February 26, 2008 Mr. Richard R. Grigg Richfield, OH 44286 Dear Dick,
February 26,
2008
Xx.
Xxxxxxx X. Xxxxx
0000 Xxx-X-Xxx
Xxxx
Richfield, OH
44286
Dear
Xxxx,
Based on our
discussions we have mutually agreed to extend the expiration date of your
January 16, 2007, amendment to your July 20, 2004 employment agreement
(collectively the “Prior Agreements”) from March 31, 2008 to June 30,
2010.
In
consideration of the foregoing, the sufficiency of which is hereby acknowledged
by the parties, your Prior Agreements are hereby replaced in their entirety with
the following terms of this agreement (“Agreement”) which shall set forth the
general terms and conditions of your continued employment with the FirstEnergy
Service Company or any of its affiliates (collectively “FirstEnergy” or the
“Company”) for the term of this Agreement:
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1.
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Effective
March 2, 2008, your title will be Executive Vice President of FirstEnergy
Corp. and President, FE Utilities, 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 Energy Delivery and
Customer Service Business Unit 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 Seven Hundred Fifty Thousand Dollars
($750,000) 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 70%
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 101%
of your Base Salary. For 2008, your target bonus opportunity
for Performance Shares will be 107% 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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Xx.
Xxxxxxx X.
Xxxxx
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 One Hundred Thousand Dollars
($1,100,000). 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.
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(d)
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Change in Control
Agreement (CIC). The CIC executed by you on December 31,
2007, remains in effect pursuant to its terms and is unaffected by the
terms of this Agreement.
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(e)
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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. Except as specifically set forth in this
Agreement, 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.
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At
the conclusion of your employment with the Company, you will be granted the
maximum credit (currently 85 points) for purposes of determining the Company
contribution toward the cost of retiree health care coverage under the Flexible
Benefits Plan or any successor plan, so long as retiree health care is provided
under the Flexible Benefits Plan and a Company contribution is provided to other
senior executive officers of FirstEnergy.
In
the event of your death as an active employee, health care coverage for your
surviving spouse will be obtained and provided at substantially the same
coverage level and participant contribution level as available to active
employees through March 31, 2008. Thereafter, health care coverage
would be provided to your surviving spouse on the same terms and conditions as
provided to other surviving spouses under the terms of the Company’s welfare
benefit plan.
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(f)
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Pension
Benefits. You are eligible to participate in any and all
of FirstEnergy’s qualified and non-qualified pension, retirement, and
deferred compensation plans, programs, policies and arrangements as they
relate to FirstEnergy’s senior executive officers with the exception of
the Supplemental Executive Retirement Program (the
“SERP”). Your participation in any of the programs for which
you are eligible will be on the same terms and conditions as applicable to
other participants in those programs and will be governed by the
applicable plan documents.
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Xx.
Xxxxxxx X.
Xxxxx 3 February
26, 2008
Upon the termination
of your employment you will be provided additional service credit of four (4)
years and two (2) months for purposes of calculating your non-qualified
supplemental pension benefit. In the event of your death while you
are an active employee, your service credit for purposes of calculating this
non-qualified supplemental pension benefit will be enhanced as necessary to give
you credit for a total of at least 10 years of service.
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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 termination
of your employment, provided that the Company continues to offer this
benefit to other similarly situated executives of
FirstEnergy.
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(h)
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Executive Severance
Plan. You and the Company agree that, notwithstanding
any other agreements 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.
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Sincerely,
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Xxxxxxx X.
Xxxxxxxxx
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President
& Chief Executive Officer
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So
Agreed: _______________________________________________
Date:____________________________________________________
