EXHIBIT 10.L
THE DIAL CORP
PERFORMANCE UNIT INCENTIVE PLAN
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 The Dial Corp.
"Code" - The Internal Revenue Code of 1986, as amended, or
its successor general income tax law of the United States.
"Committee" - The Executive Compensation Committee of the
Board.
"Corporation" - The Dial 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, 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)
A Return on Equity calculation 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 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)
A Return on Equity calculation 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 Dial Return on Common Stockholders'
Equity
A return on common stockholders' equity calculation will be made
for The Dial 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 Dial Earnings Per Share Growth
A realistic "Earnings Per Share" from continuing operations
target for The Dial 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.
The appropriate 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 after giving
consideration to the recommendations of the Chief Executive
Officer of The Dial 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 The Dial 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 The Dial 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
successfully manage the effects of such items.
Incentives to be paid under this plan must be provided out of
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. 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% for certain Subsidiary Companies. 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 Earning 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 Net Income
-------------------------
8. PARTICIPANT ELIGIBILITY:
Personnel will be eligible for participation as recommended by
The Dial Corp Chief Executive Officer for approval by the
Committee prior to 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 The Dial Corp for approval by the
Committee annually prior to 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 subsitututed 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.
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 month following
the Performance Period. Performance Unit Awards earned
will be determined as of the third Thursday of February
following the close of the Performance Period and
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 The Dial Corp.