MO » Topics » Benefit Equalization Plan

This excerpt taken from the MO DEF 14A filed Apr 9, 2009.

Benefit Equalization Plan

 

Tax laws applicable to the funded tax-qualified Retirement Plan limit the five-year average annual compensation that can be taken into account under the tax-qualified plan. As a result of these or certain other tax requirements, only a portion of the benefits calculated under the pension formula described above can be paid to the named executive officers and a number of other employees from the Retirement Plan. To compensate for benefits that would be lost by the application of these tax limits, all of the named executive officers accrued supplemental benefits with respect to accredited service in years before 2005 and years after 2007 under the BEP. Generally, the benefits accrued under the non-qualified BEP equal the difference between the pension benefits determined under the Retirement Plan provisions described above, disregarding the tax law limits, and those that actually can be provided from the Retirement Plan after taking those limits into account.

 

These excerpts taken from the MO 10-K filed Feb 27, 2009.

BENEFIT EQUALIZATION PLAN

The Benefit Equalization Plan governs the rights of an Employee whose benefit under the Retirement Plan or the Profit-Sharing Plan, or both Qualified Plans, is subject to one or more of the Statutory Limitations, or to the nondiscrimination requirements of Section 401(a)(4) of the Code and the coverage requirements of Section 410(b) of the Code.

Effective as of January 1, 2008, the liabilities allocable to employees, former employees and retired employees of the international tobacco operations conducted by Philip Morris International Inc. and its subsidiaries were transferred from the Plan to the Philip Morris International Benefit Equalization Plan, maintained by PMI Global Services Inc.

The Plan as hereinafter set forth shall be effective with respect to Employees who incur a Separation from Service on or after January 1, 2008, except as otherwise provided herein. It is intended that Grandfathered Benefit Equalization Retirement Allowances and Grandfathered Benefit Equalization Profit-Sharing Allowances with respect to Grandfathered Employees and Grandfathered Retired Employees (as well as their spouses and beneficiaries) not be subject to the requirements of Section 409A of the Code and that the Plan be interpreted and administered in accordance with this intention. The provisions of the Plan shall not be construed to change the time and form of payment of those portions of the Benefit Equalization Combined Allowance (such portions individually referred to as a Grandfathered Benefit Equalization Retirement Allowance and Grandfathered Benefit Equalization Profit-Sharing Allowance) of a TP Employee, in each case considered deferred before January 1, 2005 (within the meaning of Final Regulation §1.409A-6(a) (2) and other provisions of the Final Regulations).

The rights of a person whose Separation from Service or date of becoming an Inactive Participant is before January 1, 2008 shall be governed by the provisions of the Plan as in effect on his Separation from Service or date of becoming an Inactive Participant, as the case may be, except to the extent that the Administrator has determined in his sole discretion to administer the Plan in good faith compliance with Section 409A of the Code and any then published guidance so as to not subject any Grandfathered Benefit Equalization Retirement Allowance and Grandfathered Benefit Equalization Profit-Sharing Allowance to Section 409A of the Code.

Effective as of January 1, 2005, the Board of Directors of Altria Group, Inc. determined that certain participants in the Plan and in the Supplemental Management Employees’ Retirement Plan would be eligible to cease active participation in those plans. In lieu of accruing additional deferred compensation under the Plan and in the Supplemental Management Employees’ Retirement Plan these employees (who elected to waive participation in the Plan and in the Supplemental Management Employees’ Retirement Plan), referred to as TP Employees, entered into Supplemental Enrollment Agreements and received annual “target payments” as current compensation for the services that they provided to Altria and its affiliates during the year.

 

1


The Board of Directors of Altria Group, Inc. retained the right to discontinue making target payments at any time. Under the terms of the Supplemental Enrollment Agreements, an employee would resume active participation in the Plan and in the Supplemental Management Employees’ Retirement Plan pursuant to their terms as of the first day of the year following the year for which a target payment was last made to the employee.

Effective as of January 1, 2008, the Board of Directors of Altria Group, Inc. determined to discontinue making target payments with respect to services performed after December 31, 2007. Under the terms of the Plan, TP Employees generally are not eligible to participate for those years for which they received a target payment after December 31, 2004. It is intended that the benefits provided under the Plan will not duplicate amounts previously paid as current compensation under the terms of the Supplemental Enrollment Agreements.

In addition, effective as of January 1, 2008, the Board of Directors of Altria Group, Inc. amended the Plan (1) to provide for a Company Match Contribution to the Plan equal to the Company Match Contribution that could not be made to the Profit-Sharing Plan as a result of the Statutory Limitations, based on the percentage of Compensation that each affected Employee had elected to make to the Profit-Sharing Plan and (2) to provide that portion of the benefit that was awarded to the Chief Executive Officer of Altria Group, Inc. earned after December 31, 2004 and that was formerly provided under the Supplemental Management Employees’ Retirement Plan.

The Plan is comprised of four separate plans, programs or arrangements. Each plan shall be treated as a separate plan, program or arrangement from the other plans. One of the plans provides benefits to a Retired Employee (or his Spouse or other Beneficiary) solely in excess of the Section 415 Limitations; the second plan provides benefits to a Retired Employee (or his Spouse or other Beneficiary) attributable solely to the Compensation Limitation; the third plan provides benefits to a Retired Employee (or his Spouse or other Beneficiary) because payment of the benefit from one or both of the Qualified Plans could result in a failure to meet the nondiscrimination requirements of Section 401(a)(4) of the Code or the coverage requirements of Section 410(b) of the Code; and the fourth plan provides benefits to a TP Employee who is resuming active participation in the Plan, effective January 1, 2008.

Notwithstanding anything to the contrary in the provisions of this Plan, (1) no amounts shall be deemed credited or accrued under the Plan after December 31, 2004 to the extent the Administrator determines that the accrual, crediting or payment of such amounts under the terms of the Plan or related arrangements would risk subjecting Plan participants to taxation or penalties under Section 409A of the Code, and (2) the Plan terms applicable to any amounts determined by the Administrator to be deferred compensation subject to the requirements of such Section 409A may be modified by the Administrator to the extent it deems necessary or appropriate to ensure compliance with such requirements. The Administrator may take any such action with respect to some participants but not others as it in its sole discretion deems appropriate under the circumstances.

 

2


BENEFIT EQUALIZATION PLAN

STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%">The Benefit Equalization Plan governs the rights of an Employee whose benefit under the Retirement Plan or the Profit-Sharing Plan, or both Qualified
Plans, is subject to one or more of the Statutory Limitations, or to the nondiscrimination requirements of Section 401(a)(4) of the Code and the coverage requirements of Section 410(b) of the Code.

STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%">Effective as of January 1, 2008, the liabilities allocable to employees, former employees and retired employees of the international tobacco
operations conducted by Philip Morris International Inc. and its subsidiaries were transferred from the Plan to the Philip Morris International Benefit Equalization Plan, maintained by PMI Global Services Inc.

STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%">The Plan as hereinafter set forth shall be effective with respect to Employees who incur a Separation from Service on or after January 1, 2008,
except as otherwise provided herein. It is intended that Grandfathered Benefit Equalization Retirement Allowances and Grandfathered Benefit Equalization Profit-Sharing Allowances with respect to Grandfathered Employees and Grandfathered Retired
Employees (as well as their spouses and beneficiaries) not be subject to the requirements of Section 409A of the Code and that the Plan be interpreted and administered in accordance with this intention. The provisions of the Plan shall not be
construed to change the time and form of payment of those portions of the Benefit Equalization Combined Allowance (such portions individually referred to as a Grandfathered Benefit Equalization Retirement Allowance and Grandfathered Benefit
Equalization Profit-Sharing Allowance) of a TP Employee, in each case considered deferred before January 1, 2005 (within the meaning of Final Regulation §1.409A-6(a) (2) and other provisions of the Final Regulations).

STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%">The rights of a person whose Separation from Service or date of becoming an Inactive Participant is before January 1, 2008 shall be governed by the
provisions of the Plan as in effect on his Separation from Service or date of becoming an Inactive Participant, as the case may be, except to the extent that the Administrator has determined in his sole discretion to administer the Plan in good
faith compliance with Section 409A of the Code and any then published guidance so as to not subject any Grandfathered Benefit Equalization Retirement Allowance and Grandfathered Benefit Equalization Profit-Sharing Allowance to Section 409A
of the Code.

Effective as of January 1, 2005, the Board of Directors of Altria Group, Inc. determined that certain participants in
the Plan and in the Supplemental Management Employees’ Retirement Plan would be eligible to cease active participation in those plans. In lieu of accruing additional deferred compensation under the Plan and in the Supplemental Management
Employees’ Retirement Plan these employees (who elected to waive participation in the Plan and in the Supplemental Management Employees’ Retirement Plan), referred to as TP Employees, entered into Supplemental Enrollment Agreements and
received annual “target payments” as current compensation for the services that they provided to Altria and its affiliates during the year.

 


1








The Board of Directors of Altria Group, Inc. retained the right to discontinue making target payments at
any time. Under the terms of the Supplemental Enrollment Agreements, an employee would resume active participation in the Plan and in the Supplemental Management Employees’ Retirement Plan pursuant to their terms as of the first day of the year
following the year for which a target payment was last made to the employee.

Effective as of January 1, 2008, the Board of Directors
of Altria Group, Inc. determined to discontinue making target payments with respect to services performed after December 31, 2007. Under the terms of the Plan, TP Employees generally are not eligible to participate for those years for which
they received a target payment after December 31, 2004. It is intended that the benefits provided under the Plan will not duplicate amounts previously paid as current compensation under the terms of the Supplemental Enrollment Agreements.

In addition, effective as of January 1, 2008, the Board of Directors of Altria Group, Inc. amended the Plan (1) to provide for a
Company Match Contribution to the Plan equal to the Company Match Contribution that could not be made to the Profit-Sharing Plan as a result of the Statutory Limitations, based on the percentage of Compensation that each affected Employee had
elected to make to the Profit-Sharing Plan and (2) to provide that portion of the benefit that was awarded to the Chief Executive Officer of Altria Group, Inc. earned after December 31, 2004 and that was formerly provided under the
Supplemental Management Employees’ Retirement Plan.

The Plan is comprised of four separate plans, programs or arrangements. Each plan
shall be treated as a separate plan, program or arrangement from the other plans. One of the plans provides benefits to a Retired Employee (or his Spouse or other Beneficiary) solely in excess of the Section 415 Limitations; the second plan
provides benefits to a Retired Employee (or his Spouse or other Beneficiary) attributable solely to the Compensation Limitation; the third plan provides benefits to a Retired Employee (or his Spouse or other Beneficiary) because payment of the
benefit from one or both of the Qualified Plans could result in a failure to meet the nondiscrimination requirements of Section 401(a)(4) of the Code or the coverage requirements of Section 410(b) of the Code; and the fourth plan provides
benefits to a TP Employee who is resuming active participation in the Plan, effective January 1, 2008.

Notwithstanding anything to
the contrary in the provisions of this Plan, (1) no amounts shall be deemed credited or accrued under the Plan after December 31, 2004 to the extent the Administrator determines that the accrual, crediting or payment of such amounts under
the terms of the Plan or related arrangements would risk subjecting Plan participants to taxation or penalties under Section 409A of the Code, and (2) the Plan terms applicable to any amounts determined by the Administrator to be deferred
compensation subject to the requirements of such Section 409A may be modified by the Administrator to the extent it deems necessary or appropriate to ensure compliance with such requirements. The Administrator may take any such action with
respect to some participants but not others as it in its sole discretion deems appropriate under the circumstances.

 


2








This excerpt taken from the MO DEF 14A filed Apr 24, 2008.

Benefit Equalization Plan

 

Tax laws applicable to the funded tax-qualified Retirement Plan limit the five-year average annual compensation that can be taken into account under the tax-qualified plan. As a result of these or certain other tax requirements, only a portion of the benefits calculated under the pension formula described above can be paid to the named executive officers and a number of other employees from the Retirement Plan. To compensate for benefits that would be lost by the application of these tax limits, all of the U.S.-based named executive officers accrued supplemental benefits with respect to accredited service in years before 2005 under the BEP. Generally, the benefits accrued under the nonqualified BEP equal the difference between the pension benefits determined under the Retirement Plan provisions described above, disregarding the tax law limits, and those that actually can be provided from the Retirement Plan after taking those limits into account.

 

This excerpt taken from the MO DEF 14A filed Mar 23, 2007.

Benefit Equalization Plan

 

The BEP also provides benefits that supplement those that are provided under the tax-qualified Deferred Profit Sharing Plan for Salaried Employees maintained by us, which we refer to as the “DPS”. Under the DPS, we make a contribution on behalf of each participant for each year. The contribution is determined by a formula relating to our profits (but is capped at 15 percent of DPS participants’ aggregate compensation), which has generally resulted in the contribution for any participant (subject to the tax law limit described below) equaling 15% of the participant’s compensation for the year. For purposes of the DPS, compensation is defined as the amount reported as annual salary in the Summary Compensation Table.

 

As is the case with the Retirement Plan, applicable tax laws limit the amount of compensation ($220,000 for 2006) that can be taken into account under the DPS for any year and impose other limits on the amounts that can be allocated to individuals. A participant whose salary is more than that amount or who is otherwise affected by tax law limits has a contractual promise from us to be paid an amount generally equal to the additional benefits the participant would have received under the DPS but for the application of the tax law limits. To record that promise, bookkeeping accounts are maintained under the BEP for each participant. For each year, an amount is credited to the account maintained for the participant equal to the difference between the amount that otherwise would have been contributed to the DPS on the participant’s behalf for the year and the amount that was actually contributed. The named executive officers were credited with such allocations for their service in years before 2005. A further notional allocation is made annually to reflect what the amount credited to the participant’s account under the BEP would have earned if that account were invested in a specified investment fund maintained under the DPS. The DPS fund used as an earnings measure under this portion of the BEP is invested in a variety of high-quality fixed-income instruments with strong credit ratings and, for 2006, produced earnings at a rate of approximately 4.7%. Participants typically receive their benefits upon termination of employment in a lump sum or, if elected in advance, as a deferred lump sum payment or in installments over up to a number of years not to exceed their life expectancy.

 

As described above, in prior years we or our operating subsidiaries made funding payments to individual trusts established by a number of employees or directly to the employees themselves. These amounts reduce benefits otherwise payable at retirement for vested benefits promised under the BEP and are not intended to increase total promised benefits. For service after 2004, allocations (other than allocations of earnings on amounts previously credited) under this portion of the BEP ceased for most employees who were eligible for these payments. Instead, these employees (including all of the named executive officers) receive payments described under the “Target Payments” heading above. The promised benefits earned for service before 2005 remain in place, however, and additional payments with respect to these pre-2005 benefits may continue to be made. Such payments made during 2006 are included in the amounts noted on page 45 immediately before the “Target Payments” heading.

 

49


Table of Contents
Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki