Exhibit 10.29

 

OGE ENERGY CORP.

EXECUTIVE OFFICER COMPENSATION

 

Executive Compensation

 

In November 2006, the Compensation Committee (the “Committee”) of the OGE Energy
Corp. board of directors took actions setting executives’ salaries, target
amount of annual bonus awards and target amounts of long-term compensation
awards for 2007. Executive compensation was set by the Committee after
consideration of, among other things, individual performance and market-based
data on compensation for executives with similar duties. Payouts of 2007 annual
bonus targets and long-term awards are dependent on achievement of specified
corporate goals that will be established by the Committee at a subsequent
meeting, and no officer is assured of any payout.

 

Salary

 

The Committee established the base salaries for its senior executive group. The
salaries for 2007 for the current OGE Energy officers who are expected to be
named in the Summary Compensation Table in OGE Energy’s 2007 Proxy Statement
(the “Named Executive Officers”) are as follows:

 

Named Executive Officer

2007 Base Salary

Steven E. Moore, Chairman and Chief Executive Officer

$807,000

Peter B. Delaney, President and Chief Operating Officer

$531,000

James R. Hatfield, Senior Vice President and Chief Financial Officer

$375,000

Danny P. Harris, Senior Vice President - OGE Energy Corp. and
    Chief Operating Officer - Enogex Inc.

$305,000

Steven R. Gerdes, Vice President, Utility Operations

$210,000

 

Establishment of 2007 Annual Incentive Awards

 

As stated above, at its November 2006 meeting, the Committee approved the target
amount of annual incentive awards, expressed as a percentage of salary, with the
officer having the ability, depending upon achievement of the 2007 corporate
goals to be set by the Committee at a subsequent meeting, to receive from 0
percent to 150 percent of such targeted amount. For 2007, the targeted amount
ranged from 100 percent of salary for Mr. Moore and from 30 percent to 70
percent of salary for the other Named Executive Officers.

 

Establishment of Long-Term Awards

 

At its November 2006 meeting, the Committee also approved the level of target
long-term incentive awards, expressed as a percentage of salary, with the
officer having the ability to receive from 0 percent to 200 percent of such
targeted amount at the end of a three-year performance period depending upon
achievement of the corporate goals to be set by the Committee at a subsequent
meeting. For 2007, the targeted amount ranged from 150 percent of salary for Mr.
Moore and from 35 percent to 120 percent for the other Named Executive Officers.

 

Other Benefits

 

Retirement Benefits. Virtually all of our employees, including executive
officers, are eligible to participate in our pension plan and our supplemental
restoration plan that enables employees, including executive officers, to
receive the same benefits that they would have received under our pension plan
in the absence of limitations imposed by the federal tax laws. In addition, a
Supplemental Executive Retirement Plan (the “SERP”), which was adopted in 1993,
offers supplemental pension benefits to specific lateral hires. Mr. Delaney is
the only executive officer who participates in the SERP. Mr. Delaney’s
participation in the SERP was the result of arms-length bargaining between Mr.
Delaney and the Company at the time of his hire in April 2002 as Executive Vice
President of the Company.

 

Almost all employees of the Company, including the executive officers, also are
eligible to participate in our tax-qualified defined contribution savings plan
(the “Retirement Savings Plan”). Under the Retirement Savings Plan, participants
may contribute between two percent and 19 percent of their compensation.
Participants may designate, at their discretion, all or any portion of their
contributions as: (i) a before-tax contribution under Section 401(k) of the
Internal Revenue Code (the

 

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“Code”) subject to the limitations thereof; or (ii) a contribution made on an
after-tax basis. The Company will match, depending upon the participant’s years
of service and date of initial participation, 50 percent, 75 percent or 100
percent of the first six percent of compensation. Participants’ contributions
are fully vested and non-forfeitable. The Company match contributions vest over
a six-year period. After two years of service, participants become 20 percent
vested in their Company contribution account and vest an additional 20 percent
for each subsequent year of service. In addition, participants fully vest when
they are eligible for normal or early retirement under the Company’s pension
plan, in the event of their termination due to death, permanent disability or
upon attainment of age 65 while employed by the Company or its affiliates.

 

The Company has a nonqualified deferred compensation plan that allows key
employees, including all executive officers, to defer compensation above
government limitations on 401(k) contributions that apply to the Company’s
qualified Retirement Savings Plan and to defer taxation on all earnings on
compensation deferred into the plan. Under the terms of the nonqualified
deferred compensation plan, participants have the opportunity to elect to defer
each year up to 70% of their base salary and up to 100% of their bonus.

