Exhibit 10.10
TERMS AND CONDITIONS
RESTRICTED PERFORMANCE SHARE AWARD
Restricted
Performance Share Award made as of the ___day of __________(the
“Award Date”), by The McGraw-Hill Companies, Inc., a
New York corporation (the “Company”).
WHEREAS, the Board
of Directors of the Company has designated the Compensation
Committee of the Board of Directors of the Company (the
“Committee”) to administer the 2002 Stock Incentive
Plan, as amended and restated (the “Plan”), with
respect to certain executives of the Company;
WHEREAS,
capitalized terms not otherwise defined herein shall have the
meanings set forth for such terms in the Plan;
WHEREAS, the
Committee has determined that the Employee should be granted a
Restricted Performance Share Award under the Plan for the number of
shares as specified in the Employee’s Restricted Performance
Share Award Document; and
WHEREAS, Employee
is accepting the Restricted Performance Share Award subject to the
terms and conditions set forth below:
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1. Grant
of Awards .
(a) The
grant of the Restricted Performance Share Award
(“Award”) is subject to the terms and conditions
hereinafter set forth with respect to the Restricted Performance
Shares of Common Stock, $1.00 par value, of the Company
(“Stock”).
(b) Subject
to the terms and conditions of Section 10 hereof, the Employee
shall be issued a stock certificate in respect of the Restricted
Performance Shares of Stock covered by this Award. Such stock
certificate shall be registered in the name of the Employee, and
shall bear an appropriate legend referring to the terms, conditions
and restrictions applicable to this Award, substantially in the
following form:
“The transferability of this certificate
and the shares of stock represented hereby are subject to the terms
and conditions (including forfeiture) of (i) The McGraw-Hill
Companies, Inc. 2002 Stock Incentive Plan, as amended and restated,
(ii) the Terms and Conditions of Restricted Performance Share
Award, and (iii) the Award Document of Restricted Performance
Shares dated as of __________. Copies of the above-mentioned
documents are on file in the offices of The McGraw-Hill Companies,
Inc., 1221 Avenue of the Americas, New York, New York
10020.”
The
stock certificate evidencing such shares shall be held in custody
by the Company until the restrictions thereon shall have lapsed,
and, as a condition of this Award, the Employee shall deliver to
the Company a duly signed stock power, endorsed in blank, relating
to the Restricted Performance Shares of Stock covered by this
Award.
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With respect to
the procedures set forth in this Section 1(b), the Company
may, in its sole discretion, provide for the book entry on behalf
of the Employee of the Restricted Performance Shares of Stock
covered by this Award with the Company’s Registrar and
Transfer Agent in lieu of the issuance of a stock certificate to
the Employee for all or a portion of the period extending from the
date hereof until the lapse of restrictions upon such shares;
provided , that such shares represented by said book-entry
shall be (i) deemed to be held in custody by the Company until
the restrictions thereon shall have lapsed, (ii) subject to
the terms and conditions (including forfeiture) of the Plan, and
(iii) the terms and conditions of this Award.
2.
Performance Goals . The achievement of this Award shall be
measured against a schedule of an Earnings Per Share
(“EPS”) growth goal established by the Committee. This
schedule will govern the determination of the Restricted
Performance Shares payable on the date the Award matures. If EPS
growth equals the targeted EPS growth goal, the Restricted
Performance Share Award will be fully earned out, and the Employee
shall receive 100% of the shares. For EPS growth between the zero
payout level as established by the Committee and the targeted
growth goal, the Employee shall receive a pro rata portion of the
shares. For growth between the targeted goal and the 200% payout
level, as established by the Committee, the Employee shall receive
100% of the shares at the targeted EPS growth plus a pro rata
portion of the shares between the 100% and 200% payout levels. For
EPS growth which equals or exceeds the 200% payout level, as
established by the Committee, the Employee shall receive 200% of
the shares payable at the 100% payout level. For growth at or below
the zero payout level, all Restricted Performance Share Awards will
be forfeited by the Employee.
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For
purposes of this Award, EPS means diluted earnings per share as
shown on the Consolidated Statement of Income in the
Company’s Annual Report adjusted to exclude the following
items:
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(1)
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Charges for Discontinued
Operations;
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(2)
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Charges for Extraordinary items and
any other unusual or non-recurring items of loss or expense,
including restructuring charges;
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(3)
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The
unbudgeted current year impact and the cumulative effect of changes
in Accounting Principles;
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(4)
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Any
one-time charge, or dilution caused by seasonal impact or other
factors, resulting from any acquisition or divestiture;
and
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(5)
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The
effect of changes in Federal corporate Tax Rates.
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Items
(1) through (4) above shall be taken into account as
adjustments to EPS for purposes of calculating the amount of the
Award earned by an Employee only to the extent that they are
separately identified on the Consolidated Statement of Income in
the Company’s Annual Report or separately quantified in the
Notes to the Consolidated Financial Statements in the
Management’s Discussion and Analysis section of the
Company’s Annual Report or in other Company filings with the
Securities and Exchange Commission. Notwithstanding anything
contained herein, the Committee, in its sole discretion, reserves
the right: (i) with respect to any Employee who is, in the
year such Award becomes deductible by the Company, a “covered
employee” within the meaning of Section 162(m)(3) of the
Internal Revenue Code of 1986, as amended, to exclude from the
computation of EPS all or any part of any item of extraordinary,
unusual, non-recurring or special gain or income (but not any item
of loss or expense), whether or not shown separately on the
Consolidated Statement of Income, and whether or not separately
quantified in the Notes to the Consolidated Financial Statements in
the Management’s Discussion
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and Analysis section of the
Company’s Annual Report or in other Company filings with the
Securities and Exchange Commissions, that the Committee considers
appropriate to so exclude, (ii) with respect to any Employee, to
exclude less than all of an item of loss or expense described in
Items (1) through (5) above, and (iii) with respect
to any Employee who is not, in the year such Award becomes
deductible by the Company, a “covered employee” (or who
is a “covered employee” but whose aggregate
compensation, including this Award, is less than $1 million)
within the meaning of Section 162(m)(3) of the Internal
Revenue Code of 1986, as amended, to exclude from the computation
of EPS all or any part of any item of extraordinary, unusual,
non-recurring or special gain, income, loss or expense, whether or
not shown separately on the Consolidated Statement of Income, and
whether or not separately quantified in the Notes to the
Consolidated Financial Statements in the Management’s
Discussion and Analysis section of the Company’s Annual
Report or in other Company filings with the Securities and Exchange
Commissions, that the Committee considers appropriate to so
exclude.
It
is the intention of the Company that the share Award shall satisfy
the requirements for “other performance based
compensation” within the meaning of Section 162(m)(4)(C)
of the Internal Revenue Code of 1986, as amended, and the
Regulations thereunder, except to the extent Section 9 herein
becomes applicable. Such “other performance based
compensation” is deductible by the Company notwithstanding
the provisions of Section 162(m)(1) disallowing deductions for
annual compensation in excess of $1 million paid or accrued to
or for a “covered employee”. In view of the present
lack of clear and definitive legal guidance regarding the
requirements for “other performance based
compensation”, the Company reserves the right, in the event
that any share Award otherwise payable hereunder to a
“covered employee” is ineligible
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for treatment as “other
performance based compensation” and if, but only if, such
ineligibility would result in the loss of tax deductions to the
Company, to defer, in whole or in part, the Employee’s
receipt of such Award under the terms of the following paragraph,
but only with respect to Awards that become payable before a Change
of Control.
Under the
circumstances described in the preceding paragraph, (a) the
Employee will, but only to the extent necessary to avoid a
deduction disallowance to the Company, forfeit all rights to
Restricted Performance Shares covered by this Award and
(b) the Company shall credit to the Employee’s Deferred
Account under The McGraw-Hill Companies, Inc. Key Executive
Short-Term Incentive Deferred Compensation Plan an amount equal to
the fair market value of such forfeited Shares as of the date such
Shares are valued for other Employees. Said amount credited to the
Employee’s Deferred Account, together with interest, shall be
paid in a lump sum on January 15 following the year the
Employee is no longer a “covered employee” within the
meaning of said Section 162(m) of the Internal Revenue Code of
1986, as amended (or if the Employee so requests, at such later
date in accordance with the terms of the Key Executive Short-Term
Incentive Deferred Compensation Plan).
3.
Maturity and Payment Dates . The maturity date of this
Restricted Performance Share award will be December 31 in the
third consecutive year of the cycle includin
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