Exhibit 10.1
THE GILLETTE COMPANY
DEFERRED COMPENSATION PLAN
(effective June 1, 2004)
1. Purpose. The Gillette Company Deferred Compensation Plan (the "Plan") has
been adopted by The Gillette Company (the "Company") to enable certain
executive employees of the Company and its Participating Subsidiaries to
defer a portion of their compensation on a tax-effective basis in addition
to their eligible savings under The Gillette Company Employees' Savings
Plan (the "Savings Plan") and The Gillette Company Supplemental Savings
Plan.
The Plan is intended to constitute an unfunded plan of deferred
compensation described in Sections 201(2), 301(a)(3) and 401(a)(1) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and
in Sections 3121(v)(2) and 3306(r)(2) of the Internal Revenue Code of 1986,
as amended ("Code").
Under the terms of the Plan as approved by the Company's Board of
Directors, eligible employees may elect to defer salary and incentive
bonus. This document, which is effective June 1, 2004, addresses the salary
deferral feature of the Plan.
2. Eligible Employees. Employees of the Company and Participating Subsidiaries
who are full-time or part-time regular employees, have a job grade or a
personal grade of 21 or above, and who are generally treated by The
Gillette Company as a United States employee for employment and benefit
purposes, are eligible to participate in this Plan for any calendar year.
3. Plan Features. Eligible employees who elect to participate in the Plan
("Participants") may defer a portion of their salary ("Deferred Salary").
4. Recordkeeper. The day-to-day recordkeeping and administrative functions
with respect to the Plan shall be performed by a person or persons
appointed by the Committee ("Recordkeeper"). In accordance with procedures
determined by the Committee, Participants' elections under the Plan may be
made by way of written, telephonic or electronic instruction to the
Recordkeeper.
5. Administration. The Plan shall be administered by the Savings Plan
Committee appointed by the Board of Directors of the Company (the
"Committee"), which shall have the discretionary power and authority to
construe and interpret the provisions of the Plan, to determine the
eligibility of employees to participate in the Plan and the amount and
timing of payment of any benefits due under the Plan, and to determine all
other matters in carrying out the intended purposes of the Plan. In
administering this Plan, including but not limited to considering appeals
from the denial of claims for benefits and issuing decisions thereon, rules
and procedures substantially similar to those set forth in the Savings Plan
shall govern.
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Subsequent to a Change in Control of the Company, the Plan shall be
administered by the trustee of the trust established by the Company for the
purposes of satisfying the Company's payment obligations under the Plan
(the "Trustee"). The Trustee shall be appointed by and serve at the
pleasure of the Committee, but may not be removed following a Change in
Control of the Company until all the Company's obligations under the Plan
have been satisfied.
6. Construction of Terms. Except as expressly provided in this Plan to the
contrary, capitalized terms referenced herein shall have the same meanings
as are applied to such terms in the Savings Plan as in effect from time to
time.
7. Deferred Salary.
(a) An eligible employee may elect to defer, in whole percentages, up to
60% of his or her gross salary.
(b) A Participant may defer his or her salary on a pre-tax basis until
termination of employment or a later elected date as provided in this
Plan if termination is by reason of retirement or determination of
Total and Permanent Disability status.
(c) The Deferred Salary will be recorded in an account maintained by the
Recordkeeper, entitled the "Deferred Salary Account". A Participant
shall always be fully vested in amounts credited to the Deferred
Salary Account maintained for such Participant.
(d) A salary deferral election will become effective as of the next
practicable payroll period following receipt by the Recordkeeper in
such time and manner as prescribed by the Committee.
(e) A Participant may at any time change or discontinue his or her salary
deferral election, effective as of the next practicable payroll period
following receipt by the Recordkeeper in such time and manner as
prescribed by the Committee.
(f) Such change in salary deferral election shall operate prospectively
and shall have no effect on prior deferrals under this Plan. An
individual who has previously participated in the Plan shall be
considered a Participant for the purposes of the Plan until final
distribution is made of amounts credited to his or her Deferred Salary
Account.
8. Additional Credits to Deferred Salary Accounts.
(a) The Committee shall, from time to time, select one or more of the
Investment Funds from the Savings Plan ("Investment Fund") for
Participants to elect to have their Deferred Salary deemed invested.
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(b) Each Participant, upon electing to participate in the Plan, shall
designate the Investment Fund or Funds with respect to which such
Participant's Deferred Salary shall be deemed invested, in such a time
and manner prescribed by the Committee for such purpose. The election
shall be in whole percentage increments of each such Investment Fund.
A Participant's election shall remain in effect with respect to all
future Deferred Salary unless and until changed by the Participant in
accordance with Section 8(c) below.
If a Participant fails to make an election hereunder, all of his or
her Deferred Salary shall be deemed invested in a Money Market Fund
until the Participant makes an election hereunder.
(c) A Participant may change the Investment Fund or Funds in which his or
her future Deferred Salary is deemed to be invested. Such change in
election shall be effective as of the close of the Business Day on
which the Recordkeeper receives such instruction or, if such
instruction is received after the close of a Business Day, as of the
close of the next following Business Day.
(d) Amounts recorded in the Deferred Salary Account maintained for each
Participant shall be credited or debited with amounts equivalent to
gains or losses realized by the Investment Funds in which the
Participant elects to have his or her Deferred Salary deemed invested
from time to time.
(e) Subject to the limitations set forth in paragraphs (i) and (ii) below,
a Participant may elect at any time to have amounts credited to his or
her Deferred Salary Account transferred from any Investment Fund to
any of the other Investment Funds, by designating the percentage of
the Deferred Salary Account invested in the transferring Investment
Fund to be transferred (in whole percentage increments) and the
percentage of such transferred amount to be invested in the receiving
Investment Fund or Funds (in whole percentage increments). Such
transfer election shall be effective, and the applicable Investment
Funds shall be valued for the purpose of implementing such election,
as of the close of the Business Day on which the Recordkeeper receives
such instruction or, if such instruction is received after the close
of a Business Day, as of the close of the next following Business Day.
Elections by Participants under this Section 8(e) shall be limited in
the following respects:
(i) The minimum amount that may be deemed transferred from any
Investment Fund shall be $250 or, if less, the entire balance of
the Participant's Deferred Salary Account deemed invested in such
Investment Fund.
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(ii) The Committee may in its discretion limit the number of transfers
that may be made to or from any Investment Fund at any time. The
Committee also shall have the discretionary right to suspend the
availability of transfers among any or all of the Investment
Funds at any time without prior notice to Participants.
(f) Notwithstanding any other provision of the Plan to the contrary, in
the event of a Change of Control, the Trustee shall have the authority
to prescribe alternative investment funds in which Participants'
accounts under this Plan shall be deemed invested; provided, however,
that (i) if Participants retain the right to designate the investment
funds for deemed investment of their respective accounts, then the
investment funds selected by the Trustee shall include at least an
Equity Index Fund and a Money Market Fund, and (ii) if Participants
are no longer entitled to designate the investment funds for deemed
investment of their respective accounts, then all accounts under this
Plan shall automatically be deemed invested in a Money Market Fund
pending distribution in accordance with Section 9 below.
9. Payments from Deferred Salary Account.
(a) Except as otherwise provided in this Section, no amounts shall be
payable under the Plan to any Participant while he or she is employed
by the Company or any Participating Subsidiary. Unless an election is
made in accordance with Section 9(b) or (c) below or unless Section
9(d) below applies, all amounts credited to a Participant's Deferred
Salary Account shall be paid in a single lump sum as soon as
practicable following the termination of the Participant's employment
with the Company and all Participating Subsidiaries, valued as of the
first business day following such termination date.
(b) A Participant may elect to defer payment of his or her Deferred Salary
Account to the first business day of the month coincident with or next
following the 1st to 10th anniversary of the Participant's termination
of employment with the Company and all Participating Subsidiaries,
provided (i) the Participant's termination of employment is on account
of Retirement or Total and Permanent Disability, and (ii) the
Participant's deferral election is made at least six months prior to
the date of such termination. Such deferred payment shall be valued as
of the first business day following the 1st to 10th anniversary, as
applicable, of the Participant's termination of employment, and shall
be made in a single lump sum as soon as practicable thereafter.
Pending final distribution, the Participant's Deferred Salary Account
shall continue to be credited or debited with amounts equivalent to
gains and losses realized by the Investment Funds in which such
account is invested from time to time.
