EX-10.41



 





EXHIBIT 10.41




July 20, 2004




Mr. Richard R. Grigg

13000 West Hawthorne Lane

New Berlin, WI 53151



Dear Dick:




     The purpose of this letter agreement (“Agreement”) is to set forth the
general terms and conditions of your employment as Executive Vice President and
Chief Operating Officer of FirstEnergy Corp. (“FirstEnergy” or the “Company”).



     Your employment with the Company will commence on the Effective Date of
this Agreement (as defined below). Your duties and responsibilities as
Executive Vice President and Chief Operating Officer will be commensurate with
those customarily performed, undertaken and exercised by persons situated in a
similar executive capacity, including, without limitation responsibility for
the FirstEnergy Fossil, Energy Delivery and Commodity Business Units and such
other duties as may be assigned from time to time. In consideration of your
performance of such duties you will be compensated as follows:




	 	(a)	 	Base Salary. You will receive a base salary (the “Base
Salary”) at an annual rate of Six Hundred Thousand Dollars
($600,000) which will be payable in accordance with the existing
payroll practices of FirstEnergy. The Base Salary will be reviewed
at least annually at the same time as the base salaries of
FirstEnergy’s other senior executive officers.
	 
	 	(b)	 	Annual Bonus. You will become a participant in FirstEnergy’s
Executive and Director Incentive Compensation Plan (“EICP”) and be
eligible to receive an annual bonus each year under the Short-Term
Incentive Program (“STIP”) component of the EICP (or any successor
program). Your annual short-term target opportunity will be set by
the Compensation Committee of the Board of Directors at the same
time as other senior executive officers. For the remainder of the
2004 payroll year your target bonus opportunity will be 70% of the
Base Salary paid to you during that time. Any annual incentive
compensation awarded to you will be payable in accordance with the
provisions of the STIP. Note that any award based on performance
during 2004 as well as for the year in which your employment ends
shall be prorated based on the actual time worked during such years.
The Key Performance Indicators (“KPIs”), which serve as the basis
for determining the amount of the annual bonus earned, will be set
and approved by the Company’s Board of Directors and provided to you
as soon as practicable thereafter.
	 
	 	(c)	 	Long-Term Incentive Compensation. In lieu of participation
in FirstEnergy’s Long-Term Incentive Program (“LTIP”), a component
of




 









 






	 	 	 	the EICP, for the year 2004, the Company will grant you
non-qualified stock options to purchase shares of FirstEnergy
common stock on the Effective Date covering an approximate stock
value of 200% of the amount of Base Salary payable to you between
the Effective Date and the end of the 2004 payroll year, such
stock value being a binomial value of $7.67 per option. The
Option Price of the shares underlying the options will be equal to
the average price of FirstEnergy’s common stock on the New York
Stock Exchange on the Effective Date and rounded to the closest
number of whole shares. The options will be granted under and
subject to the terms of the Company’s EICP and will carry a
ten-year term with four-year equal annual step vesting. You will
receive a Stock Option Agreement setting forth additional terms of
the grant. For purposes of the Stock Option Agreement, you will
be deemed to have retired if you work at least three years from
the Effective Date of this Agreement.
	 
	 	 	 	The LTIP is currently under review by the Company, and we expect
the Compensation Committee of the Board of Directors to approve a
new LTIP design at the Committee’s September 2004 meeting. For
the 2005 payroll year and all subsequent payroll years during your
employment, you will be eligible for a long-term incentive
opportunity consistent with the approved and redesigned LTIP. Any
incentive compensation awarded to you will be payable according to
the provisions of the LTIP. Any award based on performance during
the year in which your employment ends shall be prorated based on
the actual time worked during such year and paid in accordance
with the terms of the LTIP. In the absence of the foregoing
provisions of this Agreement, your 2004 total target incentive
opportunity under the EICP would have been 240% of your base
compensation, such percentage being comprised of a 70% STIP
opportunity and 170% LTIP opportunity. Your 2005 total target
incentive opportunity will be set and approved by the Company’s
Board of Directors based on competitive data at the same time as
other senior executive officers.
	 
	 	(d)	 	Change in Control Agreement. As a result of the passage of
a non-binding proposal by a shareholder with respect to future
change in control agreements, the Board of Directors is currently
reviewing this matter and has not yet determined what course of
action, if any, it might take in response. After completion of that
review, a change in control agreement will be extended to you on
the terms approved by the Board of Directors and consistent with its
course of action in response to the shareholder proposal.
	 
