Exhibit 10.9
LEGG MASON, INC.
1996 EQUITY INCENTIVE
PLAN
(As Amended July 27,
1999, July 20, 2004 and March 28,
2006)
1. Purpose
The purpose of the Plan is to
provide motivation to Key Employees of the Company and its
Subsidiaries to put forth maximum efforts toward the continued
growth, profitability, and success of the Company and its
Subsidiaries by providing incentives to such Key Employees through
the ownership and performance of the Common Stock or Common Stock
derivatives of the Company. Toward this objective, the Committee
may grant stock options, stock appreciation rights, Stock Awards,
performance units, performance shares, and/or other incentive
awards to Key Employees of the Company and its Subsidiaries on the
terms and subject to the conditions set forth in the
Plan.
2. Definitions
2.1 “ Award”
means any form of stock option, stock appreciation right, Stock
Award, performance unit, performance shares or other incentive
award granted under the Plan, whether individually, in combination,
or in tandem, to a Participant by the Committee pursuant to such
terms, conditions, restrictions, and/or limitations, if any, as the
Committee may establish by the Award Notice or
otherwise.
2.2 “ Award
Notice” means a written notice from the Company to a
Participant that establishes the terms, conditions, restrictions,
and/or limitations applicable to an Award in addition to those
established by this Plan and by the Committee’s exercise of
its administrative powers.
2.3 “ Board”
means the Board of Directors of the Company.
2.4 “ Code” means
the Internal Revenue Code of 1986, as amended from time to
time.
2.5 “ Committee”
means the Compensation Committee of the Board, or such other
committee designated by the Board, authorized to administer the
Plan under paragraph 3 hereof. So long as required by law, the
Committee shall consist of not less than two members, each of whom
shall be a “disinterested person” within the meaning of
Rule 16b-3 promulgated under Section 16 of the Exchange Act
and an “outside director” within the meaning of
Section 162(m) of the Code and related Treasury regulations.
The Committee shall from time to time designate the Key Employees
who shall be eligible for Awards pursuant to this Plan.
2.6 “ Common
Stock” means common stock, par value $.10 per share, of
the Company.
2.7 “ Company”
means Legg Mason, Inc.
2.8 “ Exchange
Act” means the Securities Exchange Act of 1934, as
amended.
2.9 “ Key
Employee” means officers of the Company or a Subsidiary
and any other employee of the Company or a Subsidiary so designated
by the Committee.
2.10 “
Participant” means any individual to whom an Award has
been granted by the Committee under this Plan.
2.11 “ Plan”
means the Legg Mason, Inc. 1996 Equity Incentive Plan.
2.12 “ Stock
Award” means an award granted pursuant to paragraph 10
hereof in the form of shares of Common Stock, Common Stock
derivatives, restricted shares of Common Stock, and/or Units of
Common Stock.
2.13 “
Subsidiary” means a corporation or other business
entity in which the Company directly or indirectly has an ownership
interest of 50 percent or more.
2.14 “Unit” means a
bookkeeping entry used by the Company to record and account for the
grant of the following Awards until such time as the Award is paid,
cancelled, forfeited or terminated, as the case may be: Units of
Common Stock, performance units, and performance shares which are
expressed in terms of Units of Common Stock.
3. Administration
The Plan shall be administered by
the Committee. The Committee shall have the authority to
(a) interpret the Plan and make factual determinations;
(b) establish or amend such rules and regulations as it deems
necessary for the proper operation and administration of the Plan;
(c) select Key Employees to receive Awards under the Plan;
(d) determine the form of an Award, whether a stock option,
stock appreciation right, Stock Award, performance unit,
performance share, or other incentive award established by the
Committee in accordance with clause (h) below, the number of
shares or Units subject to the Award, all the terms, conditions,
restrictions and/or limitations, if any, of an Award, including the
time and conditions of exercise or vesting, and the terms of any
Award Notice, which may include the waiver or amendment of prior
terms and conditions or acceleration or early vesting or payment of
an Award under certain circumstances determined by the Committee;
(e) determine whether Awards will be granted individually, in
combination or in tandem; (f) grant waivers of Plan terms,
conditions, restrictions, and limitations; (g) accelerate the
vesting, exercise, or payment of an Award or the performance period
of an Award when such action or actions would be in the best
interest of the Company; (h) establish such other types of
Awards, besides those specifically enumerated in paragraph 2.1
hereof, which the Committee determines are consistent with the
Plan’s purpose; and (i) take any and all other action it
deems necessary or advisable for the proper operation or
administration of the Plan. All determinations of the Committee
shall be made by a majority of its members, and its determinations
shall be final, binding and conclusive. All actions required of the
Committee under the Plan shall be made in the Committee’s
sole discretion, not in a fiduciary capacity and need not be
uniformly applied to other persons, including similarly
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situated persons. The Committee, in its
discretion, may delegate its authority and duties under the Plan to
the Chief Executive Officer and/or to other senior officers of the
Company under such conditions and/or subject to such limitations as
the Committee may establish; provided, however, that only the
Committee may select and grant Awards to Participants who are
subject to Section 16 of the Exchange Act or to whom
Section 162(m) of the Code applies.
4. Eligibility
Any Key Employee is eligible to
become a Participant of the Plan.
5. Shares
Available
The maximum number of shares of
Common Stock, $0.10 par value per share, of the Company which shall
be available for grant of Awards under the Plan (including
incentive stock options) during its term shall not exceed
16,000,000 (such amount shall be subject to adjustment as provided
in paragraph 20 for events occurring after July 27, 1999).
Notwithstanding anything in the Plan to the contrary, the maximum
aggregate number of shares of Common Stock that shall be granted
under the Plan to any one individual during any calendar year shall
be 250,000. (Such amount shall be subject to adjustment as provided
in paragraph 20.) Any shares of Common Stock related to Awards
which terminate by expiration, forfeiture, cancellation or
otherwise without the issuance of shares, are settled in cash in
lieu of Common Stock, or are exchanged in the Committee’s
discretion for Awards not involving Common Stock, shall be
available again for grant under the Plan. Further, any shares of
Common Stock which are used by a Participant for the full or
partial payment to the Company of the purchase price of shares of
Common Stock upon exercise of a stock option, or for any
withholding taxes due as a result of such exercise, shall again be
available for Awards under the Plan. Similarly, shares of Common
Stock with respect to which a stock appreciation right
(“SAR”) has been exercised and paid in cash shall again
be available for grant under the Plan. The shares of Common Stock
available for issuance under the Plan may be authorized and
unissued shares or treasury shares.
6. Term
The Plan shall become effective as
of April 18, 1996, subject to its approval by the
Company’s shareholders at the 1996 Annual Meeting. No Awards
shall be exercisable or payable before approval of the Plan has
been obtained from the Company’s shareholders. Awards shall
not be granted pursuant to the Plan after April 20,
2014.
7. Participation
The Committee shall select, from
time to time, Participants from those Key Employees who, in the
opinion of the Committee, can further the Plan’s purposes.
Once a Participant is so selected, the Committee shall determine
the type or types of Awards to be made to the Participant and shall
establish in the related Award Notices the terms, conditions,
restrictions and/or limitations, if any, applicable to the Awards
in addition to those set forth in this Plan and the administrative
rules and regulations issued by the Committee.
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8. Stock Options
(a) Grants . Awards may be
granted in the form of stock options to purchase Common Stock or
Common Stock derivatives. These stock options may be incentive
stock options within the meaning of Section 422 of the Code or
non-qualified stock options (i.e., stock options which are not
incentive stock options), or a combination of both.
(b) Terms and Conditions of
Options . An option shall be exercisable in whole or in such
installments and at such times as may be determined by the
Committee. The price at which Common Stock may be purchased upon
exercise of a stock option shall be established by the Committee,
but such price shall not be less than 50 percent of the fair market
value of the Common Stock, as determined by the Committee, on the
date of the stock option’s grant.
(c) Restrictions Relating to
Incentive Stock Options . Stock options issued in the form of
incentive stock options shall, in addition to being subject to all
applicable terms, conditions, restrictions and/or limitations
established by the Committee, comply with Section 422 of the
Code. Accordingly, to the extent that the aggregate fair market
value (determined at the time the option was granted) of the Common
Stock with respect to which incentive stock options are exercisable
for the first time by a Participant during any calendar year (under
this Plan or any other plan of the Company or any of its
Subsidiaries) exceeds $100,000 (or such other limit as may be
required by the Code), then such option as to the excess shall be
treated as a nonqualified stock option. Further, the per share
option price of an incentive stock option shall not be less than
100 percent of the fair market value of the Common Stock, as
determined by the Committee, on the date of the grant. An incentive
stock option shall not be granted to any Participant who is not an
employee of the Company or any “subsidiary” (within the
meaning of section 424(f) of the Code). An incentive stock option
shall not be granted to any employee who, at the time of grant,
owns stock possessing more than 10 percent of the total combined
voting power of all classes of stock of the Company or any
“parent” or “subsidiary” of the Company
(within the meaning of section 424(f) of the Code), unless the
purchase price per share is not less than 110% of the fair market
value of Common Stock on the date of grant and the option exercise
period is not more than five years from the date of grant.
