EX-10.13



 



EXHIBIT 10.13






Ryder System, Inc.

Long-Term Incentive Plan



Compensation and Benefits

January 1, 2002


MASTER




 






 





Introduction


The Board of Directors of Ryder System Inc. has approved a Long-Term Incentive
Plan for designated executives as a component of Ryder’s targeted total direct
compensation package. The LTIP is designed to reward key executives with
additional compensation contingent upon attainment of critical business
objectives over a three-year period.


Definitions



For this Plan, the following terms will have these meanings:


Annual Base Pay means the participant’s base salary on January 1, 2002, the
beginning of the initial Plan Cycle. For subsequent Plan Cycles, annual base
pay will mean bonusable base pay.


Change of Control means the definition set forth in each Participant’s Change
of Control Severance Agreement.


Company or Ryder means Ryder System, Inc.



Compensation Committee means the Committee appointed by the Board of Directors
to administer all Compensation and Benefit Plans including the LTIP. May also
be referred to as the “Committee”.


Earned Cash means the cumulative total amount earned in each plan year during
the three-year Plan Cycle. Earned cash is payable according to the Plan’s
schedule following the end of each Plan Cycle.


Eligible Employee or Participant means any Employee designated by the
Compensation Committee to participate in this Plan.


Employee means any employee of the Company.


EVA means Economic Value Added and is the measurement tool that determines
whether a business is earning more than its true cost of capital by
incorporating the cost of equity capital as well as debt capital.


Investment options mean those investment funds made available under the LTIP.


LTIP or Plan means the Ryder System, Inc. Long-Term Incentive Plan.


LTIP Account means an account established for each Participant in the LTIP.


LTIP Balance means a Participant’s balance in his or her LTIP Account.


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LTIP Target means the percentage of annual base salary established for each
participant for the purpose of the LTIP. This target percentage is distributed
equally: 50% in cash and 50% in stock. The cash payout is governed by this
Plan. The stock award is governed by the terms of the 1995 Incentive Stock
Plan, or any successor stock plan. Each participant’s target for the Plan
Cycle is documented in the Plan Supplements.


Plan Cycle means the three-year period during which time a participant has the
opportunity to earn cash compensation under the Plan.


Supplement means a supplement to the Plan for a particular Plan Cycle.


Trustee means the trustee of the Plan which shall initially be Merrill Lynch
Trust Company and which can be changed by the Company at its discretion.


Vesting means the time at which the Participant gains ownership to a portion of
such Participant’s LTIP Balance.


Effective Date



The effective date of the Plan is January 1, 2002. The initial Plan Cycle
commences on January 1, 2002 and ends on December 31, 2004. Subsequent Plan
Cycles will begin on January 1 as approved by the Compensation Committee.


Eligibility



Executives will be designated each year to participate in this Plan.
Eligibility is based on the decision of the Compensation Committee and is not
tied to position, management level or past eligibility. Participation during
one Plan Cycle is not a guarantee of future participation. The Supplement for
each Plan Cycle will document those Eligible Employees.


How the Plan Works



Performance Criteria and Goal Setting


Each Plan Cycle is comprised of three consecutive years with a performance
measure for each year. The Committee will determine and approve performance
measurements and pay contingencies by March 15th of the first year of each Plan
Cycle. These measurements and pay contingencies will also be documented in the
Supplement for each Plan Cycle.


Performance will be measured each year of the Plan individually against an
annual performance goal. Achievement of the performance target or failure to
achieve the


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performance target in one plan year will not affect the target, performance
goals or compensation for any other plan year.


Cash for Performance



Payment for the initial Plan Cycle is based on a performance spread from 80% to
120% of target for the performance criteria. For subsequent Plan Cycles,
payment is based on a performance spread. Cash payouts for meeting a
performance spread is 50% to 200% of target compensation. Incremental payouts
will be made based on actual performance results.


For example:



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Performance Spread
	 	 	<80	%	 	 	80	%	 	 	100	%	 	 	120	%
	Cash Payouts
	 	 	0	%	 	 	50	%	 	 	100	%	 	 	200	%



Earned Cash Opportunity



Each Plan Cycle has an earned cash target opportunity equal to 50% of the total
LITP cash target. (Participants’ targets are documented in the Supplement for
each Plan Cycle).


          LTIP Target: 125%               Earned
Cash Target: 62.5%



To determine the earned cash opportunity for the Plan Cycle, multiply your
annual base pay by earned cash target percentage.



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Salary	 	 	 	 	 	Earned Cash Target	 	 	 	 	 	Earned Cash Opportunity @ Target
	
	 	 	 	 	 	
	 	 	 	 	 	

	$	300,000	 	 	 	X	 	 	 	62.5	%	 	 	=	 	 	$	187,500	 



This is the earned cash target opportunity for the entire three-year Plan
Cycle.


Each year of the Plan Cycle has performance measurements as detailed in the
Supplement for each Plan Cycle. Cash payouts are based on performance results.
The following example assumes that 80% of the performance spread is reached in
the first year of the Plan Cycle, 100% in the second year of the Plan Cycle and
100% in third year of the Plan Cycle.


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	 	 	Performance	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Plan Cycle	 	Spread Achieved	 	Minimum	 	Target	 	Maximum	 	Earned Payment
	
	 	
	 	
	 	
	 	
	 	

	1st Year
	 	 	80	%	 	$	31,250	 	 	$	62,500	 	 	$	125,000	 	 	$	31,250	 
	2nd Year
	 	 	100	%	 	$	31,250	 	 	$	62,500	 	 	$	125,000	 	 	$	62,500	 
	3rd Year
	 	 	100	%	 	$	31,250	 	 	$	62,500	 	 	$	125,000	 	 	$	62,500	 
	 
	 	 	 	 	 	 	 	 	 	 	
	 	 	 	 	 	 	 	
	 
	Earned Cash Target Opportunity
	 	 	 	 	 	$	187,500	 	 	 	 	 	 	$	156,250	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
	 



This example shows the participant had the opportunity to earn $187,500 upon
achieving 100% of performance targets. Based on performance results, the
participant earned $156,250.


Distribution of LTIP Awards



Each year during the Plan Cycle, the Compensation Committee will determine
what, if any, cash payments are payable to each Participant in the Plan. Any
awards payable with respect to such year will be deposited into each
Participant’s LITP Account with the Trustee.


Investment Elections



Each Participant has the right to allocate the funds in his or her LTIP Account
to one or more of several investment options, including the purchase of Ryder
stock, made available by the Trustee (as amended from time to time). Such
investment elections are within the sole discretion of each Participant, who
bears all the risk associated with such investments.


Making Investment Elections



Participants meet with a Merrill Lynch investment advisor to discuss investment
choices and allocation of awards into the Participant’s LTIP Account. The
Participant submits a signed allocation form to the Compensation Department for
processing with Merrill Lynch.


Ryder Stock



The purchase and sale of Ryder stock in the Participant’s LTIP Account must be
pr-approved by the Law Department.


Ryder Stock held in a Participant’s LTIP Account will count toward such
Participant’s compliance with Ryder’s Stock Ownership Guidelines.


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Vesting and Forfeiture



The cumulative earnings (total of each of the three years of the Plan Cycle
together will all gains and losses realized in a Participant’s LTIP Account)
become vested and non-forfeitable following the close of the three-year Plan
Cycle according to the following schedule:



	 	•	 	Six (6) months after the end of the Plan Cycle
	 
	 	•	 	Eighteen (18) months after the end of the Plan Cycle



To vest and be eligible for cash distributions, a Participant must be actively
employed in good standing with the Company. Participants who are not actively
employed in good standing with the Company at the time of distribution are not
eligible for payment and forfeit any unvested award.


Cash Payments and Method of Distribution



Payment Distribution


All payments are subject to approval by the Compensation Committee.


Distribution of each Participant’s earnings under the Plan will be paid, as
soon as practicable, after each vesting date.


The following example shows both the vesting and distribution schedule for one
plan cycle:



	 	 	 	 	 
	Plan Cycle	 	January 1, 2002 – December 31, 2004
	Plan Cycle Ends	 	
December 31, 2004	 	 
	Vesting and
Distribution	 	
June 30, 2005 — 50%
of a Participant’s
LTIP Balance on such
vesting date
	 	June 30, 2006 — The
remainder of a
Participant’s LTIP
Balance for such Plan
Cycle



Date and Method of Payment



Prior to the beginning of each Plan Cycle, Participants must complete a payment
distribution election form. The Participant elects both the date when payments
are to begin and the method of payment. These elections are irrevocable.


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Date



Participants may elect to receive account balances according to the set payment
schedule (see above) or they may elect to defer payments beyond the set payment
schedule to a future date.


Method of Payment



There are two methods of payment available: lump sum or annual installments
that will pay in a minimum of two (2) years to a maximum of ten (10) years.



	ü	 	Lump Sum Payment – the vested account balance will be paid in a lump
sum on the pre-selected date on file with the Company.
	 
	ü	 	Annual Installment Payment – the vested account balance will be paid
in annual installments beginning on the pre-selected date.



Change of Control



In the event of a Change of Control, each Participant’s LTIP Balance will vest
and be distributed as soon as practicable following such Change of Control.


Each Participant should refer to his/her individual, signed Change of Control
Agreement for full details.


Discretionary Distribution



The Compensation Committee may, in its sole and absolute discretion, accelerate
vesting and approve a lump sum distribution of all or a portion of a
Participant’s LTIP Balance in the event of:



	 	•	 	The employee’s death;
	 
	 	•	 	Normal retirement, as defined in Ryder’s Retirement Plan, as may be
amended from time to time;
	 
	 	•	 	Permanent and total disability, as defined in Ryder’s Disability
Plans, as may be amended from time to time;
	 
	 	•	 	Involuntary termination, not for cause;
	 
	 	•	 	Termination of the Plan



Participants who leave the Company under any condition other than those listed
above are not eligible for a payout under the LTIP Plan, except at the
discretion of the Compensation Committee.


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Limitations



An Eligible Employee may participate in a maximum of three concurrent Plan
Cycles at any given time.


Exclusion



Participation is the Plan is not a right but a privilege subject to annual
review by the Committee. The Committee reserves the right, at its sole and
absolute discretion, to withhold payment from any Participant who violates or
who has violated any Company principle or policy, even if there are no
documented performance issues in the Participant’s personnel file.


Plan Administration



The Compensation Committee shall have full power and authority to construe,
interpret and administer the Plan. All decisions, actions or interpretations
related to the Plan are the responsibility of the Compensation Committee,
subject to the Compensation Committee’s sole and absolute discretion, and shall
be final, conclusive and binding on all parties.


The Committee is responsible for designating Participants; setting goals;
reviewing results and proposed payments and approving cash payouts.


In the event a Participant is not actively employed by the Company the
Committee has the authority to accelerate vesting and to approve a lump sum
distribution of all or a pro-rata portion of earned cash payouts.


The Compensation Committee has the right to amend or terminate the Plan,
although it cannot rescind any payments already granted to a Participant so
long as that person is employed by the Company, and is qualified under the
terms of the Plan.


General Provisions



Non-Transferable - A participant’s rights under this Plan may not be sold,
pledged, assigned or transferred in any manner, except if required by the laws
of descent and distribution (transfers of earned compensation at death through
wills or intestate transfers).


No Right to Employment - Nothing in this Plan shall be construed as an
agreement by Ryder to employ an employee for a specific period of time, or to
change the at-will status of any employee.


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Plan Funding & Security - Amounts allocated to the Plan are general liabilities
of Ryder and will be funded in a Rabbi Trust, which is an irrevocable trust
used to fund deferred compensation benefits for key employees. The primary
purpose of a Rabbi Trust is to provide and protect nonqualified plan assets,
guaranteeing that funds will be available when promised, except in the case of
bankruptcy.


In the event of bankruptcy, the assets of the Trust are subject to the claims
of general creditors, but are inaccessible to the Company for discretionary
use. In the event that the Company becomes insolvent, each Participant will be
an unsecured general creditor of the Company. Your claim against the assets of
the Company will be considered in sequence with the claims of other general
creditors of the Company.


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SUPPLEMENT A




	 	 	 
	Plan Cycle	 	
January 1, 2002 through December 31, 2004
	 	 	 
	Plan Vesting	 	
Following the close of the Plan Cycle on December 31, 2004 in accordance with the terms of the
Plan:
	 	 	 
	 	 	
•      50% after six (6) months – June 30, 2005 and
	 	 	 
	 	 	
•      50% after eighteen (18) months – June 30, 2006
	 	 	 
	Plan Payout	 	
In accordance with the terms of the Plan:
	 	 	 
	 	 	
•      1st installment during July 2005
	 	 	 
	 	 	
•      2nd installment during July 2006
	 	 	 
	Performance

Measurement	 	
Attainment of EVA as follows:




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Plan Year	 	Threshold	 	Target	 	2 Times
	
	 	
	 	
	 	

	 	2002	 	 	 	(56.8	)	 	 	(47.3	)	 	 	(37.8	)
	 	2003	 	 	 	(51.1	)	 	 	(42.6	)	 	 	(34.0	)
	 	2004	 	 	 	(46.0	)	 	 	(38.3	)	 	 	(30.6	)



Plan Participants and LTIP Targets*




	 	 	 	 	 	 	 	 	 
	Participants	 	Total LTIP Target	 	Earned Cash Target
	
	 	
	 	

	Gregory T. Swienton
	 	 	225	%	 	 	112.5	%
	Corliss J. Nelson
	 	 	165	%	 	 	82.5	%
	Vicki A. O’Meara
	 	 	125	%	 	 	62.5	%
	Challis M. Lowe
	 	 	125	%	 	 	62.5	%
	Gene R. Tyndall
	 	 	125	%	 	 	62.5	%
	Tracy A. Leinbach
	 	 	125	%	 	 	62.5	%
	Bobby J. Griffin
	 	 	125	%	 	 	62.5	%



*     As may be modified from time to time by the Compensation Committee


 






 


SUPPLEMENT B




	 	 	 
	Plan Cycle	 	
January 1, 2003 through December 31, 2005
	 	 	 
	Plan Vesting	 	
Following the close of the Plan Cycle on December 31, 2005 in accordance with the terms of the
Plan:
	 	 	 
	 	 	
•      50% after six (6) months – June 30, 2006 and
	 	 	 
	 	 	
•      50% after eighteen (18) months – June 30, 2007
	 	 	 
	Plan Payout	 	
In accordance with the terms of the Plan:
	 	 	 
	 	 	
•      1st installment during July 2006
	 	 	 
	 	 	
•      2nd installment during July 2007
	 	 	 
	Performance

Measurement	 	
Attainment of EVA as follows:




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Plan Year	 	Threshold	 	Target	 	2 Times
	
	 	
	 	
	 	

	 	2003	 	 	$	(45.1	)	 	$	(37.6	)	 	$	15.4	 
	 	2004	 	 	$	(39.7	)	 	$	(33.1	)	 	$	17.3	 
	 	2005	 	 	$	(33.8	)	 	$	(28.1	)	 	$	19.8	 



Plan Participants and LTIP Targets*




	 	 	 	 	 	 	 	 	 
	Participants	 	Total LTIP Target	 	Earned Cash Target
	
	 	
	 	

	Gregory T. Swienton
	 	 	300	%	 	 	150	%
	Corliss J. Nelson
	 	 	200	%	 	 	100	%
	Vicki A. O’Meara
	 	 	150	%	 	 	75	%
	Challis M. Lowe
	 	 	150	%	 	 	75	%
	Tracy A. Leinbach
	 	 	150	%	 	 	75	%
	Bobby J. Griffin
	 	 	150	%	 	 	75	%
	Anthony G. Tegnelia
	 	 	150	%	 	 	75	%
	Robert E. Sanchez
	 	 	100	%	 	 	50	%



*     As may be modified from time to time by the Compensation Committee



	 	 	 
	Changes to
LTIP Targets	 	
Long Term Incentive Plan Targets for 2003 were increased
based on the recommendation of an independent compensation
consultant



 






 



SUPPLEMENT C




	 	 	 
	Plan Cycle	 	
January 1, 2004 through December 31, 2006
	 	 	 
	Plan Vesting	 	
Following the close of the Plan Cycle on December 31, 2006 in accordance with the terms of the
Plan:
	 	 	 
	 	 	
•      50% after six (6) months – June 30, 2007 and
	 	 	 
	 	 	
•      50% after eighteen (18) months – June 30, 2008
	 	 	 
	Plan Payout	 	
In accordance with the terms of the Plan:
	 	 	 
	 	 	
•      1st installment during July 2007
	 	 	 
	 	 	
•      2nd installment during July 2008
	 	 	 
	Performance

Measurement	 	
Attainment of EVA as follows:




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Plan Year	 	Threshold	 	Target	 	2 Times
	
	 	
	 	
	 	

	 	2004	 	 	$	(39.2	)	 	$	(21.1	)	 	$	3.7	 
	 	2005	 	 	$	(34.5	)	 	$	(18.5	)	 	$	5.7	 
	 	2006	 	 	$	(29.3	)	 	$	(15.7	)	 	$	7.7	 



Plan Participants and LTIP Targets*




	 	 	 	 	 	 	 	 	 
	Participants	 	Total LTIP Target	 	Earned Cash Target
	
	 	
	 	

	Gregory T. Swienton
	 	 	300	%	 	 	150	%
	Tracy A. Leinbach
	 	 	150	%	 	 	75	%
	Vicki A. O’Meara
	 	 	150	%	 	 	75	%
	Challis M. Lowe
	 	 	150	%	 	 	75	%
	Bobby J. Griffin
	 	 	150	%	 	 	75	%
	Anthony G. Tegnelia
	 	 	150	%	 	 	75	%
	Robert E. Sanchez
	 	 	100	%	 	 	50	%
	Richard B. Carson
	 	 	100	%	 	 	50	%
	Thomas S. Renehan
	 	 	100	%	 	 	50	%
	Gregory F. Greene
	 	 	100	%	 	 	50	%



*     As may be modified from time to time by the Compensation
Committee