WILLAMETTE INDUSTRIES
1995 LONG-TERM INCENTIVE
COMPENSATION PLAN
1. GENERAL. Pursuant to the terms and conditions of the WILLAMETTE
INDUSTRIES 1995 LONG-TERM INCENTIVE COMPENSATION PLAN (the "Plan"), hereinafter
set forth, the Committee specified in Article 2 may from time to time grant or
award to eligible employees of Willamette Industries, Inc. ("Company"), and of
those corporations ("Subsidiaries") in which Company owns at least 50 percent of
the total combined voting power of all classes of stock, options to purchase
shares of the $.50 par value common stock ("Stock") of Company, stock
appreciation rights, and restricted Stock. In addition, the Plan provides for
the automatic grant of options to Non-Employee Directors as defined in Article
8. Such options, stock appreciation rights, and restricted Stock are sometimes
referred to collectively as "grants and awards." The purpose of the Plan is to
motivate special achievement by officers and other key employees of Company and
its Subsidiaries by assisting them in acquiring or increasing an equity interest
in Company, and, in the case of Non-Employee Directors, to align their interest
more closely to that of Company. The options shall be nonqualified stock options
subject to Section 83 of the Internal Revenue Code, and not incentive stock
options subject to Section 422A of the Internal Revenue Code.
2. ADMINISTRATION. The Board of Directors of Company ("the Board")
shall designate a Committee of not less than two members of the Board ("the
Committee") who shall administer the Plan and serve at the pleasure of the
Board. The number and identity of the members of, and any name given to the
Committee, may be changed by the Board at any time and from time to time. The
Committee may also have other duties, as would be the case if the Board should
designate the Company's Compensation and Nomination Committee (or a successor
thereto) to act as the Committee under the Plan. No person shall be eligible or
continue to serve as a member of the Committee unless such person is a
"disinterested person" within the meaning of Rule 16b-3 ("Rule 16b-3") of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), or any law, rule, regulation, or other provision
that may hereafter replace such rule. Also, unless the Board determines
otherwise, members of the Committee must be "outside directors" within the
meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended, and
the rules thereunder. Subject to the express provisions of the Plan, the
Committee shall have full and final authority, acting in its sole discretion, to
interpret the Plan, to establish rules and regulations relating to the Plan, and
to take such action and make such determinations as the Committee may deem
necessary or advisable in the administration of the Plan. However, Committee
shall have no discretion as to any aspect of grants to Non-Employee Directors;
these grants shall be governed by Article 8. No member of the Committee shall be
liable for any action or determination made in good faith with respect to the
Plan or any grant or award made thereunder, nor be liable for any good faith
reliance upon any report or other information furnished to the Committee by
Company's officers, its independent public accountants, or by any other person
or entity.
3. ELIGIBILITY. Except as otherwise provided in Article 8, employees
eligible to receive grants and awards under the Plan shall be such key employees
(including officers, regardless whether they are directors) of Company and its
Subsidiaries as may be selected from time to time by the Committee. Except for
the provisions in Articles 5, 6, and 7 setting a per-
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employee maximum limit on the number of stock options, stock appreciation
rights, or shares of restricted Stock whose vesting is based on attainment of
one or more performance goals, no provision of the Plan shall be construed to
prohibit the Committee from making additional grants or awards under the Plan to
employees who have previously received grants or awards. No provision of the
Plan shall be construed as automatically entitling an employee to a grant or
award, regardless whether the employee has received a grant or award in a prior
year or has attained a particular executive position or salary level.
4. SHARES SUBJECT TO THE PLAN. Subject to Article 16 hereof, the total
number of shares of Stock issuable under the Plan shall not exceed 2,750,000.
For purposes of this limitation, (a) any option or stock appreciation right
which terminates or expires without exercise shall thereafter be deemed not to
have been granted, and (b) shares of restricted Stock which are forfeited shall
thereafter be deemed not to have been issued. Shares of Stock available for
issue under the Plan shall be authorized and unissued shares or shares acquired
by Company and held in treasury.
