May 22, 2001
Mr. Stephen Dickson
(Home address)
Re: Supplemental Pension Benefit
Dear Stephen:
We have discussed the Company's provision of a special
supplemental non-qualified pension benefit to you. The purpose
of this letter is to set forth the details, as follows:
1. Supplemental Pension Benefit: The Company will provide a
supplemental pension benefit to you upon your retirement at
or after age 55. This supplemental pension benefit will be
equal to the difference, if any, remaining after (a) below
has been subtracted from (b) below, less the amount of the
monthly vested retirement benefit payable to you at 65 or
that would have been payable to you at that age from defined
benefit plans of previous employers for periods of
employment prior to your employment by the Company or its
affiliate had you elected to receive your accrued benefits
from such plans of such prior employers at age 65 (the
"Reduction Amount"), where (a) and (b) are defined as
follows:
a. equals the monthly retirement benefit that is payable
from the Retirement Account Plan of Wisconsin Electric
Power Company (the "Retirement Account Plan"), plus the
amounts of any actual "make whole" pension supplements
due under the provisions of Article V of the Wisconsin
Energy Corporation Executive Deferred Compensation
Plan, plus any amount payable under monthly benefit "A"
under Wisconsin Energy Corporation's Supplemental
Executive Retirement Plan, and
b. equals the monthly retirement benefit that would have
been payable from the Management Employees' Retirement
Plan of Wisconsin Electric Power Company as in effect
on December 31, 1995 (the "1995 Management Plan") had
the defined benefit formula in effect on December 31,
1995 continued until your retirement, calculated
without regard to any limitations imposed by Section
415 of the Internal Revenue Code or any limitation on
annual compensation imposed by Section 401(a)(17) of
such Code and under the assumptions that (i) your
participation in the 1995 Management Plan had commenced
on the first day of the month following your 25th
birthday and continued uninterrupted thereafter, (ii)
any deferrals of base salary you elected under the
Wisconsin Energy Corporation Executive Deferred
Compensation Plan were disregarded and instead included
in your compensation base for calculating retirement
income under the 1995 Management Plan, and (iii) the
amount of any Performance Award or Incentive Award,
calculated at the time of its determination by the
Board of Directors had also been included in your
compensation base for calculating retirement income
under the 1995 Management Plan.
The Reduction Amount shall be converted into an actuarial
equivalent of a life annuity form of payment payable at age
65 using the actuarial equivalency factors under the
Retirement Account Plan, but shall be subtracted, without
any further adjustment, from any additional pension benefit
calculated as above set forth, whenever the same commences,
whether before or after your 65th birthday. Further, the
Reduction Amount applies to any additional pension benefit
calculated as above set forth and expressed as a life
annuity form of benefit and shall be made prior to the
application of factors applicable for any other form of
benefit available under the 1995 Management Plan (which
forms shall be available to you). Prior to the date of your
retirement, you will provide the Company with certified
information regarding the Reduction Amount.
2. Supplemental Preretirement Spouse's Benefit: Further in the
event of your death while in the employ of the Company, the
Company will pay to your surviving spouse (if any) a monthly
benefit equal to the difference, if any, remaining after (a)
below has been subtracted from (b) below, but reduced as
provided below to reflect the value of any vested defined
benefit retirement benefits attributable to prior employment
(the "Reduction Amount" as defined above), where (a) and (b)
are defined as follows:
a. equal the monthly spouse's benefit that is payable from
the Retirement Account Plan, plus the amounts of any
actual "make whole" spousal pension supplements due
under the provisions of Article V of the Wisconsin
Energy Corporation Executive Deferred Compensation
Plan, plus any amount payable under monthly benefit "A"
under the Wisconsin Energy Corporation Supplemental
Executive Retirement Plan (and if you are married at
the time of your death and your spouse survives you,
such spouse will be deemed to be the sole beneficiary
with respect to the Retirement Account Plan, the
Wisconsin Energy Corporation Deferred Compensation
Plan, and the Supplemental Executive Retirement Plan,
notwithstanding any provision in such plans or your
actual beneficiary designations to the contrary), and
b. equals the monthly spouse's benefit which would have
been payable from the 1995 Management Plan had the
defined benefit formula in effect on December 31, 1995
continued until your death, calculated on all the same
assumptions as set forth in paragraph 1(b) above.
The Reduction Amount in the event the above surviving spouse
benefit becomes payable is to be applied by reducing the
monthly surviving spouse benefit calculated as above set
forth by 1/2 of the dollar amount of the Reduction Amount that
would have been offset in the event the additional pension
benefit provisions of paragraph 1 (a) and (b) above were
applicable.
3. Conditions of Payment Regarding Supplemental Pension
Benefits: The supplemental pension benefits provided for in
paragraphs 1 and 2 hereof shall be subject to and
administered as if the same were payable directly from the
1995 Management Plan and all of the forms of payment
available under the 1995 Management Plan shall be available
to you. However, you (or your spouse if paragraph 2
applies) may at the time of your retirement make a written
request to the Chief Executive Officer or the Board of
Directors of the Company for a single lump sum payment of an
amount equal to the then present value of all additional
benefits accrued under paragraphs 1 and 2, calculated using
(i) an interest rate equal to the 5-Year United States
Treasury Note yield in effect on the last business day of
the month prior to the payment (as reported in the Wall
Street Journal or comparable publication), and (ii) the
mortality tables then in use under the Retirement Account
Plan. The Chief Executive Officer or the Board of Directors
of the Company, in such officer's or the Board's sole and
absolute discretion, may grant or deny such request.
Further, upon the occurrence of a "Change in Control"
of the Wisconsin Energy Corporation (as defined in
Exhibit A attached to and made a part of this letter),
then notwithstanding any other provision hereof, the
Company shall promptly pay to you or to anyone then
receiving additional benefits under paragraphs 1 or 2
of this letter a single lump sum payment of an amount
equal to the then present value of all such additional
benefits accrued (whether or not in pay status and
without regard to whether your employment is
continuing), calculated using the same assumptions as
set forth in the immediately preceding paragraph, with
an interest rate to equal the 5-Year United States
Treasury Note yield in effect on the last business day
of the month prior to the date when the Change in
Control occurred. If you continue in employment and
the additional benefits provided for in this letter
continue, appropriate provisions shall be made so that
any subsequent payments under paragraphs 1 or 2 of this
letter are reduced to reflect the value of such lump
sum payment.
4. All the benefits described above which are further defined
in plan documents are subject to all of the terms in those
documents which supersede any other description.
If you are in agreement with the foregoing, please date and sign
the acceptance in the space provided below on the enclosed
duplicate and return it to me. This letter will then serve as a
binding agreement between us.
Sincerely,
WISCONSIN ENERGY CORPORATION
By: /s/ Paul Donovan
------------------------
Paul Donovan
The foregoing is hereby
accepted as of this 23rd day of
May, 2001.
/s/ Stephen Dickson
- ------------------------
Stephen Dickson
EXHIBIT A
Change in Control Definition
For purposes of this Plan, a "Change in Control" with
respect to Wisconsin Energy Corporation shall mean the occurrence
of any of the following events, as a result of one transaction or
a series of transactions:
(a) any "person" (as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, but
excluding the Company, its affiliates and any qualified
or non-qualified plan maintained by the Company or its
affiliates) becomes the "beneficial owner" (as defined
in Rule 13d-3 promulgated under such act), directly or
indirectly, of securities of the Company representing
more than 20% of the combined voting power of the
Company's then outstanding securities;
(b) individuals who constitute a majority of the Board
immediately prior to a contested election for positions
on the Board cease to constitute a majority as a result
of such contested election;
(c) the Company is combined (by merger, share exchange,
consolidation, or otherwise) with another corporation
and as a result of such combination, less than 60% of
the outstanding securities of the surviving or
resulting corporation are owned in the aggregate by the
former shareholders of the Company;
(d) the Company sells, leases, or otherwise transfers all
or substantially all of its properties or assets not in
the ordinary course of business to another person or
entity; or
(e) the Board determines in its sole and absolute
discretion that there has been a Change in Control of
the Company.
These Change in Control provisions shall apply to successive
Changes in Control on an individual transaction basis.