EXHIBIT 10.27
CAPSTEAD MORTGAGE CORPORATION AND SUBSIDIARIES
DEFERRED COMPENSATION PLAN
CAPSTEAD MORTGAGE CORPORATION
DEFERRED COMPENSATION PLAN
WHEREAS, Capstead Mortgage Corporation, a Maryland corporation having
its headquarters at 2711 N. Haskell, Suite 900, Dallas, Texas 75204, desires to
implement the Capstead Mortgage Corporation Deferred Compensation Plan;
WHEREAS, the Company wishes to participate in Participant's capital
accumulation and is establishing this Plan to do so;
WHEREAS, the Company desires to establish a benefit restoration plan
for the exclusive benefit of a select group of its management and highly
compensated employees to restore retirement benefits on behalf of such employees
decreased due to limitations imposed by the Internal Revenue Code of 1986; and
WHEREAS, this Plan is intended to be an "employee pension benefit
plan" under Title I of ERISA, and which is unfunded and maintained by the
Company primarily for the purpose of providing deferred compensation for a
select group of management or highly compensated employees, and the terms of
this Plan shall be interpreted accordingly.
ARTICLE I
PLAN DEFINITIONS
1.1 "Account Balance" means the accrued balance of all Participant
deferrals, all Company contributions, and all interest credited to the Account
of each Participant.
1.2 "Beneficiary" means the person or persons designated by the
Participant under Article VIl of this Plan who may become entitled to receive
benefits payable under Article Vl of this Plan.
1.3 "Board" means the Board of Directors of the Company.
1.4 "Company" means Capstead Mortgage Corporation, a Maryland
corporation, any subsidiary and any successor corporation or entity.
1.5 "Compensation Committee" means the Compensation Committee of the
Board. A function exercisable by such Committee may also be exercised by the
Board.
1.6 "Disability Date" means the first day of the seventh calendar
month following the date a Participant becomes totally and permanently disabled.
A Participant in active Service shall be totally and permanently disabled for
the purposes of the Plan if all of the following conditions are satisfied:
(a) he qualifies for disability benefits under the Company's
Long Term Disability Plan; and
(b) in the opinion of the Compensation Committee, it is unlikely
that the Participant will return to active Service.
1.7 "Earnings" means the base salary, any compensation paid pursuant
to the Base Incentive Compensation Plan of the Company and any commissions paid
by the Company during the Plan Year.
1.8 "Eligibility Age" means the age of a Participant calculated at
the first day of the Plan Year.
1.9 "Participant" means any executive of the Company who is receiving
Earnings as an employee of the Company and who is designated as a Participant by
the Compensation Committee as provided in Article III. A Participant shall also
mean a retired or terminated Participant who continues to be entitled to
benefits under this Plan after his Termination of Service.
1.10 "Plan" means the Capstead Mortgage Corporation Deferred
Compensation Plan, and subject to Article Vll, any amendments thereto.
1.11 "Plan Year" means the twelve (12) month period which commences
January 1 and ends on December 31, or under the first Plan Year, the six (6)
month period from the effective date of the Plan until December 31 of the same
year.
1.12 "Retirement Date" means the date on which a Participant
separates from Service with the Company after the attainment of age 60 or
completion of 30 years of Service.
1.13 "Service" means the period of full time employment of a
Participant with the Company as defined in the Company's applicable policies and
procedures.
1.14 "Subsidiary" means any corporation, at least fifty percent of
the outstanding voting stock of which is beneficially owned directly or
indirectly by the Company.
1.15 "Termination of Service" means the date of termination of a
Participant's Service whether by voluntary or involuntary separation.
1.16 "Trust" means the Grantor Trust under the Capstead Mortgage
Corporation Deferred Compensation Plan.
1.17 "Vested" means the annual vesting of all Company contributions
under Article IV of the Plan. A Participant shall be credited with vesting
service and shall be vested in Company contributions under this Plan in
accordance with the vesting schedule set forth in the Company's qualified profit
sharing plan (CapSave).
ARTICLE II
EFFECTIVE DATE
2.1 This Plan shall be effective on July 1, 1994.
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.1 Designation of Participants. Participation in the Plan shall be
made available to a select group of individuals designated by the Compensation
Committee who provide services to the Company in key positions of management and
responsibility and who are eligible to make contributions to CapSave, the amount
of which is reduced by reason of the application of the limitations set forth in
Sections 401(a)(17) or 402(g)(1) of the Code.
