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Exhibit 10.243
THE CHARLES SCHWAB
CORPORATION
1987 EXECUTIVE OFFICER STOCK
OPTION PLAN
(Restated to include
Amendments through September 25, 2002)
Article
1. Introduction.
The purpose of the
1987 Executive Stock Option Plan, as Amended and Restated (the
“Plan”) is to enable The Charles Schwab Corporation and
its subsidiaries to attract and retain directors, officers, and
other key employees and to provide such persons with additional
incentive to advance the interests of the Company. The Plan was
initially adopted on March 24, 1987, and was amended on
September 17, 1996 and October 22, 1997. The Plan is
hereby restated and amended as of October 22, 1997, and the
terms of this Restatement shall apply to all awards granted under
the Plan on or after such date. The Plan shall terminate not more
than ten (10) years from the date the Plan initially was
adopted. The Plan will provide Awards in the form of Restricted
Shares, Performance Share Awards or Options. The Plan shall be
governed by, and construed in accordance with, the laws of the
State of Delaware.
Article
2. Administration.
2.1 The Committee.
The Plan shall be administered by the Committee. The Committee
shall consist of two or more Non-Employee Directors, who shall be
appointed by the Board.
2.2 Committee
Responsibilities. The Committee shall select
the Key Employees who are to receive Awards under the Plan,
determine the amount, vesting requirements and other conditions of
such Awards, may interpret the Plan, and make all other decisions
relating to the operation of the Plan. The Committee may adopt such
rules or guidelines as it deems appropriate to implement the Plan.
The Committee’s determinations under the Plan shall be final
and binding on all persons.
Article
3. Limitation on Awards.
The aggregate
number of Restricted Shares, Performance Share Awards and Options
awarded under the Plan shall not exceed 1,284,000 (including those
shares awarded prior to the amendment of the Plan). If any
Restricted Shares, Performance Share Awards or Options are
forfeited, or if any Performance Share Awards terminate for any
other reason without the associated Common Shares being issued, or
if any Options terminate for any other reason before being
exercised, then such Restricted Shares, Performance Share Awards or
Options shall again become available for Awards under the Plan. The
limitation of this Article 3 shall be subject to adjustment
pursuant to Article 10. Any Common Shares issued pursuant to the
Plan may be authorized but unissued shares or treasury
shares.
Article
4. Eligibility.
4.1 General Rule.
Key Employees shall be eligible for designation as Participants by
the Committee.
Article
5. Options.
5.1 Stock Option
Agreement. Each grant of an Option under the Plan shall
be
evidenced by a Stock Option
Agreement between the Optionee and the Company. Such Option shall
be subject to all applicable terms and conditions of the Plan, and
may be subject to any other terms and conditions which are not
inconsistent with the Plan and which the Committee deems
appropriate for inclusion in a Stock Option Agreement. The
provisions of the various Stock Option Agreements entered into
under the Plan need not be identical.
5.2 Options
Nontransferability. No Option granted under
the Plan shall be transferable by the Optionee other than by will
or the laws of descent and distribution. An Option may be exercised
during the lifetime of the Optionee only by him or her. No Option
or interest therein may be transferred, assigned, pledged or
hypothecated by the Optionee during his or her lifetime, whether by
operation of law or otherwise, or be made subject to execution,
attachment or similar process.
5.3 Number of
Shares. Each Stock Option Agreement shall
specify the number of Common Shares subject to the Option and shall
provide for the adjustment of such number in accordance with
Article 10.
5.4 Exercise
Price. Each Stock Option Agreement shall
specify the Exercise Price. The Exercise Price under an Option
shall not be less than 100 percent of the Fair Market Value of a
Common Share on the date of grant. Subject to the preceding
sentence, the Exercise Price under any Option shall be determined
by the Committee. The Exercise Price shall be payable in accordance
with Article 6.
