Exhibit 10(vi)
NORTHERN TRUST CORPORATION SEVERANCE PLAN
ARTICLE I
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Purpose
The purpose of the Northern Trust Corporation Severance Plan ("Plan") is to
provide severance payments to certain Employees in the event their employment is
terminated by their Employer in specified circumstances such as job
eliminations, reductions in force and similar situations described in this Plan.
ARTICLE II
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Definitions
2.1 "Administrator" means the Corporation or such person(s) or committee(s)
designated by the Corporation. Where appropriate, Administrator also
means any duly authorized delegate of the Administrator. The
Administrator shall be the "plan administrator" and the "named
fiduciary" of the Plan for purposes of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA").
2.2 "Base Pay" means: (i) (A) for a salaried Employee, that Employee's
weekly base salary as determined from the personnel records of an
Employer at Termination and (B) for an Employee who is paid on an
hourly basis, that Employee's hourly rate of pay multiplied by the
number of hours the Employee is schedule to work during a week, as
determined from the personnel records of the Employer at Termination,
plus (ii) for any Employee, that Employee's scheduled weekly shift
differential, if any, as determined from the personnel records of the
Employer at Termination. In all instances, Base Pay excludes overtime,
commissions, bonuses, reimbursements, pay for time worked in excess of
hours scheduled and all other forms of compensation.
2.3 "Corporation" means Northern Trust Corporation, a Delaware corporation,
and its successors and assigns.
2.4 "Company" means The Northern Trust Company, an Illinois state bank, and
its successors and assigns.
2.5 "Committee" means the Employee Benefit Administrative Committee of the
Company, as constituted from time to time.
2.6 "Eligible Employee" means an Employee who is determined by the
Administrator to be entitled to Severance Benefits under the Plan,
subject to Section 4.4.
2.7 "Employee" means an individual employed in the service of an Employer
as a regular full-time or part-time common-law employee (i) on the
active payroll; (ii) on a leave of absence with a reemployment
guarantee; or (iii) receiving disability benefits. An Employee does not
include individuals in jobs classified by an Employer as "temporary" or
"limited post" positions or any other individual in the temporary
employ of an Employer. No individual
will be considered an Employee nor will such individual be otherwise
eligible to receive benefits under the Plan during any period in which
such individual is providing services to an Employer under a contract,
arrangement, or understanding with such individual, or with an agency
or leasing organization that treats the individual as either an
independent contractor or an employee of such agency or leasing
organization, even if such individual is later determined (by judicial
action or otherwise) to have been a common law employee of an Employer
rather than an independent contractor or an employee of such agency or
leasing organization.
2.8 "Employer" means the Corporation and its U.S. affiliates, including the
Company. The term "affiliate" means any corporation which is a member
of the same controlled group of corporations as the Corporation under
section 1563(a) of the Internal Revenue Code of 1986, as amended (the
"Code") or an unincorporated trade or business under Section 414(c) of
the Code.
2.9 "Severance Benefits" means the benefits described in the Severance
Schedule to the Plan to which an Eligible Employee may be entitled
under the provisions of the Plan.
2.10 "Termination" means, for purposes of determining entitlement to
Severance Benefits under the Plan, a complete severance of an
Employee's employment relationship with Employer. "Termination" does
not include situations involving (i) temporary absence, such as a
Family and Medical Leave Act ("FMLA") leave or a temporary layoff, in
which an Employee retains any entitlement to reinstatement; (ii) the
total or partial sale or transfer of ownership of an Employer or a
business unit of an Employer (stock or asset sale) if the Employee is
offered employment with the purchasing or new entity as part of or at
the time of the sale or transfer; (iii) the outsourcing of Employer
work to a non-Employer if the Employee is offered employment with such
non-Employer as part of or at the time of the outsourcing; or (iv) the
elimination of the position or job of an Employee if the Employee is
offered comparable employment with an Employer (as determined by the
Employer in the Employer's sole discretion) in a position which does
not require relocation to a non-commutable distance.
2.11 "Termination for Unacceptable Performance" means the Termination of an
Employee for reasons related to his or her performance of job duties
and responsibilities, which performance is considered unacceptable to
an Employer.
2.12 "Termination for Cause" means the Termination of an Employee for
engaging in conduct which violates an Employer's policies and/or is
harmful to an Employer, including but not limited to excessive
unauthorized absenteeism or tardiness, abuse of controlled substances
and/or alcohol, reporting to work under the influence of controlled
substances and/or alcohol, gambling, possession of firearms on Employer
property, theft or unauthorized use of Employer property, conduct which
creates a conflict of interest, unauthorized use of insider information
and offering or accepting bribes, and all other misconduct, as
determined by an Employer.
2.13 "Termination Based on Employer Action" means any Termination of an
Eligible Employee at the request of an Employer due to: (i) the
elimination of such Employee's job, (ii) a reduction in force, (iii)
the outsourcing of Employer work to a non-Employer, (iv) the
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consolidation of positions or functions, (v) the relocation of work to
a non-commutable distance as provided in an Employer's policies and
practices, or (vi) the sale or transfer of all or part of the stock or
assets of an Employer or a business unit of Employer; provided,
however, that a Termination Based on Employer Action, shall not be
considered to have occurred if the Employee is offered (A) a comparable
position (as determined by the Employer in the Employer's sole
discretion) with an Employer which does not require relocation to a
non-commutable distance or (B) employment with a purchaser, transferee
or outsourcing non-Employer or an affiliate of a purchaser, transferee,
or outsourcing non-Employer, regardless of whether the Employee elects
to accept any such offer.
2.14 "Voluntary Termination" means an Employee's voluntary Termination of
his or her employment.
2.15 "Year of Service" means a 12-consecutive month period beginning on the
Employee's hire date with an Employer and on each anniversary thereof
during which he or she continues to be an Employee.
ARTICLE III
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Eligibility for Severance Benefits
3.1 Termination Based on Employer Action. Subject to Section 4.4, an
Employee whose Termination of employment is a Termination Based on
Employer Action, as defined in Section 2.13, will be considered an
Eligible Employee and entitled to Severance Benefits.
3.2 Ineligible Employees. An Employee whose Termination of employment is
for any reason other than a Termination Based on Employer Action,
including but not limited to Termination for Cause, Termination for
Unacceptable Performance, or Voluntary Termination, shall not be
entitled to Severance Benefits under this Plan.
3.3 Employees on Leave or Receiving Disability Benefits. (i) (A) Except as
otherwise required by applicable law, no Eligible Employee may apply
for or commence any leave of absence after the beginning of such
Eligible Employee's Notification Period described in Section 4.2, even
if such leave was previously approved before such Notification Period.
(B) If an Eligible Employee commences an authorized leave of absence
during the Notification Period pursuant to applicable law as described
in Section 3.3(i)(A) or if an Eligible Employee has commenced an
authorized leave of absence under an Employer's leave policies before
such Eligible Employee's Notification Period, such Eligible Employee
may remain on such leave until the earlier of the authorized end of the
leave or the end of such Notification Period. At the end of such
Notification Period, such Eligible Employee's employment will be
terminated, and such Eligible Employee will be entitled to Severance
Benefits, subject to Section 4.4.
(ii) If, before or during the Eligible Employee's Notification Period
described in Section 4.2, an Eligible Employee begins receiving
benefits under an Employer's short-term disability plan, the Eligible
Employee will continue to receive such disability benefits through the
end of the certification period under such short-term disability plan.
At the end of the certification period, such Eligible Employee's
employment will be terminated, and
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such Eligible Employee will be entitled to Severance Benefits, subject
to Section 4.4 and subsection (iii) of this Section 3.3.
(iii) If, before or during the Eligible Employee's Notification Period
(or immediately following an Eligible Employee's receipt of short-term
disability benefits pursuant to subsection (ii) of this Section 3.3),
an Eligible Employee begins receiving benefits under an Employer's
long-term disability plan, such Eligible Employee will continue to
receive such disability benefits in accordance with such long-term
disability plan. If such Eligible Employee is able to return to active
employment during the first six (6) months of such long-term disability
benefits, such Eligible Employee's employment will be terminated, and
such Eligible Employee will be entitled to Severance Benefits, subject
to Section 4.4. However, if such an Eligible Employee receives such
long-term disability benefits for more than six (6) months, such
Eligible Employee will no longer be entitled to any Severance Benefits
regardless of the reasons for or timing of such Employee's Termination
of employment.
(iv) Anything in the Plan to the contrary notwithstanding, an Eligible
Employee who, during his or her Notification Period, is on an
authorized, unpaid personal leave with a medical condition pursuant to
his or her Employer's leave policies, shall be treated for purposes of
this Plan as if he or she were receiving benefits under such Employer's
short-term disability plan. Such an Eligible Employee's employment
termination and eligibility for Severance Benefits shall be determined
under Section 3.3(ii) of this Plan.
ARTICLE IV
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Severance Benefits
4.1 Severance Benefits. An Eligible Employee shall be entitled to severance
benefit payments in accordance with the Severance Schedule attached
hereto. In addition, an Eligible Employee shall be entitled to certain
welfare benefits and enhanced retirement benefits in accordance with
the Severance Schedule. Welfare benefits and enhanced retirement
benefits shall only be provided pursuant to the Plan in accordance with
the provisions of the applicable welfare and retirement plans sponsored
by an Employer.
4.2 Payment. Severance Benefits will generally be paid in the form elected
by an Eligible Employee under the Plan. An Eligible Employee may elect
to receive Severance Benefits in the form of a lump sum cash payment to
be made as soon as practicable following Termination Based on Employer
Action or in a specified number of periodic payments as provided in the
Severance Schedule. All payments will be made from an Employer's
general assets. Severance Benefits will commence upon the Eligible
Employee's Termination Based on Employer Action following a
notification period of no less than sixty (60) days (the "Notification
Period"). At the Employer's sole discretion, an Eligible Employee may
or may not be required to report to his or her usual work location and
to continue to perform his or her regular duties during the
Notification Period. Payment of Severance Benefits is conditioned upon
the execution of a release in accordance with the provisions of Section
4.4.
4.3 Withholding. An Employer shall withhold from any Severance Benefits
paid hereunder all federal and state income, FICA and other employment
taxes, and any other amounts
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required or permitted to be withheld under any agreement with the
Eligible Employee, applicable law or other employee benefit plans of an
Employer.
4.4 Payments Conditioned on Release. Except as otherwise provided in this
Section 4.4, eligibility for the receipt of any and all Severance
Benefits under the Plan is expressly conditioned upon the execution by
an Eligible Employee of a comprehensive settlement agreement, waiver
and release ("Release"), in a form and manner to be determined in the
sole discretion of the Administrator. An Eligible Employee who does not
execute such a Release or who revokes such a Release during the
applicable revocation period will receive only (i) one week of Base Pay
for Non-Officers and two weeks of Base Pay for Officers as described in
the Severance Schedule, (ii) access to the Employer's Family Assistance
and LifeWorks(R) Programs for a period of ninety (90) days following
such Eligible Employee's Termination date and basic outplacement
assistance, and (iii) the opportunity to work with a recruiting
consultant to perform an internal search for a new position during the
Notification Period, and will not be eligible for any other Severance
Benefits under the Plan regardless of the reason for Termination.
4.5 Right of Offset. By accepting Severance Benefits under the Plan, an
Eligible Employee agrees that the Administrator, in its sole
discretion, may withhold from any amounts payable under the Plan any
amounts owed to the Employer by the Eligible Employee.
4.6 Reduction for Other Severance Payments. The amount of Severance
Benefits to which an Eligible Employee is otherwise entitled under the
Plan upon a Termination Based on Employer Action shall be reduced by
the amount, if any, of any other severance payments payable by reason
of such Termination to the Eligible Employee by an Employer under any
other plan, program or individual contractual arrangement.
4.7 Death of Eligible Employee. If an Eligible Employee dies after his or
her date of Termination Based on Employer Action under this Plan and
prior to the receipt of all Severance Benefits to which he or she is
entitled under the Plan, any such remaining Severance Benefits shall be
paid on his or her behalf in the form of a single, lump sum cash
payment to the Eligible Employee's estate or to the court presiding
over the deceased Eligible Employee's estate, if in the opinion of the
Administrator, the administration of the estate is in dispute.
If an Eligible Employee dies, after the beginning of his or her
Notification Period but before his or her date of Termination Based on
Employer Action, no Severance Benefits or other payments of any kind
will be made to him or her or on his or her behalf under this Plan at
any time. Instead, such pay and/or benefits as are provided upon the
death of any other active Employee shall be payable with respect to
such deceased Eligible Employee.
4.8 Reemployed Eligible Employees. If an Eligible Employee has a
Termination of employment and he or she is later reemployed by an
Employer, his or her prior service with the Employer will be treated as
follows for Plan purposes if his or her employment is terminated under
the Plan following such reemployment: (i) If such Eligible Employee is
reemployed within a year of the prior Termination date, the period of
absence and such Eligible Employee's prior service as of the prior
Termination date will be considered
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continuous service for purposes of determining eligibility for and the
amount of Plan benefits under the Plan.
(ii) If such Eligible Employee is reemployed more than one year after
the prior Termination date, neither such Eligible Employee's prior
service nor the period of absence will be considered as service for any
purpose under the Plan. Instead, such former Eligible Employee's date
of reemployment with an Employer will determine such Employee's
subsequent eligibility for and amount of Plan benefits under the Plan,
if any.
ARTICLE V
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Plan Administration
5.1 Operation and Administration of Plan by the Administrator. The
Administrator shall have the complete authority to control and manage
the operation and administration of the Plan. The Administrator has
full and exclusive discretionary authority to:
a. construe and interpret the provisions of the Plan;
b. adopt any rules, procedures and forms necessary for the
operation and administration of the Plan;
c. determine all questions relating to the eligibility, benefits
and other rights of Employees under the Plan;
d. keep all records necessary for the operation and
administration of the Plan;
e. designate or employ agents (who may also be Employees of an
Employer) and delegate to such agents the exercise of one or
specific powers of the Administrator;
f. delegate any or all of its authority under the Plan to any
individual, organization or committee either within an
Employer or an unrelated third party; and
g. retain any legal, accounting or other expert advisers (who may
also be advisers to an Employer) in connection with the
Administrator's operation and administration of the Plan.
5.2 Reliance on Documents, Instruments, etc. The Administrator may rely on
any certificate, statement or other representation made on behalf of an
Employer or any Employee which it in good faith believes to be genuine,
and on any certificate, statement, report or other representation made
to it by any agent or any attorney, accountant or other expert retained
by it or an Employer in connection with the operation and
administration of the Plan.
5.3 Administrative Expenses. All expenses of operating and administering
the Plan, including, but not limited to, fees of any agents and experts
retained by the Administrator under Sections 5.1 and 5.2, will be paid
by the Employers.
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5.4 Bond, Compensation, Indemnification of Administrator. No bond or other
security will be required of the Administrator except as provided by law.
No compensation will be paid to any person for performing his or her duties
as Administrator. If the Administrator is not an Employer, the
Administrator will be indemnified by the Corporation for any liabilities
(including legal expenses) arising from any act or failure to act which is
done in good faith in accordance with the Plan's provisions.
5.5 Claims. Any person (a "claimant") may make a claim for benefits under the
Plan by filing a written request for benefits with the Administrator. If
the claim is wholly or partially denied, the Administrator will cause the
claimant to receive written or electronic notice of the adverse benefit
determination within ninety (90) days after receipt of the claim. Notice of
an adverse benefit determination shall be written in a manner calculated to
be understood by the claimant and shall contain (1) the specific reason or
reasons for the adverse benefit determination, (2) a specific reference to
the pertinent Plan provisions upon which the adverse determination is
based, (3) a description of any additional material or information
necessary for the claimant to perfect the claim, together with an
explanation of why such material or information is necessary, and (4) an
explanation of the Plan's review procedures and the time limits applicable
to such procedures including a statement of the claimant's right to bring a
civil action under section 502(a) of ERISA following an adverse benefit
determination. If the Administrator determines that an extension of time is
necessary for processing the claim, the Administrator shall notify the
claimant in writing or electronically of such extension, the special
circumstances requiring the extension and the date by which the
Administrator expects to render the benefit determination. In no event
shall the extension exceed a period of ninety (90) days from the end of the
initial ninety (90) day period. If notice of the denial of a claim is not
furnished within ninety (90) days after the Administrator receives it (or
within one hundred and eighty (180) days after such receipt if the
Administrator determines an extension is necessary), the claim shall be
deemed denied and the claimant shall be permitted to proceed to the review
stage described in Section 5.6.
