Exhibit (10)B
TARGET CORPORATION
LONG-TERM INCENTIVE PLAN
(As amended and restated effective June 8, 2011)
ARTICLE I
ESTABLISHMENT OF THE PLAN
1.1
PLAN NAME. This plan is known as the “Target Corporation Long-Term Incentive Plan” (hereinafter called the “Plan”).
1.2
PURPOSE. The purpose of the Plan is to advance the performance and long-term growth of the Company by offering long-term incentives to directors and employees of the Company and its Subsidiaries and such other Participants who the Plan Committee determines will contribute to such performance and growth inuring to the benefit of the shareholders of the Company. This Plan is also intended to facilitate recruiting and retaining personnel of outstanding ability.
ARTICLE II
DEFINITIONS
2.1
AWARD. An “Award” is a grant of Stock Options, Stock Appreciation Rights, Dividend Equivalents, Performance Awards, Restricted Stock or Restricted Stock Units under the Plan.
2.2
BOARD. The “Board” is the Board of Directors of the Company.
2.3
CASH PROCEEDS. “Cash Proceeds” means the cash actually received by the Company for the purchase price payable upon exercise of a Stock Option plus the maximum tax benefit that could be realized by the Company as a result of the exercise of such Stock Options, which tax benefit shall be determined by multiplying (a) the amount that is deductible as a result of any such Stock Option exercise (currently equal to the amount upon which the Participant’s tax withholding obligation is calculated), times (b) the maximum federal corporate income tax rate for the year of exercise. To the extent a Participant pays the exercise price and/or withholding taxes with shares, Cash Proceeds shall not be calculated with respect to the amounts so paid.
2.4
CHANGE IN CONTROL. “Change in Control” means, unless otherwise provided in an Award agreement, one of the following:
(a)
Individuals who are Continuing Directors cease for any reason to constitute 50% or more of the directors of the Company; or
(b)
30% or more of the outstanding voting power of the Voting Stock of the Company is acquired or beneficially owned (within the meaning of Rule 13d-3 under the Exchange Act) by any Person, other than an entity
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resulting from a Business Combination in which clauses (x) and (y) of Section 2.4(c) apply; or
(c)
the consummation of a merger or consolidation of the Company with or into another entity, a statutory share exchange, a sale or other disposition (in one transaction or a series of transactions) of all or substantially all of the Company’s assets or a similar business combination (each, a “Business Combination”), in each case unless, immediately following such Business Combination, (x) all or substantially all of the beneficial owners (within the meaning of Rule 13d-3 under the Exchange Act) of the Company’s Voting Stock immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of the voting power of the then outstanding shares of voting stock (or comparable voting equity interests) of the surviving or acquiring entity resulting from such Business Combination (including such beneficial ownership of an entity that, as a result of such transaction, owns the Company or all or substantially all of the Company’s assets either directly or through one or more Subsidiaries), in substantially the same proportions (as compared to the other beneficial owners of the Company’s Voting Stock immediately prior to such Business Combination) as their beneficial ownership of the Company’s Voting Stock immediately prior to such Business Combination, and (y) no Person beneficially owns, directly or indirectly, 30% or more of the voting power of the outstanding voting stock (or comparable equity interests) of the surviving or acquiring entity (other than a direct or indirect parent entity of the surviving or acquiring entity, that, after giving effect to the Business Combination, beneficially owns, directly or indirectly, 100% of the outstanding voting stock (or comparable equity interests) of the surviving or acquiring entity); or
(d)
approval by the shareholders of a definitive agreement or plan to liquidate or dissolve the Company.
Notwithstanding the foregoing, to the extent that any Award constitutes a deferral of compensation subject to Section 409A of the Code, and if that Award provides for a change in the time or form of payment upon a Change in Control, then, solely for purposes of applying such change in the time or form of payment provision, a Change in Control shall be deemed to have occurred upon an event described in Section 2.4 only if the event would also constitute a change in ownership or effective control of, or a change in the ownership of a substantial portion of the assets of, the Company under Section 409A of the Code.
2.5
CODE. The “Code” is the Internal Revenue Code of 1986, as amended, and rules and regulations thereunder, as now in force or as hereafter amended.
2.6
COMPANY. The “Company” is Target Corporation, a Minnesota corporation, and any successor thereof.
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2.7
COMMON STOCK. “Common Stock” is the common stock, $.0833 par value per share (as such par value may be adjusted from time to time) of the Company.
2.8
DATE OF GRANT. The “Date of Grant” of an Award is the date designated in the resolution by the Plan Committee as the date of an Award, which shall not be earlier than the date of the resolution and action thereon by the Plan Committee. In the absence of a designated date or a fixed method of computing such date being specifically set forth in the Plan Committee’s resolution, then the Date of Grant shall be the date of the Plan Committee’s resolution or action.
2.9
DIVIDEND EQUIVALENT. A “Dividend Equivalent” is a right to receive an amount equal to the regular cash dividend paid on one share of Common Stock. Dividend Equivalents may only be granted in connection with the grant of an Award that is based on but does not consist of shares of Common Stock (whether or not restricted). The number of Dividend Equivalents so granted shall not exceed the number of related stock-based rights. (For example, the number of Dividend Equivalents granted in connection with a grant of Stock Appreciation Rights may equal the number of such Stock Appreciation Rights, even though the number of shares actually paid upon exercise of those Stock Appreciation Rights necessarily will be less than the number of Stock Appreciation Rights and Dividend Equivalents granted.) Dividend Equivalents shall be subject to such terms and conditions as may be established by the Plan Committee, but they shall expire no later than the date on which their related stock-based rights are either exercised, expire or are forfeited (whichever occurs first). The amounts payable due to a grant of Dividend Equivalents may be paid in cash, either currently or deferred, or converted into shares of Common Stock, as determined by the Plan Committee.
2.10
EXCHANGE ACT. The “Exchange Act” is the Securities Exchange Act of 1934, as amended, and rules and regulations thereunder, as now in force or as hereafter amended.
2.11
FAIR MARKET VALUE.
(a)
Solely for purposes of determining the exercise price of a Stock Option or Stock Appreciation Right, “Fair Market Value” of a share of Common Stock on any date is the Volume Weighted Average Price for such stock as reported for such stock by Bloomberg L.P. on such date, or in the absence of such report the Volume Weighted Average Price for such stock as reported for such stock by the New York Stock Exchange on such date or, if no sale has been recorded by Bloomberg L.P. or the New York Stock Exchange on such date, then on the last preceding date on which any such sale shall have been made in the order of primacy indicated above.
(b)
For all other purposes of the Plan, “Fair Market Value” of a share of Common Stock shall be the amount determined by the Company using
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such criteria as it shall determine, in its sole discretion, to be appropriate for valuation.
2.12
INCENTIVE STOCK OPTIONS. An “Incentive Stock Option” is a Stock Option that is intended to qualify as an “incentive stock option” under Section 422 of the Code.
2.13
NON-QUALIFIED OPTIONS. A “Non-Qualified Option” is a Stock Option that is not intended to qualify as an “incentive stock option” under Section 422 of the Code.
2.14
PARTICIPANT. A “Participant” is a person who has been designated as such by the Plan Committee and granted an Award under this Plan pursuant to Article III hereof.
2.15
PERFORMANCE GOALS. “Performance Goals” are the performance conditions, if any, established pursuant to Section 4.1 hereof by the Plan Committee in connection with an Award.
2.16
PERFORMANCE PERIOD. The “Performance Period” with respect to a Performance Award is a period of not less than one calendar year or one fiscal year of the Company, beginning not earlier than the year in which such Performance Award is granted, which may be referred to herein and by the Plan Committee by use of the calendar or fiscal year in which a particular Performance Period commences.
2.17
PERFORMANCE AWARD. A “Performance Award” is any of: a number of shares of Common Stock subject to Performance Goals (“Performance Shares”), a right to receive a number of shares of Common Stock subject to Performance Goals (“Performance Share Units”), or a cash amount subject to Performance Goals (“Performance Units”), determined (in all cases) in accordance with Article IV of this Plan based on the extent to which the applicable Performance Goals are achieved. A Performance Award shall be of no value to a Participant unless and until earned in accordance with Article IV hereof.
2.18
PLAN COMMITTEE. The “Plan Committee” is the committee described in Section 8.1 hereof.
2.19
PLAN YEAR. The “Plan Year” shall be a fiscal year of the Company falling within the term of this Plan.
2.20
RESTRICTED STOCK. “Restricted Stock” is Common Stock granted subject to terms and conditions, including a risk of forfeiture, established by the Plan Committee pursuant to Article VI of this Plan.
2.21
RESTRICTED STOCK UNIT. A “Restricted Stock Unit” is a right to receive one share of Common Stock at a future date that has been granted subject to
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terms and conditions, including a risk of forfeiture, established by the Plan Committee pursuant to Article VI of this Plan.
2.22
STOCK APPRECIATION RIGHT. A “Stock Appreciation Right” is a right to receive, upon exercise of that right, an amount, which may be paid in cash, shares of Common Stock or a combination thereof in the discretion of the Plan Committee, equal to the difference between the Fair Market Value of one share of Common Stock as of the date of exercise and the exercise price for that right as determined by the Plan Committee on or before the Date of Grant. Stock Appreciation Rights may be granted in tandem with Stock Options or other Awards or may be freestanding.
2.23
STOCK OPTION. A “Stock Option” is a right to purchase from the Company at any time not more than ten years following the Date of Grant, one share of Common Stock for an exercise price not less than the Fair Market Value of a share of Common Stock on the Date of Grant, subject to such terms and conditions established pursuant to Article V hereof. Stock Options may be either Non-Qualified Options or Incentive Stock Options.
2.24
SUBSIDIARY CORPORATION.
The terms “Subsidiary” or “Subsidiary Corporation” mean any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company, in which each of the corporations other than the last corporation in the unbroken chain owns stock possessing fifty percent or more of the total combined voting power of all classes of stock in one of the other corporations in such chain as determined at the point in time when reference is made to such “Subsidiary” or “Subsidiary Corporation” in this Plan.
2.25
CONTINUING DIRECTOR. “Continuing Director” means an individual (a) who is, as of the effective date of the Plan, a director of the Company, or (b) who becomes a director of the Company after the effective date hereof and whose initial appointment, or nomination for election by the Company’s shareholders, was approved by at least a majority of the then Continuing Directors; provided, however, that any individual whose initial assumption of office occurs as a result of either an actual or threatened contested election by any Person (other than the Board) seeking the election of such nominee in which the number of nominees exceeds the number of directors to be elected shall not be a Continuing Director.
2.26
PERSON. “Person”, as used in Sections 2.4 and 2.25, means any individual, firm, corporation or other entity and shall include any group comprised of any person and any other person with whom such person or any affiliate or associate (as defined in Rule 14a-1(a) of the Exchange Act) of such person has any agreement, arrangement or understanding, directly or indirectly, for the purpose of acquiring, holding, voting or disposing of any capital stock of the Company.
2.27
VOTING STOCK. “Voting Stock” means all then-outstanding capital stock of the Company entitled to vote generally in the election of directors of the Company.
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ARTICLE III
GRANTING OF AWARDS TO PARTICIPANTS
3.1
ELIGIBLE PARTICIPANTS. Awards may be granted by the Plan Committee to any employee of the Company or a Subsidiary Corporation, including any employee who is also a director of the Company or a Subsidiary Corporation. Awards other than grants of Incentive Stock Options may also be granted to (a) a director of the Company who is not an employee of the Company or a Subsidiary Corporation and (b) any individual or entity, other than an employee, who provides services to the Company or a Subsidiary Corporation in the capacity of an advisor or consultant. References in this Plan to “employment” and similar terms (except “employee”) shall include the providing of services in the capacity of a director, advisor or consultant, and references to termination of employment shall mean termination of the relationship (employee, director, advisor or consultant) under which the Award was granted, even if the person continues in another relationship. A person who has been engaged by the Company for employment shall be eligible for Awards other than Incentive Stock Options, provided such person actually reports for and commences such employment within 90 days after the Date of Grant. Incentive Stock Options may be granted only to individuals who are employees on the Date of Grant.
3.2
DESIGNATION OF PARTICIPANTS. At any time and from time to time during the Plan Year, the Plan Committee may designate the employees of the Company and its Subsidiaries and other Participants eligible for Awards.
3.3
ALLOCATION OF AWARDS. Contemporaneously with the designation of a Participant pursuant to Section 3.2 hereof, the Plan Committee shall determine the size, type and Date of Grant for each Award, taking into consideration such factors as it deems relevant, which may include the following:
(a)
the total number of shares of Common Stock available for Awards under the Plan;
(b)
the work assignment or the position of the Participant and its sensitivity and/or impact in relationship to the profitability and growth of the Company and its Subsidiaries; and
(c)
the Participant’s performance in reference to such factors.
The Plan Committee may grant a Participant only one type of Award or it may grant any combination of Awards in whatever relationship one to the other, if any, as the Plan Committee in its discretion so determines.
3.4
NOTIFICATION TO PARTICIPANTS AND DELIVERY OF DOCUMENTS. As soon as practicable after such determinations have been made, each Participant shall be notified of (a) his/her designation as a Participant, (b) the Date of
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Grant, (c) the number and type of Awards granted to the Participant, (d) in the case of Performance Awards, the Performance Period and Performance Goals, and (e) in the case of Restricted Stock or Restricted Stock Units, the Restriction Period. The Participant shall thereafter be supplied with written evidence of any such Awards.
ARTICLE IV
PERFORMANCE AWARDS
4.1
ESTABLISHMENT OF PERFORMANCE GOALS. Performance Goals applicable to a Performance Award shall be established by the Plan Committee in its absolute discretion on or before the Date of Grant and not more than a reasonable period of time after the beginning of the relevant Performance Period. Such Performance Goals may include or be based upon any one or more of the following criteria: net sales; comparable store sales; total revenue; gross margin rate; selling, general and administrative expense rate; earnings before interest, taxes, depreciation and amortization; earnings before interest and taxes; earnings before taxes; net earnings; earnings per share; Target Corporation share price; total shareholder return; return on equity; return on sales; return on assets; return on invested capital; cash flow return on investment; economic value added; credit card segment profitability; credit card segment pre-tax return on invested capital; credit card spread to LIBOR; operating cash flow; free cash flow; working capital; interest coverage; net debt to earnings before interest, taxes, depreciation, amortization and rent expense ratio; debt leverage; and total net debt. Performance Goals may be absolute in their terms or be measured against or in relationship to the performance of other companies or indices, whether comparably, similarly or otherwise situated to the Company. Performance Goals may be based on the Company’s consolidated results or the results of any segment or other subset of the Company’s business, and may be calculated in accordance with generally accepted accounting principles or any other management accounting principle. At any time prior to distribution of a Performance Award, the Plan Committee may, in its sole discretion, modify the Performance Goals applicable to such Performance Award if it determines that unforeseen events have occurred which have had a substantial effect on the Performance Goals and such unforeseen events would otherwise make application of the original Performance Goals unfair; provided, however, that no such change or modification may be made to the extent it increases the amount of compensation payable to any Participant who is a “covered employee” within the meaning of Code Section 162(m).
4.2
LEVELS OF PERFORMANCE REQUIRED TO EARN PERFORMANCE AWARDS.
At or about the same time that Performance Goals are established for a specific period, the Plan Committee shall in its absolute discretion establish the percentage of the Performance Awards granted for such Performance Period which shall be earned by the Participant for various levels of performance measured in relation to achievement of Performance Goals for such Performance Period.
4.3
OTHER RESTRICTIONS. The Plan Committee shall determine the terms and conditions applicable to any Performance Award, which may include restrictions on
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the delivery of Common Stock payable in connection with the Performance Award and restrictions that could result in the future forfeiture of all or part of any Common Stock earned. The Plan Committee may provide that shares of Common Stock issued in connection with a Performance Award be held in escrow and/or legended.
4.4
NOTIFICATION TO PARTICIPANTS. Promptly after the Plan Committee has established or modified the Performance Goals with respect to a Performance Award, the Participant shall be provided with written notice of the Performance Goals so established or modified.
4.5
MEASUREMENT OF PERFORMANCE AGAINST PERFORMANCE GOALS. The Plan Committee shall, as soon as practicable after the close of a Performance Period, determine:
(a)
the extent to which the Performance Goals for such Performance Period have been achieved; and
(b)
the percentage of the Performance Awards earned as a result.
Notwithstanding the foregoing, if and to the extent the applicable Performance Award agreement permits, the Plan Committee may, in its sole discretion, reduce the percentage of any Performance Award otherwise determined for a Performance Period, and such reduced percentage shall be the amount earned by the Participant. All determinations of the Plan Committee shall be absolute and final as to the facts and conclusions therein made and be binding on all parties. Promptly after the Plan Committee has made the foregoing determination, each Participant who has earned Performance Awards shall be notified, in writing thereof. For all purposes of this Plan, notice shall be deemed to have been given the date action is taken by the Plan Committee making the determination. Participants may not sell, transfer, pledge, exchange, hypothecate or otherwise dispose of all or any portion of their Performance Awards during the Performance Period, except that Performance Awards may be transferable by assignment by a Participant to the extent provided in the applicable Performance Award agreement.
4.6
TREATMENT OF PERFORMANCE AWARDS EARNED. Upon the Plan Committee’s determination that a percentage of any Performance Awards have been earned for a Performance Period, Participants to whom such earned Performance Awards have been granted and who have been (or were) in the employ of the Company or a Subsidiary thereof continuously from the Date of Grant, subject to the exceptions set forth at Section 4.9 and Section 4.10 hereof, shall be entitled, subject to the other conditions of this Plan, to payment in accordance with the terms and conditions of their Performance Awards. Such terms and conditions may permit or require that any applicable tax withholding be deducted from the amount payable. Performance Awards shall under no circumstances become earned or have any value whatsoever for any Participant who is not in the employ of the Company or its Subsidiaries continuously during the entire Performance Period for which such Performance Award was granted, except as provided at Section 4.9 or Section 4.10 hereof.
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4.7
DISTRIBUTION. Distributions payable pursuant to Section 4.6 above shall be made as soon as practicable after the Plan Committee determines the Performance Awards have been earned unless the provisions of Section 4.8 hereof are applicable to a Participant.
4.8
DEFERRAL OF RECEIPT OF PERFORMANCE AWARD DISTRIBUTIONS. With the consent of the Plan Committee, a Participant who has been granted a Performance Award may by compliance with the then applicable procedures under the Plan irrevocably elect in writing to defer receipt of all or any part of any distribution associated with that Performance Award. The terms and conditions of any such deferral, including but not limited to, the period of time for, and form of, election; the manner and method of payout; the plan and form in which the deferred amount shall be held; the interest equivalent or other payment that shall accrue pending its payout; and the use and form of Dividend Equivalents in respect of stock-based units resulting from such deferral, shall be as determined by the Plan Committee. The Plan Committee may, at any time and from time to time, but prospectively only, amend, modify, change, suspend or cancel any and all of the rights, procedures, mechanics and timing parameters relating to such deferrals. An election made prior to December 31, 2008 to defer receipt of any distribution associated with a Performance Award relating to Performance Periods ending after December 31, 2004 is subject to the provisions of Appendix A.
4.9
NON-DISQUALIFYING TERMINATION OF EMPLOYMENT. Except for Section 4.10 hereof, the only exceptions to the requirement of continuous employment during a Performance Period for Performance Award distribution are termination of a Participant’s employment by reason of death (in which event the Performance Award may be transferable by will or the laws of descent and distribution only to such Participant’s beneficiary designated to receive the Performance Award or to the Participant’s applicable legal representatives, heirs or legatees), total and permanent disability, with the consent of the Plan Committee, normal or late retirement or early retirement, with the consent of the Plan Committee, or transfer of an executive in a spin-off, with the consent of the Plan Committee, occurring during the Performance Period applicable to the subject Performance Award. In such instance a distribution of the Performance Award shall be made at the end of the Performance Period, and the percentage of the total Performance Award that would have been earned during the Performance Period shall be earned and paid out; provided, however, in a spin-off situation the Plan Committee may set additional conditions, such as, without limiting the generality of the foregoing, continuous employment with the spin-off entity. If a Participant’s termination of employment does not meet the criteria set forth above, but the Participant had at least 15 years of employment with the Company or a Subsidiary or any combination thereof, the Plan Committee may allow distribution of the percentage (or a portion thereof) of the total Performance Award that is earned for the Performance Period, subject to any conditions that the Plan Committee shall determine.
4.10
CHANGE IN CONTROL. In the event of a Change in Control, the Performance Period shall be deemed to have ended and a pro rata portion of all
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outstanding Performance Awards under the Plan shall be deemed to have been earned. Specifically, the pro rata amount earned shall be determined by multiplying 100% of each Performance Award by a fraction, the numerator of which shall be the number of months that have elapsed in the applicable Performance Period prior to the Change in Control and the denominator of which shall be the total number of months in the Performance Period. Distribution of the amount deemed earned shall be made within ten days after the Change in Control or later if so provided in the applicable Award agreement, a related deferral election or, if applicable, Appendix A.
ARTICLE V
STOCK OPTIONS AND
STOCK APPRECIATION RIGHTS
5.1
NON-QUALIFIED OPTION. Non-Qualified Options granted under the Plan are Stock Options that are not intended to be Incentive Stock Options under the provisions of Section 422 of the Code. Non-Qualified Options shall be evidenced by written agreements in such form and not inconsistent with the Plan as the Plan Committee shall in its sole discretion approve from time to time, which agreements shall specify the number of shares to which they pertain and the purchase price of such shares.
5.2
INCENTIVE STOCK OPTION. Incentive Stock Options granted under the Plan are Stock Options that are intended to be “incentive stock options” under Section 422 of the Code, and the Plan shall be administered, except with respect to the right to exercise options after termination of employment, to qualify Incentive Stock Options issued hereunder as incentive stock options under Section 422 of the Code. An Incentive Stock Option shall not be granted to an employee who owns, or is deemed under Section 424(d) of the Code to own, stock of the Company (or of any parent or Subsidiary of the Company) possessing more than 10% of the total combined voting power of all classes of stock therein. The aggregate Fair Market Value (determined as of the time the option is granted) of the stock with respect to which Incentive Stock Options are exercisable for the first time by any Participant during any calendar year (under all incentive stock option plans of the Company or any parent or Subsidiary of the Company) shall not exceed $100,000. Incentive Stock Options shall be evidenced by written agreements in such form and not inconsistent with the Plan as the Plan Committee shall in its sole discretion approve from time to time, which agreements shall specify the number of shares to which they pertain and the purchase price of such shares.
5.3
OPTION TERMS. Stock Options granted under this Plan shall be subject to the following terms and conditions:
(a)
Option Period
. Each Stock Option shall expire and all rights to purchase shares thereunder shall cease not more than ten years after its Date of Grant or on such date prior thereto as may be fixed by the Plan Committee, or on such other date as is provided by this Plan in the event of termination of employment, death or reorganization. No Stock Option shall permit the purchase of any shares thereunder during the first year
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after its Date of Grant, except as provided in Section 5.5 hereof or as otherwise determined by the Plan Committee.
(b)
Exercise Price
. The purchase price per share payable upon exercise of a Stock Option shall not be less than the Fair Market Value of a share of Common Stock on the Date of Grant of the Stock Option.
(c)
Transferability and Termination of Options
. During the lifetime of an individual to whom a Stock Option is granted, the Stock Option may be exercised only by such individual and only while such individual is an employee of the Company or a Subsidiary and only if the Participant has been continuously so employed by any one or combination thereof since the Date of Grant of the Stock Option, provided, however, that if the employment of such Participant by the Company or a Subsidiary Corporation terminates, the Stock Option may additionally be exercised as follows, or in any other manner provided by the Plan Committee, but in no event later than ten years after the Date of Grant of the Stock Option, except as set forth in (ii) and (v) below:
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(i)
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If a Participant’s termination of employment occurs by reason of normal or late retirement under any retirement plan of the Company or its Subsidiaries, such Participant’s Stock Options may be exercised within five years after the date of such termination of employment. If a Participant’s termination of employment occurs by reason of early retirement under any retirement plan of the Company or its Subsidiaries, or by reason of the transfer of a Participant in a spin-off, or by reason of total and permanent disability, as determined by the Plan Committee, without retirement, then such Participant’s Stock Options shall be exercisable for a period of up to five years after the date of such termination of employment if the Plan Committee consents to such an extension. During the extension period, the right to exercise Stock Options, if any, accruing in installments, shall continue unless the Plan Committee provides otherwise; provided, however, that if the Stock Options are Incentive Stock Options all installments shall be immediately exercisable; and provided further, that the Plan Committee may set additional conditions, such as, without limiting the generality of the foregoing, an agreement to not provide services to a competitor of the Company and its Subsidiaries and/or continuous employment with a spin-off entity.
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(ii)
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If a Participant’s termination of employment occurs by reason of death, then such Participant’s outstanding Stock Options shall all become immediately exercisable and may be exercised within five years after the date of death or the life of the option, whichever is
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less, but in the case of Non-Qualified Options in no event less than one year after the date of death, unless the Plan Committee provides otherwise.
(iii)
If a Participant’s termination of employment occurs for any reason other than as specified in Section 5.3(c)(i) or (ii) hereof, the Participant has been employed by the Company or a Subsidiary or any combination for more than 15 years, and if the Plan Committee so approves, then such Participant’s Stock Options may be exercised within a period of up to five years after the date of termination of employment. During the extension period, the right to exercise options, if any, accruing in installments shall continue unless the Plan Committee provides otherwise; provided, however, the Plan Committee may set additional conditions.
(iv)
If a Participant’s termination of employment occurs for any reason other than as specified in Section 5.3(c)(i) or (ii) hereof and the Plan Committee has not approved an extension, then, except as provided below and only with respect to installments that have as of the date of termination already accrued, such Participant’s Stock Options may be exercised within ninety days after the date of such termination of employment except in the case of Participants who would at the time be subject to the provisions of Section 16(b) of the Exchange Act, in which instance the period of exercise shall be two hundred ten days after termination. Notwithstanding the foregoing, those Participants whose employment is terminated because of deliberate and serious disloyal or dishonest conduct in the course of employment that justifies and results in prompt discharge for specific cause under the established policies and practices of the Company as interpreted by the Plan Committee shall have no additional period after termination of employment in which to exercise their options. Examples of such deliberate and serious disloyal or dishonest conduct would include material unlawful conduct, material and conscious falsification or unauthorized disclosure of important records, embezzlement or unauthorized conversion of property, serious violation of conflict of interest or vendor relations policies, and misuse or disclosure of significant trade secrets or other information likely to be of use to the detriment of the Company or its interests.
(v)
Rights accruing to a Participant under Sections 5.3(c)(i), 5.3(c)(iii) and 5.3(c)(iv) may, upon the death of a Participant subsequent to his/her termination of employment, be exercised by his/her duly designated beneficiary or otherwise by his/her applicable legal representatives, heirs or legatees to the extent vested in and unexercised or perfected by the Participant at the date of his/her
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death. In the case of Non-Qualified Options, the period for such exercise shall not expire less than one year after the date of the Participant’s death, unless the Plan Committee provides otherwise.
(vi)
Absence on a leave of absence approved by the Plan Committee shall not be deemed a termination or interruption of continuous employment for the purposes of the Plan.
No Stock Option shall be assignable or transferable by the individual to whom it is granted, except that it may be transferable (X) by assignment by the Participant to the extent provided in the applicable option agreement (or as subsequently allowed by the Plan Committee), or (Y) by will or the laws of descent and distribution in accordance with the provisions of this Plan. Upon the death of the Participant an option may only be exercised by such individual’s beneficiary designated to exercise the option or otherwise by his/her applicable legal representatives, heirs or legatees, and only within the specific time period set forth above and only to the extent vested in and unexercised by the Participant at the date of his/her death, except as provided in Section 5.3(c)(ii).
In no event, whether by the Participant directly or by his/her proper assignee or beneficiary or other representative, shall any option be exercisable at any time after its expiration date as stated in the option agreement, except as provided in Section 5.3(c)(ii) and (v). When an option is no longer exercisable it shall be deemed for all purposes and without further act to have lapsed and terminated. The Plan Committee may, in its sole discretion, determine solely for the purposes of the Plan that a Participant is permanently and totally disabled, and the acts and decisions of the Plan Committee made in good faith in relation to any such determination shall be conclusive upon all persons and interests affected thereby.
(d)
Exercise of Options
. An individual entitled to exercise Stock Options may, subject to their terms and conditions and the terms and conditions of the Plan, exercise them in whole or in part by delivery of written notice of exercise to the Company at its principal office or such other manner as the Company may direct, specifying the number of whole shares of Common Stock with respect to which the Stock Options are being exercised. Before shares may be issued, payment must be made in full, in legal United States tender, in the amount of the purchase price of the shares to be purchased at the time and any amounts for withholding as provided in Section 10.8 hereof; provided, however, in lieu of paying for the exercise price in cash as described above, the individual may pay (subject to such conditions and procedures as the Plan Committee may establish) all or part of such exercise price by tendering (either actually or by attestation) owned and unencumbered shares of Common Stock acceptable to the Plan Committee
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and having a Fair Market Value on the date of exercise of the Stock Options equal to or less than the exercise price of the Stock Options exercised, with cash, as set forth above, for the remainder, if any, of the purchase price; provided, further, that the Plan Committee may permit a Participant to elect to pay the exercise price by authorizing a third party to sell shares of Common Stock (or a sufficient portion of the shares) acquired upon exercise of the Stock Options and remit to the Company a sufficient portion of the sale proceeds to pay the entire exercise price and any tax withholding resulting from such exercise. Subject to rules established by the Plan Committee, the withholdings required by Section 10.8 hereof may be satisfied by the Company withholding shares of Common Stock issued on exercise that have a Fair Market Value on the date of exercise of the Stock Options equal to or less than the withholding required by Section 10.8 hereof.
(e)
Repricing Prohibited
. Subject to Sections 5.5, 7.3 and 10.7, outstanding Stock Options granted under this Plan shall not be repriced.
5.4
STOCK APPRECIATION RIGHTS. Stock Appreciation Rights may be granted to Participants either alone (“freestanding”) or in tandem with other Awards, including Performance Awards, Stock Options and Restricted Stock. Stock Appreciation Rights granted in tandem with Incentive Stock Options must be granted at the same time as the Incentive Stock Options are granted. Stock Appreciation Rights granted in tandem with any other Award may be granted at any time prior to the earlier of the exercise or expiration of such Award. Stock Appreciation Rights granted in tandem with Stock Options shall terminate and no longer be exercisable upon the termination or exercise of the related Stock Options. The Plan Committee shall establish the terms and conditions applicable to any Stock Appreciation Rights, which terms and conditions need not be uniform but may not be inconsistent with the terms of the Plan. Freestanding Stock Appreciation Rights shall generally be subject to terms and conditions substantially similar to those described in Section 5.3 for Stock Options, including the requirements of 5.3(a), (b) and (e) regarding the maximum period, minimum price and prohibition on repricing.
5.5
CHANGE IN CONTROL. In the event of a Change in Control:
(a)
If the Company is the surviving entity and any adjustments necessary to preserve the value of the Participant’s outstanding Stock Options and Stock Appreciation Rights have been made, or the Company’s successor at the time of the Change in Control irrevocably assumes the Company’s obligations under this Plan or replaces the Participant’s outstanding Stock Options and Stock Appreciation Rights with stock options and stock appreciation rights having substantially the same value and having terms and conditions no less favorable to the Participant than those applicable to the Participant’s Stock Options and Stock Appreciation Rights immediately prior to the Change in Control (collectively, an “Equitable Assumption or Replacement”), then such
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Awards or their replacement awards shall become immediately exercisable in full only if within two years after the Change in Control the Participant’s employment:
(i)
is terminated without “Cause”, which for purposes of this Section 5.5 shall mean (x) willful and continued failure to substantially perform the Participant’s duties (other than failure resulting from incapacity due to physical or mental illness) after receipt of a written demand for such performance specifically identifying such failure, or (y) the willful engaging by the Participant in illegal conduct or gross misconduct that is materially and demonstrably injurious to the Company or its successor;
(ii)
terminates with “Good Reason”, which for purposes of this Section 5.5 shall mean any material diminution of the Participant’s position, authority, duties or responsibilities (including the assignment of duties materially inconsistent with the Participant’s position or a material increase in the time Participant is required by the Company or its successor to travel), any reduction in salary or in the Participant’s aggregate bonus and incentive opportunities, any material reduction in the aggregate value of the Participant’s employee benefits (including retirement, welfare and fringe benefits), or relocation to a principal work site that is more than 40 miles from the Participant’s principal work site immediately prior to the Change in Control; or
(iii)
terminates under circumstances that entitle the Participant to accelerated exercisability under any individual employment agreement between the Participant and the Company, a Subsidiary, or any successor thereof.
(b)
If there is no Equitable Assumption or Replacement, then without any action by the Plan Committee or the Board, each outstanding Stock Option and Stock Appreciation Right granted under the Plan that has not been previously exercised or otherwise lapsed and terminated shall become immediately exercisable in full; provided, however, that the Plan Committee, in its sole discretion, and without the consent of any Participant affected thereby, may determine that a cash payment shall be made promptly following the Change in Control in lieu of all or any portion of the outstanding Stock Options and Stock Appreciation Rights granted under this Plan. The amount payable with respect to each share of Common Stock subject to an affected Stock Option and each affected Stock Appreciation Right shall equal the excess of the Fair Market Value of a share of Common Stock immediately prior to such Change in Control over the exercise price of such Stock Option or Stock Appreciation Right. After such a determination by the Plan Committee, each Stock Option and Stock Appreciation Right, with respect to which a cash payment is to be made shall terminate, and the Participant shall have no further rights thereunder except the right to receive such cash payment.
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ARTICLE VI
RESTRICTED STOCK AND RESTRICTED STOCK UNITS
6.1
RESTRICTION PERIOD. At the time an Award of Restricted Stock or Restricted Stock Units is made, the Plan Committee shall establish the terms and conditions applicable to such Award, including the period of time (the “Restriction Period”) during which certain restrictions established by the Plan Committee shall apply to the Award. The Restriction Period shall not be less than three years, provided, however, that for Awards to non-employee directors of the Company, the terms of the Award may allow for the ratable release of the restrictions over a minimum period of one year. Each such Award, and designated portions of the same Award, may have a different Restriction Period, at the discretion of the Plan Committee. Except as permitted or pursuant to Sections 6.4, 6.5 or 10.7 hereof, the Restriction Period applicable to a particular Award shall not be changed.
6.2
RESTRICTED STOCK TERMS AND CONDITIONS. Restricted Stock shall be represented by a stock certificate registered in the name of the Participant granted such Restricted Stock. Such Participant shall have the right to enjoy all shareholder rights during the Restriction Period except that:
(a)
The Participant shall not be entitled to delivery of the stock certificate until the Restriction Period shall have expired.
(b)
The Company may either issue shares subject to such restrictive legends and/or stop-transfer instructions as it deems appropriate or provide for retention of custody of the Common Stock during the Restriction Period.
(c)
The Participant may not sell, transfer, pledge, exchange, hypothecate or otherwise dispose of the Common Stock during the Restriction Period, except that it may be transferable by assignment by the Participant to the extent provided in the applicable Restricted Stock Award agreement.
(d)
A breach of the terms and conditions established by the Plan Committee with respect to the Restricted Stock shall cause a forfeiture of the Restricted Stock, and any dividends withheld thereon.
(e)
Dividends payable in cash or in shares of stock or otherwise may be either currently paid or withheld by the Company for the Participant’s account. At the discretion of the Plan Committee, interest may be paid on the amount of cash dividends withheld, including cash dividends on stock dividends, at a rate and subject to such terms as determined by the Plan Committee.
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Provided, however, and the provisions of Section 6.4 to the contrary notwithstanding, in lieu of the foregoing, the Plan Committee may provide that no shares of Common Stock be issued until the Restriction Period is over and further provide that the shares of Common Stock issued after the Restriction Period has been completed, be issued in escrow and/or be legended and that the Common Stock be subject to restrictions including the forfeiture of all or a part of the shares.
6.3
PAYMENT FOR RESTRICTED STOCK. A Participant shall not be required to make any payment for Restricted Stock unless the Plan Committee so requires.
6.4
FORFEITURE PROVISIONS. Subject to Section 6.5, in the event a Participant terminates employment during a Restriction Period for the Participant’s Restricted Stock or Restricted Stock Units, such Awards will be forfeited; provided, however, that the Plan Committee may provide for proration or full payout in the event of (a) a termination of employment because of normal or late retirement, (b) with the consent of the Plan Committee, early retirement or spin-off, (c) death, (d) total and permanent disability, as determined by the Plan Committee, (e) with the consent of the Plan Committee, termination of employment after 15 years of employment with the Company or a Subsidiary or any combination thereof, or (f) in the case of a non-employee director, a departure from the Board following the completion of the director’s term of office, all subject to any other conditions the Plan Committee may determine. Any Restricted Stock Unit that is not, in all cases, due and payable not later than the 15
th
day of the third month following the calendar year, or if later, the Company’s fiscal year, in which the Restricted Stock Unit ceases to be subject to a “substantial risk of forfeiture” within the meaning Section 409A of the Code, will be subject to the provisions of Appendix A.
6.5
CHANGE IN CONTROL. In the event of a Change in Control, restrictions on a fraction of each Participant’s outstanding Restricted Stock and Restricted Stock Units granted under the Plan will lapse. The numerator of such fraction with respect to an Award shall be the number of months that have elapsed in the applicable Restriction Period prior to the Change in Control and the denominator shall be the number of months in such Restriction Period. Distribution of any shares not previously distributed shall be made within ten days after the Change in Control or later if so provided in the applicable Award agreement, a related deferral election or if applicable, Appendix A.
6.6
DEFERRAL OF RECEIPT OF RESTRICTED STOCK UNITS. With the consent of the Plan Committee, a Participant who has been granted a Restricted Stock Unit may by compliance with the then applicable procedures under the Plan irrevocably elect in writing to defer receipt of all or any part of any distribution associated with that Award. The terms and conditions of any such deferral, including but not limited to, the period of time for, and form of, election; the manner and method of payout; the plan and form in which the deferred amount shall be held; the interest equivalent or other payment that shall accrue pending its payout; and the use and form of Dividend Equivalents in
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respect of stock-based units resulting from such deferral, shall be as determined by the Plan Committee. The Plan Committee may, at any time and from time to time, but prospectively only, amend, modify, change, suspend or cancel any and all of the rights, procedures, mechanics and timing parameters relating to such deferrals. An election made prior to December 31, 2008 to defer receipt of any distribution associated with a Restricted Stock Unit relating to a Restriction Period ending after December 31, 2004 is subject to the provisions of Appendix A.
ARTICLE VII
SHARES OF STOCK SUBJECT TO THE PLAN; MAXIMUM AWARDS
7.1
SHARES AVAILABLE. Subject to the other provisions of this Article VII, the total number of shares available for grant as Awards pursuant to the Plan shall not exceed in the aggregate 81,000,000 shares of Common Stock. (This limit includes the 44,000,000 shares that were originally made available under this Plan.) Solely for the purpose of applying the limitation in the preceding sentence and subject to the replenishment and adjustment provisions of Sections 7.2 and 7.3 below:
(a)
each Award granted under this Plan prior to May 19, 2004 (the date the Plan was last approved by shareholders) shall reduce the number of shares available for grant by one share for every one share granted;
(b)
each Stock Option or Stock Appreciation Right granted under this Plan on or after May 19, 2004 shall reduce the number of shares available for grant by one share for every one share granted;
(c)
each Award granted under this Plan on or after May 19, 2004 that may result in the issuance of Common Stock, other than a Stock Option, Stock Appreciation Right, or Dividend Equivalent, shall reduce the number of shares available for grant by two shares for every one share granted;
(d)
each Dividend Equivalent that the Corporation has determined may result in the issuance of Common Stock shall reduce the number of shares available for grant by two shares for every share that would be issuable if the accumulated value of the Dividend Equivalent were converted into Common Stock at Fair Market Value, but such reduction shall only occur if the corresponding dividends payable to shareholders were paid in cash; and
(e)
if Awards are granted in tandem, so that only one of the Awards may actually be exercised, only the Award that results in the greater reduction in the number of shares available for grant shall result in a reduction of the shares so available, and the other Award shall be disregarded.
Shares available for grant under the Plan may be authorized and unissued shares, treasury shares held by the Company or shares purchased or held by the Company or a Subsidiary
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for purposes of the Plan, or any combination thereof. Shares issued upon assumption or conversion of outstanding stock-based awards granted by an acquired company shall be disregarded in applying the limitation set forth in this Section 7.1.
7.2
SHARES AGAIN AVAILABLE. In the event all or any portion of an Award is forfeited or cancelled, expires, is settled for cash, or otherwise does not result in the issuance of all or a portion of the shares subject to the Award in connection with the exercise or settlement of such Award, the number of shares not issued that were deducted for such Award pursuant to Section 7.1 above shall be restored and may again be used for Awards under the Plan. If a Participant uses shares of Common Stock to pay a purchase or exercise price or tax withholding, either by having the Company withhold shares or tendering shares (either actually or by attestation), an equal number of such shares shall be restored and may again be used for Awards under the Plan. In addition, shares may be reacquired on the open market by the Company using the Cash Proceeds received by the Company from the exercise on or after May 19, 2004 of Stock Options granted under the Plan to restore an equal number of shares that may again be used for Awards under the Plan; provided, however, that the number of shares so restored does not exceed the number that could be purchased at Fair Market Value with the Cash Proceeds on the date of exercise of the Stock Option giving rise to such Cash Proceeds.
If one of the events described in the first sentence of the preceding paragraph occurs with respect to an award that was granted under a Prior Plan (as defined in Section 10.11) but was outstanding on May 19, 2004, the total number of shares available for grant under this Plan shall be increased by one share for each share subject to that award that is not issued.
Notwithstanding anything in this Section 7.2 to the contrary and solely for purposes of determining whether shares are available for the issuance of Incentive Stock Options, the maximum aggregate number of shares that may be granted under this Plan shall be determined without regard to any shares restored pursuant to this Section 7.2 that, if taken into account, would cause the Plan to fail the requirement under Code Section 422 that the Plan designate the maximum aggregate number of shares that may be issued.
7.3
RELEVANT CHANGE ADJUSTMENTS.
In the event of any equity restructuring (within the meaning of Financial Accounting Standards No. 123 (revised 2004)) other than: (1) any distribution of securities or other property by the Company to shareholders in a spin-off or split-up that does not qualify as a tax-free spin-off or split-up under Section 355 of the Code (or any successor provision of the Code); or (2) any cash dividend (including extraordinary cash dividends), appropriate adjustments in the number of shares available for grant and in any outstanding Awards, including adjustments in the size of the Award and in the exercise price per share of Stock Options and Stock Appreciation Rights, shall be made by the Plan Committee to give effect to such equity restructuring to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan. No such adjustment shall be required to reflect the events described in clauses (1) and (2) above, or any other change in
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capitalization that does not constitute an equity restructuring, however such adjustment may be made: (x) if necessary to comply with Section 409A of the Code, the adjustment qualifies as a substitution or assumption under Treasury Regulation Section 1.424-1; and (y) the Plan Committee affirmatively determines, in its discretion, that such an adjustment is appropriate.
7.4
MAXIMUM PER PARTICIPANT AWARD. During any consecutive thirty-six month period, no Participant may receive Awards that, in the aggregate, could result in that Participant receiving, earning or acquiring, subject to the adjustments described in Section 7.3:
(a)
Stock Options and Stock Appreciation Rights for, in the aggregate, more than 4,000,000 shares of Common Stock;
(b)
Performance Shares, Restricted Stock and Restricted Stock Units for, in the aggregate, more than 700,000 shares of Common Stock;
(c)
A number of Dividend Equivalents greater than the number of shares of Common Stock the Participant could receive, earn or acquire in connection with the related stock-based Awards granted to the Participant; and
(d)
Performance Units with a value exceeding $15,000,000.
In addition, during any consecutive thirty-six month period, no Participant who is a non-employee director may receive Awards that, in the aggregate, could result in that Participant receiving, earning or acquiring, subject to the adjustments described in Section 7.3, more than 75,000 shares of Common Stock. For purposes of applying the limits described in this Section 7.4, if Awards subject to the same limit are granted in tandem, so that only one of the Awards may actually be exercised, only one of the Awards shall be counted.
ARTICLE VIII
ADMINISTRATION
8.1
PLAN COMMITTEE. The Plan will be administered by a committee of two or more members of the Compensation Committee of the Board who are appointed from time to time by the Board and who are outside, independent Board members who, in the judgment of the Board, are qualified to administer the Plan as contemplated by (a) Rule 16b-3 of the Securities and Exchange Act of 1934 (or any successor rule), (b) Section 162(m) of the Code, as amended, and the regulations thereunder (or any successor Section and regulations), and (c) any rules and regulations of a stock exchange on which Common Stock is traded. Any member of the committee administering the Plan who does not satisfy or ceases to satisfy the qualifications set out in the preceding sentence may recuse himself or herself from any vote or other action taken by such committee. The Board may, at any time and in its complete discretion, remove any member of such committee and may fill any vacancy on such committee.
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8.2
POWERS. The Plan Committee shall have and exercise all of the powers and responsibilities granted expressly or by implication to it by the provisions of the Plan. Subject to and as limited by such provisions, the Plan Committee may from time to time enact, amend and rescind such rules, regulations and procedures with respect to the administration of the Plan as it deems appropriate or convenient.
8.3
INTERPRETATION. All questions arising under the Plan, any Award agreement, or any rule, regulation or procedure adopted by the Plan Committee shall be determined by the Plan Committee, and its determination thereof shall be conclusive and binding upon all parties.
8.4
COMMITTEE PROCEDURE. Any action required or permitted to be taken by the Plan Committee under the Plan shall require the affirmative vote of a majority of a quorum of the members of the Plan Committee. A majority of all members of the Plan Committee shall constitute a “quorum” for Plan Committee business. The Plan Committee may act by written determination instead of by affirmative vote at a meeting, provided that any written determination shall be signed by all members of the Plan Committee, and any such written determination shall be as fully effective as a majority vote of a quorum at a meeting.
8.5
DELEGATION. The Plan Committee may delegate all or any part of its authority under the Plan to a subcommittee of directors and/or officers of the Company for purposes of determining and administering Awards granted to persons who are not then subject to the reporting requirements of Section 16 of the Exchange Act.
ARTICLE IX
REDUCTION IN AWARDS
9.1
WHEN APPLICABLE. Anything in this Plan to the contrary notwithstanding, the provisions of this Article IX shall apply to a Participant if an independent auditor selected by the Plan Committee (the “Auditor”) determines that each of (a) and (b) below are applicable.
(a)
Payments or distributions hereunder, determined without application of this Article IX, either alone or together with other payments in the nature of compensation to the Participant which are contingent on a change in the ownership or effective control of the Company, or in the ownership of a substantial portion of the assets of the Company, or otherwise (but after any elimination or reduction of such payments under the terms of the Company’s Officer Income Continuance Policy Statement, as amended), would result in any portion of the payments hereunder being subject to an excise tax on excess parachute payments imposed under Section 4999 of the Code.
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(b)
The excise tax imposed on the Participant under Section 4999 of the Code on excess parachute payments, from whatever source, would result in a lesser net aggregate present value of payments and distributions to the Participant (after subtraction of the excise tax) than if payments and distributions to the Participant were reduced to the maximum amount that could be made without incurring the excise tax.
9.2
REDUCED AMOUNT. Under this Article IX the payments and distributions under this Plan shall be reduced (but not below zero) so that the present value of such payments and distributions shall equal the Reduced Amount. The “Reduced Amount” (which may be zero) shall be an amount expressed in present value which maximizes the aggregate present value of payments and distributions under this Plan which can be made without causing any such payment to be subject to the excise tax under Section 4999 of the Code. The determinations and reductions under this Section 9.2 shall be made after eliminations or reductions, if any, have been made under the Company’s Officer Income Continuance Policy Statement, as amended.
9.3
PROCEDURE. If the Auditor determines that this Article IX is applicable to a Participant, it shall so advise the Plan Committee in writing. The Plan Committee shall then promptly give the Participant notice to that effect together with a copy of the detailed calculation supporting such determination which shall include a statement of the Reduced Amount. Such notice shall also include a description of which and how much of the Awards shall be eliminated or reduced (as long as their aggregate present value equals the Reduced Amount). For purposes of this Article IX, Awards shall be reduced in the following order: (1) Stock Options with an exercise price above the then Fair Market Value of a share of Common Stock that have a positive value for purposes of Section 280G of the Code, as determined under applicable IRS guidance; (2) pro rata among Awards that constitute deferred compensation subject to Section 409A of the Code; and (3) if a further reduction is necessary to reach the Reduced Amount, among the Awards that are not subject to Section 409A of the Code. Present value shall be determined in accordance with Section 280G of the Code. All the foregoing determinations made by the Auditor under this Article IX shall be made as promptly as practicable after it is determined that excess parachute payments (as defined in Section 280G of the Code) will be made to the Participant if an elimination or reduction is not made. As promptly as practicable, the Company shall provide to or for the benefit of the Participant such amounts and shares as are then due to the Participant under this Plan and shall promptly provide to or for the benefit of the Participant in the future such amounts and shares as become due to the Participant under this Plan.
9.4
CORRECTIONS. As a result of the uncertainty in the application of Section 280G of the Code at the time of the initial determination by the Auditor hereunder, it is possible that payments or distributions under this Plan will have been made which should not have been made (“Overpayment”) or that additional payments or distributions which will have not been made could have been made (“Underpayment”), in each case, consistent with the calculation of the Reduced Amount hereunder. In the event that the Auditor, based upon the assertion of a deficiency by the Internal Revenue Service
22
against the Company or the Participant which the Auditor believes has a high probability of success, determines that an Overpayment has been made, any such Overpayment shall be treated for all purposes as a loan to the Participant which the Participant shall repay together with interest at the applicable Federal rate provided for in Section 7872(f)(2) of the Code; provided, however, that no amount shall be payable by the Participant if and to the extent such payment would not reduce the amount which is subject to the excise tax under Section 4999 of the Code. In the event that the Auditor, based upon controlling precedent, determines that an Underpayment has occurred, any such Underpayment shall be promptly paid to or for the benefit of the Participant together with interest at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the Code.
9.5
NON-CASH BENEFITS. In making its determination under this Article IX, the value of any non-cash benefit shall be determined by the Auditor in accordance with the principles of Section 280G(d)(3) of the Code.
9.6
DETERMINATIONS BINDING. All determinations made by the Auditor under this Article IX shall be binding upon the Company, the Plan Committee and the Participant.
ARTICLE X
GENERAL PROVISIONS
10.1
AMENDMENT OR TERMINATION OF PLAN.
The Board may at any time amend, suspend, discontinue or terminate the Plan (including the making of any necessary enabling, conforming and procedural amendments to the Plan to authorize and implement the granting of Incentive Stock Options or other income tax preferred stock options which may be authorized by federal law subsequent to the effective date of this Plan); provided, however, that no amendment by the Board shall, without further approval of the shareholders of the Company, increase the total number of shares of Common Stock which may be made subject to the Plan, except as provided at Section 7.3 hereof, or make any other change for which shareholder approval is required by law or under the applicable rules of the New York Stock Exchange. No action taken pursuant to this Section 10.1 of the Plan shall, without the consent of the Participant, adversely affect any Awards which have been previously granted to a Participant except pursuant to Section 10.5 of the Plan.
10.2
NON-ALIENATION OF RIGHTS AND BENEFITS. Except as expressly provided herein, no right or benefit under the Plan shall be subject to anticipation, alienation, sale, assignment, pledge, encumbrance or charge and any attempt to anticipate, alienate, sell, assign, pledge, encumber or charge the same shall be void. No right or benefit hereunder shall in any manner be liable for or subject to the debts, contracts, liabilities or torts of the person entitled to such right or benefit. If any Participant or beneficiary hereunder should become bankrupt or attempt to anticipate, alienate, sell, assign, pledge, encumber or charge any right or benefit hereunder (other than as expressly provided herein), then such right or benefit shall, in the sole discretion of the Plan Committee, cease and in such event the Company may hold or apply the same
23
or any or no part thereof for the benefit of the Participant or beneficiary, his/her spouse, children or other dependents or any of them in any such manner and in such proportion as the Plan Committee in its sole discretion may deem proper.
10.3
NO RIGHTS AS SHAREHOLDER. The granting of Awards under the Plan shall not entitle a Participant or any other person succeeding to his/her rights, to any dividend, voting or other right as a shareholder of the Company unless and until the issuance of a stock certificate to the Participant or such other person pursuant to the provisions of the Plan and then only subsequent to the date of issuance thereof.
10.4
LIMITATION OF LIABILITY OR OBLIGATION OF THE COMPANY. As illustrative only of the limitations of liability or obligation of the Company and not intended to be exhaustive thereof, nothing in the Plan shall be construed:
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(a)
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to give any employee of the Company any right to be granted any Award other than at the sole discretion of the Plan Committee;
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(b)
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to give any Participant any rights whatsoever with respect to shares of Common Stock except as specifically provided in the Plan;
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(c)
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to limit in any way the right of the Company or any Subsidiary to terminate, change or modify, with or without cause, the employment of any Participant at any time; or
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(d)
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to be evidence of any agreement or understanding, express or implied, that the Company or any Subsidiary will employ any Participant in any particular position at any particular rate of compensation or for any particular period of time.
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Payments and other benefits received by a Participant under an Award shall not be deemed part of a Participant’s regular, recurring compensation for purposes of any termination, indemnity or severance pay laws and shall not be included in, nor have any effect on, the determination of benefits under any other employee benefit plan, contract or similar arrangement provided by the Company or any Subsidiary, unless expressly so provided by such other plan, contract or arrangement or the Plan Committee determines that an Award or portion of an Award should be included to reflect competitive compensation practices or to recognize that an Award has been made in lieu of a portion of competitive cash compensation.
10.5
GOVERNMENT REGULATIONS. Notwithstanding any other provisions of the Plan seemingly to the contrary, the obligation of the Company with respect to Awards granted under the Plan shall at all times be subject to any and all applicable laws, rules and regulations and such approvals by any government agencies as may be required or deemed by the Board or Plan Committee as reasonably necessary or appropriate for the protection of the Company.
24
In connection with any sale, issuance or transfer hereunder, the Participant acquiring the shares shall, if requested by the Company, give assurances satisfactory to counsel of the Company that the shares are being acquired for investment and not with a view to resale or distribution thereof and assurances in respect of such other matters as the Company may deem desirable to assure compliance with all applicable legal requirements.
10.6
NON-EXCLUSIVITY OF THE PLAN. Neither the adoption of the Plan by the Board nor the submission of the Plan to shareholders of the Company for approval shall be construed as creating any limitations on the power or authority of the Board to adopt such other or additional incentive or other compensation arrangements of whatever nature as the Board may deem necessary or desirable or preclude or limit the continuation of any other plan, practice or arrangement for the payment of compensation or fringe benefits to employees generally, or to any class or group of employees, which the Company or any Subsidiary now has lawfully put into effect, including, without limitation, any retirement, pension, savings, profit sharing or stock purchase plan, insurance, death and disability benefits, and executive short term incentive plans.
10.7
REORGANIZATION. In case the Company is merged or consolidated with another corporation, or in case the property or stock of the Company is acquired by another corporation, or in case of a separation, reorganization or liquidation of the Company (for purposes hereof any such occurrence being referred to as an “Event”), the Plan Committee or a comparable committee of any corporation assuming the obligations of the Company hereunder, shall either:
(a)
make appropriate provision for the protection of any outstanding stock-based Awards granted thereunder by the substitution on an equitable basis of appropriate stock, stock units, stock options or stock appreciation rights of the Company, or of the merged, consolidated or otherwise reorganized corporation which will be issuable in respect to the Awards. Stock to be issued pursuant to such substitute awards shall be limited so that the excess of the aggregate fair market value of the shares subject to such substitute awards immediately after such substitution over the purchase price thereof (if any) is not more than the excess of the aggregate fair market value of the shares subject to such substitute awards immediately before such substitution over the purchase price thereof (if any); or
(b)
upon written notice to the Participant, declare that all Performance Awards granted to the Participant are deemed earned, that the Restriction Period of all Restricted Stock and Restricted Stock Units has been eliminated and that all outstanding Stock Options and Stock Appreciation Rights shall accelerate and become exercisable in full but that all outstanding Stock Options and Stock Appreciation Rights, whether or not exercisable prior to such acceleration, must be exercised within the period of time set forth in such notice or they will terminate. In connection with any declaration pursuant to this Section 10.7(b), the Plan Committee may, but shall not be
25
obligated to, cause a cash payment to be made to each Participant who holds a Stock Option or Stock Appreciation Right that is terminated in an amount equal to the product obtained by multiplying (x) the amount (if any) by which the Event Proceeds Per Share (as hereinafter defined) exceeds the exercise price per share covered by such Stock Option times (y) the number of shares of Common Stock covered by such Stock Option or Stock Appreciation Right. For purposes of this Section 10.7(b), “Event Proceeds Per Share” shall mean the cash plus the fair market value, as determined in good faith by the Plan Committee, of the non-cash consideration to be received per share by the shareholders of the Company upon the occurrence of the Event.
10.8
WITHHOLDING TAXES, ETC.
All distributions under the Plan shall be subject to any required withholding taxes and other withholdings and, in case of distributions in Common Stock, the Participant or other recipient may, as a condition precedent to the delivery of Common Stock, be required to pay to his/her participating employer the excess, if any, of the amount of required withholding over the withholdings, if any, from any distributions in cash under the Plan. All or a portion of such payment may, in the discretion of the Plan Committee and upon the election of the Participant, be made (a) by withholding from shares that would otherwise be delivered to the Participant a number of shares sufficient to satisfy the remaining required tax withholding or (b) by tendering (either actually or by attestation) owned and unencumbered shares of Common Stock acceptable to the Plan Committee and having a Fair Market Value on the date of tender equal to or less than the remaining required tax withholding. No distribution under the Plan shall be made in fractional shares of Common Stock, but the proportional market value thereof shall be paid in cash.
10.9
GENERAL RESTRICTION. Each Award shall be subject to the requirement that, if at any time the Board shall determine, in its discretion, that the listing, registration or qualification of the shares subject to such option and/or right upon any securities exchange or under any state or federal law, or the consent or approval of any government regulatory body, is necessary or desirable as a condition of, or in connection with the granting of such Award or the issue or purchase of shares respectively thereunder, such Award may not be exercised in whole or in part unless such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Board.
10.10
USE OF PROCEEDS. The proceeds derived by the Company from the sale of the stock pursuant to Awards granted under the Plan shall constitute general funds of the Company.
10.11
PRIOR PLANS. Notwithstanding the adoption of this Plan by the Board, the Company’s Executive Long Term Incentive Plan of 1981 and the Director Stock Option Plan of 1995, as the same have been amended from time to time (the “Prior Plans”), shall remain in effect, and all grants and awards heretofore made under the Prior
26
Plans shall be governed by the terms of the Prior Plans. The Plan Committee shall not, however, make any additional grants pursuant to the Prior Plans.
10.12
DURATION OF PLAN. This Plan shall remain in effect until the earliest of the following events occurs: (a) distribution of all shares of Common Stock subject to the Plan, (b) termination of this Plan pursuant to Section 10.1 hereof, or (c) May 19, 2014; provided, however, that Awards made before the termination or expiration of this Plan may be exercised, vested, settled or otherwise effectuated after such date in accordance with the terms of such Awards.
10.13
SEVERABILITY. In the event any provision of this Plan shall be held to be illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of this Plan, and this Plan shall be construed and enforced as if the illegal or invalid provision had not been included.
10.14
GOVERNING LAW. To the extent that federal laws do not otherwise control, this Plan and all determinations made and actions taken pursuant to this Plan shall be governed by the laws of Minnesota and construed accordingly.
10.15
HEADINGS. The headings of the Articles and their subparts in this Plan are for convenience of reading only and are not meant to be of substantive significance and shall not add to or detract from the meaning of such Article or subpart to which it refers.
10.16
STOCK CERTIFICATES. Notwithstanding anything in the Plan to the contrary, to the extent the Plan provides for the issuance of stock certificates to reflect the issuance of shares of Common Stock or Restricted Stock, the issuance may be effected on a non-certificated basis, to the extent not prohibited by applicable law or the applicable rules of any stock exchange on which the Common Stock is traded.
27
APPENDIX A
A-1
PURPOSE AND EFFECT
. This Appendix A to the Target Corporation Long-Term Incentive Plan modifies the terms of any deferred Performance Award and any Restricted Stock Unit that is subject to Section 409A of the Code that was awarded prior to December 31, 2008 and that is paid or payable after December 31, 2008. The provisions of this Appendix A will supersede any inconsistent terms of any award that is covered by this Appendix A. Awards covered by this Appendix A (collectively referred to herein as “Appendix A Awards”) include:
(a)
Any Performance Award deferred prior to December 31, 2008 for a Performance Period ending after December 31, 2004 (“Deferred Performance Share Unit”);
(b)
Any Restricted Stock Unit (other than a Deferred Restricted Stock Unit defined below) for which distribution is not, in all cases, due and payable not later than the 15
th
day of the third month following the calendar year, or if later, the Company’s fiscal year, in which the Restricted Stock Unit ceases to be subject to a “substantial risk of forfeiture” within the meaning of Section 409A of the Code; and
(c)
Any Restricted Stock Unit relating to a Restriction Period ending after December 31, 2004 for which an election was made prior to December 31, 2008 to defer receipt of any distribution associated with such Restricted Stock Unit (“Deferred Restricted Stock Unit”).
A-2
DEFINITIONS
. The capitalized terms in this Addendum that are not defined below, shall have the same meaning as in the Agreement, or, if not defined in the Agreement, as defined in the Plan.
(a)
Company
. For purposes of this Addendum, Company includes any person that would be treated as a single employer with the Company under Section 414(b) or 414(c) of the Code.
(b)
Disabled
. An employee Participant will be Disabled if, by reason of any medically-determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve months, Participant (i) is unable to engage in any substantial gainful activity or (ii) is receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Company. An employee Participant will be deemed to be Disabled if he or she is determined to be totally disabled by the Social Security Administration.
(c)
Termination of Employment
. For purposes of determining an employee Participant’s entitlement to payment of an Appendix A Award, “Termination
28
of Employment” means a severance of such Participant’s employment relationship with the Company, for any reason. For purposes of determining when a distribution will be made under Appendix A, a “Termination of Employment” will be deemed to occur if, based on the relevant facts and circumstances to the Participant, the Company and Participant reasonably anticipate that future services to be performed by the Participant for the Company will permanently decrease to no more than 20% of the average level of services performed over the immediately preceding 36-month period. A bona fide leave of absence that is six months or less, or during which an individual retains a reemployment right, will not cause a Termination of Employment. In the case of a leave of absence without a right of reemployment that exceeds the time periods described in this paragraph, a Termination of Employment will be deemed to occur once the leave of absence exceeds six months. Notwithstanding the foregoing, a Termination of Employment shall not occur unless such termination also qualifies as a “separation from service,” as defined under Section 409A of the Code and related guidance thereunder.
(d)
Trust
. Trust means the Target Corporation Deferred Compensation Trust, established by agreement dated January 1, 2005, by and between the Company and State Street Bank and Trust Company, as amended, or similar trust agreement.
A-3
PAYMENT OF EMPLOYEE PARTICIPANT’S RESTRICTED STOCK UNITS
. The vested amount of an employee Participant’s Restricted Stock Units and Deferred Restricted Stock Units shall convert to shares of Common Stock and shall be issued to or on behalf of the Participant upon the earlier of the following:
(a)
the employee Participant’s death;
(b)
the date the employee Participant becomes Disabled;
(c)
for a Participant’s Deferred Restricted Stock Units, the later of the Vesting Date or the first day of the month next following the date that is six (6) months after the employee Participant’s Termination of Employment; and for a Participant’s Restricted Stock Units that are not Deferred Restricted Stock Units, the earlier of the Vesting Date or the first day of the month next following the date that is six (6) months after the employee Participant’s Termination of Employment; or
(d)
the termination and liquidation of employee Participant’s Restricted Stock Units or Deferred Restricted Stock Units under Section A-7 below.
Payments under Paragraphs (a), (b) and (c) will be made within 90 days of such distribution event and payment on account of Paragraph (d) will be made in accordance with Section A-7.
29
A-4
PAYMENT OF NON-EMPLOYEE DIRECTOR PARTICIPANT’S RESTRICTED STOCK UNITS
. The vested amount of a non-employee director Participant’s Restricted Stock Units shall convert to shares of Common Stock and shall be issued to or on behalf of the Participant upon the earlier of the following:
(a) the date of the Participant’s death; or
(b) the date the non-employee director Participant ceases to be a member of the Board of Directors of the Company, provided the Participant has ceased all contractual relationships as an independent contractor with the Company and has experienced a “separation from service” under Section 409A of the Code, provided further, if the Participant is a “specified employee,” as defined under Section 409A of the Code, on the date of his or her separation from service, payment will be suspended for six (6) months following the Participant’s separation from service, or, if earlier, until the Participant’s death.
A-5
PAYMENT OF DEFERRED PERFORMANCE AWARD
. The vested amount of the percentage of a Participant’s Deferred Performance Share Units shall convert to shares of Common Stock and shall be issued to or on behalf of a Participant as soon as practicable, but not more than 90 days, after the later of the following:
(a) the end of the Performance Period; or
(b) the first of the following events to occur:
|
(1)
|
the Participant’s death;
|
|
(2)
|
the date the Participant becomes Disabled;
|
|
(3)
|
the first day of the month next following the date that is six (6) months after the Participant’s Termination of Employment;
|
|
(4)
|
the fixed distribution date, if any, designated by the Participant pursuant to a written distribution election made in accordance with Plan procedures; or
|
|
(5)
|
the termination and liquidation of the Participant’s Deferred Performance Share units under Section A-7 below.
|
A-6
FUNDING UPON A CHANGE IN CONTROL
. In the event a Change in Control causes the Trust to be funded, the Company shall:
(a)
determine the amount of the Company’s obligation to Participants who are entitled to a distribution of Appendix A Awards, by multiplying the number of Units earned as of the Change in Control by the Fair Market Value of one share of Common Stock on the date of the Change in Control;
(b)
credit the amounts determined in paragraph (a) to a bookkeeping account in the name of each applicable Participant;
30
(c)
on and after the date of the Change in Control, credit to such bookkeeping accounts investment earnings at an annual rate equal to the sum of the 10-Year United States Treasury Note rate plus 2%. The 10-Year United States Treasury Note rate will be determined on the date of the Change in Control, or if no such rate is available on that date, the immediately preceding date such rate is available, and such rate will be reset each calendar quarter as necessary; and
(d)
transfer cash or other property to the Trust as provided under the Trust. Such transfer shall be made to the extent permitted by, subject to, and in accordance with, the terms of the Trust.
A-7
AWARD TERMINATION AND LIQUIDATION ON ACCOUNT OF A CHANGE IN CONTROL
. Upon a Change in Control the Appendix A Awards will terminate and payment of all amounts under such Awards will be accelerated if and to the extent provided in this Section A-7.
(a)
The Appendix A Awards will be terminated effective as of the first date on which there has occurred both (i) a Change in Control under Section 2.4(a) and (ii) a funding of the Trust on account of such Change in Control (referred to herein as the “Appendix A termination effective date”) unless, prior to such Appendix A termination effective date the Board affirmatively determines that the Appendix A Awards will not be terminated as of such effective date. The Board will be deemed to have taken action to irrevocably terminate the Appendix A Awards as of the Appendix A termination effective date by its failure to affirmatively determine that the Appendix A Awards will not terminate as of such date.
(b)
The determination by the Board under paragraph (a) constitutes a determination that such termination will satisfy the requirements of Section 409A of the Code, including an agreement by the Company that it will take such additional action or refrain from taking such action as may be necessary to satisfy the requirements necessary to terminate and liquidate the Appendix A Awards under paragraph (c) below.
(c)
In the event the Board does not affirmatively determine not to terminate the Appendix A Awards as provided in paragraph (a), such termination shall be subject to either (1) or (2) as follows:
1.
If the Change in Control qualifies as a “change in control event” under Section 409A of the Code, payment of all Appendix A Awards will be accelerated and made in a lump sum as soon as administratively practicable but not more than 90 days following the Appendix A termination effective date, provided the requirements of Treasury Regulation Section 1.409A-3(j)(4)(ix)(B) have been satisfied.
31
2.
If the Change in Control does not qualify as a “change in control event” for purposes of Section 409A of the Code, payment of all Appendix A Awards will be accelerated and made in a lump sum as soon as administratively practicable but not more than 60 days following the 12 month anniversary of the Appendix A termination effective date, provided, the requirements of Treasury Regulation Section 1.409A-3(j)(4)(ix)(C) have been satisfied.
A-8
LIMITATIONS ON TRANSFER
. Awards subject to this Appendix A may not be assigned or transferred by a Participant during their lifetime, other than to a former spouse incident to divorce if and to the extent required by a qualified domestic relations order and permitted under the terms of the applicable Award agreement, and the Awards shall not be subject to anticipation, alienation, sale, assignment, pledge, encumbrance or hypothecation, execution, attachment or similar process. Any attempt to anticipate, alienate, sell, assign, transfer, pledge, encumber, hypothecate, charge or otherwise dispose of an Award in a manner contrary to the provisions hereof, and the levy of any attachment or similar process upon the awards, shall be null and void.
32
Exhibit (10)C
TARGET CORPORATION
SPP I
(2011 Plan Statement)
Effective June 8, 2011
As Amended and Restated
i
TARGET CORPORATION
SPP I
(2011 Plan Statement)
TABLE OF CONTENTS
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SECTION 1 INTRODUCTION; DEFINITIONS
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1
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1.1 History
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1
|
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1.2 Definitions
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1
|
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1.2.1 Actuarial Equivalent
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1
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1.2.2 Affiliate
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1
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1.2.3 Beneficiary
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1
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1.2.4 Board
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1
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1.2.5 Change-in-Control
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1
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1.2.6 Code
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3
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1.2.7 [Intentionally left blank]
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3
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1.2.8 Company
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3
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1.2.9 Officer
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3
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1.2.10 Officer EDCP
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3
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1.2.11 Participant
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3
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1.2.12 Participating Employer
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3
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1.2.13 Pension Plan
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3
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1.2.14 Plan
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3
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1.2.15 Plan Administrator
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3
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1.2.16 Plan Rules
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3
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1.2.17 Plan Statement
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3
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1.2.18 SPP IV
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3
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1.2.19 Termination of Employment
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3
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1.2.20 Trust
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4
|
|
|
|
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SECTION 2 PARTICIPATION
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5
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2.1 Eligibility
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5
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2.2 Termination of Participation
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5
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2.3 Rehire
|
5
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|
2.4 Effect on Employment
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5
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|
|
|
|
SECTION 3 BENEFIT — TRADITIONAL FINAL AVERAGE PAY FORMULA
|
7
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|
3.1 Amount of Pension
|
7
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|
3.2 Rehire
|
7
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|
|
|
|
SECTION 4 BENEFIT — PERSONAL PENSION ACCOUNT
|
8
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|
4.1 Amount of Pension
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8
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4.2 Rehire
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8
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|
|
|
|
SECTION 5 VESTING
|
9
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5.1 General Rule
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9
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5.2 Rehire
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9
|
ii
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5.3 Transfers to Officer EDCP
|
9
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|
|
|
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SECTION 6 TRANSFERS
|
10
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6.1 Benefit Distributions
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10
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6.2 Transfers to Officer EDCP
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10
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|
|
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SECTION 7 NATURE OF INTEREST
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11
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7.1 Unfunded Obligation
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11
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7.2 Spendthrift Provision
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11
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7.3 Compensation Recovery (Recoupment)
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11
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|
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SECTION 8 ADOPTION, AMENDMENT AND TERMINATION
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12
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8.1 Adoption
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12
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8.2 Amendment
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12
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8.3 Termination
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12
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|
|
|
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SECTION 9 CLAIM PROCEDURES
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14
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9.1
Claim Procedures
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14
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9.2 Rules and Regulations
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15
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9.3 Limitations and Exhaustion
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16
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|
|
|
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SECTION 10 PLAN ADMINISTRATION
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18
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10.1 Plan Administration
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18
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10.2 Conflict of Interest
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18
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10.3 Service of Process
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19
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10.4 Choice of Law
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19
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10.5 Responsibility for Delegate
|
19
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10.6 Expenses
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19
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10.7 Errors in Computations
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19
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10.8 Indemnification
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19
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10.9 Notice
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19
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SECTION 11 CONSTRUCTION
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20
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11.1 ERISA Status
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20
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11.2 IRC Status
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20
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11.3 Rules of Document Construction
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20
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11.4 References to Laws
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20
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11.5 Appendices
|
20
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iii
SECTION 1
INTRODUCTION; DEFINITIONS
1.1 History.
The Company originally established this Plan (formerly known as the Target Corporation Supplemental Pension Plan I) effective as of January 1, 1995. The Plan is a non-qualified, unfunded plan intended to replace certain pension benefits for a select group of management or highly compensated employees who are officers. The Plan provides retirement benefits not provided under the Pension Plan as a result of the limitations imposed by Code sections 401(a)(17) and 415. The Plan is intended to be a “top hat plan” as defined under the Employee Retirement Income Security Act of 1974, as amended from time to time. Since the effective date of this Plan, upon a Participant becoming an Officer of the Company, the benefit due under the Target Corporation SPP IV has been transferred to this Plan. Effective April 30, 2002, for Participants in this Plan who were members of the Company’s Corporate Operating Committee, the Company transferred the present value of the vested benefit due under this Plan to the Officer EDCP. Effective July 31, 2002, this transfer was extended to all Officers of the Company. After such transfer, no benefits were due or payable to the Participant from this Plan. Further, after the transfer, the individuals would no longer participate in this Plan or be eligible for further accruals under this Plan. Effective January 1, 2005 (and other effective dates as specifically provided), this Plan was operated in compliance with Code section 409A. The Plan, which is intended to comply with Code section 409A, was amended and restated effective January 1, 2009. The Plan was amended to incorporate the Company’s recoupment policy effective January 13, 2010. This Plan Statement, which was amended and restated to reflect Plan administration and amendment changes authorized by the Board on November 10, 2010 and modification of the Change in Control definition, is effective as of June 8, 2011.
1.2 Definitions.
Terms used herein with initial capital letters will have same meaning as those used in the Pension Plan except as otherwise defined below or where the context clearly indicates to the contrary.
1.2.1 Actuarial Equivalent.
An “Actuarial Equivalent” will be determined by using such factors and assumptions as the Plan Administrator considers appropriate in its sole and absolute discretion.
1.2.2
Affiliate.
An “Affiliate” is the Company and all persons, with whom the Company would be considered a single employer under Code section 414(b) or 414(c).
1.2.3 Beneficiary.
The “Beneficiary” is the “Beneficiary” as defined under the Officer EDCP.
1.2.4 Board
“Board” is the Board of Directors of the Company, or such committee of the Board of Directors to which the Board of Directors of the Company has delegated the respective authority.
1.2.5 Change in Control.
“Change in Control” means one of the following:
(a)
Individuals who are Continuing Directors cease for any reason to constitute 50% or more of the directors of the Company; or
(b)
30% or more of the outstanding voting power of the Voting Stock of the Company is acquired or beneficially owned (within the meaning of Rule 13d-3
1
under the Exchange Act) by any Person, other than an entity resulting from a Business Combination in which clauses (x) and (y) of Section 1.2.5(c) apply; or
(c)
the consummation of a merger or consolidation of the Company with or into another entity, a statutory share exchange, a sale or other disposition (in one transaction or a series of transactions) of all or substantially all of the Company’s assets or a similar business combination (each, a “Business Combination”), in each case unless, immediately following such Business Combination, (x) all or substantially all of the beneficial owners (within the meaning of Rule 13d-3 under the Exchange Act) of the Company’s Voting Stock immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of the voting power of the then outstanding shares of voting stock (or comparable voting equity interests) of the surviving or acquiring entity resulting from such Business Combination (including such beneficial ownership of an entity that, as a result of such transaction, owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries), in substantially the same proportions (as compared to the other beneficial owners of the Company’s Voting Stock immediately prior to such Business Combination) as their beneficial ownership of the Company’s Voting Stock immediately prior to such Business Combination, and (y) no Person beneficially owns, directly or indirectly, 30% or more of the voting power of the outstanding voting stock (or comparable equity interests) of the surviving or acquiring entity (other than a direct or indirect parent entity of the surviving or acquiring entity, that, after giving effect to the Business Combination, beneficially owns, directly or indirectly, 100% of the outstanding voting stock (or comparable equity interests) of the surviving or acquiring entity); or
(d)
approval by the shareholders of a definitive agreement or plan to liquidate or dissolve the Company.
For purposes of this Section 1.2.5:
“Continuing Director” means an individual (A) who is, as of June 8, 2011, a director of the Company, or (B) who becomes a director of the Company after June 8, 2011 and whose initial appointment, or nomination for election by the Company’s shareholders, was approved by at least a majority of the then Continuing Directors; provided, however, that any individual whose initial assumption of office occurs as a result of either an actual or threatened contested election by any Person (other than the Board of Directors) seeking the election of such nominee in which the number of nominees exceeds the number of directors to be elected shall not be a Continuing Director;
“Person” means any individual, firm, corporation or other entity and shall include any group comprised of any person and any other person with whom such person or any affiliate or associate (as defined in Rule 14a-1(a) of the Exchange Act) of such person has any agreement, arrangement or understanding, directly or indirectly, for the purpose of acquiring, holding, voting or disposing of any capital stock of the Company;
“Voting Stock” means all then-outstanding capital stock of the Company entitled to vote generally in the election of directors of the Company; and
2
“Exchange Act” means the Securities Exchange Act of 1934, as amended and in effect from time to time, and the regulations promulgated thereunder.
1.2.6 Code.
“Code” means the Internal Revenue Code of 1986, as amended (including, when the context requires, all regulations, interpretations and rulings issued thereunder).
1.2.7 [Intentionally left Blank]
1.2.8 Company.
“Company” means
Target Corporation, a Minnesota corporation, or any successor thereto.
1.2.9 Officer.
An “Officer” is a member of the executive committee and any other Employee who is designated and categorized as an officer of the Company by the Company’s Chief Executive Officer.
1.2.10 Officer EDCP.
“Officer EDCP” means the Target Corporation Officer EDCP.
1.2.11 Participant.
A “Participant” is an
Employee who becomes a Participant in this Plan in accordance with the provisions of Section 2. An Employee who has become a Participant shall be considered to continue as a Participant in this Plan until the date of the Participant’s death or, if earlier, the date when the Participant is no longer eligible and upon which the Participant no longer has a benefit due under this Plan (that is, a transfer of the benefit has been made pursuant to Section 6, or the Participant’s benefit under this Plan wears away, or the Participant’s benefit under this Plan has been forfeited as hereinafter provided).
1.2.12 Participating Employer.
“Participating Employer” means the Company and each other Affiliate that, with the consent of the Plan Administrator, adopts this Plan. A Participating Employer shall cease to be a Participating Employer on the date it ceases to be an Affiliate.
1.2.13 Pension Plan.
“Pension Plan” means the tax qualified defined benefit pension plan, established for the benefit of employees eligible to participate therein, and known as the Target Corporation Pension Plan, including any predecessor plan(s) or successor plan.
1.2.14 Plan.
“Plan” means this Target Corporation SPP I (formerly known as the Target Corporation Supplemental Pension Plan I).
1.2.15 Plan Administrator.
“Plan Administrator” is the individual designated in Sec. 10.1.1, or, if applicable, its delegate.
1.2.16 Plan Rules.
“Plan Rules” are rules, policies, practices or procedures adopted by the Plan Administrator or its delegate pursuant to Section 10.1.5.
1.2.17 Plan Statement.
“Plan Statement” means this document entitled “Target Corporation SPP I (2011 Plan Statement),” as adopted by the Company, effective as of June 8, 2011, as the same may be amended from time to time.
1.2.18 SPP IV.
“SPP IV” means the Target Corporation SPP IV.
1.2.19 Termination of Employment.
3
(a)
For purposes of determining entitlement to or the amount of benefits under the Plan, “Termination of Employment” means a severance of a Participant’s employment relationship with each Participating Employer and all Affiliates, for any reason.
(b)
For purposes of determining when a distribution will be made under the Plan, a “Termination of Employment” will be deemed to occur if, based on the relevant facts and circumstances to the Participant, the Participating Employer, all Affiliates and Participant reasonably anticipate that the level of bona fide future services to be performed by the Participant for the Participating Employer and all Affiliates will permanently decrease to no more than 20% of the average level of bona fide services performed over the immediately preceding 36-month period.
(c)
A bona fide leave of absence that is six months or less, or during which an individual retains a reemployment right, will not cause a Termination of Employment. In the case of a leave of absence without a right of reemployment that exceeds the time periods described in this paragraph, a Termination of Employment will be deemed to occur once the leave of absence exceeds six months.
(d)
Notwithstanding the foregoing, a Termination of Employment shall not occur unless such termination also qualifies as a “separation from service,” as defined under Code section 409A and related guidance thereunder.
1.2.20 Trust.
“Trust” means the Target Corporation Deferred Compensation Trust Agreement, dated January 1, 2009 by and between the Company and State Street Bank and Trust Company, as it is amended from time to time, or similar trust agreement.
4
SECTION 2
PARTICIPATION
2.1 Eligibility.
2.1.1 General Requirements.
An Employee is eligible to participate in this Plan on and after the date he or she:
(a)
is an active participant in the Pension Plan; and
(b)
is an Officer.
2.1.2 Applicable Benefit Formula.
A Participant’s benefit under this Plan will be determined based on the applicable benefit formula under the Pension Plan.
(a)
A Participant with a Pension Plan benefit determined solely by the traditional final average pay formula will have his or her benefit under this Plan determined pursuant to Section 3.
(b)
A Participant with a Pension Plan benefit determined solely by the personal pension account formula will have his or her benefit under this Plan determined pursuant to Section 4.
(c)
A Participant with a Pension Plan benefit determined in part by the traditional final average pay formula and in part by the personal pension account formula will have his or her benefit under this Plan determined pursuant to Section 3 with respect to the period earning a traditional final average pay benefit under the Pension Plan, and Section 4 with respect to the period earning a personal pension account benefit under the Pension Plan.
2.2 Termination of Participation.
Except as otherwise specifically provided in this Plan or by the Plan Administrator, an Employee who ceases to satisfy the requirements of Section 2.1.1 or whose benefit is transferred to the Officer EDCP pursuant to Section 6.2 is not eligible to continue to participate in this Plan, and will not accrue any additional benefits under this Plan. The Participant’s benefit under this Plan will continue to be governed by the terms of this Plan until such time as the Participant’s benefit is transferred, wears away, or is forfeited in accordance with the terms of this Plan. A Participant or Beneficiary will cease to be such as of the date on which his or her entire benefit under this Plan has been transferred, wears away, or forfeited.
2.3 Rehire.
A Participant with a vested benefit under this Plan who incurs a Termination of Employment and is rehired will not be eligible to participate in this Plan.
2.4 Effect on Employment.
2.4.1 Not a Term of Employment.
Neither the terms of this Plan Statement nor the benefits under this Plan or the continuance thereof shall be a term of the employment of any Employee.
2.4.2 Not an Employment Contract.
The Plan is not and shall not be deemed to constitute a contract of employment between any Participating Employer and any Employee or
5
other person, nor shall anything herein contained be deemed to give any Employee or other person any right to be retained in any Participating Employer’s employ or in any way limit or restrict any Participating Employer’s right or power to discharge any Employee or other person at any time and to treat him or her without regard to the effect that such treatment might have upon him or her as a Participant in this Plan.
6
SECTION 3
BENEFIT — TRADITIONAL FINAL AVERAGE PAY FORMULA
3.1 Amount of Pension.
3.1.1 General Rule.
A Participant of this Plan whose benefit under the Pension Plan is determined all or in part by the traditional final average pay formula, shall be entitled to a pension benefit determined under this Plan that is the Actuarial Equivalent of the sum of:
(a)
The monthly pension benefit of the Participant transferred to this Plan as determined under Section 3 of SPP IV, and
(b)
The excess, if any, of:
(i)
The monthly pension benefit of the Participant as determined under the Pension Plan, based on the “traditional formula” (Article VI of the Pension Plan) if such formula were applied:
(A)
without regard to the maximum benefit limits imposed by Code section 415;
(B)
without regard to the maximum compensation limits imposed by Code section 401(a)(17); and
(C)
without regard to the alternative benefit formula of Sections 4.6(a)(3) and 4.6(b)(2) of the Pension Plan.
Over
(ii)
The sum of:
(A)
The monthly pension benefit of the Participant as determined under the Pension Plan, based on the “traditional formula” (Article VI of the Pension Plan); and
(B)
The monthly pension benefit of the Participant transferred to this Plan as determined under Section 3 of SPP IV.
Such benefit will be determined as of the date of transfer as provided in Section 6. Further, such benefit will be determined without regard to any compensation the Participant accrues for any period following the Participant’s Termination of Employment.
3.1.2 Death Benefit.
If a Participant dies prior to receiving a transfer of his or her benefit determined under this Section 3, the death benefit to be transferred pursuant to Section 6 will be calculated in the same manner as the Participant’s benefit under this Section 3, and for purposes of Section 3.1.1, as if the Participant were alive and entitled to a benefit under the Pension Plan and SPP IV as of his or her date of death.
3.2 Rehire.
If a Participant or former Participant is rehired and eligible to participate in this Plan, then a Participant’s service prior to reemployment will be considered for benefit purposes
7
only to the extent such service would be recognized for benefit purposes under the traditional final average pay formula of the Pension Plan.
SECTION 4
BENEFIT — PERSONAL PENSION ACCOUNT
4.1 Amount of Pension
4.1.1 General Rule.
A Participant of this Plan whose benefit under the Pension Plan is determined all or in part by the personal pension account formula, shall be entitled to a pension benefit under this Plan that is the Actuarial Equivalent of the sum of:
(a)
The pension benefit of the Participant transferred to this Plan as determined under Section 4 of SPP IV, and
(b)
the excess, if any, of:
(i)
The amount that would have been credited each quarter (including both “pay credits” and “interest credits”) to the Participant’s “personal pension account” under the Pension Plan (Article VII of the Pension Plan), if such account were applied:
(A)
without regard to the maximum benefit limits imposed by Code section 415; and
(B)
without regard to the maximum compensation limits imposed by Code section 401(a)(17).
Over
(ii)
The sum of:
(A)
The amount of the credits actually made to the Participant’s “personal pension account” under the Pension Plan; and
(B)
The pension benefit of the Participant transferred to this Plan as determined under Section 4 of SPP IV.
Such benefit will be determined as of the date of transfer as provided in Section 6. Further, such benefit will be determined without regard to any compensation the Participant accrues for any period following the Participant’s Termination of Employment.
4.1.2 Death Benefit.
If a Participant dies prior to receiving a transfer of his or her benefit determined under this Section 4, the death benefit to be transferred pursuant to Section 6 will be calculated in the same manner as the Participant’s benefit under this Section 4.
4.2 Rehire.
If a Participant or former Participant is rehired and eligible to participate in this Plan, then a Participant’s service prior to reemployment will be considered for benefit purposes only to the extent such service would be recognized for benefit purposes under the personal pension account formula of the Pension Plan.
8
SECTION 5
VESTING
5.1 General Rule.
A Participant will be vested in his or her benefit under this Plan to the extent he or she is vested in their benefit under the Pension Plan.
5.2 Rehire.
A Participant’s service prior to reemployment will be considered for vesting purposes only to the extent such service would be recognized for vesting purposes under the Pension Plan.
5.3 Transfers to Officer EDCP.
A Participant whose benefit under this Plan is transferred to the Officer EDCP pursuant to Section 6 will no longer have any rights under this Plan effective as of the date of such transfer.
9
SECTION 6
TRANSFERS
6.1
Benefit Distributions.
6.1.1 Benefit Transfer to Officer EDCP.
No benefits transferred to this Plan from SPP IV or benefits accrued and determined under this Plan will be paid directly to Participants. All vested benefits due under this Plan, as determined under Section 3 and Section 4, will be transferred to the Officer EDCP, and paid to the Participant or Beneficiary pursuant to the terms of the Officer EDCP.
6.1.2 Form and Timing of Benefit Distribution.
Benefits earned under this Plan will be deemed to have a distribution form and timing of an Actuarial Equivalent single lump payment
of the vested benefit determined under Sections 3 and 4, as applicable, within 60 days following the one-year anniversary of the date that the Participant incurs a Termination of Employment. Any benefits earned under this Plan will be subject to the distribution terms of the Officer EDCP, including any provisions regarding the acceleration or delay of distribution (to the extent allowed under Code section 409A).
6.1.3 Transfers from SPP IV.
Benefits transferred to this Plan from SPP IV will have the distribution timing, form, and rights as provided under SPP IV, but upon transfer will be subject to the distribution terms of the Officer EDCP, including any provisions regarding the acceleration or delay of distribution (to the extent allowed under Code section 409A).
6.2 Transfers to Officer EDCP.
A Participant’s vested benefit under this Plan will be transferred to the Officer EDCP as provided below.
6.2.1 Timing of Benefit Transfer.
(a)
On or about the April 30 (or the immediately preceding business day) immediately following the calendar year in which a Participant is first eligible to participate in this Plan and has a vested benefit, a Participant will have his or her vested benefit that is determined under this Plan transferred to the Officer EDCP. The transfer will be an amount equal to the actuarial lump sum present value on March 31 (or the immediately preceding business day) for the Participant’s SPP Benefit accrued through the preceding December 31. In the case of a Participant who is an executive officer, such transfer will be made and determined on or about the last business day prior to the end of the Company’s fiscal year.
(b)
Notwithstanding the foregoing, in the case of a Termination of Employment as defined under Section 1.2.19(a) or a Plan termination upon a Change-in-Control under Section 8.3.2 prior to the date in Section 6.2.1(a), the transfer will be made within 60 days following such event.
6.2.2 Benefit to Be Transferred.
The benefit transferred to the Officer EDCP is the vested benefit accrued and determined under this Plan at the time of transfer to the Officer EDCP provided in Section 6.2.1. The transfer to the Officer EDCP will not change the payment form, payment timing, or vested status of the benefit determined under this Plan. After the transfer to the Officer EDCP, the benefit will be subject to the terms of the Officer EDCP, including the acceleration or delay of distributions permitted thereunder.
10
SECTION 7
NATURE OF INTEREST
7.1
Unfunded Obligation.
The obligation of the Participating Employers to provide benefits pursuant to this Plan constitutes only the unsecured (but legally enforceable) promise of the Participating Employers to provide such benefits. Participants and their Beneficiaries, heirs, successors and assigns shall have no legal or equitable rights, claims or interests in any specific property or assets of the Company or a Participating Employer, nor shall they be beneficiaries of, or have any rights, claims or interests in any life insurance policies, annuity contracts or the proceeds therefrom owned or which may be acquired by the Company.
7.2
Spendthrift Provision.
Except as otherwise provided in this Section 7.2, no Participant or Beneficiary shall have any interest in any benefit which can be transferred nor shall any Participant or Beneficiary have any power to anticipate, alienate, dispose of, pledge or encumber the same while in the possession or control of the Participating Employers. The Plan Administrator shall not recognize any such effort to convey any interest under this Plan. No benefit payable under this Plan shall be subject to attachment, garnishment, or execution following judgment or other legal process before actual payment to such person. This Section 7.2 shall not prevent the Plan Administrator from exercising, in its discretion, any of the applicable powers and options granted to it under any applicable provision hereof.
7.3 Compensation Recovery (Recoupment)
.
Notwithstanding any other provision of the Plan, a Participant who engaged in intentional misconduct that contributed directly or indirectly, in whole or in part, to the need for a restatement of the Company’s consolidated financial statements and who becomes subject to the Company’s recoupment policy as adopted by the Compensation Committee of the Company’s Board of Directors and amended from time to time (“Recoupment Policy”) may have all or a portion of his or her benefit under this Plan forfeited and/or all or a portion of any distributions payable to the Participant or his or her Beneficiary recovered by the Company.
(a)
Any portion of the Participant’s benefit resulting from the receipt of compensation that is subject to recovery under the Recoupment Policy may be forfeited and, in such event, a corresponding adjustment will be made to the Participant’s benefit under this Plan.
(b)
If a Participant (or his or her Beneficiary) is entitled to receive a distribution under this Plan and the Participant is subject to a claim for recovery under the Recoupment Policy, then the Company may, subject to any limitations under Code section 409A, retain all or any portion of the Participant’s (or the Beneficiary’s) taxable distribution, net of state, federal or foreign tax withholding, to satisfy such claim.
11
SECTION 8
ADOPTION, AMENDMENT AND TERMINATION
8.1
Adoption.
With the prior approval of the Plan Administrator, an Affiliate may adopt the Plan and become a Participating Employer by furnishing to the Plan Administrator a certified copy of a resolution of its board of directors adopting the Plan.
8.2 Amendment.
8.2.1 General Rule.
The Company, by action of its Board of Directors, or by action of a person so authorized by resolution of the Board of Directors and subject to any limitations or conditions in such authorization, may at any time amend the Plan, in whole or in part, for any reason, including but not limited to tax, accounting or insurance changes, a result of which may be to terminate the Plan for future deferrals provided, however, that no amendment shall be effective to decrease the benefits, nature or timing thereof payable under the Plan to any Participant with respect to deferrals made (and benefits thereafter accruing) prior to the date of such amendment. Written notice of any amendment shall be given each Participant then participating in the Plan.
8.2.2 Amendment to Benefit of Executive Officer.
Any amendment to the benefit of an executive officer under this Plan, to the extent approval of such amendment by the Board would be required by the Securities and Exchange Commission and its regulations or the rules of any applicable securities exchange will require the approval of the Board.
8.2.3 No Oral Amendments.
No modification of the terms of this Plan Statement shall be effective unless it is in writing. No oral representation concerning the interpretation or effect of this Plan Statement shall be effective to amend this Plan Statement.
8.3 Termination.
8.3.1 General Rule.
(a)
To the extent necessary or reasonable to comply with any changes in law, the Board may at any time terminate this Plan, provided such termination satisfies the requirements of Code section 409A.
(b)
To the extent that a Participant’s benefit under the Plan will be immediately included in the income of the Participant, as determined by a court of competent jurisdiction or the Internal Revenue Service, to the extent permitted under Code section 409A, the Board may terminate this Plan,
in whole or in part, as it relates to the impacted Participant.
8.3.2 Plan Termination on Account of a Change-in-Control.
Upon a Change-in-Control the Plan will terminate and the transfer of all amounts under the Plan will be accelerated if and to the extent provided in this Section 8.3.2.
(a)
The Plan will be terminated effective as of the first date on which there has occurred both (i) a Change-in-Control under Section 1.2.5, and (ii) a funding of the Trust on account of such Change-in-Control (referred to herein as the “Plan termination effective date”) unless, prior to such Plan termination effective date,
12
the Board affirmatively determines that the Plan will not be terminated as of such effective date. The Board will be deemed to have taken action to irrevocably terminate the Plan as of the Plan termination effective date by its failure to affirmatively determine that the Plan will not terminate as of such date.
(b)
The determination by the Board under paragraph (a) constitutes a determination that such termination will satisfy the requirements of Code section 409A, including an agreement by the Company that it will take such additional action or refrain from taking such action as may be necessary to satisfy the requirements necessary to terminate and liquidate the Plan under paragraph (c) below.
(c)
In the event the Board does not affirmatively determine not to terminate the Plan as provided in paragraph (a), such termination shall be subject to either (i) or (ii), as follows:
(i)
If the Change-in-Control qualifies as a “change in control event” for purposes of Code section 409A, transfer of all amounts under the Plan will be accelerated and distributed under the Officer EDCP.
(ii)
If the Change-in-Control does not
qualify as a “change in control event” for purposes of Code section 409A, transfer of all amounts under the Plan will be accelerated and distributed under the Officer EDCP.
13
SECTION 9
CLAIM PROCEDURES
9.1
Claim Procedures.
Until modified by the Plan Administrator, the claim and review procedures set forth in this Section shall be the mandatory claim and review procedures for the resolution of disputes and disposition of claims filed under the Plan. An application for a distribution or withdrawal shall be considered as a claim for the purposes of this Section.
9.1.1
Initial Claim.
An individual may, subject to any applicable deadline, file with the Plan Administrator a
written claim for benefits under
the Plan in a
form and manner prescribed by the Plan Administrator.
(a)
If the claim is denied in whole or in part, the Plan Administrator shall notify the claimant of the adverse benefit determination within ninety (90) days after receipt of the claim.
(b)
The ninety (90) day period for making the claim determination may be extended for ninety (90) days if the Plan Administrator determines that special circumstances require an extension of time for determination of the claim, provided that the Plan Administrator notifies the claimant, prior to the expiration of the initial ninety (90) day period, of the special circumstances requiring an extension and the date by which a claim determination is expected to be made.
9.1.2
Notice of Initial Adverse Determination.
A notice of an adverse determination shall set forth in a manner calculated to be understood by the claimant:
(a)
the specific reasons for the adverse determination,
(b)
references to the specific provisions of the Plan Statement (or other applicable Plan document) on which the adverse determination is based,
(c)
a description of any additional material or information necessary to perfect the claim and an explanation of why such material or information is necessary, and
(d)
a description of the claim and review procedures, including the time limits applicable to such procedure, and a statement of the claimant’s right to bring a civil action under ERISA section 502(a) following an adverse determination on review.
9.1.3
Request for Review.
Within
sixty (60) days after receipt of an initial adverse benefit determination notice, the claimant may file with the Plan Administrator a written request for a review of the adverse determination and may, in connection therewith submit written comments, documents, records and other information relating to the claim benefits. Any request for review of the initial adverse determination not filed within sixty (60) days after receipt of the initial adverse determination notice shall be untimely.
9.1.4
Claim on Review.
If the claim, upon review, is denied in whole or in part, the Plan Administrator shall notify the claimant of the adverse benefit determination within sixty (60) days after receipt of such a request for review.
14
(a)
The sixty (60) day period for deciding the claim on review may be extended for sixty (60) days if the Plan Administrator determines that special circumstances require an extension of time for determination of the claim, provided that the Plan Administrator notifies the claimant, prior to the expiration of the initial sixty (60) day period, of the special circumstances requiring an extension and the date by which a claim determination is expected to be made.
(b)
In the event that the time period is extended due to a claimant’s failure to submit information necessary to decide a claim on review, the claimant shall have sixty (60) days within which to provide the necessary information and the period for making the claim determination on review shall be tolled from the date on which the notification of the extension is sent to the claimant until the date on which the claimant responds to the request for additional information or, if earlier, the expiration of sixty (60) days.
(c)
The Plan Administrator’s review of a denied claim shall take into account all comments, documents, records, and other information submitted by the claimant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.
9.1.5
Notice of Adverse Determination for Claim on Review.
A
notice of an adverse determination for a claim on review shall set forth in a manner calculated to be understood by the claimant.
(a)
the specific reasons for the denial,
(b)
references to the specific provisions of the Plan Statement (or other applicable Plan document) on which the adverse determination is based,
(c)
a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claimant’s claim for benefits,
(d)
a statement describing any voluntary appeal procedures offered by the Plan and the claimant’s right to obtain information about such procedures, and
(e)
a statement of the claimant’s right to bring an action under ERISA section 502(a).
9.2 Rules and Regulations.
9.2.1
Adoption of Rules.
Any rule not in conflict or at variance with the provisions hereof may be adopted by the Plan Administrator.
9.2.2
Specific Rules
.
(a)
No inquiry or question shall be deemed to be a claim or a request for a review of a denied claim unless made in accordance with the established claim procedures. The Plan Administrator may require that any claim for benefits and any request
15
for a review of a denied claim be filed on forms to be furnished by the Plan Administrator upon request.
(b)
All decisions on claims and on requests for a review of denied claims shall be made by the Plan Administrator unless delegated as provided for in the Plan, in which case references in this Section 9 to the Plan Administrator shall be treated as references to the Plan Administrator’s delegate.
(c)
Claimants may be represented by a lawyer or other representative at their own expense, but the Plan Administrator reserves the right to require the claimant to furnish written authorization and establish reasonable procedures for determining whether an individual has been authorized to act on behalf of a claimant. A claimant’s representative shall be entitled to copies of all notices given to the claimant.
(d)
The decision of the Plan Administrator on a claim and on a request for a review of a denied claim may be provided to the claimant in electronic form instead of in writing at the discretion of the Plan Administrator.
(e)
In connection with the review of a denied claim, the claimant or the claimant’s representative shall be provided, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claimant’s claim for benefits.
(f)
The time period within which a benefit determination will be made shall begin to run at the time a claim or request for review is filed in accordance with the claims procedures, without regard to whether all the information necessary to make a benefit determination accompanies the filing.
(g)
The claims and review procedures shall be administered with appropriate safeguards so that benefit claim determinations are made in accordance with governing plan documents and, where appropriate, the plan provisions have been applied consistently with respect to similarly situated claimants.
(h)
The Plan Administrator may, in its discretion, rely on any applicable statute of limitation or deadline as a basis for denial of any claim.
9.3 Limitations and Exhaustion.
9.3.1 Claims.
No claim shall be considered under these administrative procedures unless it is filed with the Plan Administrator within two (2) years after the Participant knew (or reasonably should have known) of the general nature of the dispute giving rise to the claim. Every untimely claim shall be denied by the Plan Administrator without regard to the merits of the claim.
9.3.2
Lawsuits.
No suit may be brought by or on behalf of any Participant or Beneficiary on any matter pertaining to this Plan unless the action is commenced in the proper forum within two (2) years from the earlier of:
(a)
the date the Participant knew (or reasonably should have known) of the general nature of the dispute giving rise to the action, or
16
(b)
the date the claim was denied.
9.3.3 Exhaustion of Remedies.
These administrative procedures are the exclusive means for resolving any dispute arising under this Plan. As to such matters:
(a)
no Participant or Beneficiary shall be permitted to litigate any such matter unless a timely claim has been filed under these administrative procedures and these administrative procedures have been exhausted, and
(b)
determinations by the Plan Administrator (including determinations as to whether the claim was timely filed) shall be afforded the maximum deference permitted by law.
