CSS » Topics » Non-Qualified Supplemental Executive Retirement Plans (SERPs)

This excerpt taken from the CSS DEF 14A filed Jun 19, 2008.
Non-Qualified Supplemental Executive Retirement Plans (“SERPs”)
 
CSS and its subsidiaries maintain non-qualified defined contribution plans designed to provide profit sharing benefits to executives with respect to compensation that cannot be taken into account under tax qualified plans, including the Cleo 401(k) Profit Sharing Plan, because the compensation exceeds limits under the Internal Revenue Code. We refer to the compensation that exceeds these limits as “excess compensation.” Under the SERPs, each year we credit to the account of an executive an amount equal to the percentage profit sharing payment made for the year under the Cleo 401(k) Profit Sharing Plan multiplied by the executive’s excess compensation. In addition, the Human Resources Committee has the discretion to credit an amount to a participant’s account under the CSS SERP based on such percentage of the participant’s excess compensation as the Human Resource Committee determines. Participants become vested in their SERP account in the same manner as participants in the Cleo 401(k) Profit Sharing Plan become vested in our matching and profit sharing contributions, as described above. A participant can choose to have our contributions allocated to one or more notional investments. A participant’s account is adjusted to reflect the deemed rate of return, positive or negative, in the notional investments.
 
See “Non-Qualified Deferred Compensation — Fiscal 2008” on page 39 and “Non-Qualified Supplemental Executive Retirement Plan” on page 43 for additional information.
 
Tax Considerations
 
Section 162(m) of the Internal Revenue Code limits to $1 million the deductibility for federal income tax purposes of annual compensation paid by a publicly held company to its chief executive officer or certain other officers, unless certain conditions are met. Our 2004 Stock Plan was designed to preserve, to the extent otherwise available, the deductibility under Section 162(m) of income realized on the exercise of stock options. We believe that all compensation paid to our executives during the fiscal year ended March 31, 2008 was deductible. However, it is possible that some portion of compensation paid in future years will be non-deductible, and we retain the ability to authorize compensation that may not be deductible if we believe it is in the best interests of CSS to do so.
 
Notwithstanding the foregoing, we believe that it would be in the best interests of CSS and its stockholders for CSS to have the flexibility to structure its annual incentive compensation awards and its long term incentive awards (in a form other than stock options) to qualify as “qualified performance-based compensation” under Section 162(m) of the Internal Revenue Code. In order to achieve this flexibility, we have requested approval by CSS’ stockholders of the Plan Amendment and of the Management Incentive Program. For further information, see “Proposal 2 — Approval of Amendment to the 2004 Equity Compensation Plan” beginning on page 4 and “Proposal 3 — Approval of the Management Incentive Program” beginning on page 10.
 
Historically, incentive compensation under our Management Incentive Program has not qualified for deductibility under Section 162(m), meaning that a bonus paid to a named executive officer would not be deductible for tax purposes to the extent that the bonus amount, plus salary and all other compensation that is not deductible for purposes of Section 162(m), exceeds $1 million in a given year. Additionally, the stock bonus awards of restricted stock units granted to our named executive officers in June 2008 under our 2004 Stock Plan do not qualify for deductibility, meaning that the value of any shares of CSS common stock delivered to a named executive officer would not be deductible for tax purposes to the extent that the value of such shares, plus salary and all other compensation that is not deductible for purposes of Section 162(m), exceeds $1 million in a given year.
 
As indicated above, the fiscal 2009 incentive compensation awards to our named executive officers have been structured to qualify as “qualified performance-based compensation” under Section 162(m) of the Internal Revenue Code and, accordingly, have been granted subject to approval by CSS’ stockholders of the Management Incentive Program. For more information, see “Proposal 3 — Approval of the Management Incentive Program” beginning on page 10.
 


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This excerpt taken from the CSS DEF 14A filed Jun 15, 2007.
Non-Qualified Supplemental Executive Retirement Plans (“SERPs”)
 
CSS and its subsidiaries maintain non-qualified defined contribution plans designed to provide profit sharing benefits to executives with respect to compensation that cannot be taken into account under tax qualified plans, including the Cleo 401(k) Profit Sharing Plan, because the compensation exceeds limits under the Internal Revenue Code. We refer to the compensation that exceeds these limits as “excess compensation.” Under the SERPs, each year we credit to the account of an executive an amount equal to the percentage profit sharing payment made for the year under the Cleo 401(k) Profit Sharing Plan multiplied by the executive’s excess compensation. In addition, the Human Resources Committee has the discretion to credit an amount to a participant’s account under the CSS SERP based on such percentage of the participant’s excess compensation as the Human Resource Committee determines. Participants become vested in their SERP account in the same manner as participants in the Cleo 401(k) Profit Sharing Plan become vested in our matching and profit sharing contributions, as described above. A participant can choose to have our contributions allocated to one or more notional investments. A participant’s account is adjusted to reflect the deemed rate of return, positive or negative, in the notional investments.
 
See “Non-Qualified Defined Compensation — Fiscal 2007” beginning on page 26 and “Non-Qualified Supplemental Executive Retirement Plan” beginning on page 30 for additional information.
 
Tax Considerations
 
Section 162(m) of the Internal Revenue Code limits to $1 million the deductibility for federal income tax purposes of annual compensation paid by a publicly held company to its chief executive officer and its four other highest paid officers, unless certain conditions are met. Our 2004 Stock Plan was designed to preserve, to the extent otherwise available, the deductibility under Section 162(m) of income realized on the exercise of stock options. Bonuses under our Management Incentive Programs do not qualify for deductibility under Section 162(m), meaning that a bonus paid to a named executive officer would not be deductible for tax purposes to the extent that the bonus amount, plus salary and all other compensation that is not deductible for purposes of Section 162(m), exceeds $1 million in a given year. While we believe that all compensation paid to our executives during the fiscal year ended March 31, 2007 was deductible, it is possible that some portion of compensation paid in future years will be non-deductible. We retain the flexibility to authorize compensation that may not be deductible if we believe it is in the best interests of CSS to do so.
 
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