UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
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Willis Towers Watson Public Limited Company
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Notice of Annual General Meeting of Shareholders
Date and Time: Tuesday, May 11, 2021 at 9:00 a.m. EDT. Registration begins at 8:30 a.m. EDT
Date and Time: | Wednesday, June 8, 2022 at 9:30 a.m. EDT. Registration begins at 9:00 a.m. EDT |
Location: |
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We are pleased to invite you to join Willis Towers Watson Public Limited Company’s 20212022 Annual General Meeting of Shareholders.
Items of business:
1) | Election of nine directors |
2) | Advisory (non-binding) vote to ratify the appointment of the independent auditors and binding vote to fix the independent auditors’ remuneration |
3) | Advisory (non-binding) vote to approve named executive officer compensation |
4) | Renewal of the Board’s existing authority to issue shares under Irish law |
5) | Renewal of the Board’s existing authority to opt out of statutory pre-emption rights under Irish law |
6) | Approve the creation of distributable profits by the reduction and cancellation of the Company’s share premium account |
7) | Amend and restate the Willis Towers Watson Public Limited Company 2021 Equity Incentive Plan, including to increase the number of shares authorized for issuance under the 2012 Plan |
Who can vote:
● | Only shareholders of record on |
How to vote:
● | Shareholders may vote by mail, over the Internet, by telephone, or in person at the annual meeting. See “Additional Information — Information about the Proxy Materials and the |
Attending the meeting:
● | Shareholders entitled to attend and vote at the Annual General Meeting may attend at the |
● | We understand that Irish law generally requires companies to hold shareholder meetings at a physical location. However, in light of COVID-19, we strongly encourage our shareholders to vote by proxy prior to 11:59 p.m. EDT on |
● | Shareholders who wish to attend the meeting in person should review “Additional Information — Information about the Proxy Materials and the |
Date of mailing:
● | This Proxy Statement, the Company’s Annual Report on Form 10-K and the Irish Statutory Accounts are available at www.proxyvote.com. These materials were mailed or made available to shareholders on or about |
Your vote is important. We urge you to participate in deciding the items on the agenda and to read this Proxy Statement and accompanying materials for additional information concerning the matters to be considered at this meeting. Shareholders present at the meeting will have an opportunity to ask questions regarding the Irish Statutory Accounts and related reports to the representatives of our independent auditors. The only matters that will be addressed at the Annual General Meeting of Shareholders will be the items of business on the agenda included in this Proxy Statement.
On behalf of the Board of Directors,
Nicole Napolitano
Company Secretary & General Counsel, Corporate Governance & Public Company;
March 24, 2021Company Secretary
April 28, 2022
Important Notice Regarding the Availability of Proxy Materials for the Company’s Annual General Meeting of Shareholders to be held on May 11, 2021.June 8, 2022. This Proxy Statement, the Company’s Annual Report on Form 10-K and the Irish Statutory Accounts are available at www.proxyvote.com.
WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY |
The below provides an overview of each of the proposals being presented at the Company’s 2021 Annual General Meeting of Shareholders. For more complete information, please review the respective proposals in their entirety.
Items of Business: | Page number | Board vote recommendation | ||||
1. | Elect Directors
To elect the nine persons named in this Proxy Statement to serve as directors for a one-year term | 1 | FOR | |||
2. | Ratify the Appointment of the Independent Auditors in an Advisory (Non-binding) Vote and Fix the Independent Auditors’ Remuneration in a Binding Vote
To ratify, on a non-binding advisory basis, the selection of (i) Deloitte & Touche LLP to audit our financial statements and (ii) Deloitte Ireland LLP to audit our Irish Statutory Accounts, and to authorize the Board, acting through the Audit Committee, to fix the remuneration of the independent auditors on a binding basis | 29 | FOR | |||
3. | Approve Named Executive Officer Compensation in an Advisory (Non-binding) Vote
To approve, in an advisory (non-binding) vote, the compensation of the Company’s named executive officers | 33 | FOR | |||
4. | Renew the Board’s Existing Authority to Issue Shares under Irish Law
Renew the Board’s authority to issue up to approximately 33% of the Company’s issued ordinary share capital as of March 11, 2021, for a period expiring 18 months from the passing of the resolution | 87 | FOR | |||
5. | Renew the Board’s Existing Authority to Opt Out of Statutory Pre-emption Rights under Irish Law
Renew the Board’s authority to issue, free of pre-emptive rights, up to 5% of the Company’s issued ordinary share capital as of March 11, 2021 (and an additional 5% provided the Company uses it only in connection with an acquisition or approved capital acquisition) for a period expiring 18 months from the passing of the resolution | 88 | FOR |
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Proposal No. 1: Elect Directors
Willis Towers Watson Public Limited Company was formed on January 4, 2016 upon completion of the merger (the “Merger”) between Willis Group Holdings Public Limited Company (“legacy Willis Group”) and Towers Watson & Co. (“legacy Towers Watson”). We are a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. We have more than 45,00044,000 employees and service clients in more than 140 countries and territories. In this Proxy Statement, we refer to Willis Towers Watson as the “Company,” “WTW,” “we” and “our.”
Our2021 served as a transformative year for Willis Towers Watson Public Limited Company. Solid Company performance throughout the year demonstrated the resilience of WTW’s colleagues and a diversified portfolio of products and services, amid challenges caused by the COVID-19 pandemic and a shift in WTW’s strategy as an independent company. Despite these unprecedented circumstances, the Company continued to serve our clients, protect our colleagues and safeguard our business fundamentals.
With the COVID-19 pandemic, the Company continued its comprehensive set of global processes to stabilize business operations while providing high quality service to clients. This included ongoing global business continuity and incident management efforts to restrict travel, limit office access and enhance our global workforce to a work-from-home protocol with split team operations for our essential workers. The Company regularly considered the impact of the pandemic on our business and stress tested the rigor of our business resilience, continuity plans, forecasting and liquidity management. Throughout 2021, the Company took decisive measures to reinforce working capital discipline and reduce discretionary spending.
From March 2020 through July 2021, the Board of Directors (the “Board”) and leadership drove the Company towards the closing of the business combination with Aon plc (“Aon”), which would have been an all-stock transaction with a combined equity value of approximately $80 billion. One of the goals of the combination was to accelerate elements of the Company’s pre-existing strategy. At the same time as leadership was driving towards the closing of the transaction, they were also managing the day-to-day business of the Company. When the proposed Aon combination was terminated in July, after almost 18 months of integration planning and closing preparations and after a period of substantial uncertainty, the Board and leadership quickly shifted their attention to supporting the Company on an independent path. With the combination no longer feasible, the Company took decisive actions to accelerate its standalone strategy and aggressive steps to retain colleagues and recruit new talent, to enhance its ability to serve clients and to create value for stakeholders. In particular, the Company quickly announced a CEO successor, hired a new CFO and took significant steps to refresh the Board; transformed its senior management structure through the creation of a new Global Leadership Team and simplified the Company’s organizational structure; sold its treaty reinsurance business, generating several billion dollars of capital for focused investments and share repurchases; and created and launched an ambitious strategic plan to grow, simplify and transform with plans to refresh the WTW brand.
These actions, combined with the commitment of our leaders and colleagues, helped WTW deliver solid financial results in 2021 and position the Company for future years.
WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY | i |
Proxy Statement Proposal Highlights
The below provides an overview of each of the proposals being presented at the Company’s 2022 Annual General Meeting of Shareholders. For more complete information, please review the respective proposals in their entirety.
Items of Business: | Page number | Board vote recommendation | ||||
1. |
To elect the nine persons named in this Proxy Statement to serve as directors for a one-year term until the next annual general meeting of shareholders | 1 | FOR | |||
2. |
To ratify, on a non-binding advisory basis, the selection of (i) Deloitte & Touche LLP to audit our financial statements and (ii) Deloitte Ireland LLP to audit our Irish Statutory Accounts, and to authorize the Board, acting through the Audit and Risk Committee, to fix the remuneration of the independent auditors on a binding basis | 32 | FOR | |||
3. | Approve Named Executive Officer Compensation in an Advisory (Non-binding) Vote
To approve, in an advisory (non-binding) vote, the compensation of the Company’s named executive officers | 36 | FOR | |||
4. | Renew the Board’s Existing Authority to Issue Shares under Irish Law
To renew the Board’s authority to issue up to approximately 33% of the Company’s issued ordinary share capital as of March 23, 2022, for a period expiring 18 months from the passing of the resolution | 97 | FOR | |||
5. | Renew the Board’s Existing Authority to Opt Out of Statutory Pre-emption Rights under Irish Law
To renew the Board’s authority to issue, free of pre-emptive rights, up to 5% of the Company’s issued ordinary share capital as of March 23, 2022 (and an additional 5% provided the Company uses it only in connection with an acquisition or approved capital acquisition) for a period expiring 18 months from the passing of the resolution | 98 | FOR | |||
6. |
To approve the creation of distributable profits, by the reduction and cancellation of the entire amount standing to the credit of the Company’s share premium account or such lesser amount as the Board of Directors or the High Court of Ireland (the “High Court”) may determine | 100 | FOR | |||
7. |
To amend the 2012 Plan to increase by 2,000,000 the number of ordinary shares reserved for issuance under the 2012 Plan, among other amendments described in the proposal | 102 | FOR |
ii | WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY |
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Proposal No. 1: | 1 | |||||
15 | ||||||
Proposal No. 2: | 32 | |||||
Proposal No. 3: | Advisory (Non-binding) Vote on Named Executive Officer Compensation | 36 | ||||
Executive Compensation: Compensation Discussion and Analysis | 37 | |||||
64 | ||||||
64 | ||||||
65 | ||||||
Proposal No. 4: | Renew the Board’s Existing Authority to Issue Shares under Irish Law | 97 | ||||
Proposal No. 5: | Renew the Board’s Authority to Opt Out of Statutory Pre-emption Rights under Irish Law | 98 | ||||
Proposal No. 6: | 100 | |||||
Proposal No. 7: | 102 | |||||
Securities Authorized for Issuance under Equity Compensation Plans | 113 | |||||
114 | ||||||
Security Ownership of Certain Beneficial Owners and Management | 114 | |||||
116 | ||||||
Information about the Proxy Materials and the 2022 Annual General Meeting of Shareholders | 116 | |||||
Shareholder and Other Proposals for the 2023 Annual General Meeting | 121 | |||||
122 | ||||||
Exhibit A: | 123 |
WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY | iii |
Proposal No. 1: Elect Directors
Our Board is responsible for overseeing our global business in a manner consistent with its fiduciary duties. This oversight requires highly skilled individuals with various qualities, attributes and professional experience. The Corporate Governance and Nominating Committee (the “Governance Committee”) continuously assesses the Board’s size and composition to determine if it is effective and represents the long-term interests of shareholders.
As discussed further below, the Governance Committee believes that the slate of nominees as a whole reflects the collective knowledge, integrity, reputation and leadership abilities, and the diversity of skills and experience and attributes that are appropriate for the Company’s governance. At the Governance Committee’s recommendation, the Board has nominated all current directorsthe individual nominees listed in this Proposal No. 1 to hold officeserve until the next Annual General Meeting of Shareholders unless they are removed or resign before that meeting.
The Board unanimously recommends a vote “FOR” the election of each of the directors.
Required Vote
Our directors are elected by way of separate resolutions, each of which requires the affirmative vote of a majority of the votes cast by shareholders at the Annual General Meeting of Shareholders, and hold office until the next Annual General Meeting of Shareholders unless they are removed or resign before that meeting. Any nominee for director who does not receive a majority of the votes cast is not elected to the Board.
Diversity
We are committed to maintaining diversity on our Board as provided in our Corporate Governance Guidelines. Both the Board and the Governance Committee believe that Board diversity is important to ensure a balanced Board with a rounded perspective. 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 have significantly refreshed our Board since our last annual general meeting of shareholders with four new independent directors joining the Board since January 1, 2022 and a fifth nominated for election, creating a further diverse Board (as self-identified). We believe that our commitment to diversity is demonstrated by the current composition of our Board thecomposition, which reflects diversity of gender, ethnicity and nationality, (as self-identified), and the varied backgrounds and skill sets, of our currentincluding as follows (assuming all nominated directors are elected and nominees:have joined the Board):
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WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY | 1 |
Proposal No. 1: Elect Directors (continued)
The table below provides additional diversity information about our Board as of the 2022 Annual General Meeting of Shareholders (assuming all nominees are elected), in the categories listed below, each of which has the meaning as it is used in Nasdaq Listing Rule 5605(f).
Board Diversity Matrix1
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Board Size: | ||||||||
Total Number of Directors | 9 | |||||||
Female
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Male
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Non-Binary
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Did Not Disclose
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Part I: Gender Identity | ||||||||
Directors | 4 | 5 | — | — | ||||
Part II: Demographic Background | ||||||||
African American or Black | 1 | — | — | — | ||||
Alaskan Native or Native American | — | — | — | — | ||||
Asian | — | — | — | — | ||||
Hispanic or Latinx | — | — | — | — | ||||
Native Hawaiian or Pacific Islander | — | — | — | — | ||||
White | 3 | 5 | — | — | ||||
Two or More Races or Ethnicities | — | — | — | — | ||||
LGBTQ+ | 1 | — | — | — | ||||
Did Not Disclose Demographic Background | — | — | — | — |
1 | Includes all nine director nominees, including Mr. Reilly, who, if elected, will join the Board |
Board Evaluation Process
The Governance Committee considers the Board’s size, composition and effectiveness throughout the year. This includes a robust and constructive annual evaluation process, which the Board recognizes is an essential component of good corporate governance and Board effectiveness.
WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY 1
Proposal No. 1: Elect Directors (continued)
The Governance Committee oversees the process and format of the evaluations of the Board and its Committees. As the process is dynamic, the format may change from year-to-year at the discretion of the Governance Committee to ensure that honest and actionable feedback is solicited and obtained from the directors. As the Board manages evolving expectations for how boards should meet their oversight duties and assess their own performance, the format of the evaluations may vary from written questionnaires analyzed by the office of the Corporate Secretary to interviews, including from time to time by the Governance Committee Chairman or a third-party facilitator.
On March 9, 2020, the Company and Aon plc (“Aon”), entered into a Business Combination Agreement, providing for the combination of the two companies (the “Business Combination Agreement”). In the event that the Aon business combination does not close in 2021, the annual evaluation will be conducted later this year.
Typically, the annual evaluation involves a multi-step process, as set forth below, that aims to generate robust comments and discussion at all levels of the Board and each Committee, with topics ranging from Board composition to processes to materials:
● | Step 1: The Governance Committee reviews and approves the process and outline for questions (whether in the form of written questionnaires or questions to be used for open dialogue), including whether to appoint a third-party facilitator. |
● | Step 2: Directors provide responses to the questions, which address a variety of topics including, among other things: |
O | Board composition and structure; |
O | meetings, materials and topics; |
O | Board interaction with management; |
2 | WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY |
Proposal No. 1: Elect Directors (continued)
O | continuing education; and |
O | effectiveness of the Board. |
● | Step 3: The evaluation results are then discussed in closed-session discussions: |
O | with the Governance Committee, which reviews the results of the full Board as well as each Committee evaluation; |
O | by each Committee (as necessary), with discussions being led by the independent Committee |
O | by the full Board, with discussions being led by the Non-Executive |
● | Step 4: Based on evaluation results, the Non-Executive |
The evaluation process has resulted in enhancements or changes to, among other things, meeting materials, meeting topics, meeting structure, committee structure and composition and the evaluation process itself.
Board and CEO Succession
As previously announced, the Company had been engaging in a thorough, multi-year succession planning process prior to announcing the transaction with Aon in March 2020, including planning with respect to CEO succession and with respect to the composition of the Board. In 2021, including following the termination of the proposed transaction with Aon, the Board continued its work on succession planning, making announcements with respect both the transition to a new CEO and changes to Board composition.
CEO Succession
Following a succession planning process, including input from a third-party consultant to assess the experience and attributes of potential internal and external candidates, the Board appointed Mr. Hess as CEO, effective January 1, 2022. Mr. Hess served as a President from August 16, 2021 until his predecessor as CEO and a Board member, John Haley, retired at the end of 2021, as previously scheduled in his contract. For further information on Mr. Hess’s experience, see his biographical information below.
Board Succession
Following a succession planning process, including input from a third-party consulting firm and investors, the Board appointed four new independent directors, each of whom is nominated for election at the 2022 Annual General Meeting of Shareholders along with a fifth new independent director. In particular, concurrent with the transition to Mr. Hess as the new CEO, Dame Inga Beale, Mr. Michael Hammond and Ms. Michelle Swanback joined the Board, effective January 1, 2022. Additionally, Ms. Fumbi Chima joined the Board, effective April 1, 2022, and Mr. Paul Reilly is nominated for election to the Board, effective October 1, 2022. For further information on the new directors’ experience, see their biographical information below.
In order to facilitate the director transition process and spend time on other commitments, Mr. Jaymin Patel stepped down from the Board on January 1, 2022, at which time three of the new, independent directors and the Company’s new CEO joined the Board. Further, Mr. Victor Ganzi, Ms. Anna Catalano, Ms. Wendy Lane and Mr. Wilhelm Zeller decided not to run for re-election to the Board at the 2022 Annual General Meeting of Shareholders. The Board appointed Mr. Paul Thomas to serve as the next Non-Executive Chair of the Board, succeeding Mr. Ganzi at the conclusion of his term at the 2022 Annual General Meeting of Shareholders. If re-elected to the Board, Mr. Thomas’s term as Chair will commence at the conclusion of the 2022 Annual General Meeting of Shareholders and will continue until the conclusion of the 2023 Annual General Meeting of Shareholders.
WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY | 3 |
Proposal No. 1: Elect Directors (continued)
As a result of the foregoing, immediately following the 2022 Annual General Meeting of Shareholders (assuming all director nominees are elected), the Board will be composed of eight directors, four of whom will be new to the Board as of 2022. In addition, as of October 1, 2022 (assuming all director nominees are elected), the Board will be composed of nine directors, five of whom will be new to the Board as of 2022, respectively. Following the 2022 Annual General Meeting of Shareholders the Board will also have a new Chair.
Director Qualifications
When recommending an individual for new or continued membership on the Board, the Governance Committee considers each nominee’s individual qualifications in light of the overall mix of attributes represented on the Board, and the Company’s current and future needs. In its assessment of each nominee, the Governance Committee considers, at a minimum, the person’s integrity, experience, reputation, judgment, independence, maturity, skills and personality, commitment and, for current directors, his or her performance on the Board and its Committees. Extensive knowledge of our business and
Additionally, the Governance Committee:
considers each director’s ability to devote the time and effort necessary to fulfill responsibilities to the Company and, for current directors, whether each director has attended at least 75% of the aggregate of the total number of meetings held by the Board and any committee on which he or she served. In 2021, all directors satisfied these criteria. |
Proposal No. 1: Elect Directors (continued)
● | believes service on other public or private boards in markets around the world enhances a director’s knowledge and board experience. |
● | considers the experience of a director on other boards and board committees in both nomination decisions and in recommending the membership slate for each of the Company’s Board Committees. |
industry is also a key quality for directors. The Governance Committee believes each of the director nominees possesses extensive
● | believes that leadership experience, including through employment as CEO or senior executive of a public company or membership on the board of directors of a public company, is important to the Board’s ability to oversee management and the Company’s growth strategy. |
● | believes that, because of the Company’s global reach, international experience or knowledge of or experience in a key geographic area is important. |
● | seeks a high level of financial literacy and experience for the Board and its Committees, in light of the Company’s public and global nature (including conducting business in different countries and currencies). |
● | believes that, as the Company’s business
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● | believes that the Company distinguishes itself from its competitors through marketing and, as a result, having one or more directors with a strong marketing perspective is also beneficial. |
● | believes that knowledge of the Company’s business and industries, operational transformation, as well as technology and information security is also important. Based on such knowledge, the Governance Committee believes the director nominees are uniquely positioned to oversee the Company’s long-term strategy. |
In assessing whether directors and director nominees have sufficient time to devote to Board duties and responsibilities, the Governance Committee considers, among other things, the number of other public company boards of directors on which a director serves as well as other commitments. Pursuant to theThe Company’s Corporate Governance Guidelines each director (other thanrestrict the CEO), may serve on no more than threenumber of public company boards ofon which our directors in addition to the Board (four boards in total).may serve. None of the Company’s directors would beare considered “overboarded” under the terms of the Guidelines. The Board believes that an executive position at a special purpose acquisition company without operations differs from a full-time executive position at a public company with operations. Further, the Board believes that each director has demonstrated the ability to devote sufficient time and attention to Board and Committee duties, and otherwise fulfill the responsibilities required of directors.
4 | WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY |
Proposal No. 1: Elect Directors (continued)
The Board evaluates each director nominee and each director’s continued service on the Board, based on his or her own merits, knowledge, experience and attributes. For this reason, the Board has not adopted a mandatory retirement age as it believes that doing so might hinder the selection or continued service of a director who would serve as an asset to the Board.
We have highlighted below some key qualifications, attributes, skills and experiences of each director nominee at the Annual General Meeting that were considered by the Governance Committee for each nominee.Committee. The absence of a particular bullet point does not mean that a director does not possess other important qualifications or skills.
WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY |
Proposal No. 1: Elect Directors (continued)
Independent Director; Audit and Risk Committee Member;
Member
Director qualification highlights include:
•
•
• |
Dame Inga Beale
Ms. Beale is the former Chief Executive Officer of Lloyd’s of London, a role she held from 2014 to 2018. Previously, Ms. Beale was Chief Executive Officer of Canopius Group Ltd, with its principal operations at Lloyd’s, from 2012 to 2014. Prior to that, Ms.
The Board has concluded that Ms.
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WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY |
Proposal No. 1: Elect Directors (continued)
Independent Director; Audit and Risk Committee Member; Governance Committee Member
• Executive/management experience • International business experience • Information technology expertise | Fumbi Chima Fumbi Chima, 47, has served on the Board since April 1, 2022. Ms. Chima is currently the Executive Vice President and Chief Information Officer, a role she has had since 2020, at Boeing Employees’ Credit Union (BECU), a not-for-profit financial cooperative. Prior to BECU, Ms. Chima served in leadership roles at various companies in the retail and financial sectors, including as Chief Information Officer at Adidas AG, from 2019 to 2020, Chief Information Officer at Fox Networks Group, from 2017 to 2019, Chief Information Officer at Burberry Group plc, from 2015 to July 2017, and Chief Information Officer — Asia, at Walmart, Inc., from 2014 to 2015. Ms. Chima also previously served in other leadership roles at Walmart, Inc. from 2010 to 2014, and as Vice President of Corporate Systems at American Express Co. from 2006 to 2010. Ms. Chima currently serves on the public company boards of AZEK Company, Inc., a manufacturer of residential and commercial building products, Ted Baker plc, a British luxury clothing company, and Whitbread plc, a British hospitality company. Previously, Ms. Chima served as an independent member of the The Board has concluded that Ms. Chima should serve on the Board due to her global business and technology experience and for her leadership in diversity and inclusion efforts, including advocating for women in business globally. The Board believes that Ms. Chima’s broad range of experience with public and private company leadership positions and directorships provides significant insight into the Company’s global operations and information technology. |
WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY | 7 |
Proposal No. 1: Elect Directors (continued)
Director qualification highlights include:
• CEO/management experience
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Michael Hammond
Mr. Hammond is a retired senior executive with experience at several international insurance broking firms. Most recently, he served in a variety of senior roles at Lockton. This included Chairman and CEO, Lockton Overseas, from 2016 to 2017, Chairman, Lockton International Holdings Ltd., from 2016 to 2017, CEO of Lockton International Holdings Ltd., from 2006 to 2016, and CEO of Lockton Companies LLP from 2010 to 2015. He previously served as Mr. Hammond previously served on the Advisory Board. Mr.
The Board has concluded that Mr.
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8 | WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY |
Proposal No. 1: Elect Directors (continued)
Chief Executive
Director qualification highlights include:
• CEO/management experience
•
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Carl Hess
The Board has concluded that Mr.
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WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY | 9 |
Proposal No. 1: Elect Directors (continued)
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Proposal No. 1: Elect Directors (continued)
Independent Director; Audit and Risk Committee
Director qualification highlights include:
• CEO/management experience
• International business experience
• Relevant board and committee experience | Brendan
Brendan
In addition to serving on the Willis Towers Watson Board, Dr. O’Neill serves on the board of Willis Limited, the principal subsidiary of Willis Towers Watson regulated by the Financial Conduct Authority, the financial services industry regulator in the U.K. Dr. O’Neill serves on the Willis Limited Audit Committee and Enterprise Risk Management Committee.
Dr. O’Neill
Dr. O’Neill served as CEO and Director of Imperial Chemical Industries PLC (“ICI”), a manufacturer of specialty products and paints, until April 2003. Dr. O’Neill joined ICI in 1998 as its COO and Director, and was promoted to CEO in 1999. Prior to Dr. O’Neill’s career at ICI, he held numerous positions at Guinness PLC, including Chief Executive of Guinness Brewing Worldwide Ltd, Managing Director International Region of United Distillers, and Director of Financial Control. Dr. O’Neill also held positions at HSBC Holdings PLC, BICC PLC and the Ford Motor Company. He holds an M.A. in Natural Sciences from the University of Cambridge and a Ph.D. in Chemistry from the University of East Anglia, and is a Fellow of the Chartered Institute of Management Accountants (U.K.).
The Board has concluded that Dr. O’Neill should continue to serve on the Board due to, among other things, his significant experience as CEO and as a senior executive of a number of U.K.-headquartered global businesses, including ICI, a former constituent of the FTSE 100 Index. The Board believes that Dr. O’Neill’s accounting and financial background and his service on international public company boards, including both Irish and U.K. companies, provide significant insight into international business management, strategy and oversight. In addition, Dr. O’Neill’s simultaneous Willis Towers Watson and Willis Limited board service is instrumental in facilitating communication between the boards of the two companies.
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WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY |
Proposal No. 1: Elect Directors (continued)
Independent Director; Compensation Committee
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Proposal No. 1: Elect Directors (continued)
Member; Corporate Governance & Nominating Committee Member
Director qualification highlights include:
• CEO/management experience
• Relevant board and committee experience
• Marketing experience | Linda
Linda
Ms. Rabbitt is the founder and
Ms. Rabbitt currently serves as a director of the Greater Washington Board of Trade and the Economic Club of Washington, D.C. She previously served as a director of Leadership Greater Washington and as a trustee of George Washington University, and is a past
The Board has concluded that Ms. Rabbitt should continue to serve on the Board due to, among other things, her significant experience gained from being the founder and CEO of a prominent construction business and building and growing the company’s business. The Board believes that Ms. Rabbitt’s significant leadership and management experience, combined with her prior role at a global auditing/consulting firm, provides significant insight into business development, marketing, management and risk oversight.
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WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY | 11 |
Proposal No. 1: Elect Directors (continued)
Independent Director Nominee (service to commence October 1, 2022) Director qualification highlights include: • Executive/management experience • Financial expertise • International business experience | Paul Reilly Mr. Reilly, 67, will serve on the Board, effective October 1, 2022, if elected at the 2022 Annual General Meeting of Shareholders. Mr. Reilly is currently the Chief Executive Officer and Chair of the board of Raymond James Financial, a multi-national independent investment bank and financial services company, having served as CEO since May 2010. Prior to that, he served on the firm’s management team as president and CEO-designate from May 2009 to May 2010. He has served on the firm’s board of directors since 2006. From July 2007 to April 2009, Mr. Reilly was Executive Chairman of Korn/Ferry International, a global provider of talent management solutions with more than 90 offices in 39 countries throughout North America, Latin America, Europe, the Middle East, Africa and Asia Pacific. Mr. Reilly began his tenure with Korn/Ferry International as Chairman and CEO in 2001. Prior to that, he was CEO at KPMG International, a global network of professional services firms and one of the Big Four accounting organization, where he was responsible for the overall strategy and implementation of the firm’s products, services and infrastructure on a global basis. Before being named CEO at KPMG, Mr. Reilly ran the firm’s financial services business and earlier had held senior management positions in its real estate consulting group. Mr. Reilly serves as the Chair of the American Securities Association (ASA) and as a member of the Board at Large of the Securities Industry and Financial Markets Association (SIFMA). He is also active with the Bank Policy Institute. Mr. Reilly’s charitable causes include involvement with the National Leadership Roundtable on Church Management and Our Lady of Divine Providence House of Prayer in Clearwater, Florida. Formerly, he acted as a board member of United Way Suncoast and as the Chair of the American Heart Association Heart Walk and Heart Ball. He received his Bachelor of Science degree and MBA from the University of Notre Dame and remains active with the school, serving the Business Advisory Council, and being recognized as a recipient of the Distinguished Alumnus Award in 2004-2005. In addition to his degrees, he earned the Certified Public Accountant designation. The Board has concluded that Mr. Reilly should serve on the Board due to, among other things, his significant experience as CEO at both a financial services company and a professional services company as well as his international business experience and financial expertise. The Board believes that Mr. Reilly’s relevant executive management and public company board experience provides significant insight into global strategy and operations. |
12 | WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY |
Proposal No. 1: Elect Directors (continued)
Independent Director; Compensation Committee Member; Operational Transformation Committee Member Director qualification highlights include: • Management experience • Technology experience • Operational transformation experience | Michelle Swanback Michelle Swanback, 53, has served on the Board since January 1, 2022. Ms. Swanback served as President, Product and Platform, of The Western Union Company from 2020 through March 31, 2022. From 2014 to 2020, Ms. Swanback served as the Group Operating Officer at Accenture Digital. She previously served as the lead for Accenture Technology, North America, from 2012 to 2014. She also served as a managing director in the North American operating unit of the Accenture Communications, Media, and Technology operating group from 2011 to 2012. Ms. Swanback has a Bachelor of Science, Computer Information Systems and Finance from Colorado State University, and completed the IMD Executive Management program at Lausanne in Switzerland. The Board has concluded that Ms. Swanback should serve on the Board due to her management, technology and operational transformation experience. |
WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY | 13 |
Proposal No. 1: Elect Directors (continued)
Independent Director;
Member
Director qualification
• CEO/management experience
• Relevant board and committee experience
• Financial expertise | Paul
Paul
From November 2016 through March 2019, Mr. Thomas served as Senior Advisor of ProAmpac, a leading global flexible packaging company. Mr. Thomas retired on March 31, 2016 from his role as senior executive with the Rank Group NA, a position he had held since January 2011. He was previously the CEO of Reynolds Packaging Group from February 2008 through January 2011, when Alcoa sold the Reynolds Packaging Group business to the Rank Group. Mr. Thomas joined Alcoa in 1978 and, prior to the sale of its packaging businesses, most recently served as Executive Vice President for Alcoa and Group President for its Packaging and Consumer businesses. His prior roles included Executive Vice President responsible for the Alcoa Rolled and Engineered Products Group and Executive Vice President for People and Culture. Mr. Thomas holds a B.S. in Metallurgical Engineering and Material Sciences from Lehigh University and an Executive M.B.A. from the University of Tennessee.
The Board has concluded that Mr. Thomas should continue to serve on the Board due to, among other things, his significant experience as CEO or a senior executive at various large global companies, including his service as senior executive of the Rank Group NA, CEO of Reynolds Packaging Group and Executive Vice President of Alcoa. The Board believes that Mr. Thomas’s relevant management and Committee experience provides significant insight into financial and risk management as well as global strategy and operations.
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Proposal No. 1: Elect Directors (continued)
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WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY |
The Company believes good governance is critical to achieving long-term shareholder value. We are committed to governance policies and practices that serve the long-term interests of the Company and its shareholders.
Corporate Governance Highlights
● | Split CEO and |
● | Formal CEO succession planning process. |
● | Share ownership guidelines for directors and executive officers. |
● | Directors and employees prohibited from hedging Company shares. |
● | Directors and executive officers prohibited from having margin accounts and pledging Company shares. |
● | Majority voting for directors in uncontested elections; directors that do not receive a majority vote are not elected to the Board. |
● | Active Board participation in CEO and Board succession and Company strategic planning. |
● | Formal Board and Board Committee oversight of ESG initiatives, risks and disclosures. |
● | Annual Board and Committee self-evaluations. |
● | Semi-annual shareholder engagement. |
● | No poison pill. |
● | Shareholders holding 10% of the Company’s share capital can convene a special meeting. |
● | Conditional director resignations required for the Governance Committee’s and the Board’s consideration in the event a director experiences materially changed circumstances. |
● | Limit on the number of public boards on which directors may serve and assessment of a director’s continued service if he or she accepts membership on another public board. |
O | For |
O | For |
● | Majority of directors required to be |
● | Annual elections of directors. |
● | Annual review of Board Committee composition. |
● | Regular executive sessions of independent directors. |
● | Proxy access proactively implemented. |
● | Onboarding and regular continuing director education. |
● | Board): |
O |
O |
O | approximately 11% of directors identify as Black; and |
O |
WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY |
Corporate Governance (continued)
Board and Committee Member Independence
Based on the recommendation of the Governance Committee, the Board has determined that, with the exception of Mr. Haley,Hess, (i) each of the current directors and director nominees shown above and (ii) each of the Board Committee members is independent under the relevant SEC rules, NASDAQ listing standards and the Board’s Director Independence Standards. The Board’s Director Independence Standards are part of the Company’s Corporate Governance Guidelines, which were adopted by the Board and which comply with the requirements of NASDAQ listing standards.
As discussed above, each director has significant experience and affiliations with other organizations that bring relevant expertise to the oversight of the Company. In evaluating the independence of each director, the Governance Committee considered that, in the ordinary course of business, the Company provides services (such as insurance broking or consulting services) to, receives services from, or provides charitable donations to, certain organizations affiliated with the directors by virtue of their directorship, employment status or share ownership. In addition, in the ordinary course of business and on an arm’s-length basis, certain directors receive broking services from the Company on a personal basis. The Governance Committee determined that, in all of the above cases, the transactions do not impair the relevant director’s independence under the applicable SEC rules, NASDAQ listing standards or the Board’s Director Independence Standards.
Board Meetings and Attendance
The Board met formally 1211 times in 2020.2021. Additionally, the Board met informally with management on severalnumerous occasions during the course of the year to discuss, among other things, strategic, operational and management issues. All directors standing for re-election who were on the Board in 2021 attended at least 75% of the aggregate of the total number of Board meetings and of any Committee on which they served in 2020.2021.
The independent directors held separate executive sessions without management either before or after each of the Board’s regularly scheduled meetings in 2020.The2021.The Non-Executive ChairmanChair of the Board chaired each executive session. Neither the CEO nor any member of management at any level attends the executive sessions of the independent directors unless invited to discuss a particular matter.
All directors are expected to make every effort to attend each Annual General Meeting of Shareholders. All directors standing for re-election who were on the Board in 2021 participated in the 20202021 Annual General Meeting of Shareholders as well as the Special Meetings of Shareholders in connection with the Aon transaction.Shareholders.
Board Leadership Structure
As noted above, the members and chairs of each of the Board Committees are independent based on SEC, NASDAQ and governance standards. As a result, independent directors directly oversee such critical matters as the compensation policy for executive officers, nomination and corporate governance practices, and the integrity of financial statements and internal controls over financial reporting.
The Board has determined that the Company and its shareholders are currently best served by having the roles of ChairmanBoard Chair and CEO undertaken by different individuals. In the event they are not, the Corporate Governance Guidelines provide for the appointment of a Presiding Independent Director.
Mr. Ganzi has served as the Independent Non-Executive ChairmanChair of the Board since January 1, 2019 and was re-elected by the Board to serve as Chair until the 2022 Annual General Meeting of Shareholders, at which time he will retire from the Board. Following the Annual General Meeting, Mr. Thomas will serve as
16 | WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY |
Corporate Governance (continued)
the Non-Executive Board Chair for an additional one-year term.a term to be renewed each year by the Board. Pursuant to the Company’s Corporate Governance Guidelines, the Non-Executive Chairman:Chair:
● | convenes and presides at executive sessions of the independent and non-management directors; |
● | serves as principal liaison on Board-related issues between the independent and non-management directors and the CEO and provides the CEO with feedback from executive sessions; |
Corporate Governance (continued)
● | prior to Board meetings, discusses with the CEO the information to be provided to directors and reviews and approves such information; |
● | approves Board meeting agenda items and, with the CEO, proposes for Board approval the Board’s calendar, including the number and frequency of Board meetings, to ensure there is sufficient time for discussion of all agenda items; |
● | recommends to the Board the retention of outside advisors and consultants who report directly to the Board on Board-related issues; |
● | consults with the Governance Committee on the appointment of chairs and members for Board Committees; |
● | is available for consultation and communication with shareholders in appropriate circumstances, as instructed by the Board; and |
● | performs such other functions and responsibilities as requested by the Board from time to time. |
Director Orientation and Continuing Education
Director Orientation: Our robust orientation program familiarizes new directors with the Company’s businesses, strategies and policies, and assists new directors in developing company and industry knowledge to optimize their service on the Board. The orientation also provides new directors with an understanding of their fiduciary duties and other requirements associated with serving on the Board of an Irish-domiciled company with shares listed on NASDAQ.
Continuing Education: Regular continuing education programs enhance the skills and knowledge directors use to perform their responsibilities. These programs may include internally developed materials and presentations, programs presented by third parties, and financial and administrative support to attending qualifying academic or other independent programs.
Willis Towers Watson Board Committees
Critical matters such as the compensation policy for executive officers, nomination and corporate governance practices, and the integrity of financial statements and internal controls over financial reporting, and enterprise-wide risk management are overseen by the Board and its Committees, which are comprised solely of independent directors.
The Board Committees, members and a description of each Committee’s function are set forth below in further detail. OurEach of our Board Committees has its own respective charter, which can be found, along with our Corporate Governance Guidelines and all Board Committee Charters can be found in the “Investor Relations — Corporate Governance” section of our website at www.willistowerswatson.comwww.wtwco.com. Copies are also available free of charge on request from the Company Secretary.
WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY |
Corporate Governance (continued)
Board Committee Slates
The currentPrior Board Committees are comprisedCommittee Composition
As discussed further below, as of January 1, 2022, the Board combined the Audit Committee and the Risk Committee to form the Audit and Risk Committee and created a new Operational Transformation Committee. For the fiscal year 2021, prior to the combination of the Audit Committee and Risk Committee and the formation of the Operational Transformation Committee, the Board Committee composition was as follows:
Audit
|
Compensation
|
Corporate Governance & Nominating
|
Risk
| |||||||||||||||||
Anna | X | X | ||||||||||||||||||
Victor | X | X* | ||||||||||||||||||
John | ||||||||||||||||||||
Wendy | X* | X | ||||||||||||||||||
Brendan | X* | X | ||||||||||||||||||
Jaymin | X | X | ||||||||||||||||||
Linda | X | X | ||||||||||||||||||
Paul | X* | X | ||||||||||||||||||
Wilhelm Zeller (1) | X | X* |
* | Designates Committee |
Current Board Committee Composition
The current Board Committee composition as well as the combined Audit and Risk Committee and formation of the Operational Transformation Committee, is as follows:
Audit & | Compensation | Corporate | Operational | |||||
Dame Inga Beale | X | X | ||||||
Anna Catalano (1) | X | X | ||||||
Fumbi Chima | X | X | ||||||
Victor Ganzi (1) | X | X* | ||||||
Michael Hammond | X | X | ||||||
Carl Hess | ||||||||
Wendy Lane (1) | X* | X | ||||||
Brendan O’Neill | X* | X | ||||||
Linda Rabbitt | X | X | ||||||
Michelle Swanback | X | X | ||||||
Paul Thomas (2) | X | X* | ||||||
Wilhelm Zeller (1) | X | X |
* | Designates Committee Chair |
(1) |
|
18 | WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY |
Corporate Governance (continued)
(2) | At the conclusion of the 2022 Annual General Meeting of Shareholders, Mr. Thomas |
(3) | The Audit Committee |
(4) | The Operational Transformation Committee was formed effective January 1, 2022. |
General Description of Board Committee Responsibilities
The Audit and Risk Committee generally assists the Board with overseeing the following:
● | the integrity of the Company’s financial statements; |
● | the selection and oversight of the independent auditors, including their compensation and retention; |
● | the Company’s compliance with financial, legal and regulatory requirements; |
● | the independent auditors’ qualifications and independence; |
● | the performance of the independent auditors and the Company’s internal audit function; |
● | the establishment and maintenance of proper internal accounting controls and procedures; |
● | the preparation of an audit committee report as required by the SEC for inclusion in the Company’s annual proxy statement and as required by NASDAQ; |
● | the treatment of concerns regarding accounting or auditing matters as reported under the Company’s whistleblower policy; |
● | the review of the Company’s corporate and tax arrangements and structures in connection with the Directors’ Compliance Statement contained in the Irish Statutory |
● | the Company’s identification and management of material enterprise risks; |
● | the overall enterprise risk management framework and practices used by the Company to identify, assess and manage key risks facing the Company and significant emerging risks; |
● | the development of plans for risk mitigation for the most significant risks to the Company and monitoring management’s implementation of such plans, and the effectiveness generally of enterprise risk mitigation strategies and activities; and |
● | management’s approach to risk identification, risk tolerance, risk assessment and risk management for strategic and financial risks facing the Company, as well as operational risks arising out of responsibilities identified in the Committee’s charter, including without limitation risks related to compliance and internal control matters (it being acknowledged that other Board committees have responsibility with respect to the oversight of specified compensation and human capital risks, operational and operational transformation risks, and governance risks, as set forth in their charters). |
The Audit and Risk Committee’s focus on risk includes, strategic risk, including risks relating to strategic planning and execution, major financial risk exposures and the steps management has taken to monitor and control such risks, including risks relating to internal controls, disclosure controls and procedures, tax and pension matters, and mergers and acquisitions, among other items. In that regard, pursuant to its charter, the Audit and Risk Committee meets annually with the Compensation Committee Chair concerning the Compensation Committee’s risk assessment of the Company’s compensation programs. The Audit and Risk Committee is also responsible for reviewing new material transactions, products or services requiring Board approval and, in that connection, making recommendations to the Board regarding the adequacy of the Company’s resources to performance its risk management responsibilities.
The Audit and Risk Committee provides an avenue for communication among internal audit, the independent auditors, management and the Board. The members of management that join the Committee meetings include, among others, the Chief Financial Officer, the Controller, the General Counsel as well as the Heads of Internal Audit Compliance and Risk.Compliance. In addition, the Audit and Risk Committee discusses with
WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY | 19 |
Corporate Governance (continued)
management and, if appropriate, the independent auditors, matters such as the guidelines and policies governing the process by which senior management and the relevant departments of the Company assess and manage the Company’s exposure to risk relating to audit, financial disclosure, tax matters, pension matters and foreign exchange hedging. With respect to compliance, the Audit and Risk Committee discusses with the Chief Compliance Officer the compliance and regulatory risks of the Company, and receives a report outlining the main activities of the compliance function, material regulatory interactions review, progress against the annual compliance plan and the adequacy of resources. The Committee also discusses with the General Counsel any significant legal matters that may have a material effect on the Company.
Corporate Governance (continued)
Dr. O’Neill and Mr. Thomas areis an independent audit committee financial experts,expert, as defined by Regulation S-K, and all Audit and Risk Committee members are financially sophisticated under NASDAQ listing standards in light of their financial experience. In 2020,December 2021, the Board determined to combine the Audit Committee and Risk Committee of the Board. Following its combination, the Audit and Risk Committee did not meet in 2021. The Audit Committee met formally five times in 2021, and the Risk Committee met formally four times.times in 2021. In addition to holding formal meetings, the Audit Committee and Rick Committee members met informally during the course of the year to discuss and review financial matters related to the Company and its SEC filings (including earnings releases)releases for the Audit Committee). TheEach of the Committees previously met in executive session frequently, and after its formation, the Audit and Risk Committee also frequently meets in executive sessions, including separate meetings with management, the internal auditors and external auditors.
The Risk Committee generally assists the Board with the following:
|
|
|
|
|
|
The Risk Committee’s focus on risk includes, among other items, business, strategic, operational, regulatory, major financial risk exposures and the steps management has taken to monitor and control such risks, including cybersecurity risks (it being acknowledged that other Board Committees have responsibility with respect to the oversight of audit, compensation and human capital, and governance risks, as set forth in their Charters). In 2020, the Risk Committee met formally four times. After regularly scheduled meetings, the Committee also met in executive session. The members of management that join the Committee meetings include the General Counsel, the Chief Financial Officer and the Heads of Risk, Compliance and Internal Audit.
The Compensation Committee generally assists the Board with the following:
● | establishing, in consultation with senior management, the Company’s general compensation philosophy and overseeing the development and implementation of compensation programs in accordance with the philosophy; |
● | reviewing and approving annual corporate goals and objectives relevant to the compensation of the CEO, evaluating the performance of the CEO in light of those goals and objectives, and (either as a Committee or together with the other independent directors) determining and approving the CEO’s compensation based on this evaluation, which compensation shall be ratified by the independent directors of the Board; |
● | with respect to the executive officers other than the CEO, after consideration of the CEO’s recommendations, reviewing and approving annual corporate goals and objectives relevant to their compensation, evaluating their performance in light of those goals and objectives and determining and approving their compensation; |
● | reviewing and approving compensation policies applicable to the executive officers; |
● | evaluating executive compensation competitive practices and trends; |
● | reviewing and approving incentive compensation plans for the executive officers, and equity-based plans, subject to any necessary shareholder approval; |
● | in consultation with senior management, overseeing regulatory compliance with respect to compensation matters; |
Corporate Governance (continued)
● | reviewing and discussing with senior management the Compensation Discussion and Analysis and approving its inclusion in the Company’s Proxy Statement and Annual Report on Form 10-K; |
● | reviewing the results of the “say-on-pay” and “say-on-frequency” proposals included in this Proxy Statement and the appropriate response; |
● | providing input and advice on the implementation of the Company’s human capital and talent strategy, including recruiting and development strategies, inclusion and diversity initiatives and the development of senior leaders. |
20 | WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY |
Corporate Governance (continued)
● | making recommendations to the Board on the compensation for non-employee directors, Board Committee |
● | making recommendations to the Board on director and executive officer share ownership guidelines and monitor compliance therewith; |
● | annually evaluating the independence of the Committee’s compensation consultants, legal counsel and/or other advisors, taking into consideration the factors enumerated in NASDAQ listing standards; |
● | reviewing the nature of services provided by the Committee’s compensation consultant, any remuneration provided to such consultant and evaluating, in accordance with SEC rules, whether any conflict of interest exists with respect to such consultant; |
● | reviewing an assessment of the Company’s compensation programs to determine whether they create risks that would be reasonably likely to have a material adverse effect on the |
|
In 2020,2021, the Compensation Committee met formally fourseven times. In addition to holding formal meetings, the Committee members met informally during the course of the year to discuss compensation-related matters and acted from time to time by unanimous written consent. After regularly scheduled meetings, the Committee also met in executive session, which included meetings with the compensation consultant.
The Corporate Governance and Nominating Committee generally assists the Board with the following:
● | recommending to the Board, in light of the Board’s qualifications, the director nominees to stand for election by shareholders and in the event of any director vacancy; |
● | developing and recommending director independence standards to the Board, periodically reviewing those standards and evaluating directors’ independence; |
● | developing and recommending to the Board the director selection process for identifying, considering and recommending candidates to the Board and director qualification standards for use in selecting new nominees and periodically reviewing the process and standards; |
● | reviewing the appropriateness of continued service on the Board of members whose circumstances have changed, including if members contemplate accepting a directorship at another company or an appointment to an audit committee of another company; |
● | making recommendations to the Board on matters relating to director tenure, which may include the retirement of Board members, term limits or a mandatory retirement age; |
● | establishing, overseeing and recommending the purpose, structure and operations of the various Board Committees, and the qualifications and criteria for membership on each Board Committee; |
● | recommending to the Board, from time to time, changes the Committee believes is desirable to the size of the Board or any Committee thereof; |
● | recommending to the Board a nominee for |
● | reviewing periodically and recommending changes to the Board, from time to time, to the Company’s Corporate Governance Guidelines; |
Corporate Governance (continued)
● | reviewing the orientation process for all new directors and a continuing education program for all directors; |
● | developing a policy with regards to the Committee’s consideration of any director candidates recommended by the Company’s shareholders and consider director candidates recommended by the Company’s shareholders in accordance with such policy; |
WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY | 21 |
Corporate Governance (continued)
● | administering and overseeing, on behalf of the Board, the evaluation process for the overall effectiveness of the Board (including the effectiveness of the Board Committees and the Board’s performance of its governance responsibilities); |
● | reviewing succession plans prepared by management for all senior management; |
● |
|
● | reviewing the Company’s ESG disclosure in the Proxy Statement; |
● | approving any charitable contributions over a threshold delegated by the Board; |
● | reviewing any Company shareholder engagement plans, including referring to another Board Committee for review, if appropriate, or otherwise making recommendations to the Board with respect to shareholder proposals properly submitted for inclusion in the Proxy Statement or for consideration at an annual general meeting of shareholders; and |
● | reviewing government relations activities and overseeing any policies regarding political activity. |
The Governance Committee believes in fostering strong governance practices and, from time to time, reviews governance principles set out by investors or other outside groups.
In 2020,2021, the Governance Committee met formally four times. After each regularly scheduled meeting, the Governance Committee also met in executive session. In addition to holding formal meetings, the Committee members also met informally on numerous occasions during the course of the year to discuss governance-related matters.matters, including director succession.
CEO Succession PlanningThe Operational Transformation Committee generally assists the Board with the following:
Prior
● | helping to oversee the implementation of the Company’s operational transformation plan, which aims to achieve significant run rate cost savings by the end of 2024; |
● | overseeing risk management in relation to the operational transformation plan and arising out of the Company’s operational processes and functions that support the Company’s business; |
● | discussing and reviewing with management efforts to develop, implement and monitor the operational transformation plan and drive operational efficiencies; |
● | receiving reports and presentations from management and outside advisors regarding operational risk areas covered by the Committee’s charter; and |
● | conferring with the Audit and Risk Committee Chair with respect to risk assessments relating to the operational transformation plan. |
The Operational Transformation Committee was formed effective as of January 1, 2022, and will have a term ending on December 31, 2024, concurrent with the announcementconclusion of the Aon transaction in March 2020, the Board, acting through the Governance Committee, had been actively engaged in CEO succession planning. There was a formal process whereCompany’s operational transformation plan. The Operational Transformation Committee’s risk oversight includes, among other items, technology and information security risk, business continuity, market security processes, supplier management, had engaged a third party to help assess the experience and attributes of potential candidates.material new products and services that create significant operational risks. The Committee had regularly met with the CEOdid not meet in 2021, but generally holds executive sessions after each Committee meeting and the Chief Human Resources Officer to discuss the process, candidate ideas and progress, and the full Board had regularly received updates and discussed the process. This search has been put on hold pending the transaction with Aon.meets informally, as appropriate.
Director Nomination and Selection Process
The Governance Committee identifies potential director nominees by preparing a candidate profile based upon the current Board’s strengths and needs, including based on the Company’s strategy and goals for
22 | WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY |
Corporate Governance (continued)
the future, and through a variety of sources, including by engaging search firms, considering input from stakeholders or utilizing the professional networks of the Board and senior management. Nominees must meet minimum qualification standards with respect to a variety of criteria including integrity, reputation, judgment, knowledge, experience, maturity, skills and personality, commitment and independence. The Governance Committee may also take into consideration additional factors that it may deem appropriate, which may include, among other factors, diversity, 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.
With feedback from the Board members, members of the Governance Committee initiate contact with preferred candidates and, following feedback from interviews conducted by Governance Committee and Board members, recommend candidates to join the Board. The Governance Committee has the authority
Corporate Governance (continued)
to retain a search firm to assist with this process. The Governance Committee considers candidates nominated by shareholders and ensures that such nominees are given appropriate consideration in the same manner as other candidates. Recommendations may be submitted to any member of the Governance Committee pursuant to the procedures set forth below under “Communications with Shareholders and Other Constituencies” by writing to the Company Secretary at corporatesecretary@willistowerswatson.com.
The Board’s Role in Risk Oversight
The Company’s management is responsible for the day-to-day management of risks and the Board, including through its Committees, is responsible for understanding and overseeing the various risks facing the Company. Effective risk oversight is an important priority of the Board.
The Board implements its risk oversight function both as a whole and through delegation to its Committees, which meet regularly and report back to the Board. To ensure that the Board executes on its prioritypriorities with an appropriate focus on risk generally, it separatedeffective January 1, 2022, the Risk Committee from the AuditBoard formed a separate Operational Transformation Committee in 2018.addition to combining its Audit and Risk Committees. The Board has generally delegated, through respective Board Committee Charters, (i) to the Audit and Risk Committee, through its Charter, the primary responsibility of assisting the Board in its oversight of the enterprise risk management framework, policies and practices used by the Company to identify, assess and manage key strategic and operational risks facing the Company, including financial and strategic risks as well as risks relating to compliance and internal control matters, tax matters and pension matters, among other matters; and (ii) to the Operational Transformation Committee, the oversight of risks arising out of the Company’s operations that support the Company’s businesses, including risks relating to the Company’s operational transformation plan as well as risks related to information security, errorsprocesses that support quality control within the businesses, business continuity activities and omissions and conflicts of interest. supplier management, among other matters.The Board has also delegated to its other Committees the oversight of risks within their areas of responsibility and expertise. For information on the Board Committees, their responsibilities and areas of risk oversight, see the section above entitled “— General Description of Board Committee Responsibilities.Responsibilities” and “— ESG Oversight and Activities.”
In addition, an overall review of risk is inherent in the Board’s consideration of the Company’s long-term strategies and in the transactions and other matters presented to the Board, including capital expenditures, acquisitions and divestitures, and financial matters. The Company believes that its Board leadership and Committee structure supports the risk oversight function of the Board. Moreover, the Board’s role in risk oversight of the Company is consistent with the Company’s leadership structure, with the CEO and other members of senior management having responsibility for assessing and managing the Company’s risk exposure, and the Board and its Committees providing oversight in connection with those efforts. Management regularly communicates with the Board, its Committees and individual directors about significant risks identified and how they are being managed. The Board also oversees management’s crisis preparedness plan and the execution of any such plan if needed.planning.
WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY | 23 |
Corporate Governance (continued)
To learn more about risks facing the Company, you can review the factors included in Part I, “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year endedending December 31, 20202021 as updated by subsequent filings by the Company with the SEC. The risks described in such filings are not the only risks facing the Company. Additional risks and uncertainties not currently known or that may currently be deemed to be immaterial also may materially adversely affect the Company’s business, financial condition or results of operations in future periods.
Environmental, Social and Governance (“ESG”)ESG Oversight and Activities
In 2019, the Company formed a cross-functional management committee to coordinate and communicate on the Company’s ESG initiatives. Information on our ESG commitments and the various ESG-related awards we have received is available on our website at https://www.willistowerswatson.com/www.wtwco.com/en-US/About-Us/environmental-social-and-governance, which information is not part of or incorporated by reference into this Proxy Statement.
Corporate Governance (continued)
With respect to Board oversight of ESG matters in general, the Board takes an approach that the most appropriate Committee should maintain oversight over a particular issue rather than concentrating all ESG initiatives into any one Committee. The Committees report to the Board as appropriate. For example:
● | The |
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● | The Audit and Risk Committee has the primary responsibility of assisting the Board in its oversight of the framework, policies and practices used by management to identify, assess and manage key strategic and operational risks (other than with respect to operational transformation and risks overseen by the Operational Transformation Committee) facing the Company. The Audit and Risk Committee reviews ESG financial disclosure included in documents filed with the SEC or required under Irish law. |
● | The Operational Transformation Committee oversees risks arising out of the Company’s operational processes and functions that support the Company’s businesses; as such, it reviews business continuity risks, including climate-related risks, if identified as having a material impact on the business strategy or operations. |
● | The Compensation Committee reviews talent and culture, including inclusion and diversity, as well as social initiatives such as |
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ESG Commitments
Our clients, colleagues and other stakeholders expect us to conduct our business with integrity and in an environmentally and socially responsible manner with the highest ethical standards. We take these expectations seriously and have embraced principles that are aligned with our business priorities, are consistent with our commitment to ethical and sustainable practices and demonstrate our respect for those communities in which we operate across the globe.
Accordingly, we are committedour principles reflect an aspirational commitment to:
● | Demonstrating that we are a responsible and ethical business partner by conducting our business based on our Code of Conduct and our Company values, which emphasize managing all relationships with fairness, decency and good citizenship. |
●Partnering with our clients and communities to help address their social and economic challenges. For example, we are a founding member of the Insurance Development Forum, a public/private partnership led by the insurance industry and international organizations (such as the United Nations |
24 | WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY |
Corporate Governance (continued)
and the World Bank) that aims to optimize and extend the use of insurance and its related risk management capabilities to build greater resilience and protection for people, communities, business, and public institutions that are vulnerable to disasters and their associated economic shocks. |
● | Enabling our colleagues to reach their full potential by fostering a culture of mutual respect and security, an inclusive and diverse work environment, |
O | Globally: |
● | For the |
● |
|
● | In 2021, we became one of the 44 founding members of the World Economic Forum’s Racial Justice in Business Initiative. The purpose of this initiative is to build more equitable and just workplaces for professionals with under-represented racial and ethnic identities. |
O | In the U.S.: We have been recognized by the Human Rights Campaign Foundation as a “Best Place to Work” for LGBT+ equality since 2015. |
Corporate Governance (continued)
O | In the U.K.: We are a member of Stonewall’s Diversity Champions program, an employers’ forum for sexual orientation and gender identity equality. |
● | Strengthening our communities through philanthropic activities, including Matching Gifts and Volunteer Day Programs that provide our colleagues with paid opportunities to volunteer their time and amplify their charitable giving through gift matching. |
● | Minimizing our environmental impact and carbon emissions through improvements to energy efficiency in our operations, reducing our need for business travel through the use of virtual meeting technologies, promoting recycling, minimizing the waste we send to landfill, purchasing environmentally-responsible office supplies and encouraging our colleagues to adopt environmentally-responsible habits. |
O | Globally: In 2021, we announced our commitment to delivering net zero greenhouse gas emissions — in alignment with the Science Based Targets Initiative — by 2050 at the latest, with at least a 50% reduction by 2030, across the Company’s business operations. This includes a commitment to achieving 100% renewable energy supplies across the Company’s real estate portfolio. |
● | Improving our suppliers’ ESG impacts by increasing our demand for and use of goods that are developed in a sustainable way and contribute to a reduced carbon footprint, tracking supplier diversity, including ESG questions and evaluation criteria within our procurement processes, and aiming to have in place a form of supplier contract that stipulates all operations must be conducted in full compliance with all applicable laws in connection with the contract. |
● | Being closely involved with various governments, intergovernmental organizations and civil societies on climate policy and research and sharing the collective ambition of an orderly transition towards sustainable and resilient economies and communities. |
● | Participating in a variety of collaborations and memberships, including as proud members of the insurance industry initiative ClimateWise, supporters of the Taskforce on Climate-Related Financial Disclosures (“TCFD”), and |
WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY | 25 |
Corporate Governance (continued)
Additionally, to reinforce our commitments, we have in place our ESG Taskforce to provide central governance over our ESG efforts across the organization and to ensure our commitments are aligned with the Company’s strategic priorities. The ESG Taskforce is sponsored by our General Counsel, Chief Financial Officer and Chief Administrative Officer, and comprises representatives from across the business segments and corporate functions.
To learn more about our ESG commitments and related statements, including our TCFD Statement and our Sustainability Accounting Standards Board Disclosures (SASB), visit: https://www.willistowerswatson.com/www.wtwco.com/en-US/About-Us/environmental-social-and-governance. The information on, or accessible through, our website is not part of or incorporated by reference into this Proxy Statement.
Corporate Governance (continued)
Non-Employee Director Compensation
Willis Towers Watson’s non-employee director compensation takes into account, among other things, the Company’s size and complexity as well as the compensation paid by its peer companies and other similarly situated Irish-domiciled, U.S.-listed companies. In 2019, the Board made certain changes to the compensation of the non-employee directors and committee members following a review of director compensation practices of the Company and its peers and taking into account the circumstances involved in being on an Irish-domiciled company board and considering recommendations of the Compensation Committee’s independent compensation consultant, including as reflected in the tableOutlined below which outlinesare the fees paid to the non-employee directors for each term of service.
All Non-Employee Directors | ● $125,000 cash fee, payable 100% in equity at the non-employee director’s election; and
● time-based restricted share units equal to $160,000 that vest in full on the earlier of (x) the one-year anniversary of the grant date and (y) the next subsequent annual general meeting of shareholders following the grant date. | |
Non-Executive | ● $150,000, payable 50% in equity and 50% in cash, or 100% in equity at the Non-Executive | |
Audit and Risk Committee | ● $25,000† cash fee | |
All Other Audit and Risk Committee Members (1) | ● $15,000 cash fee | |
Compensation Committee | ● $20,000† cash fee | |
All Other Compensation Committee Members | ● $12,500 cash fee | |
Governance Committee | ● $17,000† cash fee | |
All Other Governance Committee Members | ● $10,000 cash fee | |
| ● | |
All Other | ● |
† | Includes Committee membership fee. |
(1) | The Audit Committee and Risk Committee were combined effective January 1, 2022. Prior to that time, cash fees for non-employee director service on the respective Committee were as follows: (i) for the Audit Committee Chair, $25,000 (including the Committee membership fee); (ii) for all other Audit Committee members, $15,000; (iii) for the Risk Committee Chair, $20,000 (including the Committee membership fee); and (iv) for all other Risk Committee members, $12,500. |
Other thanThe term of service for the Non-Executive Chairman, whose termChair of service is January 1 through December 31, the term of service forBoard as well as the Board and its Committees runs from the date of the Annual General Meeting of Shareholders to the date of the next meeting the subsequent year. The Board unanimously agreed to provide that equity awards granted to the non-employee directors on the date of the 2021 Annual General Meeting of Shareholders as well as the cash fees payable as a result of the directors’ re-elections would vest on a pro-rata basis based on the period served through the effective time of the business combination. Such treatment is in lieu of the terms of the Business Combination Agreement with Aon, which provided for full vesting of all non-employee director equity awards upon the effective date of the business combination.
26 | WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY |
Corporate Governance (continued)
The following table sets forth cash and other compensation paid or accrued to the non-employee directors of Willis Towers Watson during 2020.12021. It does not reflect compensation paid to the new directors who joined the Board in 2022.
Willis Towers Watson Non-Employee Director | Fees Earned or Paid in Cash ($) | Share Awards ($) (1) | All Other Compensation ($) (2) | Total ($) | ||||||||||||||||
Anna C. Catalano (3) | 150,000 | 160,000 | — | 310,000 | ||||||||||||||||
Victor F. Ganzi (4) | 76,375 | 435,000 | — | 511,375 | ||||||||||||||||
Wendy E. Lane (5) | 157,500 | 160,000 | — | 317,500 | ||||||||||||||||
Brendan R. O’Neill (6) | 162,500 | 160,000 | — | 322,500 | ||||||||||||||||
Jaymin B. Patel (7) | 150,000 | 160,000 | — | 310,000 | ||||||||||||||||
Linda D. Rabbitt (8) | 147,500 | 160,000 | — | 307,500 | ||||||||||||||||
Paul D. Thomas (9) | 153,049 | 160,000 | — | 313,049 | ||||||||||||||||
Wilhelm Zeller (10) | 81,875 | 285,000 | — | 366,875 |
Willis Towers Watson Non-Employee Director | Fees Earned or Paid in Cash ($) | Share Awards ($) (1) | All Other Compensation ($) (2) | Total ($) | ||||||||||||
Anna Catalano (3) | $150,000 | $ | 160,000 | — | $ | 310,000 | ||||||||||
Victor Ganzi (4) | $ 29,500 | $ | 435,000 | — | $ | 464,500 | ||||||||||
Wendy Lane (5) | $157,500 | $ | 160,000 | — | $ | 317,500 | ||||||||||
Brendan O’Neill (6) | $162,500 | $ | 160,000 | — | $ | 322,000 | ||||||||||
Jaymin Patel (7) | $206,250 | $ | 160,000 | — | $ | 366,250 | ||||||||||
Linda Rabbitt (8) | $ 69,375 | $ | 285,000 | — | $ | 354,375 | ||||||||||
Paul Thomas (9) | $160,000 | $ | 160,000 | — | $ | 320,000 | ||||||||||
Wilhelm Zeller (10) | $113,125 | $ | 160,000 | — | $ | 273,125 |
(1) | On |
(2) | The Company reimburses directors for reasonable travel and related expenses incurred in connection with their participation in Board or Board Committee meetings. The Company also hired |
(3) | The above fees reflect Ms. Catalano’s role as a member of both the Audit Committee and the Governance Committee. |
(4) | The above fees reflect Mr. Ganzi’s role as Non-Executive Chair of the |
(5) | The above fees reflect Ms. Lane’s role as the |
(6) | The above fees reflect |
(7) | The above fees reflect Mr. Patel’s role as a member of both the Compensation Committee and |
(8) | The above fees reflect Ms. Rabbitt’s role as a member of both the Compensation Committee and |
(9) | The above fees reflect Mr. Thomas’s role as |
(10) | The above fees reflect Mr. Zeller’s role as the |
WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY | 27 |
Corporate Governance (continued)
Share Ownership Guidelines
Under our share ownership guidelines, non-employee directors are required to accumulate Willis Towers Watson shares equal to five times the directors’ annual cash retainer of $125,000 (i.e., $625,000) within eight years of (i) their appointment to the board of their respective legacy company (for legacy Willis Group or legacy Towers Watson directors who serve on the Board) or (ii) their appointment to the Board. The threshold dollar amount is intended to ensure alignment with the Company’s long-term strategy and the time period is intended to attract and retain qualified new board members and candidates. Ordinary shares, deferred shares, share equivalents, RSUs and restricted shares count toward satisfying the guidelines, but options to purchase shares do not. Each director is prohibited from transferring these shares until six months after he or she leaves Board service (other than to satisfy tax obligations on the vesting/distribution of existing equity awards), but is permitted to transfer any shares in excess of this amount. If, as a result of share price decline subsequent to a non-employee director meeting the ownership requirement, the non-employee director no longer satisfies the ownership requirement, he or she is not required to buy additional shares to meet the ownership requirement. In the event a non-employee director has not met the share ownership requirement, he or she is prohibited from transferring any Willis Towers Watson shares (other than to satisfy tax obligations on the vesting/distribution of existing equity awards). In the case of financial hardship, the ownership guidelines may be waived in the discretion of the Compensation Committee until the hardship no longer applies or such other appropriate time as the Compensation Committee determines. All current non-employee directors have satisfied their share ownership requirements.
The following table sets forth the non-employee directors’ equity ownership as of December 31, 2020.2021. It does not reflect the equity granted to the new directors who joined the Board in 2022.
Non-Employee Director | Shares | RSUs | ||||||
Anna C. Catalano | 5,244 | 803 | ||||||
Victor F. Ganzi | 19,251 | 2,184 | ||||||
Wendy E. Lane | 6,916 | 803 | ||||||
Brendan R. O’Neill | 12,309 | 803 | ||||||
Jaymin B. Patel | 4,697 | 803 | ||||||
Linda D. Rabbitt | 12,996 | 803 | ||||||
Paul D. Thomas | 10,222 | 803 | ||||||
Wilhelm Zeller | 7,726 | 1,431 |
Non-Employee Director | Shares | RSUs | ||||||
Anna Catalano | 5,661 | 605 | ||||||
Victor Ganzi | 20,386 | 1,646 | ||||||
Wendy Lane | 7,333 | 605 | ||||||
Brendan O’Neill | 12,726 | 605 | ||||||
Jaymin Patel | 5,428 | 0 | ||||||
Linda Rabbitt | 13,413 | 1,078 | ||||||
Paul Thomas | 10,639 | 605 | ||||||
Wilhelm Zeller | 8,470 | 605 |
For more information regarding the number of shares beneficially owned by each director as of March 11, 2021,23, 2022, see the section entitled “Additional Information — Security Ownership of Certain Beneficial Owners and Management — Directors, Director Nominees, Named Executive Officers and Other Executive Officers.”
Review and Approval of Related Person Transactions
The Company has adopted written policies and procedures governing the review and approval of transactions between the Company and any of its directors or executive officers, director nominees, any security holder who is known to the Company to own of record or beneficially more than 5% of any class of the Company’s voting securities or their immediate family members (each, a “Related Person”) to determine whether such persons have a direct or indirect material interest. The Company’s directors, director nominees and executive officers complete an annual director and officer questionnaire, which requires the disclosure of Related Person transactions. In addition, directors, director nominees and executive officers are obligated to advise the Audit Committee of any Related Person transaction of which they are aware, or become aware, and, in the event that any such transactions involve difficult or complex
28 | WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY |
Corporate Governance (continued)
issues, the directors and executive officers are obligated to advise the General Counsel. Further, transactions that are determined to be directly or indirectly material to a Related Person are disclosed in the Company’s Proxy Statement or Annual Report on Form 10-K in accordance with SEC rules. The Audit and Risk Committee reviews and approves or ratifies any Related Person transaction that is required to be disclosed. In the course of its review and approval or ratification of a disclosable related person transaction, the Audit and Risk Committee considers, among other factors it deems appropriate:
● | the position within or relationship of the Related Person with the Company; |
● | the materiality of the transaction to the Related Person and the Company, including the dollar value of the transaction, without regard to profit or loss; |
● | the business purpose for and reasonableness of the transaction (including the anticipated profit or loss from the transaction), taken in the context of the alternatives available to the Company for attaining the purposes of the transaction; |
● | whether the transaction is comparable to a transaction that could be available on an arms-length basis or is on terms that the Company offers generally to persons who are not Related Persons; |
● | whether the transaction is in the ordinary course of the Company’s business and was proposed and considered in the ordinary course of business; and |
● | the effect of the transaction on the Company’s business and operations, including on the Company’s internal control over financial reporting and system of disclosure controls or procedures, and any additional conditions or controls (including reporting and review requirements) that should be applied to such transaction. |
Any member of the Audit and Risk Committee who is a Related Person with respect to a transaction under review may not participate in the deliberations or vote regarding the approval or ratification of the transaction, provided, however, that such director may be counted in determining the presence of a quorum at a meeting at which the Audit Committee considers the transaction.
20202021 Related Person Transactions under Item 404 of Regulation S-K
BlackRock, Inc. (“BlackRock”) filed a Schedule 13G/A with the SEC reporting that, as of December 31, 2020,2021, BlackRock and certain of its subsidiaries were beneficial owners of more than 5% of our outstanding shares. During 2020,2021, BlackRock Advisors (UK) provided services to Willis Group Services Limited with respect to Willis Pension Trustees Limited and the UK pensions scheme trust. BlackRock received approximately £484,483$511,682 for suchthese services and software solutions, which were provided in the ordinary course of business on an arm’s-length basis.
On August 2, 2021, the Company hired Ms. Calyn Haley, Mr. Haley’s daughter, as a senior research associate. Ms. Haley’s base salary is $117,500 and her target STI opportunity, subject to individual and company performance, is 15% of base salary; both are aligned with the compensation structure in place for other broad-based employees in similar roles. Mr. Haley was not involved in any employment or compensation decision by the Company with respect to Ms. Haley. No other transactions are required to be disclosed under Item 404 of Regulation S-K.
Code of Conduct
We have adopted a Code of Conduct applicable to all our directors, officers and employees, including our CEO, the CFO, the Principal Accounting Officer and all those involved in the Company’s accounting functions. Our Code of Conduct can be found in the “Investor Relations — Corporate Governance” section of our website at www.willistowerswatson.com.www.wtwco.com. It is also available free of charge on request from the Company Secretary at corporatesecretary@willistowerswatson.com. We intend to post on our website any amendments to, or waivers of, a provision of our Code of Conduct in accordance with Item 406 of Regulation S-K.
WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY | 29 |
Corporate Governance (continued)
Communications with Shareholders and Other Constituencies
The 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
Corporate Governance (continued)
communities in which it operates. It is the policy of the Company for the CEO to appoint individuals to communicate and interact fully with these stakeholders. The ChairmanChair or another spokesperson chosen by the Board will speak for the Board when the Board determines it is appropriate for the Board to have a distinct and separate spokesperson. Often the Board will look to senior management to speak for the Company; however, the Board is also committed to engaging with shareholders to promote open and sustained dialogue in a manner consistent with the Company’s communications policies and procedures.
Non-employee directors are not precluded from communicating directly with shareholders or other constituencies about Company matters, although directors are expectedrequired under the Corporate Governance Guidelines to coordinate with the ChairmanChair and senior management before doing so. An interested person may communicate with independent directors or the non-management directors as a group by writing to the Company Secretary at corporatesecretary@willistowerswatson.com. The Company Secretary will forward the communication to the director(s) to whom it is addressed.
All communications should include the following information:
● | if the person submitting the communication is a security holder, a statement of the type and amount of the securities of the Company that the person holds; |
● | if the person submitting the communication is not a security holder and is submitting the communication as an interested party, the nature of the person’s interest; and |
● | the address, telephone number and e-mail address, if any, of the person submitting the communication. |
Please note that communications may be shared with Company management.
Please see the section “Additional Information — Shareholder and Other Proposals for the 20222023 Annual General Meeting” at the end of this Proxy Statement for shareholders seeking to present a proposal for inclusion in the Company’s proxy materials for the 20222023 Annual General Meeting of Shareholders.
Shareholder Outreach Program
The Company frequently engages with shareholders. DuringEach year, during the spring and fall of each year,seasons, we reach out toshareholders holding a majority of our shareholdersshares and then discuss the feedback with our Board. The purpose of our year-roundyear- round outreach is to foster relations with our shareholders by enhancing communications on corporate governance, executive compensation and environmental and social issues and providing our shareholders with a forum to discuss any questions they may have or voice any criticisms.
For example, similar to We also use the last several years, in our spring outreach during the 2020 proxy season, we contacted shareholders representing over 60% of our outstanding shares. This past year, shareholders holding approximately 40% of our outstanding shares responded to the outreach. Our focus during our proxy season outreach isopportunity to explain the various proposals included within the Proxy Statement.
Over the past year, the Company faced different issues and, accordingly, we tailored our shareholder outreach programs to address the various corporate changes. During the 2021 Proxy Season, although the Company was awaiting regulatory approval to potentially combine with Aon, management still believed it was important to continue to reach out to its main institutional investors to discuss the Proxy Statement and theits rationale for the executive compensation program, corporate governance structure and other ESG initiatives. Shareholders were generally supportive of the Board’sCompany’s proposals, which we believe is also evidenced by our 20202021 Say-on-Pay proposal to approve the NEOs’ compensation having receivedreceiving approximately 96.8%95.92% of the votes cast in favor at the 20202021 Annual General Meeting of Shareholders. Additionally, after our 2020 AGM, we conducted a separate shareholder outreach over the summer in connection with the special meetings held on August 26, 2020 in connection with various approvals regarding the pending Aon transaction. At the special court-ordered meeting of shareholders, 80.17% of the shareholders of record as of the applicable record date voted in favor of the proposal to approve the Aon transaction. At the extraordinary general meeting of shareholders, over 93% of the shareholders of record as of the applicable record date voted in favor of each of the proposals presented. Given these two significant shareholder outreaches, we did not conduct a formal outreach program in the fall.
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Corporate Governance (continued)
The GovernanceAfter the Aon transaction was terminated, in August 2021, the Board appointed Mr. Hess as President and Compensation Committees are both involvedfuture CEO. Again, management took the opportunity to reach out to shareholders representing approximately 50% of the outstanding shares to offer an introductory call with Mr. Hess. Other management attendees included, among others, our then-current CFO, Head of Investor Relations and/or General Counsel. Management then held an Investor Day in early September to explain its going-forward strategy.
In the fall, management continued the conversations with investors and offered the opportunity to discuss governance, compensation and other ESG highlights, including governance actions the Board has recently taken and expects to take, as well as expectations for the upcoming Proxy Season.
In light of the new strategy unveiled at Investor Day, the Company undertook a review and redesign of 2022 executive officer incentives, which considered shareholder feedback, as detailed in the outreach program. Generally, we review our outreach planssection entitled “Executive Compensation: Compensation Discussion and Analysis— Executive Officer 2022 Incentive Design Update.” The Board also continued its succession plan, which included announcing the resultsappointment of our outreach effortsfour new independent directors see section entitled “Proposal No. 1: Elect Directors — Board and discuss any significant feedback with both Committees (and the full board, as appropriate). While we did not make any material changes to our compensation program or governance structure or policies specifically as a result of the outreach this year, the Committees continue to value and consider shareholder feedback, among other factors, in their evaluation of the Company’s executive compensation program and corporate governance structure.CEO Succession.”
Vote Required for Special Meetings
Shareholders holding 10% of the Company’s share capital have the ability to convene a special meeting.
WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY | 31 |
Proposal No. 2: Advisory (Non-binding) Vote to Ratify the Appointment of the Independent Auditors and a Binding Vote to Authorize the Board of Directors, Acting through the Audit and Risk Committee, to Fix the Independent Auditors’ Remuneration
For the fiscal year ending December 31, 2021,2022, the Willis Towers Watson Audit and Risk Committee approved, and the Board ratified, the appointment of (i) Deloitte & Touche LLP, Independent Registered Public Accounting Firm, to audit the financial statements of Willis Towers Watson and (ii) Deloitte Ireland LLP, Independent Statutory Audit Firm, to audit the Irish Statutory Accounts of Willis Towers Watson. Deloitte & Touche LLP and Deloitte Ireland LLP are the respective U.S. and Irish member firms of the Deloitte Touche Tohmatsu Limited network.
We are seeking ratification of both of these appointments in a non-binding advisory vote from our shareholders at the 20212022 Annual General Meeting of Shareholders. We are not required to have our shareholders ratify the appointments of our independent auditors, but we are nonetheless doing so because we believe it to be a matter of good corporate governance practice. If our shareholders do not ratify the appointments, it will be regarded as notice to the Board and the Audit and Risk Committee to consider selecting different firms. Even if the appointments are ratified, the Audit and Risk Committee may select different independent auditors at any time if it determines that such selections would be in the best interest of Willis Towers Watson and our shareholders.
The Board unanimously recommends that you vote, on a non-binding advisory basis, “FOR” the ratification of the appointment of (i) Deloitte & Touche LLP as the Company’s Independent Registered Public Accounting Firm and (ii) Deloitte Ireland LLP as the Company’s Statutory Audit Firm for the Irish Statutory Accounts; and, on a binding basis, the authorization of the Board, acting through the Audit and Risk Committee, to fix the independent auditors’ remuneration.
A majority of the votes cast by shareholders at the 20212022 Annual General Meeting of Shareholders is required for the proposals. We expect that one or more representatives of Deloitte & Touche LLP and Deloitte Ireland LLP will be present at the 20212022 Annual General Meeting of Shareholders. Each of these representatives will have the opportunity to make a statement, if he or she desires, and is expected to be available to respond to appropriate questions.
The Audit and Risk Committee reviews the auditors’ independence and performance in deciding whether to retain them or engage different independent auditors. In the course of this review, the Committee considers, among other things, the auditors’:
● | independence and process for maintaining independence; |
● | historical and recent performance on the audit; |
● | capability and expertise in handling the breadth and complexity of our worldwide operations; |
● | appropriateness of fees for audit and non-audit services; and |
● | status as a registered public accounting firm with the Public Company Accounting Oversight Board (“PCAOB”). |
32 | WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY |
Proposal No. 2: Advisory (Non-binding) Vote to Ratify the Appointment of the Independent Auditors and a Binding Vote to Authorize the Board of Directors, Acting through the Audit and Risk Committee, to Fix the Independent Auditors’ Remuneration (continued)
Fees Paid to the Independent Auditors
The fees that the Company incurs for audit, audit-related, tax and other professional services reflect the complexity and scope of the Company’s operations, including:
● | operations of the Company’s subsidiaries in multiple, global jurisdictions in more than 140 countries; |
● | the complex, often overlapping regulations to which the Company and its subsidiaries are subject in each of those jurisdictions; and |
● | the operating companies’ responsibility for preparing audited financial statements. |
The following fees have been, or will be, billed by Deloitte & Touche LLP or its respective affiliates for professional services rendered to Willis Towers Watson for the fiscal years ended December 31, 20202021 and December 31, 20192020 ($ in thousands).
2020 | 2019 | 2021 | 2020 | |||||
Audit fees (1) |
$15,641 |
$15,815 |
$19,927 |
$15,641 | ||||
Audit-related fees (2) |
2,000 |
1,600 |
1,193 |
2,000 | ||||
Tax fees (3) |
227 |
262 |
236 |
227 | ||||
All other fees (4) |
22 |
59 |
24 |
22 | ||||
Total fees |
$17,890 |
$17,736 |
$21,380 |
$17,890 |
(1) | Fees for the audits of annual financial statements of Willis Towers Watson, reviews of the financial statements included in the quarterly reports for that fiscal year, audits relating to carve-out financial statements and statutory audits for subsidiary undertakings. |
(2) | Fees for assurance and audit-related services that are traditionally performed by the Company’s independent auditor, such as employee benefit plan audits, review of SEC filings and attest services not required by statute or regulation. |
(3) | Tax fees comprise fees for various tax compliance, consultation and planning services. |
(4) | All other fees includes other permitted services, which in |
Audit and Risk Committee Pre-approval Process
The Audit and Risk Committee has adopted a policy regarding the pre-approval of services provided by the Company’s independent auditors, which can be found in the “Investor Relations — Corporate Governance” section of the Company’s website at www.willistowerswatson.comwww.wtwco.com. This policy requires all services provided by the Company’s independent auditors, both audit and permitted non-audit services, to be pre-approved by the (i) Audit and Risk Committee, (ii) the Chairman of the Audit and Risk Committee Chair or (iii) in the Chairman’sChair’s absence, any other independent member of the Committee ((ii) and (iii) defined as a “designated member”). The decisions of a designated member of the Audit and Risk Committee shall be reported to the Audit and Risk Committee at its next regularly scheduled meeting.
The pre-approval of audit and permitted non-audit services may be given at any time before engagement for a specified service. Further, the policy outlines the audit and non-audit services that have been pre-approved by the Audit and Risk Committee. Pre-approval fee levels for these services to be provided by the independent auditor will be established by the Audit and Risk Committee at an annual fee meeting and pre-approved for the 12 months thereafter. All other services not listed in the policy must be
WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY | 33 |
Proposal No. 2: Advisory (Non-binding) Vote to Ratify the Appointment of the Independent Auditors and a Binding Vote to Authorize the Board of Directors, Acting through the Audit and Risk Committee, to Fix the Independent Auditors’ Remuneration (continued)
for the 12 months thereafter. All other services not listed in the policy must be specifically pre-approved by the Audit and Risk Committee or a designated member. For pre-approved services that arise between regularly scheduled Committee meetings and exceed the pre-approval fee levels set in the annual fee meeting, the Audit and Risk Committee has pre-approved an additional pre-established fee level, which is to be administered by the Controller. The Audit and Risk Committee approved all services described in the “— Fees Paid to the Independent Auditors” section above in accordance with this policy.
Audit and Risk Committee Report
The Audit and Risk Committee is currently composed of foursix non-employee directors: Brendan R. O’Neill (Co-Chairman)(Chair), Paul D. Thomas, (Co-Chairman),Anna C. Catalano, Wilhelm Zeller, Fumbi Chima and Wilhelm Zeller. Messrs.Dame Inga Beale. Dr. O’Neill and Thomas areis an independent audit committee financial experts,expert, as defined by Regulation S-K, and all Audit and Risk Committee members are considered to be financially sophisticated under NASDAQ listing standards in view of their respective financial expertise.
The Audit and Risk Committee operates under a Charter, which is described in detail under “Corporate Governance — Willis Towers Watson Board Committees.” Among its other responsibilities described in its Charter referenced above, the Audit and Risk Committee assists the Board in its oversight of the quality and integrity of the Company’s financial reporting, internal controls over financial reporting, financial management processes and risk management at the Company and subsidiary level as well the appointment, retention, performance and compensation of the Company’s independent auditor. The Audit and Risk Committee meets with members of management, including the Chief Financial Officer, the Controller, the General Counsel as well as the Heads of Internal Audit, Compliance and Risk. The Audit and Risk Committee’s focus on risk relates to major financial risk exposure, pertaining to, among other items, regulatory, audit, financial disclosure, tax matters, pension matters and foreign exchange hedging, and the steps management has taken to monitor and control such risks. 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 in accordance with auditing standards of the PCAOB and expressing an opinion as to the conformity of the annual financial statements with U.S. generally accepted accounting principles (“GAAP”). With respect to compliance, the Audit and Risk Committee discusses with the Chief Compliance Officer the compliance and regulatory risks of the Company, and receives a report outlining the main activities of the compliance function, material regulatory interactions review and progress against the annual compliance plan.
In the performance of its oversight function, the Audit and Risk Committee has reviewed and discussed the audited financial statements as of and for the year ended December 31, 2020,2021, with management and the independent auditors. These discussions included the quality, the clarity of the disclosures and the appropriateness of the accounting principles and underlying estimates and other communications required to be discussed under PCAOB standards. The Audit and Risk Committee has also discussed with the auditors, the auditors’ independence from Willis Towers Watson and its management, including the written disclosures and the report received from the auditors regarding the auditors’ communications with the Audit and Risk Committee concerning independence as required by the PCAOB in Rule 3526, Communication with Audit & Risk Committees Concerning Independence. The independent auditors and the Company’s internal auditors had full access to the Audit Committee, including at regular meetings without management present.
It is not the duty or responsibility of the Audit and Risk Committee to conduct auditing or accounting reviews or procedures. In performing their oversight function, members of the Audit and Risk 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 and Risk Committee’s
34 | WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY |
Proposal No. 2: Advisory (Non-binding) Vote to Ratify the Appointment of the Independent Auditors and a Binding Vote to Authorize the Board of Directors, Acting through the Audit and Risk Committee, to Fix the Independent Auditors’ Remuneration (continued)
considerations and discussions do not assure that the audit of the Company’s financial statements has been carried out in accordance with GAAP or that the financial statements are presented in accordance with GAAP.
Proposal No. 2: Advisory (Non-binding) Vote to Ratify the Appointment of the Independent Auditors and a Binding Vote to Authorize the Board of Directors, Acting through the Audit Committee, to Fix the Independent Auditors’ Remuneration (continued)
Based upon the review and discussions described in this report, and subject to the limitations on the role and responsibilities referred to above, the Audit and Risk Committee 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, 2020,2021, filed with the SEC.
Submitted by the Audit and Risk Committee of the Board of Directors of Willis Towers Watson Brendan R. O’Neill (Co-Chairman)(Chair), Dame Inga Beale (Committee member as of January 1, 2022), Anna Catalano, Fumbi Chima (Committee member as of April 1, 2022), Paul D. Thomas(Co-Chairman), Anna C. Catalano and Wilhelm Zeller
WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY | 35 |
Proposal No. 3: Advisory (Non-binding) Vote on Named Executive Officer Compensation
Recognizing that executive compensation is an important matter for our shareholders, and in accordance with SEC rules, we are asking our shareholders to approve an advisory resolution on the compensation of our named executive officers as disclosed in this Proxy Statement.
This proposal, commonly known as a “say-on-pay” proposal, is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and our executive compensation philosophy, policies and practices as described in this Proxy Statement. Although the voting results are not binding, the Board and the Compensation Committee will take into account the results of the vote when considering future executive compensation arrangements.
We encourage our shareholders to read the Compensation Discussion and Analysis, which immediately follows this proposal. The Compensation Discussion and Analysis describes in more detail our executive compensation program and related policies and practices and explains the decisions the Compensation Committee has made under this program and the factors considered in making those decisions. We also encourage our shareholders to review the 20202021 Summary Compensation Table and other related compensation tables and narratives, which provide detailed information on the compensation of our named executive officers.
Accordingly, we ask our shareholders to vote “FOR” the following resolution, which requires the affirmative vote of a majority of the votes cast:
“RESOLVED, that the shareholders of Willis Towers Watson Public Limited Company approve, on an advisory basis, the compensation of the Company’s named executive officers as disclosed in the Company’s Proxy Statement for the 20212022 Annual General Meeting of Shareholders in accordance with the SEC’s rules, including in ‘Executive Compensation: Compensation Discussion and Analysis,’ ‘Compensation Tables — Summary Compensation Table’ and related tables and disclosure.”
The Board of Directors unanimously recommends a vote “FOR” the advisory (non-binding) resolution approving the overall executive compensation of Willis Towers Watson’s named executive officers, described in this Proxy Statement pursuant to the compensation disclosure rules of the SEC.
36 | WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY |
Executive Compensation: Compensation Discussion and Analysis
The Compensation Discussion and Analysis (“CD&A”) describes our compensation philosophy and provides an overview and analysis of (i) our 20202021 compensation programs and policies for our named executive officers (“NEOs”); (ii) the material compensation decisions made by the Compensation Committee under those programs and policies as reflected in the executive compensation tables that appear following this CD&A; and (iii) the material factors that the Compensation Committee considered and the process it utilized in making those decisions.
Our Named Executive Officers
Our 20202021 NEOs, as defined under applicable SEC rules, are:are listed below.
Current Executives (as of the date of this Proxy Statement)
● |
|
● |
|
● | Julie Gebauer (Head of Human Capital & Benefits (“HCB”) through December 31, 2021; Current Global Head of Health, Wealth and Career (“HWC”) as of January 1, 2022) |
● |
|
Former Executives (as of the date of this Proxy Statement)
● | John Haley (CEO through December 31, 2021) |
● |
|
Executive Compensation Overview
Key 20202021 Company Highlights
Aon Business Combination Update
On March 9, 2020, the Company announced its intention to combine with Aon pursuant to the Business Combination Agreement. On August 26, 2020, the Company’s shareholders and Aon’s shareholders both approved the business combination at a Special Meeting. The closing is currently expected to occur in the first half of 2020, subject to certain outstanding regulatory approvals.
Solid Financial Performance1 Despite COVID-19 Response: Health, Safety and Well-Beinga Shift in Strategy
The
● | Total revenue increased 4% to $9.00 billion and organic revenue grew 6% for the year |
● | Income from operations was $2.2 billion or 24.5% of revenue and adjusted operating income was $1.8 billion or 19.9% of revenue for the year, up 190 basis points over prior year |
● | Diluted earnings per share were $32.78 and adjusted diluted earnings per share were $11.60 for the year, up 328% and 19%, respectively, from prior year |
● | For the year, cash flows from operating activities were $2.0 billion, up 16% from prior year and free cash flow increased to $1.9 billion, up 23% from prior year |
2021 served as a transformative year for Willis Towers Watson Public Limited Company mobilized incident management teams to ensure employee safety(WTW). Solid Company performance throughout the year demonstrated the resilience of WTW’s colleagues and client service continuity in the early stagea diversified portfolio of products and services, amid challenges caused by the COVID-19 pandemic. Thepandemic and a shift in WTW’s strategy as an independent company. Despite these unprecedented circumstances, the Company moved from 10%continued to 95% remote working through technology enhancements, full access to flexible work-life arrangements and open communication. The Company collected feedback and well-being ideas to helpserve our clients, protect our colleagues adapt and chartered a multi-faceted team to develop a structured approach to the “new normal.” In under four weeks, the Company addressed well-being, travel guidance, remote office equipment provisioning, collaboration tools and manager resources – all to help colleagues adapt. The Company also set policies to guide future return-to-office approaches for 46,000 colleagues in 140 countries. Recognizing colleagues’ varied situations, their feedback was sought on these efforts. The June all-colleague survey, with high participation, showed strong support for our efforts, with over 90% of staff feeling connected to their teams, getting access to their managers and appreciating the flexibility. Work has since shifted to “reimagining the workplace”, using lessons from the crisis to define the evolving role offices will play in how our work is done. For information regarding the impact of COVID-19 onsafeguard our business and additional measures we have taken in response, see Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Risks and Uncertainties of the COVID-19 Pandemic” in our Annual Report on Form 10-K, filed with the SEC on February 23, 2021. In addition, risks relating to COVID-19 and other human resources risks are discussed under “Risk Factors” in our Form 10-K.fundamentals.
1 | See pages 60-66 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed with the SEC on February 24, 2022, for a reconciliation of GAAP to non-GAAP figures identified in this CD&A. All financial results are presented on a continuing operations basis except where stated otherwise. |
WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY | 37 |
Executive Compensation: Compensation Discussion and Analysis (continued)
Solid Financial Performance Despite COVID-19 Challenges
Company performance during 2020 demonstrated the resilience of Willis Towers Watson’s diversified portfolio of products and services amid a challenging global environment caused by the COVID-19 pandemic. Despite these unprecedented challenges, the Company has sought to continue to serve our clients, protect our colleagues, and safeguard our business fundamentals.
At the onset ofWith the COVID-19 pandemic, the Company implemented acontinued its comprehensive set of global processes to stabilize business operations.operations while providing high quality service to clients. This included the activation of aongoing global business continuity and incident management planefforts to restrict travel, limit office access and transitionenhance our global workforce to a work-from-home protocol with split team operations for our essential workers.
The Company regularly considered the impact of the pandemic on our business and stress tested the rigor of our business resilience, continuity plans, forecasting and liquidity management. Throughout 2020,2021, the Company took decisive measures to reinforce working capital discipline and reduce discretionary spending,spending.
From March 2020 through July 2021, the Board and prepareleadership drove the Company towards the closing of the business combination with Aon, which would have been an all-stock transaction with a combined equity value of approximately $80 billion. One of the goals of the combination was to accelerate elements of the Company’s pre-existing strategy. At the same time as leadership was driving towards the closing of the transaction, they were also managing the day-to-day business of the Company. When the proposed Aon combination was terminated in July, after almost 18 months of integration planning and closing preparations and after a period of substantial uncertainty, the Board and leadership quickly shifted their attention to supporting the Company on an independent path. With the combination no longer feasible, the Company took decisive actions to accelerate its standalone strategy and aggressive steps to retain colleagues and recruit new talent, to enhance its ability to serve clients and to create value for different economic scenarios. stakeholders. In particular, the Company quickly announced a CEO successor, hired a new CFO and took significant steps to refresh the Board; transformed its senior management structure through the creation of a new Global Leadership Team and simplified the Company’s organizational structure; sold its treaty reinsurance business, generating several billion dollars of capital for focused investments and share repurchases; and created and launched an ambitious strategic plan to grow, simplify and transform with plans to refresh the WTW brand.
These actions, combined with the commitment of our leaders and colleagues, helped Willis Towers WatsonWTW deliver solid financial results in 2020.2021 and position the Company for future years.
Certain key highlights of these efforts and our financial results are described below.
CEO and Board Succession; Global Leadership Team Transformation
Once on an independent path forward, the Board revisited its CEO succession plan and, by August, had appointed Mr. Hess as the Company’s President as of September 1, 2021 and CEO as of January 1, 2022. Mr. Hess succeeded Mr. Haley as CEO following Mr. Haley’s previously scheduled retirement on December 31, after his decades-long tenure. Additionally, Mr. Krasner was appointed as the new CFO in early September, by which time Mr. Haley and Mr. Hess had established a new management structure and appointed the members of the new Global Leadership Team. Members of the Global Leadership Team also developed and presented multi-year strategic plans to the Company’s stakeholders during the Company’s Investor Day on September 9. At Investor Day, the Company announced plans to complete approximately $4 billion in share repurchases by 2022, $1.6 billion of which has been repurchased by December 31. Throughout the fall, management continued its shareholder outreach programs to introduce Mr. Hess, maintain and strengthen relationships and understand shareholder feedback. On December 1, Arthur J. Gallagher & Co. completed the principal closing of its acquisition of the Company’s treaty reinsurance business under the Security and Asset Purchase Agreement, dated as of August 13.
By the end of December, after revisiting its refreshment plan, the Board announced the addition of four new directors before the 2022 Annual Meeting, in addition to Mr. Hess, and the retirement of six then-current directors (including Mr. Haley) by no later than the Annual Meeting. The Board also reconstituted the Board Committee slates as discussed further in the section entitled “Corporate Governance — Willis Towers Watson Board Committees.”
38 | WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY |
Executive Compensation: Compensation Discussion and Analysis (continued)
Effective January 1, 2022, we provide our comprehensive offering of services and solutions to clients across two rather than four business segments: Health, Wealth and Career (“HWC”) and Risk and Broking (“RB”). These changes were made in conjunction with changes in the Global Leadership Team.
Strategy Acceleration: Grow, Simplify and Transform
The multi-year strategic plans presented at Investor Day articulated the steps the Company would take to help accelerate performance and position WTW for a bold new future, including executing on the following:
● | Grow at or above market in priority areas |
● | Simplify the business to increase agility and effectiveness |
● | Transform operations to drive savings while enhancing our client and colleague experiences |
Focusing on these priorities is intended to benefit all Company stakeholders and we believe will better position us against our peers.
Financial Results1
Revenue
● | Generated revenue of |
● | Demonstrated growth and resilience despite the challenging |
● | Increased operating income |
As reported, $USD million, except % |
FY2020 | |||||
| Revenue | Operating Margin % | Margin Year-over-year | |||
Human Capital & Benefits |
3,278 |
26% |
+30 bps | |||
Corporate Risk & Broking |
2,977 |
21% |
+160 bps | |||
Investment, Risk & Reinsurance |
1,651 |
28% |
+200 bps | |||
Benefits Delivery & Administration |
1,359 |
24% |
-10 bps |
|
Executive Compensation: Compensation Discussion and Analysis (continued)
As reported, $USD million, except % |
FY2021 | ||||||||||||||
| Revenue | Operating Margin % | Margin Year-over-year | ||||||||||||
HCB |
|
3,447 |
|
|
27 |
% |
|
+100 bps |
| ||||||
CRB |
|
3,177 |
|
|
23 |
% |
|
+180 bps |
| ||||||
IRR |
|
814 |
|
|
20 |
% |
|
+500 bps |
| ||||||
BDA |
|
1,500 |
|
|
22 |
% |
|
-110 bps |
|
Profitability
● | Produced income from operations of |
● | Achieved adjusted operating income of |
WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY | 39 |
Executive Compensation: Compensation Discussion and Analysis (continued)
● | Reported diluted earnings per share (“EPS”), which includes discontinued operations, of |
● | Reported adjusted diluted EPS of |
Operating Margin & Adjusted Operating Margin
| FY20 | FY19 | Margin Change Year-over-year | FY21 | FY20 | Margin Change Year-over-year | ||||||||||||
Operating Margin % |
12.6% |
14.7% |
-210 bps |
|
24.5 |
% |
|
10.0 |
% |
|
+1,450 bps |
| ||||||
Adjusted Operating Margin % |
20.1% |
20.3% |
-20 bps |
|
19.9 |
% |
|
18.0 |
% |
|
+190 bps |
|
Diluted Earnings Per Share & Adjusted Diluted Earnings Per Share
| FY20 | FY19 | % Change Year-over-year | FY21 | FY20 | % Change Year-over-year | ||||||||||||||
Diluted EPS |
$ |
7.65 |
|
$ |
8.02 |
|
-5% |
$ |
32.78 |
|
$ |
7.65 |
|
+328% | ||||||
Adjusted Diluted EPS |
$ |
11.70 |
|
$ |
10.96 |
|
+7% |
$ |
11.60 |
|
$ |
9.71 |
|
+19% |
Long-Term Shareholder Value2
● |
|
● |
|
● |
|
|
Executive Compensation: Compensation Discussion and Analysis (continued)
Cumulative Total Return
Capital Return to Common Shareholders
● | Generated cash flow from operating activities of |
● | Produced free cash flow of |
● | Returned |
40 | WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY |
Executive Compensation: Compensation Discussion and Analysis +21% 4-Year CAGR(continued)
FY16
Cash Returned to FY20, annual free cash flowShareholders
$5.3 Billion (FY2016 to FY2021)
Meaningful Dividend Growth
+11% Cash Dividend Growth (5 years CAGR)
COVID-19 Response: Health, Safety and Well-Being
In 2021, the Company continued to:
● | Monitor and adapt both in-office operations and return-to-office approaches for more than 44,000 colleagues across the 140 countries and markets we serve, prioritizing colleague health and safety, as well as client service quality, while complying with all applicable local regulations. |
● | Offer effective remote working solutions that address wellbeing, potential travel, at-home office equipment provisioning, collaboration tools and manager resources, while also facilitating flexible work-life arrangements and support for home care requirements. |
● | Monitor colleague feedback on the Company’s response to the pandemic using all-colleague pulse surveys which, on an overall basis, indicated support for our efforts to respond to COVID-19 with a significant portion of respondents feeling connected to their teams, in an inclusive environment, and able to effectively work in a hybrid work model. |
WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY |
Executive Compensation: Compensation Discussion and Analysis (continued)
$3.3 Billion
Cash Returned to Shareholders
FY16 to FY20, as reported, USD millions
*2017 Includes $177 million payment for share cancellation related to legal settlement
+9% 4-Year CAGR
Meaningful Dividend Growth
FY16 to FY21e, quarterly cash dividends
Rethink how colleagues work, both independently and collaboratively, now and in the future, focusing on the evolving role company offices play. The outcome of this work has been the development of a new work style model that supports colleagues who are office-based, home-based or a hybrid of the two. For additional information, see the “Business — Human Capital” section in Part I, Item 1 of our Annual Report on Form 10-K, filed with the SEC on February 24, 2022. |
Executive Compensation: Compensation Discussion and Analysis (continued)
20202021 Compensation Program Summary
20202021 NEO Pay at a Glance
Consistent with our goals and overall compensation philosophy of appropriately incenting our executives, the Compensation Committee has adopted a compensation program that incorporates a mix of fixed and at-risk pay incentives. Total direct compensation awarded to our NEOs in 20202021 consists ofbase salary, Short-Term Incentive (“STI”) awards and Long-Term Incentive (“LTI”) awards based on performance.
Base Salary + STI Award + LTI Award = Total Direct Compensation
NEO | 2020 Base Salary | 2020 STI Award (1) | 2020 LTI Award (2) | 2020 Total Direct Compensation | % Change vs. 2019 | |||||||||||||||
Mr. Haley | $1,200,000 | $3,110,400 | $9,600,000 | $13,910,400 | 5.1% | |||||||||||||||
Mr. Burwell | $750,000 | $1,215,000 | $1,500,000 | $3,465,000 | 7.4% | |||||||||||||||
Ms. Gebauer | $650,000 | $726,570 | $975,000 | $2,351,570 | 5.2% | |||||||||||||||
Mr. Hess | $650,000 | $758,160 | $975,000 | $2,383,160 | 3.3% | |||||||||||||||
Mr. Wickes | $650,000 | $673,920 | $975,000 | $2,298,920 | (3.4%) |
NEO | 2021 Base Salary | 2021 STI Award (4) | 2021 LTI Award (5) | 2021 Total Direct | ||||||||||||||||||
Current Executives |
Mr. Hess (1) | $ | 766,667 | $ | 2,443,875 | $ | 975,000 | $ | 4,185,542 | |||||||||||||
Mr. Krasner (2) | $ | 298,622 | $ | 493,397 | $ | 0 | $ | 792,019 | ||||||||||||||
Ms. Gebauer | $ | 650,000 | $ | 837,574 | $ | 975,000 | $ | 2,462,574 | ||||||||||||||
Mr. Furman | $ | 550,000 | $ | 984,328 | $ | 750,000 | $ | 2,284,328 | ||||||||||||||
Former |
Mr. Haley | $ | 1,200,000 | $ | 3,501,000 | $ | 9,600,000 | $ | 14,301,000 | |||||||||||||
Mr. Burwell (3) | $ | 562,500 | $ | 0 | $ | 1,500,000 | $ | 2,062,500 |
(1) | In |
(2) | Mr. Krasner rejoined the Company as CFO on September 7, 2021. Previously he served as Global Treasurer and Head of Mergers and Acquisitions for the Company until January 2021. Per terms of his offer letter: (i) his annual base salary is $800,000; (ii) his STI target is 125% of base salary (prorated for 2021 to reflect the time he was employed by the Company during the year); (iii) his LTI target is 200% of base salary beginning in 2022; (iv) he received a cash |
(3) | Mr. Burwell resigned from the Company on August 26, 2021, effective as of September 30, 2021. Mr. Burwell ceased to serve as CFO when Mr. Krasner joined the Company on September 7, 2021. To reward his extraordinary achievements during his tenure and a challenging 2021 and his support of a successful transition of his position, upon his resignation: (i) he received a completion bonus of $1 million and three months of COBRA coverage (not reflected above); and (ii) he received accelerated vesting of his unvested shares under the Non-Qualified Deferred Savings Plan and Non-Qualified Stable Value Excess Plan as of his termination date (totaling 2,523 shares). Mr. Burwell did not receive a 2021 STI award and, upon his resignation, he forfeited his outstanding 2019, 2020 |
42 | WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY |
Executive Compensation: Compensation Discussion and Analysis (continued)
(4) | The |
The amounts in the |
Mr. Haley was granted a |
For more information regarding the details of the above and other compensation earned by the NEOs in |
20202021 Compensation Action Highlights
2021 Compensation Program
The Compensation Committee largely maintained the design of the 2020 compensation program in 2021. For a more detailed discussion of our compensation program for 2021, see “Components of the Named Executive Officers’ 2021 Compensation” below.
Mr. Haley’s Retirement
Mr. Haley’s employment agreement terminated in accordance with its terms on December 31, 2021, and Mr. Haley retired as CEO and director of the Company. Mr. Haley received compensation in 2021 in accordance with his employment agreement, and as accelerated, as further described under “Payments in Connection with Mr. Haley’s Retirement” below. See “Summary Compensation Table” below for additional detail.
Mr. Hess’s Appointment to President Effective September 1, 2021 and CEO Effective January 1, 2022
At the same time, it was announced that Mr. Hess would succeed Mr. Haley as CEO of the Company effective January 1, 2022.
● |
|
|
$1 million, (ii) a continued STI target |
|
|
WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY |
Executive Compensation: Compensation Discussion and Analysis (continued)
As disclosed previously, the target value of the total compensation package for Mr. Haley was designed to align Mr. Haley’s compensation opportunity with approximately 85% of the target pay for the CEOs of our most direct competitors, Aon and Marsh & McLennan Companies, Inc. When designing the compensation package,2022 Compensation Highlights
On February 22, 2022, the Compensation Committee and Board of Directors believed that this pay opportunity was appropriate to ensureapproved the continuation of Mr. Haley’s services and recognized the continued “at-risk” structure of Mr. Haley’s compensation. They believe that this positioning is appropriate for the size and scope of the organization and Mr. Haley’s long experience and prior track record as CEO.following compensation changes:
● |
|
|
|
|
|
|
|
Executive Compensation: Compensation Discussion and Analysis (continued)
For a full description of Mr. Haley’s amended employment agreement, see the section entitled “Compensation Tables — Named Executive Officers’ Employment Agreements.”
|
● |
|
Compensation Practices at a Glance
We developed and maintain a comprehensive compensation and governance framework that we believe is aligned with market practices and standards.
What We Do:
✓ | Annual “say-on-pay” vote (as recommended by the Board and management and as supported by a majority of shareholders). |
✓ | Independent compensation consultant selected, engaged and overseen by the Compensation Committee. |
✓ | A substantial majority of total compensation for executives is tied to performance. |
✓ |
|
✓ | Dividend equivalents accrued on PSUs and RSUs are |
✓ | Additional time-based vesting requirement after performance under LTI award is achieved. |
✓ | Compensation recoupment policy applicable to executive officers’ cash and equity incentive |
✓ | All LTI awards subject to double-trigger vesting upon change |
✓ | Minimal perquisites for executives. |
✓ | Significant share ownership guidelines for executive officers and non-employee directors. |
✓ | Compensation Committee oversight of risks associated with compensation policies and practices. |
Executive Compensation: Compensation Discussion and Analysis (continued)
What We Don’t Do:
x | No backdating of share options and no option repricing without shareholder approval. |
x | No excise tax gross-ups. |
x | No share reserve automatic replenishment (evergreen) provision in any share-based plans. |
x | No hedging by directors and executive officers or pledging by directors and employees of Company shares. |
Shareholder Engagement and Say-on-Pay
The Company frequently engages with shareholders. DuringEach year, during the spring and fall of each year,seasons, we reach out to shareholders holding a majority of our shareholdersshares and then discuss the feedback with our Board. The purpose of our year-roundyear- round outreach is to foster relations with our shareholders by enhancing communications on corporate governance, executive compensation and environmental and social issues and providingprovide our shareholders with a forum to discuss anyraise questions they may have or voice any criticisms. We also use the opportunity to explain the various proposals included within the Proxy Statement.
Executive Compensation: Compensation Discussion and Analysis (continued)
Over the past year, the Company tailored our shareholder outreach programs to address the various corporate changes. During the 2021 Proxy Season, although the Company was awaiting regulatory approval to potentially combine with Aon, management believed it was still important to continue to reach out to its main institutional investors to discuss the Proxy Statement and its rationale for the executive compensation program, corporate governance structure and ESG initiatives. Shareholders were generally supportive of the Company’s proposals, which is evidenced by our 2021 Say-on-Pay proposal to approve the NEOs’ compensation receiving approximately 95.92% of the votes cast in favor at the 2021 Annual General Meeting of Shareholders.
After the Aon transaction was terminated, in August 2021, the Board appointed Mr. Hess as President and future CEO. Again, management took the opportunity to reach out to shareholders representing approximately 50% of the outstanding shares to offer an introductory call with Mr. Hess. Other management attendees included, among others, our then-current CFO, Head of Investor Relations and/or General Counsel. Management then held an Investor Day in early September to explain its going-forward strategy.
In the fall, management continued the conversations with investors and offered the opportunity to discuss governance, compensation and other ESG highlights, including governance actions the Board has recently taken and expected to take, as well as expectations for the upcoming Proxy Season.
The Governance and Compensation Committees are both involved in the outreach program. Generally, we review our outreach plans and the results of our outreach efforts and discuss any significant feedback with both Committees (and the full board,Board, as appropriate). While we did not make any material changes to our compensation program or governance structure or policies specifically as a resultIn light of the outreach this year,new strategy unveiled at Investor Day, the Committees continue to valueCompany undertook a review and considerredesign of 2022 executive officer incentives, which considered shareholder feedback, among other factors,as detailed in their evaluationthe section entitled “ — Executive Officer 2022 Incentive Design Update.” The Board also continued its succession plan, which included announcing the appointment of four new independent directors as discussed in the Company’s executive compensation programsection entitled “Proposal No. 1 — Board and corporate governance structure.CEO Succession.”
Our Executive Compensation Program in Detail
Our Pay Philosophy
The main objectives of the Company’s executive compensation program are to attract, motivate and retain highly qualified executives and align their interests with our strategy of maximizing shareholder value. In
Executive Compensation: Compensation Discussion and Analysis (continued)
addition, the Compensation Committee believes it is important for the Company’s executive officers’ interests to be aligned with each other to drive profitable growth.
The Compensation Committee has placed an emphasis on variable pay; 91%90% of Mr. Haley’sHess’s target total direct compensation as CEO is performance-based and, on average, 72%74% of the other NEOs’ (who are current executives) target total direct compensation is performance-based. The Compensation Committee does not have an explicit pay positioning strategy relative to market, but rather evaluates a number of factors, including role, tenure, experience, contribution and performance, as well as comparisons to peers, among other factors, in determining appropriate target pay opportunities.
Although the Compensation Committee looks at each component of compensation (base salary, STI, LTI and pension) separately, it also looks at the total rewards package to ensure competitiveness, incenting top performance, internal equity among the executive team members and shareholder alignment. The table below table reflects the 20202021 compensation design for the NEOs after theNEOs.
WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY | 45 |
Executive Compensation: Compensation Committee adopted changes to address the economic uncertainty of the Discussion and Analysis COVID-19(continued) pandemic.
Components of the Named Executive Officers’ 20202021 Compensation
Type | Component | Objective | Additional Detail | |||
Variable Compensation | Short-Term Incentive Awards | • Incent and reward the NEOs for their contribution in generating exceptional annual performance, both financially and strategically at the enterprise and individual levels
• Incent collaboration among NEOs across different business units
• Manage through
• Promote an even more unifying company mindset with the broader employee population | • Under the
• Paid entirely in cash | |||
Long-Term Incentive Awards | • Align NEOs’ interests with those of our shareholders
• Incent long-term decision making and meaningful value creation
• Reward exceptional performance for executive officers
• Retain high-performing executives | • Grants under the
• The
• Earned PSUs will be determined based on three-year
• Dividends accrue on PSUs in the form of additional shares but are only payable to the same extent and at the same time the underlying shares vest | ||||
Fixed Compensation | Base Salary | • Provide market-competitive fixed pay reflective of an executive’s role, responsibilities, and individual performance
• Attract and retain highly talented executives | • Salary adjustments made only to reflect changes in responsibilities or when market or internal conditions warrant | |||
Pension Benefits | • Encourages sustained service and retention and provides future retirement security
• Qualified and non-qualified defined benefit plans utilizing stable value plan formula | • Applies primarily to executive officers in the U.S.
• Non-qualified plan allows for participation by all eligible U.S. employees and provides an opportunity for participants to receive equity |
Executive Compensation: Compensation Discussion and Analysis (continued)
The discussion below provides additional detail about each component of the Company’s compensation program.
Base Salary
The Compensation Committee strives to set base salary at a competitive level based on an executive’s position and the relevant markets in which suchthe executive operates. The Compensation Committee generally does not provide annual merit increases to executives, but rather rewards exceptional performance through STI and/or LTI awards. Adjustments to base salaries are made by the Compensation Committee to reflect changes in responsibilities or when competitive market or internal conditions warrant. During 2021, Mr. Hess’s base salary was increased from $650,000 to $1 million effective September 1, 2021 in connection with his promotion to President of the Company and his expanded responsibilities in the role. No other NEO received a salary increase during 2021. In February 2022, the Compensation Committee approved an increase to Mr. Furman’s base salary from $550,000 to $590,000 effective April 1, 2022, reflecting his first base salary increase since joining the Company.
Short-Term Incentive Compensation
STI awards are an integral component of the NEOs’ total compensation and in the past, have been consistently based on specific enterprise financial results, business segment or geography financial results or corporate function performance, and individual executive officer performance against strategic objectives. Theythey are intended to deliver exceptional pay for exceptional performance and provide a well-timedwell- timed link between recent performance and individual compensation.
46 | WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY |
Executive Compensation: Compensation Discussion and Analysis (continued)
Each NEO is eligible to receive an annual STI award with a target value expressed as a percentage of his or her base salary. The targets were established by the Compensation Committee based on an evaluation of each executive officer’s total compensation, market practice and market practice.preexisting employment arrangements. During 2021, the Committee increased Mr. Hess’s STI target from 90% to 175% of base salary in connection with his promotion to President of the Company. No other changes were made to STI target opportunities for the NEOs in 2021.
20202021 STI Program Design
Prior to the COVID-19 pandemic, the Compensation Committee approved a 2020 STI Program that was largely consistent with 2019, with enterprise, segment/geography, functional and individual components. The performance metrics included total adjusted revenues and adjusted net income at the enterprise level, and total adjusted revenues and adjusted operating income at the segment/geography level. The only change from the 2019 design was that the Committee added a new free cash flow metric for the enterprise performance results for 2020.
In light of the significant business uncertainty that was created by the COVID-19 pandemic and then-pending Aon transaction, in June 2020, the Compensation Committee adopted changes to the 2020 STI Program (and has determined to continuethat were continued for the changed design for 2021).2021 performance year. More specifically, the Committee eliminated: (i) eliminated separate business segment, geography and functional performance components, and (ii) eliminated defined performance metric payout grids at the enterprise level. Instead, the Committee decided to applylevel and (iii) applied the same component weightings and performance measures for all Operating Committee members.executive officers. The Committee placed a greater emphasis on enterprise financial performance (80% of STI opportunity) than individual achievement,performance (20% of STI opportunity), which was further aligned to the bonus funding for the broader employee base.base creating greater colleague cohesiveness. The objectives of these changes were to: a) reduce the potential volatility in payout levels driven by unanticipated and uncontrollable business impacts of the pandemic, b)(i) align the rewards of executive officers from different business and geographic units to promote an even more
Executive Compensation: Compensation Discussion and Analysis (continued)
unifying team mindset to help in response to the pandemic, and c)with its varied impacts on different business units within the Company, (ii) more fully align the rewards for the senior executive team with the rest of the Company’s employees during this period of economic uncertainty.uncertainty and (iii) reduce the potential volatility in payout levels driven by unanticipated and uncontrollable business impacts of the pandemic.
Weighting (as % of Total STI Award) | ||
Enterprise Financial Performance | 80% | |
Individual Performance | 20% |
20202021 STI Awards
The following table sets forth the STI awards approved by the Compensation Committee and paid in cash to the NEOs for the fiscal year ended December 31, 2020.2021.
Summary of 2020 STI Awards for NEOs | ||||||||||||||||||||
NEO | 2020 Base Salary ($) | 2020 STI Target as % of Base Salary | 2020 STI Target ($) | Total 2020 STI Award ($) | Total 2020 STI Award as % of STI Target | |||||||||||||||
Mr. Haley | 1,200,000 |
| 200% |
| 2,400,000 |
| 3,110,400 |
| 129.6% |
| ||||||||||
Mr. Burwell | 750,000 |
| 125% |
| 937,500 |
| 1,215,000 |
| 129.6% |
| ||||||||||
Ms. Gebauer | 650,000 |
| 90% |
| 585,000 |
| 726,570 |
| 124.2% |
| ||||||||||
Mr. Hess | 650,000 |
| 90% |
| 585,000 |
| 758,160 |
| 129.6% |
| ||||||||||
Mr. Wickes | 650,000 |
| 80% |
| 520,000 |
| 673,920 |
| 129.6% |
|
Summary of 2021 STI Awards for NEOs (1) | ||||||||||||||||||||||||||||
NEO | 2021 Base Salary ($) | 2021 STI Target as % of Base Salary | 2021 STI Target ($) | Total 2021 STI Award ($) | Total 2021 STI Award as % of STI Target | |||||||||||||||||||||||
Current Executives |
Mr. Hess (2) |
| 1,000,000 |
| 175 | % |
| 1,750,000 |
| 2,443,875 |
| 139.7 | % | |||||||||||||||
Mr. Krasner (3) |
| 800,000 |
| 125 | % |
| 397,260 |
| 493,397 |
| 124.2 | % | ||||||||||||||||
Ms. Gebauer |
| 650,000 |
| 90 | % |
| 585,000 |
| 837,574 |
| 143.2 | % | ||||||||||||||||
Mr. Furman |
| 550,000 |
| 125 | % |
| 687,500 |
| 984,328 |
| 143.2 | % | ||||||||||||||||
Former | Mr. Haley | 1,200,000 | 200 | % | 2,400,000 | 3,501,000 | 145.9 | % |
(1) | Mr. Burwell did not receive a 2021 STI Award as he was not employed by the Company for the full performance year. |
(2) | Mr. Hess’s base salary and STI target above were approved in connection with his promotion to President of the Company earlier this year and were used to establish his STI target for 2021. |
WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY | 47 |
Executive Compensation: Compensation Discussion and Analysis (continued)
(3) | Mr. Krasner’s 2021 STI target was prorated to reflect the time he was employed by the Company during the year. |
The Total 20202021 STI Awards reflect the NEOs’ 20202021 STI Target Opportunity as impacted by the 20202021 bonus pool funding percentage for the broader employee base (i.e., 108%124.5%). The bonus pool for the broader employee population is based on total enterprise financial performance, including adjusted netoperating income and revenue growth, which is evaluated in comparison to budget and prior year results. The Company determines what it believes is a reasonable level of total discretionary compensation funding (including bonuses) that balances both colleague rewards, as well as return on investment to shareholders. The discretionary compensation funding for the broader employee population is reflected in the Company’s financial statements which are reviewed with the Audit and Risk Committee.
The Compensation Committee concluded that the enterprise financial performance component of the NEO’s STI awards had been fully achieved and approved the NEOs’ 20202021 STI awards by applying the broader employee base bonus pool funding percentage for 2021 of 124.5% (or in Mr. Krasner’s case, the bonus pool funding percentage accrued during his time spent working for the Company in 2021 of 108%) to the enterprise financial performance component of the award. The application of the overall bonus funding percentage to the NEOs’ STI awards, rather than the historic enterprise/segment/geography/function split that had been determined at the beginning of the year (prior to the COVID-19 pandemic), was discussed in the Company’s Form 8-K filed with the SEC on June 5, 2020. The rationale for the change was that the overall funding percentage for STI awards for executive officers (as a percentage of target) would be closer toshould mirror the funding percentage for STI awards made to the broader base of employees eligible for such awards and that executive officers from different business and geographic units, all impacted differently by challenges during the pandemic,year, would be more closely aligned. As explained above, theThe approach was intended to promote an even more unifying, team mindset, thereby helping the Company manage the economic uncertainty created by the COVID-19 pandemic.Company faced during the year. The enterprise-wide bonus funding percentage reflected the Company’s strong financial results and colleagues’ resilience during an uncertain year, as discussed in the section above entitled “— Key 2021 Company Highlights.”
When assessing the individual performance of each NEO, the Compensation Committee and Mr. Haley (and, in the case of Mr. Haley, solely the Compensation Committee) considered the achievements of a range of factors. factors, including CEO recommendations. In light of Mr. Haley’s retirement at the end of the year, Mr. Haley met with the then-current Compensation Committee members several times over the course of 2021 to provide his recommendations for the individual achievements of the NEOs based on the first and second half of the performance year. For all NEOs, the final individual performance result reflects a blend of assessments of the first and second half year of performance.
As described below, these included, among other things, overall enterprise level
Executive Compensation: Compensation Discussion and Analysis (continued)
contributions through leadership of his or her respective business segment or function, particularly in light of the economic uncertainty created by the COVID-19 pandemic,Company faced in 2021, quality of underlying financial achievement and contributions towardsto strategic goals in a transformative year. Because 80% of the pending business combination with Aon. Because the 20202021 STI Program design was tied to the promotion of enterprise financial achievement, the Compensation Committee applied the enterprise-wide bonus funding percentage of 108%124.5% (108% in the case of Mr. Krasner) to the level of achievements set forth in the table below.
The Compensation Committee also included inclusion and diversity objectives as part of each NEO’s 20% individual performance component, which are reflected in the achievements below. For a more detailed discussion of the Company’s commitment to inclusion and diversity, see the “Human“Business — Human Capital” section in Part I, Item 1 of our Annual Report on Form 10-K, filed with the SEC on February 23, 2021.24, 2022.
| ||
| ||
|
WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY |
Executive Compensation: Compensation Discussion and Analysis (continued)
NEO | Considerations | |
Mr. Hess | • Significant contributions in integration planning as a member of the integration steering committee as part of the then-pending business combination with Aon. • Strong leadership and significant contributions in new role as President of the Company, including selection and implementation of the Company’s new Global Leadership Team, consisting of highly accomplished leaders across the Company’s geographies, segments and functions who will work together to drive the Company forward. • Significant contributions to the Company’s 2021 Investor Day and its major unveiling of the Company’s new vision and its new Grow, Simplify, Transform strategy that is intended to deliver the Company’s three-year financial targets. • Strong leadership of the complex IRR segment during the year amid the uncertainties
•
• Significant efforts in connection with the Company’s commitment to a disciplined capital allocation policy and the implementation of its plan to return $4+ billion to shareholders through share buybacks by fiscal year-end 2022.
• Personal leadership and commitment to improving inclusion and diversity at all levels, including increased female and racially diverse representation in senior
• Mr. Hess’s individual performance result for his | |
Mr. | •
•
•
• • Significant involvement in and contribution to the Willis Re divestiture. • Mr. Krasner’s individual performance result for his 2021 STI award was 175.0%. | |
Ms. Gebauer | • Personal leadership and significant contributions in integration planning as part of the then-pending business combination with Aon, as well as exceptional efforts post-termination of the deal, including restructuring and • Strong leadership of the HCB segment during the year amid the various major uncertainties of the year. • Significant contributions to the Company’s 2021 Investor Day, including the Grow, Simplify, Transform strategy that will be executed in the HWC segment. • Strong leadership and significant contributions as a member of the Company’s new Global Leadership Team, including leadership on various
• Personal • Ms. Gebauer’s individual performance result for her 2021 STI award was 175.0%. |
WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY | 49 |
Executive Compensation: Compensation Discussion and Analysis (continued)
NEO | Considerations | |
Mr. Furman | • Personal leadership and significant contributions to planning as part of the then-pending Aon business combination, as well as exceptional efforts up to and after the termination of the deal, including work on counseling, negotiations, implementation, communications and stakeholder relations. • Support of the Board of Directors as it managed CEO and Board succession planning. • Leadership of a high-performing team during a challenging period of uncertainty and disruption. • Significant contributions to the Company’s 2021 Investor Day. • Leadership and support of the Willis Re divestiture. • Successful efforts by Mr. Furman and his team to resolve the Company’s most significant contingent exposures and to obtain summary judgment for a large insurance coverage action. • Management of expenses, including core outside counsel spend, internal headcount and discretionary spend, so that his function was under budget for the year. • Strong leadership and significant contributions as a member of the Company’s new Global Leadership Team, including leadership on various sub-committees such as the Investment and Controls Committees. • Personal leadership in inclusion and diversity efforts and initiatives to improve racial and gender diversity, including sponsoring the Office of General Counsel’s robust I&D working group that introduced innovative programs, expanded the use of diverse slates and
• Mr. | |
Mr. Haley | • Strong leadership of the Company during the year amid the major uncertainties of the year. • Active leadership and significant contributions in integration planning leading up to the pending business combination with Aon, as well as support of the Company post-termination of the deal to retain colleagues and clients and insurer relationships. • Active efforts and contributions toward succession planning and selection of Mr. Hess as the new CEO of the Company, as well as support and guidance during the transition period. • Leading role in setting with his successor a new vision, strategy and financial targets for the Company and communicating these at the Company’s 2021 Investor Day. • Selection and implementation of the Company’s new Global Leadership Team, consisting of highly accomplished leaders across the Company’s geographies, segments and functions who will work together to drive the Company forward. • Strengthened his executive team’s commitments to inclusion and diversity. • Mr. Haley’s individual performance result for his 2021 STI award was 185.8%. |
Long-Term Incentive Compensation
LTI compensation is a significant element of our executive officer compensation and is granted in the form of equity awards under the Company’s 2012 Equity Incentive Plan (the “2012 Plan”). The NEOs’ 20202021 LTI awards (including the CEO’s) were consistent with the design of the NEOs’ 20192020 LTI awards.
20202021 LTI Program
Messrs. Hess, Furman and Burwell and Ms. Gebauer received their 2021 LTI Awards on July 20, 2021, as was customary for the most senior executive team. Pursuant to Mr. Haley’s amended employment agreement, on February 25, 2020 he received a 2020his 2021 LTI award with a target value of $9.6 million. The other NEOs received their 2020 LTI Awardsmillion on July 20, 2020.January 1, 2021. There were no changes to the NEOs’ LTI targets for the 20202021 performance year.year from 2020. Mr. Burwell had a 2020 LTI target of 200% of his annual base salary and Messrs. Hess and Wickes and Ms. Gebauer each had a 20202021 LTI target of 150% of base salary, Mr. Furman had a 2021 LTI target of $750,000 per terms of his or her respective annualemployment agreement and Mr. Burwell had a 2021 LTI target of 200% of base salary. Mr. Krasner did not receive a 2021 LTI award but received a make whole sign-on equity award of $3 million in time-based RSUs on September 7, 2021 per terms of his offer letter. Mr. Burwell’s 2021 LTI award was forfeited upon his departure from the Company in September 2021.
The NEOs’ 20202021 LTI awards (including the CEO’s) were granted on the same performance and payout terms as the 20192020 and 20182019 LTI awards. To align management’s and shareholders’ interests, the awards were 100% performance-based in the form of PSUs and were structured similarly to the awards granted under the 2019 LTI Program.PSUs. The Compensation Committee and management conduct an
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Executive Compensation: Compensation Discussion and Analysis (continued)
annual review of the appropriateness of the performance metrics for the LTI awards. For the 20202021 LTI awards, the Compensation Committee maintained a performance metric of three-year relative TSR measured against the S&P 500. The Compensation Committee selected relative TSR as it is aligned with the shareholder experience, requiring that we outperform the market to earn incentives above target. The S&P 500 was selected as a performance-benchmark as the Company has too few direct competitors to establish meaningful benchmarks for performance, and the Compensation Committee believes that the executives should be rewarded for outperforming the broader stock market returns, as represented by the S&P 500.
Earned PSUs will vest on February 25, 2023 for Mr. Haley and on July 20, 20232024 for allthe NEOs other NEOsthan Mr. Haley after a three-year performance period that runs from January 1, 20202021 to December 31, 2022 (or2023. Mr. Haley’s award was eligible to vest on a pro-rata monthly basis as to 1/12th of the Aon business combination effective date, if earlier).
Executive Compensation: Compensation Discussionnumber of earned PSUs for each full and Analysis (continued)
partial calendar month he remained employed in calendar year 2021. The number of PSUs that will become eligible to vest under the award is based on a sliding scale reflecting the achievement of the applicable performance target relating to the Company’s TSR over the performance period (measured as a compounded annual growth rate (“CAGR”)) relative to the TSR of the S&P 500 constituents as of the last day of the performance period, as set forth in the table below.
Performance Level | Company’s TSR CAGR Percentile
| Payout (as % of Target Number of PSUs Granted) | ||
Maximum | 75th Percentile | 200% | ||
Target | 50th Percentile | 100% | ||
Threshold | 25th Percentile | 50% | ||
Below Threshold | Below 25th Percentile | 0% |
The PSUs are subject to the continued employment of the NEO during the vesting period, unless the NEO meets the retirement vesting eligibility requirements under the terms of the program (as Messrs. Haley,Mr. Hess and Wickes and Ms. Gebauer do). In the event of the NEO’s termination of service on or after the first year of the performance period (December 31, 2020)2021) and prior to the vesting date due to a “qualifying retirement”,retirement,” the earned PSUs shall vest on the vesting date, subject to the NEO’s compliance with the restrictive covenants and other obligations contemplated in the award agreement. “Qualifying retirement” generally means a voluntary termination of service by the NEO after attaining the age of 55 and completing 15 years of service with the Company, or any affiliate or predecessor company thereof, provided that the Compensation Committee has not determined that a basis exists for the NEO’s termination of service for “cause” at the time of such termination. Separately, in the event of an NEO’s termination of service without “cause” or a resignation for “good reason” (as these terms are defined in the award agreements) within 24 months following a change ofin control of the Company, (which would include the business combination with Aon), any earned PSUs will fully vest. Vested PSUs, and the dividend equivalents that accrue with respect to the PSUs, are payable in Company shares within a short period following the vesting date or accelerated vesting event, if applicable.
CEO2019 — 2021 LTIP Payout
The Company’s performance against the targets established for the 2019 LTI AwardProgram resulted in a final payout of 88.0% of target for the awards granted to NEOs under the program. For additional detail on 2019 LTIP targets, determination of payout and resulting earned PSUs for the NEOs, see section entitled “Compensation Tables — Outstanding Equity Awards at Fiscal Year-End.”
PursuantAdditional Awards for NEOs in 2021
Per terms of Mr. Krasner’s offer letter dated August 26, 2021, he received: (i) a cash sign-on bonus of $361,667 (equivalent to $50,000 per month, including prorated amounts for partial months up to the third amendmentstart date) to Mr. Haley’s employment agreement dated June 12, 2020,address bonus forfeiture on account of his prior employer for the months during 2021 that he was
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Executive Compensation: Compensation Discussion and Analysis (continued)
not employed by the Company, subject to a 12-month clawback and (ii) a make whole sign-on equity award of $3 million in RSUs granted on September 7, 2021 with ratable vesting over three years. On September 20, 2021, the Compensation Committee approved a special bonus of $300,000 for Mr. Furman in recognition of his exceptional contributions during 2021 in connection with the previously pending Aon transaction and his support of the Company on a stand-alone basis. In connection with Mr. Burwell’s resignation from the Company effective September 30, 2021, he received a completion bonus of $1 million to reward his extraordinary achievements during his tenure and a challenging 2021 and his support of a successful transition of his position.
Terminated 2021 Cash Retention Awards for NEOs
On February 2, 2021, the Compensation Committee approved retention agreements for certain executives. Under the agreements, Messrs. Hess, Furman and Burwell would have been eligible to earn up to $487,500, $375,000, and $750,000, respectively, based on the number of whole and partial months of employment with the Company from January 1, 2021 through the date of the closing of then-pending business combination with Aon. The awards were granted in lieu of a 2021 LTI award and were due to expire if the combination closed after July 20, 2021, which is the date the Compensation Committee expected to award the 2021 LTI grants. On February 21, 2021, the Compensation Committee approved an additional cash retention award for Mr. Furman in the amount of $300,000 as a result of the additional efforts required in connection with a target valuethe anticipated closing of $9.6 million, effective asthe business combination. Since the business combination with Aon did not close, the retention agreements were terminated and none of January 1,the February awards were paid.
Payments in Connection with Mr. Haley’s Retirement
Acceleration of Payment of Mr. Haley’s 2021 STI Award and 2019 LTI Award: On December 6, 2021, the Committee approved, with the full Board ratifying:
● | A 2021 STI award for Mr. Haley that was paid to him on his departure date of December 31, 2021. The 2021 STI award payment was $3,298,590, which represented 95% of his estimated 2021 STI award, including forecasted 2021 enterprise financial results and individual achievement. At the time, it was agreed that (i) if actual results exceeded estimated results for the applicable period, Mr. Haley would subsequently be paid any remainder due under his STI Award and (ii) if actual results for the full year were lower than forecasted, Mr. Haley would repay any surplus. The actual results determined for the 2021 performance year exceeded the estimated results and Mr. Haley was subsequently paid the remaining amount of $202,410 due under his 2021 STI Award in March 2022. |
● | Amendments to Mr. Haley’s 2019 LTI award agreement (the “Amended LTI Agreement”) to provide for the settlement of his award to coincide with his departure date. The Amended LTI Agreement provided for the same three-year performance period as the original award agreement, with the performance period ending on December 31, 2021, but with accelerated payment in 2021. An initial number of shares (46,688) was distributed to Mr. Haley on December 30, 2021 based on a deemed partial performance period ending on December 28, 2021. A remaining number of 2019 LTI shares (2,570) was distributed to Mr. Haley on December 31, 2021 once final performance results were known following the market close. No additional shares under the award were issued after this time period. |
Treatment of Mr. Haley’s 2020 and 2021 LTI Awards: Mr. Haley met the retirement vesting eligibility requirements under the terms of the 2020 LTI Program. As such, his termination of service on December 31, 2021 was considered a “qualifying retirement” (as defined in the section entitled “— 2021 LTI Program” above). Accordingly, the earned PSUs under the 2020 LTI award (as determined and approved by the Compensation Committee following the end of the performance period on December 31, 2022) will vest on
52 | WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY |
Executive Compensation: Compensation Discussion and Analysis (continued)
the vesting date, subject to Mr. Haley’s compliance with the restrictive covenants and other obligations contemplated in the award agreement. Earned performance shares under the 2020 LTI award that become vested on the vesting date will be delivered on the vesting date or within 30 days thereafter. Mr. Haley’s 2021 LTI award was granted based on the same performance metrics and structure (i.e., 100% PSUs with a performance metric of three-year TSR measured against the S&P 500) and the same terms and conditions as the 2020 LTI award described above (including the involuntary termination and retirement vesting acceleration provisions) other than as noted below. The 2021 LTI award, which was granted in the form of PSUs, has a performance period commencing January 1, 2021 and ending December 31, 2023, or if earlier, the effective date of the business combination. Mr. Haley’s award is eligible to vest on a pro-rata monthly basis as to 1/12th of the number of earned PSUstarget grant date value for each full and partial calendar month he remainsremained employed in calendar year 2021. Earned PSUs under the 2021 LTI award will be determined and approved by the Compensation Committee following the end of the performance period on December 31, 2023. The earned performance shares under the 2021 LTI award that become vested will be delivered within 30 days of the last day of the performance period, subject to Mr. Haley’s compliance with the restrictive covenants and other obligations contemplated in the award agreement.
Executive Officer 2022 Incentive Design Update
In light of the new Grow, Simplify, Transform strategy unveiled at Investor Day in September 2021 Cash Retention Awards for NEOs (other thanand the CEO)
Onnewly announced Global Leadership Team, management and the Compensation Committee undertook a thorough review of the executive officer incentives to ensure 2022 and longer-term priorities are appropriately reflected. At its meeting on February 2, 2021,22, 2022, the Compensation Committee approved retention agreements for certain executives, including Messrs. Burwell, Wickesthe executive officer incentive plan designs summarized below. The objectives of the program changes are to: (i) align rewards with progress towards the Company’s longer-term goals, as outlined on Investor Day, and Hess who will not be continuing on(ii) create a unifying, team mindset as the Company aims to advance its new strategy.
Executive Officer 2022 STI Design
The Executive Officer 2022 STI program is based upon specific enterprise financial results and individual performance as outlined in the combined company, in order to further incentivize their continued employment to assist with the Company’s continuing business through the anticipated closing of the business combination of the Company and Aon. The retention agreements provide for the payment of cash awards to the executives upon his successful completion of his duties through the closing of the business combination, subject to the condition that such closing occurs no later than July 20, 2021, when equity awards under the 2020 LTI Program would be expected to be granted to the NEOs (other than Mr. Haley), consistent with prior year grants. Under the retention agreements, Messrs. Burwell, Wickes and Hess are each eligible to earn a cash amount of up to $750,000, $487,500, and $487,500, respectively, based on the number of whole and partial months the executive istable below:
STI Component | Metrics | |
Enterprise Financial Performance (66.7% of Total STI Award) | ■ 50% — Adjusted Net Revenue ■ 50% — Adjusted Operating Income The attainment levels for the enterprise financial performance component will continue to be determined based on the same metrics and the resulting performance percent will be the same percentage of target that the broad-based bonus pool for employees is funded. | |
Individual Performance (33.3% of Total STI Award) | ■ 50% — Qualitative assessment of Segment / Geography / Function financial performance (as applicable to each executive officer) ■ 50% — Individual objectives and contributions to shared key enterprise operational initiatives, including inclusion and diversity, colleague engagement, innovation and transformation |
The Committee and management will retain discretion on the overall STI plan payout for executive officers based on their assessment of Company performance and the broad-based employee STI enterprise funding.
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Executive Compensation: Compensation Discussion and Analysis (continued)
employedExecutive Officer 2022 — 2024 LTIP Design
The 2022 LTI awards will be comprised of: (i) 75% PSUs which will cliff vest at the end of the three-year period and (ii) 25% RSUs which will vest in equal installments over three years. Management and the Compensation Committee believe that introducing time-based RSUs into the LTI Program for 2022 will support retention as the Company executes the Grow, Simplify, Transform strategy and further align the Company’s LTI Program with common market practice.
The PSUs will vest based on performance relative to the achievement of targets at the end of fiscal year 2024 for the following metrics (as they are defined under the applicable plan or award agreement):
● | 50% Adjusted Operating Margin |
● | 30% Adjusted Net Revenue |
● | 20% Adjusted EPS |
The financial metrics were selected to align share-based rewards with the Company from January 1, 2021 throughCompany’s fiscal year 2024 financial targets, as outlined on Investor Day. Management and the dateCommittee believe that delivering improved margins, revenue growth and earnings per share are essential to a successful execution of the closing ofGrow, Simplify, Transform strategy that will benefit all stakeholders. Emphasis on Adjusted Operating Margin, as demonstrated by the business combination. The payment of a cash award under the retention agreement is in lieu of, and in satisfaction of, any right to be awarded a 2021 share-based award the executive may have under his employment agreement or terms governing his compensation.
Ifmetric weightings, will allow the Company terminatesto make the executive’s employment without “cause” priornecessary investments in order to achieve the closing ofstrategy.
The Compensation Committee selected the business combination, the executive will be entitledPSU metrics to receive the cash award that was eligible to be earned under the retention agreement, subject to potential reduction depending on the number of whole and partial months the executive is employed through the termination date. If the executive resigns for any reason, or his employment is terminated for “cause,” the executive will not be eligible to receive anyalign a significant portion of the cash award. “Cause” is generally definedexecutive officer’s compensation with the Investor Day goals, which reflect the Company’s growth strategy and commitment to driving shareholder value. The PSU award payouts are based on a sliding scale with a 100% (target) payout if the year-end 2024 targets set forth in the retention agreements as includingCompany’s Investor Day presentation are achieved (i.e., 2024 Adjusted Operating Margin (24%), 2024 Adjusted Net Revenue ($10 billion) and 2024 Adjusted EPS ($18)).
The payout on each metric will be below 100% if results fall below target and above 100% if results are above target. The sliding scales contain thresholds, such that there is a potential of $0 payout on each metric if threshold performance is not achieved and a payout of 200% if the executive’s gross or chronic neglect or negligence inmaximum performance goal is achieved. The performance ranges were established so that target is aligned with our three-year strategic priorities and the corresponding maximum performance of his employment duties, the executive’s willful misconduct in connection with his employment which is injuriousgoals represent significant outperformance relative to the Investor Day goals. The performance ranges on each metric are independent and it is possible to earn a payout on one metric and not the others (assuming threshold performance has been met on that metric). The Company or its affiliates,believes any further detail is competitively sensitive.
Both PSUs and RSUs will accrue dividends that will be paid only on vested shares.
The Compensation Committee approved the executive’s convictionfollowing 2022 LTI targets for the NEOs: (i) 725% of any criminal act, breachbase salary for Mr. Hess, (ii) 200% of any restrictive covenantsbase salary for Mr. Krasner, (iii) 175% of base salary for Ms. Gebauer and other obligations applicable to the executive, or the executive’s material violation(iv) 150% of any written Company policy.base salary for Mr. Furman.
Retirement and Savings Plans
In 2020,2021, all of the NEOs participated in qualified and supplemental non-qualified defined benefit plans sponsored by the Company in the United States. The Company’s sponsorship of such plans is consistent with its belief that defined benefit plans continue to represent a crucial and viable means to encourage sustained service with the Company and to provide for the future retirement security of our associates. When the Compensation Committee assesses the competitiveness of executive compensation for the Company’s executives, it considers the impact of changes in pension value to positioning of total compensation.
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Executive Compensation: Compensation Discussion and Analysis (continued)
Effective July 1, 2017, changes became effective for the Willis Towers Watson Pension Plan for U.S. Employees (“Willis Towers Watson Pension Plan”) (previously named the Towers Watson Pension Plan) and Towers Watson Supplemental Executive Retirement Plan (“Towers Watson SERP”). The Towers Watson SERP was frozen effective July 1, 2017. Eligible employees, including those who were earning benefits under the Willis Towers Watson Pension Plan and Towers Watson SERP as of December 31, 2016, began earning benefits under the Willis Towers Watson Non-Qualified Stable Value Excess Plan for U.S. Employees (“WTW Stable Value Excess Plan”) as of July 1, 2017. This excess plan is a share plan rather than a pension plan. For information regarding 162(m)-related amendments to the WTW Stable Value Excess Plan, see “— Plan Amendments Related to Section 162(m)” below.
Legacy Towers Watson employees earning a benefit in the Willis Towers Watson Pension Plan as of December 31, 2016 (i.e., Messrs. Haley, Hess and WickesHaley and Ms. Gebauer) began earning benefits under a stable value formula with a lump sum benefit payable at 65 based upon a formula ranging from 11.5% to 15% (depending on credited service) of each year’s covered pay up to the Social Security wage base and from 16.5% to 20% (depending on credited service) of each year’s covered pay in excess of the wage base. Other U.S. employees not earning a benefit in the Willis Towers Watson Pension Plan as of December 31, 2016 (i.e., Mr.Messrs. Furman and Burwell) also became eligible to participate in the plan under a separate stable value formula within the Willis Towers Watson Pension Plan. Note that Mr. Burwell became eligible to participate in the plan in September 2018, after a mandatory one-year waiting period. These employees will be eligible for a lump sum benefit payable at age 65 based on a stable value formula with benefits ranging from 9.5% to 12.5% (depending on credited service after January 1, 2017) of covered pay up to the Social Security wage base and ranging from 14.5% to 17.5% of covered pay in excess of the Social Security wage base. Employees not earning a benefit in the plan as of December 31, 2016 are required to make employee contributions of 2% of covered pay to the plan in order to be eligible to participate beginning July 1, 2017. Note that Mr. Krasner became eligible to participate in the plan in January 2022, since he had eligible past service count toward the mandatory one-year waiting period.
Prior to the changes above, the Company’s defined benefit plans provided benefits using a stable value formula for service rendered on or after January 1, 2012. Under this formula, the qualified and supplemental non-qualified plans provided each eligible participant with a lump sum benefit payable equal
Executive Compensation: Compensation Discussion and Analysis (continued)
to 15% of each covered year’s pay up to the Social Security wage base, and 20% of each covered year’s pay in excess of the wage base, with pay for these purposes consisting of salary, bonuses and, for non-executives, any overtime wages. The lump sum will be reduced for benefit commencement prior to age 62. Participants in the qualified pension plan may, in most instances, choose to receive the value of their lump sum benefit as an annuity at the time of retirement.
For U.S. employees, a 401(k) Plan is available for saving towards retirement pursuant to which matching contributions were made. For U.K. employees, a defined contribution plan, the Willis Group Personal Pension Plan (which replaced the Willis Stakeholder Pension Scheme as of February 1, 2015), is available for new employees.
For details of the NEOs’ retirement benefits, see “Compensation Tables — Pension Benefits at 20202021 Fiscal Year-End.”
Other Benefits for Named Executive Officers
Non-Qualified Deferred Savings Plan for U.S. Employees
Effective January 1, 2017, the Towers Watson Non-Qualified Deferred Savings Plan was changed to the Willis Towers Watson Non-Qualified Deferred Savings Plan for U.S. Employees (the “WTW Deferred Savings Plan”) and was amended to allow for participation by certain colleagues from legacy Willis Group. Messrs. Haley, Burwell, Hess and Wickes and Ms. Gebauer allAll NEOs except for Mr. Krasner participated in the WTW Deferred Savings Plan in 2020.2021. It is an unfunded deferred compensation plan for select management and other highly compensated associates. The purpose of the WTW Deferred Savings Plan is to provide a select group of associates who contribute significantly to the future success of the Company with a means to defer receipt of a portion of their
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Executive Compensation: Compensation Discussion and Analysis (continued)
compensation, and potentially to receive a discretionary matching contribution from the Company. All associate deferrals and all Company matches are credited in the form of Company share units and will be paid in Company shares under the 2012 Plan. As a result, the value of the notional account is aligned with the value of the Company’s shares. Payments will be made on the first business day of the month following the date that is six months after the participant’s separation from service. Note that Mr. Haley’s deferred compensation contributions under his Amended Agreement have different terms and distribution provisions, as outlined in the Amended Agreement.
Pursuant to his employment agreement, Mr. Haley received a $1 million deferred compensation contribution on January 1, 2020 and a fully vested $520,000 deferred compensation contribution on December 31, 2020, under the WTW Deferred Savings Plan. Interest at an annual rate of 4.5% will be credited to each of the contributions. The deferred compensation contributions were provided in recognition that, as part of his continued service as CEO, Mr. Haley will need to continue to delay the payment of significant retirement benefits which he has already earned and which he would otherwise be fully eligible to receive based on his age and service with the Company. These benefits do not accrue interest or receive other returns, resulting in a loss in value to Mr. Haley by deferring their payment. The additional deferred compensation arrangements are designed to compensate Mr. Haley for this loss in value on his pension benefits and are only paid to Mr. Haley in aggregate upon his continued service through the end of the new contract period.
For information regarding 162(m)-related amendments to the WTW Deferred Savings Plan, see “— Plan Amendments Related to Section 162(m)” below.
Employee Welfare Benefit Plans
Our NEOs are eligible to participate in the medical, life insurance and other welfare benefits available to all other colleagues. There are no special medical plans or other welfare plans for our NEOs.
Executive Compensation: Compensation Discussion and Analysis (continued)
Perquisites
The Compensation Committee does not believe that providing generous executive perquisites is necessary to attract and retain executive talent or consistent with its pay-for-performance philosophy. In 2020,2021, we did not provide perquisites to the NEOs, other than as described in the “Summary Compensation Table” or in modest amounts, less than $10,000 and not required to be itemized under applicable SEC rules.
Compensation Recoupment Policy
Effective November 15, 2017, the Board expanded the existing compensation recoupment policy beyond certain financial restatement situations to cover certain types of detrimental conduct that are likely to cause or have caused material financial, operational or reputational harm to the Company. Under the compensation recoupment policy, the Board, or if delegated by the Board, any of its committees or sub-committees, may to the extent permitted by applicable law, recoup any incentive compensation received by a Section 16 officer, as designated by the Company, in the event of a financial restatement or due to detrimental conduct, as described below.
In the case of a financial restatement, the Board may recover up to the amount by which the incentive compensation received exceeds the amount that would have been received if the error had not been made within the three years preceding the date on which the Board determines a financial restatement is required if, in the Board’s judgment and determination, the person engaged in fraud, negligence or other misconduct that contributed to the need for the financial restatement.
In the case of detrimental conduct that, in the sole discretion of the Board, is likely to cause or has caused material financial, operational, or reputational harm to the Company, the Board may recover incentive compensation received by the person during and after the period in which such detrimental conduct occurred. Detrimental conduct consists of:
i. | the commission of an act of fraud, misappropriation or embezzlement in the course of employment; |
ii. | the commission of a criminal act, whether or not in the workplace, that in the Board’s sole discretion, constitutes a felony or crime of comparable magnitude that could subject the Company to reputational harm; |
iii. | the material violation of a non-compete, non-solicitation, or confidentiality agreement; |
iv. | the willful and material breach of a covered person’s obligations under the Company’s Code of Conduct relating to compliance with law or regulations that would give rise to dismissal under the Code of Conduct or termination for cause; or |
v. | any act or omission involving willful misconduct that resulted in such covered person’s termination for cause. |
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Executive Compensation: Compensation Discussion and Analysis (continued)
The Company will comply with the provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act once the SEC’s rules are finalized. The current version of the recoupment policy is posted on the Company’s website under “Investor Relations — Corporate Governance.”
Executive Officer Share Ownership Guidelines
The executive share ownership guidelines are as follows:
Position | Multiple | |
CEO | 6.0x Base Salary | |
Other Executive Officers | 3.0x Base Salary |
Executive Compensation: Compensation Discussion and Analysis (continued)
For purposes of meeting the executive officer share ownership guidelines, the related value, based on the average daily share price over the last 30 business days of the Company’s fiscal year of the following shares will be counted: shares owned outright or in a trust for benefit (including shares acquired from equity awards or from share market purchases); shares or units held in broad-based share purchase plans (i.e., the Employee Stock Purchase Plan, U.K. Sharesave); shares held in a 401(k) self-directed brokerage account; shares deemed held in the WTW Deferred Savings Plan and the WTW Stable Value Excess Plan; unvested and vested restricted shares or RSUs that are subject to time-based vesting; and unvested earned PSUs. Unvested or vested/unexercised share options and unvested/unearned PSUs are not counted as shares owned for purposes of the guidelines. Executives are required to retain at least 50% of the net shares received under equity award programs granted following adoption of the policy until the ownership guidelines are met.
Under the guidelines, executives are encouraged to comply with their applicable guideline as soon as practical given their individual circumstances and within five years from the later of (i) February 7, 2017 (the date of adoption of the policy) or (ii) the date of the executive’s hiring or promotion. The failure to comply with or make reasonable progress towards meeting the share ownership guidelines in a timely fashion would result in the executive being required to retain all of the net shares received upon (i) the vesting of RSUs; (ii) the vesting of PSUs, and may impact future grants;PSUs; and (iii) the exercise of options to purchase Willis Towers Watson shares.shares, and may impact future grants. Once an executive accumulates sufficient shares to meet his or her individual requirement, the executive is not required to retain shares above the threshold. If, as a result of a share price decline subsequent to an executive meeting his or her ownership requirement, the executive no longer satisfies the ownership requirement as of the Company’s fiscal year-end, the executive is not required to buy additional shares to meet the ownership requirement. However, the executive is required to retain the number of shares that originally were acquired to reach the share ownership threshold until such time as he or she is once again above the threshold. The Compensation Committee has interpreted “reasonable progress” for purposes of measuring compliance as looking at an executive’s ownership levels (calculated under the guidelines) compared to ownership levels that would be expected at the relevant stage of the five-year transition period (e.g., 1/5 per year after the first year).
The NEOs have either satisfied the minimum required share ownership requirements or have made reasonable progress to achieve the ownership guidelines within the prescribed period.
Anti-Hedging and Anti-Pledging Policies
The Company prohibits directors and executive officers from pledging any Company shares, including by entering into margin accounts, and prohibits directors and all employees from engaging in hedging transactions with respect to ownership in the Company’s securities (including prepaid variable forward contracts, equity swaps, collars and exchange funds).
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Executive Compensation: Compensation Discussion and Analysis (continued)
Share Award Policy
The Board has a policy governing the granting of options and other share-based awards under the Company’s equity plans.
It is the Company’s policy not to backdate option grants or other share-based awards to take advantage of a lower share price or to schedule grants of options or other share-based awards before or after specific events to take advantage of anticipated movements in the price of our shares.
It is also the Company’s policy that, if it grants options (which have not been awarded since before January 2016), it would grant options with an exercise price no less than the closing sales price as quoted on the NASDAQ on the date of grant, except in the case of any sharesave sub-plans adopted by the Company for non-U.S. employees, for which the exercise price of the option was set at a 5% or 10% discount off the closing sales price on the date before employees are invited to participate. In addition, none of the Company’s share-based plans permit the re-pricing of options without obtaining shareholder approval.
Executive Compensation: Compensation Discussion and Analysis (continued)
Under this policy, annual share-based awards for executive officers are authorized by the Compensation Committee and the grant date is on the date of that meeting or a date specified by the Compensation Committee no later than 90 days following that meeting. Except as directed by the Compensation Committee, share-based awards granted in connection with a new hire, a promotion or the assignment of additional responsibilities to an existing employee or for retention purposes will be considered granted on March 3rd,3rd, May 13th,13th, August 13th,13th, November 13th13th or December 1st1st (or if the applicable grant date was not a trading day, the next trading day) on the date most closely following the date on which such recipient’s employment or promotion or assignment of new responsibilities commenced and such award was approved.
Tax and Accounting Implications
Prior to the amendments to Section 162(m) of the Internal Revenue Code (the “Code”) made under the Tax Cuts and Jobs Act of 2017 (“TCJA”), Code Section 162(m) generally limitedlimits the deductibility of the compensation payable by public companies to certain executive officers covered by Code Section 162(m), including the NEOs (other than the CFO), to $1 million except to the extent thein any taxable year. As a result, short-term and long-term compensation, met the requirements of “qualifiedincluding performance-based compensation.” For taxable years prior to the end of 2017, the Company granted STI awards and certain of its stock-based awards in a manner that would allow the Company to maximize the tax deductibility to the Company of compensation, under available exceptions to the application of Code Section 162(m) to the extent the Compensation Committee determined it appropriate, when weighing, among other considerations, the Company’s need to provide competitive compensation to achieve the Company’s business goals. However, the exemption from Section 162(m)’s deduction limit for qualified performance-based compensation has been repealed, effective for taxable years beginning after December 31, 2017, such that compensation paid to our covered executive officers in excess of $1 million payable to our executive officers who are considered “covered employees” under Code Section 162(m), which would include our NEOs, will not be deductible unless it qualifies for transition relief applicable to certain arrangements in place as of November 2, 2017.
tax purposes. While our general policy has been to preserve the tax deductibilitynondeductibility of compensation paid to executive officers to the extent thefor tax laws have accommodated an opportunity to do so, the repealpurposes is one of the qualified performance-based compensation exception from the Section 162(m) deductibility limitations will restrict our ability to pay compensation that is fully deductible. Moreover,several considerations the Compensation Committee reserves the right to useweighs in determining its judgment to authorizeexecutive compensation payments that may not be deductible whenprogram, the Compensation Committee believes that such payments are appropriateretains discretion to structure its executive compensation to be competitive and effective in order to promote the best interests ofCompany’s business goals even if the Company, takingcompensation payable to our NEOs is not fully deductible.
The Compensation Committee also takes into consideration changing business conditions, the need to provide competitive compensation and retain the servicespotential implications of its executive officers, and the performance of its executive officers.
Plan Amendments Related to Section 162(m)
On December 7, 2020, the Compensation Committee approved amendments to the WTW Deferred Savings Plan and the WTW Stable Value Excess Plan (collectively, the “Plans”). The amendments are intended to take advantage of certain transitional relief provided under IRS guidance based on changes to Section 162(m)409A of the Code made as a result ofin designing the TCJA.
Both Plans are non-qualified deferred compensation plans and provide, in relevant part, for the automatic deferral of compensation payable to participants who are “covered employees” withinour NEOs.
The accounting expense of the meaning of Code Section 162(m) that is non-deductiblecompensation payable to our NEOs, including the decision to adopt new share-based programs or make any changes to the Company under Code Section 162(m) until such time thatshare-based component of our NEOs’ compensation arrangements, is also factored into the compensation would become deductible under Code Section 162(m). Because “covered employee” status effectively ceased upon a covered employee’s termination of employment under the Code Section 162(m) rules that applied priorCompensation Committee’s decision to the changes made by the TCJA, the automatic deferral feature in the Plans effectively meant that the deferred compensation that was automatically deferred would become payable in the year a covered employee terminated employment. However, after the TCJA, a covered employee in any year remains a covered employee for all subsequent taxable years (including beyond employment
Executive Compensation: Compensation Discussion and Analysis (continued)
termination), resulting in the potential delay of payments under the automatic deferral provision until a significant period beyond the covered employee’s employment termination.
The transition relief provided under the TCJA permitted amendments to non-qualified deferred compensation plans that are subject to Code Section 409A to eliminate a Code Section 162(m) automatic deferral provision, such as the one contained in the Plans, and for the distribution of the automatically deferred compensation to such time when it would have become payable under the pre-TCJA Section 162(m) provisions, without violating Code Section 409A, provided these amendments were made by December 31, 2020.
Upon reliance on this transition relief, the Plans were amended to eliminate the Code Section 162(m) automatic deferral provision contained in the Plans and to provide for the distribution generally to the date that is six months following the termination of the applicable NEO’s employment. As of December 31, 2020, the values of post-TCJA automatic deferrals impacted by the foregoing amendments were $1,098,082, $139,991 and $163,078, which had been deferred by Mr. Haley, Ms. Gebauer and Mr. Wickes, respectively, pursuant to the Code Section 162(m) automatic deferral provisions contained in the Plans.approve our NEOs’ compensation.
Payments on Change ofin Control and Termination
The Compensation Committee believes that severance benefits are a necessary component of a competitive compensation program because they minimize distraction and ensure continuity during times of uncertainty or transition, including during a change ofin control. In certain cases, such benefits are
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Executive Compensation: Compensation Discussion and Analysis (continued)
consideration for an executive’s agreement not to compete. Set forth below is a summary of the NEOs’ termination arrangements as of December 31, 2020.2021. The NEOs do not receive any form of tax gross-ups, significant perquisites or automatic payments in connection with a change ofin control of the Company.
With the exception of Mr.Messrs. Furman and Haley, all NEOs are participants of the newCompany’s executive severance plans adopted on March 8, 2020 described further below. Effective as of February 22, 2022, the executive severance plans were amended to make certain changes noted below. For additional details on payments that may be due to the NEOs in certain termination scenarios, see “Compensation Tables — Potential Payments to Named Executive Officers Upon Termination and/or Change ofin Control.”
Mr. Haley (CEO)Messrs. Hess and Krasner and Ms. Gebauer
Mr. Haley’s employment agreement, as amended from time to time, provides that upon the earliest to occur of a termination of Mr. Haley’s employment by the Company without “cause,” Mr. Haley’s resignation for “good reason,”Messrs. Hess and a termination of employment due to his death or disability (as such terms may be defined in the employment contract), Mr. Haley is entitled to (i) a severance payment equal to the sum of two times his annual base salaryKrasner and two times his target STI award, payable in a lump sum, (ii) the full amount of his STI award for the year of termination, based on actual performance, (iii) continued medical coverage at the active employment rate for up to 18 months, (iv) treatment of his equity incentive awards in accordance with the terms of the applicable award agreements, (v) the waiver of service requirements under any retention policy applicable to Mr. Haley’s prior cash incentive compensation awards, and (vi) vesting of the deferred compensation contributions granted under the Amended Agreement prior to his termination. Pursuant to his employment agreement, if Mr. Haley’s employment is terminated by the Company without “cause” or by Mr. Haley for “good reason” in 2021, then Mr. Haley’s severance payment will not include any entitlement to the balance of the 2021 annual bonus for the period following the date of termination.
Other Named Executive Officers
Each of the NEOs other than Mr. Haley participatesMs. Gebauer participate in the Willis Towers Watson Public Limited Company Severance and Change in Control Pay Plan for U.S. Executives as amended on June 5, 2020 and February 22, 2022 (the “U.S. Executive Severance Plan”) and the Willis Towers Watson Severance and Change in Control Pay Plan for Non-U.S. Executives as amended on February 22, 2022 (the
Executive Compensation: Compensation Discussion and Analysis (continued)
“Non-U.S. Executive Severance Plan,” and together, the “Executive Severance Plans”). The Executive Severance Plans replaced the severance benefits payable under the participant’s employment agreements, offer letters or the Company’s general severance pay plan, as applicable, and, therefore, participation in the Executive Severance Plans was contingent on the participant’s waiver of severance benefits under the applicable employment agreement, offer letter or plan. The Executive Severance Plans provide for the payment of severance benefits (i) if a participant’s employment is involuntarily terminated without “cause” (and other than due to the participant’s death or permanent disability)“permanent disability”) (an “involuntary termination”“Involuntary Termination” under the plans) and also(ii) for an Involuntary Termination or if a participant resigns for “good reason” (a “Qualifying Termination” under the plans) in connection with a “change in control” (an involuntary termination or resignation for good reason in connection with a change in control, a “qualifying termination” under the plans).control.” Under the U.S. Executive Severance Plan:
● | If a participant experiences an |
● | If a participant experiences a |
Under the Executive Severance Plans, if any payments and benefits constitute “parachute payments” within the meaning of Section 280G of the Code and would otherwise be subject to the excise tax imposed by Section 4999 of the Code, then the payments and benefits will be either delivered in full or delivered as to such lesser extent which would result in no portion of such benefits being subject to such excise tax, whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the excise tax imposed by Section 4999 of the Code, results in the receipt by the participant on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be taxable under Section 4999 of the Code. Additional information on the Executive Severance Plans, as well as the plan documents, can be found in our Current Reports on Form 8-K8-Ks filed with the SEC on March 11, 2020.2020 and on February 28, 2022.
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Executive Compensation: Compensation Discussion and Analysis (continued)
In addition to the severance benefits described above, in the event of Mr. Krasner’s resignation for “good reason” prior to the 6-month period preceding a “change in control” or after the 24-month period following a “change in control” (as such terms are defined in the U.S Executive Severance Plan), Mr. Krasner would be entitled to: (i) monthly cash installments during a 12-month period equal to the sum of 12 months of base salary and one times target STI and (ii) the cost of COBRA premiums for the continuation of group healthcare coverage for up to 18 months following the termination date. Additionally, in the event of a Qualifying Termination and whether or not a “change in control” occurs (as such terms are defined in the U.S. Executive Severance Plan), prior to full vesting of his sign-on RSU award (granted in September 2021), the Company will (i) accelerate the vesting of any outstanding unvested RSUs under the award at the time of his termination, subject to the approval of the Compensation Committee; or, in the absence of such approval, (ii) pay him the cash value of the outstanding unvested RSUs under the award.
Mr. Furman (General Counsel)
Mr. Furman’s employment agreement, as amended from time to time, provides that upon a termination of Mr. Furman’s employment by the Company without “good cause” (other than by reason of death or “disability”) or by Mr. Furman for “good reason” (as such terms are defined in the employment agreement), he is entitled to (i) continued payment of his annual base salary during the 12-month period following the termination date, (ii) payment of his target STI of 125% of his annual base salary in equal installments during the 12-month period following the termination date, (iii) payment of a prorated STI award for the fiscal year of his termination based on actual performance, (iv) continued medical coverage for Mr. Furman, his spouse and covered dependents as of the date of termination until the earlier of the end of the 12-month period following the termination date or the date he obtains new employment with medical coverage and (v) for purposes of determining achievement of service-based vesting requirements applicable to any outstanding unvested equity awards, he will be treated as having an additional 12 months of service as of the date of termination. However, if such termination occurs within 24 months following a “change in control” (as defined under the 2012 Plan), Mr. Furman is entitled to (i) two times his annual base salary (paid in a cash lump sum), (ii) two times his target STI (paid in a cash lump sum), (iii) payment of a prorated STI award for the year of termination based on target (not actual) performance, (iv) continued medical coverage for Mr. Furman, his spouse and covered dependents as of the date of termination until the earlier of the end of the 12-month period following the termination date or the date he obtains new employment with medical coverage and (v) all service-based vesting requirements applicable to any outstanding unvested equity awards will be waived as of the date of termination. Any and all amounts payable upon Mr. Furman’s termination will be provided subject to Mr. Furman delivering and not revoking within 60 days of his termination a general release of claims in favor of the Company.
Mr. Haley (CEO through December 31, 2021)
Mr. Haley’s employment agreement, as amended, terminated on December 31, 2021, and Mr. Haley retired from the Company. Prior to its termination, the agreement provided for certain payments in connection with the termination of Mr. Haley’s employment by the Company without “cause,” his resignation for “good reason” and a termination of employment due to his death or “disability” (as such terms may be defined in the employment contract), including (i) a severance payment equal to the sum of two times his annual base salary and two times his target STI award, payable in a lump sum, (ii) the full amount of his STI award for the year of termination, based on actual performance, (iii) continued medical coverage at the active employment rate for up to 18 months, (iv) treatment of his equity incentive awards in accordance with the terms of the applicable award agreements and (v) the waiver of service requirements under any retention policy applicable to Mr. Haley’s prior cash incentive compensation awards. Pursuant to his employment agreement, if Mr. Haley’s employment had been terminated by the Company without “cause” or by Mr. Haley for “good reason” in 2021, then Mr. Haley’s severance payment would not have included any entitlement to the balance of the 2021 annual bonus for the period following the date of termination. None of the foregoing events occurred prior to the termination of the agreement.
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Executive Compensation: Compensation Discussion and Analysis (continued)
Compensation Decision Process and Methodology
Role of the Compensation Committee
The Compensation Committee is responsible for evaluating the compensation levels for each of the NEOs and for administering the Company’s executive compensation program. The Compensation Committee reviews and approves all components of executive compensation for the NEOs, including the CEO whose compensation is ratified by the other independent directors. In addition, each year, the Compensation Committee reviews and approves the corporate goals and key objectives related to the NEOs’ compensation, evaluates their performance in light of those goals and objectives and determines and approves their compensation, including for the CEO, whose compensation must be approved by the Compensation Committee and ratified by the other independent directors. Each year the Committee also reviews, among other things, compliance with share ownership guidelines, proxy season trends, shareholder feedback and the compensation risk assessment. The Committee also reviews talent, culture, inclusion and diversity initiatives; as well as its Charter, responsibilities, and annual calendar. With respect to assessing culture, the Company implements a multi-dimensional strategy to gather feedback from
Executive Compensation: Compensation Discussion and Analysis (continued)
colleagues, which includes among other things, an all-colleagueannual formal engagement surveyvia company-wide surveys as well as frequent pulse surveys and other surveys that may be distributed from time to time.listening mechanisms.
Compensation Risk Analysis
In reviewing the Company’s pay programs, the Compensation Committee considers whether the programs encourage unnecessary or excessive risk taking that might have an adverse impact on the Company. At the request of the Compensation Committee, the Company’s internal compensation consultants (the “WTW consultants”) completed a 20202021 risk assessment of the Company’s compensation programs with the review and concurrence of Semler Brossy Consulting Group LLC (“SBCG”), the Compensation Committee’s independent compensation consultant. The 20202021 risk assessment included a review of the design and features of the Company’s incentive compensation programs in place, as well as an evaluation of program structure and philosophy, design characteristics, performance management and governance practices relative to compensation risk factors. The 20202021 compensation risk assessment led SBCG and the Compensation Committee to agree that the Company’s compensation programs do not create risks that are reasonably likely to have a material adverse effect on the Company.
Role of External Compensation Committee Consultant
The Compensation Committee has the independent authority to hire external consultants as well as the sole authority to retain and terminate the services of its consultant. In 2020,2021, the Compensation Committee engaged SBCG as its independent consultant.
During the course of 2020,2021, SBCG worked directly under the guidance of the Company’s Compensation Committee, in cooperation with management, to assist the Committee with executing its executive compensation-related responsibilities. In such role, the Compensation Committee’s consultant served as an objective third-party advisor in assessing the reasonableness of compensation levels and the appropriateness of the design of the evolving compensation program structure in supporting the current and future business strategy and human resource objectives. SBCG attended all of the formal meetings of the Company’s Compensation Committee during 2020.2021.
During 2020,2021, SBCG supported the Company’s Compensation Committee by assisting with the design and administration of the Company’s executive compensation pay practices, including:
● | reviewing and providing input on the peer group used to benchmark executive pay; |
● | assessing the market pay data used to inform |
WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY | 61 |
Executive Compensation: Compensation Discussion and Analysis (continued)
● | providing input on the pay decisions for the Company’s executive officers, including pay mix and levels; |
● | reviewing and providing input on the Company’s annual and long-term incentive plan designs; |
● | reviewing the Company’s Compensation Risk Assessment; |
● | reviewing |
|
|
● | keeping the Compensation Committee informed of changes in the regulatory or governance environment for executive compensation |
● | reviewing the Company compensation plans relative to proxy advisory standards. |
The Compensation Committee was also provided compensation market data and inputs from WTW consultants. The Compensation Committee along with SBCG used the data and analysis provided by the WTW consultants to ensure that the compensation practices were consistent with the compensation
Executive Compensation: Compensation Discussion and Analysis (continued)
philosophy and objectives for both the amount and composition of executive compensation, including that of Mr. Haley. Based on the data and analysis provided by the WTW consultants as reviewed by SBCG as well as information from management and SBCG, the Compensation Committee applied business judgment in recommending compensation awards, taking into account the dynamic nature of the brokerage and consulting businesses internationally and the adaptability and response required by the senior leadership to manage significant changes that arose during the course of the year.
Other than serving as the consultant to the Willis Towers Watson Compensation Committee, SBCG provides no other services to the Company. The Willis Towers Watson Compensation Committee determined that, based on the factors specified in the exchange listing rules, SBCG’s services produced no conflicts of interest. The Willis Towers WatsonWTW consultants work for the Company and are therefore by definition not independent advisors, although they do provide professional advice, data and guidance to the Compensation Committee with the concurrence of SBCG.
Role of the CEO and Management
The CEO does not participate in the Compensation Committee’s determination of his own compensation. However, he makes recommendations to the Compensation Committee for each of the other NEOs. The CEO bases these recommendations on his holistic assessment of each executive’s individual performance, as well as overall Company financial goals for the fiscal year as described above. The Compensation Committee reviews and considers the CEO’s recommendations, makes adjustments as it determines appropriate, and approves compensation in its sole discretion.
Use of Peer Company Data
In making its determinations for fiscal year 2020,2021, the Compensation Committee considered publicly available information of a select group of peer companies as well as survey data from the Company’s compensation surveys to inform the pay levels and structures for the senior executive team. All compensation data used was reviewed and supported by SBCG as the Compensation Committee’s independent compensation consultant.
The peer group was selected by the Compensation Committee based on the recommendations of the WTW consultants and SBCG based on input from management on the comparability of the business operations of potential peer group companies, including reasonably comparable size (based on revenue and market capitalization) and industry. Information about the peer group companies was used to inform decisions regarding pay levels and mix and program design.
62 | WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY |
Executive Compensation: Compensation Discussion and Analysis (continued)
For conducting a competitive assessment of the compensation levels for the Company’s executives for fiscal year 2020,2021, the Compensation Committee approved the below peer group of 17 companies. There were no changes to the 20202021 peer group from the prior year.
● Marsh & McLennan Companies, Inc.
● Aon
● Robert Half International Inc.
● The Hartford Financial Services Group, Inc.
● Conduent Incorporated
● Cognizant Technologies Solutions Corp.
● Principal Financial Group Inc.
● Automatic Data Processing, Inc.
● Unum Group |
● Fidelity National Information Services, Inc.
● Fidelity National Financial, Inc.
● Nielsen Holdings plc
● S&P Global Inc.
● Arthur J. Gallagher & Co.
● Booz Allen Hamilton Holding Corporation
● Fiserv, Inc.
● First American Financial Corporation |
Executive Compensation: Compensation Discussion and Analysis (continued)
At the time the peer group was approved by the Compensation Committee in 2020,2021, Willis Towers Watson was at the 4741thst percentile in terms of total revenue and the 59th percentile in terms of market capitalization among this peer group.
Although the Compensation Committee references target pay for all of the companies listed in the peer group, particular attention was given to the pay practices of Aon and Marsh & McLennan Companies, Inc. as these two companies represent our most direct competitors.
WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY | 63 |
This report is submitted to the shareholders of Willis Towers Watson Public Limited Company by the Compensation Committee of the Company’s 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 NASDAQ listing standards.
The Compensation Committee has reviewed, and discussed with management, the Compensation Discussion and Analysis contained in this Proxy Statement, and based on this review and discussion, recommended to the Board that it be included in this Proxy Statement.
Submitted by the Compensation Committee of the Board of Directors of Willis Towers Watson Wendy E. Lane (Chairman)(Chair), Victor F. Ganzi, Jaymin B. PatelMichael Hammond (Committee member as of January 1, 2022), Linda Rabbitt and Linda D. RabbittMichelle Swanback (Committee member as of January 1, 2022).
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.
64 | WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY |
Summary Compensation Table
The following table sets forth the total compensation earned for services rendered in 20202021 by Carl Hess (Head of IRR and President through December 31, 2021; Current CEO as of January 1, 2022), Andrew Krasner (CFO as of September 7, 2021), Julie Gebauer (Head of HCB through December 31, 2021; Current Global Head of Health, Wealth and Career as of January 1, 2022), Matthew Furman (General Counsel), John Haley (CEO),(CEO through December 31, 2021) and Michael Burwell (CFO) and the Company’s three other most highly compensated executive officers,(CFO until September 7, 2021), collectively our NEOs, for the fiscal year ended December 31, 2020.2021.
