Exhibit 10.16

 

RETIREMENT BENEFITS, PHANTOM STOCK GRANTS AND STOCK OPTIONS FOR DIRECTORS

(Effective January 1, 1997, as revised September 24, 1998;

November 18, 1999; March 23, 2000)

 

 

No retirement benefit will be paid to any director whose service begins on or
after November 18, 1999.  Retirement benefits for directors whose service began
prior to November 18, 1999, will be determined as follows:  

 

•

A director who is retired as of January 1, 1997 will receive an annual
retirement benefit equal to 10% of the annual retainer fee payable to active
directors at the time such benefit is actually paid for each year or fraction
thereof of service as a director (with a maximum of ten years).  

 

•

Each director who was active as of January 1, 1997 shall have elected, prior to
February 15, 1997, to:

 

(1) receive an annual retirement benefit equal to 10% of the annual retainer fee
payable to active directors at the time such benefit is actually paid for each
year or fraction thereof of service as a director (with a maximum of ten years);
or

 

(2) have an amount equal to the present value of that director's earned annual
retirement benefit at December 31, 1996 credited as of January 1, 1997 to a
book-entry account of that director pursuant to a Deferred Compensation
Agreement; or

 

(3) convert the present value of that director's earned annual retirement
benefit at December 31, 1996 to the number of shares of phantom stock (carried
to four decimal places) determined by dividing such present value by the fair
market value of a share of common stock on the most recent trading day of the
common stock on the NYSE, which shares will be credited as of January 1, 1997 to
a book-entry phantom stock account.  

 

 

•

A non-employee director who (i) was active as of January 1, 1997 with less than
ten years of service as a director and who chose alternative (2) or (3) in the
preceding paragraph or (ii) is first elected to the Board on or after January 1,
1997, but prior to November 18, 1999, will be credited as of January 1 of each
year beginning January 1, 1997 with the number of shares of phantom stock
(carried to four decimal places) determined by dividing an amount equal to 35%
of the annual retainer fee payable to active directors for such year by the fair
market value of a share of common stock on the most recent trading day of the
common stock; provided that a non-employee director shall be credited with
phantom shares only until the commencement of the tenth year of service as a
non-employee director; provided, further, that a non-employee director may
elect, as set forth in and pursuant to the applicable Stock Incentive Plan of
the Company, to receive in lieu of crediting all or some of such shares of
phantom stock, an option to purchase shares of common stock.

PAYMENT OF ANNUAL RETIREMENT BENEFITS, DEFERRED COMPENSATION AND PHANTOM STOCK
AND TREATMENT OF STOCK OPTIONS

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Annual Retirement Benefits

 

Annual retirement benefits will be paid quarterly in advance as follows:

 

•

The annual retirement benefit of a director whose service on the Board
terminates at or after age 65 for any reason will begin with the first calendar
quarter following the effective date of retirement.

 

•

The annual retirement benefit of a director whose service on the Board
terminates prior to age 65 for any reason except disability that ends the
director's active business career or employment will begin with the first
calendar quarter following the attainment of age 65.

 

•

The annual retirement benefit of a director whose service on the Board
terminates prior to age 65 by reason of disability that ends the director's
active business career or employment will begin with the first calendar quarter
following the effective date of retirement.

 

•

In all cases, no payment of an annual retirement benefit will occur following
the date of death.

 

•

A former director who is receiving an annual retirement benefit will receive any
future increases in annual retirement benefits from and after the time such
increases are put into effect.

 

Deferred Compensation

 

•

A director who was active as of January 1, 1997 who elected to have an amount
equal to the present value of that director's earned annual retirement benefit
at December 31, 1996 credited as of January 1, 1997 to a book-entry account
pursuant to a Deferred Compensation Agreement will be paid in accordance with
the terms and conditions of that Agreement.

 

Phantom Stock

 

 

•

On each dividend payment date in respect of the common stock, a director's
phantom stock account shall be credited with the number of shares of phantom
stock (carried to four decimal places) determined by dividing (i) the product of
the number of shares of phantom stock credited to that director's phantom stock
account as of the record date for such dividend multiplied by the per share
amount of the dividend by (ii) the fair market value of a share of common stock
on the dividend payment date (or if the dividend payment date is not a trading
day on the NYSE, the most recent trading day of the common stock on the NYSE).

