On behalf of
Merck & Co., Inc. (“Merck”), it is my pleasure to
extend you the offer of employment for the position of President,
Global Human Health . In this position, you will report to
me at Whitehouse Station. Our offer includes the
following:
Base
Salary : You will be paid
a gross monthly salary of $91,667, which equates to $1,100,004 on
an annual basis. Your salary will be reviewed annually. The date of
your first merit increase, if any, will be March 1,
2007.
Executive
Incentive Plan : You will
be eligible to participate in Merck’s Executive Incentive
Plan (EIP), subject to the terms of the plan. The target bonus for
your position is 105% of your annual base salary. The bonus is
discretionary and the amount of the bonus, if any is awarded,
depends on individual performance, division performance and
corporate performance. Notwithstanding the preceding sentence, the
Compensation and Benefits Committee of the Board of Directors of
Merck & Co., Inc. (the “Compensation and Benefits
Committee”) has approved a guaranteed bonus for you for
Performance Year 2006 of 118% of your annual base salary. Based on
the level of your job within the Company, you will have the
opportunity within the first 30 calendar days of the first day of
your employment (provided that your first day is no later than
December 1, 2006) to elect to defer all or part of the EIP
bonus you will receive for Performance Year 2006. This 30-day
period represents your only opportunity to elect an EIP deferral
for Performance Year 2006. Information about the Deferral Program
and instructions pertaining to this election will be contained in
your new-hire materials when you join the Company. If you do not
receive Deferral Program information and instructions, please
contact the Merck Benefits Center at 800-66MERCK
(800-666-3725).
Long-Term
Incentive (LTI) Program : Starting in 2006, you will be eligible for
consideration for annual grants of stock-based incentives under the
Merck & Co., Inc. Incentive Stock Plan. (The next annual grant
date is expected to be in February 2007.) In any given year,
our incentives may include stock options, performance share units
(PSUs), restricted stock units (RSUs) or any combination thereof,
with the number and proportion of shares covered by such incentives
determined by the Compensation and Benefits Committee. For
illustrative purposes, a typical grant for a position at your job
level would be in the range of 96,000 stock options, 18,000 PSUs
and 18,000 RSUs. Currently, annual grants of Merck stock options
vest in equal installments over three years; PSUs have a three-year
performance period; and RSUs have a three-year restriction period.
Distribution of shares in connection with both PSUs and RSUs is
dependent on continued employment with the Company; additionally,
the level of payout associated with PSUs is contingent on Company
performance. Please note that terms and conditions of any future
grants may change from time to time. The specific terms and
conditions of your grants will be provided at the time the grants
are made to you. Based on your job level within the Company, you
will be covered by Merck’s stock ownership guidelines. The
guidelines are intended to reinforce our philosophy concerning
“ownership” and, in a concrete way, quantify our
expectations concerning ownership of Merck stock. Based on your job
level within the Company, the guidelines provide that you should
acquire Merck stock, over time, equal in value to five times your
annual base salary. Importantly, the LTI program – and
retention of shares earned in connection therewith – is
intended to facilitate the acquisition of shares. Also, there is
currently no time frame under which you will be required to achieve
the multiple of salary.
Mr. Peter
Loescher
Page 2
March 15, 2006
Sign-On
Bonus . You will be paid
a one-time sign-on bonus of $250,000 before taxes, which you will
receive in your first regularly scheduled paycheck following your
start date. The sign-on bonus will be paid to you in a lump sum.
However, it is conditioned upon your continued employment with
Merck & Co., Inc. or its subsidiaries for twelve months. If
your employment is voluntarily terminated by you within twelve
months of your start date, you will be required to repay a pro-rata
portion of the sign-on bonus based on months of completed
service.
Stock Option
Grant. The Compensation
and Benefits Committee has approved your receiving a stock option
to purchase 175,000 shares of Merck common stock at a fixed price
per share that is set by the Company at fair market value on the
first Friday following your start date . Subject to
its terms, this stock option grant will vest in equal installments
on the first, second and third anniversaries of the grant date and
expire on the day before the tenth anniversary of the grant date. A
summary of terms and conditions associated with this stock option
grant will be provided to you shortly after the grant is
made.
Restricted
Stock Unit Grant. The
Compensation and Benefits Committee has approved your receiving a
grant of 80,000 RSUs to be made on the same date as the stock
option grant referenced in the preceding paragraph. Subject to its
terms, this RSU grant will vest in its entirety on the third
anniversary of the grant date. A summary of terms and conditions
associated with this RSU grant will be provided to you shortly
after the grant is made.
Flexible
Benefits Program: As a
salaried emplo
|
