Annual report pursuant to Section 13 and 15(d)

Employee Compensation Plans

v2.4.1.9
Employee Compensation Plans
12 Months Ended
Dec. 31, 2014
Postemployment Benefits [Abstract]  
Employee Compensation Plans

6.    Employee Compensation Plans

The Company maintains a profit sharing plan pursuant to Sections 401(a) and (k) of the Internal Revenue Code of 1986, as amended, or the Code. The plan is available to substantially all employees who meet the length of service requirements. Employees may elect to contribute up to 75% of their compensation; however, contributions are limited to a maximum annual amount as set periodically by the Code. The Company will make matching contributions in an amount equal to one dollar for each dollar of deferred earnings up to the first 1%, and then make matching contributions in an amount equal to 50% of one dollar for each dollar on the subsequent 5% of deferred earnings. The contributions become fully vested after two years. The Company contributed $3.5 million, $4.0 million, and $2.7 million, to its profit sharing plan during the years ended December 31, 2014, 2013, and 2012, respectively.

The Company has non-qualified deferred compensation plans for select groups of management: the Herbalife Management Deferred Compensation Plan and the Herbalife Senior Executive Deferred Compensation Plan. The deferred compensation plans allow eligible employees to elect annually to defer up to 75% of their base annual salary and up to 100% of their annual bonus for each calendar year, or the Annual Deferral Amount. The Management Deferred Compensation Plan and Senior Executive Deferred Compensation Plan provide that the amount of the matching contributions is to be determined by the Company at its discretion. The matching contribution was 3.5% of a participant’s annual base salary in excess of the IRS annual compensation limit and the amount by which deferrals reduce 401(k) eligible pay below the IRS limit.

Each participant in either of the non-qualified deferred compensation plans discussed above has, at all times, a fully vested and non-forfeitable interest in each year’s contribution, including interest credited thereto, and in any Company matching contributions, if applicable. In connection with a participant’s election to defer an Annual Deferral Amount, the participant may also elect to receive a short-term payout, equal to the Annual Deferral Amount plus interest. Such amount is payable in five or more years from the first day of the year in which the Annual Deferral Amount is actually deferred.

The total expense for the two non-qualified deferred compensation plans, excluding participant contributions, was $1.7 million, $4.0 million, and $2.9 million for the years ended December 31, 2014, 2013, and 2012, respectively. The total long-term deferred compensation liability under the two deferred compensation plans was $42.9 million and $37.2 million at December 31, 2014 and 2013, respectively.

The deferred compensation plans are unfunded and their benefits are paid from the general assets of the Company, except that the Company has contributed to a “rabbi trust” whose assets will be used to pay the benefits if the Company remains solvent, but can be reached by the Company’s creditors if the Company becomes insolvent. The value of the assets in the “rabbi trust” was $27.4 million and $26.8 million as of December 31, 2014 and 2013, respectively.

The Company has employees in international countries that are covered by various deferred compensation plans. These plans are administered based upon the legal requirements in the countries in which they are established. The Company’s compensation expenses relating to these plans were $7.5 million, $8.4 million, and $7.2 million for the years ended December 31, 2014, 2013, and 2012, respectively.