9.3.4 Imputed Knowledge.
For the purpose of applying the deadlines to file a claim or a legal action, knowledge of all facts that a Participant knew or reasonably should have known shall be imputed to every claimant who is or claims to be a Beneficiary of the Participant or otherwise claims to derive an entitlement by reference to the Participant for the purpose of applying the previously specified periods.
17
SECTION 10
PLAN ADMINISTRATION
10.1
Plan Administration.
10.1.1
Administrator
.
The Company’s Vice President, Pay and Benefits (or any successor thereto) is the “administrator” of the Plan for purposes of 3(16)(A) of ERISA. Except as otherwise expressly provided herein, the Plan Administrator shall control and manage the operation and administration of the Plan and make all decisions and determinations.
10.1.2
Authority and Delegation
.
The Plan Administrator is authorized to:
(a)
Appoint one or more individuals or entities and delegate such of his or her powers and duties as he or she deems desirable to any individual or entity, in which case every reference herein made to Plan Administrator shall be deemed to mean or include the individual or entity as to matters within their jurisdiction. Such individual may be an officer or other employee of a Participating Employer or Affiliate, provided that any delegation to an employee of a Participating Employer or Affiliate will automatically terminate when he or she ceases to be an employee. Any delegation may be rescinded at any time; and
(b)
Select, employ and compensate from time to time such agents or consultants as the Plan Administrator may deem necessary or advisable in carrying out its duties and to rely on the advice and information provided by them.
10.1.3
Determinations
.
The Plan Administrator shall make such determinations as may be required from time to time in the administration of this Plan. The Plan Administrator shall have the discretionary authority and responsibility to interpret and construe the Plan Statement and to determine all factual and legal questions under this Plan, including but not limited to the entitlement of Participants and Beneficiaries, and the amounts of their respective interests. Each decision of the Plan Administrator shall be final and binding upon all parties. Benefits under the Plan will be paid only if the Plan Administrator decides in its discretion that the applicant is entitled to them.
10.1.4
Reliance
.
The Plan Administrator may act and rely upon all information reported to it hereunder and need not inquire into the accuracy thereof, nor be charged with any notice to the contrary.
10.1.5
Rules and Regulations
.
Any rule, regulation, policy, practice or procedure not in conflict or at variance with the provisions hereof may be adopted by the Plan Administrator.
10.2
Conflict of Interest.
If any individual to whom authority has been delegated or redelegated hereunder shall also be a Participant in this Plan, such Participant shall have no authority with respect to any matter specially affecting such Participant’s individual interest hereunder or the interest of a person superior to him or her in the organization (as distinguished from the interests of all Participants and Beneficiaries or a broad class of Participants and Beneficiaries), all such authority being reserved exclusively to other individuals as the case may be, to the exclusion of such Participant, and such Participant shall act only in such Participant’s individual capacity in connection with any such matter.
18
10.3
Service of Process.
In the absence of any designation to the contrary by the Plan Administrator, the General Counsel of the Company is designated as the appropriate and exclusive agent for the receipt of service of process directed to this Plan in any legal proceeding, including arbitration, involving this Plan.
10.4
Choice of Law.
Except to the extent that federal law is controlling, this Plan Statement will be construed and enforced in accordance with the laws of the State of Minnesota.
10.5
Responsibility for Delegate.
No person shall be liable for an act or omission of another person with regard to a responsibility that has been allocated to or delegated to such other person pursuant to the terms of the Plan Statement or pursuant to procedures set forth in the Plan Statement.
10.6
Expenses.
All expenses of administering the benefits due under this Plan shall be borne by the Participating Employers.
10.7
Errors in Computations.
It is recognized that in the operation and administration of the Plan certain mathematical and accounting errors may be made or mistakes may arise by reason of factual errors in information supplied to the Plan Administrator or trustee. The Plan Administrator shall have power to cause such equitable adjustments to be made to correct for such errors as the Plan Administrator, in its sole discretion, considers appropriate. Such adjustments shall be final and binding on all persons.
10.8 Indemnification.
In addition to any other applicable provisions for indemnification, the Participating Employers jointly and severally agree to indemnify and hold harmless, to the extent permitted by law, each director, officer and Employee of the Participating Employers against any and all liabilities, losses, costs or expenses (including legal fees) of whatsoever kind and nature which may be imposed on, incurred by or asserted against such person at any time by reason of such person’s services as an administrator in connection with the Plan, but only if such person did not act dishonestly, or in bad faith, or in willful violation of the law or regulations under which such liability, loss, cost or expense arises.
10.9
Notice.
Any notice required under this Plan Statement may be waived by the person entitled thereto.
19
SECTION 11
CONSTRUCTION
11.1
ERISA Status.
The Plan was adopted and is maintained with the understanding that it is an unfunded plan maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees as provided in section 201(2), section 301(a)(3) and section 401(a)(1) of ERISA. The Plan shall be interpreted and administered accordingly.
11.2
IRC Status.
The Plan is intended to be a nonqualified deferred compensation arrangement that will comply in form and operation with the requirements of Code section 409A and the Plan will be construed and administered in a manner that is consistent with and gives effect to such intention.
11.3
Rules of Document Construction.
In the event any provision of the Plan Statement is held invalid, void or unenforceable, the same shall not affect, in any respect whatsoever, the validity of any other provision of the Plan. The titles given to the various Sections of the Plan Statement are inserted for convenience of reference only and are not part of the Plan Statement, and they shall not be considered in determining the scope, purpose, meaning or intent of any provision hereof. The provisions of the Plan Statement shall be construed as a whole in such manner as to carry out the provisions thereof and shall not be construed separately without relation to the context.
11.4
References
to Laws.
Any reference in the Plan Statement to a statute or regulation shall be considered also to mean and refer to any subsequent amendment or replacement of that statute or regulation unless, under the circumstances, it would be inappropriate to do so.
11.5
Appendices.
Plan provisions that have application to a limited number of Participants or that otherwise do not apply equally to all Participants may be described in an appendix to the Plan Statement. In the event of a conflict between the terms of an appendix and the terms of the remainder of the Plan Statement, the terms of the appendix control.
20
Exhibit (10)D
TARGET CORPORATION
SPP II
(2011 Plan Statement)
Effective June 8, 2011
As Amended and Restated
TARGET CORPORATION
SPP II
(2011 Plan Statement)
TABLE OF CONTENTS
|
SECTION 1 INTRODUCTION; DEFINITIONS
|
1
|
|
1.1 History
|
1
|
|
1.2 Definitions
|
1
|
|
1.2.1 Actuarial Equivalent
|
1
|
|
1.2.2 Affiliate
|
1
|
|
1.2.3 Beneficiary
|
1
|
|
1.2.4 Board
|
1
|
|
1.2.5 Change-in-Control
|
1
|
|
1.2.6 Code
|
3
|
|
1.2.7 [Intentionally left blank.]
|
3
|
|
1.2.8 Company
|
3
|
|
1.2.9 Officer
|
3
|
|
1.2.10 Officer EDCP
|
3
|
|
1.2.11 Participant
|
3
|
|
1.2.12 Participating Employer
|
3
|
|
1.2.13 Pension Plan
|
3
|
|
1.2.14 Plan
|
3
|
|
1.2.15 Plan Administrator
|
3
|
|
1.2.16 Plan Rules
|
3
|
|
1.2.17 Plan Statement
|
3
|
|
1.2.18 SPP V
|
3
|
|
1.2.19 Termination of Employment
|
3
|
|
1.2.20 Trust
|
4
|
|
|
|
|
SECTION 2 PARTICIPATION
|
5
|
|
2.1 Eligibility
|
5
|
|
2.2 Termination of Participation
|
5
|
|
2.3 Rehire
|
5
|
|
2.4 Effect on Employment
|
5
|
|
|
|
|
SECTION 3 BENEFIT — TRADITIONAL FINAL AVERAGE PAY FORMULA
|
7
|
|
3.1 Amount of Pension
|
7
|
|
3.2 Rehire
|
8
|
|
|
|
|
SECTION 4 BENEFIT — PERSONAL PENSION ACCOUNT
|
9
|
|
4.1 Amount of Pension
|
9
|
|
4.2 Rehire
|
10
|
|
|
|
|
SECTION 5 VESTING
|
11
|
|
5.1 General Rule
|
11
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5.2 Rehire
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5.3 Transfers to Officer EDCP
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SECTION 6 TRANSFERS
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6.1 Benefit Distributions
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6.2 Transfers to Officer EDCP
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SECTION 7 NATURE OF INTEREST
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7.1 Unfunded Obligation
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7.2 Spendthrift Provision
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7.3 Compensation Recovery (Recoupment)
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SECTION 8 ADOPTION, AMENDMENT AND TERMINATION
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8.1 Adoption
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8.2 Amendment
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8.3 Termination
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SECTION 9 CLAIM PROCEDURES
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9.1
Claim Procedures
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9.2 Rules and Regulations
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9.3 Limitations and Exhaustion
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SECTION 10 PLAN ADMINISTRATION
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10.1 Plan Administration
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10.2 Conflict of Interest
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10.3 Service of Process
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10.4 Choice of Law
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10.5 Responsibility for Delegate
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10.6 Expenses
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10.7 Errors in Computations
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10.8 Indemnification
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10.9 Notice
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SECTION 11 CONSTRUCTION
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11.1 ERISA Status
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11.2 IRC Status
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11.3 Rules of Document Construction
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11.4 References to Laws
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11.5 Appendices
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2
SECTION 1
INTRODUCTION; DEFINITIONS
1.1 History.
The Company originally established this Plan (formerly known as the Target Corporation Supplemental Pension Plan II) effective as of January 1, 1995. The Plan is a non-qualified, unfunded plan intended to replace certain pension benefits for a select group of management or highly compensated employees who are officers that cannot be provided under the Pension Plan due to certain limitations imposed by the Code. The Plan provides retirement benefits not provided under the Pension Plan as a result of deferrals into the Officer EDCP. The Plan is intended to be a “top hat plan” as defined under the Employee Retirement Income Security Act of 1974, as amended from time to time. Since the effective date of this Plan, upon a Participant becoming an Officer of the Company, the benefit due under the Target Corporation SPP V is transferred to this Plan. Effective April 30, 2002, for all Officers who were vested in the benefit under this Plan, the Company transferred the present value of the vested benefit due under this Plan to the Officer EDCP. After such transfer, no benefits were due or payable from this Plan. Further, after the transfer, the individuals would no longer participate in this Plan or be eligible for further accruals under this Plan. Effective January 1, 2005 (and other effective dates as specifically provided), this Plan was operated in compliance with Code section 409A. The Plan, which is intended to comply with Code section 409A, was amended and restated effective January 1, 2009. This Plan was amended to incorporate the Company’s recoupment policy, is effective as of January 13, 2010. This Plan Statement, which was amended and restated to reflect Plan administration and amendment changes authorized by the Board on November 10, 2010 and modification of the Change in Control definition, is effective as of June 8, 2011.
1.2 Definitions.
Terms used herein with initial capital letters will have same meaning as those used in the Pension Plan except as otherwise defined below or where the context clearly indicates to the contrary.
1.2.1 Actuarial Equivalent.
An “Actuarial Equivalent” will be determined by using such factors and assumptions as the Plan Administrator considers appropriate in its sole and absolute discretion.
1.2.2
Affiliate.
An “Affiliate” is the Company and all persons, with whom the Company would be considered a single employer under Code section 414(b) or 414(c).
1.2.3 Beneficiary.
The “Beneficiary” is the “Beneficiary” as defined under the Officer EDCP.
1.2.4 Board
“Board” is the Board of Directors of the Company, or such committee of the Board of Directors to which the Board of Directors of the Company has delegated the respective authority.
1.2.5 Change in Control.
“Change in Control” means one of the following:
(a)
Individuals who are Continuing Directors cease for any reason to constitute 50% or more of the directors of the Company; or
(b)
30% or more of the outstanding voting power of the Voting Stock of the Company is acquired or beneficially owned (within the meaning of Rule 13d-3
1
under the Exchange Act) by any Person, other than an entity resulting from a Business Combination in which clauses (x) and (y) of Section 1.2.5(c) apply; or
(c)
the consummation of a merger or consolidation of the Company with or into another entity, a statutory share exchange, a sale or other disposition (in one transaction or a series of transactions) of all or substantially all of the Company’s assets or a similar business combination (each, a “Business Combination”), in each case unless, immediately following such Business Combination, (x) all or substantially all of the beneficial owners (within the meaning of Rule 13d-3 under the Exchange Act) of the Company’s Voting Stock immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of the voting power of the then outstanding shares of voting stock (or comparable voting equity interests) of the surviving or acquiring entity resulting from such Business Combination (including such beneficial ownership of an entity that, as a result of such transaction, owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries), in substantially the same proportions (as compared to the other beneficial owners of the Company’s Voting Stock immediately prior to such Business Combination) as their beneficial ownership of the Company’s Voting Stock immediately prior to such Business Combination, and (y) no Person beneficially owns, directly or indirectly, 30% or more of the voting power of the outstanding voting stock (or comparable equity interests) of the surviving or acquiring entity (other than a direct or indirect parent entity of the surviving or acquiring entity, that, after giving effect to the Business Combination, beneficially owns, directly or indirectly, 100% of the outstanding voting stock (or comparable equity interests) of the surviving or acquiring entity); or
(d)
approval by the shareholders of a definitive agreement or plan to liquidate or dissolve the Company.
For purposes of this Section 1.2.5:
“Continuing Director” means an individual (A) who is, as of June 8, 2011, a director of the Company, or (B) who becomes a director of the Company after June 8, 2011 and whose initial appointment, or nomination for election by the Company’s shareholders, was approved by at least a majority of the then Continuing Directors; provided, however, that any individual whose initial assumption of office occurs as a result of either an actual or threatened contested election by any Person (other than the Board of Directors) seeking the election of such nominee in which the number of nominees exceeds the number of directors to be elected shall not be a Continuing Director;
“Person” means any individual, firm, corporation or other entity and shall include any group comprised of any person and any other person with whom such person or any affiliate or associate (as defined in Rule 14a-1(a) of the Exchange Act) of such person has any agreement, arrangement or understanding, directly or indirectly, for the purpose of acquiring, holding, voting or disposing of any capital stock of the Company;
“Voting Stock” means all then-outstanding capital stock of the Company entitled to vote generally in the election of directors of the Company; and
2
“Exchange Act” means the Securities Exchange Act of 1934, as amended and in effect from time to time, and the regulations promulgated thereunder.
1.2.6 Code.
“Code” means the Internal Revenue Code of 1986, as amended (including, when the context requires, all regulations, interpretations and rulings issued thereunder).
1.2.7 [Intentionally left blank.]
1.2.8 Company.
“Company” means
Target Corporation, a Minnesota corporation, or any successor thereto.
1.2.9 Officer.
An “Officer” is a member of the executive committee and any other Employee who is designated and categorized as an officer of the Company by the Company’s Chief Executive Officer.
1.2.10 Officer EDCP.
“Officer EDCP” means the Target Corporation Officer EDCP.
1.2.11 Participant.
A “Participant” is an
Employee who becomes a Participant in this Plan in accordance with the provisions of Section 2. An Employee who has become a Participant shall be considered to continue as a Participant in this Plan until the date of the Participant’s death or, if earlier, the date when the Participant is no longer eligible and upon which the Participant no longer has a benefit due under this Plan (that is, a transfer of the benefit has been made pursuant to Section 6, or the Participant’s benefit under this Plan wears away, or the Participant’s benefit under this Plan has been forfeited as hereinafter provided).
1.2.12 Participating Employer.
“Participating Employer” means the Company and each other Affiliate that, with the consent of the Company, adopts this Plan. A Participating Employer shall cease to be a Participating Employer on the date it ceases to be an Affiliate.
1.2.13 Pension Plan.
“Pension Plan” means the tax qualified defined benefit pension plan, established for the benefit of employees eligible to participate therein, and known as the Target Corporation Pension Plan, including any predecessor plan(s) or successor plan.
1.2.14 Plan.
“Plan” means this Target Corporation SPP II (formerly known as the Target Corporation Supplemental Pension Plan II).
1.2.15 Plan Administrator.
“Plan Administrator” is the individual designated in Sec. 10.1.1, or, if applicable, its delegate.
1.2.16 Plan Rules.
“Plan Rules” are rules, policies, practices or procedures adopted by the Plan Administrator or its delegate pursuant to Section 10.1.5.
1.2.17 Plan Statement.
“Plan Statement” means this document entitled “Target Corporation SPP II (2011 Plan Statement),” as adopted by the Company, effective as of June 8, 2011, as the same may be amended from time to time.
1.2.18 SPP V.
“SPP V” means the Target Corporation SPP V.
1.2.19 Termination of Employment.
3
(a)
For purposes of determining entitlement to or the amount of benefits under the Plan, “Termination of Employment” means a severance of a Participant’s employment relationship with each Participating Employer and all Affiliates, for any reason.
(b)
For purposes of determining when a distribution will be made under the Plan, a “Termination of Employment” will be deemed to occur if, based on the relevant facts and circumstances to the Participant, the Participating Employer, all Affiliates and Participant reasonably anticipate that the level of bona fide future services to be performed by the Participant for the Participating Employer and all Affiliates will permanently decrease to no more than 20% of the average level of bona fide services performed over the immediately preceding 36-month period.
(c)
A bona fide leave of absence that is six months or less, or during which an individual retains a reemployment right, will not cause a Termination of Employment. In the case of a leave of absence without a right of reemployment that exceeds the time periods described in this paragraph, a Termination of Employment will be deemed to occur once the leave of absence exceeds six months.
(d)
Notwithstanding the foregoing, a Termination of Employment shall not occur unless such termination also qualifies as a “separation from service,” as defined under Code section 409A and related guidance thereunder.
1.2.20 Trust.
“Trust” means the Target Corporation Deferred Compensation Trust Agreement, dated January 1, 2009 by and between the Company and State Street Bank and Trust Company, as it is amended from time to time, or similar trust agreement.
4
SECTION 2
PARTICIPATION
2.1 Eligibility.
2.1.1 General Requirements.
An Employee is eligible to participate in this Plan on and after the date he or she:
(a)
is an active participant in the Pension Plan; and
(b)
is an Officer.
2.1.2 Applicable Benefit Formula.
A Participant’s benefit under this Plan will be determined based on the applicable benefit formula under the Pension Plan.
(a)
A Participant with a Pension Plan benefit determined solely by the traditional final average pay formula will have his or her benefit under this Plan determined pursuant to Section 3.
(b)
A Participant with a Pension Plan benefit determined solely by the personal pension account formula will have his or her benefit under this Plan determined pursuant to Section 4.
(c)
A Participant with a Pension Plan benefit determined in part by the traditional final average pay formula and in part by the personal pension account formula will have his or her benefit under this Plan determined pursuant to Section 3 with respect to the period earning a traditional final average pay benefit under the Pension Plan, and Section 4 with respect to the period earning a personal pension account benefit under the Pension Plan.
2.2 Termination of Participation.
Except as otherwise specifically provided in this Plan or by the Plan Administrator, an Employee who ceases to satisfy the requirements of Section 2.1.1 or whose benefit is transferred to the Officer EDCP pursuant to Section 6.2 is not eligible to continue to participate in this Plan, and will not accrue any additional benefits under this Plan. The Participant’s benefit under this Plan will continue to be governed by the terms of this Plan until such time as the Participant’s benefit is transferred, wears away, or is forfeited in accordance with the terms of this Plan. A Participant or Beneficiary will cease to be such as of the date on which his or her entire benefit under this Plan has been transferred, wears away, or forfeited.
2.3 Rehire.
A Participant with a vested benefit under this Plan who incurs a Termination of Employment and is rehired will not be eligible to participate in this Plan.
2.4 Effect on Employment.
2.4.1 Not a Term of Employment.
Neither the terms of this Plan Statement nor the benefits under this Plan or the continuance thereof shall be a term of the employment of any Employee.
2.4.2 Not an Employment Contract.
The Plan is not and shall not be deemed to constitute a contract of employment between any Participating Employer and any Employee or
5
other person, nor shall anything herein contained be deemed to give any Employee or other person any right to be retained in any Participating Employer’s employ or in any way limit or restrict any Participating Employer’s right or power to discharge any Employee or other person at any time and to treat him or her without regard to the effect that such treatment might have upon him or her as a Participant in this Plan.
6
SECTION 3
BENEFIT — TRADITIONAL FINAL AVERAGE PAY FORMULA
3.1 Amount of Pension.
3.1.1 General Rule.
A Participant of this Plan whose benefit under the Pension Plan is determined all or in part by the traditional final average pay formula, shall be entitled to a pension benefit determined under this Plan that is the Actuarial Equivalent of the sum of:
(a)
The monthly pension benefit of the Participant transferred to this Plan as determined under Section 3 of SPP V, and
(b)
The excess, if any, of:
(i)
The monthly pension benefit of the Participant as determined under the Pension Plan, based on the “traditional formula” (Article VI of the Pension Plan) if such formula were applied:
(A)
without regard to the maximum benefit limits imposed by Code section 415;
(B)
without regard to the maximum compensation limits imposed by Code section 401(a)(17);
(C)
without regard to the alternative benefit formula of Sections 4.6(a)(3) and 4.6(b)(2) of the Pension Plan; and
(D)
as if the definition of “certified earnings” for a plan year included compensation that would have been paid in the plan year in the absence of the Participant’s election to defer payment of the compensation to a later date pursuant to the provisions of a deferred compensation.
Over
(ii)
The sum of:
(A)
The monthly pension benefit of the Participant as determined under the Pension Plan, based on the “traditional formula” (Article VI of the Pension Plan);
(B)
The pension benefit of the Participant transferred to this Plan as determined under Section 3 of SPP V, and
(C)
The pension benefit of the Participant as determined under Section 3 of the SPP I.
Such benefit will be determined as of the date of transfer as provided in Section 6. Further, such benefit will be determined without regard to any compensation the
7
Participant accrues for any period following the Participant’s Termination of Employment.
3.1.2 Death Benefit.
If a Participant dies prior to receiving a transfer of his or her benefit determined under this Section 3, the death benefit to be transferred pursuant to Section 6 will be calculated in the same manner as the Participant’s benefit under this Section 3, and for purposes of Section 3.1.1, as if the Participant were alive and entitled to a benefit under the Pension Plan, the SPP V, and the SPP I as of his or her date of death.
3.2 Rehire.
If a Participant or former Participant is rehired and eligible to participate in this Plan, then a Participant’s service prior to reemployment will be considered for benefit purposes only to the extent such service would be recognized for benefit purposes under the traditional final average pay formula of the Pension Plan.
8
SECTION 4
BENEFIT — PERSONAL PENSION ACCOUNT
4.1 Amount of Pension.
4.1.1 General Rule.
A Participant of this Plan whose benefit under the Pension Plan is determined all or in part by the personal pension account formula, shall be entitled to a pension benefit under this Plan that is the Actuarial Equivalent of the sum of:
(a)
The pension benefit of the Participant transferred to this Plan as determined under Section 4 of SPP V, and
(b)
the excess, if any, of:
(i)
The amount that would have been credited each calendar quarter (including both “pay credits” and “interest credits”) to the Participant’s “personal pension account” under the Pension Plan (Article VII of the Pension Plan), if such account were applied:
(A)
without regard to the maximum benefit limits imposed by Code section 415,
(B)
without regard to the maximum compensation limits imposed by Code section 401(a)(17), and
(C)
as if the definition of “certified earnings” for a plan year included compensation that would have been paid in the plan year in the absence of the Participant’s election to defer payment of the compensation to a later date pursuant to the provisions of a deferred compensation.
Over
(ii)
The sum of:
(A)
The amount of the credits actually made to the Participant’s personal pension account under the Pension Plan;
(B)
The pension benefit of the Participant transferred to this Plan as determined under Section 4 of SPP V; and
(C)
The pension benefit of the Participant as determined under Section 4 of the SPP I.
Such benefit will be determined as of the date of transfer as provided in Section 6. Further, such benefit will be determined without regard to any compensation the Participant accrues for any period following the Participant’s Termination of Employment.
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4.1.2 Death Benefit.
If a Participant dies prior to receiving a transfer of his or her benefit determined under this Section 4, the death benefit to be transferred pursuant to Section 6 will be calculated in the same manner as the Participant’s benefit under this Section 4.
4.2 Rehire.
If a Participant or former Participant is rehired and eligible to participate in this Plan, then a Participant’s service prior to reemployment will be considered for benefit purposes only to the extent such service would be recognized for benefit purposes under the personal pension account formula of the Pension Plan.
10
SECTION 5
VESTING
5.1 General Rule.
A Participant will be vested in his or her benefit under this Plan to the extent he or she is vested in their benefit under the Pension Plan.
5.2 Rehire.
A Participant’s service prior to reemployment will be considered for vesting purposes only to the extent such service would be recognized for vesting purposes under the Pension Plan.
5.3 Transfers to Officer EDCP.
A Participant whose benefit under this Plan is transferred to the Officer EDCP pursuant to Section 6 will no longer have any rights under this Plan effective as of the date of such transfer.
11
SECTION 6
TRANSFERS
6.1
Benefit Distributions.
6.1.1 Benefit Transfer to Officer EDCP.
No benefits transferred to this Plan from SPP V or benefits accrued and determined under this Plan will be paid directly to Participants. All vested benefits due under this Plan, as determined under Section 3 and Section 4, will be transferred to the Officer EDCP, and paid to the Participant or Beneficiary pursuant to the terms of the Officer EDCP.
6.1.2 Form and Timing of Benefit Distribution.
Benefits earned under this Plan will be deemed to have a distribution form and timing of an Actuarial Equivalent single lump payment
of the vested benefit determined under Sections 3 and 4, as applicable, within 60 days following the one-year anniversary of the date that the Participant incurs a Termination of Employment. Any benefits earned under this Plan will be subject to the distribution terms of the Officer EDCP, including any provisions regarding the acceleration or delay of distribution (to the extent allowed under Code section 409A).
6.1.3 Transfers from SPP V.
Benefits transferred to this Plan from SPP V will have the distribution timing, form, and rights as provided under SPP V, but upon transfer will be subject to the distribution terms of the Officer EDCP, including any provisions regarding the acceleration or delay of distribution (to the extent allowed under Code section 409A).
6.2 Transfers to Officer EDCP.
A Participant’s vested benefit under this Plan will be transferred to the Officer EDCP as provided below:
6.2.1 Timing of Benefit Transfer.
(a)
On or about the April 30 (or the immediately preceding business day) immediately following the calendar year in which a Participant is first eligible to participate in this Plan and has a vested benefit, a Participant will have his or her vested benefit that is determined under this Plan transferred to the Officer EDCP. The transfer will be an amount equal to the actuarial lump sum present value on March 31 (or the immediately preceding business day) for the Participant’s SPP Benefit accrued through the preceding December 31. In the case of a Participant who is an executive officer, such transfer will be made and determined on or about the last business day prior to the end of the Company’s fiscal year.
(b)
Notwithstanding the foregoing, in the case of a Termination of Employment as defined under Section 1.2.19(a) or a Plan termination upon a Change-in-Control under Section 8.3.2 prior to the date in Section 6.2.1(a), the transfer will be made within 60 days following such event.
6.2.2 Benefit to Be Transferred.
The benefit transferred to the Officer EDCP is the vested benefit accrued and determined under this Plan at the time of transfer to the Officer EDCP provided in Section 6.2.1. The transfer to the Officer EDCP will not change the payment form, payment timing, or vested status of the benefit determined under this Plan. After the transfer to the Officer EDCP, the benefit will be subject to the terms of the Officer EDCP, including the acceleration or delay of distributions permitted thereunder.
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SECTION 7
NATURE OF INTEREST
7.1
Unfunded Obligation.
The obligation of the Participating Employers to provide benefits pursuant to this Plan constitutes only the unsecured (but legally enforceable) promise of the Participating Employers to provide such benefits. Participants and their Beneficiaries, heirs, successors and assigns shall have no legal or equitable rights, claims or interests in any specific property or assets of the Company or a Participating Employer, nor shall they be beneficiaries of, or have any rights, claims or interests in any life insurance policies, annuity contracts or the proceeds therefrom owned or which may be acquired by the Company.
7.2
Spendthrift Provision.
Except as otherwise provided in this Section 7.2, no Participant or Beneficiary shall have any interest in any benefit which can be transferred nor shall any Participant or Beneficiary have any power to anticipate, alienate, dispose of, pledge or encumber the same while in the possession or control of the Participating Employers. The Plan Administrator shall not recognize any such effort to convey any interest under this Plan. No benefit payable under this Plan shall be subject to attachment, garnishment, or execution following judgment or other legal process before actual payment to such person. This Section 7.2 shall not prevent the Plan Administrator from exercising, in its discretion, any of the applicable powers and options granted to it under any applicable provision hereof.
7.3 Compensation Recovery (Recoupment)
.
Notwithstanding any other provision of the Plan, a Participant who engaged in intentional misconduct that contributed directly or indirectly, in whole or in part, to the need for a restatement of the Company’s consolidated financial statements and who becomes subject to the Company’s recoupment policy as adopted by the Compensation Committee of the Company’s Board of Directors and amended from time to time (“Recoupment Policy”) may have all or a portion of his or her benefit under this Plan forfeited and/or all or a portion of any distributions payable to the Participant or his or her Beneficiary recovered by the Company.
(a)
Any portion of the Participant’s benefit resulting from the receipt of compensation that is subject to recovery under the Recoupment Policy may be forfeited and, in such event, a corresponding adjustment will be made to the Participant’s benefit under this Plan.
(b)
If a Participant (or his or her Beneficiary) is entitled to receive a distribution under this Plan and the Participant is subject to a claim for recovery under the Recoupment Policy, then the Company may, subject to any limitations under Code section 409A, retain all or any portion of the Participant’s (or the Beneficiary’s) taxable distribution, net of state, federal or foreign tax withholding, to satisfy such claim.
13
SECTION 8
ADOPTION, AMENDMENT AND TERMINATION
8.1
Adoption.
With the prior approval of the Plan Administrator, an Affiliate may adopt the Plan and become a Participating Employer by furnishing to the Plan Administrator a certified copy of a resolution of its board of directors adopting the Plan.
8.2 Amendment.
8.2.1 General Rule.
The Company, by action of its Board of Directors, or by action of a person so authorized by resolution of the Board of Directors and subject to any limitations or conditions in such authorization, may at any time amend the Plan, in whole or in part, for any reason, including but not limited to tax, accounting or insurance changes, a result of which may be to terminate the Plan for future deferrals provided, however, that no amendment shall be effective to decrease the benefits, nature or timing thereof payable under the Plan to any Participant with respect to deferrals made (and benefits thereafter accruing) prior to the date of such amendment. Written notice of any amendment shall be given each Participant then participating in the Plan.
8.2.2 Amendment to Benefit of Executive Officer.
Any amendment to the benefit of an executive officer under this Plan, to the extent approval of such amendment by the Board would be required by the Securities and Exchange Commission and its regulations or the rules of any applicable securities exchange, will require the approval of the Board.
8.2.3 No Oral Amendments.
No modification of the terms of this Plan Statement shall be effective unless it is in writing. No oral representation concerning the interpretation or effect of this Plan Statement shall be effective to amend this Plan Statement.
8.3 Termination.
8.3.1 General Rule.
(a)
To the extent necessary or reasonable to comply with any changes in law, the Board may at any time terminate this Plan, provided such termination satisfies the requirements of Code section 409A.
(b)
To the extent that a Participant’s benefit under the Plan will be immediately included in the income of the Participant, as determined by a court of competent jurisdiction or the Internal Revenue Service, to the extent permitted under Code section 409A, the Board may terminate this Plan,
in whole or in part, as it relates to the impacted Participant.
8.3.2 Plan Termination on Account of a Change-in-Control.
Upon a Change-in-Control the Plan will terminate and the transfer of all amounts under the Plan will be accelerated if and to the extent provided in this Section 8.3.2.
(a)
The Plan will be terminated effective as of the first date on which there has occurred both (i) a Change-in-Control under Section 1.2.5, and (ii) a funding of the Trust on account of such Change-in-Control (referred to herein as the “Plan termination effective date”) unless, prior to such Plan termination effective date,
14
the Board affirmatively determines that the Plan will not be terminated as of such effective date. The Board will be deemed to have taken action to irrevocably terminate the Plan as of the Plan termination effective date by its failure to affirmatively determine that the Plan will not terminate as of such date.
(b)
The determination by the Board under paragraph (a) constitutes a determination that such termination will satisfy the requirements of Code section 409A, including an agreement by the Company that it will take such additional action or refrain from taking such action as may be necessary to satisfy the requirements necessary to terminate and liquidate the Plan under paragraph (c) below.
(c)
In the event the Board does not affirmatively determine not to terminate the Plan as provided in paragraph (a), such termination shall be subject to either (i) or (ii), as follows:
(i)
If the Change-in-Control qualifies as a “change in control event” for purposes of Code section 409A, transfer of all amounts under the Plan will be accelerated and distributed under the Officer EDCP.
(ii)
If the Change-in-Control does not
qualify as a “change in control event” for purposes of Code section 409A, transfer of all amounts under the Plan will be accelerated and distributed under the Officer EDCP.
15
SECTION 9
CLAIM PROCEDURES
9.1
Claim Procedures.
Until modified by the Plan Administrator, the claim and review procedures set forth in this Section shall be the mandatory claim and review procedures for the resolution of disputes and disposition of claims filed under the Plan. An application for a distribution or withdrawal shall be considered as a claim for the purposes of this Section.
9.1.1
Initial Claim.
An individual may, subject to any applicable deadline, file with the Plan Administrator a
written claim for benefits under
the Plan in a
form and manner prescribed by the Plan Administrator.
(a)
If the claim is denied in whole or in part, the Plan Administrator shall notify the claimant of the adverse benefit determination within ninety (90) days after receipt of the claim.
(b)
The ninety (90) day period for making the claim determination may be extended for ninety (90) days if the Plan Administrator determines that special circumstances require an extension of time for determination of the claim, provided that the Plan Administrator notifies the claimant, prior to the expiration of the initial ninety (90) day period, of the special circumstances requiring an extension and the date by which a claim determination is expected to be made.
9.1.2
Notice of Initial Adverse Determination.
A notice of an adverse determination shall set forth in a manner calculated to be understood by the claimant:
(a)
the specific reasons for the adverse determination,
(b)
references to the specific provisions of the Plan Statement (or other applicable Plan document) on which the adverse determination is based,
(c)
a description of any additional material or information necessary to perfect the claim and an explanation of why such material or information is necessary, and
(d)
a description of the claim and review procedures, including the time limits applicable to such procedure, and a statement of the claimant’s right to bring a civil action under ERISA section 502(a) following an adverse determination on review.
9.1.3
Request for Review.
Within
sixty (60) days after receipt of an initial adverse benefit determination notice, the claimant may file with the Plan Administrator a written request for a review of the adverse determination and may, in connection therewith submit written comments, documents, records and other information relating to the claim benefits. Any request for review of the initial adverse determination not filed within sixty (60) days after receipt of the initial adverse determination notice shall be untimely.
9.1.4
Claim on Review.
If the claim, upon review, is denied in whole or in part, the Plan Administrator shall notify the claimant of the adverse benefit determination within sixty (60) days after receipt of such a request for review.
16
(a)
The sixty (60) day period for deciding the claim on review may be extended for sixty (60) days if the Plan Administrator determines that special circumstances require an extension of time for determination of the claim, provided that the Plan Administrator notifies the claimant, prior to the expiration of the initial sixty (60) day period, of the special circumstances requiring an extension and the date by which a claim determination is expected to be made.
(b)
In the event that the time period is extended due to a claimant’s failure to submit information necessary to decide a claim on review, the claimant shall have sixty (60) days within which to provide the necessary information and the period for making the claim determination on review shall be tolled from the date on which the notification of the extension is sent to the claimant until the date on which the claimant responds to the request for additional information or, if earlier, the expiration of sixty (60) days.
(c)
The Plan Administrator’s review of a denied claim shall take into account all comments, documents, records, and other information submitted by the claimant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.
9.1.5
Notice of Adverse Determination for Claim on Review.
A
notice of an adverse determination for a claim on review shall set forth in a manner calculated to be understood by the claimant.
(a)
the specific reasons for the denial,
(b)
references to the specific provisions of the Plan Statement (or other applicable Plan document) on which the adverse determination is based,
(c)
a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claimant’s claim for benefits,
(d)
a statement describing any voluntary appeal procedures offered by the Plan and the claimant’s right to obtain information about such procedures, and
(e)
a statement of the claimant’s right to bring an action under ERISA section 502(a).
17
9.2
Rules and Regulations.
9.2.1
Adoption of Rules.
Any rule not in conflict or at variance with the provisions hereof may be adopted by the Plan Administrator.
9.2.2
Specific Rules
.
(a)
No inquiry or question shall be deemed to be a claim or a request for a review of a denied claim unless made in accordance with the established claim procedures. The Plan Administrator may require that any claim for benefits and any request for a review of a denied claim be filed on forms to be furnished by the Plan Administrator upon request.
(b)
All decisions on claims and on requests for a review of denied claims shall be made by the Plan Administrator unless delegated as provided for in the Plan, in which case references in this Section 9 to the Plan Administrator shall be treated as references to the Plan Administrator’s delegate.
(c)
Claimants may be represented by a lawyer or other representative at their own expense, but the Plan Administrator reserves the right to require the claimant to furnish written authorization and establish reasonable procedures for determining whether an individual has been authorized to act on behalf of a claimant. A claimant’s representative shall be entitled to copies of all notices given to the claimant.
(d)
The decision of the Plan Administrator on a claim and on a request for a review of a denied claim may be provided to the claimant in electronic form instead of in writing at the discretion of the Plan Administrator.
(e)
In connection with the review of a denied claim, the claimant or the claimant’s representative shall be provided, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claimant’s claim for benefits.
(f)
The time period within which a benefit determination will be made shall begin to run at the time a claim or request for review is filed in accordance with the claims procedures, without regard to whether all the information necessary to make a benefit determination accompanies the filing.
(g)
The claims and review procedures shall be administered with appropriate safeguards so that benefit claim determinations are made in accordance with governing plan documents and, where appropriate, the plan provisions have been applied consistently with respect to similarly situated claimants.
(h)
The Plan Administrator may, in its discretion, rely on any applicable statute of limitation or deadline as a basis for denial of any claim.
9.3 Limitations and Exhaustion.
9.3.1 Claims.
No claim shall be considered under these administrative procedures unless it is filed with the Plan Administrator within two (2) years after the Participant knew (or
18
reasonably should have known) of the general nature of the dispute giving rise to the claim. Every untimely claim shall be denied by the Plan Administrator without regard to the merits of the claim.
9.3.2
Lawsuits.
No suit may be brought by or on behalf of any Participant or Beneficiary on any matter pertaining to this Plan unless the action is commenced in the proper forum within two (2) years from the earlier of:
(a)
the date the Participant knew (or reasonably should have known) of the general nature of the dispute giving rise to the action, or
(b)
the date the claim was denied.
9.3.3 Exhaustion of Remedies.
These administrative procedures are the exclusive means for resolving any dispute arising under this Plan. As to such matters:
(a)
no Participant or Beneficiary shall be permitted to litigate any such matter unless a timely claim has been filed under these administrative procedures and these administrative procedures have been exhausted, and
(b)
determinations by the Plan Administrator (including determinations as to whether the claim was timely filed) shall be afforded the maximum deference permitted by law.
9.3.4 Imputed Knowledge.
For the purpose of applying the deadlines to file a claim or a legal action, knowledge of all facts that a Participant knew or reasonably should have known shall be imputed to every claimant who is or claims to be a Beneficiary of the Participant or otherwise claims to derive an entitlement by reference to the Participant for the purpose of applying the previously specified periods.
19
SECTION 10
PLAN ADMINISTRATION
10.1
Plan Administration.
10.1.1
Administrator
. The Company’s Vice President, Pay and Benefits (or any successor thereto) is the “administrator” of the Plan for purposes of 3(16)(A) of ERISA. Except as otherwise expressly provided herein, the Plan Administrator shall control and manage the operation and administration of the Plan and make all decisions and determinations.
10.1.2
Authority and Delegation
. The Plan Administrator is authorized to:
(a)
Appoint one or more individuals or entities and delegate such of his or her powers and duties as he or she deems desirable to any individual or entity, in which case every reference herein made to Plan Administrator shall be deemed to mean or include the individual or entity as to matters within their jurisdiction. Such individual may be an officer or other employee of a Participating Employer or Affiliate, provided that any delegation to an employee of a Participating Employer or Affiliate will automatically terminate when he or she ceases to be an employee. Any delegation may be rescinded at any time; and
(b)
Select, employ and compensate from time to time such agents or consultants as the Plan Administrator may deem necessary or advisable in carrying out its duties and to rely on the advice and information provided by them.
10.1.3
Determinations
. The Plan Administrator shall make such determinations as may be required from time to time in the administration of this Plan. The Plan Administrator shall have the discretionary authority and responsibility to interpret and construe the Plan Statement and to determine all factual and legal questions under this Plan, including but not limited to the entitlement of Participants and Beneficiaries, and the amounts of their respective interests. Each decision of the Plan Administrator shall be final and binding upon all parties. Benefits under the Plan will be paid only if the Plan Administrator decides in its discretion that the applicant is entitled to them.
10.1.4
Reliance
. The Plan Administrator may act and rely upon all information reported to it hereunder and need not inquire into the accuracy thereof, nor be charged with any notice to the contrary.
10.1.5
Rules and Regulations
. Any rule, regulation, policy, practice or procedure not in conflict or at variance with the provisions hereof may be adopted by the Plan Administrator.
10.2
Conflict of Interest.
If any individual to whom authority has been delegated or redelegated hereunder shall also be a Participant in this Plan, such Participant shall have no authority with respect to any matter specially affecting such Participant’s individual interest hereunder or the interest of a person superior to him or her in the organization (as distinguished from the interests of all Participants and Beneficiaries or a broad class of Participants and Beneficiaries), all such authority being reserved exclusively to other individuals as the case may be, to the exclusion of such Participant, and such Participant shall act only in such Participant’s individual capacity in connection with any such matter.
20
10.3
Service of Process.
In the absence of any designation to the contrary by the Plan Administrator, the General Counsel of the Company is designated as the appropriate and exclusive agent for the receipt of service of process directed to this Plan in any legal proceeding, including arbitration, involving this Plan.
10.4
Choice of Law.
Except to the extent that federal law is controlling, this Plan Statement will be construed and enforced in accordance with the laws of the State of Minnesota.
10.5
Responsibility for Delegate.
No person shall be liable for an act or omission of another person with regard to a responsibility that has been allocated to or delegated to such other person pursuant to the terms of the Plan Statement or pursuant to procedures set forth in the Plan Statement.
10.6
Expenses.
All expenses of administering the benefits due under this Plan shall be borne by the Participating Employers.
10.7
Errors in Computations.
It is recognized that in the operation and administration of the Plan certain mathematical and accounting errors may be made or mistakes may arise by reason of factual errors in information supplied to the Plan Administrator or trustee. The Plan Administrator shall have power to cause such equitable adjustments to be made to correct for such errors as the Plan Administrator, in its sole discretion, considers appropriate. Such adjustments shall be final and binding on all persons.
10.8 Indemnification.
In addition to any other applicable provisions for indemnification, the Participating Employers jointly and severally agree to indemnify and hold harmless, to the extent permitted by law, each director, officer and Employee of the Participating Employers against any and all liabilities, losses, costs or expenses (including legal fees) of whatsoever kind and nature which may be imposed on, incurred by or asserted against such person at any time by reason of such person’s services as an administrator in connection with the Plan, but only if such person did not act dishonestly, or in bad faith, or in willful violation of the law or regulations under which such liability, loss, cost or expense arises.
10.9
Notice.
Any notice required under this Plan Statement may be waived by the person entitled thereto.
21
SECTION 11
CONSTRUCTION
11.1
ERISA Status.
The Plan was adopted and is maintained with the understanding that it is an unfunded plan maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees as provided in section 201(2), section 301(a)(3) and section 401(a)(1) of ERISA. The Plan shall be interpreted and administered accordingly.
11.2
IRC Status.
The Plan is intended to be a nonqualified deferred compensation arrangement that will comply in form and operation with the requirements of Code section 409A and the Plan will be construed and administered in a manner that is consistent with and gives effect to such intention.
11.3
Rules of Document Construction.
In the event any provision of the Plan Statement is held invalid, void or unenforceable, the same shall not affect, in any respect whatsoever, the validity of any other provision of the Plan. The titles given to the various Sections of the Plan Statement are inserted for convenience of reference only and are not part of the Plan Statement, and they shall not be considered in determining the scope, purpose, meaning or intent of any provision hereof. The provisions of the Plan Statement shall be construed as a whole in such manner as to carry out the provisions thereof and shall not be construed separately without relation to the context.
11.4
References
to Laws.
Any reference in the Plan Statement to a statute or regulation shall be considered also to mean and refer to any subsequent amendment or replacement of that statute or regulation unless, under the circumstances, it would be inappropriate to do so.
11.5
Appendices.
Plan provisions that have application to a limited number of Participants or that otherwise do not apply equally to all Participants may be described in an appendix to the Plan Statement. In the event of a conflict between the terms of an appendix and the terms of the remainder of the Plan Statement, the terms of the appendix control.
22
Exhibit (10)E
TARGET CORPORATION
SPP III
(2011 Plan Statement)
Effective June 8, 2011
As Amended and Restated
TARGET CORPORATION
SPP III
(2011 Plan Statement)
TABLE OF CONTENTS
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SECTION 1 INTRODUCTION; DEFINITIONS
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1
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1.1 History
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1
|
|
1.2 Definitions
|
1
|
|
1.2.1 Actuarial Equivalent
|
1
|
|
1.2.2 Affiliate
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1
|
|
1.2.3 Beneficiary
|
1
|
|
1.2.4 Board
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1
|
|
1.2.5 Change-in-Control
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1
|
|
1.2.6 Code
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3
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|
1.2.7 [Intentionally left blank.]
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3
|
|
1.2.8 Company
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3
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|
1.2.9 Officer
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3
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|
1.2.10 Officer EDCP
|
3
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1.2.11 Participant
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3
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1.2.12 Participating Employer
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3
|
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1.2.13 Pension Plan
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3
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1.2.14 Plan
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3
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1.2.15 Plan Administrator
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3
|
|
1.2.16 Plan Rules
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3
|
|
1.2.17 Plan Statement
|
3
|
|
1.2.18 Termination of Employment
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3
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|
1.2.19 Trust
|
4
|
|
|
|
|
SECTION 2 PARTICIPATION
|
5
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2.1 Eligibility
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5
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|
2.2 Termination of Participation
|
5
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|
2.3 Rehire
|
5
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|
2.4 Effect on Employment
|
5
|
|
|
|
|
SECTION 3 BENEFIT — TRADITIONAL FINAL AVERAGE PAY FORMULA
|
6
|
|
3.1 Amount of Pension
|
6
|
|
|
|
|
SECTION 4 VESTING
|
8
|
|
4.1 General Rule
|
8
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|
4.2 Transfers to Officer EDCP
|
8
|
|
|
|
|
SECTION 5 TRANSFERS
|
9
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|
5.1 Benefit Distributions
|
9
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|
5.2 Transfers to Officer EDCP
|
9
|
|
|
|
|
SECTION 6 NATURE OF INTEREST
|
10
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|
6.1 Unfunded Obligation
|
10
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|
6.2 Spendthrift Provision
|
10
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|
6.3 Compensation Recovery (Recoupment)
|
10
|
|
|
|
|
SECTION 7 ADOPTION, AMENDMENT AND TERMINATION
|
11
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|
7.1 Adoption
|
11
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|
7.2 Amendment
|
11
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|
7.3 Termination
|
11
|
|
|
|
|
SECTION 8 CLAIM PROCEDURES
|
13
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|
8.1
Claim Procedures
|
13
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|
8.2 Rules and Regulations
|
15
|
|
8.3 Limitations and Exhaustion
|
15
|
|
|
|
|
SECTION 9 PLAN ADMINISTRATION
|
17
|
|
9.1 Plan Administration
|
17
|
|
9.2 Conflict of Interest
|
17
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|
9.3 Service of Process
|
18
|
|
9.4 Choice of Law
|
18
|
|
9.5 Responsibility for Delegate
|
18
|
|
9.6 Expenses
|
18
|
|
9.7 Errors in Computations
|
18
|
|
9.8 Indemnification
|
18
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|
9.9 Notice
|
18
|
|
|
|
|
SECTION 10 CONSTRUCTION
|
19
|
|
10.1 ERISA Status
|
19
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|
10.2 IRC Status
|
19
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10.3 Rules of Document Construction
|
19
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|
10.4 References to Laws
|
19
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|
10.5 Appendices
|
19
|
2
SECTION 1
INTRODUCTION; DEFINITIONS
1.1
History.
The Company originally established this Plan (formerly known as the Target Corporation Supplemental Pension Plan III) effective as of January 1, 1995. The Plan is a non-qualified, unfunded plan intended to provide certain pension benefits for a select group of management or highly compensated employees who are officers that cannot be provided under the Pension Plan due to certain limitations imposed by the Code. The Plan is intended to be a “top hat plan” as defined under the Employee Retirement Income Security Act of 1974, as amended from time to time. Effective as of November 8, 2000, no additional Officers could become eligible to participate in this Plan. Effective April 30, 2002, for all Officers who had attained age 55, the Company transferred the present value of the vested benefit due under this Plan to the Officer EDCP. After such transfer, no benefits were due or payable from this Plan. Further, after the transfer, the individuals would no longer participate in this Plan or be eligible for further accruals under this Plan. Effective January 1, 2005 (and other effective dates as specifically provided), this Plan was operated in compliance with Code section 409A. The Plan, which is intended to comply with Code section 409A, was amended and restated effective January 1, 2009. The Plan was amended to include the Company’s recoupment policy effective January 13, 2010. This Plan Statement, which was amended and restated to reflect Plan administration and amendment changes authorized by the Board on November 10, 2010 and modification of the Change in Control definition, is effective as of June 8, 2011.
1.2
Definitions.
Terms used herein with initial capital letters will have same meaning as those used in the Pension Plan except as otherwise defined below or where the context clearly indicates to the contrary.
1.2.1
Actuarial Equivalent.
An “Actuarial Equivalent” will be determined by using such factors and assumptions as the Plan Administrator considers appropriate in its sole and absolute discretion.
1.2.2
Affiliate.
An “Affiliate” is the Company and all persons, with whom the Company would be considered a single employer under Code section 414(b) or 414(c).
1.2.3
Beneficiary.
The “Beneficiary” is the “Beneficiary” as defined under the Officer EDCP.
1.2.4
Board
“Board” is the Board of Directors of the Company, or such committee of the Board of Directors to which the Board of Directors of the Company has delegated the respective authority.
1.2.5
Change in Control.
