Time Warner Cable 2015 Annual Report Download - page 56

Pension Plans
Pension Benefits
Eligible employees of the Company participate in the Time Warner Cable Pension Plan, a tax qualified
defined benefit pension plan, and the Time Warner Cable Excess Benefit Pension Plan (the “Excess Benefit
Plan”), a nonqualified defined benefit pension plan (collectively, the “TWC Pension Plans”), which are
sponsored by the Company. Messrs. Marcus, Minson, Lawrence-Apfelbaum and Stern participate in the TWC
Pension Plans. Mr. Jain becomes eligible to participate once he attains one year of service with the Company.
Federal tax law limits both the amount of compensation that is eligible for the calculation of benefits and the
amount of benefits that may be paid to participants under a tax-qualified plan, such as the Time Warner Cable
Pension Plan. However, as permitted under Federal tax law, the Company has adopted the Excess Benefit Plan
that is designed to provide for supplemental payments by the Company of an amount that eligible employees
would have received under the Time Warner Cable Pension Plan if eligible compensation were subject to a
higher limit and there were no payment restrictions. The amount of the payment under the Excess Benefit Plan is
calculated based on the differences between (a) the annual benefit that would have been payable under the Time
Warner Cable Pension Plan if the annual eligible compensation limit imposed by the tax laws was $350,000 (the
maximum compensation limit imposed under the Excess Benefit Plan) and (b) the actual benefit payable under
the Time Warner Cable Pension Plan.
Benefit payments under the TWC Pension Plans are calculated using the highest consecutive five-year
average annual compensation (subject to federal law limits and the $350,000 limit referred to above), which is
referred to as “average compensation.” Compensation covered by the TWC Pension Plans takes into account
salary, bonus, some elective deferrals and other compensation paid, but excludes the payment of deferred or
long-term incentive compensation and severance payments. The annual pension payment under the terms of the
TWC Pension Plans, if the employee is vested, and if paid as a single life annuity, commencing at age 65, is an
amount equal to the sum of:
• 1.25% of the portion of average compensation that does not exceed the average of the Social Security
taxable wage base ending in the year the employee reaches the Social Security retirement age, referred
to as “covered compensation,” multiplied by the number of years of benefit service up to 35 years, plus
• 1.67% of the portion of average compensation that exceeds covered compensation, multiplied by the
number of years of benefit service up to 35 years, plus
• 0.5% of average compensation multiplied by the employee’s number of years of benefit service in
excess of 35 years, plus
• a supplemental benefit in the amount of $60 multiplied by the employee’s number of years of benefit
service up to 30 years, with a maximum supplemental benefit of $1,800 per year.
Special rules apply to various participants who were previously participants in plans that have been merged
into the TWC Pension Plans and to various participants in the TWC Pension Plans prior to January 1, 1994.
Reduced benefits are available in the case of retirement before age 65 and in other optional forms of benefits
payouts, as described below. Eligible employees become vested in benefits under the TWC Pension Plans after
completion of five years of service, including service with Time Warner and its affiliates prior to the Separation.
For employees hired on or after January 1, 2011, benefit service does not start to accrue prior to the date the
employee satisfies the TWC Pension Plans’ eligibility requirements, including one year of eligible service, and
commences participation in the TWC Pension Plans.
In addition to the benefits to which they are entitled under the TWC Pension Plans, as a result of prior
service at Time Warner or one of its affiliates prior to the Company’s Separation from Time Warner, each of
Messrs. Marcus, Minson and Stern is entitled to vested benefits under the Time Warner Pension Plan (the “TW
Pension Plan”) based on a formula similar to that under the TWC Pension Plans and benefit service of 7.7 years,
1.9 years and 2.9 years, respectively. Time Warner has also adopted an excess benefit pension plan, which, like
the TWC Excess Benefit Plan, provides for payments by Time Warner of certain amounts that eligible employees
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