Exhibit 10.1(ao)
SAUER-DANFOSS INC.
SUPPLEMENTAL EXECUTIVE
SAVINGS & RETIREMENT PLAN
As Amended and Restated Effective
January 1, 2008
SAUER-DANFOSS INC.
SUPPLEMENTAL EXECUTIVE
SAVINGS & RETIREMENT PLAN
I.
PURPOSE AND EFFECTIVE
DATE.
1.1.
Purpose
. The Sauer-Danfoss Inc.
Supplemental Executive Savings & Retirement Plan was
established by Sauer-Danfoss Inc. to attract and retain certain key
employees by supplementing such employees’ retirement income,
available under the Sauer-Danfoss Employees’ Retirement Plan
(the “ERP”) and the Sauer-Danfoss Employees’
Savings Plan (the “ESP”), which is otherwise limited by
Code Sections 415 and 401(a) (17), and the regulations issued
there under.
1.2.
Effective Date
. The Plan was initially
effective January 1, 2004 and was later amended and restated
effective January 1, 2005. The Plan is being amended and
restated effective January 1, 2008 to ensure full compliance
with Code Section 409A. The Plan shall remain in effect
until terminated in accordance with Article VIII.
II.
DEFINITIONS.
When used in the Plan and initially
capitalized, the following words and phrases shall have the
meanings indicated:
2.1.
“Accounts”
means the recordkeeping accounts
established for each Participant in the Plan for purposes of
accounting for the amount of the Participant’s Supplemental
Benefit Amounts determined and credited in accordance with
Article IV each year, if any, and all adjusted periodically to
reflect the interest earnings or hypothetical investment return on
such amounts in accordance with Article V.
2.2.
“Administrator”
means the Committee or such
individual or committee appointed by the Committee to administer
the Plan in accordance with Article VII. The Committee
shall take such actions it deems necessary or desirable to ensure
that such individual or committee has sufficient and appropriate
authority for carrying out the intent and purpose of the
Plan.
2.3.
“Affiliate” means:
(a)
any corporation, partnership, joint
venture, trust, association or other business enterprise which is a
member of the same controlled group of corporations, trades or
businesses as the Company (within the meaning of Code
Section 414), and
(b)
any other entity that is designated
as an Affiliate by the Committee.
2.4.
“Beneficiary”
means the person or entity
designated by the Participant to receive the Participant’s
Supplemental Benefits Amounts in the event of the
Participant’s death. If the Participant does not
designate a Beneficiary, or if the Participant’s designated
Beneficiary predeceases the Participant, the Participant’s
estate shall be the Beneficiary under the Plan.
2.5.
“Board”
means the Board of Directors of the
Company.
2.6.
“Cash Balance
Employee” means an
employee of the Company or an Affiliate whose retirement benefit
under the ERP is accrued, on and after January 1, 2001, in
whole or in part, under the Cash Balance Formula (as defined under
the terms of the ERP).
2.7.
“Code”
means the Internal Revenue Code of
1986, as amended.
2.8.
“Committee” means the Compensation Committee of the Board of
Directors of the Company.
2.9.
“Company”
means Sauer-Danfoss Inc. and any
successor thereto.
2.10.
“Compensation”
means either:
(a)
“Compensation” as that
term is specifically defined under the ESP, or
(b)
“Cash Balance Pay” as
that term is specifically defined under the ERP,
as the case may be, depending on the
context in which it is being used under this Plan.
2.11.
“Eligible
Employee” means a
key employee of the Company or an Affiliate who (i) is a Cash
Balance Employee, and (ii) during a Plan Year is expected to
have Compensation from the Company or any Affiliate in excess of
the Code Section 401(a)(17) limit for such Plan
Year.
2.12.
“ERP”
means the Sauer-Danfoss
Employees’ Retirement Plan.
2.13.
“ESP”
means the Sauer-Danfoss
Employees’ Savings Plan.
2.14.
“Investment Fund or
Funds” means the
investment funds designated by the Administrator as the basis for
determining the hypothetical investment return to be credited in
accordance with Article V to Participants’ Supplemental
ESP Accounts. The Investment Funds shall mirror the available
investment funds under the ESP.
2.15.
“Participant”
means an Eligible Employee who has
become a participant in the Plan in accordance with
Section 3.1.
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2.16.
“Plan”
means the Sauer-Danfoss Inc.
Supplemental Executive Savings & Retirement Plan, as set
forth herein and as amended from time to time.
2.17.
“Plan
Year” means each
calendar year commencing on and after January 1,
2004.
2.18.
“Supplemental Benefit
Amounts” means the
amounts accrued on behalf of the Participant under the Plan, if
any, and represents the sum of the Participant’s Supplemental
ERP Amounts and Supplemental ESP Amounts credited to his or her
Account in accordance with Article IV.
2.19.
“Supplemental ERP
Account” means the
bookkeeping account established for purposes of accounting for the
amount of the Participant’s Supplemental ERP Amounts
determined and credited in accordance with Article IV each
year, if any, as adjusted periodically to reflect the interest
earnings on such amounts in accordance with
Article V.
2.20.
“Supplemental ERP
Amount” means that
portion of the Supplemental Benefit Amounts determined under
Section 4.1(a) of the Plan specifically pertaining to the
ERP and credited to the Participant’s Supplemental ERP
Account in accordance with Article IV.
2.21.
“Supplemental ESP
Account” means the
bookkeeping account established for purposes of accounting for the
amount of the Participant’s Supplemental ESP Amounts
determined and credited in accordance with Article IV each
year, if any, as adjusted periodically to reflect the hypothetical
investment return or hypothetical investment loss on such amounts
in accordance with Article V.
2.22.
“Supplemental ESP
Amount” means that
portion of the Supplemental Benefit Amounts determined under
Section 4.1(b) of the Plan specifically pertaining to the
ESP and credited to the Participant’s Supplemental ESP
Account in accordance with Article IV.
2.23.
“Valuation
Date” means a date
on which the Investment Funds are valued and the
Participant’s Account is adjusted for any resulting gains or
losses. The Administrator shall determine the Valuation
Date and such date shall be at least once every calendar
year.
III.
PARTICIPATION.
3.1.
Participation
. An Eligible Employee shall become a Participant
in the Plan when he or she has had credited to his or her Accounts,
by the Company, Supplemental Benefit Amounts in accordance with
Article IV.
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3.2.
ERISA Exemption
. It is the intent of the Company that the
Plan be exempt from Parts 2, 3 and 4 of Subtitle B of Title I of
the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”), as an unfunded plan that is maintained by
the Company primarily for the purpose of providing deferred
compensation for a select group of management and highly
compensated employees (the “ERISA Exemption”).
Notwithstanding anything to the contrary in Section 3.1 or in
any other provision of the Plan, the Administrator may, in its sole
discretion, exclude any one or more employees from eligibility to
participate or from participation in the Plan, exclude any
Participant from continued participation in the Plan, and take any
further action permissible under Code Section 409A that it
considers necessary or appropriate if the Administrator reasonably
determines in good faith that such exclusion or further action is
necessary in order for the Plan to qualify for, or to continue to
qualify for, the ERISA Exemption. In the event a Participant
is identified for exclusion from participation in the Plan, such
Participant shall be excluded and become an inactive Participant as
of the January 1 of the Plan Year immediately following the
Plan Year that includes the year such exclusion determination was
made.
IV.
SUPPLEMENTAL BENEFIT
AMOUNTS.
4.1.
Computation of Supplemental
Benefit Amounts . An Eligible Employee shall be entitled to
Supplemental Benefit Amounts for each Plan Year that he or she is
an Eligible Employee. Such Supplemental Benefit Amount shall
be equal to the sum of:
(a)
Supplemental ERP
Amount : the excess, if any, of:
(i)
the benefit the Eligible Employee
otherwise would have been entitled to have credited to his or her
Cash Balance Account (as defined under the ERP) for his or her
benefit under the ERP for a given year if such benefit was
calculated without regard to the following:
1.
Code Section 415,
and
2.
Code Section 401(a)(17),
over
(ii)
the benefit which the Eligible
Employee is entitled to have credited to his Cash Balance Account
(as defined under the ERP) for his or her benefit for such given
year under the ERP, plus
(b)
Supplemental ESP
Amount : the excess, if any, of:
(i)
the benefit the Eligible Employee
otherwise would have been entitled to have credited to his or her
Employer Contribution Account (as defined in the ESP), if any, and
his or her Matching
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Contribution Account (as defined
under the ESP), if any, for a given year if such
benefit(s) was calculated without regard to the
following:
(1)
Code Section 415,
(2)
Code
Section 401(a)(17),
(3)
Code Section 401(m)(2),
and
(4)
Code Section 402(g);
over
(ii)
the actual benefit which the
Eligible Employee is entitled to have credited to a separate
account for his benefit for such given year under the ESP with
respect to such Employer Contributions and Matching
Contributions.
Notwithstanding the foregoing, an
Eligible Employee shall not be entitled to Supplemental Benefit
Amounts attributable to amounts that would have been credited to
his Matching Contribution Account for a Plan Year unless the
Eligible Employee had elected Participant Contributions (as defined
in the ESP) for such Plan Year equal to the lesser of four percent
(4%) of Compensation or the limitation in effect under Code
Section 402(g) for such Plan Year.
4.2.
Vesting
. A Participant’s Supplemental
Benefit Amounts calculated by the Company in accordance with
Sections 4.1 above shall vest in accordance with the same vesting
schedules that may exist, from time to time, in the ERP and the
ESP, as the case may be.
4.3.
Special One Time Supplemental
Benefit Amounts for Certain Participants.
Certain Eligible Employees,
but for the January 1, 2004 effective date of this Plan, would
have had amounts credited to their Accounts as Supplemental Benefit
Amounts for certain years prior to 2004. To reflect this
fact, special, one-time Supplemental ERP amounts and/or
Supplemental ESP amounts will be credited to the Accounts of
certain Eligible Employees. The eligibility for, timing and
amount of such special, one-time Supplemental Benefit amounts
pursuant to this Section 4.3 are to be determined solely at
the discretion of the Administrator.
4.4.
Crediting of Supplemental
Benefit Amounts .
(a)
General Rule
. The Supplemental Benefit Amounts computed in
Section 4.1 above for each Plan Year shall be credited by the
Company to the Participant’s Accounts as soon as reasonably
practicable after the close of the Plan Year to which the
Supplement Benefit Amounts relate.
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(b)
Current Cash Distribution of
Immaterial Supplemental ERP Amounts and Immaterial Supplemental ESP
Amounts for a Given Plan Year . Notwithstanding anything to the contrary
in the Plan, so long as a Participant is or would be fully vested
in his or her Supplemental ERP Account or his or her Supplemental
ESP Account, as the case may be, to the extent that the
Supplemental ERP Amount or the Supplemental ESP Amount,
respectively, for a given Plan Year does not exceed $750, such
amounts instead of being credited to the Participant’s
Accounts under paragraph (a) immediately above shall be paid
out currently as cash compensation in a lump sum within 2½
months of the end of the Plan Year.
V.
ACCOUNTS AND
INVESTMENTS.
5.1.
Valuation of
Accounts . The Administrator shall establish a
Supplemental ERP Account and a Supplemental ESP Account for each
Participant who has been credited with a Supplemental ERP Amount or
Supplemental ESP Amount, respectively. Such Accounts shall be
credited with a Participant’s Supplemental Benefit Amounts as
set forth in Sections 4.4. As of each Valuation Date, the
Participant’s Accounts shall be adjusted upward or downward
to reflect:
(a)
the interest earnings or investment
return to be credited as of such Valuation Date pursuant to
Section 5.3 below,
(b)
the amount of distributions, if any,
to be debited as of that Valuation Date under
Article VI.
5.2.
Earnings and
Investments .
(a)
Supplemental Benefit Relating
to the ERP . Supplemental ERP Accounts shall be
credited with interest annually. Such interest credit shall
mirror the interest credi
