EXHIBIT 10.13
ALASKA AIR GROUP, INC.
1995 ELECTED OFFICERS
SUPPLEMENTARY RETIREMENT PLAN
EFFECTIVE AUGUST 8,1995
TABLE OF CONTENTS
PAGE
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PREAMBLE................................................................................................... 1
SECTION 1 - DEFINITIONS.................................................................................... 2
1.1 Actuarial Equivalence.................................................................... 2
1.2 Administrative Committee................................................................. 3
1.3 Affiliated Companies..................................................................... 3
1.4 Authorized Leave of Absence.............................................................. 4
1.5 Beneficiary.............................................................................. 4
1.6 Board.................................................................................... 4
1.7 Change of Control........................................................................ 4
1.8 Code..................................................................................... 5
1.9 Company.................................................................................. 5
1.10 Company Service.......................................................................... 5
1.11 Compensation............................................................................. 5
1.12 Competing Activity....................................................................... 6
1.13 Disabled................................................................................. 6
1.14 Early Retirement Date.................................................................... 6
1.15 Effective Date........................................................................... 6
1.16 Elected Officer.......................................................................... 7
1.17 Elected Officer Service.................................................................. 7
1.18 Employee................................................................................. 7
1.19 Employer................................................................................. 7
1.20 ERISA.................................................................................... 7
1.21 Final Average Monthly Compensation....................................................... 7
1.22 Hour of Service.......................................................................... 7
1.23 Late Retirement Date..................................................................... 8
1.24 Normal Retirement Age.................................................................... 8
1.25 Normal Retirement Date................................................................... 8
1.26 Participant.............................................................................. 8
1.27 Plan..................................................................................... 8
1.28 Plan Administrator....................................................................... 8
1.29 Plan Year................................................................................ 8
1.30 Qualified Plan........................................................................... 8
1.31 Qualified Plan Benefit................................................................... 8
1.32 Retirement Date.......................................................................... 8
Alaska Air Group, Inc.
1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995
Table of Contents, Continued
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1.33 Social Security Benefit.................................................................. 9
1.34 Terminate................................................................................ 9
1.35 Termination For Cause.................................................................... 9
1.36 Wages.................................................................................... 9
1.37 Additional Definitions in Plan........................................................... 9
SECTION 2 - ELIGIBILITY AND PARTICIPATION.................................................................. 10
2.1 Eligibility and Participation............................................................ 10
2.2 Termination of Participation............................................................. 10
2.3 Inactive Participation................................................................... 10
SECTIONS 3 - RETIREMENT BENEFITS........................................................................... 11
3.1 Target Aggregate Benefit................................................................. 11
3.2 Normal Retirement Benefit................................................................ 12
3.3 Early Retirement Benefit................................................................. 12
3.4 Late Retirement Benefit.................................................................. 12
3.5 Cost of Living Adjustment................................................................ 13
SECTION 4 - PAYMENT FORMS.................................................................................. 14
4.1 Forms of Payment......................................................................... 14
4.2 Automatic Form of Payment................................................................ 15
4.3 Payment Form Election.................................................................... 15
SECTION 5 - CHANGE OF CONTROL BENEFITS..................................................................... 16
5.1 Change of Control Benefit................................................................ 16
5.2 Form of Payment.......................................................................... 16
5.3 Amount of Change of Control Benefit...................................................... 16
SECTION 6 - DEATH BENEFITS................................................................................. 17
6.1 Death Benefits Prior to Benefit Commencement............................................. 17
6.2 Death Benefits After Benefit Commencement................................................ 17
SECTION 7 - VESTING........................................................................................ 18
7.1 Vesting.................................................................................. 18
7.2 Forfeiture............................................................................... 19
SECTION 8 - POWERS AND DUTIES OF THE COMMITTEE............................................................. 20
8.1 Appointment of Administrative Committee.................................................. 20
8.2 Powers and Duties........................................................................ 20
8.3 Administrative Committee Procedures...................................................... 20
8.4 Appointment of Agents.................................................................... 21
8.5 Administrative Committee Expenses........................................................ 21
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1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995
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8.6 Administrative Expenses.................................................................. 21
8.7 Determinations........................................................................... 21
8.8 Claim and Review Procedure............................................................... 21
8.9 Exemption From Liability/Indemnification................................................. 23
SECTION 9 - AMENDMENT AND TERMINATION...................................................................... 24
9.1 Amendment or Termination................................................................. 24
SECTION 10 - MISCELLANEOUS PROVISIONS...................................................................... 25
10.1 Appendices............................................................................... 25
10.2 ERISA Status............................................................................. 25
10.3 Unfunded Nature of the Obligation........................................................ 25
10.4 Facility of Payment...................................................................... 25
10.5 Governing Law............................................................................ 25
10.6 Limitation on Assignment................................................................. 25
10.7 No Additional Rights..................................................................... 25
10.8 Notice................................................................................... 26
10.9 Severability............................................................................. 26
10.10 Tax Consequences and Withholding......................................................... 26
EXECUTION/SIGNATURE PAGE................................................................................... 27
APPENDIX I TO THE - ALASKA AIR GROUP, INC. 1995 ELECTED OFFICERS
SUPPLEMENTARY RETIREMENT PLAN..................................................................... 28
APPENDIX II TO THE - ALASKA AIR GROUP, INC. 1995 ELECTED OFFICERS
SUPPLEMENTARY RETIREMENT PLAN..................................................................... 29
Alaska Air Group, Inc.
1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995
PREAMBLE
The purpose of this Alaska Air Group, Inc. 1995 Elected Officers
Supplementary Retirement Plan is to provide certain elected officers of Alaska
Air Group, Inc. (the "Company") and of certain affiliated companies with
supplemental retirement benefits, the receipt of which is deferred until after
the covered employee retires or terminates employment.
This Plan shall constitute a plan which is unfunded and which is
maintained primarily for the purpose of providing deferred compensation benefits
for certain elected officers who constitute a select group of management or
highly compensated employees within the meaning of Sections 201(2), 301(a)(3),
and 401(a)(I) of ERISA.
The Plan set forth in the following pages is adopted by the Company,
effective August 8, 1995.
Alaska Air Group, Inc.
1995 Elected Officers Supplemental Retirement Plan
Effective August 8, 1995
1
SECTION 1
DEFINITIONS
Whenever capitalized in this Plan, the following capitalized terms shall have
the meanings set forth below except where otherwise provided. As used in the
Plan, the masculine, feminine, and neuter genders shall each be deemed to
include the other or others.
1.1 Actuarial Equivalence
"Actuarial Equivalence" and its derivatives as the context requires
(such as "Actuarially") means that the present value of two (2)
payments or series of payments shall be of equal value when computed as
follows:
(a) For purposes of Sections 3.2 Normal Retirement Benefit, 4.1(c)
Ten Year Certain and Life Annuity, 4.1(d) Ten Year Certain
Installments, and 5.3 Amount of Change of Control Benefit,
Actuarial Equivalence shall be computed using the following:
(i) the annual interest rate on thirty (30) year Treasury
securities as determined under Code Section 417
(which, as of the Effective Date, is the average
annual yield on thirty (30) year Treasury Constant
Maturities) for the November preceding the beginning
of the Plan Year; and
(ii) the prevailing Commissioners' standard table
described in Code Section 807(d)(5)(A), without
regard to any other subparagraphs of Section
807(d)(5) used to determine reserves for group
annuity contracts issued on the date as of which the
present value is being determined (which as of the
Effective Date is the 1983 Group Annuity Mortality
Table, fifty percent (50%) male and fifty percent
(50%) female).
(b) For purposes of Section 4.1(b) Joint and Survivor Annuity,
Actuarial Equivalence shall be computed using the following
formula:
1.0 - (.12)(W) - (.005)[(2.0)(X) - Y - Z],
but not more than one (1),
where W equals the Joint and Survivor Annuity percentage;
X equals the Participant's age nearest birthday;
Y equals the Participant's spouse's age nearest birthday; and
Z equals the age at the Participant's Normal Retirement Date.
(c) For purposes of Section 5.3(a) After Commencement of Benefits,
the Actuarial Equivalent of the remaining benefits otherwise
payable is determined as follows:
(i) for a Participant whose benefit, as of the date of
the Change of Control, is reduced by the
Participant's Social Security Benefit, the Actuarial
Equivalent of the remaining benefits otherwise
payable is determined assuming that the Participant's
Social Security Benefit does not increase after the
Change of Control date;
(ii) for a Participant whose benefit, as of the date of
the Change of Control, is not reduced by a Social
Security Benefit, the Actuarial Equivalent of the
remaining benefits otherwise payable is determined
assuming that the Participant begins receiving
monthly Social Security Benefits on the later of the
Change of Control date or the earliest date on which
the Participant is eligible for a benefit from Social
Security. The amount of the monthly
Alaska Air Group, Inc.
