Senior Executive Severance Plan - Levi Strauss & Co.
LEVI STRAUSS & CO.
SENIOR EXECUTIVE SEVERANCE PLAN
1. INTRODUCTION. Levi Strauss & Co. (the "Company") establishes the Senior
Executive Severance Plan (the "Plan") effective as of July 1, 2000. The purpose
of the Plan is to recognize the past service of Senior Executives whose
employment is involuntarily terminated as set forth herein by providing
Severance Payments. The Plan is an unfunded deferred compensation plan for a
select group of management and highly compensated employees that is intended to
qualify for the exemptions provided in section 201, 301 and 401 of ERISA and for
the alternative reporting method provided in DOL Reg. ss.2520.104-23. This Plan
supercedes all prior policies and practices of the Company with respect to
severance or separation pay for Senior Executives whose employment is
involuntarily terminated after June 30, 2000. This Plan is the only severance
program for such Senior Executives.
2. DEFINITIONS.
2.1 "COMPANY" means Levi Strauss & Co.
2.2 "COMPENSATION" means a Senior Executive's regular base salary at
the time of his or her termination. In addition, the term "Compensation" shall
also include such Senior Executive's target bonus amount under the Annual
Incentive Plan ("AIP") for the fiscal year in which the termination is announced
to the Senior Executive.
2.3 "COMPARABLE POSITION" means a position that has been determined
by the Company, in its sole discretion, to be substantially similar to the
Employee's original position in terms of pay, benefits, working conditions and
geographic location.
2.4 "EMPLOYEE" means a common-law employee of the Company on the Home
Office Payroll, including an employee classified by the Company as a U.S.
expatriate employee, who is not subject to the overtime provisions of the Fair
Labor Standards Act, and who is paid through the Company's regular payroll
system, and who has not signed an agreement that he or she is not entitled to
benefits from the Company.
2.5 "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
2.6 "GENERAL RELEASE AGREEMENT" means a legally binding document in
which an Employee waives any and all claims against the Company related to his
or her employment or separation from employment. Whether or not an Employee
chooses to sign the General Release Agreement is completely at his or her
discretion.
2.7 "PLAN" means the Levi Strauss & Co. Senior Executive Severance
Plan, as set forth in this instrument and as hereafter amended.
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2.8 "SENIOR EXECUTIVE" means an Employee whose position is classified
under Band A, B, C or D in the Company's World-Wide Executive Compensation Plan.
2.9 "SEVERANCE PAYMENT(S)" means payment of Severance Pay or Enhanced
Severance Pay Compensation continuation to an eligible Senior Executive pursuant
to Section 4 on account of the termination of his or her employment with the
Company.
2.10 "TERMINATION DATE" means the last day upon which a Senior Execu-
tive is actively employed with the Company.
3. ELIGIBILITY FOR SEVERANCE PAYMENTS.
3.1 GENERAL ELIGIBILITY. Except as otherwise provided in the Plan, a
Senior Executive is entitled to a Severance Payment under the Plan only if his
or her employment with the Company is involuntarily terminated by action of the
Company after June 30, 2000, on account of a reduction in force, layoff,
position elimination, or because the Company has determined, in its sole
discretion, that his or her services are no longer required.
3.2 EXCLUSIONS. A Senior Executive is not eligible for a Severance
Payment if he or she:
(a) Voluntarily resigns before his or her last day of active
employment as designated by the Company, even if he or she received advance
notice of his or her involuntary termination;
(b) Is terminated because of failure to return from an approved
leave of absence;
(c) Resigns or is involuntarily terminated because the Company
has determined that he or she violated any policy, procedure or rule of the
Company, engaged in dishonest or wrongful conduct, committed any crime or
performed his or her duties in an unacceptable manner;
(d) Resigns or is terminated after declining to accept an offer
of a Comparable Position with the Company;
(e) Has an individual written agreement with the Company that
provides for any form of severance, separation, or special retirement
program.
3.3 CERTAIN CORPORATE TRANSACTIONS. Unless, and only to the extent,
expressly authorized by the Company or set forth in this Plan, no Severance
Payment is payable under the Plan to an Employee in the event of the sale or
other disposition of the Company, any affiliate or any assets or stock of
either, if the Employee (i) continues to be employed by the Company, its
successor or an affiliate on or after the date of such sale or other
disposition, (ii) is offered a Comparable Position with the acquiring entity or
any of its affiliates, or (iii) is offered a Comparable Position with an entity
that was an affiliate of the Company immediately prior to the sale or other
disposition.
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4. AMOUNT AND FORM OF SEVERANCE PAYMENTS.
4.1 PAYMENT AMOUNT. An eligible Senior Executive shall be entitled to
receive the following Severance Payments:
(a) SEVERANCE PAY: Subject to Section 4.2, except as otherwise
provided in this Plan, an eligible Senior Executive will continue to
receive his or her BASE SALARY for a period of two (2) weeks beginning on
the date he or she is notified that his or her employment is terminated. If
the Company requests, the eligible Senior Executive will remain in his or
her position during this two (2) week period.
(b) ENHANCED SEVERANCE PAY: In exchange for providing the
Company a valid General Release Agreement in accordance with Section 4.5,
in a form acceptable to the Company, in addition to payments under Section
4.1 (a), and subject to Section 4.2, following the Termination Date, an
eligible Senior Executive will receive payments either in installments on
the same payment schedule and in the same amount as the Senior Executive's
Compensation or in a lump sum, solely at the discretion of the Company, in
accordance with the following schedule (COMPENSATION EQUALS BASE SALARY
PLUS ANNUAL BONUS AT TARGET, AS DEFINED IN SECTION 2.2.):
BAND A 104 weeks' Compensation
BAND B 52 weeks' Compensation
BAND C 26 weeks' Compensation, PLUS two
weeks Compensation times the number
of his or her Years of Service in
excess of 5, subject to a maximum
combined limit of 52 weeks'
Compensation.
BAND D 26 weeks' Compensation, PLUS two
weeks Compensation times the number
of his or her Years of Service in
excess of 5, subject to a maximum
combined limit of 52 weeks'
Compensation.
A "Year of Service" for purposes of this Section is a twelve-month period
of employment beginning on the later of the Senior Executive's date of hire
or most recent date of rehire. Years of Service are calculated in full
twelve month periods with no credit for partial years.
4.2 CONDITIONS AND LIMITATIONS ON SEVERANCE PAYMENTS.
(a) All Enhanced Severance Pay under Section 4.1(b) is
specifically conditioned upon the Senior Executive's execution of a General
Release Agreement at a time and in a manner to be determined by the
Company. Under no circumstances will any Enhanced Severance Pay be made to
a Senior Executive who elects not to sign a General Release Agreement.
(b) A Senior Executive who receives consulting fees from the
Company following his or her Termination Date is not eligible for Severance
Payments.
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(c) Severance Payments are in lieu of payments under any other
severance plan, program or arrangement of or with the Company.
(d) A Senior Executive is not eligible for Severance Payments if
the Company determines that he or she:
(1) has solicited any employee or consultant of the Company
to leave employment with the Company to accept
employment with any other person, company or partner-
ship;
(2) at any time discloses without the Company's written
permission any confidential or proprietary information
that the Senior Executive has learned as a result of
his or her employment with the Company and was not
previously available in the public domain; or
(3) at any time during the two-year period beginning on his
or her last day of active employment with the Company
performs work, as an employee or a consultant, for any
person, company or partnership that is a direct
competitor of the Company, including, but not limited
to VF Corp., Haggar, Farah, Tommy Hilfiger, Calvin
Klein, Guess, Bugle Boy, Ralph Lauren/Polo and The Gap.
To the extent permitted by law, if the Company determines that the Senior
Executive has engaged in any of these activities, it will immediately cease
any unpaid Severance Payments and it will have the right to seek repayment
of any such payments that have already been made.
4.3 FORM AND TIMING OF PAYMENT.
(a) Severance Payments shall be made in such form as the Plan
Administrator may determine in its sole and absolute discretion.
(b) If a Senior Executive dies before Severance Payments are
completed, any remaining Severance Payments will be made to the Senior
Executive's estate.
(c) Payment to a Senior Executive of any unpaid Severance
Payments will cease immediately upon his or her re-employment by the
Company.
4.4 PLANT SHUT-DOWN OR MASS LAYOFF. If the Senior Executive is laid
off or discharged because of a plant shut-down or mass layoff to which the
Worker Adjustment and Retraining Notice Act of 1988 ("WARN") applies, Severance
Payments shall not be available, except as provided in this subsection. The
Company shall provide notice of termination of employment, or pay in lieu of
notice, or a combination of notice and pay in lieu of notice in
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accordance with the provisions of WARN. The amount of Severance Payments to
which the Senior Executive is entitled under the Plan shall be determined by
subtracting the number of days' pay in lieu of notice he or she receives
pursuant to WARN from the amount of Severance Payments to which he or she would
be otherwise entitled under this Section 4. If the pay in lieu of notice under
WARN exceeds that Severance Payment amount the Senior Executive will be entitled
to no Severance Payments under this Plan.
4.5 GENERAL RELEASE AGREEMENT. The applicable General Release
Agreement shall be furnished to an eligible Senior Executive along with a
written explanation regarding that General Release Agreement. It is completely
within the eligible Senior Executive's own discretion as to whether he or she
elects to sign the applicable General Release Agreement. An eligible Senior
Executive is encouraged to review the applicable General Release Agreement with
his or her personal attorney at his or her own expense, if he or she so desires.
In order to receive Enhanced Severance Pay under Section 4.1(b),
an eligible Senior Executive must sign, date and return the applicable General
Release Agreement to the Company within forty-five (45) days from the date he or
she receives the applicable General Release Agreement or as of the date such
Senior Executive separates from employment with the Company and is no longer on
the Company payroll, whichever is later. If an eligible Senior Executive elects
to sign the applicable General Release Agreement, he or she then has seven (7)
days from the date of such signing to revoke the signed General Release
Agreement. Any such revocation must be in writing and must be received by the
Company or its designee within the seven (7) day revocation period. If an
eligible Senior Executive elects to revoke his or her signed General Release
Agreement, such Senior Executive shall not receive any Enhanced Severance Pay.
5. OTHER BENEFITS. An eligible Senior Executive who receives a Severance
Payment will also receive the following benefits:
(a) If a Senior Executive and/or his or her covered dependents
elect(s) to receive medical coverage continuation through Consolidated
Omnibus Budget Reconciliation Act of 1985 ("COBRA"), the Company will pay
the same percentage of the monthly cost of his or her COBRA medical
coverage as it paid for Senior Executive's medical coverage during his or
her active employment for the duration of the Senior Executive's severance
payment period under Section 4.1 above, up to a maximum coverage period of
18 months.
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During the Company-Subsidized Coverage Period, Senior Executive will be
responsible for payment of the remainder of the cost of his or her COBRA
medical coverage and for the full cost of any dental or vision coverage
elected by the Senior Executive. All periods of Company-Subsidized Coverage
are counted toward the 18-month COBRA entitlement. After the
Company-Subsidized Coverage Period ends, the Senior Executive will be
responsible for payment of his or her entire COBRA premium. Continuation of
COBRA coverage will not extend beyond the date on which a terminated Senior
Executive becomes eligible for coverage under another group health plan
unless the new plan has a pre-existing condition limitation or the Senior
Executive is entitled to Medicare.
(b) The Company will pay the cost of premiums under its standard
basic life insurance program of $10,000 in accordance with the COBRA
provisions set forth in subsection (a) above.
(c) If a Senior Executive retires and becomes covered by Company
retiree health benefits, the Company will subsidize retiree medical
coverage in accordance with the COBRA provisions set forth in subsection
(a) above.
(d) The Company will provide Senior Executive with career
counseling and transition services as selected by the Company.
