EXHIBIT 10.23
THORATEC CORPORATION
DEFERRED COMPENSATION PLAN
SECTION 1. ESTABLISHMENT AND
PURPOSES
1.1 Establishment . Thoratec Corporation established
effective as of January 1, 2004, a deferred compensation plan
for executives as described herein, known as the “THORATEC
CORPORATION DEFERRED COMPENSATION PLAN” (hereinafter called
the “Plan”).
1.2 Purposes . The purposes of the Plan are to
(i) enable the Corporation to attract and retain persons of
outstanding competence; (ii) provide means whereby certain
amounts payable by the Corporation to selected executives and
directors may be deferred to some future period; and
(iii) provide a means for possible future allocation of a
matching credit by the Corporation to selected executives and
directors. The Plan is intended to constitute an unfunded plan
primarily for the purpose of providing deferred compensation for a
select group of management or highly compensated
employees.
SECTION 2. DEFINITIONS
2.1 Definitions . Whenever used herein, the following
terms shall have the meanings set forth below:
(a) “
Board ” means the Board of Directors of the
Corporation.
(b) “
Committee ” means the Nonqualified Deferred
Compensation Committee appointed by the Board.
(c) “
Compensation ” means the gross Salary, Bonus
and Board Fees payable to a Participant during a Year.
(i) Salary.
“Salary” means all regular, basic compensation, before
reduction for amounts deferred pursuant to this Plan or any other
plan of the Corporation, payable in cash to a Participant for
services rendered during the Year, exclusive of any bonuses or
incentive compensation, special fees or awards, allowances, or
amounts designated by the Corporation as payments toward or
reimbursement of expenses.
(ii) Bonus.
“Bonus” means the Plan bonus payable in cash by the
Corporation to a Participant in a Year under the
Corporation’s Bonus Plan.
(iii) Board Fees.
“Board Fees” means the cash compensation payable to
Directors, including any annual retainer and meeting and committee
fees.
(d) “
Corporation ” means Thoratec Corporation, a
California corporation.
(e) “
Director ” means a member of the
Corporation’s Board of Directors.
(f) “
Early Retirement Date ” means the later of the
date the Participant completes ten years of service with the
Company or attains age 55.
(g) “
Growth Increment ” means the net amount of
income, appreciation, loss, etc., earned or suffered on a
Participant’s deferred amounts.
(h) “
Normal Retirement Date ” means the date the
Participants turn age 65.
(i) “
Participant ” means an individual eligible to
participate in the Plan pursuant to Section 3.1.
(j) “
Trust ” means the Thoratec Corporation Grantor
Trust Agreement attached hereto as Exhibit A.
(k) “
Year ” means a calendar year.
2.2 Gender and Number . Except when otherwise
indicated by the context, any masculine terminology used herein
also shall include the feminine gender, and the definition of any
term herein in the singular also shall include the
plural.
SECTION 3. ELIGIBILITY AND
PARTICIPATION
3.1 Eligibility . The Plan is primarily for the
purpose of providing deferred compensation for a select group of
management or highly compensated employees and Directors. Subject
to the preceding sentence, the following persons shall be eligible
to participate in the Plan:
(a) the elected
officers and appointed officers of the Corporation;
(b) cardiovascular
division senior directors and above;
(c) Directors;
and
(d) any other
employee of the Corporation or any direct or indirect subsidiary of
the Corporation designated by the Chair of the Committee or by the
Chief Executive Officer of the Corporation from time to
time.
3.2 Ceasing Eligibility . In the event a Participant
no longer meets the requirements for participation in this Plan, he
shall become an inactive Participant. An
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inactive Participant shall retain
all rights described under this Plan, except the right to make any
further deferrals and the right to receive any further matching
credits, until the time that he again meets the eligibility
requirements of Section 3.1 (and, if applicable,
Section 5.1).
SECTION 4. ELECTION TO DEFER
4.1 Deferral Election .
(a) Subject to the
following provisions, prior to the beginning of the Year, a
Participant irrevocably may elect, by written notice to the
Corporation, to defer Salary, Bonus, or Board Fees as set forth
below.
(i) With respect
to Salary deferrals, the deferral percentage elected must be at
least 2% but no greater than 50%, or a flat dollar amount of no
less than $2,000 and no more than 50% of salary. The deferral
amount shall be applied to the Participant’s Salary for each
pay period of the Year to which the deferral election applies and
must be made before November 30 of the year immediately
preceding the Year for which such deferral election
applies.
(ii) With respect
to Bonus deferrals, the deferral percentage elected shall be 0% to
100% (and/or a flat amount) and shall apply only to the
Participant’s Bonus payable with respect to service to be
performed in the Year and must be made before November 30 of
such Year.
(iii) With respect
to Board Fees, the deferral percentage elected shall be 0% to 100%
and shall apply only to the Participant’s Board Fees payable
with respect to service to be performed in the Year and must be
made before November 30 of the year immediately preceding the Year
for which such deferral election applies.
(b) An individual
who becomes a Participant at or after the beginning of the Year may
irrevocably elect, by written notice to the Corporation, to defer
all or a percentage of (i) the annual Salary or Board Fees
earned by such Participant for such Year after such election, if
such election is made within sixty (60) days after becoming a
Participant, and (ii) the Participant’s Bonus, if any,
payable with respect to service performed during such Year, if such
election is made before November 30 of such Year.
4.2 Deferral Period .
(a) The
Participant may elect a deferral period for each separate deferral.
The deferral period may be until a payment date beginning prior to
termination of employment, the date of termination of employment or
the Participant’s Early or Normal Retirement date. This
election, if made, must be made at least 12 months prior to
the scheduled payout date. Notwithstanding the foregoing, Directors
who are not also employees must defer payment until after their
service on the Board ends.
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(b) However,
notwithstanding the above, payments of deferred amounts shall be
made on the earliest to occur of:
(i)
Death,
(ii) Total and
permanent disability (as defined in the Corporation’s long
term disability plan), or
(iii) Termination
of employment other than Early or Normal Retirement.
(c) The
Participant may elect to receive an “unscheduled
withdrawal” at any time, subject to a penalty equal to 10% of
the amount received. The penalty shall be retained by the
Corporation or paid from the Trust to the Corporation. Any
Participant who makes an unscheduled withdrawal may not participate
in the Plan until the January 1 following the 12 month
anniversary of the unscheduled withdrawal.
4.3 Manner of Payment Election . Generally, payments
are to be made in one lump sum. However, in the case of Early or
Normal Retirement the Participant also may elect to have the
deferred amount paid either in a lump sum or in up to ten (10) (or,
if less, his total years of service with the Corporation)
substantially equal annual installments; provided, however, at such
time a Participant may also specify a date within the installment
period to receive all then remaining deferred amounts in a lump
sum. Also a Participant may elect to receive pre-termination
payments in equal annual installments for up to four
(4) years. Notwithstanding the foregoing, any Participant with
less than two years of service with the Corporation must receive a
lump cash sum distribution.
4.4 Modification, Corporate Discretion .
Notwithstanding the foregoing, a Participant may change the timing
of any post-employment payments of deferred amounts by written
election made prior to the Year in which deferred amounts are to be
paid. Once a Participant has elected to receive a payment after he
or she terminates employment with the Corporation, that election
may not be changed to a commencement date prior to termination
except for unscheduled or hardship withdrawals. Also, while a
Participant’s election with respect to pre-termination
payments is irrevocable once it is made, the Corporation may in its
sole discretion defer any pre-termination payment of deferred
amounts to the first Year in which the deduction of the payment
would not actually be limited by Section 162(m) of the Internal
Revenue Code. As of the end of each calendar quarter, a Participant
may elect to cease any further deferrals, but in such case may not
make any deferrals for the remainder of the calendar
year.
4.5
Denial of Participation . In the event payment of
deferred amounts commences because of long term disability or
hardship, no deferrals may be made for a
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period of twelve months following
the last payment date in connection with such disability or
hardship.
SECTION 5. MATCHING CREDITS
5.1 Effective Date and Eligibility . Effective at
such date as determined by the Board, the Corporation shall credit
matching credits to Participants under this Plan.
(a) Time and Amount of Matching Contributions .
At such time, if any, that this Section 5 is activated by the
Board the Corporation shall credit matching credits under this Plan
during each calendar quarter for the benefit of each eligible
Participant. The matching formula shall be determined by the Board
at the time it activates this Section 5.
5.2 Payment .
Payment of
matching credits shall begin at the same time the deferrals to
which they relate are paid or would have been paid in the case of
financial hardship or unscheduled withdrawals.
SECTION 6. DEFERRED COMPENSATION AND
MATCHING CREDITS ACCOUNTS
6.1 Participant Accounts .
(a) Deferred Compensation Accounts . The
Corporation shall establish and maintain individual bookkeeping
accounts in respect of deferrals made by a Participant called a
“Deferral Account.” A Participant shall have separate
Deferral Accounts for deferred amounts to be paid after termination
of employment and those paid during employment. A
Participant’s Deferral Account shall be credited with the
dollar amount of any amount deferred as of the date the amount
deferred otherwise would have become due and payable.
(b) Matching Credits Accounts . The Corporation
shall establish and maintain an ind
