Exhibit
10.1
2009
STOCK PLAN
The
Plan enables non-employee directors and professional and management
employees who contribute significantly to the success of Eaton
Corporation (the “Company”) to participate in its
future prosperity and growth and to identify their interests with
those of the shareholders. The purpose of the Plan is to provide
long-term incentive through outstanding service to the Company and
its shareholders and to assist in recruiting and retaining people
of outstanding ability and initiative in non-employee director,
professional and management positions.
(A)
Employee Awards
With
respect to employee awards, the Plan shall be administered by the
Compensation and Organization Committee of the Board of Directors
(the “Committee”).
(B)
Non-Employee Director Awards
With
respect to non-employee director awards, the Plan shall be
administered by the Governance Committee of the Board of
Directors.
(C)
Authority of Committees
With
respect only to those awards for which it has administrative
responsibility, the Committee and the Governance Committee shall
each have complete authority(except as otherwise provided herein)to
interpret all provisions of the Plan and any award consistent with
law, to determine the type and terms of awards consistent with the
provisions of the Plan, to prescribe the form of instruments
evidencing awards, to adopt, amend and rescind general and special
rules and regulations for its administration, and to make all other
determinations necessary or advisable for its administration of the
Plan. The determinations of the each committee shall be final and
conclusive. Each committee may act by resolution or in any other
manner permitted by law.
The
Committee may delegate its authority to one or more officers of the
Company (a “Delegate”) with respect to the granting of
awards to employees who are not officers or directors of the
Company who are subject to Section 16(b) of the Securities
Exchange Act of 1934, as amended (Section
“16b”).
3.
Shares Available
The
aggregate of (a) the number of Eaton common shares
(“shares”) delivered by the Company in payment and upon
exercise of awards to employees and non-employee directors and
(b) the number of shares subject to outstanding awards to
employees and non-employee directors shall not exceed
9.6 million at any one time, subject to adjustments as
authorized herein. Any shares available for options or stock
appreciation rights will be reduced by 2.36 for each restricted
share, restricted share unit, performance share, performance share
unit or other share-based awards denominated in full shares. To the
extent that any award is forfeited, or any option or stock
appreciation right terminates, expires or lapses without being
exercised, the shares subject to such awards not delivered as a
result thereof shall again be available for awards under the Plan.
Shares tendered or withheld to pay the exercise price of a stock
option or to pay tax withholding will count against the foregoing
limitations and will not be added back to the shares available
under the Plan. When a stock appreciation right that may be settled
for shares is exercised, the number of shares subject to the grant
agreement shall be counted against the number of shares available
for issuance under the Plan as one (1) share for every share
subject thereto, regardless of the number of shares used to settle
the stock appreciation right upon exercise. Shares available for
awards may consist, in whole or in part, of authorized and unissued
shares or treasury shares.
The
maximum aggregate number of shares or share units underlying
options or related to other awards that may be granted to any
employee during any three consecutive calendar year period is
1,200,000. In addition, no more than 5% of the total number of
shares authorized for delivery under the Plan may be granted as
performance shares, restricted shares, stock appreciation rights or
other share-based awards (other than stock options) which vest
within less than one year after the date of grant. With respect to
such awards in excess of
1
5%
of the total number of such authorized number of shares, the
vesting period must exceed one year, with no more than one third of
shares becoming vested at the end of each of the twelve-month
periods following the date of grant.
Awards
may be made under the Plan at any time after approval of the Plan
by shareholders at the 2009 annual meeting until December 31,
2019. Awards under the Plan shall be evidenced by a written
agreement, contract, or other instrument or document, including an
electronic communication, as may from time to time be designated by
the Company (an “Award Agreement”).
4.
Eligibility for Awards
Any
salaried employee (including officers) of the Company or any of its
subsidiaries occupying a professional or management position may be
granted an award. The Committee (or a Delegate) (a) will
designate employees to whom grants are to be made, (b) will
specify the number of options, stock appreciation rights,
performance shares, performance share units, restricted shares,
restricted share units or other share-based awards subject to each
grant, and (c) subject to Section 5(C), will specify the
price of the award, if applicable. Non-employee directors are
eligible to receive restricted shares as provided under
Section 6.
5.
Stock Options
(A) Grants.
The
Committee may grant to eligible employees (i) options which
are intended to qualify as incentive stock options
(“Incentive Stock Options”) under the Internal Revenue
Code, or (ii) options which are not intended to qualify as
Incentive Stock Options. Each option will give the employee the
right to purchase a designated number of shares. The aggregate fair
market value (at the time of grant) of shares for Incentive Stock
Options under all plans of the Company which become initially
exercisable by an employee during any calendar year shall not
exceed $100,000 (or such other amount as may be provided by the
Internal Revenue Code or the regulations thereunder).
(B) Exercise.
Each
option shall be exercisable on such date or dates, during such
period and for such number of shares, as shall be determined by the
Committee on the date of grant and set forth in the applicable
Award Agreement; provided, however, grants to employees subject to
16b shall not be exercisable for at least six months after those
options are granted. The Committee may, in its sole discretion,
accelerate or extend (but not beyond the ten-year term of the
option) the times when an option may be exercised and the
Management Compensation Committee (comprised of Company officers)
may do likewise for employees who are not subject to
Section 16b.
(C)
Price.
Each
Award Agreement for stock options shall state the number of shares
to which it pertains and the option price. The option price shall
be the fair market value of the shares subject to the option on the
date of grant. The fair market value of a share shall be the
closing price of a share as quoted on the New York Stock Exchange,
unless the Committee specifies the use of a different method to
determine the fair market value. In no event may any option granted
under the Plan be amended, other than pursuant to Section 11,
to decrease the exercise price thereof, be cancelled in conjunction
with the grant of any new option with a lower exercise price, or
otherwise be subject to any action that would be treated, for
accounting purposes, as a “repricing” of such option,
unless such amendment, cancellation or action is approved by the
Company’s shareholders.
(D)
Payment.
The
Committee shall establish in the applicable Award Agreement the
time or times when an option may be exercised in whole or in part,
and the method or methods by which, and the form or forms,
including, without limitation, cash, shares or other awards, or any
combination thereof, having a fair market value on the exercise
date equal to the exercise price in which payment of the exercise
price may be made. The Committee shall determine acceptable methods
of tendering shares or other consideration.
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