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**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

** **

**FORM 10-K/A**

** **

**Amendment No. 1**

 

**(MarkOne)**

 
| **x**                                             | **ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF  THE SECURITIES EXCHANGE ACT OF 1934** |
|---------------------------------------------------|------------------------------------------------------------------------------------------------------|
| ** **                                        | ** **                                                                                           |
| **For the fiscal year ended  June 30, 2009** |

 

**Or**

** **
| **o**                                                                                                                                                                                  | **TRANSITION REPORT PURSUANT TO SECTION 13 OR  15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------|
| ** **                                                                                                                                                                             | ** **                                                                                               |
| **For the transition period from              to            ** |

 

**Commission File Number: 001-16159**

 

**WATSON WYATT WORLDWIDE, INC.**

(Exact name of registrant as specified in its charter)

 

| **Delaware**                                                    | ** ** | **52-2211537**                        |
|-----------------------------------------------------------------|------------|---------------------------------------|
| (State or other jurisdiction of  incorporation or organization) |       | (I.R.S. Employer  Identification No.) |

 

**901 N. Glebe Road, Arlington, VA  22203**(Address of principal executive offices) (Zip Code)

 

**(703) 258-8000**(Registrant’s telephone number, including area code)

 

Securities registeredpursuant to Section 12(b) of the Act:

 

| **Title of each class**                        | ** ** | **Name of each exchange on which registered** |
|------------------------------------------------|------------|-----------------------------------------------|
| **Class A Common Stock, $0.01 par value** | ** ** | **New York Stock Exchange and NASDAQ**        |

 

Securities registered pursuant to Section 12(g) of the Act:

 
| ** **       | ** ** | ** ** |
|------------------|------------|------------|
| (Title of class) |

 

Indicate by check mark ifthe registrant is a well-known seasoned issuer, as defined in Rule 405 ofthe Securities Act. Yes x  No o

 

Indicate by check mark ifthe registrant is not required to file reports pursuant to Section 13 or Section 15(d) ofthe Act. Yes o  No x

 

Indicateby check mark whether the registrant (1) has filed all reports required tobe filed by Section 13 or 15(d) of the Securities Exchange Act of1934 during the preceding 12 months (or for such shorter period that theregistrant was required to file such reports), and (2) has been subject tosuch filing requirements for the past 90 days. Yes x  No o

 

Indicateby check mark whether the registrant has submitted electronically and posted onits corporate Website, if any, every Interactive Data File required to besubmitted and posted pursuant to Rule 405 of Regulation S-T during thepreceding 12 months (or for such shorter period that the registrant wasrequired to submit and post such files). Yes o  No o

 

Indicateby check mark if disclosure of delinquent filers pursuant to Item 405 ofRegulation S-K is not contained herein, and will not be contained, to the bestof registrant’s knowledge, in definitive proxy or information statementsincorporated by reference in Part III of this Form 10-K or anyamendment to this Form 10-K o

 

Indicate by check markwhether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, or a smaller reporting company. See the definitions of “largeaccelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2of the Exchange Act.

 

| Large accelerated  filer x                    |   | Accelerated  Filer o         |
|-----------------------------------------------|--------|------------------------------|
| Non-accelerated  Filer o                      |   | Smaller  reporting company o |
| (Do not check if a smaller reporting company) |   |                         |

 

Indicate by check markwhether the registrant is a shell company (as defined in Rule 12b-2 of theAct). Yes o  No x

 

The aggregate marketvalue of the registrant’s voting and non-voting common stock held bynon-affiliates of the registrant was approximately $2,032,629,030 based on theclosing price as of the last business day of the registrant’s most recentlycompleted second fiscal quarter, December 31, 2008.

 

As of October 15, 2009 there were outstanding42,528,286 shares of common stock par value $0.01 per share.****

 

 

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**EXPLANATORY NOTE**

 

Watson Wyatt Worldwide, Inc. is filing thisAmendment No. 1 on Form 10-K/A (“Amendment”) to amend its AnnualReport on Form 10-K for the year ended June 30, 2009, filed with theSecurities and Exchange Commission (“SEC”) on August 14, 2009 (“Original10-K”). We are filing this Amendment to the Original 10-K to include theinformation required by Item 5 of Part II for the performance graph andItems 10 through 14 of Part III of Form 10-K. Except for the additionof the Part II and Part III information, no other changes have beenmade to the Original 10-K. This Amendment does not reflect events occurringafter the filing of the Original 10-K or modify or update those disclosuresaffected by subsequent events.

 

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**WATSON WYATT WORLDWIDE, INC.**

**INDEX TO FORM 10-K/A**

** **
| PART II.  |                                                                                                                |   |
|----------------|---------------------------------------------------------------------------------------------------------------------|--------|
|           |                                                                                                                |   |
| Item 5.        | Market for Registrant’s Common Equity,  Related Stockholder Matters and Issuer Purchases of Equity Securities. | 3      |
|           |                                                                                                                |   |
| PART III. |                                                                                                                |   |
|           |                                                                                                                |   |
| Item 10.       | Directors, Executive  Officers and Corporate Governance                                                             | 4      |
|           |                                                                                                                |   |
| Item 11.       | Executive Compensation                                                                                              | 9      |
|           |                                                                                                                |   |
| Item 12.       | Security Ownership of  Certain Beneficial Owners and Management and Related Stockholder Matters                     | 35     |
|           |                                                                                                                |   |
| Item 13.       | Certain Relationships and  Related Transactions, and Director Independence                                          | 37     |
|           |                                                                                                                |   |
| Item 14.       | Principal Accounting Fees  and Services                                                                             | 38     |

 

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**Part II**

 

**Item5.  Performance Graph.**

 

The graph belowdepicts total cumulative stockholder return on $100 invested on June 30,2004 in (1) Watson Wyatt Worldwide, Inc. common stock; (2) theNew York Stock Exchange Composite Index; and (3) anindependently-compiled, industry peer group index composed of the common stockof all publicly-traded companies within the Company’s standard industrialclassification code (SIC) offering management consulting services.  The graph assumes reinvestment of dividends.

 

 

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*$100 invested on 6/30/04 in stock or index, includingreinvestment of dividends.

Fiscal year ending June 30.

 
| ** **                            | ** ** | **6/04**   | ** ** | **6/05**   | ** ** | **6/06**   | ** ** | **6/07**   | ** ** | **6/08**   | ** ** | **6/09**   | ** ** |
|---------------------------------------|------------|------------|------------|------------|------------|------------|------------|------------|------------|------------|------------|------------|------------|
|                                  |       |       |       |       |       |       |       |       |       |       |       |       |       |
| **Watson Wyatt Worldwide, Inc.** | ** ** | **100.00** | ** ** | **97.27**  | ** ** | **134.70** | ** ** | **194.76** | ** ** | **205.27** | ** ** | **146.61** | ** ** |
| **NYSE Composite**                    | ** ** | **100.00** | ** ** | **111.76** | ** ** | **129.30** | ** ** | **159.65** | ** ** | **143.30** | ** ** | **102.20** | ** ** |
| **Peer Group**                        | ** ** | **100.00** | ** ** | **91.40**  | ** ** | **109.58** | ** ** | **145.66** | ** ** | **137.62** | ** ** | **110.62** | ** ** |

 

Companies included in the independently-compiled, industry peer groupindex include: AccentureLimited; Access Worldwide Communications Inc.; Bearingpoint Inc.; BrandpartnersGroup Inc.; Corporate Executive Board Company; Diamond Management &Technology Consultants; FTI Consulting Inc.; Hewitt Associates Inc.; HuronConsulting Group Inc.; LECG Corp.; The Management Network Group Inc.; MaximusInc.; Navigant Consulting Inc.; The Hackett Group Inc. and Watson WyattWorldwide, Inc.   Deletions fromthis group include Caneum Inc.; Harris Interactive Inc.; Inventiv Health Inc.and Thomas Group Inc., because they are no longer in the Company’s SIC.

 

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**Part III**

 

**Item10.  Directors, Executive Officers, andCorporate Governance.**

** **

**DIRECTOR INFORMATION**

 

Listed below are the names, ages and biographies ofour current directors and executive officers at September 30, 2009.  Our directors are elected annually and serveuntil the next annual meeting of stockholders and until their successors areelected and qualified. Our executive officers serve until the next annualmeeting and until the election and qualification of their successors or untiltheir earlier death, resignation or removal by our board of directors.

 

**John J. Gabarro** (age 70) has served as a Director since1999 and was previously a Director of Watson Wyatt & Company from 1995to 1998. Mr. Gabarro has been a professor at the Harvard Business Schoolsince 1972. Mr. Gabarro is the UPS Foundation Professor of Human ResourceManagement, Emeritus, in Organizational Behavior, having also served as BakerFoundation Professor. He has taught in Harvard’s MBA, Executive and DoctoralPrograms. He has served as faculty chair of Harvard’s International SeniorManagement Program and twice as head of its Organizational Behavior faculty andmost recently, as faculty chair of Harvard’s Advanced Management Program. Mr. Gabarrocompleted his MBA, doctorate and post doctoral work at Harvard before joiningits faculty.

 

**John J. Haley** (age 59) has served as President and Chief ExecutiveOfficer of Watson Wyatt since January 1, 1999, Chairman of the Board ofWatson Wyatt since 1999 and as a director of Watson Wyatt since 1992.  Mr. Haley joined Watson Wyatt in1977.  Prior to becoming President andChief Executive Officer of Watson Wyatt, he was the Global Director of theBenefits Group at Watson Wyatt.  Mr. Haleyis a Fellow of the Society of Actuaries and is a co-author of Fundamentals ofPrivate Pensions (University of Pennsylvania Press).  Mr. Haley also serves on the boards ofMAXIMUS, Inc., a provider of health and human services program management,consulting services and system solutions, and Hudson Highland Group, Inc.,an executive search, specialty staffing and related consulting servicesfirm.  He has an A.B. in Mathematics fromRutgers College and studied under a Fellowship at the Graduate School ofMathematics at Yale University.

 

**R. Michael McCullough** (age 70) has served as a Director since1996. Mr. McCullough retired in 1996 as Chairman and CEO of the managementconsulting firm Booz, Allen & Hamilton. He joined Booz, Allen &Hamilton in 1965 as a consultant, was elected a partner in the firm in 1971,became Managing Partner of the firm’s Technology Center and was elected to theposition of Chairman and CEO in 1984. Mr. McCullough is a member of theboard of First Potomac Realty Trust, an industrial and office-industrial realestate investment trust. Mr. McCullough has a B.S. in ElectricalEngineering from the University of Detroit.

 

**BrendanR. O’Neill** (age 60) has served asa Director since July 2006. Dr. O’Neill was Chief Executive Officerand Director of Imperial Chemical Industries PLC (“ICI”), a manufacturer ofspecialty products and paints, until April 2003. From 2003 until 2006, Mr. O’Neillwas an independent director for a range of companies. Dr. O’Neill joinedICI in 1998 as its Chief Operating Officer and Director, and was promoted toChief Executive Officer in 1999. Prior to Dr. O’Neill’s career at ICI, heheld numerous positions at Guinness PLC, including Chief Executive of GuinnessBrewing Worldwide Ltd, Managing Director International Region of UnitedDistillers, and Director of Financial Control. Dr. O’Neill also heldpositions at HSBC Holdings PLC, BICC PLC, Aegis Group PLC, and the Ford MotorCompany. He has an M.A. from the University of Cambridge and a Ph.D. inchemistry from the University of East Anglia, and is a Fellow of the CharteredInstitute of Management Accountants (U.K.). Dr. O’Neill is also a Directorof Tyco International Ltd., Informa Group PLC and Endurance Specialty HoldingsLtd.

 

**Linda D. Rabbitt**(age 60) has served as a Director since 2002 and is the founder and CEO of RandConstruction Corporation, a commercial construction company founded in 1989that specializes in building renovation and tenant build-outs. Prior tofounding Rand Construction Corporation, Ms. Rabbitt was the co-founder andco-owner of Hart Construction Company, Inc., a commercial tenantconstruction company. From 1981 to 1985, Ms. Rabbitt was with KPMG (formerlyPeat Marwick), where she was Director of Marketing from 1982 to 1985. Ms. Rabbittis a Director of Brookfield Properties, a commercial real estate company and isa Class C Director of the Federal Reserve Bank of Richmond. Ms. Rabbittis also a Director of the Greater Washington Board of Trade and served as itsChair in 2002. Ms. Rabbitt has also served as a Director of the EconomicClub of Washington, D.C., as a Director of Leadership Washington, and is atrustee of the Federal City Council and of George Washington University. Ms. Rabbitthas a B.A. from the University of Michigan, Ann Arbor, and an M.A. from GeorgeWashington University.

 

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**Gilbert T. Ray** (age 65) has served as a Director since2000. Mr. Ray was a partner of the law firm of O’Melveny & MyersLLP until his retirement in 2000. He practiced corporate law for almost threedecades. He has extensive experience with corporate and tax exempttransactions, as well as international finance. Mr. Ray is a member of theboards of: Automobile Club of Southern California, a provider of emergency roadand travel services and insurance; two variable annuity funds managed bySunAmerica Asset management; Advance Auto Parts Company, a retailer ofautomotive parts; Diamondrock Hospitality, a real estate investment trust; andDinequity, Inc., a restaurant management and franchise company. Mr. Rayis also a trustee of The John Randolph Haynes and Dora Haynes Foundation.

 

**John C. Wright** (age 61) has served as a Director since2002 and is a retired partner of the accounting firm Ernst & Young. Hewas with Ernst & Young for almost thirty years until his retirement in2000. Mr. Wright has extensive expertise with complex financial accountingand reporting matters, including many years of experience working on mattersbefore the Securities and Exchange Commission. During the last ten years of Mr. Wright’scareer at Ernst & Young, he spent much of his time on internationalmatters. After Ernst & Young, he served briefly as the Chief FinancialOfficer of Teligent, a telecommunications company, and was the Executive VicePresident and Chief Financial Officer of QuadraMed Corporation, a provider ofhealthcare information technology solutions until 2005. Mr. Wright has aB.S. in Accounting from the University of North Carolina.

 

**BIOGRAPHICAL INFORMATION FOR OTHEREXECUTIVE OFFICERS OF THE COMPANY**

 

**Walter W. Bardenwerper** (age 58) has served as Vice Presidentand General Counsel since joining Watson Wyatt in 1987 and has served asSecretary since 1992.  Mr. Bardenwerperwas a Director of Watson Wyatt & Company from 1992 to 1997.  He is also a Director of ProfessionalConsultants Insurance Company.  Mr. Bardenwerperwas previously an attorney with Cadwalader, Wickersham & Taft andAssistant General Counsel and Secretary of Satellite Business Systems.  He has a B.A. with Honors in Economics andgraduated Phi Beta Kappa from the University of Virginia, has a J.D. from theUniversity of Virginia Law School and served as a Law Clerk to United StatesDistrict Court Judge Albert W. Coffrin.

 

**Robert J. Charles**(age 44)**has been aVice President and the Regional Manager (Asia-Pacific) of Watson Wyatt since2007.  Mr. Charles was previouslythe Regional Practice Leader for the Benefits Practice in Asia-Pacific from2003 to 2007 and also the Managing Consultant for Watson Wyatt’s Hong KongOffice from 2004 to 2007.  Mr. Charleshas also worked in India as Watson Wyatt’s Benefits Practice Leader for WatsonWyatt India, where he led the integration for a new acquisition.  He started his career as a consulting actuaryin Watson Wyatt’s Reigate office in 1987 and later became the OperationsManager for the London Benefits team.  Mr. Charleswas appointed a Partner of Watson Wyatt in Europe in 1999.  He is a frequent speaker at conferences onpension reforms, is a Fellow of the Institute of Actuaries (UK) and holdsa first class honours degree in mathematics from Oxford University.

 

**David M.E.Dow** (age 50) has served as Vice President and GlobalPractice Director of the Technology and Administration Solutions (TAS) Groupsince July 2005. Mr. Dow qualified as a Chartered Accountant withKPMG in 1983 and worked for a number of years in the insurance industry beforejoining The Wyatt Company in 1988 as a consultant. In the 21 years since, Mr. Dowhas held various leadership positions in consulting, outsourcing and technologypractices. He was Managing Director of Wyatt Financial Services Ltd from 1990to 1995, Head of Practice of the Financial Services Group of Watson WyattPartners from 1995 to 1998, Head of Practice for Benefits AdministrationSolutions (Watson Wyatt’s UK outsourcing service) from 1998 and has been VicePresident and Global Practice Director for TAS since 2005. Mr. Dow alsoheld Partnership Board and Finance Committee roles within Watson Wyatt LLP andin his current role is a member of the firm’s Global Matrix Group and EuropeanMatrix Group.

 

**Carl A. Hess** (age 47) has served as Vice Presidentand Global Practice Director, Investment Consulting since 2008. Prior to this, Mr. Hessserved as Americas Practice Director, Investment Consulting from 2006 and asU.S. East Division’s Investment Practice Leader from 2004 to 2006. Mr. Hessjoined Watson Wyatt in 1989 as a senior consulting actuary. Prior to joiningWatson Wyatt, he worked for two other consulting firms and an insurancecompany. Mr. Hess has responsibility for a number of Watson Wyatt’s majorinvestment clients, advising them on all investment issues. He also serves onthe board of the Homer Laughlin China Company and its subsidiaries. Mr. Hessis a Fellow of the Society of Actuaries and a Chartered Enterprise RiskAnalyst. He has a B.A. degree cum laude in Logic from Yale University.

 

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**Robert J. McKee** (age 47) has served as Vice Presidentand Global Director of Marketing since 2006. Mr. McKee joined Watson Wyattin 1992 and was named Director of Marketing for Watson Wyatt & Companyin 1998. Mr. McKee is responsible for: marketing strategy, planning andresearch, brand management, marketing communications and public relations,web-based marketing, and sales support. Prior to joining Watson Wyatt, Mr. McKeeheld marketing and public relations roles at Towers Perrin and at the GuardianLife Insurance Company of America. He has an A.B. degree from Columbia University.

 

**Kevin L. Meehan** (age 64) has served as Regional Manager(North America) since 2006, as a Vice President since 1994 and was a Directorfrom 1999 to 2002, and again from 2007 to 2008. Mr. Meehan joined WatsonWyatt in 1983 and was instrumental in developing the company’s flexiblebenefits operations, our North America Technologies and Administration groupand our Account Management function. Over the years Mr. Meehan has ledteams that have won some of Watson Wyatt’s largest assignments and has managedsome of Watson Wyatt’s  largest accounts.Mr. Meehan has been a speaker on employee benefits tax and legal issues,and has testified before the IRS, the Department of Labor and Committees ofCongress on these issues on behalf of our clients.  Mr. Meehan has a B.A. from the Collegeof the Holy Cross and a J.D. from St. John’s University Law School.

