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EXHIBIT 4.5
KIMBERLY-CLARK CORPORATION
OUTSIDE DIRECTORS'
STOCK OPTION PLAN
EFFECTIVE AS OF JANUARY 1, 2001
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KIMBERLY-CLARK CORPORATION
OUTSIDE DIRECTORS'
STOCK OPTION PLAN
(EFFECTIVE JANUARY 1, 2001)
1. INTRODUCTION
The Kimberly-Clark Corporation Outside Directors' Stock Option Plan
(the "Plan") specifies the compensation to be paid by Kimberly-Clark
Corporation (the "Company") in the form of options to purchase shares of common
stock, par value $1.25 per share, of the Company ("Stock") for services
performed by Outside Directors (as hereinafter defined).
The Plan is intended to promote the interests of the Company and its
stockholders by enhancing the Company's ability to attract, motivate and retain
as Outside Directors persons of training, experience and ability, and to
encourage the highest level of Outside Director performance by aligning the
Outside Directors' economic interests more closely with those of the Company's
stockholders.
2. DEFINITIONS
Unless otherwise defined in the text of the Plan, capitalized terms
herein shall have the meanings set forth in this Section 2.
"Affiliate" means any company in which the Company owns 20 percent or
more of the equity interest (collectively, the "Affiliates").
"Board" means the Board of Directors of the Company.
"Change of Control" means an event deemed to have taken place if: (i)
a third person, including a "group" as defined in section 13(d)(3) of the
Securities Exchange Act of 1934, acquires shares of the Company having 20
percent or more of the total number of votes that may be cast for the election
of Directors of the Company; or (ii) as the result of any cash tender or
exchange offer, merger or other business combination, sale of assets or
contested election, or any combination of the foregoing transactions (a
"Transaction"), the persons who were directors of the Company before the
Transaction shall cease to constitute a majority of the Board of Directors of
the Company or any successor to the Company.
"Code" means the Internal Revenue Code of 1986 and the regulations
thereunder, as amended from time to time.
"Committee" means the Compensation Committee of the Board.
"Committee Rules" means the Committee Rules for the Kimberly-Clark
Corporation 1992 Equity Participation Plan or any successor plan.
"Director" means a member of the Board.
"Effective Date" means January 1, 2001.
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"Exchange Act" means the Securities Exchange Act of 1934 and the rules
and regulations thereunder, as amended from time to time.
"Fair Market Value" means the reported closing price of the Stock, on
the relevant date as reported on the composite list used by The Wall Street
Journal for reporting stock prices or, if no such sale shall have been made on
that day, on the last preceding day on which there was such a sale.
"Option" means a right to purchase a specified number of shares of
Stock at a fixed option price equal to no less than 100 percent of the Fair
Market Value of the Stock on the date the Option is granted. For purposes of
this Plan, Options shall be issued either as "Annual Options," as described in
subsection 7(a), or "Additional Options," as described in subsection 7(b).
"Outside Director" means a Director who is not on the date of grant of
an Option pursuant to the Plan, or within one year prior to the date of such
grant, an employee of the Company or any of its Affiliates.
"Retainer" means the annual retainer payable to an Outside Director
for services rendered as a Director. As of the Effective Date, the amount of
the cash portion of such Retainer shall be $50,000 per year, payable in
quarterly installments in advance.
"Rule 16b-3" means Rule 16b-3 under the Securities Exchange Act of
1934, as amended.
"Retirement" and "Retires" means the termination of service as a
Director on or after the date the Director has attained age 55.
"Stock" means the shares of the Company's common stock, par value
$1.25 per share.
3. PARTICIPATION
Participation in the Plan is limited to Outside Directors. It is
intended that all Outside Directors will be participants in the Plan.
4. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Board, which shall have sole and
complete discretion and authority with respect thereto, except as expressly
limited by the Plan. All action taken by the Board in the administration and
interpretation of the Plan shall be final and binding on all matters relating
to the Plan. All questions of interpretation, administration and application of
the Plan shall be determined by a majority of the members of the Board, except
that the Board may authorize any Directors, officers or employees of the
Company to assist the Board in the administration of the Plan and to execute
documents on behalf of the Board. The Board also may delegate to the
Compensation Committee of the Board, or such Directors, officers or employees,
such other ministerial and discretionary duties as it sees fit.
