World Fuel Services 2005 Annual Report Download - page 78

WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
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, 2005, the approximate future minimum commitments under employment agreements,
excluding discretionary and performance bonuses, are as follows (in thousands):
Year Ended December 31,
2006 ............................................................. $10,325
2007 ............................................................. 4,843
2008 ............................................................. 1,217
2009 ............................................................. 716
2010 ............................................................. 488
$17,589
Deferred Compensation Plans
Under the terms of the 2003 Executive Incentive Plan, our five most senior executives are eligible to receive
long-term incentive awards (“LTIP awards”) upon achievement of long-term performance goals. In 2003, LTIP
awards were made to each of our five most senior executives (the “2003 LTIP awards”). The 2003 LTIP awards
were based on based on achieving certain compound average annual growth rates (“CAGR”) in net income over
a three-year performance period. Target awards for the 2003 LTIP awards were $0.8 million for each of our CEO
and COO, and $0.2 million for each of the other three senior executives. The executives would earn 50% of the
target award if we achieved 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. The maximum award was 200% of the target award,
and would be earned if at least a 21% CAGR in net income was achieved over the three-year performance period.
Each of our five most senior executives earned the maximum award.
The accrual for the 2003 LTIP awards was made equally over the awards three-year performance period
based on management’s estimate of the ultimate award to be earned by the senior executives at the end of the
three-year performance period. As of December 31, 2004 and 2005, we had accrued $2.8 million and $4.2
million, respectively, for the 2003 LTIP awards. The accrual for the 2003 LTIP awards was included in deferred
compensation and other long-term liabilities as of December 31, 2004 and in accrued expenses and other current
liabilities as of December 31, 2005 in the accompanying consolidated balance sheets.
In addition to LTIP awards, our five most senior executives are eligible to receive annual bonuses under the
2003 Executive Incentive Plan upon achievement of annual performance targets. For 2003 and 2004, the
performance targets were based on diluted earnings per share growth and the bonus payout ranged from 15% of
base salary if at least 5% diluted earnings per share growth was achieved, to 200% of base salary if diluted
earnings per share growth equaled or exceeded 15%. For 2005, the performance targets were based on net
income growth and the bonus payout ranged from 15% of base salary if at least 5% net income growth was
achieved, to 200% of base salary if net income growth equaled or exceeded 15%. As previously stated above in
“Employment Agreements,” our CEO and COO earned an aggregate annual bonus of $2.1 million, or 200% of
base salary, for 2003, 2004 and 2005. Under the 2003 Executive Incentive Plan, our other senior executives
earned an aggregate annual bonus of $1.1 million, $1.2 million and $1.3 million, respectively, for 2003, 2004 and
2005. The accrued bonus for our senior executives amounted to $3.3 million and $3.4 million as of December 31,
2004 and 2005, respectively, and was included in accrued expenses and other current liabilities in the
accompanying consolidated balance sheets.
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