Document:

Exhibit 10.2

 

ACTIVISION BLIZZARD, INC.

 

2014 INCENTIVE PLAN

 

NOTICE OF STOCK OPTION AWARD

 

You have been awarded an option to purchase Common Shares of Activision Blizzard, Inc. (the “Company”), as follows:

 

·                  Your name:  Humam Sakhnini

 

·                  Total number of Shares purchasable upon exercise of the Stock Option awarded:  215,210

 

·                  Exercise Price:  US$20.10 per Share

 

·                  Date of Grant:  November 14, 2014

 

·                  Expiration Date:  November 14, 2024

 

·                  Grant ID:  01400119

 

·                  Your Award of the Stock Option is governed by the terms and conditions set forth in:

 

·                  this Notice of Stock Option Award;

 

·                  the Stock Option Award Terms attached hereto as Exhibit A (the “Award Terms”); and

 

·                  the Company’s 2014 Incentive Plan, the receipt of a copy of which you hereby acknowledge.

 

·                  Schedule for Vesting:  Except as otherwise provided under the Award Terms, the Stock Option awarded to you will vest and become exercisable as follows, provided you remain continuously employed by the Company or one of its subsidiaries through the applicable vesting date:

 

	
Date of Vesting
    	
 
    	
No. of Shares
   Vesting at Vesting
   Date
    	
 
    
	
March 30, 2017
    	
 
    	
143,475
    	
 
    
	
March 30, 2018
    	
 
    	
71,735
    	
 
    

 

·                  Please sign and return to the Company this Notice of Stock Option Award, which bears an original signature on behalf of the Company.  You are urged to do so promptly.

 

 

·                  Please return the signed Notice of Stock Option Award to the Company at:

 

Activision Blizzard, Inc.
 3100 Ocean Park Boulevard
 Santa Monica, CA 90405
 Attn:  Stock Plan Administration

 

·                  By accepting the Award, you are deemed to be bound by the terms and conditions set forth in the 2014 Incentive Plan, this Notice of Stock Option Award and the Award Terms.

 

You should retain the enclosed duplicate copy of this Notice of Stock Option Award for your records.

 

Any capitalized term used but not otherwise defined herein shall have the meaning ascribed to such term in the Award Terms.

 

	
 
    	
ACTIVISION   BLIZZARD, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/ Chris B.   Walther
    
	
 
    	
Chris B. Walther
    
	
 
    	
Chief Legal   Officer
    
	
 
    	
 
    
	
 
    	
Date:
    	
12/15/2014
    

 

 

	
ACCEPTED   AND AGREED:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
/s/ Humam Sakhini
    	
 
    
	
Humam   Sakhnini
    	
 
    
	
 
    	
 
    
	
Date:
    	
12/16/2014
    	
 
    
			

 

2

 

EXHIBIT A

 

ACTIVISION BLIZZARD, INC.

 

2014 INCENTIVE PLAN

 

STOCK OPTION AWARD TERMS

 

1.                                      Definitions.

 

(a)                                 For purposes of these Award Terms, the following terms shall have the meanings set forth below:

 

“Award” means the award described on the Grant Notice.

 

“Cause” (i) shall have the meaning given to such term in any employment agreement or offer letter between the Holder and any entity in the Company Group in effect at the time of the determination or (ii) if the Holder is not then party to any agreement or offer letter with any entity in the Company Group or any such agreement or offer letter does not contain a definition of “cause,” shall mean a good faith determination by the Company that the Holder (A) engaged in misconduct or gross negligence in the performance of his or her duties or willfully and continuously failed or refused to perform any duties reasonably requested in the course of his or her employment; (B) engaged in fraud, dishonesty, or any other conduct that causes, or has the potential to cause, harm to any entity in the Company Group, including its business reputation or financial condition; (C) violated any lawful directives or policies of the Company Group or any applicable laws, rules or regulations; (D) materially breached his or her employment agreement, proprietary information agreement or confidentiality agreement with any entity in the Company Group; (E) was convicted of, or pled guilty or no contest to, a felony or crime involving dishonesty or moral turpitude; or (F) breached his or her fiduciary duties to the Company Group.

 

“Common Shares” means the shares of common stock, par value $0.000001 per share, of the Company or any security into which such Common Shares may be changed by reason of any transaction or event of the type referred to in Section 9 hereof.

 

“Company” means Activision Blizzard, Inc. and any successor thereto.

 

“Company Group” means the Company and its subsidiaries.

 

“Company-Sponsored Equity Account” means an account that is created with the Equity Account Administrator in connection with the administration of the Company’s equity plans and programs, including the Plan.

 

“Date of Grant” means the Date of Grant of the Award set forth on the Grant Notice.

 

“Disability” (i) shall have the meaning given to such term in, or otherwise be determined in accordance with, any employment agreement or offer letter between the Holder and any entity in the Company Group in effect at the time of the determination or (ii) if the Holder is not then party to any agreement or offer letter with any entity in the Company Group or

 

 

any such agreement or offer letter does not contain a definition of “disability” or otherwise provide a method for determining whether the Holder is disabled, shall mean the Holder is receiving benefits under any long-term disability plan of the Company Group then in effect.

 

“Employment Violation” means any material breach by the Holder of his or her employment agreement with any entity in the Company Group for so long as the terms of such employment agreement shall apply to the Holder (with any breach of the post-termination obligations contained therein deemed to be material for purposes of this definition).

 

“Equity Account Administrator” means the brokerage firm utilized by the Company from time to time to create and administer accounts for participants in the Company’s equity plans and programs, including the Plan.

 

“Exercise Price” means the Exercise Price set forth on the Grant Notice.

 

“Exercise Rules and Regulations” means (i) the Securities Act or any comparable federal securities law and all applicable state securities laws, (ii) the requirements of any securities exchange, securities association, market system or quotation system on which Common Shares are then traded or quoted, (iii) any restrictions on transfer imposed by the Company’s certificate of incorporation or bylaws, and (iv) any policy or procedure the Company has adopted with respect to the trading of its securities, in each case as in effect on the date of the intended transaction.

 

“Expiration Date” means the Expiration Date set forth on the Grant Notice.

 

“Grant Notice” means the Notice of Stock Option Award to which these Award Terms are attached as Exhibit A.

 

“Holder” means the recipient of the Award named on the Grant Notice.

 

“Look-back Period” means, with respect to any Employment Violation by the Holder, the period beginning on the date which is 12 months prior to the date of such Employment Violation by the Holder and ending on the date of computation of the Recapture Amount with respect to such Employment Violation.

 

“Option” means the Stock Option to purchase Common Shares awarded to the Holder on the terms and conditions described in the Grant Notice and these Award Terms.

 

“Plan” means the 2014 Incentive Plan, as amended from time to time.

 

“Recapture Amount” means, with respect to any Employment Violation by the Holder, the gross gain realized or unrealized by the Holder upon all exercises of the Stock Option during the Look-back Period with respect to such Employment Violation, which gain shall be calculated as the sum of:

 

(i)                                     if the Holder has exercised any portion of the Stock Option during such Look-back Period and sold any of the Shares acquired on exercise thereafter, an amount equal to (A) the sum of the sales price for all such Shares sold minus (B) the aggregate Exercise Price for such Shares; plus

 

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(ii)                                  if the Holder has exercised any portion of the Stock Option during such Look-back Period and not sold all of the Shares acquired on exercise thereafter, an amount equal to the product of (A) the greatest of the following, minus the Exercise Price: (1) the Market Value per Share of Common Shares on the date of exercise, (2) the arithmetic average of the per share closing sales prices of Common Shares as reported on NASDAQ for the 30 trading day period ending on the trading day immediately preceding the date of the Company’s written notice of its exercise of its rights under Section 12 hereof, or (3) the arithmetic average of the per share closing sales prices of Common Shares as reported on NASDAQ for the 30 trading day period ending on the trading day immediately preceding the date of computation times (B) the number of Shares as to which the Stock Option was exercised and which were not sold.

 

“Section 409A” means Section 409A of the Code and the guidance and regulations promulgated thereunder.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Shares” means the Common Shares purchasable upon exercise of the Stock Option.

 

“Withholding Taxes” means any taxes, including, but not limited to, social security and Medicare taxes and federal, state and local income taxes, required under any applicable law to be withheld from amounts otherwise payable to the Holder.

 

(b)                                 Any capitalized term used but not otherwise defined herein shall have the meaning ascribed to such term in the Plan.

 

2.                                      Expiration.  The Stock Option shall expire on the Expiration Date and, after such expiration, shall no longer be exercisable.

 

3.                                      Vesting and Exercise.

 

(a)                                 Vesting Schedule.  Except as otherwise set forth in these Award Terms, the Stock Option shall vest, and thereupon become exercisable, in accordance with the “Schedule for Vesting” set forth on the Grant Notice.

 

(b)                                 Exercisable Only by the Holder.  Except as otherwise permitted under the Plan or Section 11 hereof, the Stock Option may be exercised during the Holder’s lifetime only by the Holder or, in the event of the Holder’s legal incapacity to do so, by the Holder’s guardian or legal representative acting on behalf of the Holder in a fiduciary capacity under court supervision and/or applicable law.

 

(c)                                  Procedure for Exercise.  The Stock Option may be exercised by the Holder as to all or any of the Shares as to which the Stock Option has vested (i) by following the procedures for exercise established by the Equity Account Administrator and posted on the Equity Account Administrator’s website from time to time or (ii) with the Company’s consent, by giving the Company written notice of exercise, in such form as may be prescribed by the Company from time to time, specifying the number of Shares to be purchased.

 

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(d)                                 Payment of Exercise Price.  To be valid, any exercise of the Stock Option must be accompanied by full payment of the aggregate Exercise Price of the Shares being purchased.  The Company shall determine the method or methods the Holder may use to make such payment, which may include any of the following:  (i) by bank check or certified check or wire transfer of immediately available funds, (ii) if securities of the Company of the same class as the Shares are then traded or quoted on a national securities exchange, the Nasdaq Stock Market, Inc. or a national quotation system sponsored by the National Association of Securities Dealers, Inc., through the delivery of irrevocable written instructions, in a form acceptable to the Company, to the Equity Account Administrator (or, with the Company’s consent, such other brokerage firm as may be requested by the person exercising the Stock Option) to sell some or all of the Shares being purchased upon such exercise and to thereafter deliver promptly to the Company from the proceeds of such sale an amount in cash equal to the aggregate Exercise Price of the Shares being purchased, (iii) by tendering previously owned shares (valued at their Market Value per Share as of the date of tender), (iv) through the withholding of Shares otherwise deliverable upon exercise, or (v) any combination of (i), (ii), (iii) or (iv) above or any other manner permitted pursuant to the Plan.

 

(e)                                  No Fractional Shares.  In no event may the Stock Option be exercised for a fraction of a Share.

 

(f)                                   No Adjustment for Dividends or Other Rights.  No adjustment shall be made for cash dividends or other rights for which the record date is prior to the date as of which the issuance or transfer of Shares to the person entitled thereto has been evidenced on the books and records of the Company pursuant to clause (ii) of Section 3(g) hereof following exercise of the Stock Option.

 

(g)                                  Issuance and Delivery of Shares.  As soon as practicable (and, in any event, within 30 days) after the valid exercise of the Stock Option, the Company shall (i) effect the issuance or transfer of the Shares purchased upon such exercise, (ii) cause the issuance or transfer of such Shares to be evidenced on the books and records of the Company, and (iii) cause such Shares to be delivered to a Company-Sponsored Equity Account in the name of the person entitled to such Shares (or, with the Company’s consent, such other brokerage account as may be requested by such person); provided, however, that, in the event such Shares are subject to a legend as set forth in Section 15 hereof, the Company shall instead cause a certificate evidencing such Shares and bearing such legend to be delivered to the person entitled thereto.

 

(h)                                 Partial Exercise.  If the Stock Option shall have been exercised with respect to less than all of the Shares purchasable upon exercise of the Stock Option, the Company shall make a notation in its books and records to reflect the partial exercise of the Stock Option and the number of Shares that thereafter remain available for purchase upon exercise of the Stock Option.

 

4.                                      Termination of Employment.

 

(a)                                 Cause.  In the event that the Holder’s employment is terminated by any entity in the Company Group for Cause, as of the date of such termination of employment the Stock Option shall (i) cease to vest, if not then fully vested, (ii) no longer be exercisable, whether or not vested, and (iii) be immediately cancelled.

 

A-4

 

 

(b)                                 Death or Disability. Unless the Committee determines otherwise, in the event that the Holder dies while employed by any entity in the Company Group or the Holder’s employment with any entity in the Company Group is terminated due to the Holder’s Disability, the Stock Option shall (i) cease to vest as of the date of the Holder’s death or the first date of the Holder’s Disability (as determined by the Committee), as the case may be, and (ii) to the extent vested as of the date of the Holder’s death or the first date of the Holder’s Disability, as the case may be, remain exercisable in accordance with these Award Terms until the earlier of (A) the first anniversary of the date of the Holder’s death or termination of employment, as the case may be, and (B) the Expiration Date, after which the Stock Option shall no longer be exercisable and shall be immediately cancelled.  To the extent not vested as of the date of the Holder’s death or the first date of the Holder’s Disability, as the case may be, the Stock Option shall be immediately cancelled and shall no longer be exercisable.

 

(c)                                  Other.  Unless the Committee determines otherwise, in the event that the Holder’s employment is terminated for any reason not addressed by Section 4(a) or 4(b) hereof, the Stock Option shall (i) cease to vest as of the date of such termination of employment and (ii) to the extent vested as of the date of such termination of employment, be exercisable in accordance with these Award Terms until the earlier of (A) the 30th day after the date of such termination of employment (or, if the Holder is prohibited from exercising the Stock Option during some or all of the 30-day period following such termination date because such exercise would not be in compliance with the Exercise Rules and Regulations, whatever later date may be determined in accordance with a Committee-approved policy) and (B) the Expiration Date, after which the Stock Option shall no longer be exercisable and shall be immediately cancelled.  To the extent not vested as of the date of such termination of service, the Stock Option shall be immediately cancelled and shall no longer be exercisable.

 

5.                                      Tax Withholding.  The Company shall have the right to require the Holder to satisfy any Withholding Taxes resulting from the exercise (in whole or in part) of the Stock Option, the issuance or transfer of any Shares upon exercise of the Stock Option or otherwise in connection with the Award at the time such Withholding Taxes become due.  The Company shall determine the method or methods the Holder may use to satisfy any Withholding Taxes contemplated by this Section 5, which may include any of the following:  (a) by delivery to the Company of a bank check or certified check or wire transfer of immediately available funds; (b) if securities of the Company of the same class as the Shares are then traded or quoted on a national securities exchange, the Nasdaq Stock Market, Inc. or a national quotation system sponsored by the National Association of Securities Dealers, Inc., through the delivery of irrevocable written instructions, in a form acceptable to the Company, to the Equity Account Administrator (or, with the Company’s consent, such other brokerage firm as may be requested by the person exercising the Stock Option) to sell some or all of the Shares being purchased upon such exercise and to thereafter deliver promptly to the Company from the proceeds of such sale an amount in cash equal to the aggregate amount of such Withholding Taxes; (c) by tendering previously owned shares (valued at their Market Value per Share as of the date of tender); (d) through the withholding of Shares otherwise deliverable upon exercise; or (e) by any combination of (a), (b), (c) or (d) above.  Notwithstanding anything to the contrary contained herein, any entity in the Company Group shall have the right to ensure that all Withholding Taxes contemplated by this Section 5 are satisfied by (i) withholding from the Holder’s compensation, (ii) withholding Shares otherwise then deliverable (in which case the Holder will be deemed to have been issued the full number of Shares purchased upon exercise of the Stock

 

A-5

 

Option), and (iii) arranging for the sale, on the Holder’s behalf, of Shares otherwise then deliverable.  The Company shall have no obligation to deliver any Shares upon exercise of the Stock Option unless and until all Withholding Taxes contemplated by this Section 5 have been satisfied.

 

6.                                      Deemed Agreement.  By accepting the Award, the Holder is deemed to be bound by the terms and conditions set forth in the Plan, the Grant Notice and these Award Terms.

 

7.                                      Reservation of Shares.  The Company shall at all times reserve for issuance or delivery upon exercise of the Stock Option such number of Common Shares as shall be required for issuance or delivery upon exercise thereof.

 

8.                                      Committee Discretion.  Except as may otherwise be provided in the Plan, the Committee shall have sole discretion to (a) interpret any provision of the Plan, the Grant Notice and these Award Terms, (b) make any determinations necessary or advisable for the administration of the Plan and the Award, and (c) waive any conditions or rights of the Company under the Award, the Grant Notice or these Award Terms.  Without intending to limit the generality or effect of the foregoing, any decision or determination to be made by the Committee pursuant to these Award Terms, including whether to grant or withhold any consent, shall be made by the Committee in its sole and absolute discretion, subject only to the terms of the Plan.  Subject to the terms of the Plan, the Committee may amend the terms of the Award prospectively or retroactively; however, no such amendment may materially and adversely affect the rights of the Holder taken as a whole without the Holder’s consent.  Without intending to limit the generality or effect of the foregoing, the Committee may amend the terms of the Award (i) in recognition of unusual or nonrecurring events (including, without limitation, events described in Section 9 hereof) affecting any entity in the Company Group or any of the Company’s other affiliates or the financial statements of any entity in the Company Group or any of the Company’s other affiliates, (ii) in response to changes in applicable laws, regulations or accounting principles and interpretations thereof, or (iii) to prevent the Award from becoming subject to Section 409A.

 

9.                                      Adjustments.  Notwithstanding anything to the contrary contained herein, pursuant to Section 13 of the Plan, the Committee will make or provide for such adjustments to the Award as are equitably required to prevent dilution or enlargement of the rights of the Holder that otherwise would result from (a) any stock dividend, extraordinary dividend, stock split, combination of shares, recapitalization or other change in the capital structure of the Company, (b) any change of control, merger, consolidation, spin-off, split-off, spin-out, split-up, reorganization, partial or complete liquidation or other distribution of assets, or issuance of rights or warrants to purchase securities, or (c) any other corporate transaction or event having an effect similar to any of the foregoing.  Moreover, in the event of any such transaction or event, the Committee, in its discretion, may provide in substitution for the Award such alternative consideration (including, without limitation, cash), if any, as it may determine to be equitable in the circumstances and may require in connection therewith the surrender of the Award.

 

10.                               Registration and Listing.  Notwithstanding anything to the contrary contained herein, the Stock Option may not be exercised, and the Stock Option and Shares purchasable upon exercise of the Stock Option may not be purchased, sold, assigned, transferred, pledged,

 

A-6

 

hypothecated or otherwise disposed of or encumbered in any way, unless such transaction is in compliance with all Exercise Rules and Regulations.  The Company is under no obligation to register, qualify or list, or maintain the registration, qualification or listing of, the Stock Option or Shares with the SEC, any state securities commission or any securities exchange, securities association, market system or quotation system to effect such compliance.  The Holder shall make such representations and furnish such information as may be appropriate to permit the Company, in light of the then existence or non-existence of an effective registration statement under the Securities Act relating to the Stock Option or Shares, to issue or transfer the Stock Option or Shares in compliance with the provisions of that or any comparable federal securities law and all applicable state securities laws.  The Company shall have the right, but not the obligation, to register the issuance or resale of the Stock Option or Shares under the Securities Act or any comparable federal securities law or applicable state securities law.

 

11.                               Transferability.  Subject to the terms of the Plan and only with the Company’s consent, the Holder may transfer all or part of the Stock Option for estate planning purposes or pursuant to a domestic relations order; provided, however, that any transferee shall be bound by all of the terms and conditions of the Plan, the Grant Notice and these Award Terms and shall execute an agreement in form and substance satisfactory to the Company in connection with such transfer; and provided further that the Holder will remain bound by the terms and conditions of the Plan, the Grant Notice and these Award Terms.  Except as otherwise permitted under the Plan or this Section 11, the Stock Option shall not be transferable by the Holder other than by will or the laws of descent and distribution.

 

12.                               Employment Violation.  The terms of this Section 12 shall apply to the Stock Option if the Holder is or becomes subject to an employment agreement with any entity in the Company Group.  In the event of an Employment Violation, the Company shall have the right to require (a) the termination and cancellation of the Stock Option, whether vested or unvested, and (b) payment by the Holder to the Company of the Recapture Amount with respect to such Employment Violation; provided, however, that, in lieu of payment by the Holder to the Company of the Recapture Amount, the Holder, in his or her discretion, may tender to the Company the Shares acquired upon exercise of the Stock Option during the Look-back Period with respect to such Employment Violation (without any consideration from the Company in exchange therefor).  Any such termination of the Stock Option and payment of the Recapture Amount, as the case may be, shall be in addition to, and not in lieu of, any other right or remedy available to the Company arising out of or in connection with such Employment Violation, including, without limitation, the right to terminate the Holder’s employment if not already terminated and to seek injunctive relief and additional monetary damages.

 

13.                               Compliance with Applicable Laws and Regulations and Company Policies and Procedures.

 

(a)                                 The Holder is responsible for complying with (i) any federal, state and local taxation laws applicable to the Holder in connection with the Award and (ii) all Exercise Rules and Regulations.

