Document:

Exhibit 10.1

 

Watson
Wyatt Worldwide, Inc.

 

2008
Long-Term Incentive Program for Selected Associates

 

Summary

 

The Long-Term Incentive Program for Selected Associates (the Program)
is a long-term stock bonus program for key associates designed to meet specific
retention needs in certain parts of Watson Wyatt & Company, Watson
Wyatt Limited and their Affiliates (collectively, the “Company”).  Incentives are provided through grants of
deferred stock units tied to a 3-year performance period with vesting contingent
upon meeting certain Company goal thresholds. 
This incentive program does not replace the Fiscal Year End Bonus (FYEB)
program.

 

Eligibility

 

Associates of the Company will be eligible for nomination to
participate in the Program.  Eligible
participants will be nominated and approved by the Compensation Committee of
the Board (the Committee).  Generally,
associates eligible for nomination will be associates who are critical to the
long-term success of the Company and whom the Company seeks to retain due to
various factors, including but not limited to their ability to win major new
projects or clients, their ability to build strong and profitable relationships
with our most important clients, their exceptional technical competence and
thought leadership, or their critical role in the management of the
Company.  A list of participants
nominated and approved by the Committee for the performance period beginning January 1,
2008 and ending December 31, 2010 is attached hereto as Attachment 1.

 

Performance Period

 

The performance period is a 3-year period that begins on January 1,
20xx and ends on December 31, 20xx+3. 
For example, the performance period that began on January 1, 2008
will end on December 31, 2010. 
Baseline metrics are established at the beginning of the performance
period (except that metrics for the first performance period may be established
after January 1, 2008).  At the end
of the performance period, performance metrics will then be measured.  The Company will follow its standard process
for financial reporting in conjunction with the close of the calendar year
(i.e., following the second quarter of the fiscal year).  Once Company financial results are finalized
and the Company has filed its second quarter 10-Q (February following end
of the calendar year) the final performance metric results for the most recent
performance period can be determined. 
The Chief Financial Officer will certify the final performance metric
results to the Committee, which will then determine the earnout for the
performance period.

 

Grants

 

Grants of stock (performance
shares) are made under the 2001 Deferred Stock Unit Plan for Selected
Employees.  Grants are determined
using base salary at the start of the performance period as the starting
point.  A multiplier, which varies by
participation tier, is then applied to that value to determine the cash value
of the performance shares.  The cash
value is then converted to a number of shares of stock based on the stock
market closing price on the last day of the first quarter of the performance
period (i.e., March 31).  For
calculation purposes, salary information will be based on what is in effect as
of January 1 of the first calendar year of the performance period.

 

All performance share grants will be made by the Committee as of April 1
of the first year of the performance period. 
Final grant amounts will generally be determined by the method outlined
here.  However, the Committee, at its
discretion, may adjust final grant amounts.

 

 

Vesting

 

The performance shares will vest 3 years from the first day of the
performance period based on the achievement of certain performance metrics and
subject to the participant’s continued employment on the vesting date unless
waived in accordance with the Termination Provisions herein.  Company performance goals are established by
the Committee at the beginning of each performance period.  At the conclusion of each performance period,
Company performance metrics are measured against goals over the same period to
determine the percentage of the grant to be awarded.  The actual award is determined by an earnout
schedule which defines performance level ranges and associated earnout of
grants.  Vested shares are distributed to
participants in March following the end of the performance period and the
filing of the 10-Q for the second quarter of the fiscal year.  A participant must be an active employee of
the Company on the payment date in order to be eligible to receive a
distribution of the vested shares.

 

Performance Metrics and Earnout

 

The earnout for each performance period is determined by evaluating
actual region and practice performance, using pre-defined metrics, for the full
3-year performance period.  Baselines for
each metric will be established at the beginning of each performance period by
the Committee and will vary by region and practice corresponding to the region
and practice of each respective participant. 
The baseline will be determined by recording the metric applicable to
the prior calendar year (year ending December 31).

 

For grants under the Program covering the performance period beginning January 1,
2008 and ending December 31, 2010, two types of financial metrics will be
used:

 

1.   Revenue Growth; and

 

2.   Net
Operating Income (NOI) Percentage

 

Revenue
Growth – Revenue growth is defined as the percentage change in revenue from the
calendar year prior to the performance period of the Program through the third
calendar year of the performance period. 
Revenue will be defined as the amounts included in the published
internal results applicable to each respective region and practice, as
adjusted, if necessary, for practice-specific adjustments for the performance
period that are excluded from the financials (e.g., for the effects of
acquisitions and divestitures — see below).

 

Net Operating Income Percentage – The net operating income percentage
will be defined as the cumulative annual amounts of NOI for each of the three
calendar years in the performance period divided by total Revenue for the same
period.  All amounts will be derived from
published internal results applicable to each respective region and practice,
as adjusted, if necessary, for practice-specific adjustments for the
performance period that are excluded from the financials (as above).

 

 

The financial metrics by region and practice are as follows:

 

Europe

 

	
  Practice

  	
   

  	
  Revenue Growth

  	
   

  	
  NOI %

  	
   

  
	
  Benefits

  	
   

  	
  15.76

  	
  %

  	
  25.0

  	
  %

  
	
  HCG/WWDS

  	
   

  	
  33.10

  	
  %

  	
  15.0

  	
  %

  
	
  Investment

  	
   

  	
  52.09

  	
  %

  	
  30.0

  	
  %

  
	
  IFS

  	
   

  	
  33.10

  	
  %

  	
  20.0

  	
  %

  
	
  International - Global

  	
   

  	
  24.23

  	
  %*

  	
  12.5

  	
  %

  
	
  Business Services

  	
   

  	
  19.10

  	
  %

  	
  23.0

  	
  %

  

 

*The practice must also
generate more revenues each year for other practices than is generated by the
International Practice for itself (to be measured each year, and a record
maintained, by the International Practice).

 

North America

 

	
  Practice

  	
   

  	
  Revenue Growth

  	
   

  	
  NOI %

  	
   

  
	
  Benefits

  	
   

  	
  17.76

  	
  %

  	
  31.9

  	
  %

  
	
  Investment

  	
   

  	
  72.80

  	
  %

  	
  20.0

  	
  %

  
	
  Compensation

  	
   

  	
  33.10

  	
  %

  	
  20.0

  	
  %

  
	
  Growth

  	
   

  	
  25.97

  	
  %

  	
  25.3

  	
  %

  

 

Earnout Schedule

 

At the end of the 3-year performance period, a sliding scale will be
applied if the performance measures are not met.  For achievement of less than 90% of either
applicable performance metric, no vesting will occur.  For achievement of at least 90% of both
performance metrics, but not 100% of both, the vesting percentage will be equal
to the lower of the two achievement percentages (rounded down to the nearest
1/10th of a
percentage point).

 

If at least 100% of both performance metrics are achieved, vesting will
occur at 100%.

 

Notwithstanding the foregoing, however, a participant will not be
entitled to payment and vesting will not be deemed to have occurred with
respect to that particular participant unless the participant has achieved a
minimum assessed performance bonus in each of the three years (i.e., before
applying the bonus funding percentage for the participant’s region and
practice) equivalent to Performance Grade 4 (Strong Performance) with an
assessed bonus between 90% and 100% of the participant’s target bonus.

 

 

In
performance periods where acquisitions occur:

 

Revenue
at the start of the performance period will be increased by the revenue
generated by the acquired company during the annual period preceding the
acquisition. In the event an
acquisition occurs after the first day of the performance period, the
acquisition revenue from the calendar year preceding the acquisition will be
discounted, using Watson Wyatt’s revenue growth rate, from the calendar year
preceding the acquisition to the beginning of the performance period. In
addition, the revenue to be counted for the acquired company in the year of
acquisition will be adjusted to be representative of a full year’s
revenue.  Acquisition revenue for
purposes of this adjustment will be based on the acquired company’s audited
financials.  In the event audited
financials are unavailable, revenue generated from the acquired company will be
based on the acquired company’s internal financials as compiled in a fashion
consistent with those financials used to perform the valuation in connection
with the purchase price.

 

The
revenue growth and NOI percentage calculations will be calculated on a constant
currency basis.

 

Dividend
Equivalents

 

Participants will be entitled to the crediting of dividend equivalents
during the 3-year performance period. 
Dividend equivalents shall be credited at the same time, and in the same
manner, and shall vest as specified in Section 4.1 of the Company’s 2001
Deferred Stock Unit Plan for Selected Employees.

 

Termination Provisions

 

Performance shares granted to a participant whose employment terminates
prior to the scheduled vesting date on account of the participant’s death, or
permanent disability (permanent disability to be determined pursuant to the
terms of the Company’s tax-qualified pension plan in the U.S.) shall vest as if
the participant remained employed through the scheduled payment date.  Performance shares granted to a participant
whose employment terminates prior to the scheduled payment date on account of
retirement (determined pursuant to the terms of the Company’s qualified pension
plan in the U.S.) shall vest as the Committee may determine, in its sole
discretion and on a case-by-case basis. 
Performance shares granted to a participant whose employment terminates
prior to the payment date for reasons other than death, permanent disability or
retirement will not vest and shall be forfeited; provided, however, that the
Committee may determine, in its sole discretion and on a case-by-case basis, to
permit some or all of such participant’s performance shares to vest.

 

Change
in Control or Capitalization

 

A change in control or
capitalization (merger, consolidation, reorganization, stock split,
acquisition, etc.) may affect the value of performance shares granted, earnout
of vested performance shares or other provisions of the Program.  To assure fair and equitable treatment of
participants in the event of such a change in control or capitalization, the
Committee, at its discretion, may make changes to grants and/or vesting that is
consistent with the Change in Control and Change in Capitalization provisions
described in the 2001 Deferred Stock Unit Plan for Selected Employees.  Under these circumstances, the Committee may
make appropriate adjustments to the number of performance shares granted for
any performance period, accelerate the vesting of any performance shares
granted, or provide for payment in cash in lieu of shares.Exhibit 10.2

 

WATSON
WYATT WORLDWIDE, INC.

 

AMENDED
2001 DEFERRED STOCK UNIT PLAN FOR SELECTED EMPLOYEES

 

Article 1-General

 

Section 1.1             Purposes.

 

The purposes of the
Watson Wyatt Worldwide, Inc. Amended 2001 Deferred Stock Unit Plan for
Selected Employees (the “Plan”) are (a) to provide an incentive to certain
highly qualified individuals to serve as Selected Employees (as defined below)
of Watson Wyatt Worldwide, Inc. (“WWW”) and its Affiliates (together, the “Company”)
and (b) to further align the interests of Selected Employees with the
stockholders of WWW.

 

Section 1.2             Definitions.

 

For the purpose of the
Plan, the following terms shall have the meanings indicated.

 

	
  (a)

  	
  “Account”
  means the unfunded and unsecured journal entry account established on the
  books and records of WWW to record an Account Balance.

  
	
   

  	
   

  
	
  (b)

  	
  “Account Balance”
  means, the Deferred Stock Units credited to a Participant’s Account, as
  adjusted in accordance with Article 4 to reflect the addition of
  dividend equivalents and any changes in capitalization and as adjusted in
  accordance with Section 2.7.

  
	
   

  	
   

  
	
  (c)

  	
  “Affiliate” means any
  corporation, partnership, or other organization of which WWW owns or
  controls, directly or indirectly, not less than 50% of the total combined
  voting power of all classes of stock or other equity interests.

  
	
   

  	
   

  
	
  (d)

  	
  “Annual Meeting” means
  the Annual Meeting of Stockholders of WWW.

  
	
   

  	
   

  
	
  (e)

  	
  “Board of Directors” or
  “Board” shall mean the Board of Directors of WWW.

  
	
   

  	
   

  
	
  (f)

  	
  “Business Day” shall
  mean any day on which the New York Stock Exchange is open for business.

  
	
   

  	
   

  
	
  (g)

  	
  “Change in Control”
  shall mean the occurrence of any of the following:

  

 

(i)                         the
sale, lease, transfer, conveyance or other disposition, in one or a series of
related transactions, of all or substantially all of the assets of the Company;

 

 

(ii)                      any
“person” or “group” (as such terms are used in Sections 13(d)(3) and 14(d)(2) of
the Exchange Act, as defined below) is or becomes the “beneficial owner” (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a
person shall be deemed to have “beneficial ownership” of all shares that any
such person has the right to acquire, whether such right is exercisable
immediately or is subject to other conditions, directly or indirectly, of more
than 50% of the total voting power of the voting stock of WWW, including by way
of merger, consolidation or otherwise;

 

(iii)                   satisfaction or waiver of all
conditions precedent (including receipt of any approval by the stockholders of
WWW) under any agreement or plan of merger, consolidation or reorganization
involving WWW, if as a result of such merger, consolidation or reorganization
the stockholders of WWW immediately before such transaction will not own,
directly or indirectly immediately following such merger, consolidation or
reorganization, more than 50% of the combined voting power of the company(ies)
resulting from such merger, consolidation or reorganization in substantially
the same proportion as their ownership immediately before such merger, consolidation
or reorganization; or

 

(iv)                  during
any period of two consecutive years, individuals who at the beginning of such
period served on the Board of Directors (any such individual, an “Incumbent
Director”) cease for any reason to constitute a majority of the Board of
Directors; provided that any new director whose election to the Board or whose
nomination for election to the Board was approved by a majority of the
Incumbent Directors then in office shall be considered an “Incumbent Director”
unless the director was elected or nominated for election to the Board of
Directors to avoid or settle a threatened or actual proxy contest.

 

(h)                     “Code”
means the Internal Revenue Code of 1986 of the United States of America, as
amended from time to time.

 

(i)                         “Committee”
shall have the meaning provided in Section 7.1.

 

(j)                         “Common
Stock” means the Class A common stock, par value $.01 per share, of WWW.

 

(k)                      “Company”
means WWW and all of its Affiliates.

 

(l)                         “Current
Market Value” per share of Common Stock for any date means (i) if the
Common Stock is listed on a national securities exchange or quotation system,
the closing sales price on such exchange or quotation system on such date or,
in the absence of reported sales on such date, the closing sales price on the
immediately preceding date on which sales were reported, (ii) if the
Common Stock is not listed on a national securities exchange or quotation
system, the mean between the high bid and low offered prices as quoted by the
National Association of Securities Dealers, Inc. Automated Quotation
System (“NASDAQ”) for such date, or (iii) if the Common Stock is neither
listed on a national securities exchange or quotation system nor quoted by
NASDAQ, the fair value as determined by such other method as the Committee determines
in good faith to be reasonable.

 

 

	
  (m)

  	
  “Deferred Stock Unit”
  or “Unit” means a unit representing WWW’s obligation to deliver or issue to a
  Participant one share of Common Stock for each such unit in accordance with
  the terms of the Plan.

  
	
   

  	
   

  
	
  (n)

  	
  “Disability” means any
  physical or mental condition of a Selected Employee that in the opinion of
  the Committee renders the Selected Employee incapable of continuing to be an
  employee of the Company.

  
	
   

  	
   

  
	
  (o)

  	
  “Exchange Act” means
  the Securities Exchange Act of 1934 of the United States of America, as
  amended.

  
	
   

  	
   

  
	
  (p)

  	
  “Grant” means the
  crediting of units to a Participant’s Account pursuant to Section 2.1.

  
	
   

  	
   

  
	
  (q)

  	
  “Grant Date” shall mean
  the date that Deferred Stock Units are credited to a Participant’s Account
  pursuant to Section 2.1.

  
	
   

  	
   

  
	
  (r)

  	
  “Participant” means
  each Selected Employee to whom a Grant of Deferred Stock Units has been made
  under the Plan.

  
	
   

  	
   

  
	
  (s)

  	
  “Payment”
  means the distribution of Common Stock to a Participant in accordance with
  Sections 2.4 and 2.6(b), and it shall also include any Payment made pursuant
  to Article 6 or Section 7.4.

  
	
   

  	
   

  
	
  (t)

  	
  “Performance-Based Compensation” means any
  compensation excluded from the definition of “applicable employee
  remuneration” pursuant to Section 162(m)(4)(C) of the Code.

  
	
   

  	
   

  
	
  (u)

  	
  “Plan” means this
  Watson Wyatt Worldwide, Inc. Amended 2001 Deferred Stock Unit Plan for
  Selected Employees.

  
	
   

  	
   

  
	
  (v)

  	
  “Selected Employee”
  shall mean those highly compensated and/or highly qualified employees of the
  Company as are eligible to be selected by the Committee for awards under this
  Plan, as determined by the Committee from time to time.

  
	
   

  	
   

  
	
  (w)

  	
  “Unit Portion of the
  Bonus” means the portion of any Participant’s bonus that is to be allocated
  and paid by crediting Deferred Stock Units to the Participant’s Account, as
  determined or approved by the Committee, and done in accordance with
  Section 2.1.

  
	
   

  	
   

  
	
  (x)

  	
  “Units” has the meaning
  specified in the definition of “Deferred Stock Units”.

  
	
   

  	
   

  
	
  (y)

  	
  “Vested” means, with
  respect to a Deferred Stock Unit credited to a Participant’s Account, that
  such Unit is no longer subject to forfeiture in accordance with any notice
  given by the Company to the Participant at the time of the Grant, or any
  agreement between the Company and the Participant, in accordance with
  Section 2.2.

  

 

 

(z)                       “WWW”
has the meaning specified in Section 1.1.

 

(aa)                “Section 409A” means Section 409A of the Code
and any regulations and other guidance issued by the Internal Revenue Service
thereunder.

 

(bb) “Separation from Service” means the cessation of a Participant’s service as an employee
of the Company and its Affiliates, whether voluntary or involuntary, for any
reason determined consistent with guidance issued by the Department of the
Treasury regarding what constitutes a “separation from service” under Section 409A.

 

Section 1.3             Shares
Subject to the Plan.

 

(a)                      Reservation
of Shares.  The total number of shares of
Common Stock that shall be reserved for issuance in payment of Deferred Stock
Units under the Plan shall be 2,700,000* subject to adjustment for changes in
capitalization of WWW as provided in subparagraph (b) below.  Shares of Common Stock issued under the Plan
may be authorized but unissued shares of Common Stock, issued shares held in or
acquired for WWW’s treasury or shares reacquired by WWW upon purchase in the
open market.

 

(b)                     Changes
in Common Stock.  If any change is made
in the terms or provisions of the Common Stock then subject to the Plan
(whether by reason of reorganization, merger, consolidation, recapitalization,
stock dividend, stock split, combination of shares, exchange of shares, change
in corporate structure, or otherwise), then the Committee may make appropriate
adjustments to the maximum number of shares of Common Stock subject to and
reserved under the Plan and to the Units allocated to Accounts as it in its
sole discretion determines to be appropriate.

 

(c)                      Tax Code Limits.  The aggregate number of shares of Common
Stock or Units that may be Granted or issued under or subject to any bonus arrangement
that is authorized by the Committee during any fiscal year for any one
Participant shall not exceed 200,000 shares of Common Stock.  The foregoing share limitation shall be
adjusted to the same extent as other adjustments pursuant to Section 1.3(b) provided
that no such adjustment shall be made if it would affect the status of any
Grant or arrangement intended to qualify as Performance-Based
Compensation.  The foregoing limitation
shall apply only to any such arrangement that is intended to qualify as
Performance-Based Compensation pursuant to this Plan and shall not apply with
respect to any Grant under a bonus arrangement that is intended to qualify as
Performance-Based Compensation under either the Watson Wyatt & Company Holdings Incentive Compensation Plan or
another  stockholder
approved plan other than the Plan.

 

*Reflects 1,200,000
additional shares of Common Stock reserved and authorized by the Company’s
Board of Directors in September 2006.

 

 

Article 2                Deferred
Stock Units; Optional Deferral of Payment; Performance-Based Arrangements

 

Section 2.1             Grants
of Deferred Stock Units.

 

The Committee shall select and/or approve the Selected
Employees who shall be Participants in the Plan and shall authorize each Grant
under the Plan by determining or approving the portion or amount of any bonus
otherwise payable to any such Participant which shall equal the Unit Portion of
the Bonus made to the Participant.  Each
Participant shall have an Account established in his or her name.  In connection with any Grant, there shall be
credited to the Participant’s Account as of the Grant Date, the number of
Deferred Stock Units obtained by dividing the amount of the Unit Portion of the
Bonus made to the Participant by the Current Market Value per share of Common
Stock as of the Grant Date, and rounding the result upwards to the nearest
whole Deferred Stock Unit.  Upon a Grant
being made in the name of a Participant, the Participant’s rights with respect
to the Unit Portion of the Bonus for the Participant shall consist solely of
any benefits provided pursuant to the Plan.

 

Section 2.2             Vesting
of Deferred Stock Units.

 

The Company may provide, in a notice given by the
Company to the Participant at the time of the Grant, or in an agreement between
the Company and the Participant, a vesting schedule for the Deferred Stock
Units being credited to the Participant’s Account, such that some or all of the
Deferred Stock Units credited to the Participant’s Account shall be forfeited
if the Participant does not continue in employment with the Company until the
vesting of such Units as specified in such notice or agreement.

 

Section 2.3             Termination
of Employment.

 

Notwithstanding any provision herein to the contrary,
in the event that a Participant’s employment is terminated before any (or all)
of his or her Deferred Stock Units have become Vested, as provided in the
notice or agreement described in Section 2.2, then all such Deferred Stock
Units in the Participant’s Account which are not then Vested (including any
Units attributable to such Units pursuant to Section 4.1, as determined by
the Company) shall be forfeited, and no amount or Common Stock shall be payable
with respect to such Units under any provision of this Plan, including any
provision of this Article 2.

 

Section 2.4             Payment
of Shares on Account of Deferred Stock Units.

 

Unless deferred at the option of the Participant in
accordance with Section 2.5(a), or if otherwise modified pursuant to the
provisions of this Plan, the Account Balance with respect to a particular Grant
will become payable and shall be paid on the date that the Units become Vested
in accordance with Section 2.2, and one share of Common Stock will be
delivered in full satisfaction of each Deferred Stock Unit to be paid, after
rounding any fractional Deferred Stock Unit upwards to the nearest whole share.

 

 

Section 2.5             Optional
Deferral of Payment of Shares.

 

(a)                      Optional
Deferral of Payment.  As to each Grant,
the Committee may allow a Participant the option to defer the payment of all or
a portion of any Deferred Stock Units for later payment in accordance with Section 2.6
by submitting to the Committee or its designee such forms as the Committee
shall prescribe by such date as the Committee may establish. Any such election
shall become irrevocable as of the last date that is permissible under Section 409A.  With respect to Deferred Stock Units that
vest at least 12 months after the date of Grant, to the extent permitted by the
Committee, a Participant may irrevocably elect to defer payment of such
Deferred Stock Units at any time within 30 days of the date of Grant, provided
that such election shall apply only to the extent the applicable Deferred Stock
Units do not vest earlier than the 12-month anniversary of such election. In no
event may any deferral be made to the extent such deferral would result in the
acceleration of any tax or the imposition of any additional tax or interest
charge pursuant to Section 409A.

 

(b)                     Irrevocability
of Deferral Election.   An election to
defer the payment of all or a portion of a Participant’s Account Balance made
pursuant to Section 2.5(a) shall be irrevocable once submitted to the
Committee or his or her designee.

 

Section 2.6             Payment
of Shares Optionally Deferred.

 

(a)                      Deferral
Election.  If a Participant elects, then
his or her Account Balance will be paid by the Company, at the time elected by
the Participant in accordance with this Section 2.6.  The Account Balance shall be paid in a lump
sum at the time specified in this Section 2.6 or, if authorized by the Committee
and elected by the Participant on the deferral election form, in annual
payments over a period of years.  If the
Account Balance is to be paid in annual payments, then each payment will be
calculated as a number of Deferred Stock Units equal to (i) the number
determined by dividing the number of Units allocated to the Participant’s
Account as of the date of the first payment by the total number of annual
payments, plus (ii) the number of any additional Units allocated pursuant
to Section 4.1 after the date of the first payment to the Units then
payable.  The election shall specify the
timing of the lump sum payment or (in the case of annual payments) of the first
payment, as one of the following:  (i) the
first day of the month following the month that the Participant experiences a
Separation from Service or that the Participant dies;  (ii) the first day of the month which is
any number of whole years selected by the Participant after the date on which
the Participant’s Deferred Stock Units become Vested (i.e., without taking into
account the possibility of a Participant’s Separation from Service, death or
Disability); or (iii) in any month in the calendar year following the date
on which the Participant experiences a Separation from Service.  Notwithstanding the foregoing, if the
Participant is a “specified employee” within the meaning of Section 409A
and the event resulting in distribution of benefits is the Participant’s
Separation from Service, any distribution scheduled to be made within six months
of such Separation from Service shall be made on the six-month anniversary of
such Separation from Service.

 

 

(b)                     Form of
Payment.  One share of Common Stock will
be delivered in full satisfaction of each Deferred Stock Unit to be paid, after
rounding any fractional Deferred Stock Unit upwards to the nearest whole share.

 

(c)                      Death
Prior to Payment.  If the Participant
dies prior to payment of any or all amounts optionally deferred pursuant to
this Section 2.6, then the Account Balance will be paid to the Participant’s
beneficiary in accordance with the Participant’s election.

 

Section 2.7             Debiting
of Deferred Stock Account.

 

If and when shares of Common Stock are distributed to
a Participant, the Participant’s Account shall be debited with the number of
Units equivalent to the number of shares of Common Stock that have been
distributed.

 

Section 2.8.            Qualifying Performance-Based Compensation.

 

(a)                      General.
The Committee shall specify the Qualifying Performance Criteria and the level
of achievement under such criteria that shall determine the number of shares of
Common Stock or Units to be Granted, issued or vested under any bonus
arrangement that is intended to qualify as Performance-Based Compensation
pursuant to this Plan.  Prior to such
shares or Units being Granted, issued or vested, the Committee shall certify
the extent to which any Qualifying Performance Criteria has been achieved or
satisfied, and the number of shares of Common Stock or the number of Units that
will be Granted, issued or vested under this Plan as a result of achieving or
satisfying such criteria. Notwithstanding satisfaction of any Qualifying
Performance Criteria, the number of shares or Units Granted, issued or vested
under any such bonus or arrangement may be reduced by the Committee on the
basis of such further considerations as the Committee in its sole discretion
shall determine.

 

(b)                     Qualifying
Performance Criteria. For purposes of this Plan, the term “Qualifying
Performance Criteria” shall mean any one or more of the following performance
criteria, either individually, alternatively or in any combination, applied to
either the Company as a whole or to a business unit or Subsidiary, either
individually, alternatively or in any combination, and measured either annually
or cumulatively over a period of years, on an absolute basis or relative to a
pre-established target, to previous years’ results or to a designated
comparison group, in each case as specified by the Committee: (i) cash
flow (before or after dividends), (ii) earnings per share (including
earnings before interest, taxes, depreciation and amortization), (iii) stock
price, (iv) return on equity, (v) total stockholder return, (vi) return
on capital (including return on total capital or return on invested capital), (vii) return
on assets or net assets, (viii) market capitalization, (ix) economic
value added, (x) debt leverage (debt to capital), (xi) revenue,
(xii) income or net income, (xiii) operating income or net operating
income, (xiv) operating profit or net operating profit,
(xv) operating margin or profit margin, (xvi) return on operating
revenue, (xvii) cash from operations, (xviii) operating ratio,
(xix) operating revenue, or (xx) integration and/or penetration of
the market.

