EXHIBIT 10(i)
PFIZER INC.
STOCK AND INCENTIVE PLAN
---------------------------------
(AS AMENDED THROUGH JULY 1, 1999)
1. PURPOSE
The purpose of the Stock and Incentive Plan (known as the "Stock Option and
Incentive Plan of 1965 as amended" prior to the 1980 amendment thereof and
hereinafter called the "Plan") is to furnish a material incentive to employees
of the Company and its subsidiaries by making available to them the benefits of
a larger Common Stock ownership in the Company through stock options and
otherwise. It is believed that these increased incentives will not only induce
the continued service of employees but will also stimulate their efforts towards
the continued success of the Company and its subsidiaries, as well as assist in
the recruitment of new employees. Nothing in the Plan shall interfere with or
limit in any way the right of the Company or any subsidiary to terminate any
participant's employment at any time, nor confer upon any participant any right
to continue in the employ of the Company or any subsidiary. No employee shall
have the right to be selected to receive an option or other award under this
Plan or having been so selected, to be selected to receive a future award grant
or option. Neither the award nor any benefits arising out of this Plan shall
constitute part of a participant's employment contract with the Company or any
subsidiary and, accordingly, this Plan and the benefits hereunder may be
terminated at any time in the sole and exclusive discretion of the Company
without giving rise to liability on the part of the Company or any subsidiary
for severance payments.
2. ADMINISTRATION
Except to the extent otherwise provided in Section 4 and Section 15, the
Plan shall be administered by the Employee Compensation and Management
Development Committee, which shall make, in its sole discretion, all
determinations arising in the administration, construction or interpretation of
the Plan including the right to construe disputed or doubtful Plan terms and
provisions, and any such determination shall be conclusive and binding on all
persons, except as otherwise provided by law.
3. TOTAL NUMBER OF SHARES
Subject to the provisions of Section 6(g), the maximum amount of stock
which may be issued under the Plan is 1,179,000,000* shares of the Common Stock
of the Company (comprised of 72,000,000* shares authorized in 1965, 72,000,000*
shares authorized in 1969, 72,000,000** shares authorized in 1972, 72,000,000**
shares authorized in 1975, 72,000,000** shares authorized in 1980,
120,000,000*** shares authorized in 1983, 132,000,000*** shares authorized in
1986, 132,000,000*** shares authorized in 1989, 132,000,000**** shares
authorized in 1992, 138,000,000***** shares authorized in 1996 and
165,000,000****** shares authorized in 1999). No participant shall be granted
(i) options which would result in such participant receiving more than
1,440,000* shares of the total number of shares authorized in 1965, more than
1,440,000* shares of the total number of shares authorized in 1969, or more than
1,440,000** shares of the total number of
shares authorized in 1972, or (ii) options or awards which would result in such
participant receiving more than 1,440,000** shares of the total number of shares
authorized in 1975, more than 2,400,000** shares of the total number of shares
authorized in 1980, more than 2,400,000*** shares of the total number of shares
authorized in 1983, more than 3,600,000*** shares of the total number of shares
authorized in 1986, more than 3,600,000*** shares of the total number of shares
authorized in 1989, more than 3,600,000**** shares of the total number of shares
authorized in 1992, more than 3,600,000***** shares of the total number of
shares authorized in 1996, or more than 4,500,000****** shares of the total
number of shares authorized in 1999, or (iii) any option, stock award or
performance unit award which would result in ownership by such participant of
more than ten percent of the stock of the Company within the meaning of Section
422 of the Internal Revenue Code, or (iv) any incentive stock option, as defined
in Section 422 of the Internal Revenue Code, granted after December 31, 1986,
which would result in such participant receiving a grant of incentive stock
options for stock that would have an aggregate fair market value in excess of
$100,000, determined as of the time that the option is granted, that would be
exercisable for the first time by such participant during any calendar year. No
option with respect to any shares authorized in 1975 shall be granted to the
extent that shares authorized in 1972 are available therefor, or with respect to
any shares authorized in 1980 to the extent that shares authorized in 1972 or
shares authorized in 1975 are available therefor, or with respect to any shares
authorized in 1983 to the extent that shares authorized in 1972, 1975 or 1980
are available therefor, or with respect to any shares authorized in 1986 to the
extent that shares authorized in 1972, 1975, 1980 or 1983 are available
therefor, or with respect to any shares authorized in 1989 to the extent that
shares authorized in 1972, 1975, 1980, 1983, or 1986 are available therefor, or
with respect to any shares authorized in 1992 to the extent that shares
authorized in 1972, 1975, 1980, 1983, 1986 or 1989 are available therefor or
with respect to any shares authorized in 1996 to the extent that shares
authorized in 1972, 1975, 1980, 1983, 1986, 1989, or 1992 are available
therefor, or with respect to any shares authorized in 1999 to the extent that
shares authorized in 1972, 1975, 1980, 1983, 1986, 1989, 1992, or 1996 are
available therefor. With respect to all options and stock awards granted on or
after January 1, 1972, the records of the Company shall specify the number of
shares authorized in 1965, the number of shares authorized in 1969, the number
of shares authorized in 1972, the number of shares authorized in 1975, the
number of shares authorized in 1980, the number of shares authorized in 1983,
the number of shares authorized in 1986, the number of shares authorized in
1989, the number of shares authorized in 1992, the number of shares authorized
in 1996 and the number of shares authorized in 1999 covered by such options or
awards. None of the shares authorized in 1965, 1969 or 1972 shall be available
for stock awards.
- ----------
* Adjusted for the three-for-one stock split in 1970, the two-for-one stock
split in 1983, the two-for-one stock split in 1991, the two-for-one stock
split in 1995, the two-for-one stock split in 1997, and the three-for-one
stock split in 1999.
** Adjusted for the two-for-one stock split in 1983, the two-for-one stock
split in 1991, the two-for-one stock split in 1995, the two-for-one stock
split in 1997, and the three-for-one stock split in 1999.
