Current Report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT PURSUANT

TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported)     February 9, 2012

DIRECTV
(Exact Name of Registrant as Specified in Its Charter)

Delaware
(State or Other Jurisdiction of Incorporation)
 
001-34554
 
26-4772533
(Commission File Number)
 
(IRS Employer Identification No.)
 
 
 
2230 East Imperial Highway
 
 
El Segundo, California
 
90,245
(Address of Principal Executive Offices)
 
(Zip Code)

(310) 964-5000
( Registrant's Telephone Number, Including Area Code)

  Not Applicable
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):

o             Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o             Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o             Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o             Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))




ITEM 5.02.  Departure of Directors or Principal Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

Compensation Grants and Awards

Chief Executive Officer

Michael D. White, Chairman, President and Chief Executive Officer of the Company, entered into an employment contract with the Company effective January 1, 2010 (the “Employment Agreement”), a copy of which was filed as Exhibit 10.1 to Form 8-K of DIRECTV with the Securities and Exchange Commission on January 7, 2010. Mr. White was awarded a long-term equity incentive grant pursuant to the terms of his Employment Agreement in 2010 and does not participate in the RSU or option grants described below for the other named executive officers. Consequently, references hereinafter to “named executive officers” means the named executive officers other than the Chief Executive Officer, or CEO.

Named Executive Officers

At the February 9, 2012 meeting, the Compensation Committee approved compensation as follows:
(i)
2012 base salaries for the CEO and the named executive officers,
(ii)
cash bonuses for 2011 pursuant to the Executive Officer Cash Bonus Plan (“Bonus Plan”) for the CEO and the named executive officers,
(iii)
vesting and issuance of shares of the Company's Class A common stock pursuant to prior performance-based restricted stock units, or RSUs, granted in 2009 to the named executive officers, for the performance period 2009-2011 pursuant to the Company's Amended and Restated 2004 Stock Plan (“2004 Stock Plan”) for the named executive officers, and
(iv)
grants to the named executive officers of performance-based RSUs and stock options for the performance period 2012-2014 pursuant to the DIRECTV 2010 Stock Plan, as follows:
Name and Position 
of Executive
 
Base Salary
for 2012
($)
 
Cash Bonus
for 2011
($)
 
Shares To Be
Issued 
Pursuant
to 2009 RSU
Award
(#)
 
Restricted
Stock
Unit Grant
for 2012
(#)
 
Stock Option Grant
for 2012 1
($)
Michael D. White
Chairman, President and Chief Executive Officer

 
1,562,100

 
3,900,000

 
N/A
 
N/A

 
N/A

 
 
 
 
 
 
 
 
 
 
 
Patrick T. Doyle
Executive Vice President and Chief Financial Officer

 
825,000

 
749,000

 
46,800
 
28,674

 
391,878

 
 
 
 
 
 
 
 
 
 
 
Bruce Churchill
President - New Enterprises and DIRECTV Latin America

 
1,400,000

 
2,308,000

 
70,200
 
117,989

2  
612,510

 
 
 
 
 
 
 
 
 
 
 
Larry Hunter
Executive Vice President and General Counsel

 
1,100,000

 
1,170,000

 
67,275
 
38,232

 
522,504

 
 
 
 
 
 
 
 
 
 
 
1 Target value of stock options to be converted to the number of options following the close of the stock market on
February 17, 2012; see the discussion below in “Stock Option Grants”
2 Consists of two performance-based RSU grants; see the discussion below in “Restricted Stock Unit Awards”

At its meeting on February 10, 2012, the Board of Directors re-evaluated its criteria for the election of officers of DIRECTV and determined that, for the elections held at this meeting, those executives whose managerial responsibilities include our consolidated operations would be elected as corporate officers of DIRECTV. Consequently, Michael Palkovic, who has responsibility for the DIRECTV U.S. customer care, call centers and field operations, was not re-elected as an officer of DIRECTV but he continues as an Executive Vice President of DIRECTV Holdings LLC, a wholly-owned subsidiary. However, because he served as an elected officer of DIRECTV for all of calendar year 2011 and part of calendar year 2012, he will qualify as a “named executive officer” for purposes of the Company's 2012 proxy statement and may still qualify as a “named executive officer” for purposes of the Company's 2013 proxy statement. Mr. Palkovic's base salary for 2012 is $900,000, cash bonus for 2011 is $735,000, shares to be issued pursuant to the 2009 RSU Award are 64,350, his Restricted




Stock Unit Grant for 2012 is 29,635 restricted stock units, and the value of his Stock Option Grant for 2012 is $405,007.

Bonus Award

In establishing the cash bonus payment to the CEO and each named executive officer, the Compensation Committee first determined and certified, pursuant to the terms of the Bonus Plan, that the performance target for 2011 was satisfied, so that the Company could have paid the maximum bonus under the Bonus Plan of five times base salary for the CEO and two times base salary for each other named executive officer (a limit set by the Compensation Committee that is lower than the maximum in the Bonus Plan).  The Compensation Committee exercised its discretion in establishing the amounts of individual bonus awards for the CEO and each named executive officer with each final bonus for 2011 being less than the maximum.  The Compensation Committee took into consideration, among other things, each individual's performance and the financial and operating performance of the Company, including stock price performance in 2011, as well as the separate financial and operating performance of each of the Company's business segments.

Restricted Stock Unit Awards

With respect to the performance goals for RSUs granted in 2009 to named executive officers, the Compensation Committee determined the results for the three performance factors: (i) annual revenue growth, (ii) annual growth in cash flow before interest and taxes, or CFBIT; and (iii) growth in annual earnings per share, or EPS, for the final year of the 2009-2011 three-year performance period. The Company performance for 2011 was at the maximum for the revenue growth performance factor, above target, but below maximum for the EPS growth performance factor, and below threshold for the CFBIT growth performance factor.  After applying the applicable weighting factor to the three performance factors, overall average performance for 2011 was above target (103%). This amount was averaged with overall performance in 2010 which was above target (165.2%) and the overall performance in 2009 which was below target (82.7%). The final 2009-2011 adjustment factor was above target at 117%, which is less than the maximum permitted of 125%. This 117% performance factor was multiplied by the number of 2009-2011 RSUs granted to each named executive officer to determine the number of RSUs that would be converted one-for-one into shares of DIRECTV Class A common stock and issued to each officer.

With respect to the performance goals for RSUs granted in 2010 to the named executive officers, the Compensation Committee determined, for the second year of the 2010-2012 three-year performance period, the results of the three performance factors: (i) annual revenue growth, (ii) annual CFBIT growth, and (iii) annual EPS growth. Performance factors for revenue growth and EPS growth were at the maximum, while the CFBIT growth performance factor was below threshold. Overall average performance for 2011 was at target (100%), and will be averaged with the overall performance for 2010 which was above target (150%) and with the overall average performance for 2012 to determine the final 2010-2012 adjustment factor.  In each case, to determine the final adjustment factor, the Compensation Committee has reserved discretion to reduce payments or otherwise adjust downward restricted stock unit awards in accordance with the 2004 Stock Plan, and in no event may the final adjustment factor for the entire performance period exceed 125%. 

With respect to the performance goals for RSUs granted in 2011 to the named executive officers, the Compensation Committee determined, for the first year of the 2011-2013 three-year performance period, the results of the three performance factors: (i) annual revenue growth, (ii) annual CFBIT growth, and (iii) annual EPS growth. The performance factor for revenue growth was at maximum; the performance factor for EPS growth was above target, but below maximum, while the CFBIT growth performance factor was below threshold. Overall average performance for 2011 was slightly below target (98.9%) and will be averaged with the overall average performance for 2012 and 2013 to determine the final 2011-2013 adjustment factor.  In each case, to determine the final adjustment factor, the Compensation Committee has reserved discretion to reduce payments or otherwise adjust downward restricted stock unit awards in accordance with the DIRECTV 2010 Stock Plan, and in no event may the final adjustment factor for the entire performance period exceed 150%. 

The Compensation Committee established performance goals under the DIRECTV 2010 Stock Plan for the RSUs awarded to named executive officers for 2012, with the following performance factors: (i) annual revenue growth, (ii) annual CFBIT growth, and (iii) annual net income growth, over the three-year period from January 1, 2012 through December 31, 2014.  A copy of the summary terms and conditions for the 2012 performance RSU grants is attached to this report as Exhibit 10.1 .  The Compensation Committee also established the performance target for determination of the maximum amount payable to any executive officer in calendar year 2012 under the Bonus Plan, which is to be based on CFBIT. A copy of the summary terms and conditions for the 2012 Bonus is attached to this report as Exhibit 10.2 .

Mr. Churchill's 2012 RSU grant consists of two portions. The first portion, in the amount of 44,818 restricted stock units (the “First Grant”), is subject to the terms and conditions described above and in Exhibit 10.1. The second portion (the “Second Grant”), in the amount of 73,171 restricted stock units, is an additional grant in recognition by the Compensation Committee of




the performance of DIRECTV's Latin American operations under Mr. Churchill's leadership and as an additional retention award. The Second Grant is subject to the same performance criteria and the applicable terms and conditions differ from the First Grant in that: (1) a retirement by Mr. Churchill during the three-year performance period will be treated as a voluntary resignation and all rights to the Second Grant RSUs, vested or unvested, will be forfeited; and (2) in the event of an involuntary termination without cause or an Effective Termination, as defined in the Executive Severance Plan, 100% of the Second Grant RSUs would vest immediately but would be distributed at the same time and subject to the same adjustment for Company performance as the First Grant RSUs.

Stock Option Grants

The Compensation Committee also approved the target value of stock option awards to named executive officers for 2012 and directed that the stock options will be granted as of the close of business on February 17, 2012, with an exercise price equal to the closing stock market price of DIRECTV Class A Common Stock on that date. Based on that exercise price, the number of options granted to each named executive officer will be determined using the Black-Scholes valuation model. The stock options will vest and become exercisable at the rate of one-third per year on each of December 31, 2012, 2013 and 2014. The options will expire 10 years after the grant date on February 17, 2022.

The description of each document in this report, including the Employment Agreement, the DIRECTV 2010 Stock Plan and the Bonus Plan, previously filed with the SEC on April 21, 2010, as Annex A and Annex B respectively, to the Definitive Proxy Statement of DIRECTV, and the Executive Severance Plan, previously filed with the SEC on January 27, 2012, as Exhibit 10.1, is qualified in its entirety by reference to the applicable document, which is included herein by reference. 







ITEM 9.01             Financial Statements and Exhibits
(d)
 
Exhibits.
 
 
 
10.1

 
Summary Terms - 2012 Restricted Stock Unit Grants
10.2

 
Summary Terms - 2012 Cash Bonus
10.3

 
Summary Terms - 2012 Stock Option Grant




SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
DIRECTV
 
 
(Registrant)
 
 
 
 
 
 
 
 
 
 
Date: February 15, 2012
 
By:
 
/s/ Larry D. Hunter
 
 
 
Name:
 
Larry D. Hunter
 
 
Title:
 
Executive Vice President and
General Counsel




Exhibit Index
(d)
 
Exhibits.
 
 
 
10.1

 
Summary Terms - 2012 Restricted Stock Unit Grants
10.2

 
Summary Terms - 2012 Cash Bonus
10.3

 
Summary Terms - 2012 Stock Option Grant





Exhibit 10.1
2012-2014 Performance RSU Grant Overview
SVPs and Above
February 2012
This is a summary of the material terms and conditions of the 2012-2014 Performance RSU Grants. The full terms and conditions of the 2012-2014 Performance RSU Grants and The DIRECTV 2010 Stock Plan (the “Plan”) and Prospectus govern the awards. Capitalized terms not defined herein have the meaning assigned to them in the Plan.


TERM/CONCEPT
EXPLANATION
 
Company
DIRECTV and its Subsidiaries
Eligibility
Employees at the level of Senior Vice President and above; You must be hired or promoted by January 18, 2012 to: a) be eligible for a 2012-2014 grant for new hires or b) to be eligible for the increased target grant for promotions.
Awards
DIRECTV Restricted Stock Units (RSUs or Units); distributed in DIRECTV (DTV) common stock
Performance Period
3-year Performance Period (Jan. 1, 2012 - Dec. 31, 2014)
Adjustment Factor
This factor is the percentage (0% to 150%) used at the end of the 3-year Performance Period to determine your shares earned based on the Company's performance to the Performance Measures listed below. It is the average of the three annual Performance Factors.
Performance Measures
• Each Performance Measure is determined as the percentage growth from the prior year-end DIRECTV consolidated results.

