Pension Restoration Plan

Exhibit (10)(t)

 

Contents

 

 

 

i

 

ii

 

iii

Article 1. Introduction

1.1 Background and History

Effective as of January 1, 1994, The First American Corporation (“Company”) established The First American Corporation Pension Restoration Plan (“Plan”). The Plan is now being amended and restated, effective as of January 1, 2009, to clarify certain Plan provisions and to comply with final regulations under Code section 409A. Capitalized terms used in this Article shall have the meanings set forth in Article 2 of this Plan.

1.2 Purpose of Plan

This Plan is established to provide Participants with certain restoration benefits to offset (or partially offset) benefits under the Pension Plan which are limited by Code sections 401(a)(17) and 415.

With respect to this Plan section 1.2, the Plan is intended to be an “excess benefit plan,” as defined by ERISA section 3(36), and an unfunded plan maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees, as described under ERISA sections 201(2), 301(a)(3) and 401(a)(1). Accordingly, the Plan is not tax-qualified for purposes of the Code and is designed to be exempt from the participation, vesting, funding, and fiduciary requirements of Title 1 of ERISA.

1.3 Status of Plan

Except as otherwise provided herein, the terms of this Plan apply only to Eligible Employees who are in the employ of the Company on or after January 1, 2009. Any Employee who incurred a Separation from Service before January 1, 1994 shall not be entitled to any benefit under this Plan. Additionally, Compensation earned by an Eligible Employee after December 31, 2001 will not be considered in the Restoration Benefit determined under Article 3 of this Plan. Notwithstanding any other Plan provision, no additional benefit shall be accrued by any Participant under the Plan after April 30, 2008. Unless otherwise explicitly provided in this Plan restatement, the Plan provisions, operation and administration in effect prior to this restatement shall continue to govern the terms and conditions of the Plan prior to January 1, 2009.

1.4 Gender and Number

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

 

1

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 Accrued Benefit

“Accrued Benefit” means the Restoration Benefit described under Plan section 3.1.

2.2 Actuarial Equivalent

“Actuarial Equivalent” means a benefit having the same value as the benefit which it replaces, as determined using the “applicable interest rate” under Code section 417(e)(3), as updated by the Pension Protection Act of 2006 for the November preceding the Plan Year in which the distribution occurs and the “applicable mortality table” published in Revenue Ruling 2007-67, as updated annually by the Internal Revenue Service.

2.3 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 2.3 with the Company.

2.4 Beneficiary

“Beneficiary” means the person or persons (who may be named contingently or successively) designated by the Participant to receive any death benefit payable under the terms of the Plan. Each Participant may designate a Beneficiary in the manner prescribed by the Committee, and such designation will be effective when properly filed with the Committee, and shall revoke all prior designations by the same Participant. No change in the Beneficiary designated by the Participant shall be permitted after annuity payments to the Participant have commenced.

2.5 Board of Directors

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

 

2

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 of 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 of 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 from time to time.

2.8 Committee

“Committee” means the administrative committee appointed by the Board of Directors to administer this Plan in accordance with Article 7 of the Plan and having the administrative duties set forth in that Article and elsewhere in the Plan.

2.9 Company

“Company” means The First American Corporation.

2.10 Compensation

“Compensation” means the full salary and wages paid to a Participant (after becoming a Participant) by the Company or an Affiliate for services rendered including cash bonuses and overtime pay. Compensation shall, in addition, include salary reduction amounts under any cafeteria plan (described in Code section 125) or for qualified transportation fringe benefits (described in Code section 132(f)(4)), and qualified cash or deferred arrangements (described in Code section 401(k)) maintained by the Company or an Affiliate.

Compensation shall not include the following amounts:

 

(a)	Pay in lieu of vacation or holidays;

 

3

(b)	Severance allowances, retainers, and reimbursed expenses;

 

(c)	Amounts contributed by the Company or an Affiliate to any plan of deferred compensation, other than salary reduction amounts contributed on behalf of the Participant by the Company or an Affiliate to a qualified cash or deferred arrangement;

 

(d)

Any amount paid by the Company or an Affiliate for other fringe benefits, such as, but not limited to, health and welfare, hospitalization and group life insurance benefits (other than amounts paid through a cafeteria plan or qualified transportation fringe benefits maintained by the Company or an Affiliate pursuant to the Participant’s salary election);

 

(e)	Amounts required to be recognized as taxable under Code sections 83 and 421; and

 

(f)	Any amount of salary, wages, or other compensation of any kind earned after December 31, 2001.

