EXHIBIT 10(r)
AMERICAN ELECTRIC POWER SYSTEM
NUCLEAR PERFORMANCE
LONG TERM INCENIVE COMPENSATON PLAN
ARTICLE I
Establishment and Purpose
1.1 The Company hereby establishes the American Electric Power System
Nuclear Performance Long Term Incentive Compensation Plan effective as of August
1, 1998.
1.2 The purpose of the American Electric Power System Nuclear Performance
Long Term Incentive Compensation Plan is to enhance the performance of the D.C.
Cook Nuclear Plant and to reward those employees who efforts are instrumental to
the performance of the D.C. Cook Nuclear Plant.
ARTICLE II
Definitions
As used herein the following words and phrases shall have the following
respective meanings unless the context clearly indicates otherwise.
(a) "AEP Stock Unit" means a phantom stock unit equal to one share of
Common Stock for which no certificates shall be issued, which do not have voting
rights and a bookkeeping record of which shall be maintained by the Company.
(b) "Award Certificate" means a certificate setting forth the terms and
provisions applicable to each grant of AEP Stock Units, which shall include, but
shall not be limited to, the number of AEP Stock Units granted to the
Participant, the Performance Objectives, and the length of the Performance
Period.
(c) "Committee" means the individuals holding the following offices within
the Company; Chairman of the Board, President and Chief Executive Officer;
Executive Vice President-Financial Services; Executive Vice President-Corporate
Services; Senior Vice President-Nuclear Generation; and Senior Vice
President-Human Resources.
(d) "Common Stock" means the common stock of American Electric Power
Company, Inc., a New York corporation and any successor thereto.
(e) "Company" means American Electric Power Service Corporation, a New York
corporation, and any of its subsidiaries and affiliates.
(f) "Disability" means a total and permanent disability as defined in the
American Electric Power System Retirement Plan as amended from time to time.
(g) "Fair Market Value" means the closing sale price of the Common Stock as
published in the Wall Street Journal report of the New York Stock Exchange on
the date in question, or if the New York Stock Exchange is Closed on such date,
then the first day prior theret6 on which the Common Stock was so traded.
(h) "Participant" means any full-time employee of the Company, who has been
selected to participate in the Plan for a stipulated Performance Period.
(i) "Performance Objectives" means the annual Plan Year objectives or
multiple Plan Year objectives established by the Company for the operation of
the D. C. Cook Nuclear Plant
(j) "Performance Period" means the Plan Year or Plan Years established by
the Company over which the Performance Objectives will be measured. If a
Performance Period is for two or more Plan Years, the attained Performance
Objectives for each Plan Year within the Performance Period shall be averaged to
determine the attained Performance Objective for the Performance Period.
(k) "Plan" means the American Electric Power System Nuclear Performance
Long Term Incentive Compensation Plan.
(l) "Plan Year" means the calendar year commencing on January 1 and ending
on December 31.
(m) "Retirement" means a termination of employment after the Participant
attains age 55 and has completed five years of service.
ARTICLE III
Administration
3.1 The Committee shall administer the Plan. The Committee shall have the
authority to interpret the Plan and to prescribe, amend and rescind rules and
regulations relating to the administration of the Plan, and all such
interpretation, rules and regulation shall be conclusive and binding on all
Participants.
3.2 The Committee may employ agents, attorneys, accountants, or other
person and allocate or delegate to them powers, rights, and duties all as the
Committee may consider necessary or advisable to properly carry out the
administration of the Plan.
3.3 If the Committee determines that the occurrence of any merger,
reclassification, consolidation, recapitalization, stock dividend or stock split
requires an adjustment in order to preserve the benefits intended under the
Plan, then the Committee may, in its discretion, make equitable proportionate
adjustments in individual AEP Stock Unit grants.
ARTICLE V
Eligibility and Participation
4.1 Eligibility for participation in the Plan shall be limited to senior
officers who, in the opinion of the Committee, have the capacity for
contributing in a substantial measure to the successful performance of the D.C.
Cook Nuclear Plant.
