Exhibit 10.2
ELEVENTH AMENDED AND RESTATED
SYSCO CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
Effective June 29, 2013
Table of Contents
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ARTICLE I | DEFINITIONS................................................................................................................................................. | 2 | |
ARTICLE II | ELIGIBILITY & continued participation................................................................................................... | 9 | |
| 2.1 | Eligibility............................................................................................................................................................. | 9 |
| 2.2 | Benefits upon Re-Employment............................................................................................................... | 9 |
ARTICLE III | VESTING........................................................................................................................................................... | 10 | |
ARTICLE IV | VESTED ACCRUED BENEFIT & RETIREMENT BENEFIT.......................................................... | 11 | |
| 4.1 | Definitions......................................................................................................................................................... | 11 |
| 4.2 | Retirement Benefit........................................................................................................................................ | 17 |
| 4.3 | Benefit Commencement Date................................................................................................................. | 18 |
| 4.4 | Form of Payment.......................................................................................................................................... | 19 |
| 4.5 | Temporary Supplement............................................................................................................................... | 19 |
| 4.6 | Administrative Delay................................................................................................................................... | 19 |
| 4.7 | Delay of Payments under Section 409A of the Code................................................................. | 19 |
ARTICLE V | FROZEN PARTICIPATION....................................................................................................................... | 21 | |
| 5.1 | In General.......................................................................................................................................................... | 21 |
| 5.2 | Active Participant Previously Frozen................................................................................................... | 21 |
ARTICLE VI | DEATH BENEFIT........................................................................................................................................... | 22 | |
| 6.1 | Definitions......................................................................................................................................................... | 22 |
| 6.2 | Death of Active Participant...................................................................................................................... | 22 |
| 6.3 | Death of Frozen Participant...................................................................................................................... | 23 |
| 6.4 | Death of Vested Separated Participant............................................................................................... | 23 |
| 6.5 | Death of Retired Participant before or after Commencement of Benefits........................ | 24 |
| 6.6 | Administrative Delay................................................................................................................................... | 24 |
| 6.7 | Beneficiary Designation for Ten (10) Year Certain Period......................................................... | 25 |
ARTICLE VII | PROVISIONS RELATING TO ALL BENEFITS................................................................................. | 26 | |
| 7.1 | Effect of this Article.................................................................................................................................... | 26 |
| 7.2 | Termination of Employment..................................................................................................................... | 26 |
| 7.3 | Forfeiture for Cause.................................................................................................................................... | 26 |
| 7.4 | Forfeiture for Competition......................................................................................................................... | 27 |
| 7.5 | Restrictions on any Portion of Total Payments Determined to be Excess Parachute |
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| Payments.......................................................................................................................................................... | 28 |
| 7.6 | Claims Procedure.......................................................................................................................................... | 29 |
| 7.7 | Compensation Committee Decisions................................................................................................... | 30 |
ARTICLE VIII | ADMINISTRATION........................................................................................................................................ | 31 | |
| 8.1 | Administrative Committee Appointment............................................................................................. | 31 |
| 8.2 | Administrative Committee Organization and Voting...................................................................... | 31 |
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Table of Contents
(continued)
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| 8.3 | Powers of the Administrative Committee......................................................................................... | 31 |
| 8.4 | Committee Discretion................................................................................................................................. | 32 |
| 8.5 | Reimbursement of Expenses................................................................................................................. | 32 |
| 8.6 | Indemnification.............................................................................................................................................. | 32 |
ARTICLE IX | ADOPTION BY SUBSIDIARIES............................................................................................................ | 33 | |
