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Exhibit 10(c)
THE GILLETTE COMPANY
INCENTIVE BONUS PLAN
(AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 2000)
1. PURPOSE. The purpose of this Incentive Bonus Plan is to foster
continuing long-term growth in earnings of The Gillette Company by rewarding key
management employees for outstanding performance in the accomplishment of
assigned goals under the Company's Management by Objectives Program through
annual awards of cash bonuses.
2. DEFINITIONS.
BASE BONUS - The portion of an Eligible Employee's Bonus Award which
becomes payable automatically upon the Company's achievement of the Growth Goals
at the threshold level for an Incentive Year.
BASE SALARY - The Participant's annual base salary rate of earnings in
effect as of December 31 of any Incentive Year.
BONUS AWARD - An amount awarded to a Participant pursuant to Section 5.
BONUS POOL - An amount earned in any Incentive Year as determined pursuant
to Section 5, from which Bonus Awards may be paid.
CHAIRMAN - The Chairman of the Board of Directors of the Company.
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
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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 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.
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.
COMMITTEE - The Personnel Committee established by the Board of Directors
of the Company.
COMPANY - The Gillette Company, a Delaware corporation.
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ELIGIBLE GRADE LEVEL - For each Incentive Year, the position or personal
grade level(s) for the Company's key management employees whom the Committee
determines to have a significant impact on the attainment of the Company's
objectives.
ELIGIBLE EMPLOYEE - For each Incentive Year, a person whether or not an
officer or director of the Company or any subsidiary, who (a) is regularly
employed by the Company or a subsidiary on a full-time basis, or who, under
conditions approved by the Committee, is regularly employed by the Company or a
subsidiary on a part-time basis, (b) has been employed by the Company or a
subsidiary for the entire Incentive Year and in an Eligible Grade Level at the
end of such Incentive Year, (c) has been assigned goals under the Company's
Management by Objectives Program to be accomplished during the Incentive Year
and has received a performance rating of "Effective" or higher on his or her
Management Reporting Form for the Incentive Year, (d) is an active employee on
the date of the granting of Bonus Awards (or is a former employee whose
employment terminated (i) on account of death, retirement or disability, or (ii)
under circumstances entitling the person to severance benefits under the
applicable Change of Control Severance Program), and (e) has not engaged in any
conduct that the Committee determines to be against the best interests of the
Company.
GROWTH GOALS - Growth Goals for each Incentive Year shall mean the specific
percentage of increase in Profit from Operations, Sales Growth and Return on
Assets, as determined by the Committee for that Incentive Year, which if
achieved would result in the awarding of a Bonus Pool under Section 5.
INCENTIVE YEAR - A fiscal year of the Company in which the Plan is in
effect.
MANAGEMENT REPORTING FORM - The annual written review of individual
performance and assignment of goals conducted under the Company's Management by
Objectives Program.
MAXIMUM BONUS - The maximum amount of Bonus Award that may be paid to any
Participant for an Incentive Year.
MAXIMUM BONUS POOL - The amount of the Bonus Pool which would be earned
assuming the Growth Goals for the applicable Incentive Year are achieved at the
maximum level established by the Committee.
PARTICIPANT - Each Eligible Employee for an Incentive Year and each other
employee (including a former employee whose employment terminated during the
Incentive Year on account of death, retirement or disability) whom the Committee
has determined, in its sole and exclusive discretion, should receive a Bonus
Award for the Incentive Year in accordance with Section 5(c) or 6.
PLAN - The Incentive Bonus Plan as set forth herein, as from time to time
amended.
PRESIDENT - The President of the Company.
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PROFIT FROM OPERATIONS - The amount reported as profit from operations in
the annual financial statements of the Company after adjustments to exclude the
results of operations of businesses acquired or disposed of during the Incentive
Year and any other adjustments, all as determined by the Committee to be
necessary or appropriate to insure comparability between profit from operations
figures from year to year for the purposes of this Plan.
RETIREMENT - The termination of a Participant's employment with the Company
and its Subsidiaries if (a) upon such termination the Participant begins
receiving early or normal retirement benefits under The Gillette Company
Retirement Plan, (b) upon such termination of employment with a Subsidiary
begins receiving retirement benefits under a retirement plan maintained by or to
which the Subsidiary contributes, or (c) the Participant leaves the employment
of a Subsidiary that does not maintain or contribute to a retirement plan for
the benefit of the Participant at a time when the Participant would have been
eligible to begin receiving early or normal retirement benefits under The
Gillette Company Retirement Plan had the individual been a participant of that
plan.