1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995
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Social Security Benefit assumed to be received by the
Participant is determined in accordance with the
Social Security Act in effect as of the date of the
Change of Control and is based on the following
assumptions;
(1) assuming the Participant's Wages exceed the
taxable wage base provided under Section 230
of the Social Security Act for each Plan
Year beginning with the Plan Year in which
the Participant attained age twenty one (21)
and ending with the last Plan Year ending
before the Change of Control; and
(2) assuming the Participant has no Wages during
or after the Plan Year in which the Change
of Control occurs; and
(3) assuming the Social Security Benefits do not
increase after the assumed Social Security
Benefit beginning date.
(d) For purposes of Section 5.3(b) Before Commencement of Benefits
and After Termination and 5.3(c) Before Termination, the
Actuarial Equivalent of the Normal Retirement Benefit is
determined assuming that the Participant begins receiving
monthly Social Security Benefits on the later of the Change of
Control date or the earliest date on which the Participant is
eligible for a benefit from Social Security. The amount of the
monthly Social Security Benefit assumed to be received by the
Participant is determined in accordance with the Social
Security Act in effect as of the date of the Change of
Control, based on the following assumptions:
(i) assuming the Participant's Wages exceed the taxable
wage base provided under Section 230 of the Social
Security Act for each Plan Year beginning with the
Plan Year in which the Participant attained age
twenty one (21) and ending with the last Plan Year
ending before the Change of Control; and
(ii) assuming the Participant has no Wages during or after
the Plan Year in which the Change of Control occurs.
(iii) For purposes of determining the Qualified Plan
Benefit under Section 1.31, Actuarial Equivalence
shall be computed using the definition of Actuarial
Equivalence under the Qualified Plan, unless the form
of payment elected under this Plan is not an option
under the Qualified Plan, in which case Actuarial
Equivalence under Section 1.1(a) above shall apply.
1.2 Administrative Committee
"Administrative Committee" means a committee appointed by the Chairman
of the Board to administer the Plan pursuant to Section 8.
1.3 Affiliated Companies
"Affiliated Companies" or "Affiliate" means:
(a) the Company;
(b) any other corporation which is a member of a controlled group
of corporations which includes the Company (as defined in Code
Section 414(b));
(c) any other trade or business under common control with the
Company (as defined in Code Section 414(c)); or
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1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995
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(d) any other member of an affiliated service group which includes
the Company (as defined in Code Section 414(m)).
1.4 Authorized Leave of Absence
"Authorized Leave of Absence" means any period of approved leave of
absence from the Employer taken by a Participant, and granted by the
Employer in its absolute discretion, including absences for which a
Participant is granted re-employment rights under any Federal or state
law.
1.5 Beneficiary
"Beneficiary" means the person or persons entitled to receive a
Participant's benefits payable under the Plan. The Beneficiary is the
person or persons named in the Participant's latest written designation
filed with the Administrative Committee, provided that the consent of
the Participant's spouse (if any) is required for the election of a
nonspouse Beneficiary and for any subsequent changes of the
Participant's Beneficiary designation. Spousal consent must be in
writing, name the designated Beneficiary and be notarized.
If no designation has been filed with the Administrative Committee, or
if the person or persons designated do not survive the Participant,
the Beneficiary shall be the following persons in the following order
of priority: (1) the surviving spouse (regardless of length of
marriage), and (2) the estate of the Participant.
If the Beneficiary dies after the death of the Participant, but before
full distribution has been made to that Beneficiary, the balance, if
any, shall be distributed to the estate of that deceased Beneficiary.
1.6 Board
"Board" means the Board of Directors of the Company, or a committee
composed of fewer than all of the members of the Board of Directors of
the Company that is authorized to act on behalf of the Board.
1.7 Change of Control
"Change of Control" means the occurrence of any of the following:
(a) the Board approves (or, if approval of the Board is not
required as a matter of law, the shareholders of the Company
approve):
(i) any consolidation or merger of the Company in which
the Company is not the continuing or surviving
corporation or pursuant to which shares of common
stock of the Company would be converted into cash,
securities or other property, other than a merger of
the Company in which the holders of common stock of
the Company immediately prior to the merger have the
same proportionate ownership of common stock of the
surviving corporation immediately after the merger;
(ii) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of
all, or substantially all, the assets of the
Participant's Employer; or
(iii) the adoption of any plan or proposal for the
liquidation or dissolution of the Participant's
Employer;
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1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995
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(b) at any time during a period of twenty-four (24) months, fewer
than a majority of the members of the Board are Incumbent
Directors. "Incumbent Directors" means:
(i) individuals who constituted the Board at the
beginning of such period; and
(ii) individuals who were nominated or elected by all of,
or a committee composed entirely of, the individuals
described in (i); and
(iii) individuals who were nominated or elected by
individuals described in (ii).
(iv) any person (as such term is used in Section 13(d) of
the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) shall, as a result of a tender or
exchange offer, open market purchases,
privately-negotiated purchases or otherwise, become
the beneficial owner (within the meaning of Rule
13d-3 under the Exchange Act), directly or
indirectly, of the then-outstanding securities of the
Company ordinarily (and apart from rights accruing
under special circumstances) having the right to vote
in the election of members of the Board ("Voting
Securities" to be calculated as provided in paragraph
(d) of Rule 13d-3 in the case of rights to acquire
common stock of the Company) representing 20% or
more of the combined voting power of the
then-outstanding Voting Securities.
Unless the Board shall determine otherwise, a Change of Control shall
not be deemed to have occurred by reason of any corporate
reorganization, merger, consolidation, transfer of assets, liquidating
distribution or other transaction entered into solely by and between
the Company and an Employer, or any Affiliates thereof, provided such
transaction has been approved by at least two-thirds (2/3) of the
Incumbent Directors (as defined above) then in office and voting.
1.8 Code
"Code" means the Internal Revenue Code of 1986, as amended and
regulations promulgated under the Code.
1.9 Company
"Company" means Alaska Air Group, Inc., a corporation organized and
existing under the laws of the State of Delaware, and its successors in
interest.
1.10 Company Service
"Company Service" means the period of time measured in completed whole
years, commencing with the date on which an Employee first completes an
Hour of Service for an Affiliated Company during the current period of
employment and ending on the earlier of the date of Termination or the
date the Employee ceases to be an Elected Officer. Non-continuous
periods are aggregated to determine the Employee's total Company
Service. Notwithstanding the foregoing, the Board may increase an
individual's Company Service, in its absolute discretion provided that
any affected Participant shall be notified of any such adjustment.
1.11 Compensation
"Compensation" means the basic monthly salary paid to an Employee,
excluding amounts payable under the Management Incentive Program, any
other bonus, transportation allowances, repayment of expenses,
insurance payments, or similar payments or allowances, but including
any earnings deferred by an Employee for the month under the terms of
any
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1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995
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salary deferral plan including the Alaskasaver Plan maintained by the
Company, and including any pre-tax employee contributions to a
cafeteria plan pursuant to Code Section 125.
1.12 Competing Activity
"Competing Activity" means the following activities if begun without
the prior written consent of the Participant's Employer:
(a) solicitation of business at any time within four (4) years
after Termination that is substantially similar to the
business conducted by an Employer; or
(b) employment at any time within four (4) years after Termination
by another airline serving any of the same geographic area
served by any Affiliate.
The Administrative Committee shall determine in its sole discretion
whether a Participant has or is engaged in a Competing Activity and
shall provide the Participant with written notice of the determination
and of its demand to cease the Competing Activity within thirty (30)
days after the notice. The Administrative Committee's determination of
Competing Activity shall become final and operative if the
Administrative Committee determines that the Competing Activity is
being conducted after the expiration of the thirty (30) day notice
period.
1.13 Disabled
"Disabled" means a condition resulting from demonstrable injury or
disease which will permanently, continuously and wholly prevent the
Employee from engaging in any occupation or performing any work for
remuneration or profit; provided that this term shall not include any
injury or disease which:
(a) resulted from or consists of habitual drunkenness or addiction
to narcotics;
(b) was contracted, suffered or incurred while the Employee was
engaged in, or resulted from having engaged in, a criminal
enterprise;
(c) was intentionally self-inflicted;
(d) arose while the Employee was on Authorized Leave of Absence
without pay or was absent without authorization; or
(e) arose as a result of service in the armed forces of any
country.
1.14 Early Retirement Date
"Early Retirement Date" means the first day of the first month
following the later of:
(a) Termination; and
(b) the Participant's fifty-fifth (55th) birthday, provided that
Termination occurs prior to the participant's sixtieth (60th)
birthday.
If the Participant has reached age sixty (60) on the date of
Termination, Early Retirement Date shall not apply.
1.15 Effective Date
"Effective Date" means August 8, 1995.
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1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995
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1.16 Elected Officer
"Elected Officer" means an officer of an Employer that is elected by
the Board, pursuant to the bylaws of the Employer.
