Exhibit 10(o)
SCHERING-PLOUGH CORPORATION
LONG-TERM PERFORMANCE SHARE UNIT INCENTIVE PLAN
1. Plan Objective
Schering-Plough
Corporation (the “Company”) has established the
Schering-Plough Corporation Long-Term Performance Share Unit
Incentive Plan (referred to as the “Plan”) which is
designed to encourage results-oriented actions on the part of
elected officers and certain other key executives of the Company
that will drive the achievement of specific business
objectives.
2. Eligibility
Management
employees of the Company and its subsidiaries who are elected
officers of the Company or other key executives are eligible to
participate in the Plan. The Administrator (as defined in
Section 3 below) shall select the elected officers and other
key executives who shall participate in the Plan (the
“Participants”).
3. Administration
(a) The Plan
shall be administered by the Compensation Committee of the Board of
Directors with respect to executives who are subject to the
reporting requirements of Section 16 of the Exchange Act of
1934, as amended (“Section 16 Executives”), and
the Plan shall be administered by the Chief Executive Officer of
the Company (“CEO”) with respect to all other
employees. The CEO may delegate his authority to administer the
Plan to an individual or committee. The term
“Administrator” shall mean the Compensation Committee,
as applied to Section 16 Executives, and the CEO or such
individual or committee to which authority has been delegated, as
applied to all other employees.
(b) The
Administrator shall have full power, discretion and authority to
establish the rules and regulations relating to the Plan, to
interpret the Plan and those rules and regulations, to select
Participants for the Plan, to determine each Participant’s
target award, performance goals and final award, to make all
factual and other determinations in connection with the Plan, and
to take all other actions necessary or appropriate for the proper
administration of the Plan, including the delegation of such
authority, discretion or power, where appropriate.
(c) All
powers of the Administrator shall be executed in its sole
discretion, in the best interest of the Company, not as a
fiduciary, and in keeping with the objectives of the Plan and need
not be uniform as to similarly situated individuals. The
Administrator’s administration of the Plan, including all
such rules and regulations, interpretations, selections,
determinations, approvals, decisions, delegations, amendments,
terminations and other actions, shall be final and binding on the
Company and all employees of the Company and its subsidiaries,
including the Participants and their respective
beneficiaries.
4. Target Awards and Performance
Goals
(a) The
Administrator shall establish for each Participant a target award,
which shall be expressed as phantom stock units and shall be
payable if and to the extent that the Company attains the
performance goals for the performance period as described below or
otherwise in connection with a change in control (as defined in the
Company’s 2002 Stock Incentive Plan (hereinafter referred to
as a “Change in Control”). The target award shall be
equal to three times the annual incentive target amount in effect
for the Participant at the beginning of the performance period
under the Company’s annual incentive plan applicable to the
Participant, or such other amount as the Administrator determines,
divided by the Company’s stock price on January 2, 2004.
The Company’s stock price shall be the closing price of the
Company’s common stock on January 2, 2004 as reported on
the New York Stock Exchange. The target award shall be expressed as
phantom stock units, each of which shall represent one hypothetical
share of common stock of the Company.
(b) The
performance period is the three-year period beginning
January 1, 2004 and ending December 31, 2006. The
Administrator shall establish the performance goals for the
performance period. Unless the Administrator determines otherwise,
the performance goals shall be based on (i) the
Company’s achievement of its targeted three-year compounded
total shareholder return for the performance period, and
(ii) the Company’s total shareholder return ranking as
compared to its peer group for the performance period all as set
forth on Exhibit A. The performance period is the three-year
period beginning January 1, 2004 and ending December 31, 2006.
The Administrator may adjust the performance goals as it deems
appropriate to take into account corporate transactions or other
extraordinary events that occur during the performance period. For
purposes of this plan total shareholder return means the price of
the common stock of the Company at the end of the performance
period plus dividends paid on the common stock during the
Performance Period, divided by the price of the common stock of the
Company at the beginning of the Performance Period. The price of
the common stock of the Company is determined by the average
closing quotation price of the Company stock on the New York Stock
Exchange (NYSE) or such other national securities exchange as
may be designated by the Committee, during the 30 days of
quotation immediately prior to the applicable date (the “Fair
Market Value”).
(c) The peer
group consists of the following companies:
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Bristol-Myers
Squibb Company
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The
Administrator may adjust the peer group from time to time as it
deems appropriate, including the addition, deletion or replacement
of companies, to take into account mergers and other changes in the
companies comprising the peer group.
(d) The
Administrator may establish appropriate terms and conditions to
accommodate newly hired and transferred employees. Unless otherwise
determined by the Administrator, the target award for a newly hired
or transferred employee shall be prorated based on a fraction, the
numerator of which is the number of months such Participant will
participate in the Plan during the performance period (rounded to
the nearest whole month) and the denominator of which is 36. The
target award shall be equal to three times the annual incentive
target amount in effect for the Participant on his or her first
date of employment with the Company or on the date of transfer, as
applicable, or such other amount as the Administrator determines,
divided by the Company’s stock price on the first date of
employment with the Company or the date of transfer, as applicable.
The Company’s stock price shall be the closing price of the
Company’s common stock on the applicable date, as reported on
the New York Stock Exchange.
5. Calculation of Incentive
Awards
(a) At the
end of the performance period, the Administrator shall determine
whether and to what extent the performance goals have been met and
the percentage of the target awards that are earned.
(b) The
Administrator shall rely on the audited financial statements of the
Company and its subsidiaries to determine whether and to what
extent the performance goals are met.
(c) The
Administrator shall compute each Participant’s incentive
award for the performance period based on the Company’s
achievement of the performance goals. Each Participant’s
incentive award will be subject to vesting as described in
Section 6 below. As a Participant’s incentive award
vests pursuant to Section 6 of this Plan, the Company shall
credit the Fair Market Value of each Participant’s vested
incentive award to the Participant’s account under the
Schering-Plough Corporation Savings Advantage Plan (the
“Savings Advantage Plan”). Such credited amount shall
be deemed to be invested in the investment options available under
the Savings Advantage Plan in accordance with the
Participant’s then current election applicable to
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