1999 Directors’ Stock
Compensation Plan
As Amended and Restated
January 1, 2009
1. PURPOSE.
The purpose of this 1999 Directors’ Stock Compensation Plan
(the “Plan”) is to advance the interests of the Company
and its stockholders by providing a means to attract, retain and
compensate non-employee directors and to enable such persons to
increase their proprietary interest in the Company. In furtherance
of this purpose, the Plan provides for periodic grants of options,
Deferred Shares or Restricted Stock (as defined below), the
opportunity for a director to elect deferred and alternative forms
of compensation in lieu of cash fees for service as a director,
including Options, Deferred Shares, and deferred cash, and the
opportunity to defer delivery of shares deliverable upon exercise
of options or in settlement of other awards.
2. DEFINITIONS.
In addition to the terms defined in Section 1, the following
terms shall be defined as set forth below:
2.1
“Administrator” means the administrative committee
specified in Section 3(b) to whom the Board has delegated the
authority to take action under the Plan.
2.2
“Beneficiary” means the person(s) or trust(s) which
have been designated by a Participant in his or her most recent
written beneficiary designation filed with the Administrator to
receive the benefits specified under the Plan upon such
Participant’s death. If, upon a Participant’s death,
there is no designated Beneficiary or surviving designated
Beneficiary, then the term Beneficiary means the person(s) or
trust(s) entitled by will or the laws of descent and distribution
to receive such benefits.
2.3
“Board” means the Board of Directors of the
Company.
2.4
“Code” means the Internal Revenue Code of 1986, as
amended, including regulations thereunder and successor provisions
and regulations thereto.
2.5
“Company” means Jefferies Group, Inc., a Delaware
corporation, formerly named JEF Holding Company, Inc., the common
stock of which was distributed in the Spin-off.
2.6
“DDCP” means Predecessor’s Non-Employee
Directors’ Deferred Compensation Plan.
2.7
“Deferral Account” means the account established and
maintained by the Company for Deferred Shares credited under
Sections 7 and 8 and deferred cash credited under
Section 8. A Deferral Account shall include one or more
subaccounts, including a Deferred Share Account for forfeitable
Deferred Shares under Section 7, a Deferred Share Account for
Deferred Shares that have become nonforfeitable under
Section 7 or that are at all times nonforfeitable under
Section 8(c), a Deferred Share Account for Deferred Shares
resulting from Option exercises under Section 9(a), and a
Deferred Cash Account described in Section 8(d). The Deferral
Account also includes two subaccounts for purposes of complying
with Code Section 409A: The “Grandfathered
Account” is that portion of the Deferral Account (and
subaccouns) resulting from deferrals of compensation that was
vested before 2005, except for any designated deferred compensation
which the Committee has caused to be not grandfathered for purposes
of Code Section 409A. The “2005-and-Later Account”
is the remaining portion of the Deferral Account (and subaccounts)
which is not “grandfathered” for purposes of Code
Section 409A. The Deferral Account and subaccounts, and
Deferred Shares and deferred cash credited thereto, will be
maintained solely as bookkeeping entries by the Company to evidence
unfunded obligations of the Company.
2.8
“Deferred Share” means a credit to a
Participant’s Deferred Share Account under Sections 7 or
8 which represents the right to receive one Share upon settlement
of such Account. Deferred Shares granted under Section 7 may
be designated as “Restricted Stock Units.”
2.9
“Disability” means a Participant’s termination of
service as a director of the Company due to a physical or mental
incapacity of long duration which renders the Participant unable to
perform the duties of a director of the
2.10
“Eligible Holder” means each person who, at the
Spin-off Date, holds an option or deferred share granted by
Predecessor under a plan or program for Predecessor’s
non-employee directors with respect to which the Company has agreed
to grant, or offer to grant, an Option or Deferred Share award in
substitution for such Predecessor award or to offset any lost value
due to the early termination of such option or deferred
share.
2.11
“Exchange Act” means the Securities Exchange Act of
1934, as amended, including rules thereunder and successor
provisions and rules thereto.
2.12 “Fair
Market Value,” means, with respect to Shares, the fair market
value of such Shares determined by such methods or procedures as
shall be established from time to time by the Board. Unless
otherwise determined by the Board, the Fair Market Value of a Share
as of any given date means the average of the closing sales prices
of a Share as reported in the table entitled “New York Stock
Exchange Composite Transactions” contained in The Wall Street
Journal (or an equivalent successor table) for the day as of which
the valuation is to be made or, if that day is not a trading day,
the nearest preceding trading day, and the four trading days
immediately prior thereto; PROVIDED, HOWEVER, that Fair Market
Value at the date of the Spin-off shall be determined based on the
first five trading days for which a closing price is reported
following the Spin-off.
