Exhibit 10.36

OGE ENERGY CORP.
EXECUTIVE OFFICER COMPENSATION
 
Executive Compensation
 
In December 2009, 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 2010.  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 2010 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 2010 for the current OGE Energy officers who are expected to be
named in the Summary Compensation Table in OGE Energy’s 2010 Proxy Statement
(the “Named Executive Officers”) are as follows:
 

 
Named Executive Officer
2010 Base Salary
           
Peter B. Delaney, Chairman and Chief Executive Officer
$840,000
   
Danny P. Harris, Senior Vice President and Chief Operating Officer
$562,300
   
Sean Trauschke, Vice President and Chief Financial Officer
$412,000
   
E. Keith Mitchell, Senior Vice President and Chief Operating Officer of Enogex
LLC
$331,300
   
Stephen E. Merrill, Vice President of Human Resources
$254,800
   
Scott Forbes, Controller and Chief Accounting Officer
$245,100
 

 
Establishment of 2010 Annual Incentive Awards
 
As stated above, at its December 2009 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 2010 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 2010, the targeted amount
ranged from 40 percent to 90 percent of the approved 2010 base salary for the
Named Executive Officers.
 
Establishment of Long-Term Awards
 
At its December 2009 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 2010, the targeted amount ranged from 70 percent to 225 percent of
the approved 2010 base salary for the Named Executive Officers.
 
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, a
Supplemental Executive Retirement Plan (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 qualified defined contribution retirement plan
(the “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 Internal Revenue Code subject to the
limitations
 

 
 

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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 Internal Revenue Code. The
401(k) Plan was amended in October 2009 whereby eligible employees were offered
a one-time irrevocable election (the “Choice Program”), depending on their hire
date, to select a future retirement benefit combination from the Company’s
Pension Plan and the Company’s 401(k) Plan. If employees elected under the
Choice Program to stay in the current Pension Plan and 401(k) Plan, 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 current 401(k) Plan, 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 under the Choice Program not to
stay in the current Pension Plan and 401(k) Plan, effective January 1, 2010, the
Company will contribute on behalf of each participant, depending on the option
elected under the Choice Program, 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
Program 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 2009, 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 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
 
 

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Mr. Delaney, use of a Company car.  A prior perquisite for tax and financial
planning services was discontinued by the Committee during 2007.  In reviewing
the perquisites and the benefits under the SERP, 401(k) Plan, deferred
compensation plan, Pension Plan and related restoration plan, the Committee
sought in 2009 to provide participants with benefits at least commensurate with
those offered by other utilities of comparable size.
 
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 Change of Control Agreements and Employment Agreement are filed as
Exhibits 10.31, 10.32, 10.33, 10.37 and 10.38 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 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.
 
In connection with Mr. Trauschke’s appointment in April 2009 as Vice President
and CFO, the Company and Mr. Trauschke entered into an employment arrangement,
the terms of which are summarized below. The terms of the employment arrangement
were approved by the Committee and were subject to arms-length bargaining
between Mr. Trauschke and the Company. Under his employment arrangement, Mr.
Trauschke’s initial annual base salary was set at $382,500 and he received a
cash signing bonus of $175,000, payable in two installments, of which $87,500
was paid on April 24, 2009 and $87,500 was paid on August 28, 2009. Mr.
Trauschke is obligated under the employment arrangement to repay the $175,000 if
he voluntarily resigns or is terminated by the Company for cause within two
years of his start date, which was April 24, 2009. Pursuant to the employment
arrangement, Mr. Trauschke received an annual award under the Company’s Annual
Incentive Plan with a target amount of 60 percent of his base salary. Mr.
Trauschke also received an award of two grants of performance units under his
employment arrangement, both of which are described above. Since Mr. Trauschke’s
prior employer and residence were in North Carolina, the Company also agreed,
under the employment arrangement, to reimburse Mr. Trauschke for various
relocation and related expenses, including: (i) travel expenses between North
Carolina and Oklahoma City (maximum of one round trip per week) for nine months
or, if sooner, the closing of the sale of his house in North Carolina, (ii)
expenses for two house hunting trips in the Oklahoma City area for Mr. Trauschke
and his wife, (iii) a real estate commission of six percent or less from the
sale of his house in North Carolina, within one year of Mr. Trauschke commencing
employment, (iv) moving expenses associated with moving his residence and family
to Oklahoma City and (v) interim living expenses of up to $3,000 per month for
nine months pending the sale of his residence in North Carolina. The Company is
obligated under the employment arrangement to pay Mr. Trauschke an amount equal
to 1.5 times his then annual rate of base salary if the Company terminates Mr.
Trauschke’s employment other than for cause before April 24, 2011. After January
1, 2010, all of the provisions of the arrangement with Mr. Trauschke became
subject to change by the Company, other than the foregoing provision to pay Mr.
Trauschke 1.5 times his salary for termination prior to April 24, 2011, other
than for cause.
 
 

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As noted above, the Company agreed to pay Mr. Trauschke’s travel costs of
commuting between Oklahoma City and his home in North Carolina, along with his
interim living expenses in Oklahoma City and househunting trips with his spouse,
for nine months or until the sale of his home in North Carolina.   Since the
payment of these expenses by the Company is treated as taxable income to Mr.
Trauschke, the Company also grossed-up these payments to compensate Mr.
Trauschke for the taxes owed, which is consistent with the Company’s relocation
policy for all employees.  In May, June and July 2009, these expenses averaged
approximately $8,800 per month, which, when grossed-up for taxes, resulted in a
payment by the Company of approximately $13,000 per month.  In August 2009 and
despite not having sold his house in North Carolina, Mr. Trauschke relocated his
family to Oklahoma City and the Company began paying the cost of his rental
house in the Oklahoma City area, which was $4,650 per month and substantially
less than the $8,800 per month that the Company had been paying Mr. Trauschke
for commuting and interim living expenses.  Because the $4,650 was taxable to
Mr. Trauschke, it was grossed-up for taxes, consistent with the Company’s
relocation policy for all employees, resulting in a monthly payment by the
Company of approximately $6,800.  The Company also paid Mr. Trauschke’s expenses
in moving his family and belongings to Oklahoma City, which aggregated
approximately $3,800.  Since this amount was not taxable to Mr. Trauschke, it
was not grossed-up for taxes.  Thus, for 2009, the aggregate amount paid to Mr.
Trauschke for relocation and related benefits was approximately $76,450, of
which approximately $23,450 represented gross-up payments for taxes. The
Committee and the Company believe that this practice of paying actual relocation
expenses, including, where applicable, gross-ups for taxes incurred, for
newly-hired executives is preferable to paying the executive at hiring a lump
sum intended to compensate the executive for relocation expenses.   In
recognition of Mr. Trauschke’s performance in 2009 and the depressed housing
market, the Committee at its meeting in December 2009 extended Mr. Trauschke’s
relocation benefits until the earlier to occur of June 30, 2010, or the sale of
his house in North Carolina.