The Company or the Board may employ such legal counsel, consultants
and agents as it may deem desirable for the administration of the Plan, and may
rely upon
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any advice or opinion received from any such counsel or consultant and any
computation received from any such consultant or agent. No member of the Board
shall be liable for any act done or omitted to be done by such member, or by
any other member of the Board, in connection with the Plan, except for such
member's own willful misconduct or as otherwise expressly provided by statute.
The Board shall have the power to promulgate rules and other
guidelines in connection with the performance of its obligations, powers and
duties under the Plan, including its duty to administer and construe the Plan
and the Option Agreements.
All expenses of administering the Plan shall be paid by the Company.
5. TERM OF PLAN
The Plan shall become effective as the Effective Date. The Plan shall
remain in effect until December 31, 2011, unless the Plan is terminated prior
thereto by the Board. No Option may be granted after the termination date of
the Plan, but Options theretofore granted shall continue in force beyond that
date pursuant to their terms.
6. SHARES SUBJECT TO THE PLAN; ADJUSTMENTS
(a) Shares Subject to the Plan. The aggregate maximum number of shares
of Stock available for grant under the Plan shall be 1,000,000 shares, subject
to the adjustment provision set forth in subsection 6(b) below. Shares of Stock
subject to the Plan will be shares that were once issued and subsequently
reacquired by the Company in the form of treasury stock. Shares subject to
Options which become ineligible for purchase will be available for Options
under the Plan to the extent permitted by section 16 of the Exchange Act (or
the rules and regulations promulgated thereunder) and to the extent determined
to be appropriate by the Board. Notwithstanding anything in this Plan to the
contrary, each grant of Options under this Plan shall be subject to the
availability of shares under this subsection 6(a).
(b) Adjustments. In the event there are any changes in the Stock or
the capitalization of the Company through a corporate transaction, such as any
merger, any acquisition through the issuance of capital stock of the Company,
any consolidation, any separation of the Company (including a spin-off or other
distribution of stock of the Company), any reorganization of the Company
(whether or not such reorganization comes within the definition of such term in
section 368 of the Code), or any partial or complete liquidation by the
Company, recapitalization, stock dividend, stock split or other change in the
corporate structure, appropriate adjustments and changes shall be made by the
Board, to the extent necessary to preserve the benefit to the Outside Director
contemplated hereby, to reflect such changes in (a) the aggregate number of
shares subject to the Plan, (b) the maximum number of shares for which an
Option may be granted or awarded to any Outside Director, (c) the number of
shares and the Option Price per share of all shares of Stock subject to
outstanding Options, and (d) such other provisions of the Plan as may be
necessary and equitable to carry out the foregoing purposes, provided, however
that no such adjustment or change may be made to the extent that such
adjustment or change will result in the dilution or enlargement of any rights
of any Outside Director.
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7. TERMS OF THE GRANTS
(a) Annual Grant. As part of his or her annual Retainer each Outside
Director during the calendar year shall be granted an Option to purchase 2,500
shares. In addition, each Outside Director who during the calendar year is
designated to serve as the Chair of the Audit or Compensation Committee, or
both, of the Board, shall be granted an Option to purchase an additional 300
shares for each Chair. Each Outside Director who during the calendar year is
designated to serve as the Chair of the Nominating or Corporate Governance
Committee, or both, of the Board, shall be granted an Option to purchase an
additional 200 shares for each Chair. A grant of Options as payment of either
the annual retainer or for each applicable Chair of a Committee are referred to
herein as "Annual Options." Each Outside Director, and each Chair of the Audit,
Compensation, Nominating or Corporate Governance Committees, as of January 1 of
the calendar year, shall be automatically granted the Options hereunder,
without further action by the Board or the stockholders of the Company, on the
earlier of the date of the first regular meeting during the calendar year of
either the Board or Committee. Each Outside Director who first becomes eligible
for a grant after January 1 of the calendar year, and each Chair of the Audit,
Compensation, Nominating or Corporate Governance Committee, who is appointed
after January 1 of the calendar year, shall be automatically granted the
Options hereunder, without further action by the Board or the stockholders of
the Company, on the earlier of the date of the first regular meeting during the
calendar year of either the Board or the Committee after the date such Outside
Director first becomes eligible for the grant of Options under this subsection
7(a).
