Exhibit 10(8)
PROMUS HOTEL CORPORATION
DEFERRED COMPENSATION PLAN
This is an unfunded deferred compensation plan (referred to as the
"Plan" or "DCP") for a select group of management or highly compensated
employees ("Employees") of subsidiaries and affiliates of Promus Hotel
Corporation ("Hotel"). The Plan is an amended continuation of the "DCP"
offered by The Promus Companies Incorporated ("Promus"). This Plan will
become effective the later of June 30, 1995, or the distribution date of
the stock dividend for the spin-off of Hotel from Promus. The terms and
provisions of the Plan are as follows:
1. Eligibility.
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1.1 Only key Employees and members of the Board of Directors of Hotel
who are not employees ("Directors") are eligible to participate. Key
employees are generally those in grades 23 or higher. The "Company" or
"participating Company" in this Plan refers to Hotel or to any subsidiary
or affiliate of Hotel, as the case may be, whose Employees or former
employees are Participants in the Plan. For Directors who are Participants
in the Plan, references to the "Company" or "participating Company" refers
to Hotel. Each respective corporation shall, as the participating Company,
have the obligation under the Plan to effectuate the deferrals of its
Participants, to make distributions to its Participants, and to otherwise
perform the Company's obligations to its Participants. References to
"Participants" in the Plan refers to a participating Company's actively
participating Employees and Directors and also refers, where the context
requires, to its former Employees and former Directors and beneficiaries of
Employees and Directors who are receiving or entitled to receive benefits
under the Plan.
2. Election of Amount of Deferred Compensation.
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2.1 Prior to a Year of Deferral, a Participant may elect to defer up
to 12% of BASE SALARY and 100% of any CASH BONUS under the Company's annual
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bonus plan which would otherwise be payable to the Employee in the Year of
Deferral. CASH BONUS refers to annual bonuses paid in March and does not
include bonuses or incentive payments made at other times. A Director may
defer up to 100% of his or her Director's cash fees during the Year of
Deferral. The Company may permit new Directors or new Employees to
participate for the remainder of a Year of Deferral by electing to
participate prior to their commencement of service or employment or prior
to receipt of their first payment of compensation. Amounts deferred are
referred to as "Deferred Compensation." The amounts deferred under this
Plan are not included as eligible earnings under the Hotel Savings and
Retirement Plan (the "S&RP"). If an Employee is placed on salary
continuation, deferrals under this Agreement will continue until the
earlier of (a) the end of the Year of Deferral or (b) the end of the salary
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continuation period, unless otherwise agreed by the Company.
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2.2 Savings and Retirement Plan Exception. In addition to the
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deferrals permitted under 2.1 above, any Participant who participates at
the maximum before-tax percentage allowed by the S&RP shall be deemed to
have elected to defer under this Plan that portion of eligible S&RP
earnings which the Participant elected to defer under the S&RP, up to six
percent (6%) (or such other maximum before-tax percentage allowed by the
S&RP for the Participant), which could not be deferred on a before-tax
basis under the S&RP, by reason of DCP deferrals, under any law or
regulation as determined by Hotel, but excluding any amount which was
actually deferred into the S&RP but distributed back to the Participant in
a following Plan year as an excess deferral.
2.3 Matching Contributions.
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(a) Eligibility. Matching contributions shall be credited to
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Participants in this Plan who are eligible to participate in the
S&RP and elect to make a Basic Contribution (before-tax) equal to
the maximum rate at which a Participant may elect before-tax
contributions under the S&RP and such before-tax contribution is
limited, by reason of DCP deferrals, under any law or regulation
as determined by Hotel.
(b) Amount. The Employer shall credit to each employee Participant's
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Account a matching contribution for each calendar year equal to
one hundred percent (100%) of the Participant's compensation
elected to be deferred under this Plan for the year, such
compensation being limited for purposes of this calculation to a
maximum of six percent (6%) of the Participant's eligible S&RP
earnings (which shall not include bonus
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amounts or board fees). The matching contribution amount shall
be offset by the actual matching contribution allocated to the
Participant for the year under the S&RP.
(c) Time of Credit. The Employer matching contribution shall be
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credited to a Participant's Account as of the last day of the
calendar year or the date the Participant's employment ends, if
earlier. Such amount shall commence accruing interest when it is
credited to the account.
2.4 Vesting of Accounts. Each Participant shall be vested in the
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amounts credited to such Participant's Account and earnings thereon as
follows:
(a) Amounts Deferred. A Participant shall be one hundred percent
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(100%) vested at all times in the amount of salary, bonus and
board fees deferred under this Plan.
