EXHIBIT 10.8
TEJON RANCH CO.
DIRECTOR COMPENSATION PLAN
Annual Retainer
Each director of Tejon Ranch Co. (the "Company") who is not
an employee of the Company will be paid an annual retainer of
$24,000 for service as a director for each calendar year
commencing with 1998 and continuing through 2002. Unless a
director otherwise elects as set forth below, one-half of the
$24,000 will be paid in cash and the other half will be paid in
the form of the grant of a stock option having the terms and
valued as provided below. Any non-employee director will have
the right to elect to take all of his or her annual retainer
compensation in the form of stock options instead of taking one-
half of such compensation in cash by delivering written notice of
his or her election to do so to the Company prior to December 31
of each year with respect to compensation for the following year,
except that the election for 1998 must be made by January 31,
1998.
Any non-employee director who is affiliated with a person or
entity owning beneficially 5% or more of the outstanding shares
of Common Stock of the Company (including anyone who is an
employee of any such stockholder) will have the right to take his
or her entire annual retainer compensation in cash. For this
purpose, beneficial ownership will be determined in accordance
with Rule 13d-3 of the Securities and Exchange Commission adopted
under the Securities Exchange Act of 1934. Such election shall
be made by delivering written notice thereof to the Company
within the time period referred to above.
If a director makes any such election (either to take all
retainer compensation in options or all such compensation in
cash), such election shall remain in effect for all subsequent
years of the Plan unless it is changed by another election made
within the applicable time period for a subsequent year.
The cash portion of the annual retainer compensation will be
paid on or before December 31 of each calendar year with respect
to services during that calendar year and stock options
representing the option portion of such compensation will be
granted on the second Tuesday of January of each calendar year
with respect to service during that year, except that options for
1998 will be granted on February 2, 1998. In the event any
director serves for only a portion of any such calendar year, the
amount of the cash portion of the annual retainer shall be
reduced prorata (based upon the number of days during the year
through December 15 not served divided by the number of days in
the period from January 1 through December 15) and the option
portion shall terminate as to a similarly prorated number of
shares.
Other Compensation of Directors
In addition to the annual retainer compensation, non-
employee directors of the Company will be entitled to receive the
following amounts of cash:
$1,000 per meeting of the Board of Directors attended by
such director, whether attended in person or by telephone
conference call;
$500 per committee meeting attended by such director on
the day of a Board meeting, whether in person or by
telephone conference call;
$1,000 per committee meeting attended on a day when the
Board of Directors is not meeting, whether attended in
person or by telephone conference call.
All such other compensation of directors shall be paid on
the next regular payday of the Company following any such Board
or committee meeting. Directors shall also be compensated for
their out-of-pocket costs of travel to attend Board meetings upon
submission of customary documentation of such costs.
Terms of Stock Options
The stock options granted as part of the annual retainer
compensation shall be granted under the Company's Non-employee
Director Stock Incentive Plan (the "Stock Incentive Plan") to be
adopted by the Board of Directors of the Company and submitted to
the stockholders of the Company for approval at the 1998 Annual
Meeting of Stockholders. In the event the Stock Incentive Plan
is not approved by the stockholders, options granted under the
Stock Incentive Plan for 1998 compensation will terminate and the
entire amount of the annual retainer compensation referred to
above shall be paid in cash for 1998 and all subsequent years
through 2002 unless this Plan is otherwise amended or is repealed
by the Board of Directors. Options granted under the Stock
Incentive Plan shall have an exercise price equal to the fair
market value of the shares on the date of grant, shall have a
term of ten years, shall be fully exercisable commencing on
December 15 of the calendar year in which they are granted and
shall be non-transferable by the director except in connection
with his death or disability. The death,
disability or termination of the grantee's status as a director
shall not cause any option granted under the Stock Incentive Plan
to terminate, except that if a director ceases to serve in that
capacity at any time during the year for which the option is
granted, the option shall terminate as to the prorated number of
shares referred to above.
Valuation of Options
To determine the number of shares to be granted under the
Stock Incentive Plan to satisfy the Company's obligation to pay
annual retainer compensation, the value per share of the options
will be determined using the Black-Scholes method as of the date
of grant. The number of shares subject to the option to be
granted each director will then be determined by dividing the
amount of annual retainer compensation to be paid to such
director in the form of options by the per
share value of the options so determined.
Retention of Ownership of Stock
The Board of Directors has adopted a policy urging each
director to retain ownership of shares of stock issued upon
exercise of options issued under the Stock Incentive Plan. Such
continuing ownership is intended to more closely align the
interest of each director with those of the stockholders of the
Company. This policy is not intended to limit transfers by a
director to
his or her spouse or to lineal descendants or to any trust,
partnership or other similar entity in which they have a
substantial beneficial interest. This policy is not intended to
be legally
binding, is not reflected in the terms of the Stock Incentive
Plan and will not be reflected in the terms of options granted
under the Stock Incentive Plan.
Duration of Director Compensation Plan
This Director Compensation Plan shall commence effective
February 1, 1998 and shall continue until December 31, 2002
unless it is amended or repealed by the Board of Directors prior
to that date. Participation in the Director Compensation Plan
does not confer upon any person any right to continue as a
director of the Company.