PERFORMANCE SHARE AGREEMENT
Exhibit 10.5
Total System Services, Inc. (“Company”) confirms that, effective (the “Grant
Date”), you were awarded the opportunity to receive Performance Shares with an initial economic
value equal to the product of (a) your base salary on the Grant Date multiplied by (b)
your LTIP multiplier as determined by the Committee prior to the Grant Date (such initial economic
value being the “ Performance Opportunity”), subject to adjustment based on specified
performance measures for the period . The Performance Opportunity will
be converted into Performance Shares pursuant to the provisions of Section 1 below, with one-half
of the Performance Opportunity converted pursuant to Section 1(d) and the other half
converted pursuant to Section 1(e). The Performance Shares that you receive in connection with
this Performance Opportunity, if any, are subject to the terms and conditions of
this Performance Share Agreement (this “Agreement”) and the Company’s 2008 Omnibus Plan (the
“Plan”). Any other capitalized word used in this Agreement and not defined in this Agreement,
including each form of that word, is defined in the Plan.
1. Standard Performance Terms.
(a) In General. The terms of this Section 1 shall be referred to as the “Standard
Performance Terms” and will apply to your Performance Shares except in so far as Sections 2 (Change
of Employment Status) or 3 (Change of Control) apply.
(b) Performance Period. The number of Performance Shares you receive in connection
with the Performance Opportunity will be determined on the basis of the Company’s
performance during the performance period beginning on and ending on
(the “Performance Period”).
(c) Initial Performance Shares. The Performance Opportunity initially
will equal a number of Performance Shares determined by dividing the Performance
Opportunity by the closing price of the Company’s Shares on the New York Stock Exchange on the
Grant Date (your “Initial Performance Shares”).
(d) Performance Goals Based on Revenue Growth. The Committee will set the performance
goals for one-half of your Initial Performance Shares based on the compounded annual growth rate of
the Company’s revenue before reimbursables (as shown on the Company’s financial statement) for the
Performance Period, subject to adjustment as provided in Section 1(f) (the “Revenue Growth”).
Within 90 days after the beginning of the Performance Period, the Committee will establish a target
Revenue Growth, as well as minimum and maximum threshold levels of Revenue Growth.
After the end of the Performance Period, the Committee will certify the Revenue Growth and the
number of Performance Shares payable based on the Company’s performance against the pre-established
target, minimum and maximum threshold levels of Revenue Growth as set forth in this Section 1(d);
provided; however, without regard to the Revenue Growth, in no event will the number of Performance
Shares payable pursuant to this Section 1(d) exceed the number of Performance Shares payable
pursuant to Section 1(e).
| • | If the Revenue Growth equals the target for the Performance Period, then the number of Performance Shares payable will equal 50% of your Initial Performance Shares that are subject to this Section 1(d); | ||
| • | If the Revenue Growth equals the minimum threshold for the Performance Period, then the number of Performance Shares payable will equal 25% of your Initial Performance Shares that are subject to this Section 1(d); | ||
| • | If the Revenue Growth equals or exceeds the maximum threshold for the Performance Period, then the number of Performance Shares payable will equal 100% of your Initial Performance Shares that are subject to this Section 1(d); | ||
| • | If the Revenue Growth falls between the minimum threshold and the target for the Performance Period, or between the target and the maximum threshold for the Performance Period, then the percentage of your Initial Performance Shares that are subject to this Section 1(d) and the number of Performance Shares that are payable will be mathematically interpolated; and | ||
| • | If the Revenue Growth is less than the minimum threshold for the Performance Period, then none of your Initial Performance Shares that are subject to this Section 1(d) will be payable. |
(e) Performance Goals Based on Income Growth. The Committee will set the performance
goals for the other half of your Initial Performance Shares based on the compounded annual growth
rate of the Company’s income from continuing operations (as shown on the Company’s financial
statement) for the Performance Period, subject to adjustment as provided in Section 1(f) (the
“Income Growth”). Within 90 days after the beginning of the Performance Period, the Committee will
establish a target Income Growth, as well as minimum and maximum threshold levels of Income Growth.
After the end of the Performance Period, the Committee will certify the Income Growth and the
number of Performance Shares payable based on the Company’s performance against the pre-established
target, minimum and maximum threshold levels of Income Growth as follows:
| • | If the Income Growth equals the target for the Performance Period, then the number of Performance Shares payable will equal 50% of your Initial Performance Shares that are subject to this Section 1(e); |
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| • | If the Income Growth equals the minimum threshold for the Performance Period, then the number of Performance Shares payable will equal 25% of your Initial Performance Shares that are subject to this Section 1(e); | ||
| • | If the Income Growth equals or exceeds the maximum threshold for the Performance Period, then the number of Performance Shares payable will equal 100% of your Initial Performance Shares that are subject to this Section 1(e); | ||
| • | If the Income Growth falls between the minimum threshold and the target for the Performance Period, or between the target and the maximum threshold for the Performance Period, then the percentage of your Initial Performance Shares that are subject to this Section 1(e) and the number of Performance Shares that are payable will be mathematically interpolated; and | ||
| • | If the Income Growth is less than the minimum threshold for the Performance Period, then none of your Initial Performance Shares that are subject to this Section 1(e) will be payable. |
(f) Adjustments. In determining the Revenue Growth and Income Growth, the Committee
will (i) make adjustments for regulatory changes in accounting, tax rates, and laws, (ii) exclude
any uncapitalized expenses associated with conversion of a major client, (iii) exclude costs and
benefits associated with changes in foreign currency exchange rates, (iv) exclude extraordinary
non-recurring income/expenses, (v) include acquisitions, and (vi) exclude a quantitative amount of
income from the Income Growth performance result to adjust for any dilutive EPS effect from any
transaction or series of transactions during the performance period.
2. Change of Employment Status. Except as otherwise provided in this Section 2 or
Section 3, you must remain employed with the Company or an Affiliate through the Performance Period
in order to fully vest in your Performance Shares. For purposes of this Section 2, your transfer
between the Company and an Affiliate, or among Affiliates, will not be a termination of employment.
In the event of a Change of Control, any applicable terms of Section 3 (Change of Control) will
supersede the terms of this Section 2.
(a) Long-Term Disability or Death. If (i) you qualify for long-term disability
benefits under a plan or arrangement offered by the Company or an Affiliate for its employees, or
(ii) your employment with the Company or an Affiliate terminates due to your death during the
Performance Period, the number of Performance Shares you will receive will equal the product of 50%
of the number of your Initial Performance Shares multiplied by the ratio of the number of days you
were employed during the Performance Period to the total number of days in the Performance Period.
(b) Retirement. If your employment with the Company or an Affiliate terminates on or
after your early retirement date (which is defined as attainment of age 62 with 15 or more years of
service) or your normal retirement date (which is defined as attainment of age 65), the Standard
Performance Terms applicable to the entire Performance Period will continue to apply to determine
the number of Performance Shares, except that the amount payable to you at the end of
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the Performance Period will be prorated based on the ratio of number of day you were employed during
the Performance Period to the total number of days in the Performance Period.
(c) Other Termination of Employment. Except as set forth in Section 2(a) or (b), if
you voluntarily terminate employment or if you are involuntarily terminated by the Company or an
Affiliate before the end of the Performance Period, your Performance Shares received in connection
therewith will be forfeited immediately.
3. Change of Control. In the event of a Change of Control and your subsequent
termination of employment within two (2) years following the date of such Change of Control
(and before the end of the Performance Period) either (i) by the Company for any reason other than
Cause or (ii) by you for Good Reason (as the terms “Cause” and “Good Reason” are defined in the
Company’s Change of Control Plan Document, the provisions of which are incorporated herein by
reference), the number of Performance Shares you receive will equal the product of 50% of the
number of your Initial Performance Shares multiplied by the ratio of the number of days you were
employed during the Performance Period to the total number of days in the Performance Period.
4. Nontransferability of Awards. Except as provided in Section 5 or as otherwise
permitted by the Committee, you may not sell, transfer, pledge, assign or otherwise alienate or
hypothecate any of your Performance Shares, and all rights with respect to your Performance Shares
are exercisable during your lifetime only by you.
5. Beneficiary Designation. You may name any beneficiary or beneficiaries (who may be
named contingently or successively) who may then exercise any right under this Agreement in the
event of your death. Each beneficiary designation for such purpose will revoke all such prior
designations. Beneficiary designations must be properly completed on a form prescribed by the
Committee and must be filed with the Company during your lifetime. If you have not designated a
beneficiary, your rights under this Agreement will pass to and may be exercised by your estate.
6. Tax Withholding. The Company will withhold from any payment made under this
Agreement or any other amounts payable to you by the Company an amount sufficient to satisfy the
minimum statutory Federal, state, and local tax withholding requirements relating to such payment.
7. Adjustments. In accordance with Section 4.4 of the Plan, the Committee will make
appropriate adjustments in the terms and conditions of your Performance Shares in recognition of a
corporate event or transaction affecting the Company (such as a common stock dividend, common stock
split, recapitalization, payment of an extraordinary dividend, merger, consolidation, combination,
spin-off, distribution of assets to stockholders other than ordinary cash dividends, exchange of
shares, or other similar corporate change), to prevent unintended dilution or enlargement of the
potential benefits of your Performance Shares. The Committee’s determinations pursuant to this
Section 7 will be conclusive.
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8. Timing and Form of Payment.
(a) This Agreement is intended to comply with Code Section 409A and shall be interpreted
accordingly. If Shares are to be paid to you, you will receive evidence of ownership of those
Shares.
(b) If payment is due and payable under the Standard Performance Terms or under Section 2(a),
payment will be made in Shares in as soon as administratively practicable following the
date the Committee certifies the Revenue Growth and Income Growth, and the number of Performance
Shares payable based on the applicable pre-established target, minimum threshold and maximum
threshold annual growth rate percentages.
(c) If payment is due and payable under Section 3, it will be made in Shares six (6) months
and one day after your “separation from service” under Code Section 409A.
9. Dividend Equivalents. The Initial Performance Shares will be credited with
dividend equivalents equal to the amount of cash dividend payments that would have otherwise been
paid if the shares of the Company’s common stock represented by the Initial Performance Shares
(including deemed reinvested additional shares attributable to the Initial Performance Shares
pursuant to this paragraph) were actually outstanding (the “Dividend Equivalents”). These Dividend
Equivalents will be deemed to be reinvested in additional shares of the Company’s common stock
determined by dividing the deemed cash dividend amount by the Fair Market Value of a share of the
Company’s common stock on the applicable dividend payment date. Such credited amounts will be
added to the Initial Performance Shares and will vest or be forfeited in accordance with Section 2
based on the vesting or forfeiture of the Initial Performance Shares to which they are
attributable. In addition, the Initial Performance Shares will be credited with any dividends or
distributions that are paid in shares of the Company’s common stock represented by the Initial
Performance Shares and will otherwise be adjusted by the Committee for other capital or corporate
events as provided for in the Plan.
10. No Guarantee of Employment. This Agreement is not a contract of employment and it
is not a guarantee of employment for life or any period of time. Nothing in this Agreement
interferes with or limits in any way the right of the Company or an Affiliate to terminate your
employment at any time. This Agreement does not give you any right to continue in the employ of
the Company or an Affiliate.
11. Governing Law; Choice of Forum. This Agreement will be construed in accordance
with and governed by the laws of the State of Georgia, regardless of the law that might be applied
under principles of conflict of laws. Any action to enforce this Agreement or any action otherwise
regarding this Agreement must be brought in a court in the State of Georgia, to which jurisdiction
the Company and you consent.
12. Miscellaneous. For purposes of this Agreement, “Committee” includes any direct or
indirect delegate of the Committee (to the extent permitted by Code Section 162(m)), and the word
“Section” refers to a Section in this Agreement. The Committee has absolute discretion to
interpret and make determinations under this Agreement. Any determination or interpretation by
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the Committee pursuant to this Agreement will be final and conclusive. In the event of a conflict
between any term of this Agreement and the terms of the Plan, the terms of the Plan control. This
Agreement and the Plan represent the entire agreement between you and
the Company, and you and all Affiliates, regarding your Performance Shares. No promises, terms, or
agreements of any kind regarding your Performance Shares that are not set forth, or referred to, in
this Agreement or in the Plan are part of this Agreement. In the event any provision of this
Agreement is held illegal or invalid, the rest of this Agreement will remain enforceable. If you
are an Employee of an Affiliate, your Performance Shares are being provided to you by the Company
on behalf of that Affiliate, and the value of your Performance Shares will be considered a
compensation obligation of that Affiliate. Your Performance Shares are not Shares and do not give
you the rights of a holder of Shares. The issuance of Shares pursuant to your Performance Shares
is subject to all applicable laws, rules and regulations, and to any approvals by any governmental
agencies or national securities exchanges as may be required. No Shares will be issued if that
issuance would result in a violation of applicable law, including the federal securities laws and
any applicable state or foreign securities laws.
13. Clawback Policy. The Committee may (in its sole discretion) direct that the
Company recover all or a portion of the Performance Shares or Shares you receive pursuant to this
Agreement if such Performance Shares or Shares are determined using materially misstated financial
information or other performance metric criteria. The amount to be recovered shall be equal to the
excess of the Performance Shares or Shares you receive over the Performance Shares or Shares that
you would have received had such financial information or performance metric been fairly stated, or
any greater or lesser amount (up to all of the Performance Shares or Shares) that the Committee
shall determine. The Committee shall determine whether the Company shall effect any such recovery:
(i) by seeking repayment, (ii) by reducing (subject to applicable law and the terms and conditions
of the applicable plan, program or arrangement ) the amount that would otherwise be payable under
any compensatory plan, program, or arrangement maintained by the Company, (iii) by withholding
payment of future increases in compensation (including the payment of any discretionary bonus
amount) or grants of compensatory awards that would otherwise have been made in accordance with the
Company’s otherwise applicable compensation practices, or (iv) by any combination of the foregoing.
14. Amendments. The Committee has the exclusive right to amend this Agreement as long
as the amendment does not adversely affect your Performance Opportunity in any
material way (without your written consent) and is otherwise consistent with the Plan. The Company
will give written notice to you (or, in the event of your death, to your beneficiary or estate) of
any amendment as promptly as practicable after its adoption.
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