Retirement Plans
Pension Plan
All hourly associates earn pension
benefits under a formula using a flat dollar rate and years of service ($40 per month x years of service, up to 30 total years). For all salaried associates, Pension Plan benefits were frozen on December 31, 2018, with future retirement
benefits to be earned through a 401(k) plan, unless the salaried associate met certain grandfathering criteria on December 31, 2018. Salaried associates who were participants in the Pension Plan and were at least age 55 with 10 years of
service, or age 60 with 5 years of service as of December 31, 2018, are considered grandfathered. Grandfathered associates continue to earn benefits under the Pension Plan formula in effect prior to December 31, 2018. Of our NEOs,
Ms. Sullivan, Mr. Schmidt and Mr. Koch are grandfathered and continue earning pension benefits. Mr. Hannah was not grandfathered and, therefore, his qualified Pension Plan benefit was frozen as of December 31, 2018. All
salaried Pension Plan participants who have completed five total years of employment with the Company are vested and earn the right to receive certain benefits upon retirement at the normal retirement age of 65 or upon early retirement on or after
age 55 with 10 years of service. If the Pension Plan participant retires between the ages of 55 and 65 with at least 10 years of service, he or she is eligible for the greater of i) a subsidized monthly early retirement pension of the benefit
accrued on December 31, 2015 that is reduced 1/15 for each of the first five (5) years and 1/30 for each of the next five years that benefit commencement precedes age 65 and ii) a monthly early retirement pension which is actuarially
equivalent to the accrued benefit through termination of employment payable at age 65.
For grandfathered salaried associates, the amount of monthly
pension benefits is calculated based on years of service using a two-rate formula applied to each year of pension service and the participant receives the larger of the December 31, 2015 accrued benefit
and the benefit calculated under the current plan provisions using years of service and pay history through termination. Generally, a participant receives credit for one year of service for each 365 days of employment as an eligible employee with
the Company commencing after their date of participation in the Pension Plan, up to 30 years. A service credit of 0.825% is applied to that portion of the average annual salary for the last 10 years that does not exceed covered
compensation, which is the 35-year average compensation subject to FICA tax based on a participants year of birth; and a service credit of 1.425% is applied to that portion of the average salary
during those 10 years that exceeds said level. For the benefit accrued on December 31, 2015, service under the plan commenced at the date of hire and a 35-year service cap and an average annual salary for
the five highest consecutive years during the last 10 year period were used in the benefit formula. Annual earnings covered by the Pension plan consist of salary, wages, commissions, overtime pay, foreign service premiums, bonuses paid under a
formal bonus program, contributions to a nonqualified deferred compensation plan, employee contributions to a Section 125 cafeteria plan and employee deferrals to a 401(k) plan, while all other amounts are excluded. For highly paid employees,
benefits are limited pursuant to certain provisions of the Internal Revenue Code, including among others, the limitation on the amount of annual compensation for purposes of calculating eligible benefits for a participant under a qualified
retirement plan ($285,000 in 2020 and $280,000 in 2019).
The accumulated benefit a participant earns under the Pension Plan is payable starting after
retirement based on the participants choice of payment option, including an annuity for the participants life, 50%, 75% or 100% joint and survivor annuity, 10 year certain and life annuity, Social Security level income option, and, only
for benefits accrued before December 31, 1993, a lump sum payment. All optional forms of benefit are equal to the single life annuity adjusted by plan-specified actuarial equivalence factors.
Supplemental Executive Retirement Plan (SERP)
Certain key management employees who are participants in the Pension Plan, including the 2019 NEOs with the exception of Mr. Hannah and Ms. Adams,
are also eligible to participate in the SERP. The purpose of the SERP is to provide benefits to certain highly paid Pension Plan participants whose benefits under the Pension Plan are adversely affected by benefit limitations imposed by the Internal
Revenue Code. More specifically, the Internal Revenue Code limits the amount that may be paid from the Pension Plan ($225,000 in 2019 and $230,000 in 2020) to an individual and the amount of pay that can be used to calculate the Pension Plan benefit
($285,000 in 2020). For this reason, the Company maintains the SERP to restore benefits lost under the Pension Plan due to qualified plan limitations imposed by the Internal Revenue Code. In general, the SERP provides eligible employees a lump sum
benefit actuarially equivalent to the difference between the amount payable under the Pension Plan and the amount they would have received under the Pension Plan without regard to the limits described above. The SERP is unfunded and all payments are
made from general assets. Accordingly, these benefits are subject to forfeiture in the event of bankruptcy.
SERP participants that entered the plan prior
to January 1, 2006 (SERP Grandfathered Participants) receive certain enhanced benefits, including: (i) an increased service credit rate (1.465% instead of 1.425%), (ii) an unreduced early retirement benefit at age 60, provided
the participant has at least 10 years of service, and (iii) an increased death benefit (100% in the event of death after age 55 instead of 50%). Ms. Sullivan and Mr. Koch are SERP Grandfathered Participants, and are eligible for
the enhanced benefits described above, and are eligible for an unreduced early retirement benefit.
Caleres | 2020
Proxy Statement 51