Document:

EX-10.34

 

Exhibit 10.34

AMERICAN STANDARD COMPANIES INC.

MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE

February 2, 2005

Annual and Long Term Incentive Goals for Officers 

2005 Incentive Goals

	•  	1.5% of 2005 segment income will determine the 2005 annual incentive pool for Officers.

	•  	2.0% of 2007 segment income will determine the 2005-2007 long-term incentive pool for
Officers.

	•  	Allocation of awards:

	 	•  	Each incentive pool will be allocated 20% to the CEO and the remainder divided equally
among the other Officers.
	 
	 	•  	The Committee will apply negative discretion to each allocation to determine the final
individual annual and long-term incentive awards for Officers.
	 
	 	•  	Individual awards are limited by Omnibus Plan incentive plan maximums of $3.0M for AIP
awards and $4.5M for LTIP awards.EX-10.6

 

Exhibit 10.6

Date                              

Director

Title

Company

Street Address

City, State, Zip

Re: The McGraw-Hill Companies — Board of Directors

Dear :

     The services of the Directors of The McGraw-Hill Companies, Inc. (the “Company”) are of the
utmost importance to the Company’s continued advancement and success. The Company’s By-Laws provide
that Directors shall be indemnified to the fullest extent permitted by law, and the Company
currently provides liability insurance coverage for its Directors and officers to the extent
considered advisable and at acceptable premium costs.

     Possible future limits on the availability and the scope of directors and officers liability
insurance coverage, as well as potential increases in the premium cost of such insurance, together
with a recognition that By-Law provisions may be easily amended in future situations involving a
change in corporate control, have caused us to review the nature of the indemnification rights
available to our Directors. Accordingly, we have determined that it is to the Company’s advantage
to assure that in view of: (a) the possible limited protection of directors and officers liability
insurance in the future; or (b) the possible complete elimination of such insurance; or (c) any
threatened change in control of the Company (although we have no knowledge of any such possible
change in control), such potential occurrences do not impair or adversely affect the continued
services of any of our Directors. Consequently, as an inducement to such Directors to continue to
serve the Company and its subsidiaries, the Company shall provide as follows:

     1. The Company hereby agrees to indemnify any Director (and the estate, heirs and distributees
of such Director): (i) against all legal claims made, or threatened to be made, by a party to an
action or proceeding, whether civil or criminal, by reason of the fact that such Director is or was
a Director of the corporation, or serves or served any other corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise in any capacity, at the request of the
Company; and (ii) against all judgments, fines, amounts paid in settlement and reasonable expenses,
including attorneys’ fees actually and necessarily incurred in such action or any appeal therein,
to the fullest extent permitted by law. Nothing herein shall limit this right to indemnification
in any way or under any circumstances.

     2. The foregoing indemnity shall apply only to the extent that such Director is not
effectively indemnified by directors and officers liability insurance, if any, maintained for the
benefit of such Director by the Company or its subsidiaries.

     3. Expenses incurred by or on behalf of a Director or such Director’s estate, heirs or
distributees, in defending a civil or criminal proceeding may be paid by the Company in advance of
the final disposition of such action or proceeding if authorized pursuant to the applicable
statutory provision.

     4. The indemnification provided by this contract shall not be deemed exclusive of any rights
to which any Director may be entitled under any By-Law, agreement or otherwise, both as to action
in such Director’s official capacity and as to action in another capacity while serving as a
Director of the Company. Such indemnification shall continue for the benefit of a person who has
ceased to be a Director and shall inure to the benefit of the heirs, distributees, executors and
administrators of such Director and be binding upon the successors and assigns to the Company.

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     5. This contract shall be governed by and interpreted and applied in accordance with the laws
of the State of New York.

     6. The Company agrees that the indemnification rights under this contract are intended for
your benefit, and that this contract may not be terminated or withdrawn without your consent so
long as you serve as a Director, and under no circumstances shall such termination or withdrawal
affect your right to indemnification hereunder for legal actions of the type described in the
paragraph numbered “1” in this agreement which are in any way related to your service to the
Company.

     We would appreciate your confirming your acceptance of and agreement to this indemnification
contract by your signing and returning the enclosed counterpart to this contract.

	 	 	 	 	 
	 	Very truly yours,

The McGraw-Hill Companies, Inc.

 	 
	 	By:  	___________________________________________
 	 
	 	 	Harold McGraw III 	 
	 	 	Chairman, President and

Chief Executive Officer 	 
	 

Accepted and Agreed to this

               day of

__________________________

Director

21EX-10.10

 

Exhibit 10.10

TERMS AND CONDITIONS

RESTRICTED PERFORMANCE SHARE AWARD

     Restricted Performance Share Award made as of the ___day of __________(the “Award Date”),
by The McGraw-Hill Companies, Inc., a New York corporation (the “Company”).

     WHEREAS, the Board of Directors of the Company has designated the Compensation Committee of
the Board of Directors of the Company (the “Committee”) to administer the 2002 Stock Incentive
Plan, as amended and restated (the “Plan”), with respect to certain executives of the Company;

     WHEREAS, capitalized terms not otherwise defined herein shall have the meanings set forth for
such terms in the Plan;

     WHEREAS, the Committee has determined that the Employee should be granted a Restricted
Performance Share Award under the Plan for the number of shares as specified in the Employee’s
Restricted Performance Share Award Document; and

     WHEREAS, Employee is accepting the Restricted Performance Share Award subject to the terms and
conditions set forth below:

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     1. Grant of Awards.

          (a) The grant of the Restricted Performance Share Award (“Award”) is subject to the terms and
conditions hereinafter set forth with respect to the Restricted Performance Shares of Common Stock,
$1.00 par value, of the Company (“Stock”).

          (b) Subject to the terms and conditions of Section 10 hereof, the Employee shall be issued a
stock certificate in respect of the Restricted Performance Shares of Stock covered by this Award.
Such stock certificate shall be registered in the name of the Employee, and shall bear an
appropriate legend referring to the terms, conditions and restrictions applicable to this Award,
substantially in the following form:

“The transferability of this certificate and the shares of stock represented
hereby are subject to the terms and conditions (including forfeiture) of (i)
The McGraw-Hill Companies, Inc. 2002 Stock Incentive Plan, as amended and
restated, (ii) the Terms and Conditions of Restricted Performance Share
Award, and (iii) the Award Document of Restricted Performance Shares dated
as of __________. Copies of the above-mentioned documents are on file in
the offices of The McGraw-Hill Companies, Inc., 1221 Avenue of the Americas,
New York, New York 10020.”

     The stock certificate evidencing such shares shall be held in custody by the Company until the
restrictions thereon shall have lapsed, and, as a condition of this Award, the Employee shall
deliver to the Company a duly signed stock power, endorsed in blank, relating to the Restricted
Performance Shares of Stock covered by this Award.

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     With respect to the procedures set forth in this Section 1(b), the Company may, in its sole
discretion, provide for the book entry on behalf of the Employee of the Restricted Performance
Shares of Stock covered by this Award with the Company’s Registrar and Transfer Agent in lieu of
the issuance of a stock certificate to the Employee for all or a portion of the period extending
from the date hereof until the lapse of restrictions upon such shares; provided, that such
shares represented by said book-entry shall be (i) deemed to be held in custody by the Company
until the restrictions thereon shall have lapsed, (ii) subject to the terms and conditions
(including forfeiture) of the Plan, and (iii) the terms and conditions of this Award.

     2. Performance Goals. The achievement of this Award shall be measured against a
schedule of an Earnings Per Share (“EPS”) growth goal established by the Committee. This schedule
will govern the determination of the Restricted Performance Shares payable on the date the Award
matures. If EPS growth equals the targeted EPS growth goal, the Restricted Performance Share Award
will be fully earned out, and the Employee shall receive 100% of the shares. For EPS growth
between the zero payout level as established by the Committee and the targeted growth goal, the
Employee shall receive a pro rata portion of the shares. For growth between the targeted goal and
the 200% payout level, as established by the Committee, the Employee shall receive 100% of the
shares at the targeted EPS growth plus a pro rata portion of the shares between the 100% and 200%
payout levels. For EPS growth which equals or exceeds the 200% payout level, as established by the
Committee, the Employee shall receive 200% of the shares payable at the 100% payout level. For
growth at or below the zero payout level, all Restricted Performance Share Awards will be forfeited
by the Employee.

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     For purposes of this Award, EPS means diluted earnings per share as shown on the Consolidated
Statement of Income in the Company’s Annual Report adjusted to exclude the following items:

	 	(1)  	Charges for Discontinued Operations;
	 
	 	(2)  	Charges for Extraordinary items and any other unusual
or non-recurring items of loss or expense, including restructuring
charges;
	 
	 	(3)  	The unbudgeted current year impact and the cumulative
effect of changes in Accounting Principles;
	 
	 	(4)  	Any one-time charge, or dilution caused by seasonal
impact or other factors, resulting from any acquisition or divestiture;
and
	 
	 	(5)  	The effect of changes in Federal corporate Tax Rates.

     Items (1) through (4) above shall be taken into account as adjustments to EPS for purposes of
calculating the amount of the Award earned by an Employee only to the extent that they are
separately identified on the Consolidated Statement of Income in the Company’s Annual Report or
separately quantified in the Notes to the Consolidated Financial Statements in the Management’s
Discussion and Analysis section of the Company’s Annual Report or in other Company filings with the
Securities and Exchange Commission. Notwithstanding anything contained herein, the Committee, in
its sole discretion, reserves the right: (i) with respect to any Employee who is, in the year such
Award becomes deductible by the Company, a “covered employee” within the meaning of Section
162(m)(3) of the Internal Revenue Code of 1986, as amended, to exclude from the computation of EPS
all or any part of any item of extraordinary, unusual, non-recurring or special gain or income (but
not any item of loss or expense), whether or not shown separately on the Consolidated Statement of
Income, and whether or not separately quantified in the Notes to the Consolidated Financial
Statements in the Management’s Discussion

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and Analysis section of the Company’s Annual Report or in other Company filings with the
Securities and Exchange Commissions, that the Committee considers appropriate to so exclude, (ii)
with respect to any Employee, to exclude less than all of an item of loss or expense described in
Items (1) through (5) above, and (iii) with respect to any Employee who is not, in the year such
Award becomes deductible by the Company, a “covered employee” (or who is a “covered employee” but
whose aggregate compensation, including this Award, is less than $1 million) within the meaning of
Section 162(m)(3) of the Internal Revenue Code of 1986, as amended, to exclude from the computation
of EPS all or any part of any item of extraordinary, unusual, non-recurring or special gain,
income, loss or expense, whether or not shown separately on the Consolidated Statement of Income,
and whether or not separately quantified in the Notes to the Consolidated Financial Statements in
the Management’s Discussion and Analysis section of the Company’s Annual Report or in other Company
filings with the Securities and Exchange Commissions, that the Committee considers appropriate to
so exclude.

     It is the intention of the Company that the share Award shall satisfy the requirements for
“other performance based compensation” within the meaning of Section 162(m)(4)(C) of the Internal
Revenue Code of 1986, as amended, and the Regulations thereunder, except to the extent Section 9
herein becomes applicable. Such “other performance based compensation” is deductible by the
Company notwithstanding the provisions of Section 162(m)(1) disallowing deductions for annual
compensation in excess of $1 million paid or accrued to or for a “covered employee”. In view of
the present lack of clear and definitive legal guidance regarding the requirements for “other
performance based compensation”, the Company reserves the right, in the event that any share Award
otherwise payable hereunder to a “covered employee” is ineligible

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for treatment as “other performance based compensation” and if, but only if, such
ineligibility would result in the loss of tax deductions to the Company, to defer, in whole or in
part, the Employee’s receipt of such Award under the terms of the following paragraph, but only
with respect to Awards that become payable before a Change of Control.

     Under the circumstances described in the preceding paragraph, (a) the Employee will, but only
to the extent necessary to avoid a deduction disallowance to the Company, forfeit all rights to
Restricted Performance Shares covered by this Award and (b) the Company shall credit to the
Employee’s Deferred Account under The McGraw-Hill Companies, Inc. Key Executive Short-Term
Incentive Deferred Compensation Plan an amount equal to the fair market value of such forfeited
Shares as of the date such Shares are valued for other Employees. Said amount credited to the
Employee’s Deferred Account, together with interest, shall be paid in a lump sum on January 15
following the year the Employee is no longer a “covered employee” within the meaning of said
Section 162(m) of the Internal Revenue Code of 1986, as amended (or if the Employee so requests, at
such later date in accordance with the terms of the Key Executive Short-Term Incentive Deferred
Compensation Plan).

     3. Maturity and Payment Dates. The maturity date of this Restricted Performance Share
award will be December 31 in the third consecutive year of the cycle including, for this purpose,
the year in which the Restricted Performance Shares were awarded (the “Maturity Date”). The date
of March 15 of the year following the Maturity Date is referred to herein as the “Payment Date.”

     4. Distribution Following Maturity and Payment Dates of Award . If the
Employee remains an employee of the Company through the Payment Date, as hereinafter defined, for
the

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Award and the EPS objective is achieved in accordance with the payout schedule established by
the Committee, the Restricted Performance Shares covered by such Award shall be earned out, and a
share certificate for such shares shall be delivered to the Employee by the Payment Date. If
applicable in accordance with Section 1(b) herein, the restrictive legend shall be removed from the
certificate for such shares at the time of delivery to the Employee.

     Before the certificate is delivered to the Employee, the Company must withhold all applicable
Federal, state and local income taxes. The Company will hold back a sufficient number of the
unrestricted shares which would otherwise be delivered to the Employee to satisfy the required
withholding obligation unless the Employee notifies the Company in writing on or before October 15
in the year the award matures that the Employee will submit a check to satisfy the tax obligation.

     5. Termination of Employment Prior to Payment Date of Award. In the event of the
termination of the Employee’s employment with the Company prior to the Maturity Date for the Award
due to (i) Normal Retirement, Early Retirement, or Disability under the Company’s or one of its
subsidiaries’ retirement or disability plans, (ii) death, or (iii), with the approval of the
Committee, in connection with a termination by the Company other than for Cause, the Employee shall
be eligible to receive a pro rata portion of the Restricted Performance Shares covered by such
Award.

     Except as provided in Section 9 herein, in the event an Employee voluntarily resigns his
employment with the Company or is involuntarily terminated by the Company for Cause prior to

28

 

the Payment Date for the Award, the Employee shall forfeit the right to the shares of stock
covered by such Award.

     (a) Determination of Pro Rata Award Opportunity.

     (i) The pro rata portion of the shares to be earned out by the Employee if he or she
terminates because of Normal Retirement, Early Retirement, or Disability under the Company’s
or one of its subsidiaries’ retirement or disability plans, shall be determined (a) first,
by multiplying the number of Restricted Performance Shares awarded by a fraction, the
numerator of which is the number of years completed during the performance period (counting
the year of termination as a completed year) and the denominator of which is the total
number of years in the performance period; (b) second, by measuring the cumulative compound
growth from the Award cycle base year through the Maturity Date; and (c) by awarding the
number of shares determined in (a) based on the degree to which the cumulative compound
growth calculated in (b) achieves the EPS goal established for the Award, subject to the
limits set forth in the goal and payout schedule established for this Award and to the
provisions of Section 2 herein.

     (ii) The pro rata portion of the shares to be earned out by the Employee, with the
approval of the Committee, in connection with a termination by the Company other than for
Cause, shall be determined (a) first, by multiplying the number of Restricted Performance
Shares awarded by a fraction, the numerator of which is the number of full months during the
performance period in which Employee participated and the denominator of which is 36 months;
(b) second, by measuring the cumulative compound growth from the Award cycle base year
through the Maturity Date; and (c) by

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awarding the number of shares determined in (a) based on the degree to which the
cumulative compound growth calculated in (b) achieves the cumulative EPS goal established
for the Award, subject to the limits set forth in the goal and payout schedule established
for this Award and to the provisions of Section 2 herein.

     (iii) The pro rata portion of the shares to be earned out by the Employee if he or she
terminates because of death, shall be determined (a) first, by multiplying the number of
Restricted Performance Shares awarded by a fraction, the numerator of which is the number of
years completed during the performance period (counting the year of termination as a
completed year) and the denominator of which is the total number of years in the performance
period; (b) second, by measuring the cumulative compound growth from the Award cycle base
year through the end of the year in which termination occurs; and (c) by awarding the number
of shares determined in (a) based on the degree to which the cumulative compound growth
calculated in (b) achieves the cumulative EPS goal established for the Award, subject to the
limits set forth in the goal and payout schedule established for this Award and to the
provisions of Section 2 herein.

     (iv) For purposes of these Terms and Conditions, the “performance period” shall be
deemed to have begun as of the First business day in January of the calendar year in which
the grant of the Restricted Performance Shares of stock covered by these Terms and
Conditions shall be made.

     (b) Distribution of Pro Rated Award.

     (i) Termination Other Than for Death. In the event of the termination of the
Employee’s employment with the Company prior to the Maturity Date for the

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Award other than for death (including, without limitation, Normal Retirement, Early
Retirement, Disability under the Company’s or one of its subsidiaries’ retirement or
disability plans, or other than for Cause), the Employee’s pro rata portion of the Award (if
any) determined to have been earned out pursuant to Section 5(a) herein shall be delivered
to the Employee on the Payment Date.

     (ii) Termination for Death. In the event of the termination of the Employee’s
employment with the Company prior to the Maturity Date for the Award due to death, the
Employee’s pro rata portion of the Award (if any) determined to have been earned out
pursuant to Section 5(a) herein shall be delivered to the Employee no later than March 15 of
the year immediately following the year in which death occurred.

     6. Voting and Dividend Rights. Subject to the terms and conditions of Section 10
herein, the Employee shall have the right to vote any Restricted Performance Shares of Stock
covered by this Award and to receive any dividends with respect to such shares.

     7. Transfer Restrictions. This Award and the shares of Restricted Performance Stock
which have not yet become unrestricted and earned out are nontransferable (other than by will or by
the laws of descent and distribution), and may not be transferred, sold, assigned, pledged or
hypothecated and shall not be subject to execution, attachment or similar process. Any attempt to
effect any of the foregoing shall be null and void.

     8. Miscellaneous. The terms of this Award document (a) shall be binding upon and
inure to the benefit of any successor of the Company, (b) shall be governed by the laws of the
State of New York and any applicable laws of the United States, and (c) may not be amended or

31

 

modified in any way without the express written consent of both the Company and the Employee.
Consent on behalf of the Company may only be given through a writing signed, dated and authorized
by the Executive Vice President of Human Resources for The McGraw-Hill Companies, Inc., which
directly refers to these Terms and Conditions of the Award. No other modifications to the terms of
this Award document are valid under any circumstances. No contract or right of employment shall be
implied by this Award document. If the Award is assumed or a new award is substituted therefor in
any corporate reorganization (including, but not limited to, any transaction of the type referred
to in Section 425(a) of the Internal Revenue Code of 1986, as amended), employment by such assuming
or substituting corporation or by a parent corporation or subsidiary thereof shall be considered
for all purposes of this Award to be employment by the Company.

     9. Change in Control. In the event of a Change in Control, as defined in the Plan,
the following shall apply:

          (a) The EPS goal hereunder shall have been deemed to be achieved, and shall be the higher of
(i) the target EPS goal and (ii) the EPS goal the Employee would have earned for the Award cycle if
the achievement of the relevant goal were measured as of the date such Change in Control is
determined to have occurred solely with respect to the time frame in which the Award was
outstanding.

     (b)     (i) The restrictions applicable to the Restricted Performance Shares shall lapse
and a pro rata portion of the restricted shares as determined in Section 9(b)(ii)

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below shall be distributed immediately to the Employee in the form of unrestricted shares.

             (ii) Calculation of the pro rata unrestricted shares to be distributed to the Employee
hereunder shall be determined solely by multiplying the number of shares in the Restricted
Performance Share Award by a fraction, (x) the numerator of which is the number of calendar
quarters of the 12 quarter cycle for the award which have occurred from the date hereof up
to and including the calendar quarter in which the Change in Control occurred and (y) the
denominator of which is 12 quarters.

     (c)     (i) The other restricted shares not distributed to the Employee as unrestricted shares pursuant to Section 9(b)(i) above will be converted into cash by the Company as of
the date such Change in Control is determined to have occurred. The converted cash amount
for each restricted share shall be the Change in Control Price. For purposes of this
paragraph, the “Change in Control Price” means the highest cash price per share paid by an
acquirer related to a Change in Control for the Company’s common stock in any transaction
reported on the New York Stock Exchange Composite Index, or paid or offered in the
transaction or transactions that result in the Change in Control or any other bona fide
transaction related to a Change in Control or possible Change in Control of the Company at
any time during the sixty-day period ending on the date of the Change in Control, as
determined by the Committee. Such cash amounts for these restricted shares will be retained
by the Company for the benefit of the Employee and thereafter will be distributed by the
Company to the Employee following the Maturity Date of the Award.

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             (ii) If the payment to the shareholders of the Company in connection with the
transaction giving rise to a Change in Control is in the form of securities, either in whole
or in part, then for the purpose of determining the Change in Control Price such securities
will be deemed converted immediately by the Company into a cash equivalent amount as of the
date of the Change in Control. The determination of such cash equivalent amount for such
securities shall be made by an independent investment banking firm selected by the Company.
The determination of the cash equivalent amount by this independent investment banking firm
shall be conclusive. All fees incurred in retaining this investment banking firm will be
paid for by the Company. These cash amounts so determined as a cash equivalent in the
manner provided herein, together with the cash derived from converting the unrestricted shares into cash under Section 9(c)(i) above, will be retained by the Company for the
benefit of the Employee and thereafter will be distributed by the Company to the Employee
following the Maturity Date of the Award.

             (iii) Notwithstanding anything herein to the contrary in Sections 9(c)(i) and 9(c)(ii)
above, if in connection with a Change in Control the Company elects to fund other payments
due senior executives of the Company pursuant to various management and benefit plans by
effecting payments to the “rabbi trust” for which the Bank of New York acts as trustee or
through some other comparable vehicle in order to protect these payments for the benefit of
the senior executives, the Company in such instance will immediately fund the cash payment
referred to herein on the same basis, for example, using a rabbi trust or other comparable
vehicle, that are provided for other payments due senior executives of the Company.

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             (iv) If Employee is terminated involuntarily (except for Cause) prior to the Maturity
Date of the Award, Employee shall receive a cash payment computed as provided in Section
9(c) (i), (ii) and (iii) with respect to the Restricted Shares which were not converted into
common stock and distributed to the Employee pursuant to Section 9(a) and (b)(i) calculated
as of the date such Change in Control is determined to have occurred, upon such termination.

             (v) If the employment of Employee is terminated voluntarily and Employee receives
severance in accordance with any of the provisions of the severance plan in which Employee
participates at the time of a Change in Control, Employee shall receive a cash payment
computed as provided in Section 9(c) (i), (ii) and (iii) with respect to the Restricted
Shares which were not converted into common stock and distributed to the Employee pursuant
to Section 9(a) and (b)(i) calculated as of the date such Change in Control is determined to
have occurred, upon such termination.

             (vi) If the employment of Employee is terminated due to death, or Retirement or
Disability under the Company’s or one of its subsidiaries’ retirement or disability plans
prior to the Maturity Date of the Award, Employee shall receive a cash payment computed as
provided in Section 9(c)(i), (ii) and (iii) with respect to the Restricted Shares which were
not converted into common stock and distributed to the Employee pursuant to Section 9(a) and
(b)(i) calculated as of the date such Change in Control is determined to have occurred, upon
such termination.

35

 

          (d) If in the event of a Change in Control no listing or registration statement is in effect
pursuant to Section 10 below, the Company shall distribute to the Employee a cash equivalent amount
representing the shares of common stock to be distributed to the Employee.

     10. Securities Law Requirements. The Company shall not be required to issue shares of
Common Stock pursuant to this Award unless and until (a) such shares have been duly listed upon
each stock exchange on which the Company’s Common Stock is then registered; and (b) a registration
statement under the Securities Act of 1933, as amended, with respect to such shares is then
effective.

     11. Incorporation of Plan Provisions. This Award is made pursuant to the Plan except
where specifically noted as if the same were fully set forth herein. Capitalized terms not
otherwise defined herein shall have the meanings set forth for such terms in the Plan.

36

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