EXHIBIT 10-E (a)
September 14, 1989
as amended June 8, 1995
COLGATE-PALMOLIVE COMPANY
EXECUTIVE SEVERANCE PLAN, AS AMENDED AND RESTATED
1. PURPOSE.
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The purpose of the Colgate-Palmolive Company Executive Severance Plan (the
"Plan") is to provide executives who are in a position to contribute
materially to the success of Colgate-Palmolive Company or any company at
least 80% of whose voting shares are owned directly or indirectly by it
(collectively, the "Company") with reasonable compensation in the event of
their termination of employment with the Company under the circumstances
described herein.
2. EFFECTIVE DATE.
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The Plan, as amended and restated, is effective as of September 14, 1989.
3. ADMINISTRATION.
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The Plan shall be administered by a Committee. Committee shall mean (i)
prior to a Change of Control, the Committee appointed by the Board of
Directors of the Company to control and manage the operation and
administration of the Plan and (ii) following a Change of Control, the
Committee described in (i) above as constituted immediately prior to the
Change of Control with such changes in the membership thereof as may be
approved from time to time following the Change of Control by a majority of
the members of such Committee as constituted at the applicable time. The
Company shall have no right to appoint members to or to remove members from
the Committee following, or otherwise in connection with, a Change of
Control. Any interpretation of the Plan or construction of any of its
provisions by the Committee shall be final.
4. PARTICIPATION.
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The Committee shall from time to time select the employees who are to
participate in the Plan (the "Participants") from among those employees who
are determined by the Committee to be in a position to contribute materially
to the success of the Company. The Company shall advise each Participant of
his participation in the Plan by a letter setting forth (i) the benefits to
which the
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Participant would become entitled, (ii) the period, expressed in months, and
during or for which the Participant would become entitled to such benefits
which period shall not be less than 12 months nor more than 36 months (the
"Earned Benefit Period") and (iii) such other terms, provisions and
conditions not inconsistent with the Plan as shall be determined by the
Committee.
A Participant shall cease to be a Participant in the Plan upon termination
of employment with the Company or, if earlier, upon termination of the Plan.
Notwithstanding the foregoing, a Participant who terminates employment prior
to termination of the Plan shall remain a Participant until receipt of all
of the payments, if any, to which he is entitled under the terms hereof.
5. PAYMENTS UPON QUALIFIED TERMINATION OF EMPLOYMENT.
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In the event of a Participant's Qualified Termination of Employment, the
Participant shall be entitled, as compensation for services rendered
(subject to any applicable payroll or other taxes required to be withheld)
to:
(a) receive an amount equal to the product of (i) the sum of (A) the
Participant's annualized Monthly Base Salary at the rate in effect
immediately prior to a Qualified Termination of Employment pursuant to
Section 8(a)(i) or immediately prior to an Adverse Change in Conditions
of Employment, as the case may be, or, if higher, at the highest rate in
effect during the 90-day period preceding the Change of Control (for
purposes of this Plan, Monthly Base Salary shall mean regular monthly
salary as indicated by the Company's payroll records) and (B) the higher
of (X) the highest annual bonus paid or payable to the Participant
(either pursuant to the Company's Executive Incentive Compensation Plan
or other bonus, incentive or compensation plan of the Company or
otherwise) for any year during the five-year period ending immediately
prior to the year in which the Qualified Termination of Employment
occurs (provided, however, that if such five-year period includes the
year in which the Change of Control occurs, then the annual bonus paid
or payable for such year shall be deemed to be the higher of the said
bonus actually paid or payable and the bonus that would have been paid
for such year, determined as if all earnings, profit and other goals
(whether established for the Participant or the Company), if any, had
been met for such year and as if the Participant's employment had
continued through the end of such year on the same basis as immediately
prior to the Change of Control) and (Y) the bonus that would have been
paid to the Participant (either pursuant to the Company's Executive
Incentive Compensation Plan or other bonus, incentive or compensation
plan of the Company or otherwise) for the year in which the Qualified
Termination of Employment occurs, determined as if all earnings, profit
