Exhibit 10.36
CONSOLIDATED FREIGHTWAYS, INC.
RETURN-ON-EQUITY PLAN
CONSOLIDATED FREIGHTWAYS, INC.
RETURN-ON-EQUITY PLAN
TABLE OF CONTENTS
Article I Purpose; Effective Date; Administration
1.1 Purpose
1.2 Effective Date
1.3 Administration
Article II Award Cycles; Eligibility; Vesting 1
2.1 Award Cycles 1
2.2 Eligibility 1
2.3 ROE Units 1
2.4 Initial Value
2.5 End Value 2
2.6 Vesting 2
2.7 Change in Control
2.8 Dividends 3
Article III Awards
3.1 Equity Increase
3.2 Award Amount
3.3 Payment of Award
3.4 Amount and Form of Deferred Payment 5
3.5 Interest on Deferred Amounts 5
3.6 Payment to Beneficiary 5
3.7 Withdrawal of Deferred Amounts 6
Article IV Amendment; Termination 6
4.1 Amendment 6
4.2 Termination 7
Article V Claims Procedure 7
5.1 Submission of Claims 7
5.2 Initial Denial 7
5.3 Review of Denied Claim 7
5.4 Decision on Review 8
Article VI General Provisions 8
6.1 Attorneys Fees 8
6.2 Applicable Law 8
6.3 Notice 8
6.4 No Assignment or Alienation 8
6.5 Tax Withholding 9
6.6 Payment to Impaired Person 9
CONSOLIDATED FREIGHTWAYS, INC.
RETURN-ON-EQUITY PLAN
INDEX OF DEFINED TERMS
Term Section Page
Affiliate 2.2 1
Annual Percentage Increase 3.2 4
Award Cycle 2.1 1
Beneficiary 3.6 5
Change in Control 2.7
Committee 1.3
Dividends 2.8 3
End Value 2.5 2
Equity Increase 3.1 4
Initial Value 2.4
Participant 2.2 1
Payout Factor 3.2
ROE Units 2.3
Termination of Employment 3.3
Unforeseeable Financial Emergency 3.7
CONSOLIDATED FREIGHTWAYS, INC.
RETURN-ON-EQUITY PLAN
Article I
Purpose; Effective Date; Administration
1.1 Purpose
The purpose of the Plan is to provide eligible employees
of Consolidated Freightways, Inc. (the Company) and its
affiliates with long term compensation that is dependent on
Company financial performance and thereby provide them with an
incentive to maximize such performance.
1.2 Effective Date
The Plan shall be effective January 1, 1996.
1.3 Administration
The Plan shall be administered by the Compensation
Committee of the Board of Directors of the Company (the
"Committee"). The Committee shall interpret the Plan and
determine the amount, time and form of award payments based on
such interpretations. Any decision by the Committee within its
authority shall be final and binding on all parties.
Article II
Award Cycles; Eligibility; Vesting
2.1 Award Cycles
"Award Cycle" means a period of three consecutive
calendar years. Each Award Cycle shall be identified by its
first calendar year.
2.2 Eligibility
The Committee shall designate the employees eligible to
participate in an Award Cycle, a list of which shall be attached
as a schedule to the Plan. "Participant" means an employee of
the Company or one of its Affiliates who is eligible to
participate as designated by the Committee. Affiliate means a
corporation or other entity that is designated as such by the
Committee. The Participants in the 1996 Award Cycle are listed
on the attached Schedule A.
2.3 ROE Units
"ROE Units" means, for any Award Cycle, the units
granted to Participants for purposes of measuring awards payable
under the Plan for that Award Cycle. Each Participant in the
1996 Award Cycle is granted the number of ROE Units set out on
Schedule A opposite the Participant's name. Each Participant in
subsequent Award Cycles shall be granted a number of ROE Units
fixed by the Committee.
2.4 Initial Value
"Initial Value" means the book value per common share of
the Company as of the December 31 preceding the first day of the
Award Cycle, as reported in the Company's Monthly Financial
Review financial statements for that date. If an event described
in (a) or (b) below occurs during an Award Cycle, the Committee
shall make an appropriate adjustment to the Initial Value for
that Award Cycle so the result produced by the formula
effectuates the purpose of the Plan.
(a) The Company engages in a merger, spinoff, or
other transaction that alters the equity value per share
of the Company's common stock.
(b) The Company has a recapitalization that
changes the number of shares of its common stock
outstanding, such as a stock split, a stock combination,
a dividend or other distribution of additional common
stock, conversion of convertible preferred stock into
common, or a stock buy-back.
2.5 End Value
"End Value" means the book value per common share of the
Company on December 31 at the end of the Award Cycle, as reported
in the Company's Monthly Financial Review; provided, however, if
a Participant becomes vested earlier than the last day of the
Award Cycle, because of the occurrence of one of the events set
out in 2.6(a) through (d) below, the End Value shall be the book
value per common share on the last day of the month in which the
aforesaid event occurred, as reported in the Company's Monthly
Financial Review.
2.6 Vesting
A Participant shall become vested in the rights related
to the ROE units granted to the Participant for an Award Cycle if
the Participant is continuously employed by one or more of the
Company and its Affiliates throughout the entire Award Cycle or
until the occurrence of one of the events described in (a)
through (d) below. A Participant who departs from such
employment before the last day of an Award Cycle shall forfeit
all rights related to the ROE Units granted to the Participant
for that Award Cycle unless the departure coincides with one of
the following (in which case the Participant's ROE Units shall
vest):
(a) The Participant's death.
(b) The Participant's disability as
defined in the Company's Extended Sick Pay Plan
or a successor to that plan.
(c) The Participant's early, normal or
deferred retirement under the Company's tax
qualified Retirement Plan.
(d) The Participant's Termination of
Employment within 24 months after a Change in
Control of the Company.
2.7 Change in Control
A "Change in Control" shall have occurred upon any of
the following:
(a) The Company ceases to be a publicly
owned corporation having its outstanding common
stock listed on a nationally recognized stock
exchange or traded over the counter.
(b) More than 25 percent of the Company's
outstanding common stock, or the equivalent in
voting power of any class or classes of
outstanding securities of the Company
ordinarily entitled to vote in the election of
directors, shall be beneficially held or
acquired by any corporation or person or by any
group of persons acting in concert as described
in Section 14(d)(2) of the Securities Exchange
Act of 1934.
(c) During any period of two consecutive
years, individuals who at the beginning of such
period constitute the Board of Directors of the
Company cease for any reason to constitute a
majority thereof, unless the election, or
nomination for election, by the Company's
shareholders of each new director was approved
by a vote of a majority of the directors then
still in office who were directors at the
beginning of such period.
2.8 Dividends
"Dividends" means, for any Award Cycle, the total of all
distributions for each share of the Company's common stock during
that Award Cycle.
Article III
Awards
3.1 Equity Increase
"Equity Increase" means the increase in the equity value
per common share of the Company's stock during each Award Cycle
plus Dividends for that Award Cycle, determined pursuant to the
following formula: Equity Increase (EI) equals the End Value
(EV) minus the Initial Value (IV) plus Dividends (D). Namely . .
.
EI = (EV - IV) + D
3.2 Award Amount
A Participant shall receive an award amount under this
Plan for each Award Cycle equal to the Participant's ROE Units
for that Award Cycle that have become vested in accordance with
2.6 times the Equity Increase (EI) times the Payout Factor (PF):
Award= ROE Units x EI x PF
"Payout Factor" (PF) means a percentage based on the Annual
Percentage Increase for the Award Cycle. Annual Percentage
Increase" (API) means the annual percentage rate of increase
that, when applied to the Initial Value with annual compounding,
produces the Equity Increase. The Payout Factor shall be
determined by the Committee for different rates of the API.
