AMENDMENT AND RESTATEMENT OF THE SEMPRA ENERGY SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

Exhibit 10.19

 

AMENDMENT AND RESTATEMENT OF THE
SEMPRA ENERGY

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

 

 

 

 

 

 

Table of Contents

 

Section 1  Definitions

Section 2  Eligibility For Benefits

2.1  Participation

2.2  Supplemental Retirement Benefit

2.3  Spouse’s Supplemental Retirement Benefit

2.4  Spouse’s Death Benefit

2.5  Supplemental Disability Benefit

Section 3  Retirement Benefits

3.1  Amount of Supplemental Retirement Benefit

3.2  Amount of Spouse’s Supplemental Retirement Benefit

3.3  Adjustments

3.4  Payment

3.5  Conformance of Time and Form of Payment under the Cash Balance Restoration Plan  

Section 4  Supplemental Preretirement Spouse’s Death Benefits

4.1  Benefit

4.2  Form of Benefit

Section 5  Supplemental Disability Benefits

5.1  Amount

5.2  Payment

Section 6  Administration

6.1  Authority of Committee

6.2  Calculation of Benefits

 

 

 

 

 

 

 

Section 7  Miscellaneous

7.1  Amendment, Termination or Removal of Participant

7.2  No Employment Right

7.3  Funding

7.4  Allocation of Costs

Section 8  Benefits Deferred under Deferred Compensation Plan

Section 9  Section 409A of the Code

Section 10  Claims Procedure

10.1

Claim

10.2

Claim Decision

10.3

Request for Review

10.4

Review of Decision

Section 11  Miscellaneous

11.1

Unsecured General Creditor

11.2

Restriction Against Assignment

11.3

Withholding

11.4

Governing Law

11.5

Receipt of Release

11.6

Payment on Behalf of Persons Under Incapacity

11.7

Notice

11.8

Errors and Misstatements

11.9

Pronouns and Plurality

11.10

Severability

11.11

Headings

Appendix A

 

Appendix B

 

 

 

 

 

 

 

 

This Supplemental Executive Retirement Plan provides retirement income, disability income and death benefits to key executives and their spouses under specified circumstances.  

Except as provided in Appendix B, and except as to key executives who retired before July 1, 1998, this Plan shall amend, restate and supercede the Prior Plan.

The Plan was amended and restated effective as of December 5, 2005.

Sempra Energy hereby amends and restates this Plan in its entirety effective as of December 31, 2008, except as otherwise provided herein.  This amendment and restatement of the Plan is intended to comply with the requirements of Sections 409A(a)(2), (3) and (4) of the Code (as defined below) and the Treasury Regulations thereunder.  The elections and amendments made in accordance with the transitional relief under Internal Revenue Service Notice 2005-1, the Proposed Regulations under Section 409A of the Code and Internal Revenue Service Notices 2006-79 and 2007-86 shall be effective for the relevant periods on or before December 31, 2008.

SECTION 1

DEFINITIONS

1.1

“ Actuarial Equivalent ” means equivalent value when computed using the applicable mortality table promulgated by the IRS under Code Section 417(e)(3) as in effect on the first day of the Plan Year and the applicable interest rate promulgated by the IRS under Code Section 417(e)(3) for the November preceding the first day of the Plan Year.

1.2

“ Average Bonus ” means the average of the three highest annual incentive awards earned by a Participant under the Executive Incentive Plan during the Participant's last ten years of Service, determined an follows:

(a)

Annual incentive awards shall be counted whether or not deferred under the Deferred Compensation Plan.

(b)

If a Participant was designated as a participant in the Executive Incentive Plan for a year, but earned no annual incentive award during that year, the award will be counted as zero, and if the Participant did not earn three annual incentive awards during the other years during the last ten years of Service, the zero amount will be used to attain the average of the three highest annual incentive awards.

(c)

If the Participant was not designated as a participant in the Executive Incentive Plan for three full years of the last ten years of Service, the average shall be based on the number of full years the Participant was designated as a participant in the Executive Incentive Plan during the last ten years of Service.

(d)

As to a Participant in the Executive Incentive Plan who did not earn annual incentive awards during the last ten years of Service solely due to a disability which qualified him for a Basic Disability Plan Benefit, a Supplemental Disability Benefit or both, the applicable ten year period will be extended backwards for each year of such occurrence.

(e)

Prorated annual incentive awards earned under the Executive Incentive Plan will not be used in determining the average.

1.3

“ Average Earnings ” means the average Earnings of the highest two years of Service in the last ten years while a Participant was not receiving a Basic Disability Plan Benefit, a Supplemental Disability Benefit or both.

1.4

“ Basic Disability Plan ” means a disability plan maintained by Sempra Energy or a subsidiary which provides coverage for most full time employees of the plan sponsor.

1.5

“ Basic Disability Plan Benefit ” means the annual amount of benefit payable from the Basic Disability Plan to a Participant.

1.6

“ Basic Pension Plan” means the Sempra Energy Cash Balance Plan, and where applicable by the context, the pension plan of a subsidiary of Sempra Energy.

1.7

“ Basic Pension Plan Benefit” means the annual amount of benefit payable from the Basic Pension Plan to a Participant on his Retirement Date in the form of a straight life annuity without a cost-of-living feature unless one is provided under the Basic Pension Plan.

1.8

“ Cash Balance Restoration Plan ” means the Sempra Energy Cash Balance Restoration Plan, or any other supplemental pension plan of any Employer providing essentially the same benefits for one or more Participants.

1.9

“ Cash Balance Restoration Plan Benefit ” means the annual amount of benefit payable from the Cash Balance Restoration Plan to a Participant on his Retirement Date or the date of his Separation from Service, as applicable, in the form of a straight life annuity without a cost-of-living adjustment feature unless one is provided under the Cash Balance Restoration Plan, or the annual amount of benefit that would have been payable from the Cash Balance Restoration Plan to a Participant on his Retirement Date or the date of his Separation from Service, as applicable, at such time and in such form, if the Cash Balance Restoration Plan provided for such time and form of payment to the Participant.

1.10

“ Committee ” means the Compensation Committee of the Company's Board of Directors.

1.11

“ Company ” means Sempra Energy.

1.12

“ Deferred Compensation Plan ” means the Sempra Energy 2005 Deferred Compensation Plan (with respect to deferrals of compensation earned on or after January 1, 2005), and the Sempra Energy Deferred Compensation & Excess Savings Plan (with respect to deferrals of compensation earned on or before December 31, 2004).

1.13

“ Earnings ” means base compensation only including any deferral under the Sempra Energy Savings Plan and the Deferred Compensation Plan.

1.14

“ Employer ” means the Company and any of its subsidiaries (any corporation of which 50% or more of the issued and outstanding stock having ordinary voting rights is owned directly or indirectly by the Company or any other business entity or association of which 50% or more of the outstanding equity interest is so owned) which adopt this Plan.

1.15

“ Employment ” means employment by the Employer, including the period during which a Participant is receiving a Basic Disability Plan Benefit, and any additional period during which a Participant is receiving a Supplemental Disability Benefit under this Plan.

1.16

“ Executive Incentive Plan ” means the Sempra Energy Executive Incentive Plan, or such other Plan or Plans as may be designated by the Committee from time to time.

1.17

“ Participant ” means an employee of the Employer designated to participate in this Plan as specified in Section 2.1.

1.18

“ Plan ” means this Supplemental Executive Retirement Plan.

1.19

“ Pre-Section 409A Supplemental Retirement Benefit ” means the portion of a Participant’s Supplemental Retirement Benefit, if any, to which the Participant had a legally binding right, and which was earned and vested, as of December 31, 2004, determined in accordance with Section 409A of the Internal Revenue Code and Treasury Regulation Section 1.409A-6.  Such Participant’s “Pre-Section 409A Supplemental Retirement Benefit” shall be determined by the terms of the Plan, the Cash Balance Restoration Plan and the Basic Pension Plan, as in effect as of October 3, 2004.

Such Participant’s “ Pre-Section 409A Supplemental Retirement Benefit ” shall equal the present value of the amount to which such Participant would have been entitled under the Plan if such Participant voluntarily terminated services without cause on December 31, 2004, and received a payment of the benefits available from the Plan on the earliest possible date allowed under the Plan to receive a payment of benefits following the termination of services, and received the benefits in the form with maximum value.  Notwithstanding the foregoing, for any subsequent taxable year of such Participant, the “ Pre-Section 409A Supplemental Retirement Benefit ” shall increase to equal the present value of the benefit such Participant actually becomes entitled to, in the form and at the time actually paid, determined under the terms of the Plan (including applicable limits under the Code), as in effect on October 3, 2004, without regard to any further services rendered by such Participant after December 31, 2004, or any other events affecting the amount of or the entitlement to benefits (other than such Participant’s election with respect to the time or form of an available benefit).  Such present value shall be computed using the applicable actuarial assumptions and methods under the Basic Plan to the extent in accordance with Treasury Regulation Section 1.409A-6(a)(3)(i), or such other reasonable actuarial assumptions and methods as are permitted under Treasury Regulation Section 1.409A-6(a)(3)(i).

1.20

“ Preretirement Spouse's Benefit ” means the benefit payable or paid under the Basic Pension Plan and Cash Balance Restoration Plan to a Surviving Spouse of a Participant who dies prior to Separation from Service.

1.21

“ Post-Section 409A Supplemental Retirement Benefit ” means a Participant’s Supplemental Retirement Benefit, less such Participant’s Pre-Section 409A Supplemental Retirement Benefit (if any).

1.22

“ Prior Plan ” shall mean the Pacific Enterprises Supplemental Retirement and Survivor Plan and the San Diego Gas and Electric Supplemental Executive Retirement Plan.

1.23

“ Retirement ” means the termination of such Participant's Employment with the Employer after five years of Service on or after the Participant attains age 55.

1.24

“ Retirement Date ” means the first day of the month following a Participant's Retirement.

1.25

“ Separation from Service ” with respect to a Participant (or another Service Provider) means the Participant’s (or such Service Provider’s) “separation from service,” as defined in Treasury Regulation Section 1.409A-1(h).  

1.26

“ Service ” means a Participant's credited service which would be used to compute retirement benefits under the Basic Pension Plan.

1.27

“ Service Provider ” means a Participant or any other “service provider,” as defined in Treasury Regulation Section 1.409A-1(f).

1.28

“ Service Recipient, ” with respect to a Participant, means the Company and all persons considered part of the “service recipient,” as defined in Treasury Regulation Section 1.409A-1(g), as determined from time to time.  As provided in Treasury Regulation Section 1.409A-1(g), the “Service Recipient” shall mean the person for whom the services are performed and with respect to whom the legally binding right to compensation arises, and all persons with whom such person would be considered a single employer under Section 414(b) or 414(c) of the Code.

1.29

“ Social Security Benefit ” means the annual Primary Insurance Amount estimated to be payable to the Participant at age 65 under the Federal Social Security Act in effect at the time of the event.

1.30

“ Specified Employee ” means a Service Provider who, as of the date of the Service Provider’s Separation from Service, is a “Key Employee” of the Service Recipient any stock of which is publicly traded on an established securities market or otherwise.  For purposes of this definition, a Service Provider is a “Key Employee” if the Service Provider meets the requirements of Section 416(i)(1)(A)(i), (ii) or (iii) of the Code (applied in accordance with the Treasury Regulations thereunder and disregarding Section 416(i)(5) of the Code) at any time during the Testing Year.  If a Service Provider is a “Key Employee” (as defined above) as of a Specified Employee Identification Date, the Service Provider shall be treated as “Key Employee” for the entire twelve (12) month period beginning on the Specified Employee Effective Date.  For purposes of this definition, a Service Provider’s compensation for a Testing Year shall mean such Service Provider’s compensation, as determined under Treasury Regulation Section 1.415(c)-2(a) (and applied as if the Service Recipient were not using any safe harbor provided in Treasury Regulation Section 1.415(c)-2(d), were not using any of the elective special timing rules provided in Treasury Regulation Section 1.415(c)-2(e), and were not using any of the elective special rules provided in Treasury Regulation Section 1.415(c)-2(g)), from the Service Recipient for such Testing Year.  The “ Specified Employees ” shall be determined in accordance with Section 409A(a)(2)(B)(i) of the Code and Treasury Regulation Section 1.409A-1(i).

1.31

“ Specified Employee Effective Date ” means the first day of the fourth month following the Specified Employee Identification Date.  The Specified Employee Effective Date may be changed by the Company, in its discretion, in accordance with Treasury Regulation Section 1.409A-1(i)(4).

1.32

“ Specified Employee Identification Date ”, for purposes of Treasury Regulation Section 1.409A-1(i)(3), means December 31.  The “ Specified Employee Identification Date ” shall apply to all “nonqualified deferred compensation plans” (as defined in Treasury Regulation Section 1.409A-1(a)) of the Service Recipient and all affected Service Providers.  The “ Specified Employee Identification Date ” may be changed by Sempra Energy, in its discretion, in accordance with Treasury Regulation Section 1.409A-1(i)(3).

1.33

“ Spouse’s Death Benefit ” means the benefit payable to the Surviving Spouse of a Participant under Section 4 of this Plan.

1.34

“ Spouse's Supplemental Retirement Benefit ” means the benefit payable to the Surviving Spouse of a Participant under Section 2.3 of this Plan after the Participant has died on or after his Retirement Date.

1.35

“ Supplemental Disability Benefit ” means the benefit payable to a disabled Participant under Section 2.5 of this Plan.

1.36

“ Supplemental Retirement Benefit ” means the benefit payable to a Participant under Section 2.2 of this Plan on his Retirement Date.  A Participant’s Supplemental Retirement Benefit shall be comprised of such Participant’s Pre-Section 409A Supplemental Retirement Benefit (if any) and such Participant’s Post-Section 409A Supplemental Retirement Benefit (if any).

1.37

“ Surviving Spouse ” means in the case of a Spouse's Death Benefit, a spouse married to the Participant for at least the one-year period ending on the Participant's date of death, and means in the case of a Spouse's Supplemental Retirement Benefit, a spouse who is married to the Participant for at least the one-year period ending on the Participant's Retirement Date and who is still married to the Participant on the date of the Participant's death.  Surviving Spouse also means a Spousal Equivalent as defined by the Company (subject to the one-year requirements) under the Company Medical Plan.

1.38

“ Testing Year ” means the twelve (12) month period ending on the Specified Employee Identification Date, as determined from time to time.

1.39

“ Vesting Factor ” means the following for a Participant who qualifies for Retirement under paragraph 1.23.

Vesting Schedule

 

Based on attained age and completed years of service.

1.40

“ Voluntary Disability Insurance Program ” means the program offered by Sempra Energy under which certain employees of Sempra Energy or a subsidiary may purchase supplemental long term disability insurance coverage, such supplemental coverage shall be voluntary and the cost of such coverage shall be paid by the employee.

1.41

“ Voluntary Disability Benefit ” means the annual amount of benefit payable from the supplemental long term disability insurance coverage (if any) purchased by a Participant under the Voluntary Disability Insurance Program and maintained by such Participant.

The masculine pronoun whenever used shall include the feminine pronoun, and the singular shall include the plural where the context requires it.

SECTION 2

ELIGIBILITY FOR BENEFITS

2.1

Participation

Executive Officers of the Company as designated shall be eligible to participate in this Plan.  The Committee may designate additional officers and key employees of the Employer who shall participate in this Plan and the effective date of such participation, subject to agreement by the Board of Directors of the executive's Employer (if not the Company) that such executive participate and that such Employer pay the costs of this Plan for the executive and his Surviving Spouse.

2.2

Supplemental Retirement Benefit

Each Participant is eligible to retire and receive a benefit under this Plan as specified in Sections 3.1 and 3.4 beginning on his Retirement Date.  No Supplemental Retirement Benefit will be paid to a Participant who leaves Employment prior to attaining age 55 or completing five years of Service, except as provided under other agreements.

2.3

Spouse's Supplemental Retirement Benefit

The Surviving Spouse of a Participant who dies on or after his Retirement Date who did not receive a lump sum payment is eligible for a Spouse's Supplemental Retirement Benefit in accordance with Sections 3.2 and 3.4.

2.4

Spouse's Death Benefit

The Surviving Spouse of a Participant who dies in Employment is eligible for a Spouse's Death Benefit as specified in Sections 4.1 and 4.2 in the form of a lump sum benefit.  There is no cost to the Participant for this benefit.  If a Participant dies during Employment without an eligible Surviving Spouse, no Spouse's Death Benefit is payable under this Plan.

2.5

Supplemental Disability Benefit

A Participant who becomes disabled may be eligible to receive a Supplemental Disability Benefit  as specified in Section 5.

SECTION 3

RETIREMENT BENEFITS

3.1

Amount of Supplemental Retirement Benefit

The Supplemental Retirement Benefit payable to a Participant shall be determined as of his Retirement Date and shall equal to (a) minus (b) with the resultant product multiplied by the Participant’s Vesting Factor and then the resultant product multiplied by the early retirement reduction (pursuant to Appendix A) for Retirement Dates which precede attainment of 62 years of age.  

(a)

is a lump sum using the actuarial and mortality assumptions in the Basic Pension Plan based upon the single annuity value of the annual annuity with the annual annuity determined as follows: the sum of the following percent of the total of the Participant's Average Earnings and Average Bonus

(i)

1/3% for each month of Service  through 120 (40% for 10 years of Service), plus

(ii)

1/6% for each month of Service in excess of 120, through 240 (60% for 20 years

of Service), plus

(iii)

1/48% for each month of Service in excess of 240 (65% for 40 years of Service).

(b)

is a lump sum using the actuarial and mortality assumptions in the Basic Pension Plan based on the single annuity value of the annual annuity with the annual annuity determined as the sum of his

(i)

Basic Pension Plan Benefit, plus

(ii)

Cash Balance Restoration Plan Benefit;

provided, however, that, if a Participant’s Retirement Date occurs on a different date than the date the Participant commences receipt of benefits under the Basic Pension Plan, paragraph (i) shall be calculated based on the benefits the Participant would have received if the Participant had commenced receipt of benefits under the Basic Pension Plan on the Participant’s Retirement Date.

If (a) minus (b) results in zero or less, then no Supplemental Retirement Benefit is payable.

(c)

The Participant’s Pre-Section 409A Supplemental Retirement Benefit (if any) shall be payable as of such Participant’s Retirement Date, and the Participant’s Post-Section 409A Supplemental Retirement Benefit shall be payable upon such Participant’s Separation from Service, in accordance with Section 3.4.  Except as provided in paragraph (i) or (ii) below, the Participant’s Supplemental Retirement Benefit shall be paid in a lump sum.

(i)

(A)

The Participant may elect to receive the Pre-Section 409A Supplemental Retirement Benefit, payable on his behalf, paid in an actuarially equivalent annuity, provided the Participant elects the annuity one year prior to Retirement.  The initial election of benefit form shall be made at the time of commencement of participation, or as soon thereafter as is reasonably practicable.

(B)

Notwithstanding the foregoing, in no event shall a distribution option be available or apply to a Participant’s Pre-Section 409A Supplemental Retirement Benefit if such distribution option would result in a material modification of the Participant’s Pre-Section 409A Supplemental Retirement Benefit, as determined under Section 409A of the Code and Treasury Regulation Section 1.409A-6.

(ii)

(A)

The payment of the Participant’s Post-Section 409A Supplemental Retirement Benefit shall be made or commence on the date of the payment or commencement of such Participant’s “Post-Section 409A Benefit” (as defined in the Cash Balance Restoration Plan) under the Cash Balance Restoration Plan, and the form of payment of the Participant’s Post-Section 409A Supplemental Retirement Benefit shall be the same as the form of payment of such Participant’s “Post-Section 409A Benefit” under the Cash Balance Restoration Plan, as determined in subparagraph (B).  In the event that the payment of the Participant’s Post-Section 409A Supplemental Retirement Benefit is in the form of an annuity, such annuity shall be actuarially equivalent to the Participant’s Post-Section 409A Supplemental Retirement Benefit.

(B)

The payment of such Participant’s “Post-Section 409A Benefit” under the Cash Balance Restoration Plan shall be in a lump sum upon the Participant’s Separation from Service, unless the Participant elects to receive an optional annuity form of payment under the Cash Balance Restoration Plan.

(I)  

In the case of a Participant who first became an “Eligible Employee” in the Cash Balance Restoration Plan on or before December 31, 2005, the Participant may elect, in writing, payment of such Participant’s “Post-Section 409A Benefit” under the Cash Balance Restoration Plan commencing upon the Participant’s Separation from Service under any of the following annuity options:  (x) a straight life annuity, (y) a joint and 50% survivor annuity, and (z) a joint and 100% survivor annuity.  The election will be subject to approval of the Company's Senior Human Resources Officer, in his or her discretion, and, if approved, will become effective and  irrevocable