Exhibit 10.6
LOWE'S COMPANIES, INC.
DIRECTORS' DEFERRED COMPENSATION PLAN
Effective July 1, 1994
TABLE OF CONTENTS
Section Page
1. PURPOSE............................................................. 1
2. DEFINITIONS......................................................... 1
3. PARTICIPATION....................................................... 3
4. VESTING............................................................. 3
5. DEFERRAL ELECTION................................................... 3
6. EFFECT OF NO ELECTION............................................... 4
7. DEFERRED CASH BENEFITS.............................................. 4
8. DEFERRED STOCK BENEFITS............................................. 4
9. DISTRIBUTIONS....................................................... 5
10. COMPANY'S OBLIGATION................................................ 5
11. CONTROL BY PARTICIPANT.............................................. 6
12. CLAIMS AGAINST PARTICIPANT'S DEFERRED BENEFITS...................... 6
13. AMENDMENT OR TERMINATION............................................ 6
14. NOTICES............................................................. 6
15. WAIVER.............................................................. 6
16. CONSTRUCTION........................................................ 6
1. PURPOSE. The Lowe's Companies, Inc. Directors' Deferred Compensation
Plan (the "Plan"), is intended to constitute a deferred compensation
plan for corporate directors' fees.
2. DEFINITIONS. The following definitions apply to this Plan and to the
Deferral Election Forms.
(a) Beneficiary or Beneficiaries means a person or persons or other
entity designated on a Beneficiary Designation Form by a
Participant as allowed in subsection 9(c) of this Plan to receive
Deferred Benefit payments. If there is no valid designation by
the Participant, or if the designated Beneficiary or Beneficiaries
fail to survive the Participant or otherwise fail to take the
Deferred Benefit, the Participant's Beneficiary is the first of
the following who survives the Participant: a Participant's
spouse (the person legally married to the Participant when the
Participant dies); the Participant's children in equal shares;
and the Participant's estate.
(b) Beneficiary Designation Form means a form acceptable to the
Chairman of the Committee or his designee used by a Participant
according to this Plan to name his Beneficiary or Beneficiaries
who will receive all Deferred Benefit payments under this Plan
if he dies.
(c) Board means the board of directors of the Company.
(d) Committee means the Independent Directors Compensation Committee.
(e) Committee Fees means the portion of a Director's Compensation
that is payable in cash for his service on committees of the
Board, according to the Company's established rules and
procedures for compensating Directors.
(f) Company means Lowe's Companies, Inc. and any successor business
by merger, purchase, or otherwise that maintains the Plan.
(g) Compensation means a Director's Committee Fees and Retainer Fees
for the Deferral Year.
(h) Deferral Election Form means a document governed by the
provisions of section 5 of this Plan, including the related
Beneficiary Designation Form that applies to all of that
Participant's Deferred Benefits under the Plan.
(i) Deferral Year means a calendar year for which a Director has an
operative Deferral Election Form.
(j) Deferred Benefit means either a Deferred Cash Benefit or a
Deferred Stock Benefit under the Plan for a Participant who
has submitted an operative Deferral Election Form pursuant to
section 5 of this Plan.
(k) Deferred Cash Account means that bookkeeping record established
for each Participant who elects a Deferred Cash Benefit under
this Plan. A Deferred Cash Account is established only for
purposes of measuring a Deferred Cash Benefit and not to
segregate assets or to identify assets that may or must be used
to satisfy a Deferred Cash Benefit. A Deferred Cash Account will
be credited with the Participant's Compensation deferred
according to a Deferral Election Form and according to section 7
of this Plan. A Deferred Cash Account will be credited
periodically with amounts based upon interest rates established
under subsection 7 of this Plan.
(l) Deferred Cash Benefit means the Deferred Cash Benefit elected by
a Participant under section 5 that results in payments governed
by sections 7 and 9.
(m) Deferred Stock Account means that bookkeeping record established
for each Participant who elects a Deferred Stock Benefit under
this Plan. A Deferred Stock Account is established only for
purposes of measuring a Deferred Stock Benefit and not to
segregate assets or to identify assets that may or must be used
to satisfy a Deferred Stock Benefit. A Deferred Stock Account
will be credited with the Participant's Compensation deferred as
a Deferred Stock Benefit according to a Deferral Election Form
and according to section 8 of this Plan. A Deferred Stock Account
will be credited periodically with amounts determined by the
Committee under subsection 8 of this Plan.
(n) Deferred Stock Benefit means the Deferred Benefit elected by
a Participant under section 5 that results in payments governed
by sections 8 and 9.
(o) Directors means those duly elected members of the Board who
are not employees of the Company.
(p) Election Date means the date established by this Plan as the
date before which a Director must submit a valid Deferral
Election Form to the Committee. A separate election will be
made for each calendar year. Directors will be eligible to defer
their Compensation payable for the third and fourth calendar
quarters of 1994. The deferral election for 1994 Compensation
must be made on or before July 1, 1994. For each Deferral Year
other than 1994, the Election Date is December 31 of the calendar
year preceding the calendar year in which the Compensation
otherwise would be payable following the date that he becomes a
Director. Despite the three preceding sentences, the Committee
may set an earlier date as the Election Date for any Deferral
Year. An individual who becomes a Director during a Deferral
Year may defer Compensation that would otherwise be payable in
the following calendar year by submitting a valid Deferral
Election Form by the applicable Election Date described in the
preceding sentences.
(q) Participant, with respect to any Deferral Year, means a Director
whose Deferral Election Form is operative for that Deferral Year
according to section 5 of this Plan.
(r) Plan means the Lowe's Companies, Inc. Directors' Deferred
Compensation Plan.
(s) Retainer Fee means that portion of a Director's Compensation
that is payable in cash and that is fixed and paid without regard
to his service on committees.
(t) Terminate, Terminating, or Termination, with respect to a
Participant, mean cessation of his relationship with the
Company as a Director whether by death, disability or severance
for any other reason. Unless the Committee determines otherwise
in it sole discretion, Terminate, Terminating, or Termination do
not include situations where the Participant becomes employed by
the Company or one of its subsidiaries.
3. PARTICIPATION. A Director becomes a Participant for any Deferral Year
by filing a valid Deferral Election Form according to section 5 on or
before the Election Date for that Deferral Year, but only if his
Deferral Election Form is operative according to section 5.
4. VESTING. Each Participant is immediately and fully vested in amounts
deferred under the program. Each Participant is also immediately and
fully vested on the "earnings" credited to his or her account.
5. DEFERRAL ELECTION. A deferral election is valid when a Deferral
Election Form is completed, signed by the electing Director, and
received by the Committee Chairman. Deferral elections are governed
by the provisions of this section.
(a) A Participant may elect a Deferred Benefit for any Deferral
Year if he is a Director at the beginning of that Deferral
Year or becomes a Director during that Deferral Year.
(b) Before each Deferral Year's Election Date, each Director
will be provided with a Deferral Election Form and a
Beneficiary Designation Form. Under the Deferral Election
Form for a single Deferral Year, a Participant may elect on or
before the Election Date to defer the receipt of all, but not
less than all, of his Compensation for the Deferral Year that
will be earned and payable after the Election Date.
(c) A Participant may complete a Deferral Election Form for either
a Deferred Cash Benefit or a Deferred Stock Benefit for amounts
deferred from his Compensation. Alternatively, a Participant may
complete a Deferral Election Form that provides that amounts
deferred from his Compensation will be allocated between a
Deferred Cash Benefit and a Deferred Stock Benefit in 25%
multiples.
(d) A Participant may not elect to convert a Deferred Cash Benefit
to a Deferred Stock Benefit. A Participant may not elect to
convert a Deferred Stock Benefit to a Deferred Cash Benefit.
(e) If it does so before the last business day of the Deferral Year,
the Committee may reject any Deferral Election Form, and the
Committee is not required to state a reason for any rejection.
However, the Committee's rejection of any Deferral Election Form
must be based upon action taken without regard to any vote of the
Director whose Deferral Election Form is under consideration, and
the Committee's rejections must be made on a uniform basis with
respect to similarly situated Directors. If the Committee rejects
a Deferral Election Form, the Director must be paid the amounts he
would then have been entitled to receive if he had not submitted
the rejected Deferral Election Form.
(f) A Director may not revoke a Deferral Election Form after the
Deferral Year begins. Any revocation before the beginning of the
Deferral Year is the same as a failure to submit a Deferral
Election Form. Any writing signed by a Director expressing an
intention to revoke his Deferral Election Form and delivered to a
member of the Committee before the close of business on the
relevant Election Date is a revocation.
6. EFFECT OF NO ELECTION. A Director who has not submitted a valid
Deferral Election Form to the Committee on or before the relevant
Election Date may not defer his Compensation for the Deferral Year
under this Plan. A decision to defer or not to defer one year's cash
Compensation will not affect a Director's previous deferrals or his
or her ability to defer future years' cash Compensation.
7. DEFERRED CASH BENEFITS. Deferred Cash Benefits will be set up in a
Deferred Cash Account for each Participant and credited with interest
at Wachovia Bank and Trust Company's prime rate plus 1%, adjusted
each quarter. Deferred Cash Benefits are credited to the applicable
Participant's Deferred Cash Account as of the day they would have
been paid but for the deferral. Interest is credited on the first
day of each month based on the Deferred Cash Account balance at the
end of the preceding day.
8. DEFERRED STOCK BENEFITS. Participants' Deferred Stock Benefits are
governed by this section.
(a) Deferred Stock Benefits shall be credited to a Deferred Stock
Account as of the date on which the Compensation would have been
paid. A Deferred Stock Account shall be credited with the number
of whole and fractional shares of Company common stock that a
Participant could have purchased with amounts deferred from his
Compensation based on the closing price of Company common stock
on the New York Stock Exchange on the day on which the deferred
Compensation would have been paid. The value of a Deferred
Stock Account on any date shall be the value of the Company
common stock (whole and fractional shares) credited to the
account based on the immediately preceding closing price of
Company common stock on the New York Stock Exchange.
(b) A Deferred Stock Account also shall be credited with any
dividends that would have been paid on the whole shares of
Company common stock credited to the account. A Deferred Stock
Account shall be credited with the number of whole and
fractional shares of Company common stock that a Participant
could have purchased with such dividends based on the closing
price of the Company common stock on the day before such
dividends are credited to the account.
9. DISTRIBUTIONS.
(a) All distributions will be made as soon as practicable after a
Participant ceases to be a Director for any reason; provided,
however, that no distributions will be made until at least six
months following the last date that deferred Compensation is
credited to a Participant's Deferred Stock Account.
(b) All Deferred Cash Benefits and all Deferred Stock Benefits,
less withholding for applicable income and employment taxes,
shall be paid in a single sum in cash. A Deferred Cash Benefit
will equal the balance standing to the credit of the Participant
in his Deferred Cash Account on the first day of the month in
which the distribution is paid. A Deferred Stock Benefit will
equal the fair market value of the Company common stock credited
to the Participant's account on the first day in which the
distribution is paid. The fair market value of the Company
common stock credited to the Participant's Deferred Stock
Account will be the closing price of the Company stock on the
first day of the month in which the distribution is made.
Amounts payable on account of the death of a Director will be
paid to the Beneficiary designated by the Director.
(c) Deferred Benefits may not be assigned by a Participant or
Beneficiary. A Participant may use only one Beneficiary
Designation Form to designate one or more Beneficiaries for all
of his Deferred Benefits under the Plan; such designations are
revocable. Each Beneficiary will receive his portion of the
Participant's Deferred Benefit as soon as practicable following
the Participant's death.
10. COMPANY'S OBLIGATION. The Plan is unfunded. The Company shall not be
required to segregate any assets that at any time may represent a
Deferred Benefit. Any liability of the Company to a Participant or
Beneficiary under this Plan shall be based solely on any contractual
obligations that may be created pursuant to this Plan. No such
obligation of the Company shall be deemed to be secured by a pledge of,
or other encumbrance on, any property of the Company.
11. CONTROL BY PARTICIPANT. A Participant has no control over Deferred
Benefits except according to his Deferral Election Forms and his
Beneficiary Designation Form.
12. CLAIMS AGAINST PARTICIPANT'S DEFERRED BENEFITS. A Deferred Cash
Account and a Deferred Stock Account relating to a Participant under
this Plan shall not be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, or
charge, and any attempt to do so is void. A Deferred Benefit is not
subject to attachment or legal process for a Participant's debts or
other obligations. Nothing contained in this Plan gives any
Participant any interest, lien, or claim against any specific asset
of the Company. A Participant or his Beneficiary has no rights other
than as a general creditor of the Company.
13. AMENDMENT OR TERMINATION. Except as otherwise provided in this
section, this Plan may be altered, amended, suspended, or terminated
at any time by the Board. No amendment or termination may adversely
affect any Participant's rights under the program without his or her
consent. Notwithstanding the preceding sentence, if any amendment to
the Plan, subsequent to the date the Plan becomes effective, adversely
affects Deferred Benefits elected hereunder, after the effective date
of any such amendment, and the Internal Revenue Service declines to
rule favorably on any such amendment or to rule favorably only if the
Board makes amendments to the Plan not acceptable to such Board, the
Board, in its sole discretion, may accelerate the distribution of part
or all of the amounts attributable to affected Deferred Benefits due
Participants and Beneficiaries hereunder.
14. NOTICES. Notices and elections under this Plan must be in writing.
A notice or election is deemed delivered if it is delivered personally
or if it is mailed by registered or certified mail to the person at
his last known business address.
15. WAIVER. The waiver of a breach of any provision in this Plan does
not operate as and may not be construed as a waiver of any later
breach.
16. CONSTRUCTION. This Plan is created, adopted, and maintained
according to the laws of the State of North Carolina (except its
choice-of-law rules). It is governed by those laws in all respects.
Headings and captions are only for convenience; they do not have
substantive meaning. If a provision of this Plan is not valid or not
enforceable, that fact in no way affects the validity or
enforceability of any other provision. Use of one gender includes
all, and the singular and plural include each other.
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