Attached files
file | filename |
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10-K - FORM 10-K - Towers Watson & Co. | w84175e10vk.htm |
EX-31.1 - EX-31.1 - Towers Watson & Co. | w84175exv31w1.htm |
EX-32.1 - EX-32.1 - Towers Watson & Co. | w84175exv32w1.htm |
EX-31.2 - EX-31.2 - Towers Watson & Co. | w84175exv31w2.htm |
EX-21.1 - EX-21.1 - Towers Watson & Co. | w84175exv21w1.htm |
EX-23.1 - EX-23.1 - Towers Watson & Co. | w84175exv23w1.htm |
Exhibit 10.20
WATSON WYATT & COMPANY HOLDINGS
INCENTIVE COMPENSATION PLAN
INCENTIVE COMPENSATION PLAN
Watson Wyatt & Company Holdings (the Company), a Delaware corporation,
hereby establishes and adopts the following Incentive Compensation Plan (the Plan)
to provide incentive awards that are intended to qualify as performance-based
compensation within the meaning of Section 162(m) of the Internal Revenue Code of
1986, as amended.
1. PURPOSES OF THE PLAN
The purposes of the Plan are to provide incentive and financial rewards to executive
officers of the Company and its Affiliates who, because of the extent of their
responsibilities, can make significant contributions to the Companys success by their
ability, industry, loyalty and exceptional services.
2. DEFINITIONS
Affiliate shall mean any corporation, partnership or other organization of which the
Company owns or controls, directly or indirectly, not less than 50% of the total
combined voting power of all classes of stock or other equity interests.
Award shall mean any amount granted to a Participant under the Plan.
Board shall mean the board of directors of the Company.
Certification shall have the meaning set forth in Section 4.2.
Code shall mean the Internal Revenue Code of 1986 of the United States of America,
as amended from time to time, and any successor thereto.
Committee shall mean the Compensation Committee of the Board or any subcommittee
thereof formed by the Compensation Committee for the purpose of acting as the
Committee hereunder. For purposes of satisfying the requirements of Section 162(m) of
the Code and the regulations thereunder, the Committee is intended to consist solely
of outside directors as such term is defined in Section 162(m) of the Code.
Disability means any physical or mental condition of a Participant that in the
opinion of the Committee renders the Participant incapable of continuing to be an
employee of the Company and its Affiliates.
Maximum Incentive Award shall mean a payment in an amount equal to 2.5%, in the case
of the Companys Chief Executive Officer and any other Participant who is a member of
the Board, or 1.5%, in the case of each other Participant, of the Companys Net Income
for a given Performance Period.
Net Income shall mean the Companys after-tax income on a consolidated basis as
reported in the Companys income statement for the applicable Performance Period,
prior to accrual of any amounts for payment under this Plan for the Performance
Period, adjusted to eliminate the effects of charges for restructurings, discontinued
operations, extraordinary items and all items of gain, loss or expense determined to
be extraordinary or unusual in nature or infrequent in occurrence or related to the
disposal of a segment of a business or related to a change in accounting principle all
as determined in accordance with standards established by opinion No. 30 of the
Accounting Principles Board (APB Opinion No. 30) or other applicable or successor
accounting provisions, as well as the cumulative effect of accounting changes, in each
case as determined in accordance with generally accepted accounting principles or
identified in the Companys financial statements or notes to the financial statements.
Participant shall mean each executive officer of the Company who is employed by the
Company or an Affiliate as of the last day of a Performance Period.
Performance Period shall mean the Companys fiscal year or such other period that
the Committee, in its sole discretion, may establish, provided any such Performance
Period shall not be less than one year or more than five years in length.
3. ELIGIBILITY AND ADMINISTRATION
3.1. Eligibility. The individuals eligible to participate in the Plan shall be
the Companys Chief Executive Officer and any other executive officer of the Company
or an Affiliate selected by the Committee to participate in the Plan (each, a
Participant).
3.2. Administration.
(a) The Plan shall be administered by the Committee. The Committee shall have
full power and authority, subject to the provisions of the Plan and subject to
such orders or resolutions not inconsistent with the provisions of the Plan as
may from time to time be adopted by the Board, to: (i) select the Participants
to whom Awards may from time to time be paid hereunder; (ii) determine the
terms and conditions, not inconsistent with the provisions of the Plan, of each
Award; (iii) determine the time when Awards will be granted and paid and the
Performance Period to which they relate; (iv) affirm the formula for
determining the Maximum Incentive Award payable for each Participant in respect
of Performance Periods and certify as to the calculation of Net Income and the
amount of the Maximum Incentive Award payable for each Participant in respect
of Performance Periods; (v) determine whether payment of Incentive Awards may
be deferred by Participants as provided in Section 4.3; (vi) interpret and
administer the Plan and any instrument or agreement entered into in connection
with the Plan; (vii) correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Award in the manner and to the extent that the
Committee shall deem desirable to carry it into effect; (viii) establish such
rules and regulations and appoint such agents as it shall deem appropriate for
the proper administration of the Plan; and (ix) make any other determination
and take any other action that the Committee deems necessary or desirable for
administration of the Plan.
