Exhibit - 10.12
JOHN WILEY & SONS, INC.
FY 1999 EXECUTIVE ANNUAL INCENTIVE PLAN
PLAN DOCUMENT
CONFIDENTIAL
MAY 1, 1998
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 5
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) 1999 Executive Annual Incentive Plan
described in this document and any written amendments to this document.
plan year - The twelve month period from May 1, 1998 to April 30, 1999.
Governance and Compensation Committee (GCC) - 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 1999, 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 1999.
strategic milestone - A participant's objective to achieve specific results for
FY 1999, 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 base salary as of July 1,1998, or the date of
hire, or promotion into the plan, if later, adjusted for any increases or
decreases during FY 1999, 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, applied to the target incentive amount, used to determine the payout
for which a participant is eligible.
II. PLAN OBJECTIVES
The purpose of the FY 1999 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 GCC. 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
GCC, 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 GCC 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 GCC and the Board. The GCC 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 GCC'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 GCC 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 GCC 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 GCC, 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 GCC.
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 GCC required under this plan
or the by-laws of the company.
C. This plan may be withdrawn, amended or modified at any time, for any
reason, in writing, by the company.
D. The determination of an award and payout under this plan, if any, is
subject to the approval of the President and CEO, the GCC, 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.