Document:

Unassociated Document

    
      Exhibit
10.36

      

      OGE
ENERGY CORP.

      EXECUTIVE
OFFICER COMPENSATION

       

      Executive
Compensation

       

      In
December 2009, the Compensation Committee (the “Committee”) of the OGE Energy
Corp. board of directors took actions setting executives’ salaries, target
amount of annual bonus awards and target amounts of long-term compensation
awards for 2010.  Executive compensation was set by the Committee
after consideration of, among other things, individual performance and
market-based data on compensation for executives with similar
duties.  Payouts of 2010 annual bonus targets and long-term awards are
dependent on achievement of specified corporate goals that will be established
by the Committee at a subsequent meeting, and no officer is assured of any
payout.

       

      Salary

       

      The
Committee established the base salaries for its senior executive
group.  The salaries for 2010 for the current OGE Energy officers who
are expected to be named in the Summary Compensation Table in OGE Energy’s 2010
Proxy Statement (the “Named Executive Officers”) are as follows:

       

      
        	 	
                Named Executive
      Officer

              	
                2010 Base
      Salary

              	 
	 	 
      	 
      	 
	 	
                Peter
      B. Delaney, Chairman and Chief Executive Officer

              	
                $840,000

              	 
	 	
                Danny
      P. Harris, Senior Vice President and Chief Operating
    Officer

              	
                $562,300

              	 
	 	
                Sean
      Trauschke, Vice President and Chief Financial Officer

              	
                $412,000

              	 
	 	
                E.
      Keith Mitchell, Senior Vice President and Chief Operating Officer of
      Enogex LLC

              	
                $331,300

              	 
	 	
                Stephen
      E. Merrill, Vice President of Human Resources

              	
                $254,800

              	 
	 	
                Scott
      Forbes, Controller and Chief Accounting Officer

              	
                $245,100

              	 

      

       

      Establishment
of 2010 Annual Incentive Awards

       

      As stated
above, at its December 2009 meeting, the Committee approved the target amount of
annual incentive awards, expressed as a percentage of salary, with the officer
having the ability, depending upon achievement of the 2010 corporate goals to be
set by the Committee at a subsequent meeting, to receive from 0 percent to 150
percent of such targeted amount.  For 2010, the targeted amount ranged
from 40 percent to 90 percent of the approved 2010 base salary for the Named
Executive Officers.

       

      Establishment
of Long-Term Awards

       

      At its
December 2009 meeting, the Committee also approved the level of target long-term
incentive awards, expressed as a percentage of salary, with the officer having
the ability to receive from 0 percent to 200 percent of such targeted amount at
the end of a three-year performance period depending upon achievement of the
corporate goals to be set by the Committee at a subsequent
meeting.  For 2010, the targeted amount ranged from 70 percent to 225
percent of the approved 2010 base salary for the Named Executive
Officers.

       

      Other
Benefits

       

      Retirement
Benefits.  Virtually all of our employees hired before December
1, 2009, including executive officers, are eligible to participate in our
Pension Plan and certain employees are eligible to participate in our
supplemental restoration plan that enables participants, including executive
officers, to receive the same benefits that they would have received under our
Pension Plan in the absence of limitations imposed by the Federal tax laws. In
addition, a Supplemental Executive Retirement Plan (the “SERP”), which was
adopted in 1993, offers supplemental pension benefits to specified lateral
hires. Mr. Delaney is the only employee, including executive officers, who
participates in the SERP. Mr. Delaney’s participation in the SERP was the result
of arms-length bargaining between Mr. Delaney and the Company at the time of his
hire in April 2002 as Executive Vice President of the Company.

       

      Almost
all employees of the Company, including executive officers, also are eligible to
participate in our qualified defined contribution retirement plan (the “401(k)
Plan”). Under the 401(k) Plan, participants may contribute between two percent
and 19 percent of their compensation. Participants may designate, at their
discretion, all or any portion of their contributions as: (i) a before-tax
contribution under Section 401(k) of the Internal Revenue Code subject to the
limitations

