Document:

Exhibit 10.26

 

FIRST
AMENDMENT TO THE CHANGE IN CONTROL

EMPLOYMENT
AGREEMENT

 

This Amendment to the Change in Control
Employment Agreement (the "Amendment") is made and entered into this
17th day of December, 2008 by and between Waddell &
Reed Financial, Inc., a Delaware corporation (the "Company"),
and Henry J. Herrmann (the "Executive").

 

WITNESSETH:

 

WHEREAS, the Company
and the Executive are parties to a certain Change in Control Employment
Agreement dated as of December 14, 2001, (the "Agreement"); and

 

WHEREAS, the Company
and the Executive have agreed to make certain modifications to the Agreement to
comply with the provisions of section 409A of the Internal Revenue Code of
1986, as amended (the "Code").

 

NOW, THEREFORE, in
consideration of the premises and the mutual covenants set forth below, to
avoid adverse tax consequences under section 409A of the Code and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereby agree as follows:

 

1.               Section 6(f) of
the Agreement is hereby amended in its entirety to read as follows:

 

(f)            the Company shall,
at its sole expense as incurred, provide you with outplacement services, the
scope and provider of which shall be selected by you in your sole discretion,
provided that such outplacement services shall not be provided beyond the last
day of the second year following the year that includes your Date of
Termination.

 

2.               A new sentence is hereby
added to the end of Section 13 to read as follows:

 

The terms "terminate," "termination," "termination
of employment," and similar terms used herein are intended to mean a
termination of employment that constitutes the Executive's "Separation
from Service" as such term is defined in Treasury Regulation Section 1.409A-1(h).

 

3.               A new Section 17 is
hereby added to the Agreement to read as follows:

 

17.  SECTION 409A.  The terms of this Agreement shall be
construed in accordance with Section 409A of the Code.

 

(a)           If the Company is
publicly traded on an established securities market or otherwise on the
Executive's Date of Termination, any payments payable pursuant to Sections
6(b), (c), and (e) shall not be distributed prior to the day following the
six month anniversary of the Executive's Date of Termination if Executive is
deemed a "specified employee" as defined in Treasury Regulation Section 1.409A-1(i).  Any payments delayed pursuant to this
provision will be paid in a lump sum on the day following the six

 

 

month anniversary of the Executive's Date of
Termination (or, if earlier, the date of death of the "specified employee").

 

(b)           Anything herein to
the contrary notwithstanding, any payments, reimbursements or tax gross-up
payments payable pursuant to this Agreement shall be paid in accordance with
the requirements of Treasury Regulation Sections 1.409A-3(i)(1)(iv) and
(v).

 

IN WITNESS WHEREOF, the Company
and the Executive have executed this Amendment as of the date first written
above.

 

 

 

	
   

  	
  WADDELL & REED FINANCIAL, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Daniel P. Connealy

  
	
   

  	
   

  	
  Daniel P. Connealy

  
	
   

  	
   

  	
  Senior Vice President and Chief

  Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Henry J. Herrmann

  
	
   

  	
  Henry J. Herrmann

  

 

 

2Exhibit 10.27

 

Summary of Compensation Arrangements With Executive Officers of the
Company

 

I.              2008 Executive Officer Salaries.         On
December 24, 2008, the Compensation Committee (the “Committee”) of the
Board of Directors of Waddell & Reed Financial, Inc. (the “Company”)
approved the annual base salaries (effective as of January 1, 2009) of the
Company’s executive officers.  The
following table sets forth the annual base salaries of the Company’s Chief
Executive Officer, Chief Financial Officer and the next three most highly
compensated officers (collectively, the “Named Executive Officers”) for 2009:

 

	
  Named Executive
  Officer

  	
   

  	
  Salary

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Henry J. Herrmann
  

  	
   

  	
  $1,000,000

  	
   

  
	
  Chief Executive
  Officer

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Daniel P.
  Connealy 

  	
   

  	
  $390,000

  	
   

  
	
  Senior Vice
  President and Chief Financial Officer

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Michael L. Avery 

  	
   

  	
  $550,000

  	
   

  
	
  Senior Vice
  President and Chief Investment Officer

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Thomas W. Butch 

  	
   

  	
  $475,000

  	
   

  
	
  Senior Vice
  President and Chief Marketing Officer

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Daniel C. Schulte
  

  	
   

  	
  $365,000

  	
   

  
	
  Senior Vice
  President and General Counsel

  	
   

  	
   

  	
   

  

 

The Company has
adopted a Supplemental Executive Retirement Plan, as amended and restated (the “SERP”)
pursuant to which participants’ accounts are credited with (1) an amount
equal to 4% of his or her base salary, less the amount of the maximum employer
matching contribution allowable that can be made on the participant’s behalf under the Company 401(k) and Thrift
Plan, and (2) a non-formula award, as determined by the Committee in its discretion.   For 2008, the Committee designated Mr. Herrmann
as a participant of the SERP and did not award him a non-formula award in
2008.  None of the other Named Executive
Officers were eligible to participate in the SERP for 2008.

 

II.            2008 Executive
Incentive Plan Awards.            Pursuant
to the Company 2003 Executive Incentive Plan, as amended and restated (the “EIP”),
eligible participants may receive (1) an annual incentive plan award of
cash, and (2) an annual incentive plan award of restricted stock, both
based upon the annual financial performance of the Company.

