Exhibit 99.1
MASTERCARD INTERNATIONAL INCORPORATED
VALUE APPRECIATION PROGRAM
1. PURPOSE
This Value Appreciation Program ("Program") 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
performance-driven, market-based, and linked to member
profitability.
2. ELIGIBILITY
Employees who are designated Senior Vice President are eligible for
participation in any plan year provided they were designated a
Senior Vice President by January 1 of that year. In addition, the
Chief Executive Officer may designate any other senior executive to
participate in the Program.
3. PARTICIPATION
Participation in the Program shall be limited to senior executives
of the Company who are designated in writing by the Compensation
Committee (the "Committee") of the Global Board of Directors (the
"Board") of the Company to be participants ("Participants") in the
Program.
4. SHARE UNIT AWARDS
(a) Subject to the provisions of this Program, the Committee
may at any time, or from time to time, award share units
("Share Units") to Participants. Upon the exercise or
deemed exercise of Share Units in accordance with the
provisions of this Program, a Participant shall be
entitled to receive a cash payment, for each Share Unit
exercised, equal to the excess (if any) of the value of
such Share Unit (the "Unit Value") as of the date of
exercise over the Unit Value as of the date of grant of
Share Units. Unit Value shall be determined in
accordance with Section 5.
(b) The Committee shall specify the terms and conditions of
each award of Share Units. Each such award shall be
evidenced by a certificate or written agreement in a
form approved by the Committee. 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 Program and
without regard to the terms of the surrendered award.
- --------------------------------------------------------------------------------
Valuation Appreciation Program Plan Document - 1
5. UNIT VALUE
(a) For purposes of this Program, the following terms shall
have the meanings set forth below:
(i) "Account" shall mean an investment
management or other account established to
hold securities, cash and any other assets
of the Program.
(ii) "Administrative Committee" shall mean a
committee comprised of at least three
company officers appointed by the Committee
to perform day-to-day administrative
functions pursuant to the terms of the
Program.
(b) The Unit Value of a Share Unit as of a given date shall
be based on the market value of specific securities or
other assets that are representative of the financial
services industry, as selected by the Committee. Such
market value shall be determined in accordance with
procedures approved by the Administrative Committee.
Cash dividends and investment management expenses shall
not be taken into account in determining the Unit Value
of the specified financial services securities or other
assets. The Administrative Committee, in its sole
discretion, shall determine the treatment of all other
items.
6. VESTING
(a) An award of Share Units shall vest according to the
following schedule if the Participant remains in the
continuous employment of the Company ("Employment"):
<Table>
<Caption>
Anniversary of % of Initial Share
the Date of Grant Units Vested
----------------- ------------------
1st 20%
2nd 40%
3rd 60%
4th 80%
5th 100%
</Table>
Except as otherwise determined by the Committee or as
provided in Section 6(b), unvested Share Units shall be
forfeited upon termination of employment.
(b) Notwithstanding the foregoing, upon a Participant's
termination of employment due to death, Disability or
Retirement, all of the Participant's
- --------------------------------------------------------------------------------
Valuation Appreciation Program Plan Document - 2
Share Units shall immediately vest and none shall be
forfeited. For purposes of this Program: "Retirement"
shall mean retirement after age 65, after age 60 with at
least five years of "service", or after age 55 with at
least 10 years of "service," with the term "service"
defined as it is for purposes of the MasterCard
International Incorporated Pension Plan; and
"Disability" shall mean total and permanent disability
in accordance with the Company's long-term disability
plan.
(c) Notwithstanding any of the provisions of the Program to
the contrary, all Share Units held by a Participant
shall be forfeited in full, without any right to payment
from the Company, upon the Participant's termination of
employment for "Cause". "Cause" means (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.
Whether a termination was for "Cause" shall be
determined by the Committee in its sole discretion.
7. EXERCISE
(a) An award of Share Units may only be exercised to the
extent it is vested pursuant to Section 6. Thereafter,
subject to the provisions of Section 6 and this Section
7, and any rules which may be specified by the Committee
regarding the time and manner of exercising Share Units,
Share Units may be exercised by a Participant at any
time or from time to time, in whole or in part.
(b) Except as otherwise determined by the Committee, an
award of Share Units shall expire at the close of
business on the earliest of:
(i) The tenth anniversary of the date of grant
of the Share Units;
(ii) The last business day of the month following
the month of the Participant's termination
of employment for any reason other than
death, Disability, Retirement or Cause;
(iii) The Participant's termination of employment
for Cause.
- --------------------------------------------------------------------------------
Valuation Appreciation Program Plan Document - 3
(c) All vested Share Units that remain outstanding upon the
expiration of an award pursuant to Section 7(b)(i), (ii)
or (iii) shall, to the extent they have value, be deemed
to have been automatically exercised at the time of
expiration, and the Participant holding the Share Units
shall receive payment in accordance with the provisions
of Section 8.
(d) Share Units may be exercised by notice to the
Administrative Committee, made in the form and manner
prescribed by the Administrative Committee, specifying
the number of Share Units to be exercised. An exercise
is treated as occurring on receipt in the prescribed
form by the Company or its designee under procedures
established by the Administrative Committee. Share Units
must be exercised for a whole number of Share Units, and
the minimum number of Share Units that may be exercised
at any one time is the smaller of 10% of the combined
total number of Share Units originally awarded under all
grants or 100% of the combined total Share Units then
remaining under all grants. Upon exercise, the number of
Share Units exercised shall terminate and the
Participant shall have no further rights with regard to
the terminated Share Units.
(e) Share Units shall be exercisable only by the Participant
to whom they are granted, or upon the Participant's
death, by his beneficiary (designated by the Participant
in accordance with such procedures as the Administrative
Committee may specify) or, in the absence of a surviving
beneficiary, his estate or legal representative. Rights
granted under the Program are not otherwise assignable
and are not subject, in whole or in part, to attachment,
execution or levy of any kind.
8. PAYMENT
Following the exercise of Share Units under Section 7(a) or the
deemed exercise of Share Units under Section 7(c), the Participant
shall receive payment in an amount determined pursuant to Sections 4
and 5(b). Payment of such amount shall be made in cash in a single
installment as soon as practicable after exercise and valuation of
the Share Units.
9. TERM
The Plan shall be effective as of April 1, 1995. No Share Units
shall be granted under the Plan after March 31, 2005, but the
Program shall continue in effect thereafter with respect to
previously granted Share Units.
- --------------------------------------------------------------------------------
Valuation Appreciation Program Plan Document - 4
10. CUSTODY OF PROGRAM ASSETS
The Company, in its discretion, may establish an Account to
accumulate funds to offset its obligations under this Program. The
Company, through its Treasury Department, shall have authority to
establish an Account to hold securities, cash, or other assets for
purposes of this Program, and shall have authority to trade
(including through a broker) in the assets in the Account. The
assets of the Account shall be subject to the claims of the
Company's creditors in the event of the Company's bankruptcy or
insolvency.
11. ADMINISTRATION
(a) 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 shall appoint an Administrative Committee
comprised of at least three officers of the Company. The
Committee may, at any time, remove any member of the
Administrative Committee and appoint a replacement
member.
(c) Unless otherwise determined by the Company, the members
of the Committee and Administrative Committee shall
serve without compensation for service as such, but all
reasonable expenses incurred in the administration of
the Program shall be paid by the Company.
(d) The Administrative Committee shall determine, in its
sole discretion, any question arising in connection with
the interpretation or application of the provisions of
the Program 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. The Administrative
Committee shall determine the amounts of benefits to be
paid in accordance with the terms of the Program,
including the Unit Value of Share Units, and shall
authorize and direct disbursements in accordance with
its determination. The determination of the
Administrative Committee of the amounts of benefits to
be paid to any Participant shall be subject to review by
the Committee, and the Committee's determination
following any such review shall be final, binding and
conclusive upon the Company and all Participants and
their beneficiaries, successors and assigns. The
Administrative Committee may appoint an investment
manager to manage the assets of the Account consistent
with the terms of the Program, and the Administrative
Committee may replace the investment manager at any time
in its sole discretion. In addition, the Administrative
Committee may appoint a record keeper to perform the
record keeping functions for the Plan and may replace
such record keeper at any time in its sole discretion.
- --------------------------------------------------------------------------------
Valuation Appreciation Program Plan Document - 5
(e) Members of the Committee and Administrative Committee
shall be fully protected in relying in good faith upon
the advice of counsel and shall incur no liability with
respect to the Program 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 and
Administrative Committee against any and all claims,
liabilities and costs (including attorney fees) arising
in connection with their administration of the Program
except for such member's own gross negligence or willful
misconduct.
12. GENERAL PROVISIONS
(a) Nothing in this Program 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.
(b) The grant of Share Units shall not confer upon a
Participant any of the rights of a stockholder of the
Company or any of its member companies, and no shares of
stock shall be issued pursuant to Share Units. The
rights of a Participant under the Program shall be no
greater than the rights of a general unsecured creditor
of the Company, and no Participant shall have any claim
against or rights to the securities, cash, or other
assets held in the Account.
(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 in its discretion modify
the terms of an award to be made under the Program 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
Program, 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 more favorable to the
recipient than would be permitted if the award had been
granted under this Program as herein set forth.
(d) Participants shall be solely responsible for the payment
of any taxes due in connection with the Program;
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 Program.
- --------------------------------------------------------------------------------
Valuation Appreciation Program Plan Document - 6
(e) By accepting any benefits under the Program, 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 Program and any action or decision
under the Program by the Company, its agents and
employees, the Committee, and the Administrative
Committee.
(f) The validity, construction, interpretation and
administration of the Program and any awards under the
Program 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.
(g) This Program 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 Share 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.
13. AMENDMENT AND TERMINATION
This Program 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 Program shall affect adversely any
award of Share Units theretofore granted without the written consent
of the holder thereof. Notwithstanding the foregoing:
(a) The methodology for determining Unit Value may be
changed, on a prospective basis, at any time.
(b) Upon termination of the Program, the Board may provide
for the immediate termination of all outstanding Share
Units in exchange for a cash payment equal to the then
value of the Share Units that are outstanding and vested
(pursuant to Section 6) at the time of termination.
- --------------------------------------------------------------------------------
Valuation Appreciation Program Plan Document - 7