or other goals (whether established for the Participant or the Company),
if any, had been met for such year and as if the Participant had
continued to be employed by
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the Company through the end of such year on the same basis as
immediately prior to a Qualified Termination of Employment pursuant to
Section 8(a)(i) or immediately prior to an Adverse Change in Conditions
of Employment, as the case may be, and (ii) a fraction, the numerator of
which is the number of months in his Earned Benefit Period and the
denominator of which is twelve provided, however, that such resulting
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amount shall be reduced if and to the extent required by the terms of
Section 9 hereof; such amount shall be payable in an undiscounted cash
lump sum within 30 days of the Participant's Qualified Termination of
Employment;
(b) remain for his Earned Benefit Period an active Participant in all
welfare benefit plans, including but not limited to plans providing life
insurance, disability, accident, sickness, and/or medical benefits, in
which, and on the same basis as, he was participating at the time of the
Change of Control (or, if more favorable to the Participant, as in
effect at any time thereafter with respect to other key executives), but
subject to any coordination of benefits provisions contained in such
plans, or, alternatively, be provided with substantially similar
benefits for such period; notwithstanding the foregoing, the Participant
shall not be required to make any contributions to the cost of such
plans or benefits;
(c) receive a single cash lump sum within 30 days of the Participant's
Qualified Termination of Employment which is the actuarial equivalent of
a monthly retirement benefit commencing on the earliest date on which
such Participant's benefits could commence under the Company's Employees
Retirement Income Plan, but not prior to the end of his Earned Benefit
Period or age 65, whichever occurs first, in the form of a straight life
annuity in an amount equal to the excess of (i) the benefits under the
Employees Retirement Income Plan and the Supplemental Salaried Employees
Retirement Plan or any successor plans thereto to which the Participant
would have been entitled in the form of a straight life annuity (plus
the value of any additional spouse's benefit) commencing on the earliest
date on which such benefits could have commenced if he had remained in
the employ of the Company during his Earned Benefit Period or until age
65, whichever occurs first, at his Monthly Base Salary at the rate
determined pursuant to (a)(i)(A) above and assuming for this purpose
that all accrued benefits are fully vested and that benefit accrual
formulas are no less advantageous to the Participant than those in
effect during the 90-day period preceding the Change of Control over
(ii) the benefits to which the Participant would actually be entitled
under the Employees Retirement Income Plan and the Supplemental Salaried
Employees Retirement Plan if such benefits were paid in the form of a
straight life annuity (plus the value of any additional spouse's
benefit) commencing on the earliest date on which such benefits could
actually commence; actuarial equivalence shall be determined using the
Morgan Guaranty Trust Company of New York
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corporate base rate of interest and the mortality table used to
determine benefits under the Employees Retirement Income Plan, both as
in effect on the date of the Participant's Qualified Termination of
Employment; provided, however, that if more than one such mortality
table is then in use, the mortality table that would result in the
largest benefit to the Participant shall be used.
6. PAYMENTS UPON CHANGE OF CONTROL.
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In the event of a Change of Control of the Company (and whether or not the
Participant's employment terminates), a Participant shall be entitled, as
compensation for services rendered (subject to any applicable payroll or
other taxes required to be withheld) to:
(a) receive for the year in which the Change of Control occurs a bonus
(either pursuant to the Company's Executive Incentive Compensation Plan
or other bonus, incentive or compensation plan of the Company or
otherwise) equal to the product of (i) the amount determined pursuant to
Section 5(a)(i)(B)(Y) provided, however, that if no such goals have been
established for such year, the amount determined pursuant to Section
5(a)(i)(B)(X), and (ii) a fraction, the numerator of which is the number
of months (or part thereof) in the period beginning January 1 of the
year in which the Change of Control occurs and ending on the date of the
Change of Control and the denominator of which is twelve; such bonus
shall be payable in cash not later than March of the next following year
or, if earlier, within 30 days of the Participant's Qualified
Termination of Employment;
(b) receive within 30 days following the Change of Control, all compensation
amounts which the Participant has previously elected to defer.
