Exhibit 10(r)
SOTHEBY'S HOLDINGS, INC.
1998 STOCK COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS
1. ADOPTION AND TERM. The Sotheby's Holdings, Inc. 1998 Stock
Compensation Plan for Non-Employee Directors (the "Plan") has been approved by
the Board of Directors (the "Board") of Sotheby's Holdings, Inc. (the "Company")
and is effective on April 30, 1998, the date of the 1998 Annual Meeting. The
Plan shall remain in effect until terminated or abandoned by action of the
Board.
2. PURPOSE OF THE PLAN. The purpose of the Plan is to promote the long
term growth and success of the Company by attracting, motivating and retaining
non-employee directors of outstanding ability and to promote a greater identity
of interest between the Company's non-employee directors and its shareholders.
The Plan covers stock compensation only and does not include other amounts
receivable by non-employee directors, such as fees for attending meetings and
reimbursement of expenses.
3. ADMINISTRATION. The Plan requires no discretionary action by any
administrative body with regard to any transaction under the Plan. To the
extent, if any, that questions of administration arise, these shall be resolved
by the Board. The Board may, in its discretion, delegate to the Chief Financial
Officer or other officer of the Company any or all authority and responsibility
to act pursuant to the Plan. The determination of the Board on all matters
within its authority relating to the Plan shall be conclusive. The Board shall
not be liable for any action or determination made in good faith with respect to
the Plan, and the Company shall indemnify and hold harmless the Board, the Chief
Financial Officer and any other party to whom the Board has delegated its
authority pursuant to this Section 3 from all losses and expenses (including
reasonable attorneys' fees) arising from the assertion or judicial determination
of such liability.
4. SHARES SUBJECT TO THE PLAN. The shares to be issued under this Plan
shall be shares of the Company's authorized but unissued Class A Limited Voting
Common Stock, par value $0.10 per share (the "Common Stock"). Subject to
adjustment for share subdivision, consolidation, or other capital readjustment,
the aggregate number of shares reserved and available for issuance under the
Plan is 250,000 shares of Common Stock.
5. STOCK COMPENSATION. Each non-employee director ("Eligible Director")
shall receive, as his or her annual retainer, 2,260 shares of the Company's
Common Stock ("Director Stock"). The Director Stock shall be paid on a
quarterly basis for services rendered from the date of the Annual Meeting to the
date of the following Annual Meeting (the "Annual Period"). If an Eligible
Director serves for less than the Annual Period, the number of shares of
Director Stock payable to such Eligible Director shall be prorated accordingly.
6. DEFERRAL OF DIRECTOR STOCK. An Eligible Director may elect to defer
the receipt of all or a portion of the Director Stock by making an election
pursuant to Section 7, in which case there shall be credited to the Eligible
Director's Stock Unit Account (as defined in Section 8) a number of units equal
to the number of shares of Director Stock being deferred.
7. ELECTION TO DEFER. Each Eligible Director may elect to defer (the
"Deferral Election") part or all of the shares of Director Stock by submitting a
deferral election form (the "Deferral Election Form") to the Chief Financial
Officer, indicating the number of shares of Director Stock to be deferred (the
"Deferred Amount"). Any Deferral Election (i) shall be in writing, (ii) shall
be effective only with respect to Director Stock which is earned after the
Deferral Election Form is received by the Chief Financial Officer, and (iii) may
not be revoked or changed once made. Notwithstanding the foregoing, a Deferral
Election may be superseded with respect to Director Stock payable for the next
following Annual Period by submitting a new Deferral Election Form to the Chief
Financial Officer; provided, however, that (i) no revocation shall be effective
to make any change with respect to Deferred Amounts previously deferred; (ii) no
change in Deferred Amount shall take effect until the Annual Period after such
new Deferral Election Form has been received by the Chief Financial Officer, and
(iii) any such Deferral Election shall be irrevocable. To the extent required
by the then applicable Rule 16b-3, no Deferral Election shall take effect until
a date at least six (6) months after the Deferral Election Form is received by
the Chief Financial Officer.
8. STOCK UNIT ACCOUNT. An Eligible Director who defers the receipt of
Director Stock shall have credited to an account (the "Stock Unit Account") a
number of units (the "Stock Units") equal to the number of shares of Director
Stock being deferred. The Deferred Amount shall be credited as of the date on
which the Eligible Director becomes entitled to payment of the Deferred Amount
in accordance with Section 5. Stock Units shall have no voting rights.
9. STOCK UNITS CREDITED WITH DIVIDENDS. If Stock Units exist in an
Eligible Director's Stock Unit Account on a dividend record date for the
Company's Common Stock, the Stock Unit Account shall be credited, on the
dividend payment date related to such dividend record date, with an additional
number of Stock Units equal to (i) the cash dividend paid on one share of Common
Stock, multiplied by (ii) the number of Stock Units in the Stock Unit Account on
the dividend record date, divided by (iii) the Fair Market Value of a share of
Common Stock on the dividend payment date. "Fair Market Value" means the
closing price per share of Common Stock on the New York Stock Exchange on the
day before the relevant dividend payment date.
10. DISTRIBUTIONS. All amounts credited to an Eligible Director's Stock
Unit Account shall be distributed on the first day of the calendar month
following the date of the Eligible Director's termination of service on the
Company's Board for any reason. All distributions from the Stock Unit Account
shall be made in a lump sum payment, and shall be in the form of a certificate
for the number of whole shares of Common Stock equal to the number of whole
Stock Units to be distributed and cash in lieu of any fractional share
(determined by using the Fair Market Value of a share of Common Stock on the
date on which such distributions are distributed, but if such date is not a
business day, then on the next preceding business day).
11. DESIGNATION OF BENEFICIARY. An Eligible Director may designate, on
the Deferral Election Form, one or more beneficiaries to receive a distribution
of the Eligible Director's Stock Unit Account under the Plan upon the Eligible
Director's death. An Eligible Director may change his or her beneficiary
designation at any time by submitting a new Deferral Election Form to the
Company. If there is no designated beneficiary or no designated beneficiary
surviving at the Eligible Director's death, the Eligible Director's Stock Unit
Account shall be paid to the Eligible Director's estate.
12. COMPLIANCE WITH RULE 16B-3 OF THE SECURITIES EXCHANGE ACT.
Transactions under
2
this Plan are intended to comply with all applicable conditions of Rule 16b-3 or
its successors under the Securities Exchange Act of 1934, as amended, and in all
events the Plan shall be construed in accordance with Rule 16b-3. To the extent
any provision of the Plan or action by the Board fails to so comply, it shall be
deemed null and void to the extent permitted by law and deemed advisable by the
Board.
13. ACCOUNT STATEMENTS. Each Eligible Director shall be provided a copy
of the Plan, and, each Eligible Director who makes a Deferral Election shall
receive, not less frequently than annually, a statement reflecting the amounts
credited to the Eligible Director's Stock Unit Account.
14. NO ASSIGNMENT OR ALIENATION. The right of an Eligible Director,
beneficiary or any other person to the payment of Director Stock or of amounts
credited to the Stock Unit Account may not be assigned, transferred, pledged or
encumbered except by will or by the laws of descent and distribution.
15. AMENDMENT AND TERMINATION OF THE PLAN. The Board may from time to
time suspend, discontinue, revise or amend the Plan in any respect whatsoever.
16. DELIVERY OF ELECTIONS AND NOTICES. Any and all notices or elections
required under this Plan shall be deemed adequately given only if in writing.
All notices and elections shall be deemed to have been properly given, if
delivered by hand or mailed, on the date of receipt shown on the delivery
receipt or return receipt, if delivered by Federal Express or similar expedited
overnight commercial carrier, on the date that is one Business Day after the
date upon which the same shall have been delivered to Federal Express or similar
expedited overnight commercial carrier, addressed to the recipient, with all
shipping charges prepaid, provided that the same is actually received by the
recipient in the ordinary course, and if sent by telecopier, on the date of
confirmed delivery. Elections and notices to the Company shall be directed to:
Sotheby's Holdings, Inc.
1334 York Avenue
New York, New York 10021
Attention: Chief Financial Officer
Notices to or with respect to an Eligible Director shall be directed to the
Eligible Director, or the executors, personal representatives or distributees of
a deceased Eligible Director, at the Eligible Director's address on the records
of the Company.
17. EXECUTION. To record the adoption of the Plan, the Company has caused
the execution hereof as of this ____ day of March, 1998.
SOTHEBY'S HOLDINGS, INC.,
a Michigan corporation
By:
--------------------------------------------
Its:
---------------------------------------
3