Exhibit 10(f)
JOHNSON & JOHNSON
EXECUTIVE INCENTIVE PLAN
(EFFECTIVE JANUARY 1, 1996)
I. PURPOSE
The purpose of the Johnson & Johnson Executive Incentive Plan (the
"Plan") is to attract and retain highly qualified individuals as executive
officers; to obtain from each the best possible performance; to underscore the
importance to them of achieving particular business objectives established for
Johnson & Johnson; and to include in their compensation package a bonus
component which is intended to qualify as performance-based compensation under
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Internal
Revenue Code"), which compensation would be deductible by Johnson & Johnson
under the Internal Revenue Code.
II. DEFINITIONS
For the purposes of the Plan, the following terms shall have the
following meanings:
A. AWARDS. The cash and/or stock bonus awards made pursuant to
the Plan.
B. BOARD OF DIRECTORS. The Board of Directors of Johnson &
Johnson.
C. COMMITTEE. The Compensation Committee of the Board of
Directors or any successor thereto.
D. COMMON STOCK. The common stock of the Corporation, par
value $1.00 per share.
E. CONSOLIDATED EARNINGS. Consolidated net income for the year
for which an Award is made, adjusted to omit the effects of extraordinary items,
discontinued operations and the cumulative effects of changes in accounting
principles, all as shown on the audited consolidated
statement of income of the Corporation and its subsidiaries and as determined in
accordance with generally accepted accounting principles.
F. CORPORATION. Johnson & Johnson.
G. ELIGIBLE EMPLOYEE. An Employee who is an Executive Officer
of the Corporation.
H. EMPLOYEE. An individual who is on the active payroll of the
Corporation or a subsidiary of the Corporation at any time during the period for
which an Award is made.
I. EXECUTIVE OFFICER. The Chairman and any Vice Chairman of
the Board of Directors and any other officer of the Corporation who has been
designated a part of the Office of the Chairman or elected a Member of the
Executive Committee of the Corporation.
J. FAIR MARKET VALUE. The average between the highest and
lowest quoted selling price per share of Common Stock on the New York Stock
Exchange Composite Transactions Tape on the grant date, provided that if there
shall be no sales of shares of Common Stock on such date, the Fair Market Value
shall be deemed equal to the average between the highest and lowest sales price
of a share of Common Stock on such Composite Tape for the last preceding date on
which sales of shares of Common Stock were reported.
III. EFFECTIVE DATE; TERM
The Plan is effective as of January 1, 1996, subject to approval by the
Corporation's stockholders at the Corporation's 1996 Annual Meeting of
Stockholders, and shall remain in effect until such time as it shall be
terminated by the Board of Directors.
IV. AMOUNTS AVAILABLE FOR AWARDS; SHARES SUBJECT TO THE PLAN
A. Awards with respect to any taxable year of the Corporation shall not
exceed the limitations specified in Section VI of the Plan.
B. Awards that are granted under the Plan in the form of stock, in
whole or in part, may be made in the aggregate of not more than 4 million shares
of Common Stock less the aggregate number of shares of Common Stock awarded
under the 1995 Stock Compensation Plan of the Corporation, subject in each case,
to adjustment as hereinafter provided. These shares may, in the discretion of
the
Committee, consist either in whole or in part of authorized but unissued
shares of Common Stock or shares of Common Stock held in the treasury of the
Corporation.
C. In the event of a reorganization, recapitalization, stock split,
stock dividend, combination of shares, merger, consolidation, any separation
(including a spinoff or other distribution of stock or property), any partial or
complete liquidation or any other change in the corporate structure or shares of
the Corporation, the Committee shall make such adjustment as is equitably
required in the number and kind of shares authorized by and for the Plan or in
the number of shares of Common Stock covered by any outstanding deferred Award.
V. ELIGIBILITY FOR AWARDS
Awards for any period may be granted to those Eligible Employees who
are selected by the Committee. Such selections, except in the case of the
Corporation's Chairman, shall be made after considering the recommendations of
the Chairman. The Committee shall also give consideration to the contribution
made by the Eligible Employee to achievement of the Corporation's established
objectives and such other matters as it shall deem relevant.
In the discretion of the Committee, Awards may be made to Eligible
Employees who have retired or whose employment has terminated after the
beginning of the year for which an Award is made, or to the designee or estate
of an Eligible Employee who died during such period.
VI. DETERMINATION OF AMOUNTS OF AWARDS
The maximum Award payable with respect to any taxable year of the
Corporation to any Eligible Employee who is the Chairman or a Vice Chairman of
the Board of Directors or any other officer who has been designated a part of
the Corporation's Office of the Chairman during all or any portion of such
taxable year shall not exceed .08% of Consolidated Earnings for such year. The
maximum Award payable with respect to any taxable year of the Corporation to any
other Eligible Employee shall not exceed .04% of Consolidated Earnings for such
year. The amounts of Awards to Eligible Employees shall be determined by the
Committee acting in its discretion subject to the maximum amounts set forth
above. Such determinations, except in the case of the Award for the Chairman,
shall be made after
considering the recommendations of the Chairman and such other matters as the
Committee shall deem relevant. The Committee, acting in its discretion, may
determine to pay a lesser award than the maximum specified herein.
