Exhibit 4.4
ARTHUR J. GALLAGHER &
CO.
2009 LONG-TERM INCENTIVE
PLAN
I. INTRODUCTION
1.1 Purposes .
The purposes of the Arthur J.
Gallagher & Co. 2009 Long-Term Incentive Plan (this
“ Plan ”) are (i) to align the interests of
the Company’s stockholders and the recipients of awards under
this Plan by increasing the proprietary interest of such recipients
in the Company’s growth and success, (ii) to advance the
interests of the Company by attracting and retaining directors,
officers and other employees and (iii) to motivate such
persons to act in the long-term best interests of the Company and
its stockholders. As of the effective date of the Plan, no further
awards shall be granted under the Prior Plans, as defined in
Section 1.2.
1.2 Certain Definitions
.
“ Agreement
” shall mean the
written agreement evidencing an award hereunder between the Company
and the recipient of such award.
“ Board
” shall mean the
Board of Directors of the Company.
“ Change in Control
” shall have the
meaning set forth in Section 6.8(b).
“ Code
” shall mean the
Internal Revenue Code of 1986, as amended.
“ Committee
” shall mean the
Committee designated by the Board, consisting of two or more
members of the Board, each of whom may be (i) a
“Non-Employee Director” within the meaning of Rule
16b-3 under the Exchange Act, (ii) an “outside
director” within the meaning of Section 162(m) of the
Code and (iii) “independent” within the meaning of
the rules of the New York Stock Exchange or, if the Common Stock is
not listed on the New York Stock Exchange, within the meaning of
the rules of the principal national stock exchange on which the
Common Stock is then traded.
“ Common Stock
” shall mean the
common stock, par value $1.00 per share, of the Company, and all
rights appurtenant thereto.
“ Company
” shall mean Arthur
J. Gallagher & Co., a Delaware corporation, or any
successor thereto.
“ Exchange Act
” shall mean the
Securities Exchange Act of 1934, as amended.
“ Fair Market Value
” shall mean the
closing transaction price of a share of Common Stock as reported on
the New York Stock Exchange on the date as of which such value is
being determined or, if the Common Stock is not listed on the New
York Stock Exchange, the closing transaction price of a share of
Common Stock on the principal national stock exchange on which the
Common Stock is traded on the date as of which such value is being
determined
or, if there shall be no reported transactions
for such date, on the next preceding date for which transactions
were reported; provided , however , that if the
Common Stock is not listed on a national stock exchange or if Fair
Market Value for any date cannot be so determined, Fair Market
Value shall be determined by the Committee by whatever means or
method as the Committee, in the good faith exercise of its
discretion, shall at such time deem appropriate.
“ Free-Standing SAR
” shall mean an SAR
which is not granted in tandem with, or by reference to, an option,
which entitles the holder thereof to receive, upon exercise, shares
of Common Stock (which may be Restricted Stock) with an aggregate
value equal to the excess of the Fair Market Value of one share of
Common Stock on the date of exercise over the base price of such
SAR, multiplied by the number of such SARs which are
exercised.
“ Incentive Stock
Option ” shall
mean an option to purchase shares of Common Stock that meets the
requirements of Section 422 of the Code, or any successor
provision, which is intended by the Committee to constitute an
Incentive Stock Option.
“ Non-Employee
Director ” shall mean any director of the Company who is
not an officer or employee of the Company or any
Subsidiary.
“ Nonqualified Stock
Option ” shall
mean an option to purchase shares of Common Stock which is not an
Incentive Stock Option.
“ Performance
Measures ” shall mean the criteria and objectives,
established by the Committee, which shall be satisfied or met
(i) as a condition to the grant or exercisability of all or a
portion of an option or SAR or (ii) during the applicable
Restriction Period or Performance Period as a condition to the
vesting of the holder’s interest, in the case of a Restricted
Stock Award, of the shares of Common Stock subject to such award,
or, in the case of a Restricted Stock Unit Award, to the
holder’s receipt of the shares of Common Stock subject to
such award or of payment with respect to such award. To the extent
necessary for an award to be qualified performance-based
compensation under Section 162(m) of the Code and the
regulations thereunder, such criteria and objectives shall include
one or more of the following corporate-wide or subsidiary,
division, operating unit or individual measures, stated in either
absolute terms or relative terms, such as rates of growth or
improvement: the attainment by a share of Common Stock of a
specified Fair Market Value for a specified period of time,
earnings per share, return to stockholders (including dividends),
return on assets, return on equity, earnings of the Company before
or after taxes and/or interest, revenues, market share, cash flow
or cost reduction goals, interest expense after taxes, return on
investment, return on investment capital, economic value created,
operating margin, net income before or after taxes, pretax earnings
before interest, depreciation and/or amortization, pretax operating
earnings after interest expense and before incentives, and/or
extraordinary or special items, operating earnings, net cash
provided by operations, and strategic business criteria, consisting
of one or more objectives based on meeting specified market
penetration, geographic business expansion goals, cost targets,
customer satisfaction, reductions in errors and omissions,
reductions in lost business, management of employment practices and
employee benefits, supervision of litigation and information
technology, quality and quality
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audit scores, productivity, efficiency, and
goals relating to acquisitions or divestitures, or any combination
of the foregoing. In the sole discretion of the Committee, but
subject to Section 162(m) of the Code, the Committee may amend
or adjust the Performance Measures or other terms and conditions of
an outstanding award in recognition of unusual or nonrecurring
events affecting the Company or its financial statements or changes
in law or accounting principles.
“ Performance Option
” shall mean an
Incentive Stock Option or Nonqualified Stock Option, the grant of
which or the exercisability of all or a portion of which is
contingent upon the attainment of specified Performance Measures
within a specified Performance Period.
“ Performance Period
” shall mean any
period designated by the Committee during which (i) the
Performance Measures applicable to an award shall be measured and
(ii) the conditions to vesting applicable to an award shall
remain in effect.
“ Performance Unit
” shall mean a
right to receive, contingent upon the attainment of specified
Performance Measures within a specified Performance Period, a
specified cash amount or, in lieu thereof, shares of Common Stock
having a Fair Market Value equal to such cash amount.
“ Performance Unit
Award ” shall
mean an award of Performance Units under this Plan.
“ Prior Plans
” shall mean the
Company’s 1989 Non-Employee Directors’ Stock Option
Plan (Restated as of January 22, 1999) and Restricted Stock
Plan.
“ Restricted Stock
” shall mean shares
of Common Stock which are subject to a Restriction Period and which
may, in addition thereto, be subject to the attainment of specified
Performance Measures within a specified Performance
Period.
“ Restricted Stock
Award ” shall
mean an award of Restricted Stock under this Plan.
“ Restricted Stock
Unit ” shall
mean a right to receive one share of Common Stock or, in lieu
thereof, the Fair Market Value of such share of Common Stock in
cash, which shall be contingent upon the expiration of a specified
Restriction Period and which may, in addition thereto, be
contingent upon the attainment of specified Performance Measures
within a specified Performance Period.
“ Restricted Stock Unit
Award ” shall
mean an award of Restricted Stock Units under this Plan.
“ Restriction Period
” shall mean any
period designated by the Committee during which (i) the Common
Stock subject to a Restricted Stock Award may not be sold,
transferred, assigned, pledged, hypothecated or otherwise
encumbered or disposed of, except as provided in this Plan or the
Agreement relating to such award, or (ii) the conditions to
vesting applicable to a Restricted Stock Unit Award shall remain in
effect.
“ SAR
” shall mean a
stock appreciation right which may be a Free-Standing SAR or a
Tandem SAR.
“ Stock Award
” shall mean a
Restricted Stock Award or a Restricted Stock Unit Award.
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“ Subsidiary
” shall mean any
corporation, limited liability company, partnership, joint venture
or similar entity in which the Company owns, directly or
indirectly, an equity interest possessing more than 50% of the
combined voting power of the total outstanding equity interests of
such entity.
“ Tandem SAR
” shall mean an SAR
which is granted in tandem with, or by reference to, an option
(including a Nonqualified Stock Option granted prior to the date of
grant of the SAR), which entitles the holder thereof to receive,
upon exercise of such SAR and surrender for cancellation of all or
a portion of such option, shares of Common Stock (which may be
Restricted Stock) with an aggregate value equal to the excess of
the Fair Market Value of one share of Common Stock on the date of
exercise over the base price of such SAR, multiplied by the number
of shares of Common Stock subject to such option, or portion
thereof, which is surrendered.
“ Tax Date
” shall have the
meaning set forth in Section 6.5.
“ Ten Percent Holder
” shall have the
meaning set forth in Section 2.1(a).
1.3
Administration .
