EXHIBIT 10.1
CATERPILLAR INC.
1996 STOCK OPTION AND LONG-TERM INCENTIVE PLAN
(Amended and Restated as of 02/09/2000)
Section 1. Purpose
The Caterpillar Inc. 1996 Stock Option
and Long-Term Incentive Plan (“Plan”) is designed to attract and
retain outstanding individuals as directors, officers and key employees of
Caterpillar Inc. and its subsidiaries (collectively, the “Company
”), and to furnish incentives to such individuals through awards
based upon the performance of the Company and its stock. To this end, the
Plan provides for grants of stock options, restricted stock, and
performance awards, or combinations thereof, to non-employee directors,
officers and other key employees of the Company, on the terms and subject
to the conditions set forth in the Plan.
Section 2. Shares Subject to the Plan
2.1 Shares Reserved for
Issuance
Fourteen million shares of Company
common stock (“Shares”) shall be available for issuance under
the Plan either from authorized but unissued Shares or from Shares
acquired by the Company, including Shares purchased in the open market. An
additional four million Shares authorized but unissued under prior Company
stock option plans shall be available for issuance under this Plan.
2.2 Stock Splits/Stock
Dividends
In the event of a change in the
outstanding Shares of the Company by reason of a stock dividend,
recapitalization, merger, consolidation, split-up, combination, exchange
of shares, or similar event, the Compensation Committee (“Committee
”) of the Company’s Board of Directors (“Board”) shall
take any action, which, in its discretion, it deems necessary to preserve
benefits under the Plan, including adjustment to the aggregate number of
Shares reserved for issuance under the Plan, the number and option price
of Shares subject to outstanding options granted under the Plan and the
number and price of Shares subject to other awards under the Plan.
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2.3 Reacquired Shares
If Shares issued pursuant to the Plan are
not acquired by participants because of lapse, expiration or termination of
an award, such Shares shall again become available for issuance under the
Plan. Shares tendered upon exercise of an option by a Plan participant may
be added back and made available solely for future grants under the
Plan.
Section 3. Administration
The Committee shall have the authority to
grant awards under the Plan to officers and other key employees of the
Company. Except as limited by the express provisions of the Plan or by
resolutions adopted by the Board, the Committee also shall have the
authority and discretion to interpret the Plan, to establish and revise
rules and regulations relating to the Plan, and to make any other
determinations that it believes necessary or advisable for administration of
the Plan.
The Committee shall be composed solely of
members of the Board that are outside directors, as that term is defined in
Section 162(m) of the Internal Revenue Code. The Committee shall have no
authority with respect to non-employee director awards under the Plan.
Section 4. Stock Options
4.1 Company Employees
(a) Eligibility
The Committee shall determine Company
officers and employees to whom options shall be granted, the timing of such
grants, and the number of shares subject to the option; provided that the
maximum number of Shares upon which options may be granted to any employee
in any calendar year shall be 400,000.
(b) Option Exercise Price
The exercise price of each option shall
not be less than 100% of the fair market value of Shares underlying the
option at the time the option is granted. The fair market value for purposes
of determining the exercise price shall be the mean between the high and low
prices at which Shares are traded on the New York Stock Exchange the day the
option is granted. In the event this method for determining fair market
value is not practicable, fair market value shall be determined by such
other reasonable method as the Committee shall select.
(c) Option Exercise
Options shall be exercisable in such
installments and during such periods as may be fixed by the Committee at the
time of grant. Options that are not incentive stock options as defined in
Section 4.1(f) of the Plan shall not be exercisable after the expiration of
ten years from the date of grant.
Payment of the exercise price shall be
made upon exercise of all or a portion of any option. Such payment shall be
in cash or by tendering Shares having a fair market value equal to 100% of
the exercise price. The fair market value of Shares for this purpose shall
be the mean between the high and low prices at which Shares are traded on
the New York Stock Exchange on the date of exercise. Upon exercise of an
option, any applicable taxes the Company is required to withhold shall be
paid to the Company. Shares to be received upon exercise may be surrendered
to satisfy withholding obligations.
(d) Termination of Employment
The Committee may require a period of
continued employment before an option can be exercised. That period shall
not be less than one year, except that the Committee may permit a shorter
period in the event of termination of employment by retirement or death.
