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EXHIBIT A 10.7.1
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DEFERRED COMPENSATION PLAN FOR
OFFICERS AND DIRECTORS
OF CENTRAL VERMONT PUBLIC SERVICE
CORPORATION
Amended And Restated August 4,
2008
With An Effective Date of January 1,
2005
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TABLE OF
CONTENTS
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ARTICLE
I
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NAME, HISTORY
AND PURPOSE OF PLAN
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1
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1.1
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Name and
History
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1
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1.2
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Purpose
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1
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1.3
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Trust
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1
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ARTICLE
II
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DEFINITIONS
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2
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2.1
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Definitions
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2
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ARTICLE
III
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ELIGIBILITY AND
PARTICIPATION
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6
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3.1
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Eligibility
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6
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3.2
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Commencement of
Participation
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6
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3.3
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Duration
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6
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ARTICLE
IV
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DEFERRAL
ELECTION AGREEMENTS, INVESTMENT EARNINGS, ACCOUNTING
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6
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4.1
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Deferral
Election Agreement
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6
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4.2
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Timing
Requirements for Deferral Elections
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7
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4.3
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Amount of
Deferrals
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7
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4.4
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Period for
Which Deferral Election Agreement Applies
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8
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4.5
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Changes in
Deferral Election Agreement
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8
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4.6
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Investment
Credits
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9
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4.7
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Payment
Elections and Accounting
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10
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ARTICLE
V
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VESTING
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11
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5.1
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Vesting of
Accounts
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11
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ARTICLE
VI
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PLAN
DISTRIBUTIONS
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11
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6.1
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Time for
Payment
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11
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6.2
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Form of
Payment/Payment Schedule
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12
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6.3
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Discretionary
Acceleration of Payments
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13
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6.4
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Delay of
Payments
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15
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6.5
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Payment Upon
Change in Control of Company
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16
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6.6
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Tax
Withholding
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16
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6.7
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Valuation of
Accounts for Distributions and Withdrawals
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16
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ARTICLE
VII
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ADMINISTRATION
OF THE PLAN
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16
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7.1
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Plan
Administrator
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16
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7.2
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Outside
Services
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17
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7.3
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Indemnification
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17
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7.4
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Claims
Procedure
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17
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7.5
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Compliance with
Section 409A
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18
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ARTICLE
VIII
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AMENDMENT AND
TERMINATION
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18
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8.1
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Amendment
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18
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8.2
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Termination
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19
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ARTICLE
IX
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GRANDFATHERED
ACCOUNTS
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20
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9.1
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Maintenance of
Grandfathered Accounts
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20
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9.2
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Distributions
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20
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9.3
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Construction
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22
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ARTICLE
X
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MISCELLANEOUS
PROVISIONS
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22
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10.1
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Source of
Payments
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22
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10.2
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No
Warranties
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22
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10.3
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Inalienability
of Benefits
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22
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10.4
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Expenses
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23
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10.5
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No Right of
Employment
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23
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10.6
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Headings
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23
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10.7
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Gender and
Number
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23
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10.8
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Construction
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23
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EXHIBIT
A
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Grandfathered
Participants
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ARTICLE I
NAME, HISTORY AND PURPOSE OF
PLAN
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Name and
History . The
name of this plan is the Deferred Compensation Plan for Officers
and Directors of Central Vermont Public Service Corporation (the
“Plan”). The Plan was originally established with an
effective date of January 1, 2002, by Central Vermont Public
Service Corporation. Following the enactment of Section 409A on
October 22, 2004, the Plan was amended and restated on August 4,
2008, with an effective date of January 1, 2005, with the intention
of bringing the Plan into compliance with the requirements of
Section 409A. Subsequently, the Internal Revenue Service
and Department of Treasury issued substantive guidance regarding
the application of Section 409A to nonqualified deferred
compensation, and extended the period for amending nonqualified
deferred compensation plans that were in existence at the time of
enactment of Section 409A to December 31,
2008. Accordingly, the Plan was amended and restated by
the Board on August 4, 2008, with an effective date of January 1,
2005.
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Purpose . The purpose of the Plan is to
attract and retain key employees by providing each Participant with
an opportunity to defer receipt of a portion of their base salary,
bonus, and other specified compensation. The purpose of
amending and restating the Plan is to (i) comply with the final
Treasury regulations issued under Section 409A, and (ii) provide
for the payment of amounts deferred under the Plan prior to January
1, 2005, (including any investment earnings thereon) with respect
to those Participants who are listed on Exhibit A (the
“Grandfathered Participants”). The Plan
shall at all times be interpreted by the Plan Administrator in a
manner that is consistent with Section 409A.
