Directors Deferred Compensation Plan - Starbucks Corp.
STARBUCKS CORPORATION
DIRECTORS DEFERRED COMPENSATION PLAN
AMENDED AND RESTATED
EFFECTIVE SEPTEMBER 29, 2003
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ARTICLE I
TITLE, PURPOSE, EFFECTIVE DATE and DEFINITIONS
1.01 Title. This plan shall be known as the Starbucks
Corporation Directors Deferred Compensation Plan, and any reference in this
instrument to the "Plan" shall include the plan as described herein and as
amended from time to time.
1.02 Purpose. The Plan is intended to constitute an
unfunded plan maintained primarily for the purpose of providing deferred
compensation for members of the Board of Starbucks Corporation, a Washington
corporation, and its affiliates ("Company"), within the meaning of Sections
201(2), 301(a)(3) and 401(a)(4) of the Employee Retirement Income Security Act
of 1974 ("ERISA").
1.03 Effective Date. The Effective Date of this amended and
restated Plan shall be September 29, 2003. The Plan was previously amended and
restated effective May 7, 2003.
1.04 Definitions.
a. "Board" means the board of directors of Starbucks
Corporation.
b. "Code" means the Internal Revenue Code of 1986, as
amended.
c. "Committee" means the Nominating and Corporate
Governance Committee of the Board.
d. The "Option Plan" means the Starbucks Corporation
Amended and Restated 1989 Stock Option Plan for Non-Employee Directors,
and any successor thereto.
e. The "Plan Year" means the fiscal year of the Company.
ARTICLE II
ELIGIBILITY
2.01 Participation. A Board member becomes a "Participant"
in the Plan when he or she elects to defer a portion of his or her director fees
pursuant to the terms of the Plan and Article III. A Board member remains a
Participant as long as he or she has a Bookkeeping Account balance that has not
yet been entirely distributed.
2.02 Time of Eligibility. A Board member shall be eligible
to participate in the Plan upon the earlier: (i) for Board members who completed
at least one complete term as a director prior to March 24, 2003, the first
business day of the month following the Effective Date
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of this Plan; or (ii) the first day of the Company's fiscal year following the
fiscal year in which he or she became a Board member. Subject to the provisions
of the Plan, all Board members will be eligible to defer compensation and
receive benefits at the time and in the manner provided hereunder.
ARTICLE III
DEFERRAL OF FEES
3.01 Deferral Elections. Upon becoming eligible to be a
Participant under Section 2.01, and for any Plan Year thereafter, a Board member
must complete, sign and return a Deferral Election Agreement to the Company's
Stock Administration Department ("Stock Administration") on or before the
applicable Election Date.
a. Deferral Election. As used in this Plan, the term
"Deferral Election" means the written form of agreement prescribed by
the Committee, and developed in conjunction with Stock Administration,
and which indicates the portion of Participant's director fees he or
she elects to defer for any Plan Year, and applies only with respect to
fees to be earned in periods after the date of such election and to
such forms of fees as the Company designates as eligible for deferral.
In the case of an initial Deferral Election only, such agreement shall
also indicate directions with respect to the form of distribution
selected by the Participant. No Deferral Election shall be effective
until approved by the Company.
b. Election Date. The "Election Date" is the date by
which a Participant must submit a valid Deferral Election to the
Company, determined as follows:
i. Plan Year Open Enrollment. Except as
provided in Section 3.01.b.ii, the applicable Election Date
for any given Plan Year is the date preceding the Board
member's performing any services relating to Board membership
for such year as the Company may determine, provided that the
Election Date for any given Plan Year must be a date prior to
the first meeting of the Company's Board of Directors within
the Plan Year.
ii. Election Date for Gains from Options. The
applicable Election Date for gains from options granted under
the Option Plan and exercised in any given Plan Year is March
1 of the preceding Plan Year.
iii. New Participants. The applicable Election
Date for any person who becomes a Board member during the Plan
Year is the Plan Year Open Enrollment that occurs after first
becoming a Board member.
c. Eligible Compensation. For purposes of this Plan, the
following items of a Participant's remuneration as a Board member shall
be considered "Eligible Compensation":
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i. Cash Fees. The Participant's annual retainer
otherwise payable in the form of cash;
ii. Equity Fees. The Participant's annual
retainer otherwise payable in the form of equity compensation
(such as stock options);
iii. Options. The Participant's gain (in the form
of stock units) from the exercise of Option Plan options; and
iv. Restricted Shares. The Participant's
Restricted Shares granted under the Option Plan.
3.02 Amount of Deferral. A Participant may, for any Plan
Year, irrevocably elect to have the following amounts of Eligible Compensation
deferred and credited to the Participant's Bookkeeping Account in accordance
with the terms and conditions of the Plan:
a. Cash Fees. All or a portion of the Participant's cash
fees for such Plan Year;
b. Equity Fees. All or a portion of the Participant's
equity fees for such Plan Year;
c. Options. All or a portion of the Participant's gain
from the exercise in such Plan Year of Option Plan options; and
d. Restricted Shares. All or a portion of the
Participant's Restricted Shares granted under the Option Plan for such
Plan Year.
3.03 Minimum Deferral. Each Participant must agree to
defer a minimum of five thousand dollars ($5,000) per Plan Year; provided,
however, that this minimum need not be met if director fees actually paid is
insufficient to yield such minimum deferral in accordance with the Participant's
Deferral Election.
3.04 Requirement for Deferral Election. A Participant who
has not timely submitted a valid Deferral Election may not defer any Eligible
Compensation for the applicable Plan Year under the Plan.
3.05 Applicability of Deferral Election. A Deferral
Election remains in effect for the Plan Year to which it applies. A Participant
must file a new Deferral Election for each Plan Year. The terms of any Deferral
Election may, but need not be, similar to the terms of any prior Agreement.
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ARTICLE IV
BOOKKEEPING ACCOUNT AND CREDITING
4.01 Bookkeeping Account. A "Bookkeeping Account" is the
account established on the books of the Company as a record of each
Participant's Plan balance. A Participant's Bookkeeping Account may, at the
discretion of the Committee, include one or more sub-accounts to reflect amounts
credited to a Participant under the various terms of the Plan. As of the
effective date of this Plan, the Committee has established and a Participant's
Bookkeeping Account shall consist solely of the following sub-accounts:
a. General Stock Units Sub-Account. A `General Stock
Units Sub-Account" is the sub-account expressed in Units (denominated
in units of shares of the Company's common stock) reflecting the number
of such shares which the Participant has deferred into the Plan
following (i) the exercise or settlement of options under the Option
Plan and deferred pursuant to Article III; (ii) Option Plan Restricted
Shares deferred pursuant to Article III, or (iii) the Participant's
election to defer Cash Fees under Section 3.02, or (iii) dividends
issued in the form of Stock Units under the Option Plan.
b. Equity Fees Stock Units Sub-Account. An "Equity Fees
Stock Units Sub-Account" is the sub-account expressed in Units
(denominated in units of shares of the Company's common stock)
reflecting the number of such shares which the Participant has deferred
into the Plan following the Participant's election to defer Equity Fees
under Section 3.02.
4.02 Time of Crediting Accounts. Amounts deferred by a
Participant under the Plan shall be credited to the Participant's Bookkeeping
Account and the respective sub-accounts as soon as administratively practicable
after the date deferred amounts would otherwise have been received (or
beneficially received in the case of Company contributions) by the Participant.
In the case of Deferred Stock Units, such Units will be calculated and valued as
of the date the Participant would have otherwise been paid such deferred
amounts.
4.03 Participant Deemed Investments. As of the Effective
Date of the Plan, the only deemed investment provided under the Plan shall be
Company Stock. The number of Units in a Participant's Bookkeeping Account shall
be appropriately adjusted periodically to reflect any dividend (if applicable),
split, split-up or any combination or exchange, however accomplished, with
respect to the shares of the Company's Common Stock represented by such Units.
4.04 Limited Effect of Allocation. The fact that any
allocation shall be made and credited to a Bookkeeping Account shall not vest in
a Participant any right, title or interest in or to any specific assets of the
Company, or in any right to payment, except at the time(s) and upon the
conditions elsewhere set forth in the Plan.
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4.05 Report of Account. A Participant shall be provided
information regarding Participant's Bookkeeping Account balance within a
reasonable time after requesting such information from Stock Administration. The
Company shall furnish each Participant statements on a periodic basis, no less
frequently than annually, as soon as administratively practicable after the
allocations for the Plan Year have been completed. The Company may, in its
discretion, provide Participants with account balance statements more frequently
than provided in the preceding sentence.
ARTICLE V
RIGHTS OF PARTICIPANT IN PLAN
5.01 Ownership Rights in Bookkeeping Account. Subject to
the restrictions provided in this Article and 6.03, each Participant shall at
all times have a vested right to the value of the Participant's Bookkeeping
Account.
5.02 Rights in Plan are Unfunded and Unsecured. The
Company's obligation under the Plan shall in every case be an unfunded and
unsecured promise to pay. A Participant's right to Plan distributions shall be
no greater than those of general, unsecured creditors of the Company. The
Company may establish one or more grantor trusts (as defined in Code Section 671
et seq.) to facilitate the payment of benefits hereunder; however, the Company
shall not be obligated under any circumstances to fund its financial obligations
under the Plan. Any assets which the Company may acquire or set aside to defray
its financial liabilities shall be general assets of the Company, and such
assets, as well as any assets set aside in a grantor trust, shall be subject to
the claims of its general creditors.
5.03 No Transfer of Interest in Plan Allowed. Except as
permitted by applicable law, no sale, transfer, alienation, assignment, pledge,
collateralization or attachment of any benefits under the Plan shall be valid or
recognized by the Company. Neither the Participant, Participant's spouse or a
designated Beneficiary shall have any power to hypothecate, mortgage, commute,
modify or otherwise encumber in advance of any of the benefits payable
hereunder. Said benefits shall not be subject to seizure for the payment of any
debts, judgments, alimony, maintenance owed by the Participant or a Beneficiary,
or be transferable by operation of law in the event of bankruptcy, insolvency,
or otherwise. Notwithstanding the foregoing, the Company may, if the Committee
so determines in its sole discretion, follow the terms of any court order issued
in connection with any domestic relations proceeding including but not limited
to marital dissolution or child support.
5.04 Plan Binding upon Parties. The Plan shall be binding
upon the Company, its assigns, and any successor company that acquires
substantially all of its assets and business through merger, acquisition or
consolidation; and upon all Participants and any Participant's Beneficiaries,
assigns, heirs, executors and administrators.
ARTICLE VI
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DISTRIBUTIONS
6.01 Retirement. A Participant's "Retirement" shall mean
the date on which the Participant ceases to be a Board member pursuant to
election by the shareholders or by voluntary resignation with the approval of
the Board's chair.
6.02 In-Service Distributions. While a Participant is a
Board member, the Participant may not receive Plan distributions except as
determined in the sole and exclusive discretion of the Committee.
6.03 Distribution Following Termination. If a Participant
ceases to act or is terminated as a Board member prior to Retirement, that
Participant shall receive the value of that Participant's Bookkeeping Account as
soon as administratively practicable following such termination; provided,
however, that the Committee in its sole discretion may withhold payment until
all unresolved contingencies have been resolved with respect to such Participant
and also may offset such amounts as it determines are owing the Company by the
former Board member.
6.04 Retirement Distributions. Upon Retirement,
distribution of a Participant's Bookkeeping Account balance shall be made as
soon as administratively practicable after a Participant's Retirement, and
according to the distribution options specified on the Participant's initial
Deferral Election for any Deferred Stock Units to which the distribution
relates. Bookkeeping Accounts subject to installment payment shall continue to
be valued as provided in Section 4.03. A Participant may modify any distribution
format election at any time prior to the date that is three years before his
Retirement by submitting to the Committee a new Deferral Election. The
distribution options available to a Participant are: (i) Lump sum payment; or
(ii) three (3) year installment payments.
6.05 Cash and Stock Distributions. Distributions of a
Participant's Account shall be made in Common Stock of the Company, but only to
the extent related to (i) Deferred Stock Units held in the Participant's General
Deferred Stock Units Sub-Account, or (ii) with respect to the Participant's
Equity Fees Deferred Stock Units Sub-Account, Deferred Stock Units held in such
Sub-Account have been approved by or granted pursuant to an underlying Option
Plan that has been approved by the Shareholders. In the event that shareholder
approval is not obtained for any portion of a Participant's Equity Fees Deferred
Stock Units Sub-Account, the value (or remaining value) of such Sub-Account
shall be paid in cash, based on the market value of the Common Shares at the
time of such distribution.
ARTICLE VII
DEATH BENEFITS
7.01 Designation of Beneficiary. A Participant shall
designate a Beneficiary to receive death benefits under the Plan by completing
the beneficiary designation form specified by the Committee. A Participant shall
have the right to change the Beneficiary by submitting to
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Stock Administration a form designating the Participant's change of Beneficiary.
No beneficiary designation or change of Beneficiary shall be effective until
executed by the Company.
a. Deemed Beneficiary. If no designation has been made,
or if the Beneficiary has predeceased the Participant, then the
Participant will be deemed to have designated his or her estate as the
Beneficiary hereunder.
b. Surviving Beneficiary. For purposes of determining
the appropriate named or deemed Beneficiary or contingent Beneficiary,
an individual is considered to survive the Participant if that
individual is alive seven (7) days after the date of the Participant's
death.
7.02 Determination of Account Balance at Death. The
remaining value of a Participant's Bookkeeping Account shall be determined as of
the date of the Participant's death. The amounts in such Account shall remain
invested as provided under the Plan pending the determination and payment to the
Beneficiary as determined in the sole discretion of the Committee.
7.03 Distribution of Bookkeeping Account Balance at Death.
Upon a Participant's death, the value of the Participant's Bookkeeping Account
shall be distributed as follows:
a. Death Prior to Retirement. If a Participant dies
before Retirement, the Participant's Beneficiary shall receive the
balance of the Participant's Bookkeeping Account determined and paid as
though the Participant had retired on his or her date of death.
b. Death After Retirement. If a Participant dies after
Retirement, the Participant's Beneficiary shall receive the
Participant's remaining Account Balance in a manner consistent with the
Participant's distribution election under Section 6.04 (reflected for
any adjustments pursuant to Section 4.03 until such Account is fully
distributed).
7.04 Determination of Beneficiary. If the Committee has
any doubt as to the proper Beneficiary to receive payments hereunder, the
Committee shall have the right to direct the Company to withhold such payments
until the matter is finally adjudicated. However, as provided in Section 11.07,
any payment made by the Company, in good faith and in accordance with the Plan
and the directions of the Committee shall fully discharge the Company, the Board
and the Committee from all further obligations with respect to that payment.
7.05 Payments to Minor or Incapacitated Beneficiaries. In
distributing property hereunder to or for the benefit of any minor or
incapacitated Beneficiary, the Committee, in its sole and absolute discretion,
may direct the Company to make such distribution to a legal or natural guardian
of such Beneficiary, or to any adult with whom the minor or incompetent
temporarily or permanently resides. The receipt by such guardian or other adult
shall be a complete discharge of liability to the Company, the Board, and the
Committee. Neither the
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Board, the Committee, nor the Company shall have any responsibility to see to
the proper application of any payments so made.
7.06 Acceleration of Death Benefits. Anything in this
Article to the contrary notwithstanding, the Committee may, in its sole and
absolute discretion, accelerate to lump sum any death benefit payments
hereunder.
7.07 Effect of Divorce. If a Participant and his or her
named Beneficiary are or become married and thereafter their marriage is
dissolved by entry of a decree of dissolution or other court order having the
effect of dissolving the marriage, then any such pre-divorce beneficiary
designation shall be deemed automatically revoked as to such beneficiary spouse
as of the date of such dissolution unless the death benefit rights of such
former spouse are subsequently reaffirmed by a qualified domestic relations
order or the Participant's subsequent written designation.
ARTICLE VIII
ADMINISTRATION OF THE PLAN
8.01 Plan Sponsor and Administrator. The Company is the
"Plan Sponsor." The Committee is the "Plan Administrator." The Company's senior
officer with responsibility for Human Resources, along with its Stock
Administration Department, have been selected to assist the Committee in its
day-to-day responsibilities with respect to the Plan. The Committee is the named
fiduciary charged with responsibility for administering the Plan. The Committee,
with the advice of the Company, will make such rules and computations and will
take such other actions to administer the Plan as the Committee may deem
appropriate.
8.02 Authority of Committee. As Plan Administrator, the
Committee has the sole and exclusive discretion, authority and responsibility to
construe and interpret the terms and provisions of the Plan, to remedy and
resolve ambiguities, to grant or deny any and all claims for benefits and to
determine all issues relating to eligibility for benefits. All actions taken by
the Committee as Plan Administrator, or its delegate, will be conclusive and
binding on all person having any interest under the Plan, subject only to the
provisions of Article IX. All findings, decisions and determinations of any kind
made by the Committee or its delegate shall not be disturbed unless the
Committee has acted in an arbitrary and capricious manner.
8.03 Exercise of Authority. All resolutions or other
actions taken by the Committee shall be either: (a) by vote of a majority of
those present at a meeting at which a majority of the members are present; or
(b) in writing by a majority of all the members at the time in office if they
act without a meeting.
8.04 Delegation of Authority. The Committee may delegate
all or part of its responsibilities, authority and discretion under the Plan to
other persons. The duties of the Committee under the Plan will be carried out in
its name by the officers, directors and employees of the Company. Any such
delegation shall carry with it the full discretion and authority vested
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in the Committee under Section 8.02. As of the Effective Date of this Plan, the
Committee has delegated the day-to-day administration of the Plan to Stock
Administration, under the direction of the senior corporate officer with
responsibility for Human Resources.
8.05 Reliance on Opinions. The members of the Committee
and the officers and directors of the Company shall be entitled to rely on all
certificates and reports made by any duly appointed accountants, and on all
opinions given by any duly appointed legal counsel, including legal counsel for
the Company.
8.06 Information. The Company shall supply full and timely
information to the Committee on all matters relating to the compensation of
Participants, the date and circumstances of the termination of employment or
death of a Participant and such other pertinent information as the Committee may
reasonably require.
8.07 Indemnification. The Company shall indemnify and hold
harmless each Committee or Board member, and each Company employee, performing
services or acting in any capacity with respect to the Plan, from and against
any and all expenses and liabilities arising in connection with services
performed in regard to this Plan. Expenses against which such individual shall
be indemnified hereunder shall include, without limitation, the amount of any
settlement or judgment, costs, counsel fees and related charges reasonably
incurred in connection with a claim asserted, or a proceeding brought or
settlement thereof. The foregoing right of indemnification shall be in addition
to any other rights to which any such individual may be entitled as a matter of
law or other agreement.
ARTICLE IX
CLAIMS PROCEDURE
9.01 Submittal of Claim. Benefits shall be paid in
accordance with the provisions of this Plan. The Participant, or any person
claiming through the Participant ("Claiming Party"), shall make a written
request for benefits under this Plan, mailed or delivered to the Committee. Such
claim shall be reviewed by the Committee or its delegate.
9.02 Denial of Claim. If a claim for payment of benefits
is denied in full or in part, the Committee or its delegate shall provide a
written notice to the Claiming Party within ninety (90) days setting forth: (a)
the specific reasons for denial; (b) any additional material or information
necessary to perfect the claim; (c) an explanation of why such material or
information is necessary; and (d) an explanation of the steps to be taken for a
review of the denial. A claim shall be deemed denied if the Committee or its
delegate does not take any action within the aforesaid ninety (90) day period.
9.03 Review of Denied Claim. If the Claiming Party desires
Committee review of a denied claim, the Claiming Party shall notify the
Committee or its delegate in writing within sixty (60) days after receipt of the
written notice of denial. As part of such written request, the Claiming Party
may request a review of the Plan document or other pertinent documents, may
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submit any written issues and comments, and may request an extension of time for
such written submission of issues and comments.
9.04 Decision upon Review of Denied Claim. The decision on
the review of the denied claim shall be rendered by the Committee within sixty
(60) days after receipt of the request for review (if no hearing is held) or
within sixty (60) days after the hearing if one is held. The decision shall be
in writing and shall state the specific reasons for the decision, including
reference to specific provisions of the Plan on which the decision is based.
ARTICLE X
AMENDMENT AND TERMINATION
The Board of Directors may amend or terminate the Plan at any
time. Such amendment or termination may modify or eliminate any benefit
hereunder, provided that no such amendment or termination shall in any way
reduce the vested portion of the affected Participants' or Beneficiaries'
Bookkeeping Accounts. In addition, the Committee has the authority on behalf of
the Board, to review, finalize, approve and adopt amendments to the Plan, other
than amendments relating to benefit amounts and Plan eligibility.
ARTICLE XI
MISCELLANEOUS
11.01 No Employment Contract. The terms and conditions of
the Plan shall not be deemed to constitute a contract of employment between the
Company and any Board member. Nothing in this Plan shall be deemed to give any
Board member the right to be retained in the service of the Company or to
interfere with any right of the Company to discipline or discharge the Board
member at any time.
11.02 Employee Cooperation. A Board member will cooperate
with the company by furnishing any and all information reasonably requested by
the Company and take such other actions as may be requested to facilitate Plan
administration and the payment of benefits hereunder.
11.03 Illegality and Invalidity. If any provision of this
Plan is found illegal or invalid, said illegality or invalidity shall not affect
the remaining parts hereof, but the Plan shall be construed and enforced as if
such illegal and invalid provision had not been included herein.
11.04 Required Notice. Any notice which shall be or may be
given under the Plan or a Deferral Election shall be in writing and shall be
mailed by United States mail, postage prepaid. If notice is to be given to the
Company, such notice shall be addressed to the Company c/o Stock Administration
Department, at the Company's main offices. If notice is to be given to a
Participant, such notice shall be addressed to the last known address on the
Company's Human
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Resources records. Any notice or filing required or permitted to be given to a
Participant under this Plan shall be sufficient if in writing and
hand-delivered, or sent by mail, to the last known address of the Participant.
Any party may, from time to time, change the address to which notices shall be
mailed by giving written notice of such new address.
11.05 Interest of Participant's Spouse. The interest in the
benefits hereunder of a spouse of a Participant who has predeceased the
Participant shall automatically pass to the Participant and shall not be
transferable by such spouse in any manner, including but not limited to such
spouse's will, nor shall such interest pass under the laws of intestate
succession.
11.06 Tax Liabilities from Plan. If all or any portion of a
Participant's benefit under this Plan generates a state or federal income tax
liability to the Participant prior to receipt, that Participant may petition the
Committee for a distribution under 6.02. Such a distribution shall affect and
reduce the benefits to be paid under Articles VI and VII hereof.
11.07 Discharge of Company Obligation. The payment of
benefits under the Plan to a Participant or Beneficiary shall fully and
completely discharge the Company, the Board, and the Committee from all further
obligations under this Plan with respect to a Participant, and that
Participant's Deferral Election shall terminate upon such full payment of
benefits.
11.08 Costs of Enforcement. If any action at law or in
equity is necessary by the Committee or the Company to enforce the terms of the
Plan, the Committee or the Company shall be entitled to recover reasonable
attorneys' fees, costs and necessary disbursements in addition to any other
relief to which that party may be entitled.
11.09 Gender and Case. Unless the context clearly indicates
otherwise, masculine pronouns shall include the feminine and singular words
shall include the plural and vice versa.
11.10 Titles and Headings. Titles and headings of the
Articles and Sections of the Plan are included for ease of reference only and
are not to be used for the purpose of construing any portion or provision of the
Plan document.
11.11 Applicable Law. To the extent not preempted by
Federal law, the Plan shall be governed by the laws of the State of Washington.
11.12 Counterparts. This instrument and any Deferral
Election may be executed in one or more counterparts, each of which is legally
binding and enforceable.
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IN WITNESS WHEREOF, this instrument setting forth the terms
and conditions of this amendment and restatement to the STARBUCKS DIRECTORS
DEFERRED COMPENSATION PLAN is executed this _________ day of ________, 2003,
effective September 29, 2003, except as otherwise provided herein.
STARBUCKS CORPORATION
By: ____________________________
Title: _________________________
ATTEST:
By: ___________________________________
Title: _________________________________
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