Exhibit 10.e

 

MASCO CORPORATION

1997 NON-EMPLOYEE DIRECTORS STOCK PLAN

(Amended and Restated October 27, 2005)

 

Section 1.  Purpose

 

The purpose of this Plan is to ensure that the non-employee Directors of Masco
Corporation (the “Company”) have an equity interest in the Company and thereby
have a direct and long term interest in the growth and prosperity of the Company
by payment of part of their compensation in the form of common stock of the
Company.

 

Section 2.  Administration of the Plan

 

This Plan will be administered by the Company’s Board of Directors (the
“Board”). The Board shall be authorized to interpret the Plan, to establish,
amend, and rescind any rules and regulations relating to the Plan and to make
all other determinations necessary or advisable for the administration of the
Plan. The Board’s interpretation of the terms and provisions of this Plan shall
be final and conclusive. The Secretary of the Company shall be authorized to
implement the Plan in accordance with its terms and to take such actions of a
ministerial nature as shall be necessary to effectuate the intent and purposes
thereof.  The validity, construction and effect of the Plan and any rules and
regulations relating to the Plan shall be determined in accordance with the laws
of the State of Michigan and applicable Federal law.

 

Section 3.  Eligibility

 

Participation will be limited to individuals who are Eligible Directors, as
hereinafter defined.  Eligible Director shall mean any Director of the Company
who is not an employee of the Company and who receives a fee for services as a
Director.

 

Section 4.  Shares Subject to the Plan

 

(a) Subject to the adjustments set forth below, the aggregate number of shares
of Company Common Stock, par value $1.00 per share (“Shares”), which may be the
subject of awards issued under the Plan shall be 1,000,000.

 

(b) Any Shares to be delivered under the Plan shall be made available from newly
issued Shares or from Shares reacquired by the Company, including Shares
purchased in the open market.

 

(c) To the extent a Stock Option award, as hereinafter defined, terminates
without having been exercised, or an award of Restricted Stock, as hereinafter
defined, is forfeited, the Shares subject to such Stock Option or Restricted
Stock award shall again be available for distribution in connection with future
awards under the Plan.  Shares equal in number to the Shares surrendered to the
Company in payment of the option price or withholding taxes (if any) relating to
or arising in connection with any Restricted Stock or Stock Option hereunder
shall be added to the number of Shares then available for future awards under
clause (a) above.

 

(d) In the event of any merger, reorganization, consolidation, recapitalization,
stock split, stock dividend, or other change in corporate structure affecting
the Shares, the aggregate number of Shares which may be issued under the Plan,
the number of Shares subject to Stock Options to be granted under
Section 6(a) hereof and the number of Shares subject to any outstanding award of
Restricted Stock or unexercised Stock Option shall be adjusted to avoid
enhancement or diminution of the benefits intended to be made available
hereunder.

 

Section 5.  Director Stock Compensation

 

(a) The compensation of each Eligible Director for the five year period
beginning January 1, 1997 shall be payable in part with an award of Restricted
Stock determined as set forth below, and in part in cash.  Compensation for this
purpose means annual retainer fees but does not include supplemental retainer
fees for committee positions or fees for attendance at meetings, which shall be
paid in cash.  The portion of compensation payable in Restricted Stock during
the five year period shall be equal to one-half of the annual compensation paid
to Eligible Directors in the year immediately prior to the award multiplied by
five, and the balance of compensation, unless otherwise determined by the Board,
shall be payable in cash.  Each award of Restricted Stock shall vest in twenty
percent

 

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annual installments (disregarding fractional shares) on January 1 of each of the
five consecutive years following the year in which the award is made. Subject to
the approval of this Plan by the Company’s stockholders, each Eligible Director
on February 18, 1997 is awarded as of that date 6,940 Shares of Restricted
Stock, based on the closing price of the Shares as reported on the New York
Stock Exchange Composite Tape (the “NYSE”) on February 18, 1997.  Cash shall be
paid to an Eligible Director in lieu of a fractional share.

