<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1998
Commission file number 001-11015
VIAD CORP
(Exact name of registrant as specified in its charter)
DELAWARE 36-1169950
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1850 N. CENTRAL AVE., PHOENIX, ARIZONA 85077
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (602) 207-4000
Indicate by check mark whether the registrant (1) has filed all
Exchange Act reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12 months,
and (2) has been subject to such filing requirements for the past
90 days.
Yes x No
--------- ---------
As of July 31, 1998, 99,508,287 shares of Common Stock ($1.50 par
value) were outstanding.
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
VIAD CORP
CONSOLIDATED BALANCE SHEET
<CAPTION>
June 30, December 31,
(000 omitted) 1998 1997
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 32,923 $ 12,341
Receivables, less allowance of
$4,980 and $4,805 124,523 131,620
Inventories 106,682 105,331
Deferred income taxes 27,145 29,444
Other current assets 43,722 29,207
---------- ----------
334,995 307,943
Funds, agents' receivables and current
maturities of investments restricted
for a subsidiary's payment service
obligations, after eliminating $90,000
of the subsidiary's funds invested
in Viad commercial paper 621,978 617,887
---------- ----------
Total current assets 956,973 925,830
Investments restricted for subsidiary's
payment service obligations 2,005,482 1,615,464
Property and equipment 467,129 470,052
Other investments and assets 114,148 113,274
Deferred income taxes 88,149 74,659
Intangibles 861,995 531,034
---------- ----------
$ 4,493,876 $ 3,730,313
========== ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
June 30, December 31,
(000 omitted, except share data) 1998 1997
---------- ----------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 141,649 $ 145,641
Accrued compensation 87,434 75,589
Other current liabilities 164,480 134,477
Due to MoneyGram stockholders 93,903
Current portion of long-term debt 35,425 32,291
---------- ----------
522,891 387,998
Payment service obligations 2,645,762 2,248,004
---------- ----------
Total current liabilities 3,168,653 2,636,002
Long-term debt 531,103 377,849
Pension and other benefits 65,380 62,988
Other deferred items and insurance reserves 138,677 109,323
Minority interests 9,110 8,378
$4.75 Redeemable preferred stock 6,618 6,612
Common stock and other equity:
Common stock, $1.50 par value,
200,000,000 shares authorized,
99,739,925 shares issued 149,610 149,610
Additional capital 321,714 291,414
Retained income 249,575 209,127
Unearned employee benefits and other (151,518) (121,968)
Unrealized gain on securities
available for sale 14,005 13,625
Cumulative translation adjustments (4,998) (3,022)
Common stock in treasury, at cost,
191,582 and 516,926 shares (4,053) (9,625)
---------- ----------
Total common stock and other equity 574,335 529,161
---------- ----------
$ 4,493,876 $ 3,730,313
========== ==========
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
VIAD CORP
STATEMENT OF CONSOLIDATED INCOME
<CAPTION>
Quarter ended June 30, 1998 1997
(000 omitted, except per share data) ---------- ----------
<S> <C> <C>
REVENUES $ 657,071 $ 614,945
---------- ----------
Costs and expenses:
Costs of sales and services 591,142 556,299
Corporate activities and
nonoperating items, net 5,735 7,519
Sale of trade accounts receivable expense 1,119 1,132
Interest expense 10,233 12,339
Nonrecurring items:
Provision for payments previously
received pursuant to patent litigation 10,642
Gain on sale of business (21,155)
Minority interests 190 120
---------- ----------
597,906 577,409
---------- ----------
Income before income taxes 59,165 37,536
Income taxes 18,543 10,861
---------- ----------
NET INCOME $ 40,622 $ 26,675
========== ==========
DILUTED NET INCOME PER COMMON SHARE $ 0.41 $ 0.28
========== ==========
BASIC NET INCOME PER COMMON SHARE $ 0.43 $ 0.29
========== ==========
Average outstanding common shares 94,419 90,522
Additional dilutive shares related to
stock-based compensation 4,196 2,770
---------- ----------
Average outstanding and potentially
dilutive common shares 98,615 93,292
========== ==========
Dividends declared per common share $ 0.08 $ 0.08
========== ==========
Preferred stock dividends $ 282 $ 281
========== ==========
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
VIAD CORP
STATEMENT OF CONSOLIDATED INCOME
<CAPTION>
Six months ended June 30, 1998 1997
(000 omitted, except per share data) ---------- ----------
<S> <C> <C>
REVENUES $ 1,259,851 $ 1,184,671
---------- ----------
Costs and expenses:
Costs of sales and services 1,152,990 1,087,315
Corporate activities and
nonoperating items, net 11,940 15,502
Sale of trade accounts receivable expense 2,215 2,220
Interest expense 21,407 26,602
Nonrecurring items:
Provision for payments previously
received pursuant to patent litigation 10,642
Gain on sale of business (21,155)
Minority interests 466 484
---------- ----------
1,178,505 1,132,123
---------- ----------
Income before income taxes 81,346 52,548
Income taxes 25,345 15,353
---------- ----------
INCOME BEFORE EXTRAORDINARY CHARGE 56,001 37,195
Extraordinary charge for early retirement
of debt, net of tax benefit of $4,554 (8,458)
---------- ----------
NET INCOME $ 56,001 $ 28,737
========== ==========
DILUTED INCOME PER COMMON SHARE:
Income before extraordinary charge $ 0.56 $ 0.39
Extraordinary charge (0.09)
---------- ----------
Diluted net income per common share $ 0.56 $ 0.30
========== ==========
BASIC INCOME PER COMMON SHARE:
Income before extraordinary charge $ 0.59 $ 0.40
Extraordinary charge (0.09)
---------- ----------
Basic net income per common share $ 0.59 $ 0.31
========== ==========
Average outstanding common shares 94,199 90,283
Additional dilutive shares related to
stock-based compensation 4,034 2,783
---------- ----------
Average outstanding and potentially
dilutive common shares 98,233 93,066
========== ==========
Dividends declared per common share $ 0.16 $ 0.16
========== ==========
Preferred stock dividends $ 564 $ 563
========== ==========
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
VIAD CORP
STATEMENT OF RETAINED INCOME
<CAPTION>
Six months ended June 30, 1998 1997
(000 omitted) ---------- ----------
<S> <C> <C>
Balance, beginning of year $ 209,127 $ 146,664
Net income 56,001 28,737
Dividends on common and preferred shares (15,713) (15,110)
Adjust distribution of consumer products
business to Viad stockholders for post-
closing settlements (1,216)
Other 160 107
---------- ----------
Balance, end of period $ 249,575 $ 159,182
========== ==========
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
VIAD CORP
STATEMENT OF COMPREHENSIVE INCOME
<CAPTION>
Quarter ended June 30, Six months ended June 30,
----------------------------- -----------------------------
1998 1997 1998 1997
(000 omitted) ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net income $ 40,622 $ 26,675 $ 56,001 $ 28,737
---------- ---------- ---------- ----------
Other comprehensive income
(loss), net of tax:
Foreign currency transla-
tion adjustments:
Holding gains (losses)
arising during the period (2,632) 337 (2,027) (416)
Reclassification adjust-
ment for sale of invest-
ment in a foreign entity
included in net income 51 51
---------- ---------- ---------- ----------
(2,581) 337 (1,976) (416)
---------- ---------- ---------- ----------
Unrealized gain (loss) on
securities classified
as available for sale:
Holding gains arising
during the period 4,329 8,073 4,034 3,901
Reclassification adjust-
ment for realized gains
included in net income (2,388) (772) (3,654) (1,117)
---------- ---------- ---------- ---------
1,941 7,301 380 2,784
---------- ---------- ---------- ---------
Other comprehensive
income (loss) (640) 7,638 (1,596) 2,368
---------- ---------- ---------- ---------
Comprehensive income $ 39,982 $ 34,313 $ 54,405 $ 31,105
========== ========== ========== =========
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
VIAD CORP
STATEMENT OF CONSOLIDATED CASH FLOWS
<CAPTION>
Six months ended June 30, 1998 1997
(000 omitted) ---------- ----------
<S> <C> <C>
CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES:
Net income $ 56,001 $ 28,737
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 40,881 39,017
Deferred income taxes (8,136) (4,598)
Extraordinary charge for early retirement of debt 8,458
Gains on sale of businesses and assets, net (26,822) (1,884)
Other noncash items, net 4,895 7,326
Change in operating assets and liabilities:
Receivables and inventories (9,953) (71,310)
Payment service assets and
obligations, net 385,301 150,918
Accounts payable and accrued compensation 15,416 (205)
Other assets and liabilities, net (14,007) (5,874)
---------- ----------
Net cash provided by operating activities 443,576 150,585
---------- ----------
CASH FLOWS PROVIDED (USED) BY INVESTING ACTIVITIES:
Capital expenditures (41,964) (39,347)
Purchase of asset previously leased (20,997)
Acquisitions of businesses, net of cash acquired (229,615) (17,226)
Proceeds from sales of businesses and
other assets, net 95,539 161,003
Investments restricted for payment service obligations:
Proceeds from sales and maturities of securities
classified as available for sale 442,260 326,102
Proceeds from maturities of securities
classified as held to maturity 44,668 13,670
Purchases of securities classified as
available for sale (774,236) (395,797)
Purchases of securities classified as
held to maturity (86,082) (70,369)
Investments in and advances to discontinued
operations, net (21,319)
---------- ----------
Net cash used by investing activities (549,430) (64,280)
---------- ----------
CASH FLOWS PROVIDED (USED) BY FINANCING ACTIVITIES:
Payments on long-term borrowings (2,163) (76,031)
Premium paid upon early retirement of debt (13,012)
Net change in short-term borrowings
classified as long-term debt 153,878 4,000
Dividends on common and preferred stock (15,713) (15,110)
Proceeds from issuances of treasury stock 8,342 12,713
Cash payments on swap agreements (17,908) (214)
---------- ----------
Net cash provided (used) by financing activities 126,436 (87,654)
---------- ----------
Net increase (decrease) in cash and
cash equivalents 20,582 (1,349)
Cash and cash equivalents, beginning of year 12,341 4,422
---------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 32,923 $ 3,073
========== ==========
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
VIAD CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A--Basis of Preparation
The Consolidated Financial Statements of Viad Corp ("Viad")
include the accounts for Viad and all of its subsidiaries. This
information should be read in conjunction with the financial
statements set forth in the Viad Corp Annual Report to
Stockholders for the year ended December 31, 1997.
Effective April 1, 1998, Viad sold its Aircraft Services
International Group ("ASIG"), which conducted fueling and ground
handling operations. ASIG's operations were included in Viad's
Airline Catering and Services segment until the date of sale.
Effective June 1, 1998, Viad acquired MoneyGram Payment Systems,
Inc. ("MoneyGram"), a provider of consumer money wire transfer
services. MoneyGram's operations are included in Viad's Payment
Services results from the date of acquisition.
Accounting policies utilized in the preparation of the financial
information herein presented are the same as set forth in Viad's
annual financial statements except as modified for interim
accounting policies which are within the guidelines set forth in
Accounting Principles Board Opinion No. 28, "Interim Financial
Reporting." The interim consolidated financial information is
unaudited. In the opinion of management, all adjustments,
consisting only of normal recurring accruals, necessary to
present fairly Viad's financial position as of June 30, 1998, and
its results of operations and its cash flows for the quarters and
six months ended June 30, 1998 and 1997 have been included.
Interim results of operations are not necessarily indicative of
the results of operations for the full year.
Certain prior year amounts have been reclassified to conform with
the 1998 presentation.
NOTE B--Fiduciary Assets Restricted for Payment Service
Obligations
A Viad payment services subsidiary generates funds from the
issuance of money orders and other payment instruments, with the
related liability classified as "Payment service obligations."
The funds are invested in permissible securities, principally
debt instruments. Such investments, along with related cash and
funds in transit, are restricted by state regulatory agencies for
use by the subsidiary to satisfy the liability to pay, upon
presentment, the face amount of such payment service obligations.
Accordingly, such fiduciary assets are not available to satisfy
working capital or other financing requirements of Viad.
Following is a summary of amounts related to the payment service
obligations as of June 30, 1998, including excess funds:
<TABLE>
(000 omitted)
<S> <C>
Fiduciary Assets:
Funds, agents' receivables and current
maturities of investments restricted
for payment service obligations,
including $90,000 invested in Viad
commercial paper (1) $ 711,978
Investments restricted for payment
service obligations (2) 2,005,482
----------
2,717,460
Payment service obligations 2,645,762
----------
Asset carrying amounts in excess
of 1:1 funding coverage of
payment service obligations (2) $ 71,698
==========
<FN>
(1) See Note E of Notes to Consolidated Financial Statements for description
of Viad's revolving bank credit agreement, which supports its commercial paper
obligations.
(2) See Note C of Notes to Consolidated Financial Statements for a summary of
investments and their classification and carrying amounts in accordance with
SFAS No. 115, "Accounting for Certain Investments in Debt and Equity
Securities." As detailed therein, securities classified as "available for
sale" are carried at fair value, and the fair value of securities classified
as "held to maturity" exceeded carrying amounts by $12,551,000 at June 30,
1998.
</TABLE>
NOTE C--Investments Restricted for Payment Service Obligations
Investments restricted for payment service obligations include
the following debt and equity securities:
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
----------- -----------
(000 omitted)
<S> <C> <C>
Securities available for sale, at
fair value (amortized cost of
$1,410,053 and $1,074,371) $ 1,433,011 $ 1,096,706
Securities held to maturity, at
amortized cost (fair value of
$613,462 and $559,497) 600,911 548,773
----------- ----------
2,033,922 1,645,479
Less current maturities (28,440) (30,015)
----------- ----------
$ 2,005,482 $ 1,615,464
=========== ==========
</TABLE>
NOTE D--MoneyGram Acquisition
On May 26, 1998, Viad announced its successful cash tender offer
for MoneyGram at $17.35 per share. Approximately 67 percent of
MoneyGram shares outstanding were tendered, a sufficient number
of shares to result in the acquisition of MoneyGram. The funding
for the MoneyGram shares tendered was financed in early June 1998
with short-term borrowings. Payment for the remaining 33 percent
of the outstanding MoneyGram shares was completed on July 10,
1998, with funds from additional short-term borrowings, following
approval of an agreement and plan of merger by MoneyGram
stockholders. Accordingly, at June 30, 1998, Viad classified its
obligation to remaining MoneyGram stockholders in the
Consolidated Balance Sheet under the caption, "Due to MoneyGram
Stockholders."
MoneyGram's operations are included in Viad's Payment Services
results beginning June 1, 1998. The acquisition was accounted
for as a purchase. The purchase price, including acquisition
costs, is being allocated to the net tangible and intangible
assets acquired based on estimated fair values at the date of
acquisition. Viad is still gathering certain information
required to complete the allocation of the purchase price.
Further adjustments may arise as a result of this analysis.
NOTE E--Debt
At June 30, 1998 and December 31, 1997, Viad classified as long-
term debt $203,878,000 and $50,000,000, respectively, of short-
term borrowings which, along with the $90,000,000 commercial
paper issued to Viad's payment services subsidiary, are supported
by unused commitments under a $300,000,000 long-term revolving
bank credit agreement.
Viad sold ASIG effective April 1, 1998. The sale proceeds were
used to repay short-term borrowings. In late May 1998, Viad
announced its successful cash tender offer for MoneyGram at
$17.35 per share. The funding for the initial tender of
approximately 67 percent of MoneyGram's shares was financed in
early June 1998 with short-term borrowings supported by Viad's
long-term revolving bank credit agreement.
In late March 1997, Viad repurchased $58,414,000 par value of its
10.5 percent subordinated debentures at a premium, resulting in
an extraordinary after-tax charge of $8,458,000.
NOTE F--Nonrecurring Items
Effective April 1, 1998, Viad sold its Aircraft Services
International Group ("ASIG"), which conducted fueling and ground
handling operations. ASIG's operations were included in Viad's
Airline Catering and Services segment until the date of sale.
After repaying short-term borrowings with proceeds of the sale,
Viad terminated certain related interest rate swap agreements.
The gain on the sale of ASIG, after deducting costs of sale and
related expense provisions, was $21,155,000 ($13,201,000 after-
tax).
Following protracted efforts, including formal mediation, to
settle patent infringement litigation initiated by Viad's Payment
Services subsidiary, Travelers Express Company, Inc. ("TECI"),
against Integrated Payment Systems ("IPS"), a subsidiary of First
Data Corporation, TECI petitioned the Federal District Court in
May 1998 to set aside a settlement term sheet entered into more
than three years previously because of the parties' failure to
agree on final settlement terms. At the same time, TECI tendered
back to IPS amounts which IPS had paid to TECI pursuant to the
term sheet. The Court granted TECI's motion and set a trial date
for its patent infringement lawsuit against IPS. While TECI
expects a favorable outcome, the timing and amount of recovery
pursuant to litigation cannot be assured. Accordingly, TECI
recorded a one-time provision in the second quarter of 1998 for
the payments received from IPS (which had been reported as income
in prior years), plus interest thereon and related expenses
totaling $10,642,000 ($6,917,000 after-tax).
NOTE G--Income Taxes
A reconciliation of the provision for income taxes and the amount
that would be computed using statutory federal income tax rates
on income before income taxes for the six months ended June 30,
is as follows:
<TABLE>
<CAPTION>
1998 1997
(000 omitted) ------------ ------------
<S> <C> <C>
Computed income taxes at statutory
federal income tax rate of 35% $ 28,471 $ 18,392
Nondeductible goodwill amortization 2,252 2,071
Minority interests 163 169
State income taxes 2,788 2,519
Tax-exempt income (9,770) (7,630)
Adjustment to estimated annual
effective rate 1,500 1,175
Other, net (59) (1,343)
----------- -----------
Provision for income taxes $ 25,345 $ 15,353
=========== ===========
</TABLE>
NOTE H--Supplementary Information--Revenues and Operating Income
<TABLE>
<CAPTION>
Quarter ended June 30, Six months ended June 30,
--------------------------- ----------------------------
1998 1997 1998 1997
(000 omitted) ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues:
Airline Catering
and Services $ 227,532 $ 230,989 $ 462,660 $ 442,818
Convention Services 228,585 222,340 438,172 431,667
Travel and Leisure
and Payment
Services (1) 200,954 161,616 359,019 310,186
----------- ----------- ----------- -----------
$ 657,071 $ 614,945 $ 1,259,851 $ 1,184,671
=========== =========== =========== ===========
Operating Income:
Airline Catering
and Services (2) $ 19,502 $ 21,299 $ 33,434 $ 34,446
Convention
Services (2) 26,710 21,738 47,057 40,227
Travel and Leisure
and Payment
Services (1)(2):
Before nonrecur-
ring item 19,717 15,609 26,370 22,683
Nonrecurring
item (3) (10,642) (10,642)
----------- ----------- ----------- -----------
9,075 15,609 15,728 22,683
----------- ----------- ----------- -----------
Total principal
business
segments (2)(3) 55,287 58,646 96,219 97,356
Corporate activities
and nonoperating
items, net (2) (5,735) (7,519) (11,940) (15,502)
Sale of trade
accounts receiv-
able expense (1,119) (1,132) (2,215) (2,220)
----------- ----------- ----------- -----------
$ 48,433 $ 49,995 $ 82,064 $ 79,634
=========== =========== =========== ===========
<FN>
(1) A Viad payment services subsidiary is investing increasing amounts in tax-
exempt securities. On a fully taxable equivalent basis, revenues and operating
income would be higher by $9,616,000 and $7,477,000 for the 1998 and 1997
quarters, respectively, and by $17,847,000 and $13,937,000 for the 1998 and 1997
six month periods, respectively.
(2) In 1998, Viad began charging its operating subsidiaries an increased
allocation of Corporate expenses, which equaled about 75 percent of the
reductions in expense for Corporate activities for the 1998 periods.
(3) A one-time provision totaling $10,642,000 was recorded in the second
quarter of 1998 for payments previously received pursuant to patent litigation
(which had been recorded as income in prior years), including interest thereon
and related expenses. See Note F of Notes to Consolidated Financial Statements.
</TABLE>
NOTE I--Impact of New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No.
133, "Accounting for Derivative Instruments and Hedging
Activities." SFAS No. 133, which becomes effective in the year
2000 but may be adopted earlier, requires that entities record all
derivatives as assets or liabilities, measured at fair value, with
the change in fair value recognized in earnings or in other
comprehensive income, depending on the use of the derivative and
whether it qualifies for hedge accounting. SFAS No. 133 amends or
supersedes several current accounting Statements. Viad is in the
process of analyzing SFAS No. 133 and the impact on its
consolidated financial position and results of operations.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS:
Effective April 1, 1998, Viad sold its Aircraft Services
International Group ("ASIG"), which conducted fueling and ground
handling operations. ASIG's operations were included in Viad's
Airline Catering and Services segment until the date of sale.
Effective June 1, 1998, Viad acquired MoneyGram Payment Systems,
Inc. ("MoneyGram"), a provider of consumer money wire transfer
services, as the result of a successful cash tender offer.
MoneyGram's operations are included in Viad's Payment Services
results from the date of acquisition.
There were no other material changes in the nature of Viad's
business, nor were there any other changes in the general
characteristics of its operations as described and discussed in the
first paragraph of the results section of Management's Discussion
and Analysis of Results of Operations and Financial Condition
presented in the Viad Corp Annual Report to Stockholders for the
year ended December 31, 1997.
In 1998, Viad began charging its operating subsidiaries an
increased allocation of Corporate expenses. The increased charges
for Corporate expenses reduced 1998 operating income of Viad's
segments, resulting in lower reported increases over 1997 segment
operating income levels.
All per share figures discussed are stated on the diluted basis.
COMPARISON OF SECOND QUARTER OF 1998 TO THE SECOND QUARTER OF 1997:
In the second quarter of 1998, revenues increased $42.1 million, or
6.9 percent, to $657.1 million from $615.0 million in 1997. The
1998 second quarter operating income of Viad's principal business
segments (excluding a $10.6 million provision for payments
previously received pursuant to patent litigation, as discussed in
Note F of Notes to Consolidated Financial Statements) increased
$7.3 million, or 12.4 percent, over that of 1997. A payment
services subsidiary continues to invest increasing amounts of its
growing money order and official check funds in tax-exempt
securities. On a fully taxable equivalent basis, and excluding the
provision noted above and the effects of aircraft fueling and
ground handling operations sold as of April 1, 1998, revenues rose
12.4 percent and operating income of Viad's principal business
segments was up 20.2 percent (22.4 percent before the increased
corporate allocation).
Net income for the second quarter of 1998 was $40.6 million, or
$0.41 per share. Excluding the gain on sale of ASIG of $13.2
million (net of income taxes of $8.0 million), or $0.13 per share,
and excluding the provision for payments previously received
pursuant to patent litigation of $6.9 million (net of tax benefit
of $3.7 million), or $0.07 per share, income for the second quarter
of 1998 was $34.3 million, or $0.35 per share. Net income for the
1997 quarter was $26.7 million, or $0.28 per share.
There were 5.3 million more average common and equivalent shares
outstanding in the 1998 quarter than in the 1997 quarter, due
primarily to the acquisition of Game Financial Corporation in
December 1997 (for approximately 2.6 million shares of Viad stock),
stock option exercises over the past year and the effects of a
higher Viad stock price on the calculation of additional common
shares arising from unexercised stock options.
AIRLINE CATERING AND SERVICES.
The second quarter 1998 revenues of the Airline Catering and
Services group were $227.5 million, a decrease of 1.5 percent from
the 1997 second quarter revenues of $231.0 million. Excluding the
effects of the sold aircraft fueling and ground handling operations
(effective as of April 1, 1998), second quarter revenues increased
12.9 percent. On this same basis, operating income increased $1.5
million, or 8.2 percent (9.9 percent before the increased corporate
allocation), over that of the 1997 second quarter. These results
were driven by airline traffic growth, new business added over the
past year (including expansion of American Airlines business to six
additional cities late in the second quarter of 1997) and the June
1998 acquisition of a catering kitchen in Las Vegas. Excluding the
fueling and ground handling operations, operating margins decreased
slightly to 8.6 percent (8.7 percent before the increased corporate
allocation) from 1997's 8.9 percent, as start-up costs associated
with new accounts and kitchens affected the quarter.
CONVENTION SERVICES.
Convention Services second quarter 1998 revenues increased $6.3
million, or 2.8 percent, to $228.6 million from $222.3 million in
the 1997 second quarter. GES Exposition Services ("GES") continued
to eliminate low-margin business during the 1998 quarter, resulting
in a disproportionately low revenue increase. Operating income
increased $5.0 million, or 22.9 percent (25.4 percent before the
increased corporate allocation), and operating margins increased
from 9.8 percent in the 1997 quarter to 11.7 percent (11.9 percent
before the increased corporate allocation). Both GES and
Exhibitgroup/Giltspur had solid gains in operating income due to
improved cost controls and higher margin business in the 1998
quarter. Both companies also benefited from acquisitions made
during the second quarter of 1998.
TRAVEL AND LEISURE AND PAYMENT SERVICES.
Revenues of the Travel and Leisure and Payment Services companies
were $201.0 million for the second quarter of 1998, up $39.3
million, or 24.3 percent, from 1997 second quarter revenues.
Excluding the provision for payments previously received pursuant
to patent litigation, which had been recorded as income in prior
years, plus interest thereon and related expenses (see Note F of
Notes to Consolidated Financial Statements), operating income
increased 26.3 percent to $19.7 million. On the fully taxable
equivalent basis, second quarter revenues and operating income
would have been higher by $9.6 million and $7.5 million in 1998 and
1997, respectively, resulting in a 24.5 percent revenue increase
and a 27.1 percent (29.2 percent before the increased corporate
allocation) operating income increase. The second quarter of 1998
included results from Game Financial Corporation ("Game," acquired
in December 1997) and MoneyGram (acquired as of June 1, 1998). The
second quarter of 1998 also included full operation of Restaura's
concession operations at Bank One Ballpark, home of the new Arizona
Diamondbacks major league baseball franchise. Operating margins on
the fully taxable equivalent basis would be 13.9 percent (14.2
percent before the increased corporate allocation) in the second
quarter of 1998, up from 13.7 percent in the 1997 second quarter.
On the fully taxable equivalent basis and excluding the provision
for patent infringement payments received, payment services
revenues and operating income increased $39.0 million and $2.2
million, respectively, over those of the 1997 second quarter, as
continuing strong growth in official check business was
supplemented by results from the Game and MoneyGram acquisitions.
Duty Free and shipboard concession revenues and operating income
increased $2.3 million and $400,000, respectively, over those of
the 1997 second quarter, due primarily to increased sales at Miami
International Airport.
Travel tour service revenues decreased $1.7 million from those of
the 1997 second quarter, due primarily to the decline in Japanese
and other Asian tourism into Canada. Operating income increased
$300,000, as reductions in operating costs more than offset the
effects of the revenue decline.
Restaura foodservice revenues and operating income increased $8.2
million and $2.5 million, respectively, over those of the 1997
second quarter, as the second quarter of 1998 included full
operation of concessions at Bank One Ballpark and also benefited
from reduced operating costs.
CORPORATE ACTIVITIES AND NONOPERATING ITEMS, NET.
Corporate activities and nonoperating items, net, decreased $1.8
million in the second quarter of 1998 compared to the second
quarter of 1997. As discussed above, Viad began charging its
operating subsidiaries an increased allocation of Corporate
expenses in 1998. Approximately 75 percent of the second quarter
decline in corporate expenses is due to the increased allocation to
Viad's segments.
SALE OF TRADE ACCOUNTS RECEIVABLE EXPENSE.
Sale of trade accounts receivable expense in the second quarter of
1998 was essentially even with that of the 1997 second quarter, as
the level of trade receivables sold was unchanged from the prior
year.
INTEREST EXPENSE.
Interest expense decreased $2.1 million in the 1998 second quarter,
primarily as a result of proceeds from the previously described
sale of ASIG as of April 1, 1998, as well as debt repayment with
proceeds of other sales of noncore assets and businesses in 1997,
which more than offset the impact of new borrowings incurred in
early June 1998 for the MoneyGram acquisition.
INCOME TAXES.
The effective tax rate in the 1998 second quarter was 31.3 percent.
Excluding the effects of the $21.2 million gain on the sale of ASIG
and the $10.6 million provision for payments previously received
pursuant to patent litigation on the income tax provision, the
effective tax rate for the second quarter of 1998 was 29.4 percent
compared to 28.9 percent for the second quarter of 1997.
COMPARISON OF FIRST SIX MONTHS OF 1998 TO THE
FIRST SIX MONTHS OF 1997:
Revenues for the first six months of 1998 increased $75.2 million,
or 6.3 percent, to $1.26 billion from $1.18 billion in the same
period of 1997. Operating income of Viad's principal business
segments (excluding the previously mentioned $10.6 million
provision for payments previously received pursuant to patent
litigation) increased $9.5 million, or 9.8 percent, over that of
1997. On the fully taxable equivalent basis, and excluding the
provision noted above and the effects of aircraft fueling and
ground handling operations sold as of April 1, 1998, revenues rose
9.5 percent and operating income was up 16.0 percent (18.5 percent
before the increased corporate allocation).
Net income for the first six months of 1998 was $56.0 million, or
$0.56 per share. Excluding the gain on sale of ASIG of $13.2
million (net of income taxes of $8.0 million), or $0.13 per share,
and excluding the provision for payments previously received
pursuant to patent litigation of $6.9 million (net of tax benefit
of $3.7 million), or $0.07 per share, income for the first six
months of 1998 was $49.7 million, or $0.50 per share. Net income
for the first six months of 1997 was $28.7 million, or $0.30 per
share. Excluding an extraordinary charge of $8.5 million (net of
tax benefit of $4.6 million), or $0.09 per share, for the early
retirement of debt, income for the first six months of 1997 was
$37.2 million, or $0.39 per share.
There were 5.2 million more average common and equivalent shares
outstanding in the 1998 six month period than in the same period of
1997 for the reasons previously discussed.
AIRLINE CATERING AND SERVICES.
Six month revenues of the Airline Catering and Services group were
$462.7 million in 1998, a 4.5 percent increase from the 1997 first
half revenues of $442.8 million. Excluding the effects of the sold
aircraft fueling and ground handling operations (effective as of
April 1, 1998), first half revenues increased 12.9 percent. On
this same basis, operating income increased $2.4 million, or 8.4
percent (10.5 percent before the increased corporate allocation),
over that of the 1997 first half. These results were accomplished
primarily as a result of new business added over the past year,
including the acquisition of a flight kitchen in Miami in early
1997, expansion of American Airlines business to six new cities
late in the second quarter of 1997, and the acquisition of a
catering kitchen in Las Vegas in June 1998, as well as airline
traffic growth. Excluding the fueling and ground handling
operations, operating margins decreased slightly to 7.1 percent
(7.2 percent before the increased corporate allocation)from 1997's
7.4 percent, due largely to start-up costs associated with new
business and kitchens.
CONVENTION SERVICES.
Convention Services' first half 1998 revenues of $438.2 million
were $6.5 million, or 1.5 percent, greater than the 1997 six month
period. GES has concentrated on eliminating low-margin business
during 1998, resulting in a disproportionately low revenue
increase. Operating income for the segment increased $6.8 million,
or 17.0 percent (19.7 percent before the increased corporate
allocation), and operating margins increased to 10.7 percent (11.0
percent before the increased corporate allocation) from 9.3 percent
in 1997. These increases were due to improved cost controls and
higher margin business in 1998. Both GES and Exhibitgroup/Giltspur
also benefited from acquisitions made during the second quarter of
1998.
TRAVEL AND LEISURE AND PAYMENT SERVICES.
For the first six months of 1998, revenues of the Travel and
Leisure and Payment Services companies were $359.0 million, up
$48.8 million, or 15.7 percent, from those of the 1997 first half.
Excluding the provision for payments previously received pursuant
to patent litigation, which had been recorded as income in prior
years, plus interest thereon and related expenses (see Note F of
Notes to Consolidated Financial Statements), operating income
increased 16.3 percent to $26.4 million. On the fully taxable
equivalent basis, six month revenues and operating income would
have been higher by $17.8 million and $13.9 million in 1998 and
1997, respectively, resulting in a 16.3 percent revenue increase
and a 20.7 percent (23.5 percent before the increased corporate
allocation) operating income increase. The 1998 first half
included results from Game (acquired in December 1997) and
MoneyGram (acquired as of June 1, 1998). Operating margins on the
fully taxable equivalent basis would be 11.7 percent (12.0 percent
before the increased corporate allocation) in the 1998 first half,
up from 11.3 percent in the comparable period of 1997.
On the fully taxable equivalent basis and excluding the provision
for patent infringement payments received, payment services
revenues and operating income increased $63.2 million and $4.9
million, respectively, over those of 1997's first six months, due
primarily to increased investment income arising from larger
investment balances, business generated from the Game and MoneyGram
acquisitions, and continuing strong growth in official check
business.
Duty Free airport and shipboard concession revenues and operating
income increased $1.8 million and $600,000, respectively, over
those of the first half of 1997. Increased sales at Miami
International Airport and improved cost controls were partially
offset by reduced revenues arising from fewer shipboard passenger
days during the first quarter of 1998.
Travel tour service revenues decreased $2.0 million from those of
the first six months of 1997, primarily as a result of weaker off-
season package tour traffic in the first quarter of 1998 and a
decline in Japanese and other Asian tourism into Canada. Operating
income improved $300,000, as operating cost reductions more than
offset the effects of the revenue decline.
Restaura foodservice revenues and operating income for the first
half of 1998 increased $7.2 million and $1.8 million, respectively,
from those of the same period in 1997, primarily due to the
operation of concessions at Bank One Ballpark, which began late in
the first quarter of 1998, as well as reduced operating costs.
CORPORATE ACTIVITIES AND NONOPERATING ITEMS, NET.
Corporate activities and nonoperating items, net, decreased $3.6
million in the first six months of 1998 compared to the same period
in 1997. As discussed previously, Viad began charging its
operating subsidiaries an increased allocation of Corporate
expenses in 1998. Approximately 75 percent of the 1998 decline in
corporate expenses is due to the increased allocation to Viad's
segments.
SALE OF TRADE ACCOUNTS RECEIVABLE EXPENSE.
Expenses from the sale of trade accounts receivable in the first
half of 1998 was essentially even with those of the 1997 first
half, as the level of trade receivables sold was unchanged from the
prior year.
INTEREST EXPENSE.
Interest expense for the first six months of 1998 decreased $5.2
million from that of the first half of 1997, primarily as a result
of proceeds from the previously described sale of ASIG as of April
1, 1998, as well as debt repayment with proceeds of other sales of
noncore assets and businesses in 1997 and the repurchase of $58.4
million par value of Viad's 10.5 percent subordinated debentures in
March 1997, which more than offset the impact of new borrowings
incurred in early June 1998 for the MoneyGram acquisition.
INCOME TAXES.
The effective tax rate for the first half of 1998 was 31.2 percent.
Excluding the effects of the $21.2 million gain on the sale of ASIG
and the $10.6 million provision for payments previously received
pursuant to patent litigation on the income tax provision, the
effective tax rate for the first six months of 1998 was 29.8
percent compared to 29.2 percent for the 1997 period. The
effective tax rate for 1998 is expected to be slightly higher than
the 1997 rate as the increase in tax-exempt income by Viad's
payment services subsidiary is slowing relative to overall income
growth, and nondeductible goodwill amortization is increasing.
LIQUIDITY AND CAPITAL RESOURCES:
Viad's total debt at June 30, 1998 was $566.5 million compared with
$410.1 million at December 31, 1997. The debt-to-capital ratio at
June 30, 1998 was 0.49 to 1 compared to 0.43 to 1 at December 31,
1997. As mentioned above, Viad sold ASIG in April 1998. The sale
proceeds were used to repay short-term borrowings. In late May
1998, Viad announced its successful cash tender offer for MoneyGram
at $17.35 per share. The funding for approximately 67 percent of
MoneyGram shares tendered was financed in early June 1998 with
short-term borrowings supported by Viad's long-term revolving bank
credit agreement. Following approval of the agreement and plan of
merger by the MoneyGram stockholders, payment for the remaining 33
percent of MoneyGram shares totaling $93.9 million was made in July
1998 with funds from additional short-term borrowings. If these
additional borrowings had been made as of June 30, 1998 and
approximately $30 million from available internal cash sources had
been used to reduce short-term borrowings, the pro forma debt-to-
capital ratio at June 30, 1998 would have been 0.52 to 1.
In June 1998, Viad's payment services subsidiary amended its
agreement to sell undivided percentage ownership interests in
certain receivables. The maximum amount to be sold under the
agreement was increased from $250,000,000 to $400,000,000, and the
expiration date was extended to June 30, 2003. The items included
in the program were expanded to include receivables from bill
payment agents as well as receivables from money order agents.
There were no other material changes in Viad's financial condition
nor were there any substantive changes relative to matters
discussed in the Liquidity and Capital Resources section of
Management's Discussion and Analysis of Results of Operations and
Financial Condition as presented in Viad Corp's Annual Report to
Stockholders for the year ended December 31, 1997.
READINESS FOR THE YEAR 2000:
Viad has taken actions to understand the nature and extent of the
work required and has commenced initiatives to make its systems,
products and infrastructure "Year 2000" compliant on a timely
basis, including replacing and/or updating certain systems. Viad
is also communicating with key vendors, service providers,
customers and other third parties with whom Viad conducts business
to determine the nature of any impact of Year 2000 issues on Viad.
Viad continues to evaluate the additional efforts and estimated
costs associated with these changes. As a part of its Year 2000
initiative, Viad is developing contingency plans to mitigate the
effects of problems which may be experienced by Viad or key vendors
or service providers in the timely implementation of Year 2000
programs. While additional costs are involved, Viad believes,
based on available information to date, that it will be able to
manage its total Year 2000 transition by mid-1999, without any
material adverse effect on its business operations, products,
financial position or results of operations. However, due to the
complexity and pervasiveness of the Year 2000 issue and in
particular the uncertainty regarding the compliance programs of
third parties, no assurance can be given for successful
implementation, and if such changes are not completed timely, the
Year 2000 issue could have a material impact on Viad's operations.
FORWARD-LOOKING STATEMENTS:
Statements made in this Quarterly Report on Form 10-Q, including
those relating to expectations of or current trends in growth in
air traffic, consumer demand, new business, improved cost controls
and Year 2000 compliance issues, are forward-looking statements and
are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Such statements involve
risks and uncertainties which may cause results to differ
materially from those set forth in those statements. Among other
things, the rate of expansion of flights to new locations, consumer
demand patterns, purchasing decisions related to customer demand
for trade show services, additional competition from existing and
new competitors, and consolidation and growth patterns within the
industries in which Viad competes, may individually or in
combination impact future results. In addition to the factors
mentioned elsewhere, the economic, competitive, governmental,
technological and other factors could affect the forward-looking
statements contained in this filing.
PART II. OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Results of the annual meeting of stockholders of Viad Corp held on
May 12, 1998, were presented in the Form 10-Q for the quarterly
period ended March 31, 1998. No other matters were submitted to a
vote of security holders during the second quarter of 1998.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit No. 10A - Copy of Viad Corp Omnibus
Incentive Plan, as amended through May 12, 1998
Exhibit No. 10B - Copy of Viad Corp Performance
Unit Incentive Plan (pursuant to 1992 Stock
Incentive Plan), as amended through May 12, 1998
Exhibit No. 10C - Copy of Viad Corp Performance
Unit Incentive Plan (pursuant to 1997 Omnibus
Incentive Plan), as amended through May 12, 1998
Exhibit No. 10D - Copy of Viad Corp Performance
Based Stock Plan, as amended and restated
effective May 1998
Exhibit No. 27 - Financial Data Schedule
(b) The following reports on Form 8-K were filed by
the registrant during the quarter for which this
report is filed:
A report on Form 8-K dated April 10, 1998,
reported under Items 5 and 7 Viad's press release
announcement that Viad had commenced a cash
tender offer, through the filing of Schedule 14D-
1 with the Securities and Exchange Commission,
for all outstanding shares of MoneyGram Payment
Systems, Inc., at a purchase price of $17 per
share and, in a separate announcement, that Viad
had sold Aircraft Services International Group.
A report on Form 8-K dated May 11, 1998, reported
under Items 5 and 7 Viad's press release
announcement that Viad had increased the
MoneyGram cash tender offer to $17.35 per share
and had extended the scheduled expiration date to
May 22, 1998.
A report on Form 8-K dated May 22, 1998, reported
under Items 5 and 7 Viad's press release
announcement that Viad's tender offer for
MoneyGram at $17.35 per share was successful.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
VIAD CORP
(Registrant)
August 12, 1998 By /s/ Richard C. Stephan
-------------------------
Richard C. Stephan
Vice President-Controller
(Chief Accounting Officer
and Authorized Officer)
Exhibit 10.A
1997 VIAD CORP OMNIBUS INCENTIVE PLAN,
AS AMENDED THROUGH MAY 12, 1998
SECTION 1. PURPOSE; DEFINITIONS.
The purpose of the Plan is to give the Company a significant
advantage in attracting, retaining and motivating officers,
employees and directors and to provide the Company and its
subsidiaries with the ability to provide incentives more directly
linked to the profitability of the Company's businesses and
increases in stockholder value. It is the current intent of the
Committee that the Plan shall replace the 1992 Stock Incentive
Plan for purposes of new Awards and that the Viad Corp Management
Incentive Plan, the Viad Corp Performance Unit Incentive Plan,
and the Viad Corp Performance-Based Stock Plan continue under the
auspices of Sections 7 and 8 hereof subject to the discretion of
the Committee under the terms and conditions of this Plan.
For purposes of the Plan, the following terms are defined as
set forth below:
(a) "AFFILIATE" means a corporation or other entity
controlled by the Company and designated by the Committee as
such.
(b) "AWARD" means an award of Stock Appreciation Rights,
Stock Options, Restricted Stock or Performance-Based Awards.
(c) "AWARD CYCLE" will mean a period of consecutive fiscal
years or portions thereof designated by the Committee over which
Awards of Restricted Stock or Performance-Based Awards are to be
earned.
(d) "BOARD" means the Board of Directors of the Company.
(e) "CAUSE" means (1) the conviction of a participant for
committing a felony under federal law or the law of the state in
which such action occurred, (2) dishonesty in the course of
fulfilling a participant's employment duties or (3) willful and
deliberate failure on the part of a participant to perform his
employment duties in any material respect, or such other events
as will be determined by the Committee. The Committee will have
the sole discretion to determine whether "Cause" exists, and its
determination will be final.
(f) "CHANGE IN CONTROL" and "CHANGE IN CONTROL PRICE" have
the meanings set forth in Sections 9(b) and (c), respectively.
(g) "CODE" means the Internal Revenue Code of 1986, as
amended from time to time, and any successor thereto.
(h) "COMMISSION" means the Securities and Exchange
Commission or any successor agency.
(i) "COMMITTEE" means the Committee referred to in
Section 2.
(j) "COMMON STOCK" means common stock, par value $1.50 per
share, of the Company.
(k) "COMPANY" means Viad Corp, a Delaware corporation.
(l) "COMPANY UNIT" means any subsidiary, group of
subsidiaries, line of business or division of the Company, as
designated by the Committee.
(m) "DISABILITY" means permanent and total disability as
determined under procedures established by the Committee for
purposes of the Plan.
(n) "EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended from time to time, and any successor thereto.
(o) "FAIR MARKET VALUE" means, as of any given date, the
mean between the highest and lowest reported sales prices of the
Stock on the New York Stock Exchange Composite Tape or, if not
listed on such exchange, on any other national exchange on which
the Stock is listed or on the Nasdaq Stock Market. If there is
no regular public trading market for such Stock, the Fair Market
Value of the Stock will be determined by the Committee in good
faith. In connection with the administration of specific
sections of the Plan, and in connection with the grant of
particular Awards, the Committee may adopt alternative defi-
nitions of "Fair Market Value" as appropriate.
(p) "INCENTIVE STOCK OPTION" means any Stock Option
intended to be and designated as an "incentive stock option"
within the meaning of Section 422 of the Code.
(q) "MIP" means the Company's Management Incentive Plan
providing annual cash bonus awards to participating employees
based upon predetermined goals and objectives.
(r) "NET INCOME" means the consolidated net income of the
Company determined in accordance with GAAP before extraordinary,
unusual and other non-recurring items.
(s) "NON-EMPLOYEE DIRECTOR" means a member of the Board who
qualifies as a "Non-Employee Director" as defined in Rule
16b-3(b)(3), as promulgated by the Commission under the Exchange
Act, or any successor definition adopted by the Commission.
(t) "NON-QUALIFIED STOCK OPTION" means any Stock Option
that is not an Incentive Stock Option.
(u) "PERFORMANCE GOALS" means the performance goals estab-
lished by the Committee in connection with the grant of
Restricted Stock or Performance-Based Awards. In the case of
Qualified Performance-Based Awards, such goals (1) will be based
on the attainment of specified levels of one or more of the fol-
lowing measures with respect to the Company or any Company Unit,
as applicable: sales or revenues, costs or expenses, net profit
after tax, gross profit, operating profit, base earnings, return
on actual or pro forma equity or net assets or capital, net
capital employed, earnings per share, earnings per share from
continuing operations, operating income, operating income margin,
net income, stockholder return including performance (total
stockholder return) relative to the S&P 500 or similar index or
performance (total stockholder return) relative to the proxy
comparator group, in both cases as determined pursuant to Rule
402(l) of Regulation S-K promulgated under the Exchange Act, cash
generation, unit volume and change in working capital and (2)
will be set by the Committee within the time period prescribed by
Section 162(m) of the Code and related regulations.
(v) "PERFORMANCE-BASED AWARD" means an Award made pursuant
to Section 8.
(w) "PERFORMANCE-BASED RESTRICTED STOCK AWARD" has the
meaning set forth in Section 7(c)(1) hereof.
(x) "PLAN" means the 1997 Viad Corp Omnibus Incentive Plan,
As Amended, as set forth herein and as hereafter amended from
time to time.
(y) "PREFERRED STOCK" means preferred stock, par value
$0.01, of the Company.
(z) "QUALIFIED PERFORMANCE-BASED AWARDS" means an Award of
Restricted Stock or a Performance-Based Award designated as such
by the Committee at the time of grant, based upon a determination
that (1) the recipient is or may be a "covered employee" within
the meaning of Section 162(m)(3) of the Code in the year in which
the Company would expect to be able to claim a tax deduction with
respect to such Restricted Stock or Performance-Based Award and
(2) the Committee wishes such Award to qualify for the exemption
from the limitation on deductibility imposed by Section 162(m) of
the Code that is set forth in Section 162(m)(4)(C).
(aa) "RESTRICTED STOCK" means an award granted under
Section 7.
(bb) "RETIREMENT" means retirement from active employment
under a pension plan of the Company, any subsidiary or Affiliate,
or under an employment contract with any of them, or termination
of employment at or after age 55 under circumstances which the
Committee, in its sole discretion, deems equivalent to
retirement.
(cc) "RULE 16b-3" means Rule 16b-3, as promulgated by the
Commission under Section 16(b) of the Exchange Act, as amended
from time to time.
(dd) "STOCK" means the Common Stock or Preferred Stock.
(ee) "STOCK APPRECIATION RIGHT" means a right granted under
Section 6.
(ff) "STOCK OPTION" means an option granted under Section 5.
(gg) "TERMINATION OF EMPLOYMENT" means the termination of
the participant's employment with the Company and any subsidiary
or Affiliate. A participant employed by a subsidiary or an
Affiliate will also be deemed to incur a Termination of
Employment if the subsidiary or Affiliate ceases to be such a
subsidiary or Affiliate, as the case may be, and the participant
does not immediately thereafter become an employee of the Company
or another subsidiary or Affiliate. Transfers among the Company
and its subsidiaries and Affiliates, as well as temporary
absences from employment because of illness, vacation or leave of
absence, will not be considered a Termination of Employment.
In addition, certain other terms used herein have
definitions given to them in the first place in which they are
used.
SECTION 2. ADMINISTRATION.
The Plan will be administered by the Human Resources
Committee of the Board pursuant to authority delegated by the
Board in accordance with the Company's By-Laws. If at any time
there is no such Human Resources Committee or such Human
Resources Committee shall fail to be composed of at least two
directors each of whom is a Non-Employee Director and is an
"outside director" under Section 162(m)(4) of the Code, the Plan
will be administered by a Committee selected by the Board and
composed of not less than two individuals, each of whom is such a
Non-Employee Director and such an "outside director."
The Committee will have plenary authority to grant Awards
pursuant to the terms of the Plan to officers, employees and
directors of the Company and its subsidiaries and Affiliates, but
the Committee may not grant MIP Awards larger than the limits
provided in Section 3.
Among other things, the Committee will have the authority,
subject to the terms of the Plan:
(a) to select the officers, employees and directors to whom
Awards may from time to time be granted;
(b) to determine whether and to what extent Incentive Stock
Options, Non-Qualified Stock Options, Stock Appreciation Rights,
Restricted Stock and Performance-Based Awards or any combination
thereof are to be granted hereunder;
(c) to determine the number of shares of Stock or the
amount of cash to be covered by each Award granted hereunder;
(d) to determine the terms and conditions of any Award
granted hereunder (including, but not limited to, the option
price (subject to Section 5(a)), any vesting condition,
restriction or limitation (which may be related to the
performance of the participant, the Company or any subsidiary,
Affiliate or Company Unit) and any rule concerning vesting
acceleration or waiver of forfeiture regarding any Award and any
shares of Stock relating thereto, based on such factors as the
Committee will determine) provided, however, that the Committee
will have no power to accelerate the vesting, or waive the
forfeiture, regarding any Award and any shares of Stock relating
thereto, except in connection with a "change of control" of the
Company, the sale of a subsidiary or majority-owned affiliate of
the Company (and then only with respect to participants employed
by each such subsidiary or affiliate), the death or disability of
a participant or termination of employment of a participant, and,
further provided, however, that the Committee will have no power
to accelerate the vesting, or waive the forfeiture, of any
Qualified Performance-Based Awards;
(e) to modify, amend or adjust the terms and conditions, at
any time or from time to time, of any Award, including but not
limited to Performance Goals; provided, however, that the
Committee may not adjust upwards the amount payable with respect
to any Qualified Performance-Based Award or waive or alter the
Performance Goals associated therewith and provided, further,
however, that the Committee may not reprice Stock Options except
for an amount of Stock Options representing not more than 10% of
then outstanding Stock Options;
(f) to determine to what extent and under what
circumstances Stock and other amounts payable with respect to an
Award will be deferred; and
(g) to determine under what circumstances a Stock Option
may be settled in cash or Stock under Section 5(j).
The Committee will have the authority to adopt, alter or re-
peal such administrative rules, guidelines and practices
governing the Plan as it from time to time deems advisable, to
interpret the terms and provisions of the Plan and any Award
issued under the Plan (and any agreement relating thereto) and to
otherwise supervise the administration of the Plan.
The Committee may act only by a majority of its members then
in office, except that the members thereof may (1) delegate to
designated officers or employees of the Company such of its
powers and authorities under the Plan as it deems appropriate
(provided that no such delegation may be made that would cause
Awards or other transactions under the Plan to fail to be exempt
from Section 16(b) of the Exchange Act or that would cause
Qualified Performance-Based Awards to cease to so qualify) and
(2) authorize any one or more members or any designated officer
or employee of the Company to execute and deliver documents on
behalf of the Committee.
Any determination made by the Committee or pursuant to del-
egated authority pursuant to the provisions of the Plan with
respect to any Award will be made in the sole discretion of the
Committee or such delegates at the time of the grant of the Award
or, unless in contravention of any express term of the Plan, at
any time thereafter. All decisions made by the Committee or any
appropriately delegated officer(s) or employee(s) pursuant to the
provision of the Plan will be final and binding on all persons,
including the Company and Plan participants.
Notwithstanding anything to the contrary in the Plan, the
Committee will have the authority to modify, amend or adjust the
terms and conditions of any Award as appropriate in the event of
or in connection with any reorganization, recapitalization, stock
split, stock dividend, combination or exchange of shares, merger,
consolidation or any change in the capital structure of the
Company.
SECTION 3. STOCK SUBJECT TO PLAN AND LIMITS ON AWARDS.
(a) Subject to adjustment as provided herein, the number of
shares of Common Stock of the Company available for grant under
the Plan in each calendar year (including partial calendar years)
during which the Plan is in effect shall be equal to two percent
(2.0%) of the total number of shares of Common Stock of the
Company outstanding as of the first day of each such year for
which the Plan is in effect; provided that any shares available
for grant in a particular calendar year (or partial calendar
year) which are not, in fact, granted in such year shall be added
to the shares available for grant in any subsequent calendar
year.
(b) Subject to adjustment as provided herein, the number of
shares of Stock covered by Awards granted to any one participant
will not exceed 750,000 shares for any consecutive three-year
period and the aggregate dollar amount for Awards denominated
solely in cash will not exceed $7.5 million for any such period.
(c) In addition, and subject to adjustment as provided
herein, no more than 7.5 million shares of Common Stock will be
cumulatively available for the grant of Incentive Stock Options
over the life of the Plan.
(d) Shares subject to an option or award under the Plan may
be authorized and unissued shares or may be "treasury shares."
In the event of any merger, reorganization, consolidation, re-
capitalization, spin-off, stock dividend, stock split, extraor-
dinary distribution with respect to the Stock or other change in
corporate structure affecting the Stock, such substitution or
adjustments will be made in the aggregate number and kind of
shares reserved for issuance under the Plan, in the aggregate
limit on grants to individuals, in the number, kind, and option
price of shares subject to outstanding Stock Options and Stock
Appreciation Rights, in the number and kind of shares subject to
other outstanding Awards granted under the Plan and/or such other
equitable substitutions or adjustments as may be determined to be
appropriate by the Committee or the Board, in its sole
discretion; provided, however, that the number of shares subject
to any Award will always be a whole number.
(e) Awards under the MIP may not exceed in the case of (i)
the Company's Chief Executive Officer, one and one-half percent
(1.5%) of net income as defined; (ii) a president of any of the
Company's operating companies, whether or not incorporated,
six-tenths of one percent (0.6%) of net income as defined; and (iii)
all other executive officers of the Company individually, one-half
of one percent (0.5%) of net income as defined.
SECTION 4. ELIGIBILITY.
Officers, employees and directors of the Company, its
subsidiaries and Affiliates who are responsible for or contribute
to the management, growth and profitability of the business of
the Company, its subsidiaries and Affiliates are eligible to be
granted Awards under the Plan.
SECTION 5. STOCK OPTIONS.
Stock Options may be granted alone or in addition to other
Awards granted under the Plan and may be of two types: Incentive
Stock Options and Non-Qualified Stock Options. Any Stock Option
granted under the Plan will be in such form as the Committee may
from time to time approve.
The Committee will have the authority to grant any optionee
Incentive Stock Options, Non-Qualified Stock Options or both
types of Stock Options (in each case with or without Stock
Appreciation Rights). Incentive Stock Options may be granted
only to employees of the Company and its subsidiaries (within the
meaning of Section 424(f) of the Code). To the extent that any
Stock Option is not designated as an Incentive Stock Option or
even if so designated does not qualify as an Incentive Stock
Option, it will be deemed to be a Non-Qualified Stock Option.
Stock Options will be evidenced by option agreements, the
terms and provisions of which may differ. An option agreement
will indicate on its face whether it is an agreement for an
Incentive Stock Option or a Non-Qualified Stock Option. The
grant of a Stock Option will occur on the date the Committee by
resolution selects an individual to be a participant in any grant
of a Stock Option, determines the number of shares of Stock to be
subject to such Stock Option to be granted to such individual and
specifies the terms and provisions of the Stock Option. The
Company will notify a participant of any grant of a Stock Option,
and a written option agreement or agreements will be duly
executed and delivered by the Company to the participant.
Anything in the Plan to the contrary notwithstanding, no
term of the Plan relating to Incentive Stock Options will be
interpreted, amended or altered nor will any discretion or au-
thority granted under the Plan be exercised so as to disqualify
the Plan under Section 422 of the Code or, without the consent of
the optionee affected, to disqualify any Incentive Stock Option
under such Section 422.
Stock Options granted under the Plan will be subject to the
following terms and conditions and will contain such additional
terms and conditions as the Committee will deem desirable:
(a) OPTION PRICE. The option price per share of Stock pur-
chasable under a Stock Option will be determined by the Committee
and set forth in the option agreement, and will not be less than
the Fair Market Value of the Stock subject to the Stock Option on
the date of grant.
(b) OPTION TERM. The term of each Stock Option will be
fixed by the Committee, but no Incentive Stock Option may be
exercisable more than 10 years after the date the Incentive Stock
Option is granted.
(c) EXERCISABILITY. Except as otherwise provided herein,
Stock Options will be exercisable at such time or times and
subject to such terms and conditions as will be determined by the
Committee. If the Committee provides that any Stock Option is
exercisable only in installments, the Committee may, subject to
the provisions of Section 2(d) hereof, at any time waive such
installment exercise provisions, in whole or in part, based on
such factors as the Committee may determine. In addition, the
Committee may, subject to the provisions of Section 2(d) hereof,
at any time accelerate the exercisability of any Stock Option.
(d) METHOD OF EXERCISE. Subject to the provisions of this
Section 5, Stock Options may be exercised, in whole or in part,
at any time during the option term by giving written notice of
exercise to the Company specifying the number of shares of Stock
subject to the Stock Option to be purchased.
Such notice must be accompanied by payment in full of the
purchase price by certified or bank check or such other
instrument as the Company may accept. An option agreement may
provide that, if approved by the Committee, payment in full or in
part or payment of tax liability, if any, relating to such
exercise may also be made in the form of unrestricted Stock al-
ready owned by the optionee of the same class as the Stock sub-
ject to the Stock Option and, in the case of the exercise of a
Non-Qualified Stock Option, Restricted Stock subject to an Award
hereunder which is of the same class as the Stock subject to the
Stock Option (in both cases based on the Fair Market Value of the
Stock on the date the Stock Option is exercised); provided,
however, that, in the case of an Incentive Stock Option, the
right to make a payment in the form of already owned shares of
Stock of the same class as the Stock subject to the Stock Option
may be authorized only at the time the Stock Option is granted.
In addition, an option agreement may provide that, in the
discretion of the Committee, payment for any shares subject to a
Stock Option or tax liability associated therewith may also be
made by instruction to the Committee to withhold a number of such
shares having a Fair Market Value on the date of exercise equal
to the aggregate exercise price of such Stock Option.
If payment of the option exercise price of a Non-Qualified
Stock Option is made in whole or in part in the form of
Restricted Stock, the number of shares of Stock to be received
upon such exercise equal to the number of shares of Restricted
Stock used for payment of the option exercise price will be
subject to the same forfeiture restrictions to which such
Restricted Stock was subject, unless otherwise determined by the
Committee.
No shares of Stock will be issued until full payment
therefor has been made. Subject to any forfeiture restrictions
that may apply if a Stock Option is exercised using Restricted
Stock, an optionee will have all of the rights of a stockholder
of the Company holding the class or series of Stock that is
subject to such Stock Option (including, if applicable, the right
to vote the shares and the right to receive dividends), when the
optionee has given written notice of exercise, has paid in full
for such shares and, if requested, has given the representation
described in Section 12(a).
(e) NONTRANSFERABILITY OF STOCK OPTIONS. (1) No Stock
Option will be transferable by the optionee other than (A) by
will or by the laws of descent and distribution or (B) in the
case of a Non-Qualified Stock Option, pursuant to a qualified
domestic relations order (as defined in the Code or Title I of
the Employee Retirement Income Security Act of 1974, as amended,
or the rules thereunder). All Stock Options will be exercisable,
during the optionee's lifetime, only by the optionee or by the
guardian or legal representative of the optionee, it being
understood that the terms "holder" and "optionee" include the
guardian and legal representative of the optionee named in the
option agreement and any person to whom a Stock Option is
transferred by will or the laws of descent and distribution or
pursuant to a qualified domestic relations order.
(2) Notwithstanding Section 5(e)(1) above, the
Committee may grant Stock Options that are transferable, or amend
outstanding Stock Options to make them transferable, by the
optionee (any such Stock Option so granted or amended a
"Transferable Option") to one or more members of the optionee's
immediate family, to partnerships of which the only partners are
members of the optionee's immediate family, or to trusts
established by the optionee for the benefit of one or more
members of the optionee's immediate family. For this purpose the
term "immediate family" means the optionee's spouse, children or
grandchildren. Consideration may not be paid for the transfer of
a Transferable Option. A transferee described in this Section
5(e)(2) shall be subject to all terms and conditions applicable
to the Transferable Option prior to its transfer. The option
agreement with respect to a Transferable Option shall set forth
its transfer restrictions, such option agreement shall be
approved by the Committee, and only Stock Options granted pursu-
ant to a stock option agreement expressly permitting transfer
pursuant to this Section 5(e)(2) shall be so transferable.
(f) TERMINATION BY DEATH. If an optionee's employment
terminates by reason of death, any Stock Option held by such
optionee may thereafter be exercised, to the extent then
exercisable, or on such accelerated basis as the Committee may
determine, for a period of one year (or such other period as the
Committee may specify in the option agreement) from the date of
such death or until the expiration of the stated term of such
Stock Option, whichever period is the shorter.
(g) TERMINATION BY REASON OF DISABILITY. If an optionee's
employment terminates by reason of Disability, any Stock Option
held by such optionee may thereafter be exercised by the
optionee, to the extent it was exercisable at the time of
termination, or on such accelerated basis as the Committee may
determine, for a period of three years (or such shorter period
as the Committee may specify in the option agreement) from the
date of such termination of employment or until the expiration of
the stated term of such Stock Option, whichever period is the
shorter; provided, however, that if the optionee dies within such
three-year period (or such shorter period), any unexercised Stock
Option held by such optionee will, notwithstanding the expiration
of such three-year (or such shorter) period, continue to be exer-
cisable to the extent to which it was exercisable at the time of
death for a period of 12 months from the date of such death or
until the expiration of the stated term of such Stock Option,
whichever period is the shorter. In the event of termination of
employment by reason of Disability, if an Incentive Stock Option
is exercised after the expiration of the exercise periods that
apply for purposes of Section 422 of the Code, such Stock Option
will thereafter be treated as a Non-Qualified Stock Option.
(h) TERMINATION BY REASON OF RETIREMENT. If an optionee's
employment terminates by reason of Retirement, any Stock Option
held by such optionee may thereafter be exercised by the
optionee, to the extent it was exercisable at the time of
termination, or on such accelerated basis as the Committee may
determine, for a period of five years (or such shorter period as
the Committee may specify in the option agreement) from the date
of such termination of employment or until the expiration of the
stated term of such Stock Option, whichever period is the
shorter; provided, however, that if the optionee dies within such
five-year period (or such shorter period), any unexercised Stock
Option held by such optionee will, notwithstanding such five-year
(or such shorter) period, continue to be exercisable to the
extent to which it was exercisable at the time of death for a pe-
riod of 12 months from the date of such death or until the
expiration of the stated term of such Stock Option, whichever
period is the shorter. In the event of termination of employment
by reason of Retirement, if an Incentive Stock Option is
exercised after the expiration of the exercise periods that apply
for purposes of Section 422 of the Code, such Stock Option will
thereafter be treated as a Non-Qualified Stock Option.
(i) OTHER TERMINATION. Unless otherwise determined by the
Committee, if an optionee incurs a Termination of Employment for
any reason other than death, Disability or Retirement or Cause,
any Stock Option held by such optionee will thereupon terminate,
except that such Stock Option, to the extent then exercisable, or
subject to the provisions of Section 2(d) hereof, on such
accelerated basis as the Committee may determine, may be
exercised for the lesser of three months from the date of such
Termination of Employment or the balance of such Stock Option's
term; provided, however, that if the optionee dies within such
three-month period, any unexercised Stock Option held by such
optionee will, notwithstanding the expiration of such three-month
period, continue to be exercisable to the extent to which it was
exercisable at the time of death for a period of 12 months from
the date of such death or until the expiration of the stated term
of such Stock Option, whichever period is the shorter. In the
event of Termination of Employment, if an Incentive Stock Option
is exercised after the expiration of the exercise periods that
apply for purposes of Section 422 of the Code, such Stock Option
will thereafter be treated as a Non-Qualified Stock Option.
(j) CASHING OUT OF STOCK OPTION. On receipt of written
notice of exercise, the Committee may elect to cash out all or
part of the shares of Stock for which a Stock Option is being
exercised by paying the optionee an amount, in cash or Stock,
equal to the excess of the Fair Market Value of the Stock over
the option price times the number of shares of Stock for which
the Option is being exercised on the effective date of such
cash-out.
(k) CHANGE IN CONTROL CASH-OUT. Subject to Section 12(h),
but notwithstanding any other provision of the Plan, during the
60-day period from and after a Change in Control (the "Exercise
Period"), unless the Committee determines otherwise at the time
of grant, an optionee will have the right, whether or not the
Stock Option is fully exercisable and in lieu of the payment of
the exercise price for the shares of Stock being purchased under
the Stock Option and by giving notice to the Company, to elect
(within the Exercise Period) to surrender all or part of the
Stock Option to the Company and to receive cash, within 30 days
of such notice, in an amount equal to the amount by which the
Change in Control Price per share of Stock on the date of such
election will exceed the exercise price per share of Stock under
the Stock Option (the "Spread") multiplied by the number of
shares of Stock granted under the Stock Option as to which the
right granted under this Section 5(k) will have been exercised.
SECTION 6. STOCK APPRECIATION RIGHTS.
(a) GRANT AND EXERCISE. Stock Appreciation Rights may be
granted in conjunction with all or part of any Stock Option
granted under the Plan. In the case of a Non-Qualified Stock
Option, such rights may be granted either at or after the time of
grant of such Stock Option. In the case of an Incentive Stock
Option, such rights may be granted only at the time of grant of
such Stock Option. A Stock Appreciation Right will terminate and
no longer be exercisable upon the termination or exercise of the
related Stock Option.
A Stock Appreciation Right may be exercised by an optionee
in accordance with Section 6(b) by surrendering the applicable
portion of the related Stock Option in accordance with procedures
established by the Committee. Upon such exercise and surrender,
the optionee will be entitled to receive an amount determined in
the manner prescribed in Section 6(b). Stock Options which have
been so surrendered will no longer be exercisable to the extent
the related Stock Appreciation Rights have been exercised.
(b) TERMS AND CONDITIONS. Stock Appreciation Rights will
be subject to such terms and conditions as will be determined by
the Committee, including the following:
(1) Stock Appreciation Rights will be exercisable only
at such time or times and to the extent that the Stock
Options to which they relate are exercisable in accordance
with the provisions of Section 5 and this Section 6;
(2) Upon the exercise of a Stock Appreciation Right,
an optionee will be entitled to receive an amount in cash,
shares of Stock or both equal in value to the excess of the
Fair Market Value of one share of Stock as of the date of
exercise over the option price per share specified in the
related Stock Option multiplied by the number of shares in
respect of which the Stock Appreciation Right has been exer-
cised, with the Committee having the right to determine the
form of payment;
(3) Stock Appreciation Rights will be transferable
only to permitted transferees of the underlying Stock Option
in accordance with Section 5(e).
SECTION 7. RESTRICTED STOCK.
(a) ADMINISTRATION. Shares of Restricted Stock may be
awarded either alone or in addition to other Awards granted under
the Plan. The Committee will determine the individuals to whom
and the time or times at which grants of Restricted Stock will be
awarded, the number of shares to be awarded to any participant,
the conditions for vesting, the time or times within which such
Awards may be subject to forfeiture and any other terms and con-
ditions of the Awards, in addition to those contained in Section
7(c).
(b) AWARDS AND CERTIFICATES. Shares of Restricted Stock
will be evidenced in such manner as the Committee may deem
appropriate, including book-entry registration or issuance of one
or more stock certificates. Except as otherwise set forth in a
Restricted Stock Agreement, any certificate issued in respect of
shares of Restricted Stock will be registered in the name of such
participant and will bear an appropriate legend referring to the
terms, conditions, and restrictions applicable to such Award,
substantially in the following form:
"The transferability of this certificate and the shares of
stock represented hereby are subject to the terms and con-
ditions (including forfeiture) of the 1997 Incentive Plan
and a Restricted Stock Agreement. Copies of such Plan and
Agreement are on file at the offices of Viad Corp, Viad
Tower, Phoenix, Arizona."
The Committee may require that the certificates evidencing such
shares be held in custody by the Company until the restrictions
thereon have lapsed and that, as a condition of any Award of
Restricted Stock, the participant has delivered a stock power,
endorsed in blank, relating to the Stock covered by such Award.
(c) TERMS AND CONDITIONS. Shares of Restricted Stock will
be subject to the following terms and conditions:
(1) The Committee may, prior to or at the time of
grant, designate an Award of Restricted Stock as a Qualified
Performance-Based Award, in which event it will condition
the grant or vesting, as applicable, of such Restricted
Stock upon the attainment of Performance Goals. If the Com-
mittee does not designate an Award of Restricted Stock as a
Qualified Performance-Based Award, it may also condition the
grant or vesting thereof upon the attainment of Performance
Goals or such other performance-based criteria as the
Committee shall establish (such an Award, a "Performance-Based
Restricted Stock Award"). Regardless of whether an
Award of Restricted Stock is a Qualified Performance-Based
Award or a Performance-Based Restricted Stock Award, the
Committee may also condition the grant or vesting upon the
continued service of the participant. The provisions of Re-
stricted Stock Awards (including the conditions for grant or
vesting and any applicable Performance Goals) need not be
the same with respect to each recipient. The Committee may
at any time, in its sole discretion, subject to the
provisions of Section 7(c)(10), accelerate or waive, in
whole or in part, any of the foregoing restrictions;
provided, however, that in the case of Restricted Stock that
is a Qualified Performance-Based Award, the applicable
Performance Goals have been satisfied.
(2) Subject to the provisions of the Plan and the
Restricted Stock Agreement referred to in Section 7(c)(8),
during the period set by the Committee, commencing with the
date of such Award for which such participant's continued
service is required (the "Restriction Period") and until the
later of (A) the expiration of the Restriction Period and
(B) the date the applicable Performance Goals (if any) are
satisfied, the participant will not be permitted to sell,
assign, transfer, pledge or otherwise encumber shares of
Restricted Stock.
(3) Except as provided in this paragraph (3) and
Sections 7(c)(1) and (2) and the Restricted Stock Agreement,
the participant will have, with respect to the shares of Re-
stricted Stock, all of the rights of a stockholder of the
Company holding the class or series of Stock that is the
subject of the Restricted Stock, including, if applicable,
the right to vote the shares and the right to receive any
dividends. If so determined by the Committee in the ap-
plicable Restricted Stock Agreement and subject to Section
12(f) of the Plan, (A) dividends consisting of cash, stock
or other property (other than Stock) on the class or series
of Stock that is the subject of the Restricted Stock shall
be automatically deferred and reinvested in additional
Restricted Stock (in the case of stock or other property,
based on the fair market value thereof, and the Fair Market
Value of the Stock, in each case as of the record date for
the dividend) held subject to the vesting of the underlying
Restricted Stock, or held subject to meeting any Performance
Goals applicable to the underlying Restricted Stock, and (B)
dividends payable in Stock shall be paid in the form of
Restricted Stock of the same class as the Stock with which
such dividend was paid and shall be held subject to the
vesting of the underlying Restricted Stock, or held subject
to meeting any Performance Goals applicable to the
underlying Restricted Stock.
(4) Except to the extent otherwise provided in the
applicable Restricted Stock Agreement, Section 7(c)(1),
7(c)(2), 7(c)(5) or 9(a)(2), upon a participant's Termi-
nation of Employment for any reason during the Restriction
Period or before any applicable Performance Goals are met,
all shares still subject to restriction will be forfeited by
the participant.
(5) Except to the extent otherwise provided in Section
9(a)(2) and Sections 7(c)(9) and (10), in the event that a
participant retires or such participant's employment is
involuntarily terminated (other than for Cause), the Commit-
tee will have the discretion to waive in whole or in part
any or all remaining restrictions (other than, in the case
of Restricted Stock which is a Qualified Performance-Based
Award, satisfaction of the applicable Performance Goals
unless the participant's employment is terminated by reason
of death or Disability) with respect to any or all of such
participant's shares of Restricted Stock.
(6) Except as otherwise provided herein or as required
by law, if and when any applicable Performance Goals are
satisfied and the Restriction Period expires without a prior
forfeiture of the Restricted Stock, unlegended certificates
for such shares will be delivered to the participant upon
surrender of legended certificates.
(7) Awards of Restricted Stock, the vesting of which
is not conditioned upon the attainment of Performance Goals
or other performance-based criteria, is limited to twenty
percent (20%) of the number of shares of Common Stock of the
Corporation available for grant under the Plan in each
calendar year.
(8) Each Award will be confirmed by, and be subject to
the terms of, a Restricted Stock Agreement.
(9) Performance-Based Restricted Stock will be subject
to a minimum one-year performance period and Restricted
Stock which is not performance-based will be subject to a
minimum three-year vesting period.
(10) There will be no vesting acceleration, or waiver
of forfeiture regarding any Award and any shares of Stock
relating thereto, except in connection with a "change of
control" of the Company, the sale of a subsidiary or
majority-owned affiliate of the Company (and then only with
respect to participants employed by each subsidiary or
affiliate), the death or disability of a participant, or
termination of employment of a participant.
SECTION 8. PERFORMANCE-BASED AWARDS.
(a) ADMINISTRATION. Performance-Based Awards may be award-
ed either alone or in addition to other Awards granted under the
Plan. Subject to the terms and conditions of the Plan, the
Committee shall determine the officers and employees to whom and
the time or times at which Performance-Based Awards will be
awarded, the number or amount of Performance-Based Awards to be
awarded to any participant, whether such Performance-Based Award
shall be denominated in a number of shares of Stock, an amount of
cash, or some combination thereof, the duration of the Award
Cycle and any other terms and conditions of the Award, in
addition to those contained in Section 8(b).
(b) TERMS AND CONDITIONS. Performance-Based Awards will be
subject to the following terms and conditions:
(1) The Committee may, prior to or at the time of the
grant, designate Performance-Based Awards as Qualified
Performance-Based Awards, in which event it will condition
the settlement thereof upon the attainment of Performance
Goals. If the Committee does not designate Performance-Based
Awards as Qualified Performance-Based Awards, it may
also condition the settlement thereof upon the attainment of
Performance Goals or such other performance-based criteria
as the Committee shall establish. Regardless of whether
Performance-Based Awards are Qualified Performance-Based
Awards, the Committee may also condition the settlement
thereof upon the continued service of the participant. The
provisions of such Performance-Based Awards (including
without limitation any applicable Performance Goals) need
not be the same with respect to each recipient. Subject to
the provisions of the Plan and the Performance-Based Award
Agreement referred to in Section 8(b)(5), Performance-Based
Awards may not be sold, assigned, transferred, pledged or
otherwise encumbered during the Award Cycle.
(2) Unless otherwise provided by the Committee (A)
from time to time pursuant to the administration of
particular Award programs under this Section 8, such as the
Viad Corp Management Incentive Plan, the Viad Corp
Performance Unit Incentive Plan or the Viad Corp
Performance-Based Stock Plan or (B) in any agreement
relating to an Award, and except as provided in Section
8(b)(3), upon a participant's Termination of Employment for
any reason prior to the payment of an Award under this
Section 8, all rights to receive cash or Stock in settlement
of the Award shall be forfeited by the participant.
(3) In the event that a participant's employment is
terminated (other than for Cause), or in the event a par-
ticipant retires, the Committee shall have the discretion to
waive, in whole or in part, any or all remaining payment
limitations (other than, in the case of Awards that are
Qualified Performance-Based Awards, satisfaction of the
applicable Performance Goals unless the participant's
employment is terminated by reason of death or Disability)
with respect to any or all of such participant's Awards.
(4) At the expiration of the Award Cycle, the Com-
mittee will evaluate the Company's performance in light of
any Performance Goals for such Award, and will determine the
extent to which a Performance-Based Award granted to the
participant has been earned, and the Committee will then
cause to be delivered to the participant, as specified in
the grant of such Award: (A) a number of shares of Stock
equal to the number of shares determined by the Committee to
have been earned or (B) cash equal to the amount determined
by the Committee to have been earned or (C) a combination of
shares of Stock and cash if so specified in the Award.
(5) No Performance-Based Award may be assigned,
transferred, or otherwise encumbered except, in the event of
the death of a participant, by will or the laws of descent
and distribution.
(6) Each Award will be confirmed by, and be subject
to, the terms of a Performance-Based Award Agreement.
(7) Performance-Based Awards will be subject to a
minimum one-year performance period.
SECTION 9. CHANGE IN CONTROL PROVISIONS.
(a) IMPACT OF EVENT. Notwithstanding any other provision
of the Plan to the contrary, in the event of a Change in Control:
(1) Any Stock Options and Stock Appreciation Rights
outstanding as of the date such Change in Control is
determined to have occurred and not then exercisable and
vested will become fully exercisable and vested to the full
extent of the original grant;
(2) The restrictions and conditions to vesting
applicable to any Restricted Stock will lapse, and such Re-
stricted Stock will become free of all restrictions and
become fully vested and transferable to the full extent of
the original grant;
(3) Performance-Based Awards will be considered to be
earned and payable to the extent, if any, and in an amount,
if any, and otherwise, in accordance with the provisions of
the agreement relating to such Awards.
(b) DEFINITION OF CHANGE IN CONTROL. For purposes of the
Plan, a "Change in Control" will mean the happening of any of the
following events:
(1) An acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act) (a "Person") of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of
twenty percent (20%) or more of either (A) the then outstanding
shares of common stock of the Company (the "Outstanding Company
Common Stock") or (B) the combined voting power of the then
outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Outstanding Company
Voting Securities"); excluding, however, the following: (i) any
acquisition directly from the Company, other than an acquisition
by virtue of the exercise of a conversion privilege unless the
security being so converted was itself acquired directly from the
Company, (ii) any acquisition by the Company, (iii) any
acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation
controlled by the Company or (iv) any acquisition by any
corporation pursuant to a transaction which complies with clauses
(A), (B) and (C) of subsection (3) of this Section 9(b); or
(2) A change in the composition of the Board such that
the individuals who, as of February 20, 1997, constitute the
Board (such Board will be hereinafter referred to as the
"Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, for purposes of this
Section 9(b), that any individual who becomes a member of the
Board subsequent to February 20, 1997, whose election, or nomi-
nation for election by the Company's stockholders, was approved
by a vote of at least a majority of those individuals who are
members of the Board and who were also members of the Incumbent
Board (or deemed to be such pursuant to this proviso) will be
considered as though such individual were a member of the Incum-
bent Board; but, provided further, that any such individual whose
initial assumption of office occurs as a result of either an
actual or threatened election contest (as such terms are used in
Rule 14a-11 of Regulation 14A promulgated under the Exchange Act)
or other actual or threatened solicitation of proxies or consents
by or on behalf of a Person other than the Board will not be so
considered as a member of the Incumbent Board; or
(3) The approval by the stockholders of the Company of
a reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the
Company ("Corporate Transaction") (or, if consummation of such
Corporate Transaction is subject, at the time of such approval by
stockholders, to the consent of any government or governmental
agency, the earlier of the obtaining of such consent or the
consummation of the Corporate Transaction); excluding, however,
such a Corporate Transaction pursuant to which (A) all or
substantially all of the individuals and entities who are the
beneficial owners, respectively, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities
immediately prior to such Corporate Transaction will beneficially
own, directly or indirectly, more than sixty percent (60%) of,
respectively, the outstanding shares of common stock, and the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the
case may be, of the corporation resulting from such Corporate
Transaction (including, without limitation, a corporation which
as a result of such transaction owns the Company or all or
substantially all of the Company's assets either directly or
through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such
Corporate Transaction, of the Outstanding Company Common Stock
and Outstanding Company Voting Securities, as the case may be,
(B) no Person (other than the Company, any employee benefit plan
(or related trust) of the Company or such corporation resulting
from such Corporate Transaction) will beneficially own, directly
or indirectly, twenty percent (20%) or more of, respectively, the
outstanding shares of common stock of the corporation resulting
from such Corporate Transaction or the combined voting power of
the outstanding voting securities of such corporation entitled to
vote generally in the election of directors except to the extent
that such ownership existed prior to the Corporate Transaction
and (C) individuals who were members of the Incumbent Board will
constitute at least a majority of the members of the board of
directors of the corporation resulting from such Corporate
Transaction; or
(4) The approval by the stockholders of the Company of
a complete liquidation or dissolution of the Company.
(c) CHANGE IN CONTROL PRICE. For purposes of the Plan,
"Change in Control Price" means the higher of (1) the highest
reported sales price, regular way, of a share of Stock in any
transaction reported on the New York Stock Exchange Composite
Tape or other national exchange on which such shares are listed
or on The Nasdaq Stock Market during the 60-day period prior to
and including the date of a Change in Control or (2) if the
Change in Control is the result of a tender or exchange offer or
a Corporate Transaction, the highest price per share of Stock
paid in such tender or exchange offer or Corporate Transaction;
provided, however, that in the case of Incentive Stock Options
and Stock Appreciation Rights relating to Incentive Stock
Options, the Change in Control Price will be in all cases the
Fair Market Value of the Stock on the date such Incentive Stock
Option or Stock Appreciation Right is exercised. To the extent
that the consideration paid in any such transaction described
above consists all or in part of securities or other non-cash
consideration, the value of such securities or other non-cash
consideration will be determined in the sole discretion of the
Board.
SECTION 10. TERM, AMENDMENT AND TERMINATION.
The Plan will terminate May 31, 2007, but may be terminated
sooner at any time by the Board, provided that no Incentive Stock
Options shall be granted under the Plan after February 19, 2007.
Awards outstanding as of the date of any such termination will
not be affected or impaired by the termination of the Plan.
The Board may amend, alter, or discontinue the Plan, but no
amendment, alteration or discontinuation will be made which
would (a) impair the rights of an optionee under a Stock Option
or a recipient of a Stock Appreciation Right, Restricted Stock
Award or Performance-Based Award theretofore granted without the
optionee's or recipient's consent, except such an amendment which
is necessary to cause any Award or transaction under the Plan to
qualify, or to continue to qualify, for the exemption provided by
Rule 16b-3, or (b) disqualify any Award or transaction under the
Plan from the exemption provided by Rule 16b-3. In addition, no
such amendment may be made without the approval of the Company's
stockholders to the extent such approval is required by law or
agreement.
The Committee may amend the terms of any Stock Option or
other Award theretofore granted, prospectively or retroactively,
but no such amendment will (1) impair the rights of any holder
without the holder's consent except such an amendment which is
necessary to cause any Award or transaction under the Plan to
qualify, or to continue to qualify, for the exemption provided by
Rule 16b-3 or (2) amend any Qualified Performance-Based Award in
such a way as to cause it to cease to qualify for the exemption
set forth in Section 162(m)(4)(C). The Committee may also
substitute new Stock Options for previously granted Stock
Options, including previously granted Stock Options having higher
option prices; provided, however, that the Committee may take
such action only with respect to Stock Options representing not
more than 10% of then outstanding Stock Options.
Subject to the above provisions, the Board will have
authority to amend the Plan to take into account changes in law
and tax and accounting rules, as well as other developments and
to grant Awards which qualify for beneficial treatment under such
rules without stockholder approval.
SECTION 11. UNFUNDED STATUS OF PLAN.
It is presently intended that the Plan constitute an
"unfunded" plan for incentive and deferred compensation. The
Committee may authorize the creation of trusts or other arrange-
ments to meet the obligations created under the Plan to deliver
Stock or make payments; provided, however, that, unless the Com-
mittee otherwise determines, the existence of such trusts or
other arrangements is consistent with the "unfunded" status of
the Plan.
SECTION 12. GENERAL PROVISIONS.
(a) The Committee may require each person purchasing or
receiving shares pursuant to an Award to represent to and agree
with the Company in writing that such person is acquiring any
shares without a view to the distribution thereof. The
certificates for such shares may include any legend which the
Committee deems appropriate to reflect any restrictions on trans-
fer.
All certificates for shares of Stock or other securities
delivered under the Plan will be subject to such stock transfer
orders and other restrictions as the Committee may deem advisable
under the rules, regulations and other requirements of the
Commission, any stock exchange upon which the Stock is then
listed and any applicable federal or state securities law, and
the Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.
Notwithstanding any other provision of the Plan or
agreements made pursuant thereto, the Company shall not be re-
quired to issue or deliver any certificate or certificates for
shares of Stock under the Plan prior to fulfillment of all of the
following conditions:
(1) Listing or approval for listing upon notice of
issuance, of such shares on the New York Stock Exchange,
Inc., or such other securities exchange as may at the time
be the principal market for the Stock;
(2) Any registration or other qualification of such
shares of the Company under any state or federal law or
regulation, or the maintaining in effect of any such
registration or other qualification which the Committee
shall, in its absolute discretion upon the advice of
counsel, deem necessary or advisable; and
(3) Obtaining any other consent, approval, or permit
from any state or federal governmental agency which the
Committee shall, in its absolute discretion after receiving
the advice of counsel, determine to be necessary or
advisable.
(b) Nothing contained in the Plan will prevent the Company
or any subsidiary or Affiliate from adopting other or additional
compensation arrangements for its employees.
(c) The adoption of the Plan will not confer upon any
employee any right to continued employment nor will it interfere
in any way with the right of the Company or any subsidiary or
Affiliate to terminate the employment of any employee at any
time.
(d) No later than the date as of which an amount first
becomes includible in the gross income of the participant for
Federal income tax purposes with respect to any Award under the
Plan, the participant will pay to the Company, or make
arrangements satisfactory to the Company regarding the payment
of, any federal, state, local or foreign taxes of any kind
required by law to be withheld with respect to such amount. Un-
less otherwise determined by the Company, withholding obligations
may be settled with Stock, including Stock that is part of the
Award that gives rise to the withholding requirement. The
obligations of the Company under the Plan will be conditional on
such payment or arrangements, and the Company and its Affiliates
will, to the extent permitted by law, have the right to deduct
any such taxes from any payment otherwise due to the participant.
The Committee may establish such procedures as it deems
appropriate, including the making of irrevocable elections, for
the settlement of withholding obligations with Stock.
(e) At the time of grant, the Committee may provide in
connection with any grant made under the Plan that the shares of
Stock received as a result of such grant will be subject to a
right of first refusal pursuant to which the participant will be
required to offer to the Company any shares that the participant
wishes to sell at the then Fair Market Value of the Stock, sub-
ject to such other terms and conditions as the Committee may
specify at the time of grant.
(f) The reinvestment of dividends in additional Restricted
Stock at the time of any dividend payment will only be
permissible if sufficient shares of Stock are available under
Section 3 for such reinvestment (taking into account then
outstanding Stock Options and other Awards).
(g) The Committee will establish such procedures as it
deems appropriate for a participant to designate a beneficiary to
whom any amounts payable in the event of the participant's death
are to be paid or by whom any rights of the participant, after
the participant's death, may be exercised.
(h) Notwithstanding any other provision of the Plan or any
agreement relating to any Award hereunder, if any right granted
pursuant to this Plan would make a Change in Control transaction
ineligible for pooling-of-interests-accounting under APB No. 16
that, but for the nature of such grant, would otherwise be
eligible for such accounting treatment, the Committee will have
the ability, in its sole discretion, to substitute for the cash
payable pursuant to such grant Common Stock with a Fair Market
Value equal to the cash that would otherwise be payable
hereunder.
(i) The Plan and all Awards made and actions taken
thereunder will be governed by and construed in accordance with
the laws of the State of Delaware.
SECTION 13. EFFECTIVE DATE OF PLAN.
The Plan will be effective on the later of (a) the time it
is approved by the Board and (b) the time certain provisions of
the Plan are approved by stockholders for tax purposes.
SECTION 14. DIRECTOR STOCK OPTIONS.
(a) Each director of the Company who is not otherwise an
employee of the Company or any of its subsidiaries or Affiliates,
will (1) on the date of his or her first election as a director
of the Company (such initial grant being an "Initial Grant"), and
(2) annually on the Monday preceding the second Tuesday of May,
during such director's term (the "Annual Grant"), automatically
be granted Non-Qualified Stock Options to purchase Common Stock
having an exercise price per share of Common Stock equal to 100%
of Fair Market Value per share of Common Stock at the date of
grant of such Non-Qualified Stock Option. The number of shares
subject to each such Initial Grant, and each such Annual Grant,
will be equal to the annual retainer fee in effect at the date of
grant for non-employee directors of the Company divided by an
amount equal to one-third (1/3) of the Fair Market Value of the
Common Stock at the date of grant, rounded to the nearest 100
shares. A non-employee director who is first elected as a
director of the Company during the course of a year (i.e., on a
date other than the date of the Annual Grant) will, in addition
to the Initial Grant, receive upon election a grant of Non-Qualified
Stock Options prorated to reflect the number of months
served in the initial year of service, with the number of shares
of Common Stock subject to such Stock Option being equal to (1)
the number of shares subject to the Initial Grant multiplied by
(2) a fraction the numerator of which will be the number of
months from the date of such election through the date of the
next Annual Grant and the denominator of which will be twelve
(12).
(b) An automatic director Stock Option will be granted
hereunder only if as of each date of grant the director (1) is
not otherwise an employee of the Company or any of its sub-
sidiaries or Affiliates, (2) has not been an employee of the
Company or any of its subsidiaries or Affiliates for any part of
the preceding fiscal year, and (3) has served on the Board
continuously since the commencement of his term.
(c) Except as expressly provided in this Section 14, any
Stock Option granted hereunder will be subject to the terms and
conditions of the Plan as if the grant were made pursuant to
Section 5 hereof including, without limitation, the rights set
forth in Section 5(j) hereof.
Exhibit 10.B
VIAD CORP
PERFORMANCE UNIT INCENTIVE PLAN
AS AMENDED THROUGH MAY 12, 1998
1. PURPOSE.
The purpose of the Plan is to promote the long-term interests of
the Corporation and its shareholders by providing a means for
attracting and retaining designated key executives of the
Corporation and its Affiliates through a system of cash rewards
for the accomplishment of long-term predefined objectives.
2. DEFINITIONS.
The following definitions are applicable to the Plan:
"Affiliate" - Any "Parent Corporation" or "Subsidiary
Corporation" of the Corporation as such terms are defined in
Section 425(e) and (f), or the successor provisions, if any,
respectively, of the Code (as defined herein).
"Award" - The grant by the Committee of a Performance Unit
or Units as provided in the Plan.
"Board" - The Board of Directors of Viad Corp.
"Code" - The Internal Revenue Code of 1986, as amended, or
its successor general income tax law of the United States.
"Committee" - The Human Resources Committee of the Board.
"Corporation" - Viad Corp.
"Participant" - Any executive of the Corporation or any of
its Affiliates who is selected by the Committee to receive
an Award.
"Performance Period" - The period of time selected by the
Committee for the purpose of determining performance goals
and measuring the degree of accomplishment. Generally, the
Performance Period will be a period of three successive
fiscal years of the Corporation.
"Performance Unit Award" - An Award.
"Plan" - The Performance Unit Incentive Plan of the
Corporation.
"Unit" - The basis for any Award under the Plan.
3. ADMINISTRATION.
The Plan shall be administered by the Committee. Except as
limited by the express provisions of the Plan, the Committee
shall have sole and complete authority and discretion to (i)
select Participants and grant Awards; (ii) determine the number
of Units to be subject to Awards generally, as well as to
individual Awards granted under the Plan; (iii) determine the
targets that must be achieved in order for the Awards to be
payable and the other terms and conditions upon which Awards
shall be granted under the Plan; (iv) prescribe the form and
terms of instruments evidencing such grants; and (v) establish
from time to time regulations for the administration of the Plan,
interpret the Plan, and make all determinations deemed necessary
or advisable for the administration of the Plan.
4. PERFORMANCE GOALS.
The Performance Unit Incentive Plan is intended to provide
Participants with a substantial incentive to achieve or surpass
two pre-defined long-range financial goals which have been
selected because they are key factors (goals) in increasing
shareholder value. One of the key goals for CORPORATE and
SUBSIDIARY Participants is Average Three-Year Return on Equity,
utilizing a pro forma return on equity calculation for
subsidiaries (other than Travelers Express) which effectively
adjusts each to the overall financial objective of a capital
structure of 35% debt and 65% equity.
The second goal for each SUBSIDIARY Participant principally
emphasizes Average Three-Year Real Earnings Growth. The targets
for this goal will take several different forms in recognition of
the need to tailor the target to the most important factors for
the unit (as well as to overall corporate objectives). For
example, while operating income is normally the best indicator of
earnings growth, the target will be based on net income when
tax-exempt income (Travelers Express) or income from equity in
joint ventures (Dobbs International, GLSI) come into play, as
operating income would not give the full picture in such
circumstances. Goals for subsidiaries should be meaningful,
easily understood and consistent with the overall objectives.
The second goal for CORPORATE Participants also emphasizes
Average Three-Year Real Earnings Growth but the target will be
based on earnings per share from continuing operations, the most
appropriate measure in increasing shareholder value.
5. DETERMINATION OF TARGETS.
A. AVERAGE THREE-YEAR SUBSIDIARY PRO FORMA RETURN ON EQUITY
(EXCEPT TRAVELERS EXPRESS COMPANY, INC., GROUP).
Return on Equity calculations for each Subsidiary Company except
Travelers Express will be made by dividing each year's net
earnings after tax by the average quarterly (beginning of year
and each quarter-end, including year-end) pro forma equity. For
purposes of this calculation, pro forma equity shall be deemed to
be 65% of the sum of each Subsidiary Company's actual equity plus
its debt, including intercompany accounts payable less
intercompany accounts receivable (net capital employed). Net
income shall be adjusted (1) to exclude the after-tax effect of
intercompany interest expense and the after-tax effect of
intercompany interest income and (2) to deduct the after-tax
effect of the pro forma interest, calculated at 8% per annum, on
the excess of 35% of the average beginning and ending balance of
net capital employed over the average beginning and ending
balance of outstanding debt (pro forma debt), so that each
company's Return on Equity is based on a pro forma 65% equity and
35% debt structure for the net capital employed by it. In all
cases, the after-tax calculations are to be made using the
statutory federal income tax rate applicable to such year. In
establishing a realistic weighted average annual Return on Equity
target for the Performance Period, consideration will be given to
industry averages whenever known as well as the Performance
Period Financial Plan year-by-year Return on Equity (on the same
basis as previously described), overall Corporate objectives and,
where appropriate, other circumstances. An appropriate range of
values above and below such target will then be selected to
measure achievement above or below the target.
B. AVERAGE THREE-YEAR RETURN ON EQUITY (TRAVELERS EXPRESS).
Return on Equity calculations for Travelers Express will be made
by dividing each year's net income after taxes by the average
quarterly (beginning of year and each quarter-end, including
year-end) equity. Consideration will then be given to any known
or anticipated changes in equity structure and available industry
averages, and a realistic weighted average annual Return on
Equity target for the three-year Performance Period will be
established, taking into account all factors mentioned as well as
the three-year Performance Period Financial Plan year-by-year
Return on Equity (on the same basis as previously described),
overall Corporate objectives and, where appropriate, other
circumstances. An appropriate range of values above and below
such target will then be selected to measure achievement above or
below the target.
C. AVERAGE THREE-YEAR VIAD RETURN ON COMMON STOCKHOLDERS'
EQUITY.
Return on common stockholders' equity calculations will be made
for Viad Corp by dividing each year's net income after taxes less
preferred dividend requirements by the year's monthly average of
common stockholders' equity (return on common equity).
Consideration will then be given to any known or anticipated
changes in equity structure and to appropriate industry averages,
and a realistic weighted average annual Return on Equity target
for the three-year Performance Period will be established taking
into account all factors mentioned as well as the three-year
Performance Period Financial Plan year-by-year return on equity
(on the same basis as previously described), overall Corporate
objectives and, where appropriate, other circumstances. An
appropriate range of values above and below such target will then
be selected to measure achievement above or below the target.
D. AVERAGE THREE-YEAR SUBSIDIARY EARNINGS GROWTH.
A realistic average three-year earnings target for the
Performance Period for each Subsidiary Company will be
established taking into account historical income, financial plan
income for the Performance Period, overall Corporate objectives,
and if appropriate, other circumstances. An appropriate range of
values above and below such target will then be selected to
measure achievement above or below the target.
