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Mr. Tom D.
Kilgore
8100 Kennett Village Court
Raleigh, North Carolina 27615
The TVA Board
has authorized me to offer you the position of President and Chief
Operating Officer with the Tennessee Valley Authority in Knoxville,
Tennessee Upon acceptance of this position, your annual
compensation will be comprised of the following:
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$
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140,000
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Annual Deferred Compensation
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$
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510,000
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$
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650,000
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Annual deferred
compensation will be credited to your deferred compensation account
on a monthly basis at the rate of 1/12th each month. You may elect
to receive up to 50 percent of your annual deferred
compensation in cash at the end of the fiscal year.
Additionally,
you will be included as a participant in TVA’s Executive
Annual and Long-Term Incentive Plans. Under the Annual Incentive
Plan your annual incentive opportunity will be 70 percent of your
base compensation beginning in fiscal year 2005-prorated based on
the number of months you participate in the performance cycle.
Under the Long-term Incentive Plan, your award opportunity will be
60 percent of your base compensation beginning with the
performance cycle (FY 2003-2005) ending in fiscal year 2005. Actual
annual and long-term incentive awards are based solely on
organizational performance measured against performance goals
established at the beginning of each performance period. For FY
2005, 30 percent of your annual incentive award will be based
on TVA scorecard performance and 70 percent will be based on
the average performance of all strategic business units. You will
have an opportunity to elect to receive these awards in a lump-sum
cash payment or have all or part of the awards credited to your
deferred compensation account.
Due to the
nature of this position, you will also be included as a participant
in TVA’s Supplemental Executive Retirement Plan
(SERP) at the Tier 1 level with the following
modifications:
Mr. Tom D.
Kilgore
Page 2
January 19, 2005
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If
your employment terminates during the first five years (other than
for cause as defined below), you will be entitled to SERP benefits
and receive credit for eight years of service and the five-year
vesting requirement will be waived.
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If
your employment terminates after five years of service, your SERP
benefits will be based on your actual service plus three
years.
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The
“Prior Employer Offset” will be waived.
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The
“Qualified Plan Offset” will be calculated based on the
pension benefit you would be eligible to receive as a participant
in TVA’s Cash Balance Benefit Structure with the years of
credited service used for SERP benefit calculation
purposes.
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In
the event of termi
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