 

•

In the event of any stock split, stock dividend, recapitalization,
reorganization, merger, consolidation, combination, exchange of shares,
liquidation, spin-off or other similar change in capitalization or event, or any
distribution to holders of common stock other

 

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than a regular cash dividend, the number and class of phantom securities
credited to a director's account shall be appropriately adjusted by a committee
designated by the Board.

 

•

In connection with termination of service on the Board for any reason other than
death, the director may elect as of the effective date of such cessation of
service (and if the director's cessation of service is by reason of death, the
director shall be deemed to elect as of the date of death), to convert the value
of that director's phantom stock account (determined by multiplying the number
of shares of phantom stock by the fair market value of the common stock on the
effective date of such cessation of service) to a cash amount to be credited to
a book-entry cash account.  Such cash account shall be credited quarterly
(beginning on the last day of the calendar quarter in which the termination of
service occurred) with an amount of interest on the balance (including interest
previously credited) at an annual rate equal to the then current yield
obtainable on United States government bonds having a maturity date of
approximately five years.   Failure to make an election under this clause shall
result in the continuation of the director's phantom stock account.

 

•

If, as a result of any merger, consolidation, exchange, reclassification, sale
of assets or similar transaction or event, the common stock ceases, or as a
result of a transaction or event is intended to cease, to be listed for trading
on the NYSE (and is not otherwise publicly traded), the director or any former
director may elect at any time after the Company has entered into an agreement
providing for such transaction or event, as of a date designated by the director
or former director (and in the absence of such an election and designation the
director or former director shall be deemed to elect as of the effective date of
such transaction or event), to convert the value of that director's phantom
stock account (determined by multiplying the number of shares of phantom stock
by the fair market value of the common stock on the effective date of such
cessation of service) to a cash amount to be credited to a book-entry cash
account.  Such cash account shall be credited quarterly (beginning on the last
day of the calendar quarter in which the termination of service occurred) with
an amount of interest on the balance (including interest previously credited) at
an annual rate equal to the then current yield obtainable on United States
government bonds having a maturity date of approximately five years.  

 

A director's cash account or phantom stock account will be paid as follows:

 

 

•

A director whose service on the Board terminates at or after age 65 for any
reason except death shall elect to receive, as of the first day of the first
calendar quarter following the effective date of such cessation of service,
either (1) an annual amount in cash for a number of years not exceeding ten
determined by dividing the value of the director's phantom stock account (the
value of the phantom stock is to be determined by reference to the fair market
value of the common stock on the date of such cessation of service), but not the
director’s cash account, as of the effective date of such cessation of service
by the number of annual payments to be made; provided that the last payment made
shall be for 100% of the value of the director's account as of the date of the
last payment, (2) an annual amount in cash for a number of years not exceeding
ten determined by dividing the value of the director's cash account or phantom
stock account (the value of the

 

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phantom stock is to be determined by reference to the fair market value of the
common stock on the effective date of the distribution and after giving effect
to the crediting of shares of phantom stock on each dividend payment date on or
prior to the date of the distribution) as of the effective date of the
distribution by the number of annual payments remaining to be made; provided
that the last payment made shall be for 100% of the value of the director's cash
account or phantom stock account, as the case may be, as of the date of the last
payment,  or (3) a lump sum amount in cash equal to the value of the director’s
cash account or phantom stock account (the value of the phantom stock is to be
determined by reference to the fair market value of the common stock on the
effective date of such cessation of service). In the absence of a timely
election, a director shall be deemed to have elected option (1) with ten annual
payments with respect to his phantom stock account, and option (2) with ten
annual payments with respect to his cash account.

 

 

•

A director whose service on the Board terminates prior to age 65 for any reason
except death shall elect to receive (1) as of the first day of the first
calendar quarter following the attainment of age 65, an annual amount in cash a
number of years not exceeding ten determined by dividing the value of the
director's cash account or phantom stock account (the value of the phantom stock
is to be determined by reference to the fair market value of the common stock on
the effective date of the distribution and after giving effect to the crediting
of shares of phantom stock on each dividend payment date on or prior to the date
of the distribution) as of the effective date of the distribution by the number
of annual payments remaining to be made; provided that the last payment made
shall be for 100% of the value of the director's account as of the date of the
last payment,  or (2) shall elect to receive, as of the first day of the first
calendar quarter following the effective date of such cessation of service,
either (i) an annual amount in cash for a number of years not exceeding ten
determined by dividing the value of the director's phantom stock account (the
value of the phantom stock is to be determined by reference to the fair market
value of the common stock on the date of such cessation of service), but not the
director’s cash account,  as of the effective date of such cessation of service
by the number of annual payments to be made; provided that the last payment made
shall be for 100% of the value of the director's account as of the date of the
last payment, (ii) an annual amount in cash for a number of years not exceeding
ten determined by dividing the value of the director's cash account or phantom
stock account (the value of the phantom stock is to be determined by reference
to the fair market value of the common stock on the effective date of the
distribution and after giving effect to the crediting of shares of phantom stock
on each dividend payment date on or prior to the date of the distribution) as of
the effective date of the distribution by the number of annual payments
remaining to be made; provided that the last payment made shall be for 100% of
the value of the director's cash account or phantom stock account, as the case
may be, as of the date of the last payment,  or (iii) a lump sum amount in cash
equal to the value of the director’s cash account or phantom stock account (the
value of the phantom stock is to be determined by reference to the fair market
value of the common stock on the effective date of such cessation of
service).  In the absence of a timely election, a director shall be deemed to
have elected option (2)(i) with ten annual payments with respect to his phantom
stock account, and (2)(ii) with ten annual payments with respect to his cash
account.

 

 

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•

In all cases, if a director's cessation of service as a director is by reason of
death or if a director dies while retired and amounts remain to be paid under
the director's cash account or phantom stock account, 100% of the value of the
director's cash account or phantom stock account (the value of the phantom stock
is to be determined by reference to the fair market value of the common stock on
the date of death) as of the date of death shall be paid as soon as practicable
after the date of death to the director's estate or any beneficiaries designated
by the director.  

 

•

If, as a result of any recapitalization, reorganization, merger, consolidation,
combination, exchange of shares or similar transaction or event, the common
stock will cease, or as a result of a transaction or event is intended to cease,
to be listed for trading on the NYSE (and is not otherwise publicly traded), any
former director who has amounts remaining to be paid under the former director’s
cash account or phantom stock account, may elect at any time after the Company
has entered into an agreement providing for such transaction or event, as of a
date designated by the former director to receive a lump sum amount in cash
equal to the value of the director’s cash account or phantom stock account (the
value of the phantom stock is to be determined by reference to the fair market
value of the common stock on the date designated by the former director).

 

Stock Options

 

•

Each option to purchase shares of common stock held by a non-employee director
shall be governed by the terms and conditions of the applicable stock option
agreement and stock incentive plan.

 

MISCELLANEOUS

 

To be entitled to receive any benefits under this policy, a former director must
agree to consult with and render advice to the Company as requested at times
that do not unreasonably interfere with his personal or other business
activities.  Conduct detrimental to the Company, as determined by the Board of
Directors, will result in forfeiture of all benefits under this policy.

 

These provisions on benefits will apply to all living, former directors
effective January 1, 1997, regardless of when they were first elected or ceased
to serve, to all active, non-employee directors as of January 1, 1997 whose
service on the Board terminates after January 1, 1997 and to all non-employee
directors who are first elected to the Board on or after January 1, 1997.

 

•

A director’s rights to receive benefits shall be no greater than the rights of
any unsecured general creditor of the Company.

 

 

•

A director shall not have any rights as a stockholder of the Company with
respect to any shares of phantom stock.

 

•

This policy and all determinations made and actions taken pursuant hereto, to
the extent not governed by the Internal Revenue Code or the laws of the United
States, shall be governed by the laws of the State of Delaware and construed in
accordance therewith without giving effect to principles of conflict of laws.

 

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•

Benefits described herein may not be sold, transferred, assigned, pledged,
hypothecated, encumbered or otherwise disposed of (whether by operation of law
or otherwise) or be subject to execution, attachment or similar process.

 

For the purposes of these provisions on retirement benefits and phantom stock
grants:

 

•

A non-employee director is a director who is not currently an employee of the
Company and/or its subsidiaries and who never has been an employee of the
Company and/or its subsidiaries.

 

•

The fair market value of the common stock shall be determined by reference to
the average of the high and low trading prices as reported in the New York Stock
Exchange Composite Transactions in The Wall Street Journal for the relevant
trading day.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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