Document:

EX-10.10

 

Exhibit 10.10

KEY EXECUTIVE SHORT-TERM INCENTIVE

COMPENSATION PLAN

(As amended effective January 1, 2006)

 

 

 

THE McGRAW-HILL COMPANIES, INC.

KEY EXECUTIVE SHORT-TERM INCENTIVE COMPENSATION PLAN

     The McGraw-Hill Companies, Inc. (“McGraw-Hill”), a corporation
existing under the laws of the State of New York, hereby establishes and adopts
the following Key Executive Short-Term Incentive Compensation Plan (the “Plan”)
to provide annual incentive awards to key employees of the Company, including,
in the case of executive officers and certain other key executives of the
Company, awards which are intended to qualify as “performance-based
compensation” within the meaning of Section 162(m) of the Code. The Plan is an
amendment and restatement as of January 1, 2005, of the prior McGraw-Hill 1996
Key Executive Short-Term Incentive Plan.

	1.	 	PURPOSES OF THE PLAN

     The purposes of the Plan are to provide the opportunity for incentives and
financial rewards to key employees of the Company designated by the Committee,
who, because of the extent of their responsibilities, can make significant
contributions to the Company’s performance by their ability, industry, loyalty,
leadership and individual achievement. Providing recognition and financial
rewards to such individuals based on the performance of the Company and their
contributions will advance the interests of McGraw-Hill and its shareholders
and will assist the Company in attracting and retaining management of the
highest caliber and ability.

	2.	 	DEFINITIONS

     2.1 “Award” means, subject to Section 5, the right granted to a
Participant for a Year to receive an Award Payment from the Pool in which the
Participant is participating for such Year based on the attainment of the
Performance Objectives for the Pool, the attainment of the Participant’s
Individual Performance Criteria and such other subjective or objective factors
as the Committee may determine.

     2.2 “Award Payment” means the amount paid to a Participant for a given
year in respect of an Award.

     2.3 “Beneficiary” shall mean a Participant’s beneficiary designated on a
beneficiary designation form approved by and provided to the Company or, if no
such designation is made, the Participant’s estate.

     2.4 “Board” means the Board of Directors of McGraw-Hill.

     2.5 “Cause” means the Participant’s misconduct in respect of his or her
obligations to the Company or other acts of misconduct by the Participant
occurring during the course of his or her employment, which in either case
results in or could reasonably be expected to result in material damage to the
property, business or reputation of the Company; provided that in no
event shall unsatisfactory job performance alone be deemed to be Cause; and
provided further that no termination of employment that is
carried out at the request of a person seeking to
accomplish a Change in Control or otherwise in anticipation of a Change in
Control shall be deemed to be for Cause.

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     2.6 “Change in Control” has the meaning set forth in Section 4.7(c) below.

     2.7 “Change-in-Control Award Payment” means the pro rata portion, based on
the portion of the Year elapsed at the Change-in-Control Effective Date, of the
average of, for each of the preceding three Years, the Participant’s Award
Payment or, for any such Year in which the Participant did not participate in
the Plan, the actual amount paid to the Participant under any other short-term
incentive plan of the Company. For purposes of determining a Participant’s
Change-in-Control Award Payment, if the Participant did not participate in a
short-term incentive plan of the Company during one or more of the preceding
three Years, such average shall be deemed to be equal to the Participant’s
Award Payment (or other short-term incentive award payment) or the average of
the Participant’s Award Payments (or other payments), as applicable, for such
Year or Years in which the Participant participated in the Plan (or other
short-term incentive award plan). If any such Award Payment (or other
short-term incentive award payment) was reduced because the Participant
commenced employment with the Company after the start of the applicable Year,
then the amount of such Award Payment (or other payment) shall be annualized
for purposes of determining such average. If the Participant did not
participate in a short-term incentive plan of the Company during the preceding
three Years, then the Participant’s Change-in-Control Award Payment shall be
equal to (x) the Participant’s annual base salary, multiplied by (y) the
average of the Change-in-Control Award Payments to be paid to the other
Participants at the same grade level and in a similar business unit as the
Participant (or, in the case of a Covered Participant, the other Covered
Participants) as a result of the Change in Control, divided by (z) the average
of such other Participants’ (or Covered Participants’) annual base salaries.

     2.8 “Change-in-Control Effective Date” has the meaning set forth in
Section 4.7(a) below.

     2.9 “Code” means the Internal Revenue Code of 1986, as amended from time
to time, and any successor thereto, and the applicable rules and regulations
thereunder.

     2.10 “Covered Award” means an Award to a Covered Participant which is
intended to qualify as “performance-based compensation” within the meaning of
Section 162(m) of the Code.

     2.11 “Covered Participant” has the meaning set forth in Section 5.1 below.

     2.12 “Committee” means the Compensation Committee of the Board. If at any
time no Committee shall be in office, then, subject to satisfying the
requirements of Section 162(m)(4)(C) of the Code and the listing requirements
of the New York Stock Exchange, the functions of the Committee specified in the
Plan shall be exercised by the Board or by a committee of Board members. As
used in the Plan, where applicable, the term “Committee” also shall mean one or
more officers or employees, or committees thereof, to which the Committee has
delegated the authority to take actions on its behalf pursuant to Section
3.2(c) below.

     2.13 “Company” means McGraw-Hill and all domestic and foreign
corporations, partnerships and other legal entities of which at least
20% of the voting securities or ownership interests of such entities are
owned directly or indirectly by McGraw-Hill.

     2.14 “Corporate Transaction” has the meaning set forth in Section
4.7(c)(iii) below.

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     2.15 “Disability” means eligibility for disability benefits under the
terms of the Company’s Long-Term Disability Plan in effect for the Participant
at the time the Participant becomes disabled.

     2.16 “Early Retirement” means, with the approval of the Committee,
termination of a Participant’s employment under the applicable retirement plan
of McGraw-Hill; provided that the Participant is age 55 or older with
at least 10 years of service and is eligible to receive a Company pension
benefit payable upon termination.

     2.17 “Exchange Act” means the Securities Exchange Act of 1934, as amended
from time to time, and any successor thereto, and the applicable rules and
regulations thereunder.

     2.18 “Individual Performance Criteria” means financial or non-financial
performance criteria (which may include the Performance Objectives for the Pool
applicable to the Participant’s Award) to be achieved during a Year and upon
which the amount of Participants’ Award Payments shall be based. “Individual
Performance Criteria” may include objective and subjective determinations of
individual performance for a Year (which may include the results of a
Participant’s individual performance evaluation by the Company for the Year).

     2.19 “Net Income” means the Company’s after-tax income as reported on a
consolidated basis in the Company’s audited financial statements for the
applicable Year. Net Income shall be adjusted to eliminate the effects of
charges for restructurings, charges for discontinued operations, charges for
extraordinary items and other unusual or non-recurring items of loss or
expense, the unbudgeted current Year impact and cumulative effect of accounting
changes, the unbudgeted loss or expense impact of any acquisition or
divestiture made during the Year, and any direct or indirect change in the
Federal corporate tax law or rate affecting the Year, each as defined by
generally accepted accounting principles and identified in the audited
financial statements, notes to the audited financial statements, management’s
discussion and analysis or other Company filings with the Securities and
Exchange Commission.

     2.20 “Normal Retirement” means termination of employment from the Company
on or after age 65.

     2.21 “Outstanding Common Stock” has the meaning set forth in Section
4.7(c)(i) below.

     2.22 “Outstanding Voting Securities” has the meaning set forth in Section
4.7(c)(i) below.

     2.23 “Participant” has the meaning set forth in Section 3.1 below.

     2.24 “Performance Objectives” means financial or non-financial performance
objectives to be achieved during a Year and upon which the actual amount of
each Pool shall be based.

     2.25 “Person” has the meaning set forth in Section 4.7(c)(i) below.

     2.26 “Pool” means the amount allocated for payment of Awards in any Year,
based on achievement of the applicable Performance Objectives during such Year.
The Committee may establish, for any year: (i) one Pool for the Company; (ii)
separate Pools for each segment or for some or all of the business units within
a segment of the Company; or (iii) one or more Pools based on such
organizational and other factors as the Committee shall deem relevant.

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     2.27 “Retirement” means Early Retirement or Normal Retirement.

     2.28 “Termination Award Payment” means a pro rata Award Payment for the
portion of the Year during which the Participant was employed by the Company
and participating in the Plan, based on achievement for the Year of the
Performance Objectives for the Pool applicable to the Participant’s Award, at
the midpoint of the applicable payment range for performance of the Individual
Performance Criteria under the Award that fully meets expectations.

     The foregoing notwithstanding, in the event the achievement for the Year
of the Performance Objectives for the Pool applicable to the Participant’s
Award exceeds one hundred percent, such achievement shall for purposes of said
payment to such Participant be deemed to be one hundred percent.

     2.29 “Year” means a calendar year, or a fiscal year of McGraw-Hill if
other than a calendar year.

	3.	 	ELIGIBILITY AND ADMINISTRATION

     3.1. Eligibility. The individuals entitled to participate in the Plan
shall be those key employees of the Company (excluding employees participating
for the Year in any other short-term incentive plan of the Company) who are
selected by the Committee to receive an Award for the Year (each, a
“Participant”).

     3.2. Administration. (a) The Plan shall be administered by the
Committee. Subject to the provisions of the Plan and to such orders or
resolutions not inconsistent with the provisions of the Plan as may from time
to time be adopted by the Board: (i) the Committee may from time to time
establish rules for the administration of the Plan; (ii) the Committee shall
have discretionary authority to determine the degree of attainment of
Performance Objectives and satisfaction of Individual Performance Criteria, the
actual amount of each Pool and the amount of the Award Payment for each
Participant in respect of a Year, including, without limitation, the authority
to make factual determinations, to construe and interpret the Plan and any
instrument or agreement entered into in connection with the Plan, to correct
any defect, supply any omission or reconcile any inconsistency in the Plan or
any Award in the manner and to the extent that the Committee shall deem
desirable to carry it into effect, and to decide all matters arising thereunder
or in connection with the administration of the Plan; and (iii) the decisions
of the Committee, to the extent permitted by law, shall be final, conclusive
and binding on all persons, including the Company and any Participant, having
or claiming to have any right or interest in or under the Plan or any Award.

     (b) In addition, subject to the provisions of the Plan and to such orders
or resolutions not inconsistent with the provisions of the Plan as may from
time to time be adopted by the Board, the Committee shall have full power and
authority to do the following: (i) select the Participants for each Year; (ii)
determine the terms and conditions, not inconsistent with the provisions of the
Plan, of each Award; (iii) determine the time when Awards will be made; (iv) determine the
total amount of Awards to be granted to Participants in respect of a Year; (v)
establish and to determine the target amount of each Pool and the applicable
Performance Objectives for such Pool; (vi) establish Individual Performance
Criteria, as applicable, for each Award; (vii) certify the Award Payment in
respect of Covered Awards; (viii) determine the form of Award Payments and
whether any portion of an Award Payment shall be mandatorily or may be
voluntarily deferred by Participants; (ix) appoint such agents as the Committee
shall deem appropriate for the proper administration of the Plan; and (x) make
any other determination and take any other action that the Committee deems

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necessary or desirable for administration of the Plan. The Committee in its
sole discretion has the authority to effect adjustments from time to time in
connection with determining the degree of achievement of financial objectives
(except in the case of the determination of Net Income under Covered Awards),
and to make any other determinations, as it deems equitable, fair or advisable
for the purpose of ascertaining the amount of Award Payments.

     (c) To the extent not inconsistent with applicable law, Section
162(m)(4)(c) of the Code and the listing requirements of the New York Stock
Exchange, the Committee may delegate to one or more officers or employees of
the Company, or one or more committees thereof, the authority to take actions
on its behalf pursuant to the Plan; provided, however, that the
Committee may not delegate its authority with respect to Section 4.7, Section
5, Section 6.1 or Section 6.2 below, or in respect of a Covered Award, and that
a person to whom such authority is delegated may not further delegate such
authority unless specifically authorized by the Committee.

     (d) To the extent permitted by law, the Committee and each member of the
Committee and any officer or employee or committee thereof to whom
responsibilities have been delegated under the Plan shall be indemnified by the
Company against any claims, and the expenses of defending against such claims,
resulting from any action or conduct relating to the administration of the
Plan, except claims arising from gross negligence, willful neglect or willful
misconduct.

	4.	 	AWARDS

     4.1. Pool. At or near the start of the applicable Year, the Committee
shall: (i) determine the number of Pools and target amount of each Pool for the
Year; (ii) specify the relevant Performance Objectives and the methodology to
determine the actual amount of each Pool; and (iii) identify the Participants
eligible to receive a share of each Pool and, if applicable, specify the
Individual Performance Criteria under their Awards. During the applicable
Year, the Committee shall have discretion to adjust the target or actual amount
of each Pool to reflect changes in the employment status of Participants during
the Year and to adjust the actual amount of one or more Pools to take account
of Award Payments in respect of Covered Awards allocative to such Pool.

     4.2. Notice. The Committee shall determine for each Year the time and
manner of notice to Participants of Awards.

     4.3. Payment. As soon as reasonably practicable following the conclusion
of each Year, the Committee shall determine the actual amount of each Pool,
based on the attainment of the applicable Performance Objectives for such Year,
and shall determine each Participant’s share in the applicable Pool based on
the terms of the Participant’s Award and the Participant’s attainment of the
applicable Individual Performance Criteria for the Year. Each Award Payment
shall, subject to any deferral required or permitted by the Committee, be paid
to the Participant in cash, stock awards under a shareholder-approved stock
plan of the Company, or any combination thereof at such time as is
determined by the Committee in its sole discretion following the end of the
applicable Year, but no more than 90 days following the date of the report of
McGraw-Hill’s independent auditors certifying McGraw-Hill’s financial
statements for the Year.

     4.4. Performance Measures. Performance Objectives may consist of
financial objectives, non-financial objectives or a combination of financial
and non-financial objectives. If more than one Pool is established for a Year,
such Pools may have the same or different Performance Objectives. Individual
Performance Criteria may consist of financial objectives, non-financial
objectives or a combination of financial and non-financial objectives and may
include objective and subjective measures of individual performance, including
the results of

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a Participant’s individual performance evaluation by the
Company. Except in the case of the determination of Net Income under Covered
Awards, the Committee in its sole discretion shall have the authority to alter
or adjust financial objectives during the course of any Year, or to alter or
adjust the financial results otherwise reported or achieved by McGraw-Hill
during such Year, if it is deemed appropriate to do so.

     4.5. Termination of Employment. (a) If a Participant’s employment with
the Company terminates during any Year because of death, Disability, Retirement
or termination by the Company other than for Cause, the Participant (or the
Participant’s Beneficiary), subject to the Participant executing a general
release of claims against the Company in a form reasonably satisfactory to the
Company, shall receive a Termination Award Payment for the portion of the Year
during which the Participant was employed by the Company and participating in
the Plan. Unless the Committee specifies an earlier payment date, such
Termination Award Payment shall be made at the time that Award Payments for the
applicable Year are made to other Participants.

     (b) A Participant whose employment with the Company terminates during a
Year or prior to the payment date for Cause, or who voluntarily resigns during
a Year or prior to the payment date, shall not be eligible for any payment
under the Plan for such Year. Neither the Plan nor any action taken hereunder
shall be construed as giving any Participant any right to be retained in the
employ of the Company. A leave of absence, approved by the Committee, shall
not be deemed to be a termination of employment for purposes of the Plan, and
may warrant a full Award Payment or Termination Award Payment as determined by
the Committee.

     4.6. Transfer. If a Participant is transferred within the Company during
any Year to a position that is not considered as eligible for participation in
the Plan, the Committee may, in its sole and absolute discretion, authorize a
Termination Award Payment to the Participant, based on the portion of the Year
during which the Participant was participating in the Plan, and the degree to
which during the Year the applicable Performance Objectives and Individual
Performance Criteria were achieved during the Year.

     4.7. Change in Control. In the event of a Change in Control, then:

     (a) Immediately after such event becomes effective (the “Change-in-Control
Effective Date”), the Company shall pay to each Participant for the Year in
which the Change in Control occurs a Change-in-Control Award Payment for the
portion of the Year elapsed to the Change-in-Control Effective Date, and shall
have no further obligation under the Participant’s Award with respect to the
Year. If the Committee so determines, the Company may also pay to each
Participant an additional
amount, if any, to reflect the achievement during the portion of the Year
elapsed to the Change-in-Control Effective Date of the Performance Objectives
for the Pool applicable to the Participant’s Award and of the Individual
Performance Criteria under the Award.

     (b) The reasonable legal fees incurred by any Participant to enforce
his/her valid rights under this Section 4.7 shall be reimbursed by McGraw-Hill,
in addition to sums otherwise due under the Plan, whether or not the
Participant is successful in enforcing his/her rights or whether or not the
matter is settled. Such reimbursement shall be made on a “pay-as-you-go”
basis, as soon as practicable after presentation to McGraw-Hill of any periodic
statements for such fees.

