EXHIBIT 10.2.3
THE FEDERAL HOME LOAN BANK OF
BOSTON
THRIFT BENEFIT EQUALIZATION PLAN
(effective January 1, 2009)
Federal Home Loan Bank of Boston
(the “Bank”) adopted the Federal Home Loan Bank of
Boston Thrift Benefit Equalization Plan (the “Plan”),
as a component of the Federal Home Loan Bank of Boston Benefit
Equalization Plan, effective January 1, 1993. The
Nonqualified Deferred Compensation Program for the Directors of the
Bank was merged into the Plan effective on the close of business
December 31, 2006, and the Plan was amended and restated to
comply with Code Section 409A, as enacted by the American Jobs
Creation Act of 2004 and applicable regulations thereunder,
effective January 1, 2007 (or such earlier date as may be
required by law). The Plan is hereby further amended and
restated to comply with final regulations issued under Code
Section 409A effective January 1, 2009; provided,
however, that any provision required to be effective on and after
January 1, 2005 in order for the Plan to comply with Code
Section 409A shall become effective as of January 1, 2005
(or such later date as shall be permitted under applicable Code
Section 409A transition rules).
The Plan is established and
maintained by the Bank in order to provide Eligible Executives and
Directors an opportunity to defer taxation on income and to provide
Eligible Executives with the benefits which would have been
provided under the Pentegra Defined Contribution Plan for Financial
Institutions (the “Qualified Plan”) if (a) their
benefits under the Qualified Plan were not limited by certain
limitations imposed by the Internal Revenue Code applicable to the
Qualified Plan, and (b) “Base Salary” as defined
in the Qualified Plan took into account amounts paid under the
Bank’s incentive compensation plan(s), as well as elective
deferrals hereunder.
The Plan is a governmental plan
under Section 4(b) of the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”), and is
therefore exempt from coverage under ERISA. The Plan is
unfunded and maintained primarily for the purpose of providing
deferred compensation to a select group of management or highly
compensated employees, and Bank directors, and is not intended to
be qualified under Section 401(a) of the Internal Revenue
Code.
ARTICLE I
DEFINITIONS
Each word used herein not defined
below that begins with a capital letter and is defined in the
Qualified Plan shall have the same definition as the definition
given to that word in the Qualified Plan. Wherever used
herein, the following terms shall have the meanings hereinafter set
forth:
1.1
“ Account
” or
“ Deferred
Compensation Account ” means the separate
account established under the Plan for each Participant, as
described in Section 5.1.
1.2
“ Administrator ” means the Committee
or such person or persons as may be appointed by the Committee to
be responsible for those functions assigned to the Administrator
under the Plan.
1.3
“ Affiliate ” means any entity that
is a member of a “controlled group” of corporations
with the Bank under Code Section 414(b) or a trade or
business under common control with the Bank under Code
Section 414(c); provided, however, that in applying Code
Sections 1563(a)(1), (2) and (3) for purposes of Code
Section 414(b), the language “at least 50 percent”
will be used instead of “at least 80 percent” each
place it appears, and in applying Treasury Regulation
Section 1.414(c)-2 for purposes of Code Section 414(c),
the language “at least 50 percent” will be used instead
of “at least 80 percent” each place it appears.
In addition, to the extent that the Administrator determines that
legitimate business criteria exist to use a reduced ownership
percentage to determine whether an entity is an Affiliate for
purposes of determining whether a Termination of Service has
occurred, the Administrator may designate an entity that would meet
the definition of “Affiliate” substituting 20 percent
in place of 50 percent in the preceding sentence as an Affiliate in
Appendix A hereto. Such designation shall be made by
December 31, 2007 or, if later, at the time a 20 percent or
more ownership interest in such entity is acquired.
1.4
“ Bank
” means the
Federal Home Loan Bank of Boston.
1.5
“ Base
Salary ” means
“Salary” as defined for purposes of the Qualified
Plan.
1.6
“ Beneficiary ” means the person,
persons or trust designated by a Participant as direct or
contingent beneficiary in the manner prescribed by the
Administrator. The Beneficiary of a Participant who has not
effectively designated a beneficiary shall be the
Participant’s estate.
1.7
“ Board of
Directors ” means the Board of
Directors of the Bank.
1.8
“ Code
Limitations ” means the cap on
compensation taken into account by the Qualified Plan under Code
Section 401(a)(17); the limitations on
Section 401(k) contributions necessary to meet the
average deferral percentage (“ADP”) test under Code
Section 401(k)(3); the limitations on employee and matching
contributions necessary to meet the average contribution percentage
(“ACP”) test under Code Section 401(m); the dollar
limitations on elective deferrals under Code Section 402(g);
and the overall limitation on contributions imposed by Code
Section 415(c), as such provisions may be amended from time to
time, and any similar successor provisions of federal tax
law.
1.9
“ Committee ” means the Personnel
Committee of the Board of Directors, which is authorized to
administer the Plan and to perform the functions described in
Article VII.
1.10
“ Compensation ” means (a) with
respect to an Executive, Base Salary and/or Incentive Compensation,
as applicable; and (b) with respect to a Director, the meeting
fees paid by the Bank to the Director.
1.11
“ Deferral
Period ” means the period
described in Section 3.3 of the Plan.
1.12
“ Director ” means a member of the
Board of Directors of the Bank, other than an Employee.
1.13
“ Disability ” means that the
Participant (a) is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental
impairment that can be expected to result in death or can be
expected to last for a continuous period of not less
than
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12 months; (b) is, by
reason of any medically determinable physical or mental impairment
that 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 the Bank;
or (c) has been determined to be totally disabled by the
Social Security Administration.
1.14
“ Effective
Date ” means January 1,
2009. The Plan was initially effective January 1, 1993
and was most recently restated effective January 1,
2007. Any provision of this amendment and restatement
required to be effective on and after January 1, 2005 in order
for the Plan to comply with Code Section 409A shall become
effective as of January 1, 2005 (or such later date up to
January 1, 2009 as shall be permitted under applicable Code
Section 409A transition rules).
1.15
“ Elective
Deferral ” means the amount of
Compensation a Participant elects to defer pursuant to
Article III of the Plan.
1.16
“ Eligible
Executive ” or “
Executive ” means an employee of
the Bank who is a corporate officer and who has been selected to be
a Participant in the Plan by the Committee.
1.17
“ Hardship ” means an
unforeseeable emergency that is caused by an event beyond the
control of the Participant that would result in severe financial
hardship to the Participant resulting from (a) a sudden and
unexpected illness or accident of the Participant or the spouse or
a dependent of the Participant (as defined in Code
Section 152(a)), (b) a loss of the Participant’s
property due to casualty (including the need to rebuild a home
following damage to a home not otherwise covered by insurance, for
example, not as a result of a natural disaster), or (c) such
other extraordinary and unforeseeable circumstances arising as a
result of events beyond the control of the Participant, all as
determined in the sole discretion of the Administrator. In
addition, the need to pay for medical expenses, including
non-refundable deductibles, as well as for the costs of
prescription drug medication, or the need to pay for the funeral
expenses of a spouse or a dependent may also constitute a Hardship
event. The Administrator shall determine whether the
circumstances presented by the Participant constitute an
unanticipated emergency. Such circumstances and the
Administrator’s determination will depend on the facts of
each case, but, in any case, payment may not be made to the extent
that such hardship is or may be relieved as described in Sections
6.1.1 through 6.1.4 below.
1.18
“ Incentive
Compensation ” means bonuses under
the Bank’s Executive Incentive Plan and, if applicable, any
long-term incentive compensation payable to a Participant under the
Bank’s incentive compensation plan(s).
1.19
“ Matching
Contribution ” means the amounts
credited to a Participant’s Account under Article IV of
the Plan with respect to Elective Deferrals.
1.20
“ Participant ” means (a) an
Executive or former Executive who elects to participate in the Plan
in accordance with the terms and conditions of the Plan or who has
an Account in the Plan that has not been fully distributed; and
(b) any Director who elects to participate in the Plan or who
has an Account in the Plan that has not been fully
distributed.
1.21
“ Plan
” means The
Federal Home Loan Bank of Boston Thrift Benefit Equalization Plan,
as set forth herein or as it may be amended or restated from time
to time.
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1.22
“ Plan
Year ” means the calendar
year.
1.23
“ Qualified
Plan ” means the Pentegra
Defined Contribution Plan for Financial Institutions, as from time
to time amended.
1.24
“ Required
Withholdings ” means the federal,
state or local employment taxes, including applicable FICA taxes
required to be withheld under Section 3101 of the Code from
any (a) Elective Deferrals, (b) elective deferrals on
behalf of the Participant to the Qualified Plan,
(c) contributions by the Participant to any welfare benefit
plan maintained by the Bank, and/or (d) any other compensation
not paid to the Participant in cash, and all federal, state or
local income taxes attributable thereto required to be withheld
from income, and any additional federal, state or local income or
employment taxes attributable to such withholdings. The
Administrator shall determine Required Withholdings in its
discretion.
1.25
“ Scheduled
Distribution ” means a distribution
from a Participant’s Scheduled Distribution Sub-Account in
accordance with Section 6.3.
1.26
“ Scheduled
Distribution Sub-Accounts ” or “
Sub-Accounts
” means the
separate bookkeeping accounts established by the Administrator
under Section 5.1 to record the portion(s) of a
Participant’s Account subject to separate Scheduled
Distribution elections.
1.27
“ Termination of
Service ” means, with respect
to an Executive, the severing of employment with the Bank and any
Affiliates, voluntarily or involuntarily, for any reason. A
Termination of Service will be deemed to have occurred if the facts
and circumstances indicate that the Bank and the Participant
reasonably anticipate that no further services will be performed
after a certain date or that the level of bona fide services
the Participant will perform for the Bank and its Affiliates after
such date (whether as an employee or as an independent contractor)
will permanently decrease to no more than 20% of the average level
of bona fide services performed (whether as an employee or
an independent contractor) over the immediately preceding 36-month
period (or the full period of services to the employer if the
Participant has been providing services to the Bank and its
Affiliates less than 36 months). A Participant will not be
deemed to have incurred a Termination of Service while he or she 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 such longer
period as the Participant’s right to reemployment with the
Bank is provided either by statute or by contract. For this
purpose, a leave of absence is bona fide only if there is a
reasonable expectation that the Participant will return to
employment at the conclusion of the leave. If the period of
leave exceeds six months and the Participant’s right to
reemployment is not provided either by statute or by contract, the
Termination of Service will be deemed to occur on the first date
immediately following such six-month period. With respect to
a Director, the term “Termination of Service” means
that the Director has ceased to be a member of the Board of
Directors of the Bank, and does not otherwise provide services (as
determined under this paragraph) as an employee or independent
contractor of the Bank or any Affiliate. Whether an
individual has incurred a Termination of Service shall be
determined in accordance with the provisions of
Section 409A.
1.28
“ Valuation
Date ” means the close of
business of each business day, or such other valuation date or
dates established by the Administrator.
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ARTICLE II
PARTICIPATION
2.1
Eligibility
. Each
Executive may become a Participant upon the effective date of his
or her designation as an Executive eligible for participation in
the Plan by the Board of Directors or the Committee. Each Director
may become a Participant upon his or her becoming a member of the
Board of Directors of the Bank.
2.2
Participation in the
Plan . An Eligible Executive
or Director may elect to participate in the Plan for any Plan Year
by delivering to the Administrator a properly executed election at
the time and in the form provided by the Administrator, pursuant to
which the Eligible Executive or Director elects to defer receipt of
a specified portion of the Compensation that would otherwise be
payable to such Executive for the Plan Year, as described in
Article III hereof.
2.3
Cessation of
Participation . An Executive shall
cease to be a Participant in the Plan if (a) he or she incurs
a Termination of Service for any reason, (b) he or she remains
in the service of a Bank but ceases to be an Eligible Executive as
described in Section 1.16 due to a change in employment
status, except to the extent that the Committee determines
otherwise, or (c) the Plan is terminated or otherwise amended
so that the Executive ceases to be eligible for participation;
provided, however, that such individual shall continue to be a
Participant solely with respect to his or her vested Account
balance until such Account balance is distributed from the
Plan. Such cessation of participation shall be effective upon
the date of the change in status described in clause
(a) above, upon the end of the Deferral Period for a change in
status described in (b) above, or upon the effective date of
an amendment or termination of the Plan described in clause
(c) above. A Director shall cease to be a Participant in
the Plan if he or she ceases to be a member of the Board of
Directors for any reason; provided, however, that such individual
shall continue to be a Participant solely with respect to his or
her vested Account balance until such Account balance is
distributed from the Plan.
ARTICLE III
DEFERRAL OF COMPENSATION
3.1
Election to Defer
. A
Participant may elect to defer receipt of a portion of his or her
Compensation for a Plan Year by delivering a properly executed
election to the Administrator within the time specified in
Section 3.2. The Participant’s election shall be
in a written form acceptable to the Administrator and shall
specify:
3.1.1.
the whole percentage of Salary, other than Incentive Compensation,
for the Plan Year to be deferred to the Plan, which percentage may
not exceed 100%, reduced to the extent necessary to provide for any
Required Withholdings;
3.1.2.
the whole percentage of Incentive Compensation for the Plan Year to
be deferred to the Plan, which percentage may not exceed 100%,
reduced to the extent necessary to provide for any Required
Withholdings;
3.1.3.
if applicable, the investment fund or funds in which the
Participant’s Elective Deferrals, and Matching Contributions
attributable to such Elective Deferrals, will be deemed to be
invested pursuant to Section 5.2;
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3.1.4.
if applicable, the specific Scheduled Distribution Sub-Account or
Sub-Accounts into which all or a portion of such Elective Deferrals
and/or Matching Contributions will be directed, as described in
Section 6.3; and
3.1.5.
to the extent permitted by the Administrator under
Section 6.4.1, the payment commencement date and method of
distribution to apply to benefits distributable upon the
Participant’s Termination of Service.
An Executive who elects not to
participate in the Plan at the time he or she first becomes
eligible to do so may elect to become a Participant in any
subsequent Plan Year by filing an election to defer Compensation as
described above within the time provided in Section 3.2,
provided that he or she is then eligible to participate in the
Plan.
3.2
Date for Filing
Election .
3.2.1.
Except as provided below, an election to defer Compensation to be
earned in a Plan Year shall be filed by the Participant with the
Administrator as of a date established by the Administrator which
is no later than December 31 of the Plan Year preceding the
year in which such Compensation is earned.
3.2.2.
In the case of an individual first employed as an Executive or
becoming a Director, or first becoming eligible for this Plan (and
any similar account-based deferred compensation plan of the Bank)
during a Plan Year, an election to defer Compensation (which may
include Incentive Compensation) earned subsequent to the initial
date of employment or eligibility and subsequent to the date of
such election may be filed by such Executive or Director with the
Administrator within thirty (30) days of such initial date of
service or eligibility.
3.2.3.
An election to defer Incentive Compensation meeting the
requirements for “performance-based” compensation under
Treasury Regulation Section 1.409A-1(e) shall be filed
with the Administrator as of a date established by the
Administrator which is at least six months prior to the end of the
performance period in which such Incentive Compensation is earned,
provided that (a) performance criteria have been established
in writing by not later than 90 days after the commencement of the
applicable performance period and the outcome is substantially
uncertain at the time the criteria are established, (b) the
Participant is in employment with the Bank continuously from the
later of the beginning of the performance period or the date such
performance criteria are set, and (c) the election is made
before such performance-based compensation has become readily
ascertainable ( i.e. , is both calculable in amount and
substantially certain to be paid).
3.3
Deferral Period
. The
Deferral Period for a Participant’s Compensation earned
during any Plan Year shall begin on the first day of such Plan
Year, provided that the Participant has filed an election to defer
Compensation prior thereto, as described in
Section 3.2.1. Notwithstanding the foregoing, in the
case of an individual who is first employed as an Executive or
first becomes a Director, or who first becomes eligible for
participation during a Plan Year, the Deferral Period shall begin
as of the first day of the payroll period (or, in the case of a
Director, the first day of the month) beginning after the filing of
a timely election by the
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Participant in such Plan
Year, as described in Section 3.2.2. In each case, such
Deferral Period shall end on the last day of the Plan
Year.
The Deferral
Period for Incentive Compensation meeting the requirements for
“performance-based” compensation under Treasury
Regulation Section 1.409A-1(e) shall be the performance
period (which shall not be shorter than a Plan Year) to which such
Incentive Compensation relates. Notwithstanding the
foregoing, an election to defer Incentive Compensation shall be
deemed to be an election to defer such amount (1) to the date
specified in such election, or, if earlier, (2) solely in the
event of the Participant’s Termination of Service during the
Deferral Period or within 31 days after the end of the Deferral
Period, to the calendar quarter following the end of the Deferral
Period for payment in an immediate lump sum (assuming the
Participant is otherwise entitled to such Incentive
Compensation).
3.4
Revocation or Change of Deferral
Election .
3.4.1.
A Participant may not voluntarily revoke or amend an election to
defer Compensation under Section 3.1.1 after commencement of
the Deferral Period. Such election shall automatically expire
at the conclusion of the applicable Deferral Period, unless renewed
within the time provided in Section 3.2.
3.4.2.
A Participant may not revoke or amend an election to defer
Incentive Compensation meeting the requirements for
“performance-based” compensation under Treasury
Regulation Section 1.409A-1(e) after the date which is
six months prior to the end of the performance period in which such
Incentive Compensation is earned; except that an election to defer
Incentive Compensation under Section 3.2.2 may not be revoked
during the Deferral Period.
3.4.3.
Notwithstanding the above, if a Participant incurs a Hardship, the
Participant’s Elective Deferrals under this Plan may, upon
the request of the Participant and with the consent of the
Administrator, be permanently suspended for a period of six
(6) months (the “suspension period”). At the
end of the suspension period, the Participant’s Elective
Deferrals shall automatically resume, provided that the Participant
has timely filed a deferral election under Sections 3.1 and 3.2
with respect to the Deferral Period in effect when the suspension
period ends.
3.4.4.
If a Participant ceases to be an Eligible Executive during a
Deferral Period because of a change in his or her employment status
(except for a Termination of Service) as described in
Section 2.3(b), the Participant’s deferral election
shall remain effective for the remainder of the Deferral Period for
which the election relates.
3.5
Vesting of Elective
Deferrals . A Participant shall
be 100% vested in the balance of his or her Deferred Compensation
Account attributable to Elective Deferrals at all
times.
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ARTICLE IV
BANK MATCHING CONTRIBUTIONS
4.1
Matching Contributions for
Eligible Executive Participants .
4.1.1.
Except as provided in Section 4.1.3 below, for each Elective
Deferral credited to a Participant’s Deferred Compensation
Account under Section 3.1.1, such Participant’s Account
shall also be credited with a Matching Contribution under this Plan
equal to (a) the matching contribution, if any, that would
have been credited under the terms of the Qualified Plan with
respect to such amount if contributed to the Qualified
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