Exhibit (10)-2
WISCONSIN ENERGY CORPORATION
EXECUTIVE DEFERRED COMPENSATION PLAN
As amended and restated as of June 2, 1999
WISCONSIN ENERGY CORPORATION
EXECUTIVE DEFERRED COMPENSATION PLAN
I) Purpose and Objective
This Executive Deferred Compensation Plan (the "Plan")
succeeds to and constitutes an amendment and restatement
of the Executive Deferred Compensation Plan effective
January 1, 1996; such amendment and restatement is
effective June 2, 1999. This Plan is maintained by
Wisconsin Energy Corporation (the "Company") to provide
eligible Participants, on a calendar year basis, an
opportunity to defer income until retirement or other
termination of employment, and to permit the accumulation
of "lost" savings plan matching contributions as provided
in Article VI hereof.
The objective of this Plan is to provide an incentive to
enable the Company to attract and retain qualified
executive talent by providing deferral opportunities to
their base salary and annual incentives which enables them
to build an asset base for the use after separation from
service. The Plan is intended to be a "top hat plan"
under the provisions of the Employee Retirement Income
Security Act of 1974.
II) Eligibility
Any key employee of the Company and its subsidiaries as
may designated by the Chief Executive Officer of the
Company, the Company's Board of Directors (the "Board") or
the Compensation Committee of such Board (the "Committee")
is eligible to participate in base salary deferral,
performance award deferrals or 401(k) match makeup or any
combination of these benefits, as determined in such
designation.
III) Definition of Covered Compensation
Compensation that may be deferred into the Plan includes:
1) Annual base salary, and
2) Performance awards under the Company's Short-Term
Performance Plan or other such short-term
performance plan(s) as approved by the Board.
IV) Deferral Elections
1) Base Salary
A Participant may elect to defer a specified
percentage of monthly base salary (defined as the
aggregate monthly base salary from the Company and
its subsidiaries), a specified dollar amount of
monthly base salary or all base salary otherwise
payable for a particular calendar year in excess of a
total dollar amount. Any deferrals elected on a
percentage basis will first be subtracted and only
the balance of the Participant's compensation will be
subject to any dollar amount deferrals elected. A
written deferral election form regarding base salary
must be filed with the Company in accordance with
rules established by the Company, but no later than
the end of the month preceding the month in which the
deferral election will be effective. The deferral
election shall be effective as to compensation earned
after the first day of the month immediately
following the date the form is received by the
Company. A Participant may amend or revoke any
deferral election regarding base salary at any time
by giving written notice to the Company. Such notice
shall become effective on the first day of the month
immediately following receipt of such notice by the
Company. Any election or revocation will be given
prospective effect only and will not affect prior
deferrals.
2) Performance Awards and Other Awards as approved by
the Board
A Participant may elect to defer from 10% to 100% of
any performance award under the Company's Short-Term
Performance Plan or other plan as designated by the
Chief Executive Officer, the Committee or the Board,
a specified dollar amount thereof, or all such award
amounts otherwise payable for a particular calendar
year in excess of a total dollar amount. Any
deferrals elected on a percentage basis will first be
subtracted and only the balance of the Participant's
compensation will be subject to any dollar amount
deferrals elected. A written deferral election form
regarding a performance award which may ultimately
become payable on account of a Participant's services
during the calendar year must be filed with the
Company no later than December 31st of such calendar
year and in any event, prior to the time that the
Participant has earned an absolute and unconditional
right to payment. A Participant may not revoke a
deferral election regarding any such performance
award once such election has been made.
V) 401(k) Savings Plan Match
The intent of this Plan is to provide each Participant who
is eligible to participate in the 401(k) match make-up
feature set forth in this Article V with a credit to such
Participant's bookkeeping account equal to a theoretical
401(k) match, calculated without regard to (a) limitations
imposed by Section 402(g)(1) of the Internal Revenue Code
on the amount of a Participant's savings plan deferral
contributions, (b) limitations on annual compensation as
adjusted from time to time imposed by Section 401(a)(17)
of the Internal Revenue Code, or (c) any limitation on
benefits and contributions imposed by Section 415 of such
Code.
