Edward D. Burmeister Baker & McKenzie Two Embarcadero Center, Suite 2400

1. Global Stock Plan Design and Redesign:Issues Relating to Broad-Based Plans2001 Global Equity Compensation ForumSan Francisco, CaliforniaNovember 5, 2001 Edward D. Burmeister Baker & McKenzie Two Embarcadero Center, Suite 2400 San Francisco, California 94111 (415) 576-3029 edward.d.burmeister@bakernet.com

2. TYPES OF BROAD-BASED PLANS/AWARDS Long-Term Incentive Plan or Omnibus Stock Plan • Stock Options (Always) • ISOs • Non-Qualified Options • Restricted Stock • Typical for Executives • Other Awards • SARs • Stock Bonuses • Restricted Stock Units

3. BROAD-BASED AWARDS Hire Grants (Silicon Valley Model) • All-Employee, “One”-Time Grant • Ongoing Broad-Based Grants

4. STOCK PURCHASE PLANS • 423 Design • Non-423 Design • Open Market • No Discount Plans • Other

5. OBJECTIVES FOR BROAD-BASED PLANS One-Time Grant Programs • Recognition Event • Global “Branding” to Employees • Communication Vehicle for Corporate Values, Identify With Creating Shareholder Value • Not Typically Designed As Compensation

6. HIRE GRANTS AND ONGOING GRANT PROGRAMS • Recruitment and Retention • Recruitment and Retention • Competitive Practice • Incentive for Performance • Intended As Compensation

7. EMPLOYEE STOCK PURCHASE PLANS • Competitive Practice • Recruitment • Encouragement for Share Ownership by Employees • Build an Ownership Culture

8. STOCK OPTIONS VERSUS STOCK PURCHASE Stock Option AdvantagesStock Purchase Advantages Ease of Administration/ Employee Makes Investment Flexibility Virtually Universal and No ISS Concerns Well Recognized Participation Can Be Up Less Dilution 100% Vesting for Retention More Share Ownership Likely Automatic “Repricing”

9. STOCK OPTIONS VERSUS STOCK PURCHASE Stock Option DrawbacksStock Purchase Drawbacks Dilution 423 Design Inflexible ISS Resistance More Difficult Administration Underwater Options a Lower Participation Disincentive Little Employee Share Withholding Issues Outside Ownership U.S.

10. STOCK OPTION PLAN DESIGN • Global One Size Fits All Design • Global Design With Limited Local Variations • Global Plan With Significant Local Customization

11. ONE SIZE FITS ALL DESIGN • Pros: • Simplicity • Transfers Easier to Accommodate • Equity of Design • Cons: • Unfortunate Employee Tax Results • France • Italy • Netherlands • Switzerland • Belgium

12. ONE SIZE FITS ALL DESIGN (Con’t) • Cons: • Unfortunate Company Social Taxes • France • U. K. • Italy • Sweden • Norway • Failure to Take Advantage of Local Tax Advantages • U. K. • Ireland • Israel • Austria • Singapore • Italy

13. TOTAL CUSTOMIZATION • Pros: • Maximizes Employee Tax Results • Locally Competitive • Can Reduce Employer Social Costs • Cons: • More Difficult to Administer • Potential Inequities Within Company • Loss of Central Control

14. RECOMMENDATIONS • Draft Plan to Permit Local Customization • Sub-Plan Authorization in Option Plans • Non-423 Component in ESPP • Decide Process and Parameters for Local Customization • Retain Ultimate Central Control • Do Customize Agreements/Enrollment Forms

15. OTHER DESIGN RECOMMENDATIONS • Avoid Beneficiary Forms (at Least in ESPPs) • Avoid Transferability Outside U.S. • Avoid Stock-for-Stock or Attestation Exercise Methods Outside U.S.

16. OTHER DESIGN RECOMMENDATIONS (Con’t) • Avoid U.S. Centric Inflexible Provisions • 10-year Term • One-Year Post-Death Exercise • Compensation Definition in ESPP • Definition of “Subsidiary” in Option Plan • Methods of Exercise Locked In • Disavow Maintaining “Qualified” Status • Tailor Labor Law Language

17. WHAT IS END RESULT? • Option Plan • Flexible And General Plan Language • Authorization for Sub-plans and Country-Specific Modifications • Much Discretion in Committee

18. WHAT IS END RESULT? (Con’t) • Option Plan • Country-Specific Design Modifications • U. K.: Approved Plan and NIC Pass-Through • France: - Qualified Plan – 4-Year Requirement Mandatory - Closed Period Avoidance • Italy: Prior Month’s Average Price as Minimum Grant Price

19. WHAT IS END RESULT? (Con’t) • Option Plan • Country-Specific Design Modifications • Netherlands: Election to Defer Tax: “Pre-Acceptance” or Mandatory Cashless Exercise • Belgium: Special Offer Letter and Undertaking Consideration of Bank Products To Minimize Employee Tax Problem

20. WHAT IS END RESULT? (Con’t) • Option Plan • Country-Specific Design Modifications • Switzerland: Cantonal Tax Rulings on 10-year, 6-month Term or Mandatory Cashless • Singapore: Use of CSOP Scheme • Ireland: Consider Approved Plan • Austria Consider Tax-Advantaged Plan

21. WHAT IS END RESULT? (Con’t) • Option Plan • Country-Specific Design Modifications • Israel: Consider 102 Plan • Mandatory Cashless Exercise • Azerbaijan • Brazil • Bulgaria • China • Croatia • India • Indonesia • Morocco • Nigeria • Romania • South Africa • Thailand • Uzbekistan • Yugoslavia

22. STOCK PURCHASE PLANS • Plan Redesign • 423 Plan Component • Non-423 Plan Component • Coverage of “Affiliates” Rather Than Subsidiaries • Sub-Plans Authorized

23. STOCK PURCHASE PLAN (Con’t) • Country Modifications • No Payroll Deductions (Alternatives: Direct Deposit, Checks) • Hong Kong, Argentina, Mexico (Documentation May be Structured to Permit) • Separate Accounts • Australia • Japan (if held by local sub) • Korea

24. STOCK PURCHASE PLAN (Con’t) • Country Modifications • Immediate Transfer of Payroll Deductions • Coverage of Part-Time Employees • EU Countries

25. COUNTRY-SPECIFIC OPTION AGREEMENTS • Tax Clauses • Labor Law Language/Acknowledgement • Not Part of Severance • Discretionary • Data Privacy Consent • Special Clauses – France, U.K., Italy, Other

26. STOCK PURCHASE PLAN • Tailor Enrollment Form: • Taxes, Labor Laws, Data Privacy • Specific Clauses for United Kingdom (Deemed Loan) • Qualified Arrangements • U. K.: • SAYE • AESOP

27. STOCK PURCHASE PLAN (Con’t) • Qualified Arrangements • Ireland: • SAYE • France • P.E.E. • Japan • Employee Association • Company Structure Issues • Check-The-Box Issues • Branch Issues