EXHIBIT 10.10
DST SYSTEMS, INC.
OFFICERS INCENTIVE PLAN
(AMENDED AND RESTATED AS OF FEBRUARY 28, 2001)
SECTION 1. PURPOSE
The purpose of the Officers Incentive Plan is to reward plan participants for
achieving defined earnings per share objectives that support increasing
profitability of DST Systems, Inc. The Plan provides both annual and long-term
incentives, contingent upon meeting annual and cumulative Earnings Per Share
goals. The Company intends that the Plan will facilitate in securing, retaining,
and motivating employees of superior capability; in providing competitive
management compensation; and in linking incentive awards to objectives that
should enhance shareholder value.
SECTION 2. DEFINITIONS
When used in the Plan, the following words and phrases shall have the following
meanings:
(a) "Affiliate" means Boston EquiServe Limited Partnership, a Delaware limited
partnership, and any successor thereto and any other entity (other than the
Company or a Subsidiary) of which the Company or a Subsidiary directly or
indirectly owns 50% or more of the combined voting power of all classes of
stocks of such entity or 50% or more of the ownership interests in such
entity.
(b) "Beneficiary" means the person, persons, trust, or trusts which have been
designated by a Participant in his or her most recent written beneficiary
designation filed with the Company to receive the benefits specified under
this Plan, if any, upon the Participant's death, or, if there is no
designated Beneficiary or surviving designated Beneficiary, then the
person, persons, trust, or trusts entitled by will or the laws of descent
and distribution to receive such benefits.
(c) "Board" means the Board of Directors of the Company.
(d) "Committee" means the Compensation Committee of the Board or such other
Board Committee as may be designated by the Board to administer the Plan;
provided, however, that the Committee shall consist of two or more
directors of the Company each of whom is a "disinterested person" within
the meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as
amended from time to time and an "outside director" as required by Section
162(m) of the Internal Revenue Code.
(e) "Common Stock" means the Common Stock of the Company.
(f) "Common Stock Outstanding" means the weighted average number of actual
shares of Common Stock issued and outstanding during the Plan Year,
determined in accordance with generally accepted principles. In the event
of a reorganization, recapitalization, stock split, spin off, stock
dividend, combination of shares, merger, consolidation,
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rights offering, or any other change in the capital structure of the
Company, the Committee may make such adjustment, if any, as it deems
appropriate in the determination of Common Stock Outstanding.
(g) "Company" means DST Systems, Inc., a corporation organized under the laws
of Delaware, or any successor company.
(h) "Disability" means the Participant, because of a physical or mental
disability, will be unable to perform the duties of his or her customary
position of employment (or is unable to engage in any substantial gainful
activity for DST) for an indefinite period which the Committee considers
will be of long continued duration. The Plan considers a Participant
disabled on the date the Committee determines the Participant satisfies the
definition of disability. The Committee may require a Participant to submit
to a physical examination in order to confirm disability. The Committee
will apply the provisions of this section in a nondiscriminatory,
consistent and uniform manner.
(i) "Earnings Per Share" or "EPS" means diluted earnings per share, determined
in accordance with generally accepted accounting principles.
(j) "Equity" shall mean either Restricted Common Stock or Options.
(k) "Income" means net income of the Company and its consolidated Subsidiaries,
determined in accordance with generally accepted principles, consistently
applied, for any Plan Year for which the incentive awards are calculated,
as reported by the Company and certified by the Company's independent
certified public accountants.
(l) "Market Price" shall be the average of the highest and lowest reported
sales prices of Common Stock on the New York Stock Exchange.
(m) "Options" shall mean non-qualified options to purchase Common Stock granted
pursuant to Sections 5 and 7.
(n) "Participant(s)" mean all officers of the Company and such officers of
Subsidiaries and Affiliates as designated from time to time by the
Compensation Committee.
(o) "Plan" means this Officers Incentive Plan, as it may be amended from time
to time.
(p) "Plan Year" means the fiscal year of the Company. The first Plan Year will
begin January 1, 1997 and end December 31, 1997.
(q) "Restricted Common Stock" means Common Stock delivered in payment of an
incentive award and subject to restrictions described in Section 7.
(r) "Subsidiary" means a corporation, domestic or foreign, the majority of the
voting stock of which is owned directly or indirectly by the Company.
(s) "Targeted Earnings Per Share" or "Targeted EPS" means the Earnings Per
Share criteria to be established by the Committee, from time to time and in
its sole discretion, pursuant to Section 4(b) for purposes of determining
incentive awards.
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SECTION 3. ELIGIBILITY AND PARTICIPATION
Except in the event of (i) retirement on or after age 60, (ii) Disability, (iii)
death, or (iv) termination without cause, a Participant must be an active
employee of the Company, a Subsidiary, or Affiliate on December 31 of the Plan
Year to be eligible for an incentive award. In the event of retirement,
Disability, death, or termination without cause, the incentive award as
calculated at the end of and for the full Plan Year shall be pro-rated to
reflect the actual period of employment during the Plan Year.
SECTION 4. INCENTIVE AWARD DETERMINATION
(a) INCENTIVE AWARD OPPORTUNITY As soon as practical after adoption of the
Plan, the Committee shall establish Threshold, Target, and Maximum
incentive award opportunity levels (expressed as percentages of base salary
as of the beginning of the Plan Year) for each Participant level in the
Plan for the 1997, 1998, and 1999 Plan Years. For Plan Years following
1999, the Committee shall establish award opportunity levels at the times
and in the manner it deems appropriate for carrying out the intent of this
Plan.
The amount of the incentive award earned will be pro-rated between
incentive award opportunity levels to reflect actual performance attained.
No incentive award will be payable with respect to a performance measure
and weighting where less than Threshold performance has been attained. No
incentive award for a Plan Year shall exceed 250% of the Participant's base
salary as of the beginning of the Plan Year.
(b) PERFORMANCE MEASURES AND WEIGHTING As soon as practical after adoption of
the Plan, the Committee shall establish performance criteria and weighting
between performance criteria for each level of incentive award opportunity
for the 1997, 1998, and 1999 Plan Years. The performance criteria shall be
based upon 1997 Targeted Earnings Per Share for each of the Threshold,
Target and Maximum incentive award opportunity levels, annual increases in
the Targeted Earnings Per Share for 1998 and 1999, and cumulative Targeted
Earnings Per Share. For Plan Years following 1999, the Committee shall
establish performance criteria and weighting among criteria for each
Participant at the times and in the manner it deems appropriate for
carrying out the intent of this Plan.
Weighting between annual and cumulative Targeted Earnings Per Share goals
for the first three Plan Years shall be as follows:
1997 Plan Year: 100% on 1997 Targeted EPS.
1998 Plan Year: 67% on 1998 Targeted EPS; 33% on cumulative 1997 and 1998
Targeted EPS.
1999 Plan Year: 50% on 1999 Targeted EPS; 50% on cumulative 1997, 1998, and
1999 Targeted EPS.
SECTION 5. PAYMENT OF EARNED INCENTIVE AWARDS
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As soon as practical after the end of the Plan Year and upon the compilation of
the necessary information, the Committee shall determine the degree of
attainment of the performance measures and the awards payable in accordance with
Section 4 and this Section 5. The Committee shall certify, in writing, prior to
the payment of incentive awards that the performance goals and other material
terms of the Plan have been satisfied.
The aggregate incentive award determined for a Plan Year (annual and cumulative)
shall be paid to the Participant in a combination of cash and Equity, depending
on the level of incentive award earned, as follows:
(a) 100% cash for that portion of a Participant's incentive award up to and
including his or her Threshold incentive opportunity level;
(b) 50% cash and 50% Equity for that portion of a Participant's incentive award
above his or her Threshold incentive opportunity levels up to and including
his or her Maximum incentive opportunity level; and
Upon the Committee's written certification, the Company shall pay the cash
portion of the incentive award earned, less any amounts required to be withheld
for federal, state and local taxes, as soon as practicable and shall grant the
Equity portion in accordance with the procedures and restrictions set forth in
Section 7.
SECTION 6. LIMITATIONS ON INCENTIVE AWARDS
The aggregate value of all incentive awards for a Plan Year shall not exceed ten
percent (10%) of the Company's pre-tax income for such Plan Year. If incentive
awards generated in a Plan Year exceed this amount, the incentive awards for all
Participants shall be reduced pro-rata.
SECTION 7. EQUITY ELECTION AND PROCEDURES
(a) PARTICIPANT ELECTION Each Participant who may receive an award of Equity
pursuant to Section 5 may elect to receive either Restricted Stock or
Options. The procedures for making such election shall be determined from
time to time by the Committee.
(b) RESTRICTED COMMON STOCK
(i) ISSUANCE OF RESTRICTED COMMON STOCK Each Participant electing to
receive Restricted Common Stock shall have issued in his or her name a
number of full shares of Restricted Common Stock equal to the whole
number of the quotient obtained by dividing the dollar amount of the
incentive award to be settled in Equity, as determined in Section 5,
by the Market Price on the "date of grant". The date that the
Committee approves the incentive awards for the Plan Year shall be
deemed to be the date of grant. If the amount of the award is not
evenly divisible by such Market Price, then the remainder shall be
paid to the Participant in cash.
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(ii) RIGHTS AND OBLIGATIONS ON RESTRICTED COMMON STOCK A certificate for
all shares of Restricted Common Stock registered in the name of a
Participant shall be delivered to the office of the corporate
secretary for safekeeping. The Participant shall thereupon be a
stockholder and have all the rights of a stockholder with respect to
such shares, including the right to vote and receive all dividends or
other distributions made or paid with respect to such shares;
provided, that, in the discretion of the Compensation Committee, all
such distributions that are not capital stock of the employer of the
Participant shall be converted to capital stock of such employer, and
provided further, that such shares of Restricted Common Stock, and any
new, additional or different securities the Participant may become
entitled to receive with respect to such shares by virtue of a stock
split or stock dividend or any other change in the corporate or
capital structure of the Company, shall be subject to the restrictions
described in Section 7 (b)(iii).
(iii) RESTRICTIONS ON RESTRICTED COMMON STOCK Prior to their release as
provided in Section 7(b)(iv), the shares of Restricted Common Stock
may not be sold, exchanged, transferred, pledged, hypothecated, or
otherwise disposed of by the Participant. However, nothing herein
shall preclude a Participant from making a gift of any shares of
Restricted Common Stock to a spouse, child, step-child, grandchild,
parent or sibling, or legal dependent of the Participant or to a trust
of which the beneficiary or beneficiaries of the corpus and the income
shall be either such a person or the Participant; provided that, the
Restricted Common Stock so given shall remain subject to the
restrictions, obligations and conditions described in this Section.
(iv) RELEASE OF RESTRICTIONS AND DELIVERY OF SHARES All restrictions on
Restricted Common Stock shall lapse on the first day of the fourth
fiscal year following the Plan Year for which the Restricted Common
Stock was awarded (the "Release of Restriction Date"); provided,
however that in the event of termination of employment with the
Company, Subsidiary, or Affiliate prior to the Release of Restriction
Date for any reason other than the Participant's (i) retirement on or
after 60, (ii) Disability, (iii) death, or (iv) termination by the
Company without cause, all rights to any shares of Restricted Common
Stock with respect to such award shall be forfeited to the Company and
certificates for such shares shall be cancelled and of no further
effect.
Any shares of Restricted Common Stock held by the office of the
corporate secretary on the Release of Restriction Date shall be
delivered, free and clear of all restrictions, to (A) the Participant
upon the Release of Restriction Date, his or her retirement on or
after 60, Disability, or termination without cause; or (B) his or her
Beneficiary upon his or her death before retirement.
(c) OPTIONS
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(i) COMPUTATION OF NUMBER Each Participant electing to receive Options
shall have granted to him or her an option for that number of shares
of Common Stock equal to three times the number of shares of
Restricted Common Stock available to such Participant as computed
pursuant to Section 7(b)(i) above. The date that the Committee
approves the incentive awards for the Plan Year shall be deemed to be
the date of grant. If the amount of the award is not evenly divisible
by such value, then the remainder shall be paid to the Participant in
cash.
