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Exhibit 10.H
AIRBORNE EXPRESS
1993
EXECUTIVE INCENTIVE COMPENSATION PLAN
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AIRBORNE FREIGHT CORPORATION D/B/A
"AIRBORNE EXPRESS"
EXECUTIVE INCENTIVE COMPENSATION PLAN
Effective January 1, 1993
SUMMARY PLAN DESCRIPTION
1. Purpose
The purpose of this Plan is to achieve Corporate goals by providing
incentive compensation to eligible key executives who through
industry, ability and exceptional service, contribute materially to
the success of Airborne Express.
2. Definitions
When used in the Plan, the following words and phrases shall have
the following meanings:
(a) Beneficiary - The beneficiary or beneficiaries designated to
receive the amount, if any, payable under the Plan upon the
death of a participant.
(b) Board - The Board of Directors of Airborne Freight
Corporation.
(c) Compensation Committee - Members of the Board who are
charged with the responsibility of review and
recommendations to the full Board on matters relating to
salaries of officers and all other forms of executive and
key management compensation and benefits.
(d) Plan - The Executive Incentive Compensation Plan.
(e) Plan Year - Each calendar year for which specific
performance targets are established for the Company.
(f) Eligible Employee or Participant - Any executive employee
who is in service at the end of the Plan year and who has
been designated by the Board as eligible to receive awards
hereunder.
(g) Performance Measure - A specific objective measure to assess
individual or group success in achieving established goals.
The plan consists of two corporate performance measures and
individual MBO sections may consist of up to four additional
performance measures.
(h) Target - The point at which performance equals 100% of the
stated objective and earns the bonus percentage established
for a given position.
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(i) Attainment - The actual results of individual or group
effort to reach a performance goal, usually stated as a
percentage of target.
(j) Threshold - The point below target at which incentive payout
for each performance measure begins. Some performance
measures only pay incentive if target is achieved.
(k) Maximum - The point above target that represents the maximum
payout level for a particular performance measure.
(l) Total Disability - Complete and permanent inability by
reason of illness or accident to perform the duties of the
occupation at which a Participant was employed by Airborne
Express when such disability commenced.
(m) Retirement - When an employee leaves active service and
qualifies under the company's regular or early retirement
programs.
3. Allocation of Bonus Awards
Each Plan year bonus awards, if any, shall be allocated among eligible
employees, on the basis of their contributions to the successful
management of the total organization or of a subsidiary and in
accordance with such rules as the Board may prescribe.
Upon recommendations of the Compensation Committee, the Board shall
determine the award maximums, the allocation of the award between
individuals and the total organization and individual executive
awards.
In determining the allocation of bonus awards among individual
executives, the Chairman and the President will consider Company
performance and individual performance goals.
The Compensation Committee shall have the right to approve different
performance objectives for each performance period. However,
performance objectives will not be changed during any performance
period except as and to the extent determined by the Board in the
event of changes in accounting practices or extraordinary or
unanticipated circumstances which could have a material effect on
the achievement of the performance objectives.
4. Limitation on Allocation
The total amount allocated as a Bonus Award to an eligible employee
shall not exceed a fixed percentage of the employee's targeted award.
5. Form of Payment of Incentive Compensation
Incentive compensation awards shall be paid entirely in cash except
when otherwise authorized by the Board. Payments will be made as
soon as practicable after audited performance results are known,
which should be on or about March 1. Bonus award checks are
prepared by Payroll and the amounts are subject to tax withholding
and Capital Accumulation Plan (CAP) deductions.
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If a participant dies before the end of the Plan year an amount
equal to a pro-rated portion thereof as of the date of death shall
be paid in one lump cash sum to the employee's beneficiary.
6. Designation of Beneficiaries
Each participant shall file with the Company a written designation of
one or more persons as the Beneficiary who shall be entitled to
receive the amount, if any, payable under the Plan upon the
employee's death. A participant may, from time to time, revoke or
change his Beneficiary designation without the consent of any prior
Beneficiary by filing a new designation. The last such designation
received shall be controlling, provided, however, that no
designation, or change or revocation thereof, shall be effective
unless received by the Company prior to the Participant's death, and
in no event shall it be effective as of a date prior to such receipt.
7. Absence of Valid Designation
If no such Beneficiary designation is in effect at the time of a
Participant's death, or if no designated beneficiary survives the
participant, or if such designation conflicts with the law, the
Participant's estate shall be deemed to have been designated a
beneficiary and shall receive the payment of the amount, if any,
under the Plan upon the participant's death. If the Compensation
Committee is in doubt as to the right of any person to receive such
amount, the Compensation Committee may direct retention of such
amount, without liability for any interest thereon, until the rights
thereto are determined or the Compensation Committee may pay such
amount to any court of appropriate jurisdiction and such payment
shall be a complete discharge of the liability of the Plan and of
Airborne therefore.
ADMINISTRATION OF THE PLAN
8. Power and Authority
The Compensation Committee shall have full power and authority to
construe, interpret and administer the Plan. All decisions, actions
or interpretations of the Compensation Committee shall be final,
conclusive and binding upon all parties.
9. No Liability of Compensation Committee, Board Members or Officers
No members of the Compensation Committee, Board or Corporate officers
shall be personally liable by reason of any contract or other
instrument executed by them or on their behalf nor for any mistake or
judgment made in good faith, and Airborne shall indemnify and hold
harmless each member of the Board and each other officer, employee
or director of Airborne to whom any duty or power relating to the
administration or interpretation of the Plan may be allocated or
delegated, against any cost or expense (including counsel fees) or
liability (including any sum paid in settlement of a claim with the
approval of the Compensation Committee) arising out of any act or
omission to act in connection with the Plan unless arising out of
such person's own fraud or bad faith.
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10. Right to Amend, Suspend or Terminate Plan
The Board reserves the right at any time to amend, suspend or
terminate the Plan in whole or in part and for any reasons and
without the consent of any Participant or Beneficiary; provided that
no such amendment shall adversely affect rights to receive any
amount to which Participants or Beneficiaries have become entitled
prior to such amendment. Any amendment, modification, suspension or
termination of any provisions of the Plan may be made retroactively.
GENERAL LIMITATIONS AND PROVISIONS
11. No Rights to Continued Employment or Bonus
Nothing contained in the Plan shall give any employee the right to
be retained in the employment of Airborne or affect the right of
Airborne to dismiss any employee. The adoption of the Plan shall
not constitute a contract between Airborne and any employee. No
eligible employee shall receive any right to be granted an award
hereunder nor shall any such award be considered as compensation
under any employee benefit plan of Airborne except as otherwise
determined by Airborne.
12. No Right, Title, or Interest in Airborne Assets
The Participant shall have no right, title, or interest whatsoever
in or to any investments which Airborne may make to aid in meeting
its obligations under the Plan. Nothing contained in the Plan, and
no action taken pursuant to its provisions, shall create or be
construed to create a fiduciary relationship between Airborne and
any eligible employee or any other person. To the extent that any
person acquires a right to receive payments from Airborne under this
Plan, such right shall be no greater than the right of an unsecured
general creditor of Airborne.
13. Unfunded Plan: Governing Law
The Plan is intended to constitute an incentive compensation
arrangement for a select group of management or highly compensated
personnel and all rights thereunder shall be governed by and
construed in accordance with the laws of the State of Washington.
14. Executive Incentive Compensation Plan
The specific Executive Incentive Compensation Plan (EICP) for Plan
year 1993 is described in the next section (pages 6 -12).
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AIRBORNE FREIGHT CORPORATION D/B/A
"AIRBORNE EXPRESS"
EXECUTIVE INCENTIVE COMPENSATION PLAN (EICP)
Effective January 1, 1993
Airborne Express has adopted an executive incentive compensation program which
provides opportunities to top corporate executives to receive additional
compensation for their contribution toward achieving the Company's performance
goals as established by the Board.
1. PURPOSE
The purpose of this Plan is to increase the rate of growth of the
Company--in earnings, revenues, human resources, and strategic
position--by stimulating key executives to superior performance,
and by attracting and keeping in the employ of the Company people
of outstanding experience and ability.
2. ADMINISTRATION
(a) The Compensation Committee will have the power to interpret
the Plan and to make all determinations necessary or
desirable for its administration.
(b) The decision of the Compensation Committee on any question
concerning the interpretation or administration of the Plan
will be final and conclusive. Nothing in the Plan will be
deemed to give any officer or employee, or legal
representatives or assigns, any right to participate in the
Plan except to such extent, as the Board may determine
pursuant to the provisions of the Plan.
3. ELIGIBILITY OF EMPLOYEES
(a) Eligibility of employees to participate in the Plan in any
Plan Year will be recommended through organizational
channels and approved by the Board.
(b) Eligible employees will be the Chief Executive Officer and
those executives of the Company who have a major
impact on profits, growth, contribute importantly
to determining the Company's strategic position, or
who directs a major administrative division of the
Company.
Positions eligible for the EICP include:
Chief Executive Officer (CEO)
President and Chief Operating Officer (COO)
Executive Vice Presidents
President, ABX Air, Inc.
(c) With approval of the Board, prior to June 30 of each Plan
Year, additional
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employees may be included in the Plan, with any award bonus
pro-rated as shall be determined by the Compensation
Committee.
(d) Employees who retire in good standing during the year will
be eligible for a pro-rated bonus for the year in which they
retire provided they are on the active payroll on June 30th
or later of the plan year.
(e) Employees who take a leave of absence will have their awards
calculated based on actual Airborne salary earnings for the
calendar year. Any disability insurance payments will not
be included as earnings in calculating bonus awards.
Employees who are on a leave of absence for more than 90
days and who continue to receive full or partial salary
continuance will have their awards adjusted. Any salary
paid while on a leave of absence period over 90 days will
not be included in the base used to calculate annual bonus
awards.
(f) Bonus payments shall be made on or about March 1st following
the Plan year and after audited performance results.
(g) Bonus checks are prepared by Payroll and the amounts are
subject to tax withholding and Capital Accumulation Plan
(CAP) withholding.
4. COMPANY PERFORMANCE TARGETS
The Company's performance used to determine the payout of bonuses
on two factors -- pre-tax, pre-profit sharing net profit and
percent of sales revenue growth. Performance goals will be set as
follows:
(a) Pre-tax net profit earnings is the major corporate target
and shall be the basis of 75% of the bonus allocation.
(b) An 80% threshold is set on targeted pre-tax earnings.
(c) A 150% maximum is set on targeted pre-tax earnings.
(d) Percent growth in sales revenues is the second major
corporate target and shall be the basis of 25% of the bonus
allocation.
(e) An 80% threshold is set on targeted growth in sales revenue.
(f) The maximum is 150% of targeted growth in sales revenue.
5. QUALIFIERS AND DEFINITIONS ON PERFORMANCE TARGETS
(a) The bonus percentage is applied to the participant's salary
paid in the Plan (calendar) Year.
(b) No bonus will be paid for growth in sales revenue unless the
threshold net profit is achieved.
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(c) To receive any award under EICP, an executive's individual
performance must be evaluated as at least competent by the
Compensation Committee.
6. BONUS AMOUNTS
Actual bonuses will be determined by applying the following
percentages, or a pro-rated portion thereof, times the participant's
annual salary.
Threshold Maximum
Position (80% of Target) Target (150% of Target)
--------- --------------- ------ ----------------
CEO & COO 10% 45% 100%
EVP's 10% 35% 75%
7. ALLOCATIONS
100% of the bonus award is allocated to corporate performance
(as opposed to individual MBO achievement) for all Executive Incentive
Compensation Plan (EICP) eligible positions. The EICP incentive
payment percentages for goal attainment are:
CEO & COO
(100% CORPORATE)
Percent of
Attainment Profit (75%) Revenue (25%) Total
---------- ------------- ------------- -----
80% 7.5 % 2.5 % 10.0%
100% 33.75% 11.25% 45.0%
150% 75.0 % 25.0 % 100.0%
EVP'S
(100% CORPORATE)
Percent of
Attainment Profit (75%) Revenue (25%) Total
---------- ------------- ------------- -----
80% 7.5 % 2.5 % 10.0%
100% 26.25% 8.75% 35.0%
150% 56.25% 18.75% 75.0%
8. There is an example incentive calculation for the EVP level on
the following page.
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EICP EXAMPLE
1. TITLE: EXECUTIVE VICE PRESIDENT
2. 100% CORPORATE ALLOCATION
3. SALARY: $200,000
4. Bonus opportunity as percent of salary:
Threshold Target Maximum
--------- ------ -------
10% 35% 75%
5. Allocation:
Threshold Target Maximum
--------- --------- -------
75% - Pre-Tax Net Profit 7.5% 26.25% 56.25%
25% - Growth in Revenue 2.5% 8.75% 18.75%
----------------------------------------------------------------------------------
Total Bonus Opportunity 10.0% 35.0 % 75.0 %
6. Assumed Facts:
* Profit Performance: 87%
* Revenue Performance: 104%
7. Calculations
A. PROFIT BONUS @ 87% ACTUAL PERFORMANCE
Performance = Bonus Percentage (from table)
87% = 14.06%
Bonus % X Annual Salary = Profit Bonus
14.06% X $200,000 = $28,120
B. REVENUE GROWTH @ 104% ACTUAL PERFORMANCE
Performance = Bonus Percentage (from table)
104% = 9.55%
Bonus % X Annual Salary = Profit Bonus
9.55% X $200,000 = $19,100
C. TOTAL BONUS EARNED
Profit Bonus $28,120
Revenue Bonus $19,100
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$47,220
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BONUS PERCENT LOOKUP TABLE
CORPORATE ATTAINMENT (ONLY) PLAN, CEO & COO
NET PROFIT FACTOR REVENUE GROWTH FACTOR
(75% weight) (25% weight)
--------------------- ---------------------
Percent Percent
Attainment Percent Attainment Percent
(of Goal) of Salary (of Goal) of Salary
---------- --------- ---------- ---------
below 80% 0 below 80% 0
Threshold 80% 7.50% 80% 2.50%
81% 8.81% 81% 2.94%
82% 10.13% 82% 3.37%
83% 11.44% 83% 3.81%
84% 12.75% 84% 4.25%
85% 14.06% 85% 4.69%
86% 15.38% 86% 5.13%
87% 16.69% 87% 5.56%
88% 18.00% 88% 6.00%
89% 19.31% 89% 6.44%
90% 20.63% 90% 6.88%
91% 21.94% 91% 7.31%
92% 23.25% 92% 7.75%
93% 24.56% 93% 8.19%
94% 25.88% 94% 8.63%
95% 27.19% 95% 9.06%
96% 28.50% 96% 9.50%
97% 29.81% 97% 9.94%
98% 31.13% 98% 10.38%
99% 32.44% 99% 10.81%
Target 100% 33.75% 100% 11.25%
102% 35.40% 102% 11.80%
104% 37.05% 104% 12.35%
106% 38.70% 106% 12.90%
108% 40.35% 108% 13.45%
110% 42.00% 110% 14.00%
112% 43.65% 112% 14.55%
114% 45.30% 114% 15.10%
116% 46.95% 116% 15.65%
118% 48.60% 118% 16.20%
120% 50.25% 120% 16.75%
122% 51.90% 122% 17.30%
124% 53.55% 124% 17.85%
126% 52.20% 126% 18.40%
128% 56.85% 128% 18.95%
130% 58.50% 130% 19.50%
132% 60.15% 132% 20.05%
134% 61.60% 134% 20.60%
136% 63.45% 136% 21.15%
138% 65.10% 138% 21.70%
140% 66.75% 140% 22.25%
142% 68.40% 142% 22.80%
144% 70.05% 144% 23.35%
146% 71.70% 146% 23.90%
148% 73.35% 148% 24.45%
Maximum 150% 75.00% 150% 25.00%
Note: Actual Payouts will be calculated using Formulas where % of attainment
is rounded to the nearest 1% and % of salary is rounded to the
nearest .01%.
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Bonus Percent Lookup Table
CORPORATE ATTAINMENT (ONLY) PLAN, EXECUTIVE VPS
NET PROFIT FACTOR REVENUE GROWTH FACTOR
(75% weight) (25% weight)
------------------------- -----------------------
Percent Percent
Attnmt Percent Attnmt Percent
(of Goal) of Salary (of Goal) of Salary
--------- --------- --------- ---------
below 80% 0 below 80% 0
Threshold 80% 7.50% 80% 2.50%
81% 8.44% 81% 2.81%
82% 9.37% 82% 3.13%
83% 10.31% 83% 3.44%
84% 11.25% 84% 3.75%
85% 12.19% 85% 4.06%
86% 13.13% 86% 4.38%
87% 14.06% 87% 4.69%
88% 15.00% 88% 5.00%
89% 15.94% 89% 5.31%
90% 16.88% 90% 5.63%
91% 17.81% 91% 5.94%
92% 18.75% 92% 6.25%
93% 19.69% 93% 6.56%
94% 20.63% 94% 6.88%
95% 21.56% 95% 7.19%
96% 22.50% 96% 7.50%
97% 23.44% 97% 7.81%
98% 24.38% 98% 8.13%
99% 25.31% 99% 8.44%
Target 100% 26.25% 100% 8.75%
102% 27.45% 102% 9.15%
104% 28.65% 104% 9.55%
106% 29.85% 106% 9.95%
108% 31.05% 108% 10.35%
110% 32.25% 110% 10.75%
112% 33.45% 112% 11.15%
114% 34.65% 114% 11.55%
116% 35.85% 116% 11.95%
118% 37.05% 118% 12.35%
120% 38.25% 120% 12.75%
122% 39.45% 122% 13.15%
124% 40.65% 124% 13.55%
126% 41.85% 126% 13.95%
128% 43.05% 128% 14.35%
130% 44.25% 130% 14.75%
132% 45.45% 132% 15.15%
134% 46.65% 134% 15.55%
136% 47.85% 136% 15.95%
138% 49.05% 138% 16.35%
140% 50.25% 140% 16.75%
142% 51.45% 142% 17.15%
144% 52.65% 144% 17.55%
146% 53.85% 146% 17.95%
148% 55.05% 148% 18.35%
Maximum 150% 56.25% 150% 18.75%
Note: Actual Payouts will be calculated using Formulas where % of
attainment is rounded to nearest 1% and % of salary is rounded to
the nearest .01%.
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