Document:

EX-10.2

 

Exhibit 10.2

MASTERCARD INTERNATIONAL INCORPORATED

SENIOR EXECUTIVE ANNUAL INCENTIVE COMPENSATION PLAN

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

ARTICLE I

DEFINITIONS

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

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

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

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

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

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

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

ARTICLE II

BONUS AWARDS

     Section 2.1 Performance Targets.

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

 

 

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

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

     Section 2.2 Bonus Awards.

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

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

ARTICLE III

PAYMENT OF BONUS AWARD

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

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

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

ARTICLE IV

TRANSFERS, TERMINATIONS AND NEW EXECUTIVE OFFICERS

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

ARTICLE V

ADMINISTRATION

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     Section 5.1 Administration.

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

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

ARTICLE VI

OTHER PROVISIONS

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

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

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

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

     Section 6.5 Miscellaneous.

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

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

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

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

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

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

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

4EX-10.3

 

Exhibit 10.3

MASTERCARD INTERNATIONAL INCORPORATED

SENIOR EXECUTIVE INCENTIVE PLAN

Plan Document

	1.	 	Purpose
	 
	 	 	The Senior Executive Incentive Plan (the “Plan”) is designed to support the strategic
commitment to attract, retain and motivate senior executives of MasterCard International
Incorporated (the “Company”) and Affiliated Employers by providing a long-term incentive
opportunity that is based on the Company’s and/or Affiliated Employer’s achievement of its
long-term performance goals.
	 
	2.	 	Definitions
	 
	 	 	For purposes of this Plan, the following terms shall have the meanings set forth below:
	 
	 	 	“Affiliated Employer” shall mean (i) any corporation which is a member of a controlled
group of corporations (as defined in Section 414(b) of the Code), which includes the
Company, (ii) any trade or business (whether or not incorporated), which is under common
control (as defined in Section 414(c) of the Code) with the Company, (iii) any organization
(whether or not incorporated) which is a member of an affiliated services group (as defined
in Section 414(m) of the Code) which includes the Company, and (iv) any other entity
required to be aggregated with the Company pursuant to regulations under Section 414(o) of
the Code.
	 
	 	 	“Board” shall mean the Global Board of Directors of the Company.
	 
	 	 	“Cause” shall mean (i) the willful failure by the Participant to perform his duties or
responsibilities as an employee of the Employer (other than due to Disability), (ii) the
Participant’s having been convicted of, or entered a plea of guilty or nolo contendere to,
a crime that constitutes a felony, or a crime that constitutes a misdemeanor involving
moral turpitude, (iii) the material breach by the Participant of any written covenant or
agreement with the Company or an Affiliated Employer not to disclose any information
pertaining to the Company and/or its Affiliated Employers, or (iv) the breach by the
Executive of the Code of Conduct, or any material provision of the following Company
policies: discrimination, substance abuse, workplace violence, nepotism, travel and
entertainment, corporation information security, antitrust/competition law, foreign corrupt
practices act, and similar policies, whether currently in effect or later adopted.
	 
	 	 	“Change in Control” means:

(i) if (a) at any time three stockholders have become entitled to cast at least 45 percent
of the votes eligible to be cast by all the stockholders of MasterCard Incorporated on any
issue, (b) at any time, a plan or agreement is approved by the stockholders of MasterCard
Incorporated to sell, transfer, assign, lease or exchange (in one transaction or in a
series of transactions) all or substantially all of the Company’s or MasterCard
Incorporated’s assets, (c) at any time, a plan is approved by the stockholders of
MasterCard Incorporated for the sale, liquidation or dissolution of the Company or
MasterCard Incorporated or (d) at any time MasterCard Incorporated shall cease to be the
sole class B member of the Company or otherwise cease to control substantially all voting
rights in the Company. The foregoing notwithstanding, a reorganization in which the
stockholders of MasterCard Incorporated continue to have all of the ownership rights in the
continuing entity shall not in and of itself be deemed a “Change in Control” under (b), (c)
and/or (d);
	 
	 	 	(ii) the approval by the stockholders of MasterCard Incorporated of (a) any consolidation
or merger involving MasterCard Incorporated in which MasterCard Incorporated is not the
continuing or surviving corporation or pursuant to which shares of stock of MasterCard
Incorporated would be converted into cash, securities or other property, other than a
merger in

 

 

	 	 	which the holders of the stock immediately prior to the merger will have the same
proportionate ownership interest (i.e., still own 100% of total) of common stock of the
surviving corporation immediately after the merger;
	 
	 	 	(iii) any “person” (as defined in Section 13(d) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”)), other than MasterCard Incorporated or a subsidiary or
employee benefit plan or trust maintained by MasterCard Incorporated any of its
subsidiaries, becoming (together with its “affiliates” and “associates”, as defined in Rule
12b-2 under the Exchange Act) the “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of more than twenty-five percent (25%) of the stock
of MasterCard Incorporated outstanding at the time, without the prior approval of the
Board; or
	 
	 	 	(iv) a majority of the voting directors of MasterCard Incorporated proposed on a slate for
election by stockholders of MasterCard Incorporated are rejected by a vote of such
stockholders.
	 
	 	 	“Code” shall mean the Internal Revenue Code of 1986, as amended.
	 
	 	 	“Committee” shall mean the Compensation Committee of the Global Board of Directors of the
Company, or such other committee, or subcommittee of the Compensation Committee, as further
described in Section 9(a), designated by the Board to administer the Plan.
	 
	 	 	“Determination Date” shall have the meaning set forth in Section 5(b).
	 
	 	 	“Disability” shall mean total and permanent disability in accordance with the Company’s or
an Affiliated Employer’s long-term disability plan, as determined by the Committee.
	 
	 	 	“Employer” shall mean the Company or an Affiliated Employer that adopts the Plan with the
approval of the Board. Appendix A contains a list of each Employer.
	 
	 	 	“Participant” shall mean an eligible employee to whom a Performance Unit award has been
granted.
	 
	 	 	“Performance Levels” shall mean, with respect to the Performance Measures (on an aggregate
basis), the following degrees of achievement: Below Threshold, Threshold, Target, and
Superior.
	 
	 	 	“Performance Measures” shall mean one or more objective performance goals established by
the Committee with respect to each award of Performance Units, based upon one or more of
the following objective business criteria: (i) revenue; (ii) earnings (including earnings
before interest, taxes, depreciation, and amortization, earnings before interest and taxes,
and earnings before or after taxes); (iii) operating income; (iv) net income; (v) profit
margins; (vi) earnings per share; (vii) return on assets; (viii) return on equity; (ix)
return on invested capital; (x) economic value-added; (xi) stock price; (xii) gross dollar
volume; (xiii) total shareholder return; (xiv) market share; (xv) book value; (xvi) expense
management; and (xvii) cash flow. The foregoing criteria may relate to the Company, one or
more of its Affiliated Employers or subsidiaries or one or more of its divisions or units,
or any combination of the foregoing, and may be applied on an absolute basis and/or be
relative to one or more peer group companies or indices, or any combination thereof, all as
the Committee shall determine. In addition, the Performance Measures shall be calculated
without regard to extraordinary, unusual and/or non-recurring items that decrease earnings
or other Performance Measures, and with regard to such extraordinary, unusual, and/or
non-recurring items that increase earnings or other Performance measures.
	 
	 	 	“Performance Period” shall mean, with respect to each award of Performance Units, the
three-year period beginning on the date such award is granted, or such other period of no
less than 90 days, as may be established by the Committee at the time of grant.

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	 	 	“Performance Unit” shall mean a performance unit award granted under the Plan.
	 
	 	 	“Post-Performance Period” shall have the meaning set forth in Section 7(b).
	 
	 	 	“Retirement” shall mean termination from service by a Participant occurring on or after the
earliest of: (i) attaining age 65 while in service, (ii) attaining age 60 while in service
and completing five years of service, and (iii) attaining age 55 while in service and
completing ten years of service.
	 
	 	 	“Twelve-Month Cycle” shall mean any twelve-month period ending with an anniversary date of
the date of a grant of a Performance Unit award that occurs on or before the end of the
Vesting Period with respect to that award.
	 
	 	 	“Unit Value” shall be the value of a Performance Unit as determined in accordance with
Section 5.
	 
	 	 	“Vesting Period” shall mean, with respect to each grant of Performance Units, the period
during which such Performance Units may become vested, as set forth in the certificate or
written agreement provided to the Participant with respect to the grant, beginning on the
date of grant.
	 
	3.	 	Eligibility
	 
	 	 	Employees who are designated as members of the Company’s Policy Committee, or its
equivalent, are eligible for participation in any Performance Period provided they have
achieved the minimum performance evaluation rating required for participation as determined
by the Committee and have been designated to the appropriate level by March 31 of the first
calendar year of the Performance Period. In addition, the Committee and/or the Chief
Executive Officer may designate any other employee as eligible to participate in the Plan.
	 
