Exhibit 10(ii)
NORTHERN TRUST CORPORATION
MANAGEMENT PERFORMANCE PLAN
I. Purposes of Plan
The purposes of the Northern Trust Corporation Management Performance
Plan (the "Plan") are to (i) promote the achievement of superior
financial and operating performance of Northern Trust Corporation and its
subsidiaries (the "Corporation"), and to further the objective of
delivering unrivaled service quality to clients through the awarding of
annual cash incentives to participants in the Plan ("Participants"), (ii)
reward Participants who make significant contributions to the
Corporation's success, enabling them to share in this success, (iii)
provide the Corporation a means to attract, motivate and retain certain
key senior officers and (iv) qualify any compensation paid under the Plan
for tax deductibility under Section 162(m) of the Internal Revenue Code
of 1986, as amended, to the extent deemed appropriate by the Compensation
and Benefits Committee (the "Committee") of the Board of Directors (the
"Board") of the Corporation.
II. Administration
The Plan shall be administered by the Committee. The Committee shall have
authority for selecting Participants and determining final award amounts
to be paid to Participants. Subject to the express provisions of the
Plan, the Committee shall be authorized to interpret the Plan and to
establish, amend and rescind any rules and regulations relating to the
Plan and to make all other determinations deemed necessary or advisable
for the proper administration of the Plan. The determinations of the
Committee in the proper administration of the Plan shall be conclusive
and binding.
III. Term
The Plan shall be effective as of January 1, 1999 (the "Effective Date"),
subject to approval by the Corporation's shareholders at the 1999 annual
meeting of Stockholders. The Plan shall remain in effect until terminated
by the Board.
IV. Eligibility and Participation
Eligibility to participate in the Plan shall be limited to any key
officer of the Corporation at or above the level of an executive vice
president. Participants in the Plan shall be selected annually by the
Committee from those key senior officers eligible to participate in the
Plan.
V. Performance Objective
The Plan's performance objective (the "Performance Objective") shall be
established with reference to the Corporation's consolidated net income
as determined in accordance with generally accepted accounting
principles.
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VI. Maximum Award Funding Opportunity
The maximum award funding opportunity in any fiscal year (the "Funding
Opportunity") for the Chairman and Chief Executive Officer, if a
Participant for such fiscal year, shall be 0.6% of the Corporation's
consolidated net income for that fiscal year. The Funding Opportunity for
the President and Chief Operating Officer, if a Participant for such
fiscal year, shall be 0.4% of the Corporation's consolidated net income
for that fiscal year. The Funding Opportunity for any other Participant
shall be 0.3% of the Corporation's consolidated net income for that
fiscal year.
VII. Award Determination
As soon as practicable (but in no event later than 90 days) following
completion of a fiscal year, the Committee shall (i) determine each
Participant's Funding Opportunity for that fiscal year solely on the
basis of the Performance Objective and (ii) approve each Participant's
actual award for that fiscal year on a discretionary basis as provided
below. The Committee shall have the right to limit or reduce a
Participant's actual award in any fiscal year below the Funding
Opportunity in its sole discretion based on an assessment of individual
contribution, performance relative to performance expectations,
competitive levels of compensation and corporate performance, but it
shall not increase a Participant's award in any fiscal year above the
Funding Opportunity.
VIII. Payment of Awards
Awards for a fiscal year will be paid in cash (or deferred at the
election of a Participant as provided in Section IX (b) below) as soon as
practicable following the Committee's determination of awards for that
fiscal year.
IX. Other Provisions
The following miscellaneous provisions are applicable to the Plan:
(a) Awards paid under the provisions of the Plan are considered
pensionable earnings when paid.
(b) Awards under the Plan may be deferred into the Northern Trust
Corporation Deferred Compensation Plan. Deferred amounts will be
considered pensionable earnings under the provisions of the
Supplemental Pension Plan.
(c) Termination of employment of a Participant during the Plan year,
either voluntarily, or involuntarily with cause for reasons other
than death, disability, or retirement, shall result in immediate
exclusion from the Plan.
(d) Except in the event of the death of a Participant, the rights and
interests of a Participant under the Plan shall not be assigned,
encumbered, or transferred.
(e) Each Participant shall designate a beneficiary (the "Designated
Beneficiary") to receive the award, if any, allocated to a
Participant, in the event of such Participant's death. If no
Designated Beneficiary survives the Participant, it shall be the
surviving spouse of the Participant or, if there is no surviving
spouse, it shall be the Participant's estate.
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(f) No employee or other person shall have any claim or right to be
granted an award under the Plan. Neither the Plan, nor any action
taken thereunder, shall be construed as giving the Participant or
other person any right to be retained in the employ of the
Corporation.
(g) The Corporation shall have the right to deduct from all payments
made under the Plan any taxes required by law to be withheld with
respect to such payment.
(h) All questions pertaining to the validity, construction and
administration of the Plan and any award hereunder shall be
determined in conformity with the laws of the State of Illinois.
(i) The Board, in its sole discretion, may modify or amend any or all of
the Plan at any time and, without notice, may suspend or terminate
the Plan entirely. However, no such modification or amendment may,
without the consent of the Participant, reduce the right of a
Participant to a payment or distribution to which the Participant is
entitled by reason of an outstanding award.
(j) All obligations of the Corporation under the Plan with respect to
awards granted hereunder shall be binding on any successor to the
Corporation, whether the existence of such successor is the result
of a direct or indirect purchase, merger, consolidation, or
otherwise, of all or substantially all of the business or assets of
the Corporation.
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