RETURN ON ASSETS - The Company's earnings for an Incentive Year, expressed
as a percentage of the Company's average assets for the Incentive Year, in each
case after adjustments determined by the Committee to be necessary or
appropriate to insure comparability of this Growth Goal from year to year for
the purposes of the Plan.
SAVINGS PLAN EQUIVALENCY - An amount computed by multiplying one half of
the employee's rate of matched savings under The Gillette Company Employees'
Savings Plan, or one half of the employee's rate of savings under The Gillette
Company Ltd/Ltee Retirement Income Savings Plan, as applicable, as of the
January l immediately preceding the date of a Bonus Award, by the amount of that
award which is deferred under Section 7(b) of this Plan.
SUBSIDIARY - Any corporation (a) in which the Company owns, directly or
indirectly, stock possessing 50 percent or more of the total combined voting
power of all classes of stock, (b) over which the Company has effective
operating control, or (c) in which the Company has a material interest as
determined by the Committee.
SALES GROWTH - The amount reported as growth in net sales in the annual
financial statements of the Company after adjustments, as determined by the
Committee to be necessary or appropriate to insure comparability between net
sales from year to year for the purposes of the Plan.
TARGET BONUS - The targeted amount of Bonus Award established for each
Eligible Employee, expressed as a percentage of the Eligible Employee's Base
Salary corresponding to the Eligible Employee's position or personal grade level
at the end of the applicable Incentive Year, assuming the Growth Goals for such
Incentive Year are achieved at the 100% level established by the Committee.
TARGET BONUS POOL - The amount of the Bonus Pool which would be earned
assuming the Growth Goals for the applicable Incentive Year are achieved at the
100% level established by the Committee.
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3. DESIGNATION OF PARTICIPANTS. For each Incentive Year, the Committee
shall designate the Eligible Grade Level for determining the Eligible Employees
and shall approve such other persons who are recommended for participation by
the Chairman and the President. Designation of a person as an Eligible Employee
or a Participant for any Incentive Year shall not bind the Committee to
designate the person in any other Incentive Year.
4. ESTABLISHMENT OF GROWTH GOALS AND BONUS POOL RANGE. For each Incentive
Year, the Committee shall establish in writing (a) the Growth Goals for such
Incentive Year at threshold, target and maximum levels, and by means of one or
more formulae the corresponding amount of the Bonus Pool which may be earned at
each level of achievement of such Growth Goals, (b) the Target Bonus percentage
for each Eligible Grade Level (or group of Eligible Grade levels), and (c) the
portion of the Target Bonus constituting the Base Bonus. The Committee in its
discretion also may establish for an Incentive Year quantitative and/or
qualitative factors for its use in allocating an earned or contingency reserve
Bonus Pool (or portion thereof) among the Company's business units.
5. DETERMINATION OF BONUS POOL AND AWARDS. (a) As soon as practicable
after the end of each Incentive Year, the Committee shall determine whether the
Growth Goals for the Incentive Year were achieved and, if so, at what level of
achievement under the formulae established for such Incentive Year.
(b) If the Committee determines that Growth Goals for an Incentive Year
have been achieved at the threshold level or better, then a Bonus Pool shall be
earned for that Incentive Year and Eligible Employees shall be entitled to
receive Bonus Awards in amounts equal to their respective Base Bonuses. The
Committee in its discretion may authorize the payment of additional Bonus Awards
for the Incentive Year, up to an aggregate Bonus Pool amount corresponding to
the level of achievement of the Growth Goals (and in no event in an amount
exceeding the Maximum Bonus Pool) for such Incentive Year. The additional Bonus
Awards shall be allocated on an aggregate basis among the Company's business
units as determined by the Committee.
(c) The Chairman and the President shall allocate the additional Bonus
Awards among the Participants, except for themselves, provided that in no event
shall any individual Participant receive a total Bonus Award in excess of his or
her Maximum Bonus. Additional Bonus Awards to officers of the Company and other
senior management employees whose compensation is regularly reviewed by the
Committee shall be subject to review and approval of the Committee.
6. CONTINGENCY RESERVE; CARRY-FORWARD. For any Incentive Year, the
Committee may, within its sole discretion, establish a contingency reserve, in
an amount that shall not exceed thirty-five percent (35%) of the Target Bonus
Pool for that Incentive Year, from which contingency reserve Bonus Awards may be
made to recognize outstanding performance in that Incentive Year should a Bonus
Pool not otherwise be earned.
In addition, the Committee may, within its sole discretion, elect to carry
forward up to fifteen percent (15%) of the Bonus Pool earned in any Incentive
Year to any one or more of
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the next following three Incentive Years with the Committee having sole
discretion as to whether to distribute all or a portion of such carried forward
amounts in any one or more of those three years.
Bonus Awards authorized to be made from a contingency reserve, or from a
carried forward amount, shall be allocated among the Participants in accordance
with Section 5(b) and (c) above.
7. VESTING AND PAYMENT OF AWARDS; DEFERRAL ELECTION. (a) Bonus Awards
shall be immediately and fully vested upon the Committee's authorization of the
Bonus Pool for the applicable Incentive Year. In general, Bonus Awards shall be
paid to Participants within a reasonable time after the Committee's
authorization of such awards.
(b) The Committee in its sole and exclusive discretion may allow
Participants at certain grade levels and/or located in certain countries the
opportunity to defer payment of all or a portion of any Bonus Award earned for
any Incentive Year to March 1 of any future year or to Retirement.
Notwithstanding any prior voluntary deferral election hereunder, all amounts so
deferred shall be paid within a reasonable time after the Participant's
termination of employment with the Company and its Subsidiaries for any reason
other than Retirement. A Participant whose employment ceases on account of
Retirement may, prior to termination of employment, elect to defer payment of
any Bonus Awards beyond Retirement in accordance with rules prescribed by the
Committee and, if no such election is made, such amounts shall be paid within a
reasonable time after the date of termination of employment.
Notwithstanding the provisions of this subsection, the opportunity to defer
payment beyond termination of employment shall serve as partial consideration
for a settlement of all claims which the Participant may have against the
Company, its Subsidiaries, employees and agents and shall be subject to
execution by the Participant of a release and settlement agreement in a form
prescribed by the Committee.
(c) Amounts deferred under subsection (a) or (b) above shall be credited
to an individual account in the name of the Participant. The account of an
employee who is participating in The Gillette Company Employees' Savings Plan or
The Gillette Company Ltd/Ltee Retirement Income Savings Plan shall also be
credited with a Savings Plan Equivalency.
Amounts equivalent to interest, at the rate applicable to the Fixed Income
Fund of The Gillette Company Employees' Savings Plan, shall be credited to the
total amount in the Participant's account on at least an annual basis. Upon
payment to a Participant of an amount deferred under subsection (a) or (b)
above, the related Savings Plan Equivalency and amounts equivalent to interest
credited thereon also will be paid. In the event that the Savings Plan
Equivalency no longer exists by virtue of termination of The Gillette Company
Employees' Savings Plan and/or its Fixed Income Fund, the amounts in each
Participant's account shall be credited with a rate of return adjusted each
January 2 to reflect the interest rate in effect on January 2 for two year
United States Treasury Notes.
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(d) If a Participant dies or becomes totally and permanently disabled
while an employee of the Company or a Subsidiary, all deferred Bonus Awards and
the related Savings Plan Equivalencies and amounts equivalent to interest
accrued thereon shall be paid to the Participant or, in the case of death, to
the executor or administrator of the Participant's estate or as otherwise
provided by law.
(e) All payments made under this Plan shall be subject to any required
withholdings.
(f) Prior to the occurrence of a Change of Control, in accordance with
rules prescribed by the Committee, Participants making deferral elections
pursuant to subsection (a) or (b) above 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 (plus the related Savings Plan
Equivalencies and amounts equivalent to interest accrued thereon) as soon as
practicable following the Change of Control.
(g) In the event of a Change of Control, Bonus Awards deferred in
accordance with subsection (a) or (b) above, plus the related Savings Plan
Equivalencies and amounts equivalent to interest accrued thereon, shall continue
to be payable to each Participant in accordance with his or her deferral
elections unless the Participant has provided in the most recent such election
for their revocation in accordance with subsection (f) above.
(h) Bonus Awards shall be payable solely from the general assets of the
Company and its Subsidiaries. No Participant shall have any right to, or
interest in, any specific assets of the Company or any Subsidiary in respect of
current or deferred Bonus Awards. The foregoing shall not preclude the Company
from establishing one or more funds from which payments under the Plan shall be
made, including but not limited to circumstances under which payments are to be
made following a Change of Control.
8. AMENDMENT AND TERMINATION. The Board of Directors of the Company, or
the Personnel Committee of the Board of Directors, if and to the extent
authorized, in absolute discretion of the body so acting and without notice, may
at any time amend or terminate the Plan, provided that no such amendment or
termination shall adversely affect the rights of any Participant under any Bonus
Award previously granted. Further, once an Incentive Year has commenced, neither
the Board of Directors nor the Personnel Committee of the Board of Directors
shall have the discretion (a) not to make Bonus Awards if a Bonus Pool is earned
for that Incentive Year or (b) after a contingency reserve has been established
in any Incentive Year not to make Bonus Awards from such contingency reserve.
9. NO ASSIGNMENT. Bonus Awards authorized under this Plan shall be paid
only to Participants (or, in the event of a Participant's death, to the person
identified in Section 7(d) above). No Bonus Award, nor any part thereof, and no
right or claim to any of the moneys payable pursuant to the provisions of this
Plan shall be anticipated, assigned, or otherwise encumbered, nor be subject to
attachment, garnishment, execution or levy of any kind, prior to the actual
payment and delivery of said amount to the Participant and any attempted
assignment or other encumbrance or attachment, garnishment, execution or levy
shall be of no force or effect, except as otherwise provided by law.
Notwithstanding the above, if a Participant is
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adjudged incompetent, the Committee may direct that any amounts payable be paid
to the Participant's guardian or legal representative.
10. EMPLOYMENT AND PLAN RIGHTS. The Plan shall not be deemed to give any
Eligible Employee or Participant 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, nor shall the
Plan be deemed to give any employee any right to any Bonus Award until such
award is authorized in accordance with Section 5 or 6.
11. ADMINISTRATION AND AUTHORITY. The Plan shall be administered by the
Committee except as otherwise provided herein. The Committee shall have the
exclusive authority, consistent with the Plan, to (a) determine adjustments to
Profit from Operations, Net Sales and Return on Assets as provided in Section 2
of the Plan, (b) designate the Eligible Grade Levels, Eligible Employees and
Participants in the Plan for each Incentive Year, (c) determine the Growth Goals
necessary to earn a Bonus Pool for each Incentive Year, (d) establish Target
Bonus percentages for Eligible Employees for each Incentive Year, (e) establish
a contingency reserve and authorize payments of Bonus Awards from the reserve,
and/or provide for a carry-forward of a portion of an earned Bonus Pool and
authorize payments of Bonus Awards from the carry forward, (f) review and
approve Bonus Awards made to officers of the Company and other senior management
employees whose compensation is regularly reviewed by it, (g) adopt, amend and
rescind rules and regulations for the administration of the Plan and for its own
acts and proceedings, and (h) decide all questions and settle all controversies
and disputes which may arise in connection with the Plan. The Committee may
delegate any or all responsibilities assigned to it pursuant to clause (g)
above.
The Chairman and the President, except with respect to themselves, shall
have authority, consistent with the Plan, (a) to recommend to the Committee the
persons other than Eligible Employees for designation as Participants for each
Incentive Year, (b) to recommend to the Committee the amount of additional Bonus
Awards to be made to Participants identified in clause (f) of the preceding
paragraph, (c) to determine the amount of additional Bonus Awards to
Participants other than those identified in clause (f) of the preceding
paragraph, and (d) to evaluate the performance or review evaluations of the
performance of employees in the accomplishment of assigned objectives as
reported on their Management Reporting Forms. The Chairman and the President may
delegate any or all administrative responsibilities delegated to them by the
Committee.
All decisions, determinations and interpretations of the Committee, the
Chairman and the President, or their delegates with respect to the exercise of
their respective responsibilities, shall be binding on all parties concerned.
12. INDIVIDUAL ACCOUNTS. The Committee shall maintain a separate account
under the Plan for each Participant. Each account shall show the amounts awarded
and, if applicable, amounts deferred, Savings Plan Equivalencies and amounts
equivalent to interest credited thereon.
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13. BONUS AWARDS IN THE EVENT OF CHANGE OF CONTROL. Notwithstanding any
other provision of this Plan to the contrary, in the event of a Change of
Control, a Bonus Award for the Incentive Year in which the Change of Control
occurs shall be paid to each employee in an Eligible Grade Level at the time of
the Change of Control, whether or not the employee remains employed by the
Company or a Subsidiary at the end of the Incentive Year (other than any such
employees whose termination of employment is by the Company for cause, within
the meaning of the applicable Change of Control Severance Program). The amount
of Bonus Award payable to each such employee shall be no less than the product
of (a) the highest bonus percentage, measured as a percentage of Base Salary,
awarded the employee for any of the three full Incentive Years preceding the
Incentive Year in which the Change of Control occurs (or, if greater and if
applicable, the "target bonus percentage" set forth below), and (b) the
employee's actual salary earned for the Incentive Year in which the Change of
Control occurs.
For the purposes of this Section 13, the term `"target bonus percentage"
shall mean, with respect to each of the following groups of bonus-eligible
employees:
Employees Covered By r Under Target Bonus Percentage
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Individual Employment Agreements
Chief Executive Officer 100%
Other Executives with Agreements 65%
Change of Control Severance Program
for Key Executives 35%
14. APPLICABILITY OF PLAN DOCUMENT. The Plan as amended and restated
hereinabove shall be applicable for Incentive Years beginning on and after
January 1, 2000.
March 16, 2000