LINCOLN ELECTRIC HOLDINGS, INC.
2005 DEFERRED COMPENSATION PLAN FOR EXECUTIVES
(AS AMENDED AND RESTATED AS OF
DECEMBER 31, 2008)
The Lincoln
Electric Holdings, Inc. 2005 Deferred Compensation Plan (the
“Plan”) was established by Lincoln Electric Holdings,
Inc., effective December 30, 2004 to allow designated
management and highly compensated employees to defer a portion of
their current salary and bonus compensation. The Plan is hereby
amended and restated as of December 31, 2008.
The Plan is
intended to comply with Section 409A of the Code, and shall be
construed and interpreted in accordance with such
intent.
It is intended
that the Plan will aid in attracting and retaining employees of
exceptional ability by providing these benefits. The terms and
conditions of the Plan are set forth below.
DEFINITIONS AND
CONSTRUCTION
Section 2.1 Definitions. Whenever the
following terms are used in this Plan they shall have the meanings
specified below unless the context clearly indicates to the
contrary:
(a) “Account”:
The bookkeeping account maintained for each Participant showing his
or her interest under the Plan.
(b) “Accounting
Date”: December 31 of each year and the last day of any
calendar quarter in which a Participant’s Settlement Date
occurs.
(c) “Accounting
Period”: The period beginning on the day immediately
following an Accounting Date and ending on the next following
Accounting Date.
(d) “Administrator”:
The committee established pursuant to the provisions of
Section 7.1.
(e) “Base
Salary”: The base earnings earned by a Participant and
payable to him by the Corporation with respect to a Plan Year
without regard to any increases or decreases in base earnings as a
result of an election to defer base earnings under this Plan, or an
election between benefits or cash provided under a plan of the
Corporation maintained pursuant to Section 125 or 401(k) of
the Code.
(f) “Beneficiary”:
The person or persons (natural or otherwise), within the meaning of
Section 6.6, who are entitled to receive distribution of the
Participant’s Account balance in the event of the
Participant’s death.
(g) “Board”:
The Board of Directors of Holdings.
(h) “Bonus”
or “Bonuses”: Any cash bonus earned by a Participant
and payable to him by the Corporation with respect to any bonus
plan year ending within a Plan Year without regard to any decreases
as a result of an election to defer any portion of a bonus under
this Plan, or an election between benefits or cash provided under a
plan of the Corporation maintained pursuant to Section 125 or
401(k) of the Code.
(i) “Cash
LTIP”: Any cash incentive award under the Lincoln Electric
Holdings, Inc. Cash Long Term Incentive Plan.
(j) “Code”:
The Internal Revenue Code of 1986, as amended from time to time,
and any rules and regulations promulgated thereunder. Any reference
to a provision of the Code shall also include any successor
provision that modifies, replaces or supersedes it.
(k) “Committee”:
The Compensation & Executive Development Committee of the
Board.
(l) “Compensation”:
The amount of Base Salary plus Bonuses earned by a Participant and
payable to him by the Corporation with respect to a Plan Year, plus
the amount of Cash LTIP awarded to a Participant.
(m) “Corporation”:
Holdings and any Participating Employer or any successor or
successors thereto.
(n) “Deferral
Commitment”: An agreement by a Participant to have a
specified percentage or dollar amount of his or her Compensation
deferred under the Plan.
(o) “Deferral
Period”: The Plan Year for which a Participant has elected to
defer a portion of his or her Compensation or with respect to the
Cash LTIP, the Plan Year(s) corresponding to the measurement period
for the Cash LTIP.
(p) “Disability”:
A Participant shall be considered to have a Disability if the
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 twelve
(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 twelve (12) months, receiving income
replacement benefits for a period of not less than three
(3) months under the Corporation’s plan providing
benefits for short term disability.
(q) “Effective
Date”: This Plan was originally established by the
Corporation effective as of December 30, 2004. This amended
and restated Plan shall be effective as of December 31,
2008.
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(r) “Employee”:
Any employee of the Corporation who is, as determined by the
Committee, a member of a “select group of management or
highly compensated employees” of the Corporation, within the
meaning of Sections 201, 301 and 401 of ERISA, and who is
designated by the Committee as an Employee eligible to participate
in the Plan.
(s) “Employee
Savings Plan”: The Lincoln Electric Holdings, Inc. Employee
Savings Plan.
(t) “ERISA”:
The Employee Retirement Income Security Act of 1974, as amended
from time to time, and any rules or regulations promulgated
thereunder. Any reference to a provision of ERISA shall also
include any provision that modifies, replaces or supersedes
it.
(u) “Financial
Hardship”: A severe financial hardship to the Participant
resulting from an illness or accident of the Participant, the
Participant’s spouse, or a dependent 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.
(v) “Holdings”:
Lincoln Electric Holdings, Inc., an Ohio corporation.
(w) “Investment
Funds”: Has the meaning set forth in
Section 5.3.
