EXHIBIT 10.32
MORGAN STANLEY DEAN WITTER & CO.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
EFFECTIVE JANUARY 1, 1986
AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1989
WITH AMENDMENTS ADOPTED THROUGH DECEMBER 3, 1998
I. Purpose of Plan
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The Supplemental Executive Retirement Plan (the "Plan") is an unfunded
plan maintained by Morgan Stanley Dean Witter & Co. (the "Corporation") for the
purpose of providing deferred compensation for Managing Directors and Principals
of the Corporation, its subsidiaries and affiliates. (The Corporation, its
subsidiaries and affiliates shall collectively be referred to as the "Firm";
provided, that effective May 31, 1997, the term "Firm" shall not include
subsidiaries and affiliates of Dean Witter, Discover &Co., as in existence prior
to its merger with the Corporation, and their subsidiaries and affiliates. The
determination of whether an entity is considered a part of the "Firm" for
purposes of the Plan shall be made by the Committee.) As such, its purpose is
to provide a means of supplementing the retirement benefits of employees who are
Managing Directors or Principals of the Firm or previously held the title of
Managing Director or Principal.
II. Definitions and Assumptions
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The following words and phrases as used herein shall have the
following meanings unless a different meaning is plainly required by the
context:
A. "Accrued Benefit" under this Plan as of any specified date shall mean
the amount computed in paragraph IV(A) and offset by benefits described in
Paragraph IV(B) and limited, if applicable, as described in Paragraph IV(C),
payable as of the Participant's attainment of age 65 and based on his Credited
Service and Final Average Salary as of such specified date.
B. "Actuarial Equivalent" shall mean the following:
(i) for determinations made prior to July 1, 1996, (X) subject to
clause (Y) of this Paragraph II B(i), a benefit of equivalent value which
shall be determined based on (a) the Participant's (and, where applicable,
the beneficiary's) age as of the Participant's Benefit Commencement Date;
(b) a mortality table equal to the 1983 Group Annuity Mortality Table; and
(c) an investment rate of six percent (6%) compounded annually; and (Y) in
the case of a lump sum, an amount equivalent to the present value, as of
the Participant's Benefit Commencement Date, of the Participant's benefit
payable as of the Participant's Benefit Commencement Date in the form of a
single life annuity based on (a) the age of the Participant as of his
Benefit Commencement Date; (b) the mortality tables described in clause
(X)(b) of this Paragraph II B(i), and (c) an investment rate equal to the
Pension Benefit Guaranty Corporation single employer plan termination
immediate annuity interest rate in effect
as of the second calendar month prior to the Participant's Benefit Commencement
Date; and
(ii) For determinations made after June 30, 1996, using those
assumptions as to rate of interest and the mortality tables which are in
effect from time to time for purposes of determining actuarial equivalents
under the Morgan Stanley & Co. Incorporated Pension Plan in substantially
similar situations and for substantially similar purposes; provided,
however, that in no event shall the Actuarial Equivalent for a given form
of payment for any Participant's Accrued Benefit be less than the Actuarial
Equivalent of such form of payment on June 30, 1996 for Participants
terminated prior to July 1, 1996, based upon Actuarial Equivalent
determined in accordance with Paragraph II B(i) above.
C. "Authorized Absence" shall mean absence authorized by the Firm without
loss of employment status, including absence on account of illness, business of
the Firm, vacation and leave of absence, including leave of absence for military
or governmental service, whether or not salary shall be paid during such
absence. Any person who ceases to be an employee receiving compensation from
the Firm but remains in the employment of the Firm shall be deemed for all
purposes of the Plan to be on Authorized Absence without salary until such
employment terminates or he again receives compensation from the Firm.
D. "Benefit Commencement Date" means the date as of which a Participant's
(or in the event of the Participant's death before receiving any benefits under
the Plan, a beneficiary's) benefit under the Plan commences to be paid.
E. (i) "Credited Service" shall mean the sum of all periods of employment
by the Firm commencing from the first day of the month following the
Participant's date of hire or rehire. "Credited Service" shall also include (a)
any period during which the Participant was a partner in Morgan Stanley & Co.,
(b) any period during which the Participant is eligible for and receives
disability benefits under a long term disability plan sponsored by the Firm or a
governmental plan (including the waiting period required under any governmental
plan), provided that the disability was incurred while he was employed by the
Firm, and (c) any period of Authorized Absence.
(ii) In computing Credited Service, a Participant's Credited Service
shall be deemed to terminate on the earliest of:
(a) the date on which the Participant quits, retires, is discharged or
dies,
(b) the first anniversary of the first date of a period in which the
Participant remains absent from service (with or without pay) for any
reason other than quit, retirement, discharge, disability, Authorized
Absence or death, such as vacation, holiday, sickness, leave of absence, or
layoff, or
(c) the first anniversary of the first date of a period of disability
with respect to which he is either ineligible for or does not receive
disability benefits under the Social Security Act (excluding the required
waiting period).
F. "Final Average Salary" shall mean a Participant's average annual Salary
during his 60 highest paid consecutive months (excluding months for which he
received no Salary) during the final 120 months (or such lesser period as is
equal to his Credited Service) of his Credited Service preceding such
retirement, death or termination of Credited Service.
G. "Salary" shall mean a Participant's regular fixed base compensation
earned for any period, whether or not paid during such period.
III. Participation in the Plan
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Each employee who holds or has previously held the title of Managing
Director or Principal of the Firm shall become a participant in the Plan (a
"Participant") upon the satisfaction of all of the following requirements while
actively employed by the Firm: (1) completion of five years of Credited
Service, which service need not have been rendered while a Managing Director or
Principal of the Firm, (2) attainment of age 55, and (3) the sum of Credited
Service and age expressed in years and fractions thereof (determined using the
number of full months of age or Credited Service) at least equals 65 years.
Notwithstanding, an employee will be excluded if upon meeting the
eligibility requirements, he is included in a contractual agreement between
himself and his employer which provides substantially the same benefits under
the local plan. Notwithstanding any other provision of the Plan to the
contrary, any person who is (i) classified by the Firm as a "leased employee"
who provides services to any Firm (including, without limitation, a leased
employee as defined in Code section 414(n)), an independent contractor or a
consultant or (ii) a provider of services to the Firm pursuant to a contractual
arrangement, such as a "PAL", either with that person or with a third party,
other than one specifically providing for an employment relationship with the
Firm, shall not be eligible to become a Participant until the later of the date,
if any, on which he becomes an employee who is not classified as a leased
employee, independent contractor, consultant or a provider of services to the
Firm and is employed in a job classification that is eligible for membership
under the Plan as determined
by the Firm. If any person excluded as an employee pursuant to the preceding
clauses (i) and (ii) shall be determined by a court or a federal, state or local
regulatory or administrative authority to have served as a common law employee
of the Firm, such determination shall not alter this exclusion as an employee
for purposes of this Plan.
IV. Benefits under the Plan
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A. Plan Formula
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A Participant whose rights to benefits had vested under the
Supplemental Executive Retirement Plan in effect prior to January 1, 1986 (the
"Prior Plan") is entitled to a single life annuity in an annual amount equal to
the greater of the amounts described in subparagraphs (i) and (ii) below. A
Participant whose rights to benefits had not vested under the Prior Plan or who
was not entitled to participate in the Prior Plan shall be entitled to a single
life annuity as computed under subparagraph (ii) below:
(i) the amount which would have been payable under the Prior Plan if
the Participant had retired on December 31, 1985, based on the
Participant's Credited Service and Final Average Salary as of December 31,
1985, which amount shall be the sum of:
. 40% of his or her Final Average Salary, plus
. 2/12% of his or her Final Average Salary for each month of Credited
Service in excess of 60 months (up to a cumulative total of 50% of
Final Average Salary at 10 years of Credited Service), plus
. 1/12% of his or her Final Average Salary for each month of Credited
Service in excess of 300 months (up to a cumulative total of 60%
of Final Average Salary at 35 years of Credited Service);
(ii) an amount, based on the Participant's Final Average Salary and
Credited Service as of such Participant's actual date of retirement, death
or termination of employment with the Firm, determined as follows:
. 20% of his or her Final Average Salary, plus
. 2/12% of Final Average Salary for each completed month of Credited
Service in excess of 60 months (up to a cumulative total of 50%
of Final Average Salary at 20 years of Credited Service), plus
. 1/12% of Final Average Salary for each completed month of Credited
Service in excess of 300 months (up to a cumulative total of 60%
of Final Average Salary at 35 years of Credited Service).
B. Reduction of Benefits
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The payments to which a Participant is entitled under Paragraph IV A
shall be reduced by pension benefits which the Participant is entitled to
receive under the terms of any other defined benefit pension plan or money
purchase pension plan maintained by the Firm, and any other defined benefit or
money purchase pension plan established by a former employer (or affiliate of a
former employer) of the Participant, whether or not such employer or affiliate
is affiliated with the Firm (any such plan being referred to herein as an
"Offset Plan").
In the event that the commencement date and form of payment to a
Participant under any Offset Plan are or will be the same as the commencement
date and form of payment of the benefit to which a Participant is entitled under
Paragraph IV A hereof, each such payment under this Plan will be reduced by the
full amount of the corresponding payments under the Offset Plans. In the event
that i) a Participant's benefit under the applicable Offset Plan has been, is
being or will be received in a form of payment different from the form of
payment elected under this Plan, or ii) payment of a Participant's benefit under
the applicable Offset Plan commenced or will commence as of a different date
than payment of the benefit to which a Participant is entitled under Paragraph
IV A hereof, then the payment of such benefits under this Plan will be reduced
by the Actuarial Equivalent of the benefit payable under the Offset Plan
(determined as if such Actuarial Equivalent were to be paid under the Offset
Plan commencing on the date and in the form of payment of benefits under this
Plan). Benefits under this Plan shall not be reduced by benefits payable under
any defined contribution plan (other than a money purchase plan), including any
benefits to which the Participant is entitled
under the Corporation's Deferred Profit Sharing Plan, the Shumagco Profit
Sharing Plan or the Morgan Stanley International Profit Sharing Scheme. Benefits
under this Plan also shall not be reduced by benefits under an Offset Plan to
the extent attributable to the Participant's own contributions or discretionary
supplemental contributions made by the Firm on the Participant's behalf.
C. Maximum Benefits
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(i) Notwithstanding any other provisions of this Paragraph IV to the
contrary, the benefit to which a Participant whose date of retirement is
later than December 31, 1985 is entitled under Paragraph IV A (ii) shall in
no event exceed US$140,000 (or in the case of a Participant whose date of
retirement is in 1988, US$137,813; in the case of a Participant whose date
of retirement is in 1987, US$131,250; and in the case of a Participant
whose date of retirement is in 1986, US$125,000).
(ii) If the Participant's Benefit Commencement Date occurs after
December 31, 1988 and before the Participant attains age 60, the dollar
amounts described in Paragraph IV C (i) shall be reduced by 4/12% for each
month that the Benefit Commencement Date precedes the Participant's
attainment of age 60.
(iii) The maximum benefit to which a Participant is entitled under
Paragraph IV A (ii) as limited by Paragraph IV C (i) is determined as of
such Participant's date of retirement and remains in effect thereafter,
except as may be determined by subsequent Plan amendment. Such maximum
benefit as adjusted for early distribution under Paragraph IV C (ii) is
determined as of the Participant's Benefit Commencement Date
and remains in effect thereafter, except as may be determined by subsequent
Plan amendment.
(iv) If the benefits computed under Paragraph IV A are determined in a
currency other than United States dollars, the maximum benefit described
under Paragraph IV C (iii) shall be converted annually as of January 1 to
the currency of benefit determination using the Rolling Average Exchange
Rate for the previous calendar year. For the purpose of this Plan, Rolling
Average Exchange Rate shall be the average of the spot rates as of the
first business day of the month for the previous twelve months.
(v) The benefit payable under Paragraph IV A (i) shall not be limited
by the provisions of this Paragraph IV C.
D. Form of Payment
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The normal form of payment under this Plan shall be a single life
annuity. However, a Participant may, with the consent of the Committee, elect
to receive the Actuarial Equivalent of the Accrued Benefit otherwise payable
under this Plan, payable in the manner and at the times at which such
Participant's benefits are payable under any Offset Plan sponsored by the Firm
in which the Participant participates; provided, however, that a Participant who
is receiving benefits in the form of a joint and survivor annuity under such
Offset Plan may elect under this Plan at any time prior to his death that the
benefit otherwise payable to the Participant's spouse should the spouse survive
the Participant will be payable to the Participant's estate for a period
measured by the life of the spouse.
E. Commencement of Benefits
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The payment of the Accrued Benefit to a Participant shall commence no
earlier that the date on which benefit payments to such Participant commence
under an Offset Plan sponsored by the Firm. If payment of an Accrued Benefit
commences as a result of a Participant's retirement at or after age 60, such
Accrued Benefit will not be reduced for early retirement. If payment of an
Accrued Benefit commences as a result of a Participant's retirement at any time
after the Participant's 55th birthday but before age 60, such Accrued Benefit
will be reduced by 4/12% for each month that the Participant's Benefit
Commencement Date precedes the date on which the Participant attains age 60.
The Committee in its discretion may delay the Participant's Benefit Commencement
Date to a later date, but no later than the date on which the Participant
attains age 65. A Participant's Benefit Commencement Date may also be delayed
(at the discretion of the Committee) in a case in which a Participant terminates
his employment under circumstances, such as leaving for governmental service or
for service in the Armed Forces of the United States, indicating that i) there
is a substantial possibility that the Participant may return to employment with
the Firm or ii) that it would be inappropriate for the Participant to receive
payments of the Accrued Benefit. Furthermore, at the Committee's discretion, a
Participant's Benefit Commencement Date may be delayed or payment of the Accrued
Benefit may be suspended in the event that a Participant enters into competition
with the Firm.
In the event a Participant who is eligible for a pension under this
Plan dies while employed by the Firm, the surviving spouse of the Participant
shall be eligible for a benefit under this Plan equal to the Accrued Benefit
which would have been paid to such spouse if the
Participant had elected to receive the Accrued Benefit in the form of a joint
and 50% survivor annuity (with the spouse as beneficiary) and the Participant's
Benefit Commencement Date was the day before his death with payments under such
joint and 50% survivor annuity to begin immediately.
V. Administration of the Plan
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The Pension Plan Administration Committee (the "Committee") designated
in Section 11.1 (or any successor provision) of the Pension Plan of Morgan
Stanley & Co. Incorporated shall administer the Plan. The Committee shall
review all questions arising in connection with the Plan, including its
interpretation, and may adopt procedural rules and employ and rely on such legal
counsel, actuaries, accountants and agents as it may deem advisable to assist in
the administration of the Plan. Interpretations of the Committee shall be
conclusive and binding on all persons.
VI. Funding of Benefits
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No Participant shall have or accrue any property interest whatsoever
in any specific assets of the Firm by virtue of the Plan or any Accrued Benefit
payable hereunder. Neither the Plan nor any Accrued Benefit payable hereunder
shall create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Firm (or any entity included in the Firm) and
a Participant or any other person.
VII. Miscellaneous
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It is expected that the Plan will be continued indefinitely, but the
Plan may be terminated at any time by the Board of Directors of Morgan Stanley
Dean Witter & Co. including in the event the Pension Plan of Morgan Stanley &
Co. Incorporated is terminated. This Plan
also may be amended at any time by the Board of Directors of Morgan Stanley
Group Inc. with respect to any present or future Participants.
VIII. Effective Date
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The effective date of this amendment and restatement is January 1,
1989.
IX. Governing Law
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This Plan shall be construed in accordance with and governed by the
laws of the State of New York and, when applicable, the laws of the United
States of America.
X. Inalienability of Rights and Interests.
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No benefit payable under the Plan shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
charge or security interest and any such attempted action shall be void. No
such benefit or interest shall in any manner be liable for or subject to debts,
contracts, liabilities, engagements or torts of any Participant, former
Participant or beneficiary. If any Participant, former Participant or
beneficiary shall become bankrupt or shall attempt to anticipate, alienate,
sell, transfer, assign, pledge, encumber, or charge, or create a security
interest in, any benefit payable under the Plan or interest in any assets in
relation to the Plan, then, to the extent permitted by law, the Committee in its
discretion may hold or apply such benefit or interest or any part thereof to or
for the benefit of such Participant, former Participant or beneficiary, his
spouse, children, blood relatives or other dependents or any of them in such
manner and such proportion as the Committee may consider proper.