Common use of Recoupment of Incentive Compensation Clause in Contracts

Recoupment of Incentive Compensation. In the event of a material restatement of financial results, other than as a result of a change in accounting principles (a “Restatement”) where a Covered Officer engaged in fraud or Misconduct that caused the need for the Restatement, the Board will review all Incentive Compensation paid to Covered Officers on the basis of having met or exceeded specific performance targets for performance periods during the Restatement period. To the extent permitted by applicable law, the Board will seek to recoup Incentive Compensation, in all appropriate cases (taking into account all relevant factors, including whether the assertion of a recoupment claim may prejudice the interests of the Company in any related proceeding or investigation), paid to any Covered Officer on or after March 6, 2013, if and to the extent that (i) the amount (or vesting) of Incentive Compensation was calculated based upon the achievement of certain financial results that were subsequently reduced due to a Restatement, and (ii) the amount (or vesting) of Incentive Compensation that would have been paid (or, in the case of equity-based compensation, vested) to the Covered Officer had the financial results been properly reported would have been lower than the amount actually paid (or, in the case of equity-based compensation, vested). In the case of equity awards that vested based on the achievement of financial results that were subsequently reduced, the Board also may seek to recover gains from the sale or disposition of vested shares (including shares purchased upon the exercise of options that vested based on the achievement of financial results). In addition, the Board may to the extent it deems appropriate determine to cancel outstanding equity awards where the Board or the Compensation Committee took into account the financial performance of the Company in granting such awards and the financial results were subsequently reduced due to such a Restatement.

Recoupment of Incentive Compensation. In By accepting this Award, you agree to reimburse AEP for compensation awarded, earned, received or paid to you under this Award agreement with respect to the event of a material restatement of financial resultsrelevant time period if the Board, other than as a result of a change in accounting principles (a “Restatement”) where its discretion, determines that: • You are a Covered Officer engaged Employee (as defined in fraud or Misconduct that caused the need for the RestatementAmerican Electric Power Company, the Inc. Board will review all Incentive Compensation paid to Covered Officers Policy on the basis of having met or exceeded specific performance targets for performance periods during the Restatement period. To the extent permitted by applicable law, the Board will seek to recoup Recouping Incentive Compensation, in all appropriate cases (taking into account all relevant factors, including whether the assertion of a recoupment claim may prejudice the interests of the Company in any related proceeding or investigationas amended from time to time), paid and • This restricted stock unit award or any compensation resulting from it was predicated upon the achievement of financial or other results that were subsequently materially restated or corrected, and • A payment that is materially lower would have been made to any Covered Officer on you had achievement been calculated based upon the restated or after March 6, 2013corrected financial or other results. Therefore, if and to the extent that (i) the amount (or vesting) of Incentive Compensation was calculated based upon the achievement of certain financial results that were subsequently reduced due to a Restatement, and (ii) the amount (or vesting) of Incentive Compensation that would have been paid (orthat, in the Board’s view, the above conditions have been met and such reimbursement is warranted by the facts and circumstances of the particular case or if the applicable legal requirements impose more stringent requirements on AEP to obtain reimbursement of equity-based such compensation, vestedthen you will be required to reimburse AEP for the value of such compensation paid to you. Any such reimbursement must be paid in full to AEP within ninety (90) days of AEP’s issuance of its notice to the Covered Officer had the financial results been properly reported would have been lower than the amount actually paid (oryou. By entering into this Agreement, in the case of equity-based compensation, vested). In the case of equity awards you further agree and consent that vested based on the achievement of financial results that were subsequently reduced, the Board AEP also may seek retain any deferred compensation previously credited to recover gains from the sale or disposition of vested shares (including shares purchased upon the exercise of options you and not paid, provided that vested based on the achievement of financial results). In additionAEP will retain such deferred compensation only if, the Board may when and to the extent that it deems appropriate determine otherwise becomes payable to cancel outstanding equity awards where you. This right to reimbursement is in addition to, and not in substitution for, any and all other rights AEP might have to pursue reimbursement or such other remedies against an employee (including a Covered Employee) for misconduct in the Board course of employment by AEP or the Compensation Committee took into account the financial performance otherwise based on applicable legal considerations, all of the Company in granting such awards and the financial results were subsequently reduced due to such a Restatementwhich are expressly retained by AEP.

