EXHIBIT 10.26
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made as of the 1st day of March, 1997, between THE
UNITED ILLUMINATING COMPANY, a Connecticut corporation (the Company) and XXXXXXX
X. XXXXXXXX, an individual (the Officer),
WITNESSETH THAT
WHEREAS, the Company desires to continue to employ the Officer as a
Group Vice President of the Company, and the Officer desires to be employed by
the Company as a Group Vice President,
NOW THEREFORE, in consideration of the foregoing and the respective
covenants and agreements of the parties herein contained, and the services to be
rendered to the Company pursuant hereto, and in order to provide an incentive to
the Officer to remain in the employ of the Company hereafter and, in particular,
in the event of any Change in Control (as herein defined) of the Company,
thereby establishing and preserving continuity of management, the Parties hereby
agree as follows:
(1) EMPLOYMENT
The Company hereby agrees to employ the Officer, and the
Officer hereby agrees to serve the Company, at the pleasure of the Board of
Directors of the Company, all upon the terms and conditions set forth herein.
(2) POSITION AND DUTIES
The Officer shall be employed by the Company as a Group Vice President,
or in such other equivalent or higher officership position as the Company's
Board of Directors may determine. The Officer shall accept such employment and
shall perform and discharge, faithfully, diligently and to the best of the
Officer's abilities, the duties and obligations of the Officer's office and such
other duties as may from time to time be assigned to the Officer by, or at the
direction of, the Board of Directors of the Company, and shall devote
substantially all of the Officer's working time and efforts to the business and
affairs of the Company. Although a Change in Control of the Company shall not
affect the obligations of the Company and the Officer as set forth in the two
preceding sentences, at and after the date of any Change in Control the
Company's employment of the Officer shall also be without diminishment in the
Officer's management responsibilities, duties or powers.
(3) PLACE OF PERFORMANCE
In his employment by the Company, the Officer shall be based at the
executive offices of the Company situated within the Company's statutory service
area.
(4) COMPENSATION
(a) Base Salary. During the term of the Officer's employment
hereunder, the Officer shall receive a base salary (Base Salary) at an annual
rate of One Hundred Forty Thousand Dollars ($140,000). The Officer's Base Salary
rate shall be reviewed by the Board of Directors of the Company
contemporaneously with each review of the salary rates of the Company's other
officers by said Board of Directors, and may be revised upwards as a result of
any such review. The Officer's Base Salary may be revised downwards by said
Board of Directors contemporaneously with any general reduction of the salary
rates of the Company's other officers.
(b) Incentive Compensation. During the term of the Officer's
employment hereunder, the Officer shall be eligible to be designated by the
Board of Directors of the Company as a participant in each incentive
compensation program established for all officers of the Company.
For purposes of this Agreement, Total Compensation is defined
as the sum of the Officer's Base Salary and any amount paid or payable pursuant
to this Section (4)(b).
(c) Business Expenses. During the term of the Officer's
employment hereunder, the Officer shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by the Officer (in accordance
with the policies and procedures established by the Board of Directors of the
Company from time to time for all of the Company's officers) in performing
services hereunder, provided that the Officer properly accounts therefor.
(d) Benefit Programs. During the term of the Officer's
employment hereunder, the Officer shall be entitled to participate in and
receive full benefits under all of the Company's employee benefit plans,
programs and arrangements for its officers, including, without limitation, its
retirement and pension plan programs. Nothing paid to the Officer under any such
plan, program or arrangement presently in effect or made available by the
Company in the future shall be deemed to be in lieu of compensation to the
Officer under any other Section of this Agreement.
(e) Vacations and Holidays. During the term of the Officer's
employment hereunder, the Officer shall be entitled to the number of paid
vacation days in each calendar year determined by the Board of Directors of the
Company from time to time for all of the Company's officers, and shall also be
entitled to all paid holidays afforded by the Company to its employees.
(f) Supplemental Retirement. Upon termination of the Officer's
employment, a supplemental retirement benefit shall be payable to him or his
beneficiary in accordance with the provisions of this Section (4)(f). The annual
supplemental
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retirement benefit, expressed in the form of a single life annuity beginning at
the Officer's Normal Retirement Date (as defined in the Company's Pension Plan),
shall be the excess, if any, of (A) less (B), where (A) is 2.0% (.020) of the
Officer's highest three-year average Total Compensation times the number of
years at termination (not to exceed thirty) of the Officer's service as an
employee of the Company, and (B) is the benefit payable under the Company's
Pension Plan. Payment of the supplemental retirement benefit shall begin at the
same time as the Officer's Pension Plan benefit payments and shall be subject to
the same reductions for early commencement. The supplemental retirement benefit
may be paid in any form available under the Pension Plan, as elected by the
Officer prior to benefit payment commencement. The conversion factors between
forms of benefits used for purposes of the Pension Plan shall be used for
purposes of the supplemental retirement benefit. The form of payment of the
supplemental retirement benefit may be the same or different from the form of
payment of the Officer's benefits under the Pension Plan. If the form of payment
provides for a death benefit, such benefit shall be payable to the Officer's
estate, unless another beneficiary has been designated by the Officer. If the
Officer dies prior to the commencement of benefit payments, the death benefit
provisions of the Pension Plan shall apply, mutatis mutandis, to the
supplemental retirement benefit payable pursuant to this Section (4)(f).
(5) TERMINATION
(a) The Officer's employment hereunder shall terminate upon
the Officer's death.
(b) The Board of Directors of the Company may terminate the
Officer's employment hereunder at any time, with or without Cause. Prior to the
date of a Change in Control, the Company shall be deemed to have Cause to
terminate the Officer's employment hereunder only upon the Officer's (A)
continued failure to perform and discharge the duties or obligations of the
Officer's office, or such other duties as may from time to time be assigned to
the Officer by, or at the direction of, the Board of Directors, faithfully,
diligently, to the best of the Officer's abilities, and in accordance with
standards accepted in the electric utility industry, in the opinion of a
majority of the members of the Board of Directors of the Company, or (B)
misconduct that is injurious to the Company, or (C) conviction of a felony
involving the personal dishonesty or moral turpitude of the Officer, or (D)
total and permanent physical or mental disability, or (E) absence from work on a
full-time basis, due to physical or mental illness, for an uninterrupted 365-day
period. On and after the date of a Change in Control, the Company shall be
deemed to have Cause to terminate the Officer's employment hereunder only upon
the Officer's (F) conviction of a felony involving the personal dishonesty or
moral turpitude of the Officer, or (G) total and permanent physical or mental
disability, or (H) absence from work on a full-time basis, due to
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physical or mental illness, for an uninterrupted 365-day period.
(c) The Officer may terminate the Officer's employment
hereunder, upon at least thirty (30) days' prior Notice of Termination delivered
to the Company, for failure of the Company to observe and perform one or more of
its obligations under Sections (1), (2), (3) and/or (4) hereof, which failure
the Company fails to remedy within such notice period (a Breach by the Company)
at a time when the Officer is not in default of any of the Officer's obligations
under Sections (1) and/or (2) hereof. The Officer may terminate his employment
hereunder in the absence of a Breach by the Company, effective upon at least six
(6) months' prior Notice of Termination delivered to the Company.
(d) Notice of Termination. Any termination of employment, by
the Company or by the Officer, shall be communicated by delivery of a written
Notice of Termination to the other party.
(e) Date of Termination. For purposes of this Agreement, the
Date of Termination is defined as: if the Officer's employment is terminated (A)
by his death, the date of his death, or (B) pursuant to Section (5)(b) or
Section (5)(c) hereof, the date specified in the Notice of Termination.
(6) CONSEQUENCES OF TERMINATION
(a) If the Officer's employment terminates by reason of the
Officer's death, the Company shall pay to the personal representative and/or
spouse of the Officer the Officer's Total Compensation earned prior to the Date
of Termination, any amounts payable pursuant to Sections (4)(c), (4)(d) and 4(f)
hereof and any benefits or amounts payable under any deferred compensation plan
in which the Officer had been a participant, and the Company shall have no
further obligation under this Agreement.
(b) If the Officer terminates the Officer's employment
hereunder in the absence of a Breach by the Company and upon at least six (6)
months' prior Notice of Termination, the Company shall pay to the Officer and/or
the Officer's personal representative and/or spouse the Officer's Total
Compensation earned prior to the Date of Termination, any amounts payable
pursuant to Sections (4)(c), (4)(d) and (4)(f) hereof and any benefits or
amounts payable under any deferred compensation plan in which the Officer had
been a participant, and the Company shall have no further obligation to the
Officer and/or the Officer's personal representative and/or spouse under this
Agreement or on account of, or arising out of, the termination of the Officer's
employment. The Officer may petition the Board of Directors of the Company for
an immediate lump sum payment, in lieu of any amounts payable pursuant to
Section (4)(f) hereof on account of the Officer's termination of employment, in
an amount equal to the actuarial present value of a supplemental retirement
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benefit, expressed in the form of a single life annuity beginning at Officer's
termination of employment (or age 55, if later), equal to the excess if any of
(A) less (B) where (A) is 2.0% (.020) of the Officer's highest three-year
average Total Compensation times the number of years at termination (not to
exceed thirty) of the Officer's service as an employee of the Company, and (B)
is the benefit payable under the Company's Pension Plan at the Officer's
termination of employment (or age 55, if later). The actuarial present value of
such supplemental retirement benefit shall be calculated on the basis of the
annual yield on thirty-year United States Treasury bonds on the final business
day of the month preceding the Date of Termination of the Officer's employment
and the 1983 Group Annuity table. The Board of Directors of the Company may
grant or deny any such petition by the Officer in its absolute discretion.
(c) If the Company terminates the Officer's employment
hereunder with Cause, or if the Officer terminates the Officer's employment
hereunder in the absence of a Breach by the Company and upon less than six (6)
months' prior Notice of Termination, the Company shall pay to the Officer the
Officer's full Base Salary earned prior to the Date of Termination, any amounts
payable pursuant to Sections (4)(c) and (4)(d) hereof and any benefits or
amounts payable under any deferred compensation plan in which the Officer had
been a participant, and, provided that the Company is not in default of any of
its obligations hereunder, the Company shall have no further obligation to the
Officer under this Agreement or on account of, or arising out of, the
termination of the Officer's employment.
(d) If the Company terminates the Officer's employment
hereunder without Cause, or if the Officer terminates the Officer's employment
hereunder on account of a Breach by the Company:
(i) The Company shall pay to the Officer the
Officer's Total Compensation earned prior to the Date of Termination, any
amounts payable pursuant to Sections 4(c) and 4(d) hereof and any benefits or
amounts payable under any deferred compensation plan in which the Officer had
been a participant.
(ii) The Company shall afford the Officer the
severance benefits set forth on Schedule C attached hereto.
(iii) In lieu of any amounts payable pursuant to
Section (4)(f) hereof on account of the Officer's termination of employment, the
Company shall pay to the Officer an immediate lump sum amount equal to the
actuarial present value of a supplemental retirement benefit, expressed in the
form of a single life annuity beginning at the Officer's termination of
employment (or age 55, if later), equal to the excess if any of (A) less (B),
where (A) is 2.0% (.020) of the Officer's highest three-year average Total
Compensation times the number of years
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at termination (not to exceed thirty) of the Officer's service as an employee of
the Company, and (B) is the benefit payable under the Company's Pension Plan at
the Officer's termination of employment (or age 55, if later). The actuarial
present value of such supplemental retirement benefit shall be calculated on the
basis of the annual yield on thirty-year United States Treasury bonds on the
final business day of the month preceding the Date of Termination of the
Officer's employment and the 1983 Group Annuity table.
(iv) The payment to, and acceptance by, the Officer
of any sum of money or benefit prescribed in this Section (6)(d) shall effect
and evidence a release by the Officer of any and all claims against the Company
on account of, or arising out of, the termination of the Officer's employment.
(7) CHANGE IN CONTROL
For purposes of this Agreement, Change in Control shall mean any of the
following events:
(a) any merger or consolidation of the Company with any
corporate shareholder of group of corporate shareholders holding twenty-five
percent (.25) or more of the Common Stock of the Company or with any other
corporation or group of corporations which is, or after such merger or
consolidation would be, or be affiliated with, a shareholder owning at least
twenty-five percent (.25) of the Common Stock of the Company; or
(b) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition to or with any shareholder or group of shareholders holding
twenty-five percent (.25) or more of the Common Stock of the Company, or any
affiliate of such shareholder or group of shareholders, of any assets of the
Company having an aggregate fair market value of $50 million or more; or
(c) the issuance or sale by the Company of any securities of
the Company to any shareholder or group of shareholders holding twenty-five
percent (.25) or more of the Common Stock of the Company, or to any affiliate of
such shareholder or group of shareholders, in exchange for cash, securities or
other consideration having an aggregate fair market value of $50 million or
more; or
(d) the implementation of any plan or proposal for the
liquidation or dissolution of the Company proposed by or on behalf of any
shareholder or group of shareholders owning at least twenty-five percent (.25)
of the Common Stock of the Company, or any affiliate of such shareholder or
group of shareholders; or
(e) any reclassification of securities (including a reverse
stock split), or recapitalization of the Company or any other transaction which
has the effect, directly or indirectly,
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of increasing the proportionate share of outstanding shares of any class of
equity securities, or securities convertible into any equity securities, of the
Company, which is directly or indirectly owned by a shareholder or group of
shareholders owning at least twenty-five percent (.25) of the Common Stock of
the Company, or any affiliate of such shareholder or group of shareholders.
The Board of Directors of the Company may, from time to time, by the
affirmative vote of not less than a majority of the entire membership of said
Board of Directors, at a meeting of said Board of Directors called and held for
the purpose, modify the phrase "twenty-five percent (.25)" in one or more of the
foregoing Sections (7)(a), (7)(b), (7)(c), (7)(d) and/or (7)(e) to a lesser
percentage, but not less than twenty percent (.20).
(8) ADDITIONAL CONSEQUENCES OF A CHANGE IN CONTROL
(a) In the event that a Change in Control has been approved by
all necessary shareholder, creditor and regulatory actions, the Company will,
not later than the day prior to the date of the Change in Control, pay to the
Trustee of The United Illuminating Company Supplemental Retirement Benefit Trust
established pursuant to the Agreement, made as of the 1st day of June, 1995
between the Company and State Street Bank and Trust Company, as Trustee, for the
benefit of the Officer, cash in an amount equal to: (A) In the event that the
Officer's employment has been terminated or will be terminated prior to the date
of the Change in Control, a sum, calculated by the Company's independent
certified public accountants, reasonably sufficient to pay and discharge the
Company's future obligations, if any, to the Officer and/or his personal
representative and/or spouse, under Section (6)(a), Section (6)(b) or Section
(6)(d) hereof; or (B) in the event that the Officer's employment has not been
terminated and will not be terminated prior to the date of the Change in
Control, a sum, calculated by the Company's independent certified public
accountants, reasonably sufficient to pay and discharge the Company's
obligations to the Officer under Section (6)(d) hereof assuming, for purposes of
such calculation, that the Officer's employment is terminated under said Section
(6)(d) by a Notice of Termination delivered on the date of the Change in Control
and specifying an immediate Date of Termination.
(b) On and after the date of the Change in Control, the
Officer's Base Salary may not be reduced by the Board of Directors to an annual
rate less than the rate fixed by the Board of Directors of the Company as a
result of its most recent review of salary rates, pursuant to Section (4)(a)
hereof, prior to the date of the Change in Control.
(9) TAX SAVINGS PROVISION
If any portion of the payments which the Officer has the right to
receive from the Company, or any affiliated entity,
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hereunder would constitute "excess parachute payments" (as defined in Section
280G of the Internal Revenue Code, and not governed by the terms defined in this
Agreement) subject to the excise tax imposed by Section 4999 of the Internal
Revenue Code, such excess parachute payments shall be reduced to the largest
amount that will result in no portion of such excess parachute payments being
subject to the excise tax imposed by Section 4999 of the Internal Revenue Code.
(10) SUCCESSORS; BINDING AGREEMENT
(a) The Company shall pay to the Officer and/or the Officer's
personal representative and/or spouse all legal fees and expenses and court
costs, if any, incurred by the Officer and/or the Officer's representative
and/or spouse in successful litigation to enforce the Officer's rights under
this Agreement.
(b) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company, by agreement in form
and substance reasonably satisfactory to the Officer, to expressly assume and
agree to perform this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such succession had taken
place. Failure of the Company to obtain such agreement by the effectiveness of
any such succession shall be a breach of this Agreement and shall entitle the
Officer to compensation from the Company in the same amount and upon the same
terms as the Officer would be entitled to hereunder if the Officer terminated
the Officer's employment upon Breach by the Company, except that, for purposes
of implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination. As used in this Agreement,
the term "the Company" shall include The United Illuminating Company, any parent
and any successor to the business or assets of either as aforesaid which
executes and delivers the agreement provided for in this Section (10) or which
otherwise becomes bound by all the terms and provisions of this Agreement by
operation of law.
(c) This Agreement and all rights of the Officer hereunder
shall inure to the benefit of and be enforceable by the Officer's personal or
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Officer should die while any amounts
would still be payable to the Officer hereunder if the Officer had continued to
live, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to the Officer's devisee, legatee or
other designee or, if there be no such designee, to the Officer's estate.
