• The Hewitt Associates, Inc. (the "Company") Board of Directors (the "Board"), by resolution dated July 25, 2002, established the Hewitt Associates, Inc. Compensation and Leadership Committee (the "Committee").
• This Compensation and Leadership Committee Charter was adopted by the Board on December 17, 2002.

• The Committee, in order to assist the Board in the discharge of its responsibilities relating to compensation of the Company's directors, executives, and other key associates of the Company:
  • Reviews, approves, and modifies, as necessary, the executive compensation programs, plans and awards;
  • Reviews and approves the Company's short- and long-term incentive plans and other stock or stock-based incentive plans;
  • Issues an annual report on executive compensation for inclusion in the Company's proxy statement, in accordance with applicable rules and regulations; and
  • Reviews the Company's compensation and benefit philosophy, plans and programs on an as-needed basis.
• The Committee, in order to assist the Board in areas beyond compensation:
  • Reviews and approves succession and development plans for executives; and
  • Reviews plans and programs related to building and maintaining a broader ownership culture.

The Committee shall have the following duties and responsibilities and the necessary power and authority, including budgetary and fiscal authority, to carry out such duties and responsibilities:

• Executive Compensation.
  The Commitee:
  • Periodically reviews the Company's compensation philosophy and how the pay programs align with philosophy, especially in relation to the Company's business goals and strategies;
  • Annually assesses the Company's competitive position for each component of executive compensation (base salary, annual incentives, long-term incentives, and executive benefits) related to relevant market data and practices;
  • Periodically reviews, amends and approves Stock Ownership Guidelines;
  • Periodically reviews executives' stock ownership levels in relation to the approved Stock Ownership Guidelines, determines appropriate actions to take to ensure compliance and determines what actions to take if an executive fails to satisfy the Stock Ownership Guidelines;
  • Adopts or amends incentive compensation plans and stock-related plans (including specific provisions) for which the CEO and other senior executives and key associates may be participants, including, but not limited to:
    • Approving equity incentive guidelines, eligibility, and general size of overall grants;
    • Imposing limitations, restrictions, and conditions upon any award as the Committee deems appropriate; and
    • Establishing, maintaining, revising, and rescinding rules and regulations relating to the Company's incentive plans.
  • Assures the total compensation paid to the Company's key officers is appropriate for the size, scope, and performance of the business/individual;
  • Assures that any payments under the long-term incentive plans are in conformance with any restrictions placed thereon by the Board and the shareholders;
  • Reviews and approves recommendations made by the CEO for the compensation of the Company's key officers;
  • Annually issues a report on executive compensation in accordance with applicable rules and regulations of the Securities and Exchange Commission for inclusion in the Company's proxy statement; and
  • Administers awards and compensation programs and plans intended by the Committee to qualify for an exemption under Section 162(m) of the Internal Revenue Code of 1986, as amended.
• CEO Compensation
  • Base Salary
    Annually, the Committee:
    Reviews market data to assess the competitiveness of the CEO's base salary; and
    • Approves in advance any salary adjustment for the CEO.
  • Annual Incentives
    Annually, the Committee:
    Reviews and approves specific goals, objectives, and metrics for the next year, which are then discussed with the entire Board;
    • Evaluates the performance of the CEO in meeting those goals and objectives with input from the full Board; and
    • Approves the annual incentive award of the CEO, if any, based upon this evaluation.
  • Long-Term Incentive Compensation
    Annually, the Committee reviews and approves the CEO's long-term incentive award(s). In approving the award(s), the Committee:
    • Considers the performance of the Company and relative total shareholder return;
    • Considers the value of such awards granted to other CEOs in the market; and
    • Considers the number of stock options and common stock units granted in prior years.
• Director Compensation
  The Committee:
  • Periodically assesses the Company's competitive position for the components of director compensation;
  • Adopts or amends incentive compensation plans and stock-related plans (including specific provisions) in which directors may be participants; and
  • Assures the total compensation paid to the Company's directors is appropriate for the size and scope of the Board.
• Other Duties and Responsibilities
  • Makes recommendations to the Board with respect to executive compensation, CEO compensation, Director Compensation, and any associate or executive benefit program involving the use of Company stock.
  • Annually reviews the succession and development plans for the CEO and key officers;
  • Makes recommendations to the Board with respect to succession and development plans for executives, and with respect to building and broadening an ownership culture.
  • Forms and delegates authority to a subcommittee of one or more members, when appropriate and in accordance with applicable rules and regulations.
  • Periodically reviews the adequacy of this Charter and recommends any proposed changes to the Board for consideration and approval.
  • Performs any other activities consistent with this Charter, the Company's By-laws and applicable law, as the Committee deems appropriate or as requested by the Board.

