1
Exhibit 10.6
DESCRIPTION OF OFFICERS' INCENTIVE COMPENSATION
-----------------------------------------------
Officers are assigned earnings allocation factors related to their
responsibility. The amount of incentive compensation depends on the Company's
attainment of applicable standards. Performance above or below the standards
affects incentive compensation accordingly. An officer shall receive 100% of
his allocation in cash unless he elects to take a portion in the form of
Restricted Book Value Shares pursuant to an election procedure established by
the Company. Early in 1994 the Company's Board of Directors authorized the
Compensation Committee to appropriately amend the Plan in the event of a strike
at Roadway Express. A 24-day strike did occur and the Plan subsequently was
amended to (1) delete the penalty factor for revenue below target; (2) reduce
to 6% the threshold percentage of shareholder's equity, below which no bonuses
would be payable, from the previous 10% figure; (3) exclude from the formula
the operations of Roadway Express for the second quarter; and (4) exclude the
impact of the settlement with the Internal Revenue Service of the Roadway
Package System, Inc. employment tax case.
Subject to the conditions set forth below, approximately 75% of the cash
portion of the officer's allocation shall be estimated and paid as soon as
possible after January 1 of the year following the year for which the incentive
compensation was calculated (the Plan Year); and the balance of the cash and
any Restricted Book Value Shares shall be distributed at the Company's
convenience after RSI's independent auditors certify the total amount of
incentive compensation payable, but in no case later than March 16 of the year
after the Plan Year.
Notwithstanding the provision requiring completion of service in the Company's
employ for the full Plan Year, if the officer is not in the Company's employ on
December 31 of the Plan Year, the officer shall be allocated a portion (based
upon full weeks of service during the Plan Year) of the amount of his officer's
allocation that would otherwise have been earned for a full year performance if
any of the events of termination of employment described in Items (a), (b), (c)
and (d) below (including any conditions applicable to such events) have
occurred during the Plan Year; but the officer shall be allocated his entire
officer's allocation if his employment has been terminated pursuant to the
event described in Item (e) below. Any amounts shall then be paid in the
manner described above. The events of termination referred to above in this
paragraph are as follows:
(a) Death;
(b) Disability requiring retirement from gainful employment, provided
that the terms of Items (d)(ii) and (iii) below are complied with,
unless waived by the Company's Board of Directors;
(c) Retirement at or after the officer's normal retirement date provided
the terms of Items (d)(i), (ii) and (iii) below are complied with,
unless waived by the Company's Board of Directors;
(d) Termination of employment for reasons other than as set forth in the
preceding Items (a), (b), (c) or Item (e) below, provided that, in
each such case, such termination shall have occurred under such
circumstances that the Board of Directors shall determine that the
officers acted at all times in good faith and in a manner he
reasonably believed to be in or not opposed to the best interest of
the Company; and upon condition that he execute an agreement
obligating him:
2
(i) not to accept employment with or render service in any
manner to a competitor of the Company for the period ending
with the distribution in full of 100% of the cash portion
of the officer's allocation;
(ii) not to disclose to anyone confidential and secret
information that is a competitive asset of the Company,
including, without limitation, (1) customer information
such as names, addresses, sales histories, purchasing
habits, credit status and pricing levels, (2) prospective
customer information and lists, (3) product and system
specifications, schematics, designs and concepts developed
by the Company, (4) personnel data, (5) Company policy and
procedural manuals and memoranda, and (6) other
confidential information used by the Company to conduct its
business; and
(iii) to deliver to the Company at the time of his termination of
employment all originals and copies of documents of every
kind and nature received by him in the course of his
employment with the Company which are in his care, custody
and control, except only such documents as are necessary to
evidence rights and obligations after the date of
termination.
(e) Termination of employment initiated by the Company for reasons other
than as set forth in Item (a), (b) or (c) above, provided that, in
each case, such termination shall have occurred under such
circumstances that the Board of Directors shall determine that the
officer acted at all times in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of
the Company and upon condition that he execute an agreement
obligating him to comply with at least the provisions of Items
(d)(ii) and (iii) above.
In the event the officer's employment terminates prior to December 31 of the
Plan Year and his termination does not fall within any of the events (including
any of the conditions applicable to such events, set forth in Items (a), (b),
(c), (d) or (e) above) then the officer shall not receive any part of his
officer's allocation of incentive compensation for the Plan Year in question.