5.5 Exercisability and Term. Each Stock
Option Agreement shall specify the date when all or any installment
of the Option is to become exercisable. The Stock Option Agreement
shall also specify the term of the Option. Subject to the preceding
sentence, the Committee shall determine when all or any part of an
Option is to become exercisable and when such Option is to expire;
provided that, in appropriate cases, the Company shall have the
discretion to extend the term of an Option or the time within
which, following termination of employment, an Option may be
exercised, or to accelerate the exercisability of an Option. A
Stock Option Agreement may provide for expiration prior to the end
of its term in the event of the termination of the Optionee’s
employment and shall provide for the suspension of vesting when an
employee is on a leave of absence for a period in excess of six
months in appropriate cases, as determined by the Company; provided
that the exercisability of Options shall be accelerated in the
event of the Participant’s death or Disability and, in the
case of Retirement, the exercisability of all outstanding Options
shall be accelerated, other than any Options that had been granted
within two years of the date of the Optionee’s Retirement.
Options may also be awarded in combination with Restricted Shares,
and such an Award may provide that the Options will not be
exercisable unless the related Restricted Shares are forfeited. In
addition, Options granted under this Section 5 may be granted
subject to forfeiture provisions which provide for forfeiture of
the Option upon the exercise of tandem awards, the terms of which
are established in other programs of the Company.
5.6 Effect of
Change in Control. The Committee (in its sole discretion) may
determine, at the time of granting an Option, that such Option
shall become fully exercisable as to all Common Shares subject to
such Option immediately preceding any Change in Control with
respect to the Company.
5.7 Restrictions on Transfer of Common
Shares. Any Common Shares issued upon
exercise of an Option shall be subject to such sIpecial forfeiture
conditions, rights of repurchase, rights of first refusal and other
transfer restrictions as the Committee may determine. Such
restrictions shall be set
forth in the applicable Stock
Option Agreement and shall apply in addition to any general
restrictions that may apply to all holders of Common
Shares.
5.8 Authorization of Replacement
Options. Concurrently with the grant of any
Option to a Participant, the Committee may authorize the grant of
Replacement Options. If Replacement Options have been authorized by
the Committee with respect to a particular award of Options (the
“Underlying Options”), the Option Agreement with
respect to the Underlying Options shall so state, and the terms and
conditions of the Replacement Options shall be provided therein.
The grant of any Replacement Options shall be effective only upon
the exercise of the Underlying Options through the use of Common
Shares pursuant to Section 6.2 or Section 6.3. The number of
Replacement Options shall equal the number of Common Shares used to
exercise the Underlying Options, and, if the Option Agreement so
provides, the number of Common Shares used to satisfy any tax
withholding requirements incident to the exercise of the Underlying
Options in accordance with Section 12.2. Upon the exercise of
the Underlying Options, the Replacement Options shall be evidenced
by an amendment to the Underlying Option Agreement. The Exercise
Price of a Replacement Option shall be no less than the Fair Market
Value of a Common Share on the date the grant of the Replacement
Option becomes effective. The term of each Replacement Option shall
be equal to the remaining term of the Underlying Option. No
Replacement Options shall be granted to Optionees when Underlying
Options are exercised pursuant to the terms of the Plan and the
Underlying Option Agreement following termination of the
Optionee’s employment. The Committee, in its sole discretion,
may establish such other terms and conditions for Replacement
Options as it deems appropriate.
5.9 Effect of Job
Elimination. Notwithstanding anything to the
contrary contained in the Plan or in any Stock Option Agreement or
Stock Award Agreement entered into with respect to an Award
pursuant to the Plan, in the case of a Participant who is an
Officer, and who becomes entitled to receive payments with respect
to a Severance Period pursuant to the Charles Schwab Severance Pay
Plan (the “Severance Plan”) on account of a Job
Elimination, the terms of the Plan and any Stock Option Agreement
or Stock Award Agreement entered into with respect to an Award
shall be applied by treating the Participant as if the Participant
had terminated employment on the Participant’s Termination
Date. For purposes of applying this Section, the terms Officer,
Severance Period, Termination Date, and Job Elimination shall have
the meanings set forth in the Severance Plan.
Article
6. Payment for Option Shares.
6.1 General
Rule. The entire Exercise Price of Common
Shares issued upon exercise of Options shall be payable in cash at
the time when such Common Shares are purchased, except that the
Committee may at any time accept payment pursuant to
Section 6.2 or 6.3.
6.2 Surrender of
Stock. To the extent that this
Section 6.2 is applicable, payment for all or any part of the
Exercise Price may be made with Common Shares which are surrendered
to the Company. Such Common Shares shall be valued at their Fair
Market Value on the date when the new Common Shares are purchased
under the Plan. In the event that the Common Shares being
surrendered are Restricted Shares that have not yet become vested,
the same restrictions shall be imposed upon the new Common Shares
being purchased.
