Sallie Mae Deferred Compensation
Plan for Key Employees
Restatement Effective January 1, 2009
Section 1.1. SLM Corporation (formerly named SLM Holding
Corporation and USA Education, Inc.) offers the Sallie Mae Deferred
Compensation Plan for Key Employees (the “Plan”) to
certain key employees for the purpose of planning for retirement
and other personal expenses on a tax-favored basis. The Plan became
effective January 1, 1998 and is hereby restated effective
January 1, 2009.
With respect to
amounts deferred hereunder that are subject to Code
Section 409A, as amended, and any regulations and other
official guidance issued thereunder (generally, amounts deferred on
and after January 1, 2005 and the earnings thereon),
applicable provisions of the Plan document shall be interpreted to
permit the deferral of compensation in accordance with Code
Section 409A, and any provision that would conflict with such
requirements shall not be valid or enforceable. In addition, with
respect to amounts deferred hereunder that are not subject to Code
Section 409A (“Grandfathered Funds”), it is
intended that the terms of the Plan in effect on October 3,
2004, and not Code Section 409A and related official guidance,
shall apply with respect to such Grandfathered Funds.
Section 2.1 The following words and phrases shall have the
following meanings unless a different meaning is plainly required
by the context:
Affiliate. “Affiliate” means any firm,
partnership, or corporation that directly or indirectly, through
one or more intermediaries, controls, is controlled by, or is under
common control with the Company, provided such Affiliate is
designated as such by the Committee. “Affiliate” also
includes any other organization similarly related to the Company
that is designated as such by the Committee.
Beneficiary. “Beneficiary” means the person or
persons designated as such in accordance with
Section 13.3.
Board. “Board” means the Board of Directors
of SLM Corporation.
Bonus. “Bonus” means any performance-based
compensation earned pursuant to the SLM Corporation Incentive Plan,
any successor plan to the SLM Corporation Incentive Plan, and any
other performance-based compensation designated by the Committee as
eligible to be deferred pursuant hereto.
Bonus
Deferral. “Bonus Deferral” means that portion
of Bonus which a Participant has made an election to defer receipt
of pursuant to the terms of this Plan.
Code. “Code” means the Internal Revenue
Code of 1986, as amended from time to time.
Committee. “Committee” means the Sallie Mae
Deferred Compensation Plan Committee.
Company. “Company” means SLM Corporation and
any Affiliate, unless the Affiliate has made an affirmative
election not to adopt the Plan. A Company may revoke its
participation in the Plan at any time, but until such revocation,
all the provisions of the Plan and amendments thereto shall apply
to the Eligible Employees of the Company. In the event a Company
revokes its participation in the Plan, the Plan shall be deemed
terminated only with respect to such Company.
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Disabled . Effective January 1, 2005,
“Disabled” has the meaning giving in Code
Section 409A and the guidance issued thereunder.
Distribution Option
. “Distribution Option” means one of
the two distribution options which are available under the Plan,
consisting of the Retirement Distribution Option and the In-Service
Distribution Option, both described in Section 7.
Distribution Option Account
. “Distribution Option Account” or
“Account” means the account or accounts established on
behalf of a Participant, on the books of the Company, pursuant to
Section 5.1, which shall be comprised of a Retirement
Distribution Account and/or one or more In-Service Distribution
Accounts.
Distribution Option Period
. “Distribution Option Period” means,
with respect to the In-Service Distribution Account only, a period
of five Plan Years for which an Eligible Employee elects, in the
Enrollment Agreement for the first such Plan Year, the time and
manner of payment of amounts credited to the Eligible
Employee’s In-Service Distribution Option Account for all
Plan Years in the Distribution Option Period.
Earnings
Crediting Options . “Earnings Crediting Options” means
the deemed investment options selected by the Participant from time
to time pursuant to which deemed earnings are credited to the
Participant’s Distribution Option Account.
Eligible
Employee . “Eligible Employee” means an
Employee who is a member of the group of selected management and/or
highly compensated Employees of the Company and who is designated
by the Committee as eligible to participate in the Plan.
Employee. “Employee” means any individual
employed by the Company, in accordance with the personnel policies
and practices of the Company, including citizens of the United
States employed outside of their home country and resident aliens
employed in the United States; provided, however, that to qualify
as an “Employee” for purposes of the Plan, the
individual must be a member of a group of “key management or
other highly compensated employees” within the meaning of
Sections 201, 301, and 401 of the Employee Retirement Income
Security Act of 1974, as amended.
End
Termination Date. “End Termination Date” means the
date of termination of a Participant’s Service with the
Company and its Affiliates and shall be determined without
reference to any compensation continuation arrangement or severance
benefit arrangement that may be applicable.
Enrollment Agreement.
“Enrollment Agreement”
means the authorization form, in form and substance, satisfactory
to the Committee, which an Eligible Employee files in order to
participate in the Plan.
Grandfathered Funds. “Grandfathered Funds” means amounts
deferred hereunder before January 1, 2005 (and the earnings
credited thereon before, on or after January 1, 2005) for
which (i) the Participant had a legally binding right as of
December 31, 2004, to be paid the amount, and (ii) such
right to the amount was earned and vested as of December 31,
2004 and was credited to the Participant’s Account balance
hereunder.
In-Service Distribution Account
. “In-Service Distribution Account”
means the account maintained on behalf of a Participant for each
Distribution Option Period to which Salary and/or Bonus Deferrals
are credited, pursuant to the In-Service Distribution
Option.
In-Service Distribution Option
. “In-Service Distribution Option”
means the Distribution Option, pursuant to which benefits are
payable in accordance with Section 7.2.
Incentive
Plan .
“Incentive Plan” means
the SLM Corporation Incentive Plan adopted by the Company,
including any amendments thereto and any plan adopted in
substitution or replacement thereof, pursuant to which bonuses will
be determined for certain management employees.
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Participant. “Participant” means an Eligible
Employee who has filed a complete Enrollment Agreement with the
Committee or its designee, in accordance with the provisions of
Section 4, and who is making Salary and/or Bonus Deferrals
into the Plan. In the event that the Participant becomes
incompetent, the term shall mean his personal representative or
guardian, who shall have the rights of a Participant, except the
right to change the form and timing of the commencement of benefits
elected by the Participant on the Enrollment Agreement. In the
event of the death of a Participant, the term shall mean his
Beneficiary, who shall have the rights of a Participant, except the
right to change the form and timing of the commencement of benefits
elected by the Participant on the Enrollment Agreement. An
individual shall remain a Participant until that individual has
received full distribution of any amount credited to the
Participant’s Account.
Plan . “Plan” means this plan, called the
Sallie Mae Deferred Compensation Plan for Key Employees, as amended
from time to time.
Plan
Year .
“Plan Year” means the
12-month period beginning on each January 1 and ending on the
following December 31.
Retirement Distribution Account.
“Retirement Distribution
Account” means the account maintained on behalf of a
Participant to which Salary and/or Bonus Deferrals and Supplemental
Company Contributions are credited, pursuant to the Retirement
Distribution Option.
Retirement Distribution Option.
“Retirement Distribution
Option” means the Distribution Option, pursuant to which
benefits are payable in accordance with
Section 7.1.
Salary. “Salary” means the total amount of
cash remuneration paid by the Company to an Eligible Employee for
any calendar year of employment as base salary and/or severance
payments, including the Participant’s contributions of Salary
under this Plan, any elective deferrals, as defined in section
402(g) of the Code, and any compensation contributed on behalf of
an Eligible Employee to any cafeteria plan, as defined in section
125 of the Code, maintained by the Company or an Affiliate, but not
taking into account any Company contributions to a defined benefit
plan or supplemental defined benefit plan, any fringe benefits,
moving and relocation expenses and other forms of welfare
benefits.
Salary
Deferral. “Salary Deferral” means that portion
of Salary as to which a Participant has made an annual election to
defer receipt of, pursuant to the terms of this Plan.
Sallie
Mae .
“Sallie Mae” means SLM
Corporation
Service. “Service” means the period of time
during which an employment relationship exists between an Employee
and the Company, including any period during which the Employee is
on an approved leave of absence, whether paid or unpaid.
“Service” also includes employment with an Affiliate if
an Employee transfers directly between the Company and the
Affiliate.
Specified
Employee . “Specified Employee” means a person
identified in accordance with procedures adopted by the Committee
that reflect the requirements of Code Section 409A(a)(2)(B)(i) and
applicable guidance thereunder.
Supplemental Company
Contributions. “Supplemental Company Contributions”
means those contributions made by the Company and credited to the
Retirement Distribution Account of certain Participants, pursuant
to Section 4.4.
Termination of Employment
. “Termination of Employment” or
“Terminates Employment” means a termination of
employment or other separation from Service from the Company as
described in Code Section 409A and the regulations
thereunder.
Valuation
Date. “Valuation Date” means the last day
of any Plan Year and any other date selected by the
Committee.
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ARTICLE 3.
ADMINISTRATION OF THE PLAN AND DISCRETION
Section 3.1. The Committee shall have full power and
authority to interpret the Plan, to prescribe, amend and rescind
any rules, forms and procedures as it deems necessary or
appropriate for the proper administration of the Plan, and to make
any other determinations and to take any other actions as it deems
necessary or advisable in carrying out its duties under the Plan.
All action taken by the Committee arising out of, or in connection
with, the administration of the Plan or any rules adopted
thereunder, shall, in each case lie within its sole discretion, and
shall be final, conclusive and binding upon any Company, the Board,
all Employees, all Beneficiaries of Employees and all persons and
entities having an interest therein. Notwithstanding any provision
in this Plan to the contrary, the Committee shall have no authority
to take any action or make any decision which impacts solely on the
Plan benefits of the members of the Committee. In addition, no
member of the Committee shall have authority to take action or make
any decision which impacts solely on the Plan benefits of the
member of the Committee.
Section 3.2 . Members of the Committee shall serve without
compensation for their services unless otherwise determined by the
Board. All expenses of administering the Plan shall be paid by the
Company.
Section 3.3. Sallie Mae shall indemnify and hold harmless
each member of the Committee from any and all claims, losses,
damages, expenses (including counsel fees) and liability (including
any amounts paid in settlement of any claim or any other matter
with the consent of the Board) arising from any act or omission of
such member, except when the same is due to gross negligence or
willful misconduct. Except as otherwise provided by law, no person
who is a member of the Committee or who is an employee, officer
and/or director of the Company, will incur any liability whatsoever
on account of any matter connected with or related to the Plan or
the administration of the Plan, unless such person has acted in bad
faith, or has willfully neglected his duties, in respect of the
Plan.
Section 3.4. Any decisions, actions or interpretations to be
made under the Plan by the Committee shall be made in its
respective sole discretion, not as a fiduciary, and need not be
uniformly applied to similarly situated individuals and shall be
final, binding and conclusive on all persons interested in the
Plan.
Section 4.1. Election to Participate: Salary
Deferrals. Annually, all
Eligible Employees will be offered the opportunity to defer Salary
to be earned in the following Plan Year. Any Eligible Employee may
enroll in the Plan, effective as of the first day of a Plan Year,
by filing a complete and fully executed Enrollment Agreement with
Sallie Mae’s Human Resources Department or a Plan
administrator selected by Sallie Mae by a date established by the
Committee, but in no event later than the last day of the preceding
Plan Year. Pursuant to said Enrollment Agreement, the Eligible
Employee shall elect (a) the percentage of Salary to be
deferred (pursuant to payroll reduction, and after required payroll
taxes have been deducted), such percentage to be stated as a whole
number, and (b) the Distribution Option applicable to such
Salary Deferrals. A Participant shall allocate his or her Salary
Deferrals between the Distribution Options in increments of ten
percent, provided, however, that 100 percent of such deferrals
may be allocated to one or the other of the Distribution
Options.
The Committee may
establish minimum or maximum amounts that may be deferred under
this Section and may change such standards from time to time. Any
such limits shall be communicated by Sallie Mae to the Eligible
Employees prior to the commencement of a Plan Year.
Once a Participant
files an Enrollment Agreement with respect to Salary to be earned
in the subsequent Plan Year, he may not change the percentage of
Salary to be deferred or the allocation of such deferrals between
the Distribution Options. Notwithstanding the foregoing, effective
for Enrollment Agreements filed on and after December 1, 2007
and no later than December 31, 2007, a Participant may change
the allocation of deferrals between the Distribution Options ,
provided that any such change complies with the timing requirements
of Sections 6.2 and 6.3 of the Plan.
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Section 4.2. Election to Participate: Bonus
Deferrals. Annually, all
Eligible Employees will be offered the opportunity to defer Bonus
earned in such Plan Year and payable in the following Plan Year.
Except as provided below with respect to Bonuses that qualify as
performance-based compensation under Code Section 409A, by
December 31 of each year or such other earlier date as the
Committee may determine, each Participant may authorize, by filing
an Enrollment Agreement with the Company, to defer all or a portion
of his Bonus that would otherwise be payable for services performed
in the twelve-month period beginning on the January 1 immediately
following such December 31. In the case of any Bonus that is
designated by the Company as a performance-based Bonus and which
qualifies as performance-based compensation under Code
Section 409A and any guidance issued thereunder, a
Participant’s deferral election with respect to all or a
portion of his or her Bonus must be made, in accordance with
Treasury Regulation §1.409A-2(a)(8), by filing an Enrollment
Agreement with the Company, no later than the date that is six
months before the end of the performance period related to such
Bonus (which performance period shall be not less than 12 months)
or such other earlier date designated by the Company. Pursuant to
said Enrollment Agreement, the Eligible Employee shall elect
(a) the percentage of Bonus to be deferred (pursuant to
payroll reduction, and after required payroll taxes have been
deducted), such percentage to be stated as a whole number, and
(b) the Distribution Option applicable to such Bonus
Deferrals. A Participant shall allocate his or her Bonus Deferrals
between the Distribution Options in increments of ten percent,
provided, however, that 100 percent of such deferrals may be
allocated to one or the other of the Distribution
Options.
The Committee may
establish minimum or maximum amounts that may be deferred under
this Section and may change such standards from time to time. Any
such limits shall be communicated by Sallie Mae to the Eligible
Employees prior to the commencement of a Plan Year.
Once a Participant
files an Enrollment Agreement with respect to Bonus earned in the
Plan Year, he may not change the percentage of Bonus to be deferred
or the allocation of such deferrals between the Distribution
Options. Notwithstanding the foregoing, effective for Enrollment
Agreements filed on and after December 1, 2007 and no later
than December 31, 2007, a Participant may change the
allocation of such deferrals between the Distribution Options,
provided that any such change complies with the timing requirements
of Sections 6.2 and 6.3 of the Plan.
Section 4.3 . Newly Eligible Employees. The Committee
may, in its discretion, permit Employees who first become Eligible
Employees after the beginning of a Plan Year to enroll in the Plan
for that Plan Year by filing a complete and fully executed
Enrollment Agreement, in accordance with Sections 4.1 and 4.2,
as soon as practicable following the date the Employee becomes an
Eligible Employee but, in no event later than 30 days after
such date. Any election by an Eligible Employee, pursuant to this
Section, to defer Salary shall apply only to such amounts as are
earned by the Eligible Employee after the date on which such
Enrollment Agreement is filed. Notwithstanding anything in this
Section to the contrary, a newly Eligible Employee shall not be
eligible to elect to defer any Bonus earned in the Plan Year in
which he first becomes an Eligible Employee, if he becomes an
Eligible Employee after June 30 of the Plan Year.
Section 4.4 . Supplemental Company Contributions. The
Company may make a Supplemental Company Contribution, if necessary,
to make up for any contributions under Sallie Mae 401(k) plans that
a Participant would have received in such plans if he had not
elected to make Salary Deferrals or Bonus Deferrals pursuant to the
terms of this Plan. Any Supplemental Company Contribution shall be
credited to the Retirement Distribution Account.
Section 4.5. Transfers from Other Plans of Deferred
Compensation. The Company
may credit an Eligible Employee with an amount under this Plan
equal to the amount credited under a prior plan of deferred
compensation maintained by the Company or its predecessor on behalf
of a selected group of management and highly compensated employees.
Any such amount shall be credited to the Retirement Distribution
Account.
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ARTICLE 5.
DISTRIBUTION OPTION ACCOUNTS
Section 5.1. Distribution Option Accounts.
The Committee shall establish on its
books a hypothetical account for a Participant. This account shall
be referred to as the Distribution Option Account. Each
Distribution Option Account shall be comprised of one or more
sub-accounts. One sub-account shall be referred to as the
Retirement Distribution Account. Generally, the distribution of
amounts credited to the Retirement Distribution Account shall be
subject to Section 7.1. The other sub-accounts shall be
referred to as In-Service Distribution Accounts. One In-Service
Distribution Account shall be established for each five-year
Distribution Option Period. Supplemental Company Contributions,
when credited, are credited only to the Retirement Distribution
Account.
Section 5.2. Earnings on Distribution Option
Accounts. A
Participant’s Distribution Option Account shall be credited
with earnings in accordance with the Earnings Crediting Options,
elected by the Participant from time to time, until such Account is
fully distributed. Participants may allocate their Retirement
Distribution Account and/or each of their In-Service Distribution
Accounts among the Earnings Crediting Options available under the
Plan only in accordance with rules and procedures adopted by the
Committee. The deemed rate of return, positive or negative,
credited under each Earnings Crediting Option is based upon the
actual investment performance of such Earnings Crediting Option,
and shall equal the total return of such Earnings Crediting Option,
net of asset based charges, including, without limitation, money
management fees, fund expenses and mortality and expense risk
insurance contract charges. The Company reserves the right, on a
prospective basis, to add or delete Earnings Crediting
Options.
Section 5.3 . Earnings Crediting Options .
Notwithstanding that the rates of return credited to
Participants’ Distribution Option Accounts under the Earnings
Crediting Options are based upon the actual performance of the
Earnings Crediting Options, the Company shall not be obligated to
invest any Salary or Bonus Deferrals, Supplemental Company
Contributions, or any other amounts, in such Earnings Crediting
Options.
Section 5.4. Changes in Earnings Crediting
Options. Subject to
limitations set forth in Section 12, a Participant may change
the Earnings Crediting Options to which his Distribution Option
Account is deemed to be allocated with whatever frequency is
determined by the Committee, which shall not be less than four
times per Plan Year. Each such change may include
(a) reallocation of the Participant’s existing
Retirement Distribution Account and In-Service Distribution
Accounts among the Earnings Crediting Options, and/or (b)
reallocation of Earnings Crediting Options with respect to amounts
to be credited to the Participant’s Account in the future, as
the Participant may elect. Any such change must be in accordance
with the rules and procedures adopted by the Committee.
Section 5.5. Valuation of Accounts. The value of a Participant’s Distribution
Option Account as of any Valuation Date shall equal the amounts
theretofore credited to such Account, including any earnings
(positive or negative) deemed to be earned on such Account in
accordance with Section 5.2 through the Valuation Date
preceding such date, less the amounts therefore deducted from such
Account.
Section 5.6 . Statement of Accounts. The Committee
shall provide to each Participant, not less frequently than
annually, a statement in such form as the Committee deems desirable
setting forth the balance standing to the credit of each
Participant in each of his Distribution Option Account.
Section 5.7. Distribution from Accounts.
The Participant’s Distribution
Option Account shall be reduced by the amount of payments made by
the Company to the Participant or the Participant’s
Beneficiary pursuant to this Plan. Any distribution made to or on
behalf of a Participant from his Distribution Option Account in an
amount which is less than the entire balance of any such Account
shall be made pro rata from each of the Earnings Crediting Options
to which such Account is then allocated.
ARTICLE 6.
DISTRIBUTION OPTIONS
Section 6.1. Election of Distribution Option.
In the first Enrollment Agreement
filed with the Committee, an Eligible Employee shall elect the time
and manner of payment pursuant to which the Eligible
Employee’s Distribution Option Account will be paid. The
Eligible Employee may elect that deferrals be paid either in
accordance with the Retirement Distribution Option, or the
In-Service Distribution Option.
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Any deferrals
to be paid in accordance with the Retirement Distribution Option
shall be maintained in the Retirement Distribution Account. Any
deferrals to be paid in accordance with the In-Service Distribution
Option shall be maintained in an In-Service Distribution Account,
one such In-Service Distribution Option being established for each
Distribution Option Period.
Section 6.2. Retirement Distribution Option
. Initial elections as to time and
manner of payment for a Retirement Distribution Account shall be
applicable to all amounts in the Retirement Distribution Account.
An election to change the time and manner of payment of amounts
deferred into the Retirement Distribution Acco
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