• Committee Size.
  The Committee will consist of a minimum of three directors.
• Committee Member Qualifications.
  • All members of the Committee at all times during his/her tenure on the Committee must meet the definitions of:
    • A "non-employee director" within the meaning of Rule 16b-3 promulgated under the Securities and Exchange Act of 1934, as amended;
    • An "outside director" within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended; and
    • An "independent director" within the meaning of the New York Stock Exchange's rules and regulations.
  • In appointing members to the Committee, the Board shall keep in mind the following:
    • Whether an individual has sufficient time to commit to service on the Committee;
    • Whether an individual has experience with setting compensation policies, procedures, and programs and in the review and administration of executive and director compensation programs;
    • Whether an individual has a strong understanding of financial performance measurement;
    • Whether an individual has had exposure to modern financial theory; and
    • Whether an individual brings skills and abilities not otherwise possessed by other Committee members that would aid the Committee in the execution of its duties and responsibilities.
• Committee Member Appointment and Removal.
  • The Board will appoint the Committee members and a Chairman.
  • The Board may fill vacancies on the Committee.
  • The Board may remove a Committee member from the mebership of the Committee at any time with or without cause.
• Committee Meetings.
  • The Committee customarily conducts four regularly scheduled meetings each year, which may have both a general session and an executive session.
  • Executives, management representatives, third-party service providers, and others, as needed and requested by the Committee, may attend the general and executive session portions of each meeting. However, it is the Committee's intent to maintain regular executive sessions at which executives, management representatives, third-party service providers, and other non-Committee members generally will be excluded.
  • Attendance at meetings shall be permitted by telephone or other means which allows the members to effectively interact with one another and fully discuss proposed actions, as permitted by the Board.
  • A majority of the Committee members will be a quorum for the transaction of business.
  • The action of a majority of those present at a meeting at which a quorum is present will be the act of the Committee.
  • Any action required to be taken at a meeting of the Committee will be deemed the action of the Committee if all of the Committee members executed, either before or after the action is taken, a written consent and the consent is filed with the Company's Corporate Secretary.
  • The Committee Secretary will keep minutes of all Committee meetings, which will be distributed to all Board members.
  • Regular meetings of the Committee shall be called according to the schedule approved by the Committee for the year. Special meetings of the Committee can be called by the Committee Chair, a majority of the members of the Committee, the Chairman of the Board, or by a majority of the Board.
  • The Committee Secretary will prepare a preliminary agenda for regularly scheduled meetings as well as any special meetings. The Committee Chair will make the final decision regarding the agenda for regularly scheduled meetings and shall develop the agenda for special meetings based on the information supplied by the party(ies) requesting the special meeting.
  • The agenda and all materials to be reviewed at the meetings should be received by the Committee members as far in advance of the meeting day as practicable.
  • The Committee Secretary should coordinate all mailings to the Committee members, to the extent practicable.
• Committee Reporting to the Board.
  The Committee Chair shall present periodic reports to the Board concerning the Committee's actions related to compensation and the execution of its duties and responsibilities.
• Use of Third-Party Service Providers.
  If the Committee utilizes a third-party service provider in executing its duties, the Committee shall have the sole authority to retain and terminate the third-party service provider, including the sole authority to approve the third-party service provider's fees and other retention terms.