Document:

Exhibit 10.1

 

 

AON CORPORATION

LEADERSHIP PERFORMANCE PROGRAM

For 2006-2008

(As of February 22, 2008)

 

Overview

 

The
Program was adopted by the Committee, effective January 1, 2006, as a
sub-plan to the Stock Plan.  The Program
is the first layer of multi-year performance programs implemented by the
Company.

 

Performance
Cycle

 

The
Program covers a multi-year performance cycle that commenced on January 1,
2006 and will end on December 31, 2008 (“Performance Cycle”).

 

Eligibility

 

As
recommended by the CEO and approved by the Committee, key members of the
Company’s senior leadership team are eligible to participate in the Program.
The CEO and the Company’s Executive Chairman are also eligible to participate
in the Program as approved by the Committee.

 

Participation

 

The Committee approved in writing by May 31, 2006 the
identity of the participants eligible to participate in the Program and each
participant’s Award, denominated in US dollars. 
Those participants so identified by May 31, 2006 are eligible to participate
in the full Performance Cycle, retroactive to January 1, 2006.

 

If
a participant is no longer considered a member of the Company’s senior
leadership team, but the participant’s employment with the Company has not
terminated, the participant’s Award under the Program shall be unaffected by
the change in status.

 

Award
Components

 

Stock Options

 

At
the outset of participation in the Program, each participant received 25% of
his of her Award value in nonqualified options to purchase shares of the Company’s
common stock.  The number of stock
options was derived by dividing the value of the Award to be granted in stock
options (25% of the total value) by the Fair Market Value of a share of the
Company’s common stock on the Grant Date, and then multiplying the resulting
number by 3.

 

Performance Share Units

 

In
addition, each participant was awarded 75% of his or her Award value as target
Performance Share Units.  The number of
such target units was derived by dividing the value of the Award to be granted
in performance share units (i.e. 75% of the total value) by the Fair Market
Value of a share of the Company’s common stock on the Grant Date.

 

Rules Applicable to
Stock Options

1.                                      The options
will be priced at the Fair Market Value on the Grant Date.

2.                                      The options
will become exercisable during employment as follows:  (a) one-third on the first anniversary
of the Grant Date; (b) one-third on the second anniversary of the Grant
Date; and (c) the remainder on the third anniversary of the Grant Date.

3.                                      After the
options become exercisable in whole or in part in accordance with the table set
forth in rule #7 below and until they expire, the options may be
exercised, and the participant’s tax withholding obligations may be fulfilled,
in the manner specified by 

 

 

 

the
Committee.  Under no circumstances may
the options be exercised after they have expired.

4.                                      The options
will have a term of six years.

5.                                      If the options
would expire, or the exercise period would end, on a date that is not a
business day, they will expire, or become unexercisable, at the close of
business on the last business day preceding that date.  A business day is any day on which the
Company’s common stock is traded on the New York Stock Exchange.

6.                                      The participant
must accept the stock option award agreement through his or her Company-related
E*Trade account.

7.                                      If a
participant’s employment is terminated, the following rules will apply to
the vesting and exercise of the participant’s stock options:

 

	
  Reason
  for 

  Employment 

  Termination

  	
   

  	
  Impact
  on Vesting and Exercise of Stock Options

  
	
  Retirement
  or termination by Company without Cause

  	
   

  	
  Stock
  options will vest pro rata through the date of termination or Retirement. In
  the event of the participant’s Retirement, the vested stock options will be
  exercisable for 36 months. In the event of a termination by the Company
  without Cause, the stock options will be exercisable for 90 days.

  
	
   

  	
   

  	
   

  
	
  Death
  or Total and Permanent Disability

  	
   

  	
  Stock
  options will immediately and fully vest upon the participant’s death or Total
  and Permanent Disability. The stock options will be exercisable for twelve
  months.

  
	
   

  	
   

  	
   

  
	
  Voluntary
  Resignation

  	
   

  	
  Unvested
  stock options will be immediately forfeited. Stock options that vested in
  accordance with three-year graded vesting schedule will be exercisable for 90
  days.

  
	
   

  	
   

  	
   

  
	
  Termination by Company for
  Cause

  	
   

  	
  All vested and unexercised
  and unvested stock options will be immediately forfeited.

  
	
   

  	
   

  	
   

  
	
  Termination due to Change
  in Control

  	
   

  	
  Regardless whether a
  successor to the Company assumes and continues this Program after a Change in
  Control, the stock options will be subject to the following rules:
  (1) if the participant’s employment is terminated by the Company without
  Cause within two years after the Change in Control, the participant will
  become immediately vested in any unvested stock options and the stock options
  will be exercisable for 90 days; and (2) if the participant’s employment
  is terminated by the Company for Cause, by the participant in a voluntary
  resignation, or by reason of the participant’s death or Total and Permanent
  Disability, or if the participant’s employment is continued through the end
  of the Performance Cycle, the rules of the Program shall continue to
  apply to the stock options as if the Change in Control had not occurred.

  

 

Rules Applicable to
Performance Share Units

1.                                      The Performance
Share Units will be earned and will vest as of the Settlement Date, subject to
the satisfaction of the performance criteria set forth herein.

2.                                      The payout
resulting from the vesting of the Performance Share Units will be determined
based on the Company’s cumulative Earnings per Share over the Performance Cycle
as compared to the target Earnings Per Share.

3.                                      Payouts will
range from 0% to 150% of the targeted number of Performance Share Units
awarded.

