EXHIBIT (10-9)
The Procter & Gamble Future Shares Plan
THE PROCTER & GAMBLE FUTURE SHARES PLAN
CONTENTS
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Article 1. Establishment, Objectives, and Duration 1
Article 2. Definitions 1
Article 3. Administration 3
Article 4. Shares Subject to the Plan 3
Article 5. Eligibility and Participation 4
Article 6. Awards 4
Article 7. General Provisions 6
THE PROCTER & GAMBLE FUTURE SHARES PLAN
ARTICLE 1. ESTABLISHMENT, OBJECTIVES, AND DURATION
1.1 ESTABLISHMENT OF THE PLAN. The Procter & Gamble Company, an Ohio
corporation (hereinafter referred to as the "Company"), hereby establishes a
worldwide stock option plan to be known as "The Procter & Gamble Future Shares
Plan" (hereinafter referred to as the "Plan"), as set forth herein.
1.2 PURPOSE. The purpose of the Plan is to advance the interests of the
Company by giving substantially all employees a stake in the Company's future
growth and success, to increase employee focus on the Company's stock price, to
strengthen the alignment of interests between employees and the Company's
shareholders through the increased ownership of shares of the Company's common
stock, and to encourage employees to remain in the employ of the Company and its
Affiliates.
1.3 DURATION OF THE PLAN. The Plan shall become effective as of October
14, 1997 (the "Effective Date"). The Plan shall terminate on October 13, 2007.
No Award may be granted after the termination date of the Plan, but Awards
theretofore granted shall continue in force beyond that date pursuant to their
terms.
ARTICLE 2. DEFINITIONS
Whenever used in the Plan, the following terms shall have the meanings
set forth below, and when the meaning is intended, the initial letter of the
word shall be capitalized:
2.1 "AFFILIATE" means any entity in which the Company has an ownership
interest of fifty percent (50%) or more.
2.2 "AWARD" means a grant of an Option, a Modified Option, an SAR, or a
Modified SAR under the Plan.
2.3 "BOARD" or "BOARD OF DIRECTORS" means the Board of Directors of the
Company.
2.4 "CODE" means the Internal Revenue Code of 1986 and the regulations
thereunder, as amended from time to time.
2.5 "COMMITTEE" means the Compensation Committee of the Board or such
other committee appointed by the Board to administer the Plan.
2.6 "COMMON STOCK" means the common stock, without par value, of the
Company.
2.7 "COMPANY" means The Procter & Gamble Company, an Ohio corporation,
and any successor thereto.
2.8 "DISABILITY" or "DISABLED" shall mean qualifying for benefits under
a long-term disability pay plan maintained by the Company or any
Affiliate, or as required by or
available under applicable local law, or in the absence of any
such plan or local law, as determined by the Committee.
2.9 "EMPLOYEE" means a full- or part-time employee on the regular
payroll of the Company or any Affiliate as of the Grant Date of an
Award. For purposes of this definition, "on the regular payroll"
shall mean paid through the payroll department of the Company or
an Affiliate (or, if there is no such payroll department,
classified as a regular employee on the Company's or Affiliate's
employment records), and shall exclude individuals classified by
the Company or Affiliate as intermittent or temporary, or as
independent contractors, regardless of how such person may be
classified by any federal, state, or local, domestic or foreign,
government agency or instrumentality thereof, or court. An
individual whose only relationship to the Company or an Affiliate
is that of a temporary employee (except regular employees on
temporary assignment from another unit) or leased employee (as
defined in Section 414(n)(2) of the Code) shall not be an Employee
unless determined otherwise by the Committee at its sole
discretion. The determination of whether an individual is an
"employee on the regular payroll" shall be made solely according
to the method of paying the individual for services, and such
determination shall be within the discretion of the Committee.
