EXHIBIT 10.3
SUPPLEMENTAL RETIREMENT PLAN FOR
DESIGNATED OFFICERS
MIDAMERICAN ENERGY COMPANY
Board Approval: December 1995
MIDAMERICAN UTILITY COMPANY
SUPPLEMENTAL RETIREMENT PLAN FOR DESIGNATED OFFICERS
CONTENTS
I. Establishment 1
II. Purpose 1
III. Construction
3.1. Definitions 1
3.2. Gender and Number 5
3.3. Severability 5
IV. Administration
4.1. The Committee 5
4.2. Authority of the Committee 5
4.3. Decisions Binding 6
V. Eligibility and Participation
5.1. Participation 6
5.2. No Employment Guarantee 6
VI. Benefits
6.1. Benefits Upon Normal Retirement 6
6.2. Benefits Upon Early Retirement 6
6.3. Benefits Upon Disability 7
6.4. Actuarial Equivalent Benefit 7
6.5. Benefits Upon Death 7
6.6. Forfeiture Upon Termination For Cause 8
6.7. General Payout Restriction 8
VII. Individual Accounts and the Rabbi Trust
7.1. Establishment of a Rabbi Trust 8
7.2. Causing the Trust to Become Irrevocable 9
7.3. Payment of Benefits from the Trust 9
VIII. Beneficiary Designation
8.1. Designation of Beneficiary 9
8.2. Payment to a Participant's Estate 9
IX. Miscellaneous
9.1. Unfunded Plan 9
9.2. Withholding 9
9.3. Costs of the Plan 10
9.4. Nontransferability 10
9.5. Successors 10
9.6. Address of Participant or Beneficiary 10
9.7. Applicable Law 10
MIDAMERICAN ENERGY COMPANY
SUPPLEMENTAL RETIREMENT PLAN FOR DESIGNATED OFFICERS
I. ESTABLISHMENT
MidAmerican Energy Company, an Iowa corporation (the "Company"),
hereby establishes the Company's Supplemental Retirement Plan for
Designated Officers (the "Plan"), effective as of January 1, 1996.
II. PURPOSE
The purpose of the Plan is to enable the Company and its subsidiaries
to attract, retain, and motivate persons of outstanding competence,
and to provide appropriate supplemental retirement and survivor
benefits to Designated Officers of the Company.
III. CONSTRUCTION
SECTION 3.1. DEFINITIONS. Whenever used herein, the following terms
shall have the respective meanings set forth below:
(a) "Board" means the Board of Directors of the Company.
(b) "Cause" means a Participant's discharge from the employment of
the Company because such Participant willfully engages in
conduct, or lack thereof, that is demonstrably and materially
injurious to the Company, its business reputation or financial
structure, but shall not include a Qualifying Termination.
Determination of "Cause" shall be made by the Committee in the
exercise of good faith and reasonable judgement and approved by
the Board.
(c) "Change in Control" means either:
(i) The closing date of the restructuring of the Company as a
result of merger, consolidation, takeover or reorganization
unless at least sixty percent (60%) of the members of the
board of directors of the corporation resulting from such
merger, consolidation, takeover or reorganization were
members of the Incumbent Board; or
(ii) The occurrence of any other event that is designated as
being a "Change in Control" by a majority vote of the
directors of the Incumbent Board who are not also employees
of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means an Administrative Committee comprised of
Company employees selected by the President of the Company and
approved by the Board to administer the Plan pursuant to Article
IV herein.
(f) "Company" means MidAmerican Energy Company, and its subsidiaries.
(g) "Designated Officer" is an officer of the Company or its
subsidiaries who has been authorized by the Board to participate
in the Plan.
(h) "Disability" means a Termination of Services resulting from a
total disability of a Participant, as a result of a medically
determinable physical or mental impairment which renders such
Participant unable to engage in any substantial gainful
employment, and which can be expected to be of indefinite
duration. Such Disability shall be determined by the Committee
in the exercise of good faith and reasonable judgment in reliance
on competent medical advice from one or more qualified
individuals selected by the Committee.
(i) "Disability Benefit" means, for such Participant, the Normal
Retirement Supplemental Benefit or Early Retirement Supplemental
Benefit, computed as though the Participant is deemed to have
continued in employment during the period of disability and
incurred a Termination of Services on the date he or she elects
to begin receiving benefits hereunder.
(j) "Early Retirement Total Benefit" means a Normal Retirement Total
Benefit reduced at the rate of one percentage point for each
full and fraction of a year that, on the effective date of
commencement of benefits, such Participant's age is less than
sixty-five (65) years (i.e., 60% at age 60, 55% at age 55).
(k) "Early Retirement" means, for each Participant, the commencement
of benefits after Termination of Services of such Participant
other than because of death or Cause, but prior to such
Participant reaching Normal Retirement Age.
(l) "Early Retirement Date" means the first day of the month chosen
by the Participant for commencement of the Early Retirement
Supplement Benefit, which in no event shall be earlier than the
first day of the month following the Participant's attainment of
age fifty-five (55).
(m) "Early Retirement Supplemental Benefit" (see subsection (s)
below).
(n) "Effective Date" means January 1, 1996.
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(o) "ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, or any successor thereto.
(p) "Incumbent Board" means the members of the Board on August 1,
1995. For this purpose, an individual who becomes a member of
the Board subsequent to August 1, 1995 and who has been nominated
for election by the Company's shareholders by resolution adopted
by a vote of at least two-thirds of the directors then comprising
the Incumbent Board at a duly convened meeting thereof shall be
deemed to be a member of the Incumbent Board.
(q) "Normal Retirement Total Benefit" means the annual benefit
provided under the Plan upon a Termination of Services on or
following a Participant's Normal Retirement Date, in the amount
of sixty-five percent (65%) of such Participant's Total Cash
Compensation in effect immediately prior to such Termination of
Services, times a fraction, the numerator being the number of
years (including fractions of a year) of participation in this
Plan (or participation in a similar supplemental retirement plan
of a Predecessor Company) as of the date of Termination of
Services, and the denominator being the number of years of
participation if the Participant had remained employed to age 55
(the factor shall not exceed 1.0). The Board shall have the
authority to grant the crediting of service with a former
employer of a Participant in the calculation above (such
determination shall be made when the individual is first
designated by the Board to participate in this Plan).
(r) "Normal Retirement Supplemental Benefit" and "Early Retirement
Supplemental Benefit", respectively, mean the Normal Retirement
Total Benefit or Early Retirement Total Benefit, as applicable,
reduced by the sum of:
(i) the annual benefits provided to such Participant under the
Company's Tax Qualified Pension Plan (determined as if the
Participant elected the same benefit option as selected
under this Plan and beginning on the same date that payments
begin under this Plan, or the actuarial equivalent if
payments are not payable as early as under this Plan, as
determined by the Committee in the exercise of good faith
and judgment);
(ii) benefits under Iowa-Illinois Gas and Electric Company
Supplemental Retirement Plan, the Iowa Resources Inc. and
Subsidiaries Supplemental Retirement Income Plan, after
converting such benefits to an actuarially equivalent
amount, as determined by the Committee in the exercise of
good faith and reasonable judgment; and
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(iii) tax qualified defined benefit pension type retirement
plan benefits payable to such Participant by other
employers of such Participant if service with such
other employers is credited as service under the
Company's Tax Qualified Pension Plan, after converting
such benefits to an actuarially equivalent amount, as
determined by the Committee in the exercise of good
faith and reasonable judgment.
An Early Retirement Supplemental Benefit will not be available to
any Participant whose Termination of Services occurs prior to
being credited with five (5) Years of Service.
(s) "Normal Retirement Age" means, for each Participant, the
attainment of age sixty-five (65) years.
(t) "Normal Retirement Date" means the first day of the month next
following the date of reaching Normal Retirement Age.
(u) "Participant" means an officer of the Company or its subsidiaries
who has been approved by the Board, and any retired individual
who has a vested accrued benefit under the Plan as specified in
Article V.
(v) "Plan Year" means the calendar year beginning January 1 and
ending December 31.
(w) "Predecessor Company" means Midwest Resources Inc., Iowa-Illinois
Gas and Electric Company, Midwest Energy Company, Iowa Resources
Inc. and any member of the same controlled group of corporations
of any of these companies.
(x) "Rabbi Trust" means a grantor trust, within the meaning of
Sections 671-678 of the Code, established by the Company for the
benefit of the Participants, both active and retired, and the
Participants' designated beneficiaries, as specified in Article
VIII.
(y) "Spouse" means a husband or wife as licensed in marriage by the
state.
(z) "Survivor's Benefit" means the benefit payable to a Participant's
surviving Spouse, designated beneficiary or estate under the Plan
as specified in Section 6.6 in the event of such Participant's
death.
(aa) "Tax Qualified Pension Plan" shall mean the tax qualified defined
benefit plan, cash balance plan and money purchase pension plan,
if any, maintained by the
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Company, but shall not include any profit sharing plans, employee
stock ownership plans or qualified salary reduction or cash or
deferred plan.
(bb) "Termination of Services" means the severing of a Participant's
employment with the Company for any reason.
(cc) "Total Cash Compensation" means the highest amount payable to a
Participant by the Company (or a Predecessor Company) as annual
base salary during the five years immediately prior to
termination of services (including the year in which termination
occurs), plus the average of the Participant's last three years'
Awards under the Company's Key Employee Annual Incentive Plan or
its successor plan(s), or under a similar annual incentive bonus
program for executives of a Predecessor Company. Annual Base
Salary shall include amounts deferred under any Section 401(k)
plans, Section 125 cafeteria plans, nonqualified deferred
compensation plans or similar arrangements. If less than three
years' Awards have been made for the Participant, the average of
all Awards shall be used.
(dd) "Year of Service" or "Years of Service" means each full twelve
months of service with the Company or with a Predecessor Company.
SECTION 3.2. GENDER AND NUMBER. Except when otherwise indicated by the
context, any masculine term used herein also shall include the feminine;
the plural shall include the singular; and the singular shall include the
plural.
SECTION 3.3. SEVERABILITY. In the event any provision of the Plan shall be
held illegal or invalid for any reason, the illegality or invalidity shall
not affect the remaining parts of the Plan; and the Plan shall be construed
and enforced as if the illegal or invalid provision had not been included.
IV. ADMINISTRATION
SECTION 4.1. THE COMMITTEE. The Plan shall be administered within the
guidelines contained in this Article IV by an Administrative Committee
comprised of Company employees selected by the President of the Company and
approved by the Board. The Committee may delegate the responsibility of
performing ministerial acts to such administrative agents as it deems
advisable or desirable to carry out the purpose of the Plan.
SECTION 4.2. AUTHORITY OF THE COMMITTEE. Subject to ratification by the
Board, the Committee shall have the power to construe and interpret the
Plan and any agreement or instrument entered into hereunder; to prescribe,
amend, or waive rules and regulations for the Plan's administration; and to
make any other determination which may be necessary or advisable for the
Plan's administration. The Committee may correct any defect or supply any
omission or
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reconcile any inconsistency in the Plan in the manner and to the extent
reasonable to effect its purpose.
The Company may elect to insure the lives of Participants; in such case,
Participants must agree to undergo physical examinations and otherwise
cooperate in obtaining such insurance as a condition precedent to
participation in the Plan. Any such life insurance policies shall be owned
by and be considered a general asset of the Company. Subject to Section
7.2, no Participant or beneficiary shall have any rights to or interest in
or shall be entitled to any benefits under such policies.
SECTION 4.3. DECISIONS BINDING. All determinations and decisions made by
the Committee pursuant to the provisions of the Plan, as ratified by the
Board, and all related orders or resolutions of the Board shall be final,
conclusive, and binding on all persons, including the Company, its
shareholders, employees, the Participants and their estates and designated
beneficiaries.
The Board shall have the full power to amend or terminate the Plan at any
time prior to the occurrence of a Change in Control, as further described
in Article VII herein.
V. ELIGIBILITY AND PARTICIPATION
SECTION 5.1. PARTICIPATION. Upon approval by the Board, Designated Officers
shall automatically become Participants under the Plan. Retired
individuals who have a vested accrued benefit under the Plan will also be
considered to be Participants.
SECTION 5.2. NO EMPLOYMENT GUARANTEE. Neither this Plan nor any action
taken hereunder shall be construed as giving a Participant the right to be
retained as an employee of the Company for any period.
VI. BENEFITS
SECTION 6.1. BENEFITS UPON NORMAL RETIREMENT. Upon a Participant's Normal
Retirement, the Company shall pay to such Participant, as compensation for
services rendered prior to such date, his or her Normal Retirement
Supplemental Benefit in equal monthly installments commencing on the
Normal Retirement Date, or, if later, then first day of the month next
following Termination of Services, and continuing on the first day of each
month thereafter during the lifetime of such Participant.
SECTION 6.2. BENEFITS UPON EARLY RETIREMENT. Upon a Participant's Early
Retirement (as chosen by the Participant), and following Termination of
Services, the Company shall pay to the Participant, as compensation for
services rendered prior to such date, his or her Early Retirement
Supplemental Benefit in equal monthly installments commencing on the
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Participant's Early Retirement Date, and, in all cases, continuing on the
first day of each month thereafter during the lifetime of such Participant.
