Document:

Exhibit 4.2

 

This security is a Global Security within the meaning of the Indenture hereinafter referred to and is registered in the name of a Depository or a nominee of a Depository, which may be treated by the Company, the Trustee and any agent thereof as owner and holder of this Security for all purposes. This Global Security is exchangeable for securities registered in the name of a person other than the Depository or its nominee only in the limited circumstances hereinafter described and may not be transferred except as a whole by the Depository to a nominee of the Depository or by a nominee of the Depository to the Depository.

 

Unless this Security is presented by an authorized representative of The Depository Trust Company, a New York corporation (“DTC”), to the Company or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co., or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.

 

	
No. 1
    	
 
    	
 
    
	
CUSIP No. 494368 BU6
    	
 
    	
PRINCIPAL AMOUNT: $400,000,000
    
	
ISIN No. US494368BU61
    	
 
    	
 
    

 

KIMBERLY-CLARK CORPORATION

 

2.750% NOTES DUE FEBRUARY 15, 2026

 

Kimberly-Clark Corporation, a corporation duly incorporated and existing under the laws of the State of Delaware (hereinafter called the “Company,” which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to CEDE & CO., or registered assigns, the principal sum of FOUR HUNDRED MILLION DOLLARS ($400,000,000) on February 15, 2026, and to pay interest thereon from February 22, 2016, or from the most recent Interest Payment Date to which interest has been paid or duly provided for semi-annually on February 15 and August 15 of each year, commencing August 15, 2016, at the rate of 2.750% per annum, until the principal hereof is paid or made available for payment. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be February 1 or August 1 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date.

 

Any interest not punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and

 

 

upon such notice as may be required by such exchange, all as more fully provided in the Indenture.

 

Reference is hereby made to the further provisions of this Security set forth on the reverse hereof which further provisions shall for all purposes have the same effect as if set forth at this place.

 

Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

 

2

 

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its corporate seal.

 

DATED: February 22, 2015

 

	
 
    	
KIMBERLY-CLARK   CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Karen L.   Leets
    
	
 
    	
 
    	
Vice   President and Treasurer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Attest:
    	
 
    
	
 
    	
 
    	
Jeffrey   P. Melucci
    
	
 
    	
 
    	
Vice   President, Deputy General Counsel
    
	
 
    	
 
    	
and   Corporate Secretary
    
	
 
    	
 
    
	
 
    	
 
    
	
TRUSTEE’S   CERTIFICATE
    	
 
    
	
OF   AUTHENTICATION
    	
 
    
	
This is   one of the Securities
    	
 
    
	
of the   series designated
    	
 
    
	
therein   referred to in the
    	
 
    
	
within-mentioned   Indenture.
    	
 
    
	
 
    	
 
    
	
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.
    
	
as   successor Trustee
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
Authorized   Officer
    	
 
    
						

 

 

[Reverse of Note]

 

KIMBERLY-CLARK CORPORATION

 

2.750% NOTES DUE FEBRUARY 15, 2026

 

This Security is one of a duly authorized issue of securities of the Company (herein called the “Securities”), issued and to be issued in one or more series under a First Amended and Restated Indenture dated as of March 1, 1988, as amended or supplemented from time to time (herein called the “Indenture”), between the Company and The Bank of New York Mellon Trust Company, N.A., as successor Trustee (herein called the “Trustee,” which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities, and of the terms upon which the Securities are, and are to be, authenticated and delivered. This Security is one of the series designated on the face hereof, limited in aggregate principal amount to $400,000,000.

 

The Securities will be redeemable as a whole or in part, at the option of the Company at any time, at a redemption price equal to the greater of (i) 100% of the principal amount of the Securities to be redeemed and (ii) the sum of the present values of the Remaining Scheduled Payments (as hereinafter defined) thereon, discounted to the redemption date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 15 basis points, plus in either case accrued interest on the principal amount being redeemed to the redemption date.

 

“Treasury Rate” means, with respect to any redemption date, the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date.

 

“Business Day” means any day that is not a Saturday or Sunday and that is not a day on which banking institutions are generally authorized or obligated by law, regulation or executive order to close in the City of New York and, for any place of payment outside of the City of New York, in such place of payment.

 

“Comparable Treasury Issue” means the United States Treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term of the Securities to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issue of corporate debt securities of comparable maturity to the remaining term of such Securities.

 

“Comparable Treasury Price” means, with respect to any redemption date, the arithmetic average, as determined by the Independent Investment Banker, of the Reference Treasury Dealer Quotations for such redemption date.

 

2

 

“Independent Investment Banker” means each of Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and J.P. Morgan Securities LLC and their respective successors as may be appointed from time to time by the Company; provided, however, that if any of the foregoing shall cease to be a primary U.S. Government securities dealer (a “Primary Treasury Dealer”), the Company shall substitute therefor another Primary Treasury Dealer.

 

“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any redemption date, the arithmetic average, as determined by the Independent Investment Banker, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Independent Investment Banker by such Reference Treasury Dealer by 5:00 p.m., New York City time, on the third business day preceding such redemption date.

 

“Reference Treasury Dealer” means each of Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and J.P. Morgan Securities LLC and their respective successors; provided, however, that if any of the foregoing shall cease to be a Primary Treasury Dealer, the Company shall substitute therefor another Primary Treasury Dealer.

 

“Remaining Scheduled Payments” mean with respect to any Security, the remaining scheduled payments of the principal thereof to be redeemed and interest thereon that would be due after the related redemption date but for such redemption; provided, however, that, if such redemption date is not an interest payment date with respect to such Security, the amount of the next scheduled interest payment thereon will be reduced by the amount of interest accrued thereon to such redemption date.

 

Notice of any redemption will be sent at least 15 days but not more than 45 days before the redemption date to each holder of Securities to be redeemed.

 

Unless the Company defaults in payment of the redemption price, on and after the redemption date interest will cease to accrue on the Securities or portions thereof called for redemption.

 

The Securities will not be entitled to any sinking fund.

 

If an Event of Default, as defined in the Indenture, with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture.

 

If a Change of Control Repurchase Event occurs, unless the Company has exercised its right to redeem this series of Securities, the Company will make an offer to each Holder of Securities to repurchase all or any part (in denominations of $2,000 or integral multiples of $1,000 in excess thereof) of that Holder’s Securities at a repurchase price in cash equal to 101% of the aggregate principal amount of Securities repurchased plus any accrued and unpaid interest on the Securities repurchased to the date of repurchase. Within 30 days following any Change of Control Repurchase Event or, at the Company’s option, prior to any Change of Control, but after the public announcement of an impending Change of Control, the Company will mail a notice to each Holder, with a copy to the Trustee, describing the transaction or transactions that constitute or may constitute the Change of Control Repurchase Event and offering to repurchase Securities

 

3

 

on the payment date specified in the notice, which date will be no earlier than 30 days and no later than 60 days from the date such notice is mailed. The notice shall, if mailed prior to the date of consummation of the Change of Control, state that the offer to repurchase is conditioned on the Change of Control Repurchase Event occurring on or prior to the payment date specified in the notice.

 

The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder, to the extent those laws and regulations are applicable in connection with the repurchase of the Securities as a result of a Change of Control Repurchase Event. To the extent that the provisions of any securities laws or regulations conflict with the Change of Control Repurchase Event provisions of the Securities, the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under the Change of Control Repurchase Event provisions of the Securities by virtue of such conflict.

 

On the Change of Control Repurchase Event payment date, the Company will, to the extent lawful:

 

·                                          accept for payment all Securities or portions of Securities (in denominations of $2,000 or integral multiples of $1,000 in excess thereof) properly tendered pursuant to the Company’s offer;

 

·                                          deposit with the Trustee an amount equal to the aggregate repurchase price in respect of all Securities or portions of Securities properly tendered; and

 

·                                          deliver or cause to be delivered to the Trustee the Securities properly accepted, together with an officers’ certificate stating the aggregate principal amount of Securities being purchased by the Company.

