Exhibit 10.1

 

Proposal 3. Amendment and Reapproval of the Stock Incentive Plan

 

Summary of the Proposal

 

The company has maintained the Stock Incentive Plan since it was approved by
stockholders in 1998. We refer to the Stock Incentive Plan, as amended and in
effect before the 2010 annual meeting, as the “Existing Plan.” On March 17 and
March 26, 2010, the board of directors, based on the recommendation of the
Compensation Committee of the board (the “Committee”), authorized the adoption,
subject to stockholder approval, of amendments to the Existing Plan. We use the
term the “Plan” to refer to the Existing Plan after amending it to give effect
to the proposed amendments. We are asking you to approve the Plan, which
includes the following amendments to the Existing Plan:

 

·                  an increase by 4,353,084 of the number of shares authorized
for issuance under the Plan;

 

·                  additions to broaden the performance goals contained in the
Plan and conform them to the performance goals contained in our Annual Incentive
Plan;

 

·                  adding provisions to clarify that (i) shares tendered or
withheld to cover the exercise price of options or taxes associated with an
award and (ii) shares purchased on the open market with the proceeds from option
exercises will not be available again for future grants;

 

·                  adding provisions to clarify that the total number of shares
subject to stock-settled stock appreciation rights or net-settled options will
count against the share authorization regardless of the number of shares issued
upon settlement;

 

·                  increasing the maximum amounts of awards under the Plan to
the amounts reflected in the description of the Plan below;

 

·                  providing that a full-value award of one share after our 2010
annual meeting will reduce the shares available for future awards by two shares;

 

·                  providing a 10-year maximum term for nonqualified options
(the company has only issued options with 10-year terms throughout the life of
the Existing Plan);

 

·                  adding provisions which prohibit the cancellation of
underwater options or stock appreciation rights in exchange for cash and
prohibit reducing the minimum purchase price of a share of common stock subject
to a stock appreciation right;

 

·                  adding a prohibition of the grant of dividends or dividend
equivalents with respect to options and stock appreciation rights (the company
has never provided for dividends or dividend equivalents payable with respect to
options or stock appreciation rights);

 

·                  adding a “net exercise” provision whereby the company would
withhold shares sufficient to cover the exercise price of an option as an
alternative means of paying the exercise price;

 

·                  eliminating the current provision that any common stock
tendered to satisfy the aggregate purchase price in connection with the exercise
of an option must have been held by the recipient for at least six months prior
to such tender if acquired under the Plan (or any other

 

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compensation plan maintained by the company) or must have been purchased in the
open market;

 

·                  clarifying that discretion to deem that performance measures
have been satisfied will be limited to the maximum or any lower level instead of
the maximum or any other level;

 

·                  eliminating a provision that requires separate approval for
share withholding for taxes;

 

·                  amending the provision concerning a change in control
resulting from a reorganization, merger or consolidation of the company or sale
or other disposition of all or substantially all of the assets of the company or
the consummation of a plan of complete liquidation or dissolution of the
company, in each case in which holders of the company’s common stock receive
consideration other than shares of common stock of a public company as the
consideration for their shares of our common stock, to provide that cash
payments on account of awards under the Plan will not be made until within ten
days of the consummation of the change in control instead of within ten days of
stockholder approval of the transaction resulting in a change in control; and

 

·                  other changes to respond to changes in law or practice since
1998 such as permitting delivery of signed award agreements by participants to
the company by facsimile or e-mail and clarifying that the Committee is not
authorized to make payments with respect to awards intended to qualify as
“qualified performance-based compensation” in connection with retirement if
applicable performance goals have not been satisfied.

 

The board and the Compensation Committee believe that the proposed changes to
the Existing Plan accomplished by the adoption of the Plan would be in the best
interests of the company.

 

The following table provides the number of shares subject to outstanding awards
and the number of shares available for future grants under company plans and
programs as of March 1, 2010.

 

Number of Stock Options Outstanding

 

5,409,085

 

Weighted Average Exercise Price

 

$

26.28

 

Weighted Average Remaining Term (in years)

 

6.7

 

Number of Full-Value Awards Outstanding:

 

 

 

Number of Full-Value Awards (restricted shares, restricted stock units,
performance shares, and phantom stock units)

 

953,479

 

Number of Shares Remaining Available for Future Grant:

 

 

 

Stock Incentive Plan (the “Existing Plan”)

 

1,346,916

 

Deferred Compensation Plan for Outside Directors and Supplemental Executive
Retirement Plan (“Non-Shareholder Approved Plans”)

 

453,610

 

Common Shares Outstanding (as of March 22, 2010)

 

75,257,677

 

 

There are no other shares remaining available for grant under any other company
plans or programs except as identified in the table above. If the Proposal to
amend the Existing Plan is approved, the total number of shares of common stock
available for new awards will be increased by 4,353,084 shares to a total of
5,700,000 shares (subject to adjustment in the event of a stock split, stock
dividend, recapitalization, merger, spin-off or other similar change or event
involving the company).

 

Description of the Plan and Performance Goals

 

Purpose of the Plan.  The purpose of the Plan is to promote the long-term
financial success of the company by (i) attracting and retaining executive
personnel of outstanding ability; (ii) strengthening the company’s capability to
develop, maintain and direct a competent management team; (iii) motivating
executive personnel by means of performance-related incentives to achieve
longer-range performance goals; (iv) providing incentive compensation
opportunities which are competitive with those of other major corporations;
(v) enabling such executive personnel to participate in the long-term growth and

 

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financial success of the company through increased stock ownership and
(vi) serving as a mechanism to compensate outside directors. Under the Plan, the
company may grant a variety of different stock-based awards including
nonqualified stock options, incentive stock options, stock appreciation rights,
restricted stock, restricted stock units, bonus stock and performance shares.

 

The Plan has been designed to meet the requirements of Section 162(m) of the
Internal Revenue Code regarding deductibility of executive compensation.
Section 162(m) generally limits to $1 million the amount that a publicly held
corporation is allowed to deduct each year for the compensation paid to each of
its named executive officers. However, “qualified performance-based
compensation” is not subject to the $1 million deduction limit. To qualify as
qualified performance-based compensation, certain criteria must be satisfied and
the material terms under which the compensation is to be paid, including the
performance goals, must be disclosed to, and approved by a separate majority
vote of, stockholders before the compensation is paid. If approved by the
company’s stockholders, the Plan will enable the Committee to continue to grant
awards under the Plan that will be exempt from the deduction limits of
Section 162(m) of the Internal Revenue Code.

 

The material features of the Plan are summarized below. The following summary of
the Plan is qualified in its entirety by reference to the full text of the Plan,
which is included as Appendix B to this Proxy Statement.

 

Administration.  The Compensation Committee is the Committee responsible for
administration of the Plan. Members of the Compensation Committee do not serve
for fixed periods but may be appointed or removed at any time by the board. The
Plan provides that the Committee administering the Plan (the “Committee”) will
consist of two or more members of the board, each of whom shall be (i) a
“Non-Employee Director” within the meaning of Rule 16b-3 under the Exchange Act,
(ii) an “outside director” within the meaning of Section 162(m) of the Internal
Revenue Code and (iii) an “Independent Director” within the meaning of the
rules of the New York Stock Exchange. Subject to the express provisions of the
Plan, the Committee has the authority to select eligible directors, officers and
other key management employees of the company and its subsidiaries for
participation in the Plan and determine all of the terms and conditions of each
grant and award.

 

Eligibility and Participation.  All non-employee directors of the company and
all salaried employees of the company and its affiliates will be eligible to
receive awards under the Plan at the discretion of the Committee. The company
currently has nine non-employee directors, and the company and its affiliates
currently have approximately 3,000 employees eligible to participate in the
Plan. Generally, awards have been limited to the company’s nine outside
directors, each of its nine officers and approximately 130 other management
employees. The benefits or amounts that will be received by any of the
participants are indeterminable at this time. Each grant and award will be
evidenced by a written agreement containing such provisions not inconsistent
with the Plan as the Committee shall approve. The Committee also has the
authority to establish rules and regulations for administration of the Plan and
to decide questions of interpretation of any provisions of the Plan. All such
rules, regulations, interpretations and conditions will be conclusive and
binding on all parties. In addition and subject to compliance with Section 157
of the Delaware General Corporation Law, the Committee may authorize one or more
executive officers of the company to make certain awards under the Plan to
employees who are not directors or executive officers.

 

Available Shares.  As of March 1, 2010, there were 6,240,654 shares of common
stock subject to outstanding awards issued under the Existing Plan including
831,569 shares subject to full-value awards (restricted stock, restricted stock
units and performance shares) and 1,346,916 shares available for new awards. If
the Proposal to amend the Existing Plan is approved, the total number of shares
of common stock available for new awards will be increased by 4,353,084 to a
total of 5,700,000 (subject to adjustment in the event of a stock split, stock
dividend, recapitalization, merger, spin-off or other similar change or event
involving the company). On March 1, 2010, the closing price of a share of the

 

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common stock on the New York Stock Exchange was $33.76. Under the Existing Plan,
we reduced the number of shares available for future awards by one share for
each share that is subject to a stock option or stock appreciation right under
the Plan and each other award granted prior to May 18, 2005 and by 2.5 for all
other awards granted after May 18, 2005 and prior to May 19, 2010. Under the
Plan we will continue to reduce the number of shares available for future awards
by one share for each share that is subject to a stock option or stock
appreciation right under the Plan and for all other awards granted after May 19,
2010 we will reduce the number of shares available for future awards by 2.0. For
example, if we issue 100 shares of restricted stock after May 19, 2010, we will
reduce the number of shares available for new awards by 200, and if we grant
someone 100 stock options or stock appreciation rights to be settled in stock,
we will reduce the number of shares available by 100. We will not reduce the
number of shares available if an award can only be settled in cash or to the
extent that an award that can be settled in either stock or cash is settled in
cash.

 

If an award expires, terminates, is cancelled or forfeited, the shares subject
to that award will be available for future awards. Shares of common stock
subject to an award under the Plan may not be made available for issuance under
the Plan if such shares are: (i) shares that were subject to a stock-settled
stock appreciation right and were not issued as a result of the net settlement
or net exercise of such stock appreciation right, (ii) shares used to pay the
exercise price of an incentive stock option or non-statutory stock option,
(iii) shares delivered to or withheld by the company to pay withholding taxes
related to an award under the Plan or (iv) shares repurchased on the open market
with the proceeds of an option exercise.

 

Shares of common stock issued in accordance with the Plan will be made available
from authorized and unissued shares of common stock, or authorized and issued
shares of common stock reacquired and held as treasury shares or otherwise, or a
combination thereof.

 

To the extent required by Section 162(m) of the Internal Revenue Code and the
rules and regulations thereunder, the maximum number of shares of common stock
with respect to which options or stock awards or performance share awards or a
combination thereof may be granted during any calendar year to any person will
be 500,000, subject to adjustment as provided in the Plan.

 

Awards under the Plan are to be evidenced by written agreements containing the
terms and conditions of the awards. Award agreements are subject to amendment,
including unilateral amendment by the company (with the approval of the
Committee) unless the amendments adversely affect the participant.

 

Change in Control.  In the event of certain acquisitions of 20% or more of the
common stock, a change in a majority of the board, a reorganization, merger or
consolidation or sale or disposition of all or substantially all of the assets
of the company (unless, among other conditions, the company’s stockholders
receive 50% or more of the stock of the surviving company) or a liquidation or
dissolution of the company, all outstanding awards will be surrendered to the
company in exchange for a cash payment except, in the case of a merger or
similar transaction in which the stockholders receive publicly traded common
stock, all outstanding options and stock appreciation rights immediately will
become exercisable in full, all other awards immediately will vest, all
performance periods will lapse, each performance period will be deemed satisfied
at the target level and each option, stock appreciation right and other award
will represent a right to acquire the appropriate number of shares of common
stock received in the merger or similar transaction.