1.17 Elected Officer Service
"Elected Officer Service" means the period(s) of time measured in
completed whole years, during which an Employee is an Elected Officer
of the Company or Alaska Airlines, Inc. and the period(s) during which
an Employee is the Chief Executive Officer of Horizon Air Industries,
Inc. Non-continuous periods of Elected Officer Service are aggregated
to determine an Employee's total years of Elected Officer Service.
Notwithstanding the foregoing, the Board may increase an individual's
Elected Officer Service, in its absolute discretion provided that any
affected Participant shall be notified of any such adjustment.
1.18 Employee
"Employee" means any person who is:
(a) employed by an Employer as a common law employee;
(b) is customarily employed by the Employer for twenty (20) or
more hours per week and for at least five (5) months per
calendar year; and
(c) is compensated on a salary basis.
1.19 Employer
"Employer" means the Company and any Affiliate that adopts this Plan in
writing with the consent of the Board, and agrees to be bound by the
terms and conditions of the Plan and any amendments or modifications
thereto, and which is listed in Appendix II. In the event an Employer
ceases participation in the Plan, the date participation ceases shall
be indicated in the Appendix.
1.20 ERISA
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
1.21 Final Average Monthly Compensation
"Final Average Monthly Compensation" means a Participant's average
Compensation for a period of sixty (60) consecutive months ending on
the earlier of (a) the Participant's Termination or (b) the date of a
Change of Control. If an active Participant has fewer than sixty (60)
consecutive months in the period, Final Average Monthly Compensation
means average Compensation for the lesser of:
(a) the most recent sixty (60) months (whether or not
consecutive); or
(b) the total Company Service.
1.22 Hour of Service
"Hour of Service" means each hour for which an Employee is paid or
entitled to payment for the performance of duties for the Employer or
any Affiliated Company.
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1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995
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1.23 Late Retirement Date
"Late Retirement Date" means the first day of the month next following
the date of the Participant's Termination, provided that Termination
occurs after the Participant's sixtieth (60th) birthday.
1.24 Normal Retirement Age
"Normal Retirement Age" means the first day of the month next following
the Participant's sixtieth (60th) birthday.
1.25 Normal Retirement Date
"Normal Retirement Date" means the first day of the month next
following the Participant's sixtieth (60th) birthday provided the
Participant Terminates on the Participant's sixtieth (60th) birthday.
1.26 Participant
"Participant" means each Elected Officer who participates in this Plan
pursuant to the provisions of Section 2.
1.27 Plan
"Plan" means the Alaska Air Group, Inc. 1995 Elected Officers
Supplementary Retirement Plan, as set forth herein.
1.28 Plan Administrator
"Plan Administrator" means the Company.
1.29 Plan Year
"Plan Year" means the period beginning on the Effective Date and ending
on December 31, 1995, and thereafter each calendar year.
1.30 Qualified Plan
"Qualified Plan" means any defined benefit retirement plan that is
qualified or is intended to be qualified under Code Section 401 (a) and
that is maintained by an Affiliated Company, as amended from time to
time.
1.31 Qualified Plan Benefit
"Qualified Plan Benefit" means the Actuarial Equivalent of the
monthly benefit the Participant is entitled to receive under the
Qualified Plan determined as though benefits under the Qualified Plan
commence at the same time and are payable in the same form of payment
as benefits under this Plan.
1.32 Retirement Date
"Retirement Date" means a Participant's Early, Normal or Late
Retirement Date, whichever applies.
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1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995
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1.33 Social Security Benefit
"Social Security Benefit" means the Primary Insurance Amount, as
defined under the Social Security Act, that is actually received by a
Participant or Beneficiary. Except as provided under Section 1.1(c)
and (d) in determining Change of Control benefits under Section 5.3,
the Administrative Committee shall deem the Participant or Beneficiary
to actually receive the greatest amount of Social Security Benefit at
the earliest date to which the Participant or Beneficiary is eligible
unless the Participant provides evidence to the contrary that is
satisfactory to the Administrative Committee.
1.34 Terminate
"Terminate" and its derivatives as the context requires (such as
"Termination") means no longer employed by an Employer or Affiliated
Company as a common law employee. An Authorized Leave of Absence is not
a Termination.
1.35 Termination For Cause
"Termination For Cause" means Termination for reason of admission by
the Employee or substantiation by the Employer of;
(a) embezzlement, dishonesty or other fraud, conviction of a
felony or conspiracy against an Employer; or
(b) if Termination occurred prior to a Change of Control, any
willful or intentional injury to either an Employer, its
property, or its employees in connection with the business
affairs of an Employer.
1.36 Wages
"Wages" means a Participant's wages as defined under Code Section 3121,
which are subject to Federal Insurance Contribution Act tax under Code
Section 3101.
1.37 Additional Definitions in Plan
The following terms are defined in the following Sections of the Plan:
Benefit Percentage....................................................... 3.1(b)
Change of Control Benefit................................................ 5.1
Joint and Survivor Annuity............................................... 4.1(b)
Review Panel............................................................. 8.8(c)
Target Aggregate Benefit................................................. 3.1(a)
Ten Year Certain and Life Annuity........................................ 4.1(c)
Ten Year Certain Installments............................................ 4.1(d)
Whole Life Annuity....................................................... 4.1(a)
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1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995
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SECTION 2
ELIGIBILITY AND PARTICIPATION
2.1 Eligibility and Participation
An Elected Officer shall become a Participant upon the participation
commencement date specified by the Administrative Committee. Each
Participant, the Participant's participation commencement date, and the
Participant's Company Service and Elected Officer Service, if any, on
the Participant's participation commencement date shall be listed on
Appendix I.
2.2 Termination of Participation
A Participant's participation in the Plan will terminate when the
Participant's benefits under this Plan have been paid in full.
2.3 Inactive Participation
A Participant's active participation will cease when he or she
Terminates or becomes Disabled. A Participant's active participation
also will cease if the Board determines that the Participant ceases to
be an Elected Officer or the Administrative Committee determines that
the Participant failed to make tax payments under Section 10.9. The
date a Participant's active participation ceases shall be listed on
Appendix I, which shall be updated from time to time. An inactive
Participant's benefits shall be determined as though the Participant
Terminates on the date active participation ceases.
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1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995
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SECTION 3
RETIREMENT BENEFITS
3.1 Target Aggregate Benefit
(a) Target Aggregate Benefit Definition
A Participant's "Target Aggregate Benefit" is determined in
the form of a Whole Life Annuity commencing at Normal
Retirement Age and is equal to:
(i) the Participant's Final Average Monthly Compensation
multiplied by the Participant's Benefit Percentage;
or
(ii) if greater than (i) above, the Participant's
Qualified Plan Benefit determined without application
of any Code Section the effect of which is to limit,
reduce or restrict the Participant's Qualified Plan
Benefit, including without limitation Code Sections
415 and 401(a)(17).
Notwithstanding the preceding sentence, a Participant's
benefit under this Plan is determined in accordance with
Sections 3.2, 3.3, 3.4 and 3.5, whichever apply to the
Participant.
(b) Benefit Percentage Definition
A Participant's "Benefit Percentage" is determined in
accordance with the following table:
===================================================================================
ELECTED OFFICER SERVICE
- -----------------------------------------------------------------------------------
10 or
At Least At Least At Least At Least At Least More
5 Years 6 Years 7 Years 8 Years 9 Years Years
- -----------------------------------------------------------------------------------
Company Service
- -----------------------------------------------------------------------------------
0 to 10 Years 50% 50% 50% 55% 55% 55%
- -----------------------------------------------------------------------------------
11 to 15 Years 50% 55% 55% 60% 60% 60%
- -----------------------------------------------------------------------------------
16 to 20 Years 55% 60% 60% 65% 65% 65%
- -----------------------------------------------------------------------------------
21 to 25 Years 60% 65% 65% 70% 70% 70%
- -----------------------------------------------------------------------------------
26 or More 65% 70% 70% 70% 70% 75%
Years
===================================================================================
Notwithstanding the above and without regard to the Participant's Company
Service, a Participant who has less than five (5) years of Elected Officer
Service on the date of a Change of Control shall have the following "Benefit
Percentage" for purposes of determining the Participant's Change of Control
benefit under Section 5.3(b) or 5.3(c):
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1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995
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=====================================================
ELECTED OFFICER SERVICE BENEFIT PERCENTAGE
- -----------------------------------------------------
At least 1 year 10%
- -----------------------------------------------------
At least 2 years 20%
- -----------------------------------------------------
At least 3 years 30%
- -----------------------------------------------------
At least 4 years 40%
=====================================================
3.2 Normal Retirement Benefit
A Participant's monthly Normal Retirement Benefit payable on his or her
Normal Retirement Date is the Participant's Target Aggregate Benefit,
if any, adjusted as follows:
(a) first, Actuarially adjusted for form of payment (if the form
of payment is other than a Whole Life Annuity);
(b) second, reduced by the Qualified Plan Benefit as defined in
Section 1.31;
(c) third, multiplied by the vesting percentage determined under
Section 7; and
(d) fourth, reduced by the amount of the Social Security Benefit
(if any) as defined in Section 1.33.
3.3 Early Retirement Benefit
A Participant's monthly Early Retirement Benefit payable on his or her
Early Retirement Date is the Participant's Target Aggregate Benefit, if
any, adjusted as follows:
(a) first, reduced by one one-hundred-eightieth (1/180th) for each
of the first sixty (60) months that ,the Participant's Early
Retirement Date precedes the Participant's Normal Retirement
Age;
(b) second, Actuarially adjusted for form of payment (if the form
of payment is other than a Whole Life Annuity);
(c) third, reduced by the Qualified Plan Benefit as defined in
Section 1.31;
(d) fourth, multiplied by the vesting percentage determined under
Section 7; and
(e) fifth, reduced by the amount of the Social Security Benefit
(if any) as defined in Section 1.33.
3.4 Late Retirement Benefit
A Participant's monthly Late Retirement Benefit payable on his or her
Late Retirement Date is the Participant's Target Aggregate Benefit, if
any, determined taking into account Elected Officer Service and Company
Service and Final Average Monthly Compensation earned as of the date of
Termination (including service and compensation earned after age sixty
(60)), adjusted as follows:
(a) first, Actuarially adjusted for form of payment (if the form
of payment is other than a Whole Life Annuity);
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1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995
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(b) second, reduced by the Qualified Plan Benefit as defined in
Section 1.31;
(c) third, multiplied by the vesting percentage determined under
Section 7; and
(d) fourth, reduced by the amount of the Social Security Benefit
as defined in Section 1.33.
3.5 Cost of Living Adjustment
The Board may adjust the amount of benefits then being paid to any or
all Participants and Beneficiaries to reflect increases in the cost of
living The adjustment shall be made in the amount and at the times
determined solely in the discretion of the Board.
Alaska Air Group, Inc.
1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995
13
SECTION 4
PAYMENT FORMS
4.1 Forms of Payment
The following forms of benefit payment are options under the Plan,
subject to the conditions of Sections 4.2 and 4.3.
(a) Whole Life Annuity
"Whole Life Annuity" means monthly payments beginning on the
Retirement Date and ending the first day of the month
preceding the Participant's date of death.
(b) Joint and Survivor Annuity
"Joint and Survivor Annuity" means reduced monthly payments to
a Participant from the Retirement Date to the first day of the
month preceding the Participant's date of death, and if the
Participant predeceases the Participant's Beneficiary, monthly
payments to the Participant's Beneficiary equal to fifty
percent (50%), sixty-six and two-thirds percent (66-2/3%),
seventy-five percent (75%), or one hundred percent (100%) of
the reduced amount payable to the Participant, beginning on
the Participant's date of death and ending the first day of
the month preceding the Beneficiary's date of death. The
Participant shall elect which percentage applies at the same
time that the Participant elects a Joint and Survivor Annuity.
A Joint and Survivor Annuity shall be Actuarially Equivalent
to the Participant's benefit payable in the form of a Whole
Life Annuity.
If the Participant's Beneficiary dies after the Participant's
benefit payments begin, the Participant's payments will be the
same reduced amount as otherwise payable under the Joint and
Survivor Annuity. If the Participant's Beneficiary dies before
the date as of which the Participant's benefit payments are to
begin, any election of a form of benefit under this Section
would be canceled automatically. If the Participant dies
before the date as of which the Participant's benefit payments
are to begin, the Beneficiary shall not be entitled to receive
any payments under this Section. However, a spouse may be
entitled to a death benefit under Section 6.
(c) Ten Year Certain and Life Annuity
"Ten Year Certain and Life Annuity" means reduced monthly
payments from the Retirement Date to the first of the month
preceding the Participant's death, but in no event will less
than one hundred and twenty (120) equal monthly payments be
made. If the Participant dies before receiving one hundred and
twenty (120) monthly payments, the remaining payments shall
continue to be made to the Participant's Beneficiary. A Ten
Year Certain and Life Annuity shall be Actuarially Equivalent
to the Participant's benefit payable in the form of a Whole
Life Annuity.
(d) Ten Year Certain Installments
"Ten Year Certain Installments" means one hundred and twenty
(120) equal monthly payments that are Actuarially Equivalent
to the Participant's benefits payable as a Whole Life Annuity.
If the Participant dies before receiving one hundred and
twenty (120) monthly payments, the remaining payments shall
continue to be made to the Participant's Beneficiary.
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1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995
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4.2 Automatic Form of Payment
Unless a Participant elects otherwise in accordance with Section 4.3,
the Participant's benefit shall be paid as provided below:
(a) Married Participant
A Participant who is married on the Participant's Retirement
Date shall receive his or her benefits in the form of a one
hundred percent (100%) Joint and Survivor Annuity.
(b) Unmarried Participant
A Participant who is not married on the Participant's
Retirement Date shall receive the Participant's benefits in
the form of a Ten Year Certain and Life Annuity.
4.3 Payment Form Election
(a) Advance Election
Subject to approval of the Administrative Committee, a
Participant may elect one of the forms of payment of benefits
under Section 4.1 in lieu of the automatic payment form under
Section 4.2 as long as the Participant's election is made at
least one (1) year before the Participant's Termination.
Subject to approval of the Administrative Committee, a
Participant may change a prior payment-form election, provided
that the change is made at least one (1) year before the
Participant's Termination. Once benefit payments commence,
the payment form cannot be changed by the Participant or
Beneficiary.
(b) Unanticipated Changes In Life Circumstances
Notwithstanding the preceding Section 4.3(a), subject to
approval of the Administrative Committee, Participant may
elect a payment form or change a prior payment-form election
less than one (1) year before Termination, provided that the
Participant demonstrates that the Participant has experienced
or will experience an unanticipated change in life
circumstances that is involuntary and with respect to which
the participant's request payment form is consistent. Examples
of an unanticipated change in life circumstances that satisfy
this Section 4.3 include (but are not limited to) involuntary
Termination and death of a spouse.
(c) Form and Manner of Election
All payment-form elections shall be made in the form and
manner prescribed by the Administrative Committee and shall be
subject to approval of the Administrative Committee.
Alaska Air Group, Inc.
1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995
15
SECTION 5
CHANGE OF CONTROL BENEFITS
5.1 Change of Control Benefit
Notwithstanding any other provision of the Plan, in the event of a
Change of Control, each Participant (or his or her Beneficiary), except
a Participant Terminated For Cause before the date of the Change of
Control, shall receive a Change of Control benefit in accordance with
this Section, in lieu of all other benefits payable under this Plan.
5.2 Form of Payment
All Change of Control Benefits shall be paid in the form of a single
lump sum payment determined under Section 5.3, within sixty (60) days
after a Change of Control. After payment of all Change of Control
Benefits, this Plan shall terminate automatically, and no Participant
or Beneficiary will have any further rights under the Plan.
5.3 Amount of Change of Control Benefit
(a) After Commencement of Benefits
If benefit payments have commenced as of the date of the
Change of Control, any Participant, spouse, or Beneficiary
receiving benefits as of the date of the Change of Control
shall receive a single lump sum payment that is the Actuarial
Equivalent of the remaining benefits otherwise payable.
(b) Before Commencement of Benefits And After Termination
If the date of the Change of Control is after a Participant's
Termination, but before benefit payments have begun, the
Participant shall receive a single lump sum payment that is
Actuarially Equivalent to the Participant's Normal Retirement
Benefit (if any).
(c) Before Termination
If the date of the Change of Control is before a Participant's
Termination, the Participant shall receive a single lump sum
payment that is Actuarially Equivalent to the Participant's
Normal Retirement Benefit (if any) determined as though the
Participant Terminated on the date of the Change of Control.
Alaska Air Group, Inc.
1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995
16
SECTION 6
DEATH BENEFITS
6.1 Death Benefits Prior to Benefit Commencement
In the event a married Participant dies before benefit payments begin,
he or she shall become one hundred percent (100%) vested upon death
pursuant to Section 7.1(c) and his or her spouse shall receive a death
benefit as described below:
(a) Death Following Early Retirement Date
If the Participant dies after reaching age fifty-five (55) but
before benefit commencement, the spouse's benefit shall be
paid monthly from the first of the month coinciding with or
following the Participant's death through the first of the
month preceding the spouse's death. The benefit shall equal
the amount payable to the surviving spouse under a one hundred
percent (100%) Joint and Survivor Annuity form of payment as
if the Participant had commenced receiving Early Retirement
Benefit, Normal Retirement Benefit, or Late Retirement Benefit
payments (whichever applies) as of the date spouse death
benefits commence, based upon the Participant's vested Target
Aggregate Benefit, if any, at the date of death.
(b) Death Prior to Early Retirement Date
If the Participant dies prior to reaching age fifty-five (55),
the spouse's death benefit shall be paid monthly from the
Participant's earliest Retirement Date (determined as if the
Participant had survived but was not employed after the date
of death) through the first of the month preceding the
spouse's death. The benefit shall equal the amount payable to
the surviving spouse under a one hundred percent (100%) Joint
and Survivor Annuity form of payment as if the Participant had
Terminated on the date of death, survived to the date spouse
benefits commence and commenced receiving Early Retirement
Benefit or Normal Retirement Benefit payments (whichever
applies) on such date. If the surviving spouse dies before
benefit payments begin, no benefits shall be payable to the
spouse's estate or beneficiaries.
