EXHIBIT 10(k)(1)
American Electric Power Company, Inc.
Deferred Compensation and Stock Plan
For Non-Employee Directors
(As Amended December 10, 2003)
Article 1
Purpose
The purposes of this American Electric Power Company, Inc. Deferred Compensation
and Stock Plan For Non-Employee Directors (the "Plan") are to enable the Company
to attract and retain qualified persons to serve as Non-Employee Directors, to
provide Non-Employee Directors with an opportunity to defer some or all of their
Retainer as a means of saving for retirement or other purposes, to solidify the
common interests of its Non-Employee Directors and shareholders by enhancing the
equity interest of Non-Employee Directors in the Company, and to encourage the
highest level of Non-Employee Director performance by providing such
Non-Employee Directors with a proprietary interest in the Company's performance
and progress by permitting Non-Employee Directors to receive all or a portion of
their Retainer in Common Stock and/or to defer all or a portion of their
Retainer in Stock Units.
Article 2
Effective Date
The Plan shall be effective as of January 1, 1997.
Article 3
Definitions
Whenever used in the Plan, the following terms shall have the respective
meanings set forth below:
3.1 "Account" means, with respect to each Participant, the Participant's
separate individual account established and maintained for the
exclusive purpose of accounting for the Participant's deferred Retainer
which is accrued in terms of Stock Units.
3.2 "Beneficiary" means, with respect to each Participant, the recipient or
recipients designated by the Participant who are, upon the
Participant's death, entitled in accordance with the Plan's terms to
receive the benefits to be paid with respect to the Participant.
3.3 "Board" means the Board of Directors of the Company.
3.4 "Committee" means the Committee on Directors and Corporate Governance
of the Board.
3.5 "Common Stock" means the common stock, $6.50 par value, of the Company.
3.6 "Company" means American Electric Power Company, Inc., a New York
corporation, and any successor thereto.
3.7 "Director" means an individual who is a member of the Board.
3.8 "Market Value" means the closing price of the Common Stock, as
published in The Wall Street Journal report of the New York Stock
Exchange - Composite Transactions on the date in question or, if the
Common Stock shall not have been traded on such date or if the New York
Stock Exchange is closed on such date, then the first day prior thereto
on which the Common Stock was so traded.
3.9 "Non-Employee Director" means any person who serves on the Board and
who is not an officer of the Company or employee of its Subsidiaries.
3.10 "Participant" means any Non-Employee Director who has made an election
to defer payment of all or a portion of such person's Retainer in
Stock Units.
3.11 "Retainer" means the designated annual cash retainer, currently paid
quarterly, for Non-Employee Directors established from time to time by
the Board as annual compensation for services rendered, exclusive of
compensation for service as a member of any committee designated by the
Board or in connection with any meeting of the Board or special
assignment, and exclusive of reimbursements for expenses incurred in
performance of service as a Director.
3.12 "Stock Unit" means a measure of value, expressed as a share of Common
Stock, credited to a Participant under this Plan. No certificates shall
be issued with respect to such Stock Units, but the Company shall
maintain a bookkeeping Account in the name of the Participant to which
the Stock Units shall relate.
3.13 "Subsidiary" means any corporation in which the Company owns directly
or indirectly through its Subsidiaries, at least 50 percent of the
total combined voting power of all classes of stock, or any other
entity (including, but not limited to, partnerships and joint ventures)
in which the Company owns at least 50 percent of the combined equity
thereof.
3.14 "Termination" means retirement from the Board or termination of
services as a Director for any other
reason.
Article 4
Election to Defer Retainer in Stock Units
4.1 Election
On or before December 31 of any year, for calendar years subsequent to 1997, a
Non-Employee Director may elect, by filing with the Company an election, to
defer receipt of all or a specified portion of the Director's Retainer in Stock
Units until the Director's Termination or for a period that results in payment
commencing not later than five years thereafter as elected by the Participant.
The election to defer payment beyond the Participant's Termination must be made
at least one year prior to such Termination.