*** Adjusted for the two-for-one stock split in 1991, the two-for-one stock
split in 1995, the two-for-one stock split in 1997, and the three-for-one
stock split in 1999.
**** Adjusted for the two-for-one stock split in 1995, the two-for-one stock
split in 1997, and the three-for-one stock split in 1999.
***** Adjusted for the two-for-one stock split in 1997 and the three-for-one
stock split in 1999.
****** Adjusted for the three-for-one stock split in 1999.
2
4. PARTICIPATION IN PLAN
a. Employees: All employees of the Company or its subsidiaries shall be
eligible to participate in this Plan. From time to time, the Employee
Compensation and Management Development Committee shall determine the employees
who shall be granted options under the Plan, the number of shares of Common
Stock to be optioned to each such employee, and whether such options shall be
"incentive stock options" as defined in Section 422 of the Internal Revenue
Code, non-qualified stock options, or Tandem Options as defined herein; and
shall determine the individual employees who shall be granted stock appreciation
rights under the Plan pursuant to Section 7; and who shall be awarded shares
under the Plan pursuant to Section 8, as well as the number of shares of Common
Stock to be so awarded, and the restrictions, if any, to be placed thereon and
who shall be granted performance unit awards under the Plan pursuant to Section
9 and tandem awards under the Plan pursuant to Section 10; provided, however,
that in the case of employees who are also directors of the Company or officers
of the Company in categories designated by the Executive Compensation Committee,
the Executive Compensation Committee shall make these determinations; and
provided further, that the Executive Compensation Committee, or such other
Committee as the Board of Directors may appoint, shall make all determinations
with respect to all stock appreciation rights that are exercisable in cash or
partly in stock and partly in cash and with respect to all options related
thereto.
b. Ineligible Persons: For any and all purposes under this Plan, the term
"employee" shall not include a person hired as an independent contractor, leased
employee, consultant or a person otherwise designated by the Company at the time
of hire as not eligible to participate in or receive benefits under the Plan,
even if such ineligible person is subsequently determined to be an "employee" by
any governmental or judicial authority.
5. TERM OF PLAN
No option with respect to shares authorized in or prior to 1969 under this
Plan shall be granted pursuant to this Plan after December 31, 1978, no option
with respect to shares authorized in 1972 shall be granted pursuant to this Plan
after December 31, 1992, no option, stock appreciation right or stock award,
with respect to shares authorized in 1975 shall be granted pursuant to this Plan
after December 31, 1992, no option, stock appreciation right, stock award,
performance unit award or tandem award with respect to shares authorized in 1980
shall be granted pursuant to this Plan after December 31, 1992, no option, stock
appreciation right, stock award, performance unit award or tandem award with
respect to shares authorized in 1983 shall be granted pursuant to this Plan
after December 31, 1992, no option, stock appreciation right, stock award,
performance unit award or tandem award with respect to shares authorized in 1986
shall be granted pursuant to this Plan after December 31, 1995, no option, stock
appreciation right, stock award, performance unit award or tandem award with
respect to shares authorized in 1989 shall be granted pursuant to this Plan
after December 31, 1998, no option, stock appreciation right, stock award,
performance unit award or tandem award with respect to shares authorized in 1992
shall be granted pursuant to this Plan after December 31, 2001, no option, stock
appreciation right, stock award, performance unit award or tandem award with
respect to shares authorized in 1996 shall be granted pursuant to this Plan
after December 31, 2005, no option, stock appreciation right, stock award,
performance unit award or
3
tandem award with respect to shares authorized in 1999 shall be granted pursuant
to this Plan after December 31, 2008, but options, stock appreciation rights,
performance unit awards, tandem awards and restrictions on awards may extend
beyond such dates.
6. TERMS AND CONDITIONS OF OPTIONS
All options under the Plan shall be subject to the following terms and
conditions:
(a) Option Price. The option price per share shall be not less than the
fair market value of the Common Stock on the date the option is granted, as
determined by the Committee in accordance with applicable provisions of the
Internal Revenue Code and Treasury Department rulings and regulations
thereunder.
(b) Number of Shares. The option shall state the number of shares of
Common Stock covered thereby.
(c) Payment. At the time of the exercise of the option the option price
shall be payable in cash and/or, if the option so provides, in shares of Common
Stock valued at the market price at the time the option is exercised. The
Committee may in its discretion require or permit payroll deductions or other
suitable means to enable optionees to accumulate sufficient funds to exercise
their options and pay the option price.
(d) Term of Option. An incentive stock option shall provide that it shall
not be exercisable after the expiration of ten years from the date such option
is granted. A non-qualified option may be exercisable for a period greater than
ten years if so provided in the terms of the option.
(e) Exercise of Option. No option may be exercised during the first year
of its term or such longer period as may be specified in the option; provided,
however, in the event of a "Change of Control" of the Company, as that term is
defined in Section 11(e), the Board may in its discretion make any options that
are not yet exercisable immediately exercisable, and further provided the
Committee may in its discretion make any options that are not yet exercisable
immediately exercisable in cases where (i) an optionee's employment is to be
terminated due to a divestiture or downsizing of a business, (ii) in the case of
a retiring optionee who holds options with extended vesting provisions, or (iii)
otherwise, where the Committee determines that such action is appropriate to
prevent inequities with respect to an optionee. Thereafter, an optionee, subject
to the terms of the option, may exercise the option in whole at any time or in
part from time to time either by giving written notice thereof addressed to the
Treasurer of the Company, or by using other methods of notice as the Committee
shall adopt, specifying the number of shares to be purchased and accompanied by
payment of the option price therefor. In the event of death, the person
designated in the optionee's Will, or in the absence of such designation, the
legal representative of an optionee, or if a legal representative of the
optionee has not been appointed, the optionee's surviving spouse, may in like
manner exercise the option provided the same was exercisable by the optionee at
the time of his death, but such privilege shall expire, subject to Section 6(d)
and 6(f) (iii) hereof, one year after the death of the optionee; provided,
however, in any event that if the option is not exercised by the last day in
which it is exercisable, the option shall be exercised and the proceeds paid to
the deceased optionee's estate.