3.3 Payment of Award
The Company shall pay a Participant's award for an Award
Cycle to the Participant in a lump sum of cash within 60 days
after the End Value is determined, except as follows. Any
Participant may elect to defer payment of the award for any Award
Cycle. Payment of the deferred award shall be made or shall
commence upon the Participant's Termination of Employment, based
upon the Participant's election. Such election shall apply only
to the Award Cycle for which it is made. "Termination of
Employment" occurs on the first date on which the Participant is
no longer employed by the Company or an Affiliate, regardless of
the reason employment ceases. An election to defer payment shall
be effective if made in writing on a form furnished by the
Committee for that purpose and returned to the Committee no later
than the following dates:
(a) For the 1996 Award Cycle, February
29, 1996.
(b) For later Award Cycles, the December
31 preceding the first day of the Award Cycle.
3.4 Amount and Form of Deferred Payment
In the election to defer payment the Participant shall
choose between payment in a lump sum or in approximately equal
quarterly installments over 5, 10, 15 or 20 years. A lump sum
shall be paid within 60 days after the Termination of Employment.
Installment payments shall be paid commencing with the first day
of the second calendar quarter after the Termination of
Employment and continuing on the first day of each subsequent
calendar quarter until the period of the installments is
exhausted.
3.5 Interest on Deferred Amounts
If the Participant elects to defer payment, the deferred
amount shall be credited with interest from the date on which
payment would have been made if it had not been deferred.
Interest shall accrue at a rate equal to the rate of return on
the Moody's Seasoned Corporate Bond Rate (reset annually), or at
such higher rate as the Committee shall determine in its sole
discretion, and shall be compounded annually. Interest shall
continue to be credited on the undistributed balance until the
Participant's award is fully paid. The size of installments
shall be based on an assumption made by the Committee as to the
rate of future interest and may be adjusted by the Committee from
time to time to reflect actual interest experience different from
the assumption.
3.6 Payment to Beneficiary
In the event of a Participant's death, the award payable
to the Participant for an Award Cycle shall be paid to the
Participant's Beneficiary. "Beneficiary" means the person or
persons designated by Participant under this Plan, or if no
person is specifically designated, as determined for the
Participant under the beneficiary designation provisions of the
Company's Executive Deferral Plan. If no designation is made
under either Plan, then the award shall be paid to the
Participant's estate. Payment to the Beneficiary shall be made
at the same time and in the same form as payment would have been
made to the Participant, except as follows:
(a) If death occurs and the Participant
had elected deferral with payment in quarterly
installments, the Committee may, in its sole
discretion, choose to make immediate payment to
the Beneficiary in a lump sum. If the
Committee does not so choose, payment shall be
made to the Beneficiary in accordance with the
installment schedule elected by the
Participant.
(b) If (a) does not apply, payment to the
Beneficiary shall be made within 60 days after the later
of the date the End Value for the Award Cycle is
determined or the date of death.
3.7 Withdrawal of Deferred Amounts
If a Participant who has elected to defer payment of the
award for an Award Cycle has an Unforeseeable Financial
Emergency, the Participant may withdraw part or all of the
Participant's award after the end of the Award Cycle. The
existence of an Unforeseeable Financial Emergency shall be
determined by the Committee upon application by the Participant.
"Unforeseeable Financial Emergency" means a severe financial
hardship of the Participant resulting from:
(a) A sudden and unexpected illness or
accident of the Participant or a dependent of
the Participant.
(b) A loss of the Participant's
property due to casualty.
(c) Such other extraordinary and
unforeseeable circumstances arising as a result
of events beyond the control of the
Participant.
Article IV
Amendment; Termination
4.1 Amendment
The Committee may amend the Plan at
any time by notice to the Participants, except
as follows:
(a) No amendment shall reduce the award
determined for an Award Cycle that has ended
before the date of the amendment.
(b) No amendment shall reduce the award
for an Award Cycle that is in progress below
the amount determined under the formula in 3.2
with the End Value based on the book value per
common share of the Company as of the date of
the amendment.
(c) No amendment shall reduce the rate of
interest credited on deferral amounts after the
deadline for a Participant's election to defer.
4.2 Termination
The Committee may terminate the Plan at any time. The
award for Award Cycles in progress shall be determined under the
formula in 3.2 replacing End Value with the per share equity
value of the Company's common stock as of the date of
termination. Upon termination of the Plan, the award of each
Participant shall be paid to the Participant or to a deceased
Participant's Beneficiary as soon as practicable after the
termination. If the date of payment upon Plan termination is
after the date the Participant would have received payment in the
absence of deferral, interest shall be included for the period
between such dates.
Article V
Claims Procedure
5.1 Submission of Claims
Any person claiming an award or requesting an
interpretation, ruling or information under the Plan shall
present the request in writing to the Committee, which shall
respond in writing.
5.2 Initial Denial
If the claim or request is denied, notice of the initial
denial shall normally be given within 90 days of receipt of the
claim or request. If special circumstances require an extension
of time, the claimant shall be so notified and time limit shall
be 180 days. The written notice of denial shall state the
following:
(a) The reasons for the denial, with
specific reference to the Plan provisions on
which the denial is based.
(b) A description of any additional
materials or information required and an
explanation of why it is necessary.
5.3 Review of Denied Claim
Any person whose claim or request is denied or who has
not received a response within the time period described in 5.2
may request review by notice to the Committee. The original
decision shall be reviewed by the Committee, which may, but shall
not be required to, grant the claimant a hearing. On review,
whether or not there is a hearing, the claimant may have
representation, examine pertinent documents and submit issues and
comments in writing.
5.4 Decision on Review
The decision on review shall ordinarily be made within
60 days. If an extension of time is required for a hearing or
other special circumstances, the claimant shall be so notified
and the time limit shall be 120 days. The decision shall be in
writing and shall state the reasons and the relevant plan
provisions. All decisions on review shall be final and bind all
parties concerned.
Article VI
General Provisions
6.1 Attorneys Fees
If suit or action is instituted to enforce any rights
under this Plan, the prevailing party may recover from the other
party reasonable attorneys' fees at trial and on any appeal.
6.2 Applicable Law
This Plan shall be governed by and construed in
accordance with the laws of the State of California, except as
preempted by federal law.
6.3 Notice
Any notice under this Plan shall be in writing and shall
be effective when actually delivered or, if mailed, when
deposited as first class mail postage prepaid. Mail to the
Company shall be directed to 3240 Hillview Avenue, Palo Alto, CA
94304, or to such other address as the Company may specify by
notice to all Participants. Mailed notices to a Participant
shall be directed to the Participant's last known home address
shown in the Company's records. Notices to the Committee shall
be sent to the Company's address.
6.4 No Assignment or Alienation
The rights of a Participant or Beneficiary under this
Plan are personal. No interest of a Participant or Beneficiary
may be directly or indirectly assigned, transferred, or
encumbered. A Participant's or Beneficiary's rights to awards
payable under this Plan are not subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, or
encumbrance. Such rights shall not be subject to the debts,
contracts, liabilities, engagements or torts of the Participant
of Beneficiary.
6.5 Tax Withholding
The Company shall make any required withholding of
income taxes and of the employee's share of FICA and any other
applicable payroll taxes from payments made under this Plan. If
such withholding is required before the date of payment of
amounts deferred under this Plan, the Company shall pay the
required amount and withhold it from other compensation payable
to the Participant.
6.6 Payment to Impaired Person
The Committee may decide that because of the mental or
physical condition of a person entitled to payments, or because
of other relevant factors, it is in the best interest to make
payments to others for the benefit of the person entitled to
payment. In that event, the Committee may in its discretion
direct that payments be made to any of the following:
(a) To a parent or spouse or a child of
legal age.
(b) To a legal guardian.
(c) To one furnishing maintenance,
support, or hospitalization.
CONSOLIDATED FREIGHTWAYS, INC.
By: /s/Eberhard G. H. Schmoller
Name: Eberhard G.H. Schmoller
Title: Senior Vice President - General
Counsel
Executed: March 4, 1996