 

Effective Date, Termination and Amendment.  The Existing Plan became effective
as of January 1, 1998 and will terminate on May 1, 2020, unless terminated
earlier by the board. The board may amend the Plan at any time, subject to any
requirement of stockholder approval required by applicable law, rule or
regulation and provided that no amendment may be made without stockholder
approval if such amendment would (i) increase the maximum number of shares of
common stock available under the Plan, (ii) effect any change inconsistent with
Section 422 of the Internal Revenue Code, (iii) extend the

 

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term of the Plan or (iv) reduce the minimum purchase price of a share of common
stock subject to an option.

 

No Repricing.  Without limiting its ability to make adjustments in connection
with stock splits and similar changes in the company’s capital structure as
described below, the company may not, without stockholder approval, amend or
replace any previously granted option or stock appreciation right in a
transaction that constitutes a repricing under the rules of the New York Stock
Exchange, will not cancel an option or stock appreciation right that has an
exercise price which is greater than the fair market value of the underlying
common stock in exchange for stock, cash or other consideration and will not
cancel an option or stock appreciation right that has an exercise price which is
greater than the fair market value of the underlying common stock and regrant
such option or stock appreciation right with a lower exercise price or base
price.

 

Minimum Vesting for Full-Value Awards.  Awards of restricted stock, restricted
stock units and performance shares which vest on the basis of the recipient’s
continued employment with or provision of services to the company may not
provide for vesting that is any more rapid than annual pro rata vesting over a
three-year period and any restricted stock, restricted stock units and
performance shares which vest on the attainment of performance goals must
provide for a performance period of at least 12 months; provided that vesting
may be shortened in the case of disability, death, retirement, or a change in
control and provided further that up to five percent of the shares available for
new awards are not subject to these limitations.

 

Stock Options and Stock Appreciation Rights — General.  The Committee may grant
to eligible participants options to purchase shares of common stock which are
either nonqualified stock options or incentive stock options within the meaning
of Section 422 of the Internal Revenue Code. The Committee also may grant stock
appreciation rights either independently of, or in tandem with, stock options.
The exercise of a stock appreciation right entitles the holder to receive shares
of common stock (which may be restricted stock), cash or a combination thereof
with a value equal to the difference between the fair market value of the common
stock on the exercise date and the base price of the stock appreciation right.

 

The Committee will determine the terms of each option and stock appreciation
right, including the number and exercise price or base price of the shares
subject to the option or stock appreciation right, the term of the option or
stock appreciation right and the conditions to the exercisability of the option
or stock appreciation right. Upon exercise of an option, the purchase price must
be paid (i) in cash, (ii) by delivery of certain previously acquired shares of
common stock, (iii) by delivery of cash in an amount of the aggregate purchase
price payable by reason of the exercise by a broker-dealer acceptable to the
company to whom the optionee has submitted an irrevocable notice of exercise,
(iv) by authorizing the company to withhold whole shares of common stock which
would otherwise be delivered having an aggregate fair market value, determined
as of the date of exercise, equal to the aggregate purchase price payable by
reason of such exercise or (v) by a combination of cash and delivery of certain
previously acquired shares.

 

Shares of common stock to be delivered or withheld may not have an aggregate
Fair Market Value (as defined in the Plan), determined as of the date of
delivery or withholding, in excess of the amount determined by applying the
minimum statutory withholding rate.

 

Nonqualified Stock Options and Stock Appreciation Rights.  The exercise price of
a nonqualified stock option and the base price of a stock appreciation right
will not be less than 100% of the fair market value of the common stock on the
date of grant, provided that the base price of a stock appreciation right
granted in tandem with an option will be the exercise price of the related
option.

 

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No nonqualified stock option will be exercisable more than ten years after its
date of grant. Unless otherwise provided in the applicable award agreement, the
period for the exercise of a nonqualified stock option or stock appreciation
right following termination of employment will be as described herein. In the
event of termination of employment (1) by reason of (i) death, or
(ii) retirement on or after age 55 with a minimum of ten years of employment
with or service to the company, or (iii) permanent disability or (2) for any
reason within two years following a Change in Control, each nonqualified stock
option and stock appreciation right will be exercisable for the remainder of the
option period or stock appreciation right period as stated under the terms of
the award agreement, but only to the extent that the option or stock
appreciation right was exercisable at the date of such termination of
employment. In the event of termination of employment for any other reason, each
nonqualified stock option and stock appreciation right will remain exercisable,
to the extent that the option or stock appreciation right was exercisable at the
date of the termination of employment, for a period of 90 days after the
termination of employment, but in no event after the expiration of the option or
stock appreciation right. If an employee is terminated for Cause (as such term
is defined in the Plan), his or her rights under all options and stock
appreciation rights will terminate on the date of the termination.

 

Incentive Stock Options.  The exercise price of an incentive stock option will
not be less than the fair market value of the common stock on the date of grant
of such option, unless the recipient of the incentive stock option owns greater
than ten percent of the voting power of all shares of capital stock of the
company (a “ten percent holder”), in which case the option exercise price will
be the price required by the Internal Revenue Code, currently 110% of fair
market value.

 

No incentive stock option will be exercisable more than ten years after its date
of grant, unless the recipient of the incentive stock option is a ten percent
holder, in which case the option will be exercisable for no more than five years
after its date of grant. Subject to the limit on the total number of shares that
may be subject to awards under the Plan, the maximum number of shares of common
stock that may be issued after May 19, 2010 in the form of incentive stock
options granted under the Plan is 5,700,000 shares.

 

Unless otherwise provided in the applicable award agreement, the period for the
exercise of an incentive stock option following termination of employment will
be as described herein. In the event of a termination of employment by reason of
permanent and total disability (as defined in Section 22(e)(3) of the Internal
Revenue Code), incentive stock options will be exercisable only to the extent
the options were exercisable on the effective date of the optionee’s termination
of employment for a period of no more than one year after the termination (or
such shorter period as determined by the Committee), but in no event after the
expiration of the incentive stock option. In the event of a termination of
employment by reason of death, incentive stock options will be exercisable only
to the extent the options were exercisable on the effective date of the
termination for a period of three years after the date of death, but in no event
after the expiration of the incentive stock option. In the event an employee is
terminated for Cause (as defined in the Plan), any incentive stock options held
by such individual will terminate on the date of the termination of employment.
In the event of a termination of employment for any other reason, incentive
stock options will be exercisable to the extent exercisable on the date of
termination for a period of 90 days after the termination, but in no event after
the expiration of the incentive stock option. If the holder of an incentive
stock option dies during the specified periods following termination of
employment by reason of permanent and total disability or for any other reason
(except a termination of employment which is for Cause), each incentive stock
option will be exercisable only to the extent the option was exercisable on the
date of the holder’s death, and may thereafter be exercised for a period of no
more than three years but in no event after expiration of the incentive stock
option.

 

Bonus Stock Awards, Restricted Stock Awards and Restricted Stock Unit Awards. 
The Plan provides for the grant of (i) bonus stock awards, which are vested upon
grant, (ii) restricted stock awards and

 

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(iii) restricted stock unit awards. An award of restricted stock or of a
restricted stock unit may be subject to specified performance measures for the
applicable restriction period. Shares of restricted stock and restricted stock
units will be non-transferable. Shares of restricted stock and restricted stock
units other than those issued as payment of all or a portion of non-employee
directors’ retainers will be subject to forfeiture if the holder does not remain
continuously in the employment of the company during the restriction period and,
if the restricted stock or restricted stock unit is subject to performance
measures, if the performance measures are not attained during the restriction
period. However, unless otherwise set forth in the award agreement, upon a
termination of employment by reason of retirement on or after age 55 (with a
minimum of ten years of employment with or service to the company), disability,
death or for any reason within two years following a change in control or under
other circumstances as the Committee deems appropriate, will result in the
restricted stock or restricted stock units becoming vested in such amount as the
Committee determines to be appropriate. Unless otherwise set forth in the award
agreement, in the event of termination of employment for any other reason, the
portion of a restricted stock award or restricted stock unit award which is then
subject to a restriction period will be forfeited and canceled by the company.
Unless otherwise set forth in the award agreement, the holder of a restricted
stock award will have all of the rights as a stockholder of the company,
including the right to vote and receive dividends with respect to the shares of
common stock subject to the award. Prior to settlement, the holder of a
restricted stock unit award will have no rights as a stockholder of the company
with respect to the shares of common stock subject to the award, except that the
Committee may grant dividend equivalents with respect to the shares of common
stock subject to the award.

