Ex-10.4



 





Exhibit 10.4




ALLEGHENY ENERGY, INC.




AMENDED AND RESTATED




REVISED PLAN FOR DEFERRAL OF COMPENSATION OF DIRECTORS




     1. Name and Purpose. Allegheny Energy, Inc. (the “Company”) originally established
the Revised Plan for Deferral of Compensation of Directors as of December 2, 1993 (the “Plan”).
The purpose of the Plan is to provide a means for the elective deferral of fees payable to
non-employee directors of the Company. The Plan was amended and restated effective as of October
5, 2006. The Plan is hereby again amended and restated effective as of October 4, 2007 in order to
update the Plan for certain changes in applicable law and to make certain other clarifying changes.



     2. Participation. Each member of the Company’s Board of Directors (the “Board”) who
is not an employee of the Company or any subsidiary of the Company (each a “Non-Employee Director”)
may participate in the Plan.



     3. Deferral Elections.



          3.1 Cash and Common Stock Deferral Elections. Pursuant to the terms of the Plan, a
Non-Employee Director may make an election to defer all or a portion of (i) any retainer fee
payable in cash with respect to the Non-Employee Director’s service on the Board, (ii) the Board
meeting fees and committee meeting fees payable in cash with respect to the Non-Employee Director’s
attendance at such meetings, (iii) awards of shares of common stock of the Company (“Common Stock”)
made to the Non-Employee Director pursuant to the terms of the Company’s Non-Employee Director
Stock Plan (the “Stock Plan”) or otherwise (except that stock awards made pursuant to the
Company’s Restricted Stock Plan for Outside Directors are not eligible for deferral under the
Plan), and (iv) other cash or non-cash fees paid to Non-Employee Directors (collectively, “Fees”).
A Non-Employee Director may make a separate deferral election with respect to the portion of the
Fees payable in cash and the portion of the Fees payable in Common Stock.




          3.2 Timing and Effect of Elections. Each initial deferral election and each change to
(or revocation of) an existing deferral election shall be made by the submission of a written
election form to the Secretary of the Company (or its authorized delegate) as follows:




               (a) Annual Deferral Election. By December 31 of any calendar year, each Non-Employee
Director may make a deferral election that will be given effect with respect to Fees earned by the
Non-Employee Director for the succeeding calendar year. If a Non-Employee Director does not make a
deferral election by December 31, no Fees will be deferred for the succeeding calendar year.



               (b) Deferral Election for New Non-Employee Directors. Each Non-Employee Director
first elected or appointed to the Board during a calendar year may make a deferral election within
30 days of commencing service as a Non-Employee Director. This



1









 




election will be given effect with respect to Fees earned by the Non-Employee Director after
the date of the election.




               (c) Duration, Change or Revocation of Deferral Election. A Non-Employee Director may
change or revoke an annual deferral election at any time before the calendar year for which the
election will be given effect. Once a calendar year for which an annual election will be given
effect begins, a Non-Employee Director’s election shall be irrevocable. Once made, a new
Non-Employee Director may not change or revoke a deferral election made during a calendar year.
Any deferral election shall apply only to the deferrals for the calendar year for which the
election is made and shall not apply to Fees earned (or, in the case of an election to defer
dividends, dividends paid) in subsequent calendar years.



     4. Maintenance of Deferral Accounts.



          4.1 Deferral Account for Fees Payable in Common Stock. The Company shall establish
and maintain a recordkeeping deferral account (the “Stock Account”) for each Non-Employee Director
who elects to defer a portion of the Fees attributable to grants of Common Stock under the Stock
Plan for a particular calendar year. The Non-Employee Director’s Stock Account shall be credited
with the number of shares of Common Stock (but not actual shares of Common Stock) deferred by the
Non-Employee Director at the end of each calendar quarter. In addition, at the end of each
calendar quarter, the Stock Account shall be credited with Dividend Equivalents (as defined below),
if any.




          4.2 Deferral Accounts for Fees Payable in Cash. The Company shall establish and
maintain recordkeeping deferral accounts for each Non-Employee Director who elects to defer a
portion of the Fees payable in cash as follows:




               (a) Cash Deferral Account. A Non-Employee Director may elect to have all or a portion
of the Fees payable to him in cash for a particular calendar year credited to a cash deferral
account (the “Cash Deferral Account”). Any such amounts shall be credited to the Cash Deferral
Account on the 15th of the calendar month following the date the Fees otherwise would have been
paid to the Non-Employee Director, or if the 15th is a non-business day, the next following
business day of the month. In addition, at the end of each calendar quarter, the Cash Deferral
Account shall be credited with interest (compounded monthly based on the average daily outstanding
balance) at a rate equivalent to the prime rate of interest as published by the Federal Reserve at
the beginning of such calendar quarter.



               (b) Stock Unit Account. A Non-Employee Director may elect to have all or a portion of
the Fees payable to him in cash credited to a stock unit account (the “Stock Unit Account”). Any
such amounts shall be credited to the Stock Unit Account on the 15th of the calendar month
following the date the Fees otherwise would have been paid to the Non-Employee Director or if the
15th is a non-business day, the next following business day of the month. Any amount credited to
the Stock Unit Account shall be deemed to be invested in a number of units of Common Stock obtained
by dividing such amount by the Market Value Per Share (as defined below) as of the day such amounts
are credited to the Stock Unit Account. Further, the Stock Unit Account shall be credited on the
last day of each calendar quarter with
Dividend Equivalents, if any.



2









 





               4.3 Election Rules. Any election made by a Non-Employee Director under this Section 4
shall be subject to the same timing and effect requirements that apply to deferral elections as set
forth in Section 3.2. Further, any election made by a Non-Employee Director under this Section 4
shall apply only to the deferrals for the calendar year for which the election is made and, as
such, a Non-Employee Director shall not be permitted to make an election under this Section 4 for
amounts deferred in a prior calendar year, other than that described in Section 6.1.



               4.4 Dividend Equivalents. Each Non-Employee Director who elects to defer amounts to
his Stock and/or Stock Unit Account shall also be entitled to receive additional credits for each
dividend declared by the Company until such time as his Stock and/or Stock Unit Account is
distributed to him (“Dividend Equivalents”). The amount of any such Dividend Equivalents shall be
equal to: (1) in the case of a cash dividend or a dividend paid in property (other than shares of
Common Stock), the number of shares or units of Common Stock determined by dividing (A) the amount
of any cash dividend (or the fair market value of a dividend paid in property, other than a
dividend paid in Common Stock) which the Non-Employee Director would have received if on the
payment date for such dividend the Non-Employee Director had been the owner of record of a number
of shares of Common Stock (or units) then credited to the Non-Employee Director’s Stock and/or
Stock Unit Accounts by (B) the Market Value Per Share (as defined below) as of such payment date;
and (2) in the case of a stock dividend, the number of full and fractional shares of Common Stock
which the Non-Employee Director would have received if on the payment date for a dividend which is
to be paid in Common Stock, the Non-Employee Director had been the owner of record of a number of
shares of Common Stock (or units) then credited to the Non-Employee Director’s Stock and/or Stock
Unit Accounts.



               4.5 Definition of Market Value Per Share. For purposes of the Plan, the term “Market
Value Per Share” shall mean the average of the highest and the lowest sale price per share on the
date of reference for shares of Common Stock as reported on the New York Stock Exchange on such
date (or, if such date shall not be a business day, the next preceding day which shall be a
business day). If no sale occurs on such date, the Market Value Per Share shall be determined, in
the manner described above, as of the first preceding business day on which a sale occurs.



               4.6 Changes in Capitalization. A Non-Employee Director’s Stock Account and Stock Unit
Account shall be appropriately adjusted for any change in the Common Stock by reason of any stock
dividend, stock split, combination or exchange of shares, merger, consolidation or other change in
capitalization with a similar substantive effect on the Common Stock and the Plan.



     5. Beneficiary Designation. Each Non-Employee Director may, at any time, designate a
“Beneficiary” or “Beneficiaries” to receive amounts credited to the Non-Employee Director’s
deferral accounts in the event of the Non-Employee Director’s death. A Non-Employee Director may
make an initial Beneficiary designation, or change an existing Beneficiary designation, by
completing and signing a Beneficiary designation form and



3









 







submitting it to the Secretary of the Company (or its authorized delegate). Upon receipt by the
Secretary of the Company of a Non-Employee Director’s Beneficiary designation form, all Beneficiary
designations previously filed shall automatically be canceled. In the absence of an effective
Beneficiary designation, amounts credited to a Non-Employee Director’s deferral accounts as of his
death shall be paid to the person(s) legally entitled to such amount under the Non-Employee
Director’s will or, if none, to the Non-Employee Director’s estate.



     6. Distribution of Deferrals.



          6.1 Distribution Election. At the time that a Non-Employee Director makes an election
to defer Fees for a particular calendar year as described in Section 3, the Non-Employee Director
shall make an irrevocable distribution election to have the Fees deferred for such calendar year
(and any interest or Dividend Equivalents accrued thereon) distributed to him in a single lump sum
payment as soon as administratively practicable, but in no event later than 30 days, after: (i) the
first day of a calendar year that is no less than 12 months and a day from the date of the
distribution election, or (ii) the date that the Non-Employee Director experiences a separation
from service with the Company. In the event that a Non-Employee Director fails to make the
election provided in the preceding sentence, such Non-Employee Director shall be deemed to have
made an election to receive the payment described in clause (ii) of the preceding sentence. For
purposes of the Plan and this Section 6.1, a Non-Employee Director shall be determined to have
experienced a separation from service with the Company when the Non-Employee Director ceases to be
a member of the Board for any reason other than death, including resignation, removal or failure to
be re-elected, such determination to be made in accordance with Section 409A of the Internal
Revenue Code of 1986, as amended (the “Code”) and its corresponding regulations and related
guidance.




          6.2 Form and Amount of Distribution. Any distribution of Fees deferred to a
Non-Employee Director’s Cash Deferral Account for a particular calendar year shall be paid in cash
and the amount of such distribution shall be equal to the Fees deferred for such calendar year and
any interest accrued thereon up to the distribution date elected by the Non-Employee Director in
accordance with Section 6.1. Any distribution of Fees deferred to a Non-Employee Director’s Stock
Unit Account for a particular calendar year shall be paid in cash and the amount of such
distribution shall be equal to (i) the number of units credited to the Stock Unit Account for Fees
deferred by the Non-Employee Director for such calendar year (and any Dividend Equivalents credited
with respect to such units) as of the distribution date elected by the Non-Employee Director in
accordance with Section 6.1, multiplied by (ii) the Market Value Per Share as of the distribution
date elected by the Non-Employee Director in accordance with Section 6.1. Any distribution of Fees
deferred to a Non-Employee Director’s Stock Account for a particular calendar year shall be paid in
the form of shares of Common Stock from the Company’s Stock Plan (except that any fraction of a
share of Common Stock shall be paid in cash) and the number of shares of Common Stock paid shall be
equal to the number of shares of Common Stock credited to the Stock Account for Fees deferred by
the Non-Employee Director for such calendar year (and any Dividend Equivalents credited with
respect to such shares).




          6.3 Death. If a Non-Employee Director should die before full payment of the balance
in his accounts, the remaining balance shall be paid in a lump sum to his or her



4









 






designated Beneficiaries or his estate in accordance with Section 5. Such payment shall be
made within the 60-day period following the date of a Non-Employee Director’s death.




     7. Special Deferral and Payment Elections. Notwithstanding any other provision of the
Plan to the contrary, in accordance with the special transition relief issued pursuant to Section
409A of the Code and the procedures established by the Board (or its authorized delegate), but no
later than December 31, 2007, Non-Employee Directors shall be offered the opportunity to make new
deferral and payment elections for Fees (and any dividends declared with respect thereto) deferred
under the Plan.



     8. Unfunded Status of the Plan. A Non-Employee Director shall not have any interest
in any amount credited to his deferral accounts until it is distributed in accordance with the
Plan. Distributions under the Plan shall be made only from the general assets of the Company. All
amounts deferred under the Plan shall remain the sole property of the Company, subject to the
claims of its general creditors and available for its use for whatever purposes are desired. With
respect to amounts deferred, a Non-Employee Director is a general creditor of the Company and the
obligation of the Company hereunder is purely contractual and shall not be funded or secured in any
way.



     9 Administration. Subject to all applicable legal requirements, including without
limitation, compliance with securities, tax or other laws, or rules, regulations or regulatory
interpretations thereof, applicable to the Plan, the Plan shall be administered by the Board (or
Board Committee as designated by the Board), which shall have the sole authority to construe and
interpret the terms and provisions of the Plan. The Board (or its authorized delegate) shall
maintain records and disburse payments or shall cause such records to be maintained and payments to
be disbursed. The Board’s interpretations, determinations, regulations and calculations shall be
final and binding on all persons and parties concerned. The Board may adopt, amend and rescind
such rules and regulations as it deems necessary, desirable or appropriate in administering the
Plan, and the Board may act at a meeting, in a written action without meeting or by having actions
otherwise taken by a member of the Board pursuant to a delegation of duties from the Board. The
determination of the Board as to any disputed questions arising under the Plan, including questions
of construction and interpretation, shall be final, binding and conclusive upon all persons.



     10. Amendment and Termination. The Plan may, at any time, be amended, modified or
terminated by the Board. No amendment, modification or termination shall, without the consent of a
Non-Employee Director, adversely affect such Non-Employee Director’s rights with respect to amounts
accrued under his or her deferral accounts.



     11. Miscellaneous Provisions.



          11.1 Nothing contained herein shall be construed as conferring upon a Non-Employee Director
the right to continue in such capacity.




5









 








          11.2 The rights and obligations created hereunder shall be binding on a Non-Employee
Director’s heirs, executors and administrators and on the successors and assigns of the Company.




          11.3 The provisions of the Plan shall be construed and applied under the laws of the State of
New York, without regard to its conflict of laws principles.




          11.4 If any provision of the Plan shall be held invalid or unenforceable, such invalidity or
unenforceability shall not effect any other provisions hereof and the Plan shall be construed and
enforced as if such provisions had not been included.




          11.5 The headings and captions herein are provided for convenience only, and shall not be
construed as part of the Plan, and shall not be employed in the construction of the Plan.




          11.6 Any benefit payable to or for the benefit of a payee who is a minor, an incompetent
person, or is otherwise incapable of receipting therefor shall be deemed paid when paid to such
person’s guardian or to the party providing, or a reasonably appearing to provide, the care for
such person, and such payment shall fully discharge the Company, the Board and all other parties
with respect thereto.




          11.7 The rights of a Non-Employee Director to the payment of amounts credited to his or her
deferral account shall not be assigned, transferred, pledged or encumbered or be subject in any
manner to alienation or anticipation. A Non-Employee Director may not borrow against amounts
credited to the Non-Employee Director’s account and such amounts shall not be subject in any manner
to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, change, garnishment,
execution or levy of any kind, whether voluntary or involuntary, prior to distribution.




          11.8 The Plan is intended to comply with applicable law. Without limiting the foregoing, the
terms of the Plan are intended to, and shall be interpreted and applied so as to, comply in all
respects with the provisions of Section 409A of the Code and its corresponding regulations and
related guidance to the extent it applies to the Plan. Notwithstanding any provision of the Plan
to the contrary, to the extent applicable, deferrals and distributions under the Plan may only be
made in a manner and upon an event permitted by Section 409A of the Code. To the extent that any
provision of the Plan would cause a conflict with the requirements of Section 409A of the Code or
would cause the administration of the Plan to fail to satisfy the requirements of Section 409A of
the Code, such provision shall be deemed null and void to the extent permitted by applicable law.
Further, the Board shall have the authority to amend the Plan or take such other actions as the
Board determines is necessary to comply with the requirements of Section 409A of the Code and its
corresponding regulations and related guidance.





6