EXHIBIT 10.15



 











Exhibit 10.15




MASTERCARD INTERNATIONAL INCORPORATED

ANNUITY BONUS PROGRAM:




STATEMENT OF COMPANY PAYROLL PRACTICES AND PROCEDURES

(As amended and restated as of January 1, 2000)




                    1. Purpose.



                    This document describes the Company’s payroll practices and procedures applicable to the
payment of Annuity Bonuses and Tax Equalization Payments to Participants whose benefits are
curtailed under the MAP and the Savings Plan by operation of the Limits. The Practices and
Procedures are not intended to be, and shall be not construed as, an “employee benefit plan” within
the meaning of the Employee Retirement Security Act of 1974, as amended.



                    2. Eligibility.



                    The Human Resources Department of the Company will advise Eligible Employees of their
continuing eligibility to receive an Annuity Bonus. A Participant’s receipt of an Annuity Bonus
for one Bonus Year will not obligate the Company to award an Annuity Bonus for any succeeding Bonus
Year.



                    3. Definitions and Rules of Construction.



                    (a) Definitions. The following capitalized words shall have the meanings set forth
below:




     “Accumulation Interest Rate” means an interest rate, which may differ between classes
of employees, determined each Bonus Year by the Committee.




     “Additional Pay Credit Bonus” means the portion of the Annuity Bonus determined in
accordance with Section 4(b).




     “Annuity Bonus” means the amount determined in accordance with Section 4(a).




     “Annuity Contract” means an annuity contract, or an addition to an existing annuity
contract, issued by an insurance company or other third-party annuity provider selected by
the Committee from time to time.




     “Applicable Date” has the meaning set forth in Section 5(b).




     “Applicable Tax Rate” means a uniform rate applicable to all Participants for a Bonus Year,
reflecting the designated federal, state and local income tax rates specified by the Committee for
this purpose. The Committee’s determination of the Applicable Tax Rate shall be final and binding
on all Participants and shall not be subject to appeal or review.



 









 




2


     “Benefit Limit” means the limit on benefits under the MAP or the Savings Plan imposed
by Section 415 of the Code.




     “Board” means the Global Board of Directors of the Company.




     “Bonus Year” means the calendar year.




     “Code” means the Internal Revenue Code of 1986, as amended, and the applicable rulings
and regulations thereunder.




     “Committee” means the Pension and Savings Plan Committee.




     “Company” means MasterCard International Incorporated, a Delaware not-for-profit
corporation, and any entity that succeeds to all or substantially all of its business or
assets.




     “Companies” means the Company and each other corporation that has elected, with the
consent of the Board or the Committee, to award Annuity Bonuses in accordance with the
Practices and Procedures.




     “Compensation Limit” means the limit on compensation under the MAP or the Savings Plan
imposed by Section 401(a)(17) of the Code.




     “Conversion Eligible Participant” mean a Participant who is eligible for a MAP
Conversion Bonus in accordance with the provisions of Sections 5(a) and (b).




     “Effective Date” means January 1, 2000.




     “Eligible Employee” means a highly-compensated employee of any of the Companies.




     “Initial Account Balance” has the meaning set forth in the MAP.




     “Limits” means the Compensation Limit and the Benefit Limit.




     “MAP” means the MasterCard International Incorporated Accumulation Plan, as the same
may be amended from time to time.




     “MAP Adjustment Bonus” means the amount determined in accordance with Section 4(c).




     “MAP Conversion Bonus” means the one-time bonus payable to certain Participants under
Section 5 in connection with the establishment of MAP.



 









 




3


     “Net Savings Plan Bonus” means the portion of the Annuity Bonus determined in
accordance with Section 4(d).




     “Participant” means an Eligible Employee selected by the Company to receive an Annuity
Bonus for a given Bonus Year.




     “Pay Credit” has the meaning set forth in the MAP.




     “Practices and Procedures” means these MasterCard International Incorporated practices
and procedures, as the same may be amended from time to time.




     “Prior Plan Terms” has the meaning set forth in the MAP.




     “Savings Plan” means the MasterCard International Incorporated Savings Plan, as the
same may be amended from time to time.




     “Savings Plan Adjustment Bonus” means the amount determined in accordance with Section
4(e).




     “Tax Equalization Payment” means an amount determined in accordance with Section 4(g)
or 5(e), and subject to the provisions of Section 6(e).




	 	(b)  	Rules of Construction. Unless the context requires
otherwise, the use of the masculine form of a word shall include the feminine
form and the use of the singular form shall include the plural form.






	 	4.	Annuity Bonus.





                   (a)   Calculation. The amount of a Participant’s Annuity Bonus for a Bonus Year
beginning on and after the Effective Date will equal the sum of (i) the Additional Pay Credit Bonus
and (ii) the Net Savings Plan Bonus.



                   (b)   Additional Pay Credit Bonus. A Participant’s Additional Pay Credit Bonus for each
Bonus Year beginning on or after the Effective Date shall be an amount determined in accordance
with the formula [(1 - T) x (A - B)], where “A” is the sum of (i) the vested Pay Credits the
Participant would have received for the Bonus Year under the MAP if the Limits did not apply to the
Participant for such Year and (ii) the MAP Adjustment Bonus, if any, for such Bonus Year; “B” is
the Pay Credit actually credited to the Participant for the Bonus Year; and “T” is the Applicable
Tax Rate, as illustrated by the following example:



 









 





4



	 	 	 	 	 
	Example
	 	 	 	 
	 
	 	 	 	 
	Service
	 	6 years
	Pay Credit Multiplier from MAP
	 	 	5.75	%
	Base Pay Plus AICP Incentive
	 	$	200,000	 
	Applicable Compensation Limit
	 	$	170,000	 
	Pay Credit without Code Limit
	 	$	11,500	 
	($200,000 x .0575)
	 	 	 	 
	Pay Credit from MAP
	 	$	9,775	 
	($170,000 x .0575)
	 	 	 	 
	Applicable Tax Rate
	 	 	40	%
	Additional Pay Credit Bonus
	 	$	1,035	 
	(1 - .400) x ($11,500 - $9,775)
	 	 	 	 





All tax rates in the examples in the Practices and Procedures are for illustration purposes only.




          (c) MAP Adjustment Bonus. If a Participant who was not fully vested in the MAP would
have received an Additional Pay Credit Bonus in a prior Bonus Year but for the vesting requirement
in Section 4(b) and subsequently becomes entitled in a later Bonus Year to an Additional Pay Credit
Bonus as part of such Participant’s Annuity Bonus, then the calculation of “A” for such Participant
in such later Bonus Year shall include a MAP Adjustment Bonus. The “MAP Adjustment Bonus” shall
equal the portion of the Pay Credits that were not taken into account for each such prior Bonus
Year as a result of the vesting requirements and that become vested during the current Bonus Year,
together with interest at the Accumulation Interest Rate, applied from the end of such prior Bonus
Year to the end of the current Bonus Year, as illustrated by the following example:



	 	 	 	 	 
	Example
	 	 	 	 
	 
	 	 	 	 
	Year of Vesting
	 	 	2003	 
	Additional Pay Credit Bonus for 2001
	 	$	5,000	 
	Additional Pay Credit Bonus for 2002
	 	$	7,000	 
	Accumulation Interest Rate
	 	 	8	%
	MAP Adjustment Bonus for 2003
	 	$	13,392	 
	[($5,000 x 1.082 ) + ($7,000 x 1.08)].
	 	 	 	 






          (d) Net Savings Plan Bonus. A Participant’s Net Savings Plan Bonus for each Bonus
Year shall be an amount determined in accordance with the formula
(1 - T) x (X - Y)], where “X” is the sum of (i) the vested employer matching contribution that the
Participant would have received for the Bonus Year under the Savings Plan if the Limits did not
apply and assuming that, for such Bonus Year, the Participant’s tax deferral contributions under
the Savings Plan were not limited by the dollar limits under Section 402(g) of the Code and (ii)
the Savings Plan Adjustment Bonus, if any, for such Bonus Year; “Y” is the actual employer



 









 





5


matching contribution received by the Participant for the Bonus Year under the Savings Plan; and “T” is the Applicable Tax Rate, as illustrated by the following example:



	 	 	 	 	 
	Example
	 	 	 	 
	 
	 	 	 	 
	Vested Savings Plan Match without Limits
	 	$	26,000	 
	Actual Vested Savings Plan Match
	 	$	19,500	 
	Applicable Tax Rate
	 	 	40	%
	Net Savings Plan Bonus
	 	$	3,900	 
	(1 - .400) x ($26,000 - $19,500)
	 	 	 	 






          (e) Savings Plan Adjustment Bonus. If a Participant who was not fully vested in the
Savings Plan would have received a Net Savings Plan Bonus in a prior Bonus Year but for the vesting
requirements in Section 4(d) and subsequently becomes entitled in a later Bonus Year to a Net
Savings Plan Bonus as part of such Participant’s Annuity Bonus, then the calculation of “X” for
such Participant in such later Bonus Year shall include a Savings Plan Adjustment Bonus. The
“Savings Plan Adjustment Bonus” shall equal the portion of the employer matching contribution that
was not taken into account for each prior Bonus Year as a result of the vesting requirements and
that become vested during the current Bonus Year, together with interest at the Accumulation
Interest Rate for the then current Bonus Year, applied from the end of such prior Bonus Year to the
end of the current Bonus Year, as illustrated by the following example:



	 	 	 	 	 
	Example
	 	 	 	 
	 
	 	 	 	 
	Year of Vesting
	 	 	2003	 
	Net Savings Plan Bonus for 2001
	 	$	1,000	 
	Net Savings Plan Bonus for 2002
	 	$	2,000	 
	Accumulation Interest Rate
	 	 	8	%
	MAP Adjustment Bonus for 2003
	 	$	3,326	 
	[($1,000 x 1.082 ) + ($2,000 x 1.08)].
	 	 	 	 






          (f) Form of Payment of Annuity Bonuses. As soon as reasonably practicable after the
determination of a Annuity Bonus for a Bonus Year, the Company will apply the amount of the Annuity
Bonus for a Bonus Year to the purchase of an Annuity Contract on the life of the Participant with a
purchase price equal to the Annuity Bonus. The Annuity Contract will be distributed to the
Participant as soon as reasonably practicable after such Annuity Contract is issued.



          (g) Tax Equalization Payment. In addition to the receipt of the Annuity Contract for
a Bonus Year, each Participant shall receive, for each Bonus Year that the Participant earns an
Annuity Bonus, a Tax Equalization Payment determined in accordance with the formula [(P/(1 -
Ti)) - P], where “P” is the amount of the Annuity Bonus for the Bonus Year and
“Ti” is the federal, state and local tax rate for the Participant specified by the
Committee for



 









 





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the Bonus Year plus the rate of the Participant’s portion of the Medicare payroll
tax, as illustrated by the following example:




	 	 	 	 	 
	Example
	 	 	 	 
	 
	 	 	 	 
	a. Annuity Bonus
	 	$	10,000	 
	b. Federal, State and Local Tax Rate
	 	 	35	%
	c. Medicare Tax
	 	 	1.45	%
	d. Tax Equalization Payment
	 	$	5,736	 
	[$10,000/(1 - .35 - .0145) - $10,000]
	 	 	 	 
	e. Total Taxable Income (a + d)
	 	$	15,736	 
	f. Assumed Tax Due
	 	$	5,736	 
	g. Net
After-Tax Cash Flow (d - f)
	 	$	0.00	 





The Tax Equalization Payment shall be paid (or remitted in the manner contemplated by Section 6(e))
to the Participant at the time that the Annuity Contract is delivered to the Participant, subject
to applicable income tax and wage withholding requirements, including, without limitation,
withholding required in respect of the delivery of the Annuity Contract.




          5. MAP Conversion Bonus.



          (a) Limited Eligibility. The provisions of this Section 5 shall apply only to
individuals selected to be Conversion Eligible Participants by the Committee from among the group
of Eligible Employees who meet the criteria set forth in Section 5(b).



          (b) Minimum Eligibility Criteria. In order to be eligible for selection in accordance
with Section 5(a) for a MAP Conversion Bonus, an Eligible Employee must be (i) an employee of one
of the Companies on the Applicable Date (as defined below); (ii) have an Initial Account Balance
under MAP on the Effective Date; and (iii) be a Participant in MAP on the Applicable Date. For
purposes of this Section 5, “Applicable Date” shall be the later of (i) the Effective Date and (ii)
the date a Conversion Eligible Participant vests in his Initial Account Balance under the MAP.



          (c) Payment and Form of Payment of the MAP Conversion Bonus. If a Participant is
vested in his MAP benefit on the Effective Date, the MAP Conversion Bonus will be paid in
accordance with this section as soon as reasonably practicable after the amount of such bonus has
been determined. If a Participant is not vested in his MAP benefit on the Effective Date,
the MAP Conversion Bonus will be paid to such Participant at the same time as the first Additional
Pay Credit Bonus is paid to such Participant (or, in the event of the Participant’s death prior to
payment, at the time and in the form of the final Pay Credit Bonus payable under Section 5(g)
below). Vesting is determined in accordance with the vesting provisions of Article VI of the MAP.
The Company will apply the amount of the MAP Conversion Bonus to the purchase of an Annuity
Contract on the life of the Participant with a purchase price equal to the MAP Conversion Bonus.
The Conversion Eligible Participant will be the owner of the Annuity



 









 





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Contract and will have the
ability to direct the investment of funds held under the Annuity Contract and to surrender the
Annuity Contract at any time. The Annuity Contract will be distributed to the Conversion Eligible
Participant as soon as reasonably practicable after such Annuity Contract is issued.




          (d) Amount of the MAP Conversion Bonus. The amount of a Conversion Eligible
Participant’s MAP Conversion Bonus shall be determined as follows:




1. The Company shall calculate the difference which results by subtracting
(B) the value of such Participant’s accrued benefit under the Prior Plan Terms
immediately prior to the Effective Date from (A) the value of the accrued
benefit that such Participant would have earned under the Prior Plan Terms
immediately prior to the Effective Date if the Limits did not apply (the “Accrued
Benefit Difference”), as illustrated by the following example:



	 	 	 	 	 
	Example
	 	 	 	 
	 
	 	 	 	 
	12/31/99
Accrued Benefit under Prior Plan Terms
	 	$	8,000	 
	12/31/99
Accrued Benefit under Practices and Procedures Based Upon Prior Plan Terms
	 	$	10,000	 
	Accrued Benefit Difference
	 	$	2,000	 







2. The Company shall calculate the difference which results from subtracting
(D) the Accrued Benefit Difference multiplied by the applicable factor set forth in
Appendix A hereto from (C) the Accrued Benefit Difference multiplied by the
applicable factor set forth in Part A of Appendix C of the MAP (the “Account Balance
Difference”). The applicable factor from each table shall be based on the
Conversion Eligible Participant’s age as of the last day of the calendar year in
which the Effective Date occurs, as illustrated by the following example:



	 	 	 	 	 
	Example
	 	 	 	 
	 
	 	 	 	 
	Accrued Benefit Difference (from above)
	 	$	2,000	 
	Factor from
Part A, Appendix C of MAP (for age 60 )
	 	 	10.2880	 
	Factor from
Appendix A of the Practices and Procedures (for age 60)
	 	 	6.1638	 
	Account
Balance Difference [($2,000 x 10.2880) - ($2,000 x 6.1638)]
	 	$	8,248	 






 









 





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3. If the Applicable Date is later than the Effective Date, the Account Balance
Difference shall be credited with the Accumulation Interest Rate from the Effective
Date to the last day of the Bonus Year in which the Participant vests in his benefit
under MAP (the “Adjusted Account Balance Difference”).




4. The Account Balance Difference or Adjusted Account Balance Difference, as the
case may be, is then multiplied by one minus the Applicable Tax Rate to calculate
the MAP Conversion Bonus, as illustrated by the following example:



	 	 	 	 	 
	Example 
	 	 	 	 
	 
	 	 	 	 
	Applicable Tax rate
	 	 	40	%
	MAP
Conversion Bonus [$8,248 x (1 - .40)]
	 	$	4,949	 






          (e) Tax Equalization Payment. In addition to the receipt of the Annuity Contract in
respect of the MAP Conversion Bonus, each Conversion Eligible Participant shall receive, at the
time of delivery of such Annuity Contract, a Tax Equalization Payment determined in accordance with
the formula [(R/(1 - Ti)) - R], where “R” is the amount of the MAP Conversion Bonus and
“Ti” is the federal state and local tax rate for the Conversion Eligible Participant
specified by the Committee plus the rate of the Conversion Eligible Participant’s portion of the
Medicare payroll tax. The Tax Equalization Payment shall be paid to the Participant at the time
that the Annuity Contract is delivered to the Participant, subject to applicable income tax and
wage withholding requirements, including, without limitation, withholding required in respect of
the delivery of the Annuity Contract. An example of tax equalization is set forth at the end of
Section 4(g).



          6. General Provisions.



          (a) Administration. The Committee shall have the right (i) to construe and interpret
the Practices and Procedures and all rules, regulations, agreements and other documents related
thereto, (ii) to promulgate rules, regulations and agreements related to the Practices and
Procedures, (iii) to approve all calculations necessary for the administration and implementation
of the Practices and Procedures, (iv) to make factual and other determinations, (v) to delegate
administrative authority to one or more officers or employees of the Companies or to one or more
third-party administrators, (vi) to determine the amount of any Annuity Bonus, MAP Conversion Bonus
or Tax Equalization Payment, (vii) to correct errors in any previous calculation, and (viii) to
rely upon the reports of third parties, including the actuaries, attorneys and accountants of the
Company.



          (b) Discretion as to Form of Payment. The Company shall have the right pay some or
all of each Annuity Bonus or MAP Conversion Bonus in cash rather than through the delivery of an
Annuity Contract.



 









 





9


          (c) Participant Rights and Obligations Regarding Annuity Contracts.
The Participant will be the owner of each Annuity Contract distributed to the Participant. A
Participant, as the owner of a distributed Annuity Contract, will have the ability to direct the
investment of funds held under the Annuity Contract. The actual accumulations under the Annuity
Contract will be dependent upon investment decisions made by the Participant and consequently will
not have any direct relationship to any assumptions that may be used in calculating the Annuity
Bonus each year. A Participant is solely responsible for (i) reviewing the information (including
the prospectus) provided by the issuer of the Annuity Contract for information on investment
choices available under such contract and (ii) consulting with a personal investment adviser before
making a decision to invest in the various accounts under the Annuity Contract.



          (d) Withdrawals and Annuity Contract Charges. The Participant will have the ability
to surrender the Annuity Contract at any time. If the Participant withdraws any amount from an
Annuity Contract, for reasons other than retirement or disability, within five years of the end of
the initial Bonus Year applicable to the Participant, the Participant will no longer be entitled to
an Annuity Bonus or MAP Conversion Bonus, if any,
for any subsequent Bonus Year. Whether a withdrawal is by reason of retirement or disability
shall be determined by the Committee. Participants are responsible for reviewing the documents
(including the prospectus) related to the Annuity Contract to determine the amount of the
administrative charges against the value of the Annuity Contract if the Annuity Contract is
surrendered during any period specified in the Annuity Contract. The Participant, and not the
Company, shall be responsible for all charges against the value of the Annuity Contract (including
load, redemption, withdrawal and surrender charges) assessed under or against the Annuity Contract
after the Contract is issued.



          (e) Considerations Regarding Tax Equalization Payments. The Company shall have the
right, in lieu of paying a Tax Equalization Payment to a Participant, to credit the amount of any
such Tax Equalization Payment (in such proportions as determined by the Committee) as federal,
state and local income and other applicable withholding amounts on behalf of the affected
Participant. Tax Equalization Payments are designed to place a Participant in approximately the
same after-tax position based upon the actual tax rate as if the Participant had not received the
Annuity Bonus. As there are many variables in calculating a Participant’s tax liability, the Tax
Equalization Payments will not, in most cases, necessarily make a Participant whole with respect to
the income and other tax liability incurred as a result of receipt of the Annuity Bonus. The
Company shall have no obligation to adjust the amount of any Tax Equalization Payment based upon a
Participant’s individual circumstances.



          (f) Termination Before End of Bonus Year. If a Participant’s employment with the
Companies terminates before the end of a Bonus Year for any reason other than Cause (as defined
below), any amounts payable to the Participant for that Bonus Year will be based only on
compensation from the Companies earned by the Participant for such year through the date of such
termination of employment. No Annuity Bonus will be payable for a Bonus Year if a Participant’s
employment is terminated for cause. For purposes hereof, “Cause” means (i) a



 









 





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materially dishonest
act or omission or misrepresentation by Employee in connection with the Company’s business, the
Participant’s gross incompetence, (ii) willful misconduct, breach of fiduciary duty involving
personal profit, (iii) intentional failure to perform stated duties, willful violation of any law,
rule or regulation (other than traffic violations or similar minor violations of law), final
cease-and-desist order, or (iv) notorious act(s) contrary to customarily recognized acceptable
standards of behavior which results in publicly that adversely impacts the Company or its business
reputation by reason of the nature of the act and the Participant’s association with the Company.




          (g) Death. If a Participant’s employment with the Companies ends during a Bonus Year
as a result of the Participant’s death, any amounts otherwise payable to the Participant for that
year shall be paid to the Participant’s Beneficiary in cash (and not in the form of an Annuity
Contract). “Beneficiary” shall mean the individual designated in writing by the Participant in
accordance with these Practices and Procedures to receive any amounts after the date of death of
the Participant or, if no such designation has been made or if no such individual survives the
Participant, the Participant’s estate. A Beneficiary designation shall be effective only if it is
in writing and received by the Company prior to the date of death of the Participant.



          (h) Indemnification. The Company shall indemnify and hold harmless to the fullest
extent permitted by law each member of the Committee and each director, officer and employee of any
of the Companies who are delegated or exercise duties or responsibilities under the Practices and
Procedures in respect of any act or omission by any such person in connection with the
administration or implementation of the Practices and Procedures.



          (i) Amendment and Termination. The Company shall have no obligation to make any
payments or to provide any benefits under the Practices and Procedures after the date the Committee
and the Board indicate that no further Annuity Bonuses are to be awarded by the Company. The
Company may amend or terminate the Practices and Procedures in whole or in part at any time and
without prior notice to any person by action of the Committee and the Board.


 









 





Appendix A




Schedule of Conversion Factors




	 	 	 	 	 	 
	 	Age

	 	 	Factor	 
	 	20
	 	 	0.2837	 
	 	21
	 	 	0.3064	 
	 	22
	 	 	0.3309	 
	 	23
	 	 	0.3574	 
	 	24
	 	 	0.3860	 
	 	25
	 	 	0.4169	 
	 	26
	 	 	0.4502	 
	 	27
	 	 	0.4862	 
	 	28
	 	 	0.5251	 
	 	29
	 	 	0.5671	 
	 	30
	 	 	0.6125	 
	 	31
	 	 	0.6615	 
	 	32
	 	 	0.7141	 
	 	33
	 	 	0.7715	 
	 	34
	 	 	0.8332	 
	 	35
	 	 	0.8999	 
	 	36
	 	 	0.9719	 
	 	37
	 	 	1.0497	 
	 	38
	 	 	1.1337	 
	 	39
	 	 	1.2241	 
	 	40
	 	 	1.3224	 
	 	41
	 	 	1.4282	 
	 	42
	 	 	1.5425	 
	 	43
	 	 	1.6659	 
	 	44
	 	 	1.7992	 
	 	45
	 	 	1.9431	 
	 	46
	 	 	2.0986	 
	 	47
	 	 	2.2665	 
	 	48
	 	 	2.4478	 
	 	49
	 	 	2.6436	 
	 	50
	 	 	2.8551	 
	 	51
	 	 	3.0835	 
	 	52
	 	 	3.3302	 
	 	53
	 	 	3.5966	 
	 	54
	 	 	3.8843	 
	 	55
	 	 	4.1950	 
	 	56
	 	 	4.5306	 
	 	57
	 	 	4.8930	 
	 	58
	 	 	5.2844	 
	 	59
	 	 	5.7072	 
	 	60
	 	 	6.1638	 
	 	61
	 	 	6.6569	 
	 	62
	 	 	7.1894	 
	 	63
	 	 	7.7646	 
	 	64
	 	 	8.3858	 
	 	65
	 	 	9.0567	 
	 	66
	 	 	8.8069	 
	 	67
	 	 	8.5539	 
	 	68
	 	 	8.3004	 
	 	69
	 	 	8.0477	 
	 	70
	 	 	7.7965