 

Performance Share Awards.  The Plan also provides for the grant of performance
share awards. Each performance share is a right, contingent upon the attainment
of performance measures within a specified performance period, to receive one
share of common stock, which may be restricted stock, or the fair market value
of such performance share in cash. Prior to the settlement of a performance
share award in shares of common stock, the holder of the award will have no
rights as a stockholder of the company with respect to the shares of common
stock subject to the award. Performance shares will be non-transferable and
subject to forfeiture if the specified performance measures are not attained
during the applicable performance period; provided, however, that unless
otherwise set forth in the award agreement, termination of employment (1) by
reason of (i) death, or (ii) retirement on or after age 55 with a minimum of ten
years of employment with or service to the company or (iii) permanent disability
or (2) for any reason within two years following a Change in Control or
(3) under certain other circumstances as the Committee deems appropriate, will
result in the performance share award becoming vested in such amount as the
Committee may determine, provided that the Committee is not authorized to make
payments with respect to awards intended to qualify as “qualified
performance-based compensation” in connection with retirement if applicable
performance goals have not been satisfied. Unless otherwise set forth in the
award agreement, in the event of termination of employment for any other reason,
the portion of a performance share award which is then subject to a performance
period will be forfeited and canceled by the company.

 

Performance Goals.  Under the Plan, the vesting or payment of performance shares
will and the vesting or payment of other awards, including awards of options,
stock appreciation rights, restricted stock or restricted stock units may be
subject to the satisfaction of performance goals. All officers and other key
employees are eligible to be selected by the Committee to receive such awards.
The performance goals applicable to a particular award will be determined by the
Committee at the time of grant of the award. Under the Plan, such performance
goals may be based on one or more of the following business criteria, determined
with respect to the performance of the company as a whole, or, where determined
to be appropriate by the Committee, with respect to the performance of one or
more divisions or groups within the company, or with respect to the performance
of individual participants:

 

·                  net sales;

 

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·                  pretax income before allocation of corporate overhead and
bonus;

 

·                  budget;

 

·                  earnings per share;

 

·                  net income;

 

·                  return on stockholders’ equity;

 

·                  return on assets;

 

·                  return on capital employed;

 

·                  attainment of strategic and operational initiatives;

 

·                  appreciation in and/or maintenance of the price of the common
stock or any other publicly traded securities of the company;

 

·                  market share;

 

·                  gross profits;

 

·                  earnings before interest and taxes;

 

·                  earnings before interest, taxes, depreciation and
amortization;

 

·                  economic value-added models;

 

·                  comparisons with various stock market indices;

 

·                  increase in number of customers and/or reductions in costs;

 

·                  total stockholder return (based on the change in the price of
a share of the company’s common stock and dividends paid);

 

·                  operating income; and

 

·                  cash flows (including, but not limited to, operating cash
flow, free cash flow, cash flow return on equity and cash flow return on
investment)

 

for the applicable performance period. If the performance goal or goals
applicable to a particular award are satisfied, the amount of compensation would
be determined as described below. In the case of a performance share award, the
amount of compensation would equal the number of performance shares subject to
the award multiplied by (i) the closing sale price of a share of common stock on
the New York Stock Exchange at the time the performance shares vest, or (ii) if
such performance shares are settled in shares of restricted stock, the value of
a share of common stock at the time such restricted stock vests. In the case of
restricted stock awards or restricted stock unit awards which are subject to one
or more performance goals, the amount of compensation would equal the number of
shares of restricted stock or restricted stock units subject to the award
multiplied by the value of a share of common stock at the time the restricted
stock or restricted stock unit vests. Income with respect to other awards will
be as described below under the heading “Federal Tax Considerations.” Payments
of cash, shares of common stock or any combination thereof to any participant in
respect of the settlement of a performance share award for any performance
period may not exceed $12,000,000, with respect to the cash payment for such
award and also may not exceed 400,000 shares of common stock, with respect to
the common stock payment for such award.

 

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