EXHIBIT 10.4
QUAKER CHEMICAL
CORPORATION
1995 NAPLES SUPPLEMENTAL RETIREMENT INCOME
PROGRAM AND AGREEMENT
(As Amended and Restated Effective May 7,
2008)
Quaker Chemical Corporation (the
“Company”) and Ronald J. Naples (“Naples”)
entered into the Quaker Chemical Corporation 1995 Naples
Supplemental Retirement Income Program and Agreement (the
“Program”), effective as of October 2, 1995, to
provide Naples with an improved retirement program that enhances
the Company’s ability to retain the services of Naples as
well as to reflect Naples’ achievements and valued
contributions to the Company. This amendment and restatement of the
Program is effective May 7, 2008 and reflects
(i) Section 6(b) of the Employment, Transition and
Consulting Agreement (effective May 7, 2008) between Naples
and the Company (the “Agreement”), and
(ii) changes required under §409A of the Internal Revenue
Code of 1986, as amended (the “Code”).
The Program is a non-qualified and
unfunded plan of deferred compensation for Federal income tax
purposes and an unfunded program maintained for a select member of
management who is also a highly compensated employee, for purposes
of the Employee Retirement Income Security Act of 1974, as amended.
The Program shall be administered by the Company’s
Compensation/Management Development Committee (the
“Committee”), whose determinations shall be final,
binding and conclusive. As the Program contemplates payment of
benefits on a post-retirement basis, the Company will continue to
maintain on the Company’s books and records an accrual of the
benefits earned pursuant to the Program according to Generally
Accepted Accounting Principles.
The benefits payable under the
Program are based on a formula which will provide the maximum
supplemental retirement income benefit to Naples if he shall
(a) remain employed by the Company for 15 or more years, or
(b) incur a Separation from Service on account of Retirement
or a Severance Event (as such terms are defined in the Agreement).
If Naples’ employment with the Company is less than 15 years,
the retirement income benefit under the Program will be reduced by
2.667% for each full and fractional year less than 15 years of
employment with the Company; provided, however, that such reduction
shall not apply if Naples incurs a Separation from Service on
account of Retirement or a Severance Event (as such terms are
defined in the Agreement). For purposes of the Program (other than
for purposes of determining whether Naples has had a Separation
from Service), employment with any corporation, partnership or
other entity of which 40% or more of the voting power is held,
directly or indirectly, by the Company, shall be deemed employment
with the Company. Naples’ rights to benefits under the
Program shall continue to be fully vested and
nonforfeitable.
The Supplemental Retirement Income
Benefit payable under the Program in the form of a Single Life
Annuity (as defined in Section 5), shall be determined as
follows:
First Calculation
Salary Plus Bonus (hereinafter
defined)
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less
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Actual Social
Security taxes paid on Salary Plus Bonus.
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less
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Applicable
state income tax on Salary Plus Bonus at the rate in effect on
Separation from Service.
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less
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Federal income
tax on Salary Plus Bonus, calculated at the tax rate for a joint
return with no dependents in effect on Separation from
Service.
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Computation of the above will
generate the “Net Pre-Retirement Income.”
Second Calculation
Pension (hereinafter
defined)
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plus
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Social Security
benefit payable to Naples at age 65, assuming that he is married,
that he and his spouse are the same age, and that Naples continues
employment to age 65 at the level of compensation in effect at
termination of Naples’ employment with the
Company.
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Computation of the above will
generate the “Net After-Retirement Income.”
Third Calculation
The Supplemental Retirement Income
Benefit, in the form of a Single Life Annuity, shall be equal to
the amount (if any) by which the Net After-Retirement Income is
less than 80% of the Net Pre-Retirement Income, reduced by 2.667%
for each full and fractional year of employment with the Company
less than 15; provided, however, that such reduction shall not
apply if Naples incurs a Separation from Service on account of
Retirement or a Severance Event (as such terms are defined in the
Agreement).
Definitions
For purposes of determining the
Supplemental Retirement Income Benefit, the following definitions
shall apply:
Salary Plus Bonus means the higher
of (a) the final calendar year of base salary prior to
Separation from Service, plus the average of the highest three of
the last ten years of annual incentive bonuses earned prior to
Separation from Service; or (b) the average of the three
highest consecutive years of base salary and annual incentive
bonuses during the period of Naples’ employment with the
Company. For purposes of determining “annual incentive
bonuses,” Naples’ March 2001 award of 100,000
restricted shares under the 2001 Global Annual Incentive Plan shall
be treated as a bonus payment of $343,200 (20,000 shares at $17.16
per share) in each year beginning with 1997 and ending with 2001,
and not as a bonus in the year(s) income
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was recognized with respect to such
shares. Contributions made to the Company’s Retirement
Savings Plan (or any other plan of deferred compensation sponsored
by the Company) other than elective pre-tax contributions by Naples
shall not be included within the definition of Salary Plus Bonus.
Moreover, none of
