VERIZON COMMUNICATIONS INC. LONG-TERM INCENTIVE PLAN CONTENTS
Exhibit 10.12
VERIZON COMMUNICATIONS INC.
CONTENTS
| Article 1. |
Restatement, Objectives, and Duration | B-2 | ||
| Article 2. |
Definitions | B-2 | ||
| Article 3. |
Administration | B-4 | ||
| Article 4. |
Shares Subject to the Plan and Maximum Awards | B-5 | ||
| Article 5. |
Eligibility and Participation | B-6 | ||
| Article 6. |
Stock Options | B-6 | ||
| Article 7. |
Restricted Stock and Restricted Stock Units | B-7 | ||
| Article 8. |
Performance Units and Performance Shares | B-8 | ||
| Article 9. |
Other Awards | B-9 | ||
| Article 10. |
Award Agreements | B-9 | ||
| Article 11. |
Performance Measures | B-10 | ||
| Article 12. |
Beneficiary Designation | B-10 | ||
| Article 13. |
Deferrals | B-11 | ||
| Article 14. |
No Right to Employment or Participation | B-11 | ||
| Article 15. |
Change in Control | B-11 | ||
| Article 16. |
Amendment, Modification, and Termination | B-11 | ||
| Article 17. |
Withholding | B-11 | ||
| Article 18. |
Successors | B-12 | ||
| Article 19. |
Legal Construction | B-12 |
ARTICLE 1. RESTATEMENT, OBJECTIVES, AND DURATION
1.1 RESTATEMENT OF THE PLAN. Verizon Communications Inc., a Delaware corporation (hereinafter referred to as the “Company”), hereby amends and restates the Bell Atlantic 1985 Incentive Stock Option Plan, as in effect on January 1, 2001. This amended and restated plan shall be known as the “Verizon Communications Inc. Long-Term Incentive Plan” (hereinafter referred to as the “Plan”), as set forth in this document as amended from time to time. The Plan permits the grant of Nonqualified Stock Options, Incentive Stock Options, Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units, and Other Awards, including Stock Appreciation Rights.
The amended and restated Plan shall be effective on the date the Company’s shareholders first approve the Plan (the “Effective Date”), and shall remain in effect as provided in Section 1.3 hereof.
Whenever the following terms are used in the Plan, with their initial letter(s) capitalized, they shall have the meanings set forth below:
2.1 “AWARD” means, individually or collectively, a grant under the Plan of Nonqualified Stock Options, Incentive Stock Options, Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units, or Other Awards.
2.2 “AWARD AGREEMENT” means an agreement entered into by the Company and a Participant, or another instrument prepared by the Company in lieu of such an agreement, setting forth the terms and conditions applicable to an Award pursuant to Article 10 hereof.
2.3 “BENEFICIAL OWNER” or “BENEFICIAL OWNERSHIP” shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Exchange Act, as amended from time to time, or any successor rule.
2.4 “BOARD” or “BOARD OF DIRECTORS” means the Board of Directors of the Company.
2.5 “CHANGE IN CONTROL” means a change in control of the Company of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Exchange Act, whether or not the Company is then subject to such reporting requirement; provided that, without limitation, such a Change in Control shall be deemed to have occurred if:
(a) Any Person becomes a Beneficial Owner of shares of one or more classes of stock of the Company representing twenty percent (20%) or more of the total voting power of the Company’s then outstanding voting stock; or
(b) The Company and any Person consummate a merger, consolidation, reorganization, or other business combination; or
(c) The Board adopts resolutions authorizing the liquidation or dissolution, or sale to any Person of all or substantially all of the assets, of the Company.
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Notwithstanding the provisions of Section 2.5 (a), (b), and (c) hereof, a Change in Control shall not occur if:
(i) The Company’s voting stock outstanding immediately before the consummation of the transaction will represent no less than forty-five percent (45%) of the combined voting power entitled to vote for the election of directors of the surviving parent corporation immediately following the consummation of the transaction; and
(ii) Members of the Incumbent Board will constitute at least one-half of the board of directors of the surviving parent corporation; and
(iii) The Chief Executive Officer or co-Chief Executive Officer of the Company will be the chief executive officer or co-chief executive officer of the surviving parent corporation; and
(iv) The headquarters of the surviving parent corporation will be located in New York, New York.
