Exhibit 10.2
ASHLAND INC.
DEFERRED COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS (2005)
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(EFFECTIVE GENERALLY AS OF JANUARY 1, 2005)
WHEREAS, the Ashland Inc. Deferred Compensation Plan for Non-Employee
Directors (2005) (hereinafter the "Plan") was approved by the Board of
Directors of Ashland Inc. on November 4, 2004 to be effective January 1,
2005;
WHEREAS, the Plan as approved and effective reserved the right to
amend it;
WHEREAS, the right to amend the Plan was exercised on November 15,
2006 as identified hereinafter;
NOW, THEREFORE, generally effective January 1, 2005, except as
otherwise provided herein, the first amendment and restatement of the Plan
is as follows:
ARTICLE I. GENERAL PROVISIONS
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1. PURPOSE
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The purpose of this Ashland Inc. Deferred Compensation Plan for
Non-Employee Directors (2005) (the "Plan") is to provide each Director with
an opportunity to defer some or all of the Director's Fees as a means of
saving for retirement or other purposes. In addition, the Plan provides
Directors with the ability to increase their proprietary interest in the
Company's long-term prospects by permitting Directors to receive all or a
portion of their Fees in Ashland Common Stock. The obligations of the
Company hereunder constitute a mere promise to make the payments provided
for in this Plan. No Director, his or her spouse or the estate of either of
them shall have, by reason of this Plan, any right, title or interest of
any kind in or to any property of the Company. To the extent any
Participant has a right to receive payments from the Company under this
Plan, such right shall be no greater than the right of any unsecured
general creditor of the Company.
This Plan is a replacement of the prior Ashland Inc. Deferred
Compensation Plan for Non-Employee Directors amended as of April 1, 2003
(the "Former Plan"). Fees deferred under the Former Plan shall remain
subject to all of the rules, terms and conditions in effect under the
Former Plan as of December 31, 2004. For this purpose, the Fees deferred
under the Former Plan shall include all income, gains and losses connected
to such Deferred Fees.
The rules, terms and conditions of this Plan shall apply to Fees
deferred after December 31, 2004, including any Election to defer such Fees
made in 2004. For this purpose, the Fees deferred after December 31, 2004
shall include all income, gains and losses connected to such Fees.
2. DEFINITIONS
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The following definitions shall be applicable throughout the Plan:
(a) "Accounting Date" means the Business Day on which a calculation
concerning a Participant's Deferral Account is performed, or as otherwise
defined by the Committee.
(b) "Act" means the Securities Act of 1933, as amended from time to
time.
(c) "Beneficiary" means the person(s) designated by a Participant in
accordance with Article IV, Section 1.
(d) "Board" means the Board of Directors of Ashland Inc. or its
designee.
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(e) "Business Day" means a day on which the New York Stock Exchange is
open for trading activity.
(f) "Change in Control" shall be deemed to occur (1) upon the approval
of the shareholders of the Company (or if such approval is not required,
upon the approval of the Board) of (A) any consolidation or merger of the
Company, other than a consolidation or merger of the Company into or with a
direct or indirect wholly-owned subsidiary, in which the Company is not the
continuing or surviving corporation or pursuant to which shares of Common
Stock would be converted into cash, securities or other property other than
a merger in which the holders of Common Stock immediately prior to the
merger will have the same proportionate ownership of common stock of the
surviving corporation immediately after the merger, (B) any sale, lease,
exchange, or other transfer (in one transaction or a series of related
transactions) of all or substantially all the assets of the Company,
provided, however, that no sale, lease, exchange or other transfer of all
or substantially all the assets of the Company shall be deemed to occur
unless assets constituting 80% of the total assets of the Company are
transferred pursuant to such sale, lease, exchange or other transfer, or
(C) adoption of any plan or proposal for the liquidation or dissolution of
the Company, (2) when any "person" (as defined in Section 3(a)(9) or 13(d)
of the Exchange Act), other than the Company or any subsidiary or employee
benefit plan or trust maintained by the Company, shall become the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of more than 15% of the Common Stock outstanding at
the time, without the approval of the Board, or (3) if at any time during a
period of two consecutive years, individuals who at the beginning of such
period constituted the Board shall cease for any reason to constitute at
least a majority thereof, unless the election or the nomination for
election by the Company's shareholders of each new director during such
two-year period was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning of such
two-year period.