 

2

 

4.                                      The Performance
Share Units will pay out in shares of the Company’s common stock issued under,
and subject to, the limitations of the Stock Plan or such other
shareholder-approved Company equity-based incentive plan as designated by the
Committee.

5.                                      The Company
shall have the right to satisfy all federal, state and local withholding tax
requirements with respect to the award earned by reducing the number of earned
shares by the number of shares determined by dividing the amount of withholding
required by the Fair Market Value of a share of the Company’s common stock on
the Settlement Date.

6.                                      The Performance
Share Units are not transferable and may not be sold, assigned, pledged, hypothecated
or otherwise encumbered.

7.                                      Until the
Settlement Date, the participant will not be treated as a stockholder as to
those shares of the Company’s common stock relating to the Performance Share
Units.  No cash payments will be provided
for dividend equivalents or other distributions.

8.                                      The participant
will be granted a Performance Award Certificate at the outset of his or her
participation in the Program.  The
certificate will set forth the target number of Performance Share Units granted
to the participant.  The participant must
sign and return to the Company the certificate to indicate that he or she
agrees to be bound by the provisions of the Program, including the restrictive
covenants described herein.  Failure to
return a signed certificate to the Company will result in forfeiture of the
Performance Share Units.

9.                                      If a
participant’s employment with the Company terminates before the last day of the
Performance Cycle, the following rules will apply to the vesting of the
Performance Share Units:

 

	
  Reason
  for 

  Employment 

  Termination

  	
   

  	
  Impact
  on Vesting of Performance Share Units

  
	
  Retirement
  or termination by Company without Cause

  	
   

  	
  Performance
  Share Units will vest pro rata through the date of termination or Retirement.
  The Committee’s determination regarding the vested portion and payout will
  occur after the close of the Performance Cycle. The number of units earned
  will be pro-rated based on the proportion of achievement of the target
  cumulative earnings per share as of the last full calendar quarter preceding
  the participant’s termination or Retirement date.

  
	
   

  	
   

  	
   

  
	
  Death or Total and
  Permanent Disability

  	
   

  	
  Performance Share Units
  will become immediately vested at the greater of the target award level or
  the number of units that would have been earned based on the actual
  cumulative earnings per share during the period of the Performance Cycle in
  which the participant was employed by the Company.

  
	
   

  	
   

  	
   

  
	
  Voluntary
  Resignation

  	
   

  	
  Performance
  Share Units will be forfeited in their entirety.

  
	
   

  	
   

  	
   

  
	
  Termination by Company for
  Cause

  	
   

  	
  Performance Share Units
  will be forfeited in their entirety.

  
	
   

  	
   

  	
   

  
	
  Termination due to Change
  in Control

  	
   

  	
  If a successor to the
  Company assumes and continues this Program substantially in its current form
  after a Change in Control, the Performance Share Units will be subject to the
  following rules: (1) if the participant’s employment is terminated by
  the Company without Cause after the Change in Control but prior to the end of
  the Performance Cycle, the participant will become immediately vested in the
  greater of the target performance share units or the number of units that
  would be earned based on the proportion of 

  

 

 

3

 

	
  Reason
  for 

  Employment 

  Termination

  	
   

  	
  Impact
  on Vesting of Performance Share Units

  
	
   

  	
   

  	
  achievement of the target
  cumulative earnings per share as of the last full calendar quarter preceding
  the participant’s termination date; and (2) if the participant’s
  employment is terminated by the Company for Cause, by the participant in a
  voluntary resignation, or by reason of the participant’s death or Total and
  Permanent Disability, or if the participant’s employment is continued through
  the end of the Performance Cycle, the rules of the Program shall
  continue to apply to the Performance Share Units as if the Change in Control
  had not occurred.  

   

  If the successor to the
  Company does not assume and continue this Program substantially in its
  current form, the performance share units shall become immediately vested at
  the greater of the target performance share units or the number of units that
  would have been earned based on the proportion of achievement of the target
  cumulative earnings per share as of the last full calendar quarter preceding
  the effective date of the Change in Control.

  

 

Performance
Measure for Performance Share Units

 

The
performance measure for the Performance Share Units will be cumulative Earnings
per Share for the Performance Cycle, for which the Committee has established a
target of $6.98.

 

Following
the end of the Performance Cycle, the Committee will determine in its sole
discretion the payout, which determination shall be final and binding.  Performance Share Units will be subject to
complete forfeiture if the Company’s performance for the Performance Cycle does
not meet or exceed a minimum cumulative Earnings per Share of $6.72, and the
payout for performance at or above that level will be calculated as follows:

 

	
  2006-2008 Cumulative EPS 

  	
   

  	
  % of Targeted Units Earned

  	
   

  
	
  $

  	
  6.72

  	
   

  	
  50

  	
  %

  
	
  $

  	
  6.98

  	
   

  	
  100

  	
  %

  
	
  $

  	
  8.44
  or higher

  	
   

  	
  150

  	
  %

  

 

The
Performance Share Units will pay out linearly between each set of data points.

 

Adjustments
to Performance Measures or Results

 

The
Committee will make appropriate adjustments to the target Earnings per Share or
the Company’s actual results on account of: change in accounting policy;
gain/loss on disposition of assets or business; charge for goodwill impairment;
extraordinary legal/regulatory settlements; effects of natural or man-made
disasters (e.g. Word Trade Center); hyperinflation (e.g. >15%); change in
statutory tax rates/regulations; charges from Board-approved restructuring
programs; results of discontinued operations held for sale after sale closing;
other extraordinary, unusual or infrequently occurring items — as defined by
GAAP. The form and manner of any such adjustment shall be at the sole
discretion of the Committee.  By way of
example, the following events will not require adjustment:  change in accounting estimate; gained/lost
pre-tax income from sold/acquired businesses that represent less than 5% of
total pre-tax income; inflation; general tax developments; litigation costs;
effects of repaying or issuing debt; effects of share buyback/issue; effects of
pension plan funding; changes in benefit/incentive plans; or currency/interest
rate fluctuations.

