Exhibit 10.8
MASTERCARD INTERNATIONAL INCORPORATED
EXECUTIVE INCENTIVE PLAN
Plan Document
As Amended and Restated Effective January 31, 2002
1. Purpose
The Executive Incentive Plan (the "Plan") is designed to support the
strategic commitment to attract, retain and motivate senior executives
of MasterCard International Incorporated (the "Company") by providing a
long-term incentive opportunity that is based on the Company's
achievement of its quantitative and qualitative long-term performance
goals.
2. Definitions
For purposes of this Plan, the following terms shall have the meanings
set forth below:
"Board" shall mean the Global Board of Directors.
"Cause" shall mean (i) the willful failure by the Participant to
substantially perform his duties as an employee of the Company (other
than due to physical or mental illness) after reasonable notice to the
Participant of such failure, (ii) the Participant's engaging in serious
misconduct that is injurious to the Company including, but not limited
to, damage to its reputation or standing in its industry, (iii) the
Participant's having been convicted of, or entered a plea of nolo
contendere to a crime that constitutes a felony or (iv) the material
breach by the Participant of any written covenant or agreement with the
Company not to disclose any information pertaining to the Company.
"Change in Control" means:
(i) as long as the Company is a non-stock membership corporation, or
any of its affiliates is a private share corporation, if (a) at any time
three members have become entitled to cast at least 45 percent of the
votes eligible to be cast by all the members of the Company (or all
shareholders of such private share corporation) on any issue, (b) at any
time, a plan or agreement is approved by the members or shareholders, as
the case may be, to sell, transfer assign, lease or exchange
substantially all of the Company's or such private share corporations'
assets, or (c) at any time, a plan is approved by the members of the
Company or shareholders of such private share corporation for the sale
or liquidation of the Company or such private share corporation. The
foregoing notwithstanding, a reorganization in which the members
continue to have all of the ownership rights
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Executive Incentive Plan Plan Document 1
in the continuing entity shall not in and of itself be deemed a "Change in
Control" under (b) and/or (c), and a reorganization to convert the Company
from a membership to a stock company or a transaction resulting in the
integration of Europay and MasterCard shall not in and of itself constitute
a "Change in Control";
(ii) if the Company becomes a stock corporation, the approval by its
stockholders of (a) any consolidation or merger of the Company in which the
Company is not the continuing or surviving corporation or pursuant to which
shares of stock would be converted into cash, securities or other property,
other than a merger in which the holders of stock immediately prior to the
merger will have the same proportionate ownership interest (i.e., still own
100% of total) of common stock of the surviving corporation immediately
after the merger, (b) any sale, lease, exchange or other transfer (in one
transaction or series of related transactions) of all or substantially all
of the assets of the Company, or (c) adoption of any plan or proposal for
the liquidation or dissolution of the Company;
(iii) any "person" (as defined in Section 13(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")), other than the Company or a
subsidiary or employee benefit plan or trust maintained by the Company or
any of its subsidiaries, becoming (together with its "affiliates" and
"associates", as defined in Rule 12b-2 under the Exchange Act) the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of more than twenty-five percent (25%) of the stock
outstanding at the time, without the prior approval of the Board; or
(iv) a majority of the voting directors proposed on a slate for election
by members are rejected by a vote of such members. "
Committee" shall mean a committee of the Board designated by the Board to
administer the Plan. Unless the Board shall determine otherwise, the
Committee shall be the Compensation Committee.
"Determination Date" shall have the meaning set forth in Section 5.
"Disability" shall mean total and permanent disability in accordance with
the Company's long-term disability plan.
"Participant" shall mean an eligible employee to whom a Performance Unit
award has been granted.
"Performance Levels" shall mean, with respect to the Performance Measures
(on an aggregate basis), the following degrees of achievement: Below
Threshold, Minimum Threshold, Target and Superior.
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Performance Measures" shall mean one or more performance goals established
by the Committee with respect to each award of Performance Units.
"Performance Period" shall mean, with respect to each award of Performance
Units, the three-year period beginning on the date such award is granted or
such other period as may be established by the Committee at the time of
grant.
"Performance Unit" shall mean a performance unit award granted under the
Plan.
"Post-Performance Period" shall have the meaning set forth in Section 7(b).
"Retirement" shall mean retirement pursuant to the terms of the MasterCard
Accumulation Plan.
"Twelve-Month Cycle" shall mean any twelve-month period ending with an
anniversary date of the date of a grant of a Performance Unit award that
occurs on or before the end of the Vesting Period with respect to that
award.