 

**Stephen E. Mele** (age 59) has served as Vice Presidentand Chief Human Resources Officer since 2007. Mr. Mele was most recentlythe Chief People and Technology Officer at Mercer HR Consulting, havingpreviously worked at Prudential International as VP Human Resources. Earlier,he had been the Group Head for Human Resources Operations at Standard CharteredBank and prior to that was HR Director at Clearstream and at Schlumberger. Inparticular he has lived and worked in North America, the UK and continentalEurope. Mr. Mele received his B.S. in Business Administration fromFairleigh Dickinson University.

 

**Roger F. Millay** (age 52) has served as Vice President and ChiefFinancial Officer of Watson Wyatt since August 2008.  Prior to this, Mr. Millay was withDiscovery Communications LLC, a global cable TV programmer and digital mediaprovider since 2006, where he served as Senior Executive Vice President andChief Financial Officer.  At Discovery hewas responsible for the global financial functions, including accounting,treasury, budgeting, audit and tax. Prior to this, Mr. Millay was Senior Vice President and ChiefFinancial Officer with Airgas, Inc., an industrial gases and suppliesdistributor and producer from 1999 to 2006. Mr. Millay has over 25 years of experience in financial officerpositions, including roles at Arthur Young & Company, Citigroup, andGE Capital.  He holds a B.A. degree fromthe University of Virginia, an M.S. in Accounting from Georgetown University’sGraduate School of Business and is a Certified Public Accountant.

 

**Peter E. Mills** (age 51) has served as Vice Presidentand Regional Manager (Latin America) since 2005, and has been with Watson Wyattsince 1988, most recently as Watson Wyatt’s Latin America Region RetirementPractice Leader. Before that, Mr. Mills was a Senior Consultant for WatsonWyatt in its Latin America and Caribbean region. He worked as a project managerand account manager, and consulted for clients throughout the region. Mr. Millshas over 20 years of professional experience. He graduated from the Universityof Connecticut in 1980 with a B.S. degree in Mathematics and is a Fellow of theSociety of Actuaries, a member of the American Academy of Actuaries, a memberof the Actuarial Association of Colombia, and an Enrolled Actuary.

 

**Martin S. Pike** (age48) has served as Vice President and Global Practice Director of Insurance andFinancial Services since June 2009, was most recently European PracticeDirector for the Insurance & Financial Services Practice, and is amember of the Global Practice Management Team. Mr. Pike advises insurersand banks on the full range of services including core actuarial activities andwide ranging strategic advice. Mr. Pike’s client experiences includesenior relationship management activities with large clients, M&Atransactions; advising a large UK company on the exercise of discretion in thewith-profits funds; and restructuring of business operations. Mr. Pikegraduated from Oxford University and joined Watson Wyatt in 1983, qualifying asa Fellow of the Institute of Actuaries in 1988.

 

**Paul E. Platten** (age 56) has been Vice President andGlobal Practice Director of the Human Capital Group since 2005 and served asthe Managing Consultant for the Boston, Massachusetts office of Watson WyattWorldwide from 2003 to 2005. He joined Watson Wyatt in June 2000 as theNational Practice Leader of Strategic Rewards, specializing in executivecompensation and strategic human resource issues. Mr. Platten has spentmore than 20 years working with organizations to develop pay and performanceprograms that effectively link with strategic goals and cultural values. Priorto joining Watson Wyatt, Mr. Platten was the partner in charge of thePricewaterhouseCoopers LLP Boston Global HR Solutions practice. For 15 yearsprior to joining PricewaterhouseCoopers, Mr. Platten was part of the HayGroup as Vice President and Managing Director of Eastern Operations. Mr. Plattenis a frequent lecturer at the American Bar Association and World at Work. He isco-

 

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author of the book *People,Performance and Pay*, which has been translated into three languages.Mr. Platten holds a B.S. degree in Psychology from Boston College and aPh.D. degree in Industrial and Organizational Psychology from New YorkUniversity.

 

***Chandrasekhar (Babloo) Ramamurthy***(age 53) hasserved as Vice President, Regional Manager (Europe) of Watson Wyatt since 2005and served as a member of Watson Wyatt’s board of directors from 2005 to2008.  He joined The Wyatt Company in1977.  Following the establishment of theglobal Watson Wyatt Worldwide alliance in 1995, Mr. Ramamurthy became apartner of Watson Wyatt LLP.  Mr. Ramamurthyhas been based primarily in London, although between 1983 and 1986 hetransferred to the international benefits and compensation consulting teambased in the New York region, where he dealt primarily with the head offices ofU.S. multinational companies.  Sincereturning to Europe, Mr. Ramamurthy has been the account manager for anumber of the firm’s major clients in the U.K., advising on a broad range ofhuman capital and employee benefits issues both in the U.K. and overseas.  Mr. Ramamurthy was the Head of theEuropean Benefits Consulting Practice from 1999 to 2004, before being appointedManaging Partner of Watson Wyatt LLP in 2004, and has also served on WatsonWyatt LLP’s Partnership Board.  Mr. Ramamurthyholds an honours degree in Mathematics from King’s College, London.

*** ***

**Gene H. Wickes** (age 56) has served as the Global Director of theBenefits Practice of Watson Wyatt since 2005 and as a member of Watson Wyatt’sboard of directors from 2002 to 2007.  Mr. Wickeswas Watson Wyatt’s Global Retirement Practice Director in 2004 and theU.S. West Division’s Retirement Practice Leader from 1997 to 2004.  Mr. Wickes joined Watson Wyatt in 1996 asa senior consultant and consulting actuary. He assists clients with their retirement and executive benefitissues.  Prior to joining Watson Wyatt,he spent 18 years with Towers Perrin, where he assisted organizations withwelfare, retirement, and executive benefit issues.  Mr. Wickes is a Fellow of the Society ofActuaries and has a B.S. in Mathematics and Economics, an M.S. in Mathematicsand an M.S. in Economics, all from Brigham Young University.

 

**CORPORATEGOVERNANCE**

 

***CorporateGovernance Guidelines***

 

Watson Wyatt Worldwide, Inc. is committed toexercising the highest standard of ethical conduct and corporate governancewhich we believe best serve our stockholders, employees and clients. We haveestablished and adopted Corporate Governance Guidelines for maintaining ourethical standards, as well as, adopting corporate governance practices thatform a solid framework for effectively aligning our business objectives.Stockholders may obtain copies of our Codes of Business Conduct and Ethics, theCorporate Governance Guidelines and our Board committee charters on the Company’swebsite at http://www.watsonwyatt.com/ir or send a request addressed to WatsonWyatt Worldwide, Inc., Office of the Secretary, 901 N. Glebe Road,Arlington, Virginia 22203.

 

***Code of BusinessConduct and Ethics***

 

The Company has a Code of Business Conduct and Ethicsthat applies to all of its employees, including the President and ChiefExecutive Officer, the Chief Financial Officer and the Controller. The Companyalso has a Code of Business Conduct and Ethics that applies to all of theCompany’s Directors and any amendment or waiver of the Codes for executiveofficers and Directors will be disclosed on the Company’s website.

 

***Communications withthe Board or Presiding Director***

 

It is the policy of the Company to facilitatecommunications of stockholders and other interested parties with the Board ofDirectors and the Company’s Presiding Director. Communications to Directors ofthe Company must be in writing and may be sent to any Director, in care of theOffice of the Secretary, Watson Wyatt Worldwide, Inc., 901 N. Glebe Road,Arlington, Virginia 22203. Communications may be sent by email to all Directorsas a group or to the Presiding Director using the email addresses posted by theCompany on its web site at www.watsonwyatt.com under “Investor Relations.”Communications should identify the person submitting the communication, theinterest of such person in the subject matter of the communication, and theaddress, telephone number and email address of the person submitting thecommunication. Each communication will be forwarded to the Director(s) towhom it is addressed. The Board has authorized the Company’s Secretary to adoptreasonable procedures for collecting and distributing communications toDirectors. If such procedures are adopted, they will be made available on theCompany’s website at www.watsonwyatt.com under “Investor Relations.”

 

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***Presiding Director***

 

The Company’s Board of Directors has designated R.Michael McCullough as the Presiding Director of all executive sessions of theindependent Directors of the Board.

 

***Nominees forDirector***

 

The Nominating and Governance Committee makesrecommendations to the Board concerning individuals who are qualified to standfor election as Directors. The Nominating and Governance Committee seeksindividuals with a broad and diverse range of skills who have demonstrated thehighest levels of personal and business integrity and sound business judgment,particularly in professional services industries. The Nominating and GovernanceCommittee will consider suggestions of possible nominees for Director from theBoard of Directors and management, and may in the future retain a search firmto assist it in identifying possible nominees for Director.

 

The Nominating and Governance Committee also willconsider recommendations of possible nominees for Director submitted bystockholders. Recommendations may be submitted to any member of the Nominatingand Governance Committee in care of the Office of the Secretary, Watson WyattWorldwide, Inc., 901 N. Glebe Road, Arlington, Virginia 22203. Candidatesrecommended by stockholders will be evaluated in the same manner as othercandidates considered by the Nominating and Governance Committee.

 

***Standing Committeesof the Board***

 

The Company has three standing committees: Audit,Compensation and Nominating and Governance. These committees operate pursuantto written charters adopted by the Board of Directors. The Company also has aRisk Management Committee consisting of six members, three of which areindependent directors.

 

     **Audit Committee**

 

The Audit Committee’s principal responsibilities, asset forth in its charter, are to assist the Board in overseeing the Company’sfinancial reporting process that is established and implemented by management.The Audit Committee oversees the work of the independent registered public accountingfirm and also reviews information provided by the Company’s Director ofInternal Audit, independent registered public accounting firm, and managementconcerning internal accounting procedures and controls.

 

The Audit Committee is currently composed of fourindependent Directors, John J. Gabarro, R. Michael McCullough, Gilbert T. Rayand John C. Wright (Chair), all of whom meet the current independencerequirements of NYSE and NASDAQ’s listing standards. The Board of Directors hasdetermined that Mr. Wright is both independent and an audit committeefinancial expert, as defined by SEC guidelines and NYSE and NASDAQ listingstandards. The Audit Committee held eight meetings during fiscal year 2009.

 

     **Compensation Committee**

 

The Compensation Committee oversees executivecompensation policies, including the compensation of the Chief ExecutiveOfficer (“CEO”), and oversees administration of the 2001 Employee StockPurchase Plan, the 2001 Deferred Stock Unit Plan for Selected Employees, theWatson Wyatt Performance Share Bonus Incentive Program and the 2000 Long-TermIncentive Plan. The Board has delegated to the Compensation Committee mattersassociated with succession planning for the CEO. The Compensation Committeecurrently is composed of John J. Gabarro, Brendan R. O’Neill, Linda D. Rabbittand Gilbert T. Ray (Chair), all independent Directors, and all of whom meet theindependence requirements of the NYSE and NASDAQ’s listing standards. TheCompensation Committee held six meetings during fiscal year 2009.

 

     **Nominating and Governance Committee**

 

The Nominating and Governance Committee providesassistance to the Board of Directors of the Company in fulfilling itsresponsibilities: by identifying individuals qualified to become Directors andapproving the nomination of candidates for all Directorships to be filled bythe Board of Directors or by the stockholders of the Company; identifyingDirectors qualified to serve on the committees established by the Board ofDirectors and recommending to the Board of Directors members for each committeeto be filled by the Board of Directors; maintaining and reviewing the CorporateGovernance Guidelines; and otherwise taking a leadership role in shaping thecorporate governance of the Company.

 

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The Nominating and Governance Committee currently iscomposed of R. Michael McCullough (Chair), Brendan O’Neill, Linda D. Rabbittand John C. Wright, all independent Directors, and all of whom meet theindependence requirements of the NYSE and NASDAQ’s listing standards. TheNominating and Governance Committee held five meetings during fiscal year 2009.

*** ***

***Board Meetings***

 

The Board of Directors conducted eleven meetingsduring fiscal year 2009. All Directors attended 75 percent or more of themeetings of the Board and the committees on which they served.

*** ***

***Meetings ofNon-Employee Directors***

 

The non-employee Directors met without any managementDirectors or employees present two times last year to discuss board policies,processes and practices. The Presiding Director, who is also the Chair of theNominating and Governance Committee, chaired these meetings.

*** ***

***Annual MeetingAttendance***

 

All Directors attended the 2008 Annual Meeting ofStockholders. All Directors are expected to attend the annual meeting of theCompany’s shareholders.

 

**Item 11.**

 

**EXECUTIVE COMPENSATION**

** **

**CompensationDiscussion and Analysis**

** **

**ExecutiveSummary**

 

Our Compensation Discussion and Analysis will provide you with anoverview and analysis of (i) our compensation programs and policies for certainof our executive officers identified below; (ii) the material compensationdecisions made by the Compensation Committee (the “Committee”) of the Board ofDirectors under those programs and policies as reflected in the executivecompensation tables that appear following this Compensation Discussion andAnalysis; and (iii) the material factors that the Committee considered inmaking those decisions.

 

The Company’s executivecompensation philosophy and the elements of our executive compensation programwith regard to fiscal year 2009 are summarized below:

 

·                  The main objectives of the Company’s executive compensation program areattracting, motivating and retaining the best executives and aligning theirinterests with our strategy of maximizing stockholder value.

 

·                  Total direct compensation under the Company’s executive compensationprogram consists of base salary, supplemental performance-based awards in theform of fiscal year-end bonuses, and long-term incentive opportunities.

 

·                  The Committee is responsible for evaluating and setting thecompensation levels of our executive officers. In setting compensation levels for executives other than the CEO, theCommittee solicits the input and recommendations of our CEO, John J. Haley.

 

·                  Total target and actual direct compensation levels for the Company’snamed executive officers compare lower than those of its peer group, primarilybecause of lower long-term incentive targets but also because of lower annualincentive targets.  Because the Company’sexecutive compensation program has higher fixed elements such as base salariesand pension value, it has lower incentive elements.  As a result, this has led the Committee totarget total direct compensation lower than other companies of our size withsimilar performance.

 

·                  During fiscal year 2009, the Company operated in the midst of the worstrecession since the Great Depression, which resulted in a worldwide economicslowdown, a freeze in available credit markets, and a crisis in confidence on aglobal scale.  In spite of thesechallenges, the Company achieved the second best operating results in theCompany’s history.  Revenues were $1.68billion, up 3 percent on a constant

 

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currency basis, and net income for the year was $146.5million, or $3.42 per diluted share. Constant currency adjusted earnings per share, excluding severance,increased 11 percent from $3.50 in fiscal year 2008 to $3.89 in fiscal year2009.  The Company managed strong profitmargins of more than 12 percent and had zero debt as of June 30, 2009.

 

·                  Revenue growth and earnings per share are the primary quantitativemetrics used by the Committee to determine long-term incentive compensationearned during the applicable three-year performance periods designated by theCommittee for measuring long-term performance. For performance shares that vested at the end of fiscal year 2009, thecompensation decisions reported herein reflect the Company’s performance abovetarget with respect to both metrics for the three-year performance periodending June 30, 2009.

 

·                  Based on the Company’s sustained performance year over year relative toits peer group and the respective individual accomplishments of our namedexecutives during fiscal year 2009, the Committee deemed it appropriate forfiscal year-end bonuses for our named executives for fiscal year 2009 to bedemonstrably higher than target.  Inaddition, certain named executives received a one-time transaction bonus inrecognition of significant and extraordinary efforts made by those executivesin negotiating and executing the pending merger agreement with Towers Perrin.

 

·                  The Committee will continue to consider all relevant competitivefactors in determining compensation for our named executive officers.

 

**Named Executives**

 

Under the heading “ExecutiveCompensation,” we present a series of tables containing specific informationabout the compensation earned or paid in fiscal year 2009 to the followingindividuals, whom we refer to as our named executives:

 

·                  John J. Haley, President, Chief Executive Officer, Chairman of theBoard and Director

·                  Roger F. Millay, Vice President and Chief Financial Officer

·                  Carl D. Mautz, former Vice President and Chief Financial Officer

·                  Gene H. Wickes, Vice President and Global Director of the BenefitsPractice

·                  Kevin L. Meehan, Vice President and Regional Manager (North America)

·                  Walter W. Bardenwerper, Vice President, Secretary and General Counsel

 

Mr. Mautz retired fromthe Company effective August 29, 2008. He was replaced by Mr. Millay, who started with the Company on August 18,2008.

 

The discussion below is intended to help you understand the detailedinformation provided in those tables and to put that information into contextwithin our****overall compensation program.

 

**Objectivesof Our Executive Compensation Program**

 

The objectives of our executive compensation program are to:

 

1.               Attract,motivate and retain the most highly qualified and capable executives byproviding competitive compensation based on individual and Company performanceand reflecting our mix of compensation elements.

 

We seek to compensate all of our executives fairly on a global basisand on a basis that reflects the Company’s performance relative to its keycompetitors.  Toward this end, we providecompetitive base compensation, supplemented with variable compensation based onindividual achievement of annual results and, for select senior executives,long-term results.  As discussed below,we tie both annual and long-term compensation to quantitative and qualitativeperformance assessments that impact our success in the marketplace.

 

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2.               Alignexecutive compensation with the Company’s overall business strategies andvalues.

 

We apply our compensation objectives to all of our executives.  In implementing our compensation objectives,we take into consideration the Company’s business strategy and prevailingmarket conditions.  Specifically, ourexecutive compensation program is designed to reinforce business goalsidentified through our PerformanceExcellence process and our Horizoninitiatives.

 

Our PerformanceExcellence process is an annual three-phase performancemanagement cycle composed of planning, a mid-year review and a year-endreview.  It is designed to (a) align ouremployees’ (whom we refer to as our associates) performance goals to ourbusiness priorities; (b) develop their ability to achieve their goals; and (c) recognizeand reward their business results based on fair and accurate measurement.

 

Horizon is the Company’s strategic plan for attaining its vision ofmarket leadership in the human capital consulting profession.  Factors included in the strategic plan takeinto account our market share gains, the prioritization and allocation of ourfinancial investments and resources based on contribution to market leadership,effectiveness in enhancing our organizational structure, and the achievement ofstrategic acquisitions.

 

3.               Focusmanagement on maximizing stockholder value.

 

We also believe that the best way to directly align the interests ofour named executives with the interests of our stockholders is to ensure thatour named executives acquire and retain an appropriate level of stock ownershipthroughout their careers with us.  Infiscal year 2009, our compensation program pursued this specific objective inthree ways: (i) through our Performance Share Bonus Incentive Program(discussed below); (ii) by paying 25 percent of annual fiscal year-end bonusesto our named executives and other senior executives in the form of Companystock; and (iii) through our stock ownership guidelines for our namedexecutives, as described in more detail below.

 

4.               Foster anownership approach among our executives and reward their focus on long-termobjectives.

 

For our named executives, a portion of their fiscal year 2009 totaldirect compensation was delivered through our Performance Share Bonus IncentiveProgram, which is a long-term performance-based arrangement that pays out inCompany stock based on the achievement of performance goals over a three-yearperiod.  The Performance Share BonusIncentive Program combines the elements of basing compensation on corporateperformance, focusing on stockholder value, and rewarding long-term results.

 

When implementing ourcompensation program, the level of our named executives’ compensation isdetermined primarily based upon (a) an internal pay equity analysis that takesinto account the named executive’s level of responsibility and function withinthe Company; (b) the extent to which the named executive has helped drive theachievement of financial and strategic goals that impact stockholder value; (c)the overall performance and profitability of the Company; and (d) ourassessment of the competitive marketplace, including a comparison against whatwe deem to be our peer group of companies. We do not maintain employment agreements with any of the namedexecutives.

 

**How WeDetermine and Assess Executive Compensation**

 

The CompensationCommittee is responsible for evaluating the compensation levels for each of thenamed executives of the Company and for administering the Company’s cash- andequity-based incentive plans.  TheCommittee engages an independent compensation consultant, Frederic W. Cook &Co., Inc. (“Frederic Cook”) and, in setting compensation levels for executivesother than the CEO, solicits the input and recommendations of our CEO, JohnHaley.  Frederic Cook periodicallyreviews the Company’s total compensation philosophy, target peer group andtarget competitive positioning for reasonableness and appropriateness; conductscompetitive analyses of executive compensation for the chosen peer group andreports on its findings to the Committee; and reviews the Company’s totalexecutive compensation program on behalf of the Committee, in consultation withmanagement, and advises the Committee of changes that could be made to betterreflect evolving best practices and improve effectiveness.  For fiscal year 2009, the CompensationCommittee instituted a formal process for conducting an annual assessment ofits independent compensation consultant.

 

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In making its determinations, the Committee relies on publiclyavailable information, commissioned survey data, and its knowledge of themarket for key executives.  The Compensation Committee takes this peerdata information into account and generally seeks to provide competitive pay bytargeting total actual compensation opportunities for our named executivesbetween the 50th and 75th percentiles relative to a peer group.  However, the Compensation Committee does nottarget a particular peer group percentile for particular elements ofcompensation.  The peer group wasselected by the Compensation Committee based on the recommendations of FredericCook and input from management on the comparability of the business operationsof potential peer group companies, and is re-evaluated annually.

 

The peer group companies include those few publiccompanies with human resources consulting lines of business.  Because many of the Company’s directcompetitors are privately owned (e.g., Towers Perrin and the Hay Group) or aresubsidiaries of larger public companies (e.g., Mercer Human Resource Consultingand Buck Consultants), the number of direct competitors for which publicinformation is available for peer group comparison is limited.  Therefore, additional peer group companies inthe consulting, staffing and professional services businesses are selectedusing the following criteria: (a) reasonably comparable size (based on revenueand market capitalization); (b) positive earnings before interest, taxes,depreciation and amortization (EBITDA); (c) high human capital/low financialcapital business model; (d) creative/innovative business product; (e) highlyskilled employee base; (f) deemed a “comparable” by securities firms providingresearch coverage; and (g) global reach.

 

For conducting a competitive assessment of the compensation levels ofeach of its named executives in fiscal year 2009, the Compensation Committeeapproved a peer group of ten companies, with two changes from the peer groupused in the prior fiscal year.  Hudson Highland,which was a “primary” company in the prior fiscal year, was dropped because itis now primarily a staffing firm. Resources Connection was moved up to the “primary” sub-set.  Frederic Cook presented the Committee withcompetitive compensation comparisons for the Company’s fiscal year 2008 actualtotal compensation and fiscal year 2009 target compensation against competitive2008 actual and target compensation for the peer group companies.  Comparisons were made separately by FredericCook against the five “primary” companies considered to be most similar to theCompany, as well as against the combined peer group.   The 10 companies comprising the combinedpeer group for fiscal year 2009 are as follows:

 
| ***Primary Peers*** | *** ***         | ***Secondary Peers*** |
|---------------------|----------------------|-----------------------|
| ·              | FTI Consulting       |                  | · |   | Aon |
| ·              | Hewitt Associates    |                  | · |   | CIBER |
| ·              | Navigant Consulting  |                  | · |   | Convergys |
| ·              | Perot Systems        |                  | · |   | Gartner |
| ·              | Resources Connection |                  | · |   | Huron Consulting |

 
| ** **            | ** **       | **Position Relative to Watson  Wyatt (Based on Fiscal Year 2008 Data)** | ** ** |
|-----------------------|------------------|-------------------------------------------------------------------------|------------|
| ** **            | ** **       | **Annual Revenue  ($mil)**                                              | ** ** | **Market Capitalization  ($mil)** | ** ** | **Number of  Employees** | ** ** |
| Median Size: Primary  |             | 2,036                                                                   |       | 1,652 |   | 11,683 |   |
| Median Size: Combined |             | 1,293                                                                   |       | 1,423 |   | 8,400 |   |
| ** **            | ** **       | ** **                                                              | ** ** | ** ** | ** ** | ** ** | ** ** |
| ·                | **Watson Wyatt** | ** **                                                              | **1,760**  | ** ** | **2,038** | ** ** | **7,230** | ** ** |
|                       |                  |                                                                         |            |  |  |  |  |  |

 

Watson Wyatt isabove median in size (average percentile rank of 60% when measured in terms ofrevenue, earnings before interest, taxes, depreciation and amortization, totalassets, market capitalization and number of employees) compared to the combinedpeer group.  The combined peer group wasused for this purpose because it was determined that there are too few companiesin the primary peer group to calculate meaningful percentile ranks.  An analysis performed for the Company byFrederic Cook compared the compensation percentile ranks for our namedexecutives versus the combined peer group based on 2008 data.  The analysis revealed that the Company’s basesalaries for named executives continued to compare above median, which theCommittee believes is appropriate given the Company’s percentile rank based onaverage size.  The competitiveness oftarget bonuses for our named executives varied by position and they aregenerally less competitive than our base salaries, but are sufficient to resultin actual total cash compensation that is above median when our performance isabove median.

 

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The value of long-termincentive compensation compared low, generally falling between the 25th percentile andthe median, with the result that total direct compensation was at or below themedian for most of our named executives. However, Watson Wyatt is one of only a few companies in our combinedpeer group with a defined benefit pension plan. Taking into account both the change in pension value and actual totaldirect compensation generally increases the competitiveness of the Company’sactual total compensation to above median and, in some cases, above the 75th percentile.

 

In light of itsdetermination regarding actual total compensation, the Committee determinedthat total direct compensation for our named executives should continue to bepositioned near, but below, the median. As a result, the Committee did not increase target annual and long-termincentive levels for fiscal year 2009.  However,based on its post-year-end review of the Company’s sustained positiveperformance in fiscal year 2009, the Committee concluded that the annualyear-end bonuses for our named executives generally should exceed target inorder to reflect their strong performance during the fiscal year.

 

**Elements of Our Executive Compensation Program**

 

Our executive compensation program consists primarily of the followingintegrated components: base salary, supplemental performance-based awards inthe form of fiscal year-end bonuses, and long-term incentive opportunities,which together make up a named executive’s total direct compensation for agiven fiscal year.  The only componentnot available to all associates is the long-term incentive opportunity.

 

The process for determining Mr. Haley’s salary and fiscal year-endbonus is discussed in more detail on page 18. In determining base salary increases and fiscal year-end bonus paymentsfor the named executives other than Mr. Haley, the Committee asks forrecommendations from Mr. Haley.  Inmaking his recommendations for the named executives, Mr. Haley reviews eachnamed executive’s performance against their individual PerformanceExcellencegoals.  For our named executives, thesegoals consist primarily of objectives addressing the financial performance andeffective management of their respective business practice, region or corporatefunction.  While this process reflects amethodical approach to evaluating the job performance of our named executives,achievement of these goals is evaluated subjectively and scored in fourweighted performance domains, as described below in the discussion relating tofiscal year-end bonuses.  In making hisrecommendations, Mr. Haley also takes into consideration the named executive’sexperience, the extent to which the named executive has contributed to theCompany’s success during the fiscal year, the named executive’s expected levelof responsibility in the coming year, base salary and bonus pool levels for theCompany as a whole, peer group competitive data and relative pay levels ofother Watson Wyatt associates.  Thefollowing discussion will describe each of the components that comprise thetotal direct compensation of our named executives.

 

***Base Salary***

 

In order to provide a fixed level of compensation for the performanceof an executive’s regular duties, the Company pays all of its named executivesa fixed, annual base salary, which the Committee reviews and approves at thebeginning of each fiscal year and which becomes effective on October 1 of eachyear.  Base salary decisions are highlydiscretionary, and we do not target base salary as a particular percentage oftotal compensation.  Mr. Haley makessalary recommendations to the Committee for the named executives other thanhimself.

 

Based upon thequalitative evaluation process discussed above, in conjunction with a review ofcompetitive peer group survey data, Mr. Haley recommended salary increases forfiscal year 2009 for Messrs. Wickes and Meehan of 4.5% and for Mr. Bardenwerperof 4.2% that became effective October 1, 2008. In making these recommendations, the principal factors that Mr. Haleyconsidered were the Company’s overall financial results for fiscal year 2008,the individual performance of each executive during the fiscal year and salarylevels of similarly positioned executives in the Company’s primary peergroup.  Mr. Mautz did not receive asalary increase as he retired from the Company prior to October 1, 2008.  Mr. Millay did not receive a salary increaseeffective October 1, 2008, as he had started with the Company just prior tothat time.  Mr. Haley discussed eachrecommendation with the Committee and, thereafter, the Committee approved therecommended salary increases.

 

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A similar process wasfollowed for determining the base salaries for the named executives other than Mr.Haley effective October 1, 2009.  Becauseof general economic conditions and a desire to be prudent. Mr. Haleyrecommended that base salaries for all named executives remain unchangedeffective October 1, 2009, and the Committee agreed with hisrecommendation.  As discussed below, Mr. Haley’sbase salary remained unchanged, as did the base salaries for the namedexecutives other than Mr. Haley.

*** ***

***Fiscal Year-End Bonuses***

 

The Company’s named executives participate in an annual fiscal year-endbonus program, which the Company provides in order to supplement base salaryand reward achievement of individual, business unit/function and/or overallCompany results for the most recently completed fiscal year.  Pursuant to this program, each namedexecutive is assigned a pre-determined bonus target as a percentage of basesalary as shown in the table below:

 
| **Name**            | ** ** | **Target  Bonus Percentage** | ** ** |
|---------------------|------------|------------------------------|------------|
| John Haley          |       | 100.0                        | %          |
| Roger Millay        |       | 62.5                         | %          |
| Carl Mautz          |       | 62.5                         | %          |
| Gene Wickes         |       | 62.5                         | %          |
| Kevin Meehan        |       | 62.5                         | %          |
| Walter Bardenwerper |       | 62.5                         | %          |

 

Target bonus levels for our named executives are based on theirrespective band levels, which generally reflect their level of responsibilitiesand contributions to the business. Target bonus percentage increases as an associate’s band levelincreases.  This reflects a belief thatas associates move to higher levels of responsibility with greater ability toinfluence the Company’s results, a higher proportion of pay should bedetermined to be “at risk” and dependent on Company and individualperformance.  Mr. Haley’s target ishigher than for the other named executives in order to reflect his greaterlevel of responsibility and how critical his contributions are to the successof the Company.

 

The amount of fiscal year-end bonuses awarded as a percentage of targetis discretionarily determined.  Followingthe end of fiscal year 2009, Mr. Haley evaluated the performance of each of theother named executives by scoring their performance in four weightedperformance domains, as follows: (i) Business practice, region or Corporatefunction (representing a qualitative assessment of financial and individualperformance in leading their respective practice, region or Corporate function)— 50%; (ii) Watson Wyatt (representing a subjective judgment of theircontribution to the Company as a whole during the fiscal year) — 25%;  (iii) Other goals (representing individualgoals that were developed through our PerformanceExcellence process) — 15%; and(iv) Global Matrix Group (GMG) participation (representing their contributionas a member of the Company’s GMG) — 10%. Mr. Haley assigned a rating to each of the other named executives foreach performance category, which was then applied against the weighting for theparticular category and totaled for each of the named executives to arrive atan overall performance rating for the fiscal year utilizing a six-pointscale.  A named executive’s actual bonusis based on this rating and the named executive’s applicable bonus fundingpercentage.  The bonus funding percentageis the percentage of the Company-wide bonus pool that is subjectively allocatedto each applicable practice, region or Corporate function as a result of theirperformance during the fiscal year.

 

In making hisrecommendations within the framework discussed above, Mr. Haley took intoaccount each named executive’s responsibilities and accomplishments during thefiscal year.  In addition to thesustained positive performance of the Company in fiscal year 2009 relative toits peers, the bonus recommendations provided to the Committee by Mr. Haleytook into account the following qualitative assessment of each named executive’sperformance during the fiscal year.

 

Mr. Millay successfullytransitioned into his role as the new Chief Financial Officer of the Companyand efficiently and effectively oversaw the Company’s adherence to the higheststandards of financial reporting and controls. He led the development of improved processes and reporting capabilitieswithin the global finance and accounting functions, while at the same time providingstrong operational support and guidance to senior management and the Board ofDirectors.

 

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Mr. Wickes, as theleader of the Company’s largest practice, managed to guide the BenefitsPractice to a successful year in the midst of a global economic crisis anddeteriorating market conditions.  Pre-taxnet operating income for the Benefits Practice reached an all-time high, andthe annual organic, constant currency growth rate for the practice was strong,especially when considering the global economic environment.

 

Mr. Meehan, like Mr. Wickes,adapted well to rapidly changing and deteriorating market conditions and ledour North America region to a strong performance in fiscal year 2009.  The North America region effectively managedits costs, preserved its operating margins and was our most profitable region.

 

Mr. Bardenwerperprovided critical leadership in helping the Company through the economiccrisis.  He also made significant stridesin guiding the Company through the regulatory and litigation challenges facingit and provided valuable support to senior management and the Board ofDirectors.

 

All of the namedexecutives other than Mr. Haley were rated by Mr. Haley as a “5 –Very Strong Performance,” corresponding to a suggested bonus range of 115% to135% of target based on the named executives’ applicable bonus fundingpercentage.  Based on these performanceratings, Mr. Haley recommended annual bonuses ranging from 118.7 percent****to 138.9 percent of target for the other named executives,as set forth below.

 
| **Name**     | ** ** | **Area**           | ** ** | **Bonus as a  Percentage of  Target** | ** ** |
|--------------|------------|--------------------|------------|---------------------------------------|------------|
| Millay       |       | F&A            |       | 118.7                                 | %          |
| Mautz        |       | F&A            |       | N/A                                   |       |
| Wickes       |       | Benefits  Practice |       | 138.9                                 | %          |
| Meehan       |       | North America      |       | 133.6                                 | %          |
| Bardenwerper |       | General Counsel    |       | 131.5                                 | %          |

 

Because Mr. Mautzretired from the Company effective August 29, 2008, he did not receive afiscal year-end bonus for fiscal year 2009.

 

Mr. Haley discussedeach recommendation with the Committee. The Committee has the discretion to increase or decrease each of theseamounts (though not above the maximum incentive award established by theCommittee, described under “Tax and Accounting Treatments of Elements ofCompensation” below), but determined to approve all of the recommended payoutswithout adjustment.

 

In order to facilitatestock ownership by associates at our most senior levels, we have an equityincentive feature of our bonus program under which 25 percent of the totalbonus awarded is delivered in the form of Company stock under the Company’s2001 Deferred Stock Unit Plan for Selected Employees, which could vest based onthe discretion of the Committee over two years. The number of shares granted is based on the closing share price on thegrant date, which is the bonus payment date. Consistent with past practice, the Committee exercised its discretion togrant fully vested shares for fiscal year 2009.

 

***TransactionBonuses***

 

Mr. Haley also maderecommendations to the Committee for special one-time cash bonuses to a selectnumber of executives, including some of the named executives, in recognition ofthe significant and extraordinary efforts made by those executives innegotiating and executing the pending merger agreement with Towers Perrin.  The Committee noted that the exceptionalfiscal year 2009 results discussed above for the Company were achieved withinthe same time period as the Company’s Chief Executive Officer, the ChiefFinancial Officer, the General Counsel and the Global Director of the BenefitsPractice were successfully negotiating the largest merger in the history notonly of the Company itself, but of the human capital/actuarial industry as awhole.

 

Mr. Wickes, Mr. Bardenwerperand Mr. Millay took an active role throughout the lifecycle of the dealand devoted a significant amount of time and effort in helping to negotiate theterms of the merger agreement.  Mr. Millayand Mr. Bardenwerper also both played key roles in leading the duediligence function and providing assistance in finalizing 

 

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the contractual terms ofthe merger.  Accordingly, followingdiscussions of the time and effort exerted by each named executive, theCommittee approved the recommendations of Mr. Haley for special one-timecash bonuses in the amount of $150,000 for Mr. Millay, $200,000 for Mr. Wickesand $200,000 for Mr. Bardenwerper.

 

***Long-Term Incentive Compensation: Performance Share Bonus IncentiveProgram***

 

In fiscal year 2009, our named executives received long-term incentivecompensation under our Performance Share Bonus Incentive Program (the “SBIProgram”).  The SBI Program advances ourexecutive compensation objectives by rewarding the achievement of strategicperformance objectives with equity awards. As a result, the Committee weighted our SBI Program so that it providesa significant portion of our named executives’ total direct compensationopportunity.

 

The target number ofdeferred stock units that may be earned by the named executives under the SBIProgram represents a multiple of the cash portion (75 percent) of the namedexecutive’s target bonus for the year of grant, with the multiples ranging from2.0 for Mr. Haley to 1.25, 1.0 or 0.75 for the other namedexecutives.  Mr. Haley’s multiple ishigher because his leadership is considered by the Committee to be critical tothe Company.  Mr. Millay’smultiplier, while not as high as Mr. Haley’s, is higher than for the othernamed executives in order to reflect the importance of his role as ChiefFinancial Officer.  Mr. Bardenwerper’smultiplier is lower than the remaining named executives to reflect the factthat he is not a member of the Global Matrix Group.  The following table shows how the number ofdeferred stock units granted in fiscal year 2009 under the SBI Program wasdetermined for each of the named executives, for the performance periodbeginning July 1, 2008 and ending June 30, 2011.

 
| **LAST NAME** | ** ** | **BASE  PAY AS  OF  10/1/2008** | ** ** | **FISCAL  YEAR-  END  BONUS  (FYEB)  TARGET** | ** ** | **PORTION  OF FYEB  DELIVERED  AS CASH** | ** ** | **CASH  PORTION  OF  TARGET  BONUS** | ** ** | **MULTIPLIER** | ** ** | **FULL  CASH  EQUIVALENT  OF  STOCK  GRANT** | ** ** | **STOCK  PRICE AS  OF  6/30/2008** | ** ** | **NUMBER  OF  DEFERRED  STOCK  UNITS  GRANTED** | ** ** |
|---------------|------------|---------------------------------|------------|-----------------------------------------------|------------|------------------------------------------|------------|--------------------------------------|------------|----------------|------------|----------------------------------------------|------------|------------------------------------|------------|-------------------------------------------------|------------|
| HALEY         |       | $                               | 915,000    |                                          | 100.0      | %                                        | 75.0       | %                                    | $          | 686,250        |       | 2.00                                         |       | $                                  | 1,372,500  |                                            | $          | 52.89 |   | 25,951 |   |
| MILLAY        |       | $                               | 550,000    |                                          | 62.5       | %                                        | 75.0       | %                                    | $          | 257,813        |       | 1.25                                         |       | $                                  | 322,266    |                                            | $          | 52.89 |   | 6,094 |   |
| WICKES        |       | $                               | 575,000    |                                          | 62.5       | %                                        | 75.0       | %                                    | $          | 269,531        |       | 1.00                                         |       | $                                  | 269,531    |                                            | $          | 52.89 |   | 5,097 |   |
| MEEHAN        |       | $                               | 575,000    |                                          | 62.5       | %                                        | 75.0       | %                                    | $          | 269,531        |       | 1.00                                         |       | $                                  | 269,531    |                                            | $          | 52.89 |   | 5,097 |   |
| BARDENWERPER  |       | $                               | 500,000    |                                          | 62.5       | %                                        | 75.0       | %                                    | $          | 234,375        |       | 0.75                                         |       | $                                  | 175,781    |                                            | $          | 52.89 |   | 3,324 |   |

 

See note 1 to the table on Grants of Plan-Based Awards in Fiscal 2009on page 24 for more information on the formula to be used to determine theamount payable based on results for the fiscal 2009 through 2011 performanceperiod.

