EXHIBIT 10(a)
DEFERRED AND INCENTIVE COMPENSATION PLAN
OF THE
TEXAS UTILITIES COMPANY SYSTEM
(AS RESTATED EFFECTIVE JANUARY 1, 1995)
Section 1. Purpose
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1.1 Purpose. The Deferred and Incentive Compensation Plan of the Texas
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Utilities Company System (the Plan) is established, effective July 1, 1987, for
the purpose of focusing the attention of Eligible Employees on the long-term
performance of Texas Utilities' consolidated operations by relating rewards to
the Company's long-range success, and to tie Eligible Employees' rewards to
stock performance. The Plan also is designed to retain and motivate employees
and to recognize the contributions of such employees to the Company. The Plan
is designed as an unfunded arrangement maintained "primarily for the purpose of
providing deferred compensation for a select group of management or highly
compensated employees" as determined under the provisions of the Employee
Retirement Income Security Act of 1974 (ERISA). ERISA Section 201(2).
Section 2. Definitions
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2.1 Definitions. Whenever used hereinafter, the following terms shall
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have the meanings set forth below:
(a) "Applicable Employee Remuneration" means applicable employee
remuneration as that term is defined in Section 162(m), or any
successor provision, of the Internal Revenue Code.
(b) "Beneficiary" means the person or persons named by the
Participant as the recipient(s) of any distribution remaining to
be paid to the Participant under the Plan upon the Participant's
death.
(c) "Board of Directors" means the Board of Directors of Texas
Utilities Company.
(d) "Chief Executive" means the Chief Executive Officer of Texas
Utilities Company.
(e) "Committee" means the Organization and Compensation Committee of
the Board of Directors.
(f) "Company" means Texas Utilities Company and its subsidiaries.
(g) "Eligible Employee" means an officer of the Company with a title
of vice president or above.
(h) "Participant" means an Eligible Employee who elects to
participate in the Plan and whose account(s) has not been
completely distributed.
(i) "Performance Unit" means a measure of participation under the
Plan having a value equal to the value of a share of common stock
of the Company, as determined by the value of such stock in the
Trust.
(j) "Plan Administrator" means the person appointed to assist the
Committee in carrying out the operations of the Plan.
(k) "Plan Year" means the twelve-month period beginning July 1 and
ending June 30.
(l) "Retirement" shall have the meaning given it under the Retirement
Plan for Employees of the Texas Utilities Company System.
(m) "Salary" means the annual base salary rate in effect on the first
day of June immediately preceding the applicable Plan Year,
without reduction for any Salary deferred in the prior Plan Year.
(n) "Stock" means common stock of Texas Utilities Company.
(o) "Trust" means the irrevocable grantor trust established by Texas
Utilities Company to purchase, hold, and sell shares of Stock so
as to establish the number and value of Performance Units
allocable to Participants' Accounts and from which benefits under
the Plan will be paid.
Section 3. Deferral Participation and Percentage
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3.1 Participation. All Eligible Employees may elect to defer a percentage
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of Salary (in 1 percent increments) not to exceed the maximum percentage
determined by the Committee for a Plan Year.
3.2 Percentage. The Committee will determine, in its sole discretion, the
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maximum percentage of Salary, if any, which may be deferred by a Participant in
any Plan Year. Such percentage may not exceed 15 percent of Salary.
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Section 4. Election to Defer
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4.1 Deferral Election. An Eligible Employee may elect irrevocably, by
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written notice to the Plan Administrator in the manner prescribed by the Plan
Administrator to defer a percentage of Salary during such Plan Year.
4.2 Salary Reductions. Salary deferred under the Plan will be ratably
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deducted in each pay period in the Plan Year.
Section 5. Company Matching and Incentive Awards
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5.1 Matching Award. A Matching Award shall be credited to each
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Participant's account by the Company in an amount equal to 150 percent of the
amount deferred by the Participant. Such Matching Award shall be deemed to
occur on the first day of the Plan Year.
5.2 Incentive Award. Under the terms of the Annual Incentive Plan
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("AIP"), an Eligible Employee may receive an Incentive Award ("Incentive Award")
which shall be treated as an Incentive Award under this Plan. The effective
date of contribution for any such Incentive Award shall be the first day of the
Plan Year.
5.3 Maturity Periods. Salary deferrals and Matching Awards, subject to
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the Extended Maturity Period Provision below, shall have a Maturity Period of
five years. Incentive Awards, subject to the Extended Maturity Period and
Transition Provisions below, shall have a Maturity Period of three years. The
Maturity Period shall begin on the first day of the Plan Year in which the
Salary deferral, Matching Award, or Incentive Award is made. Notwithstanding the
foregoing, any Maturity Period shall end on the date of death, total and
permanent disability, or termination of employment for reasons other than
Retirement. Anything contained herein to the contrary notwithstanding, deferred
amounts and Matching Awards as of July 1, 1987, shall mature on June 30, 1990.
Anything contained herein to the contrary notwithstanding, the Maturity Period
for the deferred amounts and Matching Awards for the Plan Year July 1, 1989,
through June 30, 1990, and the Plan Year July 1, 1991, through June 30, 1992,
shall end on November 30, 1992.
Extended Maturity Period Provision. To the extent that the amounts
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otherwise maturing under the Plan combined with the Eligible Employee's
other remuneration exceeds the Applicable Employee Remuneration for such
year, the Maturity Period for such excess amount shall end on Retirement
date or such earlier date as of which such amounts, or any part thereof,
combined with other remuneration does not exceed the Applicable Employee
Remuneration for such year.
Transition Provision. Notwithstanding any other provisions contained
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herein, the Maturity Period for amounts subject to
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an Election made for periods prior to July 1, 1995, shall be the Maturity
Period applicable at the time of the Election.
Section 6. Participant Accounts
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6.1 Separate Accounts. The Plan Administrator shall establish and
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maintain an individual account for Salary deferrals elected by each Participant
and the Matching Awards for each Plan Year. The account shall be credited as of
the first day of the Plan Year with the amount of Salary to be deferred during
the Plan Year and the related Matching Award. An Incentive Award, if any, shall
be credited to a separate account for the Participant as of the first day of the
Plan Year.
6.2 Performance Units. Any and all amounts credited to a Participant's
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account shall be converted into Performance Units as of the applicable date.
After notification of the number of shares acquired by the Trust with the
aggregate credits to Participants, as provided in Subsection 7.2, the Plan
Administrator will allocate an equal number of Performance Units, including
fractional units, to individual accounts based on the percentage relationship of
each Participant's credits to the total of such credits for all Participants.
6.3 Dividend Equivalent Credits. Additional Performance Units shall be
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credited to a Participant's account as Dividend Equivalent Credits. Such amount
shall be determined by multiplying the Performance Units recorded in a
Participant's account by the amount of any regular or special cash dividend
declared on each share of the Stock and dividing the product by the amount paid
by the Trust for a share of Stock with the dividend amounts.
6.4 Date of Credit. Dividend Equivalent Credits shall be credited to a
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Participant's account as of the same date as the cash dividend on the Stock is
paid to shareholders. No such credit shall be made with respect to any dividend
paid after a Participant's Termination Date or after any date of termination of
the Plan, even though the record date is prior thereto.
6.5 Unsecured Interest. All Performance Units credited to the account of
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each Participant shall be for record purposes only. No Participant or
Beneficiary shall have any security interest whatsoever in any assets of the
Company. To the extent that any person acquires a right to receive payments
under the Plan, such right shall not be secured or represented by any issued
Stock or common stock to be issued.
Section 7. Investment and Funding
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7.1 Grantor Trust. The benefits to be derived by Participants in the Plan
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will be funded through the Trust; provided, however, any Stock, cash, or other
property held in the
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Trust that was contributed by the Company shall at all times be subject to the
claims of general creditors of the Company.
7.2 Funding of Trust. Upon determination of the total credits to
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Participants' accounts for a Plan Year, the Company shall promptly provide the
Trust with resources in the aggregate of such amounts. The Trustee will, within
ten (10) business days, invest such aggregate amounts in shares of Stock and
promptly notify the Plan Administrator of the number of shares so acquired. The
Trustee will use any cash dividends received on Stock held in the Trust to buy
additional shares of the Stock and promptly notify the Plan Administrator of the
number of shares so acquired.
7.3 Distributions from Trust. The Trustee, upon notification from the
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Plan Administrator, will make the distributions of matured benefits to
Participants or their Beneficiaries as provided in the Plan. If Trust assets
are insufficient to pay the amount of a matured benefit, the Company will pay
such deficiency directly to the Participant or Beneficiary. Any assets held in
the Trust which the Trustee determines to be in excess of those required to pay
the benefits when due to Participants may be returned to the Company.
7.4 Voting of Stock Held in Trust. Stock held in the Trust shall be voted
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by the Trustee in its discretion.
Section 8. Distribution of Account Values
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8.1 Value of a Participant's Account. The value of a Participant's
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account will equal the net proceeds received by the Trust from the sale of
shares equal in number to the number of Performance Units representing the
Participant's deferred amount and Matching Award, or Incentive Award applicable
to the designated Maturity Period, together with all Dividend Equivalent Credits
earned thereon. In no event shall the Participant's account be deemed to have a
cash value which is less than the sum of the Participant's deferred amount
together with a 6 percent per annum (compounded annually) interest equivalent
thereon.
8.2 Form and Timing of Distribution. The value of a Participant's account
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at maturity shall be determined as provided in Subsection 8.1. The value of the
Participant's account at maturity shall be paid in cash. Payment shall be made
as soon as practicable, but in no event later than thirty (30) days, following
maturity of the Participant's account. No interest shall accrue or be paid from
date of maturity to date of payment on such amounts.
Section 9. Termination of Employment
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9.1 Termination of Employment Due to Death or Disability. In the event a
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Participant's employment is terminated by reason of death or permanent and total
disability, all amounts credited to his account, except as provided in
Subsection 9.4, shall mature upon such termination. The Participant or his
Beneficiary shall
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then receive, as soon as practicable after the date of death or disability, a
distribution of the Participant's account based on the value of his account as
provided in Subsection 8.1.
9.2 Termination of Employment Due to Retirement. In the event a
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Participant's employment is terminated by reason of Retirement, the Participant
shall receive a distribution of his account, except as provided in Subsections
5.3 and 9.4, at the end of the applicable Maturity Period.
9.3 Termination of Employment for Reasons Other Than Death, Disability, or
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Retirement. Except as provided in Subsection 9.6, in the event a Participant's
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employment is terminated for any reason other than death, permanent and total
disability, or Retirement, all rights whatsoever to any Performance Units for
Maturity Periods not yet completed and any Dividend Equivalent Credits thereon
shall be forfeited; provided, however, that the Participant shall be fully
vested in any amounts deferred by him, together with a 6 percent per annum
(compounded annually) interest equivalent thereon, and entitled to receive a
distribution in such amount as soon as practicable, but in no event later than
thirty (30) days following termination of employment. No interest shall be paid
on such amounts for any period after the date of termination. The Committee
shall be the sole judge with respect to such reasons for termination.
9.4 Termination of Employment Prior to the End of the Plan Year. In the
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event a Participant terminates employment prior to the end of the Plan Year, the
deferred amount, Matching Award, and Dividend Equivalent Credits will be
recomputed as of the date of termination of employment. The value of the
recomputed account shall be an amount equal to the product of the value of the
Performance Units at the date of termination credited to the Participant's
account multiplied by a fraction, the numerator of which is the actual Salary
reduction for the portion of the Plan Year preceding termination, and the
denominator of which is the total Salary reduction elected for the entire Plan
Year. This Subsection will not apply if such termination is by reason of
Retirement and the Participant elected to accelerate the balance of Salary
reductions in such an event on the notice required by Subsection 4.1.
9.5 Retirement Under 1992 Voluntary Separation Plan. Notwithstanding any
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provision herein to the contrary, a Participant who elects a retirement date of
October 1, 1992, or November 1, 1992, notifies the Company of such election
between July 1, 1992, and September 1, 1992, inclusive, and retires on October
1, 1992, or November 1, 1992 (unless the Company requests and the Participant
agrees to extend such retirement date from month to month thereafter for a
period ending on or before November 1, 1993) shall, in addition to any other
benefits to which the Participant may be entitled under this Plan (including the
distribution of his account under the provisions of Subsection 9.2 hereof), be
entitled
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to receive a lump sum payment in an amount (the "Additional Matching Amount")
equal to 50% of the present value of the Matching Award for such Participant
over a ten (10) year period calculated on the basis of a deferral percentage
equal to 12% and the Salary in effect for such Participant on the last day of
the month immediately preceding such Participant's retirement; provided, that in
no event may the Additional Matching Amount for any Participant exceed $85,000.
9.6 Voluntary Termination of Employment Under 1992 Voluntary Separation
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Plan. Notwithstanding any provision herein to the contrary, a Participant who
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does not meet the eligibility requirements for electing one of the early
retirement options provided for in Section 7.8 of the Retirement Plan for
Employees of the Texas Utilities Company System, as amended effective as of May
31, 1992, and who terminates employment with the Company as of October 1, 1992,
or November 1, 1992 (unless the Participant requests and the Company agrees to
an earlier termination date), shall be entitled to: (i) have all amounts
credited to his account under this Plan matured such that the forfeitures
provided for in Subsection 9.3 above shall not apply and the full amount
credited to such Participant's account shall be payable to him as soon as
practicable after his termination; and (ii) receive a lump sum payment in an
amount equal to the Additional Matching Amount; provided, that in no event may
the Additional Matching Amount for any Participant exceed $85,000.
Section 10. Nontransferability
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10.1 Nontransferability. In no event shall the Company make any
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distribution or payment under this Plan to any assignee or creditor of a
Participant or a Beneficiary. Prior to the time of a distribution or payment
hereunder, a Participant or a Beneficiary shall have no rights by way of
anticipation or otherwise to assign or otherwise dispose of any interest under
this Plan.
