EX-10.7



 






Exhibit 10.7




KEY EXECUTIVE PERFORMANCE PLAN

OF

J.P. MORGAN CHASE & CO.

AS RESTATED EFFECTIVE AS OF

JANUARY 1, 2005




SECTION 1 — PURPOSE




     1.1 The Key Executive Performance Plan of the J.P. Morgan Chase & Co.
(the “Plan”) is designed to attract and retain the services of selected
employees who are in a position to make a material contribution to the
successful operation of the business of J.P. Morgan Chase & Co. or one or more
of its Subsidiaries. The Plan shall become effective as of January 1, 2005,
subject to approval by stockholders in the manner required by Section 162(m) of
the Internal Revenue Code of 1986, as amended (the “Code”).



SECTION 2 — DEFINITIONS




     2.1 For purposes of this Plan, the following terms shall have the
following meanings:




	 	(a)	 	“Award” means an amount payable to a Participant pursuant to
Section 4 of this Plan.
	 
	 	(b)	 	“Board of Directors” means the Board of Directors of the
Corporation.
	 
	 	(c)	 	“Compensation Committee” or “Committee” means the Compensation
and Management Development Committee of the Board of
Directors.
	 
	 	(d)	 	“Corporation” means J.P. Morgan Chase & Co.
	 
	 	(e)	 	“Participant” means an employee of the Corporation or of a
Subsidiary who has been designated by the Committee as
eligible to receive an Award pursuant to the Plan for the Plan
Year.
	 
	 	(f)	 	“Plan Year” means the calendar year.
	 
	 	(g)	 	“Subsidiary” means (i) any corporation, domestic or foreign,
more than 50 percent of the voting stock of which is owned or
controlled, directly or indirectly, by the Corporation; or,
(ii) any partnership, more than 50 percent of the profits
interest or capital interest of which is owned or




 









 






	 	 	 	controlled, directly or indirectly, by the Corporation; or
(iii) any other legal entity, more than 50 percent of the
ownership interest, such interest to be determined by the
Committee, of which is owned or controlled, directly or
indirectly, by the Corporation.





SECTION 3 — DETERMINATION OF BONUS POOL




     3.1 Not later than three months after the beginning of the Plan Year,
the Committee shall prescribe an objective formula pursuant to which a pool of
funds (a “bonus pool”) will be created for that Plan Year. The bonus pool will
consist of a percentage, established by the Committee, of the Corporation’s
income before income tax expense for that Plan Year in excess of a percentage,
established by the Committee, of total stockholders’ equity of the Corporation
at the beginning of that Plan Year. At the time that it determines the bonus
pool formula, the Committee may make provision for excluding the effect of
extraordinary events and changes in accounting methods, practices or policies on
the amount of the bonus pool.



SECTION 4 — AWARDS




     4.1 Coincident with the establishment of the formula under which the
bonus pool will be created for a Plan Year the Committee shall assign shares of
the bonus pool for that Plan Year to those individuals whom the Committee
designates as Participants for that Plan Year; provided that such shares shall
not exceed, in the aggregate, 100% of the bonus pool. The maximum annual Award
which can be made to any one Participant for a Plan Year is the sum of (a) .2%
of the Corporation’s total income before income tax expense, extraordinary items
and effect of accounting changes, as set forth on the Corporation’s Consolidated
Statement of Income for such Plan Year and (b) $1 million.



     4.2 Notwithstanding the provisions of Section 4.1, the Committee may, in
its sole discretion, reduce the amount otherwise payable to a Participant at any
time prior to the payment of the Award to the Participant.



SECTION 5 — ELIGIBILITY FOR PAYMENT OF AWARDS




     5.1 Subject to Section 4.2, a Participant who has been assigned a share
of the bonus pool shall receive payment of an Award if he or she remains
employed by the Corporation or its Subsidiaries through the end of the
applicable Plan Year; provided, however, that no Participant shall be entitled
to payment of an Award hereunder until the Committee certifies in writing that
the performance goals and any other material terms of the Plan have in fact been
satisfied. (Such written certification may take the form of minutes of the
Committee).



 









 





SECTION 6 — FORM AND TIMING OF PAYMENT OF AWARDS




     6.1 Awards may be paid, in whole or in part, in cash, in the form of
grants of stock based awards (other than options) made under the Corporation’s
Long Term Incentive Plan, as amended from time to time, or any successor plan,
or in any other form prescribed by the Committee, and may be subject to such
additional restrictions as the Committee, in its sole discretion, shall impose.
Where Awards are paid in property other than cash, the value of such Awards, for
purposes of the Plan, shall be determined by reference to the fair market value
of the property on the date of the Committee’s certification required by Section
5.1. For this purpose the fair market of shares of common stock of the
Corporation on a particular date shall equal the “Fair Market Value” (as
determined under the Long-Term Incentive Plan as in effect on January 1, 1999)
of such shares on that date.



     6.2 If an Award is payable in shares of common stock of the Corporation
or in another form permitted under the Long-Term Incentive Plan, such Awards
will be issued in accordance with the Long-Term Incentive Plan.



     6.3 Subject to Sections 5 and 7 hereof, Awards shall be paid at such
time as the Committee may determine.



SECTION 7 — DEFERRAL OF PAYMENT OF AWARDS




     7.1 The Committee may, in its sole discretion, permit a Participant to
defer receipt of a cash Award, subject to such terms and conditions as the
Committee shall impose.



SECTION 8 — ADMINISTRATION




     8.1 The Plan shall be administered by the Compensation Committee.



     8.2 Subject to the provisions of the Plan, the Committee shall have
exclusive power to determine the amounts that shall be available for Awards each
Plan Year and to establish the guidelines under which the Awards payable to each
Participant shall be determined.



     8.3 The Committee’s interpretation of the Plan, grant of any Award
pursuant to the Plan, and all actions taken within the scope of its authority
under the Plan, shall be final and binding on all Participants (or former
Participants) and their executors.



 









 







     8.4 The Committee shall have the authority to establish, adopt or revise
such rules or regulations relating to the Plan as it may deem necessary or
advisable for the administration of the Plan.



SECTION 9 — AMENDMENT AND TERMINATION




     9.1 The Board of Directors or a designated committee of the Board of
Directors (including the Committee) may amend any provision of the Plan at any
time; provided that no amendment which requires stockholder approval in order
for bonuses paid pursuant to the Plan to be deductible under the Code, as
amended, may be made without the approval of the stockholders of the
Corporation. The Board of Directors shall also have the right to terminate the
Plan at any time.



SECTION 10 — MISCELLANEOUS




     10.1 The fact that an employee has been designated a Participant shall
not confer on the Participant any right to be retained in the employ of the
Corporation or one or more of its Subsidiaries, or to be designated a
Participant in any subsequent Plan Year.



     10.2 No Award under this Plan shall be taken into account in determining
a Participant’s compensation for the purpose of any group life insurance or
other employee benefit plan unless so provided in such benefit plan.



     10.3 This Plan shall not be deemed the exclusive method of providing
incentive compensation for an employee of the Corporation and its Subsidiaries,
nor shall it preclude the Committee or the Board of Directors from authorizing
or approving other forms of incentive compensation.



     10.4 All expenses and costs in connection with the operation of the Plan
shall be borne by the Corporation and its Subsidiaries.



     10.5 The Corporation or other Subsidiary making a payment under this Plan
shall withhold therefrom such amounts as may be required by federal, state or
local law, and the amount payable under the Plan to the person entitled thereto
shall be reduced by the amount so withheld.



     10.6 The Plan and the rights of all persons under the Plan shall be
construed and administered in accordance with the laws of the State of New York
to the extent not superseded by federal law.



 









 





     10.7 In the event of the death of a Participant, any payment due under
this Plan shall be made to his or her estate (or designated beneficiary, with
respect to amounts payable in the form of the common stock of the Corporation).