Exhibit
10.5


 


AMENDED AND RESTATED

INVESTMENT TECHNOLOGY GROUP, INC.

DIRECTORS’ RETAINER FEE SUBPLAN


 


SECTION 1.           Introduction.


 


This Amended and Restated
Investment Technology Group, Inc. Directors’ Retainer Fee Subplan (the
“Subplan”) was originally implemented by Investment Technology Group, Inc. (the
“Company”) under the Investment Technology Group, Inc. Amended and Restated
1994 Stock Option and Long-term Incentive Plan and was merged with and into the
Investment Technology Group, Inc. 2007 Omnibus Equity Compensation Plan (the
“2007 Plan”) effective as of May 8, 2007 (the “Effective Date”). Effective as
of the Effective Date, the Subplan shall continue in effect according to the
terms set forth herein as a subplan under the 2007 Plan. The purpose of the
Subplan is to provide non-employee directors with an election to receive
payment of their annual retainer fees in the form of shares of Company Stock or
cash or to defer payment of their annual retainer fees in the form of Deferred
Share Units. The Subplan is intended to encourage qualified individuals to
accept nominations as directors of the Company and to strengthen the mutuality
of interest between the nonemployee directors and the Company’s other
stockholders. The Subplan is amended and restated herein, effective for
deferrals made from annual retainer fees earned for periods on or after the
Effective Date. Deferrals made from annual retainer fees earned prior to the
Effective Date shall be governed by the Subplan as in effect prior to this
amendment and restatement.


 


SECTION 2.           Definitions.


 


Capitalized terms used in
the Subplan but not defined herein shall have the same meanings as defined in
the 2007 Plan. In addition to such terms and the terms defined in
Section 1 hereof, the following terms used in the Subplan shall have the
meaning set forth below.


 


(a)           “Deferred Share Unit”
means a fully vested Stock Unit entitling the holder to receive one share of Company
Stock per Stock Unit in accordance with the terms of the Subplan.


 


(b)           “Director” means a member
of the Board who is not, and has not been during the preceding three months,
(i) an employee of the Company or any parent or subsidiary of the Company or
(ii) a consultant who has received, during the preceding 12-month period,
payments in excess of $150,000 from the Company and its subsidiaries for
consulting services.


 


(c)           “Subplan Benefits”
means the benefits described in Sections 5 and 6 hereof.


 

















 


SECTION 3.           Administration.


 


The Subplan shall be
administered by the Committee. The Committee shall have full authority to
construe and interpret the Subplan, and any action of the Committee with
respect to the Subplan shall be final, conclusive, and binding on all persons.


 


SECTION 4.           Cash or Stock
Election.


 


Each Director may elect
to receive his or her annual retainer fee in the form of cash or fully vested
shares of Company Stock. In addition, each Director may elect to defer receipt
of his or her annual retainer fee in the form of Deferred Share Units as
provided in Section 5 below. If a Director elects to receive his or her
annual retainer fee in the form of vested shares of Company Stock, the shares
will be distributed on the date the annual retainer fee is otherwise payable in
accordance with the Company’s regular retainer fee payment practices, and the
amount of Company Stock distributed shall be the number of shares of Company
Stock having an aggregate Fair Market Value on the payment date equal to the
amount of the Director’s annual retainer fee that is otherwise payable on that
date. Fractional shares will be rounded up to the nearest whole share. A
Director’s election to receive his or her annual retainer fee in the form of
cash or vested shares of Company Stock shall continue in effect until the
Director notifies the Company in writing, in a manner consistent with
Section 5 below, that the Director wishes to prospectively change his or
her election. If a Director fails to make any election under the Subplan, the
Director’s annual retainer fee shall be paid in cash.


 


SECTION 5.           Deferred Share Unit
Accounts.


 


The Company shall
maintain a Deferred Share Unit account (an “Account”) for each Director who has
elected to defer his or her annual retainer. Deferred Share Units will be
credited to each such Account as follows:


 


(a)           Each Director may make
an irrevocable election on or before December 31 by written notice to the Company,
to defer payment of all of the compensation otherwise payable as his or her
annual retainer fee for service as a Director for the following calendar year. Notwithstanding
the foregoing, a Director may make such an election within 30 days after first
becoming eligible to participate in the Subplan, with respect to compensation
payable after the effective date of the election. All compensation which a
Director elects to defer pursuant to this Section 5(a) shall be credited in the
form of Deferred Share Units to the Director’s Account. The number of Deferred
Share Units so credited will be equal to the number of shares of Company Stock
having an aggregate Fair Market Value (on the date the compensation would
otherwise have been paid) equal to the amount by which the Director’s
compensation was reduced pursuant to the deferral election. Deferrals of
compensation hereunder shall continue until the Director notifies the Company
in writing that the Director wishes his or her compensation for the following
calendar year, and succeeding periods to be paid on a current basis either in
the form of cash or Company Stock.


 


(b)           As of each date on
which a cash dividend is paid on Company Stock, there shall be credited to each
Account that number of Deferred Share Units (including fractional


 


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units) determined by (i)
multiplying the amount of such dividend (per share) by the number of Deferred
Share Units in such Account; and (ii) dividing the total so determined by the
Fair Market Value of a share of Company Stock on the date of payment of such
cash dividend. The additions to a Director’s Account pursuant to this Section
5(b) shall continue until the Director’s Subplan Benefit is fully paid in
accordance with Section 6 below.


 


SECTION 6.           Subplan Benefits.


 


(a)           Form. The
Subplan Benefit of a Director shall consist of shares of Company Stock equal in
number to the Deferred Share Units in the Director’s Account. Any fractional
Deferred Share Units shall be rounded up to the nearest whole Deferred Share
Unit.


 


(b)           Distribution.


 


(i)        The Subplan Benefit of a
Director shall be distributed at the time of termination of the Director’s
service on the Board.


 


(ii)       In the case of the death of
a Director, the Director’s Subplan Benefit shall be distributed, within a reasonable
time as determined by the Company, after the Director’s death to the Director’s
estate as beneficiary, unless the Director has requested a different
distribution by written notice to the Committee.


 


SECTION 7.           General.


 


(a)           Nontransferabilily.
Except as provided in Section 6(b)(ii), no payment of any Subplan Benefit of a
Director shall be anticipated, assigned, attached, garnished, optioned,
transferred or made subject to any creditor’s process, whether voluntarily or
involuntarily or by operation of law. Any act in violation of this subsection
shall be void.


 


(b)           Compliance
with Legal and Trading Requirements. The Subplan shall be subject to all
applicable laws, rules and regulations, including, but not limited to, federal
and state laws, rules and regulations, and to such approvals by any regulatory
or governmental agency as may be required.


 


(c)           Amendment.
The Committee may amend, alter, suspend, discontinue, or terminate the Subplan
without the consent of stockholders of the Company or individual Directors,
except that any such action will be subject to the approval of the Company’s
stockholders at the next annual meeting of the stockholders having a record
date after the date such action was taken if such stockholder approval is
required by any federal or state law or regulation or the rules of any
automated quotation system or securities exchange on which the Company Stock
may be quoted or listed, or if the Committee determines in its discretion to
seek such stockholder approval; provided, however, that, without
the consent of an affected Director, no amendment, alteration, suspension, discontinuation,
or termination


 


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of the Subplan may impair or, in any other manner, adversely affect the
rights of such Director to accrued Subplan Benefits hereunder.


 


(d)           Unfunded
Status of Awards.  The Subplan (other
than Section 4 hereof) is intended to constitute an “unfunded” plan of deferred
compensation. With respect to any payments not yet made to a Director, nothing
contained in the Subplan shall give any such Director any rights that are
greater than those of a general creditor of the Company; provided, however,
that the Company may authorize the creation of trusts or make other
arrangements to meet the Company’s obligations under the Subplan to deliver
cash, or other property pursuant to any award, which trusts or other
arrangements shall be consistent with the “unfunded” status of the Subplan
unless the Company otherwise determines with the consent of each affected
Director.


 


(e)           Nonexclusivity
of the Subplan.  The adoption of the
Subplan shall not be construed as creating any limitations on the power of the
Board or the Committee to adopt such other compensation arrangements as it may
deem desirable, including, without limitation, the granting of Options and
other awards otherwise than under the Subplan, and such arrangements may be
either applicable generally or only in specific cases.


 


(f)            Adjustments.
 The adjustment provisions in Section
5(d) of the 2007 Plan are incorporated herein by reference and shall apply in
the case of Company Stock and Deferred Share Units granted hereunder.


 


(g)           No
Right to Remain on the Board.  Neither
the Subplan nor the crediting of Deferred Share Units under the Subplan shall
be deemed to give any individual a right to remain a director of the Company or
create any obligation on the part of the Board to nominate any Director for
reelection by the stockholders of the Company.


 


(h)           Section
409A.  It is intended that this
Subplan and awards issued hereunder will comply with section 409A of the Code
(and any regulations and guidelines issued thereunder) to the extent the awards
are subject thereto, and this Subplan and such awards shall be interpreted on a
basis consistent with such intent. This Subplan and any award agreements issued
thereunder may be amended in any respect deemed by the Board or the Committee
to be necessary in order to preserve compliance with section 409A of the Code.


 


(i)            Governing
Law.  The validity, construction, and
effect of the Subplan shall be determined in accordance with the laws of the
State of Delaware without giving effect to principles of conflict of laws.


 


(j)            Effective
Date.  This Subplan, as amended and
restated herein shall become effective as of the Effective Date.


 


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(k)           Titles
and Headings. The titles and headings of the Sections in the Subplan are
for convenience of reference only. In the event of any conflict, the text of
the Subplan, rather than such titles or headings, shall control.


 


Amended and Restated by
the Committee effective:  May 8, 2007.


 


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