UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A

 

Proxy Statement Pursuant to Section 14(a) of

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Willis Group Holdings Public Limited Company

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WILLIS GROUP HOLDINGS PUBLIC LIMITED COMPANY

 

Notice of 2010 Annual General Meeting

 

of Shareholders and Proxy Statement

 

 

March 4, 2010

 

To: Shareholders of the Company

 

Dear Shareholder,

 

In December 2009, we sought and received shareholder approval to become incorporated in Ireland, having formerly been incorporated in Bermuda. You are now cordially invited to attend our first Annual General Meeting of Shareholders since becoming incorporated in Ireland at 9:00 am GMT on Wednesday April 21, 2010 at Willis Group Holdings Public Limited Company, Grand Mill Quay, Barrow Street, Dublin 4, Ireland.

 

In addition to the matters described in the attached Notice of Annual General Meeting and proxy statement, 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 your proxy card promptly.

 

I look forward to seeing you at the meeting.

 

Yours sincerely,

 

 

Joseph J. Plumeri

Chairman and Chief Executive Officer

 

Willis Group Holdings Public Limited Company

Grand Mill Quay

Barrow Street

Dublin 4

Ireland

 

WILLIS GROUP HOLDINGS PUBLIC LIMITED COMPANY

 

NOTICE OF 2010 ANNUAL GENERAL MEETING OF SHAREHOLDERS

 

AND

 

PROXY STATEMENT

 

NOTICE IS HEREBY GIVEN that the 2010 Annual General Meeting of Willis Group Holdings Public Limited Company (“Willis” or the “Company”), a company incorporated under the laws of Ireland, will be held on April 21, 2010, at 9:00 am GMT on Wednesday April 21, 2010 at Willis Group Holdings Public Limited Company, Grand Mill Quay, Barrow Street, Dublin 4, Ireland for the following purposes:

 

 

The directors will present, during the Annual General Meeting, the Company’s financial statements for the period ended December 30, 2009 prepared in accordance with Irish law (“Irish Statutory Accounts”) and the reports of the directors and auditor thereon. Shareholders present at the meeting will have an opportunity to ask any relevant and appropriate questions regarding the Irish Statutory Accounts and related reports to the representatives of our independent auditor in attendance at the meeting.

 

Only shareholders of record on February 26, 2010, are entitled to receive notice of, and to attend and vote, in person or by proxy, at the meeting and any adjournment or postponement of the meeting. A shareholder who is entitled to attend the meeting and vote is entitled to appoint one or more proxies to attend, speak and vote. A proxy need not be a member of the Company. Company shareholders of record who attend the meeting may vote their ordinary shares personally at the meeting, even if they have sent in proxies. This Notice and Proxy Statement are being mailed or made available on the Internet to shareholders on or around March 12, 2010, together with a copy of the Company’s 2009 Annual Report, which includes financial statements for the year ended December 31, 2009.

 

Your vote is important. Whether you own one share or many, your prompt cooperation in voting your proxy is greatly appreciated if you cannot attend the meeting in person. Please follow the instructions on the proxy card you receive. If you received this proxy statement by regular mail, you may cast your vote by mail, by telephone or over the Internet by following the instructions on the enclosed proxy card. If you received this proxy statement through the Internet after receiving a Notice of Internet Availability, you may cast your vote by telephone or over the Internet by following the instructions set out in that notice.

 

On Behalf of the Board of Directors,

 

Adam G. Ciongoli

Group General Counsel and Secretary

March 4, 2010

 

Willis Group Holdings Public Limited Company

Grand Mill Quay

Barrow Street

Dublin 4

Ireland

 

GENERAL INFORMATION

 

When did the Company change its jurisdiction of incorporation to Ireland?

 

The Company sought and received shareholder approval at a special court-ordered meeting of our shareholders of a scheme of arrangement (the “Scheme of Arrangement”) under Bermuda law that resulted in its shareholders owning ordinary shares of Willis Group Holdings Public Limited Company, a company incorporated in Ireland (“Willis-Ireland”), instead of common shares of Willis Group Holdings Limited, a company incorporated in Bermuda (“Willis-Bermuda”), for the purpose of changing the place of incorporation of the parent company of the Group from Bermuda to Ireland. The Scheme of Arrangement became effective at 6:59 p.m. Eastern Time on December 31, 2009 (the “Transaction Time”). This proxy statement relates to the Company’s first Annual General Meeting of Shareholders as a company organized under the laws of Ireland.

 

References to the “Company” in this proxy statement are to Willis-Bermuda for periods before the Transaction Time and Willis-Ireland for periods after the Transaction Time. References to the “Group” in this proxy statement are to the Company and its subsidiaries. References to “Shares” in this proxy statement are to the common shares of Willis-Bermuda prior to the Transaction Time and the ordinary shares of Willis-Ireland after the Transaction Time.

 

Why am I receiving these materials?

 

We are making this proxy statement available to you on or about March 12, 2010 via the Internet, or by delivering a printed version to you by mail, because the Board of Directors is soliciting your proxy to vote at the Company’s 2010 Annual General Meeting of Shareholders on April 21, 2010. The information provided in this proxy statement is for your use in deciding how to vote on the proposals described below.

 

The following documents are included with this proxy statement and are also available on the website at www.proxyvoting.com/wsh:

 

 

Why do the materials include two sets of financial statements?

 

Under applicable U.S. securities laws, we are required to send to you our financial statements for the fiscal year ended December 31, 2009 prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). Under Irish company law, we are required to provide you with our Irish Statutory Accounts, including the reports of our directors and auditors thereon, which accounts have been prepared in accordance with Irish law.

 

What proposals are scheduled to be voted on at the meeting?

 

The three proposals scheduled for a vote are:

 

Proposal 1: To elect the 11 directors to hold office until the next Annual General Meeting of Shareholders and until his/her successor is elected and qualified;

Proposal 2: To ratify the reappointment of Deloitte LLP as the Company’s independent auditors until the close of the next Annual General Meeting and to authorize the Board of Directors acting through the Audit Committee of to fix the auditor’s remuneration; and

 

Proposal 3: To approve the Willis Group Holdings Public Limited Company 2010 North American Employee Stock Purchase Plan.

 

What is the recommendation of the Board of Directors on each proposal scheduled to be voted on at the meeting? How do the Board of Directors and executive officers intend to vote with respect to the agenda items?

 

The Company’s Board of Directors recommends that you vote FOR the election of each of the directors, FOR the ratification of the reappointment of Deloitte LLP as the Company’s independent auditors and the authorization of the Board of Directors, acting through the Audit Committee, to set the independent auditor’s remuneration; and FOR the approval of the Willis Group Holdings Public Limited Company 2010 North American Employee Stock Purchase Plan. Our directors and executive officers have indicated that they intend to vote their Shares in favor of each of the agenda items. As of February 26, 2010, our directors and executive officers and their affiliates beneficially owned in the aggregate less than five percent of our outstanding Shares.

 

How do I attend the Annual General Meeting?

 

All shareholders of record on February 26, 2010 are invited to attend the Annual General Meeting in person. For admission to the meeting, shareholders of record should bring proof of identification and address. Those who have beneficial ownership of Shares held by a bank, brokerage firm or other nominee should bring account statements or letters from their banks, brokers or other nominee showing that they owned Willis Shares as of February 26, 2010. Registration will begin at 8:30 a.m. GMT and the meeting will begin at 9:00 a.m. GMT.

 

Who is entitled to vote?

 

Holders of our Shares, as recorded in our share register on February 26, 2010, may vote at the meeting. As of February 26, 2010, the latest practicable date, there were 168,829,678 Shares outstanding. Holders are entitled to one vote per Share. A list of shareholders will be available for inspection for at least 10 days prior to the meeting at our offices at One World Financial Center, 200 Liberty Street, New York, NY 10281-1003.

 

How do I vote?

 

You may vote in person at the meeting or by proxy. We recommend that you vote by proxy even if you expect to attend the meeting. You are entitled to appoint one or more proxies to attend, speak and vote instead of you. A proxy need not be a member of the Company. You will be able to change your vote at the meeting if you attend in person.

 

Please refer to your proxy card or the information forwarded by your bank, broker or other holder of record to see how you should complete your proxy card and deliver it to the Company.

 

How do proxies work?

 

The Company’s Board of Directors is asking for your proxy. Giving us your proxy means you authorize us to vote your Shares at the meeting, or at any adjournment of the meeting, in the manner you direct. You may vote for or against the proposals or abstain from voting. You may also vote for all, some, or none of the directors seeking election.

 

If you sign and return the enclosed proxy card but do not specify how to vote, we will vote your Shares FOR all items of the proposals.

If your Shares are held in an account with a broker, bank or other nominee, this institution is considered the shareholder of record and you are considered the “beneficial owner” or “street name holder” of those Shares. In this case, your broker or bank (or its agent) or other nominee has forwarded the proxy materials, and separate voting instructions, to you. Because you are not the shareholder of record, you may not vote your Shares in person at the Annual General Meeting unless you obtain a valid proxy from the broker, bank or other nominee that holds your Shares, giving you the right to vote the Shares in person at the meeting. As the beneficial owner of the Shares, you have the right to direct your broker, bank or other nominee how to vote your Shares by following the voting instructions provided to you with the proxy materials. Under relevant New York Stock Exchange (“NYSE”) rules, if you do not instruct your broker how to vote, your broker will be able to vote your Shares with respect to “routine” matters such as the ratification of the reappointment of Deloitte LLP as the Company’s independent auditors (Proposal 2) but not “non-routine” matters such as approval of the 2010 ESPP (Proposal 3). Additionally, as a result of a change in NYSE rules, we note that, unlike at our previous annual general meetings, the election of directors will be considered a non-routine matter under NYSE rules and your broker will not be able to vote your Shares with respect to Proposal 1 (Election of Directors) if you have not instructed your broker how to vote.

 

As of the date hereof, we do not know of any other business that will be presented at the meeting. If other business shall properly come before the meeting or any adjournment or postponement thereof, your proxy gives the person or persons named in the proxy the authority to vote on the matter in accordance with the recommendation of our Board of Directors.

 

Who is paying the costs of soliciting this proxy?

 

In addition to this mailing, our employees may solicit proxies personally, electronically or by telephone. We pay the costs of soliciting this proxy. We also reimburse brokers and other nominees for their expenses in sending these materials to you and getting your voting instructions. For further information on these arrangements, please refer to “Solicitation of Proxies.”

 

If I vote and then want to change or revoke my vote, may I?

 

If you are a shareholder of record, you may revoke your proxy at any time before the meeting by submitting a new proxy with a later date, by a later telephone or Internet vote, by voting in person at the meeting, or by notifying our Company Secretary. Written revocations to the Company Secretary should be directed to:

 

Company Secretary
c/o Office of the General Counsel
Willis Group Holdings Public Limited Company
One World Financial Center
200 Liberty Street
New York, NY 10281-1003

 

or by email to shareholder@willis.com.

 

If your Shares are held in a stock brokerage account or by a bank or other nominee on your behalf, follow the voting instructions provided to you with this proxy statement to determine how you may change your vote.

 

What is the quorum required for the Annual General Meeting?

 

In order to carry on the business of the meeting, we must have a quorum. Under our articles of association, shareholders holding at least 50% of our issued and outstanding Shares present in person or by proxy and entitled to vote constitute a quorum.

 

Only the Company’s shareholders, their proxy holders, the Company’s directors, the Company’s auditors and the Company’s guests may attend the meeting.

What vote is required for approval of each proposal and what is the effect of broker non-votes and abstentions?

 

All proposals to be acted on at the meeting require the affirmative vote of a majority of the votes cast at a meeting at which a quorum is present. Abstentions and broker non-votes, though counted for the purposes of determining that a quorum is present, will not be counted as votes cast and therefore will have no effect. A broker non-vote is a proxy submitted by a broker where the broker fails to vote on behalf of a client on a particular matter because the broker was not instructed by the beneficial owner when such instruction is required by the NYSE with respect to such matter.

 

Who will count the votes and certify the results?

 

BNY Mellon Shareowner Services has been appointed as the independent Inspector of Election and will count the votes, determine whether a quorum is present, evaluate the validity of proxies and ballots, and certify the results of the voting.

 

Who is your transfer agent?

 

Our transfer agent is BNY Mellon Shareowner Services. All communications concerning accounts of shareholders of record, including address changes, name changes, inquiries as to requirements to transfer Shares and similar issues, can be handled by calling toll-free (866) 259-7716 (U.S.) or (201) 680-6578 (outside the U.S.) or (800) 231-5469 (hearing impaired) or by accessing BNY Mellon’s web site at www.bnymellon.com/shareowner/isd.

 

How will the proxy materials be distributed and are they available on the Internet?

 

The instructions for accessing proxy materials and voting can be found in the information you received.

 

For shareholders who received a notice by mail about the Internet availability of proxy materials: You may access the proxy materials and voting instructions over the Internet via the web address provided in the Notice of Internet Availability. In order to access this material and vote, you will need the control number provided on the notice you received in the mail. You may vote by following the instructions on the notice or on the website.

 

For shareholders who received the proxy materials by mail: You may vote your Shares by following the instructions provided on the proxy card or voting instruction form. If you vote by Internet or telephone, you will need the control number provided on the proxy card or voting instruction form. If you vote by mail, please complete, sign and date the proxy card or voting instruction form and mail it in the accompanying pre-addressed envelope.

 

You have the right to request paper copies of the proxy materials, free of charge, regardless of whether you are a record or beneficial owner of Shares. Shareholders of record may request paper copies by emailing to shareholder@willis.com or by following the instructions contained in the notice. Shareholders who have already made a permanent election to receive paper copies of the proxy documents will receive a full set of the proxy documents in the mail. If you hold Shares through brokers, banks or other nominees, you should receive written instructions on how to request paper copies of the proxy materials if you so desire. We recommend that you contact your broker, bank or other nominee if you do not receive these instructions along with the Company’s proxy documents.

 

ITEM 1

 

ELECTION OF DIRECTORS

 

The Company’s memorandum and articles of association state that directors shall hold office only until the next Annual General Meeting of Shareholders unless they are earlier removed or resign before that meeting. All of our directors are seeking election at the Annual General Meeting. Directors are elected by the affirmative vote of a majority of the votes cast by shareholders at the Annual General Meeting and serve until the next following Annual General Meeting. Any nominee for director who does not receive a majority of the votes cast is not elected to the Board.

 

The Board recommends you vote FOR the election of each of the directors.

 

Nominees for Election

 

Our Board as a whole has been constituted to be strong in its collective knowledge, integrity, reputation, and leadership abilities, and, as discussed more below, to have a diversity of skills and experience with respect to accounting and financial services, government and regulation, marketing and operations, and global markets. The Corporate Governance and Nominating Committee considers each director’s individual qualifications in light of the overall mix of director attributes when recommending that person for membership on the Board. Following the biographical information for each director below, we have listed qualifications that, in addition to those discussed above, the Board considered in determining whether to recommend the director be nominated for reelection.

 

William W. Bradley—Senator William W. Bradley, age 66, joined the Board on September 18, 2002. He is a Managing Director of Allen & Company LLC, an investment bank. From 2001-2004 he acted as chief outside advisor to McKinsey & Company’s non-profit practice. Senator Bradley is also currently a director of Starbucks Corp. and Seagate Technology. He was a Senior Advisor and Vice Chairman of the International Council of JP Morgan & Co., Inc. from 1997-1999. During that time, he also worked 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 1979-1997 representing the state of New Jersey. In 2000, he was a candidate for the Democratic nomination for President of the United States. 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 1967-1977 during which time they won two NBA championships. Senator Bradley holds a BA degree in American History from Princeton University and an MA degree from Oxford University where he was a Rhodes Scholar. He has authored six books on American politics, culture and economy. Currently, Senator Bradley hosts American Voices, a weekly show on Sirius Satellite Radio that highlights the remarkable accomplishments of Americans both famous and unknown.

 

Senator Bradley has a deep understanding of U.S. governmental and regulatory affairs and public policy based on over 18 years in the U.S. Senate. He also has extensive experience in the private sector, including in financial services and journalism, as well as extensive experience as a director of a range of public companies.

 

Joseph A. Califano Jr.—Mr. Califano, age 78, joined the Board on April 21, 2004. He has been Chairman of the Board and President of the National Center on Addiction and Substance Abuse at Columbia University in New York City since 1992. Mr. Califano has served as Adjunct Professor of Public Health at Columbia University’s Medical School and School of Public Health and is a member of the Institute of Medicine of the National Academy of Sciences. Mr. Califano was senior partner of the Washington, D.C. office of the law firm Dewey Ballantine from 1983 to 1992. Mr. Califano served as the United States Secretary of Health, Education, and Welfare from 1977 to 1979, and he served as President Lyndon B. Johnson’s Assistant for Domestic Affairs from 1965 to 1969. He is the author of 12 books and is a Director and member of the Audit and Nominating and Corporate Governance

Committees of CBS, Inc. He also formerly served as a director on the Boards of Midway Games, Inc., AOP, Viacom, Warnaco, and Automatic Data Processing.

 

Mr. Califano has a deep understanding of governmental and legal affairs, including the regulation of healthcare. He is a lawyer and also has extensive experience as a director of other significant U.S. companies.

 

Anna C. Catalano—Ms. Catalano, age 50, joined the Board on July 21, 2006. She was Group Vice President, Marketing for BP plc from 2001 to 2003. Prior to that she held various executive positions in BP and Amoco, including Group Vice President, Emerging Markets at BP; Senior Vice President, Sales and Operations at Amoco; and President of Amoco Orient Oil Company. In addition to frequently speaking on strategic marketing and global branding, Ms. Catalano is a forthright leader on the mentoring and the advancement of women in business and in recognition of her efforts she was recognized by Fortune Magazine in 2001 as being among “The Most Powerful Women in International Business.” She currently serves on the Board of U.S. Dataworks Inc. and the Houston Chapter of the Alzheimer’s Association, and as an advisory board member of BT Global Services and Amyris Biotechnologies, and is also an advisor to the Gulf Coast Juvenile Diabetes Research Foundation. Ms. Catalano formerly served on the boards of SSL International plc, Hercules Incorporated and Aviva plc. Ms. Catalano holds a BS degree in Business Administration from the University of Illinois, Champaign-Urbana.

 

Ms. Catalano has significant executive experience in international business operations with a focus in marketing. She also brings a unique perspective as a result of her focus on the mentoring and enhancement of women in business.

 

Sir Roy Gardner—Sir Roy Gardner, age 64, joined the Board on April 26, 2006. He is a Chartered Certified Accountant and Chairman of Compass Group PLC, a food and support services company. He is a Senior Advisor to Credit Suisse and also a Director of Mainstream Renewable Power Limited, Chairman of the Advisory Board of the Energy Futures Lab of Imperial College London, President of Carers UK, Chairman of the Apprenticeship Ambassadors Network and Chairman of Plymouth Argyle Football Club (United Kingdom). He is a former Chief Executive of Centrica plc, Chairman of Manchester United plc, Finance Director of British Gas plc, Managing Director of GEC-Marconi Ltd, Director of GEC plc and of Laporte plc.

 

Sir Roy Gardner has extensive experience in finance and extensive operations experience in senior positions, including as CEO. He has deep experience in the UK business community, an important market for the Company.

 

The Rt. Hon. Sir Jeremy Hanley, KCMG—Sir Jeremy Hanley, age 64, joined the Board on April 26, 2006. He is a Chartered Accountant and a director of Willis Limited, a subsidiary of the Company, a director and member of the Audit and Compliance Committee of Lottomatica S.p.A and a director and member of the Audit and Remuneration Committees of Langbar International Limited. He is also a Director and Chairman of the Audit Committee of the Joint Arab-British Chamber of Commerce and a member of the Advisory Board of Blue Hackle Limited. Sir Jeremy was a Member of Parliament for Richmond and Barnes from 1983 to 1997 and held a number of ministerial position in the U.K. Government, including Under Secretary of State for Northern Ireland, Minister of State for the Armed Forces, Cabinet Minister without Portfolio at the same time as being Chairman of the Conservative Party and Minister of State for Foreign & Commonwealth Affairs. He retired from politics in 1998. He also served on the boards of Onslow Suffolk Limited, Mountfield Group Limited, Nymex London Limited and ITE Group plc.

 

Sir Jeremy Hanley has a deep understanding of U.K. governmental and regulatory affairs and public policy based on his 14 years as a member of Parliament and significant ministerial positions in the UK government. He also is a UK chartered accountant and has extensive experience as a director of a range of UK public companies.

Robyn S. Kravit—Ms. Kravit, age 58, joined the Board on April 23, 2008. She is an international business executive with over 26 years of experience in establishing and directing significant China-based operations engaged in the international trading of industrial raw materials. Ms. Kravit co-founded Tethys Research LLC, a biotechnology company, and has acted as its Chief Executive Officer since 2000. Ms. Kravit is a Director of FONZ, the organization which manages commercial and educational activities for Smithsonian’s National Zoological Park and chairs its Audit Committee. In addition, she serves on the Advisory Council of John Hopkins University’s Whiting School of Engineering. Ms. Kravit holds a BA in East Asian Studies from Vassar College, and a MA in East Asian Studies from Harvard University.

 

Ms. Kravit has over 26 years of business experience with Chinese-based operations, an emerging market for the Company. She also has operational experience as a CEO of a company she founded.

 

Jeffrey B. Lane—Mr. Lane, age 67, joined the Board on April 30, 2008. He has been Chief Executive Officer of Modern Bank, a private bank, since July 1, 2008. Prior to joining Modern Bank, he was Chairman and Chief Executive Officer of Bear Stearns Asset Management and was previously Vice Chairman of Lehman Brothers, Co—Chairman of Lehman Brothers Asset Management and Alternatives Division, and Chairman of Neuberger Berman Inc. He has also held senior management positions with Travelers Group, including Vice Chairman of that company’s Smith Barney division, and with Shearson Lehman Brothers.

 

Mr. Lane has extensive experience in the financial sector, including senior management positions with significant U.S. asset management and investment businesses and most recently as CEO of a bank.

 

Wendy E. Lane—Ms. Lane, age 58, joined the Board on April 21, 2004. She has been Chairman of Lane Holdings, Inc., an investment firm, since 1992. Prior to forming Lane Holdings, Inc., Ms. Lane was a Principal and Managing Director of Donaldson, Lufkin and Jenrette Securities Corporation, an investment banking firm, serving in these and other positions from 1981 to 1992. Ms. Lane is also a Director and Nominating and Corporate Governance and Audit Committee member of Laboratory Corporation of America, and a director and Audit Committee member of UPM-Kymmene Corporation. She is also a Trustee of the U.S. Ski and Snowboard Team Foundation. Ms. Lane holds a BA from Wellesley College and a MBA from Harvard Business School.

 

Ms. Lane is a founder of her own investment firm and has extensive experience in investment banking, including financings and mergers and acquisitions. She also has extensive experience in governance matters.

 

James F. McCann—Mr. McCann, age 58, joined the Board on April 21, 2004. Mr. McCann has served since 1976 as Chairman and Chief Executive Officer of 1-800-FLOWERS.COM, Inc, a florist and gift shop company. He also serves as a director and Compensation Committee member of Lottomatica S.p.A. He previously served as a director of Gateway, Inc. and The Boyds Collection, Ltd.

 

Mr. McCann has substantial management, strategic and operational experience as Chairman and CEO of a consumer-product and service-based public company for over 30 years.

