Document:

ex10_4.htm

    
      

    

    Exhibit
10.4

     

    January
2009

    

    TENNESSEE
VALLEY AUTHORITY

    EXECUTIVE
LONG-TERM INCENTIVE PLAN

    

    

    PURPOSE

    

    The
Executive Long-Term Incentive Plan (“ELTIP” or “Plan”) is designed to provide
Manager/Specialist employees in “especially critical” positions with incentive
opportunities based on successful achievement of established financial and/or
operational goals measured over a multi-year period.  The Plan, in
conjunction with salary, annual incentive compensation, and long-term deferred
compensation, provides total direct compensation opportunities similar to those
found at competing companies.

    

    

    PARTICIPATION

    

    Participation
is limited to “especially critical” positions that have the ability to directly
impact TVA’s long-term strategic objectives.  The Board of Directors,
the Chief Executive Officer (“CEO”), or their delegatees, approve the
Participants in the Plan in accordance with then existing delegations of
authority.

    

    

    PERFORMANCE
CYCLE

    

    Each
performance cycle extends for a period of three consecutive fiscal
years.

    

    A new
performance cycle begins at the start of each TVA fiscal year (October
1).

    

    An
example of the three-year performance cycle with overlapping cycles is
illustrated below:

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        
                                                          
                                                            
                                                              
                                                                
                                                                  
                                                                    
                                                                      	 
      	 
      	 
      	 
      	 
      	 
      
	
                                                                              Performance
      Cycle

                                                                            	
                                                                              FY
      2008

                                                                            	
                                                                              FY
      2009

                                                                            	
                                                                              FY
      2010

                                                                            	
                                                                              FY
      2011

                                                                            	
                                                                              FY
      2012

                                                                            
	 
      	 
      	 
      	 
      	 
      	 
      
	
                                                                              1
      - FY08

                                                                            	 
      	 
      	 
      	 
      	 
      
	
                                                                              2
      - FY09

                                                                            	 
      	 
      	 
      	 
      	 
      
	
                                                                              3
      - FY10

                                                                            	 
      	 
      	 
      	 
      	 
      

                                                                    

                                                                  

                                                                

                                                              

                                                            

                                                          

                                                        

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    

    

    PERFORMANCE
MEASURES AND GOALS

    

    The Plan
incorporates the use of Performance Measures that focus primarily on the
achievement of TVA’s long-term financial and/or operational
goals.  Performance Measures and Goals are measured over the
three-year period of the performance cycle.

    

    Performance
Measures, Performance Measure weighting, and the identification of Performance
Goals for each Performance Measure, will be established for each performance
cycle in accordance with reservations and delegations of authority under the TVA
Compensation Plan and communicated in administration of the Plan by the Vice
President, Human Resources.

    

    

    ELTIP
INCENTIVE OPPORTUNITY

    

    ELTIP
Incentive Opportunities for each Participant are established based on market
data, level of responsibility, and relationship with other TVA positions in
order to ensure a consistent approach among TVA organizations.  ELTIP
Incentive Opportunities under the Plan are designed to align each Participant’s
Total Direct Compensation with relevant labor market practices.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    The basis
of a target award opportunity is a percentage of the Participant’s salary, which
is established based on the Participant’s position within TVA.

    

    

    AWARD
DETERMINATION

    

    ELTIP
Awards are based on achieved level of performance compared to the established
Performance Measures and Goals over the Performance Cycle and the ELTIP
Incentive Opportunity for each Participant calculated as follows:

    

    
      
        
          	
                  ELTIP
      Award

                	
                  =

                	
                  Salary

                	
                  x

                	
                  ELTIP
      Incentive

                	
                  x

                	
                  Percent
      of Opportunity

                
	 
      	 
      	 
      	 
      	
                  Opportunity

                	 
      	
                  Achieved

                

        

      

    

    

    ELTIP
Awards are calculated based on Participants’ salaries at the end of the
performance cycle.  Final ELTIP Awards for each Participant may be
adjusted by the Board of Directors, the CEO, or other appropriate delegated
officer based on the evaluation of the Participant’s individual achievements,
peer group comparisons, and performance results over the Performance
Cycle.  The maximum ELTIP Award allowed under this Plan is 150 percent
of the ELTIP Incentive Opportunity for each Participant, unless a
different maximum is approved by the Board of Directors or its
delegatee.

    

    

    AWARD
ELIGIBILITY

    

    A
Participant must be a full-time employee at the end of the Performance Cycle in
order to be eligible to receive an award.

    

    Participants
who have participated in the Plan for the entire Performance Cycle, or
Participants who are not new TVA employees at the time they become participants
in the Plan, will be eligible to receive a full award.

    

    Except as
set forth above, Participants who become participants in the Plan at a time
other than the beginning of a Performance Cycle, and who are employed at the end
of the Performance Cycle, will be eligible to receive a Prorated Award based on
the number of full months he/she has been a Participant in the Performance
Cycle.

    

    Notwithstanding
the above, if a Participant’s employment is terminated due to death or
Disability, then the Participant will receive a Prorated Award for the
Performance Cycle ending on September 30th
following the date of termination of employment, but no other Performance
Cycles.

    

    

    PAYMENT
OF AWARDS

    

    ELTIP
Awards are paid in a lump sum during the first quarter of the next fiscal year
following each performance cycle but no later than March 15th of
the next calendar year following the year in which the Awards are earned. All ELTIP
Awards will be approved by the Board of Directors, the CEO, or other delegated
officer prior to payment.

    

    In the
event a Participant’s employment is terminated due to death or Disability, the
Prorated Award will be calculated assuming target achievement and paid either
(i) by the last day of the first full calendar month following the receipt of
proper proof of the Participant’s death, or (ii) within 90 days of termination
of employment due to Disability.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    DEFERRAL
ELECTION OPTION

    

    Performance-Based
Compensation

    

    Participants
may be eligible to elect to defer all or a portion of any eligible ELTIP Award
for a Performance Cycle to the TVA Deferred Compensation Plan under the
following conditions:

    

    
      	
               
      

            	
              ·

            	
              Deferral
      election must be made on or before the date that is six (6) months before
      the end of the Performance Cycle;

            

    

    
      	
               
      

            	
              ·

            	
              The
      deferral must be made in 25% increments of the actual ELTIP Award and is
      irrevocable as of the date set forth
above;

            

    

    
      	
               
      

            	
              ·

            	
              Deferred
      amounts will be paid out upon the Participant’s Separation from Service in
      either a lump sum or in 5 or 10 annual installments, as elected by the
      Participant; and

            

    

    
      	
               
      

            	
              ·

            	
              The
      Participant performs services at TVA continuously from the date the
      Participant’s performance criteria are established through the date a
      deferral election is made.

            

    

    

    ELTIP
Awards are eligible for deferral to the extent (i) they constitute
“performance-based compensation,” as that term is defined in 26 CFR §1.409A-1(e)
of the Internal Revenue Code section 409A final regulations, and (ii) the amount
of the awards has not become readily ascertainable at the time of the deferral
election.

    

    First Year of
Eligibility

    

    Participants
who become participants in the Plan at a time other than the beginning of the
Performance Cycle may be eligible to elect to defer a portion of any eligible
ELTIP Award for the Performance Cycle to the TVA Deferred Compensation Plan
under the following conditions:

    

    
      	
               
      

            	
              ·

            	
              Deferral
      election must be made within thirty (30) days after the date the
      Participant becomes eligible to participate in the
  Plan;

            

    

    
      	
               
      

            	
              ·

            	
              The
      deferral election choices are 25%, 50% or 75% of the actual ELTIP Award,
      to the extent such choices are available to the
    Participant;

            

    

    
      	
               
      

            	
              ·

            	
              The
      deferral is irrevocable as of the date set forth above;
  and

            

    

    
      	
               
      

            	
              ·

            	
              Deferred
      amounts will be paid out upon the Participant’s Separation from Service in
      either a lump sum or in 5 or 10 annual installments, as elected by the
      Participant.

            

    

    

    The
amount of ELTIP Award eligible for deferral depends on the number of days
remaining in the Performance Cycle after the date of the Participant’s election
over the total number of days in the Performance Cycle as set forth in 26 CFR
§1.409A-2(a)(7) of the Internal Revenue Code section 409A final
regulations

    

    

    PLAN
ADMINISTRATION

    

    ELTIP
Incentive Opportunities, Performance Measures and Goals, and the results of the
Performance Measures and Goals for each Participant are approved for each
Performance Cycle in accordance with the TVA Compensation Plan and the
delegations thereunder.

    

    The Plan
will be administered by the Vice President, Human
Resources.  Corporate Human Resources will develop and interpret all
rules for the administration of the Plan.

    

    

    TERMINATION
OR AMENDMENT OF THE PLAN

    

    The Board
of Directors, or its delegatee, may at any time modify, suspend, terminate, or
amend the Plan in whole or in part.

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    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, and the Participants
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.

    

    

    DEFINITION
OF TERMS

    

    
      
        
          	
                  Disability

                	
                  Term
      “disability” as defined in 26 CFR §1.409A-3(j)(4)(xii) of the Internal
      Revenue Code section 409A final regulations.

                
	 
      	 
      
	
                  ELTIP
      Award

                	
                  Actual
      dollar amount awarded to a Participant under the ELTIP.

                
	 
      	 
      
	
                  ELTIP
      Incentive Opportunity

                	
                  Award
      opportunity expressed as a percent of the Participant’s
      salary.

                
	 
      	 
      
	
                  Especially
      Critical

                	
                  A
      position that has the ability to significantly impact the long-term
      financial, and/or operational objectives critical to TVA’s overall
      success.

                
	 
      	 
      
	
                  Participant

                	
                  An
      officer or other Manager/Specialist employee in an Especially Critical
      position approved to be eligible to receive an award under the
      ELTIP.

                
	 
      	 
      
	
                  Performance
      Cycle

                	
                  The
      three-year period of time over which performance is measured for the
      purpose of awarding incentives.

                
	 
      	 
      
	
                  Performance
      Goals

                	
                  The
      long-term strategic goals established for each Performance Measure used to
      determine the ELTIP Award.

                
	 
      	 
      
	
                  Performance
      Measures

                	
                  The
      specific metrics used to measure performance.

                
	 
      	 
      
	
                  Prorated
      Award

                	
                  Method
      used to determine the ELTIP Award amount for an employee not eligible to
      receive a full award.  Pro-ration is based on the number of full
      months of participation in a given Performance Cycle.

                
	 
      	 
      
	
                  Separation
      from Service

                	
                  Term
      “separation from service” as defined in 26 CFR §1.409A-1(h) of the
      Internal Revenue Code section 409A final regulations.

                
	 
      	 
      
	
                  Total
      Direct Compensation

                	
                  Term
      used by TVA that includes salary plus Annual Incentive
      Award plus ELTIP
      Award plus LTDCP
      annual credits.

                

        

      

    

     

     

    4ex10_5.htm

    
      

    

    Exhibit
10.5

     

    January
2009

    

    TVA
LONG-TERM

    DEFERRED
COMPENSATION PLAN

    

    

    Purpose:

    

    The TVA
Long Term Deferred Compensation Plan (“Plan”) is designed to provide long-term
incentives to executives to encourage them to stay with TVA and to provide
competitive levels of total compensation to such executives.  This
Plan will also assist in the recruitment of top executive talent for TVA by
providing an opportunity for significant additional tax deferred
compensation.  As in other corporations, deferred compensation can be
an integral part of a total compensation package.

    

    Eligibility:

    

    The Board
of Directors, the Chief Executive Officer (“CEO”), or their delegatees, approve
the participants in the Plan in accordance with then existing delegations of
authority (“Participants”).

    

    Procedures:

    

    
      	
              •

            	
              TVA
      enters into a deferral agreement with each Participant (a “Deferral
      Agreement”) under which deferred compensation credits (“Credits”) are made
      to an account in the Participant’s name (each, an
      “Account”).  Credits are made on an annual or other periodic
      basis for an established period of time, as specified in the Deferral
      Agreement, after which the Participant vests in the full amount in the
      Participant’s Account, including interest or return as provided
      below.

            

    

    

    
      	
              •

            	
              The
      Participant must be employed with TVA at the time of the expiration of the
      Deferral Agreement, or no payment under this Plan will be made by TVA to
      the Participant pursuant to the Deferral Agreement, and all Credits, and
      any interest or return on such Credits, in the Participant’s Account will
      be forfeited.  This will not apply in the event TVA terminates
      the Participant’s employment without cause through no act or delinquency
      of the Participant or in the event of the Participant’s death in service,
      in which cases the Participant will become vested in the Account balance
      at the time of termination or death.  In the event of death in
      service, the Participant’s Account balance shall be paid in a lump sum to
      the Participant’s designated beneficiary, or in the absence of any such
      designation, to the Participant’s estate, by the last day of the first
      full calendar month following the receipt of proper proof of the
      Participant’s death.

            

    

    

    
      	
              •

            	
              Each
      Participant’s Account will receive interest on the same basis as interest
      is calculated under the TVA Deferred Compensation Plan.  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 selected by the Participant under the same conditions as are
      contained in the TVA Deferred Compensation
Plan.

            

    

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    
      	
              •

            	
              The
      entire vested amount in the Participant’s Account will be paid to the
      Participant in a lump sum within sixty (60) days following the expiration
      of the Deferral Agreement, unless the Participant elects, within thirty
      (30) days following the date the Deferral Agreement is entered into, to
      further defer receipt of vested amounts by having the vested Account
      balance upon expiration of the Deferral Agreement credited to an account
      in the Participant’s name in the TVA Deferred Compensation
      Plan.  Deferred amounts will be paid out upon the Participant’s
      Separation from Service in either a lump sum or in 5 or 10 annual
      installments, as chosen by the Participant at the time of
      election.

            

    

    

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

    

    
      	
              •

            	
              Under
      certain Deferral Agreements with Participants in key positions within TVA,
      TVA will vest the Participant in certain Credits at the time the Credit is
      made to the Participant’s Account.  In the event a Credit vests
      upfront on the effective date of the Deferral Agreement or within twelve
      (12) months following the effective date of the Deferral Agreement, TVA
      will specify within the terms of the Deferral Agreement how the Credit(s)
      will be paid to the Participant (lump sum within sixty (60) days following
      the expiration of the Deferral Agreement or upon Separation from Service
      in either a lump sum or in 5 or 10 annual installments), and the
      Participant shall not have a deferral election with respect to such
      Credits.

            

    

    

    Administration:

    

    
      	
              •

            	
              Approvals
      regarding the terms of Deferral Agreements under the Plan for each
      Participant, such as the duration of the Deferral Agreements and the
      amount and number of Credits, will be made in accordance with the TVA
      Compensation Plan and the delegations
  thereunder.

            

    

    

    
      	
              •

            	
              The
      Vice President, Human Resources, shall have sole and exclusive
      responsibility for resolving any dispute regarding this Plan or a Deferral
      Agreement.  The decisions of the Vice President, Human
      Resources, in all matters pertaining to the Plan’s operation shall be
      final and conclusive as to all
parties.

            

    

    

    
      	
              •

            	
              TVA
      shall maintain each Participant’s Account and credit to each Account the
      Credits, interest, return, and other such amounts as may be approved or
      elected pursuant to this Plan.  TVA shall make payments to
      Participants (and their beneficiaries, as applicable) pursuant to this
      Plan, applicable Deferral Agreements, and the TVA Deferred Compensation
      Plan.

            

    

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    
      	
              •

            	
              Nothing
      contained in this Plan or any Deferral Agreement shall be construed as
      conferring upon any Participant the right to continue in the employment of
      TVA as an executive or employee or in any other
  capacity.

            

    

    

    
      	
              •

            	
              Nothing
      contained in this Plan or any Deferral Agreement and no action taken
      pursuant to the provisions of this Plan or any Deferral Agreement shall
      create or be construed to create a trust of any kind, or a fiduciary
      relationship between TVA and any Participant, designated beneficiary or
      any other person.

            

    

    

    
      	
              •

            	
              No
      transfer, assignment, pledge, seizure, or other voluntary or involuntary
      alienation or encumbrance of any benefit provided under this Plan or any
      Deferral Agreement will be permitted or recognized other than as
      specifically provided in this Plan.

            

    

    

    
      	
              •

            	
              The
      above paragraph notwithstanding, TVA may offset amounts owed to it by a
      Participant against any amounts payable to a Participant under this Plan
      or any Deferral Agreement.

            

    

    

    Amendments:

    

    This Plan
may be amended or terminated by the Board, or its delegatee, at any time as it
deems appropriate without the consent of any Participant, beneficiary, or other
person; provided, however, that if the Board, or its delegatee, elects to
terminate the Plan, any Credits already made under then current Deferral
Agreements to Participants’ Accounts as of the date of termination, including
any interest and/or return as calculated pursuant to this Plan, will vest and be
paid to the Participants either (i) in a lump sum within sixty (60) of the
termination of the Plan or (ii) pursuant to the Participant’s valid deferral
election, as appropriate.

    

    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 and all Deferral Agreements 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, and the Participants, 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 or a Deferral Agreement 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 or any
Deferral Agreement that is not expressly set forth shall be deemed to be set
forth herein, and this Plan and such Deferral Agreement shall be administered in
all respects as if such provision were expressly set forth herein.

     

     

    3

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