EXHIBIT 10.11
NSTAR
DEFERRED COMPENSATION PLAN
(RESTATED EFFECTIVE AUGUST 25, 1999)
1. PURPOSE AND EFFECTIVE DATE
The purpose of this Plan is to provide an arrangement whereby eligible
executives of NSTAR and its affiliates can elect to defer receipt of designated
percentages or amounts of their salary and incentive awards. This Plan Document
constitutes an amendment, restatement and continuation of the Boston Edison
Company Deferred Compensation Plan (the "Edison Deferred Compensation Plan"),
which was last restated effective January 1, 1999. This document also replaces
the following plans previously maintained by Commonwealth Energy System ("CES")
for its executives, each of which were terminated by CES effective as of August
25, 1999: The Commonwealth Energy System Long Term Incentive Plan (the
"CESLTIP"); The Commonwealth Energy System Deferred Compensation Plan (the "CES
Deferred Compensation Plan"); The executive salary continuation portion of the
Executive Salary Continuation and Excess Benefit Plan For Employees of
Commonwealth Energy System and Subsidiary Companies (the "CES Salary
Continuation Benefit"). This restated Plan is effective August 25, 1999 (the
"Effective Date"). No benefits shall be payable under said terminated CES Plans
on or after the Effective Date to any Participant under this Plan or his or her
beneficiary.
The Plan is intended to be "a plan which is unfunded and is maintained by
an employer primarily for the purpose of providing deferred compensation for a
select group of management or highly compensated employees" within the meaning
of sections 201(2), 301(a)(3) and 401(a)(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and shall be administered in a
manner consistent with that intent.
2. DEFINITIONS
(a) "Base Salary" means the Participant's annualized Salary in effect on
January 1 of a year from which the Participant defers compensation.
(b) "Change of Control" has the meaning set forth in Appendix A.
(c) "Code" means the Internal Revenue Code of 1986 as amended from time to
time.
(d) "Committee" means the Executive Personnel Committee of the Company.
(e) "Company" means NSTAR.
(f) "Deferral Account" means the deferral account described in section 6.
(g) "Disability" means a disability as defined for purposes of the
Company's long-term disability insurance plan. For purposes of Section 7(c),
Disability shall be deemed to occur upon the expiration of thirty (30) months
from the commencement of the Participant's condition of disability.
(h) "Incentive Award" means, for any calendar year, such amount or amounts
as are payable to a Participant under any incentive award or bonus program
provided by the Company or its affiliate which is payable in cash or Shares.
(i) "Participant" means an executive who participates in the Plan.
(j) "Plan" means the NSTAR Deferred Compensation Plan as set forth herein
and as from time to time amended.
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(k) "Plan Administrator" means the Committee or other person or persons
authorized to administer the Plan in accordance with Section 9.
(l) "Retirement" means termination of employment from the Company after
either (i) attaining age 55, or (ii) completing 20 years of employment with the
Company or its affiliate..
(m) "Salary" means the fixed basic compensation of a Participant from the
Company or its affiliate excluding any special compensation such as overtime,
bonus payments, disability insurance benefits, severance pay or other similar
distributions, and Company or affiliate contributions under any employee
benefit plan; provided, that Salary shall include amounts that would have been
received by the Participant from the Company or its successor as fixed basic
compensation but for an election under section 401(k) or section 125 of the Code
or a deferral election under this Plan.
(n) "Salary Increase" means the amount, if any, by which a Participant's
Salary for any year may be increased over the Base Salary amount in effect on
January 1 of such year.
(o) "Shares" mean shares of the Company.
3. ELIGIBILITY
Such employees of the Company or its affiliates as are selected by the
Company shall be eligible to become Participants in the Plan provided they
complete such forms as the Plan Administrator may require.
4. ELECTIVE DEFERRALS
A Participant may elect to defer such portion of his or her Base Salary,
Salary Increase or Incentive Award otherwise payable in or for a calendar year
as the Plan Administrator may
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prescribe prior to the start of such calendar year. The Plan Administrator may
limit the amount or percentage of Base Salary, Salary Increase or Incentive
Award that a Participant may defer hereunder.
5. DEFERRAL ELECTIONS
A Participant's election of deferral under Section 4 shall be in the form
prescribed by the Plan Administrator and shall be subject to such terms and
conditions as the Plan Administrator may prescribe. The election of deferral
must be filed prior to the first day of the "Deferral Period" as hereinafter
defined. Each election shall specify the percentage or amount of the
Participant's Base Salary, Salary Increase or Incentive Award to be credited to
his or her Deferral Account instead of being paid currently to the Participant,
and the payment period (including a single sum payment if so elected) for the
distribution in respect of such deferral. Each election shall be binding with
respect to the Base Salary, Salary Increase and Incentive Award for such period
(not less than one year) as the Plan Administrator shall specify (the "Deferral
Period") and shall be irrevocable for the calendar year or years to which it
applies. Notwithstanding the foregoing, an employee who becomes a Participant
during the calendar year may make an election of deferral for the balance of
such calendar year provided he or she makes such election within 30 days of the
date he or she becomes a Participant.
Short-term disability payments shall be treated for purposes of deferral
hereunder as Base Salary; provided, that if within forty-five (45) days
following the commencement of such Disability the Participant so elects, short-
term disability payments in respect of the seventh month following the
commencement of the Participant's Disability, and subsequent months, shall be
paid currently and not deferred. Long-term disability benefits may not be
deferred under this Plan.
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6. DEFERRAL ACCOUNT
The Plan Administrator shall maintain a Deferral Account on behalf of each
Participant as follows:
(a) Opening Balance.
(1) The Edison Deferred Compensation Plan. Each Participant who
deferred amounts under the Edison Deferred Compensation Plan prior to the
Effective Date shall have an opening balance in his or her Deferral Account
under the Plan on the Effective Date equal to the value of his or her
deferral account under the Edison Deferred Compensation Plan as of the
Effective Date.
(2) CES Deferred Compensation Plan, CESLTIP and CES Salary
Continuation Benefit. Each Participant who prior to the Effective Date
deferred amounts under the CES Deferred Compensation Plan and/or elected to
waive his or her right to receive awards under the CESLTIP and/or had a CES
Salary Continuation Benefit shall have an opening balance in his or her
Deferral Account under the Plan on the Effective Date equal to the sum of
(i) the value of his or her deferral account under the CES Deferred
Compensation Plan as of the Effective Date, plus (ii) the value of his or
her waived awards under the CESLTIP as of the Effective Date, plus (iii)
the value of his or her CES Salary Continuation Benefit as of the Effective
Date. The credits described in this subparagraph (2) shall be in lieu of
amounts previously payable under the aforesaid CES Plans and each
Participant receiving such credit expressly agrees to waive any claim he or
she may have for payment of benefits under said CES Plans.
(b) Deferrals. For each deferral election made by the Participant in
respect of periods on and after the Effective Date, the Plan Administrator shall
credit to the Participant's Deferral
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Account the amounts of Base Salary, Salary Increase or Incentive Award, as
applicable, which the Participant has elected to defer under the Plan. In each
case, credits shall be made as of the dates the Salary, Salary Increase or
Incentive Award would have been payable if not deferred.
(c) Investment Measurements. Subject to paragraph (d) below, from time to
time the Company will establish investment measurements to be used to adjust the
balance of each Participant's Deferral Account. Such investment measurements
may be changed from time to time by the Company. The Company may establish
rules and procedures to permit Participants to select investments for their
respective Deferral Accounts from among available investment measurements. From
time to time, as determined by the Plan Administrator, each Participant's
Deferral Account will be adjusted to reflect such investment measurements.
(d) Shares. A Participant who elects to defer an Incentive Award which is
payable in Shares shall have the value of such deferred award determined with
reference to the number of whole Shares which could be purchased with said
amount in the open market as promptly as possible following the effective date
of such election. Any dividends on such Shares will be reinvested or deemed
reinvested in such Shares. Such number of Shares (and the value thereof) shall
be credited from time to time to the Participant's Deferral Account. The
Company may, but shall not be required to, purchase Shares to satisfy its
obligation to Participants under this paragraph. If such purchase of Shares is
made, the Company may, in its discretion and subject to such limitations as it
may determine, permit a Participant to exercise voting rights with respect to
such Shares as are allocated to his account.