E. AVERAGE THREE-YEAR VIAD EARNINGS PER SHARE GROWTH.
A realistic "Earnings Per Share" from continuing operations
target for Viad Corp will be established after considering
historical earnings per share from continuing operations,
financial plan income for the Performance Period, overall
Corporate objectives and, if appropriate, other circumstances. An
appropriate range of values above and below such target will then
be selected to measure achievement above or below the target.
F. ESTABLISHING TARGETS.
The appropriate targets, range of values above and below such
targets and the Performance Period to be used as a basis for the
measurement of performance for Awards under the Plan will be
determined by the Committee no later than 90 days after the
beginning of each new Performance Period during the life of the
Plan, after giving consideration to the recommendations of the
Chief Executive Officer of Viad Corp. Performance Units will be
earned based upon the degree of achievement of the pre-defined
targets over the Performance Period following the date of grant.
Earned Units can range, based on operating company performance
using an award matrix, from 0% to 200% of the target Units.
6. OTHER PLAN PROVISIONS.
Special treatment of any significant unusual or non-recurring
items (for purposes of earnings and/or Return on Equity
calculation) arising after targets are set may be recommended by
the Chief Executive Officer of Viad Corp to the Committee for
approval including revision to either or both targets in the
event of any significant acquisition or divestiture made during
the Performance Period to give effect, as appropriate, to planned
effects of such acquisition or divestiture during the Performance
Period. Other examples include extraordinary items, gains or
losses arising from discontinued operations, effects of a change
in accounting principles or a change in federal income tax rates.
Reclassification of a major business unit to discontinued
operations status after targets have been set would also require
adjustment because of effect on continuing operations results.
For subsidiaries, in certain extreme cases, unplanned effects of
major litigation, remediation of environmental matters,
significant uninsured losses, a significant restructuring or the
bankruptcy of a major vendor or customer are further examples of
the types of items which could be (but are not required to be)
considered by the Chief Executive Officer of Viad Corp for
recommendation to the Committee for possible special treatment.
Conversely, the general rule for Corporate measurements is that
restructuring charges affecting years after 1992, gain or loss on
sale of a smaller subsidiary or other one-time income or loss
items mentioned above regarding subsidiaries would not be
considered for special treatment as the Corporate mission is to
achieve the targets notwithstanding the effects of such items.
Incentives to be paid under this Plan must be deducted from the
corporation's earnings during the Performance Period (generally
in the third year, when the amounts to be paid can be reasonably
estimated). Goals must be achieved after deducting from actual
results all incentive compensation applicable to such performance
periods, including those incentives earned under this Plan.
7. AWARD MATRIX.
The range of values for the Corporation's or a Subsidiary
Company's performance is set at a minimum of 80% of target for
threshold and capped at 120% of the target. Notwithstanding the
foregoing, targets may be established for threshold within the
range of above 80% up to and including 95% and for maximum within
the range of below 120% down to 105%, as may be designated by the
Committee; however, the Committee may, when appropriate, adjust
such ranges upward or downward. The Return on Equity target and
range of values will be entered on the vertical axis of the
appropriate Performance Unit Award Matrix. The weighted average
annual Return on Equity target for the Performance Period will
represent a meaningful improvement over average historical
returns except in extremely unusual circumstances. Actual
weighted average annual Return on Equity performance for each
Participant will be determined at the end of the three-year
Performance Period based on the appropriate definition set forth
above. Similarly, the average three-year Real Earnings Growth
target and range of values will be entered on the horizontal axis
of the Performance Unit Award Matrix, and actual results will be
determined at the end of the three-year Performance Period based
on the appropriate definition.
Performance Units will be earned based upon the degree of
achievement of the pre-defined goals using the Performance Unit
Award Matrix.
PERFORMANCE UNIT AWARD MATRIX:
Percent of Award Earned
--------------------------------------------
Return 100% 125% 150% 175% 200%
on 75% 100% 125% 150% 175%
Equity 50% 75% 100% 125% 150%
25% 50% 75% 100% 125%
0% 25% 50% 75% 100%
--------------------------------------------
Improvement in Real Earnings
8. PARTICIPANT ELIGIBILITY.
Personnel will be eligible for participation as recommended by
Viad Corp Chief Executive Officer for approval by the Committee
no later than 90 days after the beginning of each new Performance
Period during the life of the Plan, limited only to those key
executives who contribute in a substantial measure to the
successful performance of the Corporation or its Affiliates. The
Chief Executive Officer will recommend for approval by the
Committee which Affiliates among its Affiliates should be
included in the Plan.
9. AWARD DETERMINATION.
The number of Units to be awarded will be determined, generally,
by multiplying a factor times the Participant's annual base
salary in effect at the time the Award is granted and dividing
the result by the average of the high and low of the
Corporation's Common Stock on the date of approval of the grant
by the Committee. The Award factor will be recommended by the
Chief Executive Officer of Viad Corp for approval by the
Committee annually no later than 90 days after the beginning of
each new performance period. The Committee may adjust the number
of Units awarded in its discretion.
10. GENERAL TERMS AND CONDITIONS.
The Committee shall have full and complete authority and
discretion, except as expressly limited by the Plan, to grant
Units and to provide the terms and conditions (which need not be
identical among Participants) thereof. Without limiting the
generality of the foregoing, the Committee may specify a
Performance Period of not less than two years or not more than
five years, rather than the three-year Performance Period
provided for above, and such time period will be substituted as
appropriate to properly effect the specified Performance Period.
No Participant or any person claiming under or through such
person shall have any right or interest, whether vested or
otherwise, in the Plan or in any Award thereunder, contingent or
otherwise, unless and until all the terms, conditions, and
provisions of the Plan and its approved administrative
requirements that affect such Participant or such other person
shall have been complied with. Nothing contained in the Plan or
its Administrative Guidelines shall (i) require the Corporation
to segregate cash or other property on behalf of any Participant
or (ii) affect the rights and power of the Corporation or its
Affiliates to dismiss and/or discharge any Participant at any
time.
Any recapitalization, reclassification, stock split, stock
dividend, sale of assets, combination or merger not otherwise
provided for herein which affects the outstanding shares of
Common Stock of the Corporation or any other change in the
capitalization of the Corporation affecting the Common Stock
shall be appropriately adjusted for by the Committee or the
Board, and any such adjustments shall be final, conclusive and
binding.
11. PAYMENT OF AWARDS.
(a) Performance Unit Awards which may become payable under
this Plan shall be calculated as determined by the Committee
but any resulting Performance Unit Award payable shall be
subject to the following calculation: each Unit payable
shall be multiplied by the average of the daily means of the
market prices of the Corporation's Common Stock during the
ten trading day period beginning on the day following public
announcement of the Corporation's year-end financial results
following the Performance Period. Distribution of the Award
will be made within ninety (90) days following the close of
the Performance Period. Awards will be subject to
discretionary downward adjustment, for those executive
officers affected by Section 162(m) of the Internal Revenue
Code, by the Committee.
(b) Performance Unit Awards granted under this Plan shall
be payable during the lifetime of the Participant to whom
such Award was granted only to such Participant; and, except
as provided in (d) and (e) of this Section 7, no such Award
will be payable unless at the time of payment such
Participant is an employee of and has continuously since the
grant thereof been an employee of, the Corporation or an
Affiliate. Neither absence on leave, if approved by the
Corporation, nor any transfer of employment between
Affiliates or between an Affiliate and the Corporation shall
be considered an interruption or termination of employment
for purposes of this Plan.
(c) Prior to the expiration of the Performance Period, all
Participants will be provided an irrevocable option to defer
all or a portion of any earned Performance Unit Award, if
there be one but not less than $1,000, in written form as
prescribed by the Board under the provisions of a deferred
compensation plan for executives of the Corporation and its
Affiliates, if one be adopted.
(d) If a Participant to whom a Performance Unit Award was
granted shall cease to be employed by the Corporation or its
Affiliate for any reason (other than death, disability, or
retirement) prior to the completion of any applicable
Performance Period, said Performance Unit Award will be
withdrawn and subsequent payment in any form at any time
will not be made.
(e) If a Participant to whom a Performance Unit Award was
granted shall cease to be employed by the Corporation or its
Affiliate due to early, normal, or deferred retirement, or
in the event of the death or disability of the Participant,
during the Performance Period stipulated in the Performance
Unit Award, such Award shall be prorated for the period of
time from date of grant to date of retirement, disability or
death, as applicable, and become payable within ninety (90)
days following the close of the Performance Period to the
Participant or the person to whom interest therein is
transferred by will or by the laws of descent and
distribution. Performance Unit Awards shall be determined at
the same time and in the same manner (except for applicable
proration) as described in Section 11(a).
(f) There shall be deducted from all payment of Awards any
taxes required to be withheld by any Federal, State, or
local government and paid over to any such government in
respect to any such payment.
12. ASSIGNMENTS AND TRANSFERS.
No Award to any Participant under the provisions of the Plan may
be assigned, transferred, or otherwise encumbered except, in the
event of death of a Participant, by will or the laws of descent
and distribution.
13. AMENDMENT OR TERMINATION.
The Board may amend, suspend, or terminate the Plan or any
portion thereof at any time provided, however, that no such
amendment, suspension, or termination shall invalidate the Awards
already made to any Participant pursuant to the Plan, without his
consent.
14. EFFECTIVE DATE AND TERM OF PLAN.
The Plan shall be effective January 1, 1994, provided however,
that any Award made under this Plan is subject to the approval of
this Plan by the stockholders of Viad Corp.
Exhibit 10.C
VIAD CORP
PERFORMANCE UNIT INCENTIVE PLAN
PURSUANT TO THE VIAD 1997 OMNIBUS INCENTIVE PLAN
AS AMENDED THROUGH MAY 12, 1998
1. PURPOSE.
The purpose of the Plan is to promote the long-term
interests of the Corporation and its shareholders by
providing a means for attracting and retaining designated
key executives of the Corporation and its Affiliates through
a system of cash rewards for the accomplishment of long-term
predefined objectives.
2. DEFINITIONS.
The following definitions are applicable to the Plan:
"Affiliate" - Any "Parent Corporation" or "Subsidiary
Corporation" of the Corporation as such terms are
defined in Section 425(e) and (f), or the successor
provisions, if any, respectively, of the Code (as
defined herein).
"Award" - The grant by the Committee of a Performance
Unit or Units as provided in the Plan.
"Board" - The Board of Directors of Viad Corp.
"Code" - The Internal Revenue Code of 1986, as amended,
or its successor general income tax law of the United
States.
"Committee" - The Human Resources Committee of the
Board.
"Corporation" - Viad Corp.
"Participant" - Any executive of the Corporation or any
of its Affiliates who is selected by the Committee to
receive an Award.
"Performance Period" - The period of time selected by
the Committee for the purpose of determining
performance goals and measuring the degree of
accomplishment. Generally, the Performance Period will
be a period of three successive fiscal years of the
Corporation.
"Performance Unit Award" - An Award.
"Plan" - The Performance Unit Incentive Plan of the
Corporation.
"Unit" - The basis for any Award under the Plan.
3. ADMINISTRATION.
The Plan shall be administered by the Committee. Except as
limited by the express provisions of the Plan, the Committee
shall have sole and complete authority and discretion to (i)
select Participants and grant Awards; (ii) determine the
number of Units to be subject to Awards generally, as well
as to individual Awards granted under the Plan; iii)
determine the targets that must be achieved in order for the
Awards to be payable and the other terms and conditions upon
which Awards shall be granted under the Plan; (iv) prescribe
the form and terms of instruments evidencing such grants;
and (v) establish from time to time regulations for the
administration of the Plan, interpret the Plan, and make all
determinations deemed necessary or advisable for the
administration of the Plan.
4. PERFORMANCE GOALS.
The Performance Unit Incentive Plan is intended to provide
Participants with a substantial incentive to achieve or
surpass two pre-defined long-range financial goals which
have been selected because they are key factors (goals) in
increasing shareholder value. The first goal for CORPORATE
and TRAVELERS EXPRESS COMPANY Participants is Average
Three-Year Return on Equity and for other Subsidiary Participants
is Average Three-Year Return on Capital (Assets). A minimum
(threshold) Return on Capital (Assets) or Return on Equity
target will be established and must be met or exceeded
before the Net Income Growth target can produce earned
awards. Further, there cannot be a year when a Subsidiary's
net income is down from the prior year or the threshold will
not be met.
The second goal for each SUBSIDIARY Participant principally
emphasizes growth in Average Three-Year Net Income.
The second goal for Corporate Participants also emphasizes
Growth in Average Three-Year Net Income but the target will
be based on income per share from continuing operations, the
most appropriate measure in increasing shareholder value.
5. DETERMINATION OF TARGETS.
A. AVERAGE THREE-YEAR SUBSIDIARY RETURN ON CAPITAL
(ASSETS) (EXCEPT TRAVELERS EXPRESS).
Return on Capital (Assets) calculations will be made by
dividing each year's net income after taxes by the
average quarterly (beginning of year and each quarter-end,
including year-end), total assets. Consideration
will be given to any known or anticipated changes, and
an appropriate weighted average annual Return on
Capital (Assets) target for the three-year Performance
Period will be established, taking into account all
factors mentioned as well as the three-year Performance
Period Financial Plan, including year-by-year Return on
Capital (Assets) (on the same basis as previously
described), overall Corporate objectives and, where
appropriate, other circumstances. Intercompany amounts
will be excluded from Capital (Assets). Cash and
marketable securities will be included, except for
Brewster Transport's investments on behalf of its
Canadian parent companies. Accounts receivable sold
will be reinstated as Capital (Assets) so that all
accounts receivables are included and returns will not
be affected by fluctuations in sold receivables.
Capitalized value of leases entered into during the
Performance Period for major assets (whether a sale-
leaseback or a new lease) will be added to Capital
(Assets) to properly include such assets, whether owned
or leased. Major construction in process projects,
which qualify for capitalization of interest under FASB
rules, shall not be included in Capital (Assets) until
operational (e.g. Banc One Ballpark - Restaura).
Finally, classifications of assets must be consistent
with previous years' practices.
B. AVERAGE THREE-YEAR RETURN ON EQUITY (TRAVELERS
EXPRESS).
Return on Equity calculations for Travelers Express
will be made by dividing each year's net income after
taxes by the average quarterly (beginning of year and
each quarter-end, including year-end) equity.
Consideration will then be given to any known or
anticipated changes in equity structure and available
industry data, and an appropriate weighted average
annual Return on Equity target for the three-year
Performance Period will be established, taking into
account all factors mentioned as well as the three-year
Performance Period Financial Plan year-by-year Return
on Equity (on the same basis as previously described),
overall Corporate objectives and, where appropriate,
other circumstances. Unplanned changes in unrealized
securities gains and losses, an element of
stockholder's equity pursuant to SFAS No. 115, are to
be excluded in determining equity amounts to be used in
the calculation of actual Return on Equity hereunder.
C. AVERAGE THREE-YEAR VIAD RETURN ON COMMON STOCKHOLDERS'
EQUITY.
Return on common stockholders' equity calculations will
be made for Viad Corp by dividing each year's net
income after taxes less preferred dividend requirements
by the year's monthly average of common stockholders'
equity (return on common equity). Consideration will
then be given to any known or anticipated changes in
equity structure and to relevant industry data, and an
appropriate weighted average annual Return on Equity
target for the three-year Performance Period will be
established taking into account all factors mentioned
as well as the three-year Performance Period Financial
Plan year-by-year return on equity (on the same basis
as previously described), overall Corporate objectives
and, where appropriate, other circumstances. Similar
to the Travelers Express Return on Equity definition
above, unplanned changes in unrealized securities gains
and losses are to be excluded in calculating actual
Viad return on Equity hereunder, along with unplanned
changes in unrealized foreign currency translation
adjustments.
D. AVERAGE THREE-YEAR GROWTH IN SUBSIDIARY EARNINGS.
An appropriate average three-year net income target for
the Performance Period for each Subsidiary Company will
be established taking into account historical income,
financial plan income for the Performance Period,
overall Corporate objectives, and if appropriate, other
circumstances. An appropriate range of values above
and below such target will then be selected to measure
achievement above or below the target.
E. AVERAGE GROWTH IN THREE-YEAR VIAD INCOME PER SHARE.
An appropriate average three-year "Income Per Share"
from continuing operations target for Viad Corp will be
established after considering historical income per
share from continuing operations, financial plan income
for the Performance Period, overall Corporate
objectives and, if appropriate, other circumstances.
An appropriate range of values above and below such
target will then be selected to measure achievement
above or below the target.
F. ESTABLISHING TARGETS.
The appropriate targets, range of values above and
below such targets and the Performance Period to be
used as a basis for the measurement of performance for
Awards under the Plan will be determined by the
Committee no later than 90 days after the beginning of
each new Performance Period during the life of the
Plan, after giving consideration to the recommendations
of the Chief Executive Officer of Viad Corp.
Performance Units will be earned based upon (1)
achieving the minimum (threshold) Return on Equity or
Capital (Assets) Target and (2) the degree of
achievement of the net income or income per share
target over the Performance Period following the date
of grant. Earned Units can range, based on operating
performance, from 0% to 200% of the target Units.
6. OTHER PLAN PROVISIONS.
Subsidiary net income and Viad income per share from
continuing operations are determined before extraordinary
items, effects of changes in accounting principles or a
change in federal income tax rates after the target has been
set. (For example, new FASB release on Earnings per share
to be effective for periods after December 15, 1997 but not
considered when targets were set). Reclassification of a
major business unit to discontinued operations status after
targets have been set would also require adjustment because
of effect on Viad continuing operations results. While
gains on disposition of a business would normally not be
included in determining income per share, in the event of
the sale of a subsidiary or major business unit, a portion
of gain would be included for the difference between the
sold unit's planned net income for the performance period
and actual results to date of sale plus calculated interest
savings on proceeds for the balance of the performance
period, so that actual results are not penalized for selling
a business.
There will be an addback to actual net income for any
additional intercompany interest cost (net of tax) incurred
by a subsidiary as the result of any special dividend paid
(in excess of 100% of net income for a year) during the
applicable performance period. In addition, an addback to
actual net income will be allowed for any increased cost to
a subsidiary for an increase in the formula allocation of
corporate overhead over amounts included in the
Plan/Forecast at the beginning of the applicable performance
period.
Incentives to be paid under this Plan must be deducted from
the subsidiary corporation's earnings during the Performance
Period (generally in the third year, when the amounts to be
paid can be reasonably estimated). Goals must be achieved
after deducting from actual results all incentive
compensation applicable to such performance periods,
including those incentives earned under this Plan.
7. RANGE OF PERFORMANCE AWARDS.
The range of values for the Corporation's or a Subsidiary
Company's net income or income per share performance is set
at a minimum of 80% of target for threshold and capped at
120% of the target. Notwithstanding the foregoing, targets
may be established for threshold within the range of above
80% up to and including 95% and for maximum within the range
of below 120% down to 105%, as may be designated by the
Committee; however, the Committee may, when appropriate,
adjust such ranges upward or downward.
Performance Units will be earned based upon meeting or
exceeding the minimum (threshold) Return target and the
degree of achievement of the pre-defined net income
(subsidiary) or income per share from continuing operations
(Viad Corp) goals.
<TABLE>
PERFORMANCE UNIT AWARD ILLUSTRATION:
- ----------------------------------------------------------------------------------
RETURN THRESHOLD MET NO(1) YES YES YES YES YES YES YES YES
- -------------------- ----- --- --- --- --- --- --- --- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
% of Net Income/Income
per Share Target Achieved
(Illustration Assumes
Target at 100% reflects
10% compounded annual
growth) (2) (1) 95.5% 97.0% 98.5% 100% 102% 104% 106% 108%
- -------------------- --- ----- ----- ----- ---- ---- ---- ---- ----
Percent of Award Earned 0% (1) 25% 50% 75% 100% 125% 150% 175% 200%
- -----------------------------------------------------------------------------------
<FN>
(1) Unless performance period Return threshold has been met, and for subsidiaries, each year's
net income exceeds prior year, no award can be earned regardless of achievement against
average income target.
(2) Percent of award earned will be interpolated when falling between the 25% increments.
</TABLE>
8. PARTICIPANT ELIGIBILITY.
Personnel will be eligible for participation as recommended
by the Viad Corp, Chief Executive Officer for approval by
the Committee no later than 90 days after the beginning of
each new Performance Period during the life of the Plan,
limited only to those key executives who contribute in a
substantial measure to the successful performance of the
Corporation or its Affiliates. The Chief Executive Officer
will recommend for approval by the Committee which
Affiliates among its Affiliates should be included in the
Plan.
9. AWARD DETERMINATION.
The number of Units to be awarded will be determined,
generally, by multiplying a factor times the Participant's
annual base salary in effect at the time the Award is
granted and dividing the result by the average of the high
and low of the Corporation's Common Stock on the date of
approval of the grant by the Committee. The Award factor
will be recommended by the Chief Executive Officer of Viad
Corp for approval by the Committee annually no later than 90
days after the beginning of each new performance period.
The Committee may adjust the number of Units awarded in its
discretion.
10. GENERAL TERMS AND CONDITIONS.
The Committee shall have full and complete authority and
discretion, except as expressly limited by the Plan, to
grant Units and to provide the terms and conditions (which
need not be identical among Participants) thereof. Without
limiting the generality of the foregoing, the Committee may
specify a Performance Period of not less than two years or
not more than five years, rather than the three-year
Performance Period provided for above, and such time period
will be substituted as appropriate to properly effect the
specified Performance Period. No Participant or any person
claiming under or through such person shall have any right
or interest, whether vested or otherwise, in the Plan or in
any Award thereunder, contingent or otherwise, unless and
until all the terms, conditions, and provisions of the Plan
and its approved administrative requirements that affect
such Participant or such other person shall have been
complied with. Nothing contained in the Plan or its
Administrative Guidelines shall (i) require the Corporation
to segregate cash or other property on behalf of any
Participant or (ii) affect the rights and power of the
Corporation or its Affiliates to dismiss and/or discharge
any Participant at any time.
Any recapitalization, reclassification, stock split, stock
dividend sale of assets, combination or merger not otherwise
provided for herein which affects the outstanding shares of
Common Stock of the Corporation or any other change in the
capitalization of the Corporation affecting the Common Stock
shall be appropriately adjusted for by the Committee or the
Board, and any such adjustments shall be final, conclusive
and binding.
11. PAYMENTS OF AWARDS.
(a) Performance Unit Awards which may become payable under
this Plan shall be calculated as determined by the Committee
but any resulting Performance Unit Award payable shall be
subject to the following calculation: each Unit payable
shall be multiplied by the average of the daily means of the
market prices of the Corporation's Common Stock during the
ten trading day period beginning on the day following public
announcement of the Corporation's year-end financial results
following the Performance Period. Distribution of the Award
will be made within ninety (90) days following the close of
the Performance Period. For those Executive Officers
affected by Section 162(m) of the Internal Revenue Code,
awards will be subject to discretionary downward adjustment
by the Committee.
(b) Performance Unit Awards granted under this Plan shall
be payable during the lifetime of the Participant to whom
such Award was granted only to such Participant; and, except
as provided in (d) and (e) of this Section 7, no such Award
will be payable unless at the time of payment such
Participant is an employee of and has continuously since the
grant thereof been an employee of, the Corporation or an
Affiliate. Neither absence on leave, if approved by the
Corporation, nor any transfer of employment between
Affiliates or between an Affiliate and the Corporation shall
be considered an interruption or termination of employment
for purposes of this Plan.
(c) Prior to the expiration of the Performance Period, all
Participants will be provided an irrevocable option to defer
all or a portion of any earned Performance Unit Award, if
there be one but not less than $1,000, in written form as
prescribed by the Board under the provisions of a deferred
compensation plan for executives of the Corporation and its
Affiliates, if one be adopted.
(d) If a Participant to whom a Performance Unit Award was
granted shall cease to be employed by the Corporation or its
Affiliate for any reason (other than death, disability, or
retirement) prior to the completion of any applicable
Performance Period, said Performance Unit Award will be
withdrawn and subsequent payment in any form at any time
will not be made.
(e) If a Participant to whom a Performance Unit Award was
granted shall cease to be employed by the Corporation or its
Affiliate due to early, normal, or deferred retirement, or
in the event of the death or disability of the Participant,
during the Performance Period stipulated in the Performance
Unit Award, such Award shall be prorated for the period of
time from date of grant to date of retirement, disability or
death, as applicable, and become payable within ninety (90
days) following the close of the Performance Period to the
Participant or the person to whom interest therein is
transferred by will or by the laws of descent and
distribution. Performance Unit Awards shall be determined
at the same time and in the same manner (except for
applicable proration) as described in Section 11(a).
(f) There shall be deducted from all payment of Awards any
taxes required to be withheld by any Federal, State, or
local government and paid over to any such government in
respect to any such payment.
12. ASSIGNMENTS AND TRANSFERS.
No award to any Participant under the provisions of the Plan
may be assigned, transferred, or otherwise encumbered
except, in the event of death of a Participant, by will or
the laws of descent and distribution.
13. AMENDMENT OR TERMINATION.
The Board may amend, suspend, or terminate the Plan or any
portion thereof at any time provided, however, that no such
amendment, suspension, or termination shall invalidate the
Awards already made to any Participant pursuant to the Plan,
without his consent.
14. EFFECTIVE DATE.
The Plan shall be effective January 1, 1997, provided
however, that any Award made under this Plan is subject to
the approval of the Viad 1997 Omnibus Incentive Plan by the
stockholders of Viad Corp.
Exhibit 10.D
PERFORMANCE-BASED STOCK PLAN
VIAD CORP
As Amended and Restated
Effective May 1998
PLAN SPECIFICATIONS
- -------------------
Purpose of the Plan: -- Focus management on value creation
as measured by returns to
shareholders.
-- Reward sustained performance on a
relative basis.
-- Provide an additional vehicle for
linking compensation to company
success over a longer time frame.
-- Retain management team.
-- Provide a means for building stock
ownership by executives.
Concept: -- Company makes grant of common stock
subject to restrictions based on
both performance that is measured
on pre-specified dates and
continued employment.
-- If performance goals are not met, a
smaller number of shares (or none)
may be delivered.
Eligibility: A select group of key managers, as
recommended by the Chairman and CEO and
approved by the Executive Compensation
Committee, will participate in the Plan.
Target Award Amounts: -- An example of target award sizes
follows, expressed as a percentage
of base salary. Final targets
should be adjusted periodically to
maintain the desired long-term
incentive grant mix and total
compensation objectives.
Example of targets:
SALARY RANGE TARGET AWARD AS
($000) % OF SALARY
----------- ------------
Over $400 50% - 60%
$300 - $400 25% - 35%
$200 - $299 20% - 35%
$150 - $199 10% - 30%
$100 - $149 7% - 20%
-- Individuals having salaries within
the same range may have different
award sizes, due to the extent of
their participation in other plans.
Determination of Initial
Grant Size: -- The actual number of shares granted
to each participant is determined
by dividing the target-award dollar
amount by the value of the
performance-based shares.
Example:
Salary of participant: $150,000
Target award: 15% of salary
Stock price: $43.00
Economic value of
performance-based
stock: 77% of fair
market value
Number of shares: 680
(see
calculation
below)
BASE SALARY X TARGET AWARD
--------------------------
Percentage Value Stock $150,000 x 15%
of Performance- x Price = --------------
Based Stock 77% x $43.00 = 680
Shares
Performance Period: -- Performance Period will be measured
over a three-year period, with the
initial grant beginning April 1,
1993, and ending March 31, 1996. A
new three-year performance cycle
will begin each year.
Grant Frequency: -- Grants will usually be recommended
each year.
Performance Measurement: -- The shares will be delivered based
upon the schedules below:
<TABLE>
1995 AND PRIOR AWARDS
PERFORMANCE (TSR)
RELATIVE TO
PERFORMANCE (TSR) PERCENT OF PROXY PERCENT OF
RELATIVE TO SHARES COMPARATOR SHARES
S&P 500 EARNED GROUP EARNED
- --------------- ----------- ------------- -----------
<C> <C> <C> <C>
120% 50% 120% 50%
110% 40% 110% 40%
100% 30% 100% 30%
90% 15% 90% 15%
Below 90% 0% Below 90% 0%
- -------------------------------------------------------------
1996 AND 1997 AWARDS
PERFORMANCE (TSR)
PERFORMANCE (TSR) RELATIVE TO
RELATIVE TO S&P PERCENT OF PROXY COMPARATOR PERCENT OF
MIDCAP 400 SHARES EARNED GROUP SHARES EARNED
- --------------- ----------- ------------- -----------
<C> <C> <C> <C>
120% 50% 120% 50%
110% 40% 110% 40%
100% 30% 100% 30%
90% 15% 90% 15%
Below 90% 0% Below 90% 0%
- -------------------------------------------------------------
1998 AND FUTURE AWARDS
PERFORMANCE (TSR)
PERFORMANCE (TSR) RELATIVE TO
RELATIVE TO S&P PERCENT OF PROXY COMPARATOR PERCENT OF
MIDCAP 400 SHARES EARNED GROUP SHARES EARNED
- --------------- ----------- ------------- -----------
<C> <C> <C> <C>
105% 50.0% 105% 50.0%
100% 37.5% 100% 37.5%
95% 30.0% 95% 30.0%
90% 20.0% 90% 20.0%
- --------------------------------------------------------------
</TABLE>
-- If performance is not at threshold,
no shares will be delivered. Any
shares not delivered are forfeited
at the end of the performance
period.
Payout: -- The common stock price used for
determining awards based on
achievement of performance goals
and targets shall be calculated
based on the average of the daily
means of the market prices of the
common stock of the Company, during
(i) the ten trading day period
ending on the last day of the month
immediately preceding the beginning
of the applicable performance
period and (ii) the ten trading day
period ending on the last day of
such performance period,
respectively.
-- Within 30 days of the end of the
performance period, the Company
will provide the participant with
the amount of shares that have been
earned over the performance period.
Participants will receive dividends
paid currently on the entire
initial grant until the end of the
performance period.
Tax Treatment: -- The participant recognizes ordinary
income on the fair market value of
the earned shares at the date on
which the shares are delivered.
Any dividend amounts received must
be recognized as compensation
income as well.
-- The Company incurs no tax liability
at the date of grant. It
recognizes deductible compensation
expense for tax purposes at the
same time as, and in the same
amount as, the participant realizes
taxable income. The Company is
required to withhold income taxes
to receive the deduction.
Accounting Treatment: -- The Company must recognize a
compensation expense that takes
into account increases in market
value after the grant date to the
extent that the performance goals
have been achieved.
-- Under the proposed changes to the
accounting rules for stock-based
compensation, a modified grant-date
approach will apply to this
performance-based stock plan. That
is, the compensation expense will
be based on both the stock price on
the date of grant and an estimate
of the outcome of service and
performance-related conditions.
Subsequent adjustments will be made
for expected changes in the service
and performance-related factors,
but not for changes in the stock
price.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM VIAD CORP'S
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED
JUNE 30, 1998 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
<MULTIPLIER> 1,000
<CAPTION>
Exhibit 27
VIAD CORP
FINANCIAL DATA SCHEDULE
<S> <C>
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<PERIOD-TYPE> 6-MOS
<CASH> 32,923
<SECURITIES> 0
<RECEIVABLES> 129,503
<ALLOWANCES> 4,980
<INVENTORY> 106,682
<CURRENT-ASSETS> 956,973
<PP&E> 832,426
<DEPRECIATION> 365,297
<TOTAL-ASSETS> 4,493,876
<CURRENT-LIABILITIES> 3,168,653
<BONDS> 531,103
<COMMON> 149,610
6,618
0
<OTHER-SE> 424,725
<TOTAL-LIABILITY-AND-EQUITY> 4,493,876
<SALES> 0
<TOTAL-REVENUES> 1,259,851
<CGS> 0
<TOTAL-COSTS> 1,163,632
<OTHER-EXPENSES> 14,155
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 21,407
<INCOME-PRETAX> 81,346
<INCOME-TAX> 25,345
<INCOME-CONTINUING> 56,001
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 56,001
<EPS-PRIMARY> 0.59
<EPS-DILUTED> 0.56
</TABLE>
