Summary
MetLife, Inc. filed an 8-K on December 20, 2004, detailing several significant board approvals and events. Key among these is the establishment of two new deferred compensation plans: the MetLife Leadership Deferred Compensation Plan for officers and certain employees, and the MetLife Non-Management Director Deferred Compensation Plan for directors. These plans allow eligible individuals to defer receipt of cash and stock compensation, thereby deferring income tax liabilities until payment. The company also approved a specific performance measure for its Annual Variable Incentive Plan (AVIP), focusing on net income excluding certain investment gains/losses and accounting changes, to govern executive awards.
Key Highlights
- 1Approval of the MetLife Leadership Deferred Compensation Plan, allowing eligible employees to defer salary, annual, and long-term incentives (cash and stock) for tax deferral purposes, effective January 1, 2005 (for cash) and April 15, 2005 (for stock).
- 2Establishment of the MetLife Non-Management Director Deferred Compensation Plan, enabling directors to defer director fees (including stock) for tax deferral, effective January 1, 2005.
- 3Deferred compensation under both plans are unsecured obligations of MetLife, Inc.
- 4Company matches deferred compensation to the same extent as if it were not deferred under applicable savings and investment plans.
- 5Interest or simulated investment returns on deferred compensation are not determined on an above-market basis.
- 6Both plans are intended to comply with Section 409A of the Internal Revenue Code.
- 7Adoption of a specific performance measure (net income excluding certain gains/losses and accounting changes) for the Annual Variable Incentive Plan (AVIP) impacting CEO and Section 16 Officers.
Frequently Asked Questions
The primary purposes of the MetLife Leadership Deferred Compensation Plan and the MetLife Non-Management Director Deferred Compensation Plan are to allow eligible employees and directors to defer the receipt of certain compensation (salary, incentives, director fees), including stock, and consequently defer the payment of federal and most state income taxes on those amounts until they are actually received.
The adoption of a specific performance measure for the AVIP, which is MetLife's net income excluding certain investment gains/losses and accounting changes, is significant as it defines the basis for determining incentive awards for the CEO and other Section 16 Officers. This provides clarity on how executive performance will be measured for bonus eligibility.
No, the amounts deferred under both the Leadership Plan and the Directors' Plan are unsecured obligations of MetLife, Inc. This means that in the event of MetLife's financial distress or bankruptcy, participants would be general creditors.
The interest or simulated investment returns on deferred compensation are not determined on an above-market basis. This implies that the growth of deferred amounts will likely be tied to market performance or a defined interest rate that is not artificially inflated.