SECTION 6.3. BENEFITS UPON DISABILITY. Upon a Participant's election to
begin receiving benefits hereunder following Termination of Services for
Disability, the Company shall begin payment to the Participant (but no
earlier than his or her Early Retirement Date), as compensation for
services rendered prior to such date, his or her Disability Benefit in
equal monthly installments commencing on the first day of the month
selected by the Participant and continuing on the first day of each month
thereafter during the lifetime of such Participant.
SECTION 6.4. ACTUARIAL EQUIVALENT BENEFIT. If the Participant so elects
prior to commencement of benefits hereunder, he or she may choose a payment
option under any payment option authorized under the Company's Tax
Qualified Pension Plan which is the actuarial equivalent of the benefit
accrued under this Plan, using appropriate actuarial assumptions as
determined by the Committee in the exercise of good faith and reasonable
judgment; provided, however, no lump sum payment shall be permitted and no
installments for a fixed period only shall be permitted.
SECTION 6.5. BENEFITS UPON DEATH. Upon a Participant's death, the Company
shall pay to such Participant's designated beneficiary or estate, as
appropriate, the following Survivor's Benefit;
(a) DEATH PRIOR TO COMMENCEMENT OF BENEFITS. If a Participant dies
prior to commencement of the payment of any benefit hereunder,
the Company shall pay to such Participant's designated
beneficiary or estate a Survivor's Benefit equal to the Normal
Retirement Supplemental Benefit in one hundred eighty (180) equal
monthly installments commencing on the first day of the month
following such date of death and receipt of a death certificate
by the Company, and continuing on the first day of each month
thereafter until the one hundred eighty (180) payments have been
made.
(b) DEATH AFTER COMMENCEMENT OF BENEFITS. If a Participant dies after
commencement of the payment of any benefit hereunder, the Company
shall pay to the Participant's surviving Spouse a Survivor's
Benefit commencing on the first day of the month following such
date of death and receipt of a death certificate by the Company
and continuing on the first day of each month thereafter for the
remaining lifetime of the surviving Spouse. The Survivor's
Benefit means a benefit equal to two-thirds of the Normal
Retirement Supplemental Benefit, Early Retirement Supplemental
Benefit or Disability Benefit, as applicable, that the
Participant was receiving immediately prior to death, except that
the total Survivor's Benefit shall be limited to fifty percent
(50%) of the total benefit based upon an actuarial calculation at
the time benefits commence.
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(c) Payment by the Company of the benefit in Section 6.5 (a) or (b)
shall relieve the Company of the obligation to pay a Normal
Retirement Supplemental Benefit, an Early Retirement Supplemental
Benefit, a Disability Benefit, or any other benefit which the
Participant might have otherwise received under the Plan.
(d) In the event a Participant dies without a surviving Spouse, after
commencement of the payment of any benefits hereunder, the
Company shall pay to such Participant's designated beneficiary or
estate a Survivor's Benefit equal to the Normal Retirement
Supplemental Benefit, Early Retirement Supplemental Benefit or
Disability Benefit, as applicable, that the Participant was
receiving immediately prior to death such that a total of one
hundred eighty (180) equal monthly installments is paid to the
Participant and such Participant's designated beneficiary or
estate. The Survivor's Benefit portion shall commence on the
first day of the month following such date of death and receipt
of a death certificate by the Company, and continue on the first
day of each month thereafter until a total of one hundred eighty
(180) payments have been made.
SECTION 6.6. FORFEITURE UPON TERMINATION FOR CAUSE. Upon a Participant's
Termination of Services for Cause, such Participant shall immediately
forfeit all rights and benefits provided under the Plan, and the Company
shall have no further obligation to such Participant under the Plan.
SECTION 6.7. GENERAL PAYOUT RESTRICTIONS. No benefits shall be paid under
this Plan prior to the actual Termination of Services of a Participant.
VII. INDIVIDUAL ACCOUNTS AND THE RABBI TRUST
SECTION 7.1. ESTABLISHMENT OF A RABBI TRUST. After the Effective Date, the
Company shall be authorized, but shall not be required, to establish a
revocable Rabbi Trust for the benefit of the Participants, both active and
retired. Any such Rabbi Trust shall have an independent trustee, selected
by the Company, and, it shall contain restrictions on the Company's ability
to amend or terminate any of the terms thereof after the Rabbi Trust shall
become irrevocable as provided in Section 7.2.
All assets held in the Rabbi Trust (while revocable or irrevocable) shall
at all times be specifically subject to the claims of the Company's general
creditors in the event of bankruptcy or insolvency; such terms shall be
specifically defined within the provisions of the Rabbi Trust, along with a
required procedure for notifying the Trustee of any such bankruptcy or
insolvency.