 

(b)                                 The Award is subject to the terms and conditions of any policy requiring or permitting the Company to recover any gains realized by the Holder in connection with the

 

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Award, including, without limitation, the Policy on Recoupment of Performance-Based Compensation Related to Certain Financial Restatements.

 

14.                               Section 409A.  As the Exercise Price is equal to the fair market value of a Share on the Date of Grant, payments contemplated with respect to the Award are intended to be exempt from Section 409A, and all provisions of the Plan, the Grant Notice and these Award Terms shall be construed and interpreted in a manner consistent with the requirements for avoiding taxes or penalties under Section 409A.  Notwithstanding the foregoing, (a) nothing in the Plan, the Grant Notice and these Award Terms shall guarantee that the Award is not subject to taxes or penalties under Section 409A and (b) if any provision of the Plan, the Grant Notice or these Award Terms would, in the reasonable, good faith judgment of the Company, result or likely result in the imposition on the Holder or any other person of taxes, interest or penalties under Section 409A, the Committee may, in its sole discretion, modify the terms of the Plan, the Grant Notice or these Award Terms, without the consent of the Holder, in the manner that the Committee may reasonably and in good faith determine to be necessary or advisable to avoid the imposition of such taxes, interest or penalties; provided, however, that this Section 13 does not create an obligation on the part of the Committee or the Company to make any such modification, and in no event shall the Company be liable for the payment of or gross up in connection with any taxes, interest or penalties owed by the Holder pursuant to Section 409A.

 

15.                               Legend.  The Company may, if determined by it based on the advice of counsel to be appropriate, cause any certificate evidencing Shares to bear a legend substantially as follows:

 

“THE SECURITIES REPRESENTED HEREBY MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE ‘ACT’), OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT.”

 

16.                               No Right to Continued Employment.  Nothing contained in the Grant Notice or these Award Terms shall be construed to confer upon the Holder any right to be continued in the employ of any entity in the Company Group or derogate from any right of any entity in the Company Group to retire, request the resignation of, or discharge the Holder at any time, with or without Cause.

 

17.                               No Rights as Stockholder.  No holder of the Stock Option shall, by virtue of the Grant Notice or these Award Terms, be entitled to any right of a stockholder of the Company, either at law or in equity, and the rights of any such holder are limited to those expressed, and are not enforceable against the Company except to the extent set forth, in the Plan, the Grant Notice or these Award Terms.

 

18.                               Severability.  In the event that one or more of the provisions of these Award Terms shall be invalidated for any reason by a court of competent jurisdiction, any provision so invalidated shall be deemed to be separable from the other provisions hereof, and the remaining provisions hereof shall continue to be valid and fully enforceable.

 

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19.                               Venue and Governing Law.

 

(a)                                 For purposes of litigating any dispute that arises directly or indirectly from the relationship of the parties evidenced by the grant of the Stock Option or these Award Terms, the parties submit and consent to the exclusive jurisdiction of the State of California and agree that such litigation shall be conducted only in the courts of Los Angeles County, California or the federal courts of the United States for the Central District of California, and no other courts, regardless of where the grant of the Stock Option is made and/or to be performed.

 

(b)                                 To the extent that federal law does not otherwise control, the validity, interpretation, performance and enforcement of the Grant Notice and these Award Terms shall be governed by the laws of the State of Delaware, without giving effect to principles of conflicts of laws thereof.

 

20.                               Successors and Assigns.  The provisions of the Grant Notice and these Award Terms shall be binding upon and inure to the benefit of the Company, its successors and assigns, and the Holder and, to the extent applicable, the Holder’s permitted assigns under Section 3(b) hereof and the Holder’s estate or beneficiaries as determined by will or the laws of descent and distribution.

 

21.                               Notices.

 

(a)                                 Any notice or other document which the Holder may be required or permitted to deliver to the Company pursuant to or in connection with the Grant Notice or these Award Terms shall be in writing, and may be delivered personally or by mail, postage prepaid, or overnight courier, addressed to the Company, at its office at 3100 Ocean Park Boulevard, Santa Monica, California 90405, Attn: Stock Plan Administration, or such other address as the Company by notice to the Holder may designate in writing from time to time.  Notices shall be effective upon delivery.

 

(b)                                 Any notice or other document which the Company may be required or permitted to deliver to the Holder pursuant to or in connection with the Grant Notice or these Award Terms shall be in writing, and may be delivered personally or by mail, postage prepaid, or overnight courier, addressed to the Holder at the address shown on any employment agreement or offer letter between the Holder and any entity in the Company Group in effect at the time, or such other address as the Holder by notice to the Company may designate in writing from time to time.  The Company may also, in its sole discretion, deliver any such document to the Holder electronically via an e-mail to the Holder at his or her Company-provided email address or through a notice delivered to such e-mail address that such document is available on a website established and maintained on behalf of the Company or a third party designated by the Company, including, without limitation, the Equity Account Administrator.  Notices shall be effective upon delivery.

 

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22.                               Conflict with Employment Agreement or Plan.  In the event of any conflict between the terms of any employment agreement or offer letter between the Holder and any entity in the Company Group in effect at the time and the terms of the Grant Notice or these Award Terms, the terms of the Grant Notice or these Award Terms, as the case may be, shall control.  In the event of any conflict between the terms of any employment agreement or offer letter between the Holder and any entity in the Company Group in effect at the time, the Grant Notice or these Award Terms and the terms of the Plan, the terms of the Plan shall control.

