Exhibit 10(i)
JOHNSON & JOHNSON
EXECUTIVE INCOME DEFERRAL PLAN
The Johnson & Executive Income Deferral Plan (the "Plan") is intended
to permit a select group of executives to defer income which would otherwise be
immediately payable to them under various compensation and/or incentive plans of
Johnson & Johnson (the "Company").
1. ADMINISTRATION. This Plan is administered by the Compensation
Committee of the Company's Board of Directors. The Committee shall have
responsibility for determining which investments will from time to time be
available under the Plan and shall review the investment options at least once
every three years. The Committee shall make all decisions affecting the timing,
price or amount of any and all of the Deferred Awards (as hereinafter defined)
of participants subject to Section 16 of the Securities Exchange Act of 1934, as
amended, but may otherwise delegate any of its authority under this Plan.
2. ELIGIBILITY. Eligibility to defer under this Plan will be initially
limited to members of the Executive Committee of the Company. The Committee may
from time to time expand eligibility to defer compensation under this Plan to
other executives of the Company. The Committee, however, has the authority to
refuse to permit an participant to participate in this Plan or elect to defer
payments, if the Committee determines that such participation would jeopardize
the Plan's compliance with applicable law or the Plan's status as a top hat plan
under ERISA.
3. DEFERRAL INTO AN INCOME DEFERRAL ACCOUNT. participants may elect to
defer up to (i) fifty percent (50%) of annual salary, (ii) fifty percent (50%)
of cash payments under the Company's Executive Incentive Plan and (iii) one
hundred percent (100%) of dividend equivalents paid under the Company's
Certificate of Extra Compensation ("CEC") Plan. Amounts so deferred are known as
"Deferred Awards" and will be credited to a participant's "Income Deferral
Account". A participant's decision to defer under the Plan must be made on or
before September 30 of the year prior to the commencement of the fiscal year as
to which the compensation, incentive payment or dividend equivalent monies to be
deferred will be earned. At the Plan's inception, amounts otherwise payable in
1997 (regardless of the year in which earned) may be deferred under this Plan by
elections made on or before December 15, 1996. Any election to defer pursuant to
this Section 3 shall be effective only when timely filed with Extra Compensation
Services on the form utilized for such purpose. A participant shall designate,
in multiples of 1% of the Deferred Award, the portion to be allocated to each
investment option available under this Plan. A participant may change the
investment options for Deferred Awards not yet credited to his/her Income
Deferred Account not more than once each month, such change to be effective as
of the first day of the month following the month in which a participant's
request to change such allocation is received by Extra Compensation Services.
Any elections to defer dividend equivalents under the Company's CEC
Plan will be applied such that elections will apply to the CEC contracts in the
reverse order of their issuance. Deferred Awards shall be held in one account
regardless of the form of compensation or plan under which they were earned.
Upon ceasing to be an employee of the Company, each participant (or in
the event of a participant's death, the named beneficiary or his/her estate)
shall be entitled to receive in cash in lump sum the value of his/her Income
Deferral Account as of the date of such termination, unless such participant has
elected, pursuant to the provisions of Section 7 below, to further defer payment
of his/her Income Deferral Account beyond retirement. Notwithstanding the above,
if a participant is in any fiscal year a "named executive officer" for proxy
statement reporting purposes by reason of his/her being the chief executive
officer of the Company or one of the four highest compensated officers (other
than the chief executive officer), any payment
from an Income Deferral Account otherwise due to be made in such year shall be
postponed to a date which is on or about the 15th day of January of the
following fiscal year.
4. INVESTMENT OF INCOME DEFERRAL ACCOUNTS. At the election of each
participant, amounts in an Income Deferral Account may be invested utilizing the
options set forth below. Amounts to be deferred in any month will be credited to
a participant's Income Deferral Account on the last day of each month.
(a) Common Stock Equivalent Units. All amounts elected to be deferred
under this option shall be converted into equivalent units of the Company's
Common Stock ("Common Stock") as if the compensation deferred had been invested
in Common Stock ("Common Stock Equivalent Units"). The number of Common Stock
Equivalent Units shall be determined by dividing the amount of compensation to
be deferred by the average of the high and low prices of the Common Stock as
reported in the Wall Street Journal for the last trading day of each month. The
Company shall credit the participant's Income Deferral Account with the number
of full and partial shares of the Company's Common Stock so determined. However,
at no time shall any shares be purchased or earmarked for such Account and the
participant shall not have any of the rights of a shareholder with respect to
shares credited to his/her Income Deferral Account. The number of Common Stock
Equivalent Units included in a participant's Account shall be adjusted to
reflect dividends and increases or decreases in market value which would have
resulted had funds equal to such deferred amount been invested in Common Stock.
In the event of a reorganization, stock split, stock dividend,
combination of shares, merger, consolidation, rights offering or any other
change in the corporate structure or shares of the Company the Committee shall
make such adjustment, if any, as it may deem appropriate in the number and kind
of shares of the Company's Common Stock credited to participants' Income
Deferral Accounts.
(b) Balanced Fund. All amounts elected to be deferred under this option
shall be deemed to be invested in and credited with the investment rate of
return earned under the Balanced Fund option under the Company's Savings Plan or
any such successor fund. However, no Balanced Fund shares shall be purchased or
earmarked for a participant's Account.
(c) One Year Treasury Bill Rate. All amounts elected to be deferred
under this option shall be deemed to be invested in an interest bearing account
which bears interest at the One Year Treasury Bill Rate, compounded monthly. For
purposes of the Plan, the One Year Treasury Bill Rate shall be the interest rate
for One Year Treasury Bills quoted in the Wall Street Journal on the last
trading day of the preceding calendar year. Such rate shall be adjusted
annually. No Treasury Bills will be actually purchased or earmarked for a
participant's Account.
5. REDESIGNATION OF INVESTMENT OPTIONS WITHIN AN INCOME DEFERRAL
ACCOUNT. A participant may redesignate amounts previously credited to an Income
Deferral Account among the investments available under this Plan. Participants
who wish to redesignate out of a particular investment vehicle may not at the
same time redesignate into such investment vehicle. No redesignation of
investment may take place during the 30 days prior to a scheduled distribution
under this Plan. The following additional rules shall apply with respect to
redesignations of previously credited amounts:
(a) Permitted Frequency--Redesignation by a participant may be made not
more than once during any consecutive twelve month period.
(b) Amount and Extent of Redesignation--Redesignation for any
participant must be in 1% multiples of the investment from which redesignation
is being made.
(c) Timing--Redesignation shall take place as of the first day of the
month following the month in which a participant's written redesignation is
received by Extra Compensation Services. The value of the Company's Common Stock
for purposes of investment redesignation shall be the average of the high and
low
prices of the Common Stock as reported in the Wall Street Journal for the last
trading day of the applicable month.
(d) Special rules for Redesignation Into or Out of Common Stock
Equivalent Units previously credited to an Income Deferred Account:
(i) Material, Nonpublic Information--The Committee in its sole
discretion and with advice of counsel at any time may rescind a redesignation
into or out of Common Stock Equivalent Units if such redesignation was made by a
participant who, a) at the time of the redesignation was in the possession of
material, nonpublic information with respect to the Company; and b) in the
Committee's estimation benefited from such information in the timing of his/her
redesignation.
The Committee's determination shall be final and binding. In the event
of such rescission, the participant's Income Deferral Account shall be returned
to a status as though such redesignation had not occurred. Notwithstanding the
above, the Committee shall not rescind a redesignation if the facts were
reviewed by the participant with the General Counsel of the Company or a
designee prior to the redesignation and if the General Counsel or designee had
concluded that such participant was not in possession of material, nonpublic
information.
(ii) A participant subject to Section 16(b) of the Securities Exchange
Act of 1934 may redesignate into or out of Common Stock Equivalent Units only
during the applicable "window period" with respect to the release of any
quarterly or annual statements of sales and earnings by the Company.
(iii) A redesignation into or out of Common Stock Equivalent Units may
not be made within 6 months of a discretionary "opposite way transaction" into
or out of Common Stock held by the participant in the Company's Savings Plan.
6. DISTRIBUTION OF INCOME DEFERRAL ACCOUNTS. If a participant's
employment is terminated for any reason (including death or disability), and
such participant is not eligible to retire from active service under the
Company's pension plan, then his/her Income Deferral Account will be
automatically paid in a lump sum as soon as administratively feasible in the
month following his/her termination of employment. Distributions in cash of the
value of equivalent shares of the Company's Common Stock will be valued at the
average of high and low market prices of the Common Stock as reported in the
Wall Street Journal on the last trading day of the month of his/her termination
of employment.
7. POST RETIREMENT DEFERRALS. At the further election of each
participant, to be made as provided for below, the payment of any sum otherwise
due to a participant upon his/her retirement may be further deferred and paid in
either a single lump sum or in installments. A lump sum payment may be deferred
for up to ten taxable years following the participant's retirement date. If
installment payments are elected, the first installment payment may be made
immediately upon retirement or be deferred for up to ten taxable years.
Installment payments will be made annually (in the manner described below) and
in approximately equal installment amounts (i.e., the value of the balance of
the Income Deferral Account, plus accrued interest, divided by the number of
remaining installments). The minimum number of annual installments is two (2)
and the maximum number is fifteen (15). An participant may elect to defer up to
100% of the value of his/her total Income Deferral Account at retirement; or,
any percentage increment less than that. The payment of any amounts from an
Income Deferral Account pursuant to this Section 7 shall be subject to the
provisions of the last sentence of Section 3 above. The following additional
rules shall apply with respect to all payments:
a) Immediate Lump Sum Payment - The participant will receive the full
value of his/her Income Deferral Account in the calendar month of his/her
retirement effective date.
b) Deferred Lump Sum Payment - The participant will receive the full
value of his/her Income Deferral Account, plus any accrued interest, on or about
January 15 of the year he/she elects to receive payment in.
c) Immediate Commencement of Installments - The participant will
receive the first installment in the calendar month of his/her retirement
effective date, subject to the provisions of the last sentence of Section 3
above. All subsequent installments, plus any accrued interest, will be paid on
or about January 15 of each year.
d) Deferred Commencement of Installments - The participant will receive
the first and all subsequent installments, plus any accrued interest, on or
about January 15 of each year.
With respect to any amounts which are deferred and/or paid in
installments, interest shall be paid by the Employer from the effective date of
retirement to the date of any such payment. The interest rate for all deferred
and/or installment payments to a participant shall be fixed at the date of
retirement and shall be the rate (rounded to 1 decimal place) offered, as
reported in the Wall Street Journal on the effective retirement date, on a
United States Treasury Instrument for the period comparable to the length of the
period of the deferral and/or installment payments. The interest shall be
compounded semi-annually on the last calendar day of June and December of each
year. If more than one instrument is quoted, the average of such rates shall be
utilized. By way of example, if an election is made to receive installments over
eight (8) years, the comparable eight (8) year U.S. Treasury Rate shall be
utilized; if an election is made to defer the commencement of installments for
two (2) years with installments paid out over ten (10) years, the comparable
twelve (12) year U.S. Treasury Rate shall be utilized. Once established, the
interest rate shall remain fixed for the period of the deferral and/or
installments.
In the event of death of a participant following retirement, the
Employer will make payment in full of the balance of his/her Income Deferral
Account, plus any accrued interest, as soon as administratively practical in a
single lump sum payment to the designated beneficiary, subject to the provisions
of the last sentence of Section 3 above.
In the event no deferral or installment election is made under this
Section 7, the total amount of the Income Deferral Account will be paid in
accordance with the provisions of Section 3 in a lump sum payment as soon as
practical following an participant's retirement effective date.
An election by a participant to defer payment or elect installments of
all or a part of his/her Account beyond his/her effective retirement date must
be made a minimum of twelve (12) months prior to the date of such retirement
date. Any such election may be revised or revoked up to twelve (12) months prior
to such retirement date. For the twelve month period prior to such retirement
date, any election is irrevocable and thus may not be revoked or otherwise
revised.
Notwithstanding the above, at the Plan's inception, an exception has
been made for participants who have a retirement effective date between January
1, 1997 and December 31, 1997. For participants having a retirement effective
date prior to June 30, 1997, the deferral and/or installment election must be
made a minimum of three (3) months and in the calendar year prior to the
retirement date. For such participants having a retirement date between July 1,
1997 and December 31, 1997, such election must be made at least six (6) months
prior to the retirement date. For example, a participant who retires on April 1,
1997, must make the deferral and/or installment election no later than December
31, 1996; if the retirement date is August 1, 1997, such election must be made
not later than January 31, 1997. Any such election to defer and/or receive
installment payments may only be revised or revoked prior to the last
permissible date for making such election. After such time the election may not
be revoked or otherwise revised.
An election to defer payment and/or be paid in installments is
effective only when timely filed with Extra Compensation Services on the form
utilized for such purpose. Any election made after the required deadline shall
be disregarded.
8. DEDUCTIONS FROM DISTRIBUTIONS. The Company will deduct from each
distribution amounts required to be withheld for income, Social Security and
other tax purposes. The Company may also deduct any amounts the participant owes
the Company for any reason.
9. BENEFICIARY DESIGNATIONS. A participant may designate one or more
beneficiaries to receive the value of his/her Income Deferral Account upon
death. Should a beneficiary predecease the participant, or should a beneficiary
not be named, the amount designated for such beneficiary or the participant's
balance, as the case may be, will be distributed to the participant's Estate.
Beneficiary designations may be made or revised at any time by submitting a
Beneficiary Designation Form to Extra Compensation Services.
10. AMENDMENTS. The Committee may amend this Plan at any time. However,
such amendment shall not without the consent of a participant, materially
adversely affect any right or obligation with respect to any Deferred Award made
theretofore.
11. MISCELLANEOUS. The Employer does not fund the obligations created
by the participant's participation in the Plan. Rather, the Employer makes an
unsecured promise to pay these obligations out of general corporate assets. This
applies to obligations for both active and retired participants.
In the first quarter of each calendar year, statements will be sent to
active participants participating in this Plan as well as to retirees with
Deferral Accounts. The statement will also include previously made deferral
elections and beneficiary designations. The report for retirees will provide the
deferred payout balance plus interest, as well as the deferred and/or
installment election and beneficiary designations.
This Plan is administered by the Extra Compensation Services Department
at the Corporate Headquarters of Employer. Questions in regard to the
administration of the Plan should be addressed to it.
AN ELECTION TO DEFER AND/OR BE PAID IN INSTALLMENTS SHOULD ONLY BE MADE
IN CONSULTATION WITH AN PARTICIPANT'S TAX AND/OR FINANCIAL ADVISOR.