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Exhibit 10(b)
THE GILLETTE COMPANY
STOCK EQUIVALENT UNIT PLAN
(AS AMENDED THROUGH DECEMBER 1999)
1. PURPOSE. The purpose of the Stock Equivalent Unit Plan is to provide an
incentive and reward to key salaried employees of The Gillette Company and its
subsidiaries who can make substantial contributions to the success of the
business. To that end, the Plan provides an opportunity for such key salaried
employees to participate in that success through awards of stock equivalent
units, subject to the conditions set forth in the Plan.
2. DEFINITIONS. Unless the context otherwise requires, the following words have
the following meanings for purposes of the Plan.
2.1 Basic stock unit - A stock equivalent unit awarded to a participant pursuant
to Section 4.2.
2.2 Committee - The Personnel Committee established by the Board of Directors of
the Company.
2.3 Company - The Gillette Company, a Delaware corporation.
2.4 Disability - Mental or physical disability, either occupational or
non-occupational in cause, which, in the opinion of the Committee, on the basis
of medical evidence satisfactory to it, prevents the employee from engaging in
any occupation or employment for wage or profit and is likely to be permanent.
2.5 Dividend equivalent unit - A stock equivalent unit which is credited to a
participant's account as the result of conversion of amounts credited to the
account in respect of dividends, as provided in Section 5.2.
2.6 Employee - Any person, whether or not an officer or director of the Company
or any subsidiary, who is regularly employed by the Company or a subsidiary on a
salaried full-time basis, or who, under conditions approved by the Committee, is
regularly employed by the Company or subsidiary on a salaried part-time basis.
2.7.1 Maturity date (with respect to awards made on or before 12/31/83) - When
used with respect to an award, March l5 of the tenth calendar year following the
calendar year in which the award was made.
2.7.2 Maturity date (with respect to awards made after 12/31/83) - When used
with respect to an award, March 15 of the seventh calendar year following the
calendar year in which the award was made.
2.8 Normal retirement date - In the case of any participant, the date
established by his employer as his normal retirement date (or, if no such plan
is maintained by his employer, the normal retirement date prescribed under The
Gillette Company Retirement Plan).
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2.9 Plan - The Stock Equivalent Unit Plan set forth herein, as from time to time
amended.
2.10 Share - A share of the Company's common stock as the same is constituted
from time to time.
2.11 Stock equivalent unit - A measure of value equal in amount to the value of
one share at the time of reference.
2.12 Subsidiary - Any corporation in which the Company owns, directly or
indirectly, stock possessing fifty percent or more of the total combined voting
power of all classes of stock or over which the company has effective operating
control.
2.13(A) Total credits - When used with respect to an individual account, the sum
of (a) the excess, if any, of (i) the value of that number of shares which is
equal to the number of basic stock units credited to the account in respect of
awards in designated years, after adjustment for any prior payments, over (ii)
the value on the date of the respective awards of that number of shares which
corresponds, after adjustment for stock splits, stock dividends and similar
capital changes, to the number of basic stock units referred to in (i), except
that for awards made after 12/31/78, the amount of the excess cannot exceed an
amount equal to the value on the date of the respective awards of that number of
shares which corresponds, after adjustment for stock splits, stock dividends and
similar capital changes, to the number of basic stock units referred to in (i),
plus (b) the value of that number of shares which is equal to the number of
dividend equivalent units then credited to the account in respect of such awards
plus (c) any amounts then credited to the account based on dividend payments
attributable to such awards which have not been converted into dividend
equivalent units.
2.14 Value - When used with respect to a share:
(a) On the date of an award of basic stock units, the average of the reported
high and low sales prices of the shares as quoted on a composite basis;
(b) For purposes of converting dividend credits into dividend equivalent units,
the average of the reported closing prices of the shares as quoted on a
composite basis on the last business day of the months of December, January, and
February immediately preceding the March l5 on which such conversion occurs;
(c) For purposes of determining the amount payable in respect of an interest
which becomes vested or for purposes of determining the amount payable, in cases
not covered by (d) or (e) below, in respect of an interest which previously
became vested, the average of the reported closing prices of the shares as
quoted on a composite basis on the last business day of the twelve calendar
months immediately preceding the March l5 on which such vesting occurs or the
month in which such payment becomes payable;
(d) For purposes of determining the amount payable to a terminating participant
or to the estate of a deceased participant, the average of the reported closing
prices of the shares as quoted on a
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composite basis on the last business day of the twelve calendar months
immediately preceding the month in which the participant's employment terminates
or the participant dies or the twelve consecutive calendar months including and
ending with that month if such termination or death occurs on or after the last
business day of that month;
(e) For purposes of determining the amount payable with respect to an award on
or after the maturity date thereof, the average of the reported closing prices
of the shares as quoted on a composite basis on the last business day of the
twelve calendar months immediately preceding such maturity date.
2.15 Change of Control - The occurrence of any of the following events:
(a) The 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
(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 common stock of the Company (the "Outstanding
Company Common Stock") or (B) the combined voting power of the then-outstanding
voting securities of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities"); provided, however,
that, for purposes of this Section, the following acquisitions shall not
constitute a Change of Control: (i) any acquisition directly from the Company,
(ii) any acquisition by the Company, (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company or any
Affiliated Company or (iv) any acquisition by any corporation pursuant to a
transaction that complies with clauses (A), (B) and (C) of Subsection (c) below;
(b) Individuals who, as of December 16, 1999, constitute the Board of Directors
(the "Board") of the Company (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; 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 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;
(c) Consummation of a reorganization, merger, consolidation or sale or other
disposition of all or substantially all of the assets of the Company (a
"Business Combination"), in each case, unless, following such Business
Combination, (A) all or substantially all of the individuals and entities that
were the beneficial owners of the Outstanding Company Common Stock and the
Outstanding Company Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 60% of the
then-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 Business
Combination (including, without limitation, a corporation that, as a result of
such transaction, owns the Company or all or substantially all of the Company's
assets either directly or through
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one or more subsidiaries) in substantially the same proportions as their
ownership immediately prior to such Business Combination of the Outstanding
Company Common Stock and the Outstanding Company Voting Securities, as the case
may be, (B) no Person (excluding any corporation resulting from such Business
Combination or 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, respectively, the then-outstanding
shares of common stock of the corporation resulting from such Business
Combination or the combined voting power of the then-outstanding voting
securities of such corporation, except to the extent that such ownership existed
prior to the Business Combination, and (C) at least a majority of the members of
the board of directors of the corporation resulting from such Business
Combination 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.
2.16 Change of Control Severance Program - With respect to any participant, the
Company's Change of Control Severance Program for Key Executives, Change of
Control Severance Program for Exempt Employees or Change of Control Severance
Program for Non-Exempt Employees under which such participant is eligible to
participate in the event of a Change of Control, or the individual Employment
Agreement between the participant and the Company the severance provisions of
which become operative in the event of a Change of Control.
3. ADMINISTRATION.
3.1 The Plan shall be administered by the Personnel Committee heretofore
established by the Board of Directors of the Company no member of which shall be
an employee of the Company or of any subsidiary. The Committee shall have
authority, not inconsistently with the Plan, (a) to determine which of the
eligible employees of the Company and its subsidiaries shall be awarded basic
stock units; (b) to determine the times when basic stock units shall be awarded
and the number of basic stock units to be awarded to each participant; (c) to
determine the time or times when amounts may become payable with respect to
stock equivalent units within the limits provided in the Plan; (d) to prescribe
the form of the instruments evidencing any basic stock units awarded under the
Plan (which forms need not be identical); (e) to adopt, amend and rescind rules
and regulations for the administration of the Plan and the stock equivalent
units and for its own acts and proceedings; and (f) to decide all questions and
settle all controversies and disputes which may arise in connection with the
Plan. All decisions, determinations and interpretations of the Committee shall
be binding on all parties concerned.
3.2 The maximum number of basic stock units which may be awarded under the Plan
is 41,400,000 subject to adjustment as determined by the Committee in event of a
dividend payable in shares, a stock split or a combination of shares. No basic
stock units may be awarded under the Plan after April 18, 2002.
4. PARTICIPATION.
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4.1 The participants in the Plan shall be such key salaried employees as may be
selected from time to time by the Committee. Directors who are not employees
shall not be eligible. The employees to whom basic stock units are awarded at
any time may include employees to whom basic stock units were previously granted
under the Plan.
4.2 Awards of basic stock units shall be made from time to time by the Committee
in its discretion. In addition, with respect to any award, the Committee shall
have discretion to provide that all or any portion of that award shall be
contingent on achievement by the participant or by any unit or units of the
Company of any performance goal or goals over any period or periods of time
ending before March 15 of the third year following the date of the award.
Notwithstanding the above, the Committee may not award more than 100,000 basic
stock units to any participant in any calendar year subject to adjustment as
provided under Section 8.3.
5. INDIVIDUAL ACCOUNTS.
5.1 The Committee shall maintain a separate account for each award made under
the Plan. Each such account shall show the information necessary to compute the
participant's total credits in respect of each award, including the number of
basic stock units awarded to the participant, the value of an equal number of
shares on the date of the award, the amount credited to the account in respect
of dividends, as provided below, the number of dividend equivalent units
credited to the account and details as to any payments under the Plan which are
deducted from the account.
5.2 Whenever the Company pays a dividend (other than a stock dividend) upon its
outstanding common stock, there shall be credited to the separate account for
each award a dollar amount equal to the value of such dividend per share
multiplied by the number of stock equivalent units credited to the account on
the record date for such dividend. However, no such credits shall be made with
respect to any award after the maturity date thereof or after the date on which
the participant ceases to be an employee. As of March 15 in each year the
aggregate of the amounts so credited to the account since the prior March 15
shall be converted into a number of dividend equivalent units by dividing such
aggregate by the value of a share.
5.3 In the event of a dividend payable in shares, or in the event of a stock
split or combination of shares, the Committee shall make a corresponding change
in the number of basic stock units and dividend equivalent units then credited
to the account.
5.4 On the maturity date of an award, the total amount payable with respect to
such award shall become a fixed amount which will not change thereafter except
that the Committee may provide for the payment of interest beginning at maturity
on amounts whose payment is deferred to a date thereafter. Such fixed amount
shall be the total credits in respect of such award on such maturity date.
5.5 Whenever a payment is made under the Plan to a participant with respect to
any award, there shall be a corresponding reduction in the number of stock
equivalent units and other amounts credited to the participant's account in
respect of such award, or in the case of a payment after
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maturity date or after the date on which the participant ceases to be an
employee, in the amount then credited to the account. A similar reduction shall
be made if a participant forfeits any portion of his interest in any awards.
6. PAYMENT.
6.1 Payments to a participant under the Plan may be made from time to time when
segments of his total credits in respect of an award become vested, or payment
may be deferred, all in accordance with rules established from time to time by
the Committee.
6.2.1 With respect to awards made on or before 12/31/83 fifteen percent of the
total credits in respect of an award shall become vested on March 15 of the
fourth calendar year following the calendar year of the award, an additional
fifteen percent thereof (or, in cases of vesting after one or more prior
payments under Section 6.3, the applicable vesting percentage thereof as
provided below) shall become vested on March 15 of the fifth, sixth, seventh,
eighth, and ninth calendar years following the calendar year of the award, and
any unvested balance thereof shall become vested on the maturity date of such
award.
6.2.2 With respect to awards made after 12/31/83 twenty percent of the total
credits in respect of an award shall become vested on March 15 of the third
calendar year following the calendar year of the award, an additional twenty
percent thereof (or, in cases of vesting after one or more prior payments under
Section 6.3, the applicable vesting percentage thereof as provided below) shall
become vested on March 15 of the fourth, fifth, and sixth calendar years
following the calendar year of the award, and any unvested balance thereof shall
become vested on the maturity date of such award.
6.2.3 Such vesting as described above shall occur only if the participant is an
employee on the date of vesting and has been an employee continuously since the
date of the award. The total credits in respect of all awards not at that time
subject to any contingency pursuant to Section 4.2 shall become fully vested if
the participant, while an employee, dies, incurs a disability, retires prior to
his normal retirement date with the consent of the Company and under conditions
approved by the Committee, or retires on or after his normal retirement date,
and the total amount payable with respect thereto shall become a fixed amount
which will not change thereafter, except that the Committee may provide for the
payment of interest on amounts whose payment is deferred to a date thereafter.
If the employment of a participant terminates as a result of the merger, sale or
other absorption or termination of operations of a subsidiary or a division, all
credits in respect of any such participant's award not at that time subject to
any contingency pursuant to Section 4.2 may become vested if the Committee, in
its sole discretion, determines such action to be in the best interests of the
Company, and the total amount payable with respect thereto shall become a fixed
amount which will not change thereafter, except that the Committee may provide
for the payment of interest on amounts whose payment is deferred to a date
thereafter. In connection with the determination of any participant's vested
rights under this Paragraph 6.2.3, the Committee may retroactively remove any
contingency in effect pursuant to Section 4.2. Notwithstanding the above, if a
participant retires prior to his normal retirement date but after the occurrence
of a
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Change of Control, the consent of the Company shall not be required and all
credits and all contingencies with respect to the awards of such participant
shall become fully vested.
6.2.3.1 In the event of a Change of Control, all contingencies then in effect
pursuant to Section 4.2 shall be automatically removed and the total credits in
respect of all awards of a participant shall become fully vested upon the
participant's termination of employment within two years of the Change of
Control under circumstances entitling the participant to separation benefits
under the Change of Control Severance Program (or, in the case of a participant
whose designated home country is other than the United States, under
circumstances that would have entitled the participant to separation benefits
under the Change of Control Severance Program if such participant's designated
home country was the United States). The aggregate amount of such awards shall
be payable in accordance with the participant's payment election made in
accordance with Section 6.3, unless prior to the Change of Control the
participant had provided in such election for its revocation in the event of a
Change of Control in which event payment of such awards shall be made as soon as
practicable following the Change of Control.
6.2.3.2 Notwithstanding any other provision of this Plan, (a) upon an
employer-initiated termination of employment of a participant pursuant to the
Restructuring Plan approved by the Board of Directors of the Company at its
meeting on December 18, 1986, or the Reorganization Plan approved by the Board
of Directors of the Company at its meeting on December 14, 1989, the Realignment
Plan and Parker Integration Plan approved by the Board of Directors at its
meeting held on January 7, 1994 or the Realignment Program approved by the Board
of Directors at its meeting held on September 28, 1998, or (b) upon the sale or
other disposition of the unit, division or subsidiary in which a participant is
employed pursuant to the Restructuring Plan approved by the Board of Directors
of the Company at its meeting on December 18, 1986, the Reorganization Plan
approved by the Board of Directors of the Company at its meeting on December 14,
1989 or the Reorganization and Realignment Program approved by the Board of
Directors at its meeting held on September 28, 1998, which sale or other
disposition results in the participant no longer being employed by the Company
or any of its subsidiaries, or (c) upon the sale of the Jafra Cosmetics business
pursuant to a certain Acquisition Agreement dated January 26, 1998 ("Jafra
Sale") where a participant either (i) continues to be employed by Jafra
immediately following the Jafra Sale or (ii) is terminated from the employment
of the Company or any of its subsidiaries as a direct result of the Jafra Sale,
all contingencies then in effect pursuant to Section 4.2 shall be automatically
removed except with respect to contingencies which expire on February 19, 1987.
Further, in such event, the total credits in respect of all awards of a
participant for which no contingencies remain in effect shall become fully
vested and the amount of such awards shall be fixed and payable. With respect to
awards or segments of awards which become vested under this Subparagraph or any
other award or segment thereof which becomes payable by reason of the
participant's termination of employment, the participant may elect to receive
such awards upon termination of employment or may, prior to the date
participant's employment with the Company or any subsidiary terminates, elect to
defer such award in accordance with the provisions of Paragraph 6.2.3 and rules
established from time to time by the Committee. Notwithstanding the above, the
removal of contingencies and the granting of vesting and deferral rights
provided for in this Subparagraph 6.2.3.2 shall serve as partial consideration
for a settlement of all claims and disputes which the participant may have
against the Company, its subsidiaries, employees and
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agents and shall be subject to the execution by the participant of a release and
settlement agreement in a form to be prescribed by the Committee.
6.2.4 In order to make proper adjustment for any previous payments under Section
6.3, the applicable vesting percentage to be used in computing vested segments
under the foregoing provisions of this Section 6.2 and in computing the amount
of a payment under Section 6.3 or Section 6.4 shall be determined as follows:
(a) In computing such vested segment or the amount or a payment under Section
6.3 for awards made prior to 12/31/83, the applicable vesting percentage to be
applied to the total credits in respect of a particular award shall be equal in
value to a fraction whose numerator is fifteen (or ten in the case of the final
vested installment) and whose denominator is (i) 100 minus (ii) fifteen
multiplied by the number of vested segments previously paid to the participant
under Section 6.3. Payment of each vested segment shall be considered a separate
payment.
(b) In the case of a payment under Section 6.4 for awards made prior to
12/31/83, the applicable vesting percentage to be applied to the total credits
in respect of a particular award shall be equal in value to a fraction whose
numerator is (i) fifteen multiplied by the number of segments of the award which
have become vested in accordance with the foregoing provisions prior to the date
on which the participant ceases to be an employee (but not more than 100) minus
(ii) fifteen multiplied by the number of vested segments previously paid to the
participant under Section 6.3, and whose denominator is 100 minus (ii) above.
(c) In computing such vested segment or the amount or a payment under Section
6.3 for awards made after 12/31/83, the applicable vesting percentage to be
applied to the total credits in respect of a particular award shall be equal in
value to a fraction whose numerator is twenty and whose denominator is (i) 100
minus (ii) twenty multiplied by the number of vested segments previously paid to
the participant under Section 6.3. Payment of each vested segment shall be
considered a separate payment.
(d) In the case of a payment under Section 6.4 for awards made after 12/31/83,
the applicable vesting percentage to be applied to the total credits in respect
of a particular award shall be equal in value to a fraction whose numerator is
(i) twenty multiplied by the number of segments of the award which have become
vested in accordance with the foregoing provisions prior to the date on which
the participant ceases to be an employee (but not more than 100) minus (ii)
twenty multiplied by the number of vested segments previously paid to the
participant under Section 6.3, and whose denominator is 100 minus (ii) above.
6.3 Prior to any date on which a participant is to acquire a vested interest or
additional vested interest in the total credits in respect of an award, the
participant shall make an election, at the time and in a manner specified by the
Committee, as to the time when payment is to be made of the segment or segments
of such total credits which may become vested on such date. The participant may
elect (a) to receive payment within a reasonable time after such date, or (b) to
defer payment in accordance with rules established from time to time by the
Committee, and in the absence of an affirmative deferral election shall be
deemed to have elected payment in accordance with the
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preceding clause (a). When making such deferral election, the participant may
provide for the revocation of all such deferral elections in the event of a
Change of Control and for the payment by the Company of all such deferred
amounts as soon as practicable following the Change of Control.
6.4 If a participant ceases to be an employee for any reason not specified in
Section 6.2, his vested interest in respect of each award shall thereupon become
a fixed amount which will not change thereafter. Such fixed amounts shall be
determined by multiplying the total credits in respect of each award on the date
of termination of employment by the applicable vesting percentage. The
participant shall thereupon forfeit his interest in any amounts then credited to
his account to the extent his interest has not become vested. Payment of vested
interests shall be made in accordance with rules established from time to time
by the Committee.
6.5 If a participant dies prior to termination of his employment, an amount
equal to his total credits in respect of all awards not subject to any
contingency pursuant to Section 4.2 shall be paid to his executor or
administrator or as otherwise provided by law valued as of the date of death.
6.6 All payments will be made in cash and will be subject to any required tax
withholdings.
7. AMENDMENT AND TERMINATION.
7.1 The Board of Directors of the Company, or the Personnel Committee of the
Board of Directors if and to the extent authorized, may at any time amend the
Plan for the purposes of satisfying the requirements of any changes in
applicable laws or regulations or for any other purpose which may be permitted
by law, except that neither the Board of Directors nor the Personnel Committee
of the Board of Directors may, without the approval of the stockholders of the
Company, increase the maximum number of basic stock units that may be awarded
under the Plan or increase the time within which basic stock units may be
awarded, as provided in Section 3.2, or extend the maturity date of an award
beyond March 15 of the tenth calendar year following the calendar year in which
the award was made. Notwithstanding the above, in the event of a Change of
Control, no amendment to the Plan which provides for prospective Plan benefits
and other terms and conditions any less favorable to Plan participants than
those which existed prior to the amendment shall be effective unless it provides
that all contingencies which are then in existence be removed and all awards
which are unvested prior to such amendment shall become immediately vested and
payable in accordance with Subparagraph 6.2.3.1.
7.2 The Board of Directors of the Company may terminate the Plan at any time
except that after a Change of Control such Plan may not be terminated without
providing that all contingencies then in existence shall be removed and all
unvested awards shall become immediately vested and payable in accordance with
Subparagraph 6.2.3.1.
7.3 No such amendment or termination shall adversely affect the rights of any
participant (without his consent) under any award previously made or, after the
happening of any event in connection with or in anticipation of a Change of
Control that actually occurs, deprive a participant of a benefit or right which
becomes operative upon a Change of Control.
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8. MISCELLANEOUS.
8.1 The interest under the Plan of any participant, his heirs or legatees shall
not be alienable by the participant, his heirs or legatees by assignment or any
other method and shall not be subject to being taken by his creditors by any
process whatsoever.
8.2 The Plan shall not be deemed to give any participant or employee the right
to be retained in the employ of the Company or any subsidiary nor shall the Plan
interfere with the right of the Company or any subsidiary to discharge any
employee at any time.
8.3 In the event of a stock dividend, split-up or combinations of shares,
recapitalization for merger in which the Company is the surviving corporation or
other similar capital change, the number and kind of shares of stock or
securities of the Company to be used as a basis for granting awards under the
Plan, the units then outstanding or to be granted thereunder, the maximum number
of basic stock units which may be granted, the unit value and other relevant
provisions shall be appropriately adjusted by the Board of Directors of the
Company, whose determination shall be binding on all persons. In the event of a
consolidation or a merger in which the Company is not the surviving corporation
or complete liquidation of the Company, all outstanding basic stock units and
dividend equivalent units shall thereafter accrue no further value, provided
that at least twenty days prior to the effective date of any such consolidation
or merger, the Board of Directors shall either (a) make all outstanding basic
units and dividend equivalent units immediately vested and payable, or (b)
arrange to have the surviving corporation grant replacement units to the
participants.
DECEMBER 1999
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