Exhibit 10.1
MORNINGSTAR,
INC.
2004
STOCK INCENTIVE PLAN
(AS
AMENDED AND RESTATED EFFECTIVE AS OF JULY 24, 2009)
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MORNINGSTAR,
INC. 2004 STOCK INCENTIVE PLAN
(AS AMENDED AND RESTATED EFFECTIVE AS OF JULY 24, 2009)
ARTICLE 1.
ESTABLISHMENT, OBJECTIVES AND DURATION
1.1
ESTABLISHMENT OF THE PLAN. Morningstar, Inc., an
Illinois corporation, hereby establishes this
Morningstar, Inc. 2004 Stock Incentive Plan (the
“Plan”) as set forth in this document. Capitalized
terms used but not otherwise defined herein will have the meanings
given to them in Article 2. The Plan permits the grant
of Nonstatutory Stock Options, Incentive Stock Options, Stock
Appreciation Rights, Restricted Stock, Restricted Stock Units, and
Performance Shares. In addition, the Plan provides the
opportunity for the deferral of the payment of salary, bonuses and
other forms of incentive compensation.
Subject to the
approval of the Company’s shareholders, the Plan became
effective upon its approval by the Board of Directors, and will
remain in effect as provided in Section 1.3 hereof.
1.2
PURPOSE OF THE PLAN. The purpose of the Plan is to promote
the success and enhance the value of the Company by linking the
personal interests of Participants to those of Company
shareholders, and by providing Participants with an incentive for
outstanding performance. The Plan is further intended to
provide flexibility to the Company in its ability to motivate,
attract and retain the services of Participants upon whose
judgment, interest, and special effort the successful conduct of
its business is largely dependent.
1.3
DURATION OF THE PLAN. The Plan commenced on the Effective
Date, as described in Article 2, and will remain in effect,
subject to the right of the Committee to amend or terminate the
Plan at any time pursuant to Article 14, until all Shares
subject to it pursuant to Article 4 have been issued or
transferred according to the Plan’s provisions. In no
event may an Award be granted under the Plan on or after the tenth
annual anniversary of the Effective Date.
1.4
PLAN MERGER. The 2001 Morningstar Stock Option Plan, as
amended, the Amended and Restated 2000 Morningstar Stock Option
Plan, and the Amended and Restated 1993 Morningstar Stock Option
Plan were merged into this Plan as of the Effective Date.
Stock options awarded under the Prior Plans shall be governed by
the terms of this Plan.
ARTICLE 2.
DEFINITIONS
Whenever used
in the Plan, the following terms have the meanings set forth below,
and when the meaning is intended, the initial letter of the word is
capitalized:
“AFFILIATES”
means (a) for purposes of Incentive Stock Options, any
corporation that is a Parent or Subsidiary of the Company, and
(b) for all other purposes
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hereunder, an
entity that is (directly or indirectly) controlled by, or controls,
the Company.
“AWARD”
means, individually or collectively, a grant under this Plan to a
Participant of Nonstatutory Stock Options, Incentive Stock Options,
Stock Appreciation Rights, Restricted Stock, Restricted Stock
Units, and Performance Shares.
“AWARD
AGREEMENT” means an agreement entered into by the Company and
a Participant setting forth the terms and provisions applicable to
an Award or Awards granted to the Participant or the terms and
provisions applicable to an election to defer compensation under
Section 8.2.
“BOARD”
or “BOARD OF DIRECTORS” means the Board of Directors of
the Company.
“CAUSE”
shall mean the Participant’s:
(a)
willful neglect of or continued failure to substantially perform
his or her duties with or obligations for the Company or an
Affiliate in any material respect (other than any such failure
resulting from his or her incapacity due to physical or mental
illness);
(b)
commission of a willful or grossly negligent act or the willful or
grossly negligent omission to act that causes or is reasonably
likely to cause material harm to the Company or an Affiliate;
or
(c)
commission or conviction of, or plea of nolo contendere to, any
felony or any crime significantly injurious to the Company or an
Affiliate.
An act or
omission is “willful” for this purpose if it was
knowingly done, or knowingly omitted, by the Participant in bad
faith and without reasonable belief that the act or omission was in
the best interest of the Company or an Affiliate.
Determination of Cause shall be made by the Committee in its sole
discretion.
“CHANGE
IN CONTROL” means the occurrence of any one or more of the
following: (a) any “person” (as such term is
defined in Section 3(a)(9) of the Exchange Act and as
used in Sections 13(d)(3) and 14(d)(2) of the Exchange
Act) after the Effective Date becomes a “beneficial
owner” (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of more than fifty percent (50%) of
the Shares (other than Joe Mansueto, his spouse and descendants,
and any trustee or custodian for and on behalf of any of them),
(b) the consummation of a merger, consolidation, statutory
share exchange or similar form of corporate transaction involving
the Company (a “Business Combination”), unless
immediately following such Business Combination more than sixty
percent (60%) of the total voting power of (i) the company
resulting from such Business Combination (the “Surviving
Company”), or (ii) if applicable, the ultimate parent
company that directly or indirectly has beneficial ownership of one
hundred percent (100%) of the voting securities eligible to elect
directors of the Surviving Company (the “Parent
Company”) is represented by Shares
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that were
outstanding immediately prior to such Business Combination (or, if
applicable, is represented by shares into which such Shares were
converted pursuant to such Business Combination), and such voting
power among the holders thereof is in substantially the same
proportion as the voting power of such Shares among the holders
thereof immediately prior to the Business Combination, or
(c) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or a sale of all or
substantially all of the Company’s assets.
“CODE”
means the Internal Revenue Code of 1986, as amended from time to
time.
“COMMITTEE”
shall mean the Compensation Committee of the Board of Directors,
the composition of which shall at all times satisfy the provisions
of Section 162(m) of the Code and shall consist of at
least two directors who are “independent directors”
within the meaning of the listing rules of each national
securities exchange on which the Shares are listed, and
“nonemployee directors” within the meaning of Exchange
Act Rule 16b-3.
“COMPANY”
means Morningstar, Inc., an Illinois corporation, and any
successor thereto as provided in Article 18.
“CONSULTANT”
means any person, including an advisor, engaged by the Company or
an Affiliate to render services to such entity and who is not a
Director or an Employee.
“DIRECTOR”
means any individual who is a member of the Board of
Directors.
“DISABILITY”
shall mean
(a)
A physical or mental condition that would qualify a Participant for
a disability benefit under the long-term disability plan of the
Company applicable to him or her;
(b)
If the Participant is not covered by such a long-term disability
plan, disability as defined for purposes of eligibility for a
disability award under the Social Security Act;
(c)
When used in connection with the exercise of an Incentive Stock
Option following termination of employment, disability within the
meaning of Code Section 22(e)(3); or
(d)
Such other condition as may be determined by the Committee in its
sole discretion to constitute Disability.
“EFFECTIVE
DATE” means the date of the Plan’s adoption by the
Board subject to the approval of the Plan by the Company’s
shareholders.
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“EMPLOYEE”
means any person employed by the Company or an Affiliate in a
common law employee-employer relationship. A Participant
shall not cease to be an Employee for purposes of this Plan in the
case of (i) any leave of absence approved by the Company or
(ii) transfers between locations of the Company or among the
Company, its Parent, any Subsidiary, or any successor. For
purposes of Incentive Stock Options, no such leave may exceed
ninety (90) days, unless reemployment upon expiration of such leave
is guaranteed by statute or contract. If reemployment upon
expiration of a leave of absence approved by the Company is not so
guaranteed, on the one hundred and eighty-first (181
st
) day of
such leave any Incentive Stock Option held by the Participant shall
cease to be treated as an Incentive Stock Option and shall be
treated for tax purposes as a Nonstatutory Stock Option.
Neither service as a Director nor payment of a director’s fee
by the Company shall be sufficient to constitute
“employment” by the Company.
“EXCHANGE
ACT” means the Securities Exchange Act of 1934, as amended
from time to time, or any successor act thereto.
“EXERCISE
PRICE” means the price at which a Share may be purchased by a
Participant pursuant to an Option.