6.2 Death Benefits After Benefit Commencement
In the event a Participant dies after benefit payments have
commenced, his or her Beneficiary may be entitled to receive a
benefit depending on the form of payment elected by the
Participant. The benefit payable to a Beneficiary is described
in Section 4.1(b) Joint and Survivor Annuity, 4.1(c) Ten Year
Certain and Life Annuity or 4.1(d) Ten Year Certain
Installments, whichever applies according to the form elected
by the Participant.
Alaska Air Group, Inc.
1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995
17
SECTION 7
VESTING
7.1 Vesting
Except as provided in Section 7.2, each Participant shall have at all
times a vested, nonforfeitable right to his or her Target Aggregate
Benefit as adjusted pursuant to Sections 3.2, 3.3 and 3.4, if any,
multiplied by the appropriate vesting percentage determined in
accordance with whichever of the following tables produces the greatest
vesting percentage:
(a) Schedule A
A Participant who:
(i) has reached age fifty (50) and has completed Company
Service of at least fifteen (15) years; or
(ii) Terminates on or after age sixty (60)
shall have the following vesting percentage in his or her
benefit, if any:
- ----------------------------------------------------
ELECTED OFFICER SERVICE VESTING PERCENTAGE
- ----------------------------------------------------
5 50%
- --------------------------------------------
6 60%
- --------------------------------------------
7 70%
- --------------------------------------------
8 80%
- --------------------------------------------
9 90%
- --------------------------------------------
10 100%
- --------------------------------------------
(b) Schedule B
A Participant who has reached age fifty (50) and has completed
Elected Officer Service of at least ten (10) years shall be
one hundred percent (100%) vested in his or her benefit, if
any.
(c) Death or Disability
A Participant who dies prior to Termination or becomes
Disabled shall be one hundred percent (100%) vested in his or
her Target Aggregate Benefit as adjusted pursuant to Sections
3.2, 3.3 and 3.4, if any, on the date of death or Disability.
(d) Change of Control
Notwithstanding any other provision of the Plan to the
contrary, including without limitation Sections 1.10, 1.35,
7.2(a) and 7.2(b), all Participants who are Employees when a
Change of Control occurs shall be one hundred percent (100%)
vested in their Target Aggregate Benefit as adjusted pursuant
to Sections 3.2, 3.3 and 3.4, if any, (without regard to the
Participant's age) in the event of a Change of Control.
Alaska Air Group, Inc.
1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995
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(e) Termination of Plan
In the event that the Plan is Terminated in whole or in part,
all affected Participants shall be one hundred percent (100%)
vested in his or her Target Aggregate Benefit as adjusted
pursuant to Sections 3.2, 3.3 and 3,4, if any.
7.2 Forfeiture
(a) Termination
In the event a Participant Terminates:
(i) before reaching age fifty (50) and before a Change of
Control; or
(ii) before becoming one hundred percent (100%) vested;
the Participant's nonvested portion of the Target Aggregate
Benefit shall be forfeited.
(b) Termination For Cause and Competing Activity
Notwithstanding any Plan provision to the contrary other than
Section 7.l(d), a Participant's vested and nonvested Target
Aggregate Benefit and any death benefit will be forfeited in
their entirety and will not be reinstated for any reason upon:
(i) the Participant's Termination for Cause; or
(ii) a determination that the Participant is engaged in a
Competing Activity.
This forfeiture clause has no effect on benefits payable under
the Qualified Plan.
Alaska Air Group, Inc.
1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995
19
SECTION 8
POWERS AND DUTIES OF THE COMMITTEE
8.1 Appointment of Administrative Committee
The Plan shall be administered by the Administrative Committee which
shall be appointed by the Chairman of the Board. The Administrative
Committee shall be composed of at least three (3) members, all of whom
are Elected Officers. No bond or other security shall be required of
any Administrative Committee member in such capacity.
The Chairman of the Board shall be the Chairman of the Administrative
Committee. Administrative Committee members may participate in the Plan
if they are otherwise eligible to do so.
8.2 Powers and Duties
The Administrative Committee shall have the power and the duty to take
all action and to make all decisions necessary or proper to carry out
the Plan, including the discretionary authority to interpret the
provisions of the Plan and the facts and circumstances of claims for
benefits. The Administrative Committee shall have the absolute
discretion to decide all issues of fact or law. Any decision by the
Administrative Committee that is not shown to be an abuse of discretion
must be upheld by a court of law. Without limiting the foregoing, the
Administrative Committee shall have the following administrative powers
and duties:
(a) to require any Participant or Beneficiary to furnish
information as they may request for the purpose of the proper
administration of the Plan as a condition to receiving any
benefit under the Plan;
(b) to make and enforce rules and regulations and prescribe the
use of forms as, they shall deem necessary for the efficient
administration of the Plan;
(c) to interpret the Plan and to resolve ambiguities,
inconsistencies and omissions in a nondiscriminatory manner;
(d) to determine tax withholding;
(e) to compute the amount of benefits which shall be payable to
any person in accordance with the provisions of the Plan; and
(f) to delegate any of their administrative powers or duties
hereunder to any of their agents or employees,
8.3 Administrative Committee Procedures
A majority of the Administrative Committee members in office may
fulfill any act which the Plan authorizes or requires of the
Administrative Committee, provided that no Administrative Committee
member who participates in the Plan shall vote on any matter that
pertains to the member or to the member's rights and/or benefits under
the Plan unless such matter pertains to all Participants or all
Participant's rights and/or benefits under the Plan. Each member of the
Administrative Committee shall be recused from voting on any action
pertaining solely to the member or members of the Administrative
Committee or their rights and/or benefits under the Plan, and the
action shall be taken by a majority of the remaining members of the
Administrative Committee, or if the remaining members do not constitute
a quorum, by the Compensation Committee of the Board.
Alaska Air Group, Inc.
1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995
20
The action of such majority of the Administrative Committee expressed
from time to time by a vote at a meeting, or in writing without a
meeting, shall constitute the action of the Administrative Committee
and shall have the same effect for all purposes as if assented to by
all Administrative Committee members. The majority of Administrative
Committee members may delegate in writing to any of them the authority
to give certified notice in writing of any action taken by the
Administrative Committee.
8.4 Appointment of Agents
The Administrative Committee may appoint such actuaries, accountants,
counsel, specialists, and other persons or organizations as they shall
deem necessary for administration of the Plan and they shall be
entitled to prudently rely upon any tables, valuations, certificates,
opinions, or reports which shall be furnished to them by such persons
or organizations.
8.5 Administrative Committee Expenses
The Administrative Committee shall serve without compensation for
services as such, but any reasonable expenses incurred by them in the
performance of their duties as Administrative Committee members shall
be paid by the Company.
8.6 Administrative Expenses
All expenses incurred by the Administrative Committee in connection
with the administration of the Plan, including but not limited to the
compensation of any actuary, accountant, counsel, specialist, or other
persons or organizations who shall be employed by the Administrative
Committee in connection with the administration thereof, shall be paid
by the Company.
8.7 Determinations
All determinations hereunder made by the Board or the Administrative
Committee shall be made in the sole and absolute discretion of the
Board, the Compensation Committee of the Board or of the Administrative
Committee, as the case may be.
In the event that any disputed matter shall arise hereunder, including,
without in any manner limiting the generality of the foregoing, any
matter relating to the eligibility of any person to participate under
the Plan, the participation of any person under the Plan, the amounts
payable to any person under the Plan, and the applicability and the
interpretation of the provisions of the Plan, the decision of the
Administrative Committee, Board, or Compensation Committee of the Board
upon such matter shall be binding and conclusive upon all persons,
including, without in any manner limiting the generality of the
foregoing, the Company, the Board, all persons at any time in the
employ of the Company, the Participants and their Beneficiaries, and
upon the respective successors, assigns, executors, administrators,
heirs, next of kin, and distributees of all the foregoing.
8.8 Claim and Review Procedure
(a) Application for Benefits
Any application for benefits under the Plan shall be submitted
to the Company at its principal office. Such application shall
be in writing on the prescribed form and shall be signed by
the applicant.
Alaska Air Group, Inc.
1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995
21
(b) Denial of Applications
In the event that any application for benefits is denied in
whole or in part, the Company shall notify the applicant in
writing of the right to a review of the denial. Such written
notice shall set forth, in a manner calculated to
be understood by the applicant, specific reasons for the
denial, specific references to the Plan provisions on which
the denial was based, a description of any information or
material necessary to perfect the application, an explanation
of why such material is necessary, and an explanation of the
Plan's review procedure. Such written notice shall be given to
the applicant within 90 days after the Company receives the
application unless special circumstances require an extension
of time for processing the application. In no event shall such
an extension exceed a period of ninety (90) days after the end
of the initial 90-day period. If such an extension is
required, written notice thereof shall be furnished to the
applicant before the end of the initial 90-day period. Such
notice shall indicate the special circumstances requiring an
extension of time and the date by which the Company expects to
render a decision. If written notice is not given to the
applicant within the period prescribed by this Subsection (b),
the application shall be deemed to have been denied for
purposes of Subsection (d) upon the expiration of such period.
(c) Review Panel
The Company from time to time shall appoint a Review Panel.
The "Review Panel" shall consist of three or more individuals
who may (but need not) be Employees of the Company and shall
be the named fiduciary with the authority to act on any
Employee benefit appeal. Members of the Administrative
Committee may be appointed to the Review Panel. The Review
Panel has discretionary authority to decide all issues of fact
or law. Any decision by the Review Panel that is not
established to be an abuse of discretion must be upheld by a
court of law.
(d) Requests for Review
Any person whose application for benefits is denied in whole
or in part (or such person's duly authorized representative)
may appeal from the denial by submitting to the Review Panel a
request for a review of such application within six (6) months
after receiving written notice of the denial. The Review Panel
shall give the applicant or such representative an opportunity
to review pertinent documents in preparing such request for
review and to submit issues and comments in writing. The
request for review shall be in writing and shall be addressed
to the Company's principal office. The request for review
shall set forth all of the grounds on which it is based, all
facts in support of the request, and any other matters which
the applicant deems pertinent. The Review Panel may require
the applicant to submit such additional facts, documents or
other material as it may deem necessary or appropriate in
making its review.
(e) Decisions on Review
The Review Panel shall act upon each request for review within
sixty (60) days after receipt thereof, unless special
circumstances require an extension of time for processing, but
in no event shall the decision on review be rendered more than
one hundred twenty (120) days after the Review Panel receives
the request for review. If such an extension is required,
written notice thereof shall be furnished to the applicant
before the end of the initial sixty (60)-day period. The
Review Panel shall give prompt, written notice of its decision
to the applicant and to the Company. In the event that the
Review Panel confirms the denial of the application for
benefits in whole or in part, such notice shall set forth, in
a manner calculated to be understood by the applicant, the
specific reasons for such denial and specific references to
the
Alaska Air Group, Inc.
1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995
22
Plan provisions on which the decision is based. To the extent
that the Review Panel overrules the denial of the application
for benefits, such benefits shall be paid to the applicant.
(f) Rules and Procedures
The Review Panel shall adopt such rules and procedures,
consistent with ERISA and the Plan, as it deems necessary or
appropriate in carrying out its responsibilities under this
Section 8.8
(g) Exhaustion of Administrative Remedies
No legal or equitable action for benefits under the Plan shall
be brought unless and until the claimant (1) has submitted a
written application for benefits in accordance with Subsection
(a); (2) has been notified that the application is denied; (3)
has filed a written request for a review of the application in
accordance with Subsection (d); and (4) has been notified in
writing that the Review Panel has affirmed the denial of the
application; provided, however, that an action may be brought
after the Company or the Review Panel has failed to act on the
claim within the time prescribed in Subsection (b) and
Subsection (e), respectively.
8.9 Exemption From Liability/Indemnification
The members of the Administrative Committee, collectively and
individually, shall be free from all liability, joint or
several, for their acts, omissions, and conduct, and for the
acts, omissions, and conduct of their duly-appointed agents,
in the administration of the Plan, except for those acts or
omissions and conduct resulting from willful misconduct or
lack of good faith.
The Company shall indemnify each member of the Administrative
Committee, and any other employee, officer, or director of the
Company against any claims, loss, damage, expense, or
liability, by insurance or otherwise (other than amounts paid
in settlement not approved by the Company), reasonably
incurred by the individual in connection with any action or
failure to act by reason of membership on the Administrative
Committee or performance of an authorized duty or
responsibility for or on behalf of the Company pursuant to the
Plan, unless the same is judicially determined to be the
result of the individual's gross negligence or willful
misconduct. Such indemnification by the Company shall be made
only to the extent such expense or liability is not payable to
or on behalf of such person under any liability insurance
coverage. The foregoing right to indemnification shall be in
addition to any other rights to which any such person may be
entitled as a matter of law.
Alaska Air Group, Inc.
1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995
23
SECTION 9
AMENDMENT AND TERMINATION
9.1 Amendment or Termination
(a) Right to Amend or Terminate
Except as otherwise provided in this Section, the Company
reserves the right at any time and from time to time to amend
any or all provisions of the Plan or terminate the Plan, in
whole or in part, for any reason and without consent of any
person, and without liability to any person for such amendment
or termination. Notwithstanding the preceding sentence, no
amendment of the Plan shall:
(i) adversely affect the benefits or rights of a
Participant or Beneficiary under the Plan (other than
election or availability of a form of benefit payment
under Section 4) earned and vested as of the
effective date of the amendment without the written
consent of each affected Participant and Beneficiary
unless such change is required by law or regulations
or is necessary to avoid unfavorable tax
consequences; or
(ii) adversely affect the features of the Plan in effect
as of the effective date of the amendment without the
written consent of each affected Participant and
Beneficiary unless such change is required by law or
regulations or is necessary to avoid unfavorable tax
consequences; or
(iii) be adopted or become effective after a Change of
Control without the written consent of all
Participants and Beneficiaries.
(b) Plan Termination
Nothing in this Plan shall be construed to require
continuation of benefit accruals under this Plan or
continuation of this Plan with respect to existing or future
Participants or Beneficiaries. Notwithstanding Section
9.l(a)(i), the Company may amend the Plan to cease all future
benefit accruals and shall pay benefits according to the then
existing or amended distribution provisions. Notwithstanding
Section 9.1(a)(i), the Company may terminate the Plan and
shall distribute all benefits as soon as administratively
feasible in the form of single lump sum payments calculated in
the same manner as lump sum benefits are calculated in the
event of a Change of Control pursuant to Section 5.3.
(c) Procedures
Any amendment or termination of the Plan shall be adopted by
the Board, made in writing, and executed on behalf of the
Company by an authorized officer of the Company.
Alaska Air Group, Inc.
1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995
24
SECTION 10
MISCELLANEOUS PROVISIONS
10.1 Appendices
Any Appendix to this Plan, as amended from time to time, is
incorporated into the Plan and made a part of the terms and conditions
of this Plan.
10.2 ERISA Status
This Plan shall constitute a plan which is unfunded and which is
maintained primarily for the purpose of providing deferred compensation
benefits for a select group of management or highly compensated
employees within the meaning of Sections 201(2), 301(a)(3), and
401(a)(l) of ERISA.
10.3 Unfunded Nature of the Obligation
The obligation to pay benefits under the Plan shall at all times be an
unfunded, unsecured obligation of the Employer. The Employer is not
obligated to purchase any annuity contracts to provide benefits under
the Plan, to establish a trust for the purpose of receiving
contributions and paying benefits under the Plan, or to otherwise set
aside funds for the purpose of providing Plan benefits.
10.4 Facility of Payment
In the event any benefit under this Plan shall be payable to a person
who is under legal disability or is in any way incapacitated so as to
be unable to manage his or her financial affairs, the Administrative
Committee may direct payment of such benefit to a duly appointed
guardian, committee or other legal representative of such person, or in
the absence of a guardian or legal representative, to a custodian for
such person under a Uniform Gifts to Minors Act or to any relative of
such person by blood or marriage, for such person's benefit. Any
payment made in good faith pursuant to this provision shall fully
discharge the Company and the Plan of any liability to the extent of
such payment.
10.5 Governing Law
The Plan shall be construed in accordance with ERISA and the laws of
the State of Washington, to the extent not preempted by ERISA.
10.6 Limitation on Assignment
Benefits under this Plan may not be assigned, sold, transferred, or
encumbered, and any attempt to do so shall be void. A Participant's or
Beneficiary's interest in benefits under the Plan shall not be subject
to debts or liabilities of any kind and shall not be subject to
attachment, garnishment or other legal process.
10.7 No Additional Rights
No person shall have any rights under the Plan, except as, and only to
the extent, expressly provided for in the Plan. Neither the
establishment or amendment of the Plan or the creation of any fund or
account, or the payment of benefits, nor any action of an Employer or
the Administrative Committee shall be held or construed to confer upon
any person any right to be continued as an employee, or, upon
dismissal, any right or interest in any account or fund
Alaska Air Group, Inc.
1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995
25
other than as herein provided. The Company and the other Employers
expressly reserve the right to discharge any employee at any time with
or without cause.
10.8 Notice
All notices, statements, reports and other communications from the
Company or Administrative Committee to any employee or other person
required or permitted under the Plan shall be deemed to have been duly
given when delivered to, or when mailed by first-class mail, postage
prepaid and addressed to, such employee, or other person at his or her
address last appearing on the Company's records.
10.9 Severability
If any provision of this Plan is held unenforceable or invalid for any
reason, such determination shall not affect the remaining provisions of
this Plan which shall be construed as if the unenforceable or invalid
provisions had never been included.
10.10 Tax Consequences and Withholding
The Company does not represent or guarantee that any particular federal
or state income, payroll, Social Security, or other tax consequences
will result from participation in the Plan. A Participant should
consult with professional tax advisors to determine the tax
consequences of his or her participation in the Plan.
All payments of federal or state income, Social Security, payroll, or
other tax required with respect to contributions or benefits under the
Plan shall be satisfied by withholding the required amount from the
Participant's salary or Plan benefit payment, or if the Participant's
salary or benefit payment is insufficient to satisfy any required tax
payments, the Participant shall satisfy the payments in a manner
approved by the Administrative Committee.
Determinations by the Administrative Committee with respect to tax
withholding shall be binding on the Participant and Beneficiaries.
Alaska Air Group, Inc.
1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995
26
EXECUTION/SIGNATURE PAGE
IN WITNESS WHEREOF, the Company has caused this Plan to be signed by
its duly authorized officer this 8th day of August, 1995.
ALASKA AIR GROUP, INC.
Witness:
/s/ Keith Loveless By: /s/ John F. Kelly
- ------------------ -----------------
Keith Loveless John F. Kelly
Assistant Secretary Chairman, President and
Chief Executive Officer
Alaska Air Group, Inc.
1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995
27
APPENDIX I
TO THE
ALASKA AIR GROUP, INC.
1995 ELECTED OFFICERS SUPPLEMENTARY RETIREMENT PLAN
(as of July 1,2000)
Pursuant to Section 2 of the Plan, the following Elected Officers shall be
Participants in the Plan beginning on the date listed below and shall cease to
be active Participants on the date listed below:
Participation Active
Commencement Company Elected Officer Participation
Name Date (PCD) Service on PCD Service on PCD Ceases
1. William S. Ayer August 8, 1995 13.02 0
2. Michel A. Swanigan October 23, 1995 15.54 0 January 31,2000
3. Keith Loveless May 21, 1996 10.06 0
4. Dennis J. Hamel July 29, 1997 13.88 0
5. William L. MacKay July 29, 1997 20.93 0
6. Robert M. Reeder July 29, 1997 7.38 0
7. Gregg A. Saretsky March 15, 1998 0 0
8. Robin L. Krueger January 26, 1 999 15.06 0 July 1, 1999
9. Bradley D. Tilden January 26, 1999 7.93 0
10. William F. Weaver October 26, 1999 2.90 0
11. David A. Prewitt June 1, 2000 0 0
ACKNOWLEDGED AND ACCEPTED
ALASKA AIR GROUP, INC.
By:________________________
John F. Kelly
Chairman and Chief Executive Officer
Date:______________________
Alaska Air Group, Inc.
1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995
28
APPENDIX II
TO THE
ALASKA AIR GROUP, INC.
1995 ELECTED OFFICERS SUPPLEMENTARY RETIREMENT PLAN
"Employer" as defined in Section 1.19 shall also include the following employers
during the following period of time.
Employer Beginning Date Ending Date
-------- -------------- -----------
1. Alaska Airlines, Inc. August 8, 1995
2. Horizon Air Industries, Inc. August 8, 1995
ACKNOWLEDGED AND ACCEPTED
ALASKA AIR GROUP, INC.
By: /s/ John F. Kelly
-----------------
John F. Kelly
Chairman and Chief Executive Officer
Date: 12/31/97
Alaska Air Group, Inc.
1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995 29
FIRST AMENDMENT
TO THE
ALASKA AIR GROUP, INC.
1995 ELECTED OFFICERS SUPPLEMENTARY RETIREMENT PLAN
The Alaska Air Group, Inc. 1995 Elected Officers Supplementary
Retirement Plan, effective August 8, 1995 (the "Plan"), is amended as follows,
effective January 30, 2002 unless otherwise specified below:
I. The first sentence of Section 1.1 Actuarial Equivalence is deleted in
its entirety and replaced with the following:
"Actuarial Equivalence" and its derivatives as the context requires
(such as "Actuarially Equivalent") mean that the present value of two
(2) single sum payments, two (2) series of payments, a single sum and a
series of payments, or payments commencing at different times, are of
equal value when computed as follows:
II. Section 1.30 Qualified Plan is deleted in its entirety and replaced
with the following;
1.30 Qualified Defined Benefit Plan
"Qualified Defined Benefit Plan" means the Alaska Air Group, Inc.
Retirement Plan for Salaried Employees, as amended and restated
effective January 1, 2000 and as subsequently amended.
III. Section 1.31 Qualified Plan Benefit is deleted in its entirety and
replaced with the following, and Section 1.32 Retirement Date is
redesignated as Section 1.31:
Section 1.32 Retirement Offset
"Retirement Offset" means the sum of (a), (b) and (c) below:
(a) Qualified Plan Offset
The Actuarial Equivalent of the vested monthly benefit the
Participant is actually entitled to receive under the
Qualified Defined Benefit Plan determined as though benefits
under the Qualified Defined Benefit Plan commence at the same
time and are payable in the same form of payment as benefits
under this Plan, adjusted as follows:
(i) Reduction of Offset for Non-Officer Service
The amount determined under (a) shall be reduced by
the Actuarial Equivalent of the vested monthly
benefit the Participant would be entitled
1
to receive under the Qualified Defined Benefit Plan
if the Participant's Credited Service (as defined in
the Qualified Defined Benefit Plan) earned after the
date the Participant became an Elected Officer were
disregarded in determining the benefit; and
(ii) Increase for Enhanced Match Election
If the Participant elected the enhanced match
pursuant to Section 2.6 of the Qualified Defined
Benefit Plan, the amount determined under (a) shall
be increased by the Actuarial Equivalent of the
additional vested monthly benefit the Participant
would have been entitled to receive under the
Qualified Defined Benefit Plan if the Participant had
not elected the enhanced match; and
(b) Phantom Offset
If the Participant has never been a participant in the
Qualified Defined Benefit Plan, the Actuarial Equivalent of
the vested monthly benefit that would be determined under (a),
as adjusted by (a)(i) if the Participant had participated in
the Qualified Defined Benefit Plan; and
(c) Supplementary Plan Offset
The Actuarial Equivalent of the vested monthly benefit the
Participant is actually entitled to receive under a
Supplementary Plan, determined as though benefits under the
Supplementary Plan commence at the same time and are payable
in the same form of payment as benefits under this Plan,
reduced by the Actuarial Equivalent of the vested monthly
benefit the Participant would be entitled to receive under the
Supplementary Plan if the Participant's service after the date
the Participant became an Elected Officer were disregarded in
determining the benefit.
IV. The following new Section 1.34 Supplementary Plan is inserted
immediately after Section 1.33 Social Security Benefit and the
subsequent Sections are renumbered 1.35 through 1.38:
Section 1.34 Supplementary Plan
"Supplementary Plan" means any unfunded deferred compensation plan
maintained by an Employer:
(a) that is exempted (or is intended to be exempted) from Parts 2,
3 and 4 of Subtitle B of ERISA under ERISA Sections 201(2),
301(3) and 401(a)(l);
(b) that provides a defined benefit at retirement (rather than
defined contributions to the Participant's account); and
2
(c) that is intended by its stated terms to supplement or replace
benefits provided under the Qualified Defined Benefit Plan.
V. Section 3.2 Normal Retirement Benefit, subsection (b) is deleted in its
entirety and replaced with the following:
(b) second, reduced by the Retirement Offset, as defined in
Section 1.32;
VI. Section 3.3 Early Retirement Benefit subsection (c) is deleted in its
entirety and replaced with the following:
(c) third, reduced by the Retirement Offset, as defined in Section
1.32;
VII. Section 3.4 Late Retirement Benefit, subsection (b) is deleted in its
entirety and replaced with the following:
(b) second, reduced by the Retirement Offset, as defined in
Section 1.32;
VIII. Effective January 1, 2002, Section 8.8 Claim and Review Procedure is
deleted in its entirety and replaced with the following:
8.8 Claim and Review Procedures
(a) Application for Benefits
Any person or the person's authorized representative
(the "Claimant") may apply for, claim, or request
information about, Plan benefits by submitting a
signed, written application to the Administrative
Committee.
(b) Denial of Application
If the Administrative Committee denies an application
in whole or in part, the Administrative Committee
shall notify the Claimant in writing or
electronically of the denial and the Claimant's right
to request a review of the denial. The notice of
denial shall set forth, in a manner calculated to be
understood by the Claimant:
(i) specific reasons for the denial,
(ii) specific references to the applicable Plan
provisions on which the denial was based,
3
(iii) a description of any information or material
necessary to perfect the application and an
explanation of why such material is
necessary,
(iv) an explanation of the Plan's review
procedure and the time limits for review,
and
(v) a statement of the Claimant's right to bring
a civil action under ERISA following an
adverse determination on review.
The denial notice will be given to the Claimant
within ninety (90) days after the Administrative
Committee receives the application unless special
circumstances require an extension of time for
processing the application. In no event will an
extension exceed a period of ninety (90) days after
the end of the initial 90-day period. If an extension
is required, written notice of the extension shall be
furnished to the Claimant before the end of the
initial 90-day period. The extension notice will
indicate the special circumstances requiring an
extension of time and the date by which the
Administrative Committee expects to render a
decision. If a written denial notice is not given to
the Claimant within the period prescribed by this
Section 8.8(b), the application is deemed to have
been denied for purposes of section 8.8(d).
(c) Review Panel
From time to time, the Company shall appoint a Review
Panel. The "Review Panel" will consist of three (3)
or more individuals who may be (but need not be)
Employees of the Company and shall be the named
fiduciary" with authority to act on any appeal of a
denied application. Members of the Administrative
Committee may be appointed to the Review Panel. The
Review Panel has discretionary authority to decide
all issues of fact or law. Any decision by the Review
Panel that is not established to be an abuse of
discretion must be upheld.
(d) Request for Review
A Claimant whose application is denied, in whole or
in part, may appeal the denial by submitting to the
Review Panel a written request for a review of the
denial. The request for review must be submitted to
the Review Panel within sixty (60) days after the
Claimant receives written notice of the denial. Upon
request and free of charge, the Claimant shall be
permitted reasonable access to, and copies of,
relevant information and documents. The
4
Review Panel shall give the Claimant an opportunity
to submit written information, documents, records and
comments in support of the appeal. In making its
decision, the Review panel will take the Claimant's
submissions into account, regardless of whether this
information was available in considering the initial
request.
(e) Decision on Review
The Review Panel will deliver to the Claimant an
electronic or written decision within a reasonable
time, but no later than sixty (60) days after receipt
of the Claimant's request for review. In special
circumstances, the period may be extended up to an
additional sixty (60) days. If an extension is
required, written notice of the extension will be
furnished to the Claimant before the end of the
initial 60-day period. The extension notice will
indicate the special circumstances requiring an
extension of time and the date by which the Review
Panel expects to render a decision. If a written
decision is not given to the Claimant within the
period prescribed by this Section 8.8(e), the
decision is deemed to be adverse. If the decision is
adverse, in whole or in part, the decision shall set
forth in a manner calculated to be understood by the
Claimant:
(i) specific reasons for the adverse decision
with specific references to the applicable
Plan provisions on which the decision was
based,
(ii) a statement that, upon request and free of
charge, the Claimant is entitled reasonable
access to, and copies of, relevant
information and documents,
(iii) a description of any voluntary appeals
procedures and a statement of the Claimant's
right to obtain information about these
procedures, and
(iv) a statement of the Claimant's right to bring
a civil action under ERISA.
(f) Rules and Procedures
The Administrative Committee and the Review Panel
shall establish additional administrative procedures
in accordance with this Section 8.8 and ERISA as they
deem necessary or appropriate, including safeguards
to insure and verify that decisions under this
Section 8.8 are made in accordance with the Plan
document and are applied consistently to
similarly-situated Participants and
5
Beneficiaries. Additional administrative procedures
may include, but are not limited to, protocols,
guidelines, periodic review and audits.
(g) Exhaustion of Administrative Remedies
No legal or equitable action for benefits under the
Plan shall be brought unless and until the Claimant
has satisfied the procedures in this Section 8.8.
IX. The first sentence of Section 10.3 Unfunded Nature of the Obligation is
deleted in its entirety and replaced with the following:
No Participant, spouse or Beneficiary shall have any rights
with respect to any benefits except as a general, unsecured
creditor of the Employer.
IN WITNESS WHEREOF, the Compensation Committee of the Board of
Directors of Alaska Air Group, Inc. has caused this First Amendment to be signed
by its duly-authorized Chair as of January 30, 2002.
Witness: COMPENSATION COMMITTEE OF THE
BOARD OF DIRECTORS OF ALASKA
AIR GROUP, INC.
/s/ Keith Loveless /s/ R. Marc Langland
- ---------------------------------- -----------------------------
Keith Loveless R. Marc Langland, Chair
Vice President of Legal &
Corporate Affairs, General Counsel
6
SECOND AMENDMENT
TO THE
ALASKA AIR GROUP, INC.
1995 ELECTED OFFICERS SUPPLEMENTARY RETIREMENT PLAN
The Alaska Air Group, Inc. 1995 Elected Officers Supplementary
Retirement Plan, effective August 8, 1995 (the "Plan"), is amended as follows,
effective August 28, 2002 unless otherwise specified below:
I. The first clause of Section 1.1(a) Actuarial Equivalence is replaced
with the following:
(a) For purposes of Sections 3.2 Normal Retirement Benefit, 3.6
Post-Retirement, Lump-Sum Benefit, 4.1(c) Ten Year Certain and
Life Annuity, 4.1(d) Ten Year Certain Installments and 5.3
Amount of Change of Control Benefit, Actuarial Equivalence
shall be computed using the following:
II. Section 1.1 Actuarial Equivalence is amended by inserting the following
new Section 1.1(e):
(e) For purposes of Section 3.6 Post-Retirement, Lump-Sum Benefit,
the lump sum that is Actuarially Equivalent to the remaining
monthly benefits otherwise payable is determined as follows:
(i) for a Participant whose benefit is reduced by the
Participant's Social Security Benefit, the Actuarial
Equivalent of the remaining benefits otherwise
payable is determined assuming that the Participant's
Social Security Benefit does not increase after the
first day of the most recent month for which a
payment was made.
(ii) for a Participant whose benefit is not reduced by a
Social Security Benefit, the Actuarial Equivalent of
the remaining benefits otherwise payable is
determined assuming that the Participant begins
receiving monthly Social Security Benefits on the
later of the first day of the most recent month for
which a payment was made, or the earliest date on
which the Participant is eligible for a benefit from
Social Security. The amount of the monthly Social
Security Benefit assumed to be received by the
Participant is determined in accordance with the
Social Security Act in effect as of the first day of
the most recent month for which a payment was made
and is based on the following assumptions:
(1) assuming the Participant's Wages exceed the
taxable wage base provided under Section 230
of the Social Security Act for each Plan
Year beginning with the Plan Year in which
the Participant attained age twenty one (21)
and ending
1
with the last Plan Year ending before the
first day of the most recent month for which
a payment was made;
(2) assuming the Participant has no Wages during
or after the Plan Year in which occurs the
first day of the most recent month for which
a payment was made; and
(3) assuming the Social Security Benefits do not
increase after the assumed Social Security
Benefit beginning date.
III. A new Section 3.6 Post-Retirement, Lump-Sum Benefit is inserted
immediately after Section 3.5 Cost of Living Adjustment:
Section 3.6 Post-Retirement, Lump-Sum Benefit
A Participant who has already begun receiving Normal, Early or
Late Retirement Benefits in one of the payment forms under
Section 4.1 may elect to receive a post-retirement lump sum.
(a) Definition
A post-retirement, lump-sum benefit is one (1)
payment that is Actuarially Equivalent to the
remaining monthly benefit payments that otherwise
would be payable, reduced by ten percent (10%). A
post-retirement lump sum will be paid as soon as
administratively feasible after the Participant's
lump-sum election is approved. Once a lump sum is
paid, the Participant, the Participant's spouse and
the Participant's Beneficiary have no other benefits
or rights under the Plan.
(b) Form and Manner of Election
A post-retirement lump sum can be elected only by a
Participant (not by a spouse or Beneficiary). A
Participant's lump-sum election must be made in the
form and manner prescribed by the Administrative
Committee, and the election is subject to approval of
the Administrative Committee. Once a Participant
elects and receives a lump sum, the election cannot
be changed.
(c) Right to Amend or Eliminate
Notwithstanding Section 9.1(a), the Company may amend
or delete this Section 3.6 at any time, if the Board
determines in its sole discretion that such amendment
is required by law or regulations or is necessary or
advisable to avoid unfavorable tax consequences.
2
Any amendment of this Section 3.6 shall be made in
accordance with the procedures set forth in Section
9.1(c).
IV. The last sentence of Section 4.3(a) Advance Election is deleted and
replaced in its entirety with the following:
Except as provided in Section 3.6, once benefit payments commence, the
payment form cannot be changed by the Participant or Beneficiary.
IN WITNESS WHEREOF, the Compensation Committee of the Board of
Directors of Alaska Air Group, Inc. has caused this Second Amendment to be
signed by its duly-authorized Chair as of August 28, 2002.
Witness: COMPENSATION COMMITTEE OF THE
BOARD OF DIRECTORS OF ALASKA
AIR GROUP, INC.
/s/ Keith Loveless /s/ R. Marc Langland
- ---------------------------------- -----------------------------
Keith Loveless R. Marc Langland, Chair
Vice President of Legal &
Corporate Affairs, General Counsel
3