Exhibit 10(i)(1)
AMERICAN ELECTRIC POWER SYSTEM
SENIOR OFFICER ANNUAL INCENTIVE
COMPENSATION PLAN
ARTICLE 1
ESTABLISHMENT, PURPOSE AND EFFECTIVE DATE
1.1 The Company hereby establishes the "American Electric Power
System Senior Officer Annual Incentive Compensation Plan" (the
"Plan").
1.2 The purposes of the Plan are to improve corporate performance
and enhance shareholder value by providing senior officers
incentives to earn annual incentive compensation through the
achievement of performance goals and to assist the Company in
retaining and recruiting key employees.
1.3 The Plan is effective as of January 1, 1997.
ARTICLE 2
DEFINITIONS
2.1 "Account" means, with respect to each Participant, the
Participant's separate individual account established and
maintained for the exclusive purpose of accounting for the
incentive compensation deferred by the Participant in the form
of Stock Units pursuant to Section 3.3 of the Plan.
2.2 "Board" means the Board of Directors of the Company.
2.3 "Committee" means the Human Resources Committee of the Board.
2.4 "Common Stock" means the common stock, $6.50 par value, of the
Company.
2.5 "Company" means American Electric Power Company, Inc., a New
York corporation, and any successor thereto.
2.6 "Incentive Award" means the amount of incentive compensation,
as determined by the Committee, payable to a Participant upon
the attainment of the Performance Goals for the Plan Year.
2.7 "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.
2.8 "Participant" means persons holding the positions of Chairman
of the Board, President, Chief Executive Officer and Executive
Vice President of American Electric Power Service Corporation,
a Subsidiary of the Company, and any other senior officer of
the Company or its Subsidiaries selected by the Committee.
2.9 "Performance Goals" means performance goals as shall be
established in writing by the Committee which may be based on,
but are not limited to, earnings, stock price, return on
equity, return on investment, total return to shareholders,
economic value added, debt rating and/or achievement of
business or operational goals, such as safety, customer
satisfaction, market share and/ or business development. Such
goals may be absolute in their terms or measured against or in
relationship to other companies.
2.10 "Plan Year" means the Company's fiscal year commencing January
1 and ending December 31.
2.11 "Stock Unit" means a measure of value, expressed as a share of
Common Stock. 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.
2.12 "Subsidiary" means any corporation in which the Company owns
directly or indirectly through it 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.
ARTICLE 3
AWARD DETERMINATION AND PAYMENT
3.1 Within 90 days after the commencement of each Plan Year, the
Committee shall establish Performance Goals for such Plan
Year.
3.2 The Incentive Award payable to a Participant shall be
determined by the Committee as soon as practicable after the
determination of the achieved Performance Goals. A
Participant's Incentive Award may range from zero to 60
percent of the Participant's base salary or compensation in
effect at the beginning of the Plan Year depending upon the
level of the Performance Goal achievement. An increase in a
Participant's base salary or compensation during the Plan Year
will not be considered when calculating the Participant's
Incentive Award. The Committee may, in its sole discretion,
reduce or eliminate for any reason the Incentive Award that
would otherwise be payable to a Participant.
3.3 Incentive Award payments shall be made in cash as soon as
practicable after the end of the Plan Year. However, a
Participant may elect to defer payment of all or part of the
Incentive Award for one or more years with a maximum deferral
period that results in payment commencing no later than five
years after the Participant's termination of employment. The
deferral election must be filed with the Company on or before
December 31 of the preceding Plan Year and may be effective
for the immediately following Plan Year or all subsequent Plan
Years. A deferral election may be terminated or modified for
any subsequent Plan Year by the filing of a new deferral
election on or before December 31 of the preceding Plan Year.
3.4 If a Participant elects to defer all or a portion of the
Participant's Incentive Award, Stock Units shall be credited
to the Participant's Account effective January 1 immediately
following the completion of the Plan Year. The number of
whole and fractional Stock Units, computed to three decimal
places, to be credited to the Participant's Account shall be
equal to the dollar amount of the Incentive Award which
otherwise would have been payable to the Participant divided
by the average of the Market Value for the last 20 trading
days of the associated Plan Year. On each dividend payment
date with respect to the Common Stock, the Account of a
Participant shall be credited with an additional number of
whole and fractional Stock Units 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. The number of a
Participant's Stock Units 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.
3.5 If a Participant's participation in the Plan terminates during
a Plan Year due to the Participant's death, total disability,
retirement or other reasons or causes as approved by the
Committee, the Participant's Incentive Award for the Plan Year
shall be pro-rated based upon the Participant's period of
employment with the Subsidiaries. Such Incentive Award shall
be paid to the Participant or the Participant's beneficiary
when the Incentive Awards for such Plan Year are paid to the
other Participants.
ARTICLE 4
PAYMENT OF DEFERRED INCENTIVE AWARDS
4.1 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 cash
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 3.3. The amount attributable to the 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 or respective
installment payment dates, as the case may be.
4.2 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 Participant's designated beneficiary or the
Participant's estate, as the case may be. The amount of the
lump sum cash distribution attributable to the 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 death. 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.
4.3 Each Participant shall have the right to designate a
beneficiary or beneficiaries who shall receive the balance of
the Participant's Account if the Participant dies before the
complete distribution of the Account. Any designation, or
change or rescission thereof, shall be made in writing by
completing and furnishing to the Committee the appropriate
beneficiary form prescribed by the Committee. The last
designation of beneficiary received by the Committee prior to
the death of the Participant shall control.
ARTICLE 5
ADMINISTRATION
5.1 The Plan shall be administered by the Committee. 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
interpretations, rules and regulations shall be conclusive and
binding on all Participants.
5.2 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 6
MISCELLANEOUS
6.1 The Committee shall have the right, authority and power to
alter, amend, modify, revoke or terminate the Plan; except as
provided in Article 7; 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.
6.2 No benefits at any time payable under this Plan to a
Participant or beneficiary 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.
6.3 A Participant's deferred Incentive Award 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.
6.4 Nothing in this Plan shall interfere with or limit in any way
the right of the Company or any Subsidiary to terminate any
Participant's employment at any time, nor confer upon any
Participant any right to continue in the employ of the Company
or Subsidiary.
6.5 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.
6.6 The Company or its Subsidiaries may withhold federal, state
and local income taxes and social security taxes from any
distribution hereunder to the extent that such taxes are then
payable.
6.7 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.
ARTICLE 7
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 shall be paid to the
Participant in a lump sum in cash 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.