exv10w27






Exhibit 10.27




JPMorgan Chase & Co.




PERFORMANCE-BASED INCENTIVE COMPENSATION PLAN

Effective as of January 1, 2006, as amended



SECTION 1



PREAMBLE



     The purpose of the Performance-Based Incentive Compensation Plan (“Plan”) is to provide a
program that aligns annual performance-based incentive compensation awards levels to the
performance of Eligible Employees during such period, taking into account the performance of
JPMorgan Chase & Co., the Participating Company, the Business Unit employing the Eligible Employee
and the Eligible Employee. It is designed to attract, motivate and retain those individuals
employed by JPMorgan Chase & Co. and its Subsidiaries with an opportunity to receive
performance-based incentive compensation described in the Plan. In order to realize these
objectives, Stock-Based Awards are intended to further motivate the individual to remain in the
employ of the Participating Company for future years.



     Nothing in this Plan shall be construed to alter the at-will employment relationship between
the Employees and any Participating Company. The provisions of this Plan reflect the policies of
the Participating Companies in providing performance-based incentive compensation years prior to
the effective date.



     Further, this Plan is intended to be a performance-based compensation plan within the meaning
of Section 409A of the Internal Revenue Code and Treasury regulations promulgated thereunder. By
way of further clarification, Section 4.3 off the Plan is intended to satisfy the final Treasury
regulations dealing with subjective performance criteria.



SECTION 2




DEFINITIONS



     The following terms shall have the meaning set forth below, unless a different meaning is
plainly required by the context.


(a) “Award” shall mean an amount of performance-based incentive compensation determined under the
Plan, which may be paid in the form of cash, restricted stock units, options, stock appreciation
rights or such other form of compensation as JPMorgan Chase may specify.



(b) “Award Agreement” shall mean a document provided to a recipient of an Award that evidences the
grant of a Stock-Based Award or another form of compensation awarded under the Plan and specifies
the terms and conditions of such award.



(c) “Business Unit” shall mean a division, department or a function of a Participating Company.













 



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(d) “Effective Date” shall mean January 1, 2006. This Plan shall be effective for the 2006
Performance Year and thereafter.



(e) “Eligible Employee” shall mean an Employee described in Section 5.3.



(f) “Employee” shall mean any person employed by a Participating Company, whether or not an
Eligible Employee. An individual is not an Employee for purposes of this Plan if (i) his/her
compensation is paid solely in the form of a commission or fee under contract, (ii) he/she is
classified by the Participating Company as an independent contractor or agent, (iii) he/she is
classified by the Participating Company as an employee of an independent contractor or agent, or
(iv) he/she is classified by the Participating Company as any status other than that of a common
law employee of the Participating Company, regardless of whether such individual (whether or not
described in (i), (ii) or (iii) above) is subsequently determined to be a common law employee of a
Participating Company as the result of administrative agency or judicial proceeding.



(g) “JPMorgan Chase” shall mean JPMorgan Chase & Co. or any successor thereto.



(h) “Participating Companies” or “Company” shall mean JPMorgan Chase and/or any Subsidiary which,
with the consent of the JPMorgan Chase, participates in the Plan.



(i) “Payment Date” shall have the meaning ascribed to it in Section 5.2(a).



(j) “Performance Year” shall mean the calendar year unless JPMorgan Chase designates a different
period.



(k) “Plan” shall mean this JPMorgan Chase & Co. Performance-Based Incentive Compensation Plan.
Participating Companies and Business Units may refer to the Plan with reference to their internal
business names, such as the Investment Bank Incentive Compensation Plan.



(l) “Stock-Based Awards” shall have the meaning set forth in the JPMorgan Chase & Co. 2005 Long
Term Incentive Plan or successor plan.



(m) “Subsidiary” shall mean any corporate entity in which JPMorgan Chase owns directly or
indirectly eighty percent or more of the outstanding stock.



(n) “162(m) Plan” shall mean the Key Executive Performance Plan of JPMorgan Chase & Co., a
performance-based plan adopted to satisfy the requirements of Section 162(m) of the Code.




SECTION 3




ADMINISTRATION



     The Plan shall be administered by JPMorgan Chase which shall have the authority to




	 	•	 	determine whether performance-based incentive compensation funding shall be
established for any particular Performance Year;
	 
	 	•	 	select Eligible Employees who may be granted Awards;
	 
	 	•	 	determine
















 



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	 	o	 	individual performance criteria applicable to an
Eligible Employee;
	 
	 	o	 	whether the individual performance criteria have been
satisfied;






	 	•	 	determine the terms and conditions of Awards and the Award Agreement,
including the amount of any Award;
	 
	 	•	 	interpret the provisions of the Plan and the Award Agreements;
	 
	 	•	 	establish, amend, and rescind any rules and regulations relating to the Plan;
and
	 
	 	•	 	make all other determinations necessary or advisable for the administration of
the Plan.




JPMorgan Chase may also correct any defect, supply any omission, and reconcile any inconsistency
in the Plan or in any Award, or between the Plan and any Award Agreement, in the manner and to the
extent it shall deem desirable to effectuate the purposes of the Plan. JPMorgan Chase may
delegate its authority and responsibilities under the Plan to any person or persons or committee
in its discretion, including Business Units or Participating Companies. The determinations and
actions of the JPMorgan Chase or its delegate in the administration of the Plan shall be final,
conclusive and binding on all parties.




SECTION 4




PERFORMANCE-BASED COMPENSATION ORGANIZATIONAL AND

INDIVIDUAL CRITERIA; FUNDING; PARTICIPATION




	4.1	 	Establishment of Incentive Funding. The funding of the annual performance-based
incentive compensation under this Plan is discretionary, subject to the determination of the
Compensation and Management Development Committee of the Board of Directors of JPMorgan Chase (or
any successor committee); provided that the funding for any Eligible Employee covered by the
162(m) plan shall be based on that Plan. A Business Unit or Participating Company is not
required to make individual Awards equal to the incentive funding available for a particular year.






	4.2	 	Participation in the Plan. JPMorgan Chase or (if so delegated, the Business
Unit or Participating Company) may designate an Employee as eligible for an Award (“Eligible
Employee”). Such Eligible Employee may receive an Award; provided that






	 	•	 	funding is established for a Performance Year pursuant to Section 4.1,






	 	•	 	the performance of the Eligible Employee satisfies applicable criteria set forth in
Section 4.3 for the Performance Year, as determined by JPMorgan Chase or its delegate.




Notwithstanding the above, an Award is only made to the Eligible Employee under this Plan if
he/she is employed on the Payment Date specified by the JPMorgan Chase.













 



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The amount and the form of any Award shall be determined in the sole and absolute discretion of
JPMorgan Chase, including the requirement for the execution by such Eligible Employee of such
agreements as JPMorgan Chase shall specify. No individual Awards under this Plan are guaranteed
at any time during the Performance Year; provided that in the case of new hire and retention
agreements, an Award specified therein may guaranteed as to amount but all other terms and
conditions of this Plan shall apply.




     4.3 Individual Performance Criteria. In determining whether an Award shall be made
to an Eligible Employee, JPMorgan Chase (or if so delegated, each Business Unit or Participating
Company) shall measure the performance of an Eligible Employee based its assessment of the
contributions made to the employing Business Unit during the Performance Year using the subjective
performance criteria so determined:




	 	•	 	Profitability — Success in






	 	o	 	Financial performance as compared to budget, prior year or
competitors, including expense controls, net income and other financial
measures.
	 
	 	o	 	Improving the quality of earnings.
	 
	 	o	 	Achieving expense reduction goals.
	 
	 	o	 	Maintaining capital and leverage ratios in accordance with
targeted levels.






	 	•	 	Investing for Growth— Success in






	 	o	 	Executing investment plans.
	 
	 	o	 	Achieving real revenue growth by market share gains and
performance as compared to competitors.
	 
	 	o	 	Deepening relations with customers.
	 
	 	o	 	Leveraging the JPMorgan Chase product platform.






	 	•	 	Executing Major Projects—Success in






	 	o	 	Reaching mission critical project milestones with respect to,
and in completing, major corporate and Business Unit projects.
	 
	 	o	 	Mitigating operational risks associated with such projects.
	 
	 	o	 	Insuring that clients (internal and external) consider the
completion of the project as a success.






	 	•	 	Managing People and Developing Talent—Success in






	 	o	 	Increasing diversity representation.
	 
	 	o	 	Recruiting, developing and training top talent.










 



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	 	o	 	Developing a strong leadership culture.






	 	•	 	Operating with Integrity/Protecting the Franchise—Success in






	 	o	 	Living up to JPMorgan Chase’s Operating Principles, as well as
compliance with the Code of Conduct.
	 
	 	o	 	Maintaining good standing with regulators and sustaining a
company wide culture of compliance with law and ethical standards.
	 
	 	o	 	Avoiding reputational and litigation issues.
	 
	 	o	 	Maintaining a strong control environment.
	 
	 	o	 	Managing risk.






	 	•	 	Other criteria






	 	o	 	Generation of revenue from efforts of an Employee, including
that derived from management of a team.
	 
	 	o	 	Performance of complex work assignments without supervision and
level of skill shown in such performance.
	 
	 	o	 	Adherence to the work ethic of the Business Unit.
	 
	 	o	 	Performance reviews exceeding expectations.
	 
	 	o	 	Such other subjective performance-based criteria as JPMorgan
Chase may deem appropriate for the particular job function, so long as
determined within 90 days after the start of the Performance Year.




In evaluating the performance contribution of an Eligible Employee, those criteria that are not
applicable to the job function or role of the Employee shall be disregarded and such determination
shall be that solely of JPMorgan Chase. The determination of the applicable criteria and whether
the Eligible Employee has satisfied such performance-based criteria sufficiently to be entitled to
an Award shall also be in the sole discretion of the JPMorgan Chase (or if so delegated, the
management of the Business Unit or the Participating Company). Such evaluations shall occur as
of the end of the Performance Year. By way of further clarification, the determination that any
subjective performance criteria have been met shall not made by the Eligible Employee or a family
member of the Eligible Employee as defined in the final regulations promulgated under Section
409A.




SECTION 5




AWARDS



     5.1 Determination of Awards. As soon as reasonably practical following the end of the
applicable Performance Year, and
after having determined the contribution of, and









 



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performance made
by, an Eligible Employee, JPMorgan Chase (or if so delegated, the Business Unit or Participating
Company) shall determine the amount of each individual Award.



     5.2 Payment of Awards. (a) JPMorgan Chase shall specify a payment/distribution date
of the Awards (“Payment Date”) in the calendar year following the end of the Performance Year
(“Payment Date”); provided that no Award shall be made to an Eligible Employee unless employed on
the Payment Date. Accordingly, an Eligible Employee has no interest in an Award until paid.



     (b) Each individual Award shall specify the amount or percentage of the performance-based
incentive compensation that shall be distributed in the form of cash, Stock-Based Awards or such
other form as may be designated by JPMorgan Chase. Notwithstanding the foregoing, if the Award
Agreement of a Participant who is not a United States citizen and who works outside of the United
States so provides, a Participating Company may deliver property or make contributions to a trust
in lieu of providing incentive compensation hereunder.



     (c) If JPMorgan Chase so advises an Eligible Employee, the cash portion of any
performance-based incentive compensation may be deferred pursuant to the terms of the 2005 Deferred
Compensation Program of JP Morgan Chase & Co. and Participating Companies, or any successor plan or
any applicable deferral program available to Eligible Employees who are based in locations outside
the United States.



     (d) The portion of any performance-based incentive compensation payable as a Stock-Based Award
shall be granted pursuant to the terms of an approved equity compensation plan or arrangement as
determined by JPMorgan Chase in its sole discretion. Unless changed by JPMorgan Chase in writing
on or before June 30th of each performance year hereunder, to the extent any Stock-Based
Award represents deferred compensation within the meaning of Section 409A of the Code, fifty
percent of such Award shall vest during the second calendar year immediately following the date of
grant of the Award and the remaining fifty percent of such Award shall vest during the third
calendar year immediately following the date of grant and, in each case, each vested portion of the
Award shall be distributable not later than the end of the end of the calendar year in which it
vests.



     (e) It is expressly intended that the Awards whether or not vested or immediately payable are
designed to promote continued employment and future services from an Eligible Employee, as well as
reward for performance.



     (g) All Awards will be reflected in Award Agreements signed by an authorized officer of
JPMorgan Chase. No employee or officer of JPMorgan Chase is authorized to make oral promises or
representations about Awards under this Plan.



TAXES AND OTHER WITHHOLDING




     Participating Companies shall have the right to (i) deduct from all amounts payable to any
recipient of an Award (whether amounts are payable in cash), and each recipient shall make
appropriate arrangements to pay the withholding amounts related to any taxes or other amounts
required by law to be withheld, and (ii) offset any amounts otherwise payable hereunder by any
amount the recipient owes a Participating Company, to the full extent permitted by law.









 



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SECTION 7




NON-TRANSFERABILITY



     No rights hereunder or Awards shall be assignable or transferable except as specified, and no
right or interest in any Award shall be subject to any lien, obligation or liability of the
Eligible Employee.



SECTION 8




NO RIGHT TO EMPLOYMENT/CONTINUED PLAN PARTICIPATION



     No person shall have any claim or right to be granted an Award, and the grant of an Award
shall not be construed as giving the Employee recipient the right to be retained in the employ of a
Participating Company. In addition, no Award under the Plan made during or in respect of any
Performance Year or other period shall confer on an Employee any right or entitlement to, nor shall
any Award impose any obligation on a Participating Company to provide, the same or any similar
Award in the future, and all Plan awards are made wholly at the sole and unrestricted discretion of
JPMorgan Chase. Further, each Participating Company expressly reserves the right at any time to
terminate an Employee or Eligible Employee employed by it or free from any liability or any claim
under the Plan, except as provided herein or in any Award granted hereunder.



SECTION 9




AMENDMENT AND TERMINATION



     JPMorgan Chase may amend or terminate the Plan or any portion hereof at any time and in any
manner; provided that the subjective individual performance criteria set forth in Section 4.4 can
only be amended prior to the expiration of the Performance Year to which such criteria pertain.



SECTION 10




STATUS OF PLAN



     The Plan is intended to constitute an “unfunded” bonus plan. With respect to any payments not
yet made to a recipient of an Award by a Participating Company, nothing herein contained shall
provide any such individual with any rights that are greater than those of a general, unsecured
creditor of the Participating Company. No such individual shall at any time possess any interest
whatsoever in the assets of the Participating Company. No payments under this Plan shall be taken
into account as salary or other relevant compensation in determining an Employee’s benefits under
any compensation, pension or welfare plan (unless the plan specifically permits the inclusion of
such Award), program or arrangement maintained by the Participating Company. In
addition, the terms of this document and any particular Award document granted to an Employee shall
exclusively embody the complete terms of the Plan as
applied to such an individual and shall supersede any other documents or representations that
in any way relate to any Award.









 



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SECTION 11




WAIVER



     No failure on the part of the Participating Company to exercise, and no delay in exercising,
any right or power under the Plan shall operate as a waiver of any such right or power; nor shall
any single or partial exercise preclude any other or further exercise of a right or power or the
exercise of any other right or power.



SECTION 12


SEVERABILITY




     Each provision of the Plan will be interpreted in such manner as to be valid and effective but
if any provision shall be ruled invalid or unenforceable in any jurisdiction by any court of
competent jurisdiction, the invalidity or unenforceability of such provision in such jurisdiction
shall not affect any of the remaining provisions of the Plan and the invalid term shall be deemed
to be replaced in such jurisdiction by a valid term which most closely reflects the intent of the
Plan.



SECTION 13





ASSIGNMENT



     If JPMorgan Chase shall be merged into or consolidated with another entity, this Plan shall be
binding upon the entity surviving such merger or resulting from such consolidation. JPMorgan Chase
shall require any successor to all or substantially all of JPMorgan Chase’s equity or assets
(whether by direct or indirect purchase, merger, consolidation or otherwise) to, either expressly
or by operation of law, assume and agree to perform under this Plan as if no such succession had
taken place, and all references to the “JPMorgan Chase” herein shall become references to such
successor.



SECTION 14


GOVERNING LAW




     The validity, construction and effect of the Awards, the Plan and any rules and regulations
relating to the Plan shall be determined in accordance with the laws of the State of New York,
without regard to conflicts of laws principles.



SECTION 15




EFFECTIVE DATE



     The Plan shall be effective as of the Effective Date and shall continue until terminated by
the JPMorgan Chase.