EXHIBIT 99.1 2005 EXCESS BENEFIT PLAN (AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 2008)
Published on November 20, 2007
Exhibit
99.1
SOUTHWEST
AIRLINES CO.
2005
EXCESS BENEFIT PLAN
(as
amended and restated effective January 1, 2008)
SOUTHWEST
AIRLINES CO.
2005
EXCESS BENEFIT PLAN
(as
amended and restated effective January 1, 2008)
Table
of Contents
Page
|
DEFINITIONS
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1
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|
ELIGIBILITY
|
2
|
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CREDITS
TO ACCOUNT
|
3
|
|
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BENEFITS
|
3
|
|
|
PAYMENT
OF BENEFITS
|
4
|
|
|
IN-SERVICE
WITHDRAWALS AND LOANS
|
6
|
|
|
ADMINISTRATION
OF THE PLAN
|
6
|
|
|
LIMITATION
OF RIGHTS
|
7
|
|
|
LIMITATION
OF ASSIGNMENT AND PAYMENTS TO
|
||
|
LEGALLY
INCOMPETENT DISTRIBUTEE
|
8
|
|
|
AMENDMENT
TO OR TERMINATION OF THE PLAN
|
8
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|
|
STATUS
OF PARTICIPANT AS UNSECURED CREDITOR
|
8
|
|
|
GENERAL
AND MISCELLANEOUS
|
8
|
SOUTHWEST
AIRLINES CO.
2005
EXCESS BENEFIT PLAN
(as
amended and restated effective January 1, 2008)
PREAMBLE
WHEREAS,
Southwest Airlines Co., a
corporation formed under the laws of the State of Texas, has established
the
Southwest Airlines Co. 2005 Excess Benefit Plan, an excess benefit plan for
the
exclusive benefit of its employees to restore retirement benefits decreased
due
to limitations imposed by Section 415 of the Internal Revenue Code of 1986;
and
WHEREAS,
such plan has been designed to
comply with Section 409A of the Internal Revenue Code; and
WHEREAS,
Southwest Airlines Co. now
desires to amend and restate such plan to reflect the provisions of the final
regulations promulgated pursuant to Section 409A of the Internal Revenue
Code;
and
WHEREAS,
Southwest Airlines Co. intends
that any Participant or Beneficiary under such plan shall have the status
of an
unsecured general creditor with respect to the Plan and any Trust
Fund;
NOW,
THEREFORE, the Southwest Airlines
Co. 2005 Excess Benefit Plan is hereby amended and restated in its entirety
as
follows:
ARTICLE
I
DEFINITIONS
1.1 “Account”
shall mean the record maintained by the Committee showing the monetary value
of
the individual interest in the Plan of each Participant or
Beneficiary. The term “Account” shall refer only to a bookkeeping
entry and shall not be construed to require the segregation of assets on
behalf
of any Participant or Beneficiary.
1.2 “Beneficiary”
shall mean, with respect to each Participant, the beneficiary of such
Participant under the Southwest Airlines Co. ProfitSharing Plan.
1.3 “Board”
shall mean the Board of Directors of Southwest Airlines Co.
1.4 “Code”
shall mean the Internal Revenue Code of 1986, as it may be amended from time
to
time, and the rules and regulations promulgated thereunder.
1.5 “Committee”
shall mean the committee designated by the Board to administer the
Plan.
1.6 “Company”
shall mean Southwest Airlines Co., or its successor or successors.
1.7 [INTENTIONALLY
OMITTED]
1.8 “Excess
Amount” shall mean, for a particular Plan Year, the amount by which the
allocation(s) of a Participant under the Retirement Plans which are attributable
to such Plan Year are reduced by reason of the application of the limitations
set forth in Section 415 of the Code.
1.9 “Mandatory
Retirement Age” shall, with respect to each Southwest Airlines Co. pilot, mean
the mandatory retirement age for commercial airline pilots, if any, imposed
by
the Federal Aviation Administration or applicable law.
1.10 “New
Participant” shall mean a Participant other than a Prior Plan
Participant.
1.11 “Participant”
shall mean an employee of the Company who has met the eligibility requirements
for participation in this Plan, as set forth in Article II hereof.
1.12 “Plan”
shall mean the Southwest Airlines Co. 2005 Excess Benefit Plan as amended
and
restated and set forth in this document and as further amended from time
to
time.
1.13 “Plan
Year” shall mean the annual period beginning on January 1 and ending on December
31, both dates inclusive of each year.
1.14 “Prior
Plan” shall mean the Southwest Airlines Co. Excess Benefit Plan originally
effective January 1, 1999, as amended.
1.15 “Prior
Plan Participant” shall mean a Participant who made an election to defer under
Section 5.3 of the Prior Plan.
1.16 “Retirement
Plans” shall mean the Southwest Airlines Co. ProfitSharing Plan (the
“ProfitSharing Plan”), the Southwest Airlines Co. 401(k) Plan, and the Southwest
Airlines Co. Pilots’ Retirement Savings Plan, each as amended from time to
time.
1.17 “Trust
Agreement” shall mean the agreement, if any, including any amendments thereto,
entered into between the Company and the Trustee to carry out the provisions
of
the Plan.
1.18 “Trustee”
shall mean the designated trustee acting at any time under the Trust
Agreement.
1.19 “Trust
Fund” shall mean the cash and other properties held and administered by the
Trustee pursuant to the Trust Agreement.
1.20 “Valuation
Date” shall mean each business day on which the financial markets are open for
trading activity, or such other dates as shall be established by the
Committee.
ARTICLE
II
ELIGIBILITY
Each
employee of the Company who
qualifies for an allocation under any one or more of the Retirement Plans,
and
whose Excess Amount for any Plan Year (commencing with the 2004 Plan Year)
is at
least $1,000, shall be eligible to participate in this Plan with respect
to such
Plan Year.
ARTICLE
III
CREDITS
TO ACCOUNT
3.1 Commencing
with the 2005 Plan Year and continuing for each Plan Year thereafter, as
soon as
practicable following the date on which the Company funds its contribution,
if
any, to the ProfitSharing Plan, the Company shall credit to the Account of
each
Participant who is actively employed on the date on which such ProfitSharing
contribution is funded an amount equal to the Excess Amount of such Participant
for the preceding Plan Year.
3.2 As
of each Valuation Date, the Committee shall credit to each Participant’s Account
the deemed income or losses attributable thereto, as provided in Section
3.3
below, as well as any other credits to or charges against such Account,
including such Participant’s pro rata portion of Plan administrative
expenses. All payments from an Account between Valuation Dates shall
be charged against the Account as of the preceding Valuation Date.
3.3 Each
Participant, prior to initial participation in the Plan, may, in the manner
prescribed by the Committee, designate the manner in which amounts credited
to
such Participant’s Account pursuant to Section 3.1 above shall be deemed to be
invested among the various options designated by the Committee for this purpose;
provided however, that any such designation in effect under the Prior Plan
on
December 31, 2004 shall automatically carry over and apply to this Plan
effective January 1, 2005 until changed by the Participant. Any
investment designation may be changed as of any Valuation Date solely with
respect to amounts credited under Section 3.1 after the date of such change,
and
shall be effected by filing an election with the Committee, in the manner
prescribed by the Committee, within the period of time prior to such Valuation
Date established by the Committee. The Participant must designate, in
such minimum percentages or amounts as may be prescribed by the Committee,
that
portion of the amount to be credited to the Account of such Participant that
is
to be allocated to each investment option offered hereunder. In the
absence of any such investment designation, amounts credited to a Participant’s
Account shall be deemed to be invested in such property as the Committee,
in its
sole and absolute discretion, shall determine. In no event may any
Participant designate the investment of amounts credited to an Account in
stock
or other securities of the Company. The Committee may, but shall not
be obligated to, invest amounts credited to a Participant’s Account in
accordance with the investment designations of such Participant; nevertheless,
the Account of such Participant shall be credited with the amount of income,
gains and losses attributable thereto, as if the amounts credited to such
Account had been so invested. The Committee shall be authorized at
any time and from time to time to modify, alter, delete or add to the investment
options hereunder. In the event a modification occurs, the Committee
shall, prior to the effective date of such change, notify those Participants
whom the Committee, in its sole and absolute discretion, determines are affected
by the change. The Committee shall not be obligated to substitute
options with similar investment criteria for existing options, nor shall
it be
obligated to continue the types of investment options presently available
to the
Participants.
ARTICLE
IV
BENEFITS
Except
as
otherwise provided herein, each Participant (or, in the case of death, the
Beneficiary of such Participant) shall be entitled to receive benefits hereunder
upon the earliest to occur of (i) such Participant’s separation from service
with the Company (provided that a Participant who is a “specified employee”
(within the meaning of Section 409A(a)(2) of the Code) shall not be entitled
to
receive benefits hereunder until six (6) months after the date of separation
from service), (ii) such Participant’s attainment of Mandatory Retirement Age,
or (iii) such Participant’s death.
Each
Participant or, in the case of the death of a Participant, the Beneficiary
of
such Participant shall be entitled to the entire value of all amounts credited
to such Participant’s Account, as of the Valuation Date coincident with the date
of distribution hereunder.
ARTICLE
V
PAYMENT
OF BENEFITS
5.1 Except
as otherwise provided herein, payment of a Participant’s benefit on account of
such Participant’s attainment of Mandatory Retirement Age or separation from
service shall be made either in a lump sum in cash or in cash payments in
substantially equal annual installments over a period certain not exceeding
five
(5) years. The method of payment under this Plan for a Prior Plan
Participant will be the same as the method of payment determined for such
Participant’s account under the Prior Plan. The method of payment
under this Plan for a New Participant must be irrevocably elected by the
New
Participant prior to the beginning of the Plan Year with respect to which
such
Participant first elects to make a deferral in accordance with
Section 5.3 hereof (the “New Participant Election Deadline”), in the manner
prescribed by the Committee. If a New Participant fails to elect a method
of
payment either by the New Participant Election Deadline or in the manner
prescribed by the Committee, payment hereunder shall be made in a lump sum
in
cash. Payment under this Plan to a Prior Plan Participant shall commence
on the
date payment of such Participant’s account under the Prior Plan is scheduled to
commence; provided however, that (i) all payments shall be made within the
timeframe required by Section 409A of the Code generally; and (ii) specifically,
with respect to payments that result from a separation from service and that
are
made to a Prior Plan Participant who is a “specified employee” (within the
meaning of Section 409A of the Code), such payments may not begin prior to
the
date that is six (6) months following the Prior Plan Participant’s separation
from service. A New Participant must irrevocably elect, by the New Participant
Election Deadline and in the manner prescribed by the Committee, the time
at
which payment shall commence, which time must be one of the following: (i)
as
soon as practicable following the New Participant’s separation from service with
the Company or, if earlier, the New Participant’s attainment of Mandatory
Retirement Age; (ii) at any time during the calendar year in which such event
occurs; or (iii) as soon as practicable following the end of the calendar
year
in which such event occurs; provided that (a) all payments must be made within
the timeframe required by Section 409A of the Code generally; and (b)
specifically, with respect to payments that result from a separation from
service and that are made to a New Participant who is a “specified employee”
(within the meaning of Section 409A of the Code), such payments may not begin
prior to the date that is six (6) months following the New Participant’s
separation from service. If a New Participant fails to elect a time
for payments to commence either by the New Participant Election Deadline
or in
the manner prescribed by the Committee, then payments will commence as soon
as
practicable during the calendar year after the end of the calendar year in
which
the New Participant becomes entitled to a benefit under Article IV, but in
no
event later than the date required by Section 409A of the Code. If
installment payments are made, such payments shall be charged pro rata to
the
individual investment options in which amounts credited to the Participant’s
Account are deemed to be invested, pursuant to the Participant’s designation
under Section 3.3 hereof. Furthermore, the Committee shall continue
to credit the unpaid balance of the Participant’s Account with the deemed income
and losses attributable thereto, in accordance with such Participant’s elections
pursuant to the provisions of Section 3.3 hereof, as well as with any other
credits to or charges against the unpaid balance of such Account, during
the
period for which installment payments are made. With respect to a
Participant who has elected installment payments under this Section 5.1,
provided that the Participant has received at least one installment payment
pursuant to the Participant’s election, all remaining amounts credited to a
Participant’s Account shall be distributed in a lump sum in cash at such time as
the value of such remaining amounts is $25,000 or less.
5.2 Payment
of a Participant’s benefit on account of death shall be made in a lump sum in
cash. Payment of a Participant’s death benefit shall be made to the
Beneficiary of such Participant as soon as practicable following the Committee’s
receipt of proper notice of such Participant’s death, but in no event later than
the date required by Section 409A of the Code.
5.3 Notwithstanding
any other provision herein to the contrary, unless a Participant elects,
prior
to the beginning of any Plan Year, in the manner and at the time prescribed
by
the Committee, to defer the receipt of all or a portion of the Excess Amount
for
such Plan Year credited to the Account of such Participant pursuant to Section
3.1 hereof (and, with respect to the 2005 Plan Year, such election has not
been
cancelled as permitted by Section 5.4 hereof), such amount shall be paid
to such
Participant in a cash lump sum as soon as practicable after such amount is
credited to such Participant’s Account, but in no event later than the date
required by Section 409A of the Code. Any election to defer the
receipt of all or a portion of the amount credited in accordance with Section
3.1 shall be permitted only if the portion deferred equals or exceeds
$1,000. Any such election in effect under the Prior Plan on December
31, 2004 shall automatically carry over and apply to the 2005 Plan Year under
this Plan. Any election under this Section to defer shall be
effective for all subsequent Plan Years, unless prior to the beginning of
a Plan
Year, the Participant affirmatively changes such election in the manner
prescribed by the Committee.
5.4 A
Participant with a valid election to defer the receipt of all or a portion
of
the amount to be credited in accordance with Section 3.1 hereof during the
2005
Plan Year may cancel such election prior to December 31, 2005 in the manner
and
at the time prescribed by the Committee; provided that the amounts subject
to
such cancellation are includible in the income of such Participant in the
2005
calendar year or, if later, in the taxable year in which the amounts are
earned
and vested. Any such cancellation shall be effective for all
subsequent Plan Years, unless prior to the beginning of a Plan Year, the
Participant affirmatively changes such election in the manner prescribed
by the
Committee.
5.5 The
payment of benefits under the Plan shall begin at the date specified in
accordance with the foregoing provisions of this Article V; provided that,
in
case of administrative necessity, the starting date of payment of benefits
may
be delayed up to thirty (30) days as long as such delay does not result in
the
Participant or Beneficiary receiving the distribution in a different taxable
year than if no such delay had occurred.
ARTICLE
VI
IN-SERVICE
WITHDRAWALS AND LOANS
6.1 In
the event of an unforeseeable emergency, a Participant may make a request
to the
Committee for a withdrawal from the Account of such Participant. For
purposes of this Section, the term “unforeseeable emergency” shall mean a severe
financial hardship to the Participant resulting from an illness or accident
of
the Participant, the Participant’s spouse, or a dependent (as defined in Section
152(a) of the Code) of the Participant, loss of the Participant’s property due
to casualty, or other similar extraordinary and unforeseeable circumstances
arising as a result of events beyond the control of the
Participant. Any determination of the existence of an unforeseeable
emergency and the amount to be withdrawn on account thereof shall be made
by the
Committee, in its sole and absolute discretion. However, the amount
to be withdrawn on account of an unforeseeable emergency may not exceed the
amounts necessary to satisfy such emergency plus amounts necessary to pay
taxes
reasonably anticipated as a result of the distribution, after taking into
account the extent to which such hardship is or may be relieved: (i)
through reimbursement or compensation by insurance or otherwise; or (ii)
by
liquidation of the Participant’s assets, to the extent that liquidation of such
assets would not itself cause severe financial hardship. In no event
shall the need to send a Participant’s child to college or the desire to
purchase a home be deemed to constitute an unforeseeable
emergency. No member of the Committee shall vote or decide upon any
matter relating to the determination of the existence of such member’s own
financial hardship. A request for a hardship withdrawal must be made
in the manner prescribed by the Committee, and must be expressed as a specific
dollar amount. All hardship withdrawals shall be paid in a lump sum in
cash.
6.2 Withdrawals
shall be charged pro rata to the individual investment options in which amounts
credited to a Participant’s Account are deemed to be invested, pursuant to such
Participant’s designation under Section 3.3 hereof.
6.3 In
no event may a Participant receive a loan of any portion of his benefit
hereunder.
ARTICLE
VII
ADMINISTRATION
OF THE PLAN
7.1 The
Committee may establish a Trust Fund for the purpose of retaining assets
set
aside by the Company pursuant to the Trust Agreement for payment of all or
a
portion of the benefits payable pursuant to the Plan. Any benefits
not paid from a Trust shall be paid from the Company’s general
assets. The Trust Fund, if such shall be established, shall be
subject to the claims of general creditors of the Company in the event the
Company is Insolvent, as such term is defined in the Trust
Agreement.
7.2 The
Plan shall be administered by the Committee. The members of the
Committee shall not receive compensation with respect to their services for
the
Committee. The members of the Committee shall serve without bond or
security for the performance of their duties hereunder unless applicable
law
makes the furnishing of such bond or security mandatory or unless required
by
the Company. Any member of the Committee may resign by delivering a
written resignation to the Company and to the other members of the
Committee.
7.3 The
Committee shall perform any act which the Plan authorizes expressed by a
vote at
a meeting or in a writing signed by a majority of its members without a
meeting. The Committee may, by a writing signed by a majority of its
members, appoint any member of the Committee to act on behalf of the
Committee. Any person who is a member of the Committee shall not vote
or decide upon any matter relating solely to such member or vote in any case
in
which the individual right or claim of such member to any benefit under the
Plan
is particularly involved. If, in any matter or case in which a person
is so disqualified to act, the remaining persons constituting the Committee
cannot resolve such matter or case, the Board will appoint a temporary
substitute to exercise all the powers of the disqualified person concerning
the
matter or case in which such person is disqualified.
7.4 The
Committee may designate in writing other persons to carry out its
responsibilities under the Plan, and may remove any person designated to
carry
out its responsibilities under the Plan by notice in writing to that
person. The Committee may employ persons to render advice with regard
to any of its responsibilities. All usual and reasonable expenses of
the Committee shall be paid by the Company. The Company shall
indemnify and hold harmless each member of the Committee from and against
any
and all claims and expenses (including, without limitation, attorneys’ fees and
related costs), in connection with the performance by such member of duties
in
that capacity, other than any of the foregoing arising in connection with
the
willful neglect or willful misconduct of the person so acting.
7.5 The
Committee shall establish rules and procedures, not contrary to the provisions
of the Plan, for the administration of the Plan and the transaction of its
business. The Committee shall determine the eligibility of any
individual to participate in the Plan, shall interpret the Plan in its sole
and
absolute discretion, and shall determine all questions arising in the
administration, interpretation and application of the Plan. All
determinations of the Committee shall be conclusive and binding on all
employees, Participants and Beneficiaries, subject to the provisions of this
Plan and applicable law.
7.6 Any
action to be taken hereunder by the Company shall be taken by resolution
adopted
by the Board or by a committee thereof; provided, however, that by resolution,
the Board or a committee thereof may delegate to any officer of the Company
the
authority to take any such actions hereunder, other than the power to amend
or
terminate the Plan.
ARTICLE
VIII
LIMITATION
OF RIGHTS
The
establishment of this Plan shall
not be construed as giving to any Participant, employee of the Company or
any
person whomsoever, any legal, equitable or other rights against the Company,
or
its officers, directors, agents or shareholders, or as giving to any Participant
or Beneficiary any equity or other interest in the assets or business of
the
Company or shares of Company stock or as giving any employee the right to
be
retained in the employment of the Company. All employees of the
Company and Participants shall be subject to discharge to the same extent
they
would have been if this Plan had never been adopted. The rights of a
Participant hereunder shall be solely those of an unsecured general creditor
of
the Company.
ARTICLE
IX
LIMITATION
OF ASSIGNMENT AND PAYMENTS TO
LEGALLY
INCOMPETENT DISTRIBUTEE
9.1 No
benefits which shall be payable under the Plan to any person shall be subject
in
any manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance or charge, and any attempt to anticipate, alienate, sell, transfer,
assign, pledge, encumber, charge or otherwise dispose of the same shall be
void. No benefit shall in any manner be subject to the debts,
contracts, liabilities, engagements or torts of any person, nor shall it
be
subject to attachment or legal process for or against any person, except
to the
extent required by law.
