JOHN WILEY & SONS, INC.
FY 1998 EXECUTIVE ANNUAL INCENTIVE PLAN
PLAN DOCUMENT
CONFIDENTIAL
MAY 1, 1997
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
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) 1998 Executive Annual Incentive Plan
described in this document and any written amendments to this document.
plan year
The twelve month period from May 1, 1997 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.
financial goals
A participant's objective to achieve specific financial results for FY 1998,
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 1998.
strategic milestone
A participant's objective to achieve specific results for FY
1998, 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 2,1997, or the date of hire, or promotion into the plan, if
later, adjusted for any increases or decreases during FY 1998, 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 25% 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 175% of the target incentive
amount.
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 1998 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.
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 a financial goal for any of the
operating units for which he/she is responsible is required for a
payout of strategic milestones to be made to the participant. The
CEO has the right to override this provision if he feels such
action is warranted.
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 175% 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.
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.
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.