Exhibit 10(b)
Airborne Express
2000-2004
Executive Incentive Compensation Plan
Airborne Freight Corporation D/B/A
"Airborne Express"
EXECUTIVE INCENTIVE COMPENSATION PLAN
-------------------------------------
Effective January 1, 2000 - December 31, 2004
1. Purpose
The purpose of this Plan is to achieve Corporate goals by providing
incentive compensation to eligible key executives who through
industry, ability and exceptional service, contribute materially to
the success of Airborne Express.
2. Definitions
When used in the Plan, the following words and phrases shall have the
following meanings:
(a) Attainment - The actual results of effort to reach the
Target for a Performance Measure, usually stated as a percentage
of Target.
(b) Beneficiary - The beneficiary or beneficiaries designated
to receive the amount, if any, payable under the Plan upon the
death of a Participant.
(c) Board - The Board of Directors of Airborne Freight
Corporation.
(d) Compensation Committee - The Compensation Committee of the
Board.
(e) EGICP - The Airborne Express 2000 - 2004 Executive Group
Incentive Compensation plan.
(f) Maximum - The point above Target that represents the
maximum payout level for a particular Performance Measure.
(g) Net Profit - Pre-tax, pre-profit sharing net profit.
(h) Participant - Any employee eligible to receive awards under
section 4.
(i) Performance Measure - A specific objective measure to
assess success in achieving established goals. Permitted
Performance Measures are listed in section 5.
(j) Plan - The 2000 - 2004 Executive Incentive Compensation
Plan.
(k) Plan Year - Each calendar year for which Performance
Measures and Targets are established for the Company.
(l) Retirement - When an employee leaves active service and
qualifies under the Company's regular or early retirement
programs.
(m) Revenue Growth - Percentage growth in sales revenue over
the prior year.
(n) Target - The point at which performance equals 100% of the
stated objective.
(o) Threshold - The point below Target at which incentive
payout for each Performance Measure begins.
3. Administration
(a) The Compensation Committee will have the power to interpret
the Plan and to make all determinations necessary or desirable
for its administration.
(b) The decision of the Compensation Committee on any question
concerning the interpretation or administration of the Plan will
be final and conclusive. Nothing in the Plan will be deemed to
give any officer or employee, or legal representatives or
assigns, any right to participate in the Plan except to such
extent as the Compensation Committee may determine pursuant to
the provisions of the Plan.
4. Eligibility
(a) Positions eligible for the EICP are:
Chairman of the Board
Chief Executive Officer
President
Chief Operating Officer
Senior Executive Vice Presidents
Chief Executive Officer, ABX Air, Inc.
Executive Vice Presidents
President, ABX Air, Inc.
Chief Financial Officer
Except as otherwise provided below, Participants for a Plan
Year must be employed for the entire Plan Year.
(b) With approval of the Compensation Committee, prior to June
30 of each Plan Year, additional employees may be included in
the Plan, with any award pro-rated as shall be determined by the
Compensation Committee.
(c) Participants who retire in good standing during the year
will be eligible for a pro-rated award for the year in which
they retire provided they are on the active payroll on June 30th
or later of the Plan Year.
(d) Participants who take a leave of absence will have their
awards calculated based on actual Airborne salary earnings for
the calendar year. Any disability insurance payments will not
be included as earnings in calculating awards. Participants who
are on a leave of absence for more than 90 days and who continue
to receive full or partial salary continuance will have their
awards adjusted. Any salary paid while on a leave of absence
period over 90 days will not be included in the base used to
calculate awards.
