Exhibit 10.26
AMENDED AND RESTATED
EMBARQ KEY MANAGEMENT BENEFIT PLAN
This Plan (as defined below) has
been established in accordance with Section 5 of the Employee
Matters Agreement dated May 17, 2006 by and between Sprint
Nextel Corporation and Embarq Corporation for the benefit of
certain current and former key executives of Embarq Corporation and
its subsidiaries who were participants in the Sprint Key Management
Benefit Plan immediately prior to the Effective Date (as defined
below), in order to retain or reward them for their services and
encourage them to continue the increasing profitability of the
Company (as defined below).
The Plan is now hereby amended and
restated effective January 1, 2009 to implement changes
required pursuant to and consistent with Section 409A of the
Code (as defined below). Between May 16, 2006 and
December 31, 2008, the Plan has been operated in accordance
with transition relief established by the Treasury Department and
Internal Revenue Service pursuant to Section 409A of the
Code.
Section 1.
Definitions
The following terms shall have the
meaning set forth below:
(a) “Base Salary” means
the highest annual salary (including, if applicable, the annual
salary of a Participant while such Participant was an employee of
Sprint Nextel Corporation or one of its subsidiaries) of a
Participant during the last five years immediately preceding the
Participant’s death or Separation from Service as applicable.
“Base Salary” shall include amounts deferred under the
Embarq Retirement Savings Plan and the Embarq Executive Deferred
Compensation Plan (and, if applicable, the Sprint Nextel 401(k)
Plan and the Sprint Corporation Executive Deferred Compensation
Plan), but shall not include incentive payments, bonuses,
supplemental unemployment benefits, employer contributions to any
profit sharing or other qualified plan, reimbursements of moving
expenses or other expenses, or disability payments. The
Compensation Committee shall determine whether a particular item of
income constitutes Base Salary if a question arises.
(b) “Beneficiary” means
the person or persons entitled under Section 5 to receive a
Survivor Benefit after a Participant’s death.
(c) “Code” means the
Internal Revenue Code of 1986, as amended.
(d) “Committee” means
the committee established pursuant to Section 7.
(e) “Company” means
Embarq Corporation.
(f) “Compensation
Committee” means the Compensation Committee of the
Company’s Board of Directors.
(g) “Disability” means a
Participant (i) is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be
expected to last for a continuous period of not less than 12
months, or (ii) is, by reason of any medically determinable
physical or mental impairment which can be expected to result in
death or can be expected to last for a continuous period of not
less than 12 months, receiving income replacement benefits for a
period of not less than 3 months under an accident and health plan
covering employees of Company.
(h) “Effective Date”
means May 17, 2006.
(i) “ERISA” means the
Employee Retirement Income Security Act of 1974, as
amended.
(j) “Key Executive”
means a key employee of the Company or its subsidiaries who is
designated a Key Executive for purposes of this Plan by the Chief
Executive Officer of the Company, subject to approval by the
Compensation Committee.
(k) “Participant” means
a present or former Key Executive on whose account a Survivor
Benefit under Section 3 or a Supplemental Retirement Benefit
under Section 4 will be payable, including those Participants
who were participants in the Sprint Key Management Benefit Plan
immediately prior to the Effective Date and who are listed on
Schedule 1.
(l) “Participation
Agreement” means a written agreement in form and substance
satisfactory to the Company, by which (i) a Participant in the
Plan agrees to retire from employment with the Company or
subsidiary no later than the month following the date on which the
Participant attains age 65 and (ii) a Participant designates
the form in which the Participant prefers to have his benefits
under this Plan be distributed.
(m) “Plan” means this
Amended and Restated Embarq Key Management Benefit Plan as amended
from time to time.
(n) “Separation from
Service” means a Participant’s death, retirement or
other termination of employment with Company within the meaning of
‘separation from service’ as defined in
Section 409A(a)(2)(A)(i) of the Code and its corresponding
regulations. A Separation from Service shall not occur if a
Participant is on military leave, sick leave or other bona fide
leave of absence (such as temporary employment by the government)
if the period of such leave does not exceed six months, or if
longer, as long as the Participant has a right (either by contract
or by statute) to reemployment with Company.
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(o) “Supplemental Retirement
Benefit” means a benefit payable under Section 4 of this
Plan.
(p) “Survivor Benefit”
means a benefit payable under Section 3 of this
Plan.
Section 2.
Participation
(a) Participation in this Plan on
the Effective Date shall include those Participants who were
participants in the Sprint Key Management Benefit Plan immediately
prior to the Effective Date and who are identified on Schedule
1.
(b) The Chief Executive Officer of
the Company, with the approval of the Compensation Committee, may
designate from time to time the Key Executives who may become
Participants in this Plan.
(c) A Key Executive shall become a
Participant in the Plan only after signing a Participation
Agreement. Such Participation Agreement must be submitted
(1) within 30 days of a Key Employee first being selected as a
Participant in the Plan; provided that such Key Employee must not
have been eligible to participate in the Plan (as well as any other
plan that is required to be aggregated with the Plan pursuant to
Treasury Regulation Section 1.409A-1(c)(2)) during the
24-month period ending on the date such Key Employee is first
eligible to participate in this Plan, or (2) if the
requirements in Section 2(c)(1) are not satisfied, then prior
to December 31 of the calendar year preceding the
January 1 of the calendar year in which the Participation
Agreement shall first take effect.
(d) A Beneficiary shall be eligible
for benefits only as hereinafter provided.
Section 3. Survivor
Benefit
(a) If a Participant’s
employment with the Company or one of its subsidiaries ends because
of his death while he is a Key Executive, his Beneficiary shall
receive an annual Survivor Benefit equal to 25% of the
Participant’s Base Salary. This annual benefit shall be
payable for a period of 10 years at the time in and the form set
forth in Section 4(a) below.
(b) A Participant or a
Participant’s Beneficiary, as the case may be, shall be
eligible to receive a Survivor Benefits or a Supplemental
Retirement Benefit, respectively, if a Participant (i) remains
a Key Executive until age 60, and has a Separation from Service no
later than the month after the date on which the Participant
attains age 65, or (ii) suffers a Disability, or
(iii) has a Separation from Service before age 65 and
qualifies to receive early retirement benefits under the
Company’s pension plan, then his Beneficiary shall receive
upon his death a Survivor Benefit equal to 300% of the
Participant’s Base Salary; provided, the Survivor
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Benefit for a Participant electing early
retirement under (iii) above shall be reduced 10% per
year of attained age prior to age 60, e.g., to 270% of Base Salary
for retirement at age 59, and to 150% of Base Salary for retirement
at age 55. The Survivor Benefit or Supplemental Retirement Benefit,
as applicable, shall be paid in the manner provided in
Section 4(b) or Section 4(c).
(c) If a Participant does not
satisfy the conditions of Section 3(a) or 3(b), no Survivor
Benefit or Supplemental Retirement Benefit, as applicable, shall be
payable on his account.
Section 4. Payment of
Survivor Benefit
(a) The Survivor Benefit under
Section 3(a) shall be payable in equal annual installments,
commencing on the first day of the second month following the
Participant’s death.
(b) The Survivor
Benefit described in Section 3(b) shall normally be paid in a
lump sum within 30 days following the Participant’s death.
However, a Participant may elect in the Participation Agreement an
installment method of payment and the period of such payments,
provided that in all events the Survivor Benefit shall be payable
over a period of not less than 2 years but not more than 20 years.
Such installment payments shall commence no later than the
15 th day of the third month following
the year in which the Participant’s death occurred. If a
Participant elects to have the Survivor Benefit paid in
installments, the actuaries then servicing the Company shall
determine the present value using an assumed interest rate of 6
1/2% of the payment method so elected, and the amount of the
Survivor Benefit shall be revised accordingly, so that the value of
the Survivor Benefit, determined at the time of the
Participant’s death, is the same as if the Beneficiary
received a lump sum.
(c) A Participant may elect in the
Participation Agreement, in lieu of receiving the Survivor Benefit
described in Section 3(b), to receive a Supplemental
Retirement Benefit equal to 300% of the Participant’s Base
Salary; provided, that such Supplemental Retirement Benefit for a
Participant electing early retirement as described under
Section 3(b)(iii) above shall be reduced 10% per year of
attained age prior to age 60, e.g., to 270% of Base Salary for
retirement at age 59, and to 150% of Base Salary for retirement at
age 55. Such Supplemental Retirement Benefit shall commence payment
within 30 days following the Participant’s Separation from
Service or Disability; provided, however, if a Participant is a
“Specified Employee” as defined in
Section 409A(a)(2)(A) of the Code and the Company has
securities which are publicly traded on an established securities
market at the time of the Participant’s Separation from
Service, no distribution may be made before the date which is 6
months after the date of Participant’s Separation from
Service from the Company (excluding Separation from Service on
account of death). The Participant may elect in the Participation
Agreement to receive the Supplemental Retirement Benefit either
(i) in a lump sum, (ii) in annual installments over a
period not to exceed 30 years, (iii) in the form of a single
life annuity, or (iv) in any combination of the forms set
forth in
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Section 4(c)(i)-(iii) (to be elected
as a percentage of the total benefit). The actuaries then servicing
the Company shall determine the present value using an assumed
interest rate of 6 1/2% of the payment method elected by the
Participant, and the amount of the Survivor Benefit shall be
revised accordingly, so that the value of the Supplemental
Retirement Benefit determined at the time of the
Participant’s retirement, is the same as if the Participant
received the Survivor Benefit in a lump sum.
If a Participant fails to make the
election described in this Section 4(c) in the Participation
Agreement, such Participant shall be deemed to have elected the
Survivor Benefit to be paid as provided in
Section 4(b).
(d) Notwithstanding the above
paragraphs (b) and (c) of this Section 4, the
elections as to the timing and form of payment of a Participant who
was a participant in the Sprint Key Management Benefit Plan
immediately prior to the Effective Date will apply to any benefits
paid under this Plan, unless a subsequent election to change the
form of payment is made, as described in paragraphs (e) and
(f) below.
(e) Prior to December 31, 2007,
a Participant may make a new election to change the form of payment
of his or her benefits; provided that a Participant shall not be
permitted in calendar year 2007, to (i) change a payment
election in a manner that will defer distribution of amounts that
the Participant otherwise would have received in 2007, or
(ii) accelerate payments that would otherwise be made in a
later year into 2007 (the “Special Transition Rule”).
This Special Transition Rule shall also apply to calendar year 2008
so that each mention of “2007” is replaced with
“2008” in the immediately preceding sentence. Any
election ma