4
(f) Termination of Option. The option, to the extent not exercised, shall
terminate upon its expiration as set forth in Section 6(d) hereof, its surrender
as set forth in Section 11(c) hereof, or upon breach by the optionee of any
provision of the option, or when the optionee ceases to be an employee for any
reason including retirement, whichever event shall first occur; provided,
however, that with respect to options granted during and subsequent to August
1997 which are otherwise exercisable in accordance with Section 6(e) hereof on
the date of termination of employment, three months after the optionee ceases to
be an employee for any reason including retirement, however, if the option so
provides, the Committee in its discretion may permit the optionee to exercise
the option for reasons of hardship up to twelve months after termination,
assuming that the option was otherwise exercisable; further except that, subject
to Section 6(d) hereof (i) the optionee, if his employment is terminated as a
result of a disability, and provided the option was exercisable at the time of
termination of employment, may elect to exercise the option, subject to Section
6(e) hereof, within twelve months after the date of termination, (ii) in the
event of his death while an employee, the option shall terminate as provided in
Section 6(e) hereof, and (iii) notwithstanding subsections (i) and (ii) above,
if the option so provides, in the event that the optionee has retired or is
eligible for retirement under Sections 4a., b. or d. of the Company's Retirement
Annuity Plan, or as the same may be amended from time to time, or under any
pension or retirement plan maintained by the Company or any of its subsidiaries,
the optionee, or in the event of death, the person designated in the optionee's
Will, or in the absence of such designation, the legal representative of such
optionee, or if a legal representative of the optionee has not been appointed,
the optionee's surviving spouse, may elect to exercise the option at any time
until such option expires by its terms; provided, however, in any event that if
the option is not exercised by the last day in which it is exercisable, the
option shall be exercised and the proceeds paid to the deceased optionee's
estate; any subsequent reemployment of the optionee by the Company shall not
affect such optionee's right to exercise the option as provided in this
subsection (iii).
(g) Recapitalization. In the event of any change in the number or kind of
outstanding shares of Common Stock of the Company by reason of a
recapitalization, merger, consolidation, reorganization, separation,
liquidation, stock split, stock dividend, combination of shares or any other
change in the corporate structure or shares of stock of the Company, an
appropriate adjustment will be made automatically, in accordance with applicable
provisions of the Internal Revenue Code and Treasury Department rulings and
regulations thereunder, in the number and kind of shares for which options may
thereafter be granted both in the aggregate and as to each optionee, as well as
in the number and kind of shares subject to options theretofore granted and the
option price payable upon exercise of such options.
(h) Transferability. The option shall provide that it will not be
transferable by the optionee other than by Will or the laws of descent and
distribution and shall be exercisable, during the optionee's lifetime, only by
him; provided, however, that the Committee in its discretion may grant (or
sanction by way of an amendment to an existing grant) non-qualified stock
options which may be transferred by the optionee, solely as gifts during the
optionee's lifetime, to any member of the optionee's immediate family or to a
trust established for the exclusive benefit of one or more members of the
optionee's immediate family, in which case the terms of such option shall so
state. A transfer of an option pursuant to this subjection may be effected only
by the Company at the written request of an optionee and shall become effective
only when recorded in the Company's record of outstanding options. In the event
an option is transferred as contemplated in this subsection, such option may not
be subsequently transferred by the transferee other than by Will or the laws of
descent and
5
distribution, such option shall continue to be governed by and subject to the
terms and conditions of this Plan and the relevant grant, and the transferee
shall be entitled to the same rights as the optionee as if no transfer had taken
place. As used in this subsection, "immediate family" shall mean any spouse,
child, stepchild or grandchild, and shall include relationships arising from
legal adoption.
(i) Applicable Law. The option shall contain a provision that it may not
be exercised at a time when the exercise thereof or the issuance of shares
thereunder would constitute a violation of any federal or state law or listing
requirements of the New York Stock Exchange for such shares. The provisions of
the Plan shall be construed, regulated and administered according to the laws of
the State of New York without giving effect to principles of conflicts of laws,
except to the extent superseded by any controlling Federal statute.
(j) Incorporation by Reference. The option shall contain a provision that
all the applicable terms and conditions of this Plan are incorporated by
reference therein.
(k) Tandem Award. Any option constituting a part of a tandem award
authorized by Section 10 hereof shall be subject to the terms and conditions of
such award.
(l) Other Provisions. The option shall contain such provisions as the
Committee shall deem advisable consistent with the terms of the Plan as herein
set forth. In addition, the incentive stock options shall contain such other
provisions as may be necessary to meet the requirements of the Internal Revenue
Code and the Treasury Department rulings and regulations issued thereunder with
respect to incentive stock options.
7. STOCK APPRECIATION RIGHTS
The Committee may, in its discretion, grant stock appreciation rights to
the holder of any incentive stock option or non-qualified stock option granted
by the Company. Such appreciation rights shall be subject to such terms and
conditions consistent with the Plan as the Committee shall impose from time to
time, including the following:
(a) An appreciation right may be made part of any such option at the time
of its grant or at any time thereafter prior to its expiration;
(b) Upon exercise of an appreciation right the holder shall be entitled to
receive:
(i) a number of shares of the Common Stock of the Company determined
by dividing:
(1) the number of shares which the optionee selects, not to
exceed the total number of shares that the optionee is eligible
to purchase as of the exercise date under the related option,
multiplied by the amount, if any, by which the fair market value
of a share of the Common Stock of the Company on the exercise
date exceeds the option price provided in the related option, by
(2) the fair market value of a share of the Common Stock of the
Company on the exercise date; provided, however, that the total
number of shares which
6
may be received pursuant to the exercise of an appreciation right
shall not exceed the total number of shares subject to the
related option; or
(ii) if so provided in the award, (a) payment of cash equal to the
aggregate fair market value on the date of such exercise of the
number of shares of Common Stock determined under clause (i); or
(b) in part cash and in part shares; all as determined by the
Committee in its sole discretion;
(c) No fractional share or cash in lieu thereof will be issued upon the
exercise of any such right; and
(d) Exercise of an appreciation right, in whole or in part, shall exhaust
and terminate the related option with respect to the number of shares used in
the calculation under subsection (b)(i)(1) of this Section 7 in determining the
number of shares issued upon such exercise of the appreciation right (or which
would have been issued but for any cash payment). Upon such exercise of an
appreciation right, the number of shares subject to reallocation under Section
13 shall be equal to the difference between the number of shares used in the
calculation under subsection (b)(i)(1) of this Section 7 and the number of
shares issued to the optionee pursuant to such exercise (or which would have
been issued but for any cash payment).
