EXHIBIT EX-10.2
TRANSAMERICA CORPORATION
VALUE ADDED INCENTIVE PLAN
(Effective January 1, 1994)
TRANSAMERICA CORPORATION
VALUE ADDED INCENTIVE PLAN
(Effective January 1, 1994)
TABLE OF CONTENTS
Page
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Section 1. Establishment and Purpose . . . . . . . . . . . . . . . . . 1
1.1 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Effective Date . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2. Definitions . . . . . . . . . . . . . . . . . . . . . . . . 1
2.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 3. Awards and Committee Determinations . . . . . . . . . . . . 2
3.1 Opportunity . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.2 Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.3 Determination . . . . . . . . . . . . . . . . . . . . . . . . 3
3.4 Adjustments Prior to Payment . . . . . . . . . . . . . . . . 3
3.5 Certification . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 4. Payment of Awards . . . . . . . . . . . . . . . . . . . . . 3
4.1 Right to Receive Payment . . . . . . . . . . . . . . . . . . 3
4.2 Payment Options . . . . . . . . . . . . . . . . . . . . . . . 4
4.3 Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 5. Administration . . . . . . . . . . . . . . . . . . . . . . 4
5.1 Committee . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5.2 Rules and Interpretation . . . . . . . . . . . . . . . . . . 4
5.3 Records . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5.4 Tax Withholding . . . . . . . . . . . . . . . . . . . . . . . 4
Section 6. General Provisions . . . . . . . . . . . . . . . . . . . . 4
6.1 Nonassignability . . . . . . . . . . . . . . . . . . . . . . 4
6.2 Employment Rights/Participation . . . . . . . . . . . . . . . 5
6.3 No Individual Liability . . . . . . . . . . . . . . . . . . . 5
6.4 Severability; Governing Law . . . . . . . . . . . . . . . . . 5
6.5 Affiliates of the Company . . . . . . . . . . . . . . . . . . 5
6.6 1994 Plan Year . . . . . . . . . . . . . . . . . . . . . . . 5
Section 7. Amendment and Termination . . . . . . . . . . . . . . . . . 5
7.1 Amendment and Termination . . . . . . . . . . . . . . . . . . 5
7.2 Change in Control of the Company . . . . . . . . . . . . . . 5
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TRANSAMERICA CORPORATION
VALUE ADDED INCENTIVE PLAN
(Effective January 1, 1994)
Section 1. Establishment and Purpose
1.1 Purpose. Transamerica Corporation (the "Company") hereby
establishes the Transamerica Corporation Value Added Incentive Plan
(the "Plan"), effective as of January 1, 1994. The Plan is intended to
attract and retain the services of executives who are in a position to
influence the success of the Company by providing an award based on the
financial performance of the total Company. Further, this Plan is designed to
motivate key executives to increase shareholder value by improving operating
results and efficiently employing the Company's capital.
1.2 Effective Date. The Plan is effective as of January 1,
1994, subject to the approval by an affirmative vote, at the 1994 Annual
Meeting of Stockholders, or any adjournment thereof, of the holders of a
majority of the outstanding shares of the common stock of the Company, present
in person or by proxy and entitled to vote at such meeting.
Section 2. Definitions
2.1 Defined Terms. When used in the Plan, the following terms
shall have the meanings specified below:
2.1.1 "Adjusted Net Income" means the Company's net income, in
accordance with Generally Accepted Accounting Principles, as reported for the
Plan 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 the Plan Year 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 Plan Year.
2.1.2 "Adjusted Equity" means the Company's reported
shareholders' equity for the Plan Year, 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.
2.1.3 "Average Adjusted Equity" means the "five-point" quarterly
average of the Adjusted Equity for the Plan Year, the first point being the
preceding year end.
2.1.4 "Base Salary" means as to any Plan Year a Participant's
actual salary rate approved by the Committee prior to the start of the Plan
Year. Such Base Salary shall be before (i) deductions for taxes or benefits
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and (ii) deferrals of compensation pursuant to established plans.
2.1.5 "Board" means the Company's Board of Directors.
2.1.6 "Committee" means the Management Development and
Compensation Committee of the Board of Directors of Transamerica Corporation.
2.1.7 "Cost of Equity" means the Company's imputed equity cost
based on a formula approved by the Committee prior to the start of the Plan
Year.
2.1.8 "Disability" has the meaning assigned to that term in the
Transamerica Disability Income Plan in effect from time to time.
2.1.9 "Maximum Award" means the maximum award pursuant to this
Plan to any individual Participant for any one Plan Year, which shall be $3.0
million.
2.1.10 "Normal Retirement" or "Early Retirement" means any
termination of employment (other than by death or disability) after a
Participant's normal or early retirement date (as defined in the Company's
Retirement Plan).
2.1.11 "Participant" means as to any Plan Year a key executive of
the Company who is likely to have a significant impact on the value added
performance of the Company. An employee must be approved as a Participant by
the Committee before the beginning of each Plan Year.
2.1.12 "Plan Year" means the 1994 calendar year and each
succeeding calendar year.
2.1.13 "Target Award" means the target incentive opportunity for an
individual, expressed as a percentage of his or her Base Salary for a
specific Plan Year. The schedule of individual Target Awards shall be
determined by the Committee in accordance with Section 3.1.
2.1.14 "Value Added" means Adjusted Net Income minus a capital
charge, expressed as a percentage of the Company's Average Adjusted Equity.
The capital charge is determined by multiplying the Company's Average
Adjusted Equity by the Cost of Equity.
Section 3. Awards and Committee Determinations
3.1 Opportunity. The Committee shall approve participation in
the Plan and establish a Target Award for each Participant, based on his or
her role and responsibilities, prior to the beginning of each Plan Year.
3.2 Awards. Payment under this Plan will be based on a payout
table adopted by the Committee in writing prior to the start of the Plan Year.
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Such table will generally remain unchanged for a period of years; however, the
Committee reserves the right (in its sole discretion) to modify the table,
provided that such modification is done prior to the start of the applicable
Plan Year. The payout table will provide 100% of a Participant's Target Award
if a certain level of Value Added is achieved and greater or lesser awards for
Value Added that exceeds or is less than, respectively, the level at which
100% of Target Awards are paid. No Participant's award under this Plan may
exceed three times his or her Target Award, and in no event may a
Participant's award under this Plan exceed his or her Maximum Award.
3.3 Determination. Prior to the start of any Plan Year, the
Committee shall determine for such Plan Year whether any significant non-
recurring item (e.g. an acquisition, or the gain or loss on a divestiture, of
a business) will be excluded from the calculation of Value Added for the Plan
Year. Such determination shall apply only to events that have occurred since
the adoption of this Plan or that may occur in the Plan Year. Once included,
non-recurring items may not be excluded in subsequent Plan Years.
3.4 Adjustments Prior to Payment. The Committee, in its sole
discretion, may reduce the award for any Participant below the award that
would otherwise be payable in accordance with the Plan.
3.5 Certification. The Committee shall certify in writing the
level of Value Added achieved and the respective percent of Target Awards
earned for the Plan Year prior to payment of awards.
Section 4. Payment of Awards
4.1 Right to Receive Payment. Any award that may become due
under this Plan shall be made solely from the general assets of the Company,
normally on or before the March 20th next following the end of the Plan Year
during which the award was earned. Nothing in this Plan shall be construed to
create a trust or to establish or evidence any Participant's claim of any
right other than as an unsecured general creditor with respect to any payment
to which he or she may be entitled.
4.1.1 Employment for Plan Year. If a Participant's employment
with the Company continues for the entire Plan Year, the Participant shall be
entitled to receive full payment of the award amount determined under Section
3 for the Plan Year in accordance with the terms of the Plan.
4.1.2 Retirement, Disability or Death. In the event of death,
Disability or Normal or Early Retirement of a Participant during a Plan Year,
the Committee (in its sole discretion) will determine on a pro rata basis the
amount of the partial award (if any) to be paid to such Participant (or to his
or her personal representative) for such Plan Year. Payments will be made in
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cash at the same time as other awards to Participants are made for the same
Plan Year.
4.1.3 Resignation or Discharge. If during a Plan Year, a
Participant's employment with the Company terminates by reason of resignation
or discharge, then the Participant will not be eligible for and shall forfeit
any award under this Plan for the Plan Year.
