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This excerpt taken from the BMS 10-K filed Mar 15, 2006. Sec. 4.7 Monthly
Earnings. The “Monthly
Earnings” of an employee whose Termination of Employment occurs on or after January 1,
1997 shall be determined as follows:
(a) If an employee is paid on a salaried or commission basis on the earliest date in a Plan Year on which he is a Qualified Employee, Monthly Earnings for said Plan Year is equal to the greater of:
(1) An amount equal to his or her regular monthly salary as in effect on January 1 of said Plan Year plus, where applicable, an amount equal to the total commissions paid to him or her during the preceding Plan Year divided by 12. In any case where an employee was not a Qualified Employee on January 1 of a Plan Year, but transferred to a position as a Qualified Employee on a later date in said Plan Year, Monthly Earnings for said Plan Year shall be determined according to the preceding sentence except that said amount shall be based on salary in effect immediately following said transfer. Said amount shall not exceed one-twelfth the annual limit under Code § 401(a)(17) in effect on said January 1. For example, Monthly Earnings determined under this paragraph on the basis of a Participant’s January 1, 2005 salary rate may not exceed $17,500, reflecting the 2005 Code § 401(a)(17) limit.
(2) One-twelfth of the sum of the following amounts:
(A) The total compensation (other than the annual, non-discretionary bonus) paid to the employee during the preceding Plan Year.
(B) The annual, non-discretionary bonus, if any, the employee earned during the preceding Plan Year. Such bonuses will be recognized for the Plan Year in which earned, even if the bonus is actually paid after the close of that Plan Year or payment is deferred to a later date.
However, if the employee was never a Qualified Employee at any time during the preceding Plan Year, this paragraph (2) shall not be applicable and Monthly Earnings shall be determined pursuant to paragraph (1). Said sum shall not exceed the limit under Code § 401(a)(17) for the preceding Plan Year. For example, Monthly Earnings determined under this paragraph for 2005 on the basis of 2004 total compensation and earned bonus may not exceed $17,083.33, which is one-twelfth of the 2004 Code § 401(a)(17) limit.
(b) If an employee is hourly paid on the earliest date in a Plan Year on which he or she is a Qualified Employee, Monthly Earnings for said Plan Year is equal to the greater of:
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(1) 173 1/3 multiplied by the employee’s base hourly pay rate as in effect on January 1 of said Plan Year (or on the earliest date he or she is a Qualified Employee, if later). Said amount shall not exceed one-twelfth of the annual limit in effect under Code § 401(a)(17) on said January 1.
(2) One-twelfth of the employee’s total compensation during the preceding Plan Year. However, if the employee was never a Qualified Employee at any time during the preceding Plan Year, this paragraph (2) shall not be applicable and Monthly Earnings shall be determined pursuant to paragraph (1). Monthly Earnings determined under this paragraph shall not exceed one twelfth of the limit under Code § 401(a)(17) for the preceding Plan Year.
(c) Notwithstanding the foregoing:
(1) No Monthly Earnings shall be determined for an employee for a Plan Year unless he or she was a Qualified Employee during part or all of that Plan Year. However, if a Participant who was age 34 or younger transferred on or after September 28, 1990, and before January 1, 1997, from a position as a Qualified Employee to a position in which the individual was a salaried, office clerical, or supervisory employee at a location listed in Sec. 2.37(f) or at an Affiliate which is not a Participating Employer, Monthly Earnings will continue to be determined for each Plan Year during all or any part of which the individual was a salaried, office clerical, or supervisory employee. The preceding sentence does not apply if the individual is not a Qualified Employee due to application of Sec. 2.37(c) (relating to non-resident aliens) or Sec. 2.37(d) (relating to bargaining unit employees), or during any period while the individual’s principal place of employment is outside the United States.
(2) Allowances or reimbursements for expenses, payments or contributions to or for the benefit of the employee under any profit sharing, insurance, workers’ compensation or other employee benefit plan, income derived from receipt or exercise of stock options, phantom stock awards, or benefits in the form of property or the use of property shall not be included in computing Monthly Earnings.
(3) An employee’s Monthly Earnings for any Plan Year before 1992 will be determined pursuant to the Plan as in effect prior to the amendment effective January 1, 1997.
(4) If an employee elects to defer salary or bonus pursuant to a non-qualified deferred compensation plan, Monthly Earnings will be determined without regard to said deferral. For example, monthly salary under (a)(1) is the monthly salary rate in effect before any voluntary deferral. Similarly, the annual bonus under (a)(2)(B) is the amount earned without regard to any
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election to defer receipt. When the deferred compensation later is paid to the employee, it will not be included in Monthly Earnings at the time of payment.
(d) Monthly Earnings is the gross amount, before any reduction pursuant to Code §§ 125, 132(f)(4), or 401(k).
(e) For any period while a Participant is absent from work and receiving benefits under the Long-Term Disability Plan, his or her Monthly Earnings will be deemed to remain at the same level last determined prior to the period of absence. However, the preceding sentence does not apply in cases where a Participant is receiving long-term disability benefits from a source other than the Long-Term Disability Plan.
(f) Notwithstanding any other provision of this section to the contrary, if a Participant’s service in Brazil with ITAP/BEMIS, Ltda. is recognized as Credited Service pursuant to Sec. 3.5(a)(6), Monthly Earnings for each Plan Year beginning after his or her transfer to Brazil and ending before his or her return to the United States shall be equal to the average of his or her last Monthly Earnings rate before the transfer and first Monthly Earnings rate after the return.
(g) Monthly Earnings shall be determined for periods while an individual was a salaried employee of a Participating Employer or Affiliate in Canada. Said determination will be made in accordance with this section, but Monthly Earnings expressed in Canadian dollars as of any January 1 will be converted to U.S. dollars using the rate of exchange on the last business day of the preceding December as reported in the Exchange Rate Table as published in the Wall Street Journal.
(h) The Code § 401(a)(17) limit referred to in (a) and (b) is $200,000 for 2002 and all prior Plan Years, and is subject to a cost of living adjustment for Plan Years after 2002. The limit for 2006 is $220,000.
(i) If a Group A or Group B Participant formerly employed by the Company or its Affiliates is rehired by the Company or an Affiliate on or after January 1, 2006, amounts paid during the period of reemployment will be disregarded for purposes of determining his or her Monthly Earnings.
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