Exhibit 10.12
HANESBRANDS INC.
NON-EMPLOYEE DIRECTOR DEFERRED COMPENSATION PLAN
CERTIFICATE
I hereby certify that the attached document is the official version of the Hanesbrands Inc. Non-Employee Director Deferred Compensation Plan adopted by the Board of Directors of the Company by resolution dated July 19, 2006 and subsequently finalized by the duly authorized officers of the Company effective as of July 2, 2006.
Dated this1stday of September, 2006.
| HANESBRANDS INC. | ||
| By | /s/ Kevin Oliver
| |
| Its | Senior Vice President, Human Resources | |
HANESBRANDS INC.
NON-EMPLOYEE DIRECTOR DEFERRED COMPENSATION PLAN
1.Purpose. The purpose of theHanesbrands Inc. (“HBI”) Non-Employee Director Deferred Compensation Plan (the “Plan”) is to allowNon-Employee Directors of theCorporation to defer the payment ofAnnual Retainers and/orMeeting Fees.Notwithstanding any provision of thePlan to the contrary, amounts deferred under thePlan are subject to the provisions of Section 409A of the Internal Revenue Code (the “Code”) and at all times thePlan as applied to those amounts shall be interpreted and administered so that it is consistent with such Code section.
2.Definitions. Where the context of thisPlan permits, words in the masculine gender shall include the feminine gender, the plural form of a word shall include the singular form, and the singular form of a word shall include the plural form. Unless the context clearly indicates otherwise, the following terms shall have the following meanings:
| (a) | Annual Retainer means the annual cash retainer fee payable by theCorporation to aNon-Employee Director for services as a director of theCorporation, as such amount may be changed from time to time. |
| (b) | Board means the Board of Directors of theCorporation. |
| (c) | Change in Control means “Change in Control” as defined under the terms of theStock Plan. |
| (d) | Committeemeans the Compensation and Benefits Committee of theBoard. |
| (e) | Corporationmeans Hanesbrands Inc., a Maryland corporation, and any successor thereto. |
| (f) | Deferralmeans an amount deferred pursuant to a Deferral Electionand any automatic deferral of restricted stock units as described in section 5 below . |
| (g) | Deferral Account means a bookkeeping account in the name of aNon-Employee Director who elects to defer all or a portion of anAnnual Retainer orMeeting Fees. |
| (h) | 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. |
-1-
| (i) | Deferral Electionsmeans irrevocable elections to defer receipt of Annual Retainerand/or Meeting Fees. |
| (j) | Fair Market Valuemeans the fair market value ofStock determined at any time in such manner as theCommittee may deem equitable, or as required by applicable law or regulation. |
| (k) | Interest Account means the default alternative from among the two investment alternatives (the other being anStockEquivalent Account) in which aNon-Employee Director may elect to invest aDeferral or portion thereof as described in sections 6 and 7 below. |
| (l) | Meeting Fees means the annual fees payable by theCorporation to aNon-Employee Director for services as a member or chair of aBoard committee, as such amounts may be changed from time to time. |
| (m) | Non-Employee Director means a director of theCorporation who is not an employee of theCorporation or any subsidiary of theCorporation. |
| (n) | Plan means this Hanesbrands Inc. Non-Employee Director Deferred Compensation Plan. |
| (o) | Plan Year means the calendar year. |
| (p) | Stock means a share of the common stock of theCorporationthat, by its terms, may be voted on all matters submitted to stockholders of theCorporationgenerally. |
| (q) | Stock Equivalent Accountmeans one of two investment alternatives (the other being anInterest Account) in which aNon-Employee Director may elect to invest aDeferral or portion thereof as described in sections 6 and 7 below. |
| (r) | Stock Planmeans the Hanesbrands Inc. Omnibus Incentive Plan of 2006 or any successor thereto that provides for the issuance ofStocktoNon-Employee Directors. |
| (s) | Valuation Date means each June 30 and December 31. |
3.Administration.ThePlan shall be administered by theCommittee. TheCommittee shall have full power and authority to interpret and construe thePlan and adopt such rules and regulations as it shall deem necessary and advisable to implement and administer thePlan and to designate persons other than members of theCommittee to carry out its responsibilities, subject to applicable law and such limitations, restrictions and conditions as it may prescribe, such determinations to be made in accordance with theCommittee’s best business judgment as to the best interests of theCorporation and its stockholders and in accordance with
-2-
the purposes of thePlan. TheCommittee may delegate administrative duties under thePlan to one or more agents, as it shall deem necessary or advisable. A majority of theCommittee shall constitute a quorum at any meeting of theCommittee, and all determinations of theCommittee shall be made by a majority of its members. Any determination of theCommittee under thePlan may be made without notice or a meeting of theCommittee by a written consent signed by all members of theCommittee. No member of theCommittee or theBoard shall be personally liable for any action or determination made in good faith with respect to thePlan or to any settlement of any dispute between aNon-Employee Director and theCorporation. Any decision or action taken by theCommittee or theBoard with respect to the administration or interpretation of thePlan shall be conclusive and binding upon all persons.
4.Deferral Elections. Any eligibleNon-Employee Directormay make irrevocable elections to defer receipt of all or any portion not less than 25 percent of hisAnnual Retainer and/orMeeting Fees(each such election shall be referred to as a “Deferral Election” and any amount deferred pursuant to such election is referred to as a “Deferral”) for aPlan Year in accordance with the rules set forth below.
| (a) | ANon-Employee Director shall be eligible to make aDeferral Election only if he is an active member of theBoard, or has been elected to theBoard on the date such election is made. |
| (b) | For aPlan Year, aNon-Employee Director may make no more than oneDeferral Election with respect to theNon-Employee Director’s Annual Retainer and/orMeeting Fees. |
| (c) | AllDeferral Elections must be made in writing on such forms as theCommittee may prescribe and must be received by theCommittee no later than the date specified by theCommittee. In no event will the date specified by theCommittee with respect to aDeferral Election be later than the end of thePlan Year preceding thePlan Year in which theAnnual Retainer orMeeting Feeswould otherwise be paid. In the case of the first year in which theNon-Employee Director first becomes eligible to participate, such election may be made with respect to services to be performed subsequent to the election within 30 days after the date theNon-Employee Director becomes eligible to participate. |
| (d) | As part of eachDeferral Election, theNon-Employee Director must specify the date on which theDeferral will be paid or commence (a “Distribution Date”). TheDistribution Dates specified in aNon-Employee Director’s Deferral Elections may, but need not necessarily, be the same for allDeferrals. Except as provided in subsection (f) below, eachDistribution Date is irrevocable and shall |
-3-
apply only to that portion of theNon-Employee Director’s Deferral Account which is attributable to theDeferralTheDistribution Date for the automatic deferral of restricted stock or restricted stock units, as described below in section 5, shall, at all times be the date which is six months following the termination of theNon-Employee Director’s Boardservice.
| (e) | TheDistribution Date selected by aNon-Employee Director as part of aDeferral Election shall not be earlier than the January 1 immediately following the first anniversary of the date on which theDeferral Election is made. |
| (f) | ANon-Employee Director may make an irrevocable election to extend aDistribution Date (a “Re-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 and provided further that noRe-Deferral Election shall be permitted with respect to the automatic deferral of restricted stock units as described under section 5 below. AllRe-Deferral Elections must be made in writing on such forms and pursuant to such rules as theCommittee may prescribe. |
| (g) | As part of eachDeferral Election, aNon-Employee Director must elect the form in which theDeferral will be paid beginning on the selectedDistribution Date. TheDeferral may be paid in a single lump sum or in substantially equal annual installments over a period not exceeding ten years as provided under section 9. Except as provided in section 9, aNon-Employee Director’s election as to the form of payment shall be irrevocable. If theNon-Employee Director elects an installment method of payment theDistribution Date must be in January. If aNon-Employee Director fails to elect a method of payment, such payment shall be payable in a single lump sum. |
| (h) | As part of eachDeferral Election, aNon-Employee Director must elect the investment alternatives that shall apply to theDeferral in accordance with sections 6 and 7 below. |
| (i) | Deferrals andDeferral Elections shall be irrevocable; provided, that if theCommittee determines that aNon-Employee Director has anUnforeseeable Financial Emergency (as defined in section 13), then theNon-Employee Director’s Deferral Elections then in effect shall be revoked with respect to all amounts not previously deferred. |
5.Automatic Deferral of Stock Grants. In addition to any electiveDeferralsmade by aNon-Employee Directoras provided under section 4 above, any restricted stock or restricted stock units awarded to aNon-Employee Directorthat are automatically deferred pursuant to the terms of the award agreement shall be deferred under thePlanand credited to aNon-Employee Director’s Deferral Account as described below.
-4-
6.Deferral Accounts. All amounts deferred pursuant to aNon-Employee Director’s Deferral Elections under section 4 above as well as any automaticDeferrals under section 5 above shall be allocated to a bookkeeping account in the name of theNon-Employee Director.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, theNon-Employee Director would otherwise have received theDeferral. ANon-Employee Director shall be fully vested at all times in the balance of hisDeferral Account.
