KANSAS
CITY SOUTHERN ANNUAL INCENTIVE PLAN
(As Amended and Restated Effective January 1,
2008)
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1.
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PURPOSE.
The purpose of the Plan is to provide management employees of the
Employer with annual incentive compensation based on the level of
achievement of financial and other performance criteria. The Plan
is intended to focus the interests of these employees on the key
measures of the Company’s success and to reward these
employees for achieving the key measures of the Company’s
success. This Plan is not intended to be a performance-based plan
for purposes of Section 162(m) of the Code.
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2.
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DEFINITIONS.
As used in the Plan, the following terms shall have the meanings
set forth below:
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(a)
“ Award ” shall mean a cash payment for a
Performance Year payable to a Participant on account of his or her
participation in the Plan.
(b)
“ Board ” shall mean the Board of Directors of
the Company.
(c)
“ Code ” shall mean the Internal Revenue Code of
1986, as amended from time to time, including applicable
regulations and rulings thereunder and any successor provisions
thereto.
(d)
“ Committee ” shall mean the Compensation and
Organization Committee of the Board (or any successor
committee).
(e)
“ Company ” shall mean Kansas City Southern, and
any successor thereto which adopts the Plan.
(f)
“ Disability ” shall mean a disability as
defined under the Employer’s applicable long-term disability
program.
(g)
“ Eligible Employee ” shall mean an individual
who is employed by an Employer in active service and who is not
represented by a union or other collective bargaining
organization.
(h)
“ Employer ” shall mean the Company and any
affiliate of the Company that elects to participate and be an
Employer under the Plan with the consent of the Company.
(i)
“ Leave ” shall mean an absence from work with
the approval of the applicable Employer. Leaves include absences
for short-term disability, family leaves of absence and other
approved leaves of absence.
(j)
“ Maximum Award ” shall mean an Award level that
may be paid if the maximum level of the Performance Goal(s) is
achieved in the Performance Year.
(k)
“ Participant ” shall mean, with respect to any
Performance Year, any Eligible Employee who is selected to
participate in the Plan in accordance with Section 3 of the
Plan.
(l)
“ Performance Goal ” shall mean the
pre-established performance goal(s) established under the Plan for
each Performance Year as described in Section 4 of the
Plan.
(m)
“ Performance Measures ” shall mean one or more
of the following criteria, on which Performance Goals may be based:
revenues, net income, pre-tax income, operating income, earnings
per share, earnings before interest and taxes (EBIT), earnings
before interest, taxes, depreciation and amortization (EBITDA),
cash flow, return on equity, return on capital, return on assets,
operating ratio, and capital expenditures; provided , that
the Committee shall have the authority to use Performance Measures
other than those herein specified as it deems appropriate in its
sole discretion.
(n)
“ Performance Year ” shall mean the calendar
year of the Company in which a Participant provides services on
account of which the Award is made.
(o)
“ Plan ” shall mean the Kansas City Southern
Annual Incentive Plan, as set forth herein, as from time to time
amended.
(p)
“ Proration Fraction ” shall mean a fraction,
the numerator of which is the number of days in the Performance
Year the individual was an Eligible Employee, and the denominator
of which is 365.
(q)
“ Target Award ” shall mean an Award level that
may be paid if the target level of the Performance Goal(s) is
achieved in the Performance Year.
(r)
“ Threshold Award ” shall mean an Award level
that may be paid if the threshold level of the Performance Goal(s)
is achieved in the Performance Year.
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3.
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ELIGIBILITY and PARTICIPATION.
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(a)
In General . An Eligible Employee of an Employer will become
a Participant for a Performance Year if he or she is selected by
the Company, subject to the approval of the Committee, as eligible
to participate in the Plan. Participants will be determined at the
beginning of each Performance Year, and participation in the Plan
during one
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Performance
Year does not guarantee continued participation in future
Performance Years. The Company, subject to the approval of the
Committee, may add Participants during the course of a Performance
Year as it deems appropriate in its sole discretion. A Participant
must be employed by an Employer on the last business day of a
Performance Year in order to be eligible to receive an Award,
except as provided in Section 3(b)(2) below.
(b)
Prorations for Partial Year . A Participant who is not an
Eligible Employee for an entire Performance Year may receive an
Award for any portion of the Performance Year that he or she is an
Eligible Employee, under the circumstances described below and
subject to Section 5 of the Plan:
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1)
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New Hires, Transfers
. A Participant who becomes an Eligible Employee on account of
being hired or transferred during a Performance Year will be
eligible for a prorated Award for such Performance Year. The amount
of the prorated Award shall be equal to the full amount of the
Award otherwise determined under Section 4 of the Plan,
multiplied by the Proration Fraction. Notwithstanding the preceding
two sentences, and subject to the provisions of Section 3(a) of the
Plan, an individual who becomes an Eligible Employee on or after
October 1 of a Performance Year will not become a Participant in
such Performance Year and will not be eligible for an Award for
such Performance Year.
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2)
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Death or Disability
. A Participant who has a termination of employment during a
Performance Year on account of death or Disability will be eligible
for a prorated Award for such Performance Year. The amount of the
prorated Award shall be equal to the full amount of the Award for
such individual for the Performance Year in which the death or
Disability occurs, multiplied by the Proration Fraction. With
respect to the calculation of an Award for purposes of this
provision, the Participant’s rate of base salary in effect
for the last full payroll period of his or her employment shall be
used.
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Notwithstanding
the foregoing, the Committee may, in its discretion, based upon the
recommendation of the Company, determine that a Participant who is
added during the course of a Performance Year will be eligible for
an Award for the Performance Year that is not a prorated Award and
that therefore is not multiplied by the Proration
Fraction.
(c)
Leaves . A Participant who is on Leave for an aggregate of
more than three (3) months during a Performance Year will not be
eligible for an
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Award
for such Performance Year; provided however, a Participant who is
on Leave under the Famil
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