Exhibit 10.18
TVA LONG TERM
DEFERRED COMPENSATION PLAN
Purpose:
The TVA Long Term Deferred Compensation Plan is designed to provide long term
incentives to executives to encourage them to stay with TVA and to provide
competitive levels of total compensation to such executives. This plan will also
assist in the recruitment of top executive talent for TVA by providing an
opportunity for significant additional tax deferred compensation. As in other
corporations, deferred compensation can be an integral part of a total
compensation package.
Eligibility:
Executives who are nominated by the Chief Officers and approved by the TVA Board
may participate in this plan.
Procedures:

•   Participating executives enter into Deferral Agreements with TVA under which
deferred compensation credits are made to an account in the participant’s name.
Credits are made on an annual basis for an established period of time after
which the full amount, with interest or return as provided below, is paid to the
participant.   •   The participant must be employed in TVA at the time of the
expiration of the Deferral Agreement, or no payment under this plan will be made
by TVA, and any credits to the participant’s account will be extinguished. This
will not apply to a separation due to death, or under other circumstances deemed
acceptable by TVA. In the event of a participant’s death, his or her account
balance shall be paid in a lump sum to such person as the participant shall have
designated in writing prior to his or her death, or in the absence of any such
designation, to the participant’s estate.   •   Interest will be credited daily
to the balance reflected in the participant’s deferral account. Interest will be
calculated on the same basis as interest is calculated under the Merit Incentive
Supplemental Retirement Income Plan (MISRIP). In the alternative, a participant
may choose to have their balance adjusted based on the return on funds selected
by the participant under the same conditions as are contained in MISRIP.   •  
The entire amount credited to the participant’s account will be paid to the
participant in a lump sum upon the expiration of the Deferral Agreement, unless
the participant

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    elects at the time the Deferral Agreement is entered into to further defer
receipt of that amount by having the balance upon expiration of the Agreement
credited to an account in his or her name in TVA’s MISRIP. Credits made in that
plan as a result of such an election will be subject to all of the provisions of
MISRIP, including the payout options specified in that plan.

Administration:

•   The Chief Officers or other officers reporting to the Board recommend
executives for participation in this plan, and also recommend the duration of
the Deferral Agreement and the amount of the yearly credit. The Board approves
the participation of individual executives as well as the amount of the credits
and the duration of the Deferral Agreement. The Chief Officers shall enter into
Deferral Agreements with participants on behalf of TVA after such approval. The
Board or the Board’s designee shall have sole and exclusive responsibility for
resolving any dispute regarding this plan or a Deferral Agreement. The decisions
of the Board or its’ designee in all matters pertaining to the plan’s operation
shall be final and conclusive as to all parties.   •   The Chief Financial
Officer shall maintain an account in the name of each participant and credit to
each account interest, return, and other such amounts as may be approved, The
Chief Financial Officer shall make payments to managers and beneficiaries
pursuant to this plan.   •   Nothing contained in this plan or any Deferral
Agreement shall be construed as conferring upon any participant the right to
continue in the employment of TVA as an executive or in any other capacity.   •
  Nothing contained in this plan or any Deferral Agreement and no action taken
pursuant to the provisions of this plan or any Deferral Agreement shall create
or be construed to create a trust of any kind, or a fiduciary relationship
between TVA and any participant, designated beneficiary or any other person.   •
  No transfer, assignment, pledge, seizure, or other voluntary or involuntary
alienation or encumbrance of any benefit provided under this plan or any
Deferral Agreement will be permitted or recognized other than as specifically
provided in this plan. In the event of any such attempted alienation or
encumbrance, the Board may in its uncontrolled discretion declare the said
benefit to be temporarily or permanently forfeited by the participant and, in
lieu of paying the same to or for the participant, may in its uncontrolled
discretion pay or apply such benefit temporarily or permanently to or for the
use of any persons who are dependents of, or are related by blood, by marriage,
or by adoption to, such participant, or the Board may in its uncontrolled
discretion cause such benefit to revert to the general funds of TVA.

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•   TVA may offset amounts owed to it by participants against amounts payable to
a participant under this plan.

Amendments:

•   This plan may be amended or discontinued by the Board at any time, except
that if the Board elects to discontinue the plan, any credits already made to
participant’s accounts as of the date of termination will be paid to the
participant at that time, with interest as calculated under this plan.

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