(b) Employer Matching Contribution. An Employee who leaves
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employment for reasons other than Retirement (as defined in the
S&RP), Total and Permanent Disability (as defined in the S&RP) or
death shall be vested in the Employer matching contributions and
interest thereon made for any particular year in accordance with
the vesting provisions in the S&RP as it may be amended from time
to time. Matching amounts and earnings thereon that are not
vested
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upon leaving employment shall be forfeited. The term "Deferred
Compensation" in this Plan shall include vested matching amounts
and interest thereon for distribution purposes.
(c) Retirement, Disability or Death. An Employee shall become one
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hundred percent (100%) vested in the matching amounts at
Retirement (as defined in the S&RP), or upon Total and Permanent
Disability (as defined in the S&RP) or death.
3. Deferred Compensation Account.
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3.1 The Company shall establish a bookkeeping account (the "Account")
to evidence the Company's liability to the Employee or Director for each
Year of Deferral. The Account shall be credited at the end of each
accounting period month with an amount equal to the portion of Deferred
Compensation payable during that month and with accrued interest.
3.2 Interest on Deferrals. Interest on the Account shall accrue and
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be credited to the Account at the end of each calendar year in an amount
equal to the Average Balance times the Average Prime Rate where:
"Average Balance" equals the sum of the Account balances on each day
during the year, divided by the number of days in the year; and
"Average Prime Rate" equals the sum of the rates announced by
Citibank, N.A. as its prime rate on the first business day of each calendar
quarter during the year, divided by four.
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3.3 The Company will notify each Participant quarterly of the value
of his or her Account.
3.4 For periods shorter than a year, interest shall be calculated in
a similar manner using the Average Balance during the short period and the
Average Prime Rate applicable during the previous plan year.
4. Unfunded Plan.
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4.1 The Company or Hotel is not required to earmark any assets for
payment of, or make any investment with respect to, the Account. Any
assets allocated to pay the Account will at all times remain the
unrestricted assets of the Company, subject to the claims of its general
creditors, and will at all times be available for the Company's use for
whatever purpose it desires. The Company shall have, in general, the power
to do and perform any and all acts with respect to any such assets in the
same manner and to the same extent as an individual might or could do with
respect to his or her own property. Without limiting the generality of the
foregoing, the Company may invest in any and all types of property, whether
real or personal, without regard to its location, including stock,
securities, and property of the Company and any business entity
controlling, controlled by or under common control with the Company. No
enumeration of specific powers herein made shall be construed as a
limitation upon the foregoing general power, nor shall any of the powers
herein conferred upon the Company be exhausted by the use thereof, but each
shall be continuing.
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Title to and beneficial ownership of any assets, whether cash or
investments, which the Company may earmark to pay the Account, shall at all
times remain in the Company, and the Participant shall have no property
interest whatsoever in any assets or investments of the Company. The
Company's obligations under the Plan are unsecured and unfunded, and no
assurances are given with respect to the Company's or Hotel's present or
future financial condition.
5. Distributions from Deferred Compensation Account.
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5.1 Lump Sum or Annual Distributions. (a) Lump sums and annual
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installments for deferral elections made before January 1, 1995 (including
deferrals for the year 1995) under the Promus Deferred Compensation Plan by
Employees and Directors of Hotel who were at the time Employees or
Directors of Promus or its affiliates will be governed by the deferral
agreements signed for those years. The Company has assumed the obligations
under such deferral agreements. For deferrals of compensation payable to
Directors after June 30, 1995 and to Employees in plan years 1996 and
thereafter, a Participant may elect (a) a lump sum to be paid upon leaving
employment/service or upon a specified date but not later than leaving
employment/service, or (b) annual installments of two to ten years.
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(b) Payments of an Account will be paid or will start within 30 days
after the elected date(s). The amount of any annual distribution from the
Account shall be the balance of the Account on the date of distribution
divided by the number of remaining years (including the annual distribution
being made) over which distribution is to be made. In the case of a lump
sum distribution or payment of an installment, the payment will include
interest accrued on the Account since the end of the preceding interest
accrual date until the date that the payment is calculated, computed on a
per annum basis at the Average Prime Rate for the previous plan year. At
the time of each annual distribution, the Company will provide the
Participant with a valuation of the Account showing the amount remaining in
the Account after the distribution.
