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J o n e s   L a n g   L a S a l l e   I n c o r p o r a t e d

 
EXHIBIT 10.23
 
LaSalle Investment Management Long-Term Incentive
Compensation Program
Terms and Conditions

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Amended and Restated as of December 15, 2004

I. Introduction:
The LaSalle Investment Management Long-Term Incentive Compensation Program (the
"Plan") is designed to provide certain LaSalle Investment Management ("LIM")
executives ("Participants") an opportunity to further align their interests with
those of the Jones Lang LaSalle Incorporated (the "Company") shareholders as
well as to retain the Participants at the Company. The Plan provides incentives
for the growth of LIM's core advisory revenues and margins, as well as
incentives for attaining its performance/incentive fee projections. The Plan is
designed with the flexibility to add additional Participants over time.

II. Terms:
 
Performance
The Plan is comprised of two components:
Measurement:    
1) Modified Cash Flow ("MCF")  
 
This component of the Plan is designed to recognize the value added the Company
receives from LIM's entire business, including performance/incentive fees. MCF
is defined as Pre-Global Operating Income less amortization and equity earnings.
MCF is the metric by which the Plan's payouts are determined.
     
2) Modified Base Cash Flow ("MBCF")
 
This component of the Plan is designed to recognize the value added the Company
receives from enhancing LIM's core advisory revenues and the resulting margins.
MBCF is defined as MCF less incentive fees net of any related team incentive
bonus. The MBCF is the metric by which the Plan's hurdles are measured, as
described below.
     
Additional matters to be taken into account are as follows:
 
 
·
Regarding control of overhead allocations (those which are outside LIM's span of
control), annually during budget season a reasonable and fair allocation to LIM
will be agreed upon based on all known facts, events and plans anticipated for
the respective year.
 
·
LIM will develop a list of existing incentive fee structures and forecasted
payouts, and will update this list as required during the term of the Plan.
       
Performance Payouts:
Payouts will be determined on a calendar year basis. In order to earn a payout
under the Plan (the "Earned Payout"), both a MBCF margin and a MBCF Compound
Annual Growth Rate ("CAGR"), using 2002 as the base year, must be met
(collectively, "MBCF Hurdles"). In the event that both of the MBCF Hurdles are
not met, the Earned Payout will be determined on the next lowest level for which
both are met.

 

 
Outlined below are the Plan's escalating hurdles and payouts:  
 
Hurdle
MBCF Margin
MBCF CAGR
Payout
             
i.
7.5% or >
&
> 12.5%
10% of MCF > 12.5% MBCF CAGR
             
ii.
10% or >
&
> 15%
15% of MCF > 15% MBCF CAGR
             
iii.
12.5% or >
&
> 17.5%
17.5% of MCF > 17.5% MBCF CAGR
             
iv.
15% or >
&
> 20%
20% of MCF > 20% MBCF CAGR
             
If LIM exceeds the MBCF Hurdles for a given year, the Participants would be
allocated a percentage of the current year net amount of MCF above the
respective MBCF CAGR.  

 

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J o n e s   L a n g   L a S a l l e   I n c o r p o r a t e d

 
Payout Provisions:
·
The Plan's base MBCF for 2002 will equal $5.5 million for purposes of making
calculations.
 
·
Earned Payouts will be calculated annually and be paid: (1) 50% in cash (50% at
the same time that bonus payments are made for the prior year and the remaining
50% twelve months thereafter) and (2) 50% in restricted shares granted as of
January 1 following the year they were earned (50% of which will vest 24 months
from the date of grant and the remaining 50% of which will vest 36 months from
the date of grant).
 
·
Participants must be employed by the Company to receive payment for any unvested
cash or restricted shares, subject to ‘Retirement and Death/Disability'
provisions below.
 
·
The Company reserves the right to substitute cash for restricted shares at its
sole discretion.
 
 
 
Vesting:
 
   
 
 
Change
in Control
·
Vesting and distribution of all unvested cash and restricted shares occurs
immediately if a sale or change in control occurs, as determined by the
Compensation Committee of the Board of Directors.
 
·
In the event of a change of control of LIM or the Company and the Participants
are subsequently required to take a significant change in responsibility or
reduction in compensation, Participants may choose to be treated as terminated
without cause.
 
 
   
 
 
Termination
·
Participants forfeit unvested cash and restricted shares if terminated with
cause, including documented poor performance.
 
·
Accelerated vesting, with distributions in accordance with the Payout Provisions
above, for unvested cash and restricted shares occurs if terminated without
cause, with the balance treated consistent with the terms of ‘Retirement and
Death/Disability'.
 
·
Participants forfeit unvested cash and restricted shares if Participant elects
to leave company on own accord, but not for retirement reasons.
 
 
   
 
 
Retirement and
Death/Disability
·
For retirement prior to age 58, if approved by the Company CEO in his sole
discretion,accelerated vesting occurs for all of a Participant's unvested cash
and restricted shares upon retirement , with payment or distribution in
accordance with the Payout Provisions above, and no further benefits accrue. The
factors that will be considered by the Company CEO in approving a retirement
prior to age 58 will include, but not be limited to, age, tenure with the
Company, position with the Company and plans for employment, if any, after
retirement.For death or total disability at any age or retirement at age 58 or
later, but prior to the end of the Plan term, accelerated vesting occurs for all
of a Participant's unvested cash and restricted shares with payment or
distribution in accordance with the Payout Provisions above and for Earned
Payouts determined post retirement, death, or total disability, a Senior
Participant's points will be reduced each year by 20% for the next three years.
Payment entitlements do not extend beyond three years (i.e.- points will equal
80% for the first year of retirement, 60% for the second year, 40% for the third
year and 0% thereafter).

 

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J o n e s   L a n g   L a S a l l e   I n c o r p o r a t e d

 

 
·
For retirement at age 58 or later or death or total disability at any age and
after the end of the Plan term, accelerated vesting occurs for all of a
Participant's unvested cash and restricted shares with payment or distribution
in accordance with the Payout Provisions above.
 
 
   
 
 
Forfeitures:
·
All forfeited points will be reallocated to the Reserve Pool, as defined under
‘Allocation Methodology'. All forfeited cash and restricted shares will be
reallocated to Participants in the relevant Earned Payout on a prorata basis
based on each Participant's specified points as a percent of the total.
 
 
   
 
 
Term:
·
The Plan will be effective through the calendar year 2007.
 
·
It is anticipated that a subsequent long-term plan would follow this Plan
period, and such a plan would be revised for market competitive compensation,
eligible participants, and business forecasts at that time.
 
 
   
 
 
Allocation Methodology:
 
   
 
 
Points
·
A total of 100 points will be allocated out of the Plan
 
·
Initial permanent allocation of 60 points to create a pool that is allocated
across eight initial senior Participants ("Senior Participants"), which cannot
be reduced during the life of the Plan.
 
·
Not more than 35 of the remaining 40 points ("Reserve Pool") may be allocated
to:
 
 
1.
current employees who are selected to become Senior Participants given the
strength of their contributions to the growth of LIM;
 
 
2.
new hires who become Senior Participants; or
 
 
3.
increase point allocations to individuals who are part of the initial group of
Senior Participants, as appropriate, based on the value of the ongoing
contribution made by the individual.
 
·
LIM's CEO shall ensure that reasonable efforts are taken to identify new Senior
Participants for grants out of the Reserve Pool, by either promoting from within
or hiring from the outside, as appropriate to maximize the prospects of
achieving LIM's growth opportunities.
       
 
 
Earned Payouts
·
Annual allocation of the first $20 million of the Earned Payout funds during
life of the Plan:
 
 
1.
First, to the Senior Participants according to their allocated points;
 
 
2.
Second, at least 5 points but no more than the balance of points not permanently
allocated to Senior Participants will be allocated to Key Employees;

 

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J o n e s   L a n g   L a S a l l e   I n c o r p o r a t e d

 
 

 
·
The remaining Earned Payout funds will be distributed across the Senior
Participants by:
 
 
1.
allocating 33% of any remaining amount on a pro-rata basis based on each Senior
Participant's specified points as a percent of the total;
 
 
2.
allocating 67% to the Senior Participants based on the LIM CEO's
objective/subjective assessment of each person's relative contribution to the
success of LIM.
 
§
If a payout equals more than $20 million during a single year, LIM's CEO may
elect to pay some portion or all of the amount over $20 million to other LIM
employees who are viewed as future leaders of the business ("Key Employees"),
subject to the approval of the Company's CEO. Any amount over $20 million not
used for this purpose will be allocated in accordance with the Earned Payout
allocation procedure above.
 
·
All Senior Participant changes, either Participants and/or points, will be at
the recommendation of LIM's CEO as agreed to by the Company CEO. Any
recommendations not agreed to between the LIM CEO and Company CEO may be brought
to the Compensation Committee of the Board of Directors for review.
 
·
All recommendations related to the annual distribution will be made by LIM's CEO
and submitted to the Company's CEO for final approval.
 
 
   
 
 
"Zero Sum" Rule:
·
LIM will not receive credit nor be penalized for margin gained from the transfer
of existing products and services from affiliates within the Company.
 
·
To the extent LIM is able to improve margins related to products and services
transferred to it from Company affiliated businesses, this margin enhancement
would be included as part of the payment calculation. Each transfer, and the
related base case margin impact on LIM's business, will be reviewed in advance
by senior management within both the Company and LIM, and subsequently
documented to guide future calculations related to realized margin enhancement
activities.
 
·
The Company acknowledges the Plan is a long-term compensation plan unique to the
Participants of LIM in recognition of the competitive marketplace for the skills
of Senior Participants. Participants also acknowledge that the goal of the plan
is to accelerate the contribution of the business to the overall success of the
Company, and therefore contribute to the success of the "One Firm Firm". In this
regard, the Company recognizes that LIM, while acting in the best interests of
its clients, must be able to select those service firms that LIM management
believes are best capable in the marketplace of providing the various real
estate property management, advisory and transactional services needed to create
value for their clients, taking into account skills and capabilities, market
costs and their ability to provide investment and leasing opportunities.
Therefore, subject to the provisions above, should LIM not support the Company's
overall mission, the Company's CEO will have the discretion to hold back up to
20% of the Earned Payout due to a Participant(s) in any given year. This hold
back amount can subsequently be released if there is satisfactory resolution of
the issue. The CEO of LIM may appeal to the Compensation Committee of the Board
of Directors any decision by the Company CEO to hold back any Earned Payout. The
CEO of LIM will contact the Company CEO quarterly and inquire if there are any
unresolved issues. Regardless, the Company CEO will notify the CEO of LIM in a
timely fashion if any matters come to his attention that could have an impact on
this provision.
 
 
 

 

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J o n e s   L a n g   L a S a l l e   I n c o r p o r a t e d

 
 
Eligibility:
·
LIM designated executives, who will participate based on point allocations.
 
·
Senior Participants in this plan are not eligible for other long-term plans
without the approval of the Company's CEO.
 
·
Senior Participants will be eligible for the International Director
Co-Investment Long Term Incentive Plan for the 2002 plan year, but participation
in plan years thereafter shall be determined in accordance with the terms of
that plan.
 
·
Senior Participants will not be eligible to receive Company financing for
investing into LIM funds (existing financing would stay in place), except as may
be required by a client of LIM, authorized by applicable law and approved by the
Company CEO.
 
 
 
Administration:
·
Performance calculations managed through the Company's Global Finance Group.
       
Interpretation:
This Plan shall be interpreted by the Compensation Committee of the Board of
Directors and such interpretations shall be final. Any matters upon which the
LIM CEO and Company CEO fail to reach agreement may be referred to the
Compensation Committee of the Board of Directors for resolution.

 
Loans:
Not permitted.  
Amendments:
It is the intent of both the Senior Participants and the Company that the Plan
not be amended during its term. However, both acknowledge that at some point
during its term it may be necessary to amend the Plan in order to maintain its
original objectives. An amendment to the Plan may be proposed by either the
Senior Participants (provided they all agree to the proposal) or the Company by
presenting it to the other party. Should the Company and the Senior Participants
come to an agreement on the Amendment, the amendment shall be presented to the
Compensation Committee for review and approval. In the event they are unable to
come to an agreement on an amendment, the issue shall be presented to the
Compensation Committee for resolution. Approval of the Compensation Committee of
Board of Directors is required for any amendment.

December 15, 2004
 

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