Exhibit 10.8
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CONSOLIDATED RAIL CORPORATION
ANNUAL PERFORMANCE ACHIEVEMENT REWARD PLAN FOR 1996
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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The Company means Conrail Inc.
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Operating Ratio means the percentage determined by di-
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viding (a) operating expenses by (b) revenues, as shown on
Conrail's consolidated financial statements.
Cost of Risk Ratio means the percentage determined by
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dividing (a) the sum of the cost of risk elements (as
designated by the Risk Management Department) by (b) Conrail's
railroad operating revenues.
Participant means an officer of Conrail who participates
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in the Plan in accordance with Section 3.
Phantom Shares means shares credited to a Participant's
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account each of which shall be deemed equivalent to the
promise to convert one phantom share to one share of Conrail
Inc. common stock.
Plan means the Consolidated Rail Corporation Annual
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Performance Achievement Reward Plan for 1996, as set forth in
this document and as may be amended from time to time.
Salary means the salary earned by a Participant in 1996
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from employment with Conrail. For purposes of this Plan,
Salary shall include 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
1995 Selective Cash Award paid in 1996 or to an employee bene
fit 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 1996,
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 1996, as shown on Conrail's consolidated
financial statements, is less than $690 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 APAR percentage(s)
shall depend upon the position held by the Participant and/or
the performance of Conrail, measured by the relationship of
(i) the Operating Ratio for 1996, to (ii) the Operating Ratio
goal set by the Board (or its delegate) for purposes of the
Plan and the relationship of (iii) the Cost of Risk Ratio for
1996 to (iv) the Cost of Risk Ratio goal set by the Board (or
its delegate) for purposes of the Plan, both 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. The percentage(s)
shall be determined in accordance with one of three schedules.
The APAR Plus percentage shall depend upon the
performance of Conrail, as measured by the relationship of (i)
the Operating Ratio for 1996 to (ii) the Operating Ratio goal
set by the Board (or its delegate) for purposes of the Plan.
Conrail shall furnish each Participant with a copy of the
schedule(s) of awards applicable to him/her.
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(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 1996 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 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. The opportunity to defer any APAR award
is available only to Participants who reside in the United
States and are subject to U.S. federal income tax withholding.
A Participant who elects to defer his/her APAR award shall be
credited with Phantom Shares in an account maintained for each
Participant. Such elections must be made no later than July
27, 1996, on forms provided by Conrail's Assistant Vice
President-Compensation and Benefits for this purpose.
(b) A Participant who elects to defer an APAR award in
Phantom Shares shall be credited with such shares equal in
value to the amount of his/her deferred award (the "Deferred
Shares"), plus additional Phantom Shares 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 Phantom Shares so awarded
shall be determined as of the date the non-deferred portions
of awards are or would have been paid.
(c) The dividend equivalents paid on such Deferred
Shares and Bonus Shares shall be re-invested as additional
Phantom Shares for the Participant or paid in cash based upon
the Participant's election included in the election form noted
in Section 6.(a) above. The Deferred and Bonus Shares of a
Participant shall not be entitled to voting rights.
(d) The APAR Plus award shall not be eligible for defer
ral.
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 Deferred Shares and the Participant's
Bonus Shares shall be paid in the form of Conrail Inc. common
stock, recorded in electronic book entry at First Chicago
Trust Company of New York, the Company's transfer agent, as
soon as practicable after expiration of the deferral period
chosen by the Participant. Such stock may be issued from
Conrail Inc.'s Stock Employee Compensation Trust or from the
Company's authorized but unissued shares. Any portion of an
APAR award not deferred by a Participant shall be paid to
him/her in cash during the first quarter of 1997.
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(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 1997.
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 1996
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 366, the number of
days in the year. A Participant who resigns from Conrail
after December 31, 1996, but before the date in the first
quarter of 1997 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
the first quarter of 1997.
