This excerpt taken from the SMG DEF 14A filed Dec 20, 2007.
Footnote to Column (f) of Non-Qualified Deferred Compensation Table
This amount represents the account balance for each NEO as of the end of the 2007 fiscal year. Distributions from the ERP generally begin after 6 months have elapsed from when a participant terminates employment (although the participant may specify a later date) and normally are paid in either a lump sum or in annual installments over no more than 9 years, whichever the participant has elected. Distributions from the Company stock fund are always made in the form of whole common shares and the value of fractional common shares is distributed in cash. Distributions from one of the mutual fund investments are made in cash equal to the number of mutual fund shares credited to the participant multiplied by the market value of those mutual fund shares.
The Company and Scotts LLC have entered into certain agreements and maintain certain plans that may provide compensation to the NEOs in the event of a termination of employment or a change in control of the Company.
Employment Agreements: As of the end of the 2007 fiscal year, Mr. Hagedorn was the only NEO party to an employment agreement. However, Scotts LLC entered into employment agreements with Mr. Evans, Mr. Sanders and Ms. Stump effective as of October 1, 2007. Mr. Sanders had a prior agreement that expired on September 30, 2007. The terms of the employment agreements with Mr. Hagedorn, Mr. Evans, Mr. Sanders and Ms. Stump are described below under the caption Employment Agreements and Termination of Employment and Change-in-Control Arrangements. Under the terms of their respective employment agreements, each NEO may be eligible for severance and continued compensation and benefit eligibility as summarized in the table below. For purposes of this disclosure, the employment agreements for Mr. Evans, Mr. Sanders and Ms. Stump are treated as if they were in effect on the last day of the 2007 fiscal year.
The specific obligations to each of Mr. Hagedorn, Mr. Evans, Mr. Sanders and Ms. Stump are detailed in separate tables.
Equity-Based Compensation Plans: As previously mentioned, grants of NSOs and restricted stock are typically subject to three-year, time-based vesting. However, our equity-based compensation plans generally provide for accelerated vesting or forfeiture in certain situations, as indicated in the following table. These acceleration and forfeiture provisions apply to all participants under the equity-based compensation plans.
Retirement: A voluntary termination after a participant reaches age 62, or reaches age 55 with 10 years of service.
Disability: A participants inability to perform his or her normal duties for a period of 6 months due to a physical or mental infirmity.
Upon a change in control of the Company, outstanding options and SARs will be cancelled, unless (a) the Compensation and Organization Committee determines prior to the change in control that immediately after the change in control, the options and SARs will be honored or assumed, or new awards with substantially equivalent value substituted or (b) the NEO exercises, with the permission of the Compensation and Organization Committee, the NEOs outstanding options and SARs within 15 days of the date of the change in control. For each cancelled option or SAR, an NEO will receive cash in the amount of, or common shares having a fair market value equal to, the difference between the change in control price per common share and the exercise price per share associated with the cancelled option or SAR.
The following table describes the approximate payments that would be made to Mr. Hagedorn pursuant to his employment agreement or other plans or individual award agreements in the event of his termination of employment under the circumstances described below or in the event of a change in control of the Company, assuming such termination of employment or change in control took place on September 30, 2007, the last day of the 2007 fiscal year. Please see the Outstanding Equity Awards at Fiscal Year-End Table on page 40 for further information concerning the outstanding NSOs, SARs and shares of restricted stock held by Mr. Hagedorn as of September 30, 2007. Mr. Hagedorns employment agreement is described below under the caption Employment Agreements and Termination of Employment and Change-in-Control Arrangements. In the event of voluntary termination of employment, early retirement, normal retirement or a termination for cause, Mr. Hagedorn would receive the value of his accrued benefits under each of the Associates Pension Plan, the Excess Pension Plan, the RSP and the ERP (the amounts of which would be the same as those reflected below in the applicable line items within Benefits and Perquisites), but not additional severance payments. Unless noted otherwise, the agreements and plans that give rise to the termination of employment and change in control obligations of the Company are as discussed above.