7. COMMENCEMENT OF DISTRIBUTIONS; PAYMENT PERIODS
(a) Inservice Distributions. At the time the Participant makes an
election of deferral under Section 4, and subject to the conditions of this
Section, a Participant may also elect to
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receive a single sum payment of all or a specified portion of the amount
attributable to such deferral on a fixed date prior to the Participant's
Retirement, Disability, or other termination of employment (hereinafter referred
to as the "initial fixed date"). Such initial fixed date must be at least five
years after the date of such deferral. In addition, at least two years prior to
the initial fixed date, a Participant may elect to defer payment of such amount
to a later fixed date (hereinafter referred to as the "subsequent fixed date")
which must be at least three years after the initial fixed date. Furthermore, at
least two years prior to the subsequent fixed date, a Participant may elect to
defer payment of such amount until his or her Retirement, Disability, or other
termination of employment. The rules and procedures for such elections will be
promulgated by the Plan Administrator. All elections under this Section 7(a)
require the consent of the Company to become effective.
(b) Special one-time inservice distribution. In addition to the elections
described in paragraph (a) above, a Participant may request a special one-time
inservice distribution of part or all of his or her Deferral Account for the
sole purpose of contributing such amount to a charity selected by the
Participant which is exempt from federal income tax under section 501(c)(3) of
the Code. Such request must be made in writing to the Plan Administrator at
least six months prior to the requested distribution date and requires the
consent of the Plan Administrator to become effective.
(c) Retirement or Disability. Upon the Participant's Retirement or
Disability, the Participant shall be entitled to receive the balance in his or
her Deferral Account. The Deferral Account shall be payable as the Participant
shall have specified in his or her election of deferral from among the options
prescribed by the Plan Administrator provided, however, if requested by the
Participant prior to his or her Retirement Date, the Plan Administrator may in
its sole
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discretion pay the Participant the entire balance of his or her Deferral Account
in a single sum. Payment shall be made (or if paid other than in a single sum,
shall commence) on the first day of the calendar quarter following Retirement or
Disability or as soon as practicable thereafter. Notwithstanding the foregoing
provisions of this paragraph, in the case of a Participant whose Retirement date
is prior to his or her attainment of age 65, such Participant may elect to defer
commencement of payment of part or all of his or her Deferral Account until he
or she attains age 65. Any such election to defer commencement of payment beyond
the Participant's Retirement date must be made in writing to the Plan
Administrator at least six months prior to the Retirement date and requires the
consent of the Plan Administrator to become effective.
(d) Termination of Employment. If the Participant ceases to be an
employee of the Company and its affiliates for reasons other than death,
Disability or Retirement, the balance in the Participant's Deferral Account
(determined as of the last day of the month immediately preceding payment) shall
be paid to the Participant in a single sum on the first day of the calendar
quarter following the date he or she so ceases to be an employee or as soon as
practicable thereafter.
(e) Death. If the Participant dies prior to the commencement of payment
of his or her Deferral Account as described in Section 7(c), the Participant's
designated beneficiary or beneficiaries shall be entitled to receive the balance
in the Participant's Deferral Account as of the date of death. Payment shall be
made in a single sum on the first day of the second month following the month in
which the Participant dies or as soon as practicable thereafter. If the
Participant dies after payment of his or her Deferral Account has commenced to
be paid in installments under Section 7(c) but prior to the exhaustion of such
Account, payment of the remaining balance of such Account (adjusted as provided
in Section 7(c)) shall continue to the
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Participant's designated beneficiary or beneficiaries over the installment
period selected by the Participant. Designation of a beneficiary or
beneficiaries for purposes of the Plan shall be made on a form prescribed or
approved by the Plan Administrator.
(f) Form of Distributions. All distributions under the Plan shall be paid
in cash, except for amounts credited under Section 6(d) which shall be paid in
Shares.
8. EMERGENCY BENEFIT
If a Participant suffers a financial emergency, upon the written request of
the Participant, the Plan Administrator in its sole discretion may distribute
that portion of the Participant's Deferral Account, if any, which it determines
to be necessary to meet the immediate financial emergency. A financial
emergency shall include major uninsured medical expense, major uninsured
casualty or property losses, and such other financial emergencies as the Plan
Administrator may, in its discretion, determine, provided that the Participant
demonstrates to the Plan Administrator's satisfaction that he or she lacks
available resources to meet the emergency. Any such distribution shall reduce
the balance in the Participant's Deferral Account available for distribution in
accordance with Section 7.
9. ADMINISTRATION OF THE PLAN
For purposes of prescribing the forms and conditions for deferral elections
under Section 5 and inservice distributions under Section 7(a) and 7(b) (or
other forms required to administer the Plan), and for purposes of Section 6, the
functions of the Plan Administrator shall be performed by the Chief Financial
Officer of the Company or his or her delegates. For purposes of Section 8, the
functions of the Plan Administrator shall be carried out by a committee (acting
by the vote or consent of a majority of its members) consisting of the Vice
President of Human Resources, the Chief Financial Officer and the Treasurer of
the Company; provided, that any
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determination under Section 8 with respect to any of those officers shall be
made without his or her participation on such committee. All other
administrative and interpretative functions of the Plan Administrator under the
Plan shall be vested in the Committee. The Plan Administrator shall have full
discretion to administer the Plan in all respects. A decision by the Plan
Administrator shall be final, conclusive and binding on all Participants and any
person claiming under or through any Participant. The Plan Administrator shall
exercise its functions hereunder in such manner as it deems appropriate and may,
in its discretion, waive the application of any rule to any Participant. The
Plan Administrator shall have no responsibility to exercise its discretion in a
uniform manner among similarly situated Participants, and no decision with
respect to any Participant shall give any other Participant the right to have
the same decision applied to him or her.
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10. NATURE OF CLAIM FOR PAYMENTS
Except as herein provided, the Company and its affiliates shall not be
required to set aside or segregate any assets of any kind to meet any of its
obligations hereunder, and all obligations of the Company or its affiliates
hereunder shall be reflected by book entries only. The Participant shall have
no rights on account of this Plan in or to any specific assets of the Company or
its affiliates. Any rights that the Participant may have on account of this
Plan shall be those of a general, unsecured creditor of the Company or its
affiliates. However, the Company or its affiliate may establish a trust or
trusts of which the Company or its affiliate is treated as the owner under
Subpart E of Subchapter J, Chapter 1 of the Code (a "grantor trust"), and may
from time to time deposit funds in such grantor trust or trusts to facilitate
payment of the benefits provided under the Plan. In the event the Company or
its affiliate establishes such a grantor trust or trusts with respect to the
Plan and at the time of a Change of Control, any such trust (i) has not been
terminated or revoked and (ii) is not "fully funded" (as determined in its sole
discretion by a majority of the individuals who were members of the Committee
immediately prior to a Change of Control), the Company or its affiliate shall
within ten days of such Change of Control deposit in such grantor trust or
trusts assets sufficient to cause the trust or trusts to be "fully funded" as of
the date of the deposit (as determined in its sole discretion by a majority of
the individuals who were members of the Committee prior to a Change of Control).
11. RIGHTS ARE NON-ASSIGNABLE
Neither the Participant nor any beneficiary nor any other person shall have
any right to assign or otherwise alienate the right to receive payments
hereunder, in whole or in part, which payments are expressly agreed to be non-
assignable and non-transferable, whether voluntarily or involuntarily.
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12. TAXES
If the Company or its affiliate is required to withhold taxes from payments
under the Plan, the amounts payable to Participants shall be reduced by the tax
so withheld. To determine the amount of tax to withhold, in the case of
payments in Shares, such Shares will be valued at the average of that day's high
and low price on the day of distribution as reported in the Wall Street Journal.
13. TERMINATION; AMENDMENT
The Plan shall continue in effect until terminated by action of the Company
or the Committee. Upon termination of the Plan, no deferral of Salary, Salary
Increase or Incentive Awards thereafter paid or payable to a Participant shall
be made and no individual not a Participant as of the date of termination shall
become a Participant thereafter. If, at the time of termination, there is any
Participant or beneficiary of a Participant who is or will be entitled to a
payment hereunder, the Plan Administrator shall elect either (a) to make
payments to such Participants or beneficiaries in the normal course as if the
Plan had continued in effect, or (b) to pay to such Participants or
beneficiaries the balance in the Participant's Deferral Account in a single sum
payment.
The Company or the Committee may at any time and from time to time amend
the Plan in any manner; provided that no amendment or termination shall reduce
the amounts previously credited to the Deferral Account of any Participant or
his or her beneficiary without his or her prior written consent; and provided
further, that no amendment or termination following a Change of Control shall
eliminate or reduce the Company's or its affiliates' obligations to deposit
assets in the grantor trust or trusts as described in Section 10. Furthermore,
following a Change of Control, this Section 13 may not be amended.
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14. EMPLOYMENT RIGHTS
Nothing in this Plan shall give any Participant any right to be employed or
to continue employment by the Company or an affiliate.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed by its
officer hereunto duly authorized this 4th day of August, 2000.
NSTAR
By: /s/ Thomas J. May
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Appendix A
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"Change of Control"
For the purposes of this Plan, a "Change of Control" shall mean:
1. The acquisition by any Person of ultimate beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of
either (i) the then outstanding common shares (or shares of common stock) of the
Parent (the "Outstanding Parent Common Shares") or (ii) the combined voting
power of the then outstanding voting securities of the Parent entitled to vote
generally in the election of trustees (or directors) (the "Outstanding Parent
Voting Securities"); provided, however, that for purposes of this subsection
(a), the following acquisitions shall not constitute a Change of Control: (i)
any acquisition directly from the Parent, (ii) any acquisition by the Parent or
an affiliate of the Parent, (iii) any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by the Parent, the Company or
affiliate of the Parent or (iv) any acquisition by any Person pursuant to a
transaction which complies with clauses (i), (ii) and (iii) of subsection (c) of
this Appendix A; or
2. Individuals who, as of the date hereof, constitute the Board of Trustees
of the Parent (the "Incumbent Board") cease for any reason to constitute at
least a majority of such board; provided, however, that any individual becoming
a trustee (or director) subsequent to the date hereof whose election, or
nomination for election by the Parent's shareholders, was approved by a vote of
at least a majority of the trustees (or directors) then comprising the Incumbent
Board shall be
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considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of trustees (or directors) or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person other
than such board; or
3. Consummation of a reorganization, merger or consolidation or sale or
other disposition of all or substantially all of the assets of the Parent (a
"Business Combination"), in each case, unless, following such Business
Combination, (i) all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Outstanding Parent Common
Shares and Outstanding Parent Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly, immediately
following such Business Combination more than 50% of, respectively, the then
outstanding common shares (or shares of common stock) and the combined voting
power of the then outstanding voting securities entitled to vote generally in
the election of trustees (or directors), as the case may be, of the entity
resulting from such Business Combination (including, without limitation, an
entity which as a result of such transaction owns the Parent or all or
substantially all of the Parent's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination of the Outstanding Parent Common
Shares and Outstanding Parent Voting Securities, as the case may be, (ii) no
Person (excluding any entity resulting from such Business Combination or
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any employee benefit plan (or related trust) of the Parent or the Company or
such entity resulting from such Business Combination) ultimately beneficially
owns, directly or indirectly, 30% or more of, respectively, the then outstanding
common shares or shares of common stock of the entity resulting from such
Business Combination or the combined voting power of the then outstanding voting
securities of such entity except to the extent that such ownership existed prior
to the Business Combination and (iii) at least a majority of the members of the
board of trustees (or board of directors) of the entity resulting from such
Business Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board of Trustees of
the Parent, providing for such Business Combination; or
4. Approval by the shareholders of the Parent of a complete liquidation or
dissolution of the Parent.
For purposes of this Appendix A, the term "Parent" shall mean NSTAR, or, if
any entity shall own directly or indirectly through one or more subsidiaries,
more than 50% of the outstanding common shares of NSTAR, such entity, and (ii)
the term "Person" shall mean any individual, corporation, partnership, company,
limited liability company, trust or other entity, which term shall include a
"group" within the meaning of Section 13(d) of the Securities Act of 1934, as
amended.
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