Exhibit 10.13
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JOHN WILEY & SONS, INC.
FY 1997 EXECUTIVE LONG TERM INCENTIVE PLAN
PLAN DOCUMENT
CONFIDENTIAL
MAY 1, 1996
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 Performance Shares 7
IX. Stock Option 8
X. Administration and Other Matters 8
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) 1997 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, 1996 to April 30, 1999.
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 operating income, net income and
cash flow 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
13, 1996: a restricted performance shares 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, 2001, 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 performance shares
Stock issued pursuant to this plan and the shareholder plan
that is subject to forfeiture. In the shareholder plan, such
stock is referred to as "Restricted Stock." The value of each
share of restricted performance shares under this plan will be
determined by reference to the stock closing sale price, as
reported by New York Stock Exchange (NYSE), on the date the
ECDC acts at the beginning of the plan cycle (June 13, 1996).
In the event the stock is not traded on June 13, 1996 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 13, 1996 or the date the ECDC acts on which the stock
trades.
restricted period
The period during which the shares of restricted performance
shares 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 performance shares award.
The final amount of restricted performance shares 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).
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 performance shares 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 operating income
The operating income of the company before interest
expense/income and taxes, and excluding the effects of any
unusual activity during the plan cycle.
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.
cumulative divisional operating income (divisional operating
income)
Divisional operating income is defined as operating income
before allocations for corporate support services and 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 divisional 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.
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 1997 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
performance shares, 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, divisional
operating income). 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 operating income, net income and cash
flow.
C. Threshold, target and outstanding performance levels for
the cumulative financial goals are recommended by the
President and CEO for approval by the ECDC, 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 for any single measure 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
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:
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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 performance
shares 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 performance shares.
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B. The restricted performance shares and 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 performance shares 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 the
end of the plan cycle, restricted performance shares
awarded at the beginning of the plan cycle, if any, are
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 the end of the plan cycle, is not eligible for a
payout amount and shall forfeit any restricted
performance shares awarded at the beginning of the plan
cycle.
VIII. RESTRICTED PERFORMANCE SHARES 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 performance shares) 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 performance shares, 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 performance shares, if any, shall be awarded
at the beginning of the plan cycle, after the June, 1996
ECDC meeting. The amount of restricted performance
shares awarded shall be based on the proportion of the
target incentive allocated to restricted performance
shares, as determined by the ECDC. The value of each
share will be determined based on the stock closing sale
price, as reported by the NYSE, on the date the ECDC acts
at the beginning of the plan cycle (June 13, 1996). In
the event the stock is not traded on June 13, 1996 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 13, 1996 or the date the ECDC acts on which
the stock trades, whichever is later. The restricted
performance shares 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 performance shares, 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)
below, the following conditions shall apply:
1. During the plan cycle, the participant shall not
have the right to receive dividends or other
distributions with respect to restricted performance
shares received at the beginning of the plan cycle
and shall not have the right to vote such shares.
After the end of the plan cycle, and after all
adjustments to the amount of restricted performance
shares are made by the ECDC as set forth in Section
VII(D) and (E) below, the participant shall have the
right to receive dividends or other distributions
with respect to the final amount of restricted
performance shares issued and shall have the right
to vote such shares. The date on which the dividend
and voting rights shall commence is the date on
which the ECDC makes its determination of the final
number of restricted performance shares awarded
after the plan cycle ends pursuant to Section VII(D)
and (E) below.
2. During the restricted period, the restricted
performance shares may not be sold or transferred.
Restricted performance shares shall be legended and
held by the Company.
3. Withholding taxes relating to restricted performance
shares awarded may be satisfied by surrendering
shares to the company, in lieu of cash, upon lapse
of the restrictions.
4. The restricted period for restricted performance
shares 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 performance shares awarded will occur
on the first 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 one-half of the restricted
performance shares awarded with the restrictive
legend deleted, and the lapse of restrictions on the
remaining half will occur on the second anniversary
(April 30, 2001) 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.
5. If the participant dies or becomes permanently
disabled during the restricted period, the
restrictions on the restricted performance shares
will lapse on the date of such event.
6. If the participant retires during the restricted
period at or after his/her normal retirement date,
the restrictions on the restricted performance
shares will lapse on the date of such event.
7. If the participant takes early retirement during the
restricted period, the restrictions on the
restricted performance shares 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, 2001), the lapse of restrictions on the
restricted performance shares will occur on the date
of such event.
8. The restricted performance shares 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.
9. In the event of a change of control, whether before
or after the end of the plan cycle, as defined in
the shareholder plan, all shares of restricted
performance shares which would otherwise remain
subject to restrictions under the plan shall be free
of such restrictions.
C. The number of shares of restricted performance shares
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 of restricted performance shares is adjusted at
the end of the plan cycle by the ECDC as set forth in
Section VIII (A) and/or (2) when the payout factor is
adjusted at the end of the plan cycle based on actual
achievement of target objectives.
D. The final amount of restricted performance shares will
be determined as follows: The restricted performance
shares established by the ECDC at the beginning of the
plan cycle times (x) the payout factor equals (=) the
plan end adjusted restricted performance shares award.
The result of this calculation will be compared to the
restricted performance shares awarded at the beginning
of the plan cycle, and the appropriate amount of
restricted performance shares will be awarded or
forfeited, as required, to bring the restricted
performance shares 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 and status of any
participant, and no participant shall have any right to
receive any restricted performance shares 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 performance shares 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
provisions of the shareholder plan shall apply.