<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
Russell Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
[RUSSELL LOGO]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
RUSSELL CORPORATION
To the Shareholders of Russell Corporation:
Notice is hereby given that the Annual Meeting of the Shareholders of
Russell Corporation will be held on Wednesday, April 19, 2000, at 11:00 a.m.,
Central Daylight Time, at the general offices of the Company in Alexander
City, Alabama, for the following purposes:
(1) To elect four directors to the Board of Directors for three year
terms;
(2) To vote on the Russell Corporation 2000 Employee Stock Purchase
Plan;
(3) To vote on the amended and restated Russell Corporation 1993
Executive Long-Term Incentive Plan; and
(4) To transact such other business as may properly come before the
meeting.
Holders of the Common Stock of the Company at the close of business on
March 1, 2000, are entitled to notice of and to vote upon all matters at the
Annual Meeting.
You are cordially invited to attend the Annual Meeting so that we may
have the opportunity to meet with you and discuss the affairs of the Company.
WHETHER YOU PLAN TO ATTEND THE MEETING OR NOT, PLEASE SIGN AND RETURN THE
ENCLOSED PROXY SO THAT THE COMPANY MAY BE ASSURED OF THE PRESENCE OF A QUORUM
AT THE ANNUAL MEETING. A stamped, addressed envelope is enclosed for your
convenience in returning your proxy.
BY ORDER OF THE BOARD OF DIRECTORS
FLOYD G. HOFFMAN
Senior Vice President,
General Counsel and Secretary
Alexander City, Alabama
March 16, 2000
<PAGE> 3
RUSSELL CORPORATION
PROXY STATEMENT FOR THE ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD APRIL 19, 2000
This Proxy Statement is furnished by and the accompanying proxy is
solicited on behalf of the Board of Directors of Russell Corporation, an
Alabama corporation (the "Company"), for use at its Annual Meeting of
Shareholders to be held at the general offices of the Company in Alexander
City, Alabama, on Wednesday, April 19, 2000, at 11:00 a.m., Central Daylight
Time, and at any adjournment thereof (the "Annual Meeting"). The Proxy
Statement and accompanying proxy will initially be mailed to shareholders on
or about March 16, 2000.
Shares represented by a properly executed proxy on the accompanying
form will be voted at the Annual Meeting and, when instructions have been
given by the shareholder, will be voted in accordance with those instructions.
In the absence of contrary instructions, the proxies received by the Board of
Directors will be voted FOR the election of all nominees for director of the
Company listed below, FOR the adoption of the Russell Corporation 2000
Employee Stock Purchase Plan, and FOR the proposed amendment and restatement
of the Russell Corporation 1993 Executive Long-Term Incentive Plan. A
shareholder who has given a proxy may revoke it at any time prior to its
exercise by giving written notice of such revocation to the Secretary of the
Company, by executing and delivering to the Company a later dated proxy
reflecting contrary instructions or by appearing at the Annual Meeting and
taking appropriate steps to vote in person.
ELECTION OF DIRECTORS
Directors of the Company are divided into three classes, with
approximately one-third of the directors being elected at each annual meeting
for three-year terms. The terms of John F. Ward, Margaret M. Porter, Benjamin
Russell and Eric N. Hoyle, will expire at the Annual Meeting, and each has
been nominated for reelection at the Annual Meeting to serve until the Annual
Meeting of Shareholders in 2003, and until their successors have been duly
elected and qualified. Proxies cannot be voted for more than four persons, and
in the absence of contrary instructions, shares represented by the Board of
Directors' proxies will be voted for the election of these nominees. Should
any nominee be unable or unwilling to accept election, it is expected that the
proxies will vote for the election of such other person for director as the
Board of Directors then recommends. The Board of Directors has no reason to
believe that any of the nominees will be unable to serve or will decline to
serve if elected.
NOMINEES FOR TERMS EXPIRING IN 2003:
[PHOTO]
JOHN F. WARD
Atlanta, Georgia
Director since 1998
Age 56
Mr. Ward was elected President and Chief Executive Officer of the Company
effective April 1, 1998, and Chairman of the Board effective April 22, 1998.
Prior to his elections to such positions, Mr. Ward was President of J. F. Ward
Group, Inc., a consulting firm specializing in domestic and international
apparel and textile industries from 1996 to 1998. Prior to that time, Mr. Ward
was Chief Executive Officer of the Hanes Group and Senior Vice President of
Sara Lee Corporation. Mr. Ward is a director of Lanier Worldwide, Inc.
Mr. Ward is chairman of the Executive Committee and a member of the Corporate
Responsibility and Nominating Committees of the Board of Directors.
[PHOTO]
MARGARET M. PORTER
Birmingham, Alabama
Director since 1997
Age 49
Ms. Porter presently serves on the boards of the University of Alabama Health
Services Foundation, Alabama Eye Institute, Inc. and The Children's Hospital
of Alabama. Ms. Porter formerly served as Mayor of Mountain Brook, Alabama,
and from 1992 to 1997, as founding Chairman of McWane Center in Birmingham,
Alabama. McWane Center is a non-profit organization which promotes public
understanding of service, technology and the environment and serves as a
statewide resource for Alabama schools.
Ms. Porter is Chairman of the Corporate Responsibility Committee and a member
of the Audit Committee of the Board of Directors.
- 1 -
<PAGE> 4
[PHOTO]
BENJAMIN RUSSELL
Alexander City, Alabama
Director since 1963
Age 62
Mr. Russell is Chairman and Chief Executive Officer of Russell Lands,
Incorporated, a land and timber company, and has held these positions for more
than the past five years.
Mr. Russell is a member of the Finance Committee of the Board of Directors.
[PHOTO]
ERIC N. HOYLE
Atlanta, Georgia
Director since 1998
Age 52
Mr. Hoyle was elected Executive Vice President and Chief Financial Officer and
a Director effective August 11, 1998. Mr. Hoyle was Chief Financial Officer of
Ithaca Industries, Inc. from 1994 to 1998. During the time Mr. Hoyle served as
its Chief Financial Officer, Ithaca Industries, Inc., filed a petition in
bankruptcy under Chapter 11 of the Bankruptcy Code. Prior to that time, he
served as Vice President, Finance and Administration and Chief Financial
Officer of the Bali Company, a division of Sara Lee Corporation, and Sara Lee
Intimates group from 1983 to 1994.
Mr. Hoyle is a member of the Executive and Finance Committees of the Board of
Directors.
DIRECTORS WHOSE TERMS EXPIRE IN 2001:
[PHOTO]
TIM LEWIS
Birmingham, Alabama
Director since 1995
Age 44
Mr. Lewis is President of T.A. Lewis & Associates, Inc., a telecommunications
consulting firm, and has held this position for more than five years.
Mr. Lewis is a member of the Audit and Corporate Responsibility Committees of
the Board of Directors.
[PHOTO]
C.V. NALLEY III
Atlanta, Georgia
Director since 1989
Age 57
Mr. Nalley is Chief Executive Officer of The Nalley Companies, which are
automobile and truck leasing companies, and has held this position for more
than five years.
Mr. Nalley is Chairman of the Management Development and Compensation
Committee and a member of the Nominating Committee of the Board of Directors.
[PHOTO]
JOHN R. THOMAS
Alexander City, Alabama
Director since 1966
Age 63
Mr. Thomas is Chairman, President and Chief Executive Officer of Aliant
Financial Corporation, a bank holding company, and has held these positions
for more than five years. He is a director of Alfa Corporation.
Mr. Thomas is a member of the Audit and Finance Committees of the Board of
Directors.
[PHOTO]
JOHN A. WHITE
Fayetteville, Arkansas
Director since 1992
Age 60
Dr. White has been Chancellor of the University of Arkansas since July 1997.
He served as Dean of Engineering of the Georgia Institute of Technology from
1991 to June 1997. He is a director of Motorola, Inc., Logility, Inc., Eastman
Chemical Company and J.B. Hunt Transport Services, Inc.
Dr. White is Chairman of the Audit Committee of the Board of Directors.
- 2 -
<PAGE> 5
DIRECTORS WHOSE TERMS EXPIRE IN 2002:
[PHOTO]
HERSCHEL M. BLOOM
Atlanta, Georgia
Director since 1986
Age 56
Mr. Bloom has been a partner in the law firm of King & Spalding for more than
five years. He is a director of Post Properties, Inc.
Mr. Bloom is Chairman of the Nominating Committee and a member of the
Management Development and Compensation Committee of the Board of Directors.
[PHOTO]
RONALD G. BRUNO
Birmingham, Alabama
Director since 1992
Age 48
Mr. Bruno has been President of Bruno Capital Management Corporation, an
investment company, since September 1995. From December 1991 to August 1995 he
was Chairman and Chief Executive Officer of Bruno's, Inc., a retail food store
chain. He is a director of Bruno's, Inc., and SouthTrust Bank, N.A.
Mr. Bruno is Chairman of the Finance Committee and a member of the Management
Development and Compensation Committee of the Board of Directors.
SECURITY OWNERSHIP OF EXECUTIVE OFFICER AND DIRECTORS
The following table sets forth information regarding beneficial ownership
of the Company's Common Stock by each director, the Company's five most highly
compensated executive officers and the directors and executive officers of the
Company as a group, all as of March 1, 2000:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
--------------------------------------------------------------------------------
SOLE VOTING OPTIONS
AND EXERCISABLE OTHER TOTAL PERCENT
INVESTMENT WITHIN BENEFICIAL BENEFICIAL OF
INDIVIDUAL OR GROUP POWER 60 DAYS OWNERSHIP OWNERSHIP CLASS
- ----------------------- ---------- ----------- --------- --------- -------
<S> <C> <C> <C> <C> <C>
John F. Ward 65,231 427,906 615,960 (1)(2) 1,109,091 3.36
Eric N. Hoyle 13,000 10,000 600,960 (2) 623,960 1.92
Tim Lewis 776 471 0 1,247 (*)
Herschel M. Bloom 7,827 471 0 8,298 (*)
C.V. Nalley III 12,185 471 0 12,656 (*)
Ronald G. Bruno 14,141 471 0 14,612 (*)
John A. White 3,296 471 0 3,767 (*)
John R. Thomas 109,349 471 490,121 (3) 599,941 1.84
Benjamin Russell 991,423 471 4,905,320 (4) 5,897,214 18.11
Margaret M. Porter 2,195 471 0 2,666 (*)
JTTaunton, Jr. 11,097 41,200 0 52,297 (*)
Jonathan R. Letzler 45,000 37,500 0 82,500 (*)
Thomas R. Johnson, Jr. 4,050 39,200 0 43,250 (*)
All Executive Officers and
Directors as a group (23 persons) 1,802,584 699,893 6,011,401 8,513,878 25.60
</TABLE>
(*)Represents less than one percent (1%).
(1) Includes 15,000 shares owned by Mr. Ward's spouse.
(2) Includes 600,960 shares held by the Company's pension plan, of which
Messrs. Ward and Hoyle are two of the trustees and with respect to
which they share voting rights. Messrs. Ward and Hoyle disclaim
beneficial ownership with respect to such shares.
(3) Includes (i) 32,372 shares held by a trust of which Mr. Thomas is one
of three trustees, (ii) 454,249 shares owned indirectly by Mr. Thomas
as a general and limited partner in two limited partnerships and (iii)
3,500 shares owned by Mr. Thomas' spouse.
(4) Includes (i) 731,296 shares held by the Benjamin and Roberta Russell
Foundation, Incorporated, a charitable corporation of which Mr. Russell
is one of nine directors, (ii) 3,945,024 shares held by a trust created
under the will of Benjamin C. Russell, of which Mr. Russell is one of
four trustees, (iii) 225,000 shares held by the Adelia Russell
Charitable Foundation, of which Mr. Russell is one of three trustees,
and (iv) 4,000 shares held by a profit sharing plan of which Mr.
Russell is one of two trustees.
- 3 -
<PAGE> 6
PRINCIPAL SHAREHOLDERS
The following table sets forth each person who, to the Company's
knowledge, had sole or shared voting or investment power over more than five
percent of the outstanding shares of Common Stock of the Company as of March
1, 2000:
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
- ------------------------------------ -------------------- --------
<S> <C> <C>
Benjamin Russell 5,897,214 shares (1) 18.11
755 Lee Street
P.O. Box 272
Alexander City, Alabama 35011-0272
Roberta A. Baumgardner 5,868,774 shares (2) 18.02
755 Lee Street
P.O. Box 272
Alexander City, Alabama 35011-0272
Edith L. Russell 4,686,320 shares (3) 14.39
755 Lee Street
P.O. Box 272
Alexander City, Alabama 35011-0272
Nancy R. Gwaltney 4,677,642 shares (4) 14.37
755 Lee Street
P.O. Box 272
Alexander City, Alabama 35011-0272
Merrill Lynch Asset Management Group 2,662,702 shares (5) 8.18
World Financial Center, North Tower
250 Vesey Street
New York, NY 10381
Helen Alison 1,909,380 shares (6) 5.86
755 Lee Street
P.O. Box 272
Alexander City, Alabama 35011-0272
Barclays Global Investors, N.A. 1,794,353 shares (7) 5.51
45 Fremont Street
San Francisco, CA 94105
</TABLE>
(1) Includes 991,423 shares as to which Mr. Russell has sole voting and
investment power, presently exercisable options to acquire 471 shares
and 4,905,320 shares as to which he has shared voting and investment
power. See Note (4) on page 3.
(2) Includes 1,192,454 shares as to which Mrs. Baumgardner has sole voting
and investment power and 4,676,320 shares as to which she has shared
voting and investment power, consisting of 731,296 shares held by the
Benjamin and Roberta Russell Foundation, Incorporated, a charitable
corporation of which Mrs. Baumgardner is one of nine directors; and
3,945,024 shares held by a trust created under the will of Benjamin C.
Russell of which Mrs. Baumgardner is one of four trustees.
(3) Includes 10,000 shares as to which Mrs. Russell has sole voting and
investment power, and 4,676,320 shares as to which she has shared
voting and investment power, consisting of 731,296 shares held by the
Benjamin and Roberta Russell Foundation, Incorporated, a charitable
corporation of which Mrs. Russell is one of nine directors, and
3,945,024 shares held by a trust created under the will of Benjamin C.
Russell of which Mrs. Russell is one of four trustees.
- 4 -
<PAGE> 7
(4) Includes 731,296 shares held by the Benjamin and Roberta Russell
Foundation, Incorporated, a charitable corporation of which Mrs.
Gwaltney is one of nine directors; 3,945,024 shares held by a trust
created under the will of Benjamin C. Russell of which Mrs. Gwaltney is
one of four trustees; and 1,322 shares as to which Mrs. Gwaltney has
sole voting and investment power.
(5) From Schedule 13G filed with the Company on February 10, 2000, which
states that Merrill Lynch Asset Management Group has sole voting power
with respect to no shares, sole dispositive power with respect to no
shares and shared voting and dispositive power with respect to
2,622,702 shares.
(6) From Schedule 13G filed with the Company on March 1, 2000 on behalf of
Helen Alison and National Bank of Commerce in Birmingham, Alabama.
Includes 1,909,380 shares held by trusts created under the will of J.
C. Alison, of which Mrs. Alison is one of two co-trustees and with
respect to which Mrs. Alison has shared voting and investment power.
(7) From Schedule 13G filed with the Company on February 10, 2000, which
states that Barclays Global Investors, N.A. and four other affiliated
companies have sole voting power with respect to 1,641,187 shares, sole
dispositive power with respect to 1,794,353 shares and shared voting
and dispositive power with respect to no shares.
COMMITTEES OF THE BOARD OF DIRECTORS; MEETINGS
The Board of Directors has standing executive, management development
and compensation, audit, finance, nominating and corporate responsibility
committees. The members of each committee are indicated on pages 1 through 3
of this Proxy Statement.
The Executive Committee is authorized to act in place of the Board of
Directors between meetings of the Board. The Executive Committee held ten
meetings during 1999.
The Management Development and Compensation Committee supervises the
Company's general compensation strategies, including incentive compensation,
stock options and benefit programs. The Management Development and
Compensation Committee held three meetings during 1999.
The Audit Committee recommends to the Board of Directors the
appointment of the Company's independent accountants and reviews the audit
plan, financial statements and audit results. The Audit Committee held two
meetings during 1999.
The Finance Committee reviews the Company's capital structure and
financing activities. The Finance Committee held one meeting during 1999.
The Nominating Committee recommends candidates for election to the
Company's Board of Directors. The Nominating Committee held no meetings during
1999.
The Corporate Responsibility Committee provides oversight and guidance
concerning the Company's obligations to its employees and the communities in
which it operates. The Corporate Responsibility Committee held one meeting in
1999.
During the year ended January 1, 2000, the Board of Directors held five
regular meetings. Each member of the Board attended at least 75% of the
meetings of the Board and the committees of which they are members.
COMPENSATION OF DIRECTORS
Each non-employee director receives a quarterly retainer of $3,750 and
a fee of $1,000 for each Board meeting attended. Members of committees of the
Board who are not employees of the Company receive $650 per quarter per
committee (except chairmen, who receive $1,300 per quarter). In addition,
under the Russell Corporation 1997 Non-Employee Directors' Stock Grant, Stock
Option and Deferred Compensation Plan, each non-employee director receives
annually (i) shares of Common Stock having a value of $5,000, based upon the
- 5 -
<PAGE> 8
market value of the Common Stock on the date of grant, and (ii) an option to
purchase shares of Common Stock, exercisable for ten years at a price equal to
the market value of the Common Stock on the date of grant, having, based upon
the number of shares subject thereto, an economic value of $5,000. In
addition, the plan allows a non-employee Director to defer the payment of fees
to such director at a fixed rate of interest and to defer the receipt of
Common Stock granted pursuant to the plan. Two hundred thousand (200,000)
shares of Common Stock are presently authorized to be issued under the plan
and 188,134 shares remain available for issuance.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely upon review of Forms 3, 4 and 5 and amendments thereto
related to the Company's most recent fiscal year, and written representations
from certain reporting persons that no Form 5 was required, the Company
believes that Thomas R. Johnson, Jr. had one late Form 4 filing for 1999
relating to one transaction.
TRANSACTIONS WITH MANAGEMENT AND OTHERS
The Company entered into a fuel supply contract with Russell Lands,
Incorporated ("Lands") on May 21, 1975, under which Lands provides sawdust,
bark, shavings, chips, and other wood materials for use in the Company's wood
chip boilers. The initial term of the contract was four years, and may be
renewed by agreement of the parties from year-to-year thereafter. In addition,
the contract may be cancelled by either party during any renewal period upon
30 days notice following the occurrence of certain specified conditions.
Benjamin Russell is Chairman, Chief Executive Officer and a director of Lands,
and owns beneficially approximately 70% of the equity interest in such
company. Management believes this contract is in the best interest of the
Company's shareholders. During the fiscal year ended January 1, 2000, the
Company paid Lands approximately $975,000 for wood materials to operate these
boilers.
The Company purchased miscellaneous building materials and supplies
from Russell Do-It Center, a building supply retailer. The Company also
purchased concrete for various construction and repair projects from Area
Concrete, Inc. Russell Do-It Center is a division of and Area Concrete, Inc.
is a wholly owned subsidiary of Lands. Management believes these purchases to
be in the best interest of the Company's shareholders. During the fiscal year
ended January 1, 2000, the Company paid Russell Do-It Center and Area
Concrete, Inc. approximately $94,000 and $16,000, respectively, for the
purchases described above.
The Company engaged EOD Strategies, Inc. ("EOD") to provide various
consulting services relating to enhancements to its minority vendors programs.
Tim Lewis owns 100% of the equity interest in EOD. Management believes the
engagement of EOD is in the best interest of the Company's shareholders.
During the fiscal year ended January 1, 2000, the Company paid EOD
approximately $145,000 for consulting services.
MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
THE COMMITTEE
The Management Development and Compensation Committee of the Board of
Directors (the "Committee") is responsible for establishing the compensation
policy and administering the compensation programs for the Company's executive
officers and other key employees. The Committee is comprised solely of
directors who are not current or former employees of the Company.
COMPENSATION PHILOSOPHY
The compensation program for executive officers is designed to attract,
motivate and retain talented executives who will strive to attain the
Company's strategic and financial objectives and thereby increase shareholder
value. The main elements of the program are:
- annual compensation (base salary and annual bonus) and
- long-term incentives (stock options).
- 6 -
<PAGE> 9
The Company's philosophy is to provide total compensation at a level
that is consistent with its size and performance relative to other leading
branded consumer apparel companies. These companies include many of those in
the Value Line Apparel Index used in the performance graph on page 9. The
Committee periodically reviews the reasonableness of total compensation levels
using public information from comparable company proxy statements and annual
reports as well as survey information from third-party industry surveys.
In carrying out its duties, the Committee intends to make all
reasonable efforts to comply with the requirements to exempt executive
compensation from the $1 million deduction limitation under Section 162(m) of
the Internal Revenue Code by establishing "performance-based" compensation
programs, unless the Committee determines that such compliance in given
circumstances would not be in the best interests of the Company and its
shareholders.
ANNUAL COMPENSATION
Base Salary. The Committee annually reviews and approves base salaries
for the Company's executive officers, considering the responsibilities of
their positions, their individual performance and their competitive position
relative to comparable companies and industry surveys. Salary ranges are
targeted at the median of the competitive market place. Salary increases,
including increases due to promotions, for the most recent fiscal year are
based upon these criteria.
Annual Incentive Bonus. Executive officers are eligible to receive
annual cash incentive awards under provisions of the Russell Corporation 1993
Executive Long-Term Incentive Plan. Under this plan, the Committee established
Earnings Growth and Return on Investment goals for the Company and each
operating unit. The maximum incentive opportunity is established and
communicated to each participant, along with the performance scale under which
incentive awards are earned. Threshold performance levels are also established
for each goal, below which no incentive is paid. Individual standards of
performance that are agreed upon at the beginning of each year provide each
participant the opportunity to earn incentive awards based upon the
accomplishment of strategic and tactical objectives. Award opportunities for
the Chief Executive Officer and Chief Financial Officer are tied solely to the
accomplishment of financial goals approved in advance by the Committee.
