EXHIBIT 99.1
JOHN H. HARLAND COMPANY
COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS
ADOPTED JULY 16, 1996
AMENDED THROUGH DECEMBER 18, 2003
1. Purpose. The purpose of the Plan is to enable John H. Harland Company
(the "Company") to compensate non-employee Directors who contribute to the
Company's success by their abilities, ingenuity and knowledge, and to better
ensure that the interests of such Directors are more closely aligned with the
interests of the Company's shareholders.
2. Payment of Annual Retainer in Common Stock. An annual retainer fee
covering the calendar year shall be paid in Common Stock of the Company, in such
amount as approved by the Company's Board of Directors ("Board"). Such shares
shall be issued in arrears on a quarterly basis, commencing June 30, 1996,
representing consideration for services performed for the calendar quarter then
ended. In the event that a Director has elected to defer receipt of the annual
retainer, pursuant to Section 5 below, such annual retainer will be credited to
his or her Account (as defined below) on a quarterly basis. The annual retainer
shall be subject to increase or decrease by action of the Board.
3. Payment of Other Annual Retainers. In addition to the annual Common
Stock retainer, the Board may approve an annual cash retainer for all
non-employee Directors as well as annual cash fees for the Chairs of Board
Committees and the Lead Director, if any. Such payments shall be made quarterly
in arrears. At the option of the Director, such retainers may be paid in shares
of Common Stock, valued as set forth in Section 5(b)(iv) below. In the event the
Director elects to defer receipt of such retainers, such amounts will be
credited to his or her Account on a quarterly basis. Such retainers shall be
subject to change by action of the Board.
4. Meeting Fees. In addition to payment of the annual retainers provided
for in Sections 2 and 3, each Director shall be paid such additional cash fees
for attendance at Board and Board Committee meetings as approved by the Board
from time to time. At the option of the Director, any of such fees may be paid
or deferred in shares of Common Stock, valued as set forth in Section 5(b)(v)
below.
5. Deferral of Compensation. Directors may elect to defer the receipt of
all or any portion of the annual retainers, as well as meeting and committee
fees payable to such Director (the "Deferrable Compensation"), in accordance
with the provisions of this Section 5.
(a) Deferral of Compensation. A Director may elect to defer all or
any portion of the Deferrable Compensation by executing and delivering an
election form to the Company at
such time and subject to such other conditions as the Company shall determine,
provided that any such election shall be applicable only to future Deferrable
Compensation with respect to which the Director, at the time of election, has no
current right to receive. Any newly-elected Director may elect to defer
Deferrable Compensation prior to the effective date of his or her election to
the Board. Except as provided in Section 6, the election to defer Deferrable
Compensation shall be irrevocable as to amounts earned following such election
and shall remain in effect until a new election form is delivered to the
Company.
(b) Deferred Compensation Account.
(i) The Company shall establish a deferred compensation
bookkeeping account (the "Account") for each Director electing to defer
Deferrable Compensation. As of the date payments of Deferrable Compensation
otherwise would be made to the Director, the Company shall credit to the
Account, in cash or stock equivalents, the amount of Deferrable Compensation
which the Director has elected to defer.
(ii) If the Director elects to defer and invest the annual
cash retainers or meeting fees in cash, the Account shall be credited with the
dollar amount of the deferral. Interest shall be credited to the cash balance in
the Account as of the last day of each calendar month until the total cash
balance in the Account has been paid out in accordance with the provisions
hereof. The interest rate for each calendar month shall be equal to the Prime
Rate in effect as of the last business day of the month as published in the Wall
Street Journal.
(iii) If the Director elects to defer the annual Common Stock
retainer referred to in Section 2, the Account shall be credited with stock
equivalents on a quarterly basis equal to the number of shares of Common Stock
deferred by the Director.
(iv) If the Director elects to defer and invest the annual
cash retainers referred to in Section 3 in shares of Common Stock, the stock
balance in the Account shall be credited as of the last day of the calendar
quarter with stock equivalents computed by dividing the amount of such retainer
(prorated for such quarter) by the closing price of the Common Stock on the New
York Stock Exchange on such date.
