Exhibit 10(u)
BOARD OF DIRECTORS APPROVED
SEPTEMBER 11, 2000
KEY EMPLOYEE SUPPLEMENTAL RETIREMENT PLAN OF
PHILLIPS PETROLEUM COMPANY
PURPOSE
The purpose of the Key Employee Supplemental Retirement Plan of
Phillips Petroleum Company (the "Plan") is to attract and retain
key employees by providing them with supplemental retirement
benefits. This Plan is intended to be and shall be administered
as an unfunded excess benefit plan for highly compensated
employees within the meaning of ERISA Sections 3(36) and 4(b)(5)
subject to Section IV.
SECTION I. Definitions.
-----------
As used in this Plan:
(a) "Board" shall mean the board of directors of the Company.
(b) "Chief Executive Officer (CEO)" shall mean the Chief
Executive Officer of the Company.
(c) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
(d) "Committee" shall mean the Compensation Committee of the
Board.
(e) "Company" shall mean Phillips Petroleum Company.
(f) "Employee" shall mean a person who is an active participant
in the Retirement Plan.
(g) "ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended from time to time, or any successor
statute.
1
(h) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended and in effect from time to time, or any
successor statute.
(i) "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.
(j) "KEDCP" shall mean the Key Employee Deferred Compensation
Plan of Phillips Petroleum Company.
(k) "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.
(l) "Plan" shall mean the Key Employee Supplemental Retirement
Plan of Phillips Petroleum Company, the terms of which are
stated in and by this document.
(m) "Plan Administrator" shall mean Executive Vice President,
Planning, Corporate Relations and Services, or his
successor.
(n) "Restricted Stock" shall mean shares of Stock which have
certain restrictions attached to the ownership thereof.
(o) "Retirement Plan" shall mean the Retirement Income Plan of
Phillips Petroleum Company, which plan is qualified under
Code Section 401(a).
(p) "Salary" shall mean the monthly equivalent rate of pay for
an Employee before adjustments for any before-tax voluntary
reductions.
(q) "Stock" means shares of common stock of the Company, par
value $1.25.
(r) "Total Final Average Earnings" shall mean the average of the
high 3 earnings, excluding
2
Incentive Compensation Plan Awards, paid in consecutive
years of the last 10 years prior to termination of
employment plus the average of the high 3 Incentive
Compensation Awards for any of such last 10 years under the
Incentive Compensation Plan, whether paid or deferred, and
shall include the value of any special awards specified by
the Compensation Committee to be included for final average
earnings purposes under the terms of the special awards when
granted by the Compensation Committee and shall also
recognize benefits paid under Section 4.2 of the Phillips
Petroleum Company Executive Severance Plan in the same
manner as layoff pay is recognized by the Retirement Plan.
(s) "Trustee" means 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 II. Plan Benefits.
-------------
Supplemental payments will be made in such amounts which,
together with the payments which the Employee or the Employee's
surviving spouse, in the case of the death of an Employee prior
to retirement or the death of a former Employee prior to
commencing retirement benefits is eligible to receive under the
Retirement Plan, will equal the retirement benefit that would
have been payable under the Retirement Plan except for any or all
of the following reasons:
(a) An Employee's deferral of all or any portion of one or more
awards under the Incentive Compensation Plan, pursuant to
the provisions of KEDCP, which results in a reduction in the
total retirement benefits which would have been payable
under the Retirement Plan,
(b) The issuance of Restricted Stock in settlement of awards
under the Incentive
3
Compensation Plan (which for purposes of this Section the
initial value thereof shall be considered a "deferral"),
which results in a reduction in the total retirement
benefits which would have been payable under the Retirement
Plan,
(c) An Employee's voluntary reduction of salary pursuant to the
provisions of KEDCP which results in a reduction in the
total retirement benefits which would have been payable
under the Retirement Plan,
(d) The payments which would have been received under the
Retirement Plan except for limitations relating to Code
Section 401(a)(17), or
(e) The payments which would have been received under the
Retirement Plan except for limitations relating to Code
Section 415, including without limitation the interest rate
limitations of Code Section 415(b)(2)(E).
(f) The payments which would have been received under the
Retirement Plan if benefits under Section 4.2 of the
Phillips Petroleum Company Executive Severance Plan were
recognized under the Retirement Plan as layoff pay for
purposes of final average earnings and credited service.
In addition to the supplemental payments in Section II (a), (b),
(c), (d), (e) and (f) hereof, an additional supplemental
retirement payment will be made to an Employee who terminates
employment on or after February 8, 1993, calculated under the
terms of the Retirement Plan using as final average earnings the
difference, if any, between the Total Final Average Earnings and
the Final Average Earnings used in the Retirement Plan.
4
SECTION III. Payment of Benefits.
-------------------
Subject to the requirement that the manner of payment of
supplemental retirement benefits which an Employee is eligible to
receive under this Plan, the Principal Corporate Officers
Supplemental Retirement Plan of Phillips Petroleum Company, the
Phillips Petroleum Company Supplemental Executive Retirement
Plan, the Phillips Petroleum Company Key Employee Death
Protection Plan, the Key Employee Missed Credited Service
Retirement Plan and any similar plan or plans of the Company or a
Participating Subsidiary, shall be the same and, subject further
to the condition that an Employee who receives payments under
this Plan in the manner described in Section III (b) hereof,
shall agree to be available to provide from time to time advice
and consultation to the Company after reasonable notice and for
reasonable compensation therefor:
(a) An Employee may elect in the manner prescribed by
the Plan Administrator to have the payments provided for
hereunder made on a straight life annuity basis, or to
have such life annuity payments converted in the manner
provided by the Retirement Plan to any one of the other
forms of payments which the Employee would be entitled
to select (except the lump-sum settlement option) if
such payments were to be paid to the Employee under the
Retirement Plan.
(b) Notwithstanding (a) above, an Employee who is
commencing retirement benefits and is eligible for a
lump sum distribution from the Retirement Income Plan
may, not earlier than 90 days nor later than 30 days
prior to commencing retirement benefits, express a
preference, in the manner prescribed by the Plan
Administrator, to have the payment of the amounts
provided for hereunder converted in the manner provided
by the Retirement Plan from a life annuity basis to one
lump-sum payment
5
of which all or part of the lump sum payment is either
paid to the Employee or considered an award pursuant to
the provisions of KEDCP. The Chief Executive Officer,
with respect to Employees who are not subject to Section
16 of the Exchange Act, and the Committee, with respect
to Employees who are subject to Section 16 of the
Exchange Act, shall consider such indication of prefer-
ence and shall respectively decide in the Chief
Executive Officer's or the Committee's sole discretion
whether to accept or reject the preference expressed.
In the event the Chief Executive Officer or the
Committee, as applicable, accepts such Employee's
preference, part or all of the Plan benefits shall be
paid in a lump sum as soon as practicable after the
later of such acceptance or the Employee's retirement
benefit commencement date or credited as of the
Employee's retirement benefit commencement date to the
Employee's KEDCP account as applicable.
SECTION IV. Method of Providing Benefits.
----------------------------
All amounts payable under this Plan shall be paid solely from the
general assets of the Company and any rights accruing to an
eligible Employee or Retiree under the Plan shall be those of a
general creditor; 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 an unfunded
excess benefit plan for purposes of Title I of ERISA.
SECTION V. Nonassignability.
----------------
The right of an Employee, or beneficiary, or other person who
becomes entitled to receive
6
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 Employee,
beneficiary, or other such person.
SECTION VI. Administration.
--------------
(a) The Plan shall be administered by the Plan Administrator.
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.
(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
7
(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 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 this Plan, these paragraphs (b), (c) and (d)
may not be amended without the written consent of a
8
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 VII. 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.
SECTION VIII. Miscellaneous Provisions.
------------------------
(a) The Board reserves the right to amend or terminate this Plan
at any time, if, in the sole judgment of the Board, such
amendment or termination is deemed desirable; provided that
no member of the Board who is also an Employee or Retiree
shall participate in any action which has the actual or
potential effect of increasing his or her benefits
hereunder, and further provided, the Company shall remain
liable for any benefits accrued under this Plan prior to the
date of amendment or termination.
(b) 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
9
Company may be consolidated or merged.
(c) No amount accrued or payable hereunder shall be deemed to be
a portion of an Employee's compensation or earnings for the
purpose of any other employee benefit plan adopted or
maintained by the Company, nor shall this Plan be deemed to
amend or modify the provisions of the Retirement Plan.
(d) The 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.
2DP/038
08/28/2000
10