(e) If Senior Executive has been employed by the Company at
least one fiscal quarter in the fiscal year of such Senior Executive's
Termination Date, the Senior Executive shall be entitled to a payment under
the AIP for that fiscal year based on the Senior Executive's actual
performance during such fiscal year, pro-rated to reflect the portion of
the fiscal year actually worked by the Senior Executive
6. WITHHOLDING. The Company will withhold from all Severance Payments all
required federal, state, local and other taxes and any other payroll deductions
required.
7. ADMINISTRATION. The Company has the sole and unlimited discretion to
interpret the terms of the Plan and to make all determinations about eligibility
and payment of benefits. All decisions of the Company, any action taken by the
Company with respect to the Plan and within the powers granted to the Company
under the Plan, and any interpretation by the Company of any term or condition
of the Plan, are conclusive and binding on all persons, and will be given the
maximum possible deference allowed by law. The Company may delegate and
reallocate any authority and responsibility with respect to the Plan.
8. AMENDMENT OR TERMINATION. The Company reserves the right, in its sole
and unlimited discretion, to amend or terminate the Plan at any time by action
of the Company's Chief Executive Officer without prior notice to any Senior
Executive.
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9. CLAIMS PROCEDURE. Any person who believes he or she is entitled to any
payment under the Plan may submit a claim in writing to the Company. Any such
claim should be sent to the Health & Welfare Plans Administrative Committee, c/o
Levi Strauss & Co., P.O. Box 7215, San Francisco, CA 94120, Attention: Steve
Epstein. If the claim is denied (either in full or in part), the claimant will
be provided a written notice explaining the specific reasons for the denial and
referring to the provisions of the Plan on which the denial is based. The notice
will describe any additional information needed to support the claim. The denial
notice will be provided within 90 days after the claim is received. If special
circumstances require an extension of time (up to 90 days), written notice of
the extension will be given within the initial 90-day period.
10. APPEAL PROCEDURE. If a claimant's claim is denied, the claimant may
apply in writing to the Company for a review of the decision denying the claim.
The claimant then has the right to review pertinent documents and to submit
issues and comments in writing. The Company will provide written notice of its
decision on review within 60 days after it receives a review request. If
additional time (up to 60 days) is needed to review the request, the claimant
will be given written notice of the reason for the delay.
11. SOURCE OF PAYMENTS. All Severance Payments will be paid in cash from
the general funds of the Company; no separate fund will be established under the
Plan; and the Plan will have no assets. Any right of any person to receive any
payment under the Plan will be no greater than the right of any other unsecured
creditor of the Company.
12. INALIENABILITY. In no event may any Senior Executive sell, transfer,
anticipate, assign or otherwise dispose of any right or interest under the Plan.
At no time will any such right or interest be subject to the claims of creditors
nor liable to attachment, execution or other legal process.
13. RECOVERY OF PAYMENTS MADE BY MISTAKE. An eligible Senior Executive
shall be required to return to the Company any Severance Payment, or portion
thereof, made by a mistake of fact or law.
14. NO ENLARGEMENT OF EMPLOYMENT RIGHTS. Neither the establishment or
maintenance of the Plan, the payment of any amount by the Company nor any action
of the Company shall confer upon any individual any right to be continued as an
Employee nor any right or interest in the Plan other than as provided in the
Plan. Other than an Employee who has a written agreement to the contrary signed
by the President, Chief Executive Officer or a Senior Vice President of the
Company, every Employee is an employee-at-will whose employment with the Company
may be terminated by the Company or the Employee at any time with or without
cause and with no notice.
15. APPLICABLE LAW. The provisions of the Plan will be construed,
administered and enforced in accordance with ERISA and, to the extent
applicable, the laws of the State of California.
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16. SEVERABILITY. If any provision of the Plan is held invalid or
unenforceable, its invalidity or unenforceability will not affect any other
provision of the Plan, and the Plan will be construed and enforced as if such
provision had not been included.
17. EXECUTION.
IN WITNESS WHEREOF, Levi Strauss & Co., by its duly authorized officer, has
executed the Plan on the date indicated below.
LEVI STRAUSS & CO.
By:
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Its:
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Dated:
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