Exhibit 10.8
HANESBRANDS INC.
EXECUTIVE DEFERRED COMPENSATION PLAN
(Effective January 1, 2006 and as Conformed Through the First Amendment)
Section 1
Introduction
1.1The Plan and Its Effective Date. The Hanesbrands Inc. Executive Deferred Compensation Plan is established as of January 1, 2006.
1.2Purpose.
| (a) | TheCompany has established thisPlan to allowEligible Employees to defer compensation as described herein. ThePlan is intended to be a top-hat plan described in Section 201(2) ofERISA. |
| (b) | Amounts deferred under thePlan on and after theEffective Date (and amounts described in Paragraph 5 of Supplement I to thePlan) are subject to the provisions of Section 409A of theCode; accordingly, as applied to those amounts, thePlan shall at all times be interpreted and administered so that it is consistent with suchCode section notwithstanding any provision of thePlan to the contrary. |
1.3Administration. ThePlan shall be administered by theCommittee. TheCommittee shall have the powers set forth in thePlan and the complete discretionary power to interpret its provisions. Any decisions of theCommittee shall be final and binding on all persons with regard to thePlan. TheCommittee may delegate its authority hereunder to the Senior Vice President, Human Resources of theCompany or to such other officers of theCompany as it may deem appropriate.
1.4Plan Year. ThePlan shall be administered on the basis of thePlan Year.
Section 2
Glossary of Terms
2.1 “Annual Base Salary” means the regular rate of compensation to be paid to theEligible Employee for services rendered during thePlan Year excluding severance or termination payments, commissions, foreign service payments, payments for consulting services and such other unusual or extraordinary payments as theCommittee may determine.
2.2 “Annual Bonus” means anEligible Employee’s Annual Bonus for a year due under an Annual Bonus Plan or any other short-term incentive plan of theCompany or anEmployer.
2.3 “Beneficiary” means the individual(s) or entity designated by aParticipant to receive the balance of theParticipant’s Deferral Account in the event of theParticipant’s death prior to the payment of theParticipant’s entireDeferral Account. To be effective, any beneficiary designation shall be filed in such manner as prescribed by theCommittee. AParticipant may revoke an existing beneficiary designation by filing anotherBeneficiary designation in such manner as prescribed by theCommittee. The latest beneficiary designation received by theCommittee shall be controlling. If noBeneficiary is named by aParticipant or if he survives all of his namedBeneficiaries, theDeferral Account shall be paid in the following order of precedence:
| (a) | theParticipant’s spouse; |
| (b) | theParticipant’s children (including adopted children), per stirpes; or |
| (c) | theParticipant’s estate. |
2.4 “Code” means the Internal RevenueCode of 1986, as amended.
2.5 “Committee” means the Employee Benefits Administrative Committee of the Sara Lee Corporation for as long as theCompany is a member of Sara Lee Corporation’s controlled group of corporations (as defined in Section 414 of theCode and the regulations thereunder). Thereafter, “Committee” shall mean the Employee Benefits Administrative Committee of theCompany.
2.6 “Company” means Hanesbrands Inc.
2.7 “Deferral” means the amount deferred pursuant to aDeferral Election and, as the context warrants, includes an “Employer Deferral” which is an amount credited to aParticipant’s Deferral Account by anEmployer.
2.8 “Deferral Account” means the bookkeeping account established in the name of theParticipant to hold all amounts deferred pursuant to theParticipant’s Deferral Elections or pursuant to anEmployer Deferral. As described in Supplement I to thisPlan, separate rules apply toTransferred Participant’s Grandfathered Deferrals.
2.9 “Deferral Crediting Date” means the business day coinciding with or next following the 15th day of each calendar month and the business day coinciding with or next following the last day of each calendar month.
2.10 “Deferral Election” means aParticipant’s irrevocable election to defer receipt of anIncentive Payment, anAnnual Bonus, and/orAnnual Base Salary for aPlan Year.
2.11 “Deferral Program” means the terms and conditions, described herein, pursuant to which aParticipant may on or after January 1, 2006 defer payment of anIncentive Payment, anAnnual Bonus, and/orAnnual Base Salary.
2.12 “Distribution Date” means the date on which anEligible Employee elects to have aDeferral paid pursuant to aDeferral Election.
2.13 “Effective Date” means the effective date of thePlan, January 1, 2006.
2.14 “Eligible Employee” means each salary band one through six level executive of theCompany or anEmployer on a U.S. payroll, the Chief Executive Officer of theCompany, the Executive Chairman of the Board of theCompany, and each other executive of theCompany or anEmployer who is identified as eligible by theCommittee.
2.15 “Employer” means any subsidiary or affiliate of theCompany incorporated under the laws of any state in the United States that has adopted thePlan with the consent of theCommittee.
2.16 “Employer Deferral” means an amount credited to aParticipant’s Deferral Account by anEmployer.
2.17 “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
2.18 “Incentive Payment” means any payment due under a long-term performance incentive plan of theCompany or anEmployer.
2.19 “Interest Account” means the investment alternative under which interest is credited to aParticipant’s Deferral Account eachPlan Year.
2.20 “Market Value” of common stock means the average of the high and low quotes for the applicable common stock on the applicable day on the New York Stock Exchange Composite Transaction Tape.
2.21 “Participant” means anyEligible Employee who makes aDeferral Election or has aDeferral Account under thePlan.
2.22 “Plan” means the Hanesbrands Inc. Executive Deferred Compensation Plan.
2.23 “Plan Year” means the calendar year.
2.24 “Re-Deferral Election” means aParticipant’s irrevocable election to extend aDistribution Date.
2.25 “Stock Equivalent Account” means the investment alternative under which aParticipant’s Deferral Account is treated as if it is invested in common stock equivalents.
2.26 “Top-50 Employee” means an employee who meets the key employee requirements ofCode Section 416(i)(1)(A)(i), (ii) or (iii) (applied in accordance with the
regulations thereunder and disregardingCode Section 416(i)(5)) at any time during the 12-month period ending each December 31st. If an employee is aTop-50 Employee as of any December 31st, the person is treated as aTop-50 Employee for the 12-month period beginning on the March 1st following that December 31st.
2.27 “Trust” means the grantorTrust orTrusts, if any, that theCompany or anEmployer may maintain to hold assets to be used for payment of benefits under thePlan.
2.28 “Unforeseeable Financial Emergency” means a severe financial hardship to theParticipant resulting from (i) an illness or accident of theParticipant or of a dependent of theParticipant; (ii) loss of theParticipant’s property due to casualty; or (iii) such other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of theParticipant as determined by theCommittee. If theCommitteedetermines that aParticipant has anUnforeseeable Financial Emergency, then theParticipant’s Deferral Elections then in effect shall be revoked for the balance of thePlan Year with respect to all amounts not previously deferred, however suchParticipantmay make a newDeferral Election in the followingPlan Year.
2.29 “Valuation Date” means the business day coinciding with or next following each June 30 and December 31.
Section 3
Participation and Deferral Elections
3.1Participation. Subject to the conditions and limitations of thePlan, anyEligible Employee who makes aDeferral Election as described in Section 3.2 shall become aParticipant in thePlan and shall remain aParticipant until the entire balance of hisDeferral Account is distributed to him.
3.2Rules for Deferral Elections. AnyEligible Employee may make aDeferral Election for aPlan Year in accordance with the rules set forth below.
| (a) | Eligibility.AnEligible Employee shall be eligible to make aDeferral Election only if he is an active, regular, full-time employee on the date such election is made. |
| (b) | Deferral Amounts.Under theDeferral Program, for eachPlan Year, anEligible Employee may make no more than oneDeferral Election for each of theEligible Employee’sIncentive Payments,Annual Bonus,Annual Base Salary and other payments in the amounts set forth below: |
| (i) | All or any portion of theEligible Employee’s Annual Base Salary. |
| (ii) | All or any portion not less than 25 percent of theEligible Employee’s Annual Bonus. |
| (iii) | All or any portion not less than 25 percent of theEligible Employee’s Incentive Payment. |
| (iv) | With respect to any other bonuses and incentive payments under any plan or arrangement established by theCompany or anEmployer as theCommittee may designate as compensation eligible for deferral under thisPlan, in such increments and subject to such limitations and restrictions as theCommittee may establish. |
| (c) | Timing and Other Requirements for Deferral Elections.AllDeferral Elections must be made in such form as theCommittee may prescribe and must be received by theCommittee no later than the date specified by theCommittee. With respect to deferrals ofAnnual Base Salary, the date specified by theCommittee generally may be no later than the end of the calendar year preceding the calendar year in which theAnnual Base Salary is anticipated to be paid. With respect to deferrals ofAnnual Bonuses, the date |
specified by theCommittee generally may be no later than the end of the calendar year preceding the beginning of the measurement period for suchAnnual Bonus; provided, however, that if theCommittee determines that suchAnnual Bonus qualifies as “performance-based compensation” (as defined inCode Section 409A(4)(B)(iii) and the regulations thereunder), suchDeferral Election may be made no later than 6 months before the end of the measurement period. With respect to deferrals ofIncentive Payments, the date specified by theCommittee generally may be no later than the end of the calendar year preceding the calendar year in which vesting in suchIncentive Payment would begin; provided, however, that if theCommittee determines that suchIncentive Paymentqualifies as “performance-based compensation” (as defined above), suchDeferral Election may be made no later than 6 months before the end of the measurement period. TheCommittee, in its complete discretion, may modify the general rules set forth above as permitted by IRS Notice 2005-1 and regulations issued underCode Section 409A.