(x) “Investment
Request”: An investment preference request filed by a
Participant which (i) shall apply with respect to contributions
credited to the Participant’s Account until the timely filing
of a subsequent Investment Request and (ii) shall determine
the manner in which such credited contributions shall be initially
allocated by the Participant among the various Investment Funds
within the Plan. A subsequent Investment Request may be submitted
in writing (or in an electronic format) to the Administrator by the
Participant. Such Investment Request will be effective on the first
business day of the next calendar month following receipt by the
Administrator of such Investment Request.
(y) “Investment
Re-Allocation Request”: An investment preference request
filed by a Participant which shall re-direct the manner in which
earlier credited amounts to a Participant’s Account, as well
as any appreciation (or depreciation) to-date, are invested within
the deemed Investment Funds available in the Plan. An Investment
Re-Allocation Request may be submitted in writing (or in an
electronic format) to the Administrator by the Participant. Such
Investment Re-Allocation Request will be effective on the first
business day of the next calendar month with respect to the balance
of the Participant’s Account following receipt by the
Administrator of such Investment Re-Allocation Request.
(z) “Participant”:
An Employee participating in the Plan in accordance with the
provisions of Section 3.1 or former Employee retaining
benefits under the Plan that have not been fully paid.
(aa) “Participating
Employer”: The Lincoln Electric Company, and any other
subsidiary or affiliate of Holdings that adopts the Plan with the
consent of the Committee. Any Participating Employer that adopts
the Plan and thereafter ceases to exist, ceases to be a subsidiary
or affiliate or Holdings or withdraws from the Plan shall no longer
be considered a Participating Employer unless otherwise determined
by the Committee.
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(bb) “Participation
Agreement”: The Agreement submitted by a Participant to the
Administrator with respect to one (1) or more Deferral
Commitments.
(cc) “Plan”:
The Plan set forth in this instrument as it may, from time to time,
be amended.
(dd) “Plan
Year”: The twelve (12) — month period beginning January
1 through December 31, commencing with the Plan Year beginning
January 1, 2005.
(ee) “Retirement”:
Termination of employment with the Corporation on or after
attainment of age fifty-five (55).
(ff) “Section 409A”:
Section 409A of the Code and any proposed, temporary or final
regulations, or any notices or other guidance, promulgated with
respect to Section 409A.
(gg) “Settlement
Date”: The date on which a Participant separates from service
(within the meaning of Section 409A) with the Corporation.
“Bona fide leaves of absence” (within the meaning of
Section 409A) granted by the Corporation will not be
considered a separation from service during the term of such leave.
Settlement Date will also include a date selected by the
Participant pursuant to Section 6.3.
(hh) “Specified
Employee”: A Participant who is a “specified
employee” within the meaning of Section 409A and
pursuant to procedures established by the Corporation.
(ii) “Subsequent
Deferral Rule”: Any subsequent election (other than
modifications on account of Disability, death or a Financial
Hardship) that alters the payment form or the date of distribution
designated in the Participant’s original Participation
Agreement (i) may not take effect for at least twelve
(12) months; (ii) must be made at least twelve
(12) months prior to the due date of the first payment under
the Participant’s original Participation Agreement; and (iii)
must extend payment of a Participant’s Account at least five
(5) years from the due date of the first payment under the
Participant’s original Participation Agreement.
Section 2.2 Construction. The masculine or
feminine gender, where appearing in the Plan, shall be deemed to
include the opposite gender, and the singular may include the
plural, unless the context clearly indicates to the contrary. The
words “hereof,” “herein,”
“hereunder,” and other similar compounds of the word
“here” shall mean and refer to the entire Plan, and not
to any particular provision or Section.
PARTICIPATION AND
DEFERRALS
Section 3.1 Eligibility and
Participation.
(a) Eligibility.
Eligibility to participate in the Plan for any Deferral Period is
limited to those management and/or highly compensated Employees of
the Corporation (i) who are designated, from time to time, by
the Committee, and (ii) who have elected to make the maximum
elective contributions permitted them under the terms of the
Employee Savings Plan for such Deferral Period.
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(b) Participation.
An eligible Employee may elect to participate in the Plan with
respect to any Deferral Period by submitting a Participation
Agreement to the Administrator by the last business day immediately
preceding the applicable Deferral Period.
(c) Initial
Year of Participation. Except as provided in Section 3.1(d),
in the event that an individual first becomes eligible to
participate during a Plan Year and wishes to elect a Deferral
Commitment with respect to the Compensation earned by and payable
to the individual during such Plan Year, a Participation Agreement
must be submitted to the Administrator no later than thirty
(30) days following such individual’s initial
eligibility. Any Deferral Commitments elected in such Participation
Agreement shall be effective only with regard to Compensation
earned following the submission of the Participation Agreement to
the Administrator. If an eligible Employee does not submit a
Participation Agreement within such period of time, such individual
will not be eligible to participate in the Plan until the first day
of a Deferral Period subsequent to the Deferral Period in which the
individual initially became eligible to participate.
(d) Participation
for 2005. In the event that an individual wishes to elect a
Deferral Commitment with respect to the Compensation earned by and
payable to the individual during the Plan Year beginning
January 1, 2005, a Participation Agreement must be submitted
to the Administrator on or before March 15, 2005. Any Deferral
Commitments elected in such Participation Agreement shall be
effective only with regard to Compensation that has not been paid
or become payable at the time of submission. If an Eligible
Employee does not submit a Participation Agreement within such
period of time, such individual will not be eligible to participate
in the Plan until the first day of a Deferral Period subsequent to
the 2005 Plan Year.
(e) Termination
of Participation. Participation in the Plan shall continue as long
as the Participant is eligible to receive benefits under the
Plan.
Section 3.2 Ineligible Participant. If the
Administrator determines that any Participant may not qualify as a
member of a select group of “management or highly compensated
employees” within the meaning of ERISA, or regulations
promulgated thereunder, the Administrator may determine, in its
sole discretion, that such Participant shall not be permitted to
elect to defer Compensation with respect to any subsequent Deferral
Period.
Section 3.3 Amount of Deferral.
(a) With
respect to each Deferral Period, a Participant may elect to defer a
specified dollar amount or percentage of his or her Compensation,
provided the amount the Participant elects to defer under this Plan
and the Employee Savings Plan shall not exceed the sum of eighty
percent (80%) of his or her Base Salary plus eighty percent (80%)
of his or her Bonus plus eighty percent (80%) of his or her Cash
LTIP with respect to such Deferral Period. Such amount to be
deferred shall be indicated in the Participant’s
Participation Agreement. A Participant may choose to have amounts
deferred under this Plan deducted from his or her Base Salary,
Bonus, Cash LTIP or a combination of the foregoing, which shall
also be indicated in the Participant’s Participation
Agreement.
(b) For the
first Deferral Period with respect to each category of
Compensation, a Participant may elect to defer all or any portion
of his or her Base Salary, Bonus and/or Cash
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LTIP earned or
payable after the later of the effective date of the Participation
Agreement or the date of filing the Participation Agreement with
the Administrator, provided each deferred amount for each Deferral
Period does not exceed the annual limitations under this
Section 3.3 computed for the calendar year in which such
Deferral Period commences and provided that with respect to the
Bonus and/or Cash LTIP, so long as the amounts in respect of the
Bonus and/or Cash LTIP, as applicable, have not yet become
“readily ascertainable” (within the meaning of Section
409A).
(c) A
Participant may change the dollar amount or percentage of his or
her Compensation to be deferred by filing a written notice thereof
with the Administrator. Any such change shall be effective as of
the first day of the Plan Year immediately succeeding the Plan Year
in which such notice is filed with the Administrator; provided,
however, with respect to a Deferral Commitment of an eligible
Employee’s Bonus or Cash LTIP, (i) if the notice of
change is filed with the Administrator on or before the date that
is six months before the end of the performance period applicable
to such Bonus or Cash LTIP, as applicable, and (ii) provided
that the notice is filed with the administrator before the Bonus or
Cash LTIP, as applicable, has become “readily
ascertainable” (within the meaning of Section 409A), the
change in the dollar amount or percentage of Compensation to be
deferred will be effective on the date the change is filed with the
Administrator.
Section 4.1 Establishment of Accounts. The
Corporation, through its accounting records, shall establish an
Account for each Participant. In addition, the Corporation may
establish one (1) or more sub-accounts of a
Participant’s Account, if the Corporation determines that
such sub-accounts are necessary or appropriate in administering the
Plan.
Section 4.2 Elective Deferred Compensation.
A Participant’s Compensation that is deferred pursuant to a
Deferral Commitment shall be credited to the Participant’s
Account within thirty (30) days following the date the
corresponding non-deferred portion of his or her Compensation would
have been paid to the Participant. Any withholding of taxes or
other amounts with respect to deferred Compensation which is
required by state, federal or local laws shall be withheld from the
Participant’s deferred Compensation.
Section 4.3 Determination of
Accounts.
(a) The
amount credited to each Participant’s Account as of a
particular date shall equal the deemed balance of such Account as
of such date. The balance in the Account shall equal the amount
credited pursuant to Section 4.2, and shall be adjusted in the
manner provided in Section 4.4.
(b) The
Corporation, through its accounting records, shall maintain a
separate and distinct record of the amount in each Account as
adjusted to reflect income, gains, losses, withdrawals and
distributions.
Section 4.4 Adjustments to
Accounts.
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(a) Each
Participant’s Account shall be debited with the amount of any
distributions under the Plan to or on behalf of the Participant or,
in the event of his or her death, his or her Beneficiary during the
Accounting Period ending on such Accounting Date.
(b) The
Participant’s Account shall next be credited or debited, as
the case may be, on a daily basis with the performance of each
deemed Investment Fund based on the manner in which the balance of
such Participant’s Account has been allocated among the
deemed Investment Funds provided for in Article V. The
performance of each deemed Investment Fund (either positive
o
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