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NORTHERN TRUST CORPORATION Exhibit 10(i)
ANNUAL PERFORMANCE PLAN
2000
I. Purpose of Plan
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The purpose of the Annual Performance Plan (the "Plan") is to promote the
achievement of superior financial and operating performance of the Northern
Trust Corporation (the "Corporation") and its subsidiaries (collectively,
the Corporation and its subsidiaries, "Northern Trust"), and further the
objective of delivering unrivaled service quality to its clients and
partners through the awarding of cash incentive payments to selected
officers.
II. Plan Year/Effective Date/Termination
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The Plan Year for this Plan will be the calendar year from January 1, 2000
to December 31, 2000. The Plan is effective as of January 1, 2000 and
automatically terminates on December 31, 2000.
III. Eligibility and Participation
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Eligibility to participate in the Plan is restricted to officers with the
title of Vice President and above and who are not eligible for
participation in a Specialized Incentive Plan. Plan participation is
reviewed each year, and participation in one year does not automatically
indicate participation in subsequent Plan years. Participation in the Plan
is based upon recommendation from the respective Business Unit Head.
IV. Award Funding
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At the beginning of the Plan year, the Compensation and Benefits Committee
of the Board of Directors of the Corporation will determine a Corporate
Earnings Target and profit plan funding for awards under the Annual
Performance Plan. The allocation of the plan award funding to each
respective Business Unit will be based on the salaries of the eligible
officers within the Business Unit. Within each Business Unit, one-half of
the available funding for awards under the Plan will be based on the
Northern Trust's financial achievement versus the Corporate Earnings
Target. The other half of the award funding is based on the financial
achievement of the Business Unit versus the Business Unit's earnings
target. For staff support personnel, the available funding for awards will
be based entirely on the financial achievement of Northern Trust versus the
Corporate Earnings Target. The formula determining the pool level funding
based on Corporate and Business Unit performance is described in Attachment
I.
V. Individual Award Determination
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Individual participant awards will be discretionary. They will be
determined by Business Unit Management based on an assessment of individual
performance relative to performance expectations, contribution to financial
and operating goals, competitive level of total compensation, and available
award pool funding.
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VI. Payment of Awards
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Awards will be paid in cash as soon as practicable following the completion
of the Plan year. Awards payable because of a Change in Control of the
Corporation pursuant to Paragraph VII shall be paid in cash as soon as
practicable following such Change in Control.
VII. Change in Control
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Notwithstanding any other terms contained herein, in the event of a Change
in Control of the Corporation, funding for awards under the Plan shall be
determined as if the Corporation and Business Units had achieved the
respective earnings targets, as described in Section IV. Discretionary
awards shall be paid to participants as soon as practicable. For purposes
of this paragraph, a "Change in Control" shall be deemed to have occurred
if
(1) any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Corporation (not including in
the securities beneficially owned by such Person any securities
acquired directly from the Corporation or its affiliates)
representing 20% or more of the combined voting power of the
Corporation's then outstanding securities, excluding any Person
who becomes such a Beneficial Owner in connection with a
transaction described in clause (i) of paragraph (3) below; or
(2) The election to the Board of Directors of the Corporation,
without the recommendation or approval of two thirds of the
incumbent Board of Directors of the Corporation, of the lesser
of: (A) three directors; or (B) directors constituting a majority
of the number of directors of the Corporation then in office,
provided, however, that directors whose initial assumption of
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office is in connection with an actual or threatened election
contest, including but not limited to a consent solicitation,
relating to the election of directors of the Corporation will not
be considered as incumbent members of the Board of Directors of
the Corporation for purposes of this section; or
(3) there is consummated a merger or consolidation of the
Corporation or any direct or indirect subsidiary of the
Corporation with any other company, other than (i) a merger or
consolidation which would result in the voting securities of the
Corporation outstanding immediately prior to such merger or
consolidation continuing to represent (either by remaining
outstanding or by being converted into voting securities of the
surviving entity or any parent thereof), at least 60% of the
combined voting power of the securities of the Corporation or
such surviving entity or any parent thereof outstanding
immediately after such merger or consolidation, or (ii) a merger
or consolidation effected to implement a recapitalization of the
Corporation (or similar transaction) in which no Person is or
becomes the Beneficial Owner, directly or indirectly, of
securities of the Corporation (not including in the securities
Beneficially Owned by such Person any securities acquired
directly from the Corporation or its Affiliates) representing 20%
or more of the combined voting power of the Corporation's then
outstanding securities; or
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(4) the stockholders of the Corporation approve a plan of
complete liquidation or dissolution of the Corporation or there
is consummated an agreement for the sale or disposition by the
Corporation of all or substantially all of the Corporation's
assets, other than a sale or disposition by the Corporation of
all or substantially all of the Corporation's assets to an
entity, at least 60% of the combined voting power of the voting
securities of which are owned by stockholders of the Corporation
in substantially the same proportions as their ownership of the
Corporation immediately prior to such sale.
