Exhibit 10.11
MASTERCARD INTERNATIONAL INCORPORATED
EXECUTIVE INCENTIVE PLAN
PLAN DOCUMENT
AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 2004
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") and Affiliated
Employers by providing a long-term incentive opportunity that is based
on the Company's and/or Affiliated Employer'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:
"Affiliated Employer" shall mean (i) any corporation which is a member
of a controlled group of corporations (as defined in Section 414(b) of
the Internal Revenue Code (the "Code")), which includes the Company,
(ii) any trade or business (whether or not incorporated), which is
under common control (as defined in Section 414(c) of the Code) with
the Company, (iii) any organization (whether or not incorporated) which
is a member of an affiliated services group (as defined in Section
414(m) of the Code) which includes the Company, and (iv) any other
entity required to be aggregated with the Company pursuant to
regulations under Section 414(o) of the Code.
"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 Employer (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 or an Affiliated Employer
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 or an Affiliated Employer not to disclose
any information pertaining to the Company and/or its Affiliated
Employers.
"Change in Control" means:
- --------------------------------------------------------------------------------
Executive Incentive Plan Plan Document
(i) if (a) at any time three stockholders have become entitled to cast
at least 45 percent of the votes eligible to be cast by all the
stockholders of MasterCard Incorporated on any issue, (b) at any time,
a plan or agreement is approved by the stockholders of MasterCard
Incorporated to sell, transfer, assign, lease or exchange (in one
transaction or in a series of transactions) all or substantially all of
the Company's or MasterCard Incorporated's assets, (c) at any time, a
plan is approved by the stockholders of MasterCard Incorporated for the
sale, liquidation or dissolution of the Company or MasterCard
Incorporated or (d) at any time MasterCard Incorporated shall cease to
be the sole class B member of the Company or otherwise cease to control
substantially all voting rights in the Company. The foregoing
notwithstanding, a reorganization in which the stockholders of
MasterCard Incorporated continue to have all of the ownership rights in
the continuing entity shall not in and of itself be deemed a "Change in
Control" under (b), (c) and/or (d);
(ii) the approval by the stockholders of MasterCard Incorporated of (a)
any consolidation or merger of MasterCard Incorporated in which
MasterCard Incorporated is not the continuing or surviving corporation
or pursuant to which shares of stock of MasterCard Incorporated would
be converted into cash, securities or other property, other than a
merger in which the holders of the 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;
(iii) any "person" (as defined in Section 13(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), other than
MasterCard Incorporated or a subsidiary or employee benefit plan or
trust maintained by MasterCard Incorporated 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 of MasterCard
Incorporated outstanding at the time, without the prior approval of the
board of directors of MasterCard Incorporated; or
(iv) a majority of the voting directors of MasterCard Incorporated
proposed on a slate for election by stockholders of MasterCard
Incorporated are rejected by a vote of such stockholders.
"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 or an Affiliated Employer's long-term disability
plan.
- --------------------------------------------------------------------------------
Executive Incentive Plan Plan Document
"Employer" shall mean the Company or an Affiliated Employer that adopts
the Plan with the approval of the Board. Appendix A contains a list of
each Employer.
"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.
"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
- --------------------------------------------------------------------------------
Executive Incentive Plan Plan Document
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 of the Company 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, as adjusted under Section 5(a) below, of such
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,
Performance Levels, and resulting Unit Value as a consequence
of the specified 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) Subject to the negative adjustments described in this Section
5(a), 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
------------------------------------------------------
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
values above are meant to be a framework and not an absolute.
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. Beginning with
awards granted effective on or after January 1, 2004, the
Committee may make negative adjustments in order to comply
with section 162(m) of the Code, to the Unit Value of all or
any subset of the Performance Units
- --------------------------------------------------------------------------------
Executive Incentive Plan Plan Document
awarded to reflect (i) additional or amended performance
measures or criteria, beyond those in the Performance
Measures, which additional or amended measures or criteria can
be based on a combination of corporate performance targets,
and/or performance targets for a business unit, division,
department, affiliate, geographic unit, or other unit, or (ii)
the impact of a significant event, occurrence, or charge to
earnings.
(b) The Committee shall determine the Performance Level achieved
for a Performance Period and shall determine Unit Value,
including any adjustments under Section 5(a) above, 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.
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 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
----------------- ----------------
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, and
subsequent Twelve-Month
- --------------------------------------------------------------------------------
Executive Incentive Plan Plan Document
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 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.
(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, as defined in Section 2
above, key executives defined in the MasterCard Change of
Control policy or who are parties to a "Change-in-Control"
agreement with the Company or an
- --------------------------------------------------------------------------------
Executive Incentive Plan Plan Document
Affiliated Employer 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 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 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 or an Affiliated Employer, 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 or an Affiliated Employer
if the Participant performs services or engages in business or
activities for a MasterCard member, provided that the
- --------------------------------------------------------------------------------
Executive Incentive Plan Plan Document
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 or an Affiliated Employer, the term
of which is two years or more. In the event that, during the
120 days following such voluntary termination, the Participant
does not engage in or invest in any such competitive business
or activity, and certifies to that effect on forms provided by
the Company, the Participant's Performance Units shall be
paid.
(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.
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
- --------------------------------------------------------------------------------
Executive Incentive Plan Plan Document
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 an
Affiliated Employer, or shall affect the right of the Company
or an Affiliated Employer to terminate the employment or other
service of any person at any time with or without cause.
(b) The grant of Performance Units shall not confer upon a
Participant any of the rights of a stockholder of the Company
or an Affiliated Employer, 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 or Affiliated
Employer.
(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 or an Affiliated Employer 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, an
Affiliated Employer, their agents and employees, and the
Committee.
- --------------------------------------------------------------------------------
Executive Incentive Plan Plan Document
(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.
(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 or an
Affiliated Employer'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 or the Committee 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 or the Committee 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. The
Board or the Committee also may terminate the Plan and adopt a
successor plan or may amend the Plan, and give participants
equivalent value in the successor plan or the amended plan for
their vested Performance Units in the Plan and equivalent
credit in the successor plan or the amended plan for unvested
outstanding Performance Units in the Plan.
- --------------------------------------------------------------------------------
Executive Incentive Plan Plan Document
APPENDIX A
EMPLOYERS
MasterCard International, Incorporated.
MasterCard International, LLC
- --------------------------------------------------------------------------------
Executive Incentive Plan Plan Document