This Executive Compensation Plan Agreement involves
Title: MARRIOTT INTERNATIONAL, INC. EXECUTIVE DEFERRED COMPENSATION PLAN
Governing Law: Maryland Date: 2/15/2008
Industry: Hotels and Motels Sector: Services
MARRIOTT INTERNATIONAL, INC.
EXECUTIVE DEFERRED COMPENSATION PLAN
Amended and Restated as of January 1, 2008
TABLE OF CONTENTS
ARTICLE I - DEFINITIONS
|1.6||C OMPANY A CCRUALS||2|
|1.8||D EFFERAL P ERCENTAGE||2|
|1.9||D EFERRED C OMPENSATION||2|
|1.10||D EFERRED C OMPENSATION R ESERVE||2|
|1.11||E FFECTIVE D ATE||3|
|1.13||E LECTION Y EAR||3|
|1.15||F ISCAL Y EAR||3|
|1.16||HR O FFICER||3|
|1.17||I N -S ERVICE W ITHDRAWAL||3|
|1.18||LTCI C OMPENSATION||3|
|1.19||N ON -E MPLOYEE D IRECTOR||3|
|1.21||P ERMANENT D ISABILITY||4|
|1.23||REINSTATEMENT OR REINSTATED||5|
|1.24||RETIRE OR RETIREMENT||5|
|1.25||RETIREMENT SAVINGS PLAN||5|
|1.26||SEPARATION FROM SERVICE||5|
|1.28||V ESTED P ORTION||5|
|1.29||Y EAR OF S ERVICE||6|
ARTICLE II - PARTICIPANT ELECTIONS
|2.1||D EFERRED C OMPENSATION R ESERVE||7|
|2.3||F ORM OF E LECTION||8|
ARTICLE III - PARTICIPANT ACCOUNTS
|3.1||I NDIVIDUAL A CCOUNTS||9|
|3.2||C OMPANY A CCRUALS||9|
|3.5||C REDITING OF E ARNINGS||11|
|3.6||A CCOUNTS D O N OT R ESULT IN P ROPERTY R IGHTS||11|
|3.7||N O A SSIGNMENT OF I NTERESTS||12|
|3.8||F EDERAL AND S TATE T AXES||12|
ARTICLE IV - DISTRIBUTIONS
|4.1||E LECTION OF D ISTRIBUTION||13|
|4.2||F ORM AND T IMING OF D ISTRIBUTION||13|
|4.4||CHANGES IN DISTRIBUTION ELECTION||16|
|4.6||D ISCHARGE OF O BLIGATION F OR P AYMENT||17|
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ARTICLE V - ADMINISTRATION
ARTICLE VI - CLAIMS PROCEDURE
|6.1||I NITIAL C LAIMS||19|
ARTICLE VII - MISCELLANEOUS
|7.1||P LAN N OT A N E MPLOYMENT C ONTRACT||20|
|7.2||N O T RUST C REATED||20|
|7.3||A MENDMENT OR T ERMINATION OF P LAN||20|
|7.4||E FFECT OF P LAN||20|
|7.6||A PPLICABLE L AW||21|
|B ENCHMARK F UNDS||22|
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MARRIOTT INTERNATIONAL, INC. EXECUTIVE DEFERRED COMPENSATION PLAN
WHEREAS, as of March 27, 1998, the Company established an unfunded deferred compensation arrangement known as the Marriott International, Inc. Executive Deferred Compensation Plan (the “Plan”) for the benefit of a select group of management and highly compensated employees of the Company and its subsidiaries; and
WHEREAS, effective January 1, 2001, the Plan was amended and restated to reflect amendments made to the Plan following March 27, 1998; and
WHEREAS, effective October 1, 2004, the Plan was amended and restated to reflect amendments made to the Plan following January 1, 2001; and
WHEREAS, the Company wishes to amend and restate the Plan to reflect amendments that have been made following the October 1, 2004 restatement and certain administrative changes, and to comply with section 409A of the Internal Revenue Code.
NOW THEREFORE, the Plan, as herein amended and restated, shall be effective as of January 1, 2008.
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For purposes of this Plan, unless the context requires otherwise, the following words and phrases, when used herein with initial capital letters, shall have the meanings indicated:
1.1 “ Account ” shall mean, with respect to each Participant, the amount of Company Accruals, Deferred Compensation and earnings credited to a Participant under the Deferred Compensation Reserve.
1.2 “ Administrator ” means the Company’s Senior Vice President for Executive Compensation.
1.3 “ Code ” means the Internal Revenue Code of 1986, as amended, or any successor statute, including the regulations issued thereunder.
1.4 “ Committee ” means the Compensation Policy Committee appointed by the Board of Directors of Marriott International, Inc.
1.5 “ Company ” means Marriott International, Inc. and any Subsidiary that (a) elects to join the Plan, and (b) obtains the consent of the Committee to do so.
1.6 “ Company Accruals ” means the amounts credited to the Deferred Compensation Reserve pursuant to Section 3.2.
1.7 “ Compensation ” means (a) with respect to Employees, Compensation as defined for purposes of computing contributions under the Retirement Savings Plan, determined, however, by including LTCI Compensation and without regard to any Elections made by the Employee to defer any compensation under this Plan; and (b) with respect to Non-Employee Directors, fees payable by the Company during the Election Year. Notwithstanding the preceding sentence, effective January 1, 2007, for purposes of determining contributions under the Plan, compensation received by the Employee on or after January 1, 2007, for payroll periods ending on or after December 28, 2006, shall not include payments made after the Employee’s Separation from Service.
1.8 “ Deferral Percentage ” means the percentage of a Participant’s Compensation for the Election Year to be deferred in accordance with an Election pursuant to Article II of this Plan.
1.9 “ Deferred Compensation ” means Compensation with respect to which a Participant has made an Election to defer receipt thereof in accordance with Article II of this Plan.
1.10 “ Deferred Compensation Reserve ” means the book reserve reflecting the total aggregate amounts credited to the individual accounts of Participants under Articles II and III of this Plan.
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1.11 “ Effective Date ” means January 1, 2008, the effective date of this restatement of the Plan, except as otherwise indicated herein. The Plan was originally effective March 27, 1998.
1.12 “ Election ” means an election made by a Participant in accordance with Article II of this Plan.
1.13 “ Election Year ” means, for an Employee, the calendar year for which a Participant makes an Election with respect to Compensation received during such calendar year pursuant to Article II of this Plan. “Election Year” means, for a Non-Employee Director, the one-year period that begins immediately following the first Annual Meeting of Shareholders which is subsequent to the Election period and ends on the next Annual Meeting of Shareholders.
1.14 “ Employee ” means any individual employed by the Company. Any Employee who, at the request and on the assignment of the Company specifically referencing this provision of the Plan, becomes an employee of another employer shall continue to be treated as an Employee for all purposes hereunder during the period of such assignment.
1.15 “ Fiscal Year ” means each year beginning on the first day of each fiscal year of Marriott International, Inc. and ending on the last day of each fiscal year of Marriott International, Inc. The fiscal year of Marriott International, Inc. is currently an annual period which varies from 52 to 53 weeks and ends on the Friday closest to December 31. A reference to a Fiscal Year preceding an Election Year means the Fiscal Year ending closest to the first day of the Election Year.
1.16 “ HR Officer ” means the most senior human resources executive of the Company, as designated by the President of the Company.
1.17 “ In-Service Withdrawal ” means a distribution of Deferred Compensation and the earnings thereon, in accordance with a Participant’s Election under Section 4.1, before a Participant incurs a Separation from Service from the Company.
1.18 “ LTCI Compensation ” means any compensation payable under a plan, agreement or award designated as a long term incentive or premium incentive plan, agreement or award.
1.19 “ Non-Employee Director ” means an individual who is not an Employee and (i) is a member of the Board of Directors of Marriott International, Inc., or (ii) has been elected to serve as such for a term which will begin at a subsequent point in time.
1.20 “ Participant ” means an individual who meets the requirements of any of the following paragraphs (a) through (f):
(a) Employees who are eligible to participate in the Retirement Savings Plan and have at least one Year of Service as of a date in the Election Year and Compensation, as defined below, greater than or equal to $165,000 or such higher Compensation limitation as may be determined for such Election Year by the Administrator on advice of counsel; provided, however, that such Employee’s Election shall be effective solely with respect to Compensation paid or payable on or after the date such Employee has completed one Year of Service.
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For purposes of this Section 1.20(a), “Compensation” means:
With respect to Employees other than commissioned sales executive Employees of the Marriott Vacation Club International Division of the Company, the sum of the following: (i) the rate of base pay as of November 1 (or such other date as may be specified by the Administrator) immediately preceding the Election Year, annualized; (ii) the executive bonuses, commissions and management quarterly banquet awards received from January 1 through October 31 (or such other date as may be specified by the Administrator) of the year preceding the Election Year; and (iii) with respect to Employees who have review dates between October 31 (or such other date as may be specified by the Administrator) of the year preceding the Election Year and the last day of February of the Election Year, the annualized base pay as determined in (i), above, times 1.04.
With respect to commissioned sales executive Employees of the Marriott Vacation Club International division of the Company, the commissions received from January 1 through October 31 (or such other date as may be specified by the Administrator) of the year preceding the Election Year, annualized.
