Exhibit (10)
THE MCGRAW-HILL COMPANIES, INC.
KEY EXECUTIVE SHORT-TERM INCENTIVE
DEFERRED COMPENSATION PLAN
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Exhibit (10)
ARTICLE I
PURPOSE
It is intended that the Plan will aid in retaining and attracting employees by
providing such employees with a means to defer receipt of short-term incentive
compensation and/or such other cash compensation as determined by the Committee
(as defined in Section 2.04 herein), to a future date.
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Exhibit (10)
ARTICLE II
DEFINITIONS
For the purposes of this Plan, the following words and phrases shall
have the meanings indicated, unless the context clearly indicates otherwise:
Section 2.01 BENEFICIARY. "Beneficiary" means the person, persons or
entity designated by the Participant to receive any benefits payable under the
Plan. Any Participant Beneficiary designation shall be made in a written
instrument filed with the Company and shall become effective only when received,
accepted and acknowledged in writing by the Company.
Section 2.02 BOARD. "Board" means the Board of Directors of
McGraw-Hill, Inc.
Section 2.03 CHANGE OF CONTROL. For purposes of this Plan, the term
"Change of Control" shall mean any of the following:
(i) An acquisition by an individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of either (1) the then outstanding shares of common
stock of the Corporation (the "Outstanding Corporation Common Stock") or (2) the
combined voting power of the then outstanding voting securities of the
Corporation entitled to vote generally in the election of directors (the
"Outstanding Corporation Voting Securities"); excluding, however, the following:
(1) any acquisition directly from the Corporation, other than an acquisition by
virtue of the exercise of a conversion privilege unless the security being so
converted was itself acquired directly from the Corporation; (2) any acquisition
by the Corporation; (3) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Corporation or any entity controlled by
the Corporation; or (4) any acquisition pursuant to a transaction which complies
with clauses (1), (2) and (3) of subsection (iii) of this definition; or
(ii) A change in the composition of the Board of Directors such
that the individuals who, as of the effective date of the Plan, constitute the
Board of Directors (such Board of Directors shall be hereinafter referred to as
the "Incumbent Board") cease for any reason to constitute at least a majority of
the Board of Directors; provided, however, for purposes of this definition, that
any individual who becomes a member of the Board of Directors subsequent to the
effective date of the Plan, whose election, or nomination for election by the
Corporation's shareholders, was approved by a vote of at least a majority of
those individuals who are members of the Board of Directors and who were also
members of the Incumbent Board (or deemed to be such pursuant to this proviso)
shall be considered as though such individual were a member of the Incumbent
Board; but, provided further, that any such individual whose initial assumption
of office occurs as a result of either an actual or threatened election contest
(as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies or consents
by or on behalf of a Person other than the Board of Directors shall not be so
considered as a member of the Incumbent Board; or
(iii) Consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets of the
Corporation ("Corporate Transaction"); excluding, however, such a Corporate
Transaction pursuant to which (1) all or substantially all of the individuals
and entities who are the beneficial owners, respectively, of
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Exhibit (10)
the Outstanding Corporation Common Stock and Outstanding Corporation Voting
Securities immediately prior to such Corporate Transaction will beneficially
own, directly or indirectly, more than 50% of, respectively, the outstanding
shares of common stock, and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of directors, as
the case may be, of the corporation resulting from such Corporate Transaction
(including, without limitation, a corporation which as a result of such
transaction owns the Corporation or all or substantially all of the
Corporation's assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership, immediately prior to such
Corporate Transaction, of the Outstanding Corporation Common Stock and
Outstanding Corporation Voting Securities, as the case may be, (2) no Person
(other than the Corporation, any employee benefit plan (or related trust) of the
Corporation or such corporation resulting from such Corporate Transaction) will
beneficially own, directly or indirectly, 20% or more of, respectively, the
outstanding shares of common stock of the corporation resulting from such
Corporate Transaction or the combined voting power of the outstanding voting
securities of such corporation entitled to vote generally in the election of
directors except to the extent that such ownership existed prior to the
Corporate Transaction, and (3) individuals who were members of the Incumbent
Board will constitute at least a majority of the members of the board of
directors of the corporation resulting from such Corporate Transaction; or
(IV) THE APPROVAL BY THE STOCKHOLDERS OF THE CORPORATION OF A
COMPLETE LIQUIDATION OR DISSOLUTION OF THE CORPORATION."
