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EXHIBIT 10.1
March 8, 1996
FINAL
AmeriGas Partners, L.P.
ANNUAL BONUS PLAN
Revised 10/1/95
The AmeriGas Partners, L.P. Annual Bonus Plan is designed to
effectively motivate key executives with broad decision-making responsibility
to achieve high-level predetermined business/financial performance objectives
and to accomplish predetermined individual performance objectives which support
business plans and goals. Specifically, the Plan is designed to accomplish the
following objectives:
- Link incentive compensation to the strategic objectives of the
business
- Derive the primary portion of the bonus from the Company's financial
performance
- Acknowledge individual performance
- Tie bonus payouts to a threshold of financial performance based on
Company profitability
Goal Administration
Overall goal administration responsibility (including the
establishment of the individual performance goals) for all participants other
than the President and CEO - AmeriGas and designated senior-most Officers rests
with the President and CEO - AmeriGas. Approvals of the AmeriGas
Compensation/Pension Committee and Board of Directors are required for (i) the
establishment of the annual business/financial goal, and (ii) matters
pertaining to the President and CEO - AmeriGas and designated senior-most
Officers.
Plan Administration
The President and CEO - AmeriGas will appoint the necessary
administrative, financial accounting and audit advisors to ensure accuracy and
consistency in the administrative and financial management of the Plan. All
decisions made are final and binding on all parties.
Participation
Participation in the Annual Bonus Plan is limited to key executives
having an on-going opportunity to significantly influence profitability or
strategic direction and who are approved for participation in the Plan.
Required approvals for participation in the Plan include the President and
CEO-AmeriGas (and the AmeriGas Compensation/Pension Committee and Board in
cases involving designated senior-most Officers).
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Base Salary and Annual Bonus Targets
Base salary levels (or base salary grade ranges) for all positions
included in the AmeriGas Annual Bonus Plan are set at fiftieth percentile
competitive measures to reflect competitive base salary pay practices in
general industry.
Base salary levels (salary grade ranges) will be reviewed and updated
annually in accordance with changes in competitive pay levels. Actual base
salaries for executives covered by the Plan will be administered within the
base salary grade range established for the position in a manner consistent
with AmeriGas salary administration policies taking into account individual
performance, position within the range, and length of time in job.
Annual Bonus targets (expressed as a percentage of base salary) are set
at the seventy-fifth percentile of competitive practice. Target percents are
separately established for each position and will vary according to business
unit/division and level of management. These Annual Bonus targets recognize
competitive industry annual bonus pay practices and the potential contributions
to bottom-line results among Plan participants.
Annual Bonus targets as established for each position will be reviewed
and approved annually by the President and CEO-AmeriGas (and the AmeriGas
Compensation/Pension Committee and Board for designated senior-most Officers).
Bonus targets as established for each position currently range between 25% and
55% of base salary.
An individual participant's Bonus Plan target percentage will be
established annually as approved by the President and CEO-AmeriGas (and the
AmeriGas Compensation/Pension Committee and Board for designated senior-most
Officers) and may be less than but not greater than the Annual Bonus target
percentage established for the position. Generally, it is expected that a
participant in the position for two years or more will have a bonus target
percentage equal to that established for the position.
Actual bonuses paid, however, will vary up and down from a
participant's Annual Bonus target percentage depending on business/financial
and individual performance.
Performance Measures and Weighting
The determination of Annual Bonus amounts will be based on the
achievement of predetermined business/financial goals and on the achievement of
individual MBO goals. The weighting applied to business/financial goals and
individual MBO goals for payment determination will be 75%/25%, respectively,
for all participants,
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except the President and CEO-AmeriGas. To reflect the direct identification of
the President and CEO-AmeriGas with the Company's financial performance, 100%
weighting is given to the achievement of the business/financial goal (no
weighting to individual goal achievement).
The AmeriGas Annual Bonus Plan requires the achievement of a financial
performance threshold based on Company profitability in order for any bonus to
be paid. If this financial performance threshold is not met, no bonus will be
paid for either business/financial performance or individual MBO performance.
- Business/Financial Performance (See Exhibit) The Financial
Adjustment Factor - the percentage of the business/financial target
bonus to be paid to each participant - is calculated according to the
following formula:
FINANCIAL ADJUSTMENT FACTOR = RESIDUAL INDEX X MODIFYING INDEX X
LEVERAGE INDEX.
