<PAGE>

                                                                   Exhibit 10(b)


                   Executive Group Incentive Compensation Plan
                                     (EGICP)

                                   2000 - 2004

<PAGE>


                       Airborne Freight Corporation D/B/A
                            "Airborne Express, Inc."

                   EXECUTIVE GROUP INCENTIVE COMPENSATION PLAN
                   -------------------------------------------

                  Effective January 1, 2000 - December 31, 2004

1)   Purpose
     -------
     The purpose of this Plan is to achieve Corporate goals by providing
     incentive compensation to eligible key executives who through industry,
     ability and exceptional service, contribute materially to the success of
     Airborne Express.

2)   Definitions
     -----------

     When used in the Plan, the following words and phrases shall have the
     following meanings:

     a)   Attainment - The actual results of effort to reach the Target for a
          ----------
          Performance Measure, usually stated as a percentage of Target.

     b)   Beneficiary - The beneficiary or beneficiaries designated to receive
          -----------
          the amount, if any, payable under the Plan upon the death of a
          Participant.

     c)   Board - The Board of Directors of Airborne Freight Corporation.
          -----

     d)   Compensation Committee - The Compensation Committee of the Board.
          ----------------------

     e)   Maximum - The point above Target that represents the maximum payout
          -------
          level for a particular Performance Measure.

     f)   Net Profit - Pre-tax, pre-profit sharing net profit.
          ----------

     g)   Participant - Any employee eligible to receive awards under section 4.
          -----------

     h)   Performance Measure - A specific objective measure to assess success
          -------------------
          in achieving established goals. Permitted Performance Measures are
          listed in section 5.

     i)   Plan - The 2000 - 2004 Executive Group Incentive Compensation Plan.
          ----

     j)   Plan Year - Each calendar year for which Performance Measures and
          ---------
          Targets are established for the Company.

     k)   Retirement - When an employee leaves active service and qualifies
          ----------
          under the Company's regular or early retirement programs.

     l)   Target - The point at which performance equals 100% of the stated
          ------
          objective.


     m)   Threshold - The point below Target at which incentive payout for each
          ---------
          Performance Measure begins.

3)   Administration
     --------------
     a)   The Compensation Committee will have the power to interpret the Plan
          and to make all determinations necessary or desirable for its
          administration.

     b)   The decision of the Compensation Committee on any question concerning
          the interpretation or administration of the Plan will be final and
          conclusive. Nothing in the Plan will be deemed to give any officer or
          employee, or legal representatives or assigns, any right to
          participate in the Plan except to such extent as the Compensation
          Committee may determine pursuant to the provisions of the Plan.


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4)   Eligibility
     -----------

     a)   Positions eligible for the Executive Group Incentive Compensation Plan
          (EGICP) are:

            Senior Executive Vice Presidents
            Executive Vice Presidents (EVPs)
            Chief Executive Officer, ABX Air, Inc.
            President, ABX Air, Inc.
            Chief Financial Officer (CFO)

     Except as otherwise provided below, participants for a Plan Year must be
     employed for the entire Plan Year.

     b)   With approval of the Compensation Committee, prior to June 30 of each
          Plan Year, additional employees may be included in the Plan, with any
          award pro-rated as shall be determined by the Compensation Committee.

     c)   Participants who retire in good standing during the year will be
          eligible for a pro-rated award for the year in which they retire
          provided they are on the active payroll on June 30th or later of the
          Plan Year.

     d)   Participants who take a leave of absence will have their awards
          calculated based on actual Airborne salary earnings for the calendar
          year. Any disability insurance payments will not be included as
          earnings in calculating awards. Participants who are on a leave of
          absence for more than 90 days and who continue to receive full or
          partial salary continuance will have their awards adjusted. Any salary
          paid while on a leave of absence period over 90 days will not be
          included in the base used to calculate awards.

5)   Performance Measures

     Unless otherwise determined by the Committee, bonuses for the Executive
     Group will be based on the following Performance Measure -- assigned
     management by objectives (MBOs) that specifically relate to the individual
     executive and his/her responsibilities. The Compensation Committee will set
     annual Targets for the Performance Measure within 90 days after the
     beginning of each Plan Year and such Targets will not be changed
     thereafter. The Targets may be ratified by the Board.

     MBO is the performance measure and is the basis of 100% of the bonus
     allocation.

          (1)  Quantitatively based, but judgmentally applied.
          (2)  Meaningful - represents impact of position.
          (3)  Reporting System - uses existing reporting systems.
          (4)  Quantifiable results are subject to override by the
               Committee/CEO/CFO.

6)   Qualifiers on Performance Measures
     ----------------------------------

     a)   The amount of bonus paid on MBO achievements will be at the discretion
          of the Committee/CEO/CFO.
     b)   The bonus percentage is applied to the Participant's salary paid in
          the Plan (calendar) Year.
     c)   No bonus will be paid for Revenue Growth unless the Threshold for Net
          Profit is achieved.
     d)   To receive any award under EGICP, a Participant's individual
          performance must be evaluated as at least competent by the
          Compensation Committee.
     e)   The Committee has the discretion to reduce or increase or eliminate
          any award earned under the EGICP plan.

7)   Bonus Amounts
     -------------
     Actual bonuses will be determined by multiplying the following percentages,
     or a pro-rated portion thereof, by the Participant's annual salary.

                                    Threshold                      Maximum
Position                         (60% of Target)    Target(1)  (150% of Target)
--------------------------------------------------------------------------------
Sr. EVPs, CEO ABX Air, Inc.           26.0%          65.0%          130.0%
EVPS, President ABX Air, Inc.         24.0%          60.0%          120.0%

          (1) The Committee/CEO/CFO have the authority to increase or decrease
          the quantifiable MBO attainment percents based on their judgment of
          MBO accomplishments.


8)   Allocations
     -----------
     Unless otherwise determined under section 5, the EGICP incentive payment
     percentages for Attainment of Performance Measures are:

                          Sr. EVPs, CEO ABX Air, Inc.
                          (70% Corporate / 30% MBO)
<TABLE>
<CAPTION>
                70% Corporate                      30% MBO
   Goal                           Corp.
Attainment    Profit   Revenue    Total    MBO #1 (1)   MBO #2 (1)   MBO Total
--------------------------------------------------------------------------------
<S>           <C>      <C>        <C>      <C>          <C>          <C>
Threshold     13.65%    4.55%     18.20%      3.90%        3.90%        7.80%
Target        34.12%   11.38%     45.50%      9.75%        9.75%       19.50%
Maximum       68.25%   22.75%     91.00%     19.50%       19.50%       39.00%
</TABLE>

          (1) The Committee/CEO/CFO have the authority to increase or decrease
          the quantifiable MBO attainment percents based on their judgment of
          MBO accomplishments.


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                          EVPs, President ABX Air, Inc.
                          (70% Corporate / 30% MBO)
<TABLE>
<CAPTION>
                70% Corporate                      30% MBO
   Goal                           Corp.
Attainment    Profit   Revenue    Total    MBO #1 (1)   MBO #2 (1)   MBO Total
--------------------------------------------------------------------------------
<S>           <C>      <C>        <C>      <C>          <C>          <C>
Threshold     12.60%    4.20%     16.80%      3.60%        3.60%        7.20%
Target        31.50%   10.50%     42.00%      9.00%        9.00%       18.00%
Maximum       63.00%   21.00%     84.00%     18.00%       18.00%       36.00%
</TABLE>

          (1) The Committee/CEO/CFO have the authority to increase or decrease
          the quantifiable MBO attainment percents based on their judgment of
          MBO accomplishments.

9)   Example
     -------
     An example incentive calculation for the EVP level is shown on Pages 6 - 7.

10)  Form of Payment
     ---------------
     Awards shall be paid entirely in cash. Payments will be made as soon as
     practicable after audited performance results are known and approved by the
     Compensation Committee, which should be on or about March 1. Award checks
     are prepared by the Payroll Department and the amounts are subject to tax
     withholding and Capital Accumulation Plan (CAP) deductions.

     If a Participant dies before the end of the Plan Year an amount equal to a
     pro-rated portion thereof as of the date of death shall be paid in one lump
     cash sum to the Participant's Beneficiary.

11)  Designation of Beneficiaries
     ----------------------------
     Each Participant shall file with the Company a written designation of one
     or more persons as the Beneficiary who shall be entitled to receive the
     amount, if any, payable under the Plan upon the Participant's death. A
     Participant may, from time to time, revoke or change his Beneficiary
     designation without the consent of any prior Beneficiary by filing a new
     designation. The last such designation received shall be controlling,
     provided, however, that no designation, or change or revocation thereof,
     shall be effective unless received by the Company prior to the
     Participant's death, and in no event shall it be effective as of a date
     prior to such receipt.

12)  Absence of Valid Designation
     ----------------------------
     If no such Beneficiary designation is in effect at the time of a
     Participant's death, or if no designated Beneficiary survives the
     Participant, or if such designation conflicts with the law, the Participant
     shall be deemed to have designated the Participant's estate as the
     Participant's Beneficiary and the Participant's estate shall receive the
     payment of the amount, if any, under the Plan upon the Participant's death.
     If the Compensation Committee is in doubt as to the right of any person to
     receive such amount, the Compensation Committee may direct retention of
     such amount, without liability for any interest thereon, until the rights
     thereto are determined or the Compensation Committee may pay such amount to
     any court of appropriate jurisdiction and such payment shall be a complete
     discharge of the liability of the Plan and of Airborne Express therefore.


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13)  No Liability of Compensation Committee, Board Members or Officers
     -----------------------------------------------------------------
     No members of the Compensation Committee, Board or Corporate officers shall
     be personally liable by reason of any contract or other instrument executed
     by them or on their behalf nor for any mistake or judgment made in good
     faith, and Airborne shall indemnify and hold harmless each member of the
     Board and each other officer, employee or director of Airborne Express to
     whom any duty or power relating to the administration or interpretation of
     the Plan may be allocated or delegated, against any cost or expense
     (including counsel fees) or liability (including any sum paid in settlement
     of a claim with the approval of the Compensation Committee) arising out of
     any act or omission to act in connection with the Plan unless arising out
     of such person's own fraud or bad faith.

14)  Right to Amend, Suspend or Terminate Plan
     -----------------------------------------
     The Board reserves the right at any time to amend, suspend or terminate the
     Plan in whole or in part and for any reasons and without the consent of any
     Participant or Beneficiary; provided that no such amendment shall adversely
     affect rights to receive any amount to which Participants or Beneficiaries
     have become entitled prior to such amendment. Unless otherwise provided
     herein, any amendment, modification, suspension or termination of any
     provisions of the Plan may be made retroactively.

15)  No Rights to Continued Employment or Bonus
     ------------------------------------------
     Nothing contained in the Plan shall give any employee the right to be
     retained in the employment of Airborne Express or affect the right of
     Airborne Express to dismiss any employee. The adoption of the Plan shall
     not constitute a contract between Airborne Express and any employee. No
     Participant shall receive any right to be granted an award hereunder nor
     shall any such award be considered as compensation under any employee
     benefit plan of Airborne Express except as otherwise determined by Airborne
     Express.

16)  No Right, Title, or Interest in Assets
     --------------------------------------
     The Participant shall have no right, title, or interest whatsoever in or to
     any investments which Airborne Express may make to aid in meeting its
     obligations under the Plan. Nothing contained in the Plan, and no action
     taken pursuant to its provisions, shall create or be construed to create a
     fiduciary relationship between Airborne Express and any Participant or any
     other person. To the extent that any person acquires a right to receive
     payments from Airborne Express under this Plan, such right shall be no
     greater than the right of an unsecured general creditor of Airborne
     Express.

17)  Unfunded Plan: Governing Law
     ----------------------------
     The Plan is intended to constitute an incentive compensation arrangement
     for a select group of management or highly compensated personnel and all
     rights thereunder shall be governed by and construed in accordance with the
     laws of the State of Washington.

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