|
|
 | | | |
- close
- close
- close
- close
This excerpt taken from the HAS DEF 14A filed Apr 8, 2008. Description
of Pension Plans
The Company sponsors the Hasbro, Inc. Pension Plan (the
“Pension Plan”) and the Supplemental Benefit Plan (the
“Supplemental Plan”) for its U.S. employees. The
Pension Plan provides funded, tax-qualified benefits subject to
the limits on compensation and benefits applicable under the
Internal Revenue Code. All of the named executive officers
participate in the Pension and Supplemental Plans.
Mr. Verrecchia is also eligible for an additional
non-qualified retirement benefit under his Post-Employment
Agreement (the “Post-Employment Agreement”), which is
described in detail in the Employment Agreements section of this
proxy statement. As a result of his service while in the U.K.,
Mr. Hargreaves accrued a benefit under the Company’s
former U.K. Employee Benefits Plan (the “U.K. Plan”)
and the Hasbro International Expatriate Pension Plan (the
“Expatriate Plan”). The U.K. Plan was closed in 1994
and the accrued benefits under the U.K. Plan were transferred to
Legal and General. The Company no longer has any obligation to
pay those benefits. Mr. Hargreaves is, however, entitled to
an annuity benefit from Legal and General relating back to the
closed U.K. Plan. The Pension Plan, Supplemental Plan,
Post-Employment Agreement, former U.K. Plan annuity benefit and
Expatriate Plan are described in more detail below.
The Company does not have a policy of granting any additional
years of benefit service beyond the definition of benefit
service within the plans identified above. A year of benefit
service is earned for each year in which an employee completes
at least 1000 hours of service for the Company.
Benefits earned under the Pension Plan, the Supplemental Plan
(Pension) and the Expatriate Plan were frozen effective
December 31, 2007. Effective January 1, 2008, the
Company amended its 401(k) Plan to include an additional annual
Company contribution equal to 3% of an employee’s base
salary and bonus, which is in addition to the pre-existing
Company matching formula. In addition, for eligible employees
meeting certain age and service requirements, there will be an
additional annual transition contribution ranging from 1% to 9%
of the employees’ base salary and bonus during the years
2008 through 2012. Annual contributions in excess of IRS limits
are provided on a nonqualified plan basis in the Supplemental
Plan (401(k)). Mr. Verrecchia waived his right to
participate in either of these new 401(k) Plan features.
Pension
Plan
Effective January 1, 2000, the Company amended the Pension
Plan as part of an overall redesign of its retirement programs.
The January 1, 2000 amendments to the Pension Plan
implemented a number of changes. Among the significant changes,
the amendments to the Pension Plan provided for a lump sum
benefit or an annual benefit, both determined primarily on the
basis of average compensation and actual years of service
(previously years of service in excess of 30 years were
excluded). Another aspect of the amendments made the benefits
under the Pension Plan portable after five years of service with
the Company.
Until January 1, 2007, employees working for the Company at
the time of the January 1, 2000 amendments received the
greater of the benefit provided by the unamended plan and the
benefit provided by the amended plan. For such employees
retiring on or after January 1, 2007, to compute their
benefits the Company determines what the employee’s
benefits would have been under the Pension Plan, prior to the
amendment, as of December 31, 2006. If the benefits under
the Pension Plan, prior to the amendment, are higher than the
benefits provided for such employee under the Pension Plan
following the amendment, the employee’s pension benefits
are computed by adding the benefits accrued under the unamended
plan, as of December 31, 2006, to the benefits accrued
under the plan, as amended, for periods of service after
January 1, 2007. For employees joining the Company after
January 1,
Table of Contents
2000, benefits will only be computed with respect to the Pension
Plan as amended. Mr. Goldner and Mr. Nagler were hired
after January 1, 2000 and, therefore, are covered only by
the amended Pension Plan.
Prior to the January 1, 2000 amendment the annual annuity
under the Pension Plan was computed as follows: (I) (A) 50%
of the person’s five-year average compensation was reduced
by (B) X% of the lesser of (i) the person’s
three-year average compensation and (ii) the person’s
social security covered compensation, and (II) the
resulting amount was then multiplied by the ratio of years of
benefit service (not to exceed 30) over 30. For purposes of
computing benefits in this formula X equals: (i) 22.5 if
the social security retirement age is 65, (ii) 21.0 if the
social security retirement age is 66 and (iii) 19.5 if the
social security retirement age is 67.
If benefits commenced prior to age 65, (A) and
(B) above were adjusted separately for early commencement
as follows: (A) is reduced by 4% per year until age 50
and on an actuarially equivalent basis thereafter and
(B) is reduced 5/9th of 1% for the first
60 months commencement precedes social security retirement
age and 5/18th of 1% for the next 60 months.
Thereafter, (B) is reduced on a actuarially equivalent
basis. In all cases, X above equals 22.5% for early commencement
of benefits.
Following the January 1, 2000 amendment annual annuity
benefits under the Pension Plan are computed as follows: (I)
(A) 2/3 of 1% of the person’s five-year average
compensation is added to (B) 1/3 of 1% of the person’s
five-year average compensation in excess of the social security
taxable wage base and the resulting amount is multiplied by
(II) the person’s years of benefit service. Under the
amended plan, benefits commencing prior to age 55 are
reduced
1/4th of
1% for each month commencement precedes age 55, with a
maximum reduction of 75%.
For purposes of the computations set forth above under the
Pension Plan, “five-year average compensation” equals
the highest consecutive five years of compensation during the
last ten years, while “three-year average
compensation” equals the three most recent years during the
same five-year period. Compensation includes salary, non-equity
incentive plan payments and any additional cash bonus (in the
year paid) as well as tax-qualified elective deferrals and
excludes equity based compensation, sign-on or retention bonuses
and other forms of non-cash compensation that may be taxable to
the executive. Compensation is subject to the maximum limits
imposed under the Code (which is $225,000 for 2007).
Participants may elect to receive benefits as a lump sum payment
or one of the annuity forms of payment available under the
Pension Plan. Because the plan provides for a lump sum payment,
benefits may commence at any age after termination, once vested
(generally after five years of benefit service). For early
commencement, the comparison of benefits under the amended and
unamended formulae is determined based on the reduced benefit
under each formula at the commencement age.
As is noted in the description of Pension Plans set forth above,
the benefits under this plan were frozen effective
December 31, 2007.
Supplemental
Plan(Pension)
The Supplemental Plan provides benefits determined under the
same benefit formula as the Pension Plan, but without regard to
the compensation and benefit limits imposed by the Code. For
determination of Supplemental Plan benefits, compensation
deferred into the Non-qualified Deferred Compensation Plan is
included in the year of deferral. Benefits under the
Supplemental Plan are reduced by benefits payable under the
Pension Plan. The Supplemental Plan benefits are not
tax-qualified and are unfunded.
As is noted in the description of Pension Plans set forth above,
the benefits under this plan were frozen effective
December 31, 2007.
Post-Employment
Agreement With Mr. Verrecchia
Unless Mr. Verrecchia’s employment is terminated by
the Company for Cause (as defined in the Post-Employment
Agreement), Mr. Verrecchia shall receive an annuity benefit
(calculated based on monthly installments) following the
termination of his employment for the remainder of his life in
an annual amount equal to 1.5% of his five-year average
compensation multiplied by Mr. Verrecchia’s years of
service with the Company, but not to exceed 60% of his five-year
average compensation. This enhanced retirement benefit is
reduced by the pension benefits provided to Mr. Verrecchia
by the Pension Plan and Supplemental Plan. If
Mr. Verrecchia’s employment terminates due to his
death, his spouse is entitled to the actuarial equivalent of the
enhanced retirement benefits
Table of Contents
described above. Mr. Verrecchia’s enhanced retirement
benefit under this agreement will be paid as a lump sum.
Mr. Verrecchia is currently eligible for an unreduced
retirement benefit under his Post-Employment Agreement.
U.K.
Employee Benefits Plan
As a result of his service while in the U.K.,
Mr. Hargreaves accrued a benefit under the Company’s
former U.K. Employee Benefits Plan (the “U.K. Plan”)
and the Hasbro International Expatriate Pension Plan (the
“Expatriate Plan”). The U.K. Plan was closed in 1994
and an annuity was purchased from Legal and General to provide
the accrued benefits under the U.K. Plan. The Company no longer
has any obligation to pay those benefits. Mr. Hargreaves
is, however, entitled to the annuity benefit from Legal and
General relating back to the closed U.K. Plan. The annual single
straight-life annuity benefit earned by Mr. Hargreaves
under the U.K. Plan as of the date his participation in the U.K.
Plan ceased was 9,617 British pounds. This annuity amount is
adjusted each year for inflation.
Expatriate
Plan
Mr. Hargreaves is entitled to a defined benefit from the
Hasbro International Expatriate Plan (the “Expatriate
Plan”) which considers his services while in the U.K. For
benefit service prior to 2006, the single straight-life annuity
benefit under the Expatriate Plan was determined as follows: (I)
(A) 2% of five-year average compensation minus 1.667% of
the estimated social security benefit multiplied by
(B) years of benefit service to a maximum of 30 years,
with such benefits then being reduced by (II) the benefits
payable from the (i) former U.K. Plan sponsored by Hasbro
(which benefits are now being provided by Legal and General as a
result of the buyout of deferred pensioners), (ii) Pension
Plan, (iii) Supplemental Plan (pension benefits),
(iv) the annuity equivalent of benefits attributable to the
prior qualified and nonqualified plans, such as the Profit
Sharing Plans and, for periods after 1999, (v) the 401(k)
Plan. For benefit service after 2006, benefit accruals under the
Expatriate Plan are calculated based on the amended Pension Plan
and Supplemental Plan provisions described previously. As a
minimum, the Expatriate Plan provides a benefit based on the
amended Pension and Supplemental Plan provisions counting all
years of benefit service, including employment in the UK, with
such benefits being reduced by (i), (ii) and (iii) above.
Commencement of benefits prior to normal retirement at
age 65 and other payment options will reduce benefits under
the Expatriate Plan.
As is noted in the description of Pension Plans set forth above,
the benefits under this plan were frozen effective
December 31, 2007.
|
| |||||||