Awards may be made at any time following the end of the taxable year;
provided, however, that no Awards shall be made until the Committee receives
assurances from both the Corporation's Chief Financial Officer and its
independent accountants that the amount of such Award does not exceed the
applicable limitation under this Section VI and the Committee certifies in
writing that such limitation has not been exceeded. For purposes of making these
determinations, the value of the Common Stock component of any Award shall be
its Fair Market Value.
VII. FORM OF AWARDS
Awards under the Plan shall be made in cash or Common Stock, as the
Committee shall determine, subject to the limitations set forth in Section IV.
VIII. PAYMENT OF AWARDS
A. Awards under the Plan shall be paid currently, unless the
Committee shall determine that any Award in cash or Common Stock or any portion
thereof shall be deferred. Deferred Awards may be made in one lump sum or in
installments and may bear interest in the case of any deferred cash Award or
dividend equivalents in the case of any deferred Common Stock Award, all as the
Committee shall determine.
B. When an Award is made, the Corporation shall cause the cash
or Common Stock to be paid or issued to the Eligible Employee at the time or
times specified by the Committee or, if no time or times is specified, as soon
as practicable after the Award is made.
IX. SPECIAL AWARDS AND OTHER PLANS
A. Nothing contained in the Plan shall prohibit the
Corporation or any of its subsidiaries from establishing other special awards or
incentive compensation plans providing for the payment of incentive compensation
to Employees (including Eligible Employees).
B. Payments or benefits provided to an Eligible Employee under
any stock, deferred compensation, savings, retirement or other employee benefit
plan are governed solely by the terms of such plan.
X. ADMINISTRATION, AMENDMENT AND INTERPRETATION OF THE PLAN
A. Except as otherwise provided in the Plan, the Committee
shall administer the Plan. The Committee shall consist of not less than three
members of the Board of Directors. No director shall be eligible to serve as a
member of such Committee unless such person is a "disinterested person" within
the meaning of Rule 16b-3 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended, and an "outside director" within
the meaning of Section 162(m) of the Internal Revenue Code. Committee members
shall not be eligible to participate in the Plan while members of the Committee.
The Committee shall have full power to construe and interpret the Plan,
establish and amend rules and regulations for its administration, and perform
all other acts relating to the Plan, including the delegation of administrative
responsibilities, that it believes reasonable and proper and in conformity with
the purposes of the Plan.
B. The Committee shall have the right to amend the Plan from
time to time or to repeal it entirely or to direct the discontinuance of Awards
either temporarily or permanently; provided, however, that (i) no amendment of
the Plan shall operate to annul, without the consent of the Eligible Employee,
an Award already made hereunder, and (ii) no amendment of the Plan that (x)
changes the maximum Award payable to any Eligible Employee, as set forth in
Section VI, (y) materially amends the definition of Consolidated Earnings or (z)
increases the amount of shares available for awards under the Plan (except as
contemplated by Section IV.C.) shall be effective before approval by the
affirmative vote of a majority of shares voting at a meeting of the stockholders
of the Corporation.
C. Any decision made, or action taken, by the Committee
arising out of or in connection with the interpretation and/or administration of
the Plan shall be final, conclusive and binding on all persons affected thereby.
XI. RIGHTS OF ELIGIBLE EMPLOYEES
A. Neither the Plan, nor the adoption or operation of the
Plan, nor any documents describing or referring to the Plan (or any part hereof)
shall confer upon any Employee any right to continue in the employ of the
Corporation or a subsidiary of the Corporation.
B. No individual to whom an Award has been made or any other
party shall have any interest in the cash or Common Stock, or any other asset of
the Corporation until such amount has been paid or issued. To the extent that
any party acquires a right to receive payments of cash and/or share certificates
under the Plan, such party shall have the status of unsecured creditor of the
Corporation with respect to such right.
C. No right or interest of any Eligible Employee in the Plan
shall be assignable or transferable, or subject to any claims of any creditor or
subject to any lien.
XII. MISCELLANEOUS
A. All expenses and costs incurred in connection with the
operation of the Plan shall be borne by the Corporation, and no part therefor
(other than the amounts of Awards under the Plan) shall be charged against the
maximum limitation of Section VI.
B. All Awards under the Plan are subject to withholding, where
applicable, for federal, state and local taxes.
C. Any provision of the Plan that is prohibited or
unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of the Plan.
D. The Plan and the rights and obligations of the parties to
the Plan shall be governed by, and construed and interpreted in accordance with,
the law of the State of New Jersey (without regard to principles of conflicts of
law).