The Williams Companies, Inc.
Severance Pay Plan
Effective January 1,
2008
THE WILLIAMS COMPANIES, INC.
SEVERANCE PAY PLAN
(As Amended and Restated Effective
as of January 1, 2008)
The following
capitalized words and phrases when used in the text of the Plan
shall have the meanings set forth below. Words in the masculine
gender shall connote the feminine gender as well.
|
1.1
|
|
“ Administrative
Committee ” means the committee appointed to administer
this Plan which is comprised of those individuals who are serving
on the Administrative Committee on December 31, 2004, as well
as any individual who becomes a member of the Administrative
Committee pursuant to Section 5.4, until the time that any
such individual ceases to be a member of the Administrative
Committee pursuant to Section 5.4 of the Plan. The duties of
the Administrative Committee are described in Article 5 of the
Plan.
|
|
1.2
|
|
“ Affiliate ”
means any Person that directly or indirectly, through one
(1) or more intermediaries, controls, is controlled by or is
under common control with the Company.
|
|
1.3
|
|
“ Aggregate
Compensation ” means Regular Wage Base and any annual
cash incentive awards from a Participating Company or Affiliate
annual incentive program.
|
|
1.4
|
|
“ Base Salary ”
means the amount a Participant is entitled to receive as wages or
salary on an annualized basis, including any salary deferral
contributions made to any defined contribution plan maintained by
the Participating Company and any amounts contributed by an
Employee to any cafeteria plan, flexible benefits plan or qualified
transportation plan maintained by the Participating Company in
accordance with Sections 125, 132 and related provisions of
the Code, but excluding all special pay, bonus, overtime, incentive
compensation, commissions, cost of living pay, housing pay,
relocation pay, other taxable fringe benefits and all extraordinary
compensation, payable by the Company or any of its Affiliates as
consideration for the Participant’s services, as determined
on the date immediately preceding termination of employment, except
that in the case of a termination of employment for Good Reason,
Base Salary shall be determined as of the date immediately
preceding the event which constitutes Good Reason.
|
|
1.5
|
|
“ Benefits Committee
” means the committee comprised of those individuals who were
serving on the Benefits Committee on December 31, 2004, as
well as any individual who becomes a member of the Benefits
Committee pursuant to Section 5.3, until the time that any
such individual ceases to be a member of the Benefits Committee
pursuant to Section 5.3 of the Plan. The purely settlor duties
of the Benefits Committee are described in Articles 5 and 6 of the
Plan.
|
2
|
1.6
|
|
“ Board of Directors
” means the board of directors of the Company.
|
|
1.7
|
|
“ Cause ” means
the occurrence of any one (1) or more of the following, as
determined in the good faith and reasonable judgment of the
Administrative Committee:
|
(a) willful failure by an Employee to
substantially perform his duties (as they existed immediately prior
to a reduction in force, job elimination or Change in Control),
other than any such failure resulting from a disability as defined
in the Participating Company or Affiliate disability program;
or
(b) Employee’s conviction of or plea
of nolo contendere to a crime involving fraud, dishonesty or
any other act constituting a felony involving moral turpitude or
causing material harm, financial or otherwise, to the Company or an
Affiliate; or
(c) Employee’s willful or reckless
material misconduct in the performance of his duties which results
in an adverse effect on the Company or an Affiliate; or
(d) Employee’s willful or reckless
violation or disregard of the code of business conduct or other
published policy of the Company or an Affiliate; or
(e) Employee’s habitual or gross
neglect of duties.
|
1.8
|
|
“ Change Date ”
means the date on which a Change in Control first
occurs.
|
|
1.9
|
|
“ Change in Control
” means the occurrence of: (i) a Change in the Ownership
of the Company, as defined below; (ii) a Change in Effective
Control of the Company, as defined below; or (iii) a Change in
the Ownership of a Substantial Portion of the Assets of the
Company, as defined below. To qualify as a Change in Control event,
the occurrence of the event shall be objectively determinable,
strictly ministerial, and shall not involve any discretionary
authority by the Plan Administrator. Code Section 318(a) shall be
applied to determine stock ownership for purposes of this section.
Substantially vested stock underlying a vested option is considered
owned by the person who holds the vested option (and the stock
underlying an unvested option is not considered owned by the person
who holds an unvested option). To qualify as a Change in Control
with respect to a Participant, the Change in Control must relate
to: (x) the corporation for whom the Participant is performing
services at the time of the Change in Control event; (y) the
corporation that is liable for the payment of benefits under this
Plan (or all corporations which are liable for payment if more than
one corporation is liable) but only if either the benefits are
attributable to the performance of service by the Participant for
such corporation (or corporations) or there is a bona fide business
purpose for such corporation (or corporations) to be liable for
such payment and, in either case, no significant purpose of making
such corporation or corporations liable for such payment is the
avoidance of Federal income tax; or (z) a corporation that is
a majority shareholder of a corporation identified in subsections
(x) or (y) above, or any corporation in a chain of
corporations in which each corporation is a majority shareholder of
another corporation in the chain, ending in a corporation
identified in subsections (x) or (y) above. The
provisions of Treas. Reg. § 1.409A-3, as amended, shall govern
with respect to the
|
3
|
|
|
definition of terms as used therein
and in the interpretation of whether a Change in Control has
occurred.
|
(a) A
“Change in the Ownership of the Company” occurs on the
date that any one person or more than one person Acting as a Group,
as defined below, acquires ownership of stock of the Company
(“Stock”) that, together with Stock held by such person
or group, constitutes more than fifty percent (50%) of the total
fair market value or total voting power of the Stock. However, if
any one person or more than one person Acting as a Group, is
considered to own more than fifty percent (50%) of the total fair
market value or total voting power of the Stock, the acquisition of
additional Stock by the same person or persons is not considered to
cause a Change in the Ownership of the Company. An increase in the
percentage of Stock owned by any one person, or persons Acting as a
Group, as a result of a transaction in which the Company acquires
its Stock in exchange for property will be treated as an
acquisition of Stock for purposes of this subsection. This
subsection applies only when there is a transfer of Stock (or
issuance of Stock) and Stock remains outstanding after the
transaction.
(b)
“Acting as a Group” persons will not be considered to
be Acting as a Group solely because they purchase or own Stock at
the same time or as a result of the same public offering. However,
persons will be considered to be Acting as a Group if they are
owners of a corporation that enters into a merger, consolidation,
purchase or acquisition of Stock, or similar business transaction
with the Company. If a person owns stock in both corporations that
enter into a merger, consolidation, purchase or acquisition of
Stock or similar transaction involving another corporation, such
shareholder is considered to be Acting as a Group with other
shareholders only in such corporation prior to the transaction
giving rise to the change and not with respect to the ownership
interest in the other corporation.
(c) A
“Change in the Effective Control of the Company” occurs
only on either of the following dates: (i) The date that any
one person, or more than one person Acting as a Group, acquires (or
has acquired during the twelve (12)-month period ending on the date
of the most recent acquisition by such person or persons) ownership
of the Stock possessing thirty percent (30%) or more of the total
voting power of the Stock of the Company; or (ii) The date a
majority of members of the Board of Directors is replaced during
any 12-month period by directors whose appointment or election is
not endorsed by a majority of the members of the Board of Directors
before the date of the appointment or election.
If any one person,
or more than one person Acting as a Group, is considered to be in
effective control of a Company, the acquisition of additional
control of the Company by the same person or persons is not
considered to cause a Change in the Effective Control of the
Company.
(d) A
“Change in the Ownership of a Substantial Portion of the
Assets of the Company” occurs on the date that any one
person, or more than one person Acting as a Group, acquires (or has
acquired during the twelve (12)-month period ending on the
date
4
of the most
recent acquisition by such person or persons) assets from the
Company that have a total gross fair market value equal to or more
than forty percent (40%) of the total gross fair market value of
all assets of the Company immediately prior to such acquisition or
acquisitions. For this purpose, the gross fair market value means
the value of the assets of the Company or the value of the assets
being disposed of, determined without regard to any liabilities
associated with such assets. Notwithstanding the foregoing, there
is no Change in the Ownership of a Substantial Portion of the
Assets of the Company when there is a transfer of assets to an
entity that is controlled by the shareholders of the Company
immediately after the transfer. A transfer of assets by the Company
is not treated as a Change in the Ownership of a Substantial
Portion of the Assets of the Company if the assets are transferred
to: (i) a shareholder of the Company (immediately before the
asset transfer) in exchange for or with respect to its Stock;
(ii) an entity, fifty percent (50%) or more of the total value
or voting power of which is owned, directly or indirectly, by the
Company; (iii) a person, or more than one person Acting as a
Group, that owns, directly or indirectly, fifty percent (50%) or
more of the total value or voting power of all the outstanding
Stock; or (iv) an entity, at least fifty percent (50%) of the
total value or voting power of which is owned, directly or
indirectly, by a person, or more than one person Acting as a Group,
that owns, directly or indirectly, fifty percent (50%) or more of
the total value or voting power of all the outstanding Stock. For
purposes of this subsection (d), and except as otherwise provided,
a person’s status is determined immediately after the
transfer of assets.
|
1.10
|
|
“ Code ” means
the Internal Revenue Code of 1986, as amended from time to time.
References to a particular section of the Code include references
to regulations and rulings thereunder and to successor
provisions.
|
|
1.11
|
|
“ Company ” means
The Williams Companies, Inc., a Delaware corporation and any
successor or successors thereto that continue this Plan pursuant to
Section 6.1 or otherwise.
|
|
1.12
|
|
“ Compensation
Committee ” means the Committee of the Board of Directors
designated as the Compensation Committee.
|
|
1.13
|
|
“ Comparable Offer of
Employment ” means an offer of employment for a position
with the Company, any of its Affiliates, or any successor of the
Company or its Affiliates that provides for a Regular Wage Base
equal to or greater than the Participant’s Regular Wage Base
immediately preceding the Participant’s termination date. A
successor of the Company or any of its Affiliates shall include,
but shall not be limited to, any entity (or its Affiliate) involved
in or in any way connected with a corporate rearrangement, total or
partial merger, acquisition, sale of stock, sale of assets or any
other transaction. A Comparable Offer of Employment includes,
without limitation, a position that requires the Employee to
transfer to a different work location (without your consent), but
only so long as the Employee’s commuting distance to the new
work location is not increased more than fifty (50) miles
beyond the commuting distance to his or her current work location
(except for travel reasonably required in the performance of your
duties).
|
5
|
1.14
|
|
“ Effective Date
” means January 1, 2008, which is the effective date of
this amendment and restatement.
|
|
1.15
|
|
“ Employee ”
means any regular full-time or part-time employee in the service
and on the payroll of a Participating Company as a common law
employee with the exception of any employee who is excluded either
by this Section 1.15 or Section 2.2. An Employee is
considered as part-time if he is regularly scheduled to work at
least fifty percent of the number of hours in the normal workweek
established by a Participating Company. A regular employee
receiving benefits under a Participating Company’s Short-Term
Disability Program or Long-Term Disability Program is an Employee
for purposes of this Plan. Employee shall not include:
|
(a) an
Employee who is a member of a group of Employees represented by a
collective bargaining representative, unless such agreement
expressly provides for coverage of bargaining unit employees under
the Plan;
(b) an
Employee who is not a resident of the United States and not a
citizen of the United States;
(d) a
weekly-paid employee employed at a retail petroleum convenience
store in any capacity other than a store manager;
(e) a
seasonal employee, temporary employee, leased employee, term
employee, or an employee not employed on a regularly scheduled
basis;
(f) a
person who has a written employment contract or other contract for
services, unless such contract expressly provides that such person
is an employee;
(g) a
person who is paid through the payroll of a temporary agency or
similar organization regardless of any subsequent reclassification
as a common law employee;
(h) a
person who is designated, compensated or otherwise treated as an
independent contractor by a Participating Company or its Affiliates
regardless of any subsequent reclassification as a common law
employee;
(i) a
person who has a written contract with a Participating Company or
its Affiliates which states either that such person is not an
employee or that such person is not entitled to receive employee
benefits from a Participating Company for services under such
contract;
(j) an
individual who is not contemporaneously classified as an Employee
for purposes of the Participating Company’s payroll system.
In the event any such individual is reclassified as an Employee for
any purpose, including, without limitation, as a common law or
statutory employee, by any action of any third party, including,
without limitation, any government agency, or as a result of any
private lawsuit, action or
6
administrative
proceeding, such individual will, notwithstanding such
reclassification, remain ineligible for participation hereunder and
will not be considered an eligible Employee. In addition to and not
in derogation of the foregoing, the exclusive means for an
individual who is not contemporaneously classified as an Employee
of the Participating Company’s payroll system to become
eligible to participate in this Plan is through an amendment to
this Plan which specifically renders such individual eligible for
participation hereunder;
(k) any
individual retained by a Participating Company or its Affiliates
directly or through an agency or other party to perform services
for an Employer (for either a definite or indefinite duration) in
the capacity of a fee-for-service worker or independent contractor
or any similar capacity including, without limitation, any such
individual employed by temporary help firms, technical help firms,
staffing firms, employee leasing firms, professional employer
organizations or other staffing firms, whether or not deemed to be
a “common law” employee; or
(l) any
Employee of the Company or its Affiliates that holds a position
that has been classified as an executive position by the
Company’s executive compensation department.
|
1.16
|
|
“ ERISA ” means
the Employee Retirement Income Security Act of 1974, as amended
from time to time. References to a particular section of ERISA
include references to regulations and rulings thereunder and to
successor provisions.
|
|
1.17
|
|
“ Good Reason ”
means the occurrence, within a pre-determined limited period of
time not to exceed two (2) years following the initial
existence of one (1) or more of the following conditions
arising without the consent of the Participant:
|
(a) a
material diminution in the Participant’s “base
compensation” as such term is defined pursuant to guidance
under Section 409A of the Code issued by the Internal Revenue
Service; or
(b) a
material diminution in the Participant’s authority, duties,
or responsibilities; or
(c) a
material diminution in the authority, duties, or responsibilities
of the supervisor to whom the Participant is required to report,
including a requirement that a Participant report to a corporate
officer or employee instead of reporting directly to the Board of
Directors of the Company or any of its Affiliates (or similar
governing body with respect to an entity other than a corporation);
or
(d) a
material diminution in the budget over which the Participant
retains authority; or
(e) a
material change in the geographic location at which the Participant
must perform the services; or
7
(f) any
other action or inaction that constitutes a material breach by the
Company or the Affiliate that employs the Participant of the
agreement under which the Participant provides services.
The amount, time,
and form of payment upon the “separation from service”
(as such term is defined in Treasury Regulations issued under Code
Section 409A) must be substantially identical to the amount,
time and form of payment payable due to an actual involuntary
separation from service, to the extent such a right exists. The
Participant must be required to provide notice to the Company or
any of its Affiliates of the existence of the condition described
in this Section 1.17 of this Plan within a period not to
exceed ninety (90) days of the initial existence of the
condition, upon the notice of which the service recipient must be
provided a period of at least thirty (30) days during which it
may remedy the condition and not be required to pay the
amount.
[Further, no act
or omission shall be ‘Good Reason’ if Participant has
consented in writing to such act or omission.
|
1.18
|
|
“ Leave of Absence
” means an absence, with or without compensation, authorized
on a non-discriminatory basis by the Company or any of its
Affiliates. For the purposes of this Plan, Leave of Absence
includes any leave of absence other than a Family and Medical Leave
of Absence or Military Leave of Absence.
|
|
1.19
|
|
“ Participant ”
means an Employee participating in the Plan as provided in
Article 2.
|
|
1.20
|
|
“ Participating Company
” means the Company and any Affiliate of the Company, which
has adopted this Plan in accordance with
Section 6.11.
|
|
1.21
|
|
“ Person ” means
any individual, sole proprietorship, partnership, joint venture,
limited liability company, trust, unincorporated organization,
association, corporation, institution, public benefit corporate
entity or government instrumentality, division, agency, body or
department.
|
|
1.22
|
|
“ Plan ” means
The Williams Companies, Inc. Severance Pay Plan.
|
|
1.23
|
|
“ Plan Administrator
” means the Administrative Committee appointed under
Article 5.
|
|
1.24
|
|
“ Plan Year ”
means the twelve (12) month period from January 1 through
December 31.
|
|
1.25
|
|
“ Regular Wage Base
” means an Employee’s total weekly salary or wages,
including any salary deferral contributions made to any defined
contribution plan maintained by the Participating Company and any
amounts contributed by an Employee to any cafeteria plan, flexible
benefit plan or qualified transportation plan maintained by the
Participating Company in accordance with Sections 125, 132 and
related provisions of the Code, but excluding any bonuses,
overtime, incentive compensation, commissions, cost of living pay,
housing pay, relocation pay, other taxable fringe benefits and all
other extraordinary compensation.
|
8
|
1.26
|
|
“ Related Party ”
means an Affiliate or any employee benefit plan (or any related
trust) sponsored or maintained by the Company or any of its
Affiliates.
|
|
1.27
|
|
“ Sponsor ” means
The Williams Companies, Inc., a Delaware corporation.
|
|
|
|
|
|
1.28
|
|
“ Years of Service
” means a Participant’s length of service with the
Participating Company as set by the latest hire date or rehire date
of such Participant. For purposes of this Plan, after the first
year of service as a Participant, only full, completed years of
service will be counted. Service with a predecessor company will
not be included unless, and to the extent that, the Plan
Administrator determines such servic
|
|
