World Fuel Services 2002 Annual Report Download - page 35

Committee. The bonus payout may range from 15% of base salary if at least 5% diluted earnings per share growth is
achieved, to 200% of base salary if diluted earnings per share growth equals or exceeds 15%. For the nine months ended
December 31, 2002, the CEO and COO received a prorated annual bonus.
In addition, the payment of any portion of the bonus causing the compensation of any of the above two executives to
exceed $1.0 million during any fiscal year will be deferred and accrue interest at the U.S. Prime rate, until a fiscal year
during the employment term in which the executive earns less than $1.0 million; provided, however, that in the event of the
executive’s death, the termination of the executive for any reason, or the expiration of the employment agreement, the
deferred portion of any bonus, including any interest earned thereon, shall be paid to the executive within ten days of such
death, termination or expiration. As of December 31, 2002, $126 thousand was deferred under the employment agreements
of our Chairman and President. As of March 31, 2002 and 2001, $1.6 million and $1.3 million, respectively, in bonuses was
deferred under the employment agreements of our Chairman, President, and former Chairman. Such deferred compensation
was included in Long-term liabilities in the accompanying Consolidated Balance Sheets. The compensation deferred for our
former Chairman was paid to him in August 2002 in accordance with his employment agreement.
Pursuant to their employment agreements, our CEO and COO each is entitled to receive a cash severance payment if:
(a) we terminate the executive for any reason other than death, disability or cause; (b) the executive resigns for good reason
(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.
The current employment agreements for our Chairman and CEO, and President and COO are included as Exhibits 10.1
and 10.2 as part of this Form 10-K.
In addition to the above executives, we have also entered into employment agreements with certain of our executive
officers and employees. These agreements provide for minimum salary levels, and for certain executive officers and
employees, bonus formulas which are payable if specified performance goals are attained.
As of December 31, 2002, the future minimum commitments under employment agreements, excluding discretionary
and performance bonuses, are as follows (in thousands):
For the Year Ending December 31,
2003 8
,
717$
2004 7
,
296
2005 5
,
722
2006 4
,
032
2007 1,689
27,456$
Aviation Joint Venture
In December 2000, we entered into a joint venture with Signature through the acquisition of a 50% equity interest in
PAFCO from Signature. In accordance with the venture’s operating agreement, we are entitled to 80% of the income from
PAFCO’s operations. The higher allocation percentage versus the ownership percentage is in consideration of the risks
assumed by us with respect to credit losses on PAFCO’s accounts receivable. We are required to purchase, without recourse,
PAFCO’s accounts receivable that are 120 days past due, subject to certain requirements. We also have the right to approve
all credit sales by PAFCO. Net losses, including infrequent or unusual losses, and interest expense incurred by PAFCO, and
any gain resulting from the liquidation of the venture, will be shared equally between Signature and us. During the nine
months ended December 31, 2002, we purchased $38 thousand of PAFCO’s accounts receivable, which was subsequently
written-off. For the years ended March 31, 2002 and 2001, we did not purchase any of PAFCO’s accounts receivable.
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