Notwithstanding the foregoing, a "Change in Control" shall not be deemed to have
occurred by virtue of the consummation of any transaction or series of
integrated transactions immediately following which the record holders of the
common stock of the Corporation immediately prior to such transaction or series
of transactions continue to have substantially the same proportionate ownership
in an entity which owns all or substantially all of the assets of the
Corporation immediately following such transaction or series of transactions.
For purposes of the foregoing, the following definitions shall apply:
"Affiliate" shall have the meaning set forth in Rule 12b-2 under Section 12
of the Exchange Act; "Beneficial Owner" shall have the meaning set forth in
Rule 13d-3 under the Exchange Act, except that a Person shall not be deemed
to be the Beneficial Owner of any securities with respect to which such
Person has properly filed a Form 13-G; "Exchange Act" shall mean the
Securities Exchange Act of 1934, as amended from time to time; and "Person"
shall have the meaning given in Section 3(a)(9) of the Exchange Act, as
modified and used in Sections 13(d) and 14(d) thereof, except that such
term shall not include (i) the Corporation or any of its Affiliates, (ii) a
trustee or other fiduciary holding securities under an employee benefits
plan of the Corporation or any of its subsidiaries, (iii) an underwriter
temporarily holding securities pursuant to an offering of such securities
or (iv) a corporation owned, directly or indirectly, by the stockholders of
the Corporation in substantially the same proportions as their ownership of
stock of the Corporation.
Notwithstanding anything in this Plan to the contrary, in the event of a
Potential Change in Control and for a period of six (6) months following the
Potential Change in Control, neither the Board nor the Committee may terminate
this Plan or amend this Plan in a manner that adversely affects the rights of
any participant of the Plan.
A "Potential Change in Control" shall be deemed to have occurred if the event
set forth in any one of the following paragraphs shall have occurred:
(a) the Corporation enters into an agreement, the consummation of
which would result in the occurrence of a Change in Control;
(b) the Corporation or any Person publicly announces an intention to
take or to consider taking actions which, if consummated, would
constitute a Change in Control;
(c) any Person becomes the Beneficial Owner, directly or indirectly,
of securities of the Corporation representing 15% or more of
either the then outstanding
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shares of common stock of the Corporation or the combined voting
power of the Corporation's then outstanding securities (not
including in the securities beneficially owned by such Person any
securities acquired directly from the Corporation or its
Affiliates); or
(d) the Board adopts a resolution to the effect that, for purposes of
this Plan, a Potential Change in Control has occurred.
VIII. Administration
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The Plan shall be administered by the Management Committee of the
Corporation (the "Committee"). Subject to the provisions of the Plan, the
Committee shall be authorized to interpret the Plan, to establish, amend,
and rescind any rules and regulations relating to the Plan, and to make
all other determinations necessary or advisable for the administration of
the Plan. The determinations of the Committee in the effective
administration of the Plan, as described herein, shall be final and
conclusive.
The Board of Directors of the Corporation, by written resolution, may
amend, suspend, or terminate any or all provisions of the Plan at any
time.
IX. Other Provisions
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The following miscellaneous provisions are applicable to the Plan:
(a) Awards paid under the provisions of the Plan are considered
pensionable earnings when paid.
(b) Termination of employment by a participant during the Plan Year,
either voluntary or involuntary with cause, and for reasons other
than death, disability, or retirement shall result in immediate
exclusion from the Plan. For purposes of this Plan, "Retirement"
means the termination of the participant's employment with Northern
Trust by reason of participant having attained the age of 65 years or
older or after the participant has qualified for an Early Retirement
Pension under The Northern Trust Company Pension Plan. For purposes
of this Plan, "Disability" means the participant is unable to engage
in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to
result in death or which has lasted or can be expected to last for a
continuous period of not less than 12 months.
(c) Except in the event of the death of a participant, the rights and
interests of a participant under the Plan shall not be assigned,
encumbered, or transferred.
(d) No employee or other person shall have any claim or right to be
granted an award under the Plan. Neither the Plan, nor any action
taken thereunder, shall be construed as giving any employee or other
person any right to be retained in the employ of the Corporation.
(e) The Corporation shall have the right to deduct from all payments made
under the Plan any taxes required by law to be withheld with respect
to such payment.
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(f) All questions pertaining to the validity, construction and
administration of the Plan and any award hereunder shall be
determined in conformity with the laws of the State of Illinois.
(g) Each participant shall designate a beneficiary (the "Designated
Beneficiary") to receive the award, if any, allocated to a
participant, in the event of such participant's death. If no
Designated Beneficiary survives the participant, it shall be the
surviving spouse of the participant or, if there is no surviving
spouse, it shall be the participant's estate.
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