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      
        
          thereof;
or (ii) a contribution made on an after-tax basis.   In addition,
participants age 50 or older may make as a before-tax contribution certain
“catch-up” contributions as permitted under the Internal Revenue Code. The
401(k) Plan was amended in October 2009 whereby eligible employees were offered
a one-time irrevocable election (the “Choice Program”), depending on their hire
date, to select a future retirement benefit combination from the Company’s
Pension Plan and the Company’s 401(k) Plan. If employees elected under the
Choice Program to stay in the current Pension Plan and 401(k) Plan, the Company
matches (other than the “catch-up contributions”), each pay period under the
401(k) Plan, on behalf of each participant, an amount equal to 50 percent up to
six percent of compensation for participants whose employment or re-employment
date occurred before February 1, 2000 and who have less than 20 years of
service, as defined in the 401(k) Plan, and an amount equal to 75 percent up to
six percent of compensation for participants whose employment or re-employment
date occurred before February 1, 2000 and who have 20 or more years of
service, as defined in the 401(k) Plan.  For participants whose
employment or re-employment date occurred on or after February 1, 2000 and
before December 1, 2009 under the current 401(k) Plan, the Company contributes
100 percent up to six percent of compensation.  For participants hired
on or after December 1, 2009, the Company contributes, effective January 1,
2010, 200 percent up to five percent of compensation.  If employees
elected under the Choice Program not to stay in the current Pension Plan and
401(k) Plan, effective January 1, 2010, the Company will contribute on behalf of
each participant, depending on the option elected under the Choice Program, 200
percent up to five percent of compensation or 100 percent up to six percent of
compensation.  Participants’ contributions are fully vested and
non-forfeitable. The Company match contributions vest over a three-year period.
After two years of service, participants become 20 percent vested in their
Company contribution account and become fully vested on completing three years
of service. In addition, participants fully vest when they are eligible for
normal or early retirement under the Company’s Pension Plan, in the event of
their termination due to death or permanent disability or upon attainment of age
65 while employed by the Company or its affiliates.

           

        

      

      The
Company provides a nonqualified deferred compensation plan which is intended to
be an unfunded plan.  The deferred compensation plan allows key
employees, including all executive officers, to defer compensation above
government limitations on 401(k) contributions that apply to the Company’s
401(k) Plan and to defer taxation on all earnings on compensation deferred into
the plan. Under the terms of the deferred compensation plan, participants have
the opportunity to elect to defer each year up to 70 percent of their base
salary and up to 100 percent of their annual bonus awards.

       

         The Company matches deferrals to make up
for any match lost in the 401(k) Plan because of deferrals to the deferred
compensation plan, and to allow for a match that would have been made under the
401(k) Plan on that portion of either the first six percent of total
compensation or the first five percent of total compensation, depending on
the option the participant elected under the Choice Program discussed
above, deferred that exceeds the limits allowed in
the 401(k) Plan. Matching credits vest based on years of service, with full
vesting after six years or, if earlier, on retirement, disability, death, a
change in control of the Company or termination of the plan.

      

      
        Deferrals,
plus any Company match, are credited to a special recordkeeping account in the
participant’s name. Earnings on the deferrals are indexed to the assumed
investment funds selected by the participant. During 2009, those investment fund
options included an OGE Energy Common Stock fund and various money market, bond
and equity funds.

         

      

      Normally,
payments under the deferred compensation plan begin within one year after
retirement. For these purposes, normal retirement age is 65 and the minimum age
to qualify for early retirement is age 55 with at least five years of service.
Benefits will be paid, at the election of the participant, either in a lump sum
or a stream of annual payments for up to 15 years, or a combination thereof.
Participants whose employment terminates before they qualify for retirement will
receive their vested account balance in one lump sum following termination as
provided in the plan. Participants also will be entitled to pre- and
post-retirement survivor benefits. If the participant dies while in employment
before retirement, his or her beneficiary will receive a payment of the account
balance plus a supplemental survivor benefit equal to two times the total amount
of base salary and bonuses deferred under the plan.  If the
participant dies following retirement, his or her beneficiary will continue to
receive the remaining vested account balance. Additionally, eligible surviving
spouses will be entitled to a lifetime survivor annuity payable annually. The
amount of the annuity is based on 50 percent of the participant’s account
balance at retirement, the spouse’s age and actuarial assumptions established by
the Company’s Benefits Committee.

       

      At any
time prior to retirement, a participant may withdraw all or part of amounts
attributable to his or her vested account balance at December 31, 2004, subject
to a penalty of 10 percent of the amount withdrawn. In addition, at the time of
the initial deferral election, a participant may elect to receive one or more
in-service distributions on specified dates without penalty. Hardship
withdrawals, without penalty, of amounts attributable to a participant’s vested
account balance as of December 31, 2004 may also be permitted at the discretion
of the Company’s Benefits Committee.

       

      
        Perquisites. The Company also
offers executive officers a limited amount of perquisites. These include dining
and country club memberships for certain executive officers, an annual physical
exam for all executive officers and, in the case of

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      
        
          Mr.
Delaney, use of a Company car.  A prior perquisite for tax and
financial planning services was discontinued by the Committee during
2007.  In reviewing the perquisites and the benefits under the SERP,
401(k) Plan, deferred compensation plan, Pension Plan and related restoration
plan, the Committee sought in 2009 to provide participants with benefits at
least commensurate with those offered by other utilities of comparable
size.

           

        

        Change-of-Control Provisions and
Employment Agreements.  Each
of the executive officers has an employment agreement that provides for
specified benefits upon termination following a change of control. If an
executive officer’s employment is terminated by the Company “without cause” or
by the executive for “good reason” (as defined) following a change of control,
the executive officer is entitled to, among other things, a severance payment
equal to 2.99 times the sum of such officer’s (a) annual base salary and (b)
highest recent annual bonus. “Good reason” was defined for executives hired
prior to January 1, 2009, to include the ability of the executive to terminate
voluntarily for any reason during the 30-day period immediately following the
one-year anniversary of the change of control. This type of provision, which
was eliminated for executives hired after January 1, 2009, is sometimes called a
“modified double-trigger” because payment is made only if there is a change of
control and the executive officer’s employment is terminated. The agreements
prior to January 1, 2009 utilized a modified double-trigger because the Board of
Directors believed change-of-control payments only should be made if there is a
separation of employment following a change-of-control, but also believed that
the right to voluntarily terminate for any reason within 30 days after the first
anniversary of the change of control helped ensure that the executive’s services
would be available during an important transition period. The 2.99 times
multiple for change-of-control payments was selected because at the time it was
considered standard. Although many companies also include provisions for tax
gross-up payments to cover any excise taxes on excess parachute payments, the
Board of Directors of the Company decided not to include this additional benefit
in the Company’s agreements. Instead, under the Company’s agreements if the
excise tax would be imposed, the change-of-control payments will be reduced to a
point where no excise tax would be payable, if such reduction would result in a
greater after-tax payment.

      

      

      The form
of Change of Control Agreements and Employment Agreement are filed as Exhibits
10.31, 10.32, 10.33, 10.37 and 10.38 to this Annual Report on Form
10-K.

       

      In addition, pursuant to the terms of
the Company’s incentive compensation plans, upon a change of control, all stock
options will vest immediately and, for a 60-day period following the change of
control, executive officers may surrender their options and receive in return a
cash payment equal to the excess of the change of control price (as defined)
over the exercise price; all performance units will vest and be paid out
immediately in cash as if the applicable performance goals had been satisfied at
target levels; and any annual incentive award outstanding for the year in which
the participant’s termination occurs for any reason, other than cause, within 24
months after the change of control will be paid in cash at target level on a
prorated basis.

       

      
        

          In
connection with Mr. Trauschke’s appointment in April 2009 as Vice President and
CFO, the Company and Mr. Trauschke entered into an employment arrangement, the
terms of which are summarized below. The terms of the employment arrangement
were approved by the Committee and were subject to arms-length bargaining
between Mr. Trauschke and the Company. Under his employment arrangement, Mr.
Trauschke’s initial annual base salary was set at $382,500 and he received a
cash signing bonus of $175,000, payable in two installments, of which $87,500
was paid on April 24, 2009 and $87,500 was paid on August 28, 2009. Mr.
Trauschke is obligated under the employment arrangement to repay
the $175,000 if he voluntarily resigns or is terminated by the Company for cause
within two years of his start date, which was April 24, 2009. Pursuant to the
employment arrangement, Mr. Trauschke received an annual award under the
Company’s Annual Incentive Plan with a target amount of 60 percent of his base
salary. Mr. Trauschke also received an award of two grants of performance units
under his employment arrangement, both of which are described above. Since Mr.
Trauschke’s prior employer and residence were in North Carolina, the Company
also agreed, under the employment arrangement, to reimburse Mr. Trauschke for
various relocation and related expenses, including: (i) travel expenses between
North Carolina and Oklahoma City (maximum of one round trip per week) for nine
months or, if sooner, the closing of the sale of his house in North Carolina,
(ii) expenses for two house hunting trips in the Oklahoma City area for Mr.
Trauschke and his wife, (iii) a real estate commission of six percent or less
from the sale of his house in North Carolina, within one year of Mr. Trauschke
commencing employment, (iv) moving expenses associated with moving his residence
and family to Oklahoma City and (v) interim living expenses of up to $3,000 per
month for nine months pending the sale of his residence in North Carolina. The
Company is obligated under the employment arrangement to pay Mr. Trauschke an
amount equal to 1.5 times his then annual rate of base salary if the Company
terminates Mr. Trauschke’s employment other than for cause before April 24,
2011. After January 1, 2010, all of the provisions of the arrangement with Mr.
Trauschke became subject to change by the Company, other than the foregoing
provision to pay Mr. Trauschke 1.5 times his salary for termination prior to
April 24, 2011, other than for cause.

        

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

        As noted above, the Company agreed to
pay Mr. Trauschke’s travel costs of commuting between Oklahoma City and his home
in North Carolina, along with his interim living expenses in Oklahoma City and
househunting trips with his spouse, for nine months or until the sale of his
home in North Carolina.   Since the payment of these expenses by
the Company is treated as taxable income to Mr. Trauschke, the Company also
grossed-up these payments to compensate Mr. Trauschke for the taxes owed, which
is consistent with the Company’s relocation policy for all
employees.  In May, June and July 2009, these expenses averaged
approximately $8,800 per month, which, when grossed-up for taxes, resulted in a
payment by the Company of approximately $13,000 per month.  In August
2009 and despite not having sold his house in North Carolina, Mr. Trauschke
relocated his family to Oklahoma City and the Company began paying the cost of
his rental house in the Oklahoma City area, which was $4,650 per month and
substantially less than the $8,800 per month that the Company had been paying
Mr. Trauschke for commuting and interim living expenses.  Because the
$4,650 was taxable to Mr. