AMERICAN ELECTRIC POWER
SYSTEM
EXCESS BENEFIT
PLAN
(As Amended and Restated as of
January 1, 2008)
ARTICLE I
Purposes and Effective
Date
1.1
Purpose . The American Electric Power System
Excess Benefit Plan is maintained to provide Supplemental
Retirement Benefits for eligible employees whose retirement
benefits from the Retirement Plan (as defined below) are restricted
due to limitations imposed by provisions of the Internal Revenue
Code or who are entitled to Supplemental Retirement Benefits under
the terms of an employment agreement between the eligible employee
and an Associated Company.
1.2
Effective Date . The original effective date of
this Plan was January 1, 1990, and the effective date of the
changes made by this amended and restated Plan document is January
1, 2008, unless otherwise specified.
ARTICLE II
Definitions
The following
terms shall have the meanings set forth in this Article
II. Any undefined capitalized term in this Plan shall
have the meaning set forth in the Retirement Plan.
2.1 “
Accredited Service ” means the period of time taken
into account under the terms of the Retirement Plan for the purpose
of computing a Retirement Plan benefit under the Final Average Pay
Formula.
2.2 “
Actuarial Equivalence ” or “ Actuarially
Equivalent ” will be determined using the assumptions and
methods that are used in connection with the Cash Balance Formula
under the Retirement Plan, regardless of whether the benefits under
this Plan are determined under the Cash Balance Formula.
2.3 “
Base Compensation ” means a Participant's regular base
salary or base wage Earned through the date of the termination of
employment of the Participant with the Associated
Companies. Base Compensation shall be determined (i)
without adjustment for any salary or wage elections made pursuant
to Sections 125 (regarding cafeteria plans, including pre-tax
contributions for premiums and flexible spending accounts) and
402(e)(3) (regarding elective deferrals, including before-tax
contributions under a Section 401(k) retirement savings plan) of
the Code, (ii) without reduction for any contributions to the
Supplemental Savings Plan; and (iii) excluding bonuses (such as,
but not limited to, project bonuses and sign-on bonuses),
compensation paid pursuant to the terms of an annual compensation
plan, performance pay awards, severance pay, relocation payments,
or any other form of additional compensation that is not part of
regular base salary or base wage.
2.4 “
Beneficiary ” means the person or entity designated in
accordance with the provisions of Section 7.3, to receive the
distribution of death benefits provided for in Article
VII.
2.5 “
Cash Balance Formula ” means the formula under the
Retirement Plan by which Participants accrue benefits through
credits to his or her Cash Balance Account (as defined in the
Retirement Plan). The Cash Balance Formula is effective
for Plan Years commencing after December 31, 2000.
2.6 “
Code ” means the Internal Revenue Code of 1986, as
amended from time to time.
2.7 “
Committee ” means for the period ending May 26, 2004,
the Employee Benefit Trusts Committee of the Company. Effective
beginning May 27, 2004, the Committee shall be the committee
designated by the Company (or by a person duly authorized to act on
behalf of the Company) as responsible for the administration of the
Plan.
2.8 “
Company ” means the American Electric Power Service
Corporation.
2.9 “
Corporation ” means the American Electric Power
Company, Inc., a New York corporation, and its affiliates and
subsidiaries.
2.10 “
Determination Date ” means the first day of the month
immediately following the Participant's Termination.
2.11 “
Earned ”
|
|
|
when referring
to Base Compensation and Premium Pay, means the date such amount is
paid, and
|
|
|
|
when referring
to Incentive Compensation, means
|
|
|
|
for purposes of
the Cash Balance Formula, the date such amount is paid or such
earlier date it would have been paid by an Associated Company if
the payment had not been effectively deferred according to the
terms of the American Electric Power System Incentive Compensation
Deferral Plan or such other applicable plan or agreement;
or
|
|
|
|
for purposes of
the Final Average Pay Formula, the Incentive Compensation shall be
considered Earned in equal monthly installments during the
applicable period of the calendar year for which the awarded amount
had been calculated, without regard to when such amount is paid,
provided that the amount ultimately becomes payable to the
Participant.
|
2.12 “
Employee ” means such persons employed by an
Associated Company who are designated in the records of the
Associated Company in a classification that is eligible to
participate in the Retirement Plan.
2.13 “
Employment Contract ” means an agreement between an
Associated Company and an Employee that provides the Employee with
a non-qualified retirement benefit attributable to this
Plan.
2.14 “
ERISA ” means the Employee Retirement Income Security
Act of 1974 as amended from time to time.
2.15 “
Final Average Pay Formula ” means the formula
designated as the final average pay formula by the Retirement Plan
and by which Participants accrue normal retirement benefits by
taking into account the Participant’s Accredited Service,
average annual earnings and such other factors as are set forth in
the Retirement Plan.
2.16 “
First Date Available ” or “ FDA ”
means (a) with respect to a Participant who is a Key Employee as of
the date of such Participant’s Termination, the first day of
the month next following the date that is six (6) months after the
Participant’s Termination; and (b) with respect to all other
Participants, the first day of the month next following the
Participant’s Termination.
2.17 “
HR Committee ” means the Human Resources Committee of
the board of directors of the Corporation (or any successor to such
committee).
2.18 “
Incentive Compensation ” means incentive compensation
Earned pursuant to the terms of an annual incentive compensation
plan, provided that Incentive Compensation shall not include
non-annual bonuses (such as but not limited to project bonuses and
sign-on bonuses and amounts earned under a long-term incentive
plan), severance pay, relocation payments, or any other form of
additional compensation that is not considered to be part of Base
Compensation.
2.19 “
Key Employee ” means a Participant who is classified
as a “specified employee” at the time of Termination in
accordance with policies adopted by the HR Committee in order to
comply with the requirements of Section 409A(a)(2)(B)(i) of the
Code and the guidance issued thereunder.
2.20 “
Maximum Benefit ” means the vested retirement benefit
payable from the Retirement Plan under either the Final Average Pay
Formula or the Cash Balance Formula, as provided in Article IV and
as calculated based upon the Participant’s marital status,
Beneficiary, credited service, and earnings for services rendered
to the Company, to the extent such are permitted by the Code and
the Retirement Plan to be taken into account under the Final
Average Pay Formula or the Cash Balance Formula, as
applicable.
2.21 “
Maximum Disability Period ” means the last date any
disability benefits may become payable under the terms of the
American Electric Power System Long-Term Disability Plan in effect
as of the later of December 31, 2008 or the last day on which the
Participant’s initial payment election may be made in
accordance with Section 6.3.
2.22 “
Next Date Available ” or “ NDA ”
means the July 1 of the calendar year immediately following the
calendar year in which falls the Participant’s
Termination.
2.23 “
Participant ” means any exempt salaried Employee of an
Associated Company who has entered the Plan in accordance with
Article III of this Plan and has accrued a benefit under the
Plan.
2.24 “
Associated Company ” means the Company and those of
its subsidiaries and affiliates of the Corporation who are
considered an “Associated Company” as defined under the
Retirement Plan.
2.25 “
Plan ” means this American Electric Power System
Excess Benefit Plan, as amended or restated from time to
time.
2.26 “
Plan Year ” means the calendar year commencing each
January 1 and ending each December 31.
2.27 “
Premium Pay ” means overtime pay and shift
differential pay that is Earned during the relevant time period,
but that is not a part of the Participant’s Base Compensation
or Incentive Compensation.
2.28 “
Present Value ” means the current value of a future
payment or future stream of payments, calculated using the
Applicable Mortality Table and Applicable Interest Rate.
2.29 “
Retirement Date ” means the date the Participant
terminates employment with all Associated Companies after the
Participant has attained age 55 and completed at least five years
of service with the Associated Companies.
2.30 “
Retirement Plan ” means the American Electric Power
System Retirement Plan, as amended from time to time.
2.31 “
Supplemental Retirement Benefit ” means the basic
retirement benefit determined under Article IV of this
Plan.
2.32 “
Supplemental Savings Plan ” means the American
Electric Power System Supplemental Retirement Savings Plan, as
amended from time to time.
2.33 “
Termination ” means termination of employment with the
Company and its subsidiaries and affiliates for any reason;
provided that effective with respect to Participants whose
employment terminates on or after January 1, 2005, determinations
as to the circumstances that will be considered a Termination
(including a disability and leave of absence) shall be made in a
manner consistent with the written policies adopted by the HR
Committee from time to time to the extent such policies are
consistent with the requirements imposed under Code
409A(a)(2)(A)(i).
2.34 “
Unrestricted Benefit ” means the vested retirement
benefit that would be payable from the Retirement Plan under either
the Final Average Pay Formula or the Cash Balance Formula, as
described in Article IV, assuming Sections 401(a)(17) (Compensation
Limit) and 415 (Limitation on Benefits) of the Code are not
applicable. The calculation of the Unrestricted Benefit
also shall take into account other adjustments specified in an
Employment Contract.
ARTICLE III
Participation in the
Plan
3.1
Eligibility . All exempt salaried Employees of an
Associated Company shall be eligible to participate in this Plan so
long as such Employee is either (A) entitled to a Supplemental
Retirement Benefit under the terms of an Employment Contract, or
(B) both (1) a participant in the Retirement Plan, and (2)
satisfies one of the following conditions below:
|
|
|
The
Employee’s Base Compensation for the current or any prior
Plan Year exceeds the limitation of Section 401(a)(17) of the
Code,
|
|
|
|
The Employee
was a Participant in this Plan as of December 31, 2000,
|
|
|
|
The
Employee’s Base Compensation plus Incentive Compensation plus
Premium Pay for the current or any prior Plan Year (that begins on
or after January 1, 2000, in that such amounts were taken into
account for the calendar year 2000 in calculating the opening
balance for Participants under the Cash Balance Formula) exceeds
the limitation of Section 401(a)(17) of the Code, or
|
|
|
|
Otherwise
becomes entitled to a benefit under Article V of this
Plan.
|
Additionally,
an eligible Employee may become a Participant if he or she is
designated to be a Participant by the Committee. All
such eligibility determinations generally shall be made by December
31 of each year or such other time as set forth in an Employee
Contract.
3.2
Duration . An Employee who becomes a Participant
shall continue to be a Participant until his or her Termination or
the date he or she is no longer entitled to receive a Supplemental
Retirement Benefit under this Plan.
ARTICLE IV
Benefits
4.1
General Benefits . Upon a Participant's
Termination, the Participant shall be entitled to a Supplemental
Retirement Benefit calculated as of the Participant’s
Determination Date, as determined under this Article IV, to the
extent vested, to be paid at the time and in the form determined in
accordance with Article VI of this Plan. Except as
otherwise specified in Article X, a Participant’s
Supplemental Retirement Benefit shall become vested at the same
time and to the same extent as may be provided under the terms of
the Retirement Plan. Notwithstanding the foregoing, the
amount, calculation methodology, or vesting of a
Participant’s Supplemental Retirement Benefit may be reduced
or otherwise modified in the manner described in an Employment
Contract. Additionally, if the Committee determines that
a Participant has incurred a liability to, or otherwise damaged,
the Corporation, the Company or any Associated Company, the
Committee shall have the authority and power, in its sole
discretion, to reduce any portion or all of the amounts that might
otherwise become payable to such Participant under the terms of
this Plan by the amount of such liability or damage, as reasonably
determined by the Committee.
4.2
Calculation Methodology . For purposes of
calculating the Supplemental Retirement Benefit under Section 4.3
or 4.4 of this Plan, the following rules shall apply. To
the extent a Participant’s form of benefit under Article VI
is a lump sum or installments, this calculation shall be based on
the lump sum of the Unrestricted Benefit and Maximum
Benefit. To the extent a Participant’s form of
benefit under Article VI is an annuity, this calculation shall be
based on the single life annuity of the Unrestricted Benefit and
Maximum Benefit. If a Participant’s form of
benefit under Article VI is a combination lump sum distribution and
life annuity [as set forth in Section 6.2(b)(5)], both calculations
shall be made and the appropriate elected percentage applied to
each.
4.3
Amount of Benefit for Final Average Pay Participants
. A Participant in this Plan whose Retirement Plan
benefit takes into account the Final Average Pay Formula shall be
entitled to receive a benefit equal to the excess (if any) of the
benefit determined under paragraph (a) below over the benefit
determined under paragraph (b) below.
|
|
|
The greater of
(i) if the Participant’s Base Compensation for the current or
any prior Plan Year exceeds the limitation of Section 401(a)(17) of
the Code, the Unrestricted Benefit calculated (A) using the Final
Average Pay Formula and (B) based upon the sum of the rate of the
Participant’s Base Compensation (as determined from month to
month) and Earned Incentive Compensation, or (ii) the Unrestricted
Benefit calculated (A) using the Cash Balance Formula and (B) based
upon the sum of the Participant’s Earned Base Compensation,
Earned Incentive Compensation, and Earned Premium Pay; provided
however, that
|
|
|
|
such
calculation shall not take into account any amounts Earned with
respect to any period after the date of the Participant’s
Termination with all Associated Companies; and
|
|
|
|
with regard to
Participants who have an annual incentive opportunity in excess of
250% of Base Compensation for the Plan Year in which the Incentive
Compensation is Earned (per Section 2.11(b)(ii)), the amount of
Incentive Compensation that will be considered Earned with respect
to that Plan Year for purposes of Section 4.3(a)(i) shall not
exceed 100% of the highest annualized rate of the Employee’s
Base Compensation that was in effect with respect to that Employee
at any time during that Plan Year; provided, however, that this
limitation shall not apply to the extent of any Incentive
Compensation provided through the American Electric Power System
Senior Officer Incentive Plan; and
|
|
|
|
for purposes of
Section 4.3(a)(ii), the sum of compensation shall be limited to the
greater of $1,000,000 or 200% of the Participant’s annualized
rate of Base Compensation in effect on the last day of the Plan
Year (or, if earlier, the date of Termination).
|
|
|
|
The greater of
(1) the Maximum Benefit calculated using the Final Average Pay
Formula, or (2) the Maximum Benefit calculated using the Cash
Balance Formula.
|
4.4
Amount of Benefit for Cash Balance Participants
. A Participant in this Plan whose Retirement Plan
benefit takes into account only the Cash Balance Formula shall be
entitled to receive a benefit equal to the excess (if any) of the
benefit calculated under paragraph (a) below over the benefit
calculated under paragraph (b) below.
|
|
|
The
Unrestricted Benefit calculated (A) using the Cash Balance Formula
and (B) based upon the sum of the Participant’s Earned Base
Compensation, Earned Incentive Compensation, and Earned Premium
Pay. This sum shall be limited to the greater of
$1,000,000 or 200% of the Participant’s annualized rate of
Base Compensation in effect on the last day of the Plan Year (or,
if earlier, the date of Termination).
|
|
|
|
The Maximum
Benefit, calculated using the Cash Balance Formula.
|
4.5
Disability Accruals . Notwithstanding anything in
the Plan to the contrary, if a Participant incurs a disability
(under the terms of the Retirement Plan), the Participant may
continue to accrue a benefit under this Plan from the date of such
disability through the Maximum Disability Period to the extent the
Participant is receiving such disability accruals under the
Retirement Plan, as paid in accordance with Section 6.6.
4.6
Adjustments to Supplemental Retirement Benefit .
|
|
|
The amount of a
Participant’s Supplemental Retirement Benefit shall be
reduced or otherwise modified in the manner described in an
Employment Contract (e.g., by any qualified or non-qualified
retirement benefits the Participant may be entitled to receive from
one or more prior employers).
|
|
|
|
If the
Participant’s Unrestricted Benefit under Section 4.3(a) was
the amount payable under the Final Average Pay Formula, the
following shall apply as of the date Incentive Compensation is
awarded to the Participant, to the extent such Incentive
Compensation is attributable to the calendar year that includes the
Participant’s date of Termination:
|
|
|
|
The
Participant’s Determination Date Supplemental Retirement
Benefit shall be recalculated to take into account the amount of
such Incentive Compensation that is considered Earned during the
period ending on such Participant’s Termination Date;
then
|
|
|
|
The amount(s)
payable to the Participant in accordance with the payment schedule
applicable to the Participant as set forth in Section 6.2 shall be
increased to reflect the Supplemental Retirement Benefit as
recalculated pursuant to paragraph (1); and
|
|
|
|
To the extent
the adjustment to the amount(s) payable to the Participant pursuant
to paragraph (2) relates to any amount that had already been paid
to the Participant under the applicable payment schedule, the
amount of the increase of each such payment shall receive interest
credits at the interest rate then being credited for the Cash
Balance Formula from the date such original payment had been made
through the date of the recalculation, and the aggregate amount of
the increases, plus interest, shall be paid in a single sum as soon
as administratively practicable.
|
4.7
Freeze of Benefits . No Participant shall accrue
any additional Maximum Benefit or Unrestricted Benefit under the
Final Average Pay Formula after December 31, 2010.
ARTICLE V
Enhanced Vested Lump Sum
Benefit
5.1
Severance Benefit . The benefits set forth in
this Article V shall be treated as a severance benefit under
ERISA.
5.2
Eligibility . An Employee who incurs a
Termination before age 55 due to a restructuring, consolidation, or
downsizing of the Corporation shall be eligible for a special
benefit under this Article V if he or she, at the time of
Termination, (i) has completed 25 or more years of Accredited
Service under the Retirement Plan, or (ii) has attained age 50 and
has completed 10 or more years of Accredited Service under the
terms of the Retirement Plan.
5.3
Enhanced Supplemental Plan Benefit .
|
|
|
If (i) a
Participant described in Section 5.2 has Base Compensation in
excess of the limitation under Section 401(a)(17) of the Code for
any current or prior Plan Year, (ii) such Participant is entitled
to a Supplemental Retirement Benefit calculated under Section 4.3,
and (iii) such Participant elects to receive at least some portion
of his or her Supplemental Retirement Benefit in the form of an
annuity, the Participant shall receive an enhanced vested lump sum
benefit equal to the Annuity Portion of the Present Value of the
excess (if any) of the benefit determined under paragraph (1) below
over the benefit determined under paragraph (2) below, calculated
as of the Determination Date.
|
|
|
|
The
Participant’s monthly Unrestricted Benefit calculated as a
single life annuity under the Final Average Pay Formula using the
early retirement reduction factors from age 65 to age 55 and, if
necessary, calculated with a full actuarial reduction from age 55
to the Determination Date, reduced by (but not to an amount less
than zero) the Participant’s monthly Unrestricted Benefit
calculated under Section 4.3(a).
|
|
|
|
The
Participant’s monthly Maximum Benefit calculated as a single
life annuity under the Final Average Pay Formula with a full
actuarial reduction from age 65 to the Determination Date, reduced
by (but not to an amount less than zero) the Participant’s
monthly Maximum Benefit calculated under Section 4.3(b).
|
|
|
|
For purposes of
this Section 5.3, the term “Annuity Portion” means the
percentage of the Participant’s Supplemental Retirement
Benefit that the Participant has elected under Article VI to
receive in the form of an annuity.
|
|
|
|
The special
benefit payable hereunder shall be payable in a lump sum as soon as
practicable after the annuity benefit under this Plan commences as
provided under Article VI. The amount of the lump sum
shall be credited with interest at the rate at which Interest
Credits are applied under the Retirement Plan from the
Determination Date to the date such lump sum is
distributed. If the Participant dies before the
dat
|
