Exhibit 10.39


 


Summary of
Compensation Arrangements With Executive Officers of the Company


 


I.                                         Named Executive Officer Compensation.                       On December 8, 2005, the Compensation
Committee (the “Committee”) of the Board of Directors of Waddell & Reed
Financial, Inc. (the “Company”) approved the annual base salaries (effective as
of January 1, 2006) of the Company’s executive officers.  The following table sets forth the annual
base salaries of the Company’s Chief Executive Officer and the next four most
highly compensated officers (collectively, the “Named Executive Officers”) for
2006:


 


	
  Named Executive Officer

  	
   

  	
  Salary

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Henry J.
  Herrmann

  Chief Executive Officer

  	
   

  	
  $

  	
  800,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Michael L.
  Avery

  Senior Vice President and Chief Investment Officer

  	
   

  	
  $

  	
  425,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Thomas W.
  Butch

  Senior Vice President and Chief Marketing Officer

  	
   

  	
  $

  	
  400,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Michael D.
  Strohm

  Senior Vice President and Chief Operations Officer

  	
   

  	
  $

  	
  350,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  John E.
  Sundeen, Jr.

  Senior Vice President and Chief Administrative Officer – Investments

  	
   

  	
  $

  	
  350,000

  	
   

  



 


The Company has adopted a supplemental executive retirement plan (the “SERP”)
pursuant to which participants’ accounts are credits with (1) an amount equal
to 4% of his or her base salary, less the amount of the maximum employer
matching contribution allowable that can be made on the participant’s behalf under the Company’s 401(k) plan, and (2)
a non-formula award, as determined by the Committee in its discretion.   For 2005, the Committee designated Mr.
Herrmann as a participant of the SERP and awarded him a non-formula award of
$300,000 on December 8, 2005.  None of
the other Named Executive Officers were eligible to participate in the SERP for
2005.


 


II.                                     2005
Executive Incentive Awards.             Pursuant to the
Company’s 2003 Executive Incentive Plan, as amended and restated (the “EIP”),
eligible participants may receive (1) an annual incentive award of cash, and
(2) an annual incentive award of restricted stock, both based upon the annual
financial performance of the Company.


 


A.                                   Cash
Awards.  On December 8, 2005, the
Committee authorized the payment of annual cash incentive (i.e.,
bonus) awards based on the Company’s financial


 

















 


performance for the year ended
December 31, 2005 to executive officers participating in the EIP, which included
Messrs. Herrmann, Butch, Strohm and Sundeen. 
These annual incentive awards were determined based on performance goals
established in March 2005.  As permitted
by the EIP, the Committee exercised its discretion to reduce the amount of the
cash awards payable to Messrs. Herrmann, Butch, Strohm and Sundeen, but in
accordance with the EIP, the reductions did not increase the award amounts for
any other participant.   Mr. Avery did
not participate in the EIP for 2005.  The
following table sets forth the annual cash incentive awards to the Named
Executive Officers for 2005 performance:


 


	
  Named Executive Officer

  	
   

  	
  Cash Award

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Henry J.
  Herrmann

  Chief Executive Officer

  	
   

  	
  $

  	
  1,200,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Michael L.
  Avery

  Senior Vice President and Chief Investment Officer

  	
   

  	
  $

  	
  500,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Thomas W.
  Butch

  Senior Vice President and Chief Marketing Officer

  	
   

  	
  $

  	
  400,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Michael D.
  Strohm

  Senior Vice President and Chief Operations Officer

  	
   

  	
  $

  	
  400,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  John E.
  Sundeen, Jr.

  Senior Vice President and Chief Administrative Officer – Investments

  	
   

  	
  $

  	
  350,000

  	
   

  



 


Pursuant
to the Company 1998 Executive Stock Award Plan, as amended and restated,
eligible executives may annually convert all or a portion of their
annual cash incentive award into restricted stock of the Company.  Additionally, the Compensation Committee may,
in its sole discretion, direct that all or a portion of the cash incentive
award payments payable under the EIP be paid in restricted stock.  Pursuant to such discretion, the Committee
directed that 10% of the above referenced cash incentive awards for Messrs.
Butch, Strohm and Sundeen be paid in restricted stock on April 3, 2006.  Awards granted pursuant to an executive’s
election or the Committee’s discretion are granted in accordance with the form
of restricted stock agreement filed as Exhibit 10.6 to the Company’s Quarterly
Report on Form 10-Q for the quarter ended September 30, 2005.


 


B.                                     Restricted
Stock Awards.  On December 8, 2005,
the Committee authorized the payment of the annual incentive awards of restricted
stock based on the Company’s financial performance for the year ended December
31, 2005 to executive officers participating in the EIP, which included Messrs.
Herrmann, Butch, Strohm and


 

















 


Sundeen.  These annual incentive awards were determined
based on performance goals established in March 2005.  As permitted by the EIP, the Committee
exercised its discretion to reduce the amount of the restricted stock awards
payable to Messrs. Herrmann, Butch, Strohm and Sundeen, but in accordance with
the EIP, the reductions did not increase the restricted stock award amounts for
any other participant.   As stated above,
Mr. Avery did not participate in the EIP for 2005; the Committee approved Mr.
Avery’s award of restricted stock on February 22, 2006.  The following table sets forth the annual
restricted stock awards to the Named Executive Officers for 2005 performance:


 


	
  Named Executive Officer

  	
   

  	
  Restricted Stock Award

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Henry J.
  Herrmann

  Chief Executive Officer

  	
   

  	
  100,000 shares

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Michael L.
  Avery

  Senior Vice President and Chief Investment Officer

  	
   

  	
  30,000 shares

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Thomas W.
  Butch

  Senior Vice President and Chief Marketing Officer

  	
   

  	
  30,000 shares

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Michael D.
  Strohm

  Senior Vice President and Chief Operations Officer

  	
   

  	
  25,000 shares

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  John E.
  Sundeen, Jr.

  Senior Vice President and Chief Administrative Officer - Investments

  	
   

  	
  25,000 shares

  	
   

  



 


These shares will be granted on
April 3, 2006 pursuant to the Company 1998 Stock Incentive Plan, as amended and
restated, in accordance with the form of restricted stock agreement filed as
Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarter
ended September 30, 2005.