 

The Trustee will promptly pay to each Holder of Securities properly tendered the repurchase price for the Securities, and the Trustee will promptly authenticate and mail (or cause to be transferred by book-entry) to each Holder a new Security equal in principal amount to any unpurchased portion of any Securities surrendered; provided, that each new Security will be in a principal amount of $2,000 or an integral multiple of $1,000 in excess thereof.

 

The Company will not be required to make an offer to repurchase the Securities upon a Change of Control Repurchase Event if a third party makes such an offer in the manner, at the times and otherwise in compliance with the requirements for an offer made by the Company and such third party purchases all Securities properly tendered and not withdrawn under its offer.

 

“Below Investment Grade Rating Event” means the Securities are rated below Investment Grade by each of the Rating Agencies on any date from the date of the public notice of an arrangement that could result in a Change of Control until the end of the 60-day period following public notice of the occurrence of a Change of Control (which period shall be extended so long as the rating of the Securities is under publicly announced consideration for possible downgrade by any of the Rating Agencies); provided that a Below Investment Grade Rating Event otherwise arising by virtue of a particular reduction in rating shall not be deemed to have occurred in respect of a particular Change of Control (and thus shall not be deemed a Below Investment

 

4

 

Grade Rating Event for purposes of the definition of Change of Control Repurchase Event hereunder) if the Rating Agencies making the reduction in rating to which this definition would otherwise apply do not announce or publicly confirm or inform the Trustee in writing at its request that the reduction was the result, in whole or in part, of any event or circumstance comprised of or arising as a result of, or in respect of, the applicable Change of Control (whether or not the applicable Change of Control shall have occurred at the time of the Below Investment Grade Rating Event).

 

“Change of Control” means the occurrence of any of the following: (1) the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of the Company and its subsidiaries taken as a whole to any “person” (as that term is used in Section 13(d)(3) of the Exchange Act), other than the Company or one of its subsidiaries; (2) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any “person” (as that term is used in Section 13(d)(3) of the Exchange Act) becomes the beneficial owner, directly or indirectly, of more than 50% of the then outstanding number of shares of the Company’s Voting Stock; or (3) the first day on which a majority of the members of the Company’s Board of Directors are not Continuing Directors.

 

“Change of Control Repurchase Event” means the occurrence of both a Change of Control and a Below Investment Grade Rating Event.

 

“Continuing Directors” means, as of any date of determination, any member of the Board of Directors of the Company who (1) was a member of such Board of Directors on the date of the issuance of the Securities; or (2) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board of Directors at the time of such nomination or election (either by a specific vote or by approval of the Company’s proxy statement in which such member was named as a nominee for election as a director).

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Fitch” means Fitch Ratings Ltd.

 

“Investment Grade” means a rating of Baa3 or better by Moody’s (or its equivalent under any successor rating categories of Moody’s); a rating of BBB- or better by S&P (or its equivalent under any successor rating categories of S&P); and a rating of BBB- or better by Fitch (or its equivalent under any successor rating categories of Fitch); or the equivalent investment grade credit rating from any additional Rating Agency or Rating Agencies selected by the Company.

 

“Moody’s” means Moody’s Investors Service Inc.

 

“Rating Agency” means (1) each of Fitch, Moody’s and S&P; and (2) if any of Fitch, Moody’s or S&P ceases to rate the Securities or fails to make a rating of the Securities publicly available for reasons outside of the Company’s control, a “nationally recognized statistical rating organization” within the meaning of Section 3(a)(62) under the Exchange Act, selected by the Company as a replacement agency for Fitch, Moody’s or S&P, as the case may be.

 

5

 

“S&P” means Standard & Poor’s Ratings Services, a division of McGraw-Hill, Inc.

