Exhibit 10.32

SOUTHWEST AIRLINES CO.

EXCESS BENEFIT PLAN

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SOUTHWEST AIRLINES CO.

EXCESS BENEFIT PLAN

Table of Contents

 

          Page

ARTICLE I

   DEFINITIONS    1

ARTICLE II

   ELIGIBILITY    2

ARTICLE III

   CREDITS TO ACCOUNT    3

ARTICLE IV

   BENEFITS    4

ARTICLE V

   PAYMENT OF BENEFITS    4

ARTICLE VI

   IN-SERVICE WITHDRAWALS AND LOANS    5

ARTILCLE VII

   ADMINISTRATION OF THE PLAN    7

ARTICLE VIII

   LIMITATION OF RIGHTS    8

ARTICLE IX

   LIMITATION OF ASSIGNMENT AND PAYMENTS TO LEGALLY INCOMPETENT DISTRIBUTEE    8

ARTICLE X

   AMENDMENT TO OR TERMINATION OF THE PLAN    9

ARTICLE XI

   STATUS OF PARTICIPANT AS UNSECURED CREDITOR    9

ARTICLE XII

   GENERAL AND MISCELLANEOUS    9

 

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SOUTHWEST AIRLINES CO.

EXCESS BENEFIT PLAN

PREAMBLE

WHEREAS, Southwest Airlines Co., a corporation formed under the laws of the
State of Texas, desires to establish an excess benefit plan for the exclusive
benefit of its employees to restore retirement benefits decreased due to
limitations imposed by Section 415 of the Internal Revenue Code of 1986; and

WHEREAS, Southwest Airlines Co. intends that any Participant or Beneficiary
under the Plan shall have the status of an unsecured general creditor with
respect to the Plan and any Trust Fund;

NOW, THEREFORE, Southwest Airlines Co. hereby establishes the Southwest Airlines
Co. Excess Benefit Plan, effective January 1, 1999.

ARTICLE I

DEFINITIONS

1.1 “Account” shall mean the record maintained by the Committee showing the
monetary value of the individual interest in the Plan of each Participant or
Beneficiary. The term “Account” shall refer only to a bookkeeping entry and
shall not be construed to require the segregation of assets on behalf of any
Participant or Beneficiary.

1.2 “Beneficiary” shall mean, with respect to each Participant, the beneficiary
of such Participant under the Southwest Airlines Co. ProfitSharing Plan.

1.3 “Board” shall mean the Board of Directors of Southwest Airlines Co.

1.4 “Code” shall mean the Internal Revenue Code of 1986, as it may be amended
from time to time, and the rules and regulations promulgated thereunder.

1.5 “Committee” shall mean the committee designated by the Board to administer
the Plan.

1.6 “Company” shall mean Southwest Airlines Co., or its successor or successors.

1.7 “Effective Date” shall mean January 1, 1999.

1.8 “Excess Amount” shall mean, for a particular Plan Year, the amount by which
the allocation(s) of a Participant under the Retirement Plans which are
attributable to such Plan Year are reduced by reason of the application of the
limitations set forth in Section 415 of the Code.

 

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1.9 “Mandatory Retirement Age” shall, with respect to each Southwest Airlines
Co. pilot, mean the mandatory retirement age, if any, imposed by the Federal
Aviation Agency.

1.10 “Participant” shall mean an Employee who has met the eligibility
requirements for participation in this Plan, as set forth in Article II hereof.

1.11 “Plan” shall mean the Southwest Airlines Co. Excess Benefit Plan, as set
forth in this document, and as amended from time to time.

1.12 “Plan Year” shall mean the annual period beginning on January 1 and ending
on December 31, both dates inclusive of each year.

1.13 “Retirement Plans” shall mean the Southwest Airlines Co. ProfitSharing Plan
(the “ProfitSharing Plan”), the Southwest Airlines Co. 401(k) Plan and the
Southwest Airlines Co. Pilots Retirement Savings Plan.

1.14 “Trust Agreement” shall mean the agreement, if any, including any
amendments thereto, entered into between the Company and the Trustee to carry
out the provisions of the Plan.

1.15 “Trust Fund” shall mean the cash and other properties held and administered
by the Trustee pursuant to the Trust Agreement.

1.16 “Trustee” shall mean the designated trustee acting at any time under the
Trust Agreement.

1.17 “Valuation Date” shall mean each business day on which the financial
markets are open for trading activity.

