2003 LONG-TERM INCENTIVE
COMPENSATION PLAN
1. Purpose.
The purpose of this 2003 Long-Term Incentive Compensation Plan
(this “Plan”) is to promote the long-term financial
interests and growth of Ferro Corporation (“Ferro”) and
its subsidiary and affiliated companies by:
(a) Attracting and
retaining high-quality executive personnel and
Directors;
(b) Further
motivating such executive personnel and Directors to achieve
Ferro’s long-range performance goals and objectives and thus
act in the best interests of Ferro and its shareholders generally;
and
(c) Aligning the
interests of Ferro’s executive personnel and Directors with
those of Ferro’s shareholders by encouraging increased
ownership of Ferro Common Stock, par value $1.00 per share
(“Common Stock”), by such executive personnel and
Directors.
2. Plan
Administration. The Compensation & Organization Committee (the
“Committee”) of the Board of Directors (the
“Board”) (or such other committee as the Board may from
time to time designate) will administer this Plan. Subject to any
limitations established by the Board, in administering this Plan
the Committee will have conclusive authority:
(a) To administer
this Plan in accordance with its provisions in such a way as to
give effect to economic and competitive conditions, individual
situations, and the evaluation of individual performance and the
economic potential and business plans of various units of
Ferro;
(b) To determine
the terms and conditions, not inconsistent with the provisions of
this Plan, of any Award granted under this Plan and prescribe the
form of any agreement or document applicable to any such
Award;
(c) To construe
and interpret the provisions of this Plan and all Awards granted
under this Plan; and
(d) To establish,
amend, and rescind rules and regulations for the administration of
this Plan.
The Committee
will also have such additional authority as the Board may from time
to time determine to be necessary or desirable in order to further
the purposes of this Plan.
3. Awards to
Executive Personnel. The Committee will select the executive
personnel (“Participants”) who will participate in this
Plan and determine the type(s) and number of award(s)
(“Awards”) to be made to each such Participant. The
Committee will determine the terms, conditions and limitations
applicable to each Award. The Committee may, if it so chooses,
delegate to Ferro’s Chief Executive Officer authority to
select certain of the Participants (other than officers of Ferro)
and to determine Awards to be granted to such Participants on such
terms as the Committee may specify. Awards may be made singly, in
combination, or in exchange for a previously granted Award and also
may be made in combination or in replacement of, or as alternatives
to, grants or rights under any other employee plan of the Company,
including the plan of any acquired entity.
4. Types of
Awards to Executive Personnel. Under this Plan, the Committee will
have the authority to grant the following types of Awards to
executive personnel of Ferro and its subsidiaries and
affiliates:
(a) Stock Options.
The Committee may grant Awards in the form of Stock Options. Such
Stock Options may be either incentive stock options (within the
meaning of Section 422 of the Internal Revenue Code of 1986,
as amended (the “Code”)) or nonstatutory stock options
(not intended to qualify under Section 422 of the Code).
However, incentive stock options may be granted only to employees
of Ferro and subsidiary corporations that are at least 50% owned,
directly or indirectly, by Ferro. The option price of a Stock
Option may be not less than the per share fair market value of the
Common Stock on the date of the grant, as determined by the
Committee. Once a Stock Option has been granted, the option price
may not be adjusted or amended, whether directly or indirectly, by
amendment, cancellation, replacement grants or any other means.
Such Stock Options will be exercisable in whole or in such
installments and at such times and upon such terms as the Committee
may specify. No stock option, however, may be exercisable more than
ten years after its date of grant. A Participant will be permitted
to pay the exercise price of a Stock Option in cash, with shares
of
Common Stock
(including by attestation of Common Stock owned) or by a
combination of cash and Common Stock. The aggregate fair market
value (determined at the time the option is granted) of shares of
Common Stock as to which incentive stock options are exercisable
for the first time by a Participant during any calendar year (under
this Plan and any other plan of Ferro) may not exceed $100,000 (or
such other limit as may be fixed by the Code from time to
time).
