Exhibit 10(b)
REVISED TO SHOW AMENDMENTS THROUGH 10/26/95
R.R. DONNELLEY & SONS COMPANY
1991 STOCK INCENTIVE PLAN
I. GENERAL
1. Plan. To provide incentives to management through rewards based upon the
ownership or performance of the common stock of R.R. Donnelley & Sons Company
(the "Company"), the Committee hereinafter designated, may grant cash or stock
bonus awards, stock options, stock appreciation rights, or combinations thereof,
to eligible officers and other key management employees, on the terms and
subject to the conditions stated in this Plan. In addition, to provide
incentives to members of the Board of Directors ("Board") who are not employees
of the Company ("non-employee directors"), such non-employee directors are
hereby granted options on the terms and subject to the conditions set forth in
this Plan.
2. Eligibility. Officers and other key management employees of the Company and
its subsidiaries, under selection guidelines to be established by the Committee,
shall be eligible, upon selection by the Committee, to receive cash or stock
bonus awards, stock options or stock appreciation rights, either singly or in
combination, as the Committee, in its discretion, shall determine. Non-employee
directors shall receive stock options on the terms and subject to the conditions
stated in this Plan.
3. Limitation on Shares to be Issued. The maximum number of shares of common
stock, par value $1.25 per share, to be issued pursuant to all grants made under
the Plan shall be 3,600,000. Shares awarded pursuant to grants which, by reason
of the expiration, cancellation or other termination of the grants prior to
issuance, are not issued shall again be available for future grants. Shares of
common stock to be issued may be authorized and unissued shares of common stock,
treasury stock or a combination thereof.
4. Administration of the Plan. The Plan shall be administered by a Committee
designated by the Board of Directors (the "Committee"). No member of the
Committee shall be eligible to participate in, or within one year prior to
appointment to the Committee have participated in, the Plan or any other stock
purchase, bonus award, stock option, stock appreciation rights or other stock
incentive plan of the Company, except as provided in Article III, Section 1(b).
The Committee shall, subject to the terms of the Plan, establish selection
guidelines; select eligible officers and key management employees for
participation; determine the form of grant, either as a bonus award, or as stock
option or stock appreciation rights or combination thereof; and determine the
form of stock option, the number of shares subject to the grant, the fair market
value of the common stock when necessary, the time and conditions of vesting or
exercise, and all other terms and conditions of the grant. The Committee may
establish rules and regulations for
the administration of the Plan, interpret the Plan, and impose, incidental to a
grant, conditions with respect to competitive employment or other activities not
inconsistent with or conflicting with the Plan. All such rules, regulations,
and interpretations relating to the Plan adopted by the Committee shall be
conclusive and binding on all parties. All grants and awards under this Plan
shall be evidenced by written instruments delivered by the Company to the
participants, and no such grant or award shall be valid until so evidenced.
Notwithstanding the foregoing, neither the Board nor the Committee shall
have any discretion to alter the number of shares granted to non-employee
directors pursuant to Article III, Section 1(b) or the terms or conditions under
which such shares are granted.
5. Adjustments for Changes in Capitalization. Appropriate adjustments shall be
made by the Committee in the maximum number of shares to be issued under the
Plan, the maximum number of shares to be issued pursuant to bonus awards, and
the number of shares the subject of any grant, to give effect to any stock
splits, stock dividends and other relevant changes in capitalization occurring
after the effective date of the Plan.
6. Effective Date and Term of Plan. The Plan shall be submitted to the
stockholders of the Company for approval at the 1991 annual meeting scheduled to
be held on March 28, 1991, and if approved shall become effective on that date.
The Plan shall terminate five years after it becomes effective unless terminated
prior thereto by action of the Board. No further grants shall be made under the
Plan after termination, but termination shall not affect the rights of any
participant under any grants made prior to termination.
7. Amendments. The Plan may be amended or terminated by the Board in any
respect except that no amendment may be made without stockholder approval if
such amendment would increase the maximum number of shares available for
issuance under the Plan or change the number of shares to be granted, pursuant
to stock options, to non-employee directors.
8. Prior Plans. Upon the effectiveness of this Plan, no further grants shall
be made under the Company's 1981 Stock Incentive Plan, as amended, and the 1986
Stock Incentive Plan, as amended, except that stock appreciation rights may be
granted with respect to options previously granted and outstanding under such
Plans. Bonuses awarded under the 1986 Stock Incentive Plan, as amended, and
options granted under the 1981 Stock Incentive Plan, as amended, and the 1986
Stock Incentive Plan, as amended, prior to the effectiveness of this Plan shall
continue in effect in accordance with their terms.
9. Tax Withholding. The Company shall have the right to require, prior to the
issuance or delivery of any shares of common stock or the payment of any cash
pursuant to a grant or award hereunder, payment by the holder thereof of any
Federal, state, local or other taxes which may be required to be withheld or
paid in connection therewith. The holder may satisfy any such obligation by any
of the following means: (A) a cash payment to the Company, (B) delivery to the
Company of previously owned whole shares of common stock (which the holder has
held for at least six months prior to the delivery of such shares or which the
holder purchased on the open market and for which the holder has good title,
free and clear of all liens and encumbrances)
having an aggregate fair market value determined as of the date the obligation
to withhold or pay taxes arises (the "Tax Date"), (C) authorizing the Company to
withhold whole shares of common stock which would otherwise be delivered having
an aggregate fair market value determined as of the Tax Date or withhold an
amount of cash which would otherwise be payable to a holder, (D) in the case of
the exercise of an option, a cash payment by a broker-dealer acceptable to the
Company to whom the optionee has submitted an irrevocable notice of exercise or
(E) any combination of (A), (B) and (C); provided, however, that the Committee
shall have sole discretion to disapprove of an election pursuant to any of
clauses (B)-(E) and that in the case of a holder who is subject to Section 16 of
the Exchange Act (as defined below), the Company may require that the method of
satisfying such an obligation be in compliance with Section 16 and the rules and
regulations thereunder. Shares of common stock to be delivered or withheld may
have an aggregate fair market value in excess of the minimum amount required to
be withheld, but not in excess of the amount determined by applying the holder's
maximum marginal tax rates. Any fraction of a share of common stock which would
be required to satisfy such an obligation shall be disregarded and the remaining
amount due shall be paid in cash by the holder.
II. BONUS AWARDS
1. Form of Award. Bonus awards, whether Performance Awards or Fixed Awards,
may be made to eligible officers and other key management employees in the form
of (i) cash, whether in an absolute amount or as a percentage of compensation,
(ii) stock units, each of which is substantially the equivalent of a share of
common stock but for the power to vote and the entitlement to current dividends,
(iii) in the form of shares of common stock issued to the employee but
forfeitable and with restrictions on transfer in any form as hereinafter
provided or (iv) any combination of the foregoing.
2. Performance Awards. Awards may be made in terms of a stated potential
maximum dollar amount, percentage of compensation or number of units or shares,
with the actual such amount, percentage or number to be determined by reference
to the level of achievement of corporate, group, division, individual or other
specific objectives over a performance period of not less than one nor more than
ten years, as determined by the Committee. No rights or interests of any kind
shall be vested in an individual receiving a Performance Award until the
conclusion of the performance period and the determination of the level of
achievement specified in the award, and the time of vesting, if any, thereafter
shall be as specified in the award.
3. Fixed Awards. Awards may be made which are not contingent on the
performance of objectives, but are contingent on the participant's continuing in
the Company's employ for a period to be specified in the award, which period
shall be not less than one nor more than ten years from the date of award.
4. Rights with Respect to the Restricted Shares. If shares of restricted
common stock are issued pursuant to an award, the participant shall have the
right to vote the shares and to receive
dividends thereon from the date of issuance, unless and until forfeited.
5. Rights with Respect to Stock Units. If stock units are credited to a
participant pursuant to an award, amounts equal to dividends otherwise payable
on a like number of shares of common stock after the crediting of the units
shall be credited to an account for the participant and held until the award is
forfeited or paid out. Interest shall be credited on the account annually at a
rate equal to the return on five year U.S. Treasury obligations.
6. Vesting and Resultant Events. The Committee may, in its discretion, provide
for early vesting of an award in the event of the participant's death, permanent
and total disability or retirement. At the time of vesting, (i) the award, if
in units, shall be paid to the participant either in shares of common stock
equal to the number of units, in cash equal to the fair market value of such
shares, or in such combination thereof as the Committee shall determine, and the
participant's account to which dividends and interest have been credited shall
be paid in cash, (ii) the award, if a cash bonus award, shall be paid to the
participant either in cash, or in shares of common stock with a then fair market
value equal to the amount of such award, or in such combination thereof as the
Committee shall determine and (iii) shares of restricted common stock issued
pursuant to an award shall be released from the restrictions.