(v) If the Director elects to defer and invest the meeting
fees referred to in Section 4 in shares of Common Stock, the stock balance in
the Account shall be credited as of the meeting date with stock equivalents
computed by dividing the amount of such fee by the closing price of the Common
Stock on the New York Stock Exchange on such date.
(vi) The stock balance in the Account shall be credited as of
the payment date for any cash dividend on the Common Stock with additional stock
equivalents computed by multiplying the per share dividend by the number of
stock equivalents credited to the Account and dividing the product thereof by
the closing price of the Common Stock on the New York Stock Exchange on the
dividend payment date. The Account shall be credited as of the payment date for
any stock dividend on the Common Stock with additional stock equivalents
2
computed by multiplying the per share dividend by the number of stock
equivalents credited to the Account.
(c) Distribution.
(i) Except as otherwise provided in the Plan, the balance in
the Account shall be paid out to the Director commencing on the date which the
Director has specified on the election form; provided, however, that such
commencement date must begin no later than the Director's 65th birthday or upon
termination of the Director's service as a Director, whichever is later. The
balance in the Account shall be paid either in a lump sum or, at the Director's
election, in monthly, quarterly or annual installments, over a period not to
exceed 10 years from the commencement date. Distributions of stock equivalents
may not be made more frequently than semi-annually. An election to change the
method and/or timing of distribution with respect to the Account must be
received by the Company prior to January 1 of the calendar year in which
distributions are to be made pursuant to such election. The lump sum or first
periodic installment shall be paid by the Company as promptly as practicable,
but not more than 30 days following the initial date of payment as determined
above.
(ii) Notwithstanding the provisions of paragraph 5(c)(i), in
the event the Director is removed from the Board, other than after a Change in
Control, as defined below, the balance in the Account shall be payable in a lump
sum within 30 days after January 1 of the following year.
(iii) In the event of the death of the Director, the balance
in the Account shall be payable in a lump sum to the beneficiaries designated by
the Director on a form provided to the Company or, in the absence of such
designation, to the estate of the Director. The provisions of the Plan shall
apply to and be binding upon the beneficiaries, distributees and personal
representatives and any other successors in interest of the Director.
(iv) In the event of disability, the payment commencement date
and/or payment schedule with respect to the balance in the Account may be
accelerated by the Board's Governance Committee in its sole discretion.
(v) Distribution of the cash credited to the Account shall be
made in cash. Distribution of stock equivalents credited to the Account shall be
rounded down to the nearest whole share of Common Stock; fractional shares shall
be accumulated until such time as a final distribution is made, in which case
any fractional share shall be paid in cash in an amount equal to the fractional
share multiplied by the closing price of the Common Stock on the date of final
distribution.
(vi) The Company shall deduct from all distributions hereunder
any taxes required to be withheld by the federal or any state or local
government.
3
6. Change in Control; Acceleration of Distribution.
(a) Notwithstanding any other provision of the Plan, if a Change in
Control occurs and within one year subsequent to such Change in Control either
the Director ceases to serve as a member of the Board or the Plan is terminated,
then the balance in the Account shall be payable in a lump sum to the Director
within 30 days after January 1 of the calendar year following the year in which
such subsequent event takes place, unless such Director has completed a new
election form after the Change in Control but prior to the occurrence of such
subsequent event, in which case the provisions of paragraph (b) below will no
longer be applicable.
(b) Distributions of the stock equivalents in the Account shall be
made in cash in an amount equal to the number of stock equivalents to be
distributed multiplied by the average closing price of the Common Stock for the
five trading days immediately preceding either (i) the date on which the right
to such distribution arose (that is, the date of termination of the Plan or the
Director's service on the Board), or (ii) the date of the Change in Control,
whichever is greater. For purposes of this paragraph, "Common Stock" means the
Common Stock of the Company or of the continuing or surviving corporation
following a Change in Control, as applicable.
