This excerpt taken from the CCL DEF 14A filed Mar 7, 2005.
PROPOSAL 3 (Resolution 17)
General. During 2004, Carnival Corporation & plc commenced a corporate restructuring for the purposes of improving efficiency, synergies and operational effectiveness following the combination of the businesses of Carnival Corporation and Carnival plc in the DLC structure (the Corporate Restructuring). The Corporate Restructuring involved, in part, the transfer by Carnival Corporation to Carnival plc of the cruise operations and employees of Costa. Prior to the Corporate Restructuring, the employees of Costa (the Transferred Employees) were eligible to receive options under the Amended and Restated Carnival Corporation 2002 Stock Plan which were taxed favorably under Italian tax law. As a result of the Corporate Restructuring, certain of the Transferred Employees would have faced significant negative tax consequences under Italian tax law if they retained their options granted under the Amended and Restated Carnival Corporation 2002 Stock Plan. The Transferred Employees were then eligible to participate in the Carnival plc Executive Share Plan. The Carnival plc Executive Share Plan is a plan with restrictions, such as salary-based limitations on individual option grants, which had not historically been imposed on the Transferred Employees. As a result, the share options awards made to the Transferred Employees during 2004 were greatly reduced from the amounts they were granted historically under the Amended and Restated Carnival Corporation 2002 Stock Plan. This was an unintended result of the Corporate Restructuring.
In view of the above and based upon advice of their external compensation consultants, the Compensation Committees believe that it is in the best interests of Carnival Corporation & plc to establish a flexible share plan for Carnival plc that mirrors, to the extent practicable, the existing Amended and Restated Carnival Corporation 2002 Stock Plan. Accordingly, the board of directors of Carnival plc adopted, subject to shareholder approval, a new plan, the Carnival plc 2005 Employee Share Plan (the PLC Share Plan).
The PLC Share Plan will, if it is approved by shareholders, replace the Carnival plc Executive Share Option Plan and no further options will be granted under that plan. The PLC Plan is designed for maximum flexibility as to the types of options and other share awards that may be granted to employees and executive directors. The Compensation Committees believe that the PLC Share Plan will allow them to tailor equity compensation policies for the various operating companies under Carnival plc that are competitive in their respective employment markets, as well as strengthen Carnival plcs ability to recruit and retain talented employees and more closely align their interests with those of shareholders. The Compensation Committees are aware that the terms of the PLC Share Plan are not wholly consistent with UK practices, but consider it highly relevant that approximately 95% of the annual awards made to executives of the Carnival Corporation & plc group are made to executives outside of the UK.
The PLC Share Plan is attached as Annex B to this proxy statement. The principal provisions of the PLC Share Plan are summarized below. This summary is not complete and is qualified in its entirety by the terms of the PLC Share Plan.