Document:

exv10w3

 

Exhibit 10.3

CENTERPOINT ENERGY

2005 DEFERRED COMPENSATION PLAN

(Effective as of January 1, 2008)

 

 

CENTERPOINT ENERGY

2005 DEFERRED COMPENSATION PLAN

(Effective as of January 1, 2008)

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	          Page
	ARTICLE I PURPOSES OF PLAN; DEFINITIONS; DURATION
	 	 	2	 
	 
	 	 	 	 
	1.1 Purposes
	 	 	2	 
	1.2 Definitions
	 	 	2	 
	1.3 Term
	 	 	4	 
	 
	 	 	 	 
	ARTICLE II ADMINISTRATION
	 	 	4	 
	 
	 	 	 	 
	ARTICLE III PARTICIPATION
	 	 	5	 
	 
	 	 	 	 
	3.1 Eligibility of Employees and Directors
	 	 	5	 
	3.2 Designation of Participants
	 	 	5	 
	3.3 Election to Participate
	 	 	5	 
	3.4 Salary Deferral
	 	 	5	 
	3.5 Bonus Deferral
	 	 	5	 
	3.6 Director Fees Deferral
	 	 	6	 
	 
	 	 	 	 
	ARTICLE IV BENEFICIARY DESIGNATIONS; WITHHOLDING
	 	 	6	 
	 
	 	 	 	 
	4.1 Beneficiary Designations
	 	 	6	 
	4.2 Withholding of Taxes
	 	 	7	 
	 
	 	 	 	 
	ARTICLE V BENEFITS
	 	 	7	 
	 
	 	 	 	 
	5.1 Benefit Payments
	 	 	7	 
	5.2 Death
	 	 	8	 
	5.3 Disability
	 	 	9	 
	5.4 Payment Upon Separation from Service Prior to Age 55
	 	 	9	 
	5.5 Separation from Service During Participation Year
	 	 	9	 
	5.6 Delay of Payments to Certain Participants
	 	 	9	 
	5.7 Crediting of Interest
	 	 	9	 
	 
	 	 	 	 
	ARTICLE VI RIGHTS OF PARTICIPANTS
	 	 	10	 
	 
	 	 	 	 
	6.1 Limitation of Rights
	 	 	10	 
	6.2 Non-Alienation of Benefits
	 	 	10	 
	6.3 Prerequisites to Benefits
	 	 	12	 
	6.4 Nature of Employer’s Obligation
	 	 	12	 
	6.5 Claims and Review Procedures
	 	 	12	 
	 
	 	 	 	 
	ARTICLE VII MISCELLANEOUS
	 	 	13	 
	 
	 	 	 	 
	7.1 Amendment or Termination of the Plan
	 	 	13	 

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	 	 	          Page
	7.2 Reliance Upon Information
	 	 	13	 
	7.3 Effective Date
	 	 	14	 
	7.4 Code Section 409A
	 	 	14	 
	7.5 Governing Law
	 	 	14	 
	7.6 Severability
	 	 	14	 
	7.7 Notice
	 	 	14	 

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CENTERPOINT ENERGY

2005 DEFERRED COMPENSATION PLAN

(Effective as of January 1, 2008)

RECITALS:

          WHEREAS, CenterPoint Energy, Inc. (the “Company”), maintains the CenterPoint Energy, Inc.
Deferred Compensation Plan, as amended and restated effective January 1, 2003 (the “Plan”), for the
benefit of its eligible employees; and

          WHEREAS, in response to the enactment of Section 409A of the Internal Revenue Code of 1986, as
amended (the “Code”), effective as of January 1, 2005, the Company in operation separated all Plan
benefits earned and vested as of December 31, 2004 (“Grandfathered Benefits”) from all Plan
benefits earned or vested after December 31, 2004 (“409A Benefits”); and

          WHEREAS, the Company desires to bifurcate the Plan such that (1) the Grandfathered Benefits,
along with all earnings attributable thereto, shall be maintained under and paid from a separate,
frozen plan that is intended to be a “grandfathered” plan exempt from Code Section 409A, known as
the CenterPoint Energy, Inc. 1989 Deferred Compensation Plan, and (2) the 409A Benefits, along with
all earnings attributable thereto, shall be spun-off from the Plan and into, and maintained under
and paid from, a newly established and separate plan that is intended to comply with the
requirements of Code Section 409A, effective as of January 1, 2008;

          NOW, THEREFORE, the Company hereby establishes this new plan to maintain and provide the 409A
Benefits in the form of the CenterPoint Energy 2005 Deferred Compensation Plan, as herein set
forth, effective as of January 1, 2008:

 

 

ARTICLE I

PURPOSES OF PLAN; DEFINITIONS; DURATION

     1.1 Purposes. This CenterPoint Energy 2005 Deferred Compensation Plan for selected
management and highly compensated employees is intended to aid certain of its employees in making
more adequate provision for their retirement and is intended to be a “top-hat” plan under sections
201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act of 1974 (“ERISA”).

     1.2 Definitions. Each term below shall have the meaning assigned thereto for all purposes
of this Plan unless the context requires a different construction.

     “Beneficiary” means a person or persons, a trustee or trustees of a trust, or a
partnership, corporation, limited liability partnership, limited liability company, or other
entity designated by the Participant, as provided in Section 4.1, to receive any amounts
distributed under the Plan after a Participant’s death.

     “Board” means the Board of Directors of the Company.

     “Bonus” means a formula or discretionary bonus or incentive compensation paid under a
short-term or annual incentive plan maintained by the Company or a Subsidiary.

     “Code” means the Internal Revenue Code of 1986, as amended.

     “Company” means CenterPoint Energy, Inc., a Texas corporation, or a successor to
CenterPoint Energy, Inc., in the ownership of substantially all of its assets.

     “Commencement Date” means the first day of the Participation Year, with respect to
which a Compensation deferral occurs.

     “Committee” means the Benefits Committee or such other committee, which shall consist
of five or fewer persons, as shall be appointed by the Board of Directors of the Company to
administer the Plan pursuant to Article II hereof.

     “Compensation” means the Salary and Bonus which an Employer pays its Employees, and the
Director Fees paid to a Director.

     “Director” means a non-Employee member of the Board.

     “Director Fees” means the meeting attendance fees, retainer fees and committee chairman
fees paid to a Director.

     “Disability” means a physical or mental condition that qualifies as a total and
permanent disability under the CenterPoint Energy, Inc. Long Term Disability Plan, as
amended from time to time (or any successor plan thereto).

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     “Early Distribution” means the benefit payment option available to a Participant under
Section 5.1(a) hereof.

     “Early Retirement Date” means (i) with respect to an Employee, the first day of the
month coincident with or next following his or her 60th birthday; and (ii) with respect to a
Director, the first day of the month coincident with or next following his or her
resignation or removal as a Director before his or her Normal Retirement Date.

     “Employee” means any person, including an officer of any Employer (whether or not he or
she is also a director thereof), who, at the time such person is designated a Participant
hereunder, is employed by an Employer on a full-time basis, who is compensated for such
employment by a regular Salary, and who, in the opinion of the Committee, is one of the
officers or other key employees of the Employer in a position to contribute materially to
the continued growth and development and to the future financial success of the Employer.
Any Participant who is an Employee of a Subsidiary shall not be deemed to have terminated
employment with an Employer for purposes of this Plan until the date upon which the
Participant has a Separation from Service.

     “Employer” means (i) the Company, (ii) each Subsidiary which has adopted the Plan with
the consent of the Committee, and (iii) each other employing organization in which the
Company has a direct or indirect ownership interest and which has been approved by the
Committee as an Employer under the Plan, subject to the terms and conditions established by
the Committee.

     “Interest Crediting Rate” means, for a given Plan Year, a rate of interest equivalent
to the average Moody’s Rate for such year plus two percentage points (2%).

     “Moody’s Rate” means a rate of interest equal to the composite yield on Moody’s
Long-Term Corporate Bond Yield Averages for the calendar month as determined from Moody’s
monthly yield averages published by Moody’s Investor’s Service, Inc. (or any successor
thereto), or, if such yield is no longer published, a substantially similar average selected
by the Committee.

     “Normal Retirement Distribution” means the benefit payment options available to a
Participant under Section 5.1(b) hereof.

     “Normal Retirement Date” means (i) with respect to an Employee, the first day of the
month coincident with or next following his or her 65th birthday, and (ii) with respect to a
Director, the first day of the month coincident with or next following his or her 70th
birthday.

     “Participant” means an Employee or a Director who has been designated by the Committee
to participate in the Plan pursuant to Section 3.2 hereof and who has elected to participate
in the Plan pursuant to Section 3.3.

     “Participation Year” means a Plan Year commencing on or after January 1, 2005 during
which (i) with respect to Compensation in the form of a Bonus, the Bonus would have been
paid to the Participant if not deferred; (ii) with respect to Compensation in the

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form of Salary, a Participant performs services for the Employer for a Salary; and (iii) with
respect to Compensation in the form of Director Fees, a Participant performs services as a
member of the Board for such fees.

     “Plan” means the CenterPoint Energy 2005 Deferred Compensation Plan, effective as of
January 1, 2008, and as set forth herein, as the same may hereafter be amended from time to
time.

     “Plan Year” means the calendar year (January 1st through December 31st).

     “Salary” means a base salary or wages paid to a Participant by an Employer. The Salary
of a Participant as reflected on the books and records of the Employer shall be conclusive.

     “Separation from Service” means separation from service with the Company, all Employers
and all Subsidiaries within the meaning of Treasury Regulation § 1.409A-1(h) (or any
successor regulation), or, in the case of a Director, he or she ceases to be a member of the
Board.

     “Subsidiary” means a subsidiary corporation with respect to the Company as defined in
Section 424(f) of the Code.

     Words used in this Plan in the singular shall include the plural and in the plural the
singular, and the gender of words used shall be construed to include whichever may be appropriate
under any particular circumstances of the masculine, feminine or neuter genders.

     1.3 Term. The effective date of the Plan, as amended and restated, is January 1, 2008 for
Compensation deferred and benefits accrued under the Plan on and after January 1, 2005. The Plan
shall continue until terminated by the Board of Directors of the Company. The Committee, in its
sole discretion, may or may not authorize deferral of Compensation during the term of the Plan.

ARTICLE II

ADMINISTRATION

          The Plan shall be administered by the Committee, which shall represent the Company and other
Employers in all matters concerning the administration of the Plan. Members of the Committee may
be Participants under the Plan, but no member may vote on any matter relating to his or her
benefits under the Plan. The Committee shall have primary responsibility for the administration
and operation of the Plan and shall have all powers necessary to carry out the provisions of the
Plan, including the power to determine which Employees and Directors shall be Participants under
the Plan and which Compensation may be subject to deferral. The determination of the Committee as
to the construction, interpretation, or
application of any terms and provisions of the Plan, including whether and when there has been
a Separation from Service, shall be final, binding, and conclusive upon all persons.

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ARTICLE III

PARTICIPATION

          3.1 Eligibility of Employees and Directors. An Employee must be a manager or a highly
compensated (within the meaning of Section 414(q) of the Code) salaried employee of an Employer to
be eligible to participate in the Plan. All Directors shall be eligible to participate in the
Plan. The Committee may from time to time establish additional eligibility requirements for
participation in the Plan.

          3.2 Designation of Participants. Prior to the commencement of any Participation Year, the
Committee shall designate and notify in writing the Employees and/or Directors who are eligible to
defer Compensation under this Plan. A designation of an Employee or Director to participate with
respect to Compensation for a particular Participation Year shall not automatically entitle such
Participant to participate with respect to any other Participation Year.

          3.3 Election to Participate. After an Employee or Director has been notified by the
Committee that he or she is eligible to participate in the Plan he or she must notify the
Committee, in the form and manner prescribed by the Committee, that he or she chooses to
participate in the Plan. Such election to participate in the Plan shall be effective upon its
receipt by the Committee (or its delegate) within the time periods and manner prescribed by the
Committee or the Plan. A Participant’s election (i) shall specify the type or types and the amount
or amounts of Compensation that he or she wishes to defer and the manner of such deferral pursuant
to Sections 3.4 through 3.6 hereof; (ii) shall specify, if the Participant so elects, that he or
she wishes to receive an Early Distribution of benefits with respect to some or all deferrals for
such Participation Year under Section 5.1(a) hereof; and (iii) shall specify the manner of Normal
Retirement Distribution the Participant chooses with respect to such deferrals under Section 5.1(b)
hereof.

          3.4 Salary Deferral. A Participant’s election to defer the payment of Salary must be made
prior to the first day of the Plan Year in which the Salary is earned by the Participant. Such
election will be irrevocable as of December 31 of the calendar year preceding the calendar year in
which the Salary is earned.

          A Participant may elect to defer up to 100% (or such lesser percentage designated by the
Committee, in its sole discretion) of his or her annual Salary (after deduction of the amounts
required to be withheld by the federal government or any state or local government and any other
withholding obligations) with respect to a particular Participation Year. The amount of
Compensation elected to be deferred under this Section 3.4 shall be withheld from the
Participant’s Salary during a Plan Year in equal amounts.

          3.5 Bonus Deferral. A Participant’s election to defer the payment of a Bonus that
qualifies as “performance-based compensation” under Code Section 409A(4)(B) must be made no later
than six months prior to the end of the performance period. Such election will be irrevocable as
of the date that is six months prior to the end of the performance period in which the Bonus is
earned.

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          A Participant’s election to defer the payment of a Bonus that does not qualify as
“performance-based compensation” under Code Section 409A(4)(B) must be made prior to the first day
of the Plan Year in which the Bonus is earned. Such election will be irrevocable as of December 31
of the calendar year preceding the calendar year in which the Bonus is earned.

          A Participant may elect to defer up to 100% (or such lesser percentage designated by the
Committee, in its sole discretion) of his or her annual cash Bonus award (after deduction of the
amounts required to be withheld by the federal government or any state or local government and any
other withholding obligations) with respect to a particular Participation Year. The amount of
Compensation elected to be deferred under this Section 3.5 shall be withheld from the Participant’s
Bonus otherwise payable during the Plan Year. If the amount of Bonus awarded to the Participant
with respect to a Participation Year is less than the amount of Bonus which the Participant had
elected to defer for such Participation Year, the entire amount of the Bonus awarded shall be
deferred in accordance with this Section 3.5.

          3.6 Director Fees Deferral. A Participant’s election to defer the payment of Director Fees
must be made prior to the first day of the Plan Year in which the Director Fees are earned by the
Participant. Such election will be irrevocable as of December 31 of the Plan Year preceding the
Participation Year with respect to which the Director Fees are earned.

          A Participant may elect to defer up to 100% (or such lesser percentage designated by the
Committee in its sole discretion) of each type of his or her annual Director Fees with respect to a
particular Participation Year. The amount of Compensation elected to be deferred under this
Section 3.6 shall not be paid but shall be withheld from the Participant’s Director Fees otherwise
earned and payable during the Plan Year.

ARTICLE IV

BENEFICIARY DESIGNATIONS; WITHHOLDING

          4.1 Beneficiary Designations. Each person becoming a Participant shall file with the
Committee (or its delegate), in the form and manner prescribed by the Committee, a designation of
one or more Beneficiaries to whom distributions otherwise due the Participant shall be made in the
event of his or her death while in the employ of the Company or serving on the Board or after
Separation from Service but prior to
the complete distribution of the benefits payable with respect to the Participant. Such
designation shall be effective when received by the Committee. The Participant may from time to
time revoke or change any such designation of a Beneficiary by notifying the Committee in the form
and manner prescribed by the Committee. If there is no valid designation of the Beneficiary on
file with the Committee at the time of the Participant’s death, or if all of the Beneficiaries
designated therein shall have predeceased the Participant or otherwise ceased to exist, the
Beneficiary shall be, and any payment hereunder shall be made to, the Participant’s spouse, if he
or she survives the Participant, or otherwise to the Participant’s estate. If the Beneficiary,
whether under a valid beneficiary designation or under the preceding sentence, shall survive the
Participant but die before receiving all payments hereunder, the balance of the benefits which
would have been paid to the Beneficiary had he or she lived shall, unless the Participant’s
designation provided otherwise, be distributed to the Beneficiary’s estate.

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          4.2 Withholding of Taxes. The Company may withhold from a payment any federal, state, or
local employment and income taxes required by law to be withheld with respect to such payment and
such sum as the Company may reasonably estimate as necessary to cover any taxes for which the
Company may be liable and which may be assessed with regard to such payment.

ARTICLE V

BENEFITS

          5.1 Benefit Payments. The benefit payments with respect to deferrals of Compensation for a
specific Participation Year will be determined as set forth below:

     (a) Early Distribution. At the time a Participant elects to defer Compensation
for a Participation Year pursuant to Section 3.3 hereof, he or she may elect to receive an
Early Distribution of benefits attributable to such Compensation during the Early
Distribution Plan Year (as defined below). The Early Distribution will represent either
(i) 50% or (ii) 100% of the Compensation deferred for that Participation Year. The Early
Distribution shall be paid to Participant during the Plan Year elected by the Participant
which is at least four years after the Participation Year in which the Compensation was
deferred or, if earlier (and notwithstanding the Participant’s election to the contrary),
the year the Participant attains his or her Normal Retirement Date. Notwithstanding the
foregoing, a Participant who has attained, or will attain, his or her Normal Retirement Date
during the Participation Year is not permitted to receive an Early Distribution. A
Participant may make only one Early Distribution election under this Plan for each
Participation Year for each type of Compensation deferred under Sections 3.4, 3.5 and 3.6
hereof.

     (b) Normal Retirement Distribution. At the time a Participant elects to defer
Compensation for a Participation Year pursuant to Section 3.3 hereof, he or she must elect
the form of payment of his or her potential Normal Retirement Distribution of
benefits attributable to such Compensation, taking into account any Early Distribution
election made by him under Section 5.1(a). The Participant may elect to receive a Normal
Retirement Distribution in:

	 	(i)	 	a lump-sum distribution of the amounts of Compensation
deferred, minus any Early Distributions; or
	 
	 	(ii)	 	15 annual installment payments of such Compensation, minus any
Early Distributions.

Payment of a Normal Retirement Distribution will be made, if payable in a lump sum, in the
January following the date of the Participant’s Separation from Service on or after his or
her Normal Retirement Date. Payment of a Normal Retirement Distribution will be made, if
payable in 15 annual installments, commencing the month coincident with or next following
the month in which the Participant has a Separation from Service on or after his or her
Normal Retirement Date, and the remaining annual installments will be

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paid in that same
month in each of the remaining 14 years. If a Participant fails to make an election as to
the manner in which a Normal Retirement Distribution will be paid, such Normal Retirement
Distribution will be made in the form of a lump-sum distribution in accordance with this
Section 5.1(b) as if the Participant had specifically so elected.

     (c) Separation from Service On or After Age 55 and Prior to Early Retirement
Date. Notwithstanding any provision of this Article V to the contrary, a Participant
who has a Separation from Service on or after the first day of the month coincident with or
next following the Participant’s 55th birthday, but prior to his or her Early Retirement
Date, shall receive his or her benefit under the Plan in 15 annual installment payments,
with such payments commencing on the first day of the month coincident with or next
following the month in which the Participant has a Separation from Service, and the
remaining annual installments will be paid in that same month in each of the remaining 14
years; provided, however, that the Participant did not elect to receive his or her benefit
under the Plan (i) in a lump-sum distribution or (ii) as a 100% Early Distribution. If a
Participant, who meets the requirements of this Section 5.1(c), elected to receive his or
her benefits under the Plan in a lump-sum distribution or as a 100% Early Distribution, then
his or her benefit under the Plan shall be paid during the Plan Year immediately following
the Plan Year in which the Participant has a Separation from Service.

     (d) Separation from Service On or After Early Retirement Date and Prior to Normal
Retirement Date. Any Participant who has a Separation from Service on or after his or
her Early Retirement Date but prior to his or her Normal Retirement Date will (if he or she
is living on the date of payment) receive a lump-sum distribution or 15 annual installment
payments, in accordance with his or her election under Section 5.1(b) above. If such a
Participant failed to make an election, he or she will be deemed to have elected a lump sum
pursuant to Section 5.1(b) above.

     5.2 Death.

     (a) Death Prior to Commencement of Normal Retirement Distribution. If a
Participant dies (i) prior to his or her (A) Normal Retirement Date and (B) Separation from
Service or (ii) after his or her (A) Separation from Service and (B) Early Retirement Date,
but in either event prior to the commencement of a Normal Retirement Distribution payable in
15 annual installments, then the payments otherwise described in Section 5.1 not theretofore
made shall not be made and the Employer shall pay Participant’s Beneficiary the sum or sums
of Compensation actually deferred less an amount equal to any Early Distributions or other
benefits paid prior to Participant’s death. Payments made pursuant to this Section 5.2(a)
shall be made within 90 days following the date of Participant’s death.

     (b) Death After Normal Retirement Date. If the Participant dies (i) after his
or her Normal Retirement Date but prior to his or her Separation from Service, (ii) after
his or her Separation from Service, provided the Participant had attained his or her Normal
Retirement Date on or before the date of such Separation from Service, or (iii) after
commencement of a Normal Retirement Distribution in the form of 15 annual installment
payments, pursuant to Section 5.1, but prior to completion of all such payments, the

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Company shall make (or continue to make) such payments provided for in Section 5.1 to the
Participant’s Beneficiary.

     5.3 Disability. In the event of the Disability of a Participant while in the employ of an
Employer or serving on the Board, the Participant shall be considered to have remained in the
continuous employment of the Employer during such Disability until his or her Normal Retirement
Date or earlier death. The benefits payable to such Participant under the Plan shall be paid in
the amounts and at the times otherwise provided in Sections 5.1 and 5.2.

     5.4 Payment Upon Separation from Service Prior to Age 55. If an Employee Participant has a
Separation from Service for any reason other than death, retirement at or after his or her Normal
Retirement Date or Early Retirement Date in accordance with the provisions of Section 5.1(b),
5.1(c), 5.1(d) or 5.1(e), a Normal Retirement Distribution payable in 15 annual installments, as
described in Section 5.1(b), shall not be made, but the Company shall pay the Participant the sum
or sums of Compensation actually deferred. Notwithstanding the foregoing, the amount payable under
this Section 5.4 shall be reduced by amounts equal to any Early Distribution or other benefits paid
prior thereto. Payments under this Section 5.4 shall be made within 90 days following the date of
Participant’s Separation from Service.

     5.5 Separation from Service During Participation Year. If a Participant has a Separation
from Service for any reason during the Participation Year for which Compensation that is in the
form of Salary or Director Fees is to be deferred, no further deferrals shall be made for that
Participation Year on and after the date of such Separation from Service. If a Participant has a
Separation from Service for any reason during the Participation Year for which he or she has
elected to defer the payment of a Bonus, such election shall become
null and void with respect to any Bonus which has not become payable to the Participant as of the
date of his or her Separation from Service.

     5.6 Delay of Payments to Certain Participants. Notwithstanding any provision to the
contrary in the Plan, if as of the date of the Participant’s Separation from Service (other than by
reason of death) the Participant has been identified by the Committee or its delegate as a
“Specified Employee” (within the meaning of that term under Code Section 409A(a)(2)(B)) and the
Company is a public company, then the payment specified under Article V on account of Separation
from Service shall not be paid to the Participant until the later of (a) the date specified in
Article V or (b) the earlier of (i) the expiration of the six-month period measured from the date
of the Participant’s Separation from Service or (ii) the date of the Participant’s death. In the
event that a payment is delayed under this Section 5.6, the Company shall pay to the Participant,
as of the date it pays the delayed payment, simple interest on the payment amount at the applicable
interest rate (as determined under Section 5.7(b)) for such payment, based on the period the
payment was delayed beyond the payment date specified in Article V.

     5.7 Crediting of Interest. With respect to any distribution pursuant to Sections 5.1
through 5.4 of the Plan, interest shall be credited upon the Participant’s Compensation in
accordance with this Section 5.7.

     (a) Applicable Compensation Balance for Crediting of Interest. Any interest
which accrues on a Participant’s deferrals of Compensation pursuant to Article III shall

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accrue from January 1 of each Participation Year on the total amount of Compensation
deferred during the Participation Year.

     (b) Applicable Interest Rate. A Participant’s Compensation shall be credited
with interest, compounded annually from the Participant’s Commencement Date through the date
immediately prior to the first payment to the Participant (or the Participant’s Beneficiary
in the case of death). The applicable interest rate shall be the Interest Crediting Rate;
provided, however, that the applicable interest rate with respect to a distribution pursuant
to Section 5.4 shall be the Moody’s Rate (in lieu of the higher Interest Crediting Rate).

     (c) Interest During Installment Period. For purposes of determining a benefit
payable in the form of 15 installment payments under Section 5.1(b), the Interest Crediting
Rate shall be the Interest Crediting Rate in effect for the Plan Year immediately prior to
which an Employee Participant attains age 65 or a Director Participant attains age 70. For
purposes of determining a benefit payable in the form of 15 installment payments under
Section 5.1(c), the Interest Crediting Rate shall be the Interest Crediting Rate in effect
for the Plan Year immediately prior to which a Participant has a Separation from Service.
The Interest Crediting Rate as determined under this Section 5.7(c) will constitute the
applicable Interest Crediting Rate with respect to the installment payments for all years
after the initial installment payment.

ARTICLE VI

RIGHTS OF PARTICIPANTS

     6.1 Limitation of Rights. Nothing in this Plan shall be construed to:

     (a) Give any Employee of an Employer or any Director any right to be designated a
Participant in the Plan other than in the sole discretion of the Committee;

     (b) Limit in any way the right of the Employer to terminate a Participant’s employment
at any time; or

     (c) Be evidence of any agreement or understanding, express or implied, that the Company
or any other Employer will employ a Participant in any particular position or at any
particular rate of remuneration.

     6.2 Non-Alienation of Benefits. No right or benefit under this Plan shall be subject to
anticipation, alienation, transfer, sale, assignment, pledge, encumbrance or charge, whether
voluntary, involuntary, direct or indirect, by operation of law or otherwise, including, without
limitation, a change in beneficial interest of any trust and a change in ownership of a corporation
or partnership, but not including a change of legal and beneficial title of a right or benefit
resulting from the death of any Participant or the spouse of any Participant (any such proscribed
transaction hereinafter a “Disposition”) and any attempted Disposition will be null and void. No
right or benefit hereunder shall in any manner be liable for or subject to any debts, contracts,
liabilities, or torts of any Participant or other person entitled to such benefits.
Notwithstanding

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any provision of the Plan to the contrary, a benefit under the Plan may be paid to
an alternate payee as required under a domestic relations order (as defined in Code Section
414(p)(1)(B)), approved by the Committee, consistent with the requirements of Code Section 409A and
the Treasury regulations issued thereunder. The foregoing provisions of this Section 6.2 shall
also not apply to an irrevocable Disposition of a right or benefit under this Plan to a “Permitted
Assignee,” as defined below, by (i) a Participant age 55 or older (an “Eligible Participant”), or
(ii) a “Permitted Assignee,” as defined below, who has received an assignment from an Eligible
Participant pursuant to this sentence.

     (a) Permitted Assignee. The term “Permitted Assignee” shall mean:

     (i) The Eligible Participant;

     (ii) A spouse of the Eligible Participant;

     (iii) Any person who is a lineal ascendant or descendant of the
Eligible Participant or the Eligible Participant’s spouse;

     (iv) Any brother or sister of the Eligible Participant;

     (v) Any spouse of any individual described in
subparagraph (iii) or (iv);

     (vi) A trustee of any trust which, at the applicable time, is
100% actuarially held for a Permitted Assignee or Assignees (as
defined in Section 6.2(c));

     (vii) Any corporation in which, at the applicable time, each
class of stock is 100% owned by a Permitted Assignee or Permitted
Assignees;

     (viii) Any partnership in which, at the applicable time, each
class of partnership interest is 100% owned by a Permitted Assignee
or Permitted Assignees; or

     (ix) Any limited liability company or other form of
incorporated or unincorporated business organization in which each
class of stock, membership or other equity interest is 100% owned by
a Permitted Assignee or Assignees.

     (b) Subsequent Assignees. This Section 6.2 shall be fully applicable to all
Permitted Assignees, and the provisions of this Section 6.2 shall be fully applicable to any
right or benefit transferred by an Eligible Participant to any Permitted Assignee as if such
Permitted Assignee were an Eligible Participant; provided, however, that no Permitted
Assignee shall be deemed an Eligible Participant for determining the persons who constitute
Permitted Assignees under Section 6.2(a). Any Permitted Assignee acquiring a right or
benefit under this Plan shall execute and deliver to the Committee an agreement pursuant to
which such Permitted Assignee agrees to be bound by all of the

-11-

 

terms and provisions of the
Plan, provided that the failure to execute and deliver such an agreement shall not be deemed
to relieve such Permitted Assignee of the restrictions imposed by the Plan. Any attempted
Disposition of a right or benefit under this Plan in breach of this Section 6.2, whether
voluntary, involuntary, by operation of law or otherwise shall be null and void.

     (c) Actuarially Held. In making the determination whether a trust is 100%
actuarially held for Permitted Assignee(s), a trust, at the applicable point in time, is
100% actuarially held for Permitted Assignee or Assignees when 100% of the actuarial value
of the beneficial interests of the trust, except as provided in the following sentence, are
held for a Permitted Assignee or Permitted Assignees. For purposes of making the
determination described above, the possibility that an interest in a trust may be appointed
pursuant to a special or general power of appointment shall be ignored; provided, that the
actual exercise of any such power of appointment shall not be ignored.

     6.3 Prerequisites to Benefits. No Participant, nor any Beneficiary or other person
claiming through a Participant, shall have any right or interest in the Plan, or any benefits
hereunder, unless and until all the terms,
conditions, and provisions of the Plan which affect such Participant or such other person shall
have been complied with as specified herein.

     6.4 Nature of Employer’s Obligation. This Plan is intended to be, and shall be construed
as, an unfunded plan maintained by each Employer primarily for the purpose of providing deferred
compensation for a select group of its management or highly compensated salaried employees. The
benefits provided under this Plan shall be a general, unsecured obligation of the Employer payable
solely from the general assets of the Employer, and neither the Participant nor the Participant’s
Beneficiary or estate shall have any interest in any assets of the Employer by virtue of this Plan.
Except as may be provided under a “rabbi trust,” no fund or other assets will ever be set aside or
segregated for the benefit of the Participant or the Participant’s Beneficiary under this Plan.
The adoption of the Plan and any setting aside of amounts by an Employer with which to discharge
its obligations hereunder shall not be deemed to create a trust; legal and equitable title to any
funds so set aside shall remain in the Employer and any funds so set aside shall remain subject to
the general creditors of the Employer.

     6.5 Claims and Review Procedures.

     (a) Claims Procedure. If any person believes he or she is entitled to any
rights or benefits under the Plan, such person may file a claim in writing with the
Committee. If any such claim is wholly or partially denied, the Committee will notify such
person of its decision in writing. Such notification will contain (i) specific reasons for
the denial, (ii) specific reference to pertinent Plan provisions, (iii) a description of any
additional material or information necessary for such person to perfect such claim and an
explanation of why such material or information is necessary, and (iv) information as to the
steps to be taken if the person wishes to submit a request for review, the time limits
applicable to such procedures, and a statement of the person’s rights following an adverse
benefit determination on review, including a statement of his or her right to file a lawsuit
under ERISA if the claim is denied on appeal. Such notification will be given within 90
days after the claim is received by the Committee (or within 180 days, if special

-12-

 

circumstances require an extension of time for processing the claim, and if written notice
of such extension and circumstances is given to such person within the initial 90-day
period).

     (b) Claim Review Procedure. Within 60 days after the date on which a person
receives a notice of denial (or within 60 days after the date on which such denial is
considered to have occurred), such person or his or her duly authorized representative
(“Applicant”) may (i) file a written request with the Committee for a review of his or her
denied claim; (ii) review pertinent documents; and (iii) submit issues and comments in
writing. The Committee shall render a decision no later than the date of its regularly
scheduled meeting next following receipt of a request for review, except that a decision may
be rendered no later than the second such meeting if the request is received within 30 days
of the first meeting. The Applicant may request a formal hearing before the
Committee which the Committee may grant in its discretion. Notwithstanding the
foregoing, under special circumstances that require an extension of time for rendering a
decision (including, but not limited to, the need to hold a hearing), the decision may be
rendered not later than the date of the third regularly scheduled Committee meeting
following the receipt of the request for review. If such an extension is required, the
Applicant will be advised in writing before the extension begins. If the claim is denied in
whole or part, such notice, which shall be in a manner calculated to be understood by the
person receiving such notice, shall include (i) the specific reasons for the decision, (ii)
the specific references to the pertinent Plan provisions on which the decision is based,
(iii) that the Applicant is entitled to receive, upon request and free of charge, reasonable
access to, and copies of, all documents, records, and other information relevant to the
claim for benefits, and (iv) a statement of the Applicant’s right to file a lawsuit under
ERISA. Benefits under this Plan will only be paid if the Committee decides, in its
discretion, that an Applicant is entitled to them.

     (c) Exhaustion of Administrative Remedies. The decision of the Committee on
review of the claim denial shall be binding on all parties when the Participant has
exhausted the claims procedure under this Section 6.5. Moreover, no action at law or in
equity shall be brought to recover benefits under this Plan prior to the date the Applicant
has exhausted the administrative remedies under this Section 6.5.

ARTICLE VII

MISCELLANEOUS

     7.1 Amendment or Termination of the Plan. The Board of Directors of the Company may amend
or terminate this Plan at any time. Any such amendment or termination shall not, however, without
the written consent of the affected Participant, reduce the interest rate applicable to, or
otherwise adversely affect the rights of a Participant for Compensation with respect to which a
Participant made an irrevocable deferral election before the later of the date that such amendment
is executed or effective.

     7.2 Reliance Upon Information. The Committee shall not be liable for any decision or
action taken in good faith in connection with the administration of this Plan. Without limiting

-13-

 

the generality of the foregoing, any such decision or action taken by the Committee in reliance
upon any information supplied to it by an officer of the Company, the Company’s legal counsel, or
the Company’s independent accountants in connection with the administration of this Plan shall be
deemed to have been taken in good faith.

     7.3 Effective Date. The Plan shall become effective as of January 1, 2008 for benefits
accrued under the Plan on and after January 1, 2005.

     7.4 Code Section 409A . It is intended that the provisions of this Plan satisfy the requirements of Code Section 409A
and that the Plan be operated in a manner consistent with such requirements to the extent
applicable. Therefore, the Committee may make adjustments to the Plan and may construe the
provisions of the Plan in accordance with the requirements of Code Section 409A.

     7.5 Governing Law. This Plan shall be construed, administered and governed in all respects
in accordance with ERISA and other applicable federal law and, to the extent not preempted by
federal law, in accordance with the laws of the State of Texas. If any provisions of the Plan
shall be held by a court of competent jurisdiction to be invalid or unenforceable, the remaining
provisions hereof shall continue to be fully effective.

     7.6 Severability. If any term, provision, covenant, or condition of the Plan is held to be
invalid, void, or otherwise unenforceable, the rest of the Plan shall remain in full force and
effect and shall in no way be affected, impaired, or invalidated.

     7.7 Notice. Any notice or filing required or permitted to be given to the Committee under
this Plan shall be sufficient if in writing and hand delivered, or sent by registered or certified
mail, to the principal office of the Company. Such notice shall be deemed given as of the date of
delivery or, if delivery is made by mail, as of the dates shown on the postmark on the receipt for
registration or certification.

