Exhibit 10.31
BAXTER INTERNATIONAL INC.
Non-Employee Director Compensation Plan
adopted May 6, 2003
Terms and Conditions
1. Purpose
This Non-Employee Director Compensation Plan (the "Plan") is adopted by the
Board of Directors (the "Board") of Baxter International Inc. ("Baxter"). This
Plan is adopted pursuant to the Baxter International Inc. 2003 Incentive
Compensation Program (the "Program"), for the purposes stated in the Program.
Capitalized terms defined in the Program that are used without being defined in
the Plan will have the same meaning as in the Program.
2. Participants
Each member of the Board who is not an employee of Baxter or any of its
subsidiaries shall participate in the Plan (a "Participant").
3. Restricted Stock
3.1 On the date of Baxter's annual meeting of stockholders (the "Annual
Meeting") in each year beginning with the Annual Meeting on May 6,
2003, and subject to availability of shares of Common Stock under the
Program, each Participant upon completion of the Annual Meeting shall,
automatically and without necessity of any action by the Board or any
committee thereof, receive the number of shares of Restricted Stock
equal to the quotient of (A) $60,000 divided by (B) the Fair Market
Value of a share of Common Stock on the date of grant (rounded to the
nearest whole number which is a multiple of ten) (the "Annual
Restricted Stock Grant Amount").
3.2 Each Participant elected or appointed on a date other than the date of
an Annual Meeting shall, on the date of such election or appointment
and automatically and without necessity of any action by the Board or
any committee thereof, receive the number of shares of Restricted
Stock equal to the product of (A) the Annual Restricted Stock Grant
Amount (as defined in Section 3.1, subject to adjustment in accordance
with the Program) for the Restricted Stock awarded on the date of the
immediately preceding Annual Meeting, multiplied by (B) the quotient
of (i) the number of full calendar months before the next Annual
Meeting divided by (ii) 12 (rounded to the nearest whole number which
is a multiple of ten). The number of shares of Restricted Stock
granted under this Section 3.2 shall not exceed the number available
under the Program on the date of grant.
3.3 Restricted Stock may not be sold, transferred, assigned, pledged,
hypothecated or otherwise encumbered or disposed of, whether
voluntarily,
involuntarily or by operation of law, until vested pursuant to the
terms hereof.
3.4 Subject to Section 11.10 of the Program and except as expressly
provided in Sections 3.6 and 3.7, all shares of Restricted Stock shall
vest on the date of and immediately prior to the next Annual Meeting
following the date of grant.
3.5 Except as provided in Sections 3.6 and 3.7, if a Participant ceases
service as a member of the Board before his or her Restricted Stock
vests, the Participant will forfeit his or her unvested Restricted
Stock immediately upon ceasing service as a member of the Board.
3.6 If a Participant dies while serving as a member of the Board, his or
her unvested Restricted Stock will not be forfeited and will be fully
vested immediately.
3.7 If a Participant becomes disabled and unable to continue service as a
member of the Board, his or her Restricted Stock will not be forfeited
and will, when the Participant ceases to serve as member of the Board,
be fully vested.
3.8 Each Participant receiving Restricted Stock shall have all of the
rights of a stockholder with respect to the shares of Restricted Stock
during any period in which the shares of Restricted Stock are subject
to forfeiture or restrictions on transfer, including the right to vote
the shares of Restricted Stock and to receive dividends and other
distributions thereon, unless and until such shares are forfeited
pursuant to Section 3.5; provided, however, that a dividend or other
distribution with respect to Restricted Stock (including, without
limitation, a stock dividend or stock split), other than a cash
dividend, shall be delivered to Baxter (and the Participant shall, if
requested by Baxter, execute and return one or more irrevocable stock
powers related thereto) and shall be subject to the same restrictions
as the Restricted Stock with respect to which such dividend or other
distribution was made. Cash dividends paid on the Restricted Stock
will be reinvested in shares of Common Stock, unless the Participant
elects otherwise. Common Stock purchased with reinvested cash
dividends shall not be restricted.
3.9 If requested by Baxter, each Participant receiving Restricted Stock
shall enter into an agreement with Baxter incorporating the terms and
conditions of this Plan. A stock certificate for the shares of
Restricted Stock awarded will be issued in the name of each
Participant and deposited, together with a stock power endorsed in
blank by Participant, with Baxter. Each such certificate shall bear a
legend in substantially the following form:
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The transferability of this certificate and the shares of
Common Stock represented by it are subject to the terms and
conditions (including conditions of forfeiture) contained in
the Baxter International Inc. Non-Employee Director
Compensation Plan adopted May 6, 2003. A copy of this Plan
is available from the Corporate Secretary of Baxter
International Inc.
Subject to the terms of the Program, after the Restricted Stock vests,
shares of Common Stock free and clear of all restrictions will be
delivered to the Participant (or to the Participant's legal
representative, beneficiary or heir).
4. Stock Options
4.1 On the date of Baxter's Annual Meeting in each year beginning with the
Annual Meeting on May 6, 2003, and subject to availability of shares
of Common Stock under the Program, upon completion of the Annual
Meeting each Participant shall be granted Stock Options having a value
equal to $60,000, to be determined by the Board or the Compensation
Committee of the Board (the "Committee") based on a Black-Scholes or
other option valuation model in the discretion of the Board or the
Committee (rounded to the nearest whole number which is a multiple of
ten) (the "Annual Stock Option Grant Amount").
4.2 Each Participant elected or appointed on a date other than the date of
an Annual Meeting shall, on the date of such election or appointment
and automatically and without necessity of any action by the Board or
any committee thereof, be granted a Stock Option to purchase that
number of shares of Common Stock equal to the product of (A) the
Annual Stock Option Grant Amount (as defined in Section 4.1, subject
to adjustment in accordance with the Program) for each Stock Option
granted on the date of the immediately preceding Annual Meeting,
multiplied by (B) the quotient of (i) the number of full calendar
months before the next Annual Meeting divided by (ii) 12 (rounded to
the nearest whole number which is a multiple of ten). The number of
shares of Common Stock subject to any Stock Option granted under this
Section 4.2 shall not exceed the number available under the Program on
the date of grant.
4.3 The purchase price for each share of Common Stock subject to a Stock
Option shall be the Fair Market Value of a share of Common Stock on
the date of grant. The terms of each Stock Option will be as set forth
in this Plan and the Program. To the extent that any provision of the
Plan is inconsistent with the Program, the Program shall control. The
Stock Options are not intended to qualify as Incentive Stock Options
within the meaning of Section 422 of the United States Internal
Revenue Code.
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4.4 Subject to Section 11.10 of the Program and except as expressly
provided in Sections 4.8, 4.9 and 4.10, Stock Options shall first
become exercisable on the date of and immediately prior to the next
Annual Meeting following the date of grant.
4.5 After a Stock Option becomes exercisable and until it expires, it may
be exercised in whole or in part, in the manner specified by the
Company. Under no circumstances may a Stock Option be exercised after
it has expired. Shares of Common Stock may be used to pay the purchase
price for shares of Common Stock to be acquired upon exercise of a
Stock Option or fulfill any tax withholding obligation, subject to any
requirements or restrictions specified by the Company.
4.6 Except as provided in Sections 4.8, 4.9 and 4.10, if a Participant
ceases service as a member of the Board before his or her Stock Option
becomes exercisable, the Stock Option will expire when the Participant
ceases service as a member of the Board.
4.7 If a Participant ceases service as a member of the Board after his or
her Stock Option becomes exercisable, the Stock Option will not expire
but will remain exercisable. Subject to Sections 4.8, 4.9, 4.10 and
4.11, the Stock Option will expire three months after the Participant
ceases service as a member of the Board, unless the Participant dies
or becomes disabled during such three month period in which case the
Stock Option will expire on the first anniversary of the date the
Participant ceased serving as a member of the Board.
4.8 If a Participant dies while serving as a member of the Board, his or
her Stock Option will not expire and will remain, or immediately
become, fully exercisable, as the case may be. Subject to Sections
4.10 and 4.11, the Stock Option will expire on the first anniversary
of the Participant's death.
4.9 If a Participant becomes disabled and unable to continue service as a
member of the Board, his or her Stock Option will not expire and will
remain, or when the Participant ceases to serve as member of the Board
become, fully exercisable, as the case may be. Subject to Sections
4.10 and 4.11, the Stock Option will expire on the first anniversary
of the date the Participant ceases service as a member of the Board.
4.10 If a Participant who has served as a member of the Board for a
continuous period of at least ten years or who is at least 72 years of
age ceases to serve as a member of the Board (including without
limitation by reason of death or disability), his or her Stock Option
will not expire and will remain, or when the Participant ceases to
serve as member of the Board become, fully exercisable, as the case
may be. Subject to Section 4.11, the Stock Option will expire on the
fifth anniversary of the date the Participant ceases service as a
member of the Board.
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4.11 Stock Options that have not previously expired will expire at the
close of business on the tenth anniversary of the date of grant. If a
Stock Option would expire on a date that is not a Business Day, it
will expire at the close of business on the last Business Day
preceding that date. A "Business Day" is any day on which the Common
Stock is traded on the New York Stock Exchange.
4.12 An exercisable Stock Option may only be exercised by the Participant,
his or her legal representative, or a person to whom the Participant's
rights in the Stock Option are transferred by will or the laws of
descent and distribution or in accordance with rules and procedures
established by the Committee.
5. Cash Compensation
5.1 Baxter shall pay each Participant a meeting fee of $1,000 for each
meeting of the Board or any committee thereof attended, and a
Participant acting as the chairperson of any meeting of a committee of
the Board shall receive an additional $1,000 for each meeting chaired
by him or her. Fees shall be paid quarterly in arrears and are payable
if the Participant attends in person, by conference telephone, or by
any other means permitted by the Delaware General Corporation Law and
Baxter's Bylaws.
5.2 Baxter shall pay each Participant a total annual cash retainer of
$45,000 per calendar year ("Annual Cash Retainer"). The Annual Cash
Retainer shall be paid quarterly in arrears. For purposes of
determining the amount of such quarterly payment, a Participant must
be a member of the Board on or prior to the 15th day of a month in
order to be entitled to receive payment of the Annual Cash Retainer
with respect to that month.
5.3 Participants shall be eligible to defer payment of cash compensation
otherwise payable under this Section 5 pursuant to the terms and
conditions of the Baxter Non-Employee Director Deferred Compensation
Plan.
6. Availability of Shares
If on any grant date, the number of shares of Common Stock which would
otherwise be granted in the form of Restricted Stock or subject to Stock
Options granted under the Plan shall exceed the number of shares of Common
Stock then remaining available under the Program, the available shares
shall be allocated among the Stock Options and Restricted Stock to be
granted Participants in proportion to the number of shares subject to Stock
Options and shares of Restricted Stock that Participants would otherwise be
entitled to receive, and allocated evenly between Restricted Stock and
Stock Options.
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7. General Provisions
7.1 Subject to the limitations contained in Section 11.9 of the Program,
the Board or the Committee may, at any time and in any manner, amend,
suspend, or terminate the Plan or any Stock Option outstanding under
the Plan.
7.2 Participation in the Plan does not give any Participant any right to
continue as a member of the Board for any period of time or any right
or claim to any benefit unless such right or claim has specifically
accrued hereunder.
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