Exhibit 10.2
USG CORPORATION
STOCK COMPENSATION PROGRAM
FOR NON-EMPLOYEE DIRECTORS
(As Amended and Restated Effective as of January 1, 2005)

 

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Contents
 

             
Article 1.
  Establishment, Purpose, and Duration     1  
 
           
Article 2.
  Definitions     1  
 
           
Article 3.
  Administration     2  
 
           
Article 4.
  Participation     2  
 
           
Article 5.
  Annual Equity Grants     3  
 
           
Article 6.
  Retainer Share Payments     3  
 
           
Article 7.
  Annual Deferral Opportunity     4  
 
           
Article 8.
  Deferred Stock Units     6  
 
           
Article 9.
  Annual Grant in Cash or Equity     7  
 
           
Article 10.
  Amendment, Modification, and Termination     8  
 
           
Article 11.
  Miscellaneous     8  
 
           
Appendix A.
  Beneficiary Designation        

 

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USG CORPORATION
STOCK COMPENSATION PROGRAM
FOR NON-EMPLOYEE DIRECTORS
(As Amended and Restated as of January 1, 2005)
Article 1. Establishment, Purpose, and Duration
     1.1 Establishment of the Plan. USG Corporation, a Delaware corporation (the
“Corporation”), hereby amends and restates in its entirety the non-employee
director incentive stock compensation plan known as the “USG Corporation Stock
Compensation Program for Non-Employee Directors” (herein, as so amended and
restated, called the “Plan”), as set forth in this document. The Plan provides
for the annual grant of cash or shares of the common stock of the Corporation
(“Shares”) to non-employee directors and for the acquisition of Deferred Stock
Units (as herein defined) by non-employee directors, subject to the terms and
provisions set forth herein.
     The effective date of this amendment and restatement of the Plan is
January 1, 2005. The Plan was originally effective as of July 1, 1997 (the
“Effective Date”).
     The Plan is intended as a replacement for certain compensation arrangements
for non-employee directors in effect prior to the Effective Date and the
Corporation’s Directors’ Deferred Fee Plan (collectively, the “Prior Programs”).
The Prior Programs will continue to apply in the future only with respect to
applicable compensation earned by non-employee directors for periods of service
prior to July 1, 1997.
     1.2. Purpose of the Plan. The purpose of the Plan is to promote the
achievement of long-term objectives of the Corporation by linking the personal
interests of non-employee directors to those of the Corporation’s stockholders
and to attract and retain non-employee directors of outstanding competence.
     1.3 Duration of the Plan. The Plan commenced as of the Effective Date and
shall remain in effect until terminated or amended by the Board of Directors
pursuant to Article 10.
Article 2. Definitions
     In addition to the terms defined in the Plan, these terms shall have the
meanings set forth below:

  (a)   “Code” means the Internal Revenue Code of 1986, as amended.     (b)  
“Deferred Stock Unit” or “Unit” means an award acquired by a Participant as a
measure of participation under the Plan, and having a value which changes in
direct relation to changes in the value of the Shares during the applicable
period. A Participant’s Deferred Stock Units shall be further

 

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      divided into the “Grandfathered Units” and the “Non-Grandfathered Units”
in accordance with the terms of Section 7.5 of the Plan.     (c)   “Fair Market
Value” shall equal the mean of the high and low sales prices of a Share on The
New York Stock Exchange on the relevant date, or, if there were no sales on such
date, on the last trading date preceding the relevant date.     (d)   “Grant
Date” means the scheduled date of an annual equity grant made pursuant to
Section 5.1 of the Plan or of an annual grant made pursuant to Section 9.1 of
the Plan.     (e)   “Service Year” means a fiscal year commencing July 1 and
ending on the following June 30.     (f)   “Termination of Service” means a
separation from service as defined under Section 409A of the Code.

