UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-12
Willis Group Holdings Limited
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1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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1
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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2
WILLIS GROUP HOLDINGS LIMITED
Notice of 2003 Annual General Meeting of Shareholders
and Proxy Statement
Willis
March 24, 2003
To: Shareholders of the Company
Dear Shareholder,
You are invited to attend our annual general meeting of shareholders at 9:00
a.m. on Friday, May 9, 2003 in the Majestic Ballroom, The Westin at Times
Square, 270 West 43rd, Street, New York, New York 10036.
In addition to the matters described in the attached proxy statement, I will
report on our current activities. You will have an opportunity to ask
questions and to meet your directors and executive officers.
Your representation and vote are important and your shares should be voted
whether or not you plan to come to the annual general meeting. Please
complete, sign, date and return the enclosed proxy card promptly.
I look forward to seeing you at the meeting.
Yours sincerely,
/s/ Joseph J. Plumeri,
------------------------------------
Joseph J. Plumeri,
Chairman and Chief Executive Officer
Willis Group Holdings Limited
Cedar House
41 Cedar Avenue
Hamilton HM 12
Bermuda.
WILLIS GROUP HOLDINGS LIMITED
NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS
AND
PROXY STATEMENT
Time:
9:00 a.m. New York Time.
Date:
May 9, 2003.
Place:
Majestic Ballroom,
The Westin at Times Square,
270 West 43rd Street,
New York, New York 10036.
Purpose:
o Adoption of the Financial Statements for the year ended December 31,
2002 and Auditors' Report thereon.
o Reappointment of Deloitte & Touche as auditors until the close of the
next Annual General Meeting of Shareholders and authorization of the
Board of Directors to fix the auditors' remuneration.
o Election of Directors until the close of the next Annual General Meeting
of Shareholders.
o Approval of an Amendment to the Company's 2001 Share Purchase and
Option Plan.
Only shareholders of record on March 20, 2003 may vote at the meeting. This
statement is being mailed to shareholders on or about March 24, 2003 with a
copy of the Company's 2002 Annual Report, which includes financial statements
for the year ended December 31, 2002.
Your vote is important. Please follow the instructions on the proxy card you
receive. The proxy card should be returned in accordance with the instructions
thereon.
Michael P. Chitty,
Secretary
March 24, 2003.
Willis Group Holdings Limited,
Cedar House,
41 Cedar Avenue,
Hamilton HM 12,
Bermuda.
GENERAL INFORMATION
Who may vote Solicitation
Holders of our common shares, as In addition to this mailing, our
recorded in our share register on employees may solicit proxies
March 20, 2003, may vote at the personally, electronically or by
meeting. As of that date, there were telephone. We pay the costs of
151,394,898 shares of common stock soliciting this proxy. We also
outstanding and entitled to one vote reimburse brokers and other nominees
per share. A list of shareholders for their expenses in sending these
will be available for inspection for materials to you and getting your
at least ten days prior to the voting instructions.
meeting at our offices at 7 Hanover
Square, New York, New York. Revoking a proxy
You may revoke your proxy before it
How to vote is voted by submitting a new proxy
You may vote in person at the meeting with a later date; by voting in person
or by proxy. We recommend that you at the meeting; or by notifying the
vote by proxy even if you expect to Company's Corporate Secretary.
attend the meeting. You will be able
to change your vote at the meeting. Quorum
In order to carry on the business of
Please refer to your proxy card or the meeting, we must have a quorum.
the information forwarded by your Under our bye-laws, shareholders
bank, broker or other holder of representing at least 50% of our issued
record to see how you should complete and outstanding shares of common stock
your proxy card and deliver it to the present in person or by proxy and
Company. entitled to vote constitute a quorum.
How proxies work Only shareholders, their proxy holders
The Company's Board of Directors is and the Company's guests may attend
asking for your proxy. Giving us your the meeting. Verification of ownership
proxy means you authorize us to vote may be required at the admissions desk.
your shares at the meeting, or at any If your shares are held in the name of
adjournment thereof, in the manner your broker, bank or other nominee, you
you direct. You may vote for or must bring with you to the meeting an
against the proposals or abstain from account statement or letter from the
voting. You may also vote for all, nominee indicating that you are the
some, or none of the directors beneficial owner of the shares on March
seeking election. 20, 2003, the record date for voting.
If you sign and return the enclosed Votes needed
proxy card but do not specify how to All matters to be acted on at the
vote, we will vote your shares in meeting require the affirmative vote of
favor of all items herein to be voted a simple majority of the votes cast at
on. a meeting at which a quorum is present.
A broker non-vote is a proxy submitted
As of the date hereof, we do not know by a broker in which the broker fails
of any other business that will be to vote on behalf of a client on a
presented at the meeting. If other particular matter for lack of
business shall properly come before instruction when such instruction is
the meeting or any adjournment or required by the New York Stock
postponement thereof, the person or Exchange. Broker non-votes will be
persons named in the proxy will vote counted for purposes of determining the
according to their best judgment. presence of a quorum for the
transaction of business.
5
ITEM 1
ADOPTION OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED
DECEMBER 31, 2002 AND AUDITORS' REPORT THEREON
We are required under Bermuda law to present for adoption at our Annual
General Meeting of Shareholders the Company's financial statements for the
preceding financial year together with the auditors' report thereon.
The Company's financial statements and auditors' report for the year ending
December 31, 2002 were mailed to shareholders with this proxy statement. The
financial statements also include a report on the Company's activities.
Your Board recommends you vote FOR this item.
6
ITEM 2
REAPPOINTMENT OF DELOITTE & TOUCHE
AS INDEPENDENT AUDITORS
The Company's Board of Directors, upon the recommendation of its Audit
Committee, selected Deloitte & Touche, independent auditors, to audit the
financial statements of the Company for the fiscal year ending December 31,
2003. Deloitte & Touche acted as the Company's independent auditors for the
year ended December 31, 2002. Representatives of Deloitte & Touche will attend
the meeting, will have an opportunity to make a statement if they desire to do
so and will be available to answer any pertinent questions.
A simple majority of the Company's shares of common stock present or
represented and entitled to vote at the meeting is required to ratify the
appointment of Deloitte & Touche and refer the issue of the auditors'
remuneration for the 2003 audit to the Board of Directors.
Your Board recommends you vote FOR this proposal.
Audit fees
The aggregate fees for professional services rendered by Deloitte & Touche and
their respective affiliates (collectively, "Deloitte") for the audit of the
Company's annual financial statements for the fiscal year ended December 31,
2002 and for the reviews of the financial statements included in the Company's
Quarterly Reports for that fiscal year were approximately $1,947,000.
Financial Information Systems Design and Implementation Fees
There were no fees for professional services rendered by Deloitte for
information technology services relating to financial information systems
design and implementation for the fiscal year ended December 31, 2002.
All other fees
The aggregate fees for services rendered by Deloitte to the Company, other
than the services described above under "Audit Fees" and "Financial
Information Systems Design and Implementation Fees" for the fiscal year ended
December 31, 2002 were approximately $1,135,000. This included approximately
$305,000 for tax advisory services, $185,000 for services relating to the
Company's secondary public offering, $225,000 for accounting advice related to
US GAAP interpretation, $100,000 for due diligence work in connection with an
acquisition and $185,000 for regulatory consulting services in respect of the
pension review activities of a subsidiary in the United Kingdom.
7
AUDIT COMMITTEE REPORT
The primary function of the Audit Committee is to assist the Board of
Directors in its oversight of the Company's financial reporting process. The
Committee operates pursuant to a Charter, which was revised and adopted in
February 2003, a copy of which is attached to this Proxy Statement as Appendix
A. Executive management is responsible for the Company's financial statements
and overall reporting process, including the system of internal controls. The
independent auditors are responsible for conducting annual audits and
quarterly reviews of the Company's financial statements and expressing an
opinion as to the conformity of the annual financial statements with generally
accepted accounting principles.
In the performance of its oversight function, the Committee has reviewed and
discussed the audited financial statements as of and for the year ended
December 31, 2002 with management and the independent auditors. The Committee
has also discussed with the independent auditors the matters required to be
discussed by the Statement on Auditing Standards No. 6l, Communication with
Audit Committees. Finally, the Committee has received the written disclosures
and the letter from the independent auditors required by Independence
Standards Board Standard No. l, Independence Discussions with Audit
Committees, has considered whether the provision of non-audit services by the
independent auditors to the Company is compatible with maintaining the
auditors' independence and has discussed with the auditors the auditors'
independence.
It is not the duty or responsibility of the Committee to conduct auditing or
accounting reviews or procedures. In performing their oversight
responsibility, members of the Committee rely without independent verification
on the information provided to them and on the representations made by
management and the independent auditors. Accordingly, the Committee's
oversight does not provide an independent basis to determine that management
has maintained appropriate accounting and financial reporting principles or
appropriate internal controls and procedures designed to assure compliance
with accounting standards and applicable laws and regulations. Furthermore,
the Committee's considerations and discussions do not assure that the audit of
the Company's financial statements has been carried out in accordance with
generally accepted auditing standards or that the financial statements are
presented in accordance with generally accepted accounting principles.
Based upon the review discussions described in this report, and subject to the
limitations on the role and responsibilities of the Committee referred to
above and in the Audit Committee Charter, the Committee recommended to the
Board that Deloitte & Touche be retained to audit the financial statements of
the Company for the fiscal year ending December 31, 2003 and that the audited
financial statements referred to above be submitted for approval by
shareholders and included in the Company's Annual Report on Form 10-K for the
year ended December 31, 2002 to be filed with the Securities and Exchange
Commission.
Audit Committee:
Douglas B. Roberts, Chair Perry Golkin
James R. Fisher Paul M. Hazen
Todd A. Fisher Scott C. Nuttall
9
ITEM 3
ELECTION OF DIRECTORS
Under the Company's bye-laws, directors hold office only until the next
following Annual General Meeting of Shareholders unless they are earlier
removed or resign. All the Company's directors, with the exception of Senator
William Bradley and Douglas B. Roberts, who were appointed on September 18,
2002 and February 13, 2003, respectively, were reappointed directors at the
Annual General Meeting held on May 3, 2002.
Your Board recommends you vote FOR each of the following:
Senator William Bradley# Senator Bradley, age 59, is a Managing Director of
Allen & Company LLC. Additionally, he is Chair of the Advisory Board of
McKinsey & Company's Institute for Management of Nonprofits. From 1997 to 1999
he was a Senior Advisor and Vice Chairman of the International Council of JP
Morgan & Co., Inc. During that time he also served as an essayist for CBS
evening news, a visiting professor at Stanford University, Notre Dame
University and the University of Maryland. Senator Bradley served in the U.S.
Senate from 1979 to 1997 representing the state of New Jersey. Prior to
serving in the Senate he was an Olympic gold medalist in 1964 and a
professional basketball player with the New York Knicks from 1967 to 1977.
Senator Bradley holds a BA degree in American History from Princeton
University and a MA degree from Oxford University where he was a Rhodes
Scholar.
James R. Fisher+ Mr. Fisher, age 47, is the managing member and majority owner
of Fisher Capital Corp. L.L.C. From 1986 through March 1997, Mr. Fisher was a
senior executive at American Re Corporation and served most recently as Senior
Vice President and Chief Financial Officer of American Re-Insurance Company
and American Re Corporation, President of American Re Financial Products and
President and Chief Executive Officer of American Re Asset Management. Before
joining American Re, Mr. Fisher was a Senior Accountant at Peat, Marwick,
Mitchell & Co., Chief Financial Officer of The Lawrence Corporation and Senior
Manager/Director of Insurance Industry Services at Price Waterhouse. Mr.
Fisher is also Chairman and Chief Executive Officer of BRW Acquisition, Inc.
and a member of the board of directors, Chairman of the audit committee and a
member of the investment and reinsurance committees of Alea Group Holdings,
A.G.
Todd A. Fisher*+# Mr. Fisher, age 37, has been a member of KKR & Co. L.L.C.
Since January 1, 2001. Mr. Fisher was an executive of Kohlberg Kravis Roberts
& Co. L.P. ("KKR") from June 1993 to December 31, 2000. Mr. Fisher was an
associate at Goldman Sachs & Co. from July 1992 to June 1993. He is also a
member of the board of directors of Accuride Corporation, Layne Christensen
Company, BRW Acquisition, Inc., Alea Group Holdings (Bermuda) Ltd and Rockwood
Specialties, Inc.
Perry Golkin*+# Mr. Golkin, age 49, has been a member of KKR & Co. L.L.C.
