CHURCHILL DOWNS INCORPORATED
AMENDED AND RESTATED
INCENTIVE COMPENSATION PLAN (1997)
ARTICLE 1
PURPOSE
The purpose of the CHURCHILL DOWNS INCORPORATED AMENDED AND
RESTATED INCENTIVE COMPENSATION PLAN is to promote the interests of the Company
and its stockholders by providing greater incentives to officers and other key
management employees by rewarding them for services rendered with compensation
in an amount which is directly related to the success of the Company as well as
the performance of the operating units and the individual employees.
ARTICLE 2
DEFINITIONS
2.1 Definitions. The following words and phrases, when used
herein, unless their context clearly indicates otherwise, shall have the
following respective meanings:
A. Beneficiary. A person or persons (natural or
otherwise) designated by a Participant in accordance with the provisions
of Article 8 to receive any benefits which shall be payable under this
Plan.
B. Board. The Board of Directors of Churchill Downs
Incorporated.
C. Budget. The annual operating budget approved by the
Board for each year during the term of the Plan.
D. CEO. The Chief Executive Officer of Churchill Downs
Incorporated.
E. Company. Churchill Downs Incorporated and its
subsidiaries.
F. Company Achievement Percentage Levels. The
percentages established annually by the Committee to be used, as provided
in Section 6.2, in computing a part of an Annual Incentive Compensation
Award based upon achievement of a Company Performance Goal.
G. Company Performance Goals. The goal defined in
Section 6.1.A.
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H. Disability. A physical or mental condition arising
after the Effective Date hereof which qualifies a Participant for
disability benefits under the Social Security Act in effect on the date of
disability.
I. Discretionary Achievement Percentage Levels. The
percentages established annually by the Committee to be used, as provided
in Section 6.5, in computing a part of an Annual Incentive Compensation
Award, based upon achievement of a Discretionary Performance Goal.
J. Discretionary Performance Goals. The goals defined
in Section 6.1.D.
K. Effective Date. January 1, 1997.
L. Incentive Compensation Award. The award as defined
in Article 6. An award under the Churchill Downs Incorporated Incentive
Compensation Plan (1997) during any year shall be an "Annual Incentive
Compensation Award."
M. Participant. An employee of the Company who is
selected for participation in the Plan in accordance with the provisions
of Article 5. For purposes of Articles 7 and 8, the term Participant shall
also include a former employee who is entitled to benefits under this Plan.
N. Participation Classification. The classification
assigned to each Participant in accordance with the provisions of
Article 5.
O. Participation Percentage. The percentages of
participation in the Plan as defined in Article 6.
P. Performance Goals. The performance goals as defined
in Article 6.
Q. Plan. The Churchill Downs Incorporated Incentive
Compensation Plan (1997).
R. Plan Year. The twelve-month period commencing on
January 1 of one calendar year and ending on December 31 of the same
calendar year, which period is also the Company's fiscal year.
S. Profit Center. Each Churchill Downs Incorporated
racing operation, Churchill Downs Incorporated Corporate Sales, Churchill
Downs Management Company, and any other profit centers designated by
the CEO.
T. Pre-tax Income. The annual consolidated income of
the Company, before federal and state income taxes, after any allowance
for payments
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made or to be made under this Plan, and after inclusion of all
extraordinary revenues and deduction of all extraordinary expenses, all
as calculated in accordance with generally accepted accounting
principles consistently applied and confirmed by the audit report of the
Company's independent public accountants.
U. Profit Center Achievement Percentage Levels. The
percentages established annually by the Committee to be used, as provided
in Section 6.3, in computing a part of an Annual Incentive Compensation
Award, based upon achievement of a Profit Center Performance Goal.
V. Profit Center Performance Goals. The goals defined
in Section 6.1.B.
W. Salary. The Participant's base annual salary as set
by either the Compensation Committee of the Board or the CEO.
X. Service Center. The Finance, Development &
Technology Service Center, the Legal Service Center, the Corporate
Communications Service Center, and any other service center designated by
the CEO.
Y. Service Center Achievement Percentage Levels. The
percentages established annually by the Committee to be used, as provided
in Section 6.4, in computing a part of an Annual Incentive Compensation
Award based upon achievement of a Service Center Performance Goal.
Z. Service Center Performance Goals. The goals defined
in Section 6.1.C.
AA. Termination Date. December 31, 2001, or such
earlier date as may be determined under Section 9.2.
2.2 Construction. The masculine gender, where appearing in the
Plan, shall be deemed to include the feminine gender, unless the context clearly
indicates to the contrary.
ARTICLE 3
ADMINISTRATION
3.1 Committee. The Plan shall be administered by the
Compensation Committee of the Board (hereinafter the "Committee").
3.2 Committee's Power and Authority. The Committee shall have
full and complete authority and power, subject only to the direction of the
Board, to administer the Plan in accordance with its terms and carry out the
provisions of the Plan. The Committee shall
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interpret the Plan and shall determine all questions, factual, legal or
otherwise, arising in the administration, interpretation and application of the
Plan, including but not limited to questions of eligibility and the status and
rights of Participants, Beneficiaries and other persons. The Committee shall
have any and all power and authority (including discretion with respect to the
exercise of such power and authority) which shall be necessary, properly
advisable, desirable, or convenient to enable it to carry out its duties under
the Plan. By way of illustration and not limitation, the Committee is empowered
and authorized to make rules and regulations in respect to the Plan not
inconsistent with the Plan; to determine, consistently therewith, all questions
that may arise as to the eligibility, benefits, status and right of any person
claiming benefits under the Plan; to determine whether a Participant was
terminated for just cause; and subject to and consistent with, any applicable
laws, to make factual determinations, to construe and interpret the Plan and
correct any defect, supply any omissions or reconcile any inconsistencies in the
Plan. Any such determination by the Committee shall presumptively be conclusive
and binding on all persons. The regularly kept records of the Company shall be
conclusive and binding upon all persons with respect to a Participant's date and
length of employment, time and amount of salary and the manner of payment
thereof, type and length of any absence from work and all other matters
contained therein relating to employment. All rules and determinations of the
Committee shall be uniformly and consistently applied to all persons in similar
circumstances.
3.3 Committee's Annual Review. The Committee shall review the
operation of the Plan to determine its effectiveness in promoting its operating
results and the shareholders' investment; further, the Committee shall report
annually to the Board on its findings and make such recommendations as the
Committee deems appropriate.
ARTICLE 4
EFFECTIVE DATE AND TERMINATION
The Plan shall be effective as of January 1, 1997. The Plan shall
terminate on December 31, 2001, except with respect to the payment of any
Incentive Compensation Awards which may become due and payable thereafter, or
unless terminated earlier by action of the Board under Section 9.2.
ARTICLE 5
ELIGIBILITY AND PARTICIPATION
5.1 Eligibility. All Company officers and other key management
employees who are employed by the Company on the date of the adoption of this
Plan and who are specifically designated by the Committee as Participants shall
be Participants in the Plan as of January 1, 1997. In addition, any officers and
other key management employees who are subsequently designated by the Committee
as participants shall become Participants in the Plan on the date established by
the Committee for such participation. Once an employee becomes a Participant, he
will remain a Participant until the earliest of: [i] termination of this Plan;
[ii]
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termination of his active service with the Company; or [iii] termination of his
status as a Partici pant by decision of the Committee, provided, however, that a
Participant will be terminated from participation in the Plan only at the
beginning of a Plan Year.
5.2 Classifications of Participants. The Committee shall, from
time to time, establish Participation Classifications which will determine the
Participants' Performance Goals. Simultaneous with the Committee's designation
of an employee as a Participant, the Committee shall designate in which
classifications of Participants the employee shall participate. The Committee
may change the Class designation of a Participant as of the beginning of any
Plan Year.
ARTICLE 6
ANNUAL INCENTIVE COMPENSATION AWARDS
6.1 Performance Goals. Annual Incentive Compensation Awards to
each Participant shall be determined on the basis of the achievement of the
following Performance
Goals:
A. The Company achieves certain Pre-tax Income for the
applicable year: the "Threshold Company Goal" (90% of the Pre-tax Income
target set in the applicable Budget); the "Target Company Goal" (100% of
the Pre-tax Income target set in the applicable Budget); and the Maximum
Company Goal" (115% of the Pre-tax Income target set in the applicable
Budget) (the "Company Performance Goal[s]"). The Committee shall
establish annually the percentage of the Annual Incentive Compensation
Award to each Participant which is awarded to each Participant based
upon the Company Performance Goals (the "Company Performance Goals
Percentage").