Otherwise, each option shall expire not later than ten years from
its date of grant.
(d) Additional Terms and
Conditions . The Committee may, by way of the Award Notice or
otherwise, establish such other terms, conditions, restrictions
and/or limitations, if any, of any stock option Award, provided
they are not inconsistent with the Plan.
(e) Exercise . Upon exercise,
the option price of a stock option may be paid (i) in cash or
by check, bank draft or money order payable to the order of the
Company; (ii) in shares of Common Stock or shares of
restricted Common Stock as to which restrictions have lapsed;
(iii) a combination of the foregoing; or (iv) such other
consideration as the Committee may deem appropriate. Subject to the
discretion of the Committee, any option granted under the Plan may
be exercised by a broker-dealer acting on behalf of a Participant
if (i) the broker-dealer has received from the Participant or
the Company a fully- and duly-endorsed agreement
evidencing
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such option and instructions signed by the
Participant requesting the Company to deliver the shares of Common
Stock subject to such option to the broker-dealer on behalf of the
Participant and specifying the account into which such shares
should be deposited, (ii) adequate provision has been made
with respect to the payment of any withholding taxes due upon such
exercise or, in the case of an incentive stock option, the
disposition of such shares and (iii) the broker-dealer and the
Participant have otherwise complied with Section 220.3(e)(4)
of Regulation T, 12 CFR Part 220 and any successor rules and
regulations applicable to such exercise. The Committee shall
establish appropriate methods for accepting Common Stock, whether
restricted or unrestricted, and may impose such conditions as it
deems appropriate on the use of such Common Stock to exercise a
stock option.
(f) Rule 16b-3 Restrictions .
A Participant who is a director or officer subject to
Section 16 of the Exchange Act shall be required to exercise
stock options in accordance with the requirements of Rule 16b-3
under the Exchange Act, as such Rule may be amended from time to
time.
9. Stock Appreciation
Rights
(a) Grants . Awards may be
granted in the form of stock appreciation rights
(“SARs”). An SAR may be granted in tandem with all or a
portion of a related stock option under the Plan (“Tandem
SARs”), or may be granted separately (“Freestanding
SARs”). A Tandem SAR may be granted either at the time of the
grant of the related stock option or at any time thereafter during
the term of the stock option. SARs shall entitle the recipient to
receive a payment equal to the appreciation in market value of a
stated number of shares of Common Stock from the exercise price to
the market value on the date of exercise. In the case of SARs
granted in tandem with stock options granted prior to the grant of
such SARs, the appreciation in value is from the option price of
such related stock option to the market value on the date of
exercise. No SAR may be exercised for cash by an officer or
director of the Company who is subject to Section 16 of the
Exchange Act, except in accordance with Rule 16b-3 under the
Exchange Act, as such Rule may be amended from time to
time.
(b) Terms and Conditions of
Tandem SARS . A Tandem SAR shall be exercisable to the extent,
and only to the extent, that the related stock option is
exercisable, and the “exercise price” of such an SAR
(the base from which the value of the SAR is measured at its
exercise) shall be the option price under the related stock option.
However, at no time shall a Tandem SAR be issued if the option
price of its related stock option is less than 50 percent of the
fair market value of the Common Stock, as determined by the
Committee, on the date of the Tandem SAR’s grant. If a
related stock option is exercised as to some or all of the shares
covered by the Award, the related Tandem SAR, if any, shall be
cancelled automatically to the extent of the number of shares
covered by the stock option exercise. Upon exercise of a Tandem SAR
as to some or all of the shares covered by the Award, the related
stock option shall be cancelled automatically to the extent of the
number of shares covered by such exercise, and such shares shall
again be eligible for grant in accordance with paragraph 5 hereof,
except to the extent any shares of Common Stock are issued to
settle the SAR.
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(c) Terms and Conditions of
Freestanding SARS . Freest
