FORM OF STOCK UNIT AGREEMENT UNDER THE NORTHERN TRUST CORPORATION 2002 STOCK PLANEquity Incentive Plan Agreement |
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Exhibit 10.3
FORM OF STOCK UNIT AGREEMENT UNDER THE
NORTHERN TRUST CORPORATION 2002 STOCK PLAN
This Agreement is entered into as of the day of , 200 , between Northern Trust Corporation (“Northern”) and (“Participant”).
The Northern Trust Corporation 2002 Stock Plan (“Plan”) provides, in Section 10 of the Plan, for the awarding of Stock Units to participating employees of Northern or its Subsidiaries (collectively, the “Corporation”), as approved by the Compensation and Benefits Committee (“Committee”) of the Board of Directors of Northern.
In the exercise of its discretion under the Plan, the Committee has determined that the Participant should participate in the Plan and receive an award of Stock Units under Section 10 of the Plan, and, accordingly, Northern and the Participant hereby agree as follows:
| 1. | Grant. Northern hereby grants to the Participant an award of Stock Units, subject to the terms and conditions of the Plan and this Agreement. A Stock Unit is the right, subject to the terms and conditions of the Plan and this Agreement, to receive a distribution of a share of Common Stock pursuant to Paragraph 6 of this Agreement. |
| 2. | Stock Unit Account. Northern shall maintain an account (“Stock Unit Account”) on its books in the name of the Participant which shall reflect the number of Stock Units awarded to the Participant that the Participant is eligible to receive in distribution pursuant to Paragraph 6 of this Agreement. |
| 3. | Dividend Equivalents. Upon the payment of any dividend on Common Stock occurring during the period preceding the distribution of the Participant’s Stock Unit award pursuant to Paragraph 6 of this Agreement, Northern shall promptly pay to the Participant an amount in cash equal in value to the dividends that the Participant would have received had the Participant been the actual owner of the number of shares of Common Stock represented by the Stock Units in the Participant’s Stock Unit Account on that date. |
| 4. | Forfeiture. The Stock Units granted to the Participant pursuant to this Agreement shall be forfeited and revert to Northern if prior to the date on which the Stock Units vest pursuant to Paragraph 5 of this Agreement, (i) the Participant violates the non-competition provision of Paragraph 7 of this Agreement, or (ii) except as described in Paragraphs 5 and 8 of this Agreement, the Participant’s employment with the Corporation terminates. |
| 5. | Vesting. The Participant shall become vested in the Stock Units in accordance with the vesting schedule attached as Exhibit A to this Agreement, subject to (i) earlier prorated vesting in accordance with Paragraph 8 of this Agreement upon the Participant’s death, Retirement or Disability (each as defined below), (ii) prorated vesting in accordance with Paragraph 8 of this Agreement in the event that prior to vesting the Participant’s employment with the Corporation has terminated and (a) the Participant is 55 years or |
older on the date of such termination and (b) the Participant has not violated the non-competition provision of Paragraph 7 of this Agreement during the vesting period (“Vesting Period”), (iii) earlier full vesting in the event of a Change in Control of Northern (as defined in the Plan), or (iv) a determination by the Committee in its sole discretion that earlier prorated or full vesting is appropriate. If the Participant’s employment with the Corporation terminates for any reason other than as set forth above in this Paragraph 5, the Stock Units in the Participant’s Stock Unit Account that have not yet vested shall be forfeited and revert to Northern on such termination date, and Northern shall have no further obligation after such date to pay dividend equivalents pursuant to Paragraph 3 of this Agreement. Northern shall have no further obligation to the Participant under this Agreement following the Participant’s forfeiture of Stock Units.
For purposes of this Agreement, “Retirement” means retirement occurring by reason of the Participant having qualified for a Normal, Early, or Postponed Retirement under The Northern Trust Company Pension Plan.
For purposes of this Agreement, “Disability” means a disability that continues for a period of 12 months or more as defined by Northern Trust’s Managed Disability Program.
| 6. | Distribution. Except as provided below in this Paragraph 6 or in Paragraphs 9 or 10 of this Agreement, the Participant shall become entitled to the distribution of the Participant’s Stock Units on the Applicable Date in the year in which the Stock Units vest pursuant to Paragraph 5 of this Agreement, and such distribution shall be made to the Participant as soon as practicable thereafter. |
In the event of the Participant’s death, the Participant’s beneficiary shall become entitled to the distribution of the Participant’s Stock Units on the Applicable Date immediately after the Participant’s death, and such distribution shall be made (i) as soon as practicable thereafter or on such other date designated by the Participant or the Participant’s beneficiary, but no later than two years after the death of the Participant, and (ii) to such beneficiary and in such proportions as the Participant may designate in writing, and in the absence of a designation, to the following persons in the order indicated below:
| • | The Participant’s spouse; if none, then, |
| • | The Participant’s children (in equal amounts); if none, then, |
| • | The Participant’s parents (in equal amounts); if none, then, |
| • | The Participant’s brothers and sisters (in equal amounts); if none, then, |
| • | The Participant’s estate. |
In the event of the Participant’s Retirement or Disability, the Participant shall become entitled to the distribution of the Participant’s Stock Units on the Applicable Date immediately after the Participant’s Retirement or Disability.
Stock Units shall be distributed only in shares of Common Stock so that, pursuant to Paragraph 1 of this Agreement and this Paragraph 6, a Participant shall be entitled to receive one share of Common Stock for each Stock Unit in the Participant’s Stock Unit
