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EXHIBIT 10.21
INTERNATIONAL PAPER
COMPANY
UNFUNDED SUPPLEMENTAL RETIREMENT
PLAN
FOR SENIOR MANAGERS
As Amended and Restated Effective
January 1, 2008
PREAMBLE
This Plan was originally
established as the International Paper Company Unfunded
Excess-Benefit Plan for Senior Managers and became effective as of
November 1, 1983, pursuant to a resolution of the Board of
Directors of International Paper Company (the “ Board
”) dated October 11, 1983. Effective as of
November 12, 1985, the name of the Plan was changed to the
International Paper Company Unfunded Supplemental Retirement Plan
for Senior Managers, and additional benefit provisions were added
to the Plan as set forth herein. The Plan was amended effective as
of April 1, 1991, to delete the statutory limitation excess
benefit provision from the Plan, because International Paper
Company (together with certain affiliates and subsidiaries in which
the Company has a substantial ownership interest shall be
collectively referred to as the “ Company ”) has
established a separate plan to provide statutory limitation excess
benefits to salaried employees of the Company and its United States
subsidiaries. The Plan was amended effective September 8,
1992, to change the calculation of the Supplemental Benefit payable
under the Plan. The Plan was amended effective July 1, 1993,
to change the definition of Compensation under the Plan. The Plan
was amended effective December 1, 1993, to specify the
optional forms of benefit payment and death benefits.
The Plan was amended
effective January 1, 2000, among other things, to change the
definition of Compensation under the Plan, establish a pensionable
pay minimum for purposes of the Plan, clarify the vesting
provisions applicable to participants, change certain provisions
relating to the commencement of the Supplemental Benefit payable
under the Plan and to clarify the calculation of the pre-retirement
death benefit. The Plan was amended effective January 1, 2001,
and amended effective October 9, 2001, to change the
definition of Compensation under the Plan.
The Plan was amended and
restated effective January 1, 2005, to comply with the
provisions of the American Jobs Creation Act of 2004, and to make
certain other changes, including to change the normal form of
benefit payment to a lump sum and to detail the rules for an
annuity form of payment, to change the commencement of benefit
rules, to define rules for determining the lump sum interest rate,
to allow as credited service employment with affiliated companies,
to establish a minimum service requirement of five years of vesting
service to receive benefits under the Plan, to establish new
formulas for the calculation of benefits for employees who become
eligible to participate in the Plan after July 1, 2004, and to
provide the Board and the Management Development and Compensation
Committee of the Board (the “ Committee ”) with
the authority to adjust the application of any term of the Plan
with respect to any Eligible Employee, to the extent it determines
that such action will further the purposes of the Plan.
The Plan was amended
effective January 1, 2006, to permit modifications of the Plan
in accordance with the transition rules under the American Jobs
Creation Act of 2004 and to permit payment under the Plan of
Federal Insurance Contributions Act taxes due and payable on a
Participant’s Supplemental Benefit. The Plan was amended
effective January 1, 2007, to provide an exemption to the
criteria for Eligible Employees in the event that an otherwise
eligible person would be precluded from participation in the Plan
based on an inability to participate in the Retirement Plan or
Salaried Savings Plan because of United States citizenship or
residency requirements of such plans.
The Plan was amended and
restated effective January 1, 2008, among other things, to
conform the Plan to the final regulations promulgated under
Section 409A of the Internal Revenue Code of 1986, as amended,
and to exclude compensation paid to Eligible Employees by a
non-wholly owned business entity outside the United
States.
1
This Plan shall be known as
the International Paper Company Unfunded Supplemental Retirement
Plan for Senior Managers (the “ Plan ”). The
Plan is an unfunded plan maintained by the Company for the purpose
of providing deferred compensation for a select group of management
or highly compensated employees within the meaning of the exemption
provisions of Parts 2, 3 and 4 of Subtitle B of Title I of the
Employee Retirement Income Security Act of 1974, as amended (and
related regulations and provisions of the Internal Revenue Code of
1986, as amended).
The benefits payable under
the Plan will be paid from the Company’s general assets as
payments become due under the Plan, and will not be funded in
advance through an Internal Revenue Service qualified trust
arrangement or through insurance annuity contracts. From time to
time the Company may arrange for insurance annuity contracts on the
lives of Eligible Employees (the proceeds of which are payable to
the Company) in order to insure the Company for part or all of the
payments which the Company will make under the Plan. All Eligible
Employees participating in the Plan agree to authorize the Company
to purchase such insurance contracts. Eligible Employees
participating in the Plan (and their beneficiaries) will not have
any beneficial interest in such insurance contracts or in the
proceeds of such insurance contracts. With respect to claims for
benefits under the Plan, Eligible Employees and their beneficiaries
shall be general unsecured creditors of the Company.
The persons who are eligible
to receive benefits under the Plan (“ Eligible
Employees ”) are persons who are (A) salaried
employees of the Company on or after the effective date of the
Plan, (B) elected by the Board as Senior Vice Presidents of
the Company or designated by the Chief Executive Officer as
participants in the Plan, and (C) either (i) participants
in the Retirement Plan of International Paper Company (the
“Retirement Plan ”), if hired before
July 1, 2004, or (ii) participants in the International
Paper Company Salaried Savings Plan (the “ Salaried
Savings Plan ”) eligible for a Retirement Savings
Account, if hired on or after July 1, 2004, unless
participation in either the Retirement Plan or the Salaried Savings
Plan is prohibited based on United States citizenship or residency
requirements of such plans, in which case this requirement
(C) shall be waived. All of the terms and conditions of the
Plan shall be binding upon any surviving spouse, beneficiaries,
executor, administrator, heirs or successors of an Eligible
Employee.
An Eligible Employee who has
attained his or her Vesting Date while employed by the Company
shall be vested in his or her benefits under the Plan.
For purposes of the Plan,
“ Vesting Date ”, with respect to an Eligible
Employee whose benefit under the Plan is determined under
Section 5(A), shall mean the earlier of:
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(A) |
his or her
attainment of age 62 and completion of five years of Vesting
Service (as defined in the Retirement Plan); or
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(B) |
his or her
attainment of age 61 and completion of 20 years of Vesting
Service.
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For purposes of the Plan,
“ Vesting Date ”, with respect to an Eligible
Employee whose benefit under the Plan is determined under
Section 5(B) or Section 5(C), shall mean:
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(A) |
his or her
attainment of age 55; and
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(B) |
completion of five
years of Vesting Service.
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2
| 5. |
Amount and Time
of Payment of Supplemental Benefit .
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The annual supplemental
retirement benefit entitlement for an Eligible Employee under the
Plan (the “ Supplemental Benefit ”) is
determined in accordance with Section 5(A), Section 5(B)
or Section 5(C), whichever is applicable, and is payable at
the time and in the form as provided in Section 5(D), as set
forth below:
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(A) |
Calculation of the
Amount of the Supplemental Benefit for Participants in the Plan
Prior to July 1, 2004.
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Except as expressly
otherwise provided herein, the Supplemental Benefit is the greatest
of (i), (ii), or (iii) below:
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(i) |
The
Participant’s annual Unrestricted Benefit determined under
the terms of the International Paper Company Pension Restoration
Plan (the “Pension Restoration Plan ”),
plus, the single-life annuity payable at age 65 under the Federal
Paper Board SERP to the extent applicable to any Participant in
this Plan.
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(ii) |
An amount equal to
the lesser of (a) or (b), reduced by
(c) below:
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(a) |
3.25% of the
Eligible Employee’s Compensation (as defined in
Section 5(A)(iv)(c) below) multiplied by the number of years
of his or her Credited Service.
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(b) |
Fifty percent
(50%) of the Eligible Employee’s
Compensation.
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(1) |
3.25% of the
Eligible Employee’s Primary Social Security Benefit
multiplied by the number of years of his or her Credited Service
projected to age 65, subject to a maximum of 50% of the Eligible
Employee’s Primary Social Security Benefit;
and
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(2) |
The ratio of years
of the Eligible Employee’s Credited Service at the
determination date to his or her Credited Service projected
to age 65.
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(iii) |
Twenty-five percent
(25%) of the Eligible Employee’s
Compensation.
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The amount calculated under
the formula set forth above is a single life annuity and shall be
reduced by all of the following amounts :
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(a) |
the actual amount of
the Eligible Employee’s vested benefit under the Retirement
Plan (determined on the basis of a single-life annuity);
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(b) |
the single life
annuity actuarial equivalent of any retirement benefit in respect
of which the Eligible Employee has a legally binding right on or
before December 31, 2007 and which is payable to the Eligible
Employee pursuant to an objective, nondiscretionary formula from or
under: ( v ) a qualified defined benefit plan sponsored
by the Company (other than the Retirement Plan); ( w
) any qualified defined contribution plan sponsored by the
Company (other than the Salaried Savings Plan); ( x
) any non-qualified defined benefit plan sponsored by the
Company (other than the Benefit Restoration Plan); ( y
) any non-qualified defined contribution plan sponsored by the
Company (other than the International Paper Company Deferred
Compensation Savings Plan (the “ Deferred Compensation
Plan ”)); or ( z ) a contractual-type
arrangement with the Company providing retirement income or similar
benefits; and
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(c) |
to the extent
Credited Service is granted under Section 5(A)(iv)(b) below
for service with an acquired company and/or an Affiliated Company,
the single-life annuity actuarial equivalent of any retirement
benefit in respect of which the Eligible Employee has a legally
binding right on or before the date as of which such Credited
Service is granted and which is payable
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3
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to the Eligible Employee with
respect to the period of Credited Service so granted, whether
payable from or under: ( x ) a qualified defined
benefit plan or defined contribution plan sponsored by the acquired
company and/or the Affiliated Company; ( y ) any
non-qualified defined benefit plan or defined contribution plan
sponsored by the acquired company and/or the Affiliated Company; or
( z ) a contractual-type arrangement with the acquired
company and/or the Affiliated Company providing retirement income
or similar benefits.
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(iv) |
Definitions. In
calculating the Supplemental Benefit under Section 5(A)
above:
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(a) |
The term
“Affiliated Company” means a company in which the
Company has at least a 50% ownership
interest.
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(b) |
The terms “
Credited Service ” and “ Primary Social
Security Benefit ” shall have the same meaning as
defined in the Retirement Plan except the term “Credited
Service”, with respect to an Eligible Employee, shall also
include (i) service by such Eligible Employee with an acquired
company or with an Affiliated Company, where employment with such
entity is not considered Credited Service under the Retirement
Plan, in either case solely to the extent specified by the Plan
Administrator, and (ii) any period prior to such Eligible
Employee’s attainment of age 65 during which he or she is
entitled to benefits under the Company’s long-term disability
plan applicable to him or her.
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(c) |
Except as set forth
below, the term “ Compensation ”, with respect
to any Eligible Employee and any determination date, shall equal
the sum of:
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(1) |
such Eligible
Employee’s highest annual base salary during the three
consecutive calendar years prior to such date of determination;
plus
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(2) |
the Eligible
Employee’s target award (whether or not deferred) under the
Company’s Management Incentive Plan for the year in which the
Eligible Employee terminates or retires.
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Notwithstanding the
above, Compensation shall not include any awards or
income described in Section 1.142 of the Retirement
Plan.
Further,
Compensation shall not include compensation paid to a
Participant by a non-wholly owned business entity outside the
United States in which the Company or an Affiliated Company has
an ownership interest for service to such non-U.S. business
entity; rather, in such situation, Compensation shall include
the amount determined by the Committee.
Further, in the case
of any Eligible Employee who is entitled to benefits under the
Company’s long-term disability plan applicable to him or
her, Section 5(A)(iv)(c)(1) and Section 5(A)(iv)(c)(2)
shall be replaced as follows:
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(1) |
such Eligible
Employee’s annual base salary in effect as of the last day of
active employment prior to becoming entitled to benefits under the
Company’s long-term disability plan applicable to him or her;
and
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(2) |
the Eligible
Employee’s target award (whether or not deferred) under the
Company’s Management Incentive Plan for the year in which the
Eligible Employee became disabled.
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(B) |
Calculation of the
Amount of the Supplemental Benefit for Participants Hired Prior to
July 1, 2004 and Eligible to Participate in the Plan On or
After July 1, 2004.
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4
The Supplemental
Benefit is the Participant’s annual Unrestricted Benefit
determined under the terms of the Pension Restoration Plan
reduced by :
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(i) |
The actual amount of
the Participant’s vested benefit under the Retirement Plan
(determined on the basis of a single life annuity); and
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(ii) |
The amount of the
Participant’s accrued benefit under the Pension Restoration
Plan (determined on the basis of a single life annuity) as of the
date the Eligible Employee became a Participant in this Plan
pursuant to Section 3. Any reductions in the accrued Pension
Restoration Benefit for early commencement shall be based upon the
Eligible Employee’s age and period of service as of the date
that payments commence, including periods of service rendered after
an Eligible Employee became a Participant in this Plan.
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An Eligible
Employee’s Supplemental Benefit shall be reduced by 4% for
each year that commencement of payment precedes age 62.
The Plan Administrator
may grant additional Credited Service for the calculation of the
Supplemental Benefit in accordance with
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