5.6 Appeals. Within sixty (60) days after the claimant receives the written or
electronic notice of an adverse benefit determination, or the date the
claim is deemed denied pursuant to Section 5.5, the claimant may file a
written request with the Committee that it conduct a full and fair review
of the adverse benefit determination. In connection with the claimant's
appeal of the adverse benefit determination, the claimant may review
pertinent documents and may submit issues and comments in writing. The
Committee shall render a decision on the appeal within sixty (60) days
after the receipt of the claimant's request for review, unless special
circumstances require an extension of time for processing, in which case
the sixty (60) day period may be extended to one hundred and twenty (120)
days. The Committee shall notify the claimant in writing or electronically
of any such extension, the special circumstances requiring the extension,
and the date by which the Committee expects to render the determination on
review. The Committee shall notify the claimant of its decision in writing
or electronically. In the case of an adverse determination, such notice
shall (1) include specific reasons for the adverse determination, (2) be
written in a manner calculated to be understood by the claimant, (3)
contain specific references to the pertinent Plan provisions upon which the
benefit determination is based, (4) contain a statement that the claimant
is entitled to receive upon request and free of charge, reasonable access
to, and copies of, all documents, records, and other information relevant
to the claimant's claim for
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benefits, and (5) contain a statement of the claimant's right to bring an
action under Section 502(a) of ERISA.
5.7 Rules Governing Claim and Appeal Procedures. The Administrator or the
Committee may adopt additional rules for implementing the claim and appeal
procedures under the Plan, so long as they are consistent with Department
of Labor Regulation (S)2560.503-1 or any applicable successor to such
regulation.
ARTICLE VI
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General Provisions
6.1 Amendment and Termination. The Corporation may at any time and without
prior notice amend or terminate the Plan, provided, that in no event shall
any such amendment or termination in any manner affect the entitlement to
Severance Benefits of an Eligible Employee who became eligible for such
Severance Benefits prior to the date of such amendment or termination.
6.2 Governing Law. To the extent not preempted by ERISA or any other federal
law, the Plan shall be governed by and construed in accordance with the
laws of Illinois, excluding conflicts of laws provisions.
6.3 Nonassignability. Severance Benefits under the Plan may not be assigned or
alienated by any Employee.
6.4 Gender and Number. Unless the context clearly indicates otherwise, words in
any gender will include any other gender, words in the singular will
include the plural and words in the plural will include the singular.
6.5 Severance Benefits Not Compensation. The period for which Severance
Benefits are paid and the Severance Benefits provided under the Plan shall
not constitute employment, compensation or salary for purposes of
determining eligibility, entitlement to benefits or the amount of benefits
under any other employee benefit plan of an Employer.
6.6 Severability. Any provision in the Plan that may be unenforceable will be
deemed severed from the remainder hereof, with such remaining provisions
being given full force and effect.
6.7 Effective Date: The Plan is effective as of March 1, 2002.
IN WITNESS WHEREOF, the Corporation has caused the Northern Trust Corporation
Severance Plan to be executed on its behalf by its duly authorized officer this
30th day of April, 2002.
NORTHERN TRUST CORPORATION
By: /s/ Timothy P. Moen
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Timothy P. Moen
Executive Vice President
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Severance Schedule for Termination By Employer Action*
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SEVERANCE BENEFITS PAYMENTS**
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Official Status Years of Service
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Less than 3 Years Greater than or equal to 3 Years Greater than or equal to 25 Years
but less than 25 Years
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Officer* 4 weeks of Base Pay 2 weeks of Base Pay per completed 52 weeks of Base Pay
Year of Service
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Non-Officer* 2 weeks of Base Pay 1 week of Base Pay per completed 26 weeks of Base Pay
Year of Service
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**Minimum Severance Benefits Pay is 2 weeks of Base Pay and Maximum Severance
Benefits Pay is 52 weeks of Base Pay. Total Severance Benefits payments may not
exceed twice an Eligible Employee's annual Base Pay in the year prior to
Termination. Severance Benefits Payments and any COBRA Subsidy will be paid
either as a lump sum or in periodic payments in accordance with the Employer's
regular payroll cycle, as elected by the Eligible Employee.
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WELFARE BENEFITS
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COBRA Continuation Coverage: An Eligible Employee and eligible dependents have
the right to continue medical, dental and vision coverage in accordance with the
time periods set forth under the provisions of the federal Consolidated Omnibus
Budget Reconciliation Act of 1985 ("COBRA"). Medical, dental and vision coverage
will automatically cease on the last day of the month in which an Eligible
Employee's Termination of employment occurs unless an Eligible Employee elects
such continuation coverage under the provisions of COBRA. The costs of such
coverage shall be payable by the Eligible Employee for the duration of the COBRA
coverage, to be paid monthly by personal check, as the premiums become due.
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COBRA Subsidy*: The Employer shall provide a COBRA subsidy payment to assist the
Eligible Employee in paying the costs of coverage under applicable employee
welfare benefit plans (medical and dental). The amount of the COBRA subsidy
payment shall equal the difference between an Eligible Employee's active
employee medical and/or dental premium(s) as of the first day of the
Notification Period (described in Section 4.2) and the rate under COBRA on such
date, including the 2% administrative fee, multiplied by the number of weeks to
which an Eligible Employee is eligible for Severance Benefits Payments as
described above. The COBRA subsidy payment shall be made in same form as the
Severance Benefits Payments, in accordance with the Eligible Employee's election
under Section 4.2 to receive payment in the form of a lump sum or in periodic
payments.
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Outplacement Assistance*: Varied levels of outplacement assistance will be
offered through a firm selected by the Employer. Outplacement assistance will be
available immediately following the Eligible Employee's Termination of
employment or last day worked, whichever occurs first. The level and duration of
outplacement assistance will be determined by an Eligible Employee's official
status in accordance with the Employer's policies and practices. In order to use
outplacement assistance, an Eligible Employee must begin outplacement assistance
no later than 30 days after Termination of employment.
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Non-contributory Life Insurance, Business Coverage ends upon Termination.
Travel, Workers Compensation
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Contributory Life Insurance, Dependent Coverage ends on the last day
Life Insurance, 24-Hour Accident Insurance of the month for which a
premium contribution from an
Eligible Employee's salary was
made.
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Health Care Account, Day Care Account Eligible Employees may submit
claims for expenses incurred
prior to Termination date in
accordance with applicable plan
terms and administrative
requirements. Claims must be
submitted prior to end of first
quarter of the year following
Termination. Health Care
Account may be extended on
after-tax basis through a valid
COBRA election.
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Educational Assistance* Existing tuition reimbursement
repayment obligations will be
waived. At the Eligible
Employee's Termination of
employment, if enrolled and
attending course(s), the
Eligible Employee will be
reimbursed in accordance with
the Educational Assistance
Program.
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Short-Term Disability, Long-Term Disability Coverage ends upon Termination,
unless disabled on the date of
Termination. If disabled on the
date of Termination, coverage
will generally continue until
individual determined to be
medically able to return to
work, in accordance with
applicable disability plan
terms. See also Plan Section
3.3 (ii) and (iii).
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Family Assistance and LifeWorks(R) Programs Eligible Employees will have
access to these programs for 90
days following Termination.
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ENHANCED RETIREMENT AND OTHER BENEFITS
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Pension Plan, TIP and ESOP* Enhanced retirement eligibility, vesting and
related benefits will be provided in accordance
with the applicable retirement plans.
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Stock Options* Enhanced vesting and other benefits may be
provided in accordance with the applicable
stock option plan and the Eligible Employee's
stock option agreements.
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*NOTE: Eligibility for receipt of all benefits is conditioned on execution (and
non-revocation) of a settlement agreement, waiver and release ("Release") in
accordance with Section 4.4., provided that an Eligible Employee who does not
execute (or who revokes within the revocation period) such a Release shall be
entitled to (i) severance benefits, payable in the form of a lump sum, in the
amount of one (1) week of Base Pay for non-officers and two (2)weeks of Base Pay
for officers, (ii) access to (A) the Employer's Family Assistance and
LifeWorks(R) Programs for 90 days following Termination and (B) basic
outplacement assistance and (iii) the opportunity to work with a recruiting
consultant to perform an internal search for a new position during the
Notification Period.
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