 

 

To the extent consistent
with Section 162(m) of the Code, the Committee may appropriately
adjust any evaluation of performance under a Qualifying Performance Criteria to
exclude any of the following events that occurs during a performance period: (i) asset
write-downs, (ii) litigation, claims, judgments or settlements, (iii) the
effect of changes in tax law, accounting principles or other such laws or
provisions affecting reported results, (iv) mergers, acquisitions and
divestitures, (v) accruals for reorganization and restructuring programs
and (vi) any extraordinary, unusual or non-recurring items as described in
Accounting Principles Board Opinion No. 30 and/or in management’s
discussion and analysis of financial condition and results of operations
appearing in the Company’s Forms 10-K or 10-Q for the applicable year.

 

Section 2.9.            Mandatory
Deferral if Section 162(m) Applies.

 

(a)                      Mandatory
Deferral.  Notwithstanding any other
provision of the Plan to the contrary, to the extent the Company reasonably
anticipates that payment of a Participant’s Account at the time elected by the
Participant or otherwise provided under the Plan would be nondeductible to the
Company due to the application of Section 162(m) of the Code, payment
of that portion of the Account shall be delayed until the Participant’s
separation from service (as determined pursuant to Section 409A of the
Code) or, if earlier, in the calendar year in which the Company first
reasonably anticipates that payment of the deferred amount will not be
nondeductible as a result of the application of Section 162(m) of the
Code.  Notwithstanding the preceding
sentence, where any scheduled payment to the Participant is delayed in
accordance with this Section 2.8(a), the delay in all events will be for
at least five (5) years from the date the payment otherwise was scheduled
to be made pursuant to the Participant’s election or as otherwise provided
under the Plan unless all scheduled payments to the Participant by the Company
that could be delayed consistent with Section 409A of the Code as a result of
the application of Section 162(m) of the Code are also delayed.  In addition, to the extent that the
Participant is a “specified employee” (as determined pursuant to Section 409A
of the Code) and payment is made in connection with the Participant’s separation
from service, payment of the amount described in this Section 2.8 shall in
no event be made earlier than the six-month anniversary of the Participant’s
separation from service (unless the Participant’s separation from service
results from the Participant’s death, in which case the deferred amount shall
be paid to the Participant’s beneficiary as soon as reasonably practicable
following the Participant’s death).

 

(b)                     Form of
Payment. During any deferral period required by Section 2.8(a), the Participant’s
Account shall continue to be deemed invested in Deferred Stock Units.  At time of payment specified in Section 2.8(a),
one share of Common Stock will be delivered in full satisfaction of each such
Deferred Stock Unit to be paid, after rounding any fractional Deferred Stock
Unit upwards to the nearest whole share.

 

 

Article 3                Beneficiary;
Tax

 

Section 3.1             Beneficiary.

 

(a)                      Designation
of Beneficiary.  The Participant may
designate, in writing delivered to the Committee or its designee before the Participant’s
death, a beneficiary to receive payments under the Plan in the event of the
Participant’s death.  The Participant may
also designate a contingent beneficiary to receive payments under the Plan if
the primary beneficiary does not survive the Participant.  The Participant may designate more than one
person as the Participant’s beneficiary or contingent beneficiary, in which
case (i) no contingent beneficiary would receive any payment unless all of
the primary beneficiaries predeceased the Participant, and (ii) the
surviving beneficiaries in any class shall share in any payments in proportion
to the percentages of interest assigned to them by the Participant relative to
the percentage of interests held by all survivors in that class.

 

(b)                     Change
in Beneficiary.  The Participant may
change his or her beneficiary or contingent beneficiary (without the consent of
any prior beneficiary) in a writing delivered to the Committee or its designee
before the Participant’s death.  Unless
the Participant states otherwise in such writing, any change in beneficiary or
contingent beneficiary will automatically revoke such prior designations of the
Participant’s beneficiary or of the Participant’s contingent beneficiary, as
the case may be, under this Plan only; any designations under other deferral
agreements or plans of the Company will remain unaffected.

 

(c)                      Default
Beneficiary.  In the event a Participant
does not designate a beneficiary, or no designated beneficiary survives the
Participant, the Participant’s beneficiary shall be the Participant’s surviving
spouse, if the Participant is married at the time of his or her death and not
subject to a court-approved agreement or court decree of separation, or
otherwise the person or persons designated to receive benefits on account of
the Participant’s death under the Company’s pre-retirement death benefit for
Selected Employees, if any, unless the rights to such benefit have been
assigned, in which case any amounts payable to the Participant’s beneficiary
under the Plan will be paid to the Participant’s estate.

 

(d)                     If
the Beneficiary Dies During Payment.  If
a beneficiary who is receiving or is entitled to receive payments hereunder
dies after the Participant’s death but before all the payments have been made,
the portion of the Account Balance which that beneficiary otherwise would have
received will be paid as soon as practicable in a single payment to such
beneficiary’s estate and not to any contingent beneficiary the Participant may
have designated.

 

 

Section 3.2                                      Domestic
Relations Orders.

 

Notwithstanding the Participant’s elections hereunder,
at the time any Units become payable under Sections 2.4 and 2.6, the Company
will pay to, or to the Participant for the benefit of, the Participant’s spouse
or former spouse the portion of the Participant’s Account Balance specified in
a valid court order entered in a domestic relations proceeding involving the
Participant’s divorce or legal separation. 
Any such payment will be made net of any amounts the Company may be
required to withhold under applicable U.S. federal, foreign, state or local
law.

 

Section 3.3                                      Payment of Cash
Where Distribution of Common Stock is Prohibited or Impractical Under
Applicable Law.

 

Notwithstanding any other provision of this Plan, in
any jurisdiction or country where the Committee determines that the
distribution of Common Stock in such jurisdiction or country is prohibited or
impractical (including as a result of costs or administrative procedures) under
the law of such jurisdiction or country, the Company may pay cash (rather than
Common Stock) to a Participant in an amount equal to the Current Market Value,
as of the date the shares otherwise would have been payable, of the Common
Stock that the Participant otherwise would have received.

