EXHIBIT 10(k)
EXECUTIVE SEPARATION PAY PLAN
AND SUMMARY PLAN DESCRIPTION
SOLUTIA INC.
Overview
Solutia Inc. (the “Company”) maintains this Executive Separation Pay Plan (the
“Plan”) to provide the following severance benefits if you are involuntarily
terminated through no fault of your own in the circumstances described below.
This document serves as both the summary plan description (“SPD”) and the Plan
document. The Plan is effective October 1, 2008. The Executive Compensation and
Development Committee (ECDC) of the Solutia Board of Directors will review the
Plan at least annually and reserves the right to amend or terminate the Plan.
Who’s Eligible
Executive level employees selected by the CEO who (i) are classified as
common-law employees in the payroll records of the Company or an affiliate that
has adopted this Plan, (ii) have signed both the applicable standard Employment
Agreement and a waiver and release of claims against the Company, and (iii) are
involuntarily terminated through no fault of their own, or experience a material
change in the location at which the executive performs services or a significant
reduction in annual salary, are eligible for benefits under the Plan. Executive
level employees will be notified in writing of their eligibility for the Plan.
At least annually, the CEO will review and confirm the list of eligible
executive level employees. An executive level employee will be notified in
writing if he ceases to be eligible for this Plan.
Aside from employees not included in the executive level of employment,
employees not eligible for Plan benefits include the following:

  •   employees who voluntarily resign, retire or die while employed;

  •   employees who are terminated for cause or for poor performance;

  •   employees who are receiving long-term disability benefits, or who exhaust
disability benefits and are then terminated;

  •   employees who are covered under an employment contract or agreement (other
than a noncompetition agreement) that provides for severance benefits;

  •   employees who have been offered other employment with the Company or a
subsidiary or affiliate in the case of a job elimination;

  •   employees who have been offered other employment in the case of job
elimination through divestiture, with the purchaser, successor, or a subsidiary
or affiliate of the purchaser or successor, whether or not the employee accepts
the offer; and

  •   employees who have not signed an employment agreement in the standard form
required by the Company.

Employees who are eligible for this Plan are not eligible for any other Solutia
separation pay plan.

 

 

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How the Plan Works
The Plan provides the following benefits:

  •   In the event of an involuntary termination not related to a Change in
Control, total payments (less required withholding) equal to 100% of annual base
salary (the employee’s base rate of pay on the date of termination will be used
to determine the severance benefits under the Plan).

  •   In the event of an involuntary termination within 12 months after a Change
in Control, total payments (less required withholding) equal to 100% of annual
base salary, plus the average annual bonus paid to you over the prior three
calendar years ending before the Change in Control or, if less than three
calendar years, the term of your employment with the Company.

  •   Continuation of medical, dental, vision and basic life insurance benefits
at active employee rates for four months, as described below.

In no event will the above payments exceed the lesser of (a) two times your
annualized compensation based upon the annual rate of pay for services provided
to the Company for the year preceding the year in which your separation from
service occurs (adjusted for any increase during that year that was expected to
continue indefinitely if you had not separated from service) or (b) two times
the qualified plan limits in Code Section 401(a)(17) ($245,000 for 2009, indexed
for inflation thereafter).
“Change in Control” shall be deemed to have occurred if:
(1) Any “person” (as such term is used in Sections 13(d) and 14(d) of the
Securities and Exchange Act of 1934, as amended (the “Exchange Act”)) is or
becomes a “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing more than 50%
of the voting power of the then outstanding securities of the Company, and such
person owns more aggregate voting power of the Company’s then outstanding
securities entitled to vote generally in the election of directors than any
other person, excluding for this purpose acquisitions by a person pursuant to a
merger of the Company or a Subsidiary that would not be a Change in Control
under clause (b) below;
(2) Consummation of (x) a merger or consolidation of the Company or a Subsidiary
with another corporation where the shareholders of the Company, immediately
prior to the merger or consolidation, will not beneficially own, immediately
after the merger or consolidation, shares entitling such shareholders to 50% or
more of all votes to which all shareholders of the surviving corporation (or the
ultimate parent company of the surviving company) would be entitled in the
election of directors (without consideration of the rights of any class of stock
to elect directors by a separate class vote), (y) the sale or other disposition
of 50% or more of the Company’s assets that it owns as of the effective date of
this Plan, or (z)· a liquidation or dissolution of the Company; provided,
however, the effectiveness of a plan of reorganization pursuant to which a
majority of the common stock of the reorganized Company is distributed (i) to
Persons who are (a) holders of claims against the Company; (b) holders of equity
interests in the Company; and/or (c) designated in the Company’s plan of
reorganization proposal dated October 15, 2007 to receive common stock of the
reorganized Company; or (ii) to or for the benefit of Company management, shall
not constitute a “Change in Control”; or

 