[Signature Page To Follow]

-14-

 

          IN WITNESS WHEREOF, CenterPoint Energy, Inc. has caused these presents to be executed by its
duly authorized officer in a number of copies, all of which shall constitute one and the same
instrument, which may be sufficiently evidenced by any executed copy
hereof, this 21st day of
February, 2008, but effective as of January 1, 2008.

	 	 	 	 	 
	 	CENTERPOINT ENERGY, INC.

 	 
	 	By:  	/s/ David M. McClanahan
 	 
	 	 	David M. McClanahan 	 
	 	 	President and Chief Executive Officer 	 
	 

	 	 	 
	ATTEST:
	 	 
	 
	 	 
	/s/ Richard Dauphin
 

Richard Dauphin

	 	 
	Assistant Corporate Secretary
	 	 

-15-exv10w4

 

Exhibit 10.4

CENTERPOINT ENERGY, INC. DEFERRED COMPENSATION PLAN

(As Amended and Restated Effective January 1, 2003)

First Amendment

          WHEREAS, CenterPoint Energy, Inc. (the “Company”), maintains the CenterPoint Energy, Inc.
Deferred Compensation Plan, as amended and restated effective January 1, 2003 (the “Plan”), for the
benefit of its eligible employees and directors; and

          WHEREAS, in response to the enactment of Section 409A of the Internal Revenue Code of 1986, as
amended (the “Code”), effective as of January 1, 2005, the Company in operation separated all Plan
benefits earned and vested as of December 31, 2004 (“Grandfathered Benefits”) from all Plan
benefits earned or vested after December 31, 2004 (“409A Benefits”); and

          WHEREAS, at all times on and after January 1, 2005, the Grandfathered Benefits, along with all
earnings attributable thereto, have been (and continue to be) subject to the terms and provisions
of the Plan as in effect on October 3, 2004, and no material modifications, within the meaning of
Code Section 409A and the Treasury regulations and guidance thereunder, have been made (in form or
operation) to the Plan with respect to such benefits; and

          WHEREAS, the Company desires to bifurcate the Plan such that (1) the Grandfathered Benefits,
along with all earnings attributable thereto, shall be maintained under and paid from the Plan,
which shall be frozen and intended to be a “grandfathered” plan exempt from Code Section 409A and
(2) the 409A Benefits, along with all earnings attributable thereto, shall be spun-off from the
Plan into, and maintained under and paid from, a newly established and separate plan that is
intended to comply with the requirements of Code Section 409A, known as the CenterPoint Energy 2005
Deferred Compensation Plan, effective as of January 1, 2008; and

          WHEREAS, in connection with the bifurcation of the Plan, the Company desires to change the
name of the Plan to the CenterPoint Energy, Inc. 1989 Deferred Compensation Plan;

          NOW, THEREFORE, the Company, having reserved the right under Section 7.1 of the Plan to amend
the Plan, does hereby amend the Plan, effective as of January 1, 2008, as follows:

1

 

          1. The Plan is hereby frozen. No new participants shall be permitted, and no deferred
contribution shall be made and no benefits shall be earned or vested, under the Plan after December
31, 2007 (other than earnings on the contributions and benefits earned and vested prior to January
1, 2005). The Plan shall only provide contributions made and benefits earned and vested as of
December 31, 2004, along with all earnings attributable thereto. Any contributions or benefits
(and earnings thereon) not vested as of December 31, 2004, are hereby spun-off into the new
CenterPoint Energy 2005 Deferred Compensation Plan as of January 1, 2008 (and shall be paid from
such new plan).

          2. The name of the Plan is hereby amended to be the “CenterPoint Energy, Inc. 1989 Deferred
Compensation Plan,” and all references in the Plan to the “CenterPoint Energy, Inc. Deferred
Compensation Plan” are hereby amended accordingly, and the definition of “Plan” in Article I of the
Plan is hereby amended to read as follows:

     “‘Plan’ means the CenterPoint Energy, Inc. 1989 Deferred Compensation Plan, as
amended and restated effective January 1, 2003, as set forth herein (formerly known
as the CenterPoint Energy, Inc. Deferred Compensation Plan), as the same may
hereafter be amended from time to time. As of January 1, 2008, the Plan is frozen
and no new participants shall be permitted and no contributions shall be made and no
benefits shall be earned or vested (other than earnings on the contributions and
benefits that were earned and vested as of December 31, 2004) under the Plan after
December 31, 2007. All unvested benefit accruals as of December 31, 2004 (along
with earnings attributable thereto) were spun-off from the Plan, effective as of
January 1, 2008, into, and shall be provided under, the CenterPoint Energy 2005
Deferred Compensation Plan.”

          IN WITNESS WHEREOF, CenterPoint Energy, Inc. has caused this document to be executed by its
duly authorized officer in a number of copies, all of which shall constitute one and the same
instrument, which may be sufficiently evidenced by any executed copy hereof, this 21st day of
February 2008, but effective as of January 1, 2008.

	 	 	 	 	 
	 	CENTERPOINT ENERGY, INC.

 	 
	 	By:  	/s/ David M. McClanahan
 	 
	 	 	David M. McClanahan 	 
	 	 	President and Chief Executive Officer 	 
	 

	 	 	 
	ATTEST:
	 	 
	 
	 	 
	/s/ Richard Dauphin
 

	 	 
	Richard Dauphin
	 	 
	Assistant Corporate Secretary
	 	 

2

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