(c) A "Change in Control" shall be defined to mean (i) a merger,
consolidation or reorganization of the Company in which, as a consequence of the
transaction, the incumbent Directors immediately prior to such transaction do
not constitute a majority of the directors of the continuing or surviving
corporation; (ii) the acquisition, directly or indirectly, of the power to vote
50% or more of the outstanding Common Stock of the Company by any person, entity
or "group" (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934); or (iii) any sale or other transfer, in one or a series
of transactions, of all or substantially all of the assets of the Company;
unless, in any case, a majority of the incumbent Directors determines that such
transaction or event shall not, for purposes of the Plan, be deemed a Change in
Control.
(d) The Company shall promptly reimburse the Director for all legal
fees and expenses reasonably incurred in successfully obtaining or enforcing any
right or benefit provided under this Section.
7. Six Month Holding Period and Other Restrictions. All shares of Common
Stock issued under the Plan must be held for six months from the date of
issuance prior to any disposition by the Director. The Directors are subject to
the restrictions of Section 16(b) of the Securities Exchange Act of 1934, and
may not resell such Common Stock except pursuant to a Registration Statement or
an exemption from the registration requirements under the Securities Act of
1933. The Company may endorse on certificates representing shares of Common
Stock issued pursuant to the Plan such legends referring to applicable
restrictions on resale as it deems appropriate.
4
8. Issuance of Common Stock. The maximum number of shares of Common Stock
available for issuance pursuant to the Plan shall be 200,000 shares, subject to
adjustment as set forth in Section 9. The shares of Common Stock issuable to
Directors under the Plan may be issued from shares held in the Company's
treasury or from authorized and unissued shares.
9. Adjustment to Shares of Stock Issuable Pursuant to Plan. In the event
of any change in the outstanding shares of Common Stock of the Company by reason
of any stock split, stock dividend or recapitalization of the Company, an
equitable adjustment shall be made to the number of shares issuable under the
Plan, the amount of the annual Common Stock retainer set forth in Section 2 and
the number of stock equivalents credited to the stock balance in the Account for
any Director, as the Board determines is necessary or appropriate, in its
discretion, to give proper effect to such corporate action. Any such adjustment
determined in good faith by the Board shall be conclusive and binding for all
purposes of the Plan.
10. Amendments. The provisions of Section 6 may not be amended or modified
after the occurrence of a Change in Control. The Plan may otherwise be amended,
modified or terminated by the Board at any time, provided that no such action
shall reduce the amounts credited to the Account of any Director immediately
prior to such action or change the time, method or manner of distribution of
such Account.
11. Miscellaneous.
(a) The provisions of the Plan shall be binding upon and enforceable
against the Company and/or the continuing or surviving corporation in a Change
of Control.
(b) Neither the Director nor any other person shall have any
interest in any fund or in any specific asset of the Company by reason of
amounts credited to the Account of a Director hereunder, or the right to
exercise any of the rights or privileges of a shareholder (including the right
to vote) with respect to any stock equivalents credited to the Account or to
receive any distribution under the Plan except as expressly provided for in the
Plan. Distributions hereunder shall be made from the general assets of the
Company, and the rights of the Director shall be those of an unsecured general
creditor of the Company.
(c) The interest of the Director under the Plan shall not be
assignable by the Director or the Director's beneficiary or legal
representative, either by voluntary assignment or by operation of law, and any
such attempted assignment shall be ineffective to transfer the Director's
interest; provided, however, that (i) the Director may designate beneficiaries
to receive any benefit payable under the Plan upon death, and (ii) the legal
representative of the Director's estate may assign his or her interest under the
Plan to the persons entitled to any such benefit.
(d) Nothing contained herein shall impose any obligation on the
Company to continue the tenure of the Director beyond the term for which such
Director has been elected or prevent his or her removal.
5
(e) The Plan shall be interpreted by and all questions arising in
connection therewith shall be determined by the Governance Committee of the
Board, whose interpretation or determination shall be conclusive and binding.
(f) If any amounts deferred pursuant to the Plan are found in a
final judgment or other order to have been includible in gross income by a
Director prior to payment of such amounts from his or her Account, such amounts
shall be immediately paid to such Director, notwithstanding any election
pursuant to Section 5.
(g) The provisions of the Plan shall be governed by and construed in
accordance with the laws of the State of Georgia.
6