THE CLOROX COMPANY
SUPPLEMENTAL
EXECUTIVE
RETIREMENT PLAN
RESTATED
JULY 17, 1991
AMENDED
MAY 18, 1994,
JANUARY 17, 1996
and
January 19, 2000
PURPOSE OF THE PLAN
The purpose of The Clorox Company Supplemental Executive Retirement
Plan (the "Plan") is to provide retirement benefits for certain
executives of The Clorox Company (the "Company") in addition to
the retirement benefits provided generally to all Company salaried
employees. These supplemental benefits are intended to provide
greater retirement security for those executives and to aid in
attracting and retaining future executives.
ARTICLE I
DEFINITIONS
The following words and phrases as used herein shall have the
following meanings, unless a different meaning is plainly
required by the context.
1.1 "Accrued Benefit" means the benefit of a Participant
calculated under Article II at the time of the Participant's
termination, or for Participants who have not terminated employment,
at the time of their assumed termination. In the latter case,
the benefit will be based upon the following as of their assumed
termination: (a) Compensation, (b) total years and completed months
of service, (c) any vested accrued benefit from a Company sponsored
Defined Benefits Plan, (d) the monthly benefit which could be
provided based on the actuarially determined annuity value of
the Participant's vested Company contributions account under any
Company sponsored Defined Contribution Plan, and (e) any monthly
primary insurance benefit to which the Participant may be entitled
under the Social Security Act.
1.2 "Board of Directors" means the board of directors of the
Company as from time to time constituted.
1.3 "Committee" means the Employee Benefits and Management
Compensation Committee of the Board of Directors.
1.4 "Company" means The Clorox Company.
1.5 "Compensation" means the total of annual base salary
plus the Management Incentive Compensation awarded to a
Participant and in each case includes amounts the receipt of
which the Participant has elected to defer or to take in the
form of restricted stock or a stock option. For purposes of
the calculation of benefits in Sections 2.3 and 2.5, the total
of the Participant's three highest Management Incentive
Compensation or Executive Incentive Compensation (referred to
collectively as "Incentive Compensation") awards will be
apportioned evenly over the 36 consecutive months of highest base
salary. If a Participant receives a pro-rated Incentive
Compensation award because of termination of employment other
than at the end of the Company's fiscal year, (a) that pro-rated
amount shall be divided by the number of months the Participant
was employed during the fiscal year and (b) the Participant's
third highest Incentive Compensation award shall be divided by 12.
If the result of (a) above is greater than the result of (b)
above, one of the Participant's three highest Incentive
Compensation awards for purposes of this paragraph shall be deemed
to be the Participant's final year pro-rated Incentive
Compensation Award plus the amount determined in (b) above
multiplied by the result of subtracting from 12 the number of
months Participant was employed by the Company during his or
her final year of employment.
1.6 "Defined Benefit Plan" means a plan, fund or program under
which an employer undertakes systematically for the payment of
definitely determinable benefits to its employees over a period
of years after retirement. The benefit an employee will receive
upon retirement can be determined from a formula defined in the
plan instrument.
1.7 "Defined Contribution Plan" means a plan which provides
for an individual account for each participant and for benefits
based solely on the amount contributed to the participant's
account, and any income, expenses, gains and losses and any
forfeitures of accounts of other participants which may be allocated
to such participant's account. Beginning July 1, 1994 "Defined
Contribution Plan" shall include NonQualified Deferred Compensation
Plans which a) restore amounts for a Participant's benefit which
cannot be contributed to a defined benefit or contribution plan
deemed qualified under the Internal Revenue Code, or b) account
for annual distributions, whether deferred or received in cash,
made from a Defined Contribution Plan rather than credited to the
Participant's account in such plan.
1.8 "Effective Date" means July 1, 1981.
1.9 "Married Participant" means a Participant who is lawfully
married on the date Retirement Benefits become payable pursuant
to Article II (Retirement Benefits).
1.10 "Officer" means an officer of the Company with a rank of
Vice President or above.
1.11 "Participant" means any employee who becomes a Participant
pursuant to Section 2.1 (Participation), or a former employee who
has become entitled to a Normal or Early Retirement Benefit
pursuant to the Plan.
1.12 "Retirement Benefit" means the retirement income provided to
Participants and their joint annuitants in accordance with the
applicable provisions of Article II (Retirement Benefits).
Words importing males shall be construed to include females
wherever appropriate.
ARTICLE II
RETIREMENT BENEFITS
2.1 Participation
The employees of the Company named in Exhibit A are the Participants
currently accruing benefits or who have vested deferred benefits
and have not begun to receive such benefits. From time to time,
the Committee may designate additional employees as Plan Participants.
A Participant who is an Officer of the Company and who is removed
from office or is not reelected as an Officer, or who is not an
Officer and who terminates his employment or has his employment
terminated, will thereupon cease to be a Participant and will have
no vested interest in the Plan unless he is entitled to a Normal
or Early Retirement Benefit pursuant to this Article II.
2.2 Normal Retirement Date
A Participant who terminates his employment on or after age sixty-five
with ten or more years of employment with the Company will receive
a Normal Retirement Benefit beginning on the first day of the month
following his termination of employment. Such date will be the
Participant's Normal Retirement Date.
2.3 Normal Retirement Benefits
The Normal Retirement Benefit payable to a Participant will be equal
to 3-2/3% of the monthly average of the Participant's compensation
during the thirty-six (36) consecutive months of employment
producing the highest such average, times the Participant's total
years and completed months of employment with the Company as of his
termination of employment, to a maximum of 15 years, offset by:
(a) the monthly benefit payable under a 50% joint and survivor
annuity form for a Married Participant or an annuity payable for
the life of a single Participant, which would be provided to the
Participant on his Normal Retirement Date (i) by Company contributions
under any Company sponsored Defined Benefit Plan plus (ii) the
monthly benefit which could be provided based on the actuarially
determined annuity value of his vested Company contributions account
under any Company sponsored Defined Contribution Plan, plus
(b) the monthly primary insurance benefit to which the Participant
may be entitled under the Social Security Act as of his Normal
Retirement Date.
For purposes of this Section, Company contributions shall not include
voluntary reductions of compensation under the provisions of a
Company sponsored Defined Contribution Plan. Company matching
contributions under such a plan shall be considered Company contributions.
2.4 Early Retirement Date
A Participant who terminates his employment on or after age
fifty-five with ten or more years of employment with the Company
will receive an Early Retirement Benefit beginning on the first
day of the month following his termination of employment. The
date of the commencement of the Early Retirement Benefit will be
the Participant's Early Retirement Date.
2.5 Early Retirement Benefit
The Early Retirement Benefit payable to a Participant on his
Early Retirement Date will be calculated in the same manner as
the Normal Retirement Benefit in Section 2.3 except that:
(a) Before deducting the offsets provided in Section 2.3, (a)
and (b), the benefit derived by the calculation in the first
paragraph of Section 2.3 shall be reduced to reflect the
Participant's retirement before his Normal Retirement Date.
This reduction will be one quarter of one percent (0.25%) for
each month that the Participant's Early Retirement Date precedes
his Normal Retirement Date.
(b) In calculating the offset described in Section 2.3, (a)
and (b), the reference to "Normal Retirement Date" shall be
changed to "Early Retirement Date." If the Early Retirement Date
is prior to the Participant's attainment of age 62, then the monthly
primary insurance benefit payable at age 62 shall be multiplied
by the appropriate factor from the table below:
Age at Early
Retirement Date Factor
62 1.00
61 .90
60 .81
59 .73
58 .66
57 .60
56 .54
55 .49
If the Participant's Age on the Early Retirement Date is
not an integral age, the factors above shall be interpolated to
reflect the age in years and months. If the Participant is 62
or older on his/her Early Retirement Date, the offset shall be the
actual monthly primary insurance benefit to which the Participant
is entitled under the Social Security Act as of that date.
2.6 Form of Payment
A Participant's Normal or Early Retirement Benefit, will be paid
to him monthly beginning on his Normal or Early Retirement Date
and ending with the payment due for the month in which his
death occurs. If the spouse of a Participant who is receiving
a Retirement Benefit survives the Participant, monthly payments
equal to 50% of the monthly amount payable to the Participant
will continue to such spouse ending with the payment due for
the month in which such spouse's death occurs.
2.7 Termination other than Early or Normal Retirement
A Participant who terminates employment or whose employment
is terminated by the Company and who does not meet the requirements
for an Early or Normal Retirement Benefit will be not be entitled
to a benefit under the Plan.
2.8 Pre-Retirement Death Benefit
The surviving spouse of a Participant with ten or more years of
employment with the Company who dies before he has begun
receiving a Normal or Early Retirement Benefit shall be entitled
to receive a Pre-Retirement Death Benefit. The Pre-Retirement
Death Benefit shall be one-half of a 50% joint and survivor annuity
form of the Early or Normal Retirement Benefit the Participant
would have received had he elected to begin receiving a Retirement
Benefit on the first day of the month following his death. If the
Participant's death occurs before he has attained the age at which
he could elect to receive an Early Retirement Benefit, the
Pre-Retirement Death Benefit will commence on the first day of the
month following the date upon which the Participant would have
attained that age had he survived; provided, however, that if the
surviving spouse dies before that date, there shall be no
Pre-Retirement Death Benefit available to any survivors of the
Participant or his spouse.
2.9 Disability
A Participant who becomes disabled as determined by The Clorox
Company Pension Plan will continue to participate in this Plan
on the same basis as he continues to participate in said
Pension Plan.
ARTICLE III
MISCELLANEOUS PROVISIONS
3.1 Plan Administration
The Committee shall have the power and the duty to take all action
and to make all decisions necessary and proper to carry out the
Plan. Without limiting the generality of the foregoing, the
Committee hereby designates the Employee Benefits Committee of
the Company to control and manage the operation and administration
of the Plan. The Committee shall have the authority to allocate
among themselves or to the Employee Benefits Committee or to
delegate to any other person, any fiduciary responsibility with
respect to the Plan.
3.2 Amendment and Plan Termination
(a) Except by the written consent of 75% of Plan Participants
actually or potentially affected thereby and the approval of the
Board of Directors, the Plan may not be terminated or amended in
any way which would reduce the benefits payable hereunder or
reduce or eliminate the funding provided for in Article IV until
the first regularly scheduled meeting of the Board of Directors
held after June 30, 2011.
(b) The Board of Directors, without the consent of the Plan
Participants, may amend the Plan to improve or increase the benefits
payable hereunder at any time.
(c) If the Plan is terminated, all Participants, including
beneficiaries receiving benefits, will be entitled to their
Accrued Benefits under the Plan. In such event the Board of
Directors may, at its sole discretion, elect any one or more of
the following alternatives to satisfy the Company's obligations
to such Participants or beneficiaries, provided that the method
so elected shall be applied uniformly to all Participants or
beneficiaries:
(i) Provide benefit payments in accordance with the terms of
the Plan, at the times specified in the Plan.
(ii) Purchase immediate or deferred annuities.
(iii) Make lump sum payments equal to the present value
of accrued benefits for amounts less than $25,000 adjusted
annually beginning July 1, 1995, for changes in the Consumer
Price Index.
3.3 Assignment of Benefits
A Participant may not, either voluntarily or involuntarily,
assign, anticipate, alienate, commute, pledge or encumber any
benefits to which he is or may become entitled to under the
Plan nor may the same be subject to attachment or garnishment
by any creditor of a Participant.
3.4 Not An Employment Agreement
Nothing in the establishment of the Plan is to be construed
as giving any Participant the right to be retained in the
employ of the Company.
3.5 Merger, Consolidation or Transfer
In the event that the Company shall, pursuant to action
by its Board of Directors, at any time propose to merge into,
consolidate with or sell or otherwise transfer all or
substantially all of its assets to another corporation and
provision is not made pursuant to the terms of such transaction
for the continuation of this Plan by the surviving, resulting
or acquiring corporation or for the substitution of a comparable
plan hereto, the provisions of this Plan shall remain in effect.
ARTICLE IV
FUNDING
4.1 Establishment of Irrevocable Trust
The Company shall establish an irrevocable trust of which the
Company is the owner for federal income tax purposes (within
the meaning of Sections 671 through 677 of the Internal Revenue
Code of 1986) (the "Trust") and fund the Trust as hereinafter
provided in order to provide a source from which to satisfy
the Company's obligations to Participants under this Plan.
4.2 Amount of Funding
The Company shall make such contributions to the Trust as the
Board of Directors from time to time determines appropriate.
4.3 Actuarial Assumptions and Method
The Plan's actuary shall use the following assumptions and
methods when advising the Board of Directors with regard to
contributions to the Trust:
(a) Mortality:
1983 Group Annuity Mortality Table for periods after benefits
have commenced, or are assumed to have commenced. No
mortality will be assumed prior to the assumed retirement age
for benefits not yet in payment status.
(b) Return on Investment:
Assets are assumed to earn, the liabilities are discounted at,
eight percent (8%) per year.
(c) Assumed Retirement Age:
For Participants whose benefits are not in payment status as
of July 1 of each year, the Assumed Retirement Age will be
age 60, or their current age if older. For beneficiaries,
the Assumed Retirement Age is the beneficiary's age on the
date their deceased spouse would have reached 60, or their
current age if their spouse would have already been older
than age 60.
(d) Annual Pay Increases:
Eight percent (8%) per year.
(e) Employee Turnover:
None.
(f) Social Security Increases:
Social security benefits are assumed to increase 5% per year.
(g) IRC Limits:
The Internal Revenue Code (IRC) section 415 and section 401(a)(17)
limits are assumed to increase 5% per year.
(h) Defined Contribution Plan Offset:
Annuity equivalent of projected account balance assuming an
annual earnings rate of 8.0%; Profit Sharing Plan contributions
of 8.0% of pay; annual TRIP contributions of $500 (no
inflation); and assuming no further PAYSOP contributions
are made.
(i) Actuarial Cost Method:
The Entry Age Normal Cost Method will be used. The unfunded
actuarial liability as of each July 1 will be amortized
over ten years.
April 10, 2000