7.Investment Alternatives. ANon-Employee Director must make an investment election at the time of eachDeferral Election. The investment election must be made in writing on such forms and pursuant to such rules as theCommittee may prescribe, subject to section 7 below, and shall designate the portion of theDeferral which is to be treated as invested in each investment alternative. The two investment alternatives shall be as follows:
| (a) | Stock Equivalent Account. Under theStock Equivalent Account, the value of theNon-Employee Director’s Deferral shall be determined as if theDeferral were invested inStock as of theDeferral Crediting Date. If payment ofStock is deferred (such as in the case of the automatic deferral of restricted stock and restricted stock unit awards), the number ofStock equivalents to be credited to theNon-Employee Director’s Deferral Account and appropriate subaccounts on eachDeferral Crediting Date shall equal the number of shares deferred. If payment of cash is deferred, the number ofStock equivalents to be credited to theNon-Employee Director’s Deferral Account and appropriate subaccounts on eachDeferral Crediting Date shall be determined by dividing theDeferral to be “invested” on that date by theFair Market Value of aStock on that date. FractionalStock equivalents will be computed to two decimal places. An amount equal to the number ofStock equivalents multiplied by the dividend paid on a share ofStock on each dividend payment date shall be credited to theNon-Employee Director’s Deferral Account and appropriate subaccount as of theDeferral Crediting Date coincident with or next following the dividend payment date and “invested” in additionalStock equivalents as though such dividend credits were aDeferral. The number of shares ofStock to be paid to aNon-Employee Director on aDistribution Date shall be equal to the number ofStock equivalents accumulated in theStock Equivalent Account on theDistribution Date divided by the total of the payments to be made. |
Corporation may but is not required to match any amounts that aNon-Employee Director elects to invest in theStock Equivalent Account.
| (b) | Interest Account. Under theInterest Account, interest will be credited to theNon-Employee Director’s Deferral Account as of the business day coinciding |
-5-
with or next following eachValuation Dateand on the date the final payment of aDeferral is to be made based on the balance in theNon-Employee Director’s Deferral Account deemed invested in theInterest Account on theValuation Date or such final payment date. The rate of interest to be credited as of aValuation Dateunder theInterest Accountshall equal the 5-year constant maturity treasury note interest rate as published by the Federal Reserve in effect on the first business date of the calendar year in which theValuation Dateoccurs. If installment payments are elected, the amount to be paid to theNon-Employee Director on aDistribution Date shall be determined by dividing the current principal balance by the number of remaining installment payments.
8. Investment Elections and Changes. ANon-Employee Director’s investment elections shall be subject to the following rules:
| (a) | With respect toAnnual Retainer payments orMeeting Feesthat would have been paid in the form of cash, if theNon-Employee Director fails to make an investment election with respect to aDeferral, theDeferral shall be deemed to be invested in theInterest Account. |
| (b) | All Deferrals of restricted stock and restricted stock unit awards that are deferred automatically as provided in the award agreement as described in section 5 above shall be invested in the Stock Equivalent Account. |
| (c) | All investments in theStock Equivalent Account shall be irrevocable. |
| (d) | ANon-Employee Director 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 inStock equivalents as of theValuation Date and the number ofStock equivalents to be credited to theNon-Employee Director’s Deferral Account and appropriate subaccounts as of theValuation Date shall be determined by dividing the amount to be transferred by theFair Market Value on suchValuation Date. |
| (e) | Until invested as of theDeferral Crediting Date in either theInterest Account orShare Equivalent Account, aNon-Employee Director’s Deferral shall be credited with interest in such amount as theCommittee may determine. |
9.Time and Method of Payment. Payment of aNon-Employee Director’s Deferral Account shall be made in a single lump sum or shall commence in installments as elected by theNon-Employee Director in theDeferral Election. ANon-Employee Director may make elect after the originalDeferral Election to change the method of payment previously elected by theNon-Employee Director; provided, that such election shall not be effective unless the election to change the method of payment is received by theCommittee not later that 12
-6-
months prior to theDistribution Date specified in the originalDeferral Election. If aNon-Employee Director has elected a single lump sum and later elects installment payments, such election shall constitute aRe-Deferral and will require a newDistribution Date that is not earlier than the fifth anniversary of the previousDistribution Date. If aNon-Employee Director’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 aNon-Employee Director’s Deferral Account is payable in installment payments, then theNon-Employee Director’s Deferral Account shall be paid in substantially equal annual installments over the period as elected by theNon-Employee Director in theDeferral Election commencing as soon as practicable following theDistribution Date but not later than 30 days following theDistribution Date.
