EXHIBIT 10(b)
JOHNSON & JOHNSON
1995 STOCK OPTION PLAN
(EFFECTIVE APRIL 27, 1995, AS AMENDED NOVEMBER 30, 1995, DECEMBER 4, 1997 AND
JUNE 8, 1998)
1. PURPOSE
The purpose of the Johnson & Johnson 1995 Stock Option Plan (the "Plan") is
to promote the interests of Johnson & Johnson (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 (the "Committee"). The Committee shall consist of not less than
three directors. No person 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 of 1986, as amended (the "Internal Revenue
Code"). Committee members 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 of Directors, 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 stockholders, 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.
(4) Key employees of a joint venture operation of the Company or its
subsidiaries and key employees of joint venture partners who are assigned
to such a joint venture.
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.
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4. ALLOTMENT OF SHARES
A maximum of 56,000,000 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 total number of shares which may be
awarded under the Plan to any optionee in any one year shall not exceed 5% of
the total shares allotted to the Plan. 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.
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 27, 1995. No option shall be
granted pursuant to this Plan later than April 26, 2000, 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 whose employment has terminated by reason of death,
disability or retirement, 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
Unless otherwise specified by the Committee to the contrary, 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
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shall be exercisable during the optionee's lifetime only by the
optionee. The Committee may, in the manner established by the Committee,
provide for the transfer, without payment of consideration, of a
non-qualified option by an optionee to a member of the optionee's
immediate family or to a trust or partnership whose beneficiaries are
members of the optionee's immediate family. In such case, the option
shall be exercisable only by such transferee. For purposes of this
provision, an optionee's "immediate family" shall mean the holder's
spouse, children and grandchildren.
(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, in the number of shares which may be awarded to an
optionee in any one year, and in the option price.
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
(a) For options granted prior to July 1, 1998
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.
(b) For options granted on or after July 1, 1998:
(1) In the event of termination of employment due to any cause
other than death, disability or retirement, rights to exercise the stock
option shall cease, except for those which have accrued to and including
the date of termination, unless the Committee shall otherwise specify.
These rights shall
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remain exercisable for a period of three (3) months, or such longer
period (not to exceed three (3) years) as the Committee shall provide.
(2) In the event of termination of employment due to death or
disability, rights to exercise the stock option shall cease, except for
those which have accrued to and including the date of termination,
unless the Committee shall otherwise specify. These rights shall remain
exercisable for a period of three (3) years, or such longer period (not
to exceed the term of the option) as the Committee shall provide.
Notwithstanding the above, in the event such termination of
employment due to death or disability occurs with optionee having at
least ten (10) years of service, any unexercised or unexercisable
portion of the stock option may be exercised in whole or in part during
the remaining term of the Option at such times and to the extent the
optionee could have exercised such stock option had the optionee's
employment not terminated.
(3) In the event of retirement (unrelated to termination for cause,
as defined below, which shall be governed by the provisions of (1)
above) rights to exercise the stock option shall cease, except for those
which have accrued to and including the date of termination unless the
Committee shall otherwise specify. These rights shall remain exercisable
for a period of three (3) years, or such longer period (not to exceed
the term of the option) as the Committee shall provide, provided,
however, that in the event the Optionee is employed by a competitor (as
defined below) within two (2) years from the date of such retirement, no
rights may be exercisable beyond a date which is three (3) months after
the commencement of such employment with a competitor.
Notwithstanding the above, in the event such retirement (unrelated
to termination for cause which shall be governed by the provisions of
(1) above) occurs with optionee having at least ten (10) years of
service, any unexercised or unexercisable portion of the stock option
may be exercised in whole or in part during the remaining term of the
stock option at such times and to the extent the optionee could have
exercised such stock option had the optionee's employment not
terminated, provided, however, that in the event the optionee is
employed by a competitor within two (2) years from the date of such
retirement, (i) any unexercisable portion of the stock option shall
terminate immediately and (ii) no rights may be exercisable beyond a
date which is three (3) months after the commencement of such employment
with a competitor.
(4) No stock option shall, in any event, be exercised after the
expiration of the full term of the option. In addition, any stock option
granted within six (6) months of termination of employment due to any
cause shall be void unless the Committee shall otherwise provide.
(5) As used in the Plan:
(i) The term "termination for cause" shall mean optionee's
termination by the Company in connection with the violation of any
federal or state law, dishonesty, the willful and deliberate failure
on the part of an optionee to perform his/her employment duties in
any material respect or such other events, including the existence of
a conflict of interest, as the Management Compensation Committee may
determine. Such committee shall have the sole discretion to determine
whether a "termination for cause" exists, and its determination shall
be final.
(ii) The term "employed by a competitor" shall mean the
optionee's engaging in any activity or providing services, whether as
director, employee, advisor, consultant or otherwise, for any
corporation or other entity which is a competitor of the Company. The
Management
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Compensation Committee shall have the sole discretion to determine if
an optionee is "employed by a competitor", and its determination
shall be final.
(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 which first became vested 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 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
(a) For options granted prior to July 1, 1998
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.
(b) For incentive stock options granted on or after July 1, 1998:
(1) In the event of termination of employment due to any cause
other than death, disability or retirement, rights to exercise the stock
option shall cease, except for those which have accrued to and including
the date of termination, unless the Committee shall otherwise specify.
These rights shall
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remain exercisable for a period of three (3) months, or such longer
period (not to exceed three (3) years) as the Committee shall provide.
(2) In the event of termination of employment due to death or
disability, rights to exercise the stock option shall cease, except for
those which have accrued to and including the date of termination,
unless the Committee shall otherwise specify. These rights shall remain
exercisable for a period of three (3) years, or such longer period (not
to exceed the term of the option) as the Committee shall provide.
Notwithstanding the above, in the event such termination of
employment due to death or disability occurs with optionee having at
least ten (10) years of service, any unexercised or unexercisable
portion of the stock option may be exercised in whole or in part during
the remaining term of the Option at such times and to the extent the
optionee could have exercised such stock option had the optionee's
employment not terminated.
(3) In the event of retirement (unrelated to termination for cause
(as defined in Section 6B(ii)(b)(5) above, which shall be governed by
the provisions of (1) above) rights to exercise the stock option shall
cease, except for those which have accrued to and including the date of
termination unless the Committee shall otherwise specify. These rights
shall remain exercisable for a period of three (3) years, or such longer
period (not to exceed the term of the option) as the Committee shall
provide, provided, however, that in the event the Optionee is employed
by a competitor (as defined in Section 6B(ii)(b)(5) above) within two
(2) years from the date of such retirement, no rights may be exercisable
beyond a date which is three (3) months after the commencement of such
employment with a competitor.
Notwithstanding the above, in the event such retirement (unrelated
to termination for cause which shall be governed by the provisions of
(1) above) occurs with optionee having at least ten (10) years of
service, any unexercised or unexercisable portion of the stock option
may be exercised in whole or in part during the remaining term of the
stock option at such times and to the extent the optionee could have
exercised such stock option had the optionee's employment not
terminated, provided, however, that in the event the optionee is
employed by a competitor within two (2) years from the date of such
retirement, (i) any unexercisable portion of the stock option shall
terminate immediately and (ii) no rights may be exercisable beyond a
date which is three (3) months after the commencement of such employment
with a competitor.
(4) 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. In addition, any
stock option granted within six (6) months of termination of employment
due to any cause shall be void unless the Committee shall otherwise
provide.
(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 as
specified by the Committee.
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