Notwithstanding the foregoing, a Non-Employee Director may choose to participate
in the Plan beginning with the Retainer payable on June 30, 1997, by filing an
election to so participate on or before March 31, 1997. A Non-Employee Director
elected to fill a vacancy on the Company's Board and who was not a Director on
the preceding December 31, or whose term of office did not begin until after
that date, may file an election to defer, for all or a specified portion of the
Director's Retainer, commencing not less than three months after the date of the
election.
4.2 Revocation of Election
An effective election pursuant to Section 4.1 may not be revoked or modified
(except as otherwise stated herein) with respect to the Retainer payable for a
calendar year or portion of a calendar year for which such election is
effective. An effective election may be terminated or modified for any
subsequent calendar year by the filing of an election, on or before December 31
of the preceding calendar year for which such modification or termination is to
be effective.
4.3 Deferred Retainer Election
When a Participant elects pursuant to Section 4.1 to defer all or a portion of
the Participant's Retainer in Stock Units, the number of whole and fractional
Stock Units, computed to three decimal places, to be credited to the
Participant's Account, on the date the deferred Retainer would otherwise have
been payable to the Participant, shall be equal to the dollar amount of the
deferred Retainer which otherwise would have been payable to the Participant
divided by the Market Value on such date.
Article 5
Dividends and Adjustments
5.1 Reinvestment of Dividends
On each dividend payment date with respect to the Common Stock, the Account of a
Participant, with Stock Units held pursuant to Article 4, shall be credited with
an additional number of whole and fractional Stock Units, computed to three
decimal places, equal to the product of the dividend per share then payable,
multiplied by the number of Stock Units then credited to such Account, divided
by the Market Value on the dividend payment date.
5.2 Adjustments
The number of Stock Units credited to a Participant's Account pursuant to
Article 4 shall be appropriately adjusted for any change in the Common Stock by
reason of any merger, reclassification, consolidation, recapitalization, stock
dividend, stock split or any similar change affecting the Common Stock.
Article 6
Payment of Stock Units
6.1 Manner of Payment Upon Termination
In accordance with the Participant's election, filed with the Company, all Stock
Units held in a Participant's Account shall be paid to the Participant either as
(a) a lump sum distribution within 10 days after the Participant's deferred
distribution date, or (b) up to 10 annual installments commencing within 10 days
after the Participant's deferred distribution date. This election shall be made
at the same time the Participant makes a deferral election as provided in
Section 4.1.
6.2 Manner of Payment Upon Death
Notwithstanding the Participant's election, if a Participant dies while Stock
Units are held in the Participant's Account, such Stock Units will be paid in a
lump sum in cash within 90 days from the date of the Participant's death to the
Beneficiary or the Participant's estate, as the case may be. Upon application by
the Beneficiary or the legal representative for the Participant's estate, the
lump sum payment may be deferred beyond 90 days for good cause if the Committee
consents to such deferral.
6.3 Determination
Any cash payments of Stock Units shall be calculated on the basis of the average
of the Market Value of the Common Stock for the last 20 trading days prior to
the Participant's Termination, deferred distribution date, respective
installment payment dates or the date of the Participant's death, as the case
may be.
Article 7
Beneficiary Designation
Each Participant shall be entitled to designate a Beneficiary or Beneficiaries
(which may be an entity other than a natural person) who, following the
Participant's death, will be entitled to receive any payments to be made under
Section 6.2. At any time, and from time to time, any designation may be changed
or cancelled by the Participant without the consent of any Beneficiary. Any
designation, change, or cancellation must be by written notice filed with the
Company and shall not be effective until received by the Company. Payment shall
be made in accordance with the last unrevoked written designation of Beneficiary
that has been signed by the Participant and delivered by the Participant to the
Company prior to the Participant's death. If the Participant designates more
than one Beneficiary, any payments under Section 6.2 to the Beneficiaries shall
be made in equal shares unless the Participant has designated otherwise, in
which case the payments shall be made in the proportions designated by the
Participant. If no Beneficiary has been named by the Participant or if all
Beneficiaries predecease the Participant, payment shall be made to the
Participant's estate.