“Change in Control” means one of the following:
(a)
Individuals who are Continuing Directors cease for any reason to constitute 50% or more of the directors of the Company; or
(b)
30% or more of the outstanding voting power of the Voting Stock of the Company is acquired or beneficially owned (within the meaning of Rule 13d-3 under the Exchange Act) by any Person, other than an entity resulting from a Business Combination in which clauses (x) and (y) of Section 1.2.5(c) apply; or
1
(c)
the consummation of a merger or consolidation of the Company with or into another entity, a statutory share exchange, a sale or other disposition (in one transaction or a series of transactions) of all or substantially all of the Company’s assets or a similar business combination (each, a “Business Combination”), in each case unless, immediately following such Business Combination, (x) all or substantially all of the beneficial owners (within the meaning of Rule 13d-3 under the Exchange Act) of the Company’s Voting Stock immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of the voting power of the then outstanding shares of voting stock (or comparable voting equity interests) of the surviving or acquiring entity resulting from such Business Combination (including such beneficial ownership of an entity that, as a result of such transaction, owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries), in substantially the same proportions (as compared to the other beneficial owners of the Company’s Voting Stock immediately prior to such Business Combination) as their beneficial ownership of the Company’s Voting Stock immediately prior to such Business Combination, and (y) no Person beneficially owns, directly or indirectly, 30% or more of the voting power of the outstanding voting stock (or comparable equity interests) of the surviving or acquiring entity (other than a direct or indirect parent entity of the surviving or acquiring entity, that, after giving effect to the Business Combination, beneficially owns, directly or indirectly, 100% of the outstanding voting stock (or comparable equity interests) of the surviving or acquiring entity); or
(d)
approval by the shareholders of a definitive agreement or plan to liquidate or dissolve the Company.
For purposes of this Section 1.2.5:
“Continuing Director” means an individual (A) who is, as of June 8, 2011, a director of the Company, or (B) who becomes a director of the Company after June 8, 2011 and whose initial appointment, or nomination for election by the Company’s shareholders, was approved by at least a majority of the then Continuing Directors; provided, however, that any individual whose initial assumption of office occurs as a result of either an actual or threatened contested election by any Person (other than the Board of Directors) seeking the election of such nominee in which the number of nominees exceeds the number of directors to be elected shall not be a Continuing Director;
“Person” means any individual, firm, corporation or other entity and shall include any group comprised of any person and any other person with whom such person or any affiliate or associate (as defined in Rule 14a-1(a) of the Exchange Act) of such person has any agreement, arrangement or understanding, directly or indirectly, for the purpose of acquiring, holding, voting or disposing of any capital stock of the Company;
“Voting Stock” means all then-outstanding capital stock of the Company entitled to vote generally in the election of directors of the Company; and
“Exchange Act” means the Securities Exchange Act of 1934, as amended and in effect from time to time, and the regulations promulgated thereunder.
2
1.2.6
Code.
“Code” means the Internal Revenue Code of 1986, as amended (including, when the context requires, all regulations, interpretations and rulings issued thereunder).
1.2.7
[Intentionally left blank.]
1.2.8
Company.
“Company” means
Target Corporation, a Minnesota corporation, or any successor thereto.
1.2.9
Officer.
An “Officer” is a member of the executive committee and any other Employee who is designated and categorized as an officer of the Company or a Participating Employer by the Company’s Chief Executive Officer.
1.2.10
Officer EDCP.
“Officer EDCP” means the Target Corporation Officer EDCP.
1.2.11
Participant.
A “Participant” is an
Employee who becomes a Participant in this Plan in accordance with the provisions of Section 2. An Employee who has become a Participant shall be considered to continue as a Participant in this Plan until the date of the Participant’s death or, if earlier, the date when the Participant is no longer eligible and upon which the Participant no longer has a benefit due under this Plan (that is, a transfer of the benefit has been made pursuant to Section 6, or the Participant’s benefit under this Plan wears away, or the Participant’s benefit under this Plan has been forfeited as hereinafter provided).
1.2.12
Participating Employer.
“Participating Employer” means the Company and each other Affiliate that, with the consent of the Plan Administrator, adopts this Plan. A Participating Employer shall cease to be a Participating Employer on the date it ceases to be an Affiliate.
1.2.13
Pension Plan.
“Pension Plan” means the tax qualified defined benefit pension plan, established for the benefit of employees eligible to participate therein, and known as the Target Corporation Pension Plan, including any predecessor plan(s) or successor plan.
1.2.14
Plan.
“Plan” means this Target Corporation SPP III (formerly known as the Target Corporation Supplemental Pension Plan III).
1.2.15
Plan Administrator.
“Plan Administrator” is the individual designated in Sec. 10.1.1, or, if applicable, its delegate.
1.2.16
Plan Rules.
“Plan Rules” are rules, policies, practices or procedures adopted by the Plan Administrator or its delegate pursuant to Section 9.1.5.
1.2.17
Plan Statement.
“Plan Statement” means this document entitled “Target Corporation SPP III (2011 Plan Statement),” as adopted by the Company, effective as of June 8, 2011, as the same may be amended from time to time.
1.2.18
Termination of Employment.
(a)
For purposes of determining entitlement to or the amount of benefits under the Plan, “Termination of Employment” means a severance of a Participant’s employment relationship with each Participating Employer and all Affiliates, for any reason.
3
(b)
For purposes of determining when a distribution will be made under the Plan, a “Termination of Employment” will be deemed to occur if, based on the relevant facts and circumstances to the Participant, the Participating Employer, all Affiliates and Participant reasonably anticipate that the level of bona fide future services to be performed by the Participant for the Participating Employer and all Affiliates will permanently decrease to no more than 20% of the average level of bona fide services performed over the immediately preceding 36-month period.
(c)
A bona fide leave of absence that is six months or less, or during which an individual retains a reemployment right, will not cause a Termination of Employment. In the case of a leave of absence without a right of reemployment that exceeds the time periods described in this paragraph, a Termination of Employment will be deemed to occur once the leave of absence exceeds six months.
(d)
Notwithstanding the foregoing, a Termination of Employment shall not occur unless such termination also qualifies as a “separation from service,” as defined under Code section 409A and related guidance thereunder.
1.2.19
Trust.
“Trust” means the Target Corporation Deferred Compensation Trust Agreement, dated January 1, 2009 by and between the Company and State Street Bank and Trust Company, as it is amended from time to time, or similar trust agreement.
4
SECTION 2
PARTICIPATION
2.1
Eligibility.
An Employee who is an Officer previously designated as eligible to participate in this Plan by the Chief Executive Officer of the Company prior to November 8, 2000 is eligible to participate in this Plan on and after the date he:
(a)
is an active participant in the Pension Plan; and
(b)
has attained the age of 55.
2.2
Termination of Participation.
Except as otherwise specifically provided in this Plan, an Employee who ceases to satisfy the requirements of Section 2.1 or whose benefit is transferred to the Officer EDCP pursuant to Section 5.2 is not eligible to continue to participate in this Plan, and will not accrue any additional benefits under this Plan. The Participant’s benefit under this Plan will continue to be governed by the terms of this Plan until such time as the Participant’s benefit is transferred, wears away, or is forfeited in accordance with the terms of this Plan. A Participant or Beneficiary will cease to be such as of the date on which his entire benefit under this Plan has been transferred, wears away, or forfeited.
2.3
Rehire.
A Participant under this Plan who incurs a Termination of Employment and is rehired will not be eligible to participate in this Plan.
2.4
Effect on Employment.
2.4.1
Not a Term of Employment.
Neither the terms of this Plan Statement nor the benefits under this Plan or the continuance thereof shall be a term of the employment of any Employee.
2.4.2
Not an Employment Contract.
The Plan is not and shall not be deemed to constitute a contract of employment between any Participating Employer and any Employee or other person, nor shall anything herein contained be deemed to give any Employee or other person any right to be retained in any Participating Employer’s employ or in any way limit or restrict any Participating Employer’s right or power to discharge any Employee or other person at any time and to treat him without regard to the effect that such treatment might have upon him as a Participant in this Plan.
5
SECTION 3
BENEFIT — TRADITIONAL FINAL AVERAGE PAY FORMULA
3.1
Amount of Pension.
3.1.1
General Rule.
A Participant of this Plan shall be entitled to a pension benefit under this Plan that is the Actuarial Equivalent of the excess, if any, of:
(a)
The pension benefit of the Participant as determined under Article VI of the Pension Plan applied:
(i)
without regard to the maximum benefit limits imposed by Code section 415,
(ii)
without regard to the maximum compensation limits imposed by Code section 401(a)(17),
(iii)
without regard to the alternative benefit formula of Sections 4.6(a)(3) and 4.6(b)(2) of the Pension Plan,
(iv)
as if the definition of “certified earnings” for a plan year included compensation that would have been paid in the plan year in the absence of the Participant’s election to defer payment of the compensation to a later date pursuant to the provisions of a deferred compensation, and
(v)
for purposes of the early reduction factors used under the Pension Plan, as if the Participant was five years older than his actual age (but in no case shall the Participant’s age be deemed to be greater than age 65).
Over
(b)
The pension benefit of the Participant as determined under Article VI of the Pension Plan applied:
(i)
without regard to the maximum benefit limits imposed by Code section 415,
(ii)
without regard to the maximum compensation limits imposed by Code section 401(a)(17),
(iii)
without regard to the alternative benefit formula of Sections 4.6(a)(3) and 4.6(b)(2) of the Pension Plan, and
(iv)
as if the definition of “certified earnings” for a plan year included compensation that would have been paid in the plan year in the absence of the Participant’s election to defer payment of the compensation to a later date pursuant to the provisions of a deferred compensation.
Such benefit will be determined as of the date of transfer as provided in Section 5. Further, such benefit will be determined without regard to any compensation the
6
Participant accrues for any period following the Participant’s Termination of Employment.
3.1.2
Death Benefit.
Subject to the vesting requirements of Section 4, if a Participant dies prior to a transfer of his benefit under this Section 3, the death benefit to be transferred pursuant to Section 5 will be calculated in the same manner as the Participant’s benefit under this Section 3, and for purposes of Section 3.1.1, as if the Participant were alive and entitled to a benefit under the Pension Plan and the Officer EDCP as of his date of death.
7
SECTION 4
VESTING
4.1
General Rule.
A Participant will be vested in his benefit under this Plan, unless:
(a)
The Participant incurs a Termination of Employment as defined in Section 1.2.18(a) prior to attaining age 55, or
(b)
The Participant is entitled to payments under an income continuation plan or policy of an Affiliate.
4.2
Transfers to Officer EDCP.
A Participant whose benefit under this Plan is transferred to the Officer EDCP pursuant to Section 5 will no longer have any rights under this Plan effective as of the date of such transfer.
8
SECTION 5
TRANSFERS
5.1
Benefit Distributions.
5.1.1
Benefit Transfer to Officer EDCP.
No benefits accrued under this Plan will be paid directly to Participants or Beneficiaries. All vested benefits due under this Plan, as determined under Section 3, will be transferred to the Officer EDCP, and paid to the Participant or Beneficiary pursuant to the terms of the Officer EDCP.
5.1.2
Form and Timing of Benefit Distribution.
Benefits earned under this Plan will be paid in the form of twenty-four (24) monthly installment payments commencing within 60 days following the date that the Participant incurs a Termination of Employment. Any benefits earned under this Plan will be transferred to the Officer EDCP and subject to the distribution terms of the Officer EDCP, including any provisions regarding the acceleration or delay of distribution (to the extent allowed under Code section 409A).
5.2
Transfers to Officer EDCP.
A Participant’s vested benefit under this Plan will be transferred to the Officer EDCP as provided below:
5.2.1
Timing of Benefit Transfer.
(a)
On or about the last business day prior to the end of the Company’s fiscal year immediately following the calendar year in which a Participant is first eligible for a benefit under this Plan, a Participant will have his or her benefit determined under this Plan and transferred to the Officer EDCP. The transfer will be an amount equal to the actuarial lump sum present value of the Participant’s benefit accrued under this Plan.
(b)
Notwithstanding the foregoing, in the case of a Termination of Employment as defined under Section 1.2.18(a) or a Plan termination on account of a Change-in-Control under Section 7.3.2 prior to the date in Section 5.2.1(a), the transfer will be made within 60 days following such event.
5.2.2
Benefit to Be Transferred.
The benefit transferred to the Officer EDCP is the vested benefit accrued under this Plan and determined at the time of transfer to the Officer EDCP provided in Section 5.2.1. The transfer to the Officer EDCP will not change the payment form, payment timing, or vested status of the benefit determined under this Plan. After the transfer to the Officer EDCP, the benefit will thereafter be subject to the terms of the Officer EDCP, including the acceleration or delay of distributions permitted thereunder.
9
SECTION 6
NATURE OF INTEREST
6.1
Unfunded Obligation.
The obligation of the Participating Employers to provide benefits pursuant to this Plan constitutes only the unsecured (but legally enforceable) promise of the Participating Employers to provide such benefits. Participants and their Beneficiaries, heirs, successors and assigns shall have no legal or equitable rights, claims or interests in any specific property or assets of the Company or a Participating Employer, nor shall they be beneficiaries of, or have any rights, claims or interests in any life insurance policies, annuity contracts or the proceeds therefrom owned or which may be acquired by the Company.
6.2
Spendthrift Provision.
Except as otherwise provided in this Section 6.2, no Participant or Beneficiary shall have any interest in any benefit which can be transferred nor shall any Participant or Beneficiary have any power to anticipate, alienate, dispose of, pledge or encumber the same while in the possession or control of the Participating Employers. The Plan Administrator shall not recognize any such effort to convey any interest under this Plan. No benefit payable under this Plan shall be subject to attachment, garnishment, or execution following judgment or other legal process before actual payment to such person. This Section 6.2 shall not prevent the Plan Administrator from exercising, in its discretion, any of the applicable powers and options granted to it under any applicable provision hereof.
6.3
Compensation Recovery (Recoupment)
.
Notwithstanding any other provision of the Plan, a Participant who engaged in intentional misconduct that contributed directly or indirectly, in whole or in part, to the need for a restatement of the Company’s consolidated financial statements and who becomes subject to the Company’s recoupment policy as adopted by the Compensation Committee of the Company’s Board of Directors and amended from time to time (“Recoupment Policy”) may have all or a portion of his or her benefit under this Plan forfeited and/or all or a portion of any distributions payable to the Participant or his or her Beneficiary recovered by the Company.
(a)
Any portion of the Participant’s benefit resulting from the receipt of compensation that is subject to recovery under the Recoupment Policy may be forfeited and, in such event, a corresponding adjustment will be made to the Participant’s benefit under this Plan.
(b)
If a Participant (or his or her Beneficiary) is entitled to receive a distribution under this Plan and the Participant is subject to a claim for recovery under the Recoupment Policy, then the Company may, subject to any limitations under Code section 409A, retain all or any portion of the Participant’s (or the Beneficiary’s) taxable distribution, net of state, federal or foreign tax withholding, to satisfy such claim.
10
SECTION 7
ADOPTION, AMENDMENT AND TERMINATION
7.1
Adoption.
With the prior approval of the Plan Administrator, an Affiliate may adopt the Plan and become a Participating Employer by furnishing to the Plan Administrator a certified copy of a resolution of its board of directors adopting the Plan.
7.2
Amendment.
7.2.1
General Rule.
The Company, by action of its Board of Directors, or by action of a person so authorized by resolution of the Board of Directors and subject to any limitations or conditions in such authorization, may at any time amend the Plan, in whole or in part, for any reason, including but not limited to tax, accounting or insurance changes, a result of which may be to terminate the Plan for future deferrals provided, however, that no amendment shall be effective to decrease the benefits, nature or timing thereof payable under the Plan to any Participant with respect to deferrals made (and benefits thereafter accruing) prior to the date of such amendment. Written notice of any amendment shall be given each Participant then participating in the Plan.
7.2.2
Amendment to Benefit of Executive Officer.
Any amendment to the benefit of an executive officer under this Plan, to the extent approval of such amendment by the Board would be required by the Securities and Exchange Commission and its regulations or the rules of any applicable securities exchange, will require the approval of the Board.
7.2.3
No Oral Amendments.
No modification of the terms of this Plan Statement shall be effective unless it is in writing. No oral representation concerning the interpretation or effect of this Plan Statement shall be effective to amend this Plan Statement.
7.3
Termination.
7.3.1
General Rule.
(a)
To the extent necessary or reasonable to comply with any changes in law, the Board may at any time terminate this Plan, provided such termination satisfies the requirements of Code section 409A.
(b)
To the extent that a Participant’s benefit under the Plan will be immediately included in the income of the Participant, as determined by a court of competent jurisdiction or the Internal Revenue Service, to the extent permitted under Code section 409A, the Board may terminate this Plan,
in whole or in part, as it relates to the impacted Participant.
7.3.2
Plan Termination on Account of a Change-in-Control.
Upon a Change-in-Control the Plan will terminate and the transfer of all amounts under the Plan will be accelerated if and to the extent provided in this Section 7.3.2.
(a)
The Plan will be terminated effective as of the first date on which there has occurred both (i) a Change-in-Control under Section 1.2.5, and (ii) a funding of the Trust on account of such Change-in-Control (referred to herein as the “Plan termination effective date”) unless, prior to such Plan termination effective date,
11
the Board affirmatively determines that the Plan will not be terminated as of such effective date. The Board will be deemed to have taken action to irrevocably terminate the Plan as of the Plan termination effective date by its failure to affirmatively determine that the Plan will not terminate as of such date.
(b)
The determination by the Board under paragraph (a) constitutes a determination that such termination will satisfy the requirements of Code section 409A, including an agreement by the Company that it will take such additional action or refrain from taking such action as may be necessary to satisfy the requirements necessary to terminate and liquidate the Plan under paragraph (c) below.
(c)
In the event the Board does not affirmatively determine not to terminate the Plan as provided in paragraph (a), such termination shall be subject to either (i) or (ii), as follows:
(i)
If the Change-in-Control qualifies as a “change in control event” for purposes of Code section 409A, transfer of all amounts under the Plan will be accelerated and distributed under the Officer EDCP.
(ii)
If the Change-in-Control does not
qualify as a “change in control event” for purposes of Code section 409A, transfer of all amounts under the Plan will be accelerated and distributed under the Officer EDCP.
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SECTION 8
CLAIM PROCEDURES
8.1
Claim Procedures.
Until modified by the Plan Administrator, the claim and review procedures set forth in this Section shall be the mandatory claim and review procedures for the resolution of disputes and disposition of claims filed under the Plan. An application for a distribution or withdrawal shall be considered as a claim for the purposes of this Section.
8.1.1
Initial Claim.
An individual may, subject to any applicable deadline, file with the Plan Administrator a
written claim for benefits under
the Plan in a
form and manner prescribed by the Plan Administrator.
(a)
If the claim is denied in whole or in part, the Plan Administrator shall notify the claimant of the adverse benefit determination within ninety (90) days after receipt of the claim.
(b)
The ninety (90) day period for making the claim determination may be extended for ninety (90) days if the Plan Administrator determines that special circumstances require an extension of time for determination of the claim, provided that the Plan Administrator notifies the claimant, prior to the expiration of the initial ninety (90) day period, of the special circumstances requiring an extension and the date by which a claim determination is expected to be made.
8.1.2
Notice of Initial Adverse Determination.
A notice of an adverse determination shall set forth in a manner calculated to be understood by the claimant:
(a)
the specific reasons for the adverse determination,
(b)
references to the specific provisions of the Plan Statement (or other applicable Plan document) on which the adverse determination is based,
(c)
a description of any additional material or information necessary to perfect the claim and an explanation of why such material or information is necessary, and
(d)
a description of the claim and review procedures, including the time limits applicable to such procedure, and a statement of the claimant’s right to bring a civil action under ERISA section 502(a) following an adverse determination on review.
8.1.3
Request for Review.
Within
sixty (60) days after receipt of an initial adverse benefit determination notice, the claimant may file with the Plan Administrator a written request for a review of the adverse determination and may, in connection therewith submit written comments, documents, records and other information relating to the claim benefits. Any request for review of the initial adverse determination not filed within sixty (60) days after receipt of the initial adverse determination notice shall be untimely.
8.1.4
Claim on Review.
If the claim, upon review, is denied in whole or in part, the Plan Administrator shall notify the claimant of the adverse benefit determination within sixty (60) days after receipt of such a request for review.
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(a)
The sixty (60) day period for deciding the claim on review may be extended for sixty (60) days if the Plan Administrator determines that special circumstances require an extension of time for determination of the claim, provided that the Plan Administrator notifies the claimant, prior to the expiration of the initial sixty (60) day period, of the special circumstances requiring an extension and the date by which a claim determination is expected to be made.
(b)
In the event that the time period is extended due to a claimant’s failure to submit information necessary to decide a claim on review, the claimant shall have sixty (60) days within which to provide the necessary information and the period for making the claim determination on review shall be tolled from the date on which the notification of the extension is sent to the claimant until the date on which the claimant responds to the request for additional information or, if earlier, the expiration of sixty (60) days.
(c)
The Plan Administrator’s review of a denied claim shall take into account all comments, documents, records, and other information submitted by the claimant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.
8.1.5
Notice of Adverse Determination for Claim on Review.
A
notice of an adverse determination for a claim on review shall set forth in a manner calculated to be understood by the claimant.
(a)
the specific reasons for the denial,
(b)
references to the specific provisions of the Plan Statement (or other applicable Plan document) on which the adverse determination is based,
(c)
a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claimant’s claim for benefits,
(d)
a statement describing any voluntary appeal procedures offered by the Plan and the claimant’s right to obtain information about such procedures, and
(e)
a statement of the claimant’s right to bring an action under ERISA section 502(a).
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8.2
Rules and Regulations.
8.2.1
Adoption of Rules.
Any rule not in conflict or at variance with the provisions hereof may be adopted by the Plan Administrator.
8.2.2
Specific Rules
.
(a)
No inquiry or question shall be deemed to be a claim or a request for a review of a denied claim unless made in accordance with the established claim procedures. The Plan Administrator may require that any claim for benefits and any request for a review of a denied claim be filed on forms to be furnished by the Plan Administrator upon request.
(b)
All decisions on claims and on requests for a review of denied claims shall be made by the Plan Administrator unless delegated as provided for in the Plan, in which case references in this Section 9 to the Plan Administrator shall be treated as references to the Plan Administrator’s delegate.
(c)
Claimants may be represented by a lawyer or other representative at their own expense, but the Plan Administrator reserves the right to require the claimant to furnish written authorization and establish reasonable procedures for determining whether an individual has been authorized to act on behalf of a claimant. A claimant’s representative shall be entitled to copies of all notices given to the claimant.
(d)
The decision of the Plan Administrator on a claim and on a request for a review of a denied claim may be provided to the claimant in electronic form instead of in writing at the discretion of the Plan Administrator.
(e)
In connection with the review of a denied claim, the claimant or the claimant’s representative shall be provided, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claimant’s claim for benefits.
(f)
The time period within which a benefit determination will be made shall begin to run at the time a claim or request for review is filed in accordance with the claims procedures, without regard to whether all the information necessary to make a benefit determination accompanies the filing.
(g)
The claims and review procedures shall be administered with appropriate safeguards so that benefit claim determinations are made in accordance with governing plan documents and, where appropriate, the plan provisions have been applied consistently with respect to similarly situated claimants.
(h)
The Plan Administrator may, in its discretion, rely on any applicable statute of limitation or deadline as a basis for denial of any claim.
8.3
Limitations and Exhaustion.
8.3.1
Claims.
No claim shall be considered under these administrative procedures unless it is filed with the Plan Administrator within two (2) years after the Participant knew (or
15
reasonably should have known) of the general nature of the dispute giving rise to the claim. Every untimely claim shall be denied by the Plan Administrator without regard to the merits of the claim.
8.3.2
Lawsuits.
No suit may be brought by or on behalf of any Participant or Beneficiary on any matter pertaining to this Plan unless the action is commenced in the proper forum within two (2) years from the earlier of:
(a)
the date the Participant knew (or reasonably should have known) of the general nature of the dispute giving rise to the action, or
(b)
the date the claim was denied.
8.3.3
Exhaustion of Remedies.
These administrative procedures are the exclusive means for resolving any dispute arising under this Plan. As to such matters:
(a)
no Participant or Beneficiary shall be permitted to litigate any such matter unless a timely claim has been filed under these administrative procedures and these administrative procedures have been exhausted, and
(b)
determinations by the Plan Administrator (including determinations as to whether the claim was timely filed) shall be afforded the maximum deference permitted by law.
8.3.4
Imputed Knowledge.
For the purpose of applying the deadlines to file a claim or a legal action, knowledge of all facts that a Participant knew or reasonably should have known shall be imputed to every claimant who is or claims to be a Beneficiary of the Participant or otherwise claims to derive an entitlement by reference to the Participant for the purpose of applying the previously specified periods.
16
SECTION 9
PLAN ADMINISTRATION
9.1
Plan Administration.
9.1.1
Administrator
. The Company’s Vice President, Pay and Benefits (or any successor thereto) is the “administrator” of the Plan for purposes of 3(16)(A) of ERISA. Except as expressly otherwise provided herein, the Plan Administrator shall control and manage the operation and administration of the Plan and make all decisions and determinations.
9.1.2
Authority and Delegation
. The Plan Administrator is authorized to:
(a)
Appoint one or more individuals or entities and delegate such of his or her powers and duties as he or she deems desirable to any individual or entity, in which case every reference herein made to Plan Administrator shall be deemed to mean or include the individual or entity as to matters within their jurisdiction. Such individual may be an officer or other employee of a Participating Employer or Affiliate, provided that any delegation to an employee of a Participating Employer or Affiliate will automatically terminate when he or she ceases to be an employee. Any delegation may be rescinded at any time; and
(b)
Select, employ and compensate from time to time such agents or consultants as the Plan Administrator may deem necessary or advisable in carrying out its duties and to rely on the advice and information provided by them.
9.1.3
Determinations
. The Plan Administrator shall make such determinations as may be required from time to time in the administration of this Plan. The Plan Administrator shall have the discretionary authority and responsibility to interpret and construe the Plan Statement and to determine all factual and legal questions under this Plan, including but not limited to the entitlement of Participants and Beneficiaries, and the amounts of their respective interests. Each decision of the Plan Administrator shall be final and binding upon all parties. Benefits under the Plan will be paid only if the Plan Administrator decides in its discretion that the applicant is entitled to them.
9.1.4
Reliance
. The Plan Administrator may act and rely upon all information reported to it hereunder and need not inquire into the accuracy thereof, nor be charged with any notice to the contrary.
9.1.5
Rules and Regulations
. Any rule, regulation, policy, practice or procedure not in conflict or at variance with the provisions hereof may be adopted by the Plan Administrator.
9.2
Conflict of Interest.
If any individual to whom authority has been delegated or redelegated hereunder shall also be a Participant in this Plan, such Participant shall have no authority with respect to any matter specially affecting such Participant’s individual interest hereunder or the interest of a person superior to him in the organization (as distinguished from the interests of all Participants and Beneficiaries or a broad class of Participants and Beneficiaries), all such authority being reserved exclusively to other individuals as the case may be, to the exclusion of such Participant, and such Participant shall act only in such Participant’s individual capacity in connection with any such matter.
17
9.3
Service of Process.
In the absence of any designation to the contrary by the Plan Administrator, the General Counsel of the Company is designated as the appropriate and exclusive agent for the receipt of service of process directed to this Plan in any legal proceeding, including arbitration, involving this Plan.
9.4
Choice of Law.
Except to the extent that federal law is controlling, this Plan Statement will be construed and enforced in accordance with the laws of the State of Minnesota.
9.5
Responsibility for Delegate.
No person shall be liable for an act or omission of another person with regard to a responsibility that has been allocated to or delegated to such other person pursuant to the terms of the Plan Statement or pursuant to procedures set forth in the Plan Statement.
9.6
Expenses.
All expenses of administering the benefits due under this Plan shall be borne by the Participating Employers.
9.7
Errors in Computations.
It is recognized that in the operation and administration of the Plan certain mathematical and accounting errors may be made or mistakes may arise by reason of factual errors in information supplied to the Plan Administrator or trustee. The Plan Administrator shall have power to cause such equitable adjustments to be made to correct for such errors as the Plan Administrator, in its sole discretion, considers appropriate. Such adjustments shall be final and binding on all persons.
9.8
Indemnification.
In addition to any other applicable provisions for indemnification, the Participating Employers jointly and severally agree to indemnify and hold harmless, to the extent permitted by law, each director, officer and Employee of the Participating Employers against any and all liabilities, losses, costs or expenses (including legal fees) of whatsoever kind and nature which may be imposed on, incurred by or asserted against such person at any time by reason of such person’s services as an administrator in connection with the Plan, but only if such person did not act dishonestly, or in bad faith, or in willful violation of the law or regulations under which such liability, loss, cost or expense arises.
9.9
Notice.
Any notice required under this Plan Statement may be waived by the person entitled thereto.
18
SECTION 10
CONSTRUCTION
10.1
ERISA Status.
The Plan was adopted and is maintained with the understanding that it is an unfunded plan maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees as provided in section 201(2), section 301(a)(3) and section 401(a)(1) of ERISA. The Plan shall be interpreted and administered accordingly.
10.2
IRC Status.
The Plan is intended to be a nonqualified deferred compensation arrangement that will comply in form and operation with the requirements of Code section 409A and the Plan will be construed and administered in a manner that is consistent with and gives effect to such intention.
10.3
Rules of Document Construction.
In the event any provision of the Plan Statement is held invalid, void or unenforceable, the same shall not affect, in any respect whatsoever, the validity of any other provision of the Plan. The titles given to the various Sections of the Plan Statement are inserted for convenience of reference only and are not part of the Plan Statement, and they shall not be considered in determining the scope, purpose, meaning or intent of any provision hereof. The provisions of the Plan Statement shall be construed as a whole in such manner as to carry out the provisions thereof and shall not be construed separately without relation to the context.
10.4
References
to Laws.
Any reference in the Plan Statement to a statute or regulation shall be considered also to mean and refer to any subsequent amendment or replacement of that statute or regulation unless, under the circumstances, it would be inappropriate to do so.
10.5
Appendices.
Plan provisions that have application to a limited number of Participants or that otherwise do not apply equally to all Participants may be described in an appendix to the Plan Statement. In the event of a conflict between the terms of a Plan Statement appendix and the terms of the remainder of the Plan Statement, the terms of the Plan Statement appendix control.
19
Exhibit (10)F
TARGET CORPORATION
OFFICER DEFERRED COMPENSATION PLAN
ARTICLE 1
PURPOSE
The purpose of this Target Corporation Officer Deferred Compensation Plan, formerly known as the Target Corporation Deferred Compensation Plan — Senior Management Group, (the “Plan”) is to provide a means whereby Target Corporation (the “Company”) may afford financial security to a select group of employees who are in the Senior Management Group of the Company and its subsidiaries and who have rendered and continue to render valuable services to the Company or its subsidiaries and who make an important contribution towards the Company’s continued growth and success, by providing for additional future compensation so that such employees may be retained and their productive efforts encouraged. Participants ceased to be eligible to defer Earnings into the Plan after December 31, 1996. The Plan, which is intended to comply with Code section 409A, was amended and restated effective January 1, 2009. The Plan was amended to incorporate the Company’s recoupment policy effective January 13, 2010. This Plan document, which was amended to reflect Plan administration and amendment changes authorized by the Board of Directors on November 10, 2010 and modification of the Change in Control definition, is effective June 8, 2011.
ARTICLE 2
DEFINITIONS AND CERTAIN PROVISIONS
Active Status
. “Active Status” means the Participant is currently employed by the Company or has terminated employment under Normal or Early Retirement or under other conditions described in Section 5.2 and has not yet begun to receive payments from the Plan associated with a particular Deferral Account.
Affiliate
. An “Affiliate” is the Company and all persons, with whom the Company would be considered a single employer under Code section 414(b) or 414(c).
Beneficiary
. “Beneficiary” means the person or persons designated as such in accordance with Article 6.
Benefit Deferral Period
. “Benefit Deferral Period” means that period of one (1) or four (4) Plan Years as determined pursuant to Article 4 over which a Participant defers a portion of such Participant’s Earnings.
Committee
. “Committee” means the plan administration committee appointed to administer the Plan pursuant to Article 3; provided, solely for purposes of the Plan amendment provisions of Section 7.1, “Committee” means the Chief Executive Officer and the senior ranking Human Resources officer, jointly or individually.
Cumulative Deferral Amount
. “Cumulative Deferral Amount” means the total cumulative amount by which a Participant’s Earnings must be reduced over the period prescribed in Section 4.1. If for a Plan Year a Matching Allocation for an Employee who is a member of the Senior Management Group of the Company pursuant to the Target Corporation Supplemental Retirement, Savings and Employee Stock Ownership Plan (“SRSP”) cannot be made because the Before Tax
1
Deposits or After Tax Deposits elected by the Employee are reduced to comply with the provisions of the SRSP, “Cumulative Deferral Amount” also includes the amount of the Matching Allocation that cannot be made.
Declared Rate
. “Declared Rate” means with respect to any Plan Year the applicable rate announced in advance by the Committee for such Plan Year. Under no circumstances shall the minimum rate be less than twelve percent (12%) per annum and the maximum rate shall not exceed twenty percent (20%) per annum. The rate to be announced, subject to the minimum and maximum percentages referenced above, shall be a calculated rate using the following formula:
Moody’s Corporate Bond Yield Average
. Monthly Average Corporates as published by Moody’s Investors Service, Inc. or its successor (or if said index is no longer available, its successor index, or if no successor index exists, such other index as selected by the Committee as most closely replicates the measure produced by said Moody index) for the month of June for the year preceding the subject Plan Year to which the Declared Rate shall apply, said rate of return to be rounded to the nearest .10% of said reported rate, to which percentage rate shall be added six (6) percentage points (e.g. an index of 7.16% rounded to 7.20% plus 6% equals a 13.2% “Declared Rate”). Provided however, if any tax or insurance change shall occur which in the reasoned judgment of the Committee shall have an ongoing adverse economic effect on the underlying COLI financing assumptions related to the Plan, then the Committee may adjust said Declared Rate to reflect such adverse economic impact but in no event below the twelve percent (12%) minimum referenced in the first paragraph hereof.
Deferral Account
. “Deferral Account” means the account maintained on the books of account of the Company pursuant to Section 4.4.
Early Retirement
. “Early Retirement” means the Participant’s Termination of Employment for a reason other than death on or after the date the Participant attains age 55 and prior to the date the Participant attains age 65.
Earnings
. “Earnings” means the base pay and incentive pay paid to a Participant by the Company or a subsidiary, excluding car and other allowances and other cash and non-cash compensation.
Eligible Employee
. “Eligible Employee” means each Employee in the Senior Management Group of the Company who executes an Enrollment Agreement to participate in the Plan.
Employee
. “Employee” means any person employed by the Employer on a regular salaried basis, including officers of the Employer.
Employer
. “Employer” means the Company and any of its wholly owned subsidiaries.
Enrollment Agreement
. “Enrollment Agreement” means the written agreement entered into by the Employer and an Eligible Employee pursuant to which the Eligible Employee becomes a Participant in the Plan. In the sole discretion of the Company, authorization forms filed by any Participant by which the Participant makes the elections provided for by this Plan may be treated as a completed and fully executed Enrollment Agreement for all purposes under the Plan.
2
Normal Retirement
. “Normal Retirement” means the Termination of Employment of a Participant with the Employer for reasons other than death on or after the date the Participant attains age 65.
Participant
. “Participant” means an Eligible Employee who has filed a completed and executed Enrollment Agreement or authorization form with the Committee and is participating in the Plan in accordance with the provisions of Article 4. “Participant” also means an Employee who is a member of the Senior Management Group of the Company who has a Cumulative Deferral Amount based on Matching Allocation that could not be made to the SRSP.
Pay Status
. “Pay Status” means that the Participant has had a Termination of Employment with the Company and has begun to receive payments from the Plan associated with a particular Deferral Account.
Plan Year
. “Plan Year” means the calendar year beginning January 1 and ending December 31.
Specified Employee
. For purposes of complying with the requirements of Code section 409A(a)(2)(B)(i) (relating to the 6 month suspension of certain benefit distributions), an individual is a “Specified Employee” if on his or her Termination of Employment, the Company or other Affiliate has stock that is traded on an established securities market within the meaning of Code section 409A(a)(2)(B) and such individual is a “key employee” (defined below). For this purpose, an individual is a “key employee” during the 12-month period beginning on April 1 immediately following the calendar year in which the individual was employed by the Company and other Affiliates, and satisfied, at any time within such calendar year, the requirements of Code section 416(i)(1)(A)(i), (ii) or (iii) (without regard to Code section 416(i)(5)). An individual will not be treated as a Specified Employee if the individual is not required to be treated as a Specified Employee under Treasury Regulations issued under Code section 409A.
Termination of Employment
.
(a)
For purposes of determining entitlement to or amount of benefits under the Plan, “Termination of Employment” means a severance of a Participant’s employment relationship with the Employer and all other Affiliates, for any reason.
(b)
For purposes of determining when a distribution will be made under the Plan, a “Termination of Employment” will be deemed to occur if, based on the relevant facts and circumstances to the Participant, the Employer, all other Affiliates, and Participant reasonably anticipate that the level of bona fide future services to be performed by the Participant for the Employer and all other Affiliates will permanently decrease to no more than 20% of the average level of bona fide services performed over the immediately preceding 36-month period.
(c)
A bona fide leave of absence that is six months or less, or during which an individual retains a reemployment right, will not cause a Termination of Employment. In the case of a leave of absence without a right of reemployment that exceeds the time periods described in this paragraph, a Termination of Employment will be deemed to occur once the leave of absence exceeds six months.
3
(d)
Notwithstanding the foregoing, a Termination of Employment shall not occur unless such termination also qualifies as a “separation from service,” as defined under Code section 409A and related guidance thereunder.
ARTICLE 3
ADMINISTRATION OF THE PLAN
A Committee (of one or more individuals) shall be appointed by the Board of Directors of the Company to administer the Plan and to establish, adopt or revise such rules and regulations as it may deem necessary or advisable for the administration of the Plan. The Committee shall have discretionary authority to determine eligibility for benefits and to construe the terms of the Plan. Interpretations of the Plan by the Committee shall be conclusive. Members of the Committee shall be eligible to participate in the Plan while serving as members of the Committee, but a member of the Committee shall not vote or act upon any matter which relates solely to such member’s interest in the Plan as a Participant.
4
ARTICLE 4
PARTICIPATION
4.1
Election to Participate
. Effective for Plan Years beginning on and after January 1, 1997, Participants ceased to be eligible to defer Earnings into this Plan. For Plan Years beginning prior to January 1, 1997, any Employee who is a member of the Senior Management Group of the Company may enroll in the Plan by filing a completed and fully executed Enrollment Agreement or authorization form with the Committee. Pursuant to said Enrollment Agreement or authorization form, the Employee shall irrevocably designate a dollar amount by which the aggregate Earnings of such Participant would be reduced over one (1) or four (4) Plan Years next following the execution of the Enrollment Agreement (the “Benefit Deferral Period”), provided, however, that:
(a)
Minimum Deferral
. The reduction for any Plan Year shall not be less than Five Thousand Dollars ($5,000.00)
(b)
Reduction in Earnings
.
(i)
In General
. Except as otherwise provided in this Section 4.1, the Earnings of the Participant for each of the Plan Years in the Benefit Deferral Period shall be reduced by the amount specified in the Enrollment Agreement (including any authorization form) applicable to such Plan Year.
(ii)
Accelerated Reduction
. A Participant may elect in a written notice with the consent of the Committee to increase the amount of the reduction of Earnings otherwise provided for by Section 4.1(b)(i) for any of the Plan Years remaining in the Benefit Deferral Period, provided, however, that any such increase in the reduction of Earnings for any remaining Plan Years in the Benefit Deferral Period shall not increase the Cumulative Deferral Amount, but shall act to shorten the length of the Benefit Deferral Period.
(c)
Maximum Reduction in Earnings
. A Participant may not elect a Cumulative Deferral Amount or an increase in reduction of Earnings pursuant to Section 4.1(b)(ii), or any combination of the two, that would cause the aggregate total reduction in Earnings in any Plan Year to exceed twenty-five percent (25%) of the base pay and one hundred percent (100%) of the incentive pay payable during such Plan Year up to a total of $250,000 per year plus the amount of any payout made pursuant to Section 5.4, or such greater percent of base pay and/or incentive pay or greater total amount as the Committee may permit in its sole discretion. In the event that a Participant elects a Cumulative Deferral Amount or increase in reduction of Earnings that would violate the limitation described in this paragraph (c), the election shall be valid except that the Cumulative Deferral Amount or increase in reduction of Earnings so elected shall automatically be reduced to comply with such limitation, whichever is most appropriate in the sole discretion of the Committee.
4.2
Deferral Accounts
. The Committee shall establish and maintain a separate Deferral Account for each Participant. The amount by which a Participant’s Earnings are reduced pursuant to Section 4.1 shall be credited by the Employer to the Participant’s Deferral Account on the fifteenth (15th) day of the month in which such Earnings would otherwise have been paid. The Participant’s Deferral Account shall be credited with the annual SRSP lost Matching Allocation on January 15 following the year of the lost Matching Allocation. Effective for Plan Years beginning on
5
and after January 1, 1997, Participants ceased to be eligible for the annual SRSP lost Matching Allocation. Such Deferral Account shall be debited by the amount of any payments made by the Employer to the Participant or the Participant’s Beneficiary pursuant to this Plan.
(a)
Normal and Early Retirement Interest
. Each Deferral Account of a Participant who retires as a Normal or Early Retirement shall be deemed to bear interest, in accordance with Appendix A, Section 1, from the date such Deferral Account was established through the date of commencement of payment of the Normal or Early Retirement Benefit at a rate equal to the Declared Rate which is announced by the Committee for each Plan Year. Following the date of commencement of payment of the Normal or Early Retirement Benefit, a Participant’s Deferral Account shall be deemed to bear interest on the balance of such Deferral Account in accordance with Appendix A, Section 2.
(b)
Other Interest
. In the case of any Termination of Employment other than by Normal or Early Retirement or upon the Participant’s termination of enrollment in this Plan pursuant to Section 5.2(b), the Participant’s Deferral Account shall be deemed to bear interest from the date such Deferral Account was established through the date of the earlier of Termination of Employment or termination of enrollment in this Plan under Section 5.2(c) on the balance in such Deferral Account in accordance with Appendix A, Section 1, except that the interest rate used to calculate interest earned in the Deferral Account shall be ten percent (10%) per annum, provided, however, that if more than five (5) years have elapsed since the first day of the Benefit Deferral Period, the Participant’s Deferral Account shall be deemed to bear interest from the date such Deferral Account was established through the date of the earlier of Termination of Employment or termination of enrollment in this Plan on the balance in such Deferral Account at a rate equal to the Declared Rate which is announced by the Committee for each Plan Year, in accordance with Appendix A, Section 1. Following the earlier of the date of commencement of payment of the Termination Benefit or the date of termination of enrollment in this Plan, a Participant’s Deferral Account shall be deemed to bear interest on the balance in such Deferral Account in accordance with Appendix A, Section 1, if the Participant is in Active Status with respect to the Deferral Account or in accordance with Appendix A, Section 2, if the Participant is in Pay Status with respect to the Deferral Account. However, in either case the interest rate used to calculate interest earned in the Deferral Account shall be twelve percent (12%) per annum. Notwithstanding anything contained herein to the contrary, if a Participant has begun receiving benefits under this Plan and the calculation of future benefits, using the method of calculation set forth on Appendix A causes a reduction in benefits, the future payments shall be made in accordance with the method used at the time of the Participant’s initial payment.
4.3
Rollover Deferred Compensation Account
. In its sole discretion, the Committee may permit a Participant to make a special rollover election to transfer any amounts which were previously deferred under the Company’s existing deferred compensation plans to this Plan. Notwithstanding the foregoing, no such special rollover elections or transfers to this Plan shall be permitted after December 31, 2008.
In such event, the Committee shall establish and maintain a separate Rollover Deferral Account for each Participant who makes a rollover transfer to this Plan. Such Rollover Deferral Account shall be deemed to bear interest at the same rate and subject to the same conditions as other Deferral Accounts pursuant to Section 4.2. Each Participant who makes a rollover transfer to a Rollover Deferral Account shall be treated for purposes of determining benefits under the Plan as
6
having a separate Cumulative Deferral Amount and Deferral Account which shall initially be in the amount of the rollover transfer. A Participant who makes a rollover transfer shall be deemed to waive all rights under the Company’s existing deferred compensation plans from which rollover transfers are made with respect to the amounts transferred to this Plan, including the right to make elections regarding the time or manner of payment as permitted thereunder. Rollover transfers shall be subject to the minimum deferral amount set forth in Section 4.1(a), but shall not be subject to any maximum deferral limitation.
4.4
Valuation of Accounts
. The value of a Deferral Account as of any date shall equal the amounts theretofore credited to such account less any payments debited to such account plus the interest deemed to be earned on such account in accordance with Section 4.2. Interest shall be credited in accordance with Appendix A.
4.5
Statement of Accounts
. The Committee shall submit to each Participant, within one hundred twenty (120) days after the close of each Plan Year, a statement in such form as the Committee deems desirable setting forth the balance standing to the credit of each Participant in his Deferral Account.
4.6
No Future Deferrals
. No Employee or Participant can make additional deferrals into the Plan.
7
ARTICLE 5
BENEFITS
5.1
Normal or Early Retirement
. Upon a Participant’s Normal or Early Retirement, the payment of benefits shall commence on the first day of the month following such Termination of Employment, or following such later date which the Participant elected in his Enrollment Agreement (including any authorization form). A Participant may elect in his Enrollment Agreement (including any authorization form) to have payments commence from one (1) to ten (10) years following Termination of Employment, but not later than age 65 (or five (5) years after the first day of the Benefit Deferral Period, if later).
(a)
Single Participant
. In the case of a Participant who is single when payments commence, the Employer shall make periodic payments to the Participant in an amount in accordance with Appendix A, Section 2.B., for the life of the Participant, but not less than fifteen (15) years. The payments shall be the actuarial equivalent of the aggregate of the Participant’s Deferral Account at the time payments commence and the interest that will accrue on the unpaid balance in such Deferral Account during the payment period pursuant to Section 4.2(a). The payment amount will be redetermined annually to reflect the changes in the Declared Rate.
(b)
Married Participant
. In the case of a Participant who is married when payments commence, the Employer shall make actuarially reduced payments in accordance with Appendix A, Section 2.B., to the Participant for his life and thereafter, if the Participant is survived by a spouse who was married to the Participant when Normal or Early Retirement Benefit payments commenced, shall continue to make payments to the Participant’s spouse for his life, with payments to be made for an aggregate period of not less than fifteen (15) years. The payments shall be the actuarial equivalent of the payments which would be made to the Participant pursuant to Section 5.1(a) if he were single. The monthly amount of payments will be redetermined annually to reflect changes in the Declared Rate.
5.2
Termination Benefit
.
(a)
Terminations of Employment
. If a Participant has a Termination of Employment for any reason other than death or Normal or Early Retirement, the Employer shall pay to the Participant in one immediate lump sum an amount (the “Termination Benefit”) equal to the value of the Deferral Account as of the date of payment and such Participant shall be entitled to no further benefits under this Plan. Upon Termination of Employment (as defined in paragraph (a) of that definition) the Participant shall immediately cease to be eligible for any benefits under the Plan other than the Termination Benefit. Payment will be made as soon as practicable but not more than 90 days following the Participant’s Termination of Employment or at such later time provided in Section 5.3. Except as provided in paragraph (b) below, no other benefit shall be payable to either the Participant or any Beneficiary of such Participant.
(b)
Certain Terminations of Employment
. If a Participant has a Termination of Employment after attaining age 50, but prior to attaining age 55, and the Participant has worked for the Company for at least 10 years, and has received an ICP Contract under the Company’s Income Continuance Policy that is signed by Participant and
8
Company and not rescinded, the Participant will be entitled to an additional, immediate lump sum distribution equal to the difference between:
(i)
The actuarial equivalent lump sum value of the periodic payments scheduled to be made to the Participant determined in accordance with Appendix A, Section 2.B for the life of the Participant, but not less than fifteen (15) years payments; and
(ii)
The value of the Participant’s Deferral Account.
(c)
Termination of Enrollment in Plan
. With the written consent of the Committee, a Participant may terminate his enrollment in the Plan by filing with the Committee a written request to terminate enrollment. The Committee will consent to the termination of a Participant’s enrollment in the Plan in the event of an unforeseeable financial emergency of the Participant. An unforeseeable financial emergency shall mean an unexpected need for cash arising from an illness, casualty loss, sudden financial reversal or other such unforeseeable occurrence, but only if and to the extent such unforeseeable emergency constitutes an “unforeseeable emergency” under Code section 409A. Cash needs arising from foreseeable events such as the purchase of a house or education expenses for children shall not be considered to be the result of an unforeseeable financial emergency. Upon termination of enrollment, no further reductions shall be made in the Participant’s Earnings pursuant to his Enrollment Agreement, and the Participant shall immediately cease to be eligible for any benefits under the Plan other than the Termination Benefit. No other benefit shall be payable to either the Participant or any Beneficiary of such Participant. In its sole discretion, to the extent necessary to relieve the unforeseeable emergency, the Committee may pay such benefit on a date earlier than the Participant’s Termination of Employment with the Employer. Following termination of enrollment in the Plan, a Participant’s Deferral Account shall be deemed to bear interest on the balance in such Deferral Account in accordance with Appendix A, Section 1, except that the interest rate used to calculate interest earned in the Deferral Account shall be twelve percent (12%) per annum.
5.3
Lump Sum Election
. Other provisions of Section 5.1 and Section 5.2 notwithstanding, if a Participant in his Enrollment Agreement (including any authorization form) has elected a lump sum payment to be made after his Termination of Employment, the amount of his Deferral Account (including interest) for the Benefit Deferral Period covered by that Agreement shall be paid to the Participant in a lump sum at the time specified in that Agreement.
5.4
[
Deleted
]
5.5
Survivor Benefits
. Paragraphs (a) and (b) shall apply to Participants whose death occurs prior to Termination of Employment. Paragraph (c) reflects the survivor benefit rules that apply to annuity benefits that are payable on account of a Participant’s Termination of Employment.
(a)
If a Participant dies prior to his or her Termination of Employment prior to attaining age 55, the Employer will pay to the Participant’s Beneficiary an annual benefit for the greater of:
(i)
ten (10) years, or
9
(ii)
until the Participant would otherwise have attained age 65,
in an amount equal to fifty percent (50%) of the Cumulative Deferral Amount; provided, however, if the Committee determines that installment distribution of the Participant’s Deferral Account (determined below) would produce a greater benefit, such Deferral Account balance shall be paid to the Participant’s Beneficiary in equal annual installments in accordance with Appendix A, Section 2.C.2, but over the period specified above. Payments will commence immediately (within 60 days) following the Participant’s death, and will be made each subsequent anniversary of the Participant’s death.
(b)
If a Participant dies prior to Termination of Employment after attaining age 55, the Employer will pay to the Participant’s Beneficiary the benefit that such Participant would have received had the Participant retired on the day prior to such Participant’s death. Payments will commence immediately (within 60 days) following the Participant’s death, and will be made each subsequent anniversary of the Participant’s death. Additionally, if the present value of the benefit described in this Section 5.5(b) is less than the present value of the benefit described in Section 5.5(a), using in each case twelve percent (12%) as the discount factor, then the Beneficiary shall receive an immediate lump sum payment equal to difference of such present values.
(c)
If a Participant (who was unmarried at the commencement of the payment of any Early or Normal Retirement Benefit, or whose spouse who was married to the Participant at the time of commencement of payment of any Early or Normal Retirement Benefit predeceases the Participant) dies after the commencement of the payment of any Early or Normal Retirement Benefit, the Employer will pay to the Participant’s Beneficiary the remaining installments of any such benefit for the balance of the fifteen (15) years minimum payment period. If a spouse who was married to the Participant at the time of commencement of payment of the Early or Normal Retirement Benefit survives beyond such fifteen (15) years minimum payment period, payments shall continue to be made to the spouse until the spouse’s death. If the spouse who was married to the Participant at the time of commencement of payment of the Early or Normal Retirement Benefit survives the Participant, but does not survive past the fifteen (15) years minimum payment period, the Employer will pay to the Participant’s Beneficiary the remaining installments of any such benefit for the balance of the fifteen (15) years minimum payment period. In computing any benefits to be paid following the Participant’s death pursuant to this paragraph (c), the Participant’s Deferral Account shall be deemed to bear interest following the Participant’s death on the balance in such Deferral Account annually in accordance with Appendix A, Section 2.B.
5.6
Small Benefit
. Subject to Section 5.8, in the event that the vested Deferral Account balance under the Plan of a Participant who has died or experienced a Termination of Employment is less than the applicable dollar amount under Code section 402(g)(1)(B) for that Plan Year as of the date on which the Company makes such determinations, the Company reserves the right to have the Participant’s entire Deferral Account paid in the form of a single lump sum payment provided the Company’s exercise of discretion complies with the requirements of Treas. Reg. Sec. 1.409A-3(j)(4)(v).
5.7
Withholding
. To the extent required by the law in effect at the time payments are made, the Employer shall withhold from payments made hereunder the minimum taxes that the
10
Employer reasonably determines is required to be withheld by the federal or any state or local government.
5.8
Delay in Payment Required by Code Section 409A
. Notwithstanding any other provision in this Article 5, if a Participant is a Specified Employee at Termination of Employment, then any distributions arising on account of the Participant’s Termination of Employment (other than on account of death) shall be suspended and not be made until (6) months have elapsed since such Participant’s Termination of Employment (or, if earlier, upon the date of the Participant’s death). Any payments that were otherwise payable during the six-month suspension period referred to in the preceding sentence, will be paid within 60 days after the end of such six-month suspension period. During the six-month suspension period, delayed payments will earn interest at the Declared Rate.
5.9
Acceleration of Distributions
. The Committee in its sole discretion may exercise discretion to accelerate the distribution of any payment under this Plan to the extent allowed under Code section 409A.
5.10
Delay of Distributions
. The Committee in its sole discretion may exercise discretion to delay the distribution of any payment under this Plan to the extent allowed under Code section 409A, including, but not limited to, as necessary to maximize the Company’s tax deductions as allowed pursuant to Code section 162(m) or to avoid violation of federal securities or other applicable law.
11
ARTICLE 6
BENEFICIARY DESIGNATION
Each Participant shall have the right, at any time, to designate any person or persons as Beneficiary or Beneficiaries to whom payment under this Plan shall be made in the event of the Participant’s death prior to complete distribution to the Participant of the benefits due under the Plan. Each Beneficiary designation shall become effective only when filed in writing with the Committee during the Participant’s lifetime on a form prescribed by the Committee.
The filing of a new Beneficiary designation form will cancel all Beneficiary designations previously filed. Any finalized divorce or marriage (other than a common law marriage) of a Participant subsequent to the date of filing of a Beneficiary designation form shall revoke such designation unless in the case of divorce the previous spouse was not designated as Beneficiary and unless in the case of marriage the Participant’s new spouse had previously been designated as Beneficiary. The spouse of a married Participant domiciled in a community property jurisdiction shall join in any designation of Beneficiary or Beneficiaries other than the spouse.
If a Participant fails to designate a Beneficiary as provided above, or if his Beneficiary designation is revoked by marriage, divorce, or otherwise without execution of a new designation, or if all designated Beneficiaries predecease the Participant or die prior to complete distribution of the Participant’s benefits, then the Committee shall direct the distribution of such benefits to the Participant’s estate.
12
ARTICLE 7
AMENDMENT AND TERMINATION OF PLAN
7.1
Amendment
. The Board of Directors of the Company may at any time amend the Plan, in whole or in part for any reason, including but not limited to tax, accounting or insurance changes, a result of which may be to terminate the Plan for future deferrals (excluding from such power to terminate future deferrals those future deferrals provided for in Section 5.4 Early Payout Option); provided, however, that no amendment shall be effective to decrease the benefits, nature or timing thereof payable under the Plan to any Participant with respect to deferrals made (and benefits thereafter accruing) prior to the date of such amendment. Written notice of any amendment shall be given each Participant then participating in the Plan. Notwithstanding the above, the Board authorizes the Committee to amend the Plan to make any other amendments to this Plan deemed necessary or desirable by the Committee for the operation and administration of this Plan provided such amendment does not have a material financial impact on the Company. Such changes will be considered an Amendment to this Plan and shall be effective without further action by the Board.
7.2
Termination of Plan
. The Plan shall terminate only under the following circumstances.
(a)
General Rule
. To the extent that a Participant’s benefit under the Plan will be immediately included in the income of the Participant, as determined by a court of competent jurisdiction or the Internal Revenue Service, to the extent permitted under Code section 409A, the Board may terminate this Plan, in whole or in part, as it relates to the impacted Participant. Upon any such termination of the Plan, the Employer will pay the respective Participant the value of the Participant’s Deferral Accounts in an immediate lump sum, determined as if the Participant had a Termination of Employment on the date of such termination of the Plan as provided under Section 5.2(a) hereof.
(b)
Plan Termination and Liquidation on Account of a Change-in-Control
. Upon a Change-in-Control, as defined in Section 7.3 hereof, the Plan will terminate and payment of all amounts under the Plan will be accelerated if and to the extent provided in this Section 7.2(b) hereof.
(i)
The Plan will be terminated effective as of the first date on which there has occurred both (i) a Change-in-Control under Section 7.3, and (ii) a funding of the trust on account of such Change-in-Control (referred to herein as the “Plan termination effective date”) unless, prior to such Plan termination effective date, the Board affirmatively determines that the Plan will not be terminated as of such effective date. The Board will be deemed to have taken action to irrevocably terminate the Plan as of the Plan termination effective date by its failure to affirmatively determine that the Plan will not terminate as of such date.
(ii)
The determination by the Board under paragraph (b)(i) constitutes a determination that such termination will satisfy the requirements of Code section 409A, including an agreement by the Company that it will take such additional action or refrain from taking such action as may be necessary to satisfy the requirements necessary to terminate and liquidate the Plan under paragraph (iii) below.
13
(iii)
In the event the Board does not affirmatively determine not to terminate the Plan as provided in paragraph (b)(i), such termination shall be subject to either (A) or (B), as follows:
(A)
If the Change-in-Control qualifies as a “change in control event” for purposes of Code section 409A, payment of all amounts under the Plan will be accelerated and made in a lump sum as soon a administratively practicable but not more than 90 days following the Plan termination effective date, provided the requirements of Treasury Regulation Section 1.409A-3(j)(4)((ix)(B) have been satisfied.
(B)
If the Change-in-Control does not qualify as a “change in control event” for purposes of Code section 409A, payment of all amounts under the Plan will be accelerated and made in a lump sum as soon as administratively practicable but not more than 90 days following the 12 month anniversary of the Plan termination effective date, provided the requirements of Treasury Regulation Section 1.409A-3(j)(4)(ix)(C) have been satisfied.
(iv)
Any lump sums paid pursuant to this Section 7.2(b) will be calculated as provided in Appendix B of the Target Corporation Deferred Compensation Trust Agreement.
7.3
Change-in-Control Definition
. “Change-in-Control” means one of the following:
(a)
Individuals who are Continuing Directors cease for any reason to constitute 50% or more of the directors of the Company; or
(b)
30% or more of the outstanding voting power of the Voting Stock of the Company is acquired or beneficially owned (within the meaning of Rule 13d-3 under the Exchange Act) by any Person, other than an entity resulting from a Business Combination in which clauses (x) and (y) of Section 7.3(c) apply; or
(c)
the consummation of a merger or consolidation of the Company with or into another entity, a statutory share exchange, a sale or other disposition (in one transaction or a series of transactions) of all or substantially all of the Company’s assets or a similar business combination (each, a “Business Combination”), in each case unless, immediately following such Business Combination, (x) all or substantially all of the beneficial owners (within the meaning of Rule 13d-3 under the Exchange Act) of the Company’s Voting Stock immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of the voting power of the then outstanding shares of voting stock (or comparable voting equity interests) of the surviving or acquiring entity resulting from such Business Combination (including such beneficial ownership of an entity that, as a result of such transaction, owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries), in substantially the same proportions (as compared to the other beneficial owners of the Company’s Voting
14
Stock immediately prior to such Business Combination) as their beneficial ownership of the Company’s Voting Stock immediately prior to such Business Combination, and (y) no Person beneficially owns, directly or indirectly, 30% or more of the voting power of the outstanding voting stock (or comparable equity interests) of the surviving or acquiring entity (other than a direct or indirect parent entity of the surviving or acquiring entity, that, after giving effect to the Business Combination, beneficially owns, directly or indirectly, 100% of the outstanding voting stock (or comparable equity interests) of the surviving or acquiring entity); or
(d)
approval by the shareholders of a definitive agreement or plan to liquidate or dissolve the Company.
For purposes of this Section 7.3:
“Continuing Director” means an individual (A) who is, as of June 8, 2011, a director of the Company, or (B) who becomes a director of the Company after June 8, 2011 and whose initial appointment, or nomination for election by the Company’s shareholders, was approved by at least a majority of the then Continuing Directors; provided, however, that any individual whose initial assumption of office occurs as a result of either an actual or threatened contested election by any Person (other than the Board of Directors) seeking the election of such nominee in which the number of nominees exceeds the number of directors to be elected shall not be a Continuing Director;
“Person” means any individual, firm, corporation or other entity and shall include any group comprised of any person and any other person with whom such person or any affiliate or associate (as defined in Rule 14a-1(a) of the Exchange Act) of such person has any agreement, arrangement or understanding, directly or indirectly, for the purpose of acquiring, holding, voting or disposing of any capital stock of the Company;
“Voting Stock” means all then-outstanding capital stock of the Company entitled to vote generally in the election of directors of the Company; and
“Exchange Act” means the Securities Exchange Act of 1934, as amended and in effect from time to time, and the regulations promulgated thereunder.
ARTICLE 8
MISCELLANEOUS
8.1
Unsecured General Creditor
. Participants and their Beneficiaries, heirs, successors, and assigns shall have no legal or equitable rights, claims, or interests in any specific property or assets of Employer, nor shall they be beneficiaries of, or have any rights, claims, or interests in any life insurance policies, annuity contracts, or the proceeds therefrom owned or which may be acquired by Employer (“Policies”). Such Policies or other assets of Employer shall not be held under any trust for the benefit of Participants, their Beneficiaries, heirs, successors, or assigns, or held in any way as collateral security for the fulfilling of the obligations of Employer under this Plan. Any and all of Employer’s assets and Policies shall be, and remain, the general, unpledged, unrestricted assets of Employer. Employer’s obligation under the Plan shall be merely that of an unfunded and unsecured promise of Employer to pay money in the future.
15
8.2
Nonassignability
. Neither a Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, hypothecate or convey in advance of actual receipt the amounts, if any, payable hereunder, or any part thereof, or interest therein which are, and all rights to which are, expressly declared to be unassignable and non-transferable. No part of the amounts payable shall, prior to actual payment, be subject to seizure or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, nor be transferable by operation of law in the event of a Participant’s or any other person’s bankruptcy or insolvency.
8.3
Compensation Recovery (Recoupment)
. Notwithstanding any other provision of the Plan, a Participant who engaged in intentional misconduct that contributed directly or indirectly, in whole or in part, to the need for a restatement of the Company’s consolidated financial statements and who becomes subject to the Company’s recoupment policy as adopted by the Compensation Committee of the Company’s Board of Directors and amended from time to time (“Recoupment Policy”) may have all or a portion of any distributions payable to the Participant or his or her Beneficiary recovered by the Company. If distributions to or on behalf of a Participant have commenced and the Participant is subject to a claim for recovery under the Recoupment Policy, then the Company may, subject to any limitations under Code section 409A, retain all or any portion of the Participant’s (or his or her Beneficiary’s) taxable distribution, net of state, federal or foreign tax withholding, to satisfy such claim.
8.4
Employment Not Guaranteed
. Nothing contained in this Plan nor any action taken hereunder shall be construed as a contract of employment or as giving any Employee any right to be retained in the employ of the Employer.
8.5
Protective Provisions
. Each Participant shall cooperate with the Employer by furnishing any and all information requested by the Employer in order to facilitate the payment of benefits hereunder, taking such physical examinations as the Employer may deem necessary and taking such other relevant action as may be requested by the Employer. If a Participant refuses so to cooperate, the Employer shall have no further obligation to the Participant under the Plan, other than payment to such Participant of the cumulative reductions in Earnings theretofore made pursuant to this Plan. If a Participant commits suicide during the two (2) year period beginning on the later of (a) the date of adoption of this Plan or (b) the first day of the first Plan Year of such Participant’s participation in the Plan, or if the Participant makes any material misstatement of information or nondisclosure of medical history, then no benefits will be payable hereunder to such Participant or his Beneficiary, other than payment to such Participant of the cumulative reductions in Earnings theretofore made pursuant to this Plan, provided, that in the Employer’s sole discretion, benefits may be payable in an amount reduced to compensate the Employer for any loss, cost, damage or expense suffered or incurred by the Employer as a result in any way of such misstatement or nondisclosure.
8.6
Gender, Singular and Plural
. All pronouns and any variations thereof shall be deemed to refer to the masculine or feminine as the identity of the person or persons may require. As the context may require, the singular may be read as the plural and the plural as the singular.
8.7
Captions
. The captions of the articles, sections, and paragraphs of this Plan are for convenience only and shall not control or affect the meaning or construction of any of its provisions.
16
8.8
Validity
. In the event any provision of this Plan is held invalid, void, or unenforceable, the same shall not affect, in any respect whatsoever, the validity of any other provision of this Plan.
8.9
Notice
. Any notice or filing required or permitted to be given to the Committee under the Plan shall be sufficient if in writing and hand delivered, or sent by registered or certified mail, to the principal office of the Employer, directed to the attention of the President of the Employer. Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification.
8.10
Applicable Law
. This Plan shall be governed and construed in accordance with the laws of the State of Minnesota as applied to contracts executed and to be wholly performed in such state.
17
APPENDIX A
Section 1
Participant Deferral Account Interest Crediting While in Active Status Assuming No Further Deferrals
A.
A Participant shall receive interest credited monthly equal to the Participant’s beginning-of-year (BOY) Deferral Account balance times the Declared Rate divided by twelve:
Interest crediting occurs up to the day the Participant begins to receive annuity payments from the Plan.
Example of interest credited calculation
|
BOY Deferral Account balance at 1/1/99
|
= $500,000.00
|
|
Declared Rate
|
= 13.7%
|
|
Declared Rate divided by 12 = 13.7%/12
|
= 1.1417%
|
|
Credited interest for each month of 1999
|
= $500,000 x .011417 = $5,708.50
|
B.
A participant’s Deferral Account balance shall be increased each month by taking the beginning-of-month (BOM) balance plus interest credited for the month to equal the end-of-month (EOM) balance.
BOM balance + monthly interest credited = EOM balance
Example of monthly account growth
|
BOM balance at 1/1/99
|
= $500,000.00
|
|
Monthly crediting dollars for 1998
|
= $5,708.50
|
|
EOM at 1/31/99
|
= $500,000.00 + 5,708.50 = $505,708.50
|
|
EOM at 2/28/99
|
= $505,708.500 + 5,708.50 = $511,417.00
|
Appendix-1
Section 2:
Interest Crediting, Deferral Account Balances, and Payments While in Pay Status
A.
Definition of Variables for Participant Payment Calculation
1.
“n” = number of payments expected to be made to a Participant and spouse. The number of expected payments shall be determined by: (1) The ages of the Participant and spouse at the time annuity payments first begin. (2) The number of years that the Participant and spouse are expected to live, as determined by an actuarially-based mortality table selected by the Committee. (3) The frequency of payments made to the Participant. This frequency shall be determined by the payroll procedures of the Company’s operating division responsible for administering the Participant’s payments.
Example of number of expected payments (assuming payments to begin on 10/1/99)
|
Frequency of payments
|
= monthly
|
|
Participant age on 10/1/99
|
= 50 yrs. old
|
|
Spouse age on 10/1/99
|
= 48 yrs. old
|
|
Participant’s and spouse’s joint expected remaining lives
|
= 476 months
|
|
“n” for 10/1/99
|
= 476
|
|
“n” for 1/1/00
|
= 473
|
|
“n” for 1/1/01
|
= 461
|
2.
“i” = interest rate per payment period such that when compounded over the entire year equals the Declared Rate.
“i” shall be expressed either as a weekly or monthly interest rate, depending on the frequency of annuity payments made by the operating division administering the Participant’s payments. If weekly, “i” is the interest rate that, when compounded over 52 periods, will equal the Declared Rate. If monthly, “i” is the interest rate that, when compounded over 12 periods, will equal the Declared Rate.
Example of weekly and monthly interest rates
Declared Rate = 13.7%
Weekly “i” = (1.137)
1/52
= .002472 or .2472%
Monthly “i” = (1.137)
1/12
= .010757 or 1.0757%
3.
The beginning-of-period balance (BOP balance) is the Participant’s Deferral Account balance at any time before credited interest has been added for the period and payments have been subtracted for the period.
End-of-period balance (EOP balance) is the Participant’s Deferral Account balance at any point in time after credited interest has been added for the period and payments have been subtracted for the period.
Example of EOP balance calculation
EOP balance = BOP balance + interest crediting — payment
Appendix-2
B.
Payments
1.
Calculation of payments
At the beginning of each year (or at the beginning of a month when a Participant’s Deferral Account is first transferred from active status to payment status), a payment shall be calculated for each Participant who has a Deferral Account that is in the payment status. The periodicity of payments shall depend on the payroll procedures of the operating division administering the Participant’s payments. The amount of the payment shall be effective for that calendar year (or portion of the calendar year).
The calculation of the payment amount is based on the present value of an annuity formula. Specifically, the payment is given by:
Example of a calculation with monthly payments
n = 476 months
Monthly i = 1.0757%
BOP balance = $500,000.00
Payment = $5,411.73
Example of a calculation with weekly payments
n = 2,070 weeks
Weekly i = 0.2472%
BOP balance = $500,000.00
Payment = $1,243.50
2.
Interest Crediting for Payments
Interest crediting shall be calculated every payment period, with the interest amount equal to the beginning-of-period Deferral Account balance times the periodic interest rate
Example of interest crediting calculation (assuming monthly payments and a 13.7% Declared Rate)
BOP balance = $500,000.00
Monthly i = 1.0757%
Interest crediting = $500,000.00 x .010757 = $5,378.50
Appendix-3
3.
Amortization of Participant Deferral Account Balances
Participant Deferral Account balances shall be amortized over the remaining number of expected payment periods by adding to the beginning-of-period balance the interest credits earned during the period less the payment made for the period to produce an end-of-period Deferral Account balance.
Example of Deferral Account balance amortization (assuming monthly payments and a 13.7% Declared Rate)
BOP balance = $500,000.00
Monthly i = 1.0757%
Interest crediting = $5,378.50
Payment = $5,411.73
EOP balance = $500,000.00 + $5,378.50 – $5,411.73 = $499,966.77
C.
Installment Termination Payments
1.
[Intentionally left blank.]
2.
The four equal annual installment payments are determined by using the present value of an annuity formula referenced in Section 2.B.1. of this Appendix. The interest rate used in calculating the four payments shall be 12%.
Example of a four-year annual installment payout of a Deferral Account balance
n = 4
Annual i = 12%
BOP balance = $500,000.00
Annual installment payments = $164,617.22
Appendix-4
Exhibit (10)G
TARGET CORPORATION
OFFICER EDCP
(2011 PLAN STATEMENT)
Effective June 8, 2011
as Amended and Restated
TARGET CORPORATION
OFFICER EDCP
(2011 Plan Statement)
TABLE OF CONTENTS
|
SECTION 1 INTRODUCTION; DEFINITIONS
|
1
|
|
1.1
|
Name of Plan; History
|
1
|
|
1.2
|
Definitions
|
1
|
|
|
1.2.1
|
Account
|
1
|
|
|
1.2.2
|
Affiliate
|
1
|
|
|
1.2.3
|
Base Salary
|
2
|
|
|
1.2.4
|
Beneficiary
|
2
|
|
|
1.2.5
|
Board
|
2
|
|
|
1.2.6
|
Bonus
|
2
|
|
|
1.2.7
|
Certified Earnings
|
2
|
|
|
1.2.8
|
Change-in-Control
|
2
|
|
|
1.2.9
|
Code
|
2
|
|
|
1.2.10
|
[Intentionally left blank.]
|
3
|
|
|
1.2.11
|
Company
|
4
|
|
|
1.2.12
|
Company’s Fiscal Year
|
4
|
|
|
1.2.13
|
Crediting Rate Alternative
|
4
|
|
|
1.2.14
|
Deferral Credit
|
4
|
|
|
1.2.15
|
Disabled
|
4
|
|
|
1.2.16
|
Discretionary Credit
|
4
|
|
|
1.2.17
|
Earnings Credit
|
4
|
|
|
1.2.18
|
EDCP
|
4
|
|
|
1.2.19
|
Effective Date
|
4
|
|
|
1.2.20
|
Eligible Compensation
|
4
|
|
|
1.2.21
|
Employee
|
4
|
|
|
1.2.22
|
Enhancement
|
4
|
|
|
1.2.23
|
ERISA
|
4
|
|
|
1.2.24
|
ESBP
|
4
|
|
|
1.2.25
|
ESBP Benefit
|
5
|
|
|
1.2.26
|
ESBP Benefit Transfer Credits
|
5
|
|
|
1.2.27
|
Newly Eligible Employee
|
5
|
|
|
1.2.28
|
Officer
|
5
|
|
|
1.2.29
|
Participant
|
5
|
|
|
1.2.30
|
Participating Employer
|
5
|
|
|
1.2.31
|
Performance Share Award
|
5
|
|
|
1.2.32
|
Plan
|
5
|
|
|
1.2.33
|
Plan Administrator
|
5
|
|
|
1.2.34
|
Plan Rules
|
6
|
|
|
1.2.35
|
Plan Statement
|
6
|
|
|
1.2.36
|
Plan Year
|
6
|
|
|
1.2.37
|
Restoration Match Credit
|
6
|
|
|
1.2.38
|
Signing Bonus
|
6
|
|
|
1.2.39
|
SPP Benefit
|
6
|
|
|
1.2.40
|
SPP Benefit Transfer Credit
|
6
|
|
|
1.2.41
|
Specified Employee
|
6
|
i
|
|
1.2.42
|
Target 401(k) Plan
|
6
|
|
|
1.2.43
|
Target Pension Plan
|
6
|
|
|
1.2.44
|
Termination of Employment
|
6
|
|
|
1.2.45
|
Trust
|
7
|
|
|
1.2.46
|
Unforeseeable Emergency
|
7
|
|
|
1.2.47
|
Valuation Date
|
7
|
|
|
1.2.48
|
Year of Service
|
7
|
|
|
|
|
|
SECTION 2 PARTICIPATION AND DEFERRAL ELECTIONS
|
8
|
|
2.1
|
Eligibility
|
8
|
|
2.2
|
Special Rules for Participating Employees
|
8
|
|
2.3
|
Termination of Participation
|
8
|
|
2.4
|
Rehires and Transfers
|
9
|
|
2.5
|
Effect on Employment
|
9
|
|
2.6
|
Condition of Participation
|
9
|
|
2.7
|
Deferral Elections
|
10
|
|
2.8
|
Base Salary Deferrals
|
10
|
|
2.9
|
Bonus Deferrals
|
11
|
|
2.10
|
Performance Share Award Deferrals
|
11
|
|
2.11
|
Special Code Section 162(m) Deferral Elections
|
11
|
|
2.12
|
Cancellation of Deferral Elections
|
12
|
|
|
|
|
|
SECTION 3 CREDITS TO ACCOUNTS
|
13
|
|
3.1
|
Elective Deferral Credit
|
13
|
|
3.2
|
Restoration Match Credit
|
13
|
|
3.3
|
SPP Benefit Transfer Credits
|
13
|
|
3.4
|
ESBP Benefit Transfer Credits
|
15
|
|
3.5
|
Discretionary Credits
|
16
|
|
|
|
|
|
SECTION 4 ADJUSTMENTS OF ACCOUNTS
|
17
|
|
4.1
|
Establishment of Accounts
|
17
|
|
4.2
|
Adjustments of Accounts
|
17
|
|
4.3
|
Investment Adjustment
|
17
|
|
4.4
|
Enhancement
|
17
|
|
4.5
|
Account Adjustments Upon a Change-in-Control or Plan Termination
|
18
|
|
|
|
|
|
SECTION 5 VESTING
|
19
|
|
5.1
|
Deferral Credits and Restoration Match Credits
|
19
|
|
5.2
|
Discretionary Credits
|
19
|
|
5.3
|
Enhancement
|
19
|
|
5.4
|
SPP Benefit Transfer Credit
|
19
|
|
5.5
|
ESBP Benefit Transfer Credit
|
19
|
|
5.6
|
Failure to Cooperate; Misinformation or Failure to Disclose
|
19
|
|
|
|
|
|
SECTION 6 DISTRIBUTION
|
20
|
|
6.1
|
Distribution Elections
|
20
|
|
6.2
|
General Rule
|
20
|
|
6.3
|
Six-Month Suspension for Specified Employees
|
23
|
|
6.4
|
Distribution on Account of Death
|
23
|
|
6.5
|
Distribution on Account of Unforeseeable Emergency
|
23
|
|
6.6
|
Designation of Beneficiaries
|
23
|
ii
|
6.7
|
Facility of Payment
|
25
|
|
6.8
|
Tax Withholding
|
25
|
|
6.9
|
Payments Upon Rehire
|
25
|
|
6.10
|
Application for Distribution
|
25
|
|
6.11
|
Acceleration of Distributions
|
26
|
|
6.12
|
Delay of Distributions
|
26
|
|
|
|
|
|
SECTION 7 SOURCE OF PAYMENTS; NATURE OF INTEREST
|
27
|
|
7.1
|
Source of Payments
|
27
|
|
7.2
|
Unfunded Obligation
|
27
|
|
7.3
|
Establishment of Trust
|
27
|
|
7.4
|
Spendthrift Provision
|
27
|
|
7.5
|
Compensation Recovery (Recoupment)
|
28
|
|
|
|
|
|
SECTION 8 ADOPTION, AMENDMENT AND TERMINATION
|
29
|
|
8.1
|
Adoption
|
29
|
|
8.2
|
Amendment
|
29
|
|
8.3
|
Termination and Liquidation
|
29
|
|
|
|
|
|
SECTION 9 CLAIM PROCEDURES
|
31
|
|
9.1
|
Claims Procedure
|
31
|
|
9.2
|
Rules and Regulations
|
32
|
|
9.3
|
Limitations and Exhaustion
|
33
|
|
|
|
|
|
SECTION 10 PLAN ADMINISTRATION
|
35
|
|
10.1
|
Plan Administration
|
35
|
|
10.2
|
Conflict of Interest
|
35
|
|
10.3
|
Service of Process
|
36
|
|
10.4
|
Choice of Law
|
36
|
|
10.5
|
Responsibility for Delegate
|
36
|
|
10.6
|
Expenses
|
36
|
|
10.7
|
Errors in Computations
|
36
|
|
10.8
|
Indemnification
|
36
|
|
10.9
|
Notice
|
36
|
|
|
|
|
|
SECTION 11 CONSTRUCTION
|
37
|
|
11.1
|
ERISA Status
|
37
|
|
11.2
|
IRC Status
|
37
|
|
11.3
|
Rules of Document Construction
|
37
|
|
11.4
|
References to Laws
|
37
|
|
11.5
|
Appendices
|
37
|
|
|
|
|
|
APPENDIX A
|
38
|
|
|
|
|
APPENDIX B
|
41
|
iii
SECTION 1
INTRODUCTION; DEFINITIONS
1.1 Name of Plan; History.
This Plan (formerly known as the “Target Corporation SMG Executive Officer Deferred Compensation Plan) is a non-qualified, unfunded plan established for the purpose of allowing a select group of management or highly compensated employees to defer the receipt of income. This Plan was originally adopted effective as of January 1, 1997 and was amended at various times thereafter. Effective April 30, 2002, Participants in this Plan who were members of the Company’s Corporate Operating Committee received credits under this Plan equal to the present value of their benefit under the supplemental pension plans maintained by the Company. Each subsequent April, the Participant receives annual SPP Benefit Transfer Credits equal to the change in value of his or her benefit under the supplemental pension plans. Effective July 31, 2002, this program was extended to include all officers of the Company. Effective April 30, 2002, Participants in this Plan who were members of the Company’s Corporate Operating Committee received credits under this Plan equal to the present value of their benefit under the Company’s ESBP. Each subsequent April, Participants received annual credits equal to the change in value of his or her benefit under the ESBP. Effective October 28, 2005, all officers who had not previously received ESBP Benefit Transfer Credits, received a one-time transfer of the present value of their benefit under the ESBP. As of January 28, 2006, a one-time ESBP credit was made to certain executive committee members and no subsequent ESBP Benefit Transfer Credits were made to those receiving the one-time ESBP credit. From time to time, certain participants in the Target Corporation Deferred Compensation Plan — Senior Management Group (“ODCP”) and the Company negotiated to transfer the economic value of their benefit under ODCP to this Plan. Officers eligible to receive performance share awards granted in the fiscal years ending February 1, 2003 and January 31, 2004 had an opportunity to defer receipt of the value of the earned performance shares into this Plan at the end of the performance period. The performance period for the shares granted in 2003 ended February 3, 2007. The performance period for the shares granted in 2004 ended February 2, 2008. Effective January 1, 2005 (and other effective dates as specifically provided), this Plan was operated in compliance with Code section 409A. Effective January 29, 2006, members of the Company’s executive committee ceased to be eligible to receive enhanced earnings on their account balances. The Plan, which is intended to comply with Code section 409A, was amended and restated effective January 1, 2009. The Plan was amended and restated to incorporate the Company’s recoupment policy effective January 13, 2010. This Plan Statement, which was amended and restated to reflect Plan administration and amendment changes authorized by the Board on November 10, 2010, to modify the Change in Control definition, and to set forth special provisions that are applicable to certain Participants who transfer to Canada, is effective as of June 8, 2011.
1.2 Definitions.
When the following terms are used herein with initial capital letters, they shall have the following meanings:
1.2.1 Account.
“Account” means the separate bookkeeping account representing the separate unfunded and unsecured general obligation of the Participating Employers established with respect to each person who is a Participant in this Plan. Within each Participant’s Account, separate subaccounts shall be maintained to the extent the Plan Administrator determines it to be necessary or desirable for the administration of this Plan.
1.2.2 Affiliate.
An “Affiliate” is the Company and all persons, with whom the Company would be considered a single employer under Code section 414(b) or 414(c).
1.2.3 Base Salary.
“Base Salary” with respect to a Plan Year means Certified Earnings as modified by the rules below:
(a)
the
limits imposed by Code section 401(a)(17) will not apply;
(b)
deferrals under Section 2.8 of this Plan are included as Base Salary; and
(c)
Bonus and Signing Bonus amounts are not included as Base Salary.
1.2.4 Beneficiary.
“Beneficiary” means an individual (human being), a trust that is a United Sates person within the meaning of the Code, a person that has been recognized as a charitable organization under Code section 170(b), or the Participant’s estate designated in accordance with Section 6.7 to receive all or a part of the Participant’s Account in the event of the Participant’s death prior to full distribution thereof. A person so designated shall not be considered a Beneficiary until the death of the Participant.
1.2.5 Board.
“Board” is the Board of Directors of the Company, or such committee of the Board of Directors to which the Board of Directors of the Company has delegated the respective authority.
1.2.6 Bonus.
“Bonus” with respect to a Plan Year means that portion of Certified Earnings that is equal to the amount payable under any regular incentive plan of a Participating Employer that is earned, or intended to be earned, over a period of at least a calendar year or fiscal year as modified by the rules below:
(a)
the limits imposed by Code section 401(a)(17) will not apply;
(b)
deferrals under Section 2.9 of this Plan are included as Bonus; and
(c)
Signing Bonus amounts are not included as Bonus
1.2.7 Certified Earnings. “
Certified Earnings” has the same meaning as the defined term in the Target 401(k) Plan (determined without regard to the 30-day receipt rule); provided, however, “Certified Earnings” shall not include compensation that is accrued for any period following a Participant’s Termination of Employment.
1.2.8 Change in Control.
“Change-in-Control” means one of the following:
(a)
Individuals who are Continuing Directors cease for any reason to constitute 50% or more of the directors of the Company; or
(b)
30% or more of the outstanding voting power of the Voting Stock of the Company is acquired or beneficially owned (within the meaning of Rule 13d-3 under the Exchange Act) by any Person, other than an entity resulting from a Business Combination in which clauses (x) and (y) of Section 1.2.8(c) apply; or
(c)
the consummation of a merger or consolidation of the Company with or into another entity, a statutory share exchange, a sale or other disposition (in one transaction or a series of transactions) of all or substantially all of the Company’s assets or a similar business combination (each, a “Business Combination”), in each case unless, immediately following such Business Combination, (x) all or
2
substantially all of the beneficial owners (within the meaning of Rule 13d-3 under the Exchange Act) of the Company’s Voting Stock immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of the voting power of the then outstanding shares of voting stock (or comparable voting equity interests) of the surviving or acquiring entity resulting from such Business Combination (including such beneficial ownership of an entity that, as a result of such transaction, owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries), in substantially the same proportions (as compared to the other beneficial owners of the Company’s Voting Stock immediately prior to such Business Combination) as their beneficial ownership of the Company’s Voting Stock immediately prior to such Business Combination, and (y) no Person beneficially owns, directly or indirectly, 30% or more of the voting power of the outstanding voting stock (or comparable equity interests) of the surviving or acquiring entity (other than a direct or indirect parent entity of the surviving or acquiring entity, that, after giving effect to the Business Combination, beneficially owns, directly or indirectly, 100% of the outstanding voting stock (or comparable equity interests) of the surviving or acquiring entity); or
(d)
approval by the shareholders of a definitive agreement or plan to liquidate or dissolve the Company.
For purposes of this Section 1.2.8:
“Continuing Director” means an individual (A) who is, as of June 8, 2011, a director of the Company, or (B) who becomes a director of the Company after June 8, 2011, and whose initial appointment, or nomination for election by the Company’s shareholders, was approved by at least a majority of the then Continuing Directors; provided, however, that any individual whose initial assumption of office occurs as a result of either an actual or threatened contested election by any Person (other than the Board of Directors) seeking the election of such nominee in which the number of nominees exceeds the number of directors to be elected shall not be a Continuing Director;
“Person” means any individual, firm, corporation or other entity and shall include any group comprised of any person and any other person with whom such person or any affiliate or associate (as defined in Rule 14a-1(a) of the Exchange Act) of such person has any agreement, arrangement or understanding, directly or indirectly, for the purpose of acquiring, holding, voting or disposing of any capital stock of the Company;
“Voting Stock” means all then-outstanding capital stock of the Company entitled to vote generally in the election of directors of the Company: and
“Exchange Act” means the Securities Exchange Act of 1934, as amended and in effect from time to time, and the regulations promulgated thereunder.
1.2.9 Code.
“Code” means the Internal Revenue Code of 1986, as amended (including, when the context requires, all regulations, interpretations and rulings issued hereunder).
1.2.10 [Intentionally left blank.]
3
1.2.11 Company.
“Company” means Target Corporation, a Minnesota corporation, or any successor thereto.
1.2.12 Company’s Fiscal Year.
“Company’s Fiscal Year” means the period commencing on the Sunday that immediately follows the Saturday that is nearest to the last day in January through the Saturday that is nearest to the last day in January in the following year.
1.2.13 Crediting Rate Alternative.
“Crediting Rate Alternative” means a hypothetical investment option used for the purpose of measuring income, gains and losses to the Accounts of Participants (as if the Accounts had in fact been so invested). The Crediting Rate Alternatives shall be designated in writing by the Plan Administrator.
1.2.14 Deferral Credit.
A “Deferral Credit” is the amount credited to a Participant’s Account pursuant to Section 3.1.
1.2.15 Disabled.
A Participant will be “Disabled” if he or she has become entitled to receive disability income benefits under the provisions of the Social Security Act.
1.2.16 Discretionary Credit.
A “Discretionary Credit” is the amount credited to a Participant’s Account pursuant to Section 3.5.
1.2.17 Earnings Credit.
“Earnings Credit” means the investment adjustment credited to a Participant’s Account pursuant to Section 4.3 or Section 4.5 as applicable.
1.2.18 EDCP.
“EDCP” means the Target Corporation EDCP, a non-qualified, unfunded deferred compensation plan maintained by the Company and certain other Affiliates.
1.2.19 Effective Date.
The “Effective Date” of this Plan Statement is June 8, 2011, except as otherwise provided.
1.2.20 Eligible Compensation.
“Eligible Compensation” means, the Base Salary, Bonus and Performance Share Award that the Participant receives or is entitled to receive from his or her Participating Employer for services rendered.
1.2.21 Employee.
An “Employee” is an individual who performs services for a Participating Employer as an employee of the Participating Employer (as classified by the Participating Employer at the time the services are preformed and without regard to any subsequent reclassification) and does not include any individual who is classified an independent contractor.
1.2.22 Enhancement.
“Enhancement” means an additional .1667% of investment earnings per month added to the applicable Crediting Rate Alternatives as provided in Section 4.4.
1.2.23 ERISA.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended (including, when the context requires, all regulations, interpretations and rulings issued thereunder).
1.2.24 ESBP.
“ESBP” means the Target Corporation Post Retirement Executive Survivor Benefit Plan.
4
1.2.25 ESBP Benefit.
“ESBP Benefit” means the actuarial lump sum present value of a Participant’s survivor benefit under the ESBP determined as of a particular determination date under Section 3.4 but without regard to whether the Participant had experienced either an “early retirement” or “normal retirement” under the Target Pension Plan as provided under the ESBP. The present value of such survivor benefit will be determined by the Company in its sole and absolute discretion based on such interest rates, mortality factors and other assumptions deemed appropriate by the Company.
1.2.26 ESBP Benefit Transfer Credits.
“ESBP Benefit Transfer Credits” are the initial and annual credits to a Participant’s Account under Section 3.4.
1.2.27 Newly Eligible Employee.
“Newly Eligible Employee” means an Employee who either (i) was not previously eligible to participate in this Plan or any other non-qualified, deferred compensation plans maintained by a Participating Employer or other Affiliate, (ii) had been paid all amounts previously deferred under all non-qualified, deferred compensation plans maintained by a Participating Employer or other Affiliate and had ceased to be eligible to continue to participate in such plans on or before the date of payment of all amounts due under such plans, or (iii) was not eligible to participate in any non-qualified deferred compensation plans (other than the accrual of earnings) maintained by a Participating Employer or other Affiliate at any time during the 24-month period ending on the date the Employee has again become eligible to participate in the Plan.
1.2.28 Officer.
An “Officer” is a member of the executive committee and any other Employee who is designated and categorized as an officer of the Company by the Company’s Chief Executive Officer.
1.2.29 Participant.
A
“Participant” is an Employee who becomes a Participant in this Plan in accordance with the provisions of Section 2. An Employee who has become a Participant shall be considered to continue as a Participant in this Plan until the date when the Participant no longer has any Account under this Plan, or the date of the Participant’s death, if earlier.
1.2.30 Participating Employer.
“Participating Employer” means the Company and each other Affiliate that, with the consent of the Plan Administrator, adopts this Plan. A Participating Employer shall cease to be a Participating Employer on the date it ceases to be an Affiliate.
1.2.31 Performance Share Award.
“Performance Share Award” means a performance share award issued under the Company’s Long-Term Incentive Plan of 1999 or the Company’s Long-Term Incentive Plan of 2004.
1.2.32 Plan.
“Plan” means the nonqualified, unfunded income deferral program maintained by the Company and established for the benefit of Participants eligible to participate therein, as set forth in this Plan Statement. As used herein, “Plan” does not refer to the documents pursuant to which this Plan is maintained. That document is referred to herein as the “Plan Statement”. The Plan shall be referred to as the “Target Corporation Officer EDCP” (formerly known as the Target Corporation SMG Executive Deferred Compensation Plan).
1.2.33 Plan Administrator.
“Plan Administrator” is the individual designated in Sec. 10.1.1, or, if applicable, its delegate.
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1.2.34 Plan Rules.
“Plan Rules” are rules, policies, practices or procedures adopted by the Plan Administrator or its delegate pursuant to Section 10.1.5.
1.2.35 Plan Statement. “
Plan Statement” means this document entitled “Target Corporation Officer EDCP (2011 Plan Statement),” as adopted by the Company, effective as of June 8, 2011, as the same may be amended from time to time.
1.2.36 Plan Year.
“Plan Year” means the period from January 1 through December 31.
1.2.37 Restoration Match Credit.
“Restoration Match Credit” is the amount credited to a Participant’s Account pursuant to Section 3.2.
1.2.38 Signing Bonus.
“Signing Bonus” is the cash remuneration earned following a period of employment provided to certain new Employees related to their acceptance of employment with a Participating Employer.
1.2.39 SPP Benefit.
“SPP Benefit” means the amount determined under Appendix A.
1.2.40 SPP Benefit Transfer Credit.
“SPP Benefit Transfer Credit” is the amount credited to a Participant’s Account under Section 3.3.
1.2.41 Specified Employee.
For purposes of complying with the requirements of Code section 409A(a)(2)(B)(i) (relating to the 6 month suspension of certain benefit distributions), an individual is a “Specified Employee” if on his or her Termination of Employment, the Company or other Affiliate has stock that is traded on an established securities market within the meaning of Code section 409A(a)(2)(B) and such individual is a “key employee” (defined below). For this purpose, an individual is a “key employee” during the 12-month period beginning on April 1 immediately following the calendar year in which the individual was employed by the Company and other Affiliates, and satisfied, at any time within such calendar year, the requirements of Code section 416(i)(1)(A)(i), (ii) or (iii) (without regard to Code section 416(i)(5)). An individual will not be treated as a Specified Employee if the individual is not required to be treated as a Specified Employee under Treasury Regulations issued under Code section 409A.
1.2.42 Target 401(k) Plan.
“Target 401(k) Plan” means the tax-qualified defined contribution retirement plan, with a qualified cash or deferred arrangement, established by the Company for the benefit of employees eligible to participate therein, and known as the Target Corporation 401(k) Plan.
1.2.43 Target Pension Plan.
“Target Pension Plan” means the tax qualified defined benefit pension plan, established for the benefit of employees eligible to participate therein, and known as the Target Corporation Pension Plan, including any predecessor plan(s) or successor plan.
1.2.44 Termination of Employment.
(a)
For purposes of determining entitlement to or the amount of benefits under the Plan, “Termination of Employment” means a severance of a Participant’s employment relationship with each Participating Employer and all Affiliates, for any reason.
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(b)
For purposes of determining when a distribution will be made under the Plan, a “Termination of Employment” will be deemed to occur if, based on the relevant facts and circumstances to the Participant, the Participating Employer, all Affiliates and Participant reasonably anticipate that the level of bona fide future services to be performed by the Participant for the Participating Employer and all Affiliates will permanently decrease to no more than 20% of the average level of bona fide services performed over the immediately preceding 36-month period.
(c)
A bona fide leave of absence that is six months or less, or during which an individual retains a reemployment right, will not cause a Termination of Employment. In the case of a leave of absence without a right of reemployment that exceeds the time periods described in this paragraph, a Termination of Employment will be deemed to occur once the leave of absence exceeds six months.
(d)
Notwithstanding the foregoing, a Termination of Employment shall not occur unless such termination also qualifies as a “separation from service,” as defined under Code section 409A and related guidance thereunder.
1.2.45 Trust.
“Trust” means the Target Corporation Deferred Compensation Trust Agreement, dated January 1, 2009 by and between the Company and State Street Bank and Trust Company, as it is amended from time to time, or similar trust agreement.
1.2.46 Unforeseeable Emergency.
“Unforeseeable Emergency” means a severe financial hardship to the Participant resulting from an illness or accident of the Participant, the Participant’s spouse, or a dependent (within the meaning of Code section 152(a)) of the Participant, loss of the Participant’s property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant, but only if and to the extent such Unforeseeable Emergency constitutes an “unforeseeable emergency” under Code section 409A.
1.2.47 Valuation Date.
“Valuation Date” means each business day on which the New York Stock Exchange is open.
1.2.48 Year of Service.
A “Year of Service” means each 12-consecutive month period an individual is an Employee after the date the individual is first eligible to participate under this Plan or any other non-qualified deferred compensation plan maintained by a Participating Employer.
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SECTION 2
PARTICIPATION AND DEFERRAL ELECTIONS
2.1 Eligibility
.
2.1.1
An Employee is eligible to participate in this Plan on the first day of a Plan Year if, on such day, he or she:
(a)
is a “qualified employee” as that term is defined in the Target 401(k) Plan; and
(b)
is an Officer.
2.1.2
A Newly Eligible Employee is eligible to participate in this Plan on the date that is 30 days after he or she satisfies the requirements in Section 2.1.1.
2.1.3
An Employee shall, as a condition of participation in this Plan, complete such forms and make such elections in accordance with Plan Rules as the Plan Administrator may require. An Employee who satisfies the requirements of this Section 2.1 is eligible to participate in this Plan in accordance with and subject to the requirements of this Plan.
2.1.4
An Employee who has had a Termination of Employment as defined in Section 1.2.44(b), will not be eligible to make deferral elections for subsequent Plan Years until otherwise notified by the Plan Administrator. Any deferral election in effect at the time of such Termination of Employment will continue to apply with respect to any Eligible Compensation received from a Participating Employer or other Affiliate. Such Employee will still be eligible to receive credits, if any, pursuant to Sections 3.2, 3.3, 3.4 and 3.5.
2.2 Special Rules for Participating Employees.
A Participant who transfers employment from one Participating Employer to another Affiliate, whether or not a Participating Employer will, for the duration of the Plan Year in which the transfer occurs, continue to participate in this Plan in accordance with the deferral election in effect at the time of such transfer. A Participant who is simultaneously employed with more than one Participating Employer will participate in this Plan as an Employee of each such Participating Employer on the basis of a single deferral election applied separately to his or her respective, Eligible Compensation from each Participating Employer.
2.3 Termination of Participation.
Except as otherwise specifically provided in this Plan Statement or by the Plan Administrator, an Employee who ceases to satisfy the requirements of Section 2.1 is not eligible to continue to participate in the Plan, provided, that any deferral elections in effect, and irrevocable, will continue to apply with respect to any Eligible Compensation received from a Participating Employer or other Affiliate. The Participant’s Account will continue to be governed by the terms of the Plan until such time as the Participant’s Account balance is paid in accordance with the terms of the Plan. A Participant or Beneficiary will cease to be such as of the date on which his or her entire Account balance has been distributed.
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2.4 Rehires and Transfers.
2.4.1
A Participant who incurs a Termination of Employment and is rehired during the same calendar year will continue Base Salary deferrals for such calendar year in accordance with his or her election in effect immediately prior to the Termination of Employment.
2.4.2
A Participant who incurs a Termination of Employment and is rehired prior to the later of the end of the Plan Year or the date the Bonus for such Plan Year is paid in cash, will continue Bonus Deferrals for such Plan Year in accordance with his or her election in effect immediately prior to the Termination of Employment.
2.4.3 Transfers from Non-Officer Plan
. An Employee who is a Participant in the EDCP and is promoted to an Officer position will cease to be eligible to participate in the EDCP and will be eligible to participate in this Plan, subject to the following rules:
(a)
The Employee will become a Participant in this Plan immediately upon satisfying the requirements to participate hereunder.
(b)
The Employee’s deferral elections made under the EDCP will transfer to the Plan and continue as an election made under Section 2.
(c)
The Employee’s account maintained under the EDCP will be transferred to the Employee’s Account under this Plan.
(d)
The Employee’s distribution elections made under the EDCP (including any default distributions) will transfer to this Plan and continue as the distribution elections made under this Plan.
(e)
The Employee’s beneficiary designation made under the EDCP will be treated as the Employee’s Beneficiary designation under this Plan until changed in accordance with Section 6.7.
2.5 Effect on Employment.
2.5.1 Not a Term of Employment.
Neither the terms of this Plan Statement nor the benefits under this Plan (including the continuance thereof) shall be a term of the employment of any Employee.
2.5.2 Not an Employment Contract.
This Plan is not and shall not be deemed to constitute a contract of employment between any Participating Employer and any Employee or other person, nor shall anything herein contained be deemed to give any Employee or other person any right to be retained in any Participating Employer’s employ or in any way limit or restrict any Participating Employer’s right or power to discharge any Employee or other person at any time and to treat him or her without regard to the effect that such treatment might have upon him or her as a Participant in this Plan.
2.6 Condition of Participation
2.6.1 Cooperation.
Each Participant shall cooperate with the Plan Administrator by furnishing any and all information requested by the Plan Administrator in order to facilitate the payment of benefits hereunder and taking such other relevant action as may be requested by the
9
Plan Administrator. If a Participant refuses to cooperate, neither the Company nor any Participating Employer shall have any further obligation to the Participant under this Plan, other than payment to such Participant of the aggregate amount of Eligible Compensation deferred under Section 3.1.
2.6.2 Plan Terms and Rules.
Each Participant, as a condition of participation in this Plan, is bound by all the terms and conditions of this Plan and the Plan Rules.
2.7 Deferral Elections.
An Employee who satisfies the eligibility requirements of Section 2 may, at the time and in the manner provided hereunder, elect to defer the receipt of his or her Eligible Compensation.
2.7.1 General Rule.
Except as otherwise provided in this Plan, an election shall be made before the beginning of the Plan Year during which the Participant performs services for which the Eligible Compensation is earned. The election must designate the percentage of the Base Salary, Bonus or Performance Share Award which shall be deferred under this Plan. In accordance with Plan Rules, the Plan Administrator will determine the manner and timing required to file a deferral election. No deferral election shall be effective unless prior to the deadline for making such election, the Participant has filed with the Plan Administrator, in accordance with Plan Rules, an insurance consent form permitting the Participating Employer or Company to purchase and maintain life insurance coverage on the Employee with the Participating Employer or Company as the beneficiary. An election to defer Eligible Compensation for the Plan Year or other period is irrevocable once it has been accepted by the Plan Administrator and the deadline for making such election has expired, except as otherwise provided under this Plan.
2.7.2 Newly Eligible Employees.
For a Newly Eligible Employee, the deferral election may be made after the first day of a Plan Year provided it is made within 30 days after becoming eligible to participate in this Plan. Such a deferral election by a Newly Eligible Employee is irrevocable once it has been received by the Plan Administrator and the deadline for making such election has expired, except as otherwise provided under this Plan. Such election will be effective with respect to Eligible Compensation payable for services performed after becoming eligible for this Plan and commencing with the next full pay period after the deferral election becomes irrevocable.
