CNF INC.
2005 DEFERRED COMPENSATION PLAN FOR EXECUTIVES
EFFECTIVE JANUARY 1, 2005
CNF INC.
2005 DEFERRED COMPENSATION PLAN FOR EXECUTIVES
TABLE OF CONTENTS
Page
Preamble ........................................................1
Article 1 Definitions........................................1
1.1 Account Balance.............................1
1.2 Annual Bonus................................1
1.3 Annual Bonus Deferral Amount................1
1.4 Base Annual Salary..........................1
1.5 Base Annual Salary Deferral Amount..........2
1.6 Beneficiary.................................2
1.7 Beneficiary Designation Form................2
1.8 Board.......................................2
1.9 Change in Control...........................2
1.10 Claimant....................................2
1.11 Code........................................2
1.12 Committee...................................2
1.13 Common Stock................................2
1.14 Company.....................................2
1.15 Disability..................................2
1.16 Dividend Equivalent.........................2
1.17 Dollar-Denominated Account..................2
1.18 Election Form...............................2
1.19 Employer....................................3
1.20 Fair Market Value...........................3
1.21 Investment Change...........................3
1.22 Participant.................................3
1.23 Phantom Stock Account.......................3
1.24 Phantom Stock Unit..........................3
1.25 Plan........................................3
1.26 Plan Entry Date.............................3
1.27 Plan Year...................................3
1.28 Pre-Retirement Distribution.................3
1.29 Pre-Retirement Survivor Benefit.............3
1.30 Prime Rate..................................4
1.31 Retirement..................................4
1.32 Retirement Benefit..........................4
1.33 Spouse......................................4
1.34 Termination Benefit.........................4
1.35 Termination of Employment...................4
1.36 Unforeseeable Emergency.....................4
1.37 Value Management Award......................4
1.38 Value Management Deferral Amount............4
Article 2 Selection, Enrollment, Eligibility.................5
2.1 Selection by Committee......................5
2.2 Enrollment Requirement......................5
2.3 Commencement of Participation...............5
Article 3 Deferral Commitments/Returns.......................5
3.1 Minimum Deferral............................5
3.2 Maximum Deferral............................5
3.3 Election to Defer...........................6
3.4 Annual Election of Phantom Stock Units......6
3.5 Withholding of Deferral Amounts.............7
3.6 FICA Tax....................................7
3.7 Returns and Crediting of Phantom Stock
Units and Dividend Equivalents During
Deferral Period 7
3.8 Date on Which Crediting Occurs..............8
3.9 Dollar-Denominated Account Returns and
Installment Distributions...................9
3.10 Phantom Stock Account Distributions.........9
3.11 Statement of Accounts.......................9
Article 4 Pre-Retirement Distribution/Unforeseeable
Emergencies1......................................10
4.1 Pre-Retirement Distributions...............10
4.2 Withdrawal Payout/Suspensions for
Unforeseeable Emergencies..................10
Article 5 Retirement Benefit................................11
5.1 Retirement Benefit.........................11
5.2 Payment of Retirement Benefit..............11
5.3 Death Prior to Completion of Retirement
Benefit....................................11
Article 6 Pre-Retirement Survivor Benefit...................11
6.1 Pre-Retirement Survivor Benefit............11
6.2 Payment of Pre-Retirement Survivor Benefit.11
Article 7 Termination Benefit...............................12
7.1 Termination Benefit........................12
7.2 Payment of Termination Benefit.............12
Article 8 Disability Waiver and Benefit.....................12
8.1 Disability Waiver..........................12
8.2 Disability Benefit.........................13
Article 9 Beneficiary Designation...........................13
9.1 Beneficiary................................13
9.2 Beneficiary Designation....................13
9.3 Spousal Consent............................13
9.4 No Beneficiary Designation.................13
9.5 Doubt as to Beneficiaries..................13
9.6 Discharge of Obligations...................13
Article 10 Leave of Absence..................................14
10.1 Paid Leave of Absence......................14
10.2 Unpaid Leave of Absence....................14
Article 11 Termination, Amendment or Modification............14
11.1 Termination................................14
11.2 Amendment..................................14
11.3 Effect of Payment..........................14
Article 12 Administration....................................15
12.1 Committee Duties...........................15
12.2 Agents.....................................15
12.3 Binding Effect of Decisions................15
12.4 Indemnification............................15
12.5 Stock Subject to the Plan..................15
12.6 Equitable Adjustment.......................15
Article 13 Claims Procedures.................................16
13.1 Presentation of Claim......................16
13.2 Notification of Decision...................16
13.3 Review of a Denied Claim...................16
13.4 Decision on Review.........................17
13.5 Legal Action...............................17
Article 14 Miscellaneous.....................................17
14.1 Unsecured General Creditor.................17
14.2 Employer's Liability.......................17
14.3 Company's Liability........................17
14.4 Nonassignability...........................18
14.5 Not a Contract of Employment...............18
14.6 Furnishing Information.....................18
14.7 Captions...................................18
14.8 Governing Use..............................18
14.9 Notice.....................................18
14.10 Successors.................................19
14.11 Spouse's Interest..........................19
14.12 Incompetent................................19
14.13 Saving Clause..............................19
14.14 Legal Fees To Enforce Rights...............19
14.15 Payment of Withholding.....................19
14.16 Coordination with Other Benefits...........20
14.17 Value Management Deferral Amounts
Previously Deferred........................20
CNF INC.
2005 DEFERRED COMPENSATION PLAN FOR EXECUTIVES
Effective January 1, 2005
Preamble
The purpose of this Plan is to enhance the motivational value of the salaries
and incentive compensation of a select group of management or highly
compensated employees who contribute materially to the continued growth,
development and future business success of the Company and its subsidiaries
by providing them the opportunity to defer cash compensation. The Plan is
intended to aid the Company and its subsidiaries in attracting and retaining
key employees and give them an incentive to increase the profitability of the
Company and its subsidiaries. In the future, the Company, in its discretion,
may amend the Plan to include a Company contribution.
ARTICLE 1
Definitions
For purposes hereof, unless otherwise clearly apparent from the context, the
following phrases or terms shall have the following indicated meanings:
1.1 "Account Balance" means the sum of (i) amounts credited to a
Participant's Dollar-Denominated Account, plus (ii) Phantom Stock Units
credited to a Participant's Phantom Stock Account, reduced by (iii) all
distributions made pursuant to the terms and conditions of this Plan.
Amounts credited to a Participant's Dollar-Denominated Account shall
derive from Base Annual Salary Deferral Amounts, Annual Bonus Deferral
Amounts, and Value Management Deferral Amounts.
1.2 "Annual Bonus" means any bonus or incentive compensation, other than a
Value Management Award, earned by a Participant in a Plan Year under any
annual incentive compensation plan or program of the Company or any
subsidiary that involves performance-based compensation based on
services performed over a period of at least 12 months, within the
meaning of Code Section 409A(a)(4)(B)(iii).
1.3 "Annual Bonus Deferral Amount" means that portion of a Participant's
Annual Bonus that a Participant elects to have and is deferred, in
accordance with Article 3, for any one Plan Year.
1.4 "Base Annual Salary" means a Participant's base annual salary that is to
be paid to a Participant for each Plan Year, determined as of the first
day of that year, excluding bonuses, commissions, overtime, incentive
payments, non-monetary awards, and other fees, before reduction for
compensation deferred pursuant to all qualified, nonqualified and
Internal Revenue Code Section 125 plans and all qualified transportation
fringe benefits of the Company or any subsidiary.
1.5 "Base Annual Salary Deferral Amount" means that portion of a
Participant's Base Annual Salary that a Participant elects to have and
is deferred, in accordance with Article 3, for any one Plan Year. In
the event of Retirement, Disability, death or a Termination of
Employment prior to the end of a Plan Year, such year's Base Annual
Salary Deferral Amount shall be the actual amount withheld prior to such
event. In the event a Participant has no paycheck with respect to a
payroll period, no amount shall be deferred with respect to that payroll
period for that Participant, either before, during or after the payroll
period.
1.6 "Beneficiary" means one or more persons, trusts, estates or other
entities, designated in accordance with Article 9, that are entitled to
receive benefits under this Plan upon the death of a Participant.
1.7 "Beneficiary Designation Form" means the form established from time to
time by the Committee that a Participant completes, signs and returns to
the Committee to designate one or more Beneficiaries.
1.8 "Board" means the Board of Directors of the Company.
1.9 "Change in Control" means the occurrence of an event described in Code
Section 409A(a)(2)(v) with respect to the Company or the Participant's
Employer.
1.10 "Claimant" means any Participant or Beneficiary of a deceased
Participant who makes a claim for determination under Section 13.1.
1.11 "Code" means the Internal Revenue Code of 1986, as amended.
1.12 "Committee" means the Compensation Committee of the Board or its
delegates.
1.13 "Common Stock" means the common stock, par value $0.625 per share, of
the Company.
1.14 "Company" means CNF Inc., a Delaware corporation.
1.15 "Disability" means the Participant has become "disabled," as that term
is used in Code Section 409A(a)(2)(C).
1.16 "Dividend Equivalent" means an amount representing the dividend paid on
that number of shares of Common Stock equal to the number of Phantom
Stock Units credited to a Participant's Phantom Stock Account as of the
record date for such dividend.
1.17 "Dollar-Denominated Account" shall mean that portion of a Participant's
Account Balance that is not credited to such Participant's Phantom Stock
Account.
1.18 "Election Form" means the form established from time to time by the
Committee that a Participant completes, signs and returns to the
Committee to make an election under the Plan.
1.19 "Employer" means the Company or any of its subsidiaries that employs a
Participant.
1.20 "Fair Market Value" of a share of Common Stock as of a particular date
shall mean the closing price per share of Common Stock on the New York
Stock Exchange on the last trading day immediately preceding such date;
provided, however, that, with respect to calculations made pursuant to
Section 3.7(b), relating to the crediting of an Investment Change, the
Fair Market Value of a share of Common Stock shall mean the closing
price per share of Common Stock on the New York Stock Exchange on
February 1 of the relevant year (or, if February 1 falls on a non-
trading day, the immediately preceding trading day).
1.21 "Investment Change" has the meaning specified in Section 3.4.
1.22 "Participant" for any Plan Year means any employee of an Employer who is
selected to participate in the Plan for such Plan Year by the Committee
and commences participation in accordance with Article 2.
1.23 "Phantom Stock Account" shall mean that portion of a Participant's
Account Balance which is credited with Phantom Stock Units as set forth
in Section 3.7(b).
1.24 "Phantom Stock Unit" shall mean a unit which shall at all times be equal
in value to one whole share of Common Stock.
1.25 "Plan" means the Company's 2005 Deferred Compensation Plan for
Executives, evidenced by this instrument, as amended from time to time.
1.26 "Plan Entry Date" means the date on which an employee selected by the
Committee to participate in the Plan commences participation in the Plan
in accordance with Article 2. The Plan Entry Date shall be January 1 of
the Plan Year following selection by the Committee. If an employee is
first selected for participation in the Plan subsequent to January 1 of
a Plan Year, but prior to July 1, such July 1 shall be an additional
Plan Entry Date. The Committee may in its discretion add other Plan
Entry Dates for the Plan Year in which an employee is first selected for
participation in the Plan. July 1 shall also be a Plan Entry Date for
purposes of Annual Bonus Deferral Amount elections.
1.27 "Plan Year" means the period beginning on January 1 of each year (or, in
certain limited cases, July 1 or other Plan Entry Date) and continuing
through December 31 of that year.
1.28 "Pre-Retirement Distribution" means the payout set forth in Section 4.1
below.
1.29 "Pre-Retirement Survivor Benefit" means the benefit set forth in
Article 6 below.
1.30 "Prime Rate," means the published Bank of America prime rate. For each
calendar quarter, the rate shall be the published rate as of ten days
prior to the end of the quarter; provided that, if publication is
delayed, the rate shall be the published rate as of the latest date
available when calculations are made.
1.31 "Retirement", "Retires" or "Retired" means (i) early retirement as
defined in the CNF Inc. Retirement Plan, if the Participant elects
within 60 days from the last day of regular employment to receive
monthly pension benefits under such Retirement Plan starting on the
first day of the month following the last day of employment, or (ii)
normal or deferred retirement under such Retirement Plan.
1.32 "Retirement Benefit" means the benefit set forth in Article 5.
1.33 "Spouse" has the meaning set forth in the Defense of Marriage Act of
1996 (P.L. 104-199), as amended. (As of January 1, 2005, this
definition is a legal union between one man and one woman as husband and
wife.)
1.34 "Termination Benefit" means the benefit set forth in Article 7.
1.35 "Termination of Employment" means the earlier of
(a)a separation from service, as that term is used in Code Section
409A(a)(2)(A)(i) from the Company and its subsidiaries voluntarily or
involuntarily, for any reason other than Retirement, Disability or
death., or
(b)the ceasing of employment with the Company and its subsidiaries at
the time of or following a Change in Control voluntarily or
involuntarily, for any reason other than Retirement, Disability or
death.,
1.36 "Unforeseeable Emergency" means a severe financial hardship to the
Participant resulting from an illness or accident of the Participant,
the Participant's spouse, or a dependent (as defined in Code Section
152(a)) of the Participant, loss of the Participant's property due to
casualty, or other similar extraordinary and unforeseeable circumstances
arising as a result of events beyond the control of the Participant.
1.37 "Value Management Award" means the Participant's Award for an award
cycle under the CNF Inc. Value Management Plan, as amended from time to
time, or any successor plan or program.
1.38 "Value Management Deferral Amount" means that portion of a Participant's
Value Management Award that a Participant elects to have and is
deferred, in accordance with Article 3, for any one award cycle.
ARTICLE 2
Selection, Enrollment, Eligibility
2.1 Selection by Committee. Participation in the Plan shall be limited to a
select group of management or highly compensated employees of the
Company and its subsidiaries. The Committee shall select for each Plan
Year, in its sole discretion, those employees eligible to participate in
the Plan for that Plan Year.
..
2.2 Enrollment Requirement. The Committee shall establish from time to
time such enrollment requirements as it determines in its sole
discretion are necessary or appropriate.
2.3 Commencement of Participation. Provided an employee selected to
participate in the Plan has met all enrollment requirements set forth by
the Committee, that employee shall commence participation in the Plan on
the Plan Entry Date that immediately follows the employee's election to
participate in the Plan.
ARTICLE 3
Deferral Commitments/Returns
3.1 Minimum Deferral.
(a)Minimum. A Participant may not elect to defer less than $2,000 of
Base Annual Salary for any Plan Year, less than $2,000 of Annual
Bonus for any Plan Year, or less than $2,000 of any Value Management
Award for any award cycle.
(b)Short Participation Year. If a Participant's Plan Entry Date is July
1 of any Plan Year, he must defer a minimum of $1,000 of Base Annual
Salary or a minimum of $1,000 of Annual Bonus for such Plan Year.
The Committee may set other minimums for other Plan Entry Dates.
3.2 Maximum Deferral.
(a)Base Annual Salary. For each Plan Year, a Participant may defer up
to 90% of Base Annual Salary stated as a dollar amount.
(b)Annual Bonus. For each Plan Year, a Participant may defer up to 90%
of Annual Bonus stated as a dollar or percentage amount.
(c)Value Management Award. For each award cycle under the CNF Inc.
Value Management Plan (as amended from time to time), a Participant
who participates in that plan may defer up to 90% of the
Participant's Value Management Award for that award cycle stated as a
dollar or percentage amount.
(d)Reductions of Deferrals. The amount of Base Annual Salary, Annual
Bonus, and/or Value Management Award that a Participant elects to
defer shall be reduced, without the consent of the affected
Participant, to the extent necessary to provide for (i) other
deferrals of Base Annual Salary, Annual Bonus and/or Value Management
Award, as the case may be, by such Participant under all qualified
and nonqualified plans of the Company or any subsidiary and Code
Section 125 plans of the Company or any subsidiary, (ii) any taxes
that are required to be withheld with respect to deferrals under the
Plan, and (iii) any other amounts deducted from Base Annual Salary,
Annual Bonus and/or Value Management Award pursuant to applicable law
or authorization by Participant.
3.3 Election to Defer.
(a)Base Annual Salary Deferrals. The Participant may make a Base Annual
Salary deferral election by delivering to the Committee a completed
and signed Election Form prior to the Plan Entry Date applicable to
that Participant. For each succeeding Plan Year, a new Election Form
must be delivered to the Committee, in accordance with the rules set
forth above.
(b)Annual Bonus Deferrals. The Participant may make an Annual Bonus
deferral election prior to the January 1 Plan Entry Date that
coincides with the first day of the performance period.
(c)Value Management Award Deferrals. The Participant may make a Value
Management Award deferral election with respect to an award cycle by
delivering to the Committee a completed and signed Election Form
prior to the Plan Entry Date coinciding with the beginning of the
award cycle. For each succeeding award cycle, a new Election Form
may be delivered to the Committee.
(d)Subsequent Elections or Changes. In addition, the Company may in its
sole discretion allow a Participant to make or change an election
under subsection (b) or (c) at a later time, provided that Company
has determined that such compensation has not become both
substantially certain to be paid and readily ascertainable and
provided further that any election or change in election must be made
not later than the July 1 Plan Entry Date that is 6 months before the
end of the performance period.
(e)No Subsequent Deferrals. If an Election Form is not delivered prior
to the dates indicated above, no Base Annual Salary Deferral Amount,
Annual Bonus Deferral Amount, or Value Management Deferral Amount, as
the case may be, shall be deferred for that Plan Year or award cycle.
3.4 Annual Election of Phantom Stock Units. During January of each Plan
Year prior to the commencement of installment payments, each
Participant who is currently eligible to make deferrals shall have the
opportunity to elect (an "Investment Change") to transfer all or a
portion of such Participant's Dollar-Denominated Account to such
Participant's Phantom Stock Account; provided, however, that an
Investment Change may not be elected with respect to any portion of a
Participant's Dollar-Denominated Account that has been designated for a
Pre-Retirement Distribution, as defined in Section 4.1 (the "Excluded
Portion"). The amount to be subject to an Investment Change may be
determined as a dollar amount or a percentage of the Participant's
Dollar-Denominated Account (excluding the Excluded Portion); provided,
however, that no less than five thousand dollars ($5,000) may be made
subject to an Investment Change. The amount subject to an Investment
Change shall be transferred, first, from such Participant's earliest
deferral under the Plan, and thereafter from subsequent deferrals under
the Plan in the order in which they were elected until the entire
amount subject to the Investment Change shall have been transferred.
Each Investment Change made pursuant to this Section 3.4 shall be
irrevocable. An Investment Change shall be effective as of February 1
of the Plan Year in which the election is made. The number of Phantom
Stock Units to be credited to a Participant's Phantom Stock Account
pursuant to an Investment Change shall be determined in accordance with
Section 3.7(b).
3.5 Withholding of Deferral Amounts. For each Plan Year, the Base Annual
Salary portion of the Annual Deferral Amount shall be withheld each
payroll period in equal amounts from the Participant's Base Annual
Salary. The Annual Bonus portion of the Annual Deferral Amount shall be
withheld at the time or times the Annual Bonus is or otherwise would be
paid to the Participant. The deferred portion of a Value Management
Award shall be withheld at the time the Value Management Award otherwise
would be paid to the Participant.
3.6 FICA Tax. Any applicable FICA and other payroll taxes on amounts
deferred under this Article, including Base Annual Salary, Annual Bonus
and Value Management Award, may be withheld from that portion of the
Participant's Base Salary, Annual Bonus and/or Value Management Award
that is not being deferred. If necessary, the Committee may reduce the
amount of Base Annual Salary, Annual Bonus and/or Value Management Award
deferred, in order to enable the Company to withhold all applicable FICA
and other payroll taxes on amounts deferred under this Article.
3.7 Returns and Crediting of Phantom Stock Units and Dividend Equivalents
During Deferral Period. Prior to any distribution of benefits under
Articles 4, 5, 6 or 7, returns in respect of a Participant's Dollar-
Denominated Account and Phantom Stock Units in respect of a
Participants' Phantom Stock Account shall be credited as follows:
(a)Dollar-Denominated Account.
(i)With respect to the portion of a Base Annual Salary Deferral
Amount for a Plan Year which a Participant has elected to have
credited to his or her Dollar-Denominated Account, returns shall
be credited to such Participant's Dollar-Denominated Account as
though the portion of such Base Annual Salary Deferral Amount
withheld during any calendar quarter was withheld on the first day
of such calendar quarter.
(ii)With respect to the portion of an Annual Bonus Deferral Amount
which a Participant has elected to have credited to his or her
Dollar-Denominated Account, returns shall be credited to such
Participant's Dollar-Denominated Account as though the deferral
amount was withheld on the day immediately following the last
day of the applicable award cycle.
(iii)With respect to the portion of a deferred Value Management Award
which a Participant has elected to have credited to his or her
Dollar-Denominated Account, returns shall be credited to such
Participant's Dollar-Denominated Account as though the deferral
amount was withheld on the day immediately following the last day
of the applicable award cycle.
(iv)The balance in each Participant's Dollar-Denominated Account
shall be compounded quarterly, using the Prime Rate, or such other
rate as the Committee may determine in its sole discretion prior
to the beginning of a Plan Year. For this purpose, (i) amounts
that are transferred to a Participant's Phantom Stock Account in a
Plan Year pursuant to an Investment Change shall be credited with
a return in respect of such Plan Year equal to one-twelfth (1/12)
of the return for the full Plan Year and (ii) in the event of
Retirement, death or a Termination of Employment prior to the end
of a Plan Year, that Plan Year's return will be calculated using a
fraction of a full Plan Year's return, based on the number of days
the Participant was employed with the Employer during the Plan
Year prior to the occurrence of such event.
(b)Phantom Stock Account. A Participant's Phantom Stock Account shall
consist of that number of Phantom Stock Units credited with respect
to (i) amounts transferred pursuant to an Investment Change in
accordance with Section 3.4 and (ii) Dividend Equivalents credited in
respect of Phantom Stock Units previously credited to the
Participant's Phantom Stock Account, in each case as set forth below:
(i)The number of Phantom Stock Units to be credited to a
Participant's Phantom Stock Account pursuant to an Investment
Change shall be determined by dividing (A) the dollar amount
subject to the Investment Change by (B) the Fair Market Value per
share of Common Stock as of February 1 of the Plan Year to which
the Investment Change relates; and
(ii)The number of Phantom Stock Units to be credited to a
Participant's Phantom Stock Account in respect of Dividend
Equivalents shall be equal to (A) the per share dividend paid on a
share of Common Stock, multiplied by (B) the number of Phantom
Stock Units credited to the Participant's Phantom Stock Account as
of the record date for such dividend, divided by (C) the Fair
Market Value per share of Common Stock as of the payment date for
such dividend, such crediting to be made as of such payment date.
3.8 Date on Which Crediting Occurs. A Participant's Dollar-Denominated
Account will be credited with returns in accordance with Section 3.7 up
to the date of distribution for a lump sum payment and up to the first
date of distribution for installment payments. For purposes of
crediting subsequent returns in the event that installment payments are
made, a Participant's Dollar-Denominated Account shall be reduced as of
the day on which each distribution is made.
3.9 Dollar-Denominated Account Returns and Installment Distributions. In
the event a benefit is paid in installments, a Participant's unpaid
Dollar-Denominated Account shall be credited as follows:
(a)Crediting. For each Plan Year, the undistributed Dollar-Denominated
Account shall be credited with a return equal to the Prime Rate or
such other rate as the Committee may determine in its sole discretion
prior to the beginning of a Plan Year. Returns shall start to accrue
under this Section 3.9 as of the date that returns cease to accrue
under Section 3.8 above.
(b)Installments. The installment payments shall be determined by
dividing the Participant's Dollar-Denominated Account at the time of
the commencement of the installment payments by the number of
payments over the installment period. Each payment determined above
will be considered the principal portion of the installment payment.
In addition, each installment payment will include a return
calculated for the preceding quarter using the rate determined in
Section 3.9(a) above. Installment payments shall commence on the
first day of the quarter following the first full quarter following
such Participant's date of Retirement, Termination of Employment or
death, but not before the time permitted by Section 5.2(b) or 7.2(c).
All additional installment payments shall be paid on the first day of
the remaining calendar quarters of the payment period.
3.10 Phantom Stock Account Distributions. Unless the Committee, in its
sole discretion, elects to make all or part of a distribution in
cash, distributions from a Participant's Phantom Stock Account shall
be made in the form of (i) one share of Common Stock for each whole
Phantom Stock Unit, plus (ii) cash in lieu of any fractional Phantom
Stock Unit.
(a)If a Participant's Phantom Stock Account balance is to be distributed
in a lump sum and all or part of the balance is to be distributed in
cash, including cash in lieu of a fractional Phantom Share Unit, the
amount of cash will be determined based on the Fair Market Value of a
share of Common Stock as of:
(i)In the case of a withdrawal for an Unforeseeable Emergency, the
date the Committee approves the payout,
(ii)In the case of a Retirement Benefit, the date of Retirement,
(iii)In the case of a Pre-Retirement Survivor Benefit, the date of
death,
(iv)In the case of a Termination Benefit, the date of Termination of
Employment, and
(v)In the case of a Disability distribution, the date the Committee
approves the payout.
(b)If a Participant's Phantom Stock Account balance is to be distributed
in installments,
(i)Dividend Equivalents shall continue to accrue and be credited to
such Participant's Phantom Stock Account in accordance with
Section 3.7(b)(ii) during the installment period with respect to
Phantom Stock Units that remain credited to such Phantom Stock
Account,
(ii)the number of shares of Common Stock to be delivered in a
particular installment shall be determined by dividing the number
of Phantom Stock Units credited to the Participant's Phantom Stock
Account immediately prior to such installment by the remaining
number of installments, with any fractional Phantom Stock Units
paid in cash, and
(iii)if all or part of the balance is to be distributed in cash,
including cash in lieu of a fractional Phantom Share Unit, the
amount of cash will be determined based on the Fair Market Value
of a share of Common Stock as of ten (10) days prior to the end of
each quarter.
3.11 Statement of Accounts. The Committee shall send to each Participant,
within 120 days after the close of each Plan Year, a statement in such
form as the Committee deems desirable setting forth the amount of the
Participant's Account Balance.
ARTICLE 4
Pre-Retirement Distribution/
Unforeseeable Financial Emergencies
4.1 Pre-Retirement Distributions.
(a)In the event that a Participant elects to defer a Base Annual Salary
Deferral Amount, an Annual Bonus Deferral Amount and/or a Value
Management Deferral Amount in a Plan Year, such Participant may,
subject to subsection (b), elect to receive all, but not less than
all, of the amounts so deferred as a lump sum distribution (a "Pre-
Retirement Distribution") on a specified date prior to such
Participant's Retirement. The Pre-Retirement Distribution shall be
in an amount equal to the amounts so deferred, plus returns credited
in accordance with Section 3.7, and shall be paid within 60 days
following the first day of the Plan Year chosen by the Participant on
the Election Form for such distribution. The earliest date that a
Participant may receive a Pre-Retirement Distribution is 5 years
after the first day of the Plan Year in which such deferral occurs
(i.e., the Plan Entry Date for Base Annual Salary deferrals, the
first day of the performance period for Annual Bonus deferrals, and
the first day of the award cycle for Value Management Award
deferrals).
(b)If a Participant who has elected one or more Pre-Retirement
Distributions has a Retirement or Termination of Employment before
the start of the Plan Year chosen by the Participant for such Pre-
Retirement Distribution, the Participant's Account Balance shall be
paid at the time and in the form elected by the Participant in
accordance with 5.2 and not as the elected Pre-Retirement
Distribution.
4.2 Withdrawal Payout/Suspensions for Unforeseeable Emergencies. If the
Participant experiences an Unforeseeable Emergency, the Participant may
petition the Committee to (i) suspend any deferrals required to be made
by a Participant and/or (ii) receive a partial or full payout from the
Plan. The Committee may, in its sole discretion, accept or deny such
petition. Any suspension or payout shall not exceed the lesser of the
Participant's Account Balance, calculated as if such Participant were
receiving a Termination Benefit, or the amount necessary to satisfy such
Unforeseeable Emergency plus amounts necessary to pay taxes reasonably
anticipated as a result of the distribution, after taking into account
the extent to which such hardship is or may be relieved through
reimbursement or compensation by insurance or otherwise or by
liquidation of the Participant's assets (to the extent the liquidation
of such assets would not itself cause severe financial hardship). If
the petition for a suspension and/or payout is approved, suspension
shall take effect upon the date of approval and any payout shall be made
within 60 days of the date of approval. In the event of a suspension or
payout, the Participant may not make up the lost deferral opportunity.
ARTICLE 5
Retirement Benefit
5.1 Retirement Benefit. A Participant who Retires shall receive, as a
Retirement Benefit, the Participant's Account Balance.
5.2 Payment of Retirement Benefit. A Participant may elect on the Election
Form prior to the beginning of each Plan Year to receive the Retirement
Benefit in a lump sum or in quarterly payments over a period of 5 or
10 years. The lump sum payment shall be made within 60 days of the
Participant's Retirement. For purposes of payment, the Participant's
Account Balance shall be divided into subaccounts, one for each year
elected by the Participant. Any installment payment shall be made in
accordance with Section 3.9 and 3.10 above. Notwithstanding the
foregoing -
(a)If the balance in a Participant's Dollar-Denominated Account plus the
Fair Market Value of the shares of Common Stock underlying the
Phantom Stock Units credited to such Participant's Phantom Stock
Account is less than $25,000 on the date of Retirement, such Account
Balance shall be paid to the Participant in a lump sum as soon as
practicable following the date of such Retirement (subject to Section
5.2(b)).
(b)If the Participant is a specified employee, the lump sum may not be
paid, and installments may not commence before the date which is 6
months after the date of separation from service (or, if earlier, the
date of death of the Participant). For purposes of the preceding
sentence, a specified employee is a key employee as defined in Code
Section 416(i) of a corporation any stock in which is publicly traded
on an established securities market or otherwise.
5.3 Death Prior to Completion of Retirement Benefit. If a Participant dies
after Retirement but before the Retirement Benefit is paid in full, the
Participant's unpaid Retirement Benefit payments shall continue and
shall be paid to the Participant's Beneficiary over the remaining number
of calendar quarters and in the same amounts as that benefit would have
been paid to the Participant had the Participant survived.
ARTICLE 6
Pre-Retirement Survivor Benefit
6.1 Pre-Retirement Survivor Benefit. If a Participant dies before he
Retires, experiences a Termination of Employment or suffers a
Disability, the Participant's Beneficiary shall receive a Pre-Retirement
Survivor Benefit equal to the Participant's Account Balance as of the
date of death.
6.2 Payment of Pre-Retirement Survivor Benefit. The Pre-Retirement Survivor
Benefit shall be paid to the Participant's Beneficiary in a lump sum
within 60 days of the Committee's receiving proof of the Participant's
death.
ARTICLE 7
Termination Benefit
7.1 Termination Benefit. If a Participant experiences a Termination of
Employment prior to Retirement, death or Disability, the Participant
shall receive a Termination Benefit which shall be equal to the
Participant's Account Balance determined as of the date of the
Termination of Employment.
7.2 Payment of Termination Benefit. The Termination Benefit shall be the
then current Account Balance as of the date of Termination of
Employment, paid in a lump sum within 60 days after the Termination of
Employment or in installments as the Participant elected on the Election
Form in effect at the time of the Termination of Employment under the
rules in 5.2. For purposes of payment, the Participant's Account
Balance shall be divided into subaccounts, one for each form elected by
the Participant. Notwithstanding the foregoing -
(a)If the balance in a Participant's Dollar-Denominated Account plus the
Fair Market Value of the shares of Common Stock underlying the
Phantom Stock Units credited to such Participant's Phantom Stock
Account is less than $25,000 on the date of such Participant's
Termination of Employment, such Account Balance shall be paid to the
Participant in a lump sum as soon as practicable following the date
of such Termination of Employment (subject to Section 7.2(c)).
(b)If the Participant incurs a Termination of Employment within one year
after a Change in Control, the Termination Benefit shall be paid in a
lump sum within 20 days of the Termination of Employment (subject to
Section 7.2(c)).
(c)If the Participant is a specified employee, the lump sum may not be
paid, and installments may not commence before the date which is 6
months after the date of separation from service (or, if earlier, the
date of death of the Participant). For purposes of the preceding
sentence, a specified employee is a key employee as defined in Code
Section 416(i) of a corporation any stock in which is publicly traded
on an established securities market or otherwise.
ARTICLE 8
Disability Waiver and Benefit
8.1 Disability Waiver. A Participant who is determined by the Committee to
be suffering from a Disability shall be excused from fulfilling that
portion of the Base Annual Salary Deferral Amount or Annual Bonus
Deferral Amount commitment that would otherwise have been withheld from
a Participant's Base Annual Salary or Annual Bonus for the Plan Year or
portion thereof during which the Participant has a Disability, with no
make-up for the period of Disability.
8.2 Disability Benefit. A Participant suffering a Disability shall for
benefit purposes under this Plan, continue to be considered an employee
and shall be eligible for the benefits provided for in Articles 4, 5, 6
or 7 in accordance with the provisions of those Articles.
ARTICLE 9
Beneficiary Designation
9.1 Beneficiary. Each Participant shall designate a Beneficiary to receive
any benefits payable under the Plan upon the Participant's death.
9.2 Beneficiary Designation. A Participant shall designate a Beneficiary by
completing and signing the Beneficiary Designation Form, and submitting
it to the Committee or its delegate. A Participant shall have the right
to change a Beneficiary at any time without the consent of the
Beneficiary, by completing, signing and otherwise complying with the
terms of the Beneficiary Designation Form and the Committee's rules and
procedures, as in effect from time to time. Upon the receipt by the
Committee of a new Beneficiary Designation Form, all Beneficiary
designations previously filed shall be canceled. The Committee shall be
entitled to rely on the last Beneficiary Designation Form filed by the
Participant with the Committee prior to death.
9.3 Spousal Consent. A married Participant's designation of someone other
than the Participant's Spouse as primary beneficiary shall not be
effective unless the Spouse executes a consent in writing that
acknowledges the effect of the designation and is witnessed by a notary
public. No consent is required if it is established to the satisfaction
of the Committee that consent cannot be obtained because the Spouse
cannot be located.
9.4 No Beneficiary Designation. If a Participant fails to designate a
Beneficiary as provided above, the Participant's designated Beneficiary
shall be deemed to be the surviving Spouse. If the Participant has no
surviving Spouse, the benefits otherwise payable to a Beneficiary shall
be paid to the Participant's estate.
9.5 Doubt as to Beneficiaries. If the Committee has any doubt as to the
proper Beneficiary to receive payments pursuant to this Plan, the
Committee shall have the right, exercisable in its discretion, to
withhold such payments until the matter is resolved to the Committee's
satisfaction, and/or to require indemnification.
9.6 Discharge of Obligations. The payment of benefits under the Plan to a
Participant or Participant's Beneficiary shall fully and completely
discharge the Company and the Participant's Employer from all
obligations under this Plan with respect to the deceased Participant,
Beneficiaries, and any others that may be entitled to such benefits.
ARTICLE 10
Leave of Absence
10.1 Paid Leave of Absence. If a Participant is authorized by the Company to
take a paid leave of absence, the Participant shall continue to be
considered employed by the Employer and the Base Annual Salary and
Annual Bonus deferred by the Participant shall continue to be withheld
during such paid leave of absence in accordance with Section 3.4.
10.2 Unpaid Leave of Absence. If a Participant is authorized by the Company
to take an unpaid leave of absence, the Participant shall continue to be
considered employed by the Employer and the Participant shall be excused
from making deferrals until the earlier of the date the leave of absence
expires or the Participant returns to a paid employment status. Upon
such expiration or return, deferrals shall resume for the remaining
portion of the Plan Year in which the expiration or return occurs, based
on the deferral election, if any, made for that Plan Year, with no make-
up for the period of the leave of absence.
ARTICLE 11
Termination, Amendment or Modification
11.1 Termination. The Company reserves the right to terminate the Plan at
any time.
11.2 Amendment. The Board may, at any time, amend or modify the Plan in
whole or in part, provided, however, that no amendment or modification
shall decrease or restrict a Participant's Account Balance at the time
the amendment or modification is made, calculated as if the Participant
had experienced a Termination of Employment as of the effective date of
the amendment or modification, or, if the amendment or modification
occurs after the date upon which the Participant was eligible to Retire,
the Participant had Retired as of the effective date of the amendment or
modification. The amendment or modification of the Plan shall not
affect the payment of benefits to any Participant or Beneficiary who has
become entitled to the payment of benefits under the Plan as of the date
of the amendment or modification. Notwithstanding the foregoing, the
Board may amend the Plan retroactively to the extent required to qualify
the Plan under Code Section 409A, provided that no such amendment may
reduce any Participant's Account Balance.
11.3 Effect of Payment. The full payment of the applicable benefit under
Articles 4, 5, 6 or 7 of the Plan shall completely discharge all
obligations to a Participant under this Plan.
ARTICLE 12
Administration
12.1 Committee Duties. This Plan shall be administered by the Committee or
its delegates. The Committee shall also have the discretion and
authority to make, amend, interpret, and enforce all appropriate rules
and regulations for the administration of this Plan and decide or
resolve any and all questions including interpretations of this Plan, as
may arise in connection with the Plan. The Company intends the Plan to
meet the requirements of Code Section 409A, the regulations thereunder,
and any additional guidance provided by the Treasury Department. The
Committee shall interpret the Plan in such a way as to meet such
requirements. Committee action may be (i) by the vote of a majority of
the members present at a meeting at which a quorum is present in person
or by telephone or (ii) by unanimous written consent. A majority of the
Committee shall constitute a quorum.
12.2 Agents. In the administration of this Plan, the Committee may, from
time to time, delegate to such persons as it deems appropriate such
administrative duties as it sees fit and may from time to time consult
with counsel who may be counsel to the Company or a subsidiary.
12.3 Binding Effect of Decisions. The decision or action of the Committee
with respect to any question arising out of or in connection with the
administration, interpretation and application of the Plan and the rules
and regulations promulgated hereunder shall be final and conclusive and
binding upon all persons having any interest in the Plan.
12.4 Indemnification. The Company shall indemnify and hold harmless the
named fiduciaries and any officers or employees of the Company and its
subsidiaries to which fiduciary responsibilities have been delegated
from and against any and all liabilities, claims, demands, costs and
expenses including attorneys fees, arising out of an alleged breach in
the performance of their fiduciary duties under the Plan and ERISA,
other than such liabilities, claims, demands, costs and expenses as may
result from the gross negligence or willful misconduct of such person.
The Company shall have the right, but not the obligation, to conduct the
defense of such person in any proceeding to which this paragraph
applies.
12.5 Stock Subject to the Plan. Unless otherwise determined by the Board,
shares of Common Stock utilized for purposes of distributions pursuant
to Section 3.10 shall consist of shares held in the Company's treasury.
12.6 Equitable Adjustment. In the event that the Committee shall determine
that any dividend or other distribution (whether in the form of cash or
Common Stock or other property), or recapitalization, Common Stock
split, reverse split, reorganization, merger, consolidation, spin-off,
combination, repurchase, or share exchange, or other similar corporate
transaction or event affects the Common Stock such that an adjustment is
appropriate in order to prevent dilution or enlargement of the rights of
Participants under the Plan, then the Committee shall make such
equitable changes or adjustments as it deems necessary to any or all of
the number of Phantom Stock Units credited to Participants' Phantom
Stock Accounts and/or the number and kind of shares of stock to which
such Phantom Stock Units relate or that may be thereafter be distributed
in respect of amounts credited to a Participant's Phantom Stock Account.
ARTICLE 13
Claims Procedures
13.1 Presentation of Claim. Any Participant or Beneficiary of a deceased
Participant may deliver to the Committee a written claim for a
determination with respect to the amounts distributable to such Claimant
from the Plan. If such a claim relates to the contents of a notice
received by the Claimant, the claim must be made within 60 days after
such notice was received by the Claimant. All other claims must be made
within 180 days of the date on which the event that caused the claim to
arise occurred. The claim must state with particularity the
determination desired by the Claimant.
13.2 Notification of Decision. The Committee shall consider a Claimant's
claim within a reasonable time, and shall notify the Claimant in
writing:
(a)that the Claimant's requested determination has been made, and that
the claim has been allowed in full; or
(b)that the Committee has reached a conclusion contrary, in whole or in
part, to the Claimant's requested determination, and such notice must
set forth in a manner calculated to be understood by the Claimant:
(i)the specific reason(s) for the denial of the claim, or any part of
it;
(ii)specific reference(s) to pertinent provisions of the Plan upon
which such denial was based;
(iii)a description of any additional material or information
necessary for the Claimant to clarify or perfect the claim, and an
explanation of why such material or information is necessary; and
(iv)an explanation of the claim review procedure set forth in Section
13.3 below.
13.3 Review of a Denied Claim. Within 60 days after receiving a notice from
the Committee that a claim has been denied, in whole or in part, a
Claimant (or the Claimant's duly authorized representative) may file
with the Committee a written request for a review of the denial of the
claim. Thereafter, but not later than 30 days after the review
procedure began, the Claimant (or the Claimant's duly authorized
representative):
(a)may review pertinent documents;
(b)may submit written comments or other documents; and/or
(c)may request a hearing, which the Committee, in its sole discretion,
may grant.
13.4 Decision on Review. The Committee shall render its decision on review
promptly, and not later than 60 days after the filing of a written
request for review of the denial, unless a hearing is held or other
special circumstances require additional time, in which case the
Committee's decision must be rendered within 120 days after such date.
Such decision must be written in a manner calculated to be understood by
the Claimant and it must contain:
(a)specific reasons for the decision;
(b)specific reference(s) to the pertinent Plan provisions upon which the
decision was based; and
(c)such other matters as the Committee deems relevant.
13.5 Legal Action. A Claimant's compliance with the foregoing provisions of
this Article 13 is a mandatory prerequisite to a Participant's right to
commence any legal action with respect to any claim for benefits under
this Plan.
ARTICLE 14
Miscellaneous
14.1 Unsecured General Creditor. Participants and their Beneficiaries,
heirs, successors and assigns shall have no legal or equitable rights,
interest or claims in any property or assets of the Company or an
Employer. Any and all of the Company's assets shall be, and remain, its
general, unpledged and unrestricted assets. The Company's obligation
under the Plan shall be merely that of an unfunded and unsecured promise
to pay money in the future.
14.2 Employer's Liability. An Employer other than the Company shall have no
liability to a Participant or a Participant's Beneficiary for payment of
any benefits under the Plan.
14.3 Company's Liability. Amounts payable to a Participant or Beneficiary
under this Plan shall be paid from the general assets of the Company
(including without limitation the assets of any trust established to
fund payment of obligations hereunder) exclusively.
14.4 Nonassignability. Neither a Participant nor any other person shall have
the right to commute, sell, assign, transfer, pledge, anticipate,
mortgage or otherwise encumber, transfer, hypothecate or convey in
advance of actual receipt the amounts, if any, payable hereunder, or any
part thereof, which are, and all rights to which are expressly declared
to be unassignable and non-transferable. No part of the amounts payable
shall, prior to actual payment, be subject to seizure or sequestration
for the payment of any debts, judgments, alimony or separate maintenance
owed by a Participant or any other person, nor be transferable by
operation of law in the event of a Participant's or any other person's
bankruptcy or insolvency. Notwithstanding the preceding provisions of
this section, the Committee will recognize the provisions of a qualified
domestic relations order as defined in Section 206(d) of the Employee
Retirement Income Security Act of 1974 that does not change the timing
of the Participant's benefit payments.
14.5 Not a Contract of Employment. The adoption and maintenance of the Plan
shall not confer on any Participant any right to continue in the employ
of an Employer, and shall not interfere with the right of an Employer to
discharge any person without regard to the effect that such discharge
might have on the person as a Participant. This Plan shall only create
a contractual obligation on the part of the Company, and shall not be
construed as creating a trust or any fiduciary relationship.
14.6 Furnishing Information. A Participant will cooperate with the Committee
by furnishing any and all information requested by the Committee and
take such other actions as may be requested in order to facilitate the
administration of the Plan and the payments of benefits hereunder.
14.7 Captions. The captions of the articles, sections and paragraphs of this
Plan are for convenience only and shall not control or affect the
meaning or construction of any of its provisions.
14.8 Governing Use. The provisions of this Plan shall be construed and
interpreted according to the laws of the State of California.
14.9 Notice. Any notice or filing required or permitted to be given to the
Committee under this Plan shall be sufficient if in writing and
hand-delivered, or sent by registered or certified mail, return receipt
requested, to:
CNF Inc.
Compensation Committee
Deferred Compensation Plan for Executives
3240 Hillview Avenue
Palo Alto, California 94304
Such notice shall be deemed given as of the date of delivery or, if
delivery is made by mail, as of the date shown on the postmark on the
receipt for registration or certification.
Any notice or filing required or permitted to be given to a Participant
under this Plan shall be sufficient if in writing and hand-delivered, or
sent by mail, to the last known address of the Participant.
14.10Successors. The provisions of this Plan shall be binding upon and inure
to the benefit of the Company and its successors and assigns and the
Participant, the Participant's Beneficiaries, and their permitted
successors and assigns.
14.11Spouse's Interest. The interest in the benefits hereunder of a Spouse
of a Participant who has predeceased the Participant shall automatically
pass to the Participant and shall not be transferable by such Spouse in
any manner, including but not limited to such Spouse's will, nor shall
such interest pass under the laws of intestate succession.
14.12Incompetent. If the Committee determines in its discretion that a
benefit under this Plan is to be paid to a minor, a person declared
incompetent or to a person incapable of handling the disposition of that
person's property, the Committee may direct payment of such benefit to
the guardian, legal representative or person having the care and custody
of such minor, incompetent or incapable person. The Committee may
require proof of minority, incompetency, incapacity or guardianship, as
it may deem appropriate and/or such indemnification of the Committee,
the Company and the Participant's Employer and security, as it deems
appropriate, in its sole discretion, prior to distribution of the
benefit. Any payment of a benefit shall be a payment for the account of
the Participant and the Participant's Beneficiary, as the case may be,
and shall be a complete discharge of any liability under the Plan for
such payment amount.
14.13Saving Clause. The Company intends the Plan to meet the requirements of
Code Section 409A, the regulations thereunder, and any additional
guidance provided by the Treasury Department. Any Plan provision that
does not meet such requirements shall be void.
14.14Legal Fees To Enforce Rights. If the Company has failed to comply with
any of its obligations under the Plan or any agreement thereunder or, if
the Company, the Participant's Employer or any other person takes any
action to declare the Plan void or unenforceable or institutes any
litigation or other legal action designed to deny, diminish or to
recover from any Participant the benefits intended to be provided, then
the Company irrevocably authorizes such Participant to retain counsel
chosen by the Participant and agrees to pay the reasonable legal fees
and expenses of the Participant incurred in connection with the
initiation or defense of any litigation or other legal action, whether
by or against the Company, or any director, officer, shareholder or
other person affiliated with the Company, or any successor thereto in
any jurisdiction, provided that such Participant prevails in such
action.
14.15Payment of Withholding. As a condition of receiving benefits under the
Plan, the Participant shall pay the Company and/or the applicable
Employer not less than the amount of all applicable federal, state,
local and foreign taxes required by law to be paid or withheld relating
to the receipt or entitlement to benefits hereunder. The Company may
withhold taxes from any benefits paid and/or from Base Annual Salary,
Annual Bonus, or Value Management Award, in its sole discretion.
14.16Coordination with Other Benefits. The benefits provided for a
Participant and Participant's Beneficiary under the Plan are in addition
to any other benefits available to such Participant under any other plan
or program for employees of the Company and its subsidiaries. In no
event shall distributions under the Plan prior to Retirement have the
effect of increasing payments otherwise due under the various retirement
plans of the Company and its subsidiaries.
14.17Value Management Deferral Amounts Previously Deferred. Code Section 409
appears to apply to the 2005 and 2006 portions of the Value Management
Deferral Amounts that were subject to deferral elections made in
December of 2002 and December of 2003 under the Deferred Compensation
Plan for Executives for cycles that end on December 31, 2005 and
December 31, 2006. To the extent required by Code Section 409A, the
regulations thereunder, and any additional guidance provided by the
Treasury Department, such portions shall be governed by this Plan
instead of by the Deferred Compensation Plan for Executives, with payout
conditions roughly similar to the payouts elected under the Deferred
Compensation Plan for Executives.
IN WITNESS WHEREOF, the Company has adopted this Plan as of January 1, 2005.
CNF Inc.
By:__________________________________
Its:Senior Vice President, General
Counsel and Secretary