 

4

 

Restrictive Covenants

 

The Company is in the
business of providing insurance brokerage, reinsurance brokerage, benefits
consulting, compensation consulting, human resources consulting, managing
underwriting and related services including accounting, claims management and
handling, contract wording, information systems and actuarial services.  An essential element of its business is the
development and maintenance of personal contacts and relationships with
clients.  Because of these contacts and
relationships, it is common for the Company’s clients to develop identification
with the employee who services its insurance needs, rather than with the Company
itself.  The personal identification of
clients of the Company with a Company employee creates potential for the
employee’s appropriation of the benefits of the relationships developed with
clients on behalf of and at the expense of the Company.  Since the Company would suffer irreparable harm
if the employee left is employ and solicited the insurance or other related
business of clients of the Company, it is reasonable to protect the Company
against solicitation activities by the employee for a limited period of time
after the employee leaves the Company so that the Company may renew or restore
its business relationship with its clients. 
Therefore, as consideration for participation in this Program, each
participant will be bound by the following restrictive covenants:

 

Covenant
Not to Solicit

The
employee agrees and covenants that, except with the prior written consent of
the Company, the employee will not for a period of two years after the end of
the employment compete directly or indirectly in any way with the business of
the Company.  For the purposes of this
covenant, “compete directly or indirectly in any way with the business of the
Company” means to enter into or attempt to enter into (on the employee’s own
behalf or on behalf of any other person or entity) any business relationship of
the same type or kind as the business relationship which exists between the
Company and its clients or customers to provide services related to the
business of the Company for any individual, partnership, corporation,
association or other entity who or which was a client or customer for whom the
employee was the producer or on whose account the Employee worked or became
familiar during the 24 months prior to the end of employment.

 

Covenant
Not to Hire

The
employee also agrees not to induce or attempt to induce, or to cause any person
or other entity to induce or attempt to induce, any person who is an employee
of the Company to leave the employ of the Company during the term of the
covenant set forth above.

 

If
the Company determines that a participant has breached any of the covenants,
his or her stock options and Performance Share Units will be immediately
forfeited.  In the event any of the
restrictive covenants set forth herein is deemed unenforceable, such as against
a non-US employee, the employee agrees that the maximum period, scope or
geographic area reasonable under such circumstances shall be substituted for
the stated period, scope or area and that the court shall be allowed to revise
the restrictions accordingly.

 

Administration

 

It
is expressly understood that the Committee has the discretionary authority to
administer, construe, and make all determinations necessary or appropriate to
the administration of the Program, all of which will be binding upon the
participant.  The Committee may delegate its authority to one or more of its members,
or to one or more members of the Company’s senior management team, to offer
participation in this Program to eligible individuals; provided, however, that
the Committee shall not delegate its authority with respect to the
participation of any officer of the Company who is subject to Section 16
of the Securities Exchange Act of 1934, as amended.  The Company shall, as necessary, adopt
conforming amendments to this Program as are necessary to comply with Section 409A
of the Internal Revenue Code of 1986, as amended.

 

5

 

General
Provisions

 

All
obligations of the Company under this Program with respect to payout of Awards,
and the corresponding rights granted thereunder, shall be binding on any
successor to the Company, whether the existence of such successor is the result
of a direct or indirect purchase, merger, consolidation or other acquisition of
all or substantially all of the business and/or assets of the Company.

 

This
Program constitutes a legal document which governs all matters involved with
its interpretation and administration and superseded any writing or
representation inconsistent with its terms.

 

Reservation
and Retention of Company Rights

 

The
selection of any employee for participation in this Program will not give that
participant any right to be retained in the employ of the Company.  No employee will at any time have a right to
be selected for participation in a future performance-based incentive program
despite having been selected for participation in this Program or a previous
program.

 

Stock
Plan Controls

 

Except
as specifically provided in this Program, in the event of any inconsistency
between this Program and the Stock Plan, the Stock Plan will control, but only
to the extent such Stock Plan provisions will not violate the provisions of Section 409A
of the Internal Revenue Code of 1986, as amended.

 

Definitions

 

CEO:  the Company’s Chief
Executive Officer.

 

Cause:  as determined in the sole discretion
of the Committee, means the participant: 
(A) performing an act of dishonesty, fraud, theft, embezzlement or
misappropriation involving the participant’s employment with the Company, or
breach of the duty of loyalty to the Company; (B) performing an act of
race, sex, national origin, religion, disability, or age-based discrimination
which, after investigation, counsel to the Company reasonably concludes will
result in liability being imposed on the Company and/or the participant; (C) material
violation of Company policies and procedures including, but not limited to, the
Aon Code of Business Conduct and the Aon Code of Ethics; or (D) performing
an act resulting in a criminal felony charge (or equivalent offense in a non-US
jurisdiction) brought against the participant or a criminal conviction of the
participant (other than a conviction of a minor traffic violation).

