Exhibit 10.3
SCHOLASTIC CORPORATION
GUIDELINES FOR STOCK UNITS
GRANTED UNDER THE
SCHOLASTIC CORPORATION 2001 STOCK INCENTIVE PLAN
(As Amended and Restated as of July 21, 2009)
Grants
of Stock Units (as defined below) under the Scholastic Corporation
2001 Stock Incentive Plan (the “Plan”) shall be subject
to, and governed by, the provisions set forth in these guidelines,
the Plan (including, without limitation, Article VIII) and the
applicable Award Agreement. An Award of Stock Units shall
constitute an Other Stock-Based Award under the Plan. Unless
otherwise indicated, any capitalized term used but not defined in
these guidelines shall have the meaning ascribed to such term in
the Plan.
To
the extent applicable, these guidelines are intended to comply with
the applicable requirements of Section 409A of the Code (and the
regulations thereunder) and shall be limited, construed and
interpreted in a manner so as to comply therewith.
The
Company initially adopted these guidelines effective as of
September 20, 2004. The Company amended and restated these
guidelines effective as of May 25, 2006 in order to include a
deferral feature that complies with the requirements of Section
409A of the Code. The Company amended and restated these guidelines
as of September 23, 2008, effective as of January 1, 2005, in order
to provide for deferrals of performance-based awards and comply
with the requirements of Treasury Regulations issued under Section
409A. The Company hereby amends and restates these guidelines
effective with respect to awards of Stock Units made on or after
July 21, 2009 to modify the treatment of Stock Units upon
Termination of Employment or Consultancy. These guidelines are part
of the Plan and shall expire in accordance with Article XV
thereof.
1.
Definitions . For purposes of these guidelines, the
following definitions shall apply:
1.1. “Cause”
means, solely for purposes of the grant of Stock Units and
notwithstanding the definition of Cause in the Plan: (a) in the
case where there is no employment agreement, consulting agreement,
change in control agreement or similar agreement in effect between
the Company or an Affiliate and the Participant at the time of the
grant of the Stock Unit (or where there is such an agreement but it
does not define “cause” (or words of like import)) any
of the following as determined by the Committee in its good faith
discretion: (i) willful misconduct of the Participant with regard
to the Company; (ii) willful refusal of the Participant to follow
the proper direction of the Board or any individual to whom the
Participant reports; (iii) the Participant’s fraud or
dishonesty with regard to the Company (other than good faith
expense account disputes); or (iv) the Participant’s
conviction of, or plea of guilty or nolo contendere to, a felony or
other crime involving moral turpitude; or (b) in the case where
there is an employment agreement, consulting agreement, change in
control agreement or similar agreement in effect between the
Company or an Affiliate and the Participant at the time of the
grant of a Stock Unit that defines “cause” (or words of
like import), “cause” as defined under such agreement;
provided, however, that with regard to any agreement under which
the definition of “cause” only applies on occurrence of
a change in control, such definition of “cause” shall
not apply until a change in control actually takes place and then
only with regard to a termination thereafter.
1.2. “Disability”
means, solely for purposes of the grant of Stock Units and
notwithstanding the definition of Disability in the Plan, the
Participant is unable to engage in any substantial gainful activity
by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be
expected to last for a continuous period of not less than 12
months.
1.3. “Retirement”
means, with respect to Awards of Stock Units made on or after July
21, 2009, a Termination of Employment on or after age 55 and at
least 10 years of continuous of service with the Company or its
Affiliates in accordance with the Company’s standard
retirement policies. With respect to Awards of Stock Units made
prior to July 21, 2009, “Retirement” shall mean a
Termination of Employment on or after age 55 in accordance with the
Company’s standard retirement policies.
1.4. “Specified
Employee” or “Key Employee” shall mean such
persons as shall be determined by the Company.
1.5. “Stock
Unit” means a restricted stock unit, which is a unit of
measurement equivalent to one share of Common Stock but with none
of the attendant rights of a holder of a share of Common Stock
until a share of Common Stock is ultimately distributed in payment
of the obligation (other than the right to receive dividend
equivalent amounts in accordance with Section 4 hereof). Upon
distribution, all vested Stock Units shall be paid solely in the
form of shares of Common Stock.