6.3
Exercise/Sale. To the extent this
Section 6.3 is applicable, payment may be made by the delivery
(on a form prescribed by the Company) of an
irrevocable direction to
Charles Schwab & Co., Inc. to sell Common Shares
(including the Common Shares to be issued upon exercise of the
Options) and to deliver all or part of the sales proceeds to the
Company in payment of all or part of the Exercise Price and any
withholding taxes.
Article
7. Restricted Shares and Performance Share
Awards.
7.1 Time, Amount
and Form of Awards. The Committee may grant
Restricted Shares or Performance Share Awards with respect to an
Award Year during such Award Year or at any time thereafter. Each
such Award shall be evidenced by a Stock Award Agreement between
the Award recipient and the Company. The amount of each Award of
Restricted Shares or Performance Share Awards shall be determined
by the Committee. Awards under the Plan may be granted in the form
of Restricted Shares or Performance Share Awards or in any
combination thereof, as the Committee shall determine at its sole
discretion at the time of the grant. Restricted Shares or
Performance Share Awards may also be awarded in combination with
Options, and such an Award may provide that the Restricted Shares
or Performance Share Awards will be forfeited in the event that the
related Options are exercised.
7.2 Payment for
Restricted Share Awards. To the extent that
an Award is granted in the form of Restricted Shares, the Award
recipient, as a condition to the grant of such Award, shall be
required to pay the Company in cash an amount equal to the par
value of such Restricted Shares.
7.3 Vesting or
Issuance Conditions. Each Award of
Restricted Shares shall become vested, in full or in installments,
upon satisfaction of the conditions specified in the Stock Award
Agreement. Common Shares shall be issued pursuant to Performance
Share Awards in full or in installments upon satisfaction of the
issuance conditions specified in the Stock Award Agreement. The
Committee shall select the vesting conditions in the case of
Restricted Shares, or issuance conditions in the case of
Performance Share Awards, which may be based upon the
Participant’s service, the Participant’s performance,
the Company’s performance or such other criteria as the
Committee may adopt; provided that, in the case of an Award of
Restricted Shares where vesting is based entirely on the
Participant’s service, (i) vesting shall be accelerated
in the event of the Participant’s death or Disability;
(ii) in the case of Retirement, vesting shall be accelerated
for all Restricted Shares that had been granted more than two years
prior to the date of the Participant’s Retirement; and
(iii) vesting shall be suspended when an employee is on a
leave of absence for a period in excess of six months in
appropriate cases, as determined by the Company. The Committee, in
its sole discretion, may determine, at the time of making an Award
of Restricted Shares, that such Award shall become fully vested in
the event that a Change in Control occurs with respect to the
Company. The Committee, in its sole discretion, may determine, at
the time of making a Performance Share Award, that the issuance
conditions set forth in such Award shall be waived in the event
that a Change in Control occurs with respect to the
Company.
7.4 Form of Settlement of Performance
Share Awards. Settlement of Performance
Share Awards shall only be made in the form of Common Shares. Until
a Performance Share Award is settled, the number of Performance
Share Awards shall be subject to adjustment pursuant to Article
10.
7.5 Death of
Recipient. Any Common Shares that are to be issued pursuant to a
Performance Share Award after the recipient’s death shall be
delivered or distributed to the recipient’s beneficiary or
beneficiaries. Each recipient of a Performance Share Award under
the Plan shall designate one or more beneficiaries
for this purpose by filing
the prescribed form with the Company. A beneficiary designation may
be changed by filing the prescribed form with the Company at any
time before the Award recipient’s death. If no beneficiary
was designated or if no designated beneficiary survives the Award
recipient, then any Common Shares that are to be issued pursuant to
a Performance Share Award after the recipient’s death shall
be delivered or distributed to the recipient’s estate. The
Committee, in its sole discretion, shall determine the form and
time of any distribution(s) to a recipient’s beneficiary or
estate.
Article
8. Claims Procedures.
Claims for benefits
under the Plan shall be filed in writing with the Committee on
forms supplied by the Committee. Written notice of the disposition
of a claim shall be furnish
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