 

Section 3.4                                      Withholding of
Taxes

 

Whenever under the Plan payments are to be made,
whether in shares of stock or in cash, the Company, in its sole discretion,
shall be entitled to withhold therefrom the amount it determines necessary to
satisfy any United States federal, state, local, foreign or other withholding
tax requirements relating to such amount, or to require as a condition of
delivery that the Participant remit or, in appropriate cases, agree to remit
when due the amount necessary to satisfy all federal, state, local, foreign, or
other withholding tax requirements relating thereto.  At the option of the Company, such amount may
be remitted by check payable to the Company, in shares of Common Stock (which
may include shares received pursuant to this Plan), by the Company’s
withholding of shares of Common Stock, or any combination thereof.

 

Article 4                                               Adjustment
of Accounts

 

Section 4.1                                      Dividend
Equivalents.

 

Whenever a cash
dividend is paid on a share of Common Stock, a Participant’s Account will be
adjusted by adding to the Account Balance the number of Deferred Stock Units
determined by multiplying the per share amount of the cash dividend by the
number of Units credited to the Account Balance on the record date for the cash
dividend, dividing the result by the Current Market Value of a share of Common
Stock on the date the cash dividend is paid, and rounding the result to the
nearest 1/100th of a Deferred Stock Unit as the case may be (with .005 being
rounded upwards); provided that, if a Participant’s Account Balance is reduced
to zero in accordance with the Plan between the record date and the payment
date for such cash dividend, then, in lieu of such adjustment to the
Participant’s Account, the dividend equivalent amount with respect to such
record date will be determined by multiplying the per share amount of the cash
dividend by the portion of the Participant’s Account Balance that is payable on
the record date for the cash dividend and rounding the result to the nearest
whole cent, which amount shall be paid to the Participant in cash.

 

 

Any adjustment with respect to a Participant’s Account
pursuant to this Section 4.1 which is made with respect to any Deferred
Stock Units which are not then Vested shall become Vested at the same time as
such Deferred Stock Units.

 

Section 4.2                                      Changes in
Capitalization.

 

Notwithstanding any other provision of the Plan to the
contrary, if any change shall occur in or affect shares of Common Stock on
account of a merger, consolidation, reorganization, stock dividend, stock split
or combination, reclassification, recapitalization, or distribution to holders
of shares of Common Stock (other than cash dividends), including, without
limitation, a merger or other reorganization event in which the shares of Common
Stock cease to exist, then the Committee may make an appropriate adjustment to
the Deferred Stock Units, as it determines necessary to maintain the
proportionate interest of the Participants and to preserve, without increasing,
the value of their Account Balance.  In
the event of a change in the presently authorized shares of Common Stock that
is limited to a change in the designation thereof or a change of authorized
shares with par value into the same number of shares with a different par value
or into the same number of shares without par value, the shares resulting from
any such change shall be deemed to be shares of Common Stock within the meaning
of the Plan.

 

Article 5                                               Status
of Accounts

 

Section 5.1                                      No Trust or Fund
Created; General Creditor Status.

 

Nothing contained herein and no action taken pursuant
hereto will be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company and any Participant, the Participant’s
beneficiary or estate, or any other person. 
Title to and beneficial ownership of any Common Stock or funds
represented by the Account Balance will at all times remain with the Company;
such Common Stock or funds will continue for all purposes to be a part of the
general assets of the Company and may be used for any corporate purpose. No
person will, by virtue of the provisions of this Plan, have any interest
whatsoever in any specific assets of the Company.  TO THE EXTENT THAT ANY PERSON ACQUIRES A
RIGHT TO RECEIVE PAYMENTS FROM THE COMPANY UNDER THIS PLAN, SUCH RIGHT WILL BE
NO GREATER THAN THE RIGHT OF ANY UNSECURED GENERAL CREDITOR OF THE COMPANY

 

Section 5.2                                      Non-Assignability.

 

The Participant’s right, or the right of any other
person, to the Participant’s Account Balance or any other benefits hereunder
cannot be assigned, alienated, sold, garnished, transferred, pledged, or
encumbered except by a written designation of beneficiary under this Plan, by
written will, or by the laws of descent and distribution.

 

Article 6                                               Change
in Control

 

(a)                      With respect
to the portion of the Participant’s Account that was “earned and vested” as of December 31,
2004 and earnings thereon (each as determined pursuant to applicable Internal
Revenue Service guidance), in the event of a Change in Control of the Company,
the Committee may, in its sole discretion, provide that any or none of the
following applicable actions be taken as a result, or in anticipation, of any
such event to assure fair and equitable treatment of Participants:

 

(i)                          accelerate
the Vesting of Deferred Stock Units, or provide for the Payment of Stock or
cash pursuant to this Plan;

 

 

(ii)                      make
adjustments or modifications to any award of Units, Participant’s Account or
election with respect to an Account, any Payment or right to Payment, or any
other right of a Participant hereunder, as the Committee deems appropriate to
maintain and protect the rights and interests of the Participants following
such Change in Control.

 

Any such action approved
by the Committee shall be conclusive and binding on the Company and all
Participants.

 

(b)                     With
respect to the portion of the Participant’s Account that was not “earned and
vested” as of December 31, 2004 and earnings thereon, in the event of a
Change in Control of the Company, the Committee shall accelerate the Vesting of
Deferred Stock Units and provide for the immediate Payment of Stock or cash
pursuant to this Plan.  For purposes of
this paragraph (b), an event shall be a Change in Control only if it also
qualifies as a change in ownership of the Company or a change in the effective
control of the Company, each as determined pursuant to Section 409A of the
Code.

