Exhibit 10.1

 

WADDELL & REED FINANCIAL, INC.

 

2003 EXECUTIVE INCENTIVE PLAN

As Amended and Restated

 

Effective January 1, 2008

 

1.                                      Purposes

 

The purposes of the Plan are to advance the interests of stockholders of the
Company by providing performance-based incentives to eligible Participants and
to enable the Company and its Subsidiaries to attract, retain, motivate and
reward the best qualified executive officers and key employees by providing them
with the opportunity to earn competitive compensation directly linked to the
Company’s performance. The Plan is designed to assure that amounts paid to
certain executive officers and employees of the Company will not fail to be
deductible by the Company for Federal income tax purposes because of the
limitations imposed by Section 162(m). With respect to individuals who are
Covered Employees, the Plan is intended to provide “qualified performance based
compensation,” as such term is defined in Treas. Reg. Section 1.162-27(e), to
the extent deemed appropriate by the Committee at the time Performance Goals are
established for a Performance Period. Nothing herein shall be construed as
preventing the Plan from providing both “qualified performance-based
compensation” and nonqualified compensation for the same Performance Period in
the manner permitted under Section 162(m). The Plan shall be administered and
construed in a manner consistent with Section 162(m) and regulations thereunder
for any Performance Period in which the Plan is intended to provide “qualified
performance based compensation.”

 

2.                                      Definitions

 

                Unless the context requires otherwise, the following words as
used in the Plan shall have the meanings ascribed to each below, it being
understood that masculine, feminine, and neuter pronouns are interchangeable and
that each comprehends the others.

 

(a)           “Board” means the Board of Directors of the Company.

 

(b)           “Committee” means the Compensation Committee of the Board (or such
other committee of the Board that the Board shall designate from time to time)
or any subcommittee thereof comprised of two or more directors each of whom is
an “outside director” within the meaning of Section 162(m).

 

(c)           “Company” means Waddell & Reed Financial, Inc.

 

(d)           “Covered Employee” means (i) the chief executive officer of the
Company, and (ii) a person designated by the Committee, at the time that
Performance Goals are established, who the Committee believes is likely to be a
“covered employee” (within the meaning of Section 162(m)(3)) with respect to the
Fiscal Year during which the Incentive Plan Award is granted or in the
foreseeable future.

 

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(e)           “Fiscal Year” means the twelve month period beginning on each
January 1 and ending on the following December 31.

 

(f)            “Incentive Percentage” means the pre-established award formula
established by the Committee which specifies a percentage of a pool of funds, as
determined by the Committee, to be paid as an Incentive Plan Award.

 

(g)           “Incentive Plan Award” means the annual incentive compensation
award granted under the Plan, which is contingent and based upon the attainment
of the Performance Goals with respect to a Performance Period.

 

(h)           “Participant” means (i) each executive officer of the Company, and
(ii) each other individual employee or member of a class of employees of the
Company or a Subsidiary who the Committee designates as a participant under the
Plan.

 

(i)            “Performance Goals” means the pre-established objective
performance goals established by the Committee for each Performance Period.

 

(j)            “Performance Period” means the Fiscal Year or such shorter period
as shall be established with respect to a Participant by the Committee.

 

(k)           “Plan” means the Waddell & Reed Financial, Inc. 2003 Executive
Incentive Plan, as Amended and Restated, as set forth herein and as may be
amended, modified or supplemented from time to time.

 

(l)            “Section 162(m)” means Section 162(m) of the Internal Revenue
Code of 1986, as amended, and any regulations promulgated thereunder (including
any proposed regulations).

 

(m)          “Stock” means the Company’s Class A common stock, $0.01 par value.

 

(n)           “Subsidiary” means any entity of which the Company owns, directly
or indirectly, equity representing more than 50% of the voting power of all
classes of equity entitled to vote.

 

3.                                      Administration

 

(a)           Plan Administrator.  The Plan shall be administered by the
Committee, except as may be delegated pursuant to Section 3(b).  The Committee
shall act pursuant to a majority vote at a meeting at which quorum, as defined
by the Committee Charter, is present or by unanimous written consent. The
Committee may employ such legal counsel, consultants, and agents (including
counsel or agents who are employees of the Company or a Subsidiary) as it may
deem desirable for the administration of the Plan and may rely upon any opinion
received from any such counsel, consultant, or agent and any computation
received from such consultant or agent. All expenses incurred in the
administration of the Plan, including, without limitation, for the engagement of
any counsel, consultant, or agent shall be paid by the Company.

 

(b)           Authority of the Committee.  Subject to the provisions of the
Plan, the Committee shall have full discretionary authority to administer and
interpret the Plan, to exercise all powers either specifically granted to it
under the Plan or as are necessary or advisable in the

 

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administration of the Plan, to prescribe, amend and rescind rules and
regulations relating to the Plan, and to make all other determinations necessary
or advisable for the administration of the Plan; provided that, in no event,
shall the Plan be interpreted in a manner which would cause any amount payable
under the Plan to any Covered Employee to fail to qualify as performance based
compensation under Section 162(m) to the extent the Committee intends
compensation to so qualify. The Committee may delegate its responsibilities for
administering the Plan to one or more persons as the Committee deems necessary.
However, the Committee may not delegate its responsibilities under the Plan
relating to any Covered Employee where such delegation is prohibited under
Section 162(m) pertaining to “qualified performance based compensation.”

 

(c)           Effect of Committee Determinations.  Any determination made by the
Committee under the Plan shall be final and conclusive on all persons, including
the Company, the Participants (or any person claiming any rights under the Plan
from or through any Participant), and any stockholder of the Company, but shall
be based on such objective information or financial data as is relevant to the
Performance Goal(s).  No member or former member of the Board or the Committee
shall be liable for any act, omission, interpretation, construction, or
determination made in connection with the Plan other than as a result of such
individual’s willful misconduct.

 

4.                                      Participation

 

(a)           General Participation.  For any Performance Period, the Committee
shall determine which of such executive officers and other individual employees
or class of employees shall participate in the Plan.

 

(b)           Participation by Covered Employees.  For any Performance Period
for which “qualified performance-based compensation” is to be provided, the
Committee shall designate the individual or classes of Covered Employees to whom
such compensation shall be paid no later than 90 days (or, for Performance
Periods of less than one year, the passage of 25% of the Performance Period)
after the beginning of any Performance Period.

 

5.                                      Incentive Plan Awards

 

The Committee shall establish the Incentive Percentages and Performance Goals
for any Performance Period in accordance with Section 5 and certify whether such
goals have been obtained.

 

(a)           Performance Goals. On or before the passage of 25% of any
Performance Period (or such other date as may be required or permitted under
Section 162(m)), the Committee shall establish the Performance Goals that must
be satisfied in order for a Participant to receive an Incentive Plan Award for
such Performance Period.  Solely with respect to Covered Employees, for any
Performance Period for which the Plan is intended to provide “qualified
performance-based compensation,” Performance Goals applicable to the Covered
Employees must be established by the Committee no later than 90 days (or, for
Performance Periods of less than one year, the passage of 25% of the Performance
Period) after the beginning of any Performance Period applicable to the relevant
award, and the attainment of such Performance Goal must be substantially
uncertain, for purposes of Section 162(m), at the time such Performance Goals
are established.

 

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(1)           Performance Goal Criteria.  One or more of the following business
criteria (including or excluding extraordinary and/or non-recurring items to be
determined by the Committee in advance) for the Company, on a consolidated
basis, and/or for specified subsidiaries or business or geographical units of
the Company (except with respect to the total shareholder return and earnings
per share criteria), shall be used by the Committee in establishing Performance
Goals for awards:  (i) earnings per share; (ii) increase in revenues;
(iii) increase in cash flow; (iv) increase in cash flow return; (v) return on
net assets; (vi) return on assets; (vii) return on investment; (viii) return on
capital; (ix) return on equity; (x) economic value added; (xi) operating margin;
(xii) contribution margin; (xiii) net income; (xiv) pre-tax earnings; (xv)
pre-tax earnings before interest, depreciation and amortization; (xvi) pre-tax
operating earnings after interest expense and before incentives, service fees,
and extraordinary or special items; (xvii) operating income; (xviii) total
stockholder return; (xix) debt reduction; and (xx) any of the above goals
determined on an absolute or relative basis, or as adjusted in any manner which
may be determined in the discretion of the Committee, or as compared to the
performance of a published or special index deemed applicable by the Committee
including, but not limited to, the Standard & Poor’s 500 Stock Index or a group
of competitor companies.

 

(b)           Incentive Percentage.  On or before the passage of 25% of any
Performance Period (or such other date as may be required or permitted under
Section 162(m)), the Committee shall establish the Incentive Percentage
applicable to a Participant’s Incentive Plan Award for such Performance Period. 
The Committee may establish different Incentive Percentages for individual
Participants or different classes of Participants, and/or, if applicable, the
achievement levels of the Performance Goals. Solely with respect to Covered
Employees, for any Performance Period for which the Plan is intended to provide
“qualified performance based compensation,” the Incentive Percentages applicable
to the Covered Employees must be established by the Committee no later than 90
days (or, for Performance Periods of less than one year, the passage of 25% of
the Performance Period) after the beginning of the Performance Period for which
the Incentive Plan Award pertains.

 

(c)           Certification and Maximum Amount Payable. The Committee shall,
promptly after the date on which the necessary financial, individual or other
information for a particular Performance Period becomes available, certify
(i) whether, or the degree to which, if applicable, each of the Performance
Goals has been attained; and (ii) with respect to each qualifying Participant,
the amount of the Incentive Plan Award, if any, payable to such Participant.  If
the Committee certifies in writing that any of the Performance Goals established
for the relevant Performance Period under Section 5(a) have been satisfied, each
Participant who is employed by the Company or one of its Subsidiaries on the
last day of the Fiscal Year related to the Performance Period for which the
Incentive Plan Award is payable shall receive the Incentive Plan Award. The
Incentive Plan Award shall be determined by multiplying the Incentive Percentage
applicable to the Participant by the dollar amount of the pool of funds
available with respect to the Performance Period to which the Incentive Plan
Award pertains. In no event, however, will a Covered Employee be paid
compensation pursuant to an Incentive Plan Award

 

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in excess of $7,500,000 with respect to any Fiscal Year.  Any Incentive Plan
Award that is paid, in whole or in part, in either options to purchase Stock or
in shares of Stock that will be subject to certain restrictions and/or a risk of
forfeiture, as described in Section 6 below, will be valued, for purposes of
determining whether this $7,500,000 per person limitation has been exceeded, by
multiplying the number of shares of Stock subject to such option or restricted
Stock award by the closing price of a share of Stock on the date the Incentive
Plan Award is settled (i.e., the date that the options to purchase Stock or
restricted shares of Stock are granted to the Covered Employee).

 

(d)           Eligibility.  To be eligible for payment of any Incentive Plan
Award, the Participant must (i) have performed the Participant’s duties to the
satisfaction of the Committee, (ii) have not engaged in any act deemed by the
Committee to be contrary to the best interests of the Company, and
(iii) otherwise complied with Company policies at all times prior to the date
the Incentive Plan Award is actually paid.  No Incentive Plan Award shall be
paid to any Participant who does not satisfy each of the above.

 

(e)           Termination of Employment.  If a Participant’s employment
terminates due to death, disability or a change of control of the Company and
such termination occurs prior to the last day of the Fiscal Year an Incentive
Plan Award is payable, such Participant may, in the discretion of the Committee,
receive an Incentive Plan Award equal to the maximum Incentive Plan Award
payable to such Participant multiplied by a fraction, the numerator of which is
the number of days that have elapsed during the Performance Period in which the
termination occurs prior to and including the date of the Participant’s
termination of employment and the denominator of which is the total number of
days in the Performance Period.

 

(f)            Negative Discretion. Notwithstanding any provision in this
Section 5 to the contrary, the Committee shall have the right, in its absolute
discretion, (i) to reduce or eliminate the amount otherwise payable to any
Participant under Section 5 based on individual performance or any other factors
that the Committee, in its discretion, shall deem appropriate and (ii) to
establish rules or procedures that have the effect of limiting the amount
payable to each Participant to an amount that is less than the maximum amount
otherwise authorized under Section 5(c).  Notwithstanding the foregoing, in no
event shall reduction of any Participant’s payment amount have the effect of
increasing the amount paid to any Covered Employee.

 

(g)           Affirmative Discretion. Notwithstanding any other provision in the
Plan to the contrary, with respect to any annual Incentive Plan Award that is
not intended to be “qualified performance based compensation” for purposes of
Section 162(m), (i) the Committee shall have the right, in its discretion, to
pay to any Participant who is not a Covered Employee an annual Incentive Plan
Award for such Performance Period in an amount up to the maximum bonus payable
under Section 5(c), based on individual performance or any other criteria that
the Committee deems appropriate, and (ii) in connection with the hiring of any
person who is or becomes a Covered Employee, the Committee may provide for a
minimum Incentive Plan Award amount in the calendar year of hire, regardless of
whether performance objectives are attained.

 

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6.                                      Payment

 

Except as otherwise provided hereunder, payment of any Incentive Plan Award
amount determined under Section 5 shall be made to each Participant as soon as
practicable after the Committee certifies that one or more of the applicable
Performance Goals have been attained (or, in the case of any Incentive Plan
Award payable under the provisions of Section 5(g), after the Committee
determines the amount of any such Incentive Plan Award), but, except as provided
below with respect to Stock-based payments, in no event later than March 15 of
the year following the year to which the Performance Period relates.  The
Incentive Plan Award may be paid in whole or in part, in the discretion of the
Committee, in either options to purchase Stock or in shares of Stock which will
be subject to certain restrictions and/or a risk of forfeiture, with the
remainder, if any, to be paid in cash.  The value of any Stock-based payment
under an Incentive Plan Award shall be determined in the sole and absolute
discretion of the Committee.  The Committee will establish a formula to convert
an Incentive Plan Award into a Stock-based payment of equivalent fair market
value.  All options to purchase Stock and restricted Stock issued as payment for
all or any part of an Incentive Plan Award shall be distributed from the total
number of shares of Stock reserved and available for distribution under the
Waddell & Reed Financial, Inc. 1998 Stock Incentive Plan, as amended and
restated, and as may be further amended, modified or restated, (or such other
equity compensation plan maintained by the Company that has been approved by the
stockholders of the Company) and shall comply in full with all of the terms and
provisions regarding stock options and restricted stock, as applicable, set
forth in such stock award plan, including, without limitation, Section 6A
thereof.   To the extent the Committee converts a portion of an Incentive Plan
Award into a Stock-based payment, the Stock-based payment need not be granted to
the Participant by March 15 of the year following the year to which the
Performance Period relates so long as the Committee establishes the dollar
amount of the Stock-based payment and the date the Stock-based payment will be
granted to the Participant prior to the end of the Fiscal Year to which the
Incentive Plan Award relates.

 

7.                                      General Provisions

 

(a)           Effectiveness of the Plan. The Plan became effective with respect
to calendar years beginning on or after January 1, 1999 and shall remain
effective until December 31, 2013, unless the term is extended by action of the
Board.

 

(b)           Amendment and Termination. Notwithstanding Section 7(a), the Board
or the Committee may at any time amend, suspend, discontinue, or terminate the
Plan; provided, however, that no such amendment, suspension, discontinuance, or
termination shall adversely affect the rights of any Participant with respect to
any Fiscal Year which has already commenced and no such action shall be
effective without approval by the stockholders of the Company to the extent
necessary to continue to qualify the amounts payable hereunder to Covered
Employees as “qualified performance-based compensation” under Section 162(m).

 

(c)           Designation of Beneficiary. Each Participant may designate a
beneficiary or beneficiaries (which beneficiary may be an entity other than a
natural person) to receive any payments which may be made following the
Participant’s death. Such designation may be changed or canceled at any time
without the consent of any such beneficiary. Any such

 

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designation, change or cancellation must be made in a form approved by the
Committee and shall not be effective until received by the Committee. If no
beneficiary has been named, or the designated beneficiary or beneficiaries shall
have predeceased the Participant, the beneficiary shall be the Participant’s
spouse or, if no spouse survives the Participant, the Participant’s estate. If a
Participant designates more than one beneficiary, the rights of such
beneficiaries shall be payable in equal shares, unless the Participant has
designated otherwise.

 

(d)           No Right of Continued Employment. Nothing in this Plan shall be
construed as conferring upon any Participant any right to continue in the
employment of the Company or any of its Subsidiaries.

 

(e)           No Limitation on Corporate Actions. Nothing contained in the Plan
shall be construed to prevent the Company or any Subsidiary from taking any
corporate action which is deemed by it to be appropriate or in its best
interest, whether or not such action would have an adverse effect on any awards
made under the Plan. No employee, beneficiary or other person shall have any
claim against the Company or any Subsidiary as a result of any such action.

 

(f)            Non-alienation of Benefits. Except as expressly provided herein,
no Participant or beneficiary shall have the power or right to transfer,
anticipate, or otherwise encumber the Participant’s interest under the Plan. The
Company’s obligations under this Plan are not assignable or transferable except
to (i) a corporation which acquires all or substantially all of the Company’s
assets, or (ii) any corporation into which the Company may be merged or
consolidated. The provisions of the Plan shall inure to the benefit of each
Participant and the Participant’s beneficiaries, heirs, executors,
administrators, or successors in interest.

 

(g)           Withholding. Any amount payable to a Participant or a beneficiary
under this Plan shall be subject to any applicable Federal, state, and local
income and employment taxes and any other amounts that the Company or a
Subsidiary is required by law to deduct and withhold from such payment.

 

(h)           Severability. If any provision of this Plan is held unenforceable,
the remainder of the Plan shall continue in full force and effect without regard
to such unenforceable provision and shall be applied as though the unenforceable
provision were not contained in the Plan.

 

(i)            Governing Law. The Plan shall be construed in accordance with and
governed by the laws of the State of Kansas, without reference to the principles
of conflict of laws except that any matters relating to the internal governance
of the Company shall be governed by the general corporate laws of the state of
Delaware.

 

(j)            Headings. Headings are inserted in this Plan for convenience of
reference only and are to be ignored in a construction of the provisions of the
Plan.

 

(k)           Plan not Funded. Plan awards shall be made solely from the general
assets of the Company. To the extent any person acquires a right to receive
payments from the Company under the Plan, the right is no greater than the right
of any other unsecured general creditor.

 

(l)            No Guarantee. While a discretionary Incentive Plan Award may have
been paid in the past, whether such payments will be made in the future will
depend upon various factors,

 

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such as the Company’s financial condition and performance. There is no guarantee
that the Company will pay any such discretionary award.  The Committee may, in
its sole discretion, reduce, eliminate or increase, any Incentive Plan Award,
except that the amount of any Incentive Plan Award intended to be “qualified
performance-based compensation” may not be increased above the amount
established for the Performance Goal and Incentive Percentage. The Company may
withhold an Incentive Plan Award, or portions thereof, for any reason including
gross misconduct (e.g., theft, dishonesty/compromised integrity, fraud,
harassment, etc.) or any actions deemed to be contrary to the best interests of
the Company by the Committee.

 

(m)          Rights to Payments. No Participant shall have any enforceable right
to receive any Incentive Plan Award made with respect to a Performance Period or
to retain any payment made with respect thereto if for any reason the
requirements of Section 5 are not satisfied.

 

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