Exhibit 10.1
THE ADVISORY BOARD COMPANY
2009 STOCK INCENTIVE PLAN
1.
Purpose
The purpose of The Advisory Board Company 2009 Stock Incentive Plan
(the “Plan”) is to enable The Advisory Board Company, a
Delaware corporation and its Subsidiaries (collectively, the
“Company”), to attract, retain and motivate Nonemployee
Directors, officers, employees and service providers, and to
further align the interests of such persons with those of Company
stockholders by providing for or increasing the proprietary
interest of such persons in the Company. The Plan supersedes the
Company’s 2006 Stock Incentive Plan with respect to future
awards, and provides for the grant of Incentive and Nonqualified
Stock Options, Stock Appreciation Rights, Restricted Stock and
Restricted Stock Units, any of which may be performance-based, and
for Incentive Bonuses, which may be paid in cash or stock or a
combination thereof, as determined by the Administrator.
2.
Definitions
As
used in the Plan, the following terms shall have the meanings set
forth below:
(a) “Administrator” means the
Administrator of the Plan in accordance with
Section 18.
(b) “Award” means an Incentive
Stock Option, Nonqualified Stock Option, Stock Appreciation Right,
Restricted Stock, Restricted Stock Unit or Incentive Bonus granted
to a Participant pursuant to the provisions of the Plan, any of
which the Administrator may structure to qualify in whole or in
part as a Performance Award.
(c) “Award Agreement” means a
written agreement or other instrument as may be approved from time
to time by the Administrator implementing the grant of each Award.
An Agreement may be in the form of an agreement to be executed by
both the Participant and the Company (or an authorized
representative of the Company) or certificates, notices or similar
instruments as approved by the Administrator.
(d) “Board” means the board of
directors of the Company.
(e) “change of control” when
used in the Plan or any Award granted under the Plan, shall have
the meaning specified by the Administrator in the terms of an Award
Agreement or otherwise but shall be defined to mean only the
occurrence or consummation of a change of control transaction or
event and shall not consist solely of the announcement of or
stockholder approval of any such transaction or event.
(f) “Code” means the Internal
Revenue Code of 1986, as amended from time to time, and the rulings
and regulations issues thereunder.
(g) “Fair Market Value” means,
as of any date, the official closing price per share at which the
Shares are sold in the regular way on the NASDAQ Global Select
Market or, if no Shares are traded on the NASDAQ Global Select
Market on the date in question, then for the next preceding date
for which Shares are traded on the NASDAQ Global Select Market or,
if the Shares are at any time no longer traded on the NASDAQ Global
Select Market, the closing price per share at which the Shares are
sold on such other exchange, listing, quotation or similar service,
or if no such closing price is available, such other method,
consistent with Section 409A of the Code, as the Administrator
may determine.
(h) “Incentive Bonus” means a
bonus opportunity awarded under Section 9 pursuant to which a
Participant may become entitled to receive an amount based on
satisfaction of such performance criteria as are specified in the
Award Agreement.
(i) “Incentive Stock Option”
means a stock option that is intended to qualify as an
“incentive stock option” within the meaning of
Section 422 of the Code.
(j) “Nonemployee Director”
means each person who is, or is elected to be, a member of the
Board and who is not an employee of the Company or any
Subsidiary.
(k) “Nonqualified Stock Option”
means a stock option that is not intended to qualify as an
“incentive stock option” within the meaning of
Section 422 of the Code.
(l) “Option” means an Incentive
Stock Option and/or a Nonqualified Stock Option granted pursuant to
Section 6 of the Plan.
(m) “Participant” means any
individual described in Section 3 to whom Awards have been
granted from time to time by the Administrator and any authorized
transferee of such individual.
(n) “Performance Award” means
an Award, the grant, issuance, retention, vesting or settlement of
which is subject to satisfaction of one or more Qualifying
Performance Criteria established pursuant to
Section 13.
(o) “Plan” means The Advisory
Board Company 2009 Stock Incentive Plan as set forth herein and as
amended from time to time.
(p) “Prior Plan” mean The
Advisory Board Company 2006 Stock Incentive Plan.
(q) “Qualifying Performance
Criteria” has the meaning set forth in Section 13(b). As
used in Section 13(b), the term “contract value”
means the aggregate annualized revenue attributed to all agreements
in effect at a given date without regard to the remaining duration
of any such agreement, and the term “client renewal
rate” means the percentage of member institutions renewed,
adjusted to reflect reductions in member institutions resulting
from mergers and acquisitions of members.
