Management Supplemental Benefit Plan

Exhibit (10)(p)

 

Contents

 

 

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Article 1. Introduction

1.1 Background and History

The First American Corporation Management Supplemental Benefit Plan (“Plan”) was established by the Board of Directors, effective as of January 1, 1988. The Plan was last amended and restated, effective November 1, 2007, to comply with final regulations under Code section 409A. Except as otherwise specified, the Plan is now being amended and restated, effective as of January 1, 2009, to amend and clarify certain Plan provisions and to clarify compliance with certain aspects of the final regulations under Code section 409A.

1.2 Purpose of the Plan

The Plan is designed to provide supplemental retirement income and death benefits for certain Executives.

1.3 Gender and Number

Except as otherwise indicated by the context, any masculine or feminine terminology shall also include the opposite gender, and the definition of any term in the singular or plural shall also include the opposite number.

 

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Article 2. Definitions

The following definitions, set forth in alphabetical order, are used throughout the Plan and have the meaning set forth below.

2.1 Affiliate

“Affiliate” means

 

(a)	Any entity or organization that, together with the Company, is part of a controlled group of corporations, within the meaning of Code section 414(b);

 

(b)	Any trade or business that, together with the Company, is under common control, within the meaning of Code section 414(c); and

 

(c)	Any entity or organization that is required to be aggregated with the Company, pursuant to Code sections 414(m) or 414(o).

For purposes of this Plan, however, the term “Affiliate” shall be interpreted such that the phrase “at least 50 percent” will be substituted for the phrase “at least 80 percent” in each place that it appears in Code section 1563. Additionally, an entity shall be an Affiliate only during the period when the entity has the required relationship, under this Plan section 2.1, with the Company.

2.2 Annuity Starting Date

“Annuity Starting Date” means the first day of the first period for which an amount is paid as an annuity.

2.3 Basic Plan

“Basic Plan” means The First American Corporation Pension Plan, a defined benefit pension plan qualified under Code section 401(a), as amended from time to time.

 

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2.4 Beneficiary

“Beneficiary” means the person, persons or entity designated in writing by the Executive on forms provided by the Company to receive the Pre-Retirement Death Benefit set forth under Article 4 of the Plan in the event of the Executive’s death. An Executive may change the designated Beneficiary from time to time by filing a new written designation with the Company, and such designation shall be effective upon receipt by the Company, provided that the Company has determined that such change in Beneficiary will not result in an “impermissible acceleration” under Code section 409A. If the Company determines that such change in Beneficiary will result in an “impermissible acceleration,” such intended change will be null and void and the Beneficiary on file prior to such intended change (if any) shall remain the Beneficiary. If an Executive has not designated a Beneficiary, or if a designated Beneficiary is not living or in existence at the time of the Executive’s death, the Pre-Retirement Death Benefit payable under the Plan shall be paid to the Executive’s Spouse, if then living, and if the Executive’s Spouse is not then living, to the Executive’s estate.

2.5 Board of Directors

“Board of Directors” means the Board of Directors of the Company.

2.6 Change of Control

“Change of Control” means the occurrence of any of the following:

 

(a)

The acquisition by any person, entity or “group” (as defined in section 13(d)(3) of the Securities Exchange Act of 1934, as amended (“Exchange Act”)) as beneficial owner, directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of the then outstanding securities of the Company.

 

(b)	A change in the composition of the Board of Directors occurring within a two-year period, as a result of which fewer than a majority of the directors are Incumbent Directors; or

 

(c)	Any other event constituting a change in control required to be reported in response to item 6(e) of Schedule 14A of Regulation 14A under the Exchange Act.

Notwithstanding the foregoing, a Change in Control shall not be deemed to have occurred by reason of the acquisition of Company securities by the Company, any entity controlled by the Company or any plan sponsored by the Company which is qualified under Code section 401(a) or by reason of the acquisition of Company securities (either directly or indirectly as a result of a merger, consolidation or otherwise) in a transaction approved by the Incumbent Directors.

2.7 Code

“Code” means the Internal Revenue Code of 1986, as amended.

 

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2.8 Committee

“Committee” means the Compensation Committee appointed by the Board of Directors, or any other committee appointed by the Board of Directors to administer this Plan in accordance with Article 7 of the Plan.

2.9 Company

“Company” means The First American Corporation.

2.10 Competing Business

“Competing Business” means any individual (including the Executive), person, sole proprietorship, joint venture, partnership, corporation, limited liability company, business entity, trust or other entity that competes with, or will compete with, the Company or an Affiliate in any locality worldwide. A Competing Business includes, without limitation, any start-up or other entity in formation.

2.11 Competition

“Competition” means any of the following, whether occurring during or after the end of the Executive’s employment with the Employer:

 

(a)	The Executive’s Involvement (as defined in Article 5) in or with a Competing Business;

 

(b)	The misappropriation, sale, transfer, use or disclosure of trade secrets, or confidential or proprietary information of the Company or an Affiliate;

 

(c)

Any action or attempt by the Executive, directly or indirectly, either for himself or for any other person or entity, to recruit or solicit for hire any employee, officer, director, consultant, independent contractor or other personnel of the Company or an Affiliate, or to induce or encourage such a person or entity to terminate his, her or its relationship, or breach an agreement, with the Company or an Affiliate; or

 

(d)

Any action or attempt by the Executive, directly or indirectly, either for himself or for any other person or entity, to solicit or induce any customer or potential customer of the Company or an Affiliate to cease or not commence doing business, in whole or in part, with or through the Company or an Affiliate, or to do business with any other person, firm, partnership, corporation or any Competing Business.

2.12 Covered Compensation

“Covered Compensation” means base salary, cash bonus, sales commissions, similar commission-based remuneration and equity-based compensation explicitly designated as Covered Compensation or explicitly designated as compensation for past performance. “Covered Compensation” excludes any other form of remuneration, including, but not limited to, equity compensation awarded to incentivize future performance, relocation expenses and bonuses, earn-outs and other acquisition-related consideration, car allowances

 

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and perquisites. Except as otherwise provided by the Committee, “Covered Compensation” also excludes any payments made in connection with a Separation from Service, including, but not limited to, any bonus paid to an Executive in connection with his Separation from Service during a calendar year in which such Executive has already received a performance bonus. If an Executive dies or becomes Disabled, his Covered Compensation for that calendar year shall be defined as the Covered Compensation received through the date of death or disability, respectively, and no compensation received thereafter shall be considered Covered Compensation. Covered Compensation shall for all purposes be deemed paid in the year in which it is actually paid.

2.13 Deferred Retirement Date

“Deferred Retirement Date” means the date on which an Executive who is actively employed by the Company or an Affiliate incurs a Separation from Service following attainment of his Normal Retirement Date.

2.14 Disabled

“Disabled” means an Executive who is, in the determination of the Committee, unable to perform substantially all of the material duties of one’s regular position because of a bodily injury sustained or disease originating after the date of such person’s designation as an Executive under this Plan. Notwithstanding the foregoing:

 

(a)

After an Executive has been Disabled as defined above for a period of 24 continuous months, the Executive will cease to be considered Disabled unless he is unable to perform any occupation for which he is reasonably fitted by education, training or experience because of such bodily injury or sickness; and

 

(b)	An Executive is not Disabled at any time that he is working for pay or profit at any occupation.

2.15 Early Retirement Date

“Early Retirement Date” means the later of an Executive’s

 

(a)	55 th birthday;

 

(b)	Completion of 15 Years of Credited Service; and

 

(c)	Completion of 5 years as an Executive under the Plan and/or the Executive Plan (which requirement may be waived unilaterally only by the Board of Directors or the Committee).

2.16 Employee

“Employee” means any person who is employed by the Company or Affiliate and who is classified as a common-law Employee in the employment records of the Company or an Affiliate (other than a leased employee within the meaning of Code section 414(n)(2)).

 

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2.17 Employer

“Employer” means the Company and any Affiliate.

2.18 ERISA

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

2.19 Executive

“Executive” means a key management or key highly compensated employee of the Employer who has been specifically designated by the Board of Directors or the Committee, or the designee of either, as eligible to participate in this Plan, as evidenced by execution by the Executive of the benefit agreement contemplated by Plan section 9.2.

2.20 Executive Plan

“Executive Plan” means The First American Corporation Executive Supplemental Benefit Plan.

2.21 Final Average Compensation

“Final Average Compensation” means the Executive’s average one-year Covered Compensation for the five-year period ending on December 31 of the calendar year immediately preceding the calendar year in which the Executive has a Separation from Service.

2.22 Good Cause

“Good Cause” means, with respect to an Employee’s Separation from Service with his Employer, a termination for:

 

(a)	Employee’s breach of any fiduciary duty to Employer;

 

(b)	Employee’s failure or refusal to comply with laws or regulations applicable to Employer and its business or the policies of Employer governing the conduct of its employees;

 

(c)	Employee’s gross incompetence in the performance of Employee’s job duties;

 

(d)	Commission by Employee of any criminal or fraudulent acts against Employer;

 

(e)	The failure of Employee to perform duties consistent with a commercially reasonable standard of care;

 

(f)	Employee’s failure or refusal to perform Employee’s job duties; or

 

(g)	Any gross or willful conduct of Employee resulting in loss to Employer or any other Affiliate of the Company, or damage to the reputation of Employer or any other Affiliate of the Company.

 

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2.23 Hours of Service

“Hours of Service” means:

 

(a)	Each hour for which an Executive is paid or entitled to payment by the Company or an Affiliate for the performance of duties.

 

(b)

Each hour for which an Executive is paid or entitled to payment by the Company or an Affiliate on account of a period of time during which no duties are performed (irrespective of whether the employment relationship has terminated) due to vacation, holiday, illness, incapacity (including disability) layoff, jury duty, or leave of absence.

 

(c)	Each hour for which back pay (irrespective of mitigation of damages) for an Executive is either awarded or agreed to by the Company or an Affiliate, with no duplication of credit for hours under subsections (a) or (b) and this subsection.

 

(d)

Each hour credited pursuant to applicable ERISA regulations for unpaid periods of absence for service in the United States armed forces or Public Health Service during which an Executive’s reemployment rights are guaranteed by law, provided that the Executive is reemployed by the Company or an Affiliate within the time limits prescribed by such law.

Notwithstanding the foregoing, no more than 501 Hours of Service shall be credited to an Executive on account of any single continuous period during which the Executive performs no duties.

To the extent a record of an Executive’s hours of employment is not maintained by the Company or an Affiliate, the Executive shall be credited with 10 Hours of Service for each day for which the Executive would be required to be credited with at least one Hour of Service.

All Hours of Service shall be determined and credited to computation periods in accordance with reasonable standards and policies consistent with United States Department of Labor Regulations sections 2530.200b-2(b) and (c).

2.24 In Pay Status

“In Pay Status” means, with respect to a benefit, that an Executive or Beneficiary has met all of the requirements to receive such benefit, and it is being paid or is about to be paid to such Executive or Beneficiary. No benefit can be paid under this Plan unless the Executive has incurred a Separation from Service.

 

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2.25 Incumbent Directors

“Incumbent Directors” means directors who either are:

 

(a)	Directors of the Company as of November 1, 2007; or

 

(b)

Elected, or nominated for election, to the Board of Directors with the affirmative votes of at least two-thirds of the Incumbent Directors at the time of such election or nomination (but shall not include an individual not otherwise an Incumbent Director whose election or nomination is in connection with an actual or threatened proxy contest relating to the election of directors to the Company.

2.26 Joint and Survivor Annuity

“Joint and Survivor Annuity” means an annuity that provides equal monthly payments for the life of the Executive and, after his death, a reduced annuity (“survivor annuity”) for the life of the Executive’s Surviving Spouse, if any. The monthly payment under the survivor annuity to a Surviving Spouse shall be equal to 50% of the amount of the monthly payment made to the Executive during their joint lives if the Surviving Spouse is not more than five years younger, or is older, than the Executive at the time benefits begin. If the Surviving Spouse is more than five years younger than the Executive, the survivor annuity will be determined with reference to the actual age of the Surviving Spouse at the time benefits begin and will be reduced to produce the actuarial equivalent of a 50% survivor annuity for a Surviving Spouse who is five years younger than the Executive.

If the Executive is not married at the time that Plan benefits commence, the Joint and Survivor Annuity means an annuity providing equal monthly payments for the lifetime of the Executive with no survivor benefits.

2.27 Normal Retirement Date

“Normal Retirement Date” means the last day of the month coinciding with or next following the later of an Executive’s:

 

(a)	62 nd birthday;

 

(b)	Completion of 10 Years of Credited Service (which requirement may be waived unilaterally only by the Board of Directors or the Committee); or

 

(c)	Completion of 5 years as an Executive under the Plan and/or the Executive Plan (which requirement may be waived unilaterally only by the Board of Directors or the Committee).

 

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2.28 Person

“Person” means any individual, partnership, joint venture, association, joint company, corporation, trust, limited liability company, unincorporated organization, a group, a government or other department, agency or political subdivision thereof or any other person or entity as contemplated by the Exchange Act.

2.29 Plan

“Plan” means The First American Corporation Management Supplemental Benefit Plan. The Plan was originally named The First American Financial Corporation Management Supplemental Benefit Plan and took its current name effective as of May 12, 2000, to reflect the change in the name of the Company.

2.30 Pre-Retirement Death Benefit

“Pre-Retirement Death Benefit” means the benefit payable, as set forth in Article 4, to the Beneficiary of an Executive who dies prior to the commencement of his Retirement Income Benefit.

2.31 Retirement Income Benefit

“Retirement Income Benefit” means 1/12 of the benefit described in Article 3 payable as a monthly annuity.

2.32 Separation from Service

“Separation from Service” means the date on which an Executive who ceases to be an Employee or otherwise separates from the service of the Company or an Affiliate on account of the Executive’s retirement, death or other termination of employment. Whether or not an Executive has incurred a Separation from Service will be based on all surrounding relevant circumstances, including, but not limited to, the reasonable belief of both the Executive and the Company (or Affiliate) that the Executive will perform no future services for the Company or an Affiliate whether as an Employee, as a contractor or in any other capacity. For purposes of this defined term, no Separation from Service will be deemed to have occurred if the Executive transfers employment from the Company or an Affiliate to another member of the Company’s Code section 414 controlled group. For this purpose, controlled group membership will include the Company and all Affiliates.

Notwithstanding the foregoing, the Plan will treat an anticipated permanent reduction in the level of bona fide services provided by the Executive to the Company or an Affiliate as a Separation from Service provided that it is reasonable for the Company or the Affiliate to anticipate that the Executive’s reduced level of bona fide services will not exceed 49 percent of the average level of bona fide services provided by such Executive within the immediately preceding applicable 36 months within the meaning of Treasury Regulations section 1.409A-1(h)(1)(ii).

The commencement of the Retirement Income Benefit, described in Article 3 and subject to the six-month payment delay set forth at Plan section 3.5, will be deemed to be on account of

 

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the Executive’s Separation from Service provided that the Retirement Income Benefit commences no later than the end of the calendar year in which the Separation from Service occurs or, if later, within 2  ¹ / 2  months following such Separation from Service provided that the Executive cannot designate the taxable period in which such Retirement Income Benefit shall commence.

2.33 Specified Employee

“Specified Employee” means an Executive qualifying as a “key employee” for purposes of Code section 416 (determined without regard to Code section 416(i)(5)) by satisfying any one of the following conditions at any time during the 12-month period ending on each December 31 (“Identification Date”):

 

(a)	The Executive is among the top-paid 50 officers of the Company with annual compensation (within the meaning of Code section 415(c)(3)) in excess of $145,000 (subject to cost-of-living adjustments);

 

(b)	The Executive is a five-percent owner; or

 

(c)	The Executive is a one-percent owner and has annual compensation in excess of $150,000.

If an individual is a key employee as of an Identification Date, including an individual who acknowledges his Specified Employee status to the Company immediately prior to the date his Retirement Income Benefit commences, the individual shall be treated as a Specified Employee for the 12-month period beginning on April 1 following the Identification Date. For the limited purpose of applying the “one-percent” and “five-percent” ownership rules, ownership is determined with respect to the entity for which the Employee provides services. The Code’s controlled and affiliated service group rules do not apply when determining an Executive’s ownership interests. Notwithstanding the foregoing, an individual shall not be treated as a Specified Employee unless any stock of the Company or any Affiliate is publicly traded on an established securities market or otherwise.

For purposes of making its annual Specified Employee determination, the Company shall consider compensation treated as recognizable pay under the definition of pay commonly referred to as “general Code section 415 pay.”

Notwithstanding the above, the Company may (but is not required to) adopt an alternative method for identifying Specified Employees, provided such method satisfies the requirements set forth at Treasury Regulations section 1.409A-1(i)(5).

 

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2.34 Spouse

“Spouse” means with respect to an Executive, a person of the opposite sex from the Executive, who is the Executive’s husband or wife (as applicable) under applicable state law to whom the Executive has been legally married during the 12-month period immediately preceding the Executive’s date of death, if such death is earlier than the Executive’s Early, Normal or Deferred Retirement Date, or the person to whom the Executive is married as of his Annuity Starting Date. No individual, including an individual of the opposite sex, shall be the Spouse of an Executive on account of the fact that the individual is registered as the domestic partner of the Executive under state law, even if state law provides that the domestic partners shall have the same rights, protections, and benefits, under state law, as married persons. No individual shall be the Spouse of an Executive unless the person would be treated as the “Spouse” of the Executive under 1 USC section 7 (relating to the definition of a “Spouse” for purposes of federal law, as added by the Defense of Marriage Act).

2.35 Surviving Spouse

“Surviving Spouse” means the Spouse of a deceased Executive who was the Spouse to whom the Executive was married at the time that Plan benefits commenced and who is living at the time of the Executive’s death after benefit commencement.

2.36 Years of Credited Service

“Year of Credited Service” means years of benefit service as defined in Article 3 of the Basic Plan. In making this determination, and notwithstanding the prior sentence, the provisions of Plan section&nbs