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Exhibit 10.12

 

 

MERCK & CO., INC.

 

PLAN FOR DEFERRED PAYMENT OF

 

DIRECTORS’ COMPENSATION

 

(Amended and Restated January 10, 2003)

 

 

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TABLE OF CONTENTS

 

         

Page

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Article I

  

Purpose

  

1

Article II

  

Election of Deferral, Measurement Methods and Distribution Schedule

  

1

Article III

  

Valuation of Deferred Amounts

  

2

Article IV

  

Redesignation Within a Deferral Account

  

3

Article V

  

Payment of Deferred Amounts

  

4

Article VI

  

Designation of Beneficiary

  

5

Article VII

  

Plan Amendment or Termination

  

5

Schedule A

  

Measurement Methods

  

6

 

 

 

(i)

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MERCK & CO., INC.

PLAN FOR DEFERRED PAYMENT OF

DIRECTORS’ COMPENSATION

 

I.   PURPOSE

 

To provide an arrangement under which directors of Merck & Co., Inc. other than
current employees may (i) elect to voluntarily defer payment of the annual
retainer and meeting and committee fees until after termination of their service
as a director, and (ii) value compensation mandatorily deferred on their behalf.

 

 

II.   ELECTION OF DEFERRAL, MEASUREMENT METHODS AND DISTRIBUTION SCHEDULE

 

  A.   Election of Voluntary Deferral Amount

 

  1.   Prior to December 28 of each year, each director is entitled to make an
irrevocable election to defer until termination of service as a director receipt
of payment of (a) 50% or 100% of the retainer for the 12 months beginning April
1 of the next calendar year, (b) 50% or 100% of the Committee Chairperson
retainer beginning April 1 of the next calendar year, and (c) 50% or 100% of the
meeting and committee fees for the 12 months beginning April 1 of the next
calendar year.

 

  2.   Prior to commencement of duties as a director, a director newly elected
or appointed to the Board during a calendar year must make the election under
this paragraph for the portion of the Voluntary Deferral Amount applicable to
such director’s first year of service (or part thereof).

 

  3.   The Voluntary Deferral Amount shall be credited as follows: (1) Meeting
and committee fees that are deferred are credited as of the day the director’s
services are rendered; (2) if the Board retainer and/or Committee Chairperson
retainer is deferred, a pro-rata share of the deferred retainer is credited on
the last business day of each calendar quarter. The dates the Voluntary Deferral
Amount, or parts thereof, are credited to the director’s deferred account are
hereinafter referred to as the Voluntary Deferral Dates.

 

  B.   Mandatory Deferral Amount

 

  1.   On the Friday following the Company’s Annual Meeting of Stockholders
(such Friday hereinafter referred to as the “Mandatory Deferral Date”), each
director will be credited with an amount equivalent to one-third of the annual
cash retainer for the 12 month period beginning on the April 1 preceding the
Annual Meeting (the “Mandatory Deferral Amount”). The Mandatory Deferral Amount
will be measured by the Merck Common Stock account.

 

  2.   A director newly elected or appointed to the Board after the Mandatory
Deferral Date will be credited with a pro rata portion of the Mandatory Deferral
Amount applicable to such director’s first year of service (or part thereof).
Such pro rata portion shall be credited to the director’s account on the first
day of such director’s service.

 

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  C.   Election of Measurement Method

 

       Each such annual election referred to in Section A shall include an
election as to the measurement method or methods by which the value of amounts
deferred will be measured in accordance with Article III, below. The available
measurement methods are set forth on Schedule A hereto.

 

  D.   Election of Distribution Schedule

 

       Each annual election referred to in Section A above shall also include an
election to receive payment following termination of service as a director of
all Voluntary Deferral Amounts and Mandatory Deferral Amounts in a lump sum
either immediately or one year after such termination, or in quarterly or annual
installments over five, ten or fifteen years.

 

 

III.   VALUATION OF DEFERRED AMOUNTS

 

  A.   Common Stock

 

  1.   Initial Crediting.    The annual Mandatory Deferral Amount shall be used
to determine the number of full and partial shares of Merck Common Stock which
such amount would purchase at the closing price of the Common Stock on the New
York Stock Exchange on the Mandatory Deferral Date.

 

       That portion of the Voluntary Deferral Amount allocated to Merck Common
Stock shall be used to determine the number of full and partial shares of Merck
Common Stock which such amount would purchase at the closing price of the Common
Stock on the New York Stock Exchange on the applicable Voluntary Deferral Date.

 

       However, should it be determined by the Committee on Directors of the
Board of Directors that a measurement of Merck Common Stock on any Mandatory or
Voluntary Deferral Date would not constitute fair market value, then the
Committee shall decide on which date fair market value shall be determined using
the valuation method set forth in this Article III, Section A.1.

 

       At no time during the deferral period will any shares of Merck Common
Stock be purchased or earmarked for such deferred amounts nor will any rights of
a shareholder exist with respect to such amounts.

 

  2.   Dividends.    Each director’s account will be credited with the
additional number of full and partial shares of Merck Common Stock which would
have been purchasable with the dividends on shares previously credited to the
account at the closing price of the Common Stock on the New York Stock Exchange
on the date each dividend was paid.

 

  3.   Distributions.    Distribution from the Merck Common Stock account will
be valued at the closing price of Merck Common Stock on the New York Stock
Exchange on the distribution date.

 

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  B.   Mutual Funds

 

  1.   Initial Crediting.    The amount allocated to each Mutual Fund shall be
used to determine the full and partial Mutual Fund shares which such amount
would purchase at the closing net asset value of the Mutual Fund shares on the
Mandatory or Voluntary Deferral Date, whichever is applicable. The director’s
account will be credited with the number of full and partial Mutual Fund shares
so determined.

 

       At no time during the deferral period will any Mutual Fund shares be
purchased or earmarked for such deferred amounts nor will any rights of a
shareholder exist with respect to such amounts.

 

  2.   Dividends.    Each director’s account will be credited with the
additional number of full and partial Mutual Fund shares which would have been
purchasable, at the closing net asset value of the Mutual Fund shares as of the
date each dividend is paid on the Mutual Fund shares, with the dividends which
would have been paid on the number of shares previously credited to such account
(including pro rata dividends on any partial shares).

 

  3.   Distributions.    Mutual Fund distributions will be valued based on the
closing net asset value of the Mutual Fund shares on the distribution date.

 

  C.   Adjustments

 

       In the event of a reorganization, recapitalization, stock split, stock
dividend, combination of shares, merger, consolidation, rights offering or any
other change in the corporate structure or shares of the Company or a Mutual
Fund, the number and kind of shares or units of such investment measurement
method available under this Plan and credited to each director’s account shall
be adjusted accordingly.

 

 

IV.   REDESIGNATION WITHIN A DEFERRAL ACCOUNT

 

  A.   General

 

       A director may request a change in the measurement methods used to value
all or a portion his/her account other than Merck Common Stock. Amounts deferred
using the Merck Common Stock method and any earnings attributable to such
deferrals may not be redesignated. The change will be effective on (i) the day
when the redesignation request is received pursuant to administrative guidelines
established by the Human Resources Financial Services area of the Treasury
department, provided the request is received prior to the close of the New York
Stock Exchange on such day or (ii) the next following business day if the
request is received when the New York Stock Exchange is closed.

 

  B.   When Redesignation May Occur

 

  1.   During Active Service.    There is no limit on the number of times a
director may redesignate the portion of his/her deferred account permitted to be
redesignated. Each such request shall be irrevocable and can be designated in
whole percentages or as a dollar amount.

 

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  2.   After Death.    Following the death of a director, the legal
representative or beneficiary of such director may redesignate subject to the
same rules as for active directors set forth in Article IV, Section B.1.

 

  C.   Valuation of Amounts to be Redesignated

 

       The portion of the director’s account to be redesignated will be valued
at its cash equivalent and such cash equivalent will be converted into shares or
units of the other measurement method(s). For purposes of such redesignations,
the cash equivalent of the value of the Mutual Fund shares shall be the closing
net asset value of such Mutual Fund on (i) the day when the redesignation
request is received pursuant to administrative guidelines established by the
Human Resources Financial Services area of the Treasury department, provided the
request is received prior to the close of the New York Stock Exchange on such
day or (ii) the next following business day if the request is received when the
New York Stock Exchange is closed.

 

 

V.   PAYMENT OF DEFERRED AMOUNTS

 

  A.   Payment

 

       All payments to directors of amounts deferred will be in cash in
accordance with the distribution schedule elected by the director pursuant to
Article II, Section D. Distributions shall be pro rata by measurement method.
Distributions shall be valued on the fifteenth day of the distribution month
(or, if such day is not a business day, the next business day) and paid as soon
thereafter as possible.

 

  B.   Changes to Distribution Schedule Prior to Termination

 

       Upon the request of a director made at any time during the calendar year
immediately preceding the calendar year in which service as a director is
expected to terminate, the Committee on Directors of the Board of Directors
(“Committee on Directors”), in its sole discretion, may authorize: (a) an
extension of a payment period beyond that originally elected by the director not
to exceed that otherwise allowable under Article II, Section D, and/or (b) a
payment frequency different from that originally elected by the director. Such
request may not be made with regard to amounts deferred after December 31, 1990
using the Merck Common Stock method and to any earnings attributable to such
deferrals. Deferrals into Merck Common Stock made after December 31, 1990 and
any earnings thereon may only be distributed in accordance with the schedule
elected by the director under Article II, Section D or determined by the
Committee on Directors under Article VI.

 

  C.   Post-Termination Changes to Distribution Schedule

 

       Following termination of service as a director, each director may make
one request for a further extension of the period for distribution of his/her
deferred compensation. Such request must be received by the Committee on
Directors prior to the first distribution to the participant under his/her
previously elected distribution schedule. Any revised distribution schedule may
not exceed the deferral period otherwise allowable under Article II, Section C.
This request may be granted and a new payment schedule determined in the sole
discretion of the Committee on Directors.

 

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       Such request may not be made with regard to amounts deferred after
December 31, 1990 using the Merck Common Stock Method and to any earnings
attributable to such deferrals. Any retired director who is not subject to U.S.
income tax may petition the Committee on Directors to change payment frequency,
including a lump sum distribution, and the Committee on Directors may grant such
petition if, in its discretion, it considers there to be reasonable
justification therefor. Deferrals into Merck Common Stock made after December
30, 1990 and any earnings thereon may only be distributed in accordance with the
schedule elected by the director under Article II, Section D or determined by
the Committee on Directors under Article VI.

 

  D.   Forfeitures

 

       A director’s deferred amount attributable to the Mandatory Deferral
Amount and earnings thereon shall be forfeited upon his or her removal as a
director or upon a determination by the Committee on Directors in its sole
discretion, that a director has:

 

  (i)   joined the Board of, managed, operated, participated in a material way
in, entered employment with, performed consulting (or any other) services for,
or otherwise been connected in any material manner with a company, corporation,
enterprise, firm, limited partnership, partnership, person, sole proprietorship
or any other business entity determined by the Committee on Directors in its
sole discretion to be competitive with the business of the Company, its
subsidiaries or its affiliates (a “Competitor”);

 

  (ii)   directly or indirectly acquired an equity interest of five (5) percent
or greater in a Competitor; or

 

  (iii)   disclosed any material trade secrets or other material confidential
information, including customer lists, relating to the Company or to the
business of the Company to others, including a Competitor.

 

 

VI.     DESIGNATION OF BENEFICIARY

 

       In the event of the death of a director, the deferred amount at the date
of death shall be paid to the last named beneficiary or beneficiaries designated
by the director, or, if no beneficiary has been designated, to the director’s
legal representative, in one or more installments as the Committee on Directors
in its sole discretion may determine.

 

 

VII.   PLAN AMENDMENT OR TERMINATION

 

       The Committee on Directors shall have the right to amend or terminate
this Plan at any time for any reason.

 

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SCHEDULE A

 

MEASUREMENT METHODS

 

(January 1, 2002 – January 10, 2003)

 

Merck Common Stock

 

Mutual Funds

 

American Century Emerging Markets Fund

American Century Europacific Growth Fund

Fidelity Destiny I

Fidelity Dividend Growth

Fidelity Equity Income Fund

Fidelity Low-Priced Stock Fund

Fidelity Retirement Money Market

Fidelity Spartan Government Income

Fidelity Spartan U.S. Equity Index

Franklin Small-Mid Cap Growth A

Janus Enterprise

Janus Growth & Income

Liberty Acorn Z

PIMCO Foreign Bond Institutional

PIMCO Long Term US Government Institutional

PIMCO Total Return Institutional

Putnam Global Equity Fund A*

Putnam International Voyager A

Putnam Vista A

T. Rowe Price Blue Chip Growth Fund

Vanguard Asset Allocation

 

*From September 20, 2002 — September 30, 2002, this investment was briefly named
the Putnam Global Growth Fund A as a result of the merger, in September 2002, of
Putnam Global Equity Fund A with Putnam Global Growth Fund A. The merged fund
briefly retained the name “Putnam Global Growth Fund A.” Effective October 1,
2002, the merged fund changed its name to “Putnam Global Equity Fund A.”

 

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SCHEDULE A

 

MEASUREMENT METHODS

 

(Effective January 11, 2003)

 

Merck Common Stock

 

Mutual Funds

 

American Century Emerging Markets Institutional

American Funds EuroPacific Growth Fund

Fidelity Destiny I

Fidelity Dividend Growth

Fidelity Equity-Income

Fidelity Low-Priced Stock

Fidelity Retirement Money Market

Fidelity Spartan Government Income

Fidelity Spartan U.S. Equity Index

Franklin Small-Mid Cap Growth A

Janus Enterprise

Janus Growth & Income

Liberty Acorn Class Z

PIMCO Foreign Bond Institutional

PIMCO Long Term US Government Institutional

PIMCO Total Return Institutional

Putnam Global Equity A

Putnam International Voyager A

Putnam Vista A

T. Rowe Price Blue Chip Growth

Vanguard Asset Allocation

 

 

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