5. Performance Measures
Unless otherwise determined by the Committee, bonuses will be based
on two Performance Measures -- Net Profit and Revenue Growth. In
addition to or in lieu of one or both of the preceding Performance
Measures, the Committee may select one or more of the following
Performance Measures: earnings per share, shipment growth, increase
in stock price, return on assets or return on equity. The
Compensation Committee will set annual Targets for each Performance
Measure within 90 days after the beginning of each Plan Year and
such Targets may not be changed thereafter. The Targets may be
ratified by the Board. Unless within 90 days after the beginning
of each Plan Year the Committee selects Performance Measures in
addition to or in lieu of one or both of Net Profit and Revenue
Growth, bonuses will be allocated based on Attainment of Targets as
follows:
(a) Net Profit is the major corporate Performance Measure and shall
be the basis of 75% of the bonus allocation.
(b) An 80% Threshold is set on targeted Net Profit.
(c) A 150% Maximum is set on targeted Net Profit.
(d) Revenue Growth is the second major corporate Performance
Measure and shall be the basis of 25% of the bonus allocation.
(e) An 80% Threshold is set on targeted Revenue Growth.
(f) A 150% Maximum is set on targeted Revenue Growth.
6. Qualifiers on Performance Measures
(a) The bonus percentage is applied to the Participant's salary paid
in the Plan (calendar) Year.
(b) No bonus will be paid for Revenue Growth unless the
Threshold Net Profit is achieved.
(c) To receive any award under EICP, a Participant's individual
performance must be evaluated as at least competent by the
Compensation Committee.
(d) The Committee has the discretion to reduce or eliminate any
award for any reason, including the failure of a participant to
earn an award under another incentive compensation plan, such as
EGICP.
7. Bonus Amounts
Actual bonuses will be determined by multiplying the following
percentages, or a pro-rated portion thereof, by the Participant's
annual salary.
Threshold Maximum
Position (80% of Target) Target (150% of Target)
-------- ------------- ------ --------------
CEO 30.00% 80.0% 160%
COO 30.00% 70.0% 140%
Sr.EVPs, CEO ABX Air, Inc. 19.25% 45.5% 91%
EVP's (excl. CFO),
President ABX Air, Inc. 17.50% 42.0% 84%
CFO 21.25% 51.0% 102%
8. Allocations
Unless otherwise determined under section 5, the EICP incentive
payment percentages for Attainment of Performance Measures are:
CEO
---
(100% Corporate)
Percent of
Attainment Profit (75%) Revenue (25%) Total
---------- ----------- ------------ -----
80% 22.5% 7.5% 30.0%
100% 60.0% 20.0% 80.0%
150% 120.0% 40.0% 160.0%
COO
---
(100% Corporate)
Percent of
Attainment Profit (75%) Revenue (25%) Total
---------- ----------- ------------ -----
80% 22.5% 7.5% 30.0%
100% 52.5% 17.5% 70.0%
150% 105.0% 35.0% 140.0%
Sr. EVPS, CEO ABX Air Inc
-------------------------
(100% Corporate)
Percent of
Attainment Profit (75%) Revenue (25%) Total
---------- ----------- ------------ -----
80% 14.44% 4.81% 19.25%
100% 34.125% 11.375% 45.5%
150% 68.25% 22.75% 91.0%
EVP's (excl. CFO), President ABX Air, Inc.
------------------------------------------
(100% Corporate)
Percent of
Attainment Profit (75%) Revenue (25%) Total
---------- ----------- ------------ -----
80% 13.125% 4.375% 17.5%
100% 31.5% 10.5% 42.0%
150% 63.0% 21.0% 84.0%
CFO
---
(100% Corporate)
Percent of
Attainment Profit (75%) Revenue (25%) Total
---------- ----------- ------------ -----
80% 15.94% 5.31% 21.25%
100% 38.25% 12.75% 51.0%
150% 76.5% 25.5% 102.0%
9. Form of Payment
Awards shall be paid entirely in cash. Payments will be made as soon
as practicable after audited performance results are known and
approved by the Compensation Committee, which should be on or about
March 1. Award checks are prepared by the Payroll Department and the
amounts are subject to tax withholding and Capital Accumulation Plan
(CAP) deductions.
