EXECUTIVE INCENTIVE PLAN

EX-10.11 3 y94488exv10w11.txt EXECUTIVE INCENTIVE PLAN Exhibit 10.11 MASTERCARD INTERNATIONAL INCORPORATED EXECUTIVE INCENTIVE PLAN PLAN DOCUMENT AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 2004 1. PURPOSE The Executive Incentive Plan (the "Plan") is designed to support the strategic commitment to attract, retain and motivate senior executives of MasterCard International Incorporated (the "Company") and Affiliated Employers by providing a long-term incentive opportunity that is based on the Company's and/or Affiliated Employer's achievement of its quantitative and qualitative long-term performance goals. 2. DEFINITIONS For purposes of this Plan, the following terms shall have the meanings set forth below: "Affiliated Employer" shall mean (i) any corporation which is a member of a controlled group of corporations (as defined in Section 414(b) of the Internal Revenue Code (the "Code")), which includes the Company, (ii) any trade or business (whether or not incorporated), which is under common control (as defined in Section 414(c) of the Code) with the Company, (iii) any organization (whether or not incorporated) which is a member of an affiliated services group (as defined in Section 414(m) of the Code) which includes the Company, and (iv) any other entity required to be aggregated with the Company pursuant to regulations under Section 414(o) of the Code. "Board" shall mean the Global Board of Directors. "Cause" shall mean (i) the willful failure by the Participant to substantially perform his duties as an employee of the Employer (other than due to physical or mental illness) after reasonable notice to the Participant of such failure, (ii) the Participant's engaging in serious misconduct that is injurious to the Company or an Affiliated Employer including, but not limited to, damage to its reputation or standing in its industry, (iii) the Participant's having been convicted of, or entered a plea of nolo contendere to a crime that constitutes a felony or (iv) the material breach by the Participant of any written covenant or agreement with the Company or an Affiliated Employer not to disclose any information pertaining to the Company and/or its Affiliated Employers. "Change in Control" means: - -------------------------------------------------------------------------------- Executive Incentive Plan Plan Document (i) if (a) at any time three stockholders have become entitled to cast at least 45 percent of the votes eligible to be cast by all the stockholders of MasterCard Incorporated on any issue, (b) at any time, a plan or agreement is approved by the stockholders of MasterCard Incorporated to sell, transfer, assign, lease or exchange (in one transaction or in a series of transactions) all or substantially all of the Company's or MasterCard Incorporated's assets, (c) at any time, a plan is approved by the stockholders of MasterCard Incorporated for the sale, liquidation or dissolution of the Company or MasterCard Incorporated or (d) at any time MasterCard Incorporated shall cease to be the sole class B member of the Company or otherwise cease to control substantially all voting rights in the Company. The foregoing notwithstanding, a reorganization in which the stockholders of MasterCard Incorporated continue to have all of the ownership rights in the continuing entity shall not in and of itself be deemed a "Change in Control" under (b), (c) and/or (d); (ii) the approval by the stockholders of MasterCard Incorporated of (a) any consolidation or merger of MasterCard Incorporated in which MasterCard Incorporated is not the continuing or surviving corporation or pursuant to which shares of stock of MasterCard Incorporated would be converted into cash, securities or other property, other than a merger in which the holders of the stock immediately prior to the merger will have the same proportionate ownership interest (i.e., still own 100% of total) of common stock of the surviving corporation immediately after the merger; (iii) any "person" (as defined in Section 13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), other than MasterCard Incorporated or a subsidiary or employee benefit plan or trust maintained by MasterCard Incorporated any of its subsidiaries, becoming (together with its "affiliates" and "associates", as defined in Rule 12b-2 under the Exchange Act) the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of more than twenty-five percent (25%) of the stock of MasterCard Incorporated outstanding at the time, without the prior approval of the board of directors of MasterCard Incorporated; or (iv) a majority of the voting directors of MasterCard Incorporated proposed on a slate for election by stockholders of MasterCard Incorporated are rejected by a vote of such stockholders. "Committee" shall mean a committee of the Board designated by the Board to administer the Plan. Unless the Board shall determine otherwise, the Committee shall be the Compensation Committee. "Determination Date" shall have the meaning set forth in Section 5. "Disability" shall mean total and permanent disability in accordance with the Company's or an Affiliated Employer's long-term disability plan. - -------------------------------------------------------------------------------- Executive Incentive Plan Plan Document "Employer" shall mean the Company or an Affiliated Employer that adopts the Plan with the approval of the Board. Appendix A contains a list of each Employer. "Participant" shall mean an eligible employee to whom a Performance Unit award has been granted. "Performance Levels" shall mean, with respect to the Performance Measures (on an aggregate basis), the following degrees of achievement: Below Threshold, Minimum Threshold, Target and Superior. "Performance Measures" shall mean one or more performance goals established by the Committee with respect to each award of Performance Units. "Performance Period" shall mean, with respect to each award of Performance Units, the three-year period beginning on the date such award is granted or such other period as may be established by the Committee at the time of grant. "Performance Unit" shall mean a performance unit award granted under the Plan. "Post-Performance Period" shall have the meaning set forth in Section 7(b). "Retirement" shall mean retirement pursuant to the terms of the MasterCard Accumulation Plan. "Twelve-Month Cycle" shall mean any twelve-month period ending with an anniversary date of the date of a grant of a Performance Unit award that occurs on or before the end of the Vesting Period with respect to that award. "Unit Value" shall be the value of a Performance Unit as determined in accordance with Section 5. "Vesting Period" shall mean, with respect to each grant of Performance Units, the period, as set forth in the certificate or written agreement provided to the Participant with respect to the grant, beginning on the date of grant and ending with the date the award is 100 percent vested. 3. ELIGIBILITY Employees who are designated Senior Vice President or higher are eligible for participation in any Performance Period provided they have achieved the minimum performance evaluation rating required for participation as determined by the Committee and have been designated to the appropriate level by March 31 - -------------------------------------------------------------------------------- Executive Incentive Plan Plan Document of the calendar year. In addition, the Committee and/or the Chief Executive Officer may designate any other employee as eligible to participate in the Plan. 4. PERFORMANCE UNIT AWARDS (a) Subject to the provisions of this Plan, each Performance Unit award shall be determined by the CEO of the Company with approval by the Committee and evidenced by a certificate or written agreement provided to each Participant. Subject to Sections 6 and 7 of the Plan, each Performance Unit grant shall entitle a Participant to receive a cash payment equal to the Unit Value, as adjusted under Section 5(a) below, of such Performance Unit. Unit Value shall be determined in accordance with Section 5. (b) The Committee shall specify the terms and conditions of each award of Performance Units, including the applicable vesting schedule, Performance Period, Performance Measures, Performance Levels, and resulting Unit Value as a consequence of the specified Performance Levels. The Committee may condition the grant of a new award on the surrender of an outstanding award. Any such new award shall be subject to the terms and conditions specified by the Committee at the time the new award is granted, in accordance with the provisions of the Plan and without regard to the terms of the surrendered award. 5. UNIT VALUE (a) Subject to the negative adjustments described in this Section 5(a), the Unit Value of a Performance Unit shall be determined based upon the achievement of Performance Levels as of the Determination Date as follows.