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(c) A Participant may elect to receive payment of his Deferred Salary
Account in the form of two to ten annual installments commencing in
the calendar year following the year of the Participant's termination
of employment with the Company and all Participating Subsidiaries,
provided (i) the Participant's termination of employment is on account
of Retirement or Total and Permanent Disability, and (ii) the
Participant's installment payment election is made at least six months
prior to the date of such termination. Each installment payment shall
be valued as of the close of the first business day of the month
following the applicable anniversary of the Participant's termination
of employment, and shall be paid as soon as practicable thereafter.
Pending final distribution, the remaining balance in the Participant's
Deferred Salary Account shall continue to be credited or debited with
amounts equivalent to gains and losses realized by the Investment
Funds in which such account is invested from time to time.
(d) Prior to the occurrence of a Change of Control, in accordance with
rules prescribed by the Committee, a Participant making a deferral
election pursuant to Section 9(b) above or an installment election
pursuant to Section 9(c) above may provide for the revocation of such
deferral or installment election in the event of a Change of Control
and for the payment by the Company of the Participant's Deferred
Salary Account in a single lump sum as soon as practicable following
the Change of Control valued as of the close of the Business Day on
which the Change of Control occurs, or another date if so directed by
the Committee or the Trustee.
In the absence of a Participant's affirmative direction to retain a
deferral or installment election, in the event of a Change of Control
the Participant's Deferred Salary Account will be paid by the Company
in a single lump sum as soon as practicable following the Change of
Control valued as of the close of the Business Day on which the Change
of Control occurs, or another date if so directed by the Committee or
the Trustee.
(e) In the event of the death of a Participant, whether or not then
employed by the Company or a Participating Subsidiary, all amounts
credited to the Participant's Deferred Salary Account shall be paid to
the Participant's estate in a single lump sum valued the first
business day of the month following the date of death.
(f) All determinations of value of Participants' Deferred Salary Accounts
shall be made in accordance with the relevant provisions of the
Savings Plan.
(g) All payments under the Plan shall be subject to any required
withholding of Federal, state and local taxes.
(h) The opportunity provided to a Participant to defer payment of his or
her compensation beyond termination of employment shall serve as
partial
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consideration for a settlement of all claims which the Participant may
have against the Company, its Subsidiaries, employees and agents and
shall be subject to execution by the Participant of a release and
settlement agreement in a form prescribed by the Committee.
10. Source of Payments. All amounts payable under the Plan shall be paid by the
Company and Participating Subsidiaries from their general assets. No
Participant shall have any right to or interest in any assets of the
Company or any Participating Subsidiary other than as an unsecured general
creditor, and no separate fund shall be established in which any
Participant has any right or interest. The foregoing shall not prevent the
Company or any Subsidiary from establishing one or more funds from which
payments under the Plan shall be made, including but not limited to
circumstances under which payments are to be made following a Change of
Control.
11. Plan Amendment and Termination. The Plan may be amended or terminated by
the Company at any time and in any manner prior to the happening of any
event in connection with or in anticipation of a Change of Control that
actually occurs, provided that no amendment or termination shall adversely
affect the rights and benefits of Participants with respect to Compensation
deferred pursuant to the Plan prior to such action. After the happening of
any event in connection with or in anticipation of a Change of Control that
actually occurs: (a) no amendment shall be made which adversely affects the
rights and benefits of Participants with respect to compensation deferred
or benefits accrued pursuant to the Plan prior to such amendment; and (b)
no amendment may be made with respect to any provision of the Plan which
becomes operative upon a Change of Control.
12. No Right of Employment. The adoption and operation of this Plan shall not
create in any Participant a right of continued employment with the Company
or any Subsidiary.
13. No Assignment of Interest. The interest of any Participant under the Plan
may not be assigned, alienated, encumbered or otherwise transferred, and
shall not be subject to attachment, garnishment, execution or levy; and any
attempted assignment, alienation, encumbrance, transfer, attachment,
garnishment, execution or levy shall be void and of no force or effect.
THE GILLETTE COMPANY
Date: June 1, 2004 By: /s/ Edward E. Guillet
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Edward E. Guillet
Senior Vice President - Human Resources
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