UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): December 31, 2008
Willis Group Holdings Limited
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(Exact Name of Registrant as Specified in Its Charter)
Bermuda
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(State or Other Jurisdiction of Incorporation)
001-16503 98-0352587
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(Commission File Number) (IRS Employer Identification No.)
c/o Willis Group Limited
51 Lime Street
London EC3M 7DQ, England
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(Address of Principal Executive Offices)
(44) (20) 7488-8111
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(Registrant's Telephone Number, Including Area Code)
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 5.02 Compensatory Arrangements of Certain Officers.
On December 31, 2008, Willis Group Holdings Limited (the "Company") entered into
the First Amendment to the Fourth Amended and Restated Employment Agreement,
between the Company, Willis North America Inc., and Joseph J. Plumeri (the
"Amendment").
The Amendment makes a number of changes to (i) make Mr Plumeri's employment
agreement compliant with IRS Code Section 409A regarding the taxation of
deferred compensation; (ii) clarify that the Company will gross-up the actual
amount of tax paid on certain benefits that the Company has already agreed to
gross-up, and (iii) clarify that the payment of certain benefits due "promptly"
after a termination will be within 30 days.
The Amendment also updates the performance targets and conditions applicable to
the option to purchase the Company's shares granted, in accordance with the
Fourth Amended and Restated Employment Agreement, to Mr. Plumeri on May 6, 2008
(the "Option") under the Willis Group Holdings Limited 2001 Share Purchase and
Option Plan (the "2001 Plan") following the acquisition of Hilb Rogal & Hobbs
Company ("HRH") which was completed on October 1, 2008, to match those
performance targets previously approved by the Compensation Committee of the
Board of Directors for all other 2008 option grants. As provided in the 2001
Plan, the Compensation Committee of the Board of Directors may make adjustments
to the targets originally set to take into account, among other things,
extraordinary transactions and mergers.
On June 8, 2008, the Company updated its financial targets for 2009 and 2010,
subject to the completion of its acquisition of HRH, to Adjusted EPS of $3.15 to
$3.25 and Adjusted Operating Margin of 24% for 2009, and Adjusted EPS of $4.05
to $4.15 and Adjusted Operating Margin of 27% for 2010. Following the closing of
the transaction, on October 21, 2008 the Compensation Committee of the Board of
Directors of the Company voted to approve and adopt these performance targets
for 2009 and 2010 as the performance targets contained in the option grants made
on May 6, 2008, to its senior executive officers under the Willis Group Holdings
Limited 2008 Share Purchase and Option Plan.
The Compensation Committee of the Board of Directors of the Company voted on
December 29, 2008 to similarly approve and adopt these performance targets for
2009 and 2010 as the performance targets contained in the Option granted to Mr.
Plumeri. Because the transaction closed earlier than expected, rather than
adjusting the targets for 2008 the Compensation Committee agreed that the
financial targets should stay the same but be based on results for the Company
exclusive of HRH.
A copy of the First Amendment to the Fourth Amended and Restated Employment
Agreement is attached hereto and is incorporated by reference.
This discussion includes references to non-GAAP financial measures as defined in
Regulation G of SEC rules. We present such non-GAAP financial measures, as we
believe such information is of interest to the investment community because it
provides additional meaningful methods of evaluating certain aspects of the
Company's operating performance from period to period on a basis that may not be
otherwise apparent on a GAAP basis. These financial measures should be viewed in
addition to, not in lieu of, the Company's condensed consolidated financial
statements.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
10.1 First Amendment dated December 31, 2008 to the Fourth Amended and
Restated Employment Agreement between Willis Group Holdings
Limited, Willis North America Inc., and Joseph J. Plumeri.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
WILLIS GROUP HOLDINGS LIMITED
Date: January 5, 2009 By: /s/ Adam G. Ciongoli
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Name: Adam G. Ciongoli
Title: General Counsel
EXHIBIT INDEX
Exhibit No. Description
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10.1 First Amendment dated December 31, 2008 to the Fourth Amended and
Restated Employment Agreement between Willis Group Holdings
Limited, Willis North America Inc., and Joseph J. Plumeri.
Exhibit 10.1
FIRST AMENDMENT
TO
THE FOURTH AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This FIRST AMENDMENT (this "Amendment") is dated as the 31st day of
December, 2008, by and between WILLIS GROUP HOLDINGS LIMITED, a company
established under the laws of Bermuda ("Willis Holdings"), WILLIS NORTH AMERICA
INC. (collectively with Willis Holdings, "Employer") and JOSEPH J. PLUMERI
("Executive").
WHEREAS, Executive has been employed by Employer pursuant to the terms of
the Fourth Amended and Restated Employment Agreement, dated as of February 29,
2008 (the "Employment Agreement"); and
WHEREAS, the parties desire to amend the Employment Agreement to further
comply with, or be exempt from, Internal Revenue Code Section 409A and the
regulations and guidance promulgated thereunder to the extent applicable
(collectively "Section 409A"); and
WHEREAS, on October 21, 2008 the Compensation Committee of Willis Holdings
revised the performance targets for the stock options granted to all other
senior Associates under the Willis Partners Plan grant of May 6, 2008 in light
of the acquisition of Hilb Rogal & Hobbs Company ("HRH") and seek to treat
Executive the same in the grants issued pursuant to the requirements of the
Employment Agreement; and
WHEREAS, the parties desire to make certain changes to the Employment
Agreement as set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein and for other valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. Section 3(d)(i)(x) of the Employment Agreement is hereby amended by changing
"promptly" to "within thirty (30) days" where the former appears in such
Section.
2. The first sentence in Section 4(b) of the Employment Agreement is hereby
amended by changing "highest marginal rates" and "highest effective rates" to
"actual tax rates" and "actual tax rates" respectively where the former appear
in such Section.
3. The first sentence of Section 7(l)(i) of the Employment Agreement is hereby
amended by adding the phrase "or be exempt therefrom" in between the words
"thereunder" and "and" where they appear in such sentence.
4. Section 7(l)(ii) of the Employment Agreement is hereby amended by (i) adding
the phrase "subject to Section 409A" in between the words "benefits" and "upon"
where they appear in the first sentence of such Section and (ii) deleting the
phrase "or the provision of any benefit that is specified herein as subject to
this Section or is otherwise" where it appears in the second sentence of such
Section, and "or benefit" where it appears later in the same sentence.
5. The first sentence of Section 7(l)(iii) of the Employment Agreement is hereby
amended by (i) adding the phrase "or otherwise" in between the words "hereof"
and "that" where they appear in such sentence, and (ii) deleting the phrase "or
pays such related tax" where it appears in such sentence.
6. Section 7(l)(v)(x) of the Employment Agreement is hereby amended by changing
all the references to "excise" to "additional" where the former appears in such
Section.
7. Section 7(l)(v)(y) of the Employment Agreement is hereby amended by (i)
changing the word "must" to "shall" where the former appears in the third
sentence of such Section; (ii) deleting the phrase "within the ten (10) business
days immediately following the date that the amount of such excess is finally
determined" where such phrase appears in the third sentence of such Section; and
(iii) adding the phrase "but in all events within the time period specified in
(iii) above" at the end of the last sentence of such Section.
8. The fourth sentence in Exhibit A of the Employment Agreement is hereby
amended by adding the phrase "and the last sentence of this paragraph, and shall
be distributed at the earlier of the annual meeting in 2011 or when Executive
incurs "a separation from service" as defined in Section 409A" at the end
thereof.
9. Exhibit B attached to the Employment Agreement is hereby replaced in its
entirety by the Exhibit B attached hereto which sets forth the revised
performance targets for the stock options granted under the Employment
Agreement.
10. By signing below, Executive reaffirms Executive's agreement to abide by the
terms and conditions the Employment Agreement (subject to the terms of this
Amendment).
11. The Recitals set forth above constitute operative provisions hereof and are
deemed incorporated in the operative text of this Amendment.
12. Except as expressly amended and modified by this Amendment, the Employment
Agreement shall remain in full force and effect.
13. If there is any conflict between the terms of the Employment Agreement and
this Amendment, the terms of this Amendment shall prevail.
14. Employer shall promptly pay Executive's reasonable legal and financial
advisory fees incurred in connection with entering into this Amendment and
shall, to the extent such amounts would be taxable to Executive, fully gross up
such payments so that Executive shall have no net after-tax cost in respect of
such payments. Any reimbursement hereunder that is treated as taxable income
shall be paid to Executive promptly and in accordance with Section 7(l)(iii) of
the Employment Agreement.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment as
of the date first above written.
WILLIS NORTH AMERICA, INC.
By: _________________________________
Name: _________________________________
Title: _________________________________
AND, signed as a Deed and delivered
By WILLIS GROUP HOLDINGS LIMITED ) ________________________________
) Director
)
________________________________
Director/Secretary
EXECUTIVE:
_________________________________
Joseph J. Plumeri
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EXHIBIT B
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Stock Option Grant
Given that the shareholders of the Company approved a new equity plan at
the 2008 annual general shareholder's meeting, and that the Executive as
provided in his then-effective contract, was promptly thereafter awarded
1,700,000 options at the fair market value on the date of grant, such grant
shall be subject to earning and vesting, as follows:
1. Earning of 1,200,000 based on earnings per share and operating budgets
for calendar 2008, 2009 and 2010 with a catch-up in 2010 for nonvesting in 2008
and 2009, as follows:
(x)
EPS At least Options Earned
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2008 $2.85 200,000
2009 $3.15 200,000
2010 $4.05 200,000 plus any unearned options from
2008 or 2009
(y)
Operating Margin Target Options Earned
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2008 24.0% 200,000
2009 24.0% 200,000
2010 27.0% 200,000 plus any unearned options from
2008 or 2009
(z)
Kicker Target Options Earned
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2010 EPS Exceed 250,000
$4.15
Annual Average At least 250,000
TSR from 2008-2010 S&P 500 & 1.5%
The targets for 2008 shall be based on Willis Holdings only results, ignoring
the effects of Hilb Rogal & Hobbs Company which was acquired by the Willis
Holdings on October 1, 2008.
The Compensation Committee will have discretion to treat the kicker options as
earned if targets are not met for reasons beyond Executive's control. To be
considered in good faith by the Compensation Committee and Board.
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2. Options shall have at least a 7-year term (or such longer term as
provided in grants to other executives at or about the time of grant) with two
years (not to go beyond the original term) to exercise after later of (A) the
end of the relevant performance period, if applicable, and (B) death, Disability
Termination, Termination without Cause or Termination for Good Reason, any
termination on or after annual meeting in 2011 or Mutual Retirement. If employed
at the time of the annual meeting in 2011, the earned options will be
exercisable from that date forward. If not so employed because of any of the
foregoing events, options will be exercisable from the dates provided in the
prior sentence. If termination is for Cause or without Good Reason (and, in both
cases, not either after the annual meeting in 2011 or as a result of Mutual
Retirement), the options shall be forfeited upon such termination.
3. In the event of termination as a result of death, Disability
Termination, Termination without Cause, Termination for Good Reason, any
employment condition is waived but performance criteria remain for Options not
then earned.
4. In the event of a Mutual Retirement, the employment condition is waived
with respect to Options theretofore earned.
5. In the event of a Change in Control of the Company before the end of
2010 (if Executive is then employed by the Company or his employment had
terminated prior thereto on a basis covered by paragraph 3 above), all
performance criteria are deemed satisfied, but, if then employed, the employment
obligation remains until the annual meeting in 2011 or an earlier Termination
without Cause, Termination for Good Reason, Mutual Retirement, death or
incurring of a Disability Termination; also fully vests and the Options become
immediately exercisable if a Good Reason event occurs after a Change in Control
and Executive agrees to waive it.
6. All criteria will be adjusted for change in GAAP, mergers, acquisitions,
dispositions, material change in actual stock repurchases as compared to
budgeted repurchases for purposes of calculating the projected EPS or other
material corporate event, as determined in good faith by the Compensation
Committee.
7. There will be no forfeiture provisions (other than above forfeiture for
nonvesting) and no post-employment restrictions in grant.
8. Forms of grants will be agreed by Company and Executive in good faith.
9. All terms shall have the same meaning as in the Employment Agreement.
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