The theoretical 401(k) match (the "401(k) Match") will be
calculated considering all of the Participant's base
salary and any performance award, without regard to any
deferrals made under the Plan and without regard to any of
the limitations that would otherwise be imposed by the
limitations described in (a) through (c) above, and
without regard to the actual pre-tax elective deferral and
after-tax contributions chosen by the Participant in the
qualified 401(k) plan. Instead, an assumption will be
made that the Participant made maximum utilization of the
pre-tax and after-tax contribution opportunity in the
qualified 401(k) plan and obtained the maximum matching
contribution in such plan. Such assumed maximum qualified
401(k) plan contribution shall be subtracted from the
theoretical match. The balance of the theoretical match
will be credited to the Participant's bookkeeping account
under this Plan.
An example of the calculation called for by this Article V
is shown on Exhibit 1 attached to and made a part of this
Plan.
VI) Earnings Credited
1) An amount equivalent to the deferrals elected plus
the amounts credited to the Participant due to the
401(k) Match shall be credited to a bookkeeping
account on the records of the Company in the name of
the Participant, at the time such deferrals and/or
401(k) matches would otherwise have been earned or
paid. Such account shall be simply an unsecured
claim against the general assets of the Company. A
Participant shall have no interest in such account,
which is established merely as an accounting
convenience.
2) Each Participant may elect to invest the account
balance indicated above in either the Interest Rate
Fund or WEC Stock Fund as described below:
a) Interest Rate Fund. Under this method, earnings
shall be credited on the average balance in each
account determined by averaging the beginning
and ending balance of such account within the
period intervening since interest was last
credited to the account (except, in the case of
a new Participant, within the period from the
effective date of such Participant's
participation in the Plan to the end of the next
June 30 or December 31 or the date such
Participant terminates participation, whichever
is earlier) and shall be credited to the account
semiannually, each year, until all distributions
to which the Participant, Participant's estate
or beneficiary is entitled shall have been made.
Whenever a lump sum amount or final distribution
is made as of a date other than June 30 or
December 31, interest shall be credited to the
account as of such payment date. The rate of
interest shall be the prime commercial rate as
published by Firstar Bank, Milwaukee, N.A. in
effect on the last day of the period, except for
any period in which any lump sum amount or final
distribution from an account is made as of a
date other than the end of the period, in which
case the rate of interest shall be the prime
commercial rate as published by Firstar Bank,
Milwaukee, N.A. in effect on the date interest
was last credited as determined above.
b) WEC Stock Fund. Under this method, earnings
shall be credited at a rate which reflects the
performance of Wisconsin Energy Corporation
common stock ("WEC stock"). The value of the
Participant's account in the WEC Stock Fund
shall be determined by taking into account
changes in the value of WEC stock, dividends
paid on WEC stock and any changes in the capital
structure of the Company affecting the value of
WEC stock. Money added to the account will be
credited in whole and fractional shares of WEC
Stock on the date monies are credited to the
account based upon the average of the high and
low stock price of WEC Stock on the New York
Stock Exchange. Dividends will be credited to
the account in whole and fractional shares on
the same day as the dividends are paid.
3) Investment of Deferrals
The Participant's deferral election with regard to
voluntary deferrals shall identify the fund or funds
in which deferrals shall be invested in the form of
10% increments of the total amount voluntarily
deferred. The amounts credited from the 401(k) Match
will be credited total in the WEC Stock Fund.
4) Investment Transfer
In accordance with rules established by the Company,
a Participant may make an election to transfer all or
part of the Participant's balance in the Interest
Rate Fund to the WEC Stock Fund.
VII) Vesting
Participants are 100% vested in amounts deferred into the
Plan plus earnings credited to their account, including
any amounts arising from the 401(k) Match.
VIII) Benefit Payment
1) In the Event of Retirement
At the time when a Participant completes any deferral
election form under this Plan, the Participant shall
also irrevocably specify the method of payment in
which all deferred compensation covered by such
election form shall be made if the Participant
terminates service with the Company or its
subsidiaries because of "retirement". For purposes
of this Plan, "retirement" shall have occurred if the
Participant terminates service on or after age 55
with at least 10 years of service or at or after age
65. The available methods of payment under such
circumstances are:
a) a single lump sum payment as soon as practicable
after the Participant's retirement,
b) a single lump sum payment to be made as of the
first business day of the year immediately
following the Participant's retirement,
c) payment over a ten-year period [as of the first
business day of January following the
Participant's retirement, 1/10th of the total
amount credited to the Participant's account
shall be paid to the Participant and as of the
first business day of each January thereafter,
that fraction of the total remaining amount in
the Participant's account of which the numerator
is 1 and the denominator is the total number of
remaining installments to be made to the
Participant shall be paid to the Participant],
d) payment over a five-year period [calculated in
the same fashion as provided in subparagraph (c)
above, but substituting "1/5th" for "1/10th" and
"five" for "ten" wherever the same appear].
2) In the Event of Disability
In the event the Participant leaves service of the
Company or its subsidiaries due to disability, the
Participant will be considered to have retired for
purposes of the Plan and payments shall be made
accordingly. For purposes of this Plan, "disability"
shall mean separation from service because of such
illness or injury as renders the Participant unable
to perform the material duties of his or her job.
3) In the Event of Death Prior to Termination of
Employment
If a Participant dies prior to termination of
employment with the Company or its subsidiaries, the
designated beneficiaries shall be paid the entire
balance of the account in a single lump sum, with
such distribution to be made within six months after
the Company has been notified of such death. If the
Participant has failed to designate a beneficiary, or
if the beneficiary predeceases the Participant, the
entire balance of the account shall be paid to the
Participant's estate within six months after the
Company has been notified of such death.
4) In the Event of Death After Retirement
If a retired Participant dies after retirement but
before all payments have been made under the selected
method, the remaining payments shall be paid to the
beneficiary for the balance of the applicable five or
ten-year period, or under the lump sum method, if
that was in effect. If the last beneficiary shall
die before receiving the full amount payable under
this Plan, then the balance of the account not paid
shall be paid in a single lump sum to the estate of
such beneficiary within six months after the Company
has been notified of such death.
5) In the Event of Termination for Reasons Other Than
Retirement, Death or Disability
If a Participant terminates employment with the
Company or its subsidiaries for a reason other than
retirement, death or disability, the Participant's
account shall be paid to the Participant in a single
lump sum. Such distribution will be made within 90
days of termination of employment.
6) Optional Lump Sum Payments Upon Approval
Notwithstanding any other provisions of this Plan, a
Participant may make a written request of the Chief
Executive Officer, the Board or the Committee at the
time of retirement or disability for a single lump
sum payment of all amounts covered by this Article
VIII, which request may be granted or denied in his
or its sole and absolute discretion.
7) Mandatory Lump Sum Payments Upon Change in Control
For purposes of this Plan, a "Change in Control" with
respect to the Company 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 nonqualified plan maintained
by the Company or its affiliates) becomes the
"beneficial owner" (as defined in Rule 13(d)
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.
Upon the occurrence of a Change in Control, then
notwithstanding any other provision of this Plan, the
Company shall promptly cause to be paid to each
active and retired Participant or beneficiary
receiving benefits under this Plan a single lump sum
payment for all amounts covered by this Article VIII,
without regard to whether any Participant's
employment with the Company or any of its
subsidiaries is continuing. However, if the
Participant in fact so continues and this Plan
continues, appropriate provisions shall be made so
that any subsequent payments made from this Plan are
reduced to reflect the value of such lump sum
payment.
8) Cash Distributions
All distributions under the Plan shall be in cash.
IX) Plan Amendment
The Board or the Committee reserves the right to amend,
modify, or terminate this Plan at any time; provided,
however, no such action will reduce the amounts then
credited to any Participant's account or change the time
and manner of payment of the value thereof, without the
consent of the Participant, if living, or the
Participant's designated beneficiary or beneficiaries, if
the Participant is not living. The Chief Executive
Officer of the Company may also make amendments to this
Plan at any time, consistent with the authority delegated
to the Chief Executive Officer by the Board regarding such
amendments.
X) Claim Procedure
The Participant or the Participant's beneficiary (a
"Claimant") may file a written request for benefits or
claim with the Company under this Plan. In the event of
any dispute with respect to such a claim, the following
claim procedures shall apply:
1) The Company acting as the administrator for this
Plan, shall notify the Claimant within 90 days of
receipt by the Company of a written claim of its
allowance or denial, unless the Claimant receives
written notice from the Company prior to the end of
the initial 90 day period indicating that special
circumstances require an extension of time for
decision. A written notice of decision shall be
provided to the Claimant and if the claim is denied
in whole or in part, the notice shall contain the
following information: the specific reasons for the
denial; specific reference to pertinent provisions of
the Plan on which the denial is based; if applicable,
a description of any additional material information
necessary to perfect the claim and an explanation of
why such information is necessary; and an explanation
of the claim review procedure.
2) A Claimant is entitled to request a review of any
denial of his/her claim by the Board or Committee.
The request for review must be submitted in writing
within 60 days of mailing of notice of the denial.
Absent a request for review within the 60-day period,
the claim will be deemed to be conclusively denied.
The Claimant or the Claimant's representative shall
be entitled to review all pertinent documents, and to
submit issues and comments orally and in writing.
The Board or Committee thereof shall render a review
decision in writing, within 60 days after receipt of
a request for a review, provided that, in special
circumstances (such as the necessity of holding a
hearing) the Board or Committee may extend the time
for decision by not more than 60 days upon written
notice to the Claimant. The Claimant shall receive
written notice of the separate review decision of the
Board or Committee, together with specific reasons
for the decision and reference to the pertinent
provisions of this Plan.
3) The Company, as administrator for this Plan (whether
acting through its employees, the Board or a
Committee), shall have full and complete
discretionary authority to construe and interpret
this Plan and to decide any matter presented through
the claims review procedure. Any final determination
by the administrator shall be binding on all parties.
If challenged in court, such determination shall not
be subject to de novo review and shall not be
overturned unless proven to be arbitrary and
capricious based upon the evidence considered by the
administrator at the time of such determination.
XI) Beneficiary Designation
1) Each Participant from time to time may designate any
person or persons to receive such benefits as may be
payable under the Plan upon or after the
Participant's death, and such designation may be
changed from time to time by the Participant by
filing a new designation. Each designation will
revoke all prior designations by the same
Participant, shall be in a form prescribed by the
Company, and will be effective only when filed in
writing with the Company during the Participant's
lifetime. If the Participant has failed to designate
a beneficiary, or if the beneficiary predeceases the
Participant, benefits as may be payable under the
Plan will be paid to the Participant's estate.
XII) Miscellaneous
1) The Chief Executive Officer, the Board or the
Committee may establish, amend or rescind from time
to time rules and regulations which are necessary or
desirable in connection with the Plan. The Chief
Executive Officer may not act on any matter involving
his own participation in this Plan. The Company
shall have the right to withhold from any amounts
payable under this Plan any taxes or other amounts
required to be withheld by any governmental
authority.
2) Every person receiving or claiming payments under
this Plan shall be conclusively presumed to be
mentally competent until the date on which the
Company receives a written notice, in form and manner
acceptable to it, that such person is incompetent and
that a guardian, conservator, or other person legally
vested with the care of such person's estate has been
appointed. In the event a guardian or conservator of
the estate of any person receiving or claiming
payments under this Plan shall be appointed by a
court of competent jurisdiction, payments may be made
to such guardian or conservator provided that proper
proof of appointment and continuing qualification is
furnished in a form and manner acceptable to the
Company. Any such payment so made shall be a
complete discharge of any liability therefor.
3) Participation in this Plan, or any modifications
thereof, or the payment of any benefits hereunder,
shall not be construed as giving to the Participant
any right to be retained in the service of the
Company or its subsidiaries, limiting in any way the
right of the Company or its subsidiaries to terminate
the Participant's employment at any time, evidencing
any agreement or understanding, express or implied,
that the Company or its subsidiaries will employ the
Participant in any particular position or at any
particular rate of compensation and/or guaranteeing
the Participant any right to receive a salary
increase in any year, such increase being granted
only at the sole discretion of the Compensation
Committee of the Board.
4) The Company, or its subsidiaries, or their Boards of
Directors or any committees thereof, or any officer
or director of the Company or its subsidiaries or any
other person shall not be liable for any act or
failure to act hereunder, except for fraud.
5)This Plan shall be governed by and construed in accordance
with the laws of the State of Wisconsin, to the extent not
preempted by federal law, without reference to conflicts of law
principles.
EXHIBIT 1
MAKE WHOLE CONTRIBUTION ATTRIBUTABLE TO SAVINGS PLAN
EXAMPLE
Assumptions:
* 1999 pre-deferred compensation - $180,000
* STPP Award - $72,000 [50% ($36,000) deferred into the EDCP]
* 401(k) pre-tax contribution - 6% of pay for pre- and
after-tax (actual level of participation in 401(k) plan is
disregarded)
* Employer match - 50% of pre-and after-tax contributions up to
6%
* EDCP base salary deferral - 15%
Theoretical Match Based on total compensation of base
Without Regard to IRS $180,000 plus STPP Award of $72,000
Limitations: for total of $252,000. $252,000 x
6% x 50% = $7,560
Less Assumed Maximum $160,000 (maximum compensation for
401(k) Plan Match: 1999 in 401(k) plan) x 6% x 50% = $4,800
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Lost 401(k) Match Created Under EDCP: $2,760