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Trust . Company may set aside assets in a
trust or other funding arrangement as it, or its delegate, deems
appropriate to anticipate benefit liabilities accumulating under
the Plan. However, the assets of any such arrangement
shall, at all times, be subject to the claims of Company’s
creditors and no portion of any funds set apart for a Participant,
pursuant to this Plan shall be the property of such Participant
until distribution thereof has been made. Further, the
rights of a Participant shall be limited to those of a general,
unsecured creditor of Company who has a claim equal to the value of
the Participant’s Account. Benefits under this Plan will be
payable from the general assets of Company, or from such other
funding vehicle established for such purpose as described above, or
both.
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ARTICLE II
DEFINITIONS
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Definitions . The following terms have the
meanings set forth below unless a different meaning is required by
the context.
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Account - means a bookkeeping account maintained by
Company to record Company’s payment obligation to each
Participant under the Plan. Company may maintain a
single Account to record the total of amounts deferred by a
Participant and investment earnings credited hereunder to such
deferrals and component Accounts to reflect benefits payable at
different times and different forms pursuant to the terms of a
Participant’s Deferral Election Agreement. For
example, a Participant may have one or more Specified Date Accounts
as provided for under Section 4.7 and a Retirement/Termination
Account. Accounts are maintained strictly for accounting
purposes and do not represent separate funding of the benefits
under the Plan. Accounts shall be maintained as part of
the general assets of Company.
Affiliate - means all entities with whom Company would be
considered a single employer under Code Sections 414(b) and 414(c),
provided that in applying Code Section 1563(a)(1), (2), and (3) for
purposes of determining a controlled group of corporations under
Code Section 414(b), the language “at least 50 percent”
is used instead of “at least 80 percent” each place it
appears in Section 1563(a)(1), (2), and (3), and in applying
Treasury Regulation Section 1.414(c)-2 for purposes of determining
trades or businesses (whether or not incorporated) that are under
common control for purposes of Section 414(c), “at least 50
percent” is used instead of “at least 80 percent”
each place it appears in that regulation. Such term shall be
interpreted in a manner consistent with the definition of
“service recipient” contained in Section
409A.
Base
Pay - means base
salary for Officers and retainers and fees for
Directors.
Beneficiary - means the person or persons designated by the
Participant to receive benefits under the Plan in the event of the
Participant’s death. In the absence of an
effective designation at the time of the Participant’s death,
the Beneficiary shall be the surviving spouse or civil union
partner of the Participant, or, if the Participant does not have a
surviving spouse, his/her surviving children in equal shares, or,
if he has no surviving children, his/her estate.
Board - means the Board of Directors of Central Vermont
Public Service Corporation; however, it shall include unless
specifically stated otherwise, a committee of the Board authorized
to act for the Board with respect to this Plan.
Change in
Control - means, in the case of each Participant under the
Plan, the meaning provided for in the Change in Control
Agreement, if any, between the Participant and Company.
Code - means the Internal Revenue Code of 1986, as
amended from time to time.
Company - means Central Vermont Public Service Corporation
and any Affiliate that adopts this Plan with Central Vermont Public
Service Corporation’s approval.
Directo r - means a member of the Board of Directors of
Central Vermont Public Service Corporation or the Board of
Directors of any Affiliate that adopts this Plan with Central
Vermont Public Service Corporation’s approval.
Disabled - means a Participant who is unable to engage in
any substantial gainful activity by reason of a medically
determinable physical or mental impairment which can be expected to
result in death or can be expected to last for a continuous period
of not less than 12 months, or has been, by reason of any medically
determinable physical of mental impairment which can
be expected to result in death or can be expected to last for a
continuous period of not less than 12 months, receiving income
replacement benefits for a period of not less than 3 months under
Company’s accident and health plan covering its
Employees.
Disability - means the condition of being
Disabled.
Deferral
Election Agreement - means the agreement between Company and the
Participant, memorialized by the Participant’s completed
deferral election form and described in Article IV.
Eligible
Officer, Employee or Director - shall have the meaning provided for in Section
3.1.
Employee - means an individual employed by
Company.
Entry
Date -
means January 1 of each Plan Year
provided that the Eligible Officer, Employee or Director completes
a Deferral Election Agreement within the time specified by the Plan
Administrator for such Plan Year; however, in the case of a Newly
Eligible Participant, “Entry Date ” means the
date when an Officer or Director first becomes eligible to
participate in the Plan provided that such Officer, Employee or
Director completes a Deferral Election Agreement within 30 days of
becoming eligible to participate in the Plan.
ERISA - means the Employee Retirement Income Security
Act of 1974, as amended from time to time.
Grandfathered Participant
- Shall have the meaning provided for in Section
1.2.
Incentive
Pay -
means, with respect to Officers any
Performance Share Awards and any incentive compensation payable
pursuant to the Central Vermont Public Service Corporation
Management Incentive Plan ( or any other plan in which an
Officer is or may become eligible to participate providing
incentive compensation payable in cash or shares of Company stock
to Participants determined on the basis of a specific performance
goals and performance periods).
Newly
Eligible Participant - means any Officer, Employee or Director who
first becomes eligible to participate in the Plan after January 1
of any Plan Year.
Officer - means an Employee who holds one of the
following job titles: (i) Assistant Vice President; (ii) Vice
President; (iii) Senior Vice President; or (iv) President and/or
Chief Executive Officer.
Participant - means an Officer, Employee or Director who
meets the eligibility requirements of the Plan and elects to
participate in the Plan or who has an Account under the
Plan.
Payment Schedule - means the form in which payments from a
Participant’s Account will be made, i.e. in a lump-sum or in
installments as provided for in Section 6.2. The Payment
Schedule selected by Participant may vary as between a
Participant’s Specified Date Account(s), if any, and his/her
Retirement/Termination Account.
Performance Share Plan Awards
- means an award pursuant to the
Central Vermont Public Service Corporation Performance
Share Incentive Plan or successor plan.
Plan - means this Deferred Compensation Plan for
Officers and Directors of Central Vermont Public Service
Corporation.
Plan
Administrator - means
the Plan Administrator appointed pursuant to Section
7.1.
Plan
Year -
means the calendar year.
Prime
Rate -
means the interest rate posted by a
majority of the top twenty-five insured United States chartered
banks as published in the Wall Street Journal.
Retirement/Termination Account
- means an Account established by
the Company to record the amount payable to a Participant due to
his/her Separation from Service.
Section
409A - means Code
Section 409A and any proposed, temporary or final regulations, or
any other guidance, promulgated with respect to such Section 409A
by the Department of Treasury or the Internal Revenue
Service.
Separation from Service
- means a termination of employment with Company
and its Affiliates in such a manner as to constitute a
“separation from service” as defined under Section
409A.
Specified
Date Account - means an Account established pursuant to Section
4.7 that will be paid (or that will commence to be paid) on the
date specified, by Participant in his/her Deferral Election
Agreement.
ARTICLE III
ELIGIBILITY AND
PARTICIPATION
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Eligibility . All Officers and Directors of
Company are eligible to participate in the plan as well as any
Employee who is (i) expressly selected by the Board, in its sole
discretion, to participate in the Plan, and (ii) a member of a
“select group of management or highly compensated
employees,” within the meaning of Sections 201, 301 and 401
of ERISA shall be eligible to participate in the Plan (as the
circumstances require, an “Eligible Officer”,
“Eligible Employee” or “Eligible
Director”).
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Commencement
of Participation . An Eligible Officer, Employee or
Director shall commence participation in the Plan effective as of
his/her Entry Date.
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Duration . A Participant shall be eligible to
defer Base Pay and Incentive Pay, subject to the terms of the Plan,
for as long as such Participant meets the eligibility requirements
of the Plan. A Participant’s entitlement to make
such deferrals shall cease with respect to the Plan Year following
the Plan Year in which Participant ceases to be eligible. Although
such individual’s eligibility to continue to make deferrals
may cease, he/she shall continue to be subject to all of the terms
and conditions of the Plan for as long as he/she remains a
Participant. An individual shall remain a Participant as long as
his/her Account is greater than zero. An individual shall cease
being a Participant in the Plan when all benefits under the Plan to
which he/she is entitled have been paid.
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ARTICLE IV
DEFERRAL ELECTION AGREEMENTS,
INVESTMENT EARNINGS, ACCOUNTING
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Deferral
Election Agreement . A Participant may elect to defer a
portion of his/her Base Pay and/or Incentive Pay by entering into a
Deferral Election Agreement with Company pursuant to the rules set
forth in this Article IV. Amounts deferred shall
be credited to the Participant’s Account as soon as
practicable after the date on which such Base Pay or Incentive Pay
would have been paid or otherwise made available to the Participant
but for the Participant’s deferral election.
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4.2.
Timing Requirements for Deferral Elections .
(a)
General Timing Rule for Deferral Elections
. Except as provided in Section 4.2(b), Participants may
only defer Base Pay or Incentive Pay by filing a Deferral Election
Agreement on or before the date specified by the Plan Administrator
but in no event later than December 31 immediately preceding the
Plan Year in which the compensation that is subject of such
Deferral Election Agreement will be earned. A Deferral
Election Agreement that is not timely filed shall be void and shall
have no effect with respect to the Participant’s
compensation.
