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Ashland - Supplemental Early Retirement Plan
Exhibit 10.4
NINTH AMENDED AND RESTATED
ASHLAND INC.
SUPPLEMENTAL EARLY RETIREMENT PLAN
FOR CERTAIN KEY EXECUTIVE EMPLOYEES
September 19, 1996
ARTICLE I. PURPOSE AND EFFECTIVE DATE. 1.01 The purpose of the Plan is to allow designated senior executive
employees to retire prior to their sixty-fifth birthday without an
immediate substantial loss of income. This Plan is a supplemental
retirement arrangement for a select group of management. 1.02 The Plan as described herein shall amend and supersede, as of
September 19, 1996, all provisions of the Eighth Amended and
Restated Ashland Inc. Supplemental Early Retirement Plan for
Certain Key Executive Employees. However, the rights and
obligations of Employees who were selected by the Board or
approved for participation pursuant to the eligibility
requirements of the Plan to receive a benefit under the Plan, or
who were receiving benefits under a prior plan, prior to September
19, 1996 (irrespective of the Effective Retirement Date(s) of such
Employee(s)), shall be governed by the terms of the Plan in effect
at the time of such retirement. ARTICLE II. DEFINITIONS.
The following terms used herein shall have the following meanings
unless the context otherwise requires: 2.01 "Age" - means the age of an Employee as of his or her last birthday. 2.02 "Annual Retirement Income" - means the annual income payable under
this Plan by Ashland for the lifetime
of a Participant commencing on such Participant's Effective
Retirement Date and ending on his or her date of death, subject to
the provisions of Section 5.04. 2.03 "Ashland" - means Ashland Inc. and its present or future subsidiary
corporations. 2.04 "Board of Directors" - means the Board of Directors of Ashland. 2.05 "Change in Control" - shall be deemed to occur (1) upon the
approval of the shareholders of Ashland (or
if such approval is not required, the approval of the Board) of
(A) any consolidation or merger of Ashland in which Ashland is not
the continuing or surviving corporation or pursuant to which
shares of Ashland common stock would be converted into cash,
securities or other property other than a merger in which the
holders of Ashland common stock immediately prior to the merger
will have the same proportionate ownership of common stock of the
surviving corporation immediately after the merger, (B) any sale,
lease, exchange, or other transfer (in one transaction or a series
of related transactions) of all or substantially all the assets of
Ashland, or (C) adoption of any plan or proposal for the
liquidation or dissolution of Ashland, (2) when any "person" (as
defined in Section 3(a)(9) or 13(d) of the Securities Exchange Act
of 1934), other than Ashland or any subsidiary or employee benefit
plan or trust maintained by Ashland or any of its subsidiaries,
shall become the "beneficial owner" (as defined in Rule 13d-3
under the Securities Exchange Act of 1934), directly or
indirectly, of more than 15% of the Ashland common stock
outstanding at the time, without the approval of the Board, or (3)
if at any time during a period of two consecutive years,
individuals who at the beginning of such period constituted the
Board shall cease for any reason to constitute at least a majority
thereof, unless the election or nomination for election by
Ashland's shareholders of each new director during such two-year
period was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning
of such two-year period. 2.06 "Committee" - means the Personnel and Compensation Committee of the
Board. 2.07 "Effective Retirement Date" - means the date upon which a
Participant retires under this Plan which shall be the first day
of the month following the Participant's 62nd birthday or, at
Ashland's discretion or as otherwise provided in Article VI, any
earlier age. Upon Board or Chief Executive Officer and/or Chief
Operating Officer approval, as applicable, the "Effective
Retirement Date" of a Participant may occur after the Employee
reaches age 62.
2.08 "Employee" - means an executive employee of Ashland who (i) is at
least 55 years of age; and (ii) holds a position classified at the
level of 1,000 Hay Points or above (and who is deemed on the
Effective Retirement Date to be a Level V or above employee under
the Incentive Compensation Plan). 2.09 "Employment Contracts" - means those contractual agreements, in
effect from time to time, which are approved by the Board and
which provide an Employee with a specified period of employment
and other benefits. 2.10 "Final Average Bonus" - means the Participant's average bonus paid
under the Incentive Compensation Plan (including amounts that may
have been accrued, but deferred in payment under such plan) during
the highest thirty-six (36) months out of the final sixty-month
(60) period. For these purposes, the "bonus accruedpaid" for a
particular month contained within a particular fiscal year related
to payments under such plan shall be equal to the amount of such
bonus actually paid (regardless of the date paid, but excluding
any adjustment for the deferral of such payment) to such
Participant on account of such fiscal year divided by the number
of months contained in such fiscal year which were used in
determining the amount of such bonus actually paid to such
Participant. 2.11 "Final Average Compensation" - means the Participant's average
base compensation paid during the highest thirty-six months (36)
out of the final sixty-month (60) period plus the Final Average
Bonus. For these purposes, the base the average total compensation
paid during the highest thirty-six months (36) out of the final
sixty-month (60) period. For these purposes, "total compensation
paid" is the sum of the "compensation paid" and the "bonus paid"
during a particular month. compensation paid with respect to any
particular calendar month, "Compensation paid" shall be the base
rate of compensation for such Participant in effect on the first
day of such calendar month. "Bonus paid" shall have the same
meaning as set forth in Section 2.10. 2.12 "Incentive Compensation Plan" - means the Ashland Inc. Incentive
Compensation Plan or the Ashland Inc.
Incentive Compensation Plan for Key Executives, as applicable. 2.13 "Participant" - means an Employee who has been approved for
participation in the Plan pursuant to Article III or Section 5.06. 2.14 "Plan" - means the Ninth Amended and Restated Ashland Inc.
Supplemental Early Retirement Plan for Certain Key Executive
Employees as set forth herein. 2.15 "Service" - means the number of years and fractional years of
employment by Ashland of an Employee, measured from the first day
of the month coincident with or next succeeding his or her initial
date of employment up to and including such Employee's Effective
Retirement Date. For purposes of this Section 2.142.15, Service
shall include an Employee's employment with a subsidiary or an
affiliate of Ashland determined in accordance with rules from time
to time adopted or approved by the Board. ARTICLE III. PARTICIPATION IN PLAN.
Eligibility for benefits shall be determined as follows: 3.01 Except as otherwise provided in Section 3.03, an Employee who on
the Effective Retirement Date holds a position classified at the
level of 2,000 Hay Points or above (and who is deemed to be a
Level I or II Participant under the Incentive Compensation Plan)
shall require Board approval to participate in this Plan. 3.02 An Employee who on the Effective Retirement Date holds a position
classified at the level of less than 2,000 Hay Points (and who is
deemed to be a Level III, IV, or V Participant under the Incentive
Compensation Plan) shall require the approval of either Ashland's
Chief Executive Officer or Chief Operating Officer to participate
in this Plan. 3.03 Subject to the provisions of Article VI, in the event of a "Change
in Control" (as defined in Section 2.05), an Employee who who has
2,000 or more Hay Points (and who is deemed to be a Level I or II
Participant under the Incentive Compensation Plan) shall
automatically be deemed to
be approved by the Board for participation under this Plan. 3.04 The Board or Chief Executive Officer or Chief Operating Officer,
as applicable, may approve such key executives for participation
in the Plan as they deem to be appropriate, all in its sole
discretion. 3.05 Ashland reserves the right to terminate any Participant for
"Cause" prior to his or her Effective Retirement Date, with a
resulting forfeiture of the payment of benefits under the Plan.
Ashland also reserves the right to terminate any Participant's
participation in the Plan for "Cause" subsequent to his or her
Effective Retirement Date. For purposes of this Section 3.05,
"Cause" shall mean the willful and continuous failure of a
Participant to substantially perform his or her duties to Ashland
(other than any such failure resulting from incapacity due to
physical or mental illness), or the willful engaging by a
Participant in gross misconduct materially and demonstrably
injurious to Ashland, each to be determined by Ashland in its sole
discretion. ARTICLE IV. INTERACTION WITH EMPLOYMENT CONTRACTS. 4.01 Notwithstanding any provision of this Plan to the contrary, an
Employee who has entered into an Employment Contract with Ashland
and who is either terminated without "Cause" prior to a "change in
control of Ashland" or is terminated without "Cause" or resigns
for "Good Reason" following a "change in control of Ashland" (each
quoted term as defined in the applicable employment agreement)
shall be entitled to receive the benefits as provided pursuant to
this Plan. Benefits payable hereunder in such a situation shall be
calculated in accordance with the payment option selected by the
Employee at such time. 4.02 Benefits Prior to "Change in Control."