 

The Company matches deferrals to make up for any match lost in the Retirement
Savings Plan because of deferrals to the deferred compensation plan, and to
allow for a match on that portion of the first 6% of total compensation deferred
that exceeds the limits allowed in the Retirement Savings Plan. Matching credits
vest based on years of service, with full vesting after six years or, if
earlier, on retirement, disability, death, a change in control of the Company or
termination of the plan.

 

Deferrals, plus any Company match, are credited to a special recordkeeping
account in the participant’s name. Earnings on the deferrals are indexed to the
assumed investment funds selected by the participant. For 2006, those investment
fund options included an OGE Energy common stock fund and various money market,
bond and equity funds.

 

Normally, payments under the deferred compensation plan begin within one year
after retirement. For these purposes, normal retirement age is 65 and the
minimum age to qualify for early retirement is age 55 with at least five years
of service. Benefits will be paid, at the election of the participant, either in
a lump sum or a stream of annual payments for up to fifteen years, or a
combination thereof. Participants whose employment terminates before they
qualify for retirement benefits will receive their vested account balance in one
lump sum following termination. Participants also will be entitled to pre- and
post-retirement survivor benefits. If the participant dies while in employment
before retirement, his or her beneficiary will receive a payment of the account
balance plus a supplemental survivor benefit equal to two times the total amount
of base salary and bonuses deferred under the plan. If the participant dies
following retirement, his or her beneficiary will continue to receive the
remaining vested account balance. Additionally, eligible surviving spouses will
be entitled to a lifetime survivor annuity payable annually. The amount of the
annuity is based on 50% of the participant’s account balance at retirement, the
spouse’s age and actuarial assumptions established by the Company’s Benefits
Committee.

 

At any time prior to retirement, a participant may withdraw all or part of
amounts attributable to his or her vested account balance at December 31, 2004,
subject to a penalty of 10% of the amount withdrawn. In addition, at the time of
the initial deferral election, a participant may elect to receive one or more
in-service distributions on specified dates without penalty. Hardship
withdrawals, without penalty, of amounts attributable to a participant’s vested
account balance as of December 31, 2004 may also be permitted at the discretion
of the Company’s benefits committee.

 

Perquisites. The Company also provides executive officers with a limited amount
of perquisites. These include up to $7,500 annually for tax and financial
planning services, reimbursement of dues at luncheon and country clubs, and, in
the case of Mr. Moore, a leased car.

 

Change-of-Control Provisions. The Company and OG&E also have entered into
employment agreements with each officer of the Company and OG&E. Under the
agreements, the officer is to remain an employee for a three-year period
following a change of control of the Company (the “Employment Period”). During
the Employment Period, the officer is entitled to (i) an annual base salary in
an amount at least equal to his or her base salary prior to the change of
control, (ii) an annual bonus in an amount at least equal to his or her highest
bonus in the three years prior to the change of control; and (iii) continued
participation in the incentive, savings, retirement and welfare benefit plans.
The officer also is entitled to payment of expenses and provision of fringe
benefits to the extent paid or provided to (a) such officer prior to the change
of control or (b) if more favorable, other peer executives of the Company.

If, during the Employment Period, the officer’s employment is terminated by the
employer for reasons other than cause or disability or by such officer due to a
dimunition in employment responsibilities or a substantial change in travel time
or work location, the officer is entitled to the following payments: (i) all
accrued and unpaid compensation; and (ii) a severance payment equal to 2.99
times the sum of such officer’s (a) annual base salary and (b) highest recent
annual bonus. The officer also is entitled to continued welfare benefits for
three years and outplacement services. If the payment of the

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foregoing benefits, when taken together with any other payments to the officer,
would result in the imposition of the excise tax on excess parachute payments
under Section 4999 of the Code, then the severance benefits will be reduced to
the extent no excise tax would be payable, if such reduction results in a
greater after-tax payment to the officer. The officer is entitled to receive
such amounts in a lump-sum payment within 30 days of termination. A change of
control encompasses certain mergers and acquisitions, changes in Board
membership and acquisition of securities of the Company.

 

The form of Change of Control Agreement is filed as Exhibit 10.01 to this Form
10-K.

 

In addition, pursuant to the terms of the Company’s incentive compensation
plans, upon a change of control, all stock options will vest immediately and,
for a 60-day period following the change of control, a participant may surrender
the options and receive in return a cash payment equal to the excess of the
change of control price over the exercise price; all performance units will vest
and be paid out immediately in cash as if the applicable performance goals had
been satisfied at target levels; and any annual incentive award outstanding at
the participant’s termination for any reason other than cause within 24 months
after the change of control will be paid in cash at a target level on a prorated
basis.

 

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