Section 2.04 COMMITTEE. "Committee" means the Compensation Committee of
the Board.
Section 2.05 COMPANY. "Company" means The McGraw-Hill Companies, Inc.,
its successors, any subsidiary or affiliated organizations authorized by the
Board of Directors of The McGraw-Hill Companies, Inc. or the Committee to
participate in the Plan and any organization into which or with which the
Company may merge or consolidate or to which all or substantially all of its
assets may be transferred.
Section 2.06 DEFERRED ACCOUNT. "Deferred Account" means the account
maintained on the books of account of the Company for each Participant pursuant
to Article VI. Separate Deferred Accounts shall be maintained for each
Participant. More than one Deferred Account may be maintained for each
Participant as necessary to reflect (a) various interest credits and/or (b)
separate year deferral elections. A Participant's Deferred Account shall be
utilized solely as a device for the measurement and determination of the amounts
to be paid to the Participant pursuant to this Plan. A Participant's Deferred
Account shall not constitute or be treated as a trust fund of any kind.
Section 2.07 DETERMINATION DATE. "Determination Date" means the date on
which the amount of a Participant's Deferred Account is determined as provided
in Article VI hereof. The last day of each calendar month shall be a
Determination Date.
Section 2.08 DISABILITY. "Disability" or "Disabled Participant" means
eligibility for disability benefits under the terms of the Company's Long-Term
Disability Plan in effect at the time the Participant becomes disabled.
Section 2.09 INCENTIVE COMPENSATION. "Incentive Compensation" means any
short-term compensation cash award, payable by the Company to a Participant in a
Plan Year pursuant to the provisions of the The McGraw-Hill Companies, Inc. Key
Executive Short-Term Incentive Compensation Plan, and/or such other cash
compensation as determined by the Committee.
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Exhibit (10)
Section 2.10 PARTICIPANT. "Participant" means any individual who is
designated by the Committee to participate in this Plan and who elects to
participate by filing a Participation Agreement as provided in Article IV.
Section 2.11 PARTICIPATION AGREEMENT. "Participation Agreement" means
the agreement filed by a Participant prior to the beginning of the first period
for which the Participant's Incentive Compensation is to be deferred pursuant to
the Plan and the Participation Agreement. Notwithstanding the foregoing
sentence, the Participation Agreement for the first Plan Year of the Plan may be
filed no later than August 31, 1990. A new Participation Agreement shall be
filed by the Participant for each separate Incentive Compensation deferral
election.
Section 2.12 PLAN ADMINISTRATOR. "Plan Administrator" means the
Committee.
Section 2.13 PLAN YEAR. "Plan Year" means a twelve month period
commencing January 1 and ending the following December 31. The first Plan Year
shall commence on January 1, 1990.
Section 2.14 RETIREMENT DATE. "Retirement Date" means the date on which
the Participant actually terminates employment due to retirement on or after the
first day of the month coincident with or next following a Participant's
attainment of age fifty-five (55).
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Exhibit (10)
ARTICLE III
ADMINISTRATION
Section 3.01 PLAN ADMINISTRATOR; COMMITTEE; DUTIES.
This Plan shall be administered by the Plan Administrator. Decisions of the Plan
Administrator shall be reviewable by the Committee. The Committee shall also
have the authority to make, amend, interpret, and enforce all appropriate rules
and regulations for the administration of this Plan and decide or resolve any
and all questions, including interpretations of this Plan, as may arise in
connection with the Plan.
Section 3.02 BINDING EFFECT OF DECISIONS. The decision or action of the
Committee in respect to any question arising out of or in connection with the
administration, interpretation and application of the Plan and the rules and
regulations promulgated hereunder shall be final, conclusive and binding upon
all persons having any interest in the Plan, unless a written appeal is received
by the Committee within sixty days of the disputed action. The appeal will be
reviewed by the Committee and the decision of the Committee shall be final,
conclusive and binding on the Participant and all persons claiming by, through
or under the Participant.
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Exhibit (10)
ARTICLE IV
PARTICIPATION
Section 4.01 PARTICIPATION. Participation in the Plan shall be limited
to executives selected by the Committee who elect to participate in the Plan by
filing a Participation Agreement with the Company. Except as provided below, a
Participation Agreement must be filed prior to December 15th immediately
preceding the Plan Year in which the Participant's participation under the
Agreement will commence, and the election to participate shall be effective on
the first day following receipt by the Company of a properly completed and
executed Participation Agreement. The Participation Agreement for the first Plan
Year of the Plan must be filed no later than August 31, 1990.
Section 4.02 DEFERRAL AMOUNT. A Participant may elect in any
Participation Agreement to defer all or a portion of his Incentive Compensation.
Section 4.02 (a) With respect to Incentive Compensation deferrals, the
deferral selected in each Participation Agreement shall apply only to the
Participant's Incentive Compensation paid for the Plan Year for which the
respective Participation Agreement is applicable.
Section 4.02 (b) From time to time, the Committee may increase or
decrease the period for which the deferrals are effective by giving reasonable
written notice to the affected Participants. Such changes shall be effective for
all Participation Agreements filed thereafter.
Section 4.02 (c) A Participant's election to defer his Incentive
Compensation shall be irrevocable upon the filing of the respective
Participation Agreement; provided, however, that the deferral under any
Participation Agreement may be terminated or amended as provided in paragraphs
9.01 and 9.02.
Section 4.02 (d) With respect to Incentive Compensation deferrals, to
the extent the Participant participates in the Company's qualified Employee
Retirement Plan (ERP), Employee Retirement Account Plan (ERAP), and Savings
Incentive Plan (SIP), such deferrals will be credited with Company contributions
under non-qualified accounts for the ERP, ERAP and SIP Plans to the extent such
contributions would be eligible to be so credited under such Plans.
Section 4.03 ADDITIONAL PARTICIPATION AGREEMENT. A Participant may
enter into additional Participation Agreements if authorized to do so by the
Committee by filing a Participation Agreement with the Company prior to December
15th of any calendar year, stating the amount that the Participant elects to
have deferred for the next Plan Year. Such additional agreements shall be
effective as to Incentive Compensation paid in the Plan Year beginning after the
last day of the Plan Year in which the respective agreement is filed with the
Company.
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Exhibit (10)
ARTICLE V
DEFERRED INCENTIVE COMPENSATION
Section 5.01 ELECTIVE DEFERRED INCENTIVE COMPENSATION. The amount of
Incentive Compensation that a Participant elects to defer in the Participation
Agreement executed by the Participant, with respect to each Plan Year of
participation in the Plan, shall be credited by the Company to the Participant's
Deferred Account. To the extent that the Company is required to withhold any
taxes or other amounts from the employee's deferred wages pursuant to any state,
Federal or local law, such amounts shall be taken out of the portion of the
Participant's Incentive Compensation which is not deferred under this Plan, or
the Participant's base salary.
Section 5.02 VESTING OF DEFERRED ACCOUNT. A Participant shall be 100%
vested in his/her Deferred Account at all times.
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Exhibit (10)
ARTICLE VI
DEFERRED ACCOUNT
Section 6.01 DETERMINATION OF ACCOUNT. Each Participant's Deferred
Account, as of each Determination Date, shall consist of the balance of the
Participant's Deferred Account as of the immediately preceding Determination
Date. The Deferred Account of each Participant shall be reduced by the amount of
all distributions, if any, made from such Deferred Account since the preceding
Determination Date.
Section 6.02 INTEREST CREDIT. As of each Determination Date, the
Participant's Deferred Account shall be increased by the amount of interest
earned since the preceding Determination Date. Interest shall be credited at a
rate determined to be in effect for each Plan Year based on 120% of the
Applicable Federal Long-Term Rate as prescribed by the Internal Revenue Service
in December of the year prior to the year in which the Incentive Compensation is
credited. Notwithstanding the foregoing, if a Participant's Deferred Account is
paid in installments, interest shall be credited, (i) for retired Participants,
at the rate determined to be in effect during the Plan Year in which the
Participant retires, and (ii) for all other installment payments, at the rate
determined to be in effect during the Plan Year in which such payments commence.
Section 6.03 STATEMENT OF ACCOUNTS. The Company shall submit to each
Participant, by July 1 following the close of each Plan Year, a statement in
such form as the Company deems desirable, setting forth the balance to the
credit of such Participant in his Deferred Account as of the last day of the
preceding Plan Year.
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Exhibit (10)
ARTICLE VII
BENEFITS
Section 7.01 TIME OF PAYMENT. A Participant may elect in any
Participation Agreement whether payment of the balance to the credit of his
Deferred Account shall be paid or commence to be paid (i) on a date specified by
the Participant, or (ii) upon the earlier of the Participant's (A) Retirement
Date or (B) termination of employment other than death, disability, or
retirement. In either case, the Participant shall be entitled to the balance to
the credit of his Deferred Account determined under Section 6.01, which shall be
payable under Section 7.04 as of the Determination Date coincident with or
immediately following such date or event. No change in a Participant's election
shall be valid unless it is made in a Participation Agreement which is filed
with the Committee prior to the Plan Year preceding the Plan Year in which
payment of the Participant's Deferred Account would otherwise have been made or
commenced.
Section 7.02 DEATH. If a Participant dies after the commencement of
payments of his Deferred Account, or if a Participant while employed dies prior
to any payments of his Deferred Account, his Beneficiary shall receive a
lump-sum payment equal to his Deferred Account as of the Determination Date
coincident with or immediately following such death.
Section 7.03 DISABILITY. In the event of Disability prior to retirement
or termination of employment, the Disabled Participant, unless he otherwise
elects under this paragraph, shall have payment of his Deferred Account made or
commenced in accordance with the Participation Agreement filed by the
Participant. Before payments commence or are made under the preceding sentence,
a Disabled Participant may elect, subject to Committee approval upon good cause
shown, to have payments (i) made as soon as practicable in a lump sum, or (ii)
commence as soon as practicable in equal annual installments over a period not
in excess of 15 years.
Section 7.04 FORM OF PAYMENT. Upon the happening of the date or event
described in Sections 7.01 or 7.03, the Company shall pay to the Participant the
balance to the credit of his Deferred Account in a lump sum or in equal annual
installments as elected in the Participation Agreement filed by the Participant.
If a Participant elects to receive payments in installments, payment of
the Deferred Account shall be in an amount which amortizes the Deferred Account
balance in equal annual payments of principal and interest over a period not to
exceed 15 years. For purposes of determining the amount of the annual payment,
the assumed rate of interest shall be the rate under the terms of Section 6.02.
No change in a Participant's election shall be valid unless it is made in a
Participation Agreement which is filed with the Committee prior to the Plan Year
preceding the Plan Year in which payment of the Participant's Deferred Account
would otherwise have been made or commenced.
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Exhibit (10)
Section 7.05 LUMP-SUM PAYMENT. Notwithstanding Section 7.04, in its
sole discretion the Committee may direct that the Company make a lump-sum
payment of the balance credited to a Participant's Deferred Account.
Section 7.06 WITHHOLDING OF TAXES. To the extent required by the law in
effect at the time payments are made, the Company shall withhold from payments
made hereunder any taxes required to be withheld from an employee's wages for
the Federal or any state or local government.
Section 7.07 COMMENCEMENT OF PAYMENTS. Commencement of payments under
this Plan shall be made following the earlier of (i) the date specified in the
Participation Agreement filed by the Participant or (ii) receipt of notice by
the Plan Administrator of the event which entitles a Participant (or a
Beneficiary) to payments under this Plan. All payments shall be made as of the
first day of the month.
Section 7.08 PAYMENTS IN CONNECTION WITH CHANGE OF CONTROL.
Notwithstanding anything contained in the Plan to the contrary, in the event of
a Change of Control of the Corporation the company shall immediately pay to each
Participant in a lump sum the then remaining balance in his/her Deferred
Account.
The terms of sections 9.01 and 9.02 shall not be applicable following a
Change of Control of the Corporation.
