EXHIBIT 10.3
PACIFICORP
EXECUTIVE VOLUNTARY DEFERRED COMPENSATION PLAN
(Restated effective as of January 1, 2007)
PACIFICORP
EXECUTIVE VOLUNTARY DEFERRED COMPENSATION PLAN
PacifiCorp
hereby amends and restates the PacifiCorp Compensation
Reduction Plan, most recently restated effective as of
January 1, 2002 (“Plan”) for the benefit of
certain Employees and other Participants. The primary purpose
of the Plan is to provide additional compensation to
Participants upon termination of employment or service with
the Employer. The Employer will pay benefits under the Plan
only in accordance with the terms and conditions set forth in
the Plan. This Plan is a restated plan effective as of
January 1, 2007 (See Section 7.02 (A) for good
faith compliance as to 409A Amounts during 2005, 2006 and
2007).
PREAMBLE
Plan Type. The Plan is an unfunded nonqualified
deferred compensation plan maintained “primarily for the
purpose of providing deferred compensation for a select group of
management or highly compensated employees”
(“top-hat plan”).
Possible Nonuniformity . The Employer need not provide
the same Plan benefits or apply the same Plan terms and conditions
to all Participants, even as to Participants who are of similar
pay, title and other status with the Employer. The Employer may
create a separate exhibit for one or more Participants, specifying
such terms and conditions as are applicable to a given Participant.
The Employer, in a separate exhibit, may modify any Plan provision
with respect to one or more Participants.
I. DEFINITIONS
1.01
“Account”
means the account the Employer establishes under the Plan for
each Participant and as applicable means a Participant’s
Elective Deferral Account, or Employer Contribution Account.
An Elective Deferral Account shall consist of subaccounts as
selected by the Participant, and which shall be a Retirement
Account, an In-Service Account and an Education
Account.
1.02
“Accrued Benefit”
means the total dollar amount credited to a
Participant’s Account.
1.03
“Applicable Guidance”
means Treasury Regulations issued pursuant to
Code §409A, or other written Treasury or IRS
guidance regarding Code §409A, which is in addition
to IRS Notice 2005-1 (“Notice
2005-1”).
1.04
“Base Salary”
means a Participant’s compensation consisting only of
regular annual salary and excluding any other
compensation.
1.05
“Beneficiary”
means the person or persons entitled to receive Plan benefits
in the event of a Participant’s death.
1.06
“Code”
means the Internal Revenue Code of 1986, as
amended.
1.07
“Compensation”
means Base Salary, performance awards, annual incentive
bonuses (other than Employer long term incentive awards), and
fees for serving as a member of an Advisory Board (See
definition of Participant below). Inclusion of any other forms
of compensation is subject to approval of the
Employer.
1.08
“Deferred Compensation”
means the Participant’s Account Balance attributable to
Elective Deferrals and Employer Contributions and includes
Earnings on such amounts. “Compensation Deferred”
is Compensation that the Participant or the Employer has
deferred under this Plan.
1.09
“Earnings”
means the notional earnings, gain and loss applicable to a
Participant’s Account as described in
Section 5.02.
1.10
“Effective Date”
of the Plan as amended and restated is January 1, 2007
(See Section 7.02 (A) for good faith compliance as
to 409A Amounts during 2005, 2006 and 2007.
1.11
“Elective Deferral”
means Compensation a Participant elects to defer into the
Participant’s Account under the Plan.
1.12
“Elective Deferral Account”
means the portion of a Participant’s Account
attributable to Elective Deferrals and Earnings thereon (and
which shall consist of Retirement, In-Service and Education
subaccounts).
1.13
“Employee”
means a person providing services to the Employer in the
capacity of a common law employee of the
Employer.
1.14
“Employer”
means PacifiCorp, an Oregon corporation. For purposes of
determining whether there has been a Separation from Service
with the Employer, Employer means all entities with whom the
Employer would be considered a single employer under
Code §§ 414 (b)
and (c).
1.15
“Employer Contribution”
means amounts, if any, the Employer contributes or credits to
an Account under the Plan, excluding Elective
Deferrals.
1.16
“Employer Contribution Account”
means the portion of a Participant’s Account
attributable to Employer Contributions and Earnings
thereon.
1.17
“ERISA”
means the Employee Retirement Income Security Act of 1974, as
amended.
1.18 “
Participant”
means an Employee of the Employer who has met the eligibility
requirements of Section 2.01 and who has accrued a
benefit under the Plan, and Participant also means a member of
the Rocky Mountain Power Regional Advisory Board and a member
of the Pacific Power Regional Advisory Board (together
the “Advisory Boards”) and who has accrued a
benefit under the Plan.
1.19
“Performance-Based Compensation”
means such amounts described in Applicable Guidance
.
1.20 “
Plan” means
the PacifiCorp Executive Voluntary Deferred Compensation Plan
. For
purposes of applying Code §409A requirements:
(i) this Plan is an account balance plan under Applicable
Guidance; (ii) this plan constitutes a separate plan for
each Participant; and (iii) except as the Plan otherwise
provides, all Deferred Compensation for a Participant is
aggregated with that Participant’s deferrals under any
other account balance nonqualified deferred compensation plan
of the Employer in which the Participant participates.
Employer Contribution Accounts are considered to be part of a
nonelective account balance plan type and Elective Deferral
Accounts are considered to be part of an elective account
balance plan type.
1.21
“Retirement Age”
means a Participant’s attainment of age 55 or, for any
Participant who was a Participant in the Plan on
December 31, 2006, age 50 with 5 “Years of
Participation” in the PacifiCorp Supplemental Executive
Retirement Plan (the “SERP”), as such term is
defined in the SERP, and 15 “Years of
Service” in the PacifiCorp Retirement Plan, as such term
is defined in the PacifiCorp Retirement Plan.
1.22
“Separation from Service”
means an Employee’s termination of employment with the
Employer or as otherwise defined in Applicable
Guidance.
1.23
“Specified Employee”
means a Participant who is described in
Code §416(i), disregarding paragraph (5)
thereof. However, a Participant is not a Specified Employee
unless any stock of the Employer (or of a member of the same
group of controlled entities as Employer) is publicly traded
on an established securities market or otherwise.
1.24
“Specified Time or Pursuant to a Fixed Schedule”
means a specific time or schedule (but not the occurrence of
an event) as a Participant payment election may specify, and
otherwise as described in Applicable Guidance.
1.25 “
Taxable Year”
means the 12 consecutive month period ending each
December 31.
1.26 “
Trust” means
a trust described in Section 5.01.
1.27
“Unforeseeable Emergency”
means: (i) a severe financial hardship to the Participant
resulting from a sudden and unexpected illness or accident of
the Participant, the Participant’s spouse or a dependent
(as defined in Code §152(a)) of the Participant;
(ii) loss of the Participant’s property due to
casualty; or (iii) other similar extraordinary and
unforeseeable circumstances arising as a result of events
beyond the Participant’s control. The amount of the
distribution may not exceed the amount necessary to satisfy
the Unforeseeable Emergency plus taxes reasonably anticipated
as a result of the distribution, after taking into account the
extent to which the hardship may be relieved through
reimbursement or compensation by insurance or otherwise or by
liquidation of the Participant’s assets, to the extent
that liquidation of such assets would not itself cause severe
financial hardship.
1.28 “
Valuation Date”
means the last day of each calendar month and such other dates
as the Employer may determine.
1.29
“Vested”
means Deferred Compensation which is not subject to a
Substantial Risk of Forfeiture (as defined in Applicable
Guidance) or to a requirement to perform further services for
the Employer.
II. PARTICIPATION
2.01
Participant Designated
. The Chairman of the Board of Directors of the Employer shall
designate and approve the Employees who are eligible to
participate in the Plan, such designation to be either by
name, job title or other classification. The Chairman may also
notify any Participant, including any Advisory Board member,
that he or she is no longer eligible to make future deferrals
into the Plan. Such termination of eligibility shall be
effective for compensation earned after January 1
following such written notification to the individual.
However, until final distribution has been made to such person
from his or her Accounts, for all other purposed under the
Plan the person shall still be considered a
Participant.
2.02
Elective Deferrals
. Participants may make separate Elective Deferrals to their
Accounts with respect to Base Salary and Compensation that is
not Base Salary. All elections to defer shall terminate upon
Separation from Service, Disability (as defined in
Applicable Guidance) or a distribution based on an
Unforeseeable Emergency.
(A)
Limitations
. The maximum Elective Deferral for Base Salary is 50%.
There is no limit for Compensation that is not Base Salary.
The minimum Elective Deferral for any type of Compensation
is 1%.
(B)
Form and Timing
. A Participant must make his/her Elective Deferral election
on an election form the Employer provides for that purpose.
Unless otherwise provided in this Section 2.02, a
Participant must deliver his/her election to the Employer
prior to the beginning of the Taxable Year for which it is to
go into effect (or at such other time as Applicable Guidance
may provide), at which time the election shall become
irrevocable.
(C)
New Participant
. If an Employee first becomes a Participant on a date which
is not the first day of a Taxable Year, the Participant must
make and deliver his/her Elective Deferral election for that
Taxable Year not later than 30 days after the Participant
becomes a Participant. The election may apply only to
Compensation for services the Participant performs subsequent
to the date the Participant delivers the election to the
Employer. For Compensation that is earned for a specified
performance period, including an annual bonus, and where the
new Participant makes an Elective Deferral election after the
service period commences, the Employer will pro rate the
election by multiplying the performance based Compensation by
the ratio of the number of days left in the performance period
at the time of the election, over the total number of days in
the entire performance period.
(D)
Election Duration
. A Participant’s Elective Deferral election applies
only to the Participant’s Compensation earned in the
next Taxable Year following the Taxable Year in which the
Participant makes the election. A Participant, subject to Plan
requirements regarding election timing, including those in
Article VII, may make a new election, or revoke or modify
an existing election effective no earlier than for the next
Taxable Year.
2.03
Employer Contributions
. In each Taxable Year, the Employer may make discretionary
Employer Contributions for any or all Participants, which need
not be uniform among Participants.
2.04
Allocation Conditions
. There are no conditions generally applicable to receive an
allocation of Employer Contributions, unless the Employer
establishes conditions with respect to a particular
discretionary Employer Contribution.
2.05
Timing .
The Employer may elect to make any Employer Contribution for a
Taxable Year at such times as Code §409A or
Applicable Guidance may permit.
2.06
Administration
. The Employer will administer all Employer Contributions in
the same manner as Elective Deferrals, except as the Plan
otherwise provides. The Employer will credit any Elective
Deferrals to a Participant’s Account as soon as
practicable after the date the amount of the Elective Deferral
would otherwise have become due and payable to the Participant
and will credit any Employer Contributions to a
Participant’s Account as soon as practicable after the
date of the amount of the Employer Contribution is determined.
Any Employer Contribution is not subject to an immediate
Participant right to elect a cash payment in lieu of the
Employer Contribution and such amounts are payable only in
accordance with the Plan terms.
III. VESTING AND FORFEITURE
3.01
Vesting Schedule
. Participants shall always be immediately one hundred
percent (100%) Vested in their Elective Deferral Accounts. The
Employer may separately establish a vesting schedule for any
Employer Contributions.
3.02
Application of Forfeitures
. A Participant will forfeit any non-Vested Accrued Benefit upon
Separation from Service. The Employer will keep all
forfeitures.
IV. BENEFIT PAYMENTS
4.01
Separation from Service or Death
. The Plan will pay to the Participant the Vested Accrued
Benefit held in the Participant’s Account following the
earlier of the Participant’s Separation from Service or
death. Payment will commence at the time and payment will be
made in the form and method specified under Section 4.03.
In the event of the Participant’s death, the Plan will
pay to the Participant’s Beneficiary the
Participant’s Vested Accrued Benefit or any remaining
amount thereof if benefits to the Participant already have
commenced, in accordance with the Participant’s
election.
(A)
Distribution to Specified Employees
. Notwithstanding anything to the contrary in the Plan or in a
Participant payment election, the Plan may not distribute to a
Specified Employee, based on Separation from Service, earlier
than 6 months following Separation from Service (or if
earlier, upon the Specified Employee’s
death).
4.02
Other Payment Events
. In addition to the payment events under Section 4.01,
the Plan will pay to a Participant all or any part of the
Participant’s Account: (i) at a Specified Time or
Pursuant to a Fixed Schedule elected by the Participant with
respect to Education and In-Service subaccounts; or
(ii) based upon an Unforeseeable Emergency. Payment will
commence at the time and payment will be made in the form and
method specified under Section 4.03.
4.03
Form, Timing
and Method/ Payment Election . All
distributions will be in cash. Subject to the provisions of
this paragraph, a Participant shall make an initial payment
election as to the method of payment under
Section 4.03(A) and may make a change to an election
under Section 4.03(B). Until the Plan completely
distributes a Participant’s Vested Accrued Benefit, the
Plan will continue to credit the Participant’s Account
with Earnings, in accordance with Section 5.02. Except as
provided below, a Participant may elect either a lump sum
payment or substantially equal annual installments (not to
exceed 10) with respect to a Retirement subaccount and an
In-Service subaccount. If no election is made as to method,
payment shall be made in a lump sum. Distribution from an
Education subaccount may only be made in 4 substantially
equal annual installments. Distributions from a Retirement
Account as a result of Separation from Service after
Retirement Age shall be made (or commence) in January
following the calendar year in which Separation from Service
occurs. Distributions from an In-Service subaccount, an
Education subaccount, or a Retirement subaccount, when a
Separation from Service occurs prior to Retirement Age
(including death prior to Retirement Age), shall be made as
soon as administratively feasible following the date of
Separation from Service (or death), and shall be made in a
lump sum payment (except that payments from the remaining
account balance in an Education subaccount or In-Service
subaccount, where payments have already commenced prior to
Separation from Service, shall continue to be made under the
schedule then in effect). If Separation from Service occurs
after Retirement Age and before commencement of distribution
from an In-Service subaccount or Education subaccount, any
such subaccount shall be added to the Retirement subaccount
and distributed accordingly. Payments made because of
Unforeseeable Emergency shall be made (or commence) as soon as
administratively feasible following such event. In the event
of death after attaining Retirement Age or after payments from
an Account have begun, a lump sum payment to the Beneficiary
shall be made as soon as administratively feasible after date
of death if the Participant had previously elected a lump sum
distribution to the Beneficiary pursuant to
Section 4.03(A) (initial payment election) or pursuant to
Section 4.03(B)(1) (change to payment election).
Disability shall not be treated as a distribution event if
Separation from Service has not occurred.
(A)
Initial Payment Election
. A Participant, as to an In-Service subaccount shall make an
initial payment election with respect to a Specified Time and
Pursuant to a Fixed Schedule at the time of the
Participant’s first Elective Deferral election into such
subaccount. A Participant, as to an Education subaccount,
shall make an initial election with respect to a Specified
Time at the time of the Participant’s first Elective
Deferral election into such subaccount (the Fixed Schedule
being 4 substantially equal annual payments). As to a
Retirement subaccount, a Participant shall make an initial
payment election as to a method of payment (Fixed Schedule) at
the time of his or her first deferred election into such
subaccount (the Specified Time being the date following
Separation of Service as provided in Section 4.03 above).
A Participant shall make any permissible initial payment
election on a form the Employer provides for that purpose. At
the time of any such first Elective Deferral election into any
Account, a Participant may elect to have a lump sum payment
made to his or her Beneficiary in lieu of the form of payment
that otherwise has been selected for payout during the
Participant’s life.
(B)
Changes to Payment Election
. A Participant may change the Participant’s initial
payment election (or change election) as to any or all
Deferred Compensation (but only as to timing of start of
payments for a