(r) “Restricted Stock” means
Shares granted pursuant to Section 8 of the
Plan.
(s) “Restricted Stock Unit”
means an Award granted to a Participant pursuant to Section 8
pursuant to which Shares or cash in lieu thereof may be issued in
the future.
(t) “Retirement” has the
meaning specified by the Administrator in the terms of an Award
Agreement or, in the absence of any such term, for Participants
other than Nonemployee Directors shall mean retirement from active
employment with the Company and its Subsidiaries at or after
age 65. The determination of the Administrator as to an
individual’s Retirement shall be conclusive on all
parties.
(u) “Share” means a share of
the Company’s common stock, par value $.01, subject to
adjustment as provided in Section 12.
(v) “Stock Appreciation Right”
means a right granted pursuant to Section 7 of the Plan that
entitles the Participant to receive, in cash or Shares or a
combination thereof, as determined by the Administrator, value
equal to or otherwise based on the excess of (i) the market
price of a specified number of Shares at the time of exercise over
(ii) the exercise price of the right, as established by the
Administrator on the date of grant.
(w) “Subsidiary” means any
corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company where each of the
corporations in the unbroken chain other than the last corporation
owns stock possessing at least 50 percent or more of the total
combined voting power of all classes of stock in one of the other
corporations in the chain, and if specifically determined by the
Administrator in the context other than with respect to Incentive
Stock Options, may include an entity in which the Company has a
significant ownership interest or that is directly or indirectly
controlled by the Company.
(x) “Termination of Employment”
means ceasing to serve as a full-time employee of the Company and
its Subsidiaries or, with respect to a Nonemployee Director or
other service provider, ceasing to serve as such for the Company,
except that with respect to all or any Awards held by a Participant
(i) the Administrator may determine, subject to
Section 6(d), that an approved leave of absence or approved
employment on a less than full-time basis is not considered a
Termination of Employment, (ii) the Administrator may
determine that a transition of employment to service with a
partnership, joint venture or corporation not meeting the
requirements of a Subsidiary in which the Company or a Subsidiary
is a party is not considered a Termination of Employment,
(iii) service as a member of the Board or other service
provider shall constitute continued employment with respect to
Awards granted to a Participant while he or she served as an
employee and (iv) service as an employee of the Company or a
Subsidiary shall constitute continued employment with respect to
Awards granted to a Participant while he or she served as a member
of the Board or other service provider. The Administrator shall
determine whether any corporate transaction, such as a sale or
spin-off of a division or subsidiary that employs a Participant,
shall be deemed to result in a Termination of Employment with the
Company and its Subsidiaries for purposes of any affected
Participant’s Options, and the Administrator’s decision
shall be final and binding.
(y) “Total and Permanent
Disablement” has the meaning specified by the Administrator
in the terms of an Award Agreement or, in the absence of any such
term or in the case of an Option intending to qualify as an
Incentive Stock Option, the inability to engage in any substantial
gainful activity by reason of any medically determinable physical
or mental impairment which can be expected to result in death or
which has lasted or can be expected to last for a continuous period
of not less than 12 months. The determination of the
Administrator as to an individual’s Total and Permanent
Disablement shall be conclusive on all
parties.
3.
Eligibility
Any
person who is a current or prospective officer or employee (within
the meaning of Section 5635(c) of the NASDAQ Stock Market Listing
Requirements) of the Company or of any Subsidiary shall be eligible
for selection by the Administrator for the grant of Awards
hereunder. In addition, Nonemployee Directors and any other service
providers who have been retained to provide consulting, advisory or
other services to the Company or to any Subsidiary shall be
eligible for the grant of Awards hereunder as determined by the
Administrator. Options intending to qualify as Incentive Stock
Options may only be granted to employees of the Company or any
Subsidiary within the meaning of the Code, as selected by the
Administrator. For purposes of this Plan, the Chairman of the
Board’s status as an employee shall be determined by the
Administrator.
4. Effective Date and
Termination of Plan
This
Plan was adopted by the Board as of June 22, 2009, and it will
become effective (the “Effective Date”) when it is
approved by the Company’s stockholders. All Awards granted
under this Plan are subject to, and may not be exercised before,
the approval of this Plan by the affirmative vote of the holders of
a majority of the outstanding Shares present, or represented by
proxy, and entitled to vote, at a meeting of the Company’s
stockholders or by written consent in accordance with the laws of
the State of Delaware; provided that if such approval by the
stockholders of the Company does not occur within one year of the
date that this Plan was adopted by the Board, all Awards previously
granted under this Plan shall be void. The Plan shall remain
available for the grant of Awards until the tenth (10th)
anniversary of the Effective Date. Notwithstanding the foregoing,
the Plan may be terminated at such earlier time as the Board may
determine. Termination of the Plan will not affect the rights and
obligations of the Participants and the Company arising under
Awards theretofore granted and then in effect.
5. Shares Subject
to the Plan and to Awards
(a) Aggregate Limits.
The aggregate number of Shares issuable pursuant to all
Awards shall not exceed 1,055,000, plus (i) any Shares that
were authorized for issuance under the Prior Plan that, as of
June 26, 2009, remain available for issuance under the Prior
Plan (not including any Shares that are subject to, as of
June 26, 2009, outstanding awards under the Prior Plan or any
Shares that prior to June 26, 2009 were issued pursuant to
awards granted under the Prior Plan) and (ii) any Shares
subject to outstanding awards under the Prior Plan as of
June 26, 2009 that on or after such date cease for any reason
to be subject to such awards (other than by reason of exercise or
settlement of the awards to the extent they are exercised for or
settled in vested and nonforfeitable shares); provided that any
Shares granted under Options or Stock Appreciation Rights shall be
counted against this limit on a one-for-one basis and any Shares
granted as Awards other than Options or Stock Appreciation Rights
shall be counted against this limit as two and one one-hundredths
(2.01) Shares for every one (1) Share subject to such Award.
The aggregate number of Shares available for grant under this Plan
and the number of Shares subject to outstanding Awards shall be
subject to adjustment as provided in Section 12. The Shares
issued pursuant to Awards granted under this Plan may be shares
that are authorized and unissued or shares that were reacquired by
the Company, including shares purchased in the open
market.
(b) Issuance of Shares.
For purposes of Section 5(a), the aggregate number
of Shares issued under this Plan at any time shall equal only the
number of Shares actually issued upon exercise or settlement of an
Award. Notwithstanding the foregoing, Shares subject to an Award
under the Plan may not again be made available for issuance under
the Plan if such Shares are: (i) Shares that were subject to a
stock-settled Stock Appreciation Right and were not issued upon the
net settlement or net exercise of such Stock Appreciation Right,
(ii) Shares used to pay the exercise price of an Option,
(iii) Shares delivered to or withheld by the Company to pay
the withholding taxes related to an Award, or (iv) Shares
repurchased on the open market with the proceeds of an Option
exercise. Shares subject to Awards that have been canceled,
expired, forfeited or otherwise not issued under an Award and
Shares subject to Awards settled in cash shall not count as Shares
issued under this Plan. Any Shares that again become available for
grant pursuant to Section 5(a) or this Section 5(b) shall be added
back as one (1) Share if such shares were subject to Options
or Stock Appreciation Rights granted under the Plan, and as two and
one one-hundredths (2.01) Shares if such shares were subject to
Awards other than Options or Stock Appreciation Rights granted
under the Plan.
(c) Tax Code Limits.
The aggregate number of Shares subject to Awards
granted under this Plan during any calendar year to any one
Participant shall not exceed 500,000, which number shall be
calculated and adjusted pursuant to Section 12 only to the
extent that such calculation or adjustment will not affect the
status of any Award intended to qualify as “performance-based
compensation” under Section 162(m) of the Code but which
number shall not count any tandem SARs (as defined in
Section 7). The aggregate number of Shares that may be issued
pursuant to the exercise of Incentive Stock Options granted under
this Plan shall not exceed 1,055,000, which number shall be
calculated and adjusted pursuant to Section 12 only to the
extent that such calculation or adjustment will not affect the
status of any option intended to qualify as an Incentive Stock
Option under Section 422 of the Code. The maximum amount
payable pursuant to that portion of an Incentive Bonus granted in
any calendar year to any Participant under this Plan that is
intended to satisfy the requirements for “performance-based
compensation” under Section 162(m) of the Code shall not
exceed five million dollars ($5,000,000).
(d) Director Awards.
The aggregate number of Shares subject to Options and
Stock Appreciation Rights granted under this Plan during any
calendar year to any one Nonemployee Director shall not exceed
30,000, and the aggregate number of Shares issued or issuable under
all Awards granted under this Plan other than Options or Stock
Appreciation Rights during any calendar year to any one Nonemployee
Director shall not exceed 15,000; provided, however, that in the
calendar year in which a Nonemployee Director first joins the Board
of Directors or is first designated as Chairman of the Board of
Directors or Lead Director, the maximum number of shares subject to
Awards granted to the Participant may be up to two hundred percent
(200%) of the number of shares set forth in the foregoing limits
and the foregoing limits shall not count any tandem SARs (as
defined in Section 7).
(e) Awards to Service Providers.
The aggregate number of Shares issued under this Plan
pursuant to all Awards granted to service providers shall not
exceed 100,000.
(f) Assumed Awards of Acquired
Corporations . In the event that the Company
acquires another corporation and assumes outstanding equity awards
of such acquired corporation, the number of Shares authorized for
issuance under this Plan shall be increased to the extent necessary
to satisfy such assumed equity awards (as adjusted, to the extent
appropriate, using the exchange ratio or other adjustment or
valuation ratio or formula used in such acquisition or combination
to determine the consideration payable to the holders of common
stock of the entities party to such acquisition or combination) and
such Shares shall not reduce the Shares otherwise authorized for
issuance under the Plan.
(g) Awards of Acquired Corporations
. In the event that a corporation acquired by the
Company, or with which the Company combines, has shares available
under a pre-existing plan approved by stockholders and not adopted
in contemplation of such acquisition or combination, the shares
available for grant pursuant to the terms of such pre-existing plan
(as adjusted, to the extent appropriate, using the exchange ratio
or other adjustment or valuation ratio or formula used in such
acquisition or combination to determine the consideration payable
to the holders of common stock of the entities party to such
acquisition or combination) may be used for Awards under the Plan
and shall not reduce the Shares authorized for issuance under the
Plan; provided that Awards using such available shares shall not be
made after the date awards or grants could have been made under the
terms of the pre-existing plan, absent the acquisition or
combination, and shall only be made to individuals who were not
employees, directors or consultants of the Company immediately
before such acquisition or combination.
6. Options
(a) Option Awards.
Options may be granted at any time and from time to
time prior to the termination of the Plan to Participants as
determined by the Administrator. No Participant shall have any
rights as a stockholder with respect to any Shares subject to
Option hereunder until said Shares have been issued. Each Option
shall be evidenced by an Award Agreement. Options granted pursuant
to the Plan need not be identical but each Option must contain and
be subject to the terms and conditions set forth
below.
(b) Price. The
Administrator will establish the exercise price per Share under
each Option, which, in no event will be less than the Fair Market
Value of the Shares on the date of grant; provided, however, that
the exercise price per Share with respect to an Option that is
granted in connection with a merger or other acquisition as a
substitute or replacement award for options held by optionees of
the acquired entity may be less than 100% of the market price of
the Shares on the date such Option is granted if such exercise
price is based on a formula set forth in the terms of the options
held by such optionees or in the terms of the agreement providing
for such merger or other acquisition. The exercise price of any
Option may be paid in Shares, cash or a combination thereof, as
determined by the Administrator, including an irrevocable
commitment by a broker to pay over such amount from a sale of the
Shares issuable under an Option, the delivery of previously owned
Shares and withholding of Shares otherwise deliverable upon
exercise.
(c) No Repricing without Stockholder
Approval. Other than in connection with a change in
the Company’s capitalization (as described in
Section 12), at any time when the exercise price of an Option
is above the Fair Market Value of a Share, the Company shall not,
without stockholder approval, reduce the exercise price of such
Option and shall not exchange such Option for cash or a new Award
with a lower (or no) exercise price.
(d) Provisions Applicable to
Options. The date on which Options become
exercisable shall be determined at the sole discretion of the
Administrator and set forth in an Award Agreement. Unless provided
otherwise in the applicable Award Agreement, to the extent that the
Administrator determines that an approved leave of absence or
employment on a less than full-time basis is not a Termination of
Employment, the vesting period and/or exercisability of an Option
shall be adjusted by the Administrator during or to reflect the
effects of any period during which the Participant is on an
approved leave of absence or is employed on a less than full-time
basis.
(e) Term of Options and Termination of
Employment: The Administrator shall establish the
term of each Option, which in no case shall exceed a period of five
(5) years from the date of grant. Unless an Option earlier
expires upon the expiration date established pursuant to the
foregoing sentence, upon the termination of the Participant’s
employment, his or her rights to exercise an Option then held shall
be only as follows, unless the Administrator specifies
otherwise:
(1) Death. Upon the
death of a Participant while in the employ of the Company or any
Subsidiary or while serving as a member of the Board, all of the
Participant’s Options then held shall be exercisable by his
or her estate, heir or beneficiary at any time during the one
(1) year period commencing on the date of death. Any and all
of the deceased Participant’s Options that are not exercised
during the one (1) year commencing on the date of death shall
terminate as of the end of such one (1) year
period.
