EXHIBIT 10.13
IMATION CORP.
DIRECTORS COMPENSATION PROGRAM
EFFECTIVE MAY 4, 2005
SECTION 1.
PURPOSE
(a) The
purpose of the Program is to attract and retain well-qualified
persons for service as nonemployee directors of the Company and to
promote identity of interest between directors and stockholders of
the Company. The Program is designed and intended to comply with
Rule 16b-3 under the Securities Exchange Act of 1934, as
amended, as such Rule may be amended from time to time, and shall
be interpreted in a manner consistent with the requirements
thereof, as now or hereafter construed, interpreted and applied by
regulations, rulings and cases.
(b) The
Program is also intended to comply in form and operation with
Section 409A of the Internal Revenue Code.
SECTION 2.
DEFINITIONS
The
following words and phrases have the meaning indicated below,
unless the context clearly indicates otherwise.
(a) “Accounting
Date” means the first business day following the annual
meeting of stockholders of the Company.
(b) “Basic
Fee” means the annual retainer payable to an Eligible
Director at the annual rate in effect on the Accounting Date for
such Eligible Director’s services on the Board (exclusive of
any Chairperson Fee, Lead Director Fee or Meeting Fees.)
(c) “Board”
means the Board of Directors of the Company.
(d) “Chairperson
Fee” means the annual retainer payable to an Eligible
Director at the annual rate in effect on the Accounting Date for
such Eligible Director’s services as the chairperson of any
committee of the Board.
(e) “Change
in Control” has the meaning given it in Section 8(b) to the
extent it is consistent with and satisfies the definition of
“Change of Control” under Code section 409A.
(f) “Change
in Control Price” of the Common Stock shall equal the higher
of (i) if applicable, the price paid for the Common Stock in
the transaction constituting a Change in Control and (ii) the Fair
Market Value of the Common Stock as of the last trading day
preceding the date of the Change in Control.
(g) “Code”
means the Internal Revenue Code of 1986, as amended, and any
applicable regulations or binding rules promulgated
thereunder.
(h) “Committee”
means the Compensation Committee of the Board.
(i) “Common
Stock” means the common stock, par value $.01 per share, of
the Company.
(j) “Company”
means Imation Corp.
(k) “Dividend
Equivalent Credit” has the meaning given it in
Section 7(b).
(l) “Election
Form” means the Election Form attached as Exhibit B
hereto or such other form as may be deemed acceptable by the
Secretary of the Company from time to time.
(m) “Eligible
Director” means each member of the Board who is not at the
time of reference an employee of the Company or any of its
subsidiaries.
(n) “Exchange
Act” means the Securities Exchange Act of 1934, as
amended.
(o) “Fair
Market Value” as of any date means, the fair market value as
defined under the Stock Plan.
(p) “Lead
Director Fee” means the annual retainer payable to the
Eligible Director who is selected to be the lead director at the
annual rate in effect on the Accounting Date for such Eligible
Director’s services as the lead director.
(q) “Meeting
Fees” means the amounts payable to an Eligible Director in
arrears on any Quarterly Payment Date for attendance at meetings or
participation in teleconferences of the Board or any committee of
the Board (exclusive of any Basic Fee, Chairperson Fee or Lead
Director Fee).
(r) “Program”
means the Company’s Directors Compensation Program, as
amended from time to time.
(s) “Proration
Fraction” means a fraction, the numerator of which is the
number of days from the date an Eligible Director first becomes an
Eligible Director to the date of the next succeeding annual meeting
of stockholders and the denominator of which is 365.
(t) “Quarterly
Payment Date” means the date established by the Company from
time to time for payment, in arrears, of all Meeting Fees earned by
Eligible Directors during the preceding calendar quarter, provided
such date shall not be later than two and one-half (2
1 / 2
) months from the end of such
calendar quarter.
(u) “Restricted
Stock Unit” means a right to receive payment of one share of
Common Stock in accordance with the conditions set forth in
Section 7 hereof or conditions established by the
Committee.
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(v) “Rule 16b-3”
means Rule 16b-3 under the Exchange Act, as such Rule may be
amended from time to time.
(w) “Stock
Plan” means the then current stock incentive plan of the
Company used to grant stock based awards to Eligible
Directors.
SECTION 3.
ADMINISTRATION
(a) The
Program shall be administered by the Committee.
(b) In
administering the Program, it will be necessary to follow various
laws and regulations. It may be necessary from time to time to
change or waive requirements of the Program to conform with the
law, to meet special circumstances not anticipated or covered in
the Program, or to carry on successful operation of the Program,
and in connection therewith, the Committee shall have the full
power and authority to:
(i) Prescribe,
amend, and rescind rules and regulations relating to the Program,
establish procedures deemed appropriate for its administration,
interpret the provisions of the Program, remedy ambiguities, and
make any and all other determinations not herein specifically
authorized which may be necessary or advisable for its effective
administration;
(ii) Make any
amendments to or modifications of the Program which may be required
or necessary to make the Program set forth herein comply with the
provisions of any laws, federal or state, or any regulations issued
thereunder, and to cause the Company at its expense to take any
action related to the Program which may be required under such laws
or regulations;
(iii) Contest on
behalf of the Eligible Directors or the Company, at the sole
discretion of the Committee and at the expense of the Company, any
ruling or decision on any issue related to the Program, and conduct
any such contest and any resulting litigation to a final
determination, ruling, or decision; and
(iv) Grant
stock-based awards under the Program, as provided in Section 5
hereof.
(c) Unless
otherwise expressly provided in the Program, all designations,
determinations, interpretations and other decisions under or with
respect to the Program or any award shall be within the sole
discretion of the Committee, may be made at any time and shall be
final, conclusive and binding upon any Eligible Director or
beneficiary, and any employee of the Company.
SECTION 4.
FEES/EXPENSES
(a) Each
Eligible Director who is first elected to the Board at, or who
continues to serve on the Board immediately following an annual
meeting of stockholders, is entitled to receive a Basic Fee and a
Chairperson Fee for serving as chairperson of a committee of the
Board (as applicable).
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(b) Any
Eligible Director who is designated as the lead director is
entitled to receive a Lead Director Fee for services as the lead
director.
(c) Each
Eligible Director who joins the Board or becomes a chairperson of a
committee of the Board or Lead Director after the annual meeting of
stockholders is entitled to receive a Basic Fee, Chairperson Fee or
Lead Director Fee (as applicable) multiplied by the Proration
Fraction, as of the date such Eligible Director first becomes an
Eligible Director, chairperson of a committee of the Board or Lead
Director.
(d) Each
Eligible Director is entitled to receive a Meeting Fee for
attendance at a meeting of the Board or a Committee of the Board or
participation in a teleconference in lieu of such meeting. The
Meeting Fees are payable in arrears on the Quarterly Payment Date.
Any member of the Board who interviews a Board candidate shall be
entitled to receive compensation in an amount equal to the Meeting
Fee for an in person Board meeting for each such
interview.
(e) The
current rate of the Basic Fee, Chairperson Fee, Lead Director Fee
and Meeting Fees are set forth on the attached Exhibit A, and
may be amended from time to time by the Board or any committee
given responsibility for determining Board of Director
compensation.
(f) Each
Eligible Director is entitled to reimbursement for reasonable
travel costs of attending Board and committee meetings and
interviews of Board candidates. Such reimbursement shall be payable
in cash after receipt of documentation by the Company from such
Eligible Director.
SECTION 5. ANNUAL GRANT OF
STOCK BASED AWARD
(a) Each
Eligible Director who is first elected to the Board at, or
continues to serve on the Board immediately following an annual
meeting of stockholders shall be granted a stock based award (
i.e., options, restricted stock, etc.) as of the date of
such meeting in type, proportion and amount to be determined by the
Committee and under, and in accordance with, the terms of the Stock
Plan.
(b) Each
Eligible Director who joins the Board after an annual meeting of
stockholders, shall be granted a stock based award pursuant to this
Section 5 as of the date such Eligible Director first becomes
an Eligible Director based on the number of whole shares of Common
Stock equal to the number granted other Eligible Directors at the
time of the immediately preceding annual meeting of stockholders,
multiplied by the Proration Fraction.
(c) Terms and
conditions of stock based awards (such as grant price, vesting
schedule, etc.) shall be as determined by the Committee and under,
and in accordance with, the terms of the Stock Plan.
(d) The
amount and composition of the current annual stock based award are
set forth on the attached Exhibit A, which may be amended from
time to time by the Board or any committee given responsibility for
determining Board of Director compensation.
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SECTION 6. MATCHING GIFT
PROGRAM
Each Eligible
Director is entitled to a matching gift from the Company of up to
$15,000 per calendar year to qualifying charitable institutions,
prorated for any calendar year that Eligible Director joins the
Board. Each Eligible Director must submit evidence of such gift to
the Company and the Company will send the matching contribution
directly to the qualifying charitable institution on behalf of the
Eligible Director.
SECTION 7. ELECTIONS TO
RECEIVE COMMON STOCK OR RESTRICTED STOCK UNITS
(a)
Elections .
(i) Common
Stock . Each Eligible Director who is not covered by clause
(iii) below, may elect to receive, in lieu of a cash payment for
his or her Basic Fee, Chairperson Fee, Lead Director Fee and/or
Meeting Fees (or a portion thereof, as elected by the Eligible
Director), a number of shares of Common Stock (excluding fractional
shares, which shall be paid in cash (or carried over to the next
payment if an Eligible Director elects to be paid all in Common
Stock)), which is calculated by dividing his or her Basic Fee,
Chairperson Fee, Lead Director Fee and/or Meeting Fees (or a
portion thereof), by the Fair Market Value of one share of Common
Stock on the Accounting Date or Quarterly Payment Date, as
applicable. To be effective, any such election shall be made by
submitting a completed and executed Election Form to the Secretary
of the Company prior to the relevant Accounting Date or Quarterly
Payment Date, as applicable.
(ii) Restricted
Stock Units .
(A) Each Eligible
Director who is not covered by clause (iii) below, may elect
to receive, in lieu of cash payment for his or her Basic Fee,
Chairperson Fee, Lead Director Fee and/or Meeting Fees, Restricted
Stock Units (including fractional Restricted Stock Units)
calculated by dividing his or her Basic Fee, Chairperson Fee, Lead
Director Fee and/or Meeting Fees (or a portion thereof, as elected
by the Eligible Director) for services to be performed in the
following the calendar year by the Fair Market Value of one share
of Common S
