1987 Long-Term Performance Stock Plan – CSX Corp.
CSX CORPORATION
1987 Long-Term Performance Stock Plan
As Amended and Restated Effective April 25, 1996
(As Amended through December 31, 1997)
1. Purpose
The purpose of the CSX Corporation Long-Term Performance Stock Plan (the
'Plan') is to attract and retain outstanding individuals as officers and key
employees of CSX Corporation and its subsidiaries, to furnish motivation for the
achievement of long-term performance objectives by providing such persons
opportunities to acquire ownership of common shares of the Company, monetary
payments based on the value of such shares or the financial performance of the
Company, or both, on terms as herein provided. It is intended that the
Incentives provided under this Plan will be treated as qualified
performance-based compensation within the meaning of Section 162(m) of the Code.
2. Definitions
Whenever the following words are capitalized and used in the Plan, they
shall have the respective meanings set forth below, unless a different meaning
is expressly provided. Unless the context clearly indicates to the contrary, in
reading this document the singular shall include the plural and the masculine
shall include the feminine.
a. 'Beneficiary': The term Beneficiary shall mean the person designated by
the Participant, on a form provided by the Company, to exercise the
Participant's rights in accordance with Section 14 of the Plan in the event of
his death.
b. 'Benefits Trust Committee': The term Benefits Trust Committee means the
committee established pursuant to the CSX Corporation and Affiliated Companies
Benefits Assurance Trust.
c. 'Board of Directors': The term Board of Directors or Board means the
Board of Directors of CSX Corporation.
d. 'Cause': The term Cause means (i) an act or acts of personal dishonesty
of a Participant intended to result in substantial personal enrichment of the
Participant at the expense of the Company or any of its subsidiaries, (ii)
violation of the management responsibilities by the Participant which is
demonstrably willful and deliberate on the Participant's part and which is not
remedied in a reasonable period of time after receipt of written notice from the
Company or a subsidiary, or (iii) the conviction of the Participant of a felony
involving moral turpitude.
e. 'Change in Control': The term Change in Control is defined in Section
22.
f. 'Code': The term Code means the Internal Revenue Code of 1986, as
amended.
g. 'Committee': The term Committee means the Compensation Committee of the
Board of Directors.
h. 'Company': The term Company means CSX Corporation.
i. 'Completed Month': The term Completed Month shall mean a period
beginning on the monthly anniversary date of a grant of an Incentive and ending
on the day before the next monthly anniversary.
j. 'Covered Employee': The term Covered Employee shall mean the chief
executive officer of the Company or any other individual who is among the four
(4) highest compensated officers or who is otherwise a 'covered employee' within
the meaning of Section 162(m) of the Code, as determined by the Committee.
k. 'Disability': The term Disability means long-term disability as
determined under the Company's Salary Continuance and Long-Term Disability Plan.
l. 'Divisive Transaction': The term Divisive Transaction means a
transaction in which the Participant's employer ceases to be a Subsidiary or
there is a sale of substantially all of the assets of the Subsidiary.
m. 'Exchange Act': The term Exchange Act means the Securities Exchange Act
of 1934, as amended.
n. 'Exercisability Requirements': The term Exercisability Requirements used
with respect to any grant of options means such restrictions or conditions on
the exercise of such options that the Committee may, in its discretion, add to
the one-year holding requirement contained in Sections 7 and 8.
o. 'Fair Market Value': The term Fair Market Value shall be deemed to be
the mean between the highest and lowest quoted selling prices of the stock per
share as reported under New York Stock Exchange-Composite Transactions on the
day of reference to any event to which the term is pertinent, or, if there is no
sale that day, on the last previous day on which any such sale occurred.
p. 'Functional Group': The term Functional Group means a group of
employees, identified by the Compensation Committee, in its sole discretion, to
be subject to a common set of Performance Objectives.
q. 'Incentive': The term Incentive means any incentive under the Plan
described in Section 6.
r. 'Objective Standard': The term Objective Standard means a formula or
standard by which a third party, having knowledge of the relevant performance
results, could calculate the amount to be paid to a Participant. Such formula or
standard shall specify the individual employees or class of employees to which
it applies, and shall preclude discretion to increase the amount payable that
would otherwise be due upon attainment of the objective.
s. 'Participant': The term Participant means an individual designated by
the Committee as a Participant pursuant to Section 5.
t. 'Performance Objective': The term Performance Objective shall mean a
performance objective established in writing by the Committee within ninety (90)
days of the commencement of the Performance Period to which the Performance
Objective relates and at a time when the outcome of such objective is
substantially uncertain. Each Performance Objective shall be established in such
a way that a third party having knowledge of the relevant facts could determine
whether the objective is met. A Performance Objective may be based on one or
more business criteria that apply to the individual Participant, a business unit
or the Company as a whole, and shall state, in terms of an Objective Standard,
the method of computing the amount payable to the Participant if the Performance
Objective is attained. With respect to Incentives granted to Covered Employees,
the material terms of the Performance Objective shall be disclosed to, and must
be subsequently approved by, a vote of the shareholders of the Company,
consistent with the requirements of Section 162(m) of the Code and the
regulations thereunder. The Performance Objectives for any Performance Period
shall be based on one or more of the following measures, as determined by the
Committee in writing within ninety (90) days of the commencement of the
Performance Period:
1. The achievement by the Company or business unit of specific levels
of Return on Invested Capital ('ROIC'). ROIC for the Company or
business unit means its results of operations divided by its
capital.
2. The generation by the Company or business unit of free cash flow.
3. The creation by the Company or business unit of specific levels of
Economic Value Added ('EVA'). EVA for the Company or business unit
means its ROIC less its cost of capital multiplied by its capital.
