EXHIBIT EX-10.8
TRANSAMERICA CORPORATION
1995 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 1995 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 Business Unit Financial Performance
achieved. Business Unit Financial Performance 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 Business Unit Financial Performance 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, 1995 to receive a payout under the
Plan.
1995 Bonus Plan - Page 2
EXHIBIT I
Value Added Component
_____________________________________________________________________________
Value Added is calculated in the same manner as for the 1995 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 1995 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 1995, 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
Business Unit Financial Performance Component
_____________________________________________________________________________
Bonuses under the Business Unit Financial Performance Component will be based
on either (i) Value Added or (ii) 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.
The leverage for below- and above-target performance will take into account
the expected degree of difficulty in achieving target performance level and is
not necessarily the same for each organization. The applicable payout table
will be communicated to participants as soon as possible after the Plan has
been adopted.
ii