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This excerpt taken from the SMG DEF 14A filed Dec 19, 2008. Retirement
Plans and Deferred Compensation Benefits (long-term compensation
element)
Executive
Retirement Plan
The Scotts Company LLC Executive Retirement Plan (the
“ERP”) is a non-qualified deferred compensation plan.
The ERP provides executives, including the NEOs, the opportunity
to (1) defer compensation above the specified statutory
limits applicable to The Scotts Company LLC Retirement Savings
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Plan (the “RSP”), a qualified 401(k) plan generally
offered to all employees, and (2) defer compensation with
respect to Executive Incentive Pay (as defined in the ERP)
awarded to such executives. The ERP is an unfunded plan and is
subject to the claims of the Company’s general creditors.
During the 2008 fiscal year, the ERP consisted of four parts:
The Company matching contributions and Base Retirement
Contributions to the ERP were based on the same contribution
formulae as those used for the RSP. The Company matched the
Compensation Deferral at 100% for the first 3% of eligible
earnings contributed to the ERP and 50% for the next 2% of
eligible earnings contributed to the ERP. The Company also made
a Base Retirement Contribution in an amount equal to 2% of
eligible earnings for all eligible executives, regardless of
whether they made deferral elections under the ERP. This amount
increased to 4% once an executive’s eligible earnings
reached 50% of the Social Security wage base. Base Retirement
Contributions were only made to the ERP once an executive
exceeded the maximum statutory compensation allowable under the
RSP (and/or with respect to all qualifying deferrals to the ERP).
All accounts under the ERP are bookkeeping accounts and do not
represent claims against specific assets of the Company. Each
participant directs the portion of future credits to the
participant’s ERP account that will be, as well as the
existing balance of the participant’s ERP account that is,
credited to one or more benchmarked investment funds, including
a Company stock fund and mutual fund investments, which are
substantially consistent with the investment options permitted
under the RSP. Accordingly, there were no above-market or
preferential earnings on investments associated with the ERP for
any of the NEOs for the 2008 fiscal year.
As permitted by the terms of the ERP, the Company has
established a rabbi trust to assist with discharging obligations
under the ERP. The assets of the rabbi trust remain at all times
the assets of the Company, subject to the claims of its
creditors.
See the section captioned “Recent Developments —
Approval of Retention Awards to NEOs” below for a
discussion of (1) the amendment to the ERP approved by the
Compensation Committee to authorize the grant of retention
awards under the ERP, and (2) the retention awards granted
to certain of the NEOs, each of which occurred after the end of
the 2008 fiscal year.
Other
Retirement and Deferred Compensation Plans
The Scotts Company LLC Excess Benefit Plan for Non Grandfathered
Associates (the “Excess Pension Plan”) is an unfunded
plan that provides benefits which cannot be provided under The
Scotts Company LLC Associates’ Pension Plan (the
“Associates’ Pension Plan”) due to specified
statutory limits. The Associates’ Pension Plan was frozen
effective December 31, 1997 and, therefore, no additional
benefits have accrued after that date under the Excess Pension
Plan for participating executives. Continued service taken into
account for vesting purposes under the Associates’ Pension
Plan is, however, recognized with respect to the entitlement to,
and the calculation of, subsidized early retirement benefits
under the Excess Pension Plan. For further details
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