EXHIBIT 10g1
GALLAHER LIMITED
EXECUTIVE INCENTIVE PLAN
PURPOSE
The purpose of the Plan is to provide an extra immediate incentive to key
executives of Gallaher Limited to increase the earnings of Gallaher Limited and
its subsidiaries (all of which, where the context so admits, are hereinafter
called "Gallaher").
1 Available Amount
As soon as practicable after the end of the year 1994 and of each year
thereafter, and after receipt from Coopers & Lybrand (herein called the
"Accountants") of the letter required by the paragraph 4, the contents
of which letter shall be binding and conclusive on all persons, there
shall be made available for allotment as hereinafter provided an amount
equal to 0.389% of Gallaher's adjusted profit from continuing
operations.
2 Allotment
(a) Except as otherwise provided in paragraph 2(c), of the
amount made available for allotment for any year, 18 1/2%
shall be allotted to the person (or persons) who during such
year held the position of Chairman of Gallaher and 13 1/2% to
the person (or persons) who during such year held the position
of Deputy Chairman of Gallaher, in each case subject to
reduction as permitted by paragraph 2(e). If either such
position shall have been vacant at any time during the year,
the amount to be allotted to the incumbent or incumbents of
such position for such year shall be reduced proportionately.
If either such position shall have had more than one incumbent
during the year, the amount to be allotted in respect of such
position shall be divided among the different incumbents in
the proportion of their respective periods of incumbency
during the year.
Except as otherwise provided in paragraph 2(c), of the amount
made available for allotment for any year, 68% (except for any
part thereof that the Committee determines shall not be
allotted) shall be allotted to such individuals among the
Eligible Employees (including the surviving spouses or estates
of any of them who have died during the said year) and in such
amounts as to individuals as the Committee in each case in its
sole discretion shall determine, after considering the
recommendations of the Chairman and Deputy Chairman of
Gallaher with respect thereto. In addition there shall be
allottable to Eligible Employees any amount which is not
allotted in such year to the Chairman or Deputy Chairman of
Gallaher by reason of vacancy at any time during such year in
either or both of such positions.
(b) If the Chairman or Deputy Chairman of Gallaher shall have
been an Eligible Employee for any portion of a year for which
they are making recommendations with respect to Eligible
Employees, they shall recommend that there be allotted to such
person for such a period the same percentage of the total
allottable to Eligible Employees, adjusted proportionately on
the basis of the period of year for which the allotment is
being made, as the allotment made to him for the preceding
year was of the total allottable to Eligible Employees for
that year. If any such person was not an Eligible Employee
during such preceding year or if no allotments were made for
such year, the amount allottable to him for such period shall
be determined by the Committee.
(c) No amount shall be allotted under this paragraph 2 to any
person for any period for which such person is eligible to
participate in Incentive Compensation under Article XII of the
Bye-Laws of American Brands, Inc. No part of the amount made
available for allotment for any year that shall not have been
allotted under this paragraph 2 within 60 days after receipt
of the letter required by paragraph 4 may be allotted at any
subsequent time.
(d) If at any time there shall be two or more Deputy Chairmen of
Gallaher, each such Deputy Chairman shall be regarded as an
Eligible Employee and not as a Deputy Chairman for the
purposes of the Plan.
(e) The Committee shall have authority to reduce the amount of any
allotment to the Chairman and Deputy Chairman or either of
them pursuant to paragraph 2(a) if and to the extent that the
Committee deems it appropriate. No part of any such reduction
in any allotment shall be available for allotment to any other
person.
3 Payment
Payment of amounts allotted shall be remitted in sterling by Gallaher
as soon as practicable.
4 Accountants' Letter
As soon as practicable after the end of each fiscal year of Gallaher
and before distribution of the amounts allotted, the Committee shall
obtain a letter from the Accountants who have examined to consolidated
financial statements of Gallaher and subsidiaries for such year to the
effect that in connection with such examination they have reviewed the
determination of the amount available for allotment under the Plan, and
that in their opinion such determination has been made in accordance
with the provisions of paragraphs 1 and 6(a). The review made by the
Accountants shall include comparison of the elements entering into the
computation of adjusted profit from continuing operations with the
books and records of Gallaher.
5 Duration and Amendment
The Plan shall be applicable for the year 1994 and subsequent years,
provided that the Plan may be amended or terminated by the board of
Directors of Gallaher at any time except as to any completed year.
6 Definitions
(a) "Adjusted profit from continuing operations" for any year
means the profit from continuing operations, before taxes on
profit, as reflected in Gallaher's annual report and
consolidated financial statements for such year, but adjusted
to (i) exclude the deduction for incentive compensation made
available for allotment under this Executive Incentive Plan,
(ii) exclude unrealized gains and losses on securities, and
adjust realized gains and losses on trading securities to
reflect cost, (iii) exclude restructuring charges or credits,
and charges for impaired assets other than those sold in the
ordinary course of business, (iv) include the results of
operations for such year from businesses classified as
"discontinued operations" prior to the disposition dates, and
(v) to the extent not adjusted pursuant to items (ii), (iii)
or (iv) above, exclude gains or losses included in continuing
operations resulting from the sale or writedown of intangible
assets, land or buildings, investments in business units and
securities resulting from the sale of business units.
(b) "Committee" means the Incentive Compensation Committee of
American Brands, Inc.
(c) "Eligible Employees" means those key executives of Gallaher
designated by the Chairman and Deputy Chairman of Gallaher to
participate in the Plan for any year. An employee may not be
designated and Eligible Employee as to any period for which he
participates in any other bonus or incentive plan of Gallaher.