EXHIBIT 10.6
DST SYSTEMS, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
(Amended and Restated as of May 14, 2002)
ARTICLE I.
GENERAL
1.1 Purpose.
The purpose of this Supplemental Executive Retirement Plan ("SERP") is
to supplement the DST Systems, Inc. 401(k) Profit Sharing Plan and its
predecessor plans (collectively called the "401(k) Plan"), and The Employee
Stock Ownership Plan and Trust Agreement of DST Systems, Inc. (the "ESOP"). The
401(k) Plan and the ESOP are collectively referred to herein as the "Qualified
Plan." The SERP is intended to generally replace lost benefits under the
Qualified Plan due to limitations applicable to plans of that nature under the
Internal Revenue Code of 1986, as amended (the "Code").
1.2 Nature of SERP.
The SERP is, and shall be administered as, an employee pension plan
benefiting a select group of management or highly compensated employees under
the provisions of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"). The SERP shall be "unfunded" for tax purposes and for
purposes of Title I of ERISA. Any and all payments under the SERP shall be made
solely from the general assets of DST Systems, Inc. ("DST"). A Participant's
interests under the SERP do not represent or create a claim against specific
assets of DST or any Affiliated Company. Nothing herein shall be deemed to
create a trust of any kind or create any fiduciary relationship between DST or
its Board of Directors, any Affiliated Company, the Committee or its delegates,
and a Participant, a Beneficiary or any other person or entity claiming for or
through a Participant or Beneficiary. To the extent any person acquires a right
to receive payments from DST under this SERP, such right is no greater than the
right of any other unsecured general creditor of DST.
ARTICLE II.
DEFINITIONS
Except as expressly provided herein, capitalized terms used in the SERP
shall have the same meanings as set forth in the 401(k) Plan, and the 401(k)
Plan's definitions and operative terms are incorporated herein by reference. In
the event of a conflict between the meaning of the terms used in the SERP and
the meaning of terms used in the 401(k) Plan, the meaning as set forth in the
SERP shall prevail.
2.1 "Account" means the bookkeeping account established by the
Committee or its delegate to reflect allocations made on behalf of a Participant
and credited earnings, gains or losses thereon.
2.2 "Beneficiary" means the primary and contingent beneficiaries
designated by a Participant by written instrument delivered to the Committee or
its designee to receive any benefits payable hereunder following the
Participant's death. A Participant may designate the
proportions in which such beneficiaries are to receive such payments and may
change such designation from time to time. The last written designation filed
with the Committee or its designee prior to the Participant's death shall
control. In the event no beneficiary is designated, or if the designated
beneficiary predeceases the Participant, "Beneficiary" shall mean first the
Participant's surviving spouse, then the Participant's known natural or adopted
surviving children in equal amounts or, if there are no such surviving spouse
or children, the Participant's estate.
2.3 "Committee" means the Compensation Committee of the DST Board
of Directors.
2.4 "Compensation" means the Participant's base salary actually paid
during a specified Plan Year, plus the value of accrued cash bonuses for such
year. Solely for the 1999 Plan Year, "Compensation" shall also include the
dollar value of restricted stock granted to such Participant for 1999 under the
DST Systems, Inc. Officers Incentive Plan.
2.5 "Effective Date" means January 1, 1999, the first day of the
first Plan Year for which this SERP is effective.
2.6 "Key Employee" means an employee of DST or an Affiliated Company
who is in a select group of management or highly compensated employees.
2.7 "Participant" means any individual who is designated as a
participant by the Committee pursuant to Section 3.2 and whose benefits under
the SERP have not been fully distributed.
2.8 "Retirement" means a Termination of Employment by a Participant
after attaining Normal Retirement Age, or such other Termination of Employment
as determined by the Committee or its delegate from time to time .
2.9 "Valuation Date" means each March 31, June 30, September 30 and
December 31 or such other dates as determined by the Committee in its sole
discretion.
ARTICLE III.
PARTICIPATION
3.1 Eligibility.
The following Key Employees shall be eligible to participate in the
SERP:
(a) For the 1999 Plan Year, Key Employees of DST and any
Affiliated Company (other than USCS International, Inc. and
its subsidiaries); and
(b) For subsequent Plan Years, Key Employees of DST and its
Affiliated Companies, including Key Employees of USCS
International, Inc. and its subsidiaries, other than any Key
Employee who is a participant in a nonqualified deferred
compensation plan sponsored by such Affiliated Company.
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3.2 Participation.
An eligible individual under Section 3.1 shall become a Participant in
the SERP for a Plan Year for which such individual is designated by the
Committee or its delegate to receive an allocation credit for such Plan Year.
Once an eligible individual is designated by the Committee to receive any
allocation credit for such Plan Year, such individual shall continue to receive
an allocation credit for following Plan Years unless he or she ceases to be a
Key Employee or the Committee otherwise provides. Once amounts are credited to
an individual's Account under Article IV, such individual shall remain a
Participant until his or her Account is distributed in full in accordance with
Article V. Notwithstanding anything in this Section 3.2 to the contrary, in
order for the Participant's Account to be credited with an allocation for a Plan
Year, the Participant must satisfy the requirements of Section 4.3 for such Plan
Year.
ARTICLE IV.
SERP ACCOUNTS AND CREDITS
4.1 Establishment of SERP Accounts.
The Committee or its delegate shall establish an Account on behalf of
each Participant. The amounts specified in Sections 4.4 and 4.5 shall be
credited to the Participant's Account.
4.2 Nature of SERP Accounts.
A Participant's Account shall be used solely as a measuring device to
determine the amount (if any) to be paid a Participant under this SERP. No
amounts shall actually be set aside with respect to any Account. All amounts at
any time attributable to an Account shall be, and remain, the sole property of
DST. A Participant's rights hereunder are limited to the right to receive SERP
benefits as provided herein. An Account represents an unsecured promise by DST
to pay the benefits provided by the SERP.
4.3 Allocation Requirements.
To receive an allocation pursuant to Section 4.4 for a Plan Year, a
Participant must satisfy each of the following requirements:
(a) The Participant must have Compensation of at least the
threshold amount. The threshold amount for 1999 is $170,000.
For all subsequent Plan Years, the threshold amount is equal
to the annual compensation limit in effect for the Plan Year
under Code Section 401(a)(17). Notwithstanding Section 2.4 to
the contrary, in determining if the threshold amount is
satisfied, the dollar value of the equity portion of awards
granted to a Participant for any Plan Year under the DST
Systems, Inc. Officers Incentive Plan shall always be
disregarded in determining Compensation for purposes of this
Section 4.3(a);
(b) The Participant must be employed by DST or an Affiliated
Company on the last day of such Plan Year;
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(c) The Participant must be credited with a Year of Service
during such Plan Year; and
(d) The Participant must be designated by the Committee, as
provided in Section 3.2, as eligible to participate in any
allocation credit for such year.
4.4 Allocation Credits.
With respect to each Participant who has satisfied the requirements of
Section 4.3 for a Plan Year, the Committee or its delegate shall credit for such
Plan Year to such Participant's Account, as of March 31 next following the end
of such Plan Year, the sum of the following amounts:
(a) a percentage of Compensation, as defined for this purpose
under the Qualified Plan, determined in the sole discretion of
the Committee to generally approximate the percentage of
employer contributions and forfeitures allocated under the
Qualified Plan for the Plan Year, multiplied by the
Participant's Compensation hereunder for the Plan Year in
excess of the limit specified in Section 4.3(a); and
(b) an additional percentage, if any, determined in the sole
discretion of the Committee, multiplied by the Participant's
Compensation for such Plan Year.
Notwithstanding anything to the contrary, the allocation credit under this
Section 4.4 shall be at the discretion of the Committee. For a Plan Year, the
Committee may determine a zero percentage (0%) allocation credit under (a)
and/or (b) above. The formula of (a) above shall not be construed as an
obligation to exactly match the applicable percentage under the Qualified Plan.
4.5 Income, Gain or Loss Adjustment on SERP Accounts.
As of each Valuation Date, the Committee or its delegate shall also
adjust each Account to reflect the income, gain or loss that would have been
earned on the Account had such amounts been invested since the preceding
Valuation Date in one or more investment vehicles as selected by the Committee
or its delegate prior to the applicable valuation period. The investment
vehicle(s) may be indexed or other mutual funds, but in no event shall the
investment vehicle be common stock of DST.
4.6 Participant Election.
(a) A Participant may elect on a written election form to have his
or her account adjusted on the basis that amounts in the
Participant's account had been invested since the effective
date of the Participant's latest dated written election in any
of the investment vehicles designated by the Committee or its
delegate, in such proportion as the Participant has designated
on the written election form.
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(b) A Participant may change such election annually, to be
effective March 31, by written notice to DST's Corporate
Secretary no later than ten days prior to March 31.
(c) Any election made pursuant to this Section 4.6 shall remain in
effect until changed by the Participant as provided in Section
4.6 (b). If the Participant makes no election pursuant to this
Section 4.6, makes an election with respect to only a part of
the Participant's Account, or terminates an election, then all
portions of the Account not subject to an election pursuant to
this Section 4.6 shall be credited with interest based on at
the announced rate of return on an investment or investments
selected from time to time by this Committee or its delegate.
Subsequent to the Participant's Termination of Employment, the
Participant may change an election pursuant to this Section
4.6 with respect to amounts that are not yet distributed
pursuant to Section 5.3.
ARTICLE V.
SERP BENEFITS
5.1 No In-Service Distributions.
Benefits hereunder shall not be payable to a Participant prior to the
Participant's Termination of Employment.
5.2 Benefits Upon Termination of Employment (Other Than
Retirement).
Upon a Participant's Termination of Employment (for any reason other
than Retirement), the vested portion of the Participant's SERP benefits shall be
distributed to the Participant in a lump sum cash payment as soon as
administratively practicable after the Valuation Date coinciding with or
immediately following such Termination of Employment. The amount to be
distributed to a Participant pursuant to this Section 5.2 shall be the value of
the vested portion of the Participant's Account as of the Valuation Date
coinciding with or immediately following the Participant's Termination of
Employment.
5.3 Benefits Upon Retirement.
Upon a Participant's Retirement, the Participant's SERP benefits shall
be distributed to the Participant in a lump sum cash payment or in substantially
equal annual cash installments over a fixed period not to exceed such period
established by the Committee or its delegate, as elected by the Participant in
accordance with Section 5.5.
(a) If lump sum distribution is elected by the Participant or if
no installment election is given effect under Section 5.5, the
amount to be distributed shall be the value of the
Participant's Account as of the Valuation Date immediately
following the Participant's Retirement and such distribution
shall be made as soon as administratively practicable after
the Valuation Date coinciding with or immediately following
such Retirement.
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(b) If installments are elected by the Participant, the
first annual installment shall be made as soon as
administratively practicable following December 31 of the
Plan Year in which the Participant's Retirement occurs,
and as soon as administratively practicable following each
succeeding December 31 until the Participant's Account is
distributed in full. The amount of the first installment
payment shall equal the value of the Participant's Account
as of the December 31 of the Plan Year in which the
Participant's Retirement occurs, divided by the total
number of annual installment payments to be made. The amount
of each succeeding installment payment shall equal the
value of the vested portion of the Participant's Account
as of the December 31 immediately preceding such payment,
divided by the total number of annual installment payments
remaining to be made (including the installment being
calculated).
5.4 Benefits Upon Death.
If the Participant dies prior to full payment of his or her SERP
benefits under Section 5.2 or 5.3 above, the Participant's SERP benefits shall
be paid to the Participant's Beneficiary in a lump sum cash payment as soon as
administratively practicable after the Valuation Date coinciding with or
immediately following the Participant's death.
5.5 Form Election.
If a Participant's Termination of Employment is due to Retirement,
distribution may be made under Section 5.3 in substantially equal cash
installments over a fixed period not to exceed ten (10) years. A Participant may
file a distribution election with the Committee on forms prescribed by the
Committee. A distribution election, once given effect under this Section 5.5,
will apply to the Participant's total benefits. To be given effect under this
Section 5.5, any distribution election for benefits payable under Section 5.3
must have been filed with the Committee at least six (6) months before the
Participant's Retirement. If a Participant's distribution election has not been
on file with the Committee for the full six (6)-month period, it will not be
recognized or given effect by the Committee. In that event, distribution shall
be made in accordance with the Participant's most recent distribution election
which was filed with the Committee at least six (6) months before the
Participant's Retirement.
ARTICLE VI.
VESTING AND FORFEITURE
6.1 Vesting.
A Participant's right to amounts allocated to his Account pursuant to
Article IV shall become nonforfeitable based on such Participant's credited
Years of Service from the Effective Date of the Plan in accordance with the
following schedule:
Years of Service Percentage Vested
---------------- -----------------
Less than 5 0%
5 or more 100%
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Notwithstanding the above, a Participant shall become fully vested in his or her
Account upon his or her Retirement, death, Disability, or upon a "Change of
Control" of DST, as the phrase "Change of Control" is defined under the DST
Systems, Inc. 1995 Stock Option and Performance Award Plan, as may be amended or
restated from time to time.
6.2 Application of Forfeitures.
Any amounts forfeited under this Article VI shall remain the sole
property of DST and shall not be credited to the Accounts of other Participants
as a forfeiture reallocation.
ARTICLE VII.
ADMINISTRATION
7.1 Administration.
The Committee is responsible for the administration of the SERP. In
such capacity, the Committee is granted the following rights and duties:
(a) The Committee shall have the exclusive duty, authority and
discretion to interpret and construe the provisions of the
SERP, to determine eligibility for and the amount of any
benefit payable under the SERP, and to decide any dispute
which may arise regarding the rights of SERP Participants (or
their Beneficiaries) under this SERP;
(b) The Committee shall have the sole and complete authority to
adopt, alter, and repeal such administrative rules,
regulations, and practices governing the operation of the SERP
as it shall from time to time deem advisable;
(c) The Committee may appoint a person or persons to assist the
Committee in the day-to-day administration of the SERP;
(d) The decision of the Committee in matters pertaining to this
SERP shall be final, binding, and conclusive upon DST and any
Affiliated Company, and the SERP Participant, such
Participant's Beneficiary, and upon any person affected by
such decision, subject to the claims procedure set forth in
Article VIII; and
(e) In any matter relating solely to a Committee member's
individual rights or benefits under this SERP, such Committee
member shall not participate in any Committee proceeding
pertaining to, or vote on, such matter.
ARTICLE VIII.
CLAIMS AND APPEALS PROCEDURES
8.1 General.
Any claim for benefits under the SERP must be filed by the SERP
Participant or Beneficiary ("claimant") in writing with the Committee or its
delegate. If a claim for a SERP benefit is wholly or partially denied, notice of
the decision will be furnished to the claimant by
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the Committee or its delegate within a reasonable period of time, not to exceed
sixty (60) days, after receipt of the claim by the Committee or its delegate.
Any claimant who is denied a claim for benefits will be furnished written
notice setting forth:
(a) the specific reason or reasons for the denial;
(b) specific reference to the pertinent SERP provision upon which
the denial is based;
(c) a description of any additional material or information
necessary for the claimant to perfect the claim; and
(d) an explanation of the SERP's appeals procedure.
8.2 Appeals Procedure.
To appeal a denial of a claim, a claimant or the claimant's duly
authorized representative:
(a) may request a review by written application to the Committee
not later than sixty (60) days after receipt by the claimant
of the written notification of denial of a claim;
(b) may review pertinent documents; and
(c) may submit issues and comments in writing.
A decision on review of a denied claim will be made by the Committee
not later than sixty (60) days after receipt of a request for review, unless
special circumstances require an extension of time for processing, in which case
a decision will be rendered within a reasonable period of time, but not later
than one hundred twenty (120) days after receipt of a request for review. The
decision on review will be in writing and shall include the specific reasons for
the denial and the specific references to the pertinent SERP provisions on which
the decision is based.
ARTICLE IX.
MISCELLANEOUS PROVISIONS
9.1 Amendment, Suspension or Termination of SERP.
DST, by action of the Committee, reserves the right to amend, suspend
or to terminate the SERP in any manner that it deems advisable. Notwithstanding
the preceding sentence, the SERP may not be amended, suspended or terminated to
cause a Participant to forfeit the Participant's then-existing vested Account.
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9.2 Non-Alienability.
The rights of a SERP Participant to the payment of benefits as provided
in the SERP may not be assigned, transferred, pledged or encumbered or be
subject in any manner to alienation or anticipation. No SERP Participant may
borrow against the Participant's interest in the SERP. No interest or amounts
payable under the SERP may be subject in any manner to anticipation, alienation,
sale, transfer, assignment, pledge, encumbrance, charge, garnishment, execution
or levy of any kind, whether voluntary or involuntary, including but not limited
to, any liability which is for alimony or other payments for the support of a
spouse or former spouse, or for any other relative of any Participant.
9.3 No Employment Rights.
Nothing contained herein shall be construed as conferring upon a SERP
Participant the right to continue in the employ of DST or any Affiliated Company
in the Participant's current position or in any other capacity.
9.4 Withholding and Employment Taxes.
DST or an Affiliated Company may withhold from a SERP Participant's
current compensation or from SERP distributions, as the case may be, such taxes
as are required to be withheld for federal, state or local government purposes.
9.5 Income and Excise Taxes.
Each SERP Participant (or the Participant's Beneficiaries) is solely
responsible for the payment of all federal, state, and local income and excise
taxes resulting from the Participant's participation in this SERP.
9.6 Successors and Assigns.
The provisions of this SERP are binding upon and inure to the benefit
of DST, its successors and assigns, and each SERP Participant, such
Participant's Beneficiaries, heirs, and legal representatives.
9.7 Forfeiture of Unclaimed Amounts.
Unclaimed amounts shall consist of the amounts credited to the Account
of a Participant that cannot be distributed because of the Committee's
inability, after a reasonable search, to locate a Participant or his
Beneficiary, as applicable, within a period of two (2) years after the date on
which the payment of benefits became due. Unclaimed amounts shall be forfeited
at the end of such two-year period. These forfeitures will reduce the
obligations of DST under the SERP. After an unclaimed amount has been forfeited,
the Participant or Beneficiary, as applicable, shall have no further right to
his Account.
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9.8 Governing Law.
This SERP shall be subject to and construed in accordance with the laws
of the State of Missouri to the extent not preempted by federal law.
IN WITNESS WHEREOF, this Supplemental Executive Retirement Plan has
been executed as of the 26th day of February, 2002.
DST SYSTEMS, INC.
By:/s/ Xxxxxxx X. Xxxxx
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Name: Xxxxxxx X. Xxxxx
Title: Vice President, Chief Financial
Officer and Treasurer
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