 

The number of deferredstock units earned is based upon the extent to which the Company meets certainperformance goals set at the beginning of the three-year performanceperiod.  For the fiscal 2007 through 2009performance period, the fiscal 2008 through 2010 performance period, and thefiscal 2009 through 2011 performance period, the Committee set financialmetrics for the SBI Program because it concluded that such metrics accuratelyreflected the strategic performance goals for the Company and are aligned withthe interests of the Company’s stockholders. The financial metrics for each of the three-year SBI Program performanceperiods are earnings per share growth and organic revenue growth.  For significant foreign operations, revenuefor use in the revenue growth calculations reflects a constant currencyexchange between the local currency and the U.S. dollar.

 

Based on the extent towhich financial metrics are achieved over a three-fiscal-year period,participants vest in between zero and 170 percent of the target number ofdeferred stock units, with a threshold vesting level set at 30 percent oftarget.  Dividend equivalents arecredited only on stock units that ultimately vest.

 

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See note 2 to the Stock Vested During Fiscal Year 2009 table on page 27****for information on the formula used to determine the amountpayable and the results for the fiscal 2007 through 2009 performance period.

 

The fiscal year 2008 andfiscal year 2009 SBI Program documents indicate that the Committee shallaccelerate the determination of vesting of awards and provide for theirimmediate settlement in stock or cash in connection with a change in control,subject to the Committee’s authority to assure fair and equitable treatment ofparticipants in the SBI Program.

 

Accordingly, on September 4,2009, the Committee determined that, upon and subject to consummation of theproposed merger between Watson Wyatt Worldwide, Inc. and Towers, Perrin,Forster & Crosby to form a new, publicly listed company called TowersWatson & Co. (the “Merger”), the fiscal 2008 SBI Program awards shallnot vest, with the effect that nothing will be earned or paid under thoseawards and the awards will be forfeited, but the fiscal 2009 SBI Program willvest at 100% of target.  In reachingthese determinations, the Committee assessed performance to date andprojections of performance.  As a resultof these evaluations, the Committee concluded that it is not likely that theCompany will achieve the fiscal year 2008 to 2010 minimum performancemetrics.  With respect to the fiscal 2009to 2011 performance period, the Committee determined that it is appropriate tosettle the awards at target in order to treat participants fairly, retain keytalent, and take account of the fact that the level at which performancemetrics may be met at the time of the Merger will be uncertain, as theperformance period would be only halfway completed as of December 31,2009, the projected date of the Merger.

 

As a result, thefollowing number of shares of Towers Watson & Co.’s Class Acommon stock, plus dividend equivalents that will have accrued, will be paid tothe Company’s named executives for their vested fiscal 2009 SBI Program awardsupon consummation of the Merger: Mr. Haley - 25,951; Mr. Millay -6,094; Mr. Wickes - 5,097; Mr. Meehan - 5,097; and Mr. Bardenwerper- 3,324.

 

Also, in light of thepending Merger, the Committee determined to grant nonqualified stock options asincentive compensation in lieu of establishing awards under the SBI Program forfiscal 2010.  The options were granted onSeptember 9, 2009 under the Company’s 2000 Long-Term Incentive Plan.  The options were granted to high-performingsenior executives of the Company, including the named executives,  who otherwise would have been selected by theCommittee to receive SBI Program awards as a result of the executives havingdirect impact on or responsibility for driving strategy throughout theCompany.  In light of the anticipatedtiming of the Merger, the Committee granted options with a Black-Scholes valueequal to approximately one-half of the target value of grants under the SBIProgram.    The options have a seven yearterm and will vest ratably over each of the three years following the date ofgrant, provided that upon a change in control of the Company, including theMerger, the options become fully exercisable. The options have an exercise price equal to the grant date market priceof the Company’s common stock ($42.47), so that participants will be able torealize value under their options only to the extent that the options becomevested and the value of the Company’s stock price, or the share-equivalent valueof Towers Watson common stock following the Merger, appreciates.  The options otherwise will expire to theextent that they are unvested upon a participant’s termination of employmentfor reasons other than death, disability, retirement or termination withoutcause.  The number of options granted toeach of the named executives was as follows: Mr. Haley – 55,530; Mr. Millay- 13,042; Mr. Wickes – 10,908; Mr. Meehan – 10,908; and Mr. Bardenwerper- 7,114.

 

***Equity Award Policies***

 

As discussed above, infiscal year 2009 we paid a portion of annual fiscal year-end bonuses in theform of stock and also awarded stock under the SBI program for the fiscal 2007through 2009 performance period.  Thecalculations of the amount of equity to be awarded are performed as of the lastbusiness day preceding the bonus payment date, in the case of annual fiscalyear-end bonuses, and as of the last day of the preceding fiscal year, in thecase of the SBI Program.  The timing ofthese calculations is fixed in advance so as to eliminate the opportunity fortaking advantage of material nonpublic information.

 

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**Base Salary and Bonus for the Chief ExecutiveOfficer**

 

Mr. Haley’s basesalary from October 1, 2008 to September 30, 2009 was $915,000, anincrease of $40,000, or 4.6 percent over his previous year’s base salary of$875,000.  Effective October 1,2009, Mr. Haley’s annual base salary remained unchanged at $915,000.  In determining to leave Mr. Haley’s basesalary unchanged, the principal factors that the Compensation Committeeconsidered were salary levels of CEOs in the Company’s peer group, generaleconomic conditions and the desire to be consistent with the treatment of theother named executives.

 

The Committee recommended, and the Board of Directors approved, a bonus($1,281,000) equal to 140 percent of Mr. Haley’s target bonus.  Below are Mr. Haley’s fiscal year 2009performance goals, which were the principal factors taken into account indetermining Mr. Haley’s bonus.

 

1.               Meet thefiscal year 2009 financial plan for revenue of $1.875 billion, Net OperatingIncome of $478 million, and Earnings Per Share of $3.84.  For significant foreign operations, thecalculation of fiscal year 2009 revenue, Net Operating Income and Earnings PerShare reflects a constant currency exchange between the local currency and theU.S. dollar from fiscal year 2008 to fiscal year 2009.

 

2.               Make surethat the Insurance & Financial Services Practice meets fiscal year2009 financial plan for revenue of $125 million ($119 million in fiscal year2008) and Net Operating Income of $10 million, or 8% ($2 million, or 2% infiscal year 2008).  For significantforeign operations, the calculation of fiscal year 2009 revenue, Net OperatingIncome and Earnings Per Share reflects a constant currency exchange between thelocal currency and the U.S. dollar from fiscal year 2008 to fiscal year 2009.

 

3.               Championand monitor the Diversity Program.

 

4.               Continueto develop succession planning for the CEO and top business leaders and instilla succession process and culture in the organization.

 

5.               Work withthe new CFO to drive continued enhancement in financial reporting processes.

 

6.               UseHorizon strategy to drive Company actions and plans.  Continue to ensure that strategy isconsistent with current and future needs.

 

The Committee determined that Mr. Haley did not meet the financialplan for fiscal year 2009, but that he did meet or exceed his other goals forfiscal year 2009, and that financial performance was strong in light of thedifficult economic environment.  Inmaking its bonus decision, the Committee also considered the results of aninternal CEO 360 evaluation of Mr. Haley by his direct reports and theBoard of Directors in which Mr. Haley scored very favorably in almost allcategories.

 

Mr. Haley’s compensation level is significantly higher than thatof the other named executives.  TheCommittee believes this is appropriate given:

 

a.               His yearsof experience in the human capital consulting industry;

b.              Hislengthy tenure and consistently superior performance as CEO of the Company;

c.               His level of responsibility and thesignificance and critical nature of his contributions to the success of theCompany; and

d.              The growthand performance of the Company under his leadership.

 

**Severance Benefits**

 

The Company has notentered into employment agreements with its named executives.  The Company also does not maintain a broad-basedseverance plan.  As a result, the Companyis not obligated to pay severance in the event of an involuntary termination ofemployment of one of its named executives. However, because the SBI Programrepresents a significant percentage of our named executives’ total directcompensation opportunity, the Committee retains the discretion to determinewhether and how to adjust outstanding SBI Program awards in the event of atermination of employment.  In connectionwith Mr. Mautz’s retirement from the Company effective August 29,2008, the Committee, in the exercise of such discretion, determined that Mr. Mautzshould vest in his fiscal year 2007 and fiscal year 2008 SBI Program awards atthe same time and to the same extent as other SBI Program participants,dependent upon the achievement of relevant Company metrics for each of theapplicable three-year performance periods. The plan under which the SBI Program is conducted also states that upona change in control, 

 

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the Committee shallaccelerate the vesting of awards, subject to the Committee’s authority toassure fair and equitable treatment of participants.

 

The Company alsomaintains severance pay guidelines for associates, which would include thenamed executives.  The guidelines arecompletely discretionary in the event of a termination of employment, and forany termination, the amount paid by the Company may vary.  The guidelines provide for severance pay inan amount equal to two weeks pay for each full year of the named executive’sservice, up to a maximum of 24 weeks’ pay, or an amount equal to one week’s payfor each full year of service, whichever is greater, payable in a lump sum upontermination.  Any severance benefitspayable to a named executive in such circumstances would be entirelydiscretionary and would be determined by the Company on an individual basis withthe approval of the Committee.

 

**Retirement and Savings Plan Benefits**

 

***Retirement Plans***

 

The named executives participate in a defined benefit plan available toWatson Wyatt associates in the United States. The Company’s sponsorship of such a plan is consistent with our beliefthat defined benefit plans continue to represent a crucial and viable means forus to provide for the future retirement security of our employees and toencourage sustained service to the Company. The plan benefits are based upon years of service with the Company andthe highest consecutive 60-month average of total pay, which includes base payand bonus.  More details regarding thedefined benefit plan are included in the discussion following the PensionBenefits table on page 28.

 

***Savings Plans***

 

Our named executives are also eligible to participate in the 401(k) planavailable to Watson Wyatt associates in the U.S. and in a non-qualified plandesigned to permit employees impacted by Internal Revenue Code (IRC)limitations on annual contributions to 401(k) plans to continue to receiveCompany matching contributions as if salary deferrals had continued once theyexceeded the IRC limitations.

 

***Non-Qualified Retirement Plans***

 

The Company also sponsors non-qualified defined benefit and definedcontribution retirement plans for our highly compensated executives, includingour named executives in the United States, which provide benefits in excess ofIRC limits.  The purpose of these plansis to provide our senior executives with the retirement benefits they wouldhave received in the absence of the IRC limitations.

 

***Employee Welfare Benefit Plans***

 

Our named executives are eligible for medical, life insurance and otherwelfare benefits available to other Watson Wyatt associates, depending upon theregion in which they are located.  Thereare no special medical plans or other welfare plans for our named executives,except that the named executives are covered by an excess personal liabilitypolicy that the Company provides to only certain of its senior executives.

 

**Tax and Accounting Treatments of Elements ofCompensation**

 

Section 162(m) of the IRC disallows a tax deduction for theCompany for individual executive compensation exceeding $1 million in anytaxable year, excluding compensation that is considered to be “performance based”under the Incentive Compensation Plan approved by the stockholders of theCompany.

 

During fiscal year 2006, the Company obtained stockholder approval fora plan (known as the Incentive Compensation Plan) under which annual fiscalyear-end bonuses paid to senior executives may qualify as “performance-basedcompensation” that is not counted toward the $1 million limitation ondeductibility of compensation.  Under theIncentive Compensation Plan, the Compensation Committee at the beginning ofeach fiscal year establishes a performance period with respect to which awardsin the form of fiscal year-end bonuses are granted under the plan, and alsoestablishes a formula for determining the maximum award payable to aparticipant.

 

For fiscal year 2009, the Committee established the fiscal year (July 1,2008 to June 30, 2009) as the performance period and established themaximum incentive award as 2.5 percent of net income for the performance periodin the case of the CEO and any other participant who is a member of the Board,and 1.5 percent of net income for each other named executive.  For fiscal year 2009, the Committee certifiedthe amount of net income as defined under the 

 

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plan for the performance period and each participant’s maximum awardunder the plan, and based on the subjective evaluations discussed above, theCommittee further determined each participant’s actual award, payable as theirfiscal year-end bonus as well as the transaction bonus for certain of the namedexecutives.  The combined total bonusesactually paid were well below the maximum incentive awards established by theCommittee.

 

As a result, the fiscal year-end bonuses and transaction bonuses paidto the executives under the Incentive Compensation Plan will not be countedtoward the $1 million limitation on deductibility of compensation.  Shares that vested under the previouslydescribed fiscal year 2007 SBI Program do not qualify as “performance-basedcompensation” and remain subject to the $1 million deductibility limitationunder IRC Section 162(m).

 

Prior to the adoption ofthe Incentive Compensation Plan, the Company had adopted the Senior OfficersDeferred Compensation Plan, an unfunded nonqualified deferred compensation planunder which amounts paid to senior executives subject to Section 162(m) inexcess of $1 million are deferred on a mandatory basis until such time as theexecutive is no longer subject to the requirements of Section 162(m) orleaves the Company.

 

Mr. Haley, Mr. Wickes and Mr. Meehan have been requiredto defer a portion of their compensation and therefore are the only namedexecutives who currently participate in the Senior Officers Deferred Compensation Plan.  The plan offers a minimum of three investmentoptions including an interest factor equal to the prime rate of interest asreported by the Company’s bank. Additional information on contributions and earnings under this plan isset forth in the Nonqualified Deferred Compensation table below.

 

**StockOwnership Guidelines**

 

The Company believes thatstock ownership aligns associates’ financial interest with the interests ofother stockholders and the Company.  Ourexecutive ownership guidelines specify a minimum amount of Watson Wyatt stockthat an associate should accumulate over ten or more years of employment withWatson Wyatt.  For our named executives,the guidelines call for accumulating and holding vested shares having a valuein excess of 150 percent of base salary, with such guideline prorated over thefirst ten years of employment with the Company. Each of our named executives had satisfied his guideline as of the endof fiscal year 2009 and owned substantially more stock than required by theguidelines.

 

**COMPENSATION COMMITTEE REPORT**

 

Our Committee is composed of fourindependent Directors, each of whom meets the independence requirements of theNYSE and NASDAQ listing standards and the rules and regulations of theSEC.  The Compensation Committee operatesunder a written charter adopted by the Board. Our charter can be viewed on the Company’s website(www.watsonwyatt.com), in the Investor Relations section.

 

We have reviewed anddiscussed the Compensation Discussion and Analysis (CD&A) with the CEO, CFOand senior management.  Based upon ourreview and such discussion, we recommended to the Board that the CD&A beincluded in this disclosure document.

 

THE COMPENSATIONCOMMITTEE:

 

Gilbert T. Ray (Chair)

John J. Gabarro

Brendan R. O’Neill

LindaD. Rabbitt

 

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**Executive Compensation**

 

**Summary Compensation Table**

 

The following table setsforth information for fiscal years 2009, 2008 and 2007 concerning thecompensation paid by the Company to (i) the Chief Executive Officer; (ii) theChief Financial Officer, and (iii) the three other most highly compensatedindividuals who were serving as executive officers of the Company at the end offiscal year 2009.  These individuals arereferred to as our named executives.

 
| **Name  and Principal  Position**           | ** ** | **Fiscal  Year** | ** ** | **Salary  ($)(1)** | ** ** | **Bonus  ($)(2)** | ** ** | **Stock  Awards  ($)(3)** | ** ** | **Change in  Pension  Value and  Nonqual.  Deferred  Comp.  Earnings  ($)(4)** | ** ** | **All Other  Compensation  ($)(5)** | ** ** | **Total ($)** | ** ** |
|---------------------------------------------|------------|------------------|------------|--------------------|------------|-------------------|------------|---------------------------|------------|--------------------------------------------------------------------------------|------------|-------------------------------------|------------|---------------|------------|
|                                        |       |             |       |               |       |              |       |                      |       |                                                                           |       |                                |       |          |       |
| John J. Haley                               |       | 2009             |       | $                  | 905,000    |              | $          | 1,281,000                 |       | $                                                                              | 602,058    |                                | $          | 511,176       |       | $ | 87,393 |   | $ | 3,386,627 |   |
| President, Chief                            |       | 2008             |       | 865,000            |       | 1,300,000         |       | 1,980,375                 |       | 2,491,531                                                                      |       | 79,495                              |       | 6,716,401     |       |
| Executive Officer,                          |       | 2007             |       | 826,250            |       | 876,750           |       | 2,018,750                 |       | 1,597,575                                                                      |       | 29,839                              |       | 5,349,164     |       |
| Chairman of the Board  and Director         |       |             |       |               |       |              |       |                      |       |                                                                           |       |                                |       |          |       |
|                                        |       |             |       |               |       |              |       |                      |       |                                                                           |       |                                |       |          |       |
| Roger Millay(6)                             |       | 2009             |       | 481,250            |       | 558,000           |       | 0                         |       | 120,607                                                                        |       | 6,900                               |       | 1,166,757     |       |
| Vice President and  Chief Financial Officer |       |             |       |               |       |              |       |                      |       |                                                                           |       |                                |       |          |       |
|                                        |       |             |       |               |       |              |       |                      |       |                                                                           |       |                                |       |          |       |
| Carl D. Mautz(7)                            |       | 2009             |       | 78,333             |       | 0                 |       | (23,924                   | )          | 520                                                                            |       | 62,133                              |       | 117,062       |       |
| Former Vice President                       |       | 2008             |       | 467,500            |       | 330,000           |       | 539,422                   |       | 262,747                                                                        |       | 24,298                              |       | 1,623,967     |       |
| and Chief Financial                         |       | 2007             |       | 456,250            |       | 250,000           |       | 355,938                   |       | 376,949                                                                        |       | 4,950                               |       | 1,444,087     |       |
| Officer                                     |       |             |       |               |       |              |       |                      |       |                                                                           |       |                                |       |          |       |
|                                        |       |             |       |               |       |              |       |                      |       |                                                                           |       |                                |       |          |       |
| Gene H. Wickes                              |       | 2009             |       | 568,750            |       | 699,000           |       | 119,633                   |       | 1,065                                                                          |       | 75,449                              |       | 1,463,897     |       |
| Vice President and                          |       | 2008             |       | 546,250            |       | 465,000           |       | 396,250                   |       | 427,450                                                                        |       | 69,762                              |       | 1,904,712     |       |
| Global Director of the                      |       | 2007             |       | 531,250            |       | 335,000           |       | 407,734                   |       | 519,927                                                                        |       | 45,847                              |       | 1,839,758     |       |
| Benefits Practice                           |       |             |       |               |       |              |       |                      |       |                                                                           |       |                                |       |          |       |
|                                        |       |             |       |               |       |              |       |                      |       |                                                                           |       |                                |       |          |       |
| Kevin L. Meehan                             |       | 2009             |       | 568,750            |       | 480,000           |       | 117,154                   |       | 1,527                                                                          |       | 33,339                              |       | 1,200,770     |       |
| Vice President,                             |       | 2008             |       | 545,000            |       | 530,000           |       | 365,703                   |       | 1,071,507                                                                      |       | 30,169                              |       | 2,542,379     |       |
| Regional Manager                            |       | 2007             |       | 522,500            |       | 340,000           |       | 249,688                   |       | 216,334                                                                        |       | 4,950                               |       | 1,333,472     |       |
| (North America)                             |       |             |       |               |       |              |       |                      |       |                                                                           |       |                                |       |          |       |
|                                        |       |             |       |               |       |              |       |                      |       |                                                                           |       |                                |       |          |       |
| Walter Bardenwerper                         |       | 2009             |       | 495,000            |       | 611,000           |       | 78,121                    |       | 1,263                                                                          |       | 1,800                               |       | 1,187,184     |       |
| Vice President,                             |       | 2008             |       | 476,250            |       | 375,000           |       | 258,223                   |       | 660,089                                                                        |       | 25,389                              |       | 1,794,951     |       |
| Secretary and General                       |       | 2007             |       | 461,250            |       | 275,000           |       | 263,965                   |       | 655,099                                                                        |       | 4,950                               |       | 1,660,264     |       |
| Counsel                                     |       |             |       |               |       |              |       |                      |       |                                                                           |       |                                |       |          |       |
|                                             |            |                  |            |                    |            |                   |            |                           |            |                                                                                |            |                                     |            |               |            |  |  |  |  |  |  |

 

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(1)          Salary adjustments become effective on October 1of each fiscal year.  Effective October 1,2008, Mr. Haley’s base salary increased from $875,000 to $915,000, Mr. Wickes’base salary increased from $550,000 to $575,000, Mr. Meehan’s base salaryincreased from $550,000 to $575,000 and Mr. Bardenwerper’s base salaryincreased from $480,000 to $500,000. Except for Mr. Millay and Mr. Mautz, the salary amounts shownin the Summary Compensation Table for fiscal year 2009 reflect three months ofsalary at the rate in effect prior to October 1, 2008 and nine months ofsalary at the new rate effective October 1, 2008.  The salary amount shown for Mr. Millayrepresents the amount of salary from his date of hire on August 18, 2009based on an annual rate of $550,000.  Thesalary amount shown for Mr. Mautz represents the amount of salary from July 1,2008 through his retirement effective August 29, 2008 based on an annualrate of $470,000.

 

(2)          Reflects the value of fiscal year-endbonuses earned during fiscal year 2009 and paid in September 2009 in thefollowing amounts: Mr. Haley - $1,281,000; Mr. Millay - $408,000; Mr. Wickes- $499,000; Mr. Meehan - $480,000; and Mr. Bardenwerper -$411,000.  Twenty-five percent of eachsuch bonus was paid in the form of fully vested Company stock issued under the2001 Deferred Stock Unit Plan for Selected Employees.  The remaining seventy-five percent of eachsuch bonus was paid in cash.  The amountsshown also reflect transaction bonuses in the amount of $150,000 for Mr. Millay,$200,000 for Mr. Wickes and $200,000 for Mr. Bardenwerper.  These bonuses were intended to reflect thespecial and extraordinary efforts of these named executives leading up to theannouncement on June 29, 2009 of the pending merger with Towers, Perrin,Forster & Crosby.  The transactionbonuses were paid entirely in cash in September 2009.

 

(3)          Represents the dollar amount required tobe recognized by the Company as an expense in fiscal year 2009 under FinancialAccounting Standards Board Statement of Financial Accounting Standards No. 123(R),*Share-Based Payment*(FAS 123(R)),disregarding the effect of estimated forfeitures (of which there were none infiscal year 2009), for awards under the Performance Share Bonus IncentiveProgram (SBI Program).  Assumptions usedin the calculation of these amounts are described in Note 9 to the Company’sfinancial statements for the fiscal year ending June 30, 2009.

 

The awards for whichexpense is shown in this table for fiscal year 2009 include (i) SBIProgram awards described in the Grants of Plan-Based Awards in Fiscal Year 2009table beginning on page 24****of thisdisclosure document and (ii) awards granted in fiscal years 2007 and 2008for which we recognized expense in fiscal year 2009, which are described belowthe Stock Vested During Fiscal Year 2009 table and the Outstanding EquityAwards at 2009 Fiscal Year-End table beginning on page 25 of thisdisclosure document.

 

The decrease instock-based compensation expense recognized in fiscal year 2009 as comparedwith fiscal years 2008 and 2007 is due in part to lower forecasted vestingunder the fiscal year 2009, 2008 and 2007 SBI Programs than has historicallyresulted under earlier SBI Programs for which compensation expense wasrecognized in fiscal years 2008 and 2007. In addition, during fiscal year 2009 the Company lowered its forecastfor projected vesting under the fiscal year 2008 SBI Program, resulting in areversal in fiscal year 2009 of compensation expense recognized in priorperiods.  This reversal resulted innegative compensation expense being recognized for Mr. Mautz in fiscalyear 2009 due to the true-up of previously recorded compensation expense.

 

(4)          Reflects any aggregate increase inactuarial present values during fiscal year 2009 of each named executive’saccumulated benefits under the Watson Wyatt & Company Pension Plan forU.S. Employees and the Excess Compensation Plan of Watson Wyatt &Company.  For fiscal year 2009, anyincrease was determined using assumptions that are the same as those used inthe Company’s financial statements for the year ending June 30, 2009except that retirement is assumed to occur at the earliest unreduced retirementage for the named executives or as of fiscal year end for named executivesolder than the earliest unreduced retirement age, and no pre-retirementterminations or deaths are assumed to occur.

 

The earliest unreducedretirement age for Messrs. Haley, Mautz and Meehan is age 60 because allof their accumulated benefits were earned under the grandfathered prior pensionplan provisions as of June 30, 2008 (see plan description below for moredetail).  The earliest unreducedretirement age for Messrs. Millay, Wickes and Bardenwerper is age 62 basedon the unreduced retirement age for benefits earned after June 30,2008.  As a result of the transition fromprior pension plan provisions to post-2008 benefit provisions, the earliestunreduced retirement age for Messrs. Wickes and Bardenwerper changed fromage 

 

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60 as of June 30,2008 to age 62 as of June 30, 2009. This caused the actuarial present value of their accumulated pensionbenefits to decrease by $101,057 and $337,146, respectively, despite theadditional accrued benefits payable at age 62. The actuarial present value of Mr. Meehan’s accumulated benefitsdecreased during the fiscal year, by $332,834, because he is already past theearliest unreduced retirement age.  Theactuarial present value of Mr. Mautz’s accumulated benefits decreasedduring the fiscal year, by $1,862,099 because he received payments totaling$1,862,777 after his retirement on August 29, 2009.  These decreases are not reflected in therespective amounts reported in the Summary Compensation Table for these namedexecutives.

 

The increases in theactuarial present values for Mr. Haley and Mr. Millay for fiscal year2009 of $508,258 and $120,607, respectively, can be attributed to severalfactors.  First, the increases are due tosalary increases during the year, which raised the highest average compensationbeing used in the calculations, and due to the accrual of an additional year ofservice (subject to a 25-year service cap). Second, because Mr. Haley and Mr. Millay are younger than theearliest unreduced retirement age, the present values increased because theyare one year closer to the assumed retirement date and retirement benefits arethus assumed to be one year closer to payment. Third, assumption changes made by the Company for financial reportingpurposes as of June 30, 2009 lessened the increase in the present valuecalculations.  The changes updated thepost-retirement mortality table and increased the discount rate.  These assumption changes lessened theincrease in the present value amounts by two to three percent.

 

The amounts shown forfiscal year 2009 also include above-market interest on balances in the DeferredSavings Plan for U.S. Employees of Watson Wyatt & Company (the “DeferredSavings Plan”) of $2,918 for Mr. Haley, $520 for Mr. Mautz, $1,065for Mr. Wickes, $1,527 for Mr. Meehan and $1,263 for Mr. Bardenwerper.  Interest is considered above-market to theextent it exceeds 120 percent of the applicable federal long-term rate.  Nonqualified deferred compensation earningsand account balances under the Deferred Savings Plan are disclosed in theNon-qualified Deferred Compensation during Fiscal Year 2009 table beginning on page 29of this disclosure document.

 

(5)          For fiscal year 2009, all othercompensation consists of (a) Company matching contributions made to aqualified savings plan in the amount of $6,900 each for Mr. Haley, Mr. Millay,Mr. Wickes, and Mr. Meehan, $1,589 for Mr. Mautz and $1,800 for Mr. Bardenwerper;(b) Company contributions made to a non-qualified deferred compensationplan in the amount of $59,818 for Mr. Haley, $24,319 for Mr. Wickes,and $26,439 for Mr. Meehan; and (c) payment for the annual cash outof excess unused paid time off (all U.S.-based associates are subject to thesame paid time off limits) in the amount of $20,675 for Mr. Haley, $60,544for Mr. Mautz and $44,230 for Mr. Wickes.

 

The Company provides toits named executives no perquisites or other personal benefits having anaggregate incremental cost for any named executive in excess of $10,000, and asa result, the value of any such perquisites or other personal benefits is notincluded in this column.

 

(6)          Mr. Millay joined the Company beginning August 18,2008.

 

(7)          Mr. Mautz retired from the Company effective August 29,2008.

 

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**Grants of Plan-Based Awards in Fiscal Year 2009**

 

Thetable below shows the equity awards that were made to each of the namedexecutives during fiscal year 2009 under the Company’s Performance Share BonusIncentive Program (SBI Program).  The SBIProgram is a long-term stock bonus arrangement for senior executives of theCompany and its affiliates.  Incentivesunder the SBI Program are provided through grants of deferred stock unitspursuant to the Company’s 2001 Deferred Stock Unit Plan for SelectedEmployees.  Each vested deferred stockunit represents a right to receive one share of Company stock following the endof the three-year performance period.

 
| ** **   | ** ** | ** **      | ** ** | **Grant**          | ** ** | **Estimated Future Payouts  Under Equity Incentive Plan  Awards(1)** | ** ** | **Grant Date  Fair Value of  Stock** | ** ** |
|--------------|------------|-----------------|------------|--------------------|------------|----------------------------------------------------------------------|------------|--------------------------------------|------------|
| **Name**     | ** ** | **Grant  Date** | ** ** | **Approval  Date** | ** ** | **Threshold  (#)**                                                   | ** ** | **Target  (#)**                      | ** ** | **Maximum  (#)** | ** ** | **Awards  ($)(2)** | ** ** |
| Haley        |       | 7/1/08          |       | 9/11/08            |       | 7,786                                                                |       | 25,951                               |       | 44,117 |   | $ | 2,333,348 |   |
| Millay       |       | 7/1/08          |       | 9/11/08            |       | 1,829                                                                |       | 6,094                                |       | 10,360 |   | 547,940 |   |
| Mautz        |       | N/A             |       | N/A                |       | 0                                                                    |       | 0                                    |       | 0 |   | 0 |   |
| Wickes       |       | 7/1/08          |       | 9/11/08            |       | 1,530                                                                |       | 5,097                                |       | 8,665 |   | 458,292 |   |
| Meehan       |       | 7/1/08          |       | 9/11/08            |       | 1,530                                                                |       | 5,097                                |       | 8,665 |   | 458,292 |   |
| Bardenwerper |       | 7/1/08          |       | 9/11/08            |       | 998                                                                  |       | 3,324                                |       | 5,651 |   | 298,881 |   |
|              |            |                 |            |                    |            |                                                                      |            |                                      |            |  |  |  |  |  |

 

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(1)          Represents threshold, target and maximumnumber of performance-based deferred stock units to be earned (vested) underthe Company’s SBI Program following the end of the three-year performance periodbeginning July 1, 2008 and ending June 30, 2011.  Amounts actually earned are payable in sharesof Company stock.  Dividend equivalentsare accrued during the performance period for outstanding SBI awards but areonly paid out to the extent such awards are earned.  See a discussion of the SBI Program in theCompensation Discussion and Analysis beginning on page 15 of thisdisclosure document.

 

For the fiscal year 2009grants, the performance criteria selected by the Compensation Committee wereEarnings Per Share Growth and Revenue Growth, as defined below, and the vestingcriteria are based upon such metrics.  EarningsPer Share (“E.P.S.”) Growth is defined as E.P.S. for the third year of theperformance period compared to E.P.S. for the fiscal year preceding the startof the performance period, expressed as a percentage.  E.P.S. is defined as fully diluted earningsper share from continuing operations. Revenue Growth is defined as the percentage change in revenue from thefiscal year prior to the performance period of the plan to the third year ofthe performance period, exclusive of any acquisitions during the performanceperiod.

 

For the fiscal 2009 through 2011 performance period, an earn-outschedule using total growth over the three-year performance period for E.P.S.and Revenue is shown below:

 
| E.P.S. Growth at or above |   | 47     | %      | 100                         | %      | 135    | %      | 170    | %      |
|---------------------------|--------|--------|--------|-----------------------------|--------|--------|--------|--------|--------|
|                      | 34     | %      | 65     | %                           | 100    | %      | 135    | %      |
|                      | 27     | %      | 30     | %                           | 65     | %      | 100    | %      |
|                      |   |   |   | 20                          | %      | 25     | %      | 35     | %      |
|                      |   |   |   |                        |   |   |   |   |   |
|                      |   |   |   | Revenue Growth  at or above |   |

 

(2)          Represents the grant date (July 1,2008) fair value of the award at maximum, determined in accordance with FAS123(R), based on the closing price on the last day of the fiscal year prior tothe grant date of $52.89.

 

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**Outstanding Equity Awards at 2009 Fiscal Year-End**

 

The following table setsforth information concerning the outstanding stock awards held at June 30,2009 by each of the named executives.  The stock awards shown represent performanceshares granted under the fiscal year 2008 and fiscal year 2009 PerformanceShare Bonus Incentive Program (SBI Program). No shares for such fiscal years had vested as of June 30, 2009.

 
| ** **   | ** ** | **Stock Awards**                                                                                               | ** ** |
|--------------|------------|----------------------------------------------------------------------------------------------------------------|------------|
| **Name**     | ** ** | **Equity Incentive Plan Awards: Number  of Unearned Shares, Units or Other  Rights That Have Not Vested  (#)** | ** ** | **Equity Incentive Plan Awards: Market or  Payout Value of Unearned Shares, Units or  Other Rights That Have Not Vested  ($)(1)** | ** ** |
|         |       |                                                                                                           |       |   |   |   |
| Haley        |       | 7,904                                                                                                          | (2)        | $ | 296,637 |   |
|         |       | 7,842                                                                                                          | (3)        | 294,310 |   |
|         |       |                                                                                                           |       |   |   |
| Millay       |       | 1,842                                                                                                          | (3)        | 69,130 |   |
|         |       |                                                                                                           |       |   |   |
| Mautz        |       | 1,327                                                                                                          | (2)        | 49,802 |   |
|         |       |                                                                                                           |       |   |   |
| Wickes       |       | 1,553                                                                                                          | (2)        | 58,284 |   |
|         |       | 1,541                                                                                                          | (3)        | 57,834 |   |
|         |       |                                                                                                           |       |   |   |
| Meehan       |       | 1,553                                                                                                          | (2)        | 58,284 |   |
|         |       | 1,541                                                                                                          | (3)        | 57,834 |   |
|         |       |                                                                                                           |       |   |   |
| Bardenwerper |       | 1,017                                                                                                          | (2)        | 38,168 |   |
|         |       | 1,005                                                                                                          | (3)        | 37,718 |   |

 

----

(1) Reflects the value as calculated based on the closing price of the Company’sstock on June 30, 2009 of $37.53 per share.

 

(2) Represents the number of performance shares granted under the fiscal year 2008SBI Program and credited with dividend equivalents through July 15, 2009under the terms of the Watson Wyatt & Company Holdings 2001 DeferredStock Unit Plan for Selected Employees, assuming vesting at thresholdperformance of 30 percent following completion of the three-year performanceperiod ending June 30, 2010.

 

(3) Represents the number of performance shares granted under the fiscal year 2009SBI Program and credited with dividend equivalents through July 15, 2009under the terms of the Watson Wyatt & Company Holdings 2001 DeferredStock Unit Plan for Selected Employees, assuming vesting at thresholdperformance of 30 percent following completion of the three-year performanceperiod ending June 30, 2011.  As of June 30,2009, the Company was projecting that the minimum performance criteria wouldnot be met and that there would be no payout under this program.

 

The fiscal year 2008 andfiscal year 2009 SBI Program documents state that the Committee shallaccelerate the vesting of awards and provide for the immediate settlement in stockor cash in connection with a change in control, subject to the Committee’sauthority to assure fair and equitable treatment of participants in the SBIProgram.

 

Accordingly, on September 4,2009, the Committee determined that, upon and subject to consummation of theproposed merger between Watson Wyatt Worldwide, Inc. and Towers, Perrin,Forster & Crosby to form a new, publicly listed company called TowersWatson & Co. (the “Merger”), the fiscal 2008 SBI Program awards shallnot vest, with the effect that nothing will be earned or paid under thoseawards and the awards will be forfeited, but the fiscal 2009 SBI Program willvest at 100% of target.  In reachingthese determinations, the Committee assessed performance to date andprojections of performance.  As a resultof these evaluations, the Committee concluded that it is not likely that theCompany will achieve the fiscal year 2008 to 2010 minimum performancemetrics.  With respect to the fiscal 2009to 2011 performance period, the Committee determined that it is appropriate tosettle the 

 

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awards at target in orderto treat participants fairly, retain key talent, and take account of the factthat the level at which performance metrics may be met at the time of theMerger will be uncertain, as the performance period would be only halfwaycompleted as of December 31, 2009, the projected date of the Merger.

 

As a result, thefollowing number of shares of Towers Watson & Co.’s Class Acommon stock, plus dividend equivalents that will have accrued, will be paid tothe Company’s named executives for their vested fiscal 2009 SBI Program awardsupon consummation of the Merger, representing vesting at 100% of target: Mr. Haley- 25,951; Mr. Millay - 6,094; Mr. Wickes - 5,097; Mr. Meehan -5,097; and Mr. Bardenwerper - 3,324.

 

**Stock Vested During Fiscal Year 2009**

 

The following table setsforth information concerning stock awards that vested during fiscal year 2009for each of the named executives.  Thestock awards represent performance shares issued under the Company’s fiscalyear 2007 Performance Share Bonus Incentive Program (the “SBI Program”),including dividend equivalents credited to those shares, that vested followingthe end of the three-year performance period beginning July 1, 2006 andending June 30, 2009.

 
| ** **   | ** ** | **Stock Awards**                                    | ** ** |
|--------------|------------|-----------------------------------------------------|------------|
| **Name**     | ** ** | **Number of  Shares  Acquired  on Vesting  (#)(1)** | ** ** | **Value Realized  on Vesting  ($)(2)** | ** ** |
|         |       |                                                |       |   |   |
| Haley        |       | 49,076                                              |       | $ | 1,841,822 |   |
|         |       |                                                |       |   |   |
| Millay       |       | 0                                                   |       | 0 |   |
|         |       |                                                |       |   |   |
| Mautz        |       | 8,450                                               |       | 317,129 |   |
|         |       |                                                |       |   |   |
| Wickes       |       | 9,827                                               |       | 368,807 |   |
|         |       |                                                |       |   |   |
| Meehan       |       | 9,735                                               |       | 365,355 |   |
|         |       |                                                |       |   |   |
| Bardenwerper |       | 6,408                                               |       | 240,492 |   |
|              |            |                                                     |            |  |  |  |

 

----

(1)          Represents the number of Company shares earned(vested) under the Company’s fiscal year 2007 SBI Program following the end ofthe three-year performance period beginning July 1, 2006 and ending June 30,2009.  For the fiscal year 2007 grants,the performance criteria selected by the Compensation Committee were EarningsPer Share Growth and Revenue Growth, as defined below, and the vesting criteriawere based upon such metrics.  EarningsPer Share (“E.P.S.”) Growth was defined as E.P.S. for the third year of theperformance period compared to E.P.S. for the fiscal year preceding the startof the performance period, expressed as a percentage.  E.P.S. was defined as fully diluted earningsper share from continuing operations. Revenue Growth was defined as the percentage change in revenue from thefiscal year prior to the performance period of the plan to the third year ofthe performance period, exclusive of any acquisitions during the performanceperiod.  In order for any of the deferredstock units granted for this performance period to vest, a threshold level ofachievement under each performance criteria needed to be obtained.  Additional deferred stock units would vest tothe extent that performance was above the threshold levels.

 

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An earn-out scheduleusing total growth over the three-year performance period for E.P.S. andRevenue is shown below:

 
| E.P.S. Growth at or above |   | 30     | %      | 100                         | %      | 135    | %      | 170    | %      |
|---------------------------|--------|--------|--------|-----------------------------|--------|--------|--------|--------|--------|
|                      | 22.5   | %      | 65     | %                           | 100    | %      | 135    | %      |
|                      | 15     | %      | 30     | %                           | 65     | %      | 100    | %      |
|                      |   |   |   | 15                          | %      | 20     | %      | 25     | %      |
|                      |   |   |   |                        |   |   |   |   |   |
|                      |   |   |   | Revenue Growth  at or above |   |

 

Following the completionof the fiscal 2007 through 2009 performance period, the Committee determinedthat 3-year E.P.S. Growth exceeded 30 percent and Revenue Growth exceeded 20percent but was less than 25 percent.  Asa result, the Committee determined that awards for the 2007 through2009 performance period had vested at 135 percent.

 

(2)          Reflects the value as calculated based on the closingprice of the Company’s stock on June 30, 2009 of $37.53 per share.  The shares were actually distributed on September 15,2009, based on the Company’s closing share price on the prior business day of$44.05.  The actual value ofstock awarded on the distribution date was $2,161,798****toMr. Haley, of which $2,106,397 was automatically deferred in the form ofshares into the Senior Officers Deferred Compensation Plan (SODCP); $372,223****to Mr. Mautz; $432,879 to Mr. Wickes, of which$52,731 was automatically deferred in the form of shares into the SODCP;$428,827****to Mr. Meehan; and $282,272****to Mr. Bardenwerper. The automatic deferrals to the SODCP occurred in order to keepdeductible compensation below the $1 million deductible limit imposed by Section 162(m) ofthe Internal Revenue Code.  For adescription of the material terms of the SODCP, refer to Note 1 of theNon-qualified Deferred Compensation during Fiscal Year 2009 table beginning on page 30of this disclosure document.

 

**Pension Benefits at 2009 Fiscal Year-End**

 

The Pension Benefitstable below provides information as of June 30, 2009 regarding the numberof years of credited service, the earliest unreduced retirement age and thepresent value of accumulated benefits payable at that retirement age withrespect to the Watson Wyatt & Company Pension Plan for U.S. Employees(the “Pension Plan”), the Excess Benefit Plan of Watson Wyatt &Company (the “Excess Benefit Plan”) and the Excess Compensation Plan of WatsonWyatt & Company (the “Excess Compensation Plan”).  None of the named executives currently has anaccrued benefit under the Excess Benefit Plan, and thus the Excess Benefit Planis not separately listed.

 

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| **Name**     | ** ** | **Plan Name**                                                    | ** ** | **Number of  Years Credited  Service  (#)** | ** ** | **Earliest  Unreduced  Retirement   Age** | ** ** | **Present Value of  Accumulated  Benefit  ($)(1)** | ** ** | **Payments  During  Last  Fiscal  Year  ($)** | ** ** |
|--------------|------------|------------------------------------------------------------------|------------|---------------------------------------------|------------|-------------------------------------------|------------|----------------------------------------------------|------------|-----------------------------------------------|------------|
| Haley        |       | Watson Wyatt & Company Pension Plan for  U.S. Employees |       | 32.17                                       |       | 60                                        |       | $                                                  | 1,587,055  |                                          | $          | 0 |   |
|         |       |                                                             |       |                                        |       |                                      |       |                                               |       |                                          |       |
|         |       | Excess Compensation Plan of Watson Wyatt &  Company     |       | 32.17                                       |       | 60                                        |       | 11,670,721                                         |       | 0                                             |       |
|         |       |                                                             |       |                                        |       |                                      |       |                                               |       |                                          |       |
|         |       | Total                                                            |       |                                        |       |                                      |       | 13,257,776                                         |       | 0                                             |       |
|         |       |                                                             |       |                                        |       |                                      |       |                                               |       |                                          |       |
| Millay       |       | Watson Wyatt & Company Pension Plan for  U.S. Employees |       | 0.83                                        |       | 62                                        |       | 16,433                                             |       | 0                                             |       |
|         |       |                                                             |       |                                        |       |                                      |       |                                               |       |                                          |       |
|         |       | Excess Compensation Plan of Watson Wyatt &  Company     |       | 0.83                                        |       | 62                                        |       | 104,174                                            |       | 0                                             |       |
|         |       |                                                             |       |                                        |       |                                      |       |                                               |       |                                          |       |
|         |       | Total                                                            |       |                                        |       |                                      |       | 120,607                                            |       | 0                                             |       |
|         |       |                                                             |       |                                        |       |                                      |       |                                               |       |                                          |       |
| Mautz(2)     |       | Watson Wyatt & Company Pension Plan for  U.S. Employees |       | 11.50                                       |       | 60                                        |       | 470,255                                            |       | 33,016                                        |       |
|         |       |                                                             |       |                                        |       |                                      |       |                                               |       |                                          |       |
|         |       | Excess Compensation Plan of Watson Wyatt &  Company     |       | 11.50                                       |       | 60                                        |       | 0                                                  |       | 1,829,761                                     |       |
|         |       |                                                             |       |                                        |       |                                      |       |                                               |       |                                          |       |
|         |       | Total                                                            |       |                                        |       |                                      |       | 470,255                                            |       | 1,862,777                                     |       |
|         |       |                                                             |       |                                        |       |                                      |       |                                               |       |                                          |       |
| Wickes       |       | Watson Wyatt & Company Pension Plan for  U.S. Employees |       | 12.50                                       |       | 62                                        |       | 380,506                                            |       | 0                                             |       |
|         |       |                                                             |       |                                        |       |                                      |       |                                               |       |                                          |       |
|         |       | Excess Compensation Plan of Watson Wyatt &  Company     |       | 12.50                                       |       | 62                                        |       | 1,896,647                                          |       | 0                                             |       |
|         |       |                                                             |       |                                        |       |                                      |       |                                               |       |                                          |       |
|         |       | Total                                                            |       |                                        |       |                                      |       | 2,277,153                                          |       | 0                                             |       |
|         |       |                                                             |       |                                        |       |                                      |       |                                               |       |                                          |       |
| Meehan       |       | Watson Wyatt & Company Pension Plan for  U.S. Employees |       | 26.17                                       |       | 60                                        |       | 1,089,741                                          |       | 0                                             |       |
|         |       |                                                             |       |                                        |       |                                      |       |                                               |       |                                          |       |
|         |       | Excess Compensation Plan of Watson Wyatt &  Company     |       | 26.17                                       |       | 60                                        |       | 4,675,959                                          |       | 0                                             |       |
|         |       |                                                             |       |                                        |       |                                      |       |                                               |       |                                          |       |
|         |       | Total                                                            |       |                                        |       |                                      |       | 5,765,700                                          |       | 0                                             |       |
|         |       |                                                             |       |                                        |       |                                      |       |                                               |       |                                          |       |
| Bardenwerper |       | Watson Wyatt & Company Pension Plan for  U.S. Employees |       | 22.08                                       |       | 62                                        |       | 746,013                                            |       | 0                                             |       |
|         |       |                                                             |       |                                        |       |                                      |       |                                               |       |                                          |       |
|         |       | Excess Compensation Plan of Watson Wyatt &  Company     |       | 22.08                                       |       | 62                                        |       | 2,874,856                                          |       | 0                                             |       |
|         |       |                                                             |       |                                        |       |                                      |       |                                               |       |                                          |       |
|         |       | Total                                                            |       |                                        |       |                                      |       | 3,620,869                                          |       | 0                                             |       |
|              |            |                                                                  |            |                                             |            |                                           |            |                                                    |            |                                               |            |  |  |

 

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(1)   The assumptions and methodology used in calculatingthe estimated present value shown in this column are the same as those used anddisclosed in the Company’s audited financial statements (see Note 5) as of June 30,2009, except the named executives are assumed to retire at their earliestunreduced retirement age as shown in the above chart or their current age, iflater, and no pre-retirement terminations or deaths are assumed to occur.  Also, no additional compensation or serviceis assumed beyond the June 30, 2009 calculation date.  The specific relevant assumptions includeusing a discount rate of 7.50 percent and 6.75 percent, respectively, for thePension Plan and the Excess Compensation Plan, and post-retirement mortalitybased on the mortality table described in Section 430(h)(3)(A) of theInternal Revenue Code for annuitants.  Inaddition, for the Excess Compensation Plan benefits which are payable as a lumpsum, an interest rate of 3.50 percent and the 1983 Group Annuity Mortalitytable (blended 50/50 for males and females) were used in the calculations.

 

(2)   Mr. Mautz retired from the Company on August 29,2008 and commenced receiving his benefits from the Pension Plan on September 30,2008 in the monthly amount of $3,301.62 under the 100% joint and survivoroption.  He also received a lump sum cashout of his benefits from the Excess Compensation Plan in two installments of$1,026,729 and $803,031 on September 30, 2008 and March 31, 2009,respectively.

 

**U.S. Based Pension Plans**

 

The Pension Plan is abroad-based, tax-qualified defined benefit pension plan that provides a benefitto eligible employees of the Company.  Ingeneral, all U.S. salaried and hourly employees, with the exception of temporaryemployees, leased employees and contract employees are eligible toparticipate.  Pension Plan benefits arebased upon years of service with the Company and the highest consecutive60-month average of total compensation (base pay, overtime and bonus).  The credited service amounts shown in thetable above represent actual years of service with the Company.  No additional years of credited service havebeen granted to the named executives under the Pension Plan.

 

The standard form ofbenefit payment under the Pension Plan is a single life annuity benefit forparticipants who are not married and a 100 percent joint and contingent annuitybenefit for married participants. Alternatively, participants may elect a joint and contingent annuitywith a continuation percentage of up to 100 percent, a certain and continuousannuity benefit with five or more years of guaranteed payments, or acombination of these, subject to the plan provisions, Retirement Committeeapproval and statutory limits.  Thepayout option must be elected by the Participant before benefit payments begin.

 

The monthly benefit atnormal retirement (age 65) under the qualified plan is equal to 1.7 percenttimes the participant’s average monthly compensation for the 60 consecutivemonths with the highest compensation plus 0.4 percent times the average monthlycompensation for the 60 consecutive months with the highest compensation thatexceeds the Social Security Covered Compensation, all times the number ofcompleted years and months of continuous service up to 25 years.

 

For terminations after June 30,2003, the Plan’s early retirement age is age 55 with five years of service(except as noted below for grandfathered associates).  For associates who are eligible for earlyretirement and who retire prior to age 62, gross benefits are reduced 8 percentper year between ages 58 and 62, and 6 percent per year between ages 55 and58.  For deferred vested associates whoretire prior to age 65, gross benefits are actuarially reduced from age65.  As of June 30, 2009, Messrs. Haley,Wickes, Meehan and Bardenwerper were eligible for early retirement benefits.

 

Associates who wereemployed by the Company on June 30, 2003 are grandfathered in priorpension plan provisions for five years, or until June 30, 2008.  During the five-year grandfathering period,eligible associates will continue to accrue benefits under the Pension Planprovisions in effect before July 1, 2003, except that the five-yearcertain and continuous annuity form of payment is not grandfathered.  Under these provisions, the same formuladescribed above is used except that an associate’s average pay is determined tobe the highest average 36 consecutive months of total pay.  In addition, the benefit can never be lessthan the June 30, 2003 accrued benefit indexed by 3 percent each year.

 

Benefits accrued underthe grandfathered formulas will be frozen on the earlier of June 30, 2008or termination of employment, except for the formula that indexes the June 30,2003 accrued benefit which will be frozen at termination of employment.  At retirement or termination, whether beforeor after June 30, 2008, an associate’s accrued benefit will not be lessthan the frozen grandfathered benefit. If the associate terminates employment after age 50, the frozen grandfatheredbenefit will be reduced by 5 percent per year for commencement before age60.  

 

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For termination beforeage 50, this benefit will be actuarially reduced from age 65.  Grandfathered associates who attain age 50with 10 years of service will be eligible for early retirement under the Plan.  Messrs. Haley, Wickes, Meehan andBardenwerper all currently qualify for the grandfathered Pension Planprovisions and are eligible for early retirement under those provisions.

 

The Excess Benefit andExcess Compensation Plans are designed to restore to eligible associates thereductions to their pension benefit imposed by IRC limitations.  When the excess plan benefits are added tothe benefit provided by the Pension Plan, eligible associates will receive atotal benefit equal to the benefit that would have been provided by the PensionPlan had the limitations not existed. The form of benefit payment provided under the excess plans is a lumpsum payable six months following the termination of employment for the namedexecutives.  The named executivescurrently have no accrued benefit under the Excess Benefit plan as the sum oftheir benefits under the Pension Plan and the Excess Compensation Plan does notexceed the maximum benefit limitation under IRC Section 415.

 

**Non-qualified Deferred Compensation during FiscalYear 2009**

 

The following table sets forth information concerningaggregate earnings during fiscal year 2009 under the Company’s non-qualifieddeferred compensation plans and aggregate account balances in those plans as ofJune 30, 2009.

 
| **Name**     | ** ** | **Non-Qualified    Deferred   Compensation   Plan(1)** | ** ** | **Executive    Contributions   During FY09  ($)** | ** ** | **Company    Contributions  During FY09  ($)** | ** ** | **Aggregate    Earnings in  Last FY  (FY 2009)  ($)** | ** ** | **Aggregate  Withdrawals/  Distributions  ($)** | ** ** | **Aggregate  Balance  at Last FYE  (6/30/09)  ($)** | ** ** |
|--------------|------------|--------------------------------------------------------|------------|---------------------------------------------------|------------|------------------------------------------------|------------|-------------------------------------------------------|------------|-------------------------------------------------|------------|-----------------------------------------------------|------------|
| Haley        |       | Deferred Savings                                       |       | $                                                 | 0          |                                           | $          | 59,818                                                | (2)   | $                                               | 15,835     | (3)                                            | $          | 0 |   | $ | 388,541 | (5) |
|         |       | SODCP                                                  |       | 4,538,441                                         |       | 0                                              |       | (3,517,626                                            | )(4)       | 0                                               |       | 8,066,440                                           | (6)        |
| Mautz        |       | Deferred Savings                                       |       | 0                                                 |       | 0                                              |       | 2,230                                                 | (3)        | 77,590                                          | (7)        | 2,904                                               | (5)        |
|         |       | SODCP                                                  |       | 0                                                 |       | 0                                              |       | 0                                                     |       | 0                                               |       | 0                                                   |       |
| Millay       |       | Deferred Savings                                       |       | 0                                                 |       | 0                                              |       | 0                                                     |       | 0                                               |       | 0                                                   |       |
|         |       | SODCP                                                  |       | 0                                                 |       | 0                                              |       | 0                                                     |       | 0                                               |       | 0                                                   |       |
| Wickes       |       | Deferred Savings                                       |       | 0                                                 |       | 24,319                                         | (2)        | 5,806                                                 | (3)        | 0                                               |       | 145,855                                             | (5)        |
|         |       | SODCP                                                  |       | 532,622                                           |       | 0                                              |       | (266,989                                              | )(4)       | 0                                               |       | 573,397                                             | (6)        |
| Meehan       |       | Deferred Savings                                       |       | 0                                                 |       | 26,439                                         | (2)        | 8,260                                                 | (3)        | 0                                               |       | 196,707                                             | (5)        |
|         |       | SODCP                                                  |       | 298,888                                           |       | 0                                              |       | (100,477                                              | )(4)       | 0                                               |       | 198,411                                             | (6)        |
| Bardenwerper |       | Deferred Savings                                       |       | 0                                                 |       | 0                                              |       | 6,824                                                 | (3)        | 0                                               |       | 140,411                                             | (5)        |
|         |       | SODCP                                                  |       | 0                                                 |       | 0                                              |       | 0                                                     |       | 0                                               |       | 0                                                   |       |
|              |            |                                                        |            |                                                   |            |                                                |            |                                                       |            |                                                 |            |                                                     |            |  |  |  |  |  |

 

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(1)   The Deferred Savings Plan was established tosupplement the benefits of those participants in the Watson Wyatt &Company Savings Plan for U.S. Employees whose Company matching contributions tothe Savings Plan are limited by the compensation and elective deferrallimitations, or the non-discrimination requirements, imposed by the InternalRevenue Code.  The Deferred Savings Plandoes not allow for employee contributions. Participants generally vest in their account after three years ofservice.  All of the named executives(with the exception of Mr. Millay, who is not currently a participant inthe Deferred Savings Plan) are fully vested in their account balances in theDeferred Savings Plan.  Participants areeligible for payment of their vested account balance upon termination ofemployment or retirement.

