Exhibit 10
SCHERING-PLOUGH CORPORATION
EXECUTIVE INCENTIVE PLAN
As amended to January 25, 1994
Article I -- Definitions
The following words and phrases, as used herein, have the
following meaning unless a different meaning is plainly required by
the context:
"Affiliated Company" - any corporation, partnership, or
other legal entity controlled
directly or indirectly by the
Company.
"Board" - the Board of Directors of the
Company.
"Committee" - the Executive Compensation and
Organization Committee appointed by
the Board.
"Company" - Schering-Plough Corporation, a New
Jersey corporation.
"Company Stock" - the Common Shares, par value $l per
share, of the Company.
"Company Stock Unit
Account" - an account established to record
the aggregate of all Company Stock
Units credited to the account of
Participants under the Plan, or any
predecessor Executive Incentive
Plan.
"Former Participant" - a person no longer in the employ of
the Company who is entitled to
receive a distribution under the
Plan or any predecessor Executive
Incentive Plan.
"Fund A" - a fund deemed to be invested in the
Merrill Lynch one- to ten-year
Treasury Index.
"Fund B" - a fund deemed to be invested in the
Standard and Poors 500 Index.
"Fund C" - a fund deemed to be invested in
thirty-day United States Treasury
Bills.
"Participant" - any employee of the Company who is
designated by the Committee to
participate in the Plan.
"Plan" - this Plan, either in its present
form or as hereafter amended.
"Terminated Participant" - any employee who has been removed
from further participation in the
Plan or any predecessor Executive
Incentive Plan by action of the
Committee.
Article II -- Purposes
The purposes of the Plan are to: (a) improve Company and
individual performance through financial incentives which provide
rewards to executives and managers whose activities most
significantly affect Company profitability; (b) support the
Company's planning efforts and encourage cooperation and group
effort toward the attainment of Company goals; (c) help attract and
retain outstanding executives and managers.
Article III -- Awards
1. The Committee shall, prior to or during the first quarter
of each calendar year, establish criteria for determining the
incentive awards for such calendar year for Participants in the
Plan. In establishing the criteria, the Committee may, in its
discretion, consider the following: (a) the number of
Participants; (b) projected Company and industry performance; and
(c) such other factors it may deem appropriate, including
conditions in the general economy and in the industry.
2. As soon as practicable after the close of each calendar
year, the Committee shall determine the actual incentive awards to
be made to the Participants, provided, however, that prior to the
close of such calendar year, the Committee may estimate the actual
incentive award to be made to all or certain of the Participants
and may authorize the immediate distribution of all or any portion
thereof to such Participants, and provided further, however, that
during any such calendar year the Committee may, in its discretion,
determine incentive awards for the portion of the year preceding
such determination and may authorize the immediate distribution of
such awards to all or certain of the Participants.
In determining such awards the Committee may consider, inter
alia, the following: (a) the salary of each Participant; (b) the
level of executive or managerial responsibility; and (c) the
performance of each Participant.
3. Upon the retirement, disability or death of a
Participant, or upon a transfer to an Affiliated Company of a
Participant who is no longer to participate in the Plan, the
Committee may, in its discretion, make an award to such Participant
or his beneficiary or estate for the calendar year in which such
retirement, disability, death or transfer takes place, which award
shall be based on the portion of the year preceding the date of
such retirement, disability, death or transfer. The expression
"disability" as used herein shall mean total and permanent
disability and shall be evidenced by the certification of a medical
examiner acceptable to the Committee, to the effect that the
Participant, as a result of mental or physical disability, is
prevented from engaging in any occupation or employment for wage or
profit and that such disability will probably continue for the
remainder of the Participant's life.
4. Unless the Committee shall have authorized the
distribution to a Participant of an estimated or partial award
during the calendar year, no award shall be made to any Participant
with respect to any calendar year during which his employment is
terminated for any reason other than retirement, disability or
death.
5. For purposes of the Plan, employment by an Affiliated
Company shall be deemed to be employment by the Company.
Article IV -- Distribution
1. Except as described below, distributions of estimated,
partial, or actual awards shall be made to Participants as soon as
practicable following the determination thereof by the Committee
and in any event on or about March 1st of the year following the
calendar year for which an award is made (the "Distribution Date").
