EXHIBIT EX-10.1
TRANSAMERICA CORPORATION
1994 CORPORATE BONUS PLAN
_____________________________________________________________________________
Purpose: To provide a variable pay element that serves as an incentive
to achieve planned performance; and
To recognize individual contributions to annual operating
results and achievement of the Corporation's strategic goals.
To complement the Value Added Incentive Plan described in the
1994 proxy statement.
Eligibility and
Participation: Senior corporate and subsidiary executives selected by the
Chief Executive Officer and Corporate Vice Presidents are
eligible to participate in the Plan. Individuals will be
notified of their participation, target bonuses, the percentage
weighting of the components described below, and applicable
payout tables in a letter as soon as possible after the Plan
has been adopted.
Inclusion of any individual as a participant in the Plan will
not be a guarantee that any bonus will be paid to that person
or that the person's employment will be continued for any
period.
Individual
Bonuses: Individual target bonuses will be a predetermined percentage of
1994 base salary. A percentage of each executive's target
bonus will be based on performance achieved in the following
areas as appropriate:
- The level of Value Added achieved. Value Added is described
on Exhibit I.
- The level of Operating Income achieved. Operating Income is
described on Exhibit II.
- Management's evaluation of accomplishment of Strategic Goals
or other management objectives.
Actual awards will be calculated after results are known and
will take into account performance in the above areas. Bonuses
may be further modified to reflect the individual's personal
performance.
Approval of Plan
and Payouts: The Plan is established by, and may be modified or terminated
at any time by, the Management Development and Compensation
Committee of the Corporation's Board of Directors (the
"Compensation Committee"). Individual awards under the Plan
shall be subject to review and approval by the Compensation
Committee. The Compensation Committee reserves the right to
modify the formula for individual target bonuses (both as to
the components and the percentage mix) for particular
individuals and exclude non-recurring items as appropriate.
Bonus Committee: The Plan will be administered by the Bonus Committee
composed of the Corporation's President and Chief Executive
Officer, Executive Vice President (Finn), Executive Vice
President and Chief Financial Officer and Director of
Compensation. The Bonus Committee is responsible for
interpreting the Plan and recommending methods to deal with
unforeseen circumstances.
Payment of
Bonuses: Bonuses will be paid in cash as soon as possible after Value
Added and Operating Income for the Corporation and each
subsidiary have been determined and bonus recommendations have
been approved by the Compensation Committee.
Participants must be continuously employed by the Corporation
or one of its subsidiaries from January 1 through December 31,
1994 to receive a payout under the Plan.
1994 Bonus Plan - Page 2
EXHIBIT I
Value Added Component
_____________________________________________________________________________
Value Added is calculated in the same manner as for the 1994 profit plan and
is defined as Adjusted Net Income minus a capital charge, expressed as a
percentage of the Corporation's Average Adjusted Equity. The capital charge
is determined by multiplying the Corporation's Average Adjusted Equity by the
Cost of Equity. Each of these terms is further defined for 1994 as follows:
- - - "Adjusted Net Income" means the Corporation's net income, in accordance
with generally accepted accounting principles, as reported for the year,
adjusted for (i) cumulative effects of changes in accounting standards,
(ii) the economic amount of interest and depreciation (levelized over the
life of the equipment) and any economic gains and losses on the disposition
of equipment held for lease in lieu of reported interest, depreciation and
gains and losses, (iii) amortized bond, equity and other portfolio gains
and losses in lieu of realized gains and losses as reported, and (iv) the
exclusion of goodwill amortized during the year.
- - - "Adjusted Equity" means the Corporation's reported shareholders' equity,
adjusted to exclude (i) preferred stock and (ii) net unrealized gains and
losses on marketable equity and debt securities and foreign currency
translation adjustments, and to include accumulated goodwill amortization
related to assets still owned by the Company.
- - - "Average Adjusted Equity" means the "five-point" quarterly average of the
Adjusted Equity, the first point being the preceding year end.
- - - "Cost of Equity" means the Corporation's imputed equity cost based on a
formula approved by the Bonus Committee prior to the start of the year.
For 1994, the cost of equity will be determined by adding (a) the
Corporation's risk premium (the long-term market growth in equity
securities over the risk-free rate multiplied by the Corporation's beta)
and (b) the trend risk-free rate.
i
EXHIBIT II
Operating Income Component
_____________________________________________________________________________
Bonuses under the Operating Income Component will be based on actual after-tax
operating income, excluding investment gains and losses, compared to the
profit plan operating income for the relevant subsidiary or group of
subsidiaries.
If actual Operating Income equals the target Operating Income, the actual
Operating Income bonus will equal the target Operating Income bonus. The
leverage for above-target performance will take into account the expected
degree of difficulty in achieving plan and is not necessarily the same for
each organization. If actual Operating Income is greater or less than the
target, the actual Operating Income bonus will be determined in accordance
with an applicable payout table, which will be communicated to participants
as soon as possible after the Plan has been adopted. If actual Operating
Income is less than 80 percent of the respective profit plan target, the final
bonus for that Operating Income component will be zero.
ii