Exhibit 10(b)
SCHERING-PLOUGH CORPORATION
DEFERRED COMPENSATION PLAN
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.
"Code" - the Internal Revenue Code of 1986, as amended.
"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.
"Nonqualifying Compensation" - any compensation that is subject
to the limitation on deductibility contained in Section 162(m) of
the Code and the rules and regulations thereunder by reason of
being "applicable employee remuneration" as defined therein.
"Former Participant" - a person no longer in the employ of the
Company or an Affiliated Company who is entitled to receive a
distribution under the 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 or an Affiliated
Company in a salary grade of E-6 or above.
"Plan" - this Plan, either in its present form or as hereafter
amended.
"Terminated Participant" - any employee of the Company or an
Affiliated Company who is no longer in a salary grade of E-6 or
above.
Article II -- Purpose
The purpose of the Plan is to provide an opportunity to
Participants to defer receipt of compensation that may be
nondeductible by the Company pursuant to Section 162(m) of the
Code. The Plan is an unfunded plan maintained primarily for the
purpose of providing deferred compensation for a select group of
management or highly compensated employees.
Article III -- Deferral of Nonqualifying Compensation
1. A Participant may, prior to the commencement of any
year, or with respect to a new Participant prior to the date of
commencement of his employment, elect to have all his Nonqualifying
Compensation for such year deferred until the earliest of his
retirement, disability, death, other termination of employment,
or, except for amounts credited to the Company Stock Unit Account,
the repeal of Section 162(m) of the Code (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 deferred amount shall be paid.
If no installments are specified, the election shall be deemed an
election to receive the deferred amount 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 so deferred 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 amounts
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 amounts designated
as Company Stock Units shall be credited to the Company Stock Unit
Account.
The foregoing elections shall be irrevocable.
2. 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 the January 1
following the year in which a Participant's deferred Nonqualifying
Compensation was earned, 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
Nonqualifying Compensation 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.
3. 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.
4. 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 1 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.
Anything in this Plan to the contrary notwithstanding, the
Committee may, in its sole discretion, further defer the payment of
any lump sum or annual installment otherwise payable under
paragraph 1 of this Article III to any Participant, Former
Participant or Terminated Participant, if such payment would be
nondeductible by the Company at the time it would otherwise be paid
by reason of the limitation of Section 162(m) of the Code;
provided, however, that such payment shall be made on the earliest
date on which it would no longer be nondeductible by the Company by
reason of such limitation; and provided further, however, that in
no event shall the Committee so defer any such payment for more
than two years.
A Participant, Terminated Participant or Former Participant
shall hold in trust and promptly refund to the Company at its
request any amount covered by a deferral election or credited to
his deferred account under this Plan, if by reason of a
miscalculation or other mistake by the Company such amount is
received by him before it is due and payable in accordance with
this Plan.
5. 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.
6. 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 IV -- Administration of the Plan
The Plan shall be administered by or under the direction of
the Committee, and all questions arising in connection with the
Plan shall be determined by the Committee. The officers of the
Company and the Committee may employ and rely upon such legal
counsel, consultants, accountants and agents as they may deem
advisable. Decisions of the Committee shall be conclusive and
binding upon all persons.
Article V -- Amendment or Termination
The Plan may be amended or terminated at any time by action of
the Board; provided, however, that no such amendment or termination
shall affect the rights of a Participant, Terminated Participant,
Former Participant or beneficiary to receive amounts credited to
his deferred account.
Article VI -- 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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