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EXHIBIT 10.16(b) The Ryder System, Inc. 1994 Incentive Compensation
Plan for President-Ryder Dedicated Logistics, Vehicle
Leasing & Services Division.
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RYDER
PRESIDENT
RYDER DEDICATED LOGISTICS
VEHICLE LEASING & SERVICES DIVISION BONUS PLAN SUMMARY
1994 INCENTIVE COMPENSATION PLAN PAGE 1
Supersedes 1993 President, Ryder Distribution Resources
Incentive Compensation Plan
INTRODUCTION
The following material explains the operation and administration of the 1994
Incentive Plan for the President, Ryder Dedicated Logistics (RDL), Vehicle
Leasing & Services Division (VLSD). The plan is intended to serve as a single,
comprehensive source of information that will explain your bonus for achieving
various levels of performance. Questions should be addressed to your
supervisor.
BONUS OPPORTUNITY
The following table summarizes the maximum bonus opportunity:
MAXIMUM BONUS OPPORTUNITY AS A PERCENTAGE OF BASE SALARY
Commercial Total
RSI RDL U.S. & Int'l. RPTS RSI Individual Bonus
Performance Performance Performance Performance Above Plan Performance Opportunity *
20% 30% 20% 10% 20% 20% 120
* See Special ROE Award section
BONUS PERFORMANCE MEASURES
For 1994, your bonus payout will be based on Ryder System, Inc. (RSI or the
Company) performance, RDL performance, Ryder Public Transportation Services
(RPTS) performance, Commecial U.S. & International performance 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.
RDL performance is measured based on a combination of RDL revenue performance
and RDL NBT performance for 1994.
Commercial U.S. & International performance is based on 1994 Actual Commercial
U.S. & International Operations NBT Performance.
RPTS Group performance is based on a combination of Bus Group NAT ROA
performance and Bus product line NBT performance for 1994.
RSI Above Plan is based on RSI NBT performance for 1994, as defined on page 4
Individual performance is determined based on a year-end assessment of your
performance against objectives that you and your supervisor agreed to at the
start of the year. Given their importance, the objectives should be in writing
and updated during the year to adjust for priorities that may have changed.
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RYDER
PRESIDENT
RYDER DEDICATED LOGISTICS
VEHICLE LEASING & SERVICES DIVISION 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 ROA by RSI average assets.
-- RSI NAT ROA 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.
- RDL PERFORMANCE -- RDL performance payout is based on a grid
which combines RDL revenue performance and RDL NBT
performance.
RDL revenue is defined as RDL's total revenue as verified by
the Senior Vice President and Controller, RSI.
RDL NBT is defined as RDL's consolidated Net Earnings Before
Tax as verified by the Senior Vice President and Controller,
RSI, net of a provision for the total of all incentive awards,
for the bonus year.
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RYDER
PRESIDENT
RYDER DEDICATED LOGISTICS
VEHICLE LEASING & SERVICES DIVISION BONUS PLAN SUMMARY
1994 INCENTIVE COMPENSATION PLAN PAGE 3
- COMMERCIAL U.S. / INTERNATIONAL PERFORMANCE -- Commercial
U.S./International performance payout is based on a revenue
grid of Commercial U.S./International NBT performance.
Commercial U.S./International NBT is defined as Commercial
U.S. /International'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.
- RPTS PERFORMANCE -- RPTS performance payout is based on a grid
which combines RPTS product line NBT performance and RPTS NAT
ROA performance, as verified by the SVP and Controller of RSI.
RPTS product line NBT is defined as RPTS's consolidated Net
Earnings Before Tax, net of a provision for the total of all
incentive awards for the bonus year, plus Ryder Truck Rental
(RTR) NBT resulting from maintenance contracts with Ryder
Student Transportation Services (RSTS) and ATE Management and
Service Company (ATE). RTR NBT is defined as RTR margin
resulting from maintenance work performed for RSTS and ATE,
less District and Corporate overhead. The District overhead
factor is $61.74 per bus per month and $276 per bus per month
for RSTS and ATE, respectively. The District overhead factor
is $76 per van per month for ATE. The Corporate overhead
factor is 4% and 6.5% of bus Ryder Programmed Maintenance
(RPM) revenue for RSTS and ATE, respectively.
RPTS NAT ROA performance for the bonus year is calculated by
dividing RPTS product line NAT by RPTS average assets.
-- RPTS product line NAT is defined as the sum of RPTS
NBT as reported in the RPTS Income Statement,
including a provision for the total of all incentive
awards for the bonus year, minus taxes calculated at
RPTS' tax rate and RTR NBT (as defined above) minus
taxes calculated at RTR's incremental tax rate.
-- RPTS 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 RPTS's
balance sheet at the beginning of each quarter plus
the total assets as shown on RPTS's balance sheet at
the end of each quarter, divided by two.
- RSI PERFORMANCE ABOVE PLAN -- RSI performance above plan is
based on RSI NBT performance for 1994.
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RYDER
PRESIDENT
RYDER DEDICATED LOGISTICS
VEHICLE LEASING & SERVICES DIVISION BONUS PLAN SUMMARY
1994 INCENTIVE COMPENSATION PLAN PAGE 4
- INDIVIDUAL PERFORMANCE -- Individual performance is defined as
each participant's performance against job requirements and
objectives (MBOs), as agreed upon between the individual and
his/her management, at the beginning of the bonus year. 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 and Commercial/International's
performance and/or ability to pay. Such payments are subject
to the recommendation of the Administrator of the plan 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.
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RYDER
PRESIDENT
RYDER DEDICATED LOGISTICS
VEHICLE LEASING & SERVICES DIVISION BONUS PLAN SUMMARY
1994 INCENTIVE COMPENSATION PLAN PAGE 5
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
209.8 218.3 232.0 245.8 251.0 256.0 265.0
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
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RYDER
PRESIDENT
RYDER DEDICATED LOGISTICS
VEHICLE LEASING & SERVICES DIVISION BONUS PLAN SUMMARY
1994 INCENTIVE COMPENSATION PLAN PAGE 6
2) RDL PERFORMANCE
RDL performance payout is based on a grid consisting of two
performance variables: 1994 Actual RDL NBT and 1994 RDL 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 percentage of Maximum RDL Performance Bonus
Opportunity, as shown on page 1.
POTENTIAL RDL PERFORMANCE BONUS PAYOUT
AS A PERCENTAGE OF MAXIMUM RDL PERFORMANCE BONUS OPPORTUNITY
1994 ACTUAL NBT ($MM)
THRESHOLD MAX.
12.5 13.1 14.0 16.0 18.0
REVENUE ($MM) % OF RDL NBT/REVENUE OPPORTUNITY
greater than 605 less than or equal to 615 10 15 30 45 60
greater than 615 less than or equal to 625 15 30 50 60 70
greater than 625 less than or equal to 640 45 60 65 70 80
greater than 640 less than or equal to 660 50 65 75 80 90
greater than 660 70 80 85 90 100
3) COMMERCIAL U.S./INTERNATIONAL PERFORMANCE
Commercial U.S./International Revenue performance is based on a scale
consisting of one performance variable; 1994 Commercial
U.S./International NBT. The bonus payout is determined by locating
the point on the grid which corresponds to the variable. Actual
performance may fall between the revenue points specifically displayed
on the grid, and the grid allows for interpolation between the points
as shown. No payment will be made for performance below the lowest
point displayed. The potential bonus payout is expressed as a
percentage of maximum Ryder Commercial U.S./International Performance
Bonus Opportunity, as shown on page 1.
POTENTIAL COMMERCIAL U.S./INTERNATIONAL PERFORMANCE BONUS PAYOUT AS A
PERCENTAGE OF MAXIMUM COMMERCIAL U.S./INTERNATIONAL
PERFORMANCE BONUS OPPORTUNITY
1994 Actual NBT ($MM)
Threshold Max
158.7 167.9 178.0 184.5 193.0 203.5
% of Commercial/International Operations Opportunity
20 40 60 70 80 100
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RYDER
PRESIDENT
RYDER DEDICATED LOGISTICS
VEHICLE LEASING & SERVICES DIVISION BONUS PLAN SUMMARY
1994 INCENTIVE COMPENSATION PLAN PAGE 7
4) RPTS PERFORMANCE
RPTS performance payout is based on a grid consisting of two
performance variables: 1994 Actual RPTS NBT and 1994 Actual RPTS NAT
ROA. The potential bonus payout percent is determined by locating the
point on the grid where the variables intersect. Actual performance
may fall between the points specifically displayed on the grid, and
the grid allows for interpolation between NBT points as shown. No
bonus awards will be paid for performance below threshold. The
potential bonus payout is expressed as percentage of Maximum RPTS
Performance Bonus Opportunity as shown on page 1.
POTENTIAL RPTS PERFORMANCE BONUS PAYOUT AS A PERCENTAGE
OF MAXIMUM RPTS PERFORMANCE BONUS OPPORTUNITY
1994 ACTUAL RPTS NBT ($MM) (PRODUCT LINE)
THRESHOLD MAX
RPTS 27.4 28.0 29.0 31.0 33.0
ROA %
% OF RPTS OPPORTUNITY
less than or equal to 6.5 15 50 60 70 80
greater than 6.5-7.2 25 60 70 80 90
greater than or equal to 7.2 35 70 80 90 100
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RYDER
PRESIDENT
RYDER DEDICATED LOGISTICS
VEHICLE LEASING & SERVICES DIVISION BONUS PLAN SUMMARY
1994 INCENTIVE COMPENSATION PLAN PAGE 8
5) 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
6) 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
CRITICAL CONSISTENT WITH SIGNIFICANTLY
SHORTFALLS EXPECTATIONS ABOVE
INDIVIDUAL PERFORMANCE 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
PRESIDENT
RYDER DEDICATED LOGISTICS
VEHICLE LEASING & SERVICES DIVISION BONUS PLAN SUMMARY
1994 INCENTIVE COMPENSATION PLAN PAGE 9
BONUS CALCULATION EXAMPLE
Total bonus would be calculated as follows given the following
information:
Eligible Base Salary $280,000
1994 RSI NBT $251.0MM
1994 RSI NAT ROA 2.7%
1994 Commercial/International NBT $178.0MM
1994 RDL NBT $ 14.0MM
1994 RDL Revenue $630.0MM
1994 RPTS NBT $ 28.0MM
1994 RPTS NAT ROA 7.0%
Individual Performance Significantly Above Expectations
1) RSI Performance
20% Maximum RSI Performance Bonus Opportunity
75% Potential RSI Performance Bonus Payout (from grid)
20% x 75% = 15% of Eligible Base Salary
15% x $280,000 = $42,000
2) RDL Performance
30% Maximum RDL Performance Bonus Opportunity
65% Potential RDL Performance Bonus Payout (from grid)
30% x 65% = 19.5% of Eligible Base Salary
19.5% x $280,000 = $54,600
3) Commercial U.S./International Performance
20% Maximum Commercial US/Intl. Performance Bonus Opportunity
60% Potential Commercial US/Intl. Performance Bonus Payout (from grid)
20% x 60% = 12% of Eligible Base Salary
12% x $280,000 = $33,600
EXAMPLE CONTINUED ON NEXT PAGE
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RYDER
PRESIDENT
RYDER DEDICATED LOGISTICS
VEHICLE LEASING & SERVICES DIVISION BONUS PLAN SUMMARY
1994 INCENTIVE COMPENSATION PLAN PAGE 10
4) RPTS Performance
10% Maximum RPTS Performance Bonus Opportunity
60% Potential RPTS Performance Bonus Payout (from grid)
10% x 60% = 6.00% of Eligible Base Salary
6.00% x $280,000 = $ 16,800
5) RSI Above Plan Performance
20% Maximum RSI Above Plan Performance Bonus Opportunity
25% Potential RSI Above Plan Performance Bonus Opportunity
20% x 25% = 5.0% of Eligible Base Salary
5.0% x $280,000 = $ 14,000
6) 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 $280,000 = $ 42,000
--------
TOTAL BONUS $203,000
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RYDER
PRESIDENT
RYDER DEDICATED LOGISTICS
VEHICLE LEASING & SERVICES DIVISION BONUS PLAN SUMMARY
1994 INCENTIVE COMPENSATION PLAN PAGE 11
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 $205,000,
then effective June 1 receives an increase to a base salary of
$218,000:
January 1 thru May 31 of Bonus Year:
31 + 28 + 31 + 30 + 31 = 151=.414 x $205,000/yr. = $ 84,870
---------------------- ---
365 days 365
June 1 thru December 31 of Bonus Year:
365 - 151 = 214=.586 x $218,000/yr. = $127,748
--------- ---
365 days 365
AVERAGE ANNUAL RATE OF PAY FOR BONUS YEAR = $212,618
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
PRESIDENT
RYDER DEDICATED LOGISTICS
VEHICLE LEASING & SERVICES DIVISION BONUS PLAN ADMINISTRATION
1993 INCENTIVE COMPENSATION PLAN PAGE 1
ADMINISTRATION
The Chairman, President, and Chief Executive Officer 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 President, Ryder Dedicated Logistics, if employed in good standing at the
time bonus payments are made is eligible to participate in this plan. If the
President, Ryder Dedicated Logistics 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 or VLSD 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
PRESIDENT
RYDER DEDICATED LOGISTIC
VEHICLE LEASING & SERVICES DIVISION BONUS PLAN ADMINISTRATION
1993 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 1993, participants will receive
instructions regarding the collection of incentive awards.
BONUS ELIGIBILITY ON TERMINATION
Participants leaving the Company or VLSD 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 Administrator of the plan, the Compensation Committee of
the Board of Directors or 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 or Committee approval and subsequent
to certification of consolidated financial statements by an independent
auditor.
BONUS FUNDING
Accruals for the President, Ryder Dedicated Logistics, 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 Chairman, President and Chief Executive Officer of RSI.
Unused monies may not be carried forward for subsequent bonus years.
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RYDER
PRESIDENT
RYDER DEDICATED LOGISTICS
VEHICLE LEASING & SERVICES DIVISION BONUS PLAN ADMINISTRATION
1993 INCENTIVE COMPENSATION PLAN PAGE 3
DISCRETIONARY AWARDS
With the approval of the Board of Directors of RSI, the Chairman, President,
and Chief Executive Officer of RSI has the authority to grant discretionary
bonus awards for exemplary performance to non-participants or to enhance the
awards of participants. Discretionary awards are not subject to the funding
limitations of this plan.
While it is common to grant discretionary awards at the same time as regular
awards, it may be appropriate, on occasion, to recognize an employee off-cycle
due to extremely unusual performance. Off-cycle discretionary awards must be
approved by the Chairman, President and Chief Executive Officer of RSI.
The total of all discretionary awards for employees under this plan, the VLSD
field bonus plans, the RSI SEVP Incentive Compensation Plan, the Headquarters
Executive Management Incentive Compensation Plan, the Ryder International
Incentive Compensation Plan, the Ryder Services Corporation Incentive
Compensation Plan, and all Division Presidents' Incentive Compensation Plans,
including those granted off-cycle, may not exceed $430,000 per year.
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.