This Plan shall be administered by the Committee. Any one or a
combination of the following awards may be made under this Plan to
eligible persons: (i) options to purchase shares of Common
Stock in the form of Incentive Stock Options or Nonqualified Stock
Options (which may include Performance Options), (ii) SARs in
the form of Tandem SARs or Free-Standing SARs, (iii) Stock
Awards in the form of Restricted Stock or Restricted Stock Units
and (iv) Performance Units. The Committee shall, subject to
the terms of this Plan, select eligible persons for participation
in this Plan and determine the form, amount and timing of each
award to such persons and, if applicable, the number of shares of
Common Stock, the number of SARs, the number of Restricted Stock
Units and the number of Performance Units subject to such an award,
the exercise price or base price associated with the award, the
time and conditions of exercise or settlement of the award and all
other terms and conditions of the award, including, without
limitation, the form of the Agreement evidencing the award. The
Committee may, in its sole discretion and for any reason at any
time, subject to the requirements of Section 162(m) of the
Code and regulations thereunder in the case of an award intended to
be qualified performance-based compensation, take action such that
(i) any or all outstanding options and SARs shall become
exercisable in part or in full, (ii) all or a portion of the
Restriction Period applicable to any outstanding Restricted Stock
or Restricted Stock Units shall lapse, (iii) all or a portion
of the Performance Period applicable to any outstanding Restricted
Stock, Restricted Stock Units or Performance Units shall lapse and
(iv) the Performance Measures (if any) applicable to any
outstanding award shall be deemed to be satisfied at the maximum or
any other level. The Committee shall, subject to the terms of this
Plan, interpret this Plan and the application thereof, establish
rules and regulations it deems necessary or desirable for the
administration of this Plan and may impose, incidental to the grant
of an award, conditions with respect to the award, such as limiting
competitive employment or other activities. All such
interpretations, rules, regulations and conditions shall be
conclusive and binding on all parties.
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The Committee may delegate some or
all of its power and authority hereunder to the Board or, subject
to applicable law, to the President and Chief Executive Officer or
other executive officer of the Company as the Committee deems
appropriate; provided , however , that (i) the
Committee may not delegate its power and authority to the Board or
the President and Chief Executive Officer or other executive
officer of the Company with regard to the grant of an award to any
person who is a “covered employee” within the meaning
of Section 162(m) of the Code or who, in the Committee’s
judgment, is likely to be a covered employee at any time during the
period an award hereunder to such employee would be outstanding and
(ii) the Committee may not delegate its power and authority to
the President and Chief Executive Officer or other executive
officer of the Company with regard to the selection for
participation in this Plan of an officer, director or other person
subject to Section 16 of the Exchange Act or decisions
concerning the timing, pricing or amount of an award to such an
officer, director or other person.
No member of the Board or Committee,
and neither the President and Chief Executive Officer nor any other
executive officer to whom the Committee delegates any of its power
and authority hereunder, shall be liable for any act, omission,
interpretation, construction or determination made in connection
with this Plan in good faith, and the members of the Board and the
Committee and the President and Chief Executive Officer or other
executive officer shall be entitled to indemnification and
reimbursement by the Company in respect of any claim, loss, damage
or expense (including attorneys’ fees) arising therefrom to
the full extent permitted by law (except as otherwise may be
provided in the Company’s Certificate of Incorporation and/or
By-laws) and under any directors’ and officers’
liability insurance that may be in effect from time to
time.
A majority of the Committee shall
constitute a quorum. The acts of the Committee shall be either
(i) acts of a majority of the members of the Committee present
at any meeting at which a quorum is present or (ii) acts
approved in writing by all of the members of the Committee without
a meeting.
1.4 Eligibility
. Participants in this Plan shall
consist of such officers, other employees and nonemployee
directors, and persons expected to become officers, other employees
and nonemployee directors, of the Company and its Subsidiaries as
the Committee in its sole discretion may select from time to time.
The Committee’s selection of a person to participate in this
Plan at any time shall not require the Committee to select such
person to participate in this Plan at any other time. For purposes
of this Plan, references to employment by the Company shall also
mean employment by a Subsidiary.
1.5 Shares
Available . Subject
to adjustment as provided in Section 6.7 and to all other
limits set forth in this Section 1.5, 3,000,000 shares of
Common Stock shall be available for all awards under this Plan,
reduced by the sum of the aggregate number of shares of Common
Stock which become subject to outstanding options, outstanding
Free-Standing SARs and
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outstanding Stock Awards and delivered upon the
settlement of Performance Units. To the extent that shares of
Common Stock subject to an outstanding option, SAR or stock award
granted under the Plan or any of the Prior Plans are not issued or
delivered by reason of (i) the expiration, termination,
cancellation or forfeiture of such award (excluding shares subject
to an option cancelled upon settlement in shares of a related
tandem SAR or shares subject to a tandem SAR cancelled upon
exercise of a related option) or (ii) the settlement of such
award in cash, then such shares of Common Stock shall again be
available under this Plan.
Subject to adjustment as provided in
Section 6.7 and all other limits set forth in this
Section 1.5, 600,000 shares of Common Stock shall be available
for Stock Awards and Performance Unit Awards settled with stock
under this Plan, reduced by the sum of the aggregate number of
shares of Common Stock which become subject to outstanding Stock
Awards. To the extent that shares of Common Stock subject to an
outstanding restricted stock or restricted stock unit award granted
under the Plan or any of the Prior Plans are not issued or
delivered by reason of (i) the expiration, termination,
cancellation or forfeiture of such award or (ii) the
settlement of such award in cash, then such shares of Common Stock
shall again be available for Stock Awards under this
Plan.
Notwithstanding anything in this
Section 1.5 to the contrary, shares of Common Stock subject to
an award under this Plan (or any Prior Plan) may not be made
available for issuance under this Plan if such shares are:
(i) shares that were subject to a stock-settled SAR and were
not issued upon the net settlement or net exercise of such SAR,
(ii) shares used to pay the exercise price of an Incentive
Stock Option or Nonqualified Stock Option, (iii) shares
delivered to or withheld by the Company to pay withholding taxes
related to an award under this Plan or any Prior Plan, or
(iv) shares repurchased on the open market with the proceeds
of an option exercise.
Shares of Common Stock to be
delivered under this Plan shall be made available from authorized
and unissued shares of Common Stock, or authorized and issued
shares of Common Stock reacquired and held as treasury shares or
otherwise or a combination thereof.
To the extent necessary for an award
to be qualified performance-based compensation under
Section 162(m) of the Code and the regulations thereunder
(i) the maximum number of shares of Common Stock with respect
to which options or SARs or a combination thereof may be granted
during any fiscal year of the Company to any person shall be
200,000, subject to adjustment as provided in Section 6.7;
(ii) the maximum number of shares of Common Stock with respect
to which Stock Awards subject to Performance Measures may be
granted during any fiscal year of the Company to any person shall
be 100,000, subject to adjustment as provided in Section 6.7,
and (iii) the maximum amount that may be payable with respect
to Performance Units granted during any fiscal year of the Company
to any person shall be $1,500,000.
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II. STOCK OPTIONS AND STOCK
APPRECIATION RIGHTS
2.1 Stock
Options . The
Committee may, in its discretion, grant options to purchase shares
of Common Stock to such eligible persons as may be selected by the
Committee. Each option, or portion thereof, that is not an
Incentive Stock Option, shall be a Nonqualified Stock Option. To
the extent that the aggregate Fair Market Value (determined as of
the date of grant) of shares of Common Stock with respect to which
options designated as Incentive Stock Options are exercisable for
the first time by a participant during any calendar year (under
this Plan or any other plan of the Company, or any parent or
Subsidiary) exceeds the amount (currently $100,000) established by
the Code, such options shall constitute Nonqualified Stock
Options.
Options may be granted in addition
to, or in lieu of, any other compensation payable to officers,
other employees and directors, and in all cases shall be subject to
the following terms and conditions and shall contain such
additional terms and conditions, not inconsistent with the terms of
this Plan, as the Committee shall deem advisable:
(a) Number of Shares and Purchase
Price . The number of shares of Common Stock subject to an
option and the purchase price per share of Common Stock purchasable
upon exercise of the option shall be determined by the Committee;
provided , however , that the purchase price per
share of Common Stock purchasable upon exercise of a Nonqualified
Stock Option or an Incentive Stock Option shall not be less than
100% of the Fair Market Value of a share of Common Stock on the
date of grant of such option; provided further , that
if an Incentive Stock Option shall be granted to any person who, at
the time such option is granted, owns capital stock possessing more
than 10 percent of the total combined voting power of all classes
of capital stock of the Company (or of any parent or Subsidiary) (a
“ Ten Percent Holder ”), the purchase price per
share of Common Stock shall not be less than the price (currently
110% of Fair Market Value) required by the Code in order to
constitute an Incentive Stock Option.
(b) Option Period and
Exercisability . The period during which an option may be
exercised shall be determined by the Committee; provided ,
however , that no Incentive Stock Option or nonqualified
Stock Option shall be exercised later than 7 years after its date
of grant; provided further , that if an Incentive
Stock Option shall be granted to a Ten Percent Holder, such option
shall not be exercised later than five years after its date of
grant. The Committee may, in its discretion, determine that an
option is to be granted as a Performance Option and may establish
an applicable Performance Period and Performance Measures which
shall be satisfied or met as a condition to the grant of such
option or to the exercisability of all or a portion of such option.
The Committee shall determine whether an option shall become
exercisable in cumulative or non-cumulative installments and in
part or in full at any time. An exercisable option, or portion
thereof, may be exercised only with respect to whole shares of
Common Stock.
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(c) Method of Exercise . An
option may be exercised (i) by giving written notice to the
Company specifying the number of whole shares of Common Stock to be
purchase