Determinations as to the achievement of Performance Levels shall be made by the Committee in its sole discretion. The values above are meant to be a framework and not an absolute. The Committee will determine the Unit Value based on interpolation in the event that performance between threshold and target or target and superior is achieved. Beginning with awards granted effective on or after January 1, 2004, the Committee may make negative adjustments in order to comply with section 162(m) of the Code, to the Unit Value of all or any subset of the Performance Units - -------------------------------------------------------------------------------- Executive Incentive Plan Plan Document awarded to reflect (i) additional or amended performance measures or criteria, beyond those in the Performance Measures, which additional or amended measures or criteria can be based on a combination of corporate performance targets, and/or performance targets for a business unit, division, department, affiliate, geographic unit, or other unit, or (ii) the impact of a significant event, occurrence, or charge to earnings. (b) The Committee shall determine the Performance Level achieved for a Performance Period and shall determine Unit Value, including any adjustments under Section 5(a) above, during the 60 day period following the Determination Date. Except as otherwise provided by the Committee, the Determination Date shall be the last day of the Performance Period to which a Performance Unit relates; provided that, if a Participant terminates employment prior to the end of the Performance Period, the Determination Date with respect to any Performance Units relating to such Performance Period (provided such Performance Units have not been forfeited pursuant to Section 6 by reason of such termination) shall be deemed to be the last day of employment and the Performance Level achieved with respect to any such Performance Units shall be deemed to be Target. 6. VESTING (a) Each Performance Unit shall vest subject to such terms and conditions as the Committee may, in its sole discretion, determine; provided that, unless otherwise provided by the Committee at the time of award, Performance Units which relate to a three-year Performance Period shall vest in annual increments according to the following schedule if the Participant completes 1,000 hours of service in each Twelve-Month Cycle and is employed on the last day of the respective Twelve-Month Cycle:

(b) Except as otherwise determined by the Committee or as provided below, unvested Performance Units relating to the Twelve-Month Cycle in which a Participant terminates employment, and subsequent Twelve-Month - -------------------------------------------------------------------------------- Executive Incentive Plan Plan Document Cycles during the Vesting Period for the award, shall be forfeited upon termination of employment. (c) Notwithstanding the foregoing, if a Participant ceases to be employed during a Twelve-Month Cycle, but is rehired either during the same Twelve-Month Cycle or during a subsequent Twelve-Month Cycle in the Vesting Period for the same award of Performance Units, the Participant shall be eligible to vest in the Performance Units under that award that relate to the Twelve-Month Cycle of rehiring and subsequent Twelve-Month Cycles if the Participant otherwise meets the terms and conditions specified in the award and completes 1,000 hours of service in and is employed on the last day of the Twelve-Month Cycle; provided, however, that, in order to vest in the Performance Units relating to the final Twelve-Month Cycle in the Vesting Period, the Participant must be employed on the first and last day of that final Twelve-Month Cycle and have completed 1,000 hours of service during that final Twelve-Month Cycle. (d) Notwithstanding the foregoing, upon a Participant's termination of employment due to death or Disability, all of the Participant's Performance Units shall immediately vest and none shall be forfeited. (e) Notwithstanding the foregoing, upon a Participant's termination of employment due to Retirement, all of the Participant's Performance Units (with the exception of any Performance Units granted with no vesting until the end of the Performance Period) shall immediately vest and none shall be forfeited, as long as Participant has at least six months of service in the Performance Period. The Committee shall retain the discretion to allow in particular cases immediate vesting under this Section 6(e) to a Participant holding Performance Units that have no vesting until the end of the Performance Period. (f) Notwithstanding the foregoing, upon a Participant's termination of employment for Cause, all vested but unpaid Performance Units held by the Participant shall be forfeited in full, without any right to payment from the Company. The Committee in its sole discretion shall determine whether a termination was for "Cause". (g) Notwithstanding the foregoing, upon a Participant's voluntary termination other than by reason of Disability, all vested but unpaid Performance Units held by a Participant who violates the noncompetition provisions set forth in Section 7(c) below, shall be forfeited in full. (h) In the event of a Change in Control, as defined in Section 2 above, key executives defined in the MasterCard Change of Control policy or who are parties to a "Change-in-Control" agreement with the Company or an - -------------------------------------------------------------------------------- Executive Incentive Plan Plan Document Affiliated Employer shall be eligible for 100% vesting in all unvested awards. 7. PAYMENT (a) Except as otherwise determined by the Committee at the time of grant of a Performance Unit, or as otherwise elected by the Participant pursuant to Section 7(d) below, within 60 days of the determination of the Unit Value in accordance with Section 5, Participant shall receive a cash payment in respect of each vested Performance Unit equal to such Unit Value for the completed Performance Period. (b) Except as otherwise determined by the Committee at the time of grant of a Performance Unit, or as otherwise elected by the Participant pursuant to Section 7(d) below, (i) if Participant remains employed such that he or she vests in Performance Units for a Twelve-Month Cycle in the portion of the Vesting Period that extends beyond the Performance Period (the "Post-Performance Period") or (ii) if a Participant terminates employment due to death or Disability during the Post-Performance Period, the Participant shall receive, within 60 days of the end of the Vesting Period, or termination, as the case may be, an additional cash payment in respect of each Performance Unit which has not yet been paid pursuant to paragraph (a) above equal to the Unit Value. (c) In the event a Participant voluntarily terminates employment other than by reason of Disability, no payment otherwise due under Section 7(a) or (b) above shall be made before 120 days after such voluntary termination. In the event that, during the 120 days following such voluntary termination, the Participant directly or indirectly engages or invests in any business or activity that is directly or indirectly in competition with any business or activity engaged in by the Company or an Affiliated Employer, including, but not limited to, any credit, charge, chip, or debit card business or processor, the Participant's Performance Units shall not be paid and, pursuant to Section 6(g) above, shall be forfeited in full. For purposes of the preceding sentence, the Participant shall be deemed to be engaged in any business which any person for whom he shall perform services is engaged. Notwithstanding the foregoing, nothing herein shall prohibit the Participant from having a beneficial ownership interest of less than 3% of the outstanding amount of any class of securities of any enterprise (but without otherwise participating in the activities of such enterprise) if such securities are listed on a national securities exchange or quoted on an inter-dealer quotation system. The Participant shall not be treated as engaged or invested in any business in competition with that of the Company or an Affiliated Employer if the Participant performs services or engages in business or activities for a MasterCard member, provided that the - -------------------------------------------------------------------------------- Executive Incentive Plan Plan Document MasterCard member is not a party to a brand dedication agreement with VISA USA, VISA International, American Express, JCB, Discover, Diners Club, Carte Blanche or any other competitor of the Company or an Affiliated Employer, the term of which is two years or more. In the event that, during the 120 days following such voluntary termination, the Participant does not engage in or invest in any such competitive business or activity, and certifies to that effect on forms provided by the Company, the Participant's Performance Units shall be paid. (d) Payments of Performance Units under Sections 7(a) and 7(b) above are eligible for deferral under the terms and conditions of the MasterCard International Incorporated Deferral Plan, as amended from time to time. In the event a Participant who has made a Deferred Performance Units Election under the MasterCard International Incorporated Deferral Plan voluntarily terminates employment, Sections 6(g) and 7(c) will apply to those payments that, in the absence of the Deferred Performance Units Election, would have been paid in the 120 days following termination. 8. TERM The Plan shall be effective as of January 1999. Amendments to the Plan generally shall be effective on their adoption. Section 6(g) and Section 7(c), as added to the Plan effective July 9, 2001, shall apply to Performance Units awarded beginning January 1, 2002. The amendments to the Plan made effective as of December 12, 2001, shall apply to all Performance Units awarded in 2001 as well as to Performance Units awarded thereafter. 9. ADMINISTRATION (a) The Committee shall determine, in its sole discretion, any question arising in connection with the interpretation or application of the provisions of the Plan and its decisions or actions in respect thereof shall be conclusive and binding upon any and all Participants and their beneficiaries, successors and assigns, and all other persons. All resolutions or actions taken by the Committee shall be by affirmative vote or action of a majority of the members of the Committee. (b) The Committee may delegate to one or more officers or managers of the Company, or to a committee of such officers or managers, the authority, subject to such terms and limitations as the Committee shall determine, to take any actions the Committee has the authority to take under the Plan. (c) Members of the Committee or its delegates shall be fully protected in relying in good faith upon the advice of counsel and shall incur no liability with respect to the Plan except for their own gross negligence or willful - -------------------------------------------------------------------------------- Executive Incentive Plan Plan Document misconduct in the performance of their duties. The Company shall defend, indemnify and hold harmless each member of the Committee or its delegates against any and all claims, liabilities and costs (including attorney fees) arising in connection with their administration of the Plan except for such member's own gross negligence or willful misconduct. 