EXHIBIT 4.6
THE PRUDENTIAL DEFERRED COMPENSATION PLAN
FOR NON-EMPLOYEE DIRECTORS
The Prudential Deferred Compensation Plan for Non-Employee Directors
(the "Plan") was established by The Prudential Insurance Company of America
("Prudential Insurance"), effective as of July 1, 1974, for the purpose of
providing a method of deferring payment to non-employee directors of the Company
(the "Non-Employee Directors") of their fees, as fixed from time to time by the
Board of Directors of the Company until termination of their services on the
Board. The Plan was amended and restated effective as of May 12, 1998. Effective
as of January 1, 2002, the Plan was amended to transfer sponsorship from
Prudential Insurance to Prudential Financial, Inc. (the "Company") to reflect
the change in corporate structure resulting from the demutualization of
Prudential Insurance, and the establishment of the Company as the publicly-held
parent company of Prudential Insurance as of December 17, 2001. Effective as of
September 10, 2002, the Plan has been amended and restated,with such changes
generally to be effective as of January 1, 2003 as set forth herein, to provide
for the deferral of "Stock Based Fees" and "Cash Based Fees" (as defined below),
the provision of certain additional notional investment options under the Plan
related to the deferral of such Fees, and to address the suspension of, and
"rollover" of accrued amounts under, the Pension Plan (as defined below).
The Plan is intended to be, and shall be administered as, an unfunded
plan maintained for the purpose of providing deferred compensation for the
Non-Employee Directors and, as such, is not an "employee benefit plan" within
the meaning of Title I of ERISA (as defined below). To the degree applicable,
the Plan is also intended to comply with the provisions of New Jersey Statutes
Annotated 17B:18-52.
ARTICLE I
DEFINITIONS
The following capitalized terms shall have the meanings hereinafter set
forth in this Plan:
"Board of Directors" or "Board" means the Board of Directors of the
Company.
"Cash-Based Fees" shall mean, effective as of January 1, 2003, Fees
payable in U.S. currency to the Company's Non-Employee Directors, the amount of
which may be periodically amended or modified consistent with the requirements
of the By-laws and Statement of Corporate Governance Principles and Practices of
the Company.
"Change of Control" shall be deemed to have occurred if any of the
following events shall occur:
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(i) any Person (as defined below) acquires "beneficial ownership"
(within the meaning of Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 25% or more of the
combined Voting Power (as defined below) of the Company's securities; or
(ii) within any 24-month period commencing prior to the consummation
of a plan of reorganization under which Prudential Insurance ceases to be a
mutual life insurance company, the persons who, at the beginning of such
period, were the members of the Board (the "Incumbent Company Directors")
shall cease to constitute at least a majority of the Board or the board of
directors of any successor to the Company; provided, however, that any
director elected to the Board, or nominated for election to the Board, by a
majority of the Incumbent Company Directors then still in office shall be
deemed to be an Incumbent Company Director for purposes of this subclause
(ii); or
(iii) upon the consummation of a merger, consolidation, share
exchange, division, sale or other disposition of all or substantially all
of the assets of the Company (a "Company Corporate Event"), immediately
following the consummation of which the stockholders of the Company
immediately prior to such Company Corporate Event do not hold, directly or
indirectly, a majority of the Voting Power of
(x) in the case of a merger or consolidation, the surviving or
resulting corporation,
(y) in the case of a share exchange, the acquiring corporation
or
(z) in the case of a division or a sale or other disposition of
assets, each surviving, resulting or acquiring corporation
which, immediately following the relevant Company Corporate
Event, holds more than 25% of the consolidated assets of the
Company immediately prior to such Company Corporate Event,
provided that no Change of Control shall be deemed to have
occurred with respect to any Participant who is employed,
immediately following such Company Corporate Event, by any
entity in which the policyholders or stockholders of the
Company, as the case may be, immediately prior to such
Company Corporate Event hold, directly or indirectly, a
majority of the Voting Power; or
(iv) any other event occurs which the Board declares to be a Change of
Control.
Notwithstanding the foregoing, a Change of Control shall not be deemed to have
occurred merely as a result of (i) the conversion of Prudential Insurance from a
mutual life insurance company to a stock company a majority of whose
shareholders immediately following such conversion are either (x) persons who
were policyholders of Prudential
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Insurance immediately prior to such transaction or (y) the Company or another
corporation the shares of which are held primarily by the persons described in
subclause (x); (ii) Prudential Insurance becoming a direct or indirect
subsidiary of the Company whose shareholders are primarily persons who were
policyholders of Prudential Insurance immediately prior to such transaction or
(iii) an underwritten offering of the equity securities of the Company where no
Person (including any group (within the meaning of Rule 13d-5(b) under the
Exchange Act)) acquires more than 25% of the beneficial ownership interests in
such securities.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means the Committee that has been appointed by the Board of
Directors pursuant to Article V of the Plan.
"Common Stock" means the common stock, par value $0.01, of the Company.
"Company" means Prudential Financial, Inc
"Controlled Group" means the Company and (i) each corporation which is
a member of a controlled group of corporations (within the meaning of Section
414(b) of the Code) which includes the Company, (ii) each trade or business
(whether or not incorporated) which is under common control with the Company
(within the meaning of Section 414(c) of the Code), (iii) each organization
included in the same affiliated service group (within the meaning of Section
414(c) of the Code) as the Company, and (iv) each other entity required to be
aggregated with the Company pursuant to regulations promulgated under Section
414(o) of the Code. Any such entity shall be treated as part of the Controlled
Group only for the period while it is a member of the controlled group or
considered to be in a common control group.
"Deferred Compensation Accounts" shall have the meaning set forth in
Section 3.1 of the Plan.
"Deferred Stock Units" shall have the meaning set forth in Section 7.1.
"Early Distribution With Penalty" shall have the meaning set forth in
Section 4.3.
"Effective Date" means July 1, 1974.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fees" includes all fee income payable to Non-Employee Directors for
their service on the Board of Directors, including, but not limited to (i)
annual service fees, (ii) meeting fees (including orientation meeting fees), and
(iii) compensation that may be payable to such Non-Employee Directors for
serving on any of the committees of the
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Board of Directors. The term "Fees" does not include travel payments that may be
made to such Non-Employee Directors as a result of attending orientation
meetings of the Board of Directors, payments that constitute reimbursement for
expenses incurred by such Non-Employee Director in connection with his or her
services to the Board of Directors, nor any fees that may be payable to such
Non-Employee Director for service as a trustee of The Prudential Foundation.
Effective January 1, 2003, the term "Fees" shall include both Stock-Based Fees
and Cash-Based Fees, unless otherwise noted in this Plan.
"Fixed Units" shall have the meaning set forth in Section 7.1.
"Hardship" means an unanticipated emergency that is caused by an event
beyond the control of the Participant or beneficiary, and that would result in
severe financial hardship to such Participant or beneficiary.
"Non-Employee Director" means any Director of the Company who is not a
salaried officer or employee of either the Company or any entity within the
Controlled Group.
"Participant" means a Non-Employee Director of the Company (and, if
applicable, their beneficiaries) who have elected to participate in the Plan and
thereby defer all or a portion of the Fees to be earned by such Participant in
the next applicable Plan Period.
"Pension Plan" means The Pension Plan For Non-Employee Directors Of
Prudential Financial, Inc., as suspended by the Company as of December 31, 2002.
"Pension Plan Rollover Deferrals" has the meaning set forth in Section
3.3 (a) (ii).
"Person" means any person (within the meaning of Section 3(a)(9) of the
Exchange Act), including any group (within the meaning of Rule 13d-5(b) under
the Exchange Act)), but excluding any of the Company, any Subsidiary or any
employee benefit plan sponsored or maintained by the Company or any Subsidiary.
"Plan Period" has the following meaning: (a) with respect to the "First
Plan Period," the period commencing on July 1, 1974, and terminating on December
31, 1974, and (b) with respect to all subsequent Plan Periods, the period of
time commencing on January 1 and terminating on December 31 for all successive
calendar years.
"Pre-2003 Fee Deferrals" has the meaning set forth in Section
3.3(a)(i).
"Retirement Date" means the first day of the month following the month
in which the Participant terminates his or her services as a Non-Employee
Director.
"Secretary" means the Secretary of the Board of Directors and, for
purposes of this Plan and various administrative procedures described herein,
the term "Secretary" shall also include any member of the Secretary's Department
of the Company,
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"Stock-Based Fees" shall mean, effective as of January 1, 2003, Fees
payable in Common Stock to the Company's Non-Employee Directors, the amount of
which may be periodically amended or modified consistent with the requirements
of the By-laws and Statement of Corporate Governance Principles and Practices of
the Company.
"Subsidiary" means any corporation or partnership in which the Company
owns, directly or indirectly, more than 50% of the total combined voting power
of all classes of stock of such corporation or of the capital interest or
profits interest of such partnership.
ARTICLE II
PARTICIPATION REQUIREMENTS
2.1 Eligibility. A Non-Employee Director will be deemed a Participant
in the Plan either (a) if he or she elects to defer all or a portion of the Fees
to be earned during a Plan Period as provided herein, and/or (b) if such
Non-Employee Director has accrued a pension under the terms of the Pension Plan
the value of which is to be transferred to this Plan as of such date pursuant to
the suspension and subsequent termination of the Pension Plan.
2.2 Elections
(a) General Rules. The election to defer all or a portion of the
Participant's Fees for the next Plan Period, as well as the election of the form
and timing of any distributions on the Participant's behalf, shall be made by
written notice delivered by the Participant to the Secretary not later than the
last day of the open trading window under the Company's Insider Trading Policy
immediately preceding the first day of such Plan Period. In the case of a
Non-Employee Director who first becomes eligible during such Plan Period, such
election must be made by written notice not later than thirty (30) days after
such Non-Employee Director first becomes eligible; provided, however, that with
respect to such initial elections, no Fees attributable to the period before
which the election is made and presented to the Secretary are eligible for
deferral under this Plan. Each such election shall be irrevocable during such
Plan Period and thereafter, except as set forth below.
(b) Amendment of Election Form: Each Participant may, no later than the
last day of the year prior to the year of his or her anticipated Retirement
Date, amend their election forms for deferrals of Fees related to all Plan
Periods (a) to change the previously-elected form of distribution to another
distribution form of all distributions under the Plan to another distribution
form permitted under Section 4.1, or (b) to change the starting date for
commencement of all payments under the Plan to another definitely determinable
date on or after such Retirement Date, provided, however that such election
shall be made during an open trading window under the Company's Insider Trading
Policy.
2.3 Pension Plan Rollover Elections. With respect to any Non-Employee
Director not already a Participant, or a current Participant of the Plan who has
accrued a
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pension under the terms of the Pension Plan the value of which is to be
transferred to this Plan as of such date pursuant to the suspension and
subsequent termination of the Pension Plan, such individuals must, by written
notice delivered by the Participant to the Secretary not later than the last day
of the open trading window under the Company's Insider Trading Policy
immediately preceding the first day of such Plan Period, elect the form and
timing of any distributions on the Participant's behalf with respect to such
Pension Plan Rollover Deferrals.
Such election form shall specify, at a minimum, that:
(a) For Participants of the Plan and other Non-Employee Directors
who become Participants in this Plan by virtue of such Pension
Plan Rollover who are in active service with the Board as of
December 31, 2002, the form (lump sum or installment) and
timing of any distribution of such Pension Plan Rollover
Deferrals as generally provided for under Section 4.1(a) of
the Plan; and
(b) For Participants of the Plan and other Non-Employee Directors
who become Participants in this Plan by virtue of such Pension
Plan Rollover who were in active service with the Board as of
December 31, 2001 but had retired from the Board prior to
December 31, 2002, such Participants will be permitted to
elect only 60 or 120 month installment payments of such
amounts, to commence on or after January 1, 2003.
No other election shall be permitted with respect to such Pension Plan Rollover
Deferrals, except as set forth in Section 4.4 below.
ARTICLE III
DEFERRED COMPENSATION ACCOUNTS
3.1 Establishment of Deferred Compensation Accounts. An account shall
be established for each Participant which shall be designated as his or her
Deferred Compensation Account. Such Account may be suballocated as generally
provided for under Section 3.3(a) below as a recordkeeping matter and accounting
convenience, but the Company shall not be required to segregate any amounts
credited to the Deferred Compensation Accounts in any manner or in any form,
except in its sole discretion.
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3.2 Crediting of Fees to Deferred Compensation Accounts. Upon the
execution of a valid election to defer all or a portion of the Fees attributable
to services performed by the Participant in the next Plan Period, such Fees
shall be credited to the Participant's Deferred Compensation Accounts in the
following manner:
(a) Annual Service Fees: To the degree the Fees deferred by the
Participant constitute annual service fees, the amount of the
annual service fee to be earned by the Participant for
services rendered during the First Plan Period shall be
credited in two equal installments on or about the last
business day of September and December in such Plan Period and
for services rendered during any other Plan Period shall be
credited in four equal installments on or about the last
business day of March, June, September, and December in the
Plan Period to which such service fee relates to his or her
Deferred Compensation Account, subject to the provisions of
Section 3.4.
(b) Meeting/Committee Fees: To the degree the Fees deferred by the
Participant constitute meeting fees or committee fees, the
amount of each fee to be earned by a Participant for
attendance at a meeting during a Plan Period shall be credited
to his or her Deferred Compensation Account on the last
business day of the calendar quarter during the Plan Period
when such meeting occurred.
3.3 Earnings Indices and Investment Options for Stock-Based Fees and
Cash-Based Fees Within the Deferred Compensation Accounts (Fixed Units and
Deferred Stock Units); Allocation Limitations
A Participant's Deferred Compensation Account will be credited with
notional interest, earnings (and, where applicable, notional investment gain or
loss) that are intended to mirror the investment performance and results of the
two notional investment options offered under the Plan and selected by the
Participant on the Participation Agreement, subject to the limitations set forth
below:
(a) Sub-Allocation of Deferred Compensation Accounts: Amounts
credited to each Participant's Deferred Compensation Account
shall be identified in the Plan's records as comprised of up
to four subaccounts, as follows:
(i) Amounts credited to an applicable Participant's
Deferred Compensation Account for Plan Periods ending
on December 31, 2002 (including any interest accrued
on such balances (the "Pre-2003 Fee Deferrals");
(ii) Amounts credited to an applicable Participant's
Deferred Compensation Account as a result of the
suspension and subsequent termination of the Pension
Plan as of December 31, 2002 (the "Pension Plan
Rollover Deferrals");
(iii) Stock-Based Fee Deferrals; and
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(iv) Cash-Based Fee Deferrals.
(b) Available Notional Investment Options under the Plan:
Effective for Plan Years beginning on or after January 1,
2003, the two available notional investment options under the
Plan - the "Fixed Units" and the "Deferred Stock Units" --
are intended to mirror the performance of two of the actual
investment options available to participants of the
Prudential Employee Savings Plan, as follows: (a) the Fixed
Rate Fund (in the case of the Fixed Units); and (b) the
Prudential Financial, Inc. Common Stock Fund (in the case of
the Deferred Stock Units). With respect to amounts deemed
allocated to the Fixed Units under the Plan by any
Participant, such amounts will be credited with interest in
the same general manner as interest would be credited to
amounts actually invested in the actual Fixed Rate Fund. With
respect to amounts deemed allocated to Deferred Stock Units
by any Participant, such amounts will be credited under the
Plan as if the Participant had actually purchased units of
the Prudential Financial, Inc. Common Stock Fund on the date
of such deferral, (adjusting the number of units to take into
account the subsequent payment of dividends, and any
reinvestment of such dividends, that may actually occur under
the Prudential Financial, Inc. Common Stock Fund) and the
value of such units will be adjusted in the same general
manner as amounts actually invested in the Common Stock Fund.
To the extent that the actual investment options noted above
are amended or removed from the Prudential Employee Savings
Plan, comparable changes shall be made in the available
notional investment options under this Plan, and any such
changes shall be communicated to Participants as soon as
administratively practicable.
(c) Allocation Limitations: Generally, a Participant may elect a
combination of the two available notional investment options
with respect to the amount of Fees deferred under the Plan,
subject to the limitations set forth below:
(i) Cash-Based Fees: With respect to any
Cash-Based Fee amounts, such amounts
(including any earnings) may be allocated to
either the Fixed Units or the Deferred Stock
Units under the Plan; provided, however,
that the Participant's allocation of his or
her account must be stated in five percent
(5%) increments.
(ii) Stock-Based Fees: With respect to any
Stock-Based Fees deferred under the Plan,
such amounts (and any notional dividends
paid with respect to such amounts) may only
be allocated to the Deferred Stock Units
under the Plan.
(iii) Pre-2003 Fee Deferrals: With respect to any
Pre-2003 Fee Deferrals, such amounts may be
allocated to either the
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Fixed Units or the Deferred Stock Units
under the Plan; provided,
however, that the Participant's allocation
of his or her account must be stated in five
percent (5%) increments.
(iv) Pension Plan Rollover Deferrals: With
respect to any Pension Plan Rollover
Deferrals deferred under the Plan, such
amounts (and any notional dividends paid
with respect to such amounts) may only be
allocated to the Deferred Stock Units under
the Plan.
(d) Changing Indices: Subject to the allocation limitations set
forth in Section 3.3(c) above, a Participant may change how
the notional amounts reflected in his or her Account are
deemed invested by completing an Account Reallocation Form.
Such deemed investment allocations may be changed
periodically during an open trading window under the
Company's Insider Trading Policy, and in no event more than
once per calendar quarter. Changes will be effective the
first day of the following month. To the extent that
additions to, or subtractions from, the number of
indices/notional investment options are made under this Plan,
Participants will be asked to complete an Account
Reallocation Form to indicate if they wish to reallocate
their notional Account balances. In the event no such Form is
received, no changes to the Participant's Account will be
made except that, in the event a particular indices/notional
investment option is eliminated and no Form has been
completed, the notional amounts credited in such eliminated
option shall be credited under the Fixed Units (or, if such
option has been eliminated, a notional investment equivalent
to any money market fund option offered under the Prudential
Employee Savings Plan) as of the date of such elimination (or
as soon as administratively practicable thereafter). The
aforementioned allocation limitations apply at all times
during which the Participant is in active service as a
Non-Employee Director of the Company, and for a period of two
(2) years following his or her Retirement Date (or such other
period after the Retirement Date as the Committee, in its
sole discretion, may impose).
(e) Account Valuation and Reports:
(i) Periodic Account Valuation. For purposes of
Deferred Compensation Account recordkeeping,
periodic updates of the notional value of
each Participant's Deferred Compensation
Account (and of the aggregate unfunded
liabilities of the Plan as a whole) shall be
made at the direction of the Committee (in
any event, no less frequently than as of the
end of each calendar quarter). With respect
to any distribution for a Participant's
Account as provided for in Article IV of the
Plan, the aggregate value of any
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such distribution shall be calculated by
reference to the notional value of the
Account as of the last day of the month
prior to the month in which such
distribution is either anticipated to
commence or has been requested to commence
by the Participant (or Beneficiary, as
applicable).
(ii) Participant Statements. Quarterly statements
illustrating Participant Deferred
Compensation Account balances, including any
notional gains or losses in such Accounts,
shall be made available to Participants as
soon as practicable after the end of each
calendar year quarter, in a form and manner
prescribed by the Committee.
3.4 Special Rules Governing Deferral of Annual Service Fees. If, prior
to the end of the Plan Period, a Participant (a) becomes an employee of the
Company or any member of the Controlled Group, (b) ceases for any reason to be a
Non-Employee Director, or (c) has elected to defer all or a portion of his or
her annual services fees and the effective date of participation by a
Participant for any Plan Period is other than the first day thereof, such
Participant's Deferred Compensation Account will be credited with that
proportion of the annual service fee that the Participant has elected to defer
for the full Plan Period which the number of days of his or her participation in
the Plan during such Plan Period bears to the total number of days in such Plan
Period.
ARTICLE IV
DISTRIBUTIONS FROM THE PLAN
4.1 Timing and Form of Distribution. The Company shall pay to the
Participant (or, in the event of the Participant's death, to the Participant's
designated beneficiary) a sum equal to the amount then standing to his or her
credit in his or her Deferred Compensation Account (plus interest as provided
for under Section 3.3 herein), in the following manner:
(a) Normal Form of Benefits - Lump Sum or Installment Payments:
Payments shall be made in a lump sum, or in 60 or 120 monthly
installments, as elected by the Participant in his or her
deferral election form, to begin on either (i) a date prior to
the Participant's Retirement Date, provided that such date
must be no earlier than the January 1 in the year following
the Plan Period during which such Fees would otherwise have
been payable to the Participant, (ii) the Participant's
Retirement Date, or (iii) such later date as selected by the
Participant (provided, however, that in any event,
distributions from the Plan must commence in the year such
Participant attains age 70 1/2). In the event an installment
option is chosen, such installments shall be as nearly equal
as practicable and shall continue even if the Participant
again serves on the Board of Directors.
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Any such distribution provided for under the terms of this
Section 4.3(a) will be made in the following forms:
(i) For Deferred Compensation Account balances
attributable to Pension Plan Rollover and
Stock-Based Fees, the form of distribution
shall be Common Stock;
(ii) For Deferred Compensation Account Balances
attributable to Cash-Based Fees or Pre-2003
Fee Deferrals, the form of distribution
shall be either cash or Common Stock, at the
election of the Participant.
In the event that a 60 or 120-month installment option has
been elected by the Participant, such Participant will have
the right during such allocation period to reallocate the
amounts yet to be distributed under the Plan among the
notional investment options described in and subject to
thelimits set forth in Article III. Any such reallocation
elections shall be made on a form, and under procedures
established by the Committee, in its sole discretion.
Notwithstanding the above, if the Participant dies (either
before payments commence from the Plan or while such payments
are being made), the balance of the Participant's Deferred
Compensation Account shall immediately become due and payable
in one lump sum in cash to the Participant's beneficiary or,
if no beneficiary is designated or then living, to the
Participant's estate.
(b)a Small Account Balances - Lump Sum Cashout. Notwithstanding the
foregoing, in the event the Participant's Deferred
Compensation Account balance is ten thousand dollars ($10,000)
or less at the time a distribution of the Participant's
Deferred Compensation Account balance would commence by reason
of the application of this Section, or in the event that a
Participant's remaining Account balance after commencement of
the installment options provided for above is ten thousand
dollars ($10,000) or less, the Committee reserves the right to
accelerate the payment of such Participant's Account balance
in a lump sum in cash and/or Common Stock (consistent with the
general requirements of Section 4.1(a)(i) and (ii) above),
notwithstanding the form of benefit payment elected by the
Participant under the terms of Article II (for Pension Plan
Rollover Deferrals) or Article IV (for all other deferrals),
as applicable. For purposes of this Section, a Participant's
Account balance shall be valued in accordance with the general
provisions of Section 3.3(e).
(c) Annuity Option: A Participant whose Retirement Date occurred
on or after January 1, 1989 but before January 1, 1999 had the
ability to elect to receive payments in any form of annuity
offered in the normal course of business by the Company;
provided, however, that the election of such method of payment
could not result in the receipt of payments on an
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annual basis in greater amounts that under a method of
payment, if any, previously elected by the Participant. The
annuity option provided herein did not involve the transfer by
the Company to the Participant of an annuity contract, but
merely describes an optional form of payment. Effective
January 1, 1999, this distribution option will no longer be
available to Participants whose Retirement Date has not
occurred as of such date.
4.2 Hardship Distribution. Notwithstanding any other provisions of the
Plan, the Committee may determine, in the Committee's sole discretion, to
accelerate the payment of amounts accrued in such Participant's Deferred
Compensation Account in the event of the Participant incurring a Hardship. For
purposes of this Section, the Committee may only permit the accelerated payment
of an amount not to exceed the amount necessary to satisfy the Hardship
liability and, in no event, may the Committee permit the payment under the Plan
of an amount exceeding the Participant's balance in his or her Deferred
Compensation Account as of the date of such withdrawal.
4.3 Early Distribution With Penalty. A request for an Early
Distribution With Penalty of the Participant's Deferred Compensation Account
balance (not including, for these purposes, any Pension Plan Rollover Amounts)
may be made by submitting a Deferred Compensation Withdrawal Form in any Plan
Year during an open trading window under the Company's Insider Trading Policy.
The Account balance distributed will be reduced by a penalty of ten percent
(10%) of the Account. For purposes of any such Early Distribution With Penalty,
the Account will be valued as of the last day of the month immediately preceding
the date on which the request is received and will be paid in a lump sum, in
cash and stock (as provided for under the general provisions of Section 4.1),
within thirty (30) days of receipt by the Committee of such Withdrawal Form.
If an Early Distribution With Penalty payment is made, all further
deferrals of Fees shall cease for the remainder of the Plan Year and for the
subsequent Plan Year.
Any penalty amounts withheld from the Early Distribution With Penalty
are taxable income to the Participant, and may be used by the Committee in its
sole discretion.
