Exhibit 10.39
ACE LIMITED
ELECTIVE DEFERRED COMPENSATION
PLAN
(Effective January 1,
2005)
The ACE Limited Elective Deferred
Compensation Plan is hereby adopted effective January 1, 2005
by ACE Limited to permit Eligible Employees to defer receipt of
certain compensation pursuant to the terms and provisions set forth
below. Effective January 1, 2009, participation in the Plan
will continue only to the extent amounts deferred and credited are
not subject to Code section 457A.
The Plan is intended (1) to
comply with Code section 409A and official guidance issued
thereunder for credited amounts earned and vested after
December 31, 2004, while credited amounts earned and vested
prior to January 1, 2005 (and applicable earnings credited on
these amounts) are not intended to be subject to the provisions of
Code section 409A, to the full extent permitted under by Code
section 409A and official guidance, and (2) to be “a
plan which is unfunded and is maintained by an employer primarily
for the purpose of providing deferred compensation for a select
group of management or highly compensated employees” within
the meaning of sections 201(2), 301(a)(3) and 401(a)(1) of ERISA.
Notwithstanding any other provision of this Plan, this Plan shall
be interpreted, operated and administered in a manner consistent
with these intentions. The Plan document and Plan procedures in
effect on December 31, 2004 will remain in full force and
effect for the Grandfathered Amounts and is labeled Attachment
A.
ARTICLE I
DEFINITIONS
Wherever used herein the following
terms shall have the meanings hereinafter set forth:
“ Account ” means
a bookkeeping account established by the Company for each
Participant electing to defer Eligible Income under the
Plan.
“ Affiliate ”
means any corporation or other entity that is treated as a single
employer with the Company under section 414 of the Code.
“ Base Salary ”
means the regular base salary paid to an Eligible Employee by the
Company or an Affiliate.
“ Code ” means
the Internal Revenue Code of 1986, as amended.
“ Committee ”
means the Pension Committee of ACE Limited.
“ Company ” means
ACE Limited or any successor corporation or other
entity.
“ Deferral Form ”
means a written form provided by the Committee pursuant to which an
Eligible Employee may elect to defer amounts under the
Plan.
“ Disabled ”
means a Participant (1) 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 (2) 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 three months under an accident and health
plan covering employees of the Participant’s
employer.
“ Eligible Employee
” means an Employee who is designated by the Committee as
belonging to a “select group of management or highly
compensated employees,” as such phrase is defined under
ERISA, and eligible to participate in the Plan. Any determination
of the Committee regarding whether an Employee is an Eligible
Employee shall be final and binding for all Plan
purposes.
“ Eligible Income
” means Base Salary and Incentive Awards. Eligible Income
does not include irregular, non-recurring types of
compensation.
“ Employee ”
means an individual who is a regular employee on the U.S. payroll
of the Company or its Affiliates. The term “Employee”
shall not include a person hired as an independent contractor,
leased employee, consultant, or a person otherwise designated by
the Company or an Affiliate as not eligible to participate in the
Plan, even if such person is determined to be an
“employee” of the Company or an Affiliate by any
governmental or judicial authority.
“ ERISA ” means
the Employee Retirement Income Security Act of 1974, as
amended.
“ Incentive Award
” means an amount payable to an Eligible Employee under an
annual bonus or incentive compensation plan of the Company or an
Affiliate.
“ Investment Options
” means the investment options, as determined from time to
time by the Committee, used to credit earnings, gains and losses on
Account balances.
“ Key Employee ”
means an Employee treated as a “specified employee”
under Code section 409A(a)(2)(B)(i), i.e. , a key employee
(as defined in Code section 416(i) without regard to paragraph
(5) thereof) of the Company if the Company’s stock is
publicly traded on an established securities market or otherwise.
Key Employees shall be determined in accordance with Code section
409A using a [December 31] identification date.
“ Participant ”
means an Eligible Employee who elects to defer amounts under the
Plan.
“ Payment Date ”
means the first business day of the year following an event
triggering a payment or a date, provided the date is
specified.
- 2 -
“ Plan ” means
the ACE Limited Elective Deferred Compensation Plan, as set forth
herein and as amended from time to time.
“ Plan Year ”
means January 1 through December 31.
“ Separation from
Service ” or “ Separate from Service ”
means a “separation from service” within the meaning of
Code section 409A.
ARTICLE II
PARTICIPATION
Participation in the Plan shall be
limited to Eligible Employees. The Committee shall notify any
Employee of his status as an Eligible Employee at such time and in
such manner as the Committee shall determine. An Eligible Employee
shall become a Participant by making a deferral election under
Article III.
ARTICLE III
PARTICIPANT
ACCOUNTS
3.1 Deferral Elections .
Deferrals may be made by a Participant with respect to the
following types of Eligible Income, as permitted by the
Committee:
(a) Base Salary . An Eligible
Employee may elect to defer any portion of his Base Salary, as
specified on election forms provided to Eligible
Employees.
(b) Incentive Awards . An
Eligible Employee may elect to defer any portion of an Incentive
Award up to 100%.
(c) Other amounts designated by the
Committee as Eligible Income.
In order to elect to defer Eligible
Income earned during a Plan Year, an Eligible Employee shall file
an irrevocable Deferral Form with the Committee before the
beginning of such Plan Year. Notwithstanding the foregoing,
(1) if the Committee determines that an Incentive Award
qualifies as “performance-based compensation” under
Code section 409A, an Eligible Employee may elect to defer a
portion of the Incentive Award by filing a Deferral Form at such
later time as permitted by the Committee, and (2) in the first
year in which an Employee becomes eligible to participate in the
Plan, a deferral election may be made with respect to services to
be performed subsequent to the election within 30 days after the
date the Employee becomes eligible to participate in the
Plan.
- 3 -
3.2 Crediting of Deferrals .
Eligible Income deferred by a Participant under the Plan shall be
credited to the Participant’s Account as soon as practicable
after the amounts would have otherwise been paid to the
Participant.
3.3 Vesting . A Participant
shall at all times be 100% vested in any amounts credited to his
Account.
3.4 Earnings . The Company
shall periodically credit gains, losses and earnings to a
Participant’s Account, until the full balance of the Account
has been distributed. Amounts shall be credited to a
Participant’s Account under this Section based on the results
that would have been achieved had amounts credited to the Account
been invested as soon as practicable after crediting into the
Investment Options selected by the Participant. The Committee shall
specify procedures to allow Participants to make elections as to
the deemed investment of amounts newly credited to their Accounts,
as well as the deemed investment of amounts previously credited to
their Accounts. Nothing in this Section or otherwise in the Plan,
however, will require the Company to actually invest any amounts in
such Investment Options or otherwise.
ARTICLE IV
DISTRIBUTION OF ACCOUNT
BALANCE
The provisions of this Article IV
shall apply only to amounts subject to Code section 409A.
Distribution rules applicable to amounts credited and vested before
January 1, 2005 (and the earnings credited on those amounts)
are set forth in Schedule A.
4.1. Distribution Upon
Separation . A Participant’s Account balance shall
normally be distributed to him in a lump sum payment on the Payment
Date following the Participant’s Separation from Service. A
Participant may elect on a Deferral Form delivered to the Committee
prior to the beginning of a Plan Year to have the portion of his
Account related to amounts deferred during the Plan Year (and
earnings thereon) distributed in annual installments over a period
of up to 10 years with payments commencing on the Payment Date
following the Participant’s Separation from Service.
Notwithstanding any elections by a Participant, if the
Participant’s Account balance is $10,000 or less at the time
the Participant Separates from Service, the full Account balance
shall be distributed in a lump sum payment at such time.
Notwithstanding the foregoing,
distributions may not be made to a Key Employee upon a Separation
from Service before the date which is six months after the date of
the Key Employee’s Separation from Service (or, if earlier,
the date of death of the Key Employee).
4.2. Distribution as of Specified
Date . A Participant may elect on a Deferral Form delivered to
the Committee prior to the beginning of a Plan Year to have the
portion of his Account related to amounts deferred during the Plan
Year (and earnings thereon) paid to the Participant as of a
specified date. If expressly elected by a Participant in writing,
the Payment Date may be the later or earlier of a specified date or
Separation from Service.
- 4 -
4.3. Distribution Upon
Disability . If a Participant becomes Disabled, his Account
balance will be distributed in a lump sum payment on the Payment
Date following the date the Participant becomes
Disabled.
4.4. Distributions Upon Death
. If a Participant dies before full distribution of his Account
balance, any remaining balance shall be distributed in a lump sum
payment on the Payment Date following the Participant’s death
to the Participant’s beneficiary. A Participant shall
designate his beneficiary in a writing delivered to the Committee
prior to death in accordance with procedures established by the
Committee. If a Participant has not properly designated a
beneficiary or if no designated beneficiary is living on the date
of distribution, such amount shall be distributed to the
Participant’s estate.
4.5. Withdrawals for
Unforeseeable Emergency . A Participant may withdraw all or any
portion of his Account balance for an Unforeseeable Emergency. The
amounts distributed with respect to an Unforeseeable Emergency may
not exceed the amounts necessary to satisfy such Unforeseeable
Emergency plus amounts necessary to pay taxes reasonably
anticipated as a result of the distribution, after taking into
account the extent to which such hardship is or may be relieved
through reimbursement or compensation by insurance or otherwise or
by liquidation of the Participant’s assets (to the extent the
liquidation of such assets would not itself cause severe financial
hardship) or by cessation of deferrals under the Plan.
“Unforeseeable Emergency” means for this purpose a
severe financial hardship to a Participant resulting from an
illness or accident of the Participant, the Participant’s
spouse, or a dependent (as defined in Code section 152(a)) of the
Participant, loss of the Participant’s property due to
casualty, or other similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the control of
the Participant.
A Participant’s deferral
election for the Plan Year in which he obtains a distribution under
this section shall be cancelled.
4.6. Change in Control . For
amounts credited and vested after December 31, 2004,
notwithstanding any provision in the Plan to the co
