ALEXANDER & BALDWIN, INC.
DEFERRED COMPENSATION PLAN
AMENDED AND RESTATED EFFECTIVE JANUARY 1, 2005
DEFERRED COMPENSATION PLAN
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I. PURPOSE. Alexander & Baldwin, Inc. (the "Company") established
this Deferred Compensation Plan (the "Plan") effective August 25, 1994, to
provide participants in the Company's Three-Year Performance Improvement
Incentive Plan (the "Three-Year PIIP") with the opportunity to defer payment of
the awards made to them under such Plan and/or under the Company's One-Year
Performance Improvement Incentive Plan (the "One-Year PIIP") for a period
extending until their retirement or other termination of employment or until the
expiration of the specific term (at least one full year in duration) elected by
the participant.
II. DEFINITIONS. For purposes of this Plan, the following
definitions shall be in effect:
Board shall mean the Company's Board of Directors.
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Change in Control shall mean a "Change in Control Event" as
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defined in Internal Revenue Service Notice 2005-1 or any successor guidance
issued by the Internal Revenue Service..
Common Stock shall mean shares of the Company's common stock.
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Fair Market Value shall, with respect to the per share
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valuation of the Common Stock on any relevant date, be the mean between the
highest and lowest selling prices per share of Common Stock on such date, as
quoted on the Nasdaq National Market (or any successor system). Should the
Common Stock become traded on a national securities exchange, then the Fair
Market Value per share shall be the mean between the highest and lowest selling
prices on such exchange on the date in question, as such prices are quoted on
the composite tape of transactions on such exchange. If there is no reported
sale of Common Stock on the Nasdaq National Market (or national securities
exchange) on the date in question, then the Fair Market Value shall be the mean
between the highest and lowest selling prices on the Nasdaq National Market (or
such securities exchange) on the last preceding date for which such quotation
exists.
Plan Administrator shall mean the Compensation and Stock
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Option Committee of the Board.
Section 16 Insider shall mean any participant who is, at the
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time of the relevant determination or was at any time within the immediately
preceding six (6) months, an officer or director of the Company subject to the
short-swing profit restrictions of Section 16(b) of the Securities Exchange Act
of 1934, as amended.
III. ADMINISTRATION. The Plan Administrator shall administer the
Plan and shall have full power and authority (subject to the provisions of the
Plan) to establish such rules and regulations as it may deem appropriate for
proper administration and to make such determinations under, and issue such
interpretations of, the Plan as it may deem necessary or advisable. Decisions of
the Plan Administrator shall be final and binding on all parties who have an
interest in the Plan.
IV. DEFERRAL ELECTION. An individual selected for participation in
the Three-Year PIIP may elect to defer, for the period of time described below
("Deferral Period"), all or part of his/her award(s) under the Three-Year PIIP
and/or One-Year PIIP. Any such election ("Deferral Election") must be made in
accordance with the following provisions:
1. Deferral Election Procedure. In December of each calendar
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year, the Company will send to each individual selected for participation in the
upcoming performance cycle under the Three-Year PIIP an election form whereby
such individual may elect to defer the payment of all or part of any award made
to him/her for that three-year performance cycle or for the upcoming one-year
performance cycle under the One-Year PIIP. The Deferral Election form must be
executed by the participant and delivered to the Company before the beginning of
the particular performance cycle under the One-Year PIIP or Three-Year PIIP to
which such election relates.
2. Deferral Period. The Deferral Period shall extend until the
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date the participant separates from service with the Company. At the time the
Deferral Election form is filed, the participant shall specify the date or dates
following his/her separation from service on which payments of the deferred
award are to be made. Once specified, such payment schedule cannot be changed.
Notwithstanding the foregoing, prior to January 1, 2005, participants could
elect a payment date preceding the participant's separation from service, and
any such election applicable to compensation that was earned and vested prior to
January 1, 2005, shall continue to be effective on and after January 1, 2005,
with respect to the compensation deferred under such election and all interest
or dividend equivalents credited to such compensation.