ARTICLE IV
DEFERRALS
4.1 Deferred Payment. Before the first day of any Plan Year (or, with
respect to individuals who first become Participants during a Plan Year, on or
before the date on which they become Participants) each Participant may elect to
have the payment of all or a portion of his Earnings for the Plan Year (or, if
later, so much of the Plan Year as commences on the day following the date on
which the individual becomes a Participant) deferred until the earliest to occur
of his retirement, death, Disability Date, or Termination of Service with the
Company. The election shall be irrevocable and shall be made on a form
prescribed by the Compensation Committee. The election shall apply only to that
Plan Year or partial Plan Year.
4.2 Company Match. The Company will match ail or a portion of
Participant deferrals during the Plan Year at an amount based upon the amount a
Participant elects to defer under the Plan. Only Participants that have
deferred the maximum pretax deferral amount under the Company's qualified profit
sharing plan ("CapSave") for the twelve (12) month period preceding the end of a
Plan Year will be eligible for the Company match. The Company match will be
credited to a Participant's Account on the last day of the corresponding Plan
Year.
The Company Match will be a portion of the contribution made by a
Participant into the Plan during the Plan Year based upon the Participant's
Eligibility Age; the Company Match will also be limited to a percentage of
Earnings based upon the Participant's Eligibility Age, in accordance with the
schedule below:
MATCH RATE PER DOLLAR MAXIMUM AS A
ELIGIBILITY AGE CONTRIBUTED BY PARTICIPANT PERCENTAGE OF ELIGIBLE PAY
- ------------------------- -------------------------- ---------------------------
Ages 35 or younger $0.10 1%
Ages 36 to 45 $0.15 3%
Ages 46 to 50 $0.50 6%
Ages 51 to 60 $0.75 9%
Ages 61 and older $1.00 12%
4.3 Supplemental Contributions. The Company shall make a contribution to
the Participants Account on the last day of the Plan Year equal to three percent
(3%) of Earnings in excess of the maximum amount of compensation which may be
recognized by a qualified plan pursuant to Section 401(a)(17) of the Internal
Revenue Code for such Plan Year. The Company contribution pursuant to Section
4.3 of the Plan will be made
regardless of a Participant's amount or level of participation in any Company
sponsored qualified or nonqualified plan.
ARTICLE V
ACCOUNT EARNINGS
5.1 Interest. At the end of each calendar year, the amount of interest to
be added to the balance of the Participant's account shall equal the sum of:
(a) the Company's Return on Stockholders' Equity for such calendar
year multiplied by the Participant's account balance, if any, on the first day
of such calendar year; and
(b) the Company's Return On Stockholder's Equity (ROE) for such
calendar year multiplied by the Participant's weighted average contributions (as
defined below) made during such calendar year.
"Weighted average contributions" is determined by (i) multiplying the
contribution made in a particular month by the number of months remaining in the
calendar year, (ii) adding the results, and (iii) dividing the sum by twelve.
5.2 Interest Rate. The rate of interest credited to all Participant
deferrals and Company contributions pursuant to Article IV of the Plan and
subsequent earnings credited to the Account shall be credited with an interest
rate equal to the Company's annual ROE. ROE shall be calculated by the Company
and certified by the Compensation Committee for the Plan Year within thirty (30)
days following the end of a Plan Year.
ARTICLE VL
ACCOUNT PAYOUT
6.1 Retirement Distribution. Within sixty (60) days following the end of
the Plan Year in which occurs the Retirement Date of a Participant, the Company
shall pay any and all outstanding Account Balance to a Participant in either:
(a) a lump sum cash payment, or
(b) equal annual cash installments over a period of two (2) to fifteen
(15) years with a six percent (6%) annual interest crediting rate on any Account
Balance remaining each year of the remaining years.
A Participant must elect the form of Retirement Distribution under Section
6.1(a) or 6.1(b) no later than twenty four (24) months preceding retirement,
otherwise the Account Balance will be distributed pursuant to Section 6.1(a).
If a Participant dies while receiving a Retirement Distribution under Section
6.1(b) but before the entire Account Balance has been paid to the Participant by
the Company, the Company shall pay the remaining Account Balance within sixty
(60) days of the Participant's death in a lump sum to the beneficiary designated
by the Participant.
6.2 Other Distributions. Within sixty (60) days following the end of the
Plan Year in which Termination of Service or the Disability Date of a
Participant occurs, the Company shall pay any and all outstanding Account
Balance to a Participant in a lump sum cash
payment or annual installments from two to fifteen years. If no election is made
prior to the Termination of Service or the Disability Date of a Participant, the
Company shall pay any and all outstanding Account Balance in a lump sum cash
payment. Within sixty (60) days following the death of a Participant in active
Service, the Company shall pay any and all outstanding Account Balance in a lump
sum cash payment or annual installments from two to fifteen years to the
Beneficiary designated by the Participant pursuant to Section 7.3, and shall pay
any Company contributions and interest to which the Participant would have been
entitled for the Plan Year in which his death occurs within sixty (60) days
following the end of such Plan Year.
6.3 Vesting. In no event shall any distribution made under Sections 6.1 or
6.2 of the Plan include Company contributions pursuant to Article IV that are
not Vested.
ARTICLE VLL
GENERAL PROVISIONS
7.1 Unfunded Obligation. The deferred amounts to be paid to Participants
pursuant to this Plan are unfunded obligations of the Company. The Company is
not required to segregate any monies from its general funds, to create any
trusts, or to make any special deposits with respect to this obligation. Title
to and beneficial ownership of any investments including trust investments which
the Company may make to fulfill this obligation shall at all times remain in the
Company. Any investments and the creation or maintenance of any trust or
memorandum accounts shall not create or constitute a trust or a fiduciary
relationship between the Compensation Committee or the Company and a
Participant, or otherwise create any vested or beneficial interest in any
Participant or his Beneficiary of his creditors in any assets of the Company
whatsoever,
7.2 Binding Effect. This Plan shall be binding upon and inure to the
benefit of the parties hereto and upon the successors and assigns of the
Company, and upon the heirs and legal representatives of the Participant.
7.3 Beneficiary Designation. While covered under this Plan, the Participant
may from time to time designate, in writing, any person or entity, contingently
or successively to whom the Company shall pay the Account Balance pursuant to
Article Vl in the event of the Participant's death. If the Participant fails to
designate a Beneficiary or if the Beneficiary predeceases the Participant, then
benefits shall be payable to the Participant's estate.
7.4 Assignment of Rights. None of the rights to the benefits under this
Plan are assignable by the Participant or any Beneficiary or designee of the
Participant, and any attempt to anticipate, sell, transfer, assign, pledge,
encumber, or change the Participant's right to receive any benefits of this plan
shall be void.
7.5 Plan Administration. The Compensation Committee, or its named
Administrator, shall have administration authority to control and manage the
operation and administration of this Plan.
The Administrator shall make all determinations as to rights to benefits
under this Plan. Any decision by the Administrator denying a claim made the
Participant or by a
Beneficiary for benefits under this Plan shall be stated in writing and
delivered or mailed to the Participant or such Beneficiary. Such statement shall
set forth the specific reasons for the denial, written to the best of the
Administrator's ability in a manner that may be understood without legal or
actuarial counsel. In addition, the Administrator shall afford a reasonable
opportunity to the Participant or such Beneficiary for a full and fair review of
the decision denying such claim.
Subject to the foregoing, the Compensation Committee shall have full power
and authority to interpret, construe, administer and, if necessary, to modify in
limited circumstances, this Plan. No member of the Board shall, in any event,
be liable to any person for any action taken or omitted in connection with the
interpretation, construction or administration of this Plan, so long as such
action or omission to act be made in good faith.
7.6 Incapacity of Participant or Beneficiary. If the Compensation Committee
finds that any Participant or Beneficiary to whom a payment is payable under the
Plan is unable to care for his or her affairs because of illness or accident or
is under a legal disability, any payment due (unless a prior claim therefor
shall have been made by a duly appointed legal representative) at the discretion
of the Committee, may be paid to the spouse, child, parent or brother or sister
of such Participant or Beneficiary or to any person whom the committee has
determined has incurred expense for such Participant or Beneficiary. Any such
payment shall be a complete discharge of the obligations of the Company under
the provisions of the Plan.
7.7 Funding. The Company's obligations under this Plan shall be an unfunded
and unsecured promise to pay. The Company shall not be obligated under any
circumstances to fund or otherwise secure its obligations under this Plan. Under
no circumstances will the Company, without the consent of the Participant, cause
this Plan to be directly funded in whole or part through escrow, trust, or
otherwise such as to create a taxable event to the Participant or the
Participant's Beneficiary.
7.8 Amendment and Termination. The Board may at any time, or from time to
time, amend this Plan in any respect or terminate this Plan without restriction
and without consent of any Participant or beneficiary, provided that any such
amendment or termination shall not impair the right of any Participant or any
Beneficiary of any then deceased Participant to receive benefits earned and
vested hereunder prior to such amendment or termination without the consent of
such Participant or such Beneficiary.
7.9 Gender and Number. The masculine pronoun wherever used shall include
the feminine. Wherever any words are used herein in the singular, they shall be
construed as though they were also used in the plural in all cases where they
shall so apply.
7.10 Law Governing. This Plan shall be governed by the laws of the State of
Texas.