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EXHIBIT 10.3
TRW BENEFITS EQUALIZATION PLAN
Amended and Restated
Effective August 1, 1995
1. PURPOSE. This plan, the TRW Benefits Equalization Plan
("Plan"), combines the provisions of the TRW Inc. Supplemental Executive
Retirement Plan and the TRW Inc. Nonqualified Benefits Equalization Plan as
modified and restated herein. The Plan is unfunded for tax purposes and for
purposes of Title I of the Employee Retirement Income Security Act ("ERISA")
and is maintained primarily for the purpose of providing deferred compensation
for a select group of management or highly compensated employees, including
officers, of TRW Inc. and its domestic subsidiaries (the "Company"). Its
purposes are to provide supplemental benefits to those:
a. whose benefits under the TRW Salaried Pension Plan (the
"Salaried Plan"), any other defined benefit pension plan for which TRW Inc. or
a domestic subsidiary is a sponsor ("d.b. plan") or The TRW Employee Stock
Ownership and Stock Savings Plan (the "Stock Savings Plan") are limited by
section 401(a)(17) of the Internal Revenue Code of 1986 ("Code");
b. whose benefits otherwise payable under the Stock Savings Plan
are limited by section 402(g)(1) of the Code;
c. whose benefits under the Stock Savings Plan have been limited
to the extent that the Company cannot contribute to the Stock Savings Plan the
full amount of TRW Matching Contributions as defined therein without exceeding
the amount provided by Code section 415(c)(1)(A);
d. whose (i) compensation otherwise included as "Earnings" under
the Salaried Plan or other d.b. plan or as "Compensation" under the Stock
Savings Plan and (ii) service otherwise included as Benefit Service under the
Salaried Plan or other d.b. plan would not be so included because of a
determination by the Company that such inclusion could violate the regulations
under Code section 401(a)(4); and
e. whose compensation otherwise included as "Earnings" under the
Salaried Plan or other d.b. plan or as "Compensation" under the Stock Savings
Plan would not be included because such compensation was deferred under the
provisions of the TRW Inc. Deferred Compensation Plan rather than received.
2. ELIGIBILITY.
a. Employees (i) whose base pay and bonus paid in 1994 exceeded
$150,000 and (ii) whose base pay and bonus paid in any subsequent year exceed
the Code section 401(a)(17) compensation limit for such year will be eligible
to participate in the portion of the Plan attributable to benefits otherwise
payable under the Stock Savings Plan, provided they are otherwise eligible to
participate in the Stock Savings Plan and have timely elected to participate in
the
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Plan. An account ("Account") shall be established in the name of each such
eligible employee; amounts shall be credited to such Account in accordance with
the provisions of Section 4. Once such employees have met the eligibility
requirements under this paragraph a., they will continue to be eligible to
participate in subsequent years even if their base pay and bonus paid fall
below the compensation limit of Code section 401(a)(17).
b. Any employee whose benefits under the Salaried Plan or other
d.b. plan are limited due to any reason identified in Section 1 a., d. or e.
above, is eligible to participate in the Plan; his interest will be referred to
herein as the Defined Benefit Portion.
3. DIRECTORS/COMMITTEE. For purposes of the Plan, the term "Directors"
shall mean the Compensation and Stock Option Committee of the Directors of TRW
Inc. ("Company") with respect to the approval of benefits of any participant
who is, or ever was, either a Director of the Company, a member of the Chief
Executive Office, or a member of the Management Committee. With respect to the
approval of benefits of other participants, the term "Committee" shall refer to
an Administrative Committee consisting of those three employees of the Company
who occupy the most senior positions in the Company Staff Finance, Human
Resources, and Law Departments. The Committee or its delegate shall interpret
the provisions of the Plan, determine the rights and status of participants and
beneficiaries hereunder, and handle the general administration of the Plan.
Such interpretations and determinations shall be final and conclusive as to all
interested persons.
4. ACCOUNTS.
a. An Account shall be established for each employee identified
in Section 2 a. above into which shall be credited monthly the following
amounts:
i. that percentage of the participant's current
compensation which the participant elected to contribute to the Stock
Savings Plan as "Before-Tax Contributions" and that percentage of the
participant's current compensation which the Company would have
contributed to the Stock Savings Plan as "TRW Matching Contributions"
(both terms as defined under the Stock Savings Plan) to the extent
that such amounts cannot be contributed to the Stock Savings Plan due
to any of the reasons identified in Section 1; provided, however, that
the percentage of the participant's compensation credited to the
Account, when combined with the percentage elected under the Stock
Savings Plan, may not at any time be greater than that amount of
"Before-Tax Contributions" which the participant would be permitted to
contribute, as a highly-compensated participant, to the Stock Savings
Plan without regard to the above-referenced limitations; and further
provided, that the TRW Matching Contributions credited to the Account
shall be reduced by any amounts actually contributed for the
participant by the Company to the Stock Savings Plan as TRW Matching
Contributions; plus
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ii. earnings on the amounts credited under subparagraph
i. above in accordance with the participant's election as provided in
Section 5 below, as if such amounts had been invested on a monthly
basis in the Equity Fund and/or Insured Return Fund (also sometimes
referred to as the Stable Value Fund) of the Stock Savings Plan.
b. The participant's annual election to participate by having his
Account credited as provided in paragraph a. shall be filed with the Committee
in a form prescribed by it and shall be filed at such time as the Committee may
specify, but in all cases prior to the time such compensation is to be earned
by the participant. No changes in the percentage of compensation credited to
the Account shall be made during the calendar year following the election,
unless the participant elects 0%.
c. Participants shall have, at all times, a nonforfeitable
interest in the amounts credited to their Account, subject to the provisions of
Section 10a.
d. Participants shall receive an annual statement of their
Account established under the Plan within a reasonable period after the end of
each calendar year.
5. EARNINGS.
a. Each participant shall be able to elect whether the monies
credited to his or her Account will be credited with investment earnings based
upon the performance of the Equity Fund or the Insured Return Fund (also
sometimes referred to as the Stable Value Fund) of the Stock Savings Plan.
Such election may be made by allocating the entire Account to one of the
earnings options or by allocating the Account between the options in 25 percent
multiples. Each participant may change his or her election at the middle or end
of any month by contacting the Committee or its delegee.
b. All TRW Matching Contributions allocated to a participant's
Account will be credited in the same manner as the participant's election under
Section 4a.
6. TRW SUPPLEMENTARY RETIREMENT INCOME PLAN BENEFITS. To the extent that
the participant is restricted from accruing full benefits under the Salaried
Plan or other d.b. plan, the Plan shall provide the annual pension benefits
which would be payable from the Salaried Plan or other d.b. plan but for the
limits in Section 1, less the sum of the annual pension benefits payable from
the TRW Supplementary Retirement Income Plan (SRIP) and the Salaried Plan or
other d.b. plan.
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7. TIME OF PAYMENT.
DEFINED BENEFIT PORTION.
a. No benefit is payable from the Defined Benefit Portion of the
Plan, even if the Participant has terminated his/her employment, unless a
Participant has five years of vesting service as defined under the Salaried
Plan or other d.b. plan and has attained age fifty-five.
b. If a Participant who has five or more years of vesting service
dies before his/her benefit commencement date under the Salaried Plan or other
d.b. plan, the Participant's Defined Benefit Portion benefit and the SRIP, if
any, shall be paid in the same form and shall commence at the same time as a
pre-retirement survivor benefit under the Salaried Plan or other d.b. plan.
c. Any participant in the Salaried Plan or other d.b. plan and
the Defined Benefit Portion of this Plan who is entitled to a vested or
deferred vested pension under such qualified plan shall have his Defined
Benefit Portion benefit and SRIP benefit, if any, commence at the same time as
his benefit commencement date under the Salaried Plan or other d.b. plan.
d. Except as provided above or in Section 9, payment of benefits
under the Defined Benefit Portion and SRIP, if any, shall be made commencing
with the January following the date the participant becomes eligible, having
terminated his employment with the Company, for benefits under the qualified
defined benefit plan.
ACCOUNT.
a. Except as provided in Section 9, payment of the Account to the
participant (or, in the event of his death, to his beneficiary as designated in
writing to the Committee) shall be made as of the January following the
following events:
i. the participant's becoming disabled as defined by the
terms and conditions of the Stock Savings Plan;
ii. the death of the participant; or
iii. the termination of the participant's employment with
the Company through retirement or otherwise.
b. Notwithstanding the above, the Directors/Committee, upon
determining that the participant has suffered an emergency event beyond his
control which would impose an immediate and heavy financial hardship if the
payment of his benefits were not made, may pay to the participant that part of
his Account which is needed to satisfy such hardship.
8. FORM OF PAYMENT.
Upon approval by the Directors/Committee, any election of a form of payment
other than the automatic form of payment provided in this Section 8 shall be
irrevocable.