(b) Decisions of the Committee shall be final, conclusive and binding on all
persons or entities, including the Company, any Affiliate, any Participant and
any person claiming any benefit or right under an Award or under the Plan.
(c) To the extent not inconsistent with applicable law or the rules and
regulations of the New York Stock Exchange, any other national securities
exchange or the NASDAQ National Market on which the Companys securities are
listed or qualified for trading, including the applicable provisions of Section
162(m) of the Code, the Committee may delegate to one or more officers of the
Company or a committee of officers the authority to take actions on its behalf
pursuant to the Plan.
4. AWARDS
4.1. Performance Period. Not later than the earlier of (i) 90 days after the
commencement of each fiscal year of the Company and (ii) the expiration of 25% of the
Performance Period, the Committee shall, in writing, designate one or more Performance
Periods and shall affirm the applicability of the Plans formula for determining the
Maximum Incentive Award for each Participant for such Performance Period(s).
4.2. Certification. At such time as it shall determine appropriate following the
conclusion of each Performance Period, the Committee shall certify, in writing, the
amount of the Maximum Incentive Award for each Participant for such Performance Period
(the Certification).
4.3. Payment of Awards. The selection of Participants to whom Awards shall
actually be paid and the amount of the Award actually paid to a Participant shall be
such amount as determined by the Committee in its sole discretion, including zero,
provided that the actual Award shall not exceed the Maximum Incentive Award with
respect to such Participant. The actual amount of the Award determined by the
Committee for a Performance Period shall be paid in cash or, to the extent provided in
such plan, share awards under a shareholder-approved stock plan of the Company to each
Participant at such time as determined by the Committee in its sole discretion
following the end of the applicable Performance Period, and may be deferred under a
program or plan approved by the Committee subject to the terms and conditions of such
program or plan.
4.4. Commencement or Termination of Employment. If a Participant obtains such
status during a Performance Period (whether through promotion or commencement of
employment) or if a person who otherwise would have been a Participant dies, retires
or is Disabled, or if the persons employment is otherwise terminated, during a
Performance Period (except for cause, as determined by the Committee in its sole
discretion), the Award payable to such a Participant may, in the discretion of the
Committee, be proportionately reduced based on the period of actual employment during
the applicable Performance Period.
5. MISCELLANEOUS
5.1. Amendment and Termination of the Plan. The Board may, from time to time,
alter, amend, suspend or terminate the Plan as it shall deem advisable, subject to any
requirement for stockholder approval imposed by applicable law, including Section
162(m) of the Code. No amendments to, or termination of, the Plan shall in any way
impair the rights of a Participant under any Award previously granted without such
Participants consent.
5.2. Section 162(m) of the Code. Unless otherwise determined by the Committee,
the provisions of this Plan shall be administered and interpreted in accordance with
Section 162(m) of the Code to ensure the deductibility by the Company of the payment
of Awards. Subject to shareholder approval of the Plan, the failure of any aspect of
the Plan to satisfy Section 162(m) shall not void any action taken by the Committee
under the Plan.
5.3. Tax Withholding. The Company or an Affiliate shall have the right to make
all payments or distributions pursuant to the Plan to a Participant, net of any
applicable federal, state and local taxes required to be paid or withheld. The Company
or an Affiliate shall have the right to withhold from wages, Awards or other amounts
otherwise payable to such Participant such withholding taxes as may be required by
law, or to otherwise require the Participant to pay such withholding taxes. If the
Participant shall fail to make such tax payments as are required, the Company or an
Affiliate shall, to the extent permitted by law, have the right to deduct any such
taxes from any payment of any kind otherwise due to such Participant or to take such
other action as may be necessary to satisfy such withholding obligations.
5.4. Right of Discharge Reserved; Claims to Awards. Absent action by the
Committee, nothing in this Plan shall provide any Participant a right to receive any
Award or payment under the Plan with respect to a Performance Period. Nothing in the
Plan nor the grant of an Award hereunder shall confer upon any Participant the right
to continue in the employment of the Company or an Affiliate or affect any right that
the Company or an Affiliate may have to terminate the employment of (or to demote or
to exclude from future Awards under the Plan) any such Participant at any time for any
reason. Except as specifically provided by the Committee, the Company shall not be
liable for the loss of existing or potential profit from an Award granted in the event
of the termination of employment of any Participant. No Participant shall have any
claim to be granted any Award under the Plan, and there is no obligation for
uniformity of treatment of Participants under the Plan.
