Exhibit 10(o)
BOARD OF DIRECTORS APPROVED
DECEMBER 11, 2000
KEY EMPLOYEE DEFERRED COMPENSATION PLAN OF
PHILLIPS PETROLEUM COMPANY
PURPOSE
The purpose of the Key Employee Deferred Compensation Plan of
Phillips Petroleum Company (the "Plan") is to attract and retain
key employees by providing them with an opportunity to defer
receipt of cash amounts which otherwise would be paid to them
under various compensation programs or plans by the Company.
SECTION 1. Definitions.
(a) "Affiliated Group" shall mean the Company plus other
subsidiaries and affiliates in which it owns a 5% or more
equity interest.
(b) "Award" shall mean the United States cash dollar amount (i)
allotted to an Employee under the terms of an Incentive
Compensation Plan or the Long Term Incentive Compensation Plan,
or (ii) required to be credited to an Employee's Deferred
Compensation Account pursuant to the Incentive Compensation Plan,
the Long Term Incentive Compensation Plan, the Strategic
Incentive Plan, the Long Term Incentive Plan, or any similar
plans, or any administrative procedure adopted pursuant thereto,
(iii) credited as a result of a Participant's deferral of the
receipt of the value of the Stock which would otherwise be
delivered to an Employee in the event restrictions lapse on
Restricted Stock previously awarded or which may be awarded to
the Participant pursuant to the Incentive Compensation Plan, the
Long Term Incentive Compensation Plan, the Strategic Incentive
Plan, the Long Term Incentive Plan, the Omnibus Securities Plan,
or any similar plans, or any administrative procedure adopted
pursuant thereto, (iv) credited resulting from a lump sum
distribution from
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any of the Company's non-qualified retirement plans
and/or plans which provide for a retirement supplement,
(v) resulting from the forfeiture of Restricted Stock,
required by the Company, of key employees who become
employees of GPM Gas Corporation, (vi) credited as a
result of an Employee's deferral of the receipt of the
lump sum cash payment from the Employee's account in the
Defined Contribution Makeup Plan, (vii) credited as a
result of an Employee's voluntary reduction of Salary
(viii) credited as a result of an Employee's deferral of
the settlement of a Long Term Performance Unit Award, or
(ix) any other amount determined by the Committee to be
an Award under the Plan. Sections 2 and 3 of this Plan
shall not apply with respect to Awards included under
(ii), (v), and (ix) above and a participant receiving
such an Award shall be deemed, with respect thereto, to
have elected a Section 5(b)(i) payment option - 10 annual
installments commencing about one year after retirement,
but subject to revision under the terms of this Plan.
(c) "Board of Directors" shall mean the board of directors of
the Company.
(d) "Chief Executive Officer (CEO)" shall mean the Chief
Executive Officer of the Company.
(e) "Committee" shall mean the Compensation Committee of the
Board of Directors.
(f) "Company" shall mean Phillips Petroleum Company.
(g) "Deferred Compensation Account" shall mean an account
established and maintained for each Participant in which
is recorded the amounts of Awards deferred by a
Participant, the deemed gains, losses and earnings
accrued thereon and payments made therefrom all in
accordance with the terms of the Plan.
(h) "Defined Contribution Makeup Plan" shall mean the Defined
Contribution Makeup Plan of Phillips Petroleum Company or
any similar plan or successor plans.
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(i) "Disability" shall mean the inability, in the opinion of
the Company's Medical Director, of a Participant, because
of an injury or sickness, to work at a reasonable
occupation which is available with the Company.
(j) "Employee" shall mean any individual or Rehired
Participant who satisfies the conditions of Section 5(j)
who is a salaried employee of the Company or of a
Participating Subsidiary who is eligible to receive an
Award from an Incentive Compensation Plan, has Restricted
Stock or is classified as a Grade 32P. Employee shall
also include Participants who are employed by a member of
the Affiliated Group and former employees who Retire or
are Laid Off and are eligible to receive a lump sum
distribution from non-qualified retirement plans.
(k) "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended from time to time or any
successor statute.
(l) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended and in effect from time to time, or any
successor statute.
(m) "Incentive Compensation Plan" shall mean the Incentive
Compensation Plan of the Company, or the Annual Incentive
Compensation Plan of Phillips Petroleum Company, or
similar plan of a Participating Subsidiary, or any
similar or successor plans, or all, as the context may
require.
(n) "Layoff" or "Laid Off" shall mean layoff under the
Phillips Layoff Plan or any similar plan which the
Company, any Participating Subsidiary or a member of the
Affiliated Group may adopt from time to time under the
terms of which the Participant executes and does not
revoke a general release of liability, acceptable to the
Company, Participating Subsidiary or a member of the
Affiliated Group, as applicable, under such layoff plan.
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(o) "Long-Term Incentive Compensation Plan" shall mean the
Long-Term Incentive Compensation Plan of the Company
which was terminated December 31, 1985.
(p) "Long-Term Incentive Plan" shall mean the Long-Term
Incentive Plan, or similar or successor plan, established
under the Omnibus Securities Plan of Phillips Petroleum
Company.
(q) "Long Term Performance Unit Award" shall mean a
Performance Award as authorized by Section 4.4 of the
Omnibus Securities Plan, or similar or successive plan,
where the applicable administrative procedure for such
award provides that the recipient is eligible to indicate
a preference to defer all or any part of such award.
(r) "Newhire Employee" shall mean any Employee who is hired
or rehired during a calendar year.
(s) "Participant" shall mean a person for whom a Deferred
Compensation Account is maintained.
(t) "Participating Subsidiary" shall mean a subsidiary of the
Company, of which the Company beneficially owns, directly
or indirectly, more than 50% of the aggregate voting
power of all outstanding classes and series of stock,
where such subsidiary has adopted one or more plans
making participants eligible for participation in this
Plan and one or more Employees of which are Potential
Participants.
(u) "Plan Administrator" shall mean the Executive Vice
President, Planning, Corporate Relations and Services, or
his successor.
(v) "Potential Participant" shall mean a person who has
received a notice specified in Section 2 or in
Section 5(h).
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(w) "Rehired Participant" shall mean a Participant who
subsequent to Retirement or Layoff is rehired by the
Company and whose employment status is classified as
regular full-time or its equivalent.
(x) "Restricted Stock" shall mean shares of Stock which have
certain restrictions attached to the ownership thereof.
(y) "Retirement" or "Retire", or "Retiring" shall mean
termination of employment with the Company on or after
the earliest early retirement date as defined in the
Retirement Income Plan of Phillips Petroleum Company or
of the applicable retirement plan of a Participating
Subsidiary or a member of the Affiliated Group.
(z) "Retirement Income Plan" shall mean the Retirement Income
Plan of the Company or a similar retirement plan of the
Participating Subsidiary pursuant to the terms of which
the Participant retires.
(aa)"Settlement Date" shall mean the date on which all acts
under the Incentive Compensation Plan or the Long-Term
Incentive Compensation Plan or actions directed by the
Committee, as the case may be, have been taken which are
necessary to make an Award payable to the Participant.
(bb)"Salary" shall mean the monthly equivalent rate of pay
for an Employee before adjustments for any before-tax
voluntary reductions.
(cc)"Stock" means shares of common stock of the Company, par
value $1.25.
(dd)"Strategic Incentive Plan" shall mean the Strategic
Incentive Plan portion of the 1986 Stock Plan of the
Company, of the 1990 Stock Plan of the Company, and of
any successor plans of similar nature.
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(ee)"Trustee" shall mean the trustee of the grantor trust
established by the Trust Agreement between the Company
and Wachovia Bank, N.A. dated as of June 1, 1998, or any
successor trustee.
SECTION 2. Notification of Potential Participants.
(a) Incentive Compensation Plan. Each year, during
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September, Employees who are eligible to receive an Award
in the immediately following calendar year under the
Company's or a Participating Subsidiary's Incentive
Compensation Plan will be notified and given the
opportunity, in a manner prescribed by the Plan
Administrator, to indicate a preference concerning
deferral of all or part of such Award.
(b) Restricted Stock Awards. (i) Each year Employees who are
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or will become 55 years of age prior to the end of the
calendar year or who are over 55 years old and have not
previously been notified will be notified and given the
opportunity, in a manner prescribed by the Plan
Administrator, to indicate a preference concerning the
deferral of the receipt of the value of all or part of
the Stock which would otherwise be delivered to the
Employees in the event restrictions lapse on Restricted
Stock previously awarded or which may be awarded to the
Employees.
(ii) Employees who have been granted a special
Restricted Stock Award by the Compensation Committee,
may, in the year preceding the year in which the
restrictions are scheduled to lapse, indicate a
preference concerning the deferral of the value of all or
part of the stock which would otherwise be delivered to
the Employees in the next calendar year when the
restrictions lapse on the special Restricted Stock based
on the terms of the special Restricted Stock Awards.
(c) Lump Sum Distribution from Non-Qualified Retirement
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Plans. With respect to the lump sum distribution
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permitted from the Company's non-qualified retirement
plans and/or plans which provide for a retirement
supplement, Employees may indicate, in a
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manner prescribed by the Plan Administrator, a preference
for all or part of the lump sum distribution, if any, to
be considered an Award under this Plan.
(d) Lump Sum from Defined Contribution Makeup Plan.
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Employees who will receive a lump sum cash payment from
their account under the Defined Contribution Makeup Plan,
may indicate, in a manner prescribed by the Plan
Administrator, a preference concerning deferral of all of
part of such payment.
(e) Salary Reduction. Annually, Employees and Newhire
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Employees on the U.S. dollar payroll may elect, in a
manner prescribed by the Plan Administrator, a voluntary
reduction of Salary for each pay period of the following
calendar year, or for Newhire Employees the remainder of
the calendar year in which they are hired, in which case
the Company will credit a like amount as an Award
hereunder, provided that the amount of such reduction
shall be not less than 2% nor more than a percentage of
the Employee's Salary per pay period such that the
resulting salary that is paid is sufficient to satisfy
all benefit plan deductions, tax deductions, elective
deductions and other deductions required to be withheld
by the Company.
(f) Long Term Performance Unit Award. As soon as practicable
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following the grant of a Long Term Performance Unit
Award, Employees will be notified and given the
opportunity, in a manner prescribed by the Plan
Administrator, to indicate a preference concerning
deferral of all or part of such Award.
(g) Performance Based Incentive Award. Each year, during
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September, Employees who are eligible to receive a
Performance Based Incentive Award in the immediately
following calendar year will be notified and given the
opportunity, in a manner prescribed by the Plan
Administrator, to indicate a preference for the award to
be paid as cash, deferred to their KEDCP account or
issued as Restricted Stock or a combination of cash,
deferred compensation and Restricted Stock.
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SECTION 3. Indication of Preference or Election to Defer Award.
(a) Incentive Compensation Plan. If a Potential Participant
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prefers to defer under this Plan all or any part of the
Award to which a notice received under Section 2(a)
pertains, the Potential Participant must indicate such
preference, in a manner prescribed by the Plan
Administrator, (i) if the Potential Participant is subject
to Section 16 of the Exchange Act, to the Committee, or
(ii) if the Potential Participant is not subject to
Section 16 of the Exchange Act, to the CEO. The Potential
Participant's preference must be received on or before
October 1 of the year in which said Section 2(a) notice
was received. Such indication must state the portion of
the Award the Potential Participant desires to be
deferred. If an indication is not received by October 1,
the Potential Participant will be deemed to have elected
to receive any ICP award awarded by the Committee.
Such indication of preference, if accepted, becomes
irrevocable on October 1 of the year in which the indication
is submitted to the Committee or CEO, except that, in the
event of any of the following:
i) the Employee is demoted to a job
classification/grade that is no longer eligible to
receive an Award from an Incentive Compensation Plan,
ii) the Employee's employment status is classified to a
status other than regular full-time or its
equivalent,
iii) the Employee is receiving Unavoidable Absence
Benefits (UAB) pay such that the pay received is
less than his/her pay had been prior to being on
UAB,
the Employee can request, subject to approval by the Plan
Administrator, that his/her indication of preference to
defer, whether approved or not, be revoked for that Incentive
Compensation Plan Award.
The Committee or CEO, as applicable, shall consider such
indication of preference as submitted and shall decide
whether to accept or reject the preference expressed. The
Potential Participant shall be notified in writing of the
decision.
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(b) Restricted Stock. If a Potential Participant prefers to
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defer under this Plan the value of all or any part of the
Restricted Stock to which a notice received under Section
2(b) pertains, the Potential Participant must indicate
such preference, in a manner prescribed by the Plan
Administrator, (i) if the Potential Participant is
subject to Section 16 of the Exchange Act, to the
Committee, or (ii) if the Potential Participant is not
subject to Section 16 of the Exchange Act, to the CEO.
The Potential Participant's preference must be received
on or before October 1 of the year in which said Section
2(b) notice was received. Such indication must state the
portion of the value of the Restricted Stock the
Potential Participant desires to be deferred. If an
indication is not received by October 1, the Potential
Participant will be deemed to have elected to receive any
shares for which the restrictions are lapsed. Such
indication of preference becomes irrevocable on October 1
of the year in which the indication is submitted to the
Committee or CEO. The Committee or CEO, as applicable,
shall consider such indication of preference as submitted
and shall decide whether to accept or reject the
preference expressed. The Potential Participant shall be
notified in writing of the decision. A deferral of the
value of the Restricted Stock will be paid under the
terms of Section 5(b)(i) hereof - 10 annual installments
commencing about one year after retirement, but subject
to revision under the terms of this Plan.
(c) Lump Sum Distribution from Non-Qualified Retirement
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Plans. If a Potential Participant prefers to defer under
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this Plan all or part of the lump sum distribution to
which Section 2(c) pertains, the Potential Participant
must indicate such preference, in a manner prescribed by
the Plan Administrator, (i) if the Potential Participant
is subject to Section 16 of the Exchange Act, to the
Committee or (ii) if the Potential Participant is not
subject to Section 16 of the Exchange Act, to the CEO.
The Potential Participant's preference must be received
in the period beginning 90 days prior to and ending no
less than 30 days prior to the date of commencement of
retirement benefits under such plans. Such indication
must state the portion of the lump sum distribution the
Potential Participant desires to be deferred. The
Committee
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or CEO, as applicable, shall consider such indication of
preference as submitted and shall decide whether to
accept or reject the preference expressed as soon as
practicable. Such indication of preference, if accepted,
becomes irrevocable on the date of such acceptance.
(d) Lump Sum from Defined Contribution Makeup Plan. If a
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Potential Participant prefers to defer under this Plan
all or part of the lump sum cash payment to which Section
2(d) pertains, the Potential Participant must indicate
such preference, in a manner prescribed by the Plan
Administrator, (i) if the Potential Participant is
subject to Section 16 of the Exchange Act, to the
Committee or (ii) if the Potential Participant is not
subject to Section 16 of the Exchange Act, to the CEO.
The Potential Participant's preference must be received
in the period beginning 365 days prior to and ending no
less than 90 days prior to the Participant's retirement
date except that if a Potential Participant is notified
of layoff during or after the year in which the Potential
Participant reaches age 50 and if there is not at least
120 days between the date the Potential Participant is
notified of layoff and the Potential Participant's
termination date, the Potential Participant's preference
must be received within 30 days of being notified of
layoff. Such indication must state the portion of the
lump sum payment the Potential Participant desires to be
deferred. The Committee or CEO, as applicable, shall
consider such indication of preference as submitted and
shall decide whether to accept or reject the preference
expressed as soon as practicable. Such indication of
preference, if accepted, becomes irrevocable on the date
of such acceptance. A deferral of the lump sum from the
Defined Contribution Makeup Plan will be paid under the
terms of Section 5(b)(i) hereof - 10 annual installments
commencing about one year after retirement, but subject
to revision under the terms of the Plan.
(e) Salary Reduction. If a Potential Participant elects to
----------------
voluntarily reduce Salary and receive an Award hereunder
in lieu thereof, the Potential Participant must make an
election, in the manner prescribed by the Plan
Administrator, which must be received
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on or before November 30 prior to the beginning of the
calendar year of the elected deferral or for Newhire
Employees as soon as practicable within a 30-day period
after their first day of employment or reemployment.
Such election must be in writing signed by the Potential
Participant, and must state the amount of the salary
reduction the Potential Participant elects. Such
election becomes irrevocable on November 30 prior to the
beginning of the calendar year or for Newhire Employees
after the 30-day period after their first day of
employment or reemployment, except that in the event of
any of the following:
i) the Employee is demoted to a job
classification/grade that is no longer eligible
to receive an Award from an Incentive
Compensation Plan,
ii) the Employee's employment status is classified
to a status other than regular full-time or its
equivalent,
iii)the Employee is receiving Unavoidable Absence
Benefits (UAB) pay such that the pay received is
less than his/her pay had been prior to being on
UAB,
the Employee can request, subject to approval by the Plan
Benefits Administrator, that his/her election to
voluntarily reduce his/her salary be revoked for the
remainder of the calendar year.
An Award in lieu of voluntarily reduced salary will be
paid under the terms of Section 5(b)(i) hereof - 10
annual installments commencing about one year after
retirement, but subject to revision under the terms of
the Plan.
(f) Long Term Performance Unit Award. If a Potential
---------------------------------
Participant prefers to defer under this Plan the value of
all or any part of the Long Term Performance Unit Award
to which a notice received under Section 2(f) pertains,
the Potential Participant must indicate such preference,
in a manner prescribed by the Plan Administrator, (i) if
the Potential Participant is subject to Section 16 of the
Exchange Act, to the Committee, or (ii) if the Potential
Participant is not subject to Section 16 of the Exchange
Act, to the CEO. The Potential Participant's preference
must be received on or before 90
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days from the grant date of the Long Term Performance
Unit Award. Such indication must state the portion of
the value of the Long Term Performance Unit Award the
Potential Participant desires to be deferred. If an
indication is not received by 90 days from the grant date
of the award, the Potential Participant will be deemed to
have elected not to defer any portion of the Award. Such
indication of preference becomes irrevocable 90 days from
the grant date of the Award. The Committee or CEO, as
applicable, shall consider such indication of preference
as submitted and shall decide whether to accept or reject
the preference expressed. The Potential Participant
shall be notified in writing of the decision. A deferral
of the value of the Long Term Performance Unit Award will
be paid under the terms of Section 5(b) (i) hereof - 10
annual installments commencing about one year after
retirement, but subject to revision under the terms of
this Plan.
(g) Performance Based Incentive Award. The Potential
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Participant who is eligible to receive a Performance
Based Incentive Award in the immediately following
calendar year, must indicate a preference, in a manner
prescribed by the Plan Administrator, (i) if the
Potential Participant is subject to Section 16 of the
Exchange Act, to the Committee, or (ii) if the Potential
Participant is not subject to Section 16 of the Exchange
Act, to the CEO. The Potential Participant's preference
must be received on or before October 1 of the year in
which said Section 2(g) notice was received. Such
indication must state the portion of the award the
Potential Participant desires to be in cash, the portion
to be deferred and the portion to be in Restricted Stock.
If an indication is not received by October 1, the
Potential Participant will be deemed to have elected to
receive the award as cash. Such indication of preference
becomes irrevocable on October 1 of the year in which the
indication is submitted to the Committee or CEO. The
Committee or CEO, as applicable, shall consider such
indication of preference as submitted and shall decide
whether to accept or reject the preference expressed.
SECTION 4. Deferred Compensation Accounts.
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(a) Credit for Deferral. Amounts deferred pursuant to
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Section 3(a) and Section 5(h)(1) will be credited to the
Participant's Deferred Compensation Account as soon as
practicable, but not less than 30 days after the
Settlement Date of the Incentive Compensation Plan.
Amounts deferred pursuant to Section 3(b) and Section
5(h)(2) will be credited at market value of the
underlying Restricted Stock as soon as practicable, but
not later than 30 days after the date as of which the
restrictions lapse. For this purpose, the market value
of the underlying Restricted Stock shall be based on the
higher of (i) the average of the high and low selling
prices of the Company Stock on the date the restrictions
lapse or the last trading day before the day the
restrictions lapse if such date is not a trading day or
(ii) the average of the high three monthly Fair Market
Values of the Company Stock during the twelve calendar
months preceding the month in which the restrictions
lapse. The monthly Fair Market Value of the Company
Stock is the average of the daily Fair Market Value of
the Stock for each trading day of the month. The daily
Fair Market Value of the Stock shall be deemed equal to
the average of the high and low selling prices of the
Stock on the New York Stock Exchange, as reported in the
Wall Street Journal. Amounts deferred pursuant to
Section 3(d), 3(e), and 3(f) and Section 5(h)(3) will be
credited to the Participant's Deferred Compensation
Account as soon as practicable, but not later than 30
days after the cash payment would have been made had it
not been deferred. Amounts deferred pursuant to other
provisions of this plan shall be credited as soon as
practicable but not later than 30 days after the date the
Award would otherwise be payable.
(b) Designation of Investments. The amount in each
--------------------------
Participant's Deferred Compensation Account shall be
deemed to have been invested and reinvested from time to
time, in such "eligible securities" as the Participant
shall designate. Prior to or in the absence of a
Participant's designation, the Company shall designate an
"eligible security" in which the Participant's Deferred
Compensation Account shall be deemed to have been
invested until designation instructions are received from
the Participant.
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Eligible securities are those securities designated by
the Senior Vice President and Chief Financial Officer of
the Company, or his successor. The Senior Vice President
and Chief Financial Officer of the Company may include as
eligible securities, stocks listed on a national
securities exchange, and bonds, notes, debentures,
corporate or governmental, either listed on a national
securities exchange or for which price quotations are
published in The Wall Street Journal and shares issued by
investment companies commonly known as "mutual funds".
The Participant's Deferred Compensation Account will be
adjusted to reflect the deemed gains, losses and earnings
as though the amount deferred was actually invested and
reinvested in the eligible securities for the
Participant's Deferred Compensation Account.
Notwithstanding anything to the contrary in this section
4(b), in the event the Company actually purchases or
sells such securities in the quantities and at the times
the securities are deemed to be purchased or sold for a
Participant's Deferred Compensation Account, the Account
shall be adjusted accordingly to reflect the price
actually paid or received by the Company for such
securities after adjustment for all transaction expenses
incurred (including without limitation brokerage fees and
stock transfer taxes).
In the case of any deemed purchase not actually made by
the Company, the Deferred Compensation Account shall be
charged with a dollar amount equal to the quantity and
kind of securities deemed to have been purchased
multiplied by the fair market value of such security on
the date of reference and shall be credited with the
quantity and kind of securities so deemed to have been
purchased. In the case of any deemed sale not actually
made by the Company, the account shall be charged with
the quantity and kind of securities deemed to have been
sold, and shall be credited with a dollar amount equal to
the quantity and kind of securities deemed to have been
sold multiplied by the fair market value of such security
on the date of reference. As used herein "fair market
value" means in the case of a listed security the closing
price on the date of reference, or if there were no sales
on such date, then the closing price on
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the nearest preceding day on which there were such sales,
and in the case of an unlisted security the mean between
the bid and asked prices on the date of reference, or if
no such prices are available for such date, then the mean
between the bid and asked prices to the nearest preceding
day for which such prices are available.
The Senior Vice President and Chief Financial Officer of
the Company may also designate a Fund Manager to provide
services which may include recordkeeping, Participant
accounting, Participant communication, payment of
installments to the Participant, tax reporting and any
other services specified by the Company in agreement with
the Fund Manager.
(c) Payments. A Participant's Deferred Compensation Account
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shall be debited with respect to payments made from the
account pursuant to this Plan as of the date such
payments are made from the account. The payment shall be
made as soon as practicable, but no later than 30 days,
after the installment payment date.
If any person to whom a payment is due hereunder is under
legal disability as determined in the sole discretion of
the Plan Administrator, the Plan Administrator shall have
the power to cause the payment due such person to be made
to such person's guardian or other legal representative
for the person's benefit, and such payment shall
constitute a full release and discharge of the Company,
the Plan Administrator and any fiduciary of the Plan.
(d) Statements. At least one time per year the Company or
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the Company's designee will furnish each Participant a
written statement setting forth the current balance in
the Participant's Deferred Compensation Account, the
amounts credited or debited to such account since the
last statement and the payment schedule of deferred
Awards and deemed gains, losses and earnings accrued
thereon as provided by the deferred payment option
selected by the Participant.
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SECTION 5. Payments from Deferred Compensation Accounts.
(a) Election of Method of Payment for an Incentive
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Compensation Plan Award. At the time a Potential
-----------------------
Participant submits an indication of preference to defer
all or any part of an Award under an Incentive
Compensation Plan as provided in Section 3(a) above, the
Potential Participant shall also elect in a manner
prescribed by the Plan Administrator, which of the
payment options, provided for in Paragraph (b) of this
Section, shall apply to the deferred portion of said
Award adjusted for any deemed gains, losses and earnings
accrued thereon credited to the Participant's Deferred
Compensation Account under this Plan. Subject to
Paragraphs (e), (g) and (h) of this Section, if the
Committee or CEO, as appropriate, accepts the Potential
Participant's indication of preference, the election of
the method of payment of the amount deferred shall become
irrevocable.
(b) Payment Options. A Potential Participant may elect to
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have the deferred portion of an Incentive Compensation
Plan Award adjusted for any deemed gains, losses and
earnings accrued thereon paid:
(i) (Post-Retirement) in 10 annual installments, the
payment of the first of such installments to
commence on the first day of the first calendar
quarter which is on or after the first anniversary
of the Potential Participant's first day of
Retirement, or
(ii) (Pre-Retirement) in annual installments of not less
than 5 nor more than 10, in semi-annual installments
of not less than 10 nor more than 20, or in
quarterly installments of not less than 20 nor more
than 40. The first of such installments to
commence, as soon as practicable after any date
specified by the Potential Participant, so long as
such date is the first day of a calendar quarter, is
on or after the Settlement Date, is at least one
year from the date the payout option was elected,
and is prior to the date the Potential Participant
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will attain the Participant's Normal Retirement Date
under the terms of the Retirement Income Plan.
(c) Election of Method of Payment of the Value of Restricted
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Stock. As provided in Section 3(b) above, a deferral of
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the value of all or part of the Restricted Stock will be
considered payment option (b)(i) of this Section subject
to Paragraphs (e) and (g) of this Section.
(d) Election of Method of Payment of a Lump Sum Distribution
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from Non-Qualified Retirement Plans. At the time a
-----------------------------------
Potential Participant submits an indication of preference
to defer all or part of the lump sum distribution as
provided in Section 3(c) above, the Potential Participant
shall also elect in a manner prescribed by the Plan
Administrator which payment option shall apply to the
deferred lump sum adjusted for any gains, losses and
earnings to be accrued thereon credited to the
Participant's Deferred Compensation Account under this
Plan. The payment options are annual installments of not
less than 5 nor more than 10, semi-annual installments of
not less than 10 nor more than 20, or quarterly
installments of not less than 20 nor more than 40. The
first installment to commence as soon as practicable
after any date specified by the Potential Participant, so
long as such date is the first day of a calendar quarter
and is at least one year from the date the payout option
was elected. Subject to Paragraph (g) of this Section,
if the Committee or CEO, as appropriate, accepts the
Potential Participant's indication of preference, the
election of the method of payment of the amount deferred
shall become irrevocable.
(e) Payment Option Revisions. If a Section 5(b)(i) payment
------------------------
option applies to any part of the balance of a
Participant's Deferred Compensation Account, the
Participant may revise such payment option as follows:
17
(i) Prior to Retirement. The Participant at any time
-------------------
during a period beginning 365 days prior to and
ending 90 days prior to the date the Participant
Retires may, with respect to the total of all
amounts subject to such payment option at the time
of the Participant's retirement, in the manner
prescribed by the Plan Administrator, revise such
payment option and elect one of the payment options
specified in (e)(iv) of this Section to apply to
such total amount in place of such payment option.
(ii) Upon Layoff. If a Participant who is eligible to
-----------
Retire or who is Laid Off during or after the year
in which the Participant reaches age 50 is notified
of Layoff and if there is not at least 120 days
between the date the Participant is notified of
Layoff and the Participant's termination date, the
Participant may, within 30 days of being notified of
Layoff, in the manner prescribed by the Plan
Administrator, revise such payment option and elect
one of the payment options specified in (e)(iv) of
this Section to apply to such total amount in place
of the such payment option.
(iii)If Disabled. The Participant may at any time during
------------
a period from the date of the beginning of the
qualifying period for the Company's Long Term
Disability Plan or similar plan to no later than 90
days prior to the end of such period, or within 30
days of the amendment of this Plan providing for
such election, in the manner prescribed by the Plan
Administrator, revise such payment option and elect
one of the payment options specified in (e)(iv) of
this Section to apply to the total of all amounts
subject to such payment option; provided, however,
that after the payments have begun, such payments
may be made in a different manner if, the
Participant due to an unanticipated emergency caused
by an event beyond the control of the Participant
results in financial hardship to the Participant, so
request and the CEO gives written consent to the
method of payment requested.
18
(iv) Payment Options After Revision. If a Participant
------------------------------
revises a Section 5(b)(i) payment option as
specified in (e)(i), (e)(ii) or (e)(iii) of this
Section, the Participant, subject to the exception
in (e)(v) of this Section, may select payments in
annual installments of not less than 5 nor more than
10, in semi-annual installments of not less than 10
nor more than 20, or in quarterly installments of
not less than 20 nor more than 40 with the first
installment to commence, as soon as practicable
following any date specified by the Participant so
long as such date is the first day of a calendar
quarter, is on or after the Participant's first day
of Retirement or the first day the Participant is no
longer an Employee following Layoff, is at least one
year from the date the payment option was revised
and is not more than two calendar quarters after the
Participant's 70th birthday.
(v) Payment Option After Revision Exception. If a
---------------------------------------
Participant elected a Section 5(b)(i) payment option
for amounts deferred prior to January 1, 1994, the
Participant may select payments in one lump sum or
annual installments of not less than 5 nor more than
20 in addition to the payment options specified in
(e)(iii) of this Section, provided that the
commencement date specified by the Participant would
be permitted under paragraph (e)(iii) of this
Section.
(f) Installment Amount. The amount of each installment shall
------------------
be determined by dividing the balance in the
Participant's Deferred Compensation Account as of the
date the installment is to be paid, by the number of
installments remaining to be paid (inclusive of the
current installment).
(g) Death of Participant. Upon the death of a Participant,
--------------------
the Participant's beneficiary or beneficiaries designated
in accordance with Section 6, or in the absence of an
effective beneficiary designation, the surviving spouse,
surviving children (natural or adopted) in equal shares,
or the Estate of the deceased Participant, in that order
of priority, shall receive payments in accordance with
the payment options selected by
19
the Participant, whether death occurred before or after
such payments have commenced; provided, however, such
payments may be made in a different manner if the
beneficiary or beneficiaries entitled to receive such
payments, due to an unanticipated emergency caused by an
event beyond the control of the beneficiary or
beneficiaries that results in financial hardship to the
beneficiary or beneficiaries, so requests and the CEO
gives written consent to the method of payment requested.
(h) Disability of Participant. In the event a Participant or
--------------------------
employee becomes disabled, the individual may, in the
period from the date of the beginning of the qualifying
period for the Company's Long Term Disability Plan to no
later than 90 days prior to the end of such period, or
within 30 days of the amendment of this Plan providing
for such election, indicate a preference, in a manner
prescribed by the Plan Administrator, for any of the
following:
1) to defer part or all of any Incentive Compensation
Plan Award the Employee is eligible to receive in the
immediately following calendar year,
2) to defer part or all of the value of the Stock
which would otherwise be delivered to the Employee
when the restrictions lapse on any Restricted Stock,
3) to defer part or all of the value from their
account under the Defined Contribution Makeup Plan
which would otherwise be paid as a lump sum to the
Participant.
Such indications of preference shall be subject to
approval by the Committee if the Potential Participant is
subject to Section 16 of the Exchange Act or by the CEO
if the Potential Participant is not subject to Section 16
of the Exchange Act. The Committee or CEO, as
applicable, shall consider such indication or preference
as submitted and shall decide whether to accept or reject
the preference expressed.
20
Such indications of preference, if accepted, becomes
irrevocable on the date of such acceptance. A deferral
of any amount will be paid under the terms of Section
5(b)(I) hereof - ten (10) annual installments, but
subject to revision as specified under the terms of this
Plan.
(i) Termination of Employment.
-------------------------
In the event a Participant's employment with the Company
or any Participating Subsidiary terminates for any reason
other than death, Retirement, Disability, or by layoff
during or after the year in which the Participant reaches
age 50, the entire balance of the Participant's Deferred
Compensation Account shall be paid to the Participant in
one lump sum as soon as practicable after the date the
Participant terminates employment, except that a
Participant who becomes employed by a member of the
Affiliated Group immediately after terminating employment
with the Company or Participating Subsidiary shall not
receive their benefit under the plan until the
Participant terminates employment from the Affiliated
Group, and provided however, the Committee, in its sole
discretion, may elect to make such payments in the
amounts and on such schedule as it may determine.
(j) Rehire of Participant
---------------------
In the event a Participant is a Rehired Participant,
he/she will be eligible to receive notifications as
specified in Section 2 and will be eligible to submit an
Indication of Preference or Election to Defer as
specified in Section 3, if the Participant agrees to the
suspension of payments from his/her Deferred Compensation
Account during the period of reemployment by the Company.
Upon termination of reemployment, such payments shall
resume on the same schedule as was in effect at the time
the Participant previously Retired or was Laid Off.
SECTION 6. Special Provisions for Former ARCO Alaska Employees
Notwithstanding any provisions to the contrary, in order to
comply with the terms of the
21
Master Purchase and Sale Agreement ("Sale Agreement") by
which the Company acquired certain Alaskan assets of Atlantic
Richfield Company ("ARCO"), a Participant who was eligible to
participate in the ARCO employee benefit plans immediately
prior to becoming an Employee and who was not employed by
ARCO Marine, Inc. (a "former ARCO Alaska employee") may, in a
manner prescribed by the Plan Administrator, indicate a
preference or make an election to:
a) voluntarily reduce salary and receive an Award in the
amount of the reduction credited to, at the Employee's
election, (i) an account under this Plan, or (ii) for so
long as the ARCO Executive Deferral Plan will accept such
deferrals of salary, but not beyond December 31, 2001, an
account under the ARCO Executive Deferral Plan.
b) defer any Award payable to a former ARCO employee who is
involuntarily terminated prior to April 18, 2002 in lieu
of a target ARCO Annual Incentive Plan (AIP) award, and
at the Employee's election credit the Award to (i) an
account under this Plan, or (ii) to the ARCO Executive
Deferral Plan.
c) defer the Final ARCO Supplemental Executive Retirement
Plan (SERP) benefit that will be calculated as of the
earlier of April 17, 2002 or the date the former ARCO
employee voluntarily or involuntarily terminates
employment from the Company or any Participating
Subsidiary to the ARCO Executive Deferral Plan.
d) defer the value of the restricted stock granted on
July 31, 2000 to an account under this Plan when the
restrictions lapse on July 31, 2001, July 31, 2002 and
July 31, 2002. Such indications of preference shall be
made in July of the year preceding the calendar year when
the restrictions are scheduled to lapse or as soon as
practicable after July 31, 2000 for the restrictions on
the shares that are to be lapsed on July 31, 2001.
e) all indications of preference in Section 6(a), (b) and (c)
are subject to approval by the
22
Compensation Committee if the Employee is subject to
Section 16 of the Exchange Act and by the CEO if the
Employee is not subject to Section 16 of the Exchange
Act.
f) for a former ARCO Alaska employee who was classified as a
grade 7 or 8 under ARCO's job classification system and was
eligible under ARCO's Executive Deferral Plan to voluntarily
reduce salary and defer the amount of the voluntary salary
reduction and who is now classified as a grade 31 or below under
Phillips' job classification system, make an annual election to
voluntarily reduce salary and defer the amount of the voluntary
salary reduction for salary received from July 31, 2000 through
December 31, 2000 and for the five years from 2001 through 2005
and receive a salary deferral credit under this Plan.
SECTION 7. Designation of Beneficiary
Each Participant shall designate a beneficiary or
beneficiaries to receive the entire balance of the
Participant's Deferred Compensation Account by giving signed
written notice of such designation to the Plan Administrator.
The Participant may from time to time change or cancel any
previous beneficiary designation in the same manner. The
last beneficiary designation received by the Plan
Administrator shall be controlling over any prior designation
and over any testamentary or other disposition. After
acceptance by the Plan Administrator of such written
designation, it shall take effect as of the date on which it
was signed by the Participant, whether the Participant is
living at the time of such receipt, but without prejudice to
the Company or the CEO on account of any payment made under
this Plan before receipt of such designation.
SECTION 8. Nonassignability
The right of a Participant, or beneficiary, or other person
who becomes entitled to receive payments under this Plan,
shall not be assignable or subject to garnishment, attachment
or any other legal process by the creditors of, or other
claimants against, the Participant,
23
beneficiary, or other such person.
SECTION 9. Administration.
(a)The Plan Administrator may adopt such rules, regulations and
forms as deemed desirable for administration of the Plan and
shall have the discretionary authority to allocate
responsibilities under the Plan to such other persons as may
be designated, whether or not employee members of the Board
of Directors.
(b)Any claim for benefits hereunder shall be presented in
writing to the Plan Administrator for consideration, grant or
denial. In the event that a claim is denied in whole or in
part by the Plan Administrator, the claimant, within ninety
days of receipt of said claim by the Plan Administrator,
shall receive written notice of denial. Such notice shall
contain:
(1) a statement of the specific reason or reasons for the
denial;
(2) specific references to the pertinent provisions
hereunder on which such denial is based;
(3) a description of any additional material or information
necessary to perfect the claim and an explanation of
why such material or information is necessary; and
(4) an explanation of the following claims review procedure
set forth in paragraph (c) below.
(c)Any claimant who feels that a claim has been improperly
denied in whole or in part by the Plan Administrator may
request a review of the denial by making written application
to the Trustee. The claimant shall have the right to review
all pertinent documents relating to said claim and to submit
issues and comments in writing to the Trustee. Any person
filing an appeal from the denial of a claim must do so in
writing within sixty days after receipt of
24
written notice of denial. The Trustee shall render a
decision regarding the claim within sixty days after receipt
of a request for review, unless special circumstances require
an extension of time for processing, in which case a decision
shall be rendered within a reasonable time, but not later
than 120 days after receipt of the request for review. The
decision of the Trustee shall be in writing and, in the case
of the denial of a claim in whole or in part, shall set forth
the same information as is required in an initial notice of
denial by the Plan Administrator, other than an explanation
of this claims review procedure. The Trustee shall have
absolute discretion in carrying out its responsibilities to
make its decision of an appeal, including the authority to
interpret and construe the terms hereunder, and all
interpretations, findings of fact, and the decision of the
Trustee regarding the appeal shall be final, conclusive and
binding on all parties.
(d)Compliance with the procedures described in paragraphs (b)
and (c) shall be a condition precedent to the filing of any
action to obtain any benefit or enforce any right which any
individual may claim hereunder. Notwithstanding anything to
the contrary in the Plan, these paragraphs (b), (c) and (d)
may not be amended without the written consent of a seventy-
five percent (75%) majority of Participants and Beneficiaries
and such paragraphs shall survive the termination of this
Plan until all benefits accrued hereunder have been paid.
SECTION 10. Employment not Affected by Plan.
Participation or nonparticipation in this Plan shall neither
adversely affect any person's employment status, or confer
any special rights on any person other than those expressly
stated in the Plan. Participation in the Plan by an Employee
of the Company or of a Participating Subsidiary shall not
affect the Company's or the Participating Subsidiary's right
to terminate the Employee's employment or to change the
Employee's compensation or position.
25
SECTION 11. Determination of Recipients of Awards.
The determination of those persons who are entitled to Awards
under the Incentive Compensation Plan and any other such
plans shall be governed solely by the terms and provisions of
the applicable plan, and the selection of an Employee as a
Potential Participant or the acceptance of an indication of
preference to defer an Award hereunder shall not in any way
entitle such Potential Participant to an Award.
SECTION 12. Method of Providing Payments.
(a) Nonsegregation. Amounts deferred pursuant to this Plan
--------------
and the crediting of amounts to a Participant's Deferred
Compensation Account shall represent the Company's
unfunded and unsecured promise to pay compensation in the
future. With respect to said amounts, the relationship
of the Company and a Participant shall be that of debtor
and general unsecured creditor. While the Company may
make investments for the purpose of measuring and meeting
its obligations under this Plan such investments shall
remain the sole property of the Company subject to claims
of its creditors generally, and shall not be deemed to
form or be included in any part of the Deferred
Compensation Account.
(b) Funding. It is the intention of the Company that this
--------
Plan shall be unfunded for federal tax purposes and for
purposes of Title I of ERISA; provided, however, that the
Company may establish a grantor trust to satisfy part or
all of its Plan payment obligations so long as the Plan
remains unfunded for federal tax purposes and for
purposes of Title I of ERISA.
SECTION 13. Amendment or Termination of Plan.
The Company reserves the right to amend this Plan from time
to time or to terminate the Plan entirely, provided, however,
that no amendment may affect the balance in a
26
Participant's account on the effective date of the amendment.
No Participant shall participate in a decision to amend or
terminate this Plan. In the event of termination of the
Plan, the Chief Executive Officer, in his sole discretion,
may elect to pay to the Participant in one lump sum as soon
as practicable after termination of the Plan, the balance
then in the Participant's account.
SECTION 14. Miscellaneous Provisions.
(a) Except as otherwise provided herein, the Plan shall be
binding upon the Company, its successors and assigns,
including but not limited to any corporation which may
acquire all or substantially all of the Company's assets
and business or with or into which the Company may be
consolidated or merged.
(b) This Plan shall be construed, regulated, and administered
in accordance with the laws of the State of Oklahoma
except to the extent that said laws have been preempted
by the laws of the United States.
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