Since January l, 1996. Mr. Golkin was a general partner of KKR from 1995 to
January 1996. Prior to 1995, he was an executive of KKR. He is also a member
of the board of directors of BRW Acquisition, Inc., PRIMEDIA, Inc., Alea Group
Holdings (Bermuda) Ltd, Rockwood Specialties, Inc. and Walter Industries, Inc.
9
Paul M. Hazen+# Mr. Hazen, age 61, joined Wells Fargo in 1970 and was named
Chairman on November 2, 1998 and retired in 2001. Mr. Hazen served as Chairman
and Chief Executive Officer from January 1, 1995 to November 2, 1998,
President and Chief Operating Officer from 1984 to 1995 and Vice Chairman from
1981 to 1984. Mr. Hazen is also a director of Safeway Inc., Phelps Dodge
Corporation, E.piphany Inc., Xstrata Plc, KSL Recreation Corporation and is
Chairman of Accel-KKR Company, Deputy Chairman and a director of Vodafone plc
and is President of Intermountain Center for Human Development.
Henry R. Kravis Mr. Kravis, age 59, is a founding partner of KKR and, since
January 1, 1996, has been a managing member of KKR & Co. L.L.C., the limited
liability company which is the general partner of KKR. Mr. Kravis is also a
general partner of KKR Associates, L.P. and a director of Accuride
Corporation, Amphenol Corporation, Borden Chemical, Inc., The Boyds
Collection, Ltd., BRW Acquisition, Inc., KinderCare Learning Centers, Inc.,
KSL Recreation Corporation, PRIMEDIA, Inc., Sotheby's Holdings, Inc.,
Accel-KKR Company and Alliance Imaging.
Scott C. Nuttall+# Mr. Nuttall, age 30, has been an executive of KKR since
November 1996. Mr. Nuttall was an executive at The Blackstone Group from
January 1995 to November 1996. He is also a member of the board of directors
of Alea Group Holdings (Bermuda) Ltd., Amphenol Corporation, BRW Acquisition,
Inc., KinderCare Learning Centers Inc. and Walter Industries, Inc.
Joseph J. Plumeri* Mr. Plumeri, age 59, is our Chairman and Chief Executive
Officer. Before joining the Group, Mr. Plumeri spent 32 years as an executive
with Citigroup Inc. and its predecessors. Of note, Mr. Plumeri oversaw the 450
North American retail branches of Citigroup's Citibank unit. Mr. Plumeri also
served as Chairman and Chief Executive Officer of Citigroup's Primerica
Financial Services from 1995 to 1999. In 1994, Mr. Plumeri was appointed Vice
Chairman of Citigroup's predecessor, Travelers Group Inc., and in 1993 Mr.
Plumeri became the President of a predecessor of Citigroup's Salomon Smith
Barney unit after overseeing the merger of Smith Barney and Shearson and
serving as the President and Managing Partner of Shearson since 1990. He is
also a board member and advisor to many organizations, including The Board of
Visitors of the College of William & Mary, The United Negro College Fund and
The National Center on Addiction and Substance Abuse. He is also a
commissioner of the New Jersey Sports and Exposition Authority.
Douglas B. Roberts+ Mr. Roberts, age 55, is the former Treasurer for the State
of Michigan, a position held since April 2001 and from January 1991 to
November 1998. From January 1999 to March 2001 he was Vice President of the
Business Development and Best Practices at Lockheed Martin IMS. Prior to
January 1991, Mr. Roberts worked in the Michigan Senate as Director, Senate
Fiscal Agency from April 1988 to December 1990 and as Deputy Superintendent of
Public Instruction for the Department of Education. Mr. Roberts holds a
doctorate in Economics from Michigan State University.
George R. Roberts Mr. Roberts, age 59, is a founding partner of KKR and, since
January 1, 1996, has been a managing member of KKR & Co. L.L.C. Mr. Roberts is
also a director of Borden Chemical, Inc., The Boyds Collection, Ltd.,
KinderCare Learning Centers, Inc., KSL Recreation Corporation, Owens-Illinois,
Inc., PRIMEDIA, Inc., Safeway Inc., Accel-KKR Company and Alliance Imaging.
* Member of the Executive Committee.
+ Member of the Audit Committee.
# Member of the Compensation Committee.
10
Directors' Compensation
The directors, other than Mr. Plumeri, do not receive additional compensation
for service in those capacities, other than customary directors' fees that for
the Company is currently $40,000 per annum. Mr. Douglas Roberts also receives
a further director's fee of $40,000 per annum in recognition of his duties as
Chairman of the Audit Committee. Senator Bradley also receives a further
director's fee of $60,000 per annum. The directors are entitled to defer
receipt of their fees under the directors' deferred compensation plan
described below in the section titled "Retirement and other Benefit Plans".
Mr. Plumeri receives no specific compensation for his services as a director
or member of any committee of the Board of Directors.
In connection with Mr. Hazen becoming a non-employee member of the Board of
Directors, he purchased 37,037 of the Company's shares of common stock at the
initial public offering price of $13.50 per share and was granted on June 11,
2001, under the Share Purchase and Option Plan, an
option to purchase 111,111 shares at $13.50 per share. The options are
exercisable from June 2003 until June 2011.
Senator Bradley, in connection with his appointment as a non-employee
director, was granted options over 125,000 common shares of the Company at
$31.70 per share. The options are exercisable from September 2003 to September
2013.
Board Committees and Meetings
The Executive Committee has all the powers of the Board, when it is not in
session, in the management of the business and affairs of the Company except
as otherwise provided in resolutions of the Board and under applicable law.
The Executive Committee held two meetings during 2002.
The Audit Committee assists the Board in fulfilling its oversight
responsibilities with respect to (a) the annual and quarterly financial
information to be provided to shareholders and the Securities and Exchange
Commission; (b) the system of internal controls that management has
established; and (c) the internal and external audit process. In addition, the
Audit Committee provides an avenue for communication between internal audit,
the independent auditors, management and the Board. The Audit Committee held
four meetings during 2002. During 2002, when we were a "foreign private
issuer", our Audit Committee consisted of James R. Fisher, Todd A. Fisher,
Perry Golkin, Paul M. Hazen and Scott C. Nuttall. Though we believe that under
existing NYSE listing standards each of these individuals would qualify as
independent, we are currently re-evaluating the composition of our Audit
Committee in the light of the enhanced standards of independence set forth in
the Sarbanes-Oxley Act and the newly proposed NYSE listing standards. All
members of our reconstituted Audit Committee will meet these enhanced
standards of independence when they become effective. A newly-elected Audit
Committee member, Douglas B. Roberts, has been elected Chairman of the Audit
Committee and will be our independent Audit Committee Financial Expert.
The Compensation Committee determines the compensation of the Company's
Chairman and Chief Executive Officer and other senior executives. In addition,
the Compensation Committee administers the Company's stock-based award plans.
The Compensation Committee held one meeting during 2002.
The Board held five meetings during 2002. All directors, other than Henry R.
Kravis, George R. Roberts, Todd A. Fisher, Perry Golkin and Paul M. Hazen,
attended at least 75% of the meetings of the Board and any committee on which
they served during their period of office.
11
SECURITY OWNERSHIP
Security Ownership of 5% Holders
The following table reflects the number of shares of common stock beneficially
owned by persons known to the Company to own more than 5% of its outstanding
shares:
Name and Address Amount Beneficially Percentage of Stock Outstanding
Owned at December 31, 2002
- ------------------------- --------------------- --------------------------------
KKR 1996 Overseas 59,069,037 39.1%
Limited,(1)
Ugland House,
PO Box 309,
Georgetown, Grand Cayman,
B.W.I.
__________________
(1) Shares are owned of record by Profit Sharing (Overseas), Limited
Partnership. KKR 1996 Overseas Limited, is the general partner of KKR
Associates II (1996), Limited Partnership, which is the general partner
of KKR 1996 Fund (Overseas), Limited Partnership which is the general
partner of Profit Sharing (Overseas), Limited Partnership, which owns
approximately 39.1 % of the Company's issued and outstanding shares.
Messrs. Henry R. Kravis, George R. Roberts, Paul E. Raether, Michael W.
Michelson, James H. Greene, Jr., Edward A. Gilhuly, Perry Golkin, Scott
M. Stuart, Todd A. Fisher, Johannes P. Huth, Alex Navab, Jr. and Neil A.
Richardson as members of KKR 1996 Overseas, Limited, may be deemed to
share beneficial ownership of any shares beneficially owned by KKR 1996
Overseas, Limited but disclaim such beneficial ownership. Scott C.
Nuttall is a director and executive of KKR. Mr. Nuttall is also a limited
partner in KKR Associates II (1996), Limited Partnership. Mr. Nuttall
disclaims beneficial ownership of any of the Company's shares
beneficially owned by KKR and KKR Associates II (1996), Limited
Partnership. The amounts owned by Messrs. Golkin, Fisher and Nuttall
include 34,000, 8,000 and 3,000 shares respectively. The address of each
individual listed above is Kohlberg Kravis Robert & Co. L.P., 9 West 57"
Street, New York, New York 10019.
Security Ownership of Management
The amounts and percentages of our shares beneficially owned are reported on
the basis of regulations of the Securities and Exchange Commission ("SEC")
governing the determination of beneficial ownership of securities. Under the
rules of the SEC, a person is deemed to be a beneficial owner of a security if
that person has or shares voting power, which includes the power to vote or to
direct the voting of that security, or investment power, which includes the
power to dispose of or to direct the disposition of that security. A person is
also deemed to be a beneficial owner of any securities of which that person
has a right to acquire beneficial ownership within 60 days. Under these rules,
more than one person may be deemed to be a beneficial owner of the same
securities and a person may be deemed to be a beneficial owner of securities
as to which that person has no economic interest. In computing the number of
shares beneficially owned by a person and the percentage ownership of that
person, shares of common stock subject to options or restricted shares held by
that person that are currently exercisable or exercisable within 60 days of
the date of this document are deemed issued and outstanding. These shares,
however, are not deemed outstanding for purposes of computing percentage
beneficial ownership of any other person. The percentage of our share capital
is based on 150,988,352 shares of common stock outstanding on March 7, 2003.
A substantial majority of the Company's shares of common stock and options to
purchase shares of common stock, which the executive officers and other senior
officers of the Company currently hold, is subject to contractual restrictions
on sale or other disposition in the discretion of such officer. Mr. Plumeri,
Chairman and Chief Executive Officer, has committed to continue to hold all of
his shares of common stock for as long as he continues to be associated with
the Company. In addition, all executive officers have committed that they will
continue to hold all of their common stock as long as they continue to be part
of the Company's senior management team, except to the extent dictated by
personal financial circumstances after prior consultation with Mr. Plumeri.
12
Number of
Shares Percent
Beneficially Beneficially
Name Owned Owned
- ----------------------------------------- ------------------- -----------------
Henry R. Kravis(1)........................ 59,069,037 39.1%
George R. Roberts(1)...................... 59,069,037 39.1%
Perry Golkin(1)........................... 59,103,037 39.1%
Todd A. Fisher(1)......................... 59,077,037 39.1%
Scott C. Nuttall(1)....................... 59,072,037 39.1%
James R. Fisher(2)........................ 461,232 *
Paul M. Hazen............................. 37,037 *
Senator William Bradley................... - -
Douglas B. Roberts ....................... - -
Joseph J. Plumeri......................... 3,887,095 2.6%
Frederick Arnold.......................... 175,176 *
William P. Bowden, Jr..................... 20,090 *
Richard J.S. Bucknall..................... 487,500 *
Thomas Colraine........................... 329,100 *
Janet Coolick............................. 20,853 *
Patrick Lucas............................. 50,000 *
Stephen G. Maycock........................ 148,874 *
Joseph M. McSweeny........................ 332,944 *
Grahame J. Millwater...................... 155,040 *
John M. Pelly............................. 470,000 *
James A. Ratcliffe........................ 93,360 *
Michael J. Sicard......................... 98,601 *
Sarah J. Turvill.......................... 119,000 *
Mario Vitale.............................. 195,000 *
All our directors and executive officers
(24 persons)(3)......................... 6,664,670 4.4%
__________________
* Less than 1%.
(1) See note(1) in Security Ownership of 5% Holders.
(2) James R. Fisher owns 28,500 of the Company's shares of common stock.
Fisher Capital Corp. L.L.C., is the beneficial owner of exercisable
options to purchase 384,160 of the Company's shares. Mr. Fisher, as the
managing member and majority owner of Fisher Capital Corp. L.L.C.. may be
deemed to share ownership of any shares beneficially owned by Fisher
Capital Corp. L.L.C. but disclaims such beneficial ownership. James R.
Fisher has an interest in 48,572 of the Company's shares as an investor
through KKR Partners (International) Limited Partnership. Mr. Fisher may
be deemed to share beneficial ownership of any shares beneficially owned
by KKR Partners (International) Limited Partnership but disclaims such
beneficial ownership.
(3) This includes 41,957 shares held in trust on behalf of the Company's
executive officers subject to vesting. These shares were issued in
connection with the cancellation of unvested incentive awards owned by
such executive officers prior to the acquisition of a predecessor company
in 1998.
13
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth cash and other compensation paid or accrued for
services rendered in 2002 and 2001 to the Chairman and Chief Executive Officer
and each of the other four most highly compensated executive officers of the
Company.
Name Year Salary Bonus Other Annual Restricted Securities LTIP All Other
($)(1) ($)(2) Compensation Stock Underlying Payouts Compensation
($) Awards Options(#) ($) ($)
($)(2)
__________________________________________________________________________________________________________________
J.J. Plumeri 2002 1,000,000 2,800,000 - - 5,164,222 - 12,768
2001 1,000,000 1,589,750 - 7,742 5,164,222 - 11,780
R.J.S. Bucknall 2002 525,945 786,962 - - 588,050 - 94,144
2001 504,140 725,778 - - 587,893 - 90,241
T. Colraine 2002 375,675 751,390 - - 406,137 - 67,246
2001 342,090 513,409 - - 407,049 - 58,012
J.M. Pelly 2002 360,648 827,143 - - 485,590 - 64,556
2001 342,724 793,698 - - 485,393 - 56,191
M. Vitale 2002 500,000 700,000 - - 250,000 - 10,657
2001 500,000 600,000 - - 250,000 - 8,276
_________________
(1) Messrs Bucknall, Colraine and Pelly receive their salary in pounds sterling
and the above salary figures have been convened into dollars at the
prevailing exchange rates for 2002 and 2001 respectively.
(2) The bonus figures above for 2002 and 2001 exclude the eligible amount
used to receive an award under the Company's Bonus and Stock Plan, which
is a sub-plan of the Company's 2001 Share Purchase and Option Plan. The
Bonus and Stock Plan provides for awards of restricted stock units (the
"Award") which is, except for a UK employee, simply a promise by the
Company to deliver on the third anniversary of the Award, subject to
being in the Company's employment, shares of common stock of the Company
equal to the Award. For a UK employee the Award takes the form of a zero
cost option. The Award is determined in accordance with a formula based
on the eligible bonus and the Company's share price at the time of the
Award. Further, the Company matches the Award with an additional award of
restricted stock units equal to 25% of the Award.
In respect of the year 2001, the eligible bonus of the executive
officers, who participated in the Company's Bonus and Stock Plan, used
for the Award and the Award, which includes the matching element, are Mr.
Plumeri $166,250 and 7,742 restricted stock units; and Mr. Colraine
$119,134 and 5,547 restricted stock units in the form of zero cost
options.
Chairman and Chief Executive Officer's Employment Agreement
On October 15, 2000, the Company entered into a five-year employment agreement
with Joseph J. Plumeri, pursuant to which Mr. Plumeri receives an annual
$1,000,000 base salary, plus a guaranteed $1,000,000 annual bonus
(subsequently waived for 2002 and 2003) and an additional annual discretionary
bonus provided for therein. The agreement also contains certain non-compete
covenants.
In respect of 2001, Mr. Plumeri received a base salary of $1,000,000, plus his
contractually guaranteed $1,000,000 bonus. Mr. Plumeri was awarded an
additional $756,000 discretionary bonus determined by the Board of Directors
for extraordinary performance, after taking into account $244,000 of corporate
costs relating to the Company's private airplane and other travel, lodging and
business entertainment expenses for which Mr. Plumeri wanted to be accountable
as an example of corporate cost consciousness to other officers and employees
of the Company. Out of the $756,000 discretionary bonus payable, Mr. Plumeri
deferred $166,250 into the purchase of 6,194 restricted stock units which the
Company matched with an additional 1,548 units in accordance with the terms
of the Company's Bonus and Stock Plan applicable to other officers and
employees of the Company.
In respect of 2002, Mr. Plumeri received a base salary of $1,000,000, but
waived his contractually guaranteed $1,000,000 bonus to better align his
compensation with the Company's corporate culture of performance-based
remuneration. Mr. Plumeri was awarded a $2,800,000 discretionary bonus
determined by the Board of Directors for extraordinary 2002 performance after
taking into account the waiver of Mr. Plumeri's contractually guaranteed bonus
and $700,000 of corporate costs relating to the
14
Company's private airplane and other business expenses for which Mr.
Plumeri again wished to be accountable as an example to his Willis colleagues.
The term of the agreement ends upon the earlier of October 15, 2005 or the
giving by either party of 90 days' prior written notice. In general, upon Mr.
Plumeri's termination of employment without cause or by Mr. Plumeri's
resignation with good reason (which terms are defined in the agreement),
including a resignation by Mr. Plumeri following a change of control (as
defined in the agreement), he will receive payments and benefits based on
certain formulae, which in no case exceeds an amount equal to the sum of three
times annual base salary, bonus and benefits due to him.
Further, if any payment or benefit payable to Mr. Plumeri after a change in
ownership or control would be considered to be an excess parachute payment
subject to a federal excise tax, then Mr. Plumeri will be paid an additional
payment or benefit to gross up the amount of the excise tax.
Following Mr. Plumeri's retirement at normal retirement age 65, he will be
eligible to receive a retirement benefit for the rest of his life equal to
$54,142 per year, pursuant to the United States Willis Pension Plan.
Other Named Executive Officers' Employment Agreements
The other named executive officers, Richard J. S. Bucknall, Thomas Colraine,
John M. Pelly and Mario Vitale have employment agreements with a subsidiary of
the Company. Each agreement provides for an annual salary which is subject to
review and which for 2002 was $525,945 for Mr. Bucknall, $375,675 for Mr.
Colraine, $360,648 for Mr. Pelly and for Mr. Vitale $500,000. Messrs. Bucknall,
Colraine, Pelly and Vitale participate in the Annual Incentive Plan which
provides for a cash bonus dependent on predetermined corporate and individual
performance objectives and criteria which support the Company's overall goals.
Each agreement may be terminated generally by each executive officer upon
giving between six and 12 months' notice. In the case of termination of the
executive officers without cause each will receive payment and benefits which
generally will not be less than an amount equal to 12 months' salary and
benefits due to him. None of the agreements is subject to a change of control
provision.
Following Messrs. Bucknall, Colraine and Pelly's retirement at normal
retirement age of 60, each will be eligible to receive a retirement benefit
for the rest of their life, pursuant to the United Kingdom retirement program,
equal to $393,333 per year for Mr. Bucknall, $360,000 for Mr. Colraine and
$306,667 for Mr. Pelly. Mr. Vitale following retirement at normal retirement
age of 65 will be eligible to receive a retirement benefit for the rest of his
life, pursuant to the United States retirement program equal to $196,123 per
year.
Share Option Grants in 2002
The following table sets forth certain information concerning share options
granted during 2002 to the five most highly compensated executive officers of
the Company.
15
Potential Realised Value at Assumed
No. of % of Total Annual Rates of Stock Price Appreciation
Name Options Options Granted Exercise Price Expiration Date for Option Term
Granted to Employees 5% 10%
_____________________________________________________________________________________________________________________________
J.J. Plumeri - - - - - -
R.J.S. Bucknall 157 0.02 $28.20(1) 12.31.05 $ 699 $ 1,465
T. Colraine 197 0.02 $28.20(1) 12.31.05 $ 877 $ 1,838
5,547 0.57 (pound) (1.00(1) 08.27.05 $163,415 $189,208
J.M. Pelly 197 0.02 $28.20(1) 12.31.05 $ 877 $ 1,838
M. Vitale - - - - - -
(1) The above options were granted under the Company's UK Sharesave Plan and
in the case of Mr. Colraine a zero cost option was also granted for a
total consideration of (pound)1 under the Company's Bonus and Stock Plan.
The option exercise price under the UK Sharesave Plan was (pound)19.26
being the sterling equivalent of the market value at the date of
exercise.
(2) The dollar amounts are the result of calculations at the 5% and 10%
growth rates set by the SEC; the rates are not intended to be a forecast
of future stock price appreciation. A zero percent stock price growth
rate will result in a zero gain for all optionees.
Aggregated Share Option Exercises in 2002 and Share Option Value at December
31, 2002
The following table shows the share options exercised during 2002 by the five
most highly compensated executive officers of the Company and the number and
value of specified unexercised options at December 31, 2002. The value of
unexercised in-the-money share options at December 31, 2002 shown below is
presented pursuant to SEC rules and, with respect to the Company's shares, is
based on the December 31, 2002 closing price on the New York Stock Exchange of
$28.67 per share. The actual amount, if any, realized upon exercise of share
options will depend upon the market price of the shares relative to the
exercise price per share at the time the stock option is exercised. There is
no assurance that the values of unexercised in-the-money share options
reflected in this table will be realized.
Shares Value Number of Securities Underlying Value of Unexercised in-the-Money
Name Acquired on Realised Unexercised Options at Options at December 31, 2002
Exercise ($) December 31, 2002 ($)
______________ _____________ _____________ ______________________________________ ________________________________________
Exercisable Unexercisable Exercisable Unexercisable
__________________ __________________ __________________ __________________
J.J. Plumeri - - 2,065,688 3,098,534 52,580,229 78,870,394
R.J.S. Bucknall - - 195,000 393,050 4,963,550 9,995,770
T. Colraine 6,656 101,756 120,000 286,137 3,054,492 7,132,184
J.M. Pelly - - 130,000 355,590 3,309,033 9,041,242
M. Vitale - - 100,000 150,000 2,545,410 3,818,115
Retirement and other Benefit Plans
United States Retirement Program
The Group maintains a United States Retirement Program, the Willis North
America Inc. Pension Plan, a qualified defined benefit plan.
The following table shows the estimated annual straight-life annuity benefit
payable from the Plan to employees with the specified Maximum Average Salary
(average salary over the five consecutive years out of the last 15 years that
produces the highest average). Annual pay under the Plan is subject to a
maximum ($180,000 for 2002 and 2003) that is subject to annual cost-of-living
increases. The Maximum Average Salary amounts shown in the table presume that
actual eligible pay exceeds the annual limit at all times.
16
Maximum
Average Salary Years of Service
($)
- -----------------------------------------------------------------------------------------------------
5 10 20 30 40
- -----------------------------------------------------------------------------------------------------
$170,000 $28,039 $56,078 $ 99,172 $129,281 $134,475
$180,000 $29,745 $59,490 $105,231 $137,224 $142,724
$190,000 $31,451 $62,901 $111,291 $145,168 $150,973
$200.000 $33,157 $66,313 $117,350 $153,111 $159,222
$250,000 $41,686 $83,371 $147,648 $192,829 $200,467
$300,000 $50,215 $100,430 $177,945 $232,547 $241,712
$400,000 $67,273 $134,546 $238,540 $311,982 $324,203
The Plan also allows reduced benefits to be paid in a form that provides
continued payments (100%, 75% or 50% of the participant's reduced benefit)
to the spouse after the death of the participant. For example, if a
participant with a spouse three years younger were to receive benefits in the
form of a joint and survivor with 75% continuance to the spouse, the benefit
payable to the participant would be about 13% less than those shown, with the
spouse receiving 75% of the participant's benefit after the death of the
participant, payable for the spouse's lifetime. The compensation of
participants used to calculate the retirement benefit consists of regular
salary disclosed in the "Salary" column of the Summary Compensation Table.
Certain other types of pay are includible in pensionable earnings, such as
production incentives and commissions (but not other bonus payments). However,
neither Mr. Plumeri nor Mr. Vitale received any includible compensation other
than regular pay for 2002. Moreover, the regular pay received by both
gentlemen exceeded the Plan's limit on includible compensation for 2002. As of
year-end 2002, Mr. Plumeri and Mr. Vitale each had approximately two years of
credited service. The accrued annual benefits, payable in a straight-life
annuity beginning at age 65, are as follows: Mr. Plumeri: $12,549, and Mr.
Vitale: $10,686. At retirement (age 65), the years of service and annual
Maximum Average Salary (assuming periodic increases in the Plan's pay limit
for cost of living) are: Mr. Plumeri, 8 years and $204,000; Mr. Vitale, 20
years and $330,000.
United Kingdom Retirement Program
The Group also maintains a United Kingdom retirement program consisting of the
Willis Pension Scheme, an approved defined benefits plan, and an unfunded
unapproved plan.
The table below shows the estimated annual pension benefit
payable under the Willis Pension Scheme to certain categories of executives in
the United Kingdom, including executive officers of the Company with the
specified Pensionable Salary (basic salary averaged over the 12 months leading
up to retirement) and specified years of pensionable service upon retirement
at the normal age of 60. The pension in payment increases by 3% each year and
on death two thirds of the pension is payable to a surviving spouse.
Pensionable Salary Years of Pensionable Service
- ----------------------------------------------------------------------------------------
5 10 20 30 40
- ----------------------------------------------------------------------------------------
$640,000 $106,667 $213,333 $426,667 $426,667 $426,667
$660.000 $110,000 $220,000 $440,000 $440,000 $440,000
$680,000 $113,333 $226,667 $453,333 $453,333 $453,333
$700,000 $116,667 $233,333 $466,667 $466,667 $466,667
$720,000 $120,000 $240,000 $480,000 $480,000 $480,000
$740,000 $123,333 $246,667 $493,333 $493,333 $493,333
$760,000 $126,667 $253,333 $506,667 $506,667 $506,667
$780,000 $130,000 $260,000 5520,000 $520,000 $520,000
$800,000 S133,333 $266,667 $533,333 $533,333 $533,333
17
$820,000 $136,667 $273,333 $546,667 $546,667 $546,667
$840,000 $140,000 $280,000 $560,000 $560,000 $560,000
$860,000 $143,333 $286,667 $573,333 $573,333 $573,333
$880,000 $146,667 $293,333 $586,667 $586,667 $586,667
$900,000 $150,000 $300,000 $600,000 $600,000 $600,000
The compensation of participants used to calculate the retirement benefit
consists of regular salary as disclosed in the "Salary" column of the Summary
Compensation Table and excludes bonuses and other forms of compensation not
regularly received. Messrs Bucknall, Colraine and Pelly participate in the
United Kingdom retirement program. At retirement the years of completed
pensionable service and the Pensionable Salary (assuming the 2002 compensation
increases by 6% on average each year to retirement date) are: Mr. Bucknall, 21
years and $700,000; Mr. Colraine, 30 years and $900,000; and Mr. Pelly, 39
years and $640,000.
Annual Incentive Plan
The Annual Incentive Plan provides a cash bonus to middle and senior
management as well as the directors and executive officers based on
predetermined corporate and individual performance objectives and criteria
which support the Company's overall goals.
Non-Employee Directors' Deferred Compensation Plan
Under the Non-Employee Directors' Deferred Compensation Plan, non-employee
directors may elect to defer all or any portion of their fees to be earned in
any given calendar year into (1) a cash account, in which the deferred fees
earn interest at a rate equal to that which we do or could earn on an equal
amount of money deposited with our principal lender, or (2) a stock account,
which we credit with a number of shares of the Company's common stock
("Shares") equal to the amount of the fees deferred into the stock account
divided by the 10-day average sales price of our Shares with respect to the
date the director defers his or her fees. A director shall only receive a
distribution of his or her cash account (in cash) and stock account (in
Shares), upon the earlier to occur of (1) a change of control of the Company,
(2) the first business day of the calendar year following the date the
director retires, resigns or otherwise separates from service as a director
and (3) the termination of the plan by the Board of Directors. As of March 7,
2003, there were 500,000 shares available for distribution into stock accounts
under this plan, of which 15,848 Shares have been credited in aggregate to
directors' stock accounts.
Non-Employee Directors' Share Option Plan
Due to certain adverse tax consequences associated with certain non-employee
directors' participation in the Non-Employee Directors' Deferred Compensation
Plan, we have established a share option plan for certain non-employee members
of the Board of Directors who are subject to income taxation in the United
Kingdom. Under this share option plan non-employee directors may receive an
immediately exercisable option to purchase Shares at nominal value. The number
of Shares subject to the option will be limited, in each calendar year, to
that number of our Shares having a market value, as of the date of grant of
the option, equal to the amount of fees which that non-employee director
waived in respect of that calendar year. We anticipate that under the plan, a
non-employee director may either exercise his or her option at any time and
receive Shares, or we may elect to repurchase the option at any time, at a
price equal to the excess of the fair market value of the Shares subject to
the option at the time of the repurchase minus the nominal exercise price,
payable in Shares, net of all income taxes required to be withheld by us under
applicable tax laws. As of March 7, 2003, there were 100,000 Shares available
for grant under this plan but no awards have been made to date.
18
Amended and Restated 1998 Stock Option Plan and Amended and Restated Willis
Award Plan
The Amended and Restated 1998 Share Purchase and Option Plan for Key Employees
and the Amended and Restated Willis Award Plan for Key Employees, each
provides for the grant of time-based vesting options, performance-based
vesting options and various other share-based grants to our employees to
purchase Shares. The 1998 Plan and the Willis Award Plan are intended to
promote the Company's long-term financial interests and growth by attracting
and retaining management personnel with the training, experience and ability
to enable them to make a substantial contribution to the success of our
business; motivate management personnel by means of growth-related incentives
to achieve long range goals; and further the alignment of interests of
participants with those of shareholders of Willis Group Holdings through
opportunities for increased share ownership in us.
As of March 7, 2003, of the time- and performance-based options granted,
24,946,165 remained unforfeited under the 1998 Plan and 111,510 remained
unforfeited under the Willis Award Plan. There are 5,000,000 shares available
to be granted under the Willis Award Plan. Under the 1998 Plan, unless
otherwise provided by our Board of Directors, time-based options generally
become exercisable in five equal annual installments beginning on the second
anniversary of the date of grant and performance-based options generally become
exercisable to the extent, if any, that performance goals generally based on
Willis Group Limited's cumulative consolidated cash flow and annual EBITDA, as
defined, for periods ending 2001 and 2002 are achieved. 30% of the
performance-based options are calculated based upon Willis Group Limited's
achievement of the cash flow targets, and the remaining 70% of the
performance-based options are calculated based upon Willis Group Limited's
achievement of the EBITDA targets. Effective from January 1, 2003, it was
determined that the targets had been achieved and the performance-based options
would vest and become exercisable in four equal annual installments, generally
beginning on the third anniversary of the date of grant. The exercisability of
the options may accelerate or terminate based on the circumstances surrounding
an optionee's termination of employment, and both time-based and
performance-based options may (in the discretion of our Board of Directors),
fully accelerate upon a change in control of the Company.
Unless sooner terminated by our Board of Directors, the 1998 Plan and Willis
Award Plan will expire 10 years after its adoption. That termination will not
affect the validity of any grant outstanding on the date of the termination of
either of the 1998 Plan or the Willis Award Plan.
Our Board of Directors and its compensation committee administer the 1998 Plan
and Willis Award Plan. Our Board of Directors may from time to time amend the
terms of any grant, but, except for adjustments made upon a change in our
Shares by reason of a stock split, spin-off, stock dividend, stock combination
or reclassification, recapitalization, reorganization, consolidation, change
of control or similar event, that action may not adversely affect the rights
of any participant under the 1998 Plan or Willis Award Plan, as applicable,
with respect to the options without at least a majority of the participants
approving such action. Our Board of Directors retains the right to amend,
suspend or terminate the 1998 Plan and Willis Award Plan at any time. No
further grants are to be made under the 1998 Plan.
2001 Share Purchase and Option Plan
The 2001 Share Purchase and Option Plan (the "2001 Plan") provides
for the grant of options, to purchase our Shares and restricted Shares and
other Share-based grants to any of the Company's employees (including members
of our Board of Directors who are employees). Members of our Board of
Directors who are not employees of the Company may not receive awards under
the 2001 Plan. Approximately 4,300 employees currently participate in the 2001
Plan, including Mr. Plumeri and nine executive officers. The 2001 Plan is
intended to accomplish the same purposes as the 1998 Plan explained above.
19
Limits on Awards. As of March 7, 2003, options on 3,459,300 Shares and 222,218
restricted Shares remained outstanding (whether vested or unvested). There are
currently 10,000,000 shares available to be granted under the 2001 Plan, of
which 5,000,000 may be granted to any one employee in any given calendar year.
In connection with certain of our option grants, employees have agreed and may
in the future agree to restrict the transferability of the Shares that they
own, as of the date the option is granted, for a period of six years from the
date of the original option grant, which options may be forfeited without
payment in the event the employees breach the transfer restrictions imposed on
their Shares.
Stock options generally become exercisable on the sixth or eighth anniversary
of grant. Certain option grants may accelerate depending on the achievement of
certain performance goals and option grants may terminate based on the
circumstances surrounding an optionee's termination of employment. The vesting
and exercisability of options and other share-based awards may also be
accelerated, at the discretion of our Board of Directors, upon a change in
control of Willis Group Holdings.
Stock Options. Stock options granted under the 2001 Plan may be either
incentive stock options or nonqualified stock options. Any incentive stock
options shall have an exercise price at least equal to the fair market value
of the shares subject to the option on the date of the grant. No stock option
may have a term that is longer than 10 years after the date the option is
granted. Stock options granted under the plan may have vesting periods,
expiration dates, or other restrictions, as the compensation committee of our
Board of Directors (the "Compensation Committee") in its sole discretion will
determine.
Restricted Shares. The Compensation Committee may grant to plan participants
Shares subject to certain restrictions. Subject to certain limitations,
restricted Shares shall not have a restriction period of less than 6 months.
Purchase Shares and Other Share-Based Grants. The Compensation Committee may
grant to plan participants the opportunity to purchase Shares. The
Compensation Committee also may grant to plan participants awards that are
denominated in units, payable in Shares, including awards valued other than
with respect to the fair market value of the Shares.
Termination. Unless sooner terminated by our Board of Directors, the 2001 Plan
will expire 10 years after its adoption. Any termination or expiration will
not affect the validity of any grant outstanding on the date of the plan's
termination or expiration.
Administration. Our Board of Directors and the Compensation Committee
administer the 2001 Plan, including, without limitation, the determination of
the employees to whom grants will be made, the number of Shares subject to
each grant and the various terms of those grants (including, without
limitation, the acceleration of the vesting of any award). The Compensation
Committee may from time to time amend the terms of any grant so long as such
amendment is consistent with the terms of the plan, and our Board of Directors
retains the right to amend, suspend or terminate the 2001 Plan at any time.
Effects of Certain Corporate Events. Upon the occurrence of a
merger, amalgamation under Bermuda law, consolidation or other corporate event
the Compensation Committee may elect to cancel all outstanding awards granted
under the 2001 Plan or cause them to remain outstanding and be adjusted to
reflect the effect of any such event on the Shares. In the event that the
Compensation Committee elects to cancel the outstanding awards, all holders of
stock options will have the opportunity to exercise their options in full for
a specified period of time prior to the cancellation of their options.
20
Bonus and Stock Plan
The Bonus and Stock Plan is a sub-plan of the 2001 Plan and provides for
awards of restricted stock units (the "Award") which is, except for UK
employees, simply a promise by the Company to deliver on the third anniversary
of the grant of an Award Shares equal to the Award. For all UK employees, the
Award takes the form of a Zero Cost Option. The Award is determined in
accordance with a formula based on the eligible bonus and the quoted market
price of the Share at the date of the Award. Further, the Company matches the
Award with an additional award of restricted stock units, equal to 25% of the
Award. As of March 7, 2003, restricted stock unit awards over 211,915 Shares
had been awarded and remain unforteited, 59,697 of which are in the form of
zero cost options.
Sharesave Plans
We established in 2001 a "save as you earn" plan, which we refer to as our
Sharesave Plan, which has been approved by the Inland Revenue of the United
Kingdom, under which all executive directors and employees of the Company who
have completed a minimum service requirement not exceeding five years and are
subject to certain taxes in the United Kingdom are granted options to purchase
Shares. The Sharesave Plan is a sub-plan of the 2001 Plan. Options may be
granted with a sterling option price that is not less than 80% of the market
value of the Shares on the date of grant and, where the Shares are to be
subscribed, the nominal value if greater. The options may vest in three, five
or seven years, with each participant being able to pay for his or her
options by entering into a savings contract with a savings provider under
which he or she agrees to save a regular monthly amount, not to exceed
(pound)250 per month. The current maximum monthly saving amount per grant is
(pound)100. Options have been granted in 2001 and 2002 which vest in August
2004 and July 2005 respectively. At the end of the savings period, the
participants receive their savings back plus a tax-free bonus, which may be
used, at the participant's discretion, to exercise the option. Options not
exercised within six months from the end of the contract will lapse. In
addition, in the event of a change of control of the Company, options may be
exercised within six months of the change of control.
The Board of Directors may determine the maximum number of Shares available
for any option grant. Options may be adjusted, subject to the prior approval
of the UK Inland Revenue, to reflect variations in the share capital of the
Company, including the capitalization, rights issue and subdivision,
consolidation or reduction in the capital of the Company. Also, the Board of
Directors may at any time amend the Sharesave Plan, which amendments must be
approved by the UK Inland Revenue prior to taking effect in order to ensure
that the Sharesave Plan retains its tax-qualified status. However, the Board
of Directors may not make any amendments that would adversely affect the
rights of participants without obtaining appropriate consents. No options may
be granted under the Sharesave Plan after the tenth anniversary of the
adoption of the Sharesave Plan.
In 2002, we established our International Sharesave Plan, known as TWISP, for
employees of our subsidiaries who are resident under relevant tax laws in 24
countries and our Irish Sharesave Plan for our employees in the Republic of
Ireland. Both plans operate on a similar basis to the Sharesave Plan described
above. The first offer under the plans was made in May 2002 with vesting in
three years and a maximum monthly saving amount of (pound)100 or local
currency equivalent.
As of March 7, 2003, 896,155 Shares remained unforfeited under the Sharesave
Plans.
Employee Stock Purchase Plan
Under the Employee Stock Purchase Plan ("ESPP"), employees of certain of our
subsidiaries, currently US and Canadian subsidiaries, have the opportunity to
purchase up to a specified amount of Shares
21
through payroll deductions over certain specified periods of time.
Participants in the ESPP are offered the opportunity to elect to have up to a
certain amount of their salaries deducted from their paychecks over a period
of six months, and to use that money to purchase Shares. In no event may a
participant purchase more than $25,000 worth of Shares in any given calendar
year. The purchase price for the Shares will be the lesser of the closing
price of a Share on the first day or the last day of an offering period under
the ESPP. The ESPP qualifies as an employee stock purchase plan under section
423 of the Internal Revenue Code, which provides the participants in the ESPP
with certain tax benefits upon their subsequent sale or other disposition of
the Shares that they will purchase under the terms of the ESPP. As of March 7,
2003, 143,878 Shares have been issued under this plan.
Employee Stock Purchase Agreements
Shares purchased by employees and former employees, the options granted to
employees and Shares an employee may receive upon exercise of an option (all
as granted under the 1998 Plan), generally are subject to transfer
restrictions until the sixth anniversary of the date the employees originally
purchased their Shares. One exception to this transfer restriction allows an
employee to sell Shares under an effective registration statement at the time
Profit Sharing (Overseas), our majority shareholder and an indirect
wholly-owned subsidiary of KKR, sells its Shares pursuant to such registration
statement, in the same proportion as Profit Sharing (Overseas) sells its
Shares. Shares and options are also subject to certain risks of forfeiture, in
whole or in part, prior to the sixth anniversary of the date the employees
originally purchased their shares, including, without limitation, our right to
repurchase the Shares and to terminate exercisable options at a stated
repurchase or termination price, which price ranges from the fair market value
of the Shares to the Market Price per Share (as defined in the 1998 Plan) (for
Shares purchased and options granted prior to January 20, 2001), depending
upon the circumstances of an employee's termination of employment. In the
event Profit Sharing (Overseas) sells all or a portion of its Shares to an
unaffiliated third party, the Shares purchased by the employees are also
subject to Profit Sharing (Overseas)'s right to cause the employees to sell
all or a portion of their Shares, and the employees have a right to cause
Profit Sharing (Overseas) to permit employees and former employees to sell a
portion of their Shares.
Employee Stock Ownership Plans and Trust
Our UK subsidiary, Willis Group Limited, maintains Employee Share Ownership
Plans, which as of March 7, 2003, held 779,003 Shares on behalf of Willis
Group directors, officers and other employees. These Shares were acquired by
the Plans at the time of the 1998 acquisition of Willis Group Limited by
Profit Sharing (Overseas) in return for the employees forfeiting cash awards
held by the Plans for their benefit. As part of the forfeiture arrangements,
certain employees were granted, under our Zero Cost Share Option Scheme,
options over shares (now Shares), the value of which equaled on grant the cash
amount of forfeited cash awards. The Plans are obliged to deliver the Shares
held when the zero cost option is exercised upon payment of (pound)1 and
relevant taxes. No option may be exercised more than 10 years from the date of
grant and no further options will be granted under the Zero Cost Share Option
Scheme.
Those employees who forfeited cash awards but did not receive a zero
cost option grant have their Shares vested under the Plans at the same time
they would have received the cash awards.
The options and Shares subject to the options, as well as the other Shares
held in those Plans, will be subject, among other things, to our right to
repurchase them at varying purchase prices upon certain terminations of
employment, pursuant to the employee stock purchase agreements above. However,
in the event that the Shares subject to the options are, as also described
above, required by Profit Sharing (Overseas) to be sold to a third party, the
participants will be entitled to receive a cash payment in respect
22
of his or her Shares if the participant would have received cash under his or
her forfeited award in that circumstance.
In addition, options may be adjusted to reflect variations in the share
capital of the Company including the capitalization, rights issue and
subdivision, consolidation or reduction in the capital of the Company. The
Board of Directors may amend the provisions of the Zero Cost Share Option
Scheme at any time; however, the Board of Directors may not make any
amendments that would disadvantage the participants without obtaining prior
approval of the amendments from a majority of the participants.
In connection with the employee stock purchase agreements described above, a
trust was established at the time of the 1998 acquisition of Willis Group
Limited by Profit Sharing (Overseas), which through its trustees, is a party
to the Management and Employee Shareholders' and Subscription Agreement, which
governs the Shares purchased by our employees. Under this agreement, the trust
can be required to purchase Shares and options owned by these employees whose
employment with us is terminated. Also, the trust has the power to repurchase
the Shares and options owned by such former employees and the power to sell
Shares at fair market value to current employees which is undertaken in
connection with certain option grants under the 2001 Plan. As of March 7,
2003, the trust had an interest in 903,635 Shares which can be purchased by
employees or used to satisfy options grants made by us. As of March 7, 2003,
331,250 of the Shares held by the trust were reserved to satisfy option grants
when exercised.
Others
We also maintain a deferred compensation plan for certain employees that
allows employees to defer a portion of their annual compensation and Willis
North America has a 401(k) plan covering all eligible employees of Willis
North America and its subsidiaries. Shares are available as an investment
option to participants in Willis North America's 401(k) plan.
Information concerning Equity Compensation Plans
Number of Shares to be Weighted average exercise
issued upon exercise of price of outstanding Number of Shares
outstanding options, options, warrants and remaining available
Plan Category warrants and rights rights for future issuance
- ------------------- ----------------------- ------------------------- --------------------
Equity compensation
plans approved
by security holders 2,840,199 $23.39 6,747,006
Equity compensation
plans not approved
by security holders 27,839,368 $ 3.26 7,160,632
Total 30,804,567 13,782,638
23
COMPENSATION COMMITTEE REPORT
Compensation Philosophy, Policies and Plans for Executive Officers
The primary function of the Compensation Committee is to determine the
compensation of the Chairman and Chief Executive Officer and other senior
executives. In addition, the Compensation Committee administers the Company's
stock-based award plans. To that end the Compensation Committee adopted in
February 2003, a Charter which is attached to the Proxy Statement as Appendix
B.
As one of the largest insurance brokers in the world, the Company's need to
attract and retain highly qualified and talented professionals is paramount.
The marketplace in which the Company competes is very highly competitive and
covers all the financial services areas and not just the insurance sector.
Further, our compensation policies, while designed to secure the services of
appropriate professionals, must also support our vision of creating a great
company, working together as a team to deliver value and growth. The Company's
compensation culture is, therefore, performance driven and remuneration in the
form of incentives is paid in accordance with quantitative and qualitative
guidelines that reflect overall Group and individual performance.
The Chairman and Chief Executive Officer heads a group of senior executives
who work together supporting the Company's vision. These senior executives
participate in an Annual Incentive Plan which provides a cash bonus based on
predetermined corporate and individual performance objectives and criteria
which support the Company's overall goals.
Basis for Chairman and Chief Executive Officer's Compensation
The compensation for the Company's Chairman and Chief Executive Officer,
Joseph J. Plumeri, is determined primarily with reference to the quantitative
and qualitative annual performance of the Company compared with previous
years. Consideration is also given to Mr. Plumeri's overall leadership and
influence on the performance and direction of the Company. Please see
"Chairman and Chief Executive Officer's Employment Agreement" in Item 3 -
Executive Compensation above for details of Mr. Plumeri's 2002 and 2001
compensation.
Compensation Committee:
Perry Golkin, Chair Paul M. Hazen
Senator William Bradley Scott C. Nuttall
Todd A. Fisher
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the last completed fiscal year, Senator William Bradley, Todd A.
Fisher, Perry Golkin, Paul M. Hazen and Scott C. Nuttall served on the
Compensation Committee. Messrs. Golkin and Fisher are also members of KKR 1996
Overseas, Limited, the general partner of KKR Associates II 1996, Limited
Partnership, which is the general partner of KKR 1996 Fund (Overseas), Limited
Partnership which is the general partner of Profit Sharing (Overseas), Limited
Partnership, which owns approximately 39.1% of the issued and outstanding
Shares. Mr. Nuttall, a member of the Compensation Committee, is an executive
of KKR. Please see Transactions with Management and Others below.
24
COMPARISON OF CUMULATIVE TOTAL STOCKHOLDER RETURN
The following graph demonstrates a five year comparison of cumulative total
returns for the Company, the S&P 500 and a peer group comprised of the
Company, Aon Corporation, Arthur J. Gallagher & Co., Brown & Brown Inc., Hilb,
Rogal and Hamilton Co., and Marsh & McLennan Companies, Inc. The comparison
charts the performance of $100 invested in the Company, the S&P 500 and the
peer group on June 11, 2001, assuming full dividend reinvestment.
[CHART OMITTED]
Company Base Period Dec01 Dec02
11 June 01
Company 100 174.44 212.37
S&P 500 Index 100 92,14 71.78
Peer Group 100 107.28 92.01
TRANSACTIONS WITH MANAGEMENT AND OTHERS
In 2002, the Company paid annual fees, quarterly in arrears, of
$1.0 million to KKR and $350,000 to Fisher Capital Corp. L.L.C. for
management, consulting, and certain other services provided to the Company and
its subsidiaries. We also reimburse their incidental expenses
in connection with those services.
Our US subsidiary, Willis North America Inc., has an interest of approximately
7.5% in OneShield Inc., a company it is partnering with to bring major
segments of its workflow process on United States business to the Internet.
Our subsidiary also has warrants in OneShield Inc., which on exercise could
increase its interest to approximately 13.0% on a fully diluted basis. The
partners and employees of KKR and Fisher Capital Corp. L.L.C., some of whom
serve as our directors, have current interests of 16.6% in the aggregate in
OneShield Inc. Fisher Capital Corp. L.L.C. Also has an interest of 0.2% in
OneShield Inc.
From time to time, in the ordinary course of business and on commercial terms
the Company's insurance brokering subsidiaries may provide services to
directors or executive officers and their families in connection with their
personal insurance requirements.
The Company has entered into a registration rights agreement with Profit
Sharing (Overseas), Limited Partnership which gives Profit Sharing (Overseas),
Limited Partnership the right, subject to a number of conditions and
limitations, to demand the registration of the Shares that it owns or to
partake in a registration initiated by the Company. The Company is responsible
for expenses for the first 10
25
registrations of each class or series of the Company's securities held by it.
In addition, the Company is required to indemnify Profit Sharing (Overseas),
Limited Partnership and it in turn is required to indemnify the Company, with
respect to any information they provide, against certain liabilities in
respect of any registration statement or offering covered by the registration
rights agreement.
Richard J.S. Bucknall continued as an Underwriting Member of Lloyd's during
2002 in respect of the run-off of liabilities of business not settled at the
time of his resignation in 1997 as an Underwriting Member of Lloyd's. Some of
our insurance brokerage subsidiaries placed risks with the syndicates in which
Richard J.S. Bucknall participated in the normal course of their brokerage
activities on the same basis as those subsidiaries did with other Lloyd's
syndicates. Willis Group Limited, our subsidiary, has guaranteed the
performance obligations of Willis North America Inc. In respect of the pension
benefits for Brian D. Johnson, an executive officer of the Company in 2002 and
2001, under the Willis North America Inc. Executive Supplemental Retirement
Plan, an unfunded pension plan. The Company has also given Joseph J. Plumeri a
guarantee in respect of Willis North America Inc.'s performance obligations
under its employment agreement with Mr. Plumeri.
SECTION 16 BENEFICIAL OWNERSHIP COMPLIANCE
Because the Company was a "foreign private issuer" for all of 2002, our
officers, directors and principal shareholders were exempt in 2002 from the
reporting and "short swing" profit recovery provisions contained in Section 16
of the Securities Exchange Act of 1934.
26
ITEM 4
AMENDMENT TO THE 2001 SHARE PURCHASE AND OPTION PLAN
At the annual general meeting, shareholders are being asked to approve an
amendment to the Company's 2001 Share Purchase and Option Plan (the "2001
Plan") to increase the number of shares of our common stock ("Shares")
available for issuance under the 2001 Plan by 5,000,000 Shares. The Executive
Committee adopted the amendment approving this change on March 11, 2003.
Description of the Plan
Please see the description of the 2001 Plan above under the heading "Executive
Compensation - 2001 Share Purchase and Option Plan", and a copy of the 2001
Plan, as amended and restated to include the amendment proposed in this Item 4
and attached as Appendix C.
Benefit of Amendment
The Company will benefit from the proposed increase in the number of the
Company's Shares in that it will allow the Company to continue to grant
incentive compensation to our current and newly hired employees.
As of the date of this Proxy Statement, none of the Shares that are proposed
to be added to the number of Shares available for grant under the 2001 Plan
have been granted (or subject to awards that have been granted). The
allocation of awards in 2003 to any one individual or group of individuals
under the 2001 Plan is not currently determinable because this allocation is
based upon future decisions by the Company's Compensation Committee in its
sole discretion to make awards, subject to the applicable provisions of the
2001 Plan. Members of our Board of Directors who are not employees of the
Company are not eligible to participate in the 2001 Plan.
The benefits conveyed under the 2001 Plan are at the discretion of
Compensation Committee. Therefore, of the remaining Shares authorized or
proposed to be authorized, the amounts that will be received by or allocated
to participants under the 2001 Plan are not presently determinable. Please see
the information above under the heading "Executive Compensation - Share Option
Grants in 2002" to learn more about the options granted to named executive
officers during the last fiscal year under the 2001 Plan.
U.S. Federal Income Tax Consequences
Introduction. The following discussion of the federal income tax
consequences of awards granted under the 2001 Plan is based on present federal
tax laws and regulations and does not purport to be a complete description of
U.S. federal income tax laws. Participants may also be subject to certain
state and local taxes that are not described below.
Incentive Stock Options. If an award granted is an incentive stock
option (within the meaning of Section 422 of the Internal Revenue Code of 1986
of the United States, as amended, ("the Code"), no income is realized by the
participant upon award or exercise of the option, and no deduction is
available to the Company at such times. If a participant holds Shares
purchased upon the exercise of an incentive stock option for at least two
years from the date of the grant of such option and for at least one year
after exercise, any resulting gain is taxed, upon disposition of our Shares,
at long-term capital gains rates. If Shares purchased pursuant to the option
are disposed of before the expiration of that period, any
27
gain on the disposition, up to the excess of the fair market value of our
shares at the time of exercise and the option exercise price, is taxed at
ordinary income tax rates as compensation paid to the participant, and the
Company is entitled to a deduction for an equivalent amount. Any amount
realized by the participant upon such disposition of Shares that is in excess
of the fair market value of the stock at the time of exercise is taxed at
long-term capital gains rates.
Non-Qualified Stock Options. If an award granted is a non-qualified
option (i.e., not an incentive stock option), a participant does not realize
or recognize any income at the time of grant of the option, and no deduction
is available to the Company at such time. At the time of exercise, ordinary
income is realized by the participant in an amount equal to the excess, if
any, of the fair market value of our shares on the date of exercise over the
option exercise price, and the Company receives a tax deduction for an
equivalent amount. Upon disposition, any difference between the participant's
tax basis in Shares (e.g., the amount of the exercise price plus the amount of
the ordinary income recognized, if any, by the participant upon exercise of
the option) and the amount realized on the participant's disposition of Shares
is treated as short-term or long-term capital gain or loss, depending upon
whether the participant held Shares acquired upon exercise of the option
before disposition thereof for less than or more than one year, and whether or
not the participant recognized a gain or loss upon such disposition.
Restricted Stock Awards. The Company receives a deduction and the
participant recognizes taxable income equal to the fair market value of the
restricted stock at the time or times that restrictions on Shares awarded
lapse, unless the participant elects to recognize the full fair market value
of the restricted stock awarded as income immediately upon grant of the stock,
by so electing not later than 30 days after the date of grant by the Company
to the participant of a restricted stock award as permitted under Section
83(b) of the Code (such an election, a "Section 83(b) Election"). In the event
the participant makes such an election, the participant is taxed at ordinary
income tax rates, and the Company is entitled to a deduction for an equivalent
amount at the same time. Upon disposition by a participant of any restricted
Shares following the lapse of any restrictions, any difference between the
participant's tax basis in Shares (e.g., the amount of the ordinary income
recognized, if any, by the participant upon either the making of the Section
83(b) Election or upon the lapsing of the restrictions, as applicable) and the
amount realized on the participant's disposition of Shares is treated as
short-term or long-term capital gain or loss. Whether or not a participant
recognizes a short-term or long-term capital gain or loss depends upon whether
the participant held Shares before disposition thereof for less than or more
than one year after the earlier to occur of the date the participant made the
Section 83(b) Election or the lapsing of the restrictions on the relevant
Shares, as applicable, and whether or not the participant recognized a gain or
loss upon such disposition.
Other Stock Awards. The fair market value of any Shares distributed
to a participant under any other stock or stock-based award under the 2001
Plan shall be taxable as ordinary income to such participant in the year in
which such stock is received by the participant, and the Company will be
entitled to a tax deduction for an equivalent amount.
Your Board recommends you vote FOR this proposal.
28
SOLICITATION OF PROXIES
The Board of Directors hereby solicits proxies for use at the 2003 Annual
General Meeting and at any adjournment thereof. Shareholders who execute a
proxy may still attend the meeting and vote in person. A proxy may be revoked
at any time before it is voted by giving to the Secretary of the Company, care
of the office of its subsidiary, Willis Group Limited, Ten Trinity Square,
London EC3P 3AX, written notice bearing a later date than the proxy, by
submission of a later dated proxy or by voting in person at the meeting.
Executors, administrators, trustees, guardians, attorneys and other
representatives should indicate the capacity in which they are signing and
corporations should sign by an authorized officer whose title should be
indicated. Mere attendance at the meeting will not revoke a proxy which was
previously submitted to the Company.
The cost of this proxy solicitation is borne directly by the Company.
Georgeson Shareholder Communications Inc. has been retained to assist in the
proxy process at a fee of approximately $1,500 plus expenses. In addition to
solicitation of proxies by mail, proxies may be solicited personally, by
telephone, by e-mail and by facsimile by the Company's directors, officers and
other employees. Such persons will receive no additional compensation for such
services. The Company will also request brokers and other nominees to forward
soliciting material to the beneficial owners of shares which are held of
record by them, and will pay the necessary expenses.
SHAREHOLDER AND OTHER PROPOSALS
Shareholders who wish to present a proposal and have it considered for
inclusion in the Company's proxy materials for the 2004 Annual General Meeting
of the Company's shareholders must submit such proposal in writing to the
Secretary of the Company on or before November 30, 2003.
Shareholders who wish to present a proposal at the 2004 Annual General Meeting
that has not been included in the Company's proxy materials must submit such
proposal in writing to the Secretary of the Company. Any such notice received
by the Secretary on or after January 31, 2004 shall be considered untimely for
the presentation of proposals by shareholders. In addition, the Company's
bye-laws and the Bermuda Companies Act contain further requirements relating
to the timing and content of the notice which shareholders must provide to the
Company for any nomination or matter to be properly presented at a
shareholders' meeting.
By order of the Board of Directors,
Michael P. Chitty,
Secretary
29
Appendix A
WILLIS GROUP HOLDINGS LIMITED
Audit Committee Charter
Composition of the Audit Committee
The Audit Committee of Willis Group Holdings Limited (the "Company") shall be
comprised of at least three directors. The Board of Directors shall determine
that each member of the Committee is "financially literate" and that one
member has "accounting or related financial management expertise", as such
qualifications are interpreted by the Board of Directors in its business
judgement.
Members shall be appointed by the Board and shall serve at the pleasure of the
Board and for such term or terms as the Board may determine. The Board shall
designate one member of the Audit Committee as its chairperson.
Purpose of the Audit Committee
The purpose of the Audit Committee is to assist Board oversight of (i) the
integrity of the Company's financial statements, (ii) the Company's compliance
with legal and regulatory requirements, (iii) the independent auditor's
qualifications and independence, (iv) the performance of the independent
auditors and the Company's internal audit function, and (v) the establishment
and maintenance of proper internal accounting controls and procedures.
Compensation of the Audit Committee
No member of the Audit Committee may receive any compensation from the Company
other than (i) director's fees; and (ii) a pension or other deferred
compensation for prior service that is not contingent on future service; and
(iii) any other regular benefits that other directors receive.
Meetings of the Audit Committee
The Audit Committee shall meet at least four times per year, or more
frequently if circumstances dictate. In addition, the Audit Committee will
meet at least four times per year with each of senior management, the
Company's internal auditors and the independent auditors in separate executive
sessions.
Duties and Powers of the Audit Committee
To achieve its purpose, the Audit Committee shall have the following duties
and powers:
1. With respect to the independent auditors:
(i) to appoint, retain and terminate the independent auditors (subject,
if applicable, to shareholder ratification which will be
pre-approved);
(ii) to approve all fees and engagement terms relating to audit
engagements;
(iii) to approve, in advance, all fees and engagement terms related to
significant non-audit engagements;
30
(iv) to take account of the opinions of management and the Company's
internal auditors in assessing the independent auditors'
qualifications, performance and independence;
(v) to ensure that the independent auditors prepare and deliver
annually an Auditor's Statement (describing the independent
auditors' internal quality control procedures, the results of any
relevant reviews, inquiries or investigations and all relationships
between the independent auditors and the Company), and to discuss
with the independent auditors any matters disclosed in this
Statement that may impact the quality of their audit services or
their objectivity and independence; and
(vi) to ensure the rotation of the lead (or co-ordinating) audit partner
having primary responsibility for the audit and the audit partner
responsible for reviewing the audit as required by law.
2. With respect to financial reporting principles and policies and internal
audit procedures:
(i) to consider any reports or communications (and management's and/or
the internal audit department's responses thereto) submitted to the
Audit Committee by the independent auditors required by or referred
to in SAS 61 (as codified by AU Section 380);
(ii) to meet with senior management, the independent auditors and the
director of the internal audit department:
o to discuss the scope of the annual audit;
o to review the audited annual financial statements and
unaudited quarterly financial statements, including the
Company's disclosures under "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and
to recommend to the Board whether the audited financial
statements should be included in the Company's Form 10-K;
o to review disclosures made to the Audit Committee by the
Company's CEO and CFO during their certification process for
the Form 10-K and Form 10-Q regarding any significant
deficiencies in the design or operation of internal controls
or material weaknesses therein and any fraud involving
management or other employees who have a significant role in
the Company's system of internal controls;
o to discuss any significant changes to the Company's audit and
accounting principles, policies, controls, procedures and
practices proposed or contemplated by management, the internal
audit department and the independent auditors;
o to discuss, as appropriate, (a) any major issues regarding
accounting principles and financial statement presentation,
including any significant changes in the Company's selection
or application of accounting principles, major issues as to
the adequacy of the Company's internal controls, and any
special audit steps adopted in light of material control
deficiencies; (b) analyses prepared by management, the
internal audit department or the independent auditors setting
forth significant financial reporting issues and judgements
made in connection with the preparation of the financial
statements, including analyses of the effects of alternative
GAAP methods on the financial statements; (c) material written
31
communications between the independent auditor and management,
such as any management letter or schedule of unadjusted
differences; and (d) the effect of regulatory and accounting
initiatives, as well as off-balance sheet structures, on the
financial statements of the Company;
o to review management's implementation of recommendations of
internal audit and the independent auditors;
o to review annual internal audit plans for the Company
including the adequacy of resources to accomplish said plans;
and
o to review internal audit findings and recommendations, reports
to management in connection therewith and the timelines and
thoroughness of management's responses thereto including
related implementation and corrective action.