4.2 Payment Options. Generally, awards under this Plan will be
made in cash. However, the Committee reserves the right to declare any
award, in whole or in part, payable in restricted stock, awarded under the
terms of the 1985 Stock Option and Award Plan (the "1985 Plan") in an amount
equivalent to the cash amount foregone with the restricted stock valued at
fair market value on the date that the cash payment otherwise would have been
made. Any restricted stock so awarded shall vest ratably over a period of not
more than four years, subject to acceleration for termination of employment
due to death, Disability, Normal or Early Retirement and change in control.
4.3 Beneficiaries. Each Participant may designate, in writing
and on such form as the Company may prescribe, one or more beneficiaries to
receive any amount that is payable after the individual's death. In the event
of a Participant's death, any award (whether cash or restricted stock) that is
payable to such Participant shall be paid to his or her beneficiary or, in the
event that no beneficiary has been designated, to his or her estate.
Section 5. Administration
5.1 Committee. The Plan shall be administered by the
Committee.
5.2 Rules and Interpretation. The Committee shall be vested
with all discretion and authority as it deems necessary or appropriate to
administer the Plan and to interpret the provisions of the Plan. Any
determination, decision or action of the Committee in connection with the
construction, interpretation, administration or application of the Plan shall
be final, conclusive and binding upon all persons.
5.3 Records. The records of the Committee with respect to the
Plan shall be conclusive on all Participants and their beneficiaries and on
all other persons.
5.4 Tax Withholding. The Company shall withhold all applicable
taxes required by law from any payment, including any federal, FICA, state and
local taxes.
Section 6. General Provisions
6.1 Nonassignability. Prior to the time of any payment under
the Plan, a Participant shall have no right by way of anticipation or
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otherwise to assign or transfer any interest under this Plan.
6.2 Employment Rights/Participation. The establishment and
subsequent operation of the Plan, including eligibility as a Participant,
shall not be construed as conferring any legal or other rights upon any
Participant or any other individual for the continuation of his or her
employment for any Plan Year or any other period. The Company expressly
reserves the right, which may be exercised at any time and without regard to
when during a Plan Year or other accounting period such exercise occurs, to
discharge any individual and/or treat him or her without regard to the effect
which such treatment might have upon him or her as a Participant in this
Plan. Being a Participant in any one Plan Year does not confer any right to
be named as a Participant for any succeeding Plan Year.
6.3 No Individual Liability. No member of the Committee or the
Board, or any officer of the Company, shall be liable for any determination,
decision or action made in good faith with respect to the Plan or any award
made under the Plan.
6.4 Severability; Governing Law. If any particular provision of
this Plan is found to be invalid or unenforceable, such provision shall not
affect the other provisions of the Plan, but the Plan shall be construed in
all respects as if such invalid provision had been omitted. The provisions of
the Plan shall be governed by and construed in accordance with the laws of the
State of California.
6.5 Affiliates of the Company. Requirements referring to
employment with the Company or payment of awards can be performed through the
Company or any affiliate of the Company.
6.6 1994 Plan Year. For Plan Year 1994 all actions that would
otherwise be required to be taken prior to the beginning of a Plan Year shall
be taken prior to April 1, 1994.
Section 7. Amendment and Termination
7.1 Amendment and Termination. The Committee may prospectively
amend or terminate the Plan at any time and for any reason; provided, however,
that such amendment shall not relieve the Company of its obligations under
Section 7.2.
7.2 Change in Control of the Company. In the event of a change
in control of the Company (as defined in the severance agreements in effect at
the time of adoption of this Plan between the Company and certain executive
officers, including Plan Participants, the "Agreements"), not later than the
20th business day following the date of such event, the Company shall pay each
Participant an award that is the greater of (i) an award calculated in
accordance with Section 3 above, but using the period ending on the day
immediately prior to the day a change in control occurred as the last day of
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the fiscal year for purposes of determining Value Added, or (ii) a pro rata
amount of each Participant's Target Award for the Plan Year, based upon the
portion of the fiscal year that has elapsed as of the date of the change in
control. Payments made under this Section 7.2 shall not constitute "good
reason" for purposes of terminating employment under any of the Agreements;
however, the failure of the Company or its successor to continue this Plan or
substitute a comparable plan immediately thereafter shall constitute "good
reason" for such purposes.
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