Exhibit 10.13
JOHN WILEY & SONS, INC.
FY 1996 EXECUTIVE LONG TERM INCENTIVE PLAN
PLAN DOCUMENT
CONFIDENTIAL
JUNE 15, 1995
CONTENTS
Section Subject Page
I. Definitions 2
II. Plan Objectives 4
III. Eligibility 4
IV. Incentive 4
V. Performance Measurement and Objectives 4
VI. Performance Evaluation 5
VII. Payouts 6
VIII. Restricted Stock Award Provisions 7
IX. Stock Option 8
X. Administration and Other Matters 8
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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 Long Term
Incentive Plan as set forth in this document.
shareholder plan The company's 1991 Key Employee Stock Plan.
plan cycle The three year period from May 1, 1995 to April 30,
1998.
executive compensation and development committee (ECDC) The
committee of the company's Board of Directors (Board) responsible for
reviewing executive compensation.
cumulative financial goals The company's objectives to achieve
specific cumulative financial results in terms of income, cash flow,
return on equity and return on investment, as defined below, for the
plan cycle, including interim revised cumulative financial goals, if
any, as determined by the ECDC, the Finance Committee and the Board,
and confirmed in writing.
cumulative financial results The company's actual achievement
against the cumulative financial goals set for the plan cycle, as
reflected in the company's audited financial statements.
participant Any person who is eligible and is selected to
participate in the plan, as defined in Section III.
target incentive The target incentive has two components as
determined and authorized by the ECDC at the committee meeting held on
June 15, 1995: a restricted stock award, and cash, which combined
represent the value that a participant is eligible to receive if 100%
of his/her applicable cumulative financial goals are achieved and the
participant remains an employee of the company through April 30, 2000,
except as otherwise provided in Section VIII. The target incentive is
based on the participant's position and is described in Section IV.
stock Class A Common Stock of the company.
restricted stock Stock issued pursuant to this plan and the
shareholder plan that is subject to forfeiture. The value of each
share of restricted stock under this plan will be determined by
reference to the stock closing sale price, as reported by NASDAQ, on
the date the ECDC acts at the beginning of the plan cycle (June 15,
1995). In the event the stock is not traded on June 15, 1995 or the
date the ECDC acts, whichever is later, the closing sales price shall
be the price of the stock on the next day after June 15, 1995 or the
date the ECDC acts on which the stock trades.
restricted period The period during which the shares of restricted
stock shall be subject to forfeiture in whole or in part, as defined
in the shareholder plan, in accordance with the terms of the award.
plan end adjusted restricted stock award. The final amount of
restricted stock awarded to a participant, at the end of the plan
cycle after adjustments, if any, are made, as set forth in Section
VIII.
stock option A right granted as a participant, as more fully
described under Section IX, to purchase a specific number of shares of
stock at a specified price. The stock option granted under this plan
will be non-qualified (i.e. is not intended to comply with the terms
and conditions for a tax-qualified option, as set forth in Section
422A of the Internal Revenue Code of 1986).
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grant date The date on which a participant is granted the stock
option. This is also the date on which the exercise price of the
stock option is based.
payout amount Actual gross cash dollar amount paid plus the dollar
value of the plan end adjusted restricted stock award, as set forth in
Section VIII, to a participant under this plan, if any, for
achievement of the cumulative financial goals, as further discussed in
this plan.
performance levels
threshold The minimum acceptable level of achievement for each
cumulative financial goal. If threshold performance is achieved
against all company cumulative financial goals, a participant may
earn 25% of the target incentive amount for which he/she is
eligible. If threshold performance is achieved against all
divisional cumulative financial goals, a participant may earn 50% of
the target incentive amount for which he/she is eligible.
target Achievement in aggregate of the cumulative financial
goals. Each individual cumulative financial goal is set at a level
which is both challenging and achievable.
outstanding Superior achievement of the cumulative financial
goals. If outstanding performance is achieved against all
cumulative financial goals, the maximum amount a participant may
earn is 150% of the target incentive amount for which he/she is
eligible.
payout factor The percentage applied to the target incentive amount
exclusive of the stock option portion, if any, to determine the payout
amount based on the percentage of cumulative financial goals deemed
achieved.
cumulative consolidated net income (net income) Reported net income
after taxes adjusted for the after-tax effect of : (1) any unusual
activity, and (2) any capital stock repurchase or other unusual
capital stock transaction.
cumulative cash flow from operations after investing activities (cash
flow) Net income, excluding unusual items not related to the period
being measured, plus/minus any non-cash items included in net income
and changes in operating assets and liabilities, minus normal
investments in product development assets and property and equipment.
company average return on equity (ROE) The simple average ROE of
the three fiscal years in the plan cycle. Each fiscal year ROE is net
income, excluding unusual items not related to the period being
measured, divided by the average of the total shareholders' equity.
company average return on investment (ROI) The simple average ROI
of the three fiscal years in the plan cycle. Each fiscal year ROI is
net income, excluding unusual items not related to the period being
measured, plus amortization of intangibles and interest expense after
taxes, divided by the average of total shareholders' equity plus long-
term and short-term debt.
cumulative divisional operating income (divisional operating income)
Divisional operating income is defined as operating income before
taxes excluding the effects of any unusual activity.
divisional cumulative cash flow from operations after investing
activities (divisional cash flow) Operating income before
allocations and taxes, excluding unusual items not related to the
period being measured, plus/minus any non-cash items included in
operating income (other than provisions for bad debts), and changes in
controllable assets and liabilities, less normal investments in
product development assets and direct property and equipment
additions. Controllable assets and liabilities are inventory,
composition, author advances, other deferred publication costs, and
deferred subscription revenues.
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divisional average return on investment (ROI) The simple average
ROI of the three fiscal years in the plan cycle. Each fiscal year ROI
is operating income before allocations and taxes, excluding unusual
items not related to the period being measured, plus amortization of
intangibles and increases in deferred subscription revenues (net of
any deferred subscription revenues acquired during the year), divided
by the average of fully allocated net investment. Net investment is
defined as controllable assets plus allocated accounts receivable, raw
materials inventory and LIFO reserve, corporate property and
equipment, accounts payable, trade customer credit balance, royalties
payable, cumulative amortization and write-offs of intangible assets
since May 1, 1989, deferred subscription liability balance, net of any
deferred subscription liability balance at the date of acquisition for
businesses acquired since May 1, 1989, and inventory consigned to the
division, less divisional inventory consigned to others. Controllable
assets are defined as inventory, composition costs, author advances,
pre-publication costs, divisional property and equipment, acquired
publication rights and other intangible assets, other deferred assets
and deferred subscription liability.
II. PLAN OBJECTIVES
The purpose of this plan is to enable the company to reinforce and
sustain a culture devoted to excellent performance, emphasize long
term financial performance at the corporate and division levels,
reward significant contributions to the success of the company,
attract and retain highly qualified executives, and provide an
opportunity for each participant to acquire equity in the company.
III. ELIGIBILITY
The participant is selected by the ECDC in its sole discretion, from
among those employees in key management positions deemed able to make
the most significant contributions to the growth and profitability of
the company. An employee must be a participant of the FY 1996
Executive Annual Incentive Plan to be eligible to participate in this
plan. The President and CEO of the company is a participant.
IV. INCENTIVE
A.The participant's target incentive is determined based on the
participant's position in the company and the contributions the
position is deemed able to make in achieving the cumulative
financial goals of the company.
B.The participant's target incentive is recommended by the President
and CEO to the ECDC for its and the Board's approval. In the case
of the President and CEO, the target incentive is recommended by
the ECDC for the Board's approval.
C.The incentive's two components may be restricted stock, if
authorized by the ECDC, and cash.
V. PERFORMANCE MEASUREMENT AND OBJECTIVES
A. The objectives for the cumulative financial goals are recommended
by the ECDC with the advice of the Finance Committee to the Board
for its approval. The cumulative financial goals performance
objectives are set at a level which are challenging and
achievable.
B. Cumulative 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 goals for a
particular organizational unit (e.g. cash flow, income, ROE and
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ROI). The weighting of and between the two organizational levels'
cumulative financial goals may vary, depending upon the
participant's position. Weighting of the participant's cumulative
financial goals is recommended by the President and CEO to the
ECDC. In the case of the President and CEO, the cumulative
financial goals are company net income, cash flow, ROE and ROI.
C. Threshold, target and outstanding performance levels for the
cumulative financial goals are recommended by the President and
CEO for approval by the ECDC, the Finance Committee of the Board
and the Board.
VI. PERFORMANCE EVALUATION
A. Cumulative Financial Results
1. Actual cumulative financial results achieved by the company and
by each division will be calculated at the end of the plan
cycle, subject to adjustment for audited results, and will be
compared with the previously set cumulative financial goals.
2. The cumulative financial results will be reviewed by the
President and CEO to determine proposed payout factors for the
company and for the divisions.
3. The President and CEO will provide to the ECDC a view of the
company's achievement of its cumulative financial goals, as
well as divisional achievement of like objectives, if any, and
will recommend payout factors to be used for the company and
divisional objectives.
B. Award Determination
1. At least threshold performance, in aggregate, of a
participant's particular organizational level's objectives 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 cumulative financial goal's target objective does
not preclude a payout.
2. The determination of the performance level achievement
(threshold, target and outstanding, or points in between) for
each organizational level's cumulative financial goals will be
made independent of any other organizational level's cumulative
financial goals a participant may have.
3. If the participant has more than one organizational level's
cumulative financial goals, the non-achievement of a threshold
performance level of one organizational level's cumulative
financial goals does not preclude a payout for the other
organizational level's cumulative financial goals.
4. The following details the effect of the cumulative financial
results performance levels on a participant's payout amount.
The actual payout factors will be in the sole judgment and
discretion of the ECDC, taking into account the following
guidelines:
a. For below threshold performance in aggregate, the payout
amount is zero.
b. For company threshold performance in aggregate, 25% of the
target incentive may be recommended. For divisional
threshold performance in aggregate, 50% of the target
incentive may be recommended
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c. For between company threshold and target performance in
aggregate, at minimum 25% of the target incentive and up to
100% of the target incentive may be recommended. For
between divisional threshold and target performance in
aggregate, at minimum 50% of the target incentive and up to
100% of the target incentive may be recommended.
d. For target performance in aggregate, 100% of the target
incentive may be recommended.
e. For between target and outstanding performance in
aggregate, at minimum 100% of the target incentive and up
to 150% of the target incentive may be recommended.
f. For outstanding performance in aggregate, 150% of the
target incentive may be recommended.
5. Notwithstanding anything to the contrary, the maximum payout
amount, if any, a participant may receive is 150% of the target
incentive.
VII PAYOUTS
A. The cash payout amount will be based on the following formula:
Target Incentive x Corporate Weighting x Payout Factor =
Corporate Incentive Payout
Target Incentive x Divisional Weighting x Divisional Payout Factor
= Divisional Incentive Payout
Corporate Incentive Payout + (if applicable) Divisional Incentive
Payout - (Plan End Adjusted Restricted Stock Award x Stock Price at
Beginning of Plan Cycle) = Cash Payout Amount
Note: See Section VIII for information regarding the proportion of
the payout amount which is paid in cash and in restricted stock.
B. The restricted stock portion of the payout amount, if any, will be
made as set forth in Section VIII below. The determination by the
ECDC of plan end adjusted restricted stock shall constitute payout
of this portion of the award.
C. The cash payout, if any, of the payout amount will be made within
90 days after the end of the plan cycle.
D. In the event of a participant's death, permanent disability,
retirement or leave of absence prior to payout from this plan,
restricted stock awarded at the beginning of the plan cycle, if
any, is forfeited, and the payout amount, if any, will be
determined by the ECDC in its sole discretion.
E. A participant who resigns, or whose employment is terminated by
the company, with or without cause, prior to payout from this
plan, is not eligible for a payout amount and shall forfeit any
restricted stock awarded at the beginning of the plan cycle.
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VIII. RESTRICTED STOCK AWARD PROVISIONS
A. Since one of the objectives of this plan is to provide the
participant with an equity stake in the company and align
management and shareholder interests, it is intended that a
portion of the target incentive, will be awarded in equity
(restricted stock and stock options) and the remaining portion
will be awarded in cash. At the beginning of the plan cycle, the
ECDC will determine the proportion of the target incentive that
will be allocated between restricted stock, and cash. While it is
intended that such proportions will be maintained, the actual
proportions may be adjusted by the ECDC at the end of the plan
cycle, in its sole discretion.
B. Restricted stock, if any, shall be awarded at the beginning of the
plan cycle, after the June, 1995 ECDC meeting. The amount of
restricted stock awarded shall be based on the proportion of the
target incentive allocated to restricted stock, as determined by
the ECDC. The value of each share will be determined based on the
stock closing sale price, as reported by NASDAQ, on the date the
ECDC acts at the beginning of the plan cycle (June 15, 1995). In
the event the stock is not traded on June 15, 1995 or the date the
ECDC acts, whichever is later, the closing sales price shall be
the price of the stock on the next day after June 15, 1995 or the
date the ECDC acts on which the stock trades. The restricted
stock awarded at the beginning of the plan cycle also is subject
to adjustment at the end of the plan cycle as set forth in
Sections VIII (C) and (D) below. Restricted stock, if any, shall
be awarded pursuant to the shareholder plan, as approved by the
ECDC. In addition to the terms and conditions set forth in the
shareholder plan and Section VII (D) and (E) above, the following
conditions shall apply:
1. The participant shall have the right to receive dividends or
other distributions with respect to restricted stock shares
received at the beginning of the plan cycle and shall have
the right to vote such shares, however the restricted stock
may not be sold or transferred until all restrictions lapse.
