exv10w19






EXHIBIT 10.19




 





MERCK & CO., INC.




PLAN FOR DEFERRED PAYMENT OF



DIRECTORS’ COMPENSATION



(Effective as Amended and Restated December 1, 2010)



 




 









 





TABLE OF CONTENTS




	 	 	 	 	 
	 	 	 	 	Page
	Article I
	 	Purpose	 	1
	 
	 	 	 	 
	Article II
	 	Election of Deferral, Investment Alternatives and Distribution Schedule	 	1
	 
	 	 	 	 
	Article III
	 	Valuation of Deferred Amounts	 	3
	 
	 	 	 	 
	Article IV
	 	Redesignation Within a Deferral Account	 	4
	 
	 	 	 	 
	Article V
	 	Payment of Deferred Amounts	 	5
	 
	 	 	 	 
	Article VI
	 	Designation of Beneficiary	 	6
	 
	 	 	 	 
	Article VII
	 	Plan Amendment or Termination	 	6
	 
	 	 	 	 
	Article VIII
	 	Section 409A Compliance	 	6
	 
	 	 	 	 
	Article IX
	 	Effective Date	 	6






 









 






MERCK & CO., INC.

PLAN FOR DEFERRED PAYMENT OF

DIRECTORS’ COMPENSATION





	I.	 	PURPOSE
	 
	 	 	The Merck & Co., Inc. Plan for Deferred Payment of Directors’ Compensation (“Plan”)
provides an unfunded arrangement for directors of Merck & Co., Inc., formerly known as
Schering-Plough Corporation (“Merck” or the “Company”) prior to the closing date (“Closing
Date”) of the Agreement and Plan of Merger dated as of March 8, 2009, as amended, by and
among Merck & Co., Inc., Schering-Plough Corporation, SP Merger Subsidiary One, Inc. and SP
Merger Subsidiary Two, Inc. (the “Transactions”), other than directors that are current
employees of the Company or its subsidiaries, to value, account for and ultimately
distribute amounts deferred (i) voluntarily in case of annual retainers and Board and
committee meeting fees, if any, and (ii) mandatorily in certain other cases as described
herein. Prior to the Closing Date, the predecessor to this Plan provided identical
benefits to directors of Merck Sharp & Dohme Corp. (formerly Merck & Co, Inc. prior to the
Closing Date) (“MSD”).






	II.	 	ELECTION OF DEFERRAL, INVESTMENT ALTERNATIVES AND DISTRIBUTION SCHEDULE






	 	A.	 	Election of Voluntary Deferral Amount
	 
	 	1.	 	Prior to December 31 of each year, each director may irrevocably elect (an
“Initial Election”) to defer, until termination of service as a director or later, 50%
or 100% of each of the following (together, the “Voluntary Deferral Amount”) with
respect to the 12 months beginning April 1 of the next calendar year after such
Initial Election:






	 	(a)	 	Board retainer






	 	(b)	 	Committee Chairperson retainer






	 	(c)	 	Audit Committee member retainer, and






	 	(d)	 	Board and committee meeting fees, if any.






	 	2.	 	Prior to commencement of duties as a director or within the first 30 days
following commencement of services, a director newly elected or appointed to the Board
during a calendar year may make an Initial Election 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) Board and
committee meeting fees, if any, that are deferred are credited as of the last business
day of each calendar quarter; (2) if the Board retainer, Lead Director retainer,
Committee Chairperson retainer and/or Audit Committee member retainer are deferred, a
pro-rata share of the deferred retainer is credited as of the last business day of
each calendar quarter. The dates as of which the Voluntary Deferral Amount, or parts
thereof, are credited to the director’s deferred account are hereinafter referred to
as the Voluntary Deferral Dates.






	 	4.	 	Once an Initial Election is made, including, effective December’s 2008,
elections made by directors of MSD prior to the Transactions, it shall continue to
apply in




 









 






	 	 	 	successive years on the same terms and conditions until the director makes a new
Initial Election.






	 	5.	 	Certain directors (the “Schering Directors”) who were directors of
Schering-Plough Corporation on the Closing Date of the Transactions continued service
following the Closing Date. Anything in the Plan to the contrary notwithstanding, the
Schering Directors were first eligible to elect Voluntary Deferrals by December 31 of
the year that includes the Closing Date. That initial election may not apply earlier
than January 1 of the following year and shall continue through the April 1 of the
second year following the Closing Date.






	 	B.	 	Mandatory Deferral Amount






	 	1.	 	As of the Friday following the Company’s Annual Meeting of Stockholders (the
“Mandatory Deferral Date”), each director will be credited with an amount equivalent
to the annual cash retainer for the 12 month period beginning on the April 1 preceding
the Annual Meeting; provided, however, that effective for the 12-month period
beginning April 1, 2011 and thereafter, such credit shall instead equal $150,000 (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 as of the first day of
such director’s service.






	 	3.	 	For purposes of the Mandatory Deferral Amount, the Schering Directors shall
be treated as if newly elected or appointed to the Board as of the Closing Date.






	 	C.	 	Automatic Deferral of Executive Committee Fees






	 	 	 	Between June 2005, and April 2007, directors of MSD who served as either
Chairperson or member of the Board’s Executive Committee, in lieu of any cash
payment for such service, were credited with an amount provided by way of retainer
or meeting fees (the “Automatic Deferral Amount”). The Automatic Deferral Amount
is measured by the Merck Common Stock account.






	 	D.	 	Election of Investment Alternatives






	 	 	 	Each Initial Election shall include an election as to the investment alternatives
by which the value of amounts deferred will be measured in accordance with Article
III, below. Investment alternatives available under this Plan shall be the same as
the investment alternatives available from time to time under the Merck Deferral
Program (the “Executive Deferral Program”); provided, however, that at all times
there shall be a Merck Common Stock fund. All investment alternatives other than
Merck Common Stock are referred to herein as “Other Investment Alternatives.”




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	 	E.	 	Initial Election of Distribution Schedule






	 	 	 	An Initial Election shall include an election of the year during which the
Distribution Date (as defined below) shall occur and shall apply to all Voluntary
Deferral Amounts, Mandatory Deferral Amounts and Automatic Deferral Amounts
credited during the same period. The Distribution Date shall be the 15th day of
the month (or, if such day is not a business day, the next business day) of a
calendar quarter following the Director’s termination of service as a director or
such number of years thereafter as would be permitted for distributions elected
under the Executive Deferral Program.






	 	F.	 	Changes to Distribution Schedule






	 	 	 	If and to the extent that participants in the Executive Deferral Program are
permitted to make re-deferral elections from time to time, participants in this
Plan may elect to defer their Distribution Dates subject to the same restrictions
applicable under the Executive Deferral Program; provided, however, that no
re-deferral election may have the effect of accelerating a distribution prior to a
director’s termination of service or death.






	 	G.	 	Unforeseeable Emergency






	 	 	 	The Committee shall distribute a participant’s deferred amounts prior to the
Distribution Date described in Sections II E and II F above if and to the extent a
participant (i) applies to receive a distribution due to an Unforeseeable Emergency
as defined in Treas. Reg. Sec. 1.409A-3(i) or successor thereto, and (ii) provides
the Committee or its delegate with sufficient evidence to prove to the satisfaction
of the Committee or its delegate compliance with Treas. Reg. Sec. 1.409A-3(i). The
Committee shall distribute the amount necessary in cash to satisfy the
Unforeseeable Emergency up to the participant’s entire account balance, including
the amount invested in Merck Common Stock. If less than the participant’s
entire account balance is distributable to satisfy the Unforeseeable Emergency, the
Committee shall distribute pro rata from each of the participant’s investment
alternatives, including the participant’s investment in Merck Common Stock.
Distributions under this Section II G shall be made as soon as administratively
feasible following the determination of the Committee or its delegate that clauses
(i) and (ii) of the first sentence of this Section II G have been satisfied.






	III.	 	VALUATION OF DEFERRED AMOUNTS






	 	A.	 	Merck 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 that such amount
would purchase at the closing price of the Common Stock on the New York Stock Exchange
(“NYSE”) on the Mandatory Deferral Date.





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	 	 	 	The Automatic Deferral Amount is used to determine the number of full and partial shares
of Merck Common Stock that such amount would have purchased at the closing
price of the Common Stock on the NYSE.






	 	 	 	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
that such amount would purchase at the closing price of the Common Stock on the
NYSE on the applicable Voluntary Deferral Date.






	 	 	 	This Plan is unfunded: at no time 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 that would have been
purchasable with the dividends on shares previously credited to the account at the
closing price of the Common Stock on the NYSE on the date each dividend was paid.






	 	3.	 	Distributions. Distributions from the Merck Common Stock account will be
valued at the closing price of Merck Common Stock on the NYSE as of the Distribution
Date.






	 	4.	 	For purposes of valuation of Merck Common Stock, if Merck Common Stock is no
longer traded on the NYSE, but is publicly traded on any other exchange, references to
NYSE shall mean such other exchange. If Merck Common Stock is not publicly traded and
if the Committee on Corporate Governance of the Board of Directors determines that a
measurement of Merck Common Stock on any Mandatory or Voluntary Deferral Date or
Distribution Date would not constitute fair market value, then the Committee shall
decide on the date and method to determine fair market value, which shall be in accord
with any requirements set forth under Section 409A or any successor thereto.






	 	B.	 	Other Investment Alternatives






	 	1.	 	Initial Crediting. The amount allocated to each Other Investment Alternative
shall be used to determine the full and partial Other Investment Alternative shares
that such amount would purchase at the closing net asset value of the Other Investment
Alternative 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 Other Investment Alternative shares so determined.






	 	 	 	At no time will any Other Investment Alternative 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 Other Investment Alternative shares that would have been
purchasable, at the closing net asset value of the Other Investment Alternative shares
as of the date each dividend is paid on the Other Investment Alternative shares, with
the dividends that would have been paid on the number of shares




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	 	 	 	previously credited to such account (including pro rata dividends on any partial shares).






	 	3.	 	Distributions. Other Investment Alternative distributions will be valued
based on the closing net asset value of the Other Investment Alternative shares as of
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 an Other Investment
Alternative, the number and kind of shares or units shall be adjusted accordingly.






	IV.	 	REDESIGNATION WITHIN A DEFERRAL ACCOUNT






	 	A.	 	General






	 	 	 	A director may redesignate how his or her account is invested among the Other
Investment Alternatives (a “Redesignation”). A Redesignation affects only the
Investment Alternatives; it does not affect the timing of distributions from the
Plan. Except as provided in Section G. of Article II, amounts deferred using the
Merck Common Stock method and any earnings attributable to such deferrals may not
be redesignated prior to the first anniversary of the termination of the director’s
service. The change will be effective at the closing price as of (i) the day when
the redesignation request is received pursuant to administrative guidelines
established by the Human Resources Financial Services area provided the request is
received prior to the close of the NYSE on such day or (ii) the next following
business day if the request is received when the NYSE 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 Redesignated in whole percentages or
as a dollar amount.






	 	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 Investment Alternatives. For purposes of such Redesignations, the cash
equivalent of the value of the Other Investment Alternative shares shall be the
closing net asset value of such Other Investment Alternative as of (i) the day when
the Redesignation request is received pursuant to administrative guidelines
established by the Human Resources Financial Services area of the Treasury




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	 	 	 	department, provided the request is received prior to the close of the NYSE on such
day or (ii) the next following business day if the request is received when the
NYSE is closed.






	V.	 	PAYMENT OF DEFERRED AMOUNTS






	 	A.	 	Payment






	 	 	 	Subject to Section II G, all payments to directors of amounts deferred will be in
cash as of the Distribution Date and will be paid as soon as administratively
feasible after the Distribution Date. Distributions shall be pro rata by
investment alternative.






	 	B.	 	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 Corporate Governance, 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 Corporate Governance 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 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:






	 		 	A. 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
legal representative of the director’s estate.






	 		 	B. A lump sum distribution of any remaining account balance will be made to the director’s
beneficiary or estate’s legal representative as soon as administratively feasible following
such death, whether or not the director was in service at the time of death or has
commenced to receive payments of his or her account balance. The Distribution Date of such
a distribution shall be the 15th day of the month (or, if such day is not a business day,
the next business day) of the calendar quarter following the date the Company learns of
such death.




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	VII.	 	PLAN AMENDMENT OR TERMINATION






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






	VIII.	 	SECTION 409A COMPLIANCE






	 	 	Anything in the Plan to the contrary notwithstanding, the Plan shall comply with
Section 409A of the Internal Revenue Code of 1986, as amended (or any successor thereto)
(the “Code”) and shall be interpreted in accordance therewith. Any payment called for
under the Plan as of or as soon as administratively feasible on or after a designated date
shall be made no later than a date within the same tax year of a director, or by March 15
of the following year, if later (or such other time as permitted in Treas. Reg. Sec.
1.409A-3(d) or any successor thereto); provided further, that the director is not permitted
to change the taxable year of payment, except in accordance with Article II, Section F and
Section 409A of the Code . Where the Plan’s obligation to pay is unclear, including a
dispute about who is the proper beneficiary of a director who dies, payment shall be made
as soon as administratively feasible after the Program’s obligation becomes clear and at a
time permitted by Treas. Reg. Sec. 1.409A-3(g)(4) or any successor thereto.






	IX.	 	EFFECTIVE DATE.






	 	 	This amendment and restatement of this plan shall be effective as of the Closing Date
of the Transactions.






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