Recoupment of Incentive Compensation. In the event of a material restatement of the Company’s financial results, other than statements due to the material noncompliance of the Company with any financial reporting requirement under applicable securities laws as a result of misconduct, the result of which is that any incentive compensation (as defined below) that was based on such noncompliant financial statements and received during the three year period preceding the date on which the Board of Directors or a change duly authorized committee thereof determines that the Company is required to prepare such restatement would have been a lower amount had it been based on such restated financial statements, a committee consisting of non-management members of the Board of Directors established by the Board of Directors in accounting principles its discretion in light of the circumstances, which may be the Audit Committee of the Board of Directors (a any such committee, the “RestatementIndependent Director Committee”), shall review such incentive compensation. If the Independent Director Committee determines that the amount of any such incentive compensation actually paid or awarded to an executive officer (the “Awarded Compensation”) where would have been a Covered Officer lower amount had it been calculated based on such restated financial statements (the “Actual Compensation”) and such executive officer engaged in fraud or Misconduct Improper Conduct (as defined below) that caused materially contributed to the need for such restatement, then the RestatementIndependent Director Committee shall, except as provided below, seek to recover for the benefit of the Company the after-tax portion of the difference between the Awarded Compensation and the Actual Compensation (such difference, the Board will review all Incentive Compensation paid “Excess Compensation”). In determining the after-tax portion of the Excess Compensation, the Independent Director Committee shall take into account its good faith estimate of the value of any tax deduction available to Covered Officers on the basis executive officer in respect of having met or exceeded specific performance targets for performance periods during the Restatement periodsuch repayment. To The Independent Director Committee may determine not to seek recovery to the extent permitted by applicable lawit finds (i) that to do so would be inappropriate or unreasonable or (ii) that it would be better for the Company not to do so. In making such determination, the Board will seek to recoup Incentive Compensation, in all appropriate cases (taking Independent Director Committee shall take into account all relevant factorssuch considerations as it deems appropriate, including including, without limitation, (A) the position held by the executive officer at the time of the material non-compliance, (B) the conduct of the executive officer with respect to any such material non-compliance, (C) the likelihood of success under governing law versus the cost and effort involved, (D) whether the assertion of a recoupment claim may prejudice the interests of the Company Company, including in any related proceeding or investigation, (E) the passage of time since the occurrence of the act in respect of the material non-compliance, (F) any pending legal proceeding relating to the applicable non-compliance and (G) whether the executive officer’s employment with the Company has terminated. Before the Independent Director Committee determines to seek recovery pursuant to this policy, it shall provide to the applicable executive officer written notice and the opportunity to be heard, at a meeting of the Independent Director Committee (which may be in-person or telephonic, as determined by the Independent Director Committee). If the Independent Director Committee determines to seek a recovery pursuant to this policy, paid to any Covered Officer on or after March 6, 2013it shall make a written demand for repayment from the executive officer and, if and the executive officer does not within a reasonable period tender repayment in response to the extent that (i) the amount (or vesting) of Incentive Compensation was calculated based upon the achievement of certain financial results that were subsequently reduced due to a Restatementsuch demand, and (ii) the amount (Independent Director Committee determines that he or vesting) of Incentive Compensation that would have been paid (or, in the case of equity-based compensation, vested) she is unlikely to the Covered Officer had the financial results been properly reported would have been lower than the amount actually paid (or, in the case of equity-based compensation, vested). In the case of equity awards that vested based on the achievement of financial results that were subsequently reduceddo so, the Board also Independent Director Committee may seek to recover gains from a court order against the sale or disposition of vested shares (including shares purchased upon the exercise of options that vested based on the achievement of financial results). In addition, the Board may to the extent it deems appropriate determine to cancel outstanding equity awards where the Board or the Compensation Committee took into account the financial performance of the Company in granting executive officer for such awards and the financial results were subsequently reduced due to such a Restatementrepayment.