2.13
“Option” means the right, granted to a Participant
under Section 6 or 8, to purchase a specified number of Shares
at the specified exercise price for a specified period of time
under the Plan. All Options will be non-qualified stock
options.
2.14 “Option
Valuation Methodology” means the method for determining the
number of shares to be subject to Options, and the exercise price
thereof, granted in payment of Retainer Fees under
Section 8(b).
2.15 “Other
Director Compensation” means fees payable to a director in
his or her capacity as such, other than Retainer Fees, for
attending meetings and other service on the Board and Board
committees.
2.16
“Participant” means any person who has been granted an
Option which remains outstanding, has Deferred Shares or cash
credited to his or her Deferral Account, or has elected to be
granted Options in payment of Retainer Fees or to defer payment of
Retainer Fees and Other Director Compensation in the form of
Deferred Shares or cash under the Plan.
2.17 “Plan
Year” means, with respect to a Participant, the period
commencing at the time of election of the director at an annual
meeting of stockholders (or the election of a class of directors if
the Company then has a classified Board of Directors), or the
director’s initial appointment to the Board if not at an
annual meeting of stockholders, and continuing until the close of
business of the day preceding the next annual meeting of
stockholders; PROVIDED, HOWEVER, that the initial Plan Year shall
be deemed to be a continuation of the plan year in effect under the
DDCP at the Spin-Off Date. “409A Plan Year” means the
calendar year.
2.18
“Predecessor” means Jefferies Group, Inc., a Delaware
corporation, as it existed immediately prior to the
Spin-off.
2.19
“Restricted Stock” means Shares granted under
Section 7, subject to a risk of forfeiture and restrictions on
transfer for a specified period.
2.20
“Retainer Fees” means annual retainer fees payable to a
director in his or her capacity as such for service on the Board
and service as chairman of any Board committee.
2.21
“Retirement” means a Participant’s termination of
service as a director of the Company at or after age 65.
2.22
“Shares” means shares of common stock, par value $.01
per share, of the Company and such other securities as may be
substituted or resubstituted for Shares pursuant to
Section 5.3.
2.23
“Spin-off” means the distribution of the Common Stock
of the Company by the Predecessor to the Predecessor’s
stockholders, which was approved by the Predecessor’s
stockholders on April 20, 1999.
2.24
“Spin-off Date” means the record date for
Predecessor’s distribution of Shares in the Spin-
off.
2.25
“Valuation Date” shall mean the close of business on
the last business day of each calendar quarter and, in the case of
any final distribution from a Participant’s Deferred Cash
Account, the day preceding such distribution.
3.1 AUTHORITY.
Both the Board and the Administrator (subject to the ability of the
Board to restrict the Administrator) shall administer the Plan in
accordance with its terms, and shall have all powers necessary to
accomplish such purpose, including the power and authority to
construe and interpret the Plan, to define the terms used herein,
to prescribe, amend and rescind rules and regulations, agreements,
forms, and notices relating to the administration of the Plan, and
to make all other determinations necessary or advisable for the
administration of the Plan. The Administrator may perform any
function of the Board under the Plan, except for grants of awards
under Sections 6 and 7, adoption of material amendments to the
Plan under Section 11.5, or other functions from time to time
specifically reserved by the Board to itself. Any actions of the
Board or the Administrator with respect to the Plan shall be final,
conclusive, and binding upon all persons interested in the Plan,
except that any action of the Administrator will not be binding on
the Board. The Board and Administrator may each appoint agents and
delegate thereto powers and duties under the Plan, except as
otherwise limited by the Plan.
3.2 ADMINISTRATOR.
The Administrator shall be the Director of Human Resources and the
Secretary or such other committee as may designated by the Board.
In any case in which a director is a member of the Administrator,
such director shall be not act on or decide any matter relating
solely to himself or herself or any of his or her rights or
benefits under the Plan. No bond or other security need be required
of the Administrator or any member thereof in any
jurisdiction.
3.3 LIMITATION OF
LIABILITY. Each member of the Board and the Administrator shall be
entitled to, in good faith, rely or act upon any report or other
information furnished to him or her by any officer or other
employee of the Company or any subsidiary, the Company’s
independent certified public accountants, or any executive
compensation consultant, legal counsel, or other professional
retained by the Company to assist in the administration of the
Plan. No member of the Board or the Administrator, nor any person
to whom ministerial duties under the Plan have been delegated,
shall be personally liable for any action, determination, or
interpretation taken or made in good faith with respect to the
Plan, and any such person shall, to the extent permitted by law, be
fully indemnified and protected by the Company with respect to any
such action, determination, or interpretation.
