Document:

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                                                                   Exhibit 10.20

                   KANSAS CITY SOUTHERN ANNUAL INCENTIVE PLAN

1.   PURPOSE. The purpose of the Plan is to provide management employees of the
     Employer with annual incentive compensation based on the level of
     achievement of financial and other performance criteria. The Plan is
     intended to focus the interests of these employees on the key measures of
     the Company's success and to reward these employees for achieving the key
     measures of the Company's success. This Plan is not intended to be a
     performance-based plan for purposes of Section 162(m) of the Code.

2.   DEFINITIONS. As used in the Plan, the following terms shall have the
     meanings set forth below:

          (a)      "Award" shall mean a cash payment for a Performance Year paid
          to a Participant on account of his or her participation in the Plan.

          (b)      "Board" shall mean the Board of Directors of the Company.

          (c)      "Code" shall mean the Internal Revenue Code of 1986, as
          amended from time to time, including applicable regulations and
          rulings thereunder and any successor provisions thereto.

          (d)      "Committee" shall mean the Compensation and Organization
          Committee of the Board (or any successor committee).

          (e)      "Company" shall mean Kansas City Southern, and any successor
          thereto which adopts the Plan.

          (f)      "Disability" shall mean a disability as defined under the
          Employer's applicable long-term disability program.

          (g)      "Eligible Employee" shall mean an individual who is employed
          by an Employer in active service and who is not represented by a union
          or other collective bargaining organization at any time during the
          Performance Year.

          (h)      "Employer" shall mean the Company and KCSR.

          (i)      "KCSR" shall mean The Kansas City Southern Railway Company,
          and any successor thereto which adopts the Plan.

          (j)      "Leave" shall mean an absence from work with the approval of
          the applicable Employer. Leaves include absences for short-term
          disability, family leaves of absence and other approved leaves of
          absence.

          (k)      "Maximum Award" shall mean an Award level that may be paid if
          the maximum level of the Performance Goal(s) is achieved in the
          Performance Year.

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          (l)      "Participant" shall mean, with respect to any Performance
          Year, any Eligible Employee who is selected to participate in the Plan
          in accordance with Section 3 of the Plan.

          (m)      "Performance Goal" shall mean the pre-established performance
          goal(s) established by the Committee for each Performance Year as
          described in Section 4 of the Plan.

          (n)      "Performance Measures" shall mean one or more of the
          following criteria, on which Performance Goals may be based: revenues,
          net income, pre-tax income, operating income, earnings per share,
          earnings before interest and taxes (EBIT), earnings before interest,
          taxes, depreciation and amortization (EBITDA), cash flow, return on
          equity, return on capital, return on assets, cash flow, operating
          ratio, and capital expenditures; provided, that the Committee shall
          have the authority to use Performance Measures other than those herein
          specified as it deems appropriate in its sole discretion.

          (o)      "Performance Year" shall mean the calendar year of the
          Company in which a Participant provides services on account of which
          the Award is made.

          (p)      "Plan" shall mean the Kansas City Southern Annual Incentive
          Plan, as set forth herein, as from time to time amended.

          (q)      "Proration Fraction" shall mean a fraction, the numerator of
          which is the number of days in the Performance Year the individual was
          an Eligible Employee, and the denominator of which is 365.

          (r)      "Target Award" shall mean an Award level that may be paid if
          the target level of the Performance Goal(s) is achieved in the
          Performance Year.

          (s)      "Threshold Award" shall mean an Award level that may be paid
          if the threshold level of the Performance Goal(s) is achieved in the
          Performance Year.

3.   ELIGIBILITY AND PARTICIPATION.

          (a)      In General. An Eligible Employee of an Employer will become a
          Participant for a Performance Year if he or she is selected by the
          Committee as eligible to participate in the Plan. Participants will be
          determined by the Committee at the beginning of each Performance Year,
          and participation in the Plan during one Performance Year does not
          guarantee continued participation in future Performance Years. The
          Committee may add Participants during the course of a Performance Year
          as it deems appropriate in its sole discretion. A Participant must be
          employed by an Employer on the last business day of a Performance Year

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          in order to be eligible to receive an Award, except as provided in
          Section 3(b) below.

          (b)      Prorations for Partial Year. A Participant who is not an
          Eligible Employee for an entire Performance Year may receive an Award
          for any portion of the Performance Year that he or she is an Eligible
          Employee, subject to Section 5 of the Plan and the following:

                   1)    New Hires, Transfers. A Participant who becomes an
                         Eligible Employee on account of being hired or
                         transferred during a Performance Year will be eligible
                         for a prorated Award for such Performance Year. The
                         amount of the prorated Award shall be equal to the full
                         amount of the Award otherwise determined under
                         Section 4 of the Plan, multiplied by the Proration
                         Fraction.

                   2)    Death or Disability. A Participant who has a
                         termination of employment during a Performance Year on
                         account of death or Disability will be eligible for a
                         prorated Award for such Performance Year. The amount of
                         the prorated Award shall be equal to the full amount of
                         the Award for such individual for the Performance Year
                         in which the death or Disability occurs, multiplied by
                         the Proration Fraction. With respect to the calculation
                         of an Award for purposes of this provision, the
                         Participant's rate of base salary in effect for the
                         last full payroll period of his or her employment shall
                         be used.

          (c)      Leaves. A Participant who is on Leave for an aggregate of
          more than three (3) months during a Performance Year will be eligible
          for an Award, the amount of which shall be prorated based on the
          portion of the Performance Year the individual was actively at work
          for an Employer. Such a Participant's prorated Award will be the full
          amount of such Award otherwise determined under Section 4 of the Plan,
          multiplied by the Proration Fraction. With respect to the calculation
          of an Award for purposes of this provision, the first three months of
          a Participant's Leave will be counted as a period during which the
          individual was actively at work.

4.   DETERMINATION OF AWARDS.

          (a)      Establishment of Performance Goal. The Committee shall
          establish objective Performance Goals for each Award after the
          beginning of each Performance Year. The Performance Goals may be based
          upon the performance of the Company, KCSR, the Employer, or any
          operating unit level, division or function thereof, and may be applied
          either alone or relative to the performance of other businesses or
          individuals (including industry or general market indices), based on
          one or more of the

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          Performance Measures. Performance Goals may be expressed as whole
          dollar amounts, percentages or growth rates. Performance Goals will be
          determined each year by the Committee based on a recommendation from
          senior management of the Company, with consultation from other third
          party sources. Performance Goals will be set for each Performance
          Measure as follows: threshold, target and maximum. No Award will be
          made under a Performance Measure if results are below the threshold
          level.

          (b)      Establishment of Awards. The Committee shall also establish
          the Threshold Award, the Target Award and the Maximum Award payable to
          a Participant if the Performance Goal(s) is achieved. The payment of
          any Award shall be subject to achievement of the applicable
          Performance Goals and certification by the Committee to the degree to
          which each of the Performance Goals have been attained. Threshold
          Awards, Target Awards and Maximum Awards will be expressed as a
          percentage of a participant's base salary and correspond to salary
          grades. Target Award percentages will be determined each year by the
          Committee based on a recommendation from senior management of the
          Company, with consultation from other third party sources. For
          purposes of determining the amount of an Award, the Participant's rate
          of base salary in effect for the last full payroll period of the
          Performance Year to which the Award pertains shall be used.

          (c)      Maximum Individual Award. The maximum amount of any Maximum
          Award to a Participant for any Performance Year shall be the lesser of
          $2,000,000 or 200 percent of a Participant's Target Award for a
          Performance Year. Threshold Award amounts will be 25% of the potential
          Target Award amount (multiplied by the Performance Measure weighting).