8. STOCK AWARDS
Stock awards will consist of shares of Common Stock of the Company issued
to participating employees as additional compensation for their services to the
Company. Stock awards shall be subject to the provisions of Section 3, this
Section 8, Section 11(a), (c) and (d) and, during the period in which the
restrictions or the Company's right of reacquisition hereinafter referred to are
in effect, Section 11(b). Other than for stock awards determined in accordance
with the Company's Performance-Contingent Share Award Program and paid out under
this Plan, as to which there shall be no waiting period, each stock award to a
participant shall provide that the shares subject to such award may not be
transferred or otherwise disposed of by the participant prior to the expiration
of a period or periods specified therein, which shall not occur earlier than one
year following the date of the award (except that the award may permit the
earlier lapse of such restriction in the event of the participant's death or
disability or retirement pursuant to any pension or retirement plan maintained
by the Company or any of its subsidiaries), and that the Company shall have the
right to reacquire such shares upon termination of the participant's employment
with the Company while such restriction is in effect, such reacquisition to be
upon the terms and conditions provided in the award. Stock awards shall also be
subject to such other terms and conditions, not inconsistent therewith, as the
Committee determines to be appropriate.
9. PERFORMANCE UNIT AWARDS
Performance unit awards will consist of performance units credited to
participating employees. Each award shall specify the initial value of each
performance unit, such value to be determined by reference to the book or market
value of the Common Stock of the Company or to the Company's earnings or such
other criteria related to the Company's performance as the Committee may deem
7
appropriate. The award shall be payable in cash and/or Common Stock of the
Company as the Committee shall determine in its sole discretion.
Subject to the provisions of this Section 9 and of Section 11, the
Committee shall have exclusive authority to determine additional terms and
conditions of each performance unit award. Such terms and conditions may
include, without limitation, provisions under which:
(1) On the payment date prescribed in the award a participant shall become
entitled to receive the full value of each such unit on such date, or such other
amount as such award may specify;
(2) Each unit may accrue earnings determined by reference to earnings per
share or dividends paid per share on the Common Stock of the Company, or to the
prime or another specified lending rate, or to other criteria specified in the
award and payable at such time or times as may be specified therein;
(3) The right of a participant to receive payments in respect of a
performance unit may be made subject in whole or in part to the Company's
attainment of earnings or other objectives specified in the award; and
(4) The determination of all relevant valuation and other data pertaining
to the award shall be in the sole judgment of the Committee. Without limitation
of the foregoing, in the event that an amount payable in respect of an award is
based in whole or in part on the Company's earnings or the book value of its
Common Stock, the Committee may make such adjustments to the publicly reported
amounts of the Company's consolidated earnings or of such book value as it deems
appropriate for changes in accounting practices or principles, for material
acquisitions or dispositions of stock or property, for recapitalizations or
reorganizations or for any other events with respect to which the Committee
determines such an adjustment to be appropriate in order to avoid distortion in
the operation of the Plan.
Each award shall be evidenced by a written instrument which shall set forth
the number of performance units covered thereby, the initial dollar value of
each such unit, the terms and conditions, if any, under which such value may
change prior to the vesting of the unit, the terms and conditions under which
each such unit will vest and such other matters as the Committee in its sole
discretion may deem appropriate. The Committee may from time to time establish
such rules as it deems appropriate regarding the manner and timing of payments
of amounts due in respect of vested units.
No performance unit award shall provide for the vesting in a participating
employee of any performance unit covered thereby prior to the expiration of a
period of one year after the date of the award, except that the award may
provide for such vesting in the event of death or disability or retirement of
the employee pursuant to a pension or retirement plan maintained by the Company
or one of its subsidiaries prior to the expiration of such period. Each award
shall provide that prior to the vesting of the units covered thereby they shall
be subject to forfeiture (A) upon the termination of the recipient's employment
with the Company, (B) as contemplated by Section 10 hereof, if such award is
part of a tandem award, and (C) as may otherwise be specified in the award.
No participant shall be entitled to receive in respect of a performance
unit payments of amounts exceeding twice the original value established for such
unit.
8
The maximum dollar value of performance units which may be initially
awarded to participants may not exceed 1,500,000 "Reference Units" in the
aggregate for all participants, and 50,000 Reference Units for any one
participant. For purposes of this paragraph:
(1) A Reference Unit shall be the equivalent of the greater of (a) the
fair market value of one share of the Common Stock of the Company on the date as
of which a particular award of performance units is made, or (b) the book value
of a share of such Common Stock as at the end of the last completed fiscal year
of the Company prior to such award date plus the cash dividends paid per share
on such stock during such fiscal year; and
(2) Crediting of an award of performance units shall exhaust and terminate
a number of Reference Units equal to the number obtained by dividing the
credited dollar value of such performance units by the greater of the amounts
referred to in subclauses (a) and (b) of Clause 1 above, and except as provided
in the following sentence, such terminated Reference Units shall not be utilized
for subsequent awards.
In the event that an award of performance units is forfeited or for any
other reason the cash amount or the value of the shares of the Common Stock of
the Company (as determined by the Committee in its sole judgment) ultimately
delivered to a participant in payment for an award of performance units (other
than amounts paid to the participant as earnings on the performance units) is
less than the Reference Units originally exhausted and terminated upon the
crediting of such award, a number of Reference Units equal to the dollar amount
of such shortfall divided by the value originally assigned to such Reference
Units shall be restored and become available for subsequent awards under the
Plan.