 

23.                               Imposition of Other Requirements.  The Company reserves the right to impose other requirements on the Holder’s participation in the Plan, on the Stock Option and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable in order to facilitate the administration of the Plan, and to require the Holder to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.

 

24.                               Waiver.  The Holder acknowledges that a waiver by the Company of a breach of any provision of these Award Terms shall not operate or be construed as a waiver of any other provision of these Award Terms, or of any subsequent breach by the Holder or any other holder of an equity award from the Company.

 

A-10WFC-Q1-2015-EX10A

Exhibit 10(a)
                    
WELLS FARGO BONUS PLAN

	
	
	

The Plan is amended effective January 1, 2015 and supersedes the Wells Fargo Bonus Plan originally effective January 1, 2000, subsequently clarified effective January 1, 2004 and January 1, 2006, amended and restated effective January 1, 2008, amended effective January 1, 2009, amended effective January 1, 2010, and amended effective January 1, 2011.  Participants, incentive opportunities and Performance Measures shall be identified annually.

PURPOSE OF THE PLAN 

The purpose of the Wells Fargo Bonus Plan (the “Plan”) is to motivate a select group of management, supervisory and individual contributors to achieve superior results for Wells Fargo & Company and its subsidiaries (“Wells Fargo”).  The Plan is a discretionary incentive plan designed to provide Participants with incentive compensation opportunities that focus on individual accountability for appropriate risk management and full compliance with applicable laws and regulations, as well as individual and team contributions through the measurement of meaningful performance goals that are consistent with Wells Fargo’s corporate and business unit objectives. 

The determination and payment of any incentive under the Plan is subject to the conditions and restrictions imposed under any applicable law, rules and regulations.  A Participant’s rights to or receipt of compensation under the Plan may be limited, modified, cancelled or recovered to ensure compliance with all such applicable laws, rules, regulations and guidance that may be issued from time to time.   In addition, the Plan Administrator and/or Wells Fargo (subject to the authority of the Human Resources Committee of Wells Fargo & Company’s Board of Directors (the “HRC”)) has full discretionary authority to adjust or amend a Participant’s incentive opportunity or recommended payout under the Plan at any time.

This document is comprised of three sections:

		
	1.
	Plan Eligibility

		
	2.
	Incentive Components

		
	3.
	Plan Administration

For questions related to this document, policies or the administration of the Plan, please contact your Human Resources representative.  
    
PLAN ELIGIBILITY

A.    Plan Eligibility

Wells Fargo management, supervisors, individual contributors and other groups of team members who are in a position to control or influence business results are eligible to participate in the Plan (“Participants”). Business unit managers, in consultation with their Human Resources partners, are responsible for identifying Participants within their business units who are eligible to participate in the Plan. 

B.    Plan Qualifiers.
For purposes of this Plan, a “Disqualifying Factor” is an event, the occurrence of which immediately invalidates a Participant’s opportunity for an incentive award. If a Participant’s incentive opportunity is subject to a Disqualifying Factor and the event occurs, the Participant shall have no incentive opportunity for that particular Plan Year.  

		
	1.
	A Plan Participant must be employed by Wells Fargo as of the last day of the Plan Year in order to be eligible for an incentive award under the Plan, unless otherwise noted below or in the Plan Administration section. Exceptions may be made if the termination is a result of the Participant’s retirement, death or a qualifying event under the Wells Fargo & Company 

Salary Continuation Pay Plan as set forth in the leave of absence or death or retirement policies in the Plan Administration section.

		
	2.
	A Plan Participant must receive a performance rating of 3 or greater for the applicable Plan Year to be considered for an incentive award, unless approved for consideration by the Operating Committee member and Senior Human Resources Leader for the team member’s business group.  

		
	3.
	The Corporate Performance Goal (as determined by the HRC) (the “Corporate Performance Goal”) must be met for payout to occur under this Plan.  If the Corporate Performance Goal is not met, no bonuses will be paid unless specifically authorized by the HRC.   In addition, if Wells Fargo achieves or exceeds the Corporate Performance Goal, the HRC reserves the authority to adjust bonuses, up or down, in its discretion.

Business unit managers should work with their Human Resources representative to identify any other Disqualifying Factors that may impact a Participant’s eligibility under the Plan.

In addition to the Disqualifying Factors described above, a Participant’s incentive opportunity under the Plan may be adjusted or denied, regardless of meeting individual Performance Measures or the Company meeting the Corporate Performance Goal, for unsatisfactory performance or non-compliance with or violation of Wells Fargo’s:

		
	1.
	Code of Ethics and Business Conduct;

		
	2.
	Information Security Policy, and/or

3.    Risk Management Accountability Policy.

INCENTIVE COMPONENTS

Awards under the Plan are made in the sole and absolute discretion of Wells Fargo and the Plan Administrator, with recommendations from business unit managers and approvals from senior management.  There is no guarantee that an incentive of any amount will be awarded to any Participant.  To the extent an incentive may be payable, incentive recommendations should be consistent with the following guidelines:

	
		
	Incentive
Opportunity
Ranges
	The Incentive Opportunity Range is the range of possible payout amounts.  For purposes of the Plan, the bottom of the Incentive Opportunity Range is always 0; however, each position has a pre-identified threshold, target and maximum incentive opportunity. The threshold and maximum are a range around the target:

•    Threshold   - Generally, 50% of the target award
- Satisfactory performance that falls short of target.