9.2 Whenever
any benefit which shall be payable under the Plan is to be paid to or for
the
benefit of any person who is then a minor or determined by the Committee,
on the
basis of qualified medical advice, to be incompetent, the Committee need
not
require the appointment of a guardian or custodian, but shall be authorized
to
cause the same to be paid over to the person having custody of the minor
or
incompetent, or to cause the same to be paid to the minor or incompetent
without
the intervention of a guardian or custodian, or to cause the same to be paid
to
a legal guardian or custodian of the minor or incompetent, if one has been
appointed, or to cause the same to be used for the benefit of the minor or
incompetent.
ARTICLE
X
AMENDMENT
TO OR TERMINATION OF THE PLAN
The
Company reserves the right at any
time to amend or terminate the Plan in whole or in part by resolution of
the
Board. No amendment shall have the effect of retroactively changing
or depriving Participants or Beneficiaries of rights already accrued under
the
Plan. Upon termination of the Plan, the Board may, in its sole and
absolute discretion, and notwithstanding any other provision hereunder to
the
contrary, direct that all benefits hereunder will be paid as soon as
administratively practicable thereafter.
ARTICLE
XI
STATUS
OF PARTICIPANT AS UNSECURED CREDITOR
All
benefits under the Plan shall be
the unsecured obligations of the Company and, except for those assets which
may
be placed in a Trust Fund established in connection with this Plan, no assets
will be placed in trust or otherwise segregated from the general assets of
the
Company for the payment of obligations hereunder. To the extent that
any person acquires a right to receive payments hereunder, such right shall
be
no greater than the right of any unsecured general creditor of the
Company.
ARTICLE
XII
GENERAL
AND MISCELLANEOUS
12.1 Severability. In
the event that any provision of this Plan shall be declared illegal or invalid
for any reason, said illegality or invalidity shall not affect the remaining
provisions of this Plan but shall be fully severable, and this Plan shall
be
construed and enforced as if said illegal or invalid provision had never
been
inserted herein.
12.2 Construction. The
Section headings and numbers are included only for convenience of reference
and
are not to be taken as limiting or extending the meaning of any of the terms
and
provisions of this Plan. Whenever appropriate, words used in the
singular shall include the plural or the plural may be read as the
singular.
12.3 Governing
Law. The validity and effect of this Plan and the rights and
obligations of all persons affected hereby shall be construed and determined
in
accordance with the laws of the State of Texas unless superseded by federal
law.
12.4 No
Requirement to Fund. The Company is not required to set aside any
assets for payment of the benefits provided under this Plan; however, it
may do
so as provided in the Trust Agreement, if any. A Participant shall
have no security interest in any such amounts. It is the Company’s
intention that this Plan be construed as a plan which is unfunded and maintained
primarily for the purpose of providing deferred compensation for a select
group
of highly compensated employees.
12.5 Taxes. All
amounts payable hereunder shall be reduced by any and all federal, state
and
local taxes imposed upon the Participant or a Beneficiary which are required
to
be paid or withheld by the Company.
12.6 USERRA.
Notwithstanding any provision of this Plan to the contrary, contributions,
benefits and service credit with respect to qualified military service will
be
provided to the extent necessary to comply with the Uniformed Services
Employment and Reemployment Rights Act of 1994 (USERRA).
IN
WITNESS WHEREOF, Southwest Airlines
Co., the Company, has caused these presents to be duly executed in its name
and
behalf by its proper officers thereunto duly authorized effective as of
________________.
SOUTHWEST AIRLINES CO.
By:_____________________________________
STATE
OF
TEXAS §
§
COUNTY
OF
DALLAS §
BEFORE
ME, the undersigned, a Notary
Public in and for said County and State, on this ________ day of
_______________, _________, personally appeared ____________, to me known
to be
the identical person who subscribed the name of SOUTHWEST AIRLINES CO., as
its
__________________________ to the foregoing instrument and acknowledged to
me
that he executed the same as his free and voluntary act and deed and as the
free
and voluntary act and deed of such organization for the uses and purposes
therein set forth.
GIVEN
UNDER MY HAND AND SEAL OF OFFICE,
the day and year last above written.
_________________________________
Notary
Public in and for the State of Texas
My
Commission Expires:
________________