8-KLeadership Changes

Aon plc 8-K Report, Executive Changes (Mar 21, 2007)

Filed March 21, 2007For Securities:AON

Summary

Aon Corporation filed an 8-K on March 20, 2007, detailing executive compensation decisions made by its Organization and Compensation Committee and Board of Directors around March 15-16, 2007. The report clarifies the corporate performance measure for the 2007 Annual Incentive Plan, setting pre-tax net income from continuing operations as the key metric, with a minimum payout threshold of 85% of planned net income. Furthermore, the filing outlines the approval of performance-based long-term incentive awards under the Leadership Performance Program for certain executive officers, including Named Executive Officers and others. These awards are structured with 75% in performance share units tied to cumulative earnings per share targets over a three-year period (2007-2009), and 25% in stock options vesting over the same period. This program is designed to align executive incentives with Aon's overall success and retention. Specific details on awards granted to Gregory C. Case, David P. Bolger, Patrick G. Ryan, Michael D. O’Halleran, and Dennis L. Mahoney are provided, noting Mr. Case's waiver of future annual option grants in consideration for his participation.

Key Highlights

  • 1Aon Corporation has set pre-tax net income from continuing operations as the corporate performance measure for its 2007 Annual Incentive Plan.
  • 2A minimum threshold of 85% of planned pre-tax net income must be achieved for any payout under the 2007 Annual Incentive Plan.
  • 3Performance-based long-term incentive awards have been approved for certain executive officers under the Leadership Performance Program.
  • 4Awards under the Leadership Performance Program consist of 75% performance share units tied to cumulative EPS targets (2007-2009) and 25% stock options vesting over the same period.
  • 5The Leadership Performance Program is part of Aon's stock award strategy to drive success and employee retention.
  • 6Gregory C. Case waived entitlement to annual option grants valued at not less than $1,800,000 per year for the Performance Period as consideration for his participation.
  • 7Specific numbers of target performance share units and stock options were granted to Named Executive Officers, including G.C. Case, P.G. Ryan, and others.

Frequently Asked Questions

The primary financial metric for Aon's 2007 Annual Incentive Plan is pre-tax net income from continuing operations.

The long-term incentive awards are composed of 75% performance share units, which are tied to cumulative earnings per share targets over a three-year performance period (2007-2009), and 25% stock options, which vest pro-rata over the same period.

Yes, for the 2007 Annual Incentive Plan, no payout will occur unless a minimum threshold of 85% of the planned pre-tax net income from continuing operations is met. For the long-term incentives, performance is measured against cumulative EPS targets, with awards potentially ranging from 0% to 200% of the target.

Mr. Case's waiver of his entitlement to annual option grants valued at not less than $1,800,000 per year for the Performance Period indicates a significant commitment to the specific structure and goals of the Leadership Performance Program as his primary long-term incentive compensation for that period.