Exhibit 10.e
MASCO CORPORATION
1997 NON-EMPLOYEE DIRECTORS STOCK PLAN
(Amended and Restated October 27, 2005)
SECTION 1. PURPOSE
The purpose of this Plan is to ensure that the non-employee Directors of
Masco Corporation (the "Company") have an equity interest in the Company and
thereby have a direct and long term interest in the growth and prosperity of the
Company by payment of part of their compensation in the form of common stock of
the Company.
SECTION 2. ADMINISTRATION OF THE PLAN
This Plan will be administered by the Company's Board of Directors (the
"Board"). The Board shall be authorized to interpret the Plan, to establish,
amend, and rescind any rules and regulations relating to the Plan and to make
all other determinations necessary or advisable for the administration of the
Plan. The Board's interpretation of the terms and provisions of this Plan shall
be final and conclusive. The Secretary of the Company shall be authorized to
implement the Plan in accordance with its terms and to take such actions of a
ministerial nature as shall be necessary to effectuate the intent and purposes
thereof. The validity, construction and effect of the Plan and any rules and
regulations relating to the Plan shall be determined in accordance with the laws
of the State of Michigan and applicable Federal law.
SECTION 3. ELIGIBILITY
Participation will be limited to individuals who are Eligible Directors, as
hereinafter defined. Eligible Director shall mean any Director of the Company
who is not an employee of the Company and who receives a fee for services as a
Director.
SECTION 4. SHARES SUBJECT TO THE PLAN
(a) Subject to the adjustments set forth below, the aggregate number of
shares of Company Common Stock, par value $1.00 per share ("Shares"), which may
be the subject of awards issued under the Plan shall be 1,000,000.
(b) Any Shares to be delivered under the Plan shall be made available from
newly issued Shares or from Shares reacquired by the Company, including Shares
purchased in the open market.
(c) To the extent a Stock Option award, as hereinafter defined, terminates
without having been exercised, or an award of Restricted Stock, as hereinafter
defined, is forfeited, the Shares subject to such Stock Option or Restricted
Stock award shall again be available for distribution in connection with future
awards under the Plan. Shares equal in number to the Shares surrendered to the
Company in payment of the option price or withholding taxes (if any) relating to
or arising in connection with any Restricted Stock or Stock Option hereunder
shall be added to the number of Shares then available for future awards under
clause (a) above.
(d) In the event of any merger, reorganization, consolidation,
recapitalization, stock split, stock dividend, or other change in corporate
structure affecting the Shares, the aggregate number of Shares which may be
issued under the Plan, the number of Shares subject to Stock Options to be
granted under Section 6(a) hereof and the number of Shares subject to any
outstanding award of Restricted Stock or unexercised Stock Option shall be
adjusted to avoid enhancement or diminution of the benefits intended to be made
available hereunder.
SECTION 5. DIRECTOR STOCK COMPENSATION
(a) The compensation of each Eligible Director for the five year period
beginning January 1, 1997 shall be payable in part with an award of Restricted
Stock determined as set forth below, and in part in cash. Compensation for this
purpose means annual retainer fees but does not include supplemental retainer
fees for committee positions or fees for attendance at meetings, which shall be
paid in cash. The portion of compensation payable in Restricted Stock during the
five year period shall be equal to one-half of the annual compensation paid to
Eligible Directors in the year immediately prior to the award multiplied by
five, and the balance of compensation, unless otherwise determined by the Board,
shall be payable in cash. Each award of Restricted Stock shall vest in twenty
percent annual installments (disregarding fractional shares) on January 1 of
each of the five consecutive years following the year in which the award is
made. Subject to the approval of this Plan by the Company's stockholders, each
Eligible
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Director on February 18, 1997 is awarded as of that date 6,940 Shares of
Restricted Stock, based on the closing price of the Shares as reported on the
New York Stock Exchange Composite Tape (the "NYSE") on February 18, 1997. Cash
shall be paid to an Eligible Director in lieu of a fractional share.
