Supercuts 2011 Annual Report Download - page 134

Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
14. BENEFIT PLANS (Continued)
Deferred Compensation Contracts:
The Company has agreed to pay the Chief Executive Officer, commencing upon his retirement, an amount equal to 60.0 percent of his
salary, adjusted for inflation, for the remainder of his life. Additionally, the Company has a survivor benefit plan payable upon his death at a rate
of one half of his deferred compensation benefit, adjusted for inflation, for the remaining life of his spouse. In addition, the Company has other
unfunded deferred compensation contracts covering key executives within the Company. The key executives' benefits are based on years of
service and the employee's compensation prior to departure. The Company utilizes a June 30 measurement date for these deferred compensation
contracts, a discount rate based on the Aa Bond index rate (5.5 and 5.4 percent at June 30, 2011 and 2010, respectively) and projected salary
increases of 4.0 percent at June 30, 2011 and 2010 to estimate the obligations associated with these deferred compensation contracts.
Compensation associated with these agreements is charged to expense as services are provided. Associated costs included in general and
administrative expenses on the Consolidated Statement of Operations totaled $4.3, $5.2, and $3.7 million for fiscal years 2011, 2010, and 2009,
respectively. The accrued liability and projected benefit obligation of these deferred compensation contracts totaled $33.6 and $30.2 million at
June 30, 2011 and 2010, respectively, in the Consolidated Balance Sheet. As of June 30, 2011 and 2010, $28.6 and $29.6 million is included in
other noncurrent liabilities, respectively. As of June 30, 2011 and 2010, $5.0 and $0.6 million of the balance is included in accrued liabilities,
respectively. The tax-affected accumulated other comprehensive loss for the deferred compensation contracts, consisting of primarily
unrecognized actuarial loss, was $1.6 and $1.9 million at June 30, 2011 and 2010, respectively. The amount included in accumulated other
comprehensive loss expected to be recognized as a component of net periodic deferred compensation expense in fiscal year 2012 is
approximately $0.2 million. The Company intends to fund its future obligations under these arrangements through company-owned life
insurance policies on the participants. Cash values of these policies totaled $22.3 and $20.2 million at June 30, 2011 and 2010, respectively, and
are included in other assets in the Consolidated Balance Sheet.
The Company has agreed to pay the former Vice Chairman an annual amount of $0.6 million, adjusted for inflation to $0.9 million in fiscal
years 2011 and 2010, for the remainder of his life. The former Vice Chairman has agreed that during the period in which payments are made, as
provided in the agreement, he will not engage in any business competitive with the business conducted by the Company. Additionally, the
Company has a survivor benefit plan for the former Vice Chairman's spouse, payable upon his death, at a rate of one half of his deferred
compensation benefit, adjusted for inflation, for the remaining life of his spouse. Estimated associated costs included in general and
administrative expenses on the Consolidated Statement of Operations totaled $0.7, $0.6, and $0.8 million for each of fiscal years 2011, 2010, and
2009, respectively. Related obligations totaled $5.9 and $6.2 million at June 30, 2011 and 2010, respectively, and are included in other
noncurrent liabilities in the Consolidated Balance Sheet. The Company intends to fund all future obligations under this agreement through
company-owned life insurance policies on the former Vice Chairman. Cash values of these policies totaled $4.2 and $3.9 million at June 30,
2011 and 2010, respectively, and are included in other assets in the Consolidated Balance Sheet. The policy death benefits exceed the obligations
under this agreement.
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