For the purposes of this Section 2.5, “Person” means any corporation, partnership, firm, joint venture, association, individual, trust, or other entity, but does not include the Company or any of its wholly-owned or majority-owned subsidiaries, employee benefit plans, or related trusts; and “Incumbent Board” means those persons who either (A) have been members of the Board of Directors of the Company since June 30, 2000, or (B) are new Directors whose election by the Board of Directors or nomination for election by the shareholders of the Company was approved by a vote of at least three-fourths of the members of the Incumbent Board then in office who either were Directors described in clause (A) hereof or whose election or nomination for election was previously so approved, but shall not include any Director elected as a result of an actual or threatened solicitation of proxies by any Person.
2.6 “CODE” means the Internal Revenue Code of 1986, as amended from time to time.
2.7 “COMMITTEE” means the Human Resources Committee of the Board or any other committee appointed by the Board to administer the Plan and Awards to Participants who are Employees, as specified in Article 3 hereof.
2.8 “COMPANY” means Verizon Communications Inc., a Delaware corporation, and any successor thereto as provided in Article 18 hereof.
2.9 “DIRECTOR” means any individual who is a member of the Board.
2.10 “EFFECTIVE DATE” shall have the meaning ascribed to such term in Section 1.1 hereof.
2.11 “EMPLOYEE” means any employee of the Company or of a Subsidiary. Directors who are employed by the Company or by a Subsidiary shall be considered Employees under the Plan.
2.12 “EXCHANGE ACT” means the Securities Exchange Act of 1934, as amended from time to time, or any successor statute.
2.13 “FAIR MARKET VALUE” means the average of the high and low sales prices of Shares on the principal securities exchange on which the Shares are traded or, if there are no such sales on the relevant date, then the average of the high and low sales prices of Shares on the date or dates that the Committee determines, in its sole discretion, to be appropriate for purposes of valuation.
2.14 “FREESTANDING SAR” means an SAR that is granted independently of any Option, as described in Sections 9.2 through 9.6 hereof.
2.15 “INCENTIVE STOCK OPTION” or “ISO” means an Option that is designated by the Committee as an Incentive Stock Option.
2.16 “INSIDER” means an individual who is, on the relevant date, subject to the reporting requirements of Section 16(a) of the Exchange Act.
2.17 “1985 PLAN” means the Bell Atlantic 1985 Incentive Stock Option Plan, as in effect on January 1, 2001.
2.18 “NON-EMPLOYEE DIRECTOR” means (a) a Director who is not an Employee or (b) a member of the board of directors (or comparable governing body) of a Subsidiary who is not an Employee.
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2.19 “NONQUALIFIED STOCK OPTION” or “NQSO” means an Option that is not designated by the Committee as an Incentive Stock Option.
2.20 “OPTION” means an Incentive Stock Option or a Nonqualified Stock Option granted pursuant to Article 6 hereof.
2.21 “OPTION PRICE” means the price at which a Share may be purchased by a Participant pursuant to an Option, as provided in Section 6.2 hereof.
2.22 “OTHER AWARD” means an Award granted to a Participant pursuant to Article 9 hereof.
2.23 “PARTICIPANT” means an Employee or Non-Employee Director who has been selected to receive an Award or who holds an outstanding Award.
2.24 “PERFORMANCE-BASED EXCEPTION” means the performance-based exception from the tax deductibility limitation imposed by Code Section 162(m), as set forth in Code Section 162(m)(4)(C).
2.25 “PERFORMANCE PERIOD” means the period during which performance goals must be met for purposes of Article 8 hereof.
2.26 “PERFORMANCE SHARE” means an Award granted pursuant to Article 8 hereof, which, on the date of grant, shall have a value equal to the Fair Market Value of a Share on that date.
2.27 “PERFORMANCE UNIT” means an Award granted pursuant to Article 8 hereof, which shall have an initial value established by the Committee on the date of grant.
2.28 “PLAN” means the Verizon Communication Inc. Long-Term Incentive Plan as set forth herein and as it may be amended from time to time.
2.29 “RELOAD OPTION” means an Option granted pursuant to Section 6.5 hereof.
2.30 “RESTRICTED STOCK” means an Award granted pursuant to Section 7.1 hereof.
2.31 “RESTRICTED STOCK UNIT” means an Award granted pursuant to Section 7.5 hereof.
2.32 “RESTRICTION PERIOD” means the period during which the transfer of Shares of Restricted Stock is limited in some way (based on the passage of time, the achievement of performance goals, or the occurrence of other events determined by the Committee in its discretion), and the Shares are subject to a substantial risk of forfeiture, as provided in Article 7 hereof.
2.33 “SHARE” means a share of common stock of the Company.
2.34 “SHARE POOL” means the number of Shares available under Section 4.1 hereof, as adjusted pursuant to Sections 4.2 and 4.3 hereof.
2.35 “STOCK APPRECIATION RIGHT” or “SAR” means an Award, granted either alone or in connection with a related Option, pursuant to the terms of Sections 9.2 through 9.6 hereof.
2.36 “SUBSIDIARY” means (a) a corporation, partnership, joint venture, or other entity in which the Company has an ownership interest of at least fifty percent (50%), and (b) any corporation, partnership, joint venture, or other entity in which the Company holds an ownership interest of less than fifty percent (50%) but which, in the discretion of the Committee, is treated as a Subsidiary for purposes of the Plan.
2.37 “TANDEM SAR” means an SAR granted with respect to a Share pursuant to Sections 9.2 through 9.6 hereof in connection with a related Option, under which (a) the exercise of the SAR with respect to the Share shall cancel the right to purchase such Share under the related Option and (b) the purchase of the Share under the related Option shall cancel the right to exercise the SAR with respect to such Share.
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also qualify as outside directors within the meaning of Code Section 162(m) and the related regulations under the Code. The members of the Committee shall be appointed from time to time by, and shall serve at the discretion of, the Board. The Committee shall have the authority to delegate administrative duties, including the authority to respond to and decide claims or appeals under the Plan and to interpret the Plan terms, to the Executive Vice President-Human Resources of the Company. The Committee may not delegate its authority with respect to (a) non-ministerial actions with respect to Insiders; (b) non-ministerial actions with respect to Awards that are intended to qualify for the Performance-Based Exception; and (c) certifying that any performance goals and other material terms attributable to Awards intended to qualify for the Performance-Based Exception have been satisfied.
ARTICLE 4. SHARES SUBJECT TO THE PLAN AND MAXIMUM AWARDS
4.1 NUMBER OF SHARES AVAILABLE FOR GRANTS. Shares that may be issued pursuant to Awards may be either authorized and unissued Shares, or authorized and issued Shares held in the Company’s treasury, or any combination of the foregoing. Subject to adjustment as provided in Section 4.3 hereof, (a) there shall be reserved for issuance under Awards 200,000,000 Shares, (b) not more than 30,000,000 of such Shares may be used for Awards other than Options, and (c) not more than 60,000,000 of such Shares shall be available for issuance pursuant to the exercise of Incentive Stock Options. Shares covered by Awards that are canceled or forfeited may be reused to make Awards. The maximum aggregate number of Shares with respect to which Awards may be granted in a single calendar year to an individual Participant may not exceed the lesser of (i) one-half of one percent of the total number of Shares that are issued and outstanding on the Effective Date or (ii) 13,500,000 Shares.
(1) An Award of an Option (including a Reload Option);
(2) An Award of an SAR (except a Tandem SAR);
(3) An Award of Restricted Stock;
(4) An Award of a Restricted Stock Unit payable in Shares;
(5) An Award of a Performance Share;
(6) An Award of a Performance Unit payable in Shares; and
(7) Other Awards payable in Shares.
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(b) The following transactions shall restore, on a one-for-one basis, the number of Shares available for issuance under the Share Pool:
(1) A payout of an SAR, Tandem SAR, Restricted Stock Award, or Restricted Stock Unit in the form of cash, or a payout of Performance Units, Performance Shares, or Other Award in the form of cash (if originally awarded in Shares);
(2) A cancellation, termination, expiration, or forfeiture for any reason (with the exception of the termination of a Tandem SAR upon exercise of the related Option, or the termination of a related Option upon exercise of the corresponding Tandem SAR) of any Award payable in Shares or Shares subject to an Award; and
(3) Payment of an Option Price or tax withholding obligation with previously acquired Shares or by withholding Shares that otherwise would be acquired on exercise (i.e., the Share Pool shall be increased by the number of Shares turned in or withheld as payment of the Option Price or tax withholding obligation).
ARTICLE 5. ELIGIBILITY AND PARTICIPATION
5.1 ELIGIBILITY. All Employees and Non-Employee Directors are eligible to participate in the Plan.
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previously owned Shares are tendered by such Participant to pay the Option Price. In such cases, the number of Reload Options that shall automatically be granted by the Company to the Participant shall be equal to the number of Shares tendered by the Participant to pay such Option Price.
The Option Price under each Reload Option shall be equal to the Fair Market Value of a Share on the date on which the Reload Option is automatically granted, and such Reload Option shall expire on the same date as the Predecessor Option would have expired in the absence of being exercised. Reload Options shall be exercisable by the Participant after the date on which they are granted, subsequent to any waiting period that the Committee with the advice of counsel determines is necessary or appropriate to conform with legal or accounting requirements.