Article 8
Transferability Restrictions
The Plan shall not in any manner be liable for, or subject to, the debts and
liabilities of any Participant or Beneficiary. No payee may assign any payment
due such party under the Plan. No benefits at any time payable under the Plan
shall be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, attachment, garnishment, levy, execution, or other legal or
equitable process, or encumbrance of any kind.
Article 9
Funding Policy
The Company's obligations under the Plan shall be totally unfunded so that the
Company or any Subsidiary is under merely a contractual duty to make payments
when due under the Plan. The promise to pay shall not be represented by notes
and shall not be secured in any way.
Article 10
Change in Control
Notwithstanding any provision of this Plan to the contrary, if a "Change in
Control" (as defined below) of the Company occurs, Stock Units held in a
Participant's Account will be paid in a lump sum in cash, to the Participant,
not later than 15 days after the date of the Change in Control. For this
purpose, the balance in the Account shall be determined by the higher of (a) the
average of the Market Value of the Common Stock for the last 20 trading days
prior to such Change in Control or (b) if the Change in Control of the Company
occurs as a result of a tender or exchange offer or consummation of a corporate
transaction, then the highest price paid per share of Common Stock pursuant
thereto. Any consideration other than cash forming a part or all of the
consideration for the Common Stock to be paid pursuant to the applicable
transaction shall be valued at the valuation price thereon determined by the
Board.
In addition, the Company shall reimburse a Participant for the legal fees and
expenses incurred if the Participant is required to seek to obtain or enforce
any right to distribution. In the event that it is determined that such
Participant is properly entitled to a cash distribution hereunder, such
Participant shall also be entitled to interest thereon at the prime rate of
interest as published in The Wall Street Journal plus two percent from the date
such distribution should have been made to and including the date it is made.
Notwithstanding any provisions of this Plan to the contrary, the provisions of
this Article may not be amended by an amendment effected within three years
following a Change in Control.
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, as amended ("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 13d-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 (c) 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 sale 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.
Article 11
Administration
The Plan shall be administered by the Committee. The Committee shall have
authority to interpret the Plan, and to prescribe, amend and rescind rules and
regulations relating to the administration of the Plan, and all such
interpretations, rules and regulations shall be conclusive and binding on all
Participants. The Committee may employ agents, attorneys, accountants, or other
persons (who also may be employees of a Subsidiary) 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.
Article 12
Amendment and Termination
The Company, by resolution duly adopted by the Board, shall have the right,
authority and power to alter, amend, modify, revoke, or terminate the Plan;
except as provided in Article 10; and provided further, that no amendment or
termination of the Plan shall adversely affect the rights of any Participant
with respect to any Stock Units held in such Participant's Account, unless the
Participant shall consent thereto in writing.
Article 13
Miscellaneous
13.1 No Right to Continue as a Director
Nothing in this Plan shall be construed as conferring upon a Participant any
right to continue as a member of the Board.
13.2 No Interest as a Shareholder
Stock Units do not give a Participant any rights whatsoever with respect to
shares of Common Stock.
13.3 No Right to Corporate Assets
Nothing in this Plan shall be construed as giving the Participant, the
Participant's designated Beneficiaries or any other person any equity or
interest of any kind in the assets of the Company or any Subsidiary or creating
a trust of any kind or a fiduciary relationship of any kind between the Company
or any Subsidiary and any person. As to any claim for payments due under the
provisions of the Plan, a Participant, Beneficiary and any other persons having
a claim for payments shall be unsecured creditors of the Company or any
Subsidiary.
13.4 Payment to Legal Representative for Participant
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 Participant's duly appointed
legal representative, and any such payment so made shall be a complete discharge
of the liabilities of the Plan.
13.5 No Limit on Further Corporate Action
Nothing contained in the Plan shall be construed so as to prevent the Company or
any Subsidiary from taking any corporate action which is deemed by the Company
or any Subsidiary to be appropriate or in its best interest.
13.6 Governing Law
The Plan shall be construed and administered according to the laws of the State
of New York to the extent that those laws are not preempted by the laws of the
United States of America.
13.7 Headings
The headings of articles, sections, subsections, paragraphs or other parts of
the Plan are for convenience of reference only and do not define, limit,
construe, or otherwise affect its contents.