4.2 At the beginning of each Plan Year, the Committee shall identify which,
if any, Participants shall receive a grant of AEP Stock Units for a Performance
Period that commences at the start of the Plan Year. At the sole discretion of
the Committee an individual may become a Participant in the Plan after tile
start of a Plan Year or a Performance Period and shall receive prorated grants
of AEP Stock Units. As soon as practicable following the selection of the
Participants, the Committee shall provide each Participant with an Award
Certificate.
ARTICLE V
Grants of AEP Stock Units
5.1 Grants of AEP Stock Units:
(a) AEP Stock Units may be granted to Participants as of the first day
of each Performance Period; however, grants do not necessarily have to be
made to Participant on an annual basis. The number of AEP Stock Units to be
granted to each Participant shall be determined by the Committee in its
sole discretion.
(b) If an individual becomes a Participant after the first day of a
Plan Year or Performance Period, the Committee may grant AEP Stock Units to
tile Participant as follows: (i) AEP Stock Units for a Performance Period
that ends in tile Plan Year in which tile individual becomes a Participant;
(ii) AEP Stock Units for a Performance Period that ends in the Plan Year
immediately following the Plan Year in which the individual becomes a
Participant; and (iii) AEP Stock Units for a Performance Period that ends
in the second full Plan Year after the individual becomes a Participant.
The number of AEP Stock Units granted for each such Performance Period
shall be determined by the Committee in its sole discretion.
(c) The value of the AEP Stock Units granted to a Participant at the
commencement of a Plan Year or Performance Period as provided in section
5.1(a) or after the commencement of a Plan Year or Performance Period as
provided in section 5.1(b) shall be calculated on the basis of the average
of the Fair Market Value of the Common Stock for the last 20 trading days
prior to the start of a Plan Year or Performance Period.
5.2 During the Performance Period, Participants will be credited with
dividends, equivalent in value to those declared and paid on shares of the
Common Stock, on all AEP Stock Units granted to them. These dividends will be
regarded as having been reinvested in AEP Stock Units on the date of the Common
Stock dividend payments based on the then Fair Market Value of the Common Stock,
thereby increasing the number of AEP Stock Units Held by the Participant.
5.3 The Committee shall establish Performance Periods in its sole
discretion. The minimum Performance Period shall be for one year and the maximum
Performance Period shall be for three years in length.
ARTICLE VI
Determination and Payment
6.1 The number of AEP Stock Units earned by a Participant for a Performance
Period shall be determined by multiplying the number of AEP Stock Units held by
the Participant at the end of the Performance Period by a factor based upon the
Performance Objectives.
6.2 The payment of earned AEP Stock Units shall be made in cash. The cash
payment shall be calculated on the basis of the average of the Fair Market Value
of the Common Stock for the last 20 trading days of the Performance Period for
which the AEP Stock Units were earned.
6.3 At least one year prior to the end of a Performance Period,
Participants may make an election to defer the cash payment of earned ABP Stock
Units for one or more years. However, if the Participant's deferral period
extends beyond the Participant's employment termination date, cash payment of
the earned AEP Stock Units must commence no later than five years after the
Participant's termination of employment. Deferred AEP Stock Units shall continue
to be credited with dividends during the deferral period and the dividends shall
be reinvested in additional AEP Stock Units as provided in Section 5.2. The cash
payment of the deferred AEP Stock Units shall be calculated on the basis of the
average of the Fair Market Value of the Common Stock for the last 20 trading
days prior to the date the Participant's deferral period terminates.
ARTICLE VII
Termination of Employment
7.1 In the event of a Participant's termination of employment prior to the
end of a Performance Period, but after the first six months of such Performance
period, by reason of the Participant's death, Disability Retirement or
involuntary termination other then for cause, the Participant will be eligible
to earn prorated AEP Stock Units for each such Performance Period which has not
yet ended, determined pursuant to Section 6.1 for such period and the number of
days of participation during such Performance Period.
7.2 In the event a Participant's employment is terminated prior to the end
of a Performance Period for reasons other than death, Disability, Retirement or
involuntary termination other than for cause, all rights to any unearned AEP
Stock Units under the Nuclear Performance Plan shall be forfeited.
7.3 In the event a Participant dies prior to the complete payment of the
Participant's award, the amount owning to the Participant shall be paid to the
Participant's spouse if the spouse is then living. If the Participant is not
married at the time of death, the amount owing to the Participant shall be paid
to the Participant's estate.
7.4 In the event American Electric Power Company, Inc., or the Company, or
Indiana Michigan Power Company sells or otherwise disposes of the D.C. Cook
Nuclear Plant and the acquirer of the D.C. Cook Nuclear Plant does not continue
this Plan, the Plan shall be deemed to have terminated as of the date of the
sale or disposition and the AEP Stock Units awarded and credited to the
Participants as of the date of sale or disposition shall become fully vested.
The value of each AEP Stock Unit shall be paid in cash to the Participants
within 60 days of the date of sale or disposition assuming that as of the date
of sale or disposition the Performance Measure was attained. The cash payment
shall be calculated on the basis of the average of the Fair Market Value of the
Common 8tock for the last 20 trading days immediately prior to the date of sale
or disposition. If the acquirer of the D.C. Cook Nuclear Plant continues this
Plan, American Electric Power Company, Inc., or the Company or Indiana Michigan
Power Company will not be liable or obligated to make any payments under this
Plan.
ARTICLE VIII
Amendment or Termination
8.1 The Committee shall have the right, authority and power to alter,
amend, modify, revoke or terminate the Plan.
8.2 No amendment or termination of the Plan shall directly or indirectly
deprive any current or former Participant of all or any portion of any benefits
earned up to the date of the amendment or termination of the Plan.
ARTICLE IX
Change In Control
9.1 Notwithstanding any provisions of this Plan to the contrary, if a
Change in Control of the Company occurs, all AEP Stock Unit grants awarded and
credited to the Participants shall be deemed to be fully earned as of the date
of the Change in Control. The determination of the AEP Stock Units shall be made
as of the last day before the Change in Control. Payments of AEP Stock Units
shall be made in cash within three months after the Change in Control. The cash
payment shall be calculated on the basis of the average of the Fair Market Value
of the Common Stock for the last 20 trading days immediately proceeding the date
of the Change In Control.
9.2 For purposes of this Article IX, the term "Company" shall mean the
American Electric Power Company, Inc., a New York corporation and it's
subsidiaries. All references to the term Company in other Articles of this Plan
shall have the meaning as provided in Article II(e).
9.3 A "Change in Control" of the Company shall be deemed to have occurred
if (a) any "person" or "group" (as such terms are used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934 ("Exchange Act")), other than a
trustee or other fiduciary holding securities under an employee benefit plan of
the Company, becomes the "beneficial owner" (as defined in Rule l3d-3 under the
Exchange Act), directly or indirectly, of more than 25 percent of the then
outstanding voting stock of the Company; (b)during any period of two consecutive
years, individuals who at the beginning of such period constitute the Board,
together with any new Directors whose election or nomination for election was
approved by a vote of at least two-thirds of the Directors then still in office
who were either Directors at the beginning of the period or whose election or
nomination for election was previously so approved; cease for any reason to
constitute at least a majority of the Board; or (e) the Company's shareholders
approve a merger or consolidation of the Company with any other corporation,
other than a merger or consolidation which would result in the voting securities
of the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity) at least 75 percent of the total voting power represented
by the voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation; or (d) the shareholders of the
Company approve a plan of complete liquidation of the Company, or an agreement
for the date or disposition by the Company (in one transaction or a series of
transactions) of all or substantially all of the Company's assets.
Notwithstanding the foregoing, a Change in Control shall not be deemed to
occur as a result of any event described in (a) or (c) above, if Directors who
were a majority of the members of the Board prior to such event and who continue
to serve as Directors after such event determine that the event shall not
constitute a Change in Control
For purposes of this Section 9.3, "Board" shall mean the Board of Directors
of American Electric Power Company, Inc. and `"Directors" shall mean an
individual who is a member of the Board.
ARTICLE X
Miscellaneous
10.1 Nothing in this Plan shall interfere with or limit in any way the
right of the Company to terminate any Participant's employment at any time, nor
confer upon a Participant any right to continue in the employ of the Company.
10.2 In the event the Committee shall find that a Participant is unable to
care for his or her affairs because of illness or accident, the Committee may
direct that any payment due the Participant be paid to the duly appointed legal
representative of the Participant, and any such payment so made shall be a
complete discharge of the liabilities of the Plan.
10.3 The Plan shall be construed and administered according to the laws of
the State of Ohio.