ARTICLE II

ELIGIBILITY

Each employee of the Company who qualifies for an allocation under each or any
one of the Retirement Plans, and whose Excess Amount is at least $1,000, shall
be eligible to participate in this Plan.

 

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ARTICLE III

CREDITS TO ACCOUNT

3.1 For each Plan Year, as soon as practicable following the date on which the
company funds its contribution, if any, to the ProfitSharing Plan, the Company
shall credit to the Account of each Participant who is actively employed on the
date on which such ProfitSharing contribution is funded, an amount equal to the
Excess Amount of such Participant for the preceding Plan Year.

3.2 As of each Valuation Date, the Committee shall credit to each Participant’s
Account the deemed income or losses attributable thereto, as provided in
Section 3.3 below, as well as any other credits to or charges against such
Account, including such Participant’s pro rata portion of Plan administrative
expenses. All payments from an Account between Valuation Dates shall be charged
against the Account as of the preceding Valuation Date.

3.3 Each Participant, prior to initial participation in the Plan, may, in the
manner prescribed by the Committee, designate the manner in which amounts
credited to such Participant’s Account pursuant to Section 3.1 above shall be
deemed to be invested among the various options designated by the Committee for
this purpose. Such designation may be changed as of any Valuation Date solely
with respect to amounts credited under Section 3.1 after the date of such
change, and shall be effected by filing an election with the Committee, in the
manner prescribed by the Committee, within the period of time prior to such
Valuation Date established by the Committee. The Participant must designate, in
such minimum percentages or amounts as may be prescribed by the Committee, that
portion of the amount to be credited to the Account of such Participant which is
to be allocated to each investment option offered hereunder. In the absence of
any such investment designation, amounts credited to a Participant’s Account
shall be deemed to be invested in such property as the Committee, in its sole
and absolute discretion, shall determine. In no event may any Participant
designate the investment of amounts credited to an Account in stock or other
securities of the Company. The Committee may, but shall not be obligated to,
invest amounts credited to a Participant’s Account in accordance with the
investment designations of such Participant; nevertheless, the Account of such
Participant shall be credited with the amount of income, gains and losses
attributable thereto, as if the amounts credited to such Account had been so
invested. The Committee shall be authorized at any time and from time to time to
modify, alter, delete or add to the investment options hereunder. In the event a
modification occurs, the Committee shall prior to the effective date of such
change, notify those Participants whom the Committee, in its sole and absolute
discretion, determines are affected by the change. The Committee shall not be
obligated to substitute options with similar investment criteria for existing
options, nor shall it be obligated to continue the types of investment options
presently available to the Participants.

 

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ARTICLE IV

BENEFITS

4.1 Upon the death of a Participant, the Beneficiary of such Participant shall
be entitled to the entire value of all amounts credited to such Participant’s
Account, as of the Valuation Date coincident with or preceding the date of
distribution.

4.2 Upon a Participant’s termination of employment or attainment of Mandatory
Retirement Age, as applicable, such Participant shall be entitled to the entire
value of all amounts credited to the Account of such Participant, as of the
Valuation Date coincident with or preceding the date of distribution.

ARTICLE V

PAYMENT OF BENEFITS

5.1 Payment of a Participant’s benefit on account of the attainment of Mandatory
Retirement Age or termination of employment shall be made either in a lump sum
in cash, or in cash payments in annual installments over a period certain not
exceeding five (5) years, such method of payment to be irrevocably elected by
the Participant upon initial participation in the Plan in the manner prescribed
by the Committee; provided, however, that payment will be made in a lump sum in
any event if, at the time distribution of the Account is to commence, the amount
credited to the Account is $25,000 or less. Furthermore, notwithstanding the
commencement of installment payments under this Section 5.1, all remaining
amounts credited to a Participant’s Account shall be distributed in a lump sum
in cash, at such time as the value of such remaining amounts is $25,000 or less.
Payment shall commence at the time specified by the Participant upon initial
participation in the Plan, which may be as soon as practicable following the
Participant’s termination of employment with the Company or attainment of
Mandatory Retirement Age, if applicable, and during the calendar year in which
such event occurs or, if so elected by the Participant, as soon as practicable
during the calendar year following the year in which such event occurs. If
installment payments are made, such payments shall be charged pro rata to the
individual investment options in which amounts credited to the Participant’s
Account are deemed to be invested, pursuant to the Participant’s designation
under Section 3.3 hereof. Furthermore, the Committee shall continue to credit
the unpaid balance of the Participant’s Account with the deemed income and
losses attributable thereto, in accordance with such Participant’s elections
pursuant to the provisions of Section 3.3 hereof, as well as with any other
credits to or charges against the unpaid balance of such Account, during the
period for which installment payments are made.