| (d) | Special Rule for Newly Eligible Employees.Notwithstanding anything in paragraph (c) above to the contrary, in the first year in which anEligible Employee becomes eligible to participate in thePlan, suchParticipant may make aDeferral Election within 30 days after the date theParticipant first become eligible to participate; provided, however, that such election may only apply to compensation with respect to services to be performed subsequent to the election (withAnnual Bonuses andIncentive Paymentsprorated to the extent necessary to comply with regulations issued underCode Section 409A). |
| (e) | Elections Generally Irrevocable.Deferral Elections shall be irrevocable; provided, that if theCommittee determines that aParticipant has anUnforeseeable Financial Emergency, then theParticipant’s Deferral Elections then in effect shall be revoked with respect to all amounts not previously deferred. |
| (f) | Investment Election.As part of eachDeferral Election, anEligible Employee must elect the investment alternatives that shall apply to theDeferral in accordance with Section 4.2. |
| (g) | Distribution Dates.As part of eachDeferral Election, theEligible Employee must specify aDistribution Date. TheDistribution Dates specified may be the earlier of a specified date or theEligible Employee’s termination of employment, but in no case shall theDistribution Date be prior to the January 1 following the first anniversary of the date theDeferral Election is made. TheDistribution Dates specified in anEligible Employee’s Deferral Elections may, but need not necessarily, be the same for allDeferrals. Except as provided in subsection (i) below, eachDistribution Date is irrevocable and shall apply only to that portion of theParticipant’s Deferral Account which is attributable to theDeferral. |
| (h) | Distribution Form. As part of eachDeferral Election, anEligible Employee must elect the form in which theDeferral will be paid beginning on the selectedDistribution Date in accordance with Section 5.1. The distribution form specified may, but need not necessarily be the same for all distribution events. Except as provided in Section 5.1, anEligible Employee’s election as to the method of payment shall be irrevocable. |
| (i) | Re-Deferrals.AParticipant may make aRe-Deferral Election; provided, that noRe-Deferral Election shall be effective unless (i) theCommittee receives the election not later than 12 months prior to theDistribution Date to be changed, and (ii) the newDistribution Date is not earlier than the fifth anniversary of the priorDistribution Date. AllRe-Deferral Elections must be made |
pursuant to such rules as theCommittee may prescribe. TheCommittee, in its complete discretion, may modify the general rules set forth above as permitted by IRS Notice 2005-1 and regulations issued underCode Section 409A. In addition, during 2005 and 2006,Re-Deferral Elections need not be received by theCommittee 12 months prior to theDistribution Date to be changed, and the newDistribution Date may be earlier than the fifth anniversary of the priorDistribution Date; provided, however thatRe-Deferral Elections made in 2006 may neither specify aDistribution Date in 2006 nor defer amounts otherwise payable in 2006.
3.3Transfers. With the consent of theCommittee and subject to such limits and in accordance with such rules as theCommittee may establish in its sole discretion, aParticipant who is employed by a subsidiary of theCompany may elect to transfer his entireDeferral Account to a similar deferred compensation plan maintained by such subsidiary; provided, that no portion of aParticipant’s Deferral Account that is attributable to aDeferral, theDistribution Date for which has or will have occurred before the scheduled transfer date, may be transferred under this provision.
3.4Employer Deferrals. In addition toDeferrals made pursuant to aParticipant’s Deferral Election under this Section 3, anEmployer may credit anEmployer Deferral to aParticipant’s Deferral Account. The amount of anyEmployer Deferral shall be determined by theEmployer it its complete discretion. At the time theEmployer Deferral is credited to theParticipant’s Deferral Account, theEmployer shall specify theDistribution Date and the form of payment for theEmployer Deferral. Once credited to theParticipant’s Deferral Account, theEmployer Deferral shall be treated as any otherDeferral under thePlan.
Section 4
Deferral Accounts
4.1Deferral Accounts. All amounts deferred pursuant to aParticipant’s Deferral Elections under thePlan shall be allocated to theParticipant’s Deferral Account and theCommittee shall maintain a separate subaccount under aParticipant’s Deferral Account for eachDeferral.Deferrals shall be credited to theDeferral Account as of theDeferral Crediting Date coinciding with or next following the date on which, in the absence of aDeferral Election, theParticipant would otherwise have received theDeferral.
4.2Investment Alternatives. AParticipant must make an investment election at the time of eachDeferral Election. The investment election must be made pursuant to such rules as theCommittee may prescribe, subject to Section 4.3, and shall designate the portion of theDeferral which is to be treated as invested in each investment alternative. Subject to theCommittee’s right to change the investment alternatives in the future, the investment alternatives are as follows:
| (a) | Stock Equivalent Account. |
| (i) | Under theStock Equivalent Account, the value of theParticipant’s Deferral shall be determined as if theDeferral were invested in common stock equivalents as of theDeferral Crediting Date. Subject to the special transition rules set forth in subparagraph (ii) below, until theCompany ceases to be a member of Sara Lee Corporation’s controlled group of corporations (as defined in Section 414 of theCode and the regulations thereunder) (referred to herein as the “Spin-Off Date”), Sara Lee Corporation common stock equivalents shall be used, and after theSpin-Off Date,Company common stock equivalents shall be used. |
| (ii) | In connection with Sara Lee Corporation’s intent to distribute to its shareholders all of Sara Lee Corporation’s interest in theCompany, eachParticipant deemed to be invested in theStock Equivalent Accountwill automatically be deemed to have part of his or herStock Equivalent Account based onCompany common stock equivalents in the same ratio as all other shareholders of Sara Lee Corporation common shares. With respect to the remaining portion of theParticipant’s interest in theStock Equivalent Accountthat is determined based on Sara Lee Corporation common stock equivalents, eachParticipantinvested in theStock Equivalent Account shall be permitted to elect to have his or her interest in theStock Equivalent Account: (A) determined as if such amounts were invested inCompany common stock, or (B) transferred to theInterest Account. TheParticipant election described in the immediately preceding sentence shall be made at such times and in accordance with such rules as shall be established by theCommittee; provided, however, that no such election shall be permitted after the end of the quarter containing the one-year anniversary of theSpin-Off Date. If aParticipant with a balance in theStock Equivalent Account that is determined based on Sara Lee Corporation common stock equivalents does not make such an election pursuant to this subparagraph, amounts in theParticipant’s Stock Equivalent Account shall continue to be determined as if the amounts were invested in Sara Lee Corporation common stock; provided, however, that at the end of the quarter containing the one-year anniversary of theSpin-Off Date,any amounts which are still determined as if the amounts were invested in Sara Lee Corporation common |
stock shall thereafter be transferred to theInterest Account. The foregoing transition rules only apply toStock Equivalent Accountamounts deemed invested in the Sara Lee Corporation common stock equivalents or prior to December 31, 2006; after that date, investments in theStock Equivalent Account shall be determined as if the amounts were invested inCompany common stock.
| (iii) | The conversion of Sara Lee Corporation’s common stock equivalents toCompany stock equivalents shall be determined by theCommittee in its complete discretion based on theMarket Value for Sara Lee Corporation and forCompany common stock from time to time. |
| (iv) | The number of common stock equivalents to be credited to theParticipant’s Deferral Account and appropriate subaccounts on eachDeferral Crediting Date shall be determined by dividing theDeferral to be “invested” on that date by theMarket Value of the Sara Lee Corporation orCompany common stock, as applicable. Fractional stock equivalents will be computed to two decimal places. |
| (v) | An amount equal to the number of common stock equivalents multiplied by the dividend paid on applicable common stock on each dividend payment date shall be credited to theParticipant’s Deferral Account and appropriate subaccount as of theDeferral Crediting Date coincident with or next following the dividend payment date and “invested” in additional common stock equivalents as though such dividend credits were aDeferral. |
| (vi) | In the event of any stock dividend, stock split, combination or exchange of securities, merger, consolidation, recapitalization, spin-off or other distribution (other than normal cash dividends) of any or all of the assets of Sara Lee Corporation or of theCompany to stockholders, or any other similar change or event, such proportionate adjustments, if any, as theCommittee in its discretion may deem appropriate to reflect such change or event shall be made with respect to the number of common stock equivalents credited to aParticipant’s Deferral Account. |
| (vii) | The number of shares of applicable common stock to be paid to aParticipant on aDistribution Date shall be equal to the number of common stock equivalents accumulated in theStock Equivalent Account on theDistribution Date divided by the total of the payments to be made. All payments from theStock Equivalent Account shall be made in whole shares of common stock with fractional shares credited to federal income taxes withheld. |
| (b) | Interest Account. Under theInterest Account, interest will be credited to theParticipant’s Deferral Account on a monthly basis and on the date the final payment of aDeferral is to be made based on the balance in theParticipant’s Deferral Account deemed invested in theInterest Account on theValuation Date or such final payment date. The rate of interest to be credited will be set based on a current external rate determined by theCommittee from time to time; provided, however, that the rate of interest from theEffective Date through the end of theCompany’s 2006 fiscal year shall be 4.775%. If installment payments are elected, the amount to be paid to theParticipant on aDistribution Date shall be determined as follows: the amount of each installment shall be |
determined by dividing theParticipant’s Deferral Account balance by the number of remaining installment payments. All payments from theInterest Account shall be made in cash.
4.3Investment Elections and Changes. AParticipant’s investment elections shall be subject to the following rules:
| (a) | Except as provided in subsection (b) below with respect toIncentive Payments that would have been paid in the form of common stock, if theParticipant fails to make an investment election with respect to aDeferral, theDeferral shall be deemed to be invested in theInterest Account. |
| (b) | AnyDeferral attributable to anIncentive Payment in the form of common stock, restricted or otherwise, shall automatically be deemed to be invested in theStock Equivalent Account. |
| (c) | All investments in theStock Equivalent Account shall be irrevocable. |
| (d) | AParticipant may elect to transfer amounts invested in theInterest Account to theStock Equivalent Account as of anyValuation Date by filing an investment change election with theCommittee prior to theValuation Date the change is to become effective. The amount elected to be transferred to theStock Equivalent Account shall be treated as invested in common stock equivalents as of theValuation Date and the number of common stock equivalents to be credited to theParticipant’s Deferral Account and appropriate subaccounts as of theValuation Date shall be determined by dividing the amount to be transferred by theMarket Value of the applicable company stock on suchValuation Date. |
| (e) | Until invested as of theDeferral Crediting Date in either theInterest Account orStock Equivalent Account, aParticipant’s Deferral shall be credited with interest in such amount as theCommittee may determine. |
4.4Vesting. AParticipant shall be fully vested at all times in the balance of hisDeferral Account.
Section 5
Payment of Benefits
5.1Time and Method of Payment Under the Deferral Program.
| (a) | Distribution Options.Payment of aParticipant’s Deferral made under theDeferral Program shall be made in a single lump sum or in substantially equal annual installments over a period not exceeding ten years as elected by theParticipant in theDeferral Election. If aParticipant fails to elect a method of payment, such payment shall be payable in a single lump sum. |
| (b) | Time When Payments Begin.If aParticipant’s Deferral Account is payable in a single lump sum, the payment shall be made as soon as practicable following theDistribution Date but not later than 30 days following theDistribution Date. If aParticipant’s Deferral is payable in installment payments, then theParticipant’s Deferral shall be paid in substantially equal annual installments commencing as soon as practicable following theDistribution Date. Subsequent installment payments shall be paid each January 1st over the period as elected by theParticipant in theDeferral Election. Notwithstanding any other provision of thePlan to the contrary, distributions to be made to aTop-50 Employee upon his |
retirement or other termination of employment shall not be made before the date that is six (6) months after theTop-50 Employee’sretirement or other separation from service.
| (c) | Changing Distribution Method.AParticipant may make a one-time election after the originalDeferral Election to change the method of payment elected by theParticipant; provided, that such election shall be treated as aRe-Deferral Election. Installment payments shall be treated as a single payment for purposes of making aRe-Deferral Election, and the first scheduled installment will be the measuring standard for purposes of determining whether aRe-Deferral Election complies with the requirements of Section 3.2 above, specifically, noRe-Deferral Election shall be effective unless (i) theCommittee receives the election not later than 12 months prior to theDistribution Date to be changed, and (ii) the newDistribution Date is not earlier than the fifth anniversary of the priorDistribution Date. TheCommittee, in its complete discretion, may modify the general rules set forth above as permitted by IRS Notice 2005-1 and regulations issued underCode Section 409A. |
| (d) | Special Rule for Small Amounts.Notwithstanding any election by theParticipant regarding the timing and manner of payment of hisDeferrals, upon aParticipant’s retirement or other termination of employment, if the total value of theParticipant’s Deferral Account (excludingGrandfathered Deferrals described in Supplement I to thisPlan, and determined as of theValuation Date coinciding with or immediately following theParticipant’s termination of employment) is less than $25,000, then theParticipant’s Deferral Account shall be distributed in a lump sum as soon as practicable following theParticipant’s retirement or other termination of employment. Pursuant to Section 5.1(b) above, a six month delay may be required for any such distribution to aTop-50 Employee. |
5.2Payment Upon Total Disability. In the event aParticipant becomes totally disabled before all amounts credited to hisDeferral Account have been paid, payment of theParticipant’s Deferral Account shall be made in a lump sum as soon as practicable after theParticipantis determined to be totally disabled. AParticipant will be considered to be totally disabled if theParticipant is determined to be (i) unable to engage in any substantially gainful activity 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 12 months, or (ii) is, 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 12 months, receiving income replacement benefits for a period of not less than 3 months under an accident and health plan covering employees of theParticipant’s Employer.
5.3Payment Upon Death of a Participant. In the event aParticipant dies before all amounts credited to hisDeferral Account have been paid, payment of theParticipant’s Deferral Account shall be made to theParticipant’s Beneficiary in a single lump sum payment as soon as practicable after theParticipant’s death.
5.4Form of Payment. The payment of that portion of aDeferral deemed to be invested in theInterest Account shall be made in cash. The distribution of that portion of aDeferral deemed to be invested in theStock Equivalent Account less applicable withholding shall be distributed in whole shares of common stock with fractional shares credited to federal income taxes withheld.
5.5Unforeseeable Financial Emergency. If theCommittee or its designee determines that aParticipant has incurred anUnforeseeable Financial Emergency, theParticipant may withdraw in cash and/or stock the portion of the balance of hisDeferral Account needed to satisfy theUnforeseeable Financial Emergency, to the extent that theUnforeseeable Financial Emergency may not be relieved through reimbursement or compensation by insurance or otherwise or by liquidation of theParticipant’s assets, to the extent the liquidation of such assets would not itself cause severe financial hardship. A withdrawal on account of anUnforeseeable Financial Emergency shall be paid as soon as possible following the date on which the withdrawal is approved.
5.6Withholding of Taxes. TheCompany shall withhold any applicable Federal, state or local income tax from payments due under thePlan. TheCompany may also be required to withhold Social Security taxes, including the Medicare portion of such taxes, and any other employment taxes as necessary to comply with applicable laws.
Section 6
Miscellaneous
6.1Funding. Benefits payable under thePlan to anyParticipant shall be paid directly by theParticipant’s Employer (including theCompany if theParticipant is employed by theCompany). TheCompany and theEmployers shall not be required to fund, or otherwise segregate assets to be used for payment of benefits under thePlan. Notwithstanding the foregoing, theCompany and theEmployers, in the discretion of theCommittee, may maintain one or moreTrusts. The assets of any suchTrustswith respect to benefits payable to the employees of eachEmployer shall remain the assets of suchEmployer subject to the claims of its general creditors. Any payments by aTrust of benefits provided to aParticipant under thePlan shall be considered payment by theCompany or theEmployer and shall discharge theCompany or theEmployer of any further liability under thePlan for such payments.
6.2Account Statements. As soon as practical after the end of each calendar year (or after such additional date or dates as theCommittee, in its discretion, may designate), eachParticipant shall be provided with a statement of the balance of hisDeferral Account hereunder as of the last day of such calendar year (or as of such other dates as theCommittee, in its discretion, may designate).
6.3Employment Rights. Establishment of thePlan shall not be construed to give anyEligible Employee the right to be retained in theCompany’s service or to any benefits not specifically provided by thePlan.
6.4Interests Not Transferable. No benefit payable at any time under thePlan shall be subject in any manner to alienation, sale, transfer, assignment, pledge, attachment, or other legal process, or encumbrance of any kind, except (a) as provided for under the sections of aCompany plan or agreement that state theCompany’s authority to demand repayment of amounts owed to theCompany pursuant to those sections, (b) as required for purposes of withholding of any tax under the laws of the United States or any state or locality, or (c) pursuant to a court-approved property settlement agreement issued incident to theParticipant’s divorce. Any attempt to alienate, sell, transfer, assign, pledge or otherwise encumber any such benefits, whether currently or thereafter payable, shall be void. No person shall, in any manner, be liable for or subject to the debts or liabilities of any person entitled to such benefits. If any person shall attempt to, or shall alienate, sell, transfer, assign, pledge or otherwise encumber his benefits under thePlan, or if by any reason of his bankruptcy or other event happening at any time, such benefits would devolve upon any other person or would not be enjoyed by the person entitled thereto under thePlan, then theCommittee, in its discretion, may terminate the interest in any such benefits of the person entitled thereto under thePlan and hold or apply them for or to the benefit of such person entitled thereto under thePlan or his spouse, children or other dependents, or any of them, in such manner as theCommittee may deem proper.