Section 11. Designation of Beneficiaries
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11.1 Specified Beneficiary. A Participant shall designate a Beneficiary or
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Beneficiaries who, upon the Participant's death, are to receive the amounts that
otherwise would have been paid to the Participant. All Beneficiary designations
shall be in writing and signed by the Participant, and shall be effective only
if and when delivered to the Plan Administrator during the lifetime of the
Participant. A Participant may, from time to time during his lifetime, change
his Beneficiary or Beneficiaries by a signed, written instrument delivered to
the Plan Administrator. The payment of amounts shall be in accordance with the
last unrevoked written designation of the Beneficiary that has been signed and
so delivered.
11.2 Estate as Beneficiary. If a Participant designates a Beneficiary
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without providing in the designation that the
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Beneficiary must be living at the time of each distribution, the designation
shall vest in the Beneficiary all of the distributions whether payable before or
after the Beneficiary's death, and any distributions remaining upon the
Beneficiary's death shall be made to the Beneficiary's estate. In the event a
Participant shall not designate a Beneficiary or Beneficiaries, or if for any
reason such designation shall be ineffective, in whole or in part, as determined
solely in the discretion of the Plan Administrator, the distribution that
otherwise would have been paid to such Participant shall be paid to the
Participant's estate and in such event the term "Beneficiary" shall include the
Participant's estate.
Section 12. Rights of Participants
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12.1 Employment. All Participants understand that they are employees at
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will. Therefore, nothing in the Plan shall interfere with or limit in any way
the right of the Company to terminate, for any reason, any Participant's
employment at any time, nor confer upon a Participant any right to continue in
the employ of the Company.
Section 13. Administration
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13.1 Administration. The Committee shall be responsible for the
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administration of the Plan. The Committee is authorized to interpret the Plan,
to prescribe, amend, and rescind rules and regulations relating to the Plan,
provide for conditions and assurances deemed necessary or advisable to protect
the interests of the Company, and to make all other determinations necessary or
advisable for the administration of the Plan. The determination of the
Committee, interpretation or other action made or taken pursuant to the
provisions of the Plan, shall be final, binding and conclusive for all purposes
and upon all persons whomsoever. The Committee shall appoint a Plan
Administrator to assist in carrying out the operations of the Plan.
13.2 Annual Reports. The Plan Administrator shall render annually a
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written report to each Participant, which shall set forth, at a minimum, the
Participant's Account balances as of the end of the most recent Plan Year.
13.3 Costs. Participants shall bear costs equal to the costs incurred by
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the Trust related to the purchase and sale of stock by the Trust. The Company
shall pay all other costs of the Plan and the Trust.
Section 14. Amendment or Termination of the Plan
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14.1 Amendment or Termination of the Plan. The Board of Directors may
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amend, terminate, or suspend the Plan at any time. Any such amendment,
termination, or suspension of the Plan shall be effective on such date as the
Board of Directors may determine. An
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amendment or modification of the Plan may affect Participants at the time
thereof as well as future Participants, but no amendment or modification of the
Plan for any reason may diminish any Participant's account as of the effective
date thereof. Upon Plan termination, all amounts credited to a Participant's
account shall be deemed to have matured, except that Subsection 9.4 shall apply
as if the Plan termination date were the termination of employment date.
Section 15. Corporate Changes
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15.1 Dissolution or Liquidation. Notwithstanding any provision herein to
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the contrary, upon the dissolution or liquidation of Texas Utilities Company,
the Performance Units credited to a Participant's account shall be converted to
a cash equivalent as of the day preceding the date of dissolution or
liquidation, using the method set forth in Subsection 8.1. The Company shall
cause such amount to be paid in cash in a lump sum to the Participant, or his
Beneficiary, as soon as practicable, but in no event later than thirty (30)
days, following the date of dissolution or liquidation.
15.2 Merger, Consolidation, and Sale of Assets. Notwithstanding anything
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herein to the contrary, in the event that Texas Utilities Company consolidates
with, merges into, or transfers all or substantially all of its assets to
another unrelated corporation, all Performance Units recorded in a Participant's
account hereunder immediately shall be deemed to have matured. All
Participants' accounts shall become payable pursuant to Subsection 8.2 except
that the determination of Participants' account values under Subsection 8.1
shall be made as of the effective date of such event.
Section 16. Requirements of Law
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16.1 GOVERNING LAW. THE PLAN, AND ALL AGREEMENTS HEREUNDER, SHALL BE
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CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS.
Section 17. Withholding Taxes
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17.1 Withholding Taxes. The Company shall have the right to deduct from
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all cash payments under the Plan or from a Participant's compensation an amount
necessary to satisfy any Federal, state, or local withholding tax requirements.
EXECUTED the 8th day of June , 1995.
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TEXAS UTILITIES COMPANY
By: /s/ Peter B. Tinkham
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Peter B. Tinkham, Secretary
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