(b) Election of Additional Option. Each Outside Director may elect to
receive the cash portion of his or her annual Retainer in the form of an
additional option (hereinafter referred to as an "Additional Option"), in
increments of 50 percent of such cash portion of the Retainer. Except as
otherwise provided below, such election must be made prior to the date that
services are rendered in the calendar year in which such Retainer otherwise
would be paid and shall be irrevocable thereafter for such calendar year;
provided, however, that an election by an Outside Director pursuant to this
subsection for a calendar year (or portion thereof) shall be valid and
effective for all purposes for all succeeding calendar years, unless and until
such election is revoked or modified by such Outside Director prior to the date
that services are rendered in such succeeding calendar year(s); and, provided
further, that no such election, revocation or modification may be made within
six months of another such election, revocation or modification if the
exemption afforded by Rule 16b-3 would not be available as a result thereof.
Notwithstanding the preceding, an individual who is elected as an
Outside Director during a calendar year shall be permitted to make an election
to receive the cash portion of his or her annual Retainer in the form of an
Additional Option, in increments of 50 percent of such cash portion of the
Retainer, during the thirty day period following his or her election date. An
election under this paragraph shall be subject to the terms and conditions of
this Section.
The number of shares subject to this Additional Option shall be based
on 85 percent of the Black-Scholes valuation of the cash portion of the
Retainer elected to be received as an Additional Option as of the date of
grant. Each Outside Director as of
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January 1 of the calendar year, shall be automatically granted the Additional
Options elected hereunder, without further action by the Board or the
stockholders of the Company, on the earlier of the date of the first regular
meeting during the calendar year of either the Board or the Committee. Each
Outside Director who first becomes eligible for a grant after January 1 of the
calendar year, shall be automatically granted the Additional Options elected
hereunder, without further action by the Board or the stockholders of the
Company, on the earlier of the date of the first regular meeting during the
calendar year of either the Board or the Committee after the date such Outside
Director first becomes eligible and elects the grant of Additional Options
under this subsection 7(b).
(c) Form of Additional Option Election. An election by an Outside
Director to receive some or all of the cash portion of his or her Retainer as
an Additional Option shall (i) be in writing, (ii) be delivered to the
Secretary of the Company, and (iii) be irrevocable in all respects with respect
to the calendar year(s) to which the election relates. If no election has ever
been made by the Outside Director pursuant to subsection 7(b) above, he or she
shall be deemed to have made an election to receive the entire cash portion of
the Retainer in cash.
(d) Option Agreement. After granting an Option to an Outside Director,
the Board shall cause to be delivered to the Outside Director an agreement
evidencing the granting of the Option. The agreement shall be in such form as
the Board shall from time to time approve.
(e) Period of Option. The period of each Option shall be 10 years from
the date it is granted.
(f) Option Price. The exercise price of an Option shall be the Fair
Market Value of the Stock at the time the Option is granted.
(g) Limitations on Exercise. Each Option shall not be exercisable
until at least one year has expired after the granting of the Option, during
which time the Outside Director shall have been in the continuous service as a
Director of the Company; provided, however, that the provisions of this
subsection 7(g) shall not apply and all Options outstanding under the Plan
shall be exercisable in full if a Change in Control occurs. One year after the
date the Option was granted, the Outside Director may purchase the total number
of shares covered by the Option; provided, however, that if the Director's
service is terminated for any reason other than death, Retirement, a voluntary
decision by the Director not to stand for reelection to the Board or total and
permanent disability, the Option shall be exercisable only for the number of
shares of Stock which were exercisable on the date of such termination. In no
event, however, may an Option be exercised more than 10 years after the date of
its grant.
(h) Exercise; Notice Thereof. Options shall be exercised by delivering
to the Company, at the office of the Treasurer at the World Headquarters,
written notice of the number of shares with respect to which Option rights are
being exercised and by paying in full the Option Price of the shares at the
time being acquired. Payment may be made in cash, a check payable to the
Company or in shares of Common Stock transferable to the Company and having a
Fair Market Value on the transfer date equal to the amount payable to the
Company. The date of exercise shall be deemed to be the date the
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Company receives the written notice and payment for the shares being purchased.
A Director shall have none of the rights of a stockholder with respect to
shares covered by an Option until the Director becomes the record holder of
such shares.
