WISCONSIN ENERGY CORPORATION EXECUTIVE DEFERRED COMPENSATION PLAN

Exhibit 10.13

W ISCONSIN ENERGY CORPORATION
EXECUTIVE DEFERRED COMPENSATION PLAN

Effective as of January 1, 2005

 

INTRODUCTION      ..................................................................................................................1

ARTICLE 1 DEFINITIONS    ...............................................................................1

ARTICLE 2 ELIGIBILITY AND PARTICIPATION  .........................................7

2.1       Selection by Committee            .............................................................7

2.2       Participation     ..............................................................................7

2.3       Enrollment Requirements           ...........................................................8

2.4       Cessation of Participation.         .........................................................8

ARTICLE 3 DEFERRALS AND CONTRIBUTIONS            .......................................8

3.1       Base Annual Salary       ....................................................................8

3.2       Annual or Long-Term Performance Awards      ...............................8

3.3       Restricted Stock           .........................................................................9

3.4       Performance Shares or Units     .......................................................9

3.5       Dividend Equivalents     ...................................................................10

3.6       Newly-Eligible Employees        ...........................................................11

3.7       Annual Company Contribution Amount ........................................11

3.8       Company Matching Amount     ........................................................11

ARTICLE 4 ACCOUNTS       ....................................................................................13

4.1       Establishment of Accounts        ............................................................13

4.2       Vesting .........................................................................................14

4.3       Deemed Investments     .....................................................................14

4.4       Taxes   ...........................................................................................17

ARTICLE 5 DISTRIBUTION OF ACCOUNT           .....................................................17

5.1       Time for Distribution     ......................................................................17

5.2       In-Service Payout         ..........................................................................17

5.3       Benefits Upon Retirement         ..............................................................18

5.4       Benefits Upon Separation from Service ..........................................18

5.5       Benefits Upon Death     ......................................................................19

5.6       Changes to Form of Payment    .........................................................20

5.7       Unforeseeable Emergency         .............................................................20

5.8       Change in Control         .........................................................................21

5.9       Discretion to Accelerate Distribution     .............................................21

ARTICLE 6 LEAVE OF ABSENCE   .....................................................................22

ARTICLE 7 BENEFICIARY DESIGNATION           ......................................................23

7.1       Beneficiary       .....................................................................................23

7.2       Beneficiary Designation; Change           ......................................................23

7.3       Acknowledgment          ............................................................................23

7.4       No Beneficiary Designation       ..............................................................23

7.5       Doubt as to Beneficiary ...................................................................23

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7.6       Discharge of Obligations           .................................................................23

ARTICLE 8 TERMINATION, AMENDMENT OR MODIFICATION         .................24

8.1       Termination.     ...................................................................................24

8.2       Amendment      .....................................................................................24

8.3       Effect of Payment         .............................................................................25

ARTICLE 9 ADMINISTRATION      ............................................................................25

9.1       Plan Administration       ...........................................................................25

9.2       Powers, Duties and Procedures            ........................................................25

9.3       Administration Upon Change In Control            .............................................26

9.4       Agents  ...............................................................................................26

9.5       Binding Effect of Decisions        .................................................................26

9.6       Indemnity of Committee            ......................................................................26

9.7       Employer Information   .........................................................................26

9.8       Coordination with Other Benefits          .........................................................27

ARTICLE 10 CLAIMS PROCEDURES         .....................................................................27

10.1     Presentation of Claim    ........................................................................27

10.2     Decision on Initial Claim            ....................................................................27

10.3     Right to Review            .................................................................................27

10.4     Decision on Review      ............................................................................28

10.5     Form of Notice and Decision    ..............................................................29

10.6     Legal Action     .......................................................................................29

ARTICLE 11 TRUST  ....................................................................................................29

11.1     Establishment of the Trust         ...................................................................29

11.2     Interrelationship of the Plan and the Trust          .............................................29

11.3     Distributions From the Trust      .................................................................29

ARTICLE 12 MISCELLANEOUS      .................................................................................29

12.1     Status of Plan   ......................................................................................29

12.2     Unsecured General Creditor     ................................................................29

12.3     Employer's Liability       ..............................................................................30

12.4     Nonassignability            ...................................................................................30