LONG-TERM COMPENSATION
The Committee believes stock options to be one of the most effective
ways of linking executives with the interests of the shareholders since no
gain is realized by the executive unless the stock price increases. For the
foreseeable future, stock options will be the only form of long-term
compensation at the Company.
Stock option grant guidelines have been established to meet the median
competitive practice of the marketplace. The Company grants stock options
annually during the first quarter, although special grants may be made
throughout the year in unique circumstances such as recruiting situations.
Options are granted with an exercise price equal to the market value on the
date of grant. Options granted become exercisable pro-rata on the first four
anniversaries of the grant to reinforce retention and further align
executives' compensation with shareholder returns. Options expire ten years
from the date of grant.
STOCK OWNERSHIP GUIDELINES
The Committee believes that stock ownership by the management team is
essential to a strong linkage between management and the shareholders. Thus
the Committee has approved Stock Ownership Guidelines that outline the minimum
stock ownership expectations for the officer group. The guidelines range from
shares valued at five times salary midpoint for the Chief Executive Officer to
one times salary midpoint for Vice Presidents. Each officer is expected to be
in compliance with the guidelines within five years of becoming covered by the
guideline.
- 7 -
<PAGE> 10
CHIEF EXECUTIVE OFFICER
Effective April 1, 1998, the Board of Directors elected John F. Ward
President and Chief Executive Officer, and on April 22, 1998, Mr. Ward was
elected Chairman. His compensation principally consists of base salary, annual
bonus and stock option awards. During 1999, the Committee made the following
decisions regarding Mr. Ward's compensation:
- Annual Compensation
Base Salary. The Committee increased Mr. Ward's annual salary to
$675,000 ($25,000 or 3.9%), based upon an assessment of
competitive compensation practices and in recognition of his
leadership in significantly restructuring both the Company's
operations as well as the management team.
Annual Incentive. The Committee awarded Mr. Ward an annual
incentive payment for 1999 equal to $474,279, or 70.7% of salary
earned in 1999. This incentive award was directly related to the
Company's performance relative to the goals for EPS Growth
(weighted 60%) and Return on Investment (weighted (40%) that it
approved at the beginning of 1999. The Company reported EPS of
$1.62, which was a 37% increase over 1998 (before non-recurring
items) and which resulted in an award slightly above target for
that component. The Company's ROI of 11.6% was slightly below
the target established by the Committee and resulted in an
incentive slightly below target for that component.
- Long-term compensation
Stock Options. In February, 1999, the Committee approved a stock
option grant of 250,000 shares to Mr. Ward. 125,000 of these
options have an exercise price of $19.3438, which was 100%of the
fair market value on the grant date. The additional 125,000
options have an exercise price of $27.1563, which was 40%higher
than that market price on the grant date. The terms and
conditions that apply to Mr. Ward's stock option grants are
described in the notes to the Stock Option Grant Table on page
11.
- Other benefits.
Mr. Ward participates in the same benefit programs as all other
executives of the Company. In addition, the Company has an
employment agreement with Mr. Ward which provides certain other
benefits and payments in connection with Mr. Ward's continued
service. These are described in the Summary Compensation Table
and the notes thereto on page 10. Additional provisions of Mr.
Ward's agreements are described on pages 13 and 14.
CONCLUSION
The Committee believes that the executive compensation programs directly link
the pay opportunities of the Company's executives to the financial and
shareholder returns of the Company. These programs reinforce the linkage
between pay and performance, and between executive compensation and
shareholder return, and allow the Company to attract and retain the caliber of
executives required in the highly competitive global environment in which
executives of the Company must perform.
MANAGEMENT DEVELOPMENT AND
COMPENSATION COMMITTEE
C.V. NALLEY III
HERSCHEL M. BLOOM
RONALD G. BRUNO
- 8 -
<PAGE> 11
COMPARATIVE FIVE-YEAR CUMULATIVE TOTAL RETURNS THROUGH 12/31/99
[GRAPH]
VALUE OF $100 INVESTED ON 12/31/94 AT FISCAL YEAR-END:
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998 1999
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Russell Corporation $100.00 $ 89.97 $ 98.11 $ 89.19 $ 69.68 $ 59.22
S&P 500 100.00 137.50 169.47 226.03 290.22 394.08
Value Line Apparel Index 100.00 109.68 150.21 175.23 216.78 235.49
- ---------------------------------------------------------------------------------------------------
</TABLE>
NOTES
1) Assumes that the value of the investment in the Company's Common Stock and
in each index was $100 on the last trading day preceding the first day of the
fifth preceding fiscal year and that all dividends were reinvested.
2) The Value Line Apparel Index presently includes: Fruit of the Loom, Inc.;
Hartmarx Corporation; Jones Apparel Group; Kellwood Company; Liz Claiborne,
Inc.; Nautica Enterprises, Inc.; Oshkosh B'Gosh, Inc.; Oxford Industries,
Inc.; Phillips-Van Heusen Corporation; Polo-Ralph Lauren; Tommy Hilfiger
Corp.; VF Corporation; Warnaco Group, Inc.; and the Company.
- 9 -
<PAGE> 12
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following information is furnished for the fiscal years ended
January 1, 2000, January 2, 1999 and January 3, 1998 with respect to the
Company's Chief Executive Officer and each of the four other most highly
compensated executive officers of the Company during 1999 whose salary and
bonus exceeded $100,000 (collectively, the "Named Executive Officers").
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
---------------------------------- -----------------------------------
AWARDS PAYOUTS
------------------------ -------
NAME AND OTHER RESTRICTED ALL
PRINCIPAL FISCAL ANNUAL STOCK OPTIONS/ LTIP OTHER
POSITION YEAR SALARY BONUS(1) COMPENSATION AWARDS SAR'S PAYOUTS COMPENSATION
--------------------- ------ -------- -------- ------------ ---------- ----------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John F. Ward 1999 $670,833 $474,279 $30,668(2) 250,00 $3,496,031(6)
Chairman, 1998 490,000 350,000 44,375(3) $325,913(4) 407,066(5)
President 1997
and C.E.O
JT Taunton, Jr. 1999 306,900 216,750 12,000
Sr. V.P., President & 1998 300,000 38,500 8,000
C.E.O. Fabrics 1997 290,000 0 6,100
and Services
Jonathan R. Letzler 1999 265,000 200,764 14,169(2) 25,000
Executive V.P. & 1998 17,809 65,000 3,515(3) 1,079,690(7)
C.E.O. JERZEES 1997
Eric N. Hoyle 1999 305,833 154,293 15,961(2) 40,000
Executive V.P. & 1998 116,935 52,621 13,710(3) 25,000
C.F.O 1997
Thomas R. Johnson, Jr. 1999 245,520 124,224 12,000
Sr. V.P., President & 1998 240,000 0 5,200
C.E.O. Russell Yarn 1997 235,000 0 4,900
</TABLE>
(1) Bonus payments are reported for the year in which related services were
performed.
(2) Pursuant to Mr. Ward's employment agreement, includes personal use of
Company aircraft, club dues and Company provided automobile. For Messrs.
Letzler and Hoyle, includes personal use of Company aircraft.
(3) Pursuant to Mr. Ward's employment agreement, includes personal use of
Company aircraft, personal office closure expenses, temporary housing,
club dues and Company provided automobile. For Messrs. Letzler and Hoyle,
includes personal use of Company aircraft, Company provided automobiles
and temporary housing.
(4) Pursuant to Mr. Ward's employment agreement, one-third of this amount
vested on April 1, 1998, with the remainder vesting ratably over the next
two succeeding years. As of January 1, 2000, Mr. Ward's restricted shares
consisted of 4,043 shares, or one-third of the original grant of 12,127
shares, with a value of $67,709.
(5) Pursuant to Mr. Ward's employment agreement, 125,000 options vest ratably
in each of the three years following April 1, 1998, the date of the grant.
The exercise price of these options is $27.1563, the fair market value on
the date of grant, and the options are exercisable until April 1, 2008.
Pursuant to the Executive Deferred Compensation and Buyout Plan, 282,066
vested options were issued to Mr. Ward at an exercise price of $27.1563,
the fair market value on the date of grant, and are exercisable until
October 1, 2002.
(6) Amounts either paid to Mr. Ward or deposited into a deferred compensation
trust for his benefit to replace benefits and opportunities Mr. Ward
forfeited pursuant to agreements with his former employer as a result of
accepting employment with the Company.
(7) Pursuant to Mr. Letzler's employment agreement, one-third of this amount
vested on December 15, 1999, with the remainder vesting ratably over the
next two succeeding years. As of January 1, 2000, Mr. Letzler's restricted
shares consisted of 33,333 shares, or two-thirds of the original grant of
50,000 shares, with a value of $555,328.
- 10 -
<PAGE> 13
OPTION/SAR GRANTS IN FISCAL 1999
The following table sets forth grants of incentive stock options to
the Named Executives Officers for the year ended January 1, 2000. No SAR grants
were made during such fiscal year.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS (1)
----------------------------------------------------- POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF ANNUAL RATES OF STOCK
SECURITIES %OF TOTAL PRICE APPRECIATION
UNDERLYING OPTIONS/SARS FOR OPTION TERM
OPTIONS/SARS GRANTED EXERCISE -------------------------
GRANTED TO EMPLOYEES PRICE EXPIRATION
NAME IN 1999 IN 1999 PER SHARE DATE 5% 10%
- --------------------- ------------ ------------ --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
John F. Ward 125,000(2) 13.12 $19.3438 2/24/09 $1,520,125 $3,853,100
125,000(2) 13.12 27.1563 2/24/09 2,134,813 5,409,963
JT Taunton, Jr. 12,000 1.26 19.3438 2/24/09 145,982 369,948
Jonathan R. Letzler 25,000 2.62 19.3438 2/24/09 304,130 770,725
Eric N. Hoyle 40,000 4.20 19.3438 2/24/09 486,608 1,233,160
Thomas R. Johnson, Jr. 12,000 1.26 19.3438 2/24/09 145,982 369,948
</TABLE>
(1) The stock options were granted at an exercise price equal to the fair
market value of the Company's Common Stock on the date of the grant. The
stock options become exercisable ratably over four years beginning on the
first anniversary of the grant. No other instruments were granted in
tandem with the options, nor do they carry tax reimbursement features.
(2) See "MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION - Chief Executive Officer."
AGGREGATED OPTION/SAR EXERCISES IN FISCAL 1999 AND YEAR-END VALUE TABLE
The following table sets forth information concerning the exercise of
stock options for the Named Executive Officers for the fiscal year ended
January 1, 2000:
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS/SARS IN-THE-MONEY OPTIONS/SARS
SHARES AT JANUARY 1, 2000 AT JANUARY 1, 2000(2)
ACQUIRED VALUE --------------------------- ----------------------------
NAME ON EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John F. Ward 0 $ 0 427,900 229,165 $ 0 $ 0
JT Taunton, Jr. 0 0 41,200 9,000 0 0
Jonathan R. Letzler 0 0 37,500 112,500 0 0
Eric N. Hoyle 0 0 10,000 55,000 0 0
Thomas R. Johnson, Jr. 0 0 39,200 9,000 0 0
</TABLE>
(1) This amount represents the aggregate of the market value of the Company's
Common Stock at the time each option was exercised less the exercise price
for such option.
(2) This amount represents the aggregate of the number of options multiplied
by the difference between the closing price of the Company's Common Stock
on the last trading day prior to January 1, 2000, and the exercise price
for such option.
LONG-TERM INCENTIVE PLAN AWARDS IN FISCAL 1999
The Russell Corporation 1993 Executive Long-Term Incentive Plan (the
"1993 Plan") provides for the award of long-term incentives to officers of the
Company. The Company has not granted long-term incentive awards subsequent to
January 28, 1998 and has no present plans to grant such awards in the future.
- 11 -
<PAGE> 14
PENSION PLAN
The officers of the Company participate in the Russell Corporation
Revised Pension Plan (the "Pension Plan"), a defined benefit plan covering all
employees of the Company. The amount of contributions made by the Company to
the Pension Plan is not reflected in the cash compensation table above, since
the amount of the contribution with respect to a specified person is not and
cannot readily be separately or individually calculated by the regular
actuaries for the Pension Plan.
Benefits under the Pension Plan are based upon years of credited
service at retirement and upon "Final Average Earnings," which is the average
base compensation for the highest 60 consecutive months out of the final 120
months of employment. This compensation consists only of salary and excludes
any bonus and any form of contribution to other benefit plans or any other form
of compensation. Normal or delayed retirement benefits are payable upon
retirement on the first day of any month following attainment of age 65 and
continue for the life of the employee (and his spouse, if any) or in accordance
with other elections permitted by the Pension Plan.
On January 26, 1994, the Board of Directors adopted a supplemental
retirement plan covering any participant's compensation in excess of the
limitation amount specified in Section 401 et seq., of the Internal Revenue
Code. This plan is a non-qualified plan, thereby rendering any benefits subject
to claims of general creditors and not deductible until paid.
The following table presents estimated annual benefits payable from
the Pension Plan and the supplemental retirement plan mentioned above upon
normal or delayed retirement to participants in specified remuneration and
years-of-credited service classifications. The amounts shown assume the current
maximum social security benefit and that the participant has elected for
benefits to be payable for a single life only.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF CREDITED SERVICE
5 YEAR AVERAGE ----------------------------------------------------------
REMUNERATION 15 20 25 30 35 40
-------------- --------- --------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$ 200,000 $ 31,862 $ 42,483 $ 53,104 $ 63,725 $ 74,346 $ 79,846
250,000 40,112 53,483 66,854 80,225 93,596 100,471
300,000 48,362 64,483 80,604 96,725 112,846 121,096
350,000 56,612 75,483 94,354 113,225 132,096 141,721
400,000 64,862 86,483 108,104 129,725 151,346 162,346
450,000 73,112 97,483 121,854 146,225 170,596 182,971
500,000 81,362 108,483 135,604 162,725 189,846 203,596
600,000 97,862 130,483 163,104 195,725 228,346 244,846
700,000 114,362 152,483 190,604 228,725 266,846 286,096
800,000 130,862 174,483 218,104 261,725 305,346 327,346
900,000 147,362 196,483 245,604 294,725 343,846 368,598
</TABLE>
Years of service at January 1, 2000 credited under the Pension Plan
for individuals shown in the Summary Compensation Table on page 10 are as
follows: Mr. Ward, 1 year; Mr. Taunton, 24 years; Mr. Letzler, 1 year; Mr.
Hoyle, 1 year; and Mr. Johnson, 10 years.
- 12 -
<PAGE> 15
STOCK OPTION PLANS
The Company has previously adopted the 1987 Stock Option Plan pursuant
to which the Company granted to key employees of the Company either incentive
stock options or nonqualified stock options. The terms of the options did not
exceed ten years from the dates of grant, and the option prices equaled fair
market value of the shares covered at the times of grant. There presently
remain outstanding under the 1987 Stock Option Plan options to acquire 272,050
shares of Common Stock. No further options can be granted under such plan;
however, if Proposal 3 to amend and restate the 1993 Plan is approved, any
shares of Common Stock subject to outstanding options under the 1987 Stock
Option Plan which are not issued pursuant to such options will be added to the
shares of Common Stock available for issuance under the amended and restated
1993 Plan.
The Company also has adopted the 1993 Plan which is described in
Proposal 3 above, and which will be modified in the manner described under
Proposal 3 if such proposal to amend and restate the 1993 Plan is approved.
On January 18, 2000, the Board of Directors adopted the Russell
Corporation 2000 Stock Option Plan (the "2000 Option Plan"). The 2000 Option
Plan is an incentive compensation plan that gives the Committee broad
discretion to grant awards, and fashion the terms of such awards, to any
employee, including officers, of the Company or any majority-owned subsidiary
of the Company, and any person performing services for the Company or any
majority-owned subsidiary in the capacity of a consultant, in order to provide
such employees and consultants with stock based incentives as the Committee
deems appropriate. The 2000 Option Plan permits the issuance of awards in a
variety of forms, including: (a) incentive stock options; (b) non-qualified
stock options; (c) reload stock options; (d) restricted shares; (e) bonus
shares; (f) deferred shares; (g) freestanding stock appreciation rights; (h)
tandem stock appreciation rights; (i) performance units; and (j) performance
shares. 1,500,000 shares of the Company's Common Stock are reserved for
issuance under the 2000 Option Plan, subject to adjustment by the Committee in
the event of a stock dividend, stock split, recapitalization or other similar
event. Because only treasury shares may be issued under the 2000 Option Plan,
shareholder approval of the 2000 Option Plan is not required.
The number of options to purchase shares of Common Stock granted under
the 1993 Plan by the Board of Directors to the Named Executive Officers during
the 1999 fiscal year is shown in the Summary Compensation Table. During the
1999 fiscal year, the Board of Directors granted options under the 1993 Plan to
purchase 1,072,000 shares to the executive officers as a group (15 persons). No
options were granted under the 1993 to current directors or nominees who were
not executive officers or to employees who were not executive officers.
None of the executive officers, current directors, or nominees for
director have received grants of options under the 2000 Option Plan.
EMPLOYMENT AGREEMENTS
As noted above, John F. Ward was employed as the President and Chief
Executive Officer of the Company, effective April 1, 1998. The Company entered
into an agreement with Mr. Ward providing for the employment of Mr. Ward until
March 31, 2001, at an annual base salary of $650,000, subject to increase(s) in
the discretion of the Board of Directors and a bonus of $350,000 for 1998.
After 1998, Mr. Ward is entitled to receive annual bonuses under the Company's
regular compensation plans, with bonus potential of not less than 100% of base
salary, subject to any increase determined appropriate by the Board of
Directors. The employment agreement provides that the Company will offer health
care and certain other supplemental benefits to Mr. Ward. As noted in the
Summary Compensation Table, Mr. Ward was also entitled to receive certain
payments for reimbursement of expenses in connection with his relocation and
employment with the Company. The agreement also provides that any termination
of employment of Mr. Ward after April 1, 2001 shall be treated as retirement
for purpose of the Company's various plans and benefits. Pursuant to such
agreement, Mr. Ward was also granted options in 1998 to purchase 125,000 shares
of the Company's Common Stock at the market price on the date of grant of
$27.1563 and is to be granted options to purchase a minimum of 75,000 shares
each year thereafter at the market price at the time of grant.
- 13 -
<PAGE> 16
Also as noted above, to compensate Mr. Ward for the forfeiture of
certain benefits from his former employer, the Company agreed to make a cash
payment to him of approximately $1,028,000, to put into a trust for his benefit
approximately $2,467,000, to issue him 12,127 shares of Common Stock of the
Company, and to grant him options to purchase 282,066 shares of the Company's
Common Stock at $27.1563, the market price on March 31, 1998. The amounts
placed in trust will be paid to Mr. Ward after April 1, 2001 unless his
employment is terminated by the Company for cause or is terminated by Mr. Ward
for any reason other than death, total disability or certain other reasons set
forth in the agreements. In the event of such termination prior to April 1,
2001, Mr. Ward will be entitled to receive a prorated amount from the trust
based upon the ratio that the time he has been employed by the Company bears to
three years. Similarly, the options granted to him will be forfeited on the
same basis as the amounts in trust based upon time employed with the Company.
Effective December 7, 1998, Jonathan H. Letzler was employed as the
President and Chief Executive Officer of the Company's JERZEES Division
pursuant to an agreement providing for his employment in such position until
December 7, 2002, at an annual base salary of $265,000 (subject to annual
increases in the discretion of the Chief Executive Officer of the Company and
with the concurrence of the Board of Directors). Mr. Letzler received a signing
bonus of $65,000 and is entitled to receive annual bonuses with a bonus
potential of at least 100% of his base salary, provided that his bonuses for
each of the 1998 and 1999 calendar years was to be at least 50%of his base
salary. Under the agreement, Mr. Letzler may participate in any benefit plan
offered by the Company to its executives generally. The agreement provides that
in the event of any termination of employment of Mr. Letzler, all vesting
periods under the Company's benefit plans shall be waived and Mr. Letzler will
be deemed to have reached the minimum age for retirement under all such plans.
Mr. Letzler was also entitled to receive certain payments for reimbursement of
expenses in connection with his relocation and employment with the Company.
Pursuant to the agreement, Mr. Letzler was granted an option on December 7,
1998 to purchase 125,000 shares of Common Stock at the market price of $21.5938
per share, and an option on February 24, 1999 to purchase 25,000 shares of
Common Stock at the market price of $19.3438 per share. Each option vests in
equal annual installments over a four-year period from the date of grant. Mr.
Letzler was also granted 50,000 restricted shares of Common Stock on December
7, 1998, with the restrictions lapsing as to one-third of such shares at the
end of each year of his employment with the Company.
PROPOSAL TO APPROVE THE ADOPTION OF THE RUSSELL CORPORATION
2000 EMPLOYEE STOCK PURCHASE PLAN
(PROPOSAL 2)
On January 18, 2000, the Board of Directors adopted, subject to
shareholder approval at the Annual Meeting, the Russell Corporation 2000
Employee Stock Purchase Plan (the "ESP Plan"). The plan became effective March
1, 2000, but if it is not approved by shareholders at the Annual Meeting, it
will terminate, all contributions will cease, and any cash balances credited to
participants' accounts will be distributed to them. A summary of the ESP Plan is
set forth below. The summary is qualified in its entirety by reference to the
complete text of the ESP Plan which is attached to this Proxy Statement as
Appendix A.
GENERAL
The ESP Plan's purpose is to enhance the proprietary interest of the
employees of the Company and its subsidiaries. The plan will be administered by
the Management Development and Compensation Committee of the Board of Directors
(the "Committee"). The Committee has authority to interpret and construe the
provisions of the plan, to adopt rules and regulations for its administration,
and to make all other determinations necessary or advisable for its
administration, including selecting an administrator to operate, perform
day-to-day administration, and maintain records of the plan.
SHARES SUBJECT TO THE ESP PLAN
A maximum of 800,000 shares of Common Stock are available for purchase
under the ESP Plan, subject to appropriate adjustment for stock dividends, stock
splits or combinations of shares, recapitalization or other changes in the
Company's capitalization.
- 14 -
<PAGE> 17
ELIGIBILITY; GRANT AND EXERCISE OF OPTIONS
All employees of the Company or its participating subsidiaries who are
regularly scheduled to work at least 20 hours each week and at least five
months each calendar year may participate in the ESP Plan. As of March 2, 2000,
approximately 10,043 persons were eligible to participate in the ESP Plan.
On the first day of each three-month offering period each eligible
employee is granted an option to purchase on the last day of the offering
period (the "Purchase Date") at the price described below (the "Purchase
Price") the number of full shares of Common Stock that the cash credited to the
participant's account on the Purchase Date will purchase at the Purchase Price.
An employee may not be granted an option if immediately after the grant, he or
she would own five percent or more of the total combined voting power or value
of all classes of stock of the Company or any of its subsidiaries. A
participant cannot receive options that, in combination with options under
other plans qualified under Section 423 of the Internal Revenue Code of 1986,
as amended (the "Code"), would result in the employee purchasing more than
$25,000 in aggregate fair market value of shares during any calendar year. An
employee may not purchase more than 1,000 shares during any offering period. A
participant's combined payroll deductions and lump sum cash contributions
cannot exceed ten percent of his or her compensation paid during the offering
period and during any prior offering period in the same calendar year.
A participant's payroll deductions and lump sum contributions will be
credited to a separate book entry account until these amounts are either
withdrawn, distributed or used to purchase Common Stock. No interest will be
credited on these amounts. Whole shares of Common Stock will be held in the
participant's account until distributed.
The Purchase Price will be the lesser of 85% of the fair market value
of the Common Stock on (i) the first trading day of the offering period or (ii)
the last trading day of the offering period.
Options granted under the ESP Plan are not transferable by the
participant other than by will or by the laws of descent and distribution and
are exercisable only by the participant during his or her lifetime.
TERMINATION OF EMPLOYMENT
If a participant terminates employment, the balance in the
participant's account will be returned to the participant (or his or her
beneficiary in the case of the participant's death) in cash, without interest,
and certificates for the shares of Common Stock credited to the participant's
account will be distributed to the participant.
AMENDMENT AND TERMINATION OF THE ESP PLAN
The Committee may amend the ESP Plan at any time. However, no
amendment may (a) affect any right or obligation with respect to any grant
previously made, unless required by law, or (b) unless previously approved by
the shareholders of the Company, where such approval is necessary to satisfy
the Code, the rule of any stock exchange on which the Common Stock is listed,
or the requirements necessary to meet any exemption from the application of
federal securities laws, (i) materially affect the eligibility requirements,
(ii) increase the number of shares of Common Stock eligible for purchase under
the ESP Plan, or (iii) materially increase the benefits to participants. The ESP
Plan may be terminated by the Committee at any time, in which event the
administrator will terminate all contributions to the ESP Plan. Cash balances
then credited to participants' accounts will be distributed as soon as
practicable, without interest.
FEDERAL INCOME TAX CONSEQUENCES TO THE COMPANY AND TO PARTICIPANTS
The ESP Plan is designed to qualify as an employee stock purchase plan
under Section 423 of the Code. Neither the grant nor the exercise of options
under the ESP Plan will have a Federal income tax impact on the participant or
the Company. If a participant disposes of the Common Stock acquired upon the
exercise of his option after at least two years from the date of grant and one
year from the date of exercise, then the participant must treat as ordinary
income the amount by which the lesser of (a) the fair market value of the
- 15 -
<PAGE> 18
Common Stock at the time of disposition, or (b) the fair market value of the
Common Stock at the date of grant, exceeds the Purchase Price. Any gain in
addition to this amount will be treated as a capital gain. If a participant
holds Common Stock at the time of his or her death, the holding period
requirements are automatically deemed to have been satisfied and he or she will
realize ordinary income in the amount by which the lesser of (i) the fair
market value of the Common Stock at the time of death, or (ii) the fair market
value of the Common Stock at the date of grant, exceeds the Purchase Price. The
Company will not be allowed a deduction if the holding period requirements are
satisfied. If a participant disposes of Common Stock before expiration of two
years from the date of grant and one year from the date of exercise, then the
participant must treat as ordinary income the excess of the fair market value
of the Common Stock on the date of exercise of the option over the Purchase
Price. Any additional gain will be treated as long-term or short-term capital
gain or loss, as the case may be. The Company will be allowed a deduction equal
to the amount of ordinary income recognized by the participant.
BENEFITS TO NAMED EXECUTIVE OFFICERS AND OTHERS
Participation in the ESP Plan is voluntary. Consequently, it is not
presently possible to determine either the benefits or amounts that will be
received by any person or group pursuant to the ESP Plan, or that would have
been received if the ESP Plan had been in effect during the last fiscal year.
VOTE REQUIRED; RECOMMENDATION
The affirmative vote of the holders of a majority of the outstanding
shares of the Company's Common Stock represented in person or by proxy at the
Annual Meeting is necessary to approve the adoption of the ESP Plan. The Board
of Directors recommends that shareholders vote FOR the approval of the ESP Plan.
PROPOSAL TO APPROVE THE AMENDMENT AND RESTATEMENT OF THE
RUSSELL CORPORATION 1993 EXECUTIVE LONG-TERM INCENTIVE PLAN
(PROPOSAL 3)
On January 18, 2000, the Board of Directors adopted the Russell
Corporation 2000 Stock Option Plan (the "2000 Option Plan"), which is described
in this Proxy Statement under the caption "EXECUTIVE COMPENSATION - Stock
Option Plans" on page 13. In order to conform the Russell Corporation 1993
Executive Long-Term Incentive Plan (the "1993 Plan") to the provisions of the
2000 Option Plan and to align the 1993 Plan with the Company's objectives for
its executive compensation plans, the Board of Directors has unanimously
approved, subject to and effective upon shareholder approval, the amendment and
restatement of the 1993 Plan (the "Amended 1993 Plan"), including the
redesignation of such plan as the Russell Corporation Executive Incentive Plan.
A summary of the Amended 1993 Plan and the material amendments to the 1993 Plan
is set forth below. This summary is qualified in its entirety by reference to
the complete text of the Amended 1993 Plan which is attached to this Proxy
Statement as Appendix B.
DESCRIPTION OF AMENDED 1993 PLAN
GENERAL
The plan's purpose is to assist the Company in attracting and
retaining employees and increasing their commitment to the Company's success
through equity ownership. All employees and, under appropriate circumstances,
consultants of the Company and its subsidiaries are eligible to receive awards.
The Management Development and Compensation Committee of the Board of Directors
(the "Committee") presently administers the plan and has broad discretion to
fashion the terms and, subject to limitations specified in the plan, the size
of awards in order to provide appropriate incentives. Awards may be issued in a
variety of forms, including: (a) restricted, deferred and bonus shares; (b)
incentive, non-qualified and accelerated stock ownership ("ASO" or "reload")
options (incentive, non-qualified and ASO options are referred to collectively
as "options"); (c) freestanding and tandem stock appreciation rights; and (d)
performance shares, performance units and cash- based awards. In addition to
the conditions and restrictions required under the plan with respect to each
type of award, the Committee may impose additional conditions and restrictions
with respect to the exercise or receipt of benefits under any award.
- 16 -
<PAGE> 19
TYPES OF AWARDS
Stock Options. Options provide for purchase of Common Stock at not
less than 100% of its fair market value on the date of grant (or, in case of
incentive stock options ("ISOs") any higher percentage of fair market value
required to qualify the option as an ISO). No option is exercisable more than
the ten years after its grant (or in the case of ISOs, for any shorter period
required to qualify them as ISOs). Options are exercisable at such times as the
Committee approves. The Committee may, either in connection with an option
grant or thereafter, provide that a participant who is still an eligible
participant when an option (the "Related Option") is exercised and pays the
option price or required tax withholding with shares of Common Stock (including
shares deemed delivered as payment) is automatically granted an ASO Option for
the number of shares tendered or deemed tendered to exercise the Related Option
plus (if provided in the award) the number of shares retained by the Company to
satisfy tax withholding requirements. ASO Options are deemed granted on the
date the Related Option is exercised, may be exercised only during the term of
the Related Option, and have the same terms as the Related Option, except that,
generally its option price is 100% of the fair market value of a share of
Common Stock on its grant date.
Stock Appreciation Rights. Stock appreciation rights ("SARs") are
either freestanding SARs (independent of any stock option) or tandem SARs
(granted in conjunction with a related option). Either the related option or
the tandem SAR will be adjusted for exercise of the other. All SARs must have a
grant price at least equal to the fair market value of a share of Common Stock
or the exercise price of the related option on the date of grant. Upon
exercise, a participant receives the difference between the fair market value
of a share of Common Stock on the exercise date and the grant price multiplied
by the number of shares for which the SAR is exercised. Payment may be made in
a combination of cash or Common Stock, as determined by the Committee.
Restricted Shares, Bonus Shares and Deferred Shares. Restricted shares
of Common Stock ("Restricted Shares") may be granted subject to such
restrictions (which may include satisfaction of performance goals) as the
Committee shall determine. Subject to the applicable restrictions, the grantee
has the rights of a shareholder with respect to the Restricted Shares,
including the right to vote and to receive dividends with respect to such
shares. Restricted Shares may not be disposed of until the conditions specified
by the Committee are satisfied. The Committee may also grant bonus shares
("Bonus Shares") and deferred shares ("Deferred Shares"). The Committee may
cause the Company to establish a grantor trust to hold shares subject to
Deferred Share awards.
Performance Shares, Performance Units and Cash-Based Awards. The
Committee may grant performance shares ("Performance Shares"), performance
units ("Performance Units"), and cash-based awards ("Cash-Based Awards"). At
the close of the applicable performance period, the participant is paid the
value earned with respect to an award in a combination of cash or Common Stock
determined by the Committee to have an aggregate fair market value equal to the
value of the earned award.
FEDERAL INCOME TAX CONSEQUENCES OF AWARDS
GENERAL
There are generally no Federal income tax consequences to either the
participant or the Company upon the grant of an option. On exercise of an ISO,
a participant generally will not recognize any income, and the Company will not
be entitled to a deduction for tax purposes. If a participant disposes of
shares acquired upon exercise of an ISO within two years of the grant date or
one year of the exercise date, the option will cease to be treated as an ISO,
the participant will recognize compensation income, and the Company will be
entitled to a deduction equal to the excess of the fair market value of the
shares on the exercise date over the exercise price. Otherwise, the Company
will not be entitled to any deduction upon disposition of such shares, and the
entire gain for the participant will be treated as a capital gain. On exercise
of a non-qualified stock option, the amount by which the fair market value of
the shares on the exercise date exceeds the exercise price is generally taxable
to the participant as compensation income and will generally be deductible by
the Company. The disposition of shares acquired through exercise of a
non-qualified stock option generally results in a capital gain or loss for the
participant, but will have no tax consequences for the Company.
- 17 -
<PAGE> 20
The grant of a SAR, Performance Share, Performance Unit or Cash-Based
Award will not result in income to a participant or a tax deduction for the
Company. Upon payment of such a right or award, a participant will recognize
ordinary income equal to the fair market value of any shares of Common Stock
and cash received, and the Company will be entitled to a tax deduction in the
same amount. An award of Restricted Shares will not result in income to a
participant or a tax deduction for the Company until the shares are no longer
subject to forfeiture, unless the participant, if permitted by the Company,
elects under Section 83(b) of the Code to have the amount of income to the
participant (and deduction to the Company) determined at the grant date. At
that time, the participant generally will recognize ordinary income equal to
the fair market value of the shares less any amount paid for them, and the
Company will be entitled to a tax deduction in the same amount. Dividends paid
on forfeitable Restricted Shares are treated as compensation for Federal income
tax purposes, unless the participant has made a Section 83(b) election.
PERFORMANCE MEASURES
Under Section 162(m) of the Code, in order for awards to certain
specified persons (generally the person serving as Chief Executive Officer at
the end of the Company's fiscal year and the four other most highly compensated
officers at such time (each, a "Covered Employee")) under the Amended 1993
Plan, to be fully deductible in the event the total compensation paid during a
fiscal year to a Covered Employee exceeds $1 million dollars, awards to such
Covered Employees (other than stock options the value of which is based solely
upon the increase in the value of the stock after the grant date) must be paid
solely on account of attaining one or more pre-established, objective
performance goals. Under the Amended 1993 Plan, awards granted to Covered
Employees designed to qualify for the performance-based exception under Section
162(m)(the "Performance-Based Exception") shall be based upon one or more of
the following performance measures selected by the Committee: (a) earnings
(either in the aggregate or on a per-share basis); (b) net income; (c)
operating income; (d) return measures (including return on assets, investments,
equity, or gross sales); (e) shareholder returns (including growth measures and
stockholder return or attainment of a specified share value for a specified
period of time), share price or share price appreciation; (f) cash flow; (g)
earnings before or after either, or any combination of, taxes, interest or
depreciation and amortization; (h) gross revenues; (i) reductions in expense
levels in each case, where applicable, determined either on a Company-wide
basis or in respect of any one or more business units; (j) net economic value;
or (k) market share with respect to specific designated products or product
groups. The performance measures described in (a) through (f) above may be
measured on either a pre-tax or post-tax basis and an award may provide that it
includes or excludes items to measure specific objectives, such as losses from
discontinued operations, extraordinary gains or losses, the cumulative effect
of accounting changes, acquisitions or divestitures, foreign exchange impacts
and any unusual, nonrecurring gain or loss.
DESCRIPTION OF THE MATERIAL CHANGES TO THE 1993 PLAN
The following discussion summarizes the material changes in the 1993
Plan effected by the Amended 1993 Plan.
INCREASE IN NUMBER OF SHARES ISSUABLE UNDER PLAN
The aggregate number of shares of Common Stock authorized for issuance
under the 1993 Plan is increased from 4,000,000 shares to the sum of (a)
1,500,000 shares, (b) the 4,000,000 shares currently reserved for issuance
under the 1993 Plan reduced by the number of shares issued pursuant to awards
under the 1993 Plan, and (c) shares reserved for issuance under awards still
outstanding under the Company's 1987 Stock Option Plan to the extent such
awards are forfeited, terminated or settled without issuance of the reserved
shares. Any shares of Common Stock (whether subject to or received pursuant to
an award under any Company plan) withheld or applied to pay the exercise price
or related required tax withholding reduce the number of shares treated as
issued under the Amended 1993 Plan and thereby increase the aggregate number of
shares available for issuance. Both the 1993 Plan and the Amended 1993 Plan
provide for the adjustment of these limitations for stock splits, stock
dividends, recapitalizations and other similar events. The Amended 1993 Plan
also eliminates the restriction on issuing more than 750,000 shares as
Restricted Shares. 16,900 shares of Common Stock have previously been issued
under the 1993 Plan, and 2,836,416 additional shares of Common Stock are
reserved for issuance under presently outstanding awards under the 1993 Plan.
- 18 -
<PAGE> 21
CHANGES IN INDIVIDUAL AWARD LIMITS
For awards paid to Covered Employees to qualify for the
Performance-Based Exception and be fully tax deductible, the plan must limit
the size or amount of awards which may be made to a participant during
specified time periods. The 1993 Plan presently provides that a participant may
not be awarded during any fiscal year: (a) SARs with respect to more than
500,000 shares of Common Stock; (b) options to acquire more than 500,000 shares
of Common Stock; (c) more than 200,000 Restricted Shares; and (d) Performance
Shares, Performance Units or Cash-Based Awards having a maximum aggregate
payout, measured at the time such awards are granted, in excess of the value of
200,000 shares of Common Stock on the award date.
The Amended 1993 Plan limits awards granted to a participant in any
calendar year to the following: (a) awards (other than ASO Options, Performance
Units and Cash-Based Awards) for no more than 2,000,000 shares (including as
shares the number of SARs granted), (b) ASO Options for no more that 4,000,000
shares, and (c) Performance Units and Cash-Based Awards not exceeding 300% of a
participant's salary (as in effect on the award date). The Amended 1993 Plan,
as does the 1993 Plan, provides that these limitations are to be appropriately
adjusted for recapitalizations, stock dividends, stock splits, or other similar
events if the Committee determines that such an adjustment is appropriate in
order to prevent diminution or enlargement of benefits.
CHANGES IN TERMS AND CONDITIONS OF AWARDS
Additional Performance Measures. The 1993 Plan presently provides that
awards to Covered Employees designed to qualify for the Performance-Based
Exception must be based upon one or more of the following performance measures:
(a) return on equity; (b) return on assets employed; (c) earnings per share;
(d) operating cash flow; (e) income before taxes; (f) net income; (g) return on
revenue; (h) total shareholder return; and (i) stock price appreciation of the
Common Stock. The Amended 1993 Plan changes the performance measures to those
described above under the caption "Federal Income Tax Consequences of Awards
PERFORMANCE MEASURES" on page 18.
Changes Regarding Restricted Shares. The Amended 1993 Plan authorizes
the Committee to determine the amount, if any, that a participant must pay for
Restricted Shares and prescribes the time for making such payment. The Amended
1993 Plan also provides that if the participant forfeits for any reason any
Restricted Shares for which the participant was required to pay (including
through the exercise of an option) the participant is deemed to have resold
such Restricted Shares to the Company at a price equal to the lesser of the
amount paid by the participant for the Restricted Shares or their fair market
value on the date of forfeiture.
Payment Upon Exercise of Options. The 1993 Plan presently permits a
participant to pay the exercise price of an option (a) in cash, (b) by tendering
previously acquired Common Stock held by the participant for at least six
months or (c) by effecting a cashless exercise of options under Federal Reserve
Board Regulation T. The Amended 1993 Plan also permits a participant to tender
(i) shares which the participant has purchased on the open market, whether or
not held for six months, valued at their fair market value on the exercise
date; and (ii) Restricted Shares that the participant has held for at least six
months, valued at their fair market value on the exercise date. The Amended
1993 Plan provides that if Restricted Shares are used to pay the option price,
a number of shares acquired on exercise of the option equal to the number of
Restricted Shares tendered shall become subject to the same restrictions as the
Restricted Shares tendered.
EFFECT OF TERMINATION OF EMPLOYMENT ON AWARDS
Definition of "Cause." Under the 1993 Plan, "cause" means willful and
gross misconduct that is materially and demonstrably detrimental to the Company
or the commission of one or more acts constituting an indictable crime. Under
the Amended 1993 Plan, "cause" means a participant's (a) conviction of a felony
or other crime involving fraud, dishonesty or moral turpitude, (b) willful or
reckless material misconduct in the performance of the participant's duties, or
(c) habitual neglect of duties, and a resignation in lieu of termination for
cause is treated as a termination for cause.
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<PAGE> 22
Options, SARs and Restricted Shares
Death or Disability. Under the 1993 Plan if a participant's employment
terminates due to death or "disability" (as defined in the plan), all
outstanding options and SARs fully vest immediately, and remain exercisable at
any time prior to their expiration date, or for one year after the date of
death or termination for disability, whichever is shorter. The Amended 1993
Plan provides for terminations due to death or disability that any outstanding
options and SARs fully vest and may be exercised until their expiration date.
The Amended 1993 Plan (as does the 1993 Plan) provides for terminations due to
death or disability that all Restricted Shares become nonforfeitable.
Retirement. The 1993 Plan presently provides that if a participant
retires, all outstanding options and SARs become fully vested and remain
exercisable for the lesser of the remaining exercise period or three years
after retirement, and all outstanding Restricted Shares become nonforfeitable.
The Amended 1993 Plan treats retirement as a termination for "any other
reason". Accordingly, upon retirement, any unexercised option or SAR, to the
extent exercisable immediately before retirement, remains exercisable for the
lesser of the remaining exercise period or three months after retirement, and
any Restricted Shares are forfeited.
Death Following Termination Due to Disability or Retirement. The
Amended 1993 Plan eliminates an existing provision permitting outstanding
options and SARs to be exercised for the greater of one year or the remaining
portion of the exercise period originally triggered by the termination when a
participant dies following retirement or termination due to disability and
prior to the expiration of the normal permitted exercise period following such
events.
Termination for Cause. The Amended 1993 Plan continues the provisions
that if employment is terminated for cause, all outstanding options and SARs
are forfeited without an opportunity to exercise them, and all Restricted
Shares are forfeited.
Termination for "Any Other Reason" than Death, Disability, Retirement
or Cause. The 1993 Plan presently provides that if a participant's employment
terminates for any other reason than death, disability, retirement or cause,
all unvested options and SARs are forfeited, subject to the Committee's right
to immediately vest all or any portion of the options or SARs, and vested
options and SARs may be exercised by the participant during the three month
period after termination. Under the Amended 1993 Plan, if employment terminates
for any other reason than death, disability or cause, then any vested option or
SAR remains exercisable for the shorter of the remaining exercise period or
three months after such termination. The Amended 1993 Plan (as does the 1993
Plan) provides that if a participant's employment terminates for any other
reason than death, disability or cause, then any Restricted Shares still
subject to restrictions are forfeited.
Performance Units, Performance Shares and Cash-Based Awards.
Termination other than for Cause. The 1993 Plan provides that if
employment terminates due to death, disability, retirement or any other reason
than for cause during the measurement period for the performance goals (a
"Performance Period"), the participant is entitled to receive a prorated payout
of the Performance Units, Performance Shares or Cash-Based Awards, as
determined by the Committee for the portion of the Performance Period completed
and the achievement of the performance goal.
Under the Amended 1993 Plan, retirement is treated as a termination for
"any other reason," and, therefore, any Performance Units, Performance Shares
or Cash-Based Awards with respect to which the Performance Period has not
ended, terminate upon retirement. Under the Amended 1993 Plan, if employment
terminates due to death or disability, the amount payable with respect to any
Performance Share, Performance Unit or Cash-Based Award for which the
Performance Period has not ended is prorated according to a fixed formula based
upon the number of months during the Performance Period that the award was held
and an estimate of the level of achievement of the performance goals at the end
of the Performance Period based on the rate of achievement through the
termination date, or, if the Committee elects to compute the benefit after the
end of the Performance Period, the actual performance goal attained during the
Performance Period (the "Proration Formula").
- 20 -
<PAGE> 23
Termination for Cause. The Amended 1993 Plan continues in effect the
provision that if employment terminates for cause, all outstanding Performance
Units, Performance Shares and Cash-Based Awards are forfeited.
Deferred Shares. If employment terminates due to death or disability,
all Deferred Shares that were forfeitable become nonforfeitable. If employment
terminates for any reason other than death or disability, Deferred Shares that
remained forfeitable at the time of termination are forfeited.
OTHER CHANGES
Eligible Participants. The Amended 1993 Plan adds consultants as
persons eligible to receive awards.
Expanded Committee Powers. The authority of the Committee is expanded
under the Amended 1993 Plan to allow the Committee to: (a) cancel, with the
participant's consent, outstanding awards under the plan and grant new awards
in substitution therefor; (b) accelerate the exercisability of, and accelerate
or waive terms and conditions applicable to, any awards or group of awards for
any reason and at any time; (c) extend the time during which any award or group
of awards may be exercised; and (d) make adjustments or modifications to awards
to participants who are working outside of the United States to fulfill the
purposes of the plan or to comply with applicable local law.
The Amended 1993 Plan also allows the Committee to authorize the Chief
Executive Officer of the Company to grant options and Restricted Shares to
categories of eligible participants designated by the Committee (other than to
persons subject to the short-swing profit restrictions of Section 16 of the
Securities Exchange Act of 1934) in amounts and on terms specified by the
Committee.
Extension of 1993 Plan Term. The 1993 Plan provides that no awards may
be granted under the plan on or after January 1, 2003. The Amended 1993 Plan
will remain in effect, subject to the right of the Board of Directors to amend
or terminate the plan at any time, until all shares of Common Stock subject to
it have been purchased or acquired according to the plan's provisions;
provided, that no ISO may be granted under the plan after January 18, 2010.
Types of Awards. The Amended 1993 Plan eliminates the ability to award
Affiliated SARs and authorizes the award of ASO Options, Bonus Shares and
Deferred Shares.
Grant of Options or Deferred Shares in Lieu of Compensation. The Amended
1993 Plan authorizes the Committee to grant participants, or allow any
participants to elect to receive, options or Deferred Shares instead of other
compensation such participants may be eligible to receive.
Transferability of Awards. Under the Amended 1993 Plan, the Committee
may permit a participant to transfer awards (other than ISOs) to certain
specified family members or trusts for the primary benefit of, or entities such
as corporations or partnerships which are wholly-owned by, the participant or
such family members.
Definition and Effect of "Change of Control". The Amended 1993 Plan
changes the definition of "Change of Control" in the following principal
respects:
(i) it decreases the threshold percentage for an acquisition of
beneficial ownership of Common Stock by a "person" or "group" (as such terms
are defined under the Securities Exchange Act of 1934) to constitute a Change
of Control from 30%to 20%;
(ii) it adds a provision that the acquisition of 20%or more of the
Common Stock by certain corporations, at least 70% of the common stock and
aggregate voting power of which are owned by persons who also own the Common
Stock and voting power of the securities of the Company in substantially the
same proportion, will not constitute a Change of Control; and
- 21 -
<PAGE> 24
(iii) it increases from 50%to more than 70%the percentage of voting
securities (and adds a requirement that such test must also be met with respect
to common stock) of the surviving corporation which must be owned following a
merger, consolidation or similar transaction involving the Company by persons
who were shareholders of the Company immediately prior to the transaction for
such transaction to not constitute a Change of Control.
The Amended 1993 Plan also changes the effect of a Change of Control
on outstanding awards, principally with respect to Performance Units,
Performance Shares and Cash-Based Awards. Under the 1993 Plan, the target value
attainable under all Performance Units, Performance Shares and Cash-Based
Awards is deemed to have been fully earned for the entire Performance Period as
of the effective date of any Change of Control. Under the Amended 1993 Plan,
rather than the awards being deemed fully earned, the participant will receive
a prorated payment based on the Proration Formula.
Pooling of Interests Accounting. Under the Amended 1993 Plan, if the
Committee determines that the grant or exercise of some or all outstanding
options or SARs would preclude the use of pooling of interests accounting in a
proposed sale or merger of the Company, which preclusion is reasonably expected
to have a material adverse effect on either the terms or likelihood of closing
such transaction, then the Committee may make adjustments to either the terms
or method of paying such awards so as to permit pooling, or under specified
circumstances, cancel all such awards without the participants' consent.
Awards in Connection with Certain Corporate Transactions. The Amended
1993 Plan provides that in connection with the Company's acquisition of another
business, the Committee may grant awards associated with outstanding options or
other equity interests in such business to preserve the economic value of such
interests to their holders.
Adjustments for Unusual or Nonrecurring Events. The Amended 1993 Plan
allows the Committee to adjust the terms and conditions of awards for unusual
or nonrecurring events affecting the Company or its financial statements or for
changes in applicable laws, regulations, or accounting principles, to prevent
dilution or enlargement of the benefits intended by such awards unless such
adjustment would affect compliance with the requirements of the
Performance-Based Exception.
AMENDMENT, MODIFICATION OR TERMINATION
The Committee may amend, modify or terminate the Amended 1993 Plan,
subject to approval by the Board of Directors. The requirement of the 1993 Plan
that, without shareholder approval, no such amendment, modification or
termination may (a) with limited exceptions, materially increase the total
number of shares which may be issued, (b) materially modify the eligibility
requirements for participation, or (c) materially increase the benefits
accruing to participants, has been eliminated. The Amended 1993 Plan (as does
the 1993 Plan) provides that, without a participant's consent, no amendment,
modification or termination may materially adversely affect any award granted
prior thereto.
VOTE REQUIRED; RECOMMENDATION
The affirmative vote of the holders of a majority of the outstanding
shares of the Company's Common Stock represented in person or by proxy at the
Annual Meeting is necessary to approve the amendment and restatement of the
1993 Plan by adoption of the Amended 1993 Plan. The Board of Directors
recommends that shareholders vote FOR the approval of the Amended 1993 Plan.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors does
not intend to present, and has not been informed that any other person intends
to present, any matter for action at the Annual Meeting other than those
matters stated in the Notice of the Annual Meeting. Accordingly, if other
matters should properly come before the Annual Meeting, it is intended that the
holders of the proxies will act in respect thereto in accordance with their
best judgment.
- 22 -
<PAGE> 25
AUDITORS
Ernst & Young LLP, independent accountants, served as the Company's
auditors for 1999 after having previously served in the same capacity since
1930. Representatives of Ernst & Young will be in attendance at the Annual
Meeting and will be given the opportunity to make a statement and to respond to
appropriate questions.
SHAREHOLDER PROPOSALS
The next annual meeting of shareholders is scheduled to be held on
April 25, 2001, and shareholders of the Company may submit proposals for
consideration for inclusion in the proxy statement of the Company relating to
such annual meeting of shareholders. However, in order for such proposals to be
considered for inclusion in the proxy statement of the Company relating to such
annual meeting, such proposals must be received by the Company not later than
November 16, 2000.
If a shareholder fails to notify the Company on or before January 30,
2001 of a proposal which such shareholder intends to present at the Company's
April 25, 2001 Annual Meeting by a means other than inclusion of such proposal
in the Company's proxy materials for that meeting, then if the proposal is
presented at such annual meeting, the holders of the Board of Director's
proxies at such meeting may use their discretionary voting authority with
respect to such proposal, regardless of whether the proposal was discussed in
the Company's proxy statement for such meeting.
GENERAL INFORMATION
The Board of Directors of the Company has fixed the close of business
on March 1, 2000, as the record date for determining the holders of the Common
Stock of the Company entitled to notice of and to vote at the Annual Meeting.
As of such date, the Company had issued and outstanding and entitled to vote at
the Annual Meeting an aggregate of 32,562,433 shares of Common Stock, each
share of which is entitled to one (1) vote on all matters to be considered at
the Annual Meeting.
Pursuant to Section 10-2B-7.25 of the Code of Alabama 1975, as
amended, and the Company's Bylaws, a majority of the shares of Common Stock
entitled to vote, represented in person or by proxy, will constitute a quorum
at a meeting of the shareholders. Section 10-2B-7.28 of the Code of Alabama
1975, as amended, requires that each of the nominees to be elected to the Board
of Directors receive the affirmative vote of a majority of the votes cast by
the holders of shares of Common Stock represented at the Annual Meeting as part
of the quorum. The vote for election of directors does not include shares which
abstain from voting on a matter or which are not voted on such matter by a
nominee because such nominee is not permitted to exercise discretionary voting
authority and the nominee has not received voting instructions from the
beneficial owner of such shares. Section 10-2B-7.25 of the Code of Alabama
1975, as amended, and the Company's Bylaws require, for the approval of the
adoption of the ESP Plan and the amendment and restatement of the 1993 Plan in
the form of the Amended 1993 Plan, the affirmative vote of the holders of a
majority of the outstanding shares of the Company's Common Stock represented in
person or by proxy at a meeting of shareholders at which a quorum is present
and entitled to vote with respect to such proposals. Generally, brokers who act
as nominees will be permitted to exercise discretionary voting authority where
they have received no instructions in uncontested elections for directors and
on certain other matters which are not contested (not including, however,
approval of the adoption of the ESP Plan or the amendment and restatement of the
1993 Plan in the form of the Amended 1993 Plan) where the brokers have complied
with Rule 451 concerning the delivery of proxy materials to beneficial owners
of the Company's Common Stock held by such brokers.
The Annual Meeting may be adjourned from time to time without notice
other than announcement at the Annual Meeting, or at any adjournment thereof,
and any business for which notice was given in the accompanying Notice of
Annual Meeting of Shareholders may be transacted at any such adjournment.
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<PAGE> 26
In addition to the use of the mails, proxies may be solicited by
personal interview or by telephone or telegraph. The cost of solicitation of
proxies will be borne by the Company. The Company may request brokerage houses,
nominees, custodians, and fiduciaries to forward soliciting material to the
beneficial owners of the stock held of record and will reimburse such persons
for any reasonable expense incurred in forwarding the material.
Copies of the Company's Annual Report on Form 10-K for the year ended
January 1, 2000, in form as filed with the Securities and Exchange Commission,
may be obtained from Floyd G. Hoffman, the Senior Vice President, General
Counsel and Secretary of the Company, without charge, by persons who were
shareholders beneficially or of record as of March 1, 2000.
By Order of the Board of Directors
FLOYD G. HOFFMAN
Senior Vice President,
General Counsel and Secretary
Alexander City, Alabama
March 16, 2000
- 24 -
<PAGE> 27
RUSSELL CORPORATION
2000 EMPLOYEE STOCK PURCHASE PLAN
<PAGE> 28
RUSSELL CORPORATION
2000 EMPLOYEE STOCK PURCHASE PLAN
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I - BACKGROUND ............................................................................ 1
1.1 Establishment of the Plan ......................................................... 1
1.2 Applicability of the Plan ......................................................... 1
1.3 Purpose ........................................................................... 1
ARTICLE II - DEFINITIONS........................................................................... 1
2.1 Administrator...................................................................... 1
2.2 Board.............................................................................. 1
2.3 Code............................................................................... 1
2.4 Committee.......................................................................... 1
2.5 Common Stock....................................................................... 2
2.6 Compensation....................................................................... 2
2.7 Contribution Account............................................................... 2
2.8 Corporation........................................................................ 2
2.9 Direct Registration System......................................................... 2
2.10 Effective Date..................................................................... 2
2.11 Eligible Employee.................................................................. 2
2.12 Employee........................................................................... 2
2.13 Employer........................................................................... 3
2.14 Fair Market Value.................................................................. 3
2.15 Offering Date...................................................................... 3
2.16 Offering Period.................................................................... 3
2.17 Option............................................................................. 3
2.18 Participant........................................................................ 3
2.19 Plan............................................................................... 3
2.20 Purchase Date...................................................................... 3
2.21 Purchase Price..................................................................... 3
2.22 Request Form....................................................................... 3
2.23 Stock Account...................................................................... 3
2.24 Subsidiary......................................................................... 4
2.25 Trading Date....................................................................... 4
ARTICLE III - ELIGIBILITY AND PARTICIPATION........................................................ 4
3.1 Eligibility........................................................................ 4
3.2 Initial Participation.............................................................. 4
3.3 Leave of Absence................................................................... 5
ARTICLE IV - STOCK AVAILABLE....................................................................... 5
4.1 In General......................................................................... 5
4.2 Adjustment in Event of Changes in Capitalization................................... 5
4.3 Dissolution, Liquidation, or Reorganization........................................ 6
</TABLE>
<PAGE> 29
<TABLE>
<S> <C>
ARTICLE V. - OPTION PROVISIONS..................................................................... 6
5.1 Purchase Price....................................................................... 6
5.2 Calendar Year $25,000 Limit.......................................................... 6
5.3 Offering Period Limit................................................................ 6
ARTICLE VI - PURCHASING COMMON STOCK............................................................... 7
6.1 Participant's Contribution Account................................................... 7
6.2 Payroll Deductions, Lump Sum Cash Payments; Dividends................................ 7
6.3 Discontinuance....................................................................... 8
6.4 Leave of Absence; Transfer to Ineligible Status...................................... 8
6.5 Automatic Exercise................................................................... 9
6.6 Listing, Registration, and Qualification of Shares................................... 9
6.7 Restrictions on Transfer............................................................. 9
ARTICLE VII - WITHDRAWALS, DISTRIBUTIONS........................................................... 9
7.1 Discontinuance of Deductions; Leave of Absence; Transfer to Ineligible Status........ 9
7.2 In-Service Withdrawals............................................................... 10
7.3 Termination of Employment for Reasons Other Than Death............................... 10
7.4 Death................................................................................ 10
7.5 Registration......................................................................... 11
ARTICLE VIII - AMENDMENT AND TERMINATION........................................................... 11
8.1 Amendment............................................................................ 11
8.2 Termination.......................................................................... 11
ARTICLE IX - MISCELLANEOUS......................................................................... 12
9.1 Shareholder Approval................................................................. 12
9.1 No Employment Rights................................................................. 12
9.2 Tax Withholding...................................................................... 12
9.3 Rights Not Transferable.............................................................. 12
9.4 No Repurchase of Stock by Corporation................................................ 12
9.5 Governing Law........................................................................ 12
9.6 Shareholder Approval; Registration................................................... 12
</TABLE>
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<PAGE> 30
RUSSELL CORPORATION
2000 EMPLOYEE STOCK PURCHASE PLAN
ARTICLE I
BACKGROUND
1.1 ESTABLISHMENT OF THE PLAN. Russell Corporation (the
"Corporation") hereby establishes a stock purchase plan to be known as the
"Russell Corporation 2000 Employee Stock Purchase Plan" (the "Plan"), as set
forth in this document. The Plan is intended to be a qualified employee stock
purchase plan within the meaning of Section 423 of the Internal Revenue Code of
1986, as amended, and the regulations and rulings thereunder.
1.2 APPLICABILITY OF THE PLAN. The provisions of this Plan are
applicable only to certain individuals who, on or after February 1, 2000, are
employees of the Corporation and its subsidiaries participating in the Plan.
The Committee shall indicate from time to time which of its subsidiaries, if
any, are participating in the Plan.
1.3 PURPOSE. The purpose of the Plan is to enhance the
proprietary interest among the employees of the Corporation and its
participating subsidiaries through ownership of Common Stock of the
Corporation.
ARTICLE II
DEFINITIONS
Whenever capitalized in this document, the following terms shall have
the respective meanings set forth below.
2.1 ADMINISTRATOR. Administrator shall mean the person or persons
(who may be officers or employees of the Corporation) selected by the Committee
to operate the Plan, perform day-to-day administration of the Plan, and
maintain records of the Plan.
2.2 BOARD. Board shall mean the Board of Directors of the
Corporation.
2.3 CODE. Code shall mean the Internal Revenue Code of 1986, as
amended from time to time, and the regulations thereunder.
2.4 COMMITTEE. Committee shall mean a committee which consists of
members of the Board and which has been designated by the Board to have the
general responsibility for the administration of the Plan. Unless otherwise
designated by the Board, the Management Development and Compensation Committee
of the Board of Directors of the Corporation shall serve as the Committee
administering the Plan. Subject to the express provisions of the Plan, the
Committee shall have plenary authority in its sole and absolute discretion to
interpret and construe any and all provisions of the Plan, to adopt rules and
regulations for administering the Plan, and to make all other determinations
necessary or advisable for administering the Plan. The Committee's
determinations on the foregoing matters shall be conclusive and binding upon
all persons.
2.5 COMMON STOCK. Common Stock shall mean the common stock, par
value $.01, of the Corporation.
2.6 COMPENSATION. Compensation shall mean, for any Participant,
for any Offering Period, the Participant's gross base wages for the respective
period, subject to appropriate adjustments that would
<PAGE> 31
exclude items such as bonuses, overtime pay, non-cash compensation and
reimbursement of moving, travel, trade or business expenses.
2.7 CONTRIBUTION ACCOUNT. Contribution Account shall mean the
bookkeeping account established by the Administrator on behalf of each
Participant, which shall be credited with the amounts deducted from the
Participant's Compensation or lump sum cash payments made pursuant to Article
VI. The Administrator shall establish a separate Contribution Account for each
Participant for each Offering Period.
2.8 CORPORATION. Corporation shall mean Russell Corporation, an
Alabama corporation.
2.9 DIRECT REGISTRATION SYSTEM. Direct Registration System shall
mean a direct registration system approved by the Securities and Exchange
Commission and by the New York Stock Exchange, Inc. or any securities exchange
on which the Common Stock is then listed, whereby shares of Common Stock may be
registered in the holder's name in book-entry form on the books of the
Corporation.
2.10 EFFECTIVE DATE. Effective Date shall mean the effective date
of the Plan, which shall be the later of (i) March 1, 2000, or (ii) the
effective date of the Corporation's registration statement on Form S-8 filed
under the Securities Act of 1933, as amended, covering the shares to be issued
under the Plan.
2.11 ELIGIBLE EMPLOYEE. An Employee eligible to participate in the
Plan pursuant to Section 3.1.
2.12 EMPLOYEE. Employee shall mean an individual employed by an
employer who meets the employment relationship described in Treasury Regulation
Sections 1.423-2(b) and Section 1.421-7(h).
2.13 EMPLOYER. Employer shall mean the Corporation and any
Subsidiary designated by the Committee as an employer participating in the
Plan.
2.14 FAIR MARKET VALUE. Fair Market Value of a share of Common
Stock, as of any designated date, shall mean the closing sales price of the
Common Stock on the New York Stock Exchange on such date or on the last
previous date on which such stock was traded.
2.15 OFFERING DATE. Offering Date shall mean the first Trading
Date of each Offering Period.
2.16 OFFERING PERIOD. Offering Period shall mean the quarterly
periods beginning January 1, April 1, July 1 and October 1, respectively, of
each year during which offers to purchase Common Stock are outstanding under
the Plan; provided, however, that the initial Offering Period shall be the
period beginning on the Effective Date and ending on June 30, 2000. No payroll
deductions shall be taken until the Effective Date.
2.17 OPTION. Option shall mean the option to purchase Common Stock
granted under the Plan on each Offering Date.
2.18 PARTICIPANT. Participant shall mean any Eligible Employee who
has elected to participate in the Plan under Section 3.2.
2.19 PLAN. Plan shall mean the Russell Corporation 2000 Employee
Stock Purchase Plan, as amended and in effect from time to time.
2.20 PURCHASE DATE. Purchase Date shall mean the last Trading Date
of each Offering Period.
2.21 PURCHASE PRICE. Purchase Price shall mean the purchase price
of Common Stock determined under Section 5.1.
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<PAGE> 32
2.22 REQUEST FORM. Request Form shall mean an Employee's
authorization either in writing on a form approved by the Administrator or
through electronic communication approved by the Administrator which specifies
the Employee's payroll deduction or lump sum cash payments in accordance with
Section 6.2, and contains such other terms and provisions as may be required by
the Administrator.
2.23 STOCK ACCOUNT. Stock Account shall mean the account
established by the Administrator on behalf of each Participant, which shall be
credited with shares of Common Stock purchased pursuant to the Plan and
dividends thereon until distributed in accordance with the terms of the Plan.
2.24 SUBSIDIARY. Subsidiary shall mean any present or future
corporation which is a "subsidiary corporation" of the Corporation as defined
in Code Section 424(f).
2.25 TRADING DATE. Trading Date shall mean a date on which shares
of Common Stock are traded on a national securities exchange (such as the New
York Stock Exchange), the Nasdaq National Market or in the over-the-counter
market.
Except when otherwise indicated by the context, the definition of any
term herein in the singular may also include the plural.
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.1 ELIGIBILITY. Each Employee who is an Employee regularly
scheduled to work at least 20 hours each week and at least five months each
calendar year shall be eligible to participate in the Plan as of the later of:
(a) the Offering Date immediately following the Employee's last
date of hire by an Employer; or
(b) the Effective Date.
On each Offering Date, Options will automatically be granted to all
Employees then eligible to participate in the Plan; provided, however, that no
Employee shall be granted an Option for an Offering Period if, immediately
after the grant, the Employee would own stock, and/or hold outstanding options
to purchase stock, possessing five percent or more of the total combined voting
power or value of all classes of stock of the Corporation or any Subsidiary.
For purposes of this Section, the attribution rules of Code Section 424(d)
shall apply in determining stock ownership of any Employee. If an Employee is
granted an Option for an Offering Period and such Employee does not participate
in the Plan for such Offering Period, such Option will be deemed never to have
been granted for purposes of applying the $25,000 annual limitation described
in Section 5.2.
3.2 INITIAL PARTICIPATION. An Eligible Employee having been
granted an Option under Section 3.1 may submit a Request Form to the
Administrator to participate in the Plan for an Offering Period. The Request
Form shall authorize a regular payroll deduction from the Employee's
Compensation for the Offering Period, or shall notify the Administrator that
the Participant shall make a lump sum cash payment (including personal or
certified checks) for the Offering Period, or shall both authorize a payroll
deduction and notify the Administrator of a lump sum cash payment for the
Offering Period, subject to the limits and procedures described in Article VI.
A Participant's Request Form authorizing a regular payroll deduction shall
remain effective from Offering Period to Offering Period until amended or
canceled under Section 6.3. A Participant's Request Form authorizing a lump sum
cash payment shall be valid only for the Offering Period to which it relates.
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<PAGE> 33
3.3 LEAVE OF ABSENCE. For purposes of Section 3.1, an individual
on a leave of absence from an Employer shall be deemed to be an Employee for
the first 90 days of such leave. For purposes of this Plan, such individual's
employment with the Employer shall be deemed to terminate at the close of
business on the 90th day of the leave, unless the individual has returned to
regular employment with an Employer before the close of business on such 90th
day. Termination of any individual's leave of absence by an Employer, other
than on account of a return to employment with an Employer, shall be deemed to
terminate an individual's employment with the Employer for all purposes of the
Plan.
ARTICLE IV
STOCK AVAILABLE
4.1 IN GENERAL. Subject to the adjustments in Sections 4.2 and
4.3, an aggregate of 800,000 shares of Common Stock shall be available for
purchase by Participants pursuant to the provisions of the Plan. These shares
may be authorized and unissued shares or may be shares issued and subsequently
acquired by the Corporation. If an Option under the Plan expires or terminates
for any reason without having been exercised in whole or part, the shares
subject to such Option that are not purchased shall again be available for
subsequent Option grants under the Plan. If the total number of shares of
Common Stock for which Options are exercised on any Purchase Date exceeds the
maximum number of shares then available under the Plan, the Committee shall
make a pro rata allocation of the shares available in as nearly a uniform
manner as shall be practicable and as it shall determine to be equitable; and
the balance of the cash credited to Participants' Contribution Accounts shall
be distributed to the Participants as soon as practicable.
4.2 ADJUSTMENT IN EVENT OF CHANGES IN CAPITALIZATION. In the
event of a stock dividend, stock split or combination of shares,
recapitalization or other change in the Corporation's capitalization, or other
distribution with respect to holders of the Corporation's Common Stock other
than normal cash dividends, an automatic adjustment shall be made in the number
and kind of shares as to which outstanding Options or portions thereof then
unexercised shall be exercisable and in the available shares set forth in
Section 4.1, so that the proportionate interest of the Participants shall be
maintained as before the occurrence of such event. This adjustment in
outstanding Options shall be made without change in the total price applicable
to the unexercised portion of such Options and with a corresponding adjustment
in the Purchase Price per share; provided, however, that in no event shall any
adjustment be made that would cause any Option to fail to qualify as an option
pursuant to an employee stock purchase plan within the meaning of Section 423
of the Code.
4.3 DISSOLUTION, LIQUIDATION, OR REORGANIZATION. Upon the
dissolution or liquidation of the Corporation, or upon a reorganization,
merger, or consolidation of the Corporation with one or more corporations in
which the Corporation is not the surviving corporation, or upon a sale of
substantially all of the property or stock of the Corporation to another
corporation, the holder of each Option then outstanding under the Plan shall be
entitled to receive at the next Purchase Date upon the exercise of such Option
for each share as to which such Option shall be exercised, as nearly as
reasonably may be determined, the cash, securities, or property which a holder
of one share of the Common Stock was entitled to receive upon and at the time
of such transaction. The Committee shall take such steps in connection with
these transactions as the Committee deems necessary or appropriate to assure
that the provisions of this Section shall thereafter be applicable, as nearly
as reasonably may be determined, in relation to the cash, securities, or
property which the holder of the Option may thereafter be entitled to receive.
In lieu of the foregoing, the Committee may terminate the Plan in accordance
with Section 8.2.
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<PAGE> 34
ARTICLE V
OPTION PROVISIONS
5.1 PURCHASE PRICE. The Purchase Price of a share of Common Stock
purchased for a Participant pursuant to each exercise of an Option shall be the
lesser of:
(a) 85 percent of the Fair Market Value of a share of Common
Stock on the Offering Date; or
(b) 85 percent of the Fair Market Value of a share of Common
Stock on the Purchase Date.
5.2 CALENDAR YEAR $25,000 LIMIT. Notwithstanding anything else
contained herein, no Employee may be granted an Option for any Offering Period
which permits such Employee's rights to purchase Common Stock under this Plan
and any other qualified employee stock purchase plan (within the meaning of
Code Section 423) of the Corporation and its Subsidiaries to accrue at a rate
which exceeds $25,000 of Fair Market Value of such Common Stock for each
calendar year in which an Option is outstanding at any time. For purposes of
this Section, Fair Market Value shall be determined as of the Offering Date.
5.3 OFFERING PERIOD LIMIT. Notwithstanding anything else
contained herein, the maximum number of shares of Common Stock that an Eligible
Employee may purchase in any Offering Period is 1,000 shares.
ARTICLE VI
PURCHASING COMMON STOCK
6.1 PARTICIPANT'S CONTRIBUTION ACCOUNT. The Administrator shall
establish a book account in the name of each Participant for each Offering
Period. As discussed in Section 6.2 below, a Participant's payroll deductions
and his or her lump sum cash payments shall be credited to the Participant's
Contribution Account, without interest, until such cash is withdrawn,
distributed, or used to purchase Common Stock as described below.
During such time, if any, as the Corporation participates in a Direct
Registration System, shares of Common Stock acquired upon exercise of an Option
shall be directly registered in the name of the Participant. If the Corporation
does not participate in a Direct Registration System, then until distribution
is requested by a Participant pursuant to Article VII, stock certificates
evidencing the Participant's shares of Common Stock acquired upon exercise of
an Option shall be held by the Corporation as the nominee for the Participant.
These shares shall be credited to the Participant's Stock Account. Certificates
shall be held by the Corporation as nominee for Participants solely as a matter
of convenience. A Participant shall have all ownership rights as to the shares
credited to his or her Stock Account, and the Corporation shall have no
ownership or other rights of any kind with respect to any such certificates or
the shares represented thereby.
All cash received or held by the Corporation under the Plan may be
used by the Corporation for any corporate purpose. The Corporation shall not be
obligated to segregate any assets held under the Plan.
6.2 PAYROLL DEDUCTIONS, LUMP SUM CASH PAYMENTS; DIVIDENDS.
(a) Payroll Deductions. By submitting a Request Form at any time
before an Offering Period in accordance with rules adopted by the Committee, an
Eligible Employee may authorize a payroll deduction to purchase Common Stock
under the Plan for the Offering Period. The payroll deduction shall be
effective on the first pay period during the Offering Period commencing after
receipt of the Request Form by the Administrator. The payroll deduction shall
be in any whole percentage up to a maximum of ten percent (10%) of such
Employee's Compensation payable each pay period, and at any other time an
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<PAGE> 35
element of Compensation is payable. A Participant's payroll deduction shall not
be less than one percent (1%) of such Employee's Compensation payable each
payroll period.
(b) Lump Sum Cash Payments. In lieu of, or in addition to, the
payroll deductions in subsection (a), an Employee eligible to participate in
the Plan under Section 3.1 may, by submitting a Request Form no later than the
last day of the calendar week ending before the applicable Purchase Date in
accordance with rules adopted by the Administrator, notify the Administrator
that the Participant shall make a lump sum cash payment to purchase Common
Stock under the Plan for the Offering Period. In no event shall the combined
total payroll deductions and lump sum cash payments exceed 10 percent (10%) of
the Participant's Compensation paid during the Offering Period and during any
prior Offering Period in the same calendar year. Any lump sum cash payments
under this subsection must be received by the Administrator by the last day of
the calendar week ending before the applicable Purchase Date. If the
Participant fails to remit the lump sum cash payment by the applicable date,
the Participant's Request Form with respect to such lump sum cash payment shall
be void. A Participant may submit a Request Form to make a lump sum cash
payment only once each Offering Period.
(c) Dividends. Cash dividends paid on Common Stock which is
credited to a Participant's Stock Account as of the dividend payment date shall
be credited to the Participant's Stock Account and paid to the Participant as
soon as practicable.
6.3 DISCONTINUANCE. A Participant may discontinue his or her
payroll deductions for an Offering Period by filing a new Request Form with the
Administrator. This discontinuance shall be effective on the first pay period
commencing at least 30 days after receipt of the Request Form by the
Administrator. A Participant who discontinues his or her payroll deductions for
an Offering Period may not make a subsequent lump sum contribution during such
Offering Period or resume participation in the Plan until the following
Offering Period.
Any amount held in the Participant's Contribution Account for an
Offering Period after the effective date of the discontinuance of his or her
payroll deductions will either be refunded or used to purchase Common Stock in
accordance with Section 7.1.
6.4 LEAVE OF ABSENCE; TRANSFER TO INELIGIBLE STATUS. If a
Participant either begins a leave of absence, is transferred to employment with
a Subsidiary not participating in the Plan, or remains employed with an
Employer but is no longer eligible to participate in the Plan, the Participant
shall cease to be eligible for payroll deductions or lump sum cash payments to
his or her Contribution Account pursuant to Section 6.2. The cash standing to
the credit of the Participant's Contribution Account shall become subject to
the provisions of Section 7.1.
If the Participant returns from the leave of absence before being
deemed to have ceased employment with the Employer under Section 3.3, or again
becomes eligible to participate in the Plan, the Request Form, if any, in
effect immediately before the leave of absence or disqualifying change in
employment status shall be deemed void and the Participant must again complete
a new Request Form to resume participation in the Plan.
6.5 AUTOMATIC EXERCISE. Unless the cash credited to a
Participant's Contribution Account is withdrawn or distributed as provided in
Article VII, his or her Option shall be deemed to have been exercised
automatically on each Purchase Date, for the purchase of the number of full
shares of Common Stock which the cash credited to his or her Contribution
Account at that time will purchase at the Purchase Price. If there is a cash
balance remaining in the Participant's Contribution Account at the end of an
Offering Period representing the exercise price for a fractional share of
Common Stock, such balance may be retained in the Participant's Contribution
Account for the next Offering Period, unless the Participant requests that it
be refunded, without interest. Any other cash balance remaining in the
Participant's Contribution Account at the end of an Offering Period shall be
refunded to the Participant, without interest.
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<PAGE> 36
The amount of cash that may be used to purchase shares of Common Stock may not
exceed the Compensation restrictions set forth in Section 6.2.
Except as provided in the preceding paragraph, if the cash credited to
a Participant's Contribution Account on the Purchase Date exceeds the
applicable Compensation restrictions of Section 6.2 or exceeds the amount
necessary to purchase the maximum number of shares of Common Stock available
during the Offering Period, such excess cash shall be refunded to the
Participant. Except as provided in the preceding paragraph, the excess cash may
not be used to purchase shares of Common Stock nor retained in the
Participant's Contribution Account for a future Offering Period.
Each Participant shall receive a statement on an annual basis
indicating the number of shares credited to his or her Stock Account, if any,
under the Plan.
6.6 LISTING, REGISTRATION, AND QUALIFICATION OF SHARES. The
granting of Options for, and the sale and delivery of, Common Stock under the
Plan shall be subject to the effecting by the Corporation of any listing,
registration, or qualification of the shares subject to that Option upon any
securities exchange or under any federal or state law, or the obtaining of the
consent or approval of any governmental regulatory body deemed necessary or
desirable for the issuance or purchase of the shares covered.
6.7 RESTRICTIONS ON TRANSFER. By participating in the Plan, each
participant hereby agrees that he or she will not sell or otherwise transfer
(other than by will or the laws of descent and distribution) any shares of
Common Stock acquired under the Plan for a period of 12 months following the
Purchase Date on which such shares were acquired.
ARTICLE VII
WITHDRAWALS; DISTRIBUTIONS
7.1 DISCONTINUANCE OF DEDUCTIONS; LEAVE OF ABSENCE; TRANSFER TO
INELIGIBLE STATUS. In the event of a Participant's complete discontinuance of
payroll deductions under Section 6.3 or a Participant's leave of absence or
transfer to an ineligible status under Section 6.4, the cash balance then
standing to the credit of the Participant's Contribution Account shall be--
(a) returned to the Participant, in cash, without interest, as
soon as practicable, upon the Participant's written request received by the
Administrator at least 30 days before the next Purchase Date; or
(b) held under the Plan and used to purchase Common Stock for the
Participant under the automatic exercise provisions of Section 6.5.
7.2 IN-SERVICE WITHDRAWALS. During such time, if any, as the
Corporation participates in a Direct Registration System, shares of Common
Stock acquired upon exercise of an Option shall be directly registered in the
name of the Participant and the Participant may withdraw certificates in
accordance with the applicable terms and conditions of such Direct Registration
System. If the Corporation does not participate in a Direct Registration
System, (i) a Participant may, while an Employee of the Corporation or any
Subsidiary, withdraw certificates for some or all of the shares of Common Stock
credited to his or her Stock Account at any time, upon 30 days' written notice
to the Administrator, and (ii) each Participant shall be permitted only one
withdrawal under this Section during each Offering Period. If a Participant
requests a distribution of only a portion of the shares of Common Stock
credited to his or her Stock Account, the Administrator will distribute the
oldest securities held in the Participant's Stock Account first, using a first
in-first out methodology. The Administrator may at any time distribute
certificates for some or all of the shares of Common Stock credited to a
Participant's Stock Account, whether or not the Participant so requests.
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<PAGE> 37
7.3 TERMINATION OF EMPLOYMENT FOR REASONS OTHER THAN DEATH. If a
Participant terminates employment with the Corporation and the Subsidiaries for
reasons other than death, the cash balance in the Participant's Contribution
Account shall be returned to the Participant in cash, without interest, as soon
as practicable. Certificates for the shares of Common Stock credited to his or
her Stock Account shall be distributed to the Participant as soon as
practicable, unless the Corporation then participates in a Direct Registration
System, in which case, the Participant shall be entitled to evidence of
ownership of such shares in such form as the terms and conditions of such
Direct Registration System permit.
7.4 DEATH. In the event a Participant dies, the cash balance in
his or her Contribution Account shall be distributed to the Participant's
estate, in cash, without interest, as soon as practicable. Certificates for the
shares of Common Stock credited to the Participant's Stock Account shall be
distributed to the estate as soon as practicable, unless the Corporation then
participates in a Direct Registration System, in which case, the estate shall
be entitled to evidence of ownership of such shares in such form as the terms
and conditions of such Direct Registration System permit.
7.5 REGISTRATION. Whether represented in certificate form or by
direct registration pursuant to a Direct Registration System, shares of Common
Stock acquired upon exercise of an Option shall be directly registered in the
name of the Participant or, if the Participant so indicates on the Request
Form, (a) in the Participant's name jointly with a member of the Participant's
family, with the right of survivorship, (b) in the name of a custodian for the
Participant (in the event the Participant is under a legal disability to have
stock issued in the Participant's name), or (c) in a manner giving effect to
the status of such shares as community property. No other names may be included
in the Common Stock registration. The Corporation shall pay all issue or
transfer taxes with respect to the issuance or transfer of shares of such
Common Stock, as well as all fees and expenses necessarily incurred by the
Corporation in connection with such issuance or transfer.
ARTICLE VIII
AMENDMENT AND TERMINATION
8.1 AMENDMENT. The Committee shall have the right to amend or
modify the Plan, in full or in part, at any time and from time to time;
provided, however, that no amendment or modification shall:
(a) affect any right or obligation with respect to any grant
previously made, unless required by law, or
(b) unless previously approved by the stockholders of the
Corporation, where such approval is necessary to satisfy the Code, the rules of
any stock exchange on which the Corporation's Common Stock is listed, or the
requirements necessary to meet any exemption from the application of federal
securities laws:
(1) in any manner materially affect the eligibility
requirements set forth in Sections 3.1 and 3.3, or change the
definition of Employer as set forth in Section 2.13,
(2) increase the number of shares of Common Stock
subject to any options issued to Participants (except as provided in
Sections 4.2 and 4.3), or
(3) materially increase the benefits to Participants
under the Plan.
8.2 TERMINATION. The Committee may terminate the Plan at any time
in its sole and absolute discretion. The Plan shall be terminated by the
Committee if at any time the number of shares of Common
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<PAGE> 38
Stock authorized for purposes of the Plan is not sufficient to meet all
purchase requirements, except as specified in Section 4.1.
Upon termination of the Plan, the Administrator shall give notice
thereof to Participants, shall terminate all payroll deductions and shall no
longer accept additional lump sum cash payments from Participants. Cash
balances then credited to Participants' Contribution Accounts shall be
distributed as soon as practicable, without interest.
ARTICLE IX
MISCELLANEOUS
9.1 SHAREHOLDER APPROVAL. The Plan shall be approved and ratified
by the stockholders of the Corporation, not later than 12 months after adoption
of the Plan by the Board of Directors of the Corporation, pursuant to Treasury
regulation Section 1.423-2(c). If for any reason such approval is not given by
such date, the Plan shall be null and void, and all payroll deductions to the
Plan shall cease. The cash balances and Common Stock credited to Participants'
accounts shall be promptly distributed to them; and any Common Stock
certificates issued and delivered to Participants prior to such date shall
remain the property of the Participants.
9.2 NO EMPLOYMENT RIGHTS. Neither the establishment of the Plan,
nor the grant of any Options thereunder, nor the exercise thereof shall be
deemed to give to any Employee the right to be retained in the employ of the
Corporation or any Subsidiary or to interfere with the right of the Corporation
or any Subsidiary to discharge any Employee or otherwise modify the employment
relationship at any time.
9.3 TAX WITHHOLDING. The Administrator may make appropriate
provisions for withholding of federal, state, and local income taxes, and any
other taxes, from a Participant's Compensation to the extent the Administrator
deems such withholding to be legally required.
9.4 RIGHTS NOT TRANSFERABLE. Rights and Options granted under
this Plan are not transferable by the Participant other than by will or by the
laws of descent and distribution and are exercisable only by the Participant
during his or her lifetime.
9.5 NO REPURCHASE OF STOCK BY CORPORATION. The Corporation is
under no obligation to repurchase from any Participant any shares of Common
Stock acquired under the Plan.
9.6 GOVERNING LAW. The Plan shall be governed by and construed in
accordance with the laws of the State of Alabama except to the extent such laws
are preempted by the laws of the United States.
9.7 SHAREHOLDER APPROVAL; REGISTRATION. The Plan was adopted by
the Board of Directors of the Corporation on January 18, 2000 to be effective
as of the Effective Date, provided that no payroll deductions may begin until a
registration statement on Form S-8 filed under the Securities Act of 1933, as
amended, covering the shares to be issued under the Plan, has become effective.
The Plan is subject to approval by the stockholders of the Corporation within
12 months of approval by the Board of Directors.
* * * * * * * * * * * * * *
The foregoing is hereby acknowledged as being the Russell Corporation 2000
Employee Stock Purchase Plan as adopted by the Board of Directors of the
Corporation on January 18, 2000.
RUSSELL CORPORATION
By:
------------------------------------------
Its:
-----------------------------------------
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<PAGE> 39
RUSSELL CORPORATION
EXECUTIVE INCENTIVE PLAN
<PAGE> 40
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
ARTICLE 1. ESTABLISHMENT, OBJECTIVES AND DURATION.................................................................1
1.1. Establishment of the Plan................................................................................1
1.2. Objectives of the Plan...................................................................................1
1.3. Duration of the Plan.....................................................................................1
ARTICLE 2. DEFINITIONS............................................................................................1
ARTICLE 3. ADMINISTRATION.........................................................................................7
3.1. Committee................................................................................................7
3.2. Powers of Committee......................................................................................8
ARTICLE 4. SHARES SUBJECT TO THE PLAN.............................................................................9
4.1. Number of Shares Available...............................................................................9
4.2. Adjustments in Authorized Shares.........................................................................9
4.3. Performance Measures....................................................................................10
4.4. Compliance with Section 162(m) of the Code..............................................................11
ARTICLE 5. ELIGIBILITY AND GENERAL CONDITIONS OF AWARDS..........................................................12
5.1. Eligibility.............................................................................................12
5.2. Grant Date..............................................................................................12
5.3. Maximum Term............................................................................................12
5.4. Award Agreement.........................................................................................12
5.5. Restrictions on Share Transferability...................................................................12
5.6. Termination of Affiliation..............................................................................12
5.7. Nontransferability of Awards............................................................................14
ARTICLE 6. STOCK OPTIONS.........................................................................................15
6.1. Grant of Options........................................................................................15
6.2. Award Agreement.........................................................................................15
6.3. Option Price............................................................................................15
6.4. Grant of Incentive Stock Options........................................................................15
6.5. Grant of ASO Options....................................................................................16
6.6. Conditions on ASO Options...............................................................................16
6.7. Payment.................................................................................................17
ARTICLE 7. STOCK APPRECIATION RIGHTS.............................................................................17
7.1. Grant of SARs...........................................................................................17
7.2. Exercise of Tandem SARs.................................................................................17
7.3. Payment of SAR Amount...................................................................................17
ARTICLE 8. RESTRICTED SHARES.....................................................................................18
8.1. Grant of Restricted Shares..............................................................................18
8.2. Award Agreement.........................................................................................18
8.3. Consideration...........................................................................................18
8.4. Effect of Forfeiture....................................................................................18
8.5. Escrow; Legends.........................................................................................18
</TABLE>
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<PAGE> 41
<TABLE>
<S> <C> <C>
ARTICLE 9. PERFORMANCE UNITS AND PERFORMANCE SHARES..............................................................19
9.1. Grant of Performance Units and Performance Shares.......................................................19
9.2. Value/Performance Goals.................................................................................19
9.3. Earning of Performance Units and Performance Shares.....................................................19
9.4. Form and Timing of Payment of Performance Units and Performance Shares..................................19
ARTICLE 10. BONUS SHARES AND DEFERRED SHARES.....................................................................20
10.1. Bonus Shares............................................................................................20
10.2. Deferred Shares.........................................................................................20
ARTICLE 11. BENEFICIARY DESIGNATION..............................................................................20
ARTICLE 12. DEFERRALS............................................................................................20
ARTICLE 13. RIGHTS OF EMPLOYEES AND CONSULTANTS..................................................................20
13.1. Employment..............................................................................................20
13.2. Participation...........................................................................................20
ARTICLE 14. CHANGE OF CONTROL AND CERTAIN CORPORATE TRANSACTIONS.................................................21
14.1. Change of Control.......................................................................................21
14.2. Pooling of Interests Accounting.........................................................................21
14.3. Substituting Awards in Certain Corporate Transactions...................................................22
ARTICLE 15. AMENDMENT, MODIFICATION, AND TERMINATION.............................................................22
15.1. Amendment, Modification, and Termination................................................................22
15.2. Adjustments Upon Certain Unusual or Nonrecurring Events.................................................22
15.3. Awards Previously Granted...............................................................................23
ARTICLE 16. WITHHOLDING..........................................................................................23
16.1. Withholding.............................................................................................23
16.2. Notification under Code Section 83(b)...................................................................24
ARTICLE 17. ADDITIONAL PROVISIONS................................................................................24
17.1. Successors..............................................................................................24
17.2. Gender and Number.......................................................................................24
17.3. Severability............................................................................................24
17.4. Requirements of Law.....................................................................................24
17.5. Securities Law Compliance...............................................................................24
17.6. No Rights as a Stockholder..............................................................................25
17.7. Nature of Payments......................................................................................25
17.8. Governing Law...........................................................................................25
</TABLE>
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RUSSELL CORPORATION
EXECUTIVE INCENTIVE PLAN
ARTICLE 1. ESTABLISHMENT, OBJECTIVES AND DURATION
1.1. Establishment of the Plan. Russell Corporation, an Alabama
corporation (the "Company"), established an incentive compensation plan known as
the Russell Corporation 1993 Executive Long-Term Incentive Plan (the "Plan")
effective January 1, 1993 which was duly adopted by the Board of Directors of
the Company (the "Board") and approved by shareholders. The Company is hereby
amending, restating and renaming the Plan as set forth herein effective ,
2000 (the "Effective Date"), subject to shareholder approval.
1.2. Objectives of the Plan. The Plan is intended to allow
employees and consultants of the Company and its Subsidiaries to acquire or
increase equity ownership in the Company, thereby strengthening their commitment
to the success of the Company and stimulating their efforts on behalf of the
Company, and to assist the Company and its Subsidiaries in attracting new
employees and consultants and retaining existing employees and consultants. The
Plan is also intended to optimize the profitability and growth of the Company
through incentives which are consistent with the Company's goals; to provide
incentives for excellence in individual performance; and to promote teamwork.
1.3. Duration of the Plan. The Plan shall commence on the Effective
Date and shall remain in effect, subject to the right of the Board to amend or
terminate the Plan at any time pursuant to Article 15 hereof, until all Shares
subject to it shall have been purchased or acquired according to the Plan's
provisions; provided, however, that in no event may any Incentive Stock Option
be granted under the Plan more than 10 years from the Effective Date.
ARTICLE 2. DEFINITIONS
Whenever used in the Plan, the following terms shall have the meanings
set forth below:
2.1. "Article" means an Article of the Plan.
2.2. "ASO Option" or "Accelerated Stock Ownership Option" have the
meaning set forth in Section 6.5.
2.3. "Award" means Options (including Incentive Stock Options and
ASO Options), Restricted Shares, Bonus Shares, Deferred Shares, stock
appreciation rights (SARs), Performance Units, Performance Shares or Cash-Based
Awards granted under the Plan.
2.4. "Award Agreement" means a written agreement by which an Award
is evidenced.
2.5. "Beneficial Owner" has the meaning specified in Rule 13d-3 of
the SEC under the Exchange Act.
2.6. "Board" has the meaning set forth in Section 1.1.
2.7. "Bonus Shares" means Shares that are awarded to a Grantee
without cost and without restrictions in recognition of past performance
(whether determined by reference to another employee benefit plan of the Company
or otherwise), as an incentive to become an employee or consultant of the
Company or a Subsidiary or otherwise.
2.8. "Cash-Based Award" has the meaning set forth in Article 9.
2.9. "Cause" means, unless otherwise defined in an Award Agreement,
<PAGE> 43
(i) a Grantee's conviction of a felony or other crime
involving fraud, dishonesty or moral turpitude;
(ii) a Grantee's willful or reckless material misconduct
in the performance of the Grantee's duties; or
(iii) a Grantee's habitual neglect of duties;
provided, however, that for purposes of clauses (ii) and (iii), Cause shall not
include any one or more of the following: bad judgment, negligence or any act or
omission believed by the Grantee in good faith to have been in or not opposed to
the interest of the Company (without intent of the Grantee to gain, directly or
indirectly, a profit to which the Grantee was not legally entitled). A Grantee
who agrees to resign his affiliation with the Company or a Subsidiary in lieu of
being terminated for Cause may be deemed to have been terminated for Cause for
purposes of this Plan.
2.10. "Change of Control" means, unless otherwise defined in an
Award Agreement, any one or more of the following:
(a) any person (as such term is used in Rule 13d-5 of the SEC
under the Exchange Act) or group (as such term is defined in Sections
3(a)(9) and 13(d)(3) of the Exchange Act), other than a Subsidiary, any
employee benefit plan (or any related trust) of the Company or any of
its Subsidiaries or any Excluded Person, becomes the Beneficial Owner
of 20% or more of the common stock of the Company or of Voting
Securities representing 20% or more of the combined voting power of the
Company (such a person or group, a "20% Owner"), except that (i) no
Change of Control shall be deemed to have occurred solely by reason of
such beneficial ownership by a corporation with respect to which both
more than 70% of the common stock of such corporation and Voting
Securities representing more than 70% of the aggregate voting power of
such corporation are then owned, directly or indirectly, by the persons
who were the direct or indirect owners of the common stock and Voting
Securities of the Company immediately before such acquisition in
substantially the same proportions as their ownership, immediately
before such acquisition, of the common stock and Voting Securities of
the Company, as the case may be and (ii) such corporation shall not be
deemed a 20% Owner; or
(b) the Incumbent Directors (determined using the Effective
Date as the baseline date) cease for any reason to constitute at least
two-thirds of the directors of the Company then serving; or
(c) approval by the stockholders of the Company of a merger,
reorganization, consolidation, or similar transaction, or a plan or
agreement for the sale or other disposition of all or substantially all
of the consolidated assets of the Company or a plan of liquidation of
the Company (any of the foregoing transactions, a "Reorganization
Transaction") which, based on information included in the proxy and
other written materials distributed to the Company's stockholders in
connection with the solicitation by the Company of such stockholder
approval, is not expected to qualify as an Exempt Reorganization
Transaction; or
(d) the consummation by the Company of a Reorganization
Transaction that for any reason fails to qualify as an Exempt
Reorganization Transaction as of the date of such consummation,
notwithstanding the fact that such Reorganization Transaction was
expected to so qualify as of the date of such stockholder approval.
Notwithstanding the occurrence of any of the foregoing events, a Change of
Control shall not occur with respect to a Grantee if, in advance of such event,
the Grantee agrees in writing that such event shall not constitute a Change of
Control.
2.11. "Change of Control Value" means the Fair Market Value of a
Share on the date of a Change of Control.
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2.12. "Code" means the Internal Revenue Code of 1986, as amended
from time to time, and regulations and rulings thereunder. References to a
particular section of the Code include references to successor provisions of the
Code or any successor statute.
2.13. "Committee" has the meaning set forth in Article 3.
2.14. "Common Stock" means the common stock, $0.01 par value, of the
Company.
2.15. "Company" has the meaning set forth in Section 1.1.
2.16. "Covered Employee" means a Grantee who, as of the date that
the value of an Award is recognizable as taxable income, is one of the group of
"covered employees" within the meaning of Code Section 162(m).
2.17. "Deferred Shares" means Shares that are awarded to a Grantee
on a deferred basis pursuant to Section 10.2.
2.18. "Disability" means a permanent and total disability, within
the meaning of Code Section 22(e)(3), as determined by the Committee in good
faith, upon receipt of medical advice from one or more individuals, selected by
the Committee, who are qualified to give professional medical advice.
2.19. "Disqualifying Disposition" has the meaning set forth in
Section 6.4.
2.20. "Effective Date" has the meaning set forth in Section 1.1.
2.21. "Eligible Person" means (i) any employee (including any
officer) of the Company or any Subsidiary, including any such employee who is on
an approved leave of absence, layoff, or has been subject to a disability which
does not qualify as a Disability and (ii) any person performing services for the
Company or a Subsidiary in the capacity of a consultant.
2.22. "Exchange Act" means the Securities Exchange Act of 1934, as
amended. References to a particular section of the Exchange Act include
references to successor provisions.
2.23. "Excluded Person" means any Person who, along with such
Person's Affiliates and Associates (as such terms are defined in Rule 12b-2 of
the General Rules and Regulations under the Exchange Act) is the Beneficial
Owner of 15% or more of the Shares outstanding as of the Effective Date,
provided that such Person, including such Person's Affiliates and Associates,
does not acquire, after the Effective Date hereof, additional Shares in excess
of 1% of the then outstanding Shares, exclusive of (i) Shares acquired by such
Person and such Person's Affiliates and Associates as a result of stock
dividends, stock splits, recapitalizations or similar transactions in which the
Company did not receive any consideration for issuing the Shares in question or
as a result of repurchases of stock by the Company; (ii) Shares acquired by such
Person and such Person's Affiliates and Associates as a result of gifts,
devises, bequests and intestate succession; and (iii) Shares acquired by such
Person and such Person's Affiliates and Associates as a result of participation
by such Person and such Person's Affiliates and Associates in any dividend
reinvestment plan, stock option plan or other similar plan or arrangement of the
Company.
2.24. "Exempt Reorganization Transaction" means a Reorganization
Transaction which results in the Persons who were the direct or indirect owners
of the outstanding common stock and Voting Securities of the Company immediately
before such Reorganization Transaction becoming, immediately after the
consummation of such Reorganization Transaction, the direct or indirect owners
of both more than 70% of the then-outstanding common stock of the Surviving
Corporation and Voting Securities representing more than 70% of the aggregate
voting power of the Surviving Corporation, in substantially the same respective
proportions as such Persons' ownership of the common stock and Voting Securities
of the Company immediately before such Reorganization Transaction.
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<PAGE> 45
2.25. "Fair Market Value" means (A) with respect to any property
other than Shares, the fair market value of such property determined by such
methods or procedures as shall be established from time to time by the
Committee, and (B) with respect to Shares, as of any date, (i) the average of
the high and low trading prices on such date on the New York Stock Exchange
Composite Transactions Tape (or, if no sale of Shares was reported for such
date, on the next preceding date on which a sale of Shares was reported), (ii)
if the Shares are not listed on the New York Stock Exchange, the average of the
high and low trading prices of the Shares on such other national exchange on
which the Shares are principally traded or as reported by the NASDAQ Stock
Market, or similar organization, or if no such quotations are available, the
average of the high bid and low asked quotations in the over-the-counter market;
or (iii) in the event that there shall be no public market for the Shares, the
fair market value of the Shares as determined by the Committee.
2.26. "Freestanding SAR" means an SAR that is granted independently
of any other Award.
2.27. "Grant Date" has the meaning set forth in Section 5.2.
2.28. "Grantee" means an individual who has been granted an Award.
2.29. "Incentive Stock Option" or "ISO" means an option granted
under Section 6.4 of the Plan that is intended to meet the requirements of Code
Section 422 or any successor provision thereto.
2.30. "including" or "includes" mean "including, without
limitation," or "includes, without limitation", respectively.
2.31. "Incumbent Directors" means, as of any specified baseline
date, individuals then serving as members of the Board who were members of the
Board as of the date immediately preceding such baseline date; provided that any
subsequently-appointed or elected member of the Board whose election, or
nomination for election by stockholders of the Company or the Surviving
Corporation, as applicable, was approved by a vote or written consent of at
least two-thirds of the directors then comprising the Incumbent Directors shall
also thereafter be considered an Incumbent Director, unless the initial
assumption of office of such subsequently-elected or appointed director was in
connection with (i) an actual or threatened election contest, including a
consent solicitation, relating to the election or removal of one or more members
of the Board, (ii) a "tender offer" (as such term is used in Section 14(d) of
the Exchange Act), (iii) a proposed Reorganization Transaction, or (iv) a
request, nomination or suggestion of any Beneficial Owner of Voting Securities
representing 15% or more of the aggregate voting power of the Voting Securities
of the Company or the Surviving Corporation, as applicable.
2.32. "Mature Shares" means Shares for which the holder thereof has
good title, free and clear of all liens and encumbrances, and which such holder
either (i) has held for at least six months or (ii) has purchased on the open
market.
2.33. "1987 Plan" means the Company's 1987 Stock Option Plan.
2.34. "Option" means an option granted under Article 6 of the Plan.
2.35. "Option Price" means the price at which a Share may be
purchased by a Grantee pursuant to an Option.
2.36. "Option Term" means the period beginning on the Grant Date of
an Option and ending on the expiration date of such Option, as specified in the
Award Agreement for such Option and as may, consistent with the provisions of
the Plan, be extended from time to time by the Committee prior to the expiration
date of such Option then in effect.
2.37. "Performance-Based Exception" means the performance-based
exception from the tax deductibility limitations of Code Section 162(m).
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2.38. "Performance Period" has the meaning set forth in Section 9.2.
2.39. "Performance Share" or "Performance Unit" has the meaning set
forth in Article 9.
2.40. "Period of Restriction" means the period during which the
transfer of Restricted Shares is limited in some way (based on the passage of
time, the achievement of performance goals, or upon the occurrence of other
events as determined by the Committee) or the Shares are subject to a
substantial risk of forfeiture, as provided in Article 8.
2.41. "Person" shall have the meaning ascribed to such term in
Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d)
thereof, including a "group" as defined in Section 13(d) thereof.
2.42. "Plan" has the meaning set forth in Section 1.1.
2.43. "Pre-Amendment Plan" shall have the meaning set forth in
Section 4.1 hereof.
2.44. "Reload Option" has the meaning set forth in Section 6.5.
2.45. "Reorganization Transaction" has the meaning set forth in
Section 2.10(c).
2.46. "Required Withholding" has the meaning set forth in Article
16.
2.47. "Restricted Shares" means Shares that are subject to transfer
restrictions and are subject to forfeiture if conditions specified in the Award
Agreement applicable to such Shares are not satisfied.
2.48. "Rule 16b-3" means Rule 16b-3 promulgated by the SEC under the
Exchange Act, together with any successor rule, as in effect from time to time.
2.49. "SAR" means a stock appreciation right.
2.50. "SEC" means the United States Securities and Exchange
Commission, or any successor thereto.
2.51. "Section" means, unless the context otherwise requires, a
Section of the Plan.
2.52. "Section 16 Person" means a person who is subject to
obligations under Section 16 of the Exchange Act with respect to transactions
involving equity securities of the Company.
2.53. "Share" means a share of Common Stock.
2.54. "Strike Price" of any SAR shall equal, for any Tandem SAR
(whether granted at the same time as or after the grant of the related Option),
the Option Price of such Option, or for any other SAR, 100% of the Fair Market
Value of a Share on the Grant Date of such SAR; provided that the Committee may
specify a higher Strike Price in the Award Agreement; provided further that any
SAR granted as a Substitute Award pursuant to Section 14.3 may be granted at
such Strike Price as the Committee determines to be necessary to achieve
preservation of economic value as provided in Section 14.3.
2.55. "Subsidiary" means, for purposes of grants of Incentive Stock
Options, a corporation as defined in Section 424(f) of the Code (with the
Company being treated as the employer corporation for purposes of this
definition and for all other purposes), with respect to any Person (a) any
corporation of which more than 50% of the Voting Securities are at the time,
directly or indirectly, owned by such Person, and (b) any partnership or limited
liability company in which such Person has a direct or indirect interest
(whether in the form of voting power or participation in profits or capital
contribution) of more than 50%.
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2.56. "Substitute Award" has the meaning set forth in Section 6.3.
2.57. "Surviving Corporation" means the corporation resulting from a
Reorganization Transaction or, if Voting Securities representing at least 50% of
the aggregate voting power of such resulting corporation are directly or
indirectly owned by another corporation, such other corporation.
2.58. "Tandem SAR" means an SAR that is granted in connection with a
related Option, the exercise of which shall require cancellation of the right to
purchase a Share under the related Option (and when a Share is purchased under
the related Option, the Tandem SAR shall similarly be canceled).
2.59. "10% Owner" means a person who owns capital stock (including
stock treated as owned under Code Section 424(d)) possessing more than 10% of
the total combined voting power of all classes of capital stock of the Company
or any Subsidiary.
2.60. "Termination of Affiliation" occurs on the first day on which
an individual is for any reason no longer providing services to the Company or
any Subsidiary in the capacity of an employee or consultant, or with respect to
an individual who is an employee of, or consultant to, a Person which is a
Subsidiary, the first day on which such Person ceases to be a Subsidiary.
2.61. "Voting Securities" of a corporation means securities of such
corporation that are entitled to vote generally in the election of directors,
but not including any other class of securities of such corporation that may
have voting power by reason of the occurrence of a contingency.
ARTICLE 3. ADMINISTRATION
3.1. Committee. Subject to Article 15, and to Section 3.2, the Plan
shall be administered by the Board, or a committee of the Board appointed by the
Board to administer the Plan ("Plan Committee"). To the extent the Board
considers it desirable for transactions relating to Awards to qualify for an
exemption under Rule 16b-3 or meet the Performance-Based Exception, the Plan
Committee shall consist of two or more directors of the Company, all of whom
qualify as "outside directors" as defined for purposes of the regulations under
Code Section 162(m) or as "non-employee directors" within the meaning of Rule
16b-3, as applicable. The number of members of the Plan Committee shall from
time to time be increased or decreased, and shall be subject to such conditions,
in each case as the Board deems appropriate to permit transactions in Shares
pursuant to the Plan to satisfy such conditions of Rule 16b-3 or Code Section
162(m) as then in effect. Any references herein to "Committee" are references to
the Board or the Plan Committee, as applicable.
3.2. Powers of Committee. Subject to the express provisions of the
Plan, the Committee has full and final authority and sole discretion as follows:
(a) to determine when, to whom and in what types and amounts
Awards should be granted and the terms and conditions applicable to
each Award, including the Option Price, the Option Term, the benefit
payable under any SAR, Performance Unit, or Performance Share or
Cash-Based Award, and whether or not specific Awards shall be granted
in connection with other specific Awards, and if so whether they shall
be exercisable cumulatively with, or alternatively to, such other
specific Awards;
(b) to determine the amount, if any, that a Grantee shall pay
for Restricted Shares, whether and on what terms to permit or require
the payment of cash dividends thereon to be deferred, when Restricted
Shares (including Restricted Shares acquired upon the exercise of an
Option) shall be forfeited and whether such shares shall be held in
escrow;
(c) to construe and interpret the Plan and to make all
determinations necessary or advisable for the administration of the
Plan;
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<PAGE> 48
(d) to make, amend, and rescind rules relating to the Plan,
including rules with respect to the exercisability and
nonforfeitability of Awards upon the Termination of Affiliation of a
Grantee;
(e) to determine the terms and conditions of all Award
Agreements (which need not be identical) and, with the consent of the
Grantee, to amend any such Award Agreement at any time, among other
things, to permit transfers of such Awards to the extent permitted by
the Plan; provided that the consent of the Grantee shall not be
required for any amendment which (i) does not adversely affect the
rights of the Grantee, or (ii) is necessary or advisable (as determined
by the Committee) to carry out the purpose of the Award as a result of
any new or change in existing applicable law;
(f) to cancel, with the consent of the Grantee, outstanding
Awards and to grant new Awards in substitution therefor;
(g) to accelerate the exercisability (including exercisability
within a period of less than six months after the Grant Date) of, and
to accelerate or waive any or all of the terms and conditions
applicable to, any Award or any group of Awards for any reason and at
any time, including in connection with a Termination of Affiliation;
(h) subject to Sections 1.3, 5.3 and 6.4, to extend the time
during which any Award or group of Awards may be exercised;
(i) to make such adjustments or modifications to Awards to
Grantees who are working outside the United States as are advisable to
fulfill the purposes of the Plan or to comply with applicable local
law;
(j) to delegate to the Chief Executive Officer of the Company
the power to grant Options and Restricted Shares from time to time to
specified categories of Eligible Persons in amounts and on terms to be
specified by the Committee; provided that no such grants shall be made
to individuals who are then Section 16 Persons;
(k) to delegate to officers, employees or independent
contractors of the Company matters involving the routine administration
of the Plan and which are not specifically required by any provision of
this Plan to be performed by the Committee;
(l) to impose such additional terms and conditions upon the
grant, exercise or retention of Awards as the Committee may, before or
concurrently with the grant thereof, deem appropriate, including
limiting the percentage of Awards which may from time to time be
exercised by a Grantee; and
(m) to take any other action with respect to any matters
relating to the Plan for which it is responsible.
All determinations on any matter relating to the Plan or any Award
Agreement may be made in the sole and absolute discretion of the Committee, and
all such determinations of the Committee shall be final, conclusive and binding
on all Persons. No member of the Committee shall be liable for any action or
determination made with respect to the Plan or any Award.
ARTICLE 4. SHARES SUBJECT TO THE PLAN
4.1. Number of Shares Available. Subject to Section 4.3 and to
adjustment as provided in Section 4.2, the number of Shares hereby reserved for
delivery under the Plan is the sum of (a) one and one-half million (1,500,000)
Shares, (b) the four million (4,000,000) Shares previously reserved for delivery
under this Plan immediately prior to this Amendment (the "Pre-Amendment Plan")
reduced by the number of Shares issued pursuant to Awards under such
Pre-Amendment Plan, and (c) Shares reserved for delivery and subject to
outstanding Awards under the 1987 Plan to the extent such Awards are forfeited,
terminated or settled without issuance of all of the Shares subject to issuance
under such Award; provided that if any Shares (whether subject to or received
pursuant to an Award granted under this or any other Plan, purchased on the
open-market or otherwise obtained) are
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<PAGE> 49
withheld or applied as payment by the Company in connection with the exercise of
an Award hereunder, or the withholding of taxes related thereto, such Shares
shall reduce the number of Shares treated as issued under this Plan. The
Committee may from time to time determine the appropriate methodology for
calculating the number of Shares issued pursuant to the Plan.
4.2. Adjustments in Authorized Shares. In the event that the
Committee determines that any dividend or other distribution (whether in the
form of cash, Shares, other securities, or other property), recapitalization,
stock split, reverse stock split, subdivision, consolidation or reduction of
capital, reorganization, merger, scheme of arrangement, split-up, spin-off or
combination involving the Company or repurchase or exchange of Shares or other
rights to purchase Shares or other securities of the Company, or other similar
corporate transaction or event that occurs at any time after the Effective Date
affects the Shares such that any adjustment is determined by the Committee to be
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan, then the
Committee shall, in such manner as it may deem equitable, adjust any or all of
(i) the number and type of Shares (or other securities or property of the
Company or any Person that is a party to a Reorganization Transaction with the
Company) with respect to which Awards may be granted, (ii) the number and type
of Shares (or other securities or property of the Company or any Person that is
a party to a Reorganization Transaction with the Company) subject to outstanding
Awards, and (iii) the grant or exercise price with respect to any Award or, if
deemed appropriate, make provision for a cash payment to the holder of an
outstanding Award or the substitution of other property for Shares subject to an
outstanding Award; provided, in each case that with respect to Awards of
Incentive Stock Options no such adjustment shall be authorized to the extent
that such adjustment would cause the Plan to violate Section 422(b)(1) of the
Code or any successor provision thereto; and provided, further, that the number
of Shares subject to any Award denominated in Shares shall always be a whole
number.
4.3. Performance Measures. Unless and until the Committee proposes
for shareholder vote and the shareholders of the Company approve a change in the
general performance measures set forth in this Section 4.3 the attainment of
which may determine the degree of payout and/or vesting with respect to Awards
granted to Covered Employees which are designed to qualify for the
Performance-Based Exception, the performance measure(s) to be used for purposes
of such grants shall be chosen from among the following:
(a) Earnings (either in the aggregate or on a per-share
basis);
(b) Net income;
(c) Operating income;
(d) Return measures (including return on assets, investments,
equity, or gross sales);
(e) Shareholder returns (including growth measures and
stockholder return or attainment by the Shares of a specified value for
a specified period of time), share price or share price appreciation;
(f) Cash flow;
(g) Earnings before or after either, or any combination of,
taxes, interest or depreciation and amortization;
(h) Gross revenues;
(i) Reductions in expense levels in each case, where
applicable, determined either on a Company-wide basis or in respect of
any one or more business units;
(j) Net economic value; or
(k) Market share with respect to specific designated products
or product groups;
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<PAGE> 50
provided that Sections (a)-(f) may be measured on a pre- or post-tax basis and
provided further, that the Committee may, on the Grant Date of an Award intended
to comply with the requirements of Section 162(m) of the Code and, in the case
of other grants, at any time, provide that the formula for any Award may include
or exclude items to measure specific objectives, such as losses from
discontinued operations, extraordinary gains or losses, the cumulative effect of
accounting changes, acquisitions or divestitures, foreign exchange impacts and
any unusual, nonrecurring gain or loss. The Committee shall have the discretion
to adjust the determinations of the degree of attainment of the pre-established
performance goals; provided, however, the Awards which are designed to qualify
for the Performance-Based Exception, and which are held by Covered Employees,
may not be adjusted upward (the Committee, however, shall retain the discretion
to adjust such Awards to Covered Employees downward.
In the event that applicable tax and/or securities laws change to permit
Committee discretion to alter the governing performance measures without
obtaining shareholder approval of such changes, the Committee shall have sole
discretion to make such changes without obtaining shareholder approval. In
addition, in the event that the Committee determines that it is advisable to
grant Awards which shall not qualify for the Performance-Based Exception, the
Committee may make such grants without satisfying the requirements of Section
162(m) of the Code.
4.4. Compliance with Section 162(m) of the Code.
(a) Section 162(m) Compliance. At all times when Section 162(m) of the
Code is applicable, all Awards granted under this Plan shall to the extent
provided by the Committee comply with the requirements of Section 162(m) of the
Code; provided, however, that in the event the Committee determines that such
compliance is not desired with respect to any Award or Awards available for
grant under the plan, then compliance with Section 162(m) of the Code will not
be required; provided further that to the extent Section 162 (m) or the
regulations thereunder require periodic shareholder approval of such performance
measures such approval shall not be required for the continuation of the Plan or
as a condition to grant any Award hereunder after such approval is required. In
addition, in the event that changes are made to Section 162(m) of the Code to
permit flexibility with respect to the Award or Awards available under the Plan,
the Committee may, subject to this Section 4.4, make any adjustments to such
Awards or otherwise it deems appropriate.
(b) Section 162(m) Maximum Individual Limits. Subject to adjustment as
provided in Section 4.2, the maximum number of Shares (including as Shares, a
number of Shares equal to the number of SARs granted) for which Awards (other
than ASO Options, Performance Units and Cash-Based Awards) may be granted to any
Grantee in any calendar year shall not exceed 2,000,000 and the number of Shares
for which ASO Options may be granted to any Grantee in any calendar year shall
not exceed 4,000,000. The maximum value of Performance Units and Cash-Based
Awards granted to any Grantee hereunder in any calendar year shall not exceed
300% of such Grantee's salary in effect as of the date of the grant or the
establishment of the Award. Maximum Limits under this Section 4.4(b) shall be
calculated in accordance with Treasury Regulation ss.1.162-27(e)(2)(vi)(B).
ARTICLE 5. ELIGIBILITY AND GENERAL CONDITIONS OF AWARDS
5.1. Eligibility. The Committee may grant Awards to any Eligible
Person, whether or not he or she has previously received an Award.
5.2. Grant Date. The Grant Date of an Award shall be the date on
which the Committee grants the Award or such later date as specified by the
Committee in the Award Agreement.
5.3. Maximum Term. Subject to the following proviso, the Option
Term or other period during which an Award may be outstanding shall not extend
more than 10 years after the Grant Date, and shall be subject to earlier
termination as herein specified; provided, that any deferral of a cash payment
or of the delivery of Shares that is permitted or required by the Committee
pursuant to Article 12 may, if so permitted or required by the Committee, extend
more than 10 years after the Grant Date of the Award to which the deferral
relates.
5.4. Award Agreement. To the extent not set forth in the Plan, the
terms and conditions of each Award (which need not be the same for each grant or
for each Grantee) shall be set forth in an Award Agreement.
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5.5. Restrictions on Share Transferability. The Committee may
include in the Award Agreement such restrictions on any Shares acquired pursuant
to the exercise or vesting of an Award as it may deem advisable, including
restrictions under applicable federal securities laws.
5.6. Termination of Affiliation. Except as otherwise provided in an
Award Agreement (including an Award Agreement as amended by the Committee
pursuant to Section 3.2), and subject to the provisions of Section 14.1, the
extent to which the Grantee shall have the right to exercise, vest in, or
receive payment in respect of an Award following Termination of Affiliation
shall be determined in accordance with the following provisions of this Section
5.6.
(a) For Cause. If a Grantee has a Termination of Affiliation
for Cause:
(i) the Grantee's Restricted Shares and Deferred
Shares that are forfeitable immediately before such
Termination of Affiliation shall automatically be forfeited on
such date, subject in the case of Restricted Shares to the
provisions of Section 8.4 regarding repayment of certain
amounts to the Grantee;
(ii) the Grantee's Deferred Shares that were vested
immediately before such Termination of Affiliation shall
promptly be settled by delivery to such Grantee of a number of
unrestricted Shares equal to the aggregate number of such
vested Deferred Shares, and
(iii) any unexercised Option, ISO or SAR, and any
Performance Share, Performance Unit or Cash-Based Award with
respect to which the Performance Period has not ended
immediately before such Termination of Affiliation, shall
terminate effective immediately upon such Termination of
Affiliation.
(b) On Account of Death or Disability. If a Grantee has a
Termination of Affiliation on account of death or Disability:
(i) the Grantee's Restricted Shares that were
forfeitable immediately before such Termination of Affiliation
shall thereupon become nonforfeitable;
(ii) the Grantee's Deferred Shares that were
forfeitable immediately before such Termination of Affiliation
shall thereupon become nonforfeitable and the Company shall,
unless otherwise provided in an Award Agreement, promptly
settle all Deferred Shares, whether or not forfeitable, by
delivery to the Grantee (or, after his or her death, to his or
her personal representative or beneficiary designated in
accordance with Article 11) of a number of unrestricted Shares
equal to the aggregate number of the Grantee's Deferred
Shares;
(iii) any unexercised Option, ISO or SAR, whether or
not exercisable immediately before such Termination of
Affiliation, may be exercised, in whole or in part, at any
time after such Termination of Affiliation (but in either case
only during the Option Term) by the Grantee or, after his or
her death, by (A) his or her personal representative or the
person to whom the Option, ISO or SAR, as applicable, is
transferred by will or the applicable laws of descent and
distribution, or (B) the Grantee's beneficiary designated in
accordance with Article 11; and
(iv) the benefit payable with respect to any
Performance Share, Performance Unit or Cash-Based Awards with
respect to which the Performance Period has not ended
immediately before such Termination of Affiliation on account
of death or Disability shall be equal to the product of the
Fair Market Value of a Share as of the date of such
Termination of Affiliation or the value of the Performance
Unit specified in the Award Agreement (determined as of the
date of such Termination of Affiliation), as applicable,
multiplied successively by each of the following:
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(1) a fraction, the numerator of which is
the number of months (including as a whole month any
partial month) that have elapsed since the beginning
of such Performance Period until the date of such
Termination of Affiliation and the denominator of
which is the number of months (including as a whole
month any partial month) in the Performance Period;
and
(2) a percentage determined by the Committee
that would be earned under the terms of the
applicable Award Agreement assuming that the rate at
which the performance goals have been achieved as of
the date of such Termination of Affiliation would
continue until the end of the Performance Period, or,
if the Committee elects to compute the benefit after
the end of the Performance Period, the Performance
Percentage, as determined by the Committee, attained
during the Performance Period.
(c) Any Other Reason. If a Grantee has a Termination of
Affiliation for any reason other than for Cause, death or Disability,
then:
(i) the Grantee's Restricted Shares and Deferred
Shares, to the extent forfeitable immediately before such
Termination of Affiliation, shall thereupon automatically be
forfeited, subject in the case of Restricted Shares to the
provisions of Section 8.4 regarding repayment of certain
amounts to the Grantee;
(ii) the Grantee's Deferred Shares that were not
forfeitable immediately before such Termination of Affiliation
shall, unless otherwise provided in an Award Agreement,
promptly be settled by delivery to the Grantee of a number of
unrestricted Shares equal to the aggregate number of the
Grantee's vested Deferred Shares;
(iii) any unexercised Option, ISO or SAR, to the
extent exercisable immediately before such Termination of
Affiliation, shall remain exercisable in whole or in part for
three months after such Termination of Affiliation (but only
during the Option Term) by the Grantee or, after his or her
death, by (A) his or her personal representative or the person
to whom the Option, ISO or SAR, as applicable, is transferred
by will or the applicable laws of descent and distribution, or
(B) the Grantee's beneficiary designated in accordance with
Article 11; and
(iv) any Performance Shares, Performance Units or
Cash-Based Award with respect to which the Performance Period
has not ended as of the date of such Termination of
Affiliation shall terminate immediately upon such Termination
of Affiliation.
5.7. Nontransferability of Awards.
(a) Except as provided in Section 5.7(c) below, each Award,
and each right under any Award, shall be exercisable only by the
Grantee during the Grantee's lifetime, or, if permissible under
applicable law, by the Grantee's guardian or legal representative or by
a transferee receiving such Award pursuant to a qualified domestic
relations order (a "QDRO") as defined in the Code or Title I of the
Employee Retirement Income Security Act of 1974 or the rules
thereunder.
(b) Except as provided in Section 5.7(c) below, no Award
(prior to the time, if applicable, Shares are issued in respect of such
Award), and no right under any Award, may be assigned, alienated,
pledged, attached, sold or otherwise transferred or encumbered by a
Grantee otherwise than by will or by the laws of descent and
distribution (or in the case of Restricted Shares, to the Company) or
pursuant to a QDRO, and any such purported assignment, alienation,
pledge, attachment, sale, transfer or encumbrance shall be void and
unenforceable against the Company or any Subsidiary; provided, that the
designation of a beneficiary shall not constitute an assignment,
alienation, pledge, attachment, sale, transfer or encumbrance.
(c) To the extent and in the manner permitted by the
Committee, and subject to such terms and conditions as may be
prescribed by the Committee, a Grantee may transfer an Award (other
than an Incentive
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Stock Option) to (i) a spouse, sibling, parent or lineal descendant
(including a lineal descendant by adoption) (any of the foregoing, an
"Immediate Family Member") of the Grantee; (ii) a trust, the primary
beneficiaries of which consist exclusively of the Grantee or Immediate
Family Members, or (iii) a corporation, partnership or similar entity,
the owners of which consist exclusively of the Grantee or Immediate
Family Members of the Grantee.
ARTICLE 6. STOCK OPTIONS
6.1. Grant of Options. Subject to the terms and provisions of the
Plan, Options may be granted to any Eligible Person in such number, and upon
such terms, and at any time and from time to time as shall be determined by the
Committee. Without limiting the generality of the foregoing, the Committee may
grant to any Eligible Person, or permit any Eligible Person to elect to receive,
an Option in lieu of or in substitution for any other compensation (whether
payable currently or on a deferred basis, and whether payable under this Plan or
otherwise) which such Eligible Person may be eligible to receive from the
Company or a Subsidiary, which Option may have a value (as determined by the
Committee under Black-Scholes or any other option valuation method) that is
equal to or greater than the amount of such other compensation.
6.2. Award Agreement. Each Option grant shall be evidenced by an
Award Agreement that shall specify the Option Price, the Option Term, the number
of shares to which the Option pertains, the time or times at which such Option
shall be exercisable and such other provisions as the Committee shall determine.
6.3. Option Price. The Option Price of an Option under this Plan
shall be determined by the Committee, and shall be no less than 100% of the Fair
Market Value of a Share on the Grant Date; provided, however, that any Option
granted as a Substitute Award pursuant to Section 14.3 may be granted at such
Option Price as the Committee determines to be necessary to achieve preservation
of economic value as provided in Section 14.3.
6.4. Grant of Incentive Stock Options. At the time of the grant of
any Option, the Committee may designate that such Option shall be as an
"incentive stock option" under the requirements of Section 422 of the Code. Any
Option designated as an Incentive Stock Option or ISO shall, to the extent
required by Section 422 of the Code:
(a) if granted to a 10% Owner, have an Option Price not less
than 110% of the Fair Market Value of a Share on its Grant Date;
(b) be exercisable for a period of not more than 10 years
(five years in the case of an Incentive Stock Option granted to a 10%
Owner) from its Grant Date, and be subject to earlier termination as
provided herein or in the applicable Award Agreement;
(c) not have an aggregate Fair Market Value (as of the Grant
Date of each Incentive Stock Option) of the Shares with respect to
which Incentive Stock Options (whether granted under the Plan or any
other stock option plan of the Grantee's employer or any parent or
Subsidiary thereof ("Other Plans")) are exercisable for the first time
by such Grantee during any calendar year, determined in accordance with
the provisions of Section 422 of the Code, which exceeds $100,000 (the
"$100,000 Limit") and to the extent any Grant is in excess of such
$100,000 Limit, a portion of such Grant equal to the $100,000 Limit
shall be designated as an ISO and the remainder shall, notwithstanding
its prior designation as an ISO, be regarded as an Option that is not
an ISO.
(d) be granted within 10 years from the earlier of the date
the Plan is adopted or the date the Plan is approved by the
stockholders of the Company; and
(e) by its terms not be assignable or transferable other than
by will or the laws of descent and distribution and may be exercised,
during the Grantee's lifetime, only by the Grantee; provided, however,
that the Grantee may, in any manner permitted by the Plan and specified
by the Committee, designate in writing a beneficiary to exercise his or
her Incentive Stock Option after the Grantee's death.
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Any Option designated as an Incentive Stock Option shall also require
the Grantee to notify the Committee of any disposition of any Shares issued
pursuant to the exercise of the Incentive Stock Option under the circumstances
described in Section 421(b) of the Code (relating to certain disqualifying
dispositions) (any such circumstance, a "Disqualifying Disposition"), within 10
days of such Disqualifying Disposition.
Notwithstanding the foregoing and Section 3.2, the Committee may,
without the consent of the Grantee, at any time before the exercise of an Option
(whether or not an Incentive Stock Option), take any action necessary to prevent
such Option from being treated as an Incentive Stock Option.
6.5. Grant of ASO Options. The Committee may in connection with the
grant of an Option or thereafter provide that a Grantee who (i) is an Eligible
Person when he or she exercises an Option ("Exercised Option") and (ii)
satisfies the Option Price or Required Withholding applicable thereto with
Shares (including Shares that are deemed to have been delivered as payment for
all or any portion of the Option Price of an Exercised Option by attestation or
otherwise) shall automatically be granted, subject to Article 4, an additional
option (an "ASO Option" or a "Reload Option") in an amount equal to the sum
("Reload Number") of the number of Shares tendered (including Shares that are
deemed to have been tendered) to exercise the Exercised Option plus, if so
provided by the Committee, the number of Shares, if any, retained by the Company
in connection with the exercise of the Exercised Option to satisfy any federal,
state, local or foreign tax withholding requirements. 6.6. Conditions on ASO
Options. ASO Options shall be subject to the following terms and conditions:
(a) the Grant Date for each ASO Option shall be the date of
exercise of the Exercised Option to which it relates;
(b) subject to Section 6.6(c), the ASO Option may be exercised
at any time during the Option Term of the Exercised Option (subject to
earlier termination thereof as provided in the Plan or in the
applicable Award Agreement); and
(c) the terms of the ASO Option shall be the same as the terms
of the Exercised Option to which it relates, except that, unless
otherwise provided in the Award Agreement, the Option Price for the ASO
Option shall be 100% of the Fair Market Value of a Share on the Grant
Date of the ASO Option.
6.7. Payment. Options granted under this Article 6 shall be
exercised by the delivery of a written notice of exercise to the Company,
setting forth the number of Shares with respect to which the Option is to be
exercised, accompanied by full payment for the Shares made by cash, personal
check or wire transfer or, subject to the approval of the Committee, any one or
more of the following means:
(a) Mature Shares, valued at their Fair Market Value on the
date of exercise;
(b) Restricted Shares held by the Grantee for at least six
months prior to the exercise of the Option, each such share valued at
the Fair Market Value of a Share on the date of exercise; or
(c) pursuant to procedures approved by the Committee, through
the sale of the Shares acquired on exercise of the Option through a
broker-dealer to whom the Grantee has submitted an irrevocable notice
of exercise and irrevocable instructions to deliver promptly to the
Company the amount of sale or loan proceeds sufficient to pay for such
Shares, together with, if requested by the Company, the amount of
federal, state, local or foreign withholding taxes payable by Grantee
by reason of such exercise.
If any Restricted Shares ("Tendered Restricted Shares") are used to pay the
Option Price, a number of Shares acquired on exercise of the Option equal to the
number of Tendered Restricted Shares shall be subject to the same restrictions
as the Tendered Restricted Shares, determined as of the date of exercise of the
Option.
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ARTICLE 7. STOCK APPRECIATION RIGHTS
7.1. Grant of SARs. Subject to the terms and conditions of the
Plan, SARs may be granted to any Eligible Person at any time and from time to
time as shall be determined by the Committee. The Committee may grant
Freestanding SARs, Tandem SARs, or any combination thereof. The Committee shall
determine the number of SARs granted to each Grantee (subject to Article 4), the
Strike Price thereof, and, consistent with Section 7.2 and the other provisions
of the Plan, the other terms and conditions pertaining to such SARs.
7.2. Exercise of Tandem SARs. Tandem SARs may be exercised for all
or part of the Shares subject to the related Option upon the surrender of the
right to exercise the equivalent portion of the related Option. A Tandem SAR may
be exercised only with respect to the Shares for which its related Option is
then exercisable.
Notwithstanding any other provision of this Plan to the contrary, with
respect to a Tandem SAR, (i) the Tandem SAR will expire no later than the
expiration of the underlying Option; (ii) the value of the payout with respect
to the Tandem SAR may be for no more than 100% of the difference between the
Option Price of the underlying Option and the Fair Market Value of the Shares
subject to the underlying Option at the time the Tandem SAR is exercised; and
(iii) the Tandem SAR may be exercised only when the Fair Market Value of the
Shares subject to the Option exceeds the Option Price of the Option.
7.3. Payment of SAR Amount. Upon exercise of an SAR, the Grantee
shall be entitled to receive payment from the Company in an amount determined by
multiplying:
(a) the excess of the Fair Market Value of a Share on the date
of exercise over the Strike Price;
by
(b) the number of Shares with respect to which the SAR is
exercised;
provided that the Committee may provide in the Award Agreement that the benefit
payable on exercise of an SAR shall not exceed such percentage of the Fair
Market Value of a Share on the Grant Date as the Committee shall specify. As
determined by the Committee, the payment upon SAR exercise may be in cash, in
Shares which have an aggregate Fair Market Value (as of the date of exercise of
the SAR) equal to the amount of the payment, or in some combination thereof, as
set forth in the Award Agreement.
ARTICLE 8. RESTRICTED SHARES
8.1. Grant of Restricted Shares. Subject to the terms and
provisions of the Plan, the Committee, at any time and from time to time, may
grant Restricted Shares to any Eligible Person in such amounts as the Committee
shall determine.
8.2. Award Agreement. Each grant of Restricted Shares shall be
evidenced by an Award Agreement that shall specify the Period(s) of Restriction,
the number of Restricted Shares granted, and such other provisions as the
Committee shall determine. The Committee may impose such conditions or
restrictions on any Restricted Shares as it may deem advisable, including
restrictions based upon the achievement of specific performance goals
(Company-wide, divisional, Subsidiary or individual), time-based restrictions on
vesting or restrictions under applicable securities laws.
8.3. Consideration. The Committee shall determine the amount, if
any, that a Grantee shall pay for Restricted Shares. Such payment shall be made
in full by the Grantee before the delivery of the shares and in any event no
later than 10 business days after the Grant Date for such shares.
8.4. Effect of Forfeiture. If Restricted Shares are forfeited, and
if the Grantee was required to pay for such shares or acquired such Restricted
Shares upon the exercise of an Option, the Grantee shall be deemed to have
resold such Restricted Shares to the Company at a price equal to the lesser of
(i) the amount paid by the Grantee for
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such Restricted Shares, or (ii) the Fair Market Value of a Share on the date of
such forfeiture. The Company shall pay to the Grantee the required amount as
soon as is administratively practical. Such Restricted Shares shall cease to be
outstanding, and shall no longer confer on the Grantee thereof any rights as a
stockholder of the Company, from and after the date of the event causing the
forfeiture, whether or not the Grantee accepts the Company's tender of payment
for such Restricted Shares.
8.5. Escrow; Legends. The Committee may provide that the
certificates for any Restricted Shares (i) shall be held (together with a stock
power executed in blank by the Grantee) in escrow by the Secretary of the
Company until such Restricted Shares become nonforfeitable or are forfeited or
(ii) shall bear an appropriate legend restricting the transfer of such
Restricted Shares. If any Restricted Shares become nonforfeitable, the Company
shall cause certificates for such shares to be issued without such legend.
ARTICLE 9. PERFORMANCE UNITS, PERFORMANCE SHARES AND CASH-BASED AWARDS
9.1. Grant of Performance Units and Performance Shares. Subject to
the terms of the Plan, Performance Units, Performance Shares or Cash-Based
Awards may be granted to any Eligible Person in such amounts and upon such
terms, and at any time and from time to time, as shall be determined by the
Committee.
9.2. Value/Performance Goals. Each Performance Unit shall have an
initial value that is established by the Committee at the time of grant. Each
Performance Share shall have an initial value equal to the Fair Market Value of
a Share on the date of grant. Each Cash-Based Award shall have a value as
determined by the Committee. The Committee shall set performance goals which,
depending on the extent to which they are met, will determine the number or
value of Performance Units, Performance Shares or Cash-Based Awards that will be
paid out to the Grantee. For purposes of this Article 9, the time period during
which the performance goals must be met shall be called a "Performance Period."
9.3. Earning of Performance Units, Performance Shares and
Cash-Based Awards. Subject to the terms of this Plan, after the applicable
Performance Period has ended, the holder of Performance Units, Performance
Shares or Cash-Based Awards shall be entitled to receive a payout based on the
number and value of Performance Units, Performance Shares or Cash-Based Awards
earned by the Grantee over the Performance Period, to be determined as a
function of the extent to which the corresponding performance goals have been
achieved.
If a Grantee is promoted, demoted or transferred to a different
business unit of the Company during a Performance Period, then, to the extent
the Committee determines appropriate, the Committee may adjust, change or
eliminate the performance goals or the applicable Performance Period as it deems
appropriate in order to make them appropriate and comparable to the initial
performance goals or Performance Period.
9.4. Form and Timing of Payment of Performance Units, Performance
Shares and Cash-Based Awards. Payment of earned Performance Units, Performance
Shares or Cash-Based Awards shall be made in a lump sum following the close of
the applicable Performance Period. The Committee may pay earned Performance
Units, Performance Shares or Cash-Based Awards in cash or in Shares (or in a
combination thereof) which have an aggregate Fair Market Value equal to the
value of the earned Performance Units, Performance Shares or Cash-Based Awards
at the close of the applicable Performance Period. Such Shares may be granted
subject to any restrictions deemed appropriate by the Committee. The form of
payout of such Awards shall be set forth in the Award Agreement pertaining to
the grant of the Award.
As determined by the Committee, a Grantee may be entitled to receive any
dividends declared with respect to Shares which have been earned in connection
with grants of Performance Units or Performance Shares but not yet distributed
to the Grantee. In addition, a Grantee may, as determined by the Committee, be
entitled to exercise his or her voting rights with respect to such Shares.
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ARTICLE 10. BONUS SHARES AND DEFERRED SHARES
10.1. Bonus Shares. Subject to the terms of the Plan, the Committee
may grant Bonus Shares to any Eligible Person, in such amount and upon such
terms and at any time and from time to time as shall be determined by the
Committee.
10.2. Deferred Shares. Subject to the terms and provisions of the
Plan, Deferred Shares may be granted to any Eligible Person in such amounts and
upon such terms, and at any time and from time to time, as shall be determined
by the Committee. The Committee may impose such conditions or restrictions on
any Deferred Shares as it may deem advisable, including time-vesting
restrictions and deferred payment features. The Committee may cause the Company
to establish a grantor trust to hold Shares subject to Deferred Share Awards.
Without limiting the generality of the foregoing, the Committee may grant to any
Eligible Person, or permit any Eligible Person to elect to receive, Deferred
Shares in lieu of or in substitution for any other compensation (whether payable
currently or on a deferred basis, and whether payable under this Plan or
otherwise) which such Eligible Person may be eligible to receive from the
Company or a Subsidiary.
ARTICLE 11. BENEFICIARY DESIGNATION
Each Grantee under the Plan may, from time to time, name any beneficiary
or beneficiaries (who may be named contingently or successively) to whom any
benefit under the Plan is to be paid in case of his or her death before he or
she receives any or all of such benefit. Each such designation shall revoke all
prior designations by the same Grantee, shall be in a form prescribed by the
Company, and will be effective only when filed by the Grantee in writing with
the Company during the Grantee's lifetime. In the absence of any such
designation, benefits remaining unpaid at the Grantee's death shall be paid to
the Grantee's estate.
ARTICLE 12. DEFERRALS
The Committee may permit or require a Grantee to defer receipt of the
payment of cash or the delivery of Shares that would otherwise be due by virtue
of the exercise of an Option or SAR, the lapse or waiver of restrictions with
respect to Restricted Shares, the satisfaction of any requirements or goals with
respect to Performance Units, Performance Shares or Cash-Based Awards, the grant
of Bonus Shares or the expiration of the deferral period for Deferred Shares. If
any such deferral is required or permitted, the Committee shall establish rules
and procedures for such deferrals.
ARTICLE 13. RIGHTS OF EMPLOYEES AND CONSULTANTS
13.1. No Right to Employment. Nothing in the Plan shall interfere
with or limit in any way the right of the Company to terminate any Grantee's
employment or consultancy at any time, nor confer upon any Grantee the right to
continue in the employ or as consultant of the Company.
13.2. No Right to Participation. No employee or consultant shall
have the right to be selected to receive an Award, or, having been so selected,
to be selected to receive a future Award.
ARTICLE 14. CHANGE OF CONTROL AND CERTAIN CORPORATE TRANSACTIONS
14.1. Change of Control. Except as otherwise provided in a Grantee's
Award Agreement, if a Change of Control occurs, then:
(a) the Grantee's Restricted Shares that were forfeitable
shall thereupon become nonforfeitable;
(b) the Grantee's Deferred Shares that were forfeitable shall
thereupon become nonforfeitable and the Company shall immediately
settle all Deferred Shares, whether or not forfeitable, by delivery to
such Grantee of a number of unrestricted Shares equal to the aggregate
number of the Grantee's Deferred Shares;
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(c) any unexercised Option, ISO or SAR, whether or not
exercisable on the date of such Change of Control, shall thereupon be
fully exercisable and may be exercised, in whole or in part; and
(d) the Company shall immediately pay to the Grantee, with
respect to any Performance Share, Performance Unit or Cash-Based Award
with respect to which the Performance Period has not ended as of the
date of such Change of Control, a cash payment equal to the product of
(A) in the case of a Performance Share, the Change of Control Value,
(B) in the case of a Performance Unit, the value of the Performance
Unit specified in the Award Agreement, or (c) in the case of a
Cash-Based Award, the value of the Cash-Based Award or the value of the
Performance Unit specified in the Award Agreement as applicable,
multiplied successively by each of the following:
(i) a fraction, the numerator of which is the number
of whole and partial months that have elapsed between the
beginning of such Performance Period and the date of such
Change of Control and the denominator of which is the number
of whole and partial months in the Performance Period; and
(ii) a percentage equal to a greater of (x) the
target percentage, if any, specified in the applicable Award
Agreement or (y) the maximum percentage, if any, that would be
earned under the terms of the applicable Award Agreement
assuming that the rate at which the performance goals have
been achieved as of the date of such Change of Control would
continue until the end of the Performance Period.
14.2. Pooling of Interests Accounting. If the Committee determines:
(a) that the consummation of a sale or merger of the Company
(a "Closing") is reasonably likely to occur but for the circumstances
described in this Section;
(b) that, based on the advice of the Company's independent
accountants and such other factors that the Committee deems relevant,
the grant of any Award or exercise of some or all outstanding Options
or SARs would preclude the use of pooling of interests accounting
("pooling") after the Closing; and
(c) the preclusion of pooling can reasonably be expected to
have a material adverse effect on the terms of such sale or merger or
on the likelihood of a Closing (a "Pooling Material Adverse Effect"),
then the Committee may:
(i) make adjustments to such Options, ISOs, SARs or
other Awards (including the substitution, effective upon such
Closing, of Options, ISOs, SARs or other Awards denominated in
shares or other equity securities of another party to such
proposed sale or merger transaction) prior to the Closing so
as to permit pooling after the Closing,
(ii) cause the Company to pay the benefits
attributable to such Options, ISOs, SARs or other Awards
(including for this purpose not only the spread between the
then Fair Market Value of the Shares subject to such Options,
ISOs or SARs and the Option Price or Strike Price applicable
thereto, but also the additional value of such Options, ISOs
or SARs in excess of such spread, as determined by the
Committee) in the form of Shares if such payment would not
cause the transaction to remain or become ineligible for
pooling; or
(iii) provided that the Committee has determined,
based on the advice of the Company's independent accountants
and such other factors that the Committee deems relevant, that
no reasonable alternative is available to the Company to
prevent such a Pooling Material Adverse Effect, cancel any or
all such Options, ISOs, SARs or other Awards without the
consent of any affected Grantee.
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14.3. Substituting Awards in Certain Corporate Transactions. In
connection with the Company's acquisition, however effected, of another
corporation or entity (the "Acquired Entity") or the assets thereof, the
Committee may, at its discretion, grant Awards ("Substitute Awards") associated
with the stock or other equity interest in such Acquired Entity ("Acquired
Entity Award") held by such Grantee immediately prior to such Acquisition in
order to preserve for Grantee the economic value of all or a portion of such
Acquired Entity Award at such price as the Committee determines necessary to
achieve preservation of economic value.
ARTICLE 15. AMENDMENT, MODIFICATION, AND TERMINATION
15.1. Amendment, Modification, and Termination. Subject to the terms
of the Plan, the Board may at any time and from time to time, alter, amend,
suspend or terminate the Plan in whole or in part without the approval of the
Company's stockholders.
15.2. Adjustments Upon Certain Unusual or Nonrecurring Events. The
Committee may make adjustments in the terms and conditions of Awards in
recognition of unusual or nonrecurring events (including the events described in
Section 4.2) affecting the Company or the financial statements of the Company or
of changes in applicable laws, regulations, or accounting principles, whenever
the Committee determines that such adjustments are appropriate in order to
prevent dilution or enlargement of the benefits or potential benefits intended
to be made available under the Plan; provided that no such adjustment shall be
authorized to the extent that such authority would be inconsistent with the
Plan's meeting the requirements of the Performance-Based Exception.
15.3. Awards Previously Granted. Notwithstanding any other provision
of the Plan to the contrary, no termination, amendment or modification of the
Plan shall adversely affect in any material way any Award previously granted
under the Plan, without the written consent of the Grantee of such Award,
provided that to the extent any Award shall be adversely affected by any
amendment or restatement to the Plan, the provisions of the Plan in effect as of
the date of Grant of such Award shall prevail.
ARTICLE 16. WITHHOLDING
16.1. Withholding
(a) Mandatory Tax Withholding.
(i) Whenever under the Plan, Shares are to be
delivered upon exercise or payment of an Award or upon
Restricted Shares becoming nonforfeitable, or any other event
with respect to rights and benefits hereunder, the Company
shall be entitled to require (x) that the Grantee remit an
amount in cash, or if determined by the Committee, Mature
Shares, sufficient to satisfy all federal, state, local and
foreign tax withholding requirements related thereto
("Required Withholding"), (y) the withholding of such Required
Withholding from compensation otherwise due to the Grantee or
from any Shares or other payment due to the Grantee under the
Plan or (z) any combination of the foregoing.
(ii) Any Grantee who makes a Disqualifying
Disposition or an election under Section 83(b) of the Code
shall remit to the Company an amount sufficient to satisfy all
resulting Required Withholding; provided that, in lieu of or
in addition to the foregoing, the Company shall have the right
to withhold such Required Withholding from compensation
otherwise due to the Grantee or from any Shares or other
payment due to the Grantee under the Plan.
(b) Elective Share Withholding.
(i) Subject to subsection 16.1(b)(ii), a Grantee may
elect the withholding ("Share Withholding") by the Company of
a portion of the Shares subject to an Award upon the exercise
of such Award or upon Restricted Shares becoming
non-forfeitable or upon making an election under Section 83(b)
of the Code (each, a "Taxable Event") having a Fair Market
Value equal to (x) the minimum amount necessary to satisfy
Required Withholding liability attributable to the Taxable
Event; or (y) with the
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Committee's prior approval, a greater amount, not to exceed
the estimated total amount of such Grantee's tax liability
with respect to the Taxable Event.
(ii) Each Share Withholding election shall be subject
to the following conditions:
(1) any Grantee's election shall be subject
to the Committee's discretion to revoke the Grantee's
right to elect Share Withholding at any time before
the Grantee's election if the Committee has reserved
the right to do so in the Award Agreement;
(2) the Grantee's election must be made on
or before the date (the "Tax Date") on which the
amount of tax to be withheld is determined; and
(3) the Grantee's election shall be
irrevocable.
16.2. Notification under Code Section 83(b). If the Grantee, in
connection with the exercise of any Option, or the grant of Restricted Shares,
makes the election permitted under Section 83(b) of the Code to include in such
Grantee's gross income in the year of transfer the amounts specified in Section
83(b) of the Code, then such Grantee shall notify the Company of such election
within 10 days of filing the notice of the election with the Internal Revenue
Service, in addition to any filing and notification required pursuant to
regulations issued under Section 83(b) of the Code. The Committee may, in
connection with the grant of an Award or at any time thereafter prior to such an
election being made, prohibit a Grantee from making the election described
above.
ARTICLE 17. ADDITIONAL PROVISIONS
17.1. Successors. All obligations of the Company under the Plan with
respect to Awards granted hereunder shall be binding on any successor to the
Company, whether the existence of such successor is the result of a direct or
indirect purchase, merger, consolidation, or otherwise of all or substantially
all of the business or assets of the Company.
17.2. Gender and Number. Except where otherwise indicated by the
context, any masculine term used herein also shall include the feminine; the
plural shall include the singular and the singular shall include the plural.
17.3. Severability. If any part of the Plan is declared by any court
or governmental authority to be unlawful or invalid, such unlawfulness or
invalidity shall not invalidate any other part of the Plan. Any Section or part
of a Section so declared to be unlawful or invalid shall, if possible, be
construed in a manner which will give effect to the terms of such Section or
part of a Section to the fullest extent possible while remaining lawful and
valid.
17.4. Requirements of Law. The granting of Awards and the issuance
of Shares under the Plan shall be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or stock
exchanges as may be required. Notwithstanding any provision of the Plan or any
Award, Grantees shall not be entitled to exercise, or receive benefits under,
any Award, and the Company shall not be obligated to deliver any Shares or other
benefits to a Grantee, if such exercise or delivery would constitute a violation
by the Grantee or the Company of any applicable law or regulation.
17.5. Securities Law Compliance.
(a) If the Committee deems it necessary to comply with any
applicable securities law, or the requirements of any stock exchange
upon which Shares may be listed, the Committee may impose any
restriction on Shares acquired pursuant to Awards under the Plan as it
may deem advisable. All certificates for Shares delivered under the
Plan pursuant to any Award or the exercise thereof shall be subject to
such stop transfer orders and other restrictions as the Committee may
deem advisable under the rules, regulations and other requirements of
the SEC, any stock exchange upon which Shares are then listed, any
applicable securities law, and the Committee may cause a legend or
legends to be placed on any such certificates to refer to such
restrictions. If so requested by the Company, the Grantee shall
represent to the Company in writing that he or
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<PAGE> 61
she will not sell or offer to sell any Shares unless a registration
statement shall be in effect with respect to such Shares under the
Securities Act of 1933 or unless he or she shall have furnished to the
Company evidence satisfactory to the Company that such registration is
not required.
(b) If the Committee determines that the exercise of, or
delivery of benefits pursuant to, any Award would violate any
applicable provision of securities laws or the listing requirements of
any stock exchange upon which any of the Company's equity securities
are then listed, then the Committee may postpone any such exercise or
delivery, as applicable, but the Company shall use all reasonable
efforts to cause such exercise or delivery to comply with all such
provisions at the earliest practicable date.
17.6. No Rights as a Stockholder. A Grantee shall not have any
rights as a stockholder with respect to the Shares (other than Restricted
Shares) which may be deliverable upon exercise or payment of such Award until
such shares have been delivered to him or her. Restricted Shares, whether held
by a Grantee or in escrow by the Secretary of the Company, shall confer on the
Grantee all rights of a stockholder of the Company, except as otherwise provided
in the Plan or Award Agreement. Unless otherwise determined by the Committee at
the time of a grant of Restricted Shares, any cash dividends that become payable
on Restricted Shares shall be deferred and, if the Committee so determines,
reinvested in additional Restricted Shares. Except as otherwise provided in an
Award Agreement, any stock dividends and deferred cash dividends issued with
respect to Restricted Shares shall be subject to the same restrictions and other
terms as apply to the Restricted Shares with respect to which such dividends are
issued. The Committee may provide for payment of interest on deferred cash
dividends.
17.7. Nature of Payments. Awards (other than Cash-Based Awards)
shall be special incentive payments to the Grantee and shall not be taken into
account in computing the amount of salary or compensation of the Grantee for
purposes of determining any pension, retirement, death or other benefit under
(a) any pension, retirement, profit-sharing, bonus, insurance or other employee
benefit plan of the Company or any Subsidiary or (b) any agreement between (i)
the Company or any Subsidiary and (ii) the Grantee, except as such plan or
agreement shall otherwise expressly provide.
17.8. Governing Law. The Plan shall be construed in accordance with
and governed by the laws of the State of Alabama other than its laws respecting
choice of law.
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<PAGE> 62
RUSSELL CORPORATION
Alexander City, Alabama
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS - April 19, 2000
(This Proxy is solicited by the Board of Directors of the Company)
The undersigned shareholder of Russell Corporation (the "Company")
hereby appoints C.V. Nalley III and John A. White, and each of them, with full
power of substitution, proxies to vote the shares of stock which the
undersigned could vote if personally present at the Annual Meeting of
Shareholders of Russell Corporation to be held at the general offices of the
Company in Alexander City, Alabama, on April 19, 2000 at 11:00 a.m., Central
Daylight Time, or any adjournment thereof:
1. ELECTION OF DIRECTORS - For terms expiring with the Annual Meeting of
Shareholders in 2003: John F. Ward, Eric N. Hoyle, Benjamin Russell,
Margaret M. Porter
[ ] FOR all nominees above (except as marked to the contrary)
[ ] WITHHOLD AUTHORITY to vote for all nominees above
INSTRUCTION: To withhold authority to vote for an individual nominee,
write the nominee's name in the space provided below.
2. PROPOSAL TO APPROVE THE RUSSELL CORPORATION 2000 EMPLOYEE STOCK PURCHASE
PLAN
[ ] FOR [ ] AGAINST [ ] ABSTAIN WITH RESPECT TO
proposal to approve the Russell Corporation 2000 Employee Stock Purchase
Plan as described in the Proxy Statement of the Company dated March 16,
2000.
3. PROPOSAL TO APPROVE THE AMENDED AND RESTATED 1993 EXECUTIVE LONG-TERM
INCENTIVE PLAN
[ ] FOR [ ] AGAINST [ ] ABSTAIN WITH RESPECT TO
proposal to approve the amended and restated 1993 Executive Long-Term
Incentive Plan as described in the Proxy Statement of the Company dated
March 16, 2000.
(over)
<PAGE> 63
4. IN THEIR DISCRETION UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING.
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR ELECTION OF THE
PERSONS NOMINATED BY THE BOARD OF DIRECTORS AS DIRECTORS, FOR THE PROPOSAL TO
---
APPROVE THE RUSSELL CORPORATION 2000 EMPLOYEE STOCK PURCHASE PLAN AND FOR THE
---
PROPOSAL TO APPROVE THE AMENDED AND RESTATED 1993 EXECUTIVE LONG-TERM INCENTIVE
PLAN.
PLEASE DATE AND SIGN EXACTLY AS NAME
APPEARS ON THIS PROXY. IF SHARES ARE HELD
JOINTLY, EACH SHAREHOLDER SHOULD SIGN.
EXECUTORS, ADMINISTRATORS, TRUSTEES, ETC.
SHOULD USE FULL TITLE AND, IF MORE THAN ONE,
ALL SHOULD SIGN. IF THE SHAREHOLDER IS A
CORPORATION, PLEASE SIGN FULL CORPORATE
NAME BY AN AUTHORIZED OFFICER.
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SIGNATURE(S) OF SHAREHOLDER(S)
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DATED , 2000
---------------------------------
