EXHIBIT 10.29
WADDELL & REED FINANCIAL, INC.
1999 MANAGEMENT INCENTIVE PLAN
(EFFECTIVE AS OF JANUARY 1, 1999)
1. PURPOSE
The purposes of the Plan are to advance the interests of stockholders of the
Company by providing performance-based incentives to eligible Participants and
to enable the Company and its Subsidiaries to attract, retain, motivate and
reward the best qualified executive officers and key employees by providing them
with the opportunity to earn competitive compensation directly linked to the
Company's performance. The Plan is designed to assure that amounts paid to
certain executive officers of the Company will not fail to be deductible by the
Company for Federal income tax purposes because of the limitations imposed by
Section 162(m). With respect to individuals who are Covered Employees, the Plan
is intended to provide "qualified performance-based compensation", as such term
is defined in Treas. Reg. 1.162-27(e), to the extent deemed appropriate by the
Committee at the time Performance Goals are established for a Fiscal Year.
Nothing herein shall be construed as preventing the Plan from providing both
"qualified performance-based compensation" and nonqualified compensation for the
same Fiscal Year in the manner permitted under Code Section 162(m). The Plan
shall be administered and construed in a manner consistent with Code Section
162(m) and regulations thereunder for any Fiscal Year in which the Plan is
intended to provide "qualified performance-based compensation".
2. DEFINITIONS
Unless the context requires otherwise, the following words as used in the
Plan shall have the meanings ascribed to each below, it being understood that
masculine, feminine, and neuter pronouns are interchangeable and that each
comprehends the others.
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Committee" shall mean the Compensation Committee of the Board
(or such other committee of the Board that the Board shall
designate from time to time) or any subcommittee thereof
comprised of two or more directors each of whom is an "outside
director" within the meaning of Section 162(m).
(c) "Company" shall mean Waddell & Reed Financial, Inc.
(d) "Covered Employee" shall have the meaning set forth in Section
162(m)(3).
(e) "Fiscal Year" means the twelve month period beginning on each
January 1 and ending on the following December 31.
(f) "Incentive Percentage" means the pre-established award formula
established by
the Committee for each Fiscal Year which specifies a percentage
of a Participant's rate of salary in effect for the last full
payroll period of the Fiscal Year to be paid as an Incentive Plan
Award. The Committee may establish different Incentive Percentages
for individual Participants or different classes of Participants,
and/or the achievement levels of the Performance Goals. Solely
with respect to Covered Employees, for any Fiscal Year for which
the Plan is intended to provide "qualified performance-based
compensation", the Incentive Percentages applicable to the
Covered Employees must be established by the Committee no later
than 90 days after the beginning of the Fiscal Year for which
the Incentive Plan Award pertains.
(g) "Incentive Plan Award" means the annual incentive compensation
award granted under the Plan which is contingent and based upon
the attainment of the Performance Goals with respect to a Fiscal
Year.
(h) "Participant" shall mean (i) each executive officer of the Company
and (ii) each other key employee of the Company or a Subsidiary
who the Committee designates as a participant under the Plan. For
each Fiscal Year, the Committee shall determine which of such
executive officers and other key employees shall participate in
the Plan. For any Fiscal Year for which "qualified
performance-based compensation" is to be provided, the Committee
shall designate the individual or classes of Covered Employees for
such compensation no later than the 90th day of such Fiscal Year.
(i) "Performance Goals" means the pre-established objective
performance goals established by the Committee for each Fiscal
Year. Solely with respect to Covered Employees, for any Fiscal
Year for which the Plan is intended to provide "qualified
performance-based compensation", Performance Goals applicable to
the Covered Employees must be established by the Committee no
later than 90 days after the beginning of the Fiscal Year to which
the Performance Goals pertain. The Performance Goals may be based
upon the performance of the Company or any Subsidiary, or division
thereof, using one or more of the following operating performance
measures selected by the Committee: (a) earnings; (b) revenue; (c)
operating or net cash flows; (d) financial return ratios;
(e) total stockholder return; (f) market share; (g) pre-tax
profits; (h) earnings per share; or (i) net income. Separate
Performance Goals may be established by the Committee for the
Company or a Subsidiary, or division thereof. With respect to
Participants who are not Covered Employees, the Committee may
establish such other subjective or objective goals, including
individual Performance Goals, which it deems appropriate. The
preceding sentence shall also apply to Covered Employees with
respect to any Incentive Plan Award not intended at time of grant
to be "qualified performance-based compensation". Performance
Goals may be set at a specific level, or may be expressed as a
relative percentage to the comparable measure at comparison
companies or a defined index.
(j) "Plan" shall mean the Waddell & Reed Financial, Inc. 1999
Management Incentive Plan, as set forth herein and as may be
amended from time to time.
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(k) "Section 162(m)" shall mean Section 162(m) of the Internal Revenue
Code of 1986, as amended, and any regulations promulgated
thereunder (including any proposed regulations).
(l) "Subsidiary" shall mean any corporation in which the Company owns,
directly or indirectly, stock representing more than 50% of the
voting power of all classes of stock entitled to vote.
3. ADMINISTRATION
The Committee shall administer and interpret the Plan, PROVIDED THAT, in no
event, shall the Plan be interpreted in a manner which would cause any amount
payable under the Plan to any Covered Employee to fail to qualify as
performance-based compensation under Section 162(m). The Committee shall
establish the performance objectives for any calendar year in accordance with
Section 4 and certify whether such performance objectives have been obtained.
Any determination made by the Committee under the Plan shall be final and
conclusive on all parties, but shall be based on such objective information or
financial data as is relevant to the Performance Goal. Subject to the provisions
of the Plan, the Committee shall have full discretionary authority to administer
and interpret the Plan, to exercise all powers either specifically granted to it
under the Plan or as are necessary or advisable in the administration of the
Plan, to prescribe, amend and rescind rules and regulations relating to the
Plan, and to make all other determinations necessary or advisable for the
administration of the Plan, all of which shall be binding on all persons,
including the Company, the Participants (or any person claiming any rights under
the Plan from or through any Participant), and any stockholder of the Company. A
majority of the Committee shall constitute a quorum, and the Committee shall act
pursuant to a majority vote or by unanimous written consent. The Committee may
employ such legal counsel, consultants, and agents (including counsel or agents
who are employees of the Company or a Subsidiary) as it may deem desirable for
the administration of the Plan and may rely upon any opinion received from any
such counsel or consultant or agent and any computation received from such
consultant or agent. All expenses incurred in the administration of the Plan,
including, without limitation, for the engagement of any counsel, consultant, or
agent, shall be paid by the Company. No member or former member of the Board or
the Committee shall be liable for any act, omission, interpretation,
construction, or determination made in connection with the Plan other than as a
result of such individual's willful misconduct.
The Committee may delegate its responsibilities for administering the Plan
to one or more persons as the Committee deems necessary. However, the Committee
may not delegate its responsibilities under the Plan relating to any Covered
Employee where such delegation is prohibited under Code Section 162(m)
pertaining to "qualified performance-based compensation".
4. INCENTIVE PLAN AWARDS
(a) PERFORMANCE GOALS. On or before April 1 of each year (or such
other date as may be required or permitted under Section 162(m)),
the Committee shall establish the Performance Goals that must be
satisfied in order for a Participant to receive an Incentive Plan
Award for such year.
(b) CERTIFICATION AND MAXIMUM AMOUNT PAYABLE. The Committee shall,
promptly
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after the date on which the necessary financial, individual or
other information for a particular Fiscal Year becomes available,
certify: (i) the degree to which each of the Performance Goals
have been attained; and (ii) with respect to each qualifying
Participant who is a Covered Employee, the amount of the
Incentive Plan Award, if any, payable to such Participant.
The Committee or its designee shall likewise certify the amount of
the Incentive Plan Award, if any, payable with respect to a
qualifying Participant who is not a Covered Employee. If the
Committee certifies in writing that any of the performance
objectives established for the relevant year under Section 4(a)
have been satisfied, each Participant who is employed by the
Company or one of its Subsidiaries on the last day of the calendar
year for which the Incentive Plan Award is payable shall receive
the Incentive Plan Award. The Incentive Plan Award shall be
determined by multiplying the Incentive Percentage applicable to
the Participant by the Participant's rate of base salary in effect
for the last full payroll period of the Fiscal Year to which the
Incentive Plan Award pertains. In no event, however, will an
Incentive Plan Award for a Covered Employee exceed $5,000,000. To
be eligible for payment of any Incentive Plan Award, the
Participant must: (i) have performed the Participant's duties to
the satisfaction of the Committee; (ii) have not engaged in any
act deemed by the Committee to be contrary to the best interests
of the Company; and (iii) otherwise complied with Company policies
at all times prior to the date the Incentive Plan Award is
actually paid. No Incentive Plan Award shall be paid to any
Participant who does not satisfy each of the above. If a
Participant's employment terminates for any reason (including,
without limitation, his death, disability, or retirement under the
terms of any retirement plan maintained by the Company or a
Subsidiary) prior to the last day of the Fiscal Year for which
the Incentive Plan Award is payable, such Participant shall
receive an Incentive Plan Award equal to the maximum Incentive
Plan Award payable to such Participant under the preceding
sentence multiplied by a fraction, the numerator of which is
the number of days that have elapsed during the calendar year in
which the termination occurs prior to and including the date of
the Participant's termination of employment and the denominator
of which is 365.
(c) NEGATIVE DISCRETION. Notwithstanding anything else contained in
Section 4(b) to the contrary, the Committee shall have the right,
in its absolute discretion, (i) to reduce or eliminate the amount
otherwise payable to any Participant under Section 4(b) based on
individual performance or any other factors that the Committee, in
its discretion, shall deem appropriate and (ii) to establish rules
or procedures that have the effect of limiting the amount payable
to each Participant to an amount that is less than the maximum
amount otherwise authorized under Section 4(b).
(d) AFFIRMATIVE DISCRETION. Notwithstanding any other provision in the
Plan to the contrary, (i) the Committee shall have the right, in
its discretion, to pay to any Participant who is not a Covered
Employee an annual Incentive Plan Award for such year in an amount
up to the maximum bonus payable under Section 4(b), based on
individual performance or any other criteria that the Committee
deems appropriate and (ii) in connection with the hiring any
person who is or becomes Covered Employee, the Committee may
provide for a minimum Incentive Plan
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Award amount in any calendar year, regardless of whether
performance objectives are attained.
5. PAYMENT
Except as otherwise provided hereunder, payment of any bonus amount
determined under Section 4 shall be made to each Participant as soon as
practicable after the Committee certifies that one or more of the applicable
Performance Goals have been attained (or, in the case of any Incentive Plan
Award payable under the provisions of Section 4(d), after the Committee
determines the amount of any such Incentive Plan Award). The Incentive Plan
Award may be paid in whole or in part, in the discretion of the Committee, in
Company stock options, with the remainder, if any, to be paid in cash.
6. GENERAL PROVISIONS
(a) EFFECTIVENESS OF THE PLAN. The Plan shall be effective with
respect to calendar years beginning on or after January 1, 1999,
subject to the approval of the Company's stockholders, and ending
on or before December 31, 2003, unless the term hereof is extended
by action of the Board.
(b) AMENDMENT AND TERMINATION. Notwithstanding Section 6(a), the Board
or the Committee may at any time amend, suspend, discontinue, or
terminate the Plan; provided, however, that no such amendment,
suspension, discontinuance, or termination shall adversely affect
the rights of any Participant in respect of any Fiscal Year which
has already commenced and no such action shall be effective
without approval by the stockholders of the Company to the extent
necessary to continue to qualify the amounts payable hereunder to
Covered Employees as "qualified performance-based compensation"
under Section 162(m).