(ii) OPTION TERMS The Common Stock options shall be subject to an agreement
between the grantee and the Corporation (an "Option Agreement") and
will contain the following terms:
(A) the Common Stock options shall be non- qualified options granted
pursuant to the DST Systems, Inc. 1995 Stock Option and
Performance Award Plan (the "Option Plan");
(B) the option price shall be the fair market value (as defined in
the Option Plan) on the date of grant;
(C) the options shall become exercisable on the last day of the third
calendar year following the calendar year for which the bonus
allocated to the option was earned, subject to becoming
exercisable earlier upon retirement, death, disability;
(D) the options shall have a reload feature which would be effective
only if the fair market value of the Common Stock has increased
at least 20% from the date of grant to the date of exercise;
(E) the options shall be further subject to the terms and conditions
set forth in the Option Agreement.
SECTION 8. CHANGE IN CONTROL
(a) EFFECT ON RESTRICTED COMMON STOCK AND OPTIONS In the event of a Change in
Control (as defined below), all time periods and requirements necessary to
cause a release of restrictions as set forth in Section 7(b)(iv) shall be
deemed to have been met; and, the Release of Restrictions Date will be
deemed to be upon such Change in Control. Any shares of Restricted Common
Stock then held by the office of the corporate secretary shall be delivered
to the Participant upon such Release of Restrictions, free and clear of all
restrictions. The effect of a change of control on Options shall be
determined under the Option Agreement.
(b) EFFECT ON PLAN YEAR Notwithstanding anything in the Plan to the contrary,
in the event of a Change in Control:
(i) the Plan Year will end as of the Change in Control;
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(ii) the attained level of performance with respect to any and all
performance goals and weighting and the resulting incentive award
earned for the Plan Year shall be deemed to be at Maximum, without
reduction for a short Plan Year; and
(iii) the incentive award for the Plan Year shall be paid promptly in cash.
(c) CHANGE IN CONTROL DEFINED For purposes of this Plan, a "Change in Control"
shall be deemed to have occurred if the conditions in (i), (ii), or (iii)
are met:
(i) for any reason at any time less than seventy-five percent (75%) of the
members of the Board shall be individuals who fall into any of the
following categories:
(A) individuals who were members of such Board on September 1, 1995;
(B) individuals whose election, or nomination for election by the
Company's stockholders, was approved by a vote of at least
seventy-five percent (75%) of the members of the Board then still
in office who were members of such Board on September 1, 1995; or
(C) individuals whose election, or nomination for election by the
Company's stockholders, was approved by a vote of at least
seventy-five percent (75%) of the members of the Board then still
in office who were elected in the manner described in (A) or (B)
above.
(ii) any "person" (as such term is used in Sections 13(d) and 14(d)(2) of
the Exchange Act) shall have become, according to a public
announcement or filing, without the prior approval of the Board, the
"beneficial owner" (as defined in Rule 13(d)-3 under the Exchange Act)
directly or indirectly, of securities of the Company representing
twenty percent (20%) or more (calculated in accordance with Rule
13(d)-3) of the combined voting power of the Company's then
outstanding voting securities (such "person" hereafter referred to as
a "Major Stockholder"). For purposes of the Plan, Kansas City Southern
Industries, Inc. shall not be deemed to be a Major Stockholder unless
its ownership of voting securities of the Company, directly or
indirectly, falls below twenty percent (20%) and subsequently
increases to represent twenty percent (20%) or more of the Company's
then outstanding voting securities.
(iii) the stockholders of the Company shall have approved a merger,
consolidation or dissolution of the Company or a sale, lease, exchange
or disposition of all or substantially all of the Company's assets, or
a Major Stockholder shall have proposed any such transaction, unless
such merger, consolidation, dissolution, sale, lease, exchange or
disposition shall have been approved by at least seventy-five percent
(75%) of the members of the Board who are individuals falling into any
combination of the following categories:
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(A) individuals who were members of such Board on September 1, 1995;
(B) individuals whose election or nomination for election by the
Company's stockholders was approved by at least seventy-five
percent (75%) of the members of the Board then still in office
who are members of the Board on September 1, 1995; or
(C) individuals whose election, or nomination for election by the
Company's stockholders was approved by a vote of at least
seventy-five percent (75%) of the members of the Board then still
in office who were elected in the manner described in (A) or (B)
above.
SECTION 9. PLAN ADMINISTRATION
The Plan shall be administered by the Committee which is authorized to establish
such rules and procedures necessary to carry out its tasks. The Committee shall
have sole discretion in interpreting and in exercising its authority under the
Plan. Any action of the Committee with respect to the Plan shall be final,
conclusive and binding on all persons including the Company, Subsidiaries,
Affiliates, Participants, and any person claiming any rights under the Plan from
or through any Participant.
Except for those functions that must be performed by the Committee pursuant to
Section 16 of the Securities Exchange Act of 1934 and other applicable law, the
Committee may delegate to officers of the Company the authority, subject to such
terms as the Committee shall determine, to perform administrative functions.
Notwithstanding anything herein to the contrary, the Committee shall be solely
responsible for certifying, in writing, prior to payment of any incentive awards
that the performance goals and other material terms were satisfied.
SECTION 10. NO RIGHT TO CONTINUED EMPLOYMENT
Neither the establishment of the Plan, the participation by an individual in the
Plan nor the payment of any award hereunder or any other action pursuant to the
Plan shall be held or construed to confer upon any Participant the right to
continue in the employ of the Company, a Subsidiary, or Affiliate or affect any
right which the Company or its Subsidiaries have to terminate at will the
employment of any such Participant.
SECTION 11. NON-TRANSFERABILITY OF AWARDS
Except as otherwise provided in this Plan, no amount payable at any time under
the Plan shall be subject to alienation by anticipation, sale, transfer,
assignment, bankruptcy, pledge, attachment, charge, or encumbrance of any kind
nor in any manner be subject to the debts or liabilities of any person, and any
attempt to so alienate or subject any such amount shall be void.
SECTION 12. AMENDMENT AND TERMINATION OF THE PLAN
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The Committee may amend or terminate this Plan in whole or in part at any time
without the consent of or prior notice to any Participant including, but not
limited to modifying (a) the Targeted EPS, (b) the incentive award opportunity
levels for any or all Participants, (c) the weighting between annual and
cumulative Targeted EPS, (d) the percentages of cash, restricted stock (or other
equity components such as options) to be paid to a Participant as an incentive
award. No such amendment or termination shall adversely affect the right of a
Participant to receive any amount to which he has become entitled by achieving
goals prior to such amendment or termination. In the event of a termination of
the Plan or an amendment which adversely affects the computation of an award to
a Participant which occurs during a Plan Year, the Participant shall be entitled
to receive (i) a prorata award to the effective date of such termination or
amendment, calculated under the terms and conditions of the Plan immediately
prior to such effective date and (ii) any award provided by such amended Plan
for the balance of such Plan Year. Upon termination of this Plan, any Restricted
Common Stock held by the office of the corporate secretary shall remain subject
to the restrictions, obligations, rights and conditions described in Sections 7
and 8 as though the Plan had not terminated.
SECTION 13. INDEMNIFICATION
The Company shall indemnify and hold harmless the Committee and each Committee
member against any and all claims, loss, damage, expense or liability arising
from any good faith action or failure to act with respect to this Plan.
SECTION 14. INCAPACITY
If the Committee determines that any person entitled to payments under the Plan
is unable to care for his or her affairs because of illness or accident, or has
died without naming a Beneficiary, unless a prior claim has been made by a duly
appointed legal representative, any payment due to such person or his or her
estate may, if the Committee so directs, be paid to the person's spouse, child,
a relative, an institution maintaining or having custody of such person, or any
other person the Committee deems to be a proper recipient on behalf of the
person entitled to the payment.
SECTION 15. GOVERNING LAW
The provisions of the Plan shall be construed and interpreted according to the
laws of the State of Missouri without reference to its principles of conflicts
of law.
SECTION 16. SEVERABILITY
If any provision of the Plan is held invalid or unenforceable, such invalidity
or unenforceability shall not affect any other provision of the Plan, and the
Plan shall be construed and enforced as if such provision had not been included.
SECTION 17. HEADINGS
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The headings of sections of the Plan are for convenience of reference. In case
of any conflict, the text of the Plan, rather than such headings, shall control.
* * * * *
This Plan adopted by the Compensation Committee this 27th day of February, 1997.
By: /s/ M. JEANNINE STRANDJORD
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M. Jeannine Strandjord
Chair, DST Systems, Inc. Compensation Committee
The Plan Amended and Restated as of February 28, 2001.
/s/ M. JEANNINE STRANDJORD
---------------------------------
M. Jeannine Strandjord
Chair, DST Systems, Inc.
Compensation Committee
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