•    Target        - 100% of the target award
- Good, commendable on plan performance.

•    Maximum   - Generally, 150% of the target award
                               - Performance that exceeds expectations. 

	Performance Measures

	A Performance Measure defines the action or resultant performance expected of a Participant in a given Plan Year and should always reinforce that control, profitability and growth must come in that order.  In defining a Performance Measure, careful consideration should be given to identifying the excessive risks the Participant might be incented to take that Wells Fargo would not want and the associated time horizons.  Performance Measures are commonly referred to as “MBOs” or Management Business Objectives. 

Performance Measures may vary from year to year, from position to position or from one Participant to another.  Typically each Participant should have three to five measures set by their business unit manager.

Performance Measures should be established for each Participant to be effective as of the beginning of the Plan Year.   All Performance Measures and incentive recommendations are subject to review and modification at higher levels of the organization.  

Some characteristics of Performance Measures:

•    Performance Measures should include identifiable activities and/or results for each level of achievement.  Most Performance Measures should have at least three defined Performance Levels: Threshold, Target and Maximum.

•    At least one Performance Measure should have a financial objective that is linked to business group objectives.  This measure can be set up as a distinct MBO or an additional Plan Qualifier.

•    One Performance Measure may be based on the Corporate Performance Goal.  The appropriate weighting will be determined by the business unit manager.  

	
		
	 
	

For Control Functions (including Compliance, Risk Management, Finance, Human Resources and Legal), MBO guidelines are developed at the Corporate level to ensure appropriate and consistent risk and control-based MBOs commensurate with the objectivity and independence required by these roles.  

The Plan Administrator may also designate other roles that require MBO guidelines developed at the Corporate Level to ensure appropriate oversight of the risks and compliance requirements presented by the designated roles.

	Measure Weighting
	Performance Measures may be weighted equally or weighted individually to correspond with the Participant’s accountability, strategic and tactical priorities, and/or the difficulty of achieving the goal. 

The scores for multiple Performance Measures are aggregated to determine the final incentive recommendation, subject to the Plan Qualifiers and other terms of the Plan.  

	
		
	Award Calculation 
and Payment

	Performance shall be evaluated as soon as practicable following completion of the Plan Year by the Participant’s business unit manager and/or any other manager responsible for reviewing incentive recommendations in the Participant’s business unit.  Lines of business are allocated incentive compensation pools used as guidelines to determine the appropriate amount of aggregate incentive compensation that should be paid at the business level.  Establishment of the pool is not a guarantee that bonuses will be paid to Participants nor does it guarantee the amount of any bonus payable to Participants.  Since bonuses under the Plan are discretionary, lines of business may pay out all or a portion of their pools, subject to the terms and conditions of the Plan.

All awards under the Plan are subject to the following guidelines:

•    Each Performance Measure is evaluated individually following the end of the Plan Year.  Provided the Plan Qualifiers and other terms of the Plan have been met, the Participant’s incentive recommendation for a Plan Year is determined by adding the values determined for each Performance Measure taking into consideration any assigned weighting.  The incentive recommendation should be within the Incentive Opportunity Range identified for the Participant’s position, unless the Participant’s business unit manager or the Plan Administrator exercise their discretion to modify the award as described below. 

•    Without limiting the discretion of Wells Fargo or the Plan Administrator, a Participant’s incentive recommendation may be determined to be 0 or increased by up to 15% of the Incentive Opportunity Range, on a discretionary basis by the Participant’s business unit manager, subject to the approval of the Group Head for the Participant’s line of business and the Plan Administrator.  In no event may an award exceed 115% of the maximum identified in the Incentive Opportunity Range unless approved by the Plan Administrator.

	
		
	

	

•    Incentive awards are generally calculated as a percentage of a Participant’s base salary and are subject to approval of the Group Head for the Participant’s line of business.
  
•    Incentive awards will be paid no later than March 15th of the calendar year following the end of the Plan Year. 

•    Awards may be paid in the form of short-term cash or long-term awards (cash or equity), or a combination thereof, in the HRC’s discretion and may be adjusted to match the time horizon of risk outcomes.  To the extent the HRC directs the Company to pay all or a portion of an award in the form of an equity-based award under the Wells Fargo & Company Long-Term Incentive Compensation Plan (the “LTICP”), the equity-based award will in all cases be conditioned upon and subject to the approval of the HRC and be subject to such terms and conditions as approved by the HRC in accordance with the provisions of the LTICP and reflected in the applicable award agreement.

PLAN ADMINISTRATION

		
	A.
	Plan Administrator

The Plan Administrator is the Executive Vice President and Director of Human Resources.  The Plan Administrator has full discretionary authority to administer and interpret the Plan and may, at any time, delegate to personnel of Wells Fargo such responsibilities as he or she considers appropriate to facilitate the day-to-day administration of the Plan.  The Plan Administrator also has the full discretionary authority to adjust or amend a Participant’s incentive opportunity or recommended payout under the Plan at any time subject to the authority of the HRC to adjust bonuses as described herein. 

Plan commitments or interpretations (oral or written) by anyone other than the Plan Administrator or one of his/her delegates are invalid and will have no force or effect upon the policies and procedures set forth in this Plan.

		
	B.
	Plan Year

Participant performance is measured and financial records are kept on a “Plan Year” basis.  The Plan Year is the 12-month period beginning each January 1 and ending on the following December 31, unless the Plan is modified, suspended or terminated.

