Exhibit 10.31.1

 

EXHIBIT A

 

IMS HEALTH INCORPORATED

 

LONG-TERM INCENTIVE PROGRAM

 

 

DESIGNATION OF 2005-06 PERFORMANCE PERIOD, PERFORMANCE GOAL

AND AWARD OPPORTUNITIES

 

In furtherance of Section 4 of the Long-Term Incentive Program (the “Program”),
for the period January 1, 2005 through December 31, 2006 (the “2005-06
Performance Period”) the Performance Goal, Award Opportunities, and
participation shall be as set forth in this Designation.  Terms used in this
Designation have the meanings defined in the Program.

 

Part I.              2005-06 Performance Goal and Award Opportunities

 

(a)     For the 2005-06 Performance Period, the Performance Goal shall be a
blended goal weighted 60% based on revenues of the Company and 40% based on
operating income.  The Award Opportunity earnable by each Participant shall
range from 0% to 200% of the Participant’s target Award Opportunity, and shall
relate to the Performance Goal as set forth in (i) through (iii) below:

 

(i)        Performance Goal.  The “Component Payout Percentage Table “ for the
Performance Goals for the 2005-06 Performance Period shall be as follows
(subject to Section 4(c) of the Program).  Percentages appearing in the table
are referred to in this Designation as Component Payout Percentages:

 

Performance

 

Floor

 

Downside
Minimum

 

Downside
Cliff

 

Target

 

Upside
Potential

 

Maximum

 

Revenue Component

 

< 0

%

75

%

85

%

100

%

125

%

200

%

Operating Income Component

 

< 0

%

75

%

90

%

100

%

125

%

200

%

 

The Committee has separately specified the levels of Revenue and Operating
Income that correspond to the Floor, Downside Minimum, Downside Cliff, Target,
Upside Potential, and Maximum performance levels.  The Committee may adjust the
components of the Performance Goal specified above at any time, provided that,
in the case of a Covered Employee, the level of any element of the Performance
Goal as adjusted shall be not less than the corresponding element of the
Performance Goal as set forth in the above Table.  Thus, for purposes of
Section 162(m), the Performance Goal shall be deemed to be the minimum level
specified in the preceding sentence, with any specification of a different
Performance Goal permitted hereunder in respect of a Covered Employee
representing an exercise of negative discretion decreasing the payouts that
otherwise would be authorized for achievement of such minimum levels of
performance.

 

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(ii)     Award Opportunities Earned For Performance.  Award opportunities shall
be deemed earned at the end of the Performance Period as follows:  First, the
Committee shall determine the level of achievement of the revenue component of
the Performance Goal and the operating income component of the Performance Goal,
and for each the corresponding “Component Payout Percentage.”  (Example: 
Revenue at target has a Component Payout Percentage of 100%.)  For component
performance between any two performance levels (e.g., between “Floor” and
“Downside Minimum”), the Component Payout Percentage will be interpolated.  For
performance below the “Floor” level, the Component Payout Percentage will be
zero, and for performance above the Upside Maximum, the Component Payout
Percentage will be 200%.  Second, the “Final Payout Percentage” will be
determined as the sum of 60% of the Component Payout Percentage for revenues and
40% of the Component Payout Percentage for operating income.  Third, the
Participant’s target Award Opportunity will be deemed earned at the Final Payout
Percentage.  Any portion of the Award Opportunity not earned will be canceled.

 

(iii)  Adjustments to Performance Goal.  The Committee may determine in its
discretion to adjust the Performance Goal, and each component thereof, as
specified in (i) above and shall adjust the components of the Performance Goal
to eliminate the positive and negative effects of extraordinary items, including
acquisitions, and changes in accounting principles from 2004, including the
adoption of FAS123r, provided that no such adjustment is authorized or may be
made with respect to a Covered Employee if and to the extent that such
authorization or adjustment would cause the Performance Goal not to meet the
applicable requirements of Treasury Regulation 1.162-27(e)(2) under the Code.

 

Part II.            Denomination of Award Opportunity

 

Subject to the terms of the Plans and the Program, 50% of the Award Opportunity
of each Participant shall be denominated in Restricted Stock Units and 50% of
such Award Opportunity shall be denominated in cash.  For this purpose, a
Restricted Stock Unit, if earned, may only be settled by issuance or delivery of
a Share.  The number of Restricted Stock Units earnable by a Participant for
Target performance shall equal the dollar amount of 50% of his or her Target
Award Opportunity divided by $23.31, which represents the average closing price
per Share over the final 20 trading days of 2004.  For performance other than
Target performance, the number of Restricted Stock Units (as distinguished from
the initial dollar value of the Restricted Stock Units) and the dollar amount of
the cash-denominated portion of the Award Opportunity will each be multiplied by
the applicable Final Payout Percentage under Part I (ii) above to determine the
amount of the Award Opportunity earned.

 

Part III.           Stated Vesting Schedule and Settlement

 

Subject to the terms of the Plans and the Program, any of the cash-denominated
portion of a Participant’s Award Opportunity deemed earned for the 2005-06
Performance Period shall become vested in full at December 31, 2006 if the
Participant remains employed by the Company or a Subsidiary through that date,
and any of the Restricted Stock Units portion of the Award Opportunity deemed
earned for the 2005-06 Performance Period shall become vested in full at
December 31, 2008 if the Participant remains employed by the Company or a
Subsidiary through that date.  Subject to any permitted deferrals under the
Plans and the Program, each portion of the Participant’s Award shall be settled
as promptly as practicable upon such portion becoming vested.

 

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Part IV.                                 Participants and Target Award
Opportunities

 

The Participants in the Program for the 2005-06 Performance Period, and the
target Award Opportunity of each, are set forth by the Chairman of the Board and
Chief Executive Officer and approved by the Compensation & Benefits committee
annually and may from time to time be revised or supplemented.  Award
Opportunities granted to any such Participant who is, at February 14, 2005, an
executive officer of the Company and Shares that may be issued or delivered in
settlement of such Participants’ Awards shall be governed by and drawn from the
ESIP, and Award Opportunities granted to other Participants and Shares that may
be issued or delivered in settlement of such Participants’ Awards shall be
governed by and drawn from the 2000 Plan.  The foregoing notwithstanding, the
Chief Executive Officer of the Company may modify or cancel any Award
Opportunity or Award granted to any Participant in order to comply with local
laws or customs in any jurisdiction other than the United States, or to avoid
undue administrative expense with respect to such foreign jurisdiction, and may
designate a Participant whose participation would otherwise be governed by the
2000 Plan as instead to be governed by the ESIP.

 

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