Business Context and Reporting Period
This Form 8-K is a current report filed by Willis Group Holdings Limited (Willis Towers Watson PLC) on January 5, 2009, covering events occurring on December 31, 2008. The filing primarily addresses amendments to the employment agreement of Joseph J. Plumeri and updates to performance targets related to the recent acquisition of Hilb Rogal & Hobbs Company (HRH).
Key Financial Metrics
The filing does not report specific revenue, profit, cash flow, or debt figures for the period. It references non-GAAP financial measures used for executive compensation performance targets rather than operational results.
- 2009 Performance Targets: Adjusted EPS of $3.15 to $3.25; Adjusted Operating Margin of 24%.
- 2010 Performance Targets: Adjusted EPS of $4.05 to $4.15; Adjusted Operating Margin of 27%.
Material Changes
The primary material change is the execution of the First Amendment to the Fourth Amended and Restated Employment Agreement with Joseph J. Plumeri. Key changes include:
- Alignment of the agreement with IRS Code Section 409A regarding deferred compensation taxation.
- Clarification of tax gross-up provisions and payment timelines (within 30 days) for benefits due upon termination.
- Adjustment of performance targets for Mr. Plumeri's stock options to match those approved for other senior executives following the HRH acquisition.
Guidance, Outlook, and Management Commentary
Management clarified the methodology for applying financial performance targets following the October 1, 2008, acquisition of HRH. Because the transaction closed earlier than anticipated, the Compensation Committee decided not to adjust the 2008 financial targets. Instead, the targets for 2009 and 2010 were adopted as originally set in June 2008, with the stipulation that results be calculated exclusive of HRH for the relevant periods. The filing notes that these non-GAAP measures are intended to provide meaningful evaluation of operating performance alongside GAAP statements.
Investor Verification Checklist
- Verify the specific terms of the First Amendment to Mr. Plumeri's employment agreement (Exhibit 10.1).
- Confirm the definition of "Adjusted EPS" and "Adjusted Operating Margin" used for executive compensation.
- Review the impact of the HRH acquisition on the company's consolidated financial statements in subsequent filings.
- Monitor compliance with IRS Code Section 409A as outlined in the amended agreement.