(b) Subject to the approval of this Plan by the Company's stockholders,
each Eligible Director who is first elected or appointed to the Board on or
after the date of the Company's 1997 annual meeting of stockholders shall
receive, as of the date of such election or appointment, an award of Restricted
Stock determined in accordance with Section 5(a) for the five year period
beginning on January 1 of the year in which such election or appointment
occurred; provided, however, that the price of the Shares used in determining
the number of Shares of Restricted Stock which shall be issued to such Eligible
Director shall be the fair market value of the Shares as determined by the Board
of Directors on the date on which such Eligible Director is elected or
appointed, and provided, further, that the amount of Restricted Stock awarded to
any Eligible Director who begins serving as a Director other than at the
beginning of a calendar year shall be prorated to reflect the partial service of
the initial year of the Director's term, such proration to be effected in the
initial vesting.
(c) Upon the full vesting of any award of Restricted Stock awarded pursuant
to Section 5(a) or 5(b), each affected Eligible Director shall be eligible to
receive a new award of Restricted Stock, subject to Section 4. The number of
Shares subject to such award shall be determined generally in accordance with
the provisions of Section 5(b); provided, however, that the Board shall have
sole discretion to adjust the amount of compensation then to be paid in the form
of Shares and the terms of any such award of Shares. Except as the Board may
otherwise determine, any increase or decrease in an Eligible Director's annual
compensation during the period when such Director has an outstanding award of
Restricted Stock shall be implemented by increasing or decreasing the cash
portion of such Director's compensation.
(d) Eligible Director shall be entitled to vote and receive dividends on
the unvested portion of his or her Restricted Stock, but will not be able to
obtain a stock certificate or sell, encumber or otherwise transfer such
Restricted Stock except in accordance with the terms of the Company's 1991 Long
Term Stock Incentive Plan (the "Long Term Plan"). If an Eligible Director's term
of service as a director is terminated for any reason other than death or
permanent and total disability or retirement on or after normal retirement age
as specified in the Company's Corporate Governance Guidelines, all shares of
Restricted Stock theretofore awarded to the Eligible Director which are still
subject to restrictions shall upon such termination be forfeited and transferred
back to the Company; provided, however, that a pro rata portion of the
Restricted Stock which would have vested on January 1 of the year following the
year of the Eligible Director's termination shall vest on the date of
termination, based upon the portion of the year during which the Eligible
Director served as a Director of the Company.
(e) Notwithstanding the foregoing or clause (g) below, if an Eligible
Director continues to hold an award of Restricted Stock following termination of
service as a director (including retirement), the Shares of Restricted Stock
which remain subject to restrictions shall nonetheless be forfeited and
transferred back to the Company if the Board at any time thereafter determines
that the former Director has engaged in any activity detrimental to the
interests of the Company.
(f) If an Eligible Director's term is terminated by reason of death or
permanent and total disability or if following retirement as a director a former
Director continues to have rights under an Award of Restricted Stock and
thereafter dies, the restrictions contained in the Award shall lapse with
respect to such Restricted Stock.
(g) If an Eligible Director's term is terminated by reason of retirement on
or after normal retirement age as specified in the Company's Corporate
Governance Guidelines, the restrictions contained in the Award of Restricted
Stock shall continue to lapse in the same manner as though the term had not
terminated.
SECTION 6. STOCK OPTION GRANT
(a) Subject to approval of this Plan by the Company's stockholders, each
Eligible Director on the date of such approval will be granted on such date a
stock option to purchase 8,000 Shares (the "Stock Option"). Thereafter, on the
date of each of the Company's subsequent annual stockholders meetings, each
person who is or becomes an Eligible Director on that date and whose service on
the Board will continue after such date shall be granted a Stock Option, subject
to Section 4, effective as of the date of such meeting.
(b) Stock Options granted under this Section 6 shall be non-qualified stock
options and shall have the following terms and conditions.
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1. Option Price. The option price per Share shall be equal to the fair
market value of the Shares on the date of grant as determined by the Board of
Directors.