(b) Stock
Appreciation Rights. The Committee may grant Awards in the form of
Stock Appreciation Rights. Stock Appreciation Rights will entitle a
Participant to receive a payment, in cash or Common Stock, equal to
the appreciation in market value of a stated number of shares of
Common Stock from the price stated in the Award Agreement to the
fair market value on the date of exercise or surrender, on such
terms, conditions and restrictions as the Committee deems
appropriate. Once a stock appreciation right has been granted, the
initial share value may not be adjusted or amended, whether
directly or indirectly, by amendment, cancellation, replacement
grants or any other means, so as to increase the value of such
Stock Appreciation Right. Stock Appreciation Rights may be granted
either separately or in conjunction with other Awards granted under
this Plan. Any Stock Appreciation Right related to a Stock Option,
however, will be exercisable only to the extent the related Stock
Option is exercisable. Similarly, upon exercise of a Stock
Appreciation Right as to some or all of the shares of Common Stock
covered by a related Stock Option, the related Stock Option will be
canceled automatically to the extent of the Stock Appreciation
Right exercised, and such shares of Common Stock shall not be
eligible for subsequent grant. Any Stock Appreciation Right related
to a nonstatutory stock option may be granted at the same time such
stock option is granted or at any subsequent time before exercise
or expiration of such stock option. Any Stock Appreciation Right
related to an incentive stock option must be granted at the same
time such incentive stock option is granted.
(c) Restricted
Shares. The Committee may grant Awards in the form of Restricted
Shares. Such Awards may be in such numbers of shares of Common
Stock and at such times as the Committee determines. Such Awards
will have such periods of vesting and forfeiture restrictions as
the Committee may determine at the time of grant, except that no
restriction period applicable to Restricted Shares may be less than
12 months.
(d) Performance
Shares. The Committee may grant Awards in the form of Performance
Shares. Performance Shares will be (i) represented by
forfeitable shares of Common Stock issued at the time of grant of a
Performance Share Award or (ii) phantom Performance Shares.
Such Performance Shares will be earned upon satisfaction of
Performance Targets relating to Performance Periods established by
the Committee at the time of a grant. At the end of the applicable
Performance Period, based upon the level of achievement of the
Performance Targets, Performance Shares will be converted into
Common Stock, cash, or a combination of Common Stock and cash, or
forfeited. If Performance Shares initially were represented by
forfeitable Common Stock, such Common Stock will become
nonforfeitable or be repurchased by Ferro at the end of the
applicable Performance Period. During the period any Performance
Shares are subject to forfeiture restrictions, the Committee may,
in its discretion, grant to the Participant to whom phantom
Performance Shares have been awarded the right to receive dividend
equivalents with respect to such Performance Shares.
The Committee may
establish Performance Targets in terms of any or all of the
following: sales; sales growth; gross margins; operating income;
net earnings; earnings growth; cash flows; market share; total
shareholder returns; returns on equity, net assets, assets
employed, or capital employed; accomplishment of acquisitions,
divestitures, or joint ventures (or the success of an acquisition
or joint venture, measured in terms of any of the preceding), or
the attainment of levels of performance of Ferro under one or more
of the measures described above relative to the performance of
other businesses, or various combinations of the foregoing, or
changes in any of the foregoing. Performance Targets applicable to
Performance Shares may vary from Award to Award and from
Participant to Participant.
When determining
whether Performance Targets have been attained, the Committee will
have the discretion to make adjustments to take into account
extraordinary or nonrecurring items or events, or unusual
nonrecurring gains or losses identified in Ferro’s financial
statements, provided such adjustments are made in a manner
consistent with Section 162(m) of the Code (to the extent
applicable). Awards of Performance Shares made to Participants
subject to Section 162(m) of the Code are intended to qualify under
Section 162(m) and the Committee will interpret the terms of such
Awards in a manner consistent with that intent to the extent
appropriate. (The foregoing provisions of this Section 4(d) will
also apply to Awards of Restricted Shares made under Section 4(c)
to the extent such Awards of Restricted Shares are subject to the
financial performance of Ferro.)
(e) Common Stock
Awards. The Committee may grant Awards in the form of Common Stock
or on a basis valued in whole or in part by reference to, or
otherwise based upon, Common Stock. Common Stock Awards will be
subject to conditions established by the Committee and set forth in
the applicable Award Agreement.
5. Award
Agreements. All Awards to executive personnel under this Plan will
be evidenced by a written agreement (an “Award
Agreement”) between Ferro and the Participant containing such
terms not inconsistent with this Plan as the Committee may
determine, including such restrictions, conditions, and
requirements as to transferability, continued employment,
individual performance or financial performance of Ferro or a
subsidiary or affiliate as the Committee deems appropriate. Each
such Award Agreement will, however, provide that the Award will be
forfeitable if, in the opinion of the Committee, the Participant,
without the written consent of Ferro:
(a) Directly or
indirectly, engages in, or assists or has a material ownership
interest in, or acts as agent, advisor or consultant of, for, or to
any person, firm, partnership, corporation or other entity that is
engaged in the manufacture or sale of any products manufactured or
sold by Ferro, or any subsidiary or affiliate, or any products that
are logical extensions,
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