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SECTION 7.2. CAUSING THE TRUST TO BECOME IRREVOCABLE. The instrument
establishing any such Rabbi Trust shall provide that the Rabbi Trust shall
be revocable until the occurrence of either of the following:
(i) A Change in Control; or
(ii) A majority vote by the Incumbent Board to make the Rabbi Trust
irrevocable.
SECTION 7.3. PAYMENT OF BENEFITS FROM THE TRUST. The Company shall be
primarily obligated to pay all benefits of Participants under the Plan,
whether the Rabbi Trust is revocable or irrevocable at the time. In the
event the Company fails to fulfill any such obligation hereunder in a
timely manner, the Trustee shall be empowered, under the terms of the Rabbi
Trust, to either cash in any related life insurance policies or to borrow
against the policies, to the extent necessary to pay past due benefits
directly from the Trust.
VIII. BENEFICIARY DESIGNATION
SECTION 8.1. DESIGNATION OF BENEFICIARY. Each Participant shall be entitled
to designate one or more beneficiaries by filing a signed, written notice
of such designation with the Committee, in a form as the Committee may
prescribe. A Participant may revoke or modify a beneficiary designation at
any time by filing a new beneficiary designation form with the Committee.
SECTION 8.2. PAYMENT TO A PARTICIPANT'S ESTATE. A Participant's beneficiary
designation shall be deemed automatically revoked in the event all
designated beneficiaries predecease such Participant or, if the sole
beneficiary is such Participant's Spouse, in the event of dissolution of
marriage. In such event, or in the event a Participant does not designate
a beneficiary, the benefits under Sections 6.5(a) and 6.5(d) shall be paid
to such Participant's estate.
IX. MISCELLANEOUS
SECTION 9.1. UNFUNDED PLAN. This Plan is intended to be an unfunded plan
maintained primarily to provide benefits to a "select group of management
or highly compensated employees" within the meaning of Sections 201, 301,
and 401 of ERISA and, therefore, is further intended to be exempt from the
provisions of Parts 2, 3, and 4 of Title I of ERISA. Accordingly, the
Committee may terminate the Plan for any or all Participants in order to
achieve and maintain this intended result, provided that previously accrued
benefits hereunder shall not be reduced or otherwise adversely affected
without the written consent of all affected Participants.
SECTION 9.2. WITHHOLDING. The Company shall have the right to require
Participants to remit to the Company an amount sufficient to satisfy
Federal, state, and local tax withholding requirements, or to deduct from
any or all payments made pursuant to the Plan amounts
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sufficient to satisfy such tax withholding requirements. In the event any
FICA, FUTA, Social Security, Medicare or any similar taxes become due on
benefits (or the value of such benefits) accrued under this Plan at any
time prior to the actual payment of benefits under this Plan, the Company
shall be authorized to withhold from the regular salary of such Participant
the amount of any such tax payable by the Participant. Withholding shall
take place during the same calendar year in which the taxes on such
benefits become due, or at such time as may be required by Internal Revenue
Service regulations.
SECTION 9.3. COSTS OF THE PLAN. All costs of implementing and administering
the Plan shall be borne by the Company.
SECTION 9.4. NONTRANSFERABILITY. Neither the Participants nor any
designated beneficiary shall have the right to sell, assign, transfer, or
otherwise convey the right to receive any payment hereunder; nor shall any
such payment be subject to attachment, garnishment, levy, pledge,
bankruptcy, or any other manner or kind of execution in connection with any
claim against the Participants or any designated beneficiary thereof.
SECTION 9.5. SUCCESSORS. All obligations of the Company under the Plan
shall be binding upon and inure to the benefit of any successor to the
Company, whether the existence of such successor is the direct or indirect
result of a merger, consolidation, or reorganization involving the Company
or the purchase or other acquisition of all or substantially all of the
business and/or assets of the Company.
SECTION 9.6. ADDRESS OF PARTICIPANT OR BENEFICIARY. Each Participant shall
keep the Company apprised of his or her current address and that of any
designated beneficiary during his or her participation in the Plan. Upon
the death of a Participant, any beneficiaries entitled to receive benefit
payment under the Plan shall keep the Company apprised of their current
address until the entire amount to be distributed has been paid.
SECTION 9.7. APPLICABLE LAW. To the extent not preempted by Federal law,
the Plan shall be governed by and construed in accordance with the laws of
the state of Iowa.
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