Nothing contained herein shall be deemed to limit the right of the Board of
Directors or a duly appointed committee thereof to authorize the payment or
award of compensation other than in stock to any employee otherwise than
pursuant to the Plan, regardless of the fact that a particular form of
compensation may be the same as or similar to that which the Committee may pay
or award to participants under Section 9 of the Plan.
10. TANDEM AWARDS
The Committee may, in its discretion, grant tandem awards to participating
employees. A tandem award shall consist of a right of election by the employee
among two or more of the following: (A) an option, which may include a stock
appreciation right with respect thereto, (B) a performance unit award, and (C) a
stock award. Subject to the provisions of Section 11, such right of election
shall be upon such terms and conditions as the Committee may specify in the
tandem award, which shall include the following:
(a) The number of shares of the Common Stock of the Company covered by the
option, the number of shares covered by the stock award and the number of
performance units covered by the performance unit award;
9
(b) Provisions establishing the number of shares and performance units
which will remain subject to each portion of the tandem award upon the exercise
of the right of election in whole or in part; and
(c) The date on which the right of election shall terminate unless earlier
exercised or terminated pursuant to the terms of the tandem award.
11. CONDITIONS APPLICABLE TO ALL AWARDS
(a) Recapitalization. In the event of any change in the number or kind of
outstanding shares of Common Stock of the Company by reason of a
recapitalization, merger, consolidation, reorganization, separation,
liquidation, stock split, stock dividend, combination of shares or any other
change in the corporate structure or shares of stock of the Company, an
appropriate adjustment will be made automatically, in accordance with applicable
provisions of the Internal Revenue Code and Treasury Department rulings and
regulations thereunder, in the number and kind of shares and performance units
subject to Sections 8, 9 and 10 and the maximum dollar value of performance
units subject to Sections 9 and 10.
(b) Transferability. Each award to a participant under Section 8, 9 or 10
shall provide that neither the award nor any right or interest of a participant
therein shall be transferable by the participant other than by Will or the laws
of descent and distribution, and that such award shall be exercisable, during
the participant's lifetime, only by him.
(c) Surrender. The Committee may require the surrender of an option, stock
appreciation right, stock award or performance unit award granted under this
Plan as a condition precedent to a grant of a new option, stock appreciation
right, stock award or performance unit award for the same or a different number
of shares or having the same or a different initial value in Reference Units as
the option, stock appreciation right, stock award or performance unit award
surrendered. Such new option, stock appreciation right, stock award or
performance unit award shall be subject to the terms or conditions specified by
the Committee at the time the new option, stock appreciation right, stock award
or performance unit award is granted, all determined in accordance with the
provisions of this Plan without regard to the price, period of exercise, or any
other terms or conditions of the option, stock appreciation right, stock award
or performance unit award surrendered.
(d) Leave of Absence. If approved by the Committee, an employee's absence
or leave because of military or governmental service, disability or other reason
shall not be considered an interruption of employment for any purpose of the
Plan.
(e) Change of Control shall mean the occurrence of any of the following
events: (a) at any time during the two-year period following the Effective Date,
or the beginning of a renewal term as the case may be, at least a majority of
the Company's Board of Directors shall cease to consist of "Continuing
Directors" (meaning directors of the Company who either were directors at the
beginning of such two-year period or who subsequently became directors and whose
election, or nomination for election by the Company's stockholders, was approved
by a majority of the then Continuing Directors); or (b) any "person" or "group"
(as determined for purposes of Section 13(d)(3) of the Securities Exchange Act
of 1934), except any majority-owned subsidiary of the Company or any
10
employee benefit plan of the Company or any trust or investment manager
thereunder, shall have acquired "beneficial ownership" (as determined for
purposes of Securities and Exchange Commission ("SEC") Regulation 13d-3) of
shares of Common Stock of the Company having 20% or more of the voting power of
all outstanding shares of capital stock of the Company, unless such acquisition
is approved by a majority of the directors of the Company in office immediately
preceding such acquisition; or (c) a merger or consolidation occurs to which the
Company is a party, whether or not the Company is the surviving corporation, in
which outstanding shares of Common Stock of the Company are converted into
shares of another company (other than a conversion into shares of voting common
stock of the successor corporation or a holding company thereof representing 80%
of the voting power of all capital stock thereof outstanding immediately after
the merger or consolidation) or other securities (of either the Company or
another company) or cash or other property; or (d) the sale of all, or
substantially all, of the Company's assets occurs; or (e) the stockholders of
the Company approve a plan of complete liquidation of the Company.
12. DEFINITIONS
(a) Company. The term "Company" shall mean Pfizer Inc, a Delaware
corporation.
(b) Board of Directors. The term "Board of Directors" shall mean the Board
of Directors of Pfizer Inc.
(c) Employee Compensation and Management Development Committee. The term
"Employee Compensation and Management Development Committee" shall mean the
Employee Compensation and Management Development Committee of Pfizer Inc as
constituted by resolution of the Board of Directors.
(d) Executive Compensation Committee. The term "Executive Compensation
Committee" shall mean the Executive Compensation Committee of Pfizer Inc as
constituted by resolution of the Board of Directors.
(e) Committee. The term "Committee" shall mean the Employee Compensation
and Management Development Committee or such other committee referred to in the
second proviso of the last sentence of Section 4 hereof, as may be appropriate.
(f) Subsidiary. The term "subsidiary" shall mean a subsidiary corporation
of the Company as defined in Section 424(f) of the Internal Revenue Code.
(g) Common Stock. The term "Common Stock" shall mean the $.05 par value
Common Stock of the Company, authorized but unissued, or issued and reacquired
by the Company and held as Treasury Stock, or held by any trust established by
the Company for the purpose of satisfying the Company's obligations for the
issuance of Common Stock under the Plan.
