Management Performance Improvement Plan - Pittston Co.
THE PITTSTON COMPANY
MANAGEMENT PERFORMANCE
IMPROVEMENT PLAN
1. Purpose. The purpose of the Plan, which provides for Performance
Awards to be awarded to a select group of management and highly compensated
employees of the Company and its Subsidiaries, is to promote the interests of
the Company and its Subsidiaries by linking financial incentives provided to
such employees with improvement in the Company's financial results.
2. Administration. The Plan will be administered by a Committee
composed of at least three members of the Company's Board of Directors each of
whom shall qualify as (a) an "outside director" within the meaning of Section
162(m) of the Code and (b) a "nonemployee director" within the meaning of Rule
16b-3(b)(3)(i) promulgated under the Securities Exchange Act of 1934, as
amended. Until determined otherwise by the Board, the Compensation and Benefits
Committee designated by the Board shall be the Committee under this Plan.
Subject to the express provisions of the Plan, the Committee shall have
plenary authority, in its discretion, to administer the Plan and to exercise all
powers and authority either specifically granted to it under the Plan or
necessary and advisable in the administration of the Plan, including without
limitation the authority to interpret the Plan; to prescribe, amend and rescind
rules and regulations relating to the Plan; to grant Performance Awards; to
determine the terms, provisions and conditions of all Performance Awards granted
under the Plan (which need not be identical), the individuals to whom and the
time or times when Awards shall be granted, and the performance measures used to
determine any payments of Performance Awards; and to make all other necessary or
advisable determinations with respect to the Plan. The determination of the
Committee on such matters shall be conclusive.
3. Participation. The Committee may select from time to time key
employees of the Company and its Subsidiaries to participate in the Plan who, in
the opinion of the Committee, have the capacity to contribute significantly to
the successful performance of the Company and its Subsidiaries. An employee who
is selected to be a Participant for one Performance Measurement Period shall not
have any rights to be included as a Participant for subsequent Performance
Measurement Periods.
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4. Performance Awards. (a) Performance Awards may be, but are not
required to be, granted annually. Each Performance Award shall provide that a
Participant will be entitled to a cash payment following the completion of a
designated Performance Measurement Period (which shall be three fiscal years of
the Company), subject to the satisfaction of conditions set forth in the Plan,
and the achievement of certain goals established by the Committee in connection
with each Performance Award. Cash payments to which a Participant may be
entitled following the conclusion of each Performance Measurement Period shall
be determined based on the satisfaction of various performance measures, as the
Committee shall determine in the case of each Performance Award, including, but
not limited to, net income, operating income, earnings per share, return on
equity, return on capital and/or economic value added with respect to the
Company, any Subsidiary and/or business unit of the Company or any Subsidiary.
The Committee shall determine and establish in writing, with respect to each
Performance Award, the performance measures for each year of the Performance
Measurement Period (including the levels of performance measures that must be
achieved to receive corresponding levels of cash payments); provided, however,
that minimum performance measures for the full Performance Measurement Period
(which performance measures may be raised in subsequent years) shall be
established in writing no later than 90 days after the commencement of the
Performance Measurement Period. Each Performance Award shall include a (i)
target level of performance measures which if satisfied will entitle a
Participant to 100% of a specified target dollar amount and (ii) maximum payment
(specified in dollars) which may not be greater than 200% of the target dollar
amount described in subparagraph (i). The maximum incentive payment any one
Participant may be entitled to receive (whether or not deferred as described in
Section 4(c) below) for any one Performance Measurement Period is $2,000,000.
Performance Award shall terminate for all purposes unless the
Participant remains continuously employed by the Company or a Subsidiary until
the date established by the Committee for payment of the Performance Award
unless the termination is (i) due to Retirement, Disability or death; (ii)
approved by the Committee; or (iii) subsequent to a Change in Control. In the
event a Participant's employment is terminated due to Retirement, Disability or
death, he or she (or, in the event of the Participant's death, his or her
beneficiary) will be entitled to a prorated portion of the Performance Award to
which he or she would otherwise be entitled based on the portion of the
Performance Measurement Period (determined in completed months) during which he
or she was continuously employed by the Company or a Subsidiary and based on the
extent to which the performance goals were achieved as determined at the end of
the Performance Measurement Period. In the event of a Participant's termination
of employment for reasons other than Retirement, Disability or death, the
Committee may, but is not obligated to, authorize payment of an amount up to the
prorated
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amount that would be payable under the preceding sentence. In the event of a
Change in Control, Performance Awards shall be deemed to be earned at 150% of
the specified target dollar amount described in Section 4(a)(i) and shall be
paid as soon as practicable following the earlier of the Participant's
termination of employment after the Change in Control or the end of the
Performance Measurement Period during which the Change in Control occurred.
