February 26, 2008
February 26,
2008
Xx.
Xxxx X. Xxxxxxx
0000 Xxxxxxxxxx
Xxxxx
Xxxxxxxx, XX
00000
Dear
Xxxx,
The
purpose of this letter agreement (“Agreement”) is to set forth the general terms
and conditions of your continued employment with FirstEnergy Service Company or
any of its affiliates (collectively “FirstEnergy” or the “Company”) for the term
of this Agreement:
1.
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Effective
March 2, 2008, your title will be Executive Vice President of FirstEnergy
Corp. and President, FE Generation, and your duties and responsibilities
will be commensurate with those customarily performed, undertaken and
exercised by persons situated in a similar executive capacity, including,
without limitation responsibility for the FirstEnergy Fossil Generation
and Commodity Operations, and such other duties as may be assigned from
time to time. In consideration of your performance of such
duties you will be compensated as
follows:
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(a)
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Base
Salary. You will receive a base salary (the “Base
Salary”) at an annual rate of Six Hundred Fifty Thousand Dollars
($650,000) which will be payable in accordance with the existing payroll
practices of FirstEnergy. The Base Salary will be reviewed at
least annually at the same time as the base salaries of FirstEnergy’s
other executives.
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(b)
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Annual
Bonus. You will be a participant in FirstEnergy’s 2007
Incentive Plan (“ICP”) and be eligible to receive an annual bonus each
year under the Short-Term Incentive Program (“STIP”) component of the ICP
(or any successor program). Your annual short-term target
opportunity will be set by the Compensation Committee of the Board of
Directors at the same time as other senior executive
officers. For 2008, your target bonus opportunity will be 80%
of your Base Salary. Any annual incentive compensation awarded
to you will be payable in accordance with the provisions of the
STIP. The Key Performance Indicators (“KPIs”), which serve as
the basis for determining the amount of the annual bonus earned, will be
set and approved by the Company’s Board of Directors and provided to you
as soon as practicable thereafter.
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(c)
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Long-Term Incentive
Compensation. You are eligible for a long-term incentive
opportunity under the Long-Term Incentive Program (“LTIP”) component of
the ICP. Your annual long-term target opportunity will be set
by the Compensation Committee of the Board of Directors at the same time
as other senior executive officers. For 2008, your target bonus
opportunity for Performance-Adjusted Restricted Stock Units will be 138%
of your Base Salary. For 2008, your target bonus opportunity
for Performance Shares will be 146% of your Base Salary. Any
long-term incentive compensation awarded to you will be payable in
accordance with the provisions of the
LTIP.
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Xxxx X.
Xxxxxxx 2
February 26, 2008
As
soon as practicable after the execution of this Agreement, the Company will
provide you a grant of restricted FirstEnergy common stock units with an
equivalent cash value of approximately One Million Three Hundred Thousand
Dollars ($1,300,000). The restricted stock units will be granted
under and subject to the terms of the Company’s ICP and a restricted stock unit
agreement to be entered into between you and the Company. The stock
unit grant will fully vest on June 30, 2010 and can be increased or decreased by
25% at that time based on the achievement of specific corporate performance
criteria. The criteria and the ultimate adjustment will mirror the
annual 2008 and 2009 performance measures for the Performance-Adjusted
Restricted Stock Unit grants. In the event your employment is
terminated by the Company without Cause, as defined in the ICP, prior to June
30, 2010, the stock unit grant will fully vest on the date of your
termination. In the event you voluntarily resign or retire prior to
June 30, 2010, the restricted stock unit grant will vest on a prorated basis
based on your full months of service from the date of grant through the
termination of your employment. In the event of your death, the stock
unit grant will fully vest.
(d)
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Previously Granted
Stock Award. In March 2005, you were granted 50,000
shares of restricted FirstEnergy common stock pursuant to a Restricted
Stock Agreement. You and the Company hereby agree that in the
event your employment is terminated by the Company without Cause prior to
March 1, 2010, this stock grant will fully vest on the date of your
termination. Consistent with the terms of the Restricted Stock
Agreement, in the event you voluntarily resign or retire prior to March 1,
2010, the restricted stock grant will be forfeited in its
entirety. The Restricted Stock Agreement will be amended to
reflect these terms.
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(e)
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Prior Severance
Benefit. Pursuant to the terms of your 1997 agreement
with Centerior Energy Corporation (“Centerior”) which provided you with a
severance benefit due to the change in control of Centerior, you remain
entitled to the lump-sum amount of $1,095,889 payable to you when you
reach age 62. This lump-sum amount is subject to gross-up to
cover any applicable excise tax.
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(f)
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Employee
Benefits. The Company maintains a Flexible Benefits Plan
that includes programs providing health care insurance, dental insurance,
group term life insurance, accidental death and dismemberment insurance,
long-term disability, long-term care, dependent care and health care
spending accounts. You will be eligible to participate in the
FirstEnergy Flexible Benefits Plan, as well as all executive and employee
welfare benefit plans, programs, policies and arrangements sponsored,
maintained or contributed to by FirstEnergy on the same level as other
senior executive officers of FirstEnergy, subject to the terms and
conditions of such plans. Consistent with prior agreements, you
are not eligible to participate in the FirstEnergy Supplemental Executive
Retirement Program (the “SERP”).
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(g)
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Financial
Planning. You will be entitled to the financial planning
benefits available to other senior executive officers during your
employment with the Company and will be entitled to continue to receive
the financial planning benefits for one (1) year following the date of the
termination of your employment, provided that the Company continues to
offer this benefit to other similarly situated executives of
FirstEnergy.
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Xxxx X. Xxxxxxx 3
February 26, 2008
(h)
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Executive Severance
Plan. You and the Company agree that, notwithstanding
any other agreement you may have had with the Company or any of its
affiliates, under no circumstances will you be eligible for benefits under
the Company’s Executive Severance Benefits Plan or any successor plan at
any time.
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(i)
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Other
Agreements. This Agreement supersedes any other
agreements you may have had with the Company regarding the terms of your
employment.
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2.
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The term of
this Agreement shall be from the date so agreed below until June 30, 2010;
unless either terminated early by either party for any reason upon written
notice given 60 days in advance, or mutually extended in
writing.
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If
the above is agreeable to you, please sign where indicated and return a copy to
me for our records. You should retain a copy for
yourself. If you have any questions, please do not hesitate to
call.
Sincerely, | |||
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Xxxxxxx X. Xxxxxxxxx | |||
President & Chief Executive Officer | |||
So
Agreed: _______________________________________________
Date:____________________________________________________