EXHIBIT 10(c)
JOHNSON & JOHNSON
1991 STOCK OPTION PLAN
(AS AMENDED DECEMBER 4, 1997)
1. PURPOSE
The purpose of the Johnson & Johnson 1991 Stock Option Plan (referred to
herein as the "Plan") is to promote the interests of the Company by ensuring
continuity of management and increased incentive on the part of officers and
executive employees responsible for major contributions to effective management,
through facilitating their acquisition of an equity interest in the Company on
reasonable terms.
2. ADMINISTRATION
The Plan shall be administered by the Compensation Committee of the Board
of Directors (referred to herein as the "Committee"). The Committee shall
consist of not less than three directors who shall not be eligible to
participate in the Plan while members of the Committee. It shall have the power
to select optionees, to establish the number of shares and other terms
applicable to each such option, to construe the provisions of the Plan, and to
adopt rules and regulations governing the administration of the Plan.
The Board, within its discretion, shall have authority to amend the Plan
and the terms of any option issued hereunder without the necessity of obtaining
further approval of the stockholder, unless such approval is required by law.
3. ELIGIBILITY
Those eligible to participate in the Plan will be selected by the Committee
from the following:
(1) Directors who are employees of the Company or its domestic
subsidiaries (excluding members from time to time of the Committee).
(2) Officers and other key employees of the Company and its domestic
subsidiaries.
(3) Key employees of subsidiaries outside the United States.
In all cases, optionees shall be selected on the basis of demonstrated
ability to contribute substantially to the effective management of the Company.
In no event shall an option be granted to any individual who, immediately
after such option is granted, is considered to own stock possessing more than
10% of the combined voting power of all classes of stock of Johnson & Johnson or
any of its subsidiaries within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (referred to herein as the "Internal Revenue
Code").
4. ALLOTMENT OF SHARES
A maximum of 52,000,000 authorized but unissued shares of the Common Stock
of the Company (par value $1.00) will be allotted to the Plan, subject to the
required approval by the stockholders. The Committee may, in its discretion, use
Treasury shares in lieu of authorized but unissued shares for the options. To
the extent this is done, the number of authorized but unissued shares to be used
for the Plan will be reduced.
1
Shares covered by options which lapse or have been terminated during the
duration of this Plan may be reallocated by the Committee.
5. EFFECTIVE DATE AND TERM OF PLAN
The Plan shall become effective on April 25, 1991. No option shall be
granted pursuant to this Plan later than April 27, 1995, but options theretofore
granted may extend beyond that date in accordance with their terms.
6. TERMS AND CONDITIONS
A. All Options
The following shall apply to all options granted under the Plan:
(i) Option Price
The option price per share for each stock option shall be
determined by the Committee and shall not be less than the fair market
value on the date the option is granted. The fair market value shall be
determined as prescribed by the Internal Revenue Code and Regulations.
(ii) Time of Exercise of Option
The Committee shall establish the time or times within the option
period when the stock option may be exercised in whole or in such parts
as may be specified from time to time by the Committee. With respect to
an optionee who is about to retire, the Committee may in its discretion
accelerate the time or times when any particular stock option held by
said optionee may be so exercised so that such time or times are earlier
than those originally provided in said option. In all cases exercise of
a stock option shall be subject to the provisions of Section 6B(ii) or
6C(iii), as the case may be. The Committee shall determine, either at
the time of grant or later whether, and to what extent and under what
circumstances, the transfer of shares issuable in connection with the
exercise of a non-qualified option may be deferred at the election of
the optionee.
(iii) Payment
The entire option price may be paid at the time the option is
exercised. When an option is exercised prior to termination of
employment, the Committee shall have the discretion to arrange for the
payment of such price, in whole or in part, in installments. In such
cases, the Committee shall obtain such evidence of the optionee's
obligation, establish such interest rate and require such security as it
may deem appropriate for the adequate protection of the Company.
(iv) Non-Transferability of Option
An option by its terms shall not be transferable by the optionee
otherwise than by will or by the laws of descent and distribution and
shall be exercisable during the optionee's lifetime only by the
optionee.
(v) Adjustment in Event of Recapitalization of the Company
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, the Board of Directors shall make such adjustment as it may
deem equitably required in the number and kind of shares authorized by
and for the Plan, in the number and kind of shares covered by the
options granted, and in the option price.
2
B. Non-Qualified Stock Options
The Committee may, in its discretion, grant options under the Plan which,
in whole or in part, do not qualify as incentive stock options under Section 422
of the Internal Revenue Code. In addition to the terms and conditions set forth
in Section 6A above, the following terms and conditions shall govern any option
(or portion thereof) to the extent that it does not so qualify.
(i) Form of Payment
Payment of the option price of any option (or portion thereof) not
qualifying as an incentive stock option shall be made in cash or, in the
discretion of the Committee, in the Common Stock of the Company valued
at its fair market value (as the same shall be determined by the
Committee), or a combination of such Common Stock and cash.
(ii) Rights after Termination of Employment
In the event of termination of employment due to any cause
including death, disability or retirement, rights to exercise the stock
option shall cease, except for those which have accrued to the date of
termination, unless the Committee shall otherwise specify. These rights
shall remain exercisable for a period of three months, or such longer
period (not to exceed three years) as the Committee shall provide,
following termination for any cause other than death, disability or
retirement and for a period of three years following termination due to
death, disability or retirement, unless the Committee otherwise
specifies. The Committee may, in its discretion, extend the period
within which any particular option may be exercised beyond the
expiration date originally provided in said option. However, no stock
option shall, in any event, be exercised after the expiration of the
full term of the option.
(iii) Period of Option
The exercise period of each non-qualified stock option shall be
specified by the Committee at the time of grant.
C. Incentive Stock Options
The Committee may, in its discretion, grant options under the Plan which
qualify in whole or in part as incentive stock options under Section 422 of the
Internal Revenue Code. In addition to the terms and conditions set forth in
Section 6A above, the following terms and conditions shall govern any option (or
portion thereof) to the extent that it so qualifies:
(i) Maximum Fair Market Value of Incentive Stock Options
The aggregate fair market value (determined as of the time such
option is granted) of the Common Stock for which any optionee may have
stock options vest in any calendar year (under all incentive stock
option plans of the Company and its parent and subsidiary corporations)
shall not exceed $100,000.
(ii) Form of Payment
Payment of the option price for incentive stock options shall be
made in cash or in the Common Stock of the Company valued at its fair
market value (as the same shall be determined by the Committee), or a
combination of such Common Stock and cash. Where payment of the option
price is to be made with Common Stock acquired under a Company
compensation plan (within the
3
meaning of paragraph 11(g) of Opinion No. 25 of the Accounting
Principles Board), such Common Stock will not be accepted as payment
unless the optionee has beneficially owned such Common Stock for at
least six months (increased to one year if such Common Stock was
acquired under an incentive stock option) prior to such payment.
(iii) Rights after Termination of Employment
In the event of termination of employment due to any cause
including death, disability or retirement, rights to exercise the stock
option shall cease, except for those which have accrued to the date of
termination, unless the Committee shall otherwise specify. These rights
shall remain exercisable for a period of three months, or such longer
period (not to exceed three years) as the Committee shall provide,
following termination for any cause other than death, disability or
retirement and for a period of three years following termination due to
death, disability or retirement, unless the Committee otherwise
specifies. However, no incentive stock option shall, in any event, be
exercised after the expiration of 10 years from the date such option is
granted, or such earlier date as may be specified in the option.
(iv) Period of Option
The exercise period of each incentive stock option by its terms
shall not be more than 10 years from the date the option is granted.
4