Exhibit 10.7
Watson Wyatt &
Company
Performance Share Bonus Incentive
Program
Summary
The Performance Share Bonus Incentive Program
(the Program) is a long-term bonus program for senior executives,
designed to strengthen incentives and align behaviors to grow the
business in a way that is consistent with the strategic goals of
the Company. Incentives are provided through grants of
deferred stock units tied to a 3-year performance period with
vesting contingent upon meeting certain Company goal
thresholds. This bonus program does not replace the Fiscal
Year End Bonus (FYEB).
Eligibility
Associates of Watson Wyatt & Company and its
Affiliates will be eligible for nomination to participate in the
Program. Eligible participants will be nominated and approved
by the Compensation Committee of the Board (the Committee).
Generally, associates eligible for nomination will be high
performing, senior-level executives that have direct impact or
responsibility for driving strategy throughout the
organization.
Performance Period
The performance period is a 3 year period that
begins on July 1, 20xx and ends on June 30, 20xx+3. For
example, the performance period that begins on July 1, 2004 will
end on June 30, 2007. Baseline metrics are established at the
beginning of the performance period. At the end of the
performance period, performance metrics will then be
measured. The Company will follow its standard process for
financial reporting following the close of the fiscal year.
Once Company financial results are finalized (August following end
of fiscal year) the final performance metric results for the most
recent performance period can be determined.
Grants
Grants of stock (performance shares) are made
under the 2001 Deferred Stock Unit Plan for Selected
Employees . Grants are based on the value of the cash
portion of the Fiscal Year End Bonus target. A multiplier,
which varies by participation tier, is then applied to that value
to determine the cash value of the performance shares. The
cash value is then converted to a number of shares of stock based
on the stock market closing price on the last day of the fiscal
year prior to the grant. For calculation purposes, band and
salary
1