7. EXERCISABILITY OF STOCK OPTIONS UPON CHANGE OF CONTROL.
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In the event of a Change of Control (and whether or not the Participant's
employment terminates), each stock option granted under any of the Company's
stock option plans, whether or not otherwise exercisable as of such Change
of Control, and that either was not granted in conjunction with a stock
appreciation unit or was granted in conjunction with a stock appreciation
unit whose value has been limited, shall be exercisable as of such Change of
Control.
8. QUALIFIED TERMINATION OF EMPLOYMENT.
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(a) Qualified Termination or Employment with respect to any Participant
shall mean termination of employment of the Participant with the
Company, other than as a consequence of the death or Disability of the
Participant, within two years after a Change of Control of the Company.
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(i) by the Company for any reason other than for Cause, or
(ii) by the Participant by reason of an Adverse Change in Conditions of
Employment.
(b) For the purpose or this Section, Cause shall mean serious, willful
misconduct in respect of the Participant's obligations to the Company
(including but not limited to final conviction for a felony or
perpetration of a common law fraud) that has or is likely to result in
material economic damage to the Company.
(c) An Adverse Change in Conditions of Employment shall mean the occurrence
of any of the following events:
(i) change by the Company of the Participant's functions, duties or
responsibilities, which change would cause the Participant's
position with the Company to become one of less dignity,
responsibility, importance or scope;
(ii) a reduction by the Company of the Participant's Monthly Base
Salary as in effect immediately preceding the Change of Control
or as the same may thereafter be increased from time to time;
(iii) failure by the Company to continue the Participant in any
compensation or benefit plan in which, and on at least as
favorable a basis as, he was participating immediately preceding
the Change of Control or, if more favorable to the Participant,
failure by the Company to provide for his participation in any
compensation or benefit plan on a comparable basis and as in
effect at any time thereafter with respect to other key
employees;
(iv) the Company's requiring the Participant to be based anywhere other
than within fifty (50) miles of the principal office location of
the Participant prior to the Change of Control, except for
required travel on the Company's business to an extent
substantially consistent with business travel obligations of the
Participant prior to the Change of Control.
A Participant's failure to object to a change described in (i), (ii), (iii)
or (iv) shall not constitute a waiver of such change as an Adverse Change in
Conditions of Employment. Any good faith determination by a Participant of
an Adverse Change in Conditions of Employment shall be determinative.
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(d) For purposes of the Plan, a Change of Control of the Company shall mean
the happening of any of the following events:
(i) an acquisition by any individual, entity or group (within the
meaning of Section 13 (d)(3) or 14 (d)(2) of the Securities
Exchange Act of 1934, as amended from time to time, and any
successor thereto (the "Exchange Act")) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 20% or more of either (A)
the then outstanding shares of the common stock, par value $1.00
per share of the Colgate-Palmolive Company, a Delaware corporation
(the "Parent Company") (the "Outstanding Company Common Stock"),
or (B) the combined voting power of the then outstanding voting
securities of the Parent Company entitled to vote generally in
the election of directors (the "Outstanding Company Voting
Securities"); excluding, however, the following: (1) any
acquisition directly from the Parent Company, other than an
acquisition by virtue of the exercise of a conversion privilege
unless the security being so converted was itself acquired directly
from the Parent Company, (2) any acquisition by the Parent Company,
(3) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Parent Company or any corporation
controlled by the Parent Company or (4) any acquisition by any
corporation pursuant to a transaction which complies with clauses
(A), (B) and (C) of subsection (iii) of this Section 8(d); or
(ii) a change in the composition of the Board of Directors of the Parent
Company (the "Board") such that the individuals who, as of February
17, 1994, constitute the Board (such Board shall be hereinafter
referred to as the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided, however, for
purposes of this Section 8(d), that any individual who becomes a
member of the Board subsequent to February 17, 1994, whose
election, or nomination for election by the Parent Company's
stockholders, was approved by a vote of at least a majority of
those individuals who are members of the Board and who were also
members of the Incumbent Board (or deemed to be such pursuant to
this proviso) shall be considered as though such individual were
a member of the Incumbent Board; but, provided further, that any
such individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest (as
such terms are used in Rule 14a-11 of Regulation 14A promulgated
under the Exchange Act) or other actual or threatened solicitation
of proxies or consents by or on behalf of a Person other than the
Board shall not be so considered as a member of the Incumbent
Board; or
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(iii) the approval by the stockholders of the Parent Company of a
reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the
Parent Company ("Corporate Transaction") excluding, however,
such a Corporate Transaction pursuant to which (A) all or
substantially all of the individuals and entities who are the
beneficial owners, respectively, of the outstanding Common Stock
and outstanding Company voting securities immediately prior to
such Corporate Transaction will beneficially own, directly or
indirectly, more than 60% of, respectively, the outstanding
shares of common stock, and the combined voting power of the
then outstanding voting securities entitled to vote generally
in the election of directors, as the case may be, of the
corporation resulting from such Corporate Transaction (including,
without limitation, a corporation which as a result of such
transaction owns the Parent Company or all or substantially all
of the Parent Company's assets either directly or through one or
more subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Corporate Transaction, or
the outstanding Common Stock and outstanding Company voting
securities, as the case may be, (B) no Person (other than the
Parent Company, any employee benefit plan (or related trust) of
the Parent Company or such corporation resulting from such
Corporate Transaction) will beneficially own, directly or
indirectly, 20% or more of, respectively, the outstanding
shares of common stock of the corporation resulting from such
Corporate Transaction or the combined voting power of the
outstanding voting securities of such corporation entitled to
vote generally in the election of directors except to the
extent that such ownership existed prior to the Corporate
Transaction and (C) individuals who were members of the Incumbent
Board will constitute at least a majority of the members of the
board of directors of the corporation resulting from such
Corporate Transaction; or
(iv) the approval by the shareholders of the Parent Company of a
complete liquidation or dissolution of the Parent Company.
(e) Termination by the Company of a Participant's employment based on
Disability shall mean termination because of absence from duties with
the Company on a full time basis for 6 consecutive months, as a result
of the Participant's incapacity due to physical or mental illness which
is determined to be total and permanent by a physician selected by the
Company or its insurers and acceptable to the Participant or the
Participant's legal representative (such agreement as to acceptability
not to be withheld unreasonably).
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9. CERTAIN REDUCTION IN PAYMENTS.
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For purposes of this Section 9, (i) Payment shall mean any payment or
distribution in the nature of compensation to or for the benefit of the
Participant (whether paid or payable pursuant to the Plan or otherwise, but
determined without regard to any reductions required by this Section 9);
(ii) Net After Tax Receipt shall mean the Present Value of a Payment net of
all taxes imposed on the Participant with respect thereto under Sections 1
and 4999 of the Code, determined by applying the highest marginal rate under
Section 1 of the Internal Revenue Code of 1986, as amended (the "Code"),
which applied to the Participant's taxable income for the immediately
preceding taxable year; (iii) Present Value shall mean such value determined
in accordance with Section 280G (d)(4) of the Code; and (iv) Reduced Amount
shall mean the smallest aggregate amount of Payments which (a) is less than
the sum of all Payments and (b) results in aggregate Net After Tax Receipts
which are equal to or greater than the Net After Tax Receipts which would
result if the aggregate Payments were any other amount less than the sum of
all Payments.
Anything in the Plan to the contrary notwithstanding, in the event Arthur
Andersen LLP (the "Accounting Firm") shall determine that receipt of all
Payments would subject the Participant to tax under Section 4999 of the
Code, it shall determine whether some amount of Payments would meet the
definition of a Reduced Amount. If the Accounting Firm determines that
there is a Reduced Amount, the aggregate Payments shall be reduced to such
Reduced Amount. In the event that the Accounting Firm is serving as
accountant or auditor for the individual, entity or group effecting the
Change of Control, the Participant shall appoint another nationally
recognized accounting firm to make the determinations required hereunder
(which accounting firm shall then be referred to as the Accounting Firm
hereunder). All fees and expenses of the Accounting Firm shall be borne
solely by the Company.
If the Accounting Firm determines that aggregate Payments should be reduced
to the Reduced Amount, the Company shall promptly give the Participant
notice to that effect and a copy of the detailed calculation thereof, and
the Participant may then elect which and how much of the Payments shall be
eliminated or reduced (as long as after such election the present value of
the aggregate Payments equals the Reduced Amount), and shall advise the
Company in writing of such election within ten days of his receipt of
notice. If no such election is made by the Participant within such ten-day
period, the Company may elect which of such Payments shall be eliminated or
reduced (as long as after such election the present value of the aggregate
Payments equals the Reduced Amount) and shall notify the Participant
promptly of such election. All determinations made by the Accounting Firm
under this Section 9 shall be binding upon the Company and the Participant
and shall be made within 15 business days of the date of termination
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of the Participant's employment. As promptly as practicable following such
determination, the Company shall pay to or distribute to or for the benefit
of the Participant such Payments as are then due to the Participant and
shall promptly pay to or distribute to or for the benefit of the Participant
in the future such Payments as become due to the Participant.
While it is the intention of the Company and the Participant to reduce the
amounts payable or distributable to the Participant hereunder only if the
aggregate Net After Tax Receipts to the Participant would thereby be
increased, as a result of the uncertainty in the application of Section 4999
of the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that amounts will have been paid or distributed by
the Company to or for the benefit of the Participant pursuant to the Plan
which should not have been so paid or distributed ("Overpayment") or that
additional amounts which will have not been paid or distributed by the
Company to or for the benefit of the Participant pursuant to the Plan could
have been so paid or distributed ("Underpayment"), in each case, consistent
with the calculation of the Reduced Amount hereunder. In the event that the
Accounting Firm, based either upon the assertion of a deficiency by the
Internal Revenue Service against the Company or the Participant which the
Accounting Firm believes has a high probability of success or controlling
precedent or other substantial authority determines that an Overpayment has
been made, any such Overpayment paid or distributed by the Company to or for
the benefit of the Participant shall be treated for all purposes as a loan
ab initio to the Participant which the Participant shall repay to the
Company together with interest at the applicable federal rate provided for
in Section 7872(f)(2) of the Code; provided however, that no such loan shall
be deemed to have been made and no amount shall be payable by the
Participant to the Company if and to the extent such deemed loan and payment
would not either reduce the amount on which the Participant is subject to
tax under Section 1 and Section 4999 of the Code or generate a refund of
such taxes. In the event that the Accounting Firm, based upon controlling
precedent or substantial authority, determines that an Underpayment has
occurred, any such Underpayment shall be promptly paid by the Company to or
for the benefit of the Participant together with interest at the applicable
federal rate provided for in Section 7872(f)(2) of the Code.
10. CONFIDENTIAL INFORMATION.
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The Participant shall hold, in a fiduciary capacity for the benefit of the
Company, all secret or confidential information, knowledge or data relating
to the Company and its businesses which shall have been obtained by the
Participant during his employment by the Company and which shall not be
public knowledge (other than by acts of the Participant in violation of this
provision). After termination of the Participant's employment with the
Company, the Participant shall not, without the prior written consent of the
Company, communicate or divulge any such
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information, knowledge or data to any one other than the Company and those
persons designated by it. In no event shall an asserted violation of this
Section constitute a basis for deferring or withholding any amounts
otherwise payable to the Participant under the Plan.
11. FINANCING.
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Benefit payments under the Plan shall constitute general obligations of the
Company in accordance with the terms of the Plan. A Participant shall have
only an unsecured right to payment thereof out of the general assets of the
Company. Notwithstanding the foregoing, the Company may, by agreement with
one or more trustees to be selected by the Company, create a trust on such
terms as the Company shall determine to make payments to Participants in
accordance with the terms of the Plan.
12. TERMINATION AND PAYMENT OF THE PLAN.
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The Plan shall terminate on the later of (i) June 30, 1998, unless extended
by the Board or (ii) in the event of a Change of Control of the Company on
or before the termination date of the Plan, two years after such Change of
Control, provided that the termination of the Plan shall not impair or
abridge the obligations of the Company incurred under the Plan to any
Participant.
Prior to a Change of Control, the Company may from time to time terminate
the Plan or amend the Plan in whole or in part. At any time upon or after a
Change of Control, the Plan may notbe terminated or amended by the Company.
The Plan may, however, be amended following a Change of Control by the
Committee but only to the extent such amendment is required by law or is
necessary or desirable to prevent adverse consequences to one or more
Participants.
13. BENEFIT OF PLAN.
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The Plan shall be binding upon and shall inure to the benefit of the
Participant, his heirs and legal representatives, and the Company and its
successors. The term "successor" shall mean any person, firm, corporation
or other business entity that, at any time, whether by merger, acquisition
or otherwise, acquires all or substantially all of the stock, assets or
business of the Company.
14. NON-ASSIGNABILITY.
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Each Participant's rights under this Plan shall be non-transferable except
by will or by the laws of descent and distribution and except insofar as
applicable law may otherwise require. Subject to the foregoing, no right,
benefit or interest hereunder, shall be subject to anticipation, alienation,
sale, assignment,
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encumbrance, charge, pledge, hypothecation, or set-off in respect of any
claim, debt or obligation, or to execution, attachment, levy or similar
process, or assignment by operation of law, and any attempt, voluntary or
involuntary, to effect any such action shall, to the full extent permitted
by law, be null, void and of no effect.
15. OTHER BENEFITS.
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Except as otherwise specifically provided herein, nothing in the Plan shall
affect the level of benefits provided to or received by any Participant (or
the Participant's estate or beneficiaries) as part of any employee benefit
plan of the Company, and the Plan shall not be construed to affect in any
way a Participant's rights and obligations under any other plan maintained
by the Company on behalf of employees.
The Participant shall not be required to mitigate the amount of any payment
under the Plan by seeking employment or otherwise, and there shall be no
right of set-off or counterclaim, in respect of any claim, debt or
obligation, against any payments to the Participant, his dependents,
beneficiaries or estate provided for in the Plan.
In the event of a Change of Control of the Company on or before November 3,
1990, the benefits to which any Participant may become entitled under the
Plan shall not be less than the benefits to which such Participant would
have been entitled under the terms of the Plan as in effect on June 30,
1987.
16. TERMINATION OF EMPLOYMENT.
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Nothing in the Plan shall be deemed to entitle a Participant to continued
employment with the Company, and the rights of the Company to terminate the
employment of a Participant shall continue as fully as though the Plan were
not in effect.
17. SEVERABILITY.
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In the event that any provision or portion of the Plan shall be determined
to be invalid or unenforceable for any reason, the remaining provisions and
portions of the Plan shall be unaffected thereby and shall remain in full
force and effect to the fullest extent permitted by law.
18. INDEMNIFICATION.
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If the Participant seeks, in any action, suit or arbitration, to enforce, or
to recover damages for breach of, his rights under the Plan, the Participant
shall be entitled to recover from the Company promptly as incurred, and
shall be indemnified by
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the Company against, any and all expenses and disbursements, including
attorneys' fees, actually and reasonably incurred by the Participant. The
Company shall also pay to the Participant prejudgment interest on any money
judgment obtained by the Participant calculated at the Morgan Guaranty Trust
Company of New York corporate base rate of interest in effect from time to
time from the date that payment to him should have been made under the Plan.
19. DELAWARE LAW TO GOVERN.
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All questions pertaining to the construction, regulation, validity and
effect of the provisions of the Plan shall be determined in accordance with
the laws of the State of Delaware without regard to the conflict of law
principles thereof.
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