10.Payment Upon Death of a Non-Employee Director. In the event aNon-Employee Director dies before all amounts credited to hisDeferral Account have been paid, payment of theNon-Employee Director’s Deferral Account shall be made in a single sum payment to theNon-Employee Director’s Beneficiary as soon as practicable but not later than 30 days following theNon-Employee Director’s death.
11.Beneficiary. ANon-Employee Director’s “Beneficiary” shall mean the individual(s) or entity designated by theNon-Employee Director to receive the balance of theNon-Employee Director’s Deferral Account in the event of theNon-Employee Director’s death prior to the payment of his entireDeferral Account. To be effective, anyBeneficiary designation shall be filed in writing with theCommittee. ANon-Employee Director may revoke an existingBeneficiary designation by filing another writtenBeneficiary designation with theCommittee. The latestBeneficiary designation received by theCommittee prior to theNon-Employee Director’sdeath shall be controlling. If noBeneficiary is named by aNon-Employee Director or if he survives all of his named Beneficiaries, theDeferral Account shall be paid in the following order of precedence:
| (a) | theNon-Employee Director’s spouse; |
| (b) | theNon-Employee Director’s children (including adopted children), per stirpes; or |
| (c) | theNon-Employee Director’s estate. |
-7-
12. Form of Payment. The payment of that portion of aDeferral Account deemed to be invested in theInterest Account shall be made in cash.The distribution of that portion of aDeferral Account deemed to be invested in theStock Equivalent Account shall be distributed under theStock Planin whole shares ofStock with fractional shares distributed in cash.
13.Unforeseeable Financial Emergency. If theCommittee or its designee determines that aNon-Employee Director has incurred anUnforeseeable Financial Emergency (as defined below), theNon-Employee Director may withdraw in cash and/orStock 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 theNon-Employee Director’s assets, to the extent the liquidation of such assets would not itself cause severe financial hardship. An “Unforeseeable Financial Emergency” is a severe financial hardship to theNon-Employee Director resulting from (i) a sudden and unexpected illness or accident of theNon-Employee Director or of a dependent of theNon-Employee Director; (ii) loss of theNon-Employee Director’s property due to casualty; or (iii) such other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of theNon-Employee Director as determined by theCommittee. A withdrawal on account of anUnforeseeable Financial Emergency shall be paid as soon as possible following the date on which the withdrawal is approved.
14.Funding. Payouts under thePlan to anyNon-Employee Director shall be paid directly by theCorporation. TheCorporation shall not be required to fund, or otherwise segregate assets to be used for payment of benefits under thePlan. Notwithstanding the foregoing, theCorporation, in the discretion of theCommittee, may maintain one or more grantor trusts to hold assets to be used for payment of benefits under thePlan. The assets of any such trust shall remain the assets of theCorporation subject to the claims of its general creditors. Any payments from such a trust of benefits provided to aNon-Employee Director under thePlan shall be considered payment by theCorporation and shall discharge theCorporation of any further liability under thePlan for such payments.
-8-
15.Interests 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. 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.
16.Forfeitures of Unclaimed Amounts. Unclaimed amounts shall consist of the amounts of theDeferral Account of aNon-Employee Director that are not distributed because of theCommittee’s inability, after a reasonable search, to locate aNon-Employee Director or his Beneficiary, 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 theCorporation under thePlan and theNon-Employee Director orBeneficiary, as applicable, shall have no further right to hisDeferral Account.
17.Change in Control. Notwithstanding aNon-Employee Director’selections under section 4 and 8 above or the other terms of thePlanregarding the form and timing of payment, upon theNon-Employee Director’stermination of service on theBoardfollowingChange in Control, theNon-Employee Director’s Deferral Accountshall be payable in a single lump sum as soon as administratively practicable but not later than 30 days following theNon-Employee Director’s termination ofBoard service.
18.Amendment and Termination.TheBoard may amend thePlan from time to time or terminate thePlan at any time and may unilaterally modify the terms and conditions of an outstanding election under thePlan as necessary, including revoking an election entirely, to reflect changes in applicable law.
-9-
19.Adjustment Provisions.In the event of any stock split, stock dividend, recapitalization, reorganization, merger, consolidation, combination, exchange of shares, liquidation, spin-off or other similar change in capitalization or event, or any distribution to holders ofStock other than a regular cash dividend, the number ofStock equivalents in theStock Equivalent Account under thePlan shall be equitably adjusted by theCommittee.
20.Governing Law. Except to the extent superseded by the laws of the United States, the laws of the State of North Carolina, without regard to any state’s conflict of laws principles, shall govern in all matters relating to thePlan. Any legal action related to thisPlan shall be brought only in a federal or state court located in North Carolina.
21.Effective Date of Plan.ThisPlan shall be effective as of July 2, 2006, as approved by the Board.
-10-