(c) Participants entitled to receive a Performance Award for a
Performance Measurement Period will be entitled to receive a lump-sum cash
payment on a date selected by the Committee following the end of the Performance
Measurement Period provided that the performance measures are met.
Notwithstanding the preceding sentence, Participants may elect to defer the
receipt of payment of a Performance Award under the Key Employees' Deferred
Compensation Program of The Pittston Company in accordance with the terms of
such plan. Any payments made under this Plan shall be subject to all applicable
Federal, state or local taxes required by law to be withheld.
5. Designation of Beneficiary. A Participant may designate, in a
written election filed with the Committee, a beneficiary or beneficiaries (which
may be an entity other than a natural person) to receive all distributions and
payments under the Plan after the Participant's death. Any such designation may
be revoked, and a new election may be made, at any time and from to time, by the
Participant without the consent of any beneficiary (unless otherwise required by
law). If the Participant designates more than one beneficiary, any distributions
and payments to such beneficiaries shall be made in equal percentages unless the
Participant has designated otherwise in writing, in which case the distributions
and payments shall be made in the percentages designated by the Participant. If
no beneficiary has been named by the Participant or no beneficiary survives the
Participant, any amounts due to the Participant shall be distributed or paid in
a single sum to the Participant's estate.
6. Nonexclusive Plan. The adoption of the Plan shall not be construed
as creating any limitations on the power of the Company to adopt such other
incentive arrangements as it may deem desirable and such arrangements may be
either generally applicable or applicable only in specific cases.
7. Nonassignability. No Performance Awards may be transferred,
alienated or assigned other than by will or by the laws of descent and
distribution.
8. Amendment and Termination. The Board of Directors may amend or
terminate this Plan at any time without the approval of the Company's
shareholders.
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9. Effectiveness of the Plan. The Plan shall become effective on
January 1, 2000, provided that the Plan is approved by the Company's
shareholders at the annual meeting of shareholders occurring in calendar year
2000.
10. No Right to Continued Employment. Neither the adoption of the Plan
nor any action of the Board or Committee shall be deemed to give any officer or
employee any right to continued employment or any other rights other than to
payments under a Performance Award granted hereunder in accordance with the
terms of such award.
11. Governing Law. The Plan shall be construed and interpreted under
the laws of the state of New York.
12. Definitions. For the purpose of this Plan, unless the context
requires otherwise, the following terms shall have the meanings indicated:
(a) "Board of Directors" means the board of directors of the Company.
(b) "Change in Control" shall have the same meaning as under The
Pittston Company 1988 Stock Option Plan, as amended from time to time, or any
successor to such plan.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
(d) "Committee" means the Compensation and Benefits Committee of the
Company or any successor thereto unless determined otherwise by the Board of
Directors.
(e) "Company" means The Pittston Company, a Virginia corporation.
(f) "Disability" means a physical or mental incapacity which would
entitle the Participant to benefits under the Company's long-term disability
plan.
(g) "Participant" means an employee who has been selected by the
Committee to participate in the Plan.
(h) "Performance Award" means an incentive award made pursuant to the
Plan.
(i) "Performance Measurement Period" means a performance cycle of one
or more fiscal years of the Company. The initial Performance Measurement Period
shall be 2000-2002 (inclusive).
(j) "Plan" means The Pittston Company Management Performance
Improvement Plan as amended from time to time.
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(k) "Retirement" means, with respect to any Participant, the
Participant's retirement as an employee of the Company or a Subsidiary under the
Pension-Retirement Plan of The Pittston Company and Subsidiaries or other
retirement plan sponsored by the Company or a Subsidiary.
(l) "Subsidiary" means any corporation more than 80% of the outstanding
voting stock of which is owned by the Company, by the Company and one or more
Subsidiaries or by one or more Subsidiaries. "Subsidiaries" means more than one
of any such corporation.