Exhibit 10.9
FMC 1995 MANAGEMENT INCENTIVE PLAN
----------------------------------
1. PURPOSE OF THE PLAN
The purpose of the FMC 1995 Management Incentive Plan is to promote the long-
term performance of FMC by (i) providing long-term incentives in cash and common
stock of FMC to key management employees of FMC and its subsidiaries, (ii)
assisting in attracting and retaining as employees persons whose abilities,
experience and judgment have contributed and will continue to contribute to the
financial success and progress of FMC, and (iii) aligning the identity of
interests of those employees and FMC's shareholders.
2. DEFINITIONS
(a) "Award" means a Stated Year Incentive Award or an Incentive Benefit.
(b) "Board of Directors" means the Board of Directors of FMC as it may be
constituted from time to time.
(c) "CEO" means the Chief Executive Officer of FMC.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means the Compensation and Organization Committee of the Board
of Directors.
(f) "Common Stock" means the common stock of FMC.
(g) "Date of Grant" means the date which is designated by the Committee as the
date of grant of an Award.
(h) "Disability" means complete and permanent inability by reason of illness or
accident to perform the duties of the occupation at which a Participant was
employed when such disability commenced.
(i) "Employee" means any person employed by the FMC Companies.
(j) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(k) "Fair Market Value" means the closing price of a share of Common Stock on a
specified date as reported in the New York Stock Exchange Composite
Page 1
Transactions for such date, or such other measurement of value as may be
specified by the Committee from time to time.
(l) "Financial Objective" means Net Contribution.
(m) "FMC" means FMC Corporation.
(n) "FMC Company" or "FMC Companies" means FMC and each Subsidiary Company.
(o) "Incentive Benefit" means an Award granted pursuant to Section 8.
(p) "Net Contribution" means for a business unit, operating profit after tax
less the product of 11.5% (the capital charge) and the unit's Capital Employed
(operating working capital plus net property, plant and equipment).
(q) "Option" means an Incentive Stock Option or a Nonqualified Stock Option.
(r) "Parent Corporation" means a corporation which, with respect to another
corporation, is a parent corporation within the meaning of Section 424(e)
of the Code.
(s) "Participant" means an Employee who has received an Award which has not
been exercised, paid, cancelled or forfeited and which has not expired.
(t) "Plan" means the FMC 1995 Management Incentive Plan.
(u) "Plan Year" means each calendar year commencing on or after January 1,
1995.
(v) "Restricted Stock" means Common Stock payable as part of an Award which is
subject to a restriction period before it is paid to a Participant, and such
other restrictions as may be specified by the Committee at the time the Award is
granted.
(w) "Stated-Year Incentive Award" means an award payable in cash and either
Common Stock or Restricted Stock based on achievement of a Participant's
unit's Financial Objectives over a Stated-Year Period.
(x) "Stated-Year Incentive Target Bonus" means the target bonus established for
each Participant which is the basis for the Participant's Stated-Year
Incentive Award.
Page 2
(y) "Stated-Year Period" means a period of the number of years in the Incentive
Award period determined by the Committee and commencing on January 1 of
each Plan Year.
(z) "Subsidiary Company" means (i) any corporation the majority of the voting
power of all classes of stock entitled to vote or the majority of the total
value of shares of all classes of stock of which is owned, directly or
indirectly, by FMC, or (ii) any trade or business other than a corporation
the majority of the profits interest, capital interest or actuarial
interest of which is owned, directly or indirectly, by FMC.
(aa) "Subsidiary Corporation" means a corporation or other entity that, with
respect to another corporation, is a subsidiary corporation within the
meaning of Section 424(f) of the Code.
3. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Committee. Except as limited by the
express provisions of the Plan or by resolutions adopted by the Board of
Directors, the Committee shall have the authority and discretion to interpret
the Plan, to establish and revise rules and regulations relating to the Plan,
and to make any other determinations that it believes necessary or advisable for
the administration of the Plan. Decisions and determinations by the Committee
shall be final and binding on all persons. Notwithstanding anything to the
contrary contained in the Plan, the Board of Directors shall also have all power
and authority to perform any act granted to the Committee pursuant to the Plan.
4. PARTICIPATION
Participants shall be determined by the Committee, in its sole discretion, from
Employees who, in the Committee's judgment, have a significant opportunity to
influence the growth of FMC or whose outstanding performance or potential merit
further incentive and reward for continued employment and accomplishment.
5. SHARES OF COMMON STOCK SUBJECT TO THE PLAN
Subject to adjustment pursuant to Section 9, at no time may the sum of (a) the
number of shares of Common Stock issued in payment of Awards and subject to
outstanding Awards under this Plan and (b) the number of shares of Common Stock
issued or subject to outstanding options under the FMC 1995 Stock Option Plan
exceed 3.0 million. In the event that any outstanding Award for any
Page 3
reason expires, terminates, is cancelled or forfeited, without having been
exercised or otherwise realized in full, the shares of Common Stock allocable to
the expired, terminated, cancelled or forfeited portion of such Award shall
(unless the Plan shall have been terminated) become available for subsequent
grants of Awards.
6. STATED-YEAR INCENTIVE AWARDS
(a) Financial Objectives. The Committee shall determine the number of years in
each Incentive Award period. The Committee, after consultation with the
CEO, shall establish the Financial Objective for each unit for each Stated-
Year Period. A Stated Year Incentive Target Bonus shall be established by
the CEO for each Participant.
(b) Individual Awards. Following the close of each Stated-Year Period, the
Committee shall evaluate the performance of each unit against the unit's
Financial Objective for the Stated-Year Period, and certify a rating of
zero to three for the unit. A Participant's Stated-Year Incentive Award
shall be the product of the rating for the Participant's unit and Stated-
Year Incentive Target Bonus.
(c) Form and Time of Payment
(i) Form. Each Stated-Year Incentive Award will be paid partly in cash and
partly in either Common Stock that is not Restricted Stock or Restricted Stock,
as elected by the Participant; provided, however, that if a Participant is
covered by FMC's Stock Ownership Policy and such Participant does not own a
sufficient amount of Common Stock under the Stock Ownership Policy guidelines,
such Participant shall receive the stock portion of the Stated-Year Incentive
Award in Restricted Stock. The number of shares of stock payable shall be equal
to (A) the quotient of the stock portion of the Participant's Stated-Year
Incentive Award divided by the Fair Market Value on the last day of the Stated-
Year Period to which the award relates plus (B) 20 percent of the quotient in
(A) provided that, if the Participant receives Common Stock that is not
restricted, the number of shares payable shall be reduced by one-sixth. The
portion of the Stated-Year Incentive Award to be paid in cash and in stock shall
be as determined by the Committee at the date of grant of the Award.
(ii) Timing. Payment of the portion of each Stated-Year Incentive Award
payable in cash or Common Stock that is not Restricted Stock shall be made,
without interest, as soon as practicable after the close of the Stated-Year
Period to which such award relates. Payment of any portion of a Stated-Year
Incentive Award payable in Restricted Stock will be made as soon as practicable
Page 4
following the close of the restricted period for that Restricted Stock and the
ending, or fulfillment, of other restrictions applicable to the Restricted
Stock.
(d) Special Rules for Transition Period. Each Participant in the 1995 and/or
1996 Plan Years shall receive a draw against the Stated-Year Incentive Award
otherwise payable for the Stated-Year Periods beginning January 1, 1995 and/or
January 1, 1996. The amount of such draw shall be paid in cash and shall equal
the target bonus amount under the BPF portion of the prior plan. Such
Participant's Stated-Year Incentive Award, if any, for the Stated-Year Periods
beginning in 1995 and/or in 1996 shall be reduced (but not below zero) by the
amount of such draw.
(e) Transfers Between Units. If a Participant transfers employment from one
unit to another during a Stated-Year Period, the Participant's Stated-Year
Incentive Award shall be prorated based on the proportion of time spent in each
unit in which the Participant has spent at least six months.
7. TERMINATION OF EMPLOYMENT
(a) During Award Period. Subject to meeting the performance goals, a
Participant shall be entitled to receive payment of a Stated-Year Incentive
Award only if employment with the FMC Companies continues uninterrupted from the
first day of participation in the Award to the earlier of: (i) the last day of
the applicable Stated-Year Period, (ii) retirement under the terms of any formal
retirement plan of any FMC Company, (iii) death, or (iv) Disability; provided
that if termination occurs before the last day of the applicable Stated-Year
Period for any of the reasons contained in (ii), (iii) or (iv) the Award shall
be prorated. Termination of employment before the last day of the applicable
Stated-Year Period for any reason other than the reasons contained in (ii),
(iii) or (iv) will result in automatic cancellation and forfeiture of the Award,
provided that the Committee may, if it believes circumstances warrant such
action, authorize payment of all or any portion of any Award that otherwise
would be forfeited pursuant to this section.
(b) During Restriction Period for Restricted Stock. Notwithstanding paragraph
(a) of this section, if a Participant receives Restricted Stock and employment
with the FMC Companies is terminated for any reason contained in (ii), (iii) or
(iv) of paragraph (a) or involuntary termination prior to the conclusion of the
restriction period for Restricted Stock, the Participant shall receive a number
of shares equal to the sum of (A) five-sixths of the number of shares of
Restricted Stock payable under Section 6(c)(i) and (B) the product of one-sixth
of the number of shares of Restricted Stock payable under Section 6(c)(i) and a
fraction, the numerator of which is the number of days between the commencement
of the restriction period for the Restricted Stock and the
Page 5
termination of employment and the denominator of which is 365 times the number
of years in the restriction period for the Restricted Stock, and the balance of
the stock portion of the Award shall be forfeited. If, prior to the conclusion
of the restriction period for Restricted Stock, the Participant otherwise
voluntarily terminates employment with the FMC Companies, any of the FMC
Companies terminates the Participant's employment for good cause (as defined in
Section 12(e)), or the Committee determines, in its sole discretion, that the
Participant has engaged or may engage in employment or activities competitive
with, or contrary to the best interests of, the FMC Companies, the Participant
shall receive a number of shares equal to five-sixths of the number of shares of
Restricted Stock payable under Section (c)(1).
8. INCENTIVE BENEFITS
In addition to Stated-Year Incentive Awards, the Committee may, at its
discretion, create and grant such Incentive Benefits as it believes are
desirable (including by way of illustration and not by way of limitation, stock
appreciation rights, stock bonus and restricted stock awards), provided that:
(a) any Incentive Benefits shall be governed by the terms of the Plan
as in effect on the Date of Grant of such Incentive Benefits, and for such
purpose, notwithstanding the provisions of Section 15, the Committee may amend
the Plan to create and describe Incentive Benefits and the governing terms
thereof;
(b) the creation of Incentive Benefits may not, without stockholder
approval, (i) increase the total number of shares of Common Stock issuable under
the Plan, or (ii) materially modify the requirements as to eligibility for
participation in the Plan;
(c) the Committee shall not have the power to create and grant
Incentive Benefits that would result in the grant of a prohibited tandem stock
option or other prohibited tandem arrangement, with respect to any Incentive
Stock Options, as described in applicable regulations under Section 422 of the
Code, and
(d) with respect to grants and awards to persons subject to Section
16(b) of the Exchange Act, Incentive Benefits granted or awarded shall have such
terms and conditions as will comply with Rule 16b-3 or other similar rules.
9. DILUTION AND OTHER ADJUSTMENTS
In the event of any change in the outstanding shares of Common Stock by reason
of any stock dividend or split, recapitalization, merger, consolidation,
Page 6
spinoff, reorganization, combination or exchange of shares or other similar
corporate change, the Committee shall make such adjustments, if any, as it in
its sole discretion deems equitable (a) in the number of shares of Common Stock
that may be issued under the Plan in payment of any Award, or (b) in the
Financial Objectives during any Stated-Year Period from which the requisite
performance levels are calculated, such adjustments to be conclusive and binding
upon all parties concerned. The Committee may also make adjustments, to the
extent it deems appropriate, in a unit's performance goals during and after any
Stated-Year Period to compensate for or reflect any significant changes that may
have occurred during such Stated-Year Period in accounting practices, tax laws
or other laws or regulations which alter or affect the unit's performance,
actual economic conditions, such as inflation, when contrasted with the
assumptions underlying the unit's performance goals or changes resulting from
corporate restructuring including without limitation, acquisitions and
divestitures.
10. CHANGE OF CONTROL
If a Change of Control of the Company occurs while any Awards remain outstanding
under the Plan, then from and after the date of such Change of Control, the full
value of each outstanding Award shall become exercisable and/or fully vested and
shall be paid in full to the Participant as soon as practicable following the
date of such Change. A "Change of Control" of the Company shall be deemed to
have occurred as of the first day that any one or more of the following
conditions is satisfied:
(a) The "beneficial ownership" (as defined in Rule 13d-3 under the
Exchange Act) of securities representing more than 20 percent (20%) of the
combined voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the "Company Voting
Securities") is acquired by a Person (other than the Company, any trustee or
other fiduciary holding securities under an employee benefit plan of the Company
or an affiliate thereof, any corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company); provided, however, that any acquisition from
the Company or any acquisition pursuant to a transaction that complies with
clauses (i), (ii) and (iii) of paragraph (c) of this Section 10 shall not be a
Change of Control under this paragraph (a); or
(b) Individuals who, as of the date hereof, constitute the Board of Directors
(the "Incumbent Board") cease for any reason to constitute at least a majority
of the Board of Directors; provided, however, that any individual becoming a
director subsequent to the date hereof whose election, or nomination for
election by the Company's stockholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent
Page 7
Board, but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened election
contest with respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person other
than the Board of Directors; or
(c) Consummation by the Company of a reorganization, merger or
consolidation, or sale or other disposition of all or substantially all of the
assets of the Company or the acquisition of assets or stock of another entity (a
"Business Combination"), in each case, unless immediately following such
Business Combination: (i) more than 60% of the combined voting power of then
outstanding voting securities entitled to vote generally in the election of
directors of (x) the corporation resulting from such Business Combination (the
"Surviving Corporation"), or (y) if applicable, a corporation which as a result
of such transaction owns the Company or all or substantially all of the
Company's assets either directly or through one or more subsidiaries (the
"Parent Corporation"), is represented, directly or indirectly by Company Voting
Securities outstanding immediately prior to such Business Combination (or, if
applicable, is represented by shares into which such Company Voting Securities
were converted pursuant to such Business Combination), and such voting power
among the holders thereof is in substantially the same proportions as their
ownership, immediately prior to such Business Combination, of the Company Voting
Securities, (ii) no Person (excluding any employee benefit plan (or related
trust) of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more of the
combined voting power of the then outstanding voting securities eligible to
elect directors of the Parent Corporation (or, if there is no Parent
Corporation, the Surviving Corporation) except to the extent that such ownership
of the Company existed prior to the Business Combination and (iii) at least a
majority of the members of the board of directors of the Parent Corporation (or,
if there is no Parent Corporation, the Surviving Corporation) were members of
the Incumbent Board at the time of the execution of the initial agreement, or of
the action of the Board, providing for such Business Combination; or
(d) Approval by the stockholders of the Company of a complete liquidation
or dissolution of the Company.
However, in no event shall a Change of Control be deemed to have occurred, with
respect to the Executive, if the Executive is part of a purchasing group which
consummates the Change of Control transaction. The Executive shall be deemed
"part of a purchasing group" for purposes of the preceding sentence if the
Executive is an equity participant in the purchasing company or group (except
for: (i) passive ownership of less than three percent (3%) of the stock of the
purchasing company, or (ii) ownership of equity participation in the purchasing
company or group which is otherwise not significant, as determined
Page 8
prior to the Change of Control by a majority of the nonemployee continuing
Directors).
11. CANCELLATION OF AWARDS
The Committee may cancel all or any part of an Award with the written consent of
the Participant holding such Award. In the event of any cancellation, all rights
of the former Participant in respect of such cancelled Award shall terminate.
12. MISCELLANEOUS PROVISIONS
(a) Assignment and Transfer. Awards shall not be transferable other than by
will or the laws of descent and distribution and Awards may be exercised or
otherwise realized, during the lifetime of the grantee, only by the grantee or
by his or her guardian or legal representative.
(b) No Right to Awards or Employment. No Employee or other person shall have
any claim or right to be granted an Award, nor shall any Participant have a
right to receive payment of an Award in any form other than as the Committee
shall approve. Neither the Plan nor any action taken hereunder shall be
construed as giving any Employee or Participant any right to be retained in the
employ of any FMC Company.
(c) Taxes. The FMC Companies shall have the right to deduct from payment of an
Award any taxes required by law to be withheld from an Employee with respect to
such payment and, in the case of Awards paid in Common Stock the Employee or
other person receiving such stock shall be required to pay to the FMC Companies
the amount of any taxes required to be withheld from an Employee with respect to
such stock.
(d) Securities Laws. Each Award shall be subject to the condition that such
Award may not be exercised or paid if the Committee determines that the sale of
securities upon exercise or payment of such Award may violate the Securities Act
of 1933 or any other law or requirement of any governmental authority. FMC shall
not be deemed by any reason of the granting of any Award to have any obligation
to register the shares subject to such Award under the Securities Act of 1933 or
to maintain in effect any registration of such shares which may be made at any
time under the Securities Act of 1933.
(e) Good Cause. For purposes of this Plan, "good cause" means: (i) the
Employee's willful and continued failure to substantially perform his duties
with the Company (other than any such failure resulting from Disability), after
a written demand for substantial performance is delivered to the Employee that
specifically identifies the manner in which the Company believes that the
Page 9
Employee has willfully failed to substantially perform his duties, and after the
Employee has failed to resume substantial performance of his duties on a
continuous basis within thirty (30) calendar days of receiving such demand; (ii)
the Employee's willfully engaging in conduct (other than conduct covered under
(i) above) that is demonstrably and materially injurious to the Company,
monetarily or otherwise, or (iii) the Employee's having been convicted of, or
plead guilty or nolo contendere to, a felony. For purposes of this paragraph, no
act, or failure to act, on the Employee's part shall be deemed "willful" unless
done, or omitted to be done, by the Employee not in good faith and without
reasonable belief that the action or omission was in the best interests of the
Company. Any act, or failure to act, based upon authority given pursuant to a
resolution duly adopted by the Board of Directors or upon the instructions of
the chief executive officer or a senior officer of the Company or based upon the
advice of counsel for the company shall be conclusively presumed to be done, or
omitted to be done, by the employee in good faith and in the best interests of
the Company.
(f) Severability. Whenever possible, each provision in the Plan and in every
Award shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Plan or any Award shall be held to
be prohibited by or invalid under applicable law then (i) such provision shall
be deemed amended to, and to have contained from the outset such language shall
be necessary to, accomplish the objectives of the provision as originally
written to the fullest extent permitted by law and (ii) all other provisions of
the Plan and every Award shall remain in full force and effect.
(g) No Strict Construction. No rule of strict construction shall be applied
against FMC, the Committee or any other person in the interpretation of any of
the terms of the Plan, any Award or any rule or procedure established by the
Committee.
(h) Stockholder Rights. A Participant shall not have any dividend, voting or
other stockholder rights by reason of an Award prior to the issuance of any
Common Stock pursuant to such Award.
(i) Governing Law. The Plan shall be governed by and construed in accordance
with the laws of the United States of America and, to the extent not
inconsistent therewith, by the laws of the State of Illinois.
Page 10
13. AMENDMENT AND TERMINATION
(a) Amendment. The Board of Directors may at any time amend, suspend or
terminate the Plan, provided that no such action shall adversely affect any
rights under any Award theretofore granted or change the objectives or other
measure of performance applicable to an Award in a manner adverse to
Participants in accordance with Section 9. No amendment may, without stockholder
approval in accordance with Section 14, increase the total number of shares of
Common Stock issuable under the Plan.
(b) Termination. The right to grant further Awards shall terminate
automatically upon the granting of such Awards which, together with shares of
Common Stock previously issued and/or subject to outstanding Awards, equals the
maximum authorized under the Plan, subject to additional shares of Common Stock
becoming available for Awards by reason of forfeitures or cancellations of
earlier Awards.
14. EFFECTIVE DATE OF THE PLAN
The Plan shall become effective as of January 1, 1995, subject to approval by
the affirmative vote of the holders of a majority of the securities of FMC
present, or represented, and entitled to vote at the next annual meeting of the
stockholders of FMC.
Page 11