A | B | C | D | E | F | G | H | |||||||
Name and Principal Position | Year | Salary ($) | Share Awards ($) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Non- Qualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | |||||||
John Haley | 2020 | 1,200,000 | 13,821,838 | 3,110,400 | 187,555 | 2,412,212 | 20,732,005 | |||||||
CEO | 2019 | 1,200,000 | 12,544,351 | 2,839,200 | 181,015 | 1,927,165 | 18,691,731 | |||||||
2018 | 1,200,000 | — | 2,983,680 | — | 808,148 | 4,991,828 | ||||||||
Michael Burwell CFO | 2020 | 750,000 | 2,347,182 | 1,215,000 | 32,664 | 165,735 | 4,510,581 | |||||||
2019 | 750,000 | 2,442,815 | 975,938 | 27,888 | 167,666 | 4,364,307 | ||||||||
2018 | 750,000 | 1,918,210 | 1,056,938 | 19,606 | 162,802 | 3,907,556 | ||||||||
Julie Gebauer | 2020 | 650,000 | 1,525,847 | 726,570 | 1,133,761 | 187,728 | 4,223,906 | |||||||
Head of Human Capital & Benefits | ||||||||||||||
Carl Hess Head of Investment, Risk & | 2020 | 650,000 | 1,525,847 | 758,160 | 809,732 | 197,839 | 3,941,578 | |||||||
2019 | 643,750 | 1,519,030 | 681,876 | 532,742 | 169,132 | 3,546,530 | ||||||||
Gene Wickes | 2020 | 650,000 | 1,525,847 | 673,920 | 174,259 | 273,234 | 3,297,260 | |||||||
Head of Benefits | 2019 | 650,000 | 1,624,852 | 755,248 | 183,306 | 267,879 | 3,481,285 | |||||||
2018 | 650,000 | 1,246,826 | 728,208 | — | 231,745 | 2,856,779 |
A | B | C | D | E | F | G | H | I | ||||||||||||||||||||||||
Name and Principal Position | Year | Salary ($) | Bonus ($) | Share Awards ($) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Non- Qualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | ||||||||||||||||||||||||
CURRENT EXECUTIVES | ||||||||||||||||||||||||||||||||
Carl Hess | 2021 | 766,667 | — | 1,167,419 | 2,443,875 | 209,050 | 241,474 | 4,828,485 | ||||||||||||||||||||||||
President through 12/31/2021; | 2020 | 650,000 | — | 1,525,847 | 758,160 | 809,732 | 197,839 | 3,941,578 | ||||||||||||||||||||||||
CEO as of 1/1/2022 | 2019 | 643,750 | — | 1,519,030 | 681,876 | 532,742 | 169,132 | 3,546,530 | ||||||||||||||||||||||||
Andrew Krasner CFO as of 9/7/2021 | 2021 | 333,625 | 361,667 | 2,999,991 | 493,397 | 8,178 | 2,698 | 4,199,556 | ||||||||||||||||||||||||
Julie Gebauer | 2021 | 650,000 | — | 1,167,419 | 837,574 | — | 216,167 | 2,871,160 | ||||||||||||||||||||||||
Head of HCB through 12/31/2021; Global Head of HWC as of 1/1/2022 | 2020 | 650,000 | — | 1,525,847 | 726,570 | 1,133,761 | 187,728 | 4,223,906 | ||||||||||||||||||||||||
Matthew Furman General Counsel | 2021 | 550,000 | 300,000 | 897,994 | 984,328 | 22,482 | 108,449 | 2,863,253 | ||||||||||||||||||||||||
FORMER EXECUTIVES | ||||||||||||||||||||||||||||||||
John Haley CEO through 12/31/2021 | 2021 | 1,770,721 | — | 13,300,715 | 3,501,000 | 34,743 | 1,730,113 | 20,337,292 | ||||||||||||||||||||||||
2020 | 1,200,000 | — | 13,821,838 | 3,110,400 | 187,555 | 2,412,212 | 20,732,005 | |||||||||||||||||||||||||
2019 | 1,200,000 | — | 12,544,351 | 2,839,200 | 181,015 | 1,927,165 | 18,691,731 | |||||||||||||||||||||||||
Michael Burwell (1) CFO until 9/7/2021 | 2021 | 658,457 | 1,000,000 | 1,796,252 | — | — | 177,502 | 3,632,211 | ||||||||||||||||||||||||
2020 | 750,000 | — | 2,347,182 | 1,215,000 | 32,664 | 165,735 | 4,510,581 | |||||||||||||||||||||||||
2019 | 750,000 | — | 2,442,815 | 975,938 | 27,888 | 167,666 | 4,364,307 |
(1) | Mr. Burwell’s 2021 LTI Award was forfeited upon his departure from the Company on September 30, 2021. For details on the treatment of his outstanding equity awards upon his departure, see the section entitled “— Potential Payments to Named Executive Officers Upon Termination and/or Change in Control.” |
Salary (Column C)
The amounts shown in column C reflect base salaries earned by each NEO during the listed year. In connection with Mr. Hess’s promotion to President of the Company, his base salary was increased from $650,000 to $1 million effective September 1, 2021. Mr. Krasner rejoined the Company as CFO in September 2021. Previously he served as Global Treasurer and Head of Mergers and Acquisitions for the Company until January 2021. Pursuant to his offer letter, Mr. Krasner’s annual base salary is $800,000. In addition, the amounts in column C include (i) a payout of cash in lieu of vacation days in connection with NEO departures from the Company during 2021 (a benefit provided generally by the Company to salaried employees upon termination of employment) in the amount of $35,003 for Mr. Krasner (who departed the Company earlier in 2021 and then rejoined as CFO effective September 7, 2021), $193,846 for Mr. Haley and $95,957 for Mr. Burwell and (ii) Mr. Haley’s legacy Watson Wyatt frozen vacation balance (accrued but not used as of December 31, 1992) which was paid out to him upon his departure at his then-current rate of hourly base salary in the amount of $376,875.
WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY | 65 |
Compensation Tables (continued)
Bonus (Column D)
The amount shown in column D for Mr. Krasner reflects a cash sign-on bonus that was paid to him in September 2021 and was equivalent to $50,000 per month (including prorated amounts for partial months up to the start date) to address bonus forfeiture for the months during 2021 that he was not employed by the Company, subject to a 12-month clawback. The amount shown in column D for Mr. Furman reflects a special bonus paid to him in October 2021 in recognition of his exceptional contributions during 2021 in connection with the previously pending Aon transaction and his support of the Company on a stand-alone basis. The amount shown in column D for Mr. Burwell reflects a completion bonus that was paid to him upon his departure from the Company on September 30, 2021 to reward his extraordinary achievements during his tenure and a challenging 2021 and his support of a successful transition of his position.
Share Awards (Column D)E)
The amounts shown in column DE reflect the aggregate grant date fair value computed in accordance with FASB ASC Topic 718. Assumptions used in the calculation of these amounts are included in “Note 18-Share-based19-Share-based Compensation” to our Fiscal Year 20202021 Consolidated Financial Statements included in our Annual Report on Form 10-K for Fiscal Year 20202021 filed with the SEC on February 23, 2021.24, 2022. For awards shown in column DE that are subject to market conditions, the amount included in the table is the full fair value of the award at the grant date consistent with the recognition criteria in FASB ASC Topic 718. For the 20202021 PSU awards (which are subject only to a market conditions)condition), the full fair value at the grant date takes into account all possible outcomes of the market condition. Therefore, the grant date fair value will not change if the maximum awards are paid out pursuant to FASB ASC Topic 718.718, the expense does not change based on the number of shares that are ultimately settled upon achievement of performance at the end of the performance period. Additional details regarding the 20202021 amounts shown in column DE for the NEOs are as follows:
Column D | Column E | |||||||||||||||||||||||||||||||||||||||||||||||||
Name | Award | Grant Date | PSU Award Aggregate Date Fair ($) | RSU Aggregate Date Fair ($) | Total Share Aggregate Date Fair ($) | Award | Grant Date | PSU Aggregate Date Fair ($) | RSU Aggregate Date Fair ($) | Total Share Aggregate Date Fair ($) | ||||||||||||||||||||||||||||||||||||||||
CURRENT EXECUTIVES | ||||||||||||||||||||||||||||||||||||||||||||||||||
Carl Hess |
| 2021 LTI Award |
| 20-Jul-2021 |
| 1,167,419 |
| — |
| 1,167,419 | ||||||||||||||||||||||||||||||||||||||||
Andrew Krasner |
| Sign-On RSU Award |
| 7-Sep-2021 |
| — |
| 2,999,991 |
| 2,999,991 | ||||||||||||||||||||||||||||||||||||||||
Julie Gebauer |
| 2021 LTI Award |
| 20-Jul-2021 |
| 1,167,419 |
| — |
| 1,167,419 | ||||||||||||||||||||||||||||||||||||||||
Matthew Furman |
| 2021 LTI Award |
| 20-Jul-2021 |
| 897,994 |
| — |
| 897,994 | ||||||||||||||||||||||||||||||||||||||||
FORMER EXECUTIVES | ||||||||||||||||||||||||||||||||||||||||||||||||||
John Haley | 2020 LTI Award | 25-Feb-2020 | 13,821,838 | — | 13,821,838 |
| 2021 LTI Award |
| 1-Jan-2021 |
| 13,300,715 |
| — |
| 13,300,715 | |||||||||||||||||||||||||||||||||||
Michael Burwell | 2020 LTI Award | 20-Jul-2020 | 2,347,182 | — | 2,347,182 | |||||||||||||||||||||||||||||||||||||||||||||
Julie Gebauer | 2020 LTI Award | 20-Jul-2020 | 1,525,847 | — | 1,525,847 | |||||||||||||||||||||||||||||||||||||||||||||
Carl Hess | 2020 LTI Award | 20-Jul-2020 | 1,525,847 | — | 1,525,847 | |||||||||||||||||||||||||||||||||||||||||||||
Gene Wickes | 2020 LTI Award | 20-Jul-2020 | 1,525,847 | — | 1,525,847 | |||||||||||||||||||||||||||||||||||||||||||||
Michael Burwell* |
| 2021 LTI Award |
| 20-Jul-2021 |
| 1,796,252 |
| — |
| 1,796,252 |
*Mr. Burwell’s 2021 LTIP Award was forfeited upon his departure from the Company on September 30, 2021.
For more information regarding the equity awards, see the “Grants of Plan-Based Awards” table, the “Outstanding Equity Awards at Fiscal Year-End” table and the section entitled “Executive Compensation: Compensation Discussion and Analysis — Our Executive Compensation Program in Detail — Components of the Named Executive Officers’ 20202021 Compensation — Long-Term Incentive Compensation — 20202021 LTI Program.Program” and the section entitled “Executive Compensation: Compensation Discussion and Analysis — Our Executive Compensation Program in Detail — Components of the Named Executive Officers’ 2021 Compensation — Additional Awards for NEOs in 2021.”
66 | WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY |
Compensation Tables (continued)
Non-Equity Incentive Plan Compensation (Column E)F)
The amounts shown in column EF reflect the NEOs’ 20202021 STI awards which were paid 100% in cashcash. For the NEOs other than Mr. Haley, the 2021 STI awards were paid in March 2021.2022. Mr. Haley received a 2021 STI award payment on his departure date (December 31, 2021) in the amount of $3,298,590, which represented 95% of his estimated 2021 STI award, including forecasted 2021 enterprise financial results and individual achievement. At the time, it was agreed that (i) if actual results exceeded estimated results for the applicable period, Mr. Haley would subsequently be paid any remainder due under his STI Award and (ii) if actual results for the full year were lower than forecasted, Mr. Haley would repay any surplus. The actual results determined for the 2021 performance year exceeded the estimated results and Mr. Haley was subsequently paid the remaining amount of $202,410 due under his 2021 STI Award in March 2022. For more information regarding Mr. Haley’s retirement, see the section entitled “Executive Compensation: Compensation Discussion and Analysis — Our Executive Compensation Program in Detail — Components of the Named Executive Officers’ 2021 Compensation — Payments in Connection with Mr. Haley’s Retirement.”
Change in Pension Value and Non-Qualified Deferred Compensation Earnings (Column F)G)
This column reflects any aggregate increase in actuarial present values of accumulated benefits during the relevant fiscal year for the NEOs under the Willis Towers Watson Pension Plan and the Towers Watson SERP (through July 1, 2017, when it was frozen). Any increase in actuarial present value was determined using assumptions that are the same as those used in the Company’s financial statements for the fiscal year ended December 31, 2020,2021, except that retirement is assumed to occur at the earliest unreduced retirement age for the NEOs and no pre-retirement terminations or deaths are assumed to occur.
The earliest unreduced retirement ages for each of the NEOs is as follows:
|
|
|
Compensation Tables (continued)
● | Mr. Hess – Age 62 under the Legacy Watson Wyatt and pre-July 1, 2017 stable value formulas; Age 65 under the post-July 1, 2017 stable value formula. Age 62 was assumed for Mr. Hess because the majority of his benefit value is unreduced at age 62. |
● | Messrs. Krasner and Furman – Age 65 |
● | Ms. Gebauer – Age 60 under the Legacy Towers Perrin benefit formula; Age 62 under the pre-July 1, 2017 stable value benefit formula; Age 65 under the post-July 1, 2017 stable value benefit formula. Ms. Gebauer was assumed to retire immediately because the majority of her benefit value is unreduced at age 60 and she has attained that age. |
● | Mr. Haley – Current age because he is over the plans’ unreduced early retirement ages at the end of the fiscal year. His actual retirement date was as of December 31, 2021. |
● | Mr. Burwell – Current age as he terminated employment during 2021. |
The pension values for each of the NEOsMessrs. Hess, Furman and Haley increased during the year. The increasespension value for Mr. Krasner increased during the year when reflecting the benefit that was paid to him for a prior period of service. The pension values for Ms. Gebauer and Mr. Burwell decreased during the year. The increases/(decreases) in the actuarial present values (including any benefits paid during the year) for the NEOs for fiscal year 20202021 were $187,555$209,050 for Mr. Hess, $8,178 for Mr. Krasner, $(360,218) for Ms. Gebauer, $22,482 for Mr. Furman, $34,743 for Mr. Haley $32,664and $(57,265) for Mr. Burwell, $1,133,761 for Ms. Gebauer, $809,732 for Mr. Hess and $174,259 for Mr. Wickes.Burwell. These increases are attributable to a number of factors. The NEOs (except Mr. Burwell) accrued additional benefits in the Willis Towers Watson Pension Plan during 2021. These accruals increased the present values by $43,267 for Mr. Hess, $21,167 for Mr. Krasner, $43,356 for Ms. Gebauer, $25,338 for Mr. Furman and $50,420 for Mr. Haley. Since Mr. Burwell terminated prior to vesting in his employer provided benefit, he forfeited $57,265 of benefit accruals. The actuarial present value from the Willis Towers Watson Pension and the Towers Watson SERP increased due to the passage of time by $109,821 for Mr. Hess, $1,842 for Mr. Krasner, $155,298 for Ms. Gebauer, $1,772 for Mr. Furman and $105,896 for Mr. Haley. Changes in the actuarial assumptions were also made during fiscal 2021. The discount rates used to value benefits decreasedincreased during fiscal 2020 2021
WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY | 67 |
Compensation Tables (continued)
from 3.31%2.54% to 2.54%2.87% for benefits from the Willis Towers Watson Pension Plan and 2.72%1.63% to 1.63%2.23% for the Towers Watson SERP. The assumed lump sum interest rate to determine the value of benefits under the Towers Watson SERP decreased from 2.00%1.75% to 0.75% for Ms. Gebauer and from 3.00% to 1.75%1.25% for Mr. Hess.Hess and the assumed retirement age was delayed for Mr. Haley and Ms. Gebauer. In addition, the mortality assumptionprior benefit for Mr. Krasner was paid out immediately during 2021 as opposed to being deferred to age 65 as was assumed for the Willis Towers Watson Pension Plan was updated as a result of an experience study completed in 2020.prior year calculation. The assumption changes described above increasedchanged the actuarial present value amounts by $212,890$55,962 for Mr. Haley, $4,588Hess, $(14,831) for Mr. Burwell, $886,965Krasner, $(558,873) for Ms. Gebauer, $492,950$(4,628) for Mr. HessFurman and $137,720$(121,573) for Mr. Wickes. The actuarial present value from the Willis Towers Watson Pension Plan also decreased for Messrs. Haley and Wickes due the passage of time by $75,409 and $13,582, respectively, since they are beyond their unreduced early retirement age. The passage of time increased the actuarial present value of benefits by $1,580 for Mr. Burwell, $206,264 for Ms. Gebauer and $276,482 for Mr. Hess. The NEOs accrued additional benefits in the Willis Towers Watson Pension Plan during 2020, which increased the present values by $50,074 for Mr. Haley, $26,496 for Mr. Burwell, $40,532 for Ms. Gebauer, $40,300 for Mr. Hess and $50,120 for Mr. Wickes.Haley.
All Other Compensation (Column G)H)
The amounts shown in column GH reflect the aggregate dollar amount of perquisites and other personal benefits and Company contributions to Company-sponsored retirement plans for each NEO during 2020.2021. Additional details are shown below:
Name | Perquisites and Benefits ($) (1) | Company Contributions Retirement Plans ($) (2) | 2020 All Other Compensation Total ($) | | Perquisites and Other Personal Benefits ($) (1) |
| | Company Contributions to Company-Sponsored Retirement Plans ($) (2) |
| | 2021 All Other Compensation Total ($) |
| |||||||||
CURRENT EXECUTIVES | |||||||||||||||||||||
Carl Hess |
| — |
| 241,474 |
| 241,474 | |||||||||||||||
Andrew Krasner |
| — |
| 2,698 |
| 2,698 | |||||||||||||||
Julie Gebauer |
| — |
| 216,167 |
| 216,167 | |||||||||||||||
Matthew Furman |
| — |
| 108,449 |
| 108,449 | |||||||||||||||
FORMER EXECUTIVES | |||||||||||||||||||||
John Haley | — | 2,412,212 | 2,412,212 |
| — |
| 1,730,113 |
| 1,730,113 | ||||||||||||
Michael Burwell | — | 165,735 | 165,735 |
| — |
| 177,502 |
| 177,502 | ||||||||||||
Julie Gebauer | — | 187,728 | 187,728 | ||||||||||||||||||
Carl Hess | — | 197,839 | 197,839 | ||||||||||||||||||
Gene Wickes | — | 273,234 | 273,234 |
(1) | During |
(2) | The amounts in this column reflect Company contributions to Company-sponsored retirement plans for the NEOs during |
● | For Mr. Hess, (i) the Company’s contribution to his 401(k) Plan in the amount of $10,150, (ii) Company matching contributions made in the form of fully vested RSUs to the WTW Deferred Savings Plan in the amount of $43,219 and (iii) the value of Company-provided quarterly allocations of fully vested RSUs under the WTW Stable Value Excess Plan in the amount of $188,105. |
● | For Mr. Krasner, the Company’s contribution to his 401(k) Plan. |
● | For Ms. Gebauer, (i) the Company’s contribution to her 401(k) Plan in the amount of $10,150, (ii) Company matching contributions made in the form of fully vested RSUs to the WTW Deferred Savings Plan in the amount of $38,030 and (iii) the value of Company-provided quarterly allocations of fully vested RSUs under the WTW Stable Value Excess Plan in the amount of $167,987. |
● | For Mr. Furman, (i) the Company’s contribution to his 401(k) Plan in the amount of $10,150, (ii) Company matching contributions made in the form of RSUs to the WTW Deferred Savings Plan in the amount of $38,986 and (iii) the value of Company-provided quarterly allocations of RSUs under the WTW Stable Value Excess Plan in the amount of $59,313. |
● | For Mr. Haley, (i) the Company’s contribution to his 401(k) Plan in the amount of |
68 | WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY |
Compensation Tables (continued)
● | For Mr. Burwell, (i) the Company’s contribution to his 401(k) Plan in the amount of |
Compensation Tables (continued)
|
|
|
Total (Column H)I)
The amounts shown in column HI reflect the sum of columns C through GH for each NEO.
Grants of Plan-Based Awards
The following table sets forth the grants of plan-based awards made to the NEOs during 2020.2021. Amounts shown in columns C through E relate to the STI award opportunities in respect of 2020.2021. The terms and conditions of these awards are described in the section entitled “Executive Compensation: Compensation Discussion and Analysis — Our Executive Compensation Program in Detail — Components of the Named Executive Officers’ 20202021 Compensation — Short-Term Incentive Compensation.” The remaining columns relate to equity awards granted under the 20202021 LTI Program (which consisted of PSUs) and Mr. Krasner’s sign-on equity award (which consisted of RSUs).
A | B | C | D | E | F | G | H | I | J | K | L | B | C | D | E | F | G | H | I | J | K | L | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name | Grant Date |
Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) |
Estimated Future Payouts Under Equity Incentive Plan Awards (2) | All Other Stock Awards: Number of of Stock or Units # | All Other Options Awards: Number of Securities Underlying Units # | Exercise or Base Price of Option Awards ($/ | Grant Date Fair Value of Stock and Option Awards ($) (3) | Grant Date |
Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) |
Estimated Future Payouts Under Equity Incentive Plan Awards (2) | All Other Stock Awards: Number of Shares of Stock or Units # (3) | All Other Options Awards: Number of Securities Underlying Units # | Exercise or Base Price of Option Awards ($/Share) | Grant Date Fair Value of Stock and Option Awards ($) (4) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
John Haley | — | — | 2,400,000 | 4,200,000 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/25/2020 | — | — | — | 23,687 | 47,374 | 94,748 | — | — | — | 13,821,838 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Michael Burwell | — | — | 937,500 | 1,640,625 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CURRENT EXECUTIVES | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Carl Hess | — | — | 1,750,000 | 3,062,500 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7/20/2021 | — | — | — | 2,219 | 4,437 | 8,874 | — | — | — | 1,167,419 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Andrew Krasner | — | 397,260 | 397,260 | 695,205 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7/20/2020 | — | — | — | 3,607 | 7,213 | 14,426 | — | — | — | 2,347,182 | 9/7/2021 | — | — | — | — | — | — | 13,210 | — | — | 2,999,991 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Julie Gebauer | — | — | 585,000 | 1,023,750 | — | — | — | — | — | — | — | — | — | 585,000 | 1,023,750 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7/20/2020 | — | — | — | 2,345 | 4,689 | 9,378 | — | — | — | 1,525,847 | 7/20/2021 | — | — | — | 2,219 | 4,437 | 8,874 | — | — | — | 1,167,419 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Carl Hess | — | — | 585,000 | 1,023,750 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Matthew Furman | — | — | 687,500 | 1,203,125 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7/20/2020 | — | — | — | 2,345 | 4,689 | 9,378 | — | — | — | 1,525,847 | 7/20/2021 | — | — | — | 1,707 | 3,413 | 6,826 | — | — | — | 897,994 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gene Wickes | — | — | 520,000 | 910,000 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FORMER EXECUTIVES | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
John Haley | — | — | 2,400,000 | 4,200,000 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7/20/2020 | — | — | — | 2,345 | 4,689 | 9,378 | — | — | — | 1,525,847 | 1/1/2021 | — | — | — | 22,783 | 45,566 | 91,132 | — | — | — | 13,300,715 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Michael Burwell | 7/20/2021 | — | — | — | 3,414 | 6,827 | 13,654 | — | — | — | 1,796,252 |
(1) | The amounts shown in columns C through E reflect threshold, target and maximum performance for the STI awards granted to each NEO who participated in |
Compensation Tables (continued)
(2) | The amounts shown in columns F through H reflect threshold, target and maximum performance for the PSUs granted to the NEOs pursuant to the |
WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY | 69 |
Compensation Tables (continued)
NEOs (besides Mr. Krasner) on July 20, |
The earned PSUs will vest on February 25, 2023 for Mr. Haley and on July 20, 20232024 for all other NEOs besides Mr. Haley, subject to the continued employment of the participant during the vesting period, unless eligible for retirement under the terms of the program (as Mr. Haley,Hess and Ms. Gebauer are). Mr. HessHaley’s award was eligible to vest on a pro-rata monthly basis as to 1/12th of the number of earned PSUs for each full and Mr. Wickes are).partial calendar month he remained employed in calendar year 2021. Dividend equivalents in the form of additional shares will accrue on the PSUs but are only paid to the same extent and at the same time as the underlying shares vest.
(3) | The amount shown in column I reflects the make whole sign-on equity award that Mr. Krasner received pursuant to his offer letter. The award was granted to him on September 7, 2021 in the form of time-based RSUs with ratable vesting over a 3-year period as of the first, second and third anniversary, respectively, of the grant date subject to continued employment with the Company. |
(4) | The aggregate grant date fair value is computed in accordance with FASB ASC Topic 718. For awards subject to market conditions, the full fair value at the grant date takes into account all possible outcomes of the market condition. |
WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY |
Compensation Tables (continued)
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth the options and share-based awards held by the NEOs as of December 31, 2020.2021.