Article 3. Administration
     3.1 Governance Committee. The Plan shall be administered by the Governance
Committee (formerly called the Committee on Directors) (the “Committee”) of the
Board of Directors of the Corporation, subject to the restrictions set forth in
the plan.
     3.2 Administration by the Committee. The Committee shall have the full
power, discretion, and authority to interpret and administer the Plan in a
manner which is consistent with the Plan’s provisions. In no event, however,
shall the Committee have the power to determine Plan eligibility, or to
determine the number, the value, the vesting period, or the timing of awards to
be made under the Plan (all such determinations being automatic pursuant to the
provisions of the Plan).
     3.3 Decisions Binding. All determinations and decisions made by the
Committee pursuant to the Plan, and all related orders or resolutions of the
Committee shall be final, conclusive, and binding on all persons, including the
Corporation, its shareholders, employees, directors, Participants, and their
estates and beneficiaries.

 

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Article 4. Participation
     4.1 Participation. Except as otherwise expressly provided below, persons
eligible to participate in the Plan are limited to non-employee directors who
are serving on the Board on the date of each scheduled award under the Plan
(“Participants”).
Article 5. Annual Equity Grants
     5.1 Annual Equity Grants. Commencing July 1, 1998, each Participant shall
receive an annual equity grant of five hundred (500) Shares on July 1 each
     year, or a proportionate share of such grant based on full months of
service as a non-employee director since the prior July 1. In lieu of issuing
fractional Shares, the Corporation shall round up to the nearest full Share.
     5.2 Timing of Payout. Certificates for Shares awarded pursuant to this
Article 5 shall be issued as soon as administratively practicable following July
1 each year.
     5.3 Deferral Election. In lieu of receiving his or her annual equity grant
in Shares, any Participant may elect to receive all or a portion of any such
grant in the form of Deferred Stock Units. Any such election shall be made
pursuant to Article 7.
     5.4 Biennial Review. The Committee shall conduct a biennial review of the
appropriateness of the annual equity awards granted pursuant to this Article 5.
In the event the Committee determines that an adjustment in the amount of equity
awards pursuant to this Article 5 is appropriate, the Committee shall make a
recommendation to the Board for an appropriate amendment.
     5.5 Termination of Annual Equity Grants after July 1, 2005. Notwithstanding
the foregoing, the annual equity grants provided for in this Article 5 shall not
be granted after the final grant made to Participants on the July 1, 2005 Grant
Date and no further biennial review shall be conducted pursuant to Section 5.4.
Article 6. Retainer Share Payments
     6.1 Portion of Retainers Paid in Shares. During the term of this Plan, each
Participant shall receive twenty-five percent (25%) of his or her annual
retainer for board service in the form of Shares, payable as the third quarter
installment of such annual retainer.
     6.2 Number of Shares Paid. The number of Shares to be issued pursuant to
Section 6.1 will be determined on September 25th of each year (or the next
trading date if such date is not a date on which shares are traded on The New
York Stock Exchange), and shall equal twenty-five percent (25%) of the then
current annual retainer for board service, divided by the Fair Market Value of a
Share on such date. In lieu of issuing fractional Shares, the Corporation shall
round up to the nearest full

 

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share.
     6.3 Timing of Payout. Certificates for Shares payable pursuant to this
Article 6 shall be issued as soon as administratively practicable following the
conclusion of the third calendar quarter.
     6.4 Temporary Suspension. The payment of 25% of the Participant’s annual
retainers for Board service was suspended by action of the USG Board of
Directors in May, 2001. This feature of the plan will continue to be suspended
until the Corporation emerges from Chapter 11 proceedings which it filed in
June, 2001 and the Board of Directors thereafter approves the recontinuation of
this feature, subject to any then required approval by stockholders of the
Corporation.
Article 7. Annual Deferral Opportunity
     7.1 Termination of Prior Programs; Deferral of Retainers and Meeting Fees.
The Prior Programs are hereby terminated. In lieu thereof, any Participant may
elect during the term of this Plan to receive all or a portion of the cash
component of his or her annual retainer or meeting fees for board service in the
form of Deferred Stock Units. Subject to Section 7.2 of the Plan, any
Participant may also elect to receive (i) all or a portion of his or her annual
equity grant made pursuant to Section 5.1 and (ii) all of his or her annual
grant made pursuant to Section 9.1 of the Plan in the form of Deferred Stock
Units. Elections to receive Deferred Stock Units shall be irrevocable and shall
be subject to the provisions of this Article 7 and Article 8 and Article 9.
Notwithstanding the foregoing, no annual retainer and meeting fees may be
deferred in the form of Deferred Stock Units or otherwise after May 1, 2001.
     7.2 Annual Deferral Election.
     (a) A Participant may make an annual election to defer (i) all or a portion
of his or her annual equity grant under Section 5.1 of the Plan and (ii) all of
his or her annual grant under Section 9.1 of the Plan in the form of Deferred
Stock Units, provided that deferral elections with respect to annual equity
grants under Section 5.1 of the Plan may only be made in ten percent (10%)
increments, and provided further that no deferral elections may be made with
respect to the annual grants made pursuant to Section 9.1 of the Plan with a
Grant Date of July 1, 2006.
     (b) Such deferral elections shall be made by December 31 of the calendar
year next preceding the first day of the Service Year for which such grants
would otherwise be earned, provided that a non-employee director who first
commences service on the Board during the course of a Service Year, rather than
on the first day of such Service Year, shall make such deferral election no
later than thirty (30) days following the date the non-employee director first
commences service, and such deferral election shall be effective only with
regard to the portion of the grant earned during such Service Year following the
filing of the deferral election.

 

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     (c) Subject to Section 8.3 of the Plan, a Participant’s deferral election
shall also contain the election (if any) regarding the form of payment of the
Participant’s Account attributable to the amounts deferred.
     7.3 Number of Deferred Stock Units. The number of Deferred Stock Units to
be granted in connection with an election pursuant to Section 7.2 shall equal:
(w) in the case of annual equity grants, the number of Shares being deferred;
(x) in the case of an annual retainer, the dollar value of the portion of the
annual retainer being deferred divided by the Fair Market Value of a Share on
the last day of the applicable quarter; (y) in the case of meeting fees, the
dollar value of the portion of the meeting fees being deferred divided by the
Fair Market Value of a Share on the applicable meeting date; and (z) in the case
of annual grants, the amount of the annual grant divided by the Fair Market
Value of a Share on the last trading date preceding the Grant Date.
     7.4 Vesting of Deferred Stock Units. Subject to the terms of this Plan, all
Deferred Stock Units acquired under this Article 7 shall vest upon the
acquisition of such Deferred Stock Units, which date, with respect to Deferred
Stock Units attributable to the deferral of annual equity grants made pursuant
to Section 5.1 of the Plan and annual grants made pursuant to Section 9.1 of
Plan, means the applicable Grant Date.
     7.5 Application of the American Jobs Creation Act of 2004 (“AJCA”).
     (a) The following awards of Deferred Stock Units (and all earnings thereon)
(the “Grandfathered Units”) are “grandfathered” under Section 409A of the Code
(as enacted by the AJCA) and, as such, shall continue to be governed by the law
applicable to nonqualified deferred compensation prior to the enactment of
Section 409A of the Code: (i) Deferred Stock Units attributable to the deferral
of annual retainer and meeting fees prior to May 1, 2001; and (ii) Deferred
Stock Units attributable to the deferral of annual equity grants made pursuant
to Section 5.1 of the Plan with a Grant Date on or before July 1, 2004.
     (b) The following awards of Deferred Stock Units (and all earnings thereon)
(the “Non-Grandfathered Units”) are subject to the provisions of Section 409A of
the Code (as enacted by the AJCA): (i) Deferred Stock Units attributable to the
deferral of the annual equity grant made pursuant to Section 5.1 of the Plan
with a Grant Date of July 1, 2005; and (ii) Deferred Stock Units attributable to
the deferral of annual grants made pursuant to Section 9.1 of the Plan with a
Grant Date on or after July 1, 2007 (the “New Units”).
     (c) To the extent applicable, it is intended that this Plan comply with the
provisions of Section 409A of the Code. The Plan shall be administered in a
manner consistent with this intent, and any provision that would cause the Plan
to fail to satisfy Section 409A of the Code shall have no force and effect until
amended to comply with Section 409A of the Code (which amendment may be
retroactive to the extent permitted under Section 409A of the Code and may be
made by the Corporation without the consent of the Participants).