(11) NOTICE
For the purpose of this Agreement, notices and all other communications
to either party hereunder provided for in the
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Agreement shall be in writing and shall be deemed to have been duly given when
delivered or mailed by United States certified or registered mail, return
receipt requested, postage prepaid, addressed, in the case of the Company, to
The United Illuminating Company, 000 Xxxxxx Xxxxxx, Xxx Xxxxx, Xxxxxxxxxxx,
Attention: Secretary, or, in the case of the Officer, to the Officer at 000
Xxxxxx Xxxxxx, Xxx Xxxxx Connecticut, or to such other address as either party
shall designate by giving written notice of such change to the other party.
(12) MISCELLANEOUS
(a) No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is approved by the
Board of Directors of the Company and agreed to in a writing signed by the
Officer and such officer of the Company as may be specifically authorized by the
Board of Directors of the Company. No waiver by either party hereto at any time
of any breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of any similar or dissimilar provisions or conditions at the same or at
any prior or subsequent time. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof have
been made by either party that are not set forth expressly in this Agreement.
The validity, interpretation, construction and performance of this Agreement
shall be governed by the laws of the State of Connecticut.
(b) Exhibits A-1 and A-2 attached hereto, showing calculations
of supplemental retirement benefits under Section (4)(f), and Exhibit B attached
hereto, showing a calculation of a lump sum payment under Section (6)(d)(iii),
are incorporated herein by reference and set forth, by example, the parties'
intended interpretation and application of such Sections.
(13) VALIDITY
The validity or unenforceability of any provision or provisions of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
(14) SURVIVAL
The provisions of this Agreement shall not survive the termination of
this Agreement or of the Officer's employment hereunder, except that the
provisions of Sections (4), (6), (8), (9), (10), and (11) hereof shall survive
such termination and shall be binding upon the Company's successors and assigns.
(15) COUNTERPARTS
This Agreement may be executed in one or more counterparts,
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each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date and year first above written.
Attest: THE UNITED ILLUMINATING COMPANY
/s/ Xxxx Xxxxxxx By: /s/ Xxxxxxx X. Xxxxxx
---------------------- -------------------------------------
Secretary Chairman of the Board of Directors
and Chief Executive Officer
/s/ Xxxxxxx X. Xxxxxxxx
-------------------------------------
Xxxxxxx X. Xxxxxxxx
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EXHIBIT A-1
To
EMPLOYMENT AGREEMENT
BETWEEN
THE UNITED ILLUMINATING COMPANY
AND
XX. XXXXXXX XXXXXXXX
--------------------
Sample calculation of supplemental retirement benefits under Section (4)(f).
Assume the Officer retires upon the termination of his employment and
immediately commences his Pension Plan benefits under the following facts:
(1) Retirement Age 55 (September 1, 1990)
--------------------------
(2) Actual Service with the Company 33 years 3 months (9/1/90)
--------------------------
(3) Service with the Company 33 years 3 months (9/1/90)
--------------------------
(4) Three-year average Total Compensation See Calculations Below
--------------------------
Projected Earnings at age 54 $143,580
Projected Earnings at age 53 136,095
Estimated Earnings at age 52 129,000 3-year average - $136,225
Estimated Earnings at age 51 122,275
Estimated Earnings at age 50 115,900 5-year average - $129,370
(A) Target Benefit at Age 55
----------------------------
1. 2.0% of 3-year average earnings times Service (Up to 30 years)
(.020) x ($136,225) x (30) $81,735
2. Early Retirement Reduction Factor (based on Service) .561
------
3. Target Benefit at Age 55: 1 times 2 45,853
(B) Pension Benefit at Age 55
-----------------------------
1. Quantity A $10,000
2. Quantity B 119,370
3. Quantity C 129,370
4. 1% of Quantity A plus 2% of Quantity B: 2,487
5. Service with the Company (up to 25 years) 25
6. 4 time 5 62,175
7. 1/2% of Quantity C (up to $13,000) 65
8. Service with the Company in excess of 25 years 8.25
9. 7 times 8 536
10. Pension unreduced at age 55: 6 plus 9 62,711
11. Early Retirement Reduction Factor (based on Service) .561
12. Pension payable at age 55: 10 times 11 35,181
13. Supplemental Pension: A3-B12 10,672
EXHIBIT A-2
To
EMPLOYMENT AGREEMENT
BETWEEN
THE UNITED ILLUMINATING COMPANY
AND
XX. XXXXXXX XXXXXXXX
--------------------
Sample calculation of supplemental retirement benefits under Section (4)(f).
