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VIAD CORP
EXHIBIT 10.E
PERFORMANCE UNIT INCENTIVE PLAN
PURSUANT TO THE 1997 VIAD CORP OMNIBUS INCENTIVE PLAN
AS AMENDED MARCH 15, 2001
1. PURPOSE
The purpose of the Plan is to promote the long-term interests of the
Corporation and its stockholders by providing a means for attracting
and retaining designated key executives of the Corporation and its
Affiliates through a system of cash rewards for the accomplishment of
long-term predefined objectives.
2. DEFINITIONS
The following definitions are applicable to the Plan:
"Affiliate" - Any "Parent Corporation" or "Subsidiary Corporation" of
the Corporation as such terms are defined in Section 425(e)
and (f), or the successor provisions, if any, respectively, of
the Code (as defined herein).
"Award" - The grant by the Committee of a Performance Unit or Units as
provided in the Plan.
"Board" - The Board of Directors of Viad Corp.
"Code" - The Internal Revenue Code of 1986, as amended, or its
successor general income tax law of the United States.
"Committee" - The Human Resources Committee of the Board.
"Corporation" - Viad Corp.
"Operating Income" - Income before minority interest, interest expense
and taxes, but after deduction of corporate overhead.
"Participant" - Any executive of the Corporation or any of its
Affiliates who is selected by the Committee to receive an
Award.
"Performance Period" - The period of time selected by the Committee for
the purpose of determining performance goals and measuring the
degree
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of accomplishment. Generally, the Performance Period will be a
period of three successive fiscal years of the Corporation.
"Performance Unit Award" - An Award.
"Plan" - The Performance Unit Incentive Plan of the Corporation.
"Pre-Tax Income" - Pre-tax income after minority interest.
"Unit" - The basis for any Award under the Plan.
3. ADMINISTRATION
The Plan shall be administered by the Committee. Except as limited by
the express provisions of the Plan, the Committee shall have sole and
complete authority and discretion to (i) select Participants and grant
Awards; (ii) determine the number of Units to be subject to Awards
generally, as well as to individual Awards granted under the Plan; iii)
determine the targets that must be achieved in order for the Awards to
be payable and the other terms and conditions upon which Awards shall
be granted under the Plan; (iv) prescribe the form and terms of
instruments evidencing such grants; and (v) establish from time to time
regulations for the administration of the Plan, interpret the Plan, and
make all determinations deemed necessary or advisable for the
administration of the Plan.
4. PERFORMANCE GOALS
The Performance Unit Incentive Plan is intended to provide Participants
with a substantial incentive to achieve or surpass three pre-defined
long-range financial goals which have been selected because they are
key factors (goals) in increasing stockholder value.
The first goal for each Subsidiary Participant emphasizes growth in
Average Three-Year Operating or Pre-tax Income.
The first goal for Corporate Participants also emphasizes Growth in
Average Three-Year Operating Income but the target will be based on
income per share from continuing operations, the most appropriate
measure in increasing stockholder value.
The second goal for Corporate and Subsidiary Participants is a Viad
Value Added (VVA) measure.
The third goal for Corporate and Subsidiary Participants emphasizes
growth in Average Three-Year Revenues.
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5. DETERMINATION OF TARGETS
A. AVERAGE THREE-YEAR GROWTH IN SUBSIDIARY EARNINGS
An appropriate average three-year operating or pre-tax income
target for the Performance Period for each Subsidiary Company
will be established taking into account historical operating
or pre-tax income, financial plan operating or pre-tax income
for the Performance Period, overall Corporate objectives, and
if appropriate, other circumstances. An appropriate range of
values above and below such target will then be selected to
measure achievement above or below the target.
B. AVERAGE GROWTH IN THREE-YEAR VIAD CORP INCOME PER SHARE
An appropriate average three-year "Income Per Share" from
continuing operations target for Viad Corp will be established
after considering historical income per share from continuing
operations, financial plan income per share from continuing
operations for the Performance Period, overall Corporate
objectives and, if appropriate, other circumstances. An
appropriate range of values above and below such target will
then be selected to measure achievement above or below the
target.
C. VALUE ADDED MEASUREMENT:
The VVA measurement is intended to place increased emphasis on
securing an adequate return to Viad Corp on all capital
employed in the business. VVA compares net operating income to
the return required on capital invested in the business.
In calculating the bonus pool of each Company, VVA shall mean
Net Operating Profit After Taxes (NOPAT is defined as sales
minus operating expenses minus taxes) minus a Capital Charge
calculated by multiplying a Cost of Capital times the actual
Capital (Capital is defined as total assets less current and
other liabilities exclusive of debt). Certain adjustments are
necessary to determine NOPAT and Capital.
An appropriate average three-year VVA target will be
established; a range of values above and below such target
will then be selected to measure achievement above or below
the target.
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D. REVENUE
An appropriate average three-year Revenue target will be
established for Subsidiary and Corporate with a focus on
enhancing profitable top-line growth. An appropriate range of
values above and below such target will then be selected to
measure achievement above or below the target.
E. ESTABLISHING TARGETS
The appropriate weighting of goals, targets, range of values
above and below such targets and the Performance Period to be
used as a basis for the measurement of performance for Awards
under the Plan will be determined by the Committee no later
than 90 days after the beginning of each new Performance
Period during the life of the Plan, after giving consideration
to the recommendations of the Chief Executive Officer of Viad
Corp. Performance Units will be earned based upon the degree
of achievement of pre-defined targets over the Performance
Period following the date of grant. Earned Units can range,
based on operating performance using an award range of values,
from 0% to 200% of the target Units.
6. OTHER PLAN PROVISIONS
Subsidiary operating or pre-tax income and Viad Corp income per share
from continuing operations are determined before extraordinary or
unusual items, effects of changes in accounting principles, or a change
in federal income tax rates after the target has been set.
Reclassification of a major business unit to discontinued operations
status after targets have been set would also require adjustment
because of effect on Viad Corp continuing operations results. While
gains on disposition of a business would normally not be included in
determining income per share, in the event of the sale of a subsidiary
or major business unit, a portion of gain would be included for the
difference between the sold unit's planned net income for the
performance period and actual results to date of sale plus calculated
interest savings on proceeds for the balance of the performance period,
so that actual results are not penalized for selling a business.
An adjustment to actual operating or pre-tax income will be made for
any increase or decrease in cost to a subsidiary in connection with a
change in the formula allocation of corporate overhead over amounts
included in the Plan at the beginning of the applicable performance
period.
Incentives to be paid under this Plan must be deducted from the
subsidiary corporation's and the Corporation's earnings during the
Performance Period
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(generally in the third year, when the amounts to be paid can be
reasonably estimated). Goals must be achieved after deducting from
actual results all incentive compensation applicable to such
performance periods, including those incentives earned under this Plan.
7. RANGE OF PERFORMANCE AWARDS
The range of values for the Corporation's or a Subsidiary Company's
operating or pre-tax income or income per share performance and the VVA
and Revenue measurements will be recommended by the Chief Executive
Officer of Viad Corp for approval by the Committee.
Performance Units will be earned based upon the degree of achievement
of each of the pre-defined targets (operating or pre-tax income or
income per share, VVA, and Revenue) over the Performance Period
following the date of grant. A range of values will be established for
the operating income or income per share target (to carry a 70%
weighting), for the VVA target (to carry a 30% weighting), and for the
Revenue target (to be used for adjustment to the total bonus pool
otherwise accruable by 95% (threshold) up to 105% (maximum), depending
upon the achievement against the revenue target).
8. PARTICIPANT ELIGIBILITY
Personnel will be eligible for participation as recommended by the
Chief Executive Officer of Viad Corp for approval by the Committee no
later than 90 days after the beginning of each new Performance Period
during the life of the Plan, limited only to those key executives who
contribute in a substantial measure to the successful performance of
the Corporation or its Affiliates. The Chief Executive Officer will
recommend for approval by the Committee which Affiliates among its
Affiliates should be included in the Plan.
9. AWARD DETERMINATION
The number of Units to be awarded will be determined, generally, by
multiplying a factor times the Participant's annual base salary in
effect at the time the Award is granted and dividing the result by the
average of the high and low of the Corporation's Common Stock on the
date of approval of the grant by the Committee. The Award factor will
be recommended by the Chief Executive Officer of Viad Corp for approval
by the Committee annually no later than 90 days after the beginning of
each new performance period. The Committee may adjust the number of
Units awarded in its discretion.
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10. GENERAL TERMS AND CONDITIONS
The Committee shall have full and complete authority and discretion,
except as expressly limited by the Plan, to grant Units and to provide
the terms and conditions (which need not be identical among
Participants) thereof. Without limiting the generality of the
foregoing, the Committee may specify a Performance Period of not less
than two years or not more than five years, rather than the three-year
Performance Period provided for above, and such time period will be
substituted as appropriate to properly effect the specified Performance
Period. No Participant or any person claiming under or through such
person shall have any right or interest, whether vested or otherwise,
in the Plan or in any Award thereunder, contingent or otherwise, unless
and until all the terms, conditions, and provisions of the Plan and its
approved administrative requirements that affect such Participant or
such other person shall have been complied with. Nothing contained in
the Plan or its Administrative Guidelines shall (i) require the
Corporation to segregate cash or other property on behalf of any
Participant or (ii) affect the rights and power of the Corporation or
its Affiliates to dismiss and/or discharge any Participant at any time.
Any recapitalization, reclassification, stock split, stock dividend
sale of assets, combination or merger not otherwise provided for herein
which affects the outstanding shares of Common Stock of the Corporation
or any other change in the capitalization of the Corporation affecting
the Common Stock shall be appropriately adjusted for by the Committee
or the Board, and any such adjustments shall be final, conclusive and
binding.
11. PAYMENTS OF AWARDS
(a) Performance Unit Awards which may become payable under this Plan
shall be calculated as determined by the Committee but any resulting
Performance Unit Award payable shall be subject to the following
calculation: each Unit payable shall be multiplied by the average of
the daily means of the market prices of the Corporation's Common Stock
during the ten trading day period beginning on the day following public
announcement of the Corporation's year-end financial results following
the Performance Period. Distribution of the Award will be made within
ninety (90) days following the close of the Performance Period. For
those Executive Officers affected by Section 162(m) of the Internal
Revenue Code, awards will be subject to discretionary downward
adjustment by the Committee.
(b) Performance Unit Awards granted under this Plan shall be payable
during the lifetime of the Participant to whom such Award was granted
only to such Participant; and, except as provided in (d) and (e) of
this Section 11, no such Award will be payable unless at the time of
payment such Participant is an employee of and has continuously since
the grant thereof been an employee of,
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the Corporation or an Affiliate. Neither absence or leave, if approved
by the Corporation, nor any transfer of employment between Affiliates
or between an Affiliate and the Corporation shall be considered an
interruption or termination of employment for purposes of this Plan.
(c) Prior to the expiration of the Performance Period, all Participants
will be provided an irrevocable option to defer all or a portion of any
earned Performance Unit Award, if there be one but not less than a
specified minimum, in written form as prescribed by the Board under the
provisions of a deferred compensation plan for executives of the
Corporation and its Affiliates, if one be adopted.
(d) If a Participant to whom a Performance Unit Award was granted shall
cease to be employed by the Corporation or its Affiliate for any reason
(other than death, disability, or retirement) prior to the completion
of any applicable Performance Period, said Performance Unit Award will
be withdrawn and subsequent payment in any form at any time will not be
made.
(e) If a Participant to whom a Performance Unit Award was granted shall
cease to be employed by the Corporation or its Affiliate due to early,
normal, or deferred retirement, or in the event of the death or
disability of the Participant, during the Performance Period stipulated
in the Performance Unit Award, such Award shall be prorated for the
period of time from date of grant to date of retirement, disability or
death, as applicable, and become payable within ninety (90 days)
following the close of the Performance Period to the Participant or the
person to whom interest therein is transferred by will or by the laws
of descent and distribution. Performance Unit Awards shall be
determined at the same time and in the same manner (except for
applicable proration) as described in Section 11(a).
(f) There shall be deducted from all payment of Awards any taxes
required to be withheld by any Federal, State, or local government and
paid over to any such government in respect to any such payment.
12. EFFECT OF CHANGE OF CONTROL
Notwithstanding anything to the contrary in this Plan, in the event of
a Change of Control (as defined in the 1997 Viad Corp Omnibus Incentive
Plan) each participant in the Plan shall be entitled to a prorata bonus
award calculated on the basis of achievement of performance goals
through the date of the Change of Control.
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13. ASSIGNMENTS AND TRANSFERS
No award to any Participant under the provisions of the Plan may be
assigned, transferred, or otherwise encumbered except, in the event of
death of a Participant, by will or the laws of descent and
distribution.
14. AMENDMENT OR TERMINATION
The Board may amend, suspend, or terminate the Plan or any portion
thereof at any time provided, however, that no such amendment,
suspension, or termination shall invalidate the Awards already made to
any Participant pursuant to the Plan, without his consent.
15. EFFECTIVE DATE
The Plan shall be effective January 1, 1997, provided however, that any
Award made under this Plan is subject to the approval of the 1997 Viad
Corp Omnibus Incentive Plan by the stockholders of Viad Corp.
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