5.2 Payment of a Participant’s benefit on account of death shall be made in a
lump sum in cash. Payment of a Participant’s death benefit shall be made to the
Beneficiary of such Participant as soon as practicable following the Committee’s
receipt of proper notice of such Participant’s death.

 

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5.3 Notwithstanding any other provision herein to the contrary, unless a
Participant elects, prior to the beginning of any Plan Year, in the manner and
at the time prescribed by the Committee, to defer the receipt of all or a
portion of the amount to be credited to the Account of such Participant
hereunder for such Plan Year pursuant to Section 3.1 hereof, such amount shall
be paid to such Participant in a cash lump sum as soon as practicable after such
amount is credited to such Participant’s Account. Any election to defer the
receipt of all or a portion of the amount credited in accordance with
Section 3.1 shall be permitted only if the portion deferred equals or exceeds
$1,000. Any such election shall be effective for all subsequent Plan Years,
unless prior to the beginning of a Plan Year, the Participant affirmatively
changes such election in the manner prescribed by the Committee.

5.4 Notwithstanding the provisions of sections 5.1 or 5.2, the benefits payable
hereunder may be paid before they would otherwise be payable if, based on a
change in the federal or applicable state tax or revenue laws, a published
ruling or similar announcement issued by the Internal Revenue Service, a
regulation issued by the Secretary of the Treasury, a decision by a court of
competent jurisdiction involving a Participant or a Beneficiary, or a closing
agreement made under Section 7121 of the Code that is approved by the Internal
Revenue Service and involves a Participant, the Committee determines that a
Participant has or will recognize income for federal or state income tax
purposes with respect to amounts that are or will be payable under the Plan
before they otherwise would be paid. The amount of any payments pursuant to this
Section 5.4 shall not exceed the lesser of: (a) the amount in the Participant’s
Account or (b) the amount of taxable income with respect to which the tax
liability is assessed or determined.

5.5 The payment of benefits under the Plan shall begin at the date specified in
accordance with the provisions of Sections 5.1, 5.2 and 5.3 hereof; provided
that, in case of administrative necessity, the starting date of payment of
benefits may be delayed up to thirty (30) days as long as such delay does not
result in the Participant or Beneficiary receiving the distribution in a
different taxable year than if no such delay had occurred.

ARTICLE VI

IN-SERVICE WITHDRAWALS AND LOAN

6.1 In the event of an unforeseeable emergency, a Participant may make a request
to the Committee for a withdrawal from the Account of such Participant. For
purposes of this Section, the term “unforeseeable emergency” shall mean a severe
financial hardship to the Participant resulting from a sudden and unexpected
illness or accident of the Participant or of a dependent (as defined in
Section 152(a) of the Code) of the Participant, loss of the Participant’s
property due to casualty, or other similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the control of the
Participant. Any determination of the existence of an unforeseeable emergency
and the amount to be withdrawn on account thereof shall be made by the
Committee, in its sole and absolute discretion. However, notwithstanding the
foregoing, a withdrawal will not be permitted to the extent that the financial
hardship is or may be relieved: (i) through reimbursement or compensation by
insurance or otherwise; (ii) by liquidation of the

 

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Participant’s assets, to the extent that liquidation of such assets would not
itself cause severe financial hardship; or (iii) by cessation of deferrals under
this Plan. In no event shall the need to send a Participants child to college or
the desire to purchase a home be deemed to constitute an unforeseeable
emergency. No member of the Committee shall vote or decide upon any matter
relating to the determination of the existence of such member’s own financial
hardship or the amount to be withdrawn on account thereof. A request for a
hardship withdrawal must be made in the manner prescribed by the Committee, and
must be expressed as a specific dollar amount. The amount of a hardship
withdrawal may not exceed the amount required to meet the severe financial
hardship. All hardship withdrawals shall be paid in a lump sum in cash.

6.2 A Participant may, prior to the beginning of any Plan Year, in the manner
prescribed by the Committee, request an in-service withdrawal of all or a
portion of any amounts which have been credited to the Account of such
Participant pursuant to Section 3.1 above for at least three (3) calendar years
as of the beginning of such Plan Year, together with any income attributable
thereto; provided, however, that the amount of any such withdrawal shall never
exceed such credited amounts, as adjusted for any deemed income or losses
attributable thereto. Such request must set forth the specific dollar amount to
be withdrawn and the time at which payment is to be made. The Committee, in its
sole and absolute discretion, shall, upon review of the facts pertinent to such
request, determine whether the withdrawal request shall be approved. No member
of the Committee shall vote upon, decide, or participate in any other way in a
decision involving a withdrawal request of such Committee member. Any withdrawal
under this Section 6.2 shall be made in a single lump sum, in cash.

6.3 Notwithstanding any other provision herein to the contrary, a Participant
may elect at any time, in the manner prescribed by the Committee, to accelerate
the date on which payment of such Participant’s benefit hereunder would
otherwise be made. Upon such election, the amount to which such Participant is
entitled shall be ninety percent (90%) of the benefit otherwise payable
hereunder, which shall be distributed in one lump sum, in cash, as soon as
administratively practicable following such election.

6.4 Withdrawals shall be charged pro rata to the individual investment options
in which amounts credited to a Participant’s Account are deemed to be invested,
pursuant to such Participant’s designation under Section 3.3 hereof.

6.5 In no event may a Participant receive a loan of any portion of his benefit
hereunder.

 

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ARTICLE VII

ADMINISTRATION OF THE PLAN

7.1 The Committee may establish a Trust Fund for the purpose of retaining assets
set aside by the Company pursuant to the Trust Agreement for payment of all or a
portion of the benefits payable pursuant to the Plan. Any benefits not paid from
a Trust shall be paid from the Company’s general assets. The Trust Fund, if such
shall be established, shall be subject to the claims of general creditors of the
Company in the event the Company is Insolvent, as such term is defined in the
Trust Agreement.

7.2 The Plan shall be administered by the Committee. The members of the
Committee shall not receive compensation with respect to their services for the
Committee. The members of the Committee shall serve without bond or security for
the performance of their duties hereunder unless applicable law makes the
furnishing of such bond or security mandatory or unless required by the Company.
Any member of the Committee may resign by delivering a written resignation to
the Company and to the other members of the Committee.

7.3 The Committee shall perform any act which the Plan authorizes expressed by a
vote at a meeting or in a writing signed by a majority of its members without a
meeting. The Committee may, by a writing signed by a majority of its members,
appoint any member of the Committee to act on behalf of the Committee. Any
person who is a member of the Committee shall not vote or decide upon any matter
relating solely to such member or vote in any case in which the individual right
or claim of such member to any benefit under the Plan is particularly involved.
If, in any matter or case in which a person is so disqualified to act, the
remaining persons constituting the Committee cannot resolve such matter or case,
the Board will appoint a temporary substitute to exercise all the powers of the
disqualified person concerning the matter or case in which such person is
disqualified.

7.4 The Committee may designate in writing other persons to carry out its
responsibilities under the Plan, and may remove any person designated to carry
out its responsibilities under the Plan by notice in writing to that person. The
Committee may employ persons to render advice with regard to any of its
responsibilities. All usual and reasonable expenses of the Committee shall be
paid by the Company. The Company shall indemnify and hold harmless each member
of the Committee from and against any and all claims and expenses (including,
without limitation, attorney’s fees and related costs), in connection with the
performance by such member of duties in that capacity, other than any of the
foregoing arising in connection with the willful neglect or willful misconduct
of the person so acting.

7.5 The Committee shall establish rules and procedures, not contrary to the
provisions of the Plan, for the administration of the Plan and the transaction
of its business. The Committee shall determine the eligibility of any individual
to participate in the Plan, shall interpret the Plan in its sole and absolute
discretion, and shall determine all questions arising in the administration,
interpretation, and application of the Plan. All determinations of the Committee
shall be conclusive and binding on all employees, Participants and
Beneficiaries, subject to the provisions of this Plan and applicable law.

 

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7.6 Any action to be taken hereunder by the Company shall be taken by resolution
adopted by the Board or by a committee thereof; provided, however, that by
resolution, the Board or a committee thereof may delegate to any officer of the
Company the authority to take any such actions hereunder, other than the power
to amend or terminate the Plan.

ARTICLE VIII

LIMITATION OF RIGHTS

The establishment of this Plan shall not be construed as giving to any
Participant, employee of the Company or any person whomsoever, any legal,
equitable or other rights against the Company, or its officers, directors,
agents or shareholders, or as giving to any Participant or Beneficiary any
equity or other interest in the assets or business of the Company or shares of
Company stock or as giving any employee the right to be retained in the
employment of the Company. All employees of the Company and Participants shall
be subject to discharge to the same extent they would have been if this Plan had
never been adopted. The rights of a Participant hereunder shall be solely those
of an unsecured general creditor of the Company.

ARTICLE IX

LIMITATION OF ASSIGNMENT AND PAYMENTS TO

LEGALLY INCOMPETENT DISTRIBUTEE

9.1 No benefits which shall be payable under the Plan to any person shall be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance or charge, and any attempt to anticipate, alienate, sell,
transfer, assign, pledge, encumber, charge or otherwise dispose of the same
shall be void. No benefit shall in any manner be subject to the debts,
contracts, liabilities; engagements or torts of any person, nor shall it be
subject to attachment or legal process for or against any person, except to the
extent required by law.

9.2 Whenever any benefit which shall be payable under the Plan is to be paid to
or for the benefit of any person who is then a minor or determined by the
Committee, on the basis of qualified medical advice, to be incompetent, the
Committee need not require the appointment of a guardian or custodian, but shall
be authorized to cause the same to be paid over to the person having custody of
the minor or incompetent, or to cause the same to be paid to the minor or
incompetent without the intervention of a guardian or custodian, or to cause the
same to be paid to a legal guardian or custodian of the minor or incompetent, if
one has been appointed, or to cause the same to be used for the benefit of the
minor or incompetent.

 

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ARTICLE X

AMENDMENT TO OR TERMINATION OF THE PLAN

The Company reserves the right at any time to amend or terminate the Plan in
whole or in part by resolution of the Board. No amendment shall have the effect
of retroactively changing or depriving Participants or Beneficiaries of rights
already accrued under the Plan. Upon termination of the Plan, the Board may, in
its sole and absolute discretion, and notwithstanding any other provision
hereunder to the contrary, direct that all benefits hereunder will be paid as
soon as administratively practicable thereafter.

ARTICLE XI

STATUS OF PARTICIPANT AS UNSECURED CREDITOR

All benefits under the Plan shall be the unsecured obligations of the Company
and, except for those assets which may be placed in a Trust Fund established in
connection with this Plan, no assets will be placed in trust or otherwise
segregated from the general assets of the Company for the payment of obligations
hereunder. To the extent that any person acquires a right to receive payments
hereunder, such right shall be no greater than the right of any unsecured
general creditor of the Company.

ARTICLE XII

GENERAL AND MISCELLANEOUS

12.1 Severability. In the event that any provision of this Plan shall be
declared illegal or invalid for any reason, said illegality or invalidity shall
not affect the remaining provisions of this Plan but shall be fully severable
and this Plan shall be construed and enforced as if said illegal or invalid
provision had never been inserted herein.

12.2 Construction. The Section headings and numbers are included only for
convenience of reference and are not to be taken as limiting or extending the
meaning of any of the terms and provisions of this Plan. Whenever appropriate,
words used in the singular shall include the plural or the plural may be read as
the singular.

12.3 Governing Law. The validity and effect of this Plan and the rights and
obligations of all persons affected hereby shall be construed and determined in
accordance with the laws of the State of Texas unless superseded by federal law.

 

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12.4 No Requirement to Fund. The Company is not required to set aside any assets
for payment of the benefits provided under this Plan; however, it may do so as
provided in the Trust Agreement, if any. A Participant shall have no security
interest in any such amounts. It is the Company’s intention that this Plan be
construed as a plan which is unfunded and maintained primarily for the purpose
of providing deferred compensation for a select group of highly compensated
employees.

12.5 Taxes. All amounts payable hereunder shall be reduced by any and all
federal, state and local taxes imposed upon the Participant or a Beneficiary
which are required to be paid or withheld by the Company.

IN WITNESS WHEREOF, Southwest Airlines Co., the Company, has caused its
corporate seal to be affixed hereto and these presents to be duly executed in
its name and behalf by its proper officers hereunto duly authorized this 20th
day of November, 1998.

 

COMPANY: SOUTHWEST AIRLINES CO. By:  

/s/ Herbert D. Kelleher

 

ATTEST:

/s/ Colleen C. Barrett

EVP – Customers & Corporate Secretary [CORPORATE SEAL]

 

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