12.5     Not a Contract of Employment .............................................................30

12.6     Furnishing Information   ...........................................................................30

12.7     Receipt and Release     ..............................................................................30

12.8     Incompetent     ...........................................................................................30

12.9     Governing Law and Severability            .............................................................31

12.10   Notices and Communications    ...............................................................31

12.11   Successors       ..........................................................................................31

12.12   Insurance          ............................................................................................31

12.13   Legal Fees To Enforce Rights After Change in Control  ........................31

12.14   Terms   .................................................................................................32

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12.15   Headings          .............................................................................................32

 

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WISCONSIN ENERGY CORPORATION
EXECUTIVE DEFERRED COMPENSATION PLAN

INTRODUCTION

Wisconsin Energy Corporation, a Wisconsin Corporation (the "Company"), previously established the Legacy Wisconsin Energy Corporation Executive Deferred Compensation Plan (previously named the Wisconsin Energy Corporation Executive Deferred Compensation Plan) (the "Legacy Plan"). The Company most recently amended and restated the Legacy Plan effective July 23, 2004. The Company froze the Legacy Plan effective December 31, 2004 with respect to new deferrals such that all earned and vested amounts credited under the Legacy Plan are "grandfathered" within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the "Code") enacted under the American Jobs Creation Act of 2004.

Effective as of January 1, 2005, the Company hereby establishes the Wisconsin Energy Corporation Executive Deferred Compensation Plan (the "Plan"), as set forth herein, to provide benefits to a select group of management and highly compensated employees who contribute materially to the continued growth, development and future business success of the Company and its subsidiaries, if any. The Plan shall be unfunded for tax purposes and for purposes of Title I of the Employee Retirement Income Security Act of 1974, as amended ("ERISA").

The Plan is intended to comply with the provisions of Code Section 409A, and any guidance and regulations issued thereunder. The Plan shall be interpreted and administered consistent with this intent and shall apply to all amounts deferred under the Plan on or after January 1, 2005. Such amounts include any amounts previously earned and deferred under the Legacy Plan but not vested as of December 31, 2004. Notwithstanding the foregoing, during the Code Section 409A transition period in effect from January 1, 2005 through December 31, 2008, the Company permitted distribution elections and changes consistent with IRS transition relief, the elections and changes of which are otherwise documented via completed election forms.

ARTICLE 1
DEFINITIONS

Whenever used herein, the following terms have the meanings set forth below, unless a different meaning is clearly required by the context:

1.1       "Account" shall mean a bookkeeping account established for the benefit of a Participant under Article 4 utilized solely to measure and determine the amounts credited under the Plan on behalf of a Participant or her Beneficiary. A Participant's Account may include one or more of the following sub-Accounts, as more fully described in Article 4.

1. 1. 1. Company Contribution Account,
      2. Company Matching Account,
      3. Deferral Account,
      4. Dividend Deferral Account,

 

 

1. 1. 5. Performance Share Account,
      6. Performance Unit Account, and
      7. Restricted Stock Account.

1.2       "Annual or Long-Term Performance Award" shall mean any compensation, in addition to Base Annual Salary relating to services performed during any Plan Year, whether or not paid in such Plan Year or included on the Form W-2 for such Plan Year, payable to a Participant under an Employer's annual performance award and cash incentive plans, including any long-term incentive plans as may be in existence from time to time, but excluding severance payments, non-qualified supplemental pension payments and any stock options or related gains, restricted stock, performance shares or units, dividends, dividend equivalents and any other equity-based award provided under a plan or arrangement of any Employer.

1.3       "Annual Company Contribution Amount" shall mean, for any one Plan Year, the amount determined in accordance with Section 3.7.

1.4       "Annual Deferral Amount" shall mean the portion of a Participant's Base Annual Salary and/or Annual or Long-Term Performance Award that a Participant elects to defer in accordance with Article 3 for any one Plan Year.

