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This excerpt taken from the DKS DEF 14A filed May 3, 2007. Supplemental
Savings Plans.
Company Supplemental Savings Plan. Under the
terms of the Company’s Supplemental Smart Savings Plan,
which as of December 7, 2006 excludes executive officers
from eligibility to participate, if a participant experiences a
“separation from service,” which is defined in the
plan as a termination of employment from the Company resulting
from death, retirement or otherwise, but does not include
absence for military leave, sick leave, or other bona fide leave
of absence of less than six (6) months, then the
participant shall receive the associated distribution from his
or her accounts created under the plan. Such distribution may
take the form of a single lump sum payment or monthly,
quarterly, semi-annual or annual installments, with any
installment terms between two (2) and fifteen
(15) years. In the event a participant becomes permanently
and totally disabled, as determined under the Company’s
long term disability plan, the entire value of his or her
accounts and the matching deferral account, will be distributed
in a single lump sum.
In the event of a
change-in-control
of the Company (defined below), then all plan benefits are
immediately payable in the form of a single lump sum or,
according to the times and in the forms of distribution
originally elected by the participant each year. Should a
participant during an annual election period fail to make an
election for time and form of payment, the benefit distribution
will be made in the form of a single lump sum for the applicable
year. A
change-in-control
of the Company is defined under the plan as a change in
ownership or control of the Company or one of the following
events (as objectively determined): (i) the acquisition of
the Company’s stock that, together with the stock already
held by such person, entity or group, constitutes more than 50%
of the total fair market value or total voting power of the
stock of the Company; provided that the acquisition of
additional stock by a person,
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entity or group already owning more than 50% of the
Company’s stock is not considered a change in ownership of
the Company; (ii) during any
12-month
period, the acquisition by any person, entity or group of stock
of the Company that constitutes 35% or more of the total voting
power of the stock of the Company, or a majority of the members
of the Board of Directors is replaced by directors whose
appointment or election was not endorsed by a majority of the
members of the Board of Directors as constituted prior to the
date of such appointment or election; or (iii) during any
12-month
period, the acquisition by any person, entity or group of assets
of the Company that have a total gross fair market value equal
to more than 40% of the total gross fair market value of all of
the assets of the Company immediately prior to such acquisition;
provided that, notwithstanding the foregoing, a
change-in-control
shall not occur under this section where there is a transfer of
assets to an entity that is controlled by the stockholders of
the Company immediately after the transfer.
Prior to the December 7, 2006 amendment, the only executive
officer who participated in the Supplemental Savings Plan was
Mr. Newlin, who retired at the end of March 2007. In
connection with his retirement, Mr. Newlin will receive a
distribution, which as of February 3, 2007 totaled of
$5,317.
Officers’ Supplemental Savings
Plan. Under the terms of the Officers’ Plan,
which became effective in fiscal year 2007, in the event of a
participant’s retirement or early retirement (defined
below), the participant is entitled to receive an amount equal
to the total balance of the participant’s account and
matching company account, which is payable in a single lump sum
unless the participant has elected to receive the distribution
in installments. Upon termination of employment other than by
reason of retirement, early retirement, death or termination for
cause (defined below), the participant is entitled to receive a
termination benefit equal to the vested balance of the
participant’s accounts, payable in a single lump sum;
provided, that the vested portion of the Company’s matching
account is payable in a single lump sum on the date the
participant attains age fifty-five (55). If a participant is
terminated for cause, the participant forfeits to the Company
all rights to both vested and unvested contributions of the
Company credited to the participant’s accounts, and is
entitled to receive a benefit equal to the remaining balance of
the participant’s accounts, payable in a single lump sum.
Retirement is defined in the Officers’ Plan as termination
of employment, other than a termination for cause, on or after
the date on which the participant has both attained age
fifty-five (55) and completed at least five (5) years
of participation in the Officers’ Plan, and early
termination is termination of employment, other than for cause,
on or after the date on which the participant has completed at
least five (5) years of participation. Termination for
cause is defined in the Officers’ Plan as termination of
employment by reason of (a) a substantial intentional
failure to perform duties as an employee or to comply with any
material provision of his or her employment agreement with the
Company, where such failure is not cured within thirty
(30) days after receiving written notice from the Company
specifying in reasonable detail the nature of the failure,
(b) a breach of fiduciary duty to the Company by reason of
receipt of personal profits, (c) conviction of a felony, or
(d) any other willful and gross misconduct committed by the
participant.
Distributions are also triggered upon a participant’s death
or disability (as defined in applicable treasury regulations) or
in the event of certain hardships or changes of control (each as
defined under Section 409A of the Internal Revenue Code). A
change in control is defined in the Officers’ Plan as any
of: (i) the dissolution or liquidation of the Company;
(ii) a reorganization, merger or consolidation of the
Company with one or more corporations as a result of which the
Company is not the surviving corporation; (iii) approval by
the stockholders of the Company of any sale, lease, exchange or
other transfer (in one or a series of transactions) of all or
substantially all of the assets of the Company;
(iv) approval by the stockholders of the Company of any
merger or consolidation of the Company in which the holders of
voting stock of the Company immediately before the merger or
consolidation will not own 50% or more of the voting shares of
the continuing or surviving corporation immediately after such
merger or consolidation; or (v) a change of 50% (rounded to
the next whole person) in the membership of the Board of
Directors of the Company within a twelve (12) month period,
unless the election or nomination for election by stockholders
of each new director within such period was approved by the vote
of two-thirds
(2/3)
(rounded to the next whole person) of the directors then still
in office who were in office at the beginning of the twelve
(12) month period. Notwithstanding the foregoing, no event
shall constitute a “change in control” for purposes of
acceleration of distributions on termination of the Plan if it
is not a “change in the ownership or effective control of
the corporation,” or “in the ownership of a
substantial portion of the assets of the corporation,”
“corporate dissolution,”
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or “with approval of a bankruptcy court pursuant to
11 U.S.C. Section 503(b)(1)(A)” within the
meaning of Code Section 409A.
Life Insurance Benefits. The Company currently
pays the premiums for life insurance policies for the benefit of
Messrs. Stack and Colombo, for which the beneficiaries
under the policies, upon each executive’s death, is the
executive’s respective spouses, and for an additional life
insurance policy for which a personal beneficiary designated by
Mr. Stack is, upon the executive’s death, the
beneficiary. For detail regarding the premiums paid by the
Company, see footnotes 6 and 8 of the Summary Compensation
Table on page 26. If Messrs. Stack and Colombo had
died on February 3, 2007, the spouses of Mr. Stack and
Mr. Colombo would have received $2,413,407 and $1,250,510,
respectively, under this arrangement, and a personal beneficiary
designated by Mr. Stack would have received $4,000,000 with
respect to Mr. Stack’s additional policy.
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