Termination of employment with the
Company shall terminate remaining rights under options then held;
provided, however, that an option grant may provide that if employment
terminates after completion of a specific period, the option may be
exercised during a period of time after termination. That period may not
exceed sixty months where termination of employment is caused by
retirement or death or sixty days where termination results from any other
cause. If death occurs after termination of employment but during the
period of time specified, such period may be extended to not more than
sixty-six months after retirement, or thirty-eight months after
termination of employment for any other cause. In the event of termination
within two years after a Change of Control as defined in Section 7.2 of
the Plan, options shall be exercisable for a period of sixty months
following the date of termination or for the maximum term of the option,
whichever is shorter. Notwithstanding the foregoing, the Committee may
change the post-termination period of exercisability of an option provided
that change does not extend the original maximum term of the option.
(e) Transferability of Options
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(i) Except as otherwise
permitted in Section 4.1(e)(ii), options shall not be transferable other
than by will or the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined by the Internal Revenue Code
or the Employee Retirement Income Security Act. Options are exercisable
during the holder’s lifetime only by the holder, unless the holder
becomes incapacitated or disabled, in which case the option may be
exercised by the holder’s authorized representative. A holder may
file with the Company a written designation of beneficiaries with the
authority to exercise options in the event of the holder’s
death. |
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(ii) Notwithstanding the
provisions of Section 4.1(e)(i), and in addition to the permissible
transfers under that provision, options granted to persons at the level of
Vice President and above, as well as directors of this corporation and
persons retired from those positions, may be transferred to any one or
more “Permitted Transferees,” as long as those options are not
incentive stock options as defined below. Options granted to employees
below the level of Vice President may be transferred upon prior approval
of the Company’s Director of Compensation and Benefits pursuant to
the terms of this section. |
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(iii) For purposes of
Section 4.1(e)(ii), the term “Permitted Transferees” shall mean
the individual to whom the option is granted; the lineal descendants of
the individual to whom the option is granted; the spouses of the lineal
descendants of the individual to whom the option is granted; the estate
(and any trust that serves a distributive function of an estate) of the
individual to whom the option is granted; and all trusts, corporations,
partnerships, limited liability companies and other entities in which,
directly or indirectly, but for the exercise of a power of appointment or
the death of the survivor of the individuals who are Permitted
Transferees, each owner of an equitable interest is an individual who is a
Permitted Transferee. |
(f) Incentive Stock Options
Incentive stock options, as defined in
Section 422 of the Internal Revenue Code, may be granted under the Plan.
The decision to grant incentive stock options to particular persons is
within the Committee’s discretion. Incentive stock options shall not
be exercisable after expiration of ten years from the date of grant. The
amount of incentive stock options vesting in a particular year cannot
exceed $100,000 per option recipient, based on the fair market value of
the options on the date of grant; provided that any portion of an option
that cannot be exercised as an incentive stock option because of this
limitation may be converted by the Committee to another form of option.
The Board may amend the Plan to comply with Section 422 of the Internal
Revenue Code or other applicable laws and to permit options previously
granted to be converted to incentive stock options.
4.2 Non-Employee Directors
(a) Terms
Options with a term of ten years and
one day are granted to each non-employee director for 4,000 Shares,
effective as of the close of each annual meeting of stockholders at which
an individual is elected a director or following which such individual
continues as a director. Options granted to non-employee directors shall
become exercisable by one-third at the end of each of the three successive
one-year periods since the date of grant. The exercise price of each
option shall be 100% of the fair market value of Shares underlying the
option on the date of grant.
(b) Termination of Directorship
An option awarded to a non-employee
director may be exercised any time within 60 months of the date the
director terminates such status. In the event of a director’s death,
the director’s authorized representative may exercise the option
within 60 months of the date of death, provided that if the director dies
after cessation of director status, the option is exercisable within 66
months of such cessation. In no event shall an option awarded to a
non-employee director be exercisable beyond the expiration date of that
option.
Section 5. Restricted Stock
5.1 Company Employees
(a) Eligibility
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The Committee may determine whether
restricted stock shall be awarded to Company officers and employees, the
timing of award, and the conditions and restrictions imposed on the award.
(b) Terms
During the restriction period, the
recipient shall have a beneficial interest in the restricted stock and all
associated rights and privileges of a stockholder, including the right to
vote and receive dividends, subject to any restrictions imposed by the
Committee at the time of grant.
The following restrictions will be
imposed on Shares of restricted stock until expiration of the restriction
period:
(i) The recipient shall not
be entitled to delivery of the Shares;
(ii) None of the Shares
issued as restricted stock may be transferred other than by will or by the
laws of descent and distribution; and
(iii) Shares issued as
restricted stock shall be forfeited if the recipient terminates employment
with the Company, except for termination due to retirement after a
specified age, disability, death or other special circumstances approved
by the Committee.
Shares awarded as restricted stock will
be issued subject to a restriction period set by the Committee of no less
than two nor more than ten years. The Committee, except for restrictions
specified in the preceding paragraphs, shall have the discretion to remove
any or all of the restrictions on a restricted stock award whenever it
determines such action appropriate. Upon expiration of the restriction
period, the Shares will be made available to the recipient, subject to
satisfaction of applicable tax withholding requirements.
5.2 Non-Employee
Directors
(a) On January 1 of each year, 400
Shares of restricted stock shall be granted to each director who is not
currently an employee of the Company. The stock will be subject to a
restriction period of three years from the date of grant. During the
restriction period, the recipient shall have a beneficial interest in the
restricted stock and all associated rights and privileges of a
stockholder, including the right to vote and receive dividends.
The following restrictions will be
imposed on restricted stock until expiration of the restricted period:
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(i) The recipient shall not
be entitled to delivery of the Shares; |
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(ii) None of the Shares
issued as restricted stock may be transferred other than by will or by the
laws of descent and distribution; and |
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(iii) Shares issued as
restricted stock shall be forfeited if the recipient ceases to serve as a
director of the Company, except for termination due to death, disability,
or retirement under the Company’s Directors’ Retirement
Plan. |
Upon expiration of the restriction
period, the Shares will be made available to the recipient, subject to
satisfaction of applicable tax withholding requirements.
(b) Each January 1st, 350 shares of
restricted stock, in addition to shares described in Section 5.2(a), shall
be awarded to each director who is not currently and has not been an
employee of the Company. Shares awarded under this Section 5.2(b) will be
held in escrow until the director terminates service with the Company.
During the restriction period, the recipient shall have a beneficial
interest in the restricted stock and all associated rights and privileges
of a stockholder except as discussed below.
The following restrictions will be imposed on restricted stock
awarded under this Section 5.2(b) until it is made available to the
recipient:
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(i) The recipient shall not
receive dividends on the shares, but an amount equal to such dividends
will be credited to the director’s stock equivalent account in the
Company’s Directors’ Deferred Compensation Plan; |
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(ii) The recipient shall
not be entitled to delivery of the shares; |
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(iii) None of the shares
awarded may be transferred other than by will or by the laws of descent
and distribution; and |
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(iv) The right to receive
shares shall be subordinate to the claims of general creditors of the
Company. |
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shares will be made available to the recipient subject to satisfaction of
applicable tax withholding requirements; provided, however, that if the
recipient has not served on the Board for at least five years at the time
of such termination, all restricted shares awarded under this Section
5.2(b) shall be forfeited.
Pursuant to termination of the Company
’s Directors’ Retirement Plan effective December 31, 1996, each
director continuing in office was awarded an amount of restricted stock
equal to the accumulated value of past pension accruals as determined by
the Company’s actuary. Those shares will be subject to the same
restrictions as shares awarded annually pursuant to this Section 5.2(b).
Section 6. Performance Awards
6.1 Eligibility and
Terms
The Committee may grant awards to
officers and other key employees (“Performance Awards”) based
upon Company performance over a period of years (“Performance Period
”). The Committee shall have sole discretion to determine persons
eligible to participate, the Performance Period, Company performance
factors applicable to the award (“Performance Measures”), and
the method of Performance Award calculation.
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At the time the Committee establishes a
Performance Period for a particular award, it shall also establish
Performance Measures and targets to be attained relative to those measures
(“Performance Targets”). Performance Measures may be based on
any of the following factors, alone or in combination, as the Committee
deems appropriate: (i) return on assets; (ii) return on equity; (iii)
return on sales; (iv) total shareholder return; (v) cash flow; (vi)
economic value added; and (vii) net earnings. Performance Targets may
include a minimum, maximum and target level of performance with the size
of Performance Awards based on the level attained. Once established,
Performance Targets and Performance Measures shall not be changed during
the Performance Period; provided, however, that the Committee may
eliminate or decrease the amount of a Performance Award otherwise payable
to a participant. Upon completion of a Performance Period, the Committee
shall determine the Company’s performance in relation to the
Performance Targets for that period and certify in writing the extent to
which Performance Targets were satisfied.
