Exhibit 10.1
MORNINGSTAR, INC. INCENTIVE
PLAN
(As Amended and Restated
Effective January 1, 2009)
ARTICLE 1
Statement of
Purpose
The compensation policies of
Morningstar, Inc. (the “Company”) are intended to
support the Company’s overall objective of enhancing
Shareholder value. In furtherance of this philosophy, the
Company has designed this Morningstar, Inc. Incentive Plan
(the “Plan”) to provide incentives for business
performance, reward contributions towards goals consistent with the
Company’s business strategy, and enable the Company to
attract and retain highly qualified Employees. The Plan was
originally effective January 1, 2005 and was then amended and
restated on May 22, 2007, effective as of January 1,
2007. The Plan, as amended and restated herein, is effective
January 1, 2009. Where applicable, the Bonuses payable
under the Plan are intended to qualify as “performance-based
compensation” under Section 162(m) of the
Code.
ARTICLE 2
Definitions
The terms used in this Plan include the feminine
as well as the masculine gender and the plural as well as the
singular, as the context in which they are used requires. The
following terms, unless the context requires otherwise, are defined
as follows:
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2.1
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“Affiliate” means any parent, subsidiary or other entity
that is (directly or indirectly) controlled by, or controls, the
Company.
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2.2
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“Board” means the Morningstar, Inc. Board of
Directors.
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2.3
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“Bonus” means the incentive compensation determined
under Section 4.4 of the Plan payable in cash.
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2.4
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“Bonus Bank” means a bookkeeping account maintained by the
Company pursuant to Section 4.6(b) of the
Plan.
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2.5
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“Bonus Pool” means an amount that may be established for the
Company or a Business Unit, all or a portion of which may be
allocated among the Eligible Employees of the Company or such
Business Unit.
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2.6
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“Business Unit”
means an organizational unit of
business within the Company, as identified by the
Company.
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2.7
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“Code” means the Internal Revenue Code of 1986, as
amended.
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2.8
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“Committee” means the Compensation Committee of the Board or
any successor committee with responsibility for compensation, or
any subcommittee, as long as the
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number of Committee members and their
qualifications shall at all times be sufficient to meet the
applicable requirements for “outside directors” under
Section 162(m) and the regulations thereunder and the
independence requirements of the NASDAQ Marketplace Rules or
any other applicable exchange on which
Morningstar, Inc.’s common equity is at the time listed,
in each case as in effect from time to time.
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2.9
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“Company” means Morningstar, Inc. and any of its
Subsidiaries that adopt this Plan or that have Employees who are
participants under this Plan.
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2.10
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“Covered Employee”
means an Executive Officer who is a
“covered employee” for purposes of
Section 162(m).
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2.11
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“Disability ” means permanent and total disability as
defined in the Company’s long term disability plan, or if no
such plan is then in effect, as defined in Code
Section 22(e)(3).
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2.12
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“Employee” means any person employed on a full-time or
part-time basis 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
Subsidiaries or any successor.
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2.13
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“Executive Officer”
means an Employee who is an
“executive officer” as defined in Rule 3b-7
promulgated under the Exchange Act.
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2.14
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“Exchange Act”
means the Securities Exchange Act of
1934, as amended.
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2.15
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“ Participant ” means an
Executive Officer or Employee as described in Article 3 of
this Plan.
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2.16
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“Performance Period
” means the period for which a
Bonus may be paid. Unless otherwise specified by the Committee, the
Performance Period shall be a calendar year, beginning on
January 1 and ending on December 31 of any year. The
first Performance Period under the Plan, as amended and restated
herein, shall be the calendar year 2009. Any bonus attributable to
calendar year 2008 or any prior year shall be governed by the terms
of the Plan, as in effect prior to this amendment and restatement
effective January 1, 2009. No Bonus shall be payable under
this Plan for a Performance Period beginning on or after
January 1, 2009 until the Plan has been approved by the
Company’s shareholders.
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2.17
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“Plan” , except where the context clearly indicates
otherwise, means the Morningstar, Inc. Incentive Plan, as
stated herein and as may be amended from time to time.
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2.18
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“SEC” means the U.S. Securities and Exchange
Commission.
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2.19
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“Section 162(m)”
means Code
Section 162(m) and regulations promulgated thereunder by
the Secretary of the Treasury.
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ARTICLE 3
Participation
An Executive Officer or other Employee of the
Company designated by the Committee individually or by
classification shall be a Participant in this Plan and shall
continue to be a Participant until any Bonus he may receive has
been paid or forfeited under the terms of this Plan. The
amount of a Participant’s Bonus, if any, will be governed by
Article 4.
ARTICLE 4
Incentive
Bonuses
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4.1
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Objective Performance Goals.
The Committee shall establish
written, objective performance goals for a Performance Period not
later than 90 days after the beginning of the Performance Period
(but not after more than 25% of the Performance Period has
elapsed); provided that the outcome is substantially uncertain at
the time the Committee establishes the Performance Goal. The
objective performance goals shall be stated as specific amounts of,
or specific changes in, one or more of the financial measures
described in Section 4.2. Objective performance goals may also
include operational goals such as: productivity, safety, other
strategic objectives and individual performance goals. The
objective performance goals need not be the same for different
Performance Periods and for any Performance Period may be stated:
(a) as goals for Morningstar, Inc., for one or more of
its Subsidiaries, Business Units, divisions, organizational units,
or for any combination of the foregoing; (b) on an absolute
basis or relative to the performance of other companies or of a
specified index or indices, or be based on any combination of the
foregoing; and (c) separately for one or more Participants or
Business Units, or in any combination of the two.
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4.2
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Financial Measures. The Committee shall use any one or more of the
following financial measures to establish objective performance
goals under Section 4.1: earnings before interest and taxes
(EBIT); earnings before interest, taxes, depreciation and
amortization (EBITDA); net earnings; operating earnings or income;
earnings growth; net income (absolute or competitive growth rates
comparative); net income per share; cash flow, including operating
cash flow, free cash flow, discounted cash flow return on
investment, and cash flow in excess of cost of capital; earnings
per share; return on shareholders’ equity (absolute or
peer-group comparative); stock price (absolute or peer-group
comparative); absolute and/or relative return on common
shareholders’ equity; absolute and/or relative return on
capital; absolute and/or relative return on assets; economic value
added (income in excess of cost of capital); customer satisfaction;
expense reduction; ratio of operating expenses to operating
revenues; gross revenue or revenue by pre-defined business segment
(absolute or competitive growth rates comparative); revenue
backlog; margins realized on delivered services; total Shareholder
return; dept-to-capital ratio or market share. The Committee may
specify any reasonable definition of the financial measures it
uses. Such definitions may provide for reasonable adjustments and
may include or exclude items, including but not limited to:
realized
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investment gains and losses; extraordinary,
unusual or non-recurring items; gains or losses on the sale of
assets; changes in accounting principles or the application
thereof; currency fluctuations, acquisitions, divestitures, or
necessary financing activities; recapitalizations, including stock
splits and dividends; expenses for restructuring or productivity
initiatives; and other non-operating items.
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4.3
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Performance Evaluation.
Within a reasonable time after the
close of a Performance Period, the Committee shall determine, and
with respect to Executive Officers certify in writing, whether the
objective performance goals established for that Performance Period
have been met by the respective Company, Business Unit, Executive
Officers, Employees or otherwise subject to such performance goals,
and the extent to which such performance goals may have been
exceeded.
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4.4
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Bonus. If the Committee has determined, and with
respect to Executive Officers certified in writing,
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