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MERCK & CO., INC.
Plan for Deferred Payment of
Directors' Compensation
(Amended and Restated as of November 1, 2000)
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TABLE OF CONTENTS
Page
Article I Purpose 1
Article II Election of Deferral, Measurement Methods and Distribution Schedule 1
Article III Valuation of Deferred Amounts 2
Article IV Redesignation Within a Deferral Account 3
Article V Redesignation of Deferred Amounts Measured by 4
Certain Measurement Methods on February 1, 2000
Article VI Payment of Deferred Amounts 4
Article VII Designation of Beneficiary 6
Article VIII Plan Amendment or Termination 6
Schedule A Measurement Methods 7
(i)
MERCK & CO., INC.
PLAN FOR DEFERRED PAYMENT OF
DIRECTORS' COMPENSATION
I. PURPOSE
To provide an arrangement under which directors of Merck & Co., Inc. other
than current employees may (i) elect to voluntarily defer payment of the
annual retainer and meeting and committee fees until after termination of
their service as a director, and (ii) value compensation mandatorily
deferred on their behalf.
II. ELECTION OF DEFERRAL, MEASUREMENT METHODS AND DISTRIBUTION SCHEDULE
A. Election of Voluntary Deferral Amount
-------------------------------------
1. Prior to December 28 of each year, each director is entitled to make
an irrevocable election to defer until termination of service as a
director receipt of payment of (a) 50% or 100% of the retainer for the
12 months beginning April 1 of the next calendar year, (b) 50% or 100%
of the Committee Chairperson retainer beginning April 1 of the next
calendar year, and (c) 50% or 100% of the meeting and committee fees
for the 12 months beginning April 1 of the next calendar year.
2. Prior to commencement of duties as a director, a director newly
elected or appointed to the Board during a calendar year must make the
election under this paragraph for the portion of the Voluntary
Deferral Amount applicable to such director's first year of service
(or part thereof).
3. The Voluntary Deferral Amount shall be credited as follows: (1)
Meeting and committee fees that are deferred are credited as of the
day the director's services are rendered; (2) if the Board retainer
and/or Committee Chairperson retainer is deferred, a pro-rata share of
the deferred retainer is credited on the last business day of each
calendar quarter. The dates the Voluntary Deferral Amount, or parts
thereof, are credited to the director's deferred account are
hereinafter referred to as the Voluntary Deferral Dates.
B. Mandatory Deferral Amount
-------------------------
1. On the Friday following the Company's Annual Meeting of Stockholders
(such Friday hereinafter referred to as the "Mandatory Deferral
Date"), each director will be credited with an amount equivalent to
one-third of the annual cash retainer for the 12 month period
beginning on the April 1 preceding the Annual Meeting (the "Mandatory
Deferral Amount"). The Mandatory Deferral Amount will be measured by
the Merck Common Stock account.
2. A director newly elected or appointed to the Board after the Mandatory
Deferral Date will be credited with a pro rata portion of the
Mandatory Deferral Amount applicable to such director's first year of
service (or part thereof). Such pro rata portion shall be credited to
the director's account on the first day of such director's service.
1
C. Election of Measurement Method
------------------------------
Each such annual election referred to in Section A shall include an
election as to the measurement method or methods by which the value of
amounts deferred will be measured in accordance with Article III,
below. The available measurement methods are set forth on Schedule A
hereto.
D. Election of Distribution Schedule
---------------------------------
Each annual election referred to in Section A above shall also include
an election to receive payment following termination of service as a
director of all Voluntary Deferral Amounts and Mandatory Deferral
Amounts in a lump sum either immediately or one year after such
termination, or in quarterly or annual installments over five, ten or
fifteen years.
III. VALUATION OF DEFERRED AMOUNTS
A. Common Stock
------------
1. Initial Crediting. The annual Mandatory Deferral Amount shall be used
to determine the number of full and partial shares of Merck Common
Stock which such amount would purchase at the closing price of the
Common Stock on the New York Stock Exchange on the Mandatory Deferral
Date.
That portion of the Voluntary Deferral Amount allocated to Merck
Common Stock shall be used to determine the number of full and partial
shares of Merck Common Stock which such amount would purchase at the
closing price of the Common Stock on the New York Stock Exchange on
the applicable Voluntary Deferral Date.
However, should it be determined by the Committee on Directors of the
Board of Directors that a measurement of Merck Common Stock on any
Mandatory or Voluntary Deferral Date would not constitute fair market
value, then the Committee shall decide on which date fair market value
shall be determined using the valuation method set forth in this
Article III, Section A.1.
At no time during the deferral period will any shares of Merck Common
Stock be purchased or earmarked for such deferred amounts nor will any
rights of a shareholder exist with respect to such amounts.
2. Dividends. Each director's account will be credited with the
additional number of full and partial shares of Merck Common Stock
which would have been purchasable with the dividends on shares
previously credited to the account at the closing price of the Common
Stock on the New York Stock Exchange on the date each dividend was
paid.
3. Distributions. Distribution from the Merck Common Stock account will
be valued at the closing price of Merck Common Stock on the New York
Stock Exchange on the distribution date.
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B. Mutual Funds
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1. Initial Crediting. The amount allocated to each Mutual Fund shall be
used to determine the full and partial Mutual Fund shares which such
amount would purchase at the closing net asset value of the Mutual
Fund shares on the Mandatory or Voluntary Deferral Date, whichever is
applicable. The director's account will be credited with the number of
full and partial Mutual Fund shares so determined.
At no time during the deferral period will any Mutual Fund shares be
purchased or earmarked for such deferred amounts nor will any rights
of a shareholder exist with respect to such amounts.
2. Dividends. Each director's account will be credited with the
additional number of full and partial Mutual Fund shares which would
have been purchasable, at the closing net asset value of the Mutual
Fund shares as of the date each dividend is paid on the Mutual Fund
shares, with the dividends which would have been paid on the number of
shares previously credited to such account (including pro rata
dividends on any partial shares).
3. Distributions. Mutual Fund distributions will be valued based on the
closing net asset value of the Mutual Fund shares on the distribution
date.
C. Adjustments
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In the event of a reorganization, recapitalization, stock split, stock
dividend, combination of shares, merger, consolidation, rights
offering or any other change in the corporate structure or shares of
the Company or a Mutual Fund, the number and kind of shares or units
of such investment measurement method available under this Plan and
credited to each director's account shall be adjusted accordingly.
IV. REDESIGNATION WITHIN A DEFERRAL ACCOUNT
A. General
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A director may request a change in the measurement methods used to
value all or a portion of his/her account other than Merck Common
Stock. Amounts deferred using the Merck Common Stock method and any
earnings attributable to such deferrals may not be redesignated. The
change will be effective on (i) the day when the redesignation
request is received pursuant to administrative guidelines established
by the Human Resources Financial Services area of the Treasury
department, provided the request is received prior to the close of the
New York Stock Exchange on such day or (ii) the next following
business day if the request is received when the New York Stock
Exchange is closed.
B. When Redesignation May Occur
----------------------------
1. During Active Service. There is no limit on the number of times a
director may redesignate the portion of his/her deferred account
permitted to be redesignated. Each such request shall be irrevocable
and can be designated in whole percentages or as a dollar amount.
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2. After Death. Following the death of a director, the legal
representative or beneficiary of such director may redesignate subject
to the same rules as for active directors set forth in Article IV,
Section B.1.
C. Valuation of Amounts to be Redesignated
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The portion of the director's account to be redesignated will be
valued at its cash equivalent and such cash equivalent will be
converted into shares or units of the other measurement method(s). For
purposes of such redesignations, the cash equivalent of the value of
the Mutual Fund shares shall be the closing net asset value of such
Mutual Fund on (i) the day when the redesignation request is received
pursuant to administrative guidelines established by the Human
Resources Financial Services area of the Treasury department, provided
the request is received prior to the close of the New York Stock
Exchange on such day or (ii) the next following business day if the
request is received when the New York Stock Exchange is closed.
V. REDESIGNATION OF DEFERRED AMOUNTS MEASURED BY CERTAIN MEASUREMENT METHODS
ON FEBRUARY 1, 2001
Prior to February 1, 2001, each director who has any part of his/her
deferred account measured by the ten investment funds listed in the chart
below may elect the investments by which such part of the deferred account
will be measured as of February 1, 2001.
If a director fails to make an election regarding amounts measured by those
ten funds before February 1, 2001, then the amount in each such fund shall
automatically be redesignated as of February 1, 2001, to the investments
specified in the chart below as the replacement investments. The value to
be redesignated will be the closing value on January 31, 2001 as determined
in accordance with Article III.
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Investment Fund to Be Replaced Replacement Investment Fund
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PIMCO Global Bond Institutional PIMCO Foreign Bond Institutional
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Vanguard Wellington Fund Vanguard Asset Allocation
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Fidelity Magellan Fund T. Rowe Price Blue Chip Growth Fund
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Sequoia Fund Fidelity Destiny I
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Scudder Growth & Income Fidelity Destiny I
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T. Rowe Price Small-Cap Value Fund Fidelity Low-Priced Stock Fund
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T. Rowe Price International Stock Fund Putnam International Voyager A
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Templeton Growth Fund, Inc. Putnam Global Equity A
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Templeton Developing Markets A American Century Emerging Markets Fund
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Fidelity Retirement Government Money Market Fidelity Retirement Money Market
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VI. PAYMENT OF DEFERRED AMOUNTS
A. Payment
-------
All payments to directors of amounts deferred will be in cash in
accordance with the distribution schedule elected by the director
pursuant to Article II, Section D. Distributions shall be pro rata
by measurement method. Distributions shall be valued on the
fifteenth day of the distribution month (or, if such day is not a
business day, the next business day) and paid as soon thereafter
as possible.
