Aon CORPORATION
1995 SENIOR OFFICER INCENTIVE COMPENSATION PLAN
1. PURPOSE
The purpose of the Aon Corporation 1995 Senior Officer Incentive Compensation
Plan (the "Plan") is to encourage the highest level of performance by key
employees of operating subsidiaries and affiliates of Aon Corporation (which
subsidiaries and affiliates are herein referred to as the "Corporation") by
making appropriate levels of cash awards following satisfaction of quantifiable
performance goals.
2. PLAN ADMINISTRATION
The Plan shall be administered by the Organization and Compensation Committee
(the "Committee") of the Aon Corporation Board of Directors (the "Board"). All
questions involving eligibility for awards, interpretations of the provisions of
the Plan, or the operation of the Plan shall be decided by the Committee. No
member of the Committee shall be eligible to receive an award under the Plan.
All determinations of the Committee shall be conclusive. The Committee may
obtain such advice or assistance as it deems appropriate from persons not
serving on the Committee.
3. ELIGIBILITY
Participation in the Plan is limited to key salaried employees of the
Corporation selected by the Committee (a "Participant"). Participation may be
revoked at any time by the Committee. An employee whose participation is
revoked will be notified, in writing, of such revocation as soon as practicable
following such action. An individual who becomes eligible to participate in the
Plan during the Plan Year (the one year period beginning January 1 and ending on
December 31 of each calendar year) may be approved by the Committee for a
partial year of participation. In such case, the Participant's award shall be
prorated based on the number of full months of participation.
4. TERMS AND CONDITIONS OF AWARDS
Each Participant will be entitled to receive a maximum award equal to 180% of
Base Pay (the "Award") subject to the performance measured described below.
Base Pay is the salary earned while participating in the Plan in the current
Plan Year. The maximum amount payable under the Plan to a Participant, in any
given Plan Year, is equal to the lesser of 180% of Base Pay or $3,000,000.
Within the first 90 days of the Plan Year the Committee shall determine the
specific Corporate Performance Thresholds which must be met prior to the payment
of any Awards determined pursuant to this paragraph. The Corporate Performance
Thresholds will be based upon either a certain singular business criteria, such
as Earnings Per Share, Return on Equity, Total Shareholder Return, or Operating
Income, or a combination of one or
1
more business criteria.
At the end of each Plan Year, Awards will be computed for each participant.
Payment of Awards will be made in cash, subject to applicable tax withholding,
as soon as practicable after the achievement of Corporate Performance Thresholds
and other material terms of the Plan are certified, and individual Awards are
approved, by the Committee; provided, however that the Committee may in its sole
discretion reduce individual Awards determined pursuant to this paragraph.
5. EMPLOYMENT TERMINATION
In the event a Participant's employment is terminated due to death or disability
during a Plan Year, the Participant's Award will be reduced to reflect the
partial year of participation. This reduction will be determined by multiplying
the award by a fraction, the numerator of which is the Participant's total
months of participation in the current Plan Year through the date of termination
rounded up to whole months, and the denominator of which is twelve (12). The
Participant's reduced Award will be paid in accordance with Section 4
hereinabove. In the event a Participant's employment is terminated for reasons
other than death or disability, all rights to an award for the Plan Year will be
forfeited.
6. NO RIGHT TO CONTINUED EMPLOYMENT
Nothing in the Plan shall confer on a Participant any right to continue in the
employ of the Corporation or in any way affect the Corporation's right to
terminate the Participant's employment at any time without prior notice and for
any or no reason.
7. BENEFICIARY
Each Participant under the Plan may, from time to time, name any beneficiary or
beneficiaries (who may be named contingently or successively) to whom any
benefit under the Plan is to be paid in case of his death before he receives any
or all of such benefit. Each designation will revoke all prior designations by
the same Participant, shall be in a form prescribed by the Committee, and will
be effective only when filed by the Participant in writing with the Committee
during his lifetime. In the absence of any such designation, or if for any
reason such designation is ineffective, in whole or in part, benefits remaining
unpaid at the Participant's death shall be paid to his estate.
8. TAX WITHHOLDING
Any and all payments made under the Plan shall be subject to applicable federal,
state, or local taxes required by the law to be withheld.
9. IMPACT ON OTHER BENEFITS
Amounts paid under this Plan will not be considered compensation for purposes of
other benefit plans offered by the Corporation unless specifically provided for
in such plans.
2
10. TERMINATION OR AMENDMENT OF THE PLAN
The Plan may be modified, amended, or terminated at any time by the Board. The
existence of the Plan does not obligate or bind the Corporation to pay an Award
to any Participant (or beneficiary) nor does any Participant (or beneficiary)
attain any vested, non-forfeitable right to an Award until the Award has been
finalized and approved for payment by the Committee.
11. NON-TRANSFERABILITY
Except as specifically provided herein or as may otherwise be required by law,
no undistributed Award payable to the Participant may be sold, transferred, or
assign or encumbered, in whole or in part, by a Participant, and any attempt to
so alienate or subject any such amount shall be void.
12. EFFECTIVE DATE OF THE PLAN
The Plan shall become effective as of January 1, 1995.
3