1.5       "Annual Installment Method" shall mean an annual installment payment over a specified number of years as further described in Sections 5.3 and 5.4. To determine the value of the Participant's Account balance for calculating an installment payment, the Participant's Account balance shall be valued as of the close of business on the last business day of the Plan Year preceding the Plan Year for which payment is to be made. Notwithstanding the foregoing, when determining the Account balance for calculating the first installment payment for a Participant who is a "specified employee" within the meaning of Code Section 409A subject to a payment delay pursuant to Section 5.3 or 5.4, the Participant's Account balance shall be valued as of the close of business on the last business day of the calendar quarter preceding the date the first payment is scheduled to occur. Each annual installment shall be calculated by multiplying the Account balance determined above, as the case may be, by a fraction, the numerator of which is one, and the denominator of which is the remaining number of annual payments due to the Participant. For example, if a 10-year Annual Installment Method is specified, the first payment shall be 1/10 of the Account balance, valued as described herein. The following Plan Year, the payment shall be 1/9 of the Account balance, valued as described herein.

1.6       "Base Annual Salary" shall mean the annual cash compensation relating to services performed during a Plan Year, whether or not paid in, or included on the Form W-2 for, such Plan Year, excluding severance payments, non-qualified supplemental pension payments, performance awards, bonuses, commissions, overtime, fringe benefits, relocation expenses, incentive payments, non-monetary awards, directors' fees and other fees, automobile and other allowances paid to an Eligible Employee for employment services rendered (whether or not such allowances are included in the Eligible

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Employee's gross income), stock options, restricted stock, performance shares or units, dividends, dividend equivalents and any other equity-based award provided under a plan or arrangement of an Employer. Base Annual Salary shall be calculated before it is deferred or contributed by the Eligible Employee under a qualified or non-qualified plan of an Employer and shall include amounts not otherwise included in the Eligible Employee's gross income under Code Sections 125, 132(f)(4), 402(e)(3), 402(h) or 403(b) pursuant to plans established by an Employer; provided, however, that all such amounts shall be included in Base Annual Salary only to the extent that the amount would have been payable in cash to the Eligible Employee had there been no such plan.

1.7       "Beneficiary" shall mean one or more persons, trusts, estates or other entities designated by the Participant in accordance with Article 7 that are entitled to receive benefits under this Plan upon the death of a Participant.

1.8       "Board" shall mean the board of directors of the Company.

1.9       "Change in Control" shall mean, with respect to the Company, the occurrence of any one of the following dates, interpreted consistent with Treasury Regulation Section-1.409A-3(i)(5).

1. 1. 1. Change in Ownership . The date any one Person, or more than one Person Acting as a Group, acquires ownership of stock of the Company that, together with stock held by such Person or Group, constitutes more than 50% of the total fair market value or total voting power of the stock of the Company. Notwithstanding the foregoing, for purposes of this paragraph, if any one Person, or more than one Person Acting as a Group, is considered to own more than 50% of the total fair market value or total voting power of the stock of the Company, the acquisition of additional stock by the same Person or Persons is not considered to cause a Change in Control.
      2. Change in Effective Control .
      3. 1. The date any one Person, or more than one Person Acting as a Group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such Person or Persons) ownership of stock of the Company possessing 30% or more of the total voting power of the stock of the Company. Notwithstanding the foregoing, for purposes of this subparagraph, if any one Person, or more than one Person Acting as a Group, is considered to effectively control the Company, the acquisition of additional control of the Company by the same Person or Persons is not considered to cause a Change in Control; or
         2. The date a majority of the members of the Company's Board is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Company's Board before the date of the appointment or election.

 

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1. 1. 3. Change in Ownership of a Substantial Portion of the Company's Assets . The date any one Person, or more than one Person Acting as a Group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such Person or Persons) assets from the Company that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all of the assets of the Company immediately before such acquisition or acquisitions. For purposes of this paragraph (c), "gross fair market value" means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets. Notwithstanding the foregoing, a transfer of assets is not treated as a Change in Control if the assets are transferred to:
      4. 1. An entity that is controlled by the shareholders of the transferring corporation;
         2. A shareholder of the Company (immediately before the asset transfer) in exchange for or with respect to its stock;
         3. An entity, 50% or more of the total value or voting power of which is owned, directly or indirectly, by the Company;
         4. A Person, or more than one Person Acting as a Group, that owns, directly or indirectly, 50% or more of the total value or voting power of all the outstanding stock of the Company; or
         5. An entity, at least 50% of the total value or voting power of which is owned, directly or indirectly, by a Person described in clause (iv).
      5. " Person" and "Acting as a Group. "
      6. 1. For purposes of this Section, "Person" shall have the meaning set forth in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended.
         2. For purposes of this Section, Persons shall be considered to be "Acting as a Group" if they are owners of a corporation that enter into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the Company. If a Person, including an entity, owns stock in both corporations that enter into a merger, consolidation, purchase or acquisition of stock, or similar transaction, such shareholder is considered to be Acting as a Group with the other shareholders only with respect to the ownership in that corporation before the transaction giving rise to the change and not with respect to the ownership interest in the other corporation. Notwithstanding the foregoing, Persons shall not be considered to be Acting as a Group solely because they purchase or own stock of the same corporation at the same time, or as a result of the same public offering.

 

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1.10       "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time.

1.11       "Committee" shall mean an internal administrative committee appointed by the CEO to administer the Plan in accordance with Article 9.

1.12       "Company" shall mean Wisconsin Energy Corporation, a Wisconsin corporation, and any successor to all or substantially all of the Company's assets or business.

1.13       "Company Matching Amount" shall mean, for any one Plan Year, the amount determined in accordance with Section 3.8.

1.14       "Election Form" shall mean the form or forms established from time to time by the Committee that a Participant completes, signs and returns to the Committee to make a deferral election, make or change a payment form election, and/or make or change an investment election. To the extent authorized by the Committee, such form may be electronic or set forth in some other media or format.

1.15       "Eligible Employee" shall mean an employee of an Employer who satisfies the eligibility requirements set forth in Article 2.

1.16       "Employer" shall mean the Company and/or any of its subsidiaries (now in existence or hereafter formed or acquired).

1.17       "Ending Valuation Date" shall mean the last business day of the Plan Year immediately preceding the Plan Year of distribution of a lump sum payment or final installment payment, as the case may be.

1.18        "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time.

1.19       "401(k) Plan" shall mean all tax-qualified defined contribution retirement plans maintained by the Employer that permit employee elective deferral contributions in accordance with Code Section 401(k).

1.20       "In-Service Payout" shall mean distribution of all or a portion of an Annual Deferral Amount (including the related Company Matching Amount, if any), as of a specified date elected by a Participant.

1.21       "Measurement Funds" shall mean the hypothetical investment funds available under the Plan, as provided in Section 4.3, to determine the earnings and losses credited to a Participant's Account.

1.22       "Participant" shall mean a current or former Eligible Employee who participates in the Plan in accordance with Article 2 and maintains an Account balance hereunder. A spouse or former spouse of a Participant shall not be treated as a Participant in the Plan or have an Account under the Plan, even if she has an interest in the Participant's Account as a result of applicable law or property settlements resulting from legal separation or divorce.

 

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1.23       "Performance Shares" shall mean unvested shares with respect to Stock the amount of which vests based on achievement of certain performance criteria, all as determined under the applicable plan or arrangement of an Employer.

1.24       "Performance Share Amount" shall mean, for any grant of Performance Shares, the amount that would have been distributed to the Participant, but for an election to defer such amount under the Plan.

1.25       "Performance Units" shall mean unvested units representing the right to receive a cash payment whereby one unit has a value equal to one share of Stock, the amount of which vests based on achievement of certain performance criteria, all as determined and established pursuant to the applicable plan or arrangement of an Employer.

1.26       "Performance Unit Amount" shall mean, for any grant of Performance Units, the amount that would have been distributed to the Participant, but for an election to defer such amount under the Plan.

1.27       "Plan" shall mean the Wisconsin Energy Corporation Executive Deferred Compensation Plan, including any amendments adopted hereto.

1.28       "Plan Year" shall mean the calendar year.

1.29       "Restricted Stock" shall mean unvested shares of Stock which is restricted stock selected by the Compensation Committee, approved by the Board in its sole discretion, and awarded to the Participant under any Company stock incentive plan or arrangement.

1.30       "Restricted Stock Amount" shall mean, for any grant of Restricted Stock, the amount equal to the value of such Restricted Stock, calculated using the closing price for the Stock as of the day such Restricted Stock would otherwise vest (if a business day) or as of the next following business day.

1.31       "Retirement," "Retire(s)" or "Retired" shall mean an Employee's Separation From Service on or after attaining age 55 for any reason other than a leave of absence or death.