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B. Changes to Distribution Schedule Prior to Termination
-----------------------------------------------------
Upon the request of a director made at any time during the
calendar year immediately preceding the calendar year in which
service as a director is expected to terminate, the Committee on
Directors of the Board of Directors ("Committee on Directors"), in
its sole discretion, may authorize: (a) an extension of a payment
period beyond that originally elected by the director not to
exceed that otherwise allowable under Article II, Section D,
and/or (b) a payment frequency different from that originally
elected by the director. Such request may not be made with regard
to amounts deferred after December 31, 1990 using the Merck Common
Stock method and to any earnings attributable to such deferrals.
Deferrals into Merck Common Stock made after December 31, 1990 and
any earnings thereon may only be distributed in accordance with
the schedule elected by the director under Article II, Section D
or determined by the Committee on Directors under Article VII.
C. Post-Termination Changes to Distribution Schedule
-------------------------------------------------
Following termination of service as a director, each director may
make one request for a further extension of the period for
distribution of his/her deferred compensation. Such request must
be received by the Committee on Directors prior to the first
distribution to the participant under his/her previously elected
distribution schedule. Any revised distribution schedule may not
exceed the deferral period otherwise allowable under Article II,
Section C. This request may be granted and a new payment schedule
determined in the sole discretion of the Committee on Directors.
Such request may not be made with regard to amounts deferred after
December 31, 1990 using the Merck Common Stock Method and to any
earnings attributable to such deferrals. Any retired director who
is not subject to U.S. income tax may petition the Committee on
Directors to change payment frequency, including a lump sum
distribution, and the Committee on Directors may grant such
petition if, in its discretion, it considers there to be
reasonable justification therefor. Deferrals into Merck Common
Stock made after December 30, 1990 and any earnings thereon may
only be distributed in accordance with the schedule elected by the
director under Article II, Section D or determined by the
Committee on Directors under Article VII.
D. Forfeitures
-----------
A director's deferred amount attributable to the Mandatory
Deferral Amount and earnings thereon shall be forfeited upon his
or her removal as a director or upon a determination by the
Committee on Directors in its sole discretion, that a director
has:
(i) joined the Board of, managed, operated, participated in a
material way in, entered employment with, performed
consulting (or any other) services for, or otherwise been
connected in any material manner with a company,
corporation, enterprise, firm, limited partnership,
partnership, person, sole proprietorship or any other
business entity determined by the Committee on Directors in
its sole discretion to be competitive with the business of
the Company, its subsidiaries or its affiliates (a
"Competitor");
(ii) directly or indirectly acquired an equity interest of five
(5) percent or greater in a Competitor; or
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(iii) disclosed any material trade secrets or other material
confidential information, including customer lists, relating
to the Company or to the business of the Company to others,
including a Competitor.
VII. DESIGNATION OF BENEFICIARY
In the event of the death of a director, the deferred amount at the date
of death shall be paid to the last named beneficiary or beneficiaries
designated by the director, or, if no beneficiary has been designated, to
the director's legal representative, in one or more installments as the
Committee on Directors in its sole discretion may determine.
VIII. PLAN AMENDMENT OR TERMINATION
The Committee on Directors shall have the right to amend or terminate
this Plan at any time for any reason.
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SCHEDULE A
MEASUREMENT METHODS
(Effective July 1, 1999 - January 31, 2001)
Merck Common Stock
Mutual Funds
Acorn Fund
Fidelity Destiny I
Fidelity Equity Income Fund
Fidelity Magellan Fund
Fidelity Retirement Government Money Market
Fidelity Spartan Government Income
Fidelity Spartan U.S. Equity Index Fund
PIMCO Long Term US Government Institutional
PIMCO Total Return Institutional
PIMCO Global Bond Institutional
Scudder Growth & Income Fund
Sequoia Fund
T. Rowe Price Small-Cap Value Fund
T. Rowe Price International Stock Fund
Templeton Developing Markets A
Templeton Growth Fund, Inc. I
Vanguard Wellington Fund
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SCHEDULE A
MEASUREMENT METHODS
(February 1, 2001)
Merck Common Stock
Mutual Funds
Acorn Fund
American Century Emerging Markets Fund
Europacific Growth Fund
Fidelity Destiny I
Fidelity Dividend Growth
Fidelity Equity Income Fund
Fidelity Low-Priced Stock Fund
Fidelity Retirement Money Market
Fidelity Spartan Government Income
Fidelity Spartan U.S. Equity Index
Franklin Small Cap Growth A
Janus Enterprise
Janus Growth & Income
PIMCO Foreign Bond Institutional
PIMCO Long Term US Government Institutional
PIMCO Total Return Institutional
Putnam Global Equity A
Putnam International Voyager A
Putnam Vista A
T. Rowe Price Blue Chip Growth Fund
Vanguard Asset Allocation
Vanguard U.S. Growth Portfolio
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