EXHIBIT 10.2
THE LAIDLAW INC. U.S. SUPPLEMENTAL
EXECUTIVE RETIREMENT ARRANGEMENT
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Plan Text Adopted by the Board of Directors effective April 1, 1995
September 1, 1997(rev)
TABLE OF CONTENTS
ARTICLE PAGE
1 Introduction 1
2 Definitions 2
3 Eligibility And Service 6
4 Supplemental Benefits 8
5 Normal And Optional Forms Of Benefits 12
6 Death Benefits 13
7 Future Of The Arrangement 15
8 General Provisions 16
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ARTICLE 1
INTRODUCTION
1.01 Laidlaw Inc. hereby establishes the Laidlaw Inc. U.S. Supplemental
Executive Retirement Arrangement (the "Arrangement") for the purpose of
providing supplemental benefits as hereinafter described.
1.02 Supplemental benefits payable under this Arrangement will be paid in
addition to benefits paid under any other retirement arrangement
sponsored by a participating employer.
1.03 The effective date of this Arrangement is April 1, 1995.
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ARTICLE 2
DEFINITIONS
In this Arrangement, the following terms and expressions will have the following
meanings, unless a different meaning is required by the context:
2.01 ACTUARIAL EQUIVALENT means a supplemental benefit of an equivalent
value where such equivalent benefit is established using actuarial
tables, actuarial assumptions and methodology as may be selected by the
Company on the recommendation of the Actuary.
2.02 ACTUARY means a Fellow of the Canadian Institute of Actuaries, as
appointed by the Company.
2.03 AFFILIATED COMPANY means any subsidiary company of Laidlaw Inc. or any
company related to or associated with Laidlaw Inc.
2.04 ARRANGEMENT means this Laidlaw Inc. U.S. Supplemental Executive
Retirement Arrangement, as amended or restated from time to time.
2.05 BENEFICIARY means the person designated by a Member under Article 6 and
means the Member's estate where there is no such person.
2.06 BOARD OF DIRECTORS means the board of directors of Laidlaw Inc., or
such Committee to which such board of directors may delegate its
authority in respect of this Arrangement.
2.07 CANADIAN ARRANGEMENT means the Laidlaw Inc. Canadian Supplemental
Executive Retirement Arrangement, as amended or restated from time to
time.
2.08 COMPANY means Laidlaw Inc. and any related, affiliated, associated or
subsidiary company which may be designated as a participating employer
by the Company and which has agreed to participate in the Arrangement.
Where any reference in the Arrangement is made to any action to be
taken, consent, approval or opinion to be given, discretion or decision
to be exercised by the Company, "Company" means Laidlaw Inc. acting
through the Board of Directors or any person authorized by the Board of
Directors for purposes of the Arrangement.
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2.09 CONTINUOUS SERVICE means the years and completed months of an
Employee's uninterrupted period of employment with the Company since
the Employee's last date of hire by the Company, except that where the
Employee was previously employed by another unrelated company,
Continuous Service shall mean the years and completed months of an
Employee's uninterrupted period of employment with the Company since
the date of acquisition of the shares of that unrelated company by the
Company. Notwithstanding the foregoing, Continuous Service shall not
include any notice period related to termination of employment
(including pay in lieu of notice of termination of employment), unless
required by law and only to the extent required by law.
2.10 CREDITED SERVICE of a Member means the aggregate of Credited Past
Service and Credited Future Service as follows:
(a) CREDITED PAST SERVICE
Continuous Service prior to the effective date of an Employee
becoming a Member hereunder, provided the Human Resource and
Compensation Committee has consented to the granting of such
past service for the purposes of this Arrangement: and
(b) CREDITED FUTURE SERVICE
Continuous Service from the later of April 1, 1995 or the date
the Employee becomes eligible to participate in this
Arrangement in accordance with Article 3.
2.11 EARNINGS in respect of a month of service means one-twelfth of the
aggregate of:
(a) the Employee's base salary received in a complete fiscal year
from the Company (exclusive of any allowances); and
(b) bonuses and other incentive payments received in cash that are
attributable to the fiscal year referred to in paragraph (a),
up to a maximum of the targeted bonus payable to the Member
(as determined in respect of a particular fiscal year under
the Company's annual incentive program).
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"Earnings" shall not include any severance payments (i.e. or pay in
lieu of reasonable notice of termination of employment), unless
required by law and only to the extent required by law.
For the purposes of this paragraph, where, at the time of determination
of an Employee's "Earnings", an Employee has not worked for the
entirety of the most recent fiscal year, for the purposes of
determining the Employee's Earnings for that period of service, the
salary received and bonus attributable to that period of service under
paragraphs (a) and (b) above shall be divided by the number of whole or
partial months served in that fiscal year.
2.12 EMPLOYEE means any person in full-time employment with the Company who
is a resident of Canada.
2.13 FINAL AVERAGE EARNINGS calculated on/after April 1, 2000 means the
twelve times the highest average of the Member's Earnings during any 60
consecutive months of service with the company and/or an Affiliated
Company within the 10 year period preceding the Member's retirement,
death or termination of employment. If a Member has not completed 60
months of service, Final Average Earnings will be based on the average
of the Member's Earnings during the Member's period of service.
Final Average Earnings calculated prior to April 1, 2000 means the
twelve times the highest average of the Member's earnings during any 60
consecutive months of service with the Company and/or an Affiliated
Company within the 5 year period preceding the Member's retirement,
death or termination of employment. If a Member has not completed 60
months of service, Final Average Earnings will be based on the average
of the Member's Earnings during the Member's period of service.
2.14 HUMAN RESOURCE AND COMPENSATION COMMITTEE means the Human Resource and
Compensation Committee of the Board of Directors.
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2.15 INTERNAL REVENUE CODE MAXIMUM COMPENSATION LIMIT at a particular time
means the "compensation limit" as defined under Section 415(d) of the
Internal Revenue Code of 1986 and the Regulations thereunder, as
amended from time to time. As at April 1, 1995, the "compensation
limit" is $150,000.
2.16 MEMBER means an Employee or former Employee who has been designated as
eligible to participate in the Arrangement under Article 3 and who
continues to be eligible to receive supplemental benefits under this
Arrangement.
2.17 RETIREMENT AGE at a particular time, means the age upon which an
individual can claim an unreduced pension under the United States
Social Security Act and Regulations thereunder.
2.18 STATUTORY BENEFIT OFFSET at a particular time means the maximum annual
"primary insurance amount" under the United States Social Security Act
and the Regulations thereunder, as amended from time to time, payable
at the date the Member attains the Retirement Age. Where a Member
demonstrates to the satisfaction of the Company that upon attaining the
Retirement age he or she is entitled to a pension benefit under the
Social Security Act and Regulations thereunder that is less than the
maximum annual primary insurance amount as described above, the
Statutory Benefit Offset in respect of that Member shall be that lesser
amount.
2.19 TOTAL DISABILITY means a disability in respect of which the Member is
entitled to benefits from the Company's long-term disability program.
2.20 VESTED CREDITED SERVICE has the meaning described in Section 4.04.
In this Arrangement, unless the context requires otherwise, reference to the
male gender will include the female gender and words importing the singular
number only include the plural number and vice versa.
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ARTICLE 3
ELIGIBILITY AND SERVICE
3.01 MEMBERSHIP
An Employee will become a Member under this Arrangement upon being:
(a) recommended by the Chief Executive Officer of the Company for
participation in this Arrangement; and
(b) approved for participation by the Human Resource and
Compensation Committee,
and such membership shall be effective on the date determined by the
Human Resource and Compensation Committee in respect of such Member.
3.02 DISABILITY
If the Member suffers from a Total Disability, such period of
disability will be excluded from Credited Service. If the Member's
Total Disability continues until he attains age 65, the Member will be
deemed to have retired from employment and his supplemental benefits
will be determined based on:
(a) the formula set out in Section 4.01;
(b) Credited Service accrued to the date the Total Disability
commenced;
(c) for the purposes of Article 4, Continuous Service accrued to
the date the Total Disability commenced; and
(d) Final Average Earnings at the date the Total Disability
commenced.
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3.03 TRANSFERS
(a) TRANSFER TO THE UNITED STATES AND THIS ARRANGEMENT
If an employee of an Affiliated Company is transferred from
Canada to the United States such that the individual becomes
an Employee, such Employee will become a Member of this
Arrangement upon the date of transfer of employment, provided
the Employee was a "Member" as defined under the Canadian
Arrangement immediately prior to his transfer.
In such a case, supplemental benefits payable to a Member
under this Arrangement will be calculated on the basis of:
(i) his Credited Service under this Arrangement,
including his "Credited Service" recognized, and as
defined, under the Canadian Arrangement;
(ii) his Continuous Service under this Arrangement,
including "Continuous Service" as defined under the
Canadian Arrangement; and
(iii) the Member's Final Average Earnings, which will
include earnings received by the Member from the
Affiliated Company as defined by the Canadian
Arrangement. Earnings previously received from the
Affiliated Company will be translated to Canadian
dollars based on the average exchange rates
applicable to each year of earnings.
(b) TRANSFERS OUT OF THE UNITED STATES AND THIS ARRANGEMENT
If a Member is transferred from the United States to Canada
and ceases to be an Employee, no supplemental benefits will be
payable under this Arrangement. Instead, any liability for the
payment of supplemental benefits accrued in respect of
Credited Service under this Arrangement will be assumed by the
applicable participating employer under the Canadian
Arrangement
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ARTICLE 4
SUPPLEMENTAL BENEFITS
4.01 BENEFIT FORMULA
The annual supplemental benefit formula is equal to ({A + B} - C) x D
as follows:
where
A is 1% of the lesser of (i) the Member's Final Average
Earnings; and (ii) the Internal Revenue Code maximum
Compensation Limit;
B is 1.5% of the amount by which the member's Final Average
Earnings exceeds the Internal Revenue Code Maximum
Compensation Limit;
C is, assuming the Member has attained the Retirement Age,
1/35th of the Statutory Benefit Offset, determined on the date
of termination of employment, or death, as the case may be,
and prior to the Member attaining the Retirement Age, nil; and
D is the aggregate of the number of whole or partial years of
the Member's Vested Credited Service, as determined under
Section 4.04.
4.02 PENSION COMMENCEMENT
A Member will be entitled to an annual supplemental benefit calculated
according to the formula in Section 4.01 and based on Vested Credited
Service and Final Average Earnings as at the date of termination of the
Member's employment, commencing the first the first day of the month
co-incident with or next following such Member attaining the age of 65.
4.03 EARLY RETIREMENT
A Member who retires from employment with the Company before attainment
of age 65 and who elects to have this provision apply to him will be
entitled to an annual supplemental benefit, commencing on the first day
of the month co-incident with or next following the later of such
Member's actual retirement date and such other date selected by him
that is prior to the
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Member's attainment of age 65 and on or after attainment of age 60,
equal to the supplemental benefit calculated according to the formula
in Section 4.01 and based on Vested Credited Service and the Member's
Final Average Earnings at the Member's actual retirement date. Such
supplemental benefits will be reduced by 0.1667% for each complete
month that the date of commencement of payment of benefits precedes the
Member's attainment of age 65. A Member can elect to have this
provision apply to him by giving written notice to the Company of such
election, which notice must be received by the Company prior to the
date that the Member elects that supplemental benefits will commence to
become payable to him.
4.04 VESTED CREDITED SERVICE
For the purposes of this Arrangement, Vested Credited Service is the
sum of Vested Credited Future Service and Vested Credited Past Service,
as defined below:
(a) VESTED CREDITED FUTURE SERVICE
A Member's Vested Credited Future Service is equal to the
Member's Credited Future Service multiplied by the relevant
vesting percentage contained in the following chart, based on
the number of full years of the Member's Credited Future
Service rendered after becoming a Member of this Arrangement.
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YEARS OF CREDITED FUTURE SERVICE
RENDERED AFTER BECOMING A MEMBER RELEVANT VESTING PERCENTAGE
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less than 1 year 0%
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1 or more years but less than 2 years 20%
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2 or more years but less than 3 years 40%
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3 or more years but less than 4 years 60%
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4 or more years but less than 5 years 80%
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5 or more years 100%
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Where a Member suffers from a Total Disability, such period of
Total Disability shall be considered to be Credited Future
Service rendered after becoming a Member for the purposes only
of determining the relevant vesting percentage in the above
chart.
(b) VESTED CREDITED PAST SERVICE
A Member's Vested Credited Past Service is equal to the
Member's Credited Past Service if the Member:
(i) dies, at any age, and such death occurs prior to the
commencement of payment of supplemental benefits
under this Arrangement;or
(ii) Retires from employment with the Company on or after
the attainment of age 60; or
(iii) Terminates employment with the Company before age 60,
provided the Member neither voluntarily terminates
his employment with the Company nor is dismissed for
just cause.
A Member's Vested Credited Past Service is equal to the
Member's Credited Past Service multiplied by the relevant
vesting percentage as outlined in the following chart, based
on the Member's age at retirement if the Member retires from
employment with the Company on or after attainment of age 55
and before attainment of age 60 provided that the member
provides no services to any competitor of the Company after
retirement.
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RETIREMENT AGE RELEVANT VESTING PERCENTAGE
- -------------------------------------------------------------
55 years 50%
- -------------------------------------------------------------
56 years 60%
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57 years 70%
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58 years 80%
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59 years 90%
- -------------------------------------------------------------
For the purposes of this Section 4.04 (B), the Human Resource
and Compensation Committee will determine what constitutes
"just cause" and whether a particular Member has been
dismissed for just cause, has voluntarily terminated his
employment with the Company or has retired or provided
services to a competitor of the Company. In any other case, a
Member's Vested Credited Past Service is nil.
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ARTICLE 5
NORMAL AND OPTIONAL FORMS OF BENEFITS
5.01 NORMAL FORM
The normal form of supplemental benefit payable under this Arrangement
is an annuity payable in monthly installments for the life of the
Member and, in any event, for a period of not less than 60 months. If
the Member dies before receiving 60 monthly payments, the Member's
Beneficiary will receive the remaining payments at the same time and in
the same amount that the Member would have received, had he not died.
5.02 OPTIONAL FORMS
In lieu of the normal form of supplemental benefit described in Section
5.01, the Member may elect, before supplemental benefit payments
commence, any other form of periodic lifetime annuity acceptable to the
Human Resource and Compensation Committee (the "Optional Form"), which
Optional From will be the Actuarial Equivalent of the normal form of
supplemental benefit described in Section 5.01.
Where the Member wishes to elect an Optional Form, the Member must so
advise the Company, in writing, at least 30 days before the date
benefit payments would otherwise have commenced under this Arrangement.
Section 5.01 will apply where the Member has not provided such written
notice to the Company in the specified time period.
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ARTICLE 6
DEATH BENEFITS
6.01 BENEFICIARY DESIGNATION
A Member may designate, by written notice delivered to the Company, a
Beneficiary to receive any benefits payable on the death of the Member.
A Member may revoke or amend such designation in the same manner at any
time, subject to any applicable laws governing the designation of
beneficiaries.
6.02 NO BENEFICIARY
If a Member fails to validly designate a Beneficiary, or if the
Beneficiary predeceases the Member, any benefits payable to the
Member's Beneficiary will be paid to the estate of the Member in
accordance with this Arrangement.
6.03 DEATH OF A BENEFICIARY
If a Beneficiary, as a result of a Member's death, is entitled to
payments under this Arrangement and the Beneficiary dies before
receiving any or all of the payments due to him, any remaining
guaranteed monthly payments will continue to be paid to the estate of
the Beneficiary.
6.04 DEATH BEFORE SUPPLEMENTAL BENEFIT COMMENCEMENT
Notwithstanding sections 4.02 and 4.03, if the Member dies before the
payment of supplemental benefits have commenced, the Member will be
deemed to have retired the day before his death and the Member's
Beneficiary will receive a supplemental benefit equal to the benefit
determined in accordance with Section 4.01, and payable for 60 months,
commencing on the first day of the month co-incident with or next
following the later of such Member's death.
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6.05 DEATH AFTER SUPPLEMENTAL BENEFIT COMMENCEMENT
If a Member dies after the Member's supplemental benefits have
commenced being paid, any benefits payable under this Arrangement will
be determined and payable in accordance with Article 5.
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ARTICLE 7
FUTURE OF THE ARRANGEMENT
7.01 RIGHT TO AMEND OR TERMINATE THE ARRANGEMENT
The Human Resource and Compensation Committee reserves the right to
amend or discontinue this Arrangement at any time, either in whole or
in part, at its discretion, provided such amendment or termination, as
applicable, does not reduce benefits under this Arrangement accrued to
the date of amendment or termination of the Arrangement, as applicable,
based on a Member's Final Average Earnings at the date of such
amendment or termination, as applicable.
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ARTICLE 8
GENERAL PROVISIONS
8.01 ADMINISTRATION
The Company will administer this Arrangement. The Company:
(a) will be responsible for all matters relating to the
administration of this Arrangement;
(b) may delegate such matters as it deems appropriate to be
performed by one or more agents;
(c) will decide conclusively all matters relating to the
operation, interpretation and application of the Arrangement;
and
(d) may enact rules and regulations relating to the administration
of the Arrangement to carry out the terms of this Arrangement
and may amend such rules and regulations from time to time.
