Exhibit 10.35

OGE ENERGY CORP.
EXECUTIVE OFFICER COMPENSATION
 
Executive Compensation
 
In December 2010, the Compensation 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
2011.  Executive compensation was set by the Compensation Committee after
consideration of, among other things, individual performance and market-based
data on compensation for executives with similar duties.  Payouts of 2011 annual
bonus targets and long-term awards are dependent on achievement of specified
corporate goals that will be established by the Compensation Committee at a
subsequent meeting, and no officer is assured of any payout.
 
Salary
 
The Compensation Committee established the base salaries for its senior
executive group.  The salaries for 2011 for the OGE Energy officers who are
expected to be named in the Summary Compensation Table in OGE Energy’s 2011
Proxy Statement are as follows:

Executive Officer
2011 Base Salary
   
Peter B. Delaney, Chairman and Chief Executive Officer
$859,300
Danny P. Harris, President and Chief Operating Officer
$582,000
Sean Trauschke, Vice President and Chief Financial Officer
$440,000
E. Keith Mitchell, Senior Vice President and Chief Operating Officer of Enogex
LLC
$337,900
Stephen E. Merrill, Vice President of Human Resources
$263,000

 
Establishment of 2011 Annual Incentive Awards
 
As stated above, at its December 2010 meeting, the Compensation 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 2011 corporate goals to be set by the Compensation Committee at a subsequent
meeting, to receive from 0 percent to 150 percent of such targeted amount.  For
2011, the targeted amount ranged from 50 percent to 90 percent of the approved
2011 base salary for the executive officers in the above table.
 
Establishment of Long-Term Awards
 
At its December 2010 meeting, the Compensation 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 Compensation Committee at a
subsequent meeting.  For 2011, the targeted amount ranged from 85 percent to 240
percent of the approved 2011 base salary for the executive officers in the above
table.
 
Other Benefits
 
Retirement Benefits.  Virtually all of our employees hired before December 1,
2009, including executive officers, are eligible to participate in our Pension
Plan and certain employees are eligible to participate in our supplemental
restoration plan that enables participants, 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, the
SERP, which was adopted in 1993, offers supplemental pension benefits to
specified lateral hires. Mr. Delaney is the only employee, including executive
officers, 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 executive officers, also are
eligible to participate in our 401(k) Plan. Under the 401(k) 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 Code
subject to the limitations thereof; or (ii) a contribution made on an after-tax
basis.   In addition, participants age 50 or older may make as a before-tax
contribution certain “catch-up” contributions as permitted under the Code. The
401(k) Plan was amended in October 2009 whereby eligible employees were provided
a choice to select a future retirement benefit combination from the Company’s
Pension Plan and the Company’s 401(k) Plan. For those employees who
 
 

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elected to stay in the Pension Plan (prior to it being amended) and 401(k) Plan
(prior to it being amended), the Company matches (other than the “catch-up
contributions”), each pay period under the 401(k) Plan, on behalf of each
participant, an amount equal to 50 percent up to six percent of compensation for
participants whose employment or re-employment date occurred before February 1,
2000 and who have less than 20 years of service, as defined in the 401(k) Plan,
and an amount equal to 75 percent up to six percent of compensation for
participants whose employment or re-employment date occurred before
February 1, 2000 and who have 20 or more years of service, as defined in the
401(k) Plan.  For participants whose employment or re-employment date occurred
on or after February 1, 2000 and before December 1, 2009 under the 401(k) Plan
(prior to it being amended), the Company contributes 100 percent up to six
percent of compensation.  For participants hired on or after December 1, 2009,
the Company contributes, effective January 1, 2010, 200 percent up to five
percent of compensation.  If employees elected not to stay in the Pension Plan
(prior to it being amended) and 401(k) Plan (prior to it being amended),
effective January 1, 2010, the Company contributes on behalf of each
participant, depending on the choice selected, 200 percent up to five percent of
compensation or 100 percent up to six percent of compensation.  Participants’
contributions are fully vested and non-forfeitable. The Company match
contributions vest over a three-year period. After two years of service,
participants become 20 percent vested in their Company contribution account and
become fully vested on completing three years 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
or permanent disability or upon attainment of age 65 while employed by the
Company or its affiliates.
 
The Company provides a nonqualified deferred compensation plan which is intended
to be an unfunded plan.  The deferred compensation plan allows key employees,
including all executive officers, to defer compensation above government
limitations on 401(k) contributions that apply to the Company’s 401(k) Plan and
to defer taxation on all earnings on compensation deferred into the plan. Under
the terms of the deferred compensation plan, participants have the opportunity
to elect to defer each year up to 70 percent of their base salary and up to 100
percent of their annual bonus awards.
 
The Company matches deferrals to make up for any match lost in the 401(k) Plan
because of deferrals to the deferred compensation plan, and to allow for a match
that would have been made under the 401(k) Plan on that portion of either the
first six percent of total compensation or the first five percent of total
compensation, depending on the option the participant elected under the choice
provided to eligible employees discussed above, deferred that exceeds the limits
allowed in the 401(k) 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. During 2010, those
investment fund options included a Company 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 15 years, or a combination
thereof. Participants whose employment terminates before they qualify for
retirement will receive their vested account balance in one lump sum following
termination as provided in the plan. 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 percent 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 percent 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 offers executive officers a limited amount of
perquisites. These include dining and country club memberships for certain
executive officers, an annual physical exam for all executive officers and, in
the case of Mr. Delaney, use of a Company car.  In reviewing the perquisites and
the benefits under the SERP, 401(k) Plan, Deferred Compensation Plan, Pension
Plan and Restoration of Retirement Income Plan, the Compensation Committee
sought in 2010 to provide participants with benefits at least commensurate with
those offered by other utilities of comparable size.
 
 
 
 

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Change-of-Control Provisions and Employment Agreements.  Each of the executive
officers has an employment agreement that provides for specified benefits upon
termination following a change of control. If an executive officer’s employment
is terminated by the Company “without cause” or by the executive for “good
reason” (as defined) following a change of control, the executive officer is
entitled to, among other things, a severance payment equal to 2.99 times the sum
of such officer’s (a) annual base salary and (b) highest recent annual bonus.
“Good reason” was defined for executives hired prior to January 1, 2009, to
include the ability of the executive to terminate voluntarily for any reason
during the 30-day period immediately following the one-year anniversary of the
change of control. This type of provision, which was eliminated for executives
hired after January 1, 2009, is sometimes called a “modified double-trigger”
because payment is made only if there is a change of control and the executive
officer’s employment is terminated. The agreements prior to January 1, 2009
utilized a modified double-trigger because the Board of Directors believed
change-of-control payments only should be made if there is a separation of
employment following a change-of-control, but also believed that the right to
voluntarily terminate for any reason within 30 days after the first anniversary
of the change of control helped ensure that the executive’s services would be
available during an important transition period. The 2.99 times multiple for
change-of-control payments was selected because at the time it was considered
standard. Although many companies also include provisions for tax gross-up
payments to cover any excise taxes on excess parachute payments, the Board of
Directors of the Company decided not to include this additional benefit in the
Company’s agreements. Instead, under the Company’s agreements if the excise tax
would be imposed, the change-of-control payments will be reduced to a point
where no excise tax would be payable, if such reduction would result in a
greater after-tax payment.

The form of Employment Agreements are filed as Exhibits 10.30, 10.31 10.32 and
10.37 to this Annual Report on Form 10-K.
 
In addition, pursuant to the terms of the Company’s incentive compensation
plans, upon a change of control, all stock options and restricted stock will
vest immediately and, for a 60-day period following the change of control,
executive officers may surrender their options and receive in return a cash
payment equal to the excess of the change of control price (as defined) 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 for the year in which the
participant’s termination occurs for any reason, other than cause, within 24
months after the change of control will be paid in cash at target level on a
prorated basis.