Document:

Exhibit 10.27

 

Summary
of Compensation Arrangements With Executive Officers of the Company

 

I.              Named Executive
Officer Compensation.  On December 13, 2007, 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, 2008) 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 2008:

 

	
  Named
  Executive Officer

  	
   

  	
  Salary

  
	
   

  	
   

  	
   

  
	
  Henry J. Herrmann  

  Chief Executive Officer

  	
   

  	
  $1,000,000

  
	
  Daniel P. Connealy  

  Senior Vice President andChief
  Financial Officer

  	
   

  	
  $390,000

  
	
  Michael L. Avery

  Senior Vice President and Chief
  Investment Officer

  	
   

  	
  $550,000

  
	
  Thomas W. Butch  

  Senior Vice President and Chief
  Marketing Officer

  	
   

  	
  $475,000

  
	
  Daniel C. Schulte

  Senior Vice President and General Counsel

  	
   

  	
  $365,000

  

 

                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 2007, the
Committee designated Mr. Herrmann as a participant of the SERP and did not
award him a non-formula award in 2007. 
None of the other Named Executive Officers were eligible to participate
in the SERP for 2007.

 

II.            2007 Executive Incentive Awards.    Pursuant to the Company 2003 Executive
Incentive Plan, as amended and restated (the “EIP”), eligible participants may
receive (1) an annual incentive award of cash, and (2) an annual
incentive award of restricted stock, both based upon the annual financial
performance of the Company.

 

 

A.            Cash Awards.  On December 13, 2007, 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,
2007 to executive officers participating in the EIP, which included Messrs. Herrmann,
Connealy, Avery, Butch and Schulte.  With
respect to Mr. Herrmann, the Committee authorized the payment of his
annual cash incentive award based on the Company’s financial performance for
the year ended December 31, 2007 in the amount of $2,400,000 on December 13,
2007 and $100,000 on February 20, 2008. These annual incentive awards were
determined based on performance goals established in February 2007.  As permitted by the EIP, the Committee
exercised its discretion to reduce the amount of the cash awards payable to Messrs. Herrmann,
Connealy, Avery, Butch and Schulte, but in accordance with the EIP, the
reductions did not increase the award amounts for any other participant.   The following table sets forth the annual
cash incentive awards to the Named Executive Officers for 2007:

 

	
  Named
  Executive Officer

  	
   

  	
  Cash Award

  
	
   

  	
   

  	
   

  
	
  Henry J. Herrmann  

  Chief Executive Officer

  	
   

  	
  $2,500,000

  
	
  Daniel P. Connealy  

  Senior Vice President andChief
  Financial Officer

  	
   

  	
  $440,000

  
	
  Michael L. Avery

  Senior Vice President and Chief
  Investment Officer

  	
   

  	
  $1,000,000

  
	
  Thomas W. Butch  

  Senior Vice President and Chief
  Marketing Officer

  	
   

  	
  $575,000

  
	
  Daniel C. Schulte

  Senior Vice President and General Counsel

  	
   

  	
  $440,000

  

 

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 2007, none of the Named
Executive Officer 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 13, 2007, 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,
2007 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 2007.  As
permitted by the EIP, the Committee exercised its discretion to reduce the
amount of the restricted stock awards payable to Messrs. Herrmann,
Connealy, Avery, Butch and Schulte, but in accordance with the EIP, the
reductions did not increase the restricted stock award amounts for any other
participant.  The following table sets
forth the annual restricted stock awards to the Named Executive Officers for
2007:

 

	
  Named
  Executive Officer

  	
   

  	
  Restricted Stock Award

  
	
   

  	
   

  	
   

  
	
  Henry J. Herrmann  

  Chief Executive Officer

  	
   

  	
  50,000 shares

  
	
  Daniel P. Connealy  

  Senior Vice President andChief
  Financial Officer

  	
   

  	
  30,000 shares

  
	
  Michael L. Avery

  Senior Vice President and Chief
  Investment Officer

  	
   

  	
  60,000 shares

  
	
  Thomas W. Butch  

  Senior Vice President and Chief
  Marketing Officer

  	
   

  	
  50,000 shares

  
	
  Daniel C. Schulte

  Senior Vice President and General Counsel

  	
   

  	
  25,000 shares

  

 

These
shares were granted on December 31, 2007 pursuant to the Company 1998
Stock Incentive Plan, as amended and restated, in accordance with the form of
restricted stock agreement filed as Exhibit 10.1 to the Company’s
Quarterly Report on Form 10-Q for the quarter ended September 30,
2007.Exhibit 10.28

 

Summary
of Board of Director Compensation Effective January 1, 2008

 

Annual retainer of $55,500 ($110,000 for the
Chairman of the Board);

 

Meeting
fees of $2,000/meeting;

 

Meeting
fees of $1,500/committee meeting ($3,000/committee meeting for Committee
Chairmen);

 

Award
of 5,000 shares of restricted Class A common stock upon initial election
to the Board of Directors;

 

After
initial election, annual formula-based award of 1,500 shares of restricted
stock and an additional discretionary, non-formula based award of 3,000 shares
(6,000 shares for the Chairman of the Board) of restricted stock to be awarded
the first trading day of January each year;

 

Reimbursement
for travel and lodging expenses incurred in attending meetings;

 

Eligibility
to participate in the Company’s group health insurance plan, a portion of the
premiums for which are paid by the Company; and

 

Ability
to convert annual cash compensation into restricted stock under the Company’s
1998 Non-Employee Director Stock Award Plan, as amended and restated.  The number of shares of restricted stock
granted is determined based on the closing market price of the Company’s Class A
common stock as of the grant date.Exhibit 10.33

 

	
  STATE OF KANSAS

  	
  )

  
	
   

  	
   

  
	
  JOHNSON COUNTY

  	
  )

  

 

WADDELL & REED FINANCIAL, INC. NON-QUALIFIED
STOCK OPTION

 

GRANT AGREEMENT

 

                WADDELL & REED FINANCIAL, INC., a
corporation organized and existing under the laws of the state of Delaware (the
“Company”), does hereby grant and give unto
                                        
(the “Optionee”), the following non-qualified stock options (the “Option”) upon
the terms and conditions hereinafter set forth.

 

AUTHORITY FOR GRANT

 

                1.             Employee
Incentive Plan.  The Option is
granted under the provisions of the Waddell & Reed Financial, Inc.
1998 Stock Incentive Plan, as Amended and Restated (the “Plan”), as a
non-qualified option and is subject to the terms and provisions of the
Plan.  Capitalized terms used but not
defined herein shall have the meaning given them in the Plan, which is
incorporated by reference herein.

 

TERMS OF OPTION

 

                2.             Number
of Shares.  In consideration of
future services to the Company, the Optionee is hereby granted an option to
purchase from the Company
                        
shares (the “Shares”) of the Company’s Class A Common Capital Stock, par
value $.01.

 

                3.             Option
Price Per Share.  The option price
for each Share subject to the Option shall be $                  ,
the Fair Market Value per share of the Stock on          ,     
(the “Grant Date”).

 

                4.             Option
Period.  The Option shall be and
become first exercisable six (6) months from the Grant Date.  Notwithstanding any other provision of this
Agreement, if the Option is not exercised with respect to all Shares prior to
                  ,
which is the expiration date of the 

 

 

original Option Period
for the exercised Option giving rise to the grant of this Option (the “Original
Expiration Date”), it shall terminate and the parties hereto shall have no
further rights or obligations hereunder. 
For the purposes of this Agreement, “Option Period” shall mean the
period beginning on the Grant Date and ending on the Original Expiration Date,
not to exceed a ten (10) year and two (2) day period commencing on
the Grant Date.

 

5.             Method of Exercise.  The Option may be exercised to the extent
then exercisable in whole or in part at any time during the Option Period, by
giving written notice of exercise to the Company specifying the number of
Shares to be purchased, accompanied by payment in full of the purchase price,
in cash, by check or such other instrument as may be acceptable to the
Compensation Committee of the Waddell & Reed Financial, Inc.
Board of Directors (the “Committee”). 
Payment in full or in part may also be made in the form of Stock already
owned by the Optionee (based on the fair market value of the Stock on the date
the Option is exercised).  The Optionee
shall have the rights to dividends or other rights of a stockholder with
respect to the Shares subject to the option when the Optionee has given written
notice of exercise and has paid in full for such Shares.

 

6.             Restoration
Provision.  If payment on exercise of
the Option is made in the form of Stock, and the exercise occurs on the Annual
SORP Exercise Date, an additional Option (“SORP Option”) will automatically be
granted to the Optionee as of the date of the Annual SORP Exercise Date, having
an exercise price equal to 100% of the Fair Market Value of the Stock on the date
of exercise of the Option, having a term equal to the original Option Period
for the exercised Option giving rise to the grant of the SORP Option, not to
exceed a maximum term of ten (10) years and two (2) days from such
Annual SORP Exercise Date (subject to any forfeiture provision or shorter
limitation on exercise required under the Plan), having an initial exercise
date no earlier than six months after the Annual SORP Exercise Date and
covering a 

 

2

 

number of shares of Stock equal to the number of shares of Stock used
to pay the exercise price of the Option, plus the number of shares of Stock, if
any, withheld or sold to cover income taxes on such exercise. “Annual SORP
Exercise Date” shall mean August 1, or if August 1 is not a trading
day on the New York Stock Exchange, “Annual SORP Exercise Date” shall mean the
next succeeding trading day. 
Notwithstanding the foregoing, the Committee may delay the Annual SORP
Exercise Date to the extent it determines necessary to comply with regulatory
or administrative requirements.  This
Restoration Provision shall only be available to the Optionee if the Optionee
is an employee or director of the Company, any Subsidiary or any Affiliate on
the Annual SORP Exercise Date.  Further,
the Stock used by the Optionee to exercise the Option on the Annual SORP
Exercise Date must have been owned by the Optionee for a period of at least six
months prior to the Annual SORP Exercise Date. 
Finally, this Restoration Provision is subject to further terms and
conditions contained in the SORP participant and election forms distributed to
the Optionee in advance of the Annual SORP Exercise Date and to subsequent
amendments to this provision as adopted by the Compensation Committee.

 

                7.             Transferability
of Option.  The Option may be
transferred by the Optionee to members of his or her Immediate Family (the
children, grandchildren or spouse of the Optionee), to one or more trusts for
the benefit of such Immediate Family members or to one or more partnerships
where such Immediate Family members are the only partners if (i) at the
Committee’s sole and absolute discretion, the Optionee has received express
written approval of such transfer from the Committee (ii) the Optionee
does not receive any consideration in any form whatsoever for said transfer and
(iii) the transfer is not in violation of any applicable federal or state
securities laws.  Except as provided in
the foregoing sentence, the Option shall not be transferable by the Optionee
other than by will or by the laws of descent and distribution.

 

 

3

 

TERMINATION OF OPTION

 

                8.             Termination
by Death.  If the Optionee’s
employment with the Company, any Subsidiary or any Affiliate terminates by
reason of death (or if Optionee dies following termination of employment by
reason of Disability or Normal Retirement), the Option shall become immediately
exercisable and may thereafter be immediately exercised by the legal
representative of the estate or by the legatee of the Optionee under the will
of the Optionee, during the period ending on the expiration of the stated term
of the Option or the first anniversary of the Optionee’s death, whichever is
later.

 

                9.             Termination
by Reason of Disability.  If the
Optionee’s employment with the Company, any Subsidiary or any Affiliate
terminates by reason of Disability, the Option shall be immediately exercisable
and may thereafter be exercised during the period ending on the expiration of
the stated term of the Option.

 

                10.           Termination
by Reason of Retirement.  If the
Optionee’s employment with the Company, any Subsidiary, or any Affiliate
terminates by reason of Normal Retirement, the Option shall become immediately
exercisable and may thereafter be exercised during the period ending on the
expiration of the stated term of the Option.

 

                If the Optionee’s employment with the Company, any
Subsidiary or any Affiliate terminates by reason of Early Retirement, the
Option shall terminate three (3) years from the date of such Early
Retirement or upon the expiration of the stated term of the Option, whichever
is shorter.  In the event of Early
Retirement, there shall be no acceleration of vesting of the Option and the
Option may only be exercised to the extent it is or becomes exercisable prior
to termination.

 

 

4

 

                11.           Termination
for Cause.  If the Optionee’s
employment with the Company, any Subsidiary or any Affiliate is terminated for
Cause, the Option shall be immediately forfeited to the Company upon the giving
of notice of termination of employment.

 

                12.           Other
Termination.  If the Optionee’s
employment with the Company, any Subsidiary or any Affiliate is involuntarily
terminated by the Optionee’s employer without Cause, the Option shall terminate
three (3) months from the date of termination of employment or upon the
expiration of the stated term of the Option, whichever is shorter.  If the Optionee’s employment with the
Company, any Subsidiary, or any Affiliate is voluntarily terminated for any
reason, the Option shall terminate one (1) month from the date of
termination of employment or upon the expiration of the stated term of the
Option, whichever is shorter.  In the
event of involuntary termination without Cause or voluntary termination, there
shall be no acceleration of vesting of the Option and the Option may only be
exercised to the extent it is or becomes exercisable prior to such termination.

 

GENERAL TERMS AND
PROVISIONS

 

                13.           Shares
Listed on the Exchange.  The Shares
for which the Option is hereby granted shall have been listed on the New York
Stock Exchange at the time the Option is exercised.

 

                14.           Shares
May be Newly Issued or Purchased. 
The Shares to be delivered upon the exercise of the Option shall be made
available, at the discretion of the Company, either from authorized but
previously unissued Stock or from Stock held in the treasury of the Company.

 

                15.           Adjustment
of Shares for Recapitalization.  In
the event of any merger, reorganization, consolidation, recapitalization, stock
dividend, stock split or other change in corporate structure affecting the
Stock, an equitable substitution or adjustment shall be made in the number and
price of Shares subject to the Option.

 

 

5

 

                16.           Payment
of Taxes.  The Optionee shall, no
later than the date as of which the value of any portion of the Option first
becomes includable in his/her gross income for Federal income tax purposes, pay
to the Company, or make other arrangements satisfactory to the Committee, in
its sole discretion, regarding payment of, any Federal, state, local or FICA
taxes of any kind required by law to be withheld with respect to the
Option.  The obligations of the Company
under this Agreement shall be conditional on such payment or arrangements.

 

                The Optionee may elect, subject to the approval of
the Committee, to satisfy his/her Federal, and where applicable, FICA, state
and local tax withholding obligations arising from all awards by the reduction
in an amount necessary to pay all said withholding tax obligations, of the
number of Shares of stock or amount of cash otherwise issuable or payable to
said Optionee upon the issuance of Shares or payment of cash in respect of an
Option.

 

                The Company and, where applicable, its Subsidiaries
and Affiliates shall, to the extent permitted by law, have the right to deduct
any such taxes owed by an Optionee from any payment of any kind otherwise due
to said Optionee.

 

                17.           Headings.  The headings contained herein are for
convenience of reference only, do not constitute a part of this Grant Agreement
and shall not be deemed to limit or affect any of the provisions hereof.

 

18.           Notices.  Any notices required by or permitted to be
given to the Company under this Agreement shall be made in writing and
addressed to the Secretary of the Company in care of the Company’s Legal
Department, 6300 Lamar Avenue, Overland Park, Kansas 66202.  Any such notice shall be deemed to have been
given when received by the Company.

 

                19.           Rules of Construction.  This Agreement has been executed and
delivered by the Company in Kansas and shall be construed and enforced in
accordance with the laws of said State, other than any choice of law rules calling
for the application of laws of another 

 

6

 

jurisdiction.  Should there be
any inconsistency or discrepancy between the provisions of this Option and the
terms and conditions of the Plan under which this Option is granted, the provisions
in the Plan shall govern and prevail. 
This Agreement is not an employment contract and the receipt of this
Option does not give the Optionee any right to continued employment by the
Company, any Subsidiary or any Affiliate for any period.

 

                20.           Accelerated Exercisability.  Notwithstanding Paragraph 4 above, subject to
Section 13 of the Plan, upon the occurrence of a Change in Control the
Option shall become immediately exerciseable and may thereafter be exercised up
until expiration of the original term of the Option.

 

                21.           Effective
Date Stock Option.  This Option has
been executed this          day of                  ,       ,
effective as of                  ,       .

 

	
   

  	
  WADDELL & REED
  FINANCIAL, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  “Company”

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  “Optionee”

  
	
   

  	
   

  	
   

  
						

 

 

7

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