2.11 Disability

“Disability” means a physical or mental condition which renders the Employee eligible for disability payments under the Social Security Act.

2.12 Early Retirement Age

“Early Retirement Age” means the later of the Participant’s attainment of age 55 or the Participant’s completion of three Years of Vesting Service.

2.13 Effective Date

“Effective Date” means January 1, 2009.

2.14 Eligible Employee

“Eligible Employee” means an Employee who satisfied the requirements to become a Participant as set forth at Plan section 2.21.

2.15 Employee

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

2.16 Employer

“Employer” means the Company and any Affiliate.

2.17 ERISA

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

 

4

2.18 Hours of Service

“Hours of Service” means:

 

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

 

(b)

Each hour for which an Employee 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 Employee 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 Employee’s reemployment rights are guaranteed by law, provided that the Employee is reemployed by the Company or an Affiliate within the time limits prescribed by such law.

 

(e)

Also, only to the extent and solely for the purposes required by the Family and Medical Leave Act of 1993, as amended from time to time (“FMLA”), each hour credited pursuant to applicable regulations for periods of absence, to the extent that the Company or Affiliate was required by the FMLA to permit the Employee to be absent from work during that period.

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

To the extent a record of an Employee’s hours of employment is not maintained by the Company or an Affiliate, the Employee shall be credited with 10 Hours of Service for each day for which the Employee 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).

 

5

2.19 Incumbent Directors

“Incumbent Directors” means directors who either are:

 

(a)	Directors of the Company as of January 1, 2009; 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.

2.20 Normal Retirement Age

“Normal Retirement Age” means the later of the Participant’s attainment of age 65 or the Participant’s completion of three Years of Vesting Service.

2.21 Participant

“Participant” means an individual who is designated by the Committee to participate in this Plan and who meets the criteria of either subsections (a) or (b).

 

(a)	An Employee or former Employee who:

 

(1)

Was an active member in the Pension Plan on January 1, 1994, and

 

(2)

Whose Accrued Benefit under the Pension Plan is limited or reduced under Code sections 401(a)(17) or 415; or

 

(b)	An Employee or former Employee who:

 

(1)

Became an Employee during the 1993 calendar year and elected to participate in the Pension Plan upon his initial eligibility;

 

(2)

Was born on or before January 1, 1954; and

 

(3)

For the 1994 Plan Year, received Compensation, including pay that would have been considered Compensation if the individual participated in the Plan for the entire Plan Year beginning January 1, 1994, in excess of $150,000.

2.22 Pension Plan

“Pension Plan” means The First American Corporation Pension Plan, as presently in effect and as it may be amended from time to time.

2.23 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.

 

6

2.24 Plan

“Plan” means The First American Corporation Pension Restoration Plan, as presently in effect and as it may by amended from time to time. The Plan was originally named The First American Financial Corporation Pension Restoration Plan and took its current name effective as of May 12, 2000 to reflect the change in the name of the Company.

2.25 Plan Year

“Plan Year” means the calendar year.

2.26 Restoration Benefit

“Restoration Benefit” means the benefit determined under Article 3 of this Plan and paid from the general assets of the Company.

2.27 Separation from Service

“Separation from Service” means the date on which a Participant ceases to be an Employee of the Company or an Affiliate on account of the Participant’s retirement, death or other termination of employment. Whether or not a Participant 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 Participant and the Company (or Affiliate) that the Participant will perform no future services for the Company or an Affiliate, as an Employee, contractor or in any other capacity. For purposes of this defined term, no Separation from Service will be deemed to have occurred if the Participant 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.

For purposes of a payment under this Plan triggered by a Participant’s Separation from Service, such payment will be deemed to relate to such Separation from Service provided that it is paid no later than the applicable December 31 of the Plan Year in which the Separation from Service occurs or, if later, within 2  ¹ / 2  months following the date on which such Separation from Service occurs provided that the Participant cannot designate the taxable period in which the payment is made.

The Plan will treat an anticipated permanent reduction in the level of bona fide services provided by the Participant 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 Participant’s reduced level of bona fide services will not exceed 49 percent of the average level of bona fide services provided by such Participant within the immediately preceding applicable 36 months within the meaning of Treasury Regulations section 1.409A-1(h)(1)(ii).

2.28 Specified Employee

“Specified Employee” means a Participant 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 Participant 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);

 

7

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

 

(c)	The Participant 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 of his Separation from Service, 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 Eligible Employee provides services. The Code’s controlled and affiliated service group rules do not apply when determining a Participant’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 so-called “Code section 415 general” definition of 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).

 

8

2.29 Spouse

“Spouse” means with respect to a Participant, a person of the opposite sex from the Participant, who is the Participant’s husband or wife (as applicable) under applicable state law to whom the Participant has been legally married during the 12-month period immediately preceding the Participant’s date of death, if such death is earlier than the Participant’s Early, Normal or Deferred Retirement Date, or the person to whom the Participant is married as of his or her Annuity Starting Date. No individual, including an individual of the opposite sex, shall be the Spouse of a Participant on account of the fact that the individual is registered as the domestic partner of the Participant 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 a Participant unless the person would be treated as the “Spouse” of the Participant 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).

2.30 Year of Vesting Service

“Year of Vesting Service” means the completion of 1,000 or more Hours of Service in a Plan Year. If the Employee is credited with Hours of Service for less than the full Plan Year, the Employee shall be credited with a fractional Year of Vesting Service where the Hours of Service credited during the Plan Year would, if annualized, equal or exceed 1,000. A “fractional year” shall be the equivalent of the number of completed months for which the Employee receives credit for Hours of Service, divided by 12.

Except as otherwise explicitly provided in this Plan, all other capitalized terms shall have the meaning set forth in the Pension Plan.

 

9

Article 3. Restoration Plan Benefit

3.1 Restoration Benefit

The Restoration Benefit provided under this Plan shall be the amount, if any, by which (a) exceeds (b), where:

 

(a)	If the amount of the vested Accrued Benefit which would have been payable to the Participant under the Pension Plan if such benefit were determined:

 

(1)

Without regard to any limitation on Compensation imposed by Code section 401(a)(17), but disregarding any Compensation in excess of $275,000, and

 

(2)

Without regard to any limitation under Code section 415 on benefits that may be paid from a tax-qualified plan; and

 

(b)	If the vested Accrued Benefit actually provided to the Participant under the Pension Plan (determined after giving effect to any applicable limitations imposed by Code sections 401(a)(17) and 415)).

 

10

Article 4. Retirement and Death Benefits

4.1 Commencement of Retirement Benefits

Subject to Plan section 4.4, payment of a Participant’s Restoration Benefit shall commence as of the first day of the month following the Participant’s Separation from Service (“Benefit Commencement Date”). Payment of the Accrued Benefit shall be in the normal or optional form of benefit as described in Plan section 4.2 and the Participant’s election of such normal or optional form of benefit shall be made within the 180-day period immediately preceding the Benefit Commencement Date. If a Participant has a Separation from Service prior to his or her Normal Retirement Age, the Restoration Benefit payable to the Participant will be reduced to reflect such early commencement. If the Participant’s Separation from Service occurs after the attainment of his Early Retirement Age, the Participant’s Restoration Benefit will be reduced by 1/180 for each month up to 60 months, and by 1/360 for each month over 60 months that the date that payments to the Participant commence precedes the first day of the month on or after the Participant’s 65th birthday. If the Participant’s Separation from Service occurs before the date he attains his Early Retirement Age, the Participant’s Restoration Benefit will be reduced on an Actuarial Equivalent basis from the Participant’s Normal Retirement Age, pursuant to the terms of Plan section 2.2.

Notwithstanding any other provision of this Plan, in computing the Participant’s Restoration Benefit such Restoration Benefit shall not include any accruals for Benefit Service for any Participant attributable to periods after April 30, 2008.

4.2 Normal and Optional Form of Benefit

 

(a)

Norm