This excerpt taken from the LZ DEF 14A filed Mar 14, 2007.
The role of stock options is to focus named executive officers on the long-term performance of the company and provide them with the opportunity to increase their share ownership levels.
Options are granted under the 2005 Stock Incentive Plan, which was approved by shareholders in April 2005. Stock options comprise 50% of the long-term incentive award for the named executive officers.
For awards of stock options on or after December 12, 2006, the exercise price is the closing price of Lubrizol common shares on the award date. For options awarded prior to December 12, 2006, the exercise price is the average of the high and low prices of Lubrizol common shares on the award date.
The term of each option is fixed by the committee at the time of grant and is typically 10 years. The options vest 50% after one year, 75% after two years and 100% after three years. Outstanding options under this plan will be forfeited if the executive officer is terminated for cause.
The stock option plans are discussed in greater detail under footnote (2) to the Summary Compensation Table.
This excerpt taken from the LZ DEF 14A filed Mar 16, 2005.
The committee may grant either non-qualified stock options or incentive stock options qualifying for special tax treatment under Section 422 of the Code. The price of any stock option may not be less that the fair market value of Lubrizol common shares on the date the option is granted. The option price is payable in cash or, if the grant provides, in common shares.
Option grants will vest 50% one year after the grant date, 75% two years after the grant date and 100% three years after the grant date. Option grants will vest 100% upon a change of control of Lubrizol. The committee in its discretion may fully vest options upon the separation from service of any participant.
The committee determines the length of the time period during which the option may be exercised, but incentive stock options will not have a length longer than 10 years. The committee determines the terms of each stock option grant at the time of the grant.