If a Participant should die within thirty
(30) days of his or her Termination of Employment with the
Company and its Subsidiaries, an Option shall be exercisable by his
or her estate, heir or beneficiary at any time during the one
(1) year period commencing on the date of termination, but
only to the extent of the number of Shares as to which such Option
was exercisable as of the date of such termination. Any and all of
the deceased Participant’s Options that are not exercised
during the one (1) year period commencing on the date of
termination shall terminate as of the end of such one (1) year
period. A Participant’s estate shall mean his or her legal
representative or other person who so acquires the right to
exercise the Option by bequest or inheritance or by reason of the
death of the Participant.
(2) Total and Permanent
Disablement. Upon Termination of Employment as a
result of the Total and Permanent Disablement of any Participant,
all of the Participant’s Options then held shall be
exercisable during the one (1) year period commencing on the
date of termination. Any and all Options that are not exercised
during the one (1) year period commencing on the date of
termination shall terminate as of the end of such one (1) year
period.
(3) Retirement. Upon
Retirement of a Participant, the Participant’s Options then
held shall be exercisable during the one (1) year period
commencing on the date of Retirement. The number of Shares with
respect to which the Options shall be exercisable shall equal the
total number of Shares that were exercisable under the
Participant’s Option on the date of his or her Retirement.
Any and all Options that are not exercised during the one
(1) year period commencing on the date of termination shall
terminate as of the end of such one (1) year
period.
(4) Other Reasons. Upon
the date of a termination of a Participant’s employment for
any reason other than those stated above in Sections 6(e)(1),
(e)(2) and (e)(3) or as described in Section 15, (A) to
the extent that any Option is not exercisable as of such
termination date, such portion of the Option shall remain
unexercisable and shall terminate as of such date, and (B) to
the extent that any Option is exercisable as of such termination
date, such portion of the Option shall expire on the earlier of
(i) ninety (90) days following such date and
(ii) the expiration date of such Option.
(f) Incentive Stock Options.
Notwithstanding anything to the contrary in this
Section 6, in the case of the grant of an Option intending to
qualify as an Incentive Stock Option: (i) if the Participant
owns stock possessing more than 10 percent of the combined
voting power of all classes of stock of the Company, the exercise
price of such Option must be at least 110 percent of the Fair
Market Value of the Shares on the date of grant and the Option must
expire within a period of not more than five (5) years from
the date of grant, and (ii) Termination of Employment will
occur when the person to whom an Award was granted ceases to be an
employee (as determined in accordance with Section 3401(c) of
the Code and the regulations promulgated thereunder) of the Company
and its Subsidiaries. Notwithstanding anything in this
Section 6 to the contrary, options designated as Incentive
Stock Options shall not be eligible for treatment under the Code as
Incentive Stock Options (and will be deemed to be Nonqualified
Stock Options) to the extent that either (a) the aggregate
Fair Market Value of Shares (determined as of the time of grant)
with respect to which such Options are exercisable for the first
time by the Participant during any calendar year (under all plans
of the Company and any Subsidiary) exceeds $100,000, taking Options
into account in the order in which they were granted, or
(b) such Options otherwise remain exercisable but are not
exercised within three (3) months of Termination of Employment
(or such other period of time provided in Section 422 of the
Code).
7. Stock Appreciation
Rights
Stock
Appreciation Rights may be granted to Participants from time to
time either in tandem with or as a component of other Awards
granted under the Plan (“tandem SARs”) or not in
conjunction with other Awards (“freestanding SARs”) and
may, but need not, relate to a specific Option granted under
Section 6. The provisions of Stock Appreciation Rights need
not be the same with respect to each grant or each recipient. Any
Stock Appreciation Right granted in tandem with an Award may be
granted at the same time such Award is granted or at any time
thereafter before exercise or expiration of such Award. All
freestanding SARs shall be granted subject to the same terms and
conditions applicable to Options as set forth in Section 6 and
all tandem SARs shall have the same exercise price, vesting,
exercisability, forfeiture and termination provisions as the Award
to which they relate. Subject to the provisions of Section 6
and the immediately preceding sentence, the Administrator may
impose such other conditions or restrictions on any Stock
Appreciation Right as it shall deem appropriate. Stock Appreciation
Rights may be settled in Shares, cash or a combination thereof, as
determined by the Administrator and set forth in the applicable
Award Agreement. Other than in connection with a c
