Severance Plan for Executive Officers – La-Z-Boy Inc.
LA-Z-BOY INCORPORATED
SEVERANCE PLAN FOR NAMED EXECUTIVE
OFFICERS
ARTICLE I
Statement of Purpose
La-Z-Boy Incorporated hereby establishes the La-Z-Boy Incorporated Severance
Plan for Named Executive Officers to provide financial assistance through
certain Severance Benefits to Participants whose employment with an Employer
hereunder is terminated in a Covered Termination.
The Plan is intended to be an unfunded welfare benefit plan for purposes of
the Employee Retirement Income Security Act of 1974, as amended, and a severance
pay plan within the meaning of the United States Department of Labor Regulation
Section 2510.3-2(b). This document applies to Participants whose Covered
Termination occurs on or after the Effective Date.
ARTICLE II
Definitions
For purposes of this Plan, the following terms shall have the meanings
ascribed to them below:
“Cause” means an Employee153s commission of any act or acts involving
dishonesty, fraud, illegality or moral turpitude, Employee153s willful or reckless
material misconduct in the performance of Employee153s duties, Employee153s willful
habitual neglect of material duties, Employee153s job performance that is deemed
below expectations after having been given a corrective action plan and a final
warning, or Employee153s serious and reckless or intentional violation of written
Employer policies.
“COBRA” means the provisions regarding healthcare continuation
coverage set forth in Section 601 et seq. of ERISA and Section 4980B of
the Code, and shall apply to health and welfare benefits offered by an Employer
as required by law.
“COBRA Premium” means the monthly cost of providing healthcare
continuation coverage for a qualified beneficiary under COBRA, as adjusted from
time to time.
“Code” means the Internal Revenue Code of 1986, as amended.
“Controlled Group” means La-Z-Boy Incorporated and its Related
Entities, or any of them, as currently or hereafter organized.
“Covered Termination” means an Employee153s Separation from Service
from an Employer due to an involuntary reduction in the work force, the
involuntary elimination of Employee153s position (including due to outsourcing or
job restructuring), the involuntary termination of Employee153s employment by an
Employer without Cause, or the Employee153s Separation from Service for Good
Reason. Notwithstanding the foregoing, a Covered Termination does not include a
Separation from Service for Cause or a Separation from Service for any reason if
the Participant fails to return all property of the Employer153s within 10 days
after the date of the Separation from Service.
“Effective Date” means the date that this Plan became effective,
which is June 11, 2010.
“Employee” means a common-law employee (including an officer) of an
Employer who is on the Employer153s payroll.
“Employer” includes La-Z-Boy Incorporated, its Related Entities, and
the respective successors and assigns of each. When used in the plural,
“Employers” means La-Z-Boy Incorporated and all of its Related Entities.
“ERISA” means the Employee Retirement Income Security Act of 1974,
as amended.
“Good Reason” means that a Participant resigns within 30 days after
a reduction in Employee153s Monthly Base Pay or target bonus opportunity (other
than in connection with a general decrease in compensation elements of similarly
situated employees) or after being required to relocate Employee153s office to a
facility more than 50 miles from Employee153s immediately prior principal office.
A resignation will be for Good Reason only if the Participant has provided
Participant153s Employer with written notice of Participant153s related complaints
and a reasonable opportunity to cure, and the Employer does not cure within a
reasonable time.
“Key Employee” means a “specified employee” as determined
in accordance with (including measurement of the applicable effective time
periods) the Treasury Regulations promulgated under Code Section 409A.
“La-Z-Boy Incorporated” means La-Z-Boy Incorporated and its
successors and assigns.
“Length of Service” means the amount of employment service credited
to a Participant for purposes of determining the Participant153s Severance Benefit
Period as described in Article IV.
“Monthly Base Pay” means the base salary or base wages that a
Participant earns during a calendar month, based on the rate of pay in effect
for the Participant immediately before the Participant153s Separation from
Service, excluding overtime or any special payments, and which is used to
compute the amount of Severance Pay under Article IV of the Plan.
“Participant” means an Employee who is eligible for, and is
participating in, this Plan pursuant to Article III.
“Plan” means the La-Z-Boy Incorporated Severance Plan for Named
Executive Officers as set forth in this document and its schedules and
attachments.
“Plan Administrator” means the person or committee responsible for
administration of the Plan as set forth in Article VIII of the Plan.
“Plan Year” means the calendar year for recordkeeping purposes.
“Related Entity” means a corporation or other entity if it and
La-Z-Boy Incorporated are members of a controlled group of corporations as
defined in Section 414(b) of the Code or are under common control as defined in
Section 414(c) of the Code. A Related Entity may adopt this Plan by a corporate
resolution and execution of a counterpart of this Plan.
“Release Date” means the date on which a Participant153s signed
Release Agreement required under Section 6.1 of the Plan becomes irrevocable and
non-rescindable.
“Separation from Service” means an Employee153s cessation of the
performance of services for La-Z-Boy Incorporated and all of its Related
Entities; provided, however, that a “Separation from Service” shall not
be deemed to have occurred for purposes of this Plan unless the relevant
circumstances constitute the Employee153s “Separation from Service”
within the meaning of Section 409A of the Code.
“Severance Benefit Period” means the period of time during which
Severance Benefits are payable to, or on behalf of, a particular Participant (as
applicable), if that Participant otherwise qualifies for Severance Benefits
pursuant to the provisions of this Plan.
“Severance Benefits” means the “Severance Pay” and
“COBRA Continuation Coverage” benefits as defined and described in
Article IV.
“Termination Date” means the date on which a Covered Termination
becomes effective.
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ARTICLE III
Eligibility and Participation
To be eligible for Severance Benefits under the Plan, an Employee must become
a Participant in this Plan and continue to be a Participant immediately before
the Participant153s Termination Date. An Employee will become a Participant in
this Plan on the date (but not prior to the Effective Date) that the Employee is
designated as a “Named Executive Officer” for purposes of La-Z-Boy
Incorporated153s annual proxy statement. Each Participant shall be listed on
Schedule A to this Plan, which schedule may be updated from time to time by the
Company. Severance Benefits may only be distributed to, or on behalf of, a
Participant (as applicable) if the remaining requirements of this Plan are met.
ARTICLE IV
Benefits
Section 4.1. Severance Benefits and Duration. A Participant
who has a Separation from Service that constitutes a Covered Termination shall
be entitled to the following Severance Benefits:
|
(a) |
Severance Pay – A Participant shall receive Monthly Base Pay according the |
|
(b) |
COBRA Continuation Coverage : In the event that a Participant is otherwise |
Upon termination of the Severance Benefit Period, any further health care
coverage under COBRA to which the Participant may be entitled under applicable
law shall continue only if the Participant (or beneficiary, as the case may be
under applicable law) pays the full cost thereof (using rates and procedures
applicable, from time to time, to the Employer153s standard COBRA procedures).
Notwithstanding the foregoing, if COBRA continuation coverage is no longer
required to be provided to a Participant by law during the Severance Benefit
Period, any payments by an Employer related to COBRA on behalf of that
Participant (or qualified beneficiaries) under this Plan will also terminate.
Notwithstanding anything to the contrary contained herein, a Participant must
comply with the release requirements of Section 6.1 to receive Severance
Benefits. In no event shall any Participant be entitled to receive cash or other
benefits in lieu of COBRA Premiums, and the Severance Benefits (unless otherwise
set forth above) shall be provided in accordance with the Severance Benefit
Period set forth below:
Participant153s Position with La-Z-Boy Incorporated Severance
Benefit Period
Chief Executive Officer 24 months
All other Participants 12 months
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ARTICLE V
Payment
Section 5.1. Delayed Payment Date for Key Employees if
Required. Notwithstanding anything to the contrary in this Plan, if a
Participant is a Key Employee at the time of Participant153s Separation from
Service (other than due to death), then the Severance Benefits payable to
Participant under this Plan, if any, and any other severance payments or
separation benefits payments that may be considered deferred compensation under
Section 409A (together, the “Deferred Compensation Separation Benefits”)
otherwise due to the Participant on or within the six-month period following
such Separation from Service will accrue during such six-month period and will
become payable in a lump sum payment (less applicable withholding taxes) on the
date six months and one (1) day after such Separation from Service. All
subsequent payments, if any, will be payable in accordance with the payment
schedule applicable to each payment or benefit. Notwithstanding anything herein
to the contrary, if a Participant dies following the Participant153s Separation
from Service but prior to the six month anniversary of the Participant153s
Separation from Service, then any payments delayed in accordance with this
paragraph will be payable in a lump sum (less applicable withholding taxes) to
Participant153s estate as soon as administratively practicable after the date of
Participant153s death and all other Deferred Compensation Separation Benefits will
be payable in accordance with the payment schedule applicable to each payment or
benefit. Each payment of severance benefits to a Participant under this
Agreement that is made by March 15 of the calendar year following the
Participant153s Separation From Service and is intended to not constitute a
“deferral of compensation” by virtue of the “short term deferral” rule of
Treasury Regulations Section 1.409A-1(b)(4) shall constitute a “separate
payment” for purposes of application of that rule.
Section 5.2. Death of Participant. In the event a
Participant (including a Participant who is a Key Employee) dies before
receiving the Participant153s Severance Pay under the Plan, the Severance Benefits
shall terminate and no further Severance Benefits shall be provided by this Plan
on behalf of that Participant, unless otherwise required by law.
Section 5.3. Change of Control. Notwithstanding any
provision in this Plan to the contrary, a Participant who receives any payment
or benefit pursuant to a change in control agreement with the Company (the “CIC
Benefit”) shall not be entitled to any payment or benefit pursuant to this Plan
except to the extent that the payment or benefit that the Participant would
otherwise receive pursuant to this Plan exceeds the CIC Benefit for the same
period.
Section 5.4. Limitation on Amount and Duration of Payments.
To assure compliance with Labor Reg. § 2510.3-2(b)(2)(i), the total
amount of Severance Pay shall not exceed two times the Employee153s “annual
compensation” during the year immediately before the Employee’s termination,
within the meaning of such regulation, and all installments of Severance Pay
shall be completed within 24 months of the Employee153s Separation from Service.
Any payment that would otherwise be required hereunder but that would, but for
this Section 5.4, be made after the conclusion of said 24-month period shall be
included in the last payment made to the Employee within said 24-month period.
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ARTICLE VI
Requirement of Effective Release; Integration with
Other Benefits
Section 6.1. Releases Generally. In addition to the
remaining requirements of this Plan, it shall be a condition of eligibility for
Severance Benefits that the Participant shall have timely signed a release
agreement (the “Release Agreement”) within the period of time specified
below and shall not have timely revoked or rescinded such Release Agreement.
Such Release Agreement shall be in a form acceptable to the Plan Administrator
that complies with applicable law and which is appropriate for the Participant153s
classification. The Release Agreement may include, among other items, a covenant
not to compete with the Employers. A Release Agreement must be signed no later
than the date specified in the form Release Agreement provided to the
Participant by the Plan Administrator.
No Severance Pay shall be paid to a Participant unless and until the
Participant timely signs the Release Agreement and the period of time for
revoking or rescinding such agreement under applicable law has expired without
the Participant153s having revoked or rescinded such agreement.
Section 6.2. Benefit Programs Generally. Severance Benefits
under this Plan are in addition to all pay (including accrued vacation pay) and
other benefits normally payable to a Participant as of the Participant153s
Termination Date according to the established applicable policies, plans, and
procedures of La-Z-Boy Incorporated and its Related Entities.
ARTICLE VII
Discontinuance, Reduction, or Repayment of Benefits
Upon Re-Employment or For Cause
Section 7.1. Discontinuance, Reduction, or Repayment upon
Re-Employment. If a Participant is subsequently employed by any
employer or engaged as a contractor before or after all of the Participant153s
Severance Benefits under this Plan have been paid or provided, the following
provisions shall apply:
|
(a) |
Severance Pay – A rehired Participant (whether hired or engaged as a |
|
|
(b) |
COBRA Continuation Coverage – The Employer153s payments for COBRA Premiums |
|
(c) |
Discontinuance – Notwithstanding anything herein to the contrary, if, during |
5
|
(d) |
Repayment – The Participant shall promptly advise the Plan Administrator upon |
Section 7.2. Discontinuance or Repayment for Cause.
Notwithstanding any other provision of the Plan, if the Plan Administrator
determines, at any time, that a Participant committed any act or omission, while
the Participant was employed by an Employer, that would constitute Cause, then
(i) payment of any Severance Benefits otherwise payable to the Participant under
the Plan shall cease; (ii) payments by the Employer for COBRA Premiums shall
cease; and (iii) the Participant shall repay any and all Severance Pay
previously paid to the Participant under the terms of this Plan and reimburse
the Employer for any payments by the Employer for COBRA Premiums. The Employers
shall have the right to seek enforcement of their rights under clause (iii)
above in any court of competent jurisdiction.
ARTICLE VIII
Plan Administration
Section 8.1. General Administration. La-Z-Boy Incorporated
may appoint one or more individuals or a committee to serve as Plan
Administrator for the Plan. In the absence of such an appointment, the Plan
Administrator shall be the Compensation Committee of La-Z-Boy Incorporated. The
Plan Administrator shall have the discretionary authority to determine
eligibility for Severance Benefits under the Plan and to construe the terms of
the Plan, including the making of factual determinations. Benefits under the
Plan shall be paid only if the Plan Administrator decides in its discretion that
a Claimant is entitled to such benefits. The decisions of the Plan Administrator
shall be final and conclusive with respect to all questions concerning
administration and interpretation of the Plan and those decisions shall be given
the most deference allowed by law, including case law. The Plan Administrator
may delegate to other persons responsibilities for performing certain of the
duties of the Plan Administrator under the terms of the Plan and may seek such
professional advice as the Plan Administrator deems reasonably necessary with
respect to the Plan. The Plan Administrator shall be entitled to rely on the
information and advice furnished by such delegates and professionals unless the
Plan Administrator has actual knowledge that such information and advice is
inaccurate or unlawful.
Section 8.2. Code Section 409A and other Compliance. To the
extent that this Plan is subject to Section 409A of the Code, La-Z-Boy
Incorporated intends for the Plan to comply with the requirements of Section
409A of the Code and Treasury Regulations promulgated thereunder and other
applicable rulings and guidance (but this Plan shall not be deemed to be subject
to such law, regulations or guidance merely by virtue of the references
contained herein). The Plan Administrator shall have authority to interpret and
administer the Plan to comply with Code Section 409A, Section 16 of the
Securities Exchange Act of 1934 and other laws, regulations and controlling
guidance to the extent applicable.
ARTICLE IX
Claims Procedure
Section 9.1. Filing a Claim. Any individual (“Claimant”) who
believes he is eligible for Severance Benefits under this Plan that have not
been provided may submit an application for Severance Benefits to the Plan
Administrator (or to such other person who may be designated by the Plan
Administrator) in writing in such form as is provided or approved by the Plan
Administrator. A Claimant shall have no right to seek review of a denial of
Severance Benefits, or to bring any action in any court to enforce a claim,
prior to filing a claim (“Claim”) and exhausting rights under this Article IX.
6
When a Claim has been filed properly, it shall be evaluated and the Claimant
shall be notified of the approval or the denial of the Claim within ninety (90)
days after the receipt of such Claim unless special circumstances require an
extension of time for processing the Claim. If such an extension of time for
processing is required, written notice of the extension shall be furnished to
the Claimant prior to the termination of the initial ninety (90) day period,
which notice shall specify the special circumstances requiring an extension and
the date by which a final decision will be reached (which date shall not be
later than one hundred and eighty (180) days after the date on which the Claim
was filed). A Claimant shall be given a written notice in which the Claimant
shall be advised as to whether the Claim is granted or denied, in whole or in
part. If a Claim is denied, in whole or in part, the notice shall contain (a)
the specific reasons for the denial, (b) references to pertinent Plan provisions
on which the denial is based, (c) a description of any additional material or
information necessary to perfect the Claim and an explanation of why such
material or information is necessary, and (d) the Claimant153s right to seek
review of the denial.
Section 9.2. Review of Claim Denial. If a Claim is denied,
in whole or in part, the Claimant shall have the right to (a) request that the
Plan Administrator review the denial, (b) review pertinent documents, and (c)
submit issues and comments in writing, provided that the Claimant files a
written request for review with the Plan Administrator within sixty (60) days
after the date on which the Claimant received written notification of the
denial. Within sixty (60) days after a request for review is received, the
review shall be made and the Claimant shall be advised in writing of the
decision on review, unless special circumstances require an extension of time
for processing the review, in which case the Claimant shall be given a written
notification within such initial sixty (60) day period specifying the reasons
for the extension and when such review will be completed (provided that such
review will be completed within one hundred and twenty (120) days after the date
on which the request for review was filed). The decision on review by the Plan
Administrator shall be forwarded to the Claimant in writing and shall include
specific reasons for the decision and reference to Plan provisions on which the
decision is based. A decision on review shall be final and binding on all
persons for all purposes.
ARTICLE X
Amendment and Termination
La-Z-Boy Incorporated reserves the right to modify or amend the Plan from
time to time in writing or to terminate the Plan; provided, however, that no
such amendment or termination shall reduce the amount of Severance Benefits
payable to any Participant whose Termination Date has already occurred, who has
signed and not revoked or rescinded a Release Agreement required by Section 6.1,
and who has completed all other applicable paperwork on or before the effective
date of such amendment or termination. Notwithstanding the foregoing, the Plan
may be amended or modified (i) to the extent necessary or advisable to comply
with or obtain the benefits or advantages under the provisions of applicable
law, regulations or rulings or requirements of the Internal Revenue Service or
other governmental agency or of changes in such law, regulations, ruling or
requirements (including, without limitation, any amendment necessary to comply
with or secure an exemption from Section 409A of the Code) or (ii) to adopt any
other procedural or cosmetic amendment that does not materially change the
benefits to Participants or materially increase the cost of the benefits
provided hereunder. No oral or written representations contrary to the terms of
the Plan shall be binding.
ARTICLE XI
Miscellaneous
Section 11.1. Participant Information. Each Participant
shall notify the Plan Administrator of the Participant153s current contact
information and changes thereto. In addition, each Participant shall be required
to furnish the Plan Administrator with any other information and data that the
Plan Administrator considers necessary for the proper administration of the
Plan. The information provided by the Participant under this provision shall be
binding on the Participant and the Participant153s dependents, beneficiaries, and
similar parties (to the extent applicable, if any) for all purposes of the Plan,
unless such representations are known to be false. The receipt of Severance
Benefits under the Plan by each Participant is conditioned on the Participant153s
furnishing true and complete data, evidence, or other information, and the
Participant153s timely signing of any document related to the Plan and otherwise
requested by the Plan Administrator.
7
Section 11.2. Successors and Assigns. The obligations of the
Employers under the Plan shall be assumed by their successors and assigns,
including, but not limited to, any person or entity receiving the transfer of
stock or assets of an Employer.
Section 11.3. Employment Rights. The existence of the Plan
shall not confer any legal or other rights on any Employee to continue
employment, and, absent any other agreement to the contrary, the Employers
reserve the right to terminate any Employee with or without cause at any time,
notwithstanding the provisions of this Plan.
Section 11.4. Controlling Law. The provisions of this Plan
shall be governed, construed, and administered in accordance with the laws of
the State of Michigan unless otherwise preempted by ERISA or other federal law.
Section 11.5. Notices. Any notice, request, election, or
other communication under this Plan shall be in writing and shall be considered
given when delivered personally, electronically mailed, or mailed by first-class
mail properly addressed (which, in the case of a Participant, shall include
mailing to the last address provided to the Plan Administrator by such
Participant). Notice to the Plan Administrator shall be acceptable if to the
following: Compensation Committee of La-Z-Boy Incorporated, 1284 North Telegraph
Road, Monroe, Michigan 48162.
Section 11.6. Interests Not Transferable. The interest of
any Participant entitled to Severance Benefits under the Plan is not subject to
sale, transferability, alienation, assignment, or encumbrance except as
otherwise provided herein or as provided by ERISA or other controlling law.
Section 11.7. Mistake of Fact or Law. Any mistake of fact or
law shall be corrected when it becomes known and proper adjustment made by
reason thereof. A Participant shall be required to return any payment, or
portion thereof, made by mistake of fact or law to the applicable Employer that
made such payment.
Section 11.8. Plan Funding. No person shall acquire by
reason of the Plan any right in or title to any assets, funds, or property of
any Employer. Any Severance Benefits that become payable under the Plan are
unfunded obligations of the Participant153s Employer and shall be paid from the
general assets of such Employer.
Section 11.9. Headings. The headings in this Plan are for
convenience of reference and shall not be given substantive effect.
Section 11.10. Severability. If any provision of this Plan
is held illegal or invalid for any reason, the remaining provisions of this Plan
shall not be affected.
Section 11.11. Withholding. Notwithstanding any other
provision of this Plan, the Employers may withhold from any and all Severance
Benefits federal, state, or local or foreign taxes as may be required to be
withheld pursuant to any applicable law or regulation.
Section 11.12. Indemnification. Any individual serving as
Plan Administrator without compensation, and each and every Employee to whom are
delegated duties, responsibilities, and authority with respect to the Plan,
shall be indemnified to the fullest extent permitted by applicable law and the
bylaws or other corporate documents of the Employers.
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Executed this _ – -_____ day of June, 2010.
LA-Z-BOY INCORPORATED
By:
Its:
Adopting Employers:
England, Inc.
By:
Its:
Kincaid Furniture Company, Incorporated
By:
Its:
La-Z-Boy Retail, Inc.
By:
Its:
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Schedule A
to La-Z-Boy Incorporated Severance Plan for Named
Executive Officers
This schedule sets forth the Participants in the La-Z-Boy Incorporated
Severance Plan for Named Executive Officers as determined by the Article III of
the Plan and any other relevant provisions and Plan interpretations:
|
Participant |
Date of Participation |
Position in La-Z-Boy Incorporated |
|
Kurt L. Darrow |
June 11, 2010 |
Chief Executive Officer |
|
Mark S. Bacon, Sr. |
June 11, 2010 |
Senior Vice President |
|
Steven M. Kincaid |
June 11, 2010 |
Senior Vice President |
|
Louis M. Riccio, Jr. |
June 11, 2010 |
Senior Vice President |
|
Otis S. Sawyer |
June 11, 2010 |
Senior Vice President |
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