(b) Select management or highly compensated employees of a business acquired by the Company who, prior to that acquisition, were covered by a nonqualified deferred compensation program of such acquired business;
(c) Employees with whom the Company has entered into a deferred compensation agreement under this Plan;
(d) Non-Employee Directors;
(e) Former Participants, terminated Participants, and their beneficiaries, as appropriate to the context; and
(f) Such other individuals as shall be designated by the HR Officer.
Except with respect to the Participants described in Section 1.20(d) through (f), in no event shall an individual be a Participant in this Plan unless the Administrator has invited such individual to participate in the Plan.
1.21 “ Permanent Disability ” means that the Participant, as a result of a disability, will be prevented on a permanent basis from engaging in any occupation for which he or she is reasonably qualified by education, training or experience as certified by a competent medical authority designated by the Named Fiduciary of the Retirement Savings Plan to make such determination. The foregoing shall include disability attributable to the permanent loss of or loss of use of a member or function of the body, or to the permanent disfigurement of the Participant. The determination of the existence of a Permanent Disability shall be made by the Administrator and shall be final and binding upon the Participant and all other parties.
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1.22 “ Plan ” means the Marriott International, Inc. Executive Deferred Compensation Plan, as described herein and as may be amended from time to time.
1.23 “ Reinstatement ” or “ Reinstated ” means an Employee, upon being rehired by the Company, is credited with the same hire date as that Employee’s hire date for his or her most recent period of continuous employment with the Company prior to being rehired.
1.24 “ Retire ” or “ Retirement ” means to have a Separation from Service, other than due to death or Permanent Disability, on or after (i) attainment of age fifty-five (55) and the completion of ten (10) Years of Service, or (ii) completion of 240 whole months of service with the Company, including Service, as defined in the Retirement Savings Plan, and service as a Non-Employee Director. A whole month of service is a monthly period that begins on the date of the month on which service began and ends on the date preceding the same date in the next month.
1.25 “ Retirement Savings Plan ” means the Marriott International, Inc. Employees’ Profit Sharing, Retirement and Savings Plan and Trust.
1.26 “ Separation from Service ” means termination of service with the Company in any of the following circumstances:
(a) Where the Employee or Non-Employee Director voluntarily resigns;
(b) Where the Employee or Non-Employee Director voluntarily Retires;
(c) Where the Employee or Non-Employee Director is discharged;
(d) Where the Employee or Non-Employee Director terminates service with the Company on account of a Permanent Disability;
(e) Where the Employee or Non-Employee Director dies; or
(f) Where the Non-Employee Director is not re-elected to serve on the Board of Directors of the Company.
1.27 “ Subsidiary ” means either (a) a member of a controlled group of corporations of which the Company is a member as determined in accordance with the provisions of Code Section 414(b), or (b) an unincorporated trade or business which is under common control by or with the Company as determined in accordance with Section 414(c) of the Code.
1.28 “ Vested Portion ” of a Participant’s Deferred Compensation Reserve account means (i) one hundred percent (100%) of the Deferred Compensation credited to the account, and earnings thereon, and (ii) the portion of the Company Accruals credited to the account, and earnings thereon, which have vested in accordance with the terms of Section 3.3 of the Plan.
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1.29 “ Year of Service ” means, for Employees, a Year of Service as defined in the Retirement Savings Plan and, for Non-Employee Directors, a twelve (12) consecutive month period of service as a Non-Employee Director. If an Employee terminates employment with the Company after at least one Year of Service and subsequently resumes employment with the Company, the Employee’s Years of Service, for eligibility purposes under this Plan, shall be determined in accordance with Article II of the Retirement Savings Plan.
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2.1 Deferred Compensation Reserve .
The Company shall establish and maintain a book reserve (the “Deferred Compensation Reserve”) to which it shall credit the amounts of Deferred Compensation determined in accordance with Section 2.3, Company Accruals under Section 3.2, as well as earnings allocated thereto under Section 3.5. The Deferred Compensation credited each Election Year shall be based on their Elections as provided in Sections 2.2. The Company shall maintain a separate Account under the Deferred Compensation Reserve with respect to each Participant.
2.2 Elections .
(a) Each Participant (other than a Participant under subsections 1.20(e)) shall have the option each calendar year to designate in an Election, in the form prescribed in Section 2.3, a percentage (the “Deferral Percentage”), specified in multiples of one percent (1%), of such Participant’s Compensation for the pertinent Election Year, to be credited to the Deferred Compensation Reserve; provided, however, that the Administrator shall have the right to approve or disapprove such Election by any Participant, in whole or in part, in the sole discretion of the Administrator. The Administrator shall, in its discretion, establish a maximum Deferral Percentage for the Compensation with respect to which a Participant may make an Election for the Election Year (including LTCI Compensation, subject to the election requirements in (b) below). In accordance with procedures established by the Administrator, a Participant may make a separate election under this Section 2.2(a) with respect to regular pay and to bonus.
(b) Elections described in Section 2.2(a) shall be made in accordance with procedures prescribed by the Administrator on or before (i) the last day of the calendar year immediately preceding the Election Year or (ii) such other earlier date as designated by the Administrator, provided such date precedes any service period during which the Participant earns the Compensation for which the election is made; provided, further, that an Election to have a portion or all of a Participant’s LTCI Compensation for an Election Year credited to the Deferred Compensation Reserve shall be made on or before (i) the last business day of the calendar year preceding the calendar year which precedes the Election Year or (ii) such other date as may be designated by the Administrator that satisfies the election rules for performance-based compensation under Code section 409A(a)(4)(B)(iii). Notwithstanding the preceding sentence, effective January 1, 2005, with respect to Deferred Compensation subject to Code section 409A relating all or in part to services performed on or before December 31, 2005, an Election may be made any time on or before March 15, 2005; provided that on or before the date of such Election the subject Deferred Compensation has not been paid or become payable to the Participant. Late Elections shall be invalid.
(c) Except as provided in Article IV, an Election shall be irrevocable with respect to all Compensation payable during an Election Year that is subject to the Election. A Participant’s Election made as to an Election Year shall remain in effect for all subsequent Election Years unless the Participant notifies the Administrator, in accordance with procedures specified by the Administrator, of such Participant’s desire to modify his or her Election.
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(d) If an Employee is a Participant in accordance with Section 1.20(a) for an Election Year and incurs a Separation from Service, upon the subsequent Reinstatement of such Employee within the same Election Year, the Employee shall immediately be reinstated as a Participant and shall be subject to the same deferral Elections as were in effect immediately prior to such Employee’s Separation from Service.
2.3 Form of Election .
(a) Each Election shall be made on a form provided by the Administrator within the period described in Section 2.2(b), and shall designate a Deferral Percentage. Such Elections shall designate a distribution commencement date and manner of distribution in accordance with Article IV. If no designation is received by the Administrator within the prescribed time period, the Administrator shall select the time and manner of distribution within the period described in Section 2.2(b) and notify the Participant of such selection.
(b) For purposes of this Section 2.3, Participants eligible to make Elections provided herein shall include only Participants described in Sections 1.20(a), (b), (c), (d) and (f), and shall exclude all other Participants.
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3.1 Individual Accounts .
The Administrator shall establish and maintain records reflecting each Participant’s Account in the Deferred Compensation Reserve to which the Administrator shall credit Deferred Compensation in accordance with each Participant’s Election pursuant to Section 2.3, Company Accruals pursuant to Section 3.2 and earnings pursuant to Section 3.5.
3.2 Company Accruals .
(a) Discretionary Company Accruals . The Company may make discretionary Company Accruals for each Election Year to be allocated to the Deferred Compensation Reserve on behalf of Participants. In any Election Year for which the Company makes such discretionary Company Accrual, the Company Accrual shall be calculated as follows:
|(i)||for Participants whose Compensation is equal to or greater than a threshold dollar amount established for that Election Year by the Administrator in its sole discretion (which threshold shall apply to each future Election Year unless changed by the Administrator) but less than the compensation threshold established under the following subparagraph (ii): a percentage of the first three percent (3%) of Compensation deferred by the Participant under the Plan for the Election Year.|
|(ii)||for Participants whose Compensation is equal to or greater than a threshold dollar amount established for that Election Year by the Administrator in its sole discretion (which threshold shall apply to each future Election Year unless changed by the Administrator): a percentage of the first six percent (6%) of Compensation deferred under the Plan for the Election Year.|
Notwithstanding the preceding sentence, a Participant shall only be eligible for Company Accruals for Compensation earned during periods in which the Participant is eligible to participate in the Retirement Savings Plan.
(b) Additional discretionary Company Accruals may be made by the Company from time to time. Such additional Company Accruals may be made in accordance with procedures established by the Company at the time such Company Accruals are allocated to a Participant’s Account.
(c) Company Accruals under this Section 3.2 shall be allocated only on behalf of Participants in the Plan who are actively employed (including Participants on approved leaves of absence) by the Company or serving as Non-Employee Directors as of the last day of the
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Fiscal Year of the Company for which the allocation is made. Notwithstanding the preceding sentence, Participants who incur a Separation from Service before the last day of the Fiscal Year because they Retire, have a Permanent Disability, or die, or because they are employed by a business unit which is sold or otherwise disposed of on or after January 3, 1998, shall be eligible to have C