Southwest Airlines Co. Excess Benefit Plan



 Exhibit 10.32 
 SOUTHWEST AIRLINES CO. 
 EXCESS BENEFIT PLAN 







 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

  







 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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