5. STOCK OPTIONS. The Committee may from time to time grant options to
eligible employees. Subject to appropriate adjustment pursuant to Article 16, no
employee may receive, under the Plan, stock options or stock appreciation rights
which in the aggregate would exceed 350,000 shares of Stock. The price at which
a share of Stock may be purchased on exercise of an option shall be fixed by the
Committee at the date of grant of such option and shall not be less than the
fair market value of a share of Stock at that date. Fair market value, as used
in this Article 5 and elsewhere in the Plan, shall, unless the Committee shall
determine otherwise, be the closing price of Stock on the date the option is
granted as reported on the NASDAQ national market system for such date or, if
such closing price is not available for a date (because the date is not a
trading day or otherwise), for the next preceding date for which such closing
price is available.
At the time an option is granted, the Committee shall specify the
period during which it is not exercisable, and whether the option is to be
thereafter exercisable in full or in installments. The Committee may also
specify that all the shares become exercisable no later than upon termination of
employment for certain reasons, such as death, disability, or retirement. The
Committee may at any time after the grant accelerate the exercisability of the
option. Options granted under the Plan shall expire not more than ten years and
two days from the date of the grant of the option as specified by the Committee
(the "stated period of the option") at date of grant.
No employee to whom an option is granted shall be entitled to any of
the rights of a shareholder of Company with respect to any shares covered by the
option until certificates representing such shares have been issued to the
employee.
No option may be transferred except by will or the laws of descent and
distribution and, during the lifetime of an employee to whom an option is
granted, such option may be exercised only by the employee, the employee's
guardian or legal representative. Notwithstanding the foregoing, the Committee,
in its sole discretion, may include in the agreement referred to in Article 12
evidencing the grant of an option to an employee a provision permitting the
employee to transfer such option upon the terms and conditions specified in such
agreement, provided that the foregoing provisions of this sentence shall apply
to any person
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subject to the reporting provisions of Section 16(a) of the Exchange Act only to
the extent that the exemption given by Rule 16b-3 shall continue to be available
to the grant of such option.
Upon termination of employment for any reason other than death,
disability, or retirement ("disability" and "retirement" are defined in Article
10) of an employee to whom an option has been granted, the employee may, at any
time prior to the earlier of (a) 30 days after termination of employment or (b)
the expiration of the stated period of the option, exercise the option to the
same extent, if any, that the option was exercisable by the employee on the date
of termination of employment under the terms of the option. Notwithstanding the
foregoing, the Committee may in its discretion, after giving consideration to
the circumstances of the termination of employment of an employee to whom an
option has been granted, extend said 30-day period to a period of three years
after termination of employment. The option shall expire on the date of
termination of employment to the extent it was not then exercisable and
otherwise shall expire upon the earlier of 30 days (three years, if the
Committee has extended the period) after termination of employment or the
expiration of the stated period of the option.
Upon the termination of employment by reason of death, disability, or
retirement of an employee to whom an option has been granted, the employee (or,
in case of death, any person or persons, including the legal representative of
the employee's estate, to whom the option passes by will or by the laws of
descent and distribution) may, at any time prior to the expiration of the stated
period of the option, exercise the option to the same extent, if any, that the
option was exercisable by the employee on the date of termination of employment
under the terms of the option. The option shall expire on the date of
termination of employment to the extent it was not then exercisable and
otherwise shall expire upon the expiration of the stated period of the option.
Payment upon exercise of an option shall be made in cash, by certified
check or bank draft payable to the order of Company or, at the Committee's
discretion, in whole or in part in any other form, including by personal check
or by the delivery to Company of shares of Stock previously acquired by the
employee or by any combination of the foregoing.
6. STOCK APPRECIATION RIGHTS. The Committee may from time to time award
stock appreciation rights to eligible employees and determine the base price for
each stock appreciation right (which may be higher than, equal to, or less than
the fair market value of a share of Stock on the date of award). A "stock
appreciation right" is a right to receive cash as provided in this Article 6.
Subject to appropriate adjustment pursuant to Article 16, no employee may
receive, under the Plan, stock options or stock appreciation rights which in the
aggregate would exceed 350,000 shares of Stock.
Upon the exercise of a stock appreciation right, the optionee shall be
entitled to the excess of the fair market value of one share of Stock on the
date of such exercise over the base price specified in the award agreement for
the stock appreciation right.
Except as otherwise provided in this Article 6, the terms and
conditions relating to exercise and expiration of stock appreciation rights
shall be as determined by the Committee under the same rules as provided in
Article 5 for stock options and shall be subject to the same restraints on
transferability, except that the exercise of stock appreciation rights shall be
subject
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to such conditions as are required to prevent the employee from incurring
liability under Section 16(b) of the Exchange Act.