4.4 Distribution on a Change of Control. In the event of a Change of
Control, Participants under the Plan will have the ability to make a one-time
election to commence payment of their Deferred Compensation Account balance, in
whatever manner (lump sum or installment) previously chosen by such Participant,
no earlier than the January 1st of the year following the Plan Period during
which such Change of Control occurred. Such election shall, consistent with the
general provisions of Section 2.2 of the Plan be made by written notice
delivered by the Participant to the Secretary not later than five (5) days
before the end of such Plan Period.
ARTICLE V
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ADMINISTRATION OF THE PLAN
5.1 Administration of the Plan. The Board of Directors shall appoint a
Committee to administer the Plan, which shall be comprised of the following
three persons: the Vice President and Secretary of the Company, the Vice
President of Total Compensation of the Company's (or as the case may be,
Prudential Insurance's) Human Resources Department, and a Vice President and
Corporate Counsel - Financial Management, of the Company's Law Department (with
the Vice President and Secretary of the Company serving, where appropriate, as
the primary contact for questions related to the Plan's operation by
Participants). The Committee shall maintain such procedures and records as will
enable the Committee to determine the Participants and their beneficiaries who
are entitled to receive benefits under the Plan and the amounts thereof.
5.2 General Powers of Administration. The Committee shall have the
exclusive right, power, and authority to interpret, in its sole discretion, any
and all of the provisions of the Plan; and to consider and decide conclusively
any questions (whether of fact or otherwise) arising in connection with the
administration of the Plan or any claim for benefits arising under the Plan. Any
decision or action of the Committee shall be conclusive and binding on the
Company and the Participants.
ARTICLE VI
AMENDMENT AND TERMINATION
6.1 Amendment of the Plan: The Committee shall have the authority to
adopt minor amendments to the Plan without prior approval by the Board of
Directors that:
(i) are necessary or advisable for purposes of complying with
applicable laws and regulations;
(ii) relate to administrative practices under the Plan
(including, but not limited to, the establishment of any
procedures or processes or accounts related to the
distribution of Common Stock or other amounts under the
Plan);
(iii) relate to the selection or deletion of additional notional
investment options for Participants in their accounts; or
(iv) have an insubstantial financial effect on the Plan.
The Board of Directors shall have the authority to adopt any other amendments to
the Plan not encompassed under the terms of the preceding sentence. Any such
amendments
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must be made by written instrument, and notice of such amendments shall be
provided as soon as practicable to Participants after their adoption.
6.2 Limitations on Amendment or Termination of the Plan The Company
reserves the right to amend or terminate the Plan in any respect and at any
time, without the consent of Participants or beneficiaries; provided, however,
that the following conditions with respect to such amendment or termination must
be satisfied in order for such amendment or termination to be binding and in
effect:
(a) Such amendment or termination must be made pursuant to a written
resolution of the Committee which is approved thereafter by the Board
of Directors; and
(b) Such amendment or termination resolution may not adversely affect the rights
of any Participant or beneficiary to receive benefits earned and accrued under
the Plan prior to such amendment or termination; provided, however, that
(i) any alteration of the notional investment options
under the Plan,
(ii) any acceleration of payments of amounts accrued under
the Plan by action of the Committee or the
Compensation Committee or by operation of the Plan's
terms; or
(iii) any decision by the Committee or the Compensation
Committee to limit participation (or other features
of the Plan) prospectively under the Plan
shall not be deemed to violate this provision.
6.3 Continuation or Termination -- Change of Control. In the event of a
Change of Control where the Company is not the surviving entity, any successor
to the Company may elect to continue or to terminate the Plan (in either event,
assuming any and all liabilities for such Plan); provided, however, that in the
event the Plan is terminated by such entity, the Plan shall be terminated in
accordance with the requirements of this Article VI. (including, but not limited
to, the requirements of Section 6.2 herein).
ARTICLE VII
GENERAL PROVISIONS
7.1 Participant's Rights Unsecured and Unfunded. This Plan is an
unfunded plan maintained primarily to provide deferred compensation benefits for
Non-Employee Directors, and therefore is exempt from the provisions of Parts 2,3
and 4 of Title I of ERISA. Accordingly, no assets of the Company shall be
segregated or earmarked to represent the liability for accrued benefits under
the Plan. Amounts referenced in
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Participant Account statements are only recordkeeping devices reflecting such
liability for accrued benefits, and do not reflect any actual amounts credited.
The right of a Participant (or his or her Beneficiary) to receive a payment
hereunder shall be an unsecured claim against the general assets of the Company
or any successor to the Company. All payments under the Plan shall be made from
the general funds of the Company or any successor. The Company is not required
to set aside money or any other property to fund its obligations under the Plan,
and all amounts that may be set aside by the Company prior to the distribution
of Account balances under the terms of the Plan remain the property of the
Company (or, if applicable, any successor).
Notwithstanding the foregoing, nothing in this Section 7.1 shall
preclude the Company, in its sole discretion, from establishing a "rabbi trust"
or other vehicle in connection with the operation of this Plan, provided that no
such action shall cause the Plan to fail to be an unfunded plan designed to
provide deferred compensation benefits for Non-Employee Directors within the
meaning of Title I of ERISA.
7.2 No Guarantee of Benefits. Nothing contained in the Plan shall
constitute a guaranty by the Company or any other person or entity that the
assets of the Company will be sufficient to pay any benefit hereunder.
7.3 No Creation of Employee Rights; Plan is Not A Contract of
Employment. Participation in the Plan shall not be construed to give or deem any
Participant to be an employee of the Company. This Plan shall not constitute a
contract of employment between the Company and any Participant.
7.4 Non-Alienation Provision. No interest of any person or entity in,
or right to receive a benefit or distribution under, the Plan shall be subject
in any manner to sale, transfer, anticipation, assignment, pledge, attachment,
garnishment, or other alienation or encumbrance of any kind; nor may such
interest or right to receive a distribution be taken, either voluntarily or
involuntarily for the satisfaction of the debts of, or other obligations or
claims against, such person or entity, including claims for alimony, support,
separate maintenance and claims in bankruptcy proceedings.
7.5 Applicable Law; Severability. The Plan shall be construed and
administered under the laws of the State of New Jersey, except to the extent
that such laws are preempted by ERISA, if applicable. In the event any provision
of this Plan shall be determined to be illegal or invalid for any reason, the
remaining portion(s) shall continue in full force and effect as if such illegal
or invalid provision had never been included herein.
7.6 Taxes. To the extent required by law, amounts accrued under the
Plan shall be subject to federal and state income, federal social security and
federal or state unemployment taxes (if applicable) during the year the services
giving rise to such amounts were performed (or, if later, when the amounts are
both determinable and not subject to a substantial risk of forfeiture). The
Company shall withhold from any payments made pursuant to the Plan such amounts
as may be required by federal, state or
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local law, and the Company further reserves the right: (a) to limit or reduce
the amounts intended to be deferred under the terms of the Plan as may be
necessary or appropriate in order to ensure that any required tax withholdings
can be deducted; and/or (b) to require the Participant to pay any taxes owed on
such amounts.
7.7 Excess Payments. If the compensation, years of service, age, or any
other relevant fact relating to any person is found to have been misstated, the
Plan benefit
payable by the Company to a Participant or beneficiary shall be the
Plan benefit which would have been provided on the basis of the correct
information. Any excess payments due to such misstatement, or due to any other
mistake of fact or law, shall be refunded to the Company or withheld by it from
any further amounts otherwise payable under the Plan.
7.8 No Impact on Other Benefits. Amounts accrued under the Plan shall
not be included in a Participant's compensation for purposes of calculating
benefits under any other plan, program or arrangement sponsored by the Company.
7.9 Data. Each Participant or beneficiary shall furnish the Committee
all proofs of dates of birth and death and proofs of continued existence
necessary for the administration of the Plan, and the Company shall not be
liable for the fulfillment of any Plan benefits in any way dependent upon such
information unless and until the same shall have been received by the Committee
in a form satisfactory to it.
7.10 Incapacity of Recipient. If a Participant or other beneficiary
entitled to a distribution under the Plan is living under guardianship or
conservatorship, distributions payable under the terms of the Plan to such
Participant or beneficiary shall be paid to his or her appointed guardian or
conservator and such payment shall be a complete discharge of any liability of
the Company under the Plan.
7.11 Usage of Terms and Headings. Words in the masculine gender shall
include the feminine and the singular shall include the plural, and vice versa,
unless qualified by the context. Any headings are included for ease of reference
only, and are not to be construed to alter the terms of the Plan.
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