 

A.            Cash
Awards.  On December 24, 2008,
the Committee authorized the payment of annual cash incentive (i.e., bonus) awards based on the Company’s financial
performance for the year ended December 31, 2008 to executive officers
participating in the EIP, which included Messrs. Herrmann, Connealy,
Avery, Butch and Schulte.  These annual
incentive awards were determined based on performance goals established in February 2008.  As permitted by the EIP, the Committee
exercised its discretion to reduce the amount of the cash incentive awards
payable to Messrs. Herrmann, Connealy, Avery, Butch and Schulte, but in
accordance with the EIP, the reductions did not increase the cash incentive
award amounts for any other participant.  
The 

 

 

following table sets forth the annual cash incentive plan awards for
the Named Executive Officers for 2008:

 

	
  Named Executive
  Officer

  	
   

  	
  Cash Award

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Henry J. Herrmann
  

  	
   

  	
  $1,000,000

  	
   

  
	
  Chief Executive
  Officer

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Daniel P.
  Connealy 

  	
   

  	
  $220,000

  	
   

  
	
  Senior Vice
  President and Chief Financial Officer

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Michael L. Avery 

  	
   

  	
  $500,000

  	
   

  
	
  Senior Vice
  President and Chief Investment Officer

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Thomas W. Butch
  Senior 

  	
   

  	
  $288,000

  	
   

  
	
  Vice President
  and Chief Marketing Officer

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Daniel C. Schulte
  

  	
   

  	
  $220,000

  	
   

  
	
  Senior Vice
  President and General Counsel

  	
   

  	
   

  	
   

  

 

Pursuant to the Company 1998 Executive Stock
Award Plan, as amended and restated, eligible executives may annually convert all
or a portion of their annual cash incentive award into restricted stock of the
Company.  Additionally, the Compensation
Committee may, in its sole discretion, direct that all or a portion of the cash
incentive award payments payable under the EIP be paid in restricted stock.  For 2008, none of the Named Executive Officers
converted any portion of their annual cash incentive award into restricted
stock of the Company, nor did the Committee direct that any portion of their
cash incentive award be paid in restricted stock.

 

B.            Restricted
Stock Awards.  On December 24,
2008, the Committee authorized the payment of the annual incentive awards of
restricted stock based on the Company’s financial performance for the year
ended December 31, 2008 to executive officers participating in the EIP,
which included Messrs. Herrmann, Connealy, Avery, Butch and Schulte.  These annual incentive awards were determined
based on performance goals established in February 2008.  As permitted by the EIP, the Committee
exercised its discretion to reduce the amount of the incentive award of restricted
stock payable to Mr. Herrmann and did not award Mr. Herrmann an
annual incentive award of restricted stock for 2008.  In accordance with the EIP, the reduction of Mr. Herrmann’s
award did not increase the restricted stock incentive award amounts for any
other participant.  The Committee awarded
Messrs. Connealy, Avery, Butch and Schulte the full amount of the
incentive award of restricted stock each was eligible to receive.  The following table sets forth the annual
incentive plan awards of restricted stock granted to the Named Executive
Officers for 2008:

 

	
  Named Executive
  Officer

  	
   

  	
  Incentive Plan
  Restricted

  Stock Award

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Henry J. Herrmann
  

  	
   

  	
  0 shares

  	
   

  
	
  Chief Executive
  Officer

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Daniel P.
  Connealy 

  	
   

  	
  42,000 shares

  	
   

  
	
  Senior Vice
  President and Chief Financial Officer

  	
   

  	
   

  	
   

  

 

 

	
  Michael L. Avery 

  	
   

  	
  63,000 shares

  	
   

  
	
  Senior Vice
  President and Chief Investment Officer

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Thomas W. Butch 

  	
   

  	
  63,000 shares

  	
   

  
	
  Senior Vice
  President and Chief Marketing Officer

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Daniel C. Schulte
  

  	
   

  	
  42,000 shares

  	
   

  
	
  Senior Vice
  President and General Counsel

  	
   

  	
   

  	
   

  

 

These shares were granted on December 31, 2008 pursuant to the
1998 Stock Incentive Plan, as amended and restated (the “SIP”), in accordance
with the form of restricted stock agreement filed as Exhibit            
to the Company’s Annual Report on Form 10-K for the year ended December 31,
2008.

 

III.           2008
Discretionary Awards.  On December 24,
2008, the Committee also authorized the grant discretionary awards of
restricted stock to the executive officers participating in the EIP, which
included Messrs. Herrmann, Connealy, Avery, Butch and Schulte.  The Committee did not grant Mr. Herrmann
a discretionary award of restricted stock. 
The discretionary awards of restricted stock were granted pursuant to
the terms of the SIP.  The following
table sets forth the discretionary awards of restricted stock granted to the
Named Executive Officers for 2008:

 

	
  Named Executive
  Officer

  	
   

  	
  Discretionary Restricted

  Stock Award

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Henry J. Herrmann
  

  	
   

  	
  0 shares

  	
   

  
	
  Chief Executive
  Officer

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Daniel P.
  Connealy 

  	
   

  	
  18,900 shares

  	
   

  
	
  Senior Vice
  President and Chief Financial Officer

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Michael L. Avery 

  	
   

  	
  28,350 shares

  	
   

  
	
  Senior Vice
  President and Chief Investment Officer

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Thomas W. Butch 

  	
   

  	
  28,350 shares

  	
   

  
	
  Senior Vice
  President and Chief Marketing Officer

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Daniel C. Schulte
  

  	
   

  	
  18,900 shares

  	
   

  
	
  Senior Vice
  President and General Counsel

  	
   

  	
   

  	
   

  

 

These shares were granted on December 31, 2008 pursuant to the
SIP, in accordance with the form of restricted stock agreement filed as Exhibit
            to
the Company’s Annual Report on Form 10-K for the year ended December 31,
2008.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00154-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00154-of-00352.parquet"}]]