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EXHIBIT 10.3(B)
NUVEEN 1999 EXECUTIVE OFFICER PERFORMANCE PLAN
1. Purpose. The purpose of the Nuveen Executive Officer Performance Plan
(the "Plan") is to promote the growth and financial success of The John Nuveen
Company (the "Company") and its Subsidiaries, by attracting, retaining and
motivating executive officers through performance-related incentives.
2. Definitions. The following terms shall have the meanings set forth
below:
"Award" shall mean the total bonus award to be distributed to a
Participant with respect to a Plan Year. An Award may be made in cash or in
a combination of cash and equity incentive awards, in such proportions as
are determined by, and as valued for these purposes by, the Committee,
subject to the availability of equity awards under a Nuveen Equity
Incentive Plan.
"Board of Directors" shall mean the Board of Directors of the Company.
"Cause" shall mean (i) the willful engaging by the Participant in
conduct which the Participant knows, or has substantial reason to believe,
is illegal to the extent of a felony violation (or the equivalent
seriousness under laws other than those of the United States) and which has
effects on the Company or the Participant materially injurious to the
Company; (ii) any act or acts of serious dishonesty or gross misconduct
which result in material damage to the Company or its business or
reputation or which the Board of Directors
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reasonably determines do materially and adversely affect the value,
reliability or performance of the Participant to the Company; (iii) the
willful and continued failure by the Participant to perform his or her
duties to the Company (which may include any sustained and unexcused
absence of the Participant from the performance of such duties, which
absence has not been certified in writing as due to physical or mental
illness or Disability), after a written demand for performance has been
delivered to the Participant by the Board of Directors identifying the
manner in which the Participant has failed to substantially perform his or
her duties. For purposes of the proviso of the preceding sentence: (i) no
act or failure to act on the Participant's part shall be considered
"willful" unless done, or omitted to be done, in bad faith and without
reasonable belief that such action or omission was in, or not opposed to,
the best interests of the Company; (ii) any act or failure to act by the
Participant based upon authority given pursuant to a resolution duly
adopted by the Board of Directors of the Company or based upon the advice
of counsel for the Company shall be conclusively presumed to be done, or
omitted to be done, in good faith and in the best interests of the Company;
and (iii) notwithstanding the foregoing, the Participant shall not be
deemed to have been terminated with Cause unless and until there shall have
been delivered to the Participant a copy of a resolution duly adopted by
the affirmative vote of a majority of the entire Board of Directors of the
Company at a meeting of the Board called and held after such reasonable
notice to the Participant and at which the Participant has had an
opportunity, together with his or her other counsel, to be heard before
such Board, finding that in the good faith opinion of such Board, the
Participant was guilty of the conduct set forth above and specifying the
particulars thereof in detail.
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"Change in Control" shall mean any of the following:
(i) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of voting securities of the Company where such
acquisition causes such Person to own 20% or more of the combined
voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however, that for
purposes of this subsection (i), the following acquisitions shall not
be deemed to result in a Change in Control: (A) any acquisition
directly from the Company, (B) any acquisition by the Company, (C) any
acquisition by any employee benefit plan (or related trust) sponsored
or maintained by the Company or any corporation controlled by the
Company or (D) any acquisition by any corporation pursuant to a
transaction that complies with clauses (A), (B) and (C) of subsection
(iii) below; and provided, further, that if any Person's beneficial
ownership of the Outstanding Company Voting Securities reaches or
exceeds 20% as a result of a transaction described in clause (A) or
(B) above, and such Person subsequently acquires beneficial ownership
of additional voting securities of the Company, such subsequent
acquisition shall be treated as an acquisition that causes such Person
to own 20% or more of the Outstanding Company Voting Securities; or
(ii) individuals who, as of the effective date hereof, constitute
the Board (the "Incumbent Board") cease for any reason to constitute
at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company's shareholders,
was approved by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for
this purpose, any such individual whose initial assumption of office
occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board; or
(iii) The approval by the shareholders of the Company of (x) a
reorganization, merger or consolidation, or sale or other disposition
of all or substantially all of the assets of the Company or (y) the
acquisition of assets or stock of another corporation in exchange for
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voting securities of the Company ("Business Combination") or, if
