Assurant 2005 Annual Report Download - page 21

employment for good reason, then (1) the participant will become 100% vested in his or her SERP benefit; (2) the participant will be credited
with 36 additional months of service for purposes of computing his or her target benefit; and (3) the actuarial reduction for commencement of
the SERP benefit prior to age 60 will be calculated as though the participant was 36 months older than his or her actual age.
The SERP provides that if the payments to a participant or beneficiary will be made over a period of more than one year and if at the time
payments commence the Company is not subject to pending proceedings as a debtor under the U.S. Bankruptcy Code, then Fortis Insurance
N.V. will guarantee the payment of SERP benefits to such participant or beneficiary. The SERP further provides that if Fortis Insurance N.V.
ceases to be the beneficial owner of the Company, then such guarantee will be limited to the actuarially equivalent value of the participant’s
SERP benefit immediately following such cessation of beneficial ownership.
Effective January 1, 1994, our Board of Directors adopted the Executive Pension and 401(k) Plan, which is a non-qualified, unfunded
deferred compensation plan for certain key executives of the Company and its subsidiaries. The pension portion of this plan (referred to herein
as the Executive Pension Plan) is intended to restore to participants amounts that they are restricted from receiving under the Assurant Pension
Plan, described below, due to section 401(a)(17) of the U.S. tax code, which generally limits the compensation that may be taken into account
under a tax-qualified pension plan to no more than $205,000 annually in 2004 (subject to cost of living adjustments).
A participant becomes vested in the benefits under the Executive Pension Plan after three years of vesting service, if he or she has elected to
participate in the pension equity portion of the Assurant Pension Plan, and after five years of vesting service if he or she has elected to
participate in the pension formula that predated the pension equity formula under the Assurant Pension Plan. The benefits under the Executive
Pension Plan are payable in a single lump sum.
Assurant Pension Plan
Since 1983, we have maintained the Assurant Pension Plan, which is a tax-qualified, defined benefit pension plan subject to regulation
under ERISA. Eligible employees generally may participate in the Plan after completing one year of service with the Company. The Assurant
Pension Plan provides for multiple benefit formulas for different groups of participants. Benefits under the plan are payable at termination of
employment. A participant’s benefit may be paid in a lump sum or in various annuity forms.
Employment and Change in Control Agreements
We have entered into change in control severance agreements with Mr. Clayton, our other named executive officers and other officers and
key employees. The severance agreements generally provide that if a change in control (as defined) occurs with respect to the business segment
for which an employee works, then a two-year trigger period begins. If the employee’s employment is terminated by us without cause or if the
employee resigns for good reason (each as defined) during such two-year period, the employee is entitled to certain cash severance payments
and continuation of medical and other welfare benefits for a period of 18 months following the termination of employment at the rate charged
active employees.
The amount of cash severance benefits payable to an employee is equal to a multiple (ranging from one to three depending on the
agreement, and equal to three for Mr. Clayton and our other named executive officers) times the sum of the employee’s annual base salary and
target annual bonus. The cash severance is payable within 30 days of the date of the employee’s termination, subject to the “key employee”
limitations under the American Jobs Creation Act of 2004. In addition, if a change in control has occurred and the employee’s employment has
been terminated by us without cause or if the employee has resigned for good reason within one year prior to the change in control, then the
employee is entitled to the cash severance benefits described above, to be paid in a lump sum in cash within 30 days after the change in control
has occurred, and continuation of medical and other welfare benefits for a period of 18 months at the rate charged active employees, except that
we shall reimburse the employee for the cost of obtaining such welfare benefits
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Executive Pension and 401(k) Plan