Such rules and regulations will not conflict with any
provision of this Arrangement.
8.02 SUPPLEMENTAL BENEFITS PAYABLE BY THE COMPANY
(a) Supplemental benefits payable under this Arrangement will be
paid by the participating employer. The Company is not
required to establish or contribute to a trust fund, annuity
or other advance or current funding arrangement of any kind
for the provision of supplemental benefits which may become,
or are, payable under this Arrangement.
(b) Supplemental benefits payable under this Arrangement are to be
paid solely from the general assets of the participating
employer.
8.03 FREQUENCY AND TIMING OF SUPPLEMENTAL BENEFIT BENEFITS
Unless specified otherwise, payments under this Arrangement will be
payable monthly upon the first day of the month in which they fall due.
Where such payments are subject to termination on death or loss of
eligibility ("termination event"), the last monthly payment will be
payable on the first day of the month in which the termination event
occurs.
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8.04 NON-ALIENATION
Any transaction that purports to assign, charge, anticipate, surrender
or grant as security a Member's right or interest under the
Arrangement, or supplemental benefits payable under this Arrangement,
is void.
8.05 NON-COMMUTATION OF BENEFITS
A supplemental benefit payable under this Arrangement will not be
capable of being commuted, unless the Human Resource and Compensation
Committee decides it is in the best interests of the Company to do so.
8.06 RIGHTS OF EMPLOYEES
(a) No Member will have any right or interest, whatsoever, to
supplemental benefits under this Arrangement, except as
provided in this Arrangement.
(b) The establishment of this Arrangement will not constitute an
enlargement of any rights an Employee might otherwise have as
to tenure, retention of employment with the Company,
continuity of work, advancement in employment or any
particular job or position.
8.07 LIMITATION OF LIABILITIES
Notwithstanding anything in this Arrangement to the contrary, the
Company will not be liable to any person whatsoever because of any
acts, omissions to act, mistakes, negligence or errors in judgment
either by the Company or of any person appointed or employed by it or
providing service to it in connection with its functions thereunder,
except for any claims, demands and proceedings arising from any act or
omission which is due to willful misconduct, fraud or lack of good
faith by the Company or such persons or any one of them.
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8.08 INFORMATION TO BE PROVIDED BEFORE BENEFITS ARE PAID
Payment of supplemental benefits will not be made until the person
entitled to payment of supplemental benefits delivers to the Company:
(a) satisfactory proof of age of the person and other persons who
may become entitled to payment of supplemental benefits; and
(b) any such other information as may be required to calculate and
pay supplemental benefits, including a signed declaration of
marital status, if applicable.
8.09 COMPANY RECORDS
Whenever the records of the Company are used for the purposes of this
Arrangement, such records will be conclusive as to the facts with which
they are concerned.
8.10 SUCCESSOR COMPANIES
If the Company (or participating employer contemplated by the
definition of "Company") sells or exchanges all or substantially all of
its assets or ceases, discontinues operation of its business or enters
into a statutory or non-statutory merger, consolidation or
re-organization with any other corporation, this Arrangement will be
continued and the person, firm or corporation to which the Company (or
participating employer, as the case may be) is sold or with which the
Company (or participating employer, as the case may be) is merged,
consolidated or re-organized will be deemed to be the successor of the
Company (or participating employer, as the case may be) and will be
substituted hereunder for the Company (or participating employer, as
the case may be).
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8.11 CONSTRUCTION
This Arrangement will be governed and construed in accordance with the
laws of Ontario.
8.12 CURRENCY
All supplemental benefits payable under this Arrangement will be paid
in the lawful currency of the United States.
8.13 SEVERABILITY
If any provision of this Arrangement is held to be invalid or
unenforceable by a court of competent jurisdiction, its invalidity or
unenforceability will not affect any other provision of this
Arrangement and the Arrangement will be construed and enforced as if
such provision had not been included therein.
8.14 CAPTIONS AND HEADINGS
The captions, headings and Table of Contents of this Arrangement are
included for convenience of reference only and will not be used in
interpreting the provisions of this Arrangement.
8.15 ARTICLES AND SECTIONS
"Article" or "Articles" means an article or articles as defined in the
Table of Contents and "Section" or "Sections" means a specific
provision or provisions within an Article or Articles, as applicable.
8.16 WAIVER
The Human Resource and Compensation Committee shall have the unfettered
right and sole discretion to waive any provision of this Arrangement,
if it deems such waiver to be in the best interests of the Company.
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