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equal to two percent of the participant’s average annual earnings, which is comprised of the
participant’s base salary (including any base salary that the participant waived) and target annual cash
incentives, including annual cash incentives pursuant to the SVA Cash Incentive Plan, during the final five
years of service with our company, multiplied by the participant’s years of service with our company (up
to a maximum of 30 years), less the participant’s Social Security retirement benefit. For Mr. Gliebe, the
monthly pension benefit payable under the Supplemental Plan is reduced by the amount payable to Mr.
Gliebe under his previous employer’s retirement plan. For Mr. Schlemmer, the monthly pension benefit
payable under the Supplemental Plan is reduced by the amount payable to Mr. Schlemmer under the
Management Supplemental Retirement Plan (discussed below).
To be eligible to receive benefits under the Supplemental Plan upon termination, a participant
must have a minimum of 10 years of continuous service and to have reached the age of at least 58 or to
have reached the age of 65. The Committee has discretion to grant additional years of service and/or
revise the retirement age requirement for a participant to qualify for benefits. As part of the
compensation package we offered Mr. Hinrichs when he joined our company in 2010, we reduced the
years of continuous service required for him to be eligible to receive a retirement benefit under the
Supplemental Plan to 7.5 years.
Management Supplemental Retirement Plan
Prior to April 10, 2012, Mr. Schlemmer did not participate in the Target Supplemental
Retirement Plan. Instead, he participated in a plan that was designed to provide a supplemental
retirement income benefit for certain employees who were disadvantaged by the freezing of the
Marathon Electric Salaried Employees’ Pension Plan at the end of 2008, which we refer to as the
“Management Plan.” The Management Plan supplemented retirement income which was lost as a
result of the freezing of the Marathon Electric Salaried Employees’ Pension Plan. Under that plan,
eligible participants are entitled to receive a target supplemental retirement benefit that is equal to a
specified percent (0.6743% in the case of Mr. Schlemmer) of the participant’s final average annual
earnings, which is the average of the participant’s annual base salary during the final five years of
service with our company, multiplied by the participant’s years of service with our company on and after
January 1, 2009 (up to a maximum of 30 years).
To be eligible to receive benefits under the Management Plan upon termination, a participant
must have (i) a minimum of 7 years of vesting service, (ii) a minimum of 15 years of vesting service and
to have reached the age of at least 58, (iii) reached the age of 65, or (iv) become disabled. Certain
participants, including Mr. Schlemmer, receive credit for years of vesting service completed with our
company and with their previous employer, General Electric Company. The Committee has discretion to
grant additional years of vesting service and/or revise the retirement age requirement for a participant
to qualify for benefits, which discretion has never been exercised.
On April 10, 2012, the Committee approved the participation by Mr. Schlemmer in the Target
Supplemental Retirement Plan. To reflect his earlier participation in the Management Plan, the monthly
pension benefit payable to Mr. Schlemmer under the Target Supplemental Retirement Plan will be
reduced by the amount payable to him under the Management Plan. This reduction is reflected in the
terms of the Participation Agreement that Mr. Schlemmer executed in connection with his participation
in the Target Supplemental Retirement Plan.