Exhibit 10(f)(1)
American Electric Power Company, Inc.
Deferred Compensation and Stock Plan
for Non-Employee Directors
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 is subject to the approval of a majority of the holders of
the Company's Common Stock entitled to vote thereon at the Annual
Meeting of Shareholders to be held on April 23, 1997, or such other
date fixed for the next meeting of shareholders or any adjournment
or postponement thereof. Subject to the receipt of such approval,
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 Human Resources Committee 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 receive all or a portion of such person's
Retainer in shares of Common Stock and/or to defer payment of
all or a portion of such 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 service as a Director for any other reason.
Article 4
Election to Receive Common Stock for Retainer
and/or 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, (a) to receive all or a specified portion of
the Director's Retainer in shares of Common Stock and/or (b) 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 receive Common Stock and/or 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 Common Stock Election
When a Participant elects pursuant to Section 4.1 to receive all or
a portion of the Participant's Retainer in shares of Common Stock,
the number of whole shares to be distributed to the Participant,
with any fractional shares to be paid in cash, as of the date the
Retainer would otherwise have been payable to the Participant,
shall be equal to the dollar amount of the Retainer which otherwise
would have been payable to the Participant divided by the Market
Value on such date.
4.4 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. Payment may be made in cash, shares of
Common Stock, or a combination of both as elected by the
Participant. The election to be paid in cash or Common Stock must
be filed with the Company at least 30 days prior to the payment
date and, in the event an election is not made, payment will be
made in cash.
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 deferred distribution
date, respective installment payment dates or the date of the
Participant's death, as the case may be. Payment in Common Stock
shall be at the rate of one share of Common Stock for each Stock
Unit, with any fractional shares to be paid in cash.
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, shares of Common Stock, or a combination of both, to the
Participant, as elected by 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 until such time and to such
extent that payment of Stock Units is made in shares of Common
Stock as requested by the Participant.
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.