(h) Tandem Options. A "Tandem Option" shall mean an incentive stock option
and a non-qualified option granted to an optionee, subject to the provision that
the exercise of all or any part of either option will result in a reduction in
the other option.
11
(i) Internal Revenue Code. The term "Internal Revenue Code" shall mean the
Internal Revenue Code of 1986, as it may be amended from time to time.
13. REALLOCATION OF UNUSED SHARES
Any shares which are not purchased or awarded under an option, performance
unit award or right of election which has terminated or lapsed, either by its
terms or pursuant to the exercise, in whole or in part, of an award or right
granted under the Plan, or shares which are reacquired by the Company pursuant
to Section 8 hereof, may be used for the further grant of options or, if such
shares were authorized in 1975, stock awards under the Plan, or if such shares
were authorized in 1980 or after, stock awards, performance unit awards or
tandem awards under the Plan. For purposes of this Section 13 the number of
shares subject to a tandem award under Section 10 hereof which shall be deemed
not to have been purchased or awarded as of the time such award terminated or
lapsed shall equal the excess, if any, of (i) the maximum number of shares which
the participant was entitled to receive under the tandem award over (ii) the
number of shares which he in fact had received as of the time of such
termination or lapse.
14. USE OF PROCEEDS
The proceeds received by the Company from the sale of stock under the Plan
shall be added to the general funds of the Company and shall be used for such
corporate purposes as the Board of Directors shall direct.
15. AMENDMENT AND REVOCATION
The Board of Directors shall have the right to alter, amend or revoke the
Plan or any part thereof at any time and from time to time, provided, however,
that without the consent of the participants affected no change may be made in
any option or award theretofore granted, which will impair the rights of
participants under outstanding options or awards; and provided further, that the
Board of Directors may not, without the approval of the holders of a majority of
the outstanding Common Stock, make any alteration or amendment to the Plan which
increases the maximum number of shares of Common Stock which may be issued under
the Plan or the number of shares of such stock which may be issued to any one
participant, extends the term of the Plan or of options granted thereunder,
reduces the option price below that now provided for in the Plan, or changes the
conditions of exercise of options specified in Section 6(e). The Committee may
make non-substantive administrative changes to the Plan so as to conform with or
take advantage of governmental requirements, statutes or regulations. The
Employee Compensation and Management Development Committee may delegate to
another committee, as it may appoint, the authority to take any action
consistent with the terms of the Plan, either before or after an option or award
has been granted, which such other committee deems necessary or advisable to
comply with any government laws or regulatory requirements of a foreign country,
including but not limited to, modifying or amending the terms and conditions
governing any options or awards, or establishing any local country plans as
sub-plans to this Plan, each of which may be attached as an Appendix hereto.
12
16. COMPLIANCE WITH SECTION 16
With respect to Members subject to Section 16 of the Securities Exchange
Act of 1934, transactions under the Plan are intended to comply with all
applicable conditions of Rule 16b-3 or its successors under the 1934 Act. To the
extent that compliance with any Plan provision applicable solely to such Members
is not required in order to bring a transaction by such Member into compliance
with Rule 16b-3, it shall be deemed null and void as to such transaction, to the
extent permitted by law and deemed advisable by the Plan administrators. To the
extent any provision of the Plan or action by the Plan administrators involving
such Members is deemed not to comply with an applicable condition of Rule 16b-3,
it shall be deemed null and void as to such Members, to the extent permitted by
law and deemed advisable by the Plan administrators.
13
APPENDIX A
----------
RULES OF THE PFIZER INC STOCK AND INCENTIVE PLAN
FOR EMPLOYEES IN FRANCE
1. INTRODUCTION
The Pfizer Inc Stock and Incentive Plan (hereinafter the "Plan" or the
"U.S. Plan") specifically authorizes the Committee to establish rules applicable
to options granted under the U.S. Plan, including options granted to employees
in France, as the Committee deems advisable. The Committee has determined that
it is advisable to establish a sub-plan for the purposes of permitting such
options to qualify for favorable local tax and social security treatment in
France. Therefore, the Company now establishes a sub-plan of the U.S. Plan for
the purpose of granting options which qualify for the favorable tax and social
security treatment in France applicable to options granted under the Law n(0)
70-1322 of December 31, 1970, as subsequently amended, to qualifying employees
who are resident in France for French tax purposes. The terms of the U.S. Plan,
of which this sub-plan is a part, shall constitute the Company's stock option
plan for French Employees (the "French Plan"). Under the French Plan, the
qualifying employees will be granted only stock options. In no case will they be
granted substitute awards, e.g., stock bonuses, restricted stock, stock
appreciation rights or other similar awards.
2. DEFINITIONS
Terms used in the French Plan shall have the same meanings as set forth in
the U.S. Plan.
In addition, the term "Option" shall have the following meaning:
a. Purchase options, that are rights to acquire shares repurchased by the
Company prior to the grant of said options; or
b. Subscription options, that are rights to subscribe newly issued
shares.
The term "Grant Date" shall be the date on which the Committee both (a)
designates the optionee and (b) specifies the terms and conditions of the Option
including the number of shares and the Option price.
The term "Exercise Eligibility Date" shall mean the fifth anniversary of
the Grant Date.
3. ENTITLEMENT TO PARTICIPATE
Any salaried employee or corporate executive in France shall be eligible to
receive options under the French Plan provided that he or she also satisfies the
eligibility conditions of the U.S. Plan. Options may not be issued under the
French Plan to employees or executives owning more
1
than ten percent (10%) of the Company's capital shares or to individuals other
than employees and corporate executives of a French subsidiary of the Company.
Options may not be issued to directors of a French subsidiary unless they are
employed by such subsidiary.
4. CONDITIONS OF THE OPTION/OPTION PRICE
Notwithstanding any provision in the U.S. Plan to the contrary, the
conditions of the Options (option price, number of underlying shares and vesting
period) will not be modified after the grant date, except as provided under
Section 6 of the French Plan. In this respect, Options will not be repriced,
re-granted, nor will the time at which Options may be exercised be accelerated.
