THE WPP EXECUTIVE STOCK OPTION PLAN
As adopted by the Directors on
24th June, 1996
and amended by the Compensation Committee of the Board on
23rd April, 1997
and amended by the Compensation Committee of the Board on
24th September, 1998
and amended by the Compensation Committee of the Board on
5th May, 1999 (with the approval of the shareholders on 28th June, 1999)
and amended by the Compensation Committee of the Board on
22nd September, 1999
and amended by the Compensation Committee of the Board on
20th September, 2000 (with the approval of shareholders
on 26th June, 2000)
CONTENTS
Clause Page
- ------ ----
1. Definitions and Interpretation.......................1
2. Eligibility..........................................2
3. Grant of Options.....................................2
4. Limits...............................................3
5. Exercise of Options..................................5
6. Takeover, Reconstruction and Winding-up..............6
7. Variation of Capital.................................7
8. Alterations..........................................8
9. Miscellaneous........................................8
Schedule....................................................10
Appendix 1..................................................12
Appendix 2..................................................16
Appendix 3..................................................17
Appendix 4................................................ 18
Appendix 5................................................ 19
Appendix 6................................................ 21
1. Definitions and Interpretation
(1) In this Scheme, unless the context otherwise requires:
"the Board" means the board of directors of the Company or a committee
appointed by such board of directors;
"Depository" means any depository or depositories which hold or whose
nominee holds WPP ADSs;
"the Company" means WPP Group plc (registered in England and Wales No.
1003653);
"the Grant Date" in relation to an Option means the date on which the
Option was granted;
"Group Member" means:
(a) a Participating Company or a body corporate which is (within
the meaning of section 736 of the Companies Act 1985) the
Company's holding company or a subsidiary of the Company's
holding company; or
(b) a body corporate which is (within the meaning of section 258
of that Act) a subsidiary undertaking of a body corporate
within paragraph (a) above and has been designated by the
Board for this purpose;
"Option" means a right to acquire Shares or WPP ADSs under the Plan;
and a right to acquire Shares shall be known as a "Share Option" and a
right to acquire WPP ADSs shall be known as an "ADS Option";
"Participant" means a person who holds an Option granted under the
Scheme;
"Participating Company" means the Company or any Subsidiary;
"the Plan" means the WPP Executive Stock Option Plan as herein set out
but subject to any alterations or additions made under Rule 8 below;
"Schedule 9" means Schedule 9 to the Taxes Act 1988;
"Share" means an ordinary share in the capital of the Company, and for
the purposes of Rule 4 (Limits) and if the context requires, other
provisions of the Rules, "Shares" include WPP ADSs;
"Subsidiary" means a body corporate which is a subsidiary of the
Company within the meaning of section 736 of the Companies Act 1985;
"the Taxes Act 1988" means the Income and Corporation Taxes Act 1988;
"the WOP" means the WPP Worldwide Ownership Plan (originally adopted
on 24th June, 1996) as from time to time amended;
"WPP ADS" means an American Depository Share representing 10 Shares
pursuant to the Amended and Restated Deposit Agreement between the
2
Company and Citibank NA as of 24th October, 1995 and/or any other
American depository share arrangement sponsored by the Company;
"WPP Receipt" means an American Depository Receipt evidencing WPP
ADSs;
and expressions not otherwise defined herein have the same meanings as
they have in Schedule 9.
(2) Any reference in the Plan to any enactment includes a reference to
that enactment as from time to time modified, extended or re-enacted.
2. Eligibility
(1) Subject to sub-rule (3) below, a person is eligible to be granted an
Option under the Plan if (and only if) he is a full-time director or
qualifying employee of a Participating Company.
(2) For the purposes of sub-rule (1) above:
(a) a person shall be treated as a full-time director of a
Participating Company if he is obliged to devote to the
performance of the duties of his office or employment with
that and any other Participating Company not less than 25
hours a week;
(b) a qualifying employee, in relation to a Participating
Company, is an employee of the Participating Company (other
than one who is a director of a Participating Company).
(3) A person is not eligible to be granted an Option under the Plan at any
time within the two years immediately preceding the date (if any) on
which he is bound to retire in accordance with the terms of his
contract of employment.
3. Grant of Options
(1) Subject to sub-rule (2) below and Rule 4 below, the Board may grant or
procure the grant to any person who is eligible to be granted an
Option under the Plan an Option to acquire Shares in the Company, upon
the terms set out in the Plan and upon such other objective terms as
the Board may specify; and for this purpose an option to acquire
includes an option to purchase and an option to subscribe. Unless the
Board otherwise determines Share Options shall be granted to persons
who are eligible under the Plan and who are resident in the United
Kingdom and ADS Options shall be granted to other persons who are
eligible.
(2) An Option may only be granted under the Plan:
(a) within the period of 6 weeks beginning with the date on
which the Plan is approved and adopted by the Company in
general meeting or the dealing day next following the date
on which the Company announces its results for any period,
or at any other time when the circumstances are considered
by the Board to be sufficiently exceptional to justify the
grant thereof; and
(b) within the period of 10 years beginning with the date on
which the Plan is approved and adopted as aforesaid 24th
June, 1996.
3
(3) The price at which Shares may be acquired by the exercise of an Option
shall be determined by the Board before the grant thereof, but shall
not be less than:
(a) in the case of a Share Option, if Shares of the same class as
those Shares are listed in the London Stock Exchange Daily
Official List, the average middle-market quotation of Shares
of that class (as derived from that List) over a number of
consecutive dealing days (being not more than five)
immediately preceding the Grant Date;
(b) in the case of a Share Option, if paragraph (a) above does not
apply, the market value (within the meaning of Part VIII of
the Taxation of Chargeable Gains Act 1992) of Shares of that
class, as reasonably determined by the Board;
(c) in the case of an ADR Option, the fair market value of a WPP
ADS as quoted on NASDAQ over a number of consecutive dealing
days (being not more than five) immediately preceding the
Grant Date; or
(d) except in the case of an Option to acquire shares otherwise
than by subscription, the nominal value of those Shares.
(4) An Option granted under the Plan to any person:
(a) shall not, except as provided in Rule 5(4) below, be capable
of being transferred by him; and
(b) shall lapse forthwith if he is adjudged bankrupt.
4. Limits
(1) No options shall be granted under the Plan or the WOP which would, at
the time they are granted, exceed the limit set out in this Rule 4(1).
That limit is that the number of shares which;
(i) shall have been issued; or
(ii) may be issued
in pursuance of options granted under the Plan or the WOP in the
period of 10 years beginning with 28th June, 1999 (which is subject to
the requirement under Rule 3(2)(b) that Options may only be granted
within 10 years after 28th June, 1996) must not exceed such number as
represents 10 per cent of the ordinary share capital of the Company in
issue at the time of grant of the options. In applying this Rule,
Shares issued under any other employee share scheme adopted by the
Company after 28th June 1999 (or Shares issued or capable of issue
under any other share option scheme of the Company adopted after that
date, as the case may be) shall also count against that limit.
(2) No person shall be granted Options under the Plan which would, at the
time they are granted, cause the market value of the Shares in the
Company for which he may subscribe (but excluding those for which he
has already subscribed) in pursuance of Options granted to him in the
period of 10 years ending at that time, under the Plan or under any
other share option scheme (other than a savings related scheme)
adopted by the Company, to exceed 4 times the higher of the total
remuneration (excluding benefits in kind) expressed as an annual rate
4
payable by the Participating Companies to him as at that time and the
total remuneration (excluding benefits in kind) received by him in any
period of 12 months ending within the preceding 2 years in respect of
his office or employment with the Participating Companies; and for the
purposes of this sub-rule:
(a) any Option which shall have been released to any extent
shall be treated to that extent as if it were still
exercisable;
(b) shares in a Participating Company shall not be regarded as
benefits in kind;
(c) where a payment of remuneration is made otherwise than in
sterling, the payment shall be treated as being of the
amount of sterling ascertained by applying such rate of
exchange published in a national newspaper as the Board
shall reasonably determine; and
(d) a person's remuneration shall be deemed to include fees paid
to a company whose principal purpose is to provide his
services, being services of a nature which he would be
expected to perform as an employee of a Participating
Company, and being fees referable to those services and
exclusive of VAT.
(3) For the purposes of this Rule, the market value of the Shares in
relation to which an Option was granted shall be calculated:
(a) in the case of an Option granted under the Plan, as on the
day by reference to which the price at which Shares may be
acquired by the exercise thereof was determined in
accordance with Rule 3(3) above;
(b) in the case of an option granted under any option scheme
(other than a savings related scheme) approved by the Inland
Revenue, as at the time when it was granted or, in a case
where an agreement relating to the Shares has been made
under paragraph 29 of Schedule 9, such earlier time or times
as may be provided in the agreement; and
(c) in the case of any other option, as on the day or days by
reference to which the price at which shares may be acquired
by the exercise thereof was determined
and the Board may adopt such exchange rate as it thinks fit for the
conversion of one currency to another currency.
(4) No person shall be granted an Option under the Plan if the number of
Shares which may be acquired on exercise of that Option, when added to
the number of Shares which have been or may still be acquired on the
exercise of Options previously granted to him under the Plan, exceeds
3% of the total of
(a) the number of Shares which have been or may still be
acquired on the exercise of Options previously granted to
all persons under the Plan, and
(b) the number of Shares still available for the grant of
Options under the Plan.
(5) Any Option granted under the Plan shall be limited and take effect so
that the above limits are complied with.
5
5. Exercise of Options
(1) The exercise of any Option granted under the Plan shall be effected in
such form and manner as the Board may from time to time prescribe.
(2) Subject to sub-rules (4) and (5) below and to sub-rules (1) and (3) of
Rule 6 below, an Option granted under the Plan may not be exercised
before the third anniversary of the Grant Date.
(3) Subject to sub-rule (4) and paragraphs (a) and (c) of sub-rule (5) and
paragraph (b) of sub-rule 7 below and to sub-rules (1) and (3) of Rule
6 below, an Option granted under the Plan may not be exercised if the
relevant condition is not satisfied; and in this sub-rule the relevant
condition is a condition related to performance which constitutes a
term specified by the Board as mentioned in Rule 3(1) above or, if
there is no such condition, the condition in the Schedule hereto.
(4) If any Participant dies before exercising an Option granted to him
under the Plan and at a time when either he is a director or employee
of a Group Member or he is or would but for sub-rule (3) above be
entitled to exercise the Option by virtue of sub-rule (5) below, the
Option may (and must, if at all) be exercised by his personal
representatives within 12 months after the date of his death.
(5) If any Participant ceases to be a director or employee of a Group
Member (otherwise than by reason of his death), the following
provisions apply in relation to any Option granted to him under the
Plan:
(a) if he so ceases by reason of injury or disability, or by
reason only that his office or employment is in a company
which ceases to be a Group Member, or relates to a business
or part of a business which is transferred to a person who
is not a Group Member, the Option may (and subject to
sub-rule (4) above must, if at all) be exercised within the
exercise period;
(b) if he so ceases by reason of retirement on or after reaching
the age at which he is bound to retire in accordance with
the terms of his contract of employment (or, if there is no
such age, if he retires at all), the Option may (and subject
to sub-rule (4) above must, if at all) be exercised within
the exercise period, but subject to sub-rule (3) above;
(c) if he so ceases for any other reason, the Option may not be
exercised at all unless the Board shall so permit, in which
event it may (and subject to sub-rule (4) above must, if at
all) be exercised to the extent permitted by the Board
within the exercise period;
and in this sub-rule the exercise period is the period which shall
expire 12 months after his so ceasing or 42 months after the Grant
Date, whichever shall be the latest.
(6) Subject to sub-rule 6(A) below, a Participant shall not be treated for
the purposes of sub-rule (5) above as ceasing to be a director or
employee of a Group Member until such time as he is no longer a
director or employee of any Group Member, and a female Participant who
ceases to be such a director or employee by reason of pregnancy or
confinement and who exercises her right to return to work under the
Employment Rights Act 1996 before exercising an Option under the Plan
shall be treated for those purposes as not having ceased to be such a
director or employee.
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(6A) In the case of Options granted after 1st September 1999 (other than
under the Approved Part), a Participant, who gives or is given notice
to leave employment as a director or employee of a Group Member in any
circumstances other than death or in those circumstances referred to
in sub-rule (5)(a) or (b), shall, if he subsequently ceases to be in
such employment, be treated for the purposes of sub-rule (5) above as
ceasing to be a director or employee of a Group Member on the date on
which that notice is given (and for the avoidance of doubt any
purported exercise of the option during the period of notice shall be
of no effect). If a Participant is given notice to leave employment as
a director or employee of a Group Member and the Board subsequently
uses its discretion under sub- rule (5)(c) to allow his Option to be
exercisable, nothing in this sub- rule (6)A will make his Option lapse
or cease to be exercisable.
(7) Notwithstanding any other provision of the Plan, an Option granted
under the Plan (a) may not be exercised after the expiration of the
period of 10 years (or such shorter period as the Board may have
determined before the grant thereof) beginning with the Grant Date
(the last day of such period being the "Expiry Date"); and (b) in
respect of any option granted after 1 September 1998, such option
shall be exercisable for the period of four (4) months ending on the
Expiry Date irrespective of whether the relevant condition (as that
term is defined in Rule 5(3)) has been satisfied.
(8) Within 30 days after an Option under the Plan has been exercised by
any person, the grantor of the Option shall, in the case of a Share
Option, procure the allotment or transfer to him (or a nominee for
him) of the number of Shares in respect of which the Option has been
exercised and, in the case of an ADS Option, procure the issue to him
of a WPP Receipt evidencing the WPP ADSs in respect of which the
Option has been exercised (including, if appropriate, by procuring the
allotment or transfer of Shares to a Depository) unless:
(a) the Board considers that the issue or transfer thereof would
not be lawful in all relevant jurisdictions; or
(b) in a case where a Group Member is obliged to account for any
tax (in any jurisdiction) for which the person in question
is liable by virtue of the exercise of the Option, that or
another Group Member is unable to withhold the tax from his
remuneration nor has received payment from him of a
corresponding amount.
(8A) The Board may agree with any Participant at any time that an Option
granted under the Plan before 28th June, 1999 shall be treated as if
it had been an ADS Option (and not a Share Option). The Board shall
select such exchange rate as it considers appropriate for converting
the price at which Shares may be acquired from sterling to U.S.
dollars.
(9) All Shares allotted under the Plan shall rank pari passu in all
respects with the Shares of the same class for the time being in issue
save as regards any rights attaching to such Shares by reference to a
record date prior to the date of the allotment.
(10) If Shares of the same class as those allotted under the Plan are
listed in the London Stock Exchange Official List, the Company shall
apply to the London Stock Exchange for any Shares so allotted to be
admitted to that List.
6. Takeover, Reconstruction and Winding-up
(1) If any person obtains control of the Company (within the meaning of
section 840 of the Taxes Act 1988) as a result of making a general
offer to acquire Shares in the Company, or having obtained such
7
control makes such an offer, the Board shall within 7 days of becoming
aware thereof notify every Participant thereof and, subject to
sub-rules (4), (5) and (7) of Rule 5 above, an Option granted under
the Plan may be exercised within three months (or such longer period
as the Board may permit) of such notification.
(2) For the purposes of sub-rule (1) above, a person shall be deemed to
have obtained control of the Company if he and others acting in
concert with him have together obtained control of it.
(3) If any person becomes bound or entitled to acquire Shares in the
Company under sections 428 to 430F of the Companies Act 1985, or if
under section 425 of that Act the Court sanctions a compromise or
arrangement proposed for the purposes of or in connection with a
scheme for the reconstruction of the Company or its amalgamation with
any other company or companies, or if the Company passes a resolution
for voluntary winding up, or if an order is made for the compulsory
winding up of the Company, the Board shall forthwith notify every
Participant thereof and any Option granted under the Plan may, subject
to sub-rules (4), (5) and (7) of Rule 5 above, be exercised within one
month of such notification, but to the extent that it is not exercised
within that period shall (notwithstanding any other provision of the
Plan) lapse on the expiration thereof.
(4) The Board may determine (the determination to apply equally to all
Options outstanding at the time) that the provisions of sub-rules (1)
and (3) above will neither cause Options to become exercisable nor to
lapse at different times than would otherwise be the case, if the
Board considers that the Options will continue to be an appropriate
incentive notwithstanding the changed circumstances, or that the
position of Participants can be adequately preserved by the grant to
them of some other right or rights in substitution for or addition to
the existing rights.
7. Variation of Capital
(1) In the event of any increase or variation of the share capital of the
Company (whenever effected), the Board may make such adjustments as it
considers appropriate under sub-rule (2) below.
(2) An adjustment made under this sub-rule shall be to one or more of the
following:
(a) the number of Shares in respect of which any Option granted
under the Plan may be exercised;
(b) the price at which Shares may be acquired by the exercise of
any such Option:
(c) where any such Option has been exercised, but no Shares have
been allotted or transferred pursuant to such exercise, the
number of Shares which may be so allotted or transferred and
the price at which they may be acquired.
(3) An adjustment under sub-rule (2) above may have the effect of reducing
the price at which Shares may be acquired by the exercise of an Option
to less than their nominal value, but only if and to the extent that
the Board shall be authorised to capitalise from the reserves of the
Company a sum equal to the amount by which the nominal value of the
Shares in respect of which the Option is exercised and which are to be
allotted pursuant to such exercise exceeds the price at which the same
may be subscribed for and to apply such sum in paying up such amount
on such Shares; and so that on exercise of any Option in respect of
8
which such a reduction shall have been made the Board shall capitalise
such sum (if any) and apply the same in paying up such amount as
aforesaid.
(4) As soon as reasonably practicable after making any adjustment under
sub-rule (2) above, the Board shall give notice in writing thereof to
any Participant affected thereby.
8. Alterations
(1) Subject to sub-rule (2) below, the Board may at any time alter or add
to all or any of the provisions of the Plan, or the terms of any
Option granted under it, in any respect.
(2) No alteration or addition to the advantage of Participants shall be
made under sub-rule (1) above to any Rule of the Plan without the
prior approval by ordinary resolution of the members of the Company in
general meeting other than a minor amendment to benefit the
administration of the Plan, to take account of a change in legislation
or to obtain or maintain favourable tax, exchange control or
regulatory treatment for any Participant or Group Member.
(3) As soon as reasonably practicable after making any alteration or
addition under sub-rule (1) above, the Board shall give notice in
writing thereof to any Participant affected thereby.
9. Miscellaneous
(1) The rights and obligations of any individual under the terms of his
office or employment with any Group Member shall not be affected by
his participation in the Plan or any right which he may have to
participate therein, and an individual who participates therein shall
by participating be deemed to waive any and all rights to compensation
or damages in consequence of the termination of his office or
employment for any reason whatsoever insofar as those rights arise or
may arise from his ceasing to have rights under or be entitled to
exercise any Option under the Plan as a result of such termination.
(2) In the event of any dispute or disagreement as to the interpretation
of the Plan, or as to any question or right arising from or related to
the Plan, the decision of the Board shall be final and binding upon
all persons.
(3) The Company and any Subsidiary may provide money to the trustees of
any trust or any other person to enable them or him to acquire Shares
to be held for the purposes of the Plan (which Shares may be held by a
Depository on behalf of any such trustees or other person) or enter
into any guarantee or indemnity for these purposes, to the extent
permitted by section 153 of the Companies Act 1985.
(4) In the event that Shares are transferred to a Participant in pursuance
of any Option granted under the Plan, the Participant shall, if so
required by the person making the transfer, join that person in making
a claim for relief under section 165 of the Taxation of Chargeable
Gains Act 1992 in respect of the disposal made by him in effecting
such transfer, should such relief be available.
(5) Any notice or other communication under or in connection with the Plan
may be given by personal delivery or by sending the same by post, in
the case of a company to its registered office, and in the case of an
individual to his last known address, or, where he is a director or
employee of a Group Member, either to his last known address or to the
9
address of the place of business at which he performs the whole or
substantially the whole of the duties of his office or employment.
(6) The Board may establish further plans based on the Plan but modified
to take account of local tax, exchange control or securities laws in
overseas territories, provided that any Shares made available under
such further plans are treated as counting against the limits
expressed in Rule 4(1) to (6).
10. Withholding
(1) The grant or exercise of any Option under this Scheme is subject to
the condition that the grant or an exercise of the Option shall not be
valid unless the Participant has, in addition to complying with the
other requirements of this Scheme, paid or procured the payment to the
Group Member which is his employer, or otherwise provided for (in a
manner satisfactory to that Group Member or, if appropriate, the
trustees of any employee benefit trust) an amount equal to the
Taxation for which any Group Member may be liable by reason of that
grant or exercise.
(2) Without limitation to (1) above, the Company or any other Group Member
which is a Participant's employer or the trustees of any employee
benefit trust may withhold any amount and make such arrangements as it
considers necessary which comply with applicable law to meet any
liability to Taxation in respect of the grant, exercise or
cancellation of Options or other event relating to Options or in
respect of any benefit under this Scheme. These arrangements may
include the sale of any Shares on behalf of a Participant, which the
Participant is deemed to have authorised, to produce a cash sum
sufficient to meet the Taxation liabilities referred to in this Rule
10.
(3) The Company may in its sole discretion waive the requirements set out
in this Rule 10 in respect of any part of the Participant's employer's
liability to Taxation, including in particular, any employer's
liability to National Insurance Contributions.
(4) In this Rule, "Taxation" means all forms of taxation or levy by any
state or any political sub-division of a state and includes income
tax, Pay as You Earn, National Insurance or other social security
contributions, whether being the primary liability of the employer or
the employee, or any other person.
10
SCHEDULE
1. The condition in this Schedule is that
(i) The average WPP TSR for a Relevant End Period exceeds the
average WPP TSR for a Relevant Base Period by an amount
which, expressed as a percentage, is greater than the
percentage by which the average FT-SE 100 TSR for the same
Relevant End Period exceeds the average FT-SE 100 TSR for
the same Relevant Base Period; and that the same shall have
been computed by the Company and communicated to the
Participant. The Company shall be obliged to perform the
calculation and communicate the result to the Participant
not later than the fifth working day following the end of
the calendar month in which the last weekday of the Relevant
End Period falls.
For the purposes of the paragraph above:
(a) a Relevant Base Period is any period of 60
weekdays of which the last is the day 3 years
prior to the last weekday of the Relevant End
Period (or, if that day is not a weekday, the last
preceding weekday) and is not earlier than the
last weekday before the Grant Date (weekdays in
this Schedule being Monday to Friday inclusive,
including bank holidays);
(b) a Relevant End Period is any period of 60
weekdays;
(c) FT-SE 100 TSR on any day means the total
shareholder return figure for the index FT-SE 100
companies (currently known as the index of "total
return") published in the Financial Times in
respect of that day;
(d) WPP TSR on any day means the total shareholder
return figure for the Company calculated on the
same basis as total shareholder return is
calculated for the purposes of FT-SE 100 TSR.
AND
(ii) Looking at two associated financial years of the Company of
which the later one is the third financial year after the
earlier one, the earnings per Share of the Company for the
later one must have exceeded its earnings per share for the
earlier one by an amount which, when expressed as a fraction
of the last mentioned earnings per share, is not less than
((R2-R1)/Rl) + 0.06, where R1 is the retail prices index for
the last month in the earlier year and R2 is the retail
prices index for the last month in the later year.
For the purposes of the paragraph above
(a) the earnings per share of the Company shall be
taken to be its headline earnings per Share, as
calculated in accordance with the principles set
out in Statement of Investment Practice No.1 "The
Definition of IIMR Headline Earnings" issued by
The Institute of Investment Management and
Research, or shall be calculated on such basis as
shall have been determined by the Board before the
grant of the Option;
11
(b) two financial years of the Company are associated
if the earlier one is not earlier than the
financial year of the Company last preceding the
Grant Date and the later one is not later than the
financial year of the Company last preceding the
date on which the Option is exercised;
(c) "financial year" has the same meaning as in
section 742 of the Companies Act 1985;
(d) the retail prices index is the general index of
retail prices (for all items) published by the
Central Statistical Office of the Chancellor of
the Exchequer or, if that index is not published
for the month in question, any substituted index
or index figures published by that Office.
2. The Board may make such adjustments to the method of calculating WPP
TSR, FT-SE 100 TSR, earnings per share or any other feature of the
above condition as it considers appropriate to take account of any
increase or variation of the share capital of the Company, any change
to the calculation of FT-SE 100 TSR or to earnings per share or any
other factors considered by the Board to be relevant.
12
APPENDIX 1
This Appendix constitutes the Inland Revenue approved part of the WPP Executive
Stock Option Plan ("the Approved Part"). The terms of the Approved Part are
identical to those of the other part of the said scheme to which this Approved
Part is appended except as follows.
1. In the definition of "Subsidiary" in Rule 1(1), add to the end words
"and is under the control of the Company within the meaning of Section
840 of the Taxes Act 1988".
2. In Rule 2(3), add to the end the words "nor when he is not eligible to
participate in the Plan by virtue of paragraph 8 of Schedule 9".
2A. Only Share Options, and not ADS Options, shall be granted under the
Approved Part.
3. In Rule 3(1), after the word "Company", add the words "which satisfy
the requirements of paragraphs 10 - 14 of Schedule 9".
4. In Rule 3(2), after the words "general meeting", add the words ", the
date on which the Approved Part is approved by the Inland Revenue
under Schedule 9".
5. In Rule 3(3)(a), add at the end the words "(or such other dealing day
or days as may be agreed with the Inland Revenue)".
6. In Rule 3(3)(b), delete the words "reasonably determined by the Board"
and substitute the words "agreed in advance for the purposes of the
Plan with the Shares Valuation Division of the Inland Revenue, on the
Grant Date (or such other day as may be agreed with the Inland
Revenue)".
7. Add the following as Rule 4(3A):
"No person shall be granted Options under the Approved Part which
would, at the time they are granted. cause the aggregate market value
of the Shares which he may acquire in pursuance of Options granted to
him under the Approved Part or under any other share option scheme,
not being a savings related share option scheme, approved under
Schedule 9 and established by the Company or by any associated company
of the Company (and not exercised) to exceed or further exceed
(pound)30,000".
8. In Rule 5(5), delete the words "or 42 months after the Grant Date" and
substitute the words ",42 months after the Grant Date or 42 months
after the last date prior to his so ceasing on which he exercised an
option (not being one granted under a savings related share option
scheme) in circumstances in which paragraphs (a) and (b) of Section
185(3) of the Taxes Act 1988 applied".
8A. Add the following after Rule 5(5)(b) as Rule 5(5)(bb):
"if he so ceases by reason of redundancy (within the meaning of the
Employment Rights Act 1996) the Option may not be exercised at all
following such cessation".
8B. In Rule 5(5)(c), delete the words "(including without limitation by
reason of redundancy (within the meaning of the Employment Rights Act
1996))".
13
8C. In Rule 5(6A) delete the words "after 1st September 1999 (other than
under the Approved Part" and replace those words with "18th May, 2000"
9. Add the following as Rule 5(7A):
"A Participant shall not be eligible to exercise an Option under the
Plan at any time when he is not eligible to participate in the Plan by
virtue of paragraph 8 of Schedule 9".
9A. Rule 5(8A) shall not apply.
10. Add the following as Rules 6(5) and (6):
"(5) (a) If any company ("the acquiring company"):
obtains control of the Company as a result
of making -
(i) a general offer to acquire the whole of
the issued ordinary share capital of the
Company which is made on a condition
such that if it is satisfied the person
making the offer will have control of
the Company, or
(ii) a general offer to acquire all the
Shares in the Company which are of the
same class as the Shares which may be
acquired by the exercise of Options
granted under the Plan, or
(b) obtains control of the Company in pursuance of a
compromise or arrangement sanctioned by the court
under section 425 of the Companies Act 1985 or
Article 418 of the Companies (Northern Ireland)
Order 1986, or
(c) becomes bound or entitled to acquire Shares in the
Company under sections 428 to 430F of that Act or
Articles 421 to 423 of that Order,
any Participant may at any time within the appropriate
period (which expression shall be construed in accordance
with paragraph 15(2) of Schedule 9), by agreement with the
acquiring company, release any Option granted under the Plan
which has not lapsed ("the old option") in consideration of
the grant to him of an option ("the new option") which (for
the purposes of that paragraph) is equivalent to the old
option but relates to shares in a different company (whether
the acquiring company itself or some other company falling
within paragraph 10(b) or (c) of Schedule 9).
(6) The new option shall not be regarded for the purposes of
sub-rule (5) above as equivalent to the old option unless
the conditions set out in paragraph 15(3) of Schedule 9 are
satisfied, but so that the provisions of the Plan shall for
this purpose be construed as if:
(i) the new option were an option granted under the
Plan at the same time as the old option;
(ii) except for the purposes of the definitions of
"Group Member", "Participating Company" and
"Subsidiary" in Rule 1(1) above and the reference
to "the Board" in Rule 5(7) above, the expression
14
"the Company" were defined as "a company whose
shares may be acquired by the exercise of options
granted under the Plan";
(iii) the relevant condition referred to in Rule 5(3)
above had been satisfied; and
(iv) Rule 8(2) below were omitted."
11. At the start of Rule 7(1), add the words "Subject to sub-rule (2A)
below".
12. In Rule 7(1), delete the words "increase or."
13. Add the following as Rule 7(2A):
"At a time when the Plan is approved by the Inland Revenue under
Schedule 9, no adjustment under sub-rule (2) above shall be made
without the prior approval of the Inland Revenue."
14. In Rule 8(1) delete the words "sub-rule (2)" and substitute the words
"sub-rules (2), (2A) and (2B)".
15. At the end of Rule 8(1), add the words "(having regard to the fact
that, if an alteration or addition which does not solely relate to a
special term is made at a time when the Plan is approved by the Inland
Revenue under Schedule 9, the approval will not thereafter have effect
unless the Inland Revenue have approved the alteration or addition)".
16. Add the following as Rule 8(2A) and (2B):
"(2A) No alteration or addition to the disadvantage of any
Participant, other than to a special term, shall be made
under sub-rule (1) above unless:
(a) the Board shall have invited every relevant
Participant to give an indication as to whether or
not he approves the alteration or addition, and
(b) the alteration or addition is approved by a
majority of those Participants who have given such
an indication.
(2B) No alteration or addition which solely relates to a special
term subject to which an Option has been granted shall be
under sub-rule (1) above unless:
(a) there shall have occurred an event which shall
have caused the Board reasonably to consider that
the special term would not, without the alteration
or addition, achieve its original purpose, and
(b) the Board shall act fairly and reasonably in
making the alteration or addition."
17. At the end of Rule 8(3), add the words "and if the Plan is then
approved by the Inland Revenue under Schedule 9, to the Inland
Revenue."
15
18. Add as Rule 8(4):
"Any reference in this Rule to a special term is a reference to a term
specified by the Board as mentioned in Rule 3(1) above or a term of
the Schedule hereto".
19. Delete Rule 9(6).
16
APPENDIX 2
Special Rules Applicable to Grants of Incentive Stock Options
1. Options granted in accordance with the Plan (either including or
excluding Appendix 1 thereto) may be designated as "Incentive Stock
Options" ("ISOs") within the meaning of section 422 of the United
States Internal Revenue Code of 1986, as amended (the "U.S. Tax
Code").
2. The aggregate number of Shares (including Shares comprised in any WPP
ADS) for which ISOs may be granted under Appendix 2 shall not exceed
73,811,500.
3. The class of persons who may receive ISOs shall, in addition to the
limitations imposed by Rule 2 of the Plan, be limited to those persons
who are employees of the Company or its "parent" or "subsidiary"
corporations within the meaning of sections 424(f) and (g),
respectively, of the U.S. Tax Code.
4. In addition to any other restrictions contained in the Plan, ISOs
shall not be transferable otherwise than by will or the laws of
descent and distribution. During the lifetime of the person to whom an
ISO is granted, the ISO shall be exercisable only by such person.
5. To the extent that the aggregate market value of Shares (including
Shares comprised in any WPP ADS) with respect to which ISOs are
exercisable (determined without regard to this sentence) for the first
time by a Participant during any calendar year (under all plans or
schemes of the Company or its "parent" and "subsidiary" corporations
within the meaning of sections 424(f) and (g), respectively, of the
U.S. Tax Code) exceeds US $100,000, such Options shall to the extent
of such excess be treated as Options which are not ISOs. For the
purposes of the preceding sentence, the market value of any Shares
(including Shares comprised in any WPP ADS) subject to an ISO shall be
determined at the time such ISO is granted.
6. This schedule shall be deemed to be included within the Plan as
adopted by shareholders for the purpose of any ISO grants.
17
APPENDIX 3
India
The Plan will apply to options granted to residents in India with the following
modifications:
1. Notwithstanding any other provision of the Plan, a person is eligible
to be granted an option under this Appendix if (and only if) he is a
full-time director or qualifying employee (as defined in Rule 2(2)) of
a Participating Company (whether or not the Company itself) resident
in India.
2. Notwithstanding any other provision of the Plan, the exercise of an
option will only take effect on the date on which the shares acquired
by virtue of that exercise are sold by the Participant.
3. Notwithstanding any other provision of the Plan, an option granted to
a Participant under this Appendix shall not be capable of being
transferred by that Participant except as provided in Rule 5(4) (in
the event of a Participant's death).
4. Notwithstanding any other provision of the Plan:
(a) any exercise of an option by a Participant is only effective
if, and to the extent that, the net proceeds (that is, after
taking account of dealing costs and any interest on the
money, if any, lent to the Participant to facilitate the
exercise of the option) from the immediate sale of the
shares acquired by the exercise of that option would be not
less than the price at which the Participant is able to
acquire the shares by virtue of that option;
(b) in the event that the net proceeds from the sale of shares
acquired by the exercise of an option by a Participant on
the day of acquisition of such shares would be less than the
price at which the Participant may acquire the shares by
virtue of that option, with the result that there would be a
shortfall between the acquisition price and the net proceeds
of such sale, any purported exercise of the option will not
take effect.
5. Further to 4 above, and notwithstanding any other provision of the
Plan, neither the Company nor any Participating Companies make any
representation or guarantee as to whether an intended exercise of an
option by a Participant on any given day will be effective, and
neither the Company nor any Participating Company shall be considered
to be or held accountable or liable in any way for the inability of a
Participant to exercise his option as a consequence of the
restrictions on exercise set out in 4 above.
6. The exercise of an option granted under this Appendix shall be
effected in the following manner:
(a) The exercise shall be deemed to take effect, if at all, 3
working days after the receipt by the Company of the
Participant's notice of his intention to exercise it.
(b) Assuming that the Company is able to establish that the
condition referred to in paragraph 4(a) above is met, a
third party selected by the Company will lend the option
exercise price to the Participant by way of transferring the
sum directly to the Company.
18
(c) The Company will then issue the shares to a nominee for the
Participant, which nominee will be a company controlled by a
firm of stockbrokers nominated by the Company.
(d) The nominee will sell the shares in question on the
Participant's behalf.
(e) The nominee will receive the sale price and deduct from this
dealing costs and the interest, if any referred to in
paragraph 4(a) above.
(f) As soon as practicable the remaining balance will be
converted into Indian Rupees at the best rate reasonably
obtainable on the foreign exchange markets and the resulting
sum (net of costs of conversion) remitted to the
Participant.
6. The Plan shall be administered by the Board or a committee appointed
by it and any determination by it shall be final for the purposes of
the Plan's administration in respect of employees of a Participating
Company (whether or not the Company itself) resident in India.
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APPENDIX 4
Belgium
The Plan will apply to Options granted to residents of Belgium after 1 January
1999 with the following modifications.
1. In Rule 3(4), a further sub-rule (c) shall be added as follows:
"(c) shall be cancelled if he notifies the Company that he
refuses to accept the Option within 60 days of the date of
the Company's communication to him in respect of the
Option."
2. In Rule 5(2), delete the words:
"the third anniversary of the Grant Date"
and substitute the words
"the 1 January following the third anniversary of the Grant
Date."
3. In Rule 5(4), delete the words:
"within 12 months after the date of his death."
and substitute the words
"in the later of the period of 12 months commencing with the date of
his death or the period of 6 months commencing on 1 January following
the third anniversary of the Grant Date."
4. In Rule 5(5), delete the words:
"and in this sub-rule the exercise period is the period which shall
expire 12 months after his so ceasing on 42 months after the Grant
Date, whichever shall be the latest"
and substitute the words
"and in this sub-rule the exercise period is the period which shall
commence on the 1 January following the third anniversary of the Grant
Date (the "Third Anniversary") and expire 12 months after his so
ceasing or 6 months after the Third Anniversary, whichever shall be
the latest."
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APPENDIX 5
Netherlands
The Plan will apply to Options granted to residents of the Netherlands
with the following alterations:
1. Rule 5(7) shall be deleted and replaced by the following in
substitution:-
"(7) Notwithstanding any other provision of the Plan, an Option
granted under the Plan may not be exercised after the
expiration of 4 years (or such shorter period as the Board
may have determined before the grant thereof) beginning with
the Grant Date."
2. Rule 10 shall be amended by the insertion of the following
sub-rule:
"(5) Without prejudice to sub-rules (1) to (4) above, each Option
is granted subject to the condition that, upon such Option
becoming exercisable in accordance with the Rules of the
Plan, the Participant will pay or procure the payment to the
Group Member which is his employer or otherwise provide for
(in a manner satisfactory to that Group Member or, if
appropriate, the trustees of any employee benefit trust), an
amount equal to Taxation which any Group Member or the
trustees of any employee benefit trust may be required to
withhold on the Participant's behalf by reason of that
Option becoming exercisable. No Option in the Netherlands
may be exercised, unless the Participant has complied with
his obligations under this Rule 10(5)."
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APPENDIX 6
Switzerland
The Plan will apply to Options granted to the residents of Switzerland on or
after 1 January 2002 with the modification that in Rule 5(7) the words "and six
months" be inserted after the words "10 years".