8-KLeadership Changes

Aon plc 8-K Report, Executive Changes (Mar 19, 2008)

Filed March 19, 2008For Securities:AON

Summary

This 8-K filing from Aon plc, dated March 19, 2008, primarily details the establishment of the company's 2008 annual incentive compensation and long-term incentive awards for its executive officers. The company has set pre-tax income from ongoing operations as the key corporate performance measure for 2008, with a minimum threshold of 85% of planned pre-tax income required for any payout under the Senior Officer Incentive Compensation Plan. This filing outlines specific incentive targets and potential payouts for key executives, including the CEO. Furthermore, Aon has introduced a new Leadership Performance Program for long-term incentives, designed to drive company success and employee retention. This program consists of performance share units (80%) tied to cumulative earnings per share targets over a three-year period (2008-2010), and stock options (20%) that vest over the same period. The filing provides details on the target awards for named executive officers, including Gregory C. Case, Patrick G. Ryan, Stephen P. McGill, and Andrew M. Appel, and notes that Mr. Case has waived his right to certain annual option grants in exchange for participation in this new program.

Key Highlights

  • 1Aon Corporation has established its 2008 annual incentive compensation plan, with pre-tax income from ongoing operations as the primary performance metric.
  • 2A minimum threshold of 85% of planned pre-tax income is required for any payout under the 2008 Senior Officer Incentive Compensation Plan.
  • 3Key executive officers, including CEO Gregory C. Case, have target incentives set at 150% of their base salary, with the potential to earn up to 300% of this target.
  • 4A new Leadership Performance Program has been approved for long-term incentives, designed to align executive compensation with long-term company performance and retention.
  • 5Long-term awards are comprised of 80% performance share units tied to cumulative EPS targets over a three-year period (2008-2010) and 20% stock options vesting over the same period.
  • 6Specific performance share unit and stock option awards are detailed for named executive officers, including Gregory C. Case, Patrick G. Ryan, Stephen P. McGill, and Andrew M. Appel.
  • 7Gregory C. Case has waived his entitlement to certain annual option grants in favor of participation in the new Leadership Performance Program.

Frequently Asked Questions

This 8-K filing primarily focuses on Aon Corporation's compensation plans for its senior officers, specifically outlining the terms and awards for both annual and long-term incentives for the 2008 performance year and the subsequent three-year performance period.

For 2008, Aon's executive performance for annual incentives will be measured by pre-tax income from ongoing operations. A minimum threshold of 85% of planned pre-tax income must be achieved for any payout to occur under the Aon Senior Officer Incentive Compensation Plan.

The new Leadership Performance Program for long-term incentives consists of two main components: 80% in performance share units, which are earned based on Aon's cumulative earnings per share performance over a three-year period (January 1, 2008, to December 31, 2010), and 20% in stock options that vest over the same three-year performance period.

Gregory C. Case, as consideration for his participation in the new Leadership Performance Program, has waived his right to receive an annual option grant valued at not less than $1,800,000 per year for the duration of the performance period. This indicates a commitment to the new long-term incentive structure and a potential belief in its ability to deliver greater value.