1.32       "Separation from Service" shall mean the Participant's termination of employment with all Employers and other entities affiliated with the Company, voluntarily or involuntarily, for any reason other than on account of death, or as otherwise provided by the Department of Treasury in regulations promulgated under Code Section 409A. For purposes of the foregoing, whether an entity is affiliated with the Company shall be determined pursuant to the controlled group rules of Code Section 414, as modified by Code Section 409A. Unless the employment relationship is terminated earlier by the Employer or the Participant, the following shall apply for determining a Separation from Service for Code Section 409A only:

1. 1. 1. Except as provided in paragraph (b), the Participant's employment relationship with the Employer shall be treated as continuing intact while the individual is on a military leave, sick leave or other bona fide leave of absence if the period of such leave does not exceed six months (or longer, if required by statute or contract). If

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the period of the leave exceeds six months and the Participant's right to reemployment is not provided either by statute or contract, the employment relationship is deemed to terminate on the first date immediately following such six-month period.

1. 1. 2. Where a leave of absence is due to any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than six months, where such impairment causes the Participant to be unable to perform the duties of her position of employment or any substantially similar position of employment, the Participant's relationship with the Employer shall be treated as continuing intact for a period of 29 months and will be deemed to terminate on the first date immediately following such 29 month period.

1.33       "Stock" shall mean Wisconsin Energy Corporation common stock.

1.34       "Trust" shall mean the fund created by the Wisconsin Energy Corporation Rabbi Trust Agreement dated December 1, 2000 between the Company and The Northern Trust Company, and as amended from time to time.

1.35       "Unforeseeable Emergency" shall mean, as determined by the Committee in its sole discretion, a severe financial hardship to the Participant resulting from (i) an illness or accident of the Participant, the Participant's spouse, the Participant's Beneficiary, or the Participant's dependent (as defined in Code Section 152, without regard to Code Section 152(b)(1), (b)(2), and (d)(1)(B)), (ii) loss of the Participant's property due to casualty (including the need to rebuild a home following damage to a home not otherwise covered by insurance), or (iii) other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant.

ARTICLE 2
Eligibility and Participation

2.1       Selection by Committee . Participation in the Plan shall be limited to a select group of management and highly compensated employees of the Employer (as defined in ERISA Sections 201(2), 301(a)(3) and 401(a)(1)), as determined by the Committee in its sole discretion. From that group, the Committee shall select the Eligible Employees to participate in the Plan. The Committee may limit the types of deferrals (identified in Article 3) an Eligible Employee may make under the Plan.

2.2       Participation . To begin participation in the Plan, an Eligible Employee shall properly complete and timely submit an Election Form to the Committee in accordance with the Committee's rules. An Eligible Employee shall become a Participant on the first day on which a deferral of an elected amount is first credited to her Account. The Committee or its delegate may establish from time to time such other enrollment requirements as it determines in its sole discretion are necessary. Such Participant shall remain a Participant in the Plan until her Account balance is paid in full.

 

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2.3 Enrollment Requirements . Election Forms shall be completed and filed with the Committee by the time periods set forth in Article 3 for the particular type of compensation elected for deferral or during such other enrollment period as the Committee determines in accordance with such Article. A Participant may change or revoke a deferral election any time before such election becomes irrevocable, which shall occur as of the applicable deadline specified in Article 3 unless the Committee establishes an earlier deadline. Unless the Committee determines otherwise, a new Election Form shall be required for each Plan Year in which a Participant wants to defer a type of compensation eligible for deferral. A Participant's Election Form shall specify the form of payment, which shall be paid at the times specified in Article 5. Beginning with the enrollment period held in 2008, the form of payment elected on the Participant's Election Form shall govern all amounts credited to her Account beginning in 2009 and shall apply to each subsequent Plan Year's deferrals, until changed on either a prospective or retroactive basis by the Participant pursuant to Section 5.6. Distribution elections made during the Code Section 409A transition period that relate to amounts deferred in Plan Years 2005, 2006, 2007 and 2008, as the case may be, shall be honored for such respective amounts, even if such amounts are not credited to a Participant's Account until a later Plan Year.

2.4       Cessation of Participation .

1. 1. 1. The Committee shall have the sole discretionary authority to exclude a Participant from making further deferrals under the Plan with such exclusion becoming effective as of the first day of the immediately following Plan Year. Such Participant shall remain a Participant in the Plan until her Account balance is paid in full.
      2. Elective deferrals made by a Participant or Beneficiary who receives a distribution due to an Unforeseeable Emergency pursuant to Section 5.7 shall be cancelled due to such distribution if the Committee so decides in its discretion. In either event, the Participant (or Beneficiary, as applicable) shall remain a Participant in the Plan until her Account balance is paid in full.
      3. Notwithstanding anything in the Plan to the contrary, upon the earlier to occur of a Participant's Separation from Service or death, any outstanding deferral election shall be given effect to the extent any amounts covered by such election are paid after such event. Payment of deferred amounts shall be made pursuant to Article 5.

ARTICLE 3
DEFERRALS AND CONTRIBUTIONS

3.1       Base Annual Salary .

1. 1. 4. For each Plan Year, a Participant may elect to defer up to 75% (in whole percentage or fixed dollar amount) of her Base Annual Salary.

 

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1. 1. 5. A Participant's Election Form with respect to the deferral of Base Annual Salary shall be filed with the Committee before the beginning of each Plan Year in which the Base Annual Salary is earned.
      6. Subject to Section 2.3, such deferral elections shall be irrevocable as of the first day of the Plan Year to which the Election Form relates. Elections for Participants are separate and independent elections from an election to defer compensation under the 401(k) Plan.

3.2       Annual or Long-Term Performance Awards .

1. 1. 7. For each Plan Year, a Participant may elect to defer up to 75% (in whole percentage or fixed dollar amount) of her Annual or Long-Term Performance Award.
      8. A Participant's Election Form with respect to the deferral of an Annual or Long-Term Performance Award shall be filed with the Committee before the beginning of the Plan Year in which the Award is earned. Notwithstanding the foregoing, to the extent the Committee determines that an Annual or Long-Term Performance Award constitutes "performance based compensation" (within the meaning of Code Section 409A and regulations issued thereunder), the Committee may permit a Participant to file an Election Form with the Committee on or before a date that occurs no later than six months before the end of the performance period. In no event shall an Election Form for performance based compensation be filed when such compensation is readily ascertainable (within the meaning of Code Section 409A and regulations issued thereunder).
      9. Subject to Section 2.3, such deferral elections shall be irrevocable as of the first day of the Plan Year to which the Election Form relates or the deadline established by the Committee for performance-based compensation, as the case may be.

3.3       Restricted Stock .

1. 1. 10. For any grant of Restricted Stock, a Participant may elect to defer up to 100% (in whole percentage or fixed dollar amount) of her Restricted Stock Amount, subject to such other terms or conditions as set forth in the plan or agreement under which such Restricted Stock was granted.
      11. A Participant's Election Form with respect to the deferral of Restricted Stock Amounts shall be filed with the Committee before the beginning of the Plan Year in which the Restricted Stock is awarded, as determined under the terms of the plan or arrangement. Notwithstanding the foregoing, at the discretion of the Committee, an Election Form may be submitted within 30 days after the Restricted Stock is awarded, provided that the Restricted Stock's first vesting date is at least 12 months after the date the completed Election Form is delivered to and accepted by the Committee (taking into account any automatic vesting

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provisions upon certain terminations from employment that may occur before such 12 month period).

1. 1. 12. Subject to Section 2.3, such deferral elections shall be irrevocable as of the first day of the Plan Year to which the Election Form relates, or the 30 ^th day after the Restricted Stock is awarded, as the case may be.

3.4       Performance Shares or Units .

1. 1. 13. A Participant may elect to defer up to 100% (in whole percentage or fixed dollar amount) of her Performance Share or Unit Amount, as the case may be, subject to such other terms or conditions as set forth in the plan or arrangement under which such Performance Shares were granted.
      14. A Participant's Election Form with respect to the deferral of Performance Share Amounts or Performance Unit Amounts shall be filed with the Committee at the following times, determined at the Committee's discretion:
      15. 1. Before the beginning of the Plan Year in which the Performance Shares or Performance Units are awarded, as determined under the terms of the plan or arrangement;
          2. Within 30 days after the Performance Shares or Performance Units are awarded, provided that the Performance Shares' or Performance Units' first vesting date is at least 12 months from the date the completed Election Form is delivered to and accepted by the Committee (taking into account any automatic vesting provisions upon certain terminations from employment that may occur before such 12 month period); or
          3. A date that occurs no later than six months before the end of the performance period for such Award to the extent that the Committee determines that Performance Shares or Performance Units constitute "performance based compensation" (within the meaning of Code Section 409A and regulations issued thereunder). In no event shall an Election Form for performance based compensation be filed when such compensation is readily ascertainable (within the meaning of Code Section 409A and regulations issued thereunder).
      16. Subject to Section 2.3, such deferral elections shall be irrevocable as of: (i) the first day of the Plan Year to which the Election Form relates, (ii) the 30 ^th  day after the Performance Share or Unit Award was granted, or (iii) the deadline established by the Committee for performance-based compensation, as the case may be.

 

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3.5       Dividend Equivalents .

1. 1. 16. A Participant may elect to defer up to 100% (in whole percentage or fixed dollar amount) of the dividend equivalents on any unvested Performance Shares or Performance Units under a plan or arrangement of an Employer.
      17. If dividend equivalents on Performance Shares and Performance Units are earned and paid annually, a Participant's Election Form with respect to the deferral of such dividend equivalents shall be filed with the Committee before the beginning of the Plan Year in which the dividend equivalents to be deferred are otherwise earned and paid.
      18. Subject to Section 2.3, such deferral elections shall be irrevocable as of the first day of the Plan Year to which the Election Form relates.

3.6       Newly-Eligible Employees . Notwithstanding anything in the Plan to the contrary, a newly-Eligible Employee shall be given 30 days from the date she becomes eligible to participate in the Plan (as determined in accordance with plan aggregation rules set forth in Code Section 409A) to complete and submit an Election Form with respect to Base Annual Salary and Annual or Long-Term Performance Award, and such election shall apply only to amounts paid for services performed after the date on which the election is effective.

3.7       Annual Company Contribution Amount . For each Plan Year, an Employer, in its sole discretion, may, but is not required to, credit any amount it desires as an Annual Company Contribution Amount to the Company Contribution Account of one or more Eligible Employees. The Annual Company Contribution Amount credited to a Participant may be smaller or larger than the amount credited to any other Participant, and the amount credited to any Participant for a Plan Year may be zero, even though one or more other Participants receive an Annual Company Contribution Amount for that Plan Year. Crediting of an Annual Company Contribution Amount for one Plan Year does not guarantee an Annual Company Contribution Amount for subsequent Plan Years. Notwithstanding the foregoing, if any portion of the Annual Company Contribution Amounts credited to a Participant's Company Contribution Account under the Legacy Plan remains unvested as of December 31, 2004, such Amounts shall be treated as contributed under this Plan, and shall be subject to the terms and conditions set forth herein. Participants shall be permitted to make changes to payment form elections previously filed with respect to such amounts pursuant to Section 5.6(c). If a Participant Separates from Service for any reason other than Retirement or death before the last day of a Plan Year, any Annual Company Contribution Amount previously credited for that Plan Year shall be forfeited and become zero, unless the Employer in its sole discretion determines otherwise.

3.8       Company Matching Amount . A Company Matching Amount shall be made for any month in which Base Annual Salary and/or an Annual Performance Award is credited to a Participant's Account under this Plan. If no Base Annual Salary and/or Annual

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Performance Award is credited to a Participant's Account in a month, then no Company Matching Amount will be provided for such month.

1. 1. 19. The Company Matching Amount shall be determined by using the "matching contribution formula" under the Wisconsin Energy Corporation Employee Retirement Savings Plan (the "ERSP"), regardless of the actual 401(k) Plan, if any, that applies to the Participant. Between January 1, 2005 and December 31, 2007 (inclusive), the matching contribution formula under the ERSP is 50% on 6% of eligible compensation. On and after January 1, 2008, the matching contribution formula under the ERSP is 100% on up to 1% of eligible compensation and 50% on the next 6% of eligible compensation. Such matching contribution formula is subject to change under the ERSP. In this regard, any amendment to the ERSP that makes such change shall be incorporated herein by reference effective as of the date of any such change.
      20. The formula for a Participant's Company Matching Amount is the applicable matching rate multiplied by "X." For purposes of the formula, X is the difference between (i) and (ii):
      21. 1. the result of the matching contribution formula calculated using the Participant's gross compensation for the month that is eligible under the relevant Employer 401(k) Plan determined before any reduction for deferrals of Base Annual Salary and Annual Performance Awards, if applicable, under this Plan and without regard to any Code limitations, and
          2. the Participant's