Exhibit 10.2
WISCONSIN ENERGY CORPORATION
EXECUTIVE DEFERRED COMPENSATION PLAN
PLAN DOCUMENT
Amended and Restated as of May 1, 2004
TABLE OF CONTENTS
PURPOSE
ARTICLE 1 DEFINITIONS
ARTICLE 2 SELECTION, ENROLLMENT, ELIGIBILITY
2.1 Selection by Committee
2.2 Enrollment Requirements
2.3 Eligibility; Commencement of Participation
2.4 Termination of Participation and/or Deferrals
ARTICLE 3 DEFERRAL COMMITMENTS/COMPANY MATCHING/CREDITING/TAXES
3.1 Maximum Deferral
3.2 Election to Defer; Effect of Election Form
3.3 Withholding of Annual Deferral Amounts
3.4 Annual Company Contribution Amount
3.5 Annual Company Matching Amount
3.6 Stock Option Amount
3.7 Restricted Stock Amount
3.8 Performance Share Amount
3.9 Deferred Dividend Equivalents
3.10 Rollover Amount
3.11 Investment of Trust Assets
3.12 Sources of Stock
3.13 Vesting
3.14 Crediting/Debiting of Account Balances
3.15 FICA and Other Taxes
3.16 Distributions
ARTICLE 4 IN SERVICE PAYOUT; UNFORESEEABLE FINANCIAL EMERGENCIES; WITHDRAWAL ELECTION
4.1 In Service Payout
4.2 Other Benefits Take Precedence Over In Service
4.3 Withdrawal Payout/Suspensions for Unforeseeable Financial Emergencies
4.4 Withdrawal Election
ARTICLE 5 RETIREMENT BENEFIT
5.1 Retirement Benefit
5.2 Payment of Retirement Benefit
5.3 Death Prior to Completion of Retirement Benefit
5.4 Special "Make Whole" Benefits
ARTICLE 6 PRE-RETIREMENT SURVIVOR BENEFIT
6.1 Pre-Retirement Survivor Benefit
6.2 Payment of Pre-Retirement Survivor Benefit
ARTICLE 7 TERMINATION BENEFIT
7.1 Termination Benefit
7.2 Payment of Termination Benefit
ARTICLE 8 DISABILITY WAIVER AND BENEFIT
8.1 Disability Waiver
8.2 Continued Eligibility; Disability Benefit
ARTICLE 9 BENEFICIARY DESIGNATION
9.1 Beneficiary
9.2 Beneficiary Designation; Change
9.3 Acknowledgment
9.4 No Beneficiary Designation
9.5 Doubt as to Beneficiary
9.6 Discharge of Obligations
ARTICLE 10 LEAVE OF ABSENCE
10.1 Paid Leave of Absence
10.2 Unpaid Leave of Absence
ARTICLE 11 TERMINATION, AMENDMENT OR MODIFICATION
11.1 Termination
11.2 Amendment
11.3 Effect of Payment
ARTICLE 12 ADMINISTRATION
12.1 Committee Duties
12.2 Administration Upon Change In Control
12.3 Agents
12.4 Binding Effect of Decisions
12.5 Indemnity of Committee
12.6 Employer Information
12.7 Coordination with Other Benefits
ARTICLE 13 CLAIMS PROCEDURES
13.1 Presentation of Claim
13.2 Notification of Decision
13.3 Review of a Denied Claim
13.4 Decision on Review
13.5 Legal Action
ARTICLE 14 TRUST
14.1 Establishment of the Trust
14.2 Interrelationship of the Plan and the Trust
14.3 Distributions From the Trust
ARTICLE 15 MISCELLANEOUS
15.1 Status of Plan
15.2 Unsecured General Creditor
15.3 Employer's Liability
15.4 Nonassignability
15.5 Not a Contract of Employment
15.6 Furnishing Information
15.7 Terms
15.8 Captions
15.9 Governing Law
15.10 Notice
15.11 Successors
15.12 Validity
15.13 Incompetent
15.14 Court Order
15.15 Distribution in the Event of Taxation
15.16 Insurance
15.17 Legal Fees To Enforce Rights After Change in Control
15.18 Payout Under Special Circumstances
WISCONSIN ENERGY CORPORATION
EXECUTIVE DEFERRED COMPENSATION PLAN
Purpose
The purpose of this Plan is to provide specified benefits to a select group of management and highly compensated Employees who contribute materially to the continued growth, development and future business success of Wisconsin Energy Corporation, a Wisconsin corporation, and its subsidiaries, if any, that sponsor this Plan. This Plan shall be unfunded for tax purposes and for purposes of Title I of ERISA. The Plan is hereby amended and restated effective as of May 1, 2004 (except as otherwise specifically provided).
ARTICLE 1
Definitions
For purposes of this Plan, unless otherwise clearly apparent from the context, the following phrases or terms shall have the following indicated meanings:
(a) Fractional Method. The annual installment shall be calculated by multiplying this balance by a fraction, the numerator of which is one, and the denominator of which is the remaining number of annual payments due the Participant. By way of example, if the Participant elects a 10 year Annual Installment Method, the first payment shall be 1/10 of the Account Balance, calculated as described in this definition. The following year, the payment shall be 1/9 of the Account Balance, calculated as described in this definition.
(b) Percentage or Fixed Dollar Method. The annual installment shall be calculated by multiplying this balance in the case of the percentage method, by the percentage selected by the Participant and paying out the resulting amount, or in the case of the fixed dollar method, by paying out the fixed dollar amount selected by the Participant, for the number of years selected by the Participant. However, in the event the dollar amount selected is greater than the Account Balance in any given year, the entire Account Balance will be distributed. Further, regardless of the method selected by the Participant, the final installment payment will include 100% of the then remaining Account Balance.
(c) Special Installment Method. Under this alternative method, the Participant selects both the number of years and a specified interest rate, which is then used to calculate a level fixed dollar amount of annual payouts which would exhaust the Account Balance over such number of years, if actual performance of the elected Measurement Funds were identical to the specified interest rate. However, in recognition of the fact that such exact conformity is unlikely, in the event the calculated level fixed dollar amount is greater than the Account Balance in any given year, the entire Account Balance will be distributed. Further, the final installment payment will include 100% of the then remaining Account Balance.
1.13 "Board" shall mean the board of directors of the Company.
(a) any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its affiliates) representing 20% or more of the combined voting power of the Company's then outstanding securities, excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in clause (i) of paragraph (c) below; or
(b) the following individuals cease for any reason to constitute a majority of the number of directors then serving: individuals who, on the date hereof, constitute the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Board or nomination for election by the Company's shareholders was approved or recommended by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors on the date hereof or whose appointment, election or nomination for election was previously so approved or recommended; or
(c) there is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation, other than (i) a merger or consolidation immediately following which the directors of the Company immediately prior to such merger or consolidation continue to constitute at least a majority of the board of directors of the Company, the surviving entity or any parent thereof or (ii) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities Beneficially Owned by such Person any securities acquired directly from the Company or its affiliates) representing 20% or more of the combined voting power of the Company's then outstanding securities; or
(d) the shareholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement (or series of related agreements) for the sale or disposition by the Company of all or substantially all of the Company's assets, disregarding any sale or disposition to a company at least a majority of the directors of which were directors of the Company immediately prior to such sale or disposition; or
(e) the Board of Directors of the Company determines in its sole and absolute discretion that there has been a Change in Control of the Company.
For purposes of this Change in Control definition, the terms set forth below shall have the following meanings:
"Beneficial Owner" shall have the meaning set forth in Rule 13d-3 under the Exchange Act.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended from time to time.
"Person" shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) the Company or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its affiliates, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of the stock of the Company.
1.15 "Chief Executive Officer or CEO" shall mean the Chief Executive Officer of the Company.
1.16 "Claimant" shall have the meaning set forth in Section 13.1.
1.17 "Code" shall mean the Internal Revenue Code of 1986, as it may be amended from time to time.
1.25 "Disability Benefit" shall mean the benefit set forth in Article 8.
1.29 "Employee" shall mean a person who is an employee of any Employer.
1.32 "In Service Payout" shall mean the payout set forth in Section 4.1.
1.39 "Plan" shall mean the Company's Executive Deferred Compensation Plan.
1.41 "Pre-Retirement Survivor Benefit" shall mean the benefit set forth in Article 6.
1.47 "Retirement Benefit" shall mean the benefit set forth in Article 5.
1.49 "Rollover Amount" shall mean the amount determined in accordance with Section 3.10.
1.52 "Stock" shall mean Wisconsin Energy Corporation common stock.
1.55 "Termination Benefit" shall mean the benefit set forth in Article 7.
Selection, Enrollment, Eligibility
Deferral Commitments/Company Matching/Crediting/Taxes
(a) Base Annual Salary, Annual or Long-Term Performance Award, Severance Payments SERP Payments and/or Make Whole Pension Supplements. For each Plan Year, a Participant may elect to defer, as his or her Annual Deferral Amount, Base Annual Salary, Annual or Long-Term Performance Award, Severance Payments, SERP Payments and/or Make Whole Pension Supplements (as referenced in Section 5.4(d)) up to the following maximum percentages for each deferral elected:
Deferral | Maximum Percentage |
Base Annual Salary | 100% |
Annual or Long-Term Performance Award | 100% |
Severance Payments | 100% |
SERP Payments | 100% |
Make Whole Pension Supplements | 100% |
Notwithstanding the foregoing, the Participant may change his or her election with respect to the Base Annual Salary portion of the Annual Deferral Amount on a monthly basis, by timely delivering to the Committee in accordance with its rules and procedures, before the end of the month preceding the month for which the election will be effective, a new Election Form for such purpose. Notwithstanding any other provision of this Plan, any Election form or revocation will be given prospective effect only and may not affect prior deferrals.
(b) For each Eligible Stock Option, a Participant may elect to defer up to 100% of his or her Stock Option Amount.
(c) For any grant of Restricted Stock, a Participant may elect to defer up to 100% of his or her Restricted Stock Amount.
(d) For any grant of Performance Shares, a Participant may elect to defer up to 100% of his or her Performance Share Amount.
(e) A Participant may elect to defer up to 100% of the dividend equivalents on any unvested Performance Shares under a plan or arrangement of any Employer.
(f) Deferral of Stock Option Amounts, Restricted Stock Amounts, Performance Share Amounts and dividend equivalents on Performance Shares may also be limited by other terms or conditions as set forth in the plan or agreement under which such items may be granted.
3.2 Election to Defer; Effect of Election Form.
(a) Base Annual Salary. A Participant's Election Form with respect to Base Annual Salary shall be filed with the Committee in accordance with its rules, but in no event later than the end of the month preceding the month for which the election will be effective. As noted above in Section 3.1(a), a Participant may subsequently change or revoke his or her election with respect to Base Annual Salary, but only with prospective effect only, to take effect as of the first day of the month immediately following receipt of the new Election Form by the Committee. Therefore, any Election Form shall be irrevocable with respect to the portion of Base Annual Salary deferral during the period of time covered by such Form.
(b) Annual or Long-Term Performance Award. A Participant's Election Form with respect to Annual Performance Award shall be filed with the Committee in accordance with its rules, but in no event later than November 30th of any calendar year with respect to all or any part of an Annual Performance Award that might otherwise become payable on account of a Participant's services during such calendar year and in all events prior to the time that the Participant has earned an absolute and unconditional right to payment. Any such Election Form which is on file with the Committee on November 30th of a calendar year shall become irrevocable as of such date. When and as a Long-Term Performance Award program is put into place, the Committee will establish rules for a Participant's Election Form similar to the above, and providing that such Election Form must be filed in all events prior to the time that the Participant has earned an absolute and uncondition al right to payment and that such Election Form may not be revoked by the Participant once the filing deadline date has passed.
(c) Severance Payments. A Participant's Election Form with respect to Severance Payments shall be filed with the Committee in accordance with its rules and the rules for a prior deferral election set forth in the documents or contracts providing for Severance Payments.
(d) SERP Payments. A Participant's Election Form with respect to SERP Payments shall be filed with the Committee in accordance with its rules and any rules for a prior deferral election set forth in the SERP. However, notwithstanding any contrary provisions in the SERP, a Participant who is a participant in the SERP shall be allowed to both elect that a lump sum method of payment be made to such Participant at the time when payments are to commence under the terms of the SERP (the "SERP Starting Date") for the SERP "A" or "B" benefits or that such a lump sum be determined and then credited to such Participant's Account Balance under this Plan as of the SERP Starting Date with such Participant to be treated as having then "Retired" for purpose of this Plan (so that the Participant's election for a method of payout under Article 5 shall govern), provided that such an Election Form filed by the Participant with regard to the SERP is submitted to the Committee at least on e year prior to the SERP Starting Date. Notwithstanding any other provision of this Plan to the contrary and notwithstanding any Election Form executed by any Participant at any time to the contrary, no SERP Payments which would have been made on or after April 1, 2004 in the absence of deferral shall be deferred to this Plan.
(e) Make Whole Pension Supplements. Section 5.4(d) provides the rules applicable to Election Forms regarding Make Whole Pension Supplements.
(f) Stock Option Deferral. For an election to defer Stock Option Amounts to be valid: (i) a separate Election Form must be completed and signed by the Participant with respect to the Eligible Stock Option; (ii) the Election Form must be timely delivered to the Committee and accepted by the Committee at least six (6) months prior to the date the Participant elects to exercise the Eligible Stock Option; (iii) the Election Form shall be irrevocable from and after the date which is six months prior to the date the Participant elects to exercise the Eligible Stock Option; and (iv) the Eligible Stock Option must be exercised using the Stock-for-Stock payment method (directly or by attestation).
(g) Restricted Stock. For an election to defer Restricted Stock Amounts to be valid: (i) a separate Election Form must be completed and signed by the Participant, with respect to the Restricted Stock to which such amounts relate; (ii) such Election Form must be timely delivered to the Committee and accepted by the Committee at least six (6) months prior to the date such Restricted Stock vests under the terms of the plan or arrangement pursuant to which it was granted and (iii) the Election Form shall be irrevocable from and after the date which is six months prior to the date such Restricted Stock vests under the terms of the plan or arrangement pursuant to which it was granted.
(h) Performance Shares. For an election to defer Performance Share Amounts to be valid: (i) a separate Election Form must be completed and signed by the Participant, with respect to the Performance Shares to which such amounts relate; and (ii) such Election Form must be timely delivered to the Committee and accepted by the Committee at least six (6) months prior to the date such Performance Shares vest under the terms of the plan or arrangement pursuant to which they were issued and (iii) the Election Form shall be irrevocable from and after the date which is six months prior to the date such Performance Shares vest under the terms of the plan or arrangement pursuant to which they were issued.
(i) Performance Share Dividend Equivalents. A Participant's election form with respect to deferral of dividend equivalents with respect to Performance Shares shall be filed with the Committee in accordance with its rules, but in no event later than the day preceding the date for which the election will be effective. A Participant may subsequently change or revoke his or her election with respect to deferral of dividend equivalents with respect to Performance Shares, but only with prospective effect, to take effect as of the day following receipt of the new election form by the Committee. Therefore, any election form shall be irrevocable with respect to dividend equivalents relating to dividends declared during the period of time covered by an election form.
For example, assume 2 Participants, A, who is age 50 or older and eligible for catch-up contributions, and B, who is under 50, with gross Annual Base Salary of $300,000 and $150,000, who each choose to defer 6% into this Plan. Both are covered or deemed to be covered by the Wisconsin Energy Corporation Employee Retirement Savings Plan. The Annual Company Matching Amount for each under this Plan is calculated as follows:
Matching Rate 50% Eligible Compensation Percentage 6% | ||
DMED for A is 6% x $200,000 or $12,000 DMED for B is 6% x [$150,000 - 9,000] or $8,460 | ||
Annual Matching Amount for A is 50% of "X," | ||
where "X" is 6% x $300,000 or | $18,000 | |
less DMED of | 12,000 | |
Therefore A's Annual Matching Amount is | 6,000 | |
Annual Matching Amount for B is 50% of "X," | ||
where "X" is 6% of $150,000 or | $9,000 | |
less DMED of | 8,460 | |
540 | ||
Therefore B's Annual Matching Amount is | ||
For the year 2001 only, notwithstanding any other provision of this Plan, a Participant will automatically receive a Company Matching Amount equal to X times Y, where X equals the Matching Rate multiplied by the Eligible Compensation Percentage, and Y equals the amount of any Annual Performance Award, without regard to whether any part of the same is deferred under this Plan.
If in any case the relevant 401(k) Plan does not operate on the calendar year, the Committee in its sole discretion shall determine how the Participant's Annual Company Matching Amount shall be determined for any Participant who elects some deferral of Base Annual Salary into this Plan. The Committee may modify the method of calculating the Annual Matching Amount to take into account periodic credits rather than annual calculations, consistent with the principles expressed herein.
(a) A Participant shall at all times be 100% vested in his or her Deferral Account, Stock Option Account, Restricted Stock Account, Performance Share Account, Dividend Deferral Account, Company Matching Account and Rollover Account.
(b) A Participant shall be vested in his or her Company Contribution Account in accordance with the vesting schedule, if any, contained in his or her Election Form.
(c) In the event of a Change in Control, a Participant's Company Contribution Account shall immediately become 100% vested.
(d) Notwithstanding subsection (c), the vesting schedule for a Participant's Company Contribution Account shall not be accelerated to the extent that the Committee determines that such acceleration would cause the deduction limitations of Section 280G of the Code to become effective. In the event that all of a Participant's Company Contribution Account is not vested pursuant to such a determination, the Participant may request independent verification of the Committee's calculations with respect to the application of Section 280G. In such case, the Committee must provide to the Participant within 15 business days of such a request an opinion (which need not be unqualified) of the Company's independent auditors which opinion shall state that any limitation in the vested percentage hereunder is necessary to avoid the limits of Section 280G and contain supporting calculations. The cost of such opinion shall be paid for by the Company.
(a) Election of Measurement Funds. Subject to Section 3.14(f) and (g) below, a Participant, in connection with his or her initial deferral election in accordance with Section 3.2 above, shall elect, on the Election Form, one or more Measurement Fund(s) (as described in Section 3.14(c) below) to be used to determine the additional amounts to be credited to his or her Account Balance, unless changed in accordance with the next sentence. Subject to Section 3.14(f) and (g) below, commencing with the Participant's commencement of participation in the Plan and continuing thereafter, the Participant may (but is not required to) elect, by submitting an Election Form to the Committee that is accepted by the Committee, to add or delete one or more Measurement Fund(s) to be used to determine the additional amounts to be credited to his or her Account Balance, or to change the portion of his or her Account Balance allocated to each previously or newly elected Measurement Fund. I f an election is made in accordance with the previous sentence, it shall apply thereafter in accordance with the rules of the Committee for all subsequent periods in which the Participant participates in the Plan, unless changed in accordance with the previous provisions.
(b) Proportionate Allocation. In making any election described in Section 3.14(a) above, the Participant shall specify on the Election Form, in increments of one percentage point (1%), the percentage of his or her Account Balance to be allocated to a Measurement Fund (as if the Participant was making an investment in that Measurement Fund with that portion of his or her Account Balance).
(c) Measurement Funds. Subject to Section 3.14(f) and (g) below, the Participant may elect one or more of the following measurement funds (the "Measurement Funds"), for the purpose of crediting additional amounts to his or her Account Balance: (i) any Measurement Fund selected by the WEC Investment Trust Policy Committee from time to time; (ii) Prime Rate Fund (described as a mutual fund 100% invested in a hypothetical debt instrument which earns interest at an annualized interest rate equal to the "Prime Rate" as reported each business day by the Wall Street Journal, with interest deemed reinvested in additional units of such hypothetical debt instrument); or (iii) a Company Stock Measurement Fund (described as a mutual fund 100% invested in shares of Company Stock, with dividends deemed reinvested in additional shares of Company Stock).
Subject to Section 3.14(f) and (g) below, as necessary, the WEC Investment Trust Policy Committee may, in its sole discretion, discontinue, substitute or add a Measurement Fund, subject to such advance notice to Participants as it determines.
(d) Crediting or Debiting Method. The performance of each elected Measurement Fund (either positive or negative) will be determined by the Committee, in its reasonable discretion, based on the performance of the Measurement Funds themselves. A Participant's Account Balance shall be credited or debited on a periodic basis based on the performance of each Measurement Fund selected by the Participant, as determined by the Committee in its sole discretion. The Participant's Annual Company Matching Amount shall be credited to his or her Company Matching Account for purposes of this Section 3.14(d) no later than the end of the month following the month to which such amount relates. The Participant's Annual Stock Option Amount shall be credited to his or her Stock Option Account no later than the close of business on the first business day after the day on which the Eligible Stock Option was exercised or otherwise disposed of. The Participant's Annual Restricted Stock Amo unt shall be credited to his or her Restricted Stock Account no later than the close of business on the first business day after the day on which the Participant would have become vested in the Restricted Stock to which such amount relates, but for the election to defer. The Participant's Annual Performance Share Amount shall be credited to his or her Performance Share Account no later than the close of business on the first business day after the day on which the Participant would have become vested in the Performance Shares to which such amount relates but for the election to defer. Deferrals of dividend equivalents pursuant to Section 3.1(e) shall be credited to his or her Dividend Deferral Account no later than the close of business on the first business day after the day on which those amounts would have been paid to the Participant but for the election to defer.
(e) No Actual Investment. Notwithstanding any other provision of this Plan that may be interpreted to the contrary, the Measurement Funds are to be used for measurement purposes only, and a Participant's election of any such Measurement Fund, the allocation to his or her Account Balance thereto, the calculation of additional amounts and the crediting or debiting of such amounts to a Participant's Account Balanceshallnot be considered or construed in any manner as an actual investment of his or her Account Balance in any such Measurement Fund. In the event that the Company or the Trustee (as that term is defined in the Trust), in its own discretion, decides to invest funds in any or all of the Measurement Funds, no Participant shall have any rights in or to such investments themselves. Without limiting the foregoing, a Participant's Account Balance shall at all times be a bookkeeping entry only and shall not represent any investment made on his or her behalf by the Company or the Trust; the Participant shall at all times remain an unsecured creditor of the Company.
(f) Special Rule for Stock Option, Restricted Stock and Performance Share Accounts. Notwithstanding any provision of this Plan that may be construed to the contrary, the Participant's Stock Option, Restricted Stock and Performance Share Accounts shall be deemed invested in the Company Stock Measurement Fund at all times prior to distribution from this Plan. Further, the Participant's Stock Option, Restricted Stock and Performance Share Accounts shall be distributed from this Plan in the form of cash.
(g) Special Considerations for Participants Subject to Section 16 of the Securities Exchange Act of 1934. Prior to March 1, 2002, different rules pertained with respect to amounts allocated to the Company Stock Measurement Fund. The Company Matching Account had to be deemed invested in the Company Stock Measurement Fund at all times prior to distribution from the Plan. Such restriction was dropped from the Plan effective as of March 1, 2002. In order that any election by a Participant who is an officer or director subject to the reporting requirements and trading restrictions of Section 16 of the Securities Exchange Act of 1934 ("Section 16") will conform to Section 16, such a Participant should consult with the designated individual at the Company responsible for Section 16 reporting and complianceprior to making any election to move any part of his or her Account Balance into or out of the Company Stock Measurement Fund. In general, compliance with Section 16 will require that:
(i) Any election to move any part of an Account Balance into or out of the Company Stock Measurement Fund (including any election to receive a payout in service under Section 4.1, in the event of Unforeseeable Financial Emergency under Section 4.3, or under the 10% withdrawal penalty rules of Section 4.4), which elections will be deemed made for purposes of these provisions only as of the date of such deemed investment transfers or proposed payouts, should only be effected if made at least six (6) months following the date of the most recent "opposite way" election (as explained below) made by such Participant with respect to this Plan or any plan of the Company or its affiliates that also constituted a "discretionary transaction" within the meaning of Rule 16b-3(b)(1) under Section 16.
