Exhibit 10.17

 

WADDELL & REED FINANCIAL, INC.

 

2003 EXECUTIVE INCENTIVE PLAN
As Amended and Restated

 

Effective January 1, 2012

 

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

 

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substantially uncertain, for purposes of Section 162(m), at the time such
Performance Goals are established.

 

(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, 2017, 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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