	4.	 	Performance Unit Awards

	 	(a)	 	Subject to the provisions of this Plan, the eligible employees to whom a
grant of one or more Performance Units is awarded shall be determined by the CEO of
the Company with approval by the Committee and evidenced by a certificate or written
agreement provided to each such Participant. Subject to Sections 6 and 7 of the Plan,
each Performance Unit grant shall entitle a Participant to receive a cash payment
equal to the Unit Value, as adjusted under Section 5(a) below, of such Performance
Unit. Unit Value shall be determined in accordance with Section 5.
	 
	 	(b)	 	The Committee shall specify the terms and conditions of each award of
Performance Units, including the applicable vesting schedule, Performance Period,
Performance Measures, Performance Levels, and resulting Unit Value as a consequence of
the specified Performance Levels. The Performance Measures shall be established by
the Committee for a Performance Period (i) while the outcome for that Performance
Period is substantially uncertain and (ii) no more than 90 days or, if less, the
number of days which is equal to 25 percent of the relevant Performance Period, after
the commencement of the Performance Period to which the Performance Measure relates,
or as otherwise permitted pursuant to Section 162(m) of the Code (or any successor
section thereto). The Committee may condition the grant of a new award on the
surrender of an outstanding award. Any such new award shall be subject to the terms
and conditions specified by the Committee at the time the new award is granted, in
accordance with the provisions of the Plan and without regard to the terms of the
surrendered award.

	5.	 	Unit Value

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	 	(a)	 	Subject to the negative adjustments described in this Section 5(a), the Unit Value
of a Performance Unit shall be determined based upon the achievement of Performance
Levels as of the Determination Date as follows.

	 	 	 	 	 
	Performance Level	 	Unit Value	 
	 
	Below Threshold
	 	$	0	 
	Threshold
	 	$	50	 
	Target
	 	$	100	 
	Superior
	 	$	200	 

	 	 	 	Determinations as to the achievement of Performance Levels shall be made by the
Committee in its sole discretion, and the Committee shall so certify. Where the
Committee specifies in the grant, the Committee will determine the Unit Value based
on interpolation in the event that performance between Performance Levels is
achieved (i.e., between Threshold and Target or Target and Superior), and where the
Committee does not so specify, the Unit Value will be based on the highest
Performance Level achieved. The grant may provide for interpolation as to certain
Performance Measures, but not as to others. The Unit Value of all or any subset of
the Performance Units awarded actually paid to a given Participant may be less than
the Unit Value determined by the applicable Performance Measure formula, at the
discretion of the Committee.
	 
	 	(b)	 	The Committee shall certify that it has determined the Performance Level achieved
for a Performance Period and has determined Unit Value, including any adjustments under
Section 5(a) above, during the 60-day period following the Determination Date. Except as
otherwise provided by the Committee, the Determination Date shall be the last day of the
Performance Period to which a Performance Unit relates; provided that, if a Participant
terminates employment prior to the end of the Performance Period due to death or
Disability, termination by the Company without Cause, or termination by the participant
with good reason, the Determination Date with respect to any Performance Units relating
to such Performance Period shall be deemed to be the last day of employment and the
Performance Level achieved with respect to any such Performance Units shall be deemed to
be Target. Provided, further, that, in the event of a Change in Control during a
Performance Period, the Determination Date with respect to Performance Units relating to
such Performance Period for key executives as defined in the MasterCard Change of Control
policy or who are parties to a “Change-in-Control” agreement with the Company or an
Affiliated Employer shall be deemed to be the date of the Change in Control, and the
Performance Level achieved shall be deemed to be target or as otherwise provided in the
Change-in-Control agreement. In the event the Company receives approval from the
Internal Revenue Service that such a provision will not adversely affect the
qualification as performance-based compensation under Section 162(m) of the Code of
grants under the Plan to Participants who do not terminate during a Performance Period
due to Retirement, if a Participant terminates employment prior to the end of the
Performance Period due to Retirement after performance of six months of services in the
Performance Period, the Determination Date with respect to any Performance Units relating
to such Performance Period shall be deemed to be the last day of employment and the
Performance Level achieved with respect to any such Performance Units shall be deemed to
be Target.

	6.	 	Vesting

	 	(a)	 	Each Performance Unit shall vest subject to such terms and conditions as the
Committee may, in its sole discretion, determine; provided that, unless otherwise
provided by the Committee at the time of award, Performance Units which relate to a
three-year Performance Period shall vest in annual increments according to the
following schedule, but only to the extent that the Participant completes 1,000 hours
of service in each

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	 	 	 	Twelve-Month Cycle and is employed on the last day of the respective Twelve-Month
Cycle:

	 	 	 	 	 
	Twelve-Month	 	 	 
	Cycle Ending	 	 	 
	on the Following Anniversary of	 	% of Performance	 
	the Date of Grant	 	Units Vested	 
	1st Anniversary
	 	 	26 2/3	%
	2nd Anniversary
	 	 	26 2/3	%
	3rd Anniversary
	 	 	26 2/3	%
	4th Anniversary
	 	 	0	%
	5th Anniversary
	 	 	20	%

	 	(b)	 	Except as otherwise determined by the Committee or as provided in Section
6(c), upon termination of a Participant’s employment for any reason, all then unvested
Performance Units (including those relating to the Twelve-Month Cycle in which a
Participant terminates employment, and subsequent Twelve-Month Cycles during the
Vesting Period for the award) shall be forfeited; provided, however, that (i) upon a
Participant’s termination of employment due to death or Disability, or due to
Retirement after performance of at least six months of services in the Performance
Period, all of the Participant’s Performance Units shall immediately vest and none
shall be forfeited, and (ii) in the event of a Change in Control, key executives as
defined in the MasterCard Change of Control policy or who are parties to a
“Change-in-Control” agreement with the Company or an Affiliated Employer shall be
eligible for immediate vesting in all unvested awards.
	 
	 	(c)	 	Notwithstanding the foregoing, if a Participant ceases to be employed during
a Twelve-Month Cycle within a Vesting Period, but is rehired either during the same
Twelve-Month Cycle or during a subsequent Twelve-Month Cycle in the same Vesting
Period, the Participant shall be eligible to vest in the previously forfeited
Performance Units under that award that relate to the Twelve-Month Cycle of rehiring
and subsequent Twelve-Month Cycles if the Participant otherwise meets the terms and
conditions specified in the award and completes 1,000 hours of service in and is
employed on the last day of the Twelve-Month Cycle; provided, however, that, in order
to vest in the Performance Units relating to the final Twelve-Month Cycle in the
Vesting Period, the Participant must also have been employed on the first day of that
final Twelve-Month Cycle.
	 
	 	(d)	 	Notwithstanding the foregoing Section 6(a), (i) upon a Participant’s
termination of employment for Cause or (ii) upon a Participant’s violation of the
noncompetition provisions set forth in Section 7(c) below, all vested but unpaid
Performance Units held by the Participant shall be forfeited in full, without any
right to payment from the Company. The Committee in its sole discretion shall
determine whether a termination was for Cause.

	7.	 	Payment

	 	(a)	 	Except as otherwise determined by the Committee at the time of grant of a
Performance Unit, or as otherwise elected by the Participant pursuant to Section 7(d)
below, within 60 days after the Committee’s certification of the Unit Value in
accordance with Section 5, Participant shall receive a cash payment in respect of each
vested Performance Unit equal to such Unit Value for the completed Performance Period.
	 
	 	(b)	 	Except as otherwise determined by the Committee at the time of grant of a
Performance Unit, or as otherwise elected by the Participant pursuant to Section 7(d)
below, (i) if

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	 	 	 	Participant remains employed such that he or she vests in Performance Units for a
Twelve-Month Cycle in the portion of the Vesting Period that extends beyond the
Performance Period (the “Post-Performance Period”) the Participant shall receive,
within 60 days after the end of the Vesting Period, an additional cash payment in
respect of each Performance Unit which has not yet been paid pursuant to paragraph
(a) above equal to the Unit Value. If a Participant terminates employment due to
death or Disability, termination by the Company without Cause, termination by the
Participant for good reason, or Retirement during the Post-Performance Period,
subject to Section 7(c) below, the Participant shall receive, within 60 days of the
termination, or if longer, within 60 days of the Committee’s certification of
Performance Level and determination of Unit Value under Section 5(b), an additional
cash payment in respect of each Performance Unit which has not yet been paid
pursuant to paragraph (a) above equal to the Unit Value. In the event of a
Change-in-Control during the Post-Performance Period, the Participant shall
receive, within 60 days of the Change in Control, or, if longer, within 60 days of
the Committee’s certification of Performance Level and determination of Unit Value
under Section 5(b), an additional cash payment in respect of each Performance Unit
which has not yet been paid pursuant to paragraph (a) above equal to the Unit
Value.