7. AWARDS OF RESTRICTED STOCK. The Committee may from time to time make
awards of restricted Stock under the Plan to eligible employees. An award may be
either of two types:
(a) Stock whose vesting is based on years of continuous employment
after the date of award.
(b) Stock whose vesting is based on attainment of one or more
performance goals.
YEARS OF CONTINUOUS EMPLOYMENT. At the time of an award of shares whose
vesting is based on years of continuous employment, the Committee shall specify
the number of continuous years of employment required for vesting, except that
full vesting shall occur no later than upon termination of employment by reason
of death, disability, or retirement ("disability" and "retirement" are defined
in Article 10). The Committee may at any time after the award accelerate the
vesting as to part or all the shares awarded. There is no per-employee maximum
limit on the number of shares of restricted Stock whose vesting is based on
years of continuous employment.
ATTAINMENT OF GOALS. At the time of an award of shares whose vesting is
based on attainment of performance goals, the Committee shall specify the
performance goal or goals which must be attained, and the date by which they
must be attained, in order to cause the shares to vest. The performance goal or
goals shall be one or more of earnings per share, return on equity, return on
assets, growth in earnings, growth in sales revenue, corporate profitability, or
shareholder returns. These can be measured in comparison to the performance of a
group of peer companies selected by the Committee or based on Company's results.
Notwithstanding the foregoing, full vesting shall occur upon death or
disability. Also, the Committee may, in its discretion, at the time an award is
made, specify that the shares shall become fully vested upon retirement in the
event retirement occurs before the attainment of the performance goal or goals.
If the specified performance goal or goals are not met within the time
specified, the nonvested shares subject to such goal or goals shall be
forfeited. Furthermore, upon termination of employment for any reason other than
death, disability, or (in those cases where the Committee has specified full
vesting on retirement) retirement of an employee to whom an award has been made,
any nonvested shares shall be forfeited. Subject to appropriate adjustment
pursuant to Article 16, no employee may receive, under the Plan, more than
50,000 shares of restricted Stock whose vesting is based on attainment of
performance goals.
GENERAL PROVISIONS. While the shares are not vested, the employee shall
have all the rights of a shareholder of Company as to the nonvested shares,
except that the shares may not be sold, assigned, transferred, pledged, or
otherwise encumbered. Certificates representing awarded shares shall be
registered in the name of the employee but held (with a stock power endorsed in
blank) by Company until the shares have vested, at which time they shall be
delivered to the employee or legal representative free of restrictions.
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The Committee may, in its discretion, provide that a portion of the
award of restricted Stock shall be made in cash rather than shares. Any such
cash shall be payable at the same time or times as the shares to which the cash
relates become vested. If shares are forfeited, the related amount of unpaid
cash shall also be forfeited.
8. NON-EMPLOYEE DIRECTORS. Grants shall be made to members of the Board
who are not employees of Company or any Subsidiary ("Non-Employee Directors")
only under this Article 8. No person, including the members of the Board or the
Committee, shall have any discretion as to the selection of eligible recipients
or the determination of the type, amount, or terms of grants pursuant to this
Article 8. The persons eligible to receive grants pursuant to this Article 8 are
all Non-Employee Directors.
INITIAL OPTIONS. Upon the date of approval of the Plan by Company's
shareholders (the "Approval Date"), each person who is then a Non-Employee
Director shall be automatically granted an option (a "Director Option") to
purchase 1,000 shares of Stock. Each person who becomes a Non-Employee Director
after the Approval Date shall be automatically granted, on the date such person
becomes a Non-Employee Director, an initial Director Option to purchase 2,000
Shares; provided, however, that a director who was at any time an officer of the
Company or any Subsidiary shall not be entitled to a grant of the initial
Director Option.
ANNUAL OPTIONS. Upon the date of each annual meeting of Company's
shareholders beginning with the meeting in 2001, each person who is then a
Non-Employee Director and who is to continue as a member of the Board following
the annual meeting, and without regard to how long the person has been a
Non-Employee Director or whether the person had ever been an officer of Company
or any Subsidiary, shall be automatically granted an annual Director Option to
purchase 2,000 shares of Stock.
OPTION PRICE. The option price for all Director Options shall be the
fair market value of a share of Stock at the date of grant.
OPTION AGREEMENTS. Each grant of Director Options made pursuant to this
Article 8 shall be governed by and shall be subject to the terms and conditions
set forth in an Option Agreement in the form attached to the Plan as Exhibit A.
Except to the extent otherwise provided in this Article 8 or in such Option
Agreement, each such grant shall be governed by the Plan's provisions relating
to the grant of options to, and the exercise of options by, employees.
9. CHANGE IN CONTROL. For purposes of the Plan, "change in control"
means the occurrence of any of the following events without approval by the
affirmative vote of at least two thirds of those members of the Board who (i)
are members of the Board immediately prior to the event, and (ii) are not
employees of Company or a Subsidiary:
(a) The merger or consolidation of Company with, or the sale of all
or substantially all the assets of Company to, any person or entity or group of
associated persons or entities.
(b) The attainment of direct or indirect beneficial ownership of
securities of Company which in the aggregate represent 20 percent or more of the
total combined voting power of Company's then issued and outstanding securities
by any person or entity or group of associated persons or entities acting in
concert who is not affiliated (within the meaning of the
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Securities Act of 1933) with Company as of November 10, 1994; provided, however,
the Board may at any time in its discretion increase the 20 percent requirement
but not beyond 40 percent.
(c) The approval by the shareholders of Company of any plan or
proposal for the liquidation or dissolution of Company.
A change in control shall also be deemed to occur upon a change in the
membership of the Board at any time during any consecutive 24-month period such
that the "continuity" directors cease for any reason to constitute at least 70
percent of the Board. The continuity directors are those members of the Board
who were either (i) members of the Board at the beginning of such consecutive
24-month period, or (ii) elected by, or on the nomination or recommendation of,
at least two thirds of the members of the Board.
If a change in control occurs, all options and stock appreciation
rights previously granted or awarded which are not fully exercisable shall
become exercisable in full upon the date of such occurrence and shall remain so
exercisable until the earlier of (a) three years after the date of such
occurrence, or (b) the expiration of the stated period of the option. After the
end of the three-year period, the options and rights shall revert to being
exercisable in accordance with their terms, although no option or rights which
have previously been exercised or otherwise terminated shall become exercisable.
Notwithstanding the foregoing, no stock appreciation rights may be exercised
within six months of the date of award of the rights.
Notwithstanding the provisions of Articles 5 or 6 relating to the
expiration of options and stock appreciation rights in connection with
termination of employment, upon termination of employment for any reason (other
than by reason of conduct which constitutes a felony under federal law or the
law of the state in which the employee resides) within the two-year period
following the occurrence of a change in control, the option and rights may be
exercised at any time prior to the earlier of (a) three years after termination
of employment or (b) the expiration of the stated period of the option.
If a change in control occurs, all shares of restricted Stock
previously awarded which are not vested shall become vested upon the date of
such occurrence.
10. RIGHT TO RECEIVE CASH ON CHANGE IN CONTROL. If a change in control,
as defined in Article 9, occurs, each employee (including those who are not
officers) holding an unexercised option, and regardless whether the option is
then otherwise fully exercisable, may make a cash exercise of all or any portion
of the option in lieu of the purchase of Stock under the option. A cash exercise
may be made, without any payment to Company, by surrendering unexercised the
option or any portion thereof. Upon such exercise and surrender, the optionee
shall be entitled to receive cash (less applicable withholding taxes) in an
amount equal to the excess of the aggregate fair market value of the shares of
Stock covered by the option, or the relevant portion thereof, on the date of
such exercise and surrender over the aggregate exercise price of such Stock
under the option. The cash exercise may be made only during the period beginning
on the first day following the date on which Company has actual knowledge of the
actual occurrence of the change in control and ending on the 45th day following
such date. Notwithstanding the foregoing, no cash exercise may be made by an
officer (as defined under Section 16 of the Exchange Act) of Company within six
months of the date of grant of the option
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and no cash exercise may be made by any optionee after the expiration of the
stated period of the option.
11. DISABILITY; RETIREMENT. Except as otherwise provided in Exhibit A
for Non-Employee Directors, "disability" for purposes of this Plan shall have
the same meaning as "total and permanent disability" under the Willamette
Industries, Inc., and Associated Companies Salaried Employees' Retirement Plan
(regardless whether the employee is covered by such Retirement Plan), and
"retirement" shall mean:
(a) Termination of employment at or after attainment of age 62,
provided the employee has (or would have, if covered by such Retirement Plan) at
least ten vesting credits as defined under such Retirement Plan, or
(b) Termination of employment at or after attainment of age 65,
regardless of the number of such vesting credits, if any.
12. AGREEMENT. Each employee to whom a grant or award is made under the
Plan shall execute an appropriate agreement with respect to such grant or award
referring to the terms and conditions thereof and of the Plan. The form of
agreements may be changed from time to time and need not be identical among
those receiving the grants or awards.
13. WITHHOLDING TAXES. Company shall have the right to deduct from all
cash payments made under the Plan any federal, state, or local taxes required by
law to be withheld with respect to such cash payments, and, in the event such
cash payments are insufficient to cover the required withholding, the employee
or other person receiving such payment may be required to pay to Company the
additional amount necessary for this purpose. In the case of an exercise of an
option or an award of restricted Stock, the employee or other person exercising
such option or taxable in connection with such award may be required to pay to
Company the amount of any such taxes that Company is required to withhold with
respect to such exercise or award. Company shall also have the right to deduct
any such taxes from the shares that would otherwise be issued to or vest in the
employee or other person.
The Committee may, in its discretion, allow the employee or other
person to make the required payment to Company by delivery of shares of
previously acquired Stock.
14. EMPLOYMENT. Nothing contained in the Plan or in any grant or award
under the Plan shall confer upon any employee any right with respect to the
continuation of employment with Company or its Subsidiaries or interfere in any
way with the right of Company or its Subsidiaries to terminate the employee's
employment at any time. Nothing contained in the Plan shall confer upon any
employee or other person any claim or right to any grant or award under the
Plan.
15. GOVERNMENTAL COMPLIANCE. Each grant and award under the Plan shall
be subject to the requirement that, if at any time the Committee shall determine
that the listing, registration, or qualification of any shares issuable
thereunder upon any securities exchange or under any federal or state law, or
the consent or approval of any governmental or self-regulatory body is necessary
or desirable as a condition thereof, or in connection therewith, no such grant
or award may be exercised or shares issued unless such listing, registration,
qualification, consent,
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or approval shall have been effected or obtained free of any conditions not
acceptable to the Committee.
16. ADJUSTMENTS. The right and power of Company to provide for
reclassifications, reorganizations, recapitalizations, stock splits, stock
dividends, combination of shares, merger, consolidation, or any other change in
the capital structure or shares of Company shall not be affected by the Plan. In
the event of any such action, the Committee or the Board may make such
adjustments, if any, as it may deem appropriate in the number of shares
available for grants and awards under the Plan, that may be granted or awarded
to an individual employee or Non-Employee Director, and to grants and awards
made under the Plan.
17. EXPENSES. The expenses of administering the Plan shall be borne by
Company.
18. TERMINATION. No grants or awards under the Plan shall be made after
April 27, 2005, or such earlier date as the Board may determine.
19. SUCCESSORS AND ASSIGNS. The provisions of the Plan (and
interpretations and determinations made by the Committee pursuant thereto) shall
be conclusive and binding upon Company and its Subsidiaries, their successors
and assigns, and upon each employee receiving grants or awards under the Plan
and the employee's heirs, successors, and assigns.
20. AMENDMENT. The Plan may be amended by the Board as it deems
advisable, provided that no such amendments shall adversely affect the rights of
participants to whom grants and awards under the Plan shall have been made
without the consent of the participants affected thereby, nor shall the Board,
without approval of Company's shareholders:
(a) Except as provided in Article 16, increase the number of shares of
Stock that are subject to the Plan or the number of shares that may be received
by any one employee;
(b) Extend the period during which grants and awards under the Plan may
be made;
(c) Otherwise materially increase the benefits accruing to participants
under the Plan;
(d) Amend the requirements of the Plan in respect of eligibility to
receive grants and awards under the Plan; or
(e) Establish the price at which shares may be purchased on the
exercise of an option at less than the fair market value of the Stock at the
time the option is granted.
The provisions of Article 8 of the Plan shall not be amended more than
once every six months, other than to comport with changes in the Internal
Revenue Code or in Rule 16b-3 under the Exchange Act.
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