EXHIBIT 10.7
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CONSOLIDATED RAIL CORPORATION
ANNUAL PERFORMANCE ACHIEVEMENT REWARD PLAN FOR 1994
FOR OFFICERS
1. Definitions
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When used in this document, the following terms shall
have the meanings set forth below:
Board means the Board of Directors of Conrail.
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Conrail means the Consolidated Rail Corporation.
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Operating Ratio means the percentage determined by
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dividing (a) operating expenses by (b) revenues, as shown on
Conrail's consolidated financial statements.
Participant means an officer of Conrail who participates
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in the Plan in accordance with Section 3.
Plan means the Consolidated Rail Corporation Annual
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Performance Achievement Reward Plan for 1994, as set forth in
this document and as may be amended from time to time.
Salary means the salary earned by a Participant in 1994
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from employment with Conrail. For purposes of this Plan,
Salary shall include salary in the form of lump sum 1993
Selective Salary Increase payments received either in 1993 or
1994, salary earned pursuant to any holiday, vacation, or sick
leave policy of Conrail, salary deferred pursuant to the
Consolidated Rail Corporation Matched Savings Plan, and salary
contributed pursuant to the Consolidated Rail Corporation
Flexible Benefits Plan. Except as otherwise provided in the
preceding sentence, Salary shall not include any amount
payable pursuant to receipt of a Spot Award or a 1994
Selective Cash Award or to an employee benefit or incentive
compensation plan.
2. Introduction
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The Board has approved the implementation of this Plan.
The Board expects that the Plan will provide an incentive for
enhanced individual and corporate performance and aid Conrail
in attracting and retaining capable employees.
3. Eligibility
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Each officer of Conrail, who is employed during 1994,
shall participate in the Plan.
4. Prerequisite for Award
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Anything in this Plan to the contrary notwithstanding, no
award shall be payable under the Plan in the event actual
operating income for 1994, as shown on Conrail's consolidated
financial statements, is less than $520 million.
5. Amount of Award
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(a) Under the Plan, a Participant may earn an award
equal to a percentage (or percentages) of his/her Salary.
This award may consist of two parts, the Annual Performance
Achievement Reward ("APAR") and the Annual Performance
Achievement Reward Plus ("APAR Plus"). The percentage(s)
shall depend upon the position held by the Participant and the
performance of Conrail, measured by the relationship of (i)
the Operating Ratio for 1994, as certified by Conrail's chief
financial officer, after taking into account any amounts
payable pursuant to the Plan that are not taken into account
in the Operating Ratio goal set by the Board (or its delegate)
for purposes of the Plan, to (ii) the Operating Ratio goal set
by the Board (or its delegate) for purposes of the Plan. The
percentage(s) shall be determined in accordance with one of
three schedules. Conrail shall furnish each Participant with
a copy of the schedule(s) of awards applicable to him/her.
(b) A Participant's award shall be pro-rated, as
provided in Section 8, in the event he/she participates in the
Plan for less than all of 1994 or moves into a position cov-
ered under a different schedule of awards. The Participant's
award shall equal the sum of the partial awards computed by
multiplying (i) the Salary earned by the Participant while
covered under a schedule of awards, by (ii) the percentage of
Salary determined in accordance with such schedule.
(c) Anything to the contrary in this Section 5 not
withstanding, a Participant's award may be reduced by up to 50
percent by Conrail's Chairman, President and Chief Executive
Officer (or his delegate(s)) on the basis of individual or
group performance.
6. Election to Defer Awards
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(a) Each Participant shall be entitled to elect
irrevocably to defer, for a period of one, two, three, four,
or five years, all or a portion of any APAR award payable to
him/her pursuant to this Plan. The minimum deferral permitted
is 10 percent and a deferral may be made in any percentage
above this minimum. A Participant who so elects shall receive
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his/her APAR award in the form of whole shares of Conrail Inc.
restricted common stock, which shares shall be forfeited
(except as otherwise provided in the Plan) in the event the
Participant terminates employment with Conrail during the ap-
plicable periods of deferral, as described in Section 7, and
prior to the receipt of a certificate(s) for the shares. Such
elections must be made no later than July 31, 1994, on forms
provided by Conrail's Assistant Vice President-Compensation
and Benefits for this purpose.
(b) A Participant who elects to receive an APAR award in
Conrail Inc. common stock shall be granted shares of such
stock equal in value to the amount of his/her deferred award
(the "Deferred Shares"), plus additional shares of such stock
equal in value to 10 percent (10%) of his/her deferred award
times the period of deferral selected, up to a maximum of
fifty percent (50%) (the "Bonus Shares"). The number of
shares so awarded shall be determined as of the date the non-
deferred portions of awards are or would have been paid.
(c) Deferred Shares and Bonus Shares shall be issued as
restricted shares pursuant to the Consolidated Rail
Corporation 1991 Long-Term Incentive Plan. Each such share
shall entitle the Participant to the same dividend and voting
rights as one share of Conrail Inc. common stock.
(d) The APAR Plus award shall not be eligible for
deferral.
