exv10w7



Table of Contents







    EXHIBIT 10.7



 



     



 



    ANNUAL INCENTIVE PLAN



 



    2009 Plan Year
    



 



    Guidelines



 



    KIRBY CORPORATION



 



    January 2009
    













 





 




    TABLE OF
    CONTENTS



 











	 	 	 	 	 
	

    Introduction


	
 
	 
	
    2
	 

	

    The Annual Incentive Plan


	
 
	 
	
    2
	 

	

    Performance Measurement Period


	
 
	 
	
    2
	 

	

    Eligibility


	
 
	 
	
    2
	 

	

    Plan Objectives


	
 
	 
	
    3
	 

	

    Performance Measures


	
 
	 
	
    3
	 

	

    Corporate and Business Group Weighting


	
 
	 
	
    3
	 

	

    Individual Bonus Targets


	
 
	 
	
    3
	 

	

    Annual Incentive Plan Concept


	
 
	 
	
    4
	 

	

    Performance Measures and Weighting


	
 
	 
	
    4
	 

	

    Performance Standards and Award Opportunities


	
 
	 
	
    4
	 

	

    Example Award Calculation


	
 
	 
	
    5
	 

	

    Administration


	
 
	 
	
    5
	 















    

    1








Table of Contents





 




    INTRODUCTION



 



    Kirby Corporation established its Annual Incentive Plan to focus
    employees on identifying and achieving business strategies that
    will grow the business and lead to an increase in shareholder
    value. The Annual Incentive Plan is also intended to reward
    superior performance by employees, for their contributions
    toward achieving Kirby’s objectives. This program may be
    offered, in whole or in part, to wholly owned subsidiaries of
    the Company, at the Company’s discretion.



 



    Certain aspects of this Plan are complex. Although these
    guidelines establish rules for Plan operation, those rules may
    not work in all cases. Therefore, the Compensation Committee of
    the Kirby Board of Directors shall have the discretionary
    authority to interpret these guidelines to insure that the
    awards are consistent with the Plan’s purposes and the
    Company’s interests. All decisions by the Compensation
    Committee shall be final and binding.



 



    This Plan, or any part thereof, may be amended, modified, or
    terminated at any time, without prior notice, by written
    authorization of (i) the Compensation Committee or
    (ii) the Chief Executive Officer of the Company; provided
    that the Plan may not be amended or modified in a manner that
    would cause an award that is intended to satisfy the
    performance-based compensation exception under
    Section 162(m) of the Internal Revenue Code of 1986, as
    amended (“Section 162(m)”), to fail to satisfy
    the exception.



 



    This Plan supercedes all prior annual incentive bonus plans or
    programs maintained by the Company.



 




    The
    Annual Incentive Plan



 



    Each award granted under the Plan is an award for total Company
    performance, and for the performance of our four Business
    Groups; Kirby Inland Marine, Kirby Engine Systems, Dixie
    Offshore Transportation and Osprey, Line. Awards are
    formula-driven and are based on achieving Company, Business
    Group and individual performance objectives. At the discretion
    of the Compensation Committee (or to the extent provided in the
    Plan, the Chief Executive Officer of the Company), an award may
    be decreased by up to 25% based on individual performance
    (“negative discretion”).



 




    Performance
    Measurement Period



 



    Performance is measured on a calendar year basis for the Annual
    Incentive Plan. The Performance Period begins on January 1,
    2009 and ends on December 31, 2009.



 




    Eligibility



 


			
	 	    • 
	
    Generally, shore staff managerial employees in salary grades 15
    and above, and Wheelhouse employees classified as Captain,
    Relief Captain or Pilot, are eligible for consideration to be
    participants. Selection for participation in the Plan is based
    upon each position’s ability to impact long-term financial
    results of the Company. Consequently, some employees in
    positions at salary grades 15 and above might not be included in
    the Plan, and some employees in positions below salary grade 15
    might be included.

	 
	 	    • 
	
    In order to be eligible to receive an award, participants must
    be employed on the last day of the Performance Period, and on
    the date bonuses are actually paid for the Performance Period,
    unless their earlier termination is due to death, normal
    retirement1

    or
    disability1.

    If a participant’s employment is terminated after the last
    day of the Performance Period, but prior to the date of payment,
    for any reason other than death, normal
    retirement1

    or
    disability1,

    the employee’s bonus is distributed among others eligible
    for the bonus. A “covered employee” as defined for
    purposes of Section 162(m) (a “Covered Employee”)
    is not eligible for the reallocated amounts.

	 
	 	    • 
	
    Participation in the Bonus Plan in one year does not guarantee
    participation in future years. Participants in the Plan will be
    notified annually of their selection for participation.