 

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Article 8. Deferred Stock Units
     8.1 Value of Deferred Stock Units. Each Deferred Stock Unit shall have a
value that is equal to the Fair Market Value of a Share on the relevant
valuation date, it being understood that subsequent to the date of an award or
acquisition of a Deferred Stock Unit, its value shall change in direct
relationship to changes in the Fair Market Value of a Share.
     8.2 Dividend Equivalents. Dividend equivalents shall be earned on Deferred
Stock Units provided under this Plan and shall be converted into an equivalent
amount of Deferred Stock Units based upon the value of a Deferred Stock Unit on
the payment date of the related dividend. The converted Deferred Stock Units
will be fully vested upon conversion.
     8.3 Amount and Normal Form of Payout; Installment Payment Elections.
     (a) The amount payable to a Participant shall be the aggregate value of the
Participant’s vested Deferred Stock Units, if any, on the date of the
Participant’s Termination of Service on the Board, normally payable in cash in a
lump sum within thirty (30) days following such Termination of Service.
     (b) Notwithstanding the foregoing, in lieu of such a lump sum payment a
Participant may elect, in a writing filed with the Corporate Secretary of the
Corporation, to receive payment of such amount in two installments. The first
installment, equal to fifty percent (50%) of such amount, shall be made within
thirty (30) days following the Participant’s Termination of Service on the
Board. The second installment, including interest credited at the prime interest
rate of JP Morgan Chase Bank in effect on the date of such Termination of
Service, shall be made one year after the date of the first installment. A
Participant shall make such an installment payment election as follows:
(i) elections with respect to Grandfathered Units must be made no later than
twelve (12) months prior to the Participant’s Termination of Service on the
Board; and (ii) elections with respect to Non-Grandfathered Units (including
those Non-Grandfathered Units attributable to the deferral of the annual equity
grants made pursuant to Section 5.1 of the Plan with a Grant Date of July 1,
2005) must be made on or before December 31, 2005, provided that a non-employee
director who first commences service on the Board after December 31, 20005 must
make such an installment payment election (if any) at the same time the director
makes his or her first election to defer under Section 7.2(b) of the Plan. Once
elected, there will be no changes allowed to installment payment elections for
Non-Grandfathered Units.
     8.4 Deferred Stock Unit Account. A Deferred Stock Unit Account (the
“Account”) shall be established and maintained by the Corporation for each
Participant receiving Deferred Stock Units under the Plan. As the value of each
Deferred Stock Unit changes pursuant to Section 8.1, the Account established on
behalf of each Participant shall be adjusted accordingly. Each Account shall be
the record of the

 

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Deferred Stock Units granted to the Participant under Articles 7 and 9 of the
Plan, shall be maintained solely for accounting purposes, and shall not require
a segregation of any Corporation assets. A Participant’s Account shall be
further divided into the following sub-accounts: (i) a sub-account which shall
be the record of the Grandfathered Units granted to a Participant and (ii) a
sub-account which shall be the record of the Non-Grandfathered Units granted to
a Participant.
     8.5 Annual Reports. Participants with Deferred Stock Units shall receive
annual reports providing detailed information about their Accounts and changes
in their Accounts during the preceding year.
Article 9. Annual Grant in Cash or Equity
     9.1 Annual Grant in Cash or Equity. For the remaining time during which the
Corporation is a Debtor in Chapter 11 proceedings, each non-employee director of
the Corporation shall receive an annual grant equal to $30,000 or a
proportionate share of such grant based on full months of service as a
non-employee director since the prior July 1, normally payable in cash in a lump
sum. The regular Grant Date each year shall be July 1, commencing July 1, 2006.
Notwithstanding the foregoing, in lieu of such a lump sum cash payment a
Participant may elect, in a writing filed with the Corporate Secretary of the
Corporation, to receive payment in an equivalent amount in Shares valued at the
Fair Market Value of a Share on the last trading date preceding the Grant Date.
     9.2 Timing of Payout. Payments in cash or certificates for Shares elected
pursuant to this Article shall be distributed as soon as administratively
practicable following the applicable Grant Date.
     9.3 Deferral Election. In lieu of receiving a distribution in cash or
Shares, any Participant may elect to receive all of such grant in the form of
New Units. Any such election shall be made pursuant to Article 7.
     9.4 Pro Rata Payment. To amplify Section 9.1, any non-employee director who
incurs a Termination of Service before a Grant Date shall nevertheless be
entitled to receive a proportionate payment based on the number of full months
of service since the preceding July 1, in a lump sum within 30 days of such
Termination of Service, in whatever form the terminated non-employee director
elects, cash or Shares, provided that proportionate payment shall be made in the
form of two cash installment payments (determined in the manner described in
Section 8.3(b) of the Plan) if the non-employee director made a deferral
election with respect to the annual grant under Article 7 of the Plan, and, in
connection with such election, elected to receive installment payments under
Section 8.3(b) of the Plan.
Article 10. Amendment, Modification, and Termination
     10.1 Amendment, Modification, and Termination. The Board may