 

(b) Subject to the approval of this Plan by the Company’s stockholders, each
Eligible Director who is first elected or appointed to the Board on or after the
date of the Company’s 1997 annual meeting of stockholders shall receive, as of
the date of such election or appointment,  an award of Restricted Stock
determined in accordance with Section 5(a) for the five year period beginning on
January 1 of the year in which such election or appointment occurred; provided,
however, that the price of the Shares used in determining the number of Shares
of Restricted Stock which shall be issued to such Eligible Director shall be the
fair market value of the Shares as determined by the Board of Directors on the
date on which such Eligible Director is elected or appointed, and provided,
further, that the amount of Restricted Stock awarded to any Eligible Director
who begins serving as a Director other than at the beginning of a calendar year
shall be prorated to reflect the partial service of the initial year of the
Director’s term, such proration to be effected in the initial vesting.

 

(c) Upon the full vesting of any award of Restricted Stock awarded pursuant to
Section 5(a) or 5(b), each affected Eligible Director shall be eligible to
receive a new award of Restricted Stock, subject to Section 4.  The number of
Shares subject to such award shall be determined generally in accordance with
the provisions of Section 5(b); provided, however, that the Board shall have
sole discretion to adjust the amount of compensation then to be paid in the form
of Shares and the terms of any such award of Shares. Except as the Board may
otherwise determine, any increase or decrease in an Eligible Director’s annual
compensation during the period when such Director has an outstanding award of
Restricted Stock shall be implemented by increasing or decreasing the cash
portion of such Director’s compensation.

 

(d) Eligible Director shall be entitled to vote and receive dividends on the
unvested portion of his or her Restricted Stock, but will not be able to obtain
a stock certificate or sell, encumber or otherwise transfer such Restricted
Stock except in accordance with the terms of the Company’s 1991 Long Term Stock
Incentive Plan (the “Long Term Plan”).  If an Eligible Director’s term of
service as a director is terminated for any reason other than death or permanent
and total disability or retirement on or after normal retirement age as
specified in the Company’s Corporate Governance Guidelines, all shares of
Restricted Stock theretofore awarded to the Eligible Director which are still
subject to restrictions shall upon such termination be forfeited and transferred
back to the Company; provided, however, that a pro rata portion of the
Restricted Stock which would have vested on January 1 of the year following the
year of the Eligible Director’s termination shall vest on the date of
termination, based upon the portion of the year during which the Eligible
Director served as a Director of the Company.

 

(e) Notwithstanding the foregoing or clause (g) below, if an Eligible Director
continues to hold an award of Restricted Stock following termination of service
as a director (including retirement), the Shares of Restricted Stock which
remain subject to restrictions shall nonetheless be forfeited and transferred
back to the Company if the Board at any time thereafter determines that the
former Director has engaged in any activity detrimental to the interests of the
Company.

 

(f) If an Eligible Director’s term is terminated by reason of death or permanent
and total disability or if following retirement as a director a former Director
continues to have rights under an Award of Restricted Stock and thereafter dies,
the restrictions contained in the Award shall lapse with respect to such
Restricted Stock.

 

(g) If an Eligible Director’s term is terminated by reason of retirement on or
after normal retirement age as specified in the Company’s Corporate Governance
Guidelines, the restrictions contained in the Award of Restricted Stock shall
continue to lapse in the same manner as though the term had not terminated.

 

Section 6.  Stock Option Grant

 

(a) Subject to approval of this Plan by the Company’s stockholders, each
Eligible Director on the date of such approval will be granted on such date a
stock option to purchase 8,000 Shares (the “Stock Option”).  Thereafter, on the
date of each of the Company’s subsequent annual stockholders meetings, each
person who is or

 

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becomes an Eligible Director on that date and whose service on the Board will
continue after such date shall be granted a Stock Option, subject to Section 4,
effective as of the date of such meeting.

 

(b) Stock Options granted under this Section 6 shall be non-qualified stock
options and shall have the following terms and conditions.

 

1.  Option Price.  The option price per Share shall be equal to the fair market
value of the Shares on the date of grant as determined by the Board of
Directors.

 

2.  Term of Option.  The term of the Stock Option shall be ten years from the
date of grant, subject to earlier termination in the event of termination of
service as an Eligible Director.  If an Eligible Director’s term of service as a
director is terminated for any reason other than death, the Director may
thereafter exercise the Stock Option as provided below, except that the Board
may terminate the unexercised portion of the Stock Option concurrently with or
at any time following termination if it shall determine that the former Director
has engaged in any activity detrimental to the interests of the Company.  If an
Eligible Director’s term is terminated for any reason other than death or
permanent and total disability or retirement on or after normal retirement age
as specified in the Company’s Corporate Governance Guidelines, at a time when
such Director is entitled to exercise an outstanding Stock Option, then such
Stock Option may be exercised as to all or any of the Shares which the Eligible
Director was entitled to purchase at the date of termination (A) for Stock
Options granted prior to October 27, 2005, until the later of (i) the 15th day
of the third month following the date at which such Stock Option would otherwise
have terminated in connection with the termination of service, which date prior
to the October 27, 2005 Plan amendments was three months after termination of
the Director’s service, or (ii) December 31 of the calendar year in which the
Stock Option would otherwise have terminated in connection with the termination
of service; and (B) for Stock Options granted on or after October 27, 2005,
until the earlier of (i) the expiration of the original term, or (ii) one year
after death. That portion of the Stock Option not exercisable at the time of
such termination shall be forfeited and transferred back to the Company on the
date of such termination.  If an Eligible Director’s term is terminated by
reason of permanent and total disability, any portion of a Stock Option that is
not then exercisable shall become fully exercisable and shall remain exercisable
until the earlier of the expiration of the original option term or one year
after death.  If an Eligible Director retires from service as a director on or
after normal retirement age as specified in the Company’s Corporate Governance
Guidelines, such Stock Option shall continue to become exercisable and shall
remain exercisable in accordance with its terms and the provisions of this Plan.
If an Eligible Director dies, all unexercisable installments of the Stock Option
shall thereupon become exercisable and at any time or times within one year
after death such Stock Option may be exercised as to all or any unexercised
portion of the Stock Option.  Except as so exercised, such Stock Option shall
expire at the end of such period.  Except as provided above, a Stock Option may
be exercised only if and to the extent such Stock Option was exercisable at the
date of termination of service as an Eligible Director, and a Stock Option may
not be exercised at a time when the Stock Option would not have been exercisable
had the service as an Eligible Director continued.

 

3.  Exercisability.  Subject to clause 2 above, each Stock Option shall vest and
become exercisable with respect to twenty percent of the underlying Shares on
each of the first five anniversaries of the date of grant, provided that the
optionee is an Eligible Director on such date.

 

4.  Method of Exercise.  A Stock Option may be exercised in whole or in part
during the period in which such Stock Option is exercisable by giving written
notice of exercise to the Company specifying the number of shares to be
purchased, accompanied by payment of the purchase price.  Payment of the
purchase price shall be made in cash, by delivery of Shares, or by any
combination of the foregoing.

 

5.  Non-Transferability.  Unless otherwise provided by the terms of the Long
Term Plan or the Board,  (i) Stock Options shall not be transferable by the
optionee other than by will or by the laws of descent and distribution, and
(ii) during the optionee’s lifetime, all Stock Options shall be exercisable only
by the optionee or by his or her guardian or legal representative.

 

6.  Stockholder Rights.  The holder of a Stock Option shall, as such, have none
of the rights of a stockholder.

 

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Section 7.  General

 

(a) Plan Amendments.  The Board may amend, suspend or discontinue the Plan as it
shall deem advisable or to conform to any change in any law or regulation
applicable thereto; provided, that the Board may not, without the authorization
and approval of the stockholders of the Company: (a) modify the class of persons
who constitute Eligible Directors as defined in the Plan; or (b) increase the
total number of Shares available under the Plan.  In addition, without the
consent of affected participants, no amendment of the Plan or any award under
the Plan may impair the rights of participants under outstanding awards.

 

(b) Listing and Registration.  If at any time the Board shall determine, in its
discretion, that the listing, registration or qualification of the Shares under
the Plan upon any securities exchange or under any state or Federal law, or the
consent or approval of any governmental regulatory body, is necessary or
desirable as a condition of, or in connection with, the granting of any award
hereunder, no Shares may be delivered or disposed of unless such listing,
registration, qualification, consent or approval shall have been effected or
obtained free of any condition not acceptable to the Board.

 

(c) Award Agreements.    Each award of Restricted Stock and Stock Option granted
hereunder shall be evidenced by the Eligible Director’s written agreement with
the Company which shall contain such terms and conditions not inconsistent with
the provisions of the Plan as shall be determined by the Board in its
discretion.

 

(d) Change in Control.

 

1.              Notwithstanding any of the provisions of this Plan or
instruments evidencing awards granted hereunder, upon a Change in Control of the
Company (as hereinafter defined) the vesting of all rights of Directors under
outstanding awards of Restricted Stock and Stock Options shall be accelerated
and all restrictions thereon shall terminate in order that participants may
fully realize the benefits thereunder. Such acceleration shall include, without
limitation, the immediate exercisability in full of all Stock Options and the
termination of restrictions on Restricted Stock. Further, in addition to the
Board’s authority set forth in Section 4(d), the Board, as constituted before
such Change in Control, is authorized, and has sole discretion, as to any award,
either at the time such award is made hereunder or any time thereafter, to take
any one or more of the following actions: (i) provide for the purchase of any
such award, upon the participant’s request, for an amount of cash equal to the
amount that could have been attained upon the exercise of such award or
realization of the participant’s rights had such award been currently
exercisable or payable; (ii) make such adjustment to any such award then
outstanding as the Board deems appropriate to reflect such Change in Control;
and (iii) cause any such award then outstanding to be assumed, or new rights
substituted therefor, by the acquiring or surviving corporation after such
Change in Control.  A Change in Control shall occur if, during any period of
twenty-four consecutive calendar months, the individuals who at the beginning of
such period constitute the Company’s Board of Directors, and any new Directors
(other than Excluded Directors, as hereinafter defined), whose election by such
Board or nomination for election by stockholders was approved by a vote of at
least two-thirds of the members of such Board who were either Directors on such
Board at the beginning of the period or whose election or nomination for
election as Directors was previously so approved, for any reason cease to
constitute at least a majority of the members thereof.  For purposes hereof,
“Excluded Directors” are Directors whose (i) election by the Board or approval
by the Board for stockholder election occurred within one year after any
“person” or “group of persons”, as such terms are used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, commencing a tender offer for, or
becoming the beneficial owner of, voting securities representing 25 percent or
more of the combined voting power of all outstanding voting securities of the
Company, other than pursuant to a tender offer approved by the Board prior to
its commencement or pursuant to stock acquisitions approved by the Board prior
to their representing 25 percent or more of such combined voting power or
(ii) initial assumption of office occurs as a result of either an actual or
threatened election contest (as such terms are used in Rule 14a-11 or Regulation
14A promulgated under the Exchange Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of an individual,
corporation, partnership, group, associate or other entity or “person” other
than the Board.

 

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2.              In the event that subsequent to a Change in Control it is
determined that any payment or distribution by the Company to or for the benefit
of a participant, whether paid or payable or distributed or distributable
pursuant to the terms of this Plan or otherwise, other than any payment pursuant
to this subparagraph 2 (a “Payment”), would be subject to the excise tax imposed
by Section 4999 of the Internal Revenue Code of 1986, as amended from time to
time (the “Code”) or any interest or penalties with respect to such excise tax
(such excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the “Excise Tax”), then such participant shall be
entitled to receive from the Company, within 15 days following the determination
described in subparagraph 3 below, an additional payment (“Excise Tax Adjustment
Payment”) in an amount such that after payment by such participant of all
applicable Federal, state and local taxes (computed at the maximum marginal
rates and including any interest or penalties imposed with respect to such
taxes), including any Excise Tax, imposed upon the Excise Tax Adjustment
Payment, such participant retains an amount of the Excise Tax Adjustment Payment
equal to the Excise Tax imposed upon the Payments.

 

3.              All determinations required to be made under this Section 7(d),
including whether an Excise Tax Adjustment Payment is required and the amount of
such Excise Tax Adjustment Payment, shall be made by PricewaterhouseCoopers LLP,
or such other national accounting firm as the Company, or, subsequent to a
Change in Control, the Company and the participant jointly, may designate, for
purposes of the Excise Tax, which shall provide detailed supporting calculations
to the Company and the affected participant within 15 business days of the date
of the applicable Payment.  Except as hereinafter provided, any determination by
PricewaterhouseCoopers LLP, or such other national accounting firm, shall be
binding upon the Company and the participant.  As a result of the uncertainty in
the application of Section 4999 of the Code that may exist at the time of the
initial determination hereunder, it is possible that (x) certain Excise Tax
Adjustment Payments will not have been made by the Company which should have
been made (an “Underpayment”), or (y) certain Excise Tax Adjustment Payments
will have been made which should not have been made (an “Overpayment”),
consistent with the calculations required to be made hereunder.  In the event of
an Underpayment, such Underpayment shall be promptly paid by the Company to or
for the benefit of the affected participant.  In the event that the participant
discovers that an Overpayment shall have occurred, the amount thereof shall be
promptly repaid to the Company.

 

(e)          Non-compete. Each award of Restricted Stock and Stock Option
granted hereunder shall contain a provision whereby the award holder shall
agree, in consideration for the award and regardless of whether restrictions on
shares of Restricted Stock have lapsed or whether the Stock Option becomes
exercisable or is exercised, as the case may be, as follows:

 

(i)            While the holder is a Director of the Company and for a period of
one year following the termination of such holder’s term as a Director of the
Company, other than a termination following a Change in Control, not to engage
in, and not to become associated in a “Prohibited Capacity” (as hereinafter
defined) with any other entity engaged in, any “Business Activities” (as
hereinafter defined) and not to encourage or assist others in encouraging any
employee of the Company or any of its subsidiaries to terminate employment or to
become engaged in any such Prohibited Capacity with an entity engaged in any
Business Activities.  “Business Activities” shall mean the design, development,
manufacture, sale, marketing or servicing of any product or providing of
services competitive with the products or services of the Company or any
subsidiary at any time the award is outstanding, to the extent such competitive
products or services are distributed or provided either (1) in the same
geographic area as are such products or services of the Company or any of its
subsidiaries, or (2) to any of the same customers as such products or services
of the Company or any of its subsidiaries are distributed or provided. 
“Prohibited Capacity” shall mean being associated with an entity as a director,
employee, consultant, investor or another capacity where (1) confidential
business information of the Company or any of its subsidiaries could be used in
fulfilling any of the holder’s duties or responsibilities with such other
entity, or (2) an investment by the award holder in such other entity represents
more than 1% of such other entity’s capital stock, partnership or other
ownership interests.

 

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(ii)        Should the award holder either breach or challenge in judicial or
arbitration proceedings the validity of any of the restrictions contained in the
preceding paragraph, by accepting an award each award holder shall agree,
independent of any equitable or legal remedies that the Company may have and
without limiting the Company’s right to any other equitable or legal remedies,
to pay to the Company in cash immediately upon the demand of the Company (1) the
amount of income realized for income tax purposes from an award of Restricted
Stock and/or the exercise of a Stock Option, net of all federal, state and other
taxes payable on the amount of such income, but only to the extent such income
is realized from restrictions lapsing on shares or exercises occurring, as the
case may be, on or after the termination of the award holder’s term as a
Director of the Company or within the two year period prior to the date of such
termination, plus (2) all costs and expenses of the Company in any effort to
enforce its rights under this or the preceding paragraph. The Company shall have
the right to set off or withhold any amount owed to the award holder by the
Company or any of its subsidiaries or affiliates for any amount owed to the
Company by the award holder hereunder.

 

(f)  Applicability.  The provisions of this Plan as amended and restated
October 27, 2005 shall apply to all outstanding Stock Options and awards of
Restricted Stock.

 

(g)  Term.  No shares shall be awarded under this Plan after May 21, 2007.

 

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