"Unit Value" shall be the value of a Performance Unit as determined in
accordance with Section 5.
"Vesting Period" shall mean, with respect to each grant of Performance
Units, the period, as set forth in the certificate or written agreement
provided to the Participant with respect to the grant, beginning on the
date of grant and ending with the date the award is 100 percent vested.
3. Eligibility
Employees who are designated Senior Vice President or higher are eligible
for participation in any Performance Period provided they have achieved the
minimum performance evaluation rating required for participation as
determined by the Committee and have been designated to the appropriate
level by March 31 of the calendar year. In addition, the Committee and/or
the Chief Executive Officer may designate any other employee as eligible to
participate in the Plan.
4. Performance Unit Awards
(a) Subject to the provisions of this Plan, each Performance Unit award
shall be determined by the CEO with approval by the Committee and
evidenced by a certificate or written agreement provided to each
Participant. Subject to Sections 6 and 7 of the Plan, each Performance
Unit grant shall entitle a Participant to receive a cash payment equal
to the Unit Value of such
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Executive Incentive Plan Plan Document 3
Performance Unit. Unit Value shall be determined in accordance with
Section 5.
(b) The Committee shall specify the terms and conditions of each award of
Performance Units, including the applicable vesting schedule,
Performance Period, Performance Measures and Performance Levels. The
Committee may condition the grant of a new award on the surrender of
an outstanding award. Any such new award shall be subject to the terms
and conditions specified by the Committee at the time the new award is
granted, in accordance with the provisions of the Plan and without
regard to the terms of the surrendered award.
5. Unit Value
(a) Unless otherwise provided by the Committee at the time of grant, the
Unit Value of a Performance Unit shall be determined based upon the
achievement of Performance Levels as of the Determination Date as
follows.
Performance Level Unit Value
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Below Threshold $ 0
Threshold $ 50
Target $100
Superior $200
Determinations as to the achievement of Performance Levels shall be
made by the Committee in its sole discretion. The Committee will
determine the Unit Value based on interpolation in the event that
performance between threshold and target or target and superior is
achieved.
(b) The Committee shall determine the Performance Level achieved for a
Performance Period during the 60 day period following the
Determination Date. Except as otherwise provided by the Committee, the
Determination Date shall be the last day of the Performance Period to
which a Performance Unit relates; provided that, if a Participant
terminates employment prior to the end of the Performance Period, the
Determination Date with respect to any Performance Units relating to
such Performance Period (provided such Performance Units have not been
forfeited pursuant to Section 6 by reason of such termination) shall
be deemed to be the last day of employment and the Performance Level
achieved with respect to any such Performance Units shall be deemed to
be Target.
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Executive Incentive Plan Document 4
6. Vesting
(a) Each Performance Unit shall vest subject to such terms and conditions
as the Committee may, in its sole discretion, determine; provided
that, unless otherwise provided by the Committee at the time of award,
Performance Units which relate to a three-year Performance Period
shall vest in annual increments according to the following schedule if
the Participant completes 1,000 hours of service in each Twelve-Month
Cycle and is employed by the Company on the last day of the respective
Twelve-Month Cycle:
Twelve-Month
Cycle Ending
on the Following
Anniversary of % of Performance
the Date of Grant Units Vested
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1st Anniversary 26 2/3%
2nd Anniversary 26 2/3%
3rd Anniversary 26 2/3%
4th Anniversary 0 %
5th Anniversary 20 %
(b) Except as otherwise determined by the Committee or as provided below,
unvested Performance Units relating to the Twelve-Month Cycle in which
a Participant terminates employment with the Company, and
subsequent Twelve-Month Cycles during the Vesting Period for the
award, shall be forfeited upon termination of employment.
(c) Notwithstanding the foregoing, if a Participant ceases to be employed
during a Twelve-Month Cycle, but is rehired either during the same
Twelve-Month Cycle or during a subsequent Twelve-Month Cycle in the
Vesting Period for the same award of Performance Units, the
Participant shall be eligible to vest in the Performance Units under
that award that relate to the Twelve-Month Cycle of rehiring and
subsequent Twelve-Month Cycles if the Participant otherwise meets the
terms and conditions specified in the award and completes 1,000 hours
of service in and is employed by the Company on the last day of the
Twelve-Month Cycle; provided, however, that, in order to vest in the
Performance Units relating to the final Twelve-Month Cycle in the
Vesting Period, the Participant must be employed on the first and last
day of that final Twelve-Month Cycle and have completed 1,000 hours of
service during that final Twelve-Month Cycle.
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(d) Notwithstanding the foregoing, upon a Participant's termination of
employment due to death or Disability, all of the Participant's
Performance Units shall immediately vest and none shall be forfeited.
(e) Notwithstanding the foregoing, upon a Participant's termination of
employment due to Retirement, all of the Participant's Performance
Units (with the exception of any Performance Units granted with no
vesting until the end of the Performance Period) shall immediately
vest and none shall be forfeited, as long as Participant has at least
six months of service in the Performance Period. The Committee shall
retain the discretion to allow in particular cases immediate vesting
under this Section 6(e) to a Participant holding Performance Units
that have no vesting until the end of the Performance Period.
(f) Notwithstanding the foregoing, upon a Participant's termination of
employment for Cause, all vested but unpaid Performance Units held by
the Participant shall be forfeited in full, without any right to
payment from the Company. The Committee in its sole discretion shall
determine whether a termination was for "Cause".
(g) Notwithstanding the foregoing, upon a Participant's voluntary
termination other than by reason of Disability, all vested but unpaid
Performance Units held by a Participant who violates the
noncompetition provisions set forth in Section 7(c) below, shall be
forfeited in full.
(h) In the event of a change in control, key executives defined in the
MasterCard Change of Control policy or who are parties to a
"Change-in-Control" agreement with the Company shall be eligible for
100% vesting in all unvested awards.
7. Payment
(a) Except as otherwise determined by the Committee at the time of grant
of a Performance Unit, or as otherwise elected by the Participant
pursuant to Section 7(d) below, within 60 days of the determination of
the Unit Value in accordance with Section 5, Participant shall receive
a cash payment in respect of each vested Performance Unit equal to
such Unit Value for the completed Performance Period.
(b) Except as otherwise determined by the Committee at the time of grant
of a Performance Unit, or as otherwise elected by the Participant
pursuant to Section 7(d) below, (i) if Participant remains employed by
the Company such that he or she vests in Performance Units for a
Twelve-Month Cycle in the portion of the Vesting Period that extends
beyond the Performance
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Executive Incentive Plan Plan Document 6
Period (the "Post-Performance Period") or (ii) if a Participant
terminates employment due to death or Disability during the
Post-Performance Period, the Participant shall receive, within 60 days
of the end of the Vesting Period, or termination, as the case may be,
an additional cash payment in respect of each Performance Unit which
has not yet been paid pursuant to paragraph (a) above equal to the
Unit Value.
(c) In the event a Participant voluntarily terminates employment other
than by reason of Disability, no payment otherwise due under Section
7(a) or (b) above shall be made before 120 days after such voluntary
termination. In the event that, during the 120 days following such
voluntary termination, the Participant directly or indirectly engages
or invests in any business or activity that is directly or indirectly
in competition with any business or activity engaged in by the
Company, including, but not limited to, any credit, charge, chip, or
debit card business or processor, the Participant's Performance Units
shall not be paid and, pursuant to Section 6(g) above, shall be
forfeited in full. For purposes of the preceding sentence, the
Participant shall be deemed to be engaged in any business which any
person for whom he shall perform services is engaged. Notwithstanding
the foregoing, nothing herein shall prohibit the Participant from
having a beneficial ownership interest of less than 3% of the
outstanding amount of any class of securities of any enterprise (but
without otherwise participating in the activities of such enterprise)
if such securities are listed on a national securities exchange or
quoted on an inter-dealer quotation system. The Participant shall not
be treated as engaged or invested in any business in competition with
that of the Company if the Participant performs services or engages in
business or activities for a MasterCard member, provided that the
MasterCard member is not a party to a brand dedication agreement with
VISA USA, VISA International, American Express, JCB, Discover, Diners
Club, Carte Blanche or any other competitor of the Company, the term
of which is two years or more.
(d) Payments of Performance Units under Sections 7(a) and 7(b) above are
eligible for deferral under the terms and conditions of the MasterCard
International Incorporated Deferral Plan, as amended from time to
time. In the event a Participant who has made a Deferred Performance
Units Election under the MasterCard International Incorporated
Deferral Plan voluntarily terminates employment, Sections 6(g) and
7(c) will apply to those payments that, in the absence of the Deferred
Performance Units Election, would have been paid in the 120 days
following termination.
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8. Term
The Plan shall be effective as of January 1999. Amendments to the Plan
generally shall be effective on their adoption. Section 6(g) and Section
7(c), as added to the Plan effective July 9, 2001, shall apply to
Performance Units awarded beginning January 1, 2002. The amendments to the
Plan made effective as of December 12, 2001, shall apply to all Performance
Units awarded in 2001 as well as to Performance Units awarded thereafter.
9. Administration
(a) The Committee shall determine, in its sole discretion, any question
arising in connection with the interpretation or application of the
provisions of the Plan and its decisions or actions in respect thereof
shall be conclusive and binding upon any and all Participants and
their beneficiaries, successors and assigns, and all other persons.
All resolutions or actions taken by the Committee shall be by
affirmative vote or action of a majority of the members of the
Committee.
(b) The Committee may delegate to one or more officers or managers of the
Company, or to a committee of such officers or managers, the
authority, subject to such terms and limitations as the Committee
shall determine, to take any actions the Committee has the authority
to take under the Plan.
(c) Members of the Committee or its delegates shall be fully protected in
relying in good faith upon the advice of counsel and shall incur no
liability with respect to the Plan except for their own gross
negligence or willful misconduct in the performance of their duties.
The Company shall defend, indemnify and hold harmless each member of
the Committee or its delegates against any and all claims, liabilities
and costs (including attorney fees) arising in connection with their
administration of the Plan except for such member's own gross
negligence or willful misconduct.
10. General Provisions
(a) Nothing in this Plan or in any instrument executed pursuant hereto
shall confer upon any person any right to continue in the employment
or other service of the Company, or shall affect the right of the
Company to terminate the employment or other service of any person at
any time with or without cause.
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(b) The grant of Performance Units shall not confer upon a Participant any
of the rights of a stockholder of the Company, and no shares of stock
shall be issued pursuant to Performance Units. The rights of a
Participant under the Plan shall be no greater than the rights of a
general unsecured creditor of the Company.
(c) In the event a Participant is employed or resides in a country with
laws that prescribe certain requirements for long-term incentives to
qualify for advantageous tax treatment, the Committee may at its
discretion modify the terms of an award to be made under the Plan and
procure assumption of any of the Company's obligations hereunder by an
affiliate company, in a manner consistent or inconsistent with the
terms of the Plan, for the purpose of qualifying the award under such
laws of such country; provided, however, that to the extent possible,
the overall terms and conditions of such an award should not be made
more favorable to the recipient than would be permitted if the award
had been granted under this Plan as herein set forth.
(d) Participants shall be solely responsible for the payment of any taxes
due in connection with the Plan; provided, however, that the Company
shall make such provisions as it may deem appropriate for the
withholding of any taxes which the Company determines it is required
to withhold in connection with any award under the Plan.
(e) By accepting any benefits under the Plan, each Participant, and each
person claiming under or through him, shall be conclusively deemed to
have indicated his acceptance and ratification of, and consent to, all
provisions of the Plan and any action or decision under the Plan by
the Company, its agents and employees and the Committee.
(f) The validity, construction, interpretation and administration of the
Plan and any awards under the Plan and of any determinations or
decisions made thereunder, and the rights of all persons having or
claiming to have any interest herein or thereunder, shall be governed
by, and determined exclusively in accordance with, the laws of New
York (determined without regard to its conflict of laws provisions).
(g) This Plan shall be binding upon and inure to the benefit of the
Company, its affiliated companies and their successors or assigns, and
all Participants and their beneficiaries, successors, and assigns and
all other persons claiming under or through any of them.
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Executive Incentive Plan Plan Document 9
(h) The value of Performance Unit awards shall not be treated as
compensation and/or salary for purposes of calculating a Participant's
benefits under any of the Company's other benefit plans, policies or
programs.
(i) The use of the masculine gender shall also include within its meaning
the feminine. The use of the singular shall include within its meaning
the plural and vice versa.
11. Amendment and Termination
This Plan may be amended or terminated by the Board at any time, for any
reason and in any respect; provided, however, that no such amendment or
termination of this Plan shall affect adversely any award of Performance
Units theretofore granted without the written consent of the holder
thereof. Notwithstanding the foregoing:
(a) The methodology for determining Performance Units and Unit Value may
be changed, on a prospective basis, at any time.
(b) Upon termination of the Plan, the Board may provide for the immediate
termination of all outstanding Performance Units in exchange for a
cash payment equal to the then value of the Performance Units that are
outstanding and vested (pursuant to Section 6) at the time of
termination.
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Executive Incentive Plan Plan Document 10