7. Time and Form of Payments
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(a) In the case of a Participant who has made an
election to defer, the certificates for the Participant's
Deferred Shares and for the Participant's Bonus Shares, shall
be paid or delivered to him/her, as soon as practicable after
expiration of the deferral period chosen by the Participant.
Any portion of an APAR award not deferred by a Participant
shall be paid to him/her in cash during the first quarter of
1995.
(b) In the case of a Participant who has made no
election to defer, the Participant's award shall be paid to
him/her in cash in a single installment during the first
quarter of 1995.
8. Special Payment Rules
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Anything in this Plan to the contrary notwithstanding, a
Participant who is dismissed for cause prior to receipt of any
portion of his/her award shall forfeit such portion of the
award. A Participant who resigns from Conrail during 1994
shall receive a prorated portion of his/her APAR and APAR Plus
awards. The amount of the prorated award shall be determined
by applying a fraction to the Participant's salary determined
up until his/her date of termination. The numerator of this
fraction is the number of days of the year until the
termination occurred and the denominator is 365, the number of
days in the year. A Participant who resigns from Conrail
after December 31, 1994, but before the date in the first
quarter of 1995 on which payments are made under the Plan,
shall receive a full APAR and APAR Plus award. If the
Participant has elected to defer his/her award, such election
is void and the prorated or full award will be paid in cash in
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the first quarter of 1995. If the Participant resigns during
the deferral period the Participant forfeits both the Deferred
and Bonus Shares.
If a Participant who has elected to defer all or a
portion of his/her APAR award in the form of Deferred and
Bonus Shares retires with the right to an immediate pension
under the Supplemental Pension Plan of Consolidated Rail Corpo-
ration (the "Pension Plan") prior to receipt of any such
shares, the restriction on such shares shall be lifted and the
Participant shall receive all of the Deferred Shares
representing the Participant's deferred APAR award. The
matching or Bonus Shares shall be prorated on the basis of a
fraction, the denominator of which shall be the number of days
from the date of the award through the end of the elected
deferral period and the numerator shall be the number of days
from the date of the award through the last day of employment.
This proration factor shall be multiplied by the number of
Bonus Shares and the resulting number of Bonus Shares shall be
distributed to the Participant. The balance of the Bonus
Shares shall be forfeited on the last day of the Participant's
employment.
If during 1994, a Participant goes on a leave of absence,
becomes disabled or dies, such Participant's award shall be
prorated in the first quarter of 1995 on the basis of a
fraction applied to the Participant's salary, the numerator of
which is the number of days of the year until the event
occurred and the denominator of which is 365, the number of
days in the year. The amount of the award shall be paid in
cash.
A Participant who goes on a leave of absence after the
end of 1994, but before payments under the Plan are made shall
receive a full APAR and APAR Plus award. If the Participant
has elected to defer his or her APAR award, the election is
void and the APAR award is payable in cash. A Participant who
becomes disabled or dies after the end of 1994, but before
payments under the Plan are made shall receive a full APAR and
APAR Plus award. If the Participant has elected to defer
his/her APAR award, such award will be paid in cash to the
Participant or his/her beneficiary(ies) or estate.
If, after the APAR award is made in the first quarter of
1995, a Participant becomes disabled or dies, his/her Deferred
and Bonus Shares shall be distributed in full to him/her or to
his/her beneficiary(ies) or estate. If after the APAR award
is made in the first quarter of 1995 a Participant goes on a
leave of absence, his/her Deferred and Bonus shares shall be
retained in the Plan and distributed at the end of the
deferral period selected by the Participant.
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9. Withholding for Taxes
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Payments pursuant to this Plan shall be reduced by
amounts sufficient to satisfy any Federal, state, and/or local
tax withholding requirements. With respect to payments in the
form of stock, an amount of stock shall be withheld from the
award that is sufficient to enable Conrail to satisfy any
Federal, state, and/or local tax withholding requirements.
10. Designation of Beneficiary
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A Participant may designate a beneficiary(ies) to receive
any payment pursuant to the Plan that has not been made prior
to the Participant's death. Such designation must be
submitted to Conrail's Assistant Vice President-Compensation
and Benefits, on a form provided for this purpose. Such form
is available upon request from the Administrator-APAR/APAR
Plus, 18-B 2001 Market Street, Philadelphia, PA 19101-1418.
In the absence of such a designation, a Participant's most
recent designation of beneficiary(ies) pursuant to a prior
annual performance achievement reward plan maintained by
Conrail shall be treated as his/her designation for purposes
of this Plan.
11. Duration, Amendment, and Termination of Plan
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The Plan shall take effect on January 1, 1994. Conrail,
by action of the Board, may amend or terminate the Plan at any
time. In addition, Conrail's Chairman, President and Chief
Executive Officer may amend the eligibility requirements
and/or the schedules of awards under the Plan, in connection
with a re-assessment of positions or changes in organization
or staffing. The Plan shall terminate automatically as of
January 1, 1995, unless terminated earlier by Conrail;
provided, however, that such termination shall not preclude
the subsequent payment of awards earned under the Plan.
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