2. Term of Option. The term of the Stock Option shall be ten years from the
date of grant, subject to earlier termination in the event of termination of
service as an Eligible Director. If an Eligible Director's term of service as a
director is terminated for any reason other than death, the Director may
thereafter exercise the Stock Option as provided below, except that the Board
may terminate the unexercised portion of the Stock Option concurrently with or
at any time following termination if it shall determine that the former Director
has engaged in any activity detrimental to the interests of the Company. If an
Eligible Director's term is terminated for any reason other than death or
permanent and total disability or retirement on or after normal retirement age
as specified in the Company's Corporate Governance Guidelines, at a time when
such Director is entitled to exercise an outstanding Stock Option, then such
Stock Option may be exercised as to all or any of the Shares which the Eligible
Director was entitled to purchase at the date of termination (A) for Stock
Options granted prior to October 27, 2005, until the later of (i) the 15th day
of the third month following the date at which such Stock Option would otherwise
have terminated in connection with the termination of service, which date prior
to the October 27, 2005 Plan amendments was three months after termination of
the Director's service, or (ii) December 31 of the calendar year in which the
Stock Option would otherwise have terminated in connection with the termination
of service; and (B) for Stock Options granted on or after October 27, 2005,
until the earlier of (i) the expiration of the original term, or (ii) one year
after death. That portion of the Stock Option not exercisable at the time of
such termination shall be forfeited and transferred back to the Company on the
date of such termination. If an Eligible Director's term is terminated by reason
of permanent and total disability, any portion of a Stock Option that is not
then exercisable shall become fully exercisable and shall remain exercisable
until the earlier of the expiration of the original option term or one year
after death. If an Eligible Director retires from service as a director on or
after normal retirement age as specified in the Company's Corporate Governance
Guidelines, such Stock Option shall continue to become exercisable and shall
remain exercisable in accordance with its terms and the provisions of this Plan.
If an Eligible Director dies, all unexercisable installments of the Stock Option
shall thereupon become exercisable and at any time or times within one year
after death such Stock Option may be exercised as to all or any unexercised
portion of the Stock Option. Except as so exercised, such Stock Option shall
expire at the end of such period. Except as provided above, a Stock Option may
be exercised only if and to the extent such Stock Option was exercisable at the
date of termination of service as an Eligible Director, and a Stock Option may
not be exercised at a time when the Stock Option would not have been exercisable
had the service as an Eligible Director continued.
3. Exercisability. Subject to clause 2 above, each Stock Option shall vest
and become exercisable with respect to twenty percent of the underlying Shares
on each of the first five anniversaries of the date of grant, provided that the
optionee is an Eligible Director on such date.
4. Method of Exercise. A Stock Option may be exercised in whole or in part
during the period in which such Stock Option is exercisable by giving written
notice of exercise to the Company specifying the number of shares to be
purchased, accompanied by payment of the purchase price. Payment of the purchase
price shall be made in cash, by delivery of Shares, or by any combination of the
foregoing.
5. Non-Transferability. Unless otherwise provided by the terms of the Long
Term Plan or the Board, (i) Stock Options shall not be transferable by the
optionee other than by will or by the laws of descent and distribution, and (ii)
during the optionee's lifetime, all Stock Options shall be exercisable only by
the optionee or by his or her guardian or legal representative.
6. Stockholder Rights. The holder of a Stock Option shall, as such, have
none of the rights of a stockholder.
SECTION 7. GENERAL
(a) Plan Amendments. The Board may amend, suspend or discontinue the Plan
as it shall deem advisable or to conform to any change in any law or regulation
applicable thereto; provided, that the Board may not, without the authorization
and approval of the stockholders of the Company: (a) modify the class of persons
who constitute Eligible Directors as defined in the Plan; or (b) increase the
total number of Shares available under the Plan. In addition, without the
consent of affected participants, no amendment of the Plan or any award under
the Plan may impair the rights of participants under outstanding awards.
