EXHIBIT 10.1
MeadWestvaco
Corporation
2005 Performance Incentive
Plan
Article I
Purpose and General
Provisions
Section 1.1 Purpose of Plan . The purpose of the
MeadWestvaco Corporation 2005 Performance Incentive Plan (the
“Plan”) is to advance the interests of MeadWestvaco
Corporation (the “Company”) by attracting, retaining
and motivating its employees and by further aligning the interests
of the Company’s employees with those of the stockholders of
the Company through providing for or increasing their proprietary
interest in the Company.
The Plan provides for the grant of Incentive and
Non-Qualified Stock Options, Stock Appreciation Rights, Restricted
Stock, Restricted Stock Units, Performance Shares, Performance
Share Units and Incentive Compensation arrangements, which may be
paid in cash or stock or a combination thereof, as determined by
the Committee. Any of these Awards may be performance-based, in the
discretion of the Committee.
Section 1.2 Definitions . The following terms shall
have the meanings set forth below for purposes of the
Plan.
(a) “Award” means an
Incentive Stock Option, Non-Qualified Stock Option, Stock
Appreciation Right, Restricted Stock, Restricted Stock Unit,
Performance Share, Performance Share Unit, or Incentive
Compensation arrangement or program granted to or covering a
Participant pursuant to the provisions of the Plan, any of which
the Committee may structure to qualify in whole or in part as an
Award that is intended to satisfy the requirements for
“performance-based compensation” under Code Section
162(m).
(b) “Award Agreement”
means a written agreement or other instrument as may be approved
from time to time by the Committee implementing the grant of each
Award. An Award Agreement may be in the form of an agreement to be
executed by both the Participant and the Company (or an authorized
representative of the Company) or certificates, notices or similar
instruments approved by the Committee.
(c) “Board of Directors”
means the Board of Directors of the Company.
(d) “Code” means the
Internal Revenue Code of 1986, as amended from time to time, and
the rulings and regulations issues thereunder.
(e) “Committee” has the
meaning set forth in Section 1.3.
(f) “Company” means
MeadWestvaco Corporation, a Delaware corporation and its successors
and assigns.
(g) “Exchange Act” means
the Securities Exchange Act of 1934, as amended.
(h) “Incentive
Compensation” means a bonus opportunity awarded under Section
3.4 pursuant to which a Participant may become entitled to receive
an amount based on satisfaction of such performance criteria as are
specified in the Award Agreement.
(i) “Incentive Stock
Option” or “ISO” means a stock option that is
intended to qualify as an incentive stock option within the meaning
of Section 422 of the Code.
(j) “Market Price” on a
date means the average of the high and low trading price for the
Company’s Shares on the New York Stock Exchange for that
date, unless the Committee provides otherwise.
(k) “Non-Qualified Stock
Option” or “NQSO” means a stock option that does
not qualify as an incentive stock option within the meaning of
Section 422 of the Code.
(l) “Option” means an
ISO and/or a NQSO granted pursuant to Section 3.1 of the
Plan.
(m) “Participant” means
any individual described in Section 2.1 to whom Awards have been
granted from time to time by the Committee and any authorized
transferee of such individual.
11
(n) “Performance Share”
means an Award of Restricted Stock, the grant, issuance, vesting,
transferability and/or retention of which is conditioned in whole
or in part upon performance conditions established by the
Committee.
(o) “Performance Share
Unit” means a Restricted Stock Unit Award, the grant,
issuance, vesting or settlement of which is conditioned in whole or
in part upon performance conditions established by the
Committee.
(p) “Plan” means The
MeadWestvaco Corporation 2005 Performance Incentive Plan as set
forth herein and as amended from time to time.
(q) “Prior Plans” means
The Mead Corporation Restricted Stock Plan, the MeadWestvaco
Corporation 1999 Salaried Employee Stock Incentive Plan, the
MeadWestvaco Corporation 1995 Salaried Employee Stock Incentive
Plan and the MeadWestvaco Corporation 1996 Stock Option
Plan.
(r) “Qualifying Performance
Criteria” has the meaning set forth in Section
5.1(b).
(s) “Restricted Stock”
means Shares granted pursuant to Section 3.3 of the
Plan.
(t) “Restricted Stock
Unit” means an Award granted to a Participant under Section
3.3 pursuant to which Shares may be issued in the
future.
(u) “Shares” means
shares of the Company’s common stock, par value $0.01,
subject to adjustment as provided in Section 4.1.
(v) “Stock Appreciation
Right” means a right granted pursuant to Section 3.2 of the
Plan that entitles the Participant to receive, in cash or Shares or
a combination thereof, as determined by the Committee, value equal
to or otherwise based on the excess of (i) the market price of a
specified number of Shares at the time of exercise over (ii) the
exercise price of the Stock Appreciation Right.
(w) “Subsidiary” means
any corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company where each of the
corporations in the unbroken chain other than the last corporation
owns stock possessing at least 50 percent or more of the total
combined voting power of all classes of stock in one of the other
corporations in the chain, and if specifically determined by the
Committee in the context other than with respect to Incentive Stock
Options, may include an entity in which the Company has a
significant ownership interest or that is directly or indirectly
controlled by the Company.
(x) “Substitute Award”
means an Award granted or issued by the Company in assumption of,
or in substitution or exchange for, awards previously granted, or
the right or obligation to make future awards by a company or
acquired by the Company or any Subsidiary or with which the Company
or any Subsidiary combines.
Section 1.3 Administration .
(a) Administration of the
Plan . The Plan shall be administered by the Compensation and
Organization Development Committee of the Board of Directors or
such other committee of two or more directors as established from
time to time by the Board of Directors. Any power of the Committee
may also be exercised by the Board of Directors, except to the
extent that the grant or exercise of such authority would cause any
Award or transaction to become subject to (or lose an exemption
under) the short-swing profit recovery provisions of Section 16 of
the Exchange Act, or cause an Award that is contingent on the
satisfaction of Qualifying Performance Criteria to not qualify for
treatment as “performance based compensation” under
Code Section 162(m). To the extent that any permitted action taken
by the Board conflicts with action taken by the Committee, the
Board action shall control.
(b) Delegation of Authority by
the Committee . The Committee may delegate to one or more
separate committees (any such committee a
“Subcommittee”) composed of one or more officers of the
Company (who may but need not be members of the Board of Directors)
the ability to grant Awards and take the same actions as the
Committee described in Section 1.3(c) or elsewhere in the Plan with
respect to Participants who are not “executive
officers” as defined in Exchange Act Rule 16a-1; provided,
however, that the resolution so authorizing such Subcommittee shall
specify the total number of Awards (if any) such Subcommittee may
award pursuant to such delegated authority, and any such Award
shall be subject to the form of Award Agreement theretofore
approved by the Committee. No officer or officers who are members
of any such Subcommittee shall designate himself or herself as a
recipient of any Awards granted under authority delegated to such
Subcommittee. Any action by any such Subcommittee within the scope
of such delegation shall be treated for all purposes as if taken by
the Committee and references in this Plan to the Committee shall
include any such Subcommittee. In addition, the Committee
may
12
delegate the administration of the Plan to one
or more officers or employees of the Company, and such
administrator(s) may have the authority to execute and distribute
Award Agreements or other documents evidencing or relating to
Awards granted by the Committee under this Plan, to maintain
records relating to Awards, to process or oversee the issuance of
Shares under Awards, to interpret and administer the terms of Award
Agreements and to take such other actions as may be necessary or
appropriate for the administration of the Plan and of Awards under
the Plan, provided that in no case shall any such administrator be
authorized to grant Awards under the Plan. Any action by any such
administrator within the scope of its delegation shall be deemed
for all purposes to have been taken by the Committee and, except as
otherwise specifically provided, references in this Plan to the
Committee shall include any such administrator. The Committee
established pursuant to Section 1.3(a) and, to the extent it so
provides, any Subcommittee, shall have sole authority to determine
whether to review any actions and/or interpretations of any such
administrator, and if the Committee shall decide to conduct such a
review, any such actions and/or interpretations of any such
administrator shall be subject to approval, disapproval or
modification by the Committee.
(c) Powers of the Committee .
Subject to the express provisions of this Plan, the Committee shall
be authorized and empowered to do all things that it determines to
be necessary or appropriate in connection with the administration
of this Plan, including, without limitation: (i) to prescribe,
amend and rescind rules and regulations relating to this Plan and
to define terms not otherwise defined herein; (ii) to determine
which persons are eligible to be granted Awards under Section 2.1,
to which of such persons, if any, Awards shall be granted hereunder
and the timing of any such Awards; (iii) to grant Awards to
Participants and determine the terms and conditions of Awards,
including the number of Shares subject to Awards and the exercise
or exercise price of such Shares and the circumstances under which
Awards become exercisable, vested or settled or are forfeited or
expire, which terms may but need not be conditioned upon the
passage of time, continued employment, the satisfaction of
performance criteria, the occurrence of certain events (including
events which the Board or the Committee determine constitute a
Change of Control), or other factors; (iv) to establish and certify
the extent of satisfaction of any performance goals or other
conditions applicable to the grant, issuance, exercisability,
vesting and/or ability to retain any Award; (v) to prescribe and
amend the terms of Award Agreements or other documents relating to
Awards made under this Plan (which need not be identical) and the
terms of or form of any document or notice required to be delivered
to the Company by Participants under this Plan; (vi) to determine
whether, and the extent to which, adjustments are required pursuant
to Section 4.1; (vii) to interpret and construe this Plan, any
rules and regulations under this Plan and the terms and conditions
of any Award granted hereunder, and to make exceptions to any such
provisions in good faith and for the benefit of the Company; and
(viii) to make all other determinations deemed necessary or
advisable for the administration of this Plan.
(d) Determinations by the
Committee . All decisions, determinations and interpretations
by the Committee (including by any Subcommittee or by any
administrators designated pursuant to Section 1.3(b)) regarding the
Plan, any rules and regulations under the Plan and the terms and
conditions of or operation of any Award granted hereunder, shall be
final and binding on all Participants, beneficiaries, heirs,
assigns or other persons holding or claiming rights under the Plan
or any Award. The Committee shall consider such factors as it deems
relevant, in its sole and absolute discretion, to making such
decisions, determinations and interpretations including, without
limitation, the recommendations or advice of any officer or other
employee of the Company and such attorneys, consultants and
accountants as it may select.
(e) Subsidiary Awards . In
the case of a grant of an Award to any Participant employed by a
Subsidiary, such Award may, if the Committee so directs, be
implemented by the Company issuing any subject Shares to the
Subsidiary, for such lawful consideration as the Committee may
determine, upon the condition or understanding that the Subsidiary
will transfer the Shares to the Participant in accordance with the
terms of the Award specified by the Committee pursuant to the
provisions of the Plan. Notwithstanding any other provision hereof,
such Award may be issued by and in the name of the Subsidiary and
shall be deemed granted on such date as the Committee shall
determine.
Section 1.4 Unfunded Plan . The Plan is intended to
be an unfunded plan. Participants are and shall at all times be
general creditors of the Company with respect to their Awards. If
the Committee or the Company chooses to set aside funds in a trust
or otherwise for the payment of Awards under the Plan, such funds
shall at all times be subject to the claims of the creditors of the
Company in the event of its bankruptcy or insolvency.
Section 1.5 Effective Date . This Plan was adopted by
the Board of Directors of the Company and became effective on
February 22, 2005 (the “Effective Date”), subject to
approval by the Company’s stockholders. All Awards granted
under this Plan are subject to, and may not be exercised before,
the approval of this Plan by the stockholders prior to the first
anniversary date of the effective date of the Plan, by the
affirmative vote of the holders of a majority of the outstanding
Shares of the Company present, or represented by proxy, and
entitled to vote, at a meeting of the Company’s stockholders
in which the total number of votes cast on the matter represent a
majority of the outstanding
13
shares; provided that if such approval by the
stockholders of the Company is not forthcoming, all Awards
previously granted under this Plan shall be void. The Plan shall
remain available for the grant of Awards until the tenth (10th)
anniversary of the Effective Date. Notwithstanding the foregoing,
the Plan may be terminated at such earlier time as the Board of
Directors may determine. Termination of the Plan will not affect
the rights and obligations of the Participants and the Company
arising under Awards theretofore granted and then in
effect.
Article II
Eligibility; Shares Subject to
Awards
Section 2.1 Eligibility . Any person who is a current
or prospective officer or employee (including any director who is
also an employee, in his or her capacity as such) of the Company or
of any Subsidiary shall be eligible for selection by the Committee
for the grant of Awards hereunder. Options intending to qualify as
ISOs may only be granted to employees of the Company or any
Subsidiary within the meaning of the Code, as selected by the
Committee. For purposes of this Plan, the Chairman of the
Board’s status as an employee shall be determined by the
Committee.
Section 2.2 Shares Subject to the Plan and Limitations on
Awards .
(a) Aggregate Limits . The
aggregate number of Shares issuable pursuant to all Awards shall
not exceed 12,000,000, plus any Shares subject to awards made under
Prior Plans that are outstanding on the Effective Date of this Plan
and become available pursuant to Section 2.2(b). The aggregate
number of Shares available for grant under this Plan and the number
of Shares subject to outstanding Awards shall be subject to
adjustment as provided in Section 4.1. The Shares issued pursuant
to Awards granted under this Plan may be Shares that are authorized
and unissued or Shares that were reacquired by the Company,
including Shares purchased in the open market.
