EXHIBIT 10 (127)
As Amended by the
Human Resources
Committee on 12/16/94
and 02/24/95
ADMINISTRATIVE REGULATIONS
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THE PROMUS COMPANIES INCORPORATED
(the "Company")
LONG TERM COMPENSATION PLAN
1. Application. These administrative regulations apply to all grants of
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restricted stock and stock options under the Company's 1990 Restricted Stock
Plan and 1990 Stock Option Plan (the "Plans").
2. Procedure for Awards
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2.1 Eligibility. The Company will follow the eligibility requirements for
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participants as set forth in the Plans. In general, employees in grades 23-36
and general managers and specifically identified key employees in grades 19-22
are eligible to be considered for awards under the Plans.
2.2 Recommendation Method. The Corporate Compensation Department will
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provide each Division President, the President of the Company, and Corporate
Department head with a list of employees eligible for awards. Each Division
President, the President of the Company, and
each Corporate Department head will then be requested to recommend the award(s)
for the employee(s) within their respective areas of responsibility. The
recommendations will then be submitted for appropriate corporate executive
review and approval, and then to the Human Resources Committee for final
approval.
2.3 Vesting Schedules. The term "vesting" refers to the lifting of
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restrictions on restricted stock and to exercise rights regarding stock options.
Vesting schedules will be approved by the Human Resources Committee.
2.4 Stock Price. If an award will be based on a dollar value instead of
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number of shares, then the price of the Company's common stock for the purpose
of determining the grant will normally be the average of the high and low prices
of the stock on the New York Stock Exchange on the date that the Human Resources
Committee meets and approves the award or if that is not a business day, the
preceding business day. The Human Resources Committee may use any other method
it deems appropriate to determine stock price and award values.
2.5 Special Awards. The Chief Executive Officer of the Company may
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recommend a special award to any employee at any time in recognition of
outstanding performance or for purposes of encouraging such performance.
Special awards will be presented to the Human Resources Committee for approval
or shall otherwise be authorized by the Human Resources Committee.
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3. Frequency of Awards
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3.1 Regular Awards. Regular awards will be made annually. Awards and
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their vesting schedule will be submitted to the Human Resources Committee for
approval or shall otherwise be authorized by the Human Resources Committee.
3.2 Interim Grants for Promotions and New Employees. The Committee
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reserves discretion to make awards to any one or more employees between annual
grants.
4. Guidelines For Award Amounts.
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4.1 Award amounts will follow Guidelines to be established by the
Committee from time to time. These Guidelines will remain effective until
changed by the Human Resources Committee. To promote equitable operation of the
Plans, it is contemplated that the Guidelines will be modified periodically to
reflect the current factors/assumptions that form the basis for the Guidelines.
4.2 (a) The Guidelines will be used to calculate Target Awards. Maximum
and minimum share amounts may be set on each side of the Target Award. The
value of the Target Award will be calculated using a percentage of salary. This
percentage will vary for each grade level based on competitive factors.
(b) The Guidelines will consider the following factors and
assumptions:
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(i) Current value of the Company's stock.
(ii) Compounded growth rate assumption for the stock's value.
(iii) Compounded growth rate assumption for salaries.
(iv) Competitive environment.
(c) The amount of shares in a stock option award will be a multiple
of the restricted stock award in order to achieve equivalent target value at the
end of the vesting period.
The Guidelines are intended to assist in the calculation of pro-rata
grants. However, since the circumstances of each individual may be different
and may require special consideration, the Guidelines are not mandatory in all
cases.
5. Award Certificates. Participation letters or award certificates will be
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issued in respect of shares awarded to a participant and shall be deposited with
the Company along with an executed stock power. The stock power will be used to
re-transfer forfeited or cancelled stock back to the Company.
6. Restrictions Upon Transfer of Restricted Stock.
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6.1 Restriction Period. Restrictions will be determined for each
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restricted stock award at the time the grant is made. During the restriction
period, shares may not be sold, assigned, pledged, encumbered or used as
collateral for a loan. All other rights as a stockholder shall apply to
restricted stock as would apply to issued stock (i.e., dividends, voting, etc.).