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(3) Directors are elected such that a majority of the members of the Board shall
have been members of the Board for less than two years, unless the election or
nomination for election of each new director who was not a director at the
beginning of such two-year period was approved by a vote of at least two-thirds
of the directors then still in office who were directors at the beginning of
such period.
If you are otherwise eligible for benefits under the Plan, you must sign a
waiver of claims provided by the Company in order to actually receive benefits
under the Plan. If you do not sign a waiver in the form provided by the Company
or if you sign a waiver, but later revoke it, you will not receive any benefits
under the Plan. In order to be entitled to benefits under this Plan, you must
execute and return the waiver to the Company within 60 days of the date of your
termination of employment. Your severance payments will be made or commence, in
the form determined by the Company, as soon as possible after you return the
release. All payments under the Plan will be made no later than the last day of
the second calendar year following the calendar year in which you terminate
employment.
If You are Rehired
If you are later rehired by the Company or by a subsidiary or an affiliate of
the Company, you will be required to reimburse the Company only if the number of
weeks of base pay you received as separation pay under the Plan is greater than
the number of weeks of actual separation — but then only for an amount equal to
the difference. For example, if you receive 52 weeks of separation pay under the
Plan and you are rehired by the Company, a subsidiary or an affiliate 32 weeks
after your termination of employment, you would be required to repay 20 weeks of
separation pay.
Medical, Dental and Vision
You are eligible for COBRA coverage only if you participated in the Solutia
health plans on your date of termination. During the first four months of COBRA
coverage, the Company will continue to pay the share of the cost it pays for
active employees. If you elect COBRA coverage and continue to make required
employee contributions, coverage will continue for four (4) months from the end
of the month in which your termination occurs. After this 4-month period, you
must pay 100% of the cost of COBRA coverage to continue the coverage. For
example, if you terminate employment on April 17, your subsidized COBRA coverage
would be provided from May 1 through August 31. However, if you become eligible
for coverage under a group health, dental or vision plan of a new employer
before this period ends, your coverage under the Company’s plans will cease.
Basic Term Insurance
Coverage will continue for four months from the end of the month in which your
termination occurs.

 

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Impact on Other Benefits
For detailed information regarding the impact of your termination of employment
on your other benefits, visit Solutia Benefits Center at
www.ibenefitcenter.com\solutia.
Additional Legal Information
Claims Appeal Procedures:
Your claim for benefits under the Plan will be processed within 90 days
(normally much sooner) after receipt of the claim. However, if special
circumstances require an extension of time for making a determination on the
claim, you will be so notified in writing or electronically by the Employee
Benefits Plans Committee or its designee (collectively, the “Committee”) before
the end of the initial 90-day period. In no event will the special extension
exceed a period of 90 days from the end of the first 90-day period.
If your claim for benefits is denied, you will be provided a notice of denial
that includes:

  •   The reason for the denial with specific reference to the Plan provisions
on which the denial is based;

  •   A description of any additional material or information necessary for you
to perfect the claim and an explanation of why such material or information is
necessary;

  •   Notice of your right to have the denial reviewed and an explanation of the
claim review procedure; and

  •   A statement of your right to bring a civil action under ERISA
Section S02(a) following an adverse decision on appeal.

If you receive notice of denial, you or your authorized representative may
request a review of the claim by giving written notice to the Committee. Your
request for review must be made in writing not later than 60 days after receipt
of the notice of denial. If the written request for review is not made within
the specified 60-day period, you will waive the right to review by the
Committee.
A review will be promptly made by the Committee after receipt of a timely filed
request for review. In addition, you or your authorized representative may
review, free of charge, relevant documents and submit additional issues,
comments, documents, and records, regardless of whether or not such information
was considered in connection with the initial benefits determination. A decision
on review will be made and furnished to you in writing. Deference will not be
afforded any prior benefits determination.
You will be notified no later than 60 days after submission of your request for
review. However, if the Committee finds it necessary to extend this period due
to special circumstances and they notify you in writing, the decision will be
rendered as soon as practicable, but no later than one hundred twenty (120) days
after your request for review.

 

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If your appeal is denied in whole or in part, you will be notified in writing of
the specific reasons for the decision. The denial notice will also include the
following information: (i) references to the specific Plan provision(s) upon
which the decision was based; (ii) a statement that, upon written request and
free of charge, you will be provided reasonable access to and copies of all
documents, records and other information relevant to your claim for benefits;
and (iii) a statement of your right to bring a civil action under ERISA
Section S02(a).
The Committee is granted complete fiduciary discretion and authority to
interpret the Plan, decide all questions of eligibility and benefits, and
adjudicate all claims (including any underlying factual determinations), and its
decision on review will be final and binding on all parties unless overturned by
a court.
ERISA Rights:
The Company operates its employee benefit plans with the interests of employees
in mind and attempts to communicate to employees their rights and entitlements.
Certain rights and protections are provided to participants in the Plan under
the Employee Retirement Income Security Act of 1974 (“ERISA”). These ERISA
rights include the following:

  •   You may examine all Plan documents without charge. These may include the
annual financial reports, if any, Plan descriptions, and all other documents
filed with the United States Department of Labor and available at the Public
Disclosure Room of the Employee Benefits Security Administration.

  •   Copies of Plan documents and the latest annual report (Form 5500 Series),
and other information may be obtained by writing to the Committee. A reasonable
charge may be assessed for these copies.

  •   You have the right to receive a written summary of the Plan’s annual
financial reports. The Plan Administrator is required by law to provide each
Participant with a copy of any summary annual report.

  •   You may not be discharged or discriminated against to prevent your
obtaining a benefit or exercising your ERISA rights.

  •   If a claim for a benefit is denied, in whole or in part, a written
explanation from the Committee or a delegated representative will be provided.
You have the right to obtain copies of documents relating to the decision
without charge, and to have the Plan Administrator review and reconsider any
denied claim all within certain time schedules.

In addition to creating rights for Plan participants, ERISA imposes certain
duties on the people responsible for the operation of the Plan. The people who
operate the Plan, called fiduciaries, have a duty to do so prudently and in the
best interest of you and your beneficiaries. Fiduciaries who violate ERISA may
be removed and required to make good any losses they have caused the Plan. The
named fiduciary with respect to this Plan is the Committee.

 

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Under certain circumstances, outside assistance may be necessary to resolve
disputes between you and Plan officials. For example:

  •   If materials are requested from the Committee and are not received within
30 days, suit may be filed in a federal court. In such a case, the court may
require the Committee to provide the materials and pay you up to $110 a day
until the materials are received-unless the materials were not sent because of
reasons beyond the control of the Committee.

  •   If a claim for benefits is denied or ignored, in whole or in part, after a
final review, suit may be filed in a state or federal court.

  •   If the fiduciaries misuse the Plan’s money, or if you are discriminated
against for pursuing a benefit or exercising your ERISA rights, you may seek
help from the United States Department of Labor or file suit in federal court.

If a suit is filed, the court will decide who should pay court costs and legal
fees. If you win the suit, the court may order the person sued to pay the court
costs and legal fees. If you lose the suit, the court may order you to pay the
costs and fees if, for example, the court decides the suit was frivolous.
For further information about this statement or about ERISA rights, contact the
Employee Benefits Plans Committee, Solutia Inc., 575 Maryville Centre Drive,
P.O. Box 66760, St. Louis, MO 63166-6760, or the nearest area office of the
Employee Benefits Security Administration, United States Department of Labor,
listed in the telephone directory, or the Division of Technical Assistance and
Inquiries, Employee Benefits Security Administration, U.S. Department of Labor,
200 Constitution Avenue, N.W., Washington, D.C. 20210.
You may also obtain certain publications about your rights and responsibilities
under ERISA by calling the publications hotline of the Employee Benefits
Security Administration.
No Rights to Employment.
Neither this Plan/SPD, nor any statements concerning the Plan/SPD will create
any rights to continued employment or affect the Company’s ability to terminate
an employee’s employment.
Standard of Review and Exercise of Discretion:
The Committee and its delegates have the complete fiduciary discretion and
authority to interpret all Plan provisions, and determine whether a ‘participant
or beneficiary is entitled to any benefit pursuant to the terms of the Plan.
Benefits are payable under the Plan only if the Committee so decides in its
discretion. All interpretations of the Plan by the Committee are final and
legally binding on all parties. Any review of an action taken by the Committee
shall be based solely on evidence before the Committee at the time of its
decision.
Assignment of Benefits:
You may not assign, alienate or otherwise attempt to transfer your benefits
under the Plan.
Amendment and Termination:
The Company currently intends to continue the Plan described in this document.
However, Plan benefits are neither vested nor accrued, and because it is
impossible to predict all future conditions, the Company and/or the ECDC reserve
the right to amend or terminate the Plan at any time in its sole discretion.

 

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Administrative Information

     
Name of Plan
  Solutia Inc. Executive Separation Pay Plan
 
   
Type of Plan
  Welfare Benefit
 
   
Plan Year
  January 1-December 31
 
   
Funding
  Self-Funded by Solutia Inc.
 
   
Plan Administrator and
Principal Employer
  Solutia Inc.
575 Maryville Centre Drive
P.O. Box 66760
St. Louis, MO 63166-6760
(314) 674-1000
 
   
 
  A participant or beneficiary may obtain an updated list of the employers
sponsoring the plan by sending a written request to the above address. The list
of sponsoring employers is also available for inspection at the above address.
 
   
Agent for Service of
Legal Process
  General Counsel
Solutia Inc.
575 Maryville Centre Drive
P.O. Box 66760
St. Louis, MO 63166-6760
 
   
Company Employer
Identification Number
  43-1781797
 
   
Plan Number
  531 — Part of Solutia Inc. Master Welfare Benefit Plan for Salaried and
Non-Hourly Employees

 

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