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EXHIBIT 10(b)
SUBJECT TO THE APPROVAL OF THE STOCKHOLDERS
AT THEIR ANNUAL MEETING ON APRIL 21, 1994
THE GILLETTE COMPANY
Stock Equivalent Unit Plan, as amended
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.
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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 prescribed under the Retirement plan
maintained 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).
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.
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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 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 Unapproved Change in Control shall mean the happening
of any one of the following events, which, in each case, was not
recommended to the shareholders by a vote of at least two-thirds
of the non-employee directors of the Company then still in office
who were in office two years prior to such event:
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(a) Any person within the meaning of Sections 13(d) and
14(d) of the Securities Exchange Act of 1934 (the "1934 Act"),
other than the Company or any of its subsidiaries, has become the
beneficial owner, within the meaning of Rule 13d-3 under the 1934
Act, of 20% or more of the combined voting securities;
(b) A tender offer or exchange offer, other than an
offer by the Company, pursuant to which shares of the Company's
common stock have been purchased;
(c) The stockholders or directors of the Company have
approved an agreement to merge or consolidate with or into
another corporation and the Company is not the surviving
corporation or an agreement to sell or otherwise dispose of all
or substantially all of the Company's assets (including a plan of
liquidation); or
(d) During any period of two consecutive years,
individuals who at the beginning of such period constituted the
board of directors cease for any reason to constitute at least a
majority thereof. For this purpose, new directors who were
elected, or nominated (or approved for nomination in the case of
nomination by a Committee of the Board) for election by
shareholders of the Company, by at least two thirds of the
directors then still in office who were, or are deemed to have
been directors at the beginning of the period, shall be deemed to
have been directors at the beginning of the period.
2.16 Approved Change in Control shall mean the happening of
any one of the following events, which, in each case was
recommended to the shareholders by a vote of at least two-thirds
of the non-employee directors of the Company then still in office
who were in office two years prior to such event:
(a) Any person within the meaning of Sections 13(d) and
14(d) of the Securities Exchange Act of 1934 (the "1934 Act"),
other than the Company or any of its subsidiaries, has become the
beneficial owner, within the meaning of Rule 13d-3 under the 1934
Act, of 20% or more of the combined voting securities;
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(b) A tender offer or exchange offer, other than an
offer by the Company, pursuant to which shares of the Company's
common stock have been purchased;
(c) The stockholders or directors of the Company have
approved an agreement to merge or consolidate with or into
another corporation and the Company is not the surviving
corporation or an agreement to sell or otherwise dispose of all
or substantially all of the Company's assets (including a plan of
liquidation); or
(d) During any period of two consecutive years,
individuals who at the beginning of such period constituted the
board of directors cease for any reason to constitute at least a
majority thereof. For this purpose, new directors who were
elected, or nominated (or approved for nomination in the case of
nomination by a Committee of the Board) for election by
shareholders of the Company, by at least two thirds of the
directors then still in office who were, or are deemed to have
been directors at the beginning of the period, shall be deemed to
have been directors at the beginning of the period.
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
connection settle all controversies and disputes which may arise in
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 20,700,000 subject to adjustment as
provided under Section 8.3. No basic stock units may be awarded
under the Plan after April 15, 1999.
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4. PARTICIPATION.
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 50,000 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.
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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 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.
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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, in the event
of an Unapproved or Approved Change in Control, if a participant
retires prior to his normal retirement date 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 and immediately payable.
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6.2.3.l In the event of an Unapproved Change in 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 and payable (1)
upon termination of the employment of a participant for any
reason within one year following the Unapproved Change in
control, or (2) upon termination of the employment of a
participant at any time after an Unapproved Change in Control if
such termination (a) is initiated by the Company, except that
termination for willful misconduct shall not be treated as a
termination under this subparagraph (2), or (b) is initiated by
the participant for Good Reason. In the event of an Approved
Change in 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 and payable upon termination of the employment of a
participant after an Approved Change in Control if such
termination is (i) initiated by the Company, except that
termination for willful misconduct shall not be treated as a
termination under this sentence, or (ii) initiated by the
participant for Good Reason. Good Reason, as used herein, shall
mean any of the following: Assignment of any duties inconsistent
with the position, duties, responsibilities and status of the
employee or reduction or adverse change in the nature or status
of responsibilities of the employee from those which existed on
the date immediately preceding an Approved or Unapproved Change
in Control; any reduction by the Company or any successor entity
in the employees' compensation including benefits, other than
such reduction required by law or required to maintain the
tax-qualified status of any benefit Plan, from those which
existed on the date immediately preceding an Approved or
Unapproved Change in Control; or the Company or any successor
entity requiring the employee to be based at a location in excess
of fifty miles from the location where the employee is based on
the date immediately preceding an Approved or Unapproved Change
in Control.
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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, the Reorganization Plan approved by the Board of Directors
of the Company at its meeting on December 14, 1989 or the 1994
Realignment Plan and Parker Integration Plan, 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, or the Reorganization Plan approved
by the Board of Directors of the Company at its meeting on
December 14, 1989, which sale or other disposition results in the
participant no longer being employed by the Company or any of its
subsidiaries, 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 Paragraph
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 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
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(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 of 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.
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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. In the event of an Approved or Unapproved Change in
Control, the participant may, upon any date, revoke his election
to defer receipt of any or all interests in respect of an award
and the Company shall make payment to the participant of the
value of any vested interest or interests, within a reasonable
time after such revocation and with respect to interests which
have not yet vested as of the date of such revocation, within a
reasonable time after such interests become vested. If no such
election is made, payment shall be made within a reasonable time
after the date on which such vested interest or additional vested
interest is acquired.
The amount of any payment shall be computed by multiplying the
total credits in respect of the award at the time of payment, or
in the case of revocation of an election to defer, at the time of
such revocation, by the applicable vesting percentage. The
Committee may provide for the payment of interest beginning upon
maturity for amounts deferred beyond maturity.
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.
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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 or 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 the
maximum annual grant for each participant (subject to Section
8.3) 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 an Approved or Unapproved Change in
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.
7.2 The Board of Directors of the Company may terminate the
Plan at any time except that after an Approved or Unapproved
Change in 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.
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 an Approved Change in Control
deprive a participant of a benefit or right which became
operative upon an Approved Change in Control or after an
Unapproved Change in Control deprive a participant of a benefit
or right which became operative upon an Unapproved Change in
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 or 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
maximum annual grant for each participant, 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.
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