T » Topics » DETERMINATION AND CREDITING OF INVESTMENT RETURN

This excerpt taken from the T 10-K filed Feb 26, 2007.

DETERMINATION AND CREDITING OF INVESTMENT RETURN

 

4.1 General Investment Parameters. The rate of return credited to each Participant's Accounts shall be determined on the basis of the Investment Option(s) applicable to the Participant's Accounts, as set forth in this Article IV.

 

4.2 Deemed Investments The manner in which each Participant's Deferral Contributions for each Plan Year shall be deemed invested in and between the Stock Unit Option and/or the Interest Income Option, shall be determined in accordance with the following terms:

 

(a) Nature of Deemed Investments. A deemed investment in the Stock Unit Option and/or Interest Income Option shall be for the sole purpose of determining the rate of return to be credited to a Participant's Account, and shall not be treated or interpreted in any manner whatsoever as a requirement or direction to actually invest assets in Company Stock, an interest income fund, or any other investment media. The Plan, as an unfunded, nonqualified deferred compensation plan, at no time shall have any actual investment of assets relative to the benefits or Accounts hereunder.

 

(b) Investment of Contributions. All deferrals of Compensation otherwise payable in the form of Company Stock, and all deferrals of Stock Grants, shall be deemed invested in the Stock Unit Option. With respect to deferrals of Compensation otherwise payable in cash, a Nonemployee Director shall complete an Investment Election prescribing the percentage of such Deferral Contributions for the Plan Year that will be deemed to be invested in the Stock Unit Option and/or the Interest Income Option; provided, such Investment Election shall specify one of the three alternatives, as follows:

 

(i) 100% of such Deferral Contributions for the Plan Year shall be deemed invested in the Stock Unit Option;

 

(ii) 100% of such Deferral Contributions for the Plan Year shall be deemed invested in the Interest Income Option; or

(iii) 50% of such Deferral Contributions for the Plan Year shall be deemed invested in the Stock Unit Option, and 50% of such Deferral Contributions for the Plan Year shall be deemed invested in the Interest Income Option.

 

(c) Investment of Existing Account Balances. A Participant may not make an Investment Election changing the percentage of an existing Account balance that will be deemed to be invested in the Stock Unit Option and/or the Interest Income Option. Once a deemed investment is made with respect to an Account, it shall continue to apply with respect to such Account until all amounts in such Account are distributed.

 

(d) Investment Subaccounts. For the sole purpose of tracking a Participant's investment elections and calculating investment earnings attributable to a Participant's Account for a Plan Year pursuant to the terms of this Article IV, the Plan Administrator shall establish and maintain for such Participant for such Plan Year a Stock Unit Subaccount and an Interest Income Subaccount, as necessary, the total of which shall equal such Participant's Account for such Plan Year.

 

 

4.3

Stock Unit Option.

 

(a) Stock Unit Subaccount. To the extent that a Nonemployee Director's Deferral Contributions for a Plan Year are deemed to be invested in the Stock Unit Option, the Participant's Stock Unit Subaccount for such Plan Year shall be credited, as of the date(s) on which Compensation or Stock Grants which comprise such Deferral Contributions would have been paid if not subject to the Participant's Deferral Election, with a number of Stock Units equal to (i) with respect to Stock Grants and Compensation that would be payable in the form of Company Stock if not deferred, the number of shares of Company Stock that would be so payable, and (ii) with respect to Compensation that would be payable in the form of cash if not deferred, the number of full and fractional shares of Company Stock that could have been purchased with such cash at the average of the high and low sales prices of one share of Company Stock on the New York Stock Exchange for the period of five Business Days ending on the date such Compensation is so credited (or the period of five Business Days ending on the immediately preceding Business Day if such date is not a Business Day).

 

(b) Cash Dividends. As of each date on which BellSouth has paid a cash dividend on Company Stock, the number of Stock Units credited to a Participant's Stock Unit Subaccount for each Plan Year shall be increased by a number of additional Stock Units equal to the quotient of (i) the amount of dividends that would have been paid on the number of shares of Company Stock equivalent to the number of Stock Units credited to such subaccount as of such dividend payment date, divided by (ii) the average of the daily high and low sales prices of one share of Company Stock on the New York Stock Exchange for the period of five Business Days ending on such dividend payment date (or the period of five Business Days ending on the immediately preceding Business Day if such date was not a Business Day).

 

(c) Adjustments. In the event of any change in outstanding shares of Company Stock, by reclassification, recapitalization, merger, consolidation, spin-off, combination, exchange of shares, stock split, reverse stock split or otherwise, or in the event of the payment of a stock dividend on Company Stock, or in the event of any other increase or decrease in the number of outstanding shares of Company Stock, other than the issuance of shares for value received by BellSouth or the redemption of shares for value, the Plan Administrator shall adjust the number and/or form of Stock Units in the manner it deems appropriate in its reasonable judgment to reflect such event, including substituting or adding publicly traded shares of companies other than the Company as a basis for determining Stock Units. The Plan Administrator similarly shall make such adjustments as it deems are appropriate in its reasonable judgment in the form, including the basis of measurement, of Stock Units in the event all shares of Company Stock

cease for any reason to be outstanding or to be actively traded on the New York Stock Exchange. In the event the Plan Administrator determines in its reasonable judgment that it would not be possible to appropriately reflect an event under this paragraph (c) by adjusting the number and/or form of Stock Units, the Plan Administrator shall establish a special Valuation Date appropriate to such event for all Stock Unit Subaccounts and shall cause such subaccounts, as so valued, automatically to be converted into Interest Income Subaccounts, which thereafter shall be subject to Section 4.4.

 

 

4.4

Interest Income Option.

 

(a) Interest Income Subaccount. To the extent that a Nonemployee Director's Deferral Contributions for a Plan Year are deemed to be invested in the Interest Income Option, the Participant's Interest Income Subaccount for such Plan Year shall be credited, as of the date(s) on which Compensation which comprises such Deferral Contributions would have been paid if not subject to the Participant's Deferral Election, with such portion of the Nonemployee Director's Deferral Contributions.

 

(b) Crediting of Deemed Interest. As of each Valuation Date, the Plan Administrator shall credit a Participant's Interest Income Subaccounts with the amount of earnings applicable thereto for the period since the immediately preceding Valuation Date. Such crediting of earnings for each Interest Income Subaccount shall be effected, as follows:

 

(i) Amount Invested. The Plan Administrator shall determine the amount of (A) in the case of an Interest Income Subaccount established in connection with a Deferral Election for the Plan Year in which such Valuation Date occurs, such Participant's Deferral Contributions credited to such Participant's Interest Income Subaccount since the immediately preceding Valuation Date plus the balance of such Participant's Interest Income Subaccount for such Plan Year as of the immediately preceding Valuation Date; and (B) in the case of an Interest Income Subaccount for a prior Plan Year, the balance of such Participant's Interest Income Subaccount as of the immediately preceding Valuation Date; minus the amount distributed from such Participant's Interest Income Subaccount since the immediately preceding Valuation Date; and

 

(ii) Determination of Amount. The Plan Administrator then shall apply the Credited Interest Rate for such Plan Year to such Participant's adjusted Interest Income Subaccount (as determined in subparagraph (i) hereof), and the total amount of investment earnings resulting therefrom shall be credited to such Participant's Interest Income Subaccount as of such Valuation Date.

 

4.5 Good Faith Valuation Binding. In determining the value of Accounts, the Plan Administrator shall exercise its best judgment, and all such determinations of value (in the absence of bad faith) shall be binding upon all Participants and their Beneficiaries.

 

4.6 Errors and Omissions in Accounts. If an error or omission is discovered in the Account of a Participant or in the amount of a Participant's Deferral Contributions, the Plan Administrator, in its sole discretion, shall cause appropriate, equitable adjustments to be made as soon as administratively practicable following the discovery of such error or omission.

 

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