This excerpt taken from the HNZ DEF 14A filed Jul 1, 2005.
Most full-time salaried employees in the United States who were hired before January 1, 1993 are entitled to retirement benefits from Plan A of the H. J. Heinz Company Employees Retirement System (Plan A). Benefits are based on credited service and five-year average eligible compensation through December 31, 1992, the date on which Plan A was frozen. Since January 1, 1993, retirement benefits have been provided by the Company through an age-related contribution account within the Employees Retirement and Savings Plan and the Employees Retirement and Savings Excess Plan.
The Company has a Supplemental Executive Retirement Plan (the SERP) which provides additional retirement benefits for eligible executives, including the named executive officers in the Summary Compensation Table. The SERP was adopted in order to attract and retain executives, and to compensate them for reductions in benefits due to limitations imposed by the Internal Revenue Code. Benefits under the SERP are paid as a single lump sum cash payment upon retirement at age 55 or later, after at least five years of service.
Effective May 1, 2004, the Board of Directors amended the SERP to provide future service benefits under a cash balance plan. Under the cash balance plan formula, a participant receives monthly pay credits based on the participants annual bonus category; each of the named executive officers receives a pay credit of 8% of eligible compensation. The accumulated credits earn 5% interest, compounded monthly.
For service prior to May 1, 2004, participants receive a payment equal to the product of a service-related multiple, frozen as of May 1, 2004, and the participants final average eligible compensation during the highest five of the ten years immediately prior to retirement. This product is reduced by (i) the lump sum value of the Plan A benefit (if any), and (ii) the value of the participants Age-Related Company Contribution Account under the Employees Retirement and Savings Plan and the Employees Retirement and Savings Excess Plan.
In addition to benefits under the SERP, Mr. Johnson receives benefits under an enhancement to the SERP that the Board of Directors approved on May 6, 2002. This enhancement provides for an additional benefit equal to 3.85% of final average earnings for each additional year of service after the date of the SERP enhancement. This benefit is subject to a maximum enhancement of 26.95% at 7 additional years of service. The enhancement is further limited to a total benefit equivalent to an annual annuity (from all of the Companys retirement arrangements) of 60% of final average earnings at retirement on or after the age of 60 (excluding any value received from equity awards and long-term incentives).
This enhanced benefit fully vests on May 6, 2007, subject to Mr. Johnsons continued employment. If Mr. Johnson is involuntarily terminated from his position for a reason other than for cause, the benefit will fully vest as of the date of his termination.
The following table, entitled U.S. Retirement Plans, shows the estimated retirement benefit for each of the named executives from all sources described above, stated as an annual pension equivalent beginning at age 65. The estimates assume that each executive works until age 65, and that eligible compensation under the SERP, the executives base salary, annual bonus, and restricted stock units received in lieu of cash bonus, remain constant at Fiscal Year 2005 amounts.