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UNITED STATES |
OMB APPROVAL |
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SECURITIES AND EXCHANGE COMMISSION |
OMB Number: 3235-00595 |
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Washington, D.C. 20549 |
Expires: February 28, 2006 |
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SCHEDULE 14A |
Estimated average burden hours per response......... 12.75 |
Proxy
Statement Pursuant to Section 14(a) of
the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant x | |
Filed by a Party other than the Registrant o | |
Check the appropriate box: | |
o | Preliminary Proxy Statement |
o | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
x | Definitive Proxy Statement |
o | Definitive Additional Materials |
o | Soliciting Material Pursuant to Rule §240.14a-12 |
Payment of Filing Fee (Check the appropriate box):
x | No fee required. | |
o | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. | |
1. | Title of each class of securities to which transaction applies: | |
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2. | Aggregate number of securities to which transaction applies: | |
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3. | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): | |
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4. | Proposed maximum aggregate value of transaction: | |
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5. | Total fee paid: | |
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SEC 1913 (03-04) Persons who are to respond to the Collection of information contained in this form are not required to respond unless the form displays a currently valid OMB cotrol number. |
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o | Fee paid previously with preliminary materials. | |
o | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | |
1. | Amount Previously Paid: | |
2. | Form, Schedule or Registration Statement No.: | |
3. | Filing Party: | |
4. | Date Filed: | |
February 14, 2005
MICKY ARISON
Chairman of the Boards
Chief Executive Officer
To our Shareholders:
On behalf of the boards of directors of each of Carnival Corporation and Carnival plc, it is my pleasure to invite you to attend our joint annual meetings of shareholders. As we have shareholders in both the United Kingdom and the United States, we plan to continue to rotate the location of the annual meetings between the United States and the United Kingdom each year in order to accommodate shareholders on both sides of the Atlantic. Last year we held our annual meetings in New York City, and this year we will hold them in Southampton, United Kingdom.
The annual meetings will be held at the Queen Elizabeth II Passenger Terminal, Port of Southampton, Dock Gate 4, Ocean Gate, Atlantic Way, in Southampton, United Kingdom on Wednesday, April 13, 2005. The meetings will commence at 3:00 p.m. (UK time), and although technically two separate meetings (the Carnival plc meeting will begin first), shareholders of Carnival Corporation may attend the Carnival plc meeting and vice-versa.
We are also offering an audio webcast of the annual meetings. If you choose to listen to the webcast, go to our website at www.carnivalcorp.com or www.carnivalplc.com, shortly before the start of the meetings and follow the instructions provided. For our U.S. shareholders, we will also be hosting an audio webcast of the annual meetings at our headquarters located at 3655 N.W. 87th Avenue in Miami, Florida. Although shareholders will not be able to vote in Miami (they must submit a proxy as described in the Carnival Corporation Notice of Annual Meeting), they will be able to submit questions to the directors in Southampton.
We remind our new shareholders that, as a result of our dual listed company, or DLC, structure, the conduct of our shareholder meetings differs from the practice you may be accustomed to as shareholders of other companies. Please see Questions and Answers about the Proxy Materials and the Annual Meetings which begins on page 8 for an overview of the main differences. In addition, because this proxy statement complies with the requirements of the U.S. Securities and Exchange Commission, the format of the information for the Carnival plc annual general meeting differs significantly from the format of the information that shareholders of UK companies are accustomed to receiving.
You will find information regarding the matters to be voted on in the attached notices of annual meetings of shareholders and proxy statement. The Carnival Corporation Notice of Annual Meeting begins on page 1 and the Carnival plc Notice of Annual General Meeting begins on page 3. We are also pleased to offer most Carnival Corporation and all Carnival plc shareholders the opportunity to receive future shareholder communications electronically. By signing up for electronic delivery, shareholders can receive shareholder communications faster and can help your company reduce printing and mailing costs and minimize consumption of natural resources and waste generation. Because of the DLC structure, all voting will take place on a poll (or ballot).
Under the DLC structure, shareholders of both companies effectively vote together as a single body on most significant matters, called joint electorate actions. All of the resolutions proposed for this years annual meetings are joint electorate actions, which means that Carnival Corporation shareholders will be asked to vote on resolutions for Carnival plc as well on resolutions for Carnival Corporation, and Carnival plc shareholders will be asked to vote on resolutions for Carnival Corporation as well on resolutions for Carnival plc. Please see Questions and Answers about the Proxy Materials and the Annual Meetings which begins on page 8 for a discussion of the voting procedures under the DLC structure.
The overall results of the joint electorate vote will be announced to the media and the relevant stock exchanges and posted on the websites of Carnival Corporation and Carnival plc as soon as practicable after both shareholder meetings have closed.
Your vote is important. Whether or not you plan to attend the annual meetings in person, please submit your vote using one of the voting methods described in the attached materials. Submitting your voting instructions by any of these methods will not affect your right to attend the meetings in person should you so choose.
The boards of directors consider Carnival Corporation Proposals 1-11 (being Carnival plc Resolutions 1-25) to be in the best interests of Carnival Corporation & plc and the shareholders as a whole. Accordingly, the boards of directors unanimously recommend that you cast your vote FOR Carnival Corporation Proposals 1-11 (being Carnival plc Resolutions 1-25).
Thank you for your ongoing support of, and continued interest in, Carnival Corporation & plc.
TABLE OF CONTENTS
Notice of
Annual Meeting of Carnival Corporation Shareholders |
1 | |||||
Notice of
Annual General Meeting of Carnival plc Shareholders |
3 | |||||
QUESTIONS AND
ANSWERS ABOUT THE PROXY MATERIALS AND THE ANNUAL MEETINGS |
8 | |||||
QUESTIONS
SPECIFIC TO SHAREHOLDERS OF CARNIVAL CORPORATION |
12 | |||||
QUESTIONS
SPECIFIC TO SHAREHOLDERS OF CARNIVAL PLC |
15 | |||||
STOCK
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT |
17 | |||||
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE |
23 | |||||
PROPOSAL 1
(Resolutions 1-15) ELECTION OR RE-ELECTION OF DIRECTORS |
23 | |||||
PROPOSAL 2
(Resolution 16) APPROVAL OF THE CARNIVAL CORPORATION AMENDED AND RESTATED 2001 OUTSIDE DIRECTOR STOCK PLAN |
25 | |||||
PROPOSAL 3
(RESOLUTION 17) APPROVAL OF THE CARNIVAL PLC 2005 EMPLOYEE SHARE PLAN |
29 | |||||
PROPOSAL 4
(Resolution 18) APPROVAL OF THE CARNIVAL PLC 2005 EMPLOYEE STOCK PURCHASE PLAN |
33 | |||||
PROPOSALS 5
& 6 (ResolutionS 19 & 20) RE-APPOINTMENT AND REMUNERATION OF INDEPENDENT AUDITORS FOR CARNIVAL PLC AND RATIFICATION OF INDEPENDENT REGISTERED
CERTIFIED PUBLIC ACCOUNTING FIRM FOR CARNIVAL CORPORATION |
35 | |||||
PROPOSAL 7
(Resolution 21) RECEIPT OF ACCOUNTS AND REPORTS OF CARNIVAL PLC |
36 | |||||
PROPOSAL 8
(RESOLUTION 22) APPROVAL OF DIRECTORS REMUNERATION REPORT |
36 | |||||
PROPOSALS 9
& 10 (RESOLUTIONS 23 & 24) APPROVAL OF LIMITS ON THE AUTHORITY TO ALLOT CARNIVAL PLC SHARES AND THE DISAPPLICATION OF PRE-EMPTION RIGHTS FOR
CARNIVAL PLC |
36 | |||||
PROPOSAL 11
(RESOLUTION 25) GENERAL AUTHORITY TO BUY BACK CARNIVAL PLC ORDINARY SHARES |
38 | |||||
BOARD
STRUCTURE AND COMMITTEE MEETINGS |
39 | |||||
DIRECTOR
COMPENSATION AND STOCK OWNERSHIP GUIDELINES |
42 | |||||
EXECUTIVE
COMPENSATION |
44 | |||||
Option Grants
in Last Fiscal Year |
46 | |||||
Aggregated
Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values |
47 | |||||
Equity
Compensation Plans |
50 | |||||
DEFINED
BENEFIT AND OTHER PLANS |
51 | |||||
REPORT OF THE
COMPENSATION COMMITTEES |
53 | |||||
STOCK
PERFORMANCE GRAPHS |
55 | |||||
INDEPENDENT
REGISTERED CERTIFIED PUBLIC ACCOUNTING FIRM |
57 | |||||
REPORT OF THE
AUDIT COMMITTEES |
59 | |||||
TRANSACTIONS
OF MANAGEMENT AND DIRECTORS |
60 | |||||
CHANGE IN
INDEPENDENT AUDITORS |
62 |
Annex
A |
Amended and Restated Carnival Corporation 2001 Outside Director Stock Plan |
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Annex
B |
Carnival plc 2005 Employee Share Plan |
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Annex
C |
Carnival plc 2005 Employee Stock Purchase Plan |
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Annex
D |
Carnival plc Directors Report and UK GAAP Summary Financial Information |
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Annex
E |
Carnival plc Directors Remuneration Report |
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Annex
F |
Audit Committee Charter |
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Annex
G |
Carnival plc Corporate Governance Report |
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Annex
H |
Environmental Policy |
NOTICE OF ANNUAL MEETING OF CARNIVAL CORPORATION SHAREHOLDERS
DATE |
Wednesday, April 13, 2005 |
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TIME |
3:00
p.m. (UK time), being 10:00 a.m. (Miami time) The Carnival Corporation annual meeting will start directly following the annual general meeting of Carnival plc. |
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PLACE |
Queen Elizabeth II Passenger Terminal Port of Southampton, Dock Gate 4 Ocean Gate Atlantic Way Southampton SO14 2QN United Kingdom |
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WEBCAST |
www.carnivalcorp.com or www.carnivalplc.com Please note that there will be a live audio webcast of the Carnival Corporation annual meeting and the Carnival plc annual general meeting, at Carnival Corporations headquarters located at 3655 N.W. 87th Avenue, Miami, Florida 33178, from 10:00 a.m. (Miami time). All Carnival plc and Carnival Corporation shareholders and their guests are welcome to attend the live audio webcast, although only Carnival plc and Carnival Corporation shareholders will be able to submit questions to the directors from Miami. Please note further that only shareholders attending the meetings to be held in Southampton, United Kingdom will be able to vote in person. Accordingly, shareholders attending the webcast of the meetings in Miami, Florida will need to submit a proxy (see below) to make their vote count. |
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ITEMS OF
BUSINESS |
1. To
elect and re-elect 15 directors to the boards of each of Carnival Corporation and Carnival plc; |
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2. To
approve the Amended and Restated Carnival Corporation 2001 Outside Director Stock Plan; |
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3. To
approve the Carnival plc 2005 Employee Share Plan (which includes authorization for the Compensation Committee of Carnival plc to establish sub-plans
to take into account the tax, exchange control or securities laws in the various jurisdictions where Carnival plc employees are
located); |
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4. To
approve the Carnival plc 2005 Employee Stock Purchase Plan; |
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5. To
re-appoint the independent auditors for Carnival plc and to ratify the selection of independent registered certified public accounting firm for
Carnival Corporation; |
6. To
authorize the Audit Committee of Carnival plc to agree the remuneration of the independent auditors; |
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7. To
receive the UK accounts and reports for Carnival plc for the financial year ended November 30, 2004 (in accordance with legal requirements applicable
to UK companies); |
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8. To
approve the directors remuneration report of Carnival plc (in accordance with legal requirements applicable to UK companies); |
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9. To
approve limits on the authority to allot shares by Carnival plc (in accordance with customary practice for UK companies); |
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10.
To approve the disapplication of pre-emption rights for Carnival plc shares (in accordance with customary practice for UK
companies); |
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11. To approve a general authority for Carnival plc to buy back Carnival plc ordinary shares in the open market (in accordance with legal
requirements applicable to UK companies desiring to implement share buy back programs); and |
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12. To transact such other business as may properly come before the meeting. |
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RECORD
DATE |
You
are entitled to vote your Carnival Corporation shares if you were a shareholder at the close of business on February 14, 2005. |
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MEETING
ADMISSION |
Attendance at the meeting is limited to shareholders. Each Carnival Corporation shareholder may be asked to present valid picture
identification, such as a drivers license or passport. Shareholders holding shares in brokerage accounts (under a street name) will
need to bring a copy of a brokerage statement reflecting share ownership as of the record date. |
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VOTING BY
PROXY |
Please submit a proxy as soon as possible so that your shares can be voted at the meeting in accordance with your instructions. For specific
instructions, please refer to the Questions and Answers beginning on page 8 of this proxy statement and the instructions on your proxy
card. |
This proxy statement and accompanying proxy card are being distributed on or about
March 7, 2005.
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THIS NOTICE OF ANNUAL GENERAL MEETING IS IMPORTANT. IF YOU ARE IN ANY DOUBT AS TO THE ACTION YOU SHOULD TAKE, YOU IMMEDIATELY SHOULD CONSULT YOUR STOCKBROKER, BANK MANAGER, SOLICITOR, ACCOUNTANT OR OTHER INDEPENDENT FINANCIAL ADVISER AUTHORIZED UNDER THE FINANCIAL SERVICES AND MARKETS ACT 2000.
IF YOU HAVE SOLD OR OTHERWISE TRANSFERRED ALL YOUR SHARES IN CARNIVAL PLC, PLEASE SEND THIS DOCUMENT AND THE ACCOMPANYING DOCUMENTS TO THE PURCHASER OR TRANSFEREE OR TO THE STOCKBROKER, BANK OR OTHER AGENT THROUGH WHOM THE SALE OR TRANSFER WAS EFFECTED FOR TRANSMISSION TO THE PURCHASER OR TRANSFEREE.
NOTICE OF ANNUAL GENERAL MEETING OF CARNIVAL PLC SHAREHOLDERS
NOTICE IS HEREBY GIVEN that an ANNUAL GENERAL MEETING of Carnival plc will be held at the Queen Elizabeth II Passenger Terminal, Port of Southampton, Dock Gate 4, Ocean Gate, Atlantic Way in Southampton, United Kingdom on April 13, 2005 at 3:00 p.m. (UK time), being 10:00 a.m. (Miami time), for the purpose of considering and, if thought fit, passing the resolutions described below:
| Resolutions 1 through 23 will be proposed as ordinary resolutions. For ordinary resolutions, the required majority is more than 50% of the combined votes cast at this meeting and Carnival Corporations annual meeting. |
| Resolution 24 and 25 will be proposed as special resolutions. For special resolutions, the required majority is not less than 75% of the combined votes cast at this meeting and Carnival Corporations annual meeting. |
1. | To re-elect Micky Arison as a director of Carnival Corporation and as a director of Carnival plc. |
2. | To re-elect Ambassador Richard G. Capen, Jr. as a director of Carnival Corporation and as a director of Carnival plc. |
3. | To re-elect Robert H. Dickinson as a director of Carnival Corporation and as a director of Carnival plc. |
4. | To re-elect Arnold W. Donald as a director of Carnival Corporation and as a director of Carnival plc. |
5. | To re-elect Pier Luigi Foschi as a director of Carnival Corporation and as a director of Carnival plc. |
6. | To re-elect Howard S. Frank as a director of Carnival Corporation and as a director of Carnival plc. |
7. | To elect Richard J. Glasier as a director of Carnival Corporation and as a director of Carnival plc. |
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8. | To re-elect Baroness Hogg as a director of Carnival Corporation and as a director of Carnival plc. |
9. | To re-elect A. Kirk Lanterman as a director of Carnival Corporation and as a director of Carnival plc. |
10. | To re-elect Modesto A. Maidique as a director of Carnival Corporation and as a director of Carnival plc. |
11. | To re-elect John P. McNulty as a director of Carnival Corporation and as a director of Carnival plc. |
12. | To re-elect Sir John Parker as a director of Carnival Corporation and as a director of Carnival plc. |
13. | To re-elect Peter G. Ratcliffe as a director of Carnival Corporation and as a director of Carnival plc. |
14. | To re-elect Stuart Subotnick as a director of Carnival Corporation and as a director of Carnival plc. |
15. | To re-elect Uzi Zucker as a director of Carnival Corporation and as a director of Carnival plc. |
Equity Compensation and Employee Stock Purchase Plans
16. | To consider and approve the Amended and Restated Carnival Corporation 2001 Outside Director Stock Plan. |
17. | To consider and approve the Carnival plc 2005 Employee Share Plan (which includes authorization for the Compensation Committee of Carnival plc to establish sub-plans to take into account the tax, exchange control or securities laws in the various jurisdictions where Carnival plc employees are located). |
18. | To consider and approve the Carnival plc 2005 Employee Stock Purchase Plan. |
Re-appointment and remuneration of Carnival plc auditors and ratification of
Carnival
Corporation auditors
19. | To re-appoint the UK firm of PricewaterhouseCoopers LLP as independent auditors of Carnival plc for the period commencing upon the conclusion of the meeting until the conclusion of the next general meeting at which the accounts of Carnival plc are laid and to ratify the selection of the U.S. firm of PricewaterhouseCoopers LLP as the independent registered certified public accounting firm of Carnival Corporation for the period commencing upon the conclusion of the meeting until the conclusion of the next annual meeting of Carnival Corporation after the date on which this resolution is passed. |
20. | To authorize the Audit Committee of the board of directors of Carnival plc to agree the remuneration of the independent auditors. |
Accounts and Reports
21. | To receive the UK accounts of Carnival plc and the reports of the directors and the auditors of Carnival plc for the financial year ended November 30, 2004. |
Directors remuneration report
22. | To approve the directors remuneration report of Carnival plc as set out in the accounts and the reports of the directors and the auditors for the financial year ended November 30, 2004. |
Allotment of shares
23. | THAT the authority and power conferred on the directors by Article 30 of Carnival plcs articles of association be renewed for a period commencing at the end of the meeting and expiring at the end of the next annual general meeting of Carnival plc after the date on which this resolution is passed and for that period the Section 80 amount shall be U.S. $22,715,147. |
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To consider the following resolutions as special resolutions:
24. | THAT subject to passing ordinary resolution 23 set out in the notice, the power conferred on the directors by Article 31 of Carnival plcs articles of association be renewed for a period commencing at the end of the meeting and expiring at the end of the next annual general meeting of Carnival plc after the date on which this resolution is passed and for that period the Section 89 amount shall be U.S. $17,614,229. |
General authority to buy back Carnival plc ordinary shares
25. | THAT Carnival plc be and is generally and unconditionally authorized to make market purchases (within the meaning of Section 163(3) of the UK Companies Act 1985 (the Companies Act)) of ordinary shares of US$1.66 each in the capital of Carnival plc provided that: |
(i) |
the maximum number of ordinary shares authorized to be acquired is 10,610,900; |
(ii) |
the minimum price (exclusive of expenses) which may be paid for an ordinary share is US$1.66; |
(iii) |
the maximum price which may be paid for an ordinary share is an amount (exclusive of expenses) equal to 105% of the average middle market quotation for an ordinary share, as derived from the London Stock Exchange (LSE) Daily Official List, for the five business days immediately preceding the day on which such ordinary share is contracted to be purchased; and |
(iv) |
this authority shall expire on the earlier of (i) the conclusion of the annual general meeting of Carnival plc to be held in 2006 and (ii) 18 months from the date of this resolution (except in relation to the purchase of ordinary shares, the contract of which was entered into before the expiry of such authority). |
By Order of the
Board Arnaldo Perez Company Secretary February 14, 2005 |
Registered Office: Carnival House 5 Gainsford Street London SE1 2NE United Kingdom Registered Number 4039524 |
VOTING ARRANGEMENTS FOR CARNIVAL PLC SHAREHOLDERS
Carnival plc shareholders can vote in either of two ways:
| by attending the meeting and voting in person or by attorney or, in the case of corporate shareholders, by corporate representatives; or |
| by appointing a proxy to attend and vote on their behalf, using the proxy form enclosed with this notice of annual general meeting. |
Voting in person (or by attorney)
If you come to the annual general meeting, please bring the attendance card (attached to the enclosed proxy form) with you. This will mean you can register more quickly. If you appoint an attorney to attend instead of you he or she should bring an original or certified copy of the power of attorney under which you have authorized them to attend and vote.
In order to attend and vote at the annual general meeting, a corporate shareholder may appoint an individual to act as its representative. The appointment must comply with the requirements of the Companies Act. The representative should bring evidence of their appointment, including any authority under which it is signed, to the meeting. If you are a corporation and considering appointing a corporate representative to represent you and vote your shareholding in Carnival plc at the annual general meeting you are strongly encouraged to pre-register your corporate representative to make registration on the day
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of the meeting more efficient. In order to pre-register, you would need to fax your Letter of Representation to Carnival plcs registrar, Lloyds TSB Registrars, on 01903 833168 from within the UK or +44 1903 833168 from elsewhere. |
Voting by proxy
A shareholder entitled to attend and vote at the meeting is entitled to appoint one or more proxies to attend and (on a poll) vote instead of him. A proxy need not be a shareholder of Carnival plc.
To be effective, a duly completed proxy form and the authority (if any) under which it is signed, or a notarially certified copy of such authority, must be deposited (whether delivered personally or by post) at the offices of Carnival plcs registrars, Lloyds TSB Registrars, The Causeway, Worthing, West Sussex, BN99 6DA, UK as soon as possible and in any event no later than 3:00 p.m. (UK time) on April 11, 2005. Alternatively, a proxy vote may be submitted via the Internet in accordance with the instructions set out on the proxy form.
In the case of joint registered holders, the signature of one holder on a proxy card will be accepted and the vote of the senior holder who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders. For this purpose, seniority shall be determined by the order in which names stand on the register of members of Carnival plc in respect of the relevant joint holding.
In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a CREST Proxy Instruction) must be properly authenticated in accordance with CRESTCos specifications and must contain the information required for such instructions, as described in the CREST Manual. The message, regardless of whether it constitutes the appointment of a proxy or to an amendment to the instruction given to a previously appointed proxy must, in order to be valid, be transmitted so as to be received by the issuers agent (ID 7RA01) by the latest time(s) for receipt of proxy appointments specified in the notice of meeting. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from which the issuers agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means.
CREST members and, where applicable, their CREST sponsors or voting service providers should note that CRESTCo does not make available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed a voting service provider(s), to procure that his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting service providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings.
Carnival plc may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001.
Shareholders who are entitled to vote
Carnival plc, pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001, specifies that only those shareholders registered in the register of members of Carnival plc at 11:00 p.m. on April 11, 2005 shall be entitled to attend or vote at the meeting in respect of the number of shares registered in their name at that time. Changes to the entries on the register of members after 11:00 p.m. on April 11, 2005 shall be disregarded in determining the rights of any person to attend or vote at the meeting.
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Documents available for inspection
Copies of the following documents will be available for inspection during normal business hours on any weekday (public holidays excluded) at the registered office of Carnival plc from the date of this notice until and including the date of the meeting and at the place of the meeting for at least 15 minutes prior to and during the meeting:
| the register of interests of directors in the share capital of Carnival plc; and |
| copies of all service agreements (including letters of appointment) between each director and Carnival plc. |
* * *
There are 25 Resolutions that require shareholder approval at the annual meetings this year. The directors unanimously recommend that you vote in favor of Resolutions 1-25 (inclusive), and encourage you to submit your vote using one of the voting methods described herein. Submitting your voting instructions by any of these methods will not affect your right to attend the meeting in person should you so choose.
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QUESTIONS AND ANSWERS
ABOUT THE PROXY MATERIALS AND THE ANNUAL
MEETINGS
Q: | Why am I receiving these materials? |
A: | The board of directors of each of Carnival Corporation and Carnival plc (together, Carnival Corporation & plc, we or us) is providing these proxy materials to you in connection with our joint annual meetings of shareholders on Wednesday, April 13, 2005. The annual meetings will be held at the Queen Elizabeth II Passenger Terminal, Port of Southampton, Dock Gate 4, Ocean Gate, Atlantic Way in Southampton, United Kingdom. The meetings will commence at 3:00 p.m. (UK time), and although technically two separate meetings (the Carnival plc meeting will begin first), shareholders of Carnival Corporation may attend the Carnival plc meeting and vice-versa. For our U.S. shareholders, we will be hosting a live audio webcast of the annual meeting at Carnival Corporations headquarters located at 3655 N.W. 87th Avenue, Miami, Florida 33156. Shareholders in Miami, Florida will be able to submit questions to the directors in Southampton, but will not be able to vote at that meeting. |
Q: | What information is contained in these materials? |
A: | The information included in this proxy statement relates to the proposals to be voted on at the meetings, the voting process, the compensation of directors and our most highly paid executive officers and certain other information required by U.S. Securities and Exchange Commission rules applicable to both companies. We have attached as Annexes A, B and C the stock plans described in proposals 2, 3 and 4, respectively. We have attached as Annexes D, E and G to this proxy statement information that Carnival plc is required to provide to its shareholders under applicable UK rules. Annex F is our Audit Committee Charter and Annex H is our Environmental Policy. |
Q: | What proposals will be voted on at each of the meetings? |
A: | The proposals to be voted on at each of the meetings are set out in the notices of meetings starting on pages 1 and 3 of this proxy statement. |
Q: | What is the voting recommendation of the boards of directors? |
A: | Your boards of directors recommend that you vote FOR all of the proposals described in this proxy statement. |
Q: | How does the DLC structure affect my voting rights? |
A: | On most matters that affect all of the shareholders of Carnival Corporation and Carnival plc, the shareholders of both companies effectively vote together as a single decision-making body. These matters are called joint electorate actions. Combined voting is accomplished through the special voting shares that have been issued by each company. Certain matters specified in the organizational documents of Carnival Corporation and Carnival plc where the interests of the two shareholder bodies may diverge are called class rights actions. These class rights actions are voted on separately by the shareholders of each company. If either group of shareholders does not approve a class rights action, that action generally cannot be taken by either company. All of the proposals to be voted on at these annual meetings are joint electorate actions, and there are no class rights actions. |
Q: | Generally, what actions are joint electorate actions? |
A: | Any resolution to approve an action other than a class rights action or a procedural resolution (described below) is designated as a joint electorate action. The actions designated as joint electorate actions include: |
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the appointment, removal or re-election of any director of either or both companies; |
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if required by law, the receipt or adoption of the annual accounts of both companies; |
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the appointment or removal of the independent auditors of either company; |
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a change of name by either or both companies; or |
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the implementation of a mandatory exchange of Carnival plc shares for |
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Carnival Corporation shares based on a change in tax laws, rules or regulations. |
Q: | How are joint electorate actions voted on? |
A: | Joint electorate actions are voted on as follows: |
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Carnival plc shareholders vote at the annual general meeting of Carnival plc (whether in person or by proxy). Voting is on a poll (or ballot) which remains open for sufficient time to allow the vote at the Carnival Corporation meeting to be held and reflected in the Carnival plc meeting through the mechanism of the special voting share. An equivalent vote is cast at the subsequent Carnival Corporation meeting on each of the corresponding resolutions through a special voting share issued by Carnival Corporation; and |
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Carnival Corporation shareholders vote at the Carnival Corporation annual meeting (whether in person or by proxy). Voting is by ballot (or on a poll) which remains open for sufficient time to allow the vote at the Carnival plc meeting to be held and reflected in the Carnival Corporation meeting through the mechanism of the special voting share. An equivalent vote is cast on the corresponding resolutions at the Carnival plc meeting through a special voting share issued by Carnival plc. |
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a simple majority of the votes cast in the case of an ordinary resolution (or not less than 75% of the votes cast in the case of a special resolution if required by applicable law and regulations or Carnival plcs articles) by the holders of Carnival plcs shares and the holder of the Carnival plc special voting share as a single class at a meeting at which a quorum was present and acting; |
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a simple majority of the votes cast (or other majority if required by applicable law and regulations or the Carnival Corporation articles and by-laws) by the holders of Carnival Corporation shares and the holder of the Carnival Corporation special voting share, voting as a single class at a meeting which a quorum was present and acting; and |
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a minimum of one-third of the total votes available to be voted by the combined shareholders must be cast on each resolution for it to be effective. Formal abstentions (or votes withheld) by a shareholder on a resolution will be counted as having been cast for this purpose. |
Q: | How are the directors of each company elected or re-elected? |
A: | Resolutions relating to the election or re-election of directors are considered as joint electorate actions. No person may be a member of the board of directors of Carnival Corporation or Carnival plc without also being a member of the board of directors of the other company. There are 15 nominees for election or re-election to the board of directors of each company this year. Each nominee currently serves as a director of Carnival Corporation and Carnival plc. All directors are to be elected or re-elected to serve until the next annual meetings and until their successors are elected. |
Q: | What votes are required to elect directors or approve the other proposals? |
A: | Carnival Corporation Proposals 10 and 11 (being Carnival plc Resolutions 24 and 25) are required to be approved by 75% of the combined votes cast at both meetings. |
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Q: | Generally, what are procedural resolutions? |
A: | Procedural resolutions are resolutions of a procedural or technical nature that do not adversely affect the shareholders of the other company in any material respect and are put to the shareholders at a meeting. The special voting shares do not represent any votes on procedural resolutions. The chairman of each of the meetings will determine whether a resolution is a procedural resolution. |
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that certain people be allowed to attend or be excluded from attending the meeting; |
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that discussion be closed and the question put to the vote (provided no amendments have been raised); |
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that the question under discussion not be put to the vote (where a shareholder feels the original motion should not be put to the meeting at all, if such original motion was brought during the course of that meeting); |
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to proceed with matters in an order other than that set out in the notice of the meeting; |
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to adjourn the debate (for example, to a subsequent meeting); and |
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to adjourn the meeting. |
Q: | Where can I find the voting results of the meeting? |
A: | The voting results will be announced to the media and the relevant stock exchanges and posted on the website of Carnival Corporation (www.carnivalcorp.com) and Carnival plc (www.carnivalplc.com), after both shareholder meetings have closed. The results will also be published in our quarterly report on Form 10-Q for the second quarter of fiscal 2005 ending May 31, 2005. |
Q: | What is the quorum requirement for the meetings? |
A: | The quorum requirement for holding the meetings and transacting business at the meetings is one-third of the total votes of all shareholders of both companies entitled to be voted. Shareholders may be present in person (or by attorney) or represented by proxy at the meetings. |
Q: | How is the quorum determined? |
A: | For purposes of determining a quorum with respect to joint electorate actions, the special voting shares have the maximum number of votes attached to them as were cast on such joint electorate actions, either for, against or abstained, at the parallel shareholder meeting of the other company, and such maximum number of votes (including abstentions) constitutes shares entitled to vote and present for purposes of determining whether a quorum exists at such meeting. |
Q: | Is my vote confidential? |
A: | Proxy instructions, ballots and voting tabulations that identify individual shareholders are handled in a manner that protects your voting privacy. Your vote will not be disclosed to third parties except (1) as necessary to meet applicable legal requirements, (2) to allow for the tabulation of votes and certification of the vote or (3) to facilitate a successful proxy solicitation by our boards of directors. Occasionally, shareholders provide written comments on their proxy card which are then forwarded to management. |
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Q: | Who will bear the cost of soliciting votes for the meetings? |
A: | We will pay the entire cost of preparing, assembling, printing, mailing and distributing these proxy materials and soliciting votes for the meetings. We will also reimburse brokerage houses and other custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses for forwarding proxy materials to shareholders. |
Q: | Can I view the proxy materials electronically? |
A: | This proxy statement will be posted on our websites at www.carnivalcorp.com and www.carnivalplc.com. We encourage you to take advantage of the convenience of accessing these materials through the Internet as it is simple and fast to use, saves time and money, and is environmentally friendly. |
Q: | What reports are filed by Carnival Corporation and Carnival plc with the U.S. Securities and Exchange Commission and how can I obtain copies? |
A: | We file joint annual reports on Form 10-K, joint quarterly reports on Form 10-Q and joint current reports on Form 8-K with the U.S. Securities and Exchange Commission. Copies of the Carnival Corporation & plc joint annual report on Form 10-K for the year ended November 30, 2004 (not including documents incorporated by reference), as well as any joint quarterly reports on Form 10-Q or joint current reports on Form 8-K, as filed with the U.S. Securities and Exchange Commission can be viewed or obtained without charge through the U.S. Securities and Exchange Commissions website www.sec.gov (under Carnival Corporation or Carnival plc) or at one of our websites, www.carnivalcorp.com or www.carnivalplc.com. Copies will also be provided to shareholders without charge upon written request to Investor Relations, Carnival Corporation, 3655 N.W. 87th Avenue, Miami, Florida 33178-2428 or Carnival plc, Carnival House, 5 Gainsford Street, London SE1 2NE, United Kingdom. We encourage you to take advantage of the convenience of accessing these materials through the Internet as it is simple and fast to use, saves time and money, and is environmentally friendly. |
Q: | May I propose actions for consideration at next years annual meetings? |
A: | Carnival Corporation shareholders and Carnival plc shareholders (to the extent permitted under Carnival plcs governing documents and UK law) may submit proposals for consideration at future shareholder meetings, including director nominations. In order for shareholder proposals to be considered for inclusion in our proxy statement for next years annual meetings, the written proposals must be received by our Secretary no later than November 7, 2005. Such proposals also will need to comply with U.S. Securities and Exchange Commission regulations and UK corporate law requirements regarding the inclusion of shareholder proposals in company sponsored proxy materials. Any proposal of shareholders to be considered at next years meetings, but not included in our proxy statement, must be submitted in writing by January 13, 2006. |
Q: | May I nominate individuals to serve as directors? |
A: | You may propose director candidates for consideration by our boards Nominating & Governance Committee. In order to have a nominee considered by the Nominating & Governance Committee for election at the 2006 annual meetings you must submit your recommendation in writing to the attention of our Secretary at our headquarters not later than November 7, 2005. Any such recommendation must include: |
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the name and address of the candidate; |
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a brief biographical description, including his or her occupation for at least the last five years, and a statement of the qualifications of the candidate, taking into account the factors referred to below in Board Structure and Committee Meetings Nominations of Directors; and |
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the candidates signed consent to serve as a director if elected and to be named in the proxy statement. |
11
QUESTIONS SPECIFIC TO SHAREHOLDERS OF CARNIVAL CORPORATION
Carnival plc shareholders should refer to the Questions Specific to
Shareholders of Carnival plc beginning on page 15.
Q: | What Carnival Corporation shares owned by me can be voted? |
A: | All Carnival Corporation shares owned by you as of February 14, 2005, the record date, may be voted by you. These shares include those (1) held directly in your name as the shareholder of record, including shares purchased through Carnival Corporations Dividend Reinvestment Plan and its Employee Stock Purchase Plan and (2) held for you as the beneficial owner though a stockbroker, bank or other nominee. |
Q: | Will I be asked to vote at the Carnival plc annual meeting? |
A: | No. Your vote at the Carnival Corporation annual meeting, for purposes of determining the outcome of combined voting, is automatically reflected as appropriate at the parallel annual meeting of Carnival plc through the mechanism of the special voting share issued by Carnival plc. |
Q: | What is the difference between holding shares as a shareholder of record and as a beneficial owner? |
A: | Most of the shareholders of Carnival Corporation hold their shares through a stockbroker, bank or other nominee rather than directly in their own name. As summarized below, there are some distinctions between shares held of record and those owned beneficially. |
Q: | How can I vote my Carnival Corporation shares in person at the meeting? |
A: | Shares held directly in your name as the shareholder of record may be voted in person at the annual meeting in Southampton. If you choose to do so, please bring the enclosed proxy card or proof of identification. |
Q: | How can I vote my Carnival Corporation shares without attending the meeting? |
A: | Whether you hold shares directly as the shareholder of record or beneficially in street name, you may direct your vote without attending the meeting. You may vote by granting a proxy or, for shares held in street name, by submitting voting instructions to your broker or nominee. For shareholders of record, you may do this by signing your proxy card and mailing it in the enclosed envelope. If you provided specific voting instructions, your shares will be voted as you instruct. If you |
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Q: | Can I change my vote? |
A: | You may change your proxy instruction at any time prior to the vote at the annual meeting. For shares held directly in your name, you may accomplish this by granting a new proxy bearing a later date (which automatically revokes the earlier proxy) or by attending the annual meeting and voting in person. Attendance at the meeting will not cause your previously granted proxy to be revoked unless you specifically so request. For shares owned beneficially by you, you may accomplish this by submitting new voting instructions to your broker or nominee. |
Q: | What does it mean if I receive more than one proxy or voting instruction card? |
A: | It means your shares are registered differently or are in more than one account. Please provide voting instructions on each proxy or voting card you receive and mail each, as directed. |
Q: | Who can attend the Carnival Corporation meeting? |
A: | All Carnival Corporation shareholders of record as of February 14, 2005, or their duly appointed proxies, may attend and vote at the meeting. Each shareholder may be asked to present valid picture identification, such as a drivers license or passport. |
If you hold your shares through a stockbroker or other nominee, you will need to provide proof of ownership by bringing either a copy of the voting instruction card provided by your broker or a copy of a brokerage statement showing your share ownership as of February 14, 2005 together with proof of identification. Cameras, recording devices and other electronic devices will not be permitted at the meeting. |
Q: | What class of shares are entitled to be voted at the Carnival Corporation meeting? |
A: | Carnival Corporation has only one class of common stock outstanding. Each share of Carnival Corporation common stock outstanding as of the close of business on February 14, 2005, the record date, is entitled to one vote at the annual meeting. On the record date, Carnival Corporation had approximately 634,758,397 shares of common stock issued and outstanding. The trust shares of beneficial interest in the P&O Princess Special Voting Trust that are paired with your shares of common stock do not give you separate voting rights. |
Q: | How are votes counted? |
A: | In the election of directors, you may vote FOR all of the nominees or you may WITHHOLD your vote with respect to one or more of the nominees. In the election of directors, a vote withheld on the Carnival Corporation proxy card has the same effect as a vote against the indicated nominee or nominees. You may vote FOR, AGAINST or ABSTAIN for each of the other proposals. If you ABSTAIN, it has no effect on the outcome of the votes, although abstentions will be counted for purposes of determining if a quorum is present for joint electorate actions. If you sign your proxy card or broker voting instruction card with no further instructions, your shares will be voted in accordance with the recommendations of the boards of directors. |
Q: | What happens if additional proposals are presented at the meeting? |
A: | Other than the proposals described in this proxy statement, Carnival Corporation does not expect any matters to be presented for a vote at the annual meeting. If you grant a proxy, the persons named as proxy holders, Micky Arison, Carnival Corporations Chairman of the Board and Chief Executive Officer, and Arnaldo Perez, Carnival Corporations Senior Vice President, General Counsel and Secretary, will have the |
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discretion to vote your shares on any additional matters properly presented for a vote at the meeting. If for any unforeseen reason any of our nominees is unable to accept nomination or election (which is not anticipated), the persons named as proxy holders will vote your proxy for such other candidate or candidates as may be nominated by the boards of directors. |
Q: | Who will count the vote? |
A: | A representative of SunTrust Bank, our transfer agent, will tabulate the votes and act as the inspector of elections. |
14
QUESTIONS SPECIFIC TO SHAREHOLDERS OF CARNIVAL PLC
Carnival Corporation shareholders should refer to Questions Specific to
Shareholders of Carnival Corporation beginning on page 12.
Q: | Who is entitled to attend and vote at the annual general meeting of Carnival plc? |
A: | If you are a Carnival plc shareholder registered in the register of members of Carnival plc at 11:00 p.m. (UK time) on April 11, 2005, you will be entitled to attend in person and vote at the annual general meeting to be held in Southampton, United Kingdom. in respect of the number of Carnival plc shares registered in your name at that time. You may also appoint one or more proxies to attend and (on a poll) vote instead of you. If you are a corporation you may appoint a corporate representative to represent you and vote your shareholding in Carnival plc at the annual general meeting to be held in Southampton, United Kingdom. For further details regarding appointing a proxy or corporate representative please see below. |
Q: | Will I be asked to vote at the Carnival Corporation annual meeting? |
A: | No. Your vote at the Carnival plc annual general meeting, for purposes of determining the outcome of combined voting, will automatically be reflected as appropriate at the parallel annual meeting of Carnival Corporation through the mechanism of a special voting share issued by Carnival Corporation. |
Q: | How do I vote my Carnival plc shares without attending the annual general meeting? |
A: | You may vote your Carnival plc shares at the annual general meeting by completing and signing the enclosed form of proxy in accordance with the instructions set out on the form and returning it as soon as possible, but in any event so as to be received by Carnival plcs registrar, Lloyds TSB Registrars, The Causeway, Worthing, West Sussex, BN99 6DA, by not later than 3:00 p.m. (UK time) on April 11, 2005. Alternatively, a proxy vote may be submitted via the Internet in accordance with the instructions set out in the proxy form. It is also possible to appoint a proxy via the CREST system, please see the Carnival plc Notice of Annual General Meeting for further details. Voting by proxy does not preclude you from attending the annual general meeting and voting in person should you wish to do so. |
Q: | Can I change my vote given by proxy or by my corporate representative? |
A: | Yes, in certain circumstances. You may change your proxy vote by either completing, signing and dating a new form of proxy in accordance with its instructions and returning it to Carnival plcs registrars by no later than 3:00 p.m. (UK time) on April 11, 2005, or by attending and voting in person at the annual general meeting. If you do not attend and vote in person at the annual general meeting and wish to revoke the appointment of your proxy or corporate representative you must do so by delivering a notice of such revocation to Carnival plcs registrars at least three hours before the start of the annual general meeting. |
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Q: | What class of shares are entitled to be voted at the Carnival plc meeting? |
A: | Carnival plc has only one class of ordinary shares in issue. Each Carnival plc ordinary share in issue as of the close of business on April 11, 2005, is (on a poll) entitled to one vote at the annual general meeting. |
Q: | How are votes counted? |
A: | You may vote FOR, AGAINST or WITHHOLD your vote for each of the resolutions. If you WITHHOLD, it has no effect on the outcome of the votes, although withheld votes will be counted for purposes of determining if a quorum is present for joint electorate actions. |
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STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Set forth below is information concerning the share ownership of (1) all persons known by us to be the beneficial owners of 5% or more of the 634,758,397 shares of Carnival Corporation common stock and trust shares of beneficial interest in the P&O Princess Special Voting Trust outstanding as of February 14, 2005, (2) all persons known by us to be the beneficial owners of 5% or more of the 212,219,628 ordinary shares of Carnival plc outstanding as of February 14, 2005 (41,679,877 of which are owned by Carnival Corporation and have no voting rights), (3) each of our executive officers named in the Executive Compensation Table which appears elsewhere in this proxy statement, (4) each of our other directors and (5) all directors and executive officers as a group.
Micky Arison, Chairman of the board and Chief Executive Officer of each of Carnival Corporation and Carnival plc, certain other members of the Arison family and trusts for their benefit (collectively, the Principal Shareholders), beneficially own shares representing approximately 38.3% of the voting power of Carnival Corporation and approximately 30.2% of the combined voting power of Carnival Corporation & plc and have informed us that they intend to cause all such shares to be voted in favor of the 15 nominees to the boards of directors named in this proxy statement and in favor of Proposals 2 through 11 listed in the accompanying Carnival Corporation Notice of Meeting. The table begins with ownership of the Principal Shareholders.
The number of shares beneficially owned by each entity, person, director, nominee or executive officer is determined under rules of the U.S. Securities and Exchange Commission, and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares as to which the individual has the sole or shares voting power or investment power and also any shares which the individual would have the right to acquire as of April 15, 2005 (60 days after the Carnival Corporation record date of February 14, 2005) through the conversion of a convertible security or the exercise of any stock option or other right.
Beneficial Ownership Table
Name and Address of Beneficial Owners or Identity of Group(1) |
Amount and Nature of Beneficial Ownership of Carnival Corporation Shares and Trust Shares* |
Percent of Carnival Corporation Common Stock |
Amount and Nature of Beneficial Ownership of Carnival plc Ordinary Shares |
Percent of Carnival plc Ordinary Shares |
Percent of Combined Voting Power** |
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---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Micky
Arison |
203,574,943 | (2)(3)(4) | 32.0 | % | 0 | 0 | 25.3 | % | ||||||||||||||
Shari
Arison c/o SAFO LLC 10800 Biscayne Boulevard Miami, FL 33161 |
5,103,908 | (2)(3)(5) | *** | 0 | 0 | *** | ||||||||||||||||
MA 1994 B
Shares, L.P. |
106,114,284 | (2)(6) | 16.7 | % | 0 | 0 | 13.2 | % | ||||||||||||||
MA 1994 B
Shares, Inc. |
106,114,284 | (2)(6) | 16.7 | % | 0 | 0 | 13.2 | % | ||||||||||||||
Nickel 1994
B Trust |
106,114,284 | (2)(6) | 16.7 | % | 0 | 0 | 13.2 | % | ||||||||||||||
MA 1997
Holdings, L.P. |
2,599,265 | (2)(7) | *** | 0 | 0 | *** | ||||||||||||||||
MA 1997
Holdings, Inc. |
2,599,265 | (2)(7) | *** | 0 | 0 | *** | ||||||||||||||||
Nickel 2003
Revocable Trust |
2,599,265 | (2)(7) | *** | 0 | 0 | *** | ||||||||||||||||
Artsfare 1992
Irrevocable Trust c/o SunTrust Delaware Trust Company 1011 Centre Road, Suite 108 Wilmington, DE 19805 |
41,739,830 | (2)(8) | 6.6 | % | 0 | 0 | 5.2 | % |
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Name and Address of Beneficial Owners or Identity of Group(1) |
Amount and Nature of Beneficial Ownership of Carnival Corporation Shares and Trust Shares* |
Percent of Carnival Corporation Common Stock |
Amount and Nature of Beneficial Ownership of Carnival plc Ordinary Shares |
Percent of Carnival plc Ordinary Shares |
Percent of Combined Voting Power** | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Eternity One
Trust 500 Stanton Christiana Road Newark, DE 19713 |
5,102,708 | (2)(9) | *** | 0 | 0 | *** | ||||||||||||||||
JPMorgan
Trust Company of Delaware |
5,102,708 | (2)(3)(9) | *** | 0 | 0 | *** | ||||||||||||||||
JMD-LMA
Protector, Inc. |
41,739,830 | (8) | 6.6 | % | 0 | 0 | 5.2 | % | ||||||||||||||
Nickel 2003
GRAT |
3,622,922 | (2) | *** | 0 | 0 | *** | ||||||||||||||||
Nickel
Continued Irrevocable Trust |
2,124,560 | (2) | *** | 0 | 0 | *** | ||||||||||||||||
Ted Arison
Continued Irrevocable Trust for Shari Arison |
3,759,010 | (2)(3) | *** | 0 | 0 | *** | ||||||||||||||||
Jafasa
Continued Irrevocable Trust |
3,759,010 | (2)(3) | *** | 0 | 0 | *** | ||||||||||||||||
MBA I,
L.P. |
1,432,440 | (2)(3)(10) | *** | 0 | 0 | *** | ||||||||||||||||
Artsfare 2003
Trust |
1,432,440 | (2)(3)(10) | *** | 0 | 0 | *** | ||||||||||||||||
TAMMS
Investment Company, Limited Partnership |
3,653,168 | (2)(3) | *** | 0 | 0 | *** | ||||||||||||||||
TAMMS
Management Corporation |
3,653,168 | (2)(3) | *** | 0 | 0 | *** | ||||||||||||||||
James M.
Dubin c/o Paul, Weiss, Rifkind, Wharton & Garrison LLP 1285 Avenue of the Americas New York, NY 10019 |
128,226,297 | (2)(11) | 20.2 | % | 0 | 0 | 15.9 | % | ||||||||||||||
John J.
ONeil c/o Paul, Weiss, Rifkind, Wharton & Garrison LLP 1285 Avenue of the Americas New York, NY 10019 |
71,787,525 | (2)(12) | 11.3 | % | 0 | 0 | 8.9 | % | ||||||||||||||
SunTrust
Delaware Trust Company 1011 Centre Road, Suite 108 Wilmington, DE 19805 |
41,739,830 | (13) | 6.6 | % | 0 | 0 | 5.2 | % | ||||||||||||||
JMD Delaware,
Inc. |
13,265,502 | (2) (6) | 2.1 | % | 0 | 0 | 1.7 | % | ||||||||||||||
Knight
Protector, Inc. |
71,787,525 | (14) | 11.3 | % | 0 | 0 | 8.9 | % | ||||||||||||||
Citigroup
Inc. 399 Park Avenue New York, NY 10043 |
77,949,231 | (15) | 12.3 | % | 0 | 0 | 9.7 | % | ||||||||||||||
Citigroup
Institutional Trust Company 824 Market Street Wilmington, DE 19801 |
71,801,725 | (15) | 11.3 | % | 0 | 0 | 8.9 | % | ||||||||||||||
Robert H.
Dickinson |
625,000 | (16) | *** | 0 | 0 | *** | ||||||||||||||||
Howard S.
Frank |
909,355 | (17) | *** | 0 | 0 | *** |
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Name and Address
of Beneficial Owners or Identity of Group(1) |
Amount
and Nature of Beneficial Ownership of Carnival Corporation Shares and Trust Shares* |
Percent
of Carnival Corporation Common Stock |
Amount
and Nature of Beneficial Ownership of Carnival plc Ordinary Shares |
Percent
of Carnival plc Ordinary Shares |
Percent
of Combined Voting Power** |
|||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
A.
Kirk Lanterman c/o Holland America Line Inc. 300 Elliott Avenue West Seattle, WA 98119 |
170,671 | (18) | *** | 0 | 0 | *** | ||||||||||||||
Peter
G. Ratcliffe c/o Princess Cruise Lines 24305 Town Center Drive Santa Clarita, CA 91355 |
17,974 | (19) | *** | 14,432 | (20) | *** | *** | |||||||||||||
Ambassador
Richard G. Capen, Jr. 6077 San Elijo Rancho Santa Fe, CA 92067 |
38,602 | (21) | *** | 0 | 0 | *** | ||||||||||||||
Arnold
W. Donald c/o Merisant Company 1 North Brentwood Blvd. Suite 510 Clayton, MO 63105 |
12,600 | (22) | *** | 0 | 0 | *** | ||||||||||||||
Pier
Luigi Foschi |
0 | *** | 0 | 0 | *** | |||||||||||||||
Richard
J. Glasier c/o Argosy Gaming Company 219 Piasa Street Alton, IL 62002 |
1,000 | *** | 0 | 0 | *** | |||||||||||||||
Baroness
Hogg c/o 3i Group plc 91 Waterloo Road London SE1 8XP United Kingdom |
0 | *** | 1,874 | *** | *** | |||||||||||||||
Modesto
A. Maidique c/o Florida International University Office of the President University Park Campus 107th Avenue and S.W. 8th Street Miami, FL 33199 |
24,800 | (23) | *** | 0 | 0 | *** | ||||||||||||||
John
P. McNulty 1300 3rd Street South, Suite 300 Naples, FL 34102 |
1,200 | (24) | *** | 0 | 0 | *** | ||||||||||||||
Sir
John Parker c/o National Grid Transco plc 1-3 Strand London WC2N 5EH United Kingdom |
0 | *** | 3,004 | *** | *** | |||||||||||||||
Stuart
Subotnick c/o Metromedia Company 810 7th Avenue, 29th Floor New York, NY 10019 |
12,800 | (25) | *** | 0 | 0 | *** |
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Name and Address of Beneficial Owners or Identity of Group(1) |
Amount and Nature of Beneficial Ownership of Carnival Corporation Shares and Trust Shares* |
Percent of Carnival Corporation Common Stock |
Amount and Nature of Beneficial Ownership of Carnival plc Ordinary Shares |
Percent of Carnival plc Ordinary Shares |
Percent of Combined Voting Power** | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Uzi
Zucker 870 5th Avenue New York, NY 10021 |
60,000 | *** | 0 | 0 | *** | |||||||||||||||||
Capital
Research and Management Company 333 South Hope Street Los Angeles, CA 90071 |
55,875,900 | (26) | 8.8 | % | 0 | 0 | 6.9 | % | ||||||||||||||
FMR Corp. and
Fidelity International Limited and their direct and indirect subsidiaries 82 Devonshire Street Boston, MA 02109 |
0 | 0 | 8,504,907 | (27) | 5.0 | % | 1.1 | % | ||||||||||||||
Legal &
General Group plc and/or its subsidiaries Temple Court 11 Queen Victoria Street London EC4N 4SB United Kingdom |
0 | 0 | 8,545,069 | (27) | 5.0 | % | 1.1 | % | ||||||||||||||
All directors
and executive officers as a group (23 persons) |
205,981,328 | (28) | 32.3 | % | 19,310 | (29) | *** | 25.5 | % |
* | As part of the establishment of the DLC structure, Carnival plc issued a special voting share to Carnival Corporation, which transferred such share to the trustee of the P&O Princess Special Voting Trust (the Trust), a trust established under the laws of the Cayman Islands. Trust shares of beneficial interest in the Trust were transferred to Carnival Corporation. The trust shares represent a beneficial interest in the Carnival plc special voting share. Immediately following the transfer, Carnival Corporation distributed such trust shares by way of a dividend to holders of shares of common stock of Carnival Corporation. Under a pairing agreement, the trust shares of beneficial interest in the Trust are paired with, and evidenced by, certificates representing shares of Carnival Corporation common stock on a one-for-one basis. In addition, under the pairing agreement, when a share of Carnival Corporation common stock is issued to a person after the implementation of the DLC structure, a paired trust share will be issued at the same time to such person. Each share of Carnival Corporation common stock and the paired trust share may not be transferred separately. The Carnival Corporation common stock and the trust shares (including the beneficial interest in the Carnival plc special voting share) are listed and trade together on the New York Stock Exchange (NYSE) under the ticker symbol CCL. Accordingly, each holder of Carnival Corporation common stock is also deemed to be the beneficial owner of an equivalent number of trust shares. |
** | As a result of the DLC structure, on most matters that affect all of the shareholders of Carnival Corporation and Carnival plc, the shareholders of both companies effectively vote together as a single decision-making body. Combined voting is accomplished through the special voting shares that have been issued by each company. |
*** | Less than one percent. |
(1) | The address of each natural person named, unless otherwise noted, is 3655 N.W. 87 Avenue, Miami, Florida 33178-2428. The address of all other entities, unless otherwise noted, is 1201 North Market Street, Wilmington, Delaware 19899. |
(2) | The Principal Shareholders have filed a joint statement on Schedule 13D with respect to the shares of Carnival Corporation common stock and trust shares (representing a beneficial interest in a special voting share) held by such persons. |
(3) | TAMMS Investment Company Limited Partnership (TAMMS) owns 3,653,168 shares of common stock. TAMMS general partner is TAMMS Management Corporation (TAMMS Corp.), which is wholly-owned by MBA I, L.P. (MBA I). TAMMS limited partners are various trusts established for the benefit of certain members of Mr. Arisons family (the Family Trusts). By virtue of the limited partnership agreement of TAMMS, TAMMS Corp. may also be deemed to beneficially own such 3,653,168 shares of common stock. By virtue of its interest in TAMMS, JMD Delaware, Inc. and JPMorgan Trust Company of Delaware as trustees of certain of the Family Trusts, may be deemed to beneficially own the portion of the 3,653,168 shares of common stock held by TAMMS which corresponds to their partnership interest in TAMMS. Such amounts are included in the number of shares set forth next to its name in the table above. Because of authority granted under the trust instrument for the Artsfare 2003 Trust, Mr. Arison may be deemed to beneficially own the 1,032,440 shares held by the Artsfare 2003 Trust by virtue of the limited partnership interest of MBA I in TAMMS. Because of his position as President and Treasurer of TAMMS Corp., Mr. Arison may be deemed to beneficially own the remaining 2,620,728 shares of common stock owned by TAMMS; however, Mr. Arison |
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disclaims beneficial ownership of the 2,620,728 shares which are beneficially owned by TAMMS. Accordingly, Mr. Arison has not reported beneficial ownership of any of the shares owned by TAMMS. |
(4) | Includes (i) 696,000 shares of common stock issuable to Mr. Arison upon his exercise of stock options granted to him in January 1998, 1999, 2000 and 2001, October 2001, December 2002 and October 2003, (ii) 2,599,265 shares of common stock held by the MA 1997 Holdings, L.P., (iii) 106,114,284 shares of common stock held by the MA 1994 B Shares, L.P., (iv) 89,110,032 shares of common stock held by the Artsfare 1992 Irrevocable Trust, Eternity Four Trust and the Nickel 1997 Irrevocable Trust by virtue of the authority granted to Mr. Arison under the last will of Ted Arison and (v) 1,432,440 shares of common stock held by the Artsfare 2003 Trust by virtue of authority granted under the trust instrument all of which may be deemed to be beneficially owned by Mr. Arison. |
(5) | Under the terms governing the Eternity One Trust, Shari Arison has the sole right to vote and shares the right to direct the sale of the 4,000,000 shares of common stock held directly by such trust and the 1,102,708 shares of common stock held by TAMMS which corresponds to such trusts respective ownership interest in TAMMS. In addition, the shares described above include 1,200 shares of common stock owned by Shari Arisons children. Shari Arison disclaims beneficial ownership of the shares owned by her children. |
(6) | MA 1994 B Shares, L.P. (MA 1994, L.P.) owns 106,114,284 shares of common stock. The general partner of MA 1994, L.P. is MA 1994 B Shares, Inc. (MA 1994, Inc.), which is wholly-owned by the Nickel 1994 B Trust, a trust established for the benefit of Mr. Arison and his heirs (the B Trust). The sole limited partner of MA 1994, L.P. is the B Trust. Under the terms of the instrument governing the B Trust, Mr. Arison has the sole right to vote and direct the sale of the common stock indirectly held by the B Trust. By virtue of the limited partnership agreement of MA 1994, L.P., MA 1994, Inc. may be deemed to beneficially own all such 106,114,284 shares of common stock. By virtue of Mr. Arisons interest in the B Trust and the B Trusts interest in MA 1994, L.P., Mr. Arison may be deemed to beneficially own all such 106,114,284 shares of common stock. The trustee of the B Trust is JMD Delaware, Inc., a corporation wholly-owned by James M. Dubin. |
(7) | MA 1997 Holdings, L.P. (MA 1997, L.P.) owns 2,599,265 shares of common stock. The general partner of MA 1997, L.P. is MA 1997 Holdings, Inc. (MA 1997, Inc.), which is wholly-owned by the Nickel 2003 Revocable Trust, a trust established for the benefit of Mr. Arison and his heirs (the Nickel 2003 Trust). The sole limited partner of MA 1997, L.P. is the Nickel 2003 Trust. By virtue of the limited partnership agreement of MA 1997, L.P., MA 1997, Inc. may be deemed to beneficially own all of such 2,599,265 shares of common stock. By virtue of Nickel 2003 Trusts interest in MA 1997, L.P., the Nickel 2003 Trust may be deemed to beneficially own all such 2,599,265 shares of common stock. Under the terms of the instrument governing the Nickel 2003 Trust, Mr. Arison has the sole right to vote and direct the sale of the common stock indirectly held by the Nickel 2003 Trust. The trustee of the Nickel 2003 Trust is JMD Delaware, Inc., a corporation wholly-owned by James M. Dubin. |
(8) | JMD-LMA Protector, Inc., a Delaware corporation, is the protector of the Artsfare 1992 Irrevocable Trust. JMD-LMA Protector, Inc. has shared voting and dispositive power with respect to the shares of common stock held by Artsfare 1992 Irrevocable Trust. |
(9) | JPMorgan Trust Company of Delaware acts as trustee for the Eternity One Trust. As trustee, JPMorgan Trust Company of Delaware has shared dispositive power with respect to the 4,000,000 shares of common stock directly held by Eternity One Trust and 1,102,708 shares of common stock held by TAMMS. JPMorgan Trust Company of Delaware disclaims beneficial ownership of the common stock held by Eternity One Trust. |
(10) | MBA I owns 400,000 shares of common stock and a limited partnership interest in TAMMS (See Note 3 above). MBA I may be deemed to own 1,032,440 shares of common stock held by TAMMS which corresponds to its respective partnership interest in TAMMS and TAMMS Corp. The Artsfare 2003 Trust owns a controlling interest in MBA I; therefore, the Artsfare 2003 Trust be deemed to beneficially own all such 1,432,440 shares of common stock. |
(11) | By virtue of being the sole shareholder of JMD Delaware, Inc. and JMD-LMA Protector, Inc., a fifty-percent shareholder of Knight Protector, Inc., and the sole trustee of the Artsfare 2003 Trust, Mr. Dubin may be deemed to own the aggregate of 128,226,297 shares of common stock beneficially owned by such entities, as to which he disclaims beneficial ownership. Mr. Dubin beneficially owns 1,000 shares of common stock held directly. |
(12) | By virtue of being a fifty percent shareholder of Knight Protector, Inc., Mr. ONeil may be deemed to own the aggregate of 71,787,525 shares of common stock beneficially owned by such entity, as to which he disclaims beneficial ownership. |
(13) | SunTrust Delaware Trust Company acts as trustee for the Artsfare 1992 Irrevocable Trust. |
(14) | Knight Protector, Inc. acts as protector of the Eternity Four Trust, and has shared dispositive power with respect to all 71,787,525 shares of common stock held by Eternity Four Trust, shared voting power with respect to 46,701,809 shares of common stock held by Eternity Four Trust and sole voting power with respect to 25,085,716 shares of common stock held by Eternity Four Trust. |
(15) | Citigroup Institutional Trust Company acts as trustee for the Eternity Four Trust. According to the Schedule 13G filed on February 14, 2005 by Citigroup Inc. and Citigroup Institutional Trust Company (formerly known as Smith Barney Corporate Trust Company), as of December 31, 2004 Citigroup Institutional Trust Company (of which Citigroup Inc. is the sole member) has shared voting power over 14,200 shares of common stock and shared dispositive power over 71,801,725 shares of common stock (71,787,525 shares of which are shares held by the Eternity Four Trust), and Citigroup Inc. has shared voting power over 5,939,903 shares of common stock and shared dispositive power over 77,949,231 shares of common stock (71,787,525 shares of which are shares held by the Eternity Four Trust). |
(16) | Includes 272,000 shares of common stock issuable to Mr. Dickinson upon his exercise of stock options granted to him in August 1997, 1998, 1999, 2000 and 2001 and January, October 2001 and October 2003. Also includes 328,000 shares of common stock owned by Dickinson Enterprises Limited Partnership (the Dickinson Partnership) and 25,000 shares of common stock owned by the Dickinson Foundation, of which Mr. Dickinson is the President. The general partner of the Dickinson Partnership is Dickinson Enterprises, Inc., which is wholly owned by a revocable trust established for the benefit of Mr. Dickinson and his heirs (the Dickinson Trust). Under the terms of the instrument governing the Dickinson Trust, Mr. Dickinson has the sole right to vote and direct the sale of the common stock indirectly held by the Dickinson Trust. |
(17) | Includes (i) 580,000 shares of common stock issuable to Mr. Frank upon his exercise of stock options granted to him in January 1998, 1999, 2000 and 2001, October 2001, December 2002 and October 2003 and (ii) 4,000 shares of common stock owned by the Jackson S. Woolworth Irrevocable Trust and the Cassidy B. Woolworth Trust (Mr. Frank is trustee), as to which Mr. Frank disclaims beneficial ownership. |
(18) | Includes 8,000 shares of common stock held by the Helen K. Lanterman Trust (Mr. Lanterman is trustee). |
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(19) | Includes 13,892 shares held by Mr. Ratcliffes wife. Does not include Mr. Ratcliffes conditional right to receive 20,000 shares of common stock pursuant to the under the Carnival Corporation 2002 Stock Plan after a five-year retention period, during which Mr. Ratcliffe does not have the right to vote or direct the sale of those shares. |
(20) | Includes 14,432 shares held by Mr. Ratcliffes wife. Does not include Mr. Ratcliffes conditional right to receive 22,167 and 13,304 matching awards under the P&O Princess Cruises Deferred Bonus and Co-Investment Matching Plan after a three-year retention period, during which Mr. Ratcliffe does not have the right to vote or direct the sale of those shares. |
(21) | Includes 30,800 shares of common stock issuable to Mr. Capen upon his exercise of stock options granted to him in April 1999 and 2001, October 2001, December 2002 and October 2003. Also includes 7,000 shares owned by the Capen Trust, of which Mr. Capen is co-trustee. Also includes 802 shares of common stock owned by Mr. Capens wife as to which he disclaims beneficial ownership. |
(22) | Includes 10,800 shares of common stock issuable to Mr. Donald upon his exercise of stock options granted to him in April and October 2001, December 2002 and October 2003. Also includes 1,800 shares owned by The Arnold and Hazel Donald Charitable Trust (Mrs. Donald is trustee). |
(23) | Includes 24,800 shares of common stock issuable to Dr. Maidique upon his exercise of stock options granted to him in April 1999 and 2001 and October 2001, December 2002 and October 2003. |
(24) | Includes 1,200 shares of common stock issuable to Mr. McNulty upon his exercise of stock options granted to him in October 2003. |
(25) | Includes 10,800 shares of common stock issuable to Mr. Subotnick upon his exercise of stock options granted to him in April and October 2001, December 2002 and October 2003. |
(26) | As reflected in Amendment No. 3 to Schedule 13G, dated February 13, 2004, as filed with the U.S. Securities and Exchange Commission. |
(27) | Based on notifications to Carnival plc of interests of 3% or more in the share capital of Carnival plc as required by the Companies Act. |
(28) | Includes an aggregate of 2,106,395 shares of Carnival Corporation common stock issuable to directors and executive officers upon their exercise of previously granted stock options. |
(29) | Includes an aggregate of 50,000 shares of Carnival plc issuable to executive officers upon their exercise of previously granted stock options. |
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based upon a review of Forms 3 and 4 and amendments thereto furnished to Carnival Corporation and Carnival plc during and with respect to their most recent fiscal year and upon written representations from persons known to Carnival to be subject to Section 16 of the U.S. Securities Exchange Act of 1934, as amended (the Exchange Act) (a reporting person) that no Form 5 is required to be filed for such reporting person, all reporting persons filed on a timely basis reports required by Section 16(a) of the Exchange Act during the fiscal year ended November 30, 2004, with the exception of one late report filed by each of Alan Buckelew, Micky Arison 1997 Holdings Trust, MA 1997 Holdings LP, MA 1997 Holdings Inc and the Dickinson Partnership.
PROPOSAL 1 (Resolutions 1-15)
ELECTION OR RE-ELECTION OF
DIRECTORS
The DLC structure requires the boards of Carnival plc and Carnival Corporation to be identical. Shareholders are required to approve the election or re-election of directors to each board. There are 15 nominees for election or re-election to each board of directors. Each nominee currently serves as a director of both companies. All directors are to be elected or re-elected to serve until the next annual meeting and until their successors are elected.
With respect to each nominee set forth below, the information presented includes such persons age, the month and year in which such person first became a director, any other position held with Carnival Corporation and Carnival plc, such persons principal occupations during the past five years and any directorships held by such nominee in public or certain other companies.
The Nominating & Governance Committees conducted performance evaluations on the members of our boards of directors and reported the results to the boards. The boards determined that each director was an effective member of the boards and, therefore, that each director should be proposed for election or re-election.
Accordingly, the boards of directors unanimously recommend a vote FOR the election of each of the following nominees:
Micky Arison, age 55, has been Chairman of the board of directors of Carnival Corporation since October 1990 and a director since June 1987. He became a director and Chairman of the board of directors of Carnival plc in April 2003. He has been Chief Executive Officer of Carnival Corporation since 1979 and became Chief Executive Officer of Carnival plc in April 2003.
Ambassador Richard G. Capen, Jr., age 70, has been a director of Carnival Corporation since April 1994 and a director of Carnival plc since April 2003. He is currently a corporate director, author and business consultant. From 1992 to 1993, Ambassador Capen served as United States Ambassador to Spain. From 1989 to 1991, Ambassador Capen served as Vice Chairman of Knight-Ridder, Inc. Ambassador Capen was the Chairman and Publisher of the Miami Herald from 1983 to 1989. Ambassador Capen is a member of the board of directors of the Fixed Income Funds of The Capital Group, the New Economy Fund and Smallcap World Fund.
Robert H. Dickinson, age 62, has been a director of Carnival Corporation since June 1987 and a director of Carnival plc since April 2003. Since May 2003, Mr. Dickinson has served as President and Chief Executive Officer of the Carnival Cruise Lines division of Carnival Corporation. From May 1993 through May 2003, Mr. Dickinson was President and Chief Operating Officer of Carnival Cruise Lines. Mr. Dickinson was Senior Vice President-Sales and Marketing of Carnival Cruise Lines from 1979 through May 1993. He is a member of the board of directors of Watsco, Inc.
Arnold W. Donald, age 50, has been a director of Carnival Corporation since January 2001 and a director of Carnival plc since April 2003. Since March 2000, Mr. Donald has been the Chairman of the Board of Merisant Company, a manufacturer and marketer of tabletop sweetener products, including the Equal® and Canderel® brands. From March 2000 to March 2003, he was also the Chief Executive Officer of Merisant Company. From January 1998 to March 2000 he was Senior Vice-President of Monsanto
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Company, a company which develops agricultural products and consumer goods, and president of its nutrition and consumer sector. Prior to that he was President of Monsanto Companys agricultural sector. He is a member of the board of directors of Crown Cork & Seal Company, Inc., The Laclede Group, Oil-Dri Corporation of America, Russell Corporation and The Scotts Company. |
Pier Luigi Foschi, age 58, has been a director of Carnival Corporation and of Carnival plc since April 2003. He has been Chief Executive Officer of Costa Crociere S.p.A. (Costa), a subsidiary of Carnival Corporation, since October 1997 and chairman of its board since January 2000. From 1974 to 1997, he held senior positions with OTIS, a world leader in the field of elevators, which is a subsidiary of United Technologies Corporation, and from 1990-1997 he was Executive Vice President of Otiss Asia-Pacific operations.
Howard S. Frank, age 64, has been Vice Chairman of the board of directors of Carnival Corporation since October 1993 and a director since April 1992. He has been a director, Vice Chairman of the board of directors and Chief Operating Officer of Carnival plc since April 2003. He was appointed Chief Operating Officer of Carnival Corporation in January 1998. From July 1989 to January 1998, he was Chief Financial Officer and Chief Accounting Officer of Carnival Corporation. From July 1975 through June 1989, he was a partner with Price Waterhouse.
Richard J. Glasier, age 59, has been a director of Carnival Corporation and Carnival plc since July 2004. Mr. Glasier has served as President of Argosy Gaming Company, an owner and operator of casinos, since July 2002 and its Chief Executive Officer since May 2003. He is also a member of its Board of Directors. From November 1995 to July 2002, Mr. Glasier was Executive Vice President and Chief Financial Officer of Royal Caribbean Cruises Ltd. From November 1985 to November 1995 he was Chief Financial Officer of Royal Caribbean Cruises Ltd.
Baroness Hogg, age 58, has been a director of Carnival Corporation since April 2003 and a director of Carnival plc since October 2000. She is Chairman of 3i Group Plc and Frontier Economics Ltd. and Deputy Chairman of GKN plc. She is also a member of the board of directors of BG Group plc and a member of the Financial Reporting Counsel. Sarah Hogg was Head of the Prime Ministers Policy Unit, with the rank of Second Permanent Secretary, from 1990-1995 and served as a non-executive director of The Peninsular and Oriental Steam Navigation Company (P&O) between 1999 and October 2000.
A. Kirk Lanterman, age 73, has been a director of Carnival Corporation since April 1992 and a director of Carnival plc since April 2003. He has been non-executive Chairman of the Board of Holland America Line Inc. (HAL), a subsidiary of Carnival plc, since December 2004. He was Chairman of the Board and Chief Executive Officer of HAL from November 2003 to November 2004. From August 1999 to November 2003, he was Chairman of the Board, President and Chief Executive Officer of HAL. Since 1983, Mr. Lanterman has served as either President or Chief Executive Officer of HAL.
Modesto A. Maidique, age 65, has been a director of Carnival Corporation since April 1994 and a director of Carnival plc since April 2003. He has been President of Florida International University (FIU) since 1986. Prior to assuming the presidency of FIU, Dr. Maidique taught at the Massachusetts Institute of Technology, Harvard University and Stanford University. Dr. Maidique has also served as Vice President and General Manager of the Semiconductor Division of Analog Devices, Inc. which he co-founded in 1969, as President and Chief Executive Officer of Gerome Therapeutics Collaborative Research, Inc., a genetics engineering firm, and as General Partner of Hambrecht & Quist, a venture capital firm. Dr. Maidique is a director of Ivax Corporation and National Semiconductor, Inc.
John P. McNulty, age 52, has been a director of Carnival Corporation and Carnival plc since June 25, 2003. From July 1998 through July 7, 2001, Mr. McNulty was a member of the Management Committee, head of the Investment Management Division, and Partner, Managing Director of Goldman Sachs & Co., whose principal business is financial services. From July 7, 2001 he has been retired from Goldman Sachs.
Sir John Parker, age 62, has been a director of Carnival Corporation since April 2003 and a non-executive director of Carnival plc since October 2000. He was Deputy Chairman of Carnival plc from September 2002 to April 2003. He is the non-executive Chairman of National Grid Transco plc and Deputy Chairman
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of P&O. He is also Senior Non-executive Director designate of the Court of
the Bank of England. He was formerly a non-executive director of Brambles Industries plc, Chairman of Babcock International Group plc, Chairman of RMC
Group plc and a President of the Royal Institution of Naval Architects. Sir John Parker has been a member of the General Committee of Lloyds Register
of Shipping since 1983 and Chairman of its Technical Committee from 1993 until 2002.
Peter G. Ratcliffe, age 56, has been a director of Carnival Corporation since April 2003 and a director of Carnival plc since October 2000. He was Carnival plcs Chief Executive Officer until April 2003. He is now Chief Executive Officer of P&O Princess Cruises International comprised of Cunard Line, Ocean Village, P&O Cruises, P&O Cruises (Australia), P&O Travel, Princess Cruises, Princess Tours and Swan Hellenic. He was previously an executive director of P&O and head of its cruise division, having served as President of Princess Cruises since 1993 and its Chief Operating Officer since 1989. His early career was spent with P&O Containers Limited in London and Sydney.
Stuart Subotnick, age 63, has been a director of Carnival Corporation since July 1987 and a director of Carnival plc since April 2003. Mr. Subotnick has been a general partner and the Executive Vice President of Metromedia Company since July 1986. He was a director of Metromedia Inc., a predecessor company, from 1982 and its Executive Vice President from 1986. Prior to 1986, Mr. Subotnick was Senior Vice President-Finance of Metromedia Inc. from October 1983 and a member of the Office of the President from 1982. He is a director of Big City Radio Inc., Abovenet Inc. (formerly Metromedia Fiber Networks Inc.) and Metromedia International Group, Inc.
Uzi Zucker, age 69, has been a director of Carnival Corporation since July 1987 and a director of Carnival plc since April 2003. Mr. Zucker joined Bear, Stearns & Co. in 1967, became a General Partner in 1982, a Senior Managing Director in 1986 and retired in December 2002. Mr. Zucker is now a private investor.
PROPOSAL 2 (Resolution 16)
APPROVAL OF THE CARNIVAL CORPORATION AMENDED
AND RESTATED
2001 OUTSIDE DIRECTOR STOCK PLAN
General. On February 16, 2001, the board of directors of Carnival Corporation adopted the 2001 Outside Director Stock Option Plan, and our shareholders approved it on April 17, 2001. On July 19, 2004, our boards of directors amended the 2001 Outside Director Stock Option Plan to increase the amount of the automatic annual option grant to non-executive directors from 6,000 to 10,000 shares, subject to approval of our shareholders. On January 18, 2005, our boards of directors amended and restated the 2001 Outside Director Stock Option Plan in the form of the Amended and Restated 2001 Outside Director Stock Plan (the Outside Director Plan), subject to approval of our shareholders, primarily in order (i) increase the number of shares of Carnival Corporation common stock which may be issued under the Outside Director Plan from 800,000 to 1,000,000, (ii) to permit awards of restricted stock and restricted stock units, (iii) to increase in the number of shares of Carnival Corporation common stock subject to the automatic annual award grant from 6,000 to 10,000 shares (determined as described below), (iv) to change the name of the 2001 Outside Director Stock Option Plan to the 2001 Outside Director Stock Plan to reflect the amendment of the plan to permit awards of restricted stock and restricted stock units, (v) to allow the Compensation Committee discretion in determining whether grants of annual awards are to be in the form of stock options, restricted stock, restricted stock units or any combination thereof (as described further below) and (vi) to reflect the changes to Carnival Corporation common stock as a result of the dual listed company (DLC) structure, which requires that each share of common stock be paired with a share of beneficial interest (a trust share) in the P&O Princess Special Voting Trust. A share of Carnival Corporation common stock and the paired trust share are collectively referred to in this description of Proposal 2 as a share. The Outside Director Plan is attached as Annex A to this proxy statement.
The principal provisions of the Outside Director Plan, as amended and restated, are summarized below. This summary is not complete and is qualified in its entirety by the terms of the Outside Director Plan. Approval of the Outside Director Plan is required in order to meet the requirements of the NYSE in respect of (A) the increase in the number of shares of Carnival Corporation common stock reserved for issuance under the Outside Director Plan from 800,000 to 1,000,000, (B) the addition of restricted stock awards and restricted stock unit awards as awards available for grant under the Outside Director Plan, (C) the increase in the number of shares of Carnival Corporation common stock subject to the automatic annual
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award grant from 6,000 to 10,000 shares (determined as described below) and (D)
to reflect the changes to the Carnival Corporation common stock as a result of the DLC structure.
Description of the Outside Director Plan
Purpose. The purpose of the Outside Director Plan is to provide our outside (non-executive) directors with the opportunity to acquire a proprietary interest in Carnival Corporation. We believe that offering stock options and other awards provided under the Outside Director Plan will strengthen our ability to attract and retain the services of experienced and knowledgeable non-executive directors and more closely align the interests of such directors with those of our shareholders.
Administration. The Outside Director Plan is administered by the Compensation Committee of Carnival Corporation. The composition of the Compensation Committee is described in the section of this proxy statement entitled Board Structure and Committee MeetingsBoard Committees. The Compensation Committee has no discretion to determine the non-executive directors to whom awards are granted, the number of shares to be covered by each annual award or, with respect to options, the option price or the exercise period. Subject to these limitations and those described under Annual Award Grant below, the Compensation Committee has discretion to determine the type of award granted and has plenary authority to interpret the Outside Director Plan and to make all determinations deemed necessary and advisable for its administration.
Eligibility. All of our directors who are not employees of Carnival Corporation or Carnival plc or any of their subsidiaries are eligible to participate in the Outside Director Plan. As of the date of the Annual Meeting, 10 persons are eligible to participate in the Outside Director Plan. However, A. Kirk Lanterman has agreed not to receive compensation for his services as a non-executive director and, as a result, will not receive awards under the Outside Director Plan. In addition, Baroness Hogg and Sir John Parker, as UK non-executive directors, have elected not to receive options under the Outside Director Plan. However, these UK directors will accept restricted stock and/or restricted stock unit awards under the Outside Director Plan.
Types of Awards. The Outside Director Plan provides for the granting of annual awards of options to purchase shares of Carnival Corporation common stock, restricted shares of Carnival Corporation common stock and/or restricted stock units, to our non-executive directors, being directors who are not employees of Carnival Corporation or Carnival plc or any of their subsidiaries. None of the awards relates to Carnival plc ordinary shares. Each award granted under the Outside Director Plan is governed by an award agreement between Carnival Corporation and the director.
Annual Award Grant. Each non-executive director elected or appointed to the board of directors shall receive, upon initial election to office by the shareholders and thereafter annually on the date of our annual meeting of shareholders at which such non-executive director is re-elected to office, an award representing 10,000 points. The board of directors may authorize a date for granting annual awards other than the date of the Companys annual meeting of shareholders, so long as awards granted to each non-executive director do not exceed more than 10,000 points in any given calendar year. Each option to purchase one share shall represent one point; each share of restricted stock award and each restricted stock unit shall represent four points. An award may be composed of options, restricted stock, restricted stock units or a combination thereof, at the discretion of the Compensation Committee. Individual non-executive directors may be granted varying combinations of options, restricted stock and restricted stock units, at the discretion of the Compensation Committee.
Options. The option price will be equal to the fair market value of a share of Carnival Corporation common stock at the time the option is granted, as determined in accordance with the Outside Director Plan. Such options shall vest and become exercisable in five equal annual installments beginning one year from the grant date. Such options shall also vest and become exercisable in full upon the death or disability of the director, and shall continue to vest in accordance with the original five-year vesting schedule if a director ceases to be a director for any other reason after serving as a director for at least one year. Options granted under the Outside Director Plan shall expire upon the occurrence of certain conditions, including: (a) the expiration of ten years after the date of the grant, (b) the expiration of one
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year after termination of services as a director due to death or disability and
(c) the cessation of service as a director for any reason other than death or disability prior to one year of service as a director.
Restricted Stock. An award of restricted shares of Carnival Corporation common stock is a grant of shares on terms and conditions determined by the Compensation Committee. Holders of an award of restricted stock will have, with respect to the restricted stock granted, all of the rights of a shareholder of Carnival Corporation, including the right to vote the shares. However, the Compensation Committee has discretion to determine whether cash and stock dividends with respect to the restricted stock will be currently paid to the director or withheld by us and credited for the directors account, and interest may be credited on such dividends at a rate determined by the Compensation Committee. Any cash or stock dividends withheld by the Compensation Committee (and any earnings thereon, if applicable) will be distributed to the director upon vesting of the shares to which the dividends are attributable, and if the shares are forfeited, the director shall also forfeit his or her right to any cash or stock dividends attributable to the forfeited shares. The vesting of restricted stock shall be on the same schedule as is described above with respect to stock options.
Restricted Stock Units. An award of restricted stock units is a grant of a hypothetical investment in shares of Carnival Corporation common stock on terms and conditions (including vesting) determined by the Compensation Committee, with each restricted stock unit representing a hypothetical investment in one share. A holder of restricted stock units will receive one share, or the cash equivalent of one share (as determined by the Compensation Committee), in respect of each restricted stock unit upon the satisfaction of the applicable vesting conditions, which shall be the same as those applicable to stock options and restricted stock. Holders of an award of restricted stock units shall not have, with respect to the restricted stock units granted, any of the rights of a shareholder of Carnival Corporation. The Compensation Committee has discretion to determine whether dividend equivalents with respect to the restricted stock units (being equal to the cash and stock dividends on the shares represented by the restricted stock units) will be currently paid to the director or withheld by us and credited for the directors account, and interest may be credited on such dividend equivalents at a rate determined by the Compensation Committee. Any dividend equivalents withheld by the Compensation Committee (and any earnings thereon, if applicable) will be distributed to the director upon the satisfaction of the vesting conditions on the restricted stock units to which the dividends are attributable, and if the restricted stock units are forfeited, the director shall also forfeit his or her right to any dividend equivalents attributable to the forfeited restricted stock units.
Number of Shares Authorized. The number of shares issuable pursuant to awards granted under the Outside Director Plan is subject to adjustment in the event of any stock split, stock dividend, stock change, reclassification, recapitalization or combination of shares which changes the character or amount of the outstanding shares after the date of grant of any award. The maximum number of shares which may be made subject to awards under the Outside Director Plan is 1,000,000. The fair market value of a share on February 14, 2005, as determined in accordance with the Outside Director Plan, was $55.96 per share. The amended and restated Outside Director Plan does not increase the number of shares previously authorized by the shareholders.
Transferability. Other than in connection with certain divorce decrees or estate planning transfers specifically approved by the Compensation Committee, each stock option granted under the Outside Director Plan may be exercised during the directors lifetime only by the director or, if permissible under applicable law, by the directors legal representative, and no award granted under the Outside Director Plan may be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by a director other than by will or by the laws of descent and distribution.
Amendment and Termination. The Outside Director Plan provides that it will terminate, unless earlier terminated as provided therein, on January 1, 2011. The boards of directors may amend the Outside Director Plan at any time and from time to time in such respects as it may deem advisable, subject to any shareholder or regulatory approval required by law or the rules of any stock exchange on which shares may be traded.
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Tax Effects of Plan Participation
The following summary generally describes the principal U.S. federal (and not foreign, state and local) income tax consequences of awards granted under the Outside Director Plan. It is general in nature and is not intended to cover all tax consequences that may apply to a particular director or to us. The provisions of the U.S. Internal Revenue Code of 1986 (the Code) and the regulations thereunder relating to these matters (Treasury Regulations) are complicated and their impact in any one case may depend upon the particular circumstances. Each holder of an award under the Outside Director Plan should consult his or her own accountant, legal counsel or other financial advisor regarding the tax consequences of participation in the Outside Director Plan. This discussion is based on the Code as currently in effect.
Options. Options granted under the Outside Director Plan will not be qualified as incentive stock options as defined under Section 422 of the Code. The grant of a nonqualified stock option has no U.S. federal tax consequences to a director or us. Upon exercise, a director will recognize ordinary income in an amount equal to the excess of the fair market value of the shares on such date over the exercise price of such shares. We expect a grant of options to a director under the Outside Director Plan to be exempt from the application of Section 16(b) of the Exchange Act due to the grant meeting the requirement of Rule 16b-3 promulgated under the Exchange Act. The basis of shares transferred to a director pursuant to the exercise of an option is the price paid for such shares plus an amount equal to any income recognized by the director as a result of the exercise. If a director sells shares acquired upon exercise of an option, any amount realized over the basis of such shares will constitute long-term or short term capital gain to such director for U.S. federal income tax purposes (depending on whether or not the director holds the shares for at least one year after exercise of the related option).
Restricted Stock. A director will not be subject to tax upon the grant of an award of restricted stock unless the director otherwise elects to be taxed pursuant to Section 83(b) of the Code. On the date an award of restricted stock becomes transferable or is no longer subject to a substantial risk of forfeiture, the director will have taxable compensation equal to the excess of the fair market value of the shares on that date over the amount the director paid for such shares, unless the director made an election under Section 83(b) of the Code to be taxed at the time of grant. (Special rules would normally apply to the receipt and disposition of restricted shares to directors on account of Section 16(b) of the Exchange Act, but, as previously stated, we expect that awards granted under the Outside Director Plan will be exempt from the application of Section 16(b). The director will have a tax basis in the shares equal to the amount the director paid for such shares (generally, zero) plus the amount taxable as compensation to the director. Upon the sale of the shares, any gain or loss is generally long-term or short-term capital gain or loss, depending on the holding period.
Restricted Stock Units. A director will not be subject to tax upon the grant of a restricted stock unit award. A director who receives a cash payment pursuant to a restricted stock unit will have taxable compensation equal to the full amount of such payment. If a director receives shares pursuant to a restricted stock unit award, the director will have taxable compensation equal to the fair market value of the shares on the date of receipt and the director will have a tax basis in the shares equal the amount taxable as compensation to the director. Upon the sale of the shares, any gain or loss is generally long-term or short-term capital gain or loss, depending on the holding period.
New Plan Benefits
Because the composition of the awards to be granted in the future under the Outside Director Plan is at the discretion of the Compensation Committee, it is not possible to determine the benefits or amounts which will be received in the future under the Outside Director Plan by the non-executive directors. However, as noted above, each non-executive director participating in the Outside Director Plan (except as described under Eligibility) will receive an annual grant of an award representing 10,000 points (as described above) which award may be composed of options, restricted stock, restricted stock units or a combination thereof, at the discretion of the Compensation Committee, which represents an increase from the current annual grant of options in respect of 6,000 shares.
During fiscal 2004, 10,000 options were granted on July 20, 2004 under the 2001 Outside Director Stock Option Plan at an exercise price equal to $45.92 to each of Messrs. Capen, Donald, Glasier, Maidique, McNulty, Subotnick and Zucker. Of each of these, 4,000 were granted subject to shareholder approval
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of the Outside Director Plan as described above. Baroness Hogg and Sir John
Parker, as UK non-executive directors, have elected not to receive options under the 2001 Outside Director Stock Option Plan.
The boards of directors unanimously recommend a vote FOR the Amendment and Restatement of the Outside Director Plan.
PROPOSAL 3 (Resolution 17)
APPROVAL OF THE CARNIVAL PLC 2005 EMPLOYEE
SHARE PLAN
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.
Description of the PLC Share Plan
Purpose. The purpose of the PLC Share Plan is to create an employment incentive by providing an opportunity to selected employees who are important to the success and growth of the business of Carnival Corporation & plc to own Carnival plc ordinary shares.
Types of Awards. The PLC Share Plan allows three types of awards to be granted: options to purchase Carnival plc ordinary shares; restricted shares of Carnival plc ordinary shares; and restricted share units. These may be granted separately to any eligible employee or in any combination that the Compensation Committee may decide. The Compensation Committee will determine the value of any award to be granted
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to an individual taking into account an individuals present and potential
contribution to the success of Carnival Corporation & plc and the market practice for companies with global operations in the country where a
participant is based.
Administration. The PLC Share Plan will be administered by the Compensation Committee. The composition of the Compensation Committee is described in the section of this proxy statement entitled Board Structure and Committee MeetingsBoard Committees. Subject to the limitations described below, the Compensation Committee has discretion to determine the type of award granted and has authority to interpret the PLC Share Plan and to make all determinations deemed necessary and advisable for its administration.
Eligibility. The PLC Share Plan provides that all employees of Carnival plc and its subsidiaries (the PLC Group) are eligible to participate in the PLC Share Plan at the discretion of the Compensation Committee. It is anticipated that awards will be granted primarily to management and supervisory level employees, including executive directors. As of February 14, 2005, approximately 23,500 employees are eligible to participate in the PLC Share Plan.
Options. Options to acquire Carnival plc ordinary shares may be granted at an exercise price determined by the Compensation Committee, which may not be less than the fair market value of a Carnival plc ordinary share at the time the option is granted. Options may be granted over American Depositary Shares (ADSs), each representing one ordinary share of Carnival plc, where appropriate for U.S.-based executives. In the UK and U.S., we intend that options may be granted as Inland Revenue approved options or as incentive stock options, respectively, to qualify for income tax relief on exercise, or as unapproved or non-qualified options. The Compensation Committee has discretion to decide the appropriate vesting schedule to be applied to an option which will determine when the option may be exercised. An option will not be exercisable more than ten years after the grant date.
Restricted Shares. An award of restricted shares is a grant of Carnival plc ordinary shares on terms and conditions determined by the Compensation Committee. The Compensation Committee has discretion to determine the vesting schedule for restricted shares as it does for share options. Restricted shares may be forfeited in certain circumstances (see Leaving Employment below). Holders of an award of restricted shares will have all the rights of a shareholder of Carnival plc with regard to the restricted shares during the vesting period, including the right to vote the restricted shares. However, the Compensation Committee has discretion to determine whether cash or share dividends with respect to the restricted shares will be paid to the participant as they arise or whether they will be withheld and credited to the participants account, together with interest at a rate determined by the Compensation Committee to be paid to the participant when and if the restricted shares vest. If cash or share dividends are withheld by the Compensation Committee they will be forfeited if the restricted shares to which they are attributable are forfeited.
Restricted Share Units. An award of restricted share units is a grant of a hypothetical investment in Carnival plc ordinary shares on terms and conditions (including vesting) determined by the Compensation Committee, with each restricted share unit representing a hypothetical investment in one Carnival plc ordinary share. A holder of restricted share units will receive one Carnival plc ordinary share, or the cash equivalent of one share (as determined by the Compensation Committee) in respect of each restricted share unit upon the satisfaction of the applicable vesting conditions. The Compensation Committee has discretion to determine the vesting schedule for restricted share units as it does for share options and restricted shares as well as whether the award will be settled in cash or by ordinary shares. During the vesting period, restricted share units may be forfeited in certain circumstances. Holders of an award of restricted share units shall not have any of the rights of a shareholder of Carnival plc with respect to the restricted share units. The Compensation Committee has discretion to determine whether dividend equivalents with respect to the restricted share units (being equal to the cash and share dividends on the shares represented by the restricted share units) will be paid to the participant as they arise or withheld and credited for the participants account, and interest may be credited on such dividend equivalents at a rate determined by the Compensation Committee. If dividend equivalents are withheld by the Compensation Committee they will be forfeited if the restricted share to which they are attributable are forfeited.
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Annual Award Grant. Awards will usually be granted to eligible employees on an annual basis. However, the Compensation Committee has discretion to grant additional awards to eligible employees at any time during the year when it deems advisable. Awards may not be granted when dealings in Carnival plc ordinary shares would not be permitted under the UK Listing Authoritys Model Code on restrictions in dealing in securities. Benefits under the PLC Share Plan will not be pensionable.
Performance Conditions. The Compensation Committee has discretion to determine whether the grant or vesting of an award is subject to performance conditions. In determining whether performance conditions shall apply, the Compensation Committee shall have regard to the local practice in the country in which the participant is based.
Leaving Employment. Unvested options will not normally be exercisable, and unvested restricted share awards and restricted share unit awards will normally be forfeited, if a participant leaves the employment of the PLC Group. There may be exceptions if a participant leaves employment in special circumstances, such as by reason of death, injury or disability, or retirement at normal retirement. A participant who ceases to be employed by the PLC Group for the purpose of accepting employment with Carnival Corporation or any of its subsidiaries, will not be treated as ceasing employment with the PLC Group.
Number of Shares Available. The maximum number of Carnival plc ordinary shares that may be issued pursuant to awards under the PLC Share Plan when aggregated with any ordinary shares issued or remaining issuable pursuant to rights granted in any ten-year period under any employee share plan adopted by Carnival plc, may not exceed 10% of Carnival plcs issued ordinary share capital from time to time, provided that no more than 3.5 million shares may be issued upon the exercise of incentive stock options. As of February 14, 2005, the closing price of one Carnival plc ordinary share was £31.56.
Change of Control. In the event of a change of control of Carnival plc, a sale of substantially all the assets of the business of Carnival plc, a situation where the current members of the board of directors no longer represent a majority of the board (other than in the normal course of appointments and re-election of directors), or a court sanctioning a scheme of arrangement of Carnival plc, or a merger or other business combination affecting Carnival plc, awards will be capable of early exercise or release in full. The Compensation Committee may determine that awards should be exchanged for equivalent rights in respect of shares of the acquiring company (subject to the consent of that company) or that some other arrangement is more appropriate in which case early exercise of options and vesting of awards will not be permitted.
Variations of Share Capital. In the event of a variation of share capital such as a rights or bonus issue, a share subdivision or the implementation by Carnival plc of a demerger or a special dividend or other corporate transaction which in the Compensation Committees opinion would materially affect the current or future value of awards, the number of Carnival plc ordinary shares which may be acquired pursuant to an award (and in the case of an option, the exercise price) may be adjusted in such manner as the Compensation Committee determines is appropriate.
Transferability. Awards granted under the PLC Share Plan may not be transferred during a participants lifetime, except that the Compensation Committee may in its discretion allow certain transfers of nonqualified options and restricted shares to immediate family members by gift for estate planning purposes.
Amendment and Termination. The Compensation Committee may amend the PLC Share Plan. However, the provisions governing eligibility requirements, equity dilution and the adjustments that may be made following a rights issue or any other variation of capital cannot be altered to the advantage of eligible employees or participants without the prior approval of Carnival plcs shareholders (except for minor amendments to benefit the administration of the PLC Share Plan, to take account of a change in legislation or developments in the law affecting the PLC Share Plan, or to obtain or maintain favorable tax, exchange control or regulatory treatment for participants in the PLC Share Plan or any member of the PLC Group). In addition, no alteration may be made that would materially affect any subsisting rights of any participants without their prior consent. The Compensation Committee intends to adopt a sub-plan to the PLC Share Plan under which Inland Revenue approved options capable of attracting preferential tax treatment may be granted to UK employees. The Compensation Committee may adopt further sub-plans to the PLC Share Plan without shareholder approval to take account of tax, exchange control or securities laws which
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apply to employees in countries outside the UK. Shares made available under any
sub-plan will count towards equity dilution limits. The PLC Share Plan will terminate ten years from the date of approval by the shareholders of
Carnival plc, except that the rights of existing participants will not be affected by any termination.
Operation of the Plan. Carnival plc ordinary shares used to satisfy awards may be purchased in the market or issued by Carnival plc. Ordinary shares held in treasury by Carnival plc may also be used to satisfy awards. The PLC Share Plan may be operated in conjunction with an employee trust. The trust may acquire and hold Carnival plc ordinary shares required to satisfy awards. Outstanding ordinary shares may be acquired by the trustee of the trust in the market or new ordinary shares may be issued by Carnival plc to the trustee.
Tax Effects of Plan Participation
The following summary generally describes the principal U.S. federal (and not foreign, state and local) income tax consequences of awards granted under the PLC Share Plan. It is general in nature and is not intended to cover all tax consequences that may apply to a particular participant or to us. The provisions of the Code and Treasury Regulations are complicated and their impact in any one case may depend upon the particular circumstances. Each holder of an award under the PLC Share Plan should consult his or her own accountant, legal counsel or other financial advisor regarding the tax consequences of participation in the PLC Share Plan. This discussion is based on the Code as currently in effect.
Options. If an option is granted to an employee in accordance with the terms of the PLC Share Plan, no income will be recognized by such employee at the time the option is granted. Generally, on exercise of a nonqualified option, the amount by which the fair market value of the shares on the date of exercise exceeds the purchase price of such shares will be taxable to the employee as ordinary income. The disposition of shares acquired upon exercise of a nonqualified option under the PLC Share Plan will ordinarily result in long-term or short-term capital gain or loss (depending on the applicable holding period) in an amount equal to the difference between the amount realized on such disposition and the sum of the purchase price and the amount of ordinary income recognized in connection with the exercise of the nonqualified option.
Pursuant to currently applicable rules under Section 16(b) of the Exchange Act, the grant of an option (and not its exercise) to a person who is subject to the reporting and short-swing profit provisions under Section 16 of the Exchange Act (a Section 16 Person) begins the six-month period of potential short-swing liability. The taxable event for the exercise of an option that has been outstanding at least six months ordinarily will be the date of exercise. If an option is exercised by a Section 16 Person within six months after the date of grant, however, taxation ordinarily will be deferred until the date which is six months after the date of grant, unless the person has filed a timely election pursuant to Section 83(b) of the Code to be taxed on the date of exercise. However, the six month period of potential short-swing liability may be eliminated if the option grant (i) is approved in advance by the Carnival plc board of directors (or a committee composed solely of two or more non-employee directors) or (ii) is approved in advance, or subsequently ratified by the shareholders no later than the next annual meeting of shareholders. Consequently, the taxable event for the exercise of an option that satisfies either of the conditions described in clauses (i) or (ii) above will be the date of exercise.
Generally, on exercise of an incentive option, an employee will not recognize any income and neither Carnival plc nor any of its subsidiaries will be entitled to a deduction for tax purposes. However, the difference between the purchase price and the fair market value of the shares received on the date of exercise will be treated as a positive adjustment in determining alternative minimum taxable income and the employee may be subject to the alternative minimum tax. The disposition of shares acquired upon exercise of an incentive option under the PLC Share Plan will ordinarily result in long-term or short-term capital gain or loss (depending on the applicable holding period). Generally, however, if the employee disposes of shares of Carnival plc acquired upon exercise of an incentive option within two years after the date of grant or within one year after the date of exercise (as disqualifying disposition), the employee will recognize ordinary income in the amount of the excess of the fair market value of the shares on the date of exercise over the purchase price (or, in certain circumstances, the gain on sale, if less). Any excess of the amount realized by the holder on the disqualifying disposition over the fair market value of the shares on the date of exercise of the incentive option will ordinarily constitute capital gain.
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Restricted Shares. An employee will not be subject to tax upon the grant of an award of restricted shares unless the employee otherwise elects to be taxed pursuant to Section 83(b) of the Code. On the date an award of restricted shares becomes transferable or is no longer subject to a substantial risk of forfeiture, the employee will have taxable compensation equal to the excess of the fair market value of the shares on that date over the amount the employee paid for such shares, unless the employee made an election under Section 83(b) of the Code to be taxed at the time of grant. (As discussed above, special rules would normally apply to the receipt and disposition of restricted shares to directors on account of Section 16(b) of the Exchange Act). The employee will have a tax basis in the shares equal to the amount the employee paid for such shares (generally, zero) plus the amount taxable as compensation to the employee. Upon the sale of the shares, any gain or loss is generally long-term or short-term capital gain or loss, depending on the holding period.
Restricted Share Units. An employee will not be subject to tax upon the grant of a restricted share unit award. An employee who receives a cash payment pursuant to a restricted share unit will have taxable compensation equal to the full amount of such payment. If an employee receives shares pursuant to a restricted share unit award, the employee will have taxable compensation equal to the fair market value of the shares on the date of receipt and the employee will have a tax basis in the shares equal the amount taxable as compensation to the employee. Upon the sale of the shares, any gain or loss is generally long-term or short-term capital gain or loss, depending on the holding period.
New Plan Benefits
Because the composition of the awards to be granted in the future under the PLC Share Plan is at the discretion of the Compensation Committee, it is not possible to determine the benefits or amounts which will be received in the future under the PLC Share Plan by the Carnival plc executive directors.
The boards of directors unanimously recommend a vote FOR the adoption of the PLC Share Plan.
PROPOSAL 4 (Resolution 18)
APPROVAL OF THE CARNIVAL PLC 2005 EMPLOYEE
STOCK PURCHASE PLAN
General. As a result of the Corporate Restructuring, certain subsidiaries of Carnival Corporation, including Holland America Line Inc. (HAL), were transferred to the Carnival plc side of the DLC. As a result, employees of HAL were no longer eligible to participate in Carnival Corporations 1993 Employee Stock Purchase Plan. At the time of the Corporate Restructuring, it was determined that management would evaluate proposals to adopt another employee stock purchase plan in relation to ADSs for employees of Carnival plc with substantially similar terms to the Carnival Corporation 1993 Employee Stock Purchase Plan. Accordingly, on January 18, 2005, the boards of directors adopted, subject to shareholder approval, the Carnival plc 2005 Employee Stock Purchase Plan (the 2005 ESPP). The 2005 ESPP is attached as Annex C to this proxy statement. The 2005 ESPP establishes an employee stock purchase plan for eligible employees of Carnival plc that is substantially similar to the Carnival Corporation 1993 Employee Stock Purchase Plan. The principal provisions of the 2005 ESPP are summarized below. This summary is not complete and is qualified in its entirety by the terms of the 2005 ESPP.
Approval of the 2005 ESPP is required in order to satisfy the requirements of Section 423 of the Code in order for the participants to qualify for favorable U.S. federal income tax treatment for shares purchased under the 2005 ESPP.
Description of the 2005 ESPP
Purpose. The purpose of the 2005 ESPP is to provide eligible employees with the opportunity to acquire a proprietary interest in Carnival plc ordinary shares represented by ADSs. We believe that offering this opportunity will strengthen our ability to attract and retain the services of experienced and knowledgeable employees and more closely align the interests of such employees with those of our shareholders.
Administration. The 2005 ESPP is administered by the Compensation Committee of Carnival plc. The composition of the Compensation Committee is described in the section of this proxy statement entitled Board Structure and Committee MeetingsBoard Committees. The Compensation Committee has the
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authority to interpret the 2005 ESPP, to prescribe, amend and rescind the rules
and regulations relating to it and to make all other determinations necessary for the administration of the 2005 ESPP.
Eligibility. Employees of Carnival plc, to the extent the 2005 ESPP is offered to its employees, and employees of each of its subsidiaries to whom the 2005 ESPP is offered, are eligible to participate in the 2005 ESPP, except that the following may be excluded at the discretion of the Compensation Committee: (i) employees whose customary employment is 15 hours or less per week; (ii) employees whose customary employment is for not more than 5 months per year; and (iii) employees whose period of employment with Carnival plc or any subsidiary is less than six months. In addition, employees who own five percent or more of the voting stock of Carnival plc may not participate in the 2005 ESPP. As of February 14, 2005, we expect approximately 1,800 employees are eligible to participate in the 2005 ESPP.
Participation and Terms. An eligible employee may elect to enroll in the 2005 ESPP at any time during the period from the 90th day to the 10th day prior to any offering by completing an enrollment form and either a withholding election form or a deposit election form approved by the Compensation Committee which indicates the amounts to be deducted from his or her salary or deposited and applied to the purchase of ADSs for that offering. The right to purchase ADSs under the 2005 ESPP is made available to eligible employees in a series of semi-annual offerings beginning on the first business day of each January and July. The payroll deduction or deposit must be within limits set by the Compensation Committee.
A purchase account is established for each participating employee and all payroll deductions or deposits made on behalf of each employee are credited to each such employees respective purchase account. As of each Investment Date (defined as the last Friday of each offering period), the amount credited to each participating employees purchase account is applied to purchase as many ADSs as may be purchased with such amount at the applicable purchase price. No participating employee may be granted an option that permits him or her to purchase in excess of $17,647.06 of ADSs per calendar year.
If the eligible employee elects to make deposits, such deposit must be delivered to Carnival plc on or before the 20th day prior to the Investment Date (defined as the last Friday of each offering period). The deposit election form is effective only for the offering for which it is filed. If the eligible employee files a withholding election form, such employee will be deemed to continue participation through payroll deductions for each subsequent offering until the election form ceases to be effective. If an eligible employee who has filed a withholding election form ceases to be eligible for payroll deductions at any time during an offering, any balance in his or her purchase account will be applied towards the purchase of ADSs on the next Investment Date. Any eligible employee who ceases to be eligible for participation at any time during an offering will be deemed to have ceased participation in the 2005 ESPP and the balance of his or her purchase account will be returned.
The purchase price for the ADSs shall be equal to the lesser of (A) the greater of (1) 85% of the average fair market values on the grant date and the Investment Date and the last Friday of each month within the offering period of one ADS or (2) 85% of the fair market value of one ADS on the grant date or (B) 85% of the fair market value of one ADS on the Investment Date. Participating employees are precluded from selling the ADSs purchased until one year from the Investment Date.
Number of Shares Authorized. The maximum number of ADSs which may be purchased pursuant to the 2005 ESPP is 2,000,000 ADSs ($1.66 stated value) (subject to adjustment for any dividend, stock split or other relevant changes in Carnival plcs capitalization or change in the ratio of ADSs to shares as set forth in the ADS Deposit Agreement). The 2005 ESPP is intended to go into effect on January 1, 2005. As of February 14, 2005, the closing price of one Carnival plc ADS was $59.60.
Amendment and Termination. The board of directors of Carnival plc may amend the 2005 ESPP at any time, provided that if shareholder approval is required for the plan to continue to comply with the requirements of Rule 16b-3 promulgated under the Exchange Act or Section 423 of the Code, such amendment shall not be effective unless approved by Carnival plcs shareholders within twelve months after the date of the adoption by the board of directors. The 2005 ESPP may be terminated by the board of directors at any time.
Participation in the 2005 ESPP is solely at the discretion of the eligible participants, and we cannot determine at this time the number of ADSs that will be acquired in the future by any particular employee or group.
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Tax Effects of Plan Participation
The 2005 ESPP is intended to be an employee stock purchase plan as defined in Section 423 of the Code. As a result, an employee participant will pay no federal income tax upon enrolling in the 2005 ESPP or upon purchase of the ADSs. A participant may recognize income and/or gain or loss upon the sale or other disposition of ADSs purchased under the plan, the amount and character of which will depend on whether the ADSs are held for two years from the first day of the offering period.
If the participant sells or otherwise disposes of the ADSs within that two-year period, the participant will recognize ordinary income at the time of disposition in an amount equal to the excess of the market price of the ADSs on the date of purchase over the purchase price and Carnival plc will be entitled to a tax deduction for the same amount.
If the participant sells or otherwise disposes of the ADSs after holding the ADSs for the two-year period, the participant will recognize ordinary income at the time in an amount equal to the lesser of (i) the excess of the market price of the ADSs on the first day of the offering period over the purchase price, or (ii) the excess of the market price of the ADSs at the time of disposition over the purchase price. Carnival plc will not be entitled to any tax deduction with respect to ADSs purchased under the 2005 ESPP if the ADSs are held for the requisite two-year period.
The employee may also recognize capital gain or loss at the time of disposition of the ADSs, either short-term or long-term, depending on the holding period for the ADSs.
The boards of directors unanimously recommend a vote FOR the adoption of the 2005 ESPP.
PROPOSALS 5 & 6 (Resolutions 19 & 20)
RE-APPOINTMENT AND
REMUNERATION OF INDEPENDENT AUDITORS FOR CARNIVAL PLC AND RATIFICATION OF INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTING FIRM FOR CARNIVAL
CORPORATION
The Audit Committee of the board of directors of Carnival plc has selected the UK firm of PricewaterhouseCoopers LLP as Carnival plcs independent auditors for the year ending November 30, 2005, subject to approval of our shareholders. The Audit Committee of the board of directors of Carnival Corporation has selected the U.S. firm of PricewaterhouseCoopers LLP as Carnival Corporations independent registered certified public accounting firm for the year ending November 30, 2005. Representatives of both the U.S. and UK firms of PricewaterhouseCoopers LLP will be present at the annual meetings and will have an opportunity to make a statement if they desire to do so. The PricewaterhouseCoopers LLP representatives will be available to respond to appropriate questions from shareholders.
This resolution would re-appoint PricewaterhouseCoopers LLP as the independent auditors of Carnival plc until the conclusion of the next general meeting at which accounts are laid. It is a requirement of Section 385(2) of the Companies Act that Carnival plc appoint its independent auditors at a general meeting at which accounts are laid. You are also being asked to authorize the Audit Committee of Carnival plc to determine the remuneration of PricewaterhouseCoopers LLP as independent auditors of Carnival plc.
Although ratification by our shareholders of the appointment of independent certified public accountants for Carnival Corporation is not legally required, our boards of directors believe that such action is desirable. If our shareholders do not approve Proposal 5, the Audit Committees will consider the selection of another accounting firm for 2005 and future years.
The boards of directors unanimously recommend a vote FOR the re-appointment of the UK firm of PricewaterhouseCoopers LLP as Carnival plcs independent auditors for the 2005 fiscal year, the authorization of the Audit Committee of Carnival plc to agree the remuneration of PricewaterhouseCoopers LLP and the ratification of the selection of the U.S. firm of PricewaterhouseCoopers LLP as Carnival Corporations independent registered certified public accounting firm for the 2005 fiscal year.
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PROPOSAL 7 (Resolution 21)
RECEIPT OF ACCOUNTS AND REPORTS OF CARNIVAL
PLC
The directors of Carnival plc are required by the Companies Act to present the financial statements, the UK statutory Directors Report and the auditors report relating to those accounts to the Carnival plc shareholders. Accordingly, the directors of Carnival plc lay before the annual meetings the Carnival plc accounts and the reports of the directors and auditors for the financial year ended November 30, 2004, which have been approved by and signed on behalf of Carnival plcs board of directors and will be delivered to Companies House in the UK following the annual meetings. Shareholders are voting to approve receipt of these documents, as UK law does not require shareholder approval of the substance and content of these documents. The UK statutory Directors Report and the UK GAAP summary financial information for the financial year ended November 30, 2004 are attached to this proxy statement as Annex D. The full accounts and reports of Carnival plc will be available for inspection prior to and during the annual meetings.
Only Carnival plc is subject to these rules and, accordingly, no action is required in respect of the Carnival Corporation & plc consolidated financial statements.
The boards of directors unanimously recommend a vote FOR the receipt of the accounts and reports of Carnival plc for the financial year ended November 30, 2004.
PROPOSAL 8 (Resolution 22)
APPROVAL OF DIRECTORS REMUNERATION
REPORT
The UK Directors Remuneration Report Regulations 2002 (the Regulations) require companies listed on the Official List of the UK Listing Authority to prepare a directors remuneration report, which must be put to a shareholder vote. Shareholders are voting to approve adoption of the Directors Remuneration Report, which is attached to this proxy statement as Annex E. UK law does not require shareholder approval of the substance and content of the Directors Remuneration Report. Accordingly, disapproval of the Directors Remuneration Report will not require us to amend the report although under applicable UK guidelines the boards and Compensation Committees are expected to take into account both the voting result and the views of our shareholders in their application, development and implementation of remuneration policies and schemes.
The Directors Remuneration Report sets out the boards remuneration policy for the next and subsequent financial years and other details required by the Regulations and the Combined Code appended to the Listing Rules of the UK Listing Authority (the UK Combined Code).
No action is required in respect of the Report of the Compensation Committees of Carnival Corporation and Carnival plc included in this proxy statement as it is responsive to the rules of the U.S. Securities and Exchange Commission.
The boards of directors unanimously recommend a vote FOR the approval of the Carnival plc Directors Remuneration Report.
PROPOSALS 9 & 10 (Resolutions 23 & 24)
APPROVAL OF LIMITS ON THE
AUTHORITY TO ALLOT CARNIVAL PLC SHARES
AND THE DISAPPLICATION OF PRE-EMPTION RIGHTS FOR CARNIVAL PLC
At the last Carnival plc annual general meeting, the shareholders of Carnival plc approved appropriate limits on the authority and power granted to directors by Carnival plcs articles of association to allot ordinary shares of Carnival plc and to allot shares for cash without making a pre-emptive offer to existing shareholders. These prior authorizations lapse at the upcoming annual general meeting.
Under Article 30 of Carnival plcs articles of association, the directors have, for a prescribed period, unconditional authority to allot ordinary shares in Carnival plc up to an aggregate nominal amount known as the Section 80 amount. The prescribed period and the Section 80 amount are approved
36
by shareholders passing an ordinary resolution. By passing an ordinary
resolution, shareholders are authorizing the board of Carnival plc to issue, during the prescribed period, up to an amount of shares having an
aggregate nominal value equal to the Section 80 amount, without further shareholder approval. In the absence of such approval, the issuance of any
additional shares would require shareholder approval.
Under Article 31, the directors have, for the same prescribed period, power to allot ordinary shares for cash without making a pre-emptive offer to existing shareholders up to an aggregate nominal amount known as the Section 89 amount. The Section 89 amount is approved by shareholders passing a special resolution. By passing a special resolution, shareholders are authorizing the board of Carnival plc to issue, during the same prescribed period, an amount of shares having an aggregate nominal value equal to the Section 89 amount, for cash without first offering them to existing shareholders of Carnival plc.
Carnival Corporations articles of incorporation do not contain provisions similar to Articles 30 and 31 of Carnival plcs articles of association and holders of Carnival Corporation shares do not have pre-emption rights. Accordingly, no action is required in respect of Carnival Corporations authority to allot shares or to disapply pre-emption rights.
In common with many UK companies, resolutions to renew the prescribed period and re-establish the Section 80 amount and the Section 89 amount are normally proposed each year as the directors believe occasions may arise from time to time when it would be beneficial for shares to be allotted and for shares to be allotted for cash without making a pre-emptive offer. This is the purpose of Resolution 23 (an ordinary resolution) and Resolution 24 (a special resolution). As usual, the prescribed period is the period from the passing of the resolutions until the next annual general meeting.
Guidelines issued by the Association of British Insurers, whose member insurance companies are some of the largest institutional investors in UK listed companies, require the Section 80 amount to be limited to the lesser of (a) the authorized but unissued ordinary share capital and (b) one-third of the issued ordinary share capital. By reference to Carnival plcs issued ordinary share capital on February 14, 2005, the maximum Section 80 amount is U.S.$22,715,147, which is the nominal value of the authorized but unissued ordinary share capital of Carnival plc and is equivalent to approximately 6.45% of Carnival plcs issued share capital.
Guidelines issued by the Pre-emption Group, a group comprising representatives of UK listed companies, investment institutions and corporate finance practitioners and formed under the support of the LSE to monitor the operation of the Guidelines, recommend that a resolution to disapply Section 89 of the Companies Act should be limited to an amount of equity securities not exceeding 5% of the nominal value of the companys issued ordinary share capital. By reference to Carnival plcs issued ordinary share capital on February 14, 2005, the maximum Section 89 amount is U.S.$17,614,229.
The directors have no commitment or plans to allot additional shares of Carnival plc.
Carnival plcs authorized share capital is $375 million and £100,002 divided into 225,903,614 ordinary shares of $1.66 each, two subscriber shares of £1 each, 99,998 preference shares of £1 each, a special voting share of £1 and an equalization share of £1. As of February 14, 2005, there were 212,219,628 ordinary shares allotted and issued. The proposals you are voting on do not increase the authorized share capital of Carnival plc.
The boards of directors unanimously recommend a vote FOR the approval of limits on the authority to allot Carnival plc shares and the disapplication of pre-emption rights for Carnival plc.
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PROPOSAL 11 (Resolution 25)
GENERAL AUTHORITY TO BUY BACK CARNIVAL PLC
ORDINARY SHARES
On October 25, 2004, Carnival Corporation and Carnival plc announced that their boards of directors had authorized the repurchase of up to an aggregate of $1 billion of Carnival Corporation and Carnival plc shares. Shareholder approval is not required for us to buy back shares of Carnival Corporation, but is required under the Companies Act for us to buy back shares of Carnival plc. Accordingly, shareholder approval to effect market purchases (within the meaning of Section 163(3) of the Companies Act) of up to 10,610,900 ordinary shares of Carnival plc (being approximately 5% of Carnival plcs ordinary shares in issue) is being sought. Under the terms of the Equalization and Governance Agreement entered into between Carnival Corporation and Carnival plc on formation of the DLC structure, Carnival plc is restricted from repurchasing more than 5% of its shares in any 12 month period from April 17, 2005 until April 17, 2008.
Carnival plcs board of directors confirms that the authority to purchase Carnival plcs shares will only be exercised after careful consideration of prevailing market conditions and the position of Carnival plc. In particular the program will only proceed if we believe that it is in the best interests of Carnival plc and its shareholders generally. The boards of directors are making no recommendation as to whether shareholders should sell any shares in Carnival plc and/or Carnival Corporation.
If Carnival plcs board of directors exercises the authority conferred by Proposal 11 (Resolution 25), we would have the option of holding the shares in treasury, or canceling them. Shares held in treasury can be re-sold for cash, used for employee share schemes or later cancelled. The board of directors thinks it prudent to maintain its discretion as to dealing with the purchased shares.
The Carnival plc board of directors considers that any buy back of Carnival plc may include the purchase of its American Depositary Receipts with a subsequent cancellation of the underlying ADSs. If the underlying ADSs are so cancelled, Carnival plc will either cancel or hold in treasury the ordinary share represented by such ADSs.
The minimum price (exclusive of expenses) which may be paid for each Carnival plc ordinary share is $1.66, and the maximum price which may be paid is an amount (exclusive of expenses) equal to 105% of the average middle market quotations for an ordinary share, as derived from the LSE Daily Official List, for the five business days immediately preceding the day on which such ordinary share is contracted to be purchased.
As of February 14, 2005, there are options outstanding to subscribe for 3,223,085 ordinary shares, which represent approximately 1.5% of Carnival plcs issued share capital. If 10,610,900 ordinary shares of Carnival plc were purchased, these options would represent approximately 1.6% of Carnival plcs issued share capital.
The authority to purchase Carnival plc ordinary shares will expire at the conclusion of the Carnival plc annual general meeting in 2006 or on October 15, 2006, whichever is earlier (except in relation to any purchases of shares the contract for which was entered before the expiry of such authority).
The boards of directors unanimously recommend a vote FOR the general authority to buy back Carnival plc ordinary shares.
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BOARD STRUCTURE AND COMMITTEE MEETINGS
Independence of Board Members
The boards of directors has determined that each of the following directors is an independent director in accordance with the corporate governance rules of the NYSE as a result of having no material relationship with Carnival Corporation & plc other than (1) serving as a director and board committee member, (2) receiving related fees as disclosed in this proxy statement and (3) having beneficial ownership of Carnival Corporation and/or Carnival plc securities as disclosed in the section of this proxy statement entitled Stock Ownership of Certain Beneficial Owners and Management: Ambassador Richard G. Capen, Jr., Arnold W. Donald, Richard J. Glasier, Baroness Hogg, Modesto A. Maidique, John P. McNulty, Sir John Parker, Stuart Subotnick and Uzi Zucker.
Board Meetings
During the year ended November 30, 2004, the board of directors of each of Carnival Corporation and Carnival plc held a total of 10 meetings.
During the year ended November 30, 2004, each Carnival Corporation director and each Carnival plc director attended either telephonically or in person at least 75% of all Carnival Corporation board of directors and applicable committee meetings.
Our corporate governance guidelines provide that our non-management directors will meet privately in executive session at least quarterly. Our non-management directors (all of whom satisfy the independence requirements of the NYSE), acting in executive session, elected Stuart Subotnick as the Presiding Director to preside at these meetings. Mr. Subotnick also acts as the senior independent director under the UK Combined Code.
All board members are expected to attend our annual meetings of shareholders. At the 2004 annual meetings, all of the current board members of each company were in attendance, except for Richard J. Glasier who was not a director at that time.
Board Committees
The board of directors of each of Carnival Corporation and Carnival plc has established standing Audit, Nominating & Governance, Compensation and Executive Committees, which are comprised of the same directors for each company. A majority of the directors of each company and all of the members of the Audit Committee, Nominating & Governance Committee and Compensation Committee of each company are independent (as defined by the listing standards of the NYSE and the UK Combined Code).
The membership and function of each committee is described below and a copy of the charter of each of the Audit, Nominating & Governance and Compensation Committees is available on either of our websites, www.carnivalcorp.com or www.carnivalplc.com and is available in print to any shareholder who requests it. Our Audit Committee charter, which we revised on January 17, 2005, is also attached as Annex F to this proxy statement. Each committee will periodically review its charter in light of new developments in applicable regulations and may make additional recommendations to the boards to reflect evolving best practices.
Additional information with respect to Carnival plcs corporate governance practices during the 2004 financial year is included in the Carnival plc Corporate Governance Report attached to this proxy statement as Annex G.
39
Name of Committee and Members |
Functions
of the
Committee |
Number of Meetings/ Consent Actions in Fiscal 2004 |
||||||||
---|---|---|---|---|---|---|---|---|---|---|
AUDIT: Stuart Subotnick, Chair Richard G. Capen, Jr. Arnold W. Donald Richard J. Glasier Sir John Parker |
Inspects the work and written reports of our internal audit department Reviews submissions from independent auditors Selects independent auditors and approves audit and non-audit fee services Assists board oversight of: the integrity of our financial statements; our compliance with legal and regulatory requirements; the independent auditors qualifications and independence; and the performance of the internal audit function and the independent auditors |
12 | ||||||||
Prepares the report of the Audit Committee to be included in our proxy statement |
||||||||||
NOMINATING
& GOVERNANCE: Uzi Zucker, Chair Baroness Hogg Stuart Subotnick |
Develops and recommends to the boards Corporate Governance Guidelines reflecting the requirements applicable to companies listed for
trading on the NYSE and the LSE Identifies individuals qualified to become board members Recommends to the boards the director nominees for the next annual meetings of shareholders Recommends to the boards director nominees for each committee Assists the boards with such other matters as may be set forth in its charter from time to time |
5 | ||||||||
COMPENSATION: Modesto A. Maidique, Chair Richard J. Glasier John P. McNulty Sir John Parker |
Discharges the boards responsibilities relating to the compensation of independent directors and executive officers Administers stock incentive plans Approves grants of stock and option awards Prepares the annual report on executive compensation to be included in our proxy statement Makes recommendations to the board with respect to incentive compensation and equity-based plans |
7 | ||||||||
EXECUTIVE: Micky Arison, Chair Howard S. Frank Uzi Zucker |
Exercises the authority of the full board of directors in between board meetings |
11 |
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Corporate Governance Guidelines
Our Corporate Governance Guidelines address various governance issues and principles, including director qualifications and responsibilities, access to management personnel, director compensation, director orientation and continuing education and annual performance evaluations of the boards and directors. Our Corporate Governance Guidelines are posted on our websites at www.carnivalcorp.com and www.carnivalplc.com.
Nominations of Directors
Carnival Corporation and Carnival plc are two separate legal entities and, therefore, each has a separate board of directors, each of which in turn has its own Nominating & Governance Committee. As the DLC structure requires that there be identical boards of directors, the Committees make one set of determinations in relation to both companies.
The Nominating & Governance Committees actively seek individuals qualified to become board members and recommend to the boards the nominees to stand for election as directors at the annual meetings of shareholders or, if applicable, at a special meeting of shareholders.
When evaluating prospective candidates for director, regardless of the source of the nomination, the Nominating & Governance Committees will consider, in accordance with their charter, such factors, as they deem appropriate, including:
| the candidates judgment; |
| the candidates skill; |
| diversity considerations; |
| the candidates experience with businesses and other organizations of comparable size; |
| the interplay of the candidates experience with the experience of other board members; and |
| the extent to which the candidate would be a desirable addition to the boards and any committees of the boards. |
The Nominating & Governance Committees will also use their best efforts to seek to ensure that the composition of the boards at all times adheres to the independence requirements applicable to companies listed for trading on the NYSE and the LSE. The Nominating & Governance Committees may consider candidates proposed by management, but is not required to do so. Other than the foregoing, there are no stated minimum criteria for director nominees.
The Nominating & Governance Committees identify nominees by first evaluating the current members of the boards willing to continue in service. Current members of the boards with skills and experience that are relevant to our business and who are willing to continue in service are considered for re-nomination, balancing the value of continuity of service by existing members of the boards with that of obtaining a new perspective. If any member of the boards does not wish to continue in service or if the Nominating & Governance Committees or the boards decide not to re-nominate a member for re-election, the Nominating & Governance Committees identify the desired skills and experience of a new nominee in light of the criteria above. Current members of the Nominating & Governance Committees and the boards are polled for suggestions as to individuals meeting the criteria of the Nominating & Governance Committees. The Nominating and Governance Committees may engage a third party search firm to identify or evaluate or assist in identifying potential nominees.
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Procedures Regarding Director Candidates Recommended by Shareholders
The Nominating & Governance Committees will also consider shareholder recommendations of qualified nominees when such recommendations are submitted in accordance with the procedures below. In order to have a nominee considered by the Nominating & Governance Committees for election at the 2006 annual meetings, a shareholder must submit its recommendation in writing to the attention of our Secretary at our headquarters not later than November 7, 2005. Any such recommendation must include:
| the name and address of the candidate; |
| a brief biographical description, including his or her occupation for at least the last five years, and a statement of the qualifications of the candidate, taking into account the qualification requirements set forth above; and |
| the candidates signed consent to serve as a director if elected and to be named in the proxy statement. |
Once we receive the recommendation, we will deliver to the candidate a questionnaire that requests additional information about the candidates independence, qualifications and other matters that would assist the Nominating & Governance Committees in evaluating the candidate, as well as certain information that must be disclosed about the candidate in our proxy statement or other regulatory filings, if nominated. Candidates must complete and return the questionnaire within the time frame provided to be considered for nomination by the Committees.
Communications between Shareholders and the Boards
Shareholders who wish to communicate with the boards should address their communications to the attention of the Secretary of Carnival Corporation and Carnival plc at 3655 N.W. 87th Avenue, Miami, Florida 33178-2428. The Secretary will maintain a log of all such communications, promptly forward to the Presiding Director those which the Secretary believes require immediate attention, and also periodically provide the Presiding Director with a summary of all such communications and any responsive actions taken. The Presiding Director will notify the boards or the chairs of the relevant board committees as to those matters that he believes are appropriate for further action or discussion.
Communications between Interested Parties and the Presiding Director
Interested parties who wish to communicate with the Presiding Director should address their communications to the attention of Stuart Subotnick at 3655 N.W. 87th Avenue, Miami, Florida 33178-2428. The Presiding Director will notify the boards or the chairs of the relevant board committees as to those matters that he believes are appropriate for further action or discussion.
Code of Business Conduct and Ethics
On January 21, 1997, Carnival Corporation adopted a Code of Business Conduct and Ethics, which Carnival Corporation has amended periodically to remain in line with best practices. The Code of Business Conduct and Ethics was amended most recently on January 20, 2004 and has been adopted by the board of Carnival plc. The Code of Business Conduct and Ethics applies to all employees and members of the boards of Carnival Corporation and Carnival plc. Our Code of Business Conduct and Ethics is posted on our websites at www.carnivalcorp.com and www.carnivalplc.com and is available in print to any shareholder who requests it.
DIRECTOR COMPENSATION AND STOCK OWNERSHIP GUIDELINES
Our non-employee directors are entitled to receive an annual retainer of $40,000 per year, an attendance fee per board meeting of $5,000 ($2,000 if meeting attended by telephone), equity compensation in the form of options to acquire shares of Carnival Corporation common stock (or, if the Outside Director Plan described in Proposal 2 is approved by our shareholders, restricted stock or restricted stock units, as further described below) and reimbursement for travel, meals and accommodation expenses attendant to their board membership. In certain circumstances, we request that the directors spouses attend a
42
special event and we reimburse the directors for travel expenses incurred. In
addition, non-employee directors receive additional compensation for serving as a member of a board committee, as follows:
Retainer |
Attendance Fee |
|||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Chair |
Member |
In Person |
By Telephone |
|||||||||||||||||
Audit
Committees |
$ | 15,000 | $ | 7,500 | $ | 3,000 | $ | 1,500 | ||||||||||||
All other
Committees |
$ | 7,500 | $ | 3,750 | $ | 2,500 | $ | 1,250 |
The fees in the table above reflect increases effective in October 2004 in committee retainer fees (generally by 50%) and increases in committee attendance fees by $500 (except telephonic participation in committee meetings other than the Audit Committee, which increased $250).
Baroness Hogg and Sir John Parker also received an additional $5,000 for each board meeting held outside the UK attended in person as part compensation for not accepting stock options.
For purposes of calculating fees, a board or committee meeting of Carnival Corporation and a concurrent or related board or committee meeting of Carnival plc constitute a single meeting. Directors who are employed by us or our subsidiaries do not receive any additional compensation for their board activities.
Carnival Corporation currently has a 2001 Outside Director Stock Option Plan, which was amended by our boards of directors on July 19, 2004 to increase the amount of the automatic annual option grant to non-executive directors from 6,000 to 10,000 shares, subject to approval of our shareholders, and further amended and restated by our boards of directors on January 18, 2005, also subject to shareholder approval, to, among other things, permit awards of restricted stock and restricted stock units and allow the Compensation Committee of Carnival Corporation discretion in determining whether grants of annual awards are to be in the form of stock options, restricted stock, restricted stock units or a combination thereof. See Proposal 2, Approval of the Carnival Corporation Amended and Restated 2001 Outside Director Stock Plan. If this plan is approved by the shareholders, the Compensation Committee of Carnival Corporation will have the discretion to grant options, restricted stock or restricted stock units in the amounts and in the manner described in Proposal 2.
During fiscal 2004, 10,000 options were granted on July 20, 2004 under the 2001 Outside Director Stock Option Plan at an exercise price equal to $45.92 to each of Messrs. Capen, Donald, Glasier, Maidique, McNulty, Subotnick and Zucker. Of each of these, 4,000 were granted subject to shareholder approval of the Outside Director Plan as described above. Baroness Hogg and Sir John Parker, as UK directors, have elected not to receive options under the 2001 Outside Director Stock Option Plan.
In October 2004, upon recommendation of our Compensation Committees, our boards of directors approved the increases in committee retainer fees and attendance fees described above and approved two new policies as follows:
| Stock Ownership Guidelines. All non-executive directors should own at least 5,000 shares of either Carnival Corporation common stock or Carnival plc ordinary shares. This guideline should be achieved within five years from the date the guidelines were approved or three years if the amendments to the 2001 Outside Director Stock Option Plan are approved to permit the grant of restricted stock and restricted stock units to directors. |
| Product Familiarization. All non-executive directors are encouraged to take a cruise for up to 14 days per year for product familiarization and pay $35 per day for such cruises. |
Carnival plc
Additional information with respect to Carnival plcs compensation and reimbursement practices during fiscal 2004 for non-employee directors is included in the Carnival plc Directors Remuneration Report, which is attached as Annex E to this proxy statement.
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EXECUTIVE COMPENSATION
Although Carnival Corporation and Carnival plc are two separate entities with separate officers, our business is run by a single management team. The following table sets forth all compensation awarded to, earned by, or paid to our Chief Executive Officer and our four other most highly compensated executive officers (each of whom are also members of our boards of directors) for the years ended November 30, 2004 and 2003. The compensation information for the year ended November 30, 2002 relates to Carnival Corporation only.
Summary Compensation Table
Annual
Compensation
|
Long
Term Compensation Awards |
Payouts
|
||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name and Principal Position |
Year
|
Salary ($) |
Bonus ($) |
Other
Annual Compensation ($)(1) |
Restricted Stock Awards ($)(2) |
Number
of Securities Underlying Options (#)(3) (4) |
LTIP Payouts ($) |
All
other Compensation ($) |
||||||||||||||||||||||||
Micky
Arison |
2004 | 700,000 | 2,400,000 | (5) | 389,500 | 3,475,200 | 120,000 | | | |||||||||||||||||||||||
Chairman
and |
2003 | 500,000 | 1,675,000 | 101,200 | 2,654,000 | 120,000 | | | ||||||||||||||||||||||||
CEO |
2002 | 500,000 | 1,675,000 | 96,500 | 1,546,200 | 120,000 | | | ||||||||||||||||||||||||
Howard
S. Frank |
2004 | 600,000 | 2,300,000 | 193,400 | 2,896,000 | 100,000 | | | ||||||||||||||||||||||||
Vice
Chairman |
2003 | 400,000 | 1,645,000 | 198,100 | 4,913,650 | 100,000 | | | ||||||||||||||||||||||||
and
COO |
2002 | 400,000 | 1,645,000 | 92,000 | 1,288,500 | 100,000 | | | ||||||||||||||||||||||||
Robert
H. Dickinson |
2004 | 400,000 | 1,393,200 | (6) | 137,600 | 1,849,200 | 80,000 | | | |||||||||||||||||||||||
President
and CEO |
2003 | 400,000 | 1,256,200 | (6) | 98,900 | 5,688,400 | 80,000 | | | |||||||||||||||||||||||
of
Carnival Cruise |
2002 | 400,000 | 1,304,300 | (6) | 64,500 | 1,028,000 | | | | |||||||||||||||||||||||
Lines |
||||||||||||||||||||||||||||||||
A.
Kirk Lanterman |
2004 | 214,000 | 2,352,100 | (7) | | | | | 18,450 | (8) | ||||||||||||||||||||||
Chairman
and |
2003 | 214,000 | 1,675,900 | (7) | | | | | 16,000 | (8) | ||||||||||||||||||||||
CEO
of HAL |
2002 | 214,000 | 2,425,000 | (7) | | | | | 15,700 | (8) | ||||||||||||||||||||||
Peter
G. Ratcliffe |
2004 | 1,100,000 | 814,000 | (10) | 60,500 | 1,393,200 | (11) | 50,000 | | 12,300 | (14) | |||||||||||||||||||||
CEO
of P&O |
2003 | 996,833 | (9) | 419,800 | (10) | 57,800 | 864,900 | (11) | 51,188 | (12) | 3,130,000 | (13) | 12,000 | (14) | ||||||||||||||||||
Princess
Cruises |
||||||||||||||||||||||||||||||||
International |
(1) | This column includes our aggregate incremental cost of providing perquisites and personal benefits to the named executive officers. The amounts of personal benefits shown in this column for fiscal 2004 that represent more than 25% of the applicable executives total Other Annual Compensation include: personal use of sporting event tickets of $178,211 to Mr. Arison; personal use of the Carnival Corporation aircraft of $148,336 to Mr. Arison and $135,636 to Mr. Frank; personal air travel of $80,597 to Mr. Dickinson; and private club membership of $21,669 and automobile lease of $21,977 to Mr. Ratcliffe. In accordance with U.S. Securities and Exchange Commission rules, as to any named executive officer, benefits aggregating less than $50,000 have been omitted. |
(2) | Represents the value, based on the closing market price of Carnival Corporation common stock on the NYSE on the date of grant. As of November 30, 2004, Messrs. Arison, Frank, Dickinson and Ratcliffe held 300,000 shares, 330,000 shares, 328,000 and 10,000 shares of restricted Carnival Corporation common stock, respectively. The restricted shares owned by Messrs. Frank and Dickinson include a special one-time grant in April 2003 of 100,000 restricted shares of Carnival Corporation common stock to Mr. Frank in recognition of Mr. Franks additional role and responsibilities during the period leading up to competition clearance of the P&O Princess acquisition and the completion of the DLC transaction and 160,000 restricted shares of Carnival Corporation common stock to Mr. Dickinson in recognition of his continuing services as the President and Chief Executive Officer of Carnival Cruise Lines. Mr. Lanterman does not own any shares of restricted Carnival Corporation common stock. At November 30, 2004, based on the closing price of Carnival Corporation common stock on such date of $53.01 per share, such restricted shares of common stock owned by Messrs. Arison, Frank, Dickinson and Ratcliffe had a value of $15,903,000, $17,493,300, $17,387,280, and $530,100, respectively. The restricted shares of Carnival Corporation common stock held by such executive officers have the same rights with respect to dividends and other distributions as all other outstanding shares of Carnival Corporation common stock. |
(3) | Except as otherwise indicated, represents options in respect of Carnival Corporation common stock. No stock appreciation rights were granted to any of the named executive officers. |
(4) | In certain instances, options are granted to executive officers during the subsequent fiscal year in recognition of services rendered during the prior fiscal year. |
(5) | Pursuant to Mr. Arisons request, Carnival Corporation has donated the entire amount of Mr. Arisons 2004 bonus to the American Red Cross International Relief Fund, the U.S. Fund for UNICEF and Save the Children Asia Earthquake/Tsunami Relief Fund to aid in the tsunami relief efforts in Asia and Africa. |
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(6) | Represents payments to Mr. Dickinson pursuant to the 1994 Carnival Cruise Lines Key Management Incentive Plan, which allows key management employees of Carnival Cruise Lines to participate in an incentive award pool based upon the net income of Carnival Cruise Lines reaching certain predetermined levels. |
(7) | Represents amounts payable to Mr. Lanterman under an arrangement pursuant to which he receives a bonus based on a specified percentage of the consolidated net income of HAL Antillen N.V. and HAL, our subsidiaries. |
(8) | Represents amounts paid on behalf of Mr. Lanterman pursuant to the Holland America Line Inc. Profit Sharing Plan (the Profit Sharing Plan) and the Holland America Line Inc. Employee Savings Plan (the Savings Plan). The amounts paid or accrued to Mr. Lanterman under the Profit Sharing Plan in fiscal 2004, 2003 and 2002 were $14,350, $12,000 and $12,000, respectively. The employer contributions made on behalf of Mr. Lanterman under the Savings Plan for fiscal 2004, 2003 and 2002 were $4,100, $4,000 and $3,700, respectively. The Profit Sharing Plan and the Savings Plan are generally available to all employees of HAL. |
(9) | Represents Mr. Ratcliffes compensation for the fiscal year ended November 30, 2003 (including for the period through April 16, 2003, as Chief Executive Officer of P&O Princess Cruises plc). |
(10) | Represents cash amounts payable to Mr. Ratcliffe under his employment agreement pursuant to which he receives a bonus contingent upon the net income of certain of specified cruise and tour brands, including Cunard Line, Ocean Village, P&O Cruises, P&O Cruises (Australia), P&O Travel, Princess Cruises, Princess Tours, Seabourn Cruise Line and Swan Hellenic units. The cash amount represents 50% of Mr. Ratcliffes bonus, the other 50% of which is payable in shares of Carnival plc pursuant to the Deferred Bonus Plan described in note (10) below. |
(11) | Represents (a) the value of 10,000 shares of restricted Carnival Corporation common stock, based on the closing market price of Carnival Corporation common stock on the NYSE on the date of grant, and (b) the value of awards over shares in Carnival plc in respect of 50% of Mr. Ratcliffes annual bonus described in note (9) above. We anticipate that the share awards in respect of Mr. Ratcliffes 2004 bonus will be granted to him in February 2005. Pursuant to the terms of the P&O Princess Cruises Deferred Bonus and Co-Investment Matching Plan (the Deferred Bonus Plan), 50% of Mr. Ratcliffes bonus is payable in the form of a conditional right to receive Carnival plc shares after a three-year retention period. As of November 30, 2004, Mr. Ratcliffe held 22,167 share awards under the Deferred Bonus Plan, which were granted in respect of his 2002 and 2003 bonuses. At November 30, 2004, based on the closing price of Carnival plc ordinary shares on such date of £29.24, such 22,167 restricted shares had a value of £648,163 (or $1,227,621 based on the November 30, 2004 exchange rate of $1.894:£1), which shares do not have the right to dividends until the end of the retention period. |
(12) | Represents options to purchase ordinary shares of Carnival plc granted to Mr. Ratcliffe on April 15, 2003. |
(13) | Represents the value of 128,473 Carnival plc ordinary shares at the April 15, 2003 share price of $24.37 (based on an exchange rate of $1.5748:£1) acquired by Mr. Ratcliffe on April 15, 2003 through the acceleration resulting from the DLC transaction of LTIP options, LTIP awards, share awards and matching awards, granted to him by P&O Princess Cruises plc in his capacity as Chief Executive Officer of P&O Princess Cruises plc. |
(14) | Represents employer contributions made on behalf of Mr. Ratcliffe under the Princess Cruises Retirement Savings Plan. |
Additional information with respect to Carnival plcs compensation and reimbursement practices during fiscal 2004 for non-employee (or non-executive) directors is included in the Carnival plc Directors Remuneration Report, which is attached as Annex E to this proxy statement.
45
Option Grants in Last Fiscal Year
The following table sets forth all stock options granted to our Chief Executive Officer and our four other most highly compensated executive officers during fiscal 2004.
Individual Grants |
|||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name |
Number of Securities Underlying Options Granted (#)(1)(2) |
Percent of Total Options Granted to Employees in Fiscal Year(3) |
Exercise or Base Price ($/Sh)(4) |
Expiration Date |
Grant Date Present Value ($)(5) |
||||||||||||||||||
Micky
Arison |
120,000 | 2.42 | % | 49.085 | 10/18/2014 | 1,998,000 | |||||||||||||||||
Howard S.
Frank |
100,000 | 2.02 | % | 49.085 | 10/18/2014 | 1,665,000 | |||||||||||||||||
Robert H.
Dickinson |
80,000 | 1.61 | % | 46.230 | 08/02/2014 | 1,289,600 | |||||||||||||||||
A. Kirk
Lanterman |
| | | | | ||||||||||||||||||
Peter G.
Ratcliffe |
50,000 | 1.01 | % | 43.610 | 04/21/2014 | 751,500 |
(1) | Represents options granted in respect of Carnival Corporation common stock, as no options in respect of Carnival plc ordinary shares were granted to our CEO and four other most highly compensated executive officers during fiscal 2004. No stock appreciation rights were granted to the executive officers in fiscal 2004. |
(2) | The term for each option is ten years and, subject to accelerated vesting upon the death or disability of the option holder, each option is exercisable in amounts equal to twenty percent of the aggregate number of shares underlying the option, on the first through fifth anniversaries of the grant date. |
(3) | Represents the percent of the aggregate of Carnival Corporation and Carnival plc options granted. |
(4) | Represents fair market value of Carnival Corporation common stock at date of grant. |
(5) | The Black-Scholes option pricing model was chosen to estimate the Grant Date Present Value of the Carnival Corporation options set forth in this table at $15.03 per share at April 21, 2004, $16.12 per share at August 2, 2004 and $16.65 per share at October 18, 2004. Our use of this model should not be construed as an endorsement of its accuracy at valuing options. All stock option models require a prediction about the future movement of the stock price. The Grant Date Present Values presented in the table were determined in part using the following assumptions: |
April 21, 2004 |
August 2, 2004 |
October 18, 2004 |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Expected
volatility |
35.00 | % | 35.00 | % | 35.00 | % | ||||||||
Risk-free
interest rate |
3.76 | % | 3.76 | % | 3.56 | % | ||||||||
Expected
dividend yield |
1.35 | % | 1.35 | % | 1.43 | % | ||||||||
Expected option
life |
5.75 | years | 5.75 | years | 5.75 | years |
46
Aggregated Option Exercises in Last Fiscal Year and
Fiscal Year-End Option
Values(1)
The following table provides information on the values of the exercised and unexercised options held by our Chief Executive Officer and our four other most highly compensated executive officers at November 30, 2004.
Number of Securities Underlying Unexercised Options at Fiscal Year End(#) |
Value of Unexercised In-the-Money Options at Fiscal Year End ($) |
|||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name |
Shares Acquired on Exercise (#)(1) |
Value Realized ($) |
Exercisable |
Unexercisable |
Exercisable |
Unexercisable |
||||||||||||||||||||||
Micky
Arison |
| | 600,000 | 480,000 | 8,727,930 | (2) | 8,358,360 | (2) | ||||||||||||||||||||
Howard S.
Frank |
| | 500,000 | 400,000 | 8,147,575 | (2) | 6,965,300 | (2) | ||||||||||||||||||||
Robert H.
Dickinson |
128,000 | 3,007,740 | 320,000 | 256,000 | 4,482,980 | (2) | 5,054,860 | (2) | ||||||||||||||||||||
A. Kirk
Lanterman |
| | | | | | ||||||||||||||||||||||
Peter G.
Ratcliffe |
| | 0 | 50,000 | 0 | 470,500 | (2) | |||||||||||||||||||||
0 | 51,188 | (3) | 0 | 1,587,340 | (4) |
(1) | Except as otherwise indicated, represents options granted in respect of Carnival Corporation common stock. No stock appreciation rights are held by any of the named executive officers. |
(2) | The value of the unexercised options is based upon the difference between the exercise price and the average of the high and low market prices of Carnival Corporation common stock on November 30, 2004 of $53.02. |
(3) | Represents stock options granted in respect of Carnival plc ordinary shares. |
(4) | The value of the unexercised options is based upon the difference between the exercise price and the mid-market price of Carnival plc ordinary shares on November 30, 2004 of $55.38 (based on an exchange rate of $1.894:£1). |
Additional information with respect to option values for the directors of Carnival plc for the financial year ended November 30, 2004 is included in the Carnival plc Directors Remuneration Report, which is attached as Annex E to this proxy statement.
Compensation Agreements
Carnival Corporation has entered into Executive Long-Term Compensation Agreements (the Compensation Agreements) with Micky Arison, its Chairman of the Board and Chief Executive Officer, Howard S. Frank, its Vice Chairman of the Board and Chief Operating Officer, and Robert H. Dickinson, President and Chief Executive Officer of Carnival Cruise Lines (each an Officer). The Compensation Agreements provide that during the term of such Officers employment, Carnival Corporation will provide long-term compensation (in addition to his annual compensation consisting of a base salary and annual bonus, which in the case of Mr. Dickinson is awarded under the 1994 Carnival Cruise Lines Key Management Incentive Plan) in the form of annual grants to each Officer, contingent upon satisfactory performance, as follows: Mr. Arison, 60,000 restricted shares of common stock and 120,000 options to purchase common stock; Mr. Frank, 50,000 restricted shares of common stock and 100,000 options to purchase common stock; and Mr. Dickinson, 40,000 restricted shares of common stock and 80,000 options to purchase common stock.
The options vest in five equal annual installments beginning one year from the date of grant and the restricted shares of common stock vest five years from the date of grant. Unvested options and restricted shares of common stock are forfeited if an Officers employment is terminated for cause, if he engages in competition with Carnival Corporation or if he violates the nondisclosure provisions of the Compensation Agreement.
Employment Agreements
Employment Agreement with A. Kirk Lanterman. On December 1, 2004, HAL entered into a letter agreement with Mr. Lanterman regarding the terms of his employment for the month of December 2004 (the December Employment Agreement). Pursuant to the December Employment Agreement, Mr. Lanterman was paid $62,500, less applicable taxes and other standard deductions, including, but not limited to, medical insurance premiums and previously authorized 401(k) contributions, if any. In
47
accordance with the December Employment Agreement, Mr. Lanterman resigned as a HAL employee effective December 31, 2004. |
Employment Agreement with Peter G. Ratcliffe. Peter G. Ratcliffe has entered into an employment agreement under which he acts as Chief Executive Officer of P&O Princess Cruises International responsible for the Cunard Line, Ocean Village, P&O Cruises, P&O Cruises (Australia), P&O Travel, Princess Cruises, Princess Tours, Seabourn Cruise Line and Swan Hellenic units (the Covered Operations). Beginning December 1, 2004, Seabourn Cruise Line will no longer be included among the Covered Operations. Mr. Ratcliffes base salary is $1.1 million with an annual bonus based on a specified percentage of the adjusted net income from the Covered Operations. Fifty percent of the annual bonus is payable in cash with the remaining fifty percent payable in the form of a right to receive shares in Carnival plc (share awards) after a retention period of three years pursuant to the terms of the Deferred Bonus Plan. The employment agreement provides that Carnival Corporation will provide an annual grant of options to purchase 50,000 shares of Carnival Corporation common stock, contingent upon satisfactory performance. The options vest in five equal annual installments beginning one year from the date of grant. Unvested options are forfeited if Mr. Ratcliffes employment is terminated for cause or because he is in material violation of the non-competition, non-disclosure or intellectual property provisions of his employment agreement, or by Mr. Ratcliffe prior to the age of 60 other than as a result of a terminal medical condition or for good reason as defined in his employment agreement.
Mr. Ratcliffe is also entitled to certain fringe benefits available to other senior executives as well as participation in the P&O Princess Cruises Pension Scheme and the Princess Cruises Supplemental Executive Retirement Plan.
If Mr. Ratcliffes employment agreement is terminated by Carnival plc without cause or is terminated by Mr. Ratcliffe with good reason (as such terms are defined in the employment agreement), Mr. Ratcliffe is entitled to compensation of base salary, a bonus equal to the bonus paid the year prior to termination and certain other benefits unless Mr. Ratcliffe becomes eligible for similar benefits from another employer prior to expiration of 12 months from the date of termination. If Mr. Ratcliffes employment is terminated for cause, no additional compensation is due. Termination for reasons other than termination for cause, termination by Mr. Ratcliffe without good reason or termination by reason of a material breach of the non-disclosure or intellectual property provisions of the employment agreement, permits Mr. Ratcliffe to retain his share awards and matching awards for the full retention period, subject to certain exceptions.
Additional long-term compensation information for the directors of Carnival plc for the financial year ended November 30, 2004 is included in the Carnival plc Directors Remuneration Report, which is attached as Annex E to this proxy statement.
Consulting Agreements
In 1999 and years prior thereto, A. Kirk Lanterman deferred receipt of a portion of his annual bonus. In exchange, Carnival Corporation and Mr. Lanterman entered into a Retirement and Consulting Agreement, which provides that Carnival Corporation will pay him the deferred bonus amounts plus interest in monthly installments over the 15 years following his retirement.
On November 30, 2004, HAL entered into an 11-month Consulting Agreement (the Consulting Agreement) with Mr. Lanterman. Pursuant to the Consulting Agreement, Mr. Lanterman resigned, effective as of the close of business on November 30, 2004, with respect to all positions as an officer and/or director of all affiliates and divisions of HAL, other than his positions as a director of Carnival Corporation and Carnival plc. Effective December 1, 2004 and through the term of the Consulting Agreement, Mr. Lanterman will have the title of Chairman of HAL, which shall be a non-executive title. During the term of the Consulting Agreement, Mr. Lanterman will provide such consulting services and other assistance as may be required by HALs President on strategic, financial and historical analyses and other various services that are specified by HALs President, up to a maximum of 1,000 hours annually.
The initial term of the Consulting Agreement will be from January 1, 2005 through November 30, 2005, and renews automatically for one additional year unless earlier terminated by either party, but in no event will the consulting agreement be extended beyond November 30, 2006.
48
The Consulting Agreement provides that Mr. Lanterman will receive annual compensation of $788,000, payable in monthly installments. He will not participate in any incentive compensation plans offered by HAL or any affiliate of HAL, but will be eligible for medical and dental insurance and certain other benefits. The Consulting Agreement contains confidentiality and indemnification provisions and may be terminated by HAL for good cause or upon the death or disability of Mr. Lanterman. HAL has also agreed to indemnify Mr. Lanterman from any losses arising from his provision of the consulting services subject to the Consulting Agreement, subject to customary exceptions. At the end of the term of the Consulting Agreement, no further severance or other payments shall be provided to Mr. Lanterman, except as set forth in the Retirement and Consulting Agreement between Mr. Lanterman and HAL as discussed above.
49
Equity Compensation Plans
Carnival Corporation
Set forth below is a table that summarizes compensation plans (including individual compensation arrangements) under which Carnival Corporation equity securities are authorized for issuance as of November 30, 2004.
Plan category |
Number of securities to be issued upon exercise of outstanding options, warrants and rights |
Weighted-average exercise price of outstanding options, warrants and rights |
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(a) |
(b) |
(c) |
||||||||||||
Equity
compensation plans approved by security holders |
14,913,832 | (1) | $ | 34.99 | 34,407,041 | (2)(3) | ||||||||
Equity
compensation plans not approved by security holders |
28,000 | (4) | 0 | 0 | ||||||||||
Total |
14,941,832 | $ | 34.99 | 34,407,041 |
(1) | Includes outstanding options to purchase Carnival Corporation common stock under the Carnival Cruise Lines, Inc. 1987 Stock Option Plan, Carnival Corporation 1992 Stock Option Plan, Carnival Corporation 2002 Stock Plan, Carnival Corporation 1993 Outside Directors Stock Option Plan and Carnival Corporation 2001 Outside Director Stock Plan. Also includes 21,257 restricted stock units outstanding under the Carnival Corporation 2002 Stock Plan. |
(2) | Includes Carnival Corporation common stock available for issuance as of November 30, 2004 as follows: 2,746,018 under the Carnival Corporation Employee Stock Purchase Plan, 31,111,023 under the Carnival Corporation 2002 Stock Plan and 550,000 under the Carnival Corporation 2001 Outside Director Stock Option Plan. This figure excludes securities reflected in column (a). |
(3) | In addition to options, the Carnival Corporation 2002 Stock Plan and, in the event the shareholders approve the Outside Director Plan as described above, such plans provide for the award of restricted stock without limitation on the number of shares than can be awarded in either form. |
(4) | Includes outstanding options to purchase Carnival Corporation common stock under the Outside Director Plan which were granted subject to shareholder approval as described above. |
Carnival plc
Set forth below is a table that summarizes compensation plans (including individual compensation arrangements) under which Carnival plc equity securities are authorized for issuance as of November 30, 2004.
Plan category |
Number of securities to be issued upon exercise of outstanding options, warrants and rights |
Weighted-average exercise price of outstanding options, warrants and rights(1) |
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(a) |
(b) |
(c) |
||||||||||||
Equity
compensation plans approved by security holders |
3,283,367 | $ | 38.20 | 3,187,049 | ||||||||||
Equity
compensation plans not approved by security holders |
0 | 0 | 0 | |||||||||||
Total |
3,283,367 | $ | 38.20 | 3,187,049 |
(1) | Converted from sterling, if applicable, using the exchange rate of $1.894:£1 on November 30, 2004. |
50
DEFINED BENEFIT AND OTHER PLANS
Carnival Corporation
The following table sets forth the combined estimated pension benefits payable at age 65 (the Normal Retirement Date), pursuant to Carnival Corporations Supplemental Executive Retirement Plan (the SERP) and Nonqualified Retirement Plan for Highly Compensated Employees (the Carnival Corporation Retirement Plan).
Years of Service |
|||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Pay |
15 |
20 |
25 |
30 |
35 |
||||||||||||||||||
$1,750,000 |
$ | 500,728 | $ | 675,728 | $ | 850,728 | $ | 850,728 | $ | 850,728 | |||||||||||||
$2,000,000 |
$ | 575,728 | $ | 775,728 | $ | 975,728 | $ | 975,728 | $ | 975,728 | |||||||||||||
$2,250,000 |
$ | 650,728 | $ | 875,728 | $ | 1,100,728 | $ | 1,100,728 | $ | 1,100,728 | |||||||||||||
$2,500,000 |
$ | 725,728 | $ | 975,728 | $ | 1,225,728 | $ | 1,225,728 | $ | 1,225,728 | |||||||||||||
$2,750,000 |
$ | 800,728 | $ | 1,075,728 | $ | 1,350,728 | $ | 1,350,728 | $ | 1,350,728 |
Carnival Corporation established the SERP to provide benefits to a select group of management or highly compensated employees. Currently, only Robert H. Dickinson and Howard S. Frank are eligible to participate. The SERP provides a benefit equal to 50% of cash compensation (as defined in the SERP) reduced proportionately for each year of service less than 25. Mr. Dickinson and Mr. Frank have already satisfied the 25-year service requirement. The SERP provides an early retirement benefit at age 55 after completion of 15 years of service, subject to a reduction of 0.25% for each month that distribution of benefits precedes the participants Normal Retirement Date. The SERP benefit is offset for any benefit payable under the Carnival Corporation Retirement Plan and for Social Security benefits. The form of payment is either a lump-sum, life annuity (with either a 5-year or 10-year certain benefit) or a joint and survivor annuity for married participants.
A participants benefits under the Carnival Corporation Retirement Plan are calculated based on an employees length of service with Carnival Corporation and the average of the participants five highest consecutive years of compensation (including base pay, overtime, bonuses and commissions) out of the last ten years of service. The eligible compensation with respect to the individuals named in the Summary Compensation Table includes base salary and cash bonuses. The Carnival Corporation Retirement Plan provides an early retirement benefit at age 55 after completion of 15 years of service, subject to a reduction of 0.5% for each month that distribution of benefits precedes the participants Normal Retirement Date.
The normal form of payment is a straight life annuity with benefits ceasing at the later of the death of the participant or five years from the date of first payment. If the employee is married, pension benefits are presumptively payable on a reduced 50% joint and survivor annuity basis with the employees spouse as the contingent annuitant. If the employee is not married, pension benefits are paid as a lump sum to the participants beneficiary or estate, as applicable. For retired or terminated employees, other forms of distribution are available under the Carnival Corporation Retirement Plan.
The Carnival Corporation Retirement Plan does not reduce benefits on account of Social Security (or any other benefit), other than as reflected in the benefit formula which is integrated with Social Security.
As of December 31, 2004, the years of credited service under the Carnival Corporation Retirement Plan for each of the executive officers named in the Summary Compensation Table, except for A. Kirk Lanterman and Peter G. Ratcliffe, who are not eligible for participation in the Carnival Corporation Retirement Plan, was as follows: Micky Arison, age 55, with 30 credited years of service; Robert H. Dickinson, age 62, 30 years; and Howard S. Frank, age 64, 16 years. In consideration of Mr. Franks forfeiture of retirement benefits from his prior employer, on April 17, 1995, the Compensation Committee approved an agreement with Mr. Frank whereby Carnival Corporation agreed to compensate Mr. Frank upon his retirement for benefits he would have received under the Carnival Corporation Retirement Plan if he had been credited with an additional 13 years of service in addition to the actual years of credited service, reduced by the amounts payable to him under the Carnival Corporation Retirement Plan. He is also credited with an additional 13 years of service under the SERP.
51
Carnival Corporation has a benefit limitation policy for the Carnival Corporation Retirement Plan consistent with Section 415 of the Internal Revenue Code of 1986 (the Code) applicable only to Mr. Arison. The annual compensation covered by the Carnival Corporation Retirement Plan for the calendar year 2004 for Mr. Arison is limited to $301,903 (as may be indexed) pursuant to Section 401(a)(17) of the Code. Based on Mr. Arisons level of compensation and his 30 credited years of service, the estimated benefits payable to Mr. Arison at the Normal Retirement Date pursuant to the Carnival Corporation Retirement Plan is $132,850, currently being the maximum benefit under the plan.
Carnival plc
Pursuant to the P&O Princess Cruises Pension Scheme (the UK Scheme), a UK Inland Revenue approved defined-benefit scheme, participants generally accrue pension rights at a rate of up to 1/60th of final salary for each year of service, although the accrual rate varies by employee. For this purpose, final salary is generally defined as the basic salary received in the final 12 months of service, subject to certain adjustments. Normal retirement age is 63 for general employees and 60 for sea staff and certain senior executives. Additional cash supplements are paid depending on the number of years of pensionable service.
Peter G. Ratcliffe, our only named executive officer who is eligible for pension benefits from Carnival plc, has 34 years of credited service under the UK Scheme. Under the UK Scheme, in the event of compulsory early retirement, or voluntary early retirement after the age of 55, Mr. Ratcliffe would receive a minimum pension of two-thirds of his final salary subject to UK Inland Revenue limits. The estimated annual benefits payable upon retirement to Mr. Ratcliffe under the UK Scheme at the normal retirement age of 60 is $802,933 based on unchanged basic salary.
Supplemental Executive Retirement Plan
Carnival plc has established the Princess Cruises Supplemental Executive Retirement Plan in the United States (the Supplemental Plan). This plan provides benefits to supplement those received from other plans, including the UK Scheme. The overall effect is to provide, on retirement, a pension of 65% of final salary, subject to having completed 15 years of service. For this purpose, final salary is the average basic salary for the five years immediately preceding retirement. Mr. Ratcliffes service in the Supplemental Plan commenced on September 1, 1986, so as his service exceeds 15 years, the maximum pension would be payable on retirement. Normal retirement age is 60. If benefits from the U.K. Scheme exceed those resulting from the Supplemental Plan, no further amounts are payable under the Supplemental Plan. Currently, benefits payable to Mr. Ratcliffe under the UK Scheme exceed those resulting from the Supplemental Plan and, accordingly, no amounts are payable to him under the Supplemental Plan.
Additional information with respect to pension plan arrangements for Carnival plc for the financial year ended November 30, 2004 is included in the Carnival plc Directors Remuneration Report, which is attached as Annex E to this proxy statement.
52
REPORT OF THE COMPENSATION COMMITTEES
Carnival Corporation and Carnival plc are two separate legal entities and, therefore, each has a separate board of directors, each of which in turn has its own Compensation Committee. As there is a single management team, the Compensation Committees (which have four identical members), make one set of determinations in relation to both companies.
This report of the Compensation Committees sets out the compensation policies of the Compensation Committee with respect to the Chief Executive Officer and the four other most highly compensated executive officers for the year ended November 30, 2004, details of whose compensation is set forth under Executive Compensation in accordance with U.S. Securities and Exchange Commission requirements. Further information on our compensation policies as required under applicable UK law is set out in the Carnival plc Directors Remuneration Report, which is attached as Annex E to this proxy statement.
The Compensation Committees are responsible for annually approving the cash compensation, including annual performance-related bonuses, payable to the executive officers and for the administration of the Carnival Corporation and Carnival plc equity-based incentive plans.
The Compensation Committee for each of Carnival Corporation and Carnival plc is currently comprised of Modesto A. Maidique, Richard J. Glasier, John P. McNulty and Sir John Parker, each of whom is independent as defined by the listing standards of the NYSE and the UK Combined Code.
Compensation Philosophy
The key components of the compensation of the Chief Executive Officer and the other executive officers are base salary, annual performance-related bonus and equity-based incentives. The overall objective is to position the total potential compensation at approximately the 75th percentile of comparator group of U.S. companies (being companies of similar size in the entertainment, hospitality and media industries) (the Comparative Group), as well as to provide both short-term rewards and long-term incentives for positive individual and corporate performance.
Carnival Corporation & plc is a global entity with executives working and living in different parts of the world with a majority of senior employees located in the U.S., and most of the remainder in the UK and Italy. As a global entity, it is challenging to establish consistent compensation practices across geographic and corporate lines that satisfy the particular requirements of all jurisdictions. Since the largest presence of executives is in the U.S., U.S. compensation practice shapes our compensation policy. However, the Compensation Committees seek to incorporate UK compensation principles, including the UK Combined Code, as far as practicable, unless the application of those principles would be uncompetitive in the U.S. or other markets, would result in substantial inconsistencies within the Carnival Corporation & plc group, or would restrict the Carnival Corporation & plc groups ability to transfer executives between brands. The overall remuneration objective is to pay high rewards for the continued delivery of high performance from a modest base salary.
The various components of executive compensation are discussed below.
Base Salaries
Overall, the base salaries of the executive officers, including the base salary of the Chief Executive Officer, are set at a level the Compensation Committees believe to be at approximately the 50th percentile of the Comparative Group. The objective is to emphasize the performance-related annual bonus as the most important cash compensation feature of executive compensation as a reward for contributions made towards achieving Carnival Corporation & plcs goals, including profitability.
Bonuses
The bonuses for each of the Chief Executive Officer and the Chief Operating Officer were determined by the Compensation Committees after taking into account the operating income of Carnival Corporation & plc, the individual performance of such executives and the shareholder return reflected in the Stock Performance Graphs appearing elsewhere in this proxy statement.
The annual bonuses to the heads of our operating companies are based on the financial performance of their respective operating units. The annual bonus to Robert H. Dickinson is based on the financial
53
performance of Carnival Cruise Lines and determined pursuant to the terms of the 1994 Carnival Cruise Lines Key Management Incentive Plan (the CCL Plan). Beginning in fiscal 2005, Mr. Dickinsons annual bonus will be determined in accordance with a new management incentive plan that the Compensation Committees recently adopted for Carnival Cruise Lines. The annual bonus for A. Kirk Lanterman, the former Chief Executive Officer of HAL was based on the financial performance of Hal Antillen N.V and HAL. The annual bonus for Peter G. Ratcliffe is based on the financial performance of the brands for which he was responsible during the fiscal year (for 2004 being Cunard Line, Ocean Village, P&O Cruises, P&O Cruises (Australia), P&O Travel, Princess Cruises, Princess Tours, Seabourn Cruise Line and Swan Hellenic).
Equity-Based Incentives
The third component of Carnival Corporation & plcs executive compensation is comprised of stock-based incentive plans. Whereas the cash bonus payments are intended to reward positive short-term individual and corporate performance, grants under the equity-based plans are intended to provide executives with longer-term incentives, which appreciate in value with the continued favorable future performance of Carnival Corporation & plc. The Compensation Committees approved individual compensation agreements that provide for grants of stock options and/or restricted stock pursuant to the 2002 Stock Plan, the Carnival plc Executive Share Option Plan and the other equity-based incentive plans described elsewhere in this proxy statement based on the individual performance and responsibilities of the executive officers, taking into account the following:
|
The overall financial performance of Carnival Corporation & plc in the previous fiscal year; and |
|
The personal contribution that each executive has made to the: |
|
development of a strategy to deliver future growth; |
|
ongoing creation of a competitive cost structure; and |
|
overall corporate success of Carnival Corporation & plc through the spread of best practice. |
Annual grants of stock options or restricted shares pursuant to individual compensation agreements are subject to a determination of satisfactory performance by the Compensation Committees.
Other Compensation
Carnival Corporation and Carnival plc have entered into various compensation-related agreements with each of the executive directors and certain individual officers. See Executive CompensationExecutive Long-Term Compensation Agreements and Executive CompensationEmployment Agreements. Such agreements include stock compensation agreements and employment agreements. The Compensation Committees and the boards of directors will continue to consider such arrangements in the future in connection with circumstances that warrant an individualized compensation arrangement.
In fiscal 2004, some of Carnival Corporations executive officers also participated in Carnival Corporations nonqualified defined benefit pension plan and all were able to participate in Carnival Corporations nonqualified 401(k)/profit sharing plan. In addition, two of Carnival Corporations executive officers participated in Carnival Corporations supplemental executive retirement plan and Peter G. Ratcliffe participated in the Carnival plc UK Scheme and Supplemental Plan.
Advisors
The Compensation Committees engaged an outside compensation consultant, Watson, Wyatt & Company, to conduct a review of executive remuneration within the Carnival Corporation & plc group. The review provided the Compensation Committees with benchmark data on awards within the Comparative Group on the basis of which the Compensation Committees were able to frame a more definitive compensation policy.
The Compensation Committee of Carnival Corporation |
The Compensation Committee of Carnival plc |
|||||
---|---|---|---|---|---|---|
Modesto A.
Maidique, Chairman |
Modesto A. Maidique, Chairman |
|||||
Richard J.
Glasier |
Richard J. Glasier |
|||||
John P.
McNulty |
John
P. McNulty |
|||||
Sir John
Parker |
Sir
John Parker |
54
STOCK PERFORMANCE GRAPHS
Carnival Corporation
The following graph compares the Price Performance of $100 if invested in Carnival
Corporation common stock with the Price Performance of $100 if invested in each of the S&P 500 Index, the Dow Jones Industry Group REQ
(recreational product and services index) and the FTSE 100 Index. The Price Performance, as used in the Performance Graph, is calculated by assuming
$100 is invested at the beginning of the period in Carnival Corporation common stock at a price equal to the market value. At the end of each fiscal
year the total value of the investment is computed by taking the number of shares owned, assuming Carnival Corporation dividends are reinvested on an
annual basis, times the market price of the shares at the end of each fiscal year.
1999 |
2000 |
2001 |
2002 |
2003 |
2004 |
|||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Carnival
Corporation |
100 | 52 | 61 | 67 | 85 | 130 | ||||||||||||||||||||
Dow Jones
Industry Group/REQ |
100 | 85 | 76 | 79 | 82 | 112 | ||||||||||||||||||||
S&P 500
Index |
100 | 95 | 84 | 70 | 81 | 91 | ||||||||||||||||||||
FTSE 100
Index |
100 | 95 | 83 | 68 | 74 | 83 |
55
Carnival plc
The following graph compares the Price Performance of $100 invested in Carnival plc
ADSs, each representing one ordinary share of Carnival plc (prior to April 17, 2003 each ADS represented four ordinary shares of Carnival plc), with
the Price Performance of $100 invested in each of the S&P 500 Index, the Dow Jones Industry Group REQ (recreational product and services index) and
the FTSE 100 Index. The Price Performance, as used in the Performance Graph, is calculated by assuming $100 was invested in Carnival plc ADSs at a
price equal to the market value on October 23, 2000, the date on which Carnival plc ordinary shares and ADSs were originally listed on the LSE and the
NYSE, respectively, upon the demerger of the cruise business of P&O. Prior to October 23, 2000, there was no public market for Carnival plc equity
securities. The total value of the investment at the end of each subsequent fiscal year is computed by taking the number of ADSs owned, assuming
Carnival plc dividends are reinvested on an annual basis, times the market price of ADSs at the end of each fiscal year.
Oct. 23, 2000 |
2000 |
2001 |
2002 |
2003 |
2004 |
|||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Carnival
plc |
100 | 88 | 133 | 185 | 257 | 415 | ||||||||||||||||||||
Dow Jones
Industry Group/REQ |
100 | 104 | 104 | 110 | 119 | 162 | ||||||||||||||||||||
S&P 500
Index |
100 | 92 | 81 | 68 | 78 | 88 | ||||||||||||||||||||
FTSE
100 |
100 | 97 | 85 | 70 | 76 | 85 |
56
INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTING FIRM
Audit and Non-Audit Fees
PricewaterhouseCoopers were the auditors of Carnival Corporation during 2003 and 2004 and of Carnival plc since April 18, 2003. KPMG Audit plc were the auditors of Carnival plc for the period January 1, 2003 through April 17, 2003. Aggregate fees for professional services rendered by PricewaterhouseCoopers LLP for the years ended November 30, 2004 and 2003 and by KPMG Audit plc for the period January 1, 2003 through April 17, 2003 are set forth below.
Carnival Corporation & plc 2004 (in millions)(1) |
Carnival Corporation & plc 2003 (in millions)(1)(2) |
Carnival plc January 1, 2003 through April 17, 2003 (in millions)(3) |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Audit
Fees |
$ | 3.9 | $ | 1.5 | $ | 0.1 | ||||||||
Audit-Related
Fees |
0.0 | (4) | 0.7 | 0.8 | ||||||||||
Tax
Fees |
0.5 | 0.2 | 0.9 | |||||||||||
All Other
Fees |
0.2 | 0.1 | | |||||||||||
Total |
$ | 4.6 | $ | 2.5 | $ | 1.8 |
(1) | Represents fees for professional services rendered by PricewaterhouseCoopers LLP for Carnival Corporation & plc. |
(2) | Includes fees for audit and audit related services for Carnival Corporation for 2003 and for Carnival plc for the period April 18, 2003 through November 30, 2003. |
(3) | Represents fees for professional services rendered by KPMG Audit plc for Carnival plc. |
(4) | Audit-Related Fees were $48,000, primarily for employee benefit plan audits. |
Audit Fees for PricewaterhouseCoopers LLP for 2004 and 2003 were for professional services rendered for the audits of the consolidated financial statements of Carnival Corporation & plc, quarterly review of these consolidated financial statements included in our joint quarterly reports on Form 10-Q, audits of the Carnival plc UK GAAP financial statements, consents, opinions on managements assessment of and our effectiveness of internal control over financial reporting in connection with our compliance with Section 404 of the Sarbanes-Oxley Act of 2002, comfort letters, registration statements, statutory audits of various international subsidiaries and other agreed upon procedures required to complete the year end audits of the consolidated financial statements. Substantially all of the increase in Audit Fees in 2004 compared to 2003 is attributable to the Section 404 report. Audit fees for KPMG Audit plc for the period from January 1, 2003 through April 17, 2003 were for professional services rendered for a quarterly review.
Audit-Related Fees for PricewaterhouseCoopers LLP for 2003 were for assurance and related services primarily associated with the DLC transaction with P&O Princess Cruises plc, other due diligence services, employee benefit plan audits and internal control reviews. Audit-related fees for KPMG Audit plc for the period from January 1, 2003 through April 17, 2003 were primarily for services related to the DLC transaction.
Tax Fees for PricewaterhouseCoopers LLP for 2004 and 2003 were for services related to tax compliance and tax planning. Tax fees for KPMG Audit plc for the period from January 1, 2003 through April 17, 2003 were primarily for services related to the DLC transactions.
All Other Fees for PricewaterhouseCoopers LLP for 2004 and 2003 were primarily for actuarial services and employee benefit plan consulting and Immigration and Naturalization Service certifications.
All of the services described above were approved by the Audit Committees, and in doing so, the Audit Committees did not rely on the de minimis exception set forth in Rule 2-01(c)(7)(i)(C) under Regulation S-X.
57
Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors
In December 2003, the Audit Committees adopted Key Policies and Procedures which address, among other matters, pre-approval of audit and permissible non-audit services provided by the independent auditors. The Key Policies and Procedures require that all services to be provided by the independent auditors must be approved by the Audit Committees. To facilitate smaller projects that may arise between scheduled meetings of the Audit Committees, the Committees have pre-approved the provision of certain defined services by the independent auditors, subject to an annual threshold of $100,000. For both types of pre-approval, the Audit Committees consider whether such services are consistent with the rules of the U.S. Securities and Exchange Commission on auditor independence.
58
REPORT OF THE AUDIT COMMITTEES
Carnival Corporation and Carnival plc are two separate legal entities and, therefore, each has a separate board of directors, each of which in turn has its own Audit Committee. In accordance with their charter (a copy of which is attached as Annex F to this proxy statement), each Audit Committee assists the relevant board of directors in carrying out its oversight of:
|
the integrity of the relevant financial statements; |
|
the companys compliance with legal and regulatory requirements; |
|
the independent auditors qualifications and independence; and |
|
the performance of the companys internal audit functions and independent auditor and independent registered certified public accounting firm. |
Both Audit Committees are subject to the audit committee independence requirements under the corporate governance standards of the NYSE and relevant U.S. Securities and Exchange Commission rules, and the Audit Committee of Carnival plc is also subject to the requirements of the UK Combined Code. The two Audit Committees have identical members and each currently consists of five independent (as defined by the listing standards of the NYSE currently in effect and the UK Combined Code), non-employee directors. Each board of directors has determined that Stuart Subotnick is both independent and an audit committee financial expert, as defined by SEC rules. In addition, the board of Carnival plc has determined that Stuart Subotnick has recent and relevant financial experience for purposes of the UK Combined Code.
Management has primary responsibility for Carnival Corporation & plcs financial reporting process, including its system of internal control, and for the preparation of consolidated financial statements. Carnival Corporation & plcs independent auditors are responsible for performing an independent audit of those financial statements and expressing an opinion on the conformity of those financial statements with U.S. generally accepted accounting principles. The Audit Committees are responsible for monitoring and overseeing the financial reporting process and the preparation of consolidated financial statements and for supervising the relationship between Carnival Corporation & plc and its independent auditors, as well as reviewing the groups systems of internal controls and compliance with the group Code of Business Conduct and Ethics. The Audit Committees have met and held discussions with management of Carnival Corporation & plc and the independent auditors. In this context, management represented to the Audit Committees that Carnival Corporation & plcs consolidated financial statements were prepared in accordance with U.S. generally accepted accounting principles.
The Audit Committees (i) reviewed and discussed Carnival Corporation & plcs audited financial statements for the year ended November 30, 2004 with Carnival Corporation & plcs management and with Carnival Corporation & plcs independent auditors; (ii) discussed with Carnival Corporation & plcs independent auditors the matters required to be discussed by Statement on Auditing Standards No. 61; and (iii) received the written disclosures and the letter from Carnival Corporation & plcs independent accountants required by Independence Standards Board Statement No. 1 (Independence Discussions with Audit Committees) and discussed with Carnival Corporation & plcs independent auditors the independent auditors independence. The Audit Committees also considered whether the provision to the relevant entity by the independent auditors of non-audit services was compatible with maintaining the independence of the independent auditors. Based on the reviews and discussions described above, the Audit Committees recommended to the boards of directors that the audited consolidated financial statements of Carnival Corporation & plc be included in Carnival Corporation & plcs Annual Report on Form 10-K for the year ended November 30, 2004 for filing with the U.S. Securities and Exchange Commission.
The Audit Committee of Carnival Corporation |
The Audit Committee of Carnival plc |
|||||
---|---|---|---|---|---|---|
Stuart Subotnick,
Chairman |
Stuart Subotnick, Chairman |
|||||
Richard G. Capen,
Jr. |
Richard G. Capen, Jr. |
|||||
Arnold W.
Donald |
Arnold W. Donald |
|||||
Richard J.
Glasier |
Richard J. Glasier |
|||||
Sir John
Parker |
Sir
John Parker |
59
TRANSACTIONS OF MANAGEMENT AND DIRECTORS
Transactions with Micky Arison. Micky Arison, our Chairman and Chief Executive Officer is also the Chairman and Chief Executive Officer and the indirect sole shareholder of Florida Basketball Associates, Inc., the sole general partner of the Miami Heat Limited Partnership (MHLP), the majority owner of the Miami Heat, a professional basketball team. Pursuant to a five-year advertising and promotion agreement between Carnival Cruise Lines and MHLP, Carnival Cruise Lines agreed to pay an aggregate of $240,000 per year (subject to a 3% increase for each additional year) for the advertising and promotion of Carnival Cruise Lines during Miami Heat games played at the American Airlines Arena, located in Miami, Florida. In addition, Carnival Corporation entered into a seven-year agreement with Basketball Properties, Ltd. for the use of six courtside lounge seats at the Miami Heat games played at the American Airlines Arena and other public events at the arena. Under the agreement, Carnival Corporation agreed to pay $180,000 per year for the first five years, subject to a 5% increase in years six and seven.
Transactions with the Ted Arison Family Foundation USA, Inc. Shari Arison is the Chairman of the Board of Trustees and President of the Ted Arison Family Foundation USA, Inc. (the Foundation), a charitable foundation established by Carnival Corporations founder, Ted Arison. Carnival Corporation leases approximately 100 square feet of office space to the Foundation and employs one of its employees. During fiscal 2004, Carnival Corporation received approximately $115,000 from the Foundation for both lease payments and for all costs incurred by Carnival Corporation related to this employee. It is expected that Carnival Corporation will continue these arrangements with the Foundation in the future.
Registration Rights. Pursuant to a letter agreement (the Trust Registration Rights Agreement) dated July 11, 1989, Carnival Corporation granted to the Ted Arison Irrevocable Trust (the Irrevocable Trust) and the Arison Childrens Irrevocable Trust (the Childrens Trust, and together with the Irrevocable Trust, the Trusts) certain registration rights with respect to certain shares of Carnival Corporation common stock held for investment by the Trusts (the Shares). The beneficiaries of the Trusts included the children of Ted Arison, including Micky Arison, our Chairman of the boards and Chief Executive Officer, and Shari Arison, a major shareholder. Effective December 26, 1991, the Childrens Trust was divided into three separate continued trusts, including continued trusts for Micky Arison, Shari Arison and Michael Arison.
Under the Trust Registration Rights Agreement, Carnival Corporation has granted the Trusts demand and piggyback registration rights. Carnival Corporation is not required to effect any demand registration unless all of the Shares owned by either of the Trusts are included in the demand. Carnival Corporation has agreed to bear all expenses relating to such demand and piggyback registrations, except for fees and disbursements of counsel for the Trusts, selling costs, underwriting discounts and applicable filing fees.
Under a registration rights agreement dated June 14, 1991 (the Arison Registration Rights Agreement), Carnival Corporation granted certain registration rights to Ted Arison with respect to certain shares of common stock beneficially owned by him (the Arison Shares) in consideration for $10,000. The registration rights were held by the Estate of Ted Arison. The Estate of Ted Arison subsequently transferred the Arison Shares to the Nickel 1997 Irrevocable Trust (formerly known as The 1997 Irrevocable Trust of Micky Arison), the Artsfare 1992 Irrevocable Trust (formerly known as the Ted Arison 1992 Irrevocable Trust for Lin No. 2) and the Eternity Four Trust (formerly known as the Ted Arison 1994 Irrevocable Trust for Shari No. 1) (collectively, the Family Trusts). The Arison Registration Rights Agreement provides for demand and piggyback registration rights. Carnival Corporation has agreed to bear all expenses relating to such demand and piggyback registrations, except for fees and disbursements of counsel for the Family Trusts, selling costs, underwriting discounts and applicable filing fees.
Transactions with Cruise Specialists. Until January 2005, Janet Olczak Lanterman, the wife of A. Kirk Lanterman, one of our directors and a former executive officer, was the owner of a travel agency located in Seattle, Washington, named Cruise Specialists. Under the laws of the State of Washington, Ms. Lantermans ownership interest in Cruise Specialists was her separate property and, accordingly, Mr. Lanterman did not have any ownership interest in the agency. Cruise Specialists sells cruises and other similar products for various travel providers, including us, under arrangements that are common throughout the travel industry, whereby Cruise Specialists receives a commission based on sales generated. In fiscal 2004, Cruise Specialists generated approximately $15.2 million of gross revenues for Carnival Corporation & plc. In connection with such revenues, Cruise Specialists received from Carnival
60
Corporation & plc approximately $3.2 million in commissions and other marketing incentives. Carnival Corporation and Carnival plc believe that the terms and conditions of the agreement with Cruise Specialists are no less favorable to Carnival Corporation & plc than those terms and conditions available for comparable transactions with unaffiliated persons. |
Brother of Robert H. Dickinson. Carnival Cruise Lines entered into an agreement with Waste Management National Services, Inc. (WMNS) for the analytical, management, collection, transportation, disposal and recycling services for certain wastes generated or accumulated by its vessels in U.S. and foreign ports. We have been advised that John Dickinson, the brother of Robert H. Dickinson (President and Chief Executive Officer of Carnival Cruise Lines and a member of our boards of directors), served as a consultant to WMNS in connection with the negotiation of this agreement and receives fees based on Carnival Cruise Lines usage of WMNS under the agreement. During fiscal 2004, Carnival Cruise Lines paid approximately $4.4 million to WMNS for their services. John Dickinson advised us that he received approximately $40,500 during fiscal 2004 from WMNS.
Loan to Stein Kruse. In February 2000, HAL made a $250,000 advance to Stein Kruse, currently the President and Chief Executive Officer of HAL, against amounts he was expected to receive under the Holland America Line Key Management Incentive Plan during the following five years. In March 2002, when the unpaid balance under the advance was $150,000, HAL agreed that no further deductions would be made from Mr. Kruses Key Management Incentive Plan awards in respect of this advance and the loan would be forgiven in full if he remained employed by HAL through November 30, 2004. As of November 30, 2004, Mr. Kruse was employed by HAL. As a result, the outstanding balance of the loan was forgiven.
Son of Pier Luigi Foschi. The son of Pier Luigi Foschi, one of our executive officers and a director, is a minority partner in Studio Biscozzi-Nobili, an Italian tax consulting firm, which is retained from time to time to provide tax advice to Costa Crociere, S.p.A., one of our subsidiaries. During fiscal 2004, Studio Biscozzi-Nobili earned approximately $151,000 for providing such services to Costa.
Transactions with Affiliated Entities. Carnival Corporation & plc has adopted a policy of dealing with affiliated entities on an arms-length basis and Carnival Corporation & plc may not engage in business transactions with any affiliate on terms and conditions less favorable to Carnival Corporation & plc than terms and conditions available at the time for comparable transactions with unaffiliated persons. All contracts between us and an entity in which a director or senior employee of Carnival Corporation & plc has an interest must be approved by the boards of directors.
61
CHANGE IN INDEPENDENT AUDITORS
As previously disclosed, on April 17, 2003, KPMG Audit Plc (KPMG) resigned as the independent auditors for Carnival plc. The report of KPMG on Carnival plcs financial statements for the years ended December 31, 2002 and December 31, 2001 contained no adverse opinion or disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope or accounting principles. During the years ended December 31, 2001 and December 31, 2002 and the subsequent interim period through April 17, 2003, there were no disagreements with KPMG on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements, if not resolved to the satisfaction of KPMG, would have caused it to make reference thereto in its reports on the financial statements for such periods.
On April 17, 2003, based on a decision to have one audit firm to audit the consolidated financial statements of Carnival Corporation & plc, Carnival plc engaged PricewaterhouseCoopers LLP to serve as its independent auditors for the financial period ended November 30, 2003 and this appointment was approved by Carnival plc shareholders at their annual general meeting on June 23, 2003. The decision to engage PricewaterhouseCoopers LLP was approved by the Audit Committee of the board of directors of Carnival plc.
During the years ended December 31, 2001 and 2002 and the subsequent interim period through April 17, 2003, Carnival plc did not consult PricewaterhouseCoopers LLP with respect to the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on Carnival plcs financial statements, or any other matters or reportable events as set forth in Item 304(a)(1)(v) of Regulation S-K.
62
Annex A
CARNIVAL CORPORATION
AMENDED AND RESTATED
2001 OUTSIDE DIRECTOR STOCK
PLAN
(Adopted by the Board of Directors on February 16, 2001 and approved by the shareholders on April 17, 2001, effective as of January 1, 2001, amended by the Board of Directors on October 8, 2001, further amended by the Board of Directors on July 19, 2004 and, further amended and restated by the Board of Directors on January 18, 2005)
1. |
Purpose. |
2. |
Definitions. |
A-1
A-2
(ff) |
Trust Share has the meaning assigned to it in the Pairing Agreement. |
(gg) |
Vested Unit has the meaning assigned to it in Section 9(d). |
3. |
Effective Date, Duration and Shareholder Approval. |
4. |
Administration. |
5. |
Shares Subject to Awards. |
A-3
8. |
Terms of Options. |
(d) |
Manner of Exercise and Form of Payment. |
A-4
(e) |
Termination of Board Membership. |
9. |
Restricted Stock and Restricted Stock Units. |
(a) |
Awards of Restricted Stock and Restricted Stock Units. |
A-5
(b) |
Restrictions; Forfeiture. |
(d) |
Delivery of Restricted Stock and Settlement of Restricted Stock Units. |
A-6
Stop transfer orders shall be entered with the Companys transfer agent and registrar against the transfer of legended securities.
10. |
General. |
(e) |
Adjustment Upon Changes in Capitalization, etc. |
A-7
(h) |
Termination and Amendment of Plan and Awards. |
A-8
A-9
Annex B
CARNIVAL PLC 2005 EMPLOYEE SHARE PLAN
(As adopted by the board of directors of Carnival plc on 18 January 2005
and
to be approved by shareholders of Carnival plc in general meeting on 13 April 2005)
1. | PURPOSE |
The purpose of the Plan is to provide a means through which each member of the plc Group may attract able persons to enter and remain in the employ of members of the plc Group and to provide a means whereby employees and executive directors of each member of the plc Group can acquire and maintain Share ownership, or be paid incentive compensation measured by reference to the value of Shares, thereby strengthening their commitment to the welfare of the members of the plc Group and promoting an identity of interest between shareholders and these persons. It is intended that the Plan will be an employees share scheme within the meaning of section 743 of the Companies Act 1985.
The Plan provides for the granting of Options (Incentive Share Options, Nonqualified Share Options, Unapproved Options and Approved Options), Restricted Shares and Restricted Share Units to eligible employees. Inland Revenue Approved Options may be granted under an Appendix to the Plan approved by the Inland Revenue.
2. | DEFINITIONS |
The following definitions shall be applicable throughout the Plan;
ADRs means American Depositary Receipts evidencing American Depositary Shares deposited by the Company with a depositary pursuant to a depositary agreement;
Affiliate means:
(a) any entity that directly or indirectly is Controlled by, Controls or is under common Control with the Company or Carnival Corporation; and
(b) to the extent provided by the Committee, any entity in which the Company or Carnival Corporation has a significant equity interest.