(b) Newly
Eligible Participant . Upon attaining eligibility as
provided for under Section 3.1, a Newly Eligible Participant shall
have up to 30 calendar days from such eligibility date to submit a
Deferral Election Agreement with respect to Base Pay and/or
Incentive Pay to be earned during the balance of the Plan
Year. A Deferral Election Agreement that is filed after
the 30-day period shall be void and have no effect on the
Participant’s compensation. With regard to Base
Pay, a timely filed Deferral Election Agreement described in this
Section 4.2(b) shall be effective with the first payroll period
beginning after such 30 th day. With regard to any Incentive
Pay, the Deferral Election Agreement shall only apply to the
portion of the Incentive Pay that is equal to the total amount of
the Incentive Pay earned multiplied by a fraction, the numerator of
which is the number of calendar days beginning on the day
immediately after the date that the Deferral Election Agreement
becomes effective and ending on the last day of the performance
period to which the Participant’s Incentive Pay is
attributable, and the denominator of which is the total number of
calendar days in such performance period.
4.3.
Amount of Deferrals .
(a)
From Incentive Pay . An Eligible Officer or
Employee may elect to defer up to 100% of his/her Incentive Pay as
specified in his/her Deferral Election Agreement.
(b)
From Base Pay . An Eligible Officer or Employee
may elect to defer up to 25% of his/her Base Pay, as specified in
his/her Deferral Election Agreement. Directors may elect
to defer up to 100% of their Base Pay.
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Period For
Which Deferral Election Agreement Applies . Except with respect to Performance
Share Plan Awards or similar long-term incentive compensation
plans, a Deferral Election Agreement for a Plan Year shall apply
only with respect to that Plan Year. Deferrals for a
subsequent Plan Year shall be made only pursuant to a new Deferral
Election Agreement that applies with respect to such subsequent
Plan Year. A Deferral Election Agreement made with
respect to a Performance Share Plan Award (or similar long-term
plan) shall remain in effect until the completion of the
performance period to which such election was made; however, a
separate Deferral Election Agreement may be made in each subsequent
Plan Year for each new performance cycle.
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4.5.
Changes in Deferral Election Agreement .
(a)
General Rule . Except as provided in this Section
4.5, a Participant may not change the form or delay the
distribution of the amount Participant previously elected to defer
pursuant to Deferral Election Agreement after the beginning of the
Plan Year to which the Agreement applies (a “Subsequent
Payment Election”).
(b)
Subsequent Payment Elections . A Subsequent
Payment Election whether made under Section 4.5(c) or (d) may not
take effect until at least 12 months after the date on which it is
accepted by the Plan Administrator. For this purpose,
the installment form of payment shall be treated as a single
payment rather than a series of payments. Accordingly, a
Subsequent Payment Election may not be made with respect to the
installment form of payment during the 12-month period preceding
the date on which the first installment is payable or after
payments have commenced. The Subsequent Payment Election
most recently accepted by the Plan Administrator and that satisfies
the requirements of this Section 4.5(b) shall govern the payout of
the Account (or sub-accounts specified therein) notwithstanding any
prior election to the contrary.
(c)
Retirement/Termination Account . A Participant may make a
one-time election to change the form of payment of his/her
Retirement/Termination Account to a form otherwise permitted under
the Plan. If a Subsequent Payment Election is accepted by the Plan
Administrator, then, except in the event of the death or Disability
of the Participant, the payment of such Retirement/Termination
Account shall be delayed until the 5th anniversary of the date that
the Retirement/Termination Account would otherwise have been paid
had such Subsequent Payment Election not been made (or, in the case
of installment payments, on the 5th anniversary of the date the
first installment payment was scheduled to be made). In
the event of Participant’s death or Disability, payment shall
be made as provided for in Section 6.2(d).
(d)
Specified Date Account . A Participant may make one or more
elections to (i) delay the payment date or (ii) change the form of
payment of one or more Specified Date Account(s) to a time or form
otherwise permitted under the Plan. In the case of
either (i) or (ii), the Subsequent Payment Election, must specify a
new payment date that is at least 5 years after the previously
scheduled payment date (or, in the case of installment payments, at
least 5 years from the date the first installment payment was
scheduled to be made). However, in the event of the
Participant’s death, Disability or Separation from Service
prior to complete payment of his/her Specified Date Account,
payment shall be made as provided for in Section 6.2.
4.6.
Investment Credits .
(a)
Optional Investments . Except as provided in
Section 4.6(b) and 4.6(d), a Participant shall have a choice of the
following two investment options:
(i) a fixed rate of return equal to
the Prime Rate plus 1%; or
(ii) the rate of return on Company
common stock for the applicable year, including dividends credited
to the Participant’s Account on the date dividends are paid
to Company’s shareholders. For this purpose, the
rate of return on Company common stock shall be based its closing
price at the end of the relevant measuring period and shall be
calculated by the Plan Administrator.
All Accounts
hereunder shall be credited w
