Exhibit 10.17
PEARSON INC.
EXCESS SAVINGS AND INVESTMENT PLAN
SECTION 1. ESTABLISHMENT AND PURPOSE OF THE PLAN.
1.1 ESTABLISHMENT. There is hereby established for the benefit of
Participants an unfunded plan of voluntarily deferred compensation known as
"The Pearson Inc. Excess Savings and Investment Plan".
1.2 PURPOSE. The purpose of this Plan is to provide a means by
which an Eligible Employee may, in certain circumstances, elect to defer receipt
of a portion of his Compensation. The Plan also provides that the Employer
shall, in certain instances, credit the Account of a Participant with an
Employer Match.
SECTION 2. DEFINITIONS.
The following words and phrases as used in this Plan have the
following meanings:
2.1 ACCOUNT. The term "Account" shall mean a Participant's
individual account, as described in Section 5 of the Plan including, where
necessary, sub-Accounts to separately account for the Employer Match and Prior
Plan accounts.
2.2 BOARD OF DIRECTORS. The term "Board of Directors" means
the Board of Directors of the Company.
2.3 CODE. The term "Code" means the Internal Revenue Code of
1986, as amended.
2.4 COMMITTEE. The term "Committee" means the Plan Committee, the
members of which are appointed by the Board of Directors. The Committee may act
on its own behalf or through the actions of its duly authorized delegate.
2.5 COMPANY. The term "Company" means Pearson Inc.
2.6 COMPENSATION. The term "Compensation" shall have the meaning
ascribed thereto in the 401(k) Plan but without regard to the limit contained in
Section 401(a)(17) of the Code; provided, however, that Compensation in excess
of $750,000 in any Plan Year shall be disregarded under the Plan.
2.7 ELIGIBLE EMPLOYEE. The term "Eligible Employee" means an
employee of an Employer who has been selected by the Committee for participation
in the Plan. Those employees whose rate of base salary is in excess of the
Section 401(a)(17) limitation, who are among a select group of management or
highly compensated employees, and who are participants under the 401(k) Plan may
be selected for participation. The Committee may discontinue a Participant's
future eligibility to participate in the Plan in its discretion.
1
2.8 EMPLOYER. The term "Employer" means the Company, or such other
affiliate of the Company that employs an Eligible Employee and that, with the
permission of the Company, adopts the Plan.
2.9 EMPLOYER MATCH. The term "Employer Match" means the amounts
credited to a Participant's Account pursuant to Section 4.
2.10 EXCESS SALARY REDUCTION CONTRIBUTIONS. The term "Excess Salary
Reduction Contributions" means the portion of each payment of Compensation paid
to a Participant during a Plan Year that he elects to defer under the terms of
this Plan.
2.11 401(k) PLAN. The term "401(k) Plan" means the Pearson Inc.
Savings and Investment Plan as the same may be amended from time to time.
2.12 LIMITATION. The term "Limitation" means the limitation on
contributions to a defined contribution plan under Section 415(c), on
compensation taken into account under Section 401(a)(17), or on elective
deferrals under Section 402(g) of the Code.
2.13 PARTICIPANT. The term "Participant" means an Eligible Employee
who elects to have Excess Salary Reduction Contributions made to the Plan.
2.14 PLAN. The term "Plan" means the Pearson Inc. Excess Savings
and Investment Plan as set forth herein and incorporating the rules and
procedures established by the Committee, as amended from time to time.
2.15 PRIOR PLAN. The term "Prior Plan" means the Viacom Excess
Investment Plan, the Paramount Communications, Inc. Corporate Annual Performance
Plan and such other non-qualified deferred compensation plans as may be
designated by the Committee.
SECTION 3. PARTICIPATION.
3.1 ELECTION TO PARTICIPATE. To become a Participant an Eligible
Employee must elect to participate in the Plan at such time and in such form as
determined by the Committee. Such election shall specify the rate of Excess
Salary Reduction Contributions, which rate may be no less than 1% or more than
16% of Compensation. Excess Salary Reduction Contributions shall not commence
until a Participant has reached a Limitation under the 401(k) Plan.
3.2 AMENDMENT OR SUSPENSION OF ELECTION. Participants may change
(including, suspend) their rate of Excess Salary Reduction Contributions as of
the beginning of any calendar quarter by filing such form at such time in
advance as prescribed by the Committee. Such new election shall be effective on
a prospective basis beginning with the first payroll period of the quarter. A
Participant shall not be permitted to make up suspended Excess Salary Reduction
Contributions, and during any period in which a Participant's Excess Salary
Reduction Contributions are suspended, the Employer Match to the Plan shall also
be suspended.
SECTION 4. EMPLOYER MATCH.
2
4.1 RATE. An Employer may elect to provide for an Employer Match.
The Employer Match shall be credited with respect to the Participant's Excess
Salary Reduction Contributions at the rate of matching contributions contributed
by the Participant's Employer under the 401(k) Plan, or such other rate as
elected by the Employer. Until the Participant has become fully vested pursuant
to Section 4.2, a separate sub-Account shall be maintained to record each
Employer Match and earnings and losses credited with respect thereto.
4.2 VESTING. A Participant shall be vested in his Employer
Matching Sub-Account to the same extent he is vested in his employer matching
account under the 401(k) Plan.
SECTION 5. ACCOUNTS.
5.1 CREATION OF ACCOUNTS. The Company shall maintain an Account
(including, where necessary, appropriate sub-Accounts) in the name of each
Participant. Each Participant's Account shall be increased by (i) the amount of
the Participant's Excess Salary Reduction Contributions, (ii) the Employer
Match, if any, made with respect thereto, (iii) earnings and appreciation
determined by reference to the Participant's investment selections made pursuant
to Section 5.2, and (iv) the amount credited to the Participant under a Prior
Plan where applicable. Each Participant's Account shall be decreased by (i)
payments made pursuant to Section 6, (ii) any forfeiture described in Section
6.2, and (iii) losses and depreciation determined by reference to the
Participant's investment selections made pursuant to Section 5.2.
5.2 INVESTMENTS. For purposes of determining the amount of earnings
and appreciation and losses and depreciation to be credited to a Participant's
Account, such Account shall be deemed invested in the investment options
(designated by the Committee as available under the Plan) as the Participant may
elect, from time to time, in accordance with such rules and procedures as the
Committee may establish. However, no provision of this Plan shall require the
Company or the Employer to actually invest any amounts in any fund or in any
other investment vehicle.
5.3 STATUS OF ACCOUNTS. Accounts established under the Plan are
merely bookkeeping entries to record the amount payable under the terms of the
Plan and do not represent an interest in any specific asset of the Company or
any Employer or an actual investment in any particular investment vehicle.
SECTION 6. PAYMENT.
6.1 PAYMENT UPON TERMINATION. As soon as practicable after a
Participant's termination with his Employer (and all affiliates of the Company),
the Employer shall pay, or commence payment, to the Participant (or in the event
of his death, to his beneficiary) an amount equal to the vested balance credited
to the Participant's Account. A Participant shall elect, on such form and at
such time in advance as determined by the Committee, from among the following
payment options: (i) a lump sum, (ii) three annual installments each equal to
the vested balance credited to the Account at the time of the installment
payment multiplied by a fraction, the numerator of which is 1, and the
denominator of which is three minus the number of installments previously paid,
(iii) five annual installments each equal the to the vested balance credited to
the Account at the time of the installment payment multiplied by a fraction, the
numerator of which is 1, and the denominator of which is five minus the number
of installments previously paid, or (iv) such other payment option as may be
permitted by the Committee. The Committee may adopt special
3
payment rules that apply to Participants who were former participants in a Prior
Plan and where necessary shall maintain separate sub-Accounts to track their
Prior Plan accounts.
6.2 PAYMENT PRIOR TO TERMINATION. The Participant may at any time
request a payment of an amount equal to all or any portion of the vested balance
then credited to his Account. The Employer shall thereupon pay to the
Participant 90% of the amount so requested, and the remaining 10% shall be
forfeited by the Participant as a penalty for early payment.