4. SHARES
AVAILABLE UNDER THE PLAN. The total number of Shares reserved and
available for delivery under the Plan is 2,000,000, subject to
adjustment as provided in Section 11.2 (this reflects stock
splits from the effective date of the Plan through January 1,
2009). Shares that may be delivered under the Plan may consist, in
whole or in part, of authorized and unissued Shares, treasury
Shares or Shares acquired in the market for the account of a
Participant. For purposes of the Plan, shares that may be purchased
upon exercise of an Option or distributed in settlement of Deferred
Shares will not be considered to be available after such Option has
been granted or Deferred Share credited, except for purposes of
delivery in connection with such Option or Deferred Share;
provided, however, that, if an Option expires for any reason
without having been exercised in full or Deferred Shares or shares
of Restricted Stock are forfeited or cancelled, the shares subject
to the unexercised portion of such Option or to the forfeited or
cancelled Deferred Shares or Restricted Stock will again be
available for delivery under the Plan.
5. ELIGIBILITY.
Each non-employee director of the Company who is paid fees for
service on the Board or a Board committee, and each Eligible
Holder, may participate in the Plan, subject to the terms hereof.
No person other than those specified in this Section 5 will be
eligible to participate in the Plan. The Administrator will notify
each person of his or her eligibility to participate in the Plan on
an elective basis not later than 15 days (or such other period
as may be determined by the Administrator) prior to any deadline
for filing an election form.
6. INITIAL
AND ANNUAL GRANTS OF OPTIONS. Options shall be granted to
non-employee directors in accordance with policies established from
time to time by the Board specifying the classes of directors to be
granted Options, the number of Shares to be subject to each Option,
and the time or times at which such Options shall be granted;
provided, however, that the maximum number of Shares that may be
subject to Options granted to a director in a given year under this
Section 6 (i.e., without a corresponding reduction in fees)
shall be 40,000, subject to adjustment as provided in
Section 11.2. Options granted to an Eligible Holder under
Section 9.6 shall not be counted against the limitation set
forth in the preceding sentence.
6.1 GRANT POLICY
— OPTION GRANTS. The policy with respect to grants of Options
under this Section 6 shall be established, modified and/or
revoked from time to time by the Board.
6.2 TERMS OF
OPTIONS GRANTED UNDER SECTION 6. Each Option granted under this
Section 6 shall be subject to the following terms and
conditions:
(a) EXERCISE
PRICE. The exercise price per Share purchasable under an Option
will be equal to 100% of the Fair Market Value of a Share on the
date of grant of the Option.
(b) OPTION TERM.
Each Option shall expire at the end of a term fixed by the Board,
not longer than ten years after the date of grant, or at such
earlier date as the Option may no longer be exercised and cannot,
by its terms, thereafter become exercisable. Options granted under
the initial policy set out in Section 6.1 shall expire at the
earlier of (i) a fixed term of five years after the date of
grant, (ii) 12 months after the Participant ceases to
serve as a Director of the Company due to death, Disability, or
Retirement, or (iii) 60 days after the Participant ceases
to serve as a Director of the Company for any reason other than
death, Disability, or Retirement.
(c) VESTING AND
EXERCISABILITY. The Board may establish terms regarding the times
at which Options shall become vested and exercisable. Options
granted under the initial policy set out in Section 6.1 and
not previously forfeited shall vest and become exercisable by a
Participant on the date three months after the date of grant, and,
unless otherwise provided in the Participant’s Option
agreement, any portion of a Participant’s Option that has not
vested and become exercisable at the time of termination of the
Participant’s service as a director shall be
forfeited.
(d) PAYMENT. The
exercise price of an Option shall be paid to the Company either in
cash or by the surrender of Shares, or any combination thereof, or
in such other form or manner as may be established by the
Administrator; PROVIDED, HOWEVER, that, unless otherwise determined
by the Administrator, shares shall not be surrendered in payment of
the exercise price if such surrender would result in additional
accounting expense to the Company.
7. GRANTS OF
DEFERRED SHARES AND RESTRICTED STOCK. Deferred Shares and/or
Restricted Stock shall be granted to non-employee directors in
accordance with policies established from time to time by the Board
specifying the classes of directors to be granted such awards, the
number of Deferred Shares or shares of Restricted Stock to be
granted, and the time or times at which such awards shall be
granted; provided, however, that the maximum number of Deferred
Shares and shares of Restricted Stock that may be granted to a
director in a given year under this Section 7, without a
corresponding reduction in fees, shall be 50% of the number of
Deferred Shares that could be granted under Section 8.3 in
that year with such a corresponding reduction in fees. A grant of a
specified dollar amount of Deferred Shares or Restricted Stock
shall be deemed a reduction in fees for purposes of this
Section 7. Deferred Shares and Restricted Stock granted to an
Eligible Holder under Section 9.6 shall not be counted against
the limitation set forth in the preceding sentence.