The reasonable legal fees incurred by any Participant to enforce
his/her valid rights hereunder shall be paid for by the Company to the
Participant in addition to sums otherwise due hereunder, whether or not the
Participant is successful in enforcing his/her rights or whether or not the
matter is settled.
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Exhibit (10)
ARTICLE VIII
BENEFICIARY DESIGNATION
Section 8.01 BENEFICIARY DESIGNATION. Each Participant shall have the
right, at any time, to designate any person, persons or entity as his
Beneficiary or Beneficiaries (both principal as well as contingent) to whom
payment under this Plan shall be paid in the event of his death prior to
complete distribution to the Participant of the benefits due him under the Plan.
Section 8.02 AMENDMENTS. Any Beneficiary designation may be changed by
a Participant by the written filing of such change on a form prescribed by the
Company. The filing of a new Beneficiary designation form will cancel all
Beneficiary designations previously filed.
Section 8.03 NO BENEFICIARY DESIGNATION. If a Participant fails to
designate a Beneficiary as provided above, or if all designated Beneficiaries
predecease the Participant, then any amounts to be paid to the Participant's
Beneficiary shall be paid to the Participant's estate.
Section 8.04 EFFECT OF PAYMENT. The payment to the deemed Beneficiary
shall completely discharge the Company's obligations under this Plan with
respect to the Participant.
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Exhibit (10)
ARTICLE IX
AMENDMENT AND TERMINATION OF PLAN
Section 9.01 AMENDMENT. The Board or the Committee may at any time
amend the Plan in whole or in part, provided, however, that no amendment shall
be effective to decrease or restrict any Deferred Account at the time of such
amendment.
Section 9.02 COMPANY'S RIGHT TO TERMINATE. The Board or the Committee
may at any time terminate the Plan with respect to new elections to defer if, in
its judgment, the continuance of the Plan, the tax, accounting, or other effects
thereof, or potential payments thereunder would not be in the best interests of
the Company. The Board or the Committee may also terminate the Plan in its
entirety at any time, and upon any such termination, the Company shall
immediately pay to each Participant in a lump sum the then remaining balance in
his Deferred Account.
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Exhibit (10)
ARTICLE X
MISCELLANEOUS
Section 10.01 UNSECURED GENERAL CREDITOR. Participants and their
Beneficiaries shall have no legal or equitable rights, interest or claims in any
property or assets of the Company. Any and all of the Company's assets shall be,
and remain, the general, unpledged, unrestricted assets of the Company. The
Company's obligation under the Plan shall be merely that of an unfunded and
unsecured promise of the Company to pay money in the future.
Section 10.02 NONASSIGNABILITY. Neither a Participant nor any other
person shall have any right to commute, sell, assign, transfer, pledge,
anticipate, mortgage or otherwise encumber, transfer, hypothecate or convey in
advance of actual receipt the amounts, if any, payable hereunder, or any part
thereof, which are, and all rights to which are, expressly declared to be
unassignable and non-transferable. No part of the amounts payable shall, prior
to actual payment, be subject to seizure or sequestration for the payment of any
debts, judgments, alimony or separate maintenance owed by a Participant or any
other person, nor be transferable by operation of law in the event of a
Participant's or any other person's bankruptcy or insolvency.
Section 10.03 NOT A CONTRACT OF EMPLOYMENT. The terms and conditions of
this Plan shall not be deemed to constitute a contract of employment between the
Company and the Participant, and the Participant (or his Beneficiary) shall have
no rights against the Company except as may otherwise be specifically provided
herein. Moreover, nothing in this Plan shall be deemed to give a Participant the
right to be retained in the service of the Company or to interfere with the
right of the Company to discipline or discharge him at any time.
Section 10.04 PROTECTIVE PROVISIONS. A Participant will cooperate with
the Company by furnishing any and all information requested by the Company, in
order to facilitate the payment of benefits hereunder, and by taking such
physical examinations as the Company may deem necessary and taking such other
action as may be requested by the Company.
As amended: October 27, 1993
January 25, 1995
July 31, 1996
July 30, 1997
February 23, 2000
December 4, 2002
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