Aon Plc · NYSE:AON
Aon — Merger or Acquisition (February 2012)
44 slides from Aon's merger presentation, Feb 16, 2012
Slide 1: Aon Stock Conversion Webcast
Aon Stock Conversion Webcast February 16, 2012 Filed by Aon Global Limited Pursuant to Rule 425 under the Securities Act of 1933 and deemed filed pursuant to Rule 14a-12 under the Securities Exchange Act of 1934 Subject Company: Aon Corporation Commission File No.: 001-07933 Commission File No. for
Slide 2: Disclaimer
Disclaimer To ensure compliance with Treasury Department Circular 230, PricewaterhouseCoopers LLP ("PwC" or "we" or "us") informs you that this document was not intended or written to be used, and it cannot be used by any taxpayer (including, but not limited to employees and shareholders of Aon Corp
Slide 3: Disclaimer (continued)
Disclaimer (continued) The information contained herein is intended to summarize some tax and financial planning concepts and is written for educational purposes only. The information provided by PwC and its personnel is not, and should not be taken as legal, tax, investment, or any other profession
Slide 4: Agenda
Agenda Taxability for U.S. shareholders Capital gains Company equity programs Additional information Obtaining transaction information from Fidelity Aon Stock Conversion Assistance Program
Slide 5: Objectives
Objectives Understand the taxability for U.S. shareholders Understand the capital gains that may result Locate and determine adjusted basis of shares held Become familiar with available resources to assist with transaction implications
Slide 6: Taxability for U.S. shareholders
Taxability for U.S. shareholders
Slide 7: Taxability for U.S. shareholders
Taxability for U.S. shareholders United States Tax Law U.S. shareholder will recognize gain, but not loss, on the receipt of Class A ordinary shares of Aon UK Shares with restrictions or deferral arrangements may not be subject to U.S. tax United Kingdom Tax Law U.S. residents will generally not be
Slide 8: Capital gains
Capital gains
Slide 9: Definition – Capital gains
Definition – Capital gains A capital gain is the increase in the value of a capital asset (i.e. stock) Recognized and taxable when the capital asset is sold or exchanged Difference between Fair Market Value (FMV) and the adjusted basis Gain: FMV exceeds adjusted basis Loss: FMV is less than adjusted
Slide 10: Fair Market Value (FMV)
Fair Market Value (FMV) FMV is determined by the value of Aon UK shares received Sources for obtaining FMV after the transaction close: Aon Investor Relations www.ir.aon.com Shares held with Morgan Stanley Smith Barney www.benefitaccess.com Shares held with Fidelity netbenefits.fidelity.com
Slide 11: Definition – Adjusted basis
Definition – Adjusted basis Price paid for the security Includes any fees and/or commissions paid Typically tracked in the brokerage account where the stock was initially purchased or acquired Contact Fidelity or Morgan Stanley Smith Barney for adjusted basis information on Aon shares held
Slide 12: Calculating capital gains and losses
Calculating capital gains and losses Short-term capital gains Holding period of less than or equal to one year Taxed at marginal income tax rates Long-term capital gains Holding period greater than one year Taxed at a rate of 0% or 15% Capital gains and losses must be evaluated on a lot by lot basis
Slide 13: Example – Calculating capital gains and losses
Example – Calculating capital gains and losses Colleague will recognize $3 on his or her 2012 income tax return from the sale of Lots 2 and 3. Loss from Lot 1 is disallowed and cannot be used to reduce the gains associated with Lots 2 and 3. Lot Adjusted basis FMV of transaction Gain/(Loss) Realized
Slide 14: Aon UK shares
Aon UK shares Adjusted basis in Aon UK shares Equals the adjusted basis of each share of Aon Corporation common shares exchanged plus any gain recognized Holding period of Aon UK shares Includes the holding period of the Aon Corporation common shares exchanged
Slide 15: Company equity programs
Company equity programs
Slide 16: Effect of transaction on equity programs
Effect of transaction on equity programs Shares acquired through company plans One to one conversion of all shares held at transaction close Unvested RSUs Converted to Aon UK RSUs* Unexercised Options Converted to Aon UK options* Unvested Performance Shares Converted to Aon UK performance shares* *S
Slide 17: Taxation of transaction on equity programs
Taxation of transaction on equity programs * Assumes holding period requirements are met. If not met, adjusted basis equals the FMV on the date of exercise. ** Please note that this does not address AMT tax implications. Please consult your tax advisor. Form of Award Adjusted basis Holding period Ga
Slide 18: Taxation of transaction on equity programs (cont.)
Taxation of transaction on equity programs (cont.) Form of Award Adjusted basis Holding period Gain on previously vested shares Gain on unvested shares Restricted Stock Units (RSUs), including those under the Special Stock Program (SSP) or the Incentive Stock Program (ISP) FMV on the date units were
Slide 19: Taxation of transaction on equity programs (cont.)
Taxation of transaction on equity programs (cont.) * Rules around computation of the ordinary income component (compensation) are complex, and are computed by the custodian of the ESPP. ** If the transaction closes before June 30, 2012, there will not be any capital gains tax related to the payroll
Slide 20: ESPP Example – Computing ordinary income
ESPP Example – Computing ordinary income Aon Colleagues can purchase stock at 85% of the lower of FMV at the date of grant or the date of exercise: Qualifying disposition – stock held at least 2 years from grant date and 1 year from exercise date Ordinary Income is lesser of: 15% discount at grant d
Slide 21: ESPP Example – Computing capital gain
ESPP Example – Computing capital gain Computation of taxation upon transaction: Colleague will recognize $1.76 of ordinary income on his or her 2012 income tax return and will recognize $3.24 of long-term capital gain income if holding period requirements are met. Colleague will recognize $2.00 of o
Slide 22: Additional information
Additional information
Slide 23: Alternative Minimum Tax (AMT)
Alternative Minimum Tax (AMT) Separate tax regime Alternative minimum taxable income (AMTI) is similar to regular taxable income, but with a few adjustments Applies flat tax rate on AMTI of 26% or 28% Taxpayer pays the higher of regular tax or AMT liability Taxpayers realizing capital gains from thi
Slide 24: Paying the tax liability
Paying the tax liability Increase withholding for the remainder of 2012 Use of Form W-4 Pay estimated tax payments Pay the lump sum amount due with the 2012 income tax return
Slide 25: Form W-4
Form W-4 Form W-4 Department of the Treasury Internal Revenue Service Employee’s Withholding Allowance Certificate Whether you are entitled to claim a certain number of allowances or exemption from withholding is subject to review by the IRS. Your employer may be required to send a copy of this form
Slide 26: Estimated tax payments
Estimated tax payments Advance payments of tax Payments are made quarterly Used to pay tax on income not subject to withholding Used to pay tax if the amount of tax being withheld is not sufficient
Slide 27: Federal estimated tax payments
Federal estimated tax payments Requirements: Must pay the lesser of: Safe Harbor: Depends on the Adjusted Gross Income (AGI) found on line 37 of the 2011 tax return If AGI was $150,000 or less: 100% of the 2011 tax liability If AGI was more than $150,000: 110% of the 2011 tax liability 90% of the es
Slide 28: Federal estimated tax payments (continued)
Federal estimated tax payments (continued) How to file and pay estimated taxes: File form 1040 ES When to file and pay: April 15 June 15 September 15 January 15
Slide 29: State taxes
State taxes Most states impose an income tax on capital gains Likely that the state tax liability will increase
Slide 30: State estimated tax payments
State estimated tax payments Examples of state estimated tax requirements: Illinois residents pay the lesser of: Safe Harbor: 100% of the 2011 tax liability 90% of the estimated 2012 tax liability New York (NY) residents pay the lesser of: Safe Harbor depends on AGI AGI $150,000 or less: 100% of the
Slide 31: Obtaining transaction information from Fidelity
Obtaining transaction information from Fidelity
Slide 32: Brokerage account
Brokerage account * For Illustrative Purposes Only Home Savings & Retirement Health & Insurance Pay Your Profile Welcome to NetBenefits® for Theta Corporation Hide $ Portfolio Total $358,986.09* One click can help you get closer to your goals. Join your workplace savings plan today. Click hereto enr
Slide 33: Adjusted basis
Adjusted basis * For Illustrative Purposes Only Fidelity.com Search Quotes Customer Service Open an Account Log Out Accounts & Trade Employer Benefits News & Insights Research Guidance & Retirement Investment Products Thursday, February 2, 2012 Accounts & Trade > Portfolio > Positions Help/Glossary
Slide 34: Open lots
Open lots * For Illustrative Purposes Only Fidelity.com Search Quotes Customer Service Open an Account Log Out Accounts & Trade Employer Benefits News & Insights Research Guidance & Retirement Investment Products Thursday, February 2, 2012 Accounts & Trade >Portfolio > Positions View Lots Help/Gloss
Slide 35: Aon Stock Conversion Assistance Program
Aon Stock Conversion Assistance Program
Slide 36: Overview
Overview Who is eligible? All U.S. Colleagues who own shares of Aon Corporation common stock Resources Live webcast Telephone assistance line and e-mail Income tax projections
Slide 37: PwC contact information
PwC contact information Telephone Number: 1-866-459-6649 Hours: Monday – Friday from 7am to 7 pm CST E-mail pfscsc@us.pwc.com
Slide 38: Brokerage account contact information
Brokerage account contact information Fidelity Telephone: 1-800-544-9354 Website: netbenefits.fidelity.com Morgan Stanley Smith Barney Telephone: 1-888-609-3534 Website: www.benefitaccess.com
Slide 39: About PwC
About PwC Has been providing broad-based employee tax and financial education and counseling for over 50 years Employs over 300 experienced financial counselors in offices throughout the United States Has experience in delivering tax and financial education to large company employees in similar indu
Slide 40: Disclaimer
Disclaimer To ensure compliance with Treasury Department Circular 230, PricewaterhouseCoopers LLP ("PwC" or "we" or "us") informs you that this document was not intended or written to be used, and it cannot be used by any taxpayer (including, but not limited to employees and shareholders of Aon Corp
Slide 41: Disclaimer (continued)
Disclaimer (continued) The conclusions reached in this webcast represent and are based upon our best judgment regarding the application of U.S. federal income tax laws arising under the Internal Revenue Code, judicial decisions, administrative regulations, published rulings and other tax authorities
Slide 42: Disclaimer (continued)
Disclaimer (continued) This webcast supersedes and replaces any and all prior written or oral advice (including, without limitation, electronic communications) and all such prior communications, if any, should not be relied upon by any party to the transaction or matters described herein for any pur
Slide 43: Disclaimer (continued)
Disclaimer (continued) Aon and Aon UK and their respective directors and executive officers and certain other members of management and employees may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction. You can find information about Aon’s directors and
Slide 44: [LOGO]
[LOGO]