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Exhibit
10.17
LINCOLN NATIONAL
CORPORATION
DEFERRED
COMPENSATION &
SUPPLEMENTAL/EXCESS
RETIREMENT PLAN
Effective
January 1, 2008
The Lincoln National Corporation
Deferred Compensation & Supplemental/Excess Retirement
Plan is an amendment and restatement of the Lincoln National
Corporation Executive Deferred Compensation Plan for Employees, a
plan established and maintained by Lincoln National Corporation
(the “Plan”). The Plan provides enhanced retirement
benefits and savings opportunities to certain employees of Lincoln
National Corporation and its Affiliates (the
“Company”).
The Plan is intended (1) to comply
with Internal Revenue Code section 409A and official guidance
issued thereunder, except where indicated for Grandfathered
Benefits as set forth herein, and (2) to be “a plan
which is unfunded and is maintained by the Employer primarily for
the purpose of providing deferred compensation for a select group
of management or highly compensated employees” within the
meaning of sections 201(2), 301(a)(3) and 401(a)(1) of ERISA.
Notwithstanding any other provision of this Plan, this Plan shall
be interpreted, operated and administered in a manner consistent
with these intentions.
Section 1
Definitions
The following definitions are provided
for key terms contained within this document:
“401(k)
Plan” means the Lincoln National Corporation
Savings & Retirement Plan, effective January 1,
2008.
“ Account”
means the separate deferred compensation accounts established by
the Company in the name of each Participant. Where the context
indicates, the term “Account” shall mean one or more of
the various sub-accounts that may be created within an
Account.
“Affiliate” means:
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(a) |
Any corporation which, together with the Company, is part of a
“controlled group” of corporations, in accordance with
Code section 414(b); |
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(b) |
Any organization which, together with the Company, is under
“common control,” in accordance with Code section
414(c); |
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(c) |
Any organization which, together with the Company, is an
“affiliated service group,” in accordance with Code
section 414(m); and |
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(d) |
Any entity required to be aggregated with the Company pursuant
to regulations promulgated under Code section 414(o). |
“Annual Incentive
Bonus” means any bonus paid under the Company’s
annual incentive program, as approved by the Company’s
Compensation Committee.
“Annual
Salary” means salary and W-2 commissions. For a Lincoln
Financial Advisor Second Line Manager or an LFD associate, it
refers to established compensation and first year enterprise
benefitable commissions only.
“Beneficiary” means the person or persons,
including a trust or the Participant’s estate, designated by
a Participant to receive any death benefits payable under the Plan
after the death of the Participant.
“Benefits
Administrator ” means the Company’s Senior
Vice President of Human Resources or any successor appointed by the
Chief Executive Officer of the Company.
“Benefit
Commencement Date” means the date that Plan benefits are
scheduled to be paid in a cash lump sum, or scheduled to begin to
be paid if the Participant has elected to receive periodic payments
of Plan benefits, pursuant to Section 7 of the
Plan.
“ Benefit
Determination Date ” means the date that Plan
benefits are calculated.
“Board” or
“Board of Directors” means the Board of Directors
of the Company.
“Cause”
means, as determined by LNC in its sole discretion, (1) the
conviction of a felony, or other fraudulent or willful misconduct
by a Participant that is materially and demonstrably injurious to
the business or reputation of LNC, or (2) the willful and
continued failure of a Participant to substantially perform
Participant’s duties with LNC or a Subsidiary (other than
such failure resulting from incapacity due to physical or mental
illness), after a written demand for substantial performance is
delivered to the Participant by the Participant’s manager
which specifically identifies the manner in which the manager
believes that the Participant has not substantially performed the
Participant’s duties.
“Change of
Control” means an event that qualifies as a change of
control of the Corporation as defined under the Lincoln National
Corporation Executive Severance Benefit Plan (the definition in
effect immediately prior to such change of control).
“Code”
means the Internal Revenue Code of 1986, as amended.
“Company”
means Lincoln National Corporation or any successor
thereto.
“Compensation
Deferral Agreement” means an agreement by which a
Participant directs the Company to make Elective Deferrals under
the Plan in lieu of paying the Participant cash
compensation.
“Default Investment
Option” means the Investment Option selected by the
Committee in its sole discretion, for the investment of any
Discretionary Matching Contributions, Matching Contributions,
Special Executive Credits, Elective Deferrals, and Excess
Contributions in cases where the Participant has failed to provide
valid investment directions with respect to the Plan’s
Investment Options.
“Disabled”
means, with respect to a Participant, that the Participant has been
determined to be disabled as defined in the Lincoln National
Corporation Savings & Retirement Plan, effective
January 1, 2008.
“Discretionary
Matching Contributions” means any discretionary
contributions that may made by the Company to the Plan on behalf of
a Participant with respect to the Participant’s Elective
Deferrals pursuant to Section 5.1 of the Plan.
“Distribution Year
Account” means the Account established by the Company at
the Participant’s election that is payable to the Participant
in the calendar year designated by the Participant, regardless of
whether the Participant is an active employee or has experienced a
Separation from Service.
“DMHI
Participant” means any employee of Delaware Management
Holdings, Inc. or any subsidiary who is a Participant in this
Plan.
“DMHI
Plan” means the Delaware Management Holdings, Inc.
Retirement Plan.
“Effective
Date” means January 1, 2008.
“Elective
Deferral” means the deferral of a percentage or a dollar
amount of Annual Salary or Annual Incentive Bonus that would
otherwise be paid to the Participant during a calendar year by
executing a valid Compensation Deferral Agreement pursuant to
Section 5.6 of the Plan.
“Employer”
means Lincoln National Corporation and any Affiliate who has
adopted this Plan as a participating Employer.
“ESSB Opening
Account ” means the special Account created upon
the termination of the benefit under Section 4 of the
Jefferson-Pilot Supplemental Retirement Plan, also known as the
“Executive Special Supplemental Benefit” (the
“ESSB”).
“Excess
Contributions” means the amount of any Employer Core
Contributions or Employer Transition Contributions, as described in
the 401(k) Plan, that cannot be
contributed to the 401(k) Plan due to
the operation of plan or Internal Revenue Service limits; or the
amount of any employer contribution under Section 4.1 of the
DMHI Plan that cannot be contributed to that plan due to the
operation of plan or Internal Revenue Service limits, and which is
contributed by the Company to this Plan on the behalf of the
Participant. Excess Contributions will be credited pursuant to
Section 5.3 of the Plan.
“Grandfathered
Benefit” means any amounts earned and vested under the
Plan as of December 31, 2004 within the meaning of Code
section 409A and the official guidance thereunder. Except as
specified herein, Grandfathered Benefits are subject to the
distribution rules set forth in Section 7 of this
Plan.
“Hardship”
means a severe financial hardship caused by an unforeseen emergency
to the Participant resulting from a sudden and unexpected illness
or accident of the Participant or of a dependent (as defined in
Section 152(a) of the Internal Revenue Code of 1986, as
amended) of the Participant, loss of the Participant’s
property due to casualty, or other similar extraordinary and
unforeseeable circumstances arising as a result of events beyond
the control of the Participant.
“Investment
Option” means one or more of the investment funds in
which Participants may direct the investment of their Accounts,
pursuant to Section 4.5 of the Plan.
“IRS”
means Internal Revenue Service.
“Insider”
means an individual subject to the short-swing profit recovery
provisions of Section 16 of the Securities Exchange Act of
1934.
“Key
Employee” means an Employee treated as a “specified
employee” as of his Separation from Service under Code
Section 409A(a)(2)(B)(i) of the Company or its Affiliates,
i.e., a Key employee (as defied in Code Section 416(i) without
regard to paragraph (5) thereof). Key Employees shall be
determined in a accordance with Code Section 409A using
December 31 st as
the determination date. A listing of Key Employees as of a
determination date shall be effective for the 12-month period
beginning on the April 1 st following the determination date.
“LNC Benefits
Appeals and Operations Committee” means the committee
with that name, or any successor thereto.
“LNC COC
Plan” means the Lincoln National Corporation Executive
Severance Benefit Plan.
“Matching
Contributions” means the contributions made by the
Company to the Plan on behalf of a Participant on account of a
Participant’s Elective Deferrals pursuant to Section 5.4
of the Plan.
“SCP Opening
Account ” means the special Account created upon the
termination of the Salary Continuation Plan for Executives of
Lincoln National Corporation and Affiliates.
“ SMC”
means the Company’s Senior Management Committee.
“Separate from
Service” or “Separation from Service”
is defined within the meaning of Code section 409A.
“Shortfall Balance
Account” means the account to which any
“shortfall” is credited as calculated for SMC members
as of December 31, 2007 only, pursuant to Section 5.6
below.
“Special Executive
Credit” means a contribution made by the Company on
behalf of certain Participants who are SMC Members, pursuant to
Section 5.8 of the Plan.
“Stock
Units” means “phantom” shares of Lincoln
National Corporation common stock (“LNC Stock”) that
may be made available under this Plan to Participants as an
Investment Option. Stock Units shall be notionally credited to a
Participant’s Account and administered pursuant to the
relevant provisions of Article IV of the Plan.
“Termination Year
Account” means an Account established by the Company for
each Participant, where the Valuation Date is the date the
Participant experiences a Separation from Service, regardless of
whether such departure is voluntary or involuntary.
“Valuation
Date” means the date on which the Participant’s
Account is valued prior to Benefit Commencement Date.
Section 2
Eligibility
2.1 General . This
Plan is maintained by the Company for the benefit of a select group
of management and highly compensated employees. The Benefits
Administrator shall have the discretion to determine the
eligibility of employees to participate in this Plan; provided,
however, that in order to be eligible, the employee must be a
member of a select group of management or highly compensated
employees of an Employer.
2.2 Eligibility to Make
Elective Deferrals . Only employees of the Company who have an
Annual Salary of at least $175,000, determined as of the applicable
“look back” period designated by the Benefits
Administrator, newly hired employees whose starting Annual Salary
is at least $175,000, or newly eligible employees (based on a
mid-year raise and/or promotion and at the sole discretion of the
Benefits Administrator), may make Elective Deferrals under the
Plan.
Section 3
Participation
3.1 Enrollment in the
Plan . An employee who is eligible to make an Elective Deferral
pursuant to Section 2.2 above may become a participant by
enrolling in the Plan and submitting a valid Compensation Deferral
Agreement in the manner prescribed by the Benefits Administrator
and pursuant to Section 6.1 below.
3.2. Newly Hired or
Eligible Employees . A newly hired or newly eligible employee
who is eligible to make Elective Deferrals as provided in
Section 2.2 above has thirty (30) days from the date they
are hired or become eligible to enroll in the Plan and submit a
valid Compensation Deferral Agreement, pursuant to Section 3.1
above.
3.3 Automatic
Participation . Employees may be automatically enrolled in the
Plan if they are eligible to receive Excess Contributions under the
Plan pursuant to Section 5.3, and/or are eligible to receive
Special Executive Credits under the Plan pursuant to
Section 5.8.
Section 4
Plan
Investments & Accounting
4.1 Notional or
“Phantom” Accounts . The terms
“Account” or “Accounts” refers to the
separate deferred compensation account(s) established by the
Company in the name of each Participant. Each Account is a
bookkeeping device only, established for the sole purpose of
crediting and tracking notional investments made by the Participant
in the Investment Options available under the Plan. The Company may
also establish one or more “Sub-Accounts” representing
the various notional Investment Options available under the
Plan.
4.2 Recordkeeping of
Accounts - General . The Company shall establish an Account in
the name of each Participant making Elective Deferrals under the
Plan, or receiving Excess Contributions or Special Executive
Credits under the Plan. The Company shall also establish
Sub-Accounts for Participants, as appropriate, and credit any
Elective Deferrals, Discretionary Matching Contributions, Matching
Contributions, Excess Contributions or Special Executive Credits to
the appropriate Participant Sub-accounts. The Company shall also
credit such Accounts and/or Sub-Accounts with any earnings/losses
that would have accrued if the Accounts or Sub-Accounts were
actually invested in the Investment Options selected by the
Participant from among the options offered from time to time under
the Plan.
4.3 Stock Unit Investment
Option . With respect to any Participant’s investment in
the Stock Unit Investment Option, actual shares of the
Company’s common stock will be issued in settlement of the
Participant’s investment when the
Participant’s
Account is actually paid to him or her,
with fractional Stock Units paid in cash. The Company reserves the
right to eliminate, change or add any Investment Option from the
Plan, including the Stock Unit investment, at any time.
(a) Phantom Dividends on
Stock Units . To the extent dividends are paid by the Company
with respect to common stock of the same class as the common stock
underlying the Stock Units, Participants will be credited with
phantom dividends. Phantom dividends shall be calculated, on each
dividend payment date, as an amount equal to the product of the
dividend paid on a share of common stock multiplied by the number
of Units as of the record date.
(b) Determination of Value
of Stock Units . The value of a Stock Unit shall be equal to
the total number of Stock Units in the Stock Unit Fund multiplied
by the final sales price quoted by the New York Stock Exchange
Composite Listing of a share of the Company’s common stock of
the same class as the Stock Units on the business day on which the
determination is made; plus any cash held by the Stock Unit Fund;
divided by the total number of Stock Units in the Stock Unit
Fund.
(c) Changes in Capital and
Corporate Structure . In the event of any change in the
outstanding shares of the Company’s common stock by reason of
an issuance of additional shares, recapitalization,
reclassification, reorganization, stock split, reverse stock split,
combination of shares, stock dividend or similar transaction, the
number of phantom Stock Units held by Participants under the Plan
shall be proportionately adjusted, in an equitable manner. The
foregoing adjustment shall be made in a manner that will cause the
relationship between the aggregate appreciation in outstanding
common stock and earnings per share and the increase in value of
each phantom Stock Unit granted hereunder to remain unchanged as a
result of the applicable transaction.
(d) Voting . Prior to
distribution of the Participant’s Account pursuant to
Section 7 above, and settlement of Stock Units with shares of
the Company’s common stock, no voting or other rights of any
kind associated with the ownership of the Company’s common
stock shall inure to any Participant whose Account is credited with
Stock Units.
4.4 Non-Stock Unit
Investment Option . With respect to the Investment Options
available under the Plan other than the Stock Unit Investment
Option, Participants have no rights to any of the assets, funds or
securities in which such Investment Options are actually invested.
Upon distribution of the Participant’s Account pursuant to
Section 7 below, the Participant will receive cash in
settlement of all amounts credited to non-Stock Unit Investment
Options. The Company reserves the right to eliminate, change or add
any Investment Option from the Plan at any time.
4.5 Participant Direction
of Investments . Subject to the restrictions applicable to
investing in the Plan as described in Section 8 below,
Participants in the Plan may make or change their investment
directions with respect to the Investment Options
available under the Plan at any time.
The Plan’s recordkeeper and third-party administrator will
deem any investment directions provided by the Participant to be
continuing investment directions until the Participant takes
affirmative action to change the investment directions.
4.6 Default Investment
Option . In the case where the Participant has not provided
valid investment directions to the Plan’s recordkeeper and
third-party administrator, any Discretionary Matching
Contributions, Matching Contributions, Special Executive Credits,
Elective Deferrals, and Excess Contributions, credited to a
Participant shall be invested in the Plan’s Default
Investment Option. The Plan’s Default Investment Option shall
be designated by the Plan Administrator from time to time, in the
sole discretion of the Plan Administrator. In general, the
Plan’s Default Investment Option shall be the Qualified
Default Investment Alternative (the “QDIA”) designated
for the 401(k) Plan.
Section 5
Company
Contributions
5.1 Discretionary Matching
Contributions . For Plan Years beginning January 1, 2008,
for DMHI Participants only, the Company may credit, in its sole
discretion, a Discretionary Matching Contribution with respect to
Elective Deferrals on Annual Incentive Bonus or Annual Salary once
the aggregated amount of the Participant’s Annual Salary or
Annual Incentive Bonus has exceeded the Code
Section 401(a)(17), or with respect to Elective Deferrals once
the Code section 415 limit has been reached. The Discretionary
Matching Contribution, if any, shall not exceed 100% of the
Participant’s Elective Deferrals, up to 6% of the
Participant’s Annual Salary and Annual Incentive Bonus.
