the Plan shall be made in the form of
participation shares or stock options. Generally, an award
will consist of an equal number of participation shares and
optioned shares, but the Committee may make awards solely in
stock options or participation shares, or in any combination of
the two that it deems appropriate.
6. PARTICIPATION SHARES
The Committee shall from time to time determine from among
the eligible employees those Participants who shall receive
participation share awards. The Committee shall advise
Participants of their participation share awards by a letter
indicating the number of shares awarded and the following terms
and conditions of the award.
(a) Base Value of Participation Shares. The number
of participation shares awarded to a Participant shall be
entered in a Participant's memorandum account established
for this purpose as of the date of the award. Each
participation share shall be assigned a base value equal to
the book value of one common share of the Corporation as of
the close of the fiscal year preceding the date of the
award. Book value per share shall be defined for purposes
of the Plan as common stockholders' equity, as reported in
the year end audited consolidated financial statements of
the Corporation, divided by the number of shares of the
Corporation's Common Stock outstanding as of the date of
such financial statements. Common stock outstanding shall
include such stock held by stockholders, but does not
include authorized but unissued shares or treasury shares.
(b) Participation Share Payments. A Participant
shall be entitled to a cash payment when the award reaches
maturity equal to the book value of his participation
shares at that date, less the base value of his
participation shares at the date of award; provided,
however, that in no event shall such payment exceed the
base value of his/her participation shares, and provided
further that such payment shall be subject to adjustment as
provided in subsections 6(e) and 14(d) and section 11. The
award shall reach maturity at the earlier of the close of
the fiscal year (i) in which occurs the seventh anniversary
of the date of the award or (ii) in which book value,
measured from the close of the fiscal year prior to the
date of award, increases by 100% plus an amount equal to
any reduction in book value as provided in subsection 6(d).
The book value at the date of maturity shall be the book
value per share of the Corporation as of the close of the
fiscal year of the Corporation in which maturity is
reached, less any reductions in book value as provided in
subsection 6(d).
(c) Dividend Share Payments. A Participant shall be
entitled to an additional cash payment when the award
reaches maturity equal to the number of dividend shares
credited to his/her memorandum account times the book value
per common share of the Corporation as of the date of
maturity. At the end of each fiscal year of the
Corporation, the amount available for the acquisition of
dividend shares for the Participant's memorandum account
shall be determined by multiplying the cash dividend
declared per common share of the Corporation during such
year (but subsequent to the date of the award in the case
of participation shares and subsequent to the date of
crediting in the case of dividend shares) by the total of
the Participant's participation shares and dividend shares.
The amount so determined shall be divided by the book value
of one common share of the Corporation as of the close of
such fiscal year, and the quotient shall represent the
number of full and fractional dividend shares credited to
the Participant's memorandum account for that fiscal year.
(d) Dividend Maintenance. No dividend share shall be
credited to a participant's memorandum account in any year
(i) in which the total cash dividends declared per common
share of the Corporation are less than $.90 with respect to
awards made before April 30, 1981, and $1.80 with respect
to awards made after April 29, 1981, or (ii) in which the
total cash dividends declared per common share of the
Corporation are less than the total cash dividends declared
per common share of the Corporation in the immediately
preceding year, except that in 1984 and thereafter the
determination whether the total cash dividends declared are
less than in the immediately preceding year shall be made
after adjustments for the two-for-one stock splits which
occurred in 1984 and 1987, and the two-for-one stock split
which was declared on November 12, 1991, in accordance with
generally accepted account principles. When total cash
dividends declared per common share are less than total
cash dividends declared per common share in the immediately
preceding year as described in clause (ii) above, the book
value of each participation share held by a Participant
shall be reduced by an amount equal to the cash dividend
declared in such immediately preceding year less the cash
dividend declared in the year the cash dividend is reduced.
This subsection 6(d) shall be inoperative during such
fiscal years of the Corporation as the Committee in its
discretion shall determine.
(e) Adjustments. Book value per share for purposes
of the Plan or the number of participation or dividend
shares may be adjusted to such an extent as may be
determined by the Board of Directors to preserve the
benefit of the arrangement for the Participant and the
Corporation if, in the opinion of the Committee, after
consultation with the Corporation's independent
accountants, changes in the Corporation's accounting
policies, acquisitions or other unusual or extraordinary
items have disproportionately and materially affected the
Corporation's net income, book value per share, shares of
Common Stock outstanding, or common stockholders' equity.
(f) Absence of Rights as a Stockholder. A
Participant shall not be entitled, on the basis of a
participation share award, to any of the rights of a
stockholder in the Corporation, including the right to vote
and receive dividends on the Corporation's Common Stock.
(g) Date of Payment. Except as provided in
subsections 8(a) and 14(j), the cash payment provided for
in subsection 6(b) and (c) shall be payable in the
discretion of the Committee, but no later than 90 days
following the end of the fiscal year of the Corporation in
which the award reaches maturity. The Corporation shall
deduct applicable withholding and employment taxes from all
payments made to Participants.
(h) Termination of Employment. Except as provided in
subsections 8(a) and 14(j), any participation or dividend
shares credited to a Participant's memorandum account shall
be subject to forfeiture if the Participant is dismissed or
leaves the service of the Corporation or a Subsidiary prior
to the maturity of the award for any reason other than
death, retirement, or total and permanent disability. In
the event of death, retirement or total and permanent
disability, the award shall become payable under
subsections 6(b) and (c) as if such event resulted in the
award reaching maturity as of the close of the fiscal year
in which such event occurs.
(i) Termination of Award. Following the cash payment
provided for in subsections 6(b) and (c), any rights of the
Participant (or the Participant's estate or beneficiaries)
in the participation share award shall end.
7. STOCK OPTIONS
The Committee shall determine and designate from time to
time the eligible employees to whom options are to be granted
and the number of common shares of the Corporation to be
optioned to each. After granting an option to a Participant,
the Committee shall cause to be delivered to the Participant a
document to be executed by the Corporation and the Participant
evidencing the granting of the option and the terms and
conditions of such option. The document shall be in such form
as the Committee shall from time to time approve. The terms
and conditions of all options granted under the Plan need not
be the same, but all options must, at a minimum, meet the
following terms and conditions.
(a) Period of Option. The period of each option
shall be no more than ten years from the date it is
granted.
(b) Option Price. The option price shall be
determined by the Committee, but shall not in any instance
be less than the fair market value of the stock at the time
that the option is granted. Fair market value shall be
defined as the reported closing price of the Corporation's
stock on the date the option is granted as reported on the
composite list used by The Wall Street Journal for
reporting stock prices, or if no such sale shall have been
made on that day, on the last preceding day on which there
was such a sale.
(c) Limitations on Exercise. The option shall not be
exercisable until at least one (1) year has expired after
the granting of the option, during which time the
Participant shall have been in the continuous employ of the
Corporation or a Subsidiary. At any time during the period
of the option after the end of the first year, the
Participant may purchase up to 30 percent of the shares
covered by the option; after the end of the second year, an
additional 30 percent; and after the end of the third year,
the remaining 40 percent of the total number of shares
covered by the option, so that, upon the expiration of the
third year, the Participant will have become entitled to
purchase all shares subject to the option. Provided,
however, that if the Participant's employment is terminated
for any reason other than death, retirement, or total and
permanent disability, the option shall only be exercisable
for three months following such termination and only for
the number of shares which were exercisable on the date of
such termination. In no event, however, may the option be
exercised more than ten (10) years after the date of its
grant.
(d) Exercise after Death, Retirement, or Disability.
If the Participant dies without having exercised the option
in full, the remaining portion of such option, determined
without regard to the limitations in subsection 7(c), may
be exercised within the earlier of (i) two years from the
date of death or (ii) the remaining period of the option.
The option may be exercised by the person or persons to
whom the option holder's rights under the option shall pass
by will or by applicable law or, if no such person has such
rights, by his executor or administrator. In the event of
the retirement or total and permanent disability of a
Participant without having exercised the option in full,
the remaining portion of such option shall be exercisable
without regard to the limitations in subsection 7(c) within
the earlier of (i) two years from the date of such event or
(ii) the remaining term of the option.
(e) Non-transferability. Options shall not be
transferable other than by will or by the laws of descent
and distribution, and during the Participant's lifetime
shall be exercisable only by him/her.
(f) Notice of Exercise. Options shall be exercised
by delivering to the Corporation, at the office of
Treasurer at the Dallas World Headquarters, written notice
of the number of shares with respect to which option rights
are being exercised and by paying in full the option price
of the shares at the time being acquired. Payment may be
made in cash, a check payable to the Corporation, or, in
the discretion of the Committee, in shares of the
Corporation's Common Stock transferable to the Corporation
and having a fair market value on the transfer date equal
to the amount payable to the Corporation. The date of
exercise shall be deemed to be the date the Corporation
receives the written notice and payment for the shares
being purchased. A Participant shall have none of the
rights of a stockholder until the shares are issued to
him/her.
(g) Purchase for Investment. It is contemplated that
the Corporation will register shares sold to Participants
pursuant to the Plan under the Securities Act of 1933. In
the absence of an effective registration, however, a
Participant exercising an option hereunder may be required
to give a representation that he/she is acquiring such
shares as an investment and not with a view to distribution
thereof.
8. GOVERNMENT SERVICE, LEAVES OF ABSENCE AND OTHER
TERMINATIONS
(a) In the sole and absolute discretion of the
Committee, a participation share award may be considered to
reach maturity as of the close of the fiscal year preceding
the date that a Participant enters such governmental or
military service as may be approved by the Committee. In
such cases, the cash payment contemplated in subsections
6(b) and (c) shall be paid within 90 days from the date the
Participant enters such service.
(b) A leave of absence approved by the Committee
shall not be deemed to be a termination of employment for
purposes of the Plan. A termination of employment with the
Corporation or a Subsidiary to accept immediate
reemployment with the Corporation or a Subsidiary likewise
shall not be deemed to be a termination of employment for
purposes of the Plan.
9. SHARES SUBJECT TO THE PLAN
The number of shares of Common Stock of the Corporation
available for option and sale under the Plan and the number of
participation shares which may be awarded shall not exceed
8,000,000 in the aggregate, of which not more than 6,000,000
shall be available for option and sale. If an option ceases to
be exercisable in whole or in part by reason of expiration of
time permitted for its exercise, termination of employment of a
Participant who has been granted an option, cancellation,
surrender, or for any other reason, the shares which had been
subject to such option shall continue to be available for
options or participation share awards under the Plan. The
shares subject to the Plan may consist in whole or in part of
authorized but unissued shares or of treasury shares, as the
Board of Directors may from time to time determine.
Participation shares which are retired through forfeiture or
maturity shall again be available for awards or options under
the Plan.
10. INDIVIDUAL LIMITS
In the case of awards made before April 30, 1981, the Plan
provided that no single Participant could receive over the term
of the Plan options to purchase shares or participation shares
numbering in the aggregate more than 320,000, in such
combination of participation shares and option shares as the
Committee may decide. In the case of awards made after April
29, 1981, the maximum number of participation shares or options
to purchase shares which shall be granted to any one individual
shall be such amount as shall be determined from time to time
by the Committee.
11. CHANGES IN CAPITALIZATION
In the event there are any changes in the Common Stock or
the capitalization of the Corporation through merger,
consolidation, reorganization, recapitalization, stock
dividend, stock split or other change in the corporate
structure, appropriate adjustments and changes may be made by
the Committee in (a) the aggregate number of shares subject to
the Plan, (b) the maximum number of shares for which options or
participation share awards may be granted or awarded to any one
Participant, (c) the number of shares and the option price per
share of all stock subject to outstanding options, (d) the
number of participation shares, the base value per
participation share awarded to Participants, and dividend
shares credited to Participants' memorandum accounts, and (e)
such other provisions of the Plan as may be necessary and
equitable to carry out its purposes.
12. EFFECT ON OTHER PLANS
All payments and benefits under the Plan shall constitute
special compensation and shall not affect the level of benefits
provided to or received by any Participant (or the
Participant's estate or beneficiaries) as part of any employee
benefit plan of the Corporation or a Subsidiary. This Plan
shall not be construed to affect in any way a Participant's
rights and obligations under any other plan maintained by the
Corporation or a Subsidiary on behalf of employees.
13. TERM OF THE PLAN
The term of the Plan shall be ten (10) years, beginning
April 29, 1976 and ending April 28, 1986, unless the Plan is
terminated sooner by action of the Board of Directors or
extended by action of the stockholders. No option may be
granted or participation share awarded after the termination
date of the Plan, but options and participation shares
theretofore granted or awarded may continue in force beyond
that date pursuant to their terms.
14. GENERAL PROVISIONS
(a) Designated Beneficiary. Each Participant who
shall be granted a participation share award under the Plan
may designate a beneficiary or beneficiaries with the
Committee on a form to be prescribed by it; provided that
no such designation shall be effective unless so filed
prior to the death of such Participant.
(b) No Right of Continued Employment. Neither the
establishment of the Plan nor the payment of any benefits
hereunder nor any action of the Corporation or its
Subsidiaries or of the Board of Directors of the
Corporation or its Subsidiaries or of the Committee shall
be held or construed to confer upon any person any legal
right to be continued in the employ of the Corporation or
its Subsidiaries, and the Corporation and its Subsidiaries
expressly reserve the right to discharge any Participant
whenever the interest of the Corporation or its
Subsidiaries may so require without liability to the
Corporation or its Subsidiaries, the Board of Directors of
the Corporation or its Subsidiaries or the Committee,
except as to any rights which may be expressly conferred
upon a Participant under the Plan.
(c) Discretion of the Corporation, Board of Directors
and the Committee. Any decision made or action taken by
the Corporation or by the Board of Directors of the
Corporation or by the Committee arising out of or in
connection with the construction, administration,
interpretation and effect of the Plan shall be within the
absolute discretion of the Corporation, the Board of
Directors of the Corporation or the Committee, as the case
may be, and shall be conclusive and binding upon all
persons. The Committee shall determine in its sole
discretion whether a termination of employment for purposes
of the Plan is caused by disability or retirement.
(d) Modification of Awards. The Committee may in its
sole and absolute discretion, by written notice to a
Participant, (i) limit or eliminate the ability of the
Participant's participation and dividend shares to generate
additional dividend shares, and/or (ii) fix the book value
of all or any portion of the Participant's existing
participation and dividend shares for purposes of any
payments that might be made under subsections 6(b) and (c)
at their book value as of the end of the fiscal year of the
Corporation in which such notice is dated, and/or (iii)
limit the period in which an option may be exercised to a
period ending at least three months following the date of
such notice, and/or (iv) limit or eliminate the number of
shares subject to option after a period ending at least
three months following the date of such notice. The
Committee may credit participation and dividend shares
which are affected under this subsection 14(d)(i) or (ii),
with interest at a rate and in a manner determined from
time to time by the Committee.
(e) No Segregation of Cash or Stock. Memorandum
accounts established for Participants are merely a
bookkeeping convenience and neither the Corporation nor its
Subsidiaries shall be required to segregate any cash or
stock which may at any time be represented by awards. Nor
shall anything provided herein be construed as providing
for such segregation. The Corporation or its Subsidiaries
or the Board of Directors of the Corporation or the
Committee shall not, by any provisions of this Plan, be
deemed to be a trustee of any property, and the liability
of the Corporation or its Subsidiaries to any Participant
pursuant to the Plan shall be those of a debtor pursuant to
such contract obligations as are created by the Plan, and
no such obligation of the Corporation or its Subsidiaries
shall be deemed to be secured by any pledge or other
encumbrance on any property of the Corporation or its
Subsidiaries.
(f) Inalienability of Benefits and Interest. Except
as provided in subsection (a), no benefit payable under or
interest in the Plan shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance or charge, and any such attempted
action shall be void and no such benefit or interest shall
be in any manner liable for or subject to debts, contracts,
liabilities, engagements, or torts of any Participant or
beneficiary.
(g) Delaware Law to Govern. All questions pertaining
to the construction, regulation, validity and effect of the
provisions of the Plan shall be determined in accordance
with the laws of the State of Delaware.
(h) Change in Conditions of Federal Income Tax Laws.
In the event of relevant changes in the Federal income tax
laws, regulations and rulings or other factors affecting
the continued appropriateness of participation share awards
or stock options under the Plan, the Committee may, in its
sole discretion, accelerate or change the form of payment,
distribution or exercise of such awards or stock option
grants. In addition, the Committee shall have the power to
take such action as it deems necessary and desirable to
amend this Plan and any options granted hereunder, for the
purpose of permitting the Participant to obtain favorable
Federal income tax treatment in connection with the options
or disposition of shares obtained through exercise of
options.
(i) Election to Receive Cash Rather than Stock. The
Committee, in its sole and absolute discretion, may allow
selected Participants the right to convert their
unexercised stock options to a cash payment. For each such
option so converted, the Participant shall be entitled to
receive cash equal to the difference between the
Participant's option price and the fair market value of the
Corporation's stock on the date of conversion. In order to
make such a conversion, however, the Participant must at
the time of such conversion also elect to exercise an
equivalent number of option shares for the Corporation's
stock on the same date. Fair market value at the date of
conversion shall be defined as the reported closing price
of the Corporation's stock on the date of conversion as
reported on the composite list used by The Wall Street
Journal for reporting stock prices, or if no such sale
shall have been made on that day, on the last preceding day
on which there was such a sale.
(j) Election to Defer Receipt. Under rules
established by the Committee in its sole and absolute
discretion, the Committee may permit a Participant to elect
to defer the receipt of all or any portion of amounts which
may otherwise become payable under subsections 6(b) and
(c). This election shall be evidenced by a letter from the
Participant to the Committee, which letter shall, before
the date of maturity of the award, be signed by the
Participant and accepted by the Committee. The period of
deferral specified in the letter shall be set forth in
accordance with the rules of the Committee, and may extend
to a period following retirement. If accepted by the
Committee, such letter may provide that the amount
otherwise payable to the Participant shall be valued at the
date of maturity and earn interest from that date at a rate
and in a manner determined from time to time by the
Committee. After adjustment for any resulting interest,
the deferred amount shall be paid at the date or dates
specified in the Participant's letter, and such adjusted
amount shall not be subject to forfeiture as otherwise
provided in subsection 6(h). In the discretion of the
Committee, the balance of a Participant's deferred amount
may be paid earlier than the date or dates specified in the
Participant's letter, but only in the case of severe
financial hardship.
(k) Purchase of Common Stock. The Corporation and
its Subsidiaries may, but shall not be required to,
purchase from time to time shares of Common Stock of the
Corporation in such amounts as they may determine for
purposes of the Plan. The Corporation and its Subsidiaries
shall have no obligation to retain, and shall have the
unlimited right to sell or otherwise deal with for their
own account, any shares of Common Stock of the Corporation
purchased pursuant to this paragraph.
(i) Use of Proceeds. The proceeds received by the
Corporation from the sale of stock pursuant to the exercise
of options shall be used for general corporation purposes.
15. INCENTIVE STOCK OPTIONS
The authority granted to the Committee pursuant to Section
7 of the Plan shall include the authority to (i) grant
"incentive stock options," as that term is defined in Section
422A of the Internal Revenue Code of 1954, as amended, and (ii)
modify options outstanding on August 13, 1981, to qualify them
as incentive stock options. The provisions of Section 7 of the
Plan shall apply to incentive stock options, subject to the
modifications and additions set forth in the following
subsections of this Section 15.
(a) 10 Percent Shareholders. An incentive stock
option shall be granted only to an individual who, at the
time the option is granted, does not own stock possessing
more than 10 percent of the total combined voting power of
all classes of stock of the employer corporation or of its
parent or subsidiary corporations.
(b) Prior Option Rule. An incentive stock option
shall not be exercisable while there is outstanding (within
the meaning of subsection (c)(7) of Section 422A of the
Internal Revenue Code of 1954, as amended) any incentive
stock option which was granted, before the granting of such
option, to such individual to purchase stock in his/her
employer corporation or in a corporation which (at the time
of the granting of such option) is a parent or subsidiary
corporation of the employer corporation, or in a
predecessor corporation of any such corporations.
(c) Limitations on Option Grants. In the case of an
incentive stock option granted after December 31, 1980, the
aggregate fair market value (determined as of the time the
option is granted) of the stock for which any employee may
be granted incentive stock options in any calendar year
(under all plans described in subsection (b) of Section
422A of the Internal Revenue Code of 1954, as amended, of
his/her employer corporation and its parent and subsidiary
corporations, hereinafter referred to as "such plans")
shall not exceed $100,000 plus any unused limit carryover
carried to such year. The unused limit carryover shall be
an amount which equals one-half of the amount which an
employee was granted less than $100,000 in options
(determined as of the time the option is granted) in any
calendar year after 1980 (under all such plans of his/her
employer corporation and its parent and subsidiary
corporations). The unused limit carryover from any year is
the amount of unused limit carryover reduced by the amount
of such carryover which was used in prior calendar years.
Provided, however, that such unused limit carryover may
only be carried over to each of the three calendar years
succeeding the year in which the limit carryover arises,
and further provided that the amount of any options granted
during any calendar year shall be treated as first using up
the $100,000 limitation and then shall be treated as using
up unused limit carryovers to such year in the order of the
calendar years in which such carryovers arose.
(d) Exercise After Disability or Retirement. In the
event of the total and permanent disability of a
participant without having exercised an incentive stock
option in full, the remaining portion of such incentive
stock options shall be exercisable for purposes of
subsection 7(d) of this Plan without regard to the
limitations of subsection 7(c) within the earlier of (i)
one year from the date of such event or (ii) the remaining
term of the option. In the event of the retirement of a
participant without having exercised an incentive stock
option in full, the remaining portion of such option shall
be exercisable without regard to the limitations in
subsection 7(c) within the earlier of (i) three months from
the date of such retirement or (ii) the remaining term of
the option.