“FAIR
MARKET VALUE” of a Share on a given date means:
(a)
the closing trading price of a Share on the primary national
securities exchange on which the Shares are listed on the last
trading day prior to the date as of which such value is being
determined; or
(b)
if the Shares are not traded on any national securities exchange,
the mean between the closing bid and asked prices of a Share in the
over-the-counter market on the last trading day prior to the date
as of which such value is being determined; or
(c)
if those bid and asked prices are not available, then the Fair
Market Value as of any given date shall be determined in good faith
by the Committee.
“FREESTANDING
SAR” means a SAR that is granted independently of any
Options, as described in Article 7.
“INCENTIVE
STOCK OPTION” or “ISO” means an option to
purchase Shares granted under Article 6 that is designated as
an Incentive Stock Option and that is intended to meet the
requirements of Code Section 422.
“NONSTATUTORY
STOCK OPTION” or “NQSO” means an option to
purchase Shares granted under Article 6 that is not intended
to meet the requirements of Code Section 422.
“OPTION”
means an Incentive Stock Option or a Nonstatutory Stock Option, as
described in Article 6.
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“PARENT”
means a “parent corporation,” whether now or hereafter
existing, as defined in Code Section 424(e).
“PARTICIPANT”
means an Employee, Consultant or Director who the Committee has
selected to participate in the Plan pursuant to Section 5.2
and who has an Award outstanding under the Plan.
“PERFORMANCE-BASED
EXCEPTION” means the performance-based exception from the tax
deductibility limitations of Code Section 162(m) and any
regulations promulgated thereunder.
“PERFORMANCE
PERIOD” means the time period during which performance
objectives must be met in order for a Participant to earn
Performance Shares granted under Article 9.
“PERFORMANCE
SHARE” means a notional Share that is earned based on the
Participant’s attainment of certain performance objectives
specified in the Award Agreement, as described in
Article 9.
“PERSONAL
LEAVE” means a leave of absence as described in
Section 5.3
“PLAN”
means the Morningstar, Inc. 2004 Stock Incentive Plan, as set
forth in this document, and as amended from time to
time.
“PRIOR
PLANS” means the 2001 Morningstar Stock Option Plan, as
amended, the Amended and Restated 2000 Morningstar Stock Option
Plan, and the Amended and Restated 1993 Morningstar Stock Option
Plan. The Prior Plans were merged into this Plan as of the
Effective Date and stock options awarded under the Prior Plans
shall be governed by the terms of this Plan.
“RESTRICTION
PERIOD” means the period during which the transfer of Shares
of Restricted Stock is limited in some way (based on the passage of
time, the achievement of performance objectives, or the occurrence
of other events as determined by the Committee, in its sole
discretion) or the Restricted Stock is not vested.
“RESTRICTED
STOCK” means a contingent grant of Shares awarded to a
Participant pursuant to Article 8. The Shares awarded to
the Participant will vest over the Restricted Period and according
to the time-based or performance-based criteria, specified in the
Award Agreement.
“RESTRICTED
STOCK UNIT” or “RSU” means a notional account
established pursuant to an Award granted to a Participant, as
described in Article 8, that is (a) valued solely by
reference to Shares, (b) subject to restrictions specified in
the Award Agreement, and (c) payable in cash or in Shares as
specified in the Award Agreement. The RSUs awarded to the
Participant will vest according to the time-based or
performance-based criteria specified in the Award
Agreement.
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“SERVICE”
means the provision of services to the Company or its Affiliates in
the capacity of (i) an Employee, (ii) a Director, or
(iii) a Consultant. For purposes of this Plan, the
transfer of an Employee from the Company to an Affiliate, from an
Affiliate to the Company or from an Affiliate to another Affiliate
shall not be a termination of Service. However, if the
Affiliate for which an Employee, Director or Consultant is
providing services ceases to be an Affiliate of the Company due to
a sale, transfer or other reason, and the Employee, Director or
Consultant ceases to perform services for the Company or any
Affiliate, the Employee, Director or Consultant shall incur a
termination of Service.
“SHARES”
means the shares of common stock, no par value, of the
Company.
“STOCK
APPRECIATION RIGHT” or “SAR” means an Award of
the contingent right to receive Shares or cash, as specified in the
Award Agreement, in the future, based on the value, or the
appreciation in the value, of Shares, pursuant to the terms of
Article 7. SARs may be granted alone or in connection
with a related Option.
“SUBSIDIARY”
means a “subsidiary corporation,” whether now or
hereafter existing, as defined in Code
Section 424(f).
“TANDEM
SAR” means a SAR that is granted in connection with a related
Option pursuant to Article 7, the exercise of which requires
forfeiture of the right to purchase a Share under the related
Option (and when a Share is purchased under the Option, the Tandem
SAR will similarly be canceled).
“VESTED”
means, with respect to an Option, that such Option has become fully
or partly exercisable; provided, however, that notwithstanding its
status as a Vested Option, an Option shall cease to be exercisable
pursuant to (and while exercisable shall be subject to) such terms
as are set forth herein and in the relevant Award Agreement.
Similarly, terms such as “Vest,” “Vesting,”
and “Unvested” shall be interpreted
accordingly.
ARTICLE 3.
ADMINISTRATION
3.1 THE COMMITTEE.
The Plan will be administered by the Committee, or by any other
committee appointed by the Board whose composition satisfies the
“nonemployee director” requirements of Rule 16b-3
under the Exchange Act and the regulations of Rule 16b-3 under
the Exchange Act, the “independent director”
requirements of the listing rules of each national securities
exchange on which the Shares are listed, and the “outside
director” provisions of Code Section 162(m), or any
successor regulations or provisions.
3.2 AUTHORITY OF THE
COMMITTEE. Except as limited by law and subject to the
provisions of this Plan, the Committee will have full power
to: select Employees, Directors and Consultants to
participate in the Plan; determine the sizes and types of Awards;
determine the terms and conditions of Awards in a manner consistent
with the Plan; construe and interpret the Plan and any agreement or
instrument entered into under the Plan; establish, amend or waive
rules and regulations
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for the Plan’s administration; and (subject to the provisions
of Article 15) amend the terms and conditions of any
outstanding Award to the extent they are within the discretion of
the Committee as provided in the Plan. Further, the Committee
will make all other determinations that may be necessary or
advisable to administer the Plan. As permitted by law and
consistent with Section 3.1, the Committee may delegate some
or all of its authority under the Plan, including to an officer of
the Company to designate the Employees (other than such officer
himself or herself) to receive Options and to determine the number
of Shares subject to the Options such Employees will
receive.
3.3 DECISIONS
BINDING. All determinations and decisions made by the
Committee pursuant to the provisions of the Plan will be final,
conclusive and binding on all persons, including, without
limitation, the Company, its Board of Directors, its shareholders,
all Affiliates, Employees, Participants and their estates and
beneficiaries.
3.4 CHANGE IN
CONTROL. In the event of a Change in Control, the Committee
shall have the discretion to accelerate the vesting of
Awards, eliminate any restrictions applicable to Awards, deem the
performance measures to be satisfied, or take such other action as
it deems appropriate, in its sole discretion.
ARTICLE 4. SHARES SUBJECT TO
THE PLAN AND MAXIMUM AWARDS
4.1 NUMBER OF SHARES
AVAILABLE FOR AWARDS.
(a) Subject to adjustment
as provided below and in Sections 4.2 and 4.3, the maximum number
of Shares that may be issued or transferred to Participants under
the Plan will be 5,628,843. The maximum number of Shares that
may be issued or transferred to Participants as Incentive Stock
Options is 1,000,000. The maximum number of Shares and Share
equivalent units that may be granted during any calendar year to
any one Participant under all types of Awards available under the
Plan is 1,000,000 (on an aggregate basis); the foregoing limit will
apply whether the Awards are paid in Shares or in cash. All
limits described in this Section 4.1(a) are subject to
adjustment as provided in Section 4.3.
(b) The Prior Plans shall
be merged into and continued in the form of this Plan as of the
Effective Date. Awards made and Shares awarded under the
Prior Plans prior to the Effective Date, which remain outstanding
on the Effective Date, shall be governed by the terms of this Plan,
but shall not count against the number of Shares authorized under
4.1(a) above. No additional awards will be made under
any Prior Plan on or after the Effective Date.
4.2 LAPSED AWARDS.
Any Shares (a) subject to an Award under the Plan that are
forfeited, canceled, settled or otherwise terminated without a
distribution of Shares to a Participant; or (b) delivered by
attestation to, or withheld by, the Company in connection with the
exercise of an Option awarded under the Plan or in payment of any
required income tax withholding for the exercise of an Option or
the vesting of
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Restricted Stock awarded under the Plan will thereafter be deemed
to be available for Award. Any Shares (a) subject to an
Award under a Prior Plan that are forfeited, canceled, settled or
otherwise terminated without a distribution of Shares to a
Participant; or (b) delivered by attestation to, or withheld
by, the Company in connection with the exercise of an Option
awarded under a Prior Plan or in payment of any required income tax
withholding for the exercise of an Option awarded under a Prior
Plan will not be available for Award under this Plan or the Prior
Plan.
4.3 ADJUSTMENTS IN
AUTHORIZED SHARES.
(a) In the event of any
merger, reorganization, consolidation, recapitalization,
separation, liquidation, split-up, share combination, or other such
change in the corporate structure of the Company affecting the
Shares, such adjustment shall be made in the number and class of
Shares which may be delivered under the Plan, and in the number and
class of and/or price of Shares subject to outstanding Awards
granted under the Plan, as may be determined to be appropriate and
equitable by the Committee, in its sole discretion, to prevent
dilution or enlargement of rights and provided that the number of
Shares subject to any Award shall always be a whole
number.
(b) Fractional Shares
resulting from any adjustment in Awards pursuant to this section
may be settled in cash or otherwise as the Committee
determines. The Company will give notice of any adjustment to
each Participant who holds an Award that has been adjusted and the
adjustment (whether or not that notice is given) will be effective
and binding for all Plan purposes.
ARTICLE 5. ELIGIBILITY AND
PARTICIPATION
5.1 ELIGIBILITY. An
Employee shall be deemed eligible for participation upon such
Employee’s first day of employment. Additionally,
non-Employee Directors and Consultants and/or their representatives
who are chosen from time to time at the sole discretion of the
Company to receive one or more Awards are also eligible to
participate in the Plan.
5.2 ACTUAL
PARTICIPATION. Subject to the provisions of the Plan, the
Committee will, from time to time, select those Employees,
non-Employee Directors and Consultants to whom Awards will be
granted, and will determine the nature and amount of each
Award.
5.3 PERSONAL LEAVE
STATUS.
(a) Notwithstanding
anything in the Plan to the contrary, the Committee, in its sole
discretion, reserves the right to designate a Participant’s
leave of absence as “Personal Leave.” No Options
shall be granted to a Participant during Personal Leave. A
Participant’s Unvested Options shall remain Unvested during
such Personal Leave and the time spent on such
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Personal Leave shall not count towards the Vesting of such
Options. A Participant’s Vested Options that may be
exercised pursuant to Section 6.6 hereof shall remain
exercisable upon commencement of Personal Leave until the earlier
of (i) a period of one year from the date of commencement of
such Personal Leave; or (ii) the remaining exercise period of
such Options. Notwithstanding the foregoing, if a Participant
returns to the Company from a Personal Leave of less than one year
and the Participant’s Options have not lapsed, the Options
shall remain exercisable for the remaining exercise period as
provided at the time of grant and subject to the conditions
contained herein.
(b) The Committee, in its
sole discretion, may waive or alter the provisions of this
Section 5.3 with respect to any Participant. The waiver
or alteration of such provisions with respect to any Participant
shall have no effect on any other Participant.
ARTICLE 6. OPTIONS
6.1 GRANT OF
OPTIONS. Subject to the terms and provisions of the Plan,
Options may be granted to Employees, non-Employee Directors and
Consultants in the number, and upon the terms, and at any time and
from time to time, as determined by the Committee.
6.2 AWARD
AGREEMENT. Each Option grant will be evidenced by an Award
Agreement that specifies the Exercise Price, the duration of the
Option, the number o