Except as otherwise provided in this Section 6.5, the terms and conditions applicable to the Reload Options shall be the same as those that apply to other Options described in this Article 6.
(a) In cash or its equivalent; or
(b) By tendering previously acquired Shares having an aggregate Fair Market Value at the time of exercise equal to the total Option Price (provided that the Shares that are tendered must have been held by the Participant for at least six (6) months prior to their tender to satisfy the Option Price); or
(c) By a combination of (a) and (b).
The Committee also may allow broker-assisted exercise as permitted under Federal Reserve Board’s Regulation T, subject to applicable securities law restrictions, or by any other means that the Committee determines to be consistent with the Plan’s purpose and applicable law.
Subject to any governing rules or regulations, as soon as practicable after receipt of a written notification of exercise and full payment of the Option Price, the Company shall deliver to the Participant, in the Participant’s name (or, at the direction of the Participant, jointly in the names of the Participant and the Participant’s spouse), one or more Share certificates for the Shares purchased under the Option(s).
(b) CODE SECTION 422. ISOs shall contain such other provisions as the Committee shall deem advisable, but shall in all events be consistent with and contain or be deemed to contain all provisions required in order to qualify as ISOs. Moreover, all ISOs must be granted within ten (10) years from the earlier of the date on which the Plan was adopted by the Board or the date the Plan was approved by shareholders.
ARTICLE 7. RESTRICTED STOCK AND RESTRICTED STOCK UNITS
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and/or individual), time-based restrictions on vesting following the attainment of the performance goals, and/or restrictions under applicable federal or state securities laws.
(b) The Company may retain the certificates representing Shares of Restricted Stock in the Company’s possession until such time as all conditions and/or restrictions applicable to such Shares have been satisfied.
(c) Except as otherwise provided in this Article 7, Shares of Restricted Stock that have not yet been forfeited or canceled shall become freely transferable (subject to any restrictions under applicable securities laws) by the Participant after the last day of the applicable Restriction Period.
ARTICLE 8. PERFORMANCE UNITS AND PERFORMANCE SHARES
8.1 GRANT OF PERFORMANCE UNITS/SHARES. Subject to the terms of the Plan, Performance Units, and/or Performance Shares may be granted to Participants in such amounts and upon such terms, and at any time and from time to time, as shall be determined by the Committee.
8.4 FORM AND TIMING OF PAYMENT OF PERFORMANCE UNITS/SHARES. (a) Unless the Committee determines otherwise in its discretion, payment of earned Performance Units/Shares shall be made in a single lump sum following the close of the applicable Performance Period. Subject to the terms of the Plan, the Committee, in its discretion, may direct that earned Performance Units/Shares be paid in the form of cash or Shares (or in a combination thereof) that have an aggregate Fair Market Value equal to the value of the earned Performance Units/Shares on the last trading day immediately before the close of the applicable Performance Period. Such Shares may be granted subject to any restrictions deemed appropriate by the Committee.
(b) At the discretion of the Committee, Participants may be entitled to receive any dividends declared with respect to Shares that have been earned in connection with grants of Performance Units and/or Performance Shares that have been earned, but not yet distributed to Participants; such dividends shall be subject to the same accrual, forfeiture, and payout restrictions as apply to dividends earned with respect to Shares of
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Restricted Stock set forth in Section 7.4 hereof. In addition, Participants may, at the discretion of the Committee, be entitled to exercise voting rights with respect to such Shares.
The Committee shall have complete discretion in determining the number of SARs granted to each Participant (subject to Article 4 hereof) and, consistent with the provisions of the Plan, in determining the terms and conditions pertaining to such SARs.
The xxxxx xxxxx of a Freestanding SAR shall equal the Fair Market Value of a Share on the date of grant of the SAR. The xxxxx xxxxx of Tandem SARs shall equal the Option Price of the related Option.
Notwithstanding any other provision of the Plan to the contrary, with respect to a Tandem SAR granted in connection with an ISO: (a) the Tandem SAR shall expire no later than the expiration of the ISO; (b) the value of the payout with respect to the Tandem SAR shall not exceed the excess of the Fair Market Value of the Shares subject to the ISO at the time the Tandem SAR is exercised over the Option Price under the ISO; and (c) the Tandem SAR may be exercised only when the Fair Market Value of the Shares subject to the ISO exceeds the Option Price of the ISO.
(a) The excess of the Fair Market Value of a Share on the date of exercise over the xxxxx xxxxx, by
(b) The number of Shares with respect to which the SAR is exercised.
At the discretion of the Committee, the payment upon SAR exercise may be in cash, in Shares of equivalent Fair Market Value, or in some combination thereof.
(a) In the case of an Option, the number of the Shares to which the Option pertains, the Option Price, the term of the Option, the schedule on which the Option becomes exercisable, and whether the Option is intended to be an ISO or an NQSO;
(b) In the case of Restricted Stock or Restricted Stock Units, the number of Shares of Restricted Stock or Restricted Stock Units granted, the applicable restrictions, and the Restriction Period(s);
(c) In the case of Performance Units or Performance Shares, the number of Performance Units or Performance Shares granted, the initial value of a Performance Unit (if applicable), and the performance goals; and
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(d) In the case of an SAR, the number of Shares to which the SAR pertains, the xxxxx xxxxx, the term of the SAR, the schedule on which the SAR becomes exercisable, and whether the SAR is a Freestanding SAR or a Tandem SAR.
ARTICLE 11. PERFORMANCE MEASURES
Unless and until the Company’s shareholders approve a change in the general performance measures set forth in this Article 11, the attainment of which may determine the degree of payout and/or vesting with respect to Awards that are designed to qualify for the Performance-Based Exception, the performance measure(s) to be used for purposes of such grants may be measured at the Company level, at a subsidiary level, or at an operating unit level, and shall be chosen from among:
(a) Income measures (including, but not limited to, gross profit, operating income, earnings before or after taxes, or earnings per share);
(b) Return measures (including, but not limited to, return on assets, investment, equity, or sales);
(c) Cash flow return on investments, which equals net cash flows divided by owners equity;
(d) Gross revenues;
(e) Marked value added;
(f) Economic value added; and
(g) Share price (including, but not limited to, growth measures and total shareholder return).
The Committee shall have the discretion to adjust the determinations of the degree of attainment of the preestablished performance goals; provided that Awards that are designed to qualify for the Performance-Based Exception may not be adjusted upward (although the Committee shall retain the discretion to adjust such Awards downward).
In the case of any Award that is granted subject to the condition that a specified performance measure be achieved, no payment under such Award shall be made prior to the time that the Committee certifies in writing that the performance measure has been achieved. For this purpose, approved minutes of the Committee meeting at which the certification is made shall be treated as a written certification. No such certification is required, however, in the case of an Award that is based solely on an increase in the value of a Share from the date such Award was made.
ARTICLE 12. BENEFICIARY DESIGNATION
Each Participant may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under the Plan is to be paid in case of the Participant’s death before the Participant receives any or all of such benefit. Each such designation shall revoke all prior
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designations by the same Participant with respect to such benefit, shall be in a form prescribed by the Company, and shall be effective only when filed by the Participant in writing with the Company during the Participant’s lifetime. In the absence of any such designation, any benefits remaining unpaid under the Plan at the Participant’s death shall be paid to the Participant’s estate unless otherwise provided in the Award Agreement.
The Committee may permit or require a Participant to defer receipt of the payment of cash or the delivery of Shares that would otherwise be due pursuant to the exercise of an Option or SAR, the lapse or waiver of restrictions with respect to Restricted Stock or Restricted Stock Units, the satisfaction of any requirements or goals with respect to Performance Units/Shares, or in connection with any Other Awards. If any such deferral is required or permitted, the Committee shall, in its discretion, establish rules and procedures for such deferrals. All amounts previously deferred under the 1985 Plan shall remain deferred pursuant to the rules and procedures applicable to such deferrals as amended from time to time.
ARTICLE 14. NO RIGHT TO EMPLOYMENT OR PARTICIPATION
ARTICLE 16. AMENDMENT, MODIFICATION, AND TERMINATION
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granted hereunder, Participants may elect, subject to the approval of the Committee, to satisfy the withholding requirement, in whole or in part, by having the Company withhold Shares having a Fair Market Value on the date the tax is to be determined equal to the minimum statutory withholding tax that could be imposed on the transaction. All such elections shall be irrevocable, made in writing, signed by the Participant, and shall be subject to any restrictions or limitations that the Committee, in its discretion, deems appropriate.
All obligations of the Company under the Plan with respect to Awards granted hereunder shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.
ARTICLE 19. LEGAL CONSTRUCTION
19.4 GOVERNING LAW. The Plan and all Award Agreements shall be construed in accordance with and governed by the laws of the State of Delaware (without regard to the legislative or judicial conflict of laws rules of any state), except to the extent superseded by federal law.
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