7. Acceleration Upon Change in Control. If while any Performance Award or
Fixed Award remains outstanding under this Plan--
(a) any "person," as such term is defined in Section 3(a)(9) of the
Securities Exchange Act of 1934 (the "Exchange Act"), as modified and used
in Section 13(d) and 14(d) thereof (but not including (i) the Company or
any of its subsidiaries, (ii) a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or any of its
subsidiaries, (iii) an underwriter temporarily holding securities pursuant
to an offering of such securities, or (iv) a corporation owned, directly or
indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company) (hereinafter a
"Person") is or becomes the beneficial owner, as defined in Rule 13d-3 of
the Exchange Act, directly or indirectly, of securities of the Company (not
including in the securities beneficially owned by such Person any
securities acquired directly from the Company or its affiliates)
representing 50% or more of the combined voting power of the Company's then
outstanding securities; or
(b) during any period of two (2) consecutive years (not including any
period prior to the execution of this Amendment), individuals who at the
beginning of such period constitute the Board and any new director (other
than a director designated by a Person who has entered into any agreement
with the Company to effect a transaction described in Clause (a), (c) or
(d) of this Section) whose election by the Board or nomination for election
by the Company's stockholders was approved by a vote of at least two-thirds
(2/3) 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 stockholders of the Company approve a merger or consolidation
of the Company with any other corporation, other than (i) 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), in combination with the ownership of any trustee or
other fiduciary holding securities under an employee benefit plan of the
Company, at least 50% of the combined voting power of the voting securities
of the Company or such surviving entity outstanding immediately after such
merger or consolidation, or (ii) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) in
which no Person acquires more than 50% of the combined voting power of the
Company's then outstanding securities; or
(d) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by
the Company of all or substantially all the Company's assets,
(any of such events being hereinafter referred to as a "Change in Control"),
then from and after the date on which public announcement of the acquisition of
such percentage shall have been made, or the date on which the change in the
composition of the Board set forth above shall have occurred, or the date of any
such stockholder approval of a merger, consolidation, plan of complete
liquidation or an agreement for the sale of the Company's assets as described
above occurs (the applicable date being hereinafter referred to as the
"Acceleration Date"), (i) with respect to such Performance Awards, the highest
level of achievement specified in the award shall be deemed met and the award
shall be immediately and fully vested, and (ii) with respect to such Fixed
Awards, the period of continued employment specified in the award upon which the
award is contingent shall be deemed completed and the award shall be immediately
and fully vested.
III. STOCK OPTIONS
1. Grants. (a) Options for Officers and Key Management Employees. Options to
purchase shares of common stock of the Company may be granted to such eligible
officers and key management employees as may be selected by the Committee.
These options may, but need not, constitute "incentive stock options" under
Section 422A of the Internal Revenue Code of 1986, as amended, or any other form
of option under the Code as hereafter amended.
(b) Options for Non-Employee Directors. An option to purchase 2,000 shares
of common stock of the Company shall be granted on March 28, 1991 and,
thereafter, annually on the date of the Company's annual meeting of stockholders
to each individual who immediately following such meeting on such date is a non-
employee director.
2. Terms of Options. An option granted to a non-employee director hereunder
pursuant to Section 1(b) (a "Director Option") shall become exercisable in whole
or in part on the earlier to
occur of (a) the date which is the first anniversary of the date the Director
Option is granted (the date of grant being hereafter referred to as the "Option
Date") or (b) the day immediately preceding the date of the Annual Meeting of
Stockholders of the Company next following the Option Date, provided that the
date of such Annual Meeting is at least three hundred fifty-five (355) days
after the Option Date, and Director Options shall not be exercisable more than
ten years after the Option Date. All other options granted hereunder shall be
exercisable no earlier than one, nor more than ten, years after the date any
such option is granted. The per share option price shall be not less than 100%
of the fair market value of a share of common stock of the Company at the time
the option is granted; provided that options granted to non-employee directors
shall be 100% of the fair market value of a share of common stock of the Company
at the time the option is granted. Upon exercise, the option price may be paid
in cash, in shares of common stock of the Company having a fair market value
equal to the option price, or in a combination thereof. Options may be
exercised during the individual's continued employment with the Company or
service on the Board, as the case may be, and for a period not in excess of
ninety days following termination of employment or service on the Board and only
within the original term of that option; provided, however, that if employment
of the optionee by the Company and its subsidiaries or service on the Board, as
the case may be, shall have terminated by reason of retirement or total and
permanent disability, then the option may be exercised for a period not in
excess of five years following termination of employment or service on the
Board, but not after the expiration of the term of the option. Options shall
not be transferable, except that in the event of the death of an optionee (i)
during employment or service on the Board, as the case may be, (ii) within a
period not in excess of five years after termination of employment or service on
the Board, as the case may be, by reason of retirement or total and permanent
disability or (iii) within ninety days after termination of employment or
service on the Board, as the case may be, for any other reason, outstanding
options may be exercised by the executor, administrator or personal
representative of such deceased optionee within ninety days of the death of such
optionee. (Amended 9-23-93).
3. Acceleration of Stock Options Upon a Change in Control. If while any stock
option granted pursuant to this Article III of the Plan remains unexercised and
outstanding, a Change in Control (as defined in Article II, Section 8, above)
occurs, then from and after the Acceleration Date (as defined in Article II,
Section 8, above) all such outstanding and unexercised options, whether or not
then vested, shall be fully and immediately exercisable.
IV. UK STOCK OPTION SUB-PLAN
1. GENERAL
(a) Sub-Plan. The UK Stock Option Sub-Plan ("the Sub-Plan") has been
established in order to vary the terms on which options may be given to officers
and other key management employees who are employed in the United Kingdom by the
Company or any of its subsidiaries. Stock options granted under the Sub-Plan
shall be deemed granted under this Stock Incentive Plan and shall comply in all
respects with the terms and conditions applicable to options granted under
Article III of this Stock Incentive Plan.
(b) Definitions. In the Sub-Plan the following terms shall have the following
meanings:
"the Subsidiaries" shall mean all companies which are controlled by the
Company (as defined in Section 840 of the Income and
Corporation Taxes Act 1988) and which are affiliates
controlled by the Company directly or indirectly through
one or more intermediaries for the purposes of rule 12b-2
of the U.S. Securities Exchange Act of 1934;
"the Group" shall mean the Company and the Subsidiaries;
"Associated Company" shall have the meaning attributed to it in Section 416(1)
of the Income and Corporation Taxes Act 1988;
"the Committee" shall mean the committee designated to administer this
Stock Incentive Plan;
"Full Time Employee" shall mean any director or employee who is employed by
the Group in the United Kingdom and who is required to
devote to his duties not less than 25 hours (or in the
case of an employee who is not a director of any company
in the Group, 20 hours) per week (excluding meal breaks)
and is not precluded by paragraph 8 of Schedule 9 from
participating in the Sub-Plan;
"Relevant Emoluments" shall have the meaning which the term bears in sub-
paragraph (2) of paragraph 28 of Schedule 9 by virtue of
sub-paragraph (4) of that paragraph;
"Year of Assessment" shall mean a year beginning on any 6 April and ending on
the following 5 April;
"Market Value" shall mean on any day the average of high and low
transaction prices in trading in the common stock of the
Company as reported on the New York Stock Exchange--
Composite Transaction compiled by Associated Press or if
no trading occurred on such date then on the next
preceding date on which such trading occurred;
"Schedule 9" shall mean Schedule 9 of the United Kingdom Income and
Corporation Taxes Act 1988.
"Share" or "Shares" shall mean a share or shares of common stock of par value
$1.25 which satisfy the conditions specified in
Paragraphs 10 to 14 inclusive of Schedule 9.
(c) Sub-Plan. The Committee may grant stock options to officers and other key
management employees eligible to participate in the Sub-Plan on the terms and
subject to the conditions stated in this Sub-Plan.
(d) Eligibility. Full Time Employees who are officers or other key management
employees employed by the Group in the United Kingdom under selection guidelines
to be established by the Committee, shall be eligible, upon selection by the
Committee, to receive stock options.
(e) Shares to be Issued. Shares to be issued shall be authorized and unissued
shares of common stock, treasury stock or a combination thereof. The issue of
shares of common stock, par value $1.25 per share, shall be subject to the
maximum specified in this Stock Incentive Plan.
(f) Administration. The Sub-Plan shall be administered by the Committee in
accordance with the provisions set out in this Stock Incentive Plan and varied
by the terms of this Sub-Plan.
(g) Effective Date and Term of the Sub-Plan. The Sub-Plan shall be submitted to
the stockholders of the Company for approval at the 1991 annual meeting
scheduled to be held on March 28, 1991, and if approved shall become effective
on that date. The Sub-Plan shall terminate five years after it becomes
effective unless terminated prior thereto by action of the Board. No further
grants shall be made under the Sub-Plan after termination but termination shall
not affect the right of any participation under the grants made prior to
termination.
(h) Amendments. The Sub-Plan may be amended or terminated by the Board subject
to the conditions specified in this Stock Incentive Plan. No amendment may be
made which will put the Sub-Plan in breach of conditions for approval set out in
Schedule 9 and no amendment to the Sub-Plan or any provision in this Stock
Incentive Plan which applies to options granted under the Sub-Plan shall be made
without prior approval of the Board of UK Inland Revenue.
2. STOCK OPTIONS
(a) Grants. Options to purchase shares of common stock of the Company may be
granted to such eligible Full-Time Employees as may be selected by the
Committee.
(b) Variations in Options. Variations may not be made to options granted under
the Sub-Plan pursuant to Article I clause 5 of this Stock Incentive Plan without
prior consent of the Board of UK Inland Revenue.
(c) Terms of Options. No options shall be exercisable less than one nor more
than ten years after the date of the grant. The per share option price shall be
stated at the time the option is granted and shall be not less than 100% of the
Market Value of the share on the date on which the optionee is offered options
under the Sub-Plan. Upon exercise, the option price shall be paid in cash.
Options shall not be transferable except that such options may be exercised by
the personal representative of a deceased optionee within ninety days of the
death of the optionee. Options may be exercised during the individual's
continued employment with the Group and for a period not in excess of ninety
days following termination of employment and only within the original term of
the option. No option may be exercised by an individual at any time when he is
precluded by Paragraph 8 of Schedule 9 from participating in the Sub-Plan.
(d) Exercise of Option. An option may be exercised by delivery of written
notice to the Company specifying the number of shares to be purchased and
accompanied by payment in full of the option price for the number of shares so
purchased. The Company shall within thirty days post to the optionee
certificates representing the number of shares specified, and shall pay all
original issue or transfer taxes and all other fees and expenses incidental to
such delivery.
(e) Limits on Options. No person shall be granted options under this Sub-Plan
which would, at the time that they are obtained, cause the aggregate Market
Value of the shares which he may acquire in pursuance of rights obtained under
the Sub-Plan or under any other scheme established by the Group or by any
Associated Company of the Company and approved by the Board of U.K. Inland
Revenue under Schedule 9 (and not exercised) to exceed or further exceed the
greater of:
(1) 100,000 British Pounds Sterling or
(2) Four times the Relevant Emoluments of the optionee for the current
or preceding Year of Assessment (whichever of those years gives the greater
amount) or if there were no Relevant Emoluments for the preceding Year of
Assessment four times the amount of the Relevant Emoluments for the period
of twelve months beginning with the first day during the current Year of
Assessment in respect of which there are Relevant Emoluments. For the
purposes of this clause the Market Value of the shares shall be converted
from US Dollars to sterling at the middle rate for the buying and selling
of that amount of sterling for US Dollars as quoted by the Barclays Bank
PLC at the opening of business on the day on which the optionee is offered
options under the Sub-Plan.
(f) Withholding Tax. Article III Clause 3 of this Stock Incentive Plan shall
not apply to the Sub-Plan.
V. STOCK APPRECIATION RIGHTS
1. Grants. Rights entitling the grantee to receive cash or shares of common
stock having a fair market value equal to the appreciation in market value of a
stated number of shares of common stock of the Company from the date of grant,
or in the case of rights granted in tandem with or by reference to a stock
option granted prior to the grant of such rights, from the date of grant of the
related stock option to the date of exercise may be granted to such eligible
officers and other key management employees as may be selected by the Committee.
2. Terms of Grant. Such rights may be granted in tandem with or with reference
to a related stock option, in which event the grantee may elect to exercise
either the option or the right, but not both, as to the same share of common
stock subject to the option and the right, or the right may be granted
independently of a related stock option. In either event, the right shall be
exercisable not more than ten years after the date of grant. Stock appreciation
rights shall not be transferable, except that in the event of the death of a
grantee during employment or within a period not in excess of five years after
termination of employment by reason of retirement or total and permanent
disability or within ninety days after termination of employment for any other
reason, outstanding rights may be exercised by the executor, administrator or
personal representative of such deceased grantee within ninety days of the death
of such grantee. Stock appreciation rights may be exercised during the
individual's continued employment with the Company and for a period not in
excess of ninety days following termination of employment and only within the
original term of that grant; provided, however, that if employment of the
grantee by the Company and its subsidiaries shall have terminated by reason of
retirement or total and permanent disability, then the grant may be exercised
for a period not in excess of five years following termination of employment but
not after the expiration of the term of the grant.
3. Payment on Exercise. Upon exercise of a right, the grantee shall be paid the
excess of the then fair market value of the number of shares to which the right
relates over the fair market value of such number of shares at the date of grant
of the right or of the related stock option, as the case may be. Such excess
shall be paid in cash or in shares of common stock having a fair market value
equal to such excess or in such combination thereof as the Committee shall
determine.