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EXHIBIT 10.6
PACTIV CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
(THE "PLAN")
PURPOSE
The Plan is maintained by Pactiv Corporation (the "Company")
as an unfunded plan for the purpose of providing retirement benefits with
respect to certain employees that are equal to retirement benefits lost under
its qualified defined benefit pension plan for salaried employees (the
"Retirement Plan") as a result of the imposition of the limitations contained in
the Internal Revenue Code of 1986, as amended (the "Code"). The portion of the
Plan that provides for benefits limited by Code Section 415 is maintained as an
"excess benefit plan" as described in Section 3(36) of the Employee Retirement
Income Security Act of 1974 as amended ("ERISA"). The other benefits provided
for under the Plan are only available to a "select group of management or highly
compensated employees" as determined by the Compensation / Nominating /
Governance Committee of the Board of Directors of the Company (the "Committee"),
and the portion of the Plan providing such benefits is intended to satisfy the
ERISA exemption requirements for a plan limited to such a group. Capitalized
terms not defined herein shall have the meaning ascribed to such terms in the
Retirement Plan.
THE PLAN
1. Effective Date
The Plan as set forth herein is an amendment and restatement of the
Tenneco Inc. Supplemental Executive Retirement Plan (the "Former Plan") as
provided in the Human Resources Agreement (the "HR Agreement") between the
Company and Tenneco Inc. and is effective on the date on which the Company's
stock is distributed to the shareholders of Tenneco Inc. (the "Distribution
Date"). The benefit entitlement, if any, under the Former Plan of any person who
separated from service prior to that date shall be governed by the provisions of
the Former Plan as it was in effect from time to time prior to that date, and
liability for such benefit has been allocated under the HR Agreement.
2. Eligibility
An employee shall be a "Participant" in this Plan if the employee is a
participant in the Retirement Plan or is provided a benefit under Section 11
hereof.
Participation by active and former employees of the Automotive Group
(as that term is defined in the Distribution Agreement between and among Tenneco
Inc. and the Company) shall cease as of the close of business on the
Distribution Date and all liability for benefits accrued under the Plan by such
employees shall be retained and assumed by Tenneco Inc.
3. Amount of Benefit
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The benefit payable under this Plan to a Participant, or to the
Participant's Eligible Spouse, Eligible Child(ren), joint annuitant or other
beneficiary(ies), all as determined under the provisions of the Retirement Plan,
shall equal the excess, if any, of (a) over (b) where:
(a) is the benefit that would be paid under the Retirement
Plan if the provisions of the Retirement Plan were administered without
regard to the limitations imposed by the Code and, only with respect to
Participants who, at any time, were participants in the Company's
Executive Incentive Compensation Plan or the Tenneco Inc. Executive
Incentive Compensation Plan (collectively, the "EICP"), if Final
Average Compensation, as computed under the Retirement Plan, were
determined on the basis of compensation paid during the three calendar
years (of the five calendar year period ending no later than the
calendar year immediately preceding his or her termination or
retirement) for which such compensation is the highest, and increased
by the quotient of (i) the total of the cash bonuses, as defined below,
paid to the Participant in the three calendar years (during the same
five calendar year period ending no later than the calendar year
immediately preceding his or her termination or retirement) for which
such total is the highest, divided by (ii) three or such lesser number
of calendar years (included in such period) in which such bonuses were
paid to the Participant; provided, that the calendar year including his
or her termination or retirement shall be included if such event
follows the payment of regular bonuses for that year; and provided,
that bonuses and salary, respectively, deferred at the election of the
Participant shall be counted only in the year that they would have been
paid absent such election, and provided further, that the foregoing
language shall be applied to count bonuses which relate to a calendar
year as paid in that year, for example, 2000 bonuses will be counted in
2000 notwithstanding the fact that they are actually paid in 2001; and
(b) is the benefit that is payable under the Retirement Plan.
Notwithstanding the foregoing, if, except as otherwise provided in
writing, an employee is granted credit for purposes of benefit accrual under the
Retirement Plan for service rendered prior to the time that the employee became
a participant in the Retirement Plan, such employee shall be credited with such
service under this Plan only if and to the extent determined by the Committee.
Unless otherwise provided in writing, no benefit shall be payable under the Plan
unless a benefit also is payable under the Retirement Plan, except that benefits
accrued hereunder as of the effective date are treated as fully vested and
nonforfeitable to the extent provided in the HR Agreement.
Cash bonus means only cash bonuses paid under the EICP and other cash
bonuses as the Committee determines.
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4. Form of Benefit
Any benefit under this Plan shall be paid in the same form and manner
as the benefit payments made to, or with respect to, the Participant under the
Retirement Plan. Notwithstanding the preceding sentence, no benefit is payable
hereunder prior to 60 days after the Participant has separated from service,
unless the Committee so determines. Prior to the commencement of benefits but,
in no event later than 24 months after the Participant has separated from
service, and only with respect to a Participant who at any time was a
participant in the EICP (or a beneficiary of such a Participant), such
Participant or beneficiary may elect, but only with the approval of the
Committee, to receive payment of such benefit in the form of a lump sum or
annuity, provided that in cases where a Participant has chosen a lump sum and
the exact amount of a Participant's benefit cannot be determined by the date
elected for payment, a preliminary lump sum shall be paid with respect to
amounts that can be clearly ascertained then, with the remainder to be issued in
a subsequent lump sum when that amount is exactly determined by the Committee or
its delegee. In addition, with respect to all Plan Participants, if the benefit
payable from this Plan (expressed as an age 65 life annuity) would be less than
$50 per month, the benefit payable from this Plan automatically shall be paid as
a lump sum.
The actuarial factors set forth in the Retirement Plan shall be used to
compute benefits hereunder, provided that, for purposes of any lump sum payment
that may be payable under the Plan, the interest rate used shall be the annual
rate of interest on 30-year Treasury securities as specified by the IRS for the
second calendar month preceding the first day of the Plan Year during which the
annuity starting date occurs, and the applicable mortality table described in
Rev. Rul. 95-6, 1995-1 C.B. (page 80), or in such other formal guidance as may
be issued from time to time by the IRS.
5. Unfunded Plan
This Plan shall be maintained as an unfunded non-qualified deferred
compensation plan. All benefits under this Plan shall be payable from the
general assets of the Company. No person shall be entitled to receive any
benefits under this Plan from the funds of the Retirement Plan.
6. No Assignment
No benefit under this Plan shall be assignable or alienable or
subjected, by attachment or otherwise, to the claims of creditors of any person.
7. No Guarantee of Employment
This Plan shall not be construed to give any Participant the right to
be retained in the employment of the Company or any of its affiliates.
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8. Operation and Administration
This Plan shall be operated under the direction of and administered by
the Committee and in accordance with its administrative rules.
The Committee's decision in all matters involving the interpretation
and application of this Plan shall be final and binding. The Committee shall
establish a claims procedure which is consistent with the claims procedure
employed under the Retirement Plan.
9. Governing Law
To the extent not preempted by federal law, this Plan shall be
construed, administered and enforced in accordance with the laws of the State of
Illinois.
10. Amendment and Discontinuance
The Company reserves the right, by action of the Committee, to amend or
discontinue the Plan. However, no such amendment or discontinuance shall impair
or adversely affect any benefits accrued under this Plan as of the date of such
action.
11. Special Appendix
The Company may from time to time determine to provide certain persons
additional supplemental pension benefits, which may be reflected in a Special
Appendix hereto or in such other document as the Company shall determine.
References in a Special Appendix or such other document to the "Plan" are to
this Plan.
12. Employees Transferred to Newco
This Section effects the terms of the Human Resources Agreement between
and among Tenneco Inc., Tenneco Packaging Inc. ("TPI") and Packaging Corporation
of America ("Newco"). Active employees of Tenneco Packaging Inc. ("TPI") who
become employees of Newco or one of its subsidiaries and other persons who have
vested benefits in the Retirement Plan and become employees of Newco or one of
its subsidiaries ("Newco Employees") prior to the earliest of: (i) five years
from April 12, 1999; or (ii) the date specified in the notice provided to
Tenneco by Newco that such arrangement will terminate (the "Salaried Plan
Transition Date") will continue to be covered under the Plan until the earliest
of: (i) the Salaried Plan Transition Date; (ii) his or her separation from
service with Newco; or (iii) payment of his or her benefits under the Plan
pursuant to mutual agreement. Newco Employees will cease participation in future
benefit accruals under the Plan as of the date specified in the preceding
sentence. Until that date, any service or compensation, if applicable, will be
used to determine whether Newco Employees attain eligibility for benefits under
the Plan, including eligibility for subsidized early retirement benefits. All
benefits accrued by Newco Employees will be fully vested and nonforfeitable on
April 12, 1999, and all subsequent benefits accrued until the Salaried Plan
Transition Date will be fully vested and nonforfeitable upon accrual. In
addition, service with Newco after the Salaried Plan Transition Date will be
recognized
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as service under the Plan for purposes of determining additional retirement
benefit accruals beyond those accrued as of the Salaried Plan Transition Date.
Subject to (iii) above, Newco Employees will not be treated as persons
who separated from service, unless they actually do separate from service with
Newco or an affiliate of Newco, for purposes of entitling them to commence
receiving benefits under the Plan.
Any and all enhancements to which a Newco Employee is entitled under
Section 11 hereof shall be preserved through the Salaried Plan Transition Date.
13. Special Rules Applicable to TMC Personnel
Notwithstanding any other provision hereof, the following rules shall
apply to the benefits hereunder of the personnel (active employees and persons
treated as active employees) of Tenneco Management Company who are covered by
the Tenneco Rabbi Trust: (i) the lump sum benefit of any such person shall in no
event be less than his/her lump sum computed using an interest rate no greater
than the interest rate in effect for benefits paid in 1999; (ii) any such person
shall be permitted to elect prior to his or her separation from service, a lump
sum distribution; and (iii) such a person who separates from service in 1999,
shall be eligible to receive benefits in 1999 regardless of the fact that 60
days have not elapsed. The provisions of this Section and the provisions of any
document described in Section 11 of the Former Plan are not subject to amendment
except with the written consent of the person affected.
IN WITNESS WHEREOF, the Company has caused the Plan to be
executed on its behalf by its respective officers thereunder duly authorized, on
the day and year set forth below.
PACTIV CORPORATION
Date: November 1, 1999 By: /S/ John Potempa
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Its: Vice President Employee
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Relations and Administration
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R. WAMBOLD BENEFITS
UNDER THE
COMPANY'S SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN ("PLAN")
The benefits of Richard L. Wambold ("Wambold") under the Plan
will be adjusted as follows:
The annual pension benefits to which Wambold shall be entitled
under all the Company's defined benefit plans (qualified and
non-qualified) commencing at age 55 or his separation from service, if
later, will, at a minimum, be equal to the product of (x) and (y),
where (x) is the average of his total base compensation plus bonus for
the three calendar years immediately preceding his separation from
service and (y) is the total of 25% plus 2.5% for each full year of
service with Tenneco Inc. and the Company earned in the period
commencing January 1, 1997, for a maximum total of 50%. Notwithstanding
the foregoing, the provisions set forth herein shall be applicable only
if Wambold completes five years of service with Tenneco Inc. and the
Company during the period commencing January 1, 1997.
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J. FAULKNER BENEFITS
UNDER THE
COMPANY'S SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN ("PLAN")
The benefits of James V. Faulkner, Jr. ("Faulkner") under the
Plan will be adjusted as follows:
The monthly pension benefits to which Faulkner shall be
entitled under the Plan and herein shall be equal to the normal
retirement pension benefits to which Faulkner would be entitled under
the Plan if Faulkner had commenced participation in the Tenneco Inc.
Retirement Plan ("TRP") on his employment commencement date. If
Faulkner reaches age 55 while performing services for Tenneco Inc. or
the Company as an officer, he will be eligible for an early retirement
benefit under the Plan as though he then met the participation and
service requirements of the TRP, with subsidized reduction factors no
less favorable than those in effect under the TRP on January 1, 1997.
If Faulkner dies before commencing to receive the benefits described
hereunder, his beneficiary will receive a death benefit which is the
present value of the benefits he has accrued hereunder as of the date
of his death.
If Faulkner remains employed by the Company through December
31, 2002 his benefit hereunder will be determined by counting an
additional three years of service and participation and an additional
three years of age beyond actual service, participation and age at the
time of separation from service. If he resigns or is discharged for
cause prior to December 31, 2002, he will be ineligible for the
supplemental pension plan enhancement described in this paragraph. In
all other circumstances, including without limitation his death,
disability or discharge without cause, Faulkner or his beneficiary in
the case of death will be eligible for this supplemental pension plan
enhancement.
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MEAD SPECIAL APPENDIX
TO THE
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN ("PLAN")
This Special Appendix sets forth certain special provisions of
the Plan with respect to the benefits of Dana G. Mead ("Mead").
1. Mead shall be entitled to monthly pension benefits in the
amount determined under Section 2 hereof commencing on the
first day of the calendar month immediately following the
termination of his employment with the Tenneco Management
Company (the "Company").
2. The monthly pension benefits to which Mead shall be
entitled shall be equal to the greater of (a) or (b) where
(a) equals the benefits to which Mead would be entitled
under the Tenneco Inc. Retirement Plan (the "TRP")
and this Plan, computed using the Final Average
Earnings, as defined in Section 3 hereof, and Years
of Credited Service, as defined in Section 4 hereof,
and substituting the rules of Sections 1, 5 and 6
hereof for the generally applicable rules of such
plans; and
(b) equals 2.48% of Mead's Final Average Earnings, as
defined in Section 3 hereof, times his Years of
Credited Service, as defined in Section 4 hereof,
and substituting the rules of Sections 1, 5 and 6
hereof for the generally applicable rules of such
plans.
3. "Final Average Earnings" means the quotient of (i) Mead's
Earnings, as defined below, divided by (ii) 36. "Earnings"
means the greater of (a) Mead's regular base salary for the 3
calendar years in which such regular base salary was the
highest in the 5 consecutive calendar year period ending prior
to his termination of employment plus the total cash bonus
earned by Mead for the 3 calendar years in which such total
was the highest in the 5 consecutive calendar year period
ending prior to his termination of employment; or (b) Mead's
regular base salary (annualized for the year of termination of
employment) for the 3 calendar years in which such regular
base salary was highest in the 5 consecutive calendar year
period ending in the year of his termination of employment
plus the total cash bonus earned by Mead for the 3 calendar
years in which such total was the highest in the 5 consecutive
calendar year period ending in the year of his termination of
employment.
4. "Years of Credited Service" means the total of (i) 14 2/3
plus (ii) Mead's Actual Tenneco Service, as defined below.
"Actual Tenneco Service" means the period, in whole years and
fractions thereof with each month or portion thereof
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counting as one-twelfth of one year, from March 16, 1992
through the date that Mead attains age 65.
5. The benefits provided hereunder shall be paid in the
joint and 50% survivor form of annuity if Mead is married at
the time benefits are to commence -- i.e., to Mead for life
and, after his death, 50% of the monthly amount payable during
Mead's life continuing to the spouse, if any, to whom he was
legally married at the date of the commencement of payment of
benefits hereunder and to whom he was so married on the date
of his death. There shall be no reduction in the amount of the
benefits payable during Mead's life on account of payment in
the joint and 50% survivor form. The benefits provided
hereunder shall be paid in the life only form of annuity if
Mead is not married at the time that benefit payments are to
commence. Subject to the rules stated in the immediately
following paragraph, Mead may elect to receive such benefits
in another form which is the actuarial equivalent of the
normal form of benefit specified above for his marital status
at the time in question. At Mead's election, the Company will
purchase and distribute to him an annuity contract issued by
an insurance company acceptable to Mead to provide such
benefits.
If his termination of employment is effective after he
attains age 62 or earlier with the consent of the Company,
Mead may elect to receive such benefits in the form of a lump
sum distribution. If a lump sum distribution is elected, it
shall be computed under the assumptions then in use with
respect to the TRP, or its successor; provided, that in no
event shall the interest assumption be greater than the
Pension Benefit Guaranty Corporation immediate annuity
interest rate in effect as of January 1 of the year in which
the payment is to be made, and provided further that the
mortality table shall be no less favorable to Mead or his
Beneficiary than the 1983 group annuity table, 50% male, 50%
female mix.
Mead may elect that the lump sum benefit be paid at some
date certain which is later than the date specified for
benefit commencement in Section 1 hereof. Any such election
shall be irrevocable and must be filed prior to the date
benefits would otherwise commence hereunder. If he makes such
an election, the lump sum amount computed above shall be
credited with interest at the prime rate prevailing from time
to time from the date specified in Section 1 above until the
date of actual payment.
6. If Mead dies before commencing to receive the benefits
described hereunder, his Beneficiary will receive a death
benefit in a lump sum distribution which is the present value
of the benefits which he has accrued hereunder as of the date
of his death computed in accordance with the rules set forth
herein, including the interest assumption specified in Section
5 hereof. Without limiting the generality of the foregoing, it
is specifically provided that the special alternative death
benefit called for by the TRP as in effect on December 31,
1994, shall apply if that produces a higher benefit.
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7. The benefits provided hereunder are in lieu of any
benefits to which Mead might otherwise be entitled under the
TRP, Tenneco Inc. Benefit Equalization Plan or this Plan, but
shall not adversely affect his entitlement to benefits under
any other plan, fund or program maintained by the Company, nor
shall benefits provided under any other such plan fund or
program be offset against or otherwise reduce the benefits
provided for hereunder.
8. For the purpose of calculating Mead's Earnings, the
Company shall determine an amount that shall be used as a cash
bonus number (the "Hypothetical Bonus") for any year in which
Mead has received something in lieu of a cash bonus.
Notwithstanding the foregoing, a Hypothetical Bonus shall be
counted only in circumstances in which it would yield larger
monthly pension benefits.
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