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EXHIBIT 10.8
GRANITE CONSTRUCTION INCORPORATED
KEY MANAGEMENT DEFERRED COMPENSATION PLAN
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GRANITE CONSTRUCTION INCORPORATED
KEY MANAGEMENT DEFERRED COMPENSATION PLAN
1. Introduction. The Company hereby amends and restates the Plan,
effective as of January 1, 1998. The purpose of the Plan is to provide deferred
compensation to a select group of executive employees of the Company in
recognition of their contributions to the Company and its subsidiaries. This
document constitutes the written instrument under which the Plan is maintained.
2. Definitions.
(a) "Account" means as to any Participant the separate account
established and maintained by the Company in order to reflect his or her
interest in the Plan. Each Participant's Account will reflect the allocations
and earnings credited (or debited) thereto in accordance with Section 5.
(b) "Code" means the Internal Revenue Code of 1986, as amended.
(c) "Committee" means the Compensation Committee of the Company's
Board of Directors.
(d) "Company" means Granite Construction Incorporated, a Delaware
corporation, and any other affiliated entity that is designated from time to
time by the board of directors of Granite Construction Incorporated. As to a
particular Participant, "Company" refers to the corporate entity which is his or
her employer. For purposes of Sections 2(c), 5 and 10, "Company" refers only to
Granite Construction Incorporated.
(e) "Compensation" means "compensation" (as defined in the Company's
tax-qualified retirement plans) in excess of$150,000 (as indexed under section
401(a)(17) of the Code) but not in excess of $250,000 (as indexed from time to
time by the Committee).
(f) "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
(g) "Participant" means each employee of the Company who is
designated as such from time to time by the Committee.
(h) "Plan" means the Granite Construction Incorporated Key Management
Deferred Compensation Plan, as set forth in this instrument and as hereafter
amended.
(i) "Plan Year" means the calendar year.
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3. Eligibility To Participate. The Committee will, from time to time,
designate Company employees to be Participants. Each Participant selected by the
Committee must belong to a select group of management and highly compensated
employees of the Company.
4. Vesting. Each Participant will always be 100% vested in his or her
Account; provided, however, that if a Participant is terminated "for cause" (as
such term is defined in the Company's Ethics Policy Statement), the Participant
will forfeit all amounts other than his or her own Compensation deferrals.
5. Additions To Accounts.
(a) Participant Compensation Deferrals. Each Participant may annually
elect to defer the receipt of a whole percentage (up to 3% or such other
percentage as may be determined by the Company's board of directors) of his or
her Compensation.
(b) Dividend Switchback Deferrals. Under rules established by the
Committee, each Participant may elect to defer an additional portion of the
Participant's Compensation equal to the full amount of the quarterly cash
dividends that are paid to the Participant under Section 13(a) of the Granite
Construction Employee Stock Ownership Plan.
(c) Company Matching Contributions. The Company will annually credit
each Participant's Account with an amount equal to a percentage of the
Compensation deferred by the Participant under Section 5(a), which percentage
will equal the matching contribution percentage determined under the Granite
Construction Profit Sharing and 401(k) Plan for such Plan Year.
(d) Discretionary Contributions. Each Plan Year the Company will
credit each Participant's Account with an amount equal to a percentage of the
Participant's Compensation that is equal to the total discretionary contribution
percentage determined by the Company's board of directors with respect to such
year for the Granite Construction Profit Sharing and 401(k) Plan and the Granite
Construction Employee Stock Ownership Plan.
(e) Hypothetical Investment Experience. For each Plan Year, the
balance of each Participant's Account will be credited quarterly with
hypothetical earnings equal to one-quarter of the sum of the 30-day average of
the Lehman Brothers long term bond index (as published in the Wall Street
Journal) determined as of the December 1 of the prior Plan Year, plus 100 basis
points, or as determined by the Committee.
6. Deferral Elections. Each Participant must complete a deferral form for
each Plan Year with respect to which he or she wishes to defer the receipt of
Compensation. To be effective, each such deferral form must satisfy the
following rules:
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(a) Content And Form Requirements. The deferral form must be signed
and dated by the Participant, and must specify the method for distribution of
the Participant's Account. A Participant's election to defer Compensation will
be irrevocable and cannot be modified or amended by the Participant.
(b) Timing Of Deferral Forms. In general, a Participant's deferral
form must be received by the Committee before the beginning of the Plan Year for
which the Compensation is payable. However, in the case of Compensation payable
with respect to the initial Plan Year, the deferral form must be received by the
Committee both (i) within 30 days of the later of the date that the Company
adopts the Plan or the date on which the employee is notified of his or her
eligibility to participate, and (ii) before the date on which the Compensation
subject to the deferral election would otherwise be paid.
7. Distribution Of Accounts.
(a) Form Of Distributions. Subject to Sections 7(b), 7(d), 7(g) and
10, each Participant will receive a distribution of the balance of his or her
Account in the form specified in the Participant's election form, which may be a
lump sum cash payment, or annual installments of substantially equal amounts
payable over a period of years certain not to exceed ten.
(b) Rules For Installment Distributions. If, at any time after
installment distributions have begun, the amount of any installment would be
less than $1,000, the remainder of the Participant's Account will he distributed
in a lump sum. The Committee may, in its sole discretion, accelerate the
installment distribution of any Account for any reason. Participant Accounts
will continue to be credited with hypothetical earnings under Section 5(e) while
they are in pay status.
(c) Timing Of Distributions. Subject to Sections 7(d), 7(g) and 10,
the distribution of the balance of a Participant's Account will be made or begin
as soon as practicable following the earliest of the following events:
o The Participant's disability, as determined under the Company's
Long Term Disability Plan;
o The Participant's "retirement" under the Company's tax-qualified
retirement plans; or
o The Participant's death.
(d) Special Rule for "For Cause" Terminations. If a Participant is
terminated "for cause" (as such term is defined in the Company's Ethics Policy
Statement), and the Participant forfeits all amounts other than his or her own
Compensation deferrals, then notwithstanding Sections 6, 7(a) or 7(c),
distribution of the vested portion of such Participant's
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Account will be made in a lump sum cash payment as soon as practicable following
his or her termination of Company employment.
(e) Timing Of Distribution To A Beneficiary. If a Participant dies
before receiving the distribution of his or her Account, the distribution of
such Account to his or her beneficiary will made as previously elected by the
Participant.
(f) Beneficiary Designation. Each Participant must designate a
beneficiary to receive a distribution of his or her Account if the Participant
dies before it is distributed to him or her. A beneficiary designation form must
be signed, dated and delivered to the Committee to become effective. In the
absence of a valid or effective beneficiary designation, the Participant's
surviving spouse will be his or her beneficiary or, if there is no surviving
spouse, the Participant's estate will be his or her beneficiary.
(g) Hardship Distributions. In the event of an unforeseeable
emergency, a Participant may apply to the Committee for a distribution of part
or all of his or her Account prior to the date that it would otherwise be
distributed under this Section 7. If the Committee approves such an application,
it will make such distribution as a lump sum cash payment.
8. Withholding. The Company will withhold from any Plan distribution all
required federal, state, local and other taxes and any other payroll deductions
required. Each Participant agrees as a condition of participation in the Plan to
have withheld annually from his or her salary such amounts as are necessary to
satisfy his or her FICA withholding requirements.
9. Administration. The Plan is administered and interpreted by the
Committee. The Committee has delegated to the Company's Vice President and
Director of Human Resources its responsibilities under the Plan. The Committee
(and its delegatee) have the full and exclusive discretion to interpret and
administer the Plan. All actions, interpretations and decisions of the Committee
(and its delegatee) are conclusive and binding on all persons, and will be given
the maximum possible deference allowed by law. The Company agrees to indemnify
and hold harmless the members of the Committee and any employee to whom the
Committee delegates any responsibility under the Plan.
10. Amendment Or Termination. The Company reserves the right, in its sole
and unlimited discretion, to amend or terminate the Plan at any time, without
prior notice to any Participant or beneficiary. Upon Plan termination, the
Account of each Participant will be distributed as a lump sum cash payment as
soon as practicable, without regard to Section 7 or the Participant's deferral
election.
11. Claims Procedure. Any person who believes that he or she is entitled
to any payment under the Plan may submit a claim in writing to the Committee. If
the claim is denied (either in full or in part), the claimant will be provided a
written notice explaining the specific reasons for the denial and referring to
the provisions of the Plan on which the denial is based.
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The notice will describe any additional information needed to support the claim.
The denial notice will be provided within 90 days after the claim is received.
If special circumstances require an extension of time (up to 90 days), written
notice of the extension will be given within the initial 90-day period.
12. Appeal Procedure. If a claimant's claim is denied, the claimant (or
his or her authorized representative) may apply in writing to the Committee for
a review of the decision denying the claim. The claimant (or representative)
then has the right to review pertinent documents and to submit issues and
comments in writing. The Committee will provide written notice of its decision
on review within 60 days after it receives a review request. If additional time
(up to 60 days) is needed to review the request, the claimant will be given
written notice of the reason for the delay.
13. Source Of Payments.
(a) No Plan Assets. Subject to Section 13(b), all payments under the
Plan will be paid in cash from the general funds of the Company, no separate
fund will be established under the Plan, and the Plan will have no assets. Any
right of any person to receive any payment under the Plan is no greater than the
right of any other unsecured creditor of the Company. The Plan constitutes a
mere promise by the Company to pay benefit payments in the future and is
unfunded for purposes of both Title I of ERISA and the Code.
(b) Rabbi Trust. The Company will (i) establish a trust, (ii) fund
such trust in the event that it determines that a "change in control" (as
defined in the trust agreement) is imminent, and (iii) arrange to have such
trust assume its obligations to pay benefits under the Plan. Any trust created
by the Company to assist it in meeting its obligations under the Plan will
conform to the terms of the model trust as described in Revenue Ruling 92-64.
14. Inalienability. A Participant's rights to benefits under the Plan are
not subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, attachment, or garnishment by creditors of the
Participant or the Participant's beneficiary.
15. Applicable Law. The provisions of the Plan will be construed,
administered and enforced in accordance with ERISA and, to the extent
applicable, the laws of the State of California.
16. Severability. If any provision of the Plan is held invalid or
unenforceable, its invalidity or unenforceability will not affect any other
provision of the Plan, and the Plan will be construed and enforced as if such
provision had not been included.
17. No Employment Rights. Neither the adoption or maintenance of the Plan
will be deemed to constitute a contract of employment between the Company and
any employee, or to be a consideration for, or an inducement or condition of,
any employment. Nothing contained
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in this Plan will be deemed to give an employee the right to be retained in the
service of the Company or to interfere with the right of the Company to
discharge, with or without cause, any employee at any time.
18. Status Of Plan As ERISA "Top Hat" Plan. The Plan is intended to be an
unfunded plan maintained primarily for the purpose of providing deferred
compensation for a select group of management and highly compensated employees
and will be administered and construed to effectuate this intent. Accordingly,
the Plan is subject to Title I of ERISA, but is exempt from Parts 2, 3 and 4 of
such Title.
Execution
IN WITNESS WHEREOF, Granite Construction Incorporated, by its duly
authorized officers, has executed the Plan on the date(s) indicated below.
GRANITE CONSTRUCTION
INCORPORATED
By /s/ DAVID H. WATTS
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Its David H. Watts, President & CEO
Dated 9/17/98
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By /s/ MICHAEL FUTCH
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Its Michael Futch, Secretary
Dated 9/17/98
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