B. In the case of Classes to which Participants working in
Profit Centers are assigned, the Profit Center achieves certain pre-tax
net income levels for the applicable year: the "Threshold Profit Center
Goal" (90% of the pre- tax net income set in the Profit Center's
applicable Budget); the "Target Profit Center Goal" (100% of the pre-tax
net income set in the Profit Center's applicable Budget); and the
"Maximum Profit Center Goal" (115% of the pre-tax net income set in the
Profit Center's applicable Budget) (the "Profit Center Performance
Goal[s]"). The Committee shall establish annually the percentage of the
Annual Incentive Compensation Award which is awarded to each Participant
based upon the Profit Center Performance Goals (the "Profit Center
Performance Goals Percentage").
C. In the case of Classes to which Participants working in
Service Centers are assigned, such Service Center meets certain
objective financial and other criteria established by the CEO and the
Senior Vice President
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of that Service Center for the applicable year: the "Threshold Service
Center Goal" (90% of the Service Center's established criteria); the
"Target Service Center Goal" (100% of the Service Center's established
criteria); and the "Maximum Service Center Goal" (115% of the Service
Center's established criteria) (the "Service Center Performance
Goal[s]"). Achievement of the Service Center Performance Goals shall be
determined in the CEO's sole discretion. The Committee shall establish
annually the percentage of the Annual Incentive Compensation Award which
is awarded to each Participant based upon the Service Center Performance
Goals (the "Service Center Performance Goals Percentage").
D. The Participant achieves certain performance standards
particular to his or her position in the Company for the applicable
year: the "Threshold Discretionary Goal" (90% of the Participant's
performance standards); the "Target Discretionary Goal" (100% of the
Participant's performance standards); and the "Maximum Discretionary
Goal" (115% of the Participant's performance standards) (the
"Discretionary Performance Goal[s]"). Achievement of the Discretionary
Performance Goals shall be determined in the sole discretion of the CEO.
The Committee shall establish annually the percentage of the Annual
Incentive Compensation Award which is awarded based upon the
Discretionary Performance Goals (the "Discretionary Performance Goals
Percentage").
6.2 Computation of Award Based Upon Company Performance Goals.
For each Plan Year for which the Company achieves the "Threshold Company Goal",
each Participant shall be awarded an Annual Incentive Compensation Award which
shall be computed by multiplying: (i) the Participant's Salary for the Plan
Year; by (ii) the Participation Percentage, as established annually by the
Committee for the Participant's Class; by (iii) the Company Performance Goals
Percentage, as established annually by the Committee for the Participant's
Class; by (iv) the applicable Company Achievement Percentage Level as
established annually by the Committee.
6.3 Computation of Award based on Profit Center Performance
Goals. For each Plan Year for which the Company achieves at least the Threshold
Company Performance Goal and the Profit Center in which that Participant works
achieves at least its Threshold Profit Center Performance Goal, each Participant
of a Profit Center Class shall be awarded an Annual Incentive Compensation Award
which shall be computed by multiplying: (i) the Participant's Salary for the
Plan Year; by (ii) the Participation Percentage, as established annually by the
Committee for the Participant's class; by (iii) the Profit Center Performance
Goals Percentage as established annually by the Committee for the Participant's
Class; (iv) by the applicable Profit Center Achievement Percentage Level as
established annually by the Committee.
6.4 Computation of Award based on Service Center Performance
Goals. For each Plan Year for which the Company achieves at least the Threshold
Company Performance Goal and the Service Center in which that Participant works
achieves at least its Threshold
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Service Center Performance Goal, each Participant in a Service Center Class
shall be awarded an Annual Incentive Compensation Award which shall be computed
by multiplying: (i) the Participant's Salary for the Plan Year; by (ii) the
Participation Percentage, as established annually by the Committee for the
Participant's Class; by (iii) the Service Center Performance Goals Percentage as
established annually by the Committee for the Participant's Class; by (iv) the
applicable Service Center Achievement Percentage Level as established annually
by the Committee.
6.5 Computation of Award based on Discretionary Performance
Goals. For each Plan Year for which the Company achieves at least the Threshold
Company Performance Goal and that Participant achieves at least his/her
Threshold Discretionary Performance Goal, a Participant may be awarded an Annual
Incentive Compensation Award which shall be computed by multiplying: (i) the
Participant's Salary for the Plan Year; by (ii) the Participation Percentage as
established annually by the Committee; by (iii) the Discretionary Performance
Goals Percentage for the Participant's Class as established annually by the
Committee; by (iv) the applicable Discretionary Achievement Percentage Level as
established annually by the Committee. Notwithstanding the foregoing, the
Discretionary Achievement Percentage Level for any Plan Year shall not exceed
the Company Achievement Percentage Level for that Plan Year. The CEO, in his/her
sole discretion, shall determine whether a Participant has met Discretionary
Performance Goals.
6.6 Adjustments to Annual Incentive Compensation Award. An
Annual Incentive Compensation Award shall be adjusted by any one or more of the
following adjustments:
A. In the event a Participant shall, during a Plan Year,
die, retire, go on a leave of absence with the Company's consent,
terminate employment due to Disability, or be terminated without just
cause, the Annual Incentive Compensation Award for that Participant for
such Plan Year shall be reduced, pro rata, based on the number of days
in such Plan Year during which he was not a Participant.
B. In the event that during a Plan Year a Participant
shall be discharged for just cause or shall voluntarily resign for any
reason other than Disability, the Annual Incentive Compensation Award
for that Participant shall be reduced to zero, and no Annual Incentive
Compensation Award shall be payable to that Participant for such Plan
Year.
ARTICLE 7
PAYMENT OF BENEFITS
7.1 Method of Payments. As soon as the Committee has determined
the amount of all of the Annual Incentive Compensation Awards at the end of a
Plan Year, the Committee shall instruct the Company to pay each award in cash in
one lump sum.
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ARTICLE 8
DESIGNATION OF BENEFICIARIES
A Participant may file with the Committee a designation of a
Beneficiary or Beneficiaries in writing, which designation may be changed or
revoked by the Participant's sole action, provided that the change or revocation
is filed with the Committee in writing. If a Participant dies, any benefit which
the Participant is entitled to receive under the Plan shall be delivered to the
Beneficiary or Beneficiaries so designated, or if no Beneficiary has been
designated or survives the Participant, shall be delivered to the Executor or
Administrator of the Participant's estate.
ARTICLE 9
MISCELLANEOUS PROVISIONS
9.1 Other Plans. Any payment made under the provisions of this
Plan shall be includable in or excludable from a Participant's compensation for
purposes of any other qualified or nonqualified benefit plan in which the
Participant may be eligible to participate by reference to the terms of such
other plan.
9.2 Plan Amendment and Terminations. The Company, acting through
the Committee or the Board, reserves the right to amend and/or to terminate the
Plan for any reason and at any time. Any amendment or termination of this Plan
shall not affect the right of any Participant or his Beneficiary to receive an
Incentive Compensation Award after it has been earned.
9.3 Right to Transfer, Alienate and Attach. Except to the extent
that a Participant may designate a Beneficiary under the provisions contained in
Article 8, the right of any Participant or any beneficiary to any benefit or to
any payment hereunder shall not be subject in any manner to attachment or other
legal process for the debts of such Participant or Beneficiary; and any such
benefit or payment shall not be subject to anticipation, alienation, sale,
transfer, assignment or encumbrance, except to the extent that the right to such
benefit is transferable by the Participant by will or the laws of descent and
distribution.
9.4 Indemnification. No member of the Board or of the Committee
and no officer or employee of the Company shall be liable to any person for any
action taken in connection with the administration of this Plan unless
attributable to his own fraud or willful misconduct; nor shall the Company be
liable to any person for any such action unless attributable to fraud or willful
misconduct on the part of a director, officer or employee of the Company.
9.5 Non-Guarantee of Employment. Neither the existence of this
Plan nor any award or benefit granted pursuant to it shall create any right to
continued employment of any Participant by the Company. No Participant shall,
under any circumstances, have any interest
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whatsoever, vested or contingent, in any particular property or asset of the
Company by virtue of any award, unpaid bonus or other accrued benefit under the
Plan.
9.6 Source of Payment. No special or separate fund shall be
established or other segregation of assets made with respect to any immediate or
deferred payment under the Plan. All payment of awards shall be made from the
general funds of the Company. To the extent that a Participant or his
Beneficiary acquires a right to receive payments under this Plan, such right
shall be no greater than that of any unsecured general creditor of the Company.
9.7 Withholding Taxes. The Company shall have the right to deduct
from all payments made to the Participant, whether pursuant to this Plan or
otherwise, amounts required by federal, state or local law to be withheld with
respect to any payments made pursuant to this Plan.
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