Document:

exv10w2

 

Exhibit 10.2

CSX 2006–2008 Long Term Incentive Plan

Effective Date and Term

The CSX 2006–2008 Long Term Incentive Plan (the “2006–2008 LTIP” or the “Plan”), effective May 4,
2006 (the “Effective Date”), is the vehicle pursuant to which CSX grants Performance Grants
(“Performance Grant or Grants,” as described in Section 8 of the CSX Omnibus Incentive Plan (as
reapproved by CSX’s shareholders May 3, 2006)). The 2006–2008 LTIP Cycle (the “2006–2008 Cycle”)
commences on the Effective Date and ends December 26, 2008.

Purpose and Objective

The purpose of the 2006–2008 LTIP is to reward eligible employees for their contribution to the
attainment of a lower Operating Ratio which is intended to result in CSX Corporation (“CSX”) share
price appreciation. Performance Grants are issued based on an employee’s job position,
accountability, and the potential to impact CSX’s financial results.

The Plan seeks to motivate and reward employees through the issuance of Performance Grants pursuant
to which payouts are made based on CSX’s 2008 Operating Ratio (“Operating Ratio”). Payouts of
Performance Grants will be in the form of CSX common stock.

Eligibility and Participation

Active employees of CSX or a participating affiliate (collectively, the “Companies”) in salary Band
06 and above as of the Effective Date shall participate in the 2006–2008 LTIP (“Participants”) and
shall receive Performance Grants in accordance with the Performance Grant schedule approved by the
Compensation Committee of CSX’s Board of Directors (the “Compensation Committee”). Salary band
levels (“Bands”) are determined by the CSX Compensation and Benefits Department. The Performance
Grant schedule will be maintained in the office of the Plan Administrator.

Employees hired or promoted into Band 06 and above after the Effective Date and before the end of
the 2006–2008 Cycle, will receive a pro-rata allocation of Performance Grants based on their
participation (and status as full time or part-time). Participants who are moved to a higher or
lower Band during the Cycle will receive a pro-rata allocation of Performance Grants pertaining to
each applicable Band based upon the number of months of participation in each Band relative to the
number of months in the Cycle. The same pro-rata method will be used for employees who transfer
between union and non-union employment. For purposes of the pro-rata calculation, participation
begins on the 1st day of the month following the date the Participant was hired,
promoted, or transferred. Notwithstanding the preceding, any Participant who is hired at or
promoted to a salary level making such Participant a “covered employee” under Internal Revenue Code
Section 162(m) must have had a period of service of at least 3 months to qualify for a Performance
Grant at that level. In such cases, the pro-rata calculation shall be made as of the date of
hire/promotion.

Plan Design 

The 2006–2008 LTIP provides for the issuance of Performance Grants, as approved by the Compensation
Committee, based upon the dollar amount of the award approved for each Band level or position. The
number of performance units received is based on the dollar amount of the Performance Grant issued
to each Band or position divided by $65—the approximate average price per share for April 2006—with
minor upward rounding.

1

 

As shown in the Performance Measure Table in Exhibit A, awards are paid out as a percentage of
a Participant’s Performance Grant units based upon the applicable CSX 2008 Operating Ratio.

     1. Operating Ratio

Operating Ratio is the single performance measure. Operating Ratio is defined as annual surface
transportation operating expenses divided by surface transportation revenue of CSX’s rail and
intermodal businesses. Operating Ratio is calculated excluding non-recurring items disclosed in the
financial statements. Using this measure to determine payout levels reinforces the correlation
between an improving operating ratio and an increasing stock price. Efforts to improve the
Operating Ratio aligns CSX’s business objectives in a line-of-sight way that allows individuals to
equate personal actions to desired performance outcomes. Each Plan Participant should be motivated
to grow revenue, reduce expense, improve service, increase productivity, improve safety, and
increase asset utilization/rationalization.

As the price of oil has a significant impact on the Operating Ratio but not necessarily operating
income because of CSX’s ability to pass a portion of the cost of oil on to customers, the Operating
Ratio targets vary based on the average cost of oil per barrel outside the “collar” for 2008. The
chart in Exhibit A reflects the Operating Ratio targets and related payouts at various WTI/Barrel
prices of oil and provides a payout example. Operating Ratios will be interpolated based on
differences between the actual average WTI/Barrel for 2008 and the prices in the chart.

     2. Taxation of Awards

2006-2008 LTIP Awards will be paid in shares of CSX common stock. The value received by the
Participant is taxable income, so CSX is required to withhold income and employment taxes at the
time the awards are paid; no additional shares may be withheld. Thus, CSX will withhold a number
of shares equal in value to the minimum required employment tax and income tax withholding.
Fractional shares will be paid in cash. The following is an example of the withholding
calculation:

Example:

	 	•	 	Assume the award earned is 150 shares.
	 
	 	•	 	Assume the stock price at payout is $75.
	 
	 	•	 	Assume the aggregate income tax withholding rate and payroll tax is 32%.

	 	 	 	 	 	 
	Gross Award

	 	150 shares
	 	$	11,250
	Stock Withholding

	 	  48 shares
	 	$	3,600
	Net Award

	 	102 shares
	 	$	7,650

Participants may defer receipt of awards under the CSX Executive Deferred Compensation Plan.

No Performance Grant is considered earned under the Plan until the Compensation Committee approves
the payout thereof.

Plan Administration

The Senior Vice President — Human Resources of CSX shall be the Plan Administrator and shall
interpret and construe the provisions of the Plan subject to the terms of the CSX Omnibus Incentive
Plan and the Compensation Committee’s authority and responsibility under the CSX Omnibus Incentive
Plan and Section 162(m) of the Internal Revenue Code.

Award Payouts 

As noted above, all Performance Grants will be paid in CSX stock. Fractional shares will be paid
in cash.

2

 

Awards will be paid only to Participants who are actively employed by the Companies on the date of
payout for the 2006–2008 LTIP. Except as provided below, all other Participants whose employment
terminates prior to the payout date shall forfeit any and all awards under the 2006–2008 LTIP.

A Participant, whose employment terminates due to death, disability, or retirement, shall be
eligible to receive a pro-rata payout under the LTIP. Participants whose hours are reduced so that
they are no longer full time active employees during the Cycle, as a result of a phased retirement
or similar program at the request of or with the consent of CSX, shall be entitled to a pro-rata
award to the date of such change and a pro-rata reduced award for the remaining portion of such
Cycle they work based on their reduced hours. All awards will be payable no later than the March
15 following the end of the Cycle. Retirement means an employee who retires under the CSX Pension
Pan or the Special Retirement Plan for CSX Corporation and Affiliated Companies.

A Participant who commits an act involving moral turpitude that adversely affects the reputation or
business of the Companies shall forfeit any award earned under the 2006-2008 LTIP. Examples of
acts of moral turpitude include, dishonesty or fraud involving the Companies, their employees,
vendors or customers and violations of CSX’s Code of Ethics.

Plan Amendments and Termination

Consistent with Section 162(m) of the Internal Revenue Code, the Compensation Committee reserves
the right to terminate, adjust, amend, or suspend the Plan at any time and at its sole discretion.

CSX Executive Team

The additional financial performance measure of “earnings per share”1 shall apply to the
CSX Executive Team (“E-Team”). The table in Exhibit B sets forth adjustments to the payout earned
based on the Operating Ratio achieved at the applicable WTI/Barrel price of oil as set forth in the
table in Exhibit A. The Compensation Committee, in its discretion, may reduce any payout otherwise
earned by an E-Team Participant by up to 30% based upon certain of CSX’s strategic initiatives set
forth in Exhibit B.

Except as provided above, the 2006–2008 LTIP will be administered for E-Team Participants in the
same manner as for other Plan Participants.

Miscellaneous

The adoption of the 2006–2008 LTIP does not imply any commitment to continue the same or any long
term incentive compensation plan for any succeeding year or period. Neither the Plan nor any
Performance Grant made or payment under the Plan shall create any employment contract or
relationship between the Companies and any Participant.

 

			
	1	 	EPS shall be determined by excluding non-recurring items.

3

 

Exhibit A

Exhibit A contains specific quantitative or qualitative performance related-factors, or
factors or criteria involving confidential commercial or business information, the disclosure of
which would have an adverse effect on CSX.

4

 

Exhibit B

Exhibit B contains specific quantitative or qualitative performance related-factors, or
factors or criteria involving confidential commercial or business information, the disclosure of
which would have an adverse effect on CSX.

5exv10w7w9

 

Exhibit
10.7.9

STATE OF ILLINOIS

DEPARTMENT OF PUBLIC AID

AMENDMENT NO. 3 TO THE

CONTRACT FOR FURNISHING HEALTH SERVICES

BY A

MANAGED CARE ORGANIZATION

2004-24-001-KA3

Whereas, the parties to the Contract for Furnishing Health Services by a Managed Care Organization
(“CONTRACT”), the Illinois Department of Healthcare & Family Services (formerly Public Aid), 201
South Grand Avenue East, Springfield, Illinois 62763-0001 (herein referred to as “Department”),
acting by and through its Director, and AMERIGROUP Illinois, Inc., 211 West Wacker Drive, Suite
1350, Chicago, IL 60606 (hereinafter referred to as “Contractor”), desire to amend the CONTRACT;
and

WHEREAS, pursuant to Article 9, Section 9.9 (a) of the CONTRACT, the CONTRACT may be modified or
amended by the mutual consent of the parties; and

WHEREAS, the Department’s actuary has certified that the Contract and rates resulting from this
amendment are actuarially sound;

NOW THEREFORE, the parties agree to amend the contract as follows:

	1.	 	First Amended Attachment I shall be deleted and replaced by the attached Second Amended
Attachment I. Each reference to Attachment I or First Amended Attachment I in the Contract
shall be replaced with a reference to Second Amended Attachment I.

All other terms and conditions of the CONTRACT shall remain in full force and effect.

IN WITNESS WHEREOF, the parties have hereunto caused this agreement to amend the CONTRACT to be
executed by their duly authorized representatives, effective January 1, 2006.

	 	 	 	 	 	 	 	 	 	 	 
	DEPARTMENT OF HEALTHCARE &
FAMILY SERVICES	 	 	 	AMERIGROUP ILLINOIS, INC.	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:
	 	/s/ Jared Rosenthal
 

	 	 
	 
	 	 
Barry S. Maram	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Printed Name:
	 	JARED ROSENTHAL	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Title:

	 	Director
	 	 	 	Title:
	 	CEO	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Date:

	 	 	 	 	 	Date:
	 	12/28/05	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Fein:
	 	54-1761812	 	 
	 

	 	 	 	 	 	 	 	 	 	 

Page 1 of 1

 

SECOND AMENDED ATTACHMENT I

RATE SHEETS

	 	 	 	 	 
	(a)

	 	Contractor Name:
	 	AMERIGROUP Illinois, Inc.
	 
	 	 	 	 
	 

	 	Address:
	 	211 West Wacker Drive, Suite 1350
	 
	 	 	 	 
	 

	 	 	 	Chicago, IL 60606
	 
	 	 	 	 
	(b)	 	Contracting Area(s) Covered by the Contractor and Enrollment Limit:

	 	 	 
	Contracting Area	 	Enrollment Limit
	Region IV
	 	100,000
	 	 	 
	 	 	 
	 	 	 
	 	 	 

	(c)	 	Total Enrollment Limit for all Contracting Areas: 100,000
	 
	(d)	 	Threshold Review Levels: 80,000
	 
	(e)	 	Standard Capitation Rates for Enrollees, effective August 1, 2003 through July 31, 2005:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Region I	 	Region II	 	Region III	 	Region IV	 	Region V
	Age/Gender	 	(N.W.	 	(Central	 	(Southern	 	(Cook	 	(Collar
	Mo = month	 	Illinois)	 	Illinois)	 	Illinois)	 	County)	 	Counties)
	Yr = year	 	PMPM	 	PMPM	 	PMPM	 	PMPM	 	PMPM
	0-3Mo
	 	$	1,152.25	 	 	$	1,178.77	 	 	$	1,242.71	 	 	$	1,244.64	 	 	$	854.58	 
	4Mo-1Yr
	 	 	127.81	 	 	 	117.63	 	 	 	165.94	 	 	 	125.04	 	 	 	108.35	 
	2Yr-5Yr
	 	 	63.77	 	 	 	67.81	 	 	 	71.74	 	 	 	58.67	 	 	 	56.28	 
	6Yr-13Yr
	 	 	72.08	 	 	 	79.78	 	 	 	75.18	 	 	 	58.18	 	 	 	57.47	 
	14Yr-20Yr, Male
	 	 	115.93	 	 	 	135.96	 	 	 	131.18	 	 	 	90.67	 	 	 	142.60	 
	14Yr-20Y, Female
	 	 	148.51	 	 	 	157.40	 	 	 	155.15	 	 	 	112.48	 	 	 	119.82	 
	21Yr-44Yr, Male
	 	 	161.79	 	 	 	216.53	 	 	 	201.90	 	 	 	164.23	 	 	 	159.43	 
	21Yr-44Yr, Female
	 	 	217.61	 	 	 	228.14	 	 	 	237.13	 	 	 	185.81	 	 	 	184.20	 
	45Yr+ Male and Female
	 	 	437.86	 	 	 	486.40	 	 	 	476.29	 	 	 	359.61	 	 	 	409.17	 

Att. I - 1

 

     Standard Capitation Rates for Enrollees, effective August 1, 2005 through December 31, 2005:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Region I	 	Region II	 	Region III	 	Region IV	 	Region V
	Age/Gender	 	(N.W.	 	(Central	 	(Southern	 	(Cook	 	(Collar
	Mo = month	 	Illinois)	 	Illinois)	 	Illinois)	 	County)	 	Counties)
	Yr = year	 	PMPM	 	PMPM	 	PMPM	 	PMPM	 	PMPM
	0-3Mo
	 	$	1,342.61	 	 	$	1,178.83	 	 	$	1,271.32	 	 	$	1,369.28	 	 	$	948.46	 
	4Mo-1Yr
	 	 	121.62	 	 	 	109.83	 	 	 	154.41	 	 	 	117.41	 	 	 	99.27	 
	2Yr-5Yr
	 	 	53.51	 	 	 	57.02	 	 	 	59.41	 	 	 	51.49	 	 	 	49.60	 
	6Yr-13Yr
	 	 	49.37	 	 	 	51.29	 	 	 	52.22	 	 	 	45.53	 	 	 	42.00	 
	14Yr-20Yr, Male
	 	 	85.90	 	 	 	92.02	 	 	 	85.37	 	 	 	70.16	 	 	 	100.73	 
	14Yr-20Y, Female
	 	 	127.53	 	 	 	128.58	 	 	 	123.97	 	 	 	94.84	 	 	 	98.76	 
	21Yr-44Yr, Male
	 	 	113.28	 	 	 	161.06	 	 	 	139.13	 	 	 	121.91	 	 	 	110.33	 
	21 Yr-44Yr, Female
	 	 	164.91	 	 	 	167.03	 	 	 	168.42	 	 	 	148.97	 	 	 	141.81	 
	45Yr+ Male and
Female
	 	 	277.48	 	 	 	310.00	 	 	 	275.75	 	 	 	258.08	 	 	 	273.13	 

Standard Capitation Rates for Enrollees, effective January 1, 2006 through July 31, 2006:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Region I	 	Region II	 	Region III	 	Region IV	 	Region V
	Age/Gender	 	(N.W.	 	(Central	 	(Southern	 	(Cook	 	(Collar
	Mo = month	 	Illinois)	 	Illinois)	 	Illinois)	 	County)	 	Counties)
	Yr = year	 	PMPM	 	PMPM	 	PMPM	 	PMPM	 	PMPM
	0-3Mo
	 	$	1,361.60	 	 	$	1,193.95	 	 	$	1,283.86	 	 	$	1,379.13	 	 	$	967.15	 
	4Mo-1Yr
	 	 	131.76	 	 	 	117.74	 	 	 	161.46	 	 	 	124.11	 	 	 	109.20	 
	2Yr-5Yr
	 	 	57.39	 	 	 	60.36	 	 	 	62.06	 	 	 	54.89	 	 	 	53.37	 
	6Yr-13Yr
	 	 	51.57	 	 	 	53.28	 	 	 	53.69	 	 	 	47.37	 	 	 	43.96	 
	14Yr-20Yr, Male
	 	 	87.51	 	 	 	93.46	 	 	 	86.43	 	 	 	71.41	 	 	 	102.00	 
	14Yr-20Y, Female
	 	 	129.71	 	 	 	130.56	 	 	 	125.42	 	 	 	96.23	 	 	 	100.46	 
	21Yr-44Yr, Male
	 	 	113.43	 	 	 	161.32	 	 	 	139.61	 	 	 	122.11	 	 	 	110.39	 
	21 Yr-44Yr, Female
	 	 	165.30	 	 	 	167.59	 	 	 	169.54	 	 	 	149.54	 	 	 	142.11	 
	45Yr+ Male and Female
	 	 	277.85	 	 	 	310.54	 	 	 	276.86	 	 	 	258.60	 	 	 	273.38	 

	(f)	 	Hospital Delivery Case Rate, effective August 1, 2003 through July 31, 2005:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Hospital Delivery Case
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Rate
	 	$	3,196.12	 	 	$	3,104.66	 	 	$	3,281.22	 	 	$	3,748.33	 	 	$	3,276.03	 
	(per delivery)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

     Hospital Delivery Case Rate, effective August 1, 2005 through July 31, 2006:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Hospital Delivery Case
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Rate
	 	$	3,008.88	 	 	$	2,900.77	 	 	$	3,100.59	 	 	$	3,431.08	 	 	$	3,113.07	 
	(per delivery)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

Att. I - 2

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