5.2 Withholding Taxes. Under current law, Federal income taxes are
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not withheld on Deferred Compensation when deferred. However, FICA (social
security taxes) will be withheld from an Employee's Deferred Compensation
if an Employee's maximum FICA withholding has not been reached. The
Company will endeavor to take applicable FICA from other nondeferred
compensation that is payable to the Employee at the same time that the
deferral occurs but, if necessary, the amount of deferred salary and/or
deferred bonus may be subject to reduction by reason of the FICA taxes. In
addition, if any other law requires withholding on Deferred Compensation,
the Company will apply this withholding to Deferred Compensation.
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5.3 Election of Commencement of Distribution. The Participant shall
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be required to elect the method and timing of distributions at the time a
Participation Agreement is signed. The available distribution options will
be determined by the Company and will be set forth in the Participation
Agreement.
5.4 Leaving Employment or Service. Leaving employment will be deemed
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to occur upon discontinuation or removal from the payroll; upon death; or
upon disability if a licensed physician selected by or satisfactory to the
Company certifies to the Company that, because of such disability, the
Employee is not able to perform the duties of his or her position and will
be unable to do so for a period of at least 12 months. For Directors,
leaving service means resignation from the Board of Directors of Hotel or
termination of active service on the Hotel Board of Directors. If the
Employee enters an authorized leave of absence (such as temporary sick
leave), this shall not be deemed ceasing to be an employee. If and when
the Employee commences salary continuation, then he or she shall be deemed
to have ceased to be an employee, for distribution purposes, at the end of
the salary continuation period unless otherwise agreed by Hotel, with the
first payment to be made within 30 days after leaving employment. The
foregoing definition of leaving employment shall not necessarily have
application to any other situation or benefit plan.
5.5 Date of Payment(s). If the Participant elects a lump sum
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distribution, the entire value of the Account on the date of distribution
shall be paid to the
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Participant within 30 days after the date elected by the Participant for
the payment from the Account. If distribution is to be made over a period
of years, the first payment will be made within 30 days of the date elected
by the Participant for the commencement of payments from the Account (i.e.,
the first payment will be made not later than 30 days after the date of
leaving employment or service), and each successive annual payment will be
made on or about the anniversary of the first payment. The Company may in
its discretion accelerate any annual payment in a taxable year to an
earlier date in the same taxable year. The Company may withhold applicable
taxes as determined by the Company from any payment.
5.6 Selection of and Payment to Beneficiary. The Participant will be
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given the opportunity to designate a Primary Beneficiary and an Alternate
Beneficiary in case of the Participant's death. Such designation will be
effective when a signed beneficiary designation is submitted to the Company
or Hotel. Such designation will remain in effect until changed by the
Participant by submitting a new signed designation to the Company or Hotel.
If the Participant dies prior to distribution of the entire Account,
payment of the Account shall be made to the Primary Beneficiary, or, in the
event the Primary Beneficiary has predeceased the Participant, to the
Alternate Beneficiary. If the Participant qualifies for a distribution
because of disability or termination of employment/service and thereafter
dies before the payment of any distribution is made by the Company,
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then the payment or payments will be made to the Primary Beneficiary or
Alternate Beneficiary, if applicable, if the Company's payroll department
has been notified of the death before the payment is released.
Payments to a Beneficiary shall be in the manner elected in the
deferral agreement signed by the Participant provided that the Company in
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its sole discretion may at any time, at its own election or upon receipt of
a written request from the Beneficiary, convert annual installments to a
lump sum payment of the entire account. The Company has no obligation to
convert installments to a lump sum if requested by a Beneficiary. However,
such a change in distribution will be given consideration following a
written request. Upon payment of a lump sum to the Beneficiary with
respect to any deferral agreement, all obligations of the Company under the
deferral agreement shall be terminated.
A Participant may change a Beneficiary(ies) at any time by submitting
written notice of the new Beneficiary(ies) to the Company or Hotel. If the
Participant dies and has not designated a Beneficiary, or if all named
Beneficiaries have predeceased him or her, payment from the Account shall
be made to the Participant's estate in which case the estate shall be
deemed the Beneficiary hereunder.
5.7 Irrevocable Elections. A Participant's elections are irrevocable
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by the Participant and, subject to paragraph 9 "Termination by Company"
hereof, cannot be amended, except amendments may be made by the Company in
the case of
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mistake or in case of a Participant's financial hardship as determined by
the Company in its sole discretion.
5.8 Spin-off Transactions. Notwithstanding anything in the Plan to
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contrary, in the event any business of Hotel or its subsidiaries is spun-
off and a Participant becomes an employee or director of the company owning
the spun-off business (the "Spin-Off Company") which adopts a deferred
compensation plan that is substantially the same as the Plan, then the
Human Resources Committee of the Board of Directors of Hotel may in its
discretion determine as follows prior to such spin-off:
(a) any director-Participant who resigns as a director of Hotel and
who, within 90 days, commences service as a director of the Spin-
Off Company will not be treated as having terminated service as a
director for purposes of paying Plan benefits, and his or her
entire Account balance and all obligations associated therewith
will be transferred to the corresponding Plan of the Spin-Off
Company;
(b) a transfer of employment of a Participant to the Spin-Off Company
will not be considered a termination of employment for purposes
of paying Plan benefits or of forfeiting matching contributions
and interest thereon;
(c) a transferred Participant's Account balance as of the effective
date of the spin-off and all obligations related thereto will be
transferred to the corresponding plan of the Spin-Off Company;
and
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(d) any Participant who will immediately after the effective date of
the spin-off be employed by Hotel (or a subsidiary thereof) and
also by the Spin-Off Company (or a subsidiary thereof) will have
the right to designate in writing (to be signed prior to the
effective date of the spin-off) a percentage (from zero to 100%)
of his or her Account balance that will be transferred to the
Spin-Off Company (such percentage being applied to the balances
attributable to each year of deferral) which will include the
transfer of all obligations associated therewith. (To the extent
such designation is not made, the Account Balance will remain in
the Plan pursuant to its terms); and
(e) Except to the extent related to that portion of a Participant's
Account balance that is retained in the Plan pursuant to the
above Section 5.8(d), no benefits will be payable under the Plan
to a Participant whose Account balance (or portion thereof) is
transferred to the Spin-Off Company.
6. Correction of Errors.
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6.1 In the event deferrals are not made or excessive deferrals are
made due to a mistake or error including payroll errors, then the Company
or Hotel will have discretion to correct the error in such manner as it
deems appropriate. If the Participant does not object within 30 days of
the occurrence of any mistake or
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error regarding deferrals, then the Company or Hotel in its discretion may
decide that the deferral mistake shall not be corrected or the Company or
Hotel may elect to take such action as it deems necessary to correct or
partially correct the mistake or error. The Company or Hotel may elect not
to pay interest on amounts contributed to correct a nondeferral mistake or
error if the Participant had not objected to the nondeferral within 30 days
of the occurrence of the mistake or error.
7. Restriction Against Transfers and Assignments.
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7.1 Neither the Participant nor any Beneficiary shall have any right
to commute, sell, assign, transfer, pledge, hypothecate or otherwise convey
or encumber any right to receive any payment hereunder, and all such
payments and all rights thereto are expressly declared to be non-assignable
and non-transferable. The Account shall not be subject to the claims of
the Participant's or a Beneficiary's creditors and the Company or Hotel
shall not be obligated to disburse any funds from the Account to any
creditor of the Participant or of a beneficiary.
8. Deferral Agreement Not An Employment Agreement.
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8.1 A deferral agreement does not constitute a contract for continued
employment of an Employee by the Company or Hotel. The Company or Hotel
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reserves the same rights to modify the Employee's compensation and to
terminate the Employee's employment with the Company or Hotel which it had
prior to the execution of a deferral agreement.
9. Administration.
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9.1 Committee; Duties. This Plan may be administered by a Committee,
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which shall consist of not less than three (3) individuals selected by the
Chief Executive Officer of Hotel or his designee. Members of the Committee
may be Participants under this Plan. Hotel, the Committee and its agents
have discretionary authority to decide all questions arising under the Plan
including questions as to eligibility, correction of errors, and
interpretation of the Plan and deferral agreements.
9.2 Agents. The Committee may appoint an individual to be the
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Committee's agent with respect to the day-to-day administration of the
Plan. In addition, the Committee may, from time to time, employ other
agents and delegate to them such administrative duties as it sees fit, and
may from time to time consult with counsel who may be counsel to the
Company.
9.3 Binding Effect of Decisions. The decision or action of the
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Committee in respect of any question arising out of or in connection with
the administration, interpretation and application of the Plan and the
rules and regulations promulgated hereunder shall be final and conclusive
and binding upon all persons having any interest in the Plan.
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9.4 Indemnity of Committee. The Company and Hotel shall indemnify
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and hold harmless the members of the Committee or any agents or employees
of the Company or Hotel against any and all claims, loss, damage, expense,
or liability arising from any action or failure to act with respect to this
Plan, except in the case of willful misconduct by the Committee, Committee
member, or such agent or employee of the Company or Hotel.
10. Claims Procedure.
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10.1 Claim. Any Participant or legal representative thereof may file
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a claim for benefits under the Plan by submitting to the Committee a
written statement describing the nature of the claim and requesting a
determination of its validity under the terms of the Plan. The Committee
shall issue a ruling and written notice with respect to the claim within 30
days after such claim is received. If the claim is wholly or partially
denied, written notice shall be furnished to the claimant, which notice
shall set forth in a manner calculated to be understood by the claimant;
(a) the specific reason or reasons for denial;
(b) specific reference to pertinent Plan provisions on which the
denial is based;
(c) a description of any additional materials or information
necessary for the claimant to perfect the claim and an
explanation of why such material or information is necessary; and
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(d) an explanation of the claims review procedures.
10.2 Denial of Claim. Any Participant or legal representative
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thereof whose claim for benefits has been denied, may appeal such denial by
resubmitting to the Committee a written statement requesting a further
review of the decision within sixty (60) days of the date the claimant
receives notice of such denial. The statement shall set forth the reasons
supporting the claim, the reasons such claim should not have been denied,
and any other issues or comments which the claimant deems appropriate with
respect to the claim. The Committee shall, if requested, make copies of
the Plan documents available for examination by the claimant. The
Committee shall issue a ruling and written notice within sixty (60) days
after the date the claim is resubmitted. Such written notice shall include
specific reasons for the decision, written in a manner calculated to be
understood by the claimant, with specific references to the pertinent Plan
provisions on which the decision is based. Such decision shall be
conclusive and binding on the Participant.
11. Amendment; Termination of Further Deferrals.
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11.1 Hotel may at any time amend the Plan in whole or in part, and
may provide or agree to different requirements for different Participants,
provided, however, that (i) no amendment shall be effective to decrease or
restrict the amount accrued to that date on any Account maintained pursuant
to any existing
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deferral under the Plan; (ii) on amounts that have been deferred up to the
date of amendment, no amendment shall be effective to reduce the interest
credited or to be credited as provided in paragraph 3 of this Plan, and
(iii) no amendment shall be effective to accelerate the payment of any
Account relating to deferrals during 1992 and thereafter except Hotel
retains the right to cause acceleration of payment to a Beneficiary
pursuant to Section 5.7.
11.2 Right to Terminate Future Deferrals. The Company or Hotel may
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for any new calendar year terminate further deferrals into the Plan by any
person or persons for that year and/or may reject additional Participants
in the Plan, if, in its sole judgment, such termination or rejection would
be in the best interest of the Company or Hotel. Benefits from deferrals
up to the point of termination of further deferrals shall be paid in the
form elected by the Participant in his or her Participation Agreement or
otherwise in accordance with this Plan, including crediting of interest,
until all payments are complete.
12. Miscellaneous.
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12.1 Delivery of Notice. Any notice to a Participant may be given
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either by delivery to the Participant or by deposit in the United States
Mail, postage prepaid, addressed to his or her last-known address. Any
notice to the Company or Hotel hereunder may be given either by delivery,
in person or by deposit in the United States Mail, postage prepaid,
addressed to Promus Hotel Corporation, 6800 Poplar Avenue, Memphis,
Tennessee 38138, Attn: Corporate Secretary.
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12.2 Governing Law. This Agreement shall be governed by the laws of
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Tennessee.
12.3 Immunity. So long as they act in good faith, the Company's and
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Hotel's officers, directors, agents, or employees may act pursuant to this
Agreement without any liability to a Participant or any other person.
12.4 Payment To Guardian. If a Plan benefit is payable to minor or a
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person declared incompetent or to a person incapable of handling the
disposition of property, the Company may direct payment of such Plan
benefit to the guardian, legal representative or person having the care and
custody of such minor or incompetent person. The Company may require proof
of incompetency, minority, incapacity or guardianship as it may deem
appropriate prior to distribution of the Plan benefit. Such distribution
shall completely discharge the Company from all liability with respect to
such benefit.
12.5 Captions. The captions of the articles, sections and paragraphs
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of this Plan are for convenience only and shall not control the meaning or
construction of any of its provisions unless the context clearly requires
such control.
12.6 Validity. In case any provision of this Plan shall be held
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illegal or invalid for any reason, said illegality or invalidity shall not
affect the remaining parts hereof, but this Plan shall be construed and
enforced as if such illegal and invalid provision had never been inserted
herein.
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13. Successors and Assigns.
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A participating Company may assign its rights and obligations under
any deferral agreement to any company or person that acquires all or
substantially all of the stock or assets of the Company or that is a
successor to the Company by merger. Hotel may assign its rights and
obligations under this Plan to any successor to Hotel.
PROMUS HOTEL CORPORATION
By:
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Title:
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Attest:
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Title:
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Dated as of May 26, 1995
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