This excerpt taken from the AKS DEF 14A filed Apr 16, 2007.
Pension and other retirement benefits
Non-Contributory Pension Plan
The Companys full-time, non-represented salaried employees, including its NEOs, are eligible for retirement benefits under a qualified benefit plan known as the Non-Contributory Pension Plan. Retirement benefits are calculated under the Non-Contributory Pension Plan using one of two formulas: (1) a cash balance formula, or (2) a final average pay formula. Eligibility for coverage under a particular formula is typically determined by the date on which a participant commenced employment with the Company. Participants generally are vested under the Non-Contributory Pension Plan after five years of service regardless of which formula is used to calculate benefits. The compensation taken into account in determining benefits under either formula is subject to the compensation limits imposed by the Internal Revenue Code. A description of the terms of the Non-Contributory Pension Plan, including the formulas used to calculate a participants retirement benefits, is set forth in this Proxy Statement at pages 41 and 42. The number of years of credited service and the present value of accumulated benefits for each of the NEOs under the Non-Contributory Pension Plan are set forth in the Pension Benefits Table for Fiscal Year 2006 beginning on page 41 of this Proxy Statement.
Executive Minimum and Supplemental Retirement Plan
In addition, the Companys Officers, including its NEOs, are eligible to participate in a nonqualified deferred compensation plan called the Executive Minimum and Supplemental Retirement Plan, also known as a supplemental executive retirement plan, or SERP. Each of the NEOs is a participant in the Companys SERP. The Companys SERP provides (1) a make up of qualified plan benefits that were denied as a result of limitations imposed by the Internal Revenue Code, and (2) supplemental benefits to vested participants. Vesting occurs when a participant completes a minimum of ten years of creditable service with the Company, including at least five years of service as an officer. Vesting also would occur upon the effective date of a Change of Control (as defined in the SERP). Under the SERP, the basic form of payment of a participants benefit is a single life annuity payment in equal monthly installments commencing on the later of the first day of the month following the participants 60th birthday or his or her employment termination date. A participant may elect to commence the monthly payments early following his or her 55th birthday, but the payments under those circumstances will be reduced to the actuarial equivalent of the regular payments based upon the participants age and certain actuarial assumptions. However, in the event of a Change of Control, there would be no such actuarial reduction for commencement of a participants benefit before age 60 and participants would have the right to elect a lump sum form of payment rather than the annuity form of payment.
Benefits paid under the SERP are subject to an offset for any benefit received under either of the Companys qualified plans or any qualified plan provided by another employer. A participants benefit under the SERP, prior
to giving effect to such offset, is equal to the greater of: (1) 50% of his or her average covered compensation (base salary and bonus under the Annual Incentive Plan) during the employees highest consecutive three-year period of eligible earnings over the participants last ten years of consecutive service, or (2) the participants benefit under the applicable qualified plan in which he or she participates without regard to the limitations imposed by the Internal Revenue Code. The present value of accumulated benefits for each of the NEOs under the SERP is set forth in the Pension Benefits Table for Fiscal Year 2006 beginning on page 41 of this Proxy Statement.
Thrift Plan and Supplemental Thrift Plan
The Thrift Plan is a qualified retirement plan under Section 401(k) of the Internal Revenue Code. It provides for Company matching contributions with respect to employee contributions up to 5% or more of base salary (depending on Company net income), subject to the compensation limits imposed by the Code. The Supplemental Thrift Plan is an unfunded nonqualified retirement plan. It provides for Company matching contributions with respect to base salary that may not be taken into account under the Thrift Plan due to limits on earnings imposed by the Code. The Supplemental Thrift Plan thus provides a vehicle to maximize Company matching contributions that otherwise would not be eligible for the Thrift Plan due to the Codes compensation limits. Any member of management of the Company, including the NEOs, is eligible for participation under the Thrift Plan, but participants in the Supplemental Thrift Plan must be selected by the Committee. For 2006, all of the NEOs were selected to participate in the Supplemental Thrift Plan. The contributions by the NEOs and the Company under these plans for 2006 are set forth in the Nonqualified Deferred Compensation Table for Fiscal Year 2006 on page 43 of this Proxy Statement.
Executive Deferred Compensation Plan
The Company has an Executive Deferred Compensation Plan (the Deferred Plan). Any elected officer of the Company, including the NEOs, and any member of management may be elected by the Chairman of the Board and approved by the Compensation Committee of the Board to participate in the Deferred Plan. Although they may do so, none of the NEOs currently have elected to participate in the Deferred Plan. The Deferred Plan is an unfunded deferred compensation arrangement which is intended to provide supplemental retirement benefits for a select group of management or highly compensated employees within the meaning of sections 201(2), 301(a)(3) and 401(a)(1) of the Employment Retirement Income Security Act of 1974, as amended. Participants are always fully vested in their accounts under this plan. Participants direct the investment of their accounts among available investment options (generally the same investment options available under the Companys qualified thrift plan).