GENERAL MILLS, INC.
1996 COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS
The purpose of the
General Mills, Inc. 1996 Compensation Plan for Non-Employee
Directors (the “Plan”) is to provide a compensation
program which will attract and retain qualified individuals not
employed by General Mills, Inc. or its subsidiaries (the
“Company”) to serve on the Board of Directors of the
Company (the “Board”) and to further align the
interests of non-employee directors with those of the stockholders
by providing that a portion of compensation will be linked directly
to increases in stockholder value.
B. EFFECTIVE
DATE, DURATION OF PLAN AND TRANSITION RIGHTS
This Plan shall
become effective as of September 30, 1996, subject to the
approval of the Plan by the stockholders. The Plan will terminate
on September 30, 2001 or such earlier date as determined by
the Board or the Compensation Committee of the Board (the
“Committee”); provided that no such termination shall
affect rights earned or accrued under the Plan prior to the date of
termination.
This Plan
supersedes and replaces the General Mills, Inc. Compensation Plan
for Non-Employee Directors, effective as of January 1, 1979
(the “1979 Plan”), the General Mills, Inc. Retirement
Plan for Non-Employee Directors, effective as of April 28,
1986 (the “1986 Plan”) and the General Mills Stock Plan
for Non-Employee Directors, effective as of September 17, 1990
(the “1990 Plan”). Participant rights accrued as of
September 30, 1996 under the 1979 Plan and the 1990 Plan shall
remain in effect but no new rights or benefits shall accrue
pursuant to such plans. The 1986 Plan was terminated in
February 1996. Participants who have accrued rights under the
1986 Plan shall receive a one time grant of Stock Units
(“Stock Units”) representing the right to receive
shares of General Mills, Inc. Common Stock ($.10 per value)
(“Common Stock”) equal to the value as of
September 30, 1996 of the participant’s accrued benefit
under the 1986 Plan. The value of each Stock Unit shall be deemed
equal to the mean of the high and low price of shares of Common
Stock on the New York Exchange on September 30, 1996. Common
Stock issued in respect of Stock Units granted in lieu of accrued
benefits under the 1986 Plan shall be distributed commencing on the
director’s retirement from the Board, on the date or dates
elected by the director at least one year prior to the date of his
or her retirement from the Board. In the absence of such an
election, such Common Stock shall be issued in ten substantially
equal annual installments on the January 1 of each year following
the year in which the participant ceases to be a director. Each
participant awarded Stock Units shall receive, upon distribution,
one share of Common Stock for each Stock Unit awarded, and
the
Company shall
issue to and register in the name of each such participant a
certificate for that number of shares of Common Stock. Participants
receiving Stock Units pursuant to this Part I, Section B.
shall have the same rights, protections and limitations as those
provided participants receiving Stock Units pursuant to
Part III, Section B.3. and Section C.1.
hereof.
Awards made under
this Plan which were earned and vested (within the meaning of
Internal Revenue Code section 409A) before January 1, 2005 are
intended to be grandfathered from section 409A and remain governed
by federal tax law applicable to deferred compensation as it
existed in effect prior to Section 409A. Accordingly, changes
to the Plan after October 3, 2004 shall not modify the rights
of Participants with respect to deferred amounts that were earned
and vested on or before December 31, 2004. It is further
intended that no “material modification” be made to the
Plan, as that term is used in Treasury Regulations governing
section 409A, whether by this amendment and restatement or
otherwise.
Each member of the
Board who is not an employee of the Company at the date
compensation is earned or accrued shall be eligible to participate
in the Plan.
D. COMMON
STOCK SUBJECT TO THE PLAN
Common Stock to be
issued under this Plan may be made available from the authorized
but unissued Common Stock, shares of Common Stock held in the
treasury, or Common Stock purchased on the open market or
otherwise. Subject to the provisions of the next succeeding
paragraph, the maximum aggregate number of shares authorized to be
issued under the Plan shall be 250,000.
If a corporate
transaction has occurred affecting the Common Stock such that an
adjustment to outstanding awards is required to preserve (or
prevent enlargement of) the benefits or potential benefits intended
at the time of grant, then in such manner as the Committee deems
equitable, an appropriate adjustment shall be made to (i) the
number and kind of shares which may be awarded under the Plan;
(ii) the number and kind of shares subject to outstanding
awards; (iii) the number of shares credited to an account;
and, if applicable, (iv) the exercise price of outstanding
Options; provided that the number of shares of Common Stock subject
to any Option denominated in Common Stock shall always be a whole
number. For this purpose a corporate transaction includes, but is
not limited to, any dividend or other distribution (whether in the
form of cash, Common Stock, securities of a subsidiary of the
Company, other securities or other property), recapitalization,
stock split, reverse stock split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase or
exchange of Common Stock or other securities of the Company,
issuance of warrants or other rights to purchase Common Stock or
other securities of the Company, or other similar corporate
transactions. Notwithstanding anything in this paragraph to the
contrary, an adjustment to an Option under this paragraph shall be
made in a manner that will not result in a new grant of an Option
under Code Section 409A.
-2-
ANNUAL RETAINER AND MEETING
FEES
A.
COMPENSATION STRUCTURE
|
|
1.
|
|
Each non-employee director shall be
entitled to receive an annual retainer and meeting fees as shall be
determined from time to time by the Board.
|
|
|
|
|
|
|
|
2.
|
|
Each non-employee director of the
Company may elect by written notice to the Company on or before
each annual stockholders’ meeting to participate in the
compensation alternative provisions of the Plan. Any combination of
the alternatives — Cash, Deferred Cash and/or Common Stock
— may be elected, provided the aggregate of the alternatives
elected equals one hundred percent of the non-employee
director’s compensation at the time of the
election.
|
|
|
|
|
|
|
|
3.
|
|
The
election shall remain in effect for a one-year period which shall
begin the day of the annual stockholders’ meeting and
terminate the day before the succeeding annual stockholders’
meeting (hereinafter “Plan Year”).
|
|
|
|
|
|
|
|
4.
|
|
The
Plan Year shall include four plan quarters (hereinafter “Plan
Quarters”). Plan Quarters shall correspond to the
Company’s fiscal quarters.
|
|
|
|
|
|
|
|
5.
|
|
A
director elected to the Board at a time other than the annual
stockholders’ meeting may elect, by written notice to the
Company before such director’s term begins, to participate in
the compensation alternatives for the remainder of that Plan Year,
and elections for succeeding years shall be on the same basis as
other directors.
|
|
|
|
|
|
|
|
6.
|
|
Periodically, the Company shall
supply to each participant an account statement of participation
under the Plan.
|
|
|
1.
|
|
Each non-employee director who
elects to participate under the cash compensation provision of the
Plan shall be paid all or the specified percentage of his or her
compensation for the Plan Year in cash, and such cash payment shall
be made as of the end of each Plan Quarter.
|
|
|
|
|
|
|
|
2.
|
|
If
a participant dies during a Plan Year, the balance of the amount
due to the date of the participant’s death shall be payable
in full to such participant’s designated beneficiary, or, if
none, the estate as soon as practicable following the date of
death.
|
-3-
C. DEFERRED
CASH ALTERNATIVE
|
|
1.
|
|
Each non-employee director may elect
to have all or a specified percentage of his or her compensation
for the Plan Year deferred until the participant ceases to be a
director.
|
|
|
|
|
|
|
|
2.
|
|
For
each director who has made this deferred cash election, the Company
shall establish a deferred compensation account and shall credit
such account at the end of each plan quarter for the compensation
due. Interest shall be credited to each such account monthly based
on the following rates as specified by the Committee from time to
time:
|
|
|
a.
|
|
the
rate of return as from time to time earned by the Fixed Income Fund
of the General Mills 401(k) Savings Plan; or
|
|
|
|
|
|
|
|
b.
|
|
the
rate of return as from time to time earned by the Equity Fund of
the General Mills 401(k) Savings Plan; or
|
|
|
|
|
|
|
|
c.
|
|
any
other rates of return of other funds or portfolios established
under a qualified benefit plan maintained by the Company which the
Minor Amendment Committee, or its delegate, in its discretion, may
from time to time establish.
|
|
|
3.
|
|
Distribution of the
participant’s deferred compensation account shall be as
follows:
|
|
|
a.
|
|
at
the time, and in the form of payment, elected by the participant at
the time of deferral; or
|
|
|
|
|
|
|
|
b.
|
|
in
the absence of an election at the time of deferral, in ten
substantially equal annual installments beginning on January 1 of
each year following the year in which the participant ceases to be
a director; provided, however, that for compensation earned in Plan
Years commencing after December 9, 1996, distributions must be
made or commenced by the later of (i) the date the participant
attains age 70 and (ii) five years after the director’s
retirement from the Board.
|
|
|
4.
|
|
In
the event of the termination of a participant from Board service
other than by retirement, the Committee may in its sole discretion
require that distribution of all amounts allocated to a
participant’s deferred compensation account be accelerated
and distributed as of the first business day of the calendar year
next following termination.
|
|
|
|
|
|
|
|
5.
|
|
The
Company has established a Supplemental Benefits Trust with Wells
Fargo Bank Minnesota, N.A. as Trustee to hold assets of the Company
under certain circumstances as a reserve for the discharge of the
Company’s obligations as to deferred cash compensation under
the Plan
|
-4-
|
|
|
|
and
certain other plans of deferred compensation of the Company. In the
event of a Change in Control as defined in Part IV
hereinbelow, the Company shall be obligated to immediately
contribute such amounts to the Trust as may be necessary to fully
fund all cash benefits payable under the Plan. Any participant of
the Plan shall have the right to demand and secure specific
performance of this provision. All assets held in the trust remain
subject only to the claims of the Company’s general creditors
whose claims against the Company are not satisfied because of the
Company’s bankruptcy or insolvency (as those terms are
defined in the Trust Agreement). No participant has any preferred
claim on, or beneficial ownership interest in, any assets of the
Trust before the assets are paid to the participant and all rights
created under the Trust, as under the Plan, are unsecured
contractual claims of the participant against the
Company.
|
D. GMI
COMMON STOCK ALTERNATIVE
|
|
1.
|
|
Each participant may elect to
receive all or a specified percentage of his or her compensation in
shares of Common Stock, which will be issued at the end of each
Plan Quarter.
|
|
|
|
|
|
|
|
2.
|
|
The
Company shall ensure that an adequate number of shares of Common
Stock are available for distribution to those participants making
this election.
|
|
|
|
|
|
|
|
3.
|
|
Only whole numbers of shares will be
issued, with any fractional share amounts paid in cash.
|
|
|
|
|
|
|
|
4.
|
|
For
purposes of computing the number of shares earned each Plan
Quarter, the value of each share shall be equal to the mean of the
high and low price of shares of Common Stock on the New York Stock
Exchange on the third Business Day preceding the last day of each
Plan Quarter. For the purposes of this Plan, “Business
Day” shall mean a day on which the New York Stock Exchange is
open for trading.
|
|
|
|
|
|
|
|
5.
|
|
If
a participant dies during a Plan Year, the balance of the amount
due to the date of the participant’s death shall be payable
in full to the participant’s designated beneficiary, or, if
none, to the participant’s estate, in cash, as soon as
practicable following the date of death.
|
A.
NON-QUALIFIED STOCK OPTIONS
|
|
1.
|
|
Grant of Options
. Each non-employee
director on the effective date of the Plan (or, if first elected
after the effective date of the Plan, on the date the non-employee
director is first elected) shall be awarded an option
(an
|
-5-
|
|
|
|
“Option”) to purchase
2,500 shares of Common Stock. As of the close of business on each
successive annual stockholders’ meeting date after the date
of the original award, each non-employee director re-elected to the
Board shall be granted an additional Option to purchase 2,500
shares of Common Stock (or, beginning September 27, 1999, an Option
to purchase 5,000 shares of Common Stock). All Options granted
under the Plan shall be non-statutory options not entitled to
special tax treatment under Section 422 of the Internal
Revenue Code of 1986, as amended.
|
|
|
2.
|
|
Option Exercise Price
. The per share price to
be paid by the non-employee director at the time an Option is
exercised shall be 100% of the Fair Market Value of the Common
Stock on the date of grant. “Fair Market Value” shall
equal the closing price for the Common Stock on the New York Stock
Exchange on the relevant date.
|
|
|
|
|
|
|
|
3.
|
|
Term of Option
. Each Option shall
expire ten (10) years from the date of grant.
|
|
|
|
|
|
|
|
4.
|
|
Exercise and Vesting of
Option . Each
Option will vest on the date of the annual stockholders’
meeting next following the date the Option is granted. If, for any
reason, a non-employee director ceases to serve on the Board prior
to the date an Option vests, such Option shall be forfeited and all
further rights of the non-employee director to or with respect to
such Option shall terminate. If a participant should die while
employed by the Company, any vested Option may be exercised by the
person designated in such participant’s last will and
testament or, in the absence of such designation, by the
participa
|
|