 

TheSenior Officers Deferred Compensation Plan (“SODCP”) is an unfundednonqualified deferred compensation plan under which applicable employeeremuneration (within the meaning of IRC Section 162(m)(4)) otherwisepayable to senior executives who are subject to Section 162(m) inexcess of $1 million is deferred on a mandatory basis until such time as theexecutive is no longer subject to the requirements of 162(m) or leaves theCompany, at which time it becomes payable in a lump sum to the executive.  The deferred amounts also become payable tothe executive in the event of a change in control of the Company.  As of June 30, 2009, Mr. Haley, Mr. Wickesand Mr. Meehan were the only participants in the SODCP.  The plan offers a choice of investmentoptions consisting of the S&P 500 Index, the Russell 2000 Index, WatsonWyatt Worldwide, Inc. common stock and a guaranteed interest factor equalto 

 

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theprime rate of interest as reported by the Company’s primary bank.  The investment options the executive hasselected may thereafter be changed in accordance with policies and proceduresdeveloped by the Committee.

 

(2)   Represents Company contributions accruedas of June 30, 2009 and credited to each participant’s account on September 15,2009.  These amounts are reported in the “AllOther Compensation” column of the Summary Compensation Table for fiscal year2009.

 

(3)  Represents interest earned during fiscalyear 2009 on account balances in the Deferred Savings Plan.  Interest under the Deferred Savings Plan iscalculated using the prime rate of interest as reported by the Company’s bank,determined as of the first day of the calendar year.  Of the amounts shown, a portion wasdetermined to represent above-market interest and thus is included in theSummary Compensation Table for each named executive.  The amount of such above-market interest is$2,918 for Mr. Haley, $520 for Mr. Mautz, $1,065 for Mr. Wickes,$1,527 for Mr. Meehan and $1,263 for Mr. Bardenwerper.  Interest is considered above-market to theextent it exceeds 120 percent of the applicable federal long-term rate.

 

(4)   Represents earnings during fiscal year2009 on Mr. Haley’s, Mr. Wickes’ and Mr. Meehan’s respectiveaccount balances in the SODCP.  Mr. Haley’saccount balance is deemed to be invested pursuant to his election from amongthe available investment options and is credited with earnings on a monthlybasis.  Based on his elections, Mr. Haley’saccount balance is currently deemed to be invested partially in the S&P 500Index, partially in the Russell 2000 Index, and partially in Watson WyattWorldwide, Inc. common stock.  Mr. Wickes’and Mr. Meehan’s respective account balances are deemed to be investedentirely in Watson Wyatt Worldwide, Inc. common stock.  None of the amounts shown were determined torepresent above-market earnings.

 

(5)   Other than the amounts shown as Companycontributions for fiscal year 2009 and accruals attributable to above-marketinterest, no portion of the amounts shown has been reported in the SummaryCompensation Table for fiscal year 2009 or in prior fiscal years.  Of the balances reported, $51,322 for Mr. Haley,$16,738 for Mr. Mautz, $22,275 for Mr. Wickes, and $22,609 for Mr. Meehanis attributable to Company contributions reported in prior fiscal years, and$10,384 for Mr. Haley, $2,443 for Mr. Mautz, $3,712 for Mr. Wickes,$5,535 for Mr. Meehan and $2,137 for Mr. Bardenwerper is attributableto above-market interest accruals reported in prior fiscal years.

 

(6)   Of the amount shown for Mr. Haley,$552,787 represents the portion of fiscal year end bonuses, $382,486 representssalary amounts and $7,686,458 represents the value of shares otherwise payablefrom the fiscal year 2005 and fiscal year 2006 SBI Programs that were deferredinto the SODCP in fiscal year 2009 or prior fiscal years.  Of the amount shown for Mr. Wickes and Mr. Meehan,$793,458 and $298,888, respectively, represents the value of shares otherwisepayable from the fiscal year 2005 and fiscal year 2006 SBI Programs that weredeferred into the SODCP in fiscal year 2009. The compensation expense relating to shares otherwise payable from therespective SBI Programs that were deferred into the SODCP were reported on theSummary Compensation Table for those years covered by the three-yearperformance period for each of the respective SBI Programs.  The remainder of the amounts shown consistsof accumulated aggregate earnings or losses.

 

(7)   Following his retirement, Mr. Mautzreceived a distribution of $48,600 on October 15, 2008 and a seconddistribution of $28,990 on April 30, 2009.

 

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**PostTermination Payments and Benefits**

 

The Company does not have employment agreements withany of the named executive officers.  TheCompany has not entered into any change in control agreements with any of thenamed executive officers.  The fiscalyear 2008 and fiscal year 2009 SBI Program documents state that the Committeeshall accelerate the vesting of awards and provide for the immediate settlementin stock or cash in connection with a change in control, subject to theCommittee’s authority to assure fair and equitable treatment of participants inthe SBI Program.  Thus, the CompensationCommittee could provide for vesting at any level allowed under the SBI Program,regardless of performance at the time against the metrics specified in theapplicable SBI Program, including vesting above the threshold performance levelof 30 percent as shown in the Outstanding Equity Awards at 2009 Fiscal Year-Endtable.  However, any such action would beat the complete discretion of the Compensation Committee.  See the discussion following the OutstandingEquity Awards at 2009 Fiscal Year End Table for an explanation of the Committee’sdetermination following the end of the 2009 fiscal year of outstanding equityawards under the fiscal year 2008 and fiscal year 2009 SBI Programs upon theclosing of the proposed merger with Towers, Perrin, Forster & Crosby.

 

The account valuespayable through the Non-qualified Deferred Compensation Plans are shown in theNon-qualified Deferred Compensation During Fiscal Year 2009 table and would notchange based on early retirement, death, disability or a change in control ofthe Company.  The value of benefitspayable to the named executives under the Pension Plan or the ExcessCompensation Plan outlined above may increase (or decrease) in the event of theearly retirement, death or disability of the named executive.  Benefits do not become payable under thePension Plan or the Excess Compensation Plan as a result of a change in controlof the Company.  Using the assumptionsemployed in the Pension Benefits Table (PBT) with the exception of using theactual Excess Compensation Plan lump sum interest rate as of June 30,2009, the present value of the pension and disability benefit (as applicable)payable to each of the named executives as of June 30, 2009 in the eventof early retirement, death or disability is shown in the following table.

 
| ** **   | ** ** | ** **   | ** ** | **Total Present Value in case of :** | ** ** | ** **                           | ** ** |
|--------------|------------|--------------|------------|--------------------------------------|------------|--------------------------------------|------------|
| ** **   | ** ** | ** **   | ** ** | **Early  Retirement   (1)**          | ** ** | **Increase /  (Decrease)  from PBT** | ** ** | **Death****(2)** | ** ** | **Increase  /  (Decrease)  from PBT** | ** ** | **Disability  (3)** | ** ** | **Increase  /  (Decrease)  from PBT** | ** ** |
| Haley        |       | Pension Plan |       | 1,607,254                            |       | 20,199                               |       | 1,415,884 |   | (171,171 | ) | 1,005,810 |   | (581,245 | ) |
|         |       | Excess Plan  |       | 11,728,251                           |       | 57,530                               |       | 10,455,785 |   | (1,214,936 | ) | 7,309,596 |   | (4,361,125 | ) |
|         |       | Disability   |       | N/A                                  |       | N/A                                  |       | N/A |   | N/A |   | 1,616,863 |   | 1,616,863 |   |
|         |       | Total        |       | 13,335,505                           |       | 77,729                               |       | 11,871,669 |   | (1,386,107 | ) | 9,932,269 |   | (3,325,507 | ) |
|         |       |         |       |                                 |       |                                 |       |   |   |   |   |   |   |   |   |
| Millay       |       | Pension Plan |       | N/A                                  |       | N/A                                  |       | 0 |   | (16,433 | ) | 210,590 |   | 194,157 |   |
|         |       | Excess Plan  |       | N/A                                  |       | N/A                                  |       | 0 |   | (104,174 | ) | 1,324,825 |   | 1,220,651 |   |
|         |       | Disability   |       | N/A                                  |       | N/A                                  |       | N/A |   | N/A |   | 3,116,193 |   | 3,116,193 |   |
|         |       | Total        |       | N/A                                  |       | N/A                                  |       | 0 |   | (120,607 | ) | 4,651,608 |   | 4,531,001 |   |
|         |       |         |       |                                 |       |                                 |       |   |   |   |   |   |   |   |   |
| Wickes       |       | Pension Plan |       | 462,804                              |       | 82,298                               |       | 411,862 |   | 31,356 |   | 473,121 |   | 92,615 |   |
|         |       | Excess Plan  |       | 2,264,177                            |       | 367,530                              |       | 2,024,263 |   | 127,616 |   | 2,341,078 |   | 444,431 |   |
|         |       | Disability   |       | N/A                                  |       | N/A                                  |       | N/A |   | N/A |   | 2,202,255 |   | 2,202,255 |   |
|         |       | Total        |       | 2,726,981                            |       | 449,828                              |       | 2,436,125 |   | 158,972 |   | 5,016,454 |   | 2,739,301 |   |
|         |       |         |       |                                 |       |                                 |       |   |   |   |   |   |   |   |   |
| Meehan       |       | Pension Plan |       | 1,089,741                            |       | 0                                    |       | 952,936 |   | (136,805 | ) | 1,039,987 |   | (49,754 | ) |
|         |       | Excess Plan  |       | 4,641,745                            |       | (34,214                              | )          | 4,292,024 |   | (383,935 | ) | 4,456,387 |   | (219,572 | ) |
|         |       | Disability   |       | N/A                                  |       | N/A                                  |       | N/A |   | N/A |   | 203,042 |   | 203,042 |   |
|         |       | Total        |       | 5,731,486                            |       | (34,214                              | )          | 5,244,960 |   | (520,740 | ) | 5,699,416 |   | (66,284 | ) |
|         |       |         |       |                                 |       |                                 |       |   |   |   |   |   |   |   |   |
| Bardenwerper |       | Pension Plan |       | 901,891                              |       | 155,878                              |       | 795,158 |   | 49,145 |   | 640,360 |   | (105,653 | ) |
|         |       | Excess Plan  |       | 3,427,360                            |       | 552,504                              |       | 3,026,918 |   | 152,062 |   | 2,449,652 |   | (425,204 | ) |
|         |       | Disability   |       | N/A                                  |       | N/A                                  |       | N/A |   | N/A |   | 1,752,777 |   | 1,752,777 |   |
|         |       | Total        |       | 4,329,251                            |       | 708,382                              |       | 3,822,076 |   | 201,207 |   | 4,842,789 |   | 1,221,920 |   |

 

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(1)          The increase for early retirement versus the PBT isdue primarily to reflecting the immediate early retirement benefit payable forthose under unreduced retirement age. The early retirement factors available tothe named executives through the grandfathered pension plan provisions reflecta “subsidy” versus the benefit at unreduced retirement age.  Note that these factors are generallyavailable to all grandfathered plan participants depending on age and serviceconditions. An additional cause for the increase is due to using the actual lumpsum interest rate for the Excess Compensation Plan as of June 30, 2009versus the rate assumed in future years for financial accounting purposes. TheExcess Compensation Plan benefit is payable as a lump sum.  With the exception of Mr. Millay, allnamed executives are currently eligible for early retirement under the terms ofthe Pension Plan and the Excess Compensation Plan.

 

(2)          In case of death, the Pension Plan and the ExcessCompensation Plan provide a death benefit to the named executive’s spouse assumingthe named executive retired on the date of his death, elected the 100 percentjoint and contingent benefit form and died the next day. This benefit isprovided if the participant is early retirement eligible at death and isavailable to all plan participants. The death benefit would represent adecrease in the present value of the benefit because the benefit is actuariallyreduced for payment during the life of the spouse only.  However, the table does show an increaseversus the amounts shown in the PBT in some cases because of the application ofthe early retirement factors and the different lump sum interest rate asdescribed in footnote (1) above.

 

(3)          In case of disability, the Company provides adisability benefit equal to 66.67 percent of base salary, subject to a maximummonthly benefit of $30,000.  This benefitis payable until age 65 or for at least 12 months, assuming the participantcontinues to meet the definition of disability. The table shows the value ofthe temporary disability benefit that would be payable to age 65 along with thepension benefits payable at age 65. Employees also receive service credits forpension purposes while on disability. The table shows that the present valueincreases or decreases for the different named executives. This is primarily afunction of whether the named executive’s current salary exceeds the maximummonthly disability benefit and how close he is to reaching the 25 year pensionservice cap.

 

In addition, upon anytermination of employment the named executives may be entitled to distributionsunder the deferred compensation plans described above and to benefits generallyavailable to salaried employees, including distributions under the Company’s401(k) plan, health care benefits, disability benefits and accruedvacation pay.  Two of our namedexecutives, Mr. Haley and Mr. Bardenwerper, in addition to accruingannual vacation during fiscal year 2009, have frozen vacation balances fromprior years which, if unused, will be paid out to them upon termination ofemployment at their then current rate of hourly base salary.  At June 30, 2009, the liability forfrozen vacation pay was $287,365 for Mr. Haley and $50,001 for Mr. Bardenwerper.  In the context of any particular separationfrom the Company, the Company and the executive may mutually agree on severanceterms that could include additional benefits or payments.

 

In connection with hisretirement from the Company effective August 29, 2008, Mr. Mautzcommenced receiving his benefits from the Pension Plan and received a lump sumcash out of his benefits from the Excess Compensation Plan, as described innote 2 following the Pension Benefits at 2009 Fiscal Year-End Table, andreceived distributions from his account in the Deferred Savings Plan, asdescribed in note 7 to the Non-qualified Deferred Compensation during FiscalYear 2009 Table.  In addition, theCommittee determined that Mr. Mautz should continue to vest in his awardsunder the fiscal year 2007 and fiscal year 2008 SBI Programs to the same extentas other participants following the completion of each of the applicablethree-year performance periods.  Mr. Mautzvested in 8,450 shares under the Company’s fiscal year 2007 SBI Programfollowing completion of the three-year performance period ending June 30,2009, as disclosed in the Stock Vested During Fiscal Year 2009 Table.  Mr. Mautz did not receive any severancebenefits in connection with his retirement from the Company.

 

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**DirectorCompensation in Fiscal Year 2009**

 

Every two years, at the direction of the Committee,Frederic Cook performs a competitive assessment of total director compensationusing the same peer group as is used for conducting the competitive assessmentof the compensation levels of each of the named executives.  The Committee takes the competitive findingsof the biennial assessment into account along with other factors in determiningany recommendations it may make to the Board regarding the total compensationarrangements for our non-employee directors.

 

In fiscal 2009, we provided the following compensationto those of our Directors who are not employees of the Company.

 
| **Name**                 | ** ** | **Fees  Earned or  Paid in  Cash  ($)** | ** ** | **Stock  Awards  ($)(1)** | ** ** | **Total  ($)** | ** ** |
|--------------------------|------------|-----------------------------------------|------------|---------------------------|------------|----------------|------------|
| John J. Gabarro          |       | $                                       | 89,651     |                      | $          | 89,997         |       | $ | 179,648 |   |
| R. Michael  McCullough   |       | 110,750                                 |       | 91,827                    |       | 202,577        |       |
| Brendan R.  O’Neill |       | 83,233                                  |       | 90,780                    |       | 174,013        |       |
| Linda D. Rabbitt         |       | 48,700                                  |       | 139,299                   |       | 187,999        |       |
| Gilbert T. Ray           |       | 108,733                                 |       | 90,521                    |       | 199,254        |       |
| John C. Wright           |       | 130,600                                 |       | 90,503                    |       | 221,103        |       |
|                          |            |                                         |            |                           |            |                |            |  |  |  |

 

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(1)          As of June 30, 2009, the aggregate number ofshares held by each outside Director, all of which were fully vested, was asfollows: Gabarro — 15,207; McCullough — 2,500; O’Neill — 445; Rabbitt — 11,623;Ray — 10,974; and Wright — 14,373.  Inaddition, as a result of deferral elections, Mr. McCullough held a vestedright to 6,319.02 deferred stock units; Mr. O’Neill and Ms. Rabbitteach held a vested right to 4,561.62 deferred stock units; Mr. Ray held avested right to 1,307.09 deferred stock units; and Mr. Wright held avested right to 1,906.61 deferred stock units, payable in shares upontermination of Board service.

 

Pursuant to the Amended CompensationPlan for Outside Directors:

 

(1)   outsideDirectors of the Company are paid a quarterly retainer of $11,250 plus $1,500per day for board meetings;

(2)          the feefor regular committee meetings is $1,000 per day for Compensation or Nominatingand Governance Committee meetings and $2,000 per day for Audit Committeemeetings;

(3)          thecompensation for telephone meetings of less than four hours duration is 50percent of the applicable per day fee;

(4)   thefee for other meetings is $1,000 per day;

(5)          the Chairsof the Audit, Compensation, and Nominating and Governance Committees receive anannual retainer of $15,000, $10,000, and $5,000, respectively; and

(6)   thePresiding Director receives an annual retainer of $10,000.

 

Outside Directors are paid in acombination of cash and the Company’s common stock, at the end of each calendarquarter (at the completed quarter-end share price) for services during thepreceding quarter.  Directors may electto be paid through any combination of cash, deferral of cash under the Company’sVoluntary Deferred Compensation Plan for Non-Employee Directors, and/or sharesof the Company’s common stock.  Inaddition, outside Directors receive shares with a grant date market value ofapproximately $90,000 (subject to rounding) at the end of each fiscal year forservices performed during the preceding fiscal year.  Amounts reported in the table above reflectthe FAS 123(R) grant date fair market value of the shares granted.  Because the value of the shares receivedequals the number of shares issued multiplied by the grant date fair marketvalue, no assumptions are relevant in determining grant date fair market valuefor FAS 123(R) purposes.  The sharesvest immediately at grant, and Directors may elect to receive the shares at theend of each fiscal year or in deferred stock units payable in shares upontermination of Board service.

 

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The Company also maintains the VoluntaryDeferred Compensation Plan for Non-Employee Directors to enable outsideDirectors who hold 5,000 or more shares of the Company’s common stock, at theirelection, to defer receipt of any or all of their Directors’ fees until theyare no longer serving as Directors of the Company.  Deferred amounts are creditedwith interest each month using an interest factor equivalent to the prime rateof interest as reported by the Company’s primary bank.  None of the non-employee directors earnedabove-market interest on these deferred amounts during fiscal year 2009.

