EXHIBIT 10.21
CLIPPER
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CORANGE LIMITED
INCENTIVE AND PERFORMANCE PLAN--
EXECUTIVE REMUNERATION
US Participants==============================
CORANGE LIMITED
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Explanatory Notes
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CLIPPER
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Incentive and Performance Plan -
Executive Remuneration
Introduction
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These notes provide an overview of a new long-term incentive plan for our
executives worldwide. The Plan is named the Corange Limited Incentive and
Performance Plan - Executive Remuneration, or CLIPPER
CLIPPER offers each participant a significant personal stake in the future
success of Corange. We are pleased to inform you that you have been selected to
receive a CLIPPER grant.
Why CLIPPER?
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CLIPPER has been designed to meet three important objectives:
. to create a worldwide management team within Corange by offering our
executives a similar reward opportunity through a single Plan;
. to give executives access to a new top tier of individual rewards, based on
outstanding leadership, commitment and results; and
. to balance the current emphasis on annual results within a country or
business unit with a focus on long-term performance for the Company overall.
Who Participates?
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CLIPPER awards can be made to any executives who have a direct impact on the
long-term performance of Corange. To participate, you must be nominated by the
Plan Committee and approved by the Board.
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Nominations for an award are subject to annual review by the
Plan Committee and the Board; participation in one year does
not ensure participation in another.
The Plan Committee includes the Chief Executive Officer, the
Chief Financial Officer and a Secretary (normally the Corange
Group Senior Vice President of Personnel).
How CLIPPER Works
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CLIPPER awards are a grant of performance units. The number of
performance units granted to each executive will be based on:
. an overall assessment of corporate performance, which will
be closely linked to Corange's Return on Equity; and
. the individual executive's performance and potential impact
on corporate results.
Unit Value Each performance unit will have a starting value, stated in US
dollars at the initial grant date. Corange expects to make
subsequent grants annually, with the number of units awarded
depending upon both company and individual executive
performance.
Once granted, a performance unit can only increase in value.
Performance units will be revalued annually by the Board of
Directors, based on company results. Increases in performance
unit value are at the Board's discretion; however, increases
will be no less than the US long-term Treasury Bill interest
rate.
Increases in unit value will apply to both new CLIPPER awards
and all previous grants not yet paid to you.
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If an executive elects to defer payment of a
CLIPPER award (please see page 5 for details), then
the latest date at which a Board-granted increase
in performance unit value can apply is the fifth
anniversary of the grant date of the performance
units. CLIPPER payments deferred later than the
fifth anniversary of the grant date still benefit
from increases in the performance unit value, but
only at the US long-term Treasury Bill interest
rate.
Vesting Executives will vest in the performance units
related to any one CLIPPER award over a period of
four years starting on the date of grant. Vesting
is 40% on the first anniversary of the date of
grant and 20% per year on the next three
anniversary dates.
The chart on the next page illustrates how the
vesting schedule, additional CLIPPER awards and
increases in unit value can work together to create
significant payouts. To prepare the chart, we have
used the following assumptions:
. 1992: Award 1 = 1,000 units. Unit value = $10.
. 1993: Award 2 = 1,200 units. Unit value = $11.
. 1994: Award 3 = 1,800 units. Unit Value = $12.
. 1995: Award 4 = 0 units. Unit Value = $13.
. 1996: Award 5 = 1,500 units. Unit Value = $14.
. 1997: Award 6 = 1,700 units. Unit Value = $15.
These assumptions are, of course, for illustrative
purposes only; they have been chosen to show that
grants can vary significantly, based on individual
and company performance. The actual number of
grants you receive, the value of those grants and
the resulting payments are unlikely to parallel
those shown.
CLIPPER Awards
(for illustrative purposes only)
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April '92 April '93 April '94 April '95 April '96 April '97
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Award 1 400 200 200 200
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Award 2 480 240 240 240
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Award 3 720 360 360
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Award 4 0 0
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Award 5 600
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Award 6
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Performance Units
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Number 400 680 1,160 800 1,200
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Value x 11 x 12 x 13 x 14 x 15
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Payouts $4,400 $8,160 $15,080 $11,200 $18,000
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Unless the executive chooses to defer payment, performance
units will generally be cashed in and paid out as soon as
practicable after the units are vested.
Provided the executive in the example remained with Corange,
further CLIPPER payments would be made for
. Award 3 in 1998;
. Award 4 in 1998 and 1999;
. Award 5 in 1998, 1999 and 2000; and
. Award 6 in 1998, 1999, 2000 and 2001.
Deferral Under current law in the US, executives will have the option to
defer payment of all or part of their CLIPPER awards. Payment
can be deferred to the end of any Plan year between the date of
vesting and the 15th anniversary of the award grant date.
Deferrals may prove particularly useful to executives in tax,
investment and retirement planning.
Generally, deferral decisions must be made well in advance of
the date that awards could be paid.
Exchange Rate Awards of CLIPPER performance units will be denominated
Flexibility initially in US dollars. Executives will, however, have the
option of election on the award date either the dollar or ECU
as the currency for determining future performance unit values.
In addition, once executives are vested in their performance
units, they may elect to have them converted for payment in
either US dollars or the local currency of their country of tax
residence at the time of payment. If executives do not specify
a currency, their CLIPPER awards will be paid in their local
currency.
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