Each Index in this formula is described below:
1) Residual Index. This index measures quantity of cash flow derived
from the business. The Company must meet a threshold level of
profitability for any bonus to be paid. This threshold is met when
the Residual Gross Income (RGI) is greater than $1. RGI is defined as
EBITDA (earnings before interest, taxes, depreciation and
amortization) LESS Contribution Charges (interest expense, capital
expenditures, the AmeriGas distribution to the common and General
Partnership units and the required distribution to subordinated units
as set forth on page 1 of the Exhibit). The total business/financial
performance target bonus for all participants expressed as a
percentage of budgeted RGI (the "Allocation Percentage") multiplied
times the actual RGI is the dollar amount available for financial
bonus payout (the "Residual Income"). Residual Income is divided by
the total of the business/financial target bonus for all participants
to arrive at the Residual Index. If Residual Income is equal to the
total business/financial target bonus - the Residual Index equals
100%. If the Residual Income is less than the total
business/financial target bonus - the Residual Index will be less than
100%. If the Residual Income is greater than the total
business/financial target bonus - the Residual Index will be greater
than 100%.
2) Modifying Index. This index addresses business performance as it
pertains to volume and customer base and is determined using a
performance matrix which addresses (i) Unit Volume Growth
(weather-adjusted), and (ii) Net Customer Gains/Losses.
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3) Leverage Index. This index measures business performance
pertaining to the efficient usage of assets. The leverage index
compares Return on Assets versus a table as a percentage of target.
- Individual Performance
Individual performance will be measured in terms of each
participant's achievement of, generally, two or more key
individual MBO objectives mutually determined in advance with
the participant's immediate superior, subject to final review
and approval by higher levels of management including the
President and CEO-AmeriGas (and the AmeriGas
Compensation/Pension Committee and Board for designated
senior-most Officers). Individual MBO goals will be
established to reflect truly significant accomplishments which
support business plans and goals. As determined by the
participant's immediate superior, subject to final review and
approval of the President and CEO-AmeriGas (and the AmeriGas
Compensation/Pension Committee and Board for designated
senior-most Officers), adjustments may be made to individual
goals to reflect major unplanned contributions/achievements in
order to more fully recognize significant individual results
during the Plan fiscal year.
Bonus payments based on the achievement of individual MBO
goals can only be made once the financial performance
threshold is met. Individual performance bonus payments will
be made for goal acheivement at the 50% level of performance
and above and will be capped at the 150% level. Individual
performance bonus payments will be calculated as follows:
- Individual Target Bonus = Total Target Bonus X Individual
Performance Weighting (25% for all participants with
individual MBO goals).
- Multiply the Individual Target Bonus times the Individual
MBO Goal achievement rating (from 50% to 150% in increments of
5%) to determine the final payout amount for individual
performance.
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INDIVIDUAL PERFORMANCE LEVERAGE TABLE
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Individual Performance Goals (MBOs)*
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% of Individual Goal Achieved % of Individual Target Bonus Payable
- ----------------------------- ------------------------------------
less than 50 0
- ----------------------------- ------------------------------------
50 50
- ----------------------------- ------------------------------------
75 75
- ----------------------------- ------------------------------------
100 100
- ----------------------------- ------------------------------------
125 125
- ----------------------------- ------------------------------------
150 150
- ----------------------------- ------------------------------------
greater than 150 150
- ----------------------------- ------------------------------------
* Payout requires achievement of Business/Financial
Performance threshold; payouts to be prorated for intermediate
levels of performance in 5% increments.
Final determination of both business/financial and individual goal achievement
for all Plan participants will be made by the President and CEO-AmeriGas (and
the AmeriGas Compensation/Pension Committee and Board for designated
senior-most Officers).
The AmeriGas Compensation/Pension Committee has the discretion to make an
adjustment of +/- 15% to the calculated bonus payment of the President and
CEO-AmeriGas based on individual contribution with significant impact on
Company performance.
Annual Bonus Payments
Except for the amounts deferred as provided for in the following
paragraph, annual bonus payments will be paid in cash to each participant as
close as possible to within 90 days following the end of the Plan fiscal year.
Optional Deferral
To provide participants with the flexibility to tailor annual bonus
payouts to individual needs, participants may elect to defer all or part
(subject to a minimum of 50%) of their payout until retirement or termination
of employment. Deferred amounts will earn interest annually during the
deferral period at a market rate determined in accordance with a procedure
determined by the AmeriGas Compensation/Pension Committee. The procedure
governing optional deferral is contained in Attachment 1 hereto.
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Plan Amendment
The Annual Bonus Plan may at any time or from time to time be amended,
modified, suspended or terminated by the AmeriGas Compensation/Pension
Committee and Board of Directors, except that no amendment, modification or
termination may (i) adversely affect the balance in a participant's Deferred
Compensation Account without the participant's consent or (ii) permit payment
of such balance prior to the earliest permitted date as described in the
optional deferral provisions of the Annual Bonus Plan.
Other Provisions:
- Treatment of New Hires and Promotions
New hires and individuals promoted or transferred into a
position eligible for the Plan (or into a position with a
different annual bonus target percentage) during the fiscal
year will receive a prorated award based on the relative time
spent in the new position during the fiscal year.
- Treatment of Retirement, Death and Permanent Disability
Participants who retire or are permanently disabled during the
fiscal year may receive all or part of their payout, based on
the discretion of the President and CEO-AmeriGas (and the
AmeriGas Compensation/Pension Committee in cases involving
designated senior-most Officers). The same consideration
will be granted to the heirs or assigns of a deceased
participant.
- Treatment of Other Terminations
A participant who terminates employment for any reason other
than retirement, death or permanent disability during the
fiscal year will forfeit the entire annual bonus payment for
that year, unless determined otherwise by the President and
CEO-AmeriGas (and the AmeriGas Compensation/Pension Committee
in cases involving designated senior-most Officers).
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ATTACHMENT 1
Procedure Optional Deferral of Annual Bonus Payments
An election to defer an annual bonus payout for a particular fiscal
year must be made in writing on a Form of Notice (Exhibit "A") available from
the Vice President - Human Resources. In order for an election to defer to be
effective for any particular year, the signed Notice must be received by the
Vice President - Human Resources prior to October 1 of the year for which it is
to be effective. The Notice must include the exact percentage of the annual
bonus payout which is to be deferred. Once a Notice is submitted to the Vice
President - Human Resources, the election to defer is irreversible for that
year, except in certain cases, as determined at the sole discretion of UGI's
Chairman and CEO, of severe financial hardship occasioned by an unforeseeable
emergency as referred to below.
The election to defer will be effective starting on October 1 of the
year indicated on the Notice and will remain in effect only for that fiscal
year.
A participant may elect to defer the receipt of all or a specified
portion (but not less than 50%) of the annual bonus payment otherwise payable
pursuant to the Plan. All deferred amounts will be paid out in cash.
An unfunded Deferred Compensation Account will be established for each
participant who elects deferment, and the portion of the annual bonus payment
that a participant elects to defer will be credited to that Account. Each such
credit will be made to the Account as of the date payment of the annual bonus
payment would otherwise have been made to the participant, had the participant
not elected to defer payment of all or part of the payout.
Deferred payouts are assumed to earn interest at a market rate
determined by the Compensation/Pension Committee for each year during the
period in which compensation is deferred. Each participant will be notified of
this rate annually. The Company may at any time or from time to time change or
otherwise modify the basis or the method for calculating and crediting such
interest, but any such change or modification will not adversely affect the
balance in any participant's Account at the time of the change or modification.
Each deferring participant will receive a statement of the balance in
the participant's Account at the end of each fiscal year as promptly as
practicable after the end of that year.
Unless a Notice (Exhibit "B") prescribing the method of payment
selected by a participant within the guidelines set forth
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below is given to the Vice President - Human Resources during the fiscal year
immediately preceding a participant's retirement at normal retirement age under
the Company's or a subsidiary's retirement plan and no less than 30 days prior
to the participant's retirement date, upon the termination of a participant's
services as an employee of UGI or any of its subsidiaries or affiliates, the
balance in a participant's Account will be paid out to the participant in a
lump sum distribution, or, at the option of the Company, in any of the methods
of payment which might have been selected by the participant had a Notice
prescribing a method of payment been given.
During the fiscal year immediately preceding a participant's
retirement at normal retirement age under the Company's or a subsidiary's
retirement plan and no less than 30 days prior to the participant's retirement
date, a participant may elect any method of payment of the balance in the
participant's Account, including periodic payments over a specified period of
years or a lump sum distribution, except that (i) no payment may be made prior
to October of the fiscal year following the fiscal year during which the
participant's services as an employee of UGI or any of its subsidiaries or
affiliates terminate, unless the payment is made as set forth in the next two
paragraphs; (ii) a lump sum payment must be made or installment payments must
commence no later than October of the fiscal year following the participant's
attainment of age 70, or October of the fiscal year following the termination
of the participant's services as an employee of UGI or any of its subsidiaries
or affiliates, whichever is later; and (iii) installment payments must be made
at least annually and not more frequently than monthly for a period of 5, 10,
15 or 20 years.
If UGI's Chairman and CEO determines, after consideration of a
participant's application, that, due to an unforeseeable emergency occasioned
by extraordinary and unforeseeable circumstances arising as a result of events
beyond the control of the participant which results in a severe financial
hardship to the participant which cannot be relieved (i) through reimbursement
or compensation by insurance or otherwise, (ii) by liquidation of the
participant's assets, to the extent the liquidation of such assets would not
itself cause severe financial hardship, or (iii) by cessation of deferrals of
earned awards, the participant has a financial need of such a substantial
nature that a contemporaneous payment of earned awards previously deferred is
warranted, the Chairman and CEO may, at his sole and absolute discretion,
direct that all or a portion of the balance in the participant's Account be
paid to the participant, but only to the extent of the amount of the particular
financial need which cannot be relieved as set forth above. Any such payment
will be made in the manner and at the time specified by the Chairman and CEO.
In any case involving a request for payment by the Chairman and CEO, any
decisions will instead be made by the Compensation/Pension Committee without
the participation of the Chairman and CEO.
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In the event of a participant's death before the balance in the
participant's Account is fully paid out:
(a) Payment of such balance will be made to the beneficiary or
beneficiaries designated by the participant in the Notice
(Exhibit "A") given to the Vice President - Human Resources,
or, if the participant has not designated a beneficiary, to
the beneficiary indicated on the participant's group life
insurance policy through the Company or a Subsidiary, or if no
beneficiary survives, to the participant's estate. In any
case, the payment will be made in a lump sum distribution no
later than October of the fiscal year following the
participant's death, unless the participant has given a Notice
to the Vice President - Human Resources during the fiscal year
immediately preceding the participant's retirement at normal
retirement age under the Company's or a subsidiary's
retirement plan and no less than 30 days prior to the
participant's retirement date electing that payment of the
balance in the participant's Account in the event of the
participant's death be made to the participant's beneficiary
or beneficiaries in periodic payments as indicated in the
Notice, provided that any such installment payments to a
beneficiary or beneficiaries must commence no later than
October of the fiscal year following the participant's death.
(b) If the balance in the Account is to be paid to the estate of
the participant in installments, the Chairman and CEO may, at
his sole and absolute discretion and upon receipt of an
application from the duly appointed Administrator or Executor
of such estate, direct that the balance in the deceased
participant's Deferred Compensation Account be paid to the
estate in a single payment at such time as is specified by the
Chairman and CEO.
The right of any participant, beneficiary or estate to receive payment
of any unpaid balance in a participant's Account will be an unsecured claim
against the general assets of the Company.
During a participant's lifetime, any deferred payment will be made
only to the participant. No sum in a participant's Account or other interest
in a deferred award shall be subject in any manner to anticipation, alienation,
sale, transfer, assignment, pledge, encumbrance or charge, and any attempt by a
participant or any beneficiary to do so shall be void. No balance in a
participant's Account or interest in a deferred award shall in any manner be
liable for or subject to the debts, contracts, liabilities, engagements or
torts of a participant or beneficiary who is entitled to it.
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Except as otherwise described above or within the Annual Bonus Plan,
all provisions of the Annual Bonus Plan relating to optional deferral of annual
bonus payments will be administered by the Chairman and CEO who will have the
authority, except as may be otherwise provided above, to adopt, amend and
rescind rules and regulations relating to the optional deferral provisions, and
to interpret, construe and implement those provisions.
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