(ii) An "opposite way" election means (x) in case of an election by a Participant to move any part of an Account Balance into the Company Stock Measurement Fund, an election that was a disposition of Company Stock or an interest in a phantom Company Stock fund or similar security, or (y) in case of any election by a Participant to move any part of an Account Balance out of the Company Stock Measurement Fund, an election that was an acquisition of Company Stock or an interest in a phantom Company Stock fund or similar security.
(iii) Any change of election to an alternative payout period made under Section 5.2 or 7.2 by such a Participant may only be given effect if it is approved by the Compensation Committee or the Board of Directors of the Company.
The Company reserves the right to impose such restrictions as it determines to be appropriate, in is sole discretion, on any elections, dispositions or other matters under this Plan relating to the Company Stock Measurement Fund in order to comply with or qualify for exemption under Section 16.
(a) Annual Deferral Amounts. For each Plan Year in which an Annual Deferral Amount is being withheld from a Participant or an Annual Company Matching Amount is Credited to a Participant, the Participant's Employer(s) shall withhold from that portion of the Participant's non-deferred compensation, in a manner determined by the Employer(s), the Participant's share of FICA and other employment taxes on such amounts. If necessary, the Committee may reduce the Annual Deferral Amount in order to comply with this Section 3.15.
(b) Company Contribution Amounts. When a participant becomes vested in a portion of his or her Company Contribution Account, the Participant's Employer(s) shall withhold from the Participant's non-deferred compensation, in a manner determined by the Employer(s), the Participant's share of FICA and other employment taxes. If necessary, the Committee may reduce the vested portion of the Participant's Company Contribution Account in order to comply with this Section 3.15.
(c) Annual Stock Option, Restricted Stock, Performance Share and Similar Amounts. For each Plan Year in which an Annual Stock Option Amount, Annual Restricted Stock Amount, Annual Performance Share Amount and/or deferred dividend equivalent is being first credited to a Participant's Account Balance, the Participant's Employer(s) shall withhold from that portion of the Participant's non-deferred compensation, in a manner determined by the Employer(s), the Participant's share of FICA and other employment taxes on such Annual Stock Option Amount, Annual Restricted Stock Amount, Annual Performance Share Amount and/or deferred dividend equivalent. If necessary, the Committee may reduce such deferrals in order to comply with this Section 3.15.
ARTICLE 4
In Service Payout; Unforeseeable Financial Emergencies;
Withdrawal Election
(a) In connection with and at the time of each election to defer an Annual Deferral Amount, a Participant may irrevocably elect, on a prospective basis only, to receive a future "In Service Payout" from the Plan with respect to such Annual Deferral Amount. Subject to the Deduction Limitation, the In Service Payout shall be a lump sum payment in an amount that is expressed either as a fixed dollar amount or as a percentage of the Annual Deferral Amount plus amounts credited or debited thereto, determined at the time that the In Service Payout becomes payable (rather than the date of a Termination of Employment). Subject to the Deduction Limitation and the other terms and conditions of this Plan, each In Service Payout elected shall be paid out during a 90 day period commencing immediately after the last day of any Plan Year designated by the Participant that is at least two Plan Years after the Plan Year in which the Annual Deferral Amount is actually deferred. By way of exa mple, if a two year In Service Payout is elected with respect to an Annual Performance Award relating to services in 2002 that would otherwise be payable in 2003 but is actually deferred in 2003, the two year In Service Payout would become payable during a 90 day period commencing January 1, 2006.
(b) A Participant's election to defer dividends under Section 3.1(e) must be made annually and a Participant shall have the ability to elect to receive a future In Service Payout with respect to each year's annual Performance Share dividend equivalent deferrals pursuant to the same rules as described in paragraph (a) above.
(c) If a Participant makes an election pursuant to paragraph (a) above with respect to the Annual Deferral Amount for any year, such election shall also apply to and shall result in an In Service Payout of the Annual Company Matching Amount for that year plus amounts credited or debited thereto, determined at the time the In Service Payout becomes payable. Such In Service Payout shall be made at the same time as the In Service Payout with respect to the Annual Deferral Amount for that year.
ARTICLE 5
Retirement Benefit
5.4 Special "Make Whole" Benefits.
(a) "Make Whole" Pension Benefit With Respect to Deferrals of Base Annual Salary. Base Annual Salary which is deferred pursuant to this Plan cannot be included in the compensation base for calculating retirement income under the qualified defined benefit pension plans of the Company and its affiliates (the "Pension Plans"). Therefore, a "make whole" benefit will be paid from this Plan as a pension supplement to or with respect to a Participant whose deferrals of Base Annual Salary result in a lesser pension payment under the Pension Plans. Such pension supplement shall equal the amount by which such Participant's pension under the Pension Plans (calculated for this purpose without regard to any limitation or benefits imposed by Section 415 of the Code, or any limitation on annual compensation imposed by Section 401(a)(17) of the Code; hereinafter, the "IRS Limitations") was less because deferrals of Base Annual Salary under this Plan were not taken into account in th e calculation of such participant's pension (but the amount of any supplemental pension benefit "A" applicable to the Participant under the Company's SERP shall be taken into account to avoid any duplication of the pension supplement provided hereunder). This section applies to all forms of pension payable under the Pension Plans, including pre-retirement death benefits.
(b) "Make Whole" Pension Benefit With Regard to Performance and Incentive Awards. Performance awards under the Company Short-Term Performance Plan and incentive awards made under a former incentive plan of the Company known as the Executive Incentive Compensation Plan are excluded from the compensation base under the Retirement Account Plan, a tax qualified defined benefit plan of Wisconsin Electric Power Company (the "Retirement Account Plan"). Similarly, special awards made from time to time as determined by the Board are likewise excluded. A "make whole" pension supplement was provided for under the terms of Article IX(2) of the prior Wisconsin Energy Corporation Executive Deferred Compensation Plan as amended and restated as of January 1, 1994 (the "Prior Company Plan") for any Participant in that plan whose pension benefit under the Retirement Account Plan would have been greater had such performance awards, incentive awards or special awards been included in the compensation base of the Retirement Account Plan, calculated without regard to the IRS limitations. As with Section 5.4(a) above, supplemental pension benefit "A" shall be considered in order to avoid duplication. It is the intent of this Section to continue to provide such "make whole" pension supplement and the provisions of such Article IX(2) of the Prior Company Plan are incorporated by reference and continue to apply hereunder, except as modified by other provisions of this Section 5.4.
(c) "Make Whole" Long-Term Disability Benefit. It is the intent of this Plan that a Participant not suffer any loss with respect to a disability benefit under the disability benefit applicable to employees of the Company and its affiliates, if the Participant is eligible for and participating in the long-term disability benefit plan of an Employer (the "LTD" Plan) because of either the exclusion of Base Annual Salary deferred under this Plan from the compensation base under the LTD Plan (the "Salary Deferral Limit") or the special limitation on annual compensation which can be taken into account under the LTD Plan imposed by Section 505(b)(7) of the Code (the "IRS Special Limit"). Therefore, in the event such a Participant becomes eligible for and begins to receive a disability benefit from the LTD Plan and the amount of such disability benefit is limited because of the application of the Salary Deferral Limit or the IRS Special Limit, a "make whole" disability benefi t shall be paid from this Plan as a supplement to the disability limit paid from the LTD Plan. Such LTD supplement shall equal the monthly amount by which such Participant's disability benefit under the LTD Plan was less because of the application of the Salary Deferral Limit and the IRS Special Limit. Such LTD supplement shall commence at the same time as the disability benefit paid under the LTD Plan and continue for so long as such disability benefit is paid. Such LTD supplement shall be paid out of general corporate assets or out of a grantor trust, but not out of any voluntary employees' beneficiary association or trust covered by Section 501(c)(9) of the Code.
(d) Form of Payment and Deferral Option. The "make whole" pension supplements provided for in this Section 5.4(a) and (b) shall be payable in lump sum form at the same time as the benefit becomes payable to or with respect to the Participant under the relevant Pension Plan (as to the Section 5.4(a) supplement) or under the Retirement Account plan (as to the Section 5.4(b) supplement). The terms and conditions of the relevant Pension Plan or the Retirement Account Plan shall provide the governing principles as to the calculation of the pension supplements arising under this Section 5.4. Notwithstanding the above, a Participant who becomes entitled to a pension supplement pursuant to Section 5.4(a) or (b) will be allowed to elect that the relevant lump sum payment be determined and then credited to such Participant's Account Balance under this Plan as of the date the same would have otherwise been paid (the "Supplement Payment Date") (with such Participant to be treate d as having then "Retired" for purposes of this Plan, so that the Participant's election for a method of payout under Article 5 shall govern), provided that such an Election Form filed by the Participant with regard to such pension supplement(s) is submitted to the Committee at least one year prior to the Supplemental Payment Date.
ARTICLE 6
Pre-Retirement Survivor Benefit
ARTICLE 7
Termination Benefit
ARTICLE 8
Disability Waiver and Benefit
(a) Waiver of Deferral. A Participant who is determined by the Committee to be suffering from a Disability shall be (i) excused from fulfilling that portion of the Annual Deferral Amount commitment that would otherwise have been withheld from a Participant's Base Annual Salary, Annual or Long-Term Performance Award, Severance Payments and/or SERP Payments for the Plan Year during which the Participant first suffers a Disability and (ii) excused from fulfilling the deferral of any Restricted Stock Amount, Performance Share Amount, Stock Option Amount or dividend equivalent deferral which would otherwise take place following the Committee determination. During the period of Disability, the Participant shall not be allowed to make any additional deferral elections, but will continue to be considered a Participant for all other purposes of this Plan.
(b) Return to Work. If a Participant returns to employment after a Disability ceases, the Participant may elect to defer an Annual Deferral Amount, Stock Option Amount, Restricted Stock Amount, Performance Share Amount and dividend equivalents for the Plan Year following his or her return to employment or service and for every Plan Year thereafter while a Participant in the Plan; provided such deferral elections are otherwise allowed and an Election Form is delivered to and accepted by the Committee for each such election in accordance with Section 3.2 above.
ARTICLE 9
Beneficiary Designation
ARTICLE 10
Leave of Absence
Termination, Amendment or Modification
(a) the Company enters into an agreement, the consummation of which would result in the occurrence of a Change in Control;
(b) the Company or any Person publicly announces an intention to take or to consider taking actions which, if consummated, would constitute a Change in Control;
(c) any Person becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 15% or more of either the then outstanding shares of common stock of the Company or the combined voting power of the Company's then outstanding securities (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its affiliates); or
(d) the Board adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change in Control has occurred.
The capitalized terms in the above definition have the same meaning as in the "Change in Control" definition set forth in Section 1.14 of the Plan. The Company's power to amend or modify the Plan includes the power to suspend and, if it determines to do so, re-institute the ability of any Participant or group of Participants to make deferrals under Article 3 at any time (any such suspension of the ability to make deferrals shall also suspend continued accruals of the make whole retirement benefits under Section 5.4) and such action may be taken by the Company's Board of Directors, the Compensation Committee or the Committee referred to in Article 12 below.
ARTICLE 12
Administration
ARTICLE 13
Claims Procedures
13.1 Presentation of Claim. Any Participant or Beneficiary of a deceased Participant (such Participant or Beneficiary being referred to below as a "Claimant") may deliver to the Committee a written claim for a determination with respect to the amounts distributable to such Claimant from the Plan. If such a claim relates to the contents of a notice received by the Claimant, the claim must be made within 90 days after such notice was received by the Claimant. All other claims must be made within 180 days of the date on which the event that caused the claim to arise occurred. The claim must state with particularity the determination desired by the Claimant.
(a) that the Claimant's requested determination has been made, and that the claim has been allowed in full; or
(b) that the Committee has reached a conclusion contrary, in whole or in part, to the Claimant's requested determination, and such notice must set forth in a manner calculated to be understood by the Claimant:
(i) the specific reason(s) for the denial of the claim, or any part of it;
(ii) specific reference(s) to pertinent provisions of the Plan upon which such denial was based;
(iii) a description of any additional material or information necessary for the Claimant to perfect the claim, and an explanation of why such material or information is necessary; and
(iv) an explanation of the claim review procedure set forth in Section 13.3 below.
(a) may review pertinent documents;
(b) may submit written comments or other documents; and/or
(c) may request a hearing, which the Committee, in its sole discretion, may grant.
(a) specific reasons for the decision;
(a) specific reference(s) to the pertinent Plan provisions upon which the decision was based; and
(c) such other matters as the Committee deems relevant.
ARTICLE 14
Trust
ARTICLE 15
Miscellaneous
Corporate Secretary |
Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification.
Any notice or filing required or permitted to be given to a Participant under this Plan shall be sufficient if in writing and hand-delivered, or sent by mail, to the last known address of the Participant.
15.15 Distribution in the Event of Taxation.
(a) In General. If, for any reason, all or any portion of a Participant's benefits under this Plan becomes taxable to the Participant prior to receipt, a Participant may petition the Committee before a Change in Control, or the third party administrator after a Change in Control, for a distribution of that portion of his or her benefit that has become taxable. Upon the grant of such a petition, which grant shall not be unreasonably withheld (and, after a Change in Control, shall be granted), a Participant's Employer shall distribute to the Participant immediately available funds in an amount equal to the taxable portion of his or her benefit (which amount shall not exceed a Participant's unpaid Account Balance under the Plan). If the petition is granted, the tax liability distribution shall be made within 90 days of the date when the Participant's petition is granted. Such a distribution shall affect and reduce the benefits to be paid under this Plan.
(b) Trust. If the Trust terminates in accordance with its terms and benefits are distributed from the Trust to a Participant in accordance therewith, the Participant's benefits under this Plan shall be reduced to the extent of such distributions.
(a) the occurrence of a Change in Control; or
(b) should at any time Moody's or Standard & Poor's investment rating services classify the senior debt obligations of the Company as less than "investment grade" (which term shall mean senior debt obligations of the Company which are assigned to the top four grades, which as of the date of this document are AAA, AA, A and BBB by Standard & Poor's and Aaa, Aa, A and Baa by Moody's.