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6.2 Lapse of Restrictions. When the restrictions on shares are lifted,
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the stock certificate will be released to the participant, or to his beneficiary
or estate, subject to any restrictive legend as may be required by law.
6.3 Types of Vesting -- Performance and Longevity. Grants of restricted
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stock and stock options will normally vest based upon continued active service
(longevity). However, the Human Resources Committee may grant awards of
restricted stock or stock options that have either
performance vesting, longevity vesting, or both. If performance restricted
shares or performance stock options are granted, the vesting of such shares
generally will occur only if the Company has met certain performance criteria
established by the Board of Directors for the fiscal year that is substantially
completed prior to such vesting date.
In the event that performance criteria for a particular fiscal year are not
met, any performance restricted shares or performance stock options scheduled to
vest with respect to that year will be forfeited back into the plan; provided,
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however, that the Board of Directors, upon recommendation of the Human Resources
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Committee, shall have discretion to make exceptions to the provisions concerning
forfeiture of performance restricted shares and performance stock options. The
Board of Directors has broad discretion to set and modify such performance
criteria and, in its sole and absolute discretion, may vary the performance
standards among holders of
performance restricted shares and/or performance stock options and may waive any
performance standards set. When adjusting or waiving performance standards, the
Board of Directors, upon recommendation of the
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Human Resources Committee, shall also have discretion to provide for vesting or
partial vesting of performance restricted shares or performance stock options
for participants who are not employed for a full performance period.
7. Vesting on Change in Control of the Company.
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7.1 In the event of a Change in Control of the Company, as hereinafter
defined, all outstanding restricted shares and all unvested options granted
whether such shares or options were granted before or after the approval dates
of these regulations shall vest.
7.2 Subject to Section 7.3 below, a "Change in Control" of the Company
shall be deemed to have occurred if:
(a) any "person" (as such term is used in Section 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act")),
other than a trustee or other fiduciary holding securities under an
employee benefit plan of the Company, is or becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange act), directly or indirectly,
of 25% or more of the
Company's then outstanding voting securities carrying the right to vote in
elections of persons to the Board, regardless of comparative voting power
of such voting securities, and regardless of whether or not the Board shall
have approved such Change in Control; or
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(b) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board and any new director (other
than a director designated by a person who shall have entered into an
agreement with the Company to effect a transaction described in clauses (a)
or (c) of this Subsection) whose election by the Board or nomination for
election by the Company's stockholders was approved by a vote of at least
two-thirds of the directors then still in office who either were directors
at the beginning of the period or whose election or nomination for election
was previously so approved, cease for any reason to constitute a majority
thereof; or
(c) the holders of securities of the Company entitled to vote thereon
approve (i) a merger or consolidation regardless of which entity is the
surviving company, other than a merger or consolidation which would result
in the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) at least
80% of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or (ii) a plan
of complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's
assets. The disposition of assets for purposes of repayment of debt shall
not be deemed the sale of all or substantially all of the Company's assets.
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7.3 Notwithstanding the definition of a "Change in Control" of the Company
as set forth in Section 7.2 hereof, the Human Resources Committee shall have
full and final authority, which shall be exercised in its discretion, to
determine conclusively whether a Change in Control of the Company has occurred,
and the date of the occurrence of such Change in Control and any incidental
matters relating thereto, with respect to a transaction or series of
transactions which have resulted or will result in a substantial portion of the
assets or business of the Company (as determined immediately prior to the
transaction or series of transactions by the Human Resources Committee in its
sole discretion, which determination shall be final and conclusive) being held
by a corporation at least 80% of whose voting securities are held, immediately
following such transaction or series of transactions, by holders of the voting
securities of the Company (determined immediately prior to such transaction or
series of transactions). The Human Resources Committee may exercise such
discretionary authority without regard to whether one or more of the
transactions in such series of transactions would otherwise constitute a
Change in Control of the Company under the definition set forth in Section
7.2 hereof. If the Human Resources Committee determines that a Change in
Control of the Company has not occurred, then Section 9 of the Restricted
Stock Plan and Section N of the Stock Option Plan, which provide for
adjustments in restricted shares and stock options on the terms set forth
therein, shall be applicable to such transaction or series of transactions.
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8. Forfeiture of Restricted Shares and Stock Options.
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8.1 In the event that a participant terminates active employment with the
Company or any affiliate of the Company voluntarily or involuntarily including
by reason of retirement (except in the event of death or disability as provided
herein), then (subject to any agreement with the participant) all restricted
shares and all stock options which shares or options at that time have not yet
vested shall be forfeited by the participant to the Company without payment of
any consideration by the Company. Neither the participant, nor any successor,
heir, assign or personal representative of the participant, shall have any
further right to or interest in such restricted shares or stock options or the
certificate or certificates evidencing them. Such forfeited shares or options
shall be available for reissuance under the Plans.
8.2 In the event any employee holding stock options retires (leaves
employment at age 55 or older with ten or more years of service), then such
person shall have a period of two years in the event of ten or more years of
service, or three years in the event of 20 or more years of service, after the
retirement date to exercise any outstanding stock options which are vested
(exercisable) or become vested (exercisable) as of the retirement date, provided
that (1) for incentive stock options, this two or three year period will not
extend beyond the normal term of the option and (2) for non-incentive options,
the term of the option will be extended up to a maximum term of thirteen years
and one day to accommodate the two or three year
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extension in cases where retirement, death or determination of disability occurs
within the three year period prior to the end of the normal term of the option.
This provision shall apply to all options whether granted before or after the
approval dates of these regulations.
8.3 In the event of the participant's death or disability, then (subject
to any agreement with the participant) one half of all unvested restricted
shares and one half of all unvested stock options shall vest as of the date of
death or determination of disability and the remaining shares shall be
forfeited. With respect to vested options upon a participant's death or
disability, the participant or his legal representative shall have the right to
exercise such options for a period of two years in the event of ten or more
years of service, or three years in the event of 20 or more years of service,
after such death or determination of disability, provided that (1) for incentive
stock options, this two or three year period will not extend beyond the normal
term of the option and (2) for non-incentive options, the term of the option
will be extended up to a maximum term of thirteen years and one day to
accommodate the two or three year extension in cases where retirement, death or
determination of disability occurs within the three year period prior to the end
of the normal term of the option. This provision shall apply to all options
whether granted before or after the approval dates of these regulations.
8.4 For purposes of administration, a participant shall be deemed disabled
when a determination is made (while the participant is an employee or is on
authorized sick leave) that the participant qualifies for long-term
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disability insurance under the LTD policy of the Company's affiliate who is the
participant's employer.
8.5 The Human Resources Committee shall have sole discretion to make
exceptions to the provisions in this section 8 regarding the forfeiture of
restricted shares and stock options for persons who are subject to Section 16 of
the Securities Exchange Act. The Chief Executive Officer is hereby granted
authority to make exceptions regarding such forfeitures for all other employees
without the necessity for Committee approval. The provisions of this Section
8.5 shall apply to all awards of stock options and restricted stock whether
granted before or after the date of these regulations.
9. Rights to Terminate Employment. No award shall confer upon a participant
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the right to continue in the employment of the Company or its affiliates or
affect any right which the Company or its affiliates may have to terminate the
employment of a participant with or without cause.
10. Withholding. Whenever the Company proposes or is required to issue,
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transfer, or release shares of Common Stock under the Plans or to make any
payments to a participant, the Company or its affiliates shall have the right to
withhold from any sums due to the recipient, or to require the recipient to
remit to the Company or its affiliates, any amount sufficient to satisfy any
federal, state and/or local withholding tax requirements prior to the delivery
of any stock certificates or any payments to the participant. Whenever
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payments are to be made in cash, such payments shall be net of an amount
sufficient to satisfy any federal, state and/or local withholding tax
requirements imposed with respect to such payments. The Company shall have
flexibility to use any reasonable methods or procedures to satisfy
withholding tax requirements including but not limited to the right to charge
reasonable interest on amounts due, to withhold amounts from any other sums due
a participant, and/or to sell a portion of vested shares in order to satisfy
withholding taxes.
11. Discretion of Human Resources Committee and Chief Executive Officer. These
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regulations may be amended by the Human Resources Committee at any time and are
not intended to limit the discretion or rights of the Chief Executive Officer,
the Human Resources Committee, or the Board of Directors as provided under the
Plans.
VDY/kmr
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