Exhibit 10.12
TECO ENERGY GROUP
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
FOR ALAN D. OAK
SECTION 1. PURPOSE AND EFFECTIVE DATE
The purpose of this plan is to provide Alan D. Oak, Senior Vice
President - Finance and Chief Financial Officer of TECO Energy, with
additional retirement income by supplementing the retirement benefits provided
under the retirement plan. The plan was originally effective as of July 21,
1992. The effective date of this amendment and restatement is October 16,
1996.
SECTION 2. DEFINITIONS
This section contains definitions of terms used in the plan. Where the
context so requires, the singular includes the plural, and the plural includes
the singular.
2.1 Annual earnings will have the same meaning as in the retirement
plan, except that the same will be determined without regard to (a) any dollar
limitation on such annual earnings that may be imposed under the retirement
plan or (b) any reduction in taxable income as a result of voluntary salary
reduction deferrals under the TECO Energy Group Retirement Savings Excess
Benefit Plan.
2.2 Average annual earnings of Mr. Oak as of any date of reference
means the average of his annual earnings during whichever of the following
periods yields the highest average: (a) the 36 consecutive months of active
employment preceding the date of reference (or all months of employment if
less than 36), or (b) any three consecutive calendar years out of the five
calendar years preceding the date of reference. Bonuses are included as
compensation for the period in which paid, provided that if more than three
regular annual bonuses are paid in any 36 consecutive month period, only the
largest three bonuses will be counted.
2.3 Board means the Board of Directors of TECO Energy.
2.4 Committee means the retirement plan committee as constituted under
the retirement plan.
2.5 TECO Energy means TECO Energy, Inc. and any successor to all or a
major portion of its assets or business which assumes the obligations of TECO
Energy, Inc. under this plan.
2.6 Disability income plan means the TECO Energy Group Disability
Income Plan, as amended from time to time.
- 197 -
Exhibit 10.12
2.7 Plan means the TECO Energy Group Supplemental Executive Retirement
Plan for Alan D. Oak, as set forth in this plan instrument, and as it may be
amended from time to time.
2.8 Retirement means termination of Mr. Oak's employment with TECO
Energy by Mr. Oak or TECO Energy for any reason on or after he attains age 56.
2.9 Retirement plan means the TECO Energy Group Retirement Plan, as
amended from time to time.
2.10 Service will have the same meaning as "plan service" in the
retirement plan.
2.11 Social security benefit of Mr. Oak as of any date of reference
(the "computation date") means the primary insurance amount to which he is or
would be entitled, payable under Title II of the Social Security Act as in
effect on such date, based on the assumptions: (a) that no changes in the
benefit levels payable or the wage base under Title II occur after the
computation date; (b) that, if the computation date falls before his 63rd
birthday, his annual earnings during the calendar year in which the
computation date falls and during any subsequent calendar year before the
calendar year in which his 63rd birthday falls is zero; (c) that payment of
his primary insurance amount begins for the month after he reaches age 63, or
his date of retirement if later, without reduction or delay because of future
gainful employment or delay in applying for benefits; and (d) that his
earnings for calendar years before the calendar year in which the computation
date falls will be determined using his actual earnings history if available,
and otherwise by applying a six percent retrospective salary scale to his rate
of annual earnings in effect on the computation date. The social security
benefit of Mr. Oak if he retires after his 66th birthday will include any
delayed retirement credit.
2.12 Survivor income plan means the TECO Energy Group Survivor Income
Plan, as amended from time to time.
SECTION 3. RETIREMENT BENEFITS
3.1 Retirement at or after age 63. Subject to the reductions in
Section 6.1 below, if Mr. Oak retires on or after attaining age 63, he will
receive a supplemental monthly retirement benefit equal to one-twelfth of 60
percent of his average annual earnings (60 percent is equal to three percent
multiplied by a maximum of 20 years of service). Mr. Oak's retirement benefit
hereunder will be calculated using his average annual earnings as of his
actual date of retirement.
3.2 Retirement before age 63. Subject to the reductions in Section
6.1 below, if Mr. Oak retires before attaining age 63, he will receive a
supplemental monthly retirement benefit equal to one-twelfth of (a) three
percent of his average annual earnings multiplied by his years of service (or
portions thereof) up to a maximum of 20 years determined as of his date of
retirement, multiplied by (b) an early retirement factor determined under the
following table:
- 198 -
Exhibit 10.12
Years by which the
start of payments Early retirement
precedes age 63* factor
7 .65
6 .70
5 .75
4 .80
3 .85
2 .90
1 .95
* Interpolate for completed months
3.3 Termination before age 56. If Mr. Oak's employment terminates for
any reason before age 56, he will receive a supplemental monthly pension equal
to one-twelfth of the amount determined under the formula in Section 3.2
above, calculated using his years of service (or portions thereof) and average
annual earnings as of his date of termination.
3.4 Form of Payment.
(a) Normal form of retirement benefits. The normal form of retirement
benefit payable to Mr. Oak under the plan is a life annuity. Benefits payable
in the normal form will begin on the first day of the month coinciding with or
next following the date of Mr. Oak s retirement. If Mr. Oak s employment
terminates before his age of retirement set forth in Section 2.8, benefits
will begin on the first day of the month coinciding with or next following the
date he attains that age.
(b) Optional lump sum benefit. In lieu of the normal form of benefit,
Mr. Oak may elect to receive payment of his benefit in the form of a commuted
single sum payment that is the actuarial equivalent of the normal form of
benefit (including the value of the post-retirement surviving spouse benefit
under Section 4.2(c)). If Mr. Oak elects to receive a lump sum payment, such
payment will be made on the first day of the month coinciding with or next
following the date Mr. Oak s employment terminates. Actuarial equivalence
will be based on the actuarial assumptions specified from time to time in the
retirement plan for lump sum payments. Mr. Oak s election to receive a lump
sum payment will be effective only with respect to a retirement occurring at
least 12 months after the date Mr. Oak submits the election, provided that
elections submitted on or before December 31, 1996 will be immediately
effective.
SECTION 4. SURVIVING SPOUSE BENEFIT
4.1 Eligibility. Mr. Oak's surviving spouse will receive the
surviving spouse benefit if Mr. Oak and his spouse were married to each other
for at least the 12 months preceding Mr. Oak's death and, in the case of Mr.
Oak's death after retirement, Mr. Oak and his spouse were married to each
other on Mr. Oak's date of retirement.
- 199 -
Exhibit 10.12
4.2 Amount of surviving spouse benefit. Subject to the reductions
described in Section 6.2 below, the benefit provided under the plan to Mr.
Oak's surviving spouse will be determined as follows:
(a) Pre-retirement before age 63. If Mr. Oak dies during
employment with TECO Energy and before his 63rd birthday, his surviving spouse
will receive a monthly survivor income payment equal to 50 percent of his
monthly projected retirement benefit. Mr. Oak's monthly projected retirement
benefit is the monthly benefit he would have received if he had retired at age
63 under Section 3.1 calculated using his average annual earnings determined
as of his date of death.
(b) Pre-retirement on or after age 63. If Mr. Oak dies during
employment with TECO Energy on or after his 63rd birthday, his surviving
spouse will receive a monthly survivor income payment equal to 50 percent of
his monthly retirement benefit earned under Section 3.1 using his average
annual earnings as of his date of death.
(c) Post-retirement. If Mr. Oak dies on or after the date of
his retirement, his surviving spouse will receive a monthly survivor income
payment equal to 50 percent of the monthly benefit payment he was receiving at
his death (or would have received if he had survived until the first payment
date).
4.3 Form and time of surviving spouse benefit. Surviving spouse
benefits under this Section 4 will be payable only in the form of a life
annuity to the surviving spouse. Benefit payments will begin on the first day
of the month coinciding with or next following the date of Mr. Oak's death.
4.4 Death benefit where lump sum paid. If Mr. Oak received a lump sum
payment of his benefit under Section 3.4(b), no surviving spouse benefit or
other death benefit will be payable under the plan to any person.
SECTION 5. DISABILITY
5.1 If Mr. Oak suffers a total disability (as defined in the
disability income plan) before age 63, he will continue to be credited with
service as if he were actively employed by TECO Energy during his period of
total disability. Mr. Oak may not receive benefits under this plan at any
time when he is receiving disability income payments under the disability
income plan. Benefits under this plan will begin when payments cease under
the disability income plan.
5.2 Mr. Oak's disability date is his last day of work for TECO Energy
before becoming unable to continue working because of his total disability. A
period of total disability of Mr. Oak will begin on his disability date and
will end on the earlier of the last day of the month in which his final
disability income payment is due under the disability income plan or on the
date he retires hereunder and starts receiving benefit payments.
5.3 If Mr. Oak does not return to active service with TECO Energy
after suffering a total disability, his retirement benefits under Section 3
- 200 -
Exhibit 10.12
will be calculated using his average annual earnings as of his disability
date, his total service including service credited under Section 5.1 above,
and his primary social security benefit as of his date of disability.
5.4 If Mr. Oak dies while disabled, his surviving spouse will, if
eligible, receive the pre-retirement surviving spouse benefit determined under
Section 4.2(a) or (b).
SECTION 6. OFFSET FOR OTHER PAYMENTS
6.1 Mr. Oak's retirement benefit will be reduced (but not below zero)
by the following payments, with such reductions starting when such payments
are assumed to begin: (a) 100 percent of the social security benefit of Mr.
Oak assuming such benefit begins on the later of the date he reaches age 63 or
his actual retirement, and (b) the amount of his benefit payments under the
retirement plan (converted to a life annuity if such payments are in an
optional form), assuming such payments begin on the later of the date he
reaches age 56 or his actual retirement.
6.2 The benefit of Mr. Oak's surviving spouse will be reduced (but not
below zero) by the following payments: (a) payments under the survivor income
plan, and (b) payments under the retirement plan.
SECTION 7. BENEFITS NOT CURRENTLY FUNDED
7.1 Nothing in this plan will be construed to create a trust or to
obligate TECO Energy or any other employer to segregate a fund, purchase an
insurance contract, or in any other way currently to fund the future payment
of any benefits hereunder, nor will anything herein be construed to give Mr.
Oak or any other person rights to any specific assets of TECO Energy or of any
other employer or entity.
7.2 Notwithstanding Section 7.1, TECO Energy has established a grantor
trust of which it is treated as the owner under Section 671 of the Internal
Revenue Code to provide for the payment of benefits hereunder.
SECTION 8. ADMINISTRATION
The plan will be administered by the committee, which will have full
power and authority to construe, interpret and administer the plan. Decisions
of the committee will be final and binding on all persons. The committee may,
in its discretion, adopt, amend and rescind rules and regulations relating to
the administration of the plan.
SECTION 9. RIGHTS NON-ASSIGNABLE
Neither Mr. Oak, his surviving spouse, nor any other person will have
any right to assign or otherwise to alienate the right to receive payments
under the plan, in whole or in part.
- 201 -
Exhibit 10.12
SECTION 10. OTHER BENEFIT PLANS
This plan will supersede any obligation to pay benefits to Mr. Oak under
the excess benefit plan contained in the retirement plan or the TECO Energy
Group Supplemental Executive Retirement Plan, as they may be amended from time
to time. No benefits will be payable to Mr. Oak under such excess benefit
plan or the TECO Energy Group Supplemental Executive Retirement Plan.
SECTION 11. AMENDMENT
TECO Energy reserves the right at any time by action of the board to
amend the plan in any way. However, no amendment of the plan may reduce the
benefits to be paid to Mr. Oak or his surviving spouse below those that would
have been paid if the plan had continued without change to the date of Mr.
Oak's retirement or termination of employment for any reason.
Executed as of October 16, 1996.
TECO ENERGY, INC.
By:
____________________________________
Roger A. Dunn
V i ce President - Human Resources
ALAN D. OAK
___________________________________
- 202 -