If a Participant dies before the end of the Plan Year an amount equal
to a pro-rated portion thereof as of the date of death shall be paid
in one lump cash sum to the Participant's Beneficiary.
10. Limitation on Allocation
Notwithstanding any other provision of the Plan, in no circumstances
will the total amount allocated as an award to a Participant for any
Plan Year exceed $1,500,000.
11. Designation of Beneficiaries
Each Participant shall file with the Company a written designation of
one or more persons as the Beneficiary who shall be entitled to
receive the amount, if any, payable under the Plan upon the
Participant's death. A Participant may, from time to time, revoke or
change his Beneficiary designation without the consent of any prior
Beneficiary by filing a new designation. The last such designation
received shall be controlling, provided, however, that no
designation, or change or revocation thereof, shall be effective
unless received by the Company prior to the Participant's death, and
in no event shall it be effective as of a date prior to such receipt.
12. Absence of Valid Designation
If no such Beneficiary designation is in effect at the time of a
Participant's death, or if no designated Beneficiary survives the
Participant, or if such designation conflicts with the law, the
Participant shall be deemed to have designated the Participant's
estate as the Participant's Beneficiary and the Participant's estate
shall receive the payment of the amount, if any, under the Plan upon
the Participant's death. If the Compensation Committee is in doubt
as to the right of any person to receive such amount, the
Compensation Committee may direct retention of such amount, without
liability for any interest thereon, until the rights thereto are
determined or the Compensation Committee may pay such amount to any
court of appropriate jurisdiction and such payment shall be a
complete discharge of the liability of the Plan and of Airborne
Express therefore.
13. No Liability of Compensation Committee, Board Members or Officers
No members of the Compensation Committee, Board or Corporate officers
shall be personally liable by reason of any contract or other
instrument executed by them or on their behalf nor for any mistake or
judgment made in good faith, and Airborne shall indemnify and hold
harmless each member of the Board and each other officer, employee or
director of Airborne Express to whom any duty or power relating to
the administration or interpretation of the Plan may be allocated or
delegated, against any cost or expense (including counsel fees) or
liability (including any sum paid in settlement of a claim with the
approval of the Compensation Committee) arising out of any act or
omission to act in connection with the Plan unless arising out of
such person's own fraud or bad faith.
14. Right to Amend, Suspend or Terminate Plan
The Board reserves the right at any time to amend, suspend or
terminate the Plan in whole or in part and for any reasons and
without the consent of any Participant or Beneficiary; provided that
no such amendment shall adversely affect rights to receive any amount
to which Participants or Beneficiaries have become entitled prior to
such amendment. Unless otherwise provided herein, any amendment,
modification, suspension or termination of any provisions of the Plan
may be made retroactively.
15. No Rights to Continued Employment or Bonus
Nothing contained in the Plan shall give any employee the right to be
retained in the employment of Airborne Express or affect the right of
Airborne Express to dismiss any employee. The adoption of the Plan
shall not constitute a contract between Airborne Express and any
employee. No Participant shall receive any right to be granted an
award hereunder nor shall any such award be considered as
compensation under any employee benefit plan of Airborne Express
except as otherwise determined by Airborne Express.
16. No Right, Title, or Interest in Assets
The Participant shall have no right, title, or interest whatsoever in
or to any investments which Airborne Express may make to aid in
meeting its obligations under the Plan. Nothing contained in the
Plan, and no action taken pursuant to its provisions, shall create or
be construed to create a fiduciary relationship between Airborne
Express and any Participant or any other person. To the extent that
any person acquires a right to receive payments from Airborne Express
under this Plan, such right shall be no greater than the right of an
unsecured general creditor of Airborne Express.
17. Unfunded Plan: Governing Law
The Plan is intended to constitute an incentive compensation
arrangement for a select group of management or highly compensated
personnel and all rights thereunder shall be governed by and
construed in accordance with the laws of the State of Washington.