 

 


    1 Normal

    retirement or disability as defined for shore based employees in
    the Company’s Profit Sharing Plan, and as defined for
    wheelhouse employees in the Vessel Pension Plan




    

    2








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    Plan
    Objectives



 



    The Annual Incentive Plan has five key objectives:



 


			
	 	    • 
	
    Provide an annual incentive plan that drives performance toward
    objectives critical to creating shareholder value.

	 
	 	    • 
	
    Offer competitive cash compensation opportunities to key Kirby
    employees.

	 
	 	    • 
	
    Award outstanding achievement among employees who can directly
    affect Kirby’s results.

	 
	 	    • 
	
    Assist Kirby in attracting and retaining high quality employees.

	 
	 	    • 
	
    Reflect both quantitative and qualitative performance factors in
    actual bonus payouts.




 




    Performance
    Measures



 



    The performance measures for the Annual Incentive Plan are:



 


			
	 	    • 
	
    EBITDA

	 
	 	    • 
	
    Return on Total Capital

	 
	 	    • 
	
    Earnings per share




 



    Annual performance targets will be established for each measure
    based on Kirby’s projected budget, and individual bonus
    payments will be based on a combination of Company performance
    and individual performance.



 



    The maximum amount that may be paid under an award is based on
    Company performance in achieving the three performance measures,
    although an award may be decreased by up to 25% based on an
    assessment of individual performance for the year.



 



    Each of the performance measures will have equal weight in
    calculating the bonus payout pool.



 




    Corporate &
    Business Group Weighting



 



    The Annual Incentive Plan bonus is calculated at the end of the
    year based on the performance of Kirby and the performance of
    our four Business Groups, Kirby Inland Marine, Kirby Engine
    Systems, Dixie Offshore Transportation and Osprey Line, relative
    to objectives established at the beginning of the year.



 



    The award for Business Group employees will be primarily tied to
    Business Group performance, with a defined portion tied to
    Company performance.



 



    The award for Corporate employees will be tied entirely to total
    Kirby performance.



 




    Annual
    Incentive Plan Calculation



 


	 	 	 	 	 	 	 	 	 
	
 
	
 
	
    Incentive Bonus Calculation %
	
 

	
 
	
 
	
    Kirby (Company)
	
 
	
 
	
    Business Group
	
 

	 

	

    All Corporate Employees


	
 
	
 
	
    100
	
    %
	
 
	
 
	
    0
	
    %

	

    Business Group Employees 

    (Inland, Engine Systems, Offshore and Osprey)


	
 
	
 
	
    30
	
    %
	
 
	
 
	
    70
	
    %

	

    Inland & Engine Systems Presidents


	
 
	
 
	
    50
	
    %
	
 
	
 
	
    50
	
    %









 




    Individual
    Bonus Targets



 



    Each participant will be assigned a bonus level which is based
    on competitive market practices, as well as the employee’s
    ability to impact long-term Company performance. Market
    practices will be determined using data from either general
    industry, the marine transportation industry, or the diesel
    repair industry, depending upon the individual position being
    considered. It is the Company’s intent that salary plus
    target annual bonus be positioned to provide a competitive
    market opportunity for target performance.




    

    3








Table of Contents





 




    Annual
    Incentive Plan Concept



 



     



 




    Performance
    Measures and Weighting



 


	 	 	 	 	 
	

    Measure


	
 
	
    Weight
	
 

	 

	

    EBITDA (Earnings Before Interest, Taxes, Depreciation and
    Ammortization)


	
 
	
 
	
    331/3
    
	
    %

	

    Return on Total Capital (Earnings before interest and taxes
    divided by average beginning and ending shareholders equity plus
    long-term debt)


	
 
	
 
	
    331/3
    
	
    %

	

    Earnings per Share


	
 
	
 
	
    331/3
    
	
    %

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
    100
	
    %

	
 
	
 
	
 
	
 
	
 









 




    Performance
    Standards & Award Opportunities



 


	 	 	 	 	 	 	 	 	 
	
 
	
 
	
 
	
 
	
    Relationship to

    
	
 
	
    % of Target

    
	
 

	

    Performance Level


	
 
	

    Definition


	
 
	
    Budget
	
 
	
    Earned
	
 

	 

	

    Threshold


	
 
	
    Minimal acceptable

    performance for payout
	
 
	
    80% of Budget
	
 
	
 
	
    50
	
    %

	

    Target


	
 
	
    Expected performance at a

    stretch level
	
 
	
    100% of Budget
	
 
	
 
	
    100
	
    %

	

    Maximum


	
 
	
    Outstanding performance
	
 
	
    120% of Budget
	
 
	
 
	
    200
	
    %









 



    Performance must be at least to Threshold to earn a bonus
    payment.




    

    4








Table of Contents





 




    Example
    Award Calculation



 


	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
 
	
 
	
    Performance Standards
	
 
	
 
	
    Example Calculation
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
    Assumed

    
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
    Weighted

    
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
    Actual

    
	
 
	
 
	
    Percent

    
	
 
	
 
	
 
	
 
	
 
	
    Percent of

    
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
    Results

    
	
 
	
 
	
    of Target

    
	
 
	
 
	
 
	
 
	
 
	
    Target

    
	
 

	
 
	
 
	
    Below

    
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
    (% Budget

    
	
 
	
 
	
    Award

    
	
 
	
 
	
    Objective

    
	
 
	
 
	
    Award

    
	
 

	

    Performance Objectives


	
 
	
    Threshold
	
 
	
 
	
    Threshold
	
 
	
 
	
    Target
	
 
	
 
	
    Maximum
	
 
	
 
	
    Achieved)
	
 
	
 
	
    Earned
	
 
	
 
	
    Weight
	
 
	
 
	
    Earned
	
 

	 

	

    Percent of Target Award Earned:


	
 
	
 
	
    0
	
    %
	
 
	
 
	
    50
	
    %
	
 
	
 
	
    100
	
    %
	
 
	
 
	
    200
	
    %
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	

    EBITDA (% Budget Achieved)


	
 
	
 
	
    < 80
	
    %
	
 
	
 
	
    80
	
    %
	
 
	
 
	
    100
	
    %
	
 
	
 
	
    120
	
    %
	
 
	
 
	
    90
	
    %
	
 
	
 
	
    75
	
    %
	
 
	
 
	
    331/3
    
	
    %
	
 
	
 
	
    25
	
    %

	

    Return on Total Capital (% Budget Achieved)


	
 
	
 
	
    < 80
	
    %
	
 
	
 
	
    80
	
    %
	
 
	
 
	
    100
	
    %
	
 
	
 
	
    120
	
    %
	
 
	
 
	
    110
	
    %
	
 
	
 
	
    150
	
    %
	
 
	
 
	
    331/3
    
	
    %
	
 
	
 
	
    50
	
    %

	

    Earnings per Share (% Budget Achieved)


	
 
	
 
	
    < 80
	
    %
	
 
	
 
	
    80
	
    %
	
 
	
 
	
    100
	
    %
	
 
	
 
	
    120
	
    %
	
 
	
 
	
    100
	
    %
	
 
	
 
	
    100
	
    %
	
 
	
 
	
    331/3
    
	
    %
	
 
	
 
	
    33.3
	
    %

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
    Total Percent of Target Awards Earned for Bonus Pool:
	
 
	
 
	
    108.3
	
    %

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 









 


			
	 	    • 
	
    As shown in the exhibit, actual performance on each objective
    results in a corresponding percent of target award earned.

	 
	 	    • 
	
    The percents of target award earned for each objective are then
    multiplied by the weight for the objective, producing a weighted
    percent of target award earned for each objective.

	 
	 	    • 
	
    The weighted percents of target award earned for all objectives
    are summed to produce a total percent of target awards earned.
    This factor, when multiplied by the sum of target bonuses for
    plan participants, equals the bonus funding pool.

	 
	 	    • 
	
    The total pool is paid to participants pro-rata, based on their
    individual bonus level and their applicable base salary for the
    period, except that each individual award may be decreased by up
    to 25% based on individual performance.




 




    Administration



 




    Award
    Payout



 



    A participant’s Final Award is paid out in cash within
    90 days following the end of the Company’s fiscal
    year, based on audited financials. No payment shall be made to a
    participant who is a Covered Employee until the Compensation
    Committee certifies that the performance objectives related to
    an award granted to such participant have been satisfied.



 




    Eligibility
    Limitation



 



    Unless otherwise provided for in the Plan, participants must be
    employed by the Company on the last day of the Performance
    Period, and on the date bonuses are actually paid for the
    Performance Period, in order to be eligible to receive a bonus
    award.



 




    Special
    Circumstances



 



    Listed below are guidelines addressing payment of awards upon
    termination and other events. The Committee will have the sole
    authority to resolve disputes related to Plan administration.
    Decisions made by the Committee will be final and binding on all
    participants.



 



    New Employees.  New employees hired after the
    beginning of a Performance Period who are selected for
    participation in the Plan, will receive prorated awards for the
    then current Performance Period, subject to the Termination of
    Employment restrictions.




    

    5








Table of Contents






    Termination of Employment.  If employment
    terminates before the end of the full Performance Period as a
    result of death, normal
    retirement2,

    or
    disability2,

    the participant (or the participant’s heirs) will be
    entitled to receive a prorated award at the end of the
    Performance Period, based upon actual performance and base wages
    earned while employed during the Performance Period.



 



    If employment terminates prior to the last day of the
    Performance Period for any reason other then death, normal
    retirement2,

    or
    disability2,

    the participant will be ineligible to receive an award.



 



    Transfer.  A participant who is transferred
    between business units of the Company will be entitled to
    receive a weighted award based upon the time spent at each of
    the units. The weighted award is calculated by adding
    (1) the participant’s prorated award for time spent at
    the first business unit, to (2) the participant’s
    prorated award for time spent at the second business
    unit3.




 



    Promotions.  A participant who is promoted or
    reassigned during any Performance Period, and whose bonus target
    is subsequently increased or decreased, will be eligible to
    receive a weighted award. The award is calculated by adding
    (1) the prorated award for service before the promotion or
    reassignment, to (2) the prorated award for service after
    the promotion or
    reassignment3.




 




    Compensation
    Committee



 



    The Compensation Committee has the responsibility for the
    overall governance and administration of the Plan. In fulfilling
    its duties, the Committee will be responsible for interpreting
    the Plan and will rely on these guidelines in making all
    determinations that are necessary or advisable for
    administration of the Plan.



 



    In administering the Plan the Committee will, on an annual basis:



 


			
	 	    • 
	
    Approve the designation of Business Groups within the Company

	 
	 	    • 
	
    Approve the Performance Measures and the Threshold, Target and
    Maximum budget performance levels for all participants

	 
	 	    • 
	
    Approve linkage for participants to Company and Business Group
    performance

	 
	 	    • 
	
    Approve the Bonus Levels for all participants whose salaries are
    at or above $100,000

	 
	 	    • 
	
    Determine in its discretion whether a participant’s award
    will be decreased

	 
	 	    • 
	
    Certify whether the performance objectives for a Covered
    Employee have been satisfied prior to payment of an award to a
    Covered Employee




 



    The Compensation Committee may deviate from the guidelines in
    the Plan, but in no event may it increase the amount payable to
    a Covered Employee upon attaining the performance objectives.
    The performance objectives of Covered Employees may only be
    adjusted as permitted under Section 162(m) or the
    regulations thereunder. In addition, the exercise of negative
    discretion with respect to one participant is not permitted to
    result in an increase in the amount payable to another
    participant who is a Covered Employee.



 




    CEO



 



    The CEO will have primary responsibility for recommending Plan
    guidelines to the Committee, and for carrying out the
    administrative duties associated with annual award calculations.
    In addition, the Compensation Committee may delegate additional
    administrative duties to the CEO or any Company officer. The CEO
    may determine, in his discretion, whether the award to any
    participant who is not an executive officer of the Company will
    be decreased (up to a maximum of 25% of the award) based on
    individual performance. The CEO may


 

 


    2 Normal

    retirement or disability as defined for shore based employees in
    the Company’s Profit Sharing Plan, and as defined for
    wheelhouse employees in the Vessel Pension Plan.




    3 Company

    and Business Group performance factors are calculated using
    performance for the entire Performance Period.




    

    6








Table of Contents






    recommend, subject to Compensation Committee approval, that the
    award to any executive officer of the Company be similarly
    decreased based on individual performance.



 




    CFO



 



    The CFO will be responsible for calculating performance under
    the Plan and recommending adjustments to the performance
    objectives. In this capacity, the CFO will:



 


			
	 	    • 
	
    Provide annual reports to the Compensation Committee and the CEO
    on each Business Group’s performance at the end of the
    Company’s fiscal year

	 
	 	    • 
	
    Maintain a financial information system that reports results on
    an estimated quarterly and annual basis

	 
	 	    • 
	
    Coordinate with the Company’s auditors to properly
    recognize any accounting expense associated with awards under
    the Plan

	 
	 	    • 
	
    Provide the VP of Human Resources with the performance results
    of each Business Group as well as overall Company performance

	 
	 	    • 
	
    Calculate new Threshold, Target and Maximum performance
    objectives as required by the Plan




 




    VP of
    Human Resources



 



    The VP of Human Resources will have primary responsibility for
    the day-to-day administration of the Plan. In this capacity, the
    VP of Human Resources will:



 


			
	 	    • 
	
    Develop and recommend Target Award Guidelines and eligible
    participants for each new Performance Period to the CEO for
    approval

	 
	 	    • 
	
    Coordinate communications with participants, including materials
    to facilitate understanding the Plan’s objectives and goals

	 
	 	    • 
	
    Provide quarterly performance updates to Plan participants

	 
	 	    • 
	
    Calculate participants’ awards, using the performance
    factors provided by the CFO

	 
	 	    • 
	
    Process paperwork approving individual award payments




 




    Business
    Group Presidents and Vice Presidents



 



    Business Group Presidents and Vice Presidents will:



 


			
	 	    • 
	
    Recommend participants for each Performance Period

	 
	 	    • 
	
    Coordinate with the CFO to determine any significant changes in
    business conditions for purposes of reviewing the Threshold,
    Target and Maximum performance objectives

	 
	 	    • 
	
    Insure that participants are informed of the actual award earned
    for each Performance Period





    

    7