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DEFINED BENEFIT PORTION.
a. Except as provided in paragraph b. and Section 9, the
automatic form of payment under the Defined Benefit Portion shall be, for an
unmarried participant, a single life annuity, and, for a married participant, a
50% joint and survivor annuity with the participant's eligible spouse the
survivor annuitant. Notwithstanding the above, the participant may petition
the Directors/Committee at any time at least two months prior to termination of
employment to change such form of payment into a single sum or annual
installments from two to ten years, or any other payment form approved by the
Directors/Committee in their or its discretion. If annual installment payments
are elected, interest, if any, on such installments shall be determined by the
Actuary, subject to approval by the Company.
b. Except as provided in Section 9, any participant in the
Salaried Plan or other d.b. plan and the Defined Benefit Portion of this Plan
who is entitled to a vested or deferred vested pension under such qualified
plan shall have his vested or deferred vested benefit paid from the Defined
Benefit Portion in the same form and with the same designated joint annuitant,
if any, as his form of payment under the Salaried Plan or other d.b. plan,
unless otherwise provided under the terms of any Qualified Domestic Relations
Order applicable to said participant or unless otherwise determined by the
Committee, in its sole discretion.
c. Any benefit payable from the Defined Benefit Portion shall be
paid in the same form as payments from the SRIP.
ACCOUNT.
a. Subject to paragraph b., the automatic form of payment of
monies in the Account shall be ten equal annual installments, payable during
the month of January; provided, however, that the participant can petition the
Directors or the Committee at any time at least two months prior to the
participant's eligibility for payout from the Stock Savings Plan to change such
payment to any lesser number of annual installments or to a single sum. If
annual installments are paid, the balance of the Account shall continue to be
credited with earnings as previously elected by the participant in accordance
with Section 5.
b. Payment of the Account shall be made in the form of cash
unless the Directors/Committee determines in its discretion that it is
appropriate to pay that portion of the participant's Account attributable to
TRW Matching Contributions and earnings thereon in shares of the Company's
Common Stock, in which event such distribution of shares shall occur no earlier
than six months following the date that the participant is last employed by the
Company.
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9. SMALL BENEFIT CASHOUTS.
a. If the present value of a participant's interest in the
Defined Benefit Portion of the Plan, determined as of the later of the
participant's age 55 or termination of employment from the Company, is less
than an amount which, if converted to a single sum equals $3,500, the benefit
shall be paid out in single sum, either at the same time as his benefit
commencement date under the Salaried Plan or other d.b. plan or at an earlier
date as determined by the Committee in its sole discretion.
b. If the balance in the participant's Account under the Plan,
determined as of any of the events described in Section 8c. above, is less than
$3,500, said Account balance shall automatically be paid out in the first
January following said event.
10. OTHER LIMITATIONS ON BENEFITS
a. Payments under the Plan shall be made by the Company, with any
appropriate reimbursement being made by subsidiaries of the Company. The Plan
shall be unfunded, and the Company shall not be required to establish any
special or separate fund nor to make any other segregation of assets in order
to assure the payment of any amounts under the Plan. Participants of the Plan
have the status of general unsecured creditors of the Company and the Plan
constitutes a mere promise by the Company to make benefit payments in the
future.
b. No benefit payable at any time under the Plan shall be
subject in any manner to alienation, sale, transfer, assignment, pledge,
attachment or encumbrance of any kind. No benefit under the Plan shall in any
manner be subject to the debts or liabilities of any participant or former
participant or beneficiary. If a participant or former participant or
beneficiary shall attempt to or shall alienate, sell, transfer, assign, pledge
or otherwise encumber his benefits under the Plan or any part thereof, or if by
reason of his bankruptcy or other event happening at any time such benefits
would devolve upon anyone else or would not be enjoyed by him, then the
Committee in its discretion may terminate his interest in any such benefit and
hold or apply it to or for his benefit or the benefit of his spouse, children
or other dependents, or any of them, in such a manner as they may deem proper.
11. AMENDMENT AND TERMINATION. Nothing herein shall be construed to
constitute a contract between the Company and the participants to continue the
Plan, and the Company's Directors in their sole discretion may terminate or
discontinue the Plan at any time and may at any time and from time to time
amend any or all of its provisions; provided, however, that no termination or
amendment shall reduce amounts credited prior to such termination or amendment.
12. MISCELLANEOUS PROVISIONS.
a. As used in this document, the masculine gender shall include
the feminine and the singular shall include the plural. To the extent that any
term is
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not defined under the Plan, it shall have the same meaning as defined in the
Stock Savings Plan or the Salaried Plan.
b. Employment rights with the Company or any subsidiary shall not
be enlarged or affected by the existence of the Plan.
c. In case any provision of the Plan shall be held illegal or
invalid for any reason, said illegality or invalidity shall not affect the
remaining provisions.
d. The Plan shall be governed by the laws of the State of Ohio.
7/7/95
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