6.2 Payment of Awards
Performance Awards may be paid in cash,
Shares of restricted stock (pursuant to terms applicable to restricted
stock awarded to Company employees as described in the Plan) or a
combination thereof, as determined by the Committee. Performance Awards
shall be made not later than 90 days following the end of the relevant
Performance Period. The fair market value of a Performance Award payment
to any individual employee in any calendar year shall not exceed $2.5
million. The fair market value of Shares to be awarded shall be determined
by the average of the high and low price of Shares on the New York Stock
Exchange on the last business day of the Performance Period. Federal,
state and local taxes will be withheld as appropriate.
6.3 Termination
To receive a Performance Award, the
participant must be employed by the Company on the last day of the
Performance Period. If a participant terminates employment during the
Performance Period by reason of death, disability or retirement, a payout
based on the time of employment during the Performance Period shall be
distributed. Participants employed on the last day of the Performance
Period, but not for the entire Performance Period, shall receive a payout
prorated for that part of the Performance Period for which they were
participants. If the participant is deceased at the time of Performance
Award payment, the payment shall be made to the recipient’s
designated representative.
Section 7. Election to Receive Non-Employee Director Fees
in Shares
Effective April 8, 1998, non-employee
directors shall have the option of receiving all or a portion of their
annual retainer fees, as well as fees for attendance at meetings of the
Board and committees of the Board (including any Committee Chairman
stipend), in the form of Shares.
The number of Shares that may be issued
pursuant to such election shall be based on the amount of cash
compensation subject to the election divided by the fair market value of
one Share on the date such cash compensation is payable. The fair market
value shall be the mean between the high and low prices at which shares
are traded on the New York Stock Exchange on payable date.
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Shares provided pursuant to the
election shall be held in book-entry form by the Company on behalf of the
non-employee director. Upon request, the Company shall deliver Shares so
held to the non-employee director. While held in book-entry form, the
Shares shall have all associated rights and privileges, including voting
rights and the right to receive dividends.
Section 8. Change of Control
8.1 Effect on Grants and
Awards
Unless the Committee shall otherwise
expressly provide in the agreement relating to a grant or award under the
Plan, upon the occurrence of a Change of Control as defined below: (i) all
options then outstanding under the Plan shall become fully exercisable as
of the date of the Change of Control; (ii) all terms and conditions of
restricted stock awards then outstanding shall be deemed satisfied as of
the date of the Change of Control; and (iii) all Performance Awards for a
Performance Period not completed at the time of the Change of Control
shall be payable in an amount equal to the product of the maximum award
opportunity for the Performance Award and a fraction, the numerator of
which is the number of months that have elapsed since the beginning of the
Performance Period through the later of (A) the date of the Change of
Control or (B) the date the participant terminates employment, and the
denominator of which is the total number of months in the Performance
Period; provided, however, that if this Plan shall remain in force after a
Change of Control, a Performance Period is completed during that time, and
the participant’s employment has not terminated, this provision (iii)
shall not apply.
8.2 Change of Control Defined
For purposes of the Plan, a
“Change of Control” shall be deemed to have occurred if:
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(a) Any person becomes the
“beneficial owner” (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing 15
percent or more of the combined voting power of the Company’s then
outstanding common stock, unless the Board by resolution negates the
effect of this provision in a particular circumstance, deeming that
resolution to be in the best interests of Company stockholders; |
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(b) During any period of
two consecutive years, there shall cease to be a majority of the Board
comprised of individuals who at the beginning of such period constituted
the Board; |
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(c) The shareholders of the
Company approve a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) less than fifty percent of the
combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation; or |
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(d) Company shareholders
approve a plan of complete liquidation of the Company or an agreement for
the sale or disposition by the Company of all or substantially all of its
assets. |
Section 9. Amendment and Termination
The Board may terminate the Plan at any
time, except with respect to grants and awards then outstanding. The Board
may amend the Plan without shareholder approval, unless such approval is
necessary to comply with applicable laws, including provisions of the
Exchange Act or Internal Revenue Code.
Section 10. Regulatory Compliance
Notwithstanding any other provision of
the Plan, the issuance or delivery of any Shares may be postponed for such
period as may be required to comply with any applicable requirements of
any national securities exchange or any requirements under any other law
or regulation applicable to the issuance or delivery of such Shares. The
Company shall not be obligated to issue or deliver any Shares if such
issuance or delivery shall constitute a violation of any provision of any
law or regulation of any governmental authority or national securities
exchange.
Section 11. Effective Date
The Plan shall be effective upon its
approval by the Company’s stockholders at the 1996 Annual Meeting of
Stockholders.
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