EXHIBIT 10.8
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BAXTER INTERNATIONAL INC.
Non-Employee Director Stock Option Plan adopted April 30, 2001
[Plan for Annual Grant]
Terms and Conditions
As amended and restated effective February 25, 2002
1. Purpose
This Non-Employee Director Stock Option Plan (the "Plan") is adopted by the
Compensation Committee (the "Committee") of the Board of Directors (the
"Board") of Baxter International Inc. ("Baxter"). This Plan is adopted pursuant
to the Baxter International Inc. 2001 Incentive Compensation Program (the
"Program"), for the purposes stated in the Program. Capitalized terms defined
in the Program that are used without being defined in the Plan will have the
same meaning as in the Program.
2. Participants
Each member of the Board who is not an employee of Baxter or any of its
subsidiaries shall participate in the Plan (a "Participant").
3. Awards
3.1 On the date of Baxter's annual meeting of stockholders (the "Annual
Meeting") in each year beginning with the Annual Meeting on May 1, 2001, and
subject to availability of shares of Common Stock under Section 4.2, each
Participant upon completion of the Annual Meeting shall, automatically and
without necessity of any action by the Board or any committee thereof, be
granted an option (an "Option") to purchase the number of shares of Common
Stock determined pursuant to Section 4.1 of this Plan.
3.2 Each Participant elected or appointed on a date other than the date
of an Annual Meeting shall, on the date of such election or appointment and
automatically and without necessity of any action by the Board or any
committee thereof, be granted an Option to purchase that number of shares of
Common Stock equal to the product of (A) the Annual Stock Option Grant
Amount (as defined in Section 4.1) for each Option granted on the date of
the immediately preceding Annual Meeting, multiplied by (B) the quotient of
(i) the number of full calendar months before the next Annual Meeting
divided by (ii) 12 (rounded to the nearest whole number which is a multiple
of ten). The number of shares of Common Stock subject to any Option granted
under this Section 3.2 shall not exceed the number available under Section
4.2 on the date of grant.
3.3 The purchase price for each share of Common Stock subject to an
Option shall be the Fair Market Value of a share of Common Stock on the date
of grant. The terms of each Option will be as set forth in the Plan and the
Program. To the extent that any provision of the Plan is inconsistent with
the Program, the Program shall control. The Options are not intended to
qualify as Incentive Stock Options within the meaning of Section 422 of the
United States Internal Revenue Code.
4. Number of Shares
4.1 The number of shares of Common Stock subject to each Option granted
pursuant to this Plan on the date of an Annual Meeting ("Annual Stock Option
Grant Amount") shall be determined in accordance with this Section 4.1. Each
Participant shall be assigned an annual stock option target equal to 10,000
shares of Common Stock, subject to adjustment in accordance with the Program
("Annual Stock Option Target"). The Annual Stock Option Grant Amount shall
be equal to the product of (A) the Annual Stock Option Target multiplied by
(B) the stock performance multiplier ("Stock Performance Multiplier") set
forth on Exhibit A attached to this Plan, which is based on Baxter's total
shareholder return ("Baxter TSR")
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compared to the total shareholder return for the Standard and Poor's (S&P)
500 Health Care Index ("HCI TSR") for the 12-month period ending on the most
recent September 30 prior to the date of an Annual Meeting. The Annual Stock
Option Grant Amount shall not be more than 150% of the Annual Stock Option
Target or less than 75% of the Annual Stock Option Target.
4.2 The total number of shares of Common Stock available for Options
granted under this Plan shall be 500,000 shares, subject to adjustment in
accordance with the Program. If on any grant date, the number of shares of
Common Stock which would otherwise be subject to Options granted under the
Plan shall exceed the number of shares of Common Stock then remaining
available under the Plan, the available shares shall be allocated among the
Options to be granted Participants in proportion to the number of shares
subject to Options that Participants would otherwise be entitled to receive.
5. Exercise and Expiration
5.1 Subject to Section 11.10 of the Program and except as expressly
provided in Sections 5.5, 5.6 and 5.7, Options shall first become
exercisable on the first anniversary of the date of grant, or if that date
is not a Business Day, then on the next succeeding Business Day. A "Business
Day" is any day on which the Common Stock is traded on the New York Stock
Exchange.
5.2 After an Option becomes exercisable and until it expires, it may be
exercised in whole or in part, in the manner specified by the Company. If
exercised in part, the Option must be exercised in increments of 100 shares
of Common Stock or, if the Option is not then exercisable for 100 shares of
Common Stock, to the full extent the Option can then be exercised. Under no
circumstances may an Option be exercised after it has expired. Shares of
Common Stock may be used to pay the purchase price for shares of Common
Stock to be acquired upon exercise of an Option in accordance with the
requirements specified by the Company.
5.3 Except as provided in Sections 5.5, 5.6 and 5.7, if a Participant
ceases service as a member of the Board before his or her Option becomes
exercisable, the Option will expire when the Participant ceases service as a
member of the Board.
5.4 If a Participant ceases service as a member of the Board after his
or her Option becomes exercisable, the Option will not expire but will
remain exercisable. Subject to Sections 5.5, 5.6, 5.7 and 5.8, the Option
will expire three months after the Participant ceases service as a member of
the Board, unless the Participant dies or becomes disabled during such three
month period in which case the Option will expire on the first anniversary
of the date the Participant ceased serving as a member of the Board.
5.5 If a Participant dies while serving as a member of the Board, his or
her Option will not expire and will remain, or immediately become, fully
exercisable, as the case may be. Subject to Sections 5.7 and 5.8, the Option
will expire on the first anniversary of the Participant's death.
5.6 If a Participant becomes disabled and unable to continue service as
a member of the Board, his or her Option will not expire and will remain, or
when the Participant ceases to serve as member of the Board become, fully
exercisable, as the case may be. Subject to Sections 5.7 and 5.8, the Option
will expire on the first anniversary of the date the Participant ceases
service as a member of the Board.
5.7 If a Participant who has served as a member of the Board for a
continuous period of at least ten years or who is at least 72 years of age
ceases to serve as a member of the Board (including without limitation by
reason of death or disability), his or her Option will not expire and will
remain, or when the Participant ceases to serve as member of the Board
become, fully exercisable, as the case may be. Subject to Section 5.8, the
Option will expire on the fifth anniversary of the date the Participant
ceases service as a member of the Board.
5.8 Options that have not previously expired will expire at the close of
business on the tenth anniversary of the date of grant. If an Option would
expire on a date that is not a Business Day, it will expire at the close of
business on the last Business Day preceding that date.
5.9 An exercisable Option may only be exercised by the Participant, his
or her legal representative, or a person to whom the Participant's rights in
the Option are transferred by will or the laws of descent and distribution
or in accordance with rules and procedures established by the Committee.
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6. General Provisions
6.1 Subject to the limitations contained in Section 11.9 of the Program,
the Board or the Committee may, at any time and in any manner, amend,
suspend, or terminate the Plan or any Option outstanding under the Plan.
6.2 Participation in the Plan does not give any Participant any right to
continue as a member of the Board for any period of time or any right or
claim to any benefit unless such right or claim has specifically accrued
hereunder.
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EXHIBIT A
To
Plan For Annual Grants
Stock Option Performance Multiplier
Annual Stock
Baxter TSR Performance TSR Multiplier Target Option Award
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Above HCI TSR by 25%. 150% 10,000 15,000
Above HCI TSR by 15%. 130% 10,000 13,000
Above HCI TSR by 10%. 120% 10,000 12,000
Equal to HCI TSR 100% 10,000 10,000
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Below HCI TSR by 10%. 90% 10,000 9,000
Below HCI TSR by 15%. 85% 10,000 8,500
Below HCI TSR by 25%. 75% 10,000 7,500
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NOTE: Results that fall between performance levels will be interpolated
(e.g., A performance of 12.5% above HCI TSR would equate to a 125% multiplier)
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