Exhibit 4
IBM EXECUTIVE DEFERRED COMPENSATION PLAN
Amended and Restated Effective January 1, 2000
INTRODUCTION
The IBM Executive Deferred Compensation Plan has been authorized by the Board of
Directors of International Business Machines to be applicable effective on and
after January 1, 1995. The Plan is restated as amended herein. The purpose of
this Plan is to attract and retain executives by providing a means for making
compensation deferrals and matching company contributions for those employees
eligible to participate in the IBM TDSP 401(k) (the "TDSP") with respect to whom
compensation deferrals and company contributions under the TDSP are or would be
limited by application of the limitations imposed on qualified plans by Sections
401(a)(17), 401(a)(30), and 415 of the Internal Revenue Code.
This Plan is intended to constitute an unfunded deferred compensation plan for a
select group of management or highly compensated employees under Sections
201(2), 301(a)(2), 401(a)(1), and 4021(b)(6) of the Employee Retirement Income
Security Act of 1974, as amended. All benefits payable under the Plan shall be
paid out of the general assets of the Company.
IBM EXECUTIVE DEFERRED COMPENSATION PLAN
TABLE OF CONTENTS
ARTICLE 1. DEFINITIONS
ARTICLE 2. PARTICIPATION
2.01 Eligibility
2.02 Participation
ARTICLE 3. CONTRIBUTIONS
3.01 Amount of Deferral Contributions
3.02 Matching Contributions
3.03 Additional Company Contributions
3.04 Investment of Accounts
3.05 Vesting of Accounts
3.06 Individual Accounts
3.07 Deferral of RSUs
ARTICLE 4. INVESTMENT OF DEFERRALS AND DEFERRAL ACCOUNTS
4.01 Deemed TDSP Investments; Participant Control
4.02 Change of Investment Selection on Future Deferrals
4.03 Change of Investment Selection on Existing Deferral Accounts
ARTICLE 5. PAYMENT OF ACCOUNTS
5.01 Commencement of Deferral Payments
5.02 Method of Payment
5.03 Designation of Beneficiary
ARTICLE 6. GENERAL PROVISIONS
6.01 Funding
6.02 No Contract of Employment
6.03 Facility of Payment
6.04 Withholding Taxes
6.05 Nonalienation
6.06 Administration
6.07 Construction
ARTICLE 7. MANAGEMENT AND ADMINISTRATION
7.01 Amendment or Termination
7.02 Responsibilities
ARTICLE 8. CLAIMS PROCEDURE
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ARTICLE 1. DEFINITIONS
The following words and phrases as used herein have the following meanings
unless a different meaning is required by the context:
1.01 "Accounts" shall mean the Company Account and the Deferral Account.
1.02 "Beneficiary" shall mean a person other than a Participant who is
designated by a Participant or by the terms of the Plan to receive a
benefit under the Plan by reason of the death of the Participant.
1.03 "Board" shall mean the Board of Directors of IBM.
1.04 "Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time. All citations to sections of the Code are to such sections as
they may from time to time be amended or renumbered.
1.05 "Committee" shall mean the Executive Compensation and Management
Resources Committee appointed by the Board.
1.06 "Company" shall mean International Business Machines Corporation ("IBM"),
a New York corporation having its principal place of business at Armonk,
New York, and its Domestic Subsidiaries, excluding Foreign Branches of
the Company except as may be otherwise provided in these Articles.
1.07 "Company Account" shall mean, with respect to a Participant, all amounts
credited to the Participant under Articles 3.02, 3.03 and 3.07, and
earnings, gains, or losses on those amounts pursuant to Article 3.04.
1.08 "Company Contributions" shall mean the amount credited to a Participant
under Articles 3.02 and 3.03.
1.09 "Compensation" shall mean the Participant's salary and annual incentive
payment for a calendar year which would be payable to a Participant for
services rendered to the Company after the Participant is no longer able
to actively participate in the TDSP (or would have been unable to
actively participate in the TDSP if the Participant was not an active
participant in the TDSP) during the calendar year by reason of Code
Section 401(a)(17) or Code Section 401(a)(30). A Participant's
Compensation will be determined without regard to a Participant's
election to make compensation reduction contributions under the TDSP (or
under a cafeteria plan pursuant to Code Section 125) or to make Deferrals
under this Plan.
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Compensation shall also include, solely for purposes of Section 3.07, the
amount of any RSUs that are determined to be eligible for deferral in
accordance with Section 3.07.
1.10 "DCP Participant" shall mean a Participant who, for a calendar year, was
offered the opportunity by the Company to defer up to 100% of his or her
annual incentive payment payable for that calendar year.
1.11 "Deferral Account" shall mean, with respect to a Participant, the
Participant's account balance under the Deferred Compensation Plan that
has been transferred to this Plan, all amounts credited to a Participant
under Article 3.01 and earnings, gains, or losses on those amounts
pursuant to Article 3.04.
1.12 "Deferral Election Agreement" shall mean the agreement entered into by
the Participant pursuant to Article 2.02 under which he or she elects to
defer a portion of his or her Compensation under this Plan.
1.13 "Deferrals" shall mean the amount credited to a Participant under Article
3.01.
1.14 "Deferred Compensation Plan" shall mean the incentive compensation
deferral program established by IBM in November 1993.
1.15 "Domestic Subsidiary" shall mean a Subsidiary organized and existing
under the laws of the United States or any state, territory, or
possession thereof; provided however, that the Plan shall not be deemed
to cover the employees of any Domestic Subsidiary unless authorized by
the Company's chief human resources officer.
1.16 "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time.
1.17 "Effective Date" shall mean January 1, 1995.
1.18 "Eligible Employee" shall mean, for a calendar year, a domestic executive
employee of the Company.
1.19 "IBM" shall mean International Business Machines Corporation, any
predecessor, or any successor by merger, purchase, or otherwise.
1.20 "Participant" shall mean each Eligible Employee who has made the election
described in Article 2.02(a), is credited with an amount under Article
3.03, or whose account balance under the Deferred Compensation Plan has
been transferred to the employee's Deferral Account under this Plan.
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1.21 "Plan" shall mean this IBM Executive Deferred Compensation Plan, as now
in effect or as hereafter amended.
1.22 "Plan Administrator" shall mean a person or a committee appointed
pursuant to Article 7 which shall be responsible for reporting,
recordkeeping, and related administrative requirements. If appointed as a
committee, any one of the members of the committee may act individually
on behalf of the committee to fulfill the committee's duties. As of the
Effective Date, the Director of Executive Compensation has been appointed
as the Plan Administrator.
1.23 "Plan Year" shall mean the calendar year with the first Plan Year
commencing on January 1, 1995.
1.24 "RSU" shall mean a restricted stock unit payable under an award granted
under a Company Long-Term Performance Plan.
1.25 "Subsidiary" shall mean a corporation or other form of business
organization the majority interest of which is owned, directly or
indirectly, by the Company.
1.26 "TDSP" shall mean the IBM TDSP 401(k) Plan, established by the Company by
resolution of its Retirement Plans Committee, effective July 1, 1983, as
amended from time to time.
ARTICLE 2. PARTICIPATION
2.01 Eligibility
Eligibility is limited to U.S. executive level Eligible Employees of IBM and
selected Domestic Subsidiaries whose rate of annual Compensation (defined as
salary and annual incentive rate) is $150,000 or more for calendar year 1995
(adjusted periodically thereafter based on industry trends and government
guidelines) who are members of the Company's Senior Management Group regardless
of rate of annual Compensation. For this purpose, the defining of "selected
Domestic Subsidiaries", the "executive level" and "Senior Management Group", as
well as the ability to change the rate of annual Compensation threshold are
delegated to the chief human resources officer of the Company in his or her sole
discretion and are subject to change. The Committee shall notify employees of
their eligibility for participation in the Plan as soon as practicable after the
chief human resources officer has made its determination that such employees
qualify as Eligible Employees for a calendar year.
2.02 Participation
(a) No later than one month before the first day of the calendar year
during which an Eligible Employee desires to have contributions credited on his
or her behalf pursuant to Article 3.01, an Eligible Employee must execute a
Deferral Election
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Agreement authorizing Deferrals under this Plan for such year in accordance with
the provisions of Article 3.01.
(b) If an Eligible Employee becomes an employee of the Company during a
calendar year, he or she may execute a Deferral Election Agreement as soon as
practical after his or her date of hire. The Deferral Election Agreement shall
apply to Compensation earned by the Eligible Employee in the payroll periods
beginning after such agreement is submitted to the Committee.
(c) Each Deferral Election Agreement under the Plan shall be irrevocable
for the calendar year to which it relates.
(d) Irrespective of whether an employee has made the election described
above, any employee who has been selected by the Committee to have Company
Contributions credited on his or her behalf pursuant to Article 3.03 shall be a
Participant.
(e) As a condition to participation in the Plan, a Participant may also be
required by the Committee to provide such other information as the Committee may
deem necessary to properly administer the Plan.
ARTICLE 3. CONTRIBUTIONS
3.01 Amount of Deferral Contributions
For each payroll period that an Eligible Employee has Compensation beginning on
or after the effective date of an Eligible Employee's Deferral Election
Agreement, his or her Deferral Account shall be credited with an amount of
Deferrals. The amount of Deferrals shall be equal to the designated percentage
of Compensation elected by the Participant in his or her Deferral Election
Agreement. Under the Deferral Election Agreement, the Eligible Employee may
elect to forego receipt of amounts equivalent to 1%, 2%, 3%, 4%, 5%, 6%, 7%, 8%,
9%, 10%, 11%, 12%, 13%, 14% or 15% of the Employee's Compensation for each pay
period during which the election is in effect, and in the event an Eligible
Employee is a DCP Participant for the calendar year, he or she may defer up to
100% of his or her annual incentive payment for the calendar year. In addition,
any Company officer who is subject to 162(m) of the Internal Revenue Code may
defer up to 100% of his or her salary.
Deferrals shall be made under this Article 3.01 shall commence for payroll
periods for a calendar year at such time as the Participant may no longer
actively participate in the TDSP for the calendar year (or would have been
unable to actively participate in the TDSP if the Participant was an active
participant in the TDSP for the calendar year) by reason of Code Section
401(a)(17) or Code Section 401(a)(30) and has Compensation. No Deferrals may be
made hereunder prior to such time, except for the deferral of a DCP
Participant's annual incentive payment.
3.02 Matching Contributions
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The amount of Company Matching Contributions credited to a Participant for each
payroll period shall be equal to 50% of the Participant's Deferrals for the
payroll period; provided however, that no Company Matching Contributions will be
made for a Participant's Deferrals in excess of 6% of the Participant's
Compensation for that payroll period. Company Matching Contributions will be
made in units of IBM Stock with no right to transfer such units, except as
otherwise provided in this Plan.
3.03 Additional Company Contributions
IBM may cause the Committee to credit on behalf of any Participant or any
Eligible Employee who is not otherwise a Participant for a particular calendar
year an additional amount of Company Matching Contributions or other Company
Contributions, which will be made only in units of IBM Stock with no right to
transfer such units, except as otherwise provided in this Plan.
3.04 Investment of Accounts
A Participant's Deferral Account shall be treated as if the Participant had
invested it in certain TDSP Investment Funds in accordance with Article 4. A
Participant's Company Account shall be treated as if it had been invested in the
IBM Stock Fund under the TDSP; provided however, that in the event a Participant
retires from the Company and does not elect to have the entire amount of his or
her Accounts then paid to him or her, any amounts credited to the Participant's
Company Account after retirement will be treated as if they were transferred to
the Participant's Deferral Account for purposes of this Article 3.04 and Article
4.
3.05 Vesting of Accounts
A Participant always shall be fully vested in his or her Accounts.
3.06 Individual Accounts
The Committee shall maintain, or cause to be maintained, records showing the
individual balances of each Participant's Accounts. Periodically, each
Participant shall be furnished with a statement setting forth the value of his
or her Accounts.
3.07 Deferral of RSUs
A Participant may also elect to defer, on a form provided by the Company, the
amount of any RSUs that are determined by the Company to be eligible for
deferral under this Plan, at the time such RSU would otherwise be paid to the
Participant. Any amounts deferred pursuant to this Section shall be contributed
in units of IBM Stock, solely to the Company Account, with no right to transfer
such units, except as otherwise provided under this Plan. No Company Matching
Contributions shall be credited for any amounts deferred under this Section of
the Plan.
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Employees of Foreign Branches of the Company who receive RSUs and who would be
Eligible Employees, but for the fact that they are not a domestic executive
employee of the Company who is eligible for the IBM Retirement Plan, may
nevertheless be eligible solely for the deferral pursuant to this Section, if so
designated eligible by the chief human resources officer of the Company.
ARTICLE 4. INVESTMENT OF DEFERRALS AND DEFERRAL ACCOUNTS
4.01 Deemed TDSP Investments; Participant Control
A Participant shall designate the proportions in which his or her Deferrals
shall be treated as if they had been allocated among certain Investment Funds
under the TDSP. Prior to January 1, 1998, those Investment Funds were:(a) The
Fixed Income Fund;(b) The Large Company Index Fund; (c) The Small Company Stock
Fund;(d) The International Stock Fund; and (e) The IBM Stock Fund.
As of January 1, 1998, a Participant shall designate the proportions in which
his or her Deferrals shall be treated as if they had been allocated among any or
all of the Investment Funds which are available under the TDSP as of January 1,
1998.
The Committee may, in its discretion (which discretion may be delegated to the
Treasurer or other executive officer of IBM), from time to time, make additional
TDSP Investment Funds available as an investment measure under this Plan and may
determine that any TDSP Investment Fund, including any of the Funds described
above, may be terminated as an investment measure under this Plan.
A Participant may elect to invest his or her Deferrals entirely in any one of
the funds or may elect any combination in 5% multiples.
4.02 Change of Investment Selection on Future Deferrals
A Participant may elect to change his or her investment selection for future
Deferrals once per month. The Participant must make this election in the manner
prescribed by the Committee.
4.03 Change of Investment Selection on Existing Deferral Accounts
With regard to a Participant's existing Deferral Account balance, a Participant
may elect to transfer balances among the Investment Funds once per month;
provided however, that the portion of the Deferral Account of a Company officer
that is allocated to the IBM Stock Fund may not be transferred to another
Investment Fund while the officer remains in Company employment. Any permissible
transfers, if among more than one Investment Fund, must be made in 5% multiples.
The Participant must make this election in the manner prescribed by the
Committee, and the Committee may impose such additional rules and limitations
upon transfers between Investment Funds as the Committee may consider necessary
or appropriate.
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ARTICLE 5. PAYMENT OF ACCOUNTS
5.01 Commencement of Deferral Payments
A Participant shall receive payment of his or her Accounts upon the
Participant's (1) termination of employment from the Company for any reason
other than retirement from the Company or (2) retirement from the Company with a
balance of less than $25,000 in his or her Accounts, as soon as administratively
feasible following termination of employment. Any other Participant who retires
from the Company shall be entitled to receive payment of his or her Accounts
during the January following the calendar year during which the Participant had
a termination of employment from the Company.
5.02 Method of Payment
Payment of Accounts shall be made in a single lump sum payment. Notwithstanding
the foregoing, a Participant with a balance of at least $25,000 in his or her
Accounts who retires from the Company may elect to receive (1) a lump sum
payment upon his or her termination of employment from the Company or (2) up to
ten ratable annual installment payments of the balance in his or her Accounts
commencing during the January following the calendar year during which the
Participant had a termination of employment from the Company. For this election
to be effective, at least one full calendar year must pass between the calendar
year the Participant makes the election and the calendar year the Participant
has a termination of employment from the Company. The Participant must make this
election in the manner prescribed by the Committee. For purposes of this Plan,
"retires" means attainment of any age and service or service requirements
adopted by the Company, or eligibility for benefits under the IBM Long-Term
Disability Plan (and for purposes of this Plan, termination of employment shall
be deemed to have occurred coincident with eligibility for benefits under the
IBM Long-Term Disability Plan).
Upon application of a Participant, the Committee may authorize earlier payment
to the Participant after termination of employment with the Company of an amount
reasonably needed to satisfy the emergency need caused by an unforeseeable
emergency that causes severe financial hardship to the Participant. If a
Participant dies before payment of the entire balance of his or her Accounts, an
amount equal to the unpaid portion thereof as of the date of his or her death
shall be payable in one lump sum to his or her Beneficiary.
5.03 Designation of Beneficiary
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Each Participant's Beneficiary under this Plan shall automatically be the person
or persons designated as the Participant's beneficiary under the TDSP even if
such designation is found to be invalid under the provisions of ERISA or the
Code. Such Beneficiary shall be entitled to receive the lump sum amount, if any,
payable under the Plan upon the Participant's death pursuant to this Article
5.03 (except if that Participant was a DCP Participant and had made an election
pursuant to Article 5.02); provided however, that the beneficiary is alive at
the time of the Participant's death. If no such Beneficiary designation is in
effect at the time of the Participant's death, or if no designated Beneficiary
survives the Participant, the Participant's Beneficiary shall be deemed to be
the Participant's beneficiary according to the provisions of the TDSP.
ARTICLE 6. GENERAL PROVISIONS
6.01 Funding
(a) All amounts payable in accordance with this Plan shall constitute a
general unsecured obligation of the Company. Such amounts, as well as any
administrative costs relating to the Plan, shall be paid out of the general
assets of the Company, to the extent not paid by a grantor trust established
pursuant to paragraph (b) below. In the sole discretion of the Committee, a
Participant's Accounts may be reduced to reflect allocable administrative
expense.
(b) IBM may, for administrative reasons, establish a grantor trust for the
benefit of Participants participating in the Plan. The assets of said trust will
be held separate and apart from other Company funds and shall be used
exclusively for the purposes set forth in the Plan and the applicable trust
agreement, subject to the following conditions:
(i) The creation of said trust shall not cause the Plan to be other
than "unfunded" for purposes of Title I of the Employee Retirement Income
Security Act of 1974, as amended;
(ii) The Company shall be treated as "grantor" of said trust for
purposes of Section 677 of the Code; and
(iii) Said trust agreement shall provide that its assets may be used
to satisfy claims of the Company's general creditors in the event of its
insolvency, and the rights of such general creditors are enforceable by them
under federal and state law.
(c) Neither the Company nor the Committee guarantees the investment
alternatives available under the Plan in any manner against loss or
depreciation.
6.02 No Contract of Employment
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Nothing herein contained shall be deemed to give any employee the right to be
retained in the service of the Company or an Affiliate or to interfere with the
right of the Company or an Affiliate to discharge any employee at any time
without regard to the effect that such discharge may have upon the employee
under the Plan. Nothing appearing in or done pursuant to the Plan shall be held
or construed to create a contract of employment with the Company, to obligate
the Company to continue the services of any Employee, or to affect or modify any
Employee's terms of employment in any way or to give any person any legal or
equitable right or interest in the Plan or any part thereof or distribution
therefrom or against the Company except as expressly provided herein.
6.03 Facility of Payment
In the event the Plan Administrator determines that any Participant or
Beneficiary receiving or entitled to receive benefits under the Plan is
incompetent to care for his or her affairs and in the absence of the appointment
of a legal guardian of the property of the incompetent, benefit payments due
under the Plan (unless prior claim thereto has been made by a duly qualified
guardian, committee, or other legal representative) may be made to the spouse,
parent, brother or sister, or other person, including a hospital or other
institution, deemed by the Plan Administrator to have incurred or to be liable
for expenses on behalf of such incompetent. In the absence of the appointment of
a legal guardian of the property of a minor, any minor's share of benefits
payable under the Plan may be paid to such adult or adults as in the opinion of
the Plan Administrator have assumed the custody and principal support of such
minor.
The Plan Administrator, however, in its sole discretion, may require that a
legal guardian for the property of any such incompetent or minor be appointed
before authorizing the payment of benefits in such situation. Benefit payments
made under the Plan in accordance with determinations of the Plan Administrator
pursuant to this Article 6 shall be a complete discharge or any obligation
arising under the Plan with respect to such benefit payments.
6.04 Withholding Taxes
The Plan Administrator shall have the right to withhold all applicable taxes or
other payments from benefits hereunder and to report information to government
agencies when required to do so by law.
6.05 Nonalienation
No benefits payable under the Plan shall be subject to alienation, sale,
transfer, assignment, pledge, attachment, garnishment, lien, levy, or like
encumbrance. No benefit under the Plan shall in any manner be liable for or
subject to the debts or liabilities of any person entitled to benefits under the
Plan.
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6.06 Administration
All decisions, determinations, or interpretations the Board, the Committee, the
Plan Administrator, the Company or any member, officer or employee thereof are
authorized to make under the Plan (including the delegation of any authority
hereunder to another party) shall be made in that party's sole discretion and
shall be final, binding, and conclusive on all interested persons.
6.07 Construction
The Plan is intended to constitute an unfunded deferred compensation arrangement
for a select group of management or highly compensated employees, and all rights
hereunder shall be governed by and construed in accordance with the laws of the
State of New York to the extent not governed by the Employee Retirement Income
Security Act of 1974, as amended.
ARTICLE 7. MANAGEMENT AND ADMINISTRATION
7.01 Amendment or Termination
This Plan may be amended from time to time for any purpose permitted by law or
terminated at any time by written resolution of the Board or the Committee, but
only if the Committee's action is not materially inconsistent with a prior
action of the Board.
The authority to amend or terminate the Plan shall include the authority to
amend the procedure for amending or terminating the Plan and the authority to
amend or terminate any related instrument or agreement.
7.02 Responsibilities
(a) The following persons and groups of persons shall severally have the
authority to control and manage the operation and administration of the Plan as
herein delineated:
(i) the Board,
(ii) the Committee,
(iii) the chief human resources officer, and
(iv) the Plan Administrator and each person on any committee serving as the Plan
Administrator.
Each person or group of persons shall be responsible for discharging only the
duties assigned to it by the terms of the Plan.
(b) The Board shall be responsible only for designating those persons who will
serve on the Committee and for approval of any resolution to amend or terminate
the Plan.
(c) The Committee may, pursuant to a duly adopted resolution, delegate to the
chief financial officer or the chief human
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resources officer, the Treasurer, the Plan Administrator or any other officer or
employee of IBM, authority to carry out any decision, directive, or resolution
of the Committee.
(d) The Committee shall appoint one or more executives employed by IBM to serve
as Plan Administrator or as a committee to fulfill the function of Plan
Administrator. In the sole discretion of the Plan Administrator, the Plan
Administrator shall have the full power and authority to:
(i) promulgate and enforce such rules and regulations as shall be deemed be
necessary or appropriate for the administration of the Plan;
(ii) adopt any amendments to the Plan that are required by law;
(iii) interpret the Plan consistent with the terms and intent thereof; and
(iv) resolve any possible ambiguities, inconsistencies, and omissions.
All such determinations and interpretations shall be in accordance with the
terms and intent of the Plan, and the Plan Administrator shall report such
actions to the Committee on a regular basis. Additionally, the chief human
resources officer shall appoint and designate such other IBM employees as may be
needed to provide adequate staff services to the Committee and the Plan
Administrator.
(e) The Committee and the Plan Administrator may engage the services of
accountants, attorneys, actuaries, investment consultants, and such other
professional personnel as are deemed necessary or advisable to assist them in
fulfilling their responsibilities under the Plan. The Committee, the Plan
Administrator, and their delegates and assistants will be entitled to act on the
basis of all tables, valuations, certificates, opinions, and reports furnished
by such professional personnel.
ARTICLE 8. CLAIMS PROCEDURE
IBM's Executive Compensation Department is responsible for advising Participants
and Beneficiaries of their benefits under the Plan. In the event a Participant
or Beneficiary believes he or she is entitled to benefits and has not received
them, the Participant or Beneficiary must submit a claim to the Director of
Executive Compensation, IBM Corporation, New Orchard Road, Armonk, New York
10504. A written decision setting forth its conclusions will be furnished by the
Plan Administrator to the Participant or Beneficiary within 60 days after the
request for review is received. Failure of the Plan Administrator to follow this
procedure shall not, in and of itself, give rise to a cause of action for
benefits hereunder.
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