This excerpt taken from the DKS DEF 14A filed May 3, 2007.
Supplemental Savings Plans.
Company Supplemental Savings Plan. Under the terms of the Companys 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 Companys 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 Companys 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,
entity or group already owning more than 50% of the Companys 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 participants retirement or early retirement (defined below), the participant is entitled to receive an amount equal to the total balance of the participants 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 participants accounts, payable in a single lump sum; provided, that the vested portion of the Companys 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 participants accounts, and is entitled to receive a benefit equal to the remaining balance of the participants 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 participants 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,
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 executives death, is the executives respective spouses, and for an additional life insurance policy for which a personal beneficiary designated by Mr. Stack is, upon the executives 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. Stacks additional policy.