World Fuel Services 2004 Annual Report Download - page 78

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(generally a reduction in his responsibilities or compensation, or a breach by us), or resigns for any reason following a change
of control; or (c) we elect not to renew the executive's employment agreement upon expiration, for any reason other than
cause. The severance payment is equal to two times the executive's average salary and bonus during the three-year period
preceding termination; provided, if (i) the termination occurs within three years after a change of control the multiple set forth
above will be three instead of two, and (ii) in the case of a non-renewal, as described in item (c) above, the multiple will be one
and the severance will be paid in 26 equal installments over a one year period. Upon any such termination, we will continue to
provide coverage to the executive under our group insurance plans for up to three years, and all of the executive's stock options
and stock grants will immediately vest.
We have also entered into employment agreements with certain of our other executive officers and key employees. These
agreements provide for minimum salary levels, and, in most cases, bonuses which are payable if specified performance goals
are attained. Some executive officers and key employees are also entitled to severance benefits upon termination or non-
renewal of their contracts under certain circumstances.
As of December 31, 2004, the approximate future minimum commitments under employment agreements, excluding
discretionary and performance bonuses, are as follows (in thousands):
For the Year ending December 31,
2005 11,113$
2006 9,541
2007 3,993
2008 474
2009 306
$ 25,427
We recorded expenses under the terms of the above described agreements, including discretionary and performance
bonuses, and executive severance charges of approximately $17.9 million, $13.0 million and $11.4 million for the years ended
December 31, 2004, 2003 and 2002, respectively, and approximately $14.9 million for the nine months ended December 31,
2002.
Deferred Compensation Plans
In September 2003, the Compensation Committee amended our Executive Incentive Plan to provide for long-term
incentive awards (“LTIP awards”) in addition to the annual bonuses already provided in the plan. Under the terms of the plan,
as amended, our five senior executives are eligible to receive long term incentive awards ("LTIP awards") upon achievement
of long-term performance goals. The performance goals are based on achieving certain Compound Average Annual Growth
Rates ("CAGR") in net income over a three-year performance period. In September 2004, the Compensation Committee of the
Board of Directors elected to reconsider the use of net income as the performance measure for LTIP awards due to an increase
in the disparity between the growth rates of net income and diluted earnings per share. In connection with this decision, the
Compensation Committee agreed to suspend future LTIP awards until a more appropriate performance measure could be
established and to cancel the LTIP award for the three-year performance period commencing January 2004. The LTIP award
for the three-year performance period commencing January 2003 was left in effect. Target awards for the three-year
performance period commencing January 2003 are $750 thousand for each of our Chief Executive Officer and Chief Operating
Officer, and $200 thousand for each of the other three senior executives. The executives would earn 50% of the target award
if we achieve a 15% CAGR in net income over the three-year performance period, and 100% of the target award if an 18%
CAGR in net income is achieved over the three-year performance period. The maximum award is 200% of the target award,
and would be earned if at least a 21% CAGR in net income is achieved over the three-year performance period. If and when
an award is earned, such award may be deferred at the executive's option, on such terms and conditions as may be approved by
the Compensation Committee. The deferred amounts will earn interest at the U.S. Prime Rate, with a maximum rate of 10%
per year.
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