**Exhibit 10.3**

 

**Watson Wyatt Worldwide, Inc.**

 

**Performance Share Bonus Incentive Program**

 

**FY09**

 

Summary

 

ThePerformance Share Bonus Incentive Program (the Program) is a long-term bonusprogram for senior executives, designed to strengthen incentives and alignbehaviors to grow the business in a way that is consistent with the strategicgoals of the Company.  Incentives areprovided through grants of deferred stock units tied to a 3-year performanceperiod with vesting contingent upon meeting certain Company goalthresholds.  This bonus program does notreplace the Fiscal Year End Bonus (FYEB).

 

Eligibility

 

Associatesof Watson Wyatt & Company and its Affiliates will be eligible fornomination to participate in the Program. Eligible participants will be nominated and approved by the CompensationCommittee of the Board (the Committee). Generally, associates eligible for nomination will be high performing,senior-level executives that have direct impact or responsibility for drivingstrategy throughout the organization.  Alist of participants nominated and approved by the Committee for theperformance period beginning July 1, 2008 and ending June 30, 2011 isattached hereto as Attachment 1.

 

PerformancePeriod

 

Theperformance period is a 3-year period that begins on July 1, 20xx and endson June 30, 20xx+3.  For example,the performance period that began on July 1, 2008 will end on June 30,2011.  Baseline metrics are establishedat the beginning of the performance period. At the end of the performance period, performance metrics will then bemeasured.  The Company will follow itsstandard process for financial reporting following the close of the fiscalyear.  Once Company financial results arefinalized (August following end of fiscal year) the final performancemetric results for the most recent performance period can be determined.

 

Grants

 

Grantsof stock (performance shares) are made under the 2001 Deferred Stock UnitPlan for Selected Employees.  Grantsare based on the value of the cash portion of the Fiscal Year End Bonustarget.  A multiplier, which varies byparticipation tier, is then applied to that value to determine the cash valueof the performance shares.  The cash valueis then 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 thefirst fiscal year of the performance period.

 

Allperformance share grants will be made by the Committee at the beginning of eachperformance period (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

 

Theperformance shares will vest 3 years from the date of grant based on theachievement of certain performance metrics and subject to the participant’scontinued employment on the vesting date unless waived in accordance with theTermination Provisions herein.  Companyperformance goals are established by the Committee at the beginning of eachperformance period.  At the conclusion ofeach performance period, Company performance metrics are measured against goalsover the same period to determine the percentage of the grant to beawarded.  The actual award is determinedby an earnout schedule which defines performance level ranges and associatedearnout of grants.  Vested shares aredistributed to participants on or before September 15th following the end of theperformance period and the fiscal year end close.

 

PerformanceMetrics and Earnout

 

Theearnout for each performance period is determined by evaluating actual Companyperformance, using pre-defined metrics, for the full 3-year performanceperiod.  Baselines for each metric willbe established at the beginning of each performance period by theCommittee.  The baseline will bedetermined by recording the metric as of the last day of the prior fiscal year(6/30).

 

Forgrants under the Program covering the performance period beginning July 1,2008 and ending June 30, 2011, two types of financial metrics will beused:

 

1.   Earnings Per Share (“EPS”)Growth; and

 

2.   RevenueGrowth.

 

*Earnout Schedule*

 

Anearnout schedule using total growth over the 3-year performance period forE.P.S and Revenue is shown below:

 

| ** **        | ** ** | **47%**    |       | 100%                |       | 135%    |       | 170%    |
|-------------------|------------|------------|------------|---------------------|------------|---------|------------|---------|
| **E.P.S. Growth** | ** ** | **34%**    |       | 65%                 |       | 100%    |       | 135%    |
| ** **        | ** ** | **27%**    |       | 30%                 |       | 65%     |       | 100%    |
|              | ** ** | ** ** | ** ** | **20%**             | ** ** | **25%** | ** ** | **35%** |
|              | ** ** | ** ** | ** ** | **Revenue  Growth** |
|                   |            |            |            |                     |            |         |            |         |  |

 

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*PerformanceMetrics for Performance period 7/1/2008 — 6/30/2011*

 

EarningsPer 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 $3.50 whichreflects fiscal 2008 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 defined asthe amount stated in the Form 10-K.

 

In performance periods whereacquisitions occur:

 

Revenue at the start of theperformance period (as published in the Form 10-K) will be increased bythe revenue generated by the acquired company during the annual periodpreceding the acquisition. In the eventan acquisition occurs after the first day of the performance period, theacquisition revenue from the year preceding the acquisition will be discounted,using Watson Wyatt’s revenue growth rate, from the year preceding theacquisition to the beginning of the performance period. In addition, therevenue to be counted for the acquired company in the year of acquisition willbe adjusted to be representative of a full year’s revenue.  Acquisition revenue used will be asreported in the acquired company’s published financial reports (Form 10-K).In the event such financial reports are unavailable, revenue generated by theacquired company will be provided by the investment bankers familiar with theacquired company.

 

For significant foreignoperations, revenue for use in the revenue growth calculations will reflect aconstant currency exchange between the local currency and the U.S. dollar overthe 3-year measurement period.

 

Termination Provisions

 

Performance shares granted to a participantwhose employment terminates prior to the scheduled vesting date on account ofthe participant’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.

 

Changein Control or Capitalization

 

A change in control or capitalization (merger, consolidation,reorganization, stock split, acquisition, etc.) may affect the value ofperformance shares granted, earnout of vested performance shares or otherprovisions of the Program.  To assurefair and equitable treatment of participants in the event of such a change incontrol or capitalization, the Committee, at its discretion, may make changesto grants and/or vesting that is consistent with the Change in Control andChange in Capitalization provisions described in the 2001 Deferred StockUnit Plan forSelected 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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**Attachment 1**

 

**Watson Wyatt Worldwide, Inc.**

 

**Performance Share Bonus IncentiveProgram**

 

| ** **     | ** ** | **Multiplier** | ** ** | **FY09**                                                                                                                                                                                                         |
|----------------|------------|----------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|           |       |           |       |                                                                                                                                                                                                             |
| **Tier One**   |       | 2.0            |       | ·      John  Haley                                                                                                                                                                 |
| ** **     |       |           |       |                                                                                                                                                                                                             |
| **Tier Two**   |       | 1.25           |       | ·       Roger  Millay                                                                                                                                                              |
| ** **     |       |           |       |                                                                                                                                                                                                             |
| **Tier Three** |       | 1.0            |       | ·      Gene Wickes 

·      Kevin  Meehan 

·      Babloo  Ramamurthy                                                  |
| ** **     |       |           |       |                                                                                                                                                                                                             |
| **Tier Four**  |       | .75            |       | ·      Paul Platten 

·      Steve  Mele 

·      Ira Kay  

·      Walter  Bardenwerper |

 

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