Assume the Agreement terminates but the Officer continues to be employed by the
Company for 2 years thereafter before retiring and commencing his Pension Plan
benefits under the following facts:
(1) Retirement Age 57 (September 1, 1992)
--------------------------
(2) Service with the Company
(a) Before Expiration of Agreement 33 years 3 months
--------------------------
(b) After Expiration of Agreement 2 years
--------------------------
(c) Total 35 years 3 months (9/1/92)
--------------------------
(3) Three-year average total Compensation See Calculations Below
--------------------------
Projected Earnings at age 56 $159,808
Projected Earnings at age 55 151,477
Estimated Earnings at age 54 143,580 3-year average - $151,622
Estimated Earnings at age 53 136,095
Estimated Earnings at age 52 129,000 5-year average - $143,992
(A) Target Benefit at Age 57
----------------------------
1. 2.0% of 3-year average earnings times Service (Up to 30 years)
(.020) x ($151,622) x (30) $90,973
2. Early Retirement Reduction Factor (based on Service) .655
------
3. Target Benefit at Age 55: 1 times 2 59,587
(B) Pension Benefit at Age 57
-----------------------------
1. Quantity A $10,000
2. Quantity B 133,992
3. Quantity C 143,992
4. 1% of Quantity A plus 2% of Quantity B: 2,780
5. Service with the Company (up to 25 years) 25
6. 4 times 5 69,500
7. 1/2% of Quantity C (up to $13,000) 65
8. Service with the Company in excess of 25 years 10.25
9. 7 times 8 666
10. Pension unreduced at age 57: 6 plus 9 70,166
11. Early Retirement Reduction Factor (based on Service) .655
12. Pension payable at age 57: 10 times 11 45,959
13. Supplemental Pension: A3-B12 13,628
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EXHIBIT B
To
EMPLOYMENT AGREEMENT
BETWEEN
THE UNITED ILLUMINATING COMPANY
AND
XX. XXXXXXX XXXXXXXX
--------------------
Sample calculation of lump sum payment in lieu of supplemental retirement
benefit under Section (6)(d)(iii). Assume the Officer's employment terminates
and Section (6)(d) applies under the following facts:
Assume the Officer retires upon the termination of his employment and
immediately commences his Pension Plan benefits under the following facts:
(1) Age of Executive at Termination 53 (May 31, 1988)
--------------------------
(2) Service with the Company 31 years (5/31/88)
--------------------------
(3) Three-year average Total Compensation See Calculations Below
--------------------------
Projected Earnings at age 53 $136,095
Estimated Earnings at age 52 129,000
Estimated Earnings at age 51 122,275 3-year average = $129,123
Estimated Earnings at age 50 115,900
Estimated Earnings at age 49 109,858 5-year average = $122,626
(A) Target Benefit at Age 51
----------------------------
1. 2.0% of 3-year average earnings times Service (Up to 30 years)
(.020) x ($129,123) x (30) $77,474
2. Early Retirement Reduction Factor (based on Service) 1.000
------
3. Target Benefit at Age 51: 1 times 2 77,474
(B) Pension Benefit at Age 55
-----------------------------
1. Quantity A $10,000
2. Quantity B 112,626
3. Quantity C 122,626
4. 1% of Quantity A plus 2% of Quantity B: 2,353
5. Service with the Company (up to 25 years) 25
6. 4 times 5 58,825
7. 1/2% of Quantity C (up to $13,000) 65
8. Service with the Company in excess of 25 years 6
9. 7 times 8 390
10. Pension unreduced at age 55: 6 plus 9 59,215
11. Early Retirement Reduction Factor (based on Service) .561
12. Pension payable at age 55: 10 times 11 33,220
13. Supplemental Pension: A3-B12 44,254
14. Annuity Factor for Determining Lump Sum Value at age 55 10.3880
15. Lump Sum Value at age 55: 13 times 14 459,711
16. Interest discount factor from age 55 to age 53 (based on 7-1/2%) .8653
17. Lump Sum Value at age 55, discounted to age 53 15 times 16 397,788
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SCHEDULE C
Severance Benefits
------------------
At the option of the Officer, exercised by written notice to the Company, the
benefits of either (A) or (B) below will be afforded the Officer:
(A) a lump sum payment in an amount equal to the product of (X) multiplied by
(Y), where:
(X) is the sum of one-twelfth of the Officer's annual salary rate
approved by the Board of Directors of the Company at the time of
its most recent review of the salary rates of all of the
Company's officers, plus one-twelfth of the cash award(s) that
the Officer would earn under the short-term incentive
compensation program(s) in which the Officer is a participant on
the date of the termination of the Officer's employment, assuming
that all of the Officer's program goals for the performance
period are achieved at the target level; and
(Y) is the number of whole and partial years (not to be less than 12
nor more than 24) of the Officer's service deemed as an employee
of the Company on the date of termination of the Officer's
employment.
(B) The Officer's choice of the addition of six years of age, or six years of
service deemed as an employee of the Company, or any combination (not to
exceed 6) of whole and partial years of age and whole and partial years of
service deemed as an employee of the Company, in the calculation of the
benefits payable to the Officer under the Company's retiree medical benefit
plan(s) and in the calculation of the benefits payable to the Officer as a
supplemental retirement benefit under his Employment Agreement.
Exhibits C-1 and C-2 attached hereto, showing calculations of supplemental
retirement benefits under Schedule C, paragraph (B), set forth, by example, the
parties' intended interpretation and application of said paragraph.
EXHIBIT C-1
TO
EMPLOYMENT AGREEMENT
BETWEEN
THE UNITED ILLUMINATING COMPANY
AND
XX. XXXXXXX XXXXXXXX
--------------------
Sample calculation of supplemental retirement benefits under Schedule A
paragraph (B).
Assume the Officer retires on the date of termination of employment based on the
following facts:
Actual Date of Termination 4/1/97
Actual Age of Officer at Termination 56
Actual Years of Service at Termination 30
Enhanced Age of Officer at Termination 62 (+6 years)
Enhanced Years of Service at Termination 30 (+0 years)
Three Year Average Total Compensation $140,000
(A) The retirement benefit calculated in accordance with Company's Pension
Plan, but with the addition of six years of age.
Gross Pension (Attachment A-1-1) $67,605.84
Reduction for Early Retirement Age: 62 years (.0000) 0.00
---------
Net Annual Pension $67,605.84
(B) The benefit payable to the Officer under the Company's Pension Plan at the
age of 56.
Gross Pension (Attachment A-1-2) $67,611.44
Reduction for Early Retirement Age 56 (.3950) 26,706.52
---------
Net Annual Pension $40,904.92
Supplemental Retirement Benefit
(A) - (B) = ($67,605.84) - ($40,904.92) = $26,700.92
Attachment A-1-1
THE UNITED ILLUMINATING COMPANY
-------------------------------
NAME: ENHANCED AGE 62
S.S. NUMBER: - -
AGE AT RETIREMENT: 62 YRS. AND 0 MOS.
YEARS OF SERVICE: 30 YRS. AND 0 MOS.
VESTED PERCENTAGE: 100%
PREPARER'S NAME:
DATE PREPARED: 4/03/97
BENEFIT CALCULATION
------------------------------------- ANNUAL
AMOUNT
--------
A1 = 1024.00 FIRST 25 YEARS OF PARTICIPATION:
1.0% X 25.0000 X 12076.66 = $ 3019.17
A2 = 407.00 (NO. OF YRS.) (QUANTITY A)
A = 4800XA1/A2 2.0% X 25.0000 X 127923.34 = 63961.67
= 12076.66 (NO. OF YRS.) (QUANTITY B)
B = 127923.34 YEARS OF PARTICIPATION IN EXCESS OF 25:
.5% X 5.0000 X 25000.00 = 625.00
C = 140000.00 (NO. OF YRS.) (QUANTITY C - MAXIMUM
OF 25000.00) --------
GROSS PENSION = $67605.84
========
Attachment A-1-2
THE UNITED ILLUMINATING COMPANY
-------------------------------
NAME: ENHANCED AGE 56
S.S. NUMBER: - -
AGE AT RETIREMENT: 56 YRS. AND 0 MOS.
YEARS OF SERVICE: 30 YRS. AND 0 MOS.