4. The creation by the Company of specific levels of Total
Shareholder Return ('TSR'). TSR for the Company means total return
to shareholders as measured by stock price appreciation plus
dividends.
u. 'Performance Period': The term Performance Period means a fixed period
of time, established by the Committee, during which a Participant performs
service for the Company and during which Performance Objectives may be achieved.
v. 'Plan': The term Plan means this CSX Corporation 1987 Long-Term
Performance Stock Plan as amended or restated from time to time.
w. 'Retirement': The term Retirement means termination of employment with
immediate commencement of retirement benefits under the Company's defined
benefit pension plan.
x. 'Separation From Employment': The term Separation From Employment means
an employee's separation from employment with the Company or a Subsidiary as a
result of Retirement, death, Disability, or termination of employment
(voluntarily or involuntarily). A Participant in receipt of periodic severance
payments shall be considered separated from employment on the day preceding the
day such severance payments commenced.
y. 'Subsidiary': The term Subsidiary means, with respect to any
corporation, or corporation more than 50% of whose voting shares are owned
directly or indirectly by the Company.
z. 'Trust': The term Trust means the CSX Corporation and Affiliated
Companies Executives' Stock Trust or such other trust or trusts which
substantially conforms to the terms of the Internal Revenue Service model trust
as described in Revenue Procedure 92-64, 1992-2 C.B. 422.
3. Number of Shares
Subject to the provisions of Section 19 of this Plan, the maximum number
of shares which may be issued pursuant to the Incentives shall be 16,000,000
shares of the Company's common stock, par value $1.00 per share. Such shares
shall be authorized and unissued shares of the Company's common stock. Subject
to the provisions of Section 19, if any Incentive granted under the Plan shall
terminate or expire for any reason without having been exercised in full, the
unissued shares subject thereto shall again be available for the purposes of the
Plan. Similarly, shares which have been issued, but which the Company retains or
which the Participant tenders to the Company in satisfaction of income and
payroll tax withholding obligations or in satisfaction of the exercise price of
any option shall remain authorized and shall again be available for the purposes
of the Plan, provided, however, that any such previously issued shares shall not
be the subject of any grant under the Plan to any officer of the Company who, at
the time of such grant, is subject to the short-swing trading provisions of
Section 16 of the Exchange Act.
4. Administration
a. Prior to a Change of Control, the Plan shall be administered by the
Committee. The Committee shall consist of three or more members of the Board of
Directors. No member of the Committee shall be eligible to receive any
Incentives under the Plan while a member of the Committee. A majority of the
Committee shall constitute a quorum. The Committee shall recommend to the Board
individuals to receive Incentives, including the type and amount thereof, unless
the Board shall have delegated to the Committee the authority and power to
select persons to whom Incentives may be granted, to establish the type and
amount thereof, and to make such grants.
Subject to the express provisions of the Plan, the Committee shall have
authority to construe any agreements entered into with any person in respect of
any Incentive or Incentives, to prescribe, amend and rescind rules and
regulations relating to the Plan, to determine the terms and provisions of any
such agreements and to make all other determinations necessary or advisable for
administering the Plan. The Committee may correct any defect or supply any
omission or reconcile any inconsistency in the Plan or in any agreement under
the Plan in the manner and to the extent it shall deem expedient to carry it
into effect, and it shall be the sole and final judge of such expedience. Any
determination of the Committee under the Plan may be made without notice of
meeting of the Committee by a writing signed by a majority of the Committee
members. The determinations of the Committee on the matters referred to in this
Section 4 shall be conclusive.
b. Following a Change of Control, the Benefits Trust Committee may remove
and/or replace the Committee as the Plan Administrator. Additionally, following
a Change of Control, any and all final benefit determinations for Participants,
their beneficiaries, heirs and assigns and decisions regarding benefit claims
under this Plan shall rest with the Benefits Trust Committee or its delegate in
its sole judgment and absolute discretion.
5. Eligibility and Participation
Incentives may be granted only to officers and key employees of the
Company and of its Subsidiaries at the time of such grant as the Committee in
its sole discretion may designate from time to time to receive an Incentive or
Incentives. An officer or key employee who is so designated shall become a
Participant. A director of the Company or of a Subsidiary who is not also an
officer or employee of the Company or of such Subsidiary will not be eligible to
receive an Incentive.
The Committee's designation of an individual to receive an Incentive at
any time shall not require the Committee to designate such person to receive an
Incentive at any other time. The Committee shall consider such factors as it
deems pertinent in selecting Participants and in determining the type and amount
of their respective Incentives, including without limitation (a) the financial
condition of the Company, (b) anticipated financial results for the current or
future years, including return on invested capital, (c) the contribution by the
Participant to the profitability and development of the Company through
achievement of established strategic objectives, and (d) other compensation
provided to Participants.
6. Incentives
Incentives may be granted in any one or a combination of (a) Incentive
Stock Options; (b) Non-Qualified Stock Options; (c) Stock Appreciation Rights;
(d) Performance Shares; (e) Performance Units; (f) Restricted Stock; and (g)
Incentive Compensation Program Shares, all as described below and pursuant to
the terms set forth in Sections 7-12 hereof. With respect to Items (a)-(c), the
maximum number of shares of common stock of the Company with respect to which
these Incentives may be granted in any Plan Year to any Participant will be
750,000. With respect to Items (d)-(f), the maximum number of shares of common
stock of the Company with respect to which these Incentives may be granted
during any Plan Year to any Participant will be 150,000.
7. Incentive Stock Options
Incentive Stock Options (ISOs) will consist of options to purchase shares
of the Company's common stock at purchase prices not less than 100 percent of
the Fair Market Value of such common stock on the date of grant. ISOs will be
exercisable upon the date or dates specified in an option agreement entered into
with a Participant but not earlier than one year after the date of grant of the
options and not later than 10 years after the date of grant of the options;
provided, however, that whether or not the one-year holding requirement is
satisfied, any Exercisability Requirements must be satisfied. For options
granted after December 31, 1986, the aggregate Fair Market Value, determined at
the date of grant, of shares for which ISOs are exercisable for the first time
by a Participant during any calendar year shall not exceed $100,000.
