Exhibit 10.17
DEFERRED COMPENSATION PLAN FOR
DIRECTORS OF
REYNOLDS AMERICAN INC.
(EFFECTIVE JULY 30, 2004)
ARTICLE I
1.1 NAME AND PURPOSE. The name of this plan is the "Deferred Compensation
Plan for Directors of Reynolds American Inc." (the "Plan"). The Plan is an
amendment, restatement and continuation of the Deferred Compensation Plan for
Directors of R.J. Reynolds Tobacco Holdings, Inc. The purpose of this Plan is to
provide non-employee Directors of the Company with increased flexibility in
timing the receipt of board service fees and to assist the Company in attracting
and retaining qualified individuals to serve as Directors.
1.2 DEFINITIONS. Whenever used in the Plan, the following terms shall have
the meaning set forth below:
(a) "Closing Price" means the closing price of the Company's Common
Stock as reported in THE WALL STREET JOURNAL.
(b) "Common Stock" means the Common Stock, par value $0.0001 per share,
of Reynolds American Inc.
(c) "Company" means Reynolds American Inc. and each Participating
Company.
(d) "Compensation" means all remuneration paid to a Director for service
as a Director other than reimbursement for expenses and shall
include, but not be limited to, Board of Directors retainer fees,
Board of Directors committee chairmanship and/or committee
attendance fees, and any fees for attendance at Board of Directors
meetings.
(e) "Director" means any individual serving on the Board of Directors of
the Company who is not an employee of the Company or any of its
subsidiaries.
(f) "Participant" means a Director who has filed an election to
participate under Section 3.1 with regard to any Plan Year.
(g) "Participating Company" means any corporation which is a direct or
indirect subsidiary of Reynolds American Inc., which has, by action
of its board of directors, adopted the Plan and consented to being a
Participating Company in the Plan.
(h) "Plan Administrator" means the Corporate Governance and Nominating
Committee of the Board of Directors of the Company.
(i) "Plan Year" means the calendar year except the first Plan year is
the period July 30, 2004 through December 31, 2004.
ARTICLE II
2.1 PARTICIPATION IN THE PLAN. Any individual who is a Director as defined
in Section 1.2(e) may participate in the Plan.
ARTICLE III
3.1 ELECTION TO PARTICIPATE. Each Director may elect annually to have
payment of all or any increment of twenty-five percent (25%) of his or her
Compensation for that Plan Year deferred. An election to defer may provide that
the Compensation deferred will be paid in January of a specified year in the
future or in January following the end of the Plan Year during which the
Participant ceased to be a Director.
No election to defer under this Plan may be made after December 31 of the
year preceding the Plan Year during which Compensation would otherwise be paid
or, if later, within thirty days after the date a Director becomes a Director.
An election to defer any Compensation shall be in writing and shall be delivered
to the Plan Administrator. An election to defer shall be irrevocable by the
Director and shall be effective only for the Plan Year immediately following the
date on which it was filed. In the absence of a written election to defer filed
by a Director with the Plan Administrator, any Compensation will be paid
directly to the Director.
3.2 MODE OF DEFERRAL. Payment of a Participant's Compensation may be
deferred in twenty-five percent (25%) increments by means of a cash credit, a
stock credit or a combination of the two as the Participant shall elect in
writing at the same time as the election provided for in Section 3.1. If a
Participant fails to make an election as to mode of deferral, he or she shall be
deemed to have elected deferral by means of a cash credit. Cash credits and
stock credits shall be recorded in accounts established in Participants' names
on the books of the Company.
(a) CASH CREDITS. If the deferral is wholly or partly by means of a cash
credit, the Participant's cash credit account shall be credited, as
of the last day of the calendar quarter, with the dollar amount of
Compensation deferred during the quarter by means of a cash credit.