	 	(c)	 	In the event a Participant voluntarily terminates employment other than by
reason of Disability, no payment otherwise due under Section 7(a) or (b) above shall
be made before 120 days after such voluntary termination. In the event that, during
the 120 days following such voluntary termination, the Participant directly or
indirectly engages or invests in any business or activity that is directly or
indirectly in competition with any business or activity engaged in by the Company or
an Affiliated Employer, including, but not limited to, any credit, charge, chip, or
debit card business or processor, the Participant’s Performance Units shall not be
paid and, pursuant to Section 6(d)(ii) above, shall be forfeited in full. For
purposes of the preceding sentence, the Participant shall be deemed to be engaged in
any business in which any person for whom he shall perform services is engaged.
Notwithstanding the foregoing, nothing herein shall prohibit the Participant from
having a beneficial ownership interest of less than 3% of the outstanding amount of
any class of securities of any enterprise (but without otherwise participating in the
activities of such enterprise) if such securities are listed on a national securities
exchange or quoted on an inter-dealer quotation system. The Participant shall not be
treated as engaged or invested in any business in competition with that of the Company
or an Affiliated Employer if the Participant performs services or engages in business
or activities for a MasterCard member, provided that the MasterCard member is not a
party to a brand dedication agreement with VISA USA, VISA International, American
Express, JCB, Discover, Diners Club, Carte Blanche or any other competitor of the
Company or an Affiliated Employer, the term of which is two years or more. In the
event that, during the 120 days following such voluntary termination, the Participant
does not engage in or invest in any such competitive business or activity, and
certifies to that effect on forms provided by the Company, the Participant’s otherwise
vested Performance Units shall be paid.
	 
	 	(d)	 	Payments of Performance Units under Sections 7(a) and 7(b) above are eligible
for deferral under the terms and conditions of the MasterCard International
Incorporated Deferral Plan, as amended from time to time. In the event a Participant
who has made a Deferred Performance Units Election under the MasterCard International
Incorporated Deferral Plan voluntarily terminates employment, Sections 6(d)(ii) and
7(c) will apply to those payments that, in the absence of the Deferred Performance
Units Election, would have been paid in the 120 days following termination.
	 
	 	(e)	 	The maximum cash payment for all awards payable for any three-year
performance period, at a Target Performance Level under section 5 above, shall be
$8,000,000. In the case of Superior Performance Level, the maximum cash payment for
all awards for a three-year Performance Period shall be twice that amount. In the
case of a longer or

6

 

	 	 	 	shorter Performance Period, correlative adjustments shall be made to the maximum
cash payment.

	8.	 	Term
	 
	 	 	The Plan was adopted effective January 1, 2005, so as to allow the Company to provide
members of the Company’s Policy Committee with performance-based compensation that complies
with section 162(m) of the Code. The terms provided herein shall apply to Performance
Units awarded under the Plan on and after January 1, 2005. Amendments to the Plan
generally shall be effective on their adoption, subject to shareholder approval required by
Section 11.
	 
	9.	 	Administration

	 	(a)	 	The Plan shall be administered by the Committee, which may delegate its
duties and powers in whole or in part to any subcommittee thereof; it is expected that
the Committee, or if not the Committee, then the subcommittee, shall consist solely of
at least two individuals who are intended to qualify as “outside directors” within the
meaning of Section 162(m) of the Code (or any successor section thereto); provided,
however, that the failure of the subcommittee to be so constituted shall not impair
the validity of any grant made by such subcommittee. The Committee shall determine,
in its sole discretion, any question arising in connection with the interpretation or
application of the provisions of the Plan and its decisions or actions in respect
thereof shall be conclusive and binding upon any and all Participants and their
beneficiaries, successors and assigns, and all other persons. All resolutions or
actions taken by the Committee shall be by affirmative vote or action of a majority of
the members of the Committee.
	 
	 	(b)	 	Members of the Committee or its delegates shall be fully protected in
relying in good faith upon the advice of counsel and shall incur no liability with
respect to the Plan except for their own gross negligence or willful misconduct in
the performance of their duties. The Company shall defend, indemnify and hold
harmless each member of the Committee or its delegates against any and all claims,
liabilities and costs (including attorney fees) arising in connection with their
administration of the Plan except for such member’s own gross negligence or willful
misconduct.

	10.	 	General Provisions

	 	(a)	 	Nothing in this Plan or in any instrument executed pursuant hereto shall
confer upon any person any right to continue in the employment or other service of the
Company or an Affiliated Employer, or shall affect the right of the Company or an
Affiliated Employer to terminate the employment or other service of any person at any
time with or without cause.
	 
	 	(b)	 	The grant of Performance Units shall not confer upon a Participant any of
the rights of a stockholder of the Company or an Affiliated Employer, and no shares
of stock shall be issued pursuant to Performance Units. The rights of a
Participant under the Plan shall be no greater than the rights of a general
unsecured creditor of the Company or Affiliated Employer.
	 
	 	(c)	 	In the event a Participant is employed or resides in a country with
laws that prescribe certain requirements for long-term incentives to qualify for
advantageous tax treatment, the Committee may at its discretion modify the terms of
an award to be made under the Plan and procure assumption of any of the Company’s
obligations hereunder by an affiliate company, in a manner consistent or
inconsistent with the terms of the Plan, for the purpose of qualifying the award
under such laws of such country; provided, however, that to the extent possible,
the overall terms and

7

 

	 	 	 	conditions of such an award should not be made more favorable to the recipient than
would be permitted if the award had been granted under this Plan as herein set
forth.
	 
	 	(d)	 	Participants shall be solely responsible for the payment of any taxes
due in connection with the Plan; provided, however, that the Company shall make
such provisions as it may deem appropriate for the withholding of any taxes which
the Company determines it or an Affiliated Employer is required to withhold in
connection with any award under the Plan.
	 
	 	(e)	 	By accepting any benefits under the Plan, each Participant, and
each person claiming under or through him, shall be conclusively deemed to have
indicated his acceptance and ratification of, and consent to, all provisions of the
Plan and any action or decision under the Plan by the Company, an Affiliated
Employer, their agents and employees, and the Committee.
	 
	 	(f)	 	The validity, construction, interpretation and administration of the
Plan and any awards under the Plan and of any determinations or decisions made
thereunder, and the rights of all persons having or claiming to have any interest
herein or thereunder, shall be governed by, and determined exclusively in
accordance with, the laws of New York (determined without regard to its conflict of
laws provisions).
	 
	 	(g)	 	This Plan shall be binding upon and inure to the benefit of the Company, its
affiliated companies and their successors or assigns, and all Participants and their
beneficiaries, successors, and assigns and all other persons claiming under or through
any of them.
	 
	 	(h)	 	The value of Performance Unit awards shall not be treated as
compensation and/or salary for purposes of calculating a Participant’s benefits
under any of the Company’s or an Affiliated Employer’s other benefit plans,
policies or programs.
	 
	 	(i)	 	The use of the masculine gender shall also include within its
meaning the feminine. The use of the singular shall include within its meaning the
plural and vice versa.

	11.	 	Approval of Plan by Stockholders
	 
	 	 	This Plan shall be submitted for the approval of the Company’s stockholders at the annual
meeting of stockholders to be held in May 2005. In the event that the Plan is not so
approved, no awards of Performance Unit shall be payable under the Plan, and the Plan shall
terminate and shall be null and void in its entirety.
	 
	12.	 	Amendment and Termination
	 
	 	 	This Plan may be amended or terminated by the Board or the Committee at any time, for any
reason and in any respect; provided, however, that no such amendment or termination of this
Plan shall affect adversely any award of Performance Units theretofore granted without the
written consent of the holder thereof. Notwithstanding the foregoing:

	 	(a)	 	The methodology for determining Performance Units and Unit Value may be
changed, on a prospective basis, at any time.
	 
	 	(b)	 	Upon termination of the Plan, the Board or the Committee may provide for the
immediate termination of all outstanding Performance Units in exchange for a cash
payment equal to the then value of the Performance Units that are outstanding, vested
(pursuant to Section 6), and as to which the Committee has certified the Performance
Level in accordance with section 5(b). Except in the case of a termination of the
Plan as a consequence of a Change of Control, payments for vested awards on
termination of the Plan shall not be

8

 

	 	 	 	made before the Committee has certified the Performance Level in accordance with
section 5(b). The Board or the Committee also may terminate the Plan and adopt a
successor plan or may amend the Plan, and give participants equivalent value in the
successor plan or the amended plan for their vested Performance Units in the Plan
and equivalent credit in the successor plan or the amended plan for unvested
outstanding Performance Units in the Plan.

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Appendix A

Employers

MasterCard International Incorporated

MasterCard International, LLC

10

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