Notwithstanding the provisions of Section 5 of this Plan, no individual
will be eligible for or granted an ISO if that individual owns stock of the
Company possessing more than 10 percent of the total combined voting power of
all classes of the stock of the Company or its Subsidiaries.
Any Participant who is an option holder may exercise his option to
purchase stock in whole or in part upon the date or dates specified in the
option agreement offered to him. In no case may an option be exercised for a
fraction of a share. Except as set forth in this Section 7, Section 12 and in
Sections 14 through 16, no option holder may exercise an option unless at the
time of exercise he has been in the continuous employ of the Company or one of
its Subsidiaries since the grant of such option. An option holder under this
Plan shall have no rights as a shareholder with respect to any shares subject to
such option until such shares have been issued.
For purposes of this Section 7, written notice of exercise must be
received by the Corporate Secretary of the Company not less than one year nor
more than 10 years after the option is granted. Such notice must state the
number of shares being exercised and must be accompanied by payment of the full
purchase price of such shares. Payment for the shares for which an option is
exercised may be made by (1) a personal check or money order payable to CSX
Corporation; (2) a tender by the employee (in accordance with procedures
established by the Company) of shares of the Company's common stock having a
Fair Market Value on the date of tender equaling the purchase price of the
shares for which the option is being exercised; or (3) any combination of (1)
and (2).
8. Non-Qualified Stock Options
Non-Qualified Stock Options (NQSOs) will consist of options to purchase
shares of the Company's common stock at purchase prices not less than 100
percent of the Fair Market Value of such common stock on the date of grant.
NQSOs will be exercisable upon the date or dates specified in an option
agreement entered into with a Participant but not earlier than one year after
the date of grant of the options and not later than 10 years after the date of
grant of the options; provided, however, that whether or not the one-year
holding requirement is satisfied, any Exercisability Requirements must be
satisfied.
Any Participant may exercise an option to purchase stock upon the date or
dates specified in the option agreement offered to him. In no case may an option
be exercised for a fraction of a share. Except as set forth in this Section 8
and in Sections 12 through 15, no option holder may exercise an option unless at
the time of exercise he has been in the continuous employ of the Company or one
of its Subsidiaries since the grant of his option. An option holder under this
Plan shall have no rights as a shareholder with respect to any shares subject to
such option until such shares have been issued.
For purposes of this Section 8, written notice of exercise must be
received by the Corporate Secretary of the Company, not earlier than one year
nor later than 10 years after the option is granted. Such notice must state the
number of shares being exercised and must be accompanied by payment of the full
purchase price of such shares. Payment for the shares for which an option is
exercised may be made by (1) a personal check or money order payable to CSX
Corporation; (2) a tender by the employee (in accordance with procedures
established by the Company) of shares of the Company's common stock having a
Fair Market Value on the date of tender equaling the purchase price of the
shares for which the option is being exercised; (3) the delivery of a properly
executed exercise notice, together with irrevocable instructions to a broker to
promptly deliver to the Company either sale proceeds of shares sold to pay the
purchase price or the amount loaned by the broker to pay the purchase price; or
(4) any combination of (1), (2) and (3).
9. Stock Appreciation Rights
Any option granted under the Plan may include a stock appreciation right
(SAR) by which the participant may surrender to the Company all or a portion of
the option to the extent exercisable at the time of surrender and receive in
exchange a payment equal to the excess of the Fair Market Value of the shares
covered by the option portion surrendered over the aggregate option price of
such shares. Such payment shall be made in shares of Company common stock, in
cash, or partly in shares and partly in cash, as the Committee in its sole
discretion shall determine, but in no event shall the number of shares of common
stock delivered upon a surrender exceed the number the option holder could then
purchase upon exercise of the option. Such rights may be granted by the
Committee concurrently with the option or thereafter by amendment upon such
terms and conditions as the Committee may determine.
The Committee may also grant, in addition to, or in lieu of options to
purchase stock, SARs which will entitle the Participant to receive a payment
upon surrender of that right, or portion of that right in accordance with the
provisions of the Plan, equaling the difference between the Fair Market Value of
a stated number of shares of Company common stock on the date of the grant and
the Fair Market Value of a comparable number of shares of Company common stock
on the day of surrender, adjusted for stock dividends declared between the time
of the grant of the SAR and its surrender. The Committee shall have the right to
limit the amount of appreciation with respect to any or all of the SARs granted.
Payment made upon the exercise of the SARs may be in cash or shares of Company
common stock, or partly in shares and partly in cash, as the Committee in its
sole discretion shall determine.
For purposes of this Section 9, written notice must be received by the
Corporate Secretary of the Company not earlier than one year nor later than 10
years after the SAR is granted. Such notice must state the number of SARs being
surrendered and the method of settlement desired within the guidelines
established from time to time by the Committee. The SAR holder will receive
settlement based on the Fair Market Value on the day the written request is
received by the Corporate Secretary of the Company.
In certain situations as determined by the Committee, for purposes of this
Section 9, written notice must be received by the Corporate Secretary of the
Company between the third and twelfth business days after the public release of
the Company's quarterly earnings report, or between such other, different period
as may hereinafter be established by the Securities and Exchange Commission. For
such settlements, a Participant subject to a restricted exercise period shall
receive settlement based on the highest Fair Market Value during the period
described in the foregoing sentence.
The Committee may not grant an SAR or other rights under this Section 9 in
connection with an incentive stock option if such grant would cause the option
or the Plan not to qualify under Section 422 of the Code or if it is prohibited
by such section or Treasury regulations issued thereunder. Any grant of an SAR
or other rights which would disqualify either the option as an ISO or the Plan,
or which is prohibited by Section 422 of the Code or Treasury regulations issued
thereunder, is and will be considered as void and vesting no rights in the
grantee. It is a condition for eligibility for the benefits of the option and of
the Plan that the Participant agree that in the event an SAR or other right
granted should be determined to be void as provided by the foregoing, the
Participant has no right or cause of action against the Company.
10. Performance Unit Awards and Performance Share Awards.
The Committee may grant Performance Unit Awards (PUAs) and Performance
Share Awards (PSAs) under which payment shall be made in shares of the Company's
common stock, in cash, or partly in shares and partly in cash, as the Committee
in its sole discretion shall determine. PUAs and PSAs may be awarded to
individual Participants or to a Functional Group. Awards to a Functional Group
shall be subject to distribution by the Chief Executive Officer of the Company,
or by his designees, to individuals within such group. At the time of the grant,
the Committee shall establish in writing and communicate to Participants, and to
members of a Functional Group who can be identified, Performance Objectives to
be achieved during the Performance Period. Awards of PUAs and PSAs may be
determined by the average level of attainment of Performance Objectives over
multiple Performance Periods.
Prior to the payment of PUAs and PSAs, the Committee shall determine the
extent to which Performance Objectives have been attained during the Performance
Period or Performance Periods in order to determine the level of payment to be
made, if any, and shall record such results in the minutes of the meeting of the
Committee. In no instance will payment be made if the Performance Objectives are
not attained.
Payment, if any, shall be made in a lump sum or in installments, in cash
or shares of Company common stock, as determined by the Committee, commencing as
promptly as feasible following the end of the Performance Period, except that
(a) payments to be made in cash may be deferred subject to such terms and
conditions as may be prescribed by the Company, and (b) payments to be made in
Company common stock may be deferred pursuant to an election filed on forms
prescribed and provided by and filed with the Company. A Participant may elect
annually to defer to a date certain, or the occurrence of an event, as provided
in the form, the receipt of all or any part of shares of Company common stock he
may subsequently become entitled to receive. On forms provided by and filed with
the Company, the Participant shall also specify whether, when the deferral
period expires or when the restrictions below lapse, payment will be in a lump
sum or installments over a period not exceeding twenty (20) years. The Committee
shall prescribe the time periods during which the election must be filed in
order to be effective. Elections to defer, once effective, are irrevocable.
Changes regarding the date of payment, the period over which payments are to be
made and the method of payment are subject to substantial penalties. However, a
One-Time Change of Distribution Election may be made to change the timing or the
form of payment without penalty. Any such election which changes a distribution
election on 'termination of employment' or 'the earlier of termination or a
specified age' shall be void in the event the Participant's employment
terminates within twelve (12) months following the date of the election.
If a Participant has made an effective election to defer the payment of
shares of common stock, the Company shall, within a reasonable period of time
after the deferral election is made, transfer shares of common stock or other
assets equal in value to the number of shares as to which payment is deferred to
the Trust to secure the Company's obligation to pay shares of common stock to
the Participant in the future. However, in any event, the Company shall make any
previously deferred payment of shares to the Participant upon:
a. the death of the Participant;
b. the Disability of the Participant;
c. the Participant's termination of employment with the Company or a
subsidiary of the Company, subject to the Participant's deferral
election;
d. A Divisive Transaction, subject to the Participant's deferral election;
or
e. a Change in Control.
Notwithstanding a Participant's election to defer the payment of shares of
common stock pursuant to this Section 10, the Company shall make cash payments
to Participants following each common stock dividend payment date equal to the
dividends payable on the number of shares of Company common stock credited to
the Participant's account as of the dividend record date (including shares for
which an election to defer has been made and any reinvested dividends thereon).
A Participant may elect to defer receipt of the cash payments pursuant to
election forms prescribed and provided by and filed with the Company. Such
deferred cash payments shall be credited to the Participant's account and
reinvested in shares of Company common stock as of the dividend payment date. An
election to defer, once effective, shall be irrevocable for the calendar year,
and shall continue in effect with respect to subsequent calendar years until
changed by a timely filed new election.
Any dividends paid on shares of Company common stock held in the Trust
shall be paid to the Trust and shall be reinvested in shares of Company common
stock, or other assets equal in value, to secure the Company's obligation to pay
shares of common stock to Participants in the future.
11. Restricted Stock
A Restricted Stock Award (RSA) shall entitle the Participant, subject to
his continued employment during the restriction period determined by the
Committee and his complete satisfaction of any other conditions, restrictions
and limitations imposed in accordance with the Plan, to the unconditional
ownership of the shares of the Company's common stock covered by the grant
without payment therefore.
The Committee may grant RSAs at any time or from time to time to a
Participant selected by the Committee in its sole discretion. The Committee
shall establish at the time of grant of each RSA a Performance Period and
Performance Objectives to be achieved during the Performance Period.
At the time of grant, the Performance Period and Performance Objectives
shall be set forth either in agreements or in guidelines communicated to the
Participant in such form consistent with this Plan as the Committee shall
approve from time to time.
Following the conclusion of each Performance Period and prior to payment,
the Committee shall determine the extent to which Performance Objectives have
been attained or a degree of achievement between maximum and minimum Performance
Objectives during the Performance Period in order to determine the level of
payment to be made, if any, and shall record such results in the minutes of the
meeting of the Committee. In no instance will payment be made if the Performance
Objectives are not attained.
At the time that an RSA is granted, the Committee shall establish in the
written agreement a restriction period applicable to all shares covered by such
grant. Subject to the provisions of the next following paragraph, the
Participant shall have all of the rights of a stockholder of record with respect
to the shares covered by the grant to receive dividends or other distributions
in respect of such shares (provided, however, that any shares of stock of the
Company distributed with respect to such shares shall be subject to all of the
restrictions applicable to such shares) and to vote such shares on all matters
submitted to the stockholders of the Company, but such shares shall not be sold,
exchanged, pledged, hypothecated or otherwise disposed of at any time prior to
the expiration of the restriction period, including by operation of law, and any
purported disposition, including by operation of law, shall result in automatic
forfeiture of any such shares.
Except as hereinafter provided, if, during the restriction period
applicable to such grant, a Separation From Employment of a Participant occurs
for any reason other than death, Disability or Retirement, all shares covered by
such grant shall be forfeited to the Company automatically. If the Participant's
Separation From Employment is because of Retirement or death, or in the event of
Disability, the Participant or his successor in interest shall be entitled to
unconditional ownership of a fraction of the total number of shares covered by
such grant of which the numerator is the number of whole calendar months in the
period commencing with the first whole calendar month following the date of
grant and ending with the whole calendar month including the date of death,
Disability or Retirement, and of which the denominator is the number of whole
calendar months in the applicable restriction period. Any fractional shares
shall be disregarded.
The Committee may, at the time of granting any RSA, impose such other
conditions, restrictions or limitations upon the rights of the Participants
during the restriction period or upon the Participant's right to acquire
unconditional ownership of shares as the Committee may, in its discretion,
determine and set forth in the written agreement.
At the time of grant of an RSA, the Company shall cause to be issued and
registered in the name of the Participant a stock certificate representing the
full number of shares covered thereby, which certificate shall bear an
appropriate legend referring to the terms, conditions and restrictions
applicable to such grant, and the grantee shall execute and deliver to the
Company a stock power endorsed in blank covering such shares. Such stock
certificate and stock power shall be held by the Company or its designee until
the expiration of the restriction period, at which time the same shall be
delivered to the Participant or his designee if all of the conditions and
restrictions of the grant have been satisfied, or until the forfeiture of such
shares, at which time the same shall be cancelled and the shares shall be
returned to the status of unissued shares.
12. Incentive Compensation Program Shares
A Participant who receives base compensation in excess of a dollar level
to be determined by the Committee and who is eligible to receive an award under
the Company's Incentive Compensation Program ('ICP') may elect, by filing the
prescribed election form with the Company in accordance with rules established
by the Committee, to receive all or part of his annual ICP award in shares of
the Company's common stock, rather than cash; provided, however, the Participant
must agree that his receipt of the stock will be deferred until his retirement
or termination of employment, with a minimum deferral period of three (3) years.
Elections to defer are irrevocable. A Participant who makes such election shall,
at the time that the stock is deferred, receive an additional award of stock
equal to a percentage, established by the Committee from time to time, of the
amount that he elected to have deferred, but not to exceed 25% (the 'Stock
Premium'). The Participant's election to defer shall also apply to the Stock
Premium.
If a Participant made an effective election to defer the payment of shares
of common stock and receive the Stock Premium, the Company shall, within a
reasonable period of time after the deferral election is made, transfer shares
of common stock or other assets equal in value to the number of shares as to
which payment is deferred to the Trust to secure the Company's obligation to pay
shares of common stock to the Participant in the future. However, in any event,
the Company shall make any previously deferred payment of shares to the
Participant upon:
a. the death of the Participant;
b. the Disability of the Participant;
c. the Participant's termination of employment with the Company or a
subsidiary of the Company, subject to the Participant's deferral
election and the three (3) year deferral requirement;
d. a Divisive Transaction, subject to the Participant's deferral
election; or
e. a Change in Control.
Notwithstanding any provisions of this Plan to the contrary, upon the
occurrence of a Divisive Transaction, the three (3) year holding requirement of
the stock premium for deferred ICP shares shall be deemed satisfied.
Notwithstanding a Participant's election to defer the payment of shares of
common stock pursuant to this Section 12, the Company shall make cash payments
to Participants following each common stock dividend payment date equal to the
dividends payable on the number of shares of Company common stock credited to
the Participant's account as of the dividend record date (including shares for
which an election to defer has been made and any reinvested dividends thereon).
A Participant may elect to defer receipt of the cash payments pursuant to
election forms prescribed and provided by and filed with the Company. Such
deferred cash payments shall be credited to the Participant's account and
reinvested in shares of Company common stock as of the dividend payment date. An
election to defer, once effective, shall be irrevocable for the calendar year,
and shall continue in effect with respect to subsequent calendar years until
changed by a timely filed new election.
13. Contributions to the Trust
a. The Company shall make contributions to the Trust to secure a source of
future payments with respect to Participant's deferral elections pursuant to
Sections 10 and 12. The Trustee shall be responsible only for contributions
actually received by it hereunder and the Trustee shall have no duty or
responsibility with respect to the timing, amounts and sufficiency of the
contributions made or to be made by the Company hereunder.
b. The Company may make contributions to the Trust in Common Stock.
c. A separate bookkeeping account (an 'Account') shall be established by
the Trustee for each Participant covered by the Trust pursuant to the Plan, as
directed in writing by the Company. A Participant may have more than one
Account. Each account is intended to represent the amount of a Participant's
deferred and unpaid benefit under the related provisions of the Plan. The value
of a Participant's Account at any time will equal the fair market value of the
number of shares of Common Stock owed to a Participant under the affected
provisions of this Plan at such time. The number of shares owed at any time will
equal the number of shares of Common Stock which were originally deferred by the
Participant (including any applicable Stock Premium), plus, the number of Common
Stock Shares which would have been acquired if dividends subsequently declared
by the Company had been paid with respect to such shares and reinvested in
Common Stock. 'Account' may also mean individual sub-accounts which have been or
may be established under this Plan from time to time.
d. Within sixty days following the close of each calendar year, or more
frequently or at such other time as may be required by the Trust Agreement, the
Trustee shall provide the Company and each Participant with a written statement
of the Account of each Participant.
14. Separation From Employment and Divisive Transactions
If the Participant's Separation From Employment is because of Disability
or death, the right of the Participant or his successor in interest to exercise
an ISO, NQSO or SAR shall terminate not later than five years after the date of
such Disability or death, but in no event later than 10 years from the date of
grant; provided, however, that if such Participant is eligible to retire with
the ability to begin immediately receiving retirement benefits under the
Company's pension plan, his or his successor in interest's right to exercise any
ISOs, NQSOs or SARs shall be determined as if his Separation From Employment was
because of Retirement.
If the Participant's Separation From Employment is because of his
Retirement, the right of the Participant or his successor in interest to
exercise an ISO, NQSO or SAR shall terminate not later than 10 years from the
date of grant.
Unless the Committee deems it necessary in individual cases (except with
respect to Covered Employees) to extend a Participant's exercise period, if a
Participant's Separation From Employment is for any reason other than
Retirement, Disability or death, the right of the Participant to exercise an
ISO, NQSO or SAR shall terminate not later than one year from the date of
Separation From Employment, but in no event later than 10 years after the date
of grant.
At the time of his Separation From Employment for any reason other than
Cause, a Participant shall vest in a portion of any Incentives granted under
Sections 7 (ISOs), 8 (NQSOs) or 9 (SARs) that he has held for less than one year
from the date of the grant. The portion of such Incentives in which the
Participants shall vest shall be determined by multiplying all shares subject to
such Incentives by a fraction, the numerator of which shall be the number of
Completed Months of employment following the date of grant and the denominator
of which shall be twelve.
A Participant who vests in any Incentives under the preceding paragraph
may not exercise such Incentives prior to the satisfaction of the one-year
holding requirement and the Exercisability Requirements pertaining to such
Incentives. Any Incentives vested under the preceding paragraph must be
exercised within one year from the date of the Participant's Separation From
Employment.
If the Participant's employer is a Subsidiary involved in a Divisive
Transaction, the right of the Participant or his successor in interest to
exercise an ISO, NQSO or SAR shall terminate not less than three years after the
date of the closing of such Divisive Transaction, but in no event later than 10
years from the date of grant; provided, however, that if such Participant is
eligible to retire with the ability to begin immediately receiving retirement
benefits under the Company's pension plan, his or his successor in interest's
right to exercise any ISO, NQSO' or SAR' shall be determined as if he had
retired. Notwithstanding anything to the contrary in this paragraph, a
Participant may not exercise such Incentives prior to satisfaction of the one
year holding requirement and the Exercisability Requirements pertaining to such
Incentives.
As to PUAs or PSAs, in the event of a Participant's Separation from
Employment because of his Retirement, Disability or death prior to the end of
the applicable Performance Period, or if the Participant's employer is a
Subsidiary involved in a Divisive Transaction prior to the end of the applicable
Performance Period, payment, if any, to the extent earned under the applicable
Performance Objectives and awarded by the Committee, shall be payable at the end
of the Performance Period in proportion to the active service of the Participant
during the Performance Period, as determined by the Committee. If the Separation
From Employment prior to the end of the Performance Period is for any other
reason, the Participant's participation in Section 10 of the Plan shall
immediately terminate, his agreement shall become void and the PUA or PSA shall
be canceled.
Notwithstanding anything to the contrary in this Plan, if a Participant or
former Participant (a) becomes the owner, director or employee of a competitor
of the Company or its subsidiaries, (b) has his employment terminated by the
Company or one of its subsidiaries on account of actions by the Participant
which are detrimental to the interests of the Company or its subsidiaries, or
(c) engages in conduct subsequent to the termination of his employment with the
Company or its subsidiaries which the Committee determines to be detrimental to
the interests of the Company or its subsidiaries then the Committee may, in its
sole discretion, pay the Participant or former Participant a single sum payment
equal to the amount of his unpaid benefits which were awarded and deferred under
Sections 10 or 12 of the Plan; provided, however, if the deferral has been for
less than three (3) years under Section 12, the Participant shall not be
eligible to receive the Stock Premium. The single sum payment shall be made as
soon as practicable following the date the Participant or former Participant
becomes an owner, director or employee of a competitor, his termination of
employment or the Committee's determination of detrimental conduct, as the case
may be, and shall be in lieu of all other benefits which may be payable to the
Participant or former Participant under this Plan.
15. Incentives Non-assignable and Non-transferable
Any Incentive granted under this Plan shall be non-assignable and
non-transferable other than as provided in Section 16 and shall be exercisable
(including any action of surrender and exercise of rights under Section 9)
during the Participant's lifetime only by the Participant who is the holder of
the Incentive or by his guardian or legal representative.
16. Death of Option Holder
In the event of the death of a Participant who is an Incentive holder
under the Plan while employed by the Company or one of its subsidiaries or prior
to exercise of all rights under an Incentive, the Incentive theretofore granted
may be exercised (including any action of surrender and exercise of rights under
Section 9) by the Participant's Beneficiary or, if no Beneficiary is designated,
by the executor or executrix of the Participant's estate or by the person or
persons to whom rights under the Incentive shall pass by will or the laws of
descent and distribution in accordance with the provisions of the Plan and of
the option and to the same extent as though the Participant were then living.
17. No Right to Continued Employment
Notwithstanding any other provisions of this Plan to the contrary, it is a
condition for eligibility for any benefit or right under this Plan that each
individual agrees that his or her designation as a Participant and any grant
made under the Plan may be rescinded and determined to be void and forfeited
entirely in the absolute and sole discretion of the Committee in the event that
such individual is discharged for Cause.
Incentives granted under the Plan shall not be affected by any change of
employment so long as the Incentive holder has not suffered a Separation From
Employment. A leave of absence granted by the Company or one of its subsidiaries
shall not constitute Separation From Employment unless so determined by the
Committee. Nothing in the Plan or in any Incentive granted pursuant to the Plan
shall confer on any individual any right to continue in the employ of the
Company or one of its subsidiaries or interfere in any way with the right of the
Company or such subsidiary to terminate employment at any time.
18. Funding Method
To the extent reflected by resolutions of the applicable boards of
directors, obligations for benefits under this Plan shall be joint and several.