 

“Voting Stock” means the Company’s capital stock of any class or kind the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of the Company, even if the right so to vote has been suspended by the happening of such a contingency.

 

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of not less than 66 2/3% in principal amount of the Securities at the time Outstanding of each series to be affected. The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.

 

The Indenture contains provisions for defeasance at any time of (a) the entire indebtedness on this Security and (b) certain restrictive covenants and certain Events of Default, upon compliance by the Company with certain conditions set forth therein, which provisions apply to this Security.

 

Upon due presentment for registration of transfer of this Security at the office or agency of the Trustee maintained for that purpose in the Borough of Manhattan, The City of New York, a new Security or Securities of this series in authorized denominations for an equal aggregate principal amount will be issued to the transferee in exchange herefor, as provided in the Indenture and subject to the limitations provided therein and to the limitations described below, without charge except for any tax or other governmental charge imposed in connection therewith.

 

This Security is exchangeable for definitive Securities in registered form only if (x) the Depositary notifies the Company that it is unwilling or unable to continue as Depositary for this Security or if at any time the Depositary ceases to be a clearing agency registered under the Securities Exchange Act of 1934, as amended, or (y) the Company in its sole discretion determines that this Security shall be exchangeable for definitive Securities in registered form and notifies the Trustee thereof. If this Security is exchangeable pursuant to the preceding sentence, it shall be exchangeable for definitive Securities in registered form in denominations of $2,000 and any integral multiple of $1,000 in excess thereof, registered in such names as such Depositary shall direct, bearing interest at the same rate, having the same date of issuance, redemption provisions, Stated Maturity and other terms and of differing denominations aggregating a like amount.

 

6

 

This Security may not be transferred except as a whole by the Depositary to a nominee of the Depositary, or by a nominee of the Depositary to the Depositary or another nominee of the Depositary, or by the Depositary or any such nominee to a successor of the Depositary or a nominee of such successor. Except as provided above, owners of beneficial interests in this global Security will not be entitled to receive physical delivery of Securities in definitive form and will not be considered the Holders hereof for any purpose under the Indenture.

 

No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest on this Security at the times, place and rate, and in the coin or currency, herein prescribed, except that in the event the Company deposits money or Government Obligations as provided in Section 402 of the Indenture, such payments will be made only from proceeds of such money or Government Obligations.

 

Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.

 

No recourse shall be had for the payment of the principal of (or premium, if any) or the interest on this Security, or for any claim based hereon, or otherwise in respect hereof, or based on or in respect of the Indenture or any indenture supplemental thereto, against any incorporator, stockholder, officer or director, as such, past, present or future, of the Company or any successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issuance hereof, expressly waived and released.

 

All capitalized terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture.

 

7Exhibit 10.5

 

 

ANNUAL INCENTIVE PLAN (AIP)

2016 Plan Year

Guidelines

KIRBY CORPORATION

 

January 2016

 

TABLE OF CONTENTS

	
Introduction

	
2

	 	 
	
The Annual Incentive Plan

	
3

	 	 
	
Plan Objectives

	
3

	 	 
	
Performance Period

	
3

	 	 
	
Eligibility

	
3

	 	 
	
Individual Bonus Targets

	
4

	 	 
	
Aggregate Payment Amount

	
4

	 	 
	
Section 162(m) Performance Goal and Maximum Awards

	
5

	 	 
	
Performance Measures

	
5

	 	 
	
Business Group Designations and Weightings

	
5

	 	 
	
Performance Standards for Interim Incentive Payment Calculations

	
6

	 	 
	
Administration

	
8

 

1

Introduction

Kirby Corporation (together with its subsidiaries, “Kirby” or the “Company”) established the 2016 Annual Incentive Plan (the “Plan”) to focus employees on identifying and achieving business strategies that lead to increased stockholder value.  The Plan is also intended to reward superior performance by employees and their contribution to 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 circumstances.  Therefore, the Compensation Committee of the Kirby Board of Directors has discretion to interpret these guidelines to assure 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.