 

Joseph J. Plumeri—Mr. Plumeri, age 66, joined the Board on February 8, 2001. He is our Chairman and Chief Executive Officer. Prior to joining the Willis Group, Mr. Plumeri spent 32 years as an executive with Citigroup Inc. and its predecessors, where his responsibilities included overseeing the 450 North American retail branches of Citigroup’s Citibank unit. Before that, Mr. Plumeri 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. 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 of a number of organizations, including The Board of Visitors of the College of William & Mary and The National Center on Addiction and Substance Abuse at Columbia University, and formerly served as a director of Commerce Bancorp Inc. and a Trustee for the Granum Value Fund.

Mr. Plumeri is our Chairman and CEO and, before joining the Company, he had over 30 years experience in the financial services industry. Since joining the Company, he has navigated a number of challenges, including the soft insurance market, the current global economic downturn and an industry-wide investigation by former Attorney General Eliot Spitzer regarding the placement of insurance.

 

Douglas B. Roberts—Mr. Roberts, age 62, joined the Board on February 13, 2003. He is the former Treasurer for the State of Michigan, a position held from April 2001 to December 2002 and from January 1991 to November 1998. From January 1999 to March 2001 he was Vice President of 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. Currently, Mr. Roberts is both a Professor and the Director for the Institute for Public Policy and Social Research at Michigan State University.

 

Mr. Roberts has a deep understanding of public finance and other public policy matters from his extraordinary record as a Michigan state treasurer and his current academic position.

 

Please also see the Corporate Governance and Nominating Committee’s recommendations regarding the appointment of a new director discussed below in “Corporate Governance—Board Leadership Structure.”

 

CORPORATE GOVERNANCE

 

The Board, Board Committees and Meetings

 

The Board has adopted Corporate Governance Guidelines which meet the NYSE’s listing standards, including the requirement that a majority of the Company’s Board is independent and that the Board’s Audit Committee, Compensation Committee and Corporate Governance and Nominating Committee are comprised solely of independent directors. The Board has determined that, with the exception of Mr. Plumeri, all the directors shown above and the members of the Audit Committee, Compensation Committee and Corporate Governance and Nominating Committee are independent under the relevant U.S. Securities and Exchange Commission (“SEC”) rules, NYSE listing standards and the Company’s Corporate Governance Guidelines. The Company’s Director Independence Standards are part of the Company’s Corporate Governance Guidelines.

 

In considering the independence of the directors, the Board considered that the Company, in the ordinary course of business and on commercial terms, (i) provides services (such as insurance broking or consultancy services) to, (ii) pays for services from and/or (iii) provides charitable donations to organizations with which the following members of the Board are connected: Mr. Bradley; Mr. Califano; Ms. Catalano; Sir Roy Gardner; Sir Jeremy Hanley; Ms. Lane; and Mr. McCann. In addition, in the ordinary course of business and on commercial terms, certain of the directors pay for services from the Company in their individual capacity: Mr. Lane, Ms. Kravit and Mr. McCann. The Board also considered that Mr. Plumeri made an investment of £100,000 in an entity to assist that entity in purchasing a minority interest in the Plymouth Argyle Football Club (United Kingdom), of which Sir Roy Gardner serves as chairman. This represents an indirect ownership interest in the Club by Mr. Plumeri of less than 1%.

 

Our Corporate Governance Guidelines and board Committee Charters can be found in the Investor Relations—Corporate Governance section of our website at www.willis.com. Copies are also available free of charge on request from the Company Secretary, Willis Group Holdings Public Limited Company, c/o Office of General Counsel, One World Financial Center, 200 Liberty Street, New York, NY 10281-1033.

 

The Board met formally seven times in 2009. Each Director attended at least 75% of the aggregate of the total number of meetings held in 2009 of the Board and any committee on which he or she served.

The independent directors held separate executive sessions without senior management following each of the four regularly scheduled quarterly meetings of the Board in 2009. The Chairman of each such session was the Chair of the Corporate Governance and Nominating Committee. Neither the Chairman and CEO nor any member of management, at any level, attend the executive sessions of the independent directors.

 

All directors are expected to make every effort to attend the Annual General Meeting, and all of the serving directors attended this meeting in 2009.

 

Board Leadership Structure

 

Our Corporate Governance Guidelines provide that the roles of Board Chairman and Chief Executive Officer may be filled by the same or different individuals, which provides the Board the flexibility to determine whether these roles should be combined or separated based on the Company’s circumstances and needs at any given time. The roles of Chairman and CEO of the Company are currently held by the same person, Joseph J. Plumeri. The Board believes that the Company and its shareholders are best served by having Mr. Plumeri serve in both positions. Mr. Plumeri is most familiar with our business and the challenges the Company faces in the current environment, and his experience and expertise makes him best suited to set agendas for, and lead discussions of, strategic matters affecting the Company at this time. Moreover, this structure enables Mr. Plumeri to act as a bridge between management and the Board, and helps to promote unified leadership and direction.

 

As noted above, the members and chairs of each of our Board committees are independent based on our governance standards and those of the SEC and NYSE. As a result, independent directors directly oversee such critical matters as the compensation policy for our executive officers, our corporate governance guidelines, and the integrity of our financial statements and internal controls over financial reporting. In addition, the Chair of the Corporate Governance and Nominating Committee presided over four separate executive sessions of the independent directors without senior management in 2009.

 

The Executive Committee has the full powers, authorities and discretions of the Board of the Directors, when it is not in session, in the management of the business and affairs of the Company, except as otherwise provided in the resolutions of the Board and under applicable law. The Executive Committee, whose members are Joseph J. Plumeri (Chairman), William W. Bradley, Joseph A. Califano, Jr. and Sir Roy Gardner, did not meet in 2009.

 

The Audit Committee assists the Board in fulfilling its oversight responsibilities with respect to: (i) the integrity of the Company’s financial statements; (ii) the selection and oversight of the independent auditors; (iii) the Company’s compliance with legal and regulatory requirements; (iv) the independent auditors’ qualifications and independence; (v) the performance of the independent auditors and the Company’s internal audit function; (vi) the establishment and maintenance of proper internal accounting controls and procedures; and (vii) the treatment of employees’ concerns regarding accounting or auditing matters as reported under the Company’s whistleblower policy. In addition, the Audit Committee provides an avenue for communication among internal audit, the independent auditors, management and the Board. The Audit Committee operates pursuant to a Charter, a copy of which can be found in the Investor Relations—Corporate Governance section of the Company’s website at www.willis.com. The Audit Committee, whose members are Douglas B. Roberts (Chairman), Sir Jeremy Hanley, Robyn S. Kravit and Wendy E. Lane met five times during 2009. Mr. Roberts, Sir Jeremy Hanley and Ms. Lane are considered to be Audit Committee Financial Experts in light of their financial experience described in their biographies above.

 

The Compensation Committee determines the compensation of the Company’s Chairman and CEO and makes recommendations to the Board in respect of the compensation of non-employee directors and other executive officers. In addition, the Compensation Committee administers the Company’s share-based award plans and, in consultation with senior management, establishes the Company’s general compensation philosophy. In connection with those objectives, the Compensation Committee is also responsible for: (i) overseeing the development and implementation of compensation programs;

(ii) reviewing and approving annually corporate performance goals and objectives relevant to the compensation of the Chairman and CEO and evaluating his performance in light of those goals and objectives; (iii) reviewing and approving compensation policies applicable to the senior management of the Company; (iv) making recommendations to the Board on the Company’s existing and proposed incentive compensation plans and equity-based plans and overseeing the administration of these plans; (v) making recommendations to the Board with respect to non-CEO executive officer compensation in light of the Compensation Committee’s evaluation of the officers; and (vi) making recommendations to the Board on the non-employee directors’ compensation. The Compensation Committee operates pursuant to a Charter, a copy of which can be found in the Investor Relations — Corporate Governance section of the Company’s website at www.willis.com. The Compensation Committee, whose members are Sir Roy Gardner (Chairman), Jeffrey B. Lane and James F. McCann, met five times during 2009.

 

The Corporate Governance and Nominating Committee identifies and recommends individuals to the Board for nomination as members of the Board and its Committees, including this Committee. The Corporate Governance and Nominating Committee identifies director nominees by preparing a candidate profile based upon the current Board’s strengths and needs and by utilizing the personal network of the Board and senior management. Nominees must meet minimum qualification standards with respect to a variety of criteria including integrity, reputation, judgment, experience, maturity, skills and personality, commitment and independence. The Corporate Governance and Nominating Committee may also take into consideration additional factors it deems appropriate, which may include skill, experience with business and other organizations, the interplay of the candidate’s experience with the experience of other Board members and the extent to which the candidate would be a desirable addition to the Board and any committee thereof.

 

The Corporate Governance and Nominating Committee also considers diversity when assessing the appropriateness of Board membership. The Company’s Corporate Governance Guidelines provide that the Company is committed to maintaining diversity within the Board. Diversity is not defined in the Corporate Governance Guidelines or in the Corporate Governance and Nominating Committee’s charter, each of which can be found in the Investor Relations—Corporate Governance section of the Company’s website at www.willis.com. Diversity is broadly interpreted by the Board to include viewpoints, background, experience, industry knowledge, and geography, as well as more traditional characteristics of diversity, such as race and gender. We believe that our commitment is demonstrated by the current structure of our Board and the varied backgrounds and skill sets of our directors.

 

With feedback from the Board members, members of the Corporate Governance and Nominating Committee initiate contact with preferred candidates and, following feedback from interviews conducted by Committee and Board members, recommends candidates to join the Board. The Corporate Governance and Nominating Committee has the authority to retain a search firm to assist with this process. The Corporate Governance and Nominating Committee considers candidates nominated by shareholders and ensures that such nominees are given appropriate consideration in the same manner as other candidates. In addition, the Corporate Governance and Nominating Committee develops and recommends to the Board the corporate governance principles, including independence standards for directors of the Company. The Corporate Governance and Nominating Committee, whose members are William W. Bradley (Chairman), Joseph A. Califano Jr. and Anna C. Catalano met five times during 2009.

 

On March 1, 2010, the Corporate Governance and Nominating Committee agreed to recommend that Michael Somers, whose biography is set forth below, be appointed as a new director to the Board. In addition, in accordance with its Charter, the Corporate Governance and Nominating Committee considered the composition of the Committees of the Board of Directors for 2010 and agreed to recommend that they be comprised, on a going-forward basis following the Board’s approval, as follows:

 

 

 

The Board will consider, and if appropriate will approve, both the new director and Committee recommendations at its regularly scheduled April meeting.

 

Michael J. Somers—Dr. Somers, age 67, was Chief Executive Officer of the Irish National Treasury Management Agency from 1990, when it was established, until the end of 2009. The Agency, which is a commercial entity outside the public administration, was initially set up to arrange Ireland’s borrowing and manage its National Debt. Its remit was extended to establish and manage the National Pensions Reserve Fund, of which he was a Commissioner, and the National Development Agency, of which he was Chairman. It also incorporated the State Claims Agency, which handles claims against the State and against hospitals and other medical institutions. He previously worked in the Irish Department of Finance and the Central Bank and served as Secretary General of the Department of Defence from 1985 to 1987. He was the Irish member of the EU Monetary Committee from 1987 to 1990 and chaired the EU group that established the European Bank for Reconstruction and Development. He served on the board of the Irish Stock Exchange until the end of 2009. He is currently the Irish Director on the Board of the European Investment Bank and also serves on the Boards of Allied Irish Banks plc, St. Vincent’s Healthcare Group Ltd., the Institute of Directors and is a Council member of the Dublin Chamber of Commerce. He was awarded the honour of Chevalier of the Légion d’Honneur by the President of France. Dr. Somers is also in the process of joining the Board of Hewlett Packard International Bank in Dublin. He holds B. Comm, M.Econ.Sc and Ph.D degrees from University College Dublin.

 

Dr. Somers has extensive knowledge and experience in serving the Irish and European financial, business and governmental community. The Irish market is important to the Group which recently completed its redomicile to Ireland, in part, to facilitate business expansion.

 

The Risk Committee was formed by the Board in October 2009 and is responsible for assisting the Board in: (i) monitoring oversight of the Company’s enterprise risk management; (ii) overseeing, on the basis of proposals from management, the creation, and subsequent iteration, of a framework, for approval by the Board, in relation to the management of risk; (iii) reviewing the adequacy of the Company’s resources to perform its risk management responsibilities; (iv) reviewing the activities of the Company’s Enterprise Risk Management Committee (“ERMC”), as well as reviewing and approving annually the Company’s Enterprise Risk Management Policy; (v) meeting with the chairman and/or other members of the Company’s EMRC and Audit Committee, as needed or advisable, to discuss the Company’s corporate risk management framework and/or related areas; and (vi) reviewing and recommending any major transactions or decisions affecting the Company’s risk profile or exposure. The Risk Committee will operate pursuant to a Charter, a copy of which can be found in the Investor Relations—Corporate Governance section of the Company’s website at www.willis.com. We expect members of the Risk Committee to be those directors recommended by the Corporate Governance and Nominating Committee discussed above. The first meeting of the Risk Committee is scheduled for April 2010.

 

Risk Oversight

 

The Board of Directors has the ultimate oversight responsibility for the risk management function of the Company. The Company has implemented an enterprise-wide approach to risk management and

has established the ERMC. The members of the ERMC include senior executives in the finance, legal, internal audit and IT departments, including our Group General Counsel, Chief Financial Officer and Group Chief Operating Officer. It also includes senior representatives from the Company’s main operating units such as our North American, Reinsurance and Global Specialties and UK and Ireland Retail businesses. The ERMC has adopted the Enterprise Risk Management Policy, which operates as a framework for the identification, assessment, measurement, reporting and management of exposure to the Company’s risk on an enterprise-wide basis. During each quarter of 2009, the full Board of Directors participated in an enterprise risk management review with management, focusing on three primary areas of risk: financial risk, legal/compliance risk and operational/strategic risk.

 

In addition to the Risk Committee discussed above, the various committees of the Board also assist it in its responsibility for oversight of risk management. In particular, the Audit Committee focuses on major financial risk exposures, the steps management has taken to monitor and control such risks, and, if appropriate, discusses with the independent auditor the guidelines and policies governing the process by which senior management and the relevant departments of the Company assess and manage the Company’s financial risk exposure and operational/strategic risk.

 

Communications with Shareholders and Other Constituencies

 

The Chairman and CEO is responsible for establishing effective communications with the Company’s stakeholder groups, including shareholders, the press, analysts, clients, suppliers, governments and representatives of the communities in which it operates. It is the policy of the Company to appoint individuals to communicate and interact fully with these stakeholders and the Board will look to senior management to speak for the Company. This policy does not preclude outside directors from communicating directly with shareholders or other constituencies about Company matters, but any such communications will generally be held at the request of the Board or senior management or with senior management present.

 

An interested person may communicate with independent directors or the non-management directors as a group by writing to the Company Secretary, c/o Office of General Counsel, Willis Group Holdings Public Limited Company, One World Financial Center, 200 Liberty Street, New York, NY 10281-1003.

 

A shareholder who wishes to propose an individual to the Corporate Governance and Nominating Committee for its consideration as a nominee for election to the Board may do so by writing to the Company Secretary, c/o the Office of the General Counsel, Willis Group Holdings Public Limited Company, One World Financial Center, 200 Liberty Street, New York, NY 10281-1003.

 

For a more detailed description regarding the solicitation of proxies, including with respect to shareholder nominations of directors, see “Solicitation of Proxies.”

 

SECURITY OWNERSHIP

 

Security Ownership of Certain Beneficial Owners and Management

 

The following tables show the number of Shares beneficially owned, as of February 26, 2010:

 

 

The amounts and percentages of our Shares beneficially owned are reported in accordance with Rule 13d-3 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Under these rules, 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 of February 26, 2010 (i.e., April 27, 2010). Also, 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 subject to share awards held by that person that are currently exercisable, or vest within 60 days of February 26, 2010, are deemed issued and outstanding. These Shares, however, are not deemed outstanding for purposes of computing percentage beneficial ownership of any other person

 

5% Beneficial Owners

 

 

 

 

Security Ownership of Management

 

 

 

 

ITEM 2

 

RATIFICATION OF REAPPOINTMENT OF DELOITTE LLP

AS INDEPENDENT AUDITOR AND AUTHORIZATION OF BOARD OF

DIRECTORS, ACTING THROUGH THE AUDIT COMMITTEE,

TO FIX THE REMUNERATION OF THE COMPANY’S AUDITOR

 

The Audit Committee, in accordance with the authority granted by the Board of Directors, recommended for Board ratification the reappointment of Deloitte LLP, Independent Registered Public Accountants, to audit the financial statements of the Company for the fiscal year ending December 31, 2010. This selection was approved by the Board in February 2010, and ratification of such approval is being sought from shareholders at the Annual General Meeting. Deloitte LLP acted as the Company’s independent auditors for the year ended December 31, 2009. Representatives of Deloitte LLP 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 majority of the votes cast by shareholders at the Annual General Meeting is required to ratify the reappointment of Deloitte LLP and to refer the issue of their remuneration for the 2010 audit to the Board of Directors, acting through the Audit Committee. In accordance with the Company’s articles of association, the Board of Directors delegates the determination of the audit fee, as well as fees for permitted non-audited services, to the Audit Committee.

 

The Board recommends you vote FOR the ratification of the reappointment of Deloitte LLP as the Company’s independent auditors and the authorization of the Board, acting through the Audit Committee, to determine the auditor’s remuneration.

 

FEES PAID TO INDEPENDENT AUDITORS

 

The following fees have been, or will be, billed by Deloitte LLP and their respective affiliates for professional services rendered to the Company for the fiscal years ended December 31, 2009 and December 31, 2008.

 

 

 

 

The Audit Committee approved all of the services described above in accordance with the Company’s pre-approval policy. Less than 1% of the services described above were approved by the Audit Committee under the de minimis exception provided by Rule 2-01 (c)(7)(i)(C) under Regulation S-X.

 

AUDIT COMMITTEE PRE-APPROVAL PROCESS

 

The Audit Committee has adopted a policy regarding the Pre-Approval of Independent Auditors’ Services, which can be found in the Investor Relations — Corporate Governance of the Company’s website at www.willis.com. This policy requires all services provided by the Company’s independent auditors, both audit and permitted non-audit, to be pre-approved by the Audit Committee or the Chairman of the Audit Committee or, in his absence, any other member of the Committee.

 

AUDIT COMMITTEE REPORT

 

The primary function of the Audit Committee is to assist the Board of Directors in its oversight with respect to: (i) the integrity of the Company’s financial statements; (ii) the selection and oversight of the independent auditors; (iii) the Company’s compliance with legal and regulatory requirements; (iv) the independent auditors’ qualifications and independence; (v) the performance of the independent auditors and the Company’s internal audit function; (vi) the establishment and maintenance of proper internal accounting controls and procedures; and (vii) the treatment of employees’ concerns regarding accounting or auditing matters as reported under the Company’s whistleblower policy. The Audit Committee operates under a Charter, a copy of which can be found in the Investor Relations — Corporate Governance section of the Company’s website at www.willis.com. 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 Audit Committee has reviewed and discussed the audited financial statements as of and for the year ended December 31, 2009, with management and the independent auditors. These discussions included the judgments regarding the quality and acceptability of the Company’s accounting principles, the clarity of the disclosures and the appropriateness of the accounting principles and underlying estimates and other communications required to be discussed by the Statement on Auditing Standards No. 61, Communication with Audit Committees, as adopted by the Public Company Accounting Oversight Board in Rule 3200T. Finally, the Audit Committee has discussed with the auditors the auditors’ independence from the Company and its management, including the written disclosures and the letter received from the auditors regarding the auditors’ communications with the Audit Committee concerning independence as required by the Public Company Accounting Oversight Board in Rule 3526, Communication with Audit Committees Concerning Independence. The independent auditors and the Company’s Internal Auditors had full access to the Audit Committee, including regular meetings without management present.

 

It is not the duty or responsibility of the Audit Committee to conduct auditing or accounting reviews or procedures. In performing their oversight function, members of the Audit Committee rely, without independent verification, on the information provided to them and on the representations made by management and the independent auditors. Accordingly, the Audit Committee’s considerations and discussions do not assure that the audit of the Company’s financial statements has been carried out in accordance with U.S. GAAP or that the financial statements are presented in accordance with U.S. GAAP.

 

Based upon the review discussions described in this report, and subject to the limitations on the role and responsibilities of the Audit Committee referred to above, the Audit Committee recommended that Deloitte LLP be retained to audit the financial statements of the Company for the fiscal year ending December 31, 2010, and agreed that the audited financial statements referred to above be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009, filed with the SEC. The Audit Committee also recommended that Deloitte LLP be retained to conduct the integrated audit of the Company’s financial statements and internal control over financial reporting for the fiscal year ending December 31, 2010.

The Audit Committee is comprised of Douglas B. Roberts (Chairman), Sir Jeremy Hanley, Robyn S. Kravit and Wendy E. Lane. Mr. Roberts, Sir Jeremy Hanley and Ms. Lane are all independent Audit Committee Financial Experts as defined by Regulation S-K in view of their respective financial expertise.

 

Submitted by the Audit Committee of the Board of Directors

 

Douglas B. Roberts (Chairman), Sir Jeremy Hanley, Robyn S. Kravit and Wendy E. Lane.

 

ITEM 3

 

APPROVAL OF THE WILLIS GROUP HOLDINGS PUBLIC LIMITED COMPANY
2010 NORTH AMERICAN EMPLOYEE STOCK PURCHASE PLAN

 

In February 2010 our Board of Directors approved the adoption of a new employee stock purchase plan titled The Willis Group Holdings Public Limited Company 2010 North American Employee Stock Purchase Plan (the “ESPP”). Our current employee stock purchase plan, the Willis Group 2001 North American Employee Stock Purchase Plan, will expire in May 2011.

 

We believe that equity participation by employees is important in creating an environment in which employees will be motivated to remain employed and be productive for long periods of time. We further believe that the attraction, retention and motivation of highly qualified personnel are essential to our continued growth and success and that incentive plans, such as the ESPP, help us to remain competitive in our compensation practices. In addition, we believe that the ESPP is an effective way to assure alignment of employees’ and shareholders’ interests and are in the best interest of our shareholders.

 

Required Vote

 

A majority of the votes cast by shareholders at the Annual General Meeting is required to approve the ESPP.

 

The Board recommends you vote FOR the approval of the Willis Group Holdings Public Limited Company 2010 North American Employee Stock Purchase Plan.

 

Summary of Employee Stock Purchase Plan

 

The following is a summary of the material terms of the ESPP, but does not include all of the provisions of the ESPP. For further information about the ESPP, we refer you to a complete copy of the ESPP, which is attached as Appendix A to this proxy statement.

 

The purpose of the ESPP is to give eligible employees of certain of our subsidiaries in the United States and Canada the opportunity to purchase our Shares through the use of payroll deductions. The plan is intended to qualify as an employee stock purchase plan under Section 423 of the Internal Revenue Code, which will provide the U.S. taxpayer participants in the plan with certain tax benefits upon their subsequent sale or other disposition of our Shares that they will purchase under the terms of the plan. The ESPP will be generally available to all eligible employees, including our named executive officers under the same offering and eligibility terms, and will not be tied to any performance criteria. The ESPP is not subject to any of the provisions of the Employee Retirement Income Security Act of 1974, as amended.

 

Administration

 

The ESPP will be administered by our board of directors or any subcommittee of the board designated by the board to administer the ESPP. The administrator will have the authority to interpret the ESPP, to establish, amend and rescind any rules and regulations relating to the ESPP, and to make any other determinations that it deems necessary or desirable for the administration of the ESPP. All actions taken and all interpretations and determinations made by the administrator are final and binding upon the participants and the Company and the participating subsidiaries.

 

Shares Subject to the Plan

 

Our Shares issuable under the ESPP may be either newly issued Shares, treasury Shares or Shares we reacquire, including by purchase on the open market. The number of Shares reserved pursuant to the ESPP is 1,000,000, subject to adjustment.

If any change is made to the Company’s outstanding Shares in connection with any merger, consolidation, reorganization, recapitalization, Share split, Share dividend, or other like change, the administrator may make appropriate adjustments to, without limitation, the number or kind of shares subject to the ESPP and the purchase price of such shares in order to prevent dilution or enlargement of participants’ rights.

 

Offering Periods

 

Shares are offered for purchase under the ESPP during one or more offering periods, the timing of which is designated by the administrator. Offering periods will be 6 months in length. An employee who participates in the ESPP for a particular offering period will have the right to purchase our Shares on the terms and conditions set forth below.

 

Eligibility

 

In general, all full-time employees of any subsidiary of the Company designated by our Board of Directors as a participating subsidiary will be eligible to participate in the ESPP. In no event may an employee be granted a right to purchase Shares under the ESPP if, immediately after the grant, the employee would own Shares possessing 5 percent or more of the total combined voting power or value of all classes of our capital shares or the capital shares of any of our subsidiaries. The administrator may, in its discretion, exclude employees (i) who have not been continuously employed by a participating subsidiary for up to 2 years and (ii) certain highly compensated employees.

 

Participation

 

Eligible employees who enroll in the ESPP may elect to have between 1 and 15 percent of their eligible compensation withheld and accumulated for the purchase of Shares at the end of each offering period in which they participate. A participant may not elect to purchase more than $25,000, or a lesser amount determined by the Board, worth of Shares (based on the fair market value of Shares determined at grant date) in any calendar year and may not purchase more than 5,000 Shares during any single offering period. Amounts credited to a participant’s account will earn interest as determined by the Board.

 

Each participant may cancel his or her election to participate in the ESPP by written notice to the administrator in such form and at such times as the administrator may require and any accumulated payroll deductions, plus any accrued interest, will be returned to the participant. Participation shall end automatically upon termination of employment for any reason.

 

Purchase of Shares

 

Amounts accumulated for each participant will be used to purchase our Shares (in whole or fractional shares) at the end of each offering period. The per Share purchase price will be determined by the administrator, but shall not be less than 85 percent of the lesser of (i) the fair market value of a Share on the first date of the offering period and (ii) the fair market value of a Share on the last date of the offering period. Any amounts not used for the purchase of Shares shall be returned to the participant. No purchase rights will be assignable or transferable by the participant.

 

As soon as practicable following the end of each offering period, the number of Shares purchased by each participant will be deposited into an account established in the participant’s name with a stock brokerage firm designated by the Board of Directors. The brokerage firm will hold the Shares until the second anniversary of the first day of the offering period from which the Shares were purchased. Unless otherwise permitted by our board, dividends that are declared on the Shares held in such account will be paid in cash to the participant. At the end of the two-year holding period the participant may transfer his or her Shares to another brokerage firm or request that the Shares be issued to him or her. Any fractional Shares will be paid out in cash.

Resale Restrictions

 

The ESPP is intended to provide our Shares for investment by employees and not for resale. A brokerage firm designated by the Board of Directors will hold all Shares purchased pursuant to the ESPP until the second anniversary of the first day of the offering period from which the Shares were purchased. We do not intend to restrict or influence any participant from selling Shares purchased under the ESPP after the expiration of the two-year holding period, subject to compliance with applicable law.

 

Shareholder Rights

 

No participant will have any rights as a shareholder with respect to the Shares covered by his or her purchase right until the Shares are actually purchased on the participant’s behalf. No adjustment will be made for dividends, distributions, or other rights for which the record date is prior to the date of such purchase.

 

Amendment and Termination

 

Our Board of Directors may amend or terminate the ESPP at any time, subject to applicable law. Upon a termination Shares may be issued to participants and any amounts not applied to the purchase of Shares shall be refunded to the participants.

 

Federal Income Tax Consequences

 

The following summarizes only the federal income tax consequences of participation under the ESPP based upon federal income tax laws in effect on the date of this proxy statement. This summary does not purport to be complete, and does not discuss any non-U.S., state or local tax consequences. In addition, the discussion does not address tax consequences which may vary with, or are contingent on, a participant’s individual circumstances. Each participant in the ESPP is strongly urged to consult with his or her tax advisor regarding participation in the ESPP.

 

The ESPP, and the right of participants to make purchases thereunder, is intended to qualify under the provisions of Sections 421 and 423 of the federal tax code (except to comply with applicable foreign or local law). Under these provisions, no income will be taxable to a participant at the time of grant of the option or purchase of Shares. Amounts deducted from a participant’s pay under the ESPP are part of the employee’s regular compensation and remain subject to federal, state and local income and employment withholding taxes.

 

Upon disposition of the Shares, the participant will generally be subject to tax, the amount of which will depend upon the participant’s holding period. If the participant disposes of his or her Shares more than two years after the date of option grant and more than one year after the purchase of the Shares, the lesser of (i) 15 percent of the fair market value of the Shares on the date the option was granted or (ii) the excess (or zero if there is no excess) of the fair market value of the Shares on the date of the disposition of the Shares over the purchase price will be treated as ordinary income, and any further gain will be treated as long-term capital gain. If the participant disposes of the Shares before the expiration of these holding periods, the excess of the fair market value of the Shares on the exercise date over the purchase price will be treated as ordinary income, and any further gain or loss on such disposition will be long-term or short-term capital gain or loss, depending on the holding period.

 

We are not entitled to a deduction for amounts taxed as ordinary income or capital gain to a participant except to the extent of ordinary income reported by participants upon disposition of Shares within two years from date of grant or within one tax year of the date of purchase. We are required to report to the United States Internal Revenue Service income recognized by a participant as a result of Share purchases and disposition. In the future, we may be required to withhold (from a participant’s salary) the amount due as taxes on such ordinary income.

Securities Authorized for Issuance Under Equity Compensation Plans

 

The following table provides information, as of December 31, 2009, about the securities authorized for issuance under our equity compensation plans, and is categorized according to whether or not the equity plan was previously approved by shareholders:

 

 

 

 

As of December 31, 2009, of the time and performance-based options granted, 1,658 remained outstanding under the 1998 Plan and 2,540 remained outstanding under the Willis Award Plan. No further grants are to be made under the 1998 Plan which expired in 2008. There are 4,851,270 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 became exercisable in five equal annual installments beginning on the second anniversary of the date of grant and performance-based options generally became exercisable in four equal annual installments, beginning on the third anniversary of grant, subject to performance targets. Effective from January 1, 2003, it was determined that these financial performance targets had been achieved. 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.

 

The 1998 Plan has expired, and unless sooner terminated by our Board of Directors, the Willis Award Plan will expire in 2011. The plan terminations 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 Share split, spin-off, Share dividend, Share 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 Willis Award Plan at any time.

 

As a consequence of the completion of the acquisition of Hilb Rogal & Hobbs Company (“HRH”) on October 1, 2008, outstanding options granted under the HRH employee share plans were exchanged for options for Willis Shares. These are also included in the above table under “Equity compensation plans not approved by security holders.” As of December 31, 2009, time-based options over 2,059,436 Shares remain outstanding, and 952,879 Shares remain available for issuance to former HRH employees and other employees who have joined the Company since October 1, 2008.

EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS

 

The following discussion provides an overview and analysis of the Compensation Committee’s philosophy and objectives in designing compensation programs for the executive officers. In this discussion and analysis we will address the compensation determinations and the rationale for those determinations relating to the Company’s Chief Executive Officer, Chief Financial Officer, and the next three most highly compensated executive officers, whom we refer to collectively as the “named executive officers”.

 

Compensation Philosophy and Objectives

 

The Company’s compensation philosophy is to attract and retain highly qualified and talented executives and professionals. This is paramount, as the marketplace in which the Company operates is highly competitive and covers all the financial services areas. We also aim to incentivize our executives to improve their individual performance with the objective of improving the Company’s performance, and accordingly, create value and wealth for shareholders and our associates.

 

Role of the Board Compensation Committee

 

As described below, the Compensation Committee is responsible for establishing, implementing and monitoring the Company’s compensation programs, philosophy and objectives.

 

Compensation Consultant

 

The Compensation Committee, in accordance with best practices of executive compensation governance, annually reviews the appointment of Frederick W. Cook & Co., Inc (“F. W. Cook”) and in 2009 reaffirmed its appointment as its compensation consultant to provide advice on all matters related to the senior executives’ compensation and compensation programs. F. W. Cook reports directly to the Compensation Committee and provides data on U.S. and U.K. executive compensation trends and analyzes the companies with whom the Company competes for senior executive talent. F. W. Cook assists with selecting appropriate peer companies and assessing non-employee director compensation. The Compensation Committee has the independent authority to terminate F. W. Cook’s services at its discretion. F. W. Cook provides no services to the Company without being authorized by the Chairman Compensation Committee. In fiscal year 2009, F. W. Cook provided no services to the Company other than its services to the Compensation Committee. Those services included assisting the Compensation Committee in its analysis of risks associated with the Company’s compensation policies. F. W. Cook attended all of the Compensation Committee meetings in 2009.

 

The Compensation Committee uses the data and analysis provided by F. W. Cook to better ensure that the Company’s compensation practices are consistent with the Company’s compensation philosophy and objectives for both the amount and composition of executive compensation, including that of the Chairman and CEO. The Compensation Committee may, however, exercise discretion when recommending compensation awards, to take account of the dynamic nature of the insurance sector internationally and the adaptability and response required by the Company’s leadership to manage significant changes that arise during the course of a year.

 

Overview of Executive Compensation

 

We principally provide insurance brokerage and risk consultancy services, a distinction that leaves us with no direct competitors of comparable financial size in our marketplace. Accordingly, to assist the Compensation Committee in judging the reasonableness of its compensation recommendations, we typically use data related to the financial services sector and a group of peer companies, some of whom do not directly operate as insurance brokers. The peer group was chosen by the Compensation Committee following discussion with the Chairman and CEO. This peer group, which was reviewed in 2009 and is reviewed regularly by the Compensation Committee to ensure that it remains reasonable

and justifiable, consists of Ace Limited, AON Corporation, Arch Capital Group Limited, Arthur J. Gallagher & Co., Axis Capital Holdings Limited, Brown & Brown Inc., The Chubb Corporation, Comerica Incorporated, Jardine Lloyd Thompson Group plc, Marsh & McLennan Companies, Inc., Raymond James Financial, Inc. and XL Capital Ltd. In 2009, the Compensation Committee did not place as much relevance on the data obtained from the financial services sector as in prior years because the compensation policies of those companies who received U.S. federal government assistance differed from those that did not receive assistance.

 

Our executive officers are based in both the United States and the United Kingdom. The country of each executive officer’s primary location is the principal market basis for reviewing and assessing his or her annual base salary, annual incentive compensation and benefits. However, so that we may make grants in a consistent manner to executive officers, we follow the U.S. market for all of our equity compensation grants to executive officers.

 

We compete with many large companies for senior executives and we aim to reward our executives for exceptional performance. As a result, in order to attract and retain exceptional senior executives, the Compensation Committee generally sets the executive officer’s total annual compensation around the 75th percentile of compensation paid to similarly-situated executives of our peer group companies. This is in recognition of the Compensation Committee’s expectations that, over the long term, the Company will continue to generate returns in excess of the average of its peer group. We may compensate above this percentile depending on the individual’s level of experience, performance and market factors. For example, we believe that the total annual compensation for 2009 will be above the 75th percentile for Messrs. Millwater, Wright, Regan and Hearn in part as a result of a one-time restricted stock retention grant issued in May 2009. This retention grant was made in response to the turmoil experienced in the global economy along with the added concern that equity held in stock options, which were provided as part of the Company’s annual equity grant practice, were now generally underwater and provided little retentive value. Both situations were viewed as being outside the individual’s control.

 

The Compensation Committee reviews each element of compensation separately, as well as the total compensation of executive officers, which includes long-term incentives. Any compensation differences among the executive officers reflect their different roles, their contribution and the different market pay relating to those roles.

 

The Components of Executive Compensation

 

The key components of our executive officers’ compensation are: base salary; annual incentive compensation (payable in cash and/ or equity awards); and long-term incentive compensation (equity grants).

 

Base Salary—Base salary is intended to provide a fixed level of compensation based on the individual’s role, experience and skills and is set at a level designed to be competitive in the relevant markets in which our executive officers operate. Base salaries are reviewed by the Compensation Committee annually in February for all the Company’s executive officers against either U.S. or U.K. survey data, as applicable.

 

The salary levels are generally positioned at and around the median level in our peer group companies and adjustments are only made to reflect changes in responsibilities or when competitive market conditions warrant. In line with our compensation philosophy, exceptional performance by our executive officers is generally rewarded through annual and/or long-term incentive compensation and not through base pay.

 

The Chairman and CEO, Joseph J. Plumeri, has had no change to his base salary since he joined Willis in October 2000. This reflects the Company’s and Mr. Plumeri’s shared view that his incentives will be best aligned with the interests of shareholders if a majority of his annual compensation is tied to the Company’s performance. In addition, the other executive officers did not receive, nor did our senior management team request, any increase to their base salaries in 2009.

Annual Incentive Compensation—We have designed our annual incentive compensation to incentivize and reward our executive officers for generating financial performance on a short-term basis at both the Company and business unit level, and to retain strong performers. Each executive officer, other than the Chairman and CEO, is eligible to receive an annual incentive compensation award under the Company’s Annual Incentive Plan (“AIP”). The Chairman and CEO’s annual incentive compensation is determined in accordance with his employment agreement discussed below. While the AIP is discretionary, the awards are intended to deliver exceptional pay for exceptional performance and also to provide short-term performance-driven wealth creation, offsetting the de-emphasis on regular base-pay increases and the high risk/high wealth potential associated with the Company’s long-term incentives. The annual incentive award levels are generally set to provide that exceptional performance will deliver total base and annual incentive compensation around the 75th percentile of the relevant markets in which our senior executives operate.

 

The annual incentive compensation may be paid in cash and/or equity (including Shares, Share options and RSUs). Annual incentive compensation awards to the executive officers are approved by the Compensation Committee in February with payments generally made in March. The annual incentive compensation is designed to be retentive in nature. Generally, the executive officers must repay a proportionate amount of their cash incentive awards if they voluntarily leave the Company’s employ, other than in the event of retirement or permanent disability, before a certain date. The equity incentive is retentive through its vesting conditions. To recognize the deferred and retentive form of compensation in the form of RSU awards, recipients actually receive RSUs in an amount equal to 11/4 times every RSU earned plus a cash amount equal to the dividends that would have been received on the RSUs if such RSUs had originally been issued in Shares.

 

Named Executive Officers Other than the Chairman and CEO

 

The AIP is a discretionary plan in which all of the executive officers (other than the Chairman and CEO) participate. The Chairman and CEO generally recommends to the Compensation Committee for its approval the overall AIP pool and the allocation of the awards for the executive officers. The Chairman and CEO considered the following in connection with his recommendations:

 

 

The Company uses these metrics as it believes these best represent how the Company manages its cost base (through the use of the Adjusted Operated Margin), enhances shareholder value (as measured by the Adjusted EPS), and meets non-financial objectives (through the use of each executive’s qualitative objectives). The Company’s method of calculating non-GAAP metrics may differ from those used by other companies. In 2009, the Company’s results were impacted by the accelerated amortization of intangible assets, a premium on the early repurchase of 2010 bonds, charges related to its 2008 expense review, costs associated with the acquisition, financing and integration of HRH, net gains/losses on disposal of operations, and costs associated with the redomicile of the Group’s parent company from Bermuda to Ireland. The Company believes that excluding these items from operating income and net

income as applicable, along with the GAAP measures, provides a more complete and consistent comparative analysis of its results of operations.

 

After recommendations regarding allocations of the AIP, the annual incentive awards of the executive officers (other than for the CEO and Chairman) were considered by the Compensation Committee as follows:

 

 

The main objective for the named executive officers was to support the Company in achieving its Adjusted EPS and Adjusted Operating Margin targets. The personal objectives for the named executive officers (other than the Chairman and CEO), which evolved over the course of the year, included the following:

 

Grahame Millwater:

 

 

Patrick Regan:

 

 

Timothy Wright:

 

 

Peter Hearn:

 

 

 

These personal objectives were focused primarily on supporting the Group’s overall achievements. In considering these personal objectives, the Compensation Committee discussed with the Chairman and CEO the role of each named executive officer within the organization and the assistance provided by each person in the Group’s 2009 achievements. Among other things in 2009, the Group achieved an Adjusted EPS target of $2.45 and Adjusted Operating Margin target of 21%. The Company also repaid $750 million on its bridge financing, completed the Goldman Sachs $500 million loan note transaction in a challenging credit market, completed a $300 million bond offering, completed a tender offer for $160 million of outstanding notes and reduced the revolving credit line down to zero dollars by year-end. The Company additionally established the Willis Capital Markets & Advisory Group to provide advice to insurance and reinsurance companies on a broad array of capital markets products and mergers and acquisitions. The Company also completed the Gras Savoye reorganization tax free, completed the sale of Bliss & Glennon and redomiciled the Group’s parent from Bermuda to Ireland. Furthermore, the Company earned an improved outlook to “Stable” from both Moody’s and Standard & Poor’s. The Group’s Global segment, which Reinsurance is a part of, delivered organic commissions growth of 4%. The Company also realized approximately $100 million of gross benefits from the Shaping Our Future initiatives, as well as significant cost savings from Right Sizing Willis. This included savings from a program of initiatives within Reinsurance focused on enhancing our client offering, including implementation of a global sales model, improving service delivery, developing further cutting edge analytical capabilities and hiring of additional production and specialist product resources. The Compensation Committee and the CEO also discussed feedback by the executive officers of their views of their peers’ performance, the compensation of the Company’s executive officers as against executives in their peer group and generally in the finance market in their primary locations, and, with respect to Mr. Wright, his guaranteed minimum annual incentive award payment under his employment agreement.

 

In light of the foregoing, finding that each of the named executive officers achieved their personal objectives, the Compensation Committee approved 2009 AIP awards for Messrs. Millwater, Hearn and Wright. The payment will be made 100% in cash as a result of an assessment of the equity holdings of the named executive officers and the Company determination that given available share capacity it would be more appropriate to direct retentive equity awards to other employees. The named executive officers must repay a proportionate amount of the cash amount if they voluntarily leave the Company’s employ other than in the event of retirement or permanent disability, before December 31, 2012.

 

As a result of his resignation effective February 19, 2010, the Compensation Committee elected not to grant an AIP award to Mr. Regan, but in light of his exceptional performance, agreed to waive the forfeiture conditions contained within his previous cash AIP awards. The Compensation Committee did not exercise any discretion with respect to Mr. Regan’s equity grants which will be governed by the terms of the award agreements on his departure as discussed in further detail under the “Grant of Plan-Based Awards” and “Outstanding Equity Awards at Fiscal Year End.”

 

Chairman and CEO

 

Annual incentive awards to the Chairman and CEO are determined in accordance with his employment agreement and with the Willis Group Senior Management Incentive Plan, which was approved by shareholders at the 2005 Annual General Meeting. The plan, which was established to comply with U.S. tax laws, provides for an annual incentive award payment of 5% of the Company’s earnings for the fiscal year, which the Compensation Committee may reduce (but not increase) in its discretion. For this purpose, earnings means the Company’s operating income before taxes and extraordinary loss as reported in its audited consolidated financial statements. Mr. Plumeri’s annual incentive award may, in the discretion of the Compensation Committee, be paid in cash or equity

awards. Mr. Plumeri’s annual incentive award is reviewed and approved by our Compensation Committee each year, with payments generally made in March.

 

In determining Mr. Plumeri’s 2009 bonus award, the Compensation Committee took account of his outstanding overall leadership in a rapidly changing global business and regulatory environment and the bonus arrangements in his then-current employment agreement, which provided for a bonus target of at least 337% of his base salary if the EBIT target is met, at least 225% of his base salary if 95% of the EBIT target is met and at least 450% of his base salary if 105% of the EBIT target is met. The Company exceeded its 2009 EBIT target, however, Mr. Plumeri asked the Compensation Committee not to exercise its discretion to increase his 2009 award, and the Compensation Committee agreed.

 

Mr. Plumeri’s 2009 award of $3,370,000, which is the same as his 2008 award, will be paid 50% in the form of RSUs and 50% in cash. The RSUs will vest one year from grant date (i.e., March 1, 2011) and Mr. Plumeri will receive RSUs in an amount equal to 11/4 times every RSU earned plus a cash amount equal to the dividends that would have been received on the RSUs if such RSUs had originally been issued in Shares. Consistent with the retentive nature of the award, Mr. Plumeri must repay a proportionate amount of the cash award if he voluntarily leaves the Company’s employ, other than in the event of retirement or permanent disability, before December 31, 2012.

 

Details of the 2009 annual incentive awards made to our named executive officers are shown in the Bonus Column of the Summary Compensation Table and, in the case of Mr. Plumeri, in footnote (1) to the Grant of Plan-Based Awards table.

 

Long-Term Incentives—Our long-term incentives are the most significant element of compensation for our executive officers. Discretionary awards are considered each year and are usually in the form of equity grants, which, since 2008, have generally consisted of performance-based options and performance-based RSUs, which we believe aligns executive officers’ interests with those of our shareholders. Long-term incentive compensation awards are generally approved by the Compensation Committee in April with award grants made in May.

 

Our 2009 long-term incentive strategy was designed to reward and retain executives by granting options and RSUs in 2009 that would be earned on an annual basis following the achievement of Adjusted EPS and Adjusted Operating Margin targets. The option awards were 100% performance related, where 50% of the award was earned against an Adjusted EPS target of $2.45 and 50% was awarded against an Adjusted Operating Margin target of 21%.

 

The RSU awards were 100% performance-related, where the award was earned if an Adjusted Operating Margin target of 21% and an Adjusted EPS target of $2.45 were met. However, if these targets were not achieved, the amount of the RSU award would be reduced on the following sliding scale basis, except that if both performance targets were not achieved, the adjusted target which results in the lowest RSU award would be used:

 

 

 

The performance targets in respect of 2009 (Adjusted EPS of $2.45 and Adjusted Operating Margin of 21%) were achieved. Subject to the continued employment of the executive officer, the 2009 long-term incentive awards will vest as follows:

 

 

For the RSUs that vest on the 1st anniversary of the grant date, the Shares received following the settlement of taxes must be retained for one-year post vesting.

 

Details of the RSUs and performance options granted in 2009 to the named executive officers are shown in the Grant of Plan-Based Awards table.

 

Perquisites—The Company provides certain perquisites to its executive officers, as disclosed in the Summary Compensation Table. The main perquisite is the provision of housing accommodations because of the global nature of our business and the amount of travel required by our executive officers.

 

Other Benefits—In addition to the elements of compensation described above, we provide retirement, life assurance and medical benefits to our executive officers to be competitive with the marketplace in which executive officers operate.

 

Retirement income is provided to the Chairman and the CEO and some other executive officers through our defined benefit retirement plans. In recent years the Company has closed its defined benefits plans to new employees so that recently hired executive officers participate in defined contribution plans. The Company believes that this is the most appropriate way of providing an income after retirement to our executive officers. Details of the retirement benefits received by the named executive officers are contained in the compensation tables in the section entitled “Pension Benefits”.

 

Most of our U.S. executive officers participated in a non-contributory defined benefit plan with no enhanced benefits compared to other U.S. employees other than Mr. Plumeri, who participates in a deferred compensation plan. $800,000 is credited annually to a deferred compensation plan on Mr. Plumeri’s behalf to provide retirement income. On May 15, 2009, the U.S. defined benefit plan was closed to future accrual for all U.S. employees including the executive officers.

 

For U.S. employees a 401(k) Plan is available for savings towards retirement. For 2009, in light of the challenging economic environment, the Company decided to suspend its matching contribution to the 401(k) Plan for all employees. Associates who were part of the HRH acquisition were eligible for a 2009 401(k) Plan match until October 1, 2009. Shares are available as an investment option in Willis North America’s 401(k) Plan.

 

We also maintain a deferred compensation plan for certain U.S. employees whose annual salary is in excess of $150,000 that allows them to plan their tax position through a deferral of part of their annual compensation. Other than Mr. Plumeri, none of our U.S named executive officers currently participate in this plan.

Clawback Policy

 

The Board of Directors, or any committee thereof, may to the extent permitted by applicable law, cancel or require reimbursement of any incentive payments or equity-based awards received by an executive officer after December 31, 2008, if and to the extent that, (a) the incentive payment or equity award was based on the achievement of Company financial results which are subsequently restated, (b) the Compensation Committee determines that the executive officer engaged in fraud, negligence or other misconduct that contributed to the need to restate the Company’s financial results and (c) the incentive payments or equity-based award values made to the executive officer would have been lower if the Company’s results had been properly reported. In such cases, the Company will seek to recover from the executive officer the amount by which the actual incentive payment or equity award for the relevant period exceeded the amount that the executive officer would have received based on the restated results. The Company’s clawback policy is posted on its website under Investor Relations — Corporate Governance.

 

Executive Officer Share Ownership Guidelines

 

Executive officers are required to retain 75% of the Shares they acquire upon the exercise of options or vesting of RSUs, after paying taxes and exercise costs. No sales of Shares by an executive officer in excess of the 25% threshold will be permitted while still in office, other than in exceptional circumstances, which must be approved by the Chairman and CEO and the Chairman of the Compensation Committee.

 

Details of share awards made to our named executive officers during 2009 are shown in the Grant of Plan-Based Awards table. All outstanding Share awards held by our named executive officers are shown in the Outstanding Equity Awards at Fiscal Year-End table.

 

As of February 26, 2010, our executive officers beneficially owned in the aggregate 4,911,545 Shares, including 1,286,885 options and RSUs that vest or can be exercised by April 27, 2010.

 

Share Award Policy

 

In October 2008, the Board of Directors adopted a policy to govern the granting of options and other stock awards under the Company’s share plans, as summarized below.

 

It is the Company’s policy not to backdate option grants or other stock awards to take advantage of a lower share price; nor will it schedule grants of options or other stock awards before or after specific events to take advantage of anticipated movements in the price of our Shares. Share awards to executive officers made in 2009 were granted in accordance with the share award policy, on the first permissible dealing day, in accordance with the Company’s policy for dealing in Willis Shares.

 

It is also the Company’s policy to grant options with an exercise price no less than the closing sales price as quoted on the NYSE on the date of grant, except in the case of the Company’s Sharesave plans, for which the exercise price is set at the closing sales price on the date before employees are invited to participate.

 

In addition to approving share award grants to executive officers, the Compensation Committee is responsible for approving the overall allocation of stock award grants to the Company’s employees for the forthcoming year. Implementation of the granting of such awards within the agreed annual plan is delegated to the Share Award Committee consisting of the Chairman and CEO, the President, the Group Chief Operating Officer and Group Chief Financial Officer, and the Group Human Resources Director. The members of the Share Award Committee liaise closely with the Chairman of the Compensation Committee to ensure that, in particular, the timing of grants is appropriate.

 

Awards may be made at a time when the Company is in possession of material non-public information, so long as the timing of the award is not motivated by an intention to improperly use any such material non-public information for the benefit of the recipient.

Annual Share awards to executive officers will be authorized by the Compensation Committee at its first regularly scheduled meeting following the announcement of the Company’s annual results, and the grant date shall be the date of that meeting or a date specified by the Compensation Committee not later than 30 days following that meeting.

 

Except as directed by the Compensation Committee, Share awards granted by the Share Award Committee to non-executive officers, for example to new employees or for retention purposes, will be granted on the first trading day in each month at fair market value following the month in which a new employee commences his employment or a retention award is approved by management.

 

Tax and Accounting Implications

 

The Compensation Committee considers the anticipated tax treatment to the Company and to the executive officers in its review and establishment of compensation programs and payments. Section 162(m) of the Internal Revenue Code of 1986, as amended (“Section 162(m)”), imposes a limit on the amount the Company may deduct for U.S. tax purposes for compensation paid to our CEO and certain other executive officers. However, compensation which qualifies as “performance-based” is excluded from the limit if, among other requirements, the compensation is payable only upon the attainment of pre-established, objective performance goals under a plan approved by the Company’s shareholders. The Willis Group Senior Management Incentive Plan was approved by shareholders at the 2005 Annual General Meeting. The Compensation Committee will designate the executive officers who participate in the plan. The plan is intended to comply with the provisions of Section 162(m) and is intended to be administered in compliance with the requirements of Section 162(m). It is anticipated that all incentive compensation payments made under the plan will be tax deductible.

 

Interpretations of and changes in applicable tax laws and regulations as well as other factors beyond the control of the Compensation Committee can affect deductibility of compensation and there can be no assurance that compensation paid to our executive officers who are covered by Section 162(m) will be treated as qualified performance-based compensation. Our general policy is to preserve the tax deductibility of compensation paid to the Chairman and CEO and other executive officers whose compensation is required to be disclosed, including annual incentives and equity awards under the terms of the Company’s share plans. The Compensation Committee reserves the right to use its judgment to authorize compensation payments that may not be deductible when the Compensation Committee believes that such payments are appropriate and in the best interests of the Company, taking into consideration changing business conditions and the performance of its employees.

 

For U.K.-based executives, a condition of the stock awards is that the participant agrees to pay any social security taxes otherwise paid by the Company upon the exercise of the stock award.

 

The Compensation Committee will continue to monitor developments and assess alternatives for preserving the deductibility of compensation payments and benefits to the extent reasonably practicable, consistent with its compensation policies and as determined to be in the best interests of the Company and its shareholders.

 

It is also the Company’s general policy to deliver equity-based compensation to employees in as tax-efficient a manner as possible, taking into consideration the overall cost to the Company, for which the Company accounts in accordance with FAS 123R.

 

Payments on Change of Control and Termination

 

It is the Company’s policy not to enter into new arrangements with our executive officers providing for potential payments upon the occurrence of a change in control of the Company or other termination events, unless it is necessary to secure the employment of the executive. In general, the Company does not believe that such payments are consistent with best pay practices or its compensation philosophy and objectives.

 

No named executive officer, other than Mr. Plumeri, has entered into an agreement providing for potential payments relating to a change of control of the Company. These provisions were included in

Mr. Plumeri’s employment agreement when he joined the Company. At that time, the Company was privately owned, predominantly by Kohlberg, Kravis & Roberts (“KKR”). In order to recruit an individual of the right caliber to fill the role of Chairman and CEO of the Company as then existed, and given the range of exit strategies available to KKR, it was considered appropriate at that time to include provisions in his employment agreement which provided protection in the case of a change of control.

 

During 2009, the Compensation Committee and the Board of Directors determined that it would be in the best interests of the Company to ensure Mr. Plumeri’s continued services as the Company’s Chairman and CEO until at least July of 2013. In addition, Mr. Plumeri, the Compensation Committee and the Board of Directors agreed that Mr. Plumeri’s prior employment agreement should be updated to reflect the evolution of best pay practices over the last several years. Specifically, it was determined that the provision in Mr. Plumeri’s employment agreement allowing the executive to voluntarily terminate his employment for any reason following a change in control and receive severance payments was inconsistent with best pay practices as well as the Company’s compensation philosophy and objectives. Consequently, the amended employment agreement, which Mr. Plumeri entered into in January 2010, provides that, Mr. Plumeri will be eligible for severance payments in connection with a change in control only if he is involuntarily terminated without Cause or terminates employment for Good Reason (each as defined in the amended employment agreement) within 6 months prior to or within 24 months following a change in control. Further information regarding Mr. Plumeri’s employment agreement and details of the change of control provisions are contained in the sections entitled “Compensation Tables—Chairman and CEO’s Employment Agreement; “—Potential Payments to the Chairman and CEO.”

 

Mr. Hearn entered into a restrictive covenant agreement with the Company. The agreement provides, in part, that if we desire for Mr. Hearn to refrain from working for, engaging or generally having a financial interest in certain of our competitors after the termination of his employment, we are obligated to make severance payments to Mr. Hearn during such non-compete period.

 

Messrs. Millwater, Regan and Wright have each entered into employment agreements providing that the Company or the executive may terminate the executive’s employment at any time by giving 12 months prior written notice. Due to their roles, we may require that the executives vacate their offices without serving the full notice period. We therefore may be required to pay the executive an amount equal to his base salary for the remaining portion of the notice period. Further, payments in respect of Messrs. Millwater, Regan and Wright may be made to address any statutory redundancy payments required to be made, at rates set forth from time to time by the Department of Trade and Industry of the U.K. Government. Further information regarding the employment agreements of the named executive officers (other than Mr. Plumeri) and details of the applicable termination provisions are contained in the sections entitled “Compensation Tables—Other Named Executive Officers’ Employment Agreements; “—Potential Payments to Other Named Executive Officers Other than the Chairman and CEO.”

 

COMPENSATION COMMITTEE REPORT

 

This report is submitted to the shareholders of Willis Group Holdings Public Limited Company (the “Company”) by the Compensation Committee of the Board of Directors. The Compensation Committee consists solely of non-executive directors who are independent, as determined by the Board in accordance with the Company’s guidelines and NYSE listing standards.

 

The Compensation Committee has reviewed, and discussed with management, the Compensation Discussion and Analysis contained in this proxy statement, and having satisfied itself as to the completeness and accuracy of the Compensation Company’s compensation philosophy and policies recommended to the Board that it be included in this proxy statement.

 

Submitted by the Compensation Committee of the Board of Directors
Sir Roy Gardner, Jeffrey B. Lane and James F. McCann.

 

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

 

None of our executive officers serves as a member of the Board of Directors or compensation committee of any entity that has one or more of its executive officers serving as a member of the Compensation Committee. In addition, none of our executive officers serves as a member of the compensation committee of any entity that has one or more of its executive officers serving as a member of our Board of Directors.

 

COMPENSATION TABLES

 

Summary Compensation Table

 

The following table sets forth cash and other compensation paid or accrued for services rendered in 2009 to the Chairman and CEO, the Group Chief Financial Officer and each of the other three most highly compensated executive officers of the Company.

 

 

 

 

Grant of Plan-Based Awards

 

The following table sets forth the grants of options and RSUs made to the named executive officers during 2009.

 

 

 

 

Outstanding Equity Awards at Fiscal Year End

 

The following table sets forth the options and share awards held by the named executive officers as of December 31, 2009.

 

 

 

 

 

 

Option Exercises and Shares Vested

 

The following table sets forth the share options exercised and RSUs vesting during 2009 by the named executive officers.

 

 

 

 

Pension Benefits

 

Willis North America Inc. Pension Plan—The Group maintains a US retirement program, the Willis North America Inc. Pension Plan, a qualified defined benefits plan. This plan provides members with a pension on normal retirement age of 60 or 65 based on length of service, pensionable remuneration and when they first joined the plan. The compensation limit for the plan is $210,000 for 2008 and 2009. Participants are 100% vested in the plan after completing five years of service. Employees also become 100% vested if they are participants in the plan and are employed by Company after reaching age 60. The plan was closed to new hires on January 1, 2007 and frozen on May 15, 2009.

 

If participants are vested and married, their surviving spouses may be entitled to survivor benefits from the plan, if the participants die before starting retirement benefits. The default death benefit is the

survivor portion of a 50% Joint & Survivor annuity. If participants are age 55 with 10 or more years of service, they may elect an enhanced survivor benefit.

 

As of December 31, 2009, Mr. Plumeri had approximately nine years of vesting service. The accrued annual benefit for Mr. Plumeri, payable as a normal-form annuity beginning on January 1, 2010, is $56,184 (Mr. Plumeri is over 65). At this retirement age, the years of vesting service and annual Maximum Average Salary for Mr. Plumeri are approximately nine years and $202,000 respectively.

 

As of December 31, 2009, Mr. Hearn had approximately 16 years of vesting service. The accrued annual benefit for Mr. Hearn, payable as a normal-form annuity beginning at age 65 is $79,255. At retirement age of 65, the years of vesting service and annual Maximum Average Salary for Mr. Hearn are approximately 27 years and $200,897 respectively.

 

Also, Willis North America Inc. (“Willis US”) has a 401(k) Plan covering its eligible employees and those of its subsidiaries. Shares are available as an investment option to participants in the Willis 401(k) Retirement Savings Plan.

 

Willis Pension Scheme—The Group also maintains a U.K. retirement program consisting of the Willis Pension Scheme, an approved defined benefits plan. A defined contribution plan was introduced in 2006 for new employees. The Willis Pension Scheme provides members with a pension of up to two thirds of pensionable remuneration on normal retirement age of either 60 or 65. Members accrue pension at a rate of 1/30th, 1/50th or 1/60th of pensionable remuneration, depending on grade and when they first joined the Scheme, in each case subject to a maximum of two-thirds of pensionable remuneration on retirement. Other members may have different accrual rates due to individual circumstances, such as continuation of existing benefits on joining. Members contribute 8% of their pensionable remuneration. The Willis Pension Scheme was closed to new members beginning on January 1, 2006.

 

Pensionable remuneration is based on full basic salary less an offset in respect of the U.K. State Pension, currently £4,953, in the case of most members including Messrs. Millwater and Regan. In addition, pensionable remuneration for members who joined the Scheme after June 1, 1989, including Mr. Regan, is subject to a cap, currently £123,600.

 

Mr. Millwater accrues pension remuneration at a rate of approximately 1/53rd per annum, and Mr. Regan accrues pension at a rate of approximately 1/60th.

 

On death, pensions based on one half of the members’ pensions are payable to a surviving spouse.

 

Rest of World—Elsewhere, pension benefits for our employees are typically provided in the country of operation through defined contribution plans.

 

The following table sets forth the retirement benefits that may be received by the named executive officers that participate in a pension scheme:

 

 

 

 

Non-Qualified Deferred Compensation

 

The following table sets forth the non-qualified deferred compensation to be received by the Chairman and CEO. None of the other named executive officers receives deferred compensation.

 

 

 

 

Chairman and Chief Executive Officer’s Employment Agreement

 

The Compensation Committee and the Board of Directors determined that it would be in the best interests of the Company to ensure Joseph J. Plumeri’s continued services as the Company’s Chairman and Chief Executive Officer until at least July of 2013. In addition, Mr. Plumeri and the Compensation Committee and the Board of Directors agreed that Mr. Plumeri’s prior employment agreement should be updated to reflect the evolution of best pay practices over the last several years. Two members of the Compensation Committee, Sir Roy Gardner and James McCann, participated in all discussions with Mr. Plumeri regarding his employment agreement and were advised by F.W. Cook during the negotiations. As a consequence, after receiving unanimous Board approval, on January 15, 2010, Willis US, a subsidiary of the Company, entered into an amended and restated employment agreement with Mr. Plumeri.

 

Mr. Plumeri agreed to extend the term of his employment for approximately 27 additional months until July 7, 2013. Either party may terminate Mr. Plumeri’s employment at an earlier time by giving 90 days prior written notice. Pursuant to the amended employment agreement, Mr. Plumeri’s base salary of $1,000,000, which has not increased since he joined Willis in October 2000, will be maintained. Similarly, Mr. Plumeri will continue to be eligible to receive an annual bonus, subject to the achievement of performance targets to be determined by the compensation committee. This is consistent with Mr. Plumeri’s and the Company’s shared view that his incentives will be best aligned with the interest of the shareholders if a majority of his annual compensation is tied to the Company’s performance. Except for the pro-rata bonus for 2013 or as otherwise determined by the Compensation Committee and the Board of Directors, the annual bonus will continue to be paid 50% in cash and 50% in restricted stock units. Mr. Plumeri will also continue to receive the same annual deferred compensation credit of $800,000 for each year he continues to be employed by Willis US, which is made to a non-qualified deferred compensation plan on his behalf.

 

In the interest of complying with best pay practices, Mr. Plumeri has agreed to a number of significant changes to his prior employment agreement. In the event of a Change in Control (as defined in the amended employment agreement), Mr. Plumeri’s prior agreement permitted him to voluntarily terminate his employment and receive severance. Effective January 1, 2010, in the event of a Change in Control, Mr. Plumeri can no longer voluntarily terminate and receive severance and instead will only be eligible for severance if he is involuntarily terminated (without Cause) or terminates employment for Good Reason (each as defined in the amended employment agreement). Effective upon the expiration of the term of his prior employment agreement, which will occur on the annual general meeting of shareholders of the Company in 2011, the Company will no longer be required to reimburse Mr. Plumeri for any by excise taxes imposed upon him under Section 4999 of the Internal Revenue

Code (“golden parachute” excise taxes) or penalty taxes imposed upon him under Section 409A of the Internal Revenue Code relating to the deferral of compensation. Mr. Plumeri also agreed, effective January 1, 2010, to remove provisions requiring the Company to provide similar tax reimbursement (gross up) payments in respect of income taxes imposed on him relating to reimbursements for expenses and legal fees.

 

In consideration for the changes noted above, the Compensation Committee and the Board of Directors amended Mr. Plumeri’s employment agreement to provide that Mr. Plumeri will receive a grant of RSUs in 2010 that will vest only upon the achievement of performance and time-based vesting criteria to be determined by the Compensation Committee (but that are consistent with the performance criteria and time vesting schedule granted for other senior executives). They will have a grant date value of $6,000,000, and if earned, vest no later than July 7, 2013. It is the expectation and intent of the Compensation Committee to award Mr. Plumeri grants of comparable value and containing comparable terms in 2011 and 2012, subject to the Compensation Committee’s good faith evaluation of changes in circumstances of the Company, the performance of the Company and the performance of Mr. Plumeri that justifies an alternative vehicle or amount of grant.

 

As stated above, Mr. Plumeri will continue to be eligible to receive an annual bonus tied to performance goals established in good faith by the Compensation Committee. As an added incentive, the threshold, target and maximum bonus payout percentages are 250%, 375%, and 500% of base salary (increased from 225%, 337% and 450%, respectively). If Willis US terminates Mr. Plumeri’s employment without Cause or Mr. Plumeri terminates his employment for Good Reason, he is entitled to a lump sum payment equal to $4,000,000 in lieu of the prior provision which provided for a payment equal to the lesser of $4,000,000 and $2,000,000 multiplied by a fraction, the numerator of which was the number of months of employment remaining until April 2011 and the denominator of which was 12. If Willis US terminates Mr. Plumeri’s employment without Cause or if Mr. Plumeri terminates his employment for Good Reason within 6 months prior to or within 24 months following a Change in Control, Mr. Plumeri will receive a payment equal to two times the sum of his base salary and target annual bonus during the year in which the termination of employment occurs in lieu of the prior provision which provided for a payment equal to $6,000,000.

 

In addition, in the event of any termination of employment without Cause or for Good Reason, Mr. Plumeri will continue to be entitled to accrued benefits earned prior to termination but not yet paid. The accrued benefits include unpaid salary and vacation pay; any bonus due as a result of actual performance but not yet paid for any completed financial year; a pro rated bonus for the year in which the termination occurs based upon actual performance achieved for that year; amounts due under medical, life insurance, disability and pension plans; and reimbursable business expenses. Mr. Plumeri will also continue to be entitled to have credited to his deferred compensation benefit account the amounts he would have received had he remained until the end of his contract of employment, which is now July 7, 2013.

 

If Mr. Plumeri’s employment is terminated for any other reason, he remains only entitled to his accrued benefits, provided that if Mr. Plumeri terminates his employment without Good Reason following a Change in Control, he is entitled to be credited to his deferred compensation benefit account the amounts he would have received had he remained until the end of his contract of employment, which is now July 7, 2013.

 

The amended employment agreement also contains certain confidentiality, non-compete and non-solicitation covenants and provisions relating to Mr. Plumeri’s termination of employment.

 

Other Named Executive Officers’ Employment Agreements

 

Messrs. Millwater, Regan, Hearn and Wright each have an employment agreement with a subsidiary of the Company. Each agreement provides for an annual salary which is subject to review and which in 2009 was $704,295 for Mr. Millwater, $626,040 for Mr. Regan, $550,000 for Mr. Hearn and $633,866 for Mr. Wright. Pursuant to his employment agreement, Mr. Wright was also guaranteed a minimum

$626,400 2009 AIP award. Messrs. Millwater, Regan, Hearn and Wright participate in the AIP which provides for an annual incentive award which depends on Company and personal performance. In respect of Messrs. Millwater, Regan, and Wright each employment agreement may be terminated generally upon giving 12 months’ notice and contains certain non-compete and non-solicitation covenants. The Company has entered into a separate restrictive covenant agreement with Mr. Hearn which prevents him from undertaking any activity deemed to be in competition with the Company for a period of up to 12 months following termination of his employment, during which the Company will make monthly payments equivalent to his base salary and provide for continued medical coverage.

 

Mr. Regan resigned on October 22, 2009 and his last day at the Company was February 19, 2010. Effective upon his departure, Stephen E. Wood was appointed Interim Group Chief Financial Officer. Pursuant to Mr. Wood’s employment agreement, he receives a base salary of $313,020 per annum, effective January 1, 2010. He also participates in the AIP.

 

Messrs. Millwater, Regan, Wood and Wright receive their salaries in pounds sterling and the above figures have been converted into dollars at the average exchange rate for 2009 (£1:$1.5651).

 

Potential Payments to the Chairman and Chief Executive Officer

 

The following table shows the estimated payments and benefits that our Chairman and CEO would have received if his employment had terminated on December 31, 2009 and the terms of his former employment agreement applied. The severance terms of his amended employment agreement, dated January 15, 2010, are disclosed in the footnotes to the table.

 

 

 

 

“Change of Control” is defined in Mr. Plumeri’s agreement as:

 

 

 

 

 

Mr. Plumeri’s amended employment agreement further provides that the definition of “Change in Control” may be narrowed in some circumstances, to the extent necessary to comply with Section 409A of the federal tax code.

Potential Payments to Named Executive Officers other than the Chairman and CEO

 

The following table sets forth the estimated payments and benefits our named executive officers other than the Chairman and CEO would have received assuming the named executive officer was terminated on December 31, 2009.