VESTED PERCENTAGE: 100%
PREPARER'S NAME:
DATE PREPARED: 4/03/97
BENEFIT CALCULATION
------------------------------------ ANNUAL
AMOUNT
------
A1 = 1223.00 FIRST 25 YEARS OF PARTICIPATION:
l.0% X 25.0000 X 12054.21 = $ 3013.55
A2 = 487.00 (NO. OF YRS.) (QUANTITY A)
A = 4800XA1/A2 2.0% X 25.0000 X 127945.79 = 63972.89
= 12054.21 (NO. OF YRS.) (QUANTITY B)
B = 127945.79 YEARS OF PARTICIPATION IN EXCESS OF 25:
.5% X 5.0000 X 25000.00 = 625.00
C = 140000.00 (NO. OF YRS.) (QUANTITY C - MAXIMUM
OF 25000.00) --------
GROSS PENSION = $67611.44
========
EXHIBIT C-2
TO
EMPLOYMENT AGREEMENT
BETWEEN
THE UNITED ILLUMINATING COMPANY
AND
XX. XXXXXXX XXXXXXXX
--------------------
Sample calculation of supplemental retirement benefits under Schedule A
paragraph (B).
Assume the Officer terminates on the date of termination of employment and
elects to begin receiving his/her vested pension benefit at age 55 based on the
following facts:
Actual Date of Termination 4/1/97
Actual Age of Executive at Termination 50
Actual Years of Service at Termination 24
Enhanced Age of Executive at Termination 50 (+0 years)
Enhanced Years of Service at Termination 30 (+6 years)
Three Year Average Total Compensation $140,000
(A) The retirement (vested pension) benefit, payable to the Officer at age 55,
calculated in accordance with Company's Pension Plan, but with the addition
of six years of service.
Gross Vested Pension (Attachment A-2-1) $67,526.96
Reduction for Early Retirement Age: 55 years (.4390) 29,644.34
---------
Net Annual Pension $37,882.62
(B) The vested pension benefit payable to the Officer under the Company's
Pension Plan at the age of 55.
Gross Vested Pension (Attachment A-2-2) $63,876.25
Reduction for Early Retirement Age: 55 years (.5730) 36,601.09
---------
Net Annual Pension $27,275.16
Supplemental Retirement Benefit
(A) - (B) = ($37,882.62) - ($27,275.16) = $10,607.46
Attachment A-2-1
THE UNITED ILLUMINATING COMPANY
-------------------------------
NAME: ACTUAL AGE 50
S.S. NUMBER: - -
AGE AT TERMINATION: 50 YRS. AND 0 MOS.
YEARS OF SERVICE: 30 YRS. AND 0 MOS.
VESTED PERCENTAGE: 100%
PREPARER'S NAME:
DATE PREPARED: 4/03/97
BENEFIT CALCULATION
------------------------------------ ANNUAL
AMOUNT
------
A1 = 1185.00 FIRST 25 YEARS OF PARTICIPATION:
1.0% X 25.0000 X 12392.16 = $ 3098.04
A2 = 459.00 (NO. OF YRS.) (QUANTITY A)
A = 4800XA1/A2 2.0% X 25.0000 X 127607.84 = 63803.92
= 12392.16 (NO. OF YRS.) (QUANTITY B)
B = 127607.84 YEARS OF PARTICIPATION IN EXCESS OF 25:
.5% X 5.0000 X 25000.00 = 625.00
C = 140000.00 (NO. OF YRS.) (QUANTITY C - MAXIMUM
OF 25000.00) --------
GROSS PENSION = $67526.96
========
Attachment A-2-2
THE UNITED ILLUMINATING COMPANY
-------------------------------
NAME: AGE 50
S.S. NUMBER: - -
AGE AT TERMINATION: 50 YRS. AND 0 MOS.
YEARS OF SERVICE: 24 YRS. AND 0 MOS.
VESTED PERCENTAGE: 100%
PREPARER'S NAME:
DATE PREPARED: 4/04/97
BENEFIT CALCULATION
------------------------------------ ANNUAL
AMOUNT
------
A1 = 1131.00 FIRST 25 YEARS OF PARTICIPATION:
1.0% X 24.0000 X 13848.98 = $ 3323.76
A2 = 392.00 (NO. OF YRS.) (QUANTITY A)
A = 4800XA1/A2 2.0% X 24.0000 X 126151.02 = 60552.49
= 13848.98 (NO. OF YRS.) (QUANTITY B)
B = 126151.02 YEARS OF PARTICIPATION IN EXCESS OF 25:
.5% X .0000 X 25000.00 = .00
C = 140000.00 (NO. OF YRS.) (QUANTITY C - MAXIMUM
OF 25000.00) --------
GROSS PENSION = $63876.25
========
