|
EXHIBIT
10.5
EXECUTIVE DEFERRED COMPENSATION
PLAN
HNI Corporation
As Amended and Restated Effective
January 1, 2005 to comply with Section 409A
of the Internal Revenue Code
TABLE OF
CONTENTS
Page
|
1. Amendment and
Restatement
|
|
|
1
|
|
|
1.1.
|
Amendment and Restatement
|
1
|
|
|
1.2.
|
Purpose
|
1
|
|
|
1.3.
|
Application of the Plan
|
1
|
|
|
2.1.
|
Definitions
|
1
|
|
|
2.2.
|
Gender and Number
|
6
|
|
3. Eligibility and Participation
|
|
|
6
|
|
|
3.1.
|
Eligibility
|
6
|
|
|
3.2.
|
Participation
|
6
|
|
|
3.3.
|
Missing Persons
|
6
|
|
4. Establishment and Entries to
Accounts
|
|
|
7
|
|
|
4.1.
|
Accounts
|
7
|
|
|
4.2
|
Deferral Election Agreement
|
7
|
|
|
4.3.
|
Adjustments to Accounts
|
9
|
|
|
4.4.
|
Commencement and Form of Distribution of
Sub-Account
|
10
|
|
|
4.5.
|
Exceptions to Payment Terms
|
12
|
|
|
4.6.
|
Death Benefit
|
14
|
|
|
4.7.
|
Funding
|
14
|
|
|
5.1.
|
Administration
|
15
|
|
|
5.2.
|
Actions of the Committee
|
15
|
|
|
5.3.
|
Delegation
|
15
|
|
|
5.4.
|
Expenses
|
15
|
|
|
5.5.
|
Reports and Records
|
15
|
|
|
5.6.
|
Valuation of Accounts and Account
Statements
|
15
|
|
|
5.7.
|
Indemnification and Exculpation
|
16
|
|
6. Beneficiary Designation
|
|
|
16
|
|
|
6.1.
|
Designation of Beneficiary
|
16
|
|
|
6.2.
|
Death of Beneficiary
|
16
|
|
|
6.3.
|
Ineffective Designation
|
16
|
|
8. Change in Control, Amendment, and
Termination
|
|
|
16
|
|
|
8.1.
|
Change in Control
|
17
|
|
|
8.2.
|
Plan Amendment and Termination
|
17
|
|
|
10.1.
|
Unfunded Plan
|
18
|
|
|
10.2.
|
Nontransferability
|
18
|
|
|
10.3.
|
Successors
|
18
|
|
|
10.4.
|
Severability
|
18
|
|
|
10.5.
|
Applicable Law
|
18
|
|
|
10.6.
|
No Other Agreements
|
19
|
|
|
10.7.
|
Incapacity
|
19
|
|
|
10.8.
|
Counterparts
|
19
|
|
|
10.9.
|
Electronic Media
|
19
|
|
|
10.10.
|
Administratively Reasonable
|
19
|
|
|
10.11.
|
Release
|
19
|
|
|
10.12.
|
Notices
|
19
|
HNI Corporation
Executive Deferred Compensation Plan
1. Amendment and
Restatement
1.1. Amendment
and Restatement . HNI Corporation, an Iowa corporation
(the "Corporation"), hereby amends and restates, effective as of
January 1, 2005 (the "Restatement Date"), the HNI Corporation
Executive Deferred Compensation Plan (the "Plan") to comply with
Section 409A of the Internal Revenue Code and to effect certain
other changes in its design and operation. The Plan was most
recently amended and restated, effective November 7, 2002.
1.2. Purpose . The purpose of the Plan is to give
eligible executive employees of the Corporation and certain of its
Subsidiaries the opportunity to defer the receipt of compensation
to supplement their retirement savings and to achieve their
personal financial planning goals.
1.3. Application
of the Plan . The terms of the Plan, as amended and
restated herein, apply to amounts deferred under the Plan on or
after the Restatement Date. Amounts deferred under the Plan before
the Restatement Date are subject to the terms of the Plan as in
effect prior to the Restatement Date; provided, however, that
Section 4.11 of the Plan (as in effect prior to the Restatement
Date) is deleted in its entirety as of the Restatement Date, such
that such section shall no longer apply to any amounts deferred
under the Plan, whether before or after the Restatement
Date.
2.
Definitions
2.1. Definitions . Whenever used in the Plan, the
following terms shall have the meaning set forth below and, when
the defined meaning is intended, the term is capitalized:
|
(a)
|
"Account" means the device used to measure and
determine the amount of benefits payable to a Participant or
Beneficiary under the Plan. The Corporation shall establish a Cash
Account and Stock Account for each Participant under the Plan, and
the term "Account," as used in the Plan, may refer to either such
Account or the aggregate of the two Accounts. In addition, the
Corporation shall establish a separate Sub-Account under each of
the Participant's Cash Account and Stock Account for each Deferral
Election Agreement entered into by the Participant pursuant to
Section 4.2.
|
|
(b)
|
"Annual Bonus," of a Participant for a Plan Year,
means the bonus awarded by the Employer to a Participant in cash or
Stock for services performed by the Participant during the Plan
Year, as provided in the HNI Corporation Executive Bonus Plan, or
any successor plan thereto.
|
|
(c)
|
"Base Salary," of a Participant for a Plan Year,
means the base salary, including all regular basic wages before
reduction for any amounts deferred on a tax-qualified or
nonqualified basis, payable in cash to the Participant for services
rendered to an Employer during the Plan Year. Base Salary shall
exclude bonuses, incentive compensation, special fees or awards,
allowances, or any other form of premium or incentive pay, or
amounts designated by an Employer as payment toward or
reimbursement of expenses.
|
|
(d)
|
"Beneficiary" means the persons or entities
designated by a Participant in writing pursuant to Article 6 of the
Plan as being entitled to receive any benefit payable under the
Plan by reason of the death of a Participant, or, in the absence of
such designation, the Participant's estate (pursuant to the rules
specified in Article 6).
|
|
(e)
|
"Board of Directors" means the board of directors
of the Corporation.
|
|
(f)
|
"Change in Control" means:
|
(i) the acquisition
by any individual, entity or group (with the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) (a "Person") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange
Act) of 35% or more of either (A) the then outstanding shares of
common stock of the Corporation (the "Outstanding Corporation
Common Stock") or (B) the combined voting power of the then
outstanding voting securities of the Corporation entitled to vote
generally in the election of Directors (the "Outstanding
Corporation Voting Securities"); provided, however, that for
purposes of this subsection (i), the following acquisitions shall
not constitute a Change in Control: (I) any acquisition directly
from the Corporation; (II) any acquisition by the Corporation;
(III) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Corporation or any
corporation controlled by the Corporation; or (IV) any acquisition
by any corporation pursuant to a transaction which complies with
clauses (A), (B) and (C) of subsection (iii) of this paragraph;
or
(ii) individuals
who, as of the date hereof, constitute the Board (the "Incumbent
Board") cease for any reason to constitute a majority of the Board;
provided, however, that any individual becoming a Director
subsequent to the date hereof whose election, or nomination for
election by the Corporation's shareholders, was approved by a vote
of a majority of the Directors then comprising the Incumbent Board
shall be considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of
an actual or threatened election contest with respect to the
election or removal of Directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person
other than the Board; or
(iii) consummation
of a reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the
Corporation (a "Business Combination"), in each case, unless,
following such Business Combination: (A) all or substantially all
of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Corporation Common Stock and
Outstanding Corporation Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly, 50%
or more of, respectively, the then outstanding shares of common
stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of Directors,
as the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which as
a result of such transaction owns the Corporation or all or
substantially all of the Corporation's assets either directly or
through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Business
Combination of the Outstanding Corporation Common Stock and
Outstanding Corporation Voting Securities, as the case may be; (B)
no Person (excluding any corporation resulting from such Business
Combination or any employee benefit plan (or related trust) of the
Corporation or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 35% or more
of, respectively, the then outstanding shares of common stock of
the corporation resulting from such Business Combination or the
combined voting power of the then outstanding voting securities of
such corporation except to the extent that such ownership existed
prior to the Business Combination; and (C) at least a majority of
the members of the board of directors of the corporation resulting
from such Business Combination were members of the Incumbent Board
at the time of the execution of the initial agreement, or of the
action of the Board, providing for such Business
Combination.
|
(g)
|
"Code" means the Internal Revenue Code of 1986,
as amended from time to time, or any successor thereto.
|
|
(h)
|
"Committee" means the Human Resources and
Compensation Committee of the Board of Directors or a delegate of
such Committee.
|
|
(i)
|
"Compensation" means the remuneration paid or
awarded to the Participant by an Employer as Base Salary, Annual
Bonus, or LTP Award.
|
|
(j)
|
"Corporation" means HNI Corporation, an Iowa
corporation.
|
|
(k)
|
"Deferral Election Agreement" means the agreement
described in Section 4.2 in which the Participant designates the
amount of his or her Compensation, if any, that he or she wishes to
contribute to the Plan and acknowledges and agrees to the terms of
the Plan.
|
|
(l)
|
"Elective Deferral" means a contribution to the
Plan made by a Participant pursuant to a Deferral Election
Agreement that the Participant enters into with the Corporation.
Elective Deferrals shall be made according to the terms of the Plan
set forth in Section 4.2.
|
|
(m)
|
"Employer" means the Corporation, any Subsidiary
that adopts the Plan, and any entity that continues the Plan as a
successor under Section 10.3.
|
|
(n)
|
"Enrollment Period" means the period designated
by the Corporation during which a Deferral Election Agreement may
be entered into with respect to an eligible employee's future
Compensation as described in Section 4.2. Generally, the Enrollment
Period must end no later than the end of the calendar year before
the calendar year in which the services giving rise to the
Compensation to be deferred are performed. As described in Section
4.2, an exception may be made to this requirement for individuals
who first become eligible to participate in the Plan and for
Elective Deferrals from Compensation considered to be
Performance-Based Compensation, as determined by the Committee or
by the Vice-President, Member and Community Relations, from time to
time.
|
|
(o)
|
"ERISA" means the Employee Retirement Income
Security Act of 1974, as amended from time to time, or any
successor thereto.
|
|
(p)
|
"Fair Market Value," of a share of Stock, means
the average of the high and low transaction prices of the share as
reported on the New York Stock Exchange on the date as of which
such value is being determined, or, if there shall be no reported
transactions for such date, on the next preceding date for which
transactions were reported; provided, however, that if Fair Market
Value for any date cannot be so determined, Fair Market Value shall
be determined by the Committee by whatever means or method as the
Committee, in the good faith exercise of its discretion, shall at
such time deem appropriate.
|
|
(q)
|
"LTP Award," of a Participant for a performance
period, means the amount payable to the Participant in cash or
Stock for the performance period pursuant to the HNI Corporation
Long-Term Performance Plan. The performance period for an LTP Award
shall be set forth in the HNI Corporation Long-Term Performance
Plan.
|
|
(r)
|
"Participant" means an individual who satisfies
the requirements of Section 3.1 and who has entered into a Deferral
Election Agreement.
|
|
(s)
|
"Performance-Based Compensation," of a
Participant for a period, means incentive compensation of the
Participant for such period where the amount of, or entitlement to,
the incentive compensation is contingent on the satisfaction of
pre-established organizational or individual performance criteria
relating to a performance period of at least 12 consecutive months
in which the Participant performs services. Organizational or
individual performance criteria are considered pre-established if
established in writing by not later than 90 days after the
commencement of the period of service to which the criteria relate,
provided that the outcome is substantially uncertain at the time
the criteria are established. Performance-based compensation may
include payment based on performance criteria that are not approved
by the Board of Directors or the Committee or by the stockholders
of the Corporation.
|
|
(t)
|
"Plan Year" means the consecutive 12-month period
beginning each January 1 and ending December 31.
|
|
(u)
|
"Prime Rate" means the interest rate charged by
the Northern Trust Corporation, Chicago, Illinois, on corporate
loans made to their best customers as of the first business day
coincident with or immediately following the first day of each Plan
Year.
|
|
(v)
|
"Qualified Domestic Relations Order" has the same
meaning as in Section 414(p) of the Code.
