**Exhibit 10.2**

**WatsonWyatt Worldwide, Inc.**

**PerformanceShare Bonus Incentive Program**

**FY07**

Summary

The Performance ShareBonus Incentive Program (the Program) is a long-term bonus program for seniorexecutives, designed to strengthen incentives and align behaviors to grow thebusiness in a way that is consistent with the strategic goals of theCompany.  Incentives are provided throughgrants of deferred stock units tied to a 3-year performance period with vestingcontingent upon meeting certain Company goal thresholds.  This bonus program does not replace theFiscal Year End Bonus (FYEB).

Eligibility

Associates of WatsonWyatt & Company and its Affiliates will be eligible for nomination toparticipate in the Program.  Eligibleparticipants will be nominated and approved by the Compensation Committee ofthe Board (the Committee).  Generally,associates eligible for nomination will be high performing, senior-levelexecutives that have direct impact or responsibility for driving strategythroughout the organization.

Performance Period

The performance period isa 3-year period that begins on July 1, 20xx and ends on June 30, 20xx+3.  For example, the performance period thatbegan on July 1, 2006 will end on June 30, 2009.  Baseline metrics are established at the beginningof the performance period.  At the end ofthe performance period, performance metrics will then be measured.  The Company will follow its standard processfor financial reporting following the close of the fiscal year.  Once Company financial results are finalized(August following end of fiscal year) the final performance metric results forthe most recent performance period can be determined.

Grants

Grants of stock(performance shares) are made under the 2001 Deferred Stock Unit Plan forSelected Employees.  Grants are basedon the value of the cash portion of the Fiscal Year End Bonus target.  A multiplier, which varies by participationtier, is then applied to that value to determine the cash value of theperformance shares.  The cash value isthen converted to a number of shares of stock based on the stock market closingprice on the last day of the fiscal year prior to the grant.  For calculation purposes, band and salaryinformation will be based on what is in effect as of October 1 of the firstfiscal year of the performance period.

All performance sharegrants will be made by the Committee at the beginning of each performanceperiod (following the fiscal year end close process).  Final grant amounts will generally bedetermined by the method outlined here. However, the Committee, at its discretion, may adjust final grantamounts.

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Vesting

The performance shareswill vest 3 years from the date of grant based on the achievement of certainperformance metrics and subject to the participant’s continued employment onthe vesting date unless waived in accordance with the Termination Provisionsherein.  Company performance goals areestablished by the Committee at the beginning of each performance period.  At the conclusion of each performance period,Company performance metrics are measured against goals over the same period todetermine the percentage of the grant to be awarded.  The actual award is determined by an earnoutschedule which defines performance level ranges and associated earnout of grants.  Vested shares are distributed to participantsin September following the end of the performance period and the fiscal yearend close.

Performance Metrics andEarnout

The earnout for eachperformance period is determined by evaluating actual Company performance,using pre-defined metrics, for the full 3-year performance period.  Baselines for each metric will be establishedat the beginning of each performance period by the Committee.  The baseline will be determined by recordingthe metric as of the last day of the prior fiscal year (6/30).

For grants under theProgram covering the performance period beginning July 1, 2006 and ending June30, 2009, two types of financial metrics will be used:

1.   EarningsPer Share (“EPS”) Growth;  and

2. * *  Revenue Growth.

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*EarnoutSchedule*

An earnout schedule usingtotal growth over the 3-year performance period for E.P.S and Revenue is shownbelow:

 

|                    | ** ** | **30**     | **%**      | 100                 | %          | 135    | %     | 170    | %     |
|--------------------|------------|------------|------------|---------------------|------------|--------|-------|--------|-------|
|               | ** ** | **22.5**   | **%**      | 65                  | %          | 100    | %     | 135    | %     |
| **E.P.S.  Growth** | ** ** | **15**     | **%**      | 30                  | %          | 65     | %     | 100    | %     |
|               | ** ** | ** ** | ** ** | **15**              | **%**      | **20** | **%** | **25** | **%** |
|               | ** ** | ** ** | ** ** | **Revenue  Growth** | ** ** |

 

*Performance Metrics forPerformance period 7/1/2006 — 6/30/2009*

Earnings Per Share(E.P.S.) Growth — E.P.S. for the fiscal year before the start of theperformance period compared to E.P.S. of the 3rd year of the performance period, expressed as apercentage.  E.P.S. is defined as fully diluted earnings per share from continuingoperations.  The E.P.S. to be used forthe fiscal year before the start of the performance period is $1.99 whichreflects fiscal 2006 fully diluted earnings per share from continuingoperations.

Revenue Growth — Revenuegrowth is defined as the percentage change in revenue from the fiscal yearprior to the performance period of the plan to the third year of theperformance period.

Revenue will be definedas the amount stated in the Form 10-K.

In performance periodswhere acquisitions occur:

Revenue at the start of the performance period (aspublished in the Form 10-K) will be increased by the revenue generated by theacquired company during the annual period preceding the acquisition. In the event an acquisition occurs after thefirst day of the performance period, the acquisition revenue from the yearpreceding the acquisition will be discounted, using Watson Wyatt’s revenuegrowth rate, from the year preceding the acquisition to the beginning of theperformance period. In addition, the revenue to be counted for the acquiredcompany in the year of acquisition will be adjusted to be representative of afull year’s revenue.  Acquisitionrevenue used will be as reported in the acquired company’s published financialreports (Form 10-K). In the event such financial reports are unavailable,revenue generated by the acquired company will be provided by the investmentbankers familiar with the acquired company.

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Termination Provisions

Performance shares granted to a participant whoseemployment terminates prior to the scheduled vesting date on account of theparticipant’s death, or permanent disability (permanent disability to bedetermined pursuant to the terms of the Company’s tax-qualified pension plan)shall vest as if the participant remained employed through the scheduledvesting date.  Performance shares grantedto a participant whose employment terminates prior to the scheduled vestingdate on account of retirement (determined pursuant to the terms of the Company’squalified pension plan) shall vest as the Committee may determine, in its solediscretion and on a case-by-case basis. Performance shares granted to a participant whose employment terminatesfor reasons other than death, permanent disability or retirement will not vestand shall be forfeited; provided, however, that the Committee may determine, inits sole discretion and on a case-by-case basis, to permit some or all of suchparticipant’s performance shares to vest.

Change in Control orCapitalization 

A change in control orcapitalization (merger, consolidation, reorganization, stock split,acquisition, etc.) may affect the value of performance shares granted, earnoutof vested performance shares or other provisions of the Program.  To assure fair and equitable treatment ofparticipants in the event of such a change in control or capitalization, theCommittee, at its discretion, may make changes to grants and/or vesting that isconsistent with the Change in Control and Change in Capitalization provisionsdescribed in the 2001 Deferred Stock Unit Plan for Selected Employees.  Under these circumstances, the Committee maymake appropriate adjustments to the number of performance shares granted forany performance period, accelerate the vesting of any performance sharesgranted, or provide for payment in cash in lieu of shares.

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