 

None of the current Directors who are employed by the Company iscompensated separately for his or her services as a Director or as a member ofany committee.

 

**Item12.  Security Ownership of Certain BeneficialOwners and Management and Related Stockholder Matters.**

 

The following table sets forth information known tothe Company concerning the shares of Class A common stock beneficiallyowned, as of October 1, 2009, by (i) the Directors during the last fiscalyear and nominees for Director of the Company; (ii) the executive officersnamed in the Summary Compensation Table herein under “Executive Compensation;”and (iii) all executive officers and Directors as a group. Except asotherwise indicated in the footnotes to the table below, the Company believesthat the beneficial owners of the common stock, based on information furnishedby such owners, have sole investment power and voting power with respect tosuch shares.

 
| ** **                                           | ** ** | **Number of Outstanding Shares Beneficially********Owned on October 1, 2009** | ** ** |
|------------------------------------------------------|------------|------------------------------------------------------------------------------------|------------|
| ** **                                           | ** ** | **Number and Class**                                                               | ** ** | **Percent of Class(a)** | ** ** |
| **Name of Beneficial Owner**                         | ** ** | **Class A**                                                                   | ** ** | **Class A** | ** ** |
| John J. Haley(b)                                     |       | 100,541                                                                            |       | * |   |
| Roger F. Millay                                      |       | 1,876                                                                              |       | * |   |
| Carl D. Mautz(i)                                     |       | 5,729                                                                              |       | * |   |
| Gene H. Wickes(c)                                    |       | 65,447                                                                             |       | * |   |
| Walter W. Bardenwerper                               |       | 63,806                                                                             |       | * |   |
| Kevin L. Meehan(d)                                   |       | 48,346                                                                             |       | * |   |
| John J. Gabarro                                      |       | 15,207                                                                             |       | * |   |
| R. Michael McCullough(e)                             |       | 8,831.70                                                                           |       | * |   |
| Brendan R. O’Neill(f)                           |       | 5,015.75                                                                           |       | * |   |
| Linda D. Rabbitt(f)                                  |       | 16,388.75                                                                          |       | * |   |
| Gilbert T. Ray(g)                                    |       | 12,283.73                                                                          |       | * |   |
| John C. Wright(h)                                    |       | 16,283.46                                                                          |       | * |   |
|                                                 |       |                                                                               |       |   |   |
| All executive officers and Directors as a group:  20 |       | 827,313.39                                                                         |       | 1.9 | % |

 

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(a)          Beneficial ownership of 1percent or less of all of the outstanding common stock is indicated with anasterisk (*).

(b)         Ownership includes 14,252shares that were deferred but are treated as beneficially owned and does notinclude 213,886.69 deferred stock units.

(c)          Ownership does not include16,506.52 deferred stock units.

(d)         Ownership does not include5,297.05 deferred stock units.

(e)          Ownership includes 6,319.02shares that were deferred but are treated as beneficially owned.

(f)            Ownership includes 4,561.62shares that were deferred but are treated as beneficially owned.

(g)         Ownership includes 1,307.09shares that were deferred but are treated as beneficially owned.

(h)         Ownership includes 1,906.61shares that were deferred but are treated as beneficially owned.

(i)             Mr. Mautz retired fromWatson Wyatt effective August 29, 2008.

 

**Security Ownership Of CertainBeneficial Owners**

 

The following table sets forth information known tothe Company concerning the shares of Class A common stock beneficiallyowned, as of June 30, 2009 by entities that have reported beneficialownership of greater than five percent.

 
| ** **                     | ** ** | **Number of Outstanding Shares  Beneficially** | ** ** |
|--------------------------------|------------|------------------------------------------------|------------|
| ** **                     | ** ** | **Owned as of June 30, 2009**             | ** ** |
| **Name of  Beneficial  Owner** | ** ** | **Number and Class  (a)**                      | ** ** | **Percent  of Class** | ** ** |
|                           |       |                                           |       |   |   |
|                           |       |                                           |       |   |   |
|                           |       |                                           |       |   |   |

 
| ** **                                 | ** ** | ** **       | ** ** | **Class A** | ** ** | ** **       | ** ** |
|--------------------------------------------|------------|------------------|------------|------------------|------------|------------------|------------|
| ** **                                 | ** ** | **Class A** | ** ** | **(Options)**    | ** ** | **Class A** | ** ** |
| Marathon  Asset Management LLP             |       | 2,167,452        | (b)        | 0                |       | 5.08             |       |
| Barclays  Global Investors UK Holdings Ltd |       | 3,045,159        | (c)        | 0                |       | 7.14             |       |

 

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(a)          Pursuant to current regulations of the SEC, securitiesmust be listed as beneficially owned by a person who directly or indirectly hasor shares the power to vote (“voting power”) or the power to dispose of (“dispositivepower”) the securities, whether or not the person has any economic interest inthe securities. In addition, a person is deemed a beneficial owner if he hasthe right to acquire beneficial ownership within 60 days, whether upon exerciseof a stock option or warrant, conversion of a convertible security orotherwise. The information contained in this table has been included solely inreliance upon and without independent investigation of, SEC filings includingthe disclosures contained in the schedules and forms referenced in thefootnotes below.

(b)         As reported by Marathon Asset Management LLP (“Marathon”)in its report on Form 13F filed with the SEC for the quarter ended June 30,2009, Marathon has shared investment discretion with respect to all of suchshares and discloses that it shares voting authority over 1,567,597 shares andno voting authority over 599,855 shares.

(c)          As reported by Barclays Global Investors UK HoldingsLtd (“Barclays”) in its report on Form 13F filed with the SEC for thequarter ended March 31, 2009, Barclays disclosed the following: (i) BarclaysGlobal Investors Ltd had defined investment discretion with respect to 34,885shares and sole voting authority with respect to 3,065 shares and no votingauthority with respect to 31,820 shares; (ii) Barclays Global InvestorsN.A. had defined investment discretion with respect to 1,649,344 shares andsole voting authority with respect to 1,396,617 shares and no voting authoritywith respect to 252,727 shares; (iii) Barclays Global Fund Advisors haddefined investment discretion with respect to 1,222,908 shares and sole votingauthority with respect to 1,059,626 shares and no voting authority with respectto 274,282 shares; (iv) Barclay’s Global Investors Australia Ltd haddefined investment discretion with respect to 10,440 shares 

 

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and sole voting authoritywith respect to 10,440 shares; (v) Barclay’s Global Investors Canada Ltdhad defined investment discretion with respect to 3,147 shares and sole votingauthority with respect to 3,147 shares; and (vi) Barclay’s GlobalInvestors Japan Ltd had defined investment discretion with respect to 13,445shares and sole voting authority with respect to 13,445 shares.

 

**Item13.  Certain Relationships and RelatedTransactions, and Director Independence.**

 

***Review, Approval or Ratificationof Transactions with Related Persons***

 

Our Related PartyTransactions Policy (the “Policy”) is designed to avoid entering intotransactions with directors, executive officers, immediate family members andcertain other persons with specified relationships to the Company (a “RelatedPerson”) except where clearly consistent with the interests of the Company andappropriately vetted and approved. This Policy is set forth in writing andadministered by the Audit Committee and applies to any transaction orrelationship or series of similar transactions arrangements or relationshipswith a Related Person. Under the Policy the Chief Financial Officer (“CFO”)shall seek approval of the Audit Committee for any proposed transaction with aRelated Person of which he is informed or becomes aware. If the CFO becomesaware of an existing transaction with a Related Person which has not beenapproved in advance under the Policy, the matter will be referred to the AuditCommittee. The Audit Committee will evaluate any options available, includingratification or take other appropriate action for existing transactions thatwere not approved initially by the Audit Committee. The Audit Committee willreview the proposed transaction for approval, ratification or other appropriateaction. In making its determination, the Audit Committee considers all relevantfactors including (i) the extent of the Related Person’s interest in theRelated Person Transaction, (ii) if applicable, the availability of othersources of comparable products or services, (iii) whether the terms of theRelated Person Transaction are no less favorable than terms generally availablein unaffiliated transactions under like circumstances, (iv) benefit to theCompany, and (v) the aggregate value of the Related Person Transaction.During Fiscal Year 2009 there were no transactions subject to this policy byRelated Persons.

*** ***

***DirectorIndependence***

 

The Board is composed of a majority of Directors whoqualify as independent Directors pursuant to the corporate governance standardsfor companies listed on the NYSE and NASDAQ. The Board committee structureincludes an Audit Committee, Compensation Committee, Nominating and GovernanceCommittee and a Risk Management Committee, the first three committeesconsisting entirely of independent Directors.

 

In determining independence, each year the Boardaffirmatively determines whether Directors have any material relationship withthe Company. When assessing the materiality of a Director’s relationship withthe Company, the board considers all relevant facts and circumstances, notmerely from the Director’s standpoint, but from that of the persons ororganizations with which the Director has an affiliation, and the frequency orregularity of the services, if any, provided to or by such persons ororganizations, whether the services are being carried out at arm’s length inthe ordinary course of business and whether the services are being providedsubstantially on the same terms to the Company as those prevailing at the timefrom unrelated parties for comparable transactions. Material relationships caninclude commercial, banking, industrial, consulting, legal, accounting,charitable and familial relationships. A Director will not be consideredindependent if:

 

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(1) the Director is, or in the past three yearshas been, an employee of the Company, or an immediate family member of theDirector is, or in the past three years has been, an executive officer of theCompany;

 

(2) the Director, or a member of the Director’simmediate family, is receiving or has in the past three years received directcompensation from the Company in excess of $100,000 per year, other thancompensation for Board service, compensation received by the Director’simmediate family member for service as a non-executive employee of the Company,and pension or other forms of deferred compensation for prior service with theCompany;

 

(3) the Director, or a member of the Director’simmediate family, is or in the past three years has been an executive officerof another company where any of the Company’s present executives at the sametime serves or served on the Compensation Committee;

 

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(4) the Director or an immediate family member isa current partner of the Company’s internal or outside auditor; the Director isa current employee of the internal or outside auditor; the Director has animmediate family member who is a current employee of the internal or outsideauditor and who participates in the auditor’s audit, assurance or taxcompliance practice; or the Director or an immediate family member was withinthe past three years a partner or employee of the internal or outside auditorand personally worked on the Company’s audit; or

 

(5) the Director is an executive officer oremployee, or a member of the Director’s immediate family is an executiveofficer of another company that has made payments to or received payments fromthe Company for property or services in an amount that, in any of the pastthree fiscal years, exceeded the greater of $1 million or 2 percent of theother company’s consolidated gross revenues.

 

For these purposes, an “immediate family” memberincludes a Director’s spouse, parents, children, siblings, mother andfather-in-law, sons and daughters-in-law, brothers and sisters-in-law, andanyone (other than a domestic employee) who shares the Director’s home.

 

Applying these standards, the Board has determinedthat the following Directors are independent: John J. Gabarro, R. MichaelMcCullough, Brendan R. O’Neill, Linda D. Rabbitt, Gilbert T. Ray, and John C.Wright. In making these determinations, the board determined that none of theindependent Directors, their family members or organizations with which theDirectors are affiliated have any material direct or indirect relationship withthe Company.

 

**Item14.  Principal Accounting Fees andServices.**

** **

**Fees Paid to the IndependentRegistered Public Accounting Firm**

 

The Audit Committee has responsibility for theappointment, compensation and oversight of the work of the independentregistered public accounting firm. Deloitte & Touche LLP (“Deloitte”)is the Company’s independent registered public accounting firm and audited theCompany’s financial statements for fiscal years 2008 and 2009.

 

As part of its oversight responsibility, the AuditCommittee must pre-approve all permissible services to be performed by theindependent registered public accounting firm. The Audit Committee hasestablished policies and procedures for the pre-approval of audit and non-auditservices to be performed by the independent registered public accounting firm.

 

Under the policy, the Committee must give priorapproval for any amount or specific type of service within four categories: (i) audit,(ii) audit-related, (iii) tax services or, to the extent permitted by law,(iv) other services that the independent registered public accounting firmprovides. Prior to the annual engagement, the Audit Committee may grantpre-approval for specific independent registered public accounting firmservices within these four categories at maximum pre-approved fee levels; however,the Audit Committee’s policy is generally not to engage the independentregistered public accounting firm for any non-audit related services, includingtax planning or tax return preparation. If circumstances arise that wouldrequire the Company to engage the independent registered public accounting firmfor additional services not contemplated in the original pre-approval, then theengagement for such services would require separate pre-approval by the AuditCommittee. The Chair of the Audit Committee is authorized to approve a requestfor pre-approval provided the additional service is presented to the AuditCommittee for approval at its next scheduled meeting.

 

The following table presents fees for professionalaudit services rendered by Deloitte for the audit of the Company’s annualfinancial statements for the years ended June 30, 2008 and 2009 and feesbilled by Deloitte for other services rendered during those respective periods.

 

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| ** **              | ** ** | **2008**                        | ** ** | **2009**                        | ** ** |
|-------------------------|------------|---------------------------------|------------|---------------------------------|------------|
| ** **              | ** ** | **Deloitte &  Touche** | ** ** | **Deloitte &  Touche** | ** ** |
| **Fee Category**        | ** ** | **LLP**                         | ** ** | **LLP**                         | ** ** |
| Audit  Fees (1)         |       | $                               | 3,780,581  |                            | $          | 3,621,500 |   |
| Audit-Related  Fees (2) |       | 374,406                         |       | 132,000                         |       |
| Tax  Fees (3)           |       | 42,683                          |       | 13,041                          |       |
| Subtotal                |       | 4,197,670                       |       | 3,766,541                       |       |
| All  Other Fees (4)     |       | 2,000                           |       | 2,000                           |       |
| Total  Fees             |       | $                               | 4,199,670  |                            | $          | 3,768,541 |   |

 

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(1)  Audit Fees – consists of fees billed forprofessional services performed by Deloitte for the audit of the Company’s annualfinancial statements, review and audit of internal controls to ascertaincompliance with the Sarbanes-Oxley Act, review of financial statements includedin the Company’s quarterly and annual filings, and services that are normallyprovided in connection with statutory and regulatory filings or engagements.

(2)  Audit-Related Fees – includes fees forbenefit plan audits and related services performed by Deloitte that arereasonably related to the performance of the audit or review of the Company’sfinancial statements and are not reported under “Audit Fees.”

(3)  Tax Fees – includes fees of Deloitte for anyprofessional services related to tax compliance, tax advice and/or tax planningprimarily for overseas matters.

(4)  All Other Fees – represents fees for anannual license fee for access to Deloitte’s online database of financialreporting and accounting literature.

 

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**SIGNATURES**

 

Pursuant to therequirements of Section 13 or 15(d) of the Securities Exchange Act of1934, the registrant has duly caused this report to be signed on its behalf bythe undersigned, thereunto duly authorized.

 
|                         | WATSON WYATT WORLDWIDE,  INC. |
|------------------------------|-------------------------------|
|                         | (Registrant)                  |
|                         |                          |
| Date: October 20,  2009 | By:                           | /s/ John J. Haley |
|                         |                          | John J. Haley |
|                         |                          | President and Chief  Executive Officer |

 

Pursuant to therequirements of the Securities Exchange Act of 1934, this report has beensigned below by the following persons on behalf of the registrant and in thecapacities and on the dates indicated.

 
| **Signature**              | ** ** | **Title**                                        | ** ** | **Date**               |
|----------------------------|------------|--------------------------------------------------|------------|------------------------|
| ** **                 | ** ** | ** **                                       | ** ** | ** **             |
| /s/ John J. Haley          |       | President, Chief  Executive Officer and Director |       | October 20,  2009 |
| John J. Haley              |       |                                             |       |                   |
|                       |       |                                             |       |                   |
| /s/ Roger F. Millay        |       | Vice President and  Chief Financial Officer      |       | October 20,  2009 |
| Roger F. Millay            |       |                                             |       |                   |
|                       |       |                                             |       |                   |
| /s/ Peter L. Childs        |       | Controller                                       |       | October 20,  2009 |
| Peter L. Childs            |       |                                             |       |                   |
|                       |       |                                             |       |                   |
| /s/ John J. Gabarro        |       | Director                                         |       | October 20,  2009 |
| John J. Gabarro            |       |                                             |       |                   |
|                       |       |                                             |       |                   |
| /s/ R. Michael  McCullough |       | Director                                         |       | October 20,  2009 |
| R. Michael McCullough      |       |                                             |       |                   |
|                       |       |                                             |       |                   |
| /s/ Brendan O’Neill   |       | Director                                         |       | October 20,  2009 |
| Brendan O’Neill       |       |                                             |       |                   |
|                       |       |                                             |       |                   |
| /s/ Linda D. Rabbitt       |       | Director                                         |       | October 20,  2009 |
| Linda D. Rabbitt           |       |                                             |       |                   |
|                       |       |                                             |       |                   |
| /s/ Gilbert T. Ray         |       | Director                                         |       | October 20,  2009 |
| Gilbert T. Ray             |       |                                             |       |                   |
|                       |       |                                             |       |                   |
| /s/ John C. Wright         |       | Director                                         |       | October 20,  2009 |
| John C. Wright             |       |                                             |       |                   |

 

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**EXHIBITS.**

In reviewing theagreements included or incorporated by reference as exhibits to this AnnualReport on Form 10-K/A, it is important to note that they are included toprovide investors with information regarding their terms, and are not intendedto provide any other factual or disclosure information about Watson Wyatt orthe other parties to the agreements. The agreements contain representations andwarranties made by each of the parties to the applicable agreement. Theserepresentations and warranties have been made solely for the benefit of theother parties to the applicable agreement, and should not be treated ascategorical statements of fact, but rather as a way of allocating risk betweenthe parties; have in some cases been qualified by disclosures that were made tothe other party in connection with the negotiation of the applicable agreement,which disclosures are not necessarily reflected in the agreement; may applystandards of materiality in a way that is different from what may be materialto investors; and were made only as of the date of the applicable agreement orsuch other date or dates as may be specified in the agreement and are subjectto more recent developments.

 

Accordingly, theserepresentations and warranties may not describe the actual state of affairs asof the date they were made or at any other time. Additional information aboutWatson Wyatt may be found elsewhere in this Annual Report on Form 10-K/Aand our other public filings, which are available without charge through theSEC’s website at *http://www.sec.gov*.

 
| 21   | Subsidiaries of Watson  Wyatt Worldwide, Inc.                                                                                                                                             |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 31.1 | Certification of Chief  Executive Officer Pursuant to Securities Exchange Act Rules 13a-14 and  15d-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of  2002        |
| 31.2 | Certification of Chief  Financial Officer Pursuant to Securities Exchange Act Rules 13a-14 and  15d-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of  2002        |
| 32   | Certification of Chief  Executive Officer and Chief Financial Officer Pursuant to Title 18, U.S.C.  Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley  Act of 2002 |

 

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