10. GENERAL PROVISIONS (a) Nothing in this Plan or in any instrument executed pursuant hereto shall confer upon any person any right to continue in the employment or other service of the Company or an Affiliated Employer, or shall affect the right of the Company or an Affiliated Employer to terminate the employment or other service of any person at any time with or without cause. (b) The grant of Performance Units shall not confer upon a Participant any of the rights of a stockholder of the Company or an Affiliated Employer, and no shares of stock shall be issued pursuant to Performance Units. The rights of a Participant under the Plan shall be no greater than the rights of a general unsecured creditor of the Company or Affiliated Employer. (c) In the event a Participant is employed or resides in a country with laws that prescribe certain requirements for long-term incentives to qualify for advantageous tax treatment, the Committee may at its discretion modify the terms of an award to be made under the Plan and procure assumption of any of the Company's obligations hereunder by an affiliate company, in a manner consistent or inconsistent with the terms of the Plan, for the purpose of qualifying the award under such laws of such country; provided, however, that to the extent possible, the overall terms and conditions of such an award should not be made more favorable to the recipient than would be permitted if the award had been granted under this Plan as herein set forth. (d) Participants shall be solely responsible for the payment of any taxes due in connection with the Plan; provided, however, that the Company shall make such provisions as it may deem appropriate for the withholding of any taxes which the Company determines it or an Affiliated Employer is required to withhold in connection with any award under the Plan. (e) By accepting any benefits under the Plan, each Participant, and each person claiming under or through him, shall be conclusively deemed to have indicated his acceptance and ratification of, and consent to, all provisions of the Plan and any action or decision under the Plan by the Company, an Affiliated Employer, their agents and employees, and the Committee. - -------------------------------------------------------------------------------- Executive Incentive Plan Plan Document (f) The validity, construction, interpretation and administration of the Plan and any awards under the Plan and of any determinations or decisions made thereunder, and the rights of all persons having or claiming to have any interest herein or thereunder, shall be governed by, and determined exclusively in accordance with, the laws of New York (determined without regard to its conflict of laws provisions). (g) This Plan shall be binding upon and inure to the benefit of the Company, its affiliated companies and their successors or assigns, and all Participants and their beneficiaries, successors, and assigns and all other persons claiming under or through any of them. (h) The value of Performance Unit awards shall not be treated as compensation and/or salary for purposes of calculating a Participant's benefits under any of the Company's or an Affiliated Employer's other benefit plans, policies or programs. (i) The use of the masculine gender shall also include within its meaning the feminine. The use of the singular shall include within its meaning the plural and vice versa. 11. AMENDMENT AND TERMINATION This Plan may be amended or terminated by the Board or the Committee at any time, for any reason and in any respect; provided, however, that no such amendment or termination of this Plan shall affect adversely any award of Performance Units theretofore granted without the written consent of the holder thereof. Notwithstanding the foregoing: (a) The methodology for determining Performance Units and Unit Value may be changed, on a prospective basis, at any time. (b) Upon termination of the Plan, the Board or the Committee may provide for the immediate termination of all outstanding Performance Units in exchange for a cash payment equal to the then value of the Performance Units that are outstanding and vested (pursuant to Section 6) at the time of termination. The Board or the Committee also may terminate the Plan and adopt a successor plan or may amend the Plan, and give participants equivalent value in the successor plan or the amended plan for their vested Performance Units in the Plan and equivalent credit in the successor plan or the amended plan for unvested outstanding Performance Units in the Plan. - -------------------------------------------------------------------------------- Executive Incentive Plan Plan Document APPENDIX A EMPLOYERS MasterCard International, Incorporated. MasterCard International, LLC - -------------------------------------------------------------------------------- Executive Incentive Plan Plan Document