          (d)      Adjustments to Awards. The Committee may, in its discretion,
          modify the amount of any Award based on such criteria as it shall
          determine, including, but not limited to, financial results,
          individual performance, safety performance, business unit and site
          accomplishments, and other factors tied to the success of the Company
          or any of its business units. The Committee shall retain the
          discretion to adjust any Award downward. There is no obligation of
          uniformity of treatment of Participants under the Plan.

          (e)      Determination of Attainment of Performance Goals. The
          Committee may determine in its sole discretion how results will be
          calculated related to the Performance Measures selected for a
          particular Performance Year. In determining results for a Performance
          Year, the Committee may approve adjustments in the calculations to
          reflect extraordinary, unusual or non-recurring items.

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5.   PAYMENT OF AWARDS.

          (a)      Time of Payment. An Award shall be paid to a Participant in
          cash as soon as practicable after the Committee has certified in
          writing that the Performance Goal(s) for the Performance Year have
          been achieved. No absolute right to any Award shall be considered as
          having accrued to any Participant prior to the payment of the Award.
          Awards payable to other Participants who have had a termination of
          employment on account of death or Disability during the Performance
          Year shall be payable in accordance with Section 3(b) of the Plan and
          at the same time other Participants receive Awards under the Plan.

          (b)      Termination of Employment Other Than on Account of Death or
          Disability. A Participant who has a termination of employment other
          than on account of death or Disability prior to the last day of a
          Performance Year shall not be paid any Award for such Performance
          Year.

          (c)      Termination of Employment on Account of Death or Disability.
          A Participant who has a termination of employment on account of death
          or Disability after the end of the Performance Year but prior to the
          payment date for Awards for such Performance Year shall be paid the
          full amount of any Award for such Performance Year, determined under
          Section 4 of the Plan (in addition to any amount determined under
          Section 3(b) for the Performance Year in which the termination of
          employment on account of death or Disability occurs). If the
          Participant dies prior to receiving payment of an Award, any Award
          payable under the Plan to such Participant shall be paid to the
          Participant's estate.

          (d)      Withholding. Awards are subject to withholding for applicable
          federal, state and local taxes.

6.   PLAN ADMINISTRATION.

          (a)      Administration. The Plan shall be administered by the
          Committee. The Committee shall have full discretionary authority to
          establish the rules and regulations relating to the Plan, to interpret
          the Plan and those rules and regulations, to determine the Awards and
          the Performance Measures applicable to each Award, to approve all
          Awards, to decide the facts in any case arising under the Plan, and to
          make all other determinations and to take all other actions necessary
          or appropriate for the proper administration of the Plan. In making
          any determinations under or referred to in the Plan, the Committee
          shall be entitled to rely on opinions, reports or statements of
          employees of the Company and KCSR and of counsel, public accountants,
          and other professional or expert persons. The Committee's
          administration of the Plan, including all such rules and regulations,
          interpretations, selections, determinations, approvals, decisions,
          delegations, amendments, terminations and other actions, shall be
          final and binding on the Company and its stockholders and all
          employees, including Participants and their beneficiaries. No member
          of

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          the Committee shall be liable for any action taken or determination
          made in good faith with respect to the Plan or any Award.

          (b)      Delegation. Except to the extent prohibited by applicable law
          or the applicable rules of a stock exchange, the Committee may
          allocate all or any portion of its responsibilities and powers to any
          one or more of its members, may delegate all or any part of its
          responsibilities and powers for administering the Plan to one or more
          persons as the Committee deems appropriate, and at any time revoke the
          allocation or delegation.

7.   AMENDMENT OR TERMINATION OF PLAN. The Committee may amend (in whole or in
     part) or terminate the Plan at any time, effective at such date as the
     Committee may determine.

8.   MISCELLANEOUS PROVISIONS.

          (a)      Awards Not Transferable. A Participant's right and interest
          under the Plan may not be assigned or transferred. Any attempted
          assignment or transfer shall be null and void and shall extinguish, in
          the Committee's sole discretion, the Company's obligation under the
          Plan to pay Awards with respect to the Participant.

          (b)      Effect of Awards on Other Compensation.

                   1)    Awards shall not be considered eligible pay under other
                         plans, benefit arrangements or fringe benefit
                         arrangements of the Company or KCSR, unless otherwise
                         provided under the terms of other plans.

                   2)    To the extent provided in the applicable benefit plan
                         or benefit arrangement of an Employer, amounts payable
                         as Awards will be reduced in accordance with the
                         Participant's compensation reduction election, if any,
                         in effect under other plans at the time the Award is
                         paid.

          (c)      No Employment Rights. This Plan is not a contract between the
          Employer and any employee or Participant. Neither the Plan, nor any
          action taken hereunder, shall be construed as giving to any
          Participant the right to be retained in the employ of the Company or
          KCSR. Nothing in the Plan shall limit or affect in any manner or
          degree the normal and usual powers of management, exercised by the
          officers and the Board or any committee of the Board, to change the
          duties or the character of employment of any employee or to remove an
          individual from the employment of the Company or KCSR at any time, all
          of which rights and powers are expressly reserved.

          (d)      Unfunded Plan. The Plan shall be unfunded. Neither the
          Company nor KCSR shall be required to establish any special or
          separate fund, or to

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          make any other segregation of assets, to assure payment of Awards.
          Awards shall be paid solely from the general assets of the
          Participant's Employer, to the extent the payments are attributable to
          services for the Employer. To the extent any person acquires a right
          to receive payments from an Employer under the Plan, the right is no
          greater than the right of any other unsecured general creditor.

          (e)      Applicable Law. The Plan shall be governed by the laws of the
          State of Missouri and applicable federal law.

                                        7<PAGE>

                                                                   Exhibit 10.36

                                    AGREEMENT
                             TO FOREGO COMPENSATION

An Agreement is made between A. Edward Allinson (the "Director") and Kansas City
Southern Industries, Inc. (the "Company").

WHEREAS, the Director has been and continues to be a valued member of the Board
of Directors of the Company;

WHEREAS, the Company desires to assist the Director in acquiring a life
insurance policy on the life of the Director (the "Policy"), by loaning an
amount to the Director (or to a trust to be created by the Director), so that
the loaned amount can be used by the Director (or the trust) to pay a premium
for the Policy; and

WHEREAS, the Director agrees to forego all of the balance payable to the
Director under the Retirement Plan Account in the Directors' Deferred Fee Plan
of Kansas City Southern Industries, Inc. (the "Plan").

NOW, THEREFORE, in consideration for the aforementioned promises, and for other
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows, intending to be legally bound.

1.      The Company agrees to enter into a loan agreement (the "Loan Agreement")
        to provide a loan to the Director or to a trust (the "Trust") created by
        the Director. The terms of the loan shall be documented by a Promissory
        Note (the "Note") to be executed by the Company and the Director (or the
        Trust).

2.      In consideration for the Company's promise to enter into the Loan
        Agreement, the Director's Retirement Plan Account balance in the Plan
        shall be reduced to zero effective March 31, 2001. The Director's
        balance in such account as of such date shall be foregone by the
        Director, and the Director hereby irrevocably waives his right to
        payment of such amount.

IN WITNESS WHEREOF, the parties hereby execute this Agreement, intending to be
legally bound,

                                           Kansas City Southern Industries, Inc.

/s/ A. Edward Allinson                     By: /s/ Eric B. Freestone
-----------------------------------        -------------------------------------
A. Edward Allinson

March 27, 2001                             3-30-01
-----------------------------------        -------------------------------------
Date                                       Date

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                                                                   Exhibit 10.36

                                 LOAN AGREEMENT

This Loan Agreement is made between A. Edward Allinson (the "Director") and
Kansas City Southern Industries, Inc. (the "Company").

WHEREAS, the Director has been and continues to be a valued member of the Board
of Directors of the Company;

WHEREAS, the Director and the Company have entered into an Agreement to Forego
Compensation (the "Agreement") under which the Director has agreed to forego
certain compensation; and

WHEREAS, in consideration for the Director entering into the Agreement, the
Company has agreed, pursuant to this Loan Agreement, to make a loan to a trust
created by the Director.

NOW THEREFORE, in consideration for the aforementioned promises, and for other
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows, intending to be legally bound.

1.      The Company agrees to loan $523,662 to The A. Edward Allinson
        Irrevocable Trust Agreement dated June 4, 2001, Courtney Ann Arnot, A.
        Edward Allinson III and Bradford J. Allinson, Trustees (the "Trust")
        with interest at the Applicable Federal Rate (AFR) provided for in
        Internal Revenue Code Section7872(f)(2)(A) or any successor Section in
        effect at the time the loan is made, with the loan principal amount to
        be used by the Trust to pay a premium on a life insurance policy on the
        life of the Director.

2.      The terms of the loan shall be documented by a Promissory Note (the
        "Note") to be executed by the Company and the Trust.

IN WITNESS WHEREOF, the parties hereby execute this Agreement, intending to be
legally bound,

                                           Kansas City Southern Industries, Inc.

/s/ A. Edward Allinson                     By: /s/ Eric B. Freestone
-----------------------------------        -------------------------------------
A. Edward Allinson

8-14-01                                    September 18, 2001
-----------------------------------        -------------------------------------
Date                                       Date

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                                                                   Exhibit 10.36

                                 PROMISSORY NOTE

Principal Sum:  $523,662

Maker:          The A. Edward Allinson Irrevocable Trust Agreement dated June 4,
                2001, Courtney Ann Arnot, A. Edward Allinson III and Bradford
                J. Allinson, Trustees

Holder:         Kansas City Southern Industries, Inc.

FOR VALUE RECEIVED, the undersigned Maker (also referred to herein as the
"Trust") promises to pay to the order of the Holder the Principal Sum, plus
interest from the Loan Date (as hereinafter defined, and as indicated on
Schedule A attached hereto) until the date paid, at the Loan Rate indicated in
Schedule A.

The Maker agrees that the entire Principal Sum shall be used to pay a premium on
the life insurance Policy described in Schedule A, and that no part of the
Principal Sum shall be used for any other purpose. Such premium shall be paid by
the Maker within ninety (90) days after the Loan Date (subject to an extension
of up to sixty (60) days if so agreed by the parties). The "Loan Date" shall be
the date on which the Holder pays the Principal Sum to the Maker, or if the
Maker instructs the Holder to pay the Principal Sum amount directly to the
insurer issuing the Policy, the date on which the Holder pays the amount to the
insurer.

The entire Principal Sum, plus accrued interest thereon, shall be due and
payable within ninety (90) days following the death of the Insured (as listed in
Schedule A). Maker agrees to take all reasonable steps to ensure payment of the
Policy death benefit promptly following the deaths of the Insureds.

All payments hereon shall be made in lawful money of the United States of
America to the order of the Holder at 114 West 11th Street, Kansas City, MO
64105-1804 or at such other place as the Holder may designate in writing to the
Maker from time to time. This Note may be prepaid by the Maker in whole or in
part at any time without penalty or premium. If any payment due is not paid
within ten (10) business days of the due date, such overdue amount shall bear
interest from and after the due date until paid in full at the rate of 10% per
annum, compounded annually, or at the maximum rate permitted by law, whichever
is less.

At any time during the term of this Note, the Maker may elect to reset the Loan
Rate. The Reset Loan Rate shall equal the Applicable Federal Rate provided for
under Internal Revenue Code Section 7872(f)(2)(A), or any successor Section,
with such rate

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                                                                   Exhibit 10.36

to be the Applicable Federal Rate in effect on the Reset Date. The Reset Loan
Rate shall be effective as of the Reset Date, which shall be specified in
writing by the Maker to the Holder at least five (5) days in advance of such
Reset Date. The outstanding loan principal and accrued interest at the Reset
Date shall bear interest at the Reset Loan Rate from the Reset Date until the
date paid. The Reset Loan Rate shall apply for the remaining term of the loan,
and no further reset shall be allowed.

The Maker agrees that the Policy shall be owned solely by the Maker, that the
Trust shall be designated as beneficiary to receive the Policy death benefit or
any benefit paid at policy maturity, and that no other person or entity will
have any interest in the policy, except as otherwise provided herein. Also, the
Maker shall not surrender the Policy, in whole or in part, withdraw cash value
from or borrow from the Policy, or otherwise pledge or encumber the Policy,
except as expressly permitted by the terms of this Note. Maker further agrees
that the entire Principal Sum and accrued interest shall become immediately due
and payable, without any further demand or notice, all of which are expressly
waived, upon the occurrence of any of the following events:

(1)  The Maker fails to pay the Policy premium within the time allowed by the
     terms of this Note (including any permitted extensions).

(2)  The Maker attempts to transfer all or any part of its interest in the
     Policy to any party, except that a transfer of Policy rights to a successor
     trustee under the terms of the Trust shall not be deemed a transfer for the
     purpose of this sentence.

(3)  The Maker surrenders the Policy in whole or in part, or borrows from or
     withdraws cash value from the Policy, or otherwise pledges or encumbers the
     Policy.

(4)  The Maker reduces the face amount of the Policy without the consent of the
     Holder, but only if the face amount reduction results in a distribution of
     policy cash values.

The obligations created by this Note are obligations of the Maker only, and no
individual or entity who is a trustee of the Trust shall have any personal
responsibility or liability with respect to this Note, except in such party's
fiduciary capacity as a trustee. In addition, no beneficiary of the Trust, or
creator of the Trust, shall have any personal responsibility or liability with
respect to this Note, except to the extent of any Policy death benefits paid to
any such beneficiary, in which case the Holder may pursue available legal
remedies to recover any such amount if the Holder has not received payment of
the full amount due to the Holder.

The Maker, the creator of the Trust, and any trustee or beneficiary of the Trust
shall not be responsible for paying any additional amounts as Policy premiums,
even if it becomes necessary to do so to prevent the Policy from lapsing.
However, any such party may pay additional Policy premiums as it elects.

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                                                                   Exhibit 10.36

The Holder may transfer or assign its rights under this Note to any individual
or entity without the consent of the Maker. However, notice of any such transfer
or assignment shall be given to the Maker by the Holder.

The Maker hereby waives presentment, demand for payment, notice of default and
notice of protest. The Maker agrees to pay on demand all losses, costs and
expenses incurred by the Holder in connection with the enforcement of this Note.

This Note shall be governed by and construed in accordance with the laws of the
state of Missouri.

IN WITNESS WHEREOF, the undersigned parties have caused this Note to be duly
executed under seal as of the date first above written.

Holder                                         Maker

By: /s/ Eric B. Freestone                      By: /s/ Courtney Ann Arnot
-------------------------------------          ---------------------------------
Kansas City Southern Industries, Inc.          Courtney Ann Arnot, Trustee

September 18, 2001                             /s/ A. Edward Allinson III
-------------------------------------          ---------------------------------
Date                                           A. Edward Allinson III, Trustee

                                               /s/ Bradford J. Allinson
                                               ---------------------------------
                                               Bradford J. Allinson, Trustee

                                               9-10-01
                                               ---------------------------------
                                               Date

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                                                                   Exhibit 10.36

                                 PROMISSORY NOTE

                                   SCHEDULE A

Loan Date:            September 19, 2001

Loan Rate:            5.49% per annum compounded semi-annually

Policy

     Insurer:         American General Life Insurance Company

     Policy Number:   VL1005743V

     Insured:         A. Edward Allinson

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