THE CLOROX COMPANY
EXECUTIVE INCENTIVE COMPENSATION PLAN
Amended and Restated Effective
as of July 1, 2001
The purpose of The Clorox Company Executive Incentive Compensation Plan (the
"Plan") is to provide an incentive for corporate officers and to recognize and
reward those officers. The Company's executive officers are eligible to earn
short-term incentive awards under this Plan and under the Company's Management
Incentive Compensation Plan.
The following terms will have the following meaning for purposes of the Plan:
(a) "Award" means a bonus paid in cash, Stock and/or restricted Stock.
(b) "Board" means the Board of Directors of the Company.
(c) "Clorox Value Measure" means an economic value-added model the calculation
of which links profit to investment by including a capital charge for assets
employed in the business.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means the Employee Benefits and Management Compensation
Committee of the Board, or such other Committee designated by the Board to
administer the Plan provided that the Committee shall consist of two or more
persons, each of whom is an "outside director" within the meaning of Section
162(m) of the Code.
(f) "Company" means The Clorox Company.
(g) "Participant" means a corporate officer of the Company or a Subsidiary
selected by the Committee to participate in the Plan.
(h) "Performance Criteria" means the following measures of performance: total
shareholder return, Stock price, Clorox Value Measure, economic value added,
profit margin (gross or net), asset turnover, sales growth, asset growth, return
on investment, earnings per share, return on equity, return on assets, return on
capital, operating cash flow, cost of capital, net income, market share, working
capital, customer satisfaction, and employee satisfaction.
A Performance Criterion may be applied by the Committee as a measure of the
performance of any, all, or any combination of the following: the Company, a
Subsidiary, a division, group or other unit of the Company or a Subsidiary, or a
particular product category or categories of the Company or a Subsidiary.
(i) "Performance Goal(s)" means the goal or goals established for a Participant
by the Committee in accordance with Section 4(a).
(j) "Stock" means common stock of the Company.
(k) "Subsidiary" means any corporation in which the Company, directly or
indirectly, controls 50 percent or more of the total combined voting power of
all classes of stock.
(l) "Target Award" means the amount of the target award established for each
Participant by the Committee in accordance with Section 4(a).
The Plan shall be effective as of July 1, 1996 and shall continue until June 30,
2006, subject to stockholders' approval unless reapproved by the Company's
stockholders or unless amended or terminated pursuant to Section 9 hereof.
(a) Within 90 days after the beginning of each fiscal year of the Company (a
"year"), the Committee will select Participants for the year and establish in
writing (i) an objective Performance Goal or Goals for each Participant for that
year based on one or more of the Performance Criteria, (ii) the specific Award
amounts that will be paid to each Participant if his or her Performance Goal or
Goals are achieved (the "Target Award") and (iii) the method by which such
amounts will be calculated. The Committee may specify as to each Target Award
the form of payment of the Award (cash, Stock, restricted Stock, and/or other
property), provided that if restricted Stock is offered as an incentive to
Participants to take some or all of their Award in Stock the amount of the
restricted Stock shall be specified and the Target Award, including such
restricted Stock, shall not exceed the maximum Award permitted under Section
4(b). The Target Award may provide for payment of all or part of the Target
Award in the case of retirement, death, disability or change of ownership of
control of the Company or a Subsidiary during the year.
(b) The maximum Award that may be paid to any Participant under the Plan for any
year will be $4 million.
(c) The Committee may reduce or eliminate, but may not increase, any Award
calculated under the methodology established in
accordance with paragraph (a) in order to reflect additional considerations
relating to performance.
(d) As soon as practicable following each year while the Plan is in effect, the
Committee shall determine and certify, for each Participant, the extent to which
the Performance Goal or Goals have been met and the amount of the Award, if any,
to be made. Awards will be paid to the Participants following such certification
by the Committee and no later than ninety (90) days following the close of the
year with respect to which the Awards are made.
(e) The Company shall withhold from the payment of any Award hereunder any
amount required to be withheld for taxes.
5. TERMINATION OF EMPLOYMENT
Except as may be specifically provided in an Award pursuant to Section 4(a), a
Participant shall have no right to an Award under the Plan for any year in which
the Participant is not actively employed by the Company or its Subsidiaries on
June 30 of such year. In establishing Target Awards, the Committee may also
provide that in the event a Participant is not employed by the Company or its
Subsidiaries on the date on which the Award is paid, the Participant may forfeit
his or her right to the Award paid under the Plan.
The Plan will be administered by the Committee. The Committee will have the
authority to interpret the Plan, to prescribe rules relating to the Plan and to
make all determinations necessary or advisable in administering the Plan.
Decisions of the Committee with respect to the Plan will be final and
7. UNFUNDED PLAN
Awards under the Plan will be paid from the general assets of the Company, and
the rights of Participants under the Plan will be only those of general
unsecured creditors of the Company.
8. CODE SECTION 162(M)
It is the intent of the Company that all Awards under the Plan qualify as
performance-based compensation for purposes of Code Section 162(m)(4)(C) so that
the Company's tax deduction for such Awards is not disallowed in whole or in
part under Code Section 162(m). The Plan is to be applied and interpreted
9. AMENDMENT OR TERMINATION OF THE PLAN
The Committee may from time to time suspend, revise, amend or terminate the
Plan; PROVIDED, that any such amendment or revision which requires approval of
the Company's shareholders in order to maintain the qualification of Awards as
performance-based compensation pursuant to Code Section 162(m)(4)(C) shall not
be made without such approval.
10. APPLICABLE LAW
The Plan will be governed by the laws of California.
11. NO RIGHTS TO EMPLOYMENT
Nothing contained in the Plan shall give any person the right to be retained in
the employment of the Company or any of its Subsidiaries. The Company reserves
the right to terminate any Participant at any time for any reason
notwithstanding the existence of the Plan.
12. NO ASSIGNMENT
Except as otherwise required by applicable law, any interest, benefit, payment,
claim or right of any Participant under the Plan shall not be sold, transferred,
assigned, pledged, encumbered or hypothecated by any Participant and shall not
be subject in any manner to any claims of any creditor of any Participant or
beneficiary, and any attempt to take any such action shall be null and void.
During the lifetime of any Participant, payment of an Award shall only be made
to such Participant. Notwithstanding the foregoing, the Committee may establish
such procedures as it deems necessary for a Participant to designate a
beneficiary to whom any amounts would be payable in the event of any
13. STOCKHOLDER APPROVAL
This Plan shall be subject to approval by a vote of the stockholders of the
Company at the 2001 Annual Meeting, and such stockholder approval shall be a
condition to the right of any Participant to receive any benefits hereunder.