EX-10.2



 






Exhibit 10.2




MASTERCARD INTERNATIONAL INCORPORATED

SENIOR EXECUTIVE ANNUAL INCENTIVE COMPENSATION PLAN




     MasterCard International Incorporated (the “Company”) has adopted the MasterCard International
Incorporated Senior Executive Annual Incentive Compensation Plan (the “Plan”) to reward senior
executives for successfully achieving performance goals that are in direct support of corporate and
business unit/regional goals.



ARTICLE I




DEFINITIONS




     Section 1.1 “Board” shall mean the Global Board of Directors of the Company.



     Section 1.2 “Code” shall mean the Internal Revenue Code of 1986, as amended. Any reference to
a section of the Code herein shall be deemed to include a reference to the regulations promulgated
under such section.



     Section 1.3 “Committee” shall mean the Compensation Committee of the Global Board of Directors
of the Company, or such other committee or subcommittee designated by the Board to administer the
Plan.



     Section 1.4 “Disability” shall mean total and permanent disability in accordance with the
Company’s long-term disability plan, as determined by the Committee.



     Section 1.5 “Executive Officer” shall mean a person who is a member of the Company’s Policy
Committee, or its equivalent.



     Section 1.6 “Participant” shall mean, with respect to any Performance Period, any Executive
Officer selected by the Committee to participate in the Plan with respect to that Performance
Period.



     Section 1.7 “Performance Period” shall mean a period of no less than 90 days for which
incentive compensation shall be paid hereunder, as established by the Committee.



ARTICLE II




BONUS AWARDS




     Section 2.1 Performance Targets.



     (a) The Committee (or subcommittee described in Section 5.1(a) below), will establish
performance targets for each Performance Period. The performance targets for a Performance Period
shall be based upon one or more of the following objective business criteria: (i) revenue; (ii)
earnings (including earnings before interest, taxes, depreciation and amortization, earnings before
interest and taxes, and earnings before or after taxes); (iii) operating income; (iv) net income;
(v) profit margins; (vi) earnings per share; (vii) return on assets; (viii) return on equity; (ix)
return on invested capital; (x) economic value-added; (xi) stock price; (xii) gross dollar volume;
(xiii) total shareholder return; (xiv) market share; (xv) book value; (xvi) expense management; and
(xvii) cash flow. The foregoing criteria may relate to the Company, one or more of its affiliated
employers or subsidiaries or one or more of its divisions, regions or units, or any combination of
the foregoing, and may be applied on an absolute basis and/or be relative to one or more peer group
companies or indices, or any combination thereof, all as the Committee shall determine. In
addition, the performance targets must be calculated without regard to extraordinary, unusual



 









 




and/or non-recurring items that decrease earnings or other performance targets, and with
regard to such extraordinary, unusual, and/or non-recurring items that increase earnings or other
performance targets.




    (b) The performance targets shall be established by the Committee (or subcommittee) for a
Performance Period (i) while the outcome for that Performance Period is substantially uncertain and
(ii) no more than 90 days or, if less, the number of days which is equal to 25 percent of the
relevant Performance Period, after the commencement of the Performance Period to which the
performance target relates, or as otherwise permitted pursuant to Section 162(m) of the Code (or
any successor section thereto).



     Section 2.2 Bonus Awards.



     (a) The maximum bonus award payable to any Participant with respect to any calendar year of
the Company shall not exceed $6,000,000.



(b) Prior to the payment of a bonus award to any Participant, the Committee (or
subcommittee described in Section 5.1(a) below) shall certify in writing the level of
performance attained for the Performance Period to which such bonus award relates. The
Committee shall have no discretion to increase the amount of a Participant’s maximum bonus
award that would otherwise be payable to the Participant upon the achievement of specified
levels of the performance target established by the Committee, however, the Committee may
exercise negative discretion to make an award to any Participant for any Performance Period
in an amount that is less than such maximum bonus award.



ARTICLE III




PAYMENT OF BONUS AWARD




     Section 3.1 Form of Payment. Each Participant’s bonus award shall be paid in cash.



     Section 3.2 Timing of Payment. Unless otherwise elected by the Participant pursuant
to Section 3.3 below, each bonus award shall be paid no later than 2 1/2 months after the end of the
Performance Period.



     Section 3.3 Deferral of Payment. Payments of bonus awards under the Plan are eligible
for deferral as allowed under the MasterCard International Incorporated Deferral Plan.