|
|
(w)
|
"Restatement Date" means January 1,
2005.
|
|
(x)
|
"Retirement," of a Participant, means the
Participant's Separation from Service with the Corporation and its
Subsidiaries on or after the attainment of age 65 ,
or age 55 with
ten years of service with an Employer. The Chief Executive Officer
of the Corporation, in his or her discretion, may waive or reduce
the ten-year service requirement with respect a Participant;
provided that the waiver or reduction does not cause an
impermissible change in the timing of a Participant's payments
under the Plan and otherwise complies with the requirements Section
409A of the Code.
|
|
(y)
|
"Separation from Service," of a Participant,
means the Participant's separation from service with the
Corporation and all of its affiliates, within the meaning of
Section 409A(a)(2)(A)(i) of the Code and the regulations
thereunder. Solely for these purposes, a Participant will be
considered to have a Separation from Service when the Participant
dies, retires, or otherwise has a termination of employment with
all affiliates. The employment relationship is treated as
continuing intact while the 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, so long as the individual's rights
to reemployment with the Corporation or any affiliate is provided
either by statute or by contract. If the period of leave exceeds
six months and the individual's right to re-employment is not
provided either by statute or contract, the employment relationship
is deemed to terminate on the first date immediately following such
six-month period. Whether a termination of employment has occurred
is based on the facts and circumstances.
|
|
(z)
|
"Specified Employee" means a "key employee" (as
defined in Section 416(i) of the Code without regard to Section
416(i)(5)) of the Corporation. For purposes hereof, an employee is
a key employee if the employee meets the requirements of Section
416(1)(A)(i), (ii) or (iii) (applied in accordance with the
regulations thereunder and disregarding Section 416(i)(5)) at any
time during the 12-month period ending on December 31. If a person
is a key employee as of such date, the person is treated as a
Specified Employee for the 12-month period beginning on the first
day of the fourth month following such date
|
|
(aa)
|
"Subsidiary" means a corporation which is wholly
owned by the Corporation.
|
|
(bb)
|
"Stock" means the Corporation's common stock,
$1.00 par value.
|
|
(cc)
|
"Stock Unit" means the notational unit
representing the right to receive one share of Stock.
|
2.2. Gender and
Number . Except when otherwise indicated by the
context, any masculine term used in the Plan also shall include the
feminine gender; and the definition of any plural shall include the
singular and the singular shall include the plural.
3. Eligibility and
Participation
3.1. Eligibility . Participation in the Plan shall be
limited to those executive employees of an Employer who are
eligible to participate in the HNI Corporation Executive Bonus
Plan.
3.2. Participation . An eligible executive employee shall be
notified of his or her eligibility to make an Elective Deferral
under the Plan for a Plan Year prior to the beginning of the Plan
Year, or as soon as administratively possible thereafter. Unless so
notified, an employee shall not have the right to make Elective
Deferrals for a Plan Year, whether or not he or she has been
permitted to make Elective Deferral for any prior Plan Year.
Further, nothing in the Plan shall interfere with or limit in any
way the right of an Employer to terminate any Participant's
employment at any time, nor confer upon any Participant a right to
continue in the employ of an Employer, and all Participants shall
remain subject to change of salary and other terms of employment,
transfer, change of job, discipline, layoff, discharge, or any
other change of status.
3.3. Missing
Persons . Each Participant and Beneficiary entitled to
receive benefits under the Plan shall be obligated to keep the
Corporation informed of his or her current address until all Plan
benefits that are due to be paid to the Participant or Beneficiary
have been paid to him or her. If the Corporation is unable to
locate the Participant or his or her Beneficiary for purposes of
making a distribution, the amount of a Participant's benefit under
the Plan that would otherwise be considered as non-forfeitable
shall be forfeited effective one year after: (a) the last date a
payment of said benefit was made, if at least one such payment was
made; or (b) the first date a payment of said benefit was due to be
made pursuant to the terms of the Plan, if no payments have been
made. If such person is located after the date of such forfeiture,
the benefits for such Participant or Beneficiary shall not be
reinstated hereunder.
4 .
Establishment and Entries to Accounts
4.1. Accounts . The Committee shall establish two Accounts
for each Participant under the Plan as follows:
(a) Cash
Account . A Participant's Cash Account, as of any date,
shall consist of the Compensation that the Participant has elected
to allocate to that Account under his or her various Deferral
Election Agreements pursuant to Section 4.2, increased by earnings
thereon pursuant to Section 4.3(a), and adjusted to reflect
transfers to and from the Account pursuant to Section 4.3(c) and
distributions from the Account pursuant to Sections 4.4, 4.5 and
4.6.
(b) Stock
Account . A Participant's Stock Account, as of any date,
shall consist of the Compensation that the Participant has elected
to allocate to that Account pursuant to Section 4.2, increased with
earnings (including dividend equivalents) thereon and converted to
Stock Units pursuant to Section 4.3(b), and adjusted to reflect
transfers to and from the Account pursuant to Section 4.3(c) and
distributions from the Account pursuant to Sections 4.4, 4.5 and
4.6.
The Committee shall establish a separate
Sub-Account under each of these Accounts for each Deferral Election
Agreement entered into by the Participant pursuant to Section 4.2.
As specified in Section 4.2, as part of a Participant's Deferral
Election Agreement, the Participant shall elect how amounts
deferred under each Deferral Election Agreement are to be
distributed to him or her from among the available distribution
options described in Section 4.4. The separate Sub-accounts are
established to account for the different distribution terms that
may apply to each Sub-account. The Corporation may combine
Sub-accounts that have identical distribution terms, or may
establish other Sub-accounts for a Participant under the Plan from
time to time in its discretion, as it deems appropriate or
advisable. A Participant shall have a full and immediate
nonforfeitable interest in his or her Accounts at all
times.
4.2 Deferral
Election Agreement . A Participant wishing to make an
Elective Deferral under the Plan for a Plan Year shall enter into a
Deferral Election Agreement during the Enrollment Period
immediately preceding the beginning of the Plan Year. A separate
Deferral Election Agreement must be entered into for each Plan Year
that a Participant wishes to make Elective Deferrals under the
Plan. In order to be effective, the Deferral Election Agreement
must be completed and submitted to the Committee at the time and in
the manner specified by the Committee, which may be no later than
the last day of the Enrollment Period. The Committee shall not
accept Deferral Election Agreements entered into after the end of
the Enrollment Period. The Committee may require that a Participant
enter into a separate Deferral Election Agreement for each
component of the Participant's Compensation, i.e., Base
Compensation, Annual Bonus and LTP Award, that he or she wishes to
defer for a Plan Year. Except as specified in the following two
paragraphs, a Deferral Election Agreement will be effective to
defer Compensation earned after the Deferral Election Agreement is
entered into, and not before.
For the Plan Year in which an employee first
becomes eligible to participate in the Plan, the Committee may, in
its discretion, allow the employee to enter into a Deferral
Election Agreement within 30 days after he or she first becomes
eligible. In order to be effective, the Deferral Election Agreement
must be completed and submitted to the Committee on or before the
30-day period has elapsed. The Committee shall not accept Deferral
Election Agreements entered into after the 30-day period has
elapsed. If the employee fails to complete a Deferral Election
Agreement by such time, he or she may enter into a Deferral
Election Agreement during any succeeding Enrollment Period in
accordance with the rules described in the preceding paragraph. For
Compensation that is earned based upon a specified performance
period (for example, the Annual Bonus) where a Deferral Election
Agreement is entered into in the first year of eligibility but
after the beginning of the performance period, the Deferral
Election Agreement will be deemed to apply to Compensation paid for
services performed subsequent to the date the Deferral Election
Agreement is entered into if the Deferral Election Agreement
applies to the portion of the Compensation equal to the total
amount of the Compensation for the performance period multiplied by
the ratio of the number of days remaining in the performance period
after the election over the total number of days in the performance
period. For purposes of the exception described in this paragraph,
the term "Plan" shall mean the Plan and any other plan required to
be aggregated with the Plan pursuant to Code Section 409A, and the
regulations and other guidance thereunder. Accordingly, if an
employee has previously been eligible to participate in a plan
required to b
|
