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Exhibit
(10)(x)
POTLATCH
CORPORATION
MANAGEMENT DEFERRED
COMPENSATION PLAN
Effective June 1,
2008
POTLATCH
CORPORATION
MANAGEMENT DEFERRED
COMPENSATION PLAN
Effective June 1,
2008
| 1. |
ESTABLISHMENT AND PURPOSE |
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(a) |
The Potlatch Corporation Management Deferred Compensation Plan
was adopted on May 16, 2008, by the Board of Directors of
Potlatch Corporation to provide an opportunity for senior
management who have made the maximum elective contributions
permitted under the Savings Plan to elect to defer additional
compensation and to invest and accumulate such compensation on a
tax-deferred basis. |
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(b) |
This Plan is also intended to provide the rules and regulations
for deferral of awards under the Potlatch Corporation Management
Performance Award Plan II (“MPAP II”) for the 2008
performance period and under the Potlatch Corporation Annual
Incentive Plan (the “AIP”) beginning with the 2009
performance period. |
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(c) |
Effective as of October 1, 2008, this Plan also provides
the rules and regulations for the administration of deferrals
previously made under the MPAP II. For avoidance of doubt,
deferrals made under the Potlatch Corporation Management
Performance Award Plan, which are not subject to Section 409A
of the Code, continue to be subject to the rules of that plan and
the administrative rules and regulations applicable
thereto. |
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(d) |
The provisions of this Plan for elections to defer base salary
are effective for base salary earned on or after January 1,
2009. |
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(e) |
The Plan is intended to comply with the requirements of
Section 409A of the Code. The Plan is intended to constitute
an unfunded program for the benefit of a select group of management
or highly compensated employees of ERISA, and, as such, to be
exempt from all of the provisions of Parts 2, 3, and 4 of Title I
of ERISA. |
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(a) |
“Affiliate” means any other entity which would be
treated as a single employer with the Corporation under
Section 414(b) or (c) of the Code, provided that in
applying such Sections and in accordance with the rules of Treasury
Regulations Section 1.409A-1(h)(3), the language “at
least 50 percent” shall be used instead of “at least 80
percent.” |
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(b) |
“AIP” means the Potlatch Corporation Annual
Incentive Plan. |
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(c) |
“Beneficiary” means the person or persons
designated by the Employee to receive payment of the
Employee’s Deferred Compensation Account in the event of the
death of the Employee. |
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(d) |
“Board” and “Board of Directors” means
the board of directors of the Corporation. |
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(e) |
“Code” means the Internal Revenue Code of 1986, as
amended. |
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(f) |
“Committee” means the Executive Compensation and
Personnel Policies Committee of the Board. |
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(g) |
“Compensation” means the amount of compensation due
by the Corporation to an Employee for his or her services as an
Employee as either (i) annual base salary or (ii) an
award under the MPAP II or AIP. |
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(h) |
“Corporation” means Potlatch Corporation, a
Delaware corporation. |
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(i) |
“Deferred Compensation Account” means the
bookkeeping account established pursuant to Section 6 on
behalf of each Employee who elects to participate in the Plan.
Within an Employee’s Deferred Compensation Account, a
Directed Investment Account, Stock Unit Account, Cash Account, and
appropriate sub-accounts, shall be maintained as are necessary for
the proper administration of a Participant’s Deferred
Compensation Account. An Employee who has made a deferral under the
MPAP II or the AIP shall be deemed to have elected to participate
in this Plan. |
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(j) |
“Disabled” means an Employee 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 months. |
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(k) |
“Dividend Equivalent” means an amount equal to the
cash distribution paid on an outstanding share of the
Corporation’s common stock. Dividend Equivalents shall be
credited to Stock Units as if each Stock Unit were an outstanding
share of the Corporation’s common stock, except that Dividend
Equivalents shall also be credited to fractional Stock
Units. |
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(l) |
“Equal Installment Method” is a distribution method
available only for amounts treated as credited to a Cash Account
under Section 7(a) for a Participant who incurred a Separation
from Service prior to October 1, 2008, and which are payable
in installments. Under the Equal Installment Method, the first
installment is equal to the principal amount divided by the total
number of installments due. All subsequent installments are equal
to the amount of the initial installment plus the full additional
amount of earnings credited to the Participant’s Cash Account
since the last installment payment. |
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(m) |
“ERISA” means the Employee Retirement Income
Security Act of 1974, as amended. |
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(n) |
“Employee” means a full-time salaried employee of
the Corporation or any subsidiary thereof. |
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(o) |
“MPAP II” means the Potlatch Corporation Management
Performance Award Plan II, as amended. |
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(p) |
“Performance-Based Compensation” means compensation
the amount of which, or the entitlement to which, is contingent on
the satisfaction of preestablished organizational or individual
performance criteria relating to a performance period of at least
twelve (12) consecutive months. Organizational or individual
performance criteria are considered preestablished if established
in writing by not later than ninety (90) days after the
commencement of the period of service to which the criteria
relates, provided that the outcome is substantially uncertain at
the time the criteria are established. Performance-Based
Compensation does not include any amount or portion of any amount
that will be paid either regardless of performance, or based upon a
level of performance that is substantially certain to be met at the
time the criteria is established. Compensation may be
Performance-Based Compensation where the amount will be paid
regardless of satisfaction of the performance criteria due to the
Employee’s death, disability, or a Change in Control Event
(as defined in Treasury Regulation Section 1.409A-3(i)(5)),
provided that a payment made under such circumstances without
regard to the satisfaction of the performance criteria will not
constitute performance-based compensation. For this purpose, a
disability refers to any medically determinable physical or mental
impairment resulting in the Participant’s inability to
perform the duties of his or her position or any substantially
similar position, where such impairment can be expected to result
in death or can be expected to last for a continuous period of not
less than six months. Performance-Based Compensation may include
payments based upon subjective performance criteria, provided that:
(i) the subjective performance criteria are bona fide and
relate to the performance of the Participant, a group of service
providers that includes the Participant, or a business unit for
which the Participant provides services (which may include the
entire organization); and (ii) the determination that any
subjective performance criteria have been met is not made by the
Participant or a family member of the Participant (as defined in
Section Code 267(c)(4) applied as if the family of an individual
includes the spouse of any member of the family), or a person under
the effective control of the Participant or such a family member,
and no amount of the compensation of the person making such
determination is effectively controlled in whole or in part by the
Participant or such a family member. |
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(q) |
“Plan” means the Potlatch Corporation Management
Deferred Compensation Plan. |
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(r) |
“Plan Year” means the 12-month period beginning
January 1 and ending December 31. |
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(s) |
“Savings Plan” means the Potlatch Corporation
Salaried Employees Savings Plan, as amended. |
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(t) |
“Separation from Service” means termination of an
Employee’s service as an Employee consistent with
Section 409A of the Code and the regulations promulgated
thereunder. For purposes of the Plan, “Separation from
Service” generally means termination of an Employee’s
employment as a common-law employee of the Corporation and each
Affiliate of the Corporation. A Separation from Service will not be
deemed to have occurred if an Employee continues to provide
services to the Corporation or an Affiliate in a capacity other
than as an employee and if the former employee is providing a level
of bona fide services that is fifty percent (50%) or more of
the average level of services rendered, during the immediately
preceding thirty-six (36) months of employment with the
Corporation or Affiliate; provided, however, that a Separation from
Service will be deemed to have occurred if it is reasonably
anticipated that an Employee’s service with the Corporation
and its Affiliates will terminate after a certain date or the level
of bona fide services that the Employee will perform after such
date (whether as an employee or another capacity) will permanently
reduce to a rate that is less than twenty percent (20%) of the
bona fide level of services rendered, on average, during the
immediately preceding thirty-six (36) months (or if employed
by the Corporation and its Affiliates less than thirty-six
(36) months, such lesser period). However, the employment
relationship is treated as continuing intact while the individual
is on military leave, sick leave, or other bona fide leave of
absence if the period of such leave does not exceed six months, or
if longer, so long as the individual’s right to reemployment
with the service recipient is provided either by statute or by
contract. If the period of leave exceeds six months and the
individual’s right to reemployment is not provided either by
statute or by contract, the employment relationship is deemed to
terminate on the first date immediately following such six-month
period. |
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(u) |
“Stock Units” means the deferred portion of
Compensation, which is converted into a unit denominated in shares
of the Corporation’s common stock. |
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(v) |
“Value” means the closing price of the
Corporation’s common stock as reported in the New York Stock
Exchange, Inc., composite transactions reports for the relevant
date. |
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(w) |
“Variable Fractions Method” is a distribution
method for amounts payable in installments. The amount of the first
installment is determined by dividing the Participant’s
account balance by the total number of installments due. Each
subsequent annual installment is equal to the Participant’s
account balance as adjusted for earnings or losses since the last
distribution date divided by a denominator equal to the total
number of installments due minus the number of installments
previously paid. |
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(x) |
“Year” shall mean the calendar year. |
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| 3. |
ELIGIBILITY TO MAKE DEFERRALS |
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(a) |
Each Employee who is eligible for an award under the
Corporation’s Long-Term Incentive Plan and has made the
maximum elective deferrals under Section 402(g) of the Code or
the maximum elective contributions permitted under the terms of the
Savings Plan shall be eligible to elect to defer base salary under
the Plan. |
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(b) |
Each Employee who is eligible to receive an award under the
MPAP II or AIP shall be eligible to defer such award under the
Plan; provided that, an Employee who is required to defer his or
her award shall automatically become a participant in this
Plan. |
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(a) |
Each Employee who is eligible to participate in the Plan
pursuant to Section 3 above shall prior to the beginning of
each Year and in accordance with the applicable deadline
established by the Committee have the option to make an irrevocable
election to defer a percentage of his or her Compensation earned
during the following Year before the beginning of each such Year.
Compensation paid after December 31 of a Plan Year for
services performed by the Employee during the final payroll period
of the calendar year and which payroll period includes the last day
of such calendar year shall be treated as earned for services
performed in the year paid. |
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(b) |
Notwithstanding the foregoing, an Employee may make an
irrevocable election to participate during a Year with respect to
Compensation earned during that Year and subsequent to the filing
of such election, provided such election is made within thirty
(30) days of the Employee’s initial eligibility to
participate in this Plan and any other nonqualified deferred
compensation plans treated as a single plan with this Plan under
Section 409A of the Code. Any such initial election shall
apply only to Compensation earned for services performed after the
date of the election. If compensation is due for services performed
over a period of time which includes the period both before and the
period after the date of the election, the election will apply to
an amount equal to the total amount of the compensation paid for
such 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. |
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(c) |
Notwithstanding the preceding rules, a deferral election for an
award of Compensation under MPAP II or AIP, which constitutes
Performance-Based Compensation, may be made no later than six
months before the end of such performance period and such election
shall apply to the full amount of such Performance-Based
Compensation Payment. This special election rule is available only
(i) if the Employee performs services for the Company or its
Affiliate continuously from the later of the beginning of the
performance period or the date the performance criteria are
established through the date an Election is
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made with respect to such
payment, (ii) the Election is made before the amount of the
Performance-Based Compensation to be received becomes reasonably
ascertainable or, if the Performance-Based Compensation is a
specified or calculable amount, when the amount is substantially
certain to be paid, and (iii) the performance period is at
least twelve (12) months in duration.
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(d) |
The Committee may also adopt such additional or alternative
election rules provided that such rules comply with the rules of
Section 409A of the Code and applicable regulatory
authority. |
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(a) |
An Employee who elects to participate in the Plan with respect
to annual base salary or an award under the MPAP II or AIP for a
Year shall file a deferral election with respect to each type of
Compensation on such form as the Committee shall prescribe, which
shall indicate: |
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(i) |
The amount or percentage of each type of Compensation that such
Employee elects to defer pursuant to the terms of the Plan. The
percentage must be in increments of ten percent (10%) and may
not exceed fifty percent (50%) in the case of annual base
salary. An election to voluntarily defer an award under MPAP II or
AIP shall be for not less than fifty percent (50%) of such
award. Notwithstanding the foregoing, an election to defer
compensation may not reduce the Employee’s remaining
compensation below the amount necessary to satisfy applicable
employment tax withholding, income tax withholding, and benefit
plan withholding. This election shall be irrevocable with respect
to each type of Compensation for that Year to which it applies
after the applicable deadline for making such election as provided
in Section 4 for that Year. |
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(ii) |
The percentage of the Compensation deferred pursuant to the
election that is to be converted into Stock Units. |
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(b) |
An Employee who elects to Participate in the Plan shall have
only one form of payment election in effect for all amounts
deferred under the Plan. Subject to Section 5(c), below, at
the time of an Employee’s initial election to defer base
salary or an award under the MPAP II or AIP, the Employee shall
file an election and shall indicate: |
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(i) |
Whether the deferred Compensation shall be paid in a lump sum
or paid in five (5), ten (10), or fifteen (15) annual
installments. For purposes of the Plan, installment payments shall
be treated as a single distribution for purposes of
Section 409A of the Code. Deferred Compensation shall be paid
in fifteen (15) annual installments unless the Employee elects
otherwise. |
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(ii) |
Whether benefit payments shall commence immediately upon
separation from service or attainment of a specified age, if
later. |
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(c) |
A Participant’s election as to the time and form of
payment of deferred Compensation shall be irrevocable and binding
on all deferred Compensation under the Plan. For avoidance of doubt
it is intended that a Participant shall have only one method of
payment in effect. Notwithstanding any provision herein to the
contrary, an Employee or former Employee may revoke a previous
election and make a new election as to the time and form of
distribution under the Plan. Such new election shall take effect
twelve (12) months after it is filed with the Committee and
shall apply only to that portion of the Employee’s or former
Employee’s Deferred Compensation Account and/or Stock Units
scheduled to be paid more than twelve (12) months after the
date the election is filed with the Committee; provided, however,
that the newly scheduled distribution date must be at least five
years later than the originally scheduled distribution
date. |
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(d) |
For purposes of determining the payment election in effect for
a participant with existing deferrals under MPAP II as of the date
this Plan is effective, such existing payment election shall remain
in effect for all existing and future deferrals under the Plan
unless the Employee elects and becomes subject to a new payment
election in accordance with the rules of this paragraph.
Notwithstanding the limitations on changes in the time or form of
payment under this Section, a Participant may, not later than the
date permitted by the Committee, which shall in no event be later
than December 31, 2008, change his or her election with
respect to the time or form of payment for his or her Deferred
Compensation Account, provided that such election shall not be
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