3. Minimum Deferral Amount. A participant may elect to defer
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all or any portion of his/her award under the One-Year or Three-Year PIIP (with
the balance to be paid currently, i.e., on a non-deferred basis), provided the
amount to be so deferred is at least Two Thousand Dollars ($2,000.00). The
portion of each award which is to be deferred pursuant to such election shall be
credited to a separate account ("Deferred Compensation Account") maintained for
the participant on the Company's books. The credit to such book account shall be
made at the time the award otherwise would be payable to the participant under
the applicable PIIP in the absence of his/her Deferral Election.
V. CONVERSION ELECTION - COMMON STOCK-EQUIVALENT UNITS. Subject
to the provisions stated below and pursuant to procedures determined by the Plan
Administrator or by the committee or individual(s) to which such authority is
delegated, the participant may make an election ("Conversion Election") to have
all or any portion of his/her award under the One-Year or Three-Year PIIP that
is credited to his/her Deferred Compensation Account, converted into Common
Stock-equivalent units which will be valued from time to time during the
Deferral Period on the basis of the Fair Market Value of the Common Stock.
1. Timing of Conversion Election. Conversion Elections shall
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be made at the time the applicable PIIP awards are determined. Conversion
Elections by Section 16 Insiders, once made, shall be irrevocable.
2. Limitation on Conversion Election. The Conversion Election
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shall be subject to the following limitations:
(i) The portion of the award which may be converted
into Common Stock-equivalent units shall not exceed fifty percent (50%) of the
total dollar amount of such award, including the portion of such award payable
currently and the portion deferred under this Plan, and
(ii) The dollar value of the One-Year or Three-Year
PIIP award which may be converted into Common-Stock equivalent units under this
Plan shall not, when added to the Fair Market Value (at date of issuance) of any
shares of Common Stock issued under the Company's Restricted Stock Bonus Plan in
payment of all or part of the balance of such award (exclusive of any bonus
shares issued under the Restricted Stock Bonus Plan), exceed fifty percent (50%)
of the total dollar value of such PIIP award.
3. Approval of Plan Administrator. No Conversion Election
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shall be effective, and no portion of the participant's Deferred Compensation
Account shall actually be converted into Common Stock-equivalent units, except
to the extent such Conversion Election is approved by the Plan Administrator.
4. Bonus Common Stock-Equivalent Units. The deferred portion
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of any award converted into Common Stock-equivalent units may, in the Plan
Administrator's sole discretion, be credited, as a premium, with additional,
bonus Common Stock-equivalent units ("bonus units") equal to up to 50% of the
number of Common Stock-equivalent units into which such portion is initially
converted.
VI. VALUATION OF DEFERRED COMPENSATION ACCOUNTS. From time to time
during the Deferral Period, the value of each Deferred Compensation Account
shall be adjusted to reflect an investment return on the balance credited to
such account, and such value and adjustments periodically shall be communicated
to each participant. Such periodic valuation shall be made as follows:
1. Cash Balance. The deferred portion of any award valued in
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cash shall be credited with interest, compounded annually, for each
calendar year falling in whole or in part within the Deferral Period.
Such interest shall be at a per annum rate equal to the New York
Reserve Bank discount rate in effect as of January 15 of each calendar
year within the Deferral Period plus 1%.
2. Common Stock-Equivalent Units.
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(i) The Common Stock-equivalent units (including
bonus units) will be credited, at the time dividends are paid
on outstanding shares of Common Stock, with an amount
("dividend-equivalent credits") equal to the dividends which
otherwise would be paid if the number of Common
Stock-equivalent units in the participant's Deferred
Compensation Account were actually outstanding shares of
Common Stock.
(ii) Dividend-equivalent credits will be applied in
the manner of a dividend reinvestment plan to purchase
additional Common Stock-equivalent units valued at Fair Market
Value on the applicable dividend payment date.
(iii) If the employment of a participant terminates
for any reason, other than by reason of normal or approved
early retirement, death, or total and permanent disability,
then:
(a) such participant shall no longer have
any right, title or interest in any Common
Stock-equivalent units which were credited as bonus
units within three (3) years prior to the date of
such termination or discharge, and such participant
shall not be entitled to receive any payment with
respect to such bonus units, and
(b) the Company shall have the right,
exercisable at its discretion, to convert to cash any
or all non-bonus Common Stock-equivalent units which
were credited to the participant's account within
three (3) years prior to the date of such termination
or discharge, at an amount equal to the lesser of the
original award amount that was converted to these
non-bonus Common Stock-equivalent units, and, an
amount equal to the Fair Market Value per share of
Common Stock on the date of such termination or
discharge multiplied by the number of such Common
Stock-equivalent units.
(iv) After the Common Stock-equivalent units have
been credited to the participant's Deferred Compensation
Account for a period of at least three (3) years, that
participant may elect, pursuant to procedures determined by
the Plan Administrator or by the committee or individual(s) to
which such authority is delegated, to have all or a portion of
those units converted into cash on the basis of the Fair
Market Value (at date of conversion) of the shares of Common
Stock represented by such units; provided, however, that
participants may not make such an election if they are Section
16 Insiders at the time of such election. Any portion so
converted to cash shall begin to earn interest in accordance
with Section VI.1. above and shall stop earning
dividend-equivalent credits.
(v) Any Common Stock-equivalent units credited to a
participant's Deferred Compensation Account shall
automatically be converted into cash, on the basis of the Fair
Market Value (at the date of conversion) of the shares of
Common Stock represented by such units, upon the earlier of
(A) the participant's termination of employment with the
Company for any reason or (B) the expiration date of the
Deferral Period in effect for such account pursuant to the
participant's prior election. Any amounts so converted to cash
shall begin to earn interest in accordance with Section VI.1.
above.
VII. PAYMENT. Upon the participant's separation from service (or at
the time specified in the participant's pre-2005 election as described in the
last sentence of Section IV.2), each Deferred Compensation Account maintained
for the participant shall be paid out either in installments or in a lump sum in
accordance with the payment schedule irrevocably designated by the participant
for that account in the Deferral Election form executed and filed by him/her in
accordance with Section IV. above; provided, however, that in the case of a
participant who is a "key employee" (as defined in section 416(i) of the
Internal Revenue Code without regard to paragraph (5) thereof), except as
otherwise permitted under the last sentence of Section IV.2, the participant's
Deferred Compensation Account(s) shall be paid no earlier than six months
following the participant's separation from service.
VIII. FUNDING. Deferred Compensation Accounts shall not be funded
and shall be maintained by the Company only as book reserves. The Company's
obligation to pay such accounts as they become due and payable under the Plan
shall be at all times an unfunded and unsecured obligation of the Company, and
the participants only shall have the status of general creditors with respect to
the amounts credited to their accounts and shall look solely and exclusively to
the general assets of the Company for payment.
IX. CHANGE IN CONTROL. Notwithstanding any other provision of this
Agreement, upon the occurrence of a Change in Control, all Common
Stock-equivalent units which previously were credited as bonus units shall
immediately vest, the provisions of Section VI.2.(iii)(b) with respect to the
conversion rights of the Company applicable to non-bonus Common Stock-equivalent
units shall terminate, all outstanding Common Stock-equivalent units at the time
credited to outstanding Deferred Compensation Accounts shall immediately be
converted into cash on the basis of the higher of (i) the Fair Market Value of
the Common Stock at the time of such Change of Control or (ii) the highest price
paid per share of Common Stock in effecting the Change in Control, and the
amount outstanding in each Deferred Compensation Account after such conversion
shall be paid out in a single lump sum to the participants within thirty (30)
days after such Change in Control, whereupon the Plan shall terminate.
X. BENEFICIARY DESIGNATIONS. Each participant may file with the
Company a written designation of one or more primary beneficiaries and one or
more contingent beneficiaries to whom payments otherwise due the participant
under the Plan are to be made after his/her death, in such amounts and at such
times as would have been made to the participant had he/she lived. Such payments
shall be divided among the primary beneficiaries who survive the participant in
such proportion as the participant shall direct in his/her written designation.
If no primary beneficiary survives the participant, such payment shall be
divided among the contingent beneficiaries who survive the participant in such
proportion as the participant shall direct in his/her written designation. If no
primary or contingent beneficiary survives the participant or is named by the
participant, such payments shall be made to the participant's estate. At the
discretion of the Plan Administrator, payments to the participant's estate may
be made in a lump sum equal to the total value of the participant's account. The
participant may from time to time change his/her beneficiary designation by
filing a new written designation with the Company.
XI. INALIENABILITY. No participant or beneficiary, or any other
person having or claiming to have any interest of any kind or character in or
under this Plan or in any of the Deferred Compensation Accounts or any part
thereof or payment therefrom shall have the right to sell, assign, transfer,
convey, hypothecate, anticipate, pledge or otherwise dispose of such interest;
and to the extent permitted by law, such interest shall not be subject to any
liabilities or obligations of the participant or to any bankruptcy proceedings,
creditor claims, attachment, garnishments, execution, levy or other legal
process against such participant or his/her property.
XII. PLAN DURATION AND AMENDMENT. The Plan shall become effective
immediately upon adoption by the Board. The Board may amend, modify or terminate
the Plan at any time thereafter; provided, however, that no such action shall
adversely affect the rights of participants with respect to their outstanding
Deferral Elections under the Plan and the payment of their Deferred Compensation
Accounts in accordance with those elections.
XIII. NO EMPLOYMENT RIGHTS. Nothing in the Plan shall confer upon
any participant any right to continue in the Company's service for any period of
specific duration or interfere with or otherwise restrict in any way the rights
of the Company or of the participant, which rights are hereby expressly reserved
by each, to terminate the participant's employment at any time for any reason,
with or without cause, except to the extent such right is expressly limited by
any written employment in effect between the Company and such participant.
XIV. WITHHOLDING TAXES. All amounts which become payable under the
Plan shall be subject to the Company's collection of all applicable Federal,
state and local income and employment taxes required to be withheld therefrom.
XV. GOVERNING LAW. The provisions of the Plan shall, to the extent
not preempted by the Employee Retirement Income Security Act of 1974, as amended
(ERISA), be governed by and construed in accordance with the laws of the State
of Hawaii without resort to that State's conflict-of-laws rules.
XVI. MISCELLANEOUS.
A. The liabilities and obligations of the Company hereunder
shall be binding upon any successor corporation or entity which succeeds to all
or substantially all of the assets and business of the Company by merger,
purchase or other transaction.
B. All costs and expenses incurred in the administration of
the Plan shall be borne by the Company.
XVII. ARBITRATION. In the event that a participant should dispute
the decision of the Committee with respect to such participant's claimed benefit
entitlement under the Plan, such dispute shall be settled by arbitration
proceedings conducted in Honolulu, Hawaii in accordance with the applicable
rules of the American Arbitration Association. If the parties cannot agree upon
the individual to serve as arbitrator, then they shall request the American
Arbitration Association to submit a list of five (5) potential arbitrators, and
in the absence of any agreement as to which of the named individuals shall serve
as arbitrator, each party shall have the right to remove two (2) of the named
individuals from the list, and the last remaining individual on the list shall
accordingly serve as the arbitrator. Such arbitrator shall have full power and
authority to settle the dispute through interpretation and application of the
express provisions of the Plan, but shall have no authority to amend, revise or
supplement such provisions. The costs of such arbitration shall be shared
equally by the Company and the participant, and the decision of the arbitrator
shall be final and binding on them.
IN WITNESS WHEREOF, Alexander & Baldwin, Inc. has caused this Plan to
be executed by its duly authorized officers, effective January 1, 2005.
ALEXANDER & BALDWIN, INC.
By /s/ Nelson N. S. Chun
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Its Senior Vice President
By /s/ Alyson J. Nakamura
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Its Secretary