The option price per share of common stock payable pursuant to options
issued hereunder shall be fixed by the Committee on the date the option is
granted, but in no event shall the option price per share be less than the
greater of:
a. with respect to purchase options over the common stock, the higher of
either 80% of the average quotation price of such common stock during
the 20 days of quotation immediately preceding the grant date or 80%
of the average purchase price paid for such common stock by the
Company;
b. with respect to subscription options over the common stock, 80% of the
average quotation price of such common stock during the 20 days of
quotation immediately preceding the grant date; and
c. the minimum option exercise price permitted under the U.S. Plan.
5. EXERCISE OF AN OPTION
Upon exercise of an option, the full option price will have to be paid
either by check or credit transfer. The optionee may also give irrevocable
instructions to a stockbroker to properly deliver the option price to the
Company.
The shares acquired upon exercise of an option will be recorded in an
account in the name of the shareholder, or if the shares are held by a broker
after exercise, in an account in the name of the shareholder with the broker.
No Option can be exercised before the Exercise Eligibility Date. However,
in the case of death of an optionee, outstanding options shall be immediately
vested and exercisable under the conditions set forth by Section 7 of the French
Plan.
6. CHANGES IN CAPITALIZATION
In compliance with French law, the option price shall not be modified
during the option's duration. Adjustments to the option exercise price or number
of shares subject to an option issued hereunder shall be made to preclude the
dilution or enlargement of benefits under such option only in the case of one or
more of the following transactions by the Company:
2
a. an increase of corporate capital by cash contribution;
b. an issuance of convertible or exchangeable bonds;
c. a capitalization of retained earnings, profits, or issuance premiums;
d. a distribution of retained earnings by payment in cash or shares; and
e. a reduction of corporate capital by set off against losses.
7. DEATH
In the event of the death of a French optionee, said individual's heirs may
exercise the option within six months following the death, provided that any
option which remains unexercised shall expire six months following the date of
the optionee's death.
8. INTERPRETATION
It is intended that options granted under the French Plan shall qualify for
the favorable tax and social security treatment applicable to stock options
granted under the Law n(0) 70-1322 of December 31, 1970, as subsequently
amended, and in accordance with the relevant provisions set forth by French tax
law and the French tax administration. The terms of the French Plan shall be
interpreted accordingly and in accordance with the relevant provisions set forth
by French tax and social security laws, as well as the French tax and social
security administrations.
9. AMENDMENTS
Subject to the terms of the U.S. Plan, the Committee reserves the right to
amend or terminate the French Plan at any time.
10. ADOPTION
The French Plan was adopted by the Board of Directors of the Company at a
meeting held on August 27, 1998.
3
APPENDIX B
----------
SPECIAL PROVISIONS APPLICABLE TO EMPLOYEES IN THE UNITED KINGDOM
1. ADMINISTRATION; OPERATION AND EFFECT
This Amendment to the Plan, which is effective as of June 26, 1986 sets
forth the Employee Share Option (UK) Scheme (hereinafter referred to as "the
Scheme"). In all respects, the Scheme will be administered by the Committee as
provided in Section 2 of the Plan.***** No amendment to the Plan shall have
effect in relation to the Scheme and no amendment to the Scheme shall have
effect without the prior approval of the Board of Inland Revenue in the UK. The
Committee shall be responsible for ensuring that all matters relating to the
Scheme are in compliance with UK tax laws and codes.
2. STOCK
Options granted under this Scheme shall be to purchase shares of the
Company's authorized, but unissued or reacquired Common Stock (hereinafter
referred to as "Scheme Shares") satisfying the requirements of paragraphs 7 to
11 of Schedule 10 to the Finance Act of 1984 (hereinafter referred to as
"Schedule 10"). The total number of such shares with respect to which options
may be granted under the Scheme is subject to the limits set out in the Plan*
and the limits set out below.
3. ELIGIBILITY
Persons eligible to receive options under the Scheme shall be employees or
full time directors of the Company's UK subsidiaries who are employed at the
time of the grant of the option and whom the Committee selects from time to time
PROVIDED ALWAYS that at the date of the grant or exercise of the option, they
are not ineligible to participate in the Scheme by virtue of paragraph 4(1)(b)
of Schedule 10.*****
4. TERMS AND CONDITIONS OF OPTIONS
(a) Grants of Options
Offers of options may be sent as soon as practicable after approval of the
Scheme by the UK Board of Inland Revenue, and thereafter at any time. All offers
of options shall be evidenced by an option certificate and shall be made on the
basis that participation in the Scheme will be deemed to constitute acceptance
of the provisions set forth or incorporated by reference in this Amendment to
the Plan.
(b) Number of Shares
The number of Scheme Shares subject to each option shall be stated. Such
number shall be determined by the Committee, but their aggregate Market Value,
as that term is defined in Schedule 10, and number of Shares shall not at any
time exceed either:
(i) the aggregate fair market value or the number of Shares as is
determined for such option holder by the Committee in accordance with
Section 3 of the Plan; or
(ii) in total with subsisting options over shares granted under any
scheme established by the Company or any associated company of the
Company (not being a savings-related scheme) approved by the Board of
Inland Revenue under Schedule 10, (pound)30,000.******
In calculating the limits stated above and the Market Value, sums
denominated in US dollars shall be converted to sterling at the rate of
exchange published by the Company's bankers (being a United Kingdom
clearing bank) at 11 o'clock a.m. on the date of the grant of the relevant
option.
(c) Option Price and Payment of Option Price
(i) The option price per share shall be no less than the mean between
the high and the low selling prices on the composite tape of the New
York Stock Exchange as reported by the New York Times for the date the
option is granted.
(ii) Upon the exercise of an option, the option price shall be payable
in lawful money of the United States and may be paid in cash or by
certified check or by bank draft.
(d) Terms and Exercise of Options
The times at which and the terms under which any option shall be
exercisable shall (unless otherwise stated in accordance with the determination
of the Committee and with prior approval of the Board of Inland Revenue) be as
stated in Section 6(d), 6(e) AND 6(f)**, ***** of the Plan provided that the
reference to Section 11(c) in Section 6 of the Plan shall be replaced by a
reference to Clause 4(f) of the Scheme and in no event may an option be
exercised more than 12 months after an option holder's death.***, *****
(e) Recapitalization
Section 6(g)***** of the Plan shall apply to the Scheme provided that any
adjustments made pursuant to that Section shall not be made automatically but
shall be subject to the prior approval of the Board of Inland Revenue pursuant
to Schedule 10 to the Finance Act and take effect only after such approval.
2
(f) Surrender
The Committee may require the surrender of an option granted under the
Scheme as a condition precedent to a grant of a new option for the same or a
different number of shares surrendered. Such new options shall be subject to the
terms and conditions specified by the Committee at the time the new option is
granted, determined in accordance with the provisions of the Plan and the Scheme
without regard to the price, period of exercise or any other terms or conditions
of the options surrendered.
(g) Transferability, Applicable Law and Leave of Absence
Sections 6(h)*****, except the proviso thereto, 6(i)***** and, subject to
Clause 3 hereof, 11(d) of the Plan shall apply to the Scheme.
(h) Incorporation by Reference
The option agreement shall contain a provision that all the terms and
conditions of the Scheme are incorporated by reference therein.
5. REALLOCATION OF UNUSED SHARES
Any shares which are not purchased under an option which has terminated or
lapsed, either by its terms or pursuant to the exercise in whole or in part, may
be used for the further grant of options, provided always that no options shall
be granted to an employee at a time when his employment is interrupted.
6. AMENDMENT AND REVOCATION
Section 15 of the Plan shall apply to the Scheme but no amendment may be
made so as to have effect with respect to the Scheme or the Scheme Shares
without the prior approval of the Board of Inland Revenue.****, *****
7. DEFINITIONS
(a) In the Scheme, the term the "Plan" shall mean the Company's Stock
Option and Incentive Plan of 1965 as amended.
(b) Section 12 of the Plan other than sub-sections (d) and (h) shall apply
to the Scheme.*****
3
(FOOTNOTES FOR UK PLAN)
* Section 3 of the Plan was amended by resolution of the shareholders on
April 26, 1990 and has effect in relation to the Scheme with the approval
of the Board of Inland Revenue in the UK given June 14, 1990.
** Section 6(e), 6(f) and 11 were amended with the approval of the
shareholders on April 26, 1990. These amendments have effect in relation
to the Scheme with the approval of the Board of Inland Revenue in the UK
given on June 14, 1990 provided that the amendment to Section 6(e) to give
the Board power to "make any options that are not yet exercisable
immediately exercisable" shall not have effect with regard to subsisting
options granted before June 14, 1990.
*** Section 6(e) was further amended with the approval of the shareholders on
April 22, 1993 by the insertion of the following words "and further
provided the Committee may in its discretion make any options that are not
yet exercisable immediately exercisable in cases where (i) an optionee's
employment is to be terminated due to a divestiture or downsizing of a
business, (ii) in the case of a retiring optionee who holds options with
extended vesting provisions, or (iii) otherwise, where the Committee
determines that such action is appropriate to prevent inequities with
respect to an optionee" at the end of the second sentence. The amendment
has effect in relation to the Scheme with the approval of the Board of
Inland Revenue in the UK given on August 5, 1993 provided that the
discretionary power conferred on the Committee "to make any options that
are not yet exercisable immediately exercisable" shall not have effect
with regard to subsisting options granted before August 5, 1993.
**** Section 15 of the Plan was amended by resolution of the Board of Directors
on December 18, 1989 and has effect in relation to the Scheme with the
approval of the Board of Inland Revenue in the UK given June 14, 1990.
***** (i) Section 1 of the Plan was amended by resolution of the Board of
Directors on October 22, 1998.
(ii) Section 2 of the Plan was amended by resolution of the Employee
Compensation and Management Development Committee dated December 15, 1997
and further by resolution of the Board of Directors dated October 22,
1998.
(iii) Section 3 of the Plan was amended by resolutions of the Board of
Directors dated April 27, 1995 and April 24, 1997, in each case as a
result of a stock split to the Common Stock of the Company, and by
resolution of the Board of Directors effective January 25, 1996 by the
approval of the majority of the holders of the Common Stock of the
Company.
(iv) Section 4 of the Plan was amended by the Board of Directors on May
28, 1998.
(v) Section 6(e) of the Plan was amended by resolution of the Board of
Directors on October 22, 1998.
4
(vi) Section 6(f) of the Plan was amended by resolution of the Board of
Directors on June 26, 1997.
(vii) Section 6(g) of the Plan was amended by resolution of the Board of
Directors on January 25, 1996.
(viii) Section 6(h) of the Plan was amended by resolution of the Board of
Directors on September 26, 1996.
(ix) Section 6(i) of the Plan was amended by resolution of the Board of
Directors on May 28, 1998.
(x) Section 12(g) of the Plan was amended by resolution of the Board of
Directors on June 23, 1994.
(xi) Section 15 of the Plan was amended by resolution of the Board of
Directors on October 22, 1998.
The amendments listed, with the exception of the amendments to Section
6(h) noted at (viii) above and to Section 6(g) noted at (vii) above, have
effect in relation to the Scheme with approval of the Board of Inland
Revenue in the UK given on March 25, 1999 provided that the following
amendments shall not have effect with regard to subsisting options granted
before March 25, 1999:
A the amendments to Section 2 mentioned at (ii) above
B the amendments to Section 6(f) mentioned at (vi) above
C the amendment to Section 6(i) mentioned at (ix) above
******Note Section 4 of the Scheme was amended on March 25, 1999 pursuant to
Finance Act 1996 and without prejudice to options outstanding which were
granted prior to July 17, 1995.
5