FirstEnergy Corp.
Supplemental Executive Retirement Plan
Effective September 29, 1985
Amended and Restated as of January 1, 1999
TABLE OF CONTENTS
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ARTICLE I - PURPOSE 1
ARTICLE II - ELIGIBILITY AND PARTICIPATION 1
2.1 Eligibility 1
2.2 Participation 1
2.3 Designation of Participating Companies 1
2.4 Withdrawal From Plan of Participating Employer 1
2.5 Delegation of Authority 2
ARTICLE III - TYPE AND LEVEL OF BENEFITS 2
3.1 Supplemental Benefit After Termination of Employment 2
3.2 Month of Service; Year of Service 2
3.3 Eligible Spouse 2
3.4 Conditions of Benefits 3
3.5 Forfeiture of Benefits 5
3.6 Change of Control 6
ARTICLE IV - UNFUNDED PLAN 6
4.1 Unfunded Plan 6
4.2 Nontransferability 7
ARTICLE V - ADMINISTRATION 7
5.1 Committee; Duties 7
5.2 Agents 7
5.3 Indemnity of Committees 7
ARTICLE VI - CLAIMS PROCEDURES 8
6.1 Claim 8
6.2 Denial of Claim 8
6.3 Review of Claim 8
6.4 Final Decision 8
TABLE OF CONTENTS
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ARTICLE VII - MISCELLANEOUS 9
7.1 Unsecured General Creditor 9
7.2 Obligations to Company 9
7.3 Not a Contract of Employment 9
7.4 Protective Provisions 9
7.5 Captions 9
7.6 Governing Law 9
7.7 Validity 9
7.8 Mistaken Information 10
7.9 Taxes and Expenses 10
7.10 Notice 10
ARTICLE VIII - EFFECTIVE DATE, TERMINATION, AND AMENDMENT 10
ARTICLE IX - SUCCESSORS 10
APPENDIX A
APPENDIX B
FIRSTENERGY CORP.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
ARTICLE I-PURPOSE
The Supplemental Executive Retirement Plan (the "Plan") was
established on September 29, 1985 as part of an integrated executive
compensation program that is intended to attract, retain, and motivate certain
key executives ("Executives") who are in positions to make significant
contributions to the operation and profitability of FirstEnergy Corp. (the
"Company") for the benefit of stockholders and customers.
The Plan provides for the payment of supplemental retirement, death,
and disability benefits to or in respect of key senior Executives designated
by the Chief Executive Officer of the FirstEnergy Corp. (the "Chief Executive
Officer").
The Chief Executive Officer shall appoint an Administrative
Committee (the "Committee") to administer this Plan. The Committee shall
consist of three or more individuals.
ARTICLE II - ELIGIBILITY AND PARTICIPATION
2.1 Eligibility
Eligibility to participate in the Plan shall be limited to those
Executives who are designated by the Chief Executive Officer.
2.2 Participation
An Executive's participation in the Plan shall be effective on January
1 of the year following the year in which he or she becomes eligible.
2.3 Designation of Participating Companies
The Compensation Committee of the Board of Directors of FirstEnergy
Corp. (the "Compensation Committee") or the Chief Executive Officer may allow
other corporations or other entities affiliated with or subsidiary to the
Company to participate in the Plan without approval or ratification by the
Company's Board of Directors. Such companies ("Participating Companies") and
their adoption dates shall be added to Appendix A, which is attached hereto
and incorporated herein by reference.
2.4 Withdrawal From Plan of Participating Employer
Any Participating Company may at any time, by resolution of its Board
of Directors (with notice thereof to the Company's Board of Directors if the
terminating company is not FirstEnergy Corp.), terminate its participation in
the Plan. Participating Companies which cease to be Participating Companies
shall be shown in Appendix A together with their adoption dates and
termination dates.
2.5 Delegation of Authority
The Company is hereby fully empowered to act on behalf of itself and
the other Participating Companies as it may deem appropriate in maintaining
the Plan. Furthermore, the adoption by the Company of any amendment to the
Plan or the termination thereof will constitute and represent, without any
further action on the part of any Participating Company, the approval,
adoption, ratification or confirmation by each Participating Company of any
such amendment or termination. In addition, the appointment of or removal by
the Company of any Committee member or other person under the Plan shall
constitute and represent, without any further action on the part of any
Participating Company, the appointment or removal by each Participating
Company of such person.
ARTICLE III - TYPE AND LEVEL OF BENEFITS
3.1 Supplemental Benefit After Termination of Employment
An Executive included in the Plan shall, subject to the terms and
conditions set forth herein, be eligible to receive a supplemental benefit
under the Plan after termination of employment due to retirement, death,
disability or involuntary separation that is directly related to either:
(a) The Executive's Highest Average Monthly Base Earnings which
is defined as the average of the highest twelve (12) consecutive full
months of base salary earnings paid to the Executive in the one
hundred twenty (120) consecutive full months prior to termination of
employment, including any salary deferred in the FirstEnergy Corp.
Executive Deferred Compensation Plan ("Deferred Plan") or the
FirstEnergy Corp. Savings Plan ("Savings Plan"), but excluding any
incentive payments, or
(b) The Executive's Highest Average Monthly Total Compensation
which is defined as the average of the highest thirty-six (36)
consecutive full months of base salary earnings paid to the Executive
in the one hundred twenty (120) consecutive full months prior to
termination of employment, including any salary deferred into the
Deferred Plan and Savings Plan. Highest Total Compensation shall also
include any Annual Incentive Award from the Executive Incentive
Compensation Plan either paid to the Executive or deferred into the
Deferred Plan after January 1, 1996.
3.2 Month of Service; Year of Service
For the purpose of this Plan, a "Month of Service" shall be a whole
month of service with a Participating Company based upon the Executive's
service anniversary date with the Company. Further, a "Year of Service"
shall be equal to a twelve "Months of Service," with a Participating Company
based upon the Executive's service anniversary date with the Company.
3.3 Eligible Spouse
For the purposes of this Plan, Eligible Spouse shall mean the spouse
to whom the Executive is married at the time payment of a supplemental benefit
from the Plan commences and who is so designated, or deemed to have been
designated in accordance with the FirstEnergy Corp. Pension Plan ("Pension
Plan").
3.4 Conditions of Benefits
A supplemental benefit under this Plan will be determined in
accordance with and shall be nonforfeitable upon the date the Executive
terminates employment under the conditions described in the following
sections:
(a) Retirement Benefits
(i) An Executive retiring from the Company on or after age
fifty-five (55) who has completed ten (10) Years of Service will
be entitled to receive, commencing at retirement, a monthly
supplemental retirement benefit under the Plan equal to sixty-
five percent (65%) of the Executive's Highest Average Monthly
Base Earnings or fifty-five percent (55%) of the Executive's
Highest Average Monthly Total Compensation, whichever is greater,
multiplied by the number of Months of Service the Executive has
completed after having completed ten (10) Years of Service, up to
a maximum of sixty (60) months, divided by sixty (60), less:
a) The monthly primary Social Security benefit to which
the Executive may be entitled at such retirement (or the
projected age sixty-two (62) benefit if retirement occurs
prior to age sixty-two (62)), irrespective of whether the
Executive actually receives such benefit at the time of
retirement, and
b) The monthly early, normal or deferred retirement
income benefit to which the Executive may be entitled at such
retirement, under the Pension Plan, the monthly supplemental
pension benefit under the Deferred Plan and the monthly
benefit, or actuarial equivalent, under the tax-qualified or
nonqualified defined benefit pension plans of previous
employers, all calculated by an actuary selected by the
Company, with the following assumptions based on the
Executive's marital status at the time of such retirement:
i) In the case of a married Executive in the form
of a fifty percent (50%) joint and survivor annuity.
ii) In the case of an unmarried Executive, in the
form of a single-life annuity.
For an Executive who retires prior to attaining age sixty-
five (65), the net dollar amount above shall be further reduced
by one-fourth (1/4) of one percent (1%) for each month the
commencement of benefits under this Plan precedes the month the
Executive attains age sixty-five (65).