Unless resolutions of the Compensation Committee expressly provide otherwise, awards granted under the Plan shall constitute performance awards granted under Article IV of the Kirby Corporation 2005 Stock and Incentive Plan (as amended from time to time, the “Stock Plan”) and are subject to the terms and provisions of the Stock Plan that apply to such performance awards.

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.

 

2

The Annual Incentive Plan

Each award granted under the Plan is an award for total Company and designated Business Group performance.  Awards are generally based on achieving the Company Performance Goal as well as additional Company, Business Group and individual performance measures and objectives.  Once the Performance Goal is reached participants in the Plan become eligible for a bonus.

All amounts paid to participants pursuant to the Plan shall be subject to any policy relating to the recovery of erroneously awarded incentive compensation that may hereafter be adopted by the Company in order to comply with Securities and Exchange Commission rules or New York Stock Exchange listing standards.

Plan Objectives

The Plan key objectives are:

		·	Provide an annual incentive plan that drives performance toward objectives critical to creating stockholder value.

		·	Offer competitive cash compensation opportunities to key Kirby employees.

		·	Reward outstanding achievement by employees who 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.

		·	Ensure that incentive payments made by the Company are fully deductible by the Company.

Performance Period

Performance is measured on a calendar year basis for the Plan.  The Performance Period begins on January 1, 2016 and ends on December 31, 2016.

Eligibility

	·	Generally, managerial employees and Kirby Inland Marine Wheelhouse employees classified as Captain, Relief Captain or Pilot, are eligible for participation.  Selection for participation in the Plan is based upon each position’s ability to impact long-term financial results of the Company and designation by management.  Some employees in managerial positions might not be included in the Plan.

 

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	·	In order to be eligible to receive an incentive payment under the Plan, 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 retirement or disability. If a participant’s employment is terminated prior to the last day of the Performance Period, or prior to the date of payment, for any reason other than death, normal retirement or disability, any bonus the participant may otherwise have received will be forfeited and the participant will have no right to any incentive payment under the Plan.

	·	Participation in the Plan in 2016 does not guarantee participation in similar plans in future years.  Participants in the Plan or in similar plans in future years will be notified annually of their selection for participation.

Individual Bonus Targets

On or before March 31, 2016, each participant will be assigned a target bonus level defined as a percentage of base salary earned during the Performance Period.  This bonus target 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 engine services industry, depending upon the individual position being considered.

Aggregate Payment Amount

An interim incentive payment amount will be determined as of December 31, 2016 for each participant in the Plan based on the target incentive level for such participant and the calculation formulas described in the Plan under the headings Performance Measures, Business Group Designations and Weightings, and Performance Standards for Interim Incentive Payment Calculations.  The Aggregate Payment Amount shall equal the sum of all of such interim incentive payment amounts.

The Company will be obligated to pay out the full Aggregate Payment Amount to eligible participants, subject to the discretion of the Compensation Committee, with respect to the allocation of the Aggregate Payment Amount among individual participants.  Therefore, the Company’s obligation to pay out the Aggregate Payment Amount becomes fixed on the last day of the Performance Period.

The Compensation Committee may determine the amount of the bonus paid to any participant based on the performance measures described in the Plan or any other criteria deemed appropriate in its discretion, provided that in no event will the aggregate incentive payments made pursuant to the Plan exceed the Aggregate Payment Amount.

 

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Section 162(m) Performance Goal and Maximum Awards

The performance goal (the “Performance Goal”) that must be attained in order for any Plan participant to receive a bonus under the Plan is the achievement by the Company of net earnings attributable to Kirby for 2016 (as shown in Kirby’s audited Consolidated Statements of Earnings for 2016) greater than $1,000,000.  If the Company achieves the Performance Goal, the maximum bonus that any participant may receive under the Plan will be equal to 200% of the individual bonus target established for such participant (for each participant, the “Maximum Award”).  The Compensation Committee in its discretion may reduce the bonus paid to any participant to an amount less than the Maximum Award.

Performance Measures

In addition to the Performance Goal, performance measures used under the 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 each of the performance measures will have equal weight in calculating the interim incentive payment amount for each participant.

	
Measure2

	
Weight

	
EBITDA

	
	 	 
	(Earnings before Interest, Taxes, Depreciation and Amortization)	33.33%
	 Return on Total Capital	 
	 	 
	
(Earnings before interest and taxes divided by average beginning and ending stockholders' equity plus long-term debt)

	
33.33%

	
Earnings per Share

	
33.33%

	 	
100%

2 United Holdings measured on EBITDA only.

 

Business Group Designations and Weightings

The following business groups are designated for purposes of the Plan:

		·	Kirby Inland Marine

		·	Kirby Engine Systems

		·	United Holdings

		·	Kirby Offshore Marine

Note: Kirby Ocean Transport Company and Osprey Line, LLC are considered part of the Kirby Inland Marine business group for purposes of the Plan.

 

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In calculating actual versus target performance against the performance measures, the recommended award for Business Group employees will be primarily based on Business Group performance with a defined portion based on Company performance.  The award for Corporate employees will be based on total Kirby performance.  Specific weightings are defined in the following table:

 

	 	
Calculation of Incentive Payments

	 	 
	 	 	 		 	 		 	 
	 	 	 	
Incentive Bonus Calculation

	 	 
	 	 	 	Kirby (Company)	 	 	Business Group(s)	 	 
	 	
Eligible Corporate Employees

	 	
100%

	
 

	 	
0%

	 	
 

	 	 	 	 	 	 	 	 	 
	 	
Business Group Presidents

	 	
50%

	
 

	 	
50%

	 	
 

	 	(KMTG President 50% company, 35% KIM 15%KOM)	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	
Officers with primary responsibilities for KIM and partial KOM (5)

	 	
30%

	
 

	 	
70%

	 	
 

	 	(30% corporate, 50% KIM, 20% KOM)	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	
Officers with primary responsibilities for KOM and partial KIM (1)

	 	
30%

	
 

	 	
70%

	 	
 

	 	(30% corporate, 50% KOM, 20% KIM)	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	Other Business Group Employees	 	30%	 	 	70%	 	 
	 	 	 	 	 	 	 	 	 

Performance Standards for Incentive Payment Calculations

	
Performance 

Level

	
Definition

	
Relationship to Budget*

	
% of Target 

Used for 

Calculation

	
Below Threshold

	
Performance did not meet minimum metric

	
less than 80% of Budget

	
0%

	
Threshold

	
Minimal acceptable performance for payout

	
80% of Budget

	
50%

	
Target

	
Expected performance at stretch level

	
100% of Budget

	
100%

	
Maximum

	
Outstanding performance

	
120% of Budget

	
200%

 

*budget and target are measured on an incremental basis (example: 90% of budget results in 75% of target used for calculation)

 

		·	As shown in the tables, actual performance against each performance measure results in a corresponding percentage of target amount.

		·	The target amount determined for each performance measure is then multiplied by the weight for the performance measure (33.33%) and the results are added together to produce a total corporate or business payout percentage of the target incentive that is applied to each individual participant.

 

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		·	The Compensation Committee shall in its discretion allocate the Aggregate Payment Amount among eligible participants.  In allocating the Aggregate Payment Amount, the Compensation Committee may consider, but shall not be bound by, the interim incentive payment calculation for each participant.

		·	The Compensation Committee has discretion to modify the performance measures or adjust the calculation of the interim incentive amounts to adjust for acquisitions, divestures, and other material business events.

		·	Notwithstanding the foregoing or any provision of the Plan to the contrary, no participant who is a covered employee as defined in the Section 162(m) of the Internal Revenue Code of 1986, as amended (a "Covered Employee”), may receive an amount in excess of the participant’s Maximum Award and the aggregate amount of incentive payments made to participants in the Plan must equal the Aggregate Payment Amount.

 

7

Administration

Award Payout

A participant’s final bonus payment is paid out in cash within 90 days following the end of the Company’s fiscal year, based on audited financial statements of the Company.  No payment shall be made to a participant who is a Covered Employee until the Compensation Committee certifies that the Performance Goal and other material terms of the Plan resulting in such payment have been achieved.

Eligibility Limitation

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

Special Circumstances

The Compensation Committee will have the sole authority to resolve disputes related to Plan administration.  Decisions made by the Compensation Committee will be final and binding on all participants.  The Compensation Committee has the sole discretion to determine the bonuses for newly hired, terminated, transferred and promoted employees, but will generally award bonuses based on the following provisions.

New Employees

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

Termination of Employment

If employment terminates prior to the last day of the Performance Period or prior to the date bonuses are actually paid for the Performance Period, for any reason other than death, normal retirement, or disability, the participant will be ineligible to receive a bonus.

If employment terminates before the end of the full Performance Period or before the date bonuses are actually paid for the Performance Period as a result of death, normal retirement, or disability, the participant (or the participant’s heirs) will be entitled to receive a prorated bonus at the end of the Performance Period based upon actual performance and base wages earned while employed during the Performance Period.

Transfer

A participant who is transferred between business units of the Company will be eligible to receive a weighted bonus based upon the time spent at each of the units3.

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 bonus, based on the service before and after the promotion or reassignment.

 

8

Compensation Committee

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

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

		
·

	
Approve the designation of Business Groups within the Company

		·	Approve the Performance Goal

		·	Approve the performance measures and the Threshold, Target and Maximum budget performance levels for all participants for purposes of calculating interim incentive payments

		·	Approve linkage for participants to Company and Business Group performance

		·	Approve the individual bonus targets for all participants whose salaries are at or above $100,000

		·	Determine at its discretion the final incentive payments for participants

		·	Approve the Aggregate Payment Amount to be paid to participants in the Plan

		·	Certify whether the Performance Goal and other material terms that result in payments under the Plan have been satisfied prior to payment of an award to a Covered Employee.

The Compensation Committee may deviate from the guidelines for the Plan, but in no event will a bonus paid pursuant to the Plan exceed the Maximum Award for any Covered Employee.  The Compensation Committee may decrease the bonus to be paid to any participant below the Maximum Award based on such objective or subjective criteria as the Compensation Committee deems appropriate.

The total amount of the bonuses paid to participants pursuant to the Plan may not exceed the Aggregate Payment Amount.

The performance objectives of Covered Employees may only be adjusted as permitted under Section 162(m) or the regulations thereunder.

 

3Company and Business Group performance factors are calculated using performance for the entire Performance Period.

 

9

Chief Executive Officer (CEO)

The CEO has primary responsibility for recommending Plan guidelines to the Committee and for delegating administrative duties associated with the plan.  The Compensation Committee may delegate additional administrative duties to the CEO or any Company officer.  The CEO may make recommendations subject to Compensation Committee approval, with respect to the incentive payment to any participant.

Chief Financial Officer (CFO)

The CFO is responsible for calculating performance under the Plan and recommending adjustments to the performance objectives.  The CFO will:

		·	Provide annual reports to the Compensation Committee and the CEO on each Business Group’s performance at the end of the 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 incentive payments 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 HR has responsibility for administration of the Plan and will:

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

 

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

 

		·	Calculate participants’ interim incentive amounts, using the performance factors provided by the CFO

 

		·	Process paperwork approving individual incentive payments

Business Group Presidents and Vice Presidents will:

		·	Recommend participants in the Plan

 

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

 

		·	Assure that participants are informed of the actual incentive payment to be made for the Performance Period

 

 

10

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