2. In lieu of the normal method of distribution described
above, a Participant may, prior to the commencement of any year, or
with respect to a new Participant prior to his date of commencement
of participation, elect to have all or any part of the award for
such year deferred until the earliest of his retirement,
disability, death, or other termination of employment (herein
called "the deferral period"). Such election may include an
election as to the number of annual installments, in multiples of
five but not exceeding thirty, over which such award shall be paid.
If no installments are specified, the election shall be deemed an
election to receive the deferred award in a lump sum. Lump sum
payments and the first of any installment payments shall be made on
the 90th day after the termination of the deferral period or, at
the Participant's election, made at the time of the election to
defer an award, on the April 1st of the calendar year following the
year of the termination of such deferral period. The amount of a
deferred award shall be expressed and credited to each Participant
in terms of compensation units (herein called "Units") which shall,
in accordance with the election of the Participant, consist of Fund
A Units, Fund B Units, Fund C Units, or Company Stock Units, or any
combination thereof. A Participant may elect a separate deferral
period and separate payment schedules with respect to Fund A Units,
Fund B Units, Fund C Units or Company Stock Units. The cash
equivalent of all deferred awards designated as Fund A Units, Fund
B Units, and Fund C Units shall be credited respectively to the
Fund A Account, the Fund B Account, and the Fund C Account. The
aggregate deferred awards designated as Company Stock Units shall
be credited to the Company Stock Unit Account.
The foregoing elections shall be irrevocable.
3. The Company shall establish a separate deferred account
for each Participant representing his participation in Fund A, Fund
B, Fund C, or the Company Stock Unit Account. As of each
Distribution Date, the Company shall credit to each such deferred
account of each Participant a number of Units and fractional Units
equal to the number of Units and fractional Units determined by
dividing the amount of such Participant's deferred award by the
Unit Value of Fund A, Fund B, Fund C or one share of Company Stock,
whichever is applicable.
The Unit Value of Fund A, Fund B, and Fund C shall be
determined as of any valuation date by dividing the fair market
value of each of such Funds at such date by the number of Units
then outstanding to the credit of all Participants, Former
Participants or Terminated Participants, respectively, with respect
to each such Fund, excluding amounts to be credited as of such
date. The Unit Value of one share of Company Stock for various
purposes hereunder shall be the closing price of one share of
Company Stock on the New York Stock Exchange on the day in
question; or if there were no sales on that day, then the closing
price on such Exchange on the nearest preceding day on which there
were sales.
4. When dividends are paid from time to time with respect to
Company Stock, the Company shall calculate the amount which would
have been payable in cash or property on the total Company Stock
Units in all deferred accounts on each dividend payment date as if
each Company Stock Unit represented one issued and outstanding
share of Company Stock. The number of Company Stock Units equal to
the aggregate amount of such dividends (based on the Unit Value of
one share of Company Stock on the payment date with respect to such
dividend) shall be credited to the Company Stock Unit Account, and
each deferred account representing a participation in the Company
Stock Unit Account shall be credited with its pro rata share of
such number of Company Stock Units. In the event of any capital
stock adjustment to Company Stock, the Company Stock Unit Account
and each such deferred account shall be correspondingly adjusted as
of the date of such capital stock adjustment.
5. Upon expiration of any deferral period, an amount of cash
equal to the Unit Value of Units credited to a Participant's,
Terminated Participant's, or Former Participant's deferred accounts
shall be payable either in a lump sum or in the number of annual
installments payable as specified by a Participant in his election
under paragraph 2 of this Article. Any lump sum payment shall be
valued as of the end of the most recent calendar month prior to the
payment date. The amount of each installment payment shall be
determined by dividing the aggregate Unit Value of the Units
credited to the Participant's, Terminated Participant's or Former
Participant's deferred accounts valued as of the end of the most
recent calendar month prior to the payment date by the remaining
number of unpaid installments; provided, however, that the
Committee may, in its absolute discretion, approve any other method
of determining the amount of each installment payment in order to
achieve approximately equal installment payments over the
installment period. The Committee may, in its sole discretion,
where a Participant, Terminated Participant or Former Participant
has terminated his employment and where it finds such action
necessary to avoid severe financial hardship to a Participant,
Terminated Participant or Former Participant or their respective
beneficiaries, direct at any time that payment of any installment
or lump sum be accelerated or that any remaining installments due
to a Participant, Terminated Participant or Former Participant or
their respective beneficiaries or estates shall be paid in a lump
sum. A severe financial hardship must result from the illness of
or an unexpected accident or casualty to the Participant,
Terminated Participant or Former Participant or a member of his or
her family or to his or her property, or due to other similar
extraordinary and unforeseeable circumstances arising as a result
of events beyond the control of the Participant, Terminated
Participant or Former Participant. A severe financial hardship
shall not exist to the extent the loss or expense is covered by
insurance or can be met by the sale of other liquid assets of the
Participant, Terminated Participant or Former Participant.