	 	(e)	 	Employee Benefits. The Company maintains a Flexible Benefits
Plan that includes programs providing health care insurance, dental
insurance, group term life insurance, accident death and
dismemberment insurance, long term disability, long term care,
dependent care and health care spending accounts. Except as set
forth in the following paragraph, you




 









 






	 	 	 	will be eligible to participate in the FirstEnergy Flexible
Benefits Plan, as well as all executive and employee welfare
benefit plans, programs, policies and arrangements sponsored,
maintained or contributed to by FirstEnergy on the same level as
other senior executive officers of FirstEnergy, subject to the
terms and conditions of such plans.
	 
	 	 	 	It is our understanding that you currently maintain health care
and life insurance coverage under the terms of your retirement
from your prior employer and will do so until March 1, 2007.
Consequently, your eligibility to participate in the health care
and group life insurance coverages under the Flexible Benefits
Plan will not commence until March 1, 2007. Moreover, at the
conclusion of your employment with the Company, you will be
granted seven (7) years of service credit in addition to any
service credit actually earned for purposes of calculating
eligibility and contribution towards retiree health care coverage
under the Flexible Benefits Plan or any successor plan.
	 
	 	(f)	 	Pension Benefits. You will be eligible to participate in any
and all of FirstEnergy’s qualified and non-qualified pension,
retirement, and deferred compensation plans, programs, policies, and
arrangements as they relate to FirstEnergy’s senior executive
officers with the exception of the Supplemental Executive
Retirement Program (“SERP”). Your participation in any of the
programs for which you are eligible will be on the same terms and
conditions as applicable to other participants in those programs and
will be governed by the applicable plan documents.
	 
	 	 	 	In lieu of participation in the SERP, you will receive a grant of
restricted FirstEnergy common stock on the Effective Date with an
approximate value of $500,000. The number of shares of restricted
stock granted will be equal to such value divided by the average
price of the Company’s common stock on the New York Stock Exchange
on the Effective Date and rounded to the closest number of whole
shares. The restricted stock will be granted under and subject to
the terms of the Company’s EICP and will 100% vest three years
from the date granted. Should your employment continue beyond
such time, you will not be permitted to sell the shares (other
than the minimum amount necessary to pay for the associated taxes)
until such time your employment terminates. A Restricted Stock
Agreement will be prepared outlining the specific details.
	 
	 	(g)	 	Expenses. You will be entitled to reimbursement of all
business, travel, and entertainment expenses incurred by you on
behalf of FirstEnergy in the course of the performance of your
duties hereunder in the same manner as other senior executive
officers. You will also be entitled to receive reimbursements and
benefits under FirstEnergy’s Relocation Program for Current
Employees, Package B, as set forth in Human Resources Letter 204.




 









 






	 	(h)	 	Vacations. You will be entitled to vacation in each calendar
year in accordance with the Company’s policy in effect from time to
time as it relates to the Company’s senior executive officers, but
in no event less than 25 days per full calendar year worked. For
2004, you will receive 15 days of vacation.
	 
	 	(i)	 	Financial Planning. You will be entitled to the financial
planning benefits available to other senior executive officers.
	 
	 	(j)	 	Other Interests. You agree to either resign from or not
begin, as appropriate, any term of office as a Director of Allete or
of any other Company. You further agree to obtain all appropriate
written assurances as determined to be sufficient by FirstEnergy
from Wisconsin Energy Corporation that your acceptance of employment
with FirstEnergy does not violate any noncompetition covenants that
may be in effect.





It is anticipated that you will begin working on or about August 20, 2004 or
such later date on which the conditions noted in subparagraph (j) above, have
been satisfied. August 20, 2004, or such later date, shall be considered the
Effective Date of this Agreement. This Agreement will expire three (3) years
from the Effective Date, unless either terminated early by either party for any
reason upon written notice given 60 days in advance, or mutually extended in
writing. This offer is contingent upon your taking and passing a
pre-employment physical, which includes a drug and alcohol test. The Company
will pay the cost of the medical examination.




If this Agreement accurately reflects our agreement and understanding, please
sign the enclosed copy and return it to me.




	 	 	 	 	 
	 	 	Very Truly Yours,
	 
	 	 	 	 
	 	 	First Energy Corp.
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	

	

	 	 	 	Anthony J. Alexander
	

	 	 	 	Chief Executive Officer
	 
	 	 	 	 
	Agreed and Accepted:
	 	 	 	 
	 
	 	 	 	 
	

Richard R. Grigg	 	 
	 
	 	 	 	 
	Dated: