8-KLeadership Changes

STATE STREET CORP 8-K Report, Executive Changes (Sep 24, 2007)

Filed September 24, 2007For Securities:STTSTT-PG

Summary

State Street Corporation (STT) filed an 8-K on September 24, 2007, reporting amendments to its U.S. qualified and non-qualified retirement plans, specifically the Supplemental Executive Retirement Plan (SERP) and the Restoration Plan. The most significant change is the closure of the SERP to new participants and the cessation of future benefit accruals for most participants, effective December 31, 2007. A three-year transition subsidy for certain existing participants is being introduced. The Restoration Plan also sees material amendments effective January 1, 2008. These include increased deferral limits for base salary and bonuses, enhanced State Street matching credits, and a new performance-based credit. These changes primarily impact named executives and highly compensated employees, affecting their ability to defer compensation and the company's matching contributions to their retirement savings.

Key Highlights

  • 1State Street Corporation is amending its Supplemental Executive Retirement Plan (SERP) and Restoration Plan.
  • 2The SERP will be closed to new participants effective December 31, 2007.
  • 3Future benefit accruals in the SERP will cease for most participants, with a limited three-year transition subsidy for select individuals.
  • 4The Restoration Plan amendments, effective January 1, 2008, allow higher deferral percentages for base salary (up to 25%) and annual cash incentive bonuses (5-92%).
  • 5State Street is increasing its matching credit in the Restoration Plan to 100% of the first 6% of pay deferred, plus a potential discretionary performance-based credit of up to 5%.
  • 6The definition of 'pay' for matching and performance credits in the Restoration Plan is being updated and capped.
  • 7Distribution methods for benefits under both plans are being standardized, primarily to lump-sum payments after termination.

Frequently Asked Questions

The SERP will be closed to new participants as of December 31, 2007, and future benefit accruals will cease for most participants. A three-year transition subsidy, offering an annual credit of 3% of base salary (up to $500,000, subject to IRS limits), will be available to certain participants who meet specific age and service requirements by that date. Benefits will be distributed as a lump sum after termination.

The Restoration Plan amendments, effective January 1, 2008, allow eligible employees to defer a higher percentage of their base salary (up to 25%) and annual cash incentive bonuses (5-92%). State Street's matching credit is significantly enhanced to 100% of the first 6% of pay deferred, and a new discretionary performance-based credit of up to 5% of pay is being introduced. The definition of pay for these credits is also updated.

These amendments primarily affect State Street's designated management and highly compensated employees, including the Named Executives (Chairman and CEO, CFO, and Vice Chairmen), who are participants in or eligible for the SERP and Restoration Plan. The changes are designed to address limitations imposed by the Internal Revenue Code on qualified retirement plans.

The amendments to the SERP are effective December 31, 2007. The amendments to the Restoration Plan are effective January 1, 2008.