Exhibit 10.31

 

WELLCHOICE, INC.

 

DIRECTORS DEFERRED CASH COMPENSATION PLAN

 

Effective as of January 1, 2004

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WELLCHOICE, INC.

DIRECTORS DEFERRED CASH COMPENSATION PLAN

 

TABLE OF CONTENTS

 

1.

  

PURPOSE OF THE PLAN

   1

2.

  

DEFINITIONS

   1

3.

  

PARTICIPATION AND DEFERRAL ELECTIONS

   2

4.

  

INVESTMENT PERFORMANCE ELECTIONS

   2

5.

  

ACCOUNTS

   3

6.

  

DISTRIBUTION OF BENEFITS

   3

7.

  

DEATH OF A PARTICIPANT

   4

8.

  

UNFORESEEABLE EMERGENCY

   4

9.

  

ADMINISTRATION

   5

10.

  

GENERAL PROVISIONS

   6

11.

  

SOURCE OF BENEFITS

   6

12.

  

EFFECTIVE DATE

   7

13.

  

AMENDMENT OR TERMINATION

   7

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WELLCHOICE, INC.

DIRECTORS DEFERRED CASH COMPENSATION PLAN

 

1. Purpose of the Plan

 

The purpose of this WellChoice, Inc. Directors Deferred Cash Compensation Plan
(the “Plan”) is to enable WellChoice, Inc. (“WellChoice”) to compete more
effectively with other corporations in attracting individuals to serve as
non-employee members of the Board of Directors (the “Board”). To that end, the
Plan provides members of the Board with an opportunity to defer certain fees
received from WellChoice in connection with their service as members of the
Board.

 

2. Definitions

 

  2.1 “Administrator” means the Compensation Committee of the Board of Directors
or agent of the Administrator specified in, or appointed pursuant to, Section
9.2.

 

  2.2 “Board” means the Board of Directors of WellChoice, Inc.

 

  2.3 “Deferral Account” means the bookkeeping account maintained for a
Participant to record his or her Deferred Amounts, together with earnings
thereon credited, or debited, pursuant to Section 4.3.

 

  2.4 “Deferral Election” means the Participant’s election to defer all or a
portion of his or her retainer and/or meeting fees.

 

  2.5 “Deferred Amounts” means the amounts credited to a Participant’s Deferral
Account pursuant to Section 3.2.

 

  2.6 “Director” means an individual who, at the relevant time, is serving as a
non-employee member of the Board of Directors of WellChoice and is not an active
participant in the Empire Blue Cross and Blue Shield Executive Savings Plan.

 

  2.7 “Investment Election” means a Participant’s election under Article 4 of
the investment fund or funds used to measure the hypothetical investment
performance of the Participant’s Deferral Account.

 

  2.8 “Participant” means a Director who elected to participate in the Plan and
shall continue until his or her participation terminates in accordance with
Section 3.1.

 

  2.9 “Plan” means this WellChoice, Inc. Directors Deferred Cash Compensation
Plan, as amended from time to time.

 

  2.10 “Plan Year” means the 12-consecutive month period beginning on January 1
and ending on December 31.

 

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  2.11 “Valuation Date” means the last day of each calendar quarter and such
additional dates as the Administrator may establish.

 

3. Participation and Deferral Elections

 

  3.1 Participation. To commence participation in the Plan, a Director must file
with the Administrator a Deferral Election with respect to a Plan Year in
accordance with Sections 3.2 and 3.3. Participation in the Plan shall terminate
when all amounts credited to a Participant’s account have been distributed.

 

  3.2 Deferral Election. A Deferral Election for a Plan Year shall specify the
respective deferral percentages applicable to the Participant’s Retainer Fees
and/or Meeting Fees otherwise payable during such Plan Year. Any amount deferred
pursuant to a Deferral Election shall be credited to the Participant’s Deferral
Account within 30 days after the date on which such amount would otherwise have
been paid.

 

  3.3 Timely Filing of Election. A Deferral Election shall be filed with the
Administrator, in such form as the Administrator shall designate, prior to the
commencement of the relevant Plan Year. In the case of a Director who becomes an
Eligible Director after January 1 and before December 1 of a Plan Year, such
Director may make an initial Deferral Election no later than 30 days after the
date on which he or she becomes a Director. Such Deferral Election shall be
effective as soon as administratively practicable after it is filed with the
Administrator. A Deferral Election shall be applicable only to fees payable
during the Plan Year to which it relates, exclusive of any fees payable before
the Director commences participating in the Plan.

 

4. Investment Performance Elections

 

  4.1 Additions to Account. At the time a Participant makes a Deferral Election
with respect to a Plan Year, he or she shall file an Investment Election. In the
Investment Election, the Participant shall designate one or more investment
fund(s) from the investment funds available for selection under the Plan that
shall be used to measure the investment performance of Deferred Amounts added to
the Participant’s Deferral Account. An Investment Election shall remain in
effect until a subsequent Investment Election is made pursuant to Section 4.2.

 

  4.2 Existing Account Balances. A Participant may, on or before July 1 of any
Plan Year, change the proportions of his or her existing Deferral Account
balance that are deemed invested in the investment fund or funds referred to in
Section 4. 1. Such change shall be implemented as of August 1 of such Plan Year
or as soon as administratively practicable thereafter.

 

  4.3 Crediting of Investment Return. As of any Valuation Date, each
Participant’s Deferral Account shall, under such procedures as the Administrator
shall establish, be credited with any income, and debited with any loss, that
would have been realized if the amounts credited to his or her Deferral Account
had been invested since the preceding Valuation Date in accordance with his or
her Investment Election.

 

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References in the Plan to Investment Elections are for the sole purpose of
attributing hypothetical investment performance to each Participant’s Deferral
Account. Nothing herein shall require WellChoice to invest, earmark, or set
aside its general assets in any specific manner.

 

5. Accounts

 

  5.1 Maintenance of Account. The Administrator shall maintain or cause to be
maintained for each Participant a Deferral Account. Each Participant shall be
furnished with quarterly statements setting forth the balances in his or her
Deferral Account.

 

  5.2 Vesting. The amounts in a Participant’s Deferral Account shall be fully
vested at all times.

 

6. Distribution of Benefits

 

  6.1 Benefit Payment Election.

 

  (a) Prior to the commencement of his or her participation in the Plan, each
Participant shall file a benefit payment election with the Administrator on such
form as the Administrator shall prescribe specifying: (i) whether the
Participant’s benefit is to be paid in a lump sum, substantially equal annual
installments, or both; (ii) the year in which such lump-sum payment is to be
made or such installments are to commence; and (iii) if installments are
elected, the number of such installments. Lump-sum payments may not be made
later than, and installment payments may not extend beyond, the 10th year
following the year in which the Participant ceases to serve as a Director.

 

  (b) In the event a Participant fails to make an initial benefit payment
election pursuant to subsection (a), he or she shall be deemed to have made an
initial election to receive his or her benefit in a lump sum within 60 days
following the effective date of his or her cessation of service as a Director.

 

  6.2 Change in Election. A Participant’s benefit payment election may be
changed from time to time, provided, however, that no such change shall be
effective if the Participant’s cessation of service as a Director occurs less
than 12 months after the date such change is made. In such event the
Participant’s benefit shall be paid in accordance with his or her most recent
election or change in election (other than a change in election made less than
12 months before his or her separation from service). For purposes of this
Section 6.2, a revocation of a prior change of election shall itself be treated
as a new change of election.

 

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  6.3 Distribution of Benefits. Except as otherwise in accordance with Articles
7 and 8, A Participant’s Account shall be distributed in accordance with his or
her benefit payment election made pursuant to Section 6.1 (after giving effect
to any modifications to such election pursuant to Section 6.2). The payment of
an initial installment or the entire lump sum amount shall, in accordance with
the Participant’s election, be made either: (i) within 60 days after the date
the Participant ceases to Serve as a Director; or (ii) during the first 60 days
of a calendar year commencing after the Participant ceases to serve as a
Director.

 

7. Death of a Participant

 

  7.1 A Participant may designate in writing, on such form as the Administrator
may prescribe, a beneficiary to receive any benefits with respect to such
Participant in the event of his or her death. Such beneficiary designation may
be changed at any time.

 

  7.2 Subject to Section 7.3, in the event of a Participant’s death prior to the
distribution of his or her entire Deferral Account balance, the remaining
balance in the Participant’s Deferral Account shall be distributed in accordance
with his or her benefit payment election made pursuant to Section 6.1 (after
giving effect to any modifications to such election pursuant to Section 6.2).
Such distribution shall be made to the Participant’s designated beneficiary or,
in the absence of any such designated beneficiary, to the Participant’s estate.

 

  7.3 A Participant may elect to have any amount remaining in his or her
Deferral Account upon his or her death paid to his or her designated beneficiary
in a lump sum within 60 days after the Administrator has received notification
of his or her death, rather than in accordance with the Participant’s benefit
payment election under Section 6.1 (after giving effect to any modifications to
such election pursuant to Section 6.2). Such a lump-sum death benefit election
may be made or revoked at any time; provided, however, that no such election or
revocation shall be effective if made less than 12 months before the date of the
Participant’s death.

 

8. Unforeseeable Emergency

 

  8.1 Emergency Acceleration. In the event that a Participant experiences an
Unforeseeable Emergency, such Participant may request an acceleration of the
distribution of all or a portion of his or her Deferral Account. Any such
request shall be subject to the approval of the Administrator. Approval shall
only be granted to the extent such distribution is reasonably needed to satisfy
the need created by the Unforeseeable Emergency and shall not be granted to the
extent that such need may reasonably be relieved: (i) through reimbursement or
compensation by insurance or otherwise; or (ii) by liquidation of the
Participant’s assets (to the extent the liquidation of such assets would not
itself cause severe financial hardship). The amount paid in an accelerated
distribution shall approximate the amount reasonably necessary to alleviate the
need created by the Unforeseeable Emergency.

 

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  8.2 Unforeseeable Emergency. An “Unforeseeable Emergency” means severe
financial hardship to the Participant resulting from: (i) a sudden and
unexpected illness or accident of the Participant or his or her dependent; (ii)
loss of the Participant’s property due to casualty; or (iii) other similar
extraordinary and unforeseeable circumstances arising as a result of events
beyond the Participant’s control. Examples of circumstances not qualifying, as
an Unforeseeable Emergency include the need to send a Participant’s child to
college and the desire to purchase a home.

 

  8.3 Suspension of Deferrals. Notwithstanding anything to the contrary in this
Article 8, in the event the Administrator approves a Participant’s request for
an acceleration of the distribution of all or a portion of his or her Deferral
Account pursuant to Section 8.1 on account of an Unforeseeable Emergency, the
Participant’s Deferral Election shall be suspended (and the Participant shall be
ineligible to make a new Deferral Election) with respect to any fees otherwise
payable during the period beginning on the date of such withdrawal or effective
date of such approval and ending on the last day of the next succeeding Plan
Year.

 

9. Administration

 

  9.1 Administrator. The Plan shall be administered by the Compensation
Committee of the Board, except that no member of the Compensation Committee
shall have the authority to take any action with respect to his or her own
benefits under the Plan. The Administrator shall have full power and
discretionary authority to administer, interpret and construe this Plan, to
determine and review claims for benefits under this Plan, to establish rules and
regulations, to delegate responsibilities to others to assist it in
administering this Plan, to establish investment guidelines, and to perform all
other acts it believes reasonable and proper in connection with the
administration of this Plan. Until such time as the Administrator establishes
other policies and procedures and/or appoints another agent or agents pursuant
to Section 9.2, and except for Article 8, the policies and procedures
established with respect to investment management, recordkeeping and day-to-day
administration of the Plan will be handled in accordance with the policies and
procedures established for the Empire Blue Cross and Blue Shield Executive
Savings Plan; and, agents appointed to provide services for the Empire Blue
Cross and Blue Shield Executive Savings Plan are appointed to provide such
services for this Plan.

 

  9.2 Agents. The Administrator may appoint an individual to be the
Administrator’s agent with respect to the day-to-day administration of the Plan.
In addition, the Administrator may, from time to time, employ other agents and
delegate to them such administrative duties as it sees fit, and may from time to
time consult with counsel who may be counsel to the Employer.

 

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  9.3 Binding Effect of Decisions. The decision or action of the Administrator
with respect to any question arising out of or in connection with the
administration, interpretation and application of the Plan and the rules and
regulations promulgated hereunder shall be final and binding upon all persons
having any interest in the Plan.

 

10. General Provisions

 

  10.1 No Contract of Service. The establishment of the Plan shall not be
construed as conferring any legal rights upon any Participant to continue to
serve as a member of the Board.

 

  10.2 Withholding. As a condition to a Participant’s entitlement to benefits
hereunder, WellChoice shall have the right to deduct from any amounts otherwise
payable to a Participant, whether pursuant to the Plan or otherwise, or
otherwise to collect from the Participant, any required withholding taxes with
respect to amounts deferred or benefits payable under the Plan.

 

  10.3 Non-Assignablility of Benefits. Subject to any applicable law, no benefit
under the Plan shall be subject in any manner to, nor shall WellChoice be
obligated to recognize, any purported anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, or charge, and any attempt to do so shall be
void. No such benefit shall in any manner be liable for or subject to
garnishment, attachment, execution, or a levy, or liable for or subject to the
debts, contracts, liabilities, engagements, or torts of the Participant.

 

  10.4 Successor Company. The Plan shall be binding upon any successor to
WellChoice by merger, consolidation, or sale or transfer of substantially all of
its assets.

 

  10.5 Validity In case any provision of this Plan shall be held illegal or
invalid for any reason, said illegality or invalidity shall not affect the
remaining parts hereof, but this Plan shall be construed and enforced as if such
illegal and invalid provision had never been inserted herein.

 

  10.6 Governing Law. The laws of the State of New York shall govern the
construction of this Plan and the rights and the liabilities hereunder of the
parties hereto.

 

11. Source of Benefits

 

The Plan is an unfunded plan maintained by WellChoice for the purpose of
providing deferred compensation for members of the Board. Benefits under the
Plan shall be payable from the general assets of WellChoice. The Plan shall not
be construed as conferring on a Participant any right, title interest, or claim
in or to any specific asset, reserve, account, or property of any kind possessed
by WellChoice. To the extent that a Participant or any other person acquires a
right to receive payments from WellChoice, such right shall be no greater than
the right of an unsecured general creditor.

 

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12. Effective Date

 

This Plan shall be effective January 1, 2004.

 

13. Amendment or Termination

 

The Board reserves the right to amend or terminate this Plan at any time. No
amendment or termination of the Plan shall adversely affect the right of any
Participant to receive his or her accrued benefits as determined as of the date
of amendment or termination.

 

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