As of the last day of each calendar quarter, the Participant's cash
credit account shall also be credited with interest equivalent in an
amount determined by applying to the balance in the account as of
the first day of the quarter (less any distributions during the
quarter) an interest rate for such quarter which, when annualized,
shall be the prime rate of Morgan Guaranty Trust Company of New York
as of the first business day of the quarter. Interest shall be
calculated on the actual number of days in the quarter based upon a
360-day year.
(b) STOCK CREDITS. If the deferral is wholly or partly by means of a
stock credit, the Participant's stock credit account shall be
credited, as of the last day of the calendar quarter, with a Common
Stock equivalent equal to the number of shares of Common Stock
(including fractions of a share) that could have been purchased at
the average of the Closing Price of Common Stock on each business
day during the last month of the calendar quarter with the amount of
the Compensation deferred during the quarter by means of a stock
credit. As of the date any
dividend is paid to shareholders of Common Stock, the Participant's
stock credit account shall also be credited with an additional
Common Stock equivalent equal to the number of shares of Common
Stock (including fractions of a share) that could have been
purchased at the Closing Price of Common Stock on such date with the
dividend paid on the number of shares of Common Stock to which the
Participant's stock credit account is then equivalent. In case of
dividends paid in property, the dividend shall be deemed to be the
fair market value of the property at the time of distribution of the
dividend, as determined by the Plan Administrator.
(c) A Participant may elect in writing that all or any designated
portion of his stock credit account or his cash credit account be
changed to, and such Participant shall instead be credited with, the
other type of account as of the first day of the month following the
month in which the election is received by the Plan Administrator.
For this purpose, the value of a participant's stock credit account
will be determined using the average of the Closing Price of Common
Stock on each business day during the month preceding the effective
date of the election. Notwithstanding the foregoing, any election to
transfer between accounts may be made no more frequently than once
in any six (6) month period and no such election may be made unless
the transfer would be an exempt transaction for purposes of Section
16(b) of the Securities Exchange Act of 1934.
3.3 DISTRIBUTION OF CREDITS.
(a) Unless a Participant has elected to receive installment payments as
provided below, payment of a Participant's accounts shall be made in
one (1) lump sum as soon as practicable in the year in which the
Participant had elected to receive payment.
At the election of the Participant made in writing and delivered to
the Plan Administrator at any time on or before December 1 of the
year prior to the year in which the Participant had elected to
receive payment, distribution of all of his or her account shall be
made in any number of annual installments not exceeding (10) ten.
Any such election, unless made irrevocable by its terms, may be
changed by written notice to the Plan Administrator at any time
prior to December 1 of the Plan Year prior to the year in which the
Participant had elected to receive payment.
(b) Distribution of a Participant's cash credit and stock credit
accounts shall be made in cash. For this purpose, the value of a
Participant's stock credit account shall be determined by
multiplying the number of shares of Common Stock attributable to the
payment by the average of the Closing Price of Common Stock on each
business day in the month of December immediately prior to the Plan
Year in which the payment is to be paid.
3.4 ADJUSTMENT. If at any time the number of outstanding shares of Common
Stock shall be changed or increased as the result of any stock dividend,
subdivision or
reclassification of shares, the number of shares of Common Stock to which each
Participant's stock credit account is equivalent shall be changed or increased
in the same proportion as the outstanding number of shares of Common Stock is
changed or increased, or if the number of outstanding shares of Common Stock
shall at any time be decreased as the result of any combination or
reclassification of shares, the number of shares of Common Stock to which each
Participant's stock credit account is equivalent shall be decreased in the same
proportion as the outstanding number of shares of Common Stock is decreased. In
the event the Company shall at any time be consolidated with or merged into any
other corporation and holders of the Company's Common Stock receive common
shares of the resulting or surviving corporation, there shall be credited to
each Participant's stock credit account, in place of the shares then credited
thereto, a stock equivalent determined by multiplying the number of common
shares of stock given in exchange for a share of Common Stock upon such
consolidation or merger, by the number of shares of Common Stock to which the
Participant's account is then equivalent. If in such a consolidation or merger,
holders of the Company's Common Stock shall receive any consideration other than
common shares of the resulting or surviving corporation, the Plan Administrator,
in its sole discretion, shall determine the appropriate change in Participants'
accounts.