If the Employee's termination is without "Cause" prior to a
"change in control of Ashland," benefits payable hereunder shall
not include those benefits which would have been payable to the
Employee during the first two (2) years of his or her retirement
under the Plan. The benefits payable hereunder shall commence no
earlier than as of the first day of the calendar month coincident
with or next following the second anniversary following the
Employee's "Date of Termination" (as defined in the applicable
employment agreement); however, if the Employee elects to receive
such benefits in a lump sum as provided in Section 5.04(b)(1),
such benefits shall commence and be payable as therein specified.
4.03 Benefits Subsequent to a "Change in Control."
If the Employee's termination is without "Cause" or he or she
resigns for "Good Reason" following a "change in control of
Ashland," benefits payable hereunder shall not include those
benefits which would have been payable to the Employee during the
first three (3) years of his or her retirement under the Plan. The
benefits payable hereunder shall commence no earlier than as of
the first day of the calendar month coincident with or next
following the third anniversary following the Employee's "Date of
Termination" (as defined in the applicable employment agreement);
however, if the Employee elects to receive such benefits in a lump
sum as provided in Section 5.04(b)(1), such benefits shall
commence and be payable as therein specified. 4.04 If a Participant accepts, during a period of five (5) years
subsequent to his or her Effective Retirement Date, any consulting
or employment activity which is in direct conflict with the
business of Ashland at such time (such determination regarding
conflicting activity to be made in the sole discretion of the
Board), he or she shall not be entitled to the receipt of any
further payments of Annual Retirement Income under this Plan;
provided, however, he or she shall not be restricted in any manner
with respect to any other nonconflicting activity in which he or
she is engaged. If a Participant wishes to accept employment or
consulting activity which may be prohibited under this Section
4.04, such Participant may submit to Ashland written notice
(Attention: Administrative Vice President, Human Resources) of his
or her wish to accept such employment or consulting activity. If
within ten (10) business days following receipt of such notice
Ashland does not notify the Participant in writing of Ashland's
objection to his or her accepting such employment or consulting
activity, then such Participant shall be free to accept such
employment or consulting activity for the period of time and upon
the basis set forth in his or her written request. ARTICLE V. ANNUAL RETIREMENT INCOME AND OTHER BENEFITS. 5.01 LEVELS I AND II.
The Annual Retirement Income of a Participant who retired from a
position which was assigned a Hay Point rating equal to or
exceeding 2,000 points (and who is deemed to be a Level I or II
Participant under the Incentive Compensation Plan) shall be equal
to: (a) Pre-Age 62 Benefit
A Participant who retires under this Plan shall receive
an Annual Retirement Income from and after the first day
of the calendar month next following his or her Effective
Retirement Date until the end of the month in which he or
she attains age 62 equal to the greater of (1) the
amounts provided in the following schedule; or (2) 50% of
Final Average Compensation; provided, however, that in
the event such Participant retired with less than 20
years of Service, such Annual Retirement Income shall be
50% of Final Average Compensation multiplied by a
fraction (A) the numerator of which is such Participant's
years of and fractional years of Service, and (B) the
denominator of which is twenty (20).
% of
Retirement Compensation
---------- ------------
1st - Year After Effective 75%
Retirement Date
2nd - ( 70%
3rd - ( 65%
4th - ( 60%
5th - ( 55%
6th - Year and thereafter 50%
to Age 62
For purposes of this Section 5.01(a), "% of Compensation"
shall mean the annualized average of the Participant's
base monthly compensation rates (excluding incentive
awards, bonuses, and any other form of extraordinary
compensation) in effect with respect to Ashland on the
first day of the thirty-six (36) consecutive calendar
months which will give the highest average out of the
one-hundred twenty (120) consecutive calendar month
period ending on the Participant's Effective
Retirement Date.
(b) Age 62 Benefit and Thereafter
From and after the first day of the calendar month next
following his or her Effective Retirement Date, or the
attainment of age 62, whichever is later, the
Participant's Annual Retirement Income shall be equal to
50% of Final Average Compensation; provided, however,
that in the event such Participant retired with less than
20 years of Service, such Annual Retirement Income shall
be 50% of Final Average Compensation multiplied by a
fraction (A) the numerator of which is such Participant's
years of and fractional years of Service, and (B) the
denominator of which is twenty (20).
(c) Benefit Reduction
The amount of benefit provided in paragraphs (a) and (b) of
this Section 5.01 shall be reduced by the sum of the
following:
(1) the Participant's benefit under the Ashland Inc.
and Affiliates Pension Plan (the
"Pension Plan") (assuming 50% of such
Participant's account under the Ashland Inc.
Leveraged Employee Stock Ownership Plan were
transferred to the Pension Plan, as allowed under
the terms of each of the said plans), determined
on the basis of a single life annuity form of
benefit;
(2) the Participant's benefit under any other defined
benefit pension plan qualified under Section
401(a) of the Internal Revenue Code of 1986, as
amended which is maintained by Ashland, determined
on the basis of a single life annuity form of
benefit (said plans referred to in sub-paragraphs
(1) and (2) of this paragraph (c) are hereinafter
referred to jointly and severally as the "Affected
Plans");
(3) the Participant's benefit under the Ashland Inc.
Non-qualified Excess Benefit Pension Plan, deter-
mined on the basis of a single life annuity form
of benefit; and
(4) the Participant's benefit under the Ashland Inc.
ERISA Forfeiture Plan attributable to amounts
which were forfeited under the Ashland Inc.
Leveraged Employee Stock Ownership Plan,
multiplied by 50%, and determined on the basis of
a single life annuity benefit.
In the event a Participant's benefit hereunder is paid as
a lump sum pursuant to an election under Section
5.04(b)(1), the reduction to such benefit shall be
calculated based upon the lump sum actuarial present
present actuarial value of the benefits referred to in
sub-paragraphs (1)-(4) of this paragraph (c) to which the
Participant would be entitled at age 62, regardless of
the date payments actually commence. In the event the
Participant's benefit hereunder is paid in any form of
periodic payments, the reduction shall apply from and
after the date the Participant actually commences
payments under the plans referred to under sub-paragraphs
(1) or, (2) or (3) of this paragraph (c). 5.02 LEVELS III, IV AND V.
The Annual Retirement Income of a Participant who retired from a
position which was assigned a Hay Point rating of less than 2,000
points (and who on his or her Effective Retirement Date was deemed
to be a Level III, IV, or V Participant under the Incentive
Compensation Plan) shall, from and after the first day of the
calendar month next following his or her 62nd birthday, be equal
to 50% of Participant's Final Average Bonus; provided, however,
that in the event such Participant retired with less than 20 years
of Service, such Annual Retirement Income after age 62 shall be
50% of Final Average Bonus multiplied by a fraction (A) the
numerator of which is such Participant's years of and fractional
years of Service, and (B) the denominator of which is twenty (20).
Although a Participant may elect to commence benefits under this
Plan upon his or her Effective Retirement Date, there shall be an
actuarial adjustment (consistent with that applied under Ashland's
qualified pension plan, as from time to time in effect) for
Participants receiving benefits under this Section 5.02 whose
Effective Retirement Date is retire prior to age 62. 5.03 Annual Retirement Income benefits payable under Sections 5.01 and
5.02 for
a period of less than 12 months due to a Participant's
attainment of age 62 or death will be payable on a pro-rata basis,
with months taken as a fraction of a year. 5.04 Payment Options.
(a) Election.
A Participant shall, subject to Sections 5.05 and 5.06,
elect the form in which such benefit shall be paid from
among those identified in this Section 5.04 and such
election shall be made at the time and in the manner
prescribed by Ashland, from time to time, provided that
the election is made before the date as of which such
Participant is entitled to have the benefit
commenceParticipant's Effective Retirement Date. Such
election, including the designation of any contingent
annuitant or alternate recipient under Sections
5.04(b)(4) or (5), shall be irrevocable except as
otherwise set forth herein. . Notwithstanding anything in
the foregoing to the contrary, any Participant approved
for participation in the Plan pursuant to Sections 3.01,
3.01 3.02 and 3.04 who makes an election under Section
5.04(b)(2) shall make such election by the later of -
(1) the 60th day following such Participant's
approval to participate in in this Plan; or
(2) the earlier of -
(A) the date six months prior to Participant's
termination from employment Effective Retirement
Date; or
(B) the December 31 immediately preceding the
first day of the month following such Participant's
termination from employment. Participant's
Effective Retirement Date.
Such deferral election shall be made in the
manner prescribed by Ashland, from time to time,
and shall be irrevocable as of the applicable
time identified under Sections 5.04(a)(1) or
(2).
Until the time at which such an election becomes
irrevocable, an Participant shall be able to change it.
(b) Optional Forms of Payment.
(1) Lump Sum Option. A Participant may elect to
receive the benefit under Article V as a lump
sum distribution, subject to the discretion of
the Committee as described below. A lump sum
benefit payable under the Plan to a Participant
shall be computed on the basis of the present
actuarially equivalent present val...
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