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EXHIBIT 10.13(b) The Ryder System, Inc. 1994 Incentive Compensation Plan
for Chairman, President & Chief Executive Officer,
Ryder System, Inc.
2
RYDER
CHAIRMAN, PRESIDENT &
CHIEF EXECUTIVE OFFICER
BONUS PLAN SUMMARY
1994 INCENTIVE COMPENSATION PLAN PAGE 1
Supersedes
1993 Chairman, President & Chief Executive Officer Incentive Compensation Plan
INTRODUCTION
The following material explains the operation and administration of the 1994
Incentive Plan for the Chairman, President & Chief Executive Officer (CEO) of
Ryder System, Inc. (RSI or the Company). The plan is intended to serve as a
single, comprehensive source of information that will explain your bonus for
achieving various levels of performance.
BONUS OPPORTUNITY
The following table summarizes the maximum bonus opportunity:
MAXIMUM BONUS OPPORTUNITY AS A PERCENTAGE OF BASE SALARY
RSI RSI PERFORMANCE INDIVIDUAL TOTAL BONUS
PERFORMANCE ABOVE PLAN PERFORMANCE OPPORTUNITY*
80% 30% 20% 130%
* See Special ROE Award section
BONUS PERFORMANCE MEASURES
For 1994, your bonus payout will be based on RSI performance, RSI performance
above plan, and your performance as an individual.
RSI performance is measured based on a combination of RSI Net Earnings After
Tax (NAT) Return on Assets (ROA) performance and RSI Net Earnings Before Tax
(NBT) performance for 1994.
RSI performance above plan is based on RSI NBT performance for 1994, as defined
on page 3.
Individual performance is determined based on a year-end assessment of your
performance against objectives. The objectives should be updated during the
year to adjust for priorities that may have changed.
3
RYDER
CHAIRMAN, PRESIDENT &
CHIEF EXECUTIVE OFFICER
BONUS PLAN SUMMARY
1994 INCENTIVE COMPENSATION PLAN PAGE 2
DEFINITION OF MEASURES
Performance levels attained in the following areas determine the extent to
which participants of this bonus plan are eligible for bonus awards.
- RSI PERFORMANCE -- RSI performance payout is based on a grid
which combines RSI ROA performance and RSI NBT performance.
RSI ROA performance for the bonus year is calculated by
dividing RSI NAT by RSI average assets.
-- RSI NAT is defined as RSI's consolidated Net Earnings
After Tax for the bonus year, as certified to the
Board of Directors and shareholders of RSI by the
Company's independent auditors, including appropriate
accruals for all incentive awards estimated to be
payable for that bonus year.
-- RSI average assets is defined as the average of the
four quarters' average assets. A quarter's average
assets is defined as the assets, as shown on RSI's
balance sheet at the beginning of each quarter plus
the total assets as shown on RSI's balance sheet at
the end of each quarter, divided by two.
RSI NBT performance is defined as RSI's consolidated Net
Earnings Before Tax as certified to the Board of Directors and
shareholders of RSI by the Company's independent auditors, net
of a provision for the total of all incentive awards, for the
bonus year.
- RSI PERFORMANCE ABOVE PLAN -- RSI performance above plan
payout is based on RSI NBT Performance.
- INDIVIDUAL PERFORMANCE -- Individual performance is defined as
performance against job requirements and objectives (MBOs).
If necessary, goals and objectives may be revised during the
bonus year to reflect changing business priorities.
Individual performance awards are separate from payments based
upon ROA and NBT performance, and may be paid, in part or in
whole, based on RSI's performance and/or ability to pay. Such
payments are subject to the recommendation of the Compensation
Committee of the Board of Directors and approval by the Board
of Directors of RSI.
NOTE: The effects of any unusual and material accounting
transactions may be excluded from bonus calculations with the
approval of the Board of Directors of RSI.
4
RYDER
CHAIRMAN, PRESIDENT &
CHIEF EXECUTIVE OFFICER
BONUS PLAN SUMMARY
1994 INCENTIVE COMPENSATION PLAN PAGE 3
BONUS CALCULATION
Bonus awards are based on the following grids.
1) RSI PERFORMANCE
RSI performance payout is based on a grid consisting of two
performance variables: 1994 Actual RSI NBT and 1994 RSI NAT ROA. The
potential bonus payout percent is determined by locating the point on
the grid where the variables intersect. Actual performance may fall
between the points specifically displayed on the grid, and the grid
allows for interpolation between NBT points as shown. No bonus awards
will be paid for performance below threshold. The potential bonus
payout is expressed as a percentage of Maximum RSI Performance Bonus
Opportunity, as shown on page 1.
POTENTIAL RSI PERFORMANCE BONUS PAYOUT
AS A PERCENTAGE OF MAXIMUM RSI PERFORMANCE BONUS OPPORTUNITY
1994 ACTUAL NBT ($MM)
THRESHOLD MAXIMUM
208.9 218.3 232.0 245.8 251.0 256.0 265.0
ROA (%) % OF COMPANY OPPORTUNITY
less than 2.5 15 30 40 50 60 70 80
2.5 - 3.0 25 40 50 60 75 85 95
greater than 3 35 50 60 70 80 90 100
2) RSI PERFORMANCE ABOVE PLAN
RSI performance above plan payout is based on a grid of 1994 Actual
RSI NBT. The potential bonus payout percent is determined by locating
the point on the grid under the 1994 Actual RSI NBT. Actual
performance may fall between the points specifically displayed on the
grid, and the grid allows for interpolation between NBT points as
shown. No bonus awards will be paid for performance below threshold,
which is 1994 RSI Business Plan NBT. The potential bonus payout is
expressed as a percentage of Maximum RSI Performance Above Plan Bonus
Opportunity, as shown on page 1.
POTENTIAL RSI PERFORMANCE ABOVE PLAN BONUS PAYOUT
AS A PERCENTAGE OF MAXIMUM
RSI PERFORMANCE ABOVE PLAN BONUS OPPORTUNITY
1994 ACTUAL NBT ($MM)
THRESHOLD MAXIMUM
245.8 251.0 256.0 265.0
% OF RSI PERF. ABOVE PLAN
0 25 50 100
5
RYDER
CHAIRMAN, PRESIDENT &
CHIEF EXECUTIVE OFFICER
BONUS PLAN SUMMARY
1994 INCENTIVE COMPENSATION PLAN PAGE 4
3) INDIVIDUAL PERFORMANCE
Individual performance payout is based on a grid consisting of
individual performance results versus objectives. The potential bonus
payout percent is determined by awarding a percentage within one of
the grid ranges. The potential bonus payout is expressed as a
percentage of Maximum Individual Performance Bonus Opportunity, as
shown on page 1.
POTENTIAL INDIVIDUAL PERFORMANCE BONUS PAYOUT
AS A PERCENTAGE OF MAXIMUM INDIVIDUAL PERFORMANCE BONUS OPPORTUNITY
FAIR - SOME SIGNIFICANTLY
CRITICAL CONSISTENT WITH ABOVE
INDIVIDUAL PERFORMANCE SHORTFALLS EXPECTATIONS EXPECTATIONS EXCEPTIONAL
% OF INDIVIDUAL
PERFORMANCE OPPORTUNITY 0-29% 30-59% 60-89% 90-100%
ALL PERFORMANCE GRIDS REPRESENT GUIDELINES ONLY. ACTUAL PAYOUTS MAY BE
PRORATED DOWNWARD AT THE COMPANY'S DISCRETION. ADDITIONAL CRITERIA MAY ADJUST
THE PERFORMANCE PORTION DOWNWARD IF SPECIFIC GOALS ARE NOT ACHIEVED. THE GRIDS
WILL BE REVISED ANNUALLY TO ENSURE CONSISTENCY WITH COMPANY GOALS AND
OBJECTIVES.
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RYDER
CHAIRMAN, PRESIDENT &
CHIEF EXECUTIVE OFFICER
BONUS PLAN SUMMARY
1994 INCENTIVE COMPENSATION PLAN PAGE 5
BONUS CALCULATION EXAMPLE
Total bonus would be calculated as follows, given the following information:
Eligible Base Salary $ 725,000
1994 RSI NBT $ 251.0MM
1994 RSI NAT ROA 2.7%
Individual Performance Significantly Above Expectations
1) RSI Performance
80% Maximum RSI Performance Bonus Opportunity
75% Potential RSI Performance Bonus Payout (from grid)
80% x 75% = 60% of Eligible Base Salary
60% x $725,000 = $ 435,000
2) RSI Performance Above Plan
30% Maximum RSI Performance Above Plan Bonus Opportunity
25% Potential RSI Performance Above Plan Bonus Payout (from grid)
30% x 25% = 7.5% of Eligible Base Salary
7.5% x $725,000 = 54,375
3) Individual Performance
20% Maximum Individual Performance Bonus Opportunity
75% Potential Individual Performance Bonus Payout (from grid)
20% x 75% = 15% of Eligible Base Salary
15% x $725,000 = $ 108,750
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TOTAL BONUS $ 598,125
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RYDER
CHAIRMAN, PRESIDENT &
CHIEF EXECUTIVE OFFICER
BONUS PLAN SUMMARY
1994 INCENTIVE COMPENSATION PLAN PAGE 6
BASE SALARY CALCULATION
For the purpose of bonus calculations, base salary is defined as the average
annual rate of pay for the calendar year, excluding all other compensation paid
to the employee during the year, e.g. bonus, commissions, employee benefits,
moving expenses, and imputed income from company car, insurance, and amounts
attributable to any of the Company's stock plans.
Average annual rate of pay for a participant whose base salary changes within
the bonus year is calculated as shown below.
BASE SALARY CALCULATION EXAMPLE
Average annual rate of pay would be calculated as follows for a
participant who begins a bonus year with a base salary of
$725,000, then effective June 1 receives an increase to a base
salary of $760,000:
January 1 thru May 31 of Bonus Year:
31 + 28 + 31 + 30 + 31 = 151=.414 x $725,000/yr. = $ 300,150
---------------------- ---
365 days 365
June 1 thru December 31 of Bonus Year:
365 - 151 = 214=.586 x $760,000/yr. = $ 445,360
--------- ---
365 days 365
AVERAGE ANNUAL RATE OF PAY FOR BONUS YEAR = $ 745,510
SPECIAL ROE AWARD
One and one-half percent of the RSI NAT amount in excess of that required to
reach 17% Return on Equity (ROE) will be credited to deferred compensation for
elected Officers of the Company and the Division Presidents. This amount will
be prorated based on each individual participant's earned salary (while in the
eligible position) in relation to the sum of the earned salaries of all
participants.
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RYDER
CHAIRMAN, PRESIDENT &
CHIEF EXECUTIVE OFFICER
BONUS PLAN ADMINISTRATION
1994 INCENTIVE COMPENSATION PLAN PAGE 1
ADMINISTRATION
The Compensation Committee of the Board of Directors of RSI will administer
this Incentive Compensation Plan.
BONUS YEAR
The bonus year is defined as the calendar year in which bonus awards are
earned.
ELIGIBILITY
The Chairman, President & Chief Executive Officer of RSI, if employed in good
standing at the time bonus payments are made is eligible to participate in this
plan. If the CEO has an agreement which specifically provides for incentive
compensation other than that which is provided in this plan or is a participant
in any other incentive compensation plan of RSI, its subsidiaries or
affiliates, he/she is not eligible to participate in this plan.
Employees who are newly hired, promoted or transferred into or out of eligible
positions and those who move from one eligibility level to another will receive
pro rata bonus awards based on the average annual rate of pay in eligible
positions, provided they are employed in good standing at the time bonus awards
are distributed.
In addition, participants who leave the Company during the bonus year under any
of the following conditions may be eligible for pro rata bonus awards:
- retirement under the provisions of one of the Company's
retirement plans or the Social Security Act, or
- disability
Note: The spouse or legal representative of a deceased participant may be
eligible for pro rata bonus awards as well.
BONUS ELIGIBILITY ON CHANGE OF CONTROL
Notwithstanding anything in this plan to the contrary, in the event of a Change
of Control of the Company (as defined and adopted by the Board of Directors on
August 20, 1993), the funds necessary to pay incentive awards will be placed in
a trust administered by an outside financial institution.
The amount of each participant's incentive award will be determined in
accordance with the provisions of the plan by a "Big 6" accounting firm chosen
by the Company. Participants will receive bonus awards for actual time
employed during the bonus year based upon: a) the greater of actual company
performance or 80% of maximum company performance opportunity plus b) the
greater of actual individual performance or 80% of maximum individual
performance opportunity.
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RYDER
CHAIRMAN, PRESIDENT &
CHIEF EXECUTIVE OFFICER
BONUS PLAN ADMINISTRATION
1994 INCENTIVE COMPENSATION PLAN PAGE 2
However, if the Company fails to verify incentive awards through a "Big 6"
accounting firm, participants will receive 100% of their maximum company and
individual performance opportunities based on actual time worked during the
bonus year. The Company will be responsible for all legal fees and expenses
which participants may reasonably incur in enforcing their rights under the
plan in the event of a Change of Control of the Company.
Should a Change of Control occur during 1994, participants will receive
instructions regarding the collection of incentive awards.
BONUS ELIGIBILITY ON TERMINATION
Participants leaving the Company under any conditions other than those outlined
in the Eligibility or Change of Control sections of this plan are not eligible
for bonus awards for the bonus year in which they leave, nor are they eligible
for awards for the preceding bonus year, if such awards have not yet been
distributed.
BONUS PAYMENT
Shortly after the end of the calendar year and after considering the
recommendations of the Administrators of the plan, the full Board of Directors
of RSI will, in its sole discretion, determine the participants, if any, who
will receive bonus awards and the amounts of such awards. Bonus award payments
will be distributed to eligible participants following such Board approval and
subsequent to certification of consolidated financial statements by an
independent auditor.
BONUS FUNDING
Accruals for the CEO and all discretionary awards are excluded from funding
limitations.
Bonus payout maximums are limited by the lower of the total earned opportunity
provided under the plan or the amount of the accrual. Should the accrual not
provide for bonus allotments under the plan, proration will be effected at the
discretion of the Board of Directors of RSI. Unused monies may not be carried
forward for subsequent bonus years.
DISCRETIONARY AWARDS
With the approval of the Board of Directors of RSI, the Administrators of this
plan have the authority to grant discretionary bonus awards to enhance the
award of the participant of this plan. Discretionary awards are not subject to
funding limitations.
AMENDMENTS
The Board of Directors of RSI reviews RSI's, its subsidiaries' and affiliates'
incentive compensation plans annually to ensure equitability both within the
Company, and in relation to current economic conditions. THE BOARD OF
DIRECTORS RESERVES THE RIGHT TO AMEND, SUSPEND, TERMINATE OR MAKE EXCEPTIONS TO
THIS PLAN AT ANY TIME.