6.5Forfeitures and Unclaimed Amounts. Unclaimed amounts shall consist of the amounts of theDeferral Account of aParticipant that are not distributed because of theCommittee’s inability, after a reasonable search, to locate aParticipant or hisBeneficiary, as applicable, within a period of two (2) years after theDistribution Date upon which the payment of any benefits becomes due. Unclaimed amounts shall be forfeited at the end of such two-year period. These forfeitures will reduce the obligations of theCompany under thePlan and theParticipant orBeneficiary, as applicable, shall have no further right to hisDeferral Account.
6.6Controlling Law. The law of North Carolina, without regard to any state’s choice of law principles, shall be controlling in all matters relating to thePlan to the extent not preempted byERISA.
6.7Gender and Number. Words in the masculine gender shall include the feminine, and the plural shall include the singular and the singular shall include the plural.
6.8Action by the Company. Except as otherwise specifically provided herein, any action required of or permitted by theCompany under thePlan shall be by resolution of the Board of Directors of theCompany or by action of any member of theCommittee or person(s) authorized by resolution of the Board of Directors of theCompany.
Section 7
Employer Participation
Any subsidiary or affiliate of theCompany incorporated under the laws of any state in the United States may, with the approval of theCommittee and under such terms and conditions as theCommittee may prescribe, adopt thePlan. TheCommittee may amend thePlan as necessary or desirable to reflect the adoption of thePlan by anEmployer; provided, however, that an adoptingEmployer shall not have the authority to amend or terminate thePlan under Section 8.
Section 8
Amendment and Termination
TheCompany intends thePlan to be permanent, but reserves the right at any time by action of its Board of Directors to modify, amend or terminate thePlan; provided, however, that any amendment or termination of thePlan shall not reduce or eliminate anyDeferral Account accrued through the date of such amendment or termination. Upon termination of thePlan, theCommittee may provide that, notwithstanding theDistribution Date or form selected by eachParticipant, allDeferral Accounts will be distributed on a date and in a form selected by theCommittee.
TheCommittee shall have the authority to adopt amendments to thePlan as set forth in resolutions of the Compensation and Employee Benefits Committee of the Board of
Directors of theCompany. TheCommittee shall provide notice of amendments it adopts to the Compensation and Employee Benefits Committee of the Board of Directors of theCompany on a timely basis.
SUPPLEMENT I
TO
HANESBRANDS INC.
EXECUTIVE DEFERRED COMPENSATION PLAN
(Effective January 1, 2006)
Transfer Of Liabilities From
Sara Lee Corporation
Executive Deferred Compensation Plan
| 1. | Background.Sara Lee Corporation (“Sara Lee”) maintains the Sara Lee Corporation Executive Deferred CompensationPlan (the “Sara Lee Plan”). In connection with the establishment of theCompany,Sara Lee and theCompany desire to cause the liabilities under theSara Lee Plan attributable to current and former employees of theCompany (and of theCompany’s predecessor, the Branded Apparel division ofSara Lee) to be transferred to thePlan. Current and former employees described in the immediately preceding sentence are described herein as “Transferred Participants”. |
| 2. | Transfer, Effect of Transfer. Effective on January 1, 2006 (the “Transfer Date”), the liabilities/account balances of theSara Lee Plan attributable to theTransferred Participants shall be transferred to theCompany, to be held and administered in accordance with the terms of thePlan, as amended; provided, that any elections and beneficiary designations made under theSara Lee Plan shall remain in effect under thePlan. ThePlan is the successor to theSara Lee Plan with regard toTransferred Participants. |
| 3. | Special Rules forGrandfathered Deferrals. Any deferrals made by aTransferred Participant under theSara Lee Plan prior to January 1, 2005 (“Grandfathered Deferrals”) shall be subject to the rules set forth below. |
| (a) | Previously Elected Distribution Dates.As part of eachDeferral Election, theTransferred Participant was required to specify aDistribution Date for theGrandfathered Deferral, which may differ for variousGrandfathered Deferrals. Except as provided below, eachDistribution Date is irrevocable and shall apply only to that portion of theTransferred Participant’s Deferral Account which is attributable to thatGrandfathered Deferral. |
| (b) | Previously Elected Distribution Form.As part of eachDeferral Election, aTransferred Participant was required to elect the form in which theGrandfathered Deferral will be paid beginning on the selectedDistribution Date as either (i) a single lump sum or (ii) substantially equal annual installments (each January 1) over a period not exceeding ten years. If aTransferred Participant’s Grandfathered Deferral is payable in a single lump sum, the payment shall be made as soon as practicable following theDistribution Date but not later than 30 days following theDistribution Date. If aTransferred Participant’s Grandfathered Deferral is payable in installment payments, then payments shall be made in substantially equal annual installments (each January 1) over the period as elected by theTransferred Participant in theDeferral Election commencing as soon as practicable following theDistribution Date but not later than 30 days following theDistribution Date. Except as provided below, aTransferred Participant’s election as to the time and method of payment shall be irrevocable. |
| (c) | Re-Deferral Elections for Grandfathered Amounts.ATransferred Participant may make aRe-Deferral Election with respect toGrandfathered Deferrals; provided, that noRe-Deferral Election shall be effective unless (i) theCommittee receives the election prior to the |
December 1 of the calendar year preceding the calendar year in which theDistribution Date to be changed occurs, and (ii) the newDistribution Date is not earlier than the January 1 immediately following the first anniversary of the date theRe-Deferral Election is made. AllRe-Deferral Elections must be made pursuant to such rules as theCommittee may prescribe.
| (d) | Change in Method of Payment of Grandfathered Deferrals.ATransferred Participant may make a one-time election to change the method of payment elected by theTransferred Participant; provided, that such election shall not be effective unless the election to change the method of payment is received by theCommittee prior to the December 1 of the calendar year preceding the calendar year in which theDistribution Date specified in the originalDeferral Election occurs. All such elections must be made pursuant to such rules as the Committee may prescribe. |
| (e) | Early Withdrawal With Penalty. Notwithstanding the other provisions of thePlan and this Supplement to the Contrary, aTransferred Participant may request a withdrawal from hisGrandfathered Deferrals, pro rata, by filing a request with theCommittee or its designee in such form as theCommittee may prescribe. Any withdrawal under this provision will be charged with a 10 percent early withdrawal penalty which will be withheld from the amount withdrawn and forfeited. |
| (f) | Disability. In the event aTransferred Participant becomes totally disabled (as defined above) before allGrandfathered Deferrals have been paid, payment of theTransferred Participant’s Grandfathered Deferralsshall be made in a lump sum as soon as practicable after theTransferred Participantis determined to be totally disabled. |
| (g) | Death. In the event aTransferred Participant dies before allGrandfathered Deferrals have been paid, payment of theTransferred Participant’s Grandfathered Deferrals shall be made in a single lump sum payment as soon as practicable after theTransferred Participant’s death. |
| (h) | Small Amounts.Notwithstanding any election by theTransferred Participant regarding the timing and manner of payment of hisGrandfathered Deferrals, upon aParticipant’s retirement or other termination of employment, if the total value of theTransferred Participant’s Grandfathered Deferrals (determined as of theValuation Date coinciding with or immediately following theTransferred Participant’s termination of employment) is less than $10,000, then theTransferred Participant’s Grandfathered Deferrals shall be distributed in a lump sum as soon as practicable following theParticipant’s retirement or other termination of employment. |
| 4. | Liberty Fabrics Plan Transfer. Effective June 30, 2002, the account balance of certain participants in the Liberty Fabrics, Inc. Nonqualified Deferred CompensationPlan (the “Liberty Plan”) was transferred to and became subject to the provisions of theSara Lee Plan. Those balances in theSara Lee Plan were transferred to thePlan as part of the transfers described in this Supplement and shall be treated as separateGrandfathered Deferrals under thePlan. Accordingly, eachLiberty Plan participant has specified aDistribution Date, method of payment, and investment alternative with respect to such transferred account balance. However, notwithstanding anything contained in thePlan to the contrary, aLiberty Plan participant may not make a one-time election to change the method of payment under Paragraph 3 above with respect to his or her transferred account balance. |
| 5. | Rules for Non-Grandfathered Amounts.Amounts transferred from theSara Lee Plan that were deferred on or after January 1, 2005 shall be subject to the rules described in thePlan rather than under Paragraph 3 of this Supplement. |
| 6. | General.Except as expressly provided to the contrary in this Supplement,Transferred Participants will be subject to the terms and conditions of thePlan, as amended from time to time. The terms expressly defined in this Supplement shall supersede any conflicting terms of thePlan. All other defined terms used in this Supplement shall have the same meanings assigned to them by thePlan. |