Exhibit 10(d)
A. O. SMITH
CORPORATION
EXECUTIVE SUPPLEMENTAL PENSION
PLAN
AS AMENDED AND
RESTATED
EFFECTIVE JANUARY 1,
2009
Section 1.
Purpose
The purpose of this Plan is to
provide a pension plan supplement for certain key executives of the
Company. This Plan, which was originally effective January 1,
2001, applies only to Executives who are in active employment with
the Company or an Affiliate on or after such date.
This Plan is amended and restated
effective January 1, 2009, to comply with the final
regulations promulgated under Section 409A of the Internal
Revenue Code.
Section 2.
Definitions
(a) “ Affiliate ”
means each entity that, along with the Company, constitutes a
controlled group of corporation or groups of businesses under
common control within the meaning of Code Sections 414(b) and
(c).
(b) “ Annuity Factor
” means the factor provided by an insurance company that
would be applied to determine the single sum amount needed to
purchase a commercial annuity that will provide an amount equal to
the Monthly Benefit Amount.
(c) “ Applicable Interest
Rate ” means the rate determined by multiplying
(i) the Lehman Total Corporate Index rate for the close of
business immediately prior to the date of payment as reported in
The Wall Street Journal by (ii) one minus the aggregate
of the highest marginal federal, state and local income tax rates
applicable to the Participant, based on the Participant’s
primary residence at the time the benefit is being
determined.
(d) “ Average Monthly
Earnings ” means the monthly average of the
Executive’s Earnings for any of the five (5) Plan Years
(of the most recent (10) Plan Years prior to Separation from
Service) in which the greatest Earnings were received.
(e) “ Beneficiary
” means the beneficiary(ies) named by the Executive to
receive death benefits under the split-dollar life insurance policy
maintained on the Executive’s life and either owned by the
Company or in which the Company has an interest.
(f) “ Code ”
means the Internal Revenue Code of 1986, as amended from time to
time.
(g) “ Company ”
means A. O. Smith Corporation.
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(h) “ Committee ”
means the Personnel and Compensation Committee of the Board of
Directors of the Company.
(i) “ Early Retirement
Age ” means earlier of: (i) the Executive’s
attainment of age 57 and ten (10) Years of Service: or
(ii) the date the Executive attains thirty (30) Years of
Service.
(j) “ Earnings ”
shall mean the total of all wages, salaries, commissions and
bonuses paid to the Executive by the Company or a Participating
Affiliate, including any deferred compensation or salary reduction
amounts pursuant to Section 125 and 401(k) of the Internal
Revenue Code or any non-qualified deferred compensation
arrangement, but excluding payments made under any long-term
performance bonus plan and with respect to any restricted stock
units.
(k) “ Executive ”
means an Executive of the Company or a Participating Affiliate with
a position which is assigned Grade 23 or above and who is entitled
to a deferred vested or retirement benefit in the Pension
Plan.
(1) “ Normal Retirement
Age ” means:
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(1)
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age 65 for a
Participant born before January 1, 1938;
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(2)
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age 66 for a
Participant born on or after January 1, 1938 and prior to
December 31, 1954; and
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(3)
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age 67 for a
Participant born on or after January 1, 1955.
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(m) “ Participating
Affiliate ” means an Affiliate which has been designated
as being eligible to participate in the Plan by the
Committee.
(n) “ Pension Plan
” means the A. O. Smith Retirement Plan for Salaried
Employees.
(o) “ Plan Year ”
means the calendar year.
(p) “ Separation from
Service ” means a “separation from service”
within the meaning of Section 409A of the Code.
(q) “ Special Early
Retirement Age ” means:
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(1)
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age 62 for a
Participant born before January 1, 1938;
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(2)
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age 63 for a
Participant born on or after January 1, 1938 and prior to
December 31, 1954; and
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(3)
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age 64 for a
Participant born on or after January 1, 1955.
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(r) “ Years of Service
” has the same meaning as years of “Vesting
Service” under the Pension Plan.
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Section 3. Pension Plan
Supplement
(a) Entitlement . An
Executive shall he entitled to receive a lump sum payment (the
“Single Sum Pension Plan Supplement”) from the Company
under this Plan if he terminates employment with the Company and
its Affiliates on or after completion of five (5) Years of
Service.
(b) Normal Retirement or Special
Early Retirement Benefit . If an Executive described in
subsection (a) terminates employment from the Company and its
Affiliates on or after his Normal Retirement Age, or on or after
his Special Early Retirement Age and completion of ten
(10) Years of Service, then the amount of the
Executive’s Single Sum Pension Plan Supplement shall be
determined as follows:
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(1)
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First,
calculate a monthly amount payable in a single life annuity form
(assuming benefits commence immediately on the date of the
Executive’s termination of employment) equal to:
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(A)
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1.65% of the
Executive’s Average Monthly Earnings multiplied by the number
of years of Credited Service (as defined in the Pension Plan), but
not more than forty (40) years;
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(B)
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minus the total
monthly retirement benefit actually payable to the Executive from
the Pension Plan as of the Executive’s date of termination of
employment (the result, the “Monthly Benefit
Amount”);
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(C)
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minus the
federal, state and local income and employment taxes that would be
owed by the Executive on the Monthly Benefit Amount, calculated
assuming the Executive pays taxes at the highest marginal tax rates
for federal, state and local income tax purposes, based on the
location of the Executive’s primary residence at the time of
his termination of employment (the result, the “After-Tax
Monthly Benefit Amount”);
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(2)
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Second,
multiply the After-Tax Monthly Benefit Amount by the Annuity Factor
for an immediately commencing annuity (the result, the
“Single Sum Amount”);
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(3)
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Third,
determine an additional amount such that the net amount retained by
the Executive, after payment of any federal, state or local income
tax or employment tax with respect to the Single Sum Amount, and
any federal, state and local income tax or employment tax upon the
payment provided for by this clause, is equal to the Single Sum
Amount (the “Gross-Up Amount”). For purposes of
determining the Gross-Up Amount, the Company shall use
the
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highest marginal rate of federal
income and employment taxation in the calendar year in which the
Executive’s termination of employment occurs and state and
local income taxes at the highest marginal rate of taxation in the
state and locality of the Executive’s primary residence on
the date of Executive’s termination of employment, net of the
maximum reduction in federal income taxes that may be obtained from
the deduction of such state and local taxes in such
year;
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(4)
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Fourth, add the
Single Sum Amount and the Gross-Up Amount to determine the Single
Sum Pension Plan Supplement; and
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(5)
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Fifth, the
Single Sum Pension Plan Supplement payable to the Executive shall
be reduced by the cash surrender value (determined as of the date
immediately prior to payment under Subsection (e)) of any
pre-retirement, collateral assignment, split-dollar life insurance
policies issued to the Executive under the A. O. Smith Corporation
Executive Life Insurance Plan prior to August 1,
2002.
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(c) Early Retirement Benefit
. If an Executive described in subsection (a) terminates
employment on or after his Early Retirement Age, at a time when he
is not eligible for the benefit described in subsection (b), then
the amount of the Single Sum Pension Plan Supplement shall be
determined as follows:
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(1)
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First,
calculate a monthly amount payable in a single life annuity form
(assuming benefits commence at the Executive’s Special Early
Retirement Age) equal to:
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(A)
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1.65% of the
Executive’s Average Monthly Earnings multiplied by the number
of years of Credited Service (as defined in the Pension Plan), but
not more than forty (40) years;
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(B)
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minus the total
monthly retirement benefit actually payable to the Executive from
the Pension Plan as of the Executive’s Special Early
Retirement Age (the result, the “Monthly Benefit
Amount”);
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(C)
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minus the
federal, stale and local income and employment taxes that would be
owed by the Executive on the Monthly Benefit Amount, calculated
assuming the Executive pays taxes at the highest marginal tax rates
for federal, state and local income tax purposes, based on the
location of the Executive’s primary residence at the time of
his termination of employment (the result, the “After-Tax
Monthly Benefit Amount”);
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(2)
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Second,
multiply the After-Tax Monthly Benefit Amount by the Annuity Factor
for an annuity that commences benefit payments at the
Executive’s Special Early Retirement Age (the result, the
“Single Sum Amount”);
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(3)
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Third,
determine the present value of the Single Sum Amount (assuming the
Single Sum Amount is payable at the Executive’s Special Early
Retirement Age) using the Applicable Interest Rate, as of the
Executive’s date of termination of employment;
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(4)
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Fourth,
determine an additional amount such that the net amount retained by
the Executive, after payment of any federal, state or local income
tax or employment tax with respect to the Single Sum Amount, and
any federal, state and local income tax or employment tax upon the
payment provided for by this clause, is equal to the Single Sum
Amount (the “Gross-Up Amount”). For purposes of
determining the Gross-Up Amount, the Company shall use the highest
marginal rate of federal income and employment taxation in the
calendar year in which the Executive’s termination of
employment occurs and state and local income taxes at the highest
marginal rate of taxation in the state and locality of the
Executive’s primary residence on the date of
Executive’s termination of employment, net of the maximum
reduction in federal income taxes that may be obtained from the
deduction of such state and local taxes in such year;
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(5)
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Fifth, add the
Single Sum Amount and the Gross-Up Amount to determine the Single
Sum Pension Plan Supplement; and
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(6)
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Sixth, the
Single Sum Pension Plan Supplement payable to the Executive shall
be reduced by the cash surrender value (determined as of the date
immediately prior to pa
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