Discretionary Matching Contributions shall be 100% vested upon
contribution.
5.2 ESSB Opening Balance
Contribution . For any Participant actively employed by the
Company at 11:59 p.m. on December 31, 2007 who has an accrued
benefit under Section 4 of the Jefferson-Pilot Supplemental
Retirement Plan, also known as the “Executive Special
Supplemental Benefit,” the Company will credit a present
value lump sum to the Plan to an ESSB Opening Balance Account
established for the Participant pursuant to Section 7.1(a)
below. The amount of a Participant’s ESSB Opening Account
shall be calculated pursuant to Section B of the ESSB as if the
Participant were to receive a distribution at age 62 reduced as
appropriate for early benefit commencement using the relevant set
of reduction factors provided under Section C(2) of the ESSB. The
actuarial equivalent lump sum value of each such Executive’s
age 62 benefit shall be calculated based on the interest rate
provided under section 417(e) of the Internal Revenue Code of 1986,
as amended (the “Code”) in effect for November 2007,
provided, however, that such rate shall be capped at a maximum of
5.7%, and subject to a “floor” of 4.7%. The applicable
mortality factors shall be those in the 1994 GAR unisex table,
projected to 2002 using scale AA. The ESSB Opening Balance
Contribution shall be 100% vested upon contribution.
5.3 Excess
Contributions . The Company will credit the amount of any
Employer Core Contributions or Employer Transition Contributions
that cannot be contributed to the Participant under the Lincoln
National Corporation Employees’ Savings and Retirement Plan
due to the operation of plan or Internal Revenue Service limits, or
the amount of any Employer Contribution under Section 4.1 of
the Delaware Management Holdings, Inc. Retirement Plan that cannot
be contributed to that Plan due to the operation of plan or
Internal Revenue Service limits, to the Participant’s Excess
Contributions Account. Any Excess Contributions will be 100% vested
upon contribution. Excess Contributions made on behalf of DMHI
Participants are credited to the same account as elected by the
Participant for his or her Elective Deferrals pursuant to
Section 6.
5.4 Matching
Contributions . Matching Contributions will be 100% vested upon
contribution.
(a) DMHI Participants
. For DMHI Participants only, the Company will make Matching
Contributions with respect to Elective Deferrals on Annual
Incentive Bonus or Annual Salary once the aggregated amount of the
Participant’s Annual Salary or Annual Incentive Bonus has
exceeded the Code Section 401(a)(17) limit or with respect to
Elective Deferrals once the Code section 415 limit has been
reached. Such Matching Contributions shall be made in the amount of
50% of the Participant’s Elective Deferrals, on up to 6% of
the Participant’s Annual Salary and Annual Incentive
Bonus.
(b) Non-DMHI
Participants . For all other Participants in the Plan, the
Company will make Matching Contributions with respect to Elective
Deferrals on Annual Incentive Bonus or Annual Salary once the
aggregated amount of the Participant’s Annual Salary or
Annual Incentive Bonus has exceeded the Code
Section 401(a)(17) limit or with respect to Elective Deferrals
once the Code section 415 limit has been reached. Such Matching
Contributions shall be made in the amount of 100% of the
Participant’s Elective Deferrals, on up to 6% of the
Participant’s Annual Salary and Annual Incentive
Bonus.
5.5 SCP Opening Balance
Contribution . For any Participant actively participating in
the Salary Continuation Plan for Executives of Lincoln National
Corporation and Affiliates (the “SCP”) at 11:59 pm on
December 31, 2007, the Company will credit a present value
lump sum representing the Participant’s SCP benefit as of
December 31, 2007 to an SCP Opening Balance Account
established for the Participant, as described in
Section 7.1(d) below. The amount of an Executive’s SCP
Opening Account shall be calculated pursuant to Section 5 of
the Salary Continuation Plan for Executives of Lincoln National
Corporation and Affiliates (the “SCP”) as if the
Executive were to receive a distribution at age 62 , reduced
as appropriate using the relevant set of reduction factors in
Section 7 of the SCP. For an Executive participating in the
SCP as of 11:59 p.m. on December 31, 2007, the relevant set of
reduction factors shall be determined by assuming that the
Executive will remain employed until age 62, and crediting
additional Years of Vesting Service as appropriate. The actuarial
equivalent lump sum value of each such Executive’s age 62
benefit shall be calculated
based on the interest rate provided
under section 417(e) of the Internal Revenue Code of 1986, as
amended (the “Code”) in effect for November 2007,
provided, however, that such rate shall be capped at a maximum of
5.7%, and subject to a “floor” of 4.7%. The applicable
mortality factors shall be those in the 1994 GAR unisex table
projected to 2002 using scale AA. The SCP Opening Balance
Contribution will vest upon the earlier of:
(a) Participant’s attainment of age 55 (or older) with
five (5) years of service, (b) death, or
(c) involuntarily termination of employment. A Participant who
Separates from Service prior to vesting in his or her SCP Opening
Balance Contribution will forfeit this Contribution.
5.6 Shortfall Balance
Contribution . For SMC members who are actively employed by the
Company as of December 31, 2007 only, the Company shall
calculate the “shortfall,” if any, between the SMC
member’s targeted retirement benefits projected to age 62,
and the sum of their benefits under the current defined benefit
retirement program, and their hypothetical 401(k) Plan and Plan
account balance projected to age 62 based on various assumptions
(including but not limited to annual base salary increases,
hypothetical deferred contribution account balances, investment
earnings, lump sum conversion interest rates, and future bonus
amounts). The Company shall convert any such
“shortfall” to a present value lump sum and contribute
such amount to a Shortfall Balance Account established for the
Participant, as described in Section 7.1(e) below. The
Shortfall Balance Contribution, if any, will vest according to an
individualized “phased vesting” schedule for each
applicable SMC member, based on the difference (in years) between
the date on which the SMC member attains (1) age 55 (or older)
with five (5) years of service, and (2) age 62. A
Participant who Separates from Service prior to vesting in his or
her Shortfall Balance Contribution will forfeit the unvested
portion of this Contribution. Each SMC member’s individual
vesting schedule is included in Appendix A to the Plan.
5.7 Special Change of
Control Contributions for SMC . For SMC members only, any
unvested SCP Opening Account balances and Special Executive Credits
will immediately vest upon the Change of Control. In the case where
an SMC member Separates from Service and is eligible for benefits
under the LNC COC Plan within two (2) years of a Change of
Control, an additional two (2) (or three (3), in the case of
the Chief Executive Officer) years’ worth of Employer Core
Contributions, Employer Transition Contributions, Matching
Contributions, and any Discretionary Matching Contributions and
Special Executive Credits will be credited to the appropriate
Sub-Account of the SMC member. The amount of such Employer Core
Contributions, Employer Transition Contributions, Matching
Contributions, Discretionary Matching Contributions and Special
Executive Credits will be determined as of the date of the
Participant’s Separation from Service. In addition, an
additional two (2) (or three (3), the case of the Chief
Executive Officer) years of service will be credited towards the
individual “phased vesting” schedule for each SMC
members’ Shortfall Balance Accounts (if any) as provided in
Appendix A. Finally, any Participant with an ESSB Opening Account
who Separates from Service and is eligible for benefits under the
Jefferson-Pilot Executive Change of Control Severance Plan
(“JP COC Plan”) or under an applicable employment
agreement on or before the date set forth in Appendix B to this
Plan, will have their ESSB Opening Account Contribution
recalculated as of
December 31, 2007, as if they had
continued to participate in the ESSB for a period of time equal to
their “tier” period under the JP COC Plan.
5.8 Special Executive
Credits . For all SMC members except for SMC members who are
DMHI Participants, the amount of the “Special Executive
Credit,” if any, will be calculated as: 15% of Total Pay (as
defined below) expressed as a percentage, offset by the total of:
(a) the SMC member’s maximum Basic Matching Contribution
opportunity (6%), plus (b) the Core Contribution amount (4%),
plus (c) the Transition Contribution amount, if any, (0% to
8%) as determined under the 401(k) Plan, each expressed as a
percentage. For all SMC members except for SMC members who are DMHI
Participants, the Special Executive Credit un
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