8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):

March 7, 2005 (December 9, 2004)

WADDELL & REED FINANCIAL, INC.

(Exact name of registrant as specified in its charter)

Delaware	001-13913	51-0261715
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

6300 Lamar Avenue

Overland Park, Kansas 66202

(Address of Principal Executive Offices) (Zip Code)

(913) 236-2000

(Registrant’s telephone number, including area code)

(Registrant’s Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 1.01:ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

I.Named Executive Officer Compensation.  On December 9, 2004, the Compensation Committee (the “Committee”) of the Board of Directors of Waddell & Reed Financial, Inc. (the “Company”) approved the annual base salaries (effective as of January 1, 2005) of the Company’s executive officers.  The following table sets forth the annual base salaries of the Company’s Chief Executive Officer and the next four most highly compensated officers (collectively, the “Named Executive Officers”) for 2005:

Named Executive Officer	Salary
Keith A. Tucker Chairman and Chief Executive Officer	$	800,016
Henry J. Herrmann President and Chief Investment Officer	$	800,000
Thomas W. Butch Senior Vice President and Chief Marketing Officer	$	400,000
Michael D. Strohm Senior Vice President and Chief Operations Officer	$	350,000
John E. Sundeen, Jr. Senior Vice President and Treasurer	$	350,000

The Company has adopted a supplemental executive retirement plan (the “SERP”) pursuant to which participants’ accounts are credits with (1) an amount equal to 4% of his or her base salary, less the amount of any employer matching contribution made on the participant’s behalf under the Company’s 401(k) plan, and (2) a non-formula award, as determined by the Committee in its discretion.  For 2004, the Committee designated Messrs. Tucker and Herrmann as participants of the SERP and awarded a non-formula award of $300,000 to each participant.

II.2004 Executive Incentive Awards.Pursuant to the Company’s 2003 Executive Incentive Plan, as amended (the “EIP”), eligible participants may receive (1) an annual incentive award of cash, and (2) an annual incentive award of restricted stock, both based upon the annual financial performance of the Company.

A.Cash Awards.  On December 9, 2004, the Committee authorized the payment of annual cash incentive (i.e., bonus) awards based on the Company’s financial performance for the year ended December 31, 2004 to executive officers participating in the EIP.  These annual incentive awards were determined based on performance goals established in March 2004.  As permitted by the EIP, the Committee exercised its discretion to reduce the amount of the cash awards payable to the participants, but in accordance with the EIP, these reductions did not increase the award amounts for any other participant.  The following table sets forth the annual cash incentive awards to the Named Executive Officers for 2004 performance:

Named Executive Officer	Cash Award Amount
Keith A. Tucker Chairman and Chief Executive Officer	$	1,200,000
Henry J. Herrmann President and Chief Investment Officer	$	1,200,000
Thomas W. Butch Senior Vice President and Chief Marketing Officer	$	450,000
Michael D. Strohm Senior Vice President and Chief Operations Officer	$	450,000
John E. Sundeen, Jr. Senior Vice President and Treasurer	$	400,000

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Pursuant to the Company 1998 Executive Deferred Compensation Plan, as amended and restated, eligible executives may elect, prior to payment thereof, to defer all or a portion of their salary and/or annual cash incentive award into an interest-bearing account and to subsequently, within a limited time period, elect to convert all or a portion of such deferred compensation into restricted stock of the Company in lieu of cash.  Additionally, the Compensation Committee may, in its sole discretion, direct that all or a portion of the cash incentive award payments payable under the EIP be paid in restricted stock.  Pursuant to such discretion, the Committee directed that 10% of the above referenced cash incentive awards for Messrs. Butch, Strohm and Sundeen be paid in restricted stock on April 2, 2005.  Awards granted pursuant to an executive’s election or the Committee’s direction are granted in accordance with the form of restricted stock agreement attached hereto as Exhibit 10.1 and incorporated herein by reference.

B.Restricted Stock Awards.  On March 1, 2005, the Committee authorized the payment of the annual incentive awards of restricted stock based on the Company’s financial performance for the year ended December 31, 2004 to executive officers participating in the EIP.  These annual incentive awards were determined based on performance goals established in March 2004.  As permitted by the EIP, the Committee exercised its discretion to reduce the amount of the restricted stock awards payable to the participants, but in accordance with the EIP, the reductions did not increase the restricted stock award amounts for any other participant.  The following table sets forth the annual restricted stock awards for the Named Executive Officers for 2004 performance:

Named Executive Officer	Restricted Stock Award
Keith A. Tucker Chairman and Chief Executive Officer	75,000 shares
Henry J. Herrmann President and Chief Investment Officer	75,000 shares
Thomas W. Butch Senior Vice President and Chief Marketing Officer	30,000 shares
Michael D. Strohm Senior Vice President and Chief Operations Officer	25,000 shares
John E. Sundeen, Jr. Senior Vice President and Treasurer	25,000 shares

These shares will be granted on April 2, 2005 pursuant to the Company 1998 Stock Incentive Plan, as amended and restated, (the “SIP”) in accordance with the form of restricted stock agreement attached hereto as Exhibit 10.2 and incorporated herein by reference.

III.Non-Employee Director Compensation.  On December 9, 2004, the Committee approved the compensation to be paid to each non-management director of the Board (“Outside Directors”) with respect to service on the Board for 2005.  A summary describing the elements of such compensation is filed as Exhibit 10.3 attached hereto and incorporated herein by reference.  Compensation approved included an annual retainer of $40,000, meeting fees of $2,000 for each Board meeting attended, and $1,500 for each committee meeting attended (the Chairman of each committee receives an additional $500 per committee meeting).  Additionally, for each Outside Director the Committee approved an annual formula-based award of 1,500 shares of restricted stock and a discretionary, non-formula based award of an additional 2,000 shares of restricted stock.  These shares were granted on January 3, 2005 pursuant to the SIP, in accordance with the form of restricted stock agreement attached hereto as Exhibit 10.4 and incorporated herein by reference.  Outside Directors are also reimbursed for travel and lodging expenses incurred in attending meetings, but are not compensated for the execution of written consents in lieu of Board or committee meetings.

At their election, Outside Directors are also eligible to participate in the Company’s group health insurance plan, a portion of the premiums for which are paid by the Company.  Additionally, Outside Directors may annually elect to defer their annual compensation into an interest-bearing account under the Company’s 1998 Non-Employee

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Director Stock Award Plan, as amended, which may subsequently be converted into restricted stock in accordance with the form of restricted stock agreement attached hereto as Exhibit 10.5 and incorporated herein by reference.

IV.2005 Performance Goals.  On March 1, 2005, the Committee adopted performance goals under the EIP for the Company’s 2005 fiscal year, pursuant to which incentive awards of cash and restricted stock may be awarded to the participants upon the achievement of these goals.  The 2005 performance goals are attached hereto as Exhibit 10.6 and incorporated herein by reference.  The cash awards for each participant will be calculated as a designated percentage (ranging from 4.5% to 24%) of the aggregate cash incentive award amount, which amount is equal to four percent of the Company’s 2005 adjusted operating income.  The restricted stock award for each participant will be calculated as a designated percentage (ranging from 4.5% to 24%) of the aggregate restricted stock award amount available for issuance to all participants based upon the attainment of a targeted 2005 adjusted return on equity.  The Committee, in its discretion, designates the executive officers of the Company that are eligible to receive incentive awards pursuant to the EIP, as well as sets the percentage of the incentive award each participant is entitled to earn upon achievement of the performance goals. Additionally, the Committee reserves the right to reduce or eliminate entirely the amount of incentive award payable to any participant in its discretion, but any such reduction may not increase the award of another participant.  For fiscal year 2005, the Committee has designated that the Named Executive Officers be eligible for the following maximum percentages of the total award amounts:  Messrs. Tucker, Herrmann, Butch, Strohm and Sundeen are eligible to receive 24%, 24%, 9.5%, 9.5% and 9.5%, respectively.

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Item 9.01Financial Statements and Exhibits.

(c)Exhibits.

10.1Form of Restricted Stock Award Agreement for awards pursuant to the Waddell & Reed Financial, Inc. 1998 Executive Deferred Compensation Stock Award, as amended and restated.

10.2Form of Restricted Stock Award Agreement for awards to Employees pursuant to the Waddell & Reed Financial, Inc. 1998 Stock Incentive Plan, as amended and restated.

10.3Summary of Non-Employee Director Compensation.

10.4Form of Restricted Stock Award Agreement for awards to Non-Employee Directors pursuant to the Waddell & Reed Financial, Inc. 1998 Stock Incentive Plan, as amended and restated.

10.5Form of Restricted Stock Award Agreement for awards pursuant to the Waddell & Reed Financial, Inc. 1998 Non-Employee Director Stock Award Plan, as amended.

10.62005 Performance Goals established pursuant to the Company 2003 Executive Incentive Plan, as amended.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	WADDELL & REED FINANCIAL, INC.
Date: March 7, 2005	By:	/s/ Daniel P. Connealy
		Senior Vice President and
		Chief Financial Officer

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EXHIBIT INDEX

Exhibit No.	Description
10.1	Form of Restricted Stock Award Agreement for awards pursuant to the Waddell & Reed Financial, Inc. 1998 Executive Deferred Compensation Stock Award, as amended and restated.
10.2	Form of Restricted Stock Award Agreement for awards to Employees pursuant to the Waddell & Reed Financial, Inc. 1998 Stock Incentive Plan, as amended and restated.
10.3	Summary of Non-Employee Director Compensation.
10.4	Form of Restricted Stock Award Agreement for awards to Non-Employee Directors pursuant to the Waddell & Reed Financial, Inc. 1998 Stock Incentive Plan, as amended and restated.
10.5	Form of Restricted Stock Award Agreement for awards pursuant to the Waddell & Reed Financial, Inc. 1998 Non-Employee Director Stock Award Plan, as amended.
10.6	2005 Performance Goals established pursuant to the Company 2003 Executive Incentive Plan, as amended.

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EX-10.1

Exhibit 10.1

WADDELL & REED FINANCIAL, INC.

RESTRICTED STOCK AWARD AGREEMENT

WADDELL & REED FINANCIAL, INC., a corporation organized and existing under the laws of the state of Delaware (or any successor corporation) (the “Company”), does hereby grant and give unto ________ (the “Awardee”), an award of restricted shares of Stock (the “Restricted Stock”) upon the terms and conditions hereinafter set forth (the “Award”).

AUTHORITY FOR GRANT

1.             Executive Deferral Plan.  The Restricted Stock is granted under the provisions of the Waddell & Reed Financial, Inc. 1998 Executive Deferred Stock Award Plan (the “Plan”), and is subject to the terms and conditions set forth in this Restricted Stock Award Agreement (the “Agreement”) and not inconsistent with the Plan.  Capitalized terms used but not defined herein shall have the meaning given them in the Plan, which is incorporated by reference herein.

TERMS OF AWARD

2.             Number of Shares.  In consideration of future services to the Company, the Awardee is hereby granted _______ shares of Restricted Stock (the “Shares”) of the Company’s Class A common stock, par value $.01 on ____________, 20____ (the “Grant Date”), subject to repurchase of a portion thereof by the Company pursuant to Section 12.

3.             Restrictions; Forfeiture.  The Restricted Stock may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated until its restrictions are removed or expire.  The Restricted Stock may be forfeited to the Company pursuant to Section 5(b), at which time the Company shall have the right to instruct the Company’s transfer agent to transfer the Restricted Stock to the Company to be held by the Company in treasury or by any designee of the Company.  Notwithstanding the preceding sentences, the Compensation Committee of the Board of Directors of the Company (the “Committee”) may, in its sole discretion, provide for the expiration of such restrictions in installments and may accelerate or waive such restrictions in whole or in part, before or after the Awardee’s termination of employment, based on performance and/or such other factors as the Committee may determine, in its sole discretion.

4.             Expiration of Restrictions and Risk of Forfeiture.  The restrictions and risk of forfeiture for the Restricted Stock will expire as set forth in this Section 4, as of the vesting dates set forth in this Section 4, provided that (a) Awardee is an employee of the Company, a Subsidiary or an Affiliate continuously from the Grant Date through the applicable vesting date, and (b) the restrictions and risk of forfeiture have not previously expired pursuant to this Agreement.

Percentage of Shares Vesting	Vest Date
331/3%	__________, 20___
331/3%	__________, 20___
331/3%	__________, 20___

TERMINATION OF AWARD

5.             Termination of Employment

(a)           Termination of Employment Due to Death, Disability or Normal Retirement.  If an Awardee’s employment with the Company or any of its Subsidiaries or Affiliates terminates by reason of death, Disability or Normal Retirement, the restrictions and risk of forfeiture with respect to the Restricted Stock which have not expired shall immediately expire and all shares of the Restricted Stock shall be fully vested.

(b)           Termination of Employment Other Than Due to Normal Retirement, Death or Disability.  If an Awardee’s employment with the Company or any of its Subsidiaries or Affiliates terminates for a reason other than death, Disability or Normal Retirement, the shares of Restricted Stock for which the restrictions and risk of forfeiture have not expired as of the date of termination shall be immediately forfeited without further action by the Company; provided, however, that the portion, if any, of those shares of Restricted Stock for which the restrictions and risk of forfeiture have expired as of the date of such termination shall not be forfeited.

6.             Change in Control or Potential Change in Control of the Company.  In the event of a Change in Control, unless otherwise determined by the Committee in writing after the Grant Date, but prior to the occurrence of such Change in Control, or, in the event of a Potential Change in Control, if and to the extent so determined by the Committee in writing after the Grant Date (subject to any right of approval expressly reserved by the Committee at the time of such determination): (a) the restrictions with respect to the Restricted Stock shall expire and such shares shall be deemed fully vested; and (b) the value of the outstanding Stock previously subject to restrictions, shall, to the extent determined by the Committee at or after the Grant Date, be settled on the basis of the Change in Control Price as of the date the Change in Control occurs or Potential Change in Control is determined to have occurred, or such other date as the Committee may determine prior to the Change in Control or Potential Change in Control.  In the sole discretion of the Committee, such settlements may be made in cash or in stock, as shall be necessary to effect the desired accounting treatment for the transaction resulting in the Change in Control or Potential Change of Control.

7.             No Limitation on Excess Parachute Payments.  The provisions of Section 14 of the Plan regarding the payment of any “Excess Parachute Payment” within the meaning of Section 280G(b)(1) of the Internal Revenue Code of 1986, as amended, shall not apply to this Agreement.

GENERAL TERMS AND PROVISIONS

8.             Administration of Award.  The Restricted Stock shall be maintained in a book-entry account (the “Account”) by and at the Company’s transfer agent until the restrictions associated with such Restricted Stock expire pursuant to Sections 4, 5 or 6.  The Awardee shall execute and deliver to the transfer agent one or more stock powers in blank for the Restricted Stock.  The Awardee hereby agrees that the transfer agent shall maintain such Account and the

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related stock power(s) pursuant to the terms of this Agreement until such restrictions expire pursuant to Sections 4, 5 or 6.

9.             Ownership of Restricted Stock.  From and after the time that the Account representing the Restricted Stock has been activated and prior to forfeiture, the Awardee will be entitled to all the rights of absolute ownership of the Restricted Stock, including the right to vote those shares and to receive dividends thereon if, as, and when declared by the Board, subject, however, to the terms, conditions and restrictions set forth in this Agreement.  Dividends paid in stock of the Company or stock received in connection with a Stock split with respect to the Restricted Stock shall be subject to the same restrictions as on such Restricted Stock.  The shares of Restricted Stock subject to this Award are not eligible to be enrolled in any dividend re-investment program until the restrictions thereon expire.

10.           Adjustment of Shares for Recapitalization, Etc.  In the event there is any change in the outstanding Stock of the Company by reason of any reorganization, recapitalization, stock split, stock dividend, combination of shares or otherwise, there shall be substituted for or added to each share of Stock theretofore appropriated or thereafter subject, or which may become subject, to this Award, the number and kind of shares of stock or other securities into which each outstanding share of Stock shall be so changed or for which each such share shall be exchanged, or to which each such share shall be entitled, as the case may be.  Adjustment under the preceding provisions of this Section 10 will occur automatically upon any such change in the outstanding Stock of the Company.  No fractional interest will be issued under the Plan on account of any such adjustment.

11.           Conditions to Delivery of Stock and Registration.  Nothing herein shall require the Company to issue or the transfer agent to deliver any shares with respect to the Award if (a) that issuance would, in the opinion of counsel for the Company, constitute a violation of the Securities Act of 1933, as amended, or any similar or superseding statute or statutes, any other applicable statute or regulation, or the rules of any applicable securities exchange or securities association, as then in effect; or (b) the withholding obligation as provided in Section 12 of this Agreement has not been satisfied.  From time to time, the Board and appropriate officers of the Company are authorized to and shall take whatever actions are necessary to file required documents with governmental authorities, stock exchanges, and other appropriate persons to make shares of Stock available for issuance.

12.           Payment of Taxes.  The delivery of shares of Stock pursuant to this Award is conditioned upon satisfaction of any withholding obligation described in this Section 12.  The Awardee may be required, from time to time, in the Company’s discretion, to pay to the Company (or any Subsidiary or Affiliate as applicable), the amount that the Company deems necessary to satisfy the Company’s or its Subsidiary’s or Affiliate’s current or future obligation to withhold federal, state or local income or other taxes incurred by the Awardee as a result of the Award.  With respect to any required tax withholding obligation, the Awardee may (a) upon election at the time and in the manner prescribed by the Company, direct the Company to purchase from the Awardee the number of shares of Restricted Stock to be issued upon vesting equal in value to the amount of such obligation, based on the shares’ Fair Market Value at the time such obligation is incurred; (b) deliver to the Company sufficient shares of Stock to satisfy such obligations, based on the shares’ Fair Market Value at the time such obligation is incurred; or (c) deliver sufficient cash to the Company to satisfy such obligations.  The Company may, in

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its sole discretion, deny any request to satisfy withholding obligations through Stock instead of cash.  In the event the Company subsequently determines that the aggregate Fair Market Value of any shares of Stock withheld as payment of any tax withholding obligation is insufficient to discharge that tax withholding obligation, then the Awardee shall pay to the Company, immediately upon the Company’s request, the amount of that deficiency in cash.

13.           Company Records.  Records of the Company or its Subsidiaries or Affiliates regarding any period(s) of employment, termination of employment and the reason therefor, leaves of absence, re-employment, and other matters shall be conclusive for all purposes hereunder, unless determined by the Company to be incorrect.

14.           Right of the Company and Subsidiaries to Terminate Employment.  Nothing contained in this Agreement shall confer upon the Awardee the right to continue in the employ of the Company or any Subsidiary or Affiliate, or interfere in any way with the rights of the Company or any Subsidiary or Affiliate to terminate the Awardee’s employment at any time.

15.           No Liability for Good Faith Determinations.  The members of the Board and the Committee shall not be liable for any act, omission, interpretation or determination taken or made in good faith with respect to this Agreement or the Restricted Stock granted hereunder and all members of the Board or the Committee and each and any officer or employee of the Company acting on their behalf shall, to the extent permitted by law, be fully indemnified and protected by the Company with respect to any such action, determination or interpretation.

16.           Severability.  If any provision of this Agreement is held to be illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining provisions hereof, but such provision shall be fully severable and this Agreement shall be construed and enforced as if the illegal or invalid provision had never been included herein.

17.           Successors.  This Agreement shall be binding upon the Awardee, their legal representatives, heirs, legatees and distributees, and upon the Company, its successors and assigns.

18.           Notices.  Any notices required by or permitted to be given to the Company under this Agreement shall be made in writing and addressed to the Secretary of the Company in care of the Company’s Legal Department, 6300 Lamar Avenue, Overland Park, Kansas 66202.  Any such notice shall be deemed to have been given when received by the Company.

19.           Headings.  The titles and headings herein are included for convenience of reference only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.

20.           Rules of Construction.  This Agreement has been executed and delivered by the Company in Kansas and shall be construed and enforced in accordance with the laws of said State, other than any choice of law rules calling for the application of laws of another jurisdiction.  Should there be any inconsistency or discrepancy between the provisions of this Agreement and the terms and conditions of the Plan under which this Award is granted, the provisions in the Plan shall govern and prevail.

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21.           Amendment.  This Agreement may be amended by the Committee; provided, however, that no amendment may decrease rights inherent in this Award prior to such amendment without the express written consent of the parties hereto.  Notwithstanding the provisions of this Section 21, this Agreement may be amended by the Committee to the extent necessary to comply with applicable laws and regulations and to conform the provisions of this Agreement to any changes thereto.

22.           Effective Date.  This Agreement has been executed this ___ day of _____, 20__, effective as of ____________, 20_____.

WADDELL & REED FINANCIAL, INC.
By:
	Daniel P. Connealy, Senior Vice President and Chief Financial Officer
	“Company”
	[Name]
	“Awardee”

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STOCK POWER

FOR VALUE RECEIVED, ______ does hereby assign and transfer unto Waddell & Reed Financial, Inc. (51-0261715) _________ shares of Class A common stock of Waddell & Reed Financial, Inc., a Delaware corporation, granted on ____________, 20___, as evidenced by the Restricted Stock Award Agreement of even date herewith and standing in the name of the undersigned on the books of Waddell & Reed Financial, Inc.  The undersigned does hereby appoint EquiServe Trust Company, N.A. as attorney-in-fact to transfer the said stock on the books of Waddell & Reed Financial, Inc. with full power of substitution in the premises.

Dated as of this ____ day of _________, 20___.

[Name]

EX-10.2

Exhibit 10.2

WADDELL & REED FINANCIAL, INC.

RESTRICTED STOCK AWARD AGREEMENT

WADDELL & REED FINANCIAL, INC., a corporation organized and existing under the laws of the state of Delaware (or any successor corporation) (the “Company”), does hereby grant and give unto _____________ (the “Awardee”), an award of restricted shares of Stock (the “Restricted Stock”) upon the terms and conditions hereinafter set forth (the “Award”).

AUTHORITY FOR GRANT

1.             Stock Incentive Plan.  The Restricted Stock is granted under the provisions of the Waddell & Reed Financial, Inc. 1998 Stock Incentive Plan, as amended and restated (the “Plan”), and is subject to the terms and conditions set forth in this Restricted Stock Award Agreement (the “Agreement”) and not inconsistent with the Plan.  Capitalized terms used but not defined herein shall have the meaning given them in the Plan, which is incorporated by reference herein.

TERMS OF AWARD

2.             Number of Shares.  In consideration of future services to the Company, the Awardee is hereby granted ________  shares of Restricted Stock (the “Shares”) of the Company’s Class A common stock, par value $.01 on ______________, 20____ (the “Grant Date”), subject to repurchase of a portion thereof by the Company pursuant to Section 12.

3.             Restrictions; Forfeiture.  The Restricted Stock may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated until its restrictions are removed or expire.  The Restricted Stock may be forfeited to the Company pursuant to Section 5(b), at which time the Company shall have the right to instruct the Company’s transfer agent to transfer the Restricted Stock to the Company to be held by the Company in treasury or by any designee of the Company.  Notwithstanding the preceding sentences, the Compensation Committee of the Board of Directors of the Company (the “Committee”) may, in its sole discretion, provide for the expiration of such restrictions in installments and may accelerate or waive such restrictions in whole or in part, before or after the Awardee’s termination of employment, based on performance and/or such other factors as the Committee may determine, in its sole discretion.

4.             Expiration of Restrictions and Risk of Forfeiture.  The restrictions and risk of forfeiture for the Restricted Stock will expire as set forth in this Section 4, as of the vesting dates set forth in this Section 4, provided that (a) Awardee is an employee of the Company, a Subsidiary or an Affiliate continuously from the Grant Date through the applicable vesting date, and (b) the restrictions and risk of forfeiture have not previously expired pursuant to this Agreement.

Percentage of Shares Vesting	Vest Date
331/3%	_____________, 20___
331/3%	_____________, 20___
331/3%	_____________, 20___

TERMINATION OF AWARD

5.             Termination of Employment.

(a)           Termination of Employment Due to Death, Disability or Normal Retirement.  If an Awardee’s employment with the Company or any of its Subsidiaries or Affiliates terminates by reason of death, Disability or Normal Retirement, the restrictions and risk of forfeiture with respect to the Restricted Stock which have not expired shall immediately expire and all shares of the Restricted Stock shall be fully vested.

(b)           Termination of Employment Other Than Due to Normal Retirement, Death or Disability.  If an Awardee’s employment with the Company or any of its Subsidiaries or Affiliates terminates for a reason other than death, Disability or Normal Retirement, the shares of Restricted Stock for which the restrictions and risk of forfeiture have not expired as of the date of termination shall be immediately forfeited without further action by the Company; provided, however, that the portion, if any, of those shares of Restricted Stock for which the restrictions and risk of forfeiture have expired as of the date of such termination shall not be forfeited.

6.             Change in Control or Potential Change in Control of the Company.  In the event of a Change in Control, unless otherwise determined by the Committee in writing after the Grant Date, but prior to the occurrence of such Change in Control, or, in the event of a Potential Change in Control, if and to the extent so determined by the Committee in writing after the Grant Date (subject to any right of approval expressly reserved by the Committee at the time of such determination): (a) the restrictions with respect to the Restricted Stock shall expire and such shares shall be deemed fully vested; and (b) the value of the outstanding Stock previously subject to restrictions, shall, to the extent determined by the Committee at or after the Grant Date, be settled on the basis of the Change in Control Price as of the date the Change in Control occurs or Potential Change in Control is determined to have occurred, or such other date as the Committee may determine prior to the Change in Control or Potential Change in Control.  In the sole discretion of the Committee, such settlements may be made in cash or in stock, as shall be necessary to effect the desired accounting treatment for the transaction resulting in the Change in Control or Potential Change of Control.

7.             No Limitation on Excess Parachute Payments.  The provisions of Section 14 of the Plan regarding the payment of any “Excess Parachute Payment” within the meaning of Section 280G(b)(1) of the Internal Revenue Code of 1986, as amended, shall not apply to this Agreement.

GENERAL TERMS AND PROVISIONS

8.             Administration of Award.  The Restricted Stock shall be maintained in a book-entry account (the “Account”) by and at the Company’s transfer agent until the restrictions associated with such Restricted Stock expire pursuant to Sections 4, 5 or 6.  The Awardee shall execute and deliver to the transfer agent one or more stock powers in blank for the Restricted Stock.  The Awardee hereby agrees that the transfer agent shall maintain such Account and the

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related stock power(s) pursuant to the terms of this Agreement until such restrictions expire pursuant to Sections 4, 5 or 6.

9.             Ownership of Restricted Stock.  From and after the time that the Account representing the Restricted Stock has been activated and prior to forfeiture, the Awardee will be entitled to all the rights of absolute ownership of the Restricted Stock, including the right to vote those shares and to receive dividends thereon if, as, and when declared by the Board, subject, however, to the terms, conditions and restrictions set forth in this Agreement.  Dividends paid in stock of the Company or stock received in connection with a Stock split with respect to the Restricted Stock shall be subject to the same restrictions as on such Restricted Stock.  The shares of Restricted Stock subject to this Award are not eligible to be enrolled in any dividend re-investment program until the restrictions thereon expire.

10.           Adjustment of Shares for Recapitalization, Etc.  In the event there is any change in the outstanding Stock of the Company by reason of any reorganization, recapitalization, stock split, stock dividend, combination of shares or otherwise, there shall be substituted for or added to each share of Stock theretofore appropriated or thereafter subject, or which may become subject, to this Award, the number and kind of shares of stock or other securities into which each outstanding share of Stock shall be so changed or for which each such share shall be exchanged, or to which each such share shall be entitled, as the case may be.  Adjustment under the preceding provisions of this Section 10 will occur automatically upon any such change in the outstanding Stock of the Company.  No fractional interest will be issued under the Plan on account of any such adjustment.

11.           Conditions to Delivery of Stock and Registration.  Nothing herein shall require the Company to issue or the transfer agent to deliver any shares with respect to the Award if (a) that issuance would, in the opinion of counsel for the Company, constitute a violation of the Securities Act of 1933, as amended, or any similar or superseding statute or statutes, any other applicable statute or regulation, or the rules of any applicable securities exchange or securities association, as then in effect; or (b) the withholding obligation as provided in Section 12 of this Agreement has not been satisfied.  From time to time, the Board and appropriate officers of the Company are authorized to and shall take whatever actions are necessary to file required documents with governmental authorities, stock exchanges, and other appropriate persons to make shares of Stock available for issuance.

12.           Payment of Taxes.  The delivery of shares of Stock pursuant to this Award is conditioned upon satisfaction of any withholding obligation described in this Section 12.  The Awardee may be required, from time to time, in the Company’s discretion, to pay to the Company (or any Subsidiary or Affiliate as applicable), the amount that the Company deems necessary to satisfy the Company’s or its Subsidiary’s or Affiliate’s current or future obligation to withhold federal, state or local income or other taxes incurred by the Awardee as a result of the Award.  With respect to any required tax withholding obligation, the Awardee may (a) upon election at the time and in the manner prescribed by the Company, direct the Company to purchase from the Awardee the number of shares of Restricted Stock to be issued upon vesting equal in value to the amount of such obligation, based on the shares’ Fair Market Value at the time such obligation is incurred; (b) deliver to the Company sufficient shares of Stock to satisfy such obligations, based on the shares’ Fair Market Value at the time such obligation is incurred; or (c) deliver sufficient cash to the Company to satisfy such obligations.  The Company may, in

3

its sole discretion, deny any request to satisfy withholding obligations through Stock instead of cash.  In the event the Company subsequently determines that the aggregate Fair Market Value of any shares of Stock withheld as payment of any tax withholding obligation is insufficient to discharge that tax withholding obligation, then the Awardee shall pay to the Company, immediately upon the Company’s request, the amount of that deficiency in cash.

13.           Company Records.  Records of the Company or its Subsidiaries or Affiliates regarding any period(s) of employment, termination of employment and the reason therefor, leaves of absence, re-employment, and other matters shall be conclusive for all purposes hereunder, unless determined by the Company to be incorrect.

14.           Right of the Company and Subsidiaries to Terminate Employment.  Nothing contained in this Agreement shall confer upon the Awardee the right to continue in the employ of the Company or any Subsidiary or Affiliate, or interfere in any way with the rights of the Company or any Subsidiary or Affiliate to terminate the Awardee’s employment at any time.

15.           No Liability for Good Faith Determinations.  The members of the Board and the Committee shall not be liable for any act, omission, interpretation or determination taken or made in good faith with respect to this Agreement or the Restricted Stock granted hereunder and all members of the Board or the Committee and each and any officer or employee of the Company acting on their behalf shall, to the extent permitted by law, be fully indemnified and protected by the Company with respect to any such action, determination or interpretation.

16.           Severability.  If any provision of this Agreement is held to be illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining provisions hereof, but such provision shall be fully severable and this Agreement shall be construed and enforced as if the illegal or invalid provision had never been included herein.

17.           Successors.  This Agreement shall be binding upon the Awardee, their legal representatives, heirs, legatees and distributees, and upon the Company, its successors and assigns.

18.           Notices.  Any notices required by or permitted to be given to the Company under this Agreement shall be made in writing and addressed to the Secretary of the Company in care of the Company’s Legal Department, 6300 Lamar Avenue, Overland Park, Kansas 66202.  Any such notice shall be deemed to have been given when received by the Company.

19.           Headings.  The titles and headings herein are included for convenience of reference only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.

20.           Rules of Construction.  This Agreement has been executed and delivered by the Company in Kansas and shall be construed and enforced in accordance with the laws of said State, other than any choice of law rules calling for the application of laws of another jurisdiction.  Should there be any inconsistency or discrepancy between the provisions of this Agreement and the terms and conditions of the Plan under which this Award is granted, the provisions in the Plan shall govern and prevail.

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21.           Amendment.  This Agreement may be amended by the Committee; provided, however, that no amendment may decrease rights inherent in this Award prior to such amendment without the express written consent of the parties hereto.  Notwithstanding the provisions of this Section 21, this Agreement may be amended by the Committee to the extent necessary to comply with applicable laws and regulations and to conform the provisions of this Agreement to any changes thereto.

22.           Effective Date.  This Agreement has been executed this ___  day of _____, 20___, effective as of ____________, 20___.

WADDELL & REED FINANCIAL, INC.
By:
	Daniel P. Connealy, Senior Vice President and Chief Financial Officer
	“Company”
	[Name]
	“Awardee”

5

STOCK POWER

FOR VALUE RECEIVED, __________________ does hereby assign and transfer unto Waddell & Reed Financial, Inc. (51-0261715) _______ shares of Class A common stock of Waddell & Reed Financial, Inc., a Delaware corporation, granted on ___________, 20___, as evidenced by the Restricted Stock Award Agreement of even date herewith and standing in the name of the undersigned on the books of Waddell & Reed Financial, Inc.  The undersigned does hereby appoint EquiServe Trust Company, N.A. as attorney-in-fact to transfer the said stock on the books of Waddell & Reed Financial, Inc. with full power of substitution in the premises.

Dated as of this___ day of ______, 20____.

[Name]

EX-10.3

Exhibit 10.3

Summary of Annual Non-Employee Director Compensation; Effective January 1, 2005

Annual retainer of $40,000;

Meeting fees of $2,000/meeting;

Meeting fees of $1,500/committee meeting;

Committee Chairmen receive an additional $500/committee meeting;

Award of 5,000 shares of restricted Class A common stock upon initial election to the Board of Directors;

After initial election, annual formula-based award of 1,500 shares of restricted stock and an additional discretionary, non-formula based award of 2,000 shares of restricted stock to be awarded the first trading day of January each year;

Reimbursement for travel and lodging expenses incurred in attending meetings;

Eligibility to participate in the Company’s group health insurance plan, a portion of the premiums for which are paid by the Company; and

Deferral of annual cash compensation into an interest-bearing account under the Company’s 1998 Non-Employee Director Stock Award Plan, as amended, which may subsequently be converted into restricted stock.  The number of shares of restricted stock granted is determined based on the closing market price of the Company’s Class A common stock as of the conversion date.

EX-10.4

Exhibit 10.4

WADDELL & REED FINANCIAL, INC.

RESTRICTED STOCK AWARD AGREEMENT

WADDELL & REED FINANCIAL, INC., a corporation organized and existing under the laws of the state of Delaware (or any successor corporation) (the “Company”), does hereby grant and give unto _____________ (the “Awardee”), an award of restricted shares of Stock (the “Restricted Stock”) upon the terms and conditions hereinafter set forth (the “Award”).

AUTHORITY FOR GRANT

1.Stock Incentive Plan.  The Restricted Stock is granted under the provisions of the Waddell & Reed Financial, Inc. 1998 Stock Incentive Plan, as amended and restated (the “Plan”), and is subject to the terms and conditions set forth in this Restricted Stock Award Agreement (the “Agreement”) and not inconsistent with the Plan.  Capitalized terms used but not defined herein shall have the meaning given them in the Plan, which is incorporated by reference herein.

TERMS OF AWARD

2.Number of Shares.  In consideration of future services to the Company, the Awardee is hereby granted ______ shares and _______  shares of Restricted Stock (collectively, the “Shares”) of the Company’s Class A common stock, par value $.01 on _________________________, 20___ (the “Grant Date”), subject to repurchase of a portion thereof by the Company pursuant to Section 12.

3.Restrictions; Forfeiture.  The Restricted Stock may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated until its restrictions are removed or expire.  The Restricted Stock may be forfeited to the Company, at which time the Company shall have the right to instruct the Company’s transfer agent to transfer the Restricted Stock to the Company to be held by the Company in treasury or by any designee of the Company.  Notwithstanding the preceding sentences, the Compensation Committee of the Board of Directors of the Company (the “Committee”) may, in its sole discretion, provide for the expiration of such restrictions in installments and may accelerate or waive such restrictions in whole or in part, before or after the Awardee’s termination of service on the Board, based on such factors as the Committee may determine, in its sole discretion.

4.Expiration of Restrictions and Risk of Forfeiture.  The restrictions and risk of forfeiture for the Restricted Stock will expire as set forth in this Section 4, as of the vesting dates set forth in this Section 4, provided that the restrictions and risk of forfeiture have not previously expired pursuant to this Agreement.

Percentage of Shares Vesting	Vest Date
331/3%	______________, 20___
331/3%	______________, 20___
331/3%	______________, 20___

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TERMINATION OF AWARD

5.Termination of Service on the Board.  If an Awardee’s service on the Board terminates for any reason, the restrictions and risk of forfeiture with respect to the Restricted Stock which have not expired shall immediately expire and all shares of the Restricted Stock shall be fully vested.

6.Change in Control or Potential Change in Control of the Company.  In the event of a Change in Control, unless otherwise determined by the Committee in writing after the Grant Date, but prior to the occurrence of such Change in Control, or, in the event of a Potential Change in Control, if and to the extent so determined by the Committee in writing after the Grant Date (subject to any right of approval expressly reserved by the Committee at the time of such determination): (a) the restrictions with respect to the Restricted Stock shall expire and such shares shall be deemed fully vested; and (b) the value of the outstanding Stock previously subject to restrictions, shall, to the extent determined by the Committee at or after the Grant Date, be settled on the basis of the Change in Control Price as of the date the Change in Control occurs or Potential Change in Control is determined to have occurred, or such other date as the Committee may determine prior to the Change in Control or Potential Change in Control.  In the sole discretion of the Committee, such settlements may be made in cash or in stock, as shall be necessary to effect the desired accounting treatment for the transaction resulting in the Change in Control or Potential Change of Control.

