PORTLAND GENERAL ELECTRIC COMPANY 2005 MANAGEMENT DEFERRED COMPENSATION PLAN

EXHIBIT 10.18

 

PORTLAND GENERAL ELECTRIC COMPANY

2005 MANAGEMENT DEFERRED COMPENSATION PLAN

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effective as of January 1, 2005

 

TABLE OF CONTENTS

Page

ARTICLE I PURPOSE             1

1.1        Purpose             1

1.2        Effective Date    1

1.3        Plan Sponsor     1

ARTICLE II DEFINITIONS    2

2.1        Account            2

2.2        Administrative Committee          2

2.3        Base Salary       2

2.4        Beneficiary        2

2.5        Board    2

2.6        Bonuses            2

2.7        Company          2

2.8        Code     2

2.9        Compensation   3

2.10      Compensation Committee          3

2.11      Deferral Election            3

2.12      Determination Date        3

2.13      Direct Subsidiary           3

2.14      Eligible Employee          3

2.15      ERISA 4

2.16      Incentive Compensation             4

2.17      Indirect Subsidiary         4

2.18      Interest 4

2.19      Key Employee   5

2.20      Paid Time Off    5

2.21      Paid Time Off Cancellation        5

2.22      Participant         5

2.23      Participating Employer   5

2.24      Pension Plan      5

2.25      Plan       5

2.26      Policies 5

2.27      President           6

2.28      Separation from Service or Separate from Service          6

2.29      Unforeseeable Emergency          6

ARTICLE III ELIGIBILITY AND DEFERRALS         6

3.1        Eligibility            6

3.2        Deferral Elections          6

3.3        Limits on Elective Deferrals        7

3.4        Matching Contributions 8

3.5        Welfare Benefits            8

ARTICLE IV DEFERRED COMPENSATION ACCOUNT   8

4.1        Crediting to Account      8

4.2        Determination of Accounts         8

4.3        Vesting of Accounts       8

4.4        Statement of Accounts   9

ARTICLE V PLAN BENEFITS           9

5.1        Benefits             9

5.2        Withdrawals for Unforeseeable Emergency        9

5.3        Form of Benefit Payment           10

5.4        Withholding; Payroll Taxes         11

5.5        Commencement of Payments     11

5.6        Full Payment of Benefits             11

5.7        Payment to Guardian     12

ARTICLE VI RESTORATION OF PENSION PLAN BENEFITS      12

6.1        Pension Plan      12

6.2        Restoration of Pension Plan Benefits       12

ARTICLE VII BENEFICIARY DESIGNATION         13

7.1        Beneficiary Designation 13

7.2        Amendments     13

7.3        No Beneficiary Designation        13

7.4        Effect of Payment          13

ARTICLE VIII ADMINISTRATION   13

8.1        Administrative Committee; Duties           13

8.2        Agents   14

8.3        Binding Effect of Decisions         14

8.4        Indemnity of Administrative Committee; Compensation Committee         14

8.5        Availability of Plan Documents   14

8.6        Cost of Plan Administration        14

ARTICLE IX CLAIMS PROCEDURE            14

9.1        Claim    14

9.2        Denial of Claim 15

9.3        Review of Claim            15

9.4        Decision Upon Review 16

9.5        Finality of Determinations; Exhaustion of Remedies         16

ARTICLE X AMENDMENT AND TERMINATION OF PLAN        16

10.1      Amendment       16

10.2      Termination       17

10.3      Payment at Termination 17

ARTICLE XI MISCELLANEOUS       17

11.1      Legal Determinations     17

11.2      Liability             18

11.3      Trust Fund         18

11.4      Nonassignability             19

11.5      Not a Contract of Employment 19

11.6      Protective Provisions     19

11.7      Governing Law 19

11.8      Terms    19

11.9      Validity 19

11.10    Notice   20

11.11    Successors        20

 

PORTLAND GENERAL ELECTRIC COMPANY

2005 MANAGEMENT DEFERRED COMPENSATION PLAN

 

ARTICLE I

PURPOSE

1.1        Purpose

The purpose of this 2005 Management Deferred Compensation Plan is to provide elective deferred compensation in excess of the limits on elective deferrals under qualified cash or deferred arrangements. It is intended that the Plan will aid in attracting and retaining personnel of exceptional ability.