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(b) Listing and Registration. If at any time the Board shall determine, in
its discretion, that the listing, registration or qualification of the Shares
under the Plan upon any securities exchange or under any state or Federal law,
or the consent or approval of any governmental regulatory body, is necessary or
desirable as a condition of, or in connection with, the granting of any award
hereunder, no Shares may be delivered or disposed of unless such listing,
registration, qualification, consent or approval shall have been effected or
obtained free of any condition not acceptable to the Board.
(c) Award Agreements. Each award of Restricted Stock and Stock Option
granted hereunder shall be evidenced by the Eligible Director's written
agreement with the Company which shall contain such terms and conditions not
inconsistent with the provisions of the Plan as shall be determined by the Board
in its discretion.
(d) Change in Control.
1. Notwithstanding any of the provisions of this Plan or instruments
evidencing awards granted hereunder, upon a Change in Control of
the Company (as hereinafter defined) the vesting of all rights of
Directors under outstanding awards of Restricted Stock and Stock
Options shall be accelerated and all restrictions thereon shall
terminate in order that participants may fully realize the
benefits thereunder. Such acceleration shall include, without
limitation, the immediate exercisability in full of all Stock
Options and the termination of restrictions on Restricted Stock.
Further, in addition to the Board's authority set forth in
Section 4(d), the Board, as constituted before such Change in
Control, is authorized, and has sole discretion, as to any award,
either at the time such award is made hereunder or any time
thereafter, to take any one or more of the following actions: (i)
provide for the purchase of any such award, upon the
participant's request, for an amount of cash equal to the amount
that could have been attained upon the exercise of such award or
realization of the participant's rights had such award been
currently exercisable or payable; (ii) make such adjustment to
any such award then outstanding as the Board deems appropriate to
reflect such Change in Control; and (iii) cause any such award
then outstanding to be assumed, or new rights substituted
therefor, by the acquiring or surviving corporation after such
Change in Control. A Change in Control shall occur if, during any
period of twenty-four consecutive calendar months, the
individuals who at the beginning of such period constitute the
Company's Board of Directors, and any new Directors (other than
Excluded Directors, as hereinafter defined), whose election by
such Board or nomination for election by stockholders was
approved by a vote of at least two-thirds of the members of such
Board who were either Directors on such Board at the beginning of
the period or whose election or nomination for election as
Directors was previously so approved, for any reason cease to
constitute at least a majority of the members thereof. For
purposes hereof, "Excluded Directors" are Directors whose (i)
election by the Board or approval by the Board for stockholder
election occurred within one year after any "person" or "group of
persons", as such terms are used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, commencing a tender offer
for, or becoming the beneficial owner of, voting securities
representing 25 percent or more of the combined voting power of
all outstanding voting securities of the Company, other than
pursuant to a tender offer approved by the Board prior to its
commencement or pursuant to stock acquisitions approved by the
Board prior to their representing 25 percent or more of such
combined voting power or (ii) 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 or Regulation 14A
promulgated under the Exchange Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of an
individual, corporation, partnership, group, associate or other
entity or "person" other than the Board.
2. In the event that subsequent to a Change in Control it is
determined that any payment or distribution by the Company to or
for the benefit of a participant, whether paid or payable or
distributed or distributable pursuant to the terms of this Plan
or otherwise, other than any payment pursuant to this
subparagraph 2 (a "Payment"), would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended from time to time (the "Code") or any interest or
penalties with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then such
participant shall be entitled to receive from the Company, within
15 days following the determination described in subparagraph 3
below, an additional payment ("Excise Tax Adjustment Payment") in
an amount such that after payment by such participant of all
applicable Federal, state and local taxes (computed at the
maximum marginal rates and including any interest or penalties
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imposed with respect to such taxes), including any Excise Tax,
imposed upon the Excise Tax Adjustment Payment, such participant
retains an amount of the Excise Tax Adjustment Payment equal to
the Excise Tax imposed upon the Payments.
