Exhibit 10.39
PRUDENTIAL INSURANCE
SUPPLEMENTAL
EXECUTIVE RETIREMENT
PLAN
As amended and restated effective as
of January 1, 2009
The Prudential Executive
Supplemental Retirement Plan (the “Plan”) was
established by The Prudential Insurance Company of America (the
“Company”), effective as of April 14, 1998, for
the purpose of providing reasonable supplemental retirement
benefits for certain eligible employees (and their Beneficiaries)
whose retirement benefits under The Prudential Merged Retirement
Plan, the Prudential Supplemental Retirement Plan and such other
plans or arrangements sponsored by the Company are, in the opinion
of the Board of Directors of the Company, inadequate. Effective as
of March 12, 2002, subject to regulatory approval, the Plan
was renamed the Prudential Insurance Supplemental Executive
Retirement Plan and restated with amendments. The Plan provides
“Participants” (and their Beneficiaries) with one or
more of the following categories of benefits: (1) Mid-career
Hire Benefits (as set forth in Article II); and (2) Early
Retirement Benefits (as set forth in Article III).
The Plan is intended to be, and
shall be administered as, 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
Title I of ERISA (as defined below). The Plan is also intended to
comply with the provisions of New Jersey Statutes Annotated
§17B:18-52. A separate, similar plan is being adopted by
Prudential Financial, Inc. to cover employees not regulated by New
Jersey Statutes §17B:18-52.
The Plan, as set forth herein, is
amended and restated effective January 1, 2009 to comply with
the requirements of Section 409A of the Code (as defined
below) and shall govern the determination and the time and form of
benefits payable to Participants and their Beneficiaries who
incurred a Termination of Employment after 2004 and who have not
commenced receiving payment of their benefits under the Plan prior
to January 1, 2009 ( i.e. , excluding those who did not
accrue any Accrued Benefits after December 31,
2004).
ARTICLE I
DEFINITIONS
The following terms shall have the
meanings hereinafter set forth. Other terms that are capitalized in
the Plan shall be defined in the same manner as they are defined in
the Supplemental Plan or the Retirement Plan.
1.1 “Account Based Plan”
means a career average pension plan where benefits are recorded and
updated each plan year as an account or lump sum equivalent, such
as a cash balance pension plan or retirement equity pension plan
arrangement.
1.2 “Accrued Benefits”
means the Early Retirement Benefits and Mid-Career Hire Benefits
granted under Articles II and III of the Plan.
1.3 “Actuarial
Equivalent” or “Actuarially Equivalent” means the
equality of value as defined in the applicable component of the
Retirement Plan.
1.4 “Additional Plan”
has the meaning ascribed thereto in Section 2.2(b).
1.5 “Annuity Form” means
the annuity form of payment set forth in Section 5.05 of the
Supplemental Plan.
1.6 “Beneficiary” means
the natural, living person or persons determined in accordance with
this Section 1.6 entitled to receive benefits payable under
this Plan at the Participant’s death. In the event a
Participant is married at the time of death, the Beneficiary shall
be his or her spouse. Otherwise, the Beneficiary shall be the
individual designated by the Participant by proper written request
to the Company in accordance with the rules and procedures
established by the Committee to receive death benefits under the
Plan. In the event a Participant is unmarried and has not
designated a Beneficiary under the Plan or the designated
Beneficiary predeceases the Participant, the Beneficiary shall be:
(a) the Participant’s child, or if there is more than
one, each child, equally; (b) if there are no children, the
Participant’s parent or parents, equally; or (c) if
there are none of the foregoing, the Participant’s sibling,
or if more than one, each sibling, equally. In the event that a
deceased unmarried Participant is not survived by a child, parent
or sibling, as provided in the immediately preceding sentence, no
benefit shall be payable from this Plan in respect of such
Participant.
1.7 “Board of Directors”
means the Board of Directors of the Company.
1.8 “Code” means the
Internal Revenue Code of 1986, as amended.
1.9 “Committee” means
the Committee that has been appointed by the Compensation Committee
pursuant to Section 5.1 of the Plan.
1.10 “Compensation
Committee” means the Compensation Committee of the Board of
Directors, as defined by the Company’s by-laws.
1.11 “Company” means The
Prudential Insurance Company of America. When referring to Company
employees or officers, it also means life insurance companies
controlled by the Company that are regulated under section
17B:18-52 of New Jersey Statutes.
1.12 “Controlled Group”
means the Company and (i) each corporation which is a member
of a controlled group of corporations (within the meaning of
Section 414(b) of the Code) which includes the Company,
(ii) each trade or business (whether or not incorporated)
which is under common control with the Company (within the meaning
of Section 414(c) of the Code), (iii) each organization
included in the same affiliated service group (within the meaning
of Section 414(m) of the Code) as the Company, and
(iv) each other entity required to be aggregated with the
Company pursuant to regulations promulgated under
Section 414(o) of the Code. Any such entity shall be treated
as part of the Controlled Group only for the period while it is a
member of the controlled group or considered to be in a common
control group.
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1.13 “Determination
Date” means, solely for purposes of calculating the amount of
any Accrued Benefits under the Plan, the Payment Date set forth in
Article V of the Supplemental Plan; provided, however, such date
shall be determined without regard to any 6-month delay in the
event such Payment Date is based on the date of a
Participant’s Separation from Service.
1.14 “Early Retirement
Benefits” means benefits granted to Participants in
accordance with Article III of this Plan.
1.15 “Eligibility Date”
means the date the Participant is first eligible for a benefit
under the terms of Article II.
1.16 “Expected Earnings”
means base pay at the Hire Date plus annualized target annual
incentive bonus. If a Participant first becomes eligible for this
Plan after the first year of employment, Expected Earnings will
mean the actual base pay and annual incentive bonus payable for the
full calendar year of employment immediately prior to eligibility
for the Plan.
1.17 “ERISA” means the
Employee Retirement Income Security Act of 1974, as
amended.
1.18 “409A Service
Recipients” means the Company and each other entity which is
in the same controlled group of affiliated employers as the
Company, as determined in accordance with the rules under
Section 414(b) and (c) of the Code.
1.19 “Mid-Career Hire
Benefits” means benefits granted to Participants in
accordance with Article II of this Plan.
1.20 “Hire Date” means
the date employment with a member of the Controlled Group
starts.
1.21 “Mandatory Payment
Date” means, with respect to any Participant, the Mandatory
Payment Date established for such Participant under the
Supplemental Plan.
1.22 “Normal Retirement
Date” means the first day of the month on or following the
Participant’s attainment of age 65.
1.23 “Original Payment
Form” means the form of payment specified in Article V of the
Supplemental Plan that would have been applicable to the
Participant assuming that the Participant’s Determination
Date was the Status Date.
1.24 “Participant” means
any salaried officer, senior officer, or employee of the Company
(including any life insurance companies controlled by the Company
which are Participating Affiliates (as such term is used in the
Retirement Plan) and regulated under section 17B:18-52 of New
Jersey Statutes) and their Beneficiaries who has been designated as
a Participant in the Plan pursuant to the requirements of Articles
II or III of this Plan and has been granted an Accrued Benefit, but
in each case only to the extent such Accrued Benefits have been
granted and have not yet been paid in full to such
individuals.
1.25 “Payment Date”
means the date for payment set forth in Section 5.01 of the
Supplemental Plan.
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1.26 “Plan” means this
Prudential Insurance Supplemental Executive Retirement Plan, as
amended from time to time.
1.27 “Prior Employer”
with respect to any Participant means an employer that is not a
member of the Company’s Controlled Group with whom such
Participant had an employment relationship immediately before a
Participant’s Hire Date. Prior Employer includes all entities
of a group (i) each corporation which is a member of a
controlled group of corporations (within the meaning of
Section 414(b) of the Code) which includes the employer,
(ii) each trade or business (whether or not incorporated)
which is under common control with the employer (within the meaning
of Section 414(c) of the Code), (iii) each organization
included in the same affiliated service group (within the meaning
of Section 414(m) of the Code) as the employer, and
(iv) each other entity required to be aggregated with the
employer pursuant to regulations promulgated under
Section 414(o) of the Code. Any such entity shall be treated
as part of such group only for the period while it was a member of
the controlled group or considered to be in a common control
group.
1.28 “Prior Employer
Plan” means one or more defined benefit pension plans
maintained by the Prior Employer, including an unfunded defined
benefit plan maintained by the Prior Employer for the purpose of
providing deferred compensation to a select group of management or
highly compensated employees within the meaning of Title I of ERISA
and also including any written individual defined benefit
arrangement or agreement agreed to by the Prior
Employer.
1.29 “Prudential Cash Balance
Plan” means the Prudential Cash Balance Pension Plan Document
component of The Prudential Merged Retirement Plan, a defined
benefit retirement plan maintained by the Company for itself and
Participating Affiliates.
1.30 “Prudential Traditional
Retirement Plan” means the Prudential Traditional Retirement
Plan Document component of The Prudential Merged Retirement Plan, a
defined benefit retirement plan maintained by the Company for
itself and Participating Affiliates.
1.31 “Release” means a
written release of rights and claims, from a Participant, in favor
of the Company, any Controlled Group member, and individuals
employed by or formerly employed by the Company and any Controlled
Group member, in a form that is satisfactory to, and approved by,
the Committee.
1.32 “Retirement Plan”
means the Prudential Traditional Retirement Plan and the Prudential
Cash Balance Plan.
1.33 “Section 409A”
means Code section 409A and applicable guidance issued
thereunder.
1.34 “Separation from
Service” means a separation from service with the 409A
Service Recipients within the meaning of Section 409A, as
determined pursuant to such rules or policies as the Company shall
from time to time adopt in accordance with such
regulations.
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1.35 “SERP Service”
means service with the Company’s Controlled Group plus any
service with a Prior Employer. Service with the Company’s
Controlled Group shall be Credited Service under the Prudential
Traditional Retirement Plan as to benefits for Participants under
that plan or Cash Balance Service under the Prudential Cash Balance
Plan as to benefits for Participants under that plan. Service with
the Prior Employer will be service credited under the Prior
Employer Plans, both qualified and unfunded plans, and shall be
applied as though Credited Service or Cash Balance Service as
determined by the Committee.
1.36 “Status Date” means
the later of: (1) January 1, 2008 or (2) the
Participant’s Hire Date.
1.37 “Supplemental Plan”
means the Prudential Supplemental Retirement Plan, a non-qualified
deferred compensation plan maintained by the Company for itself and
Participating Affiliates (as such term is used in the Retirement
Plan). A copy of the Supplemental Plan is attached hereto as
Exhibit A.
1.38 “Termination of
Employment” means the voluntary or involuntary termination of
employment with all members of the Controlled Group for any reason,
including death.
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ARTICLE II
MID-CAREER HIRE
BENEFITS
2.1 Eligibility . A salaried
officer, senior officer, or employee of the Company who:
(A) meets requirements (1) through (7) below, and
(B) is also designated as eligible for Mid-career Hire
Benefits under the Plan in a written resolution either by the
Compensation Committee which is subsequently and timely approved by
the Board of Directors, or by the Board of Directors (in the case
of an employee who is hired at, or becomes otherwise eligible after
attaining, a pay grade under the Prudential Compensation Plan of 1
through 3, or an investment professional pay grade of 56A, or the
equivalent, or to the extent otherwise required by the by-laws of
the Company), thereby becomes a Participant under the Plan and is
therefore eligible to accrue Mid-Career Hire Benefits under this
Article II. No Controlled Group employee who is not a Company
employee or an employee of a life insurance company controlled by
the Company and regulated under section 17B:18-52 of New Jersey
Statutes will be eligible. By approval of any designation by the
Compensation Committee, or any designation made directly by the
Board of Directors, the Board of Directors has determined that the
retirement benefits otherwise available to such individuals under
the Retirement Plan, the Supplemental Plan and such other plans or
arrangements sponsored by the Company are inadequate, and the
failure to provide such benefits pursuant to the Plan would
compromise the Company’s ability to hire and retain such
employee.
The requirements are as
follows:
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(1)
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He or she is a
participant in the Retirement Plan as of the date of designation of
such person as a Participant under Article II of the Plan by the
Compensation Committee or Board of Directors, as
applicable;
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(2)
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He or she has a
pay grade of 1 through 4 in the Prudential Compensation Plan or
investment professional grade of 56A, or the equivalent;
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(3)
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He or she was
actively employed by a Prior Employer immediately prior to being
hired by a member of the Controlled Group;
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(4)
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He or she
terminated his or her employment with such Prior Employer in order
to become an employee within the Controlled Group;
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(5)
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As a result of
such termination of employment with the Prior Employer, he or she
either (A) forfeits prior benefit accruals, or (B) loses
the future benefit accruals he or she would have earned had he or
she remained employed by the Prior Employer, in each case, under a
Prior Employer Plan;
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(6)
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He or she
requests in writing, as part of a negotiation with the Company
regarding the written terms of his or her employment by the
Company, that the Company agree to provide additional retirement
benefits in recognition of the loss of such Prior Employer Plan
benefit accruals and/or future benefit accruals; and
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(7)
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He or she meets
the terms of this Plan and any other additional or different term
or condition that the Compensation Committee (or in the case of an
employee who is hired at, or otherwise becomes eligible after
attaining, a pay grade of 1 through 3, the Board of Directors)
determines, in its sole discretion, should be satisfied as a
condition precedent or a condition subsequent to the receipt of
Mid-Career Hire Benefits accrued under this Article II, including,
but not limited to, signing a Release to the extent required under
Section 4.4; provided, that any additional or different
term or condition is set forth in the written resolution
designating the employee as eligible to accrue Mid-Career Hire
Benefits under the Plan.
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2.2 Amount—Prudential
Traditional Retirement Plan Participant . Except as otherwise
provided in Section 2.4, below, the amount of the Mid-Career
Hire Benefits for a Participant in the Prudential Traditional
Retirement Plan shall be an amount determined as of the
Determination Date equal to the excess, if any, of (a) over
(b), subject to subsection (c) below:
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(a)
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Participant’s hypothetical accrued
retirement benefits (including, if applicable, early retirement
benefits) under the Retirement Plan and Supplemental Plan,
calculated using SERP Service and stated as a single life
annuity.
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(b)
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The applicable
offset in (1), (2) or (3), below, plus the Participant’s
hypothetical benefit, if any, under the Retirement Plan,
Supplemental Plan and any other defined benefit or other pension
benefit plan for employees of members of the Controlled Group other
than the Company, or life insurance companies controlled by the
Company which are regulated under section 17B:18-52 of New Jersey
Statutes (each, an “Additional Plan” and together, the
“Additional Plans”) in which the Participant
participates as of the Determination Date.
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(1)
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If benefits are
provided under a Prior Employer Plan, either as an annuity or an
Account Based Plan benefit for which no lump sum is
available at or before the date of benefit commencement under this
Plan and:
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(A)
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Benefits under
the Prior Employer Plan have commenced at the time the benefit
under this plan will commence—the offset is the annuity
benefit being paid to the Participant from the Prior Employer Plan.
The amount of offset will increase or decrease upon, and be
co-extensive with, any changes in the amount of benefit provided by
the Prior Employer Plan that are known at the Determination Date.
If any partial lump sum payment was previously made, an additional
offset for that payment will be calculated as if it were a benefit
from an Account Based Plan described in paragraph (2),
below.
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(B)
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Benefits under the Prior Employer
Plan have not commenced at the time the benefit under
this Plan will commence, but could commence at the
Participant’s election—the offset is the normal form of
annuity benefit available to the participant from the Prior
Employer Plan, assuming the Prior Employer Plan benefit
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commenced at the time the benefit
under this Plan will commence. The amount of the offset will
increase or decrease upon, and be co-extensive with, any expected
changes in the amount of benefit provided by the Prior Employer
Plan that are known at the Determination Date.
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(C)
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Benefits under
the Prior Employer Plan cannot commence until after
the time the benefit under this Plan will commence—the offset
is the normal form of annuity benefit available to the Participant
from the Prior Employer Plan, but applied beginning as of the
earliest date that the Prior Employer Plan benefit can commence.
The amount of offset will increase or decrease upon, and be
co-extensive with, any expected changes in the amount of benefit
provided by the Prior Employer Plan that are known at the
Determination Date.
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(2)
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If Prior
Employer Plan benefits are provided by an Account Based Plan from
which lump sum is available at or before date of benefit
commencement from this Plan, the offset is a single life annuity,
determined as follows:
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(A)
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Determine the
lump sum payable from the Prior Employer Plan at the age benefits
commence under this Plan. If a lump sum has been previously paid,
increase the amount paid from the date of payment to benefit
commencement date using the Prudential Cash Balance Plan interest
crediting rate in effect on the Participant’s Termination of
Employment (or other determination date).
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(B)
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Convert the
lump sum determined in (A) to a single life annuity using
conversion assumptions provided in the Prudential Cash Balance Plan
as of the date of the determination.
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(3)
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If benefits are
provided by both an annuity and Account Based Plan from which lump
sum is available at or before date of benefit commencement from
this Plan, the offset is the sum of the offsets calculated by
applying paragraphs (1) and (2), above, separately to each
type of benefit.
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(c)
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The amount
determined above shall be subject to the following:
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(1)
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If the
Participant is to be paid in an Annuity Form, any temporary benefit
determined as the excess of (a) over (b) shall be
converted to an Actuarially Equivalent single life
annuity;
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(2)
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If the
Participant is to be paid in an Annuity Form, the amount payable
(in the Annuity Form that is applicable to the Participant as of
his or her Determination Date in accordance with the provisions of
Article V of the Supplemental Plan) shall be the Actuarial
Equivalent of the amount determined above paid in the Original
Payment Form; and
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(3)
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If the
Participant is to be paid in the form of a lump sum, the amount
that is Actuarially Equivalent to the form of annuity that would
apply to the Participant pursuant to Article V of the Supplemental
Plan at the Determination Date, assuming the Participant had not
elected a lump sum payment, plus interest on that amount from the
Determination Date at the rate used to determine the lump sum
through the applicable Payment Date set forth in Article V of the
Supplemental Plan.
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2.3 Amount—Cash Balance
Plan Participant . Except as otherwise provided pursuant to
Section 2.4 below, the amount of the Mid-Career Hire Benefits
for a Participant in the Prudential Cash Balance Plan shall be the
sum of (i) a deemed Opening Account Balance equal to the
excess, if any, of (a) less the offsets in (b), plus
(ii) the credits described in (c) below. This sum will be
maintained in a book-entry account, which may be divided into
appropriate sub-accounts.
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(a)
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Participant’s hypothetical Opening Account
Balance determined as follows:
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(2)
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Multiplied by
Participant’s initial SERP Basic Credit Rate;
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(3)
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Multiplied by
SERP Service as of the Hire Date; and
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The SERP Basic Credit Rate is the
percentage determined under Exhibit B of the Prudential Cash
Balance Plan calculated using SERP Service.