 

Change
in Control:  means the first
to occur of the following:  (1) the
acquisition by any individual, entity or group (a “Person”), including any
“person” within the meaning of Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”), of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of 30% or more of either (i) the then outstanding shares
of common stock of the Company (the “Outstanding Common Stock”) or (ii) the
combined voting power of the then outstanding securities of the Company
entitled to vote generally in the election of directors (the “Outstanding
Voting Securities”); excluding, however, the following: (A) any
acquisition directly from the Company (excluding any acquisition resulting from
the exercise of an exercise, conversion or exchange privilege unless the
security being so exercised, converted or exchanged was acquired directly from
the Company), (B) any acquisition by the Company, (C) any acquisition
by an employee benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company, or (D) any
acquisition by any corporation pursuant to a transaction which complies with
clauses (i), (ii) and (iii) of subsection (3) of this Section 1(c);
provided further, that for purposes of clause (B), if any Person (other than
the Company or any 

 

6

 

employee
benefit plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company) shall become the beneficial owner of 30%
or more of the Outstanding Common Stock or 30% or more of the Outstanding
Voting Securities by reason of an acquisition by the Company, and such Person
shall, after such acquisition by the Company, become the beneficial owner of
any additional shares of the Outstanding Common Stock or any additional Outstanding
Voting Securities and such beneficial ownership is publicly announced, such
additional beneficial ownership shall constitute a Change in Control;

 

(2)                                 individuals
who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease
for any reason to constitute at least a majority of such Board; provided that
any individual who becomes a director of the Company subsequent to the date
hereof whose election, or nomination for election by the Company’s
stockholders, was approved by the vote of at least a majority of the directors
then comprising the Incumbent Board shall be deemed a member of the Incumbent
Board; and provided further, that any individual who was initially elected as a
director of the Company as a result of an actual or threatened solicitation by
a Person other than the Board for the purpose of opposing a solicitation by any
other Person with respect to the election or removal of directors, or any other
actual or threatened solicitation of proxies or consents by or on behalf of any
Person other than the Board shall not be deemed a member of the Incumbent
Board;

 

                                                (3)                                 the
consummation of a reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the Company (a
“Corporate Transaction”); excluding, however, a Corporate Transaction pursuant
to which (i) all or substantially all of the individuals or entities who
are the beneficial owners, respectively, of the Outstanding Common Stock and
the Outstanding Voting Securities immediately prior to such Corporate
Transaction will beneficially own, directly or indirectly, more than  60% of, respectively, the outstanding shares of common
stock, and the combined voting power of the outstanding securities entitled to
vote generally in the election of directors, as the case may be, of the
corporation resulting from such Corporate Transaction (including, without
limitation, a corporation which as a result of such transaction owns the
Company or all or substantially all of the Company’s assets either directly or
indirectly) in substantially the same proportions relative to each other as
their ownership, immediately prior to such Corporate Transaction, of the
Outstanding Common Stock and the Outstanding Voting Securities, as the case may
be, (ii) no Person (other than:  the
Company; any employee benefit plan (or related trust) sponsored or maintained
by the Company or any corporation controlled by the Company; the corporation
resulting from such Corporate Transaction; and any Person which beneficially
owned, immediately prior to such Corporate Transaction, directly or indirectly,
30% or more of the Outstanding Common Stock or the Outstanding Voting
Securities, as the case may be) will beneficially own, directly or indirectly,
30% or more of, respectively, the outstanding shares of common stock of the
corporation resulting from such Corporate Transaction or the combined voting
power of the outstanding securities of such corporation entitled to vote
generally in the election of directors and (iii) individuals who were
members of the Incumbent Board will constitute at least a majority of the
members of the board of directors of the corporation resulting from such
Corporate Transaction; or

 

                                                (4)                                 the
consummation of a plan of complete liquidation or dissolution of the Company.

 

Committee:  the Organization and
Compensation Committee of the Company’s board of directors.

 

Company:  Aon Corporation, a Delaware
corporation, and its subsidiaries.

 

7

 

Earnings
per Share or EPS:  the Company’s
earnings per share from continuing operations as reported each quarter.  The Committee has the sole discretion to
approve an adjustment to EPS, in accordance with the adjustment criteria set
forth herein.

 

Fair
Market Value:  the average of
the high and low trading prices of the Company’s common stock as quoted on the
New York Stock Exchange as of the close of business on the Grant Date (or if
the New York Stock Exchange was not open for trading on that day, the next
preceding day that the New York Stock Exchange was open for trading and the
common stock of the Company was traded) as reported for such date by the Wall
Street Journal.

 

Grant
Date:  the date an Award to a
participant is approved in writing by the Committee.

 

Program:  the Leadership Performance
Program, as adopted effective January 1, 2008 and amended effective February 22,
2008.

 

Retire
or Retirement: a voluntary termination of employment at or after
the participant’s 55th birthday.

 

Settlement
Date:  the date that the Committee
determines whether the performance criteria applicable to the Performance Share
Units has been achieved or exceeded and determines the payout to
participants.  The Settlement Date shall
occur as soon as practicable following the close of the Performance Cycle.

 

Settlement
Date Value:  the Fair Market
Value of a share of the Company’s common stock on the date the Committee
determines the amount of the Performance Share Units earned.

 

Stock
Plan:  the 2001 Aon Stock Incentive
Plan, as amended and re-approved by the Company’s stockholders at the 2006
annual meeting of stockholders.

 

Total
and Permanent Disability:  for (a) US
employees, entitlement to long-term disability benefits under the Company’s
program, as amended from time to time and (b) non-US employees, as
established by applicable Company policy or as required by local law or
regulations.

 

If
a term is used but not defined, it has the meaning given such term in the Stock
Plan.

 

8Exhibit 10.2

 

 

AON CORPORATION

LEADERSHIP PERFORMANCE PROGRAM

For 2007-2009

(As of February 22, 2008)

 

Overview

 

The
Program was adopted by the Committee, effective January 1, 2007, as a
sub-plan to the Stock Plan.  The Program
is the second layer of multi-year performance programs implemented by the
Company.

 

Performance
Cycle

 

The
Program covers a multi-year performance cycle that commenced on January 1,
2007 and will end on December 31, 2009 (“Performance Cycle”).

 

Eligibility

 

As
recommended by the CEO and approved by the Committee, key members of the
Company’s senior leadership team are eligible to participate in the Program.
The CEO and the Company’s Executive Chairman are also eligible to participate
in the Program as approved by the Committee.

 

Participation

 

The Committee approved in writing by May 31, 2007 the
identity of the participants eligible to participate in the Program and each
participant’s Award, denominated in US dollars. 
Those participants so identified by May 31, 2007 are eligible to participate
in the full Performance Cycle, retroactive to January 1, 2007.

 

If
a participant is no longer considered a member of the Company’s senior
leadership team, but the participant’s employment with the Company has not
terminated, the participant’s Award under the Program shall be unaffected by
the change in status.

 

Award
Components

 

Stock Options

 

At
the outset of participation in the Program, each participant received 25% of
his of her Award value in nonqualified options to purchase shares of the Company’s
common stock.  The number of stock
options was derived by dividing the value of the Award to be granted in stock
options (25% of the total value) by the Fair Market Value of a share of the
Company’s common stock on the Grant Date, and then multiplying the resulting
number by 3.

 

Performance Share Units

 

In
addition, each participant was awarded 75% of his or her Award value as target
Performance Share Units.  The number of
such target units was derived by dividing the value of the Award to be granted
in performance share units (i.e. 75% of the total value) by the Fair Market
Value of a share of the Company’s common stock on the Grant Date.

 

Rules Applicable to
Stock Options

1.                                      The options
will be priced at the Fair Market Value on the Grant Date.

2.                                      The options
will become exercisable during employment as follows:  (a) one-third on the first anniversary
of the Grant Date; (b) one-third on the second anniversary of the Grant
Date; and (c) the remainder on the third anniversary of the Grant Date.

3.                                      After the
options become exercisable in whole or in part in accordance with the table set
forth in rule #7 below and until they expire, the options may be
exercised, and the participant’s tax withholding obligations may be fulfilled,
in the manner specified by 

 

 

 

the
Committee.  Under no circumstances may
the options be exercised after they have expired.

4.                                      The options
will have a term of six years.

5.                                      If the options
would expire, or the exercise period would end, on a date that is not a
business day, they will expire, or become unexercisable, at the close of
business on the last business day preceding that date.  A business day is any day on which the
Company’s common stock is traded on the New York Stock Exchange.

6.                                      The participant
must accept the stock option award agreement through his or her Company-related
E*Trade account.

7.                                      If a
participant’s employment is terminated, the following rules will apply to
the vesting and exercise of the participant’s stock options:

 

	
  Reason
  for 

  Employment 

  Termination

  	
   

  	
  Impact
  on Vesting and Exercise of Stock Options

  
	
  Retirement
  or termination by Company without Cause

  	
   

  	
  Stock
  options will vest pro rata through the date of termination or Retirement. In
  the event of the participant’s Retirement, the vested stock options will be
  exercisable for 36 months. In the event of a termination by the Company
  without Cause, the stock options will be exercisable for 90 days.

  
	
   

  	
   

  	
   

  
	
  Death
  or Total and Permanent Disability

  	
   

  	
  Stock
  options will immediately and fully vest upon the participant’s death or Total
  and Permanent Disability. The stock options will be exercisable for twelve
  months.

  
	
   

  	
   

  	
   

  
	
  Voluntary
  Resignation

  	
   

  	
  Unvested
  stock options will be immediately forfeited. Stock options that vested in
  accordance with three-year graded vesting schedule will be exercisable for 90
  days.

  
	
   

  	
   

  	
   

  
	
  Termination by Company for
  Cause

  	
   

  	
  All vested and unexercised
  and unvested stock options will be immediately forfeited.

  
	
   

  	
   

  	
   

  
	
  Termination due to Change
  in Control

  	
   

  	
  Regardless whether a
  successor to the Company assumes and continues this Program after a Change in
  Control, the stock options will be subject to the following rules:
  (1) if the participant’s employment is terminated by the Company without
  Cause within two years after the Change in Control, the participant will
  become immediately vested in any unvested stock options and the stock options
  will be exercisable for 90 days; and (2) if the participant’s employment
  is terminated by the Company for Cause, by the participant in a voluntary
  resignation, or by reason of the participant’s death or Total and Permanent
  Disability, or if the participant’s employment is continued through the end
  of the Performance Cycle, the rules of the Program shall continue to
  apply to the stock options as if the Change in Control had not occurred.

  

 

Rules Applicable to
Performance Share Units

1.                                      The Performance
Share Units will be earned and will vest as of the Settlement Date, subject to
the satisfaction of the performance criteria set forth herein.

2.                                      The payout
resulting from the vesting of the Performance Share Units will be determined
based on the Company’s cumulative Earnings per Share over the Performance Cycle
as compared to the target Earnings Per Share.

3.                                      Payouts will
range from 0% to 200% of the targeted number of Performance Share Units
awarded.