     (c) “Change in Control” means any of the following events:

     (i) An acquisition by any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a

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“Person”) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of 20% or more of either (1) the then outstanding shares of common stock of
McGraw-Hill (the “Outstanding Common Stock”) or (2) the combined voting power
of the then outstanding voting securities of McGraw-Hill entitled to vote
generally in the election of directors (the “Outstanding Voting Securities”);
excluding, however, the following: (A) any acquisition directly from
McGraw-Hill, other than an acquisition by virtue of the exercise of a
conversion privilege unless the security being so converted was itself acquired
directly from McGraw-Hill; (B) any acquisition by McGraw-Hill; (C) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by McGraw-Hill or any entity controlled by McGraw-Hill; or (D) any
acquisition pursuant to a transaction which complies with clauses (1), (2) and
(3) of subsection (iii) of this definition; or

     (ii) A change in the composition of the Board such that the individuals
who, as of the effective date of the Plan, constitute the Board (such Board
shall be hereinafter referred to as the “Incumbent Board”) cease for any reason
to constitute at least a majority of the Board; provided,
however, for purposes of this definition, that any individual who
becomes a member of the Board subsequent to the effective date of the Plan,
whose election, or nomination for election by McGraw-Hill’s shareholders, was
approved by a vote of at least a majority of those individuals who are members
of the Board and who were also members of the Incumbent Board (or deemed to be
such pursuant to this proviso) shall be considered as though such individual
were a member of the Incumbent Board; but, provided further
that any such individual whose initial assumption of office occurs as a result
of either an actual or threatened election contest (as such terms are used in
Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other
actual or threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board shall not be so considered as a member of the
Incumbent Board; or

     (iii) Consummation of a reorganization, merger or consolidation or sale or
other disposition of all or substantially all of the assets of McGraw-Hill (a
“Corporate Transaction”); excluding, however, a Corporate Transaction pursuant
to which (1) all or substantially all of the individuals and entities who are
the beneficial owners, respectively, of the Outstanding Common Stock and
Outstanding Voting Securities immediately prior to such Corporate Transaction
will beneficially own, directly or indirectly, more than 50% of, respectively,
the outstanding shares of common stock, and the combined voting power of the
then outstanding voting 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 McGraw-Hill or all or
substantially all of McGraw-Hill’s assets either directly or through one or
more subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Corporate Transaction, of the Outstanding Common
Stock and Outstanding Voting Securities, as the case may be, (2) no Person
(other than the McGraw-Hill, any employee benefit plan (or related trust) of
McGraw-Hill or such corporation resulting from such Corporate Transaction) will
beneficially own, directly or indirectly, 20% 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 voting
securities of such corporation entitled to vote generally in the election of
directors except to the extent that such ownership existed prior to the
Corporate Transaction, and (3) 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

     (iv) The approval by the shareholders of McGraw-Hill of a complete
liquidation or dissolution of McGraw-Hill.

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	5.	 	COVERED AWARDS

     5.1. Covered Participants. No later than 90 days after the commencement
of each Year, the Committee shall, in writing: (i) designate the Participants
to receive a Covered Award for the Year (“Covered Participants”); and (ii)
notify each Covered Participant of his or her Covered Award for the Year. The
Committee shall designate as Covered Participants the Participants who are
executive officers of the Company and the other Participants who are expected
to be a “covered employee” within the meaning of Section 162(m)(3) of the Code
in the Year in which McGraw-Hill would become entitled to take a compensation
deduction as a result of the Award Payment (determined without regard to the
limitation on deductibility imposed by Section 162(m) of the Code).

     5.2. Covered Award. For each Year, a Covered Award shall consist of 0.7%
of Net Income for the Year in the case of the Chief Executive Officer of
McGraw-Hill and 0.5% of Net Income for the Year in the case of each other
Covered Participant.

     5.3. Award Payment. The Award Payment in respect of each Covered Award
shall be an amount equal to or less than such percentage of Net Income, as
determined by the Committee in its sole discretion. In the exercise of such
discretion, the Committee may take into account the Award Payment that the
Covered Participant would have received had the Covered Participant
participated in a specified Pool for the Year, and may reduce the actual amount
of such Pool by reference to the Award Payment made to the Covered Participant
for the Year. Notwithstanding anything to the contrary in the Plan, however,
the Committee shall not have any discretion or authority to increase the Award
Payment payable under a Covered Award.

     5.4. Certification. As soon as reasonably practicable following the
conclusion of each Year, the Committee shall certify, in writing, the
achievement of Net Income and the amount of the Award Payment in respect of
each Covered Award for the Year.

	6.	 	MISCELLANEOUS

     6.1 Amendment and Termination of the Plan. The Committee or the Board
may, from time to time, alter, amend, suspend or terminate the Plan as it shall
deem advisable subject to any requirement for shareholder approval imposed by
applicable law, including Section 162(m)
of the Code, and to the listing requirements of the New York Stock
Exchange; provided, however, that Section 4.7 above, as it
applies to any Change in Control, may not be amended following that Change in
Control, nor may it be amended in anticipation of a Change in Control, in
either case, in a manner adverse to any Participant without the Participant’s
express written consent.

     6.2 Section 162(m) of the Code. Unless otherwise determined by the
Committee, or expressly provided herein, the provisions of this Plan shall be
administered and interpreted in accordance with Section 162(m) of the Code to
ensure the maximum deductibility by the Company of the payment of Covered
Awards.

     6.3 Tax Withholding. The Company shall have the right to make all
payments or distributions pursuant to the Plan to a Participant, net of any
applicable Federal, State and local taxes required to be paid or withheld. The
Company shall have the right to withhold from wages, Award Payments or other
amounts otherwise payable to such Participant such withholding taxes as may be
required by law, or to otherwise require the Participant to pay such
withholding taxes. If the Participant shall fail to make such tax payments as
are required or to satisfy any other payment obligation to the Company, the
Company shall, to the extent permitted by law, have the right to deduct any
such amounts from any payment of any kind otherwise due to such Participant

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or to take such other action as may be necessary to satisfy such withholding or
other obligations.

     6.4 Right of Discharge Reserved; Claims to Awards. Nothing in the Plan
nor the grant of an Award hereunder shall confer upon any Participant the right
to continue in the employment of the Company or affect any right that the
Company may have to terminate the employment of (or to demote or to exclude
from future Awards under the Plan) any such Participant at any time for any
reason. No Participant shall have any claim to be granted any Award under the
Plan, and there is no obligation for uniformity of treatment of Participants
under the Plan.

     6.5 Nature of Payments. All Awards made pursuant to the Plan are in
consideration of services performed or to be performed for the Company,
division or business unit of the Company. Any income or gain realized pursuant
to Awards under the Plan constitute a special incentive payment to the
Participant and shall not be taken into account, to the extent permissible
under applicable law, as compensation for purposes of any of the employee
benefit plans of the Company except as specifically provided under the
applicable plan or as may otherwise be determined by the Committee or by the
Board.

     6.6 Other Plans. Nothing contained in the Plan shall prevent the Board
from adopting other or additional compensation arrangements, subject to
shareholder approval if such approval is required; and such arrangements may be
either generally applicable or applicable only in specific cases.

     6.7 Unfunded Status of the Plan. The Plan is intended to constitute an
“unfunded” plan for incentive compensation, and deferred compensation if
permitted by the Committee. With respect to any payments not yet made to a
Participant by the Company, nothing contained herein shall give any such
Participant any rights that are greater than those of a general unsecured
creditor of the Company.

     6.8 Effective Date of Plan. The Plan shall be effective as of January 1,
2005, upon the approval of the Plan by McGraw-Hill’s shareholders at the 2005
annual meeting. The Plan shall be null and void and of no effect if the
foregoing condition is not fulfilled.

     6.9 Governing Law. The Plan and all determinations made and actions taken
thereunder, to the extent not otherwise governed by the Code or the laws of the
United States, shall be governed by the laws of the State of New York.

9EX-10.15

 

Exhibit 10.15

THE McGRAW-HILL COMPANIES, INC.

SENIOR EXECUTIVE SEVERANCE PLAN

(As Amended and Restated Effective October 23, 2003)

 

TABLE OF CONTENTS

	 	 	 	 	 	 
	 	 	 	Page
	Section 1
	Purpose

	 	 	1	 
	Section 2

	Effective Date

	 	 	1	 
	Section 3

	Administration

	 	 	1	 
	Section 4

	Participation

	 	 	2	 
	Section 5

	Payments Upon Qualified Termination of Employment

	 	 	2	 
	Section 6

	Unfunded Status of Plan

	 	 	8	 
	Section 7

	Termination and Amendment of the Plan

	 	 	8	 
	Section 8

	Benefit of Plan

	 	 	9	 
	Section 9

	Non-Assignability

	 	 	9	 
	Section 10.

	Effect of Other Plans

	 	 	9	 
	Section 11.

	Mitigation and Offset

	 	 	9	 
	Section 12.

	Termination of Employment

	 	 	10	 
	Section 13.

	Severability

	 	 	10	 
	Section 14.

	Disputed Claims

	 	 	10	 
	Section 15.

	Governing Law; Section Headings

	 	 	11	 
	Section 16.

	Claims Procedure

	 	 	11	 
	Section 17.

	Limit on Discretionary Authority After Change of Control

	 	 	12	 

 

THE McGRAW-HILL COMPANIES, INC. SENIOR EXECUTIVE SEVERANCE PLAN

Section 1.  Purpose.

     The purpose of the Senior Executive Severance Plan (the “Plan”) is to provide senior
executives who are in a position to contribute materially to the success of The McGraw-Hill
Companies, Inc., or any subsidiary at least 20% of whose voting shares are owned directly or
indirectly by The McGraw-Hill Companies, Inc. (collectively, the “Company”), with reasonable
compensation in the event of their termination of employment with the Company.

Section 2. Effective Date.

     The Plan is effective as of January 28, 1987.

Section 3. Administration.

     The Plan shall be administered (i) by the Compensation Committee of the Board of Directors of
the Company (the “Board”) or by such other committee of non-employee directors as the Board shall
appoint (the “Committee”), or (ii) in the absence of such Committee or if the Committee is unable
to act, by the Board (the “Administrator”). Subject to the express provisions of the Plan,
including without limitation Section 17 below, and the rights of Participants pursuant thereto, the
Administrator shall have discretionary authority to (i) adopt, alter and repeal such administrative
rules, guidelines and practices governing the Plan as the Administrator shall, from time to time,
deem advisable; (ii) resolve all questions or ambiguities relating to the interpretation and
application of the Plan (and any notices or agreements relating thereto); (iii) make eligibility
and benefit determinations under the Plan, including any factual determinations relevant thereto;
and (iv) otherwise supervise the administration of the Plan in accordance with the terms hereof.
The discretionary authority under the preceding sentence may also be exercised by any person making
a determination on a claim for benefits or a review of a claim pursuant to Section 16 below,
subject to Section 17 below.

     Subject to Sections 16 and 17 hereof, all decisions made by the Administrator pursuant to the
provisions of the Plan
shall be final and binding on all persons, including the Company and Participants.

1

 

     All decisions made by the CEO, as hereinafter defined, which may personally benefit, directly
or indirectly, the CEO shall be subject to the approval of the Committee.

Section 4. Participation.

     The Chief Executive Officer (the “CEO”) of the Company shall from time to time select, subject
to the approval of the Committee, the employees who are to participate in the Plan (the
"Participants”) from among those employees who are determined by the CEO to be in a position to
contribute materially to the success of the Company. The Company shall notify each Participant in
writing of his participation in the Plan, and such notice shall also set forth the payments and
benefits to which the Participant may become entitled. The Company may also enter into such
agreements as the Committee deems necessary or appropriate with respect to a Participant’s rights
under the Plan. Any such notice or agreement may contain such terms, provisions and conditions not
inconsistent with the Plan, including but not limited to provisions for the extension or renewal of
any such agreement, as shall be determined by the Committee, in its sole discretion.

     A Participant shall cease to be a Participant in the Plan upon the earlier of (i) his receipt
of all of the payments, if any, to which he is or becomes entitled under the terms of this Plan and
the terms of any notice or agreement issued by the Company with respect to his participation
hereunder, or (ii) the termination of his employment with the Company under circumstances not
requiring payments under the terms of this Plan.

Section 5. Payments Upon Qualified Termination of Employment.

          (a) In the event of a Qualified Termination of Employment, the Participant shall be entitled,
as compensation for services rendered, subject to any applicable payroll or other taxes required to
be withheld, to:

     (i) continue to receive an amount equal to his Monthly Base Salary for a period
following his termination of employment, based upon the following formula, but in no event
for less than 12 months: the
number of full and partial years of the Participant’s continuous service with the
Company, up to a maximum of 15 years, multiplied by 1.6; provided that if the foregoing
formula yields a period exceeding 12 months, the Participant shall be entitled to salary
continuation for only 12 months and, in addition, shall be entitled to a single lump sum
cash payment equal to the product of the Participant’s Monthly Base Salary and the

2

 

number
of months under the formula in excess of 12, to be paid 12 months after the Participant’s
termination of employment, or as soon thereafter as practicable; and

     (ii) remain an active participant in all Company-sponsored retirement, life, medical,
dental, accidental death and disability insurance benefit plans or programs in which he was
participating at the time of his termination for the duration of the salary continuation
period described in Section 5(a)(i) above (not in excess of 12 months), but only to the
extent permitted by applicable law, as determined by the Company, it being understood that
continued participation in Company-sponsored retirement plans or programs shall be limited
to such plans or programs that are not intended to be qualified under Section 401(a) or
401(k) of the Internal Revenue Code of 1986, as amended (the “Code”), and, in addition, if
the formula in Section 5(a)(i) above yields a period exceeding 12 months, the Participant
shall be entitled to a single lump sum cash payment equal to 10% of the product of the
Participant’s Monthly Base Salary and the number of months under the formula in excess of
12, to be paid 12 months after the Participant’s termination of employment, or as soon
thereafter as practicable;

provided that the CEO may authorize, in his sole discretion, in lieu of the payments and benefits
provided under Sections 5(a)(i) and (ii) above, payment to the Participant of a single lump sum
equal to 110% of the Participant’s Monthly Base Salary for the period under the formula specified
under Section 5(a)(i), or for 12 months, if longer (100% of Monthly Base Salary for such period in
lieu of salary continuation, and 10% of Monthly Base Salary for such period in lieu of benefits
continuation).

Such payments shall be in lieu of any other payments under the Plan or under any other severance
pay or separation allowance plan, program or policy of the Company including the Company’s
Separation Pay Plan; provided, however, that if payments pursuant to the terms and conditions of
the Company’s Separation Pay Plan would result in greater payments to a Participant than would be
payable under this Plan, said Participant shall in such event receive payments pursuant to the
terms and conditions of the Company’s Separation Pay Plan in lieu of payments pursuant to this
Plan.

          (b) For purposes of this Section 5, the following definitions shall apply:

3

 

     (i) A “Qualified Termination of Employment” shall mean termination of
employment with the Company (other than by reason of death, Disability, voluntary
resignation by a Participant under circumstances not qualifying under (B) below, or
lawful Company mandated retirement at normal retirement age)

     (A) by the Company for any reason other than for Cause, or

     (B) by the Participant after an Adverse Change in Conditions of
Employment or for any reason during the 30-day period following the first
anniversary of a Change of Control.

     (ii) “Cause” shall mean the Participant’s misconduct in respect of the Participant’s
obligations to the Company or other acts of misconduct by the Participant occurring during
the course of the Participant’s employment, which in either case results in or could
reasonably be expected to result in material damage to the property, business or reputation
of the Company; provided that in no event shall unsatisfactory job performance alone be
deemed to be “Cause”; and, provided, further, that no termination of employment that is
carried out at the request of a person seeking to accomplish a Change in Control or
otherwise in anticipation of a Change in Control shall be deemed to be for “Cause”.

     (iii) An “Adverse Change in Conditions of Employment” shall mean the occurrence of any
of the following events:

     (A) an adverse change by the Company in the Participant’s functions, duties or
responsibilities, which change would cause the Executive’s position with the Company
to become one of substantially less responsibility, importance or scope; or

     (B) a 10% or larger reduction by the Company (in one or more steps) of the
Participant’s Monthly Base Salary.

     Notwithstanding the foregoing the Participant’s failure to object to the Company in writing to
a change described in (A) or (B) above within 120 days after such change shall constitute a waiver
of such change as an Adverse Change in Conditions of Employment.

4

 

     (iv) “Disability” shall mean a Participant’s long-term disability pursuant to a
determination of disability under the Company’s Long-Term Disability Plan.

     (v) “Monthly Base Salary” shall mean a Participant’s highest regular monthly salary
during the preceding 24-month period, excluding any of the following: year-end or other
bonuses, incentive compensation, whether short term or long term, commissions, reimbursed
expenses, and any payments on account of premiums on insurance or other contributions made
to other Company welfare or benefit plans.

     (vi) “Change of Control” shall mean any of the following:

     (i) An acquisition by an individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of
20% or more of either (1) the then outstanding shares of common stock of the
Corporation (the “Outstanding Corporation Common Stock”) or (2) the combined voting
power of the then outstanding voting securities of the Corporation entitled to vote
generally in the election of directors (the “Outstanding Corporation Voting
Securities”); excluding, however, the following: (1) any acquisition directly from
the Corporation, other than an acquisition by virtue of
the exercise of a conversion privilege unless the security being so converted
was itself acquired directly from the Corporation; (2) any acquisition by the
Corporation; (3) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Corporation or any entity controlled by the
Corporation; or (4) any acquisition pursuant to a transaction which complies with
clauses (1), (2) and (3) of subsection (iii) of this definition; or

     (ii) A change in the composition of the Board of Directors such that the
individuals who, as of the effective date of the Plan, constitute the Board of
Directors (such Board of Directors shall be hereinafter referred to as the
“Incumbent Board”) cease for any reason to constitute at least a majority of the
Board of Directors; provided, however, that for purposes of this definition, that
any individual who becomes a member of the Board of Directors subsequent to the

5

 

effective date of the Plan, whose election, or nomination for election by the
Corporation’s shareholders, was approved by a vote of at least a majority of those
individuals who are members of the Board of Directors and who were also members of
the Incumbent Board (or deemed to be such pursuant to this proviso) shall be
considered as though such individual were a member of the Incumbent Board; but,
provided, further, that any such individual whose initial assumption of office
occurs as a result of either an actual or threatened election contest (as such terms
are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or
other actual or threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board of Directors shall not be so considered as a member of
the Incumbent Board; or

     (iii) Consummation of a reorganization, merger or consolidation or sale or
other disposition of all or substantially all of the assets of the Corporation
(“Corporate Transaction”); excluding, however, such a Corporate Transaction pursuant
to which (1) all or substantially all of the individuals and entities who are the
beneficial owners, respectively, of the Outstanding Corporation Common Stock and
Outstanding Corporation Voting Securities
immediately prior to such Corporate Transaction will beneficially own, directly
or indirectly, more than 50% of, respectively, the outstanding shares of common
stock, and the combined voting power of the then outstanding voting 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 Corporation
or all or substantially all of the Corporation’s assets either directly or through
one or more subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Corporate Transaction, of the Outstanding Corporation
Common Stock and Outstanding Corporation Voting Securities, as the case may be, (2)
no Person (other than the Corporation, any employee benefit plan (or related trust)
of the Corporation or such corporation resulting from such Corporate Transaction)
will beneficially own, directly or indirectly, 20% 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 voting

6

 

securities of
such corporation entitled to vote generally in the election of directors except to
the extent that such ownership existed prior to the Corporate Transaction, and (3)
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

     (iv) The approval by the stockholders of the Corporation of a complete
liquidation or dissolution of the Corporation.

     (c) (i) In the event a Participant dies after the commencement of payments pursuant to
Section 5(a) above, the balance of said payments shall be payable to said Participant’s
estate.

          (ii) It is the intent of this Plan that a Participant’s transfer to another location
shall not by itself constitute an “Adverse Change in Conditions of Employment”; provided,
however, that such an “Adverse Change in Conditions of Employment” will be deemed to
exist if, after a Change of Control, a Participant is transferred to a principal
business location so as to increase the distance between the principal business location and
such Participant’s place of residence at the time of the Change of Control by more than 50
miles or such other distance standard as may be established from time to time under Section
217(c)(1)(A) of the Code.

          (iii) It is the intent of this Plan that a Participant shall not receive payments
hereunder in the event of a sale of the business unit of the Company with which the
Participant is associated as an executive, provided that the Participant is offered a
position and salary with the buyer or the Company comparable to the position and salary of
the Participant immediately prior to said sale, whether or not such offer is accepted by the
Participant. If, however, the Participant is not offered a comparable position and salary,
the Participant shall be entitled to payments hereunder. A position shall not be deemed to
be a “comparable position” for purposes of this subsection (iii) if it increases the
distance between the Participant’s principal business location and the Participant’s place
of residence at the time of the sale by more than 50 miles or such other distance standard
as may be established from time to time under Section 217(c)(1)(A) of the Code.

7

 

Section 6. Unfunded Status of Plan.

     The Plan is intended to constitute an “unfunded” compensation arrangement. With respect to any
payments required to be made, but not yet made to a Participant by the Company, nothing contained
herein shall give any such Participant any rights that are greater than those of a general creditor
of the Company. In its sole discretion, the Company may authorize the creation of trusts or other
arrangements to meet the obligations created under the Plan to deliver payments in lieu of or with
respect to amounts payable hereunder, provided, however, that the existence of such trusts or other
arrangements is consistent with the unfunded status of the Plan.

Section 7. Termination and Amendment of the Plan.

     The Board shall have the right at any time, in its discretion, to amend the Plan, in whole or
in part, or to terminate the Plan, except that no amendment or termination
shall impair or abridge the obligations of the Company to any Participant or the rights of any
Participant under the Plan (1) under any notices or agreements previously issued pursuant to the
Plan, (2) with respect to any termination of employment that occurred before such amendment or
termination, or (3) with respect to any termination of employment that occurs during the period of
24 months following a Change of Control or that is carried out at the request of a person seeking
to accomplish a Change in Control or otherwise in anticipation of a Change in Control, in each case
without the express written consent of the affected Participant.

Except for the amendments or modifications made by the Board or Committee as provided for in
this section, no modifications, alterations and/or changes made to the terms and/or
provisions of the Plan, either globally or for an individual participant, will be effective
unless evidenced by a writing that directly refers to the Plan and which is signed and dated
by the Executive Vice President of Human Resources, as such title may be modified from time
to time; provided, however, that any alterations and/or changes made to the terms and/or
provisions of the Plan for the Executive Vice President of Human Resources as such title may
be modified from time to time, must be signed and dated by the Chief Executive Officer and
any alterations and/or changes made to terms and/or provisions of the Plan for the Chief
Executive Officer must be signed and dated by all the members of the Committee.

8

 

Section 8. Benefit of Plan.

     The Plan shall be binding upon and shall inure to the benefit of the Participant, his heirs
and legal representatives, and the Company and its successors. The term “successor” shall mean any
person, firm, corporation or other business entity that, at any time, whether by merger,
acquisition or otherwise, acquires all or substantially all of the stock, assets or business of the
Company.

Section 9. Non-Assignability.

     Each Participant’s rights under this Plan shall be non-transferable except by will or by the
laws of descent and distribution and except insofar as applicable law may otherwise require.
Subject to the foregoing, no right, benefit or interest hereunder, shall be subject to
anticipation, alienation, sale, assignment, encumbrance, charge, pledge, hypothecation, or set off
in respect of any claim, debt or obligation, or to execution, attachment, levy or similar process,
or assignment by operation of law, and any attempt, voluntary or involuntary, to effect any such
action shall, to the full extent permitted by law, be null, void and of no effect.

Section 10. Effect of Other Plans.

     Except as expressly provided in Section 5 with respect to the Company’s Separation Pay Plan,
(i) nothing in the Plan shall affect the level of benefits provided to or received by any
Participant (or the Participant’s estate or beneficiaries) as part of any employee benefit plan of
the Company, and (ii) the Plan shall not be construed to affect in any way a Participant’s rights
and obligations under any other plan maintained by the Company on behalf of employees.

Section 11. Mitigation and Offset.

     No Participant shall be required to mitigate the amount of any payment under the Plan by
seeking employment or otherwise, and there shall be no right of setoff or counterclaim, in respect
of any claim, debt or obligation, against any payments to the Participant, his dependents,
beneficiaries or estate provided for in the Plan.

     If, after a Participant’s termination of employment with the Company, the Participant is
employed by another entity or becomes self-employed, the amounts (if any) payable under this Plan
to the Participant shall not be offset by the amounts (if any)

9

 

payable to the Participant from such
new employment with respect to services rendered during the severance period applicable to such
Participant under this Plan.

Section 12. Termination of Employment.

     Nothing in the Plan shall be deemed to entitle a Participant to continued employment with the
Company, and the rights of the Company to terminate the employment of a
Participant shall continue as fully as though this Plan were not in effect.

Section 13. Severability.

     In the event that any provision or portion of the Plan shall be determined to be invalid or
unenforceable for any reason, the remaining provisions and portions of the Plan shall be unaffected
thereby and shall remain in full force and effect to the fullest extent permitted by law.

Section 14. Disputed Claims.

          (a) If a Participant makes a claim for payments under the Plan and such claim is disputed by
the Company (a “Disputed Claim”), the Company shall reimburse the Participant for any reasonable
attorney’s fees and disbursements incurred in pursuing such claim (“Attorney’s Fees”) provided that
the Participant obtains a non-appealable, final judgment from a court of competent jurisdiction or
a binding arbitration award granting the Participant all or substantially all of the amount sought
(a “Judgment or Award”). Unless the Judgment or Award specifies whether it constitutes “all or
substantially all of the amount sought,” such determination shall be made by the Administrator in
its sole and absolute discretion. Said reimbursement of Attorney’s Fees, if applicable, shall be
made as soon as practicable after said determination.

          (b) If a Disputed Claim is made with respect to a termination of employment occurring during a
period beginning on the date of a Change of Control and ending 24 months thereafter, the
Participant shall be entitled to reimbursement of Attorney’s Fees, whether or not the Participant
obtains a Judgment or Award. Such reimbursement shall be made on a “pay-as-you-go” basis, as soon
as practicable after presentation to the Company of any periodic statements for Attorney’s Fees.

          (c) Without affecting the rights of a Participant under subsection (a) of this Section 14, a
Participant shall be entitled to reimbursement of Attorney’s Fees for a Disputed Claim in
accordance with the terms of subsection (b) with respect to termination of employment occurring six
months prior to a Change

10

 

of Control, whether or not the Participant obtains a Judgment or Award,
provided, however, that no reimbursement will be made under this subsection (c) in such case (i)
unless and until the Change of
Control actually occurs or (ii) if reimbursement has been made under subsection (a) of this
Section 14.

Section 15. Governing Law; Section Headings.

     All questions pertaining to the construction, regulation, validity and effect of the
provisions of the Plan shall be determined in accordance with the laws of the State of New York.

     The section headings used in this document are for ease of reference only and shall not be
controlling with respect to the application and interpretation of this Plan.

Section 16. Claims Procedure.

          (a) Benefits shall be paid in accordance with the provisions of the Plan. Any claim for
benefits under the Plan shall be promptly filed in writing by the Participant, the Participant’s
beneficiary or contingent beneficiary, or the Participant’s authorized representative (hereinafter
collectively referred to as the “Claimant”) with the Company. This written claim shall be mailed
or delivered to the Company by registered mail and shall be decided by the person or persons to
whom this responsibility is delegated from time to time by the Administrator.

11

 

          (b) The Claimant shall be sent a written notice of the Company’s determination with respect to
the claim of the Claimant within 90 days of receipt of the claim, unless special circumstances
require an extension of time for processing the claim. Such extension shall not exceed 90 days and
notice thereof will be given within the first 90-day period. If the claim is denied in whole or in
part, the notice shall indicate the reason for the denial (including references to the Plan
provisions on which the denial is based), describe any additional information or material needed
and the reasons why such additional information or material is necessary, and explain the claim
review procedure.

          (c) If a claim is denied in whole or in part (or if no decision on a claim is rendered within
the limitations of the time described in Section 16(b)), the Claimant may request a review of the
decision (or of the claim, if no timely decision has been rendered). This request shall be
submitted in writing to the Chief Human Resources Officer of the Company (the “Claims Reviewer”)
within 60 days of receipt of the notice of denial. The business address and telephone number of
the Claims Reviewer is:

The McGraw-Hill Companies, Inc.

1221 Avenue of the Americas

New York, New York 10020

(212) 512-2000

This written request for review shall be mailed or delivered to the Claims Reviewer by registered
mail. The Claimant may review pertinent documents and may submit in writing additional comments
and material.

          (d) The Company shall have the right to change the Claims Reviewer under the Plan. The
Company shall also have the right to change the address and telephone number of the Claims
Reviewer. The Company shall give the Participants written notice of any change of the Claims
Reviewer, or any change in the address and telephone number of the Claims Reviewer.

          (e) A review decision shall be made by the Claims Reviewer within 60 days of receipt of the
request for review, unless there are special circumstances (such as the need for a hearing) which
require an extension of the time for processing. Such extension shall not exceed 60 days and
notice thereof shall be given within the first 60-day period. The review decision shall be in
writing and include specific references to the Plan provisions on which the decision is based.

Section 17. Limit on Discretionary Authority After Change of Control

     Notwithstanding any other provision of this plan, the authority granted pursuant to Sections
3, 14 and 16 above to the Administrator and to persons making determinations on claims for
benefits and reviews of claims shall, when exercised (1) during the period of 24 months
following a Change of Control or (2) with respect to any termination of employment that occurs
during the period of 24 months following a Change of Control or that is carried out at the request
of a person seeking to accomplish a Change in Control or otherwise in anticipation of a Change in
Control, shall not be

12

 

“discretionary,” but shall be subject to de novo review by a court of
competent jurisdiction or an arbitrator, as applicable.

January 28, 1987

	 	 	 
	As amended:

	 	March 25, 1987
	 

	 	September 30, 1987
	 

	 	September 28, 1988
	 

	 	April 26, 2000
	 

	 	April 24, 2002
	 

	 	October 23, 2003

13

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