(b) Issuance of Shares .
Shares subject to Awards that have been canceled, expired or
forfeited or settled in cash and Shares subject to Awards that have
been delivered or applied to the Company in payment or satisfaction
of the exercise price or tax withholding obligation of an Award
shall again become available for issuance under this Plan.
Likewise, Shares subject to awards made under any of the Prior
Plans that on or after the Effective Date are not issued as a
result of such awards being canceled, expired, forfeited or settled
in cash or that are delivered or applied to the Company in payment
or satisfaction of the exercise price or tax withholding
obligations of an award under a Prior Plan, as well as shares
acquired by the Company on the open market or otherwise with the
proceeds from the exercise or settlement price of an Award or a
Prior Plan award shall be available for grant under this Plan.
Shares issued in connection with a Substitute Award shall not count
against the limits of this Section 2.2(b).
(c) Tax Code Limits . The
aggregate number of Shares subject to Options and Stock
Appreciation Rights that may be granted under this Plan during any
three fiscal year period to any one Participant shall not exceed
3,000,000. The aggregate number of Shares subject to any Award
intended to qualify as “performance-based compensation”
under Code Section 162(m), other than Options or Stock Appreciation
Rights, that may be granted under this Plan in any one fiscal year
to any one Participant shall not exceed 400,000. The Share numbers
set forth in this Section 2.2(c) shall be calculated and adjusted
pursuant to Section 4.1 only to the extent that such calculation or
adjustment will not affect the status of any Award intended to
qualify as “performance based compensation” under Code
Section 162(m). The maximum amount payable pursuant to that portion
of an Incentive Compensation Award granted under this Plan in any
calendar year to any Participant that is denominated in dollars (as
opposed to Shares) and is intended to satisfy the requirements for
“performance based compensation” under Code Section
162(m) shall not exceed the following separate and distinct
limitations: (i) six million dollars ($6,000,000), if performance
is measured with respect to a fiscal year, and (ii) six million
dollars ($6,000,000), if performance is measured with respect to a
period longer than a fiscal year.
(d) Substitute Awards .
Substitute Awards shall not be subject to the limits described in
Section 2.2(a) above and shall not be subject to any other terms
and conditions (for example, vesting and pricing) that apply to
shares subject to Awards under the Plan.
Article III
Terms of Awards
Section 3.1 Options .
(a) Option Awards . The
Committee may grant an Option or provide for the grant of an
Option, either from time-to-time in the discretion of the Committee
or automatically upon the occurrence of specified events,
including, without limitation, the achievement of performance
goals. Except to the extent provided herein, no Participant shall
have any rights as a stockholder with respect to any Shares subject
to an Option granted hereunder until said Shares have been issued.
Each Option shall be evidenced by an Award Agreement. Options
granted pursuant to the Plan need not be identical, but each Option
must contain and be subject to the terms and conditions set forth
below.
14
(b) Price . The exercise
price under each Option shall be established by the Committee and
shall not be less than the Market Price of Shares on the date of
grant, provided, however, that the exercise price per Share with
respect to an Option that is granted in connection with a merger or
other acquisition as a substitute or replacement award for options
held by optionees of the acquired entity may be less than 100% of
the Market Value on the date such Option is granted if based on a
formula set forth in the terms of the options held by such
optionees or in the terms of the agreement providing for such
merger or other acquisition. The exercise price of any Option may
be paid in cash or, to the extent allowed by the Committee, an
irrevocable commitment by a broker to pay over such amount from a
sale of the Shares issuable under an Option, the delivery of
previously owned Shares, withholding of Shares deliverable upon
exercise or a combination thereof.
(c) No Repricing . Other than
in connection with a change in the Company’s capitalization
(as described in Section 4.1), an Option may not be repriced
without stockholder approval (including canceling previously
awarded Options and regranting them with a lower exercise
price).
(d) Provisions Applicable to
Options . In no event shall any Option become exercisable
sooner than one (1) year after the date of grant except to the
extent provided by the Committee in the event of: (i) the
Participant’s death, disability or retirement, (ii) an award
to a Participant upon his or her first becoming an employee of the
Company (to replace prior employer forfeited compensation), or
(iii) subject to Section 4.2, a Change of Control. The Committee
may provide at the time of grant that the exercise price of an
Option is adjusted after the date of grant based on the performance
of the Company’s Common Stock price relative to a
pre-established index. Unless provided otherwise in the applicable
Award Agreement, the vesting period and/or exercisability of an
Option shall be adjusted by the Committee during or to reflect the
effects of any period during which the Participant is on an
approved leave of absence or is employed on a less than full-time
basis. Each Option shall expire within a period of not more than
ten (10) years from the date of grant.
(e) Incentive Stock Options .
Notwithstanding anything to the contrary in this Section 3.1, in
the case of the grant of an Option intending to qualify as an ISO:
(i) if the Participant owns stock possessing more than 10 percent
of the combined voting power of all classes of stock of the Company
(a “10% Shareholder”), the exercise price of such
Option must be at least 110 percent of the Market Price of Shares
on the date of grant and the Option must expire within a period of
not more than five (5) years from the date of grant, and (ii)
termination of employment will be deemed to occur when the person
to whom an Award was granted ceases to be an employee (as
determined in accordance with Code Section 3401(c) and the
regulations promulgated thereunder) of the Company and its
Subsidiaries. Notwithstanding anything in this Section 3.1 to the
contrary, options designated as ISOs shall not be eligible for
treatment under the Code as ISOs to the extent that either (a) the
aggregate Market Price of Shares (determined as of the time of
grant) with respect to which such Options are exercisable for the
first time by the Participant during any calendar year (under all
plans of the Company and any Subsidiary) exceeds $100,000, taking
Options into account in the order in which they were granted, and
(b) such Options otherwise remain exercisable but are not exercised
within three (3) months of termination of employment (or such other
period of time provided in Code Section 422).
Section 3.2 Stock Appreciation Rights .
(a) General . Stock
Appreciation Rights may be granted to Participants from time to
time either in tandem with or as a component of other Awards
granted under the Plan (“tandem SARs”) or not in
conjunction with other Awards (“freestanding SARs”) and
may, but need not, relate to a specific Option granted under
Section 3.1. The provisions of Stock Appreciation Rights need not
be the same with respect to each grant or each recipient. Any Stock
Appreciation Right granted in tandem with an Option may be granted
at the same time such Option is granted or at any time thereafter
before exercise or expiration of such Option. All Stock
Appreciation Rights under the Plan shall be granted subject to the
same terms and conditions applicable to Options as set forth in
Section 3.1; provided, however, that Stock Appreciation Rights
granted in tandem with a previously granted Option shall have the
terms and conditions of such Option. Subject to the provisions of
Section 3.1, the Committee may impose such other conditions or
restrictions on any Stock Appreciation Right as it shall deem
appropriate. Stock Appreciation Rights may be settled in Shares,
cash or a combination thereof, as determined by the Committee.
Other than in connection with a change in the Company’s
capitalization (as described in Section 4.1) the exercise price of
a Stock Appreciation Rights may not be repriced without stockholder
approval (including canceling previously awarded Stock Appreciation
Rights and regranting them with a lower exercise price).
15
(b) Award Agreement . Each
Stock Appreciation Right shall be evidenced by an Award Agreement.
Stock Appreciation Rights granted pursuant to the Plan need not be
identical, but each Stock Appreciation Right must contain and be
subject to the terms and conditions set forth below.
(c) Provisions Applicable to
Stock Appreciation Rights . The Committee may grant a Stock
Appreciation Right or provide for the grant of a Stock Appreciation
Right, either from time-to-time in the discretion of the Committee
or automatically upon the occurrence of specified events,
including, without limitation, the achievement of performance goals
(which may include Qualifying Performance Criteria). In no event
shall any freestanding SAR become exercisable sooner than one (1)
year after the date of grant except to the extent provided by the
Committee in the event of (i) the Participant’s death,
disability or retirement, (ii) an award to a Participant upon his
or her first becoming an employee of the Company (to replace
forfeited prior employer compensation) or (iii) subject to Section
4.2, a Change of Control. Unless provided otherwise in the
applicable Award Agreement, the vesting period and/or
exercisability of a Stock Appreciation Right shall be adjusted by
the Committee during or to reflect the effects of any period during
which the Participant is on an approved leave of absence or is
employed on a less than full-time basis. Each Stock Appreciation
Right shall expire within a period of not more than ten (10) years
from the date of grant.
Section 3.3 Restricted Stock and Restricted Stock
Units .
(a) General . Restricted
Stock and Restricted Stock Units may be granted a