 

2

 

4.                                      The Performance
Share Units will pay out in shares of the Company’s common stock issued under,
and subject to, the limitations of the Stock Plan or such other
shareholder-approved Company equity-based incentive plan as designated by the
Committee.

5.                                      The Company
shall have the right to satisfy all federal, state and local withholding tax
requirements with respect to the award earned by reducing the number of earned
shares by the number of shares determined by dividing the amount of withholding
required by the Fair Market Value of a share of the Company’s common stock on
the Settlement Date.

6.                                      The Performance
Share Units are not transferable and may not be sold, assigned, pledged,
hypothecated or otherwise encumbered.

7.                                      Until the
Settlement Date, the participant will not be treated as a stockholder as to
those shares of the Company’s common stock relating to the Performance Share
Units.  No cash payments will be provided
for dividend equivalents or other distributions.

8.                                      The participant
will be granted a Performance Award Certificate at the outset of his or her
participation in the Program.  The
certificate will set forth the target number of Performance Share Units granted
to the participant.  The participant must
sign and return to the Company the certificate to indicate that he or she
agrees to be bound by the provisions of the Program, including the restrictive
covenants described herein.  Failure to
return a signed certificate to the Company will result in forfeiture of the
Performance Share Units.

9.                                      If a
participant’s employment with the Company terminates before the last day of the
Performance Cycle, the following rules will apply to the vesting of the
Performance Share Units:

 

	
  Reason
  for 

  Employment 

  Termination

  	
   

  	
  Impact
  on Vesting of Performance Share Units

  
	
  Retirement
  or termination by Company without Cause

  	
   

  	
  Performance
  Share Units will vest pro rata through the date of termination or Retirement.
  The Committee’s determination regarding the vested portion and payout will
  occur after the close of the Performance Cycle. The number of units earned
  will be pro-rated based on the proportion of achievement of the target
  cumulative earnings per share as of the last full calendar quarter preceding
  the participant’s termination or Retirement date.

  
	
   

  	
   

  	
   

  
	
  Death or Total and
  Permanent Disability

  	
   

  	
  Performance Share Units
  will become immediately vested at the greater of the target award level or
  the number of units that would have been earned based on the actual
  cumulative earnings per share during the period of the Performance Cycle in
  which the participant was employed by the Company.

  
	
   

  	
   

  	
   

  
	
  Voluntary
  Resignation

  	
   

  	
  Performance
  Share Units will be forfeited in their entirety.

  
	
   

  	
   

  	
   

  
	
  Termination by Company for
  Cause

  	
   

  	
  Performance Share Units
  will be forfeited in their entirety.

  
	
   

  	
   

  	
   

  
	
  Termination due to Change
  in Control

  	
   

  	
  If a successor to the
  Company assumes and continues this Program substantially in its current form
  after a Change in Control, the Performance Share Units will be subject to the
  following rules: (1) if the participant’s employment is terminated by
  the Company without Cause after the Change in Control but prior to the end of
  the Performance Cycle, the participant will become immediately vested in the
  greater of the target performance share units or the number of units that
  would be earned based on the proportion of

  

 

3

 

	
  Reason
  for 

  Employment 

  Termination

  	
   

  	
  Impact
  on Vesting of Performance Share Units

  
	
   

  	
   

  	
  achievement
  of the target cumulative earnings per share as of the last full calendar
  quarter preceding the participant’s termination date; and (2) if the
  participant’s employment is terminated by the Company for Cause, by the
  participant in a voluntary resignation, or by reason of the participant’s
  death or Total and Permanent Disability, or if the participant’s employment
  is continued through the end of the Performance Cycle, the rules of the
  Program shall continue to apply to the Performance Share Units as if the
  Change in Control had not occurred.

   

  If
  the successor to the Company does not assume and continue this Program
  substantially in its current form, the performance share units shall become
  immediately vested at the greater of the target performance share units or
  the number of units that would have been earned based on the proportion of
  achievement of the target cumulative earnings per share as of the last full
  calendar quarter preceding the effective date of the Change in Control.

  

 

Performance
Measure for Performance Share Units

 

The
performance measure for the Performance Share Units will be cumulative Earnings
per Share for the Performance Cycle, for which the Committee has established a
target of $7.77.

 

Following
the end of the Performance Cycle, the Committee will determine in its sole
discretion the payout, which determination shall be final and binding.  Performance Share Units will be subject to
complete forfeiture if the Company’s performance for the Performance Cycle does
not meet or exceed a minimum cumulative Earnings per Share of $7.32, and the
payout for performance at or above that level will be calculated as follows:

 

	
  2007-2009 Cumulative EPS 

  	
   

  	
  % of Targeted Units Earned

  	
   

  
	
  $

  	
  7.32

  	
   

  	
  50

  	
  %

  
	
  $

  	
  7.77

  	
   

  	
  100

  	
  %

  
	
  $

  	
  8.52
  or higher

  	
   

  	
  200

  	
  %

  

 

 

The
Performance Share Units will pay out linearly between each set of data points.

 

Adjustments
to Performance Measures or Results

 

The
Committee will make appropriate adjustments to the target Earnings per Share or
the Company’s actual results on account of: change in accounting policy;
gain/loss on disposition of assets or business; charge for goodwill impairment;
extraordinary legal/regulatory settlements; effects of natural or man-made
disasters (e.g. Word Trade Center); hyperinflation (e.g. >15%); change in
statutory tax rates/regulations; charges from Board-approved restructuring
programs; results of discontinued operations held for sale after sale closing;
other extraordinary, unusual or infrequently occurring items — as defined by
GAAP. The form and manner of any such adjustment shall be at the sole
discretion of the Committee.  By way of
example, the following events will not require adjustment:  change in accounting estimate; gained/lost
pre-tax income from sold/acquired businesses that represent less than 5% of
total pre-tax income; inflation; general tax developments; litigation costs;
effects of repaying or issuing debt; effects of share buyback/issue; effects of
pension plan funding; changes in benefit/incentive plans; or currency/interest
rate fluctuations.