(ii) After commencement of supplemental retirement benefits
to the Executive, such payments shall continue in monthly
installments thereafter ending with a payment for the month in
which such Executive's death occurs. At death, benefits under
Section 3.4(c)(ii) may be paid to the Executive's surviving
Eligible Spouse.
(b) Disability Benefits
(i) An Executive who becomes disabled while employed by the
Company will be entitled to receive, commencing at the time the
Executive's employment terminates by reason of disability, a
monthly supplemental disability benefit under the Plan equal to
sixty-five percent (65%) of the Executive's Highest Base Earnings
or fifty-five (55%) of the Executive's Highest Total Compensation,
whichever is greater, less:
a) The monthly Social Security disability benefit to
which the Executive may become entitled due to such
disability.
b) The monthly disability pension payment under the
Pension Plan, the monthly benefit provided by the Long-Term
Disability Plan of the Company and the monthly disability or
pension benefits, or actuarial equivalent, from plans of
previous employers to which the Executive may be entitled at
termination of employment.
"Disabled" means a disability such that an Executive would be
entitled to receive a monthly disability payment under the
Pension Plan, except for the purposes of this provision an
Executive need not have completed ten (10) Years of Service.
(ii) After commencement of supplemental disability benefits
to the Executive, such payments shall continue in monthly
installments thereafter ending with a payment in the month in
which the Executive attains age sixty-five (65) or retires from
the Company, dies, or is no longer disabled, whichever first
occurs. Upon retirement, benefits under Section 3.4(a) may be
paid. At death, benefits under Section 3.4(c)(i) may be paid to
the Executive's surviving Eligible Spouse.
(c) Death Benefits
(i) If an Executive, including an Executive receiving a
supplemental disability benefit under the Plan, dies prior to
retiring from the Company, the Executive's surviving Eligible
Spouse shall be entitled to receive commencing in the month
following the Executive's death, a monthly supplemental surviving
spouse benefit under the Plan equal to fifty percent (50%) of the
monthly supplemental retirement benefit, calculated in accordance
with Section 3.4(a), which the Executive would have received had
he or she retired in the month of death, except that if the
Executive dies prior to attaining age fifty-five (55), such
monthly supplemental retirement benefit will be calculated as if
the Executive had attained age fifty-five (55) and retired on the
date of his or her death. In addition, if at the time of his or
her death the deceased Executive had completed less than ten (10)
Years of Service with a Participating Company, the Death Benefit,
if any, shall be calculated as if the executive had been credited
with five(5) Years of Service at the time of his/her employment
with the Company.
The surviving spouse benefit payment shall be paid in monthly
installments thereafter ending with a payment for the month in
which such surviving Eligible Spouse's death occurs, or for a
period of one hundred eighty (180) payments less the number of
supplemental disability payments the Executive had received,
whichever first occurs.
(ii) If an Executive dies after retiring from the Company but
prior to receiving one hundred eighty (180) monthly supplemental
retirement and/or supplemental disability payments under the Plan,
the Executive's surviving Eligible Spouse shall be entitled to
receive a monthly supplemental surviving spouse benefit under the
Plan equal to fifty percent (50%) of the supplemental retirement
benefit which the deceased Executive was receiving on the day
before his or her death.
This monthly supplemental surviving spouse benefit payment
shall commence in the month following the Executive's death and
shall be paid in monthly installments thereafter ending with a
payment for the month in which such surviving Eligible Spouse's
death occurs, or for a period of one hundred eighty (180) payments
less the number of supplemental retirement and/or supplemental
disability payments the Executive had received, whichever first
occurs.
(d) Involuntary Separation Benefits
An Executive under age fifty-five (55) with ten or more years
of service at the time of an involuntary separation, due to the
closing of a facility, corporate restructuring, reduction in the
work force, or job elimination, will be entitled to receive,
beginning at age fifty-five (55), a supplemental retirement
benefit under the Plan calculated in accordance with
Section 3.4(a). If the Executive dies prior to or after
commencement of his or her supplemental retirement benefit, the
Executive's surviving Eligible Spouse shall be entitled to receive
a monthly supplemental surviving spouse benefit under the Plan
calculated in accordance with Section 3.4(c). Such supplemental
benefits will be calculated using the number of Months of Service
the Executive had with the Company at separation of employment.
However, the Executive will not be eligible for a supplemental
retirement benefit beginning at age fifty-five (55) if the
separation is due to any other reason including but not limited
to: voluntary resignation; discharge for misconduct or poor job
performance; failure to return from a leave of absence; or as a
result of a merger or acquisition of the Company or any of its
assets and the Executive's employment with the acquiring or
merging company is continued and the Executive does not suffer
unemployment.
3.5 Forfeiture of Benefits:
If it is determined, in the sole discretion of the Compensation
Committee (the "Committee") of the FirstEnergy Board of Directors or
its delegate, that the Executive has engaged in any of the following
enumerated actions, and unless such engagement has been approved by
the Committee or its delegate in writing, all future SERP benefit
payments shall be immediately forfeited. Notwithstanding any other
provision of this paragraph 3.4, the forfeiture of benefits will only
apply to those supplemental retirement benefits accrued on or after
January 1, 1999 and shall not apply to supplemental benefits accrued
before January 1, 1999.
1. Participate or engage, directly or indirectly, in the
business of selling, servicing, and/or manufacturing
products, supplies or services of the kind, nature or
description of those sold by the Company except pursuant to
his/her employment with Company;
2. Directly participate or engage, on the behalf of other
parties, in the purchase of products, supplies or services
of the kind, nature or description of those sold by the
Company except pursuant to his/her employment with the
Company;
3. Solicit, divert, take away or attempt to take away any of
the Company's Customers or the business or patronage of any
such Customers of the Company;
4. Solicit, entice, lure, employ or endeavor to employ any of
the Company's employees;
5. Divulge to others or use for his/her own benefit any
confidential information obtained during the course of
his/her employment with Company relative to sales, services,
processes, methods, machines, manufacturers, compositions,
ideas, improvements, patents, trademarks, or inventions
belonging to or relating to the affairs of Company;
6. Divulge to others or use to his/her own benefit any trade
secrets belonging to the Company obtained during the course
of his/her employment or that he/she became aware of as a
consequence of his/her employment.
The term "Customer" shall mean any person, firm, association,
corporation or other entity to which Executive or the Company has
sold the Company's products or services within the twenty-four (24)
month period immediately preceding the termination of Executive's
employment with Company or to which Executive or the Company is in
the process of selling its products or services, or to which
Executive or the Company has submitted a bid, or is in the process
of submitting a bid to sell the Company's products or services.
Should it be necessary for FE to initiate legal action to recover
any amounts due, FE shall be entitled to recover from Executive, in
addition to such amounts due, all costs, including reasonable
attorneys fees, incurred as a result of such legal action.
3.6 Change of Control
In the event of a Change in Control, as defined in Appendix B, the
Forfeiture of Benefit provisions in section 3.5 will not apply.
ARTICLE IV-Unfunded Plan
4.1 Unfunded Plan
The Plan shall be unfunded. The Plan is intended to benefit key senior
Executives who are considered to be a select group of management or highly
compensated employees within the meaning of the Employee Retirement Income
Security Act of 1974, as amended. The Chief Executive Officer reserves the
right to restrict participation to such Executives.
4.2 Nontransferability
Neither an Executive nor any other person shall have any right to
transfer, pledge, or otherwise encumber, in advance of actual receipt, any
amounts payable hereunder. No part of the amounts payable shall, prior to
actual payment, be subject to seizure or sequestration for the payment of any
debts, judgments, alimony, or separate maintenance owed by an Executive or any
other person, nor be transferable by operation of law in the event of an
Executive's or any other person's bankruptcy or insolvency.
ARTICLE V-ADMINISTRATION
5.1 Committee; Duties
This Plan shall be administered by and under the direction of the
Committee. Members of the Committee may be participants in this Plan. However,
no member of the Committee may participate in a review of his or her own claim
under Article VI. The Committee shall administer the Plan and shall have the
power and the duty to take all action and to make all decisions necessary or
proper to carry out the Plan. The determination of the Committee as to any
question involving the general administration and interpretation of the Plan
shall be final, conclusive, and binding except as otherwise provided in
Article VI. A majority vote of the Committee members shall control any
decision. Any discretionary actions to be taken under the Plan by the
Committee with respect to the Executives' contributions or benefits shall be
uniform in nature and applicable to all persons similarly situated. Without
limiting the generality of the foregoing, the Committee shall have the
following discretionary authority, powers and duties:
(a) To require any person to furnish such information as it may
request for the purpose of the proper administration of the Plan as a
condition to receiving any benefit under the Plan;
(b) To make and enforce such rules and regulations and prescribe
the use of such forms as it deems necessary for the efficient
administration of the Plan;
(c) To interpret the Plan and to resolve ambiguities,
inconsistencies and omissions;
(d) To decide all questions concerning the Plan and any questions
concerning the eligibility of any Employee to participate in the Plan;
and
(e) To determine the amount of benefits which will be payable to
any person in accordance with the provisions of the Plan.
5.2 Agents
In the administration of this Plan, the Committee may, from time to
time, employ agents and delegate to them such administrative duties as it sees
fit, and may from time to time consult with counsel, who may be counsel to the
Company.
5.3 Indemnity of Committees
The Company shall indemnify and hold harmless members of the Committee
and the Compensation Committee against any and all claims, loss, damage,
expense or liability arising from any action or failure to act with respect to
this Plan, except in the case of intentional misconduct.
ARTICLE VI-CLAIMS PROCEDURE
6.1 Claim
Any person claiming a benefit, requesting an interpretation or ruling
under the Plan, or requesting information under the Plan shall present the
request in writing to the Committee, which shall respond in writing as soon as
practicable, but no more than sixty-three (63) days after the end of the month
the request is received. Payment of a claimed benefit shall also constitute a
written response.
6.2 Denial of Claim
If the claim or request is denied, the written notice of denial shall
state:
(a) The reasons for denial, with specific reference to the Plan
provisions on which the denial is based.
(b) A description of any additional material or information
required and an explanation of why it is necessary.
(c) An explanation of the Plan's claim review procedure.
For the purposes of this Section 6.2, the failure by the Committee to
deliver within the sixty-three (63) day period notice of a written denial of
claim shall constitute a written response of denial, unless the failure to
correspond was the result of clerical or administrative error.
6.3 Review of Claim
Any person whose claim or request is denied or who has not received a
response within sixty-three (63) days after the end of the month in which the
request was received may request review by notice given in writing to the
Compensation Committee. The claim or request shall be reviewed by the
Compensation Committee who may, but shall not be required to, grant the
claimant a hearing. On review, the claimant may have a representative examine
pertinent documents and submit issues and comments in writing.
6.4 Final Decision
The decision on review shall normally be made within sixty (60) days.
If an extension of time is required for a hearing or other special
circumstances, the claimant shall be notified and the time limit shall be one
hundred twenty (120) days. The decision shall be in writing and shall state
the reason and the relevant Plan provisions. All decisions on review shall be
final and bind all parties concerned.
ARTICLE VII-MISCELLANEOUS
7.1 Unsecured General Creditor
Participants and their Beneficiaries, heirs, successors and assigns
shall have no legal or equitable rights, interest or claims in any property or
assets of Company. Any and all Company's assets shall be, and remain, the
general, unpledged, unrestricted assets of Company. Company's obligation under
the Plan shall be merely that of an unfunded and unsecured promise of Company
to pay money in the future.
7.2 Obligations to Company
If an Executive or the Executive's surviving Eligible Spouse becomes
entitled to a benefit under the Plan and the Executive has outstanding any
debt, obligation, or other liability representing an amount owing to the
Company, then the Company may offset such amount owing to it or an affiliate
against the amount of benefits otherwise distributable. The determination of
the amount and duration of the offset shall be made by the Committee.
7.3 Not a Contract of Employment
The terms and conditions of the Plan shall not be deemed to constitute
a contract of employment between the Company and the Executive, and the
Executive (or his or her surviving Eligible Spouse) shall have no rights
against the Company except as may be otherwise provided specifically herein.
Moreover, nothing in the Plan shall be deemed to give an Executive the right
to be retained in the service of the Company or to interfere with the right of
the Company to discipline or discharge him or her at any time.
7.4 Protective Provisions
An Executive shall cooperate with the Company by furnishing any and
all information requested by the Company in order to evaluate a claim or to
facilitate the payment of benefits hereunder, and by taking such physical
examinations as the Company may deem necessary and taking such other action as
may be requested by the Company.
7.5 Captions
The captions of the articles, sections and paragraphs of the Plan are
for convenience only and shall not control or affect the meaning or
construction of any of its provisions.
7.6 Governing Law
The provisions of the Plan shall be construed, administered, and
enforced according to and governed by the laws (other than conflict of law
provisions) of the state of Ohio, except to the extent such laws are
superseded by ERISA.
7.7 Validity
In case any provision of the Plan shall be illegal or invalid for any
reason, such illegality or invalidity shall not affect the remaining parts
hereof, but the Plan shall be construed and enforced as if such illegal and
invalid provision had never been included herein.
7.8 Mistaken Information
If any information upon which an Executive's benefit under the Plan is
misstated or otherwise mistaken, such benefit shall not be invalidated (unless
upon the basis of the correct information the Executive would not be entitled
to a benefit), but the amount of the benefit shall be adjusted to the proper
amount and any overpayments shall be charged against future payments.
7.9 Taxes and Expenses
Any taxes imposed on Plan benefits shall be the sole responsibility of
the Executive or surviving Eligible Spouse. The Company shall deduct from Plan
benefits any amounts required by applied law to be withheld. All Plan
administration expenses incurred by the Company or Committee shall be borne by
the Company.
7.10 Notice
Any notice or filing required or permitted to be given to the
Committee under the Plan shall be sufficient if in writing and hand delivered,
or sent by registered or certified mail to any member of the Committee, or to
the Statutory Agent of FirstEnergy Corp. Notice to the Committee may be given
to any member of the Committee and if mailed shall be addressed to the
principal executive offices of FirstEnergy Corp. Notice mailed to the
Participant shall be sent to the address set out in the Participant's most
recent Participation Agreement or such other address as is given to the
Committee by notice. Notices shall be deemed given as of the date of delivery
or, if delivery is made by mail, as of the date shown on the postmark on the
receipt for registration or certification.
ARTICLE VIII-EFFECTIVE DATE, TERMINATION, AND AMENDMENT
The effective date of the Plan shall be September 29, 1985. The
effective date of participation of an Executive in this Plan shall be
determined by the Chief Executive Officer. The Plan may be terminated at any
time and amended from time to time by action of the Board or the Compensation
Committee or by a writing executed on behalf of the Board or the Compensation
Committee by the Company's duly authorized officers, provided that neither
termination nor any amendment of the Plan may, without the written approval of
a participating Executive or surviving Eligible Spouse, reduce or terminate
any accrued benefit.
ARTICLE IX-SUCCESSORS
The provisions of this Plan shall bind and inure to the benefit of the
Company and its successors and assigns. The term successors as used herein
shall include any corporate or other business entity which shall, whether by
merger, consolidation, purchase or otherwise acquire all or substantially all
of the business and assets of the Company, and successors of any such
corporation or other business entity.
IN WITNESS WHEREOF, and pursuant to approval of the Compensation
Committee of the Board, on April 29, 1999, the Company has caused this
instrument to be executed by its duly authorized officers effective as of
January 1, 1999.
FOR THE COMPANY
By: Date
------------------------------------------------- ------------------
H. Peter Burg
President and Chief Executive Officer of
FirstEnergy Corp.
Witness: Date
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J. A. Gill
Sr. Vice President
APPENDIX A
1 2 3
Participating Company Adoption Date Termination Date
- -----------------------------------------------------------------------------
Ohio Edison Company September 29, 1985
Pennsylvania Power Company September 29, 1985
FirstEnergy Corp. January 1, 1999
Cleveland Electric Illuminating
Company January 1, 1999
Toledo Edison Company January 1, 1999
FirstEnergy Nuclear Operating Company January 1, 1999
FirstEnergy Fuel Marketing Company January 1, 1999
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