 
 
Performance Measure
Level of Performance
Performance Factor
Weight
 
 
 
Annual Revenue Growth
10% or more
150%
1/3
 
 
 
8% Target
100%
 
 
 
4% or less
0%
 
 
 
Annual Cash Flow Before Interest and Taxes (CFBIT) Growth
25% or more
200%
1/3
 
 
 
13% Target
100%
 
 
 
0% or less
0%
 
 
 
Annual Net Income Growth
12% or more
200%
1/3
 
 
 
7% Target
100%
 
 
 
0% or less
0%
 
Tranches
Each grant of 2012-2014 RSUs is divided into three tranches or pieces, with each tranche representing one-third of the RSUs assigned to each of the three performance years (2012, 2013 and 2014). All fractional shares in the resulting tranches are assigned to the third and final tranche, so that each tranche consists only of whole shares and the sum of the three tranches equals the original RSU grant.
Performance Determination
• At the end of each year, the Company assesses DIRECTV performance for each Performance Measure, weights the performance result for each Performance Measure, and sums the three weighted numbers, resulting in an annual Performance Factor  per the chart above.
 
 
• At the end of the three years, the average of the three annual Performance Factors creates the Adjustment Factor (the percentage used to determine the final shares earned). The final Adjustment Factor is capped at 150%.




TERM/CONCEPT
EXPLANATION
Distribute Shares at the End of Three Years
• Within 60 days after the end of the Performance Period, the Company determines the Adjustment Factor . The Company will multiply the total number of RSUs granted by this factor to determine the number of shares to distribute.

 
• After the Adjustment Factor is determined, the shares will be distributed to you (minus applicable tax withholding) and then are yours to sell or hold as you wish.
 
• Upon distribution, the shares will be directly deposited into an account in your name with the Company's stock plan recordkeeper (currently Morgan Stanley Smith Barney). Account and tax information will be distributed shortly thereafter.
Taxes
• Generally, your award is taxable at the time of distribution in the year in which you receive your shares of DTV common stock if the performance goals are met.

 
• The applicable withholding taxes are due upon distribution, whether or not you sell your shares at that time. The Company will generally withhold shares of stock to satisfy the applicable tax withholdings, so you will receive shares net of tax withholdings.
 
• Please consult with your personal tax or financial advisor for specific information regarding the tax consequences of your award.
Continued Employment
Continued employment or Service through the end of the Performance Period is required as a condition of receiving your award and the rights and benefits under the Plan. Partial employment or Service, even if substantial, during the Performance Period will not entitle you to any proportionate award, or avoid or mitigate a termination of rights and benefits upon or following a termination of employment or Service except as otherwise provided in the sections below.
Impact of Termination
If you leave the Company for any reason within the first calendar year of the Performance Period, your award is forfeited.
Resignation or Term for Cause
If you resign from the Company or are terminated for Cause at any time during the Performance Period (and for Cause, anytime prior to the distribution date), you forfeit all awards.
• Term Without Cause (e.g., Layoff)

• Retirement 1

• Long-Term Disability or Death
• For terminations without Cause, Retirement, Long-Term Disability or Death, in addition to previously vested shares, you are eligible for a pro-rated award determined as the number of shares in the tranche for the year of termination of employment prorated by the number of months of Service during that year completed prior to the termination, including the month of termination, subject to Company performance.
• Any vested shares will be distributed as soon as practicable in the year following the end of the Performance Period, except for termination due to death, when the vested shares will be distributed as soon as practicable after the Participant's death.
Impact of Leave of Absence
Absence from work caused by military service, authorized sick leave, or other leave approved by the Company will not be considered a termination of employment or Service by the Company if reemployment upon the expiration of the leave is required by contract or law, or if the leave is for a period of not more than 90 days. The Company reserves the right to adjust grants for employees on leave in excess of 90 days.
Recovery of Stock Awards
If the financial or operating results used to determine the payout of shares are subsequently restated or revised such that fewer shares would have been awarded using such restated or revised results, the Company will be entitled to recover those shares that should not have been awarded. See the policy statement in the 2011 Proxy Statement section “Compensation Discussion and Analysis.”
1 Retirement means termination of employment at age 55 or older, with 5 or more years of Continuous Service as defined by the Pension Plan.







Exhibit 10.2

2012 Elected Officer
Cash Bonus Plan Overview
February 2012

This is a summary of the terms and conditions of the Plan. The full terms and conditions of the DIRECTV Executive Officer Cash Bonus Plan govern the Bonuses.

TERM/CONCEPT
EXPLANATION
Eligibility
Executives of DIRECTV who may become subject to Internal Revenue Code, or IRC, Section 162(m) and the CFO are eligible to participate in the Plan.
Plan Year
January 1 - December 31
Administration
The Compensation Committee of the Board of Directors, or Committee, administers the Plan. The Plan and its administration are intended to comply with IRC Section 162(m). In the beginning of the Plan Year, the Committee:
 
 
• Selects one or more annual performance measures for the Plan,

 
▪  Sets individual executive target bonuses as a percentage of base salary or as a dollar amount, and

 
▪  Establishes the maximum funding for each executive in the Plan,

 
At the end of the Plan Year, the Committee determines final bonuses.

Company Performance Measures
For 2012, the Committee has selected growth in cash flow before interest and taxes (“CFBIT”) as the performance measure. If the Company's CFBIT exceeds $2.0 billion, the available bonus fund will be equal to or greater than the target bonus.
Bonus Determination
• Following the end of the Plan Year, the Committee will review Company and individual performance and determine bonuses.
 
• Typically, when determining bonuses the Committee will reduce bonuses from the funded amounts to align the bonuses with Company and individual performance. Seventy percent of the bonus will be evaluated on Base Business results for the senior leadership as a team ; the remaining 30% will be evaluated on individual  performance for Strategic Initiatives and Talent & Teamwork. The Committee may also consider other performance factors in its sole discretion as it determines the actual bonuses. For example, these factors may include net subscriber growth, churn, ARPU growth, SAC, margin improvement, customer satisfaction, revenue growth, cash flow growth and basic EPS growth.

Timing of Payments
Bonuses, if any, are paid by March 15 following the end of the Plan Year.
Pro-Rated Bonuses
An executive who participates in the Plan for less than a full year may be eligible for a pro-rated target bonus. A pro rata calculation may also apply to changes in base salary or target bonus percentage that occur during the year.
Taxation
Bonuses are subject to applicable income and employment tax withholding. The Company will also withhold contributions for the savings benefit plans.




TERM/CONCEPT
EXPLANATION
Employment Status:
• Resignation or Termination for Cause
• A voluntary resignation during the Plan Year will result in the forfeiture of the bonus.
• A termination for cause during the Plan Year or at any time before payment of the bonus will result in the forfeiture of the bonus.
• Retire, Layoff, Death or Disability
Executives who terminate for these reasons are eligible to receive a pro-rated bonus during the usual payout cycle. Individual employment agreements may have other terms and conditions. The Committee may use daily, monthly or other methods to pro rate the bonuses.
• Leave of Absence During the Year
Executives who are on an unpaid Company-approved leave of absence during the Plan Year are eligible to receive a bonus (pro-rated to exclude the period of their absence) during the usual payout cycle.
Employee Benefits
Bonuses are Covered Compensation for purposes of determining 401K and pension benefits.
Recovery of Bonus Awards
If the financial or operating results used to determine the payout of bonuses are subsequently restated or revised such that smaller bonuses would have been awarded using such restated or revised results, the Company will be entitled to recover the portion of the bonuses that should not have been awarded. See the policy statement in the 2011 Proxy Statement section “Compensation Discussion and Analysis.”





Exhibit 10.3
2012 Stock Option Grant Overview
February 2012

This is a summary of the material terms and conditions of the 2012 Stock Option Grants for DIRECTV. The 2012 Stock Option Terms and Conditions and the DIRECTV 2010 Stock Plan (the “Plan”) govern the stock options. Capitalized terms not defined herein shall have the meaning assigned to them in the 2012 Stock Option Terms and Conditions or the Plan.

TERM/CONCEPT
EXPLANATION
Company
DIRECTV and its Subsidiaries
Eligibility
Executives who are direct reports to the CEO are eligible
Stock Options and Grant Date
Non-qualified stock options on DIRECTV Common stock were granted on February 17, 2012, without dividend equivalents
10-Year Term
The stock options will expire at the close of business 10 years after the grant date (the “Term” of the option), unless exercised or cancelled at an earlier date as provided below.
3-Year Vesting Period
Vesting refers to the right to exercise the stock option and purchase the underlying stock from the Company. The options will vest and become exercisable at the rate of one-third per year on each of December 31, 2012, 2013 and 2014 (each a "vesting date"). Your rights to exercise the stock option expire at the end of the 10-year term of the options (the "Term") or earlier as noted below.
Exercise Price
The options are granted at [$xx.xx] per share, which is the stock market closing price on February 17, 2012. This is the price you would pay to the Company to exercise the option and acquire the underlying shares of DIRECTV Common stock.
Taxes
Generally, the value of your stock option is taxable at the time you elect to exercise the stock options. The applicable withholding taxes are due upon exercise, whether or not you sell your shares at that time. The Company may withhold shares of stock to satisfy the stock option exercise (purchase) price and applicable tax withholdings, so you may receive shares net of the exercise (purchase) price and tax withholdings.
Please consult with your personal tax or financial advisor for specific information regarding the tax consequences of your stock option.

Continued Employment
Except as noted below, continued employment or Service through the date you exercise the stock option is required as a condition of exercising your stock option and obtaining certain rights and benefits under the Plan. Partial employment or Service, even if substantial, prior to the vesting and exercise dates will not entitle you to any proportionate stock option vesting or exercise rights, or avoid or mitigate a termination of rights and benefits upon or following a termination of employment or Service, except as otherwise provided below.

Impact of Termination
If you leave the Company for any reason before the first vesting date, your stock option is forfeited.






TERM/CONCEPT
EXPLANATION
Resignation or Termination for Cause
If you resign from the Company or are terminated for cause at any time during the Term, you forfeit all non-exercised stock options on your termination date.
• Retirement *
• Long-Term Disability

• Death
After the first vesting date and before the third vesting date (when the option is vested 100%), if your Service terminates due to a Retirement, a Long-Term Disability or your
death, you will vest as follows:
 

• You are eligible for pro-rated vesting of the stock option based on the number of full calendar months of Service completed after the first vesting date and prior to your termination, including the month of termination.
• After the vesting calculation above, any remaining unvested stock options will be cancelled at the close of business on your termination date.
• Your vested stock options will be exercisable until the earlier of the third  anniversary of your termination date or the end of the Term of the option.

• Involuntary Termination Without Cause (e.g., Layoff)

If your Service terminates due to an Involuntary Termination without Cause, you will vest as follows:

•    You will vest in the additional number of shares that would have vested had you remained in Service until the next vesting date immediately following your termination date.

• In addition to the above, if your termination date occurs in a December, you will vest in the additional number of shares that would have vested had you remained in Service until the second vesting date immediately following your termination date.
•    After the vesting calculation above, any remaining unvested stock options will be cancelled at the close of business on your termination date.

•    Your vested stock options will be exercisable until the earlier of the first  anniversary of your termination date or the end of the Term of the option.

• If your Involuntary Termination without Cause also qualifies as a Retirement, your vested stock options will be exercisable until the earlier of the third  anniversary of your termination date or (2) the end of the Term of the option.

Impact of Leave of Absence
Absence from work caused by military service, authorized sick leave, or other leave approved by the Company will not be considered a termination of employment by the Company if reemployment upon the expiration of the leave is required by contract or law, or if the leave is for a period of not more than 90 days. The Company reserves the right to adjust stock option vesting for employees on leave in excess of 90 days during the vesting period.
* Retirement means termination of employment at age 55 or older and with 5 or more years of Continuous Service as defined by the Pension Plan.