1.6. “Unforeseeable
Emergency” means a severe financial hardship to the
Participant resulting from a sudden and unexpected illness or
accident of the Participant or of a dependent (as described in
Section 152(a) of the Code, without regard to Section 152(b),
(b)(2) and (d)(1)(B)) of a Participant, loss of the
Participant’s property due to casualty or other similar
extraordinary and unforeseeable circumstances arising as a result
of events beyond the control of the Participant.
2.
Eligibility . Any Eligible Employee or Consultant (or
prospective employee of the Company or any of its Affiliates or
prospective Consultant) who is designated by the Committee is
eligible to receive Stock Units pursuant to these guidelines.
Notwithstanding the foregoing, no such person shall be eligible to
defer the payment of Stock Units unless such person is an Eligible
Employee who is a member of a select group of management and highly
compensated employees within the meaning of Sections 201(2),
301(a)(3) and 401(a)(1) of ERISA. To the extent a Participant is no
longer considered a member of a select group of management and
highly compensated employees within the meaning of Section 201(2),
301(a)(3) and 401(a)(1) of ERISA, the Committee may deem such
Participant ineligible to defer any additional Stock Units and all
then unvested Stock Units shall continue to vest in accordance with
the applicable vesting schedule and all vested Stock Units shall be
payable in accordance with the Participant’s then existing
elections, subject to the terms of these guidelines.
3.
Vesting of Stock Units and Payment .
3.1.
Except as otherwise
provided in Section 3.3 hereof, Stock Units shall vest in
accordance with the vesting schedule and conditions set forth in
the relevant Award Agreement, provided that the Participant is
continuously employed by (or continuously provides consulting
services to) the Company or any of its Affiliates (including any
period during which the Participant is on leave of absence or any
other break in employment in accordance with the Company’s
policies and procedures) on each applicable vesting date and,
provided further, that no portion of such Award shall vest or be
payable earlier than the date that is thirteen (13) months after
the date of its grant (“Initial Vesting Date”). An
Award Agreement may condition the grant or vesting of Stock Units
upon the attainment of Performance Goals, including established
Performance Goals intended to meet the requirements of
qualified-performance-based compensation under Section 162(m) of
the Code, or such other factors as the Committee may determine, in
its sole discretion.
2
3.2. Except
as otherwise provided in this Section 3 or in Section 4.2 hereof,
the Company shall distribute one share of Common Stock with respect
to each vested Stock Unit on the applicable vesting
date.
3.3. (a)
For awards granted on or after July 21, 2009, subject to the
limitations set forth in Section 3.4 below:
(i)
upon a Termination of Employment by reason of a Participant’s
Retirement, for a period of three years from the date of
Termination of Employment, unvested Stock Units will continue to
vest and shares of Common Stock with respect to such Stock Units
shall be distributed on the applicable vesting date in accordance
with the vesting schedule that would have been in effect pursuant
to Section 3.1 but for the Termination of Employment. The foregoing
continuation of vesting and payment provision shall not apply with
respect to any award of Stock Units made on or after July 21, 2009
to a Participant who is or may become eligible for Retirement at
any time prior to the Initial Vesting Date and has also made a
deferral election with respect to such Award and, as a result, such
Award shall be forfeited if the Participant’s Termination of
Employment occurs on or before the Initial Vesting Date;
provided, however, that, the foregoing continuation of
vesting and payment provisions shall apply to such Award if the
Participant’s Termination of Employment under the
circumstances described herein occurs after the Initial Vesting
Date.
(ii)
upon a Termination of Employment or Termination of Consultancy (as
applicable) by reason of a Participant’s death or Disability,
all outstanding unvested Stock Units granted on or after July 21,
2009 shall immediately vest and a share of Common Stock with
respect to each Stock Unit shall be distributed within 90 days of
such termination; provided, however, that, if a Participant
makes a deferral election with respect to an Award, the foregoing
accelerated vesting and payment provisions shall not apply to such
Award if the Participant’s Termination of Employment or
Termination of Consultancy (as applicable) under the circumstances
described herein occurs on or be