3.5 INSTALLMENT AMOUNT. In the event a Participant has elected to receive
distribution of his or her accounts in more than one installment, the amount of
each installment shall be determined either (i) by multiplying the current
balance (denominated in cash units for the portion elected to be deferred as
cash credits and denominated in stock units for the portion elected to be
deferred in stock credits) in the accounts as determined under Section 3.2, by a
fraction, the numerator of which is one, and the denominator of which is the
number of installments yet to be paid or (ii) by any other method acceptable to
the Plan Administrator.
3.6 DISTRIBUTION UPON DEATH. In the event of the death of a Participant,
whether before or after ceasing to serve as a Director, any cash credit account
and stock credit account to which he or she was entitled, shall be converted to
cash and distributed in one lump-sum to such person or persons or the survivors
thereof, including corporations, unincorporated associations or trusts, as the
Participant may have designated. All such designations shall be made in writing
signed by the Participant and delivered to the Plan Administrator. A Participant
may from time to time revoke or change any such designation by written notice to
the Plan Administrator. If there is no unrevoked designation on file with the
Plan Administrator at the time of the Participant's death, or if the person or
persons designated therein shall have all predeceased the Participant or
otherwise ceased to exist, such distributions shall be made in accordance with
the Participant's will or in the absence of a will, to the administrator of the
Participant's estate. Any distribution under this Section 3.6 shall be made as
soon as practicable following the end of the fiscal quarter in which the Plan
Administrator is notified of the Participant's death. In this case, a
Participant's stock credit account shall be converted to cash by multiplying the
number of whole and fractional shares of Common Stock to which the Participant's
stock credit account is equivalent by the average of the Closing Price of Common
Stock on each business day during the last month of the calendar quarter prior
to the date of death.
3.7 WITHHOLDING TAXES. The Company shall deduct from all distributions
under the Plan any taxes required to be withheld by federal, state, or local
governments.
ARTICLE IV
4.1 PLAN ADMINISTRATOR. The Plan Administrator shall have full power and
authority to administer the Plan including the power to promulgate forms to be
used with regard to the Plan, the power to promulgate rules of Plan
administration, the power to settle any disputes as to rights or benefits
arising from the Plan, and the power to make such decisions or take such action
as the Plan Administrator, in its sole discretion, deems necessary or advisable
to aid in the proper maintenance of the Plan.
ARTICLE V
5.1 FUNDING. No promise hereunder shall be secured by any specific assets
of the Company, nor shall any assets of the Company be designated as
attributable or allocated to the satisfaction of such promises. Nothing herein
creates a vested right. Cash credit and stock credit accounts are not funded and
are paid from the general assets of the Company from which the Participant
terminated service as a Director. Nothing herein shall be construed to require
the Company to maintain any fund or segregate any amount for the benefit of any
Participant and no Participant or other person shall have any claim against,
right to, or security or other interest in, any fund, account or asset of the
Company.
ARTICLE VI
6.1 NON-ALIENATION OF BENEFITS. No benefit under the Plan shall be subject
in any manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, or charge, and any attempt to do so shall be void. No such benefit
shall, prior to receipt thereof by the Participant, be in any manner liable for
or subject to the debts, contracts, liabilities, engagements, or torts of the
Participant.
ARTICLE VII
7.1 DELEGATION OF ADMINISTRATIVE DUTIES. Administrative duties imposed by
this Plan may be delegated by the Plan Administrator or the individual charged
with such duties.
7.2 GOVERNING LAW. This Plan shall be governed by the laws of the State of
North Carolina.
7.3 AMENDMENT, MODIFICATION AND TERMINATION OF THE PLAN. The Plan
Administrator at any time may terminate and in any respect, amend or modify the
Plan.