		
	C.
	Disputes

If a Participant has a dispute regarding his/her incentive award under the Plan, the Participant should attempt to resolve the dispute with the manager of his/her business unit.  If this is not successful, the Participant should prepare a written request for review addressed to the Participant’s Human Resources representative. The request for review should include any facts supporting the Participant’s request as 

well as any issues or comments the Participant deems pertinent.  The Human Resources representative will send the Participant a written response documenting the outcome of this review in writing no later than 60 days following the date of the Participant’s written request. (If additional time is necessary, the Participant shall be notified in writing.) The determination of this request shall be final and conclusive upon all persons.

		
	D.
	Amendment or Termination

The Board of Directors of Wells Fargo & Company (the “Company”), the HRC, the Company’s President, any Vice Chairman, or the Director of Human Resources may amend, suspend or terminate the Plan or any incentive opportunity or recommendation at any time, for any reason.  Action taken on behalf of the Company may be taken by the Chairman, President, Director of Human Resources or Director of Compensation and Benefits of the Company. 

		
	E.
	Leaves of Absence

Incentive recommendations under the Plan may be pro-rated for Participants who go on a leave of absence provided the terms and conditions of the Plan have been satisfied, the Participant actively worked at least three months during the Plan Year and the Participant’s performance contributed towards the achievement of some or all of the Participant’s Performance Measures.  If a Participant’s performance during the Plan Year contributed towards the achievement of all of the Participant’s Performance Measures, the Participant’s incentive recommendation should be evaluated as if the Participant had not gone on leave.  Business units should apply these criteria consistently to all Participants.  

For Participants who receive notice of a qualifying event under the Wells Fargo & Company Salary Continuation Pay Plan, the Notice Period (as defined by that plan) should be considered in determining whether the Participant satisfies the three-month “actively at work” requirement.  Incentive recommendations will be determined following the end of the Plan Year and are subject to the other terms and conditions of the Plan. 

		
	F.
	Changes in Employment Status

		
	1.
	Employees (i) hired or (ii) transferred to a position that is bonus-eligible following a promotion from a non-bonus-eligible position, after the beginning of the Plan Year may be eligible to participate in the Plan.  Performance Measures should be designed accordingly.  Where Performance Measures are impractical to develop for a partial Plan Year, eligibility should be delayed until the next Plan Year.  

		
	2.
	If, during the Plan Year, a Participant transfers to another business unit or receives a promotion to a new bonus-eligible position within Wells Fargo, the former and latter business unit managers should work together to determine whether the Participant met some or all of the Performance Measures prior to the transfer or promotion and the terms and conditions of the Plan have been satisfied.  Incentive awards, if any, will be determined following the end of the Plan Year.

 
		
	G.
	Death or Retirement

In the event of a Participant’s death or retirement during the Plan Year, a Participant may be paid a pro-rated incentive award provided the Participant actively worked for at least three months during the Plan Year, met some or all of the Participant’s Performance Measures, and the terms and conditions of the Plan have been satisfied.  

		
	H.
	Withholding Taxes

Wells Fargo shall deduct from all payments under the Plan an amount necessary to satisfy federal, state or local tax withholding requirements.
    

		
	I.
	Not an Employment Contract

The Plan is not an employment contract and participation in the Plan does not alter a Participant’s at-will employment relationship with Wells Fargo.  Both the Participant and Wells Fargo are free to terminate their employment relationship at any time for any reason.  No rights in the Plan may be claimed by any person whether or not he/she is selected to participate in the Plan.  No person shall acquire any right to an accounting or to examine the books or the affairs of Wells Fargo.

		
	J.
	Assignment

No Participant shall have any right or power to pledge or assign any rights, privileges, or incentive awards provided for under the Plan.

		
	K.
	Pro-Rated Incentive Recommendations

In the event that an incentive recommendation will be pro-rated the following methodology should be used.  

The annual salary should be multiplied by the ratio of months worked during the Plan Year by the target bonus percentage.

The ratio of months worked is equal to the number of full months worked in the qualifying position divided by 12.

For example, a Participant transfers to another position on November 1st.  Their salary was $100,000 per year at the time of transfer, and they had a 10% incentive target.  They achieved all their goals at target level.  Their incentive recommendation would be:

		
	L.
	Code of Conduct

Violation of the terms or the spirit of the Plan and/or Wells Fargo’s Code of Ethics and Business Conduct by the Participant and/or the Participant’s supervisor, or other serious misconduct (including, but not limited to, gaming which is more fully discussed below), are grounds for disciplinary action, including disqualification from further participation in the Plan (including awards payable under the terms of the Plan) and/or immediate termination of employment. 

Participants are expected to adhere to ethical and honest business practices. A Participant who violates the spirit of the Plan by “gaming” the system becomes immediately ineligible to participate in the Plan.   “Gaming” is the manipulation and/or misrepresentation of sales or sales reporting in order to receive or attempt to receive compensation, or to meet or attempt to meet goals.

N.    Internal Revenue Code Section 409A

To the extent that an award is paid in cash under the Plan, Wells Fargo intends such award to qualify as a short-term deferral exempt from the requirements of Internal Revenue Code Section 409A.  In the event an award payable under the Plan does not qualify for treatment as an exempt short-term deferral, such amount will be paid in a manner that will satisfy the requirements of Internal Revenue Code Section 409A and applicable guidance thereunder.

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