19. Adjustment of Shares
a. In the event of any change (through recapitalization, merger,
consolidation, stock dividend, split-up, combination or exchanges of shares or
otherwise) in the character or amount of the Company's common stock prior to
exercise of any Incentive granted under this Plan, the Incentives, to the extent
not exercised, shall entitle the Participant who is the holder to such number
and kind of securities as he would have been entitled to had he actually owned
the stock subject to the Incentives at the time of the occurrence of such
change. If any such event should occur, prior to exercise of an Incentive
granted hereunder, which shall increase or decrease the amount of common stock
outstanding and which the Committee, in its sole discretion, shall determine
equitably requires an adjustment in the number of shares which the Incentive
holder should be permitted to acquire, such adjustment as the Committee shall
determine may be made, and when so made shall be effective and binding for all
purposes of the Plan.
b. Incentives may also be granted having terms and provisions which vary
from those specified in the Plan provided that any Incentives granted pursuant
to this paragraph are granted in substitution for, or in connection with the
assumption of, then existing Incentives granted by another corporation and
assumed or otherwise agreed to be provided for by the Company pursuant to or by
reason of a transaction involving a corporate merger, consolidation, acquisition
of property or stock, separation, reorganization or liquidation to which the
Company or a subsidiary corporation is a party.
c. The obligations of the Company or any of its affiliated corporations
and the benefit due any Participant, surviving spouse or beneficiary hereunder
shall be reduced by any amount received in regard thereto under the CSX
Corporation and Affiliated Companies Executives' Stock Trust or any similar
trust or trusts or other vehicle.
d. Notwithstanding the preceding, following a Change of Control, the
authority to delay payment of a Participant's benefits rests solely with the
Benefits Trust Committee
20. Loans to Option Holders
The Committee may adopt programs and procedures pursuant to which the
Company may lend money to any Participant who is an Incentive holder for the
purpose of assisting the Participant to acquire or carry shares of common stock
issued upon the exercise of Incentives granted under the Plan.
21. Termination and Amendment of Plan
a. Unless the Plan shall have been previously terminated as hereinafter
provided, the Plan shall terminate on May 2, 1999, and no Incentives under it
shall be granted thereafter. The Board of Directors, without further approval of
the company's shareholders, may at any time prior to that date terminate the
Plan, and thereafter no further Incentives may be granted under the Plan.
However, Incentives previously granted thereunder may continue to be exercised
in accordance with the terms thereof. Following a Change of Control, all
amendments to this Plan are subject to the approval of the Benefits Trust
Committee.
b. Prior to a Change of Control, the Board of Directors, without further
approval of the shareholders, may, on the recommendation of the Compensation
Committee of the Board, amend the Plan from time to time in such respects as the
Board may deem advisable; provided, however, that no amendment shall become
effective without prior approval of the shareholders which would: (i) increase
(except in accordance with Section 19) the maximum number of shares for which
Incentives may be granted under the Plan; (ii) reduce (except in accordance with
Section 19) the Incentive price below the Fair Market Value of the Company's
common stock on the date of grant of the Incentive; (iii) extend the term of the
Plan beyond May 2, 1999; (iv) change the standards of eligibility prescribed by
Section 5; or (v) increase the maximum awards identified in Sections 7, 8, 9, 10
and 11. Following a Change of Control, all amendments to this Plan are subject
to the approval of the Benefits Trust Committee.
c. No termination or amendment of the Plan may, without the consent of a
Participant who is a holder of an Incentive then existing, terminate his or her
Incentive or materially and adversely affect his or her rights under the
Incentive.
22. Change in Control
a. Notwithstanding any provision of this Plan to the contrary, upon the
occurrence of a Change in Control as set forth in subsection b., below: (i) all
stock options then outstanding under this Plan shall become fully exercisable as
of the date of the Change in Control, whether or not then otherwise exercisable;
(ii) all SARs which have been outstanding for at least six months shall become
fully exercisable as of the date of the Change in Control, whether or not then
otherwise exercisable; (iii) all terms and conditions of RSAs then outstanding
shall be deemed satisfied as of the date of the Change in Control; (iv) all PUAs
and PSAs then outstanding shall be deemed to have been fully earned and to be
immediately payable in cash as of the date of the Change of Control, however,
Participants may defer those case payments, as stock, into the Trust, consistent
with the deferral provisions of Section 10; and (v) the three (3) year holding
requirement of the Stock Premium for deferred ICP shall be deemed satisfied.
b. A 'Change in Control' shall mean any of the following:
(i) Stock Acquisition. The acquisition, by any individual, entity or
-----------------
group [within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the 'Exchange Act')]
(a 'Person') of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 20% or more of
either (A) the then outstanding shares of common stock of the
Company (the 'Outstanding Company Common Stock'), or (B) the
combined voting power of the then outstanding voting securities
of the Company entitled to vote generally in the election of
directors (the 'Outstanding Company Voting Securities');
provided, however, that for purposes of this subsection (i), the
--------- -------
following acquisitions shall not constitute a Change of Control:
(A) any acquisition directly from the Company; (B) any
acquisition by the Company; (C) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company; or (D) any
acquisition by any corporation pursuant to a transaction which
complies with clauses (A), (B) and (C) of subsection (iii) of
this Section 22(b); or
(ii) Board Composition. Individuals who, as of the date hereof,
------------------
constitute the Board of Directors (the 'Incumbent Board') cease
for any reason to constitute at least a majority of the Board of
Directors; provided, however, that any individual becoming a
director subsequent to the date hereof whose election or
nomination for election by the Company's shareholders, was
approved by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding,
for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election
contest with respect to the election or removal of directors or
other actual or threatened solicitation of proxies or consents by
or on behalf of a Person other than the Board of Directors; or
(iii) Business Combination. Approval by the shareholders of the
---------------------
Company of a reorganization, merger, consolidation or sale or
other disposition of all or substantially all of the assets of
the Company or its principal subsidiary that is not subject, as a
matter of law or contract, to approval by the Interstate Commerce
Commission or any successor agency or regulatory body having
jurisdiction over such transactions (the 'Agency') (a 'Business
Combination'), in each case, unless, following such Business
Combination:
(A) all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 50% of, respectively, the then
outstanding shares of common stock and the combined voting power
of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of
the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result
of such transaction owns the Company or its principal subsidiary
or all or substantially all of the assets of the Company or its
principal subsidiary either directly or through one or more
subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be;
(B) no Person (excluding any corporation resulting from such
Business Combination or any employee benefit plan (or related
trust) of the Company or such corporation resulting from such
Business Combination) beneficially owns, directly or indirectly,
20% or more of, respectively, the then outstanding shares of
common stock of the corporation resulting from such Business
Combination or the combined voting power of the then outstanding
voting securities of such corporation except to the extent that
such ownership existed prior to the Business Combination; and
(C) at least a majority of the members of the board of directors
resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board of Directors, providing
for such Business Combination; or
(iv) Regulated Business Combination. Approval by the shareholders of the
------------------------------
Company of a Business Combination that is subject, as a matter of
law or contract, to approval by the Agency (a 'Regulated Business
Combination') unless such Business Combination complies with clauses
(A), (B) and (C) of subsection (iii) of this Section 22(b); or
(v) Liquidation or Dissolution. Approval by the shareholders of the
----------------------------
Company of a complete liquidation or dissolution of the Company or
its principal subsidiary.
c. Each Participant who has elected to defer the payment of PSAs pursuant
to Section 10 or an ICP award pursuant to Section 12, may elect in a time and
manner determined by the Committee, but in no event later than December 31, 1996
or the occurrence of a Change in Control, if earlier, to have amounts and
benefits currently deferred, and to be deferred, under the Plan determined and
payable under the terms of the Plan as if a Change in Control had not occurred.
New Participants in the Plan may elect in a time and manner determined by the
Committee, but in no event later than ninety (90) days after becoming a
Participant, to have amounts and benefits currently deferred, and to be
deferred, under the Plan determined and payable under the terms of the Plan as
if a Change in Control had not occurred. A Participant who has made an election,
as set forth in the two preceding sentences, may at any time and from time to
time, change that election; provided, however, a change of election that is made
within one year of a Change in Control shall be invalid.
d. Upon a Change of Control, the Company or Subsidiary shall, as soon as
possible, but in no event more than seven (7) days following the Change of
Control make an irrevocable contribution to the Trust in an amount that is
sufficient to pay each Participant or beneficiary of this Plan the benefits to
which Participants of this Plan or their beneficiaries would be entitled based
on elections under Sections 10 and 12 (including any applicable Stock Premium),
and for which the Company is liable pursuant to the terms of this Plan as of the
date on which the Change of Control occurred. The amount of the Company's
irrevocable contributions shall be based on the actuarial valuation and
accounting for the most recent calendar year or more recent period for the Plan,
as approved by the independent actuary engaged by the Company prior to the
Change of Control and approved by the Benefits Trust Committee if selected or
changed following a Change of Control (the 'Actuary'), and shall include an
amount deemed necessary to pay estimated administrative expenses for the
following five (5) years. The Benefits Trust Committee shall cause such
actuarial valuations or accountings to be updated, using Participant data
supplied to the Actuary by the Company, through a date no earlier than the date
of the initial contribution and shall notify the Company of the amount of
additional contributions required as soon as practicable.
23. Compliance with Regulatory Authorities
Any shares purchased or distributed pursuant to any Incentives granted
under this Plan must be held for investment and not with a view to the
distribution or resale thereof. Each person who shall exercise an Incentive
granted under this Plan may be required to give satisfactory assurances to such
effect to the Company as a condition to the issuance to him or to her of shares
pursuant to such exercise; provided, however, that the Company may waive such
condition if it shall determine that such resale or distribution may be
otherwise lawfully made without registration under the Securities Act of 1933,
or if satisfactory arrangements for such registration are made. Each Incentive
granted under this Plan is further subject to the condition that if at any time
the Board shall in its sole discretion determine that the listing, registration
or qualification of the shares covered by such Incentive upon any securities
exchange or under any state or federal law, or the consent or approval of any
governmental regulatory body, is necessary or desirable as a condition of or in
connection with the granting of such Incentives or the purchase or transfer of
shares thereunder, the delivery of any or all shares of stock pursuant to
exercise of the Incentive may be withheld unless and until such listing,
registration, qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Board.
24. Withholding Tax
Whenever the Company proposes or is required to issue or transfer shares
of common stock under the Plan, a Participant shall remit to the Company an
amount sufficient to satisfy any federal, state or local income and payroll tax
withholding liability prior to the delivery of any certificate or certificates
for such shares. Alternatively, to the extent permitted by applicable laws, such
federal, state or local income and payroll tax withholding liability may be
satisfied prior to the delivery of any certificate or certificates for the
shares by an adjustment, equal in value to such liability, in the number of
shares to be transferred to the Participant. Whenever under the Plan payments
are to be made in cash, such payments shall be net of an amount sufficient to
satisfy any federal, state or local income and payroll tax withholding
liability.
25. Non-Uniform Determinations
Determinations by the Committee under the Plan, including, without
limitation, determinations of the persons to receive Incentives and the form,
amount and timing of such Incentives, and the terms and provisions of such
Incentives and the agreements evidencing the same need not be uniform, and may
be made by the Committee selectively among persons who receive, or are eligible
to receive, Incentives under the Plan, whether or not such persons are similarly
situated.
Without amending the Plan, Incentives may be granted to eligible employees
who are foreign nationals or who are 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 to further the
purposes of the Plan. Such different terms and conditions may be reflected in
Addenda to the Plan.
26. Construction
The Plan shall be governed by the laws of the Commonwealth of Virginia.
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