consummation of such Business Combination is subject, at the time of
such approval by shareholders, to the consent of any government or
governmental agency, the obtaining of such consent (either explicitly
or implicitly by consummation); excluding, however, such a Business
Combination pursuant to which (A) all or substantially all of the
individuals and entities who were the beneficial owners of the
Outstanding Company Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly, more
than 50% of, respectively, the then 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 Business
Combination (including, without limitation, a corporation that as a
result of such transaction owns the Company or all or substantially
all of the Company's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination of the
Outstanding Company Voting Securities, (B) no Person (excluding any
employee benefit plan (or related trust) of the Company or such
corporation resulting from such Business Combination) beneficially
owns, directly or indirectly, (except to the extent that such
ownership existed prior to the Business Combination) an amount of,
respectively, the then outstanding shares of common stock of the
corporation resulting from such Business Combination or the combined
voting power of the then outstanding voting securities of such
corporation representing the greater of (1) 20% thereof or (2) a
percentage thereof equal to or greater than the percentage thereof
held after such transaction by the persons who were the owners of the
Company's Class B stock prior to such transaction; and (C) at least a
majority of the members of the board of directors of the corporation
resulting from such Business Combination were members of the Incumbent
Board at the time of the execution of the initial agreement, or of the
action of the Board, providing for such Business Combination; or
(iv) approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
Notwithstanding the foregoing, unless a majority of the Incumbent Board
determines otherwise, no Change in Control shall be deemed to have occurred
with respect to a particular Participant if the Change in Control results
from
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actions or events in which such Participant is a participant in a capacity
other than solely as an officer, employee or director of the Company.
"Committee" shall mean a Committee of the Board of Directors, the
members of which are selected by and serve at the pleasure of the Board of
Directors; provided, however, that the Committee shall at all times consist
of not fewer than two directors. The Committee shall initially be the
Compensation Committee of the Board of Directors, which consists of
directors who are "outside directors" within the meaning of Section 162(m)
of the Internal Revenue Code.
"Constructive Termination" shall mean any of the following, without
the written consent of the Participant: (i) a substantial adverse change in
the Participant's position, authority, responsibilities or titles; (ii) a
requirement that the Participant retire before reaching age 65; or (iii) a
material reduction in the Participant's base salary, incentive compensation
opportunities, or other employee benefits; or (iv) in the case of an
officer-director, a requirement that the Participant relocate to an office
or location other than that at which he is based at the beginning of the
Plan Year A Participant shall be considered to have terminated his or her
employment as a result of Constructive Termination only if he or she gives
notice thereof within 90 days after the occurrence of an event described in
the preceding sentence and the Company has not cured the condition within
60 days of its receipt of such notice.
"Deferred Bonus Plan" shall mean the Nuveen Deferred Compensation
Plan.
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"Disability" shall mean the inability of a Participant to perform the
services normally rendered to the Company or the Subsidiary that employs
him or her, due to a physical or mental impairment that can be expected to
be of either permanent or indefinite duration, as determined by the
Committee, and which results in the Participant's inability to perform his
or her normal duties to the Company or such Subsidiary.
"Formula Award" shall mean, for the Chief Executive Officer, (A) for
the 1999 Plan Year, the sum of (i) 1.95% of Pre-Bonus, Pre-Tax Net
Operating Income in excess of the amount that represents a 19% return on
average equity capital and (ii) 7% of the increase (or decrease) in
Pre-Tax, After Bonus Net Operating Income, (B) for the 2000 Plan Year, the
sum of (i) 1.80% of Pre-Bonus, Pre-Tax Net Operating Income in excess of
the amount that represents a 20% return on average equity capital and (ii)
7% of the increase (or decrease) in Pre-Tax, After Bonus Net Operating
Income, and (C) for the 2001 Plan Year, the sum of (i) 1.65 of the
Pre-Bonus, Pre-Tax Net Operating Income in excess of the amount that
represents a 21% return on average equity capital and (ii) 7% of the
increase (or decrease) in Pre-Tax, After Bonus Net Operating Income. The
Formula Award for the next most senior Officer-Director after the Chief
Executive Officer for each Plan Year shall be 85% of Chief Executive
Officer's Formula Award. The Formula Award for any other Officer-Director
for each Plan Year shall be 75% of the Chief Executive Officer's Formula
Award. The Formula Award for each Plan Participant other than any
Officer-Director for each Plan Year shall be 60% of the Chief Executive
Officer's Formula Award.
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"Nuveen Equity Incentive Plans" shall mean the Nuveen 1996 Equity Plan
and the Nuveen 1992 Special Incentive Plan.
"Nuveen 1996 Equity Plan" shall mean the Nuveen 1996 Amended and
Restated Equity Incentive Award Plan.
"Participant" shall have the meaning given in Section 4.
"Plan Year" shall mean the fiscal year of the Company.
"Pre-Bonus, Pre-Tax Net Operating Income" for any Plan Year shall mean
the consolidated pre-tax net operating income of the Company for such year,
before deduction of (i) Awards under the Plan, (ii) awards under the Nuveen
Annual Incentive Award Plan, and (iii) expenses associated with the grant,
vesting and payment of awards under the Nuveen Equity Incentive Plans
(including, without limitation, the vesting of shares of Restricted Stock,
the payment of dividends on Restricted Stock (other than Deferred
Restricted Stock) and of Dividend Equivalents on Deferred Restricted Stock,
as such terms are defined in the Nuveen Equity Incentive Plans). In
addition to the foregoing, Pre-Bonus, Pre-Tax Net Operating Income shall
also (a) exclude, unless the Compensation Committee determines otherwise
with respect to any Plan Year, amortization of the cost of intangible
assets (for any Plan Year or with respect to any particular transaction the
Compensation Committee may determine to include all or a portion of such
cost); and (b) include, unless the Compensation Committee determines
otherwise with respect to any Plan Year,
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extraordinary items of income (as that term is used under generally
accepted accounting practices) and other unusual or non-recurring items of
income which are identified as such and quantified in the footnotes to the
financial statements or MD&A section of the Annual Report. If the
accounting rules or principles to which the Company is subject are changed,
or if the Company elects to change its method of accounting so as to
materially change, in the judgment of the Committee, the manner in which
Pre-Bonus, Pre-Tax Net Operating Income is determined, the Committee may
make such adjustments as it deems advisable in order to arrive at
substantially the same Formula Award as would have been derived if the
accounting rules, principles or methods had not so changed.
"Retirement" shall mean the retirement of a Participant from the
employment of the Company or a Subsidiary at (i) such Participant's normal
retirement date upon reaching age 65, or (ii) such Participant's early
retirement either (A) upon having reached that age, which, when added to
his or her years of continuous service (as such term is defined under the
Nuveen Employees' Retirement Plan or any successor thereto) is equal to or
greater than 90, or (B) with the approval of the Committee.
"Section 162(m)" shall mean Section 162(m) of the Internal Revenue
Code of 1986, as amended, and the Treasury Regulations thereunder.
"Subsidiary" shall mean any corporation or other entity, of which 50%
or more of the normal voting power for the election of directors or other
managers is owned, directly or indirectly, by the Company.
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"Termination of Employment" shall mean a cessation of the
employee-employer relationship between a Participant and an Employer (other
than by reason of transfer of the employee to another Employer), or the
consummation of a transaction whereby a Participant's Employer (other than
the Company) ceases to be a Nuveen Subsidiary (such consummation, a
"Disaffiliation Transaction"). The employment of a Participant who is on an
approved leave of absence in excess of two years shall be considered
terminated as of the commencement of such leave for all purposes of the
Plan.
3. Administration. The Plan shall be administered by the Committee. Any
action of the Committee with respect to the administration of the Plan shall be
taken pursuant to the unanimous vote of its members. Subject to the express
provisions of the Plan, the Committee shall have authority to:
(a) construe and interpret the Plan, define the terms used herein,
prescribe, amend and rescind rules and regulations relating to the
administration of the Plan and make all other determinations necessary or
advisable for the administration of the Plan;
(b) select individuals for participation in the Plan;
(c) subject to the provisions of Sections 5 and 6 hereof, determine
the size of the Awards to be made under the Plan; and
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(d) appoint and authorize officers of the Company or other persons to
assist in the execution and administration of the Plan (other than the
interpretation of the Plan and the adoption of rules governing its
execution and administration).
Notwithstanding any other provision of the Plan, the Committee shall not have
the power to increase the amount of any Formula Award above the amount
determined in accordance with Section 5 hereof, or to take any other action that
would cause Awards hereunder not to qualify as performance-based compensation
for purposes of Section 162(m).
4. Participation. The Committee shall designate as Participants in the Plan
for each Plan Year not less than five senior officers of the Company and/or the
Subsidiaries (including the Chief Executive Officer of the Company), which
designations shall be made not more than 90 days after the beginning of the Plan
Year.
5. Determination of Awards. The amount of the Formula Award shall be
computed for each Participant promptly after the end of each Plan Year in
accordance with the terms and provisions of the Plan and regulations established
by the Committee, and when so computed shall be certified as accurate by the
Committee. Each Participant shall be entitled to receive the Formula Award for
the Plan Year provided, , that the Committee may, at the time an Award is made
or at any time before an Award is payable in full (or would be so payable but
for deferral thereof under the Deferred Bonus Plan) but before the occurrence of
a Change in Control, in its sole discretion and taking into consideration such
factors as it deems appropriate, reduce the amount of the Award of any
Participant other than the Company's Chief Executive Officer and other
Officer-Director Participants below such amount. The amount by which any Award
is so reduced shall not be paid to any other Participant but shall be added to
the available incentive pool under the Nuveen Annual Incentive Award Plan.
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6. Payment of Awards. (a) Except as provided in the next sentence, no Award
shall be payable to a Participant unless he or she is employed by the Company or
a Subsidiary on the last day of the applicable Plan Year. Notwithstanding the
foregoing, if a Participant's employment is terminated as a result of the
Participant's death, Disability or Retirement, by the Company or a Subsidiary
without Cause, by the Participant as a result of Constructive Termination, or as
a result of a Disaffiliation Transaction, the Committee shall have the
discretion to make an Award to the Participant (or the Participant's estate) for
the Plan Year in which such termination occurs in an amount not to exceed to the
product of (i) the Award he or she would have received (for this purpose only
assumed to be the same Award for the Plan Year as his or her Award for the prior
year), had there been no such termination of employment, times (ii) a fraction,
the numerator of which is the number of days in the Plan Year before such
termination of employment and the denominator of which is the number of days in
the Plan Year. Such Award shall be payable at the same time as other Awards are
paid for the Plan Year.
(b) Awards determined by the Committee to be payable under the Plan for a
Plan Year shall be paid in full as soon as practicable after the close of the
applicable Plan Year; provided, that any Participant selected to participate in
the Deferred Bonus Plan may elect to defer all or any portion of his Award for
any Plan Year in accordance with the terms of the Deferred Bonus Plan.
8. Change in Control. Notwithstanding any other provision of the Plan, upon
a Change in Control, the amount of the Formula Award shall be determined and
Awards shall be paid as if the date of the Change of Control were the last day
of the Plan Year during which such Change of Control occurs, with the Formula
Award being determined prior to any expenses directly related to such change in
Control and by adjusting the applicable return on
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equity factor proportionately to reflect the length of such truncated Plan Year.
After the actual end of the Plan Year during which such Change of Control occurs
(determined without regard to the preceding sentence), the amount of the Formula
Award shall be determined based upon the entire Plan Year, and any excess of the
Awards payable based on the redetermined Formula Award over the amounts paid
pursuant to the preceding sentence shall be paid in accordance with the Plan
(but if the redetermined Formula Award is less than the Formula Award determined
pursuant to the preceding sentence, the Awards payable pursuant to the preceding
sentence shall not be reduced or subject to being returned).
9. Amendment; Termination. The Plan may be amended or terminated by a
majority vote of the Board of Directors at any time; provided, that no such
amendment or termination shall have the effect of increasing the Award that
would otherwise be payable to a Participant without approval of shareholders,
and provide further, that no such amendment or termination shall adversely
affect the rights of any Participant for any Plan Year that begins before such
amendment or termination is adopted by the Board of Directors.
10. Effective Date. The Plan shall be effective as of the first day of the
Company's 1999 fiscal year, provided that it is approved by the shareholders of
the Company at their annual meeting in 1999.