These meetings may be held either in person, or by means of such
telephone, electronic or other communication facilities as allows all
persons participating in the meeting to communicate with each other
simultaneously and instantaneously;
(iii) to discuss guidelines and policies governing the process by which
senior management of the Company and the relevant departments of
the Company assess and manage the Company's exposure to risk, and
to discuss the Company's major financial risk exposures and the
steps management has taken to monitor and control such exposures;
(iv) to discuss with the Company's General Counsel any significant
legal, compliance or regulatory matters that may have a material
effect on the Company's business, financial statements or
compliance policies, including material notices to or inquiries
received from governmental agencies;
(v) to discuss earnings press releases, and financial information and
earnings guidance provided to analysts and rating agencies; and
(vi) to obtain reports from management of any significant related party
transactions and to review and approve such transactions.
3. With respect to reporting and recommendations:
(i) to prepare any report or other disclosures, including any
recommendation of the Audit Committee, required by the rules of the
SEC to be included in the Company's annual proxy statement;
(ii) to review this Charter at least annually and recommend any changes
to the full Board of Directors;
(iii) to report its activities to the full Board of Directors on a
regular basis and to make such recommendations with respect to the
above and other matters as the Audit Committee may deem necessary
or appropriate; and
(iv) to prepare and review with the Board an annual performance
evaluation of the Audit Committee, comparing the performance of the
Audit Committee with the requirements of
32
the Charter, and setting forth the goals and objectives of the Audit
Committee for the upcoming year. The performance evaluation by the
Audit Committee shall be conducted in such a manner as the Audit
Committee deems appropriate. The report to the Board may take the
form of an oral report by the chairperson of the Audit Committee or
any other member of the Audit Committee designated by the Audit
Committee to make this report.
4. With respect to Compliance, to establish procedures for the receipt,
retention and treatment of complaints received by the Company regarding
accounting, internal accounting controls or auditing matters, and the
confidential, anonymous submission by employees of concerns regarding
questionable accounting or auditing matters.
Resources and Authority of the Audit Committee
The Audit Committee shall have the resources and authority appropriate to
discharge its duties and responsibilities. In particular, it will be
authorized to engage independent auditors for special audits, reviews and
other procedures and to retain special or independent counsel and other
experts or consultants, as it deems appropriate, without seeking approval of
the Board or management.
Limitation of the Audit Committee's Role
While the Audit Committee has the responsibilities and powers set forth in
this Charter, it is not the duty of the Audit Committee to plan or conduct
audits or to determine that the Company's financial statements and disclosures
are complete and accurate and are in accordance with generally accepted
accounting principles and applicable rules and regulations. These are the
responsibilities of management and the independent auditor.
33
Appendix B
WILLIS GROUP HOLDINGS LIMITED
Compensation Committee Charter
Purpose of Committee
The purpose of the Compensation Committee (the "Committee") of the Board of
Directors (the "Board") of Willis Group Holdings Limited (the "Company") is to
oversee the administration of the Company's compensation programs, review the
compensation of senior management and prepare any report on executive
compensation required by the rules and regulations of the Securities and
Exchange Commission (the "SEC").
Committee Membership
The Committee shall consist of a minimum of three members of the Board who
shall be appointed by the Board, and shall serve at the pleasure of the Board
and for such term or terms as the Board may determine.
Committee Structure and Operations
The Board shall designate one member of the Committee as its chairperson. The
Committee shall meet in person or telephonically at least twice a year at a
time and place determined by the Committee chairperson, with further meetings
to occur, or actions to be taken by unanimous written consent, when deemed
necessary or desirable by the Committee or its chairperson.
The Committee may invite such members of management to its meetings as it may
deem desirable or appropriate, consistent with the maintenance of the
confidentiality of compensation discussions. The Company's Chief Executive
Officer ("CEO") shall not attend the portion of any meeting during which the
CEO's performance or compensation is discussed, unless specifically invited by
the Committee.
Committee Duties and Responsibilities
The following are the duties and responsibilities of the Committee:
1. In consultation with senior management, establish the Company's general
compensation philosophy, and oversee the development and implementation
of compensation programs.
2. Review and approve corporate goals and objectives relevant to the
compensation of the CEO, evaluate the performance of the CEO and in light
of those goals and objectives, and set the CEO's compensation level based
on this evaluation. In determining the long-term incentive component of
CEO compensation, the Committee shall consider, among other factors, the
Company's performance and relative shareholder return, the value of
similar incentive awards to chief executive officers at comparable
companies, the awards given to the CEO in the past years and such other
factors as the Committee may deem relevant.
3. Review and approve compensation programs applicable to the senior
management of the Company.
34
4. Make recommendations to the Board with respect to the Company's existing
and proposed incentive compensation plans and equity-based plans, oversee
the activities of the employees and management committees responsible for
administering these plans and discharge any responsibilities imposed on
the Committee by any of these plans.
5. In consultation with senior management, oversee regulatory compliance
with respect to compensation matters, including overseeing the Company's
policies on structuring compensation programs to preserve tax
deductibility, and, as and when required, establishing performance goals
and certifying that performance goals have been attained for purposes of
Section 162(m) of the Internal Revenue Code.
6. Prepare and issue the evaluations and reports required under "Committee
Reports" below.
7. Perform any other duties or responsibilities expressly delegated to the
Committee by the Board from time to time relating to the Company's
compensation programs.
Delegation to Subcommittee
The Committee may, in its discretion, delegate all or a portion of its duties
and responsibilities to a subcommittee in accordance with the Company's
bye-laws. In particular, the Committee may delegate the approval of certain
transactions to a subcommittee consisting solely of members of the Committee
who are (i) "Non-Employee Directors" for the purposes of Rule 16b-3 of the
Securities Exchange Act of 1934, as in effect from time to time, and (ii)
"outside directors" for the purposes of Section 162(m) of the Internal Revenue
Code, as in effect from time to time.
Committee Reports
The Committee shall produce the following reports and provide them to the
Board:
l. An annual Report of the Compensation Committee on Executive Compensation
for inclusion in the Company's annual proxy statement in accordance with
applicable SEC rules and regulations.
2. An annual performance evaluation of the Committee, comparing the
performance of the Committee with the requirements of this charter and
setting forth the goals and objectives of the Committee for the upcoming
year. The performance evaluation should also recommend to the Board any
improvements to this charter deemed necessary or desirable by the
Committee. The performance evaluation by the Committee shall be conducted
in such manner as the Committee deems appropriate. The report to the
Board may take the form of an oral report by the chairperson of the
Committee or any other member of the Committee designated by the
Committee to make this report.
3. A summary of the actions taken at each Committee meeting, which shall be
presented to the Board at the next Board meeting.
Resources and Authority of the Committee
The Committee shall have the resources and authority appropriate to discharge
its duties and responsibilities, including the authority to retain counsel and
other experts or consultants. The Committee shall have the sole authority to
select, retain and terminate a compensation consultant and to approve the
consultant's fees and other retention terms.
35
Appendix C
WILLIS GROUP HOLDINGS LIMITED
2001 SHARE PURCHASE AND OPTION PLAN
AMENDED AND RESTATED
1. Purpose of Plan
The Willis Group Holdings, Limited ("Holdings") 2001 Share Purchase
and Option Plan (the "Plan") is designed:
(a) to promote the long term financial interests and growth of
Holdings and its Subsidiaries (collectively, "Willis Group") by attracting and
retaining personnel with the training, experience and ability to enable them
to make a substantial contribution to the success of Willis Group's business;
(b) to motivate management personnel by means of growth-related
incentives to achieve long range goals; and
(c) to further the identity of interests of participants with those
of the shareholders of Willis Group through opportunities for increased stock,
or stock-based, ownership in Willis Group.
2. Definitions
As used in the Plan, the following words shall have the following
meanings:
(a) "Board of Directors" means the Board of Directors of Holdings.
(b) "Change in Control" means: (i) sale of all or substantially all
of the assets of Holdings or Willis Group to a Person or Group that is not
Kohlberg Kravis Roberts & Co. or an affiliate thereof (collectively, the "KKR
Partnerships"), (ii) a sale by any member of the KKR Partnerships resulting in
more than 50% of the voting stock of Holdings or Willis Group being held by a
Person or Group that is not a member of the KKR Partnerships or (iii) a
merger, consolidation, recapitalization or reorganization of Holdings or
Willis Group with or into another Person which is not a member of the KKR
Partnerships; and following any of the foregoing events in (ii)-(iii), (x) the
KKR Partnerships no longer have the ability, without the approval of a Person
or Group who is not a member of the KKR Partnerships, to elect a majority of
the Board of Directors of Holdings (or the resulting entity) and (y) any
Person or Group who is not a member of the KKR Partnerships is or becomes the
Beneficial Owner, directly or indirectly, in the aggregate, of a greater
percentage of the total voting power of Holdings or Willis Group than that
held, directly or indirectly, in the aggregate, by the KKR Partnerships. For
purposes of this definition, "Beneficial Owner" shall have the same meaning as
defined in Rules 13d-3 and 13d-5 under the Exchange Act, which shall in any
event include having the power to vote (or cause to be voted) pursuant to
contract, irrevocable proxy or otherwise, and which, for purposes of the
calculation under clause (y), shall be deemed to include shares that any such
Person or Group has a right to acquire, whether such right is exercisable
immediately or only after the passage of time.
36
(c) "Committee" means the Compensation Committee of the Board of
Directors (or, if no such committee is appointed, the Board of Directors).
(d) "Common Shares" or "Share" means common shares of Willis Group,
which may be authorized but unissued.
(e) "Director" means any member of the Board of Directors who is an
Employee.
(f) "Employee" means a person, including a director and an officer,
in the employment of Willis Group.
(g) "Exchange Act" means the Securities Exchange Act of 1934 of the
United States, as amended.
(h) "Grant" means an award made to a Participant pursuant to the
Plan and described in Paragraph 5, including, without limitation, an award of
a Share Option, Restricted Share, Purchase Share, or Other Share-Based Grant
or any combination of the foregoing.
(i) "Grant Agreement" means an agreement between Holdings and a
Participant that sets forth the terms, conditions and limitations applicable
to a Grant.
(j) "Group" means a "group" as such term is used in Sections 13(d)
and 14(d) of the Exchange Act, acting in concert.
(k) "Participant" means an Employee or Director of any member of
Willis Group, to whom one or more Grants have been made, and such Grants have
not all been forfeited or terminated under the Plan.
(l) "Person" means "person" as such term is used in Sections 13(d)
and 14(d) of the Exchange Act.
(m) "Share-Based Grants" means the collective reference to the grant
of Purchase Shares, Restricted Shares and Other Share-Based Grants.
(n) "Share Options" means options to purchase Common Shares, which
may or may not be incentive stock options ("Incentive Stock Options") within
the meaning of Section 422 of the Internal Revenue Code of 1986 of the United
States, as amended (the "Code").
(o) "Subsidiary" means a "subsidiary", as such term is defined in
Section 86 of the Bermudan Companies Act 1981.
3 Administration of Plan
(a) The Plan shall be administered by the Committee. All of the
members of the Committee and any other Directors shall be eligible to be
selected for Grants under the Plan; provided, however, that to the extent the
Board determines it is necessary or desirable to satisfy any regulation or
rule, whether under Section 16 of the Exchange Act or otherwise related to the
Grants, the members of the Committee shall qualify under such regulation or
rules. The Committee may adopt its own rules of procedure, and the action of a
majority of the Committee, taken at a meeting or taken without a meeting by a
writing signed by such majority, shall constitute action by the Committee. The
Committee shall have the power and authority to administer, construe and
interpret the Plan, to make rules for carrying it
37
out and to make changes in such rules. The Committee shall also have the power
to establish sub-plans, which may constitute separate schemes, for the purpose
of establishing schemes which qualify for approval by the UK Inland Revenue or
meet any special tax or regulatory requirements anywhere in the world. Any
such interpretations, rules, administration and sub-plans shall be consistent
with the basic purposes of the Plan.
(b) The Committee may delegate to the Chief Executive Officer and to
other senior officers of Willis Group its duties under the Plan subject to
such conditions and limitations as the Committee shall prescribe except that
only the Committee may designate and make Grants to Participants who are
subject to Section 16 of the Exchange Act.
(c) The Committee may employ attorneys, consultants, accountants,
appraisers, brokers or other persons. The Committee, Willis Group, and the
officers and Directors of Willis Group shall be entitled to rely upon the
advice, opinions or valuations of any such persons. All actions taken and all
interpretations and determinations made by the Committee in good faith shall
be final and binding upon all Participants, Willis Group and all other
interested persons. No member of the Committee shall be personally liable for
any action, determination or interpretation made in good faith with respect to
the Plan or the Grants, and all members of the Committee shall be fully
protected by Willis Group with respect to any such action, determination or
interpretation.
4. Eligibili!y
Subject to Section 11 of the Plan, the Committee may from time to
time make Grants under the Plan to such Employees or Directors of Willis
Group, and in such form and having such terms, conditions and limitations as
the Committee may determine. Grants may be granted singly, in combination or
in tandem. The terms, conditions and limitations of each Grant under the Plan
shall be set forth in a Schedule to the Plan (as described in Section 11
below), to be attached hereto, and/or a Grant Agreement, in a form approved by
the Committee, consistent, however, with the terms of the Plan.
5. Grants
From time to time, the Committee will determine the forms and
amounts of Grants for Participants. Such Grants may take the following forms
in the Committee's sole discretion; provided, however, that in no event shall
the purchase price of any Grant be less than the par value of the Shares. The
terms of any Grant may include a requirement that the Participant enter into
an agreement or election under which the Participant agrees to pay his or her
employer's social security or National Insurance liability (or reimburse the
employer for such liability) in any jurisdiction arising on exercise of any
Share Option, or at any other time with respect to any other Share-Based
Award, and if this requirement is not permitted in any jurisdiction the Grant
in such circumstances shall be null and void.
(a) Share Options - These are options to purchase Common Shares,
which may or may not be Incentive Stock Options. Any options that are granted
as Incentive Stock Options shall have an exercise price at least equal to the
fair market value of one share of Common Shares on the date of Grant (or, if
the person to whom the option is being granted owns Common Shares representing
more than 10 percent of the voting power of all classes of Company equity, the
exercise price shall be at least equal to 110 percent of the fair market value
of one Common Share on the date of Grant). At the time of the Grant the
Committee shall determine, and shall have contained in the Grant Agreement or
other Plan rules, the option exercise period, the option price, and such other
conditions or restrictions on the grant or exercise of the option as the
Committee deems appropriate, which may include the requirement that the grant
of options is predicated on the acquisition of Purchase Shares under Section
5(c) by the Participant
38
or as may be required pursuant to applicable law, if such options shall be
Incentive Stock Options. Payment of the option price shall be made in cash or
in shares of Common Shares (provided, that such Shares have been held by the
Participant for not less than six months (or such other period as established
by the Committee from time to time)), or a combination thereof, in accordance
with the terms of the Plan, the Grant Agreement and any applicable guidelines
of the Committee in effect at the time.
(b) Restricted Shares - Restricted Shares are Common Shares
delivered to a Participant with or without payment of consideration with
restrictions or conditions on the Participant's right to transfer or sell such
shares; provided that the price of any Restricted Stock may not be less than
the par value of the Common Shares. The number of shares of Restricted Shares
and the restrictions or conditions on such shares shall be as the Committee
determines, in the Grant Agreement or by other Plan rules, and the certificate
for the Restricted Shares shall bear evidence of such restrictions or
conditions. Subject to Section 9 and Section 11, Restricted Shares may NOT
have a restriction period of less than 6 months.
(c) Purchase Shares - Purchase Shares refers to shares of Common
Shares offered to a Participant at such price as determined by the Committee,
the acquisition of which may make him eligible to receive under the Plan,
among other things, Share Options.
(d) Other Share-Based Grants - The Committee may make other Grants
under the Plan pursuant to which shares of Common Shares or other equity
securities of Willis Group are or may in the future be acquired, or Grants
denominated in stock units, including ones valued using measures other than
market value. Other Share-Based Grants may be granted with or without
consideration.
6. Limitations and Conditions
(a) The number of Shares available for Grants under this Plan shall
be 15,000,000 shares of the authorized Common Shares as of the effective date
of the Plan. The number of Shares subject to Grants under this Plan to any one
Participant shall not be more than 5,000,000 Shares in any one calendar year.
Unless restricted by applicable law, Shares related to Grants that are
forfeited, terminated, cancelled or expire unexercised, shall immediately
become available for new Grants.
(b) No Grants shall be made under the Plan beyond ten years after
the effective date of the Plan, but the terms of Grants made on or before the
expiration of the Plan may extend beyond such expiration. At the time a Grant
is made or amended or the terms or conditions of a Grant are changed, the
Committee may provide for limitations or conditions on such Grant.
(c) Nothing contained herein shall affect the right of Willis Group
to terminate any Participant's employment at any time or for any reason. The
rights and obligations of any individual under the terms of his office or
employment with any member of Willis Group shall not be affected by his or her
participation in this Plan or any right which he or she may have to
participate in it, and an individual who participates in this Plan shall waive
any and all rights to compensation or damages in consequence of the
termination of his or her office or employment for any reason whatsoever
insofar as those rights arise or may arise from his or her ceasing to have
rights under or be entitled to exercise any Grant as a result of such
termination.
(d) Deferrals of Grant payouts may be provided for, at the sole
discretion of the Committee, in the Grant Agreements.
39
(e) Except as otherwise prescribed by the Committee, the amounts of
the Grants for any employee of a Subsidiary, along with interest, dividend,
and other expenses accrued on deferred Grants shall be charged to the
Participant's employer during the period for which the Grant is made. If the
Participant is employed by more than one Subsidiary or by both Willis Group
and a Subsidiary during the period for which the Grant is made, the
Participant's Grant and related expenses will be allocated between the
companies employing the Participant in a manner prescribed by the Committee.
(f) Other than as specifically provided pursuant to a Grant
Agreement or other related agreement between a Participant and Willis Group,
no benefit under the Plan shall be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, or charge, and
any attempt to do so shall be void. No such benefit shall, prior to receipt
thereof by the Participant, be in any manner liable for or subject to the
debts, contracts, liabilities, engagements, or torts of the Participant.
(g) Participants shall not be, and shall not have any of the rights
or privileges of, shareholders of Willis Group in respect of any Shares
purchasable in connection with any Grant unless and until certificates
representing any such Shares have been issued by Willis Group to such
Participants, unless the Committee shall otherwise determine.
(h) No election as to benefits or exercise of Stock Options or other
rights may be made during a Participant's lifetime by anyone other than the
Participant except by a legal representative appointed for or by the
Participant.
(i) Absent express provisions to the contrary, any grant under this
Plan shall not be deemed compensation for purposes of computing benefits or
contributions under any retirement plan of any member of Willis Group and
shall not affect any benefits under any other benefit plan of any kind now or
subsequently in effect under which the availability or amount of benefits is
related to level of compensation. This Plan is not a "Retirement Plan" or
"Welfare Plan" under the Employee Retirement Income Security Act of 1974 of
the United States, as amended.
(j) Unless the Board determines otherwise, no benefit or promise
under the Plan shall be secured by any specific assets of any member of Willis
Group, nor shall any assets of any member of Willis Group be designated as
attributable or allocated to the satisfaction of Willis Group's obligations
under the Plan.
7. Transfers and Leaves of Absence
For purposes of the Plan, unless the Committee determines otherwise:
(a) a transfer of a Participant's employment without an intervening period of
separation among Willis Group and any Subsidiary shall not be deemed a
termination of employment, and (b) a Participant who is granted in writing a
leave of absence shall be deemed to have remained in the employ of Willis
Group during such leave of absence.
8. Adiustments
In the event of any change in the outstanding Common Shares by
reason of a stock split, spin-off, stock dividend, stock combination or
reclassification, recapitalization or merger, change of control, or similar
event, the Committee shall adjust appropriately the number of Shares subject
to the Plan and available for or covered by Grants and Share prices related to
outstanding Grants to the extent necessary, and may make such other revisions
to outstanding Grants as it deems are equitably required
40
including, without limitation, in an event that is not a change of control,
providing for the payment of a dividend in respect of the Shares subject to
any outstanding Grants, in all events in order to allow Participants to
participate in such event in an equitable manner.
9. Merger, Consolidation, Exchange, Acquisition, Liquidation or
Dissolution
In its absolute discretion, and on such terms and conditions as it
deems appropriate, coincident with or after the grant of any Stock Option or
any Stock-Based Grant, the Committee may provide that such Stock Option or
Stock-Based Grant cannot be exercised after a Change in Control, a merger,
amalgamation pursuant to Bermuda law, or other consolidation of Holdings or
Willis Group with or into another company, the exchange of all or
substantially all of the assets of Holdings or Willis Group for the securities
of another company, the acquisition by another Person or Group of 80% or more
of Holdings or Willis Group's then outstanding shares of voting stock or the
recapitalization, reclassification, liquidation or dissolution of Holdings or
Willis Group, and if the Committee so provides, it shall, on such terms and
conditions as it deems appropriate in its absolute discretion, also provide,
either by the terms of such Stock Option or Stock-Based Grant or by a
resolution adopted prior to the occurrence of such Change in Control merger,
consolidation, exchange, acquisition, recapitalization, reclassification,
liquidation or dissolution, that, for some period of time prior to such event,
such Stock Option or Stock-Based Grant shall be exercisable as to all shares
subject thereto, notwithstanding anything to the contrary herein (but subject
to the provisions of Section 6(b) and that, upon the occurrence of such event,
such Stock Option or Stock-Based Grant shall terminate and be of no further
force or effect; provided, however, that the Committee may also provide, in
its absolute discretion, that even if the Stock Option or Stock-Based Grant
shall remain exercisable after any such event, from and after such event, any
such Stock Option or Stock-Based Grant shall be exercisable only for the kind
and amount of securities and/or other property, or the cash equivalent
thereof, receivable as a result of such event by the holder of a number of
shares of stock for which such Stock Option or Stock-Based Grant could have
been exercised immediately prior to such event.
10. Amendment and Termination
The Committee shall have the authority to make such amendments to
any terms and conditions applicable to outstanding Grants as are consistent
with this Plan. The Board of Directors may amend, suspend or terminate the
Plan at any time.
11. Foreign Options and Rights
The Committee or Board, as applicable, may establish rules or
schemes in order to make Grants to Employees who are subject to the laws of
nations other than Bermuda, which Grants may have terms and conditions that
differ from the terms thereof as provided elsewhere in the Plan for the
purpose of complying with foreign laws. In the event that the Committee or
Board establishes such rules or schemes, the substantive provisions thereof
shall be set forth on schedules attached hereto, and are hereby incorporated
by reference as part of the Plan, subject to any additional action required to
be taken pursuant to the applicable foreign law.
12. Withholding Taxes
(a) Willis Group shall have the right to deduct from any cash
payment made under the Plan any federal, state, local, national, provincial or
other income or other taxes required by law to be withheld with respect to
such payment. It shall be a condition to the obligation of Willis Group to
deliver
41
shares upon the exercise of an Option, upon delivery of Restricted Stock or
upon exercise, settlement or payment of any Other Stock-Based Grant that the
Participant pay to Willis Group such amount as may be requested by Willis
Group for the purpose of satisfying any liability for such withholding taxes.
Any Grant Agreement may provide that the Participant may elect, in accordance
with any conditions set forth in such Grant Agreement, to pay a portion or the
entire minimum amount of such withholding taxes in shares of Common Shares:
(b) Notwithstanding anything set forth in section 12(a), an option
may not be exercised unless:
(i) the Board considers that the issue or transfer of shares
pursuant to such exercise would be lawful in all relevant jurisdictions; and
(ii) in a case where, if the option were exercised, Willis Group
would be obliged to (or would suffer a disadvantage if it were not to) account
for any tax (in any jurisdiction) for which the person in question would be
liable by virtue of the exercise of the option and/or for any social security
contributions that would be recoverable from the person in question (together,
the "Tax Liability"), that person has either:
(x) made a payment to Willis Group of an amount at least equal
to the Holdings estimated of the Tax Liability; or
(y) entered into arrangements acceptable to Willis Group to
secure that such a payment is made (whether by authorizing
the sale of some or all of the shares on his behalf and
the payment to Willis Group of the relevant amount out of
the proceeds of sale or otherwise).
13. Governing Law
This Plan shall be governed by the laws of Bermuda, without regard
to conflicts of laws.
14. Effective Date and Termination Dates
The Plan shall be effective on and as of the date of its original
approval by the Board of Directors of Holdings and shall be approved by a
majority of the shareholders of Holdings, and shall terminate ten years
thereafter, subject to earlier termination by the Board of Directors pursuant
to Sections 9 and 10.
42
