Amended and Restated Supplemental Executive Retirement Plan
Addendum or Modifications
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Amended and Restated Supplemental Executive Retirement Plan
Addendum or Modifications
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Amended and Restated
(as amended through June 7, 2010)
WHEREAS, Staples, Inc. (the “Company”) heretofore adopted the Staples, Inc. Supplemental Executive Retirement Plan (the “Plan”), an unfunded plan maintained for the purpose of providing deferred compensation for a select group of management or highly compensated employees within the meaning of the United States Code of Federal Regulations Section 2520.104-23 and Sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act of 1974 (“ERISA”); and
WHEREAS, the Company desires to amend the Plan to satisfy the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code);
NOW, THEREFORE, effective January 1, 2008, the Plan is amended and restated to comply with Section 409A of the Code, with the Plan being operated in good faith compliance with Code Section 409A for the period January 1, 2005 to December 31, 2007.
Section 1. Purpose of Plan
The purpose of the Plan is to permit certain executives of the Company to elect to defer receipt of a portion of their annual compensation in supplement to their pre-tax contributions made to the Staples, Inc. Employees’ 401(k) Savings Plan (the “401(k) Plan”).
The Plan is intended to qualify as an unfunded, deferred compensation plan for a select group of management or highly compensated employees under ERISA.
The obligation of the Company to make payments under the Plan constitutes solely an unsecured (but legally enforceable) promise of the Company to make such payments, and no person, including any employee, shall have any lien, prior claim or other security interest in any property of the Company as a result of this Plan. Rather, any employee participating in the Plan shall have the status of a general unsecured creditor of the Company. It is the intention of the parties hereunder that the Plan be unfunded for tax purposes and for purposes of Title I of ERISA. The Company shall be the sole owner and beneficiary of any account provided for herein below and any property used to measure such account shall remain the sole and exclusive property of the Company.
Section 2. Definitions
2.1 “Administrator” means the Committee on Employee Benefit Plans as described in Section 15.
2.2 “Beneficiary” means the person or entity determined to be a Participant’s beneficiary pursuant to Section 12.
2.3 “Board” means the board of directors of the Company.
2.4 “Change in Control” means a “change in ownership” of the Company, a “change in effective control” of the Company, or a “change in the ownership of a substantial portion of the assets” of the Company (within the meaning of Section 409A of the Code).
2.5 “Code” means the Internal Revenue Code of 1986, as amended from time to time.
2.6 “Company” means Staples, Inc.
2.7 “Compensation” means the annual compensation paid to a Participant in cash by the Company for the calendar year (after any requisite tax withholding and payroll deductions), including base pay, other regular earnings, overtime, shift differentials, commissions, any amounts deferred under a salary reduction agreement pursuant to the 401(k) Plan or under a “cafeteria plan” (within the meaning of Section 125 of the Code) maintained by the Company, but exclusive of payments from the Executive Officer Incentive Plan, the Key Management Bonus Plan, the Retail Management Bonus Plan and the Long Term Cash Incentive Plan or any other bonus payments, severance pay, expense reimbursements, awards, any moving expenses paid by the Company, car allowance, taxable fringe benefits, group term life insurance over $50,000, expatriate compensation, exercised stock options and short and long-term disability paid by a third party.
2.8 “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.
2.9 “401(k) Plan” means the Staples, Inc. Employees’ 401(k) Savings Plan, as amended from time to time.
2.10 “Participant” means an employee of the Company who is eligible to participate in the Plan pursuant to Section 2.
2.11 “Plan” means the Staples, Inc. Supplemental Executive Retirement Plan, as set forth herein and as amended from time to time.
2.12 “Plan Year” means the calendar year.
Section 3. Eligible Employees
The employees eligible to participate in the Plan shall be those individuals who qualify under the criteria set forth on Schedule A and who have both attained age twenty-one (21) and completed “six (6) Months of Service” (as defined, for purposes of eligibility to participate, under the 401(k) Plan, the terms of which are incorporated herein by this reference).
Section 4. Election to Defer Compensation
An eligible employee may begin participating in the Plan, as of the first day of the calendar quarter (October 1, January 1, April 1 or July 1, the “entry date”) coinciding with or next following the date on which the eligibility requirements (set forth under Section 3) are first satisfied, by making a deferral election during the thirty (30) day period immediately preceding such entry date. Any such deferral election shall be made in accordance with the provision of Section 409A of the Code and shall apply only to Compensation earned after the applicable entry date. In this regard, a Participant may elect to defer one percent (1%) to one hundred percent (100%) of his Compensation, less any requisite tax withholding and payroll deductions, for the balance of the Plan Year. Any election so made shall be binding for each following Plan Year, provided that it may be revised or revoked on or before December 31 for any subsequent Plan Year, or such earlier date as the Administrator may specify.
A Participant may elect to defer a specified percentage (from one percent (1%) to one hundred percent (100%)) of any payments from the Executive Officer Incentive Plan, the Key Management Bonus Plan and the Retail Management Bonus Plan (which are intended to qualify as “performance-based compensation” within the meaning of Section 409(A) of the Code) to be paid on behalf of the Participant for a fiscal year by filing an election with the Administrator (pursuant to Section 5) on or prior to the last day of the sixth month of such fiscal year.
A Participant may elect to defer a specified percentage (from one percent (1%) to one hundred percent (100%)) of any payments from the Long Term Cash Incentive Plan, which are intended to qualify as “performance-based compensation” within the meaning of Section 409A of the Code, to be paid on behalf of the Participant upon the conclusion of a three (3) fiscal year period, by filing an election with the Administrator (pursuant to Section 5) on or prior to the last day of the sixth month of the first fiscal year of the three (3) fiscal year period.
An otherwise eligible employee who fails to begin participating in the Plan as of the first possible entry date may not begin participating until the first day of any following Plan Year.
Section 5. Accounts
Each Participant may elect to establish a separate “in-service withdrawal account” for each year of participation, such account to be established and maintained on the Company’s books and shall record (a) any Compensation deferred by the Participant under the Plan which the Participant has elected to be credited into such account, and (b) the allocation of any hypothetical investment experience. There shall also be established for each Participant a separate “retirement account” which shall record (a) any Compensation deferred by the Participant, under the Plan which the Participant has not elected to be credited to the “in-service withdrawal account” and any Company contributions made on his behalf under the Plan and (b) the allocation of any hypothetical investment experience. Each Participant’s account hereunder shall be reduced by any distributions made plus any federal, state and/or local tax withholding and any social security withholding tax as may be required by law.
Section 6. Manner of Election
Any election(s) made by a Participant pursuant to this Plan shall be made at the time(s) and in the manner as the Administrator shall from time to time prescribe.
Section 7. Company Contributions
Each year, the Company shall contribute to the Plan on behalf of each Participant, a matching contribution equal to one hundred percent (100%) of the first four percent (4%) of the Participant’s Compensation (excluding any bonuses) deferred under the Plan, and with respect to any bonus payments from the Executive Officer Incentive Plan, Key Management Bonus Plan and the Retail Management Bonus Plan deferred under the Plan for the fiscal year, a matching contribution in an amount equal to one hundred percent (100%) of the first four percent (4%) of any such bonuses deferred.
The Company reserves the right to make a supplemental matching contribution for any Participant at the end of the year to ensure the full matching contribution is received.
In addition to the matching contribution described above, for any Plan Year, the Company may elect to
allocate an additional discretionary contribution to the account of any Participant, or any group of Participants, as selected by the Board, in any amount and manner as determined by the Board.
Section 8. Investment of Accounts
The Administrator, in its discretion, may from time to time designate one or more investment media in which the portion of a Participant’s account representing his deferrals shall be hypothetically invested. The Administrator shall provide the Participant the opportunity to determine how such portion of the Participant’s account shall be deemed to be hypothetically invested from among the available investment options, and may permit changes in those investment directions at whatever frequency it deems appropriate and within whatever limitations are applicable to any investment option. As of January 1, 2008, a Participant may also direct the hypothetical investment of the portion of his account attributable to any Company contributions made on his behalf, after September 30, 2004. If a Participant makes an investment selection, the Administrator may follow such investment selection but shall not be legally bound to do so.
Any Company contributions made on behalf of a Participant beginning October 1, 2004 through December 31, 2007 were hypothetically invested in insurance contracts designated by the Administrator. Such rate of interest for each calendar year was the insurer’s declared crediting rate on such insurance policies, as of December 1 of the preceding year, plus 125 basis points, with the rate being rounded to the nearest one tenth of a percent.
The portion, if any, of a Participant’s account derived from Company matching contributions made prior to October 1, 2004 shall be credited with gains and losses as if it had been invested in Staples, Inc. common stock, provided however, that a Participant shall have the same investment diversification rights (except with respect to the available investment options), as exist under the 401(k) Plan.
Beginning with the Plan Year 2011, the portion of any Participant’s account that is hypothetically invested in an insurance contract’s fixed account shall be credited with a rate of interest announced by the Administrator at the beginning of the Plan Year. The Administrator shall choose the rate that is the higher of (1) the insurance carrier’s fixed account crediting rate at the beginning of the Plan Year; or (2) the Internal Revenue Service’s mid-term Applicable Federal Rate (AFR) for January 1 of the Plan Year, compounded annually.
Section 9. Vested Status of a Participant’s Account
A Participant shall at all times have a nonforfeitable (“vested”) right to the fair market value of any in-service withdrawal account(s) established under Section 5.
Subject to the following provisions of this Section, if a Participant separates from service with the Company (within the meaning of Section 409A of the Code) for any reason on or after his Normal Retirement Age (within the meaning of the 401(k) Plan), or prior to that date as a result of the Participant’s “disability”, or as a result of the Participant’s death, such Participant shall have a nonforfeitable (vested) right to the fair market value of the Participant’s retirement account. For this purpose, a Participant shall be considered “disabled” if he is determined to be “permanently and totally disabled” by the Social Security Administration.
Except as otherwise provided herein below, if a Participant separates from service with the Company for any other reason other than Normal Retirement, death, or disability, such Participant shall be entitled to receive the vested value of his retirement account. For this purpose, each Participant shall at all times have a nonforfeitable (vested) right to his retirement account derived from any Compensation deferred
pursuant to Section 4. However, with respect to any Company matching contributions made on the Participant’s behalf pursuant to Section 7, the Participant shall have a nonforfeitable (vested) right to a percentage of the fair market value of such portion of his retirement account as follows: