executives of the Surviving Entity, unless such reduction only applies to former executives of Oncor; (iii) a material reduction in the executive’s authority, duties or responsibilities, including an adverse change in (a) the executive’s title, reporting level, reporting line or structure, scope of responsibilities, or management authority, or (b) the scope or size of the business, entity, or budget for which the executive had responsibility, in each case as in effect immediately prior to the effective time of the change in control; (iv) the executive’s primary work location is relocated, resulting in an increase in the executive’s work commute in excess of thirty-five miles more than the executive’s work commute immediately prior to the change in control; (v) a material breach by the Surviving Entity of the terms of any employment agreement with the executive; (vi) the failure of Oncor to obtain an agreement by the Surviving Entity, if such entity is not Oncor, to fully assume and perform the provisions of the CIC Policy; or (vii) the executive is asked or required to resign in connection with a change in control and does so resign. In order to constitute a resignation with good reason, however, the executive must provide written notice to the Surviving Entity describing the event or condition constituting good reason within a period of not more than 90 days from the initial occurrence of such event or circumstance, and if the applicable event or circumstance is capable of being cured, the Surviving Entity fails or refuses to fully remedy such event or circumstance within a 30-day cure period following the receipt of such notice.
The foregoing description of the CIC Policy is qualified in its entirety by reference to the complete terms of the CIC Policy, which is filed as Exhibit 10.1 to this Form 8-K and incorporated by reference herein.
Oncor Salary Deferral Program
On December 9, 2020, the Board approved an amended and restated Oncor Salary Deferral Program (the “Amended Salary Deferral Program”) effective as of December 1, 2020. The Amended Salary Deferral Program amends and restates Oncor’s salary deferral program that was originally effective as of January 1, 2010 (the “Original Salary Deferral Program”). Employees who meet a specified salary threshold level or other criteria established by the program administrator are eligible to participate in the program, including executive officers. The Amended Salary Deferral Program deletes certain references no longer applicable following Sempra’s March 2018 acquisition of a majority of Oncor’s outstanding equity interests, including all references relating to a change in control and membership interests in Oncor Management Investment LLC.
The Amended Salary Deferral Program also revises the definition of cause. Under the Amended Salary Deferral Program, cause is defined as however such term may be defined in any employment agreement or change-in-control agreement in effect between the participant and Oncor or, if no such agreement exists, as (i) the participant engaging in conduct in carrying out his or her employment duties to Oncor that constitutes (a) a breach of fiduciary duty to Oncor or its equity holders, (b) gross neglect, or (c) gross misconduct resulting in material and objectively determinable damage to the business of Oncor, or (ii) the indictment of the participant for, or the participant’s plea of nolo contendere to, a felony or misdemeanor involving moral turpitude. In addition, the Amended Salary Deferral Program provides that a termination shall not constitute a termination for cause unless the participant has received written notice specifying the alleged misconduct constituting cause, the participant has been given an opportunity to be heard by, if the participant is an executive, the Board, and, if the participant is not an executive, Oncor’s senior leadership team, and following such hearing, the Board or senior leadership team, as applicable, determines in good faith and by at least a two-thirds vote that the termination for cause is appropriate under the circumstances.
Other than as described herein, the material terms of the Amended Salary Deferral Program remain the same as those contained in the Original Salary Deferral Program. The foregoing description of the amendment is qualified in its entirety by reference to the complete terms of the Amended Salary Deferral Program, which is filed as Exhibit 10.2 to this Form 8-K and incorporated by reference herein.
Long-Term Incentive Plan
On December 9, 2020, the Board approved an amended and restated Oncor Long-Term Incentive Plan (the “Amended Long-Term Incentive Plan”) effective as of December 1, 2020. The Amended Long-Term Incentive Plan amends and restates Oncor’s long-term incentive plan that was originally effective as of January 1, 2013 (the “Original Long-Term Incentive Plan”). Participants in the plan include Oncor’s executive officers as well as certain other key employees.