5.5. Nature of Payments. All Awards made pursuant to the Plan are in
consideration of services performed or to be performed for the Company or an
Affiliate, division or business unit of the Company. Any income or gain realized
pursuant to Awards under the Plan constitute a special incentive payment to the
Participant and shall not be taken into account, to the extent permissible under
applicable law, as compensation for purposes of any of the employee benefit plans of
the Company or an Affiliate except as may be determined by the Committee or by the
Board or board of directors of the applicable Affiliate.
5.6. Other Plans. Nothing contained in the Plan shall prevent the Board from
adopting other or additional compensation arrangements, subject to stockholder
approval if such approval is required; and such arrangements may be either generally
applicable or applicable only in specific cases.
5.7. Severability. If any provision of the Plan shall be held unlawful or
otherwise invalid or unenforceable in whole or in part by a court of competent
jurisdiction, such provision shall (a) be deemed limited to the extent that such court
of competent jurisdiction deems it lawful, valid and/or enforceable and as so limited
shall remain in full force and effect, and (b) not affect any other provision of the
Plan or part thereof, each of which shall remain in full force and effect. If the
making of any payment or the provision of any other benefit required under the Plan
shall be held unlawful or otherwise invalid or unenforceable by a court of competent
jurisdiction, such unlawfulness, invalidity or unenforceability shall not prevent any
other payment or benefit from being made or provided under the Plan, and if the making
of any payment in full or the provision of any other benefit required
under the Plan in full would be unlawful or otherwise invalid or unenforceable,
then such unlawfulness, invalidity or unenforceability shall not prevent such payment
or benefit from being made or provided in part, to the extent that it would not be
unlawful, invalid or unenforceable, and the maximum payment or benefit that would not
be unlawful, invalid or unenforceable shall be made or provided under the Plan.
5.8. Construction. As used in the Plan, the words include and including, and
variations thereof, shall not be deemed to be terms of limitation, but rather shall be
deemed to be followed by the words without limitation.
5.9. Unfunded Status of the Plan. The Plan is intended to constitute an
unfunded plan for incentive compensation and deferred compensation if permitted by
the Committee. With respect to any payments not yet made to a Participant by the
Company, nothing contained herein shall give any such Participant any rights that are
greater than those of a general creditor of the Company.
5.10. Governing Law. The Plan and all determinations made and actions taken
thereunder, to the extent not otherwise governed by the Code or the laws of the United
States, shall be governed by the laws of the State of Delaware, without reference to
principles of conflict of laws that might result in the application of the laws of
another jurisdiction, and shall be construed accordingly.
5.11. Resolution of Disputes. In the event a Participant or person claiming a
right under an Award or the Plan believes that a decision by the Committee with
respect to such person or Award was arbitrary or capricious, the person may request
arbitration with respect to such decision. The review by the arbitrator shall be
limited to determining whether the Participant or other person has proven that the
Committees decision was arbitrary or capricious. This arbitration shall be the sole
and exclusive review permitted of the Committees decision. Participants and persons
claiming rights under an Award or the Plan explicitly waive any right to judicial
review. Notice of demand for arbitration shall be made in writing to the Committee
within thirty (30) days after the applicable decision by the Committee. The arbitrator
shall be selected by those members of the Board of Directors who are neither members
of the Compensation Committee of the Board of Directors nor employees of the Company
or any Affiliate. If there are no such members of the Board of Directors, the
arbitrator shall be selected by the Board of Directors. Such arbitrator shall be
neutral within the meaning of the Commercial Rules of Dispute Resolution of the
American Arbitration Association; provided, however, that the arbitration shall not be
administered by the American Arbitration Association. Any challenge to the neutrality
of the arbitrator shall be resolved by the arbitrator whose decision shall be final
and conclusive. The arbitration shall be administered and conducted by the arbitrator
pursuant to the Commercial Rules of Dispute Resolution of the American Arbitration
Association. Each side shall bear its own fees and expenses, including its own
attorneys fees, and each side shall bear one half of the arbitrators fees and
expenses. The decision of the arbitrator on the issue(s) presented for arbitration
shall be final and conclusive and may be enforced in any court of competent
jurisdiction.
5.12. Effective Date of Plan. The Plan shall be effective on the date of the
approval of the Plan by the holders of the then outstanding securities of the Company
entitled to vote generally in the election of directors. The Plan shall be null and
void and of no effect if the foregoing condition is not fulfilled.
5.13. Captions. The captions in the Plan are for convenience of reference only,
and are not intended to narrow, limit or affect the substance or interpretation of the
provisions contained herein.