6.3 WITHHOLDING. All payments made under the Plan shall be subject
to applicable tax withholding and other statutory deductions. The Employer may
also withhold taxes from Compensation not deferred hereunder where such
withholding may be required prior to actual payment of benefits under the Plan.
SECTION 7. NATURE OF INTEREST OF PARTICIPANT.
Participation in this Plan shall not create, in favor of any
Participant, any right or lien in or against any of the assets of the Company or
any Employer, and all amounts of Compensation deferred hereunder shall at all
times remain an unrestricted asset of the Company or the Employer. All payments
hereunder shall be paid in cash from the general funds of the applicable
Employer and no special or separate fund shall be established and no other
segregation of assets shall be made to assure the payment of benefits hereunder.
Nothing contained in the Plan, and no action taken pursuant to its provisions,
shall create or be construed to create a trust of any kind, or a fiduciary
relationship, between any Employer and a Participant or any other person, and
each Employer's promise to pay benefits hereunder shall at all times remain
unfunded as to the Participant, and the Participant shall be treated as an
unsecured creditor of the Employer with respect thereto.
Although the Plan is intended to constitute an "unfunded" plan for
deferred compensation, the Company or any Employer may set aside assets in a
trust or otherwise, to satisfy its obligations under the Plan; provided,
however, that with respect to any payments not yet made to a Participant in
respect of his or her Account, nothing contained in the Plan shall give any such
Participant any rights that are greater than those of a general unsecured
creditor of his or her Employer, and any such trust or other arrangement shall
not create, in favor of any Participant, any right or lien in or against any of
the assets of the Company or any Employer.
SECTION 8. BENEFICIARY DESIGNATION.
A Participant's beneficiary designation for this Plan shall
automatically be the same as such Participant's beneficiary designation under
the 401(k) Plan, unless a separate beneficiary form for this Plan has been
properly filed.
SECTION 9. ADMINISTRATION.
9.1 COMMITTEE. This Plan shall be administered by the Committee.
9.2 POWERS OF THE COMMITTEE. The Committee's powers shall include,
but shall not be limited to, the power:
4
(i) to determine who are Eligible Employees for purposes of
participation in the Plan.
(ii) to interpret the terms and provisions of the Plan and to
determine any and all questions arising under the Plan,
including without limitation, the right to remedy
possible ambiguities, inconsistencies, or omissions by a
general rule or particular decision, and
(iii) to adopt rules and procedures, and prescribe forms,
consistent with the Plan, and amend such rules,
procedures and forms as it deems appropriate.
9.3 FINALITY OF COMMITTEE DETERMINATIONS. Determinations by the
Committee and any interpretation, rule, or decision adopted by the Committee
under the Plan or in carrying out or administering the Plan shall be final and
binding for all purposes and upon all interested persons, their heirs, and
personal representatives.
SECTION 10. ASSIGNMENT.
A Participant's right to receive payment under the Plan, and the
Employer's obligation to make payment under the Plan, may not be anticipated,
sold, encumbered, pledged, mortgaged, charged, transferred, alienated, assigned
nor become subject to execution, garnishment or attachment; provided, however,
that the Participant's Employer may assign its obligation to make payment under
the Plan to any successor to all or any portion of the Employer's business, and
provided further that the Employer may offset from any payment to which the
participant is otherwise entitled under the Plan any amount owing by the
Participant to the Employer.
SECTION 11. NO EMPLOYMENT RIGHTS.
No provisions of the Plan or any action taken by the Company, the Board
of Directors, any Employer or the Committee shall give any person any right to
be retained in the employ of any Employer, and the right and power of the
Company and any Employer to dismiss or discharge any Participant is specifically
reserved.
SECTION 12. AMENDMENT, SUSPENSION AND TERMINATION.
The Board of Directors shall have the right to amend, suspend, or
terminate the Plan at any time, and each Employer shall have the right to
terminate its participation if the Plan at any time. No amendment, suspension or
termination shall, without the consent of a Participant, adversely affect such
Participant's right to receive payment of the amount then credited to his
Account.
SECTION 13. GOVERNING LAW.
The Plan shall in all respects be construed according to the laws of
the State of New York, except where preempted by applicable Federal law.
5