AVY » Topics » Benefits

This excerpt taken from the AVY DEF 14A filed Mar 12, 2009.
Benefits
 
The Company provides a benefit program for all eligible employees in the United States, including the NEOs, to provide them with retirement, savings, health and welfare, and disability coverage.
 
Defined Benefit Retirement Plans
 
The Company provides retirement benefits for all eligible employees, including the NEOs, under the Avery Dennison Pension Plan (“Avery Pension Plan”), the successor plan to the Retirement Plan for Employees of Avery Dennison Corporation and the Avery Associate Retirement Plan, which merged on November 30, 2008. The Company also provides the Benefit Restoration Plan (“BRP”) for eligible employees as described below. Effective January 1, 2009, the Avery Pension Plan and the BRP have been closed to new employees.
 
Benefits under the Avery Pension Plan are based on pensionable earnings, length of service, when benefits commence and how they are paid, and are currently calculated separately for each year of service. Employees vest in the Avery Pension Plan after five years of service.
 
Employees who participated in the Avery Pension Plan at any time from December 1, 1986 through November 30, 1997, may also have a benefit under the Stock Holding and Retirement Enhancement Plan of Avery Dennison Corporation (“SHARE Plan”). In order to receive a maximized benefit under the Avery Pension Plan, these employees have the option to transfer their SHARE Plan balance to the Avery Pension Plan, which will be converted into an annual annuity and combined with the monthly benefit from the Avery Pension Plan. If they choose not to transfer their SHARE Plan balance, they will receive a lump-sum payment from the SHARE Plan and a lesser benefit from the Avery Pension Plan.
 
Amounts payable under the Avery Pension Plan may be reduced in accordance with certain Code provisions, which, as applied to plan years beginning on or after December 1, 1994, currently limit the annual amount of


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compensation used to determine annual benefit accruals under the Avery Pension Plan to the first $230,000 of covered compensation as of December 31, 2008. In December 1994, the Company established the BRP to provide for the payment of supplemental retirement benefits to eligible employees, including the NEOs, whose benefits under the Avery Pension Plan are limited under the foregoing Code provisions. The BRP is a nonqualified excess benefit plan. Benefits are payable under the BRP in amounts equal to the amount by which a participant’s benefits, otherwise payable under the Avery Pension Plan, are reduced under applicable provisions of the Code.
 
All NEOs currently have a benefit in at least one of the plans discussed above.
 
Supplemental Executive Retirement Plan
 
The Supplemental Executive Retirement Plan (“SERP”) is designed to provide participants with additional incentives to further the Company’s growth and development, and as an inducement to remain with the Company. Participants designated by the Compensation Committee are offered benefits under this plan to supplement other retirement benefits. The Company believes that it is in the stockholders’ best interest to retain key executives in critical roles in order to provide continuity of leadership and to focus them on the Company’s long-term success. The Compensation Committee has designated Messrs. Scarborough, van Schoonenberg and O’Bryant as participants in this plan. Benefits will commence upon retirement at a benefit level that, when added to the benefits to which they will be entitled from the Avery Pension Plan, the BRP, the SHARE Plan at the time of retirement (assuming retirement at age 65), certain Company contributions (plus interest) to the 401(k) Plan, fixed amounts representative of contributions plus interest to the deferred compensation plans, and estimated Social Security payments, will equal 62.5% for Mr. Scarborough, 57.5% for Mr. van Schoonenberg and 52.5% for Mr. O’Bryant of their respective final average compensation (annual average of their salary for the three highest twelve month periods out of their last sixty months of employment with the Company plus the average of their three highest earned annual bonuses during their last sixty months of employment with the Company). Survivor and disability benefits are also payable under the SERP under certain circumstances. Under certain circumstances, benefits are payable prior to age 65, with a reduction for early commencement.
 
Defined Contribution Retirement Plan
 
The Employee Savings Plan (“401(k) Plan”) is a tax-qualified retirement savings plan that permits employees to defer up to 25% of their annual salary and bonus or, if lower, the limit prescribed by the Internal Revenue Service to the 401(k) Plan on a before-tax basis. The employees’ elective deferrals are immediately vested upon contribution to the 401(k) Plan. The Company currently makes matching contributions to the 401(k) Plan in an amount equal to fifty cents for each dollar a participant contributes up to a maximum of 6% of the participant’s annual salary and bonus contributed, subject to certain other Code limits. After three years of service, participants vest in the amounts contributed by the Company. Employees of the Company are immediately eligible to participate in the 401(k) Plan.
 
Deferred Compensation
 
All eligible employees, including the NEOs are eligible to defer up to 75% of their base salary and 100% of cash bonuses to the 2005 Executive Variable Deferred Retirement Plan (“EVDRP”), which is a nonqualified plan. Deferrals are 100% vested. This plan provides NEOs and other employees with a long-term capital accumulation opportunity. The EVDRP provides a number of investment opportunities, including fixed income and mutual fund alternatives. Certain NEOs also participated in prior deferred compensation plans that are no longer available for new deferrals.
 
The Company makes an annual contribution to each NEO’s deferred compensation account equal to 3% of cash compensation (salary and annual bonus) in excess of the 401(k) Plan limit. This contribution is added to their deferred compensation account at the beginning of each plan year as long as the NEO has contributed at least the


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pre-tax limit into the 401(k) Plan during the prior plan year and is employed by the Company at year end. This benefit is designed to supplement pre-tax 401(k) contributions that are limited for certain executives (by the Code).
 
Retiree Medical
 
Retirees, including the NEOs, may be eligible for medical coverage under the Company’s plan until they are eligible for Medicare provided they meet the following criteria: elect to retire immediately following separation from the Company; receive a pension benefit from the Avery Pension Plan; and are age 55 or older with 15 or more years of service. For employees who are at least age 60 and have 20 years of service, the cost for this coverage is shared by the Company and the retiree.
 
Medical Insurance
 
All NEOs contribute to, and participate in, medical plans available to employees. In addition, the Company provides each NEO, the NEO’s spouse and dependent children, with supplemental medical coverage, which reimburses the NEOs for medical costs not covered under the basic medical plan. Mr. Scarborough has reimbursement coverage up to $30,000 per year for himself and for each covered family member, and the other NEOs have coverage up to $20,000 per year for themselves and for each covered family member.
 
Dental Insurance
 
All NEOs contribute to, and participate in, dental plans available to employees. In addition, the Company provides each NEO, the NEO’s spouse and dependent children, supplemental dental coverage, which reimburses the NEOs for dental costs not covered under the basic dental plan. Mr. Scarborough has reimbursement coverage up to $2,000 per year for himself and for each covered family member, and the other NEOs have coverage up to $1,500 per year for themselves and for each covered family member. This benefit includes orthodontia coverage ($4,000 lifetime maximum) for dependents up to age 19.
 
Life Insurance
 
The Company provides $50,000 in life insurance for all employees, including the NEOs. In addition, the Company provides each NEO supplemental life insurance equal to three times the NEO’s base salary less $50,000 (which is covered under the Company’s basic plan) up to a maximum coverage of $700,000.
 
This excerpt taken from the AVY DEF 14A filed Mar 17, 2008.
Benefits
 
The Company provides a benefit program for all eligible employees in the United States, including NEOs, to provide them with retirement, savings, health and welfare, and disability coverage.
 
Defined Benefit Retirement Plans
 
The Company provides retirement benefits for all eligible employees, including NEOs, under the Retirement Plan for Employees of Avery Dennison Corporation (“Avery Retirement Plan”) and/or the Dennison Retirement Plan (“Dennison Retirement Plan”), collectively the “Qualified Retirement Plans.” The Company also provides the Benefit Restoration Plan (“BRP”) for eligible employees as described below.
 
Benefits under the Qualified Retirement Plans are based on pensionable earnings, length of service, when benefits commence and how they are paid, and are currently calculated separately for each year of service. Employees vest in the Qualified Retirement Plans after five years of service.
 
Employees who participated in the Avery Retirement Plan at any time from December 1, 1986 through November 30, 1997, may also have a benefit under the Stock Holding and Retirement Enhancement Plan of Avery Dennison Corporation (“SHARE Plan”). In order to receive a maximized benefit under the Avery Retirement Plan, these employees have the option to transfer their SHARE Plan balance to the Avery Retirement Plan, which will be converted into an annual annuity and combined with the monthly benefit from the Avery Retirement Plan. If they choose not to transfer their SHARE Plan balance, they will receive a lump-sum payment from the SHARE Plan and a lesser benefit from the Avery Retirement Plan.
 
Amounts payable under the Qualified Retirement Plans may be reduced in accordance with certain provisions, which, as applied to plan years beginning on or after December 1, 1994, currently limit the annual amount of compensation used to determine annual benefit accruals under the Qualified Retirement Plans to the first $225,000 of covered compensation as of December 31, 2007. In December 1994, the Company established the BRP to provide for the payment of supplemental retirement benefits to eligible employees, including the NEOs, whose benefits under the Qualified Retirement Plans are limited under the foregoing Code provisions. The BRP is a non-


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qualified excess benefit plan. Benefits are payable under the BRP in amounts equal to the amount by which a participant’s benefits, otherwise payable under the Qualified Retirement Plans, are reduced under applicable provisions of the Code.
 
All NEOs currently have a benefit in at least one of the plans discussed above. Mr. Simcic began employment with the Company as a French citizen and participated in certain French pension plans for a period of time before he was added as a participant in the U.S. plans. Additional information related to Mr. Simcic’s French retirement benefit is discussed in the Pension Benefit table following the CD&A.
 
Defined Contribution Retirement Plan
 
The Employee Savings Plan (“401(k) Plan”) is a tax-qualified retirement savings plan that permits employees to defer up to 25% of their annual salary and bonus or, if lower, the limit prescribed by the Internal Revenue Service to the 401(k) Plan on a before-tax basis. The employees’ elective deferrals are immediately vested upon contribution to the 401(k) Plan. The Company currently makes matching contributions to the 401(k) Plan in an amount equal to fifty cents for each dollar a participant contributes up to a maximum of 6% of the participant’s annual salary and bonus contributed, subject to certain other Code limits. After three years of service, participants vest in the amounts contributed by the Company. Employees of the Company are immediately eligible to participate in the 401(k) Plan.
 
Supplemental Executive Retirement Plan
 
The Supplemental Executive Retirement Plan (“SERP”) is designed to provide participants with additional incentives to further the Company’s growth and development, and as an inducement to remain with the Company. Participants designated by the Compensation Committee are offered benefits under this plan to supplement other retirement benefits. The Company believes that it is in the stockholders’ best interest to retain key executives in critical roles in order to provide continuity of leadership and to focus them on the Company’s long-term success. The Compensation Committee has designated Messrs. Scarborough, van Schoonenberg and O’Bryant as participants in this plan. Benefits will commence upon retirement at a benefit level that, when added to the benefits to which they will be entitled from the Qualified Retirement Plans, the BRP, the SHARE Plan at the time of retirement (assuming retirement at age 65), Company contributions (plus interest) to the 401(k) Plan and the deferred compensation plans, and Social Security payment, will equal 62.5% for Mr. Scarborough, 57.5% for Mr. van Schoonenberg and 52.5% for Mr. O’Bryant of their respective final average compensation (annual average of their salary for the three highest twelve month periods out of their last sixty months of employment with the Company plus the average of their three highest earned annual bonuses during their last sixty months of employment with the Company). Survivor and disability benefits are also payable under the SERP under certain circumstances.
 
Deferred Compensation
 
NEOs are eligible to defer up to 50% of their base salary and 50% of cash bonuses to the 2005 Executive Variable Deferred Retirement Plan (“EVDRP”), which is a non-qualified plan. Deferrals are 100% vested. This plan provides NEOs and other employees with a long-term capital accumulation opportunity. The EVDRP provides a number of investment opportunities, including fixed income and mutual fund alternatives. The EVDRP is designed to comply with section 409A of the Code. Certain NEOs also participated in prior deferred compensation plans that are no longer available for new deferrals.
 
The Company makes an annual contribution to each NEO’s deferred compensation account equal to 3% of cash compensation (salary and annual bonus) in excess of the 401(k) Plan limit. This contribution is added to their deferred compensation account at the end of each plan year as long as the NEO has contributed at least 6% into the 401(k) Plan during the same plan year and is employed by the Company at year end. This benefit is designed to supplement pre-tax 401(k) contributions that are limited for certain executives (by the Code). Starting with the 2007


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plan year, the Company provides all employees eligible for the deferred compensation program a Company match up to the Code and Company 401(k) Plan limits.
 
Retiree Medical
 
Retirees, including NEOs, may be eligible for medical coverage until they are eligible for Medicare provided they meet the following criteria: elect to retire immediately following separation from the Company; receive a pension benefit from the Avery Retirement Plan and/or the Associate Retirement Plan for Employees of Avery Dennison Corporation (a component of the Dennison Retirement Plan); and are age 55 or older with 15 or more years of service. For employees who are at least age 60 and have 20 years of service, cost for this coverage is shared by the Company and the retiree.
 
Medical Insurance
 
All NEOs contribute to, and participate in, medical plans available to employees. In addition, the Company provides each NEO, the NEO’s spouse and dependent children, with supplemental medical coverage, which reimburses the NEOs for medical costs not covered under the basic medical plan. Mr. Scarborough has reimbursement coverage up to $30,000 per year for himself and for each covered family member, and the other NEOs have coverage up to $20,000 per year for themselves and for each covered family member.
 
Dental Insurance
 
All NEOs contribute to, and participate in, dental plans available to employees. In addition, the Company provides each NEO, the NEO’s spouse and dependent children, supplemental dental coverage, which reimburses the NEOs for dental costs not covered under the basic dental plan. Mr. Scarborough has reimbursement coverage up to $2,000 per year for himself and for each covered family member, and the other NEOs have coverage up to $1,500 per year for themselves and for each covered family member. This benefit includes orthodontia coverage ($4,000 lifetime maximum) for dependents up to age 19.
 
Life Insurance
 
The Company provides $50,000 in life insurance for all employees, including NEOs. In addition, the Company provides each NEO supplemental life insurance equal to three times his/her base salary less $50,000 (which is covered under the Company’s basic plan) up to a maximum coverage of $700,000.
 
These excerpts taken from the AVY 10-K filed Mar 17, 2005.

ARTICLE 7 – BENEFITS

 

7.1        Retirement Benefit.

A Participant is eligible for a Retirement Benefit under this Plan upon the satisfaction of the requirements for Normal Retirement.

 

7.2        Benefit Election Alternatives.

The Retirement Benefit will be paid beginning on the Settlement Date, and in the manner which the Participant elects no later than twelve months prior to the originally scheduled commencement of the distribution, consistent with procedures established by the Company and with the requirements of Section 409A To the extent required under Section 409A, an election by a Participant to change the form or timing of an initial or subsequent distribution must defer the commencement of Retirement Benefits for at least 5 years.

 

7.3        Installment Payments.

All installment payments will be calculated on an annual basis but paid at such intervals as may be determined by the Committee, subject to the provisions of Section 7.2 above, provided that such intervals shall not be less frequent than quarterly. If a Participant elects to receive his Retirement Benefit in installment payments, the payments will be based on the Deferral Account balance at the beginning of the payment period. The payments will be recalculated annually by dividing the Participant’s current Deferral Account balance as of the last day of the plan year by the number of remaining years in the payment period based on the Participant’s retirement payment election. The rate of return (positive or negative) during any payment year will be credited during the year on the unpaid Deferral Account balance at the applicable Declared Rate(s). A retired Participant may continue to change his Declared Rate(s) pursuant to Section 6.1.

 

7.4        Disability Benefit.

If a Participant becomes Disabled, the Participant may request a Disability Benefit.

 

7.5        Termination Benefit.

If a Participant ceases to be a Director for any reason other than death, Disability or Normal Retirement, the Company shall pay to the Participant in one lump sum an amount (the “Termination Benefit”) equal to the value of the Deferral Account. The Participant shall be entitled to no further Benefits under this Plan.

 

7.6        Survivor Benefits.

 

(a)        Pre-Retirement. If a Participant dies and has not yet commenced receiving Retirement Benefit payments, a Survivor Benefit will be paid to his Beneficiary in annual installments over ten years unless a different payment schedule is required under Section 409A. The aggregate Survivor Benefit will be equal to the Deferral Account balance plus the Declared Rate(s). The annual Survivor Benefit payments shall be re-determined each year based upon the value of the Deferral Account at that time.

 

(b)        Post-Retirement. If a Participant dies after payment of Retirement Benefits has commenced, his Beneficiary will be entitled to receive the remainder of the payments not yet paid to the Participant in accordance with the election of the Participant then in effect unless a different payment schedule is required under Section 409A.

 

7.7        Change of Control.

A Participant may make an irrevocable election at the time of making a deferral election to take a distribution in the event of a Change of Control prior to the Participant’s termination of status as a Director. A distribution on Change of Control shall be equal to the total balance of the Deferral Account or Accounts specified by the Participant including notional earnings credited thereon through the Valuation Date and shall be paid in the form of a single lump sum payable no later than the last day of the month following the month in which such Change of Control occurs, subject to Section 409A.

 

7.8        Valuation Date.

Unless otherwise provided by the Administrator, the Valuation Date for determining Deferral Account balances shall be the last day of the month in which an event occurs that triggers a Benefit payment.

 

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7.9        Settlement Date.

Unless otherwise provided by the Administrator, the Settlement Date for Benefit payments shall be within 90 days or as soon as possible following the Valuation Date, except as might otherwise be required under Section 409A.

 

ARTICLE 7 - BENEFITS

 

7.1 Retirement Benefit.

 

A Participant is eligible for a Retirement Benefit under this Plan upon the satisfaction of the requirements for Normal Retirement or Early Retirement.

 

7.2 Benefit Election Alternatives.

 

The Retirement Benefit will be paid beginning on the Settlement Date, and in the manner which the Participant elects no later than twelve months prior to the originally scheduled commencement of the distribution, consistent with procedures established by the Company and with the requirements of Section 409A To the extent required under Section 409A, an election by a Participant to change the form or timing of an initial or subsequent distribution must defer the commencement of Retirement Benefits for at least 5 years.

 

To the extent required under Section 409A, payments upon separation from service of a Key Employee shall be delayed for at least 6 months after separation from service.

 

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7.3 Installment Payments.

 

All installment payments will be calculated on an annual basis but paid at such intervals as may be determined by the Committee, subject to the provisions of Section 7.2 above, provided that such intervals shall not be less frequent than quarterly. If a Participant elects to receive his Retirement Benefit in installment payments, the payments will be based on the Deferral Account balance at the beginning of the payment period. The payments will be recalculated annually by dividing the Participant’s current Deferral Account balance as of the last day of the plan year by the number of remaining years in the payment period based on the Participant’s retirement payment election. The rate of return (positive or negative) during any payment year will be credited during the year on the unpaid Deferral Account balance at the applicable Declared Rate(s). A retired Participant may continue to change his Declared Rate(s) pursuant to Section 6.1.

 

7.4 Disability Benefit.

 

If a Participant becomes Disabled, the Participant may request a Disability Benefit.

 

7.5 Termination Benefit.

 

If a Participant ceases to be an Employee for any reason other than death, Disability or Normal or Early Retirement, the Employer shall pay to the Participant in one lump sum an amount (the “Termination Benefit”) equal to the value of the Deferral Account, subject to the last sentence of Section 7.2 above. The Participant shall be entitled to no further Benefits under this Plan.

 

7.6 Survivor Benefits.

 

(a) Pre-Retirement. If a Participant (prior to having reached age 55 with at least 15 years of service) dies and has not yet commenced receiving Retirement Benefit payments, a Survivor Benefit will be paid to his Beneficiary in annual installments over ten years unless a different payment schedule is required under Section 409A. If a Participant (after having reached age 55 with at least 15 years of service) dies and has not yet commenced receiving Retirement Benefit payments, a Survivor Benefit will be paid to his Beneficiary in annual installments over the period of time previously elected by the deceased Participant unless a different payment schedule is required under Section 409A. The aggregate Survivor Benefit will be equal to the Deferral Account balance plus the Declared Rate(s). The annual Survivor Benefit payments shall be re-determined each year based upon the value of the Deferral Account at that time.

 

(b) Post-Retirement. If a Participant dies after reaching age 55 with at least 15 years of service and after payment of Benefits has commenced, his Beneficiary will be entitled to receive the remainder of the payments not yet paid to the Participant in accordance with the election of the Participant then in effect unless a different payment schedule is required under Section 409A.

 

7.7 Change of Control or other Benefit.

 

A Participant may make an irrevocable election at the time of making a deferral election to take a distribution in the event of a Change of Control prior to the Participant’s Termination of Employment. A distribution on Change of Control shall be equal to the total balance of the Deferral Account or Accounts specified by the Participant including notional earnings credited thereon through the Valuation Date and shall be paid in the form of a single lump sum payable no later than the last day of the month following the month in which such Change of Control occurs, subject to Section 409A.

 

Notwithstanding anything herein to the contrary, the Administrator may provide for any other distribution of Benefit to the extent permitted by Section 409A.

 

7.8 Valuation Date.

 

Unless otherwise provided by the Administrator, the Valuation Date for determining Deferral Account balances shall be the last day of the month in which an event occurs that triggers a Benefit payment.

 

7.9 Settlement Date.

 

Unless otherwise provided by the Administrator, the Settlement Date for Benefit payments shall be within 90 days or as soon as possible following the Valuation Date, except as might otherwise be required under Section 409A.

 

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