Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On
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The key updates to the 2022 Incentive Programs and the amendments to the Severance Plans are summarized below.
Short-Term Incentive Program
Under the 2022 STI Program, executive officers will continue to receive an annual target award expressed as a percentage of such person's base salary. The awards will be weighted 66.7% upon enterprise financial performance and 33.3% upon individual performance. The enterprise financial performance component will be based half on adjusted net revenue and half on adjusted operating income, while the individual performance component will be based half on a qualitative assessment tied to applicable segment, geography or function financial performance, and half on individual objectives and contributions to shared key enterprise operational initiatives, including inclusion and diversity, colleague engagement, transformation and innovation.
Payouts under the 2022 STI Program will be measured based upon the achievement of adjusted net revenue and adjusted operating income targets aligned with the Company's annual budget, which will range from 50% of target for threshold performance to 200% of target for maximum performance. The attainment levels for the enterprise financial performance component will continue to be determined based on the same metrics and the resulting performance percent will be the same percentage of target that the broad-based bonus pool for employees is funded.
The Compensation Committee retains discretion on the overall 2022 STI Program payout for executive officers based on their assessment of Company performance and the broad-based employee short-term incentive enterprise funding.
Long-Term Incentive Program
For the 2022 LTI Program, the Compensation Committee has introduced time-based restricted share units ("RSUs"), which will be awarded to executive officers along with performance-based restricted share units ("PSUs") to support retention as the Company executes the Grow, Simplify, Transform strategy and further align the Company's LTI Program with common market practice. Accordingly, under the 2022 LTI Program, in order to align share-based awards with the Company's three-year performance targets, the equity awards to executive officers are comprised of 75% PSUs that cliff vest at the end of the three-year performance period, subject to the satisfaction of the applicable
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performance goals under the award agreement, and 25% RSUs that vest in equal installments over three years. The PSUs granted under the 2022 LTI Program will vest based on performance relative to the achievement of growth targets at the end of fiscal year 2024, which will be based 50% on adjusted operating margin, 30% on adjusted net revenue and 20% on adjusted earnings per share metrics, consistent with the Company's three-year financial targets, as outlined in the Company's 2021 Investor Day presentation. Both PSUs and RSUs will accrue dividends that will be paid only on vested shares. This LTI design will be the same for the broad-based 2022 LTI Program.
The Forms of 2022 LTI award agreements for the executive officers are attached hereto as Exhibit 10.1 and Exhibit 10.2.
Severance Plans
The Severance Plans provide for the payment of severance benefits if a
participant's employment is involuntarily terminated without "cause" (and other
than due to the participant's death or permanent disability) (an "Involuntary
Termination") and also if a participant resigns for "good reason" in connection
with a "change in control" (an Involuntary Termination or resignation for good
reason in connection with a change in control, a "Qualifying Termination"). The
amendments to the
Certain other clarifying changes were also made to the Severance Plans relating to eligibility, updated Company policies, the Company continuing on a standalone basis and also to require that participants in the Severance Plans execute and deliver a general release of liability in favor of Company.
The foregoing descriptions of the Severance Plans provide a summary of updated
terms and are subject to and qualified in their entirety by the terms of the
full text of the
Payment of 2021 STI Award to Mr.
The Company previously reported that the Committee approved, and Board ratified,
the payment of a 2021 STI award to
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Item 9.01 Financial Statements and Exhibits
(d) Exhibits Exhibit No. Description 10.1 Form of 2022 Executive Officer LTI Award Agreement (RSUs). 10.2 Form of 2022 Executive Officer LTI Award Agreement (PSUs). 10.3Willis Towers Watson Severance and Change in Control Pay Plan forU.S. Executives, dated as ofFebruary 22, 2022 . 10.4Willis Towers Watson Severance and Change in Control Pay Plan for Non-U.S. Executives, dated as ofFebruary 22, 2022 . 104 Cover Page Interactive File (the cover page tags are embedded within the Inline XBRL document)
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