2.10 "FAIR MARKET VALUE" means, unless determined otherwise by the
Committee, the average of the high and low prices of a share of
Common Stock on the New York Stock Exchange on the date of
measurement as determined by the Committee, and if there were no
trades on such date, on the day on which a trade occurred next
preceding such date, or as otherwise determined by the Committee.
2.11 "GRANT DATE" means such date, as determined by the Committee, upon
which Awards are granted to Participants pursuant to the terms of
this Plan.
2.12 "MODIFIED OPTION" means an Option that must be exercised on the
fifth anniversary of the Grant Date or forfeited.
2.13 "MODIFIED SAR" means an SAR that must be exercised on the fifth
anniversary of the Grant Date or forfeited.
2.14 "OPTION" means a right to purchase a specified number of shares of
Common Stock at the Option Price, which is not intended to qualify
under Code Section 422 as an Incentive Stock Option, except as
otherwise provided in Section 6.1(j).
2.15 "OPTION PRICE" means the price at which a share of Common Stock
may be purchased by a Participant pursuant to an Option or a
Modified Option.
2.16 "PARTICIPANT" means an Employee who has been selected by the
Committee in its sole discretion to receive an Award or who has
outstanding an Award granted under the Plan.
2.17 "RETIREMENT" means, strictly for purposes of this Plan, the
termination of employment on or after the date the Participant has
attained age fifty-five (55), except as otherwise determined by
the Committee.
2.18 "SAR" means an Award pursuant to which the Participant receives a
right to a cash settlement payment upon exercise equal to the
excess of the Fair Market Value of one share of Common Stock on
the date of exercise over the Fair Market Value of one share of
Common Stock on the Grant Date of the SAR, multiplied by the
number of SARs granted.
2.19 "SPECIAL SEPARATION" means any termination of employment, except a
termination for cause or a voluntary resignation that is not
initiated or encouraged by the Company, that occurs prior to the
time a recipient is eligible to retire.
2.20 "SPREAD VALUE" means the excess of the Fair Market Value of one
share of Common Stock on the date of exercise over the Fair Market
Value of one share of Common Stock on the Grant Date, multiplied
by the number of shares of Common Stock underlying the Award.
ARTICLE 3. ADMINISTRATION
The Plan and all Awards granted pursuant thereto shall be administered
by the Compensation Committee of the Board. The Committee may, from time to
time, adopt rules and regulations for carrying out the provisions and purposes
of the Plan. The Committee, in its absolute discretion, shall have the power to
interpret and construe the Plan; provided, however, that the Committee may
designate persons other than members of the Committee to carry out such
responsibilities of the Committee under the Plan as it may deem appropriate. Any
interpretation of construction of any provision of this Plan by the Committee
shall be final and conclusive upon all parties. No member of the Committee or
the Board shall be liable for any action or determination made hereunder in good
faith.
ARTICLE 4. SHARES SUBJECT TO THE PLAN
4.1 NUMBER OF SHARES AVAILABLE FOR OPTIONS. The number of shares of
Common Stock available with respect to all Awards granted under the Plan shall
not exceed seventeen million (17,000,000) in the aggregate, subject to
adjustment under Section 4.2 herein. The shares of Common Stock subject to the
Plan shall consist of either authorized but unissued shares or treasury shares,
as determined by the Committee. Notwithstanding any terms or conditions
contained herein, the shares to be delivered by the Company upon exercise of an
Award by a Participant located in Italy shall be authorized but unissued shares.
4.2 CHANGES IN CAPITALIZATION. In the event of any future
reorganization, recapitalization, stock split, stock dividend, combination of
shares, merger, consolidation, rights offering, share exchange,
reclassification, distribution, spin-off or other change affecting the corporate
structure, capitalization or Common Stock of the Company occurring after the
date of approval of the Plan by the Company shareholders, appropriate
adjustments and changes shall be made by the Committee to the extent necessary
to prevent dilution or enlargement of rights under the Plan in (a) the aggregate
number of shares of Common Stock subject to the Plan; (b) the number of shares
of Common Stock for which Awards may be granted or awarded to any Participant;
(c) the
number of shares and the Option Price per share of all shares of Common Stock
subject to outstanding Options or Modified Options, as applicable; (d) the
number of SARs or Modified SARs subject to an Award and the Fair Market Value of
a share of Common Stock for purposes of determining the cash settlement payment
on exercise of an SAR or Modified SAR, as applicable; and (e) such other
provisions of the Plan as may be necessary and equitable to carry out the
foregoing purposes.
ARTICLE 5. ELIGIBILITY AND PARTICIPATION
An Award may be granted by the Committee, in its discretion, to an
Employee who is actively employed by the Company or any Affiliate on the Grant
Date. The granting of Awards under the terms of this Plan is made at the sole
discretion of the Committee and does not entitle a Participant to receive future
Awards. The adoption of this Plan shall not be deemed to give any Participant
any right to be granted an Award, except to the extent as may be determined by
the Committee.
ARTICLE 6. AWARDS
6.1 AWARDS. The Award to each Participant under the Plan shall consist
of either Options, Modified Options, SARs, or Modified SARs. The Committee shall
determine (i) the number of shares of Common Stock to be covered by each Award;
(ii) the terms and conditions of the Awards (including, but not limited to,
restrictions upon the Awards, when Awards are first exercisable and the period
of exercise, conditions of their exercise, requirements regarding payment of the
exercise price, withholding requirements and restrictions on the shares of
Common Stock issuable upon the exercise thereof); and (iii) the form of the
instruments necessary or advisable in the administration of the Awards.
(a) TERM OF AWARD. The term of each Award shall be no more than ten
(10) years from the Grant Date, except as provided in Section 6.1(j).
(b) OPTION PRICE. With respect to an Option or Modified Option, the
Option Price shall be not less than the Fair Market Value of the Common
Stock on the Grant Date.
(c) EXERCISE AND LIMITATIONS ON EXERCISE. Except as otherwise provided
for herein, if a Participant has been in the continuous employ of the
Company through the fifth anniversary of the Grant Date, at any time on
or after the fifth anniversary of the Grant Date, but in no event later
than the tenth anniversary of the Grant Date (except as provided in
Section 6.1(j)), the Participant may exercise the Award, and purchase
the number of shares of Common Stock covered by the Option (or Modified
Option if the Award is exercised on the fifth anniversary of the Grant
Date), or receive the cash settlement payment with respect to the SAR
(or Modified SAR if the Award is exercised on the fifth anniversary of
the Grant Date), as applicable. An Award must be exercised for the full
number of shares of Common Stock covered by the Option or Modified
Option, or for the entire cash settlement payment with respect to the
SAR or Modified SAR, as applicable. Notwithstanding the foregoing,
stock options and stock appreciation rights granted hereunder shall
vest immediately upon a "Change in Control." A "Change in Control"
shall mean the occurrence of any of the following:
(i) An acquisition (other than directly from the Company) of
any voting securities of the Company (the "Voting Securities") by any
"Person" (as the term person is used
for purposes of Section 13(d) or 14(d) of the Exchange Act),
immediately after which such Person has "Beneficial Ownership" (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of twenty
percent (20%) or more of the then outstanding Shares or the combined
voting power of the Company's then outstanding Voting Securities;
provided, however, in determining whether a Change in Control has
occurred pursuant to this Section 6.1(c), Shares or Voting Securities
which are acquired in a "Non-Control Acquisition" (as hereinafter
defined) shall not constitute an acquisition which would cause a Change
in Control. A "Non-Control Acquisition" shall mean an acquisition by
(i) an employee benefit plan (or a trust forming a part thereof)
maintained by (A) the Company or (B) any corporation or other Person of
which a majority of its voting power or its voting equity securities or
equity interest is owned, directly or indirectly, by the Company (for
purposes of this definition, a "Related Entity"), (ii) the Company or
any Related Entity, or (iii) any Person in connection with a
"Non-Control Transaction" (as hereinafter defined);
(ii) The individuals who, as of July 11, 2000 are members of
the Board (the "Incumbent Board"), cease for any reason to constitute
at least half of the members of the Board; or, following a Merger (as
hereinafter defined) which results in a Parent Corporation (as
hereinafter defined), the board of directors of the ultimate Parent
Corporation; provided, however, that if the election, or nomination for
election by the Company's common stockholders, of any new director was
approved by a vote of at least two-thirds of the Incumbent Board, such
new director shall, for purposes of this Plan, be considered as a
member of the Incumbent Board; provided further, however, that no
individual shall be considered a member of the Incumbent Board if such
individual initially assumed office as a result of either an actual or
threatened "Election Contest" (as described in Rule 14a-11 promulgated
under the Exchange Act) or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Board (a
"Proxy Contest") including by reason of any agreement intended to avoid
or settle any Election Contest or Proxy Contest; or
(iii) The consummation of:
(A) A merger, consolidation or reorganization with or
into the Company or in which securities of the Company are issued (a
"Merger), unless such Merger is a "Non-Control Transaction." A
"Non-Control Transaction" shall mean a Merger where:
(1) the stockholders of the Company, immediately
before such Merger own directly or indirectly immediately following
such Merger at least fifty percent (50%) of the combined voting power
of the outstanding voting securities of (x) the corporation resulting
from such Merger (the "Surviving Corporation") if fifty percent (50%)
or more of the combined voting power of the then outstanding voting
securities of the Surviving Corporation is not Beneficially Owned,
directly or indirectly by another Person (a "Parent Corporation"), or
(y) if there is one or more Parent Corporations, the ultimate Parent
Corporation;
(2) the individuals who were members of the
Incumbent Board immediately prior to the execution of the agreement
providing for such Merger constitute at least half of the members of
the board of directors of (x) the Surviving Corporation, if there is no
Parent Corporation, or (y) if there is one or more Parent Corporations,
the ultimate Parent Corporation; and
(3) no Person other than (1) the Company, (2) any
Related Entity, (3) any employee benefit plan (or any trust forming a
part thereof) that, immediately prior to such Merger was maintained by
the Company or any Related Entity, or (4) any Person who, immediately
prior to such Merger had Beneficial Ownership of twenty percent (20%)
or more of the then outstanding Voting Securities or Shares, has
Beneficial Ownership of twenty percent (20%) or more of the combined
voting power of the outstanding voting securities or common stock of
(x) the Surviving Corporation if there is no Parent Corporation, or (y)
if there is one or more Parent Corporations, the ultimate Parent
Corporation;
(b) A complete liquidation or dissolution of the
Company; or
(c) The sale or other disposition of all or
substantially all of the assets of the Company to any Person (other
than a transfer to a Related Entity or under conditions that would
constitute a Non-Control Transaction with the disposition of assets
being regarded as a Merger for this purpose or the distribution to the
Company's stockholders of the stock of a Related Entity or any other
assets).
Notwithstanding the foregoing, a Change in Control shall not be deemed
to occur solely because any Person (the "Subject Person") acquired
Beneficial Ownership of more than the permitted amount of the then
outstanding Shares or Voting Securities as a result of the acquisition
of Shares or Voting Securities by the Company which, by reducing the
number of Shares or Voting Securities then outstanding, increases the
proportional number of shares Beneficially Owned by the Subject
Persons, provided that if a Change in Control would occur (but for the
operation of this sentence) as a result of the acquisition of Shares or
Voting Securities by the Company, and after such share acquisition by
the Company, the Subject Person becomes the Beneficial Owner of any
additional Shares or Voting Securities which increases the percentage
of the then outstanding Shares or Voting Securities Beneficially Owned
by the Subject Person, then a Change in Control shall occur.
(d) TERMINATION OF EMPLOYMENT GENERALLY.
(i) If a Participant's employment is terminated on or after the
fifth anniversary of the Grant Date, for any reason other than
death, Disability, Retirement, or Special Separation the Award shall
be exercisable only for thirty (30) calendar days following such
termination, and only to the extent such Award was exercisable on
the date of such termination, except as may be otherwise determined
by the Committee. In no event, however, may an Award be exercised
more than ten (10) years after the Grant Date, except as provided in
Section 6.1(j). If a Participant's employment is terminated prior to
the fifth anniversary of the Grant Date, for any reason other than
death, Disability, Retirement, or Special Separation, each Award
granted to such Participant shall be immediately canceled and the
Participant shall forfeit the Award upon such termination of
employment.
(ii) Neither the Company nor the Committee shall have any
obligation to notify a Participant of the expiration of an Award.
(iii) Unless the Committee shall determine otherwise, a
Participant employed by an Affiliate or business unit of the Company
that is sold or otherwise divested from the
Company shall be considered to have his or her employment terminated
as of the effective date of the divestiture.
(e) TERMINATION OF EMPLOYMENT DUE TO DISABILITY, RETIREMENT, OR
SPECIAL SEPARATION.
(i) If prior to the fifth anniversary of the Grant Date a
Participant's employment is terminated due to Disability,
Retirement, or Special Separation the Award may be exercised on or
after the fifth anniversary of the Grant Date, but in no event may
such an Award be exercised more than ten (10) years after the Grant
Date, except as provided in Section 6.1(j). If a Participant's
employment is terminated due to Disability, Retirement, or Special
Separation on or after the fifth anniversary of the Grant Date, the
Award may be exercised, to the extent such Award was exercisable on
the date of such termination, within the remaining period of the
Award.
(ii) Notwithstanding the above and except for Participants
located in Italy, the Committee reserves the discretionary ability
to substitute an immediate cash payment equal to the Spread Value of
the Award in full satisfaction of the Award, in the event of a
termination of employment due to Disability, Retirement, or Special
Separation to the extent such payment is permitted by law.
(f) DEATH OF A PARTICIPANT. Upon the death of a Participant, while
an Award is still outstanding, regardless of whether the Award is or
is not exercisable, a cash payment equal to the Spread Value of the
Award, as of the date of the Participant's death, shall be paid as
soon as administratively practicable to the Participant's estate, in
full satisfaction of the Award. Notwithstanding the above, upon the
death of a Participant located in Italy, the outstanding Award
granted to such Participant shall be (i) immediately canceled if the
death occurs prior to the fifth anniversary of the Grant Date, or
(ii) exercisable by the executors, administrators or heirs of the
deceased Participant only for six (6) months following such death if
the death occurs on or after the fifth anniversary of the Grant
Date.
(g) NONTRANSFERABILITY. Awards are not transferable and may only be
exercised by the Participant.
(h) EXERCISE; NOTICE THEREOF. Awards shall be exercised by
delivering written notice of intention to exercise the Award,
pursuant to such terms and conditions as may be determined by the
Committee. The Committee shall have the authority to establish
procedures under any or all methods of exercise, including the
designation of the brokerage firm or firms through which exercises
may be effected, which need not be the same for each grant or for
each Participant. The Committee shall have the authority to change
without notice any method of exercise for any reason whatsoever,
notwithstanding the fact that the method of exercise had been
available to Participants in the past.
(i) RIGHTS AS SHAREHOLDER. A Participant shall have none of the
rights of a shareholder with respect to shares of Common Stock
covered by any Award until the Participant becomes the record holder
of such shares as determined by the records of the Company's
transfer agent.
(j) ADDITIONAL TERMS. With respect to any Award, the Committee may,
in its discretion: (i) determine which Affiliates will be covered by
the Plan; (ii) determine which Employees are eligible to participate
in the Plan; (iii) modify or restrict any of the terms and
conditions of any Awards including but not limited to extending the
term of an Award beyond ten (10) years; (iv) modify or restrict
exercise procedures and any other Plan procedures; (v) establish
local country plans as subplans to this Plan, each of which may be
attached as an Appendix hereto; and (vi) take any action, before or
after an Award is made, which it deems advisable to obtain or comply
with any necessary local government regulatory exemptions or
approvals; provided that the Committee may not take any action
hereunder which would (1) increase the number of shares of Common
Stock covered by the Plan; or (2) violate any securities law, the
Code, or any governing statute.
(k) STOCK APPRECIATION RIGHTS. The Committee may grant SARs or
Modified SARs, as applicable, in lieu of Options or Modified Options
under the Plan.
6.2 REFUSAL OF AWARD. Any Participant may refuse the grant of an
Award by notifying the Committee of his or her refusal in writing in a form and
pursuant to procedures to be determined by the Committee.
ARTICLE 7. GENERAL PROVISIONS
7.1 NO ADDITIONAL RIGHTS. Nothing in the Plan shall interfere with or
limit in any way the right of the Company to terminate any Participant's
employment at any time, or confer upon any Participant any right to continue in
the employ of the Company. No Employee shall have the right to be selected to
receive an Award under this Plan or having been so selected, to be selected to
receive a future Award. Neither the Award nor any benefits arising under this
Plan shall constitute part of a Participant's employment contract with the
Company or any Affiliate, and accordingly, this Plan and the benefits hereunder
may be terminated at any time in the sole and exclusive discretion of the
Committee without giving rise to liability on the part of the Company or any
Affiliate for severance payments.
7.2 NO EFFECT ON OTHER BENEFITS. The receipt of Awards under the Plan
shall have no effect on any benefits and obligations to which a Participant may
be entitled from the Company or any Affiliate, under another plan or otherwise,
or preclude a Participant from receiving any such benefits.
7.3 BINDING EFFECT. Any decision made or action taken by the Company,
the Board, or by the Committee arising out of or in connection with the
construction, administration, interpretation, and effect of the Plan shall be
conclusive and binding upon all persons, including the Company, its
shareholders, Employees, Participants, and their estates and beneficiaries.
7.4 INALIENABILITY OF BENEFITS AND INTEREST. No benefit payable under,
or interest in, the Plan shall be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, or charge, and any
such attempted action shall be void and no such benefits or interest shall be in
any manner liable for or subject to debts, liabilities, engagements, or torts of
any Participant or beneficiary.
7.5 REQUIREMENTS OF LAW. The granting of Awards and the issuance of
shares of Common Stock under the Plan shall be subject to all applicable laws,
rules, and regulations, and to such approvals by any governmental agencies or
national securities exchanges as may be required.
7.6 GOVERNING LAW. To the extent not preempted by federal law, the Plan
and all agreements hereunder shall be construed in accordance with and governed
by the laws of the state of Ohio.
7.7 WITHHOLDING. The Company shall have the power and the right to
deduct or withhold, to require an Affiliate to deduct or withhold, or to require
a Participant to remit to the Company or an Affiliate, an amount sufficient to
satisfy federal, state, and local taxes, domestic or foreign, required by law or
regulation to be withheld with respect to any taxable event arising as a result
of this Plan.
7.8 AMENDMENTS. Subject to the terms of the Plan, the Committee may at
any time and from time to time alter, amend, suspend, or terminate the Plan in
whole or in part.
Adopted October 14, 1997
Article 2, Paragraph 2.19 added, Article 4, Paragraph 4.1 amended, Article 6,
Paragraphs 6.1(d)(i), (e) (i) and (ii) and (f) amended - May 12, 1998
Article 4, Paragraph 4.1 amended - April 11, 2000
Article 2, Paragraph 2.19 amended - June 13, 2000
Article 6, Paragraph 6.1(c) amended and Paragraph 6.1(c)(i), (ii) and (iii)
adopted - July 11, 2000
Article 4.2 amended - December 11, 2001