 

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terminate, amend, or modify the Plan at any time and from time to time.
     10.2 Awards Previously Granted. Unless required by law, and subject to
Section 7.5(c) of the Plan, no termination, amendment, or modification of the
Plan shall in any material manner adversely affect any award previously provided
under the Plan, without the written consent of the Participant holding such
award.
Article 11. Miscellaneous
     11.1 Severability. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.
     11.2 Benefit Transfers. The interests of any Participant or beneficiary
entitled to payments hereunder shall not be subject to attachment or garnishment
or other legal process by any creditor of any such Participant or beneficiary
nor shall any such Participant or beneficiary have any right to alienate,
anticipate, commute, pledge, encumber, or assign any of the benefits or rights
which he or she may expect to receive, contingently or otherwise under this Plan
except as may be required by the tax withholding provisions of the Code or of a
state’s income tax act. Notwithstanding the foregoing, amounts payable with
respect to a Participant hereunder may be paid as follows:

  (a)   Payments with respect to a disabled or incapacitated person may be paid
to such person’s legal representative for such person’s benefit, to a custodian
under the Uniform Gifts or Transfers to Minors Act of any state, or to a
relative or friend of such person for such person’s benefit; and     (b)  
Transfers by the Participant to a grantor trust established pursuant to
Sections 674, 675, 676 and 677 of the Code for the benefit of the participant or
a person or persons who are members of his or her immediate family (or for the
benefit of their descendants) shall be recognized and given effect, provided
that any such transfer has not been disclaimed prior to the payment, and the
trustee of such trust certifies to the Committee that such transfer occurred
without any payment of consideration for such transfer.

     11.3 Beneficiary Designation. Each Participant under the Plan may, from
time to time, name any beneficiary or beneficiaries (who may be named
contingently or successively) to whom any benefit under the Plan is to be paid
in the event of his or her death. Each designation will revoke all prior
designations by the same Participant, shall be in a form as provided in
Appendix A hereto, and will be effective only when filed by the Participant in
writing with the Corporate Secretary of the Corporation, acting on behalf of the
Board, during his or her lifetime. In the absence of any such designation,
benefits remaining unpaid at the Participant’s death shall be paid to the
Participant’s

 

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estate.
     11.4 No Right of Nomination. Nothing in this Plan shall be deemed to create
any obligation on the part of the Board to nominate any director for reelection
by the Corporation’s shareholders.
     11.5 Shares Available. The Shares delivered under the Plan may be either
treasury shares, originally issued Shares, or Shares that have been reacquired
by the Corporation, including shares purchased in the open market.
     11.6 Stock Splits/Stock Dividends. In the event of any change in the
outstanding Shares of the Company by reason of a stock dividend,
recapitalization, merger, consolidation, split-up, combination, exchange of
Shares, or the like, the aggregate number of and class of Shares and Deferred
Stock Units awarded hereunder may be appropriately adjusted by the Committee,
whose determination shall be conclusive.
     11.7 Successors. All obligations of the Corporation under the Plan with
respect to awards granted hereunder shall be binding on any successor to the
Corporation, whether the existence of such successor is the result of a direct
or indirect purchase, merger, consolidation, or otherwise, of all or
substantially all of the business and/or assets of the Corporation.

 

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     11.8 Requirements of Law. The granting of awards under the Plan shall be
subject to all applicable laws, rules, and regulations, and to such approvals by
any governmental agencies or national securities exchanges as may be required.
     11.9 Governing Law. The Plan, and all agreements hereunder, shall be
construed in accordance with and governed by the laws of the State of Delaware.
Chicago, Illinois
November 9, 2005