 

Article 7                                               Administration
of the Plan

 

Section 7.1                                      Administration.

 

The Plan shall be administered by a Committee
appointed by the Board of Directors of the Company (the “Committee”). The
Committee shall consist of two or more directors who are “non-employee
directors,” within the meaning of Rule 16b-3 under the Exchange Act, and “outside
directors” within the meaning of Section 162(m) of the Code.  Any vacancy on the Committee, whether due to
action of the Board of Directors or due to any other cause, may be filled, and
shall be filled if required to maintain a Committee of at least two such
persons, by resolution adopted by the Board of Directors.

 

Section 7.2                                      Procedures.

 

(a)                      The
Committee shall select one of its members as Chairman and shall adopt such rules and
regulations as it shall deem appropriate concerning the holding of its meetings
and the administration of the Plan.  A
majority of the whole Committee shall constitute a quorum, and the acts of a
majority of the members of the Committee present at a meeting at which a quorum
is present, or acts approved in writing by all of the members of the Committee,
shall be the acts of the Committee.

 

(b)                     Subject to
the provisions of the Plan and the specific duties delegated by the Board to
the Committee, the Committee may delegate, to any executive or other delegate
of the Company, the following authority:

 

(i)                          to
construe and interpret the terms of the Plan;

 

(ii)                       to
prescribe, amend and rescind rules and regulations relating to the Plan;
and

 

(iii)                    to make all
other determinations deemed necessary or advisable for administering the Plan.

 

 

Section 7.3                                      Interpretation.

 

The Committee shall have full power and authority to
interpret the provisions of the Plan and any agreement or notice made or
provided under this Plan, to administer the Plan in all jurisdictions in which
this Plan is effective or where there are Participants who are participating in
this Plan, to determine how and as of what date any currencies other than
United States dollars will be converted into United States Dollars, and to
determine any and all questions arising under the Plan.  The Committee’s decisions shall be final and
binding on all Participants in or other persons claiming under the Plan.

 

Section 7.4                                      Payments on
Behalf of an Incompetent.

 

If the Committee finds that any person who is at the
time entitled to any payment hereunder is a minor or is unable to care for his
or her affairs because of disability or incompetency, payment of the Account
Balance may be made to anyone found by the Committee to be the authorized
representative of such person, or to be otherwise entitled to such payment, in
the manner and under the conditions that the Committee determines.  Such payment will be a complete discharge of
the liabilities of the Company hereunder with respect to the amounts so paid.

 

Section 7.5                                      Corporate Books
and Records Controlling.

 

The books and records of the Company will be
controlling in the event a question arises hereunder concerning any Account
Balance, deferral elections, beneficiary designations, or any other matters.

 

Section 7.6                                      Indemnity.

 

No member of the Board of Directors or the Committee
shall be liable for any action or determination made in good faith with respect
to the Plan or any option granted under it. 
The Company shall indemnify each member of the Board of Directors and
the Committee to the fullest extent permitted by law with respect to any claim,
loss, damage or expense (including counsel fees) arising in connection with
their responsibilities under this Plan.

 

Article 8                                               Miscellaneous
Provisions

 

Section 8.1                                      Litigation.

 

The Company shall have the right to contest, at its
expense, any ruling or decision, administrative or judicial, on an issue that
is related to the Plan and that the Committee believes to be important to
Participants, and to conduct any such contest or any litigation arising
therefrom to a final decision.

 

Section 8.2                                      Headings Are Not
Controlling.

 

The headings contained in this Plan are for
convenience only and will not control or affect the meaning or construction of
any of the terms or provisions of this Plan.

 

 

Section 8.3                                      Right to
Terminate Employment.

 

Nothing in this Plan or in any notice or agreement
evidencing any Grant under the Plan shall confer upon any Participant the right
to continue as an employee or a director of the Company or affect the right of
the Company to terminate the Participant’s employment at any time, subject,
however, to the provisions of any agreement of employment between the
Participant and the Company.

 

Section 8.4                                      Transfer; Leave
of Absence.

 

For purposes of this Plan, neither (i) a transfer
of an employee from WWW to an Affiliate, or vice versa, or from one Affiliate
of the Company to another, nor (ii) a duly authorized leave of absence,
shall be deemed a termination of employment.

 

Section 8.5                                      Governmental
Regulation.

 

The Company’s obligation to deliver shares of the
Company’s Common Stock under this Plan is subject to the approval of any
governmental authority required in connection with the authorization and
issuance of such stock.  In this regard,
the Board of Directors may, in its discretion, require as a condition to the
issuance of any shares pursuant to this Plan that a registration statement
under the Securities Act of 1933, as amended, with respect to such shares be
effective.

 

Section 8.6                                      Governing Law.

 

To the extent not preempted by applicable U.S. Federal
law, this Plan will be construed in accordance with and governed by the laws of
the State of Delaware, USA, as to all matters, including, but not limited to,
matters of validity, construction and performance.

 

Section 8.7                                      Amendment and
Termination.

 

The Board of Directors, or, if permitted pursuant to Rule 16b-3
under the Exchange Act, the executive committee of the Board, if applicable,
may amend or terminate this Plan at any time, provided that (i) no
amendment or termination may be made that would adversely affect the right of a
Participant to his or her Account Balance as of the date of such amendment or
termination, and (ii) unless approved by WWW’s stockholders, no such
amendment may materially increase the number of shares that may be issued under
the Plan.

 

Article 9                                               Effective
Date

 

The Amended Plan shall be effective as of November 14,
2008.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00152-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00152-of-00352.parquet"}]]