(g) "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
(h) "Committee" means the Governance and Nominating Committee of the
Board or its designee.
(i) "Common Stock" means the common stock, $.01 par value, of Ashland
Inc.
(j) "Common Stock Fund" means that investment option, approved by the
Committee, in which a Participant's Deferral Account may be deemed to be
invested and may earn income based on a hypothetical investment in Common
Stock.
(k) "Company" means Ashland Inc., its divisions and subsidiaries.
(l) "Corporate Human Resources" means the Corporate Human Resources
Department of the Company.
(m) "Credit Date" means the date on which any Fees would otherwise
have been paid to the Participant.
(n) "Deferral Account" means the account(s) to which the Participant's
Deferred Fees, Stock Units and Restricted Stock Units are credited and from
which distributions are made.
(o) "Deferred Fees" mean the Fees elected by the Participant to be
deferred pursuant to the Plan.
(p) "Director" means any non-employee director of the Company.
(q) "Disability" means that a Participant is unable to engage in any
substantial gainful activity because of a medically determinable physical
or mental impairment that is expected to result in death or
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last for a continuous period of 12 or more months. Corporate Human
Resources or its delegate shall determine whether a Participant has
incurred a Disability.
(r) "Election" means a Participant's delivery of a written notice to
the Vice-President of Human Resources for the Company (or his or her
delegate) directing how his or her Fees will be paid under the terms of the
Plan. The Committee or the Company may prescribe other means of making and
delivering an Election. An Election shall also include instructions
specifying the time and form under which the Participant's Deferral Account
will be paid. Such elections shall be irrevocable except as otherwise
provided in the Plan.
(s) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(t) "Fair Market Value" means the price of a share of Common Stock, as
reported on the Composite Tape for New York Stock Exchange on the date and
at the time designated by the Company.
(u) "Fees" mean the annual retainer, any committee retainer and, as
applicable, other additional retainers or compensation earned by a Director
for service as a member of the Board during all or part of a calendar year.
(v) "Fiscal Year" means that annual period commencing October 1 and
ending the following September 30.
(w) "Participant" means a Director.
(x) "Payment Commencement Date" means the date payments of amounts
deferred begin pursuant to Article III, Section 5.
(y) "Personal Representative" means the person or persons who, upon
the disability or incompetence of a Participant, have acquired on behalf of
the Participant, by legal proceeding or otherwise, the right to receive the
benefits specified in this Plan.
(z) "Plan" means this Ashland Inc. Deferred Compensation Plan for
Non-Employee Directors (2005) as it now exists or may be hereafter amended.
(aa) "Restricted Stock Account" means the portion of a Participant's
Stock Account that is separately accounted for and to which Restricted
Stock Units are credited.
(bb) "Restricted Stock Unit(s)" means the share equivalents credited
to a Participant's Restricted Stock Account pursuant to Article III,
Section 1.
(cc) "Secretary of the Treasury" or "Treasury" means the United States
Department of Treasury.
(dd) "Stock Account" means the portion of a Participant's Deferral
Account that is separately accounted for and to which Stock Units are
credited.
(ee) "Stock Unit(s)" means the share equivalents credited to a
Participant's Stock Account pursuant to Article III, Section 1.
(ff) "Termination" means retirement from the Board or termination of
service as a Director for any other reason.
(gg) "Unforeseeable Emergency" means a severe financial hardship of a
Participant because of -
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1. An illness or accident of the Participant, the Participant's
spouse or dependent (as defined in Internal Revenue Code
section 152(a));
2. A loss of the Participant's property due to casualty; or
3. Such other similar extraordinary unforeseeable circumstances
because of events beyond the control of the Participant.
Corporate Human Resources or its delegate shall determine whether a
Participant has incurred an Unforeseeable Emergency.
3. SHARES; ADJUSTMENTS IN EVENT OF CHANGES IN CAPITALIZATION
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(a) Shares Authorized for Issuance. There shall be reserved for
issuance under the Plan 500,000 shares of Common Stock, subject to
adjustment pursuant to subsection (b) below. Such shares shall be
authorized but unissued shares of Common Stock.
(b) Adjustments in Certain Events. In the event of any change in the
outstanding Common Stock of the Company by reason of any stock split, stock
dividend, recapitalization, merger, consolidation, reorganization,
combination, or exchange of shares, split-up, split-off, spin-off,
liquidation or other similar change in capitalization, or any distribution
to common shareholders other than ordinary cash dividends, the number or
kind of shares that may be issued under the Plan shall be automatically
adjusted so that the proportionate interest of the Directors shall be
maintained as before the occurrence of such event. Such adjustment shall be
conclusive and binding for all purposes of the Plan.
4. ELIGIBILITY
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Any non-employee Director of the Company shall be eligible to
participate in the Plan.
5. ADMINISTRATION
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Full power and authority to construe, interpret and administer the
Plan shall be vested in the Company and the Committee or one or more of
their delegates. This power and authority includes, but is not limited to,
establishing deferral terms and conditions and adopting modifications and
amendments to procedures as may be deemed necessary or appropriate. This
power and authority also includes, without limitation, the ability to
construe and interpret provisions of the Plan, make determinations
regarding law and fact, reconcile any inconsistencies between provisions in
the Plan or between provisions of the Plan and any other statement
concerning the Plan, whether oral or written, supply any omissions to the
Plan or any document associated with the Plan, and to correct any defect in
the Plan or in any document associated with the Plan. Decisions of the
Company and the Committee (or their delegates) shall be final, conclusive
and binding upon all parties. Day-to-day administration of the Plan shall
be the responsibility of Corporate Human Resources. This responsibility
includes authority to create new administrative forms or modify existing
forms for use under this Plan so long as any such modified or new forms are
not inconsistent with the terms of the Plan.
ARTICLE II. COMMON STOCK PROVISION
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Each Participant may make an Election to receive all or a portion of
his or her Fees in shares of Common Stock or make an Election to defer Fees
pursuant to Article III, Section 3. A Participant who elects to receive
Fees in shares of Common Stock shall receive such shares at the end of each
quarter beginning in the quarter the Election is effective. The number of
shares of Common Stock so issued shall be equal to the amount of Fees which
otherwise would have been payable during the quarter divided by the Fair
Market Value. Only whole number of shares of Common Stock will be issued,
with any fractional shares to be paid in cash.
ARTICLE III. DEFERRED COMPENSATION
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1. PARTICIPANT ACCOUNTS
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(a) For each Participant, there shall be established a Deferral
Account to which there shall be credited any Deferred Fees as of each
Credit Date. The Deferral Account shall be credited (or debited) on each
Accounting Date with income (or loss) based upon a hypothetical investment
in any one or more of the investment options available under the Plan, as
prescribed by the Committee, which may include a Common Stock Fund, as
elected by the Participant under the terms of Article III, Section 3. The
crediting or debiting on each Accounting Date of income (or loss) shall be
made for the respective amounts that were subject to each Election under
Article III Section 3.
(b) The Stock Account of a Participant shall be credited on each
Accounting Date with Stock Units equal to the number of shares of Common
Stock (including fractions of a share) that could have been purchased with
the amount of such Deferred Fees as to which a stock deferral election has
been made at the Fair Market Value on the Accounting Date. As of the date
of any dividend distribution date for the Common Stock, the Participant's
Stock Account shall be credited with additional Stock Units equal to the
number of shares of Common Stock (including fractions of a share) that
could have been purchased, at the Fair Market Value on such date, with the
amount which would have been paid as dividends on that number of shares
(including fractions of a share) of Common Stock which is equal to the
number of Stock Units then credited to the Participant's Stock Account with
respect to a particular Election under Article III Section 3.
(c) Each Participant may have his or her Stock Account credited on an
Accounting Date determined by the Committee with the number of Restricted
Stock Units approved for such allocation equal to the number of shares of
Common Stock (including fractions of a share) that could have been
purchased with the dollar amount of the approved grant for this purpose at
the Fair Market Value on the Accounting Date. The Stock Units so credited
shall be separately maintained and accounted for in a Restricted Stock
Account for the Participant. Amounts credited to the Restricted Stock
Account shall be forfeitable until the earlier of (i) one year anniversary
of the date on which such amounts were so credited, or (ii) the date of the
next annual shareholders' meeting of the Company. As of the date of any
dividend distribution date for the Common Stock, the Participant's
Restricted Stock Account shall be credited with additional Restricted Stock
Units equal to the number of shares of Common Stock (including fractions of
a share) that could have been purchased, at the Fair Market Value on such
date, with the amount which would have been paid as dividends on that
number of shares (including fractions of a share) of Common Stock which is
equal to the number of Restricted Stock Units then credited to the
Participant's Restricted Stock Account. The additional Restricted Stock
Units so allocated shall remain forfeitable until the date on which the
Restricted Stock Units with respect to which the additional Restricted
Stock Units were credited become non-forfeitable. On the date that a
Participant ceases to be a Director, all Stock Units (including fractional
Stock Units) that have not become non-forfeitable shall be forfeited. Upon
a Change in Control, all forfeitable amounts in the Restricted Stock
Account shall become non-forfeitable.
2. EARLY WITHDRAWAL
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(a) Unforeseeable Emergency. A Participant or a Participant's legal
representative may submit an application for a distribution from the
Participant's Deferral Account (including the non-forfeitable portion of
the Restricted Stock Account) because of an Unforeseeable Emergency. The
amount of the distribution shall not exceed the amount necessary to satisfy
the needs of the Unforeseeable Emergency. Such distribution shall include
an amount to pay taxes reasonably anticipated as a result of the
distribution. The amount allowed as a distribution under this Section 2(a)
shall take into account the extent to which the Unforeseeable Emergency may
be relieved through reimbursement or compensation from insurance or
liquidation of the Participant's assets (but only to the extent such
liquidation would itself not cause a severe financial hardship). The
distribution shall be made in a single sum and paid as soon as practicable
after the application for the distribution on account of the Unforeseeable
Emergency is approved. The provisions of this Section 2(a) shall be
interpreted and administered in accordance with applicable guidance that
may be issued by the Treasury.
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(b) Disability. A Participant or a Participant's legal representative
may submit an application for a total distribution from the Participant's
Deferral Account (including the non-forfeitable portion of the Restricted
Stock Account) because of the Participant's Disability. The distribution
shall be made in a single sum and paid as soon as practicable after the
application is approved.
(c) Prohibition on Acceleration. Except as otherwise provided in the
Plan and except as may be allowed in guidance from the Secretary of the
Treasury, distributions from a Participant's Deferral Account may not be
made earlier than the time such amounts would otherwise be distributed
pursuant to the terms of the Plan.
3. DEFERRAL ELECTION
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(a) General. Any Participant wishing to defer Fees under the Plan may
elect to do so by delivering to the Vice-President of Human Resources of
the Company (including a delegate thereof) an Election on a form prescribed
by Corporate Human Resources designating the manner in which such Deferred
Fees are to be invested in accordance with Article III, Section 1 and
electing the timing and form of distribution. The timing of the filing of
the appropriate form with Corporate Human Resources shall be determined by
the Company or the Committee. An effective election to defer Fees may not
be revoked or modified except as otherwise determined by the Company or the
Committee or as stated herein.
(b) Permissible Deferral Election. A Participant's Election to defer
Fees may only be made in the taxable year before the Fees are earned, with
one exception. The exception applies to a Participant during his or her
first year of eligibility to participate in the Plan. In that event such a
Participant may, if so offered by the Company or the Committee, elect to
defer Fees for services performed after the Election, provided that the
Election is made within 30 days of the date the Participant becomes
eligible to participate in the Plan. A Participant's Election under this
Section 3(b) shall specify the amount or percentage of Fees deferred and
the time and form of distribution from among those described in Article III
Section 4 of the Plan. Each Election to defer Fees may be treated as a
separate election regarding the time and form of distribution, if so
determined at the time of a particular election by the Company.
(c) Investment Alternatives - Existing Balances. A Participant may
elect to change an existing selection as to the investment alternatives in
effect with respect to existing deferred Fees (in increments prescribed by
the Committee or the Company) as often, and with such restrictions, as
determined by the Committee or by the Company.
(d) Change of Beneficiary. A Participant may, at any time, elect to
change the designation of a Beneficiary in accordance with Article IV,
Section 1 hereof.
4. DISTRIBUTION
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(a) Deferral Account. In accordance with the Participant's Election
and as prescribed by the Committee, Deferred Fees credited to a
Participant's Deferral Account, which shall include the non-forfeitable
portion of the Participant's Restricted Stock Account, shall be distributed
in cash or shares of Common Stock (or a combination of both). Unless
otherwise directed by the Committee, if no Election is made by a
Participant as to the distribution or form of payment of his or her
Deferral Account, upon Termination such account shall be paid in cash in a
lump sum. The entire Deferral Account must be paid out within fifteen years
following the date of the Participant's Termination. In accordance with a
Participant's Election under Article III Section 3, but subject to Sections
2 and 6 of Article III, amounts subject to such Election in the Deferred
Account (determined in accordance with Article III Section 1) shall be
distributed -
1. Upon a Participant's separation from service, including death, as a
Director as either a lump sum or in installments not exceeding 15
years; or
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2. At a specified time or under a fixed schedule not exceeding 15 years.
(b) Medium of Distribution and Default Method. In accordance with the
Participant's Election and within the guidelines established by the
Committee or the Company, a Participant's Deferral Account (including the
non-forfeitable portion of the Restricted Stock Account) shall be
distributed in cash or shares of Common Stock (or a combination of both).
To the extent permissible under law, a Participant may make this Election
at any time before a distribution is to be made. If no Election is made by
a Participant as to the distribution or form of payment of his or her
Deferral Account, upon the earliest time that a distribution from such
account is to be made pursuant to the terms of the Plan, such account shall
be paid in cash or shares of Common Stock (or a combination of both) in
lump sum.
(c) Election to Delay the Time or Change the Form of Distribution. A
Participant may make an Election to delay the time of a distribution or
change the form of a distribution, or may elect to do both, with respect to
an amount that would be payable pursuant to an Election under paragraph (a)
of this Section 4, except in the event of a distribution on account of the
Participant's death, if all of the following requirements are met -
1. Such an Election may not take effect until at least 12 months after it
is made;
2. Any delay to the distribution that would take effect because of the
Election is at least to a date five years after the date the
distribution otherwise would have begun; and
3. In the case of a distribution that would be made under paragraph
(a)(2) of this Section 4 such an Election may not be made less than 12
months before the date of the first scheduled payment.
5. PAYMENT COMMENCEMENT DATE
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Payments of amounts deferred pursuant to a valid Election shall
commence in accord with the Participant's Election. If a Participant dies
prior to the first deferred payment specified in an Election, payments
shall commence to the Participant's Beneficiary on the first payment date
so specified.
6. CHANGE IN CONTROL
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Notwithstanding any provision of this Plan to the contrary, in the
event of a "Change in Control" (as defined in Section 2(f) of Article I),
each Participant in the Plan shall receive an automatic lump sum cash
distribution of all amounts accrued in the Participant's Cash and/or Stock
Account(s) (including interest at the Prime Rate of Interest through the
business day immediately preceding the date of distribution) not later than
fifteen (15) days after the date of the "Change in Control." For this
purpose, the balance in the Stock Account shall be determined by
multiplying the number of Stock Units by the higher of (a) the highest
closing price of a share of Common Stock during the period commencing 30
days prior to such Change in Control or (b) if the Change in Control of the
Company occurs as a result of a tender or exchange offer or consummation of
a corporate transaction, then the highest price paid per share of Common
Stock pursuant thereto. Any consideration other than cash forming a part or
all of the consideration for Common Stock to be paid pursuant to the
applicable transaction shall be valued at the valuation price thereon
determined by the Board.
In addition, the Company shall reimburse a Participant for the legal
fees and expenses incurred if the Participant is required to seek to obtain
or enforce any right to distribution. In the event that it is determined
that such Participant is properly entitled to a cash distribution
hereunder, such Participant shall also be entitled to interest thereon at
the Prime Rate of Interest quoted by Citibank, N.A. as its prime commercial
lending rate on the subject date from the date such distribution should
have been made to and including the date it is made. Notwithstanding any
provision of this Plan to the contrary, Article I, Section 2(f) and Section
6 of this Article may not be amended after a "Change in Control" occurs
without the written consent of a majority in number of Participants.
ARTICLE IV. MISCELLANEOUS PROVISIONS
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1. BENEFICIARY DESIGNATION
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A Participant may designate one or more persons (including a trust) to
whom or to which payments are to be made if the Participant dies before
receiving payment of all amounts due hereunder. A designation of
Beneficiary will be effective only after the signed Election is filed with
the Vice-President of Human Resources for the Company (or a delegate
thereof) while the Participant is alive and will cancel all designations of
a Beneficiary signed and filed earlier. If the Participant fails to
designate a Beneficiary as provided above or if all of a Participant's
Beneficiaries predecease him or her and he or she fails to designate a new
Beneficiary, remaining unpaid amounts shall be paid in one lump sum to the
estate of such Participant. If all Beneficiaries of the Participant die
before the Participant or before complete payment of all amounts due
hereunder, the remaining unpaid amounts shall be paid in one lump sum to
the estate of the last to die of such Beneficiaries.
2. INALIENABILITY OF BENEFITS
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The interests of a Participant and his or her Beneficiaries under the
Plan may not in any way be voluntarily or involuntarily transferred,
alienated or assigned, nor be subject to attachment, execution, garnishment
or other such equitable or legal process.
3. GOVERNING LAW
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The provisions of this Plan shall be interpreted and construed in
accordance with the laws of the Commonwealth of Kentucky.
4. AMENDMENTS
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The Committee may amend, alter or terminate this Plan at any time;
provided, however, that the Committee may not, without approval by the
Board:
(a) materially increase the number of securities that may be issued
under the Plan (except as provided in Article I, Section 3),
(b) materially modify the requirements as to eligibility for
participation in the Plan, or
(c) otherwise materially increase the benefits accruing to
participants under the Plan.
5. COMPLIANCE WITH RULE 16b-3
--------------------------
It is the intention of the Company that the Plan comply in all
respects with Rule 16b-3 promulgated under Section 16(b) of the Exchange
Act and that Plan Participants remain non-employee directors ("Non-Employee
Directors") for purposes of administering other employee benefit plans of
the Company and having such other plans be exempt from Section 16(b) of the
Exchange Act. Therefore, if any Plan provision is found not to be in
compliance with Rule 16b-3 or if any Plan provision would disqualify Plan
participants from remaining Non-Employee Directors, that provision shall be
deemed amended so that the Plan does so comply and the Plan participants
remain Non-Employee Directors, to the extent permitted by law and deemed
advisable by the Committee, and in all events the Plan shall be construed
in favor of its meeting the requirements of Rule 16b-3.
6. COMPLIANCE WITH 409A
--------------------
It is the intention of the Company and the Committee that the Plan be
administered in compliance with Code section 409A and the applicable
guidance issued thereunder by the Secretary of the Treasury. Any provision
that is found to be inconsistent with Code section 409A or the applicable
guidance issued thereunder by the Secretary of the Treasury shall be
reformed and applied by the Company in a manner consistent with applicable
law, as determined by the Company.
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7. EFFECTIVE DATE
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The Plan was approved and originally became effective as of January 1,
2005; provided, however, that Article I Sections 2 (n), (u), (aa) and (bb);
and Article III Section 1 (c) are effective January 26, 2007.
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