ARTICLE IV




TRANSFERS, TERMINATIONS AND NEW EXECUTIVE OFFICERS




     Section 4.1 Terminations. A Participant who, whether voluntarily or involuntarily, is
terminated, demoted, transferred or otherwise ceases to be an Executive Officer (otherwise than by
death, disability, termination by the Company without cause, or termination by the Participant with
good reason) at any time prior to the date a bonus award is paid in respect of a Performance Period
shall not be eligible to receive any bonus award with respect to such Performance Period. In the
event of a Participant’s death during a Performance Period or prior to the date a bonus award is
paid in respect of a Performance Period, the Participant shall receive the target award payable for
the Performance Period of the Participant’s death. In the event of a Participant’s termination by
reason of disability, termination by the Company without cause, or termination by the Participant
with good reason during the Performance Period or prior to the date a bonus award is paid in
respect of a Performance Period, the Participant shall receive a partial target award, prorated
based on the portion of the Performance Period that elapsed prior to such termination of
employment.



ARTICLE V




ADMINISTRATION





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     Section 5.1 Administration.



     (a) The Plan shall be administered by the Committee, which may delegate its duties and powers
in whole or in part to any subcommittee thereof; it is expected that, in the event the Committee is
not comprised solely of “outside directors” within the meaning of Section 162(m) of the Code, a
subcommittee comprised solely of at least two individuals who qualify as “outside directors” within
the meaning of Section 162(m) of the Code (or any successor section thereto) shall establish and
administer the performance goals and certify that the performance goals have been attained;
provided, however, that the failure of the subcommittee to be so constituted shall not impair the
validity of any bonus award granted by such subcommittee.



     (b) It shall be the duty of the Committee to conduct the general administration of the Plan in
accordance with its provisions. The Committee shall have the power to interpret the Plan, and to
adopt such rules for the administration, interpretation and application of the Plan as are
consistent therewith and to interpret, amend or revoke any such rules. The Committee’s decisions
or actions in respect thereof shall be conclusive and binding upon any and all Participants and
their beneficiaries, successors and assigns, and all other persons.



ARTICLE VI




OTHER PROVISIONS




     Section 6.1 Term. This Plan shall be effective as of January 1, 2005, with respect to
bonus awards granted on or after January 1, 2005.



     Section 6.2 Amendment, Suspension or Termination of the Plan. This Plan does not
constitute a promise to pay and may be wholly or partially amended or otherwise modified, suspended
or terminated at any time or from time to time by the Board or the Committee; provided, however,
that any such amendment or modification shall comply with all applicable laws and applicable
requirements for exemption (to the extent necessary) under Section 162(m) of the Code.



     Section 6.3 Approval of Plan by Stockholders. The Plan shall be submitted for the
approval of the Company’s stockholders at the annual meeting of stockholders to be held in May
2005. In the event that the Plan is not so approved, no bonus award shall be payable under the
Plan, and the Plan shall terminate and shall be null and void in its entirety.



     Section 6.4 Bonus Awards and Other Plans. Nothing contained in the Plan shall
prohibit the Company from granting awards or authorizing other compensation to any Executive
Officer under any other plan or authority or limit the authority of the Company to establish other
special awards or incentive compensation plans providing for the payment of incentive compensation
to the Executive Officers.



     Section 6.5 Miscellaneous.



     (a) The Company shall deduct all federal, state and local taxes required by law to be withheld
from any bonus award paid to a Participant hereunder.



     (b) In no event shall the Company be obligated to pay to any Participant a bonus award for a
Performance Period by reason of the Company’s payment of a bonus award to such Participant in any
other Performance Period.



     (c) The rights of Participants under the Plan shall be unfunded and unsecured. Amounts
payable under the Plan are not and will not be transferred into a trust or otherwise set aside,
except as provided in the MasterCard International Incorporated Deferral Plan, in the event of a
deferral thereunder. The Company shall not be required to establish any special or separate fund
or to make any other segregation of assets to assure the payment of any bonus award under the Plan.



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     (d) Nothing in this Plan or in any instrument executed pursuant hereto shall confer upon any
person any right to continue in the employment or other service of the Company, or shall affect the
right of the Company to terminate the employment or other service of any person at any time with or
without cause.



     (e) No rights of any Participant to payments of any amounts under the Plan shall be sold,
exchanged, transferred, assigned, pledged, hypothecated or otherwise disposed of other than by will
or by laws of descent and distribution, and any such purported sale, exchange, transfer,
assignment, pledge, hypothecation or disposition shall be void.



     (f) Any provision of the Plan that is prohibited or unenforceable shall be ineffective to the
extent of such prohibition or unenforceability without invalidating the remaining provisions of the
Plan.



     (g) The validity, construction, interpretation and administration of the Plan and any bonus
awards under the Plan and of any determinations or decisions made thereunder, and the rights of all
persons having or claiming to have any interest herein or thereunder, shall be governed by, and
determined exclusively in accordance with, the laws of New York (determined without regard to its
conflict of laws provisions).




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