Approved Option means an Option granted under an Inland Revenue approved share plan contained in the Appendix to this Plan;
Award means, individually or collectively, any Incentive Share Option, Nonqualified Share Option, Unapproved Option, Approved Option, Restricted Share Award or Restricted Share Unit Award;
Award Agreement means a Share Option Agreement, Restricted Share Agreement or Restricted Share Unit Agreement;
Board means the board of directors of the Company;
Capital Reorganisation means any variation in the share capital or reserves of the Company (including, without limitation, by way of capitalisation issue, rights issue, sub-division, consolidation, or reduction);
Carnival Corporation means Carnival Corporation, a corporation organised under the laws of the Republic of Panama;
Cause means a member of the plc Group having a right to terminate a Participants employment summarily either in accordance with the terms of the Participants contract of employment with that member or otherwise at common law including without limitation:
B-1
(a) | the determination by the Committee that the Participant has ceased to perform his duties to a member of the plc Group (other than as a result of his incapacity due to physical or mental illness or injury), which failure amounts to an intentional and extended neglect of his duties to his employer; |
(b) | the Committees determination that the Participant has engaged or is about to engage in wilful misconduct or conduct which causes or may reasonably be expected to cause substantial damage to a member of the plc Group; |
(c) | the Participant having been convicted of, or pleaded guilty to, an offence involving as a material element fraud or dishonesty; or |
(d) | the failure of the Participant to follow the lawful instructions of the Board or any of his superiors; |
Change of Control means the occurrence of any of the following:
(a) | a person (either alone or together with any person acting in concert with him) obtaining Control of the Company as a result of a general offer or otherwise for the whole of the share capital of the Company (other than those shares which are already owned by him and/or any person acting in concert with him); |
(b) | a person (either alone or together with any person acting in concert with him) acquiring 50% or more (on a fully diluted basis) of either: |
(i) |
the then outstanding Shares taking into account as outstanding for this purpose such Shares as are issuable upon the exercise of options or warrants, the conversion of convertible shares or debt and the exercise of any similar right to acquire such Shares (the Outstanding Shares); or |
(ii) |
the combined voting power of the then outstanding voting shares
or securities of the Company entitled to vote generally in the election of directors (the Outstanding Company Voting Securities); provided, however, that for purposes of this Plan, the following acquisitions shall not constitute a Change of Control: |
(A) |
any acquisition by the Company or any Affiliate, |
(B) |
any acquisition by any employee benefit plan sponsored or maintained by the Company or any Affiliate, |
(C) |
any acquisition by Marilyn B. Arison, Micky Arison, Shari Arison, Michael Arison or their spouses or lineal descendents, any trust established for the benefit of any of the aforementioned Arison family members, or any person directly or indirectly controlling, controlled by or under common control with any of the aforementioned Arison family members or any trust established for the benefit of any of the aforementioned Arison family members or any charitable trust or non-profit entity established by any person or entity described in this sub-paragraph (C); or |
(D) |
any acquisition by any person which falls within the proviso to paragraph (e) below or sub-paragraphs (i), (ii) and (iii) of paragraph (h) below; |
(c) | individuals who, on the date this Plan is approved by shareholders in general meeting, constitute the board of directors of the Company (the Incumbent Directors) ceasing for any reason to constitute at least a majority of the board, provided that any person who becomes a director subsequently and whose election or nomination for election was approved by a vote of at least two-thirds of the Incumbent Directors then on the board (either by a specific vote of the directors or |
B-2
by approval of the proxy statement or annual report and accounts of the Company in which such person is nominated for election by shareholders, without written objection to such nomination) shall be an Incumbent Director; and for the purposes of this Plan an event falling within this sub-paragraph (c) shall be referred to as a Board Change; |
(d) | a person becoming bound or entitled to give notice under sections 428 to 430F of the Companies Act 1985 to acquire Shares (a Compulsory Acquisition Procedure); |
(e) | a Court directing that a meeting of the holders of Shares be convened pursuant to section 425 of the Companies Act 1985 for the purposes of considering a scheme of arrangement of the Company or its amalgamation with any other company or companies and the scheme of arrangement being approved by the shareholders meeting or sanctioned by the Court (as the Committee may determine) (the Relevant Condition) provided, however, that the Committee may determine that the scheme of arrangement shall not constitute a Change of Control if the purpose and effect of the scheme of arrangement is to create a new holding company for the Company, such company having substantially the same shareholders with the same proportionate shareholdings as the Company had immediately prior to the scheme of arrangement, and for the purposes of this Plan an event falling within this sub- paragraph (e) shall be referred to as a Scheme of Arrangement; |
(f) | notice being duly given of a resolution for the voluntary winding-up of the Company (a Voluntary Winding Up); |
(g) | the sale, transfer or other disposition of all or substantially all of the business or assets of the Company (a Sale); or |
(h) | the completion of a reorganization, recapitalization, merger, consolidation, share exchange or similar form of corporate transaction involving the Company that requires the approval of the Companys shareholders, whether for such transaction or the issuance of securities in the transaction (a Business Combination), unless immediately following such Business Combination: |
(i) |
more than 50% of the total voting power of: |
(A) |
the company or body corporate resulting from such Business Combination (the Surviving Company); or |
(B) |
if applicable, the ultimate parent company or body corporate that directly or indirectly has beneficial ownership of sufficient voting securities eligible to elect a majority of the directors of the Surviving Company (the Parent Company), is represented by the Outstanding Company Voting Securities that were outstanding immediately prior to such Business Combination (or, if applicable, is represented by shares into which the Outstanding Company Voting Securities were converted pursuant to such Business Combination), and such voting power among the holders thereof is in substantially the same proportion as the voting power of the Companys Voting Securities among the holders thereof immediately prior to the Business Combination, |
(ii) |
no person, is or becomes the beneficial owner, directly or indirectly, of 50% or more of the total voting power of the outstanding voting securities eligible to elect directors of the Parent Company (or, if there is no Parent Company, the Surviving Company); and |
(iii) |
at least a majority of the members of the board of directors of the Parent Company (or, if there is no Parent Company, the Surviving Company) following the completion of the Business Combination were members of the board of directors of the Company at the time of the boards approval of the execution of the initial agreement providing for such Business Combination |
B-3
Code means the United States Internal Revenue Code of 1986, as amended. Reference in the Plan to any section of the Code shall be deemed to include any amendments or successor provisions to such section and any regulations under such section;
Combined Group means the plc Group and Carnival Corporation and any subsidiary of Carnival Corporation as that term is defined in section 736 of the Companies Act 1985;
Committee means the Compensation Committee of the board of directors. Unless the Board determines otherwise, each member of the Committee shall, at the time he takes any action with respect to an Award under the Plan, be an Eligible Director. However, the mere fact that a Committee member shall fail to qualify as an Eligible Director shall not invalidate any Award which is otherwise validly granted under the Plan;
Company means Carnival plc, a company incorporated under the laws of England and Wales;
Control has the meaning given to it by section 840 of ICTA;
Date of Grant means the date on which the granting of an Award is authorized, or such other date as may be specified in such authorization or, if there is no such date, the date indicated on the applicable Award Agreement;
Dealing Day means any day on which the London Stock Exchange is open for the transaction of business;
Effective Date means the date on which the Plan is approved by the Companys shareholders in general meeting;
Eligible Director means a person who is a non-employee director within the meaning of Rule 16b-3 under the Exchange Act, or a person meeting any similar requirement under any successor rule or regulation;
Employee means any employee (including an executive director) of a member of the plc Group whose terms of service require him to devote substantially the whole of his working time to the affairs of a member of the Combined Group;
Employee Share Plan means any share option plan or other employees share incentive plan established by the Company including the P&O Princess Cruises Deferred Bonus & Co-Investment Matching Plan;
Exchange Act means the U.S. Securities Exchange Act of 1934, as amended;
Fair Market Value means, on a given date:
(a) | for so long as the Shares are traded on the London Stock Exchange, the closing middle market quotation for a Share as derived from the Daily Official List of the London Stock Exchange for that day; or |
(b) | subject to (a) above, its market value determined in accordance with Part VIII of the Taxation of Chargeable Gains Act 1992 and in the case of any Award under which Shares are to be issued, the nominal value of a Share; |
ICTA means the United Kingdom Income and Corporation Taxes Act 1988;
ITEPA means the United Kingdom Income Tax (Earnings and Pensions) Act 2003;
Incentive Share Option means an Option granted by the Committee to a US Participant under the Plan which is designated by the Committee as an incentive stock option as described in Section 422 of the Code and which otherwise meets the requirements set forth herein;
the London Stock Exchange means London Stock Exchange plc or any successor body thereto;
B-4
Nonqualified Share Option means an Option granted by the Committee to a US Participant under the Plan, which is not designated by the Committee as an Incentive Share Option;
Option means an Award granted under Section 7 being either an Incentive Share Option, a Nonqualified Share Option, an Unapproved Option or an Approved Option;
Option Holder means any individual who holds a subsisting Option (including, where the context permits, the legal personal representatives of a deceased Option Holder);
Option Period means such period commencing on the Date of Grant and not exceeding ten years, as the Committee may be determine under Section 7.6 in respect of an Option or portions of an Option;
Option Price means the exercise price of an Option as described in Section 7.3;
Participant means an Employee who has been selected by the Committee to participate in the Plan and to receive an Award;
Performance Goals means the performance objectives which may be established by the Committee for the purpose of determining whether, and to what extent, Awards will vest or be subject to a Restricted Period.
Plan means this Carnival plc 2005 Employee Share Plan, as amended from time to time;
the plc Group means the Company and the Subsidiaries and member of the Group shall be construed accordingly;
Registered Holder means any person or persons nominated by the Committee to hold Restricted Shares on behalf of a Participant;
Relevant Period means in the case of:
(a) | an Acquisition, the period of three months from the date of completion of the acquisitions and if the acquisitions occur as a result of an offer which is made subject to conditions, the period of three months from the date when the offer becomes or is declared unconditional in all respects; |
(b) | a Board Change, the period of three months from the date that the relevant majority no longer subsists; |
(c) | a Compulsory Acquisition Procedure, the period of 30 days from the date on which a notice of compulsory acquisition is first issued; |
(d) | a Scheme of Arrangement, the period between the date of the Courts direction and twelve noon on the day immediately preceding the date for which the shareholders meeting is convened or such longer period up to the date on which the Court sanctions the Scheme of Arrangement as the Committee may determine; |
(e) | a Voluntary Winding Up, the period of two months from the date the resolution; |
(f) | a Sale, the period of three months from the date of completion of the relevant transaction; and |
(g) | a Corporate Transaction, the period of three months from the date of completion of the relevant transaction; |
Restricted Period means, with respect to any Restricted Shares or any Restricted Share Unit, the period of time determined by the Committee during which such Award is subject to the restrictions set forth in Section 9 (unless foreshortened pursuant to the rules of this Plan);
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Restricted Shares means Shares issued or transferred to a Participant subject to forfeiture and the other restrictions set forth in Section 9;
Restricted Share Award means an Award of Restricted Shares granted under Section 9;
Restricted Share Unit means a hypothetical investment equivalent to one Share granted in connection with an Award made under Section 9;
Restricted Share Unit Award means an Award of Restricted Share Units granted under Section 9;
Retirement means the cessation of a Participants employment with a member of the plc Group on or after the earlier of:
(a) | age 65 with at least five years of service with a member of the plc Group; or |
(b) | age 55 with at least 15 years of service with a member of the plc Group; |
Retirement Age means age 55 for the purposes of paragraph 35A of Schedule 4 to ITEPA;
Securities Act means the Securities Act of 1933, as amended;
Shares means fully paid and irredeemable ordinary shares in the capital of the Company or shares representing those shares following any Capital Reorganization;
Share Option Agreement means any agreement between the Company and a Participant who has been granted an Option pursuant to Section 7 which evidences the grant of an Option and in the case of an Option granted by way of a share option certificate, shall mean the share option certificate;
Subsidiary means any subsidiary of the Company, as defined in Section 736 of the Companies Act 1985, of which the Company has Control;
UKLA means the United Kingdom Listing Authority;
Unapproved Option means an Option granted to a Participant other than a US Participant under the Plan which is not designated by the Committee as an Approved Option; and
Vested Unit shall have the meaning assigned to it in Section 9.12.
3. | EFFECTIVE DATE, DURATION AND SHAREHOLDER APPROVAL |
3.1 The Plan is effective as of the Effective Date [, and the Plan was approved by shareholders at a general meeting held on 13 April 2005 in a manner intended to comply with the shareholder approval requirements of Sections 422(b)(1) of the Code and the New York Stock Exchange].1
3.2 The expiration date of the Plan, on and after which no Awards may be granted hereunder, shall be the tenth anniversary of the Effective Date; provided, however, that the administration of the Plan shall continue in effect until all matters relating to Awards previously granted have been settled.
4. | ADMINISTRATION |
4.1 | The Committee shall administer the Plan. |
4.2 Subject to the provisions of the Plan and applicable law, the Committee shall have the power, in addition to other express powers and authorizations conferred on the Committee by the Plan, to:
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(a) | designate Participants; |
(b) | determine the type or types of Awards to be granted to a Participant; |
(c) | determine the number of Shares to be covered by, or with respect to which payments, rights, or other matters are to be calculated in connection with, Awards; |
(d) | determine the terms and conditions of any Awards; |
(e) | determine whether, to what extent, and under what circumstances Awards may be settled or exercised in cash, Shares, other securities, other Awards or other property, or cancelled, forfeited or suspended and the method or methods by which Awards may be settled, exercised, cancelled, forfeited or suspended; |
(f) | determine whether, to what extent, and under what circumstances the delivery of cash, Shares, other securities, other Awards, other property and other amounts payable with respect to an Award shall be deferred either automatically or at the election of the holder thereof or of the Committee; |
(g) | interpret, administer, reconcile any inconsistency, correct any defect and/or supply any omission in the Plan and any instrument or agreement relating to, or Award granted under, the Plan; |
(h) | establish, amend, suspend, or waive such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan; and |
(i) | make any other determination and take any other action specified under the Plan or that the Committee deems necessary or desirable for the administration of the Plan. |
4.3 Unless otherwise expressly provided in the Plan, all designations, determinations, interpretations and other decisions under or with respect to the Plan or any Award or any documents evidencing Awards shall be within the sole discretion of the Committee, may be made at any time and shall be final, conclusive and binding upon all parties, including, without limitation, each member of the Combined Group, any Participant, any holder or beneficiary of any Award, and any shareholder.
5. | GRANT OF AWARDS; SHARES SUBJECT TO THE PLAN |
5.1 The Committee may, from time to time, grant Awards of Options, Restricted Shares or Restricted Share Units to one or more Employees provided that no Award to subscribe for Shares shall be granted to the extent that the aggregate number of Shares that could be issued pursuant to that Award and any other Awards granted at the same time when added to the number of Shares that:
(a) | could be issued on the exercise of any other subsisting share options or awards granted during the preceding ten years under the Plan or any other Employee Share Plan; and |
(b) | have been issued on the exercise of any share options or awards granted during the preceding ten years under the Plan or any other Employee Share Plan; and |
(c) | have been issued during the preceding ten years under any Employee Share Plan or any profit sharing or other employee share incentive plan established by the Company; |
would exceed 10% of the ordinary share capital of the Company for the time being in issue.
5.2 Shares delivered by or on behalf of the Company in settlement of Awards may be authorized and unissued Shares or Shares held in the treasury of the Company or purchased on the open market or by private purchase.
5.3 Any member of the plc Group may provide money to the trustees of any trust or any other person to enable them or him to acquire Shares to be held for the purposes of the Plan, or enter into any guarantee or indemnity for those purposes, to the extent not prohibited by section 151 of the Companies Act 1985.
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6. | ELIGIBILITY |
Participation shall be limited to Employees who have received written notification from the Committee, or from a person designated by the Committee, that they have been selected to participate in the Plan.
7. | TERMS OF OPTIONS |
7.1 The Committee is authorized to grant one or more Approved Options, Unapproved Options, Incentive Share Options or Nonqualified Share Options to any Employee. Each Option so granted shall be subject to the conditions set forth in this Section 7, or to such other conditions consistent with this Plan as may be reflected in the applicable Share Option Agreement.
Option Price
7.2 The Option Price per Share for each Option shall be set by the Committee at the Date of Grant but shall not be less than the Fair Market Value of a Share on the Date of Grant and, if the Shares are to be issued, the nominal value of a Share.
Manner of Exercise and Form of Payment
7.3 No Shares shall be delivered pursuant to any exercise of an Option until payment in full of the Option Price therefor is received by the Company or the Participant has made arrangements acceptable to the Company for the payment of the Option Price. Options which have become exercisable may be exercised by delivery of written notice of exercise to the Company accompanied by payment of, or an undertaking to pay, the aggregate Option Price. The Option Price shall be payable in cash.
Conditions of Grant
7.4 An Option may be granted subject to such conditions for payment of taxation, employees National Insurance contributions and employers National Insurance contributions liability as the Committee may determine (including without limitation the right to sell on an Option Holders behalf sufficient Shares to satisfy any taxation or National Insurance contributions) and if any condition is imposed relating to the assumption, payment or reimbursement by the Option Holder of employers National Insurance contributions liability, such conditions shall comply with any applicable legislation or regulations and the Company shall be entitled to waive in whole or in part the Option Holders obligation in respect of such liability.
Vesting, Option Period and Expiration
7.5 Subject to Sections 8 and 13, Options shall vest and become exercisable in such manner and on such date or dates as the Committee may determine at the Date of Grant and set out in a vesting schedule (a Vesting Schedule) in the applicable Share Option Agreement or share option certificate. The Committee may determine that an Option may vest in full on one date only or may vest partially as to different portions on different dates so that an Option may have one Option Period or a number of Option Periods applying to determine when each portion shall vest. Subject to Sections 8 and 13 Options shall lapse on the earlier of:
(a) | the expiry of the Option Period; and |
(b) | the Option Holder being declared bankrupt or entering into any general composition with or for the benefit of his creditors including a voluntary arrangement under the Insolvency Act 1986; |
provided, however, that notwithstanding any vesting dates set by the Committee, the Committee may, in its sole discretion, accelerate the exercisability of any Option, which acceleration shall not affect the terms and conditions of such Option provided for in this Plan other than with respect to exercisability. If an Option is exercisable in installments, such installments or portions thereof which vest and become exercisable shall remain exercisable until the Option lapses but subject to any earlier lapse provisions under Sections 8 and 13.
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Performance Goals
7.6 The Committee shall determine prior to the Date of Grant whether any Performance Goals shall apply to the vesting of an Option and if so these shall be set out in the applicable Share Option Agreement or share option certificate.
Other Terms and Conditions
7.7 Each Option granted under the Plan shall be evidenced by a Share Option Agreement or a share option certificate. Immediately prior to the granting of any Options, the Committee may, in its absolute discretion, enter into a deed poll recording its intention to be bound by the share option certificates to be issued to the Option Holder in respect of such Option. Except as specifically provided otherwise in a Share Option Agreement or a share option certificate, each Option granted under the Plan shall be subject to the following terms and conditions:
(a) | each Option or portion thereof that is exercisable shall be exercisable for the full amount or for any part thereof; |
(b) | each Share acquired through the exercise of an Option shall be treated as fully paid up at the time of issue or transfer. Each Option shall cease to be exercisable, as to any Share, when the Participant acquires the Share or when the Option lapses; |
(c) | subject to Sections 11.9 and 11.10, Options shall not be transferable by the Participant except by will or the laws of inheritance and shall be exercisable during the Participants lifetime only by him; |
(d) | each Option shall vest and become exercisable by the Participant in accordance with the Vesting Schedule established by the Committee and set forth in the Share Option Agreement; |
(e) | at the time of any exercise of an Option, a Participant must take whatever action is reasonably required by the Committee to ensure compliance with applicable securities laws; and |
(f) | each Participant awarded an Incentive Share Option under the Plan shall notify the Company in writing immediately after the date he makes a disqualifying disposition of any Shares acquired pursuant to the exercise of such Incentive Share Option. A disqualifying disposition is any disposition (including any sale) of such Shares before the later of (i) two years after the Date of Grant of the Incentive Share Option or (ii) one year after the date the Participant acquired the Shares by exercising the Incentive Share Option. |
Incentive Share Option Grants to 10% Shareholders
7.8 Notwithstanding anything to the contrary in this Section 7, if an Incentive Share Option is granted to a Participant who owns shares representing more than ten percent of the voting power of all classes of shares of the Company or of a Subsidiary or a parent of the Company, the Option Period shall not exceed five years from the Date of Grant of such Option and the Option Price shall be at least 110 percent of the Fair Market Value (on the Date of Grant) of the Shares subject to the Option.
Time of Grant
7.9 The Committee shall not grant Options at any time when it would be prohibited from doing so by the Model Code for Securities Transactions by Directors of Listed Companies (or the Companys dealing code).
$100,000 Per Year Limitation for Incentive Share Options
7.10 To the extent the aggregate Fair Market Value (determined as of the Date of Grant) of Shares for which Incentive Share Options are exercisable for the first time by any Participant during any calendar year (under all plans of the Company) exceeds $100,000, such excess Incentive Share Options shall be treated as Nonqualified Share Options.
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8. | EXERCISE AND LAPSE OF OPTIONS CESSATION OF EMPLOYMENT |
8.1 Save as otherwise provided in these rules, an Option shall lapse automatically on the Option Holder ceasing to be an employee of the plc Group (whether lawfully or unlawfully).
8.2 Where an Option Holder ceases to be an employee of the plc Group before the end of the Option Period by reason of his employment with a member of the plc Group being terminated by a member of the plc Group without Cause or by the Participant for any reason other than Retirement, the Option shall lapse on the earlier of:
(a) | the last day of the Option Period; and |
(b) | the date that is three months after the date of such termination; |
provided, however, that any Participant whose employment with a member of the plc Group is terminated and who is subsequently re-hired or re-engaged by a member of the plc Group prior to the lapse of the Option shall not be treated as if his employment had terminated.
In the event of a termination described in this Section 8.2, the Option shall remain exercisable by the Participant until its lapse only to the extent the Option was exercisable at the time of such termination.
8.3 Where an Option Holder ceases to be an employee of the plc Group before the end of the Option Period by reason of his death or his disability (as determined by the Committee) while still in the employment of a member of the plc Group, or he dies following a cessation of employment described in this Section 8.2, the Option shall lapse on the earlier of:
(a) | the last day of the Option Period; and |
(b) | the date that is one year after the date of such death or cessation on account of disability of the Participant, as applicable. |
In such event, the Option shall remain exercisable by the Participant or his or her personal representatives or beneficiaries determined in accordance with Section 11, as applicable, until its lapse only to the extent the Option was exercisable by the Participant at the time of such event.
8.4 Where the Participant ceases to be an employee of a member of the plc Group by reason of Retirement prior to the end of the Option Period, the Option shall:
(a) | lapse at the end of the Option Period; and |
(b) | continue vesting in accordance with the Vesting Schedule set forth in the share option certificate or Share Option Agreement (as applicable), without regard to any requirement that the Participant remain employed with a member of the plc Group as a condition to vesting. |
8.5 For the avoidance of doubt, an Option exercisable under Sections 8.2 to 8.4 may lapse at an earlier date by virtue of Section 13 and may not be exercised after the expiry of the Option Period.
8.6 For the purposes of Sections 8.1 to 8.5 a female Option Holder shall not be treated as ceasing to be an employee of a member of the plc Group if absent from work wholly or partly because of pregnancy or confinement until she ceases to be entitled to exercise any statutory or contractual right to return to work.
8.7 Where any exercise of an Option under Sections 8.2 to 8.5 would be prohibited by law or the Model Code for Securities Transactions by Directors of Listed Companies (or the Companys dealing rules) the period during which the Option Holder may exercise his Options shall be extended by an additional period equal to the length of the period of prohibition but not beyond the expiry of the Option Period.
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9. | RESTRICTED SHARE AWARDS AND RESTRICTED SHARE UNIT AWARDS |
Awards of Restricted Shares and Restricted Share Unit Awards
9.1 The Committee shall have the authority:
(a) | to grant Restricted Share Awards and Restricted Share Unit Awards to Employees; |
(b) | to issue or transfer Restricted Shares to Registered Holders on behalf of Participants; and |
(c) | to establish terms, conditions and restrictions applicable to such Restricted Shares and Restricted Share Units, including the Restricted Period, which may differ with respect to each Participant, the time or times at which Restricted Shares or Restricted Share Units shall become vested and the number of Shares or units to be covered by each grant and whether the Award shall be subject to Performance Goals. |
No Restricted Share Awards or Restricted Share Unit Awards shall be granted at any time when the Committee is prohibited from doing so by the Model Code for Securities Transactions by Directors of Listed Companies (or the Companys dealing rules).
9.2 The Committee may require a Participant granted a Restricted Share Award to execute and deliver to the Company a Restricted Share Agreement with respect to the Restricted Shares setting forth the restrictions applicable to such Restricted Shares. The Committee shall determine whether:
(a) | the Restricted Shares shall be held in escrow rather than delivered to the Participant pending the release of the applicable restrictions, in which case the Committee may require the Participant to additionally execute and deliver to the Company an escrow agreement satisfactory to the Company; or |
(b) | the Restricted Shares shall be registered in the name of the nominated Registered Holder during the Restricted Period; or |
(c) | other arrangements shall apply to the holding of Restricted Shares during the Restricted Period, the terms of such arrangements being consistent with the terms of this Plan. |
9.3 If an escrow arrangement is used, the Committee shall cause a share certificate registered in the name of the Participant to be issued and, if it so determines, deposited together with the share powers with any escrow agent designated by the Committee. The Committee may cause the escrow agent to issue to a Participant a receipt evidencing any share certificate held by it registered in the name of the Participant.
9.4 If a nominated Registered Holder is used, the Committee shall cause a share certificate registered in the name of the Participant to be issued and, if it so determines, deposited together with the share powers with any Registered Holder nominated by the Committee. The Participant shall not be entitled to delivery of the share certificate until the Restricted Period has expired and the Registered Holder shall retain custody of such shares during the Restricted Period.
9.5 Subject to the restrictions set forth in Section 9.7 to 9.9, the Participant generally shall have the rights and privileges of a beneficial owner as to such Restricted Shares, including the right to direct the Registered Holder how to vote such Restricted Shares. At the discretion of the Committee, cash dividends and share dividends with respect to the Restricted Shares may be either currently paid to the Participant or withheld by the Company or the Registered Holder for the Participants account, and interest may be credited on the amount of cash dividends withheld at a rate and subject to such terms as determined by the Committee. The cash dividends or share dividends so withheld by the Committee and attributable to any particular Restricted Shares (and earnings thereon, if applicable) shall be distributed to the Participant upon the release of restrictions on such Restricted Shares and, if such Restricted Share is forfeited, the Participant shall have no right to such cash or share dividends.
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9.6 The terms and conditions of a grant of a Restricted Share Unit Award will be reflected in a written Restricted Share Unit Award Agreement. The Committee may determine that a Restricted Share Unit Award be granted in the form of a nil cost option or a conditional or contingent right to acquire shares. Where a Restricted Share Unit Award is granted in the form of a nil cost option, any reference to the Restricted Period expiring in respect of Restricted Share Units shall be construed as meaning that a Participant may call for the Restricted Share Units within the period determined by the Committee. A Participant shall not have any beneficial interest in any Shares during the Restricted Period as a result of being granted a Restricted Stock Unit Award. The Company will not be required to set aside a fund for the payment of any such Award. At the discretion of the Committee, each Restricted Share Unit (representing one Share) awarded to a Participant may be credited with cash and share dividends paid in respect of one Share (Dividend Equivalents). At the discretion of the Committee, Dividend Equivalents may be either currently paid to the Participant or withheld by the Company for the Participants account, and interest may be credited on the amount of cash Dividend Equivalents withheld at a rate and subject to such terms as determined by the Committee. Dividend Equivalents credited to a Participants account and attributable to any particular Restricted Share Unit (and earnings thereon, if applicable) shall be distributed to the Participant upon settlement of such Restricted Share Unit and, if such Restricted Share Unit is forfeited, the Participant shall have no right to such Dividend Equivalents.
Restrictions
9.7 Restricted Shares comprised in a Restricted Share Award granted to a Participant shall be subject to the following restrictions until the expiration of the Restricted Period and the attainment of any other vesting criteria established by the Committee, and to such other terms and conditions as may be set forth in the applicable Restricted Share Award Agreement:
(a) | the Participant shall not be entitled to delivery of the share certificate; |
(b) | the Restricted Shares shall be subject to the restrictions on transferability set forth in the Restricted Share Award Agreement; and |
(c) | the Restricted Shares shall be subject to forfeiture to the extent provided in the Rules and the applicable Restricted Share Agreement and, to the extent such Restricted Shares are forfeited, the share certificates shall be returned to the Company, and all rights of the Participant to such Restricted Shares and as a shareholder shall terminate without further obligation on the part of the Company. |
9.8 | Restricted Share Units awarded to any Participant shall be subject to: |
(a) | forfeiture until the expiration of the Restricted Period and the attainment of any other vesting criteria established by the Committee, to the extent provided in these Rules and the applicable Restricted Share Unit Agreement, and to the extent such Restricted Share Units are forfeited, all rights of the Participant to such Restricted Share Units shall terminate without further obligation on the part of the Company; and |
(b) | such other terms and conditions as may be set forth in the applicable Restricted Share Unit Agreement. |
9.9 The Committee shall have the authority to remove any or all of the restrictions on the Restricted Shares and Restricted Share Units whenever it may determine that, by reason of changes in applicable laws or other changes in circumstances arising after the date of the Restricted Share Award or Restricted Share Unit Award, such action is appropriate.
Restricted Period
9.10 The Restricted Period applicable to Restricted Shares and Restricted Share Units comprised in an Award shall commence on the Date of Grant and shall expire from time to time as to that part of the Restricted Shares and Restricted Share Units indicated in a schedule (the Vesting Schedule) established by the Committee in the applicable Restricted Share Agreement or Restricted Share Unit Agreement.
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Delivery of Restricted Shares and Settlement of Restricted Share Units
9.11 Upon the expiration of the Restricted Period with respect to any Restricted Shares covered by a Restricted Share Award and the attainment of any other vesting criteria established by the Committee, the restrictions set forth in Section 9.7 to 9.9 and the Restricted Share Agreement shall be of no further force or effect with respect to the Restricted Shares which have not then been forfeited. The Company shall deliver or procure the delivery to the Participant, or his beneficiary, without charge, the share certificate evidencing the Restricted Shares which have not then been forfeited and with respect to which the Restricted Period has expired and any other vesting criteria established by the Committee has been attained (to the nearest full share) and any cash dividends or share dividends credited to the Participants account with respect to such Restricted Shares and the interest thereon, if any.
9.12 Upon the expiration of the Restricted Period and the attainment of any other vesting criteria established by the Committee, with respect to any Restricted Share Units covered by a Restricted Share Unit Award, the Company shall determine whether the Award shall be settled in Shares or cash. If the Committee determines that the Award shall be settled in Shares, the Company shall procure the delivery to the Participant, or his beneficiary, without charge, one Share for each Restricted Share Unit which has not then been forfeited and with respect to which the Restricted Period has expired and any other such vesting criteria are attained (Vested Unit). If the Committee has elected to pay cash (or part cash and part Shares) for Vested Units, the amount of such payment shall be equal to the Fair Market Value of the Shares as of the date on which the Restricted Period lapsed with respect to such Vested Unit.
Conditions of Grant
9.13 Restricted Share Awards and Restricted Share Unit Awards may be granted subject to such conditions for payment of tax and employees National Insurance contributions and employers National Insurance contributions as the Committee may determine, including that, with respect to Awards of Restricted Shares which qualify as employment related restricted securities under Chapter 2 of Part VII of ITEPA, any member of the plc Group may require a Participant to enter into an election under section 430 or section 431 of ITEPA.
10. | FORFEITURE |
Restricted Shares
10.1 Save as otherwise provided in these rules and unless otherwise stated in the applicable Restricted Share Award Agreement, Restricted Shares shall be forfeited automatically on the Participant ceasing to be an employee of the plc Group (whether lawfully or unlawfully) before the end of the Restricted Period.
10.2 Where a Participant ceases to be an employee of the plc Group before the end of the Restricted Period by reason of Retirement, the Restricted Shares shall not be forfeited and the restrictions attaching to the Restricted Shares shall continue and shall lapse in accordance with the terms of the Restricted Share Award provided, however, that the Committee may in its discretion determine that some or all of the Restricted Shares may be released early.
10.3 Where a Participant ceases to be an employee of the plc Group before the end of the Restricted Period by reason of his death while still in the employment of a member of the plc Group, or he dies following a cessation of employment described in Section 10.2 the Restricted Shares shall not be forfeited and the Restricted Period shall expire forthwith and the restrictions shall lapse.
Restricted Share Units
10.4 Save as otherwise provided in these rules and unless otherwise stated in the applicable Restricted Share Unit Award Agreement, Restricted Share Units shall be forfeited automatically on the Participant ceasing to be an employee of the plc Group (whether lawfully or unlawfully) before the end of the Restricted Period.
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10.5 Where a Participant ceases to be an employee of the plc Group before the end of the Restricted Period by reason of Retirement, the Restricted Share Units shall not be forfeited and the restrictions attaching to the Restricted Share Units shall continue and shall lapse in accordance with the terms of the Restricted Share Unit Award provided, however, that the Committee may in its discretion determine that some or all of the Restricted Share Units may be released early.
10.6 Where a Participant ceases to be an employee of the plc Group before the end of the Restricted Period by reason of his death while still in the employment of a member of the plc Group, or he dies following a cessation of employment described in Section 10.2 the Restricted Share Units shall not be forfeited and the Restricted Period shall expire forthwith and the restrictions shall lapse.
10.7 For the avoidance of doubt, an Award that is retained under this Section 10 may lapse at an earlier date by virtue of Section 13.
10.8 For the purposes of Sections 10.1 to 10.6 a female Participant shall not be treated as ceasing to be an employee of a member of the plc Group if absent from work wholly or partly because of pregnancy or confinement until she ceases to be entitled to exercise any statutory or contractual right to return to work.
10.9 Where any release or exercise of an Award under this Section 10 would be prohibited by law or the Model Code for Securities Transactions by Directors of Listed Companies (or the Companys dealing rules) the period during which the Restricted Shares or Restricted Share Units may be released to a Participant shall be extended by an additional period equal to the length of the period of prohibition.
11. | GENERAL |
Additional Provisions of an Award
11.1 Awards granted to a Participant under the Plan also may be subject to such other provisions (whether or not applicable to Awards granted to any other Participant) as the Committee determines appropriate including, without limitation, provisions to assist the Participant in financing the acquisition of Shares upon the exercise of Options (provided that the Committee determines that providing such financing does not violate the Sarbanes-Oxley Act of 2002 and applicable UK law), provisions for the forfeiture of or restrictions on resale or other disposition of Shares acquired under any Award, provisions giving the Company the right to repurchase Shares acquired under any Award in the event the Participant elects to dispose of such Shares, provisions allowing the Participant to elect to defer the receipt of Shares upon the exercise of Awards for a specified period or until a specified event, and provisions to comply with US Federal and state securities laws and US Federal and state tax withholding requirements. Any such provisions shall be reflected in the applicable Award Agreement.
Privileges of Share Ownership
11.2 Except as otherwise specifically provided in the Plan, no person shall be entitled to the privileges of ownership in respect of Shares which are subject to Awards hereunder until such Shares have been issued or transferred to that person.
Government and Other Regulations
11.3 The obligation of the Company to issue Shares upon the exercise of Options or otherwise settle Awards in Shares shall be subject to all applicable laws, rules, and regulations, and to such approvals by governmental agencies as may be required.
Tax Withholding
11.4 A Participant may be required to pay to a member of the Combined Group, and each member of the Combined Group shall have the right and is hereby authorized to withhold from any Shares or other property deliverable under any Award or from any compensation or other amounts owing to a Participant the amount (in cash, Shares or other property) of any required tax withholding and payroll taxes in respect
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of an Award, its exercise, or any payment or transfer under an Award or under
the Plan and to take such other action as may be necessary in the opinion of the Company to satisfy all obligations for the payment of such
taxes.
11.5 Without limiting the generality of clause 11.4 above, the Committee may, in its sole discretion, permit a Participant to satisfy, in whole or in part, the foregoing withholding liability (but no more than the minimum required withholding liability if using method (b) or (c) of this subsection) by:
(a) | payment in cash; |
(b) | delivery of Shares owned by the Participant with a Fair Market Value equal to such withholding liability; |
(c) | having the Company withhold from the number of Shares otherwise issuable pursuant to the exercise of the Award a number of Shares with a Fair Market Value equal to such withholding liability; or |
(d) | authorising the Company to arrange the sale of sufficient Shares to generate proceeds sufficient to discharge any withholding liability. |
Claim to Awards and Employment Rights
11.6 The rights and obligations of an Employee under the terms and conditions of his office or employment shall not be affected by his participation in the Plan or any right he may have to participate in the Plan. An individual who participates in the Plan waives all and any rights to compensation and damages in consequence of the termination of his office or employment with any company for any reason whatsoever (whether lawfully or unlawfully) insofar as those rights arise, or may arise, from his ceasing to have rights under or his entitlement to an Award under the Plan as a result of such termination or from the loss or diminution in value of such rights or entitlements. In the event of conflict between the terms of this Section 11.6 and the Employees terms of employment, this Section will take precedence.
Governing Law
11.7 The Plan shall be governed by, and construed in accordance with, the laws of England. All disputes arising out of or in connection with the rules shall be subject to the exclusive jurisdiction of the courts of England and Wales.
Funding
11.8 No provision of the Plan shall require the Company, for the purpose of satisfying any obligations under the Plan, to purchase assets or place any assets in a trust or other entity to which contributions are made or otherwise to segregate any assets, nor shall the Company maintain separate bank accounts, books, records or other evidence of the existence of a segregated or separately maintained or administered fund for such purposes. Participants shall have no rights under the Plan other than as unsecured general creditors of the Company, except that insofar as they may have become entitled to payment of additional compensation by performance of services, they shall have the same rights as other employees under general law.
Nontransferability
11.9 Each Award shall be exercisable only by a Participant during the Participants lifetime, or, if permissible under applicable law, by the Participants legal guardian or personal representative. No Award may be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by a Participant otherwise than by will or by the laws of inheritance and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against each member of the plc Group.
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11.10 Notwithstanding the foregoing, the Committee may, in its sole discretion, permit Awards other than Incentive Share Options to be transferred by a Participant, without consideration, subject to such rules as the Committee may adopt consistent with any applicable Award Agreement to preserve the purposes of the Plan, to:
(a) | any person who is a spouse or child or step child under the age of 18 of the Participant (an Immediate Family Member); |
(b) | a trust solely for the benefit of the Participant and his or her Immediate Family Members; |
(c) | a partnership or limited liability company whose only partners or shareholders are the Participant and his Immediate Family Members; |
(each transferee described in clauses (a), (b) and (c) above is hereinafter referred to as a Permitted Transferee); provided that the Participant gives the Committee advance written notice describing the terms and conditions of the proposed transfer and the Committee notifies the Participant in writing that such a transfer would comply with the requirements of the Plan.
11.11 The terms of any Award transferred in accordance with Section 11.10 shall apply to the Permitted Transferee and any reference in the Plan, or in any applicable Award Agreement or share option certificate, to a Participant shall be deemed to refer to the Permitted Transferee, except that:
(a) | Permitted Transferees shall not be entitled to transfer any Award, other than by will or the laws of inheritance; |
(b) | Permitted Transferees shall not be entitled to exercise a transferred Nonqualified Share Option unless there shall be in effect a registration statement on an appropriate form covering the Shares to be acquired pursuant to the exercise of such Nonqualified Share Option if the Committee determines, consistent with any applicable Share Option Agreement, that such a registration statement is necessary or appropriate, |
(c) | the Committee or any member of the plc Group shall not be required to provide any notice to a Permitted Transferee, whether or not such notice is or would otherwise have been required to be given to the Participant under the Plan or otherwise; and |
(d) | the consequences of a Participant no longer being employed by, or in the services of, a member of the plc Group under the terms of the Plan and the applicable Award Agreement or share option certificate shall continue to be applied with respect to the Participant, including, without limitation, that a Nonqualified Share Option shall be exercisable by the Permitted Transferee only to the extent, and for the periods, specified in the Plan and the applicable Share Option Agreement. |
Relationship to Other Benefits
11.12 No payment under the Plan shall be taken into account in determining any benefits under any pension, retirement, profit sharing, group insurance or other benefit plan of a member of the Combined Group except as otherwise specifically provided in such other plan.
Expenses
11.13 The expenses of administering the Plan shall be borne by the plc Group.
Gender and Number
11.14 Where the context admits, masculine pronouns and other words of masculine gender shall refer to both men and women, words in the singular shall include the plural and words in the plural shall include the singular.
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Termination of Employment
11.15 For all purposes herein, a person who transfers from employment with a member of the plc Group to employment or service with a member of the Combined Group shall not be deemed to have terminated employment or service with a member of the plc Group.
Titles and Headings
11.16 The titles and headings of the sections in the Plan are for convenience of reference only, and in the event of any conflict, the text of the Plan, rather than such titles or headings shall control.
Severability
11.17 If any provision of the Plan or any Award Agreement is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as to any person or Award, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to the applicable laws, or if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or Award, such provision shall be stricken as to such jurisdiction, person or Award and the remainder of the Plan and any such Award shall remain in full force and effect.
12. | CHANGES IN CAPITAL STRUCTURE |
12.1 | In the event of any: |
(a) | Capital Reorganisation; |
(b) | Corporate Transaction; or |
(c) | the implementation by the Company of a demerger, or the payment by the Company of a dividend in specie or a super dividend or other transaction or any change in applicable laws or any change in circumstances which in the opinion of the Committee (acting fairly and reasonably and taking into account any criteria it may consider to be relevant) would materially affect (whether by increasing or reducing) the current or future value of an Award |
the number or type of shares subject to an Award and the Option Price per Share may be adjusted or the Awards may be subject to substitution in such manner as the Committee may determine is fair and reasonable, PROVIDED THAT:
(i) |
in respect of an Award under which Shares are to be transferred, prior notification shall be given to the person holding the Shares to which the Award relates; |
(ii) |
no adjustment shall be made pursuant to this Section which would decrease the aggregate Option Price of any Option; and |
(iii) |
except as provided in this sub-paragraph (iii), no adjustment may have the effect of reducing the Option Price of any Option to less than the nominal value of a Share. Where an Option subsists over both issued and unissued Shares, any such adjustment may only be made if the reduction of the Option Price of Options over both issued and unissued Shares can be made to the same extent. Any adjustment to the Option Price of Options over unissued Shares shall only be made if and to the extent that the Committee shall be authorised to capitalise from the reserves of the Company a sum equal to the amount by which the nominal value of the Shares in respect of which the Option is exercisable exceeds the adjusted Option Price. The Company may apply such sum in paying up such amount on such Shares and so that, on exercise of any Option in respect of which such reduction shall have been made, the Company shall capitalise such sum (if any) and apply the same in paying up such amount as aforesaid; and |
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(iv) |
any adjustment in Incentive Stock Options under this Section 12 shall be made only to the extent not constituting a modification within the meaning of Section 424(h)(3) of the Code, and any adjustments under this Section 12 shall be made in a manner which does not adversely affect the exemption provided pursuant to Rule 16b-3 under the Exchange Act. |
12.2 Notwithstanding the above, in the event of any of the following:
(a) | the Company is merged or consolidated with another company or body corporate and, in connection therewith, consideration is received by shareholders of the Company in a form other than shares or other equity interests of the surviving entity; |
(b) | a Sale; |
(c) | the reorganization or liquidation of the Company; or |
(d) | the Company enters into a written agreement to undergo an event described in sub-paragraphs (a), (b) or (c) above, |
then the Committee may, in its discretion and upon at least 10 days advance notice to the affected persons, cancel any outstanding Awards and cause the holders thereof to be paid, in cash or shares, or any combination thereof, the value of such Awards based upon the price per share of the shares or other consideration received or to be received by shareholders of the Company in the event.
12.3 The Company shall give each Participant notice of an adjustment hereunder and, upon notice, such adjustment shall be conclusive and binding for all purposes.
13. | EFFECT OF CHANGE OF CONTROL |
13.1 In the event of a Change of Control which is not a Scheme of Arrangement, notwithstanding any provision of the Plan to the contrary and notwithstanding that the Option Period may not have commenced nor the Performance Goals been satisfied, an Option shall forthwith vest and become exercisable with respect to 100 per cent of the Shares subject to such Option. An Option Holder may exercise his Options during the Relevant Period. Failing any permitted exercise the Options shall without prejudice to the operation of Section 13.7, cease to be exercisable and shall automatically lapse upon the expiry of the Relevant Period, and if more than one Relevant Period is running concurrently, the Option shall cease to be exercisable and lapse upon the expiry of whichever of those periods is the first to expire.
13.2 In the event of a Change of Control which is a Scheme of Arrangement, notwithstanding any provision of the Plan to the contrary and notwithstanding that the Option Period may not have commenced nor the Performance Goals been satisfied, an Option shall forthwith vest and become exercisable with respect to 100 per cent of the Shares subject to such Option conditionally upon satisfaction of the Relevant Condition. An Option Holder may exercise his Options during the Relevant Period. Failing any permitted exercise the Options shall cease to be exercisable between the last date upon which permitted exercises may occur and the first date when it can be determined whether or not the Relevant Condition is satisfied. If the Relevant Condition is not satisfied the Options shall continue subject to the terms of this Plan. If the Relevant Condition is satisfied the Options shall, without prejudice to the operation of Section 13.7, lapse automatically on the date upon which the scheme of arrangement is sanctioned by the Court.
13.3 In the event of a Change of Control which is not a Scheme of Arrangement, notwithstanding any provision of the Plan to the contrary and notwithstanding that the Restricted Period may not have expired nor any Performance Goals been satisfied, the Restricted Period shall forthwith expire with respect to 100 per cent of the Shares comprised in a Restricted Stock Award or a Restricted Stock Unit Award. The Restricted Period shall expire immediately upon the commencement of the Relevant Period and the Company shall satisfy its obligations under Section 9.11 and 9.12 of this Plan in respect of the Restricted Share Awards and Restricted Share Unit Awards within 30 days thereof at the end of which period, without prejudice to the operation of Section 13.7, the Awards shall lapse.
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13.4 In the event of a Change of Control which is a Scheme of Arrangement, notwithstanding any provision of the Plan to the contrary and notwithstanding that the Restricted Period may not have expired nor any Performance Goals been satisfied, the Restricted Period shall expire with respect to 100 per cent of the Shares comprised in a Restricted Stock Award or a Restricted Stock Unit Award conditionally upon satisfaction of the Relevant Condition. If the Relevant Condition is not satisfied the Restricted Period shall not expire and the Restricted Share Awards and Restricted Share Unit Awards shall continue subject to the terms of this Plan. If the Relevant Condition is satisfied the Restricted Period shall expire on the date upon which the scheme of arrangement is sanctioned by the Court and the Company shall satisfy its obligations under Section 9.11 and 9.12 of this Plan in respect of the Restricted Share Awards and Restricted Share Unit Awards within 30 days thereof at the end of which period, without prejudice to the operation of Section 13.7, the Awards shall lapse.
Cancellation of Awards
13.5 In the event of a Change of Control, the Committee may in its discretion and upon at least 10 days advance notice to the affected persons, cancel any outstanding Award and pay to the holders thereof, in cash or shares, or any combination thereof, the value of such Awards based upon the price per Share received or to be received by other shareholders of the Company in the event.
Demerger
13.6 If the Committee becomes aware that the Company is or is expected to be affected by any demerger, dividend in specie, super-dividend or other transaction which, in the opinion of the Committee, would materially affect (whether by increasing or reducing) the current or future value of any Awards, the Committee (acting fairly and reasonably and taking into account criteria it may consider to be relevant) may, in its absolute discretion, allow Options to be exercised (whether or not the Option Period has commenced) and the Restricted Period to expire in respect of Restricted Shares and Restricted Share Units, in each case in respect of such number of Shares as the Committee may determine in its discretion. The Committee shall specify the period in which such Options shall be exercisable and whether such Options shall lapse at the end of the specified period. The Committee shall notify any Participant who is affected by the discretion exercised under this Section.
Roll-over of Awards
13.7 In the event of a Change of Control the Committee may, in its absolute discretion, with the consent of any acquiring company determine that:
(a) | Options shall not be exercisable and that the Restricted Period shall not expire in respect of Restricted Shares and Restricted Share Units but that Participants shall be required within the Relevant Period to release any outstanding Awards (whether vested or unvested) in consideration for the grant of equivalent Awards over shares or restricted shares or restricted share units in the capital of the acquiring company or any company which Controls such acquiring company, on such terms as the Committee may determine; or |
(b) | Participants may at any time within the Relevant Period by agreement with the acquiring company, release any outstanding Awards (whether vested or unvested) in consideration for the grant of equivalent Awards over shares or restricted shares or restricted share units in the capital of the acquiring company or any company which Controls such acquiring company, on such terms as the Committee may determine. |
14. | NON EXCLUSIVITY OF THE PLAN |
Neither the adoption of this Plan by the Committee nor the submission of this Plan to the shareholders of the Company for approval shall be construed as creating any limitations on the power of the Committee to adopt such other incentive arrangements as it may deem desirable, including, without limitation, the granting of share options otherwise than under this Plan, and such arrangements may be either applicable generally or only in specific cases.
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15. | AMENDMENTS AND TERMINATION |
15.1 | The Committee may at any time discontinue the grant of further Awards. |
15.2 | The Committee may amend any of the provisions of the Plan in any way it thinks fit, provided that: |
(a) | the Committee shall not make any amendment that would materially prejudice the interests of existing Participants except with the prior consent or sanction of Participants who, if they exercised their Options in full or the Restricted Period in respect of their Award expired, would thereby become entitled to not less than three-quarters of all the Shares which would fall to be allotted, transferred or released upon exercise in full of all outstanding Options and expiry of the Restricted Period; and |
(b) | no amendment to the advantage of Employees or may be made to: |
(i) |
the definition of Employee in Section 2; |
(ii) |
the limitations on the number of Shares subject to the Plan; |
(iii) |
the basis for determining an Executives entitlement to Shares under the Plan; |
(iv) |
the terms of Shares to be provided under the Plan; |
(v) |
the adjustment provisions of Section 12 of the Plan; |
(c) | without prejudice to any provision of the Plan which provides for the lapse of an Option, the Committee may not cancel an Option unless the Option Holder agrees in writing to such cancellation. |
15.3 Notwithstanding any other provision of the Plan, the Committee may establish appendices to the Plan for the purpose of granting Approved Options to Employees who are primarily liable to tax in the United Kingdom and Awards to Employees who are or may become primarily liable to tax outside the United Kingdom on their remuneration, subject to such modifications as may be necessary or desirable to take account of overseas tax, exchange control or securities laws provided that any shares made available under such appendices shall count towards the limit set out in Section 5.1.
15.4 Benefits under the Plan shall not be pensionable.
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APPENDIX 1
United States Part of the Plan
For any Employee whose remuneration is (or, at the time of Option exercise, is expected wholly to be) subject to taxation in the United States of America and to whom the Committee wishes to grant Options under this Plan which will be treated as Incentive Stock Options, the following provisions shall apply:
(A) | All the provisions of the Plan shall apply to the grant of Options subject to the modifications contained in the following paragraphs. |
(B) | The number of Shares issued or transferred pursuant to the exercise of Incentive Share Options shall not, in aggregate, exceed 3.5 million Shares. The number of Shares available for issuance pursuant to the preceding sentence shall not exceed the limit in Section 5.1 and shall be subject to appropriate adjustment on the occurrence of any event described in Section 12. |
(C) | The term disability in Section 8.3 shall have the meaning given by Section 22(e)(3) of the Code. |
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Annex C
CARNIVAL PLC
2005 EMPLOYEE STOCK PURCHASE PLAN
1. | Purpose. |
2. | Administration. |
(a) |
Compliance with Rule 16b-3. |
(b) |
The Committee. |
(c) |
Interpretation of the Plan. |
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all other determinations deemed necessary and advisable for the administration of the Plan. The determinations of the Committee shall be conclusive.
3. | ADSs Subject to Plan. |
4. | Offerings of ADSs. |
(a) |
Offerings. |
(b) |
Business Day. |
5. | Eligibility to Participate in the Plan. |
(a) |
Eligible Employees. |
(b) |
Subsidiary. |
(c) |
Continuous Service. |
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6. | Enrollment; Election to Participate by Deposits and Payroll Deductions. |
(a) |
Enrollment. |
(b) |
Participating Depositing Employees. |
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7. | Stock Purchase Accounts. |
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8.Investment of Moneys in Stock Purchase Accounts to Purchase ADSs; Investment Accounts.
(c) |
Definitions. |
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(d) |
Deemed Grant of Options. |
9. | Limitation of Number of Shares That an Employee May Purchase. |
(b) |
Limitation of Five Percent Voting Power. |
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(c) |
Effect on Eligibility. |
(d) |
Insufficient Number of Shares. |
10. | Rights Not Transferable. |
11. | Adjustment upon Changes in Capitalization; Effects of Certain Transactions. |
(a) |
Changes in Capitalization. |
(b) |
Effect of Merger, Consolidation, Dissolution or Liquidation. |
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12. | Share Ownership. |
13. | Right to Terminate Employment. |
14. | Non-alienation of Benefits. |
15. | Purchase for Investment. |
16. | Termination and Amendment of Plan. |
(a) |
Insufficient Number of Shares. |
(b) |
Termination by the Board of Directors. |
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(c) |
Effect of Termination of Plan on Participating Employees. |
17. | Government and Other Regulations. |
18. | Withholding. |
19. | Severability. |
20. | Non-Exclusivity of the Plan. |
21. | Governing Law. |
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Annex D
CARNIVAL PLC DIRECTORS REPORT AND UK GAAP SUMMARY FINANCIAL INFORMATION
Directors Report
Carnival plc and Carnival Corporation are separate legal entities (together referred to in this report as Carnival Corporation & plc) and each company has its own board of directors and committees of the board. However, as is required by the agreements governing the dual listed company (DLC) structure, there is a single management team and the boards of directors and members of the committees of the boards are identical.
The directors of Carnival plc have pleasure to present their report to shareholders, together with the audited financial information for Carnival plc for the year ended November 30, 2004.
Principal activities
Carnival Corporation & plc is the largest cruise vacation group in the world, with a portfolio of 12 cruise brands in North America, Europe and Australia. Together, these brands operate over 77 ships totalling more than 132,000 lower berths with 13 new ships scheduled for delivery between March 2005 and April 2009. Carnival has a multi-brand strategy, which provides products and services appealing to the widest possible target audience across all major segments of the vacation industry.
Business review and future developments
A review of the Carnival Corporation & plcs group activities during the year and likely future developments is provided in the Chairmans statement and the Managements Discussion and Analysis of Financial Condition and Results of Operations contained in the Carnival Corporation & plc 2004 Annual Report, which accompanies the proxy statement
As described in note 2 to the audited consolidated financial statements of Carnival plc (the Carnival plc Accounts), the Carnival Corporation & plc group undertook a corporate restructuring commencing on December 1, 2003. This primarily resulted in the transfer by Carnival plc to Carnival Corporation of Princess Cruise Lines Limited and a number of related ship owning entities and the transfer by Carnival Corporation to Carnival plc of the cruise operations of both Cunard Line Limited (excluding Seabourn Line Limited), Costa Finance S.A. and Carnival Corporations land based operations. In addition, Carnival plc acquired substantially all of the business assets and certain investment holding companies from P&O Princess Cruises International Limited, its wholly owned subsidiary, in February 2004.
Dividends
During the year ended November 30, 2004, Carnival Corporation and Carnival plc paid four quarterly dividends totalling 50 U.S. cents per ordinary share. During the year ended November 30, 2003, prior to the DLC transaction, Carnival Corporation paid a quarterly dividend of 10.5 U.S. cents per share and Carnival plc paid a quarterly dividend of 10 U.S. cents per ordinary share, as adjusted for the share reorganisation. Following the completion of the DLC transaction, Carnival Corporation and Carnival plc paid three quarterly dividends totalling 33.5 U.S. cents per ordinary share. In October 2004 the boards approved an increase in the quarterly dividend to 15 U.S. cents per share.
Although the dividend is declared in U.S. cents, it is paid in sterling to the holders of ordinary shares in Carnival plc unless they elect to receive their dividends in U.S. dollars. The dividend will be converted into sterling at an exchange rate set approximately 10 days prior to the actual payment.
Holders of the Carnival plcs American Depositary Shares (ADSs) are paid their dividend in U.S. dollars.
On January 21, 2004 The Royal Bank of Scotland Trust Company (Jersey) Limited, the trustee for the P&O Princess Cruises Deferred Bonus and Co-investment Matching Plan (the Plan), retired as trustee of the Plan and Bedell Cristin Trustees Limited was appointed in their stead. Both The Royal Bank of
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Scotland Trust Company (Jersey) Limited and Bedell Cristin Trustees Limited
waived their right to all dividends payable by Carnival plc. The amount waived during the year was £49,054.
Share capital
Changes in Carnival plcs share capital during the year are given in note 18 to the Carnival plc Accounts.
The preference shares of Carnival plc, which have been allotted but not issued, are entitled, in priority to the holders of any other class of shares in Carnival plcs share capital, to a cumulative fixed dividend of 8% per annum. The preference shares carry no voting rights and rank behind the ordinary shares in relation to a winding-up and certain types of return of capital. The Carnival plc subscriber shares have no dividend rights nor voting rights nor any rights to payment of capital upon a distribution of assets by Carnival plc. The preference shares and subscriber shares are unlisted.
Details of options over ordinary shares granted to employees are given in note 21 to the Carnival plc Accounts.
Directors
The names of the persons, who served as directors of Carnival Corporation and Carnival plc during the financial year, and biographical notes about each of the directors, including the period for which they held office during the 2004 financial year, are contained in the proxy statement. Details of the directors membership on board committees are set out in the Carnival plc Corporate Governance Report attached as Annex G to the proxy statement.
Richard Glasier, who was appointed to the boards as a non-executive director since the last Annual General Meeting (AGM), retires from the board at the forthcoming AGM and offers himself for election. Like the other non-executive directors of Carnival Corporation & plc, Mr. Glasier does not have a service contract. All other directors retire at the forthcoming AGM and, being eligible, offer themselves for re-election.
On December 1, 2004, A. Kirk Lanterman became a non-executive director of the boards after becoming non-executive Chairman of Holland America Line, Inc, an indirect wholly-owned subsidiary of Carnival plc.
Details of the directors remuneration and their interests in the shares of Carnival Corporation and Carnival plc are set out in the Carnival plc Directors Remuneration Report attached as Annex E of the proxy statement.
Substantial shareholdings
As at the date of this report, Carnival plc has been notified of the following material interests of 3% or more in Carnival plcs issued ordinary share capital:
No. of shares |
Percentage of issued capital |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
Carnival
Investments Ltd. |
41,679,877 | 19.64% | (1) | |||||||
Fidelity
Investments |
8,504,907 | 4.01% | (2) | |||||||
Legal &
General Group plc |
8,545,069 | 4.03% | (3) |
(1) | These shares carry no voting rights or rights on a liquidation unless Carnival Corporation owns over 90% of all the Carnival plc shares. |
(2) | FMR Corp. and its direct and indirect subsidiaries and Fidelity International Limited and its direct and indirect subsidiaries have a non-beneficial interest in these shares. |
(3) | Legal & General Group plc and/or its subsidiaries have an interest in these shares. |
Save for the above, no person has reported any material interest of 3% or more or any non-material interest exceeding 10% of the issued ordinary share capital of Carnival plc.
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Corporate Governance
A report on corporate governance and compliance with the Combined Code appended to the UK Listing Authoritys Listing Rules is contained in the Carnival plc Corporate Governance Report attached as Annex G to the proxy statement. The Carnival plc Directors Remuneration Report is attached as Annex E to the proxy statement.
Corporate and Social Responsibility
Health, safety and the environment
There are corporate policies for Health & Safety and the Environment that are reviewed annually.
The boards recognise that Carnival Corporation & plc need to ensure there is a consistent standard of operation throughout its fleet in keeping with its leading position in the cruise industry. In this regard, the Carnival Corporation & plc Corporate Maritime Affairs Department, has worked with the operating companies in developing corporate-wide health and safety and security standards in order to provide fleet-wide consistency.
Similarly, in conjunction with the Carnival Corporation & plc Corporate Environmental Compliance Department, appropriate standards are being developed on policy matters regarding environmental issues.
Monitoring of compliance with corporate policies, and corporate standards is maintained by annual audit under the direction of the Carnival Corporation & plc Management Advisory Services Department, which reports to the Audit Committees.
Carnival Corporation & plcs environmental policy is attached as Annex H of the proxy statement.
Employees
Carnival Corporation & plc is comprised of 12 cruise brands in North America, Europe and Australia. Individual brands employ a variety of methods, such as internet sites, newsletters and reward programmes to keep employees informed of the performance, development and progress of Carnival Corporation & plc.
Senior employees within Carnival Corporation & plc are eligible to participate in either the P&O Princess Cruises Executive Option Plan or the Carnival Corporation 2002 Stock Plan, further details of which are provided in the Carnival plc Directors Remuneration Report attached as Annex E of the proxy statement. These schemes reinforce the philosophy of encouraging senior employees to contribute directly to the achievement of Carnival Corporation & plcs goals and of rewarding individual and collective success.
It is the policy of Carnival Corporation & plc that disabled persons should receive full and fair consideration for all job vacancies for which they are suitable applicants and training and career development is encouraged as for all other employees. It is the policy of Carnival Corporation & plc to seek to retain employees who become disabled whilst in its service wherever possible and to provide specialist training where appropriate.
Charitable donations
Carnival Corporation & plc provides support to charities by way of donations in cash and/or gifts in kind. Carnival Corporation has established the Carnival Foundation (the Foundation), which assists it in its commitment to enrich and better the lives of communities where it does business and/or where its employees live and work. The Foundation considers applications for charitable support from individuals and organisations and, according to an assessment of the merits of each application, determines whether it is appropriate to support particular causes or projects. Its primary funding interests include human and social needs, art and culture, health services and education.
During the financial year ended November 30, 2004, the Carnival plc group made charitable donations totalling U.S.$1.0 million (2003 U.S.$0.7 million) of which U.S.$0.8 million (2003 U.S.$0.5 million) was in respect of charitable organisations in the United States. Donations in both years include those by businesses transferred to Carnival plc as part of the corporate restructuring noted above.
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Creditor payment policy
It is Carnival plcs policy that payments to suppliers are made in accordance with those terms and conditions agreed between the company and its suppliers, provided that all trading terms and conditions have been complied with. At November 30, 2004, the company had an average of 14 days purchases outstanding in trade creditors.
Political contributions
Carnival plc did not make any political contributions to any European Union (EU) political organisation during the year ended November 30, 2004 (2003 nil). Carnival plc subsidiaries made political donations to organisations outside the EU of U.S.$0.5 million (2003 U.S.$0.2 million). Contributions in both years include those by businesses transferred to Carnival plc as part of the corporate restructuring noted above.
Auditors
The independent auditors, PricewaterhouseCoopers LLP, have indicated their willingness to continue in office and a resolution that they be re-appointed will be proposed at the Annual General Meeting.
By order of the board
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Statement of directors responsibilities
UK company law requires the directors of Carnival plc to prepare financial statements for each financial year that give a true and fair view of the state of affairs of the Carnival plc group and of the profit or loss of the group for that period.
In preparing those financial statements the directors are required to:
|
Select suitable accounting policies and then apply them consistently; |
|
Make judgements and estimates that are reasonable and prudent; and |
|
State whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements. |
The directors confirm that they have complied with the above requirements in preparing the financial statements.
The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of Carnival plc and the group and to enable them to ensure that the financial statements comply with the Companies Act 1985. They are also responsible for safeguarding the assets of Carnival plc and the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
By order of the board
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Carnival plc UK GAAP Summary Financial Information
The Summary Financial Information does not give all the information needed to gain as full an understanding of the results and state of affairs of the Carnival plc group (being Carnival plc and its subsidiary undertakings) as the full UK Annual Report and Accounts. To receive a free copy of the full UK Annual Report and Accounts which consists of the Proxy Statement (which includes the Directors Report and Directors Remuneration Report), the Carnival Corporation & plc 2004 Annual Report and the Carnival plc 2004 financial statements for this or future years, please contact our registrar, details of which can be found on the inside back cover of the Carnival Corporation & plc 2004 Annual Report. The Carnival plc group standalone financial information excludes the results of Carnival Corporation and is prepared under UK GAAP, whereas the Carnival Corporation & plc financial statements include the results of Carnival Corporation and Carnival plc prepared under U.S. GAAP.
Summarised Group profit and loss account
Twelve months to Nov. 30, 2004 |
Eleven months to Nov. 30, 2003 |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
U.S.$m | U.S.$m Restated (note 1) |
|||||||||
Turnover |
3,901.3 | 4,040.3 | ||||||||
Cost of sales
before exceptional item |
(2,632.3 | ) | (2,918.0 | ) | ||||||
Exceptional
impairment loss |
| (50.0 | ) | |||||||
(2,632.3 | ) | (2,968.0 | ) | |||||||
Administrative expenses before exceptional costs |
(609.0 | ) | (533.7 | ) | ||||||
Exceptional
transaction costs |
| (30.7 | ) | |||||||
(609.0 | ) | (564.4 | ) | |||||||
Operating
costs |
(3,241.3 | ) | (3,532.4 | ) | ||||||
Group
operating profit |
660.0 | 507.9 | ||||||||
Loss on sale
of business |
| (2.7 | ) | |||||||
Profit on
ordinary activities before interest |
660.0 | 505.2 | ||||||||
Net interest
payable and similar items |
(110.3 | ) | (130.2 | ) | ||||||
Profit on
ordinary activities before taxation |
549.7 | 375.0 | ||||||||
Taxation |
(27.6 | ) | (26.2 | ) | ||||||
Profit on
ordinary activities after taxation |
522.1 | 348.8 | ||||||||
Dividends |
(116.5 | ) | (94.2 | ) | ||||||
Retained
profit for the financial period |
405.6 | 254.6 | ||||||||
Carnival
plc standalone earnings per share |
||||||||||
Basic
earnings per share (in U.S. dollars) |
2.47 | 1.67 | ||||||||
Diluted
earnings per share (in U.S. dollars) |
2.46 | 1.66 | ||||||||
Dividend per
share (in U.S. dollars) |
0.55 | 0.46 |
See accompanying notes to the Summary Financial
Information.
Within the DLC structure the most appropriate presentation of Carnival plcs results and financial position is considered to be by reference to the U.S. GAAP consolidated financial statements of Carnival Corporation & plc, which are included within the Carnival Corporation & plc 2004 Annual Report (see note 1). For information, we set out below the U.S. GAAP consolidated earnings per share included within the Carnival Corporation & plc consolidated financial statements for the twelve month periods ended November 30, 2004 and 2003:
DLC Basic
earnings per share (in U.S. dollars) |
2004: 2.31 |