THE SHERWIN-WILLIAMS COMPANY
DEFERRED COMPENSATION SAVINGS AND PENSION EQUALIZATION PLAN
The Sherwin-Williams Company, an Ohio corporation (the "Company"), hereby establishes this Deferred Compensation Plan (the "Plan"), effective July 24, 2002, for the purpose of attracting high quality executives and promoting in its key executives increased efficiency and an interest in the successful operation of the Company. This Plan is intended to supplement benefits provided under the Company's qualified plans for a select group of management or highly compensated employees by accepting contributions which may not be placed in the qualified plans because of limitations imposed by one or more of Sections 401(a)(17), 401(k), 401(m), 402(g), 403(b), 408(k) or 415 or any other limitation on contributions or benefits in the Internal Revenue Code.
1.1 Account shall mean the account or accounts established for a particular
Participant pursuant to Article 3 of the Plan.
1.2 Administrator shall mean the person or persons appointed by the Board
of Directors of the Company to administer the Plan pursuant to Article
11 of the Plan.
1.3 Beneficiary shall mean the person(s) or entity designated as such in
accordance with Article 10 of the Plan.
1.4 Company shall mean The Sherwin-Williams Company.
1.5 Company Match Contributions shall mean matching contributions credited
by the Company to a Participant's Account pursuant to Section 2.3 of
1.6 Company Makeup Contributions shall mean makeup contributions credited
by the Company to a Participant's Account pursuant to Section 2.4 of
1.7 Compensation shall mean the Participant's total reportable compensation
including incentive and discretionary bonuses and including or
excluding such other items of compensation as the Administrator may, in
its sole nondiscriminatory discretion, determine, before reductions for
contributions to or deferrals under any qualified retirement or pension
plans or welfare benefit plans sponsored by the Company and without
regard to any Statutory Limitations.
1.8 Crediting Rate shall mean the notional gains and losses credited on the
Participant's Account balance which are based on the Participant's
choice among the investment alternatives made available by the
Administrator pursuant to Article 3 of the Plan.
1.9 Disability shall have the same definition given to such term under the
1.10 Eligible Executive shall mean any management employee of the Company,
its subsidiaries or affiliates as may be designated by the
Administrator to be eligible to participate in the Plan.
1.11 ERISA shall mean the Employee Retirement Income Security Act of 1974,
1.12 Financial Hardship shall mean the Participant's or the Participant's
dependent's (as defined in Section 152(a) of the Internal Revenue Code)
sudden and unexpected illness or accident, the Participant's sudden and
unexpected property casualty loss, or other similar extraordinary and
unforeseeable circumstances arising as a result of events beyond the
control of the Participant, which is not covered by insurance and may
not be relieved by cessation of Plan deferrals or by the liquidation of
the Participant's assets provided that such liquidation would not cause
a severe Financial Hardship, and which is determined to qualify as a
Financial Hardship by the Administrator. Cash needs arising from
foreseeable events such as the purchase of a residence or education
expenses for children shall not, alone, be considered a Financial
1.13 Participant shall mean an Eligible Executive who has either elected to
participate in the Plan by completing a Participant Election Form or
has received a Company Contribution pursuant to Article 2 of the Plan.
1.14 Participant Election Form shall mean the agreement, in a form
acceptable to the Administrator, to make a deferral submitted by the
Participant to the Administrator on a timely basis pursuant to Article
2 of the Plan. The Participant Election Form may take the form of an
electronic communication followed by appropriate written confirmation
from the Administrator according to specifications established by the
1.15 Plan Year shall mean the calendar year, except that the first Plan Year
shall begin on the effective date of the Plan and end December 31,
1.16 Qualified Plans shall mean the Qualified PIP, Qualified SEPIP and the
1.17 Qualified PIP shall mean The Sherwin-Williams Company Salaried
Employees' Revised Pension Investment Plan, as it may be amended from
time to time.
1.18 Qualified SEPIP shall mean The Sherwin-Williams Company Salaried
Employees' Pension Investment Plan, as it may be amended from time to
1.19 Qualified SPP shall mean The Sherwin-Williams Company Employee Stock
Purchase and Savings Plan, as it may be amended from time to time.
1.20 Retirement shall mean Termination of Employment on or after the
Retirement Eligibility Date.
1.21 Retirement Eligibility Date shall mean the date on which the
Participant attains age fifty-five (55).
1.22 Settlement Date shall mean the date by which a lump sum payment shall
be made or the date by which installment payments shall commence.
Unless otherwise specified, the Settlement Date shall be no later than
ninety (90) days following the occurrence of the event triggering the
payout unless the Participant elects to defer the Settlement Date, at
the time and in a form specified by the Administrator, until the last
day of January of the Plan Year following the year in which the event
triggering the payout occurs. In the case of death, the event
triggering payout shall be deemed to occur upon the date the
Administrator is provided with the documentation reasonably necessary
to establish the fact of the Participant's death.
1.23 Statutory Limitations shall mean any statutory or regulatory
limitations imposed by one or more of Sections 401(a)(17), 401(k),
401(m), 402(g), 403(b), 408(k) or 415 or any other limitation on
contributions or benefits in the Internal Revenue Code The impact of
such limits on the Participant for purposes of this Plan shall be
determined by the Administrator based upon reasonable estimates and
shall be final and binding as of the date the Company Contribution is
credited to the Participant's Account. No subsequent adjustments shall
be made to increase Company Contribution under this Plan as a result of
any adjustments ultimately required under the Qualified Plans due to
actual employee contributions or other factors.
1.24 Termination of Employment shall mean the date of the cessation of the
Participant's employment with the Company for any reason whatsoever,
whether voluntary or involuntary, including as a result of the
Participant's Retirement or death, or to the extent provided in Article
6 of the Plan, Disability.
1.25 Unscheduled Withdrawal shall mean a distribution elected by the
Participant pursuant to Article 7 of the Plan.
1.26 Valuation Date shall mean the date through which earnings are credited
and shall, if a business day, be the date on which the payout or other
event triggering the valuation occurs; or if not a business day, the
next succeeding business day.
1.27 Withdrawal Penalty shall mean the ten percent (10%) penalty deducted
from an Account as a result of an Unscheduled Withdrawal pursuant to
Article 7 of the Plan.
2.1 ELECTIVE DEFERRAL. Each Plan Year an Eligible Executive may elect to
defer any whole percentage up to six percent (6%) of Compensation
earned by the Eligible Executive during the Plan Year; provided,
however, that the sum of (i) the Eligible Executive's "Salary Reduction
Contributions" made pursuant to the Qualified SPP and (ii) the Eligible
Executive's elective deferrals pursuant to this Section 2.1, shall not
exceed six percent (6%) of the Eligible Executive's Compensation.
2.2 SPECIAL ROLLOVER ELECTION. An Eligible Executive may elect, during the
thirty (30) day period commencing with the effective date of this Plan,
to transfer to and defer under this Plan, such Eligible Executive's
account balance(s) or accrued benefit, as applicable, in any of the
following nonqualified deferred compensation plans maintained by the
Company: (1) The Sherwin-Williams Company Deferred Compensation Savings
Plan; (2) The Sherwin-Williams Company PIP Equalization Program; and
(3) The Sherwin-Williams Company Retirement Equalization Program. Any
such election shall be effective as of the first business day of the
calendar month immediately following the end of such thirty (30) day
2.3 PARTICIPANT ELECTION FORM. In order to make a deferral, an Eligible
Executive must submit a Participant Election Form to the Administrator
during the enrollment period established by the Administrator prior to
the beginning of the period to which the deferred amounts relate or are
determined, except that with respect to the first Plan Year, the
Participant shall submit a Participant Election Form within thirty (30)
days of adoption of the Plan by the Board of Directors of the Company.
Any such election shall be effective as of the first business day of
the calendar month immediately following the end of such thirty (30)
day election period. The Administrator may establish a special
enrollment period for Eligible Executives hired during a Plan Year to
allow deferrals of amounts earned during the balance of such Plan Year
after such enrollment period. The Participant shall be required to
submit a new Participant Election Form on a timely basis in order to
change the Participant's deferral election for a subsequent Plan Year.
If no Participant Election Form is filed during the prescribed
enrollment period, the Participant's election for the prior Plan Year
shall continue in force for the next Plan Year.
2.4 QUALIFIED SPP MATCH CONTRIBUTION. The Company shall make Company Match
Contribution to this Plan on behalf of the Participant for each Plan
Year in which the Participant makes a deferral under this Plan which
shall be equal to the match the Participant would have received under
the Qualified SPP had the amount deferred under this Plan been deferred
under the Qualified SPP without regard to any Statutory Limitations and
without regard to the applicable dollar limit under Section 402(g)(1)
of the Internal Revenue Code. The Company Match Contribution shall be
reduced by the amount of Company contributions actually credited to the
Participant under the Qualified SPP for such Plan Year.
2.5 QUALIFIED PIP OR QUALIFIED SEPIP MAKEUP CONTRIBUTION. The Company shall
make a Company Makeup Contribution to this Plan on behalf of the
Participant for each Plan Year whether or not the Participant makes a
deferral under this Plan. The Qualified PIP or Qualified SEPIP Makeup
Contribution shall equal the total
Company contributions that would have been made to Qualified PIP or
Qualified SEPIP, as applicable, on behalf of the Participant without
regard to deferrals made under this Plan and absent any Statutory
Limitations. The Qualified PIP or Qualified SEPIP Makeup Contribution
shall be reduced by the amount of Company contributions actually
credited to the Participant under Qualified PIP or Qualified SEPIP for
such Plan Year.
2.6 CREDITING OF ACCRUED BENEFIT. To the extent a Participant accrues a
benefit pursuant to the final average pay formula applicable to certain
participants covered by Appendix B of the Qualified SEPIP, such
Participant shall be entitled to a benefit hereunder equal to the total
accrued benefit the Participant would have been entitled to receive
based upon such formula absent any Statutory Limitations, reduced by
the amount of benefits actually payable from the Qualified SEPIP
pursuant to the formula specified in Appendix B thereof.
3.1 PARTICIPANT ACCOUNTS. Solely for recordkeeping purposes an Account
shall be maintained for each Participant and shall be credited with the
Participant's deferrals at the time such amounts would otherwise have
been paid to the Participant. Company Match Contributions and Company
Makeup Contributions shall be credited to the applicable Participant's
Account on or before the January 31st of the Plan Year following the
Plan Year in which the deferrals are earned. Accounts shall be deemed
to be credited with notional gains or losses as provided in Section 3.2
from the date amounts are credited to the Account through the Valuation
Date. Amounts credited to a Participant's Account shall be fully vested
at all times.
3.2 CREDITING RATE. The Crediting Rate on amounts in a Participant's
Account shall be based on the Participant's choice among the investment
alternatives made available from time to time by the Administrator. The
Administrator shall establish a procedure by which a Participant may
elect to have the Crediting Rate based on one or more investment
alternatives and by which the Participant may change investment
elections at least quarterly. The Administrator may provide only one
investment option for a particular class of contributions and may
establish a separate subaccount for such contributions which shall be
paid out at the same time and under the same circumstances as the
Participant Account. The Participant's Account balance shall reflect
the investments selected by the Participant. If an investment selected
by a Participant sustains a loss, the Participant's Account shall be
reduced to reflect such loss. The Participant's choice among
investments shall be solely for purposes of calculation of the
Crediting Rate. If the Participant fails to elect an investment
alternative the Crediting Rate shall be based on the investment
alternative selected for this purpose by the Administrator. The Company
shall have no obligation to set aside or invest funds as directed by
the Participant and, if the Company elects to invest funds as directed
by the Participant, the Participant shall have no more right to such
investments than any other unsecured general creditor of the Company.
During payout, the Participant's Account shall continue to be credited
at the Crediting Rate selected by the Participant from among the
investment alternatives or rates made available by the Administrator
for such purpose. Installment payments shall be recalculated annually
by dividing the account balance by the number of payments remaining
without regard to anticipated earnings or in any other reasonable
manner as may be determined from time to time by the Administrator.
3.3 STATEMENT OF ACCOUNTS. The Administrator shall provide each Participant
with statements at least annually setting forth the Participant's
Account balance as of the end of each Plan Year.
4.1 RETIREMENT BENEFITS ATTRIBUTABLE TO ACCOUNT. In the event of the
Participant's Retirement, the Participant shall be entitled to receive
an amount equal to the total balance of the Participant's Account
credited with notional earnings as provided in Article 3 through the
Valuation Date. The benefits shall be paid in substantially level
annual installments over ten (10) years unless the Participant makes a
timely election to have the benefit paid in a single lump sum and/or in
annual installments over a specified period of not more than fifteen
(15) years. Payments shall begin on the Settlement Date following
Retirement. An election to change the form of benefit payout may be
made at any time prior to Retirement by submitting to the Administrator
the form provided for such purpose within an administratively
reasonable time preceding Retirement.
4.2 RETIREMENT BENEFITS ATTRIBUTABLE TO ACCRUED BENEFIT. Notwithstanding
anything herein to the contrary, a Participant or his Beneficiary shall
receive a distribution of his accrued benefit credited pursuant to
Section 2.6 hereof only at the same time, in the same manner and form
as such benefits accrued pursuant to Appendix B of Qualified SEPIP are
paid from Qualified SEPIP.
4.3 TERMINATION BENEFIT. Upon Termination of Employment other than by
reason of Retirement or death, the Company shall pay to the Participant
a termination benefit equal to the balance on Termination of Employment
of the Participant's Account credited with notional earnings as
provided in Article 3 th