2.7.3 Terminations of Employment.
A Participant who completes a deferral election in accordance with this Section 2.7, but who has a Termination of Employment prior to the expiration of the deadline for making such election, will be deemed to have made no deferral election for the respective period.
2.8 Base Salary Deferrals.
A Participant’s election to defer Base Salary is subject to the following requirements:
2.8.1
A Base Salary deferral election will be effective with respect to the first paycheck issued during the Plan Year, including for the payroll period that includes the last day of the preceding Plan Year, and such election will remain in effect through the last paycheck issued during the Plan Year.
2.8.2
Except as provided in Section 2.11, the Base Salary deferral percentage may not exceed 80%.
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2.9 Bonus Deferrals.
A Participant’s election to defer his or her Bonus is subject to the following requirements:
2.9.1
A Bonus deferral election will be in effect for service periods that begin in the Plan Year immediately following the date the election becomes irrevocable and continue through the end of the Plan Year or if the Bonus is paid after such Plan Year, through the date the Bonus would have been paid in cash. Notwithstanding Section 2.7.2, a Newly Eligible Employee may not elect to defer a Bonus that is payable with respect to a service period that begins before the effective date of the Newly Eligible Employee’s deferral election.
2.9.2
Except as provided in Section 2.11, a Participant’s Bonus effective deferral percentage may not exceed 80%.
2.9.3
If the Plan Administrator determines that a Participant’s Bonus is “performance-based compensation” within the meaning of Code section 409A, then, consistent with Plan Rules, the Participant’s deferral election may be made no later than six months before the last day of the performance period during which the Bonus is earned.
2.9.4
If a Participant has a Termination of Employment before the end of the service period for any Bonus, but is still entitled to receive a bonus, the Participant’s existing Bonus deferral election will continue to apply.
2.10 Performance Share Award Deferrals.
A Participant’s election to defer his or her Performance Share Award is subject to the following requirements:
2.10.1
The election is available for Performance Share Awards issued in the Company’s Fiscal Year ending in calendar year 2003 and 2004.
2.10.2
A Participant’s Performance Share Award deferral percentage may not exceed 100%.
2.10.3
If the Plan Administrator determines that a Participant’s Performance Share Award is “performance-based compensation” within the meaning of Code section 409A, then the Participant’s Performance Share Award deferral election must be made no later than twenty-four (24) months prior to the date the Performance Share Award would otherwise be paid in the form of cash or Company stock, or, if earlier, six (6) months before the end of the period over which the services giving rise to the Performance Share Award were performed.
2.10.4
The “Plan Committee” as defined under the Company’s Long Term Incentive Plan shall determine, in its sole and absolute discretion for each Plan Year during which a Performance Share Award is issued, whether Participants in any group or class are eligible to make deferral elections under this Section 2.10 with respect to a Performance Share Award.
2.11 Special Code Section 162(m) Deferral Elections.
Notwithstanding Sections 2.8 and 2.9, a Participant who, prior to the beginning of a Plan Year, is identified by the Plan Administrator as a potential “covered employee” (within the meaning of Code section 162(m)) for the Company’s Fiscal Year either ending in or beginning in the Plan Year may:
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2.11.1
Make a Base Salary deferral election for the Plan Year that consists of two parts:
(a)
the first part of the election will apply with respect to the first paycheck issued during the applicable Plan Year through the last paycheck issued prior to the end of the Company’s Fiscal Year ending in the Plan Year, and
(b)
the second part will apply to the paychecks issued after the beginning of the Company’s Fiscal Year beginning in such Plan Year and issued prior to the end of such Plan Year.
2.11.2
Make a separate Bonus deferral election for the Plan Year with respect to:
(a)
The Bonus amounts that satisfy the requirements of performance-based compensation under Code section 162(m), and
(b)
All other Bonus amounts as determined by the Plan Administrator.
The Plan Administrator will set the maximum Bonus deferral percentage in its sole discretion, on a Participant by Participant basis.
2.12 Cancellation of Deferral Elections.
2.12.1 401(k) Hardship.
Notwithstanding any provisions in the Plan to the contrary, an election to defer under Sections 2.8, 2.9, and 2.10 will be cancelled to the extent necessary for the Participating Employer to comply with the hardship withdrawal provisions of such Participating Employer’s 401(k) plan.
(a)
An election to defer Base Salary amounts for the Plan Year during which the hardship withdrawal was made will be cancelled. Further, no Base Salary deferral election will be effective for the next Plan Year if the hardship withdrawal occurs after June 30, and on or before December 31 of the calendar year.
(b)
Any election to defer Bonus or Performance Share Award amounts in effect at the time of the hardship withdrawal will be cancelled. Further, no deferral election for a Bonus related to service in the next Plan Year will be effective if the hardship withdrawal occurs after June 30, and on or before December 31 of the calendar year.
2.12.2 Unforeseeable Emergency.
Notwithstanding any provisions in the Plan to the contrary, an election to defer under Sections 2.8, 2.9, and 2.10 will be cancelled for the remaining portion of the Plan Year in the event the Participant has received a distribution on account of an Unforeseeable Emergency under Section 6.5. The revocation shall be made at the time and in the manner specified in Plan Rules and must otherwise comply with the requirements of Section 6.5.
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SECTION 3
CREDITS TO ACCOUNTS
3.1 Elective Deferral Credit
. The Plan Administrator shall credit to the Account of each Participant the amount, if any, of Eligible Compensation the Participant elected to defer pursuant to Section 2. Such amount shall be credited as nearly as practicable as of the time or times when the Eligible Compensation would have been paid to the Participant but for the election to defer.
3.2 Restoration Match Credit.
3.2.1 Eligibility for Credit
. An Employee who satisfies the eligibility requirements of Section 2.1 during a Plan Year will receive a Restoration Match Credit for the Plan Year if he or she: (i) was actively employed and eligible to participate in this Plan on the last business day of the Plan Year; (ii) has experienced a Termination of Employment as defined under Section 1.2.44(a) during the Plan Year after attaining age 55 and completing five (5) “years of vesting service” as defined in the Target Pension Plan; (iii) has experienced a Termination of Employment as a result of death; or (iv) has become Disabled during such Plan Year.
3.2.2 Amount of Credit
. A Participant who satisfies the requirements of Section 3.2.1 is entitled to a Restoration Match Credit equal to the sum of:
(a)
5% of the Participant’s Base Salary and Bonus that is deferred under this Plan during the Plan Year; and
(b)
5% of the Participant’s Plan Year Base Salary and Bonus that is not deferred under this Plan during the Plan Year and that exceeds the compensation limit in effect under Code section 401(a)(17) for such Plan Year;
provided, however, that: (y) no Restoration Match Credit shall be made for Base Salary or Bonus paid prior to the date the Participant became eligible to participate in the Target 401(k) Plan, and (z) the credit under this Section 3.2.2 will not exceed the amount of Deferral Credits made by the Participant under Section 3.1 during the Plan Year.
3.2.3 Crediting to Account
. The Plan Administrator shall credit to a Participant’s Account as of the last business day of the Plan Year the amount of the Restoration Match Credit determined for the Plan Year for that Participant under Section 3.2.2.
3.2.4 Credit Upon Change-in-Control
. Upon a Change-in-Control that causes the Plan to be terminated under Section 8.3.2, the Plan Administrator shall credit to a Participant’s Account as of the date of the Plan termination a Restoration Match Credit determined for the Plan Year for that Participant under Section 3.2.2 through such date. Any subsequent determination of the Restoration Match Credit during the same Plan Year will be made under Section 3.2.2, less any amounts previously credited under this Section 3.2.4.
3.3 SPP Benefit Transfer Credits.
3.3.1 Eligibility.
A Participant who satisfies the eligibility requirements of Section 2.1 shall receive an SPP Benefit Transfer Credit under this Plan if he or she: (i) is classified as an Officer of the Company; and (ii) has a vested benefit under the Target Pension Plan, including a vested interest arising on account of the Participant’s death.
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3.3.2 Initial SPP Benefit Transfer Credit.
(a)
A Participant who satisfies the requirements of Section 3.3.1 receives an initial SPP Benefit Transfer Credit on or about the April 30 (or immediately preceding business day) immediately following the calendar year in which the Participant becomes eligible under Section 3.3.1, in an amount equal to the actuarial lump sum present value on March 31 (or immediately preceding business day) for the Participant’s SPP Benefit accrued through the preceding December 31. In the case of Participant who is an executive officer, such transfer will be made and determined on or about the last business day prior to the end of the Company’s Fiscal Year.
(b)
Upon a Plan termination upon a Change-in-Control under Section 8.3.2, the Plan Administrator shall credit the initial SPP Benefit Transfer Credit to a Participant’s Account as of the Plan termination effective date in an amount equal to the actuarial lump sum present value on the Plan termination effective date.
3.3.3 Annual SPP Benefit Transfer Credit
. A Participant who has received an initial SPP Benefit Transfer Credit under the Plan, who is eligible to receive credits pursuant to Section 3.3.1, and who is employed by a Participating Employer during a Plan Year will receive an annual SPP Benefit Transfer Credit to his or her Account under the Plan as follows:
(a)
For each Plan Year, the annual SPP Benefit Transfer Credit will be the difference between (i) the SPP Benefit determined as the last day of the Plan Year expressed as the actuarial lump sum present value on the determination date and (ii) the aggregate amount of the previous SPP Benefit Transfer Credits to the Participant’s Account increased by assumed earnings at an annual rate equal to the sum of the average of the applicable Stable Value Crediting Rate Alternative for the Plan Year plus two percent determined from the crediting date through the determination date; provided that with respect to periods that a Participant does not receive the Enhancement on their Account, the annual rate will be equal to the average of the applicable Stable Value Crediting Rate Alternative.
(b)
If the amount of the annual or final SPP Benefit Transfer Credit is positive, a credit will be made to the Participant’s Account. If the amount of the SPP Benefit Transfer Credit is negative and if, and only if, (i) the Participant is an executive officer on the determination date, or (ii) the Participant is an Employee and member of the Board, but was formerly an executive officer, then such Participant’s Account will be debited by such negative amount. The debit will be made prorata among all distribution options of the Plan other than fixed payment dates.
(c)
The annual SPP Benefit Transfer Credit (including a negative credit) will be made to the Participant’s Account as of the April 30 (or immediately preceding business day) following the determination date. In the case of a Participant who is an executive officer, such transfer will be made and determined on or about the last business day prior to the end of the Company’s Fiscal Year.
(d)
For purposes of this section, “determination date” means on or about March 31; provided that in the case of Participant who is an executive officer,
14
“determination date” shall mean on or about the last business day prior to the end of the Company’s Fiscal Year.
(e)
Upon a Plan termination on account of a Change-in-Control under Section 8.3.2, the Plan Administrator shall credit to a Participant’s Account as of the Plan termination effective date an SPP Benefit Transfer Credit as determined in this Section 3.3.3 as of the Plan termination effective date.
(f)
Notwithstanding the foregoing, a Participant’s final SPP Benefit Transfer Credit will be determined within 60 days following his or her Termination of Employment as defined under Section 1.2.44(a).
3.3.4 Forfeiture
. A Participant’s SPP Benefit Transfer Credits under this Section 3.3 and corresponding earnings adjustments under Section 4 are subject to forfeiture at the time and in the amount provided under Sections 3.3.3(b) and 5.4 and Section A-5 of Appendix A.
3.4 ESBP Benefit Transfer Credits.
3.4.1 Eligibility
. A Participant who satisfies Section 2.1, who has received an initial ESBP Benefit Transfer Credit under the Plan, who is employed by a Participating Employer during the a Plan Year, and who has provided advance written notice of his retirement/termination date prior to January 11, 2006 will receive an annual ESBP Benefit Transfer Credit to his Account under the Plan.
(a)
For each Plan Year, the annual ESBP Benefit Transfer Credit will be the difference between (i) the ESBP Benefit determined as of the last day of the Plan Year as expressed as the actuarial lump sum present value on the determination date, and (ii) the aggregate amount of the previous ESBP Benefit Transfer Credits to the Participant’s Account increased by earnings at an annual rate equal to the sum of the average of the applicable Stable Value Crediting Rate Alternatives plus two percent, from the crediting dates through the determination date.
(b)
The credit to the Participant’s Account will be made as of the April 30 (or immediately preceding business day) following the determination date.
(c)
For purposes of this section, “determination date” means on or about March 30.
(d)
Upon a Change-in-Control, the Plan Administrator shall credit to a Participant’s Account as of the date of the Change-in-Control an ESBP Benefit Transfer Credit as determined in this Section 3.4. as of the date of the Change-in-Control.
(e)
Notwithstanding the foregoing, a final annual ESBP Benefit Transfer Credit will be made to the Participant’s Account 60 days following a Participant’s Termination of Employment as defined under Section 1.2.44(a).
3.4.2 Forfeiture
. A Participant who has a Termination of Employment as defined under Section 1.2.44(a) prior to the attainment of age 55 and completion of 5 Years of Service will forfeit his or her ESBP Benefit Transfer Credits, and an amount of Earnings Credits and Enhancement equal to the investment adjustments that would have been credited on the ESBP Benefit Transfer Credits at the Stable Value Crediting Rate Alternative (or successor rate) plus an
15
annual rate of two percent 2%. The amount to be forfeited will be made prorata among all distribution options of the Plan.
3.5 Discretionary Credits.
The Company in its sole and absolute discretion may determine in writing for each Participant an amount that shall be credited the Participant’s Account as a Discretionary Credit. Any Discretionary Credit to an executive officer will require the approval of the Compensation Committee of the Board. The Plan Administrator shall credit to a Participant’s Account the amount of a Participating Employer’s Discretionary Credit, if any, determined for that Participant under this Section. Such amount shall be credited as nearly as practicable as of the time or times fixed by the Participating Employer when awarding such credit. Any special provisions relating to Discretionary Credits made on behalf of a Participating Employer’s Employees will be set forth on an exhibit to the Plan Statement.
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SECTION 4
ADJUSTMENTS OF ACCOUNTS
4.1 Establishment of Accounts.
There shall be established for each Participant an Account which shall be adjusted as provided under Section 4.
4.2 Adjustments of Accounts
. On each Valuation Date, the Plan Administrator shall cause the value of the Account (or subaccount) to be increased (or decreased) for distributions, withdrawals, credits, debits and investment income, gains or losses charged to the Account.
4.3 Investment Adjustment
. The investment income, gains and losses shall be determined for the Accounts in accordance with the following:
4.3.1 Participant Elections
. In accordance with Plan Rules and procedures established by the Plan Administrator, each Participant shall prospectively elect, as part of the initial enrollment process, and from time to time thereafter, one or more Crediting Rate Alternatives that shall be used to measure income, gains and losses until the next Valuation Date.
4.3.2 Default Rate
. If a Participant fails to designate one or more Crediting Rate Alternatives to be used to measure income, gains and losses with respect to amounts credited to his or her Account, such amounts will be deemed to be invested in a default Crediting Rate Alternative designated by the Plan Administrator in accordance with Plan Rules.
4.3.3 Crediting
. As of each Valuation Date, each Participant’s Account shall be adjusted for income, gains and losses as if the Account had in fact been invested in the Crediting Rate Alternative(s) so selected.
4.3.4 Responsibility for Investing Adjustments
. The Plan Administrator will not be responsible in any manner to any Participant, Beneficiary or other person for any damages, losses or liabilities, costs or expenses of any kind arising in connection with any designation or elimination of a Crediting Rate Alternative or a Participant’s election of a Crediting Rate Alternative.
4.4 Enhancement.
4.4.1 General Rule.
The Account of each Participant who is employed by the Company or other Affiliate for the entire calendar month will be credited by an amount equal to the Enhancement multiplied by the balance of the Account on the first day of the month. On the last business day of each month, this amount will be credited according to the Crediting Rate Alternatives in effect for new Deferral Credits.
4.4.2 Exception.
No Enhancement will be credited with respect to the Participant during the remainder of the Company’s Fiscal Year in which the Participant becomes an executive committee member or during any of the Company’s Fiscal Years beginning after the date the Participant becomes an executive committee member; provided that the Plan Administrator, in its sole discretion, can cause the forfeiture of the Enhancement credited to a Participant’s Account during the Company’s Fiscal Year in which a Participant initially becomes an executive committee member. In addition, no Enhancement will be credited with respect to a Participant for any month in a calendar year following the calendar year in which the Participant’s employment is transferred to a Canadian Affiliate, unless and until the Participant’s employment is transferred back to the Company or a U.S. Affiliate.
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4.5 Account Adjustments Upon a Change-in-Control or Plan Termination.
4.5.1
In the event of a Plan termination following a Change-in-Control under Section 8.3.2 that causes a Trust to be established and funded pursuant to Section 7.3 where distribution of a Participant’s Account may not be made from the Trust within 60 days of the event because of restrictions imposed by Code section 409A, then the Participant’s Account as of the date of such event will no longer receive adjustments determined pursuant to Sections 4.3 and 4.4.
4.5.2
On and after the date of an event described in Section 4.5.1, the Account will have an investment adjustment determined at an annual rate equal to the sum of the 10-Year U.S. Treasury Note plus 2%. The 10-Year U.S. Treasury Note rate will be determined as of the date of the Plan termination under Section 8.3.2, or if no such rate is available on that date, the immediately preceding date such rate is available, and reset each calendar quarter as necessary.
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SECTION 5
VESTING
5.1 Deferral Credits and Restoration Match Credits.
Deferral Credits and Restoration Match Credits (and related Earnings Credits) of each Participant shall be fully (100%) vested and nonforfeitable at all times except as otherwise provided.
5.2 Discretionary Credits
. A Participant will be vested in any Discretionary Credits (and related Earnings Credits) as provided by the Plan Administrator when such amounts are credited to the Participant’s Account.
5.3 Enhancement.
5.3.1 General Rule
. Except as provided under Section 4.4.2, the Enhancement credited to a Participant’s Account will become fully vested and nonforfeitable upon the earliest occurrence of any of the following events while the Participant is still in the employment of a Participating Employer or other Affiliate: (i) the Participant’s death; (ii) the last day of the calendar month in which a Participant attains age sixty-five (65) years; (iii) the determination that the Participant is Disabled; (iv) the occurrence of a Change-in-Control; (v) the Participant’s completion of five (5) Years of Service; or (vi) such other date as provided in writing to a Participant from the Plan Administrator.
5.3.2 Forfeiture
. Any forfeiture of the Enhancement will occur as soon as practicable after the Participant’s Termination of Employment. Forfeiture of the Enhancement that is not vested under Section 5.3.1 is limited to the aggregate amount of the Enhancement credited with respect to such amounts determined without regard to Earnings Credits on such Enhancement. The amount of the Enhancement to be forfeited will be debited prorata against the Participant’s distribution options.
5.4 SPP Benefit Transfer Credit
. A Participant has a forfeiture of the SPP Benefit to the extent there is a debit as provided in Section 3.3 or Appendix A. The forfeiture amount will be debited against a Participant’s Account. The debit will be made prorata among all distribution options of the Plan.
5.5 ESBP Benefit Transfer Credit
. A Participant has a forfeiture of the ESBP Benefit to the extent there is a forfeiture as provided in Section 3.4.2. The forfeiture amount will be debited against a Participant’s Account. The debit will be made prorata among all the Participant’s distribution options under the Plan.
5.6 Failure to Cooperate; Misinformation or Failure to Disclose
. A Participant’s Account is subject to forfeiture as provided under Sections 2.6.1.
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SECTION 6
DISTRIBUTION
6.1 Distribution Elections.
Except as otherwise specifically provided in this Plan, a Participant may irrevocably elect for each Plan Year the form and time of distribution of the credits made to his or her Account for such Plan Year.
6.2 General Rule.
A Participant’s distribution election relating to Deferral Credits must be made prior to the date the Participant’s deferral election becomes irrevocable. The election shall be made in the form and manner prescribed by Plan Rules. Distribution elections for Base Salary deferrals will also apply to Restoration Match Credits related to the same Plan Year. Earnings Credits and Enhancements will be distributed in the same form and time as in effect for the related Account credit. All Discretionary Credits will be distributed in the form of a single lump sum as of the time determined under Section 6.2.2(b).
6.2.1 Form of Distribution
.
The Participant may elect among the following forms of distribution.
(a)
Installments.
A series of annual installments made over either five (5) years or ten (10) years commencing at a time provided under Section 6.2.2(a) or (b). For purposes of Code section 409A, installment payments will be treated as a series of separate payments at all times.
(b)
Lump Sum.
A single lump sum payment.
6.2.2 Time of Payment
.
The Participant may elect among the distribution commencement times described in this section; provided that: (y) SPP Benefit Transfer Credits determined pursuant to Appendix A, Section A-4.3 will be distributed as provided in Section 6.2.5(b), and (z) SPP Benefit Transfer Credits, other than those pursuant to Appendix A, Section A-4.3, as well as unvested ESBP Benefit Transfer Credits may not be distributed on a fixed payment date as described in paragraph (c).
(a)
Termination of Employment.
Within 60 days following the Participant’s Termination of Employment.
(b)
One-Year Anniversary of Termination of Employment.
Within 60 days following the one-year anniversary of the Participant’s Termination of Employment.
(c)
Fixed Payment Date.
Within 60 days of January 1 of the calendar year elected by the Participant at the time of deferral. If a Participant has a Termination of Employment as defined in Section 1.2.44 prior to the fixed payment date, such amount shall be paid on the earlier of: (i) within 60 days following January 1 in the tenth year following the year of the Termination of Employment, or (ii) January 1 of the calendar year elected by the Participant at the time of deferral. The Plan Administrator will establish Plan Rules, procedures and limitations on establishing the number and times of the fixed payment dates available for Participants to elect.
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(d)
Payouts in 2008 and 2009.
During 2007 and 2008, consistent with transition relief available under Code section 409A, and subject to Plan Rules:
(i)
Participants had an opportunity to elect during 2007 to receive a distribution of all or a portion of their Account valued as of December 31, 2007 to be distributed in January 2008.
(ii)
Participants had an opportunity to elect during 2007 to receive a distribution of all or a portion of their Bonus Deferral Credits for 2007 and Performance Share Awards in 2004, if any, to be credited under this Plan in 2008, to be distributed on the date such Bonus Deferral Credits or Performance Share Awards would otherwise have been credited to this Plan, or, with respect to such Performance Share Awards, such other date as specified in the election form.
(iii)
Participants had an opportunity to elect during 2008 to receive a distribution of all or a portion of their Account valued as of December 31, 2008 to be distributed in January 2009.
(iv)
Participants had an opportunity to elect during 2008 to receive a distribution of all or a portion of their Bonus Deferral Credits for 2008, if any, to be credited under this Plan in 2009, to be distributed on the date such Bonus Deferral Credits would otherwise have been credited to this Plan.
6.2.3 Installment Amounts.
The amount of the annual installments shall be determined by dividing the amount of the vested portion of the Account as of the most recent Valuation Date preceding the date the installment is being paid by the number of remaining installment payments to be made (including the payment being determined).
6.2.4 Small Benefit.
Subject to Section 6.3,
in the event that the vested Account balance of a Participant who has died or experienced a Termination of Employment under the Plan is less than the applicable dollar amount under Code section 402(g)(1)(B) for that Plan Year as of the date on which the Plan Administrator makes such determinations, the Plan Administrator (on behalf of the Company) reserves the right to have the Participant’s entire Account paid in the form of a single lump sum payment, provided the Plan Administrator’s exercise of discretion (on behalf of the Company) complies with the requirements of Treas. Reg. Sec. 1.409A-3(j)(4)(v).
6.2.5 Default.
If for any reason a Participant shall have failed to make a timely designation of the form or time of distribution with respect to credits for a Plan Year (including reasons entirely beyond the control of the Participant), except as provided in Section 6.2.6, the distribution shall be made as indicated below:
(a)
In the case of SPP Benefit Transfer Credits, other than those pursuant to Appendix A, Section A-4.3 - a single lump sum within 60 days following the one-year anniversary of the Participant’s Termination of Employment.
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(b)
In the case of SPP Benefit Transfer Credits pursuant to Appendix A, Section A-4.3:
(i)
Twenty-four (24) monthly installment payments commencing within 60 days following the Participant’s Termination of Employment;
(ii)
Each monthly installment payment will be determined by dividing: (A) the amount of the vested portion of the Account attributable to Appendix A, Section A-4.3 and an amount of Earnings Credits equal to the investment adjustment that would have been credited on such SPP Benefit Transfer Credits at the Stable Value Crediting Rate Alternative as of the most recent Valuation Date preceding the date the installment is due, by (B) twenty-four (24), less the number of monthly installment payments that have previously been made from the Plan.
(c)
In all other cases - a single lump sum payment within 60 days following the Participant’s Termination of Employment.
6.2.6 Crediting of Amounts after Benefit Distribution.
Notwithstanding any provision in this Plan Statement to the contrary other than Section 6.3:
(a)
Deferral and Restoration Match Credits.
(i)
Lump Sum Distribution.
If Deferral or Restoration Match Credits are due after the complete distribution of the Participant’s vested Account balance, or subaccount balance to which such Deferral or Restoration Match Credit relate, then such subsequent credits will be made to the Account and paid to the Participant in a single lump sum cash payment within 60 days of being credited to the Account.
(ii)
Installment Distribution.
If Deferral or Restoration Match Credits are due after a related installment distribution occurs, then such subsequent credits will be made to the Account and included to determine the amount of the remaining scheduled payments as applicable.
(b)
SPP or ESBP Benefit Transfer Credit.
The SPP Benefit Transfer Credit other than those pursuant to Appendix A, Section A-4.3 or ESBP Benefit Transfer Credit, as applicable, arising after a Participant’s Termination of Employment pursuant to Sections 3.3.3(f) and 3.4.1(e) shall be distributed in a single lump sum within 60 days following the Termination of Employment.
6.2.7 Vesting in Benefits After the Distribution Date.
No portion of a Participant’s Account will be distributed prior to being vested. Subject to Section 6.3, if Participant is scheduled to receive a distribution of a portion of his or her Account that is not vested, such unvested amount will not be paid until subsequently vested, at which time it will be paid out in accordance with the respective distribution election.
6.2.8 No Spousal Rights.
No spouse, former spouse, Beneficiary or other person shall have any right to participate in the Participant’s designation of a form or time of payment.
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6.3 Six-Month Suspension for Specified Employees.
Notwithstanding any other provision in this Section 6 to the contrary, if a Participant is a Specified Employee at Termination of Employment, then any distributions arising on account of the Participant’s Termination of Employment (other than on account of death) that are due shall be suspended and not be made until (6) months have elapsed since such Participant’s Termination of Employment (or, if earlier, upon the date of the Participant’s death). Any payments that were otherwise payable during the six-month suspension period referred to in the preceding sentence, will be paid within 60 days after the end of such six-month suspension period.
6.4 Distribution on Account of Death.
Upon the death of a Participant, the Participant’s Account balance will be paid to the Participant’s Beneficiary in a single lump sum within 90 days following the Participant’s death.
6.5 Distribution on Account of Unforeseeable Emergency.
6.5.1 When Available.
A Participant may receive a distribution from the vested portion of his or her Account (which shall be deemed to include the deferral that would have been made but for the cancellation under Section 6.5.3) if the Plan Administrator determines that such distribution is on account of an Unforeseeable Emergency and the conditions in Section 6.5.2 have been fulfilled. To receive such a distribution, the Participant must request a distribution by filing an application with the Plan Administrator and furnish such supporting documentation as the Plan Administrator may require. In the application, the Participant shall specify the basis for the distribution and the dollar amount to be distributed. If such request is approved by the Plan Administrator, distribution shall be made in a lump sum payment within 60 days following the approval by the Plan Administrator of the completed application.
6.5.2 Limitations
. The amount that may be distributed with respect to a Participant’s Unforeseeable Emergency shall not exceed the amounts necessary to satisfy the emergency plus amounts necessary to pay taxes reasonably anticipated as a result of the distribution, after taking into account the extent to which such Unforeseeable Emergency is or may be relieved through reimbursement or compensation by insurance or otherwise by liquidation of the Participant’s assets (to the extent the liquidation of such assets would not itself cause severe financial hardship), and/or cancellation of deferrals pursuant to Section 6.5.3, provided the determination of such limitation is consistent with the requirements of Code section 409A(a)(2)(B)(ii).
6.5.3 Cancellation of Deferral Elections.
As provided by Section 2.12, in the event of a distribution under Section 6.5.1 the Plan Administrator will cancel the Participant’s deferral elections for the balance of the applicable Plan Year.
6.6 Designation of Beneficiaries
.
6.6.1 Right to Designate or Revoke.
(a)
Each Participant may designate one or more primary Beneficiaries or secondary Beneficiaries to receive all or a specified part of such Participant’s vested Account in the event of such Participant’s death. If fewer than all designated primary or secondary Beneficiaries predecease the Participant, then the amount of such predeceased Beneficiary’s portion shall be allocated to the remaining primary or secondary Beneficiaries, as the case may be.
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(b)
The Participant may change or revoke any such designation from time to time without notice to or consent from any spouse, any person named as Beneficiary or any other person.
(c)
No such designation, change or revocation shall be effective unless completed and filed with the Plan Administrator in accordance with Plan Rules during the Participant’s lifetime.
6.6.2 Failure of Designation.
If a Participant:
(a)
fails to designate a Beneficiary,
(b)
designates a Beneficiary and thereafter revokes such designation without naming another Beneficiary, or
(c)
designates one or more Beneficiaries and all such Beneficiaries so designated fail to survive the Participant, such Participant’s vested Account, shall be payable to the first class of the following classes of automatic Beneficiaries:
Participant’s surviving spouse
Representative of Participant’s estate
6.6.3 Disclaimers by Beneficiaries
. A Beneficiary entitled to a distribution of all or a portion of a deceased Participant’s vested Account may disclaim an interest therein subject to the Plan Rules.
6.6.4 Special Rules.
Unless the Participant has otherwise specified in the Participant’s Beneficiary designation, the following rules shall apply:
(a)
If there is not sufficient evidence that a person designated as a Beneficiary was living at the time of the death of the Participant, it shall be deemed that the Beneficiary was not living at the time of the death of the Participant.
(b)
The automatic Beneficiaries specified in Section 6.6.2 and the Beneficiaries designated by the Participant shall become fixed at the time of the Participant’s death (subject to Section 6.6.3) so that, if a Beneficiary survives the Participant but dies before the receipt of all payments due such Beneficiary hereunder, such remaining payments shall be payable to the representative of such Beneficiary’s estate.
(c)
If the Participant designates as a Beneficiary the person who is the Participant’s spouse on the date of the designation, either by name or by relationship, or both, the dissolution, annulment or other legal termination of the marriage between the Participant and such person shall automatically revoke such designation. The foregoing shall not prevent the Participant from designating a former spouse as a beneficiary on a form that is both executed by the Participant and received by the Plan Administrator (i) after the date of the legal termination of the marriage between the Participant and such former spouse and (ii) during the Participant’s lifetime.
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(d)
A finalized marriage (other than a common law marriage) of a Participant subsequent to the date of filing of a Beneficiary designation shall revoke such designation unless the Participant’s new spouse had previously been designated as the Beneficiary.
(e)
Any designation of a nonspouse Beneficiary by name that is accompanied by a description of relationship to the Participant shall be given effect without regard to whether the relationship to the Participant exists either then or at the Participant’s death.
(f)
Any designation of a Beneficiary only by statement of relationship to the Participant shall be effective only to designate the person or persons standing in such relationship to the Participant at the Participant’s death.
6.7 Facility of Payment.
6.7.1 Legal Disability.
In case of the legal disability, including minority, of an individual entitled to receive any payment under this Plan, payment shall be made, if the Plan Administrator shall be advised of the existence of such condition:
(a)
to the duly appointed guardian, conservator or other legal representative of such individual, or
(b)
to a person or institution entrusted with the care or maintenance of the incompetent or disable Participant or Beneficiary, provided such person or institution has satisfied the Plan Administrator that the payment will be used for the best interest and assist in the care of such individual, and provided further, that no prior claim for said payment has been made by a duly appointed guardian, conservator or other legal representative of such individual.
6.7.2 Discharge of Liability.
Any payment made in accordance with the foregoing provisions of this Section 6.7 shall constitute a complete discharge of any liability or obligation of the Participating Employers under this Plan.
6.8 Tax Withholding.
The Participating Employer (or any other person legally obligated to do so) shall withhold the amount of any federal, state or local income tax, payroll tax or other tax that the payer reasonably determines is required to be withheld under applicable law with respect to any amount payable under this Plan. All benefits otherwise due hereunder shall be reduced by the amount to be withheld.
6.9 Payments Upon Rehire.
If a Participant who is receiving installment payments or due a deferred lump sum payment under this Plan is rehired, the payments will continue in accordance with the prior distribution elections.
6.10 Application for Distribution.
A Participant may be required to make application to receive payment and to complete other forms and furnish other documentation required by the Plan Administrator. Distribution shall not be made to any Beneficiary until such Beneficiary shall have filed an application for benefits in a form acceptable to the Plan Administrator and such application shall have been approved by the Plan Administrator and the Plan Administrator has determined that the applicant is entitled to payment.
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6.11 Acceleration of Distributions.
The Plan Administrator in its sole discretion may exercise discretion on behalf of the Company to accelerate the distribution of any payment under this Plan to the extent allowed under Code section 409A.
6.12 Delay of Distributions.
The Plan Administrator in its sole discretion may exercise discretion on behalf of the Company to delay the distribution of any payment under this Plan to the extent allowed under Code section 409A, including, but not limited to, as necessary to maximize the Company’s tax deductions as allowed pursuant to Code section 162(m) or to avoid violation of federal securities or other applicable law.
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SECTION 7
SOURCE OF PAYMENTS; NATURE OF INTEREST
7.1 Source of Payments.
7.1.1 General Assets.
Each Participating Employer will pay, from its general assets, the distribution of the Participant’s Account under Section 6, and all costs, charges and expenses relating thereto.
7.1.2 Trust.
Upon a Change-in-Control that causes the Plan to be terminated under Section 8.3.2, the trustee of the Trust will make distributions to Participants and Beneficiaries from the Trust in satisfaction of a Participating Employer’s obligations to make distributions under this Plan in accordance with and subject to the terms of the Trust to the extent such payments are not otherwise made directly by the Participating Employer.
7.2 Unfunded Obligation.
The obligation of the Participating Employers to make payments under this Plan constitutes only the unsecured (but legally enforceable) promise of the Participating Employers to make such payments. Participants and their Beneficiaries, heirs, successors and assigns shall have no legal or equitable rights, claims or interests in any specific property or assets of the Company or a Participating Employer, nor shall they be beneficiaries of, or have any rights, claims or interests in any life insurance policies, annuity contracts or the proceeds therefrom owned or which may be acquired by the Company.
7.3 Establishment of Trust.
The Participating Employers shall have no obligation to establish or maintain any fund, trust or account (other than a bookkeeping account or reserve) for the purpose of funding or paying the benefits promised under this Plan except as provided in the Trust. The Participating Employers may from time to time transfer to the Trust cash, or other marketable securities or other property acceptable to the trustee in accordance with the terms of the Trust. If the Participating Employers have deposited funds in the Trust, such funds shall remain the sole and exclusive property of the Participating Employer that deposited such funds.
7.4 Spendthrift Provision.
Except as otherwise provided in this Section 7.4, no Participant or Beneficiary shall have any interest in any Account which can be transferred nor shall any Participant or Beneficiary have any power to anticipate, alienate, dispose of, pledge or encumber the same while in the possession or control of the Participating Employers. The Plan Administrator shall not recognize any such effort to convey any interest under this Plan. No benefit payable under this Plan shall be subject to attachment, garnishment, or execution following judgment or other legal process before actual payment to such person.
7.4.1 Right to Designate Beneficiary.
The power to designate Beneficiaries to receive the Account of a Participant in the event of such Participant’s death shall not permit or be construed to permit such power or right to be exercised by the Participant
so as thereby to anticipate, pledge, mortgage or encumber such Participant’s Account or any part thereof, and any attempt of a Participant so to exercise said power in violation of this provision shall be of no force and effect and shall be disregarded by the Participating Employers.
7.4.2 Plan Administrator’s Right to Exercise Discretion.
This Section 7.4 shall not prevent the Plan Administrator from exercising, in its discretion, any of the applicable powers and options granted to it under any applicable provision hereof.
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7.5 Compensation Recovery (Recoupment)
.
Notwithstanding any other provision of the Plan, a Participant who engaged in intentional misconduct that contributed directly or indirectly, in whole or in part, to the need for a restatement of the Company’s consolidated financial statements and who becomes subject to the Company’s recoupment policy as adopted by the Compensation Committee of the Company’s Board of Directors and amended from time to time (“Recoupment Policy”) may have all or a portion of his or her benefit under this Plan forfeited and/or all or a portion of any distributions payable to the Participant or his or her Beneficiary recovered by the Company.
7.5.1
Any Deferral Credit and related Earnings Credits resulting from the deferral of Eligible Compensation that is subject to recovery under the Recoupment Policy may be forfeited and, in such event, a corresponding adjustment will be made to the Participant’s Account balance.
7.5.2
If a Participant has commenced distributions and is subject to a claim for recovery under the Recoupment Policy, then the Company may, subject to any limitations under Code section 409A, retain all or any portion of the Participant’s (or his or her Beneficiary’s) taxable distribution, net of state, federal or foreign tax withholding, to satisfy such claim.
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SECTION 8
ADOPTION, AMENDMENT AND TERMINATION
8.1 Adoption.
With the prior approval of the Plan Administrator, an Affiliate may adopt the Plan and become a Participating Employer by furnishing to the Plan Administrator a certified copy of a resolution of its board of directors adopting this Plan.
8.2 Amendment.
8.2.1 General Rule.
The Company, by action of its Board of Directors, or by action of a person so authorized by resolution of the Board of Directors and subject to any limitations or conditions in such authorization, may at any time amend the Plan, in whole or in part, for any reason, including but not limited to tax, accounting or insurance changes, a result of which may be to terminate the Plan for future deferrals provided, however, that no amendment shall be effective to decrease the benefits, nature or timing thereof payable under the Plan to any Participant with respect to deferrals made (and benefits thereafter accruing) prior to the date of such amendment. Written notice of any amendment shall be given each Participant then participating in the Plan.
8.2.2 Amendment to Benefit of Executive Officer.
Any amendment to the benefit of an executive officer under this Plan, to the extent approval of such amendment by the Board would be required by the Securities and Exchange Commission and its regulations or the rules of any applicable securities exchange, will require the approval of the Board.
8.2.3 No Oral Amendments.
No modification of the terms of this Plan Statement shall be effective unless it is in writing. No oral representation concerning the interpretation or effect of this Plan Statement shall be effective to amend this Plan Statement.
8.3 Termination and Liquidation.
8.3.1 General Rule.
(a)
To the extent necessary or reasonable to comply with any changes in law, the Board may at any time terminate and liquidate this Plan, provided such termination and liquidation satisfies the requirements of Code section 409A.
(b)
To the extent that a Participant’s benefit under the Plan will be immediately included in the income of the Participant, as determined by a court of competent jurisdiction or the Internal Revenue Service, to the extent permitted under Code section 409A, the Board may terminate and liquidate this Plan,
in whole or in part, as it relates to the impacted Participant.
8.3.2 Plan Termination and Liquidation on Account of a Change-in-Control.
Upon a Change-in-Control, the Plan will terminate and payment of all amounts under the Plan will be accelerated if and to the extent provided in this Section 8.3.2.
(a)
The Plan will be terminated effective as of the first date on which there has occurred both (i) a Change-in-Control under Section 1.2.8, and (ii) a funding of the Trust on account of such Change-in-Control (referred to herein as the “Plan termination effective date”) unless, prior to such Plan termination effective date, the Board affirmatively determines that the Plan will not be terminated as of such
29
effective date. The Board will be deemed to have taken action to irrevocably terminate the Plan as of the Plan termination effective date by its failure to affirmatively determine that the Plan will not terminate as of such date.
(b)
The determination by the Board under paragraph (a) constitutes a determination that such termination will satisfy the requirements of Code section 409A, including an agreement by the Company that it will take such additional action or refrain from taking such action as may be necessary to satisfy the requirements necessary to terminate and liquidate the Plan under paragraph (c) below.
(c)
In the event the Board does not affirmatively determine not to terminate the Plan as provided in paragraph (a), such termination shall be subject to either (i) or (ii), as follows:
(i)
If the Change-in-Control qualifies as a “change in control event” for purposes of Code section 409A, payment of all amounts under the Plan will be accelerated and made in a lump sum as soon a administratively practicable but not more than 90 days following the Plan termination effective date, provided the requirements of Treasury Regulation Section 1.409A-3(j)(4)(ix)(B) have been satisfied.
(ii)
If the Change-in-Control does not qualify as a “change in control event” for purposes of Code section 409A, payment of all amounts under the Plan will be accelerated and made in a lump sum as soon as administratively practicable but not more than 60 days following the 12 month anniversary of the Plan termination effective date, provided the requirements of Treasury Regulation Section 1.409A-3(j)(4)(ix)(C) have been satisfied.
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SECTION 9
CLAIM PROCEDURES
9.1 Claims Procedure.
Until modified by the Plan Administrator, the claim and review procedures set forth in this Section shall be the mandatory claim and review procedures for the resolution of disputes and disposition of claims filed under this Plan. An application for a distribution or withdrawal shall be considered as a claim for the purposes of this Section.
9.1.1 Initial Claim.
An individual may, subject to any applicable deadline, file with the Plan Administrator a written claim for benefits under this Plan in a form and manner prescribed by the Plan Administrator.
(a)
If the claim is denied in whole or in part, the Plan Administrator shall notify the claimant of the adverse benefit determination within ninety (90) days after receipt of the claim.
(b)
The ninety (90) day period for making the claim determination may be extended for ninety (90) days if the Plan Administrator determines that special circumstances require an extension of time for determination of the claim, provided that the Plan Administrator notifies the claimant, prior to the expiration of the initial ninety (90) day period, of the special circumstances requiring an extension and the date by which a claim determination is expected to be made.
9.1.2 Notice of Initial Adverse Determination.
A notice of an adverse determination shall set forth in a manner calculated to be understood by the claimant.
(a)
The specific reasons for the adverse determinations,
(b)
references to the specific provisions of this Plan Statement (or other applicable Plan document) on which the adverse determination is based,
(c)
a description of any additional material or information necessary to perfect the claim and an explanation of why such material or information is necessary, and
(d)
a description of the claim and review procedures, including the time limits applicable to such procedure, and a statement of the claimant’s right to bring a civil action under ERISA section 502(a) following an adverse determination on review.
9.1.3 Request for Review.
Within sixty (60) days after receipt of an initial adverse benefit determination notice, the claimant may file with the Plan Administrator a written request for a review of the adverse determination and may, in connection therewith submit written comments, documents, records and other information relating to the claim benefits. Any request for review of the initial adverse determination not filed within sixty (60) days after receipt of the initial adverse determination notice shall be untimely.
9.1.4 Claim on Review.
If the claim, upon review, is denied in whole or in part, the Plan Administrator shall notify the claimant of the adverse benefit determination within sixty (60) days after receipt of such a request for review.
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(a)
The sixty (60) day period for deciding the claim on review may be extended for sixty (60) days if the Plan Administrator determines that special circumstances require an extension of time for determination of the claim, provided that the Plan Administrator notifies the claimant, prior to the expiration of the initial sixty (60) day period, of the special circumstances requiring an extension and the date by which a claim determination is expected to be made.
(b)
In the event that the time period is extended due to a claimant’s failure to submit information necessary to decide a claim on review, the claimant shall have sixty (60) days within which to provide the necessary information and the period for making the claim determination on review shall be tolled from the date on which the notification of the extension is sent to the claimant until the date on which the claimant responds to the request for additional information or, if earlier, the expiration of sixty (60) days.
(c)
The Plan Administrator’s review of a denied claim shall take into account all comments, documents, records, and other information submitted by the claimant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.
9.1.5 Notice of Adverse Determination for Claim on Review.
A notice of an adverse determination for a claim on review shall set forth in a manner calculated to be understood by the claimant.
(a)
the specific reasons for the denial,
(b)
references to the specific provisions of this Plan Statement (or other applicable Plan document) on which the adverse determination is based,
(c)
a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claimant’s claim for benefits,
(d)
a statement describing any voluntary appeal procedures offered by the Plan and the claimant’s right to obtain information about such procedures, and
(e)
a statement of the claimant’s right to bring an action under ERISA section 502(a).
9.2 Rules and Regulations.
9.2.1 Adoption of Rules.
Any rule not in conflict or at variance with the provisions hereof may be adopted by the Plan Administrator.
9.2.2 Specific Rules.
(a)
No inquiry or question shall be deemed to be a claim or a request for a review of a denied claim unless made in accordance with the established claim procedures. The Plan Administrator may require that any claim for benefits and any request for a review of a denied claim be filed on forms to be furnished by the Plan Administrator upon request.
32
(b)
All decisions on claims and on requests for a review of denied claims shall be made by the Plan Administrator unless delegated as provided for in the Plan, in which case references in this Section 9 to the Plan Administrator shall be treated as references to the Plan Administrator’s delegate.
(c)
Claimants may be represented by a lawyer or other representative at their own expense, but the Plan Administrator reserves the right to require the claimant to furnish written authorization and establish reasonable procedures for determining whether an individual has been authorized to act on behalf of a claimant. A claimant’s representative shall be entitled to copies of all notices given to the claimant.
(d)
The decision of the Plan Administrator on a claim and on a request for a review of a denied claim may be provided to the claimant in electronic form instead of in writing at the discretion of the Plan Administrator.
(e)
In connection with the review of a denied claim, the claimant or the claimant’s representative shall be provided, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information necessary to make a benefit determination accompanies the filing.
(f)
The time period within which a benefit determination will be made shall begin to run at the time a claim or request for review is filed in accordance with the claims procedures, without regard to whether all the information necessary to make a benefit determination accompanies the filing.
(g)
The claims and review procedures shall be administered with appropriate safeguards to that benefit claim determinations are made in accordance with governing plan documents and, where appropriate, the plan provisions have been applied consistently with respect to similarly situated claimants.
(h)
The Plan Administrator may, in its discretion, rely on any applicable statute of limitation or deadline as a basis for denial of any claim.
9.3 Limitations and Exhaustion.
9.3.1 Claims.
No claim shall be considered under these administrative procedures unless it is filed with the Plan Administrator within two (2) years after the Participant knew (or reasonably should have known) of the general nature of the dispute giving rise to the claim. Every untimely claim shall be denied by the Plan Administrator without regard to the merits of the claim.
9.3.2 Lawsuits.
No suit may be brought by or on behalf of any Participant or Beneficiary on any matter pertaining to this Plan unless the action is commenced in the proper forum within two (2) years from the earlier of:
(a)
the date the Participant knew (or reasonably should have known) of the general nature of the dispute giving rise to the action, or
(b)
the date the claim was denied.
33
9.3.3 Exhaustion of Remedies.
These administrative procedures are the exclusive means for resolving any dispute arising under this Plan. As to such matters:
(a)
no Participant or Beneficiary shall be permitted to litigate any such matter unless a timely claim has been filed under these administrative procedures and these administrative procedures have been exhausted, and
(b)
determinations by the Plan Administrator (including determinations as to whether the claim was timely filed shall be afforded the maximum deference permitted by law.
9.3.4 Imputed Knowledge.
For the purpose of applying the deadlines to file a claim or a legal action, knowledge of all facts that a Participant knew or reasonably should have known shall be imputed to every claimant who is or claims to be a Beneficiary of the Participant or otherwise claims to derive an entitlement by reference to the Participant for the purpose of applying the previously specified periods.
34
SECTION 10
PLAN ADMINISTRATION
10.1 Plan Administration
10.1.1 Administrator.
The Company’s Vice President, Pay & Benefits (or any successor thereto) is the “administrator” of the Plan for purposes of section 3(16)(A) of ERISA. Except as otherwise expressly provided herein, the Plan Administrator shall control and manage the operation and administration of this Plan and make all decisions and determinations.
10.1.2 Authority and Delegation
. The Plan Administrator is authorized to:
(a)
Appoint one or more individuals or entities and delegate such of his or her powers and duties as he or she deems desirable to any individual or entity, in which case every reference herein made to Plan Administrator shall be deemed to mean or include the individual or entity as to matters within their jurisdiction. Such individual may be an officer or other employee of a Participating Employer or Affiliate, provided that any delegation to an employee of a Participating Employer or Affiliate will automatically terminate when he or she ceases to be an employee. Any delegation may be rescinded at any time; and
(b)
Select, employ and compensate from time to time such agents or consultants as the Plan Administrator may deem necessary or advisable in carrying out its duties and to rely on the advice and information provided by them.
10.1.3 Determination.
The Plan Administrator shall make such determinations as may be required from time to time in the administration of this Plan. The Plan Administrator shall have the discretionary authority and responsibility to interpret and construe this Plan Statement and to determine all factual and legal questions under this Plan, including but not limited to the entitlement of Participants and Beneficiaries, and the amounts of their respective interests. Each decision of the Plan Administrator shall be final and binding upon all parties. Benefits under the Plan will be paid only if the Plan Administrator decides in its discretion that the applicant is entitled to them.
10.1.4 Reliance.
The Plan Administrator may act and rely upon all information reported to it hereunder and need not inquire into the accuracy thereof, nor be charged with any notice to the contrary.
10.1.5 Rules and Regulations.
Any rule, regulation, policy, practice or procedure not in conflict or at variance with the provisions hereof may be adopted by the Plan Administrator.
10.2 Conflict of Interest.
If any individual to whom authority has been delegated or redelegated hereunder shall also be a Participant in this Plan, such Participant shall have no authority with respect to any matter specially affecting such Participant’s individual interest hereunder or the interest of a person superior to him or her in the organization (as distinguished from the interests of all Participants and Beneficiaries or a broad class of Participants and Beneficiaries), all such authority being reserved exclusively to other individuals as the case may be, to the exclusion of such Participant, and such Participant shall act only in such Participant’s individual capacity in connection with any such matter.
35
10.3 Service of Process.
In the absence of any designation to the contrary by the Plan Administrator, the General Counsel of the Company is designated as the appropriate and exclusive agent for the receipt of service of process directed to this Plan in any legal proceeding, including arbitration, involving this Plan.
10.4 Choice of Law.
Except to the extent that federal law is controlling, this Plan Statement will be construed and enforced in accordance with the laws of the State of Minnesota.
10.5 Responsibility for Delegate.
No person shall be liable for an act or omission of another person with regard to a responsibility that has been allocated to or delegated to such other person pursuant to the terms of the Plan Statement or pursuant to procedures set forth in the Plan Statement.
10.6 Expenses.
All expenses of administering the benefits due under this Plan shall be borne by the Participating Employers.
10.7 Errors in Computations.
It is recognized that in the operation and administration of the Plan certain mathematical and accounting errors may be made or mistakes may arise by reason of factual errors in information supplied to the Plan Administrator or trustee. The Plan Administrator shall have power to cause such equitable adjustments to be made to correct for such errors as the Plan Administrator, in its sole discretion, considers appropriate. Such adjustments shall be final and binding on all persons.
10.8 Indemnification.
In addition to any other applicable provisions for indemnification, the Participating Employers jointly and severally agree to indemnify and hold harmless, to the extent permitted by law, each director, officer and Employee of the Participating Employers against any and all liabilities, losses, costs or expenses (including legal fees) of whatsoever kind and nature which may be imposed on, incurred by or asserted against such person at any time by reason of such person’s services as an administrator in connection with this Plan, but only if such person did not act dishonestly, or in bad faith, or in willful violation of the law or regulations under which such liability, loss, cost or expense arises.
10.9 Notice.
Any notice required under this Plan Statement may be waived by the person entitled thereto.
36
SECTION 11
CONSTRUCTION
11.1 ERISA Status.
This Plan was adopted and is maintained with the understanding that it is an unfunded plan maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees as provided in section 201(2), section 301(a)(3) and section 401(a)(1) of ERISA. This Plan shall be interpreted and administered accordingly.
11.2 IRC Status.
This Plan is intended to be a nonqualified deferred compensation arrangement that will comply in form and operation with the requirements of Code section 409A and this Plan will be construed and administered in a manner that is consistent with and gives effect to such intention.
11.3 Rules of Document Construction.
In the event any provision of this Plan Statement is held invalid, void or unenforceable, the same shall not affect, in any respect whatsoever, the validity of any other provision of this Plan. The titles given to the various Sections of this Plan Statement are inserted for convenience of reference only and are not part of this Plan Statement, and they shall not be considered in determining the scope, purpose, meaning or intent of any provision hereof. The provisions of this Plan Statement shall be construed as a whole in such manner as to carry out the provisions thereof and shall not be construed separately without relation to the context.
11.4 References to Laws.
Any reference in this Plan Statement to a statute or regulation shall be considered also to mean and refer to any subsequent amendment or replacement of that statute or regulation unless, under the circumstances, it would be inappropriate to do so.
11.5 Appendices.
The Plan provisions that have application to a limited number of Participants or that otherwise do not apply equally to all Participants may be described in an appendix to this Plan Statement. In the event of a conflict between the terms of an appendix and the terms of the remainder of this Plan Statement, the appendix will control.
37
APPENDIX A
SPP Benefit
A-1 Purpose and Application.
The purpose of this Appendix A to this Plan Statement is to establish the rules for determining the amount of the SPP Benefit Transfer Credit under this Plan.
A-2 Background.
A-2.1 Transfer Credits.
The Company has adopted and maintained several nonqualified supplemental pension plans to provide retirement income to a select group of highly compensated and key management employees in excess of the retirement income that can be provided under the Target Pension Plan on account of limitations imposed by the Code. Effective April 30, 2002, the Company began converting the accrued supplemental pension benefits of certain participants to credits under this Plan as adjusted annually to reflect changes in such benefits.
A-2.2 Cash Balance Formula
. Effective January 1, 2003, the Target Pension Plan was amended to add a cash balance pension plan formula (referred to as the “personal pension account”). Depending on the date participation commences or an election was made, a Participant who has a benefit under the Target Pension Plan may have his or her accrued benefit under such plan based solely on the final average pay formula (the “traditional formula”), solely on the personal pension account, or a combination of the traditional formula (frozen as of December 31, 2002) and the personal pension account.
A-3 Definitions.
A-3.1 SPP I
“SPP I” means the Target Corporation SPP I.
A-3.2 SPP II
“SPP II” means the Target Corporation SPP II.
A-3.3 SPP III
“SPP III” means the Target Corporation SPP III.
A-4 SPP Benefit.
Each Participant’s SPP Benefit is equal to the sum of the benefits under Section A-4.1, Section A-4.2 and Section A-4.3.
A-4.1 Traditional Formula Benefit.
A Participant’s SPP Benefit is the excess, if any, of the monthly pension benefit under (a) over the monthly pension benefit under (b):
(a)
The monthly pension benefit the Participant would be entitled to under the Target Pension Plan, based on the “traditional formula,” if such formula were applied
(i)
without regard to the maximum benefit limitation required by Code section 415;
(ii)
without regard to the maximum compensation limitation under Code section 401(a)(17);
(iii)
as if the definition of “certified earnings” under the Target Pension Plan for a plan year included compensation that would have been paid in the plan year in the absence of the Participant’s election to defer payment of
38
the compensation to a later date pursuant to the provisions of a deferred compensation plan;
(iv)
without regard to the alternative benefit formula of Sections 4.6(a)(3) and 4.6(b)(2) of the Target Pension Plan.
(b)
The monthly pension benefit the Participant is entitled to receive under the Target Pension Plan on account of the “traditional formula.”
A-4.2 Personal Pension Account.
A Participant’s SPP Benefit includes the excess, if any, of the amount determined under (a) over the amount determined under (b):
(a)
The amount that would have been credited each quarter (including both “pay credits” and “interest credits”) to the Participant’s “personal pension account” under the Target Pension Plan, if such account were applied:
(i)
without regard to the maximum benefit limitations required by Code section 415;
(ii)
without regard to the maximum compensation limitation under Code section 401(a)(17);
(iii)
as if the definition of “certified earnings” under the Target Pension Plan for a calendar quarter included compensation that would have been paid during such calendar quarter in the absence of the Participant’s election to defer payment of the compensation to a later date pursuant to the provisions of a deferred compensation plan;
(iv)
as if a distribution had been made from such account equal to any SPP Benefit Transfer Credits made under Section 3.3.
(b)
The amount of the credits actually made to the Participant’s “personal pension account” under the Target Pension Plan.
A-4.3 SPP III.
For a Participant who was participating in SPP III, the Participant’s SPP Benefit includes the actuarial equivalent lump sum present value of the monthly pension benefit under (a) over the monthly pension benefit under (b):
(a)
The monthly pension benefits determined under Section A-4.1(a) determined by treating the Participant as five (5) years older than his or her actual age solely for purposes of determining the early reduction factor (but in no case shall the Participant’s age be deemed to be greater than age 65).
(b)
The monthly pension benefits determined under Section A-4.1(a).
A-4.4 Company Determination.
The actuarial lump sum present value of a Participant’s benefit determined under this Appendix A will be determined by the Company, in its sole and absolute discretion, by using such factors and assumptions as the Company considers appropriate in its sole and absolute discretion as of the date of distribution or transfer.
39
A-5 Forfeiture of SPP III Benefit.
A-5.1 Pre-Age 55 SPP III Forfeiture.
A Participant who has a Termination of Employment prior to attaining age 55 will forfeit that portion of his or her SPP Benefit Transfer Credit and Earnings Credit determined under Section A-5.3.
A-5.2 ICP Eligibility SPP III Forfeiture.
A Participant who becomes entitled to receive payments under an income continuation plan or policy of an Affiliate on account of his or her Termination of Employment after attaining age 55 will forfeit that portion of his or her SPP Benefit Transfer Credit and Earnings Credit determined under Section A-5.3.
A-5.3 Amount of SPP III Forfeiture.
A Participant’s forfeiture under Sections A-5.1 or A-5.2 is that portion of the SPP Benefit Transfer Credits attributable to his or her SPP Benefit determined under Section A-4.3 of Appendix A, and an amount of Earnings Credits equal to the investment adjustment that would have been credited on such SPP Benefit Transfer Credits at the Stable Value Crediting Rate Alternative.
40
APPENDIX B
Participants on Temporary Assignment to Canada
B-1.
Purpose; Application
. The purpose of this Appendix B to this Plan Statement is to set forth the application of specific provisions or exceptions to the general provisions of the Plan as they relate to those Participants who are transferred to Canada on a temporary assignment as a Seconded Participant.
B-2.
Definitions
. The following terms when used herein with initial capital letters, have the following meanings:
(a)
Letter of Assignment
. “Letter of Assignment” means the written instrument provided to and executed by a Seconded Participant, as amended, that, among other things, establishes the date of the Seconded Participant’s transfer to Canada.
(b)
Participation End Date
. “Participation End Date” means the last day of the full calendar month that includes the 34-month anniversary of the Seconded Participant’s date of transfer to Canada as a Seconded Participant or, if earlier, the last day of the calendar month that immediately precedes the month during which the Seconded Participant is scheduled, in his or her Letter of Assignment, to return to the United States. The Participation End Date as established by a Seconded Participant’s Letter of Assignment will become irrevocable on the January 1 of the calendar year that includes such Participation End Date.
(c)
Seconded Participant
. A “Seconded Participant” is a Participant under the Plan (i) who is transferred to Canada for a temporary assignment, (ii) who is employed by Target Corporation or a U.S. Affiliate on its U.S. payroll, (iii) who has executed a Letter of Assignment, and (iv) whose employment is seconded to a Canadian Affiliate.
B-3.
Eligibility
. A Seconded Participant is eligible to participate in the Plan until the last day of the calendar month that includes the Seconded Participant’s Participation End Date. A Seconded Participant who has ceased to be eligible to participate in the Plan under this Appendix B is again eligible to participate in the Plan as of the first day of the Plan Year following the Plan Year during which the Participant ceased to be a Seconded Participant.
B-4.
Deferral Elections
. A Participant’s deferral election for the calendar year that includes the Participation End Date:
(a) may not include an election to defer any Bonus Amount;
(b) may only defer specified dollar amounts of Base Salary for each of the calendar months through the Participation End Date, unless guidance under Section 409A of the Internal Revenue Code allows an alternative (e.g., percentage of Base Salary) election to be made for a partial year); and
(c) may not include any Base Salary deferrals for the calendar months following the Participation End Date.
41
B-5.
Restoration Match Credit
. A Seconded Participant who is eligible to receive a Restoration Match Credit under Section 3.2.1 shall be subject to the following rules for the Plan Year that includes such Participant’s Participation End Date and for each subsequent Plan Year during which the Participant is a Seconded Participant:
(a) For each entire calendar month through the Participation End Date (which includes the calendar month that ends with the Participation End Date), the Seconded Participant shall receive a Restoration Match Credit equal to the amount of the Restoration Match Credit the Seconded Participant would have received if Section 3.2.1(ii) were applicable and the Participation End Date was his or her Termination of Employment.
(b) The amount of the Restoration Match Credit for the Plan Year that includes the Participation End Date, determined without regard to Section B-3, that is in excess of the amount determined in Paragraph (a) shall be paid in cash to the Participant on the last business day of the Plan Year.
(c) For any Plan Year following the Plan Year that includes the Participant’s Participation End Date and during which the Participant is a Seconded Participant, the Participant will receive a cash payment on the last business day of the Plan Year equal to the Restoration Match Credit the Participant would have received if Section B-3 did not apply.
B-6.
Enhancement.
A Seconded Participant who is eligible to receive the Enhancement credit under Section 4.4 (and is not subject to exclusion or forfeiture under Section 4.4.2) shall be subject to the following rules for the Plan Year that includes the Participant’s Participation End Date and for each subsequent Plan Year during which the Participant is a Seconded Participant:
(a) For each entire calendar month through the Participation End Date (which includes the calendar month that ends with the Participation End Date), the Seconded Participant shall be eligible to receive the Enhancement as a credit to his or her Account, subject to the conditions set forth in Section 4.4.
(b) For each calendar month following the Participation End Date during which the Seconded Participant is employed by the Company or an Affiliate for the entire calendar month, the Participant will receive a cash payment on the last day of the calendar year that includes such month in an amount equal to the Enhancement multiplied by the balance of the Account on the first day of the month; provided, however, no cash payment will be made with respect to any period during which the Seconded Participant satisfies the conditions for exclusion or forfeiture under Section 4.4.2. The cash payment under this Paragraph (b) will be made whether or not the Participant would be treated as vested under Section 5.3.
42
Exhibit (10)I
TARGET CORPORATION
DDCP
(2011 PLAN STATEMENT)
Effective June 8, 2011
As Amended and Restated
TARGET CORPORATION
DDCP
(2011 Plan Statement)
TABLE OF CONTENTS
|
SECTION 1 INTRODUCTION; DEFINITIONS
|
1
|
|
1.1
Name of Plan; History
|
1
|
|
1.2 Definitions
|
1
|
|
1.2.1 Account
|
1
|
|
1.2.2 Affiliate
|
1
|
|
1.2.3 Beneficiary
|
1
|
|
1.2.4
Board
|
1
|
|
1.2.5
Change-in-Control
|
1
|
|
1.2.6 Code
|
2
|
|
1.2.7 [Intentionally left blank.]
|
3
|
|
1.2.8 Company
|
3
|
|
1.2.9 Crediting Rate Alternative
|
3
|
|
1.2.10 Deferral Credit
|
3
|
|
1.2.11 Director
|
3
|
|
1.2.12 Earnings Credit
|
3
|
|
1.2.13 Effective Date
|
3
|
|
1.2.14 Newly Eligible Director
|
3
|
|
1.2.15 Participant
|
3
|
|
1.2.16 Participating Employer
|
3
|
|
1.2.17 Plan
|
3
|
|
1.2.18 Plan Administrator
|
4
|
|
1.2.19 Plan Rules
|
4
|
|
1.2.20 Plan Statement
|
4
|
|
1.2.21 Plan Year
|
4
|
|
1.2.22 Retainer
|
4
|
|
1.2.23 Specified Employee
|
4
|
|
1.2.24 Termination of Employment
|
4
|
|
1.2.25 Trust
|
4
|
|
1.2.26 Unforeseeable Emergency
|
4
|
|
1.2.27 Valuation Date
|
4
|
|
SECTION 2 PARTICIPATION AND DEFERRAL ELECTIONS
|
5
|
|
2.1 Eligibility
|
5
|
|
2.2 Termination of Participation
|
5
|
|
2.3 No Guarantee of Continued Directorship
|
5
|
|
2.4 Deferral Elections
|
5
|
|
2.5 Deferral of Retainers
|
6
|
|
2.6 Elective Deferral Credit
|
6
|
|
2.7 Cancellation of Deferral Elections
|
6
|
|
SECTION 3 ADJUSTMENTS OF ACCOUNTS
|
7
|
|
3.1 Establishment of Accounts
|
7
|
|
3.2 Adjustments of Accounts
|
7
|
1
|
3.3 Investment Adjustment
|
7
|
|
3.4 Account Adjustments Upon a Change-in-Control or Plan Termination
|
7
|
|
SECTION 4 VESTING
|
8
|
|
4.1 Participant Accounts
|
8
|
|
SECTION 5 DISTRIBUTION
|
9
|
|
5.1 Distribution Elections
|
9
|
|
5.2 General Requirements
|
9
|
|
5.3 Six-Month Suspension for Specified Employees
|
10
|
|
5.4 Distribution on Account of Death
|
10
|
|
5.5 Distribution on Account of Unforeseeable Emergency
|
10
|
|
5.6 Designation of Beneficiaries
|
11
|
|
5.7 Facility of Payment
|
12
|
|
5.8 Tax Withholding
|
13
|
|
5.9 Application for Distribution
|
13
|
|
5.10 Acceleration of Distributions
|
13
|
|
5.11 Delay of Distributions
|
13
|
|
SECTION 6 SOURCE OF PAYMENTS; NATURE OF INTEREST
|
14
|
|
6.1 Source of Payments
|
14
|
|
6.2 Unfunded Obligation
|
14
|
|
6.3 Establishment of Trust
|
14
|
|
6.4 Spendthrift Provision
|
14
|
|
SECTION 7 ADOPTION, AMENDMENT AND TERMINATION
|
15
|
|
7.1 Adoption
|
15
|
|
7.2 Amendment
|
15
|
|
7.3 Termination and Liquidation
|
15
|
|
SECTION 8 CLAIM PROCEDURES
|
17
|
|
8.1 Claim Procedures
|
17
|
|
8.2 Rules and Regulations
|
18
|
|
8.3 Limitations and Exhaustion
|
19
|
|
SECTION 9 PLAN ADMINISTRATION
|
21
|
|
9.1 Plan Administration
|
21
|
|
9.2 Conflict of Interest
|
21
|
|
9.3 Service of Process
|
22
|
|
9.4 Choice of Law
|
22
|
|
9.5 Responsibility for Delegate
|
22
|
|
9.6 Expenses
|
22
|
|
9.7 Errors in Computations
|
22
|
|
9.8 Indemnification
|
22
|
|
9.9 Notice
|
22
|
|
SECTION 10 CONSTRUCTION
|
23
|
|
10.1 IRC Status
|
23
|
|
10.2 Rules of Document Construction
|
23
|
|
10.3 References to Laws
|
23
|
2
SECTION 1
INTRODUCTION; DEFINITIONS
1.1
Name of Plan; History.
This Plan (formerly known as the Target Corporation Director Deferred Compensation Plan) is a non-qualified, unfunded plan established for the purpose of allowing directors of the Company to defer the receipt of income. This Plan was originally adopted effective as of January 1, 1997 and was amended at various times thereafter. Effective January 1, 2005 (and other effective dates as specifically provided), this Plan was operated in compliance with Code section 409A. Effective January 29, 2006, members of the Board ceased to be eligible to receive enhanced earnings on their account balances. The Plan, which is intended to comply with Code section 409A, was amended and restated effective January 1, 2009. This Plan Statement, which was amended and restated to reflect Plan administration and amendment changes authorized by the Board on November 10, 2010 and modification of the Change in Control definition, is effective as of June 8, 2011.
1.2
Definitions.
When the following terms are used herein with initial capital letters, they shall have the following meanings:
1.2.1
Account.
“Account” means the separate bookkeeping account representing the separate unfunded and unsecured general obligation of the Participating Employers established with respect to each person who is a Participant in this Plan. Within each Participant’s Account, separate subaccounts shall be maintained to the extent the Plan Administrator determines it to be necessary or desirable for the administration of this Plan.
1.2.2
Affiliate.
An “Affiliate” is the Company and all persons, with whom the Company would be considered a single employer under Code section 414(b) or 414(c).
1.2.3
Beneficiary.
“Beneficiary” means an individual (human being), a trust that is a United Sates person within the meaning of the Code, a person that has been recognized as a charitable organization under Code section 170(b), or the Participant’s estate designated in accordance with Section 5.6 to receive all or a part of the Participant’s Account in the event of the Participant’s death prior to full distribution thereof. A person so designated shall not be considered a Beneficiary until the death of the Participant.
1.2.4
Board.
“Board” is the Board of Directors of the Company, or such committee of the Board of Directors to which the Board of Directors of the Company has delegated the respective authority.
1.2.5
Change in Control.
“Change in Control” means one of the following:
(a)
Individuals who are Continuing Directors cease for any reason to constitute 50% or more of the directors of the Company; or
(b)
30% or more of the outstanding voting power of the Voting Stock of the Company is acquired or beneficially owned (within the meaning of Rule 13d-3 under the Exchange Act) by any Person, other than an entity resulting from a Business Combination in which clauses (x) and (y) of Section 1.2.5(c) apply; or
(c)
the consummation of a merger or consolidation of the Company with or into another entity, a statutory share exchange, a sale or other disposition (in one
1
transaction or a series of transactions) of all or substantially all of the Company’s assets or a similar business combination (each, a “Business Combination”), in each case unless, immediately following such Business Combination, (x) all or substantially all of the beneficial owners (within the meaning of Rule 13d-3 under the Exchange Act) of the Company’s Voting Stock immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of the voting power of the then outstanding shares of voting stock (or comparable voting equity interests) of the surviving or acquiring entity resulting from such Business Combination (including such beneficial ownership of an entity that, as a result of such transaction, owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries), in substantially the same proportions (as compared to the other beneficial owners of the Company’s Voting Stock immediately prior to such Business Combination) as their beneficial ownership of the Company’s Voting Stock immediately prior to such Business Combination, and (y) no Person beneficially owns, directly or indirectly, 30% or more of the voting power of the outstanding voting stock (or comparable equity interests) of the surviving or acquiring entity (other than a direct or indirect parent entity of the surviving or acquiring entity, that, after giving effect to the Business Combination, beneficially owns, directly or indirectly, 100% of the outstanding voting stock (or comparable equity interests) of the surviving or acquiring entity); or
(d)
approval by the shareholders of a definitive agreement or plan to liquidate or dissolve the Company.
For purposes of this Section 1.2.5:
“Continuing Director” means an individual (A) who is, as of June 8, 2011, a director of the Company, or (B) who becomes a director of the Company after June 8, 2011 and whose initial appointment, or nomination for election by the Company’s shareholders, was approved by at least a majority of the then Continuing Directors; provided, however, that any individual whose initial assumption of office occurs as a result of either an actual or threatened contested election by any Person (other than the Board of Directors) seeking the election of such nominee in which the number of nominees exceeds the number of directors to be elected shall not be a Continuing Director;
“Person” means any individual, firm, corporation or other entity and shall include any group comprised of any person and any other person with whom such person or any affiliate or associate (as defined in Rule 14a-1(a) of the Exchange Act) of such person has any agreement, arrangement or understanding, directly or indirectly, for the purpose of acquiring, holding, voting or disposing of any capital stock of the Company;
“Voting Stock” means all then-outstanding capital stock of the Company entitled to vote generally in the election of directors of the Company: and
“Exchange Act” means the Securities Exchange Act of 1934, as amended and in effect from time to time, and the regulations promulgated thereunder.
1.2.6
Code.
“Code” means the Internal Revenue Code of 1986, as amended (including, when the context requires, all regulations, interpretations and rulings issued hereunder).
2
1.2.7
[Intentionally left blank.]
1.2.8
Company.
“Company” means Target Corporation, a Minnesota corporation, or any successor thereto.
1.2.9
Crediting Rate Alternative.
“Crediting Rate Alternative” means a hypothetical investment option used for the purpose of measuring income, gains and losses to the Accounts of Participants (as if the Accounts had in fact been so invested). The Crediting Rate Alternatives shall be designated in writing by the Plan Administrator.
1.2.10
Deferral Credit.
A “Deferral Credit” is the amount credited to a Participant’s Account pursuant to Section 2.6.
1.2.11
Director.
“Director” means any person who is a director of the Company or Participating Employer.
1.2.12
Earnings Credit.
“Earnings Credit” means the investment adjustment credited to a Participant’s Account pursuant to Section 3.3 or Section 3.4 as applicable.
1.2.13
Effective Date.
The “Effective Date” of this Plan Statement is June 8, 2011, except as otherwise provided.
1.2.14
Newly Eligible Director.
“Newly Eligible Director” means a Director who either (i) was not previously eligible to participate in this Plan or any other non-qualified, deferred compensation plans maintained for directors or independent contractors by a Participating Employer or other Affiliate, (ii) had been paid all amounts previously deferred under all non-qualified, deferred compensation plans maintained for directors or independent contractors by a Participating Employer or other Affiliate and had ceased to be eligible to continue to participate in such plans on or before the date of payment of all amounts due under such plans, or (iii) was not eligible to participate in any non-qualified deferred compensation plans (other than the accrual of earnings) maintained for directors or independent contractors by a Participating Employer or other Affiliate at any time during the 24-month period ending on the date the Director has again become eligible to participate in the Plan.
1.2.15
Participant.
A
“Participant” is a Director who becomes a Participant in this Plan in accordance with the provisions of Section 2. A Director who has become a Participant shall be considered to continue as a Participant in this Plan until the date when the Participant no longer has any Account under this Plan, or the date of the Participant’s death, if earlier.
1.2.16
Participating Employer.
“Participating Employer” means the Company and each other Affiliate that, with the consent of the Plan Administrator adopts this Plan. A Participating Employer shall cease to be a Participating Employer on the date it ceases to be an Affiliate.
1.2.17
Plan.
“Plan” means the nonqualified, unfunded income deferral program maintained by the Company and established for the benefit of Participants eligible to participate therein, as set forth in this Plan Statement. As used herein, “Plan” does not refer to the documents pursuant to which this Plan is maintained. That document is referred to herein as the “Plan Statement”. The Plan shall be referred to as the “Target Corporation DDCP” (formerly known as the Target Corporation Director Deferred Compensation Plan).
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1.2.18
Plan Administrator.
“Plan Administrator” means the individual designated in Sec. 10.1.1, or, if applicable, its delegate.
1.2.19
Plan Rules.
“Plan Rules” are rules, policies, practices or procedures adopted by the Plan Administrator or its delegate pursuant to Section 9.1.5.
1.2.20
Plan Statement. “
Plan Statement” means this document entitled “Target Corporation DDCP (2011 Plan Statement),” as adopted by the Company, effective as of June 8, 2011, as the same may be amended from time to time.
1.2.21
Plan Year.
“Plan Year” means the period from January 1 through December 31.
1.2.22
Retainer.
“Retainer” means the total cash fees paid to Participant for service on the Board (or any committee there of).
1.2.23
Specified Employee.
For purposes of complying with the requirements of Code section 409A(a)(2)(B)(i) (relating to the 6 month suspension of certain benefit distributions), an individual is a “Specified Employee” if on his or her Termination of Employment, the Company or other Affiliate has stock that is traded on an established securities market within the meaning of Code section 409A(a)(2)(B) and such individual is a “key employee” (defined below). For this purpose, an individual is a “key employee” during the 12-month period beginning on April 1 immediately following the calendar year in which the individual was employed by the Company and other Affiliates, and satisfied, at any time within such calendar year, the requirements of Code section 416(i)(1)(A)(i), (ii) or (iii) (without regard to Code section 416(i)(5)). An individual will not be treated as a Specified Employee if the individual is not required to be treated as a Specified Employee under Treasury Regulations issued under Code section 409A.
1.2.24
Termination of Employment.
“Termination of Employment” means a severance of a Participant’s directorship, and all independent contractor relationships, with the Company, each Participating Employer and all Affiliates, for any reason. Notwithstanding the foregoing, a Termination of Employment shall not occur unless such termination also qualifies as a “separation from service,” as defined under Code section 409A and related guidance thereunder.
1.2.25
Trust.
“Trust” means the Target Corporation Deferred Compensation Trust Agreement, dated January 1, 2009 by and between the Company and State Street Bank and Trust Company, as it is amended from time to time, or similar trust agreement.
1.2.26
Unforeseeable Emergency.
“Unforeseeable Emergency” means a severe financial hardship to the Participant resulting from an illness or accident of the Participant, the Participant’s spouse, or a dependent (within the meaning of Code section 152(a)) of the Participant, loss of the Participant’s property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant, but only if and to the extent such Unforeseeable Emergency constitutes an “unforeseeable emergency” under Code section 409A.
1.2.27
Valuation Date.
“Valuation Date” means each business day on which the New York Stock Exchange is open.
4
SECTION 2
PARTICIPATION AND DEFERRAL ELECTIONS
2.1
Eligibility.
A Director is eligible to participate in this Plan in accordance with and subject to the requirements of this Plan.
2.1.1
Eligibility for Newly Eligible Director.
A Newly Eligible Director is eligible to participate in this Plan on the date that is 30 days after he or she becomes a Director.
2.1.2
Initial Enrollment.
A Director shall, as a condition of participation in this Plan, complete such forms and make such elections in accordance with Plan Rules as the Plan Administrator may require for the effective administration of this Plan.
2.2
Termination of Participation.
Except as otherwise specifically provided in this Plan Statement or by the Plan Administrator, a Director who ceases to be a Director is not eligible to continue to participate in the Plan, provided, that any deferral elections in effect, and irrevocable, will continue to apply with respect to any Retainers. The Participant’s Account will continue to be governed by the terms of the Plan until such time as the Participant’s Account balance is paid in accordance with the terms of the Plan. A Participant or Beneficiary will cease to be such as of the date on which his or her entire Account balance has been distributed.
2.3
No Guarantee of Continued Directorship.
Participation in this Plan does not constitute a guarantee
or contract with any Participating Employer guaranteeing that the Director will continue to be a director. Such participation shall in no way interfere with any rights the shareholders of a Participating Employer would have in the absence of such participation to determine the duration of the director’s service.
2.4
Deferral Elections.
A Director who satisfies the eligibility requirements of Section 2 may, at the time and in the manner provided hereunder, elect to defer the receipt of his or her Retainer.
2.4.1
General.
Except as otherwise provided in this Plan, an election shall be made before the beginning of the Plan Year during which the Participant performs services for which the Retainer is earned. The election must designate the percentage of the Retainer which shall be deferred under this Plan. In accordance with Plan Rules, the Plan Administrator will determine the manner and timing required to file a deferral election. No deferral election shall be effective unless prior to the deadline for making such election, the Participant has filed with the Plan Administrator, in accordance with Plan Rules, an insurance consent form permitting the Participating Employer or Company to purchase and maintain life insurance coverage on the Director with the Participating Employer or Company as the beneficiary. An election to defer the Retainer for the Plan Year or other period is irrevocable once it has been accepted by the Plan Administrator and the deadline for making such election has expired, except as otherwise provided under this Plan.
2.4.2
Newly Eligible Director.
For a Newly Eligible Director, the deferral election may be made after the first day of a Plan Year provided it is made within 30 days after becoming eligible to participate in this Plan. Such a deferral election by a Newly Eligible Director is irrevocable once it has been received by the Plan Administrator and the deadline for making such election has expired, except as otherwise provided under this Plan. Such election will be
5
effective with respect to Retainers for services commencing with the next full calendar quarter after the deferral election becomes irrevocable.
2.4.3
Terminations of Employment.
A Participant who completes a deferral election in accordance with this Section 2.4, but who has a Termination of Employment prior to the deadline for making such election has expired, will be deemed to have made no deferral election for the respective period.
2.5
Deferral of Retainers.
A Participant’s election to defer a Retainer is subject to the following requirements:
2.5.1
A deferral election will be effective with respect to the first Retainer paid for services performed during the Plan Year and such election will remain in effect through the last Retainer paid for services performed during the Plan Year.
2.5.2
The Retainer deferral percentage may not exceed 100%.
2.6
Elective Deferral Credit
. The Plan Administrator shall credit to the Account of each Participant the amount, if any, of the Retainer the Participant elected to defer pursuant to this Section 2. Such amount shall be credited as nearly as practicable as of the time or times when the Retainer would have been paid to the Participant but for the election to defer.
2.7
Cancellation of Deferral Elections.
Notwithstanding any provisions in the Plan to the contrary, an election to defer under this Section will be cancelled for the remaining portion of the Plan Year in the event the Participant has received a distribution on account of an Unforeseeable Emergency under Section 5.5. The revocation shall be made at the time and in the manner specified in Plan Rules and must otherwise comply with the requirements of Section 5.5.
6
SECTION 3
ADJUSTMENTS OF ACCOUNTS
3.1
Establishment of Accounts.
There shall be established for each Participant an Account which shall be adjusted as provided under Section 3.
3.2
Adjustments of Accounts
. On each Valuation Date, the Plan Administrator shall cause the value of the Account (or subaccount) to be increased (or decreased) for distributions, withdrawals, credits, debits and investment income, gains or losses charged to the Account.
3.3
Investment Adjustment
. The investment income, gains and losses shall be determined for the Accounts in accordance with the following:
3.3.1
Participant Elections
. In accordance with Plan Rules and procedures established by the Plan Administrator, each Participant shall prospectively elect, as part of the initial enrollment process, and from time to time thereafter, one or more Crediting Rate Alternatives that shall be used to measure income, gains and losses until the next Valuation Date.
3.3.2
Default Rate
. If a Participant fails to designate one or more Crediting Rate Alternatives to be used to measure income, gains and losses with respect to amounts credited to his or her Account, such amounts will be deemed to be invested in a default Crediting Rate Alternative designated by the Plan Administrator in accordance with Plan Rules.
3.3.3
Crediting
. As of each Valuation Date, each Participant’s Account shall be adjusted for income, gains and losses as if the Account had in fact been invested in the Crediting Rate Alternative(s) so selected.
3.3.4
Responsibility for Investing Adjustments
. The Plan Administrator will not be responsible in any manner to any Participant, Beneficiary or other person for any damages, losses or liabilities, costs or expenses of any kind arising in connection with any designation or elimination of a Crediting Rate Alternative or a Participant’s election of a Crediting Rate Alternative.
3.4
Account Adjustments Upon a Change-in-Control or Plan Termination.
3.4.1
In the event of a Plan termination following a Change-in-Control under Section 7.3.2 that causes a Trust to be established and funded pursuant to Section 6.3 where distribution of a Participant’s Account may not be made from the Trust within 60 days of the event because of restrictions imposed by Code section 409A, then the Participant’s Account as of the date of such event will no longer receive adjustments determined pursuant to Section 3.3.
3.4.2
On and after the date of an event described in Section 3.4.1, the Account will have an investment adjustment determined at an annual rate equal to the sum of the 10-Year U.S. Treasury Note plus 2%. The 10-Year U.S. Treasury Note rate will be determined as of the date of the Plan termination under Section 7.3.2, or if no such rate is available on that date, the immediately preceding date such rate is available, and reset each calendar quarter as necessary.
7
SECTION 4
VESTING
4.1
Participant Accounts.
The Participant Accounts are fully (100%) vested and non-forfeitable at all times.
8
SECTION 5
DISTRIBUTION
5.1 Distribution Elections.
Except as otherwise specifically provided in this Plan, a Participant may irrevocably elect for each Plan Year the form and time of distribution of the credits made to his or her Account for such Plan Year.
5.2 General Requirements.
A Participant’s distribution election must be made prior to the date the Participant’s deferral election becomes irrevocable. Earnings Credits will be distributed in the same form and time as in effect for the related Account credit. The election shall be made in the form and manner prescribed by Plan Rules.
5.2.1 Form of Distribution.
The Participant may elect among the following forms of distribution.
(a)
Installments.
A series of annual installments made over either five (5) years or ten (10) years commencing at a time provided under Section 5.2.2(a) or (b). For purposes of Code section 409A, installment payments will be treated as a series of separate payments at all times.
(b)
Lump Sum.
A single lump sum payment.
5.2.2 Time of Payment.
The Participant may elect among the following distribution commencement times:
(a)
Termination of Employment.
Within 60 days following the Participant’s Termination of Employment.
(b)
One-Year Anniversary of Termination of Employment.
Within 60 days following the one-year anniversary of the Participant’s Termination of Employment.
(c)
Fixed Payment Date.
Within 60 days of January 1 of the calendar year elected by the Participant at the time of deferral. If a Participant has a Termination of Employment prior to the fixed payment date, such amount shall be paid on the earlier of: (i) within 60 days following January 1 in the tenth year following the year of the Termination of Employment, or (ii) January 1 of the calendar year elected by the Participant at the time of deferral. The Plan Administrator will establish Plan Rules, procedures and limitations on establishing the number and times of the fixed payment dates available for Participants to elect.
(d)
Payouts in 2008 and 2009.
During 2007 and 2008, consistent with transition relief available under Code section 409A, and subject to Plan Rules:
(i)
Participants had an opportunity to elect during 2007 to receive a distribution of all or a portion of their Account valued as of December 31, 2007 to be distributed in January 2008.
(ii)
Participants had an opportunity to elect during 2008 to receive a distribution of all or a portion of their Account valued as of December 31, 2008 to be distributed in January 2009.
9
5.2.3 Installment Amounts.
The amount of the annual installments shall be determined by dividing the amount of the vested portion of the Account as of the most recent Valuation Date preceding the date the installment is being paid by the number of remaining installment payments to be made (including the payment being determined).
5.2.4 Small Benefit.
Subject to Section 5.3,
in the event that the vested Account balance of a Participant who has died or experienced a Termination of Employment under the Plan is less than the applicable dollar amount under Code section 402(g)(1)(B) for that Plan Year as of the date on which the Plan Administrator makes such determinations, the Plan Administrator (on behalf of the Company) reserves the right to have the Participant’s entire Account paid in the form of a single lump sum payment, provided the Plan Administrator’s exercise of discretion (on behalf of the Company) complies with the requirements of Treas. Reg. Sec. 1.409A-3(j)(4)(v).
5.2.5 Default.
If for any reason a Participant shall have failed to make a timely designation of the form or time of distribution with respect to credits for a Plan Year (including reasons entirely beyond the control of the Participant), except as provided in Section 5.3, the distribution shall be made as a single lump sum payment within 60 days following the Participant’s Termination of Employment.
5.2.6 No Spousal Rights
. No spouse, former spouse, Beneficiary or other person shall have any right to participate in the Participant’s designation of a form or time of payment.
5.3 Six-Month Suspension for Specified Employees.
Notwithstanding any other provision in this Section 5, if a Participant is a Specified Employee at Termination of Employment, then any distributions arising on account of the Participant’s Termination of Employment (other than on account of death) shall be suspended and not be made until (6) months have elapsed since such Participant’s Termination of Employment (or, if earlier, upon the date of the Participant’s death). Any payments that were otherwise payable during the six-month suspension period referred to in the preceding sentence, will be paid within 60 days after the end of such six-month suspension period.
5.4 Distribution on Account of Death.
Upon the death of a Participant, the Participant’s Account balance will be paid to the Participant’s Beneficiary in a single lump sum within 90 days following the Participant’s death.
5.5 Distribution on Account of Unforeseeable Emergency.
5.5.1 When Available.
A Participant may receive a distribution from the vested portion of his or her Account (which shall be deemed to include the deferrals that would have been made but for the cancellation under Section 5.5.3) if the Plan Administrator determines that such distribution is on account of an Unforeseeable Emergency and the conditions in Section 5.5.2 have been fulfilled. To receive such a distribution, the Participant must request a distribution by filing an application with the Plan Administrator and furnish such supporting documentation as the Plan Administrator may require. In the application, the Participant shall specify the basis for the distribution and the dollar amount to be distributed. If such request is approved by the Plan Administrator, distribution shall be made in a lump sum payment within 60 days following the approval by the Plan Administrator of the completed application.
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5.5.2 Limitations
. The amount that may be distributed with respect to a Participant’s Unforeseeable Emergency shall not exceed the amounts necessary to satisfy the emergency plus amounts necessary to pay taxes reasonably anticipated as a result of the distribution, after taking into account the extent to which such Unforeseeable Emergency is or may be relieved through reimbursement or compensation by insurance or otherwise by liquidation of the Participant’s assets (to the extent the liquidation of such assets would not itself cause severe financial hardship), and/or cancellation of deferrals pursuant to Section 5.5.3, provided the determination of such limitation is consistent with the requirements of Code section 409A(a)(2)(B)(ii).
5.5.3 Cancellation of Deferral Elections.
As provided by Section 2.7, in the event of a distribution under Section 5.5.1 the Plan Administrator will cancel the Participant’s deferral elections for the balance of the applicable Plan Year.
5.6 Designation of Beneficiaries.
5.6.1 Right to Designate or Revoke.
(a)
Each Participant may designate one or more primary Beneficiaries or secondary Beneficiaries to receive all or a specified part of such Participant’s vested Account in the event of such Participant’s death. If fewer than all designated primary or secondary Beneficiaries predecease the Participant, then the amount of such predeceased Beneficiary’s portion shall be allocated to the remaining primary or secondary Beneficiaries, as the case may be.
(b)
The Participant may change or revoke any such designation from time to time without notice to or consent from any spouse, any person named as Beneficiary or any other person.
(c)
No such designation, change or revocation shall be effective unless completed and filed with the Plan Administrator in accordance with Plan Rules during the Participant’s lifetime.
5.6.2 Failure of Designation
. If a Participant:
(a)
fails to designate a Beneficiary,
(b)
designates a Beneficiary and thereafter revokes such designation without naming another Beneficiary, or
(c)
designates one or more Beneficiaries and all such Beneficiaries so designated fail to survive the Participant, such Participant’s vested Account, shall be payable to the first class of the following classes of automatic Beneficiaries:
Participant’s surviving spouse
Representative of Participant’s estate
5.6.3 Disclaimers by Beneficiaries
. A Beneficiary entitled to a distribution of all or a portion of a deceased Participant’s vested Account may disclaim an interest therein subject to the Plan Rules.
11
5.6.4 Special Rules.
Unless the Participant has otherwise specified in the Participant’s Beneficiary designation, the following rules shall apply:
(a)
If there is not sufficient evidence that a person designated as a Beneficiary was living at the time of the death of the Participant, it shall be deemed that the Beneficiary was not living at the time of the death of the Participant.
(b)
The automatic Beneficiaries specified in Section 5.6.2 and the Beneficiaries designated by the Participant shall become fixed at the time of the Participant’s death (subject to Section 5.6.3) so that, if a Beneficiary survives the Participant but dies before the receipt of all payments due such Beneficiary hereunder, such remaining payments shall be payable to the representative of such Beneficiary’s estate.
(c)
If the Participant designates as a Beneficiary the person who is the Participant’s spouse on the date of the designation, either by name or by relationship, or both, the dissolution, annulment or other legal termination of the marriage between the Participant and such person shall automatically revoke such designation. The foregoing shall not prevent the Participant from designating a former spouse as a beneficiary on a form that is both executed by the Participant and received by the Plan Administrator (i) after the date of the legal termination of the marriage between the Participant and such former spouse and (ii) during the Participant’s lifetime.
(d)
A finalized marriage (other than a common law marriage) of a Participant subsequent to the date of filing of a Beneficiary designation shall revoke such designation unless the Participant’s new spouse had previously been designated as the Beneficiary.
(e)
Any designation of a nonspouse Beneficiary by name that is accompanied by a description of relationship to the Participant shall be given effect without regard to whether the relationship to the Participant exists either then or at the Participant’s death.
(f)
Any designation of a Beneficiary only by statement of relationship to the Participant shall be effective only to designate the person or persons standing in such relationship to the Participant at the Participant’s death.
5.7 Facility of Payment.
5.7.1 Legal Disability.
In case of the legal disability, including minority, of an individual entitled to receive any payment under this Plan, payment shall be made, if the Plan Administrator shall be advised of the existence of such condition:
(a)
to the duly appointed guardian, conservator or other legal representative of such individual, or
(b)
to a person or institution entrusted with the care or maintenance of the incompetent or disable Participant or Beneficiary, provided such person or institution has satisfied the Plan Administrator that the payment will be used for the best interest and assist in the care of such individual, and provided further,
12
that no prior claim for said payment has been made by a duly appointed guardian, conservator or other legal representative of such individual.
5.7.2 Discharge of Liability.
Any payment made in accordance with the foregoing provisions of this Section 5.7 shall constitute a complete discharge of any liability or obligation of the Participating Employers under this Plan.
5.8 Tax Withholding.
The Participating Employer (or any other person legally obligated to do so) shall withhold the amount of any federal, state or local income tax, payroll tax or other tax that the payer reasonably determines is required to be withheld under applicable law with respect to any amount payable under this Plan. All benefits otherwise due hereunder shall be reduced by the amount to be withheld.
5.9 Application for Distribution.
A Participant may be required to make application to receive payment and to complete other forms and furnish other documentation required by the Plan Administrator. Distribution shall not be made to any Beneficiary until such Beneficiary shall have filed an application for benefits in a form acceptable to the Plan Administrator and such application shall have been approved by the Plan Administrator and the Plan Administrator has determined that the applicant is entitled to payment.
5.10 Acceleration of Distributions.
The Plan Administrator in its sole discretion may exercise discretion on behalf of the Company to accelerate the distribution of any payment under this Plan to the extent allowed under Code section 409A.
5.11 Delay of Distributions.
The Plan Administrator in its sole discretion may exercise discretion on behalf of the Company to delay the distribution of any payment under this Plan to the extent allowed under Code section 409A, including, but not limited to, as necessary to maximize the Company’s tax deduction as allowed pursuant to Code section 162(m) or to avoid violation of securities law or other applicable law.
13
SECTION 6
SOURCE OF PAYMENTS; NATURE OF INTEREST
6.1 Source of Payments.
6.1.1 General Assets.
Each Participating Employer will pay, from its general assets, the distribution of the Participant’s Account under Section 5, and all costs, charges and expenses relating thereto.
6.1.2 Trust.
Upon a Change-in-Control that causes the Plan to be terminated under Section 7.3.2, the trustee of the Trust will make distributions to Participants and Beneficiaries from the Trust in satisfaction of a Participating Employer’s obligations to make distributions under this Plan in accordance with and subject to the terms of the Trust to the extent such payments are not otherwise made directly by the Participating Employer.
6.2 Unfunded Obligation.
The obligation of the Participating Employers to make payments under this Plan constitutes only the unsecured (but legally enforceable) promise of the Participating Employers to make such payments. Participants and their Beneficiaries, heirs, successors and assigns shall have no legal or equitable rights, claims or interests in any specific property or assets of the Company or a Participating Employer, nor shall they be beneficiaries of, or have any rights, claims or interests in any life insurance policies, annuity contracts or the proceeds therefrom owned or which may be acquired by the Company.
6.3 Establishment of Trust.
The Participating Employers shall have no obligation to establish or maintain any fund, trust or account (other than a bookkeeping account or reserve) for the purpose of funding or paying the benefits promised under this Plan except as provided in the Trust. The Participating Employers may from time to time transfer to the Trust cash, or other marketable securities or other property acceptable to the trustee in accordance with the terms of the Trust. If the Participating Employers have deposited funds in the Trust, such funds shall remain the sole and exclusive property of the Participating Employer that deposited such funds.
6.4 Spendthrift Provision.
Except as otherwise provided in this Section 6.4, no Participant or Beneficiary shall have any interest in any Account which can be transferred nor shall any Participant or Beneficiary have any power to anticipate, alienate, dispose of, pledge or encumber the same while in the possession or control of the Participating Employers. The Plan Administrator shall not recognize any such effort to convey any interest under this Plan. No benefit payable under this Plan shall be subject to attachment, garnishment, or execution following judgment or other legal process before actual payment to such person.
6.4.1 Right to Designate Beneficiary.
The power to designate Beneficiaries to receive the Account of a Participant in the event of such Participant’s death shall not permit or be construed to permit such power or right to be exercised by the Participant
so as thereby to anticipate, pledge, mortgage or encumber such Participant’s Account or any part thereof, and any attempt of a Participant so to exercise said power in violation of this provision shall be of no force and effect and shall be disregarded by the Participating Employers.
6.4.2 Plan Administrator’s Right to Exercise Discretion.
This Section 6.4 shall not prevent the Plan Administrator from exercising, in its discretion, any of the applicable powers and options granted to it under any applicable provision hereof.
14
SECTION 7
ADOPTION, AMENDMENT AND TERMINATION
7.1 Adoption.
With the prior approval of the Plan Administrator, an Affiliate may adopt the Plan and become a Participating Employer by furnishing to the Plan Administrator a certified copy of a resolution of its board of directors adopting this Plan.
7.2 Amendment.
7.2.1 General Rule.
The Company, by action of its Board of Directors, or by action of a person so authorized by resolution of the Board of Directors and subject to any limitations or conditions in such authorization, may at any time amend the Plan, in whole or in part, for any reason, including but not limited to tax, accounting or insurance changes, a result of which may be to terminate the Plan for future deferrals provided, however, that no amendment shall be effective to decrease the benefits, nature or timing thereof payable under the Plan to any Participant with respect to deferrals made (and benefits thereafter accruing) prior to the date of such amendment. Written notice of any amendment shall be given each Participant then participating in the Plan.
7.2.2 No Oral Amendments.
No modification of the terms of this Plan Statement shall be effective unless it is in writing. No oral representation concerning the interpretation or effect of this Plan Statement shall be effective to amend this Plan Statement.
7.3 Termination and Liquidation.
7.3.1 General Rule.
(a)
To the extent necessary or reasonable to comply with any changes in law, the Board may at any time terminate and liquidate this Plan, provided such termination and liquidation satisfies the requirements of Code section 409A.
(b)
To the extent that a Participant’s benefit under the Plan will be immediately included in the income of the Participant, as determined by a court of competent jurisdiction or the Internal Revenue Service, to the extent permitted under Code section 409A, the Board may terminate and liquidate this Plan,
in whole or in part, as it relates to the impacted Participant.
7.3.2 Plan Termination and Liquidation on Account of a Change-in-Control.
Upon a Change-in-Control the Plan will terminate and payment of all amounts under the Plan will be accelerated if and to the extent provided in this Section 7.3.2.
(a)
The Plan will be terminated effective as of the first date on which there has occurred both (i) a Change-in-Control under Section 1.2.5, and (ii) a funding of the Trust on account of such Change-in-Control (referred to herein as the “Plan termination effective date”) unless, prior to such Plan termination effective date, the Board affirmatively determines that the Plan will not be terminated as of such effective date. The Board will be deemed to have taken action to irrevocably terminate the Plan as of the Plan termination effective date by its failure to affirmatively determine that the Plan will not terminate as of such date.
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(b)
The determination by the Board under paragraph (a) constitutes a determination that such termination will satisfy the requirements of Code section 409A, including an agreement by the Company that it will take such additional action or refrain from taking such action as may be necessary to satisfy the requirements necessary to terminate and liquidate the Plan under paragraph (c) below.
(c)
In the event the Board does not affirmatively determine not to terminate the Plan as provided in paragraph (a), such termination shall be subject to either (i) or (ii), as follows:
(i)
If the Change-in-Control qualifies as a “change in control event” for purposes of Code section 409A, payment of all amounts under the Plan will be accelerated and made in a lump sum as soon a administratively practicable but not more than 90 days following the Plan termination effective date, provided the requirements of Treasury Regulation Section 1.409A-3(j)(4)(ix)(B) have been satisfied.
(ii)
If the Change-in-Control does not qualify as a “change in control event” for purposes of Code section 409A, payment of all amounts under the Plan will be accelerated and made in a lump sum as soon as administratively practicable but not more than 60 days following the 12 month anniversary of the Plan termination effective date, provided the requirements of Treasury Regulation Section 1.409A-3(j)(4)(ix)(C) have been satisfied.
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SECTION 8
CLAIM PROCEDURES
8.1 Claims Procedure.
Until modified by the Plan Administrator, the claim and review procedures set forth in this Section shall be the mandatory claim and review procedures for the resolution of disputes and disposition of claims filed under this Plan. An application for a distribution or withdrawal shall be considered as a claim for the purposes of this Section.
8.1.1 Initial Claim.
An individual may, subject to any applicable deadline, file with the Plan Administrator a written claim for benefits under this Plan in a form and manner prescribed by the Plan Administrator.
(a)
If the claim is denied in whole or in part, the Plan Administrator shall notify the claimant of the adverse benefit determination within ninety (90) days after receipt of the claim.
(b)
The ninety (90) day period for making the claim determination may be extended for ninety (90) days if the Plan Administrator determines that special circumstances require an extension of time for determination of the claim, provided that the Plan Administrator notifies the claimant, prior to the expiration of the initial ninety (90) day period, of the special circumstances requiring an extension and the date by which a claim determination is expected to be made.
8.1.2 Notice of Initial Adverse Determination.
A notice of an adverse determination shall set forth in a manner calculated to be understood by the claimant.
(a)
The specific reasons for the adverse determinations,
(b)
references to the specific provisions of this Plan Statement (or other applicable Plan document) on which the adverse determination is based,
(c)
a description of any additional material or information necessary to perfect the claim and an explanation of why such material or information is necessary, and
(d)
a description of the claim and review procedures.
8.1.3 Request for Review.
Within sixty (60) days after receipt of an initial adverse benefit determination notice, the claimant may file with the Plan Administrator a written request for a review of the adverse determination and may, in connection therewith submit written comments, documents, records and other information relating to the claim benefits. Any request for review of the initial adverse determination not filed within sixty (60) days after receipt of the initial adverse determination notice shall be untimely.
8.1.4 Claim on Review.
If the claim, upon review, is denied in whole or in part, the Plan Administrator shall notify the claimant of the adverse benefit determination within sixty (60) days after receipt of such a request for review.
(a)
The sixty (60) day period for deciding the claim on review may be extended for sixty (60) days if the Plan Administrator determines that special circumstances require an extension of time for determination of the claim, provided that the
17
Plan Administrator notifies the claimant, prior to the expiration of the initial sixty (60) day period, of the special circumstances requiring an extension and the date by which a claim determination is expected to be made.
(b)
In the event that the time period is extended due to a claimant’s failure to submit information necessary to decide a claim on review, the claimant shall have sixty (60) days within which to provide the necessary information and the period for making the claim determination on review shall be tolled from the date on which the notification of the extension is sent to the claimant until the date on which the claimant responds to the request for additional information or, if earlier, the expiration of sixty (60) days.
(c)
The Plan Administrator’s review of a denied claim shall take into account all comments, documents, records, and other information submitted by the claimant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.
8.1.5 Notice of Adverse Determination for Claim on Review.
A notice of an adverse determination for a claim on review shall set forth in a manner calculated to be understood by the claimant.
(a)
the specific reasons for the denial,
(b)
references to the specific provisions of this Plan Statement (or other applicable Plan document) on which the adverse determination is based,
(c)
a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claimant’s claim for benefits,
(d)
a statement describing any voluntary appeal procedures offered by the Plan and the claimant’s right to obtain information about such procedures, and
8.2 Rules and Regulations.
8.2.1 Adoption of Rules.
Any rule not in conflict or at variance with the provisions hereof may be adopted by the Plan Administrator.
8.2.2 Specific Rules.
(a)
No inquiry or question shall be deemed to be a claim or a request for a review of a denied claim unless made in accordance with the established claim procedures. The Plan Administrator may require that any claim for benefits and any request for a review of a denied claim be filed on forms to be furnished by the Plan Administrator upon request.
(b)
All decisions on claims and on requests for a review of denied claims shall be made by the Plan Administrator unless delegated as provided for in the Plan, in which case references in this Section 8 to the Plan Administrator shall be treated as references to the Plan Administrator’s delegate.
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(c)
Claimants may be represented by a lawyer or other representative at their own expense, but the Plan Administrator reserves the right to require the claimant to furnish written authorization and establish reasonable procedures for determining whether an individual has been authorized to act on behalf of a claimant. A claimant’s representative shall be entitled to copies of all notices given to the claimant.
(d)
The decision of the Plan Administrator on a claim and on a request for a review of a denied claim may be provided to the claimant in electronic form instead of in writing at the discretion of the Plan Administrator.
(e)
In connection with the review of a denied claim, the claimant or the claimant’s representative shall be provided, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information necessary to make a benefit determination accompanies the filing.
(f)
The time period within which a benefit determination will be made shall begin to run at the time a claim or request for review is filed in accordance with the claims procedures, without regard to whether all the information necessary to make a benefit determination accompanies the filing.
(g)
The claims and review procedures shall be administered with appropriate safeguards to that benefit claim determinations are made in accordance with governing plan documents and, where appropriate, the plan provisions have been applied consistently with respect to similarly situated claimants.
(h)
The Plan Administrator may, in its discretion, rely on any applicable statute of limitation or deadline as a basis for denial of any claim.
8.3
Limitations and Exhaustion.
8.3.1
Claims.
No claim shall be considered under these administrative procedures unless it is filed with the Plan Administrator within two (2) years after the Participant knew (or reasonably should have known) of the general nature of the dispute giving rise to the claim. Every untimely claim shall be denied by the Plan Administrator without regard to the merits of the claim.
8.3.2
Lawsuits.
No suit may be brought by or on behalf of any Participant or Beneficiary on any matter pertaining to this Plan unless the action is commenced in the proper forum within two (2) years from the earlier of:
(a)
the date the Participant knew (or reasonably should have known) of the general nature of the dispute giving rise to the action, or
(b)
the date the claim was denied.
8.3.3
Exhaustion of Remedies.
These administrative procedures are the exclusive means for resolving any dispute arising under this Plan. As to such matters:
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(a)
no Participant or Beneficiary shall be permitted to litigate any such matter unless a timely claim has been filed under these administrative procedures and these administrative procedures have been exhausted, and
(b)
determinations by the Plan Administrator (including determinations as to whether the claim was timely filed shall be afforded the maximum deference permitted by law.
8.3.4
Imputed Knowledge.
For the purpose of applying the deadlines to file a claim or a legal action, knowledge of all facts that a Participant knew or reasonably should have known shall be imputed to every claimant who is or claims to be a Beneficiary of the Participant or otherwise claims to derive an entitlement by reference to the Participant for the purpose of applying the previously specified periods.
20
SECTION 9
PLAN ADMINISTRATION
9.1
Plan Administration
9.1.1
Administrator.
The Company’s Vice President, Pay and Benefits (or any successor thereto) is the “administrator” of the Plan. Except as expressly otherwise provided herein, the Plan Administrator shall control and manage the operation and administration of this Plan and make all decisions and determinations.
9.1.2
Authority and Delegation.
The Plan Administrator is authorized to:
(a)
Appoint one or more individuals or entities and delegate such of his or her powers and duties as he or she deems desirable to any individual or entity, in which case every reference herein made to Plan Administrator shall be deemed to mean or include the individual or entity as to matters within their jurisdiction. Such individual may be an officer or other employee of a Participating Employer or Affiliate, provided that any delegation to an employee of a Participating Employer or Affiliate will automatically terminate when he or she ceases to be an employee. Any delegation may be rescinded at any time; and
(b)
Select, employ and compensate from time to time such agents or consultants as the Plan Administrator may deem necessary or advisable in carrying out its duties and to rely on the advice and information provided by them.
9.1.3
Determination.
The Plan Administrator shall make such determinations as may be required from time to time in the administration of this Plan. The Plan Administrator shall have the discretionary authority and responsibility to interpret and construe this Plan Statement and to determine all factual and legal questions under this Plan, including but not limited to the entitlement of Participants and Beneficiaries, and the amounts of their respective interests. . Each decision of the Plan Administrator shall be final and binding upon all parties. Benefits under the Plan will be paid only if the Plan Administrator decides in its discretion that the applicant is entitled to them.
9.1.4
Reliance.
The Plan Administrator may act and rely upon all information reported to it hereunder and need not inquire into the accuracy thereof, nor be charged with any notice to the contrary.
9.1.5
Rules and Regulations.
Any rule, regulation, policy, practice or procedure not in conflict or at variance with the provisions hereof may be adopted by the Plan Administrator.
9.2
Conflict of Interest.
If any individual to whom authority has been delegated or redelegated hereunder shall also be a Participant in this Plan, such Participant shall have no authority with respect to any matter specially affecting such Participant’s individual interest hereunder or the interest of a person superior to him or her in the organization (as distinguished from the interests of all Participants and Beneficiaries or a broad class of Participants and Beneficiaries), all such authority being reserved exclusively to other individuals as the case may be, to the exclusion of such Participant, and such Participant shall act only in such Participant’s individual capacity in connection with any such matter.
21
9.3
Service of Process.
In the absence of any designation to the contrary by the Plan Administrator, the General Counsel of the Company is designated as the appropriate and exclusive agent for the receipt of service of process directed to this Plan in any legal proceeding, including arbitration, involving this Plan.
9.4
Choice of Law.
Except to the extent that federal law is controlling, this Plan Statement will be construed and enforced in accordance with the laws of the State of Minnesota.
9.5
Responsibility for Delegate.
No person shall be liable for an act or omission of another person with regard to a responsibility that has been allocated to or delegated to such other person pursuant to the terms of the Plan Statement or pursuant to procedures set forth in the Plan Statement.
9.6
Expenses.
All expenses of administering the benefits due under this Plan shall be borne by the Participating Employers.
9.7
Errors in Computations.
It is recognized that in the operation and administration of the Plan certain mathematical and accounting errors may be made or mistakes may arise by reason of factual errors in information supplied to the Plan Administrator or trustee. The Plan Administrator shall have power to cause such equitable adjustments to be made to correct for such errors as the Plan Administrator, in its sole discretion, considers appropriate. Such adjustments shall be final and binding on all persons.
9.8
Indemnification.
In addition to any other applicable provisions for indemnification, the Participating Employers jointly and severally agree to indemnify and hold harmless, to the extent permitted by law, each director, officer and employee of the Participating Employers against any and all liabilities, losses, costs or expenses (including legal fees) of whatsoever kind and nature which may be imposed on, incurred by or asserted against such person at any time by reason of such person’s services as an administrator in connection with this Plan, but only if such person did not act dishonestly, or in bad faith, or in willful violation of the law or regulations under which such liability, loss, cost or expense arises.
9.9
Notice.
Any notice required under this Plan Statement may be waived by the person entitled thereto.
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SECTION 10
CONSTRUCTION
10.1
IRC Status.
This Plan is intended to be a nonqualified deferred compensation arrangement that will comply in form and operation with the requirements of Code section 409A and this Plan will be construed and administered in a manner that is consistent with and gives effect to such intention.
10.2
Rules of Document Construction.
In the event any provision of this Plan Statement is held invalid, void or unenforceable, the same shall not affect, in any respect whatsoever, the validity of any other provision of this Plan. The titles given to the various Sections of this Plan Statement are inserted for convenience of reference only and are not part of this Plan Statement, and they shall not be considered in determining the scope, purpose, meaning or intent of any provision hereof. The provisions of this Plan Statement shall be construed as a whole in such manner as to carry out the provisions thereof and shall not be construed separately without relation to the context.
10.3
References to Laws.
Any reference in this Plan Statement to a statute or regulation shall be considered also to mean and refer to any subsequent amendment or replacement of that statute or regulation unless, under the circumstances, it would be inappropriate to do so.
23
Exhibit (10)J
TARGET CORPORATION
OFFICER INCOME CONTINUANCE POLICY STATEMENT
As Amended and Restated June 8, 2011
I.
CONCEPTS
A.
GENERAL
The present policy of the Corporation is to provide, under certain defined circumstances, Income Continuance Payments to certain “Officers” or “Executives” whose employment is terminated at the instance of the Corporation or who involuntarily or for good reason terminate within two years after a Change in Control. This policy is intended to assist in the occupational transition and financial security of those identified Executives whose services are no longer deemed required within the Corporation, who have during their tenure been faithful and honest employees, who do not during the period of those payments engage in disqualifying misconduct, and to the extent not compensated for services to a directly competitive employer and to assist Executives who involuntarily or for good reason terminate employment with the Corporation within two years after a Change in Control.
This will be known as the Officer Income Continuance Policy (“Officer-ICP”) of the Corporation. It will be interpreted and applied in accordance with this Statement of policy and with any subsequent amendment or restatement applicable to the Executive. The Corporation’s Income Continuance Policy Statement has been consolidated and transferred into the Officer-ICP.
The Officer-ICP has been operated in compliance with Internal Revenue Code (“Code”) Section 409A since January 1, 2005. Effective January 1, 2009, the Officer-ICP was amended to comply with Code Section 409A with respect to all amounts payable from the Officer-ICP that are considered nonqualified deferred compensation.
B.
ELIGIBILITY
To be eligible under Officer-ICP, an individual must be an Officer as specified in this Statement.
C.
REASSIGNMENT
An Executive will continue to have income protection under Officer-ICP for at least 12 calendar months (Eligibility Period) after internal reassignment to a position which does not otherwise include eligibility for Officer-ICP benefits.
D.
SPIN-OFF
An Executive who is employed by a business unit on the closing date of any Spin-Off which includes such business unit is no longer eligible for Officer-ICP.
1
E.
DISQUALIFICATION AND REDUCTION
Serious and deliberate misconduct in employment by an Executive resulting in discharge for cause can disqualify an Executive from Officer-ICP eligibility. Except as otherwise expressly provided in this Statement, after termination under Officer-ICP and normal windup of former duties an Executive will not be required to perform any regular services for the Corporation, and will be free to accept any other employment. Except as otherwise provided in this Statement, Officer-ICP Payments otherwise payable to an Executive will be reduced or excused in the amount of compensation from Directly Competitive Employment as specifically defined to the Executive in advance according to this Statement. An Executive otherwise entitled to Officer-ICP Payments after Termination or Reassignment will be disqualified from receiving future Payments by reason of serious and deliberate misconduct which is unlawful or clearly and seriously harmful to the Corporation, or to its interests.
F.
INTERPRETATION
Subject to the express terms of this Statement, the Chief Executive Officer of the Corporation will have sole and final authority to interpret the Officer-ICP and determine its application, and will interpret it consistently. Section I of this Statement is intended as a summary of the more detailed provisions of Section II. For that reason, Section II will control in the event of any difference.
II.
APPLICATION
A.
ELIGIBILITY PERIOD - DEFINITION
The “Eligibility Period” of an Executive is determined by the Executive’s most recent Salary Grade on the Notice of Termination or Reassignment by the Corporation; provided, however, in the event of a downgrade or downgrades, the Eligibility Period of the Executive’s highest Salary Grade shall continue to be applicable until the expiration of the Eligibility Period for that Salary Grade and then the Eligibility Period for the next highest Salary Grade shall be used until it expires and this process shall continue until the Eligibility Period for the last Salary Grade for which this Statement covers expires. It will be calculated according to the following schedule:
|
Salary Grade
|
|
Eligibility Period
|
|
|
|
|
|
|
37 or higher
|
|
24 months
|
|
|
35-36
|
|
22 months
|
|
|
32-34
|
|
20 months
|
|
|
30-31
|
|
18 months
|
|
|
28-29
|
|
16 months
|
|
|
26-27
|
|
14 months
|
|
lower than 26
|
|
12 months
|
2
An Executive entitled to Officer-ICP Payments will not be entitled to prepayment or other change in the payment schedule.
B.
ELIGIBILITY PERIOD - USE
The Eligibility Period of an Executive will determine the number of consecutive calendar months for which an Executive remains eligible for Officer-ICP Payments under this Statement after:
1.
Reassignment to a new position within the Corporation which is not designated an Officer Position, or
2.
A downgrade as set forth in A. above.
C.
PAYMENT PERIOD - DEFINITION
The Payment Period for an Executive will consist of the same number of months as the Executive’s Eligibility Period, measured from the time when Officer-ICP Payments first become payable to the Executive under the terms of this Statement and the agreement with the Executive implementing the terms of this Statement.
D.
PAYMENTS
1.
Amount
Each monthly Officer-ICP amount during the Payment Period will equal one twelfth (1/12) of the Executive’s Final Annual Cash Compensation from the Corporation which will consist of the sum of:
a.
Base Compensation
The annual Base (regular monthly or other fixed salary) rate payable as Cash Compensation to the Executive at the time of Notice of Termination or effective date of Reassignment or downgrade, but in no event less than the highest annual rate paid to the Executive at any time during a number of months equal to the Executive’s Eligibility Period immediately before the Notice of Termination or effective date of Reassignment or downgrade, and
b.
Performance Bonus
The average amount of the three annual Performance Bonuses most recently paid or credited to the Executive as Cash Compensation or deferred bonus, prior to Executive’s Notice of Termination or effective date of Reassignment or downgrade. For purposes of Officer-ICP, the Performance Bonus of an Executive shall be determined according to the applicable Short Term Incentive Plan of the Corporation, shall also include, if applicable, any discretionary bonus paid during said
3
applicable period on account of the Executive’s performance but outside of the purview of the then applicable Short Term Incentive Plan.
c.
Adjustment
The annual rate in dollars of each merit increase awarded to an Executive before Notice of Termination will be included in Base Compensation to determine the Executive’s Officer-ICP Payments. If the Executive’s annual rate of Base Compensation at the time of Notice of Termination has been increased or decreased to reflect a change from the Short Term Incentive Plan used to determine the Performance Bonus defined above, and the change is for the purpose of altering the future relationship of Bonus to total Annual Cash Compensation of the Executive, then the dollar amount of that increase or decrease in annual rate of Base Compensation will be excluded in determining ICP Payments.
d.
Installment Payments
Although the amount of an Executive’s benefit is determined on a monthly basis, such monthly amount shall be converted to and made at the same frequency as the Corporation’s standard payroll practices. With respect to any benefit under Officer-ICP that is considered deferred compensation pursuant to Code Section 409A, each installment payment shall be considered a separate payment.
2.
Commencement
Officer-ICP Payments, or entitlement to begin receiving them, will commence after the Corporation has received a valid unrevoked Release and Agreement from Executive, subject to any Set-offs, Adjustments and Withholding as specified herein. Unless the Executive is a Specified Employee, Officer-ICP Payments shall commence as of the date specified in the agreement with the Executive implementing the terms of an Executive’s Officer-ICP Payments, but not later than ninety (90) days following the date of the Executive’s separation from service, as defined under Code Section 409A. If at the time of the Executive’s separation from service, as defined under Code Section 409A, the Executive is a Specified Employee then no distribution of an Officer-ICP Payment that is considered deferred compensation pursuant to Code Section 409A will be made within 6 months of the separation from service, as defined under Code Section 409A, unless such Officer-ICP Payment would otherwise be exempt from the requirements of Code Section 409A. Any Officer-ICP Payments suspended during such 6 month period will be paid at the time of the first Officer-ICP Payment after such 6 month period. The Executive shall not be entitled to any compensation, benefits or perquisites, other than Officer-ICP Payments, after the date of the Executive’s separation from service, as defined under Code Section 409A.
4
3.
Set-Off and Withholding
Officer-ICP Payments are not intended to duplicate or be in addition to any other payment due between the Corporation and the Executive.
a.
Reduction
Each Payment otherwise due from the Corporation to the Executive will be reduced, dollar for dollar and in timing by all amounts which the Executive receives or is entitled to receive from the Corporation or under a plan, program or agreement maintained by and at the expense of the Corporation after the Employment Severance Date. This will include but not be limited to legally required payments during any required notice period or in connection with a plant closing, mass layoff, termination, severance or redundancy under any law, regulation or order. This will also include such sources as life and disability insurance. It will not apply to accrued vacation or expense reimbursement (both will be paid in cash at termination), pension proceeds, 401(k) proceeds, deferred compensation plans, Social Security, equity awards (for example, stock options, performance shares or restricted stock awards) or benefits payable under any Worker’s Compensation or similar law or regulation. Termination of employment by reason of mandatory retirement under a lawful and uniform policy of the employer applicable to the Executive will not be treated as a termination for Officer-ICP purposes. In no circumstance whatsoever shall there be any combination or duplication of any Officer-ICP Payments with any such other legally required payment or payments which shall result in the Executive receiving because of or due to termination of employment a combined total amount from the Corporation which is greater than the amount of Officer-ICP Payments to which Executive is entitled under this Officer-ICP before accounting for such legally required other payments.
b.
Adjustments
Taxes and other amounts which the Corporation reasonably determines are required by law or by the Executive’s written instruction will be withheld from Officer-ICP amounts otherwise payable.
4.
Recovery of Payments
.
In addition to any other remedies available to the Corporation on account of an Executive’s violation of the requirements under this Officer-ICP, the Corporation has the right to recover Officer-ICP Payments that have been made to the Executive as specified in the agreement with the Executive implementing the terms of an Executive’s Officer-ICP Payments.
5
E.
DEATH OF EXECUTIVE
If an Executive should die after Notice of Termination and before completion of the Executive’s Payment Period, the remaining Payments will be made by the Corporation as follows, without unnecessary interruption:
1.
Unless the Executive has otherwise designated in unrevoked writing, acknowledged in writing by the CEO, the surviving spouse of the Executive, if any, will be entitled to all remaining Payments.
2.
If the Executive has otherwise effectively designated in unrevoked writing, acknowledged in writing by the CEO, then Payment will be made to or for the account of the person or persons so designated as identified by the Corporation.
3.
In the absence of effective prior written designation by the Executive and of a known surviving spouse, the Corporation shall pay any remaining Payments to the Executive’s estate.
4.
In the interest of providing uninterrupted income to authorized beneficiaries of the Executive, any Officer-ICP Payment made with reasonable care and in good faith by the Corporation shall conclusively constitute Payment by the Corporation in accordance with and satisfaction of the entitlement of the Executive and Executive’s beneficiaries under Officer-ICP. No interest or other charge shall be payable by the Corporation or its representatives on any Payment delayed by the Corporation to permit reasonable verification of authorized recipient(s).
F.
DISQUALIFICATION
1.
No Executive will be disqualified from receipt of future Officer-ICP Payments by reason of any act or omission of anyone other than the Executive or one or more persons acting pursuant to the conscious and effective control of the Executive. Disqualification will be interpreted as follows:
a.
While Employed in the Corporation
Deliberate and serious disloyal or dishonest conduct in the course of employment will disqualify if it justifies and results in prompt discharge for specific cause under the established policies and practices of the Corporation as interpreted by the CEO for this purpose. Examples would include material unlawful conduct, material and conscious falsification or unauthorized disclosure of important records or reports, embezzlement or unauthorized conversion of property, serious violation of conflict of interest or vendor relations policies, and misuse or disclosure of significant trade secrets or other information likely to be of use to the detriment of the Corporation or its interests.
6
b.
After Notice of Termination
The Officer-ICP will not restrict an Executive’s conduct or employment opportunities after Notice of Termination, or any independent remedy of the Corporation or its representatives by reason of the Executive’s conduct while employed. The obligation of the Corporation to or for an Executive during the Eligibility and Payment Periods can be terminated only by the deliberate conduct of the Executive or one acting under the Executive’s conscious and effective control, and only as to any Officer-ICP Payments not yet due, by reason of one or more of the following events:
1)
Unauthorized removal, use or disclosure of strategic or operating plans, trade secrets, customer lists, internal systems or other significant proprietary information of or concerning the Corporation or its personnel, the use or disclosure of which is intended or likely to cause loss or reduction of business advantage or substantial injury to the Corporation or its management, business opportunities or interests.
2)
Expressing or endorsing publication of untrue statements which are intended or likely to receive broad public attention and to bring the Corporation or its interests, methods or representatives into disrepute.
3)
Providing materially false or misleading information concerning post-termination employment, or failure or refusal promptly and accurately to provide required information, verification or authorization required by the CEO as provided in this Statement and affecting any Officer-ICP payment due from the Corporation.
4)
Solicitation of or an offer to an employee within the Corporation to accept employment elsewhere, where the selection of or offer to the recruited employee was based in the whole or in part upon Executive’s knowledge or experience concerning the employee which was acquired by the Executive while employed within the Corporation or through one or more personal acquaintances employed within the Corporation.
5)
Exercising the discretion, authority or powers of an office or position held by an Executive after Notice of Termination, and whether or not before an Employment Severance Date, unless specifically authorized or directed in writing in advance by an authorized executive of the Corporation.
2.
Recoupment
Notwithstanding any other provisions of the Officer-ICP, pursuant to the Corporation’s recoupment policy as adopted by the Compensation Committee of
7
the Board of Directors (the “Committee”), as amended from time to time, and as in effect at the date of the Officer’s Employment Severance Date (“Recoupment Policy”), an Officer who engaged in intentional misconduct that contributed directly or indirectly, in whole or in part, to the need for a restatement of the Corporation’s consolidated financial statements may be disqualified from receipt of Officer-ICP Payments and the Committee retains the discretion to recover Officer-ICP Payments in such event.
a.
If the Committee determines Officer-ICP Payments are subject to recovery by the Corporation under this Section II.F.2. and the Recoupment Policy, the Committee shall be entitled, in its discretion, to demand repayment or cancellation of all or a portion of the maximum amount that can be recovered or cancelled, to the extent necessary to avoid unjust enrichment of the recipient under the circumstances.
b.
Pending a determination by the Committee on the application of this Section II.F.2. and the Recoupment Policy to a recipient of Officer-ICP Payments, the Committee shall have the authority to suspend any payments under the Officer-ICP.
c.
Upon a determination by the Committee that Officer-ICP payments are subject to recovery by the Corporation, the Corporation shall have the right, to the extent permitted by law (and without causing payments to become taxable under Section 409A of the Code), to set-off amounts due under this Section II.F.2. and the Recoupment Policy against any amount owed by the Corporation to the recipient of Officer-ICP Payments under any deferred compensation plan.
d.
An amendment of the Recoupment Policy shall not be treated as an amendment of the Officer-ICP under Section II.M.
3.
Preservation of Rights
Neither Officer-ICP nor its application shall waive, excuse, preclude or otherwise affect any right or remedy which the Corporation or any agent or representative of the Corporation may have, individually or collectively, under law by reason of conduct of the Executive during or after employment within the Corporation. Any remedies or rights set forth in this Section II.F. will be additional and not exclusive remedies.
G.
COMPETITIVE EMPLOYMENT
An Executive will receive not less than the full amount of the specified Officer-ICP Payments from the Employment Severance Date through the full Payment Period whether or not compensated by another employer for services in that period, unless disqualified under Section F., immediately above or as provided in this Section G. Compensation from employment which is not identified as Directly Competitive Employment (“DCE”) will be in addition to and will not reduce any Officer-ICP
8
Payment. If an Executive engages in DCE as specifically defined in advance and by this Statement, then each Officer-ICP Payment otherwise payable to the Executive will be currently reduced, dollar for dollar and in timing, by the amount of all Cash Compensation earned (whether on a current or deferred payment basis) from that source during the Payment Period.
These provisions will be interpreted and administered as follows:
1.
Purpose of Set-Off
Reduction of Officer-ICP Payments by the amount of Cash Compensation determined to be from DCE is not intended to restrict or penalize an Executive’s choice of alternative career opportunities, but only to preserve and reconcile the personal income security intended to be provided to Executives by Officer-ICP with the legitimate interests of the Shareholders of the Corporation in its highly competitive business context.
2.
Competitors Identified
At or about the time of Notice of Termination, the Corporation will inform the Executive in writing of those employers who have been individually and specifically determined to offer DCE for Officer-ICP purposes with respect to the Executive’s former employment within the Corporation. This designation will take into account existing operations and known plans of the Corporation and of the employers listed, and will not change during the Eligibility Period by reason of subsequent and mutually unanticipated changes in the operations or plans of either.
3.
Criteria
The following criteria will be employed in determining and administering Officer-ICP application to DCE.
a.
Selective Potential Detriment
A position will not be determined to constitute DCE for this purpose unless the CEO determines that the competitive effectiveness of the Executive and the new employer would be materially enhanced by the Executive’s current knowledge of such matters as the particular methods, policies, customers, suppliers, personnel or plans of the Corporation or its relevant business unit, as distinguished from the skills, experience and services of the Executive generally. The Corporation will identify for DCE purposes not more than five persons, firms or corporations who are determined for this purpose to be the leading direct and immediate competitors of the affected business of the Corporation.
9
b.
Preservation of Employment Opportunities
Whether or not an Executive’s most recent employment within the Corporation involved direct participation in the management of one or more business units, this section will not be used to discourage or penalize otherwise suitable employment opportunities in retailing or otherwise. The Corporation may require, as a condition of avoiding DCE designation for the Executive, a suitable written undertaking by the Executive and the new employer that the Executive remains obliged not to use or divulge trade secrets or proprietary information of the Corporation and that the Executive will not volunteer or be expected or required to violate that obligation in the course of the new employment.
c.
Relevant Considerations
In determining DCE, the CEO will give suitable consideration to geographic, product and price-line marketing overlaps, the nature and content of the Executive’s particular knowledge of strategies and plans within the Corporation, and the extent to which the Executive’s knowledge, as distinguished from skills, is likely to be a significant factor in generating an employment opportunity. Employment exclusively with a component of a larger business entity, which component is not presently or known to be planned to be a direct and immediate competitor of the Executive’s former business unit, will not be treated as DCE merely because one or more other components of that entity is or may become a competitor of the Corporation or one or more of its business units.
4.
Officer-ICP Payment Reduction
Uniform and responsible administration of Officer-ICP will require reliable information and verification to the Corporation.
a.
Reporting
To be eligible for any Officer-ICP Payment during a period of DCE, an Executive must, in addition to all other required reporting, provide to the Corporation in writing an accurate statement of the amount and payment schedule of all Cash Compensation or its equivalent to be received from the new DCE employer and of any subsequent change or correction of that amount, in such form and with such verification as the CEO may request in writing. An Executive will not be or become entitled to receive or retain any portion of any Officer-ICP Payment on account of any Payment Period for which that information, and any required verification, is not currently and accurately provided.
10
b.
Verification and Reconciliation
Required verification may include authorization for written confirmation from the employer and confidential disclosure of completed W-2, payroll and income tax forms of the Executive on which taxes have been or will be paid. If the Corporation withholds for more than 30 days any Officer-ICP Payment pending receipt of required information or verification which is later received and found satisfactory, the Corporation will pay interest at a realistic rate determined by the CEO for the period of delay. The Corporation and the Executive will each fairly and promptly adjust by payment any discrepancy later discovered between reported and actual Cash Compensation of the Executive, but the Corporation will have no liability for any amount not claimed by an Executive in writing before final expiration of the Executive’s Payment Period.
H.
REASSIGNMENT AND SPIN-OFF
1.
Reassignment and Other Adjustments
The Corporation may transfer an Executive to another position within the Corporation or reduce the Executive’s Base Compensation in Executive’s current position (collectively referred to as “Reassignment”). An Executive in the case of either event may elect Officer-ICP Payments if the Executive’s total monetary compensation after Reassignment will be measurably and substantially below the total monetary compensation of the Executive immediately before notice of Reassignment. For this purpose, total monetary compensation will include salary and bonus and continuation, or payment of the substantial equivalent in Cash Compensation, of all non-cash personal benefits and perquisites which the Executive was receiving immediately before and does not receive after the Reassignment and which are susceptible of accurate and objective measurement in dollars as determined by the CEO. An Executive who elects Officer-ICP Payments must terminate employment with the Corporation within thirty (30) days after notice of Reassignment to be eligible for such payments.
2.
Spin-Off
An Executive who is employed by a business unit on the closing date of any Spin-Off that includes such business unit is no longer eligible for Officer-ICP. A Spin-Off will be deemed to have occurred for purposes of this paragraph whether or not afterward: (a) the Executive has a personal ownership or incentive interest in the severed business unit or operation; or (b) the severed business unit or operation becomes, as a result of or after the severance, a part of one or more other legal entity or entities.
I.
REPORTING
For convenience and uniformity of administration, each Executive while eligible for or entitled to Officer-ICP Payments after Notice of Termination will be expected as a pre-
11
condition currently and accurately to inform the Corporation in writing of the name and business address of each employer of Executive during the Eligibility and Payment Periods, including a summary description of the nature and principal business locations of the new employer and the title, principal duties, address and telephone number of the Executive. Significant changes in employment, duties or location will also be promptly reported. The Corporation will not be required to make any Officer-ICP Payment for any period for which it has not received a current and accurate report as required by, or by the CEO in accordance with, this Statement.
J.
INTERPRETATION
1.
Any decision of the CEO will be: (1) Final and conclusive of the rights and obligations of all affected parties and (2) Applied uniformly as to all Executives then similarly situated (subject to subsequent Officer-ICP amendment); and (3) Not subject to separate determination or review by any public or private agency or authority except as expressly provided in this Statement.
2.
References to compensation and other monetary rates or measurements in this Statement and its applications are in current dollars, unadjusted by reason of inflation, deflation or otherwise.
3.
Any portion of a full calendar month or year will be prorated on a full calendar basis, without differential related to such considerations as working days or holidays. Any portion of a day will be treated as a full day, and measurement days will begin and end at midnight, current time. The fiscal year of the Corporation will be treated for all purposes as it is for financial reporting purposes.
4.
In the event of application or interpretation of Officer-ICP to an individual Executive who is a Director of the Corporation, or otherwise in its sole discretion, the Board of Directors of the Corporation or its authorized committee shall have and may exercise the sole, exclusive and final authority and discretion of the CEO for any purpose under Officer-ICP.
K.
RELEASE
Payment and receipt of Officer-ICP Payments will be in full and final satisfaction of all claims by or through an Executive against the Corporation and its representatives by reason of the employment of the Executive and its termination, except as otherwise expressly provided in this Statement or as required by applicable law or regulation. A signed and unrevoked written Release to that effect, in form approved by the CEO, will be delivered by the Executive or the Executive’s representative to the Corporation before any Officer-ICP Payment will become payable by the Corporation to or on account of the Executive. Such Release must be delivered to the Corporation within 60 days of the date of Executive’s separation from service, as defined under Code Section 409A. The Release may, without limitation, require a representation that no confidential documents concerning the Corporation or its intentions have been or will be removed or retained by the Executive without specific authority, and that the Executive will not
12
engage in disqualifying misconduct as defined in this Statement, in reference to the Corporation. The Release will not affect any conversion, vested or continuing rights available to an Executive under a plan of the Corporation other than Officer-ICP.
L.
GENERAL
The Officer-ICP and this Statement will not constitute or infer an obligation or undertaking to employ any person for any future period of time or in any specific position. Officer-ICP Eligibility or Payments after Notice of Termination will not create, continue or evidence any employment relationship with the Corporation. All employment privileges, benefits and perquisites not expressly and in writing reserved to an Executive under Officer-ICP will terminate on Executive’s separation from service, as defined under Code Section 409A, unless otherwise expressly agreed in advance in writing by the Corporation. This will not affect any conversion, vested or other continuing benefits or rights available to an Executive under a plan of the Corporation other than Officer-ICP.
M.
AMENDMENT
Officer-ICP and this Statement may not be terminated and may not be amended to reduce benefits with respect an Executive subject to the Officer-ICP until twelve months after the Executive receives written notice of the proposed termination or amendment. Except as set forth in the first sentence hereof, Officer-ICP and this Statement can be amended (including modification, restatement, suspension and termination) at any time, without prior written notice to or consultation with any Executive, by action of the Board of Directors or by action of a person so authorized by resolution of the Board of Directors and subject to any limitations or conditions in such authorization. Any such change will have effect as follows:
1.
Effective Date of Change
Except as set forth below, any amendment will be effective on the date of its adoption by the Board or committee or such other such subsequent date or dates as may be specified in the amendment or the resolution by which it is adopted. Unless otherwise mutually agreed in writing by the parties, (a) an amendment or termination will have no effect upon any Executive who at the time has received Notice of Termination under Officer-ICP and (b) a termination or an amendment that reduces benefits will not be effective as to an Executive subject to the Officer-ICP until twelve months after the Executive receives written notice of the termination or amendment.
2.
Notice of Amendment
The Corporation will promptly after any amendment provide to each Executive then eligible for Officer-ICP benefits a written statement of Officer-ICP as amended, and no amendment will be effective as to an Executive until the later of the date the Executive receives such written statement, or twelve months after notice as provided in 1 above. An Executive will be deemed to have received the
13
written statement if it is delivered to the Executive in person, or after 48 hours following its hand delivery or dispatch by mail or other suitable means of delivery to the last known address of the Executive.
3.
Acquiescence
An amendment will apply in full to an Executive if mutually agreed in writing by the Executive and the Corporation, or if the Executive or the Executive’s representative knowingly receives a benefit or improvement under Officer-ICP as amended which would not have been available without the amendment. If any such benefit from an amendment is knowingly received by an Executive with the consent of the Corporation, then all elements of that amendment and all prior Officer-ICP Statements and amendments then currently in effect will also be applicable to the Executive.
4.
Adjustment
A change in or addition or deletion of any benefit or perquisite plan or program of the Corporation applicable to an Executive may be expressly made subject to prior written agreement by the Executive upon a corresponding change in the interpretation or application of Officer-ICP to the Executive, to prevent redundant or other unintended benefits or detriments to the Executive or the Corporation which might otherwise result.
5.
Change in Control
No amendment or termination that would adversely affect the benefits or protections under the Officer-ICP of any eligible Executive as of the date of such amendment or termination shall be effective as to such individual unless no Change in Control occurs within twelve (12) months of the adoption of such amendment or termination, and any such attempted amendment or termination adopted within twelve (12) months prior to a Change in Control shall retroactively be null and void from the date of adoption as it relates to all such Executives who were eligible for benefits under the Officer-ICP prior to such adoption.
For two (2) years after a Change in Control, the Officer-ICP and this Statement may not be amended in any manner that would adversely affect the benefits or protections under the Officer-ICP of the Executives who are eligible for benefits under the Officer-ICP at the time of the Change in Control.
N.
APPLICABLE LAW
It is intended that the decision of the CEO, as specified in the Officer-ICP statement, will be exclusive and final with respect to any application or interpretation of Officer-ICP. If any body of law should be used or applied in determining the meaning or effect of Officer-ICP, in the interest of consistency this will be deemed an agreement made
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and executed in the State of Minnesota and the law of the State of Minnesota will control to the extent not preempted by federal law.
O.
DEFINITIONS
As used in this Statement:
1.
“Cash Compensation”
Means all amounts earned, whether or not currently payable, as wages, salary, bonus or a combination by an Executive, payable in cash or its equivalent or agreed to be in lieu of cash compensation. This will not include any stock-based compensation (whether such stock-based compensation is settled in cash or otherwise), or the value of employee or executive perquisites or benefits accrued or received pursuant to a plan of the employer which is uniformly applied to all of the employees of the employer who are similarly situated or is consistent with established prior practice for the position occupied by the Executive.
2.
“
CEO”
Means the Chief Executive Officer of Target Corporation, as then currently designated by its Board of Directors, or as otherwise expressly provided in the Officer-ICP Statement.
3.
“Corporation”
Means Target Corporation and each and all of its business units, including divisions and subsidiaries, unless otherwise clearly intended by the written context, and any person with whom Target Corporation would be considered a single employer under Code Sections 414(b) and 414(c).
4.
“Directly Competitive Employment” (or “DCE”)
Means personal services to, or for the direct and intended benefit of, a person, firm or corporation determined by the CEO and specified in writing to the Executive at or about the time of Notice of Termination as constituting DCE for Officer-ICP purposes.
5.
“Employment Severance Date”
All employment relationships between the Executive and the Corporation shall cease on the Employment Severance Date.
6.
“Executive” or “Officer” (both of which shall have the same definition)
Means an Executive Officer (as defined by the Securities and Exchange Commission) of the Corporation or an individual employed as an executive within the Corporation who currently, or within the designated Eligibility
15
Period, has been designated and categorized by the CEO as an Officer of the Corporation. Unless clearly otherwise intended by the written context, Executive or Officer will include all beneficiaries of and persons claiming by or through the designated employee or former employee.
An Executive or Officer is not eligible for Officer-ICP unless (1) his or her services are performed within the continental United States (including Alaska) or Hawaii or (2) his or her principal base of operations to which he or she frequently returns is within the continental United States (including Alaska ) or Hawaii.
7.
“Notice of Termination” (or “Notice”)
Means an unconditional written or oral statement of an Executive’s organizational superior that the Executive’s employment in the Corporation is terminated at the instance of the Corporation. Notice that an Executive’s employment will end because of achievement of the age of mandatory retirement under lawful policies of the Corporation will not be a Notice of Termination for Officer-ICP purposes.
8.
“Payments” (or “ICP Payments”)
By the Corporation will include all of those payments made by or on account of the Corporation under Officer-ICP and will include all of those made to or for the account of an Executive or a designated creditor or authorized representative or beneficiary of an Executive or deceased Executive.
9.
“Reassignment”
Means the transfer of an Executive to another position within the Corporation or a reduction on the Executive’s Base Compensation in Executive’s current position.
10.
“Spin-Off”
Means a sale of assets or stock or other disposition as a going business of the Corporation’s ownership or control of a business unit or other operation previously a part of the Corporation.
11.
“Change in Control”
“Change in Control” means one of the following:
(a)
Individuals who are Continuing Directors cease for any reason to constitute 50% or more of the directors of Target, or
(b)
30% or more of the outstanding voting power of the Voting Stock of Target is acquired or beneficially owned (within the meaning of Rule
16
13d-3 under the Exchange Act) by any Person other than an entity resulting from a Business Combination in which clauses (x) and (y) of subparagraph (c) apply, or
(c)
the consummation of a merger or consolidation of Target with or into another entity, a statutory share exchange, a sale or other disposition (in one transaction or a series of transactions) of all or substantially all of Target’s assets or a similar business combination (each, a “Business Combination”), in each case unless, immediately following such Business Combination, (x) all or substantially all of the beneficial owners (within the meaning of Rule 13d-3 under the Exchange Act) of Target’s Voting Stock immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of the voting power of the then outstanding shares of voting stock (or comparable voting equity interests) of the surviving or acquiring entity resulting from such Business Combination (including such beneficial ownership of an entity that, as a result of such transaction, owns Target or all or substantially all of Target’s assets either directly or through one or more subsidiaries), in substantially the same proportions (as compared to the other beneficial owners of Target’s Voting Stock immediately prior to such Business Combination) as their beneficial ownership of Target’s Voting Stock immediately prior to such Business Combination, and (y) no Person beneficially owns, directly or indirectly, 30% or more of the voting power of the outstanding voting stock (or comparable equity interests) of the surviving or acquiring entity (other than a direct or indirect parent entity of the surviving or acquiring entity, that, after giving effect to the Business Combination, beneficially owns, directly or indirectly, 100% of the outstanding voting stock (or comparable equity interests) of the surviving or acquiring entity), or
(d)
approval by the shareholders of a definitive agreement or plan to liquidate or dissolve Target.
For purposes of this Section II.O.11:
(i)
“Continuing Director” means an individual (A) who is, as of June 8, 2011, a director of Target, or (B) who becomes a director of Target after June 8, 2011, and whose initial appointment, or nomination for election by Target’s shareholders, was approved by at least a majority of the then Continuing Directors; provided, however, that any individual whose initial assumption of office occurs as a result of either an actual or threatened contested election by any Person (other than the Board of Directors) seeking the election of such nominee in which the number of nominees exceeds the number of directors to be elected shall not be a Continuing Director;
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(ii)
“Voting Stock” means all then-outstanding capital stock of Target entitled to vote generally in the election of directors of Target;
(iii)
“Person” means any individual, firm, corporation or other entity and shall include any group comprised of any person and any other person with whom such person or any affiliate or associate (as defined in Rule 14a-1(a) of the Exchange Act) of such person has any agreement, arrangement or understanding, directly or indirectly, for the purpose of acquiring, holding, voting or disposing of any capital stock of Target;
(iv)
“Target” means Target Corporation, a Minnesota corporation, and any successor thereof; and
(v)
“Exchange Act” means the Securities Exchange Act of 1934, as amended and in effect from time to time, and the regulations promulgated thereunder.
12.
“Salary Grade”
The numerical “Salary Grade” that the Executive is assigned under the Corporation’s salary grading system.
13.
“Auditor”
The “Auditor” is the independent auditor selected by a committee of two or more members of the Compensation Committee of the Board of Directors who are appointed from time to time by the Board and who are outside, independent Board members.
14.
“
Specified Employee
”
“Specified Employee” means an Executive who as of the date of his or her separation from service, as defined under Code Section 409A, is a “key employee” (as defined below), and the Corporation has stock that is traded on an established securities market (within the meaning of Code Section 409A(a)(2)(B)). The Executive is a “key employee” during the 12-month period beginning on the April 1 immediately following a calendar year, any time during which such Executive was a key employee as defined in Code Section 416(i) (without regard to Code Section 416(i)(5)), of the Corporation. An Executive will not be treated as a Specified Employee if he or she would not be a “specified employee” as defined under Treasury regulations issued under Code Section 409A.
NOTE:
Additional Definitions for particular purposes are contained in the text.
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P.
CHANGE IN CONTROL
Other provisions of this Statement to the contrary notwithstanding, in the event of a Change in Control:
1.
If an Executive’s employment with the Corporation is terminated, whether involuntarily or by the Executive for “good reason” (as defined in Section II.P.5), within two years following a Change in Control, an Executive shall be eligible for Officer-ICP Payments.
2.
To the extent the Officer ICP-Payments are not subject to Code Section 409A (including pursuant to a short-term deferral exception under Treasury Regulation Section 1.409A-1(b)(4) and separation pay plan exception under Treasury Regulation Section 1.409A-1(b)(9)), or such Change in Control qualifies as a “change in control event” under Code Section 409A, the Officer-ICP Payments shall be made in a lump sum payment within 20 days of the Executive’s separation of service, as defined under Code Section 409A; provided that if the Executive is a Specified Employee, the distribution of any such Officer-ICP Payments subject to Code Section 409A will be made 6 months after the separation of service, as defined under Code Section 409A. The lump sum amount shall be determined by discounting the periodic Officer-ICP Payments by a rate equivalent to the annual prime rate as published in the Wall Street Journal on the first business day following the Officer-ICP Payments.
3.
To the extent the Officer-ICP Payments are subject to Code Section 409A, (after considering any exceptions to Code Section 409A, including the short-term deferral exception under Treasury Regulation Section 1.409A-1(b)(4) and separation pay plan exception under Treasury Regulation Section 1.409A-1(b)(9)) and such Change in Control does not qualify as a change in control event under Code Section 409A, the Officer-ICP Payments shall be made according to the payment schedule set forth in Section II.D of this Statement; provided that if the Executive is a Specified Employee, the distribution of any such Officer-ICP Payments subject to Code Section 409A will be made 6 months after Executive’s separation from service, as defined under Code Section 409A.
4.
Except for the Release required by Section II.K of this Statement, all other obligations or restrictions of Executive under this Statement shall terminate.
5.
For purposes of this Section II.P, “good reason” shall mean any material diminution of the Executive’s position, authority, duties or responsibilities (including the assignment of duties materially inconsistent with the Executive’s position or a material increase in the time Executive is required by the Corporation or its successor to travel), any reduction in salary or in the Executive’s aggregate bonus and incentive opportunities, any material reduction in the aggregate value of the Executive’s employee benefits (including retirement, welfare and fringe benefits), or relocation to a principal work site
19
that is more than 40 miles from the Executive’s principal work site immediately prior to the Change in Control.
6.
If an Executive’s employment was terminated prior to a Change in Control, such Executive is receiving or is entitled to receive Officer-ICP Payments that will continue after the Change in Control, and the Change in Control qualified as a “change in control event” for purposes of Code Section 409A, then, subject to the six month delay for Specified Employees in effect under Section II.D.2, the Officer-ICP Payments due after such change in control event will be accelerated and paid to Executive in a lump sum as soon as practicable, but not more than 90 days following such change in control event. The lump sum under this Section II.P.6 will be calculated in the same manner as the lump sum calculated under Section II.P.2 above.
Q.
CERTAIN REDUCTION OF PAYMENTS BY THE CORPORATION
1.
Anything in this Officer-ICP to the contrary notwithstanding, the provisions of this Section Q shall apply to an Executive if the Auditor determines that each of a and b below are applicable.
a.
Payments hereunder, determined without application of this Section Q, either alone or together with other payments in the nature of compensation to the Executive which are contingent on or accelerated by a change in the ownership or effective control of the Corporation, or in the ownership of a substantial portion of the assets of the Corporation, or otherwise, would result in any portion of the payments hereunder being subject to an excise tax on excess parachute payments imposed under Code Section 4999.
b.
The excise tax imposed on the Executive under Section 4999 of the Code on excess parachute payments, from whatever source, would result in a lesser net aggregate present value of payments and distributions to the Executive (after subtraction of the excise tax) than if payments and distributions to the Executive were reduced to the maximum amount that could be made without incurring the excise tax.
2.
Under this Section Q the payments under this Officer-ICP shall be reduced (but not below zero) so that the present value of such payments and distributions shall equal the Reduced Amount. The “Reduced Amount” (which may be zero) shall be an amount expressed as the present value of the payments and distributions under this Officer-ICP that can be made without causing such payments and distributions to be subject to the excise tax under Section 4999 of the Code. To the extent necessary, the reductions in the payments and distributions will be applied to those Officer-ICP payments nearest the Employment Severance Date until the full amount of the necessary reductions have been applied. The determinations and reductions under this Section Q shall
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be made before any eliminations or reductions, if any, have been made under the Corporation’s Long Term Incentive Plan.
3.
If the Auditor determines that this Section Q is applicable to an Executive, it shall so advise the Corporation. The Corporation shall then promptly give the Executive notice to that effect together with a copy of the detailed calculation supporting such determination which shall include a statement of the Reduced Amount. Such notice shall also include a description of which and how much of the payments shall be eliminated or reduced (as long as after such election the aggregate present value of the payments equals the Reduced Amount.) For purposes of this Section Q, present value shall be determined in accordance with Section 280G of the Code. All the foregoing determinations made by the Auditor under this Section Q shall be made as promptly as practicable after it is determined that parachute payments will be made to the Executive if an elimination or reduction is not made. As promptly as practicable following the election hereunder, the Corporation shall pay to or for the benefit of the Executive such amounts as are then due to the Executive under this Officer-ICP and shall promptly pay to or for the benefit of the Executive in the future such amounts as become due to the Executive under this Officer-ICP.
4.
As a result of the uncertainty in the application of Section 280G of the Code at the time of the initial determination by the Auditor hereunder, it is possible that payments under this Officer-ICP will have been made which should not have been made (“Overpayment”) or that additional payments which will have not been made could have been made (“Underpayment”), in each case, consistent with the calculation of the Reduced Amount hereunder. In the event that the Auditor, based upon the assertion of a deficiency by the Internal Revenue Service against the Corporation or the Executive which the Auditor believes has a high probability of success, determines that an Overpayment has been made, any such Overpayment shall be treated for all purposes as a loan to the Executive which the Executive shall repay together with interest at the applicable Federal rate provided for in Section 7872(f)(2) of the Code; provided, however, that no amount shall be payable by the Executive if and to the extent such payment would not reduce the amount which is subject to the excise tax under Section 4999 of the Code. In the event that the Auditor, based upon controlling precedent, determines that an Underpayment has occurred, any such Underpayment shall be promptly paid to or for the benefit of the Executive together with interest at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the Code.
5.
In making its determination under this Section Q, the value of any non-cash benefit shall be determined by the Auditor in accordance with the principles of Section 280G(d)(3) of the Code.
6.
All determinations made by the Auditor under this Section Q shall be binding upon the Corporation and the Executive.
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CLAIMS PROCEDURE
for the
Target Corporation
Officer Income Continuance Policy Statement
When your employment with Target Corporation (the “Company”) terminates, the Company will tell you whether you are eligible for benefits from the above-referenced plan and, if so, the amount and timing of the payments that will be made to you.
If you believe that the Company’s determination is incorrect in any way, you must file a written claim with the Chief Executive Officer of the Company. The Chief Executive Officer or his or her delegate ordinarily will respond to the claim within 90 days of the date on which it is received. However, if special circumstances require an extension of the period of time for processing a claim, the 90-day period can be extended for an additional 90 days by giving you written notice of the extension and the reason that the extension is necessary.
If the claim for a benefit is approved, you will receive written notice of the amount of your benefit and the date on which payments will begin. If your claim is denied in whole or in part, you will be told in writing the specific reasons for the decision and will receive an explanation of the procedures for reviewing the decision.
If you do not agree with the decision, you can request that the Chief Executive Officer reconsider his or her decision by filing a written request for review within 60 days after receiving notice that the claim has been denied. You or your representative can also present written statements which explain why you believe that the benefit claimed should be paid and may review all pertinent plan documents.
Generally, the decision will be reviewed within 60 days after the Chief Executive Officer receives a request for reconsideration. However, if special circumstances require a delay, the review may take up to 120 days. (If a decision cannot be made within the 60-day period, you will be notified of this fact in writing.) You will receive a written notice of the decision which will explain the reasons for the decision by making specific reference to the Plan provisions on which the decision is based.
These Claims Procedures must be followed before you can file a lawsuit seeking recovery of any Officer-ICP Payments to which you claim to be entitled.