| 9.1 | Procedure for and Status after Adoption........................................................................................... | 33 |
| 9.2 | Termination of Participation by Adopting Subsidiary................................................................... | 33 |
ARTICLE X | AMENDMENT AND/OR TERMINATION............................................................................................ | 34 | |
| 10.1 | Amendment or Termination of the Plan.............................................................................................. | 34 |
| 10.2 | No Retroactive Effect on Awarded Benefits................................................................................... | 34 |
| 10.3 | Effect of Termination................................................................................................................................. | 34 |
ARTICLE XI | FUNDING........................................................................................................................................................ | 36 | |
| 11.1 | Payments Under This Plan are the Obligation of the Company............................................ | 36 |
| 11.2 | Plan May Be Funded Through the Trust............................................................................................. | 36 |
| 11.3 | Reversion of Excess Assets.................................................................................................................. | 36 |
| 11.4 | Participants Must Rely Only on General Credit of the Company......................................... | 37 |
| 11.5 | Funding of Benefits for Participants Subject to Canadian Income Tax Laws is Prohibited | 37 |
ARTICLE XII | MISCELLANEOUS....................................................................................................................................... | 38 | |
| 12.1 | Responsibility for Distributions and Withholding of Taxes....................................................... | 38 |
| 12.2 | Limitation of Rights..................................................................................................................................... | 38 |
| 12.3 | Benefits Dependent upon Compliance with Certain Covenants............................................. | 38 |
| 12.4 | Distributions to Incompetents or Minors............................................................................................ | 38 |
| 12.5 | Nonalienation of Benefits......................................................................................................................... | 38 |
| 12.6 | Reliance upon Information....................................................................................................................... | 39 |
| 12.7 | Amendment Applicable to Active Participants Only Unless it Provides Otherwise....... | 39 |
| 12.8 | Severability..................................................................................................................................................... | 39 |
| 12.9 | Notice................................................................................................................................................................. | 39 |
| 12.10 | Gender and Number.................................................................................................................................... | 39 |
| 12.11 | Governing Law............................................................................................................................................... | 39 |
| 12.12 | Effective Date............................................................................................................................................... | 39 |
| 12.13 | Compliance with Section 409A............................................................................................................... | 40 |
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ELEVENTH AMENDED AND RESTATED
SYSCO CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
WHEREAS, Sysco Corporation (“Sysco”) established the Sysco Corporation Supplemental Executive Retirement Plan (the “SERP”), originally effective July 3, 1988, to provide a select group of highly compensated management personnel within the meaning of Sections 201, 301 and 401 of ERISA (and therefore exempt from the requirements of Parts 2, 3 and 4 of Title I of ERISA as a “top hat” plan and eligible for the alternative method of compliance for reporting and disclosure which is available for such plans), a supplement to their retirement pay so as to retain their loyalty and to offer them a further incentive to maintain and increase their standard of performance;
WHEREAS, Sysco’s Board of Directors (the “Board of Directors”) amended and restated the SERP pursuant to that certain Tenth Amended and Restated Sysco Corporation Supplemental Executive Retirement Plan (the “Current Plan”), effective as of August 27, 2010 (as amended pursuant to that certain First Amendment dated May 27, 2011, that certain Second Amendment dated February 22, 2012 and that certain Third Amendment dated November 13, 2012), which among other things adopted the Third Amended and Restated MIP Retirement Program effective as of December 31, 2012 (the “Program”) which is attached as Appendix I to the Current Plan;
WHEREAS, pursuant to Section 10.1 of the Current Plan, the Board of Directors, the Compensation Committee of the Board of Directors (the “Compensation Committee”) or their designees may amend the Current Plan (including the Program) by an instrument in writing;
WHEREAS, pursuant to Section 3.3 of the Current Plan, the Compensation Committee may increase a participant’s vested percentage under the Current Plan to an amount not to exceed 100%;
WHEREAS, the Compensation Committee has determined that it is in the best interests of Sysco and its stockholders to amend and restate the Current Plan to, among other things, (i) cease the accrual of benefits under the Current Plan effective June 29, 2013; (ii) provide that the accrued benefits of Active and Frozen Participants in the Current Plan on June 29, 2013 will be 100% vested effective June 29, 2013, subject to reduction pursuant to an early retirement factor for Participants who are not eligible for immediate commencement of benefit payment at Retirement or Vested Separation; and (iii) make such other changes to the Current Plan to implement the changes in (i) and (ii) above, and to ease administration of the Current Plan.
NOW, THEREFORE, Sysco hereby adopts this Eleventh Amended and Restated Sysco Corporation Supplemental Executive Retirement Plan (including the Third Amended and Restated Sysco Corporation MIP Retirement Program, attached as Appendix I hereto) (the “Plan”), effective as of June 29, 2013, as follows:
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DEFINITIONS
1.2 | Active Participant. “Active Participant” means a Participant in the employ of the Company who, as of June 29, 2013, is not a Frozen Participant. If after June 29, 2013, an Active Participant either (i) ceases to be a participant in the Management Incentive Plan, or (ii) transfers to a Non-Participating Subsidiary, his status shall remain that of an Active Participant until Separation from Service. |
1.3 | Actuarial Equivalence or Actuarially Equivalent. “Actuarial Equivalence” shall be determined on the basis of the mortality and interest rate assumptions used in computing annuity benefits under the Pension Plan. If there is no Pension Plan in effect at the time any such determination is made, the actuarial assumptions to be used shall be selected by an actuarial firm chosen by the Administrative Committee. Such actuarial firm shall select such actuarial assumptions as would be appropriate for the Pension Plan if the Pension Plan remained in existence with its last participant census. “Actuarially Equivalent” means equality in value of the aggregate amounts expected to be received under different forms of payment based on the mortality and interest rate assumptions specified for purposes of Actuarial Equivalence. |
1.4 | Administrative Committee. “Administrative Committee” means the committee administering this Plan (including the Program). |
1.5 | Affiliate. “Affiliate” means any entity with respect to which Sysco beneficially owns, directly or indirectly, at least 50% of the total voting power of the interests of such entity and at least 50% of the total value of the interests of such entity. |
1.6 | Annuity. “Annuity” means a monthly annuity for the life of the Participant with a ten (10) year certain period. Except as provided in Section 4.4, a Participant’s Vested Accrued Benefit and Retirement Benefit are expressed in the form of an Annuity. |
1.7 | Beneficiary. “Beneficiary” means a person or entity designated by the Participant under the terms of this Plan to receive any amounts distributed under the Plan upon the death of the Participant. |
1.8 | Benefit Commencement Date. “Benefit Commencement Date” means the first date the Participant’s benefits are payable under Section 4.3, without regard to any delay under either Section 4.6 or 4.7. |
1.9 | Benefit Service. “Benefit Service” shall have the meaning set forth in Section 4.1(d). |
1.10 | Board of Directors. “Board of Directors” means the Board of Directors of Sysco. |
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1.11 | Canada/Quebec Pension Plan Offset. “Canada/Quebec Pension Plan Offset” shall have the meaning set forth in Section 4.1(j). |
1.12 | Change of Control. “Change of Control” means the occurrence of one or more of the following events: |
(a) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Act) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Securities Act) of 20% or more of either (i) the then-outstanding shares of Sysco common stock (the “Outstanding Sysco Common Stock”) or (ii) the combined voting power of the then-outstanding voting securities of Sysco entitled to vote generally in the election of directors (the “Outstanding Sysco Voting Securities”); provided, however, that the following acquisitions shall not constitute a Change of Control: (1) any acquisition directly from Sysco, (2) any acquisition by Sysco, (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by Sysco or any Affiliate, or (4) any acquisition by any corporation; pursuant to a transaction that complies with Sections (c)(i), (c)(ii) and (c)(iii), below;
(b) Individuals who, as of July 1, 2012, constitute the Board of Directors (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board of Directors; provided, however, that any individual becoming a director subsequent to July 1, 2012 whose election, or nomination for election by Sysco’s stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board of Directors;
(c) Consummation of a reorganization, merger, statutory share exchange or consolidation or similar corporate transaction involving Sysco or any of its Affiliates, a sale or other disposition of all or substantially all of the assets of Sysco, or the acquisition of assets or stock of another entity by Sysco or any of its Affiliates (each, a “Business Combination”), in each case unless, following such Business Combination, (i) all or substantially all of the individuals and entities that were the beneficial owners of the Outstanding Sysco Common Stock and the Outstanding Sysco Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of the then-outstanding shares of common stock and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation that, as a result of such transaction, owns Sysco or all or substantially all of Sysco’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Sysco Common Stock and the Outstanding Sysco Voting Securities, as the case may be, (ii) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of Sysco or such corporation resulting from such Business Combination) beneficially
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owns, directly or indirectly, 20% or more of, respectively, the then-outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then-outstanding voting securities of such corporation, except to the extent that such ownership existed prior to the Business Combination, and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement or of the action of the Board of Directors providing for such Business Combination; or
(d) Approval by the stockholders of Sysco of a complete liquidation or dissolution of Sysco.
1.13 | Change of Control Period. “Change of Control Period” shall have the meaning set forth in Section 7.3(d). |
1.14 | Code. “Code” means the Internal Revenue Code of 1986, as amended from time to time. |
1.16 | Compensation Committee. “Compensation Committee” means the Compensation Committee of the Board of Directors of Sysco. |
1.17 | Current Plan. “Current Plan” shall have the meaning set forth in the Recitals. |
1.18 | Death Benefit Eligible Earnings. “Death Benefit Eligible Earnings” shall have the meaning set forth in Section 6.1(d). |
1.19 | Defined Benefit Offset. “Defined Benefit Offset” shall have the meaning set forth in Section 4.1(g). |
1.20 | Defined Contribution Offset. “Defined Contribution Offset” shall have the meaning set forth in Section 4.1(h). |
1.21 | Early Payment Criteria. “Early Payment Criteria” shall have the meaning set forth in Section 4.1(l). |
1.22 | EDCP. “EDCP” means the Sysco Corporation Executive Deferred Compensation Plan, as it may be amended from time to time, and any successor plan thereto. |
1.23 | Eligible Earnings. “Eligible Earnings” shall have the meaning set forth in Section 4.1(a). |
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1.25 | Executive Officer. “Executive Officer” means each of Sysco’s Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, President, Executive Vice Presidents, Senior Vice Presidents or any other officers designated as “officers” for purposes of Section 16 of the Securities Act. |
1.26 | Executive Retirement Plans. “Executive Retirement Plans” means, collectively, this Plan, the Program, the Sysco Corporation Management Savings Plan, the Sysco Corporation Canadian Executive Capital Accumulation Plan, the EDCP and such other non-qualified deferred compensation arrangements sponsored by Sysco or a Subsidiary as determined by the Compensation Committee. |
1.27 | For Cause Event. “For Cause Event” shall have the meaning set forth in Section 7.3. |
1.28 | Frozen Participant. “Frozen Participant” means a Participant in the employ of Sysco or a Subsidiary on June 29, 2013, whose participation in the Plan is frozen prior to June 30, 2013, because on or before June 29, 2013, he either (i) ceased to be a participant in the Management Incentive Plan; or (ii) he transferred to a Non-Participating Subsidiary. A Frozen Participant on June 29, 2013 shall not be treated as an Active Participant if he subsequently becomes a participant in the Management Incentive Plan or transfers to the Company after June 29, 2013. |
1.29 | High-Five Average Compensation as of June 28, 2008. “High-Five Average Compensation as of June 28, 2008” shall have the meaning set forth in Section 4.1(c). |
1.30 | Joint and Survivor Annuity. “Joint and Survivor Annuity” means a joint and two-thirds survivor monthly annuity with a ten (10) year certain period that is the Actuarial Equivalent of an Annuity. This annuity is payable during the joint lives of the Participant and his spouse, and a monthly annuity shall continue for the life of the survivor in an amount equal to two-thirds of the monthly amount provided during their joint lives. Notwithstanding the above, during the ten (10) year certain period, there shall be no reduction in the amount of such payment regardless of the death of either or both the Participant and his spouse. |
1.31 | Minimum Vested Accrued Benefit. “Minimum Vested Accrued Benefit” shall have the meaning set forth in Section 10.2. |
1.33 | MIP Participation. “MIP Participation” refers to an individual’s periods of participation in the MIP. Non-continuous periods of MIP Participation (e.g., as a result of a termination and subsequent reemployment) shall be added together. A Participant’s years of MIP Participation shall mean the number of full years of such eligible periods of participation determined on an elapsed time basis. |
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1.34 | Non-Participating Subsidiary. “Non-Participating Subsidiary” means a Subsidiary that has not adopted this Plan pursuant to Article IX. |
1.35 | Offset Amount. “Offset Amount” shall have the meaning set forth in Section 4.1(f). |
1.37 | Pension Plan. “Pension Plan” means the Sysco Corporation Retirement Plan, a defined benefit plan qualified under Section 401(a) of the Code, as amended from time to time and any U.S. tax-qualified defined benefit pension plan successor thereto. |
1.41 | Protected Benefit and Protected Participant. A “Protected Benefit,” as determined under Sections 4.2(a)(i)(B), 4.2(a)(ii)(B), 4.2(b)(i)(B), and 4.2(b)(ii)(B), is a benefit which is only applicable to a Protected Participant. A “Protected Participant” is an individual who, as of July 3, 2005, was an Active Participant who was (a) at least age sixty (60) or (b) at least age fifty-five (55) and had at least ten (10) years of MIP Participation. |
1.43 | Retirement. “Retirement” means the Participant’s Separation from Service from Sysco or its Subsidiaries on or after June 29, 2013 for reason other than death, provided that at the time of such Separation from Service, the Participant is at least age fifty-five (55) and has a Vested Accrued Benefit. |
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1.45 | Section 409A. “Section 409A” means Section 409A of the Code. References herein to “Section 409A” shall also include any regulatory or other interpretive guidance promulgated by the Treasury Department, including the U.S. Treasury Regulations, or the U.S. Internal Revenue Service under Section 409A of the Code. |
1.46 | Securities Act. “Securities Act” means the Securities Exchange Act of 1934, as amended from time to time. |
1.48 | Service Factor. “Service Factor” shall have the meaning set forth in Section 4.1(e). |
1.49 | Social Security Offset. “Social Security Offset” shall have the meaning set forth in Section 4.1(i). |
1.52 | Sysco. “Sysco” means Sysco Corporation, the sponsor of this Plan (including the Program). |
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1.53 | Ten-Year Final Average Compensation. “Ten-Year Final Average Compensation” shall have the meaning set forth in Section 4.1(b). |
1.56 | Trust Agreement. “Trust Agreement” shall mean the Third Amended and Restated Grantor Trust under the Sysco Corporation Supplemental Executive Retirement Plan, as may be further amended and/or restated from time to time. |
1.57 | Trustee. “Trustee” shall mean the trustee as defined in the Trust Agreement. |
1.58 | Vested Accrued Benefit. “Vested Accrued Benefit” shall mean the benefit calculated pursuant to Sections 4.2(a) and 4.2(b), as applicable. |
1.59 | Vested Percentage. “Vested Percentage” shall have the meaning set forth in Article III. |
1.60 | Vested Separated Participant. “Vested Separated Participant” shall have the meaning set forth in Section 6.1(a). |
1.61 | Vested Separation. “Vested Separation” means the Participant’s Separation from Service from Sysco or its Subsidiaries on or after June 29, 2013, other than upon Retirement or death on or after June 29, 2013, if, at the time of the Separation from Service, the Participant has a Vested Accrued Benefit. |
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Article II
ELIGIBILITY & continued participation
2.1 Eligibility. Only those Company employees who are Participants (including Frozen Participants) in the Plan as of June 29, 2013, shall be eligible to participate in the Plan. For purposes of clarification, this Section 2.1 is not applicable to the Program, which has unique eligibility requirements as set forth in Section 2.1 of the Program.
2.2 Benefits upon Re-Employment. If a Retired or Vested Separated Participant is subsequently re-employed by Sysco or an Affiliate, the re-employed Participant’s status shall remain that of a Retired or Vested Separated Participant for all purposes under this Plan and distributions to such Participant shall commence as provided under Section 4.3 without regard to his re-employment or, in the case of a Retired or Vested Separated Participant who is receiving distributions from this Plan as of his re-employment date, such payments shall continue unchanged during his period of re-employment.
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Article III
VESTING
Subject to Section 7.5, all Active Participants and Frozen Participants on June 29, 2013 shall have a Vested Percentage of 100%. If a Participant’s Vested Percentage is reduced by reason of Section 7.5 (as a result of a Change of Control), no additional vesting credit shall be awarded to such Participant under this Plan.
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VESTED ACCRUED BENEFIT & RETIREMENT BENEFIT
4.1 Definitions. The following definitions are used in this Article IV:
(a) Eligible Earnings. “Eligible Earnings” means, for a given Plan Year ending before June 30, 2013, the sum of the Participant’s (i) salary, including salary deferred under the EDCP, and (ii) to the extent described in the table below: (A) all or a portion of the bonus payable to the Participant under the MIP, any amounts payable to the Participant as a substitute for or in lieu of such MIP bonus for a Plan Year (but excluding any amounts paid as a substitute for or in lieu of such MIP bonus pursuant to a severance agreement or other arrangement providing for post-termination benefits, unless otherwise determined by the Administrative Committee) (“MIP Bonus”) and (B) the bonus earned under the Sysco Corporation 2006 Supplemental Performance Based Bonus Plan (“Supplemental Performance Bonus”), even if the amounts described above were earned before the individual became a Participant.
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Plan Year | Treatment of Bonuses for Purposes of Eligible Earnings | ||
MIP Bonus (including any MIP Bonus deferred under the EDCP) | Supplemental Performance Bonus | ||
Benefits other than Protected Benefits | Protected Benefits | ||
2009 PY through | Included, except for MIP Additional Bonuses, but capped at 150% of base salary rate as of the last day of the Plan Year | Included, except for MIP Additional Bonuses, but capped at 150% of base salary rate as of the last day of the Plan Year | Excluded |
2008 PY | Included, except for MIP Additional Shares and MIP Additional Bonuses | Included, except for MIP Additional Bonuses | Excluded |
2007 PY | Included, except for MIP Additional Shares | Included in full | Included, except for calculation of Protected Benefit |
2006 PY | Included, except for MIP Additional Shares and MIP Additional Cash Bonuses | Included in full | Excluded |
2005 PY and prior PYs | Included in full | Included in full | Excluded |
NOTE: The terms “MIP Additional Bonus”, “MIP Additional Shares” and “MIP Additional Cash Bonus” shall have the meanings given to them in the MIP. No bonus other than those specified in the above table is included in Eligible Earnings. |
Eligible Earnings shall not include a Participant’s compensation from a company before the date such company was acquired by Sysco or a Subsidiary. Eligible Earnings for Plan Years commencing after June 29, 2013, shall not be used in calculating, or taken into account in determining, Participants’ accrued benefits under the Plan.
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Solely for purposes of determining the salary component of Eligible Earnings used in the determination of
Ten-Year Final Average Compensation defined in (b) below, “salary” shall mean the annual rate of the Participant’s base salary as of his last day of employment during the applicable Plan Year.
(b) Ten-Year Final Average Compensation. Except as provided in Section 5.1(c), “Ten-Year Final Average Compensation” means the monthly average of the Participant’s Eligible Earnings for the ten (10) Plan Years (excluding those Plan Years in which the Participant does not have any Eligible Earnings) ending on June 29, 2013. If the Participant does not have ten (10) Plan Years of Eligible Earnings, the Participant’s Ten-Year Final Average Compensation shall be based on the monthly average of Eligible Earnings for the available Plan Years ending on June 29, 2013. The Plan Year in which the Participant was originally hired shall be disregarded if he was hired after the first business day of such Plan Year.
(c) High-Five Average Compensation as of June 28, 2008. Except as provided in Section 5.1(d), “High-Five Average Compensation as of June 28, 2008” means the monthly average of the Participant’s Eligible Earnings for the five (5) full Plan Years (which need not be successive) that yield the highest monthly average of Eligible Earnings out of the ten (10) full Plan Years ending June 28, 2008. If the Participant does not have five (5) full Plan Years of Eligible Earnings, the Participant’s High-Five Average Compensation as of June 28, 2008 shall be based on the monthly average of Eligible Earnings for the available full Plan Years ending June 28, 2008.
(d) Benefit Service. Except as provided in Section 5.1(b), “Benefit Service” means service with Sysco and its Subsidiaries through (i) June 28, 2008, for purposes of Sections 4.2(a)(i) and 4.2(b)(i), and (ii) June 29, 2013, for purposes of Sections 4.2(a)(ii) and 4.2(b)(ii), for which the Participant is awarded “credited service” under the Pension Plan for vesting purposes or would have been awarded “credited service” under the Pension Plan for vesting purposes if the Participant was covered under the Pension Plan; provided, however, the Compensation Committee may, in its sole discretion, award a Participant additional Benefit Service.
(e) Service Factor. “Service Factor” means a fraction equal to the Participant’s full years of Benefit Service as determined under Section 4.1(d) (not to exceed twenty (20) years) divided by twenty (20).
(f) Offset Amount. “Offset Amount” means the sum of a Participant’s Defined Benefit Offset, Defined Contribution Offset, Social Security Offset and the Canada/Quebec Pension Plan Offset.
(g) Defined Benefit Offset. “Defined Benefit Offset” refers to the offset of the Participant’s vested accrued benefit under the Pension Plan, and each other U.S. tax-qualified defined benefit plan, or Canadian registered pension plan sponsored by Sysco or a Subsidiary (or any company for which the Participant worked that was acquired by Sysco or a Subsidiary), each determined as of (i) June 28, 2008, for purposes of Sections 4.2(a)(i) and 4.2(b)(i) or, in the case of a Frozen Participant, as provided under Section 5.1(f), and (ii) December 31, 2012, for purposes of Sections 4.2(a)(ii) and 4.2(b)(ii) or, in the case of a Frozen Participant, as provided under Section 5.1(f), and further determined as follows:
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(i) Such a vested accrued benefit shall only reflect the benefit derived from employer contributions.
(ii) Each such vested accrued benefit will be adjusted in accordance with provisions of the applicable plan to reflect an assumed benefit commencement date of the later of (A) the Benefit Commencement Date or (B) the date a retirement benefit is first payable to the Participant under the applicable plan without regard to the actual election made by the Participant under such plan. The resulting amount shall be converted to an Actuarially Equivalent Annuity as of the assumed benefit commencement date.
(iii) Such benefits shall include prior distributions (subject to the limitation in item (i) and including but not limited to an in-service withdrawal or a qualified domestic relations order distribution), increased with interest. If the prior distribution was a lump-sum payment, interest will be credited from the date of the lump-sum payment. If the prior distribution consists or consisted of periodic payments, the Actuarially Equivalent single-sum value of the stream of payments will be determined as of the date of the first periodic payment and increased with interest from such date. Interest on the lump-sum payment or single-sum value of periodic payments will be credited to the assumed benefit commencement date described in (ii) above using the interest rate used for determining Actuarial Equivalence. The resulting amount will be converted to an Actuarial Equivalent Annuity as described in (ii) above.
(h) Defined Contribution Offset. “Defined Contribution Offset” refers to the offset of an Annuity that could be provided by the Participant’s vested account balance under the 401(k) Plan, and each other U.S. tax-qualified defined contribution plan or each Canadian tax-registered capital accumulation plan, sponsored by Sysco or a Subsidiary (or any company for which the Participant worked that was acquired by Sysco or a Subsidiary), determined as follows:
(i) Such account balance shall only reflect the vested balance derived from employer contributions, excluding the balance attributable to 401(k) Plan salary deferrals.
(ii) Such account balance shall be determined as (1) May 31, 2008, for purposes of Sections 4.2(a)(i) and 4.2(b)(i) or, in the case of a Frozen Participant, as provided under Section 5.1(f), and (ii) December 31, 2012, for purposes of Sections 4.2(a)(ii) and 4.2(b)(ii) or, in the case of a Frozen Participant, as provided under Section 5.1(f). This balance will be increased with interest to the Benefit Commencement Date, using the interest rate used for determining Actuarial Equivalence and shall be converted to an Actuarially Equivalent Annuity as of the Benefit Commencement Date.
(iii) Such balances shall include prior distributions (subject to the limitation in item (i) and including but not limited to an in-service withdrawal or a qualified domestic relations order distribution), increased with interest. Interest will be credited from the date of the lump-sum payment to the Benefit Commencement Date, using the interest rate used for determining Actuarial Equivalence. The resulting balance shall be converted to an Actuarially Equivalent Annuity as of the Benefit Commencement Date.
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(i) Social Security Offset. “Social Security Offset” means the Participant’s monthly old-age benefit under the Federal Social Security Act or any similar federal act in effect (i) June 28, 2008, for purposes of Sections 4.2(a)(i) and 4.2(b)(i) or, in the case of a Frozen Participant whose participation was frozen before June 28, 2008, as of the Frozen Participant’s Retirement or Vested Separation as provided under Section 5.1(f), and (ii) June 29, 2013, for purposes of Sections 4.2(a)(ii) and 4.2(b)(ii) or, in the case of a Frozen Participant, as of the Frozen Participant’s Retirement or Vested Separation as provided under Section 5.1(f), and payable as of the later of age sixty-two (62) or the Benefit Commencement Date (the “Social Security Benefit”), and without regard to whether such Social Security Benefit is actually delayed, superseded, or forfeited because of failure to apply or for any other reason. The amount of the Social Security Benefit shall be determined based upon the pay and employment data that may be furnished by the Company and/or the Participant concerned and it shall be assumed that the Participant has no compensation after (1) June 28, 2008, for purposes of Sections 4.2(a)(i) and 4.2(b)(i) or, in the case of a Frozen Participant whose participation was frozen before June 28, 2008, the Frozen Participant’s Retirement or Vested Separation, subject to Section 5.1(f), and (2) June 29, 2013, for purposes of Sections 4.2(a)(ii) and 4.2(b)(ii) or, in the case of a Frozen Participant, the Frozen Participant’s Retirement or Vested Separation. Any pay for periods prior to the earliest data furnished shall be estimated by applying a salary scale discount, and the discount applied for this purpose shall be the actual change in average wages from year to year as determined by the Social Security Administration.
(j) Canada/Quebec Pension Plan Offset. “Canada/Quebec Pension Plan Offset” means the Participant’s monthly retirement benefit payable under the Canada Pension Plan or Quebec Pension Plan, as applicable, as in effect (i) June 28, 2008, for purposes of Sections 4.2(a)(i) and 4.2(b)(i) or, in the case of a Frozen Participant whose participation was frozen before June 28, 2008, as of the Frozen Participant’s Retirement or Vested Separation as provided under Section 5.1(f), and (ii) June 29, 2013, for purposes of Sections 4.2(a)(ii) and 4.2(b)(ii) or, in the case of a Frozen Participant, as of the Frozen Participant’s Retirement or Vested Separation as provided under Section 5.1(f), and payable as of the later of age sixty (60) or the Benefit Commencement Date (the “Canada/Quebec Pension Benefit”), and without regard to whether such Canada/Quebec Pension Benefit is actually delayed, superseded, or forfeited because of failure to apply or for any other reason. The amount of the Canada/Quebec Pension Benefit shall be determined based upon the pay and employment data that may be furnished by the Company and/or the Participant concerned and it shall be assumed that the Participant has no compensation or service for benefit accrual purposes under such plan after (1) June 28, 2008, for purposes of Sections 4.2(a)(i) and 4.2(b)(i) or, in the case of a Frozen Participant whose participation was frozen before June 28, 2008, the Frozen Participant’s Retirement or Vested Separation, subject to Section 5.1(f), and (2) June 29, 2013, for purposes of Sections 4.2(a)(ii) and 4.2(b)(ii) or, in the case of a Frozen Participant, the Frozen Participant’s Retirement or Vested Separation. Any pay for periods prior to the earliest data furnished shall be estimated by applying a salary scale discount, and the discount applied for this purpose shall be the actual change in average wages from year to year as determined for purposes of the Canada Pension Plan or the Quebec Pension Plan, as applicable.
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(k) Participant who has paid into both the US Federal Social Security and either the Canada Pension Plan or the Quebec Pension Plan. If a Participant has paid into both the US Federal Social Security and either the Canada Pension Plan or the Quebec Pension Plan, while an employee of Sysco or its Subsidiaries, the monthly Social Security Offset will be assumed to be zero and the monthly Canada/Quebec Pension Plan Offset will be determined to be a theoretical amount calculated under the Canada Pension Plan or Quebec Pension Plan, as applicable, as if the Participant had always been covered under and contributing to the Canada Pension Plan or Quebec Pension Plan. For purposes of determining the monthly Canada/Quebec Pension Plan Offset, the amount of the benefit shall be determined based upon the pay and employment data that may be furnished by the Company and/or the Participant while a Canadian Participant. Any pay for periods prior to the earliest data furnished shall be estimated by applying a salary scale discount, and the discount applied for this purpose shall be the actual change in average wages from year to year as determined for purposes of the Canada Pension Plan or the Quebec Pension Plan, as applicable. Any pay for periods prior to (i) June 28, 2008, for purposes of Sections 4.2(a)(i) and 4.2(b)(i) or, in the case of a Frozen Participant whose participation was frozen before June 28, 2008, the Frozen Participant’s Retirement or Vested Separation as provided under Section 5.1(f), and (ii) June 29, 2013, for purposes of Sections 4.2(a)(ii) and 4.2(b)(ii) or, in the case of a Frozen Participant, the Frozen Participant’s Retirement or Vested Separation, but after the latest data furnished, shall be estimated by applying a salary scale factor, and the factor applied for this purpose shall be the actual change in average wages from year to year as determined for purposes of the Canada Pension Plan or the Quebec Pension Plan, as applicable. It shall be assumed that the Participant has no compensation after (1) June 28, 2008, for purposes of Sections 4.2(a)(i) and 4.2(b)(i) or, in the case of a Frozen Participant whose participation was frozen before June 28, 2008, the Frozen Participant’s Retirement or Vested Separation, subject to Section 5.1(f), and (2) June 29, 2013, for purposes of Sections 4.2(a)(ii) and 4.2(b)(ii) or, in the case of a Frozen Participant, the Frozen Participant’s Retirement or Vested Separation. For purposes of the Temporary Supplement of Section 4.7, the Participant will be treated as a Canadian Participant, regardless of the Participant’s status at Retirement or Vested Separation.
(l) Early Payment Criteria. “Early Payment Criteria” are as follows:
(i) Early Payment Criteria of a Protected Benefit: If, as of his Retirement or Vested Separation, the Participant is at least age sixty (60), has at least 10 years of MIP Participation and has at least twenty (20) years of Vesting Service.
(ii) Early Payment Criteria of a Benefit other than a Protected Benefit: If, as of his Retirement or Vested Separation, the Participant has either (1) satisfied the criteria in Section 4.1(l)(i) above or (2) is at least age fifty-five (55) and has at least fifteen (15) years of MIP Participation.
(m) Early Retirement Factor or ERF. “Early Retirement Factor” or “ERF” means the percentage determined in accordance with this Section 4.1(m) using the Participant’s age, Vesting Service and MIP Participation determined as of the ERF Determination Date. The Early Retirement Factor shall be the greatest of the percentages determined under Section 4.1(m)(i) or Section 4.1(m)(ii), except the schedule under Section 4.1(m)(ii)
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shall not apply for purposes of determining an Early Retirement Factor applicable to a Protected Participant’s Protected Benefit. The “ERF Determination Date” shall be the date of the applicable distribution event.
(i) If the Participant (A) is at least age sixty (60), has at least ten (10) years of MIP Participation and twenty (20) years of Vesting Service, his Early Retirement Factor under this Section 4.1(m)(i) shall be determined as follows:
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Participant with at least ten (10) years of MIP Participation and 20 Years of Vesting Service whose age is |
| ERF |
60 but less than 61...............................................................................................................................50%
61 but less than 62...............................................................................................................................60%
62 but less than 63...............................................................................................................................70%
63 but less than 64...............................................................................................................................80%
64 but less than 65...............................................................................................................................90%
65 or more..............................................................................................................................................100%
(ii) If the Participant (i) is at least age fifty-five (55) and (ii) has at least fifteen (15) years of MIP Participation, his Early Retirement Factor under this Section 4.1(m)(ii) shall be determined as follows:
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Sum of Participant’s full years of age plus full |
| ERF |
70..................................................................................................................................................................50%
71..................................................................................................................................................................55%
72..................................................................................................................................................................60%
73..................................................................................................................................................................65%
74..................................................................................................................................................................70%
75..................................................................................................................................................................75%
76..................................................................................................................................................................80%
77..................................................................................................................................................................85%
78..................................................................................................................................................................90%
79..................................................................................................................................................................95%
80 or more..............................................................................................................................................100%
(iii) If the Participant is (i) at least age sixty-two (62), (ii) has completed at least twenty-five (25) years of Vesting Service and (iii) has at least fifteen (15) years of MIP Participation, he shall have an Early Retirement Factor of 100%;
provided that, the Compensation Committee, in its sole discretion, may increase a Participant’s Early Retirement Factor to any percentage not to exceed 100%; provided further, subject to Section 7.5, a Participant’s Early Retirement Factor shall be 100% upon a Change of Control.
(n) Vested Percentage. “Vested Percentage” means the Participant’s vested percentage, which shall be 100%.
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4.2 Retirement Benefit. If a Participant’s Separation from Service from Sysco or its Subsidiaries occurs prior to June 29, 2013, such Participant’s Retirement Benefit, if any, shall be determined under the Current Plan. Upon the Retirement or Vested Separation of an Active Participant or, subject to Article V, a Frozen Participant, such Participant’s Retirement Benefit shall be determined as provided in this Section 4.2, as follows:
(a) Participant Does Not Satisfy the Early Payment Criteria. If, as of the date of the Participant’s Retirement or Vested Separation, the Participant does not satisfy the Early Payment Criteria, the Participant’s Retirement Benefit under this Section 4.2(a) shall be the Participant’s Vested Accrued Benefit determined as follows:
(i) Minimum Vested Accrued Benefit as of June 28, 2008. An Active Participant as of June 28, 2008 shall have a Minimum Vested Accrued Benefit as of June 28, 2008, equal to:
(A) In General. The Participant’s { High-Five Average Compensation as of June 28, 2008 × 50% × Service Factor × Vested Percentage } less Offset Amount; provided, however, the resulting monthly amount shall not exceed the Participant’s Vested Percentage × USD $199,486.
(B) For a Protected Participant. The greater of (i) the amount determined under Section 4.2(a)(i)(A) above or (ii) the Protected Minimum Vested Accrued Benefit equal to the Protected Participant’s { (High-Five Average Compensation as of June 28, 2008 × 50%) less Offset Amount } × Service Factor × Vested Percentage.
(ii) Vested Accrued Benefit on or after June 29, 2013. An Active Participant’s Vested Accrued Benefit on or after June 29, 2013 shall equal the greater of the Participant’s benefit, if any, under Section 4.2(a)(i) above, or:
(A) In General. The Participant’s { Ten-Year Final Average Compensation × 50% × Service Factor × Vested Percentage } less Offset Amount; provided however, the resulting monthly amount shall not exceed the Participant’s Vested Percentage × USD $199,486.
(B) For a Protected Participant. The greater of (i) the amount determined under Section 4.2(a)(ii)(A) above or (ii) the Protected Benefit equal to the Protected Participant’s { (Ten-Year Final Average Compensation × 50% ) less Offset Amount } × Service Factor × Vested Percentage.
Participant Satisfies the Early Payment Criteria. If, as of the date of the Participant’s Retirement or Vested Separation, the Participant satisfies the Early Payment Criteria, the Participant’s Retirement Benefit under this Section 4.2(b) shall be the Participant’s Vested Accrued Benefit determined as follows: |