A Participant who defers his/her award and resigns from
Conrail during the deferral period shall receive a payment of
his/her APAR award in cash. Such payment shall be equal to
the lesser of the amount of his/her deferred award made in the
first quarter of 1997 or the number of phantom shares times
the fair market value of Conrail Inc. common stock on the date
of his/her termination. Any shares accumulated through the
election to reinvest dividend equivalents will be paid in cash
at the fair market value of Conrail Inc. common stock on the
date of his/her termination. Such Participant shall forfeit
all 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 the deferred
award, the Participant shall receive shares of Conrail Inc.
common stock representing the Participant's deferred APAR
award recorded in electronic book entry at First Chicago Trust
Company of New York. 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 1996, a Participant is force reduced, moves
from a non-agreement position to an agreement position, goes
on a leave of absence, becomes disabled or dies, such
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Participant's award shall be prorated and paid in the first
quarter of 1997 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 366, the number of days in the year. The amount
of the award shall be paid in cash.
A Participant who is force reduced, moves from a non-
agreement position to an agreement position or goes on a leave
of absence after the end of 1996, 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 1996, 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 when the award is made to the Participant or
his/her beneficiary(ies) or estate.
If, after the APAR award is made in the first quarter of
1997, a Participant is force reduced, 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 in
the form of Conrail Inc. common stock recorded in electronic
book entry at First Chicago Trust Company of New York. If
after the APAR award is made in the first quarter of 1997 a
Participant goes on a leave of absence or to an agreement
position, his/her Deferred and Bonus shares shall be retained
in his/her account and distributed in the form of Conrail Inc.
common stock recorded in electronic book entry at First
Chicago Trust Company of New York at the end of the deferral
period selected by the Participant; unless he/she is
dismissed for cause, in which case such shares shall be
forfeited.
9. Acceleration of Awards Upon a Change of Control
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Notwithstanding any provision of the Plan to the
contrary, upon the occurrence of a Change of Control, as
defined below, all terms and conditions with respect to
Phantom Stock then outstanding shall be deemed satisfied as of
the date of the Change of Control for all purposes hereunder,
and Conrail Inc. common stock issued in settlement of such
Phantom Stock shall be payable to Participants as soon as
practicable following such change of control.
A Change of Control hereunder shall be deemed to have
occurred on the earliest of the following dates: (i) the date
any entity, person or group (within the meaning of Section
13(d)(3) or Section 14(d)(2) of the Securities Exchange Act of
1934, as amended) other than the Company or any of its
Subsidiaries or any employee benefit plan (or related trust)
sponsored or maintained by the Company or any of its
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Subsidiaries, shall have become the beneficial owner of, or
shall have obtained voting control over, outstanding
securities issued by the Company entitled to cast 20% or more
of the votes which all outstanding securities issued by the
Company are entitled to cast in an election of directors of
the Company; (ii) the date the shareholders of the Company and
the shareholders of the other constituent corporations have
approved a definitive agreement to merge or consolidate the
Company with or into another corporation other than in either
case, a merger or consolidation of the Company in which
holders of shares of common stock of Conrail Inc. immediately
prior to the merger or consolidation have at least 80% of the
ownership of common stock of the surviving corporation
immediately after the merger or consolidation, which common
stock is then held in the same proportion as such holders'
ownership of Common Stock of Conrail Inc. immediately before
the merger or consolidation; (iii) the date the shareholders
of the Company approve a definitive agreement to sell or
otherwise dispose of substantially all the assets of the
Company; or (iv) the date there shall have been a change in
the composition of the Company's Board such that a majority of
the Company's Board shall have been members thereof for less
than twelve (12) months, unless the nomination for election of
each new director who was not a director at the beginning of
such twelve (12) month period was approved by a vote of at
least two-thirds of the directors then still in office who
were directors at the beginning of such period.
To the extent a Participant hereunder is a party to an
agreement with the Company as authorized by its Board on June
21, 1995, awards hereunder shall be subject to the terms of
such agreement, in addition to the foregoing provisions of
this Section 9. In resolving any conflict between the terms
of such agreement and the terms of the Plan, the provisions
which are most favorable to the Participant shall prevail.
10. 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.
11. Designation of Beneficiary
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, 18-B
2001 Market Street, Philadelphia, PA 19101-1418. In the ab
sence 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.
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12. Duration, Amendment, and Termination of Plan
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The Plan shall take effect on January 1, 1996. Conrail,
by action of the Board, may amend or terminate the Plan at any
time. In addition, Conrail's 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, 1997, 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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