RESTORATIONPLAN
Exhibit 10.21
RESTORATION PLAN
At its August 7, 2002 meeting, the Compensation Committee of the Board reviewed and agreed to, in principle, a recommendation regarding a nonqualified benefit restoration plan. The recommendation was as follows:
“Establish a restoration plan for the executives who are impacted by limits on tax-qualified defined contribution plans to make up for benefits lost due to statutory limitations.”
The recommended plan provisions are summarized below:
| PROVISION |
| DETAILS |
| COMMENTS |
| Effective Date |
| First payroll following January 1, 2003 |
|
|
| Plan Objective |
| To restore employer matching contributions that would be otherwise limited due to eligible participants reaching the compensation and deferral limit caps imposed on qualified plan contributions and benefits reductions occurring from nondiscrimination test |
| For government business unit executives, this plan also restores benefits lost because bonuses are not included in compensation under the qualified plan |
| Eligibility |
| All approved Executives (approximately 120) |
| Currently approximately 100 would receive benefits |
| Plan Year |
| Calendar Year |
|
|
| Eligible Compensation |
| Annual Base Salary
|
| For non-government business unit executives, this is the same definition of compensation as the qualified plan. For government business unit executives, compensation considered for qualified plan excludes bonuses |
| Deferral Requirements |
| Executive must defer at least the lesser of 5% (6% for “Government) of qualified plan “eligible compensation” or the 402(g) deferral limit ($12,000 in 2003) |
|
|
| Allocation Frequency |
| Participant accounts will be credited beginning with the first payroll period in which limits are triggered and each payroll period thereafter |
| For “government” executives not on Washington Group payroll system, it will be necessary to credit accounts on an annual basis |
| Years of Service/Vesting |
| Participants will be immediately 100% vested in all amounts credited |
|
|
| Account Crediting Rate |
| Matching amounts are credited with an interest rate equal to Moody’s August long-term corporate bond yield average (Aaa, Aa, A, Baa) based on bonds with maturities 20 years and above, adjusted annually on a predetermined date |
| Moody’s long-term corporate bond yield average for the month of August was 7.06% |
| Additional Employer Contributions |
| At the company’s discretion additional amounts may be contributed to meet special circumstances |
| e.g. , an executive hired mid-year who has already hit contribution limits with a previous employer |
| Forms of Payment |
| Lump sum or
|
| Valued at termination |
| Funding |
| Benefits will not be funded and no trust will be established Individual, notional accounts established and maintained by the company (or third party administrator) |
|
|
Proposed Restoration Plan – Estimated Cost
| Total number of executives* |
| Approximately 120 |
| |
| Projected 2002 executive compensation |
| $ | 33,640,000 |
|
| Annual cost based on projected 2002 executive compensation |
| $ | 513,000 |
|
| 2003 Emergence Bonuses (1 year after emergence) |
| $ | 5,533,000 |
|
| Additional one-time cost in 2003 Emergence Bonuses |
| $ | 268,000 |
|
• Assumes all executives defer at least the lesser of 5% (6% for Government) of qualified plan “eligible compensation” or the 402(g) deferral limit ($12,000 in 2003).
• Compensation = Base salary plus target bonus
• For non-government executives, this is the same definition of pay as the qualified plan.
• For government executives, pay considered for qualified plan does not include bonuses.
• Benefit Restoration plan restores benefits lost due to the 401(a)(17) compensation limit ($200,000) and the 402(g) deferral limit ($11,000).
• For the government executives, the Benefit Restoration plan also restores benefits lost because bonuses are not included in compensation for the qualified plan.
• We have not considered the potential effects of limitations due to nondiscrimination testing.
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