Summary
The St. Paul Travelers Companies, Inc. (TRV) filed an 8-K report on December 6, 2004, announcing the adoption of new Deferred Compensation Plans for both employees and non-employee directors, effective December 2, 2004. These new plans are designed to comply with Section 409A of the Internal Revenue Code, which introduced new regulations for deferred compensation arrangements. The Employee Plan allows eligible employees to defer a portion of their salary and incentive awards, with options to invest in various funds, including company stock. The Directors Plan enables non-employee directors to defer cash compensation and receive units equivalent to company stock, with dividend equivalents credited and paid out in stock.
Key Highlights
- 1Adoption of new St. Paul Travelers Deferred Compensation Plan (Employee Plan) and The St. Paul Travelers Companies, Inc. Deferred Compensation Plan for Non-Employee Directors (Directors Plan) effective December 2, 2004.
- 2The new plans are designed to comply with Section 409A of the Internal Revenue Code.
- 3Employees can defer between 1% and 50% of base salary and 1% to 100% of annual incentive awards.
- 4Deferred employee compensation can be invested in approved funds, including a company stock fund.
- 5Non-employee directors can defer cash compensation (retainers, fees) and receive common stock units.
- 6Dividend equivalents will be credited to directors' accounts and paid out in company stock.
- 7Prior deferred compensation plans (The Deferred Management Incentive Awards Plan, The Deferred Stock Plan for Non-Employee Directors, The Directors’ Deferred Compensation Plan, and The Travelers Deferred Compensation Plan) will be suspended for new deferrals effective December 31, 2004, but will continue for administering existing deferrals.
Frequently Asked Questions
The primary purpose of this 8-K filing is to announce the adoption of new deferred compensation plans for employees and non-employee directors by The St. Paul Travelers Companies, Inc., and to ensure compliance with new tax regulations under Section 409A of the Internal Revenue Code.
The new Employee Plan allows eligible employees to defer a portion of their annual base salary (1-50%) and incentive awards (1-100%). These deferred amounts are credited to a personal account where participants can choose to invest them in various approved investment funds, potentially including The St. Paul Travelers' own stock.
Under the Directors Plan, non-employee directors can defer cash compensation, such as retainers and fees. This deferred amount is converted into common stock units based on the company's stock price. Directors also receive dividend equivalents on these units, which are paid out in the form of company stock.
Effective December 31, 2004, several previous deferred compensation plans are being suspended for any new deferrals. However, these older plans will continue to operate solely for the administration of compensation that was already deferred prior to that date.