(i) Exercise after Death, Retirement, Disability or Voluntary
Termination of Service. If a Director dies, retires, becomes totally and
permanently disabled, or terminates service on the Board by reason of a
voluntary decision by the Director not to stand for reelection to the Board,
without having exercised an Option in full, the remaining portion of such
Option may be exercised, without regard to the limitations in subsection 7(g),
within the remaining period of the Option. Upon a Director's death, the Option
may be exercised by the person or persons to whom such Director's rights under
the Option shall pass by will or the laws of descent and distribution or, if no
such person has such rights, by his executor or administrator.
(j) Non-transferability. During the Director's lifetime, Options
shall be exercisable only by such Director. Options shall not be transferable
other than by will or the laws of descent and distribution upon the Director's
death. Notwithstanding anything in this subsection 7(j) to the contrary,
Directors shall have the right to transfer Options, to the extent allowed under
rule 16b-3 of the Exchange Act, subject to the same terms and conditions
applicable to options granted to the Chief Executive Officer of the Company
under Committee Rules.
(k) Purchase for Investment. It is contemplated that the Company will
register shares sold to Directors pursuant to the Plan under the Securities Act
of 1933. In the absence of an effective registration, however, a Director
exercising an Option hereunder may be required to give a representation that
he/she is acquiring such shares as an investment and not with a view to
distribution thereof.
(l) Options for Nonresident Aliens. In the case of any Option awarded
to a Director who is not a resident of the United States, the Board may (i)
waive or alter the conditions set forth in subsections 7(a) through 7(k) to the
extent that such action is necessary to conform such Option to applicable
foreign law, or (ii) take any action, either before or after the award of such
Option, which it deems advisable to obtain approval of such Option by an
appropriate governmental entity; provided, however, that no action may be taken
hereunder if such action would (1) increase any benefits accruing to any
Directors under the Plan, (2) increase the number of securities which may be
issued under the Plan, (3) modify the requirements for eligibility to
participate in the Plan, or (4) result in a failure to comply with applicable
provisions of the Securities Act of 1933, the Exchange Act or the Code.
8. NOTICES; DELIVERY OF STOCK CERTIFICATES
Any notice required or permitted to be given by the Company or the
Board pursuant to the Plan shall be deemed given when personally delivered or
deposited in the United States mail, registered or certified, postage prepaid,
addressed to the Outside Director at the last address shown for the Outside
Director on the records of the Company.
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9. AMENDMENT AND TERMINATION
The Board may at any time amend, suspend, or discontinue the Plan or
alter or amend any or all Options and Option Agreements under the Plan to the
extent (i) permitted by law, (ii) permitted by the rules of any stock exchange
on which the Stock or any other security of the Company is listed, and (iii)
permitted under applicable provisions of the Securities Act of 1933, as
amended, the Exchange Act (including Rule 16b-3 thereof); provided, however,
that if any of the foregoing requires the approval by the stockholders of any
such amendment, suspension or discontinuance, then the Board may take such
action subject to the approval of the stockholders. Except as provided in
subsection 6(b), no such amendment, suspension or termination of the Plan
shall, without the consent of the Director, adversely alter or change any of
the rights or obligations under any Option granted to the Director. The Board
may in its sole and absolute discretion, by written notice to a Director, (i)
limit the period in which an Option may be exercised to a period ending at
least three months following the date of such notice, and/or (ii) limit or
eliminate the number of shares subject to Option after a period ending at least
three months following the date of such notice. Except as provided in
subsection 7(l) and this Section 9, no such amendment, suspension, or
termination of the Plan shall, without the consent of the Director, adversely
alter or change any of the rights or obligations under any Options or other
rights previously granted the Director under the Plan.
10. TAXES
The Company shall require the withholding of all taxes as required by
law.
11. GOVERNING LAW
The terms of the Plan shall be governed, construed, administered and
regulated in accordance with the laws of the state of Delaware and applicable
federal law. In the event any provision of the Plan shall be determined to be
illegal or invalid for any reason, the other provisions of the Plan shall
continue in full force and effect as if such illegal or invalid provision had
never been included herein.
12. DIRECTOR'S SERVICE
Nothing contained in the Plan, or with respect to any grant hereunder,
shall interfere with or limit in any way the right of stockholders of the
Company to remove any Director from the Board, nor confer upon any Director any
right to continue to serve on the Board as a Director.
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