EXHIBIT 10.A
VIAD CORP
MANAGEMENT INCENTIVE PLAN
PURSUANT TO THE 1997 VIAD CORP OMNIBUS INCENTIVE PLAN
AS AMENDED MARCH 26, 2002
I. PURPOSE:
The purpose of the Viad Corp Management Incentive Plan (Plan) is to
provide key executives of Viad Corp (Viad) and its subsidiaries with an
incentive to achieve goals as set forth under this Plan for each
calendar year (Plan Year) for their respective companies and to provide
effective management and leadership to that end.
II. PHILOSOPHY:
The Plan will provide key executives incentive bonuses based upon
appropriately weighted pre-defined income and other performance
measurements.
III. SUBSIDIARIES, SUBSIDIARY GROUPS AND DIVISIONS:
A. Each subsidiary, subsidiary group, line of business or
division listed below is a "Company" for the purposes of this
Plan:
Name of Company
Brewster Transport Company Limited/Brewster Tours group
Exhibitgroup/Giltspur group
GES Exposition Services, Inc. group
Glacier Park, Inc.
Travelers Express Company, Inc. group
Viad may, by action of its Board of Directors or its Human Resources
Committee, add or remove business units on the list of participant
companies from time to time.
B. FUNDING LIMIT:
A "funding limit" shall be established annually for each
Company participant who has been designated an Executive
Officer as defined under Section 16(b) of the Securities
Exchange Act. The funding limit shall be an amount determined
by multiplying the actual net income of the Company for the
Plan Year by the percent of such income approved by the Human
Resources Committee of the Viad Corp Board of Directors
(Committee) for such funding limit. The subsidiary executive
cannot be paid a larger bonus than the funding limit provided
by this clause, but may be paid less in the discretion of the
Committee based on the Performance Goals set forth below and
other such factors which the Committee may consider.
C. PERFORMANCE GOALS:
1. OPERATING OR PRE-TAX INCOME (as calculated for external
reporting purposes):
An appropriate "operating income" or "pre-tax income"
target for the plan year for each Company will be
recommended by the Chief Executive Officer of Viad to the
Committee for approval taking into account overall
corporate objectives, historical income and Plan Year
financial plan income (on the same basis as determined
below) and, if appropriate, other circumstances.
Operating or pre-tax income to be used in calculating the
bonus pool of each Company shall mean operating income
before minority interest, interest expense and taxes,
after deduction of corporate overheard, or pre-tax income
after minority interest, in each case adjusted to
appropriately exclude the effects of gains and losses from
the sale or other disposition of capital assets other than
vehicles. In addition, 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 actual formula allocation of corporate
overhead over amounts included in the Plan for the year.
Special treatment of any other significant unusual or
non-recurring items (for purposes of determining actual or
target operating or pre-tax income) arising after a
Company's targets are set may be recommended by the Chief
Executive Officer of Viad to the Committee for approval,
including, for example, appropriate adjustment of
operating or pre-tax income target or actuals to reflect
planned effects of an acquisition approved after target
has been set. Other examples include unusual items or
effects of a change in accounting principle.
Incentives to be paid under this Plan must be deducted
from the subsidiary corporation's earnings by the end of
the year. Goals must be achieved after deducting from
actual results all incentive compensation applicable to
the year, including those incentives earned under this
Plan.
2. Value Added Measurement:
An appropriate "Value Added" target for the plan year for
certain companies will be recommended by the Chief
Executive Officer of Viad Corp to the Committee for
approval. This measurement is intended to place increased
emphasis on securing an adequate return to Viad on all
capital employed in the business. Viad Value Added (VVA)
compares net operating income to the return required on
capital invested in the business.
In calculating the bonus pool of each applicable 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.
3. CASH FLOW:
An appropriate "Cash Flow" target for the plan year for
certain companies will be recommended by the Chief
Executive Officer of Viad Corp to the Committee for
approval. This measurement is intended to place increased
emphasis on delivering available cash to Viad.
Free Cash Flow is defined as net income plus depreciation
and amortization less capital expenditures, plus the
change in working capital plus minority interest
income/loss plus the change in other operating activities
(i.e., change in long-term assets/liabilities, settlement
of lawsuits, etc.).
4. OTHER PERFORMANCE MEASUREMENTS:
An appropriate number of performance measurements other
than operating or pre-tax income, VVA, and cash flow will
be established for each Company, to place increased
emphasis on areas of importance to achieving overall
corporate objectives, with the Chief Executive Officer of
Viad to recommend to the Committee the measures to be used
and, at the end of the year, the level of achievement
against each.
5. REVENUE:
The bonus pool earned will be subject to a further
calculation whereby the total bonus pool otherwise
accruable will be adjusted by 95% (threshold) up to 105%
(maximum), depending on the achievement against the
revenue target.
6. ESTABLISHING TARGETS:
The targets for revenue, operating or pre-tax income, VVA,
cash flow and for the categories of discretionary
performance measurements to be employed will be
established by the Committee no later than 90 days after
the beginning of the Plan Year after receiving the
recommendations of the Chief Executive Officer of Viad
Corp.
D. PARTICIPANT ELIGIBILITY:
The Committee will select the Executive Officers as defined
under Section 16(b) of the Securities Exchange Act eligible
for participation no later than 90 days after the beginning of
the Plan Year. Other personnel will be eligible for
participation as designated by each Company President or Chief
Executive Officer and recommended to the Chief Executive
Officer of Viad Corp for approval, limited only to those
executives who occupy a position in which they can
significantly affect operating results as pre-defined by
appropriate and consistent criteria, i.e., base salary not
less than $49,000 per year, or base salary not less than 50%
of the Company's Chief Executive Officer, or position not more
than the third organizational level below the Company Chief
Executive Officer or another applicable criteria.
NOTE: Individuals not qualifying under the criteria
established for the Plan Year who were included in the
previous year will be grandfathered (continue as qualified
participants until retirement, reassignment, or termination of
employment) if designated by the Company President or Chief
Executive Officer, and approved by the Chief Executive Officer
of Viad Corp.
E. TARGET BONUSES:
Target bonuses will be approved by the Committee for each
Executive Officer in writing within the following parameters
no later than 90 days after the beginning of the Plan Year and
will be expressed as a percentage of salary paid during the
year. Target bonuses for other eligible personnel will be
established in writing within the following parameters subject
to approval by the Chief Executive Officer of Viad Corp.
Actual bonus awards will be dependent on Company performance
versus the targets established. A threshold performance will
be required before any bonus award is earned under the net
income goal. Awards will also be capped when stretch
performance levels are achieved.
As a Percentage of Salary
Subsidiary Positions* Threshold** Target Cap
--------------------- ----------- ------ ---
Chief Executive Officer/President 25.0% 50% 89.25%
22.5% 45% 80.325%
20.0% 40% 71.4%
Executive Vice President-Senior Vice President, 20.0% 40% 71.4%
and Other Operating Executives
Vice Presidents 17.5% 35% 62.475%
15.0% 30% 53.55%
Key Management Reporting to Officers 12.5% 25% 44.625%
10.0% 20% 35.7%
Staff Professionals 7.5% 15% 26.775%
5.0% 10% 17.85%
* Target Bonus, as determined by the Committee, is dependent upon
organization reporting relationships.
** Reflects minimum achievement of all performance targets. Threshold
could be lower if minimum achievement of only one performance target is
met.
F. BONUS POOL TARGET:
1. The "Bonus Pool Target" will be initially established no
later than 90 days after the beginning of the Plan Year
and will be adjusted to equal the sum of the target
bonuses of all designated participants in each Company
based upon actual Plan Year salaries, as outlined in
paragraph D above, plus 15% for Special Achievement
Awards.
2. The bonus pool will accrue in accordance with the Bonus
Pool Accrual Formula recommended by the Chief Executive
Officer of Viad Corp and approved by the Committee.
3. Bonus pool accruals not paid out shall not be carried
forward to any succeeding year.
G. INDIVIDUAL BONUS AWARDS:
1. Indicated bonus awards will be equal to the product of the
target bonus percentage times the weighted average
percentage of bonus pool accrued as determined in
paragraph F above times the individual's actual base
salary earnings during the Plan Year, subject to
adjustments as follows:
a) discretionary upwards or downward adjustment of
formula bonus awards by the Committee after
considering the recommendation of the Company
President or Chief Executive Officer with the
approval of the Chief Executive Officer of Viad Corp
for those executives not affected by Section 162(m)
of the Internal Revenue Code, and
b) discretionary downward adjustment of awards by the
Committee for those Executive Officers affected by
Section 162(m) of the Internal Revenue Code, and
c) no individual award may exceed the individual's
capped target award or the funding limit with respect
to Executive Officers, and the aggregate recommended
bonuses may not exceed the bonus pool accrued for
other than Special Achievement Awards.
2. Bonuses awarded to the participating management staff of
subsidiary groups may be paid from funds accrued based
upon the target bonus for such participant(s) times the
weighted average performance of the Companies in the
subsidiary group, subject to adjustments as above.
IV. VIAD CORP CORPORATE STAFF:
A. FUNDING LIMIT:
A "funding limit" shall be established annually for each
Corporate participant who has been designated an Executive
Officer as defined under Section 16(b) of the Securities
Exchange Act. The funding limit will be an amount determined
by multiplying the actual net income from continuing
operations of Viad (as used in the income per share
calculation described herein) for the Plan Year by the percent
of such income approved by the Committee for such funding
limit. The executive cannot be paid a larger bonus than the
funding limit provided by this clause, but may be paid less in
the discretion of the Committee based on the Performance Goals
set forth below and such other factors which the Committee may
consider.
B. PERFORMANCE GOALS:
1. INCOME PER SHARE:
An appropriate "income per share" from continuing
operations target for Viad Corp will be recommended by the
Chief Executive Officer of Viad Corp to the Committee for
approval after considering historical income per share
from continuing operations, Plan Year financial plan
income, overall corporate objectives, and, if appropriate,
other circumstances.
Income per share from continuing operations is determined
before unusual or extraordinary 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 the effect on continuing operations results.
While gains on disposition of a business would normally
not be included in determining actual Plan Year net income
or income per share, in the event of the sale of a
subsidiary or major business unit, a portion of gain would
be included equal to the difference between the sold
unit's planned net income for the year and actual results
to date of sale plus calculated interest savings on
proceeds for the balance of the year, so that actual
results are not penalized for selling a business.
Incentives to be paid under this Plan must be deducted
from Viad's earnings by the end of the year. Goals must be
achieved after deducting from actual results all incentive
compensation applicable to the year, including those
incentives earned under this Plan.
2. VALUE ADDED MEASUREMENT:
An appropriate "Value Added" target for the plan year for
Corporate will be recommended by the Chief Executive
Officer of Viad for approval by the Human Resources
Committee. This measurement is intended to place increased
emphasis on securing an adequate return to Viad on all
capital employed in the business. Viad Value Added (VVA)
compares operating income to the return required on
capital invested in the business.
In calculating the bonus pool for Corporate, 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.
3. OTHER PERFORMANCE MEASUREMENTS:
An appropriate number of performance measurements other
than income per share will be established for Corporate,
with the Chief Executive Officer of Viad to recommend to
the Committee the level of achievement against each of the
measures.
4. REVENUE:
The bonus pool earned will be subject to a further
calculation whereby the total bonus pool otherwise
accruable will be adjusted by 95% (threshold) up to 105%
(maximum) depending on the achievement against the revenue
target.
5. ESTABLISHING TARGETS:
The actual targets for revenue, income per share, VVA and
for the performance measurements to be used will be
established by the Committee no later than 90 days after
the beginning of the Plan Year after receiving the
recommendations of the Chief Executive Officer of Viad
Corp.
C. PARTICIPANT ELIGIBILITY:
The Committee will select the Executive Officers as defined
under Section 16(b) of the Securities Exchange Act eligible
for participation no later than 90 days after the beginning of
the Plan Year. Other personnel will be eligible for
participation as recommended by the appropriate staff Vice
President and as approved by the Chief Executive Officer of
Viad Corp, limited only to those executives who occupy a
position in which they can significantly affect operating
results as defined by the following criteria:
a) Salary grade 25 and above; and
b) Not more than Organizational Level Four below the
Chief Executive Officer.
NOTE: Individuals not qualifying under the criteria
established for the Plan Year who were included in the
previous year will be grandfathered (continue as qualified
participants until retirement, reassignment, or termination of
employment) if designated by the appropriate Vice President
and approved by the Chief Executive Officer of Viad Corp.
D. TARGET BONUSES:
Target bonuses will be approved by the Committee for each
Executive Officer in writing within the following parameters
no later than 90 days after the beginning of the Plan Year and
will be expressed as a percentage of salary. Target bonuses
for other eligible personnel will be established in writing
within the following parameters subject to approval by the
Chief Executive Officer of Viad Corp.
Actual bonus awards will be dependent on Company performance
versus the targets established. A threshold performance will
be required before any bonus award is earned under the income
per share goal. Awards also will be capped when stretch
performance levels are achieved.
As a Percentage of Salary
Corporate Positions Threshold** Target Cap
------------------- ----------- ------ ---
Chairman, President & Chief Executive Officer 37.5% 75% 137.8%
Senior Advisory Group 25.0% 50% 89.25%
22.5% 45% 80.325%
Corporate Staff Officers 20.0% 40% 71.4%
Staff Directors* 17.5% 35% 62.475%
15.0% 30% 53.55%
12.5% 25% 44.625%
10.0% 20% 35.7%
Staff Professionals* 7.5% 15% 26.775%
5.0% 10% 17.85%
* Target Bonus, as determined by the Committee, is dependent upon
organization reporting relationships.
** Reflects minimum of achievement of all performance targets. Threshold
could be lower if minimum achievement of only one performance target is
met.
E. BONUS POOL TARGET:
1. The "Bonus Pool Target" will be established no later than
90 days after the beginning of the Plan Year and will be
adjusted to equal the sum of the target bonuses of all
qualified participants based upon actual Plan Year base
salaries, as outlined in paragraph C above, plus 15% for
Special Achievement Awards.
2. The bonus pool will accrue in accordance with the Bonus
Pool Accrual Formula recommended by the Chief Executive
Officer of Viad Corp and approved by the Committee.
3. Bonus pool accruals not paid out shall not be carried
forward to any succeeding year.
F. INDIVIDUAL BONUS AWARDS:
Indicated bonus awards will be equal to the product of the
target bonus percentage times the weighted average percentage
of bonus pool accrued as determined in paragraph D above times
the individual's actual Plan Year base salary earnings,
subject to adjustments as follows:
a) discretionary upward or downward adjustment of
formula awards by the Committee after considering the
recommendations of the Chief Executive Officer of
Viad Corp for those executives not affected by
Section 162(m) of the Internal Revenue Code,
b) discretionary downward adjustment of awards by the
Committee for those Executive Officers affected by
Section 162(m) of the Internal Revenue Code, and
c) no individual award may exceed the individual's
capped target award or the funding limit with respect
to Executive Officers and the aggregate recommended
bonuses may not exceed the bonus pool for other than
Special Achievement Awards.
V. SPECIAL ACHIEVEMENT AWARDS:
Special bonuses of up to 15% of base salary for exceptional performance
to employees (primarily exempt employees) who are not participants in
this Plan, including newly hired employees, may be recommended at the
discretion of the Chief Executive Officer to the Committee from the
separate funds for discretionary awards provided for under paragraphs
III F and IV E.
VI. APPROVAL AND DISTRIBUTION:
The individual incentive bonus amounts and the terms of payment thereof
will be fixed following the close of the Plan Year by the Committee.
Any award made under this Plan is subject to the approval of this Plan
by the stockholders of Viad Corp.
VII. COMPENSATION ADVISORY COMMITTEE:
The Compensation Advisory Committee is appointed by the Chief Executive
Officer of Viad Corp to assist the Committee in the implementation and
administration of this Plan. The Compensation Advisory Committee shall
propose administrative guidelines to the Committee to govern
interpretations of this Plan and to resolve ambiguities, if any, but
the Compensation Advisory Committee will not have the power to
terminate, alter, amend, or modify this Plan or any actions hereunder
in any way at any time.
VIII. SPECIAL COMPENSATION STATUS:
All bonuses paid under this Plan shall be deemed to be special
compensation and, therefore, unless otherwise provided for in another
plan or agreement, will not be included in determining the earnings of
the recipients for the purposes of any pension, group insurance or
other plan or agreement of a Company or of Viad Corp. Participants in
this Plan shall not be eligible for any contractual or other short-term
(sales, productivity, etc.) incentive plan except in those cases where
participation is weighted between this Plan and any such other
short-term incentive plan.
IX. DEFERRALS:
Participants subject to taxation of income by the United States may
submit to the Committee, prior to November 15 of the year in which the
bonus is being earned a written request that all or a portion, but not
less than a specified minimum, of their bonus awards to be determined,
if any, be irrevocably deferred substantially in accordance with the
terms and conditions of a deferred compensation plan approved by the
Board of Directors of Viad Corp or, if applicable, one of its
subsidiaries. Participants subject to taxation of income by other
jurisdictions may submit to the Committee a written request that all or
a portion of their bonus awards be deferred in accordance with the
terms and conditions of a plan which is adopted by the Board of
Directors of a participant's Company. Upon the receipt of any such
request, the Committee thereunder shall determine whether such request
should be honored in whole or part and shall forthwith advise each
participant of its determination on such request.
X. PLAN TERMINATION:
This Plan shall continue in effect until such time as it may be
canceled or otherwise terminated by action of the Board of Directors of
Viad Corp and will not become effective with respect to any Company
unless and until its Board of Directors adopts a specific plan for such
Company. While it is contemplated that incentive awards from the Plan
will be made, the Board of Directors of Viad Corp, or any other Company
hereunder, may terminate, amend, alter, or modify this Plan at any time
and from time to time. Participation in the Plan shall create no right
to participate in any future year's Plan.
XI. EMPLOYEE RIGHTS:
No participant in this Plan shall be deemed to have a right to any part
or share of this Plan, except as provided in Paragraph XII. This Plan
does not create for any employee or participant any right to be
retained in service by any Company, nor affect the right of any such
Company to discharge any employee or participant from employment.
Except as provided for in administrative guidelines, a participant who
is not an employee of Viad Corp or one of its subsidiaries on the date
bonuses are paid will not receive a bonus payment.
XII. 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.
XIII. 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.