Unforeseeable hardship shall not include the college expenses of a
child or the costs of purchasing a residence. The amount of any
distribution hereunder shall not exceed the amount needed to meet
the severe financial hardship. Any benefits payable under the Plan
shall be equitably reduced to reflect any payments made from any
trust established by the Corporation to meet its obligations under
this Plan.
6. Designations of beneficiaries shall be made in writing
filed with the Company in such form and in such manner as the
Company may from time to time prescribe. Beneficiaries may be
changed by a Participant, Terminated Participant or Former
Participant in the same manner at any time prior to death, and may
thereafter be designated or changed by a surviving beneficiary
eligible to receive any payment unless a successor beneficiary to
such surviving beneficiary has been designated by the Participant,
Terminated Participant, Former Participant or prior beneficiary.
If a Participant, Terminated Participant, Former Participant or
beneficiary eligible to receive any payment dies without a
surviving beneficiary having been designated, or with his estate or
a trust designated as the beneficiary, his interest under the Plan
shall be distributed to the legal representative of his estate, or
to the trustee of any such trust, in a lump sum on the 90th day
after his death.
7. A Participant, Former Participant, or Terminated
Participant who has a balance in any of the deferred accounts may
elect to have his interest in such accounts reallocated among the
deferred accounts as follows:
(i) the election shall be in writing and shall be
delivered to the Corporation on or before the 20th
calendar day of the month in which the reallocation is to
be effective;
(ii) the reallocation shall be effected as of the last
business day of the month designated, or as soon
thereafter as practicable;
(iii) a reallocation may only be made once during any
calendar year by a Participant, Former Participant, or
Terminated Participant; and
(iv) in no event may a Participant, Former Participant,
or Terminated Participant subject to Section 16 of the
Securities Exchange Act of 1934 reallocate any balance
from the Company Stock Unit Account to any other deferred
account.
Article V -- Committee Powers and Responsibilities
The Committee, in its sole discretion, shall designate
all Participants in the Plan, and may at any time remove any
Participant from further participation in the Plan. The Committee
shall have the exclusive power and authority, except as provided
herein, to interpret and administer the Plan. The Committee shall
act by a majority of the members present at a meeting at which a
quorum is present or by a majority of its members in writing
without a meeting, and such action shall constitute the action of
the Committee. The action of the Committee shall be final and
binding upon the Company and all interested parties.
Article VI -- Amendment or Termination
The Plan may be amended or terminated at any time by
action of the Board. In the event of termination, no awards shall
be made thereafter, except for a year preceding the year in which
termination occurs and provided that no such amendment or
termination shall affect any right or obligation with respect to
any award theretofore made, or the rights of a Participant,
Terminated Participant, Former Participant or beneficiary to
receive amounts credited to his deferred account.
Article VII -- Miscellaneous
1. Neither the establishment of the Plan nor
participation therein shall confer upon any person any right to be
continued as an employee of the Company or an Affiliated Company,
and the Company reserves the right to discharge any employee
whenever in its sole judgment the interest of the Company or an
Affiliated Company so requires.
2. All expenses of administering the Plan shall be paid
by the Company.
3. No benefit under the Plan shall be subject in any
manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, or charge or subject to attachment,
garnishment, or other legal process.
4. The Plan shall be construed, administered and
enforced according to the laws of the State of New Jersey.
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