This excerpt taken from the HR DEF 14A filed Mar 27, 2006.
Pension or Retirement Plans
The Companys Executive Retirement Plan for certain officers is a defined benefit plan. The amount of a retirees pension is calculated using pay and years of service as an employee, rather than by the market value of the plans assets as in defined contribution plans.
Upon retirement, a participant receives an annual pension from the plan equal to 60% of the participants Final Average Annual Compensation, as defined below, plus 6% for each year of (but not more than five years) service after age 60 (90% for retirement at age 65 with at least five years of service). Plan benefits are reduced by the participants primary Social Security benefits and Company contributions to the participants 401(k) plan. The annual pension benefit is payable to the participants spouse upon the participants death.
The retirement benefit is adjusted annually to reflect changes in the Consumer Price Index. In addition, a participant may elect to take the retirement benefit in a lump-sum payment equal to the present value of the cash payments that would otherwise be paid to the participant. Such present value shall be determined as of the date of delivery of the notice of election and shall be based on a discount rate on 90-day U.S. Treasury bills, as reported in the Wall Street Journal (or similar publication).
Final Average Annual Compensation, which is calculated as the average of the three highest, not necessarily consecutive, years earnings, is based upon a participants annual cash compensation (but not including cash bonuses for employees whose annual salary exceeds $200,000). The value of any restricted stock awards will not be included as Final Average Annual Compensation in determining the annual pension.
The Compensation Committee selects eligible participants in the plan. As of January 24, 2006, the Compensation Committee has selected only one executive officer, David R. Emery, as a participant for this plan. Mr. Emery has provided 13 years of service to the Company as of December 31, 2005.
The following table illustrates the annual pension benefits upon the normal retirement age of 65 calculated before any offset of the employees primary Social Security benefits or Company contributions to the participants 401(k) plan: