ex10_2.htm


    
      

    

    Exhibit
10.2

     

    January
2009

    


    TVA
DEFERRED COMPENSATION PLAN

    


    This
Deferred Compensation Plan (“Plan”) constitutes an agreement between TVA and its
managerial employees who are subject to it (“Participants”).  The
purposes of this Plan are to provide Participants (i) with deferrals of
compensation in order to provide income to supplement retirement benefits, (ii)
an additional means of deferring taxes on deferred compensation, and (iii) an
opportunity to earn a notational investment return on deferred
compensation.

     

     

    Section
1  Definitions

    


    “Account”
means the account established on TVA’s books in the name of each Participant to
which compensation deferred by the Participant pursuant to any of TVA’s
compensation plans, or deferred compensation awarded to the Participant by TVA,
as well as any notational investment earnings on such compensation, is accounted
for in the form of credits.

    


    “Board”
means the Board of Directors of the Tennessee Valley Authority.

    


    “Committee”
means a group of three persons appointed by the Board or its delegatee to
administer the Plan.

    


    “Dependent”
means the same as the term “dependent” as defined in Internal Revenue Code
section 152, without regard to section 152(b)(1), (b)(2), and
(d)(1)(B).

    


    “Interest”
means the notational interest on a Participant’s Account balance based on an
annual interest rate set from time to time by TVA’s Chief Financial Officer or
his or her designee.

    


    “Participant”
shall mean any employee of the Tennessee Valley Authority who is eligible under
any of TVA’s other compensation plans (i) to defer compensation earned during a
year to a later year, or (ii) to receive deferred compensation
credits.  Participants shall not include the members of the TVA Board
of Directors.

    


    “Return”
means the notational investment return on a Participant’s Account balance based
on the change in the value of the mutual funds designated by the
Participant.

    


    “Recordkeeper”
means the organization selected by TVA to recordkeep the notational investment
return alternatives from which the Participant may choose.


    
      
         


      

      
        1

        
          

        

      

      
         


      

    


    “Separation
from Service” or “separates from service” means the same as the term “separation
from service” as defined in 26 CFR §1.409A-1(h) of the Internal Revenue Code
section 409A final regulations.

    


    “Source”
means a division within each Participant’s Account to which deferred
compensation credits are assigned based on the form of payment for such deferred
compensation.

    


    “Unforeseeable
Emergency” means the same as the term “unforeseeable” as defined in 26 CFR
§1.409A-3(i)(3) of the Internal Revenue Code section 409A final
regulations.

    


    


    Section
2  Deferred
Compensation Plan Credits

    


    
      	
              A.

            	
              There
      shall be established for each Participant an Account in the name of the
      Participant.  Each Participant’s Account will consist of one or
      more Sources.

            


    

    


    
      	
              B.

            	
              A
      Participant’s Account shall be credited with any compensation amounts that
      the Participant earns during any year and properly elects to defer to a
      later year pursuant to any TVA compensation plan that allows deferral
      elections.

            


    

    


    
      	
              C.

            	
              From
      time to time the Board or the Board’s delegatee , in the sole discretion
      of the Board or its delegatee , may award deferred compensation credits to
      a Participant’s Account.  At the time of award, the Board or its
      delegatee shall designate the manner in which such deferred compensation
      credits shall be paid out to the Participant.  In the absence of
      such a designation, such deferred compensation credits shall be paid out
      to the Participant in a lump sum upon Separation from Service in
      accordance with Section 3.A.1a
below.

            


    

    


    
      	
              D.

            	
              The
      Board (or its delegatee) may consider such factors as the following in
      determining whether to award deferred compensation credits to a
      Participant and the amount of deferred compensation credits to be awarded
      pursuant to Section 2.C above:

            


    

    


    
      	
               
      

            	
              1.

            	
              meritorious
      performance;

            


    

    


    
      	
               
      

            	
              2.

            	
              providing
      Participants with total compensation equivalent to prevailing rates in
      corporate, professional, and other public
  organizations;

            


    

    


    
      	
               
      

            	
              3.

            	
              the
      need to use deferred compensation credits for recruitment
      purposes;

            


    


    
      
         


      

      
        2

        
          

        

      

      
         


      

    


    
      	
               
      

            	
              4.

            	
              lost
      annual leave; and

            


    

    


    
      	
               
      

            	
              5.

            	
              such
      other factors as may be deemed
appropriate.

            


    

    


    
      	
              E.

            	
              Each
      Participant’s Account will receive Interest calculated on the ending daily
      balance in each Participant’s Account and credited to the Account by the
      Recordkeeper at the end of each month.  In lieu of Interest,
      each Participant may elect to have all or a portion of the Participant’s
      Account adjusted by the Return tied to one or more mutual funds available
      to Participants through the Recordkeeper as selected by the
      Participant.  TVA is not responsible for the effect on the
      Participant’s Account of decisions by any Participant who elects to
      receive the Return tied to mutual funds as provided
      herein.  Such decisions shall be the sole responsibility of the
      Participant.

            


    

    


    


    Section
3  Benefits

    


    The total
amount credited to each Participant’s Account shall be paid by TVA to the
Participant upon the Participant’s Separation from Service, or the Participant’s
death, in the manner set forth below.  In addition, certain amounts
credited to a Participant’s Account may be paid by TVA to such Participant in
the event of an Unforeseeable Emergency as set forth below.

    


    
      	
              A.

            	
              Separation from
      Service

            


    

    


    
      	
               
      

            	
              1.

            	
              Upon
      a Participant’s Separation from Service, the balance of each Source within
      the Participant’s Account shall be paid to the Participant in a lump sum
      or in 5, 10, or 15 annual installments as properly elected by the
      Participant or designated by TVA (the “Lump-Sum Source,” “5-Year Source,”
      “10-Year Source,” and “15-Year Source,”
  respectively).

            


    

    


    
      	
               
      

            	
              a.

            	
              The
      balance in the Lump-Sum Source of the Participant’s Account shall be paid
      in a lump sum to the Participant not later than the last day of the first
      full calendar month following the date of the Participant’s Separation
      from Service.

            


    

    


    
      	
               
      

            	
              b.

            	
              The
      balances in the 5-Year, 10-Year, and 15-Year Sources shall be paid in the
      following manner.  Not later than the last day of the first full
      calendar month following the date of the Participant’s Separation from
      Service, the Participant shall be paid a sum equal to balance in the
      Source divided by the number of annual installments (5, 10, or 15) tied to
      such Source.  Subsequent annual installments shall be paid each
      year through 2009 on the same date as the initial installment in each year
      through 2009 and in January in each year beginning in 2010.  The
      amount of each installment shall be determined by dividing the balance in
      the Source by the number of payments remaining to be
  made.

            


    


    
      
         


      

      
        3

        
          

        

      

      
         


      

    


    
      	
               
      

            	
              2.

            	
              Any
      Participant with an Account balance not greater than the applicable dollar
      amount under Internal Revenue Code section 402(g)(1)(B) at the time of
      Separation from Service shall be paid that balance in a lump sum not later
      than the last day of the first full calendar month following the date of
      the Participant’s Separation from Service, provided that the payment
      results in the termination and liquidation of the entirety of the
      Participant’s interest under the
Plan.

            


    

    


    
      	
              B.

            	
              Death - Upon
      receipt of proper proof of the death of a Participant who has died in
      service, or a former Participant who has been receiving payments under
      Section 3.A.1.b. above, the balance in the Participant’s Account or the
      balance remaining in the Participant’s account, as appropriate, shall be
      paid in a lump sum to the beneficiary or beneficiaries designated by the
      Participant in writing prior to the Participant’s death.  In the
      absence of any designation of beneficiary, payment shall be made in the
      following order of precedence:

            


    

    


    
      	
               
      

            	
              1)

            	
              to
      the widow or widower of the
Participant;

            


    

    


    
      	
               
      

            	
              2)

            	
              if
      there is no widow or widower, to the child or children of the Participant
      and descendants of deceased children by
  representation;

            


    

    


    
      	
               
      

            	
              3)

            	
              if
      none of the above, to the parents of the Participant or the survivor of
      them;

            


    

    


    
      	
               
      

            	
              4)

            	
              if
      none of the above, to the duly appointed legal representative of the
      estate of the Participant; and

            


    

    


    
      	
               
      

            	
              5)

            	
              if
      none of the above, to the person or persons entitled to it under the law
      of the state of domicile of the Participant at the time of
      death.

            


    

    


    Payment
shall be made by the last day of the first full calendar month following the
receipt of proper proof of the Participant’s death.


    
      
         


      

      
        4

        
          

        

      

      
         


      

    


    
      	
              C.

            	
              Unforeseeable
      Emergency - In the event of an Unforeseeable Emergency, a
      Participant may apply to the Committee for a distribution of all or part
      of the total amount credited to the Participant’s Account.  The
      distribution may be granted in the Committee’s sole discretion upon a
      determination by the Committee that the amount distributed is reasonably
      necessary to satisfy the emergency need based on the relevant facts and
      circumstances of the case.  Under Internal Revenue Code section
      409A and its implementing regulations (collectively, “Section 409A”), an
      Unforeseeable Emergency means a severe financial hardship to the
      Participant resulting from any of the
following:

            


    

    


    
      	
               
      

            	
              1)

            	
              illness
      or accident of the Participant, the Participant’s spouse, the
      Participant’s beneficiary, or the Participant’s
  Dependent;

            


    

    


    
      	
               
      

            	
              2)

            	
              loss
      of the Participant’s property due to casualty (including the need to
      rebuild a home following damage to a home not otherwise covered by
      insurance); or

            


    

    


    
      	
               
      

            	
              3)

            	
              other
      similar extraordinary and unforeseeable circumstances arising as a result
      of events beyond the control of the
Participant.

            


    

    


    Section
409A states that the purchase of a home and the payment of college tuition are
not unforeseeable emergencies.  Under Section 409A, a distribution on
account of an Unforeseeable Emergency may not be made to the extent that such
emergency is or may be relieved through reimbursement or compensation from
insurance or otherwise, by liquidation of the Participant’s assets, to the
extent the liquidation of such assets would not cause severe financial hardship,
or by cessation of deferrals under the Plan.  In other words,
Participants will not be eligible for consideration of distributions from the
Plan for an Unforeseeable Emergency under this Section 3.C if the Participant
has, or through his or her own ability has access to, any funds to help take
care of the financial issues related to the Participant’s Unforeseeable
Emergency.

    


    Unforeseeable
Emergency distributions will be deducted from the Sources within the
Participant’s Account until exhausted in the following order of precedence:
Lump-Sum Source, 5-Year Source, 10-Year Source, and 15-Year
Source.


    
      
         


      

      
        5

        
          

        

      

      
         


      

    


    Section
4  Assignments
Prohibited

    


    No
transfer, assignment, pledge, seizure, or other voluntary or involuntary
alienation or encumbrance of any benefit provided under the Plan will be
permitted or recognized other than as specifically provided in this Plan;
provided, however, that TVA may offset amounts owed to it by a Participant
against amounts payable to a Participant under this Plan.

    


    


    Section
5  No Trust
is Created

    


    No trust
in favor of any Participant is created by this Plan, and in the absence of any
attempted assignment prohibited under Section 5, Participants shall have the
rights of general unsecured creditors of TVA with respect to amounts credited
their Accounts established by this Plan.

    


    


    Section
6  Amendments to
Plan

    


    This Plan
may be amended or terminated as authorized by the Board, or its delegatee, at
any time as it deems appropriate without the consent of any Participant,
beneficiary, or other person.

    


    


    Section
7  Compliance with Section
409A

    


    At all
times, to the extent Internal Revenue Code section 409A and its implementing
regulations (collectively, “Section 409A”) applies to amounts deferred under
this Plan: (a) this Plan shall be operated in accordance with the requirements
of Section 409A; (b) any action that may be taken (and, to the extent possible,
any action actually taken) by the Board or its delegatee, the Committee, and the
Participants or their Beneficiaries shall not be taken (or shall be void and
without effect), if such action violates the requirements of Section 409A; (c)
any provision in this Plan that is determined to violate the requirements of
Section 409A shall be void and without effect; and (d) any provision that is
required by Section 409A to appear in this Plan that is not expressly set forth
shall be deemed to be set forth herein, and this Plan shall be administered in
all respects as if such provision were expressly set forth herein.

     

     

    6