 

4

 

Restrictive Covenants

 

The Company is in the
business of providing insurance brokerage, reinsurance brokerage, benefits
consulting, compensation consulting, human resources consulting, managing
underwriting and related services including accounting, claims management and
handling, contract wording, information systems and actuarial services.  An essential element of its business is the
development and maintenance of personal contacts and relationships with
clients.  Because of these contacts and
relationships, it is common for the Company’s clients to develop identification
with the employee who services its insurance needs, rather than with the Company
itself.  The personal identification of
clients of the Company with a Company employee creates potential for the
employee’s appropriation of the benefits of the relationships developed with
clients on behalf of and at the expense of the Company.  Since the Company would suffer irreparable harm
if the employee left is employ and solicited the insurance or other related
business of clients of the Company, it is reasonable to protect the Company
against solicitation activities by the employee for a limited period of time
after the employee leaves the Company so that the Company may renew or restore
its business relationship with its clients. 
Therefore, as consideration for participation in this Program, each
participant will be bound by the following restrictive covenants:

 

Covenant
Not to Solicit

The
employee agrees and covenants that, except with the prior written consent of
the Company, the employee will not for a period of two years after the end of
the employment compete directly or indirectly in any way with the business of
the Company.  For the purposes of this
covenant, “compete directly or indirectly in any way with the business of the
Company” means to enter into or attempt to enter into (on the employee’s own
behalf or on behalf of any other person or entity) any business relationship of
the same type or kind as the business relationship which exists between the
Company and its clients or customers to provide services related to the
business of the Company for any individual, partnership, corporation,
association or other entity who or which was a client or customer for whom the
employee was the producer or on whose account the Employee worked or became
familiar during the 24 months prior to the end of employment.

 

Covenant
Not to Hire

The
employee also agrees not to induce or attempt to induce, or to cause any person
or other entity to induce or attempt to induce, any person who is an employee
of the Company to leave the employ of the Company during the term of the
covenant set forth above.

 

If
the Company determines that a participant has breached any of the covenants,
his or her stock options and Performance Share Units will be immediately
forfeited.  In the event any of the
restrictive covenants set forth herein is deemed unenforceable, such as against
a non-US employee, the employee agrees that the maximum period, scope or
geographic area reasonable under such circumstances shall be substituted for
the stated period, scope or area and that the court shall be allowed to revise
the restrictions accordingly.

 

Administration

 

It
is expressly understood that the Committee has the discretionary authority to
administer, construe, and make all determinations necessary or appropriate to
the administration of the Program, all of which will be binding upon the
participant.  The Committee may delegate its authority to one or more of its members,
or to one or more members of the Company’s senior management team, to offer
participation in this Program to eligible individuals; provided, however, that
the Committee shall not delegate its authority with respect to the
participation of any officer of the Company who is subject to Section 16
of the Securities Exchange Act of 1934, as amended.  The Company shall, as necessary, adopt
conforming amendments to this Program as are necessary to comply with Section 409A
of the Internal Revenue Code of 1986, as amended.

 

5

 

General
Provisions

 

All
obligations of the Company under this Program with respect to payout of Awards,
and the corresponding rights granted thereunder, shall be binding on any
successor to the Company, whether the existence of such successor is the result
of a direct or indirect purchase, merger, consolidation or other acquisition of
all or substantially all of the business and/or assets of the Company.

 

This
Program constitutes a legal document which governs all matters involved with
its interpretation and administration and superseded any writing or
representation inconsistent with its terms.

 

Reservation
and Retention of Company Rights

 

The
selection of any employee for participation in this Program will not give that
participant any right to be retained in the employ of the Company.  No employee will at any time have a right to
be selected for participation in a future performance-based incentive program
despite having been selected for participation in this Program or a previous
program.

 

Stock
Plan Controls

 

Except
as specifically provided in this Program, in the event of any inconsistency
between this Program and the Stock Plan, the Stock Plan will control, but only
to the extent such Stock Plan provisions will not violate the provisions of Section 409A
of the Internal Revenue Code of 1986, as amended.

 

Definitions

 

CEO:  the Company’s Chief
Executive Officer.

 

Cause:  as determined in the sole discretion
of the Committee, means the participant: 
(A) performing an act of dishonesty, fraud, theft, embezzlement or
misappropriation involving the participant’s employment with the Company, or
breach of the duty of loyalty to the Company; (B) performing an act of
race, sex, national origin, religion, disability, or age-based discrimination
which, after investigation, counsel to the Company reasonably concludes will
result in liability being imposed on the Company and/or the participant; (C) material
violation of Company policies and procedures including, but not limited to, the
Aon Code of Business Conduct and the Aon Code of Ethics; or (D) performing
an act resulting in a criminal felony charge (or equivalent offense in a non-US
jurisdiction) brought against the participant or a criminal conviction of the
participant (other than a conviction of a minor traffic violation).

 

Change
in Control:  means the first
to occur of the following:  (1) the
acquisition by any individual, entity or group (a “Person”), including any
“person” within the meaning of Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”), of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of 30% or more of either (i) the then outstanding shares
of common stock of the Company (the “Outstanding Common Stock”) or (ii) the
combined voting power of the then outstanding securities of the Company
entitled to vote generally in the election of directors (the “Outstanding
Voting Securities”); excluding, however, the following: (A) any
acquisition directly from the Company (excluding any acquisition resulting from
the exercise of an exercise, conversion or exchange privilege unless the
security being so exercised, converted or exchanged was acquired directly from
the Company), (B) any acquisition by the Company, (C) any acquisition
by an employee benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company, or (D) any
acquisition by any corporation pursuant to a transaction which complies with
clauses (i), (ii) and (iii) of subsection (3) of this Section 1(c);
provided further, that for purposes of clause (B), if any Person (other than
the Company or any 

 

6

 

employee
benefit plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company) shall become the beneficial owner of 30%
or more of the Outstanding Common Stock or 30% or more of the Outstanding
Voting Securities by reason of an acquisition by the Company, and such Person
shall, after such acquisition by the Company, become the beneficial owner of
any additional shares of the Outstanding Common Stock or any additional Outstanding
Voting Securities and such beneficial ownership is publicly announced, such
additional beneficial ownership shall constitute a Change in Control;

 

(2)                                 individuals
who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease
for any reason to constitute at least a majority of such Board; provided that
any individual who becomes a director of the Company subsequent to the date
hereof whose election, or nomination for election by the Company’s
stockholders, was approved by the vote of at least a majority of the directors
then comprising the Incumbent Board shall be deemed a member of the Incumbent
Board; and provided further, that any individual who was initially elected as a
director of the Company as a result of an actual or threatened solicitation by
a Person other than the Board for the purpose of opposing a solicitation by any
other Person with respect to the election or removal of directors, or any other
actual or threatened solicitation of proxies or consents by or on behalf of any
Person other than the Board shall not be deemed a member of the Incumbent
Board;

 

                                                (3)                                 the
consummation of a reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the Company (a
“Corporate Transaction”); excluding, however, a Corporate Transaction pursuant
to which (i) all or substantially all of the individuals or entities who
are the beneficial owners, respectively, of the Outstanding Common Stock and
the Outstanding Voting Securities immediately prior to such Corporate
Transaction will beneficially own, directly or indirectly, more than  60% of, respectively, the outstanding shares of common
stock, and the combined voting power of the outstanding securities entitled to
vote generally in the election of directors, as the case may be, of the
corporation resulting from such Corporate Transaction (including, without
limitation, a corporation which as a result of such transaction owns the
Company or all or substantially all of the Company’s assets either directly or
indirectly) in substantially the same proportions relative to each other as
their ownership, immediately prior to such Corporate Transaction, of the
Outstanding Common Stock and the Outstanding Voting Securities, as the case may
be, (ii) no Person (other than:  the
Company; any employee benefit plan (or related trust) sponsored or maintained
by the Company or any corporation controlled by the Company; the corporation
resulting from such Corporate Transaction; and any Person which beneficially
owned, immediately prior to such Corporate Transaction, directly or indirectly,
30% or more of the Outstanding Common Stock or the Outstanding Voting
Securities, as the case may be) will beneficially own, directly or indirectly,
30% or more of, respectively, the outstanding shares of common stock of the
corporation resulting from such Corporate Transaction or the combined voting
power of the outstanding securities of such corporation entitled to vote
generally in the election of directors and (iii) individuals who were
members of the Incumbent Board will constitute at least a majority of the
members of the board of directors of the corporation resulting from such
Corporate Transaction; or

 

                                                (4)                                 the
consummation of a plan of complete liquidation or dissolution of the Company.

 

Committee:  the Organization and
Compensation Committee of the Company’s board of directors.

 

Company:  Aon Corporation, a Delaware
corporation, and its subsidiaries.

 

7

 

Earnings
per Share or EPS:  the Company’s
earnings per share from continuing operations as reported each quarter.  The Committee has the sole discretion to
approve an adjustment to EPS, in accordance with the adjustment criteria set
forth herein.

 

Fair
Market Value:  the average of
the high and low trading prices of the Company’s common stock as quoted on the
New York Stock Exchange as of the close of business on the Grant Date (or if
the New York Stock Exchange was not open for trading on that day, the next
preceding day that the New York Stock Exchange was open for trading and the
common stock of the Company was traded) as reported for such date by the Wall
Street Journal.

 

Grant
Date:  the date an Award to a
participant is approved in writing by the Committee.

 

Program:  the Leadership Performance
Program, as adopted effective January 1, 2007 and amended effective February 22,
2008.

 

Retire
or Retirement: a voluntary termination of employment at or after
the participant’s 55th birthday.

 

Settlement
Date:  the date that the Committee
determines whether the performance criteria applicable to the Performance Share
Units has been achieved or exceeded and determines the payout to
participants.  The Settlement Date shall
occur as soon as practicable following the close of the Performance Cycle.

 

Settlement
Date Value:  the Fair Market
Value of a share of the Company’s common stock on the date the Committee
determines the amount of the Performance Share Units earned.

 

Stock
Plan:  the 2001 Aon Stock Incentive
Plan, as amended and re-approved by the Company’s stockholders at the 2006
annual meeting of stockholders.

 

Total
and Permanent Disability:  for (a) US
employees, entitlement to long-term disability benefits under the Company’s
program, as amended from time to time and (b) non-US employees, as
established by applicable Company policy or as required by local law or
regulations.

 

If
a term is used but not defined, it has the meaning given such term in the Stock
Plan.

 

8

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