7.1 GRANT POLICY.
The policy with respect to grants of awards under this
Section 7 shall be established, modified and/or revoked from
time to time by the Board.
7.2 TERMS OF
DEFERRED SHARES AND RESTRICTED STOCK GRANTED UNDER SECTION 7.
Deferred Shares granted under this Section 7 shall be subject
to the terms and conditions of Deferred Shares specified in
Sections 9.2, 9.3, and 9.4 (including the requirement that any
Deferred Shares granted or vested in 2005 or thereafter comply with
Code Section 409A), unless otherwise determined by the Board.
Deferred Shares and Restricted Stock granted under this Section 7
shall also be subject to the following additional terms and
conditions:
(a) VESTING AND
FORFEITURE. The Board may establish terms regarding the times at
which Deferred Shares and Restricted Stock shall become vested and
non-forfeitable. Unless otherwise determined by the Board, an award
granted under this Section 7 shall be subject to the following
terms: Such award, if not previously forfeited, shall become vested
and non-forfeitable as to one-third of the number of Deferred
Shares or shares of Restricted Stock at the close of business on
the day preceding each of the three annual meetings of stockholders
following the date of grant of such award, rounded to the nearest
number of whole shares; provided, however, that if such award was
not previously vested or forfeited, it shall vest and become
non-forfeitable on an accelerated basis upon the termination of the
Participant’s service as a director due to death, Disability
or Retirement (settlement shall remain subject to Section 9.4,
however). Unless otherwise determined by the Board, an award of
Deferred Shares or Restricted Stock not previously vested or
forfeited will cease to vest and will be forfeited upon the
termination of the Participant’s service as a director for
any reason other than death, Disability or Retirement.
(b) DEFERRED
SHARES CREDITED AS A RESULT OF DIVIDEND EQUIVALENTS. Unless
otherwise determined by the Board, Deferred Shares credited as a
result of dividend equivalents under Section 9.2 shall be
subject to the same terms, including risk of forfeiture, as the
Deferred Shares with respect to which the dividend equivalents were
credited.
(c) DIVIDENDS ON
RESTRICTED STOCK. Unless otherwise determined by the Board,
dividends on Restricted Stock declared and paid prior to the lapse
of the risk of forfeiture on such Restricted Stock shall be
automatically reinvested in additional shares of Restricted Stock,
which shall be subject to the same terms, including risk of
forfeiture, as the Restricted Stock on which the dividend was
paid.
(d) AWARDS
NONTRANSFERABLE. Deferred Shares and Restricted Stock shall be
nontransferable by the Participant at any time that the award
remains subject to a risk of forfeiture.
(e) CONSIDERATION
FOR RESTRICTED STOCK. If shares to be granted as Restricted Stock
are not treasury shares, the Board or Administrator may impose
additional conditions upon the grant of the Restricted Stock,
possibly including a requirement that cash consideration be paid by
the Participant, if and to the extent necessary to ensure that the
Company will receive lawful consideration equal to the aggregate
par value of the Shares being granted as Restricted
Stock.
8. OPTIONS
GRANTED IN PAYMENT OF FEES AND DEFERRAL OF FEES IN DEFERRED SHARES
AND DEFERRED CASH. Each director of the Company who is eligible
under Section 5 may elect, in accordance with
Section 8.1, to be paid Retainer Fees in the form of Options
under Section 8.2 or to defer receipt of Retainer Fees and
Other Director Compensation in the form of Deferred Shares under
Section 8.3 or deferred cash under
Section 8.4.
8.1 ELECTIONS. A
director shall elect to participate and the terms of such
participation by filing an election with the Company prior to the
beginning of a 409A Plan Year or, in the case of a director
commencing service with the Company, prior to his or her
commencement of service, or at such other date compliant with
Exhibit A to the 2003 Incentive Compensation Plan and/or
compliant with Section 9.6(a)(ii) of the 2003 Incentive
Compensation Plan as may be specified by the Administrator,
provided that any date so specified shall ensure effective deferral
of taxation (including under Code Section 409A) and otherwise
comply with applicable laws.
(a) EFFECT AND
IRREVOCABILITY OF ELECTIONS. Elections shall be deemed continuing,
and therefore applicable to Plan Years or 409A Plan Years after the
initial Plan Year or 409A Plan Year
covered by the
election, until the election is modified or superseded by the
Participant. Elections to participate (including the amount of any
deferrals), other than those elections subject to Section 9.4,
shall become irrevocable with respect to a given Plan Year
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