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EXHIBIT (10)-2
November 21, 1994
Mr. R. A. Abdoo
231 West Michigan Street
Milwaukee, Wisconsin 53201
Dear Mr. Abdoo:
RE: SUPPLEMENTAL BENEFITS
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This letter agreement replaces in its entirety the letter agreement between us
dated December 14, 1990 and signed by you on December 18, 1990.
In consideration of your service with Wisconsin Energy Corporation and its
subsidiaries (hereinafter collectively called the Corporation) and your
agreement to devote your individual best efforts to the interest of said
Corporation in the future, it is agreed that supplemental benefits as
described in this Agreement will be provided on behalf of the Corporation by
Wisconsin Electric Power Company (hereinafter called the Company).
Retirement
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Upon your retirement at age 60 or older (or prior to age 60 with the approval
of the Boards of Directors of Wisconsin Energy Corporation and the Company),
the Company will pay a supplemental monthly retirement benefit equal to the
difference between (1) and (2) below, less the amount of the monthly vested
retirement benefits payable to you at age 65 under defined benefit plans from
previous employers for periods of employment prior to your employment by the
Corporation, where (1) and (2) are defined as follows:
(1) equals the monthly retirement benefit payable from the Management
Employees' Retirement Plan of the Company or such successor Plans as may
be adopted by the Company (hereinafter called the Plan) plus the amounts
of any actual "make whole" pension supplements due under the provisions
of Section IX(1) and (2) of the Wisconsin Energy Corporation Executive
Deferred Compensation Plan, plus any amount payable under Monthly
Benefit A under the Corporation's Supplemental Executive Retirement
Plan, and
(2) equals the monthly retirement benefit which would have been payable from
the Plan calculated without regard to any limitations imposed by
Section 415 of the Internal Revenue Code or any limitation on annual
compensation, as adjusted from time to time, imposed by
Section 401(a)(17) of such Code and under the assumptions that (i) your
participation in the Plan had commenced on the first day of the month
following your twenty-fifth birthday and continued uninterrupted
thereafter, (ii) any deferrals of base salary you elected under the
Corporation's Executive Deferred Compensation Plan were disregarded and
instead included in your compensation base for calculating retirement
income under the Plan, and (iii) the amount of any Performance Award,
Incentive Award or special award, calculated at the time of its
determination by the Board of Wisconsin Energy Corporation had also been
included in your compensation base for calculating retirement income
under the Plan.
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The reduction amount with respect to benefits payable to you at age 65 under
defined benefit plans from previous employers shall be converted into an
actuarial equivalent of a Life Annuity Form payable at age 65 using the
actuarial equivalency factors under the Plan, but shall be subtracted, without
any further adjustment, from any supplemental monthly retirement benefit
calculated as above set forth whenever the same commences whether before or
after your 65th birthday. Further, such reduction amount applies to any
supplemental monthly retirement 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 provisions of the Plan. Prior to the time of retirement, you will
provide the Company with certified information regarding any such defined
benefit retirement benefits payable or to be payable to you by a previous
employer.
Preretirement Spouse's Benefit
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In the event of your death while in the employ of the Corporation, the Company
will pay to your surviving spouse a monthly benefit equal to the difference
between (a) and (b) below, but reduced as provided below to reflect the value
of any vested defined benefit retirement benefits attributable to prior
employment as set forth under the "Retirement" paragraph of this letter, where
(a) and (b) are defined as follows:
(a) equals the monthly spouse's benefit, if any, payable from the Plan
plus the amounts of any actual "make whole" spousal pension supplements
due under the provisions of Section IX(1) and (2) of the Wisconsin
Energy Corporation Executive Deferred Compensation Plan, plus any amount
payable under Monthly Benefit A under the Corporation's Supplemental
Executive Retirement Plan, and
(b) equals the monthly spouse's benefit which would have been payable
from the Plan calculated on all the same assumptions as set forth in
subsection (2) of the "Retirement" paragraph of this letter.
The reduction amount with respect to vested defined benefit retirement
benefits attributable to prior employment is to be applied by reducing the
monthly surviving spouse benefit calculated as above set forth by one-half of
the dollar amount of the vested benefit which would have been offset under the
"Retirement" paragraph of this letter.
Condition of Payment
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All of the terms and conditions of the supplemental benefits provided herein
shall be subject to and shall be administered as if such supplemental benefits
were payable directly from the Plan. No supplemental benefits, other than
those specifically provided herein, shall be paid by the Company or the
Corporation upon your termination of employment with the Corporation for any
other reasons.
The form of your supplemental benefits will follow the form payable to you
from the Plan. However, notwithstanding any other provision hereof, you may
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at the time of your retirement make a written request to the Board of
Directors of the Corporation for a single lump sum payment of an amount equal
to the then present value of all supplemental benefits accrued under this
letter agreement, calculated using (i) an interest rate equal to the five-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
Plan. The Board of Directors of the Corporation, in its sole and absolute
discretion, may grant or deny such request.
Further, upon the occurrence of a "Change in Control" of the Corporation (as
defined in Exhibit A attached to and made a part of this letter), then
notwithstanding any other provision hereof, the Corporation shall promptly pay
to you or to anyone then receiving supplemental benefits under this letter
agreement a single lump sum payment of an amount equal to the then present
value of all such supplemental 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 five-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 supplemental
benefits provided for in this letter continue, appropriate provisions shall be
made so that any subsequent payments under this letter agreement are reduced
to reflect the value of such lump sum payment.
All amounts payable under this letter agreement shall be subject to all
applicable withholding taxes. The Corporation may establish a grantor trust
to serve as a vehicle to hold such contributions as the Corporation may choose
to make to pre-fund its obligations hereunder, but the trust shall be designed
so that this letter agreement remains an unfunded arrangement and your rights
to benefits under this letter agreement shall be those of an unsecured
creditor.
If the terms of this agreement are satisfactory to you, please indicate your
acceptance below.
Sincerely,
WISCONSIN ENERGY CORPORATION
By: /s/John H. Goetsch
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Vice President and Secretary
I understand, accept and agree to all the provisions and conditions contained
in the above Agreement.
/s/R. A. Abdoo
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R. A. Abdoo
Nov. 22, 1994
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Date
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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.