            The Plan is intended (1) to comply with section 409A of the Internal Revenue Code of 1986, as amended (the "Code") and official guidance issued thereunder, and (2) to be "a plan which is unfunded and is maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees" within the meaning of sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA" ). Notwithstanding any other provision of this Plan, this Plan shall be interpreted, operated and administered in a manner consistent with these intentions.

1.2        Effective Date

Prior to January 1, 2005, the Portland General Electric Company (the "Company") maintained the Management Deferred Compensation Plan, which was frozen as of December 31, 2004. The Plan is hereby established by the Company effective January 1, 2005 and is intended to replace the frozen plan on a prospective basis.

1.3        Plan Sponsor

The Plan is adopted for the benefit of selected employees of the Company and selected employees of any corporations or other entities affiliated with or subsidiary to it, if such corporations or entities are selected by the Board. The Company assumes no liability for the payment of any Plan benefit owed by any other Participating Employer, as defined herein, by reason of its Plan sponsorship.

ARTICLE II

DEFINITIONS

2.1        Account

" Account " means the account maintained by a Participating Employer in accordance with ARTICLE IV with respect to any deferral of Compensation or Paid Time Off Cancellation pursuant to this Plan.

2.2        Administrative Committee

" Administrative Committee " means the persons designated by the Board to administer the Plan.

2.3        Base Salary

" Base Salary " means the Eligible Employee ' s actual base pay in the pay period and, except as provided herein, excluding any bonuses and/or overtime pay.

2.4        Beneficiary

" Beneficiary " means the person, persons or entity entitled under ARTICLE VII to receive any Plan benefits payable after a Participant ' s death.

2.5        Board

" Board " means the Board of Directors of Portland General Electric Company.

2.6        Bonuses

" Bonuses " means Corporate Incentive Plan Awards, Notable Achievement Awards, and any other form of cash Incentive Compensation explicitly designated as deferrable pursuant to this Plan by the Deferral Election form approved by the Administrative Committee.

2.7        Company

" Company " means Portland General Electric Company, an Oregon corporation.

 

2.8        Code

" Code " means the Internal Revenue Code of 1986, as amended.

 

2.9        Compensation

" Compensation " means the total of the following, before reduction for elective deferrals under this Plan or a Participating Employer ' s tax qualified retirement savings plan or any other flexible benefit plan:

2.9-1     Base Salary;

2.9-2     Bonuses;

2.9-3     Any interest on the above payments credited by a Participating Employer for the benefit of an Eligible Employee prior to the date of payment, without respect to any deferral of Compensation made pursuant to this Plan, by a Participating Employer.

Compensation, for purposes of this Plan, may include any new form of cash remuneration paid by a Participating Employer to any Eligible Employee which is explicitly designated as deferrable pursuant to this Plan by the Deferral Election form approved by the Administrative Committee. Compensation for purposes of this Plan, does not include expense reimbursements, imputed income, or any form of noncash compensation or benefits.

2.10      Compensation Committee

"Compensation Committee " means the Compensation Committee of the Board.

2.11      Deferral Election

" Deferral Election " means the election completed by Participant in a form approved by the Administrative Committee which indicates Participant ' s irrevocable election to defer Compensation as designated in the Deferral Election, pursuant to ARTICLE III.

2.12      Determination Date

" Determination Date " means the last day of each calendar month.

2.13      Direct Subsidiary

            " Direct Subsidiary " means any corporation of which a Participating Employer owns at least eighty percent (80%) of the total combined voting power of all classes of its stock entitled to vote.

2.14      Eligible Employee

            " Eligible Employee " means an employee of a Participating Employer who:

2.14-1   Is exempt;

2.14-2   Is not covered by a collective bargaining agreement; and

2.14-3   If employed for the entire calendar year, receives or, is expected to receive, Base Salary and an annual bonus from one or more Participating Employers in the calendar year, in an amount equal to or in excess of the threshold amount described in 2.14-5 below, or

2.14-4   If employed for a part of the calendar year, receives or, based on an annualized level of pay would have received, Base Salary and an annual bonus from one or more Participating Employers in the calendar year, in an amount equal to or in excess of the threshold amount described in 2.14-5 below. Notwithstanding the above, eligibility is at the discretion of the Administrative Committee.

2.14-5   The threshold amount in calendar year 2005 and any subsequent year shall be one hundred and twenty-five thousand dollars ($125,000). Such amount may be adjusted by the Administrative Committee each subsequent calendar year at the same time and in not less than the percentage ratio as the cost of living adjustment in the dollar limit on defined benefits under Code section 415(d).

2.15      ERISA

"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.

2.16      Incentive Compensation

            " Incentive Compensation " means payments made to a Participant in recognition of meritorious work performance but shall not include, without limitation, any payment received as moving expense, mortgage expense or mortgage interest reimbursement.

2.17      Indirect Subsidiary

" Indirect Subsidiary " means any corporation of which a Participating Employer directly and constructively owns at least eighty percent (80%) of the total combined voting power of all classes of its stock entitled to vote. In determining the amount of stock of a corporation that is constructively owned by a Participating Employer, stock owned, directly or constructively, by a corporation shall be considered as being owned proportionately by its shareholders according to such shareholders ' share of voting power of all classes of its stock entitled to vote.

2.18      Interest

            " Interest " means the interest yield computed at the monthly equivalent of an annual yield that is one-half (0.5) percentage point higher than the annual yield on Moody ' s Average Corporate Bond Yield Index for the three (3) calendar months preceding the immediately prior month as published by Moody ' s Investors Service, Inc. (or any successor thereto), or, if such index is no longer published, a substantially similar index selected by the Board.

2.19      Key Employee

            "Key Employee" means an Employee treated as a "specified employee" under Code section 409A(a)(2)(B)(i), i.e. , a key employee (as defined in Code section 416(i) without regard to paragraph (5) thereof) of a corporation any stock in which is publicly traded on an established securities market or otherwise.

2.20      Paid Time Off

            " Paid Time Off " means those vacation and holiday days for which the Employer pays employees for time not worked.

2.21      Paid Time Off Cancellation

            " Paid Time Off Cancellation " means cash payments made in lieu of Paid Time Off earned by an Eligible Employee.

2.22      Participant

            " Participant " means any Eligible Employee who has elected to make deferrals under this Plan.

2.23      Participating Employer

            " Participating Employer " means the Company or any affiliated or subsidiary company designated by the Board as a Participating Employer under the Plan, as long as such designation has become effective and continues to be in effect. The designation as a Participating Employer shall become effective only upon the acceptance of such designation and the formal adoption of the Plan by a Participating Employer. A Participating Employer may revoke its acceptance of designation as a Participating Employer at any time, but until it makes such revocation, all of the provisions of this Plan and any amendments thereto shall apply to the Eligible Employees of the Participating Employer and their Beneficiaries.

2.24      Pension Plan

            " Pension Plan " means the Participating Employer ' s Pension Plan, as may be amended from time to time, and any successor defined benefit retirement income plan or plans maintained by the Participating Employer which qualify under Code section 401(a).

2.25      Plan

            " Plan " means the Portland General Electric Company 2005 Management Deferred Compensation Plan, as may be amended from time to time.

 

 

 

2.26      Policies

" Policies " means any life insurance policies, annuity contracts or the proceeds therefrom owned or which may be acquired by Participating Employer.

 

2.27      President

" President " means the President of the Company.

2.28      Separation from Service or Separate from Service means a "separation from service" within the meaning of Code section 409A. Generally, a separation from service occurs when an individual ceases to provide services for the Company and any corporations or other entities that are treated as a single employer with the Company under Code section 414.

2.29      Unforeseeable Emergency

            "Unforeseeable Emergency" means a severe financial hardship to a Participant resulting from an illness or accident of the Participant, the Participant's spouse, or a dependent (as defined in Code section 152(a)) 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.

 

ARTICLE III

ELIGIBILITY AND DEFERRALS

3.1        Eligibility

3.1-1     General. An Eligible Employee who has completed one year of continuous employment with one or more Participating Employers shall be eligible to participate by making a Deferral Election under Section 3.2 below. The Administrative Committee shall notify Eligible Employees about the Plan and the benefits provided under it. The requirement of one year of continuous employment may be waived by the Administrative Committee.

3.1-2     Cessation of Eligibility. An Eligible Employee who ceases to be an employee of a Participating Employer or to satisfy condition 2.14-1, 2.14-2 or 2.14-3 of the definition of Eligible Employee shall cease participating as to new deferrals immediately.

 

 

 

3.2        Deferral Elections

3.2-1     Time of Elections. An Eligible Employee may elect to participate in the Plan with respect to any Compensation and/or Paid Time Off Cancellation designated in a Deferral Election in a form approved by the Administrative Committee. The Deferral Election must be filed with the Administrative Committee no later than December 15 of the year preceding the year in which the Compensation and/or Paid Time Off Cancellation is earned, or such shorter period as is designated in the Deferral Election form, provided all such elections must be made by the deadline imposed by Code section 409A. A Deferral Election for a new form of cash remuneration may be made at such other time before a Participant becomes entitled to receipt thereof, as may be approved by the Administrative Committee and within the deadline imposed by Code section 409A.

3.2-2     Mid-Year Eligibility. If an individual first becomes eligible to participate during a calendar year and wishes to defer Compensation and/or Paid Time Off Cancellation during the remainder of the year, a Deferral Election may be filed no later than thirty (30) days after becoming eligible to participate in the Plan. Such Deferral Election shall be effective only with regard to Compensation and/or Paid Time Off Cancellation earned after it is filed with the Administrative Committee and otherwise to the extent permitted by Code section 409A.

3.2-3     Performance-based Compensation. Notwithstanding the foregoing, if the Administrative Committee determines that an item of Compensation qualifies as "performance-based compensation" under Code section 409A, an Eligible Employee may elect to defer a portion of the performance-based compensation by filing a Deferral Election at such later time as permitted by the Administrative Committee and permitted under Code section 409A.

3.2-4     Irrevocability. A Deferral Election for amounts earned in the following calendar year shall become irrevocable on the December 15 by which it is due under Section 3.2-1 and a Deferral Election for amounts earned in the current calendar year shall become irrevocable upon filing with the Administrative Committee under Section 3.2-2 or, if applicable, Section 3.2-3.

3.2-5     Transfer to a Participating Employer. If a Participant transfers employment from one Participating Employer to another Participating Employer, the Participant's Deferral Election shall remain in effect for the remainder of the calendar year with respect to Compensation and/or Paid Time Off Cancellation earned by the individual after the transfer to the new Participating Employer.

3.3        Limits on Elective Deferrals

            A Participant may elect to defer up to eighty percent (80%) of Base Salary and up to one hundred percent (100%) of Bonuses or other form of cash remuneration as approved by the Administrative Committee. The level of deferral elected in either case must be in one percent (1%) increments. A Participant may elect to defer up to one hundred twenty (120) hours per year of Paid Time Off Cancellation in one-tenth (1/10) hour increments, but may not defer any Paid Time Off Cancellation earned in prior calendar years, or the first two hundred (200) hours of Paid Time Off Cancellation earned in the calendar year to which the Deferral Election relates.

3.4        Matching Contributions

            The Participating Employer shall provide a matching contribution for each Participant who is making deferrals of Base Salary under this Plan. The matching contribution shall be three percent (3%) of the Participant ' s annual elective Base Salary deferral under this Plan. For purposes of this provision, Base Salary shall not include amounts received as a Nuclear Regulatory Commission licensing bonus.

3.5        Welfare Benefits

            Compensation deferred under this Plan shall constitute compensation for purposes of any welfare plans, (as defined by ERISA), sponsored by the Participating Employer.

 

 

 

ARTICLE IV

DEFERRED COMPENSATION ACCOUNT

4.1        Crediting to Account

            The amount of the elective deferrals and matching contributions for a Participant under this Plan shall be credited to an Account for the Participant on the books of the Participating Employer at the time the Compensation and/or Paid Time Off Cancellation would have been paid in cash. Any taxes or other amounts due from the Participant with respect to the deferred Compensation under federal, state or local law, such as a Participant ' s share of FICA, shall be withheld from nondeferred Compensation payable to the Participant at the time the deferred amounts are credited to the Account. If at the time of such credit, there is not sufficient nondeferred compensation to make the required tax withholding, the amount deferred shall be reduced to allow the Company to comply with the tax withholding required.

4.2        Determination of Accounts

            The last day of each calendar month shall be a Determination Date. Each Participant ' s Account as of each Determination Date shall consist of the balance of the Account as of the immediately preceding Determination Date, plus the Participant ' s elective deferrals, matching contributions, and Interest credited under this Plan, minus the amount of any distributions made from this Plan since the immediately preceding Determination Date. Interest credited shall be calculated as of each Determination Date based upon the average daily balance of the Account since the preceding Determination Date.

4.3        Vesting of Accounts

            Account balances in this Plan shall be fully vested at all times.

4.4        Statement of Accounts

            The Administrative Committee shall submit to each Participant, after the close