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Retirement Restoration Plan - Safeway Inc.

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                          RETIREMENT RESTORATION PLAN

                                       OF

                                  SAFEWAY INC.





                           Effective January 1, 1994
<PAGE>   2
                               TABLE OF CONTENTS





                                                                                           Page
                                                                                           ----
         
ARTICLE I        -        Definitions                                                       1

ARTICLE II       -        Eligibility for and Amount of Retirement
                          Related Benefits                                                  2

ARTICLE III      -        Executive Death Benefits                                          6

ARTICLE IV       -        Miscellaneous                                                     7


<PAGE>   3
                                                                             1
                                  SAFEWAY INC.

                          RETIREMENT RESTORATION PLAN



This Retirement Restoration Plan for designated employees of Safeway Inc. is
adopted by the Company to be effective as of January 1, 1994.

                                   ARTICLE I
                                  DEFINITIONS


     
1.01     "Actuarial Equivalent" shall mean the equivalent of a given
          benefit or a given amount payable in another manner or by other means,
          determined by or under the direction of the Committee in accordance with
          actuarial principles, methods and assumptions which are found to be
          appropriate by the Committee.  Unless otherwise determined by the
          Committee, such assumptions shall be those assumptions which are in
          effect from time to time under the Basic Plan.
         
1.02     "Affiliate" means any corporation, partnership or other entity
          in which the Company has a substantial economic interest and which the
          Committee designates as an Affiliate.

1.03     "Basic Plan" means the Employee Retirement Plan of Safeway Inc.
          and its Domestic Subsidiaries, as amended and restated from time to
          time.
         
1.04     "Beneficiary" means any person designated in writing by the
          Participant to receive benefits under the terms of the Basic Plan.
          "Life Insurance Beneficiary" means any person designated in writing by
          the Participant to receive benefits under the terms of the Safeway Inc.
          Group Term Life Insurance Plan.
         
1.05     "Board of Directors" means the Board of Directors of Safeway
          Inc.
         
1.06     "Committee" means the Executive Compensation Committee
          appointed by the Board of Directors of the Company, and given authority
          by the Board of Directors to administer this Plan.
         
1.07     "Company" means Safeway Inc.

1.08     "Executive Officer" means any Senior Vice President, Executive
          Vice President or more senior executive officer of the Company (or an
          Affiliate of the Company) provided that he is on a U.S. payroll.
          Certain Executive Officers are eligible for special death benefits under
          Article III.  By written resolution, the Committee may specify other key
          employees to be eligible for those benefits or may discontinue coverage
          for otherwise eligible Executive Officers.
         

<PAGE>   4 2


1.09     "Participant" means any employee who was a Participant in the
          Senior Executive Supplemental Benefit Plan as of December 31, 1993, or
          any salaried employee on the U.S. payroll of the Company, any
          Subsidiary, or any Affiliate, who is a Participant in the Basic Plan and
          whose benefits under the Basic Plan are limited by the restrictions of
          Sections 401(a)(17) and/or 415 of the Internal Revenue Code of 1954 or
          the Internal Revenue Code of 1986, as amended (collectively, the
          "Code"); provided that no employee shall become or remain a Participant
          if the Committee determines that such employee is not a member of "a
          select group of management or highly compensated employees" within the
          meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of the Employee
          Retirement Income Security Act of 1974, as amended ("ERISA").  Certain
          employees who might otherwise qualify as Participants in this Plan shall
          specifically be ineligible for benefits set forth in Article II, Article
          III or both Articles of this Plan as set forth in Appendix B, which
          appendix may be amended or supplemented by the Committee, from time to
          time, in its sole discretion and the Committee shall have the power to
          exclude current Participants from the Plan in its sole discretion.
         
1.10     "Plan" means this Retirement Restoration Plan.

1.11     "Service" shall mean service of a Participant as a common law
          employee of the Company, any Subsidiary, or any Affiliate.
         
1.12     "Subsidiary" means any corporation in which the Company holds
          stock, directly or indirectly, possessing more than 50% of the total
          combined voting power of all classes of stock of such corporation.
         
1.13     The masculine gender, where appearing in the Plan will be
          deemed to include the feminine gender, and the singular may include the
          plural, unless the context clearly indicates the contrary.
         

                                   ARTICLE II
           ELIGIBILITY FOR AND AMOUNT OF RETIREMENT RELATED BENEFITS

2.01     Eligibility

         Each Participant is eligible to receive a retirement benefit under
         this Plan if he is eligible to receive a benefit under the terms of
         the Basic Plan and if he separates from Service after attaining age
         55.  Notwithstanding the foregoing, the Beneficiary of a Participant
         who separates from Service due to death shall be eligible for a
         benefit hereunder regardless of the Participant's age at death.
<PAGE>   5
                                                                            3
2.02     Amount of Benefit

         Unless a Participant is entitled to receive a greater retirement
         benefit under paragraph 2.03 below, the Participant's retirement
         benefit under this Plan shall be the Actuarial Equivalent of the
         Participant's benefits under the Basic Plan with respect to the period
         of the Participant's participation in the Basic Plan, subject to the
         adjustments described in subparagraphs (a), (b), and (c) below,
         reduced by the Actuarial Equivalent of the benefits to which the
         Participant is entitled under the Basic Plan:

         (a)     "Compensation", as defined in the Basic Plan shall be
                 determined without reference to the limitations of Section
                 401(a)(17) of the Code,

         (b)     the limitation on benefits of Section 415 of the Code shall
                 not apply, and

         (c)     a Participant's number of Years of Participation which are
                 taken into account in determining the Participant's benefits
                 under the Basic Plan shall be limited to 35 years, unless the
                 Participant had more than 35 Years of Participation as of
                 December 31, 1993, in which case the Participant's Years of
                 Participation shall be the Participant's number of Years of
                 Participation as of the date of his separation from Service.

2.03     Minimum Benefit

         The amount of monthly benefit payable to a Participant who was a
         member of the Senior Executive Supplemental Benefit Plan as of
         December 31, 1993 under paragraph 2.02 above shall not be less than
         the "gross frozen benefit" defined in (a) below, minus the "frozen
         offsets" defined in (b) below, minus the amount deemed payable to the
         Participant under the terms of the Basic Plan offset defined in (c)
         below.

         (a)     "Gross frozen benefit" shall mean the Participant's retirement
                 benefit under the Senior Executive Supplemental Benefit Plan
                 as in effect immediately prior to its termination based on the
                 Participant's age and service determined as of December 31,
                 1993, and final average compensation calculated as of December
                 31, 1993 as if the Participant separated from Service on such
                 date, as modified below.  This amount shall be frozen as of
                 December 31, 1993 and shall equal the product of (i), (ii) and
                 (iii), as follows:

                 (i)      85% of the Participant's final average annual
                          compensation calculated as of December 31, 1993 as if
                          the Participant separated from Service on such date
                          under the terms of the Senior Executive Supplemental
                          Benefit Plan, divided by 12.

                 (ii)     The early retirement factor under the terms of the
                          Senior Executive Supplemental Benefit Plan based on
                          the Participant's age as of December 31, 1993,
                          provided that if the Participant is then under age
                          55, the early retirement factor for age 55 will be
                          used.
<PAGE>   6
                                                                              4

                 (iii)    A fraction, not to exceed 1.0, where the numerator is
                          the Participant's years of Service determined as of
                          December 31, 1993 under the terms of the Senior
                          Executive Supplemental Benefit Plan and the
                          denominator is 20 years.

         (b)     The "frozen offsets" shall also be calculated under the terms
                 of the Senior Executive Supplemental Benefit Plan as in effect
                 immediately prior to its termination, as modified below, and
                 shall equal the sum of (i) and (ii), as follows.

                 (i)      The Participant's maximum monthly primary Social
                          Security benefit projected to be payable at age 65
                          based on the Social Security law in effect on
                          December 31, 1993 and assuming:

                          *       4% annual growth in the National Average
                                  Earnings Index, and

                          *       3% annual increases in the Consumer Price
                                  Index.

                          This amount shall be multiplied by an early
                          retirement factor under the Senior Executive
                          Supplemental Benefit Plan based on the Participant's
                          actual retirement date, as selected from the
                          following table:




              Actual Retirement Age         Early Retirement Factor
              ---------------------         -----------------------
                                                 
                       65                            100.0%
                       64                             93.3
                       63                             86.7
                       62                             80.0
                       61                             73.3
                       60                             66.7
                       59                             63.3
                       58                             60.0
                       57                             56.7
                       56                             53.3
                       55                             50.0


             The early retirement factor shall be
             interpolated for fractional ages.

<PAGE>   7
                                                                            5
                 (ii)     The monthly benefit, payable as a single life
                          annuity, that can be purchased at the Participant's
                          actual retirement date based on:

                          *       The Participant's assumed account balance in
                                  the Safeway Inc. Profit Sharing Plan as of
                                  December 31, 1992, increased by the lesser of
                                  the GIC rate of return or the aggregate
                                  annual earnings rate of the Profit Sharing
                                  Plan for 1993.  This amount shall be further
                                  increased by 7% assumed annual growth
                                  compounded from December 31, 1993 until the
                                  Participant's actual retirement date.

                          *       Single life annuity factors based on the 1983
                                  Group Annuity Mortality Table discounted at
                                  7% interest.

         (c)     A Participant's Basic Plan offset shall equal the amount
                 payable to the Participant under the Basic Plan, in a single
                 life annuity form, increased by any additional benefits,
                 stated in single life annuity form, which the Participant
                 would have been entitled to receive with respect to any period
                 of time during which the Participant was eligible to, but
                 elected not to, participate in the Basic Plan and by the
                 single life annuity benefits attributable to any employee
                 contributions which were withdrawn by the Participant from the
                 Basic Plan.

         This paragraph 2.03 generally grandfathers retirement benefits payable
         under the Senior Executive Supplemental Benefit Plan prior to its
         termination on December 31, 1993, but does not grandfather any
         benefits that would have been payable on account of a Participant's
         pre-retirement or post-retirement death, except to the extent that
         post-retirement survivor benefits are payable in connection with the
         annuity form payable under paragraph 2.04 below.  To clarify the
         calculation of the minimum benefit hereunder, Appendix A attached
         hereto sets forth the amounts calculated under paragraph 2.03(a) and
         under subparagraphs (i) and (ii) of paragraph 2.03(b) assuming
         retirement occurs at age 65 or December 31, 1993, if later.

2.04     Forms and Times of Benefit Payments

         Any benefit to which a Participant or Beneficiary is determined to be
         entitled to under this Plan will be payable in the same form, at the
         same time, and subject to the same actuarial reductions, if any, as
         benefits payable under the terms of the Basic Plan; provided, however,
         the option to choose a lump sum distribution shall not be available
         under this Plan.  Accordingly, if benefits under the Basic Plan are
         paid in a lump sum, the Participant or Beneficiary shall elect, at
         least one month prior to commencement of payments, one of the annuity
         options offered under the Basic Plan for payment of benefits under
         this Plan and the amount of the benefit shall be reduced if a form
         other than single life annuity is elected.  If periodic payments are
         nominal, the Committee may, in its sole discretion, pay the benefit in
         a lump sum payment on an Actuarially Equivalent present value basis.

<PAGE>   8
                                                                            6
                                  ARTICLE III
                            EXECUTIVE DEATH BENEFITS

3.01     Eligibility for Pre-retirement Death Benefit

         A death benefit shall be payable to the Life Insurance Beneficiary of
         any Executive Officer who is a Participant and who dies subsequent to
         December 31, 1993 while employed as an Executive Officer by the
         Company, a Subsidiary, or an Affiliate, regardless of whether death
         occurs while performing services.

3.02     Amount of Pre-retirement Death Benefit

         The death benefit payable to a Life Insurance Beneficiary on account
         of the pre-retirement death of an eligible Executive Officer shall
         equal 400% of the Executive Officer's annual rate of base salary in
         effect at time of his death to a maximum death benefit of $4 million,
         minus the amount payable on account of the Executive Officer's death
         to his Life Insurance Beneficiary.

3.03     Eligibility for Post-retirement Death Benefit

         A post-retirement death benefit shall be payable to the Life Insurance
         Beneficiary of a Participant if and only if he retires from the
         Company, a Subsidiary, or an Affiliate as an Executive Officer after
         attaining age 55 and after December 31, 1993.

3.04     Amount of Post-retirement Death Benefit

         The death benefit payable to a Life Insurance Beneficiary on account
         of the post-retirement death of an eligible Executive Officer shall
         equal the greater of (a) or (b), as follows:

         (a)     (i)      Death prior to age 70:  If the eligible Executive
                          Officer dies prior to age 70, 100% of the his final
                          average annual compensation at retirement as defined
                          under the Basic Plan, to a maximum of $1 million.

                 (ii)     Death on or after attainment of age 70:  If the
                          eligible Executive Officer dies upon or after
                          attaining age 70, 25% of the amount in (i) above.

         (b)     If the eligible Executive Officer was a member of the Senior
                 Executive Supplemental Benefit Plan, and had both attained age
                 50 and participated in the Safeway Executive Supplemental
                 Benefit Plan for at least five years as of December 31, 1993,
                 the lump sum post-retirement death benefit in effect on
                 December 31, 1993 under the terms of the Senior Executive
                 Supplemental Benefit Plan based on final average compensation
                 determined as of December 31, 1993.

<PAGE>   9
                                                                            7

3.05     Post-retirement Death Benefit for Certain Former Senior Executive
         Supplemental Benefit Plan Members

         Participants who were members of the Senior Executive Supplemental
         Benefit Plan who are not eligible for a post-retirement death benefit
         under paragraph 3.03 shall be eligible for the Safeway Post-Retirement
         Life Insurance Plan (irrespective of the 15-year service requirement).
         If such a Participant's death benefit under the Post-Retirement Life
         Insurance Plan is less than the amount payable under paragraph
         3.04(b), and if the Participant had both attained age 50 and
         participated in the Safeway Executive Supplemental Benefit Plan for at
         least five years as of December 31, 1993, then the difference between
         such amounts shall be paid under this Plan to the Participant's Life
         Insurance Beneficiary.

3.06     Forms and Times of Benefit Payments

         Death benefits shall be paid as soon as practicable to the Life
         Insurance Beneficiary following submission of an authentic death
         certificate.  In the event that lump sum payments result in cash flow
         strain or other adverse impact on the Company as determined by the
         Committee, the Committee shall have sole discretion to make payment in
         the form of periodic installments which have the same Actuarially
         Equivalent value as the lump sum benefit specified herein.

                                   ARTICLE IV
                                 MISCELLANEOUS

4.01     Accrual and Vesting of Benefits

         No Participant, or Life Insurance Beneficiary shall have accrued a
         right to or vested in any benefits under Article III of this Plan
         until the date on which payment of such benefits shall have commenced
         thereunder. No Participant or Beneficiary shall have accrued a right
         to or vested in any benefits under Article II of this Plan until the
         earlier of the date on which payment of such benefits shall have
         commenced thereunder or the last day of the calendar year of the
         Participant's retirement.

4.02     Amendment and Plan Termination

         The Company may, in its sole and absolute discretion, terminate,
         suspend or amend this Plan at any time or from time to time, in whole
         or in part.  Any such termination, suspension or amendment may reduce
         or eliminate any benefits payable hereunder except with respect to any
         Participant, Beneficiary or Life Insurance Beneficiary who is
         receiving benefit payments hereunder as of the date of such
         termination, suspension or amendment.

<PAGE>   10
                                                                            8

         In the event of a Plan termination, the Board of Directors, may, at
         its sole and absolute discretion, elect any one or more of the
         following alternatives to satisfy the Company's obligations to
         Participants or Beneficiaries who are then receiving benefits under
         the Plan:

         (a)     Continue to provide benefit payments in accordance with
                 Articles II and III.

         (b)     Make lump sum payments which are Actuarially Equivalent to the
                 benefits payable under the Plan.

4.03     Not An Employment Agreement

         Nothing contained herein will confer upon any Participant the right to
         be retained in the service of the Company, nor will it interfere with
         the right of the Company to deal with Participants without regard to
         the existence of this Plan or to terminate a Participant's employment
         at any time with or without cause.

4.04     No Advance Funding

         This Plan is unfunded, and the Company will make Plan benefit payments
         solely on a current disbursement basis.  Nothing in the establishment
         of this Plan is to be construed as requiring or authorizing the
         Company to create or maintain any separate fund, account or reserve to
         provide for the payment of the Company's liability to a Participant
         under the Plan.

         All payments hereunder shall be made from the general assets of the
         Company and no Participant shall have any right hereunder to any
         specific asset of the Company.

4.05     Assignment of Benefits

         A Participant may not, either voluntarily or involuntarily, assign,
         anticipate, alienate, commute, pledge, discount, borrow against or
         encumber any benefits to which he is or may become entitled to under
         the Plan, nor may the same be subject to attachment or garnishment by
         any creditor of a Participant.

4.06     Interpretation

         This Plan is intended to qualify for exemption from Parts II, III and
         IV of the Employee Retirement Income Security Act of 1974, as amended,
         as a plan maintained primarily for the purpose of providing deferred
         compensation for a select group of management or highly compensated
         employees under Sections 201(2), 301(a)(3) and 401(a)(1) of such Act,
         and shall be so interpreted.  Subject to that restriction, the
         Committee shall have the sole discretion to interpret this Plan and to
         adopt rules and interpretations for the application and implementation
         of this Plan.  The decisions and interpretations by the Committee
         shall be final and binding on all Participants.

<PAGE>   11

                                                                            9

4.07     Governing Law

         This Plan shall be construed, administered and governed in all
         respects under and by the laws of the State of California, except to
         the extent preempted by federal law.


         IN WITNESS WHEREOF, Safeway Inc. has adopted this Plan, effective
         January 1, 1994.

                                        SAFEWAY INC.




                                        BY___________________________________

<PAGE>   12

                                   APPENDIX A



                          Gross Frozen                      Frozen Offsets At Age 65 Under
                          Benefit Under                     ------------------------------
Participant               Provision 2.03(b)        Provision 2.03(b)(i)         Provision 2.03(b)(ii)
-----------               -----------------        --------------------         ---------------------
                                                                       



<PAGE>   13

                                   APPENDIX B



                                                   Ineligible for Benefits Under                       
                          ------------------------------------------------------------------------------
Employee                  Article II                        Article III              Articles II and III
--------                  ----------                        -----------              -------------------