Exhibit 10.1
KELLOGG COMPANY
DEFERRED COMPENSATION PLAN
FOR NON-EMPLOYEE DIRECTORS
(As Amended and Restated as of April 24, 2003)
I. NAME AND PURPOSE.
The name of this Plan (as amended and restated, the "Plan") is the Kellogg
Company Deferred Compensation Plan for Non-Employee Directors. Its purpose
is to provide non-employee Directors of Kellogg Company (the "Company) with
an opportunity to defer compensation earned as a Director.
II. EFFECTIVE DATE.
The Plan was originally effective on August 1, 1986 and was previously
amended and restated as of May 21, 1993 and July 26, 2002. This third
amendment and restatement is effective as of April 24, 2003.
III. PARTICIPANTS.
Any Director of the Company who is not an employee of the Company or of a
subsidiary of the Company shall be eligible to participate in the Plan. Any
such person who elects to participate in the Plan is hereinafter called a
"Participant". The Plan shall establish for each Participant an unfunded
deferred compensation account.
IV. ELECTION OF DEFFERRAL.
(A) On or before December 31 of any year during which the Plan is in effect,
each Director shall be entitled to make an irrevocable election to defer
receipt of all or a specified portion of each component of the
Participant's cash compensation (exclusive of expense reimbursement)
otherwise payable during the following February 1 to January 31 period for
service on the Board of Directors of the Company (the "Board") and on a
Committee of the Board and for service as a Chairperson of a Committee.
Such compensation shall be credited to the Participant's deferred
compensation account on the date the compensation is otherwise payable
pursuant to the Compensation Policy of the Kellogg Company Board of
Directors (the "Compensation Policy").
(B) A newly-elected Director may elect to participate in the Plan for the
remainder of the calendar year and the month of January of the succeeding
year in which such Director joins the Board. Any such election shall be
made within two months following the date on which such Director is elected
to the Board and shall be effective with respect to compensation allocable
to the quarterly period following the date on which such election is made.
It shall be made in the same manner as in Section IV(A) above.
(C) Each annual election shall include an irrevocable election as to the method
by which and the form in which the amounts deferred are to be distributed
in accordance with Section VI below.
(D) Such annual notice shall be delivered to the Company on or before December
31 of the year preceding the first year to which such election relates,
except that notice from newly-elected Directors may be delivered at any
time within two months following the date of their election to the Board.
The elections set forth in such notice shall be given continuing effect for
subsequent years until a new notice specifying a different election shall
be delivered to the Company. Any such new notice shall apply only to
compensation for years (February 1 through January 31) subsequent to the
calendar year in which such new notice is delivered.
V. DEFERRED COMPENSATION ACCOUNTS.
(A) An account shall be established and maintained for each Participant in the
Plan. Units, including fractional Units, shall be credited to each
Participant's account to the extent of compensation deferred pursuant to
the Plan in accordance with the following procedures: (1) compensation
otherwise payable to the Participant, but deferred pursuant to the Plan,
arising from payment of quarterly (or other) installments of the annual
standard retainer payable to all non-employee members of the Board, shall
be credited to the Participant's account as Units, including fractional
Units, with the actual payment date of such installments being those
specified in the Compensation Policy (or, if any such day is a Saturday,
Sunday or legal holiday, the next business day); (2) compensation otherwise
payable to the Participant, but deferred pursuant to the Plan, arising from
payment of fees attributable to service on Committee(s) of the Board or as
the Chairperson of any Committee(s), shall be credited to the Participant's
account as Units, including fractional Units, on the payment dates
specified in the Compensation Policy (or, if any such day is a Saturday,
Sunday or legal holiday, the next business day); and (3) dividend
equivalents earned on the basis of whole Units previously credited to the
Participant's account shall be credited to the Participant's account as
Units, including fractional Units, on the date any such dividend has been
declared to be payable on shares of Common Stock of the Company by the
Board. Units, excluding fractional Units, shall earn dividend equivalents
from the date of crediting until the date of final valuation of the Units
on the last day of the Participant's service as a Director. Dividend
equivalents shall be computed by multiplying the dividend paid per share of
Common Stock of the Company during the period Units are credited to a
Participant's account times the number of whole Units so credited, but
Units, excluding fractional Units, shall earn such dividend equivalents
only as, if and when dividends are declared and paid on the on Company
Common Stock.
(B) Each Unit shall have an initial value and be credited in respect of
deferred compensation, equal to one hundred percent (100%) of the Fair
Market Value (as defined below) of one share of Common Stock of the Company
on the date earned under the Compensation Policy. The Fair Market Value per
Unit shall be the average between the highest and lowest quoted selling
price per share of common stock on the New York Stock Exchange Composite
Transactions Tape. If there should be no sale of the shares of common stock
of the Company on such date, then the price per share shall be the average
between the highest and lowest quoted selling price on the Composite Tape
on the next preceding day on which there shall have been a sale.
VI. METHOD OF DISTRIBUTION OF DEFERRED COMPENSATION UNFORSEEABLE EMERGENCY.
(A) No distribution of deferred compensation may be made except as provided in
this Section VI.
(B) The final value of such Units, including fractional Units, shall be
computed on and as of the last day of a Participant's service as a Director
in accordance with the provisions of the second and third sentences of
Section V.(B). The value of Units, including fractional Units, credited to
a Participant's deferred compensation account for each year may be payable
in whole or part in cash, or in shares of Company Common Stock having a
Fair Market Value (determined on such last day of service) equal to the
final Fair Market Value of the Units, and either in a lump sum or in up to
ten annual installments. Any fractional share of Company Common Stock shall
be paid in cash with the first installment or lump sum. Payment of the lump
sum or the first annual installment shall be made or shall commence, as the
case may be, as soon as practicable, but not later than fifteen (15) days
following the date on which the Participant's service as a Director
terminates. If annual installments are elected for any year, the amount of
the first payment shall be a fraction of the amount of the Participant's
deferred compensation account for such year as of the last day of a
Participant's service as a Director, the numerator of which is one and the
denominator of which is the total number of installments elected. The
amount of each subsequent payment shall be a fraction of the amount as of
December 31 of the year preceding each subsequent payment, the numerator of
which is one and the denominator of which is the total number of
installments elected minus the number of installments previously paid.
(C) Each distribution of deferred compensation, subsequent to the first
distribution, in annual installments, shall be made on January 10 (or, if
that date is a Saturday, Sunday or holiday, the next business day) of the
year, or years, as the case may be, of distribution.
(D) At the written request of a Participant, the Company's ERISA Administrative
Committee, in its sole discretion, may authorize the cessation of deferrals
by such Participant under the Plan or accelerate payment of any
installments at any time after the sixth month following such Participant's
termination of service as a Director, upon a showing of unforeseeable
emergency by such Participant. If the ERISA Administrative Committee
authorizes any such distribution, valuation of the Units to be distributed
shall be determined on the date of such authorization in accordance with
the second and third sentences of Section VI.(B). For purposes of this
paragraph, "unforeseeable emergency" is defined as severe financial
hardship resulting from extraordinary and unanticipated circumstances
arising as a result of one or more recent events beyond the control of the
Participant. In any event, payment may not be made to the extent such
emergency is or may be relieved: (1) through reimbursement or compensation
by insurance or otherwise; (2) by liquidation of the Participant's assets,
to the extent the liquidation of such assets would not, itself, cause
severe financial hardship; and (3) by cessation of deferrals under the
Plan. Examples of what are not considered to be unforeseeable emergencies
include the need to send a Participant's child to college or the desire to
purchase a home.
(E) The account will be credited with dividend equivalents in accordance with
the Plan up to the date of hardship distribution on account of an
unforeseeable emergency, or the last date of the Participant's service as a
Director, whichever first occurs.
(F) In the case of Units being paid in cash installments, interest shall accrue
and be payable each succeeding January 10 (or, if that date is a Saturday,
Sunday or holiday, the next business day), on and with respect to the total
amount credited to a Participant's account on and as of the final valuation
of such account on each Participant's last day of service as a Director
through the date of initial distribution and until the subsequent January
10 (or, if that date is a Saturday, Sunday or holiday, the next business
day) on the total amount less the initial distribution. Such interest shall
accrue at the prime corporate rate in effect (at Morgan Guaranty, New York
City) on the last day of service. Regardless, if the Participant receives a
lump sum distribution in cash, such lump sum distribution shall include the
interest accrued through such date. Thereafter, interest will accrue on
remaining principal amounts at the prime corporate rate in effect (at
Morgan Guaranty, New York City) on January 10 of each succeeding year, and
be payable in full on each immediately following January 10 (or, in each
case, if such date is a Saturday, Sunday or holiday, the next business day)
until all principal amounts in the Participant's account have been paid in
accordance with his or her cash election regarding lump sum or installment
payments of deferred amounts.
(G) In the case of Units being paid in shares of Company Common Stock in
installments, dividend equivalents shall be earned and credited to a
Participant's account on and with respect to the total amount of Company
Common Stock in a Participant's account on the date earned until such
account is paid in full. Such dividend equivalents shall be computed as
provided in Section V.(A) above.
VII. DISTRIBUTION UPON DEATH.
If any Participant dies while a Director, or thereafter, before receiving all
amounts credited to his or her account, the unpaid amount in the
Participant's account shall be paid in one lump sum on the last business
day of the month following the month of death to any beneficiary or
beneficiaries designated by the Participant by written notice to the
Company or, in the absence of such designation, to such Participant's
estate.
VIII.PARTICIPANT'S RIGHTS IN ACCOUNT - UNFUNDED STATUS OF THE PLAN.
A Participant shall not have any interest in any amounts credited to his or
her account until it is distributed in accordance with the Plan. Any and
all cash payments made to a Participant pursuant to the Plan shall be made
only from the general assets of the Company. All amounts deferred under the
Plan shall remain the sole property of the Company, subject to the claims
of its general creditors and available for its use for whatever purposes
are desired. With respect to amounts deferred, a Participant is merely a
general creditor of the Company; and the obligation of the Company
hereunder is purely contractual and shall not be funded or secured in any
way.
IX. NON-ALIENABILITY AND NON-TRANSFERABILITY.
The rights of a Participant to the payment of deferred compensation as
provided in the Plan shall not be assigned, transferred, pledged or
encumbered or be subject in any manner to alienation or anticipation. No
Participant may borrow against Units or fractional Units. No Units or
fractional Units shall be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, change,
garnishment, execution or levy of any kind, whether voluntary or
involuntary prior to distribution of deferred compensation in accordance
with Section VI.
X. STATEMENT OF ACCOUNT.
Statements will be sent to Participants at least twice a year as to the
balance in their deferred compensation accounts.
XI. ADMINISTRATION.
The administrator of this Plan shall be the Company's ERISA Administrative
Committee. The ERISA Administrative Committee shall consist of up to (but
may be less than) three (3) persons who are not and cannot be Participants
in the Plan. The ERISA Administrative Committee shall be appointed by, and
may include, the Chairman and Chief Executive Officer of the Company. The
ERISA Administrative Committee shall have authority to adopt rules and
regulations for carrying out the Plan and to interpret, construe and
implement the provisions thereof.
XII. AMENDMENT AND TERMINATION.
The Plan may, at any time, be amended, modified or terminated by the Board
of Directors or the Nominating and Governance Committee of the Board. No
amendment, modification or termination shall, without the consent of a
Participant, adversely affect such Participant's rights with respect to
amounts accrued in his or her deferred compensation account.
XIII.NOTICES.
All notices to the Company hereunder shall be delivered to the attention of
the Secretary of the Company.
XIII.SHARES; ADJUSTMENTS.
Subject to the adjustments described, a total of 150,000 shares of Company
Common Stock are available for use under this Plan. Such shares may be
authorized but un-issued shares or treasury shares. No shares of Company
Common Stock may be issued under legal counsel for the Company believes
such issuance complies with all applicable laws and stock exchange
regulations. If any change is made in the shares of Company Common Stock,
whether through merger, consolidation, reorganization, recapitalization,
stock dividend, split-up, combination of shares, change in corporate
structure or otherwise, the ERISA Administrative Committee, in its sole
discretion, may make appropriate adjustments in the number and value of
outstanding Units, or fractional Units, and the shares subject to this
Plan. The decision of the ERISA Administrative Committee as to whether to
make any such adjustments, and their amount and timing, if made, shall be
conclusive.