Restricted stock shall be legended and held by the Company.
2. Withholding taxes relating to restricted stock awarded may be
satisfied by surrendering shares to the company, in lieu of
cash, upon lapse of the restriction.
3. The restricted period for restricted stock awarded shall be
as follows: subject to continued employment except as
otherwise set forth in the shareholder plan or Sections VII
and VIII of this plan, the lapse of restrictions on one-half
of the restricted stock awarded will occur on the first
anniversary (April 30, 1999) of the plan end date at which
time the participant will receive a new stock certificate in
a number of shares equal to one-half of the restricted stock
awarded with the restrictive legend deleted, and the lapse of
restrictions on the remaining half will occur on the second
anniversary (April 30, 2000) of the plan end date at which
time the participant will receive a new stock certificate in
a number of shares equal to the remaining half with the
restrictive legend deleted.
4. If the participant dies or becomes permanently disabled
during the restricted period, the restrictions on the
restricted stock will lapse on the date of such event.
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5. If the participant retires during the restricted period at or
after his/her normal retirement date, the restrictions on the
restricted stock will lapse on the date of such event.
6. If the participant takes early retirement during the
restricted period, the restrictions on the restricted stock
will not lapse until the restricted period expires. If the
participant dies between the time the participant takes early
retirement and the end of the restricted period (April 30,
2000), the lapse of restrictions on the restricted stock will
occur on the date of such event.
7. The restricted stock may be adjusted by the ECDC for any
change in the capital stock of the company, as provided in
Section II of the shareholder plan and is in all respects
subject to the provisions of that plan.
8. In the event of a change of control, as defined in the
shareholder plan, all shares of restricted stock which would
otherwise remain subject to restrictions under the plan shall
be free of such restrictions.
C. The number of shares of restricted stock awarded at the beginning
of the plan cycle, may be adjusted at the end of the plan cycle
for the following reasons: (1) if the proportion of the target
incentive award is restricted stock is adjusted at plan year end
by the ECDC as set forth in Section VIII (A) and/or (2) when the
payout factor is adjusted at plan year end based on actual
achievement of target objectives.
D. An adjustment to the restricted stock will be determined as
follows: The final proportion (%) of restricted stock established
by the ECDC at the end of the plan cycle times (x) the payout
amount equals (=) that part of the payout amount to be awarded in
restricted stock. The result of this calculation will be divided
by the stock price set at the beginning of the plan cycle, as
previously defined, to give the number of shares for the plan end
adjusted restricted stock award. The result of this calculation
will be compared to the restricted stock awarded at the beginning
of the plan cycle, and the appropriate amount of restricted stock
will be awarded or forfeited, as required, to bring the restricted
stock award to the number of shares designated as the plan end
adjusted stock award.
IX. STOCK OPTION
The participant may be granted a stock option pursuant to the
shareholder plan at the beginning of the plan cycle, representing
another incentive vehicle by which the participant is able to share in
the equity growth of the company. The number of shares in the stock
option granted to a participant under this plan is based on a set of
variables and assumptions, applied consistently to all participants,
regarding the monetary value a participant might receive upon exercise
of the stock option. The terms and conditions of the award of the
stock option are contained in the shareholder plan and in the stock
option award. Withholding taxes relating to the gain realized on the
exercise of an option may be satisfied by surrendering to the company
the equivalent value of the taxes, or a portion thereof, in option
shares in lieu of cash.
X. ADMINISTRATION AND OTHER MATTERS
A.This plan will be administered by the ECDC, who will have authority
in its sole discretion to interpret and administer this plan,
including, without limitation, all questions regarding eligibility
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and status of any participant, and no participant shall have any
right to receive any restricted stock or payment of any kind
whatsoever, except as determined by the ECDC hereunder.
B.The company will have no obligation to reserve or otherwise fund in
advance any amount which may become payable under the plan.
C.Restricted stock awarded and cash paid out under this plan shall
not be considered as compensation for purposes of defining
compensation for retirement, savings or supplemental executive
retirement plans, or similar type plans.
D.This plan may not be modified or amended except with the approval
of the ECDC. Notwithstanding the foregoing, Section VIII B (8)
shall not be amended.
E.In the event of a conflict between the provisions of this plan and
the provisions of the shareholder plan, the latter shall apply.
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