3. All determinations required to be made under this Section 7(d),
including whether an Excise Tax Adjustment Payment is required
and the amount of such Excise Tax Adjustment Payment, shall be
made by PricewaterhouseCoopers LLP, or such other national
accounting firm as the Company, or, subsequent to a Change in
Control, the Company and the participant jointly, may designate,
for purposes of the Excise Tax, which shall provide detailed
supporting calculations to the Company and the affected
participant within 15 business days of the date of the applicable
Payment. Except as hereinafter provided, any determination by
PricewaterhouseCoopers LLP, or such other national accounting
firm, shall be binding upon the Company and the participant. As a
result of the uncertainty in the application of Section 4999 of
the Code that may exist at the time of the initial determination
hereunder, it is possible that (x) certain Excise Tax Adjustment
Payments will not have been made by the Company which should have
been made (an "Underpayment"), or (y) certain Excise Tax
Adjustment Payments will have been made which should not have
been made (an "Overpayment"), consistent with the calculations
required to be made hereunder. In the event of an Underpayment,
such Underpayment shall be promptly paid by the Company to or for
the benefit of the affected participant. In the event that the
participant discovers that an Overpayment shall have occurred,
the amount thereof shall be promptly repaid to the Company.
(e) Non-compete. Each award of Restricted Stock and Stock Option granted
hereunder shall contain a provision whereby the award holder shall agree, in
consideration for the award and regardless of whether restrictions on shares of
Restricted Stock have lapsed or whether the Stock Option becomes exercisable or
is exercised, as the case may be, as follows:
(i) While the holder is a Director of the Company and for a period of
one year following the termination of such holder's term as a
Director of the Company, other than a termination following a
Change in Control, not to engage in, and not to become associated
in a "Prohibited Capacity" (as hereinafter defined) with any
other entity engaged in, any "Business Activities" (as
hereinafter defined) and not to encourage or assist others in
encouraging any employee of the Company or any of its
subsidiaries to terminate employment or to become engaged in any
such Prohibited Capacity with an entity engaged in any Business
Activities. "Business Activities" shall mean the design,
development, manufacture, sale, marketing or servicing of any
product or providing of services competitive with the products or
services of the Company or any subsidiary at any time the award
is outstanding, to the extent such competitive products or
services are distributed or provided either (1) in the same
geographic area as are such products or services of the Company
or any of its subsidiaries, or (2) to any of the same customers
as such products or services of the Company or any of its
subsidiaries are distributed or provided. "Prohibited Capacity"
shall mean being associated with an entity as a director,
employee, consultant, investor or another capacity where (1)
confidential business information of the Company or any of its
subsidiaries could be used in fulfilling any of the holder's
duties or responsibilities with such other entity, or (2) an
investment by the award holder in such other entity represents
more than 1% of such other entity's capital stock, partnership or
other ownership interests.
(ii) Should the award holder either breach or challenge in judicial or
arbitration proceedings the validity of any of the restrictions
contained in the preceding paragraph, by accepting an award each
award holder shall agree, independent of any equitable or legal
remedies that the Company may have and without limiting the
Company's right to any other equitable or legal remedies, to pay
to the Company in cash immediately upon the demand of the Company
(1) the amount of income realized for income tax purposes from an
award of Restricted Stock and/or the exercise of a Stock Option,
net of all federal, state and other taxes payable on the amount
of such income, but only to the extent such income is realized
from restrictions lapsing on shares or exercises occurring, as
the case may be, on or after the termination of the award
holder's term as a Director of the Company or within the two year
period prior to the date of such termination, plus (2) all costs
and expenses of the Company in any effort to enforce its rights
under this or the preceding paragraph. The Company shall have the
right to set off or withhold any amount owed to the award holder
by the Company or any of its subsidiaries or affiliates for any
amount owed to the Company by the award holder hereunder.
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(f) Applicability. The provisions of this Plan as amended and restated
October 27, 2005 shall apply to all outstanding Stock Options and awards of
Restricted Stock.
(g) Term. No shares shall be awarded under this Plan after May 21, 2007.
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