Exhibit 10.12
JOHN WILEY & SONS, INC.
FY 1996 EXECUTIVE ANNUAL INCENTIVE PLAN
PLAN DOCUMENT
CONFIDENTIAL
JUNE 15, 1995
CONTENTS
Section Subject Page
I. Definitions 2
II. Plan Objectives 3
III. Eligibility 3
IV. Performance Objectives and Measurement 3
V. Performance Evaluation 4
VI. Payouts 6
VII. Status Changes 6
VIII. Administration and Other Matters 6
-1-
I. DEFINITIONS
Following are definitions for words and phrases used in this document.
Unless the context clearly indicates otherwise, these words and
phrases are considered to be defined terms and appear in this document
in italicized print:
company John Wiley & Sons, Inc.
plan The company's FY (Fiscal Year) 1996 Executive Annual Incentive
Plan described in this document and any written amendments to this
document.
plan year The twelve month period from May 1, 1995 to April 30,
1996.
executive compensation and development committee (ECDC) The
committee of the company's Board of Directors (Board) responsible for
reviewing executive compensation.
financial goals A participant's objective to achieve specific
financial results for FY 1996, including interim revised financial
goals, if any, as approved and communicated in writing, as described
in Sections IV and V below.
financial results Total company or division achievement against
financial goals set for FY 1996.
strategic milestone A participant's objective to achieve specific
results for FY 1996, including interim revised strategic milestones,
if any, as approved and communicated in writing, as described in
Sections IV and V below. Strategic milestones are leading indicators
of performance.
participant Any person who is eligible to and is selected to
participate in the plan, as defined in Section III.
base salary The participant's total amount of base salary,
calculated as follows: base salary as of June 26,1995, or the date
of hire, or promotion into the plan, if later, adjusted for any
increases or decreases during FY 1996, on a prorated basis and
adjusted for any amount of time the participant may not be in the plan
for reasons of hire, promotion, death, disability, retirement and/or
termination.
payout Actual gross dollar amount paid to a participant under the
plan, if any, for achievement of financial goals and strategic
milestones, as further discussed in this plan.
target incentive percent The percent applied to the participant's
base salary to determine the target incentive amount.
target incentive amount The amount, if any, that a participant is
eligible to receive if a participant achieves 100% of his/her
financial goals and strategic milestones. The incentive for financial
goals should constitute at least 70% of the target incentive amount
for the participant.
performance levels
threshold The minimum acceptable level of achievement of each
financial goal and strategic milestone. If threshold performance
is achieved against all financial goals and strategic milestones, a
participant may earn 50% of the target incentive amount for which
he/she is eligible.
target Achievement in aggregate of target financial goals and
strategic milestones. Each individual financial goal and strategic
milestone is set at a level which is both challenging and
achievable.
outstanding Superior achievement of financial goals and strategic
milestones, both in quality and scope, with limited time and
resources. If outstanding performance is achieved against all
financial goals and strategic milestones, the maximum amount a
participant may earn is 150% of the target incentive amount.
-2-
payout factor Percentage of financial goals and strategic milestones
deemed achieved, used to determine the payout for which a participant
is eligible.
II. PLAN OBJECTIVES
The purpose of the FY 1996 Executive Annual Incentive Plan is to
enable the company to reinforce and sustain a culture devoted to
excellent performance, emphasize performance at the corporate and
division levels, reward significant contributions to the success of
Wiley, and attract and retain highly qualified executives.
III. ELIGIBILITY
The participant is selected by the President and CEO of the company,
from among those employees in key management positions deemed able to
make the most significant contributions to the growth and
profitability of the company, with the approval of the ECDC. The
President and CEO of the company is a participant.
IV. PERFORMANCE OBJECTIVES AND MEASUREMENT
The plan employs two categories of objectives for performance
measurement: financial goals and strategic milestones. The weighting
of and between the two measures may vary, depending upon the
participant's position. Weighting is recommended by the participant's
manager and approved by the President and CEO, if the President and
CEO is not the participant's manager.
A.Financial Goals
1. Financial goals for the company are determined near the
beginning of the plan year by the President and CEO. The
President and CEO's goals are reviewed and approved by the
Finance Committee of the Board and ECDC, and approved by the
Board.
2. Financial goals are set for the company as a whole and for each
division and may be revised in the interim, as appropriate. The
participant will be given specific financial goals, based on an
appropriate mix of company and/or division objectives.
3. Financial goals include defining levels of performance
(threshold, target and outstanding) and the measures of each.
B. Strategic Milestones
1. Strategic milestones are non-financial individual objectives
over which the participant has a large measure of control, which
lead to, or are expected to lead to improved performance for the
company in the future. Strategic milestones are determined near
the beginning of the plan year by the participant, and approved
by the participant's manager, if the President and CEO is not
the participant's manager.
2. The strategic milestones for the President and CEO are reviewed
and approved by the Executive and Policy Committee of the Board
and by the Board.
3. The strategic milestones for the President and CEO should be
appropriately reflected in those of all other employees at all
levels. Each participant collaborates with his/her manager in
setting strategic milestones. The strategic milestones may be
revised in the interim, as appropriate.
-3-
4. The determination of strategic milestones includes defining a
target level of performance and the measure of such, and may
include defining threshold and outstanding levels of performance
and the measures of such.
V. PERFORMANCE EVALUATION
A. Financial Results
1. Actual financial results achieved by the company and by each
group and division will be calculated at the end of the plan
year, subject to adjustment for audited results, and will be
compared with previously set financial goals.
2. Actual financial results will be reviewed by the participant's
manager and the President and CEO and a payout factor
determined. The payout factor is based on a judgment of the
relative importance of financial results and the achievement
compared to the financial goals. This payout factor is subject
to the review and approval of the President and CEO. The ECDC
will evaluate the President and CEO's financial results and
will recommend to the Board his/her financial results payout
factor.
B. Strategic Milestones
1. Achievement of a participant's strategic milestones will be
determined at the end of the plan year by comparing results
achieved to previously set objectives.
2. Each participant's manager will recommend a payout factor for
achievement of all strategic milestones compared with the
previously set objectives. In determining the payout factor,
the overall performance on all strategic milestones will be
considered. This payout factor is subject to the review and
approval of the President and CEO, the ECDC and the Board. The
ECDC will recommend to the Board for approval the payout factor
for the President and CEO's achievement of his/her strategic
milestones based on the Executive and Policy Committee of the
Board's evaluation of his/her achievement compared with the
previously set objectives.
C. Award Determination
1. Financial goals, established for each participant, may include
one or more organizational level's financial goals (e.g.
company and division), and one or more financial goal for a
particular organizational unit. At least threshold
performance, in aggregate, of a participant's particular
organizational level is necessary for the participant to
receive a payout for the particular organizational level.
However, once the overall threshold is achieved, the non-
achievement of any one particular financial goal's target
objective does not preclude a payout for all the participant's
financial goals.
2. At least threshold performance of financial goals is required
of the participant's organizational level for a payout of
strategic milestones to be made. If the participant is
measured against more than one organizational level, at least
threshold performance of financial goals, is required of the
-4-
organizational level which has the greatest percent weighting
of the organizational levels' target incentive amount for a
payout of strategic milestones to be made. If the percent
weighting of the target incentive amount is equal for all the
organizational levels against which the participant is
measured, then at least threshold performance of financial
goals is required of all the participant's organizational
levels for a payout of strategic milestones to be made.
3. Payout eligibility will be determined by calculating the amount
for achievement of financial goals and strategic milestones and
adding the two together, as follows:
EAIP PAYOUT ELIGIBILITY CALCULATION
FINANCIAL RESULTS PAYOUT AMOUNT
Base Salary X Target Incentive Percent
X Weighting of Financial Goals X Payout Factor
= Financial Goals Payout Eligibility
STRATEGIC MILESTONES PAYOUT AMOUNT
Base Salary X Target Incentive Percent
X Weighting of Strategic Milestones X Payout Factor
= Strategic Milestones Payout Eligibility
EAIP PAYOUT ELIGIBILITY
Financial Goals Payout Amount + Strategic Milestones Payout Amount
= EAIP Payout Eligibility
4. Notwithstanding anything to the contrary, the maximum payout,
if any, a participant may receive is 150% of the target
incentive amount.
5. The foregoing EAIP payout eligibility calculation is intended
to set forth general guidelines on how awards are to be
determined. The purpose of this plan is to motivate the
participant to perform in an outstanding manner. The President
and CEO has discretion under this plan to take into
consideration the contribution of the participant, the
participant's management of his/her organizational unit and
other relevant factors, positive or negative, which impact the
company's, the participant's organizational unit(s), and the
participant's performance overall in determining whether to
recommend granting or denying an award, and the amount of the
award, if any. If the participant is the President and CEO,
such discretion is to be exercised by the ECDC and the Board.
-5-
VI. PAYOUTS
Payouts will be made within 90 days after the end of the plan year and
will be based on audited financial results.
VII. STATUS CHANGES
A. In the event of a participant's death, disability, retirement or
leave of absence prior to payout from the plan, the payout, if
any, will be determined by the President and CEO in his/her sole
discretion, subject to any approval of the ECDC in its sole
discretion, subject to any required Board approvals. If the
participant is the President and CEO, such approval is required by
the Board, in its sole discretion.
B. A participant who resigns, or whose employment is terminated by
the company, with or without cause, before payout from the plan is
distributed, will not receive a payout. Exception to this
provision shall be made only with the approval of the ECDC, in its
sole discretion, subject to any required Board approvals. If the
participant is the President and CEO, such approval is required by
the Board in its sole discretion.
C. A participant who transfers between divisions of the company, will
have his/her payout prorated to the nearest fiscal quarter for the
time spent in each division, based on the achievement of financial
goals and strategic milestones established for the position in
each division, and based upon a judgment of the participant's
contribution to the achievement of goals in each position,
including interim revisions, if appropriate.
D. A participant who is appointed to a position with a different
target incentive percent will have his/her payout prorated to the
nearest fiscal quarter for the time spent in each position, based
on the achievement of financial goals and strategic milestones
established for each position.
E. A participant who is hired or promoted into an eligible position
during the plan year may receive a prorated payout as determined
by the President and CEO, in his/her sole discretion, subject to
the approval of the ECDC.
VIII. ADMINISTRATION AND OTHER MATTERS
A. The plan is effective for the plan year. It will terminate,
subject to payout, if any, in accordance with and subject to the
provisions of this plan unless renewed by the company in writing
in its sole discretion.
B. This plan will be administered by the President and CEO, who will
have authority to interpret and administer this plan, including,
without limitation, all questions regarding eligibility and status
of the participant, subject to the approval of the ECDC required
under this plan or the by-laws of the company.
C. This plan may be withdrawn, amended or modified at any time, and
for any reason, in writing, in the company's sole discretion.
D. The determination of an award and payout under this plan, if any,
is subject to the approval of the President and CEO, the ECDC, and
the Board in their sole discretion. This plan does not confer
upon any participant the right to receive any payout, or payment
of any kind whatsoever.
-6-
E. No participant shall have any vested rights under this plan. This
plan does not constitute a contract.
F. All deductions and other withholdings required by law shall be
made to the participant's payout, if any.