(c) DESIGNATION OF BENEFICIARY. Each Participant may designate a
beneficiary or beneficiaries (which beneficiary may be an entity
other than a natural person) to receive any payments which may be
made following the Participant's death. Such designation may be
changed or canceled at any time without the consent of any such
beneficiary. Any such designation, change or cancellation must be
made in a form approved by the Committee and shall not be
effective until received by the Committee. If no beneficiary has
been named, or the designated beneficiary or beneficiaries shall
have predeceased the Participant, the beneficiary shall be the
Participant's spouse or, if no spouse survives the Participant,
the Participant's estate. If a Participant designates more than
one beneficiary, the rights of such beneficiaries shall be payable
in equal shares, unless the Participant has designated otherwise.
(d) NO RIGHT OF CONTINUED EMPLOYMENT. Nothing in this Plan shall be
construed as conferring upon any Participant any right to continue
in the employment of the Company or any of its Subsidiaries.
(e) NO LIMITATION ON CORPORATE ACTIONS. Nothing contained in the Plan
shall be construed to prevent the Company or any Subsidiary from
taking any corporate
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action which is deemed by it to be appropriate or in its best
interest, whether or not such action would have an adverse
effect on any awards made under the Plan. No employee,
beneficiary or other person shall have any claim against
the Company or any Subsidiary as a result of any such action.
(f) NONALIENATION OF BENEFITS. Except as expressly provided herein,
no Participant or beneficiary shall have the power or right to
transfer, anticipate, or otherwise encumber the Participant's
interest under the Plan. The Company's obligations under this Plan
are not assignable or transferable except to (i) a corporation
which acquires all or substantially all of the Company's assets,
or (ii) any corporation into which the Company may be merged or
consolidated. The provisions of the Plan shall inure to the
benefit of each Participant and the Participant's beneficiaries,
heirs, executors, administrators, or successors in interest.
(g) WITHHOLDING. Any amount payable to a Participant or a beneficiary
under this Plan shall be subject to any applicable Federal, state,
and local income and employment taxes and any other amounts that
the Company or a Subsidiary is required at law to deduct and
withhold from such payment.
(h) SEVERABILITY. If any provision of this Plan is held unenforceable,
the remainder of the Plan shall continue in full force and effect
without regard to such unenforceable provision and shall be
applied as though the unenforceable provision were not contained
in the Plan.
(i) GOVERNING LAW. The Plan shall be construed in accordance with and
governed by the laws of the State of Kansas, without reference to
the principles of conflict of laws except that any matters
relating to the internal governance of the Company shall be
governed by the general corporate laws of the state of Delaware.
(j) HEADINGS. Headings are inserted in this Plan for convenience of
reference only and are to be ignored in a construction of the
provisions of the Plan.
(k) PLAN NOT FUNDED. Plan awards shall be made solely from the general
assets of the Company. To the extent any person acquires a right
to receive payments from the Company under the Plan, the right is
no greater than the right of any other unsecured general creditor.
(l) NO GUARANTEE. While a discretionary Incentive Plan Award may
have been paid in the past, whether such payments will be made in
the future will depend upon various factors, such as the Company's
financial condition and performance. There is no guarantee that
the Company will pay any such incentive. The Committee may, in its
sole discretion, reduce, eliminate or increase, any Incentive Plan
Award, except that the amount of any Incentive Plan Award intended
to be "qualified performance-based compensation" may not be
increased above the amount established for the Performance Goal
and Incentive Percentage. The Company may withhold an Incentive
Plan Award, or portions thereof, for any reason including gross
misconduct (e.g., theft, dishonesty/compromised integrity, fraud,
harassment, etc.) or any actions deemed to be contrary to the best
interests of the Company by the Committee.
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(m) RIGHTS TO PAYMENTS. No absolute right to any Incentive Plan Award
shall be considered as having accrued to any Participant prior to
the close of the Fiscal Year with respect to which the award is
made. No Participant shall have any enforceable right to receive
any Incentive Plan Award made with respect to a Fiscal Year or to
retain any payment made with respect thereto if for any reason the
requirements of Section 4 are not satisfied.
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