7.No Limitation on Excess Parachute Payments.  The provisions of Section 14 of the Plan regarding the payment of any “Excess Parachute Payment” within the meaning of Section 280G(b)(1) of the Internal Revenue Code of 1986, as amended, shall not apply to this Agreement.

GENERAL TERMS AND PROVISIONS

8.Administration of Award.  The Restricted Stock shall be maintained in a book-entry account (the “Account”) by and at the Company’s transfer agent until the restrictions associated with such Restricted Stock expire pursuant to Sections 4, 5 or 6.  The Awardee shall execute and deliver to the transfer agent one or more stock powers in blank for the Restricted Stock.  The Awardee hereby agrees that the transfer agent shall maintain such Account and the related stock power(s) pursuant to the terms of this Agreement until such restrictions expire pursuant to Sections 4, 5 or 6.

9.Ownership of Restricted Stock.  From and after the time that the Account representing the Restricted Stock has been activated and prior to forfeiture, the Awardee will be entitled to all the rights of absolute ownership of the Restricted Stock, including the right to vote those shares and to receive dividends thereon if, as, and when declared by the Board, subject, however, to the terms, conditions and restrictions set forth in this Agreement.  Dividends paid in stock of the Company or stock received in connection with a Stock split with respect to the Restricted Stock shall be subject to the same restrictions as on such Restricted Stock.  The shares

2

of Restricted Stock subject to this Award are not eligible to be enrolled in any dividend re-investment program until the restrictions thereon expire.

10.Adjustment of Shares for Recapitalization, Etc.  In the event there is any change in the outstanding Stock of the Company by reason of any reorganization, recapitalization, stock split, stock dividend, combination of shares or otherwise, there shall be substituted for or added to each share of Stock theretofore appropriated or thereafter subject, or which may become subject, to this Award, the number and kind of shares of stock or other securities into which each outstanding share of Stock shall be so changed or for which each such share shall be exchanged, or to which each such share shall be entitled, as the case may be.  Adjustment under the preceding provisions of this Section 10 will occur automatically upon any such change in the outstanding Stock of the Company.  No fractional interest will be issued under the Plan on account of any such adjustment.

11.Conditions to Delivery of Stock and Registration.  Nothing herein shall require the Company to issue or the transfer agent to deliver any shares with respect to the Award if (a) that issuance would, in the opinion of counsel for the Company, constitute a violation of the Securities Act of 1933, as amended, or any similar or superseding statute or statutes, any other applicable statute or regulation, or the rules of any applicable securities exchange or securities association, as then in effect.  From time to time, the Board and appropriate officers of the Company are authorized to and shall take whatever actions are necessary to file required documents with governmental authorities, stock exchanges, and other appropriate persons to make shares of Stock available for issuance.

12.Payment of Taxes.  The delivery of shares of Stock pursuant to this Award is conditioned upon satisfaction of any withholding obligation described in this Section 12.  The Awardee may be required, from time to time, in the Company’s discretion, to pay to the Company (or any Subsidiary or Affiliate as applicable), the amount that the Company deems necessary to satisfy the Company’s or its Subsidiary’s or Affiliate’s current or future obligation to withhold federal, state or local income or other taxes incurred by the Awardee as a result of the Award.  With respect to any required tax withholding, the Awardee may (a) upon election at the time and in the manner prescribed by the Company, direct the Company to purchase from the Awardee the number of shares of Restricted Stock to be issued upon vesting equal in value to the amount of such obligation, based on the shares’ Fair Market Value at the time such obligation is incurred; (b) deliver to the Company sufficient shares of Stock to satisfy such obligations, based on the shares’ Fair Market Value at the time such obligation is incurred; or (c) deliver sufficient cash to the Company to satisfy such obligations.  The Company may, in its sole discretion, deny any request to satisfy withholding obligations through Stock instead of cash.  In the event the Company subsequently determines that the aggregate Fair Market Value of any shares of Stock withheld as payment of any tax withholding obligation is insufficient to discharge that tax withholding obligation, then the Awardee shall pay to the Company, immediately upon the Company’s request, the amount of that deficiency in cash.

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13.Company Records.  Records of the Company or its Subsidiaries or Affiliates regarding any period(s) of service on the Board, termination of service and the reason therefor, and other matters shall be conclusive for all purposes hereunder, unless determined by the Company to be incorrect.

14.No Liability for Good Faith Determinations.  The members of the Board and the Committee shall not be liable for any act, omission, interpretation or determination taken or made in good faith with respect to this Agreement or the Restricted Stock granted hereunder and all members of the Board or the Committee and each and any officer or employee of the Company acting on their behalf shall, to the extent permitted by law, be fully indemnified and protected by the Company in respect of any such action, determination or interpretation.

15.Severability.  If any provision of this Agreement is held to be illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining provisions hereof, but such provision shall be fully severable and this Agreement shall be construed and enforced as if the illegal or invalid provision had never been included herein.

16.Successors.  This Agreement shall be binding upon the Awardee, their legal representatives, heirs, legatees and distributees, and upon the Company, its successors and assigns.

17.Notices.  Any notices required by or permitted to be given to the Company under this Agreement shall be made in writing and addressed to the Secretary of the Company in care of the Company’s Legal Department, 6300 Lamar Avenue, Overland Park, Kansas 66202.  Any such notice shall be deemed to have been given when received by the Company.

18.Headings.  The titles and headings herein are included for convenience of reference only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.

19.Rules of Construction.  This Agreement has been executed and delivered by the Company in Kansas and shall be construed and enforced in accordance with the laws of said State, other than any choice of law rules calling for the application of laws of another jurisdiction.  Should there be any inconsistency or discrepancy between the provisions of this Agreement and the terms and conditions of the Plan under which this Award is granted, the provisions in the Plan shall govern and prevail.

20.Amendment.  This Agreement may be amended by the Committee; provided, however, that no amendment may decrease rights inherent in this Award prior to such amendment without the express written consent of the parties hereto.  Notwithstanding the provisions of this Section 20, this Agreement may be amended by the Committee to the extent necessary to comply with applicable laws and regulations and to conform the provisions of this Agreement to any changes thereto.

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21.Effective Date.  This Agreement has been executed this ____ day of _____________, 20___, effective as of _________________, 20___.

WADDELL & REED FINANCIAL, INC.
By:
	Daniel P. Connealy, Senior Vice President and Chief Financial Officer
	“Company”
	[Name]
	“Awardee”

5

STOCK POWER

FOR VALUE RECEIVED, __________________ does hereby assign and transfer unto Waddell & Reed Financial, Inc. (51-0261715) ____________  shares of Class A common stock of Waddell & Reed Financial, Inc., a Delaware corporation, granted on _________________, 20___, as evidenced by the Restricted Stock Award Agreement of even date herewith and standing in the name of the undersigned on the books of Waddell & Reed Financial, Inc.  The undersigned does hereby appoint EquiServe Trust Company, N.A. as attorney-in-fact to transfer the said stock on the books of Waddell & Reed Financial, Inc. with full power of substitution in the premises.

Dated as of this ____ day of ___________, 20___.

[Name]

EX-10.5

Exhibit 10.5

WADDELL & REED FINANCIAL, INC.

RESTRICTED STOCK AWARD AGREEMENT

WADDELL & REED FINANCIAL, INC., a corporation organized and existing under the laws of the state of Delaware (or any successor corporation) (the “Company”), does hereby grant and give unto ______________ (the “Awardee”), an award of restricted shares of Stock (the “Restricted Stock”) upon the terms and conditions hereinafter set forth (the “Award”).

AUTHORITY FOR GRANT

1.Non-Employee Director Stock Award Plan.  The Restricted Stock is granted under the provisions of the Waddell & Reed Financial, Inc. 1998 Non-Employee Director Stock Award Plan, as amended (the “Plan”), and is subject to the terms and conditions set forth in this Restricted Stock Award Agreement (the “Agreement”) and not inconsistent with the Plan.  Capitalized terms used but not defined herein shall have the meaning given them in the Plan, which is incorporated by reference herein.

TERMS OF AWARD

2.Number of Shares.  Pursuant to his Secondary Election Form dated ______________, the Awardee is hereby granted ________________ shares of Restricted Stock (the “Shares”) of the Company’s Class A common stock, par value $.01 on ________________, 20___ (the “Grant Date”), subject to repurchase of a portion thereof by the Company pursuant to Section 12.

3.Restrictions; Forfeiture

.  The Restricted Stock may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated until its restrictions are removed or expire.  The Restricted Stock may be forfeited to the Company, at which time the Company shall have the right to instruct the Company’s transfer agent to transfer the Restricted Stock to the Company to be held by the Company in treasury or by any designee of the Company.  Notwithstanding the preceding sentences, the Compensation Committee of the Board of Directors of the Company (the “Committee”) may, in its sole discretion, provide for the expiration of such restrictions in installments and may accelerate or waive such restrictions in whole or in part, before or after the Awardee’s termination of service on the Board, based on such factors as the Committee may determine, in its sole discretion.

4.Expiration of Restrictions and Risk of Forfeiture

.  The restrictions and risk of forfeiture for the Restricted Stock will expire as set forth in this Section 4, as of the vesting dates set forth in this Section 4, provided that the restrictions and risk of forfeiture have not previously expired pursuant to this Agreement.

Percentage of Shares Vesting	Vest Date
331/3%	______________, 20___
331/3%	______________, 20___
331/3%	______________, 20___

TERMINATION OF AWARD

5.Termination of Service on the Board.  If an Awardee’s service on the Board terminates for any reason, the restrictions and risk of forfeiture with respect to the Restricted Stock which have not expired shall immediately expire and all shares of the Restricted Stock shall be fully vested.

6.Change in Control or Potential Change in Control of the Company.  In the event of a Change in Control, unless otherwise determined by the Committee in writing after the Grant Date, but prior to the occurrence of such Change in Control, or, in the event of a Potential Change in Control, if and to the extent so determined by the Committee in writing after the Grant Date (subject to any right of approval expressly reserved by the Committee at the time of such determination): (a) the restrictions with respect to the Restricted Stock shall expire and such shares shall be deemed fully vested; and (b) the value of the outstanding Stock previously subject to restrictions, shall, to the extent determined by the Committee at or after the Grant Date, be settled on the basis of the Change in Control Price as of the date the Change in Control occurs or Potential Change in Control is determined to have occurred, or such other date as the Committee may determine prior to the Change in Control or Potential Change in Control.  In the sole discretion of the Committee, such settlements may be made in cash or in stock, as shall be necessary to effect the desired accounting treatment for the transaction resulting in the Change in Control or Potential Change of Control.

7.No Limitation on Excess Parachute Payments.  The provisions of Section 14 of the Plan regarding the payment of any “Excess Parachute Payment” within the meaning of Section 280G(b)(1) of the Internal Revenue Code of 1986, as amended, shall not apply to this Agreement.

GENERAL TERMS AND PROVISIONS

8.Administration of Award.  The Restricted Stock shall be maintained in a book-entry account (the “Account”) by and at the Company’s transfer agent until the restrictions associated with such Restricted Stock expire pursuant to Sections 4, 5 or 6.  The Awardee shall execute and deliver to the transfer agent one or more stock powers in blank for the Restricted Stock.  The Awardee hereby agrees that the transfer agent shall maintain such Account and the related stock power(s) pursuant to the terms of this Agreement until such restrictions expire pursuant to Sections 4, 5 or 6.

9.Ownership of Restricted Stock.  From and after the time that the Account representing the Restricted Stock has been activated and prior to forfeiture, the Awardee will be entitled to all the rights of absolute ownership of the Restricted Stock, including the right to vote those shares and to receive dividends thereon if, as, and when declared by the Board, subject, however, to the terms, conditions and restrictions set forth in this Agreement.  Dividends paid in stock of the Company or stock received in connection with a Stock split with respect to the Restricted Stock shall be subject to the same restrictions as on such Restricted Stock.  The shares

1

of Restricted Stock subject to this Award are not eligible to be enrolled in any dividend re-investment program until the restrictions thereon expire.

10.Adjustment of Shares for Recapitalization, Etc.  In the event there is any change in the outstanding Stock of the Company by reason of any reorganization, recapitalization, stock split, stock dividend, combination of shares or otherwise, there shall be substituted for or added to each share of Stock theretofore appropriated or thereafter subject, or which may become subject, to this Award, the number and kind of shares of stock or other securities into which each outstanding share of Stock shall be so changed or for which each such share shall be exchanged, or to which each such share shall be entitled, as the case may be.  Adjustment under the preceding provisions of this Section 10 will occur automatically upon any such change in the outstanding Stock of the Company.  No fractional interest will be issued under the Plan on account of any such adjustment.

11.Conditions to Delivery of Stock and Registration.  Nothing herein shall require the Company to issue or the transfer agent to deliver any shares with respect to the Award if (a) that issuance would, in the opinion of counsel for the Company, constitute a violation of the Securities Act of 1933, as amended, or any similar or superseding statute or statutes, any other applicable statute or regulation, or the rules of any applicable securities exchange or securities association, as then in effect.  From time to time, the Board and appropriate officers of the Company are authorized to and shall take whatever actions are necessary to file required documents with governmental authorities, stock exchanges, and other appropriate persons to make shares of Stock available for issuance.

12.Payment of Taxes.  The delivery of shares of Stock pursuant to this Award is conditioned upon satisfaction of any withholding obligation described in this Section 12.  The Awardee may be required, from time to time, in the Company’s discretion, to pay to the Company (or any Subsidiary or Affiliate as applicable), the amount that the Company deems necessary to satisfy the Company’s or its Subsidiary’s or Affiliate’s current or future obligation to withhold federal, state or local income or other taxes incurred by the Awardee as a result of the Award.  With respect to any required tax withholding, the Awardee may (a) upon election at the time and in the manner prescribed by the Company, direct the Company to purchase from the Awardee the number of shares of Restricted Stock to be issued upon vesting equal in value to the amount of such obligation, based on the shares’ Fair Market Value at the time such obligation is incurred; (b) deliver to the Company sufficient shares of Stock to satisfy such obligations, based on the shares’ Fair Market Value at the time such obligation is incurred; or (c) deliver sufficient cash to the Company to satisfy such obligations.  The Company may, in its sole discretion, deny any request to satisfy withholding obligations through Stock instead of cash.  In the event the Company subsequently determines that the aggregate Fair Market Value of any shares of Stock withheld as payment of any tax withholding obligation is insufficient to discharge that tax withholding obligation, then the Awardee shall pay to the Company, immediately upon the Company’s request, the amount of that deficiency in cash.

13.Company Records.  Records of the Company or its Subsidiaries or Affiliates regarding any period(s) of service on the Board, termination of service and the reason therefor,

2

and other matters shall be conclusive for all purposes hereunder, unless determined by the Company to be incorrect.

14.No Liability for Good Faith Determinations.  The members of the Board and the Committee shall not be liable for any act, omission, interpretation or determination taken or made in good faith with respect to this Agreement or the Restricted Stock granted hereunder and all members of the Board or the Committee and each and any officer or employee of the Company acting on their behalf shall, to the extent permitted by law, be fully indemnified and protected by the Company in respect of any such action, determination or interpretation.

15.Severability.  If any provision of this Agreement is held to be illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining provisions hereof, but such provision shall be fully severable and this Agreement shall be construed and enforced as if the illegal or invalid provision had never been included herein.

16.Successors.  This Agreement shall be binding upon the Awardee, their legal representatives, heirs, legatees and distributees, and upon the Company, its successors and assigns.

17.Notices.  Any notices required by or permitted to be given to the Company under this Agreement shall be made in writing and addressed to the Secretary of the Company in care of the Company’s Legal Department, 6300 Lamar Avenue, Overland Park, Kansas 66202.  Any such notice shall be deemed to have been given when received by the Company.

18.Headings.  The titles and headings herein are included for convenience of reference only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.

19.Rules of Construction.  This Agreement has been executed and delivered by the Company in Kansas and shall be construed and enforced in accordance with the laws of said State, other than any choice of law rules calling for the application of laws of another jurisdiction.  Should there be any inconsistency or discrepancy between the provisions of this Agreement and the terms and conditions of the Plan under which this Award is granted, the provisions in the Plan shall govern and prevail.

20.Amendment.  This Agreement may be amended by the Committee; provided, however, that no amendment may decrease rights inherent in this Award prior to such amendment without the express written consent of the parties hereto.  Notwithstanding the provisions of this Section 20, this Agreement may be amended by the Committee to the extent necessary to comply with applicable laws and regulations and to conform the provisions of this Agreement to any changes thereto.

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21.Effective Date.  This Agreement has been executed this ____ day of ____________, 20___, effective as of __________________, 20___.

WADDELL & REED FINANCIAL, INC.
By:
	Daniel P. Connealy, Senior Vice President and Chief Financial Officer
	“Company”
	[Name]
	“Awardee”

4

STOCK POWER

FOR VALUE RECEIVED, __________________ does hereby assign and transfer unto Waddell & Reed Financial, Inc. (51-0261715) _________  shares of Class A common stock of Waddell & Reed Financial, Inc., a Delaware corporation, granted on _____________________, 20___, as evidenced by the Restricted Stock Award Agreement of even date herewith and standing in the name of the undersigned on the books of Waddell & Reed Financial, Inc.  The undersigned does hereby appoint EquiServe Trust Company, N.A. as attorney-in-fact to transfer the said stock on the books of Waddell & Reed Financial, Inc. with full power of substitution in the premises.

Dated as of this ___ day of _____________, 20___.

[Name]

EX-10.6

Exhibit 10.6

A.Performance Criteria for Incentive Plan Awards for Year 2005 Pursuant to the 2003 Executive Incentive Plan

1.The aggregate incentive plan cash award for all participants (the “Incentive Plan Cash Award”) shall equal four percent of the Adjusted 2005 Operating Income (defined below).  The Compensation Committee, in its discretion, will designate the executive officers of the Company that are eligible to receive cash incentive awards, as well as set the percentage of the aggregate Incentive Plan Cash Award each participant is eligible to earn upon achievement of the performance goals (for each participant, the “Individual Cash Incentive Award”). Notwithstanding the foregoing, the Compensation Committee may, in its sole discretion, elect to award any participant an amount that is less than the actual Individual Cash Incentive Award the participant is eligible to earn as determined by the participant’s designated percentage, provided that any such decrease in the Individual Cash Incentive Award for any one participant shall not increase the award for any other participant.

2.The term “Adjusted 2005 Operating Income” means the operating income of the Company for its fiscal year ending December 31, 2005 (the “2005 Year”), determined pursuant to generally accepted accounting principles, adjusted as follows:  (i) such amount shall be increased by the Company’s interest expense for the 2005 Year; (ii) such amount shall be increased by the Company’s federal, state and local income taxes for the 2005 Year; (iii) such amount shall be increased by bonuses paid under Company executive compensation and deferred compensation plans for the 2005 Year; (iv) such amount shall be increased by losses from publicly-disclosed transactions entered into during the 2005 Year that the Compensation Committee considers to be extraordinary or non-recurring; (v) such amount shall be decreased by gains from publicly-disclosed transactions entered into during the 2005 Year that the Compensation Committee considers to be extraordinary or non-recurring; (vi) such amount shall be increased by any net losses during the 2005 Year from entities, trades or businesses and lines of businesses acquired from unrelated parties (“2005 Acquisitions”); and (vii) such amount shall be decreased by any net profits during the 2005 Year from entities, trades or businesses and lines of businesses acquired pursuant to 2005 Acquisitions.

B.Performance Criteria for Restricted Stock Awards for Year 2005 Pursuant to the 1998 Stock Incentive Plan

1.The aggregate incentive plan restricted stock award for all participants (the “Incentive Plan Restricted Stock Award”) shall equal 420,000 shares of Company common stock, provided that no award shall be made unless the Threshold Condition (defined below) is met. The Compensation

Committee, in its discretion, will designate the executive officers of the Company that are eligible to receive restricted stock incentive awards, as well as set the percentage of the aggregate Incentive Plan Restricted Stock Award each participant is eligible to earn upon the achievement of the performance goals (for each participant, the “Individual Restricted Stock Incentive Award”).  Notwithstanding the foregoing, the Compensation Committee may, in its sole discretion, elect to award any participant a number of shares of restricted stock that is less than the actual Individual Restricted Stock Incentive Award the participant is eligible to earn as determined by the participant’s designated percentage, provided that any such decrease in the Individual Restricted Stock Incentive Award for any one participant shall not increase the award for any other participant.  These awards, if any, are to be granted as of the close of business on the first calendar day of the second quarter of 2006 on which the New York Stock Exchange is open for business.

2.The term “Threshold Condition” means that the quotient of (i) Adjusted 2005 Operating  Income (defined in Section A), divided by (ii) Adjusted 2005 Equity (defined below), equals or exceeds 0.40.

3.The term “Adjusted 2005 Equity” means the quotient of (i) the sum of Beginning 2004 Equity (defined below) plus Adjusted Ending 2005 Equity (defined below), divided by (ii) 2.0.

4.The term “Beginning 2005 Equity” means the shareholders equity of the Company as of January 1, 2005, determined pursuant to generally accepted accounting principles.

5.The term “Adjusted Ending 2005 Equity” means the shareholders equity of the Company as of December 31, 2005, determined pursuant to generally accepted accounting principles, adjusted as follows:  (i) such amount shall be increased by bonuses paid under Company executive compensation and deferred compensation plans for the 2005 Year; (ii) such amount shall be increased by losses from publicly-disclosed transactions entered into during the 2005 Year that the Compensation Committee considers extraordinary or non-recurring; (iii) such amount shall be decreased by gains from publicly-disclosed transactions entered into during the 2005 Year that the Compensation Committee considers to be extraordinary or non-recurring; (iv) such amount shall be increased by any net losses during the 2005 Year from entities, trades or businesses and lines of businesses acquired pursuant to 2005 Acquisitions; and (v) such amount shall be decreased by any net profits during the 2005 Year from entities, trades or businesses and lines of businesses acquired pursuant to 2004 Acquisitions.