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8-K - WALGREEN CO. 8-K - WALGREEN CO | walgreen_8-k.htm |
WALGREEN
CO.
EXECUTIVE
STOCK OPTION PLAN
(As
Amended and Restated Effective January 13, 2010)
Section
1. Establishment and Purpose
1.1 The Plan. Effective as of
October 13, 1982, Walgreen Co. (the "Company") established this stock option
plan for certain officers and key employees, which plan was then known as the
"Walgreen Co. 1982 Executive Incentive Stock Option Plan." Effective as of
January 1, 1989, the Plan was amended, restated, and renamed as the "Walgreen
Co. 1982 Executive Stock Option Plan." Effective as of October 13, 1992, the
Plan was amended, restated, and renamed as the "Walgreen Co. Executive Stock
Option Plan" (the "Plan"). Effective as of each of October 9, 1996 and January
11, 2006, the Plan was amended and the term of the Plan was extended. The Plan
as described herein reflects a further amendment and restatement effective as of
January 13, 2010.
1.2 Purpose. The purpose of
the Plan is to enable the Company and its subsidiaries (as subsidiaries are
defined in Section 424(f) of the Internal Revenue Code of 1986, as amended,
hereinafter referred to as the "Code") to attract and retain key employees of
outstanding ability, to stimulate the efforts of such employees toward
achievement of Company objectives and to encourage the identification of their
interest with that of the Company's shareholders. It is intended that options
issued pursuant to the Plan, shall constitute "Incentive Stock Options,"
containing such terms and conditions as required by Section 422 of the Code, to
the extent that the Committee specifies such intention at the time such options
are granted. The term "ISO Options" shall mean Incentive Stock Options granted
pursuant to this Plan. The term "Nonqualified Options" shall mean options other
than ISO Options granted pursuant to this Plan. The term "Options" shall mean
both ISO Options and Nonqualified Options granted pursuant to this
Plan.
1.3 Effective Date of the Plan.
The Plan as originally adopted was effective as of October 13, 1982 (the
"Original Effective Date"). The effective date of the Plan as set forth herein
is January 13, 2010 (the "Effective Date").
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Section
2. Plan Administration
2.1 Administration. The Plan
shall be administered by the Compensation Committee of the Board of Directors of
the Company (the "Committee"), consisting of three or more members appointed by
the Board of Directors of the Company (the “Board”) from those of its members
not eligible to receive Options and who satisfy such other requirements as may
be necessary to qualify as "Non-Employee Directors" as that phrase is defined
for purposes of the Securities and Exchange Commission's (the "Commission’s")
rules and regulations issued under Section 16 of the Securities and Exchange Act
of 1934 (the "1934 Act") and as "Outside Directors" as that phrase is defined
for purposes of the Internal Revenue Service's (the Department of Treasury's)
regulations issued under Section 162(m) of the Internal Revenue Code. The
Committee may take action with regard to this Plan only upon the vote of a
majority of the entire Committee or by written consent. The day-to-day
administration of the Plan may be carried out by such officers and employees of
the Company as may be designated by the Committee.
2.2 Authorized Actions. The
Committee shall have full power and authority to interpret the Plan, to
establish, amend, and rescind rules and regulations relating to the Plan, to
determine the form and content of Options to be issued under the Plan, to
provide for conditions and assurances deemed necessary or advisable to protect
the interests of the Company, and to make all other determinations necessary or
advisable for the administration of the Plan, but only to the extent not
contrary to the express provisions of the Plan. The Committee shall determine,
within the limits of the express provisions of the Plan, the employees to whom,
and the time or times at which, Options shall be granted, the number of shares
of stock to be subject to each Option, the duration of each Option, the Option
price of each Option, and the time or times within which (during the term of the
Option) all or portions of each Option may be exercised. The Committee may, in
its sole discretion, delegate its authority to one or more senior executive
officers for the purpose of granting Options to Participants who are not subject
to Section 16 of the 1934 Act.
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2.3 Finality of
Determination. The determination of the Committee as to any disputed
question arising under the Plan, including questions of construction and
interpretation, shall be final, binding, and conclusive upon all persons
including the Company, its shareholders, and persons having any interests in
Options which may be granted under the Plan.
2.4 Liability Limitation.
Neither the Board nor the Committee, nor any member of either, shall be
liable for any act, omission, interpretation, construction or determination made
in good faith in connection with the Plan (or an Option Agreement), and the
members of the Board and the Committee shall be entitled to indemnification and
reimbursement by the Company in respect of any claim, loss, damage or expenses
(including, without limitation attorneys’ fees) arising or resulting therefrom
to the fullest extent permitted by law and/or under any directors and officers
liability insurance coverage which may be in effect from time to
time.
Section
3. Eligibility and Participation
3.1 Eligibility.
Full-time, key employees of the Company or its subsidiaries, as
designated by the Committee from time to time and without limitation as to
length of service, shall be eligible to receive Options under the Plan. No
Option shall be granted to any person who owns, directly or indirectly, shares
of stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company. Eligible employees of the Company or its
subsidiaries who have been granted and are in receipt of valid Options pursuant
to this Plan are hereunder referred to as "Participants."
3.2 Rights of Employees.
Nothing in this Plan or in any Option shall interfere with or limit in
any way the right of the Company and any of its subsidiaries to terminate any
Participant's or employee's employment at any time, nor confer upon any employee
any right to continue in the employ of the Company and any of its subsidiaries.
No employee shall have a right to be selected as a Participant, nor, having been
so selected to be selected again as a Participant.
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Section
4. Shares Subject to the Plan
4.1 Number. As of the
Effective Date, the maximum number of shares of common stock, $.078125 par
value, of the Company (the "Shares") that may be optioned under the Plan,
subject to adjustment in accordance with Section 4.3, is (a) 25,000,000, plus
(b) the number of Shares that remained available for issuance under the Plan
immediately prior to the Effective Date (including Shares underlying outstanding
Options that were granted under the Plan prior to the Effective Date that are
forfeited, terminated, expire unexercised or are otherwise settled without the
delivery of Shares on and after the Effective Date). Shares may consist, in
whole or in part, of authorized but heretofore unissued Shares, treasury Shares,
or Shares reacquired by the Company, including Shares purchased by the Company
in the open market.
4.2 Unused Shares. In
the event any Shares that are subject to an Option which, for any reason, is
forfeited, terminated, expires unexercised or is otherwise settled, such Shares
may again be subjected to Options pursuant to this Plan.
4.3 Changes in Capitalization.
In the event of any change (increase or decrease) in the outstanding
shares of the Company by reason of a stock dividend, recapitalization, merger,
consolidation, stock split, split up, spin off, combination or exchange of
shares, reorganization, liquidation, or other change in corporate
capitalization, the aggregate number and class of Shares available under this
Plan, the number and class of Shares subject to each outstanding Option, the
Option prices, and the limit on the number of Shares that may be granted to any
participant under Section 5.1 shall be appropriately and proportionately
adjusted by the Committee to prevent dilution or enlargement of rights and
preserve the value of outstanding awards; provided that fractional Shares shall
be rounded to the nearest whole Share. The Committee’s determination shall be
final and conclusive.
Section
5. Options
5.1 Grant of Options.
The Committee may, from time to time at its discretion, subject to the
provisions of the Plan, determine those employees of the Company or its
subsidiaries to whom Options shall be granted, the Option price, the number of
shares subject to such Options, and the dates on which such Options are to be
granted. An eligible employee may be granted more than one Option. The aggregate
number of Shares with respect to which options may be granted during any
12-month period to any participant under this Plan is limited to 1,000,000
shares, subject to adjustment pursuant to Section 4.3.
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5.2
Additional ISO Option Limitation. The aggregate amount of fair market
value of shares (the fair market value of a Share on the date of grant times the
number of Shares optioned under the grant) for which an employee may first
exercise ISO Options in any calendar year under this Plan (and any other
Incentive Stock Option plan which the Company or its subsidiaries may have)
shall not exceed $100,000.
5.3 Option
Agreement. Each Option granted under the Plan shall be evidenced by a
written agreement or notice of stock option terms (hereinafter, “Option
Agreement”), setting forth the terms and conditions upon which the Option is
granted. Each Option Agreement shall state the number of Shares, as designated
by the Committee, to which that Option pertains. The appropriate officers of the
Company are hereby authorized to execute and deliver Option agreements in the
name of the Company, as directed from time to time by the
Committee.
5.4 Option
Price. The Option price per Share under each Option shall be reflected in
the Option Agreement. The Option price shall not be less than 100% of the fair
market value, and in any event not less than the par value, of a Share on the
designated grant date for such Option. For purposes of this Section 5.4 and the
remaining provisions of this Plan, fair market value means the closing price on
the New York Stock Exchange Composite Transaction Tape on the relevant valuation
date (i.e., the designated grant date for purposes of the Option Price) or on
the next preceding date on which a closing price was quoted.
5.5 Duration
of Options. Each Option shall be of a duration specified in the Option
Agreement. All rights to exercise an Option shall expire not later than ten
years from the date on which the Option is granted.
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5.6 Other
Terms and Conditions. Options may contain such other provisions, which
shall not be inconsistent with any of the foregoing terms, as the Committee
shall deem appropriate.
5.7
Exercise. Subject to Section 5.8, each Option may be exercised, as long
as it is valid and outstanding, from time to time, in part or as a whole and in
such manner and subject to such conditions as the Committee in its discretion
may provide in the Option Agreements, provided that no partial exercise may be
for less than 10 full Shares.
5.8 Periods
of Non-Exercise. To the extent required to satisfy exemptions established
from time to time by the Securities and Exchange Commission issued under Section
16 of the 1934 Act, the Committee may prohibit or restrict the effectiveness of
any exercise hereunder for a period of up to six months. Options not subject to
such restrictions may be exercised at such time as the Committee, in its
discretion, may designate.
Section
6. Purchase of Shares
6.1 Notice
of Exercise. The holder of an Option wishing to exercise an Option shall
give notice to the Company in such form and manner as prescribed by the Company
from time to time. The date the Company receives notice of an exercise, and full
payment for the Shares exercised pursuant to the Option, shall be considered as
the date such Option, or the portion thereof specified in notice, is exercised
(the "Exercise Date").
6.2 Payment.
Payment in full shall be made for the number of Shares purchased, as
specified in the notice, at the same time notice of exercise of an Option is
given to the Company. Payment of the Option price may be made in cash, or by
delivery of Shares of the Company equivalent in fair market value to the Option
price on the Exercise Date, or partly in cash and partly in Shares, as the
Committee may from time to time determine. The proceeds from such payment shall
constitute general funds of the Company. Exercise of a Nonqualified Option is
conditioned on the Participant satisfying all applicable withholding taxes. To
the extent permitted by the Committee and subject to such other requirements as
the Committee shall deem appropriate, tax withholding may be satisfied, in whole
or in part, by (a) cash or check, or (b) having the Company withhold Shares
otherwise issuable or tendering previously acquired Shares, in either case
having a value equal to the amount of tax to be withheld. The value of the
Shares to be withheld or tendered is to be determined by such methods or
procedures as shall be established from time to time by the
Committee.
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6.3 Issuance
of Stock Certificates. As soon as possible after receipt of notice and
payment, the Company shall, without stock issue or transfer taxes to the
Participant, deliver to the holder of the Option a certificate or certificates
for the requisite number of Shares. Alternatively, such Shares may be held on
behalf of the holder in book entry form.
6.4.
Privileges of a Shareholder. The holder of an Option shall not have
shareholder privileges with respect to any Share covered by the Option until the
date of issuance of a stock certificate to him or her for such Shares or until
such shares are registered in his or her name in book entry form. No adjustments
shall be made for dividends or distributions or other rights in respect to such
Shares for which the record date is prior to the date on which the Participant
became the holder of record thereof.
Section
7. Termination of Employment
7.1 General.
Except as otherwise determined by the Committee (pursuant to Section 7.5
or otherwise), if the employment of an employee to whom an Option is granted
should terminate for any reason, other than death, Retirement, or Disability,
his or her Option shall terminate on the date employment terminates. Any Options
or portions of Options of terminated employees not exercised shall
terminate.
7.2 Death.
Except as otherwise determined by the Committee (pursuant to Section 7.5
or otherwise), if the employee to whom an Option was granted shall die while the
Option is exercisable, the Participant's designated beneficiary (or the executor
or administrator of his or her estate or the person or persons who acquired the
right to exercise the Option by bequest or inheritance or by reason of his or
her death, if the Participant failed to properly designate a beneficiary) may,
at any time within one year after the date of death but no later than the date
of expiration of the Option, exercise the Option, but only to the extent that
the Option is exercisable. Options or portions of Options of deceased employees
not so exercised shall terminate. A Participant may designate a beneficiary for
this purpose, including a beneficiary that is a trust, by properly completing a
beneficiary designation form supplied by the Committee.
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7.3
Disability. Except as otherwise determined by the Committee (pursuant to
Section 7.5 or otherwise), in the event of termination of employment with the
Company or a subsidiary due to Disability, the employee to whom an Option is
granted may exercise the Option, to the extent that it is exercisable, at any
time within one year after the date of such Disability but no later than the
date of expiration of the Option. For purposes of the Plan, “Disability” shall
mean disability as determined by the Committee in accordance with standards and
procedures similar to those under the applicable Company long-term disability
plan, if any. At any time that the Company does not maintain an applicable
long-term disability plan, “Disability” shall mean any physical or mental
disability which is determined to be total and permanent by a physician selected
or relied upon in good faith by the Company.
7.4
Retirement. Except as otherwise determined by the Committee (pursuant to
Section 7.5 or otherwise), if the Participant’s termination of employment with
the Company and its Subsidiaries occurs due to Retirement, the Participant may
exercise the Option, to the extent that it is exercisable, at any time within
one year after the date of such retirement but no later than the date of
expiration of the Option. For purposes of the Plan, “Retirement” means voluntary
retirement in good standing by the Participant from active employment with the
Company and its Subsidiaries on or after the attainment of age 55, subject to
the approval of the Committee or subject to such years of service requirements
as may be spelled out in the Option Agreement approved by the
Committee.
7.5
Committee Discretion to Extend Exercise Period. Notwithstanding the
provisions of Sections 7.1, 7.2, 7.3 and 7.4, the Committee may extend the time
periods for exercise of Options which would otherwise be applicable under such
Sections, at its sole discretion, to reflect the employee's role, if any, in
developing the Company's long-term business objectives or to accomplish such
other business purposes of the Company as may be determined by the Committee.
The Committee may provide for such extended exercise periods in the initial
Option Agreement or by extending such time periods thereafter, and in either
case the extension shall not exceed 60 months from the date of the employee's
death, Disability, Retirement, or employment termination; and provided that such
exercise period shall not extend beyond the original expiration date specified
in the Option Agreement.
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Section
8. Duration of the Plan
The Plan shall remain in effect until January 14, 2020, but Options may extend
beyond that date in accordance with the provisions of the Plan.
Section
9. Amendment or Discontinuance
The Board of Directors of the Company may alter, suspend, or discontinue the
Plan, but may not, without the approval of the shareholders of the Company, make
any alteration that would:
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(A)
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Increase
the aggregate number of Shares subject to Option under the Plan, except as
provided in Section 4.3;
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(B)
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Decrease
the minimum Option price;
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(C)
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Increase
the maximum number of shares for which an Option or Options may be granted
to any one employee, except as provided in Section 4.3;
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(D)
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Permit
any member of the Board of Directors of the Company who is not an officer
or employee of the Company or subsidiary, or any member of the Committee,
to become eligible for Options under the Plan;
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(E)
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Extend
the term of the Plan or the maximum period during which any Option may be
exercised; or
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(F)
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Otherwise
amend the Plan, to the extent such amendment would be deemed material (and
thereby require shareholder approval), within the meaning of the rules of
any stock exchange or similar organization governing the listing of the
Shares.
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The Board of Directors may not revoke or alter, in a manner unfavorable to the
holder, any outstanding Option, without the consent of the holder.
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Section
10. Other Conditions
10.1
Transferability of Options. An option shall not be transferable except by
beneficiary designation, by will, or the laws of descent and distribution (as
described in Section 7.2). An Option may be exercised, during the optionee's
lifetime, only by the optionee. Notwithstanding the foregoing, under such rules
and procedures as the Committee may establish, an optionee may transfer a
Nonqualified Option to members of the optionee’s immediate family (i.e.,
children, grandchildren and spouse) or to one or more trusts for the benefit of
the optionee or such family members or to partnerships in which the optionee or
such family members are the only partners; provided that (i) the Option
Agreement with respect to such Option expressly so permits or is amended to so
permit, (ii) the optionee does not receive any consideration for such transfer,
and (iii) the optionee provides such documentation or information concerning any
such transfer or transferee as the Committee may reasonably request. Any Option
held by a transferee shall be subject to the same terms and conditions that
applied immediately prior to its transfer.
10.2 Other
Benefit Plans. No Options under this Plan shall be taken into account in
determining any benefits under any other benefit plan or profit sharing plan
maintained by the Company.
10.3
Government Regulations. The Plan, and the granting and exercise of
Options thereunder, and the obligation of the Company to sell and deliver Shares
under such Options, shall be subject to all applicable laws, rules, and
regulations, and to such approvals, registration, and listing requirements by
any governmental agencies or national securities exchanges as may be
required.
10.4 Section
16 Requirements. With respect to persons subject to Section 16 of the
1934 Act, transactions under this Plan are intended to comply with all
applicable conditions of Rule 16b-3 or its successors under the 1934 Act. To the
extent any provision of the Plan or action by the Committee or of any person or
persons acting on the Committee's behalf fails to so comply, it shall be deemed
null and void, to the extent permitted by law and deemed advisable by the
Committee.
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10.5
Potential Option Adjustments. Options may be granted to employees of the
Company or subsidiaries who are foreign nationals or employed outside the United
States, or both, on such terms and conditions different from those specified in
the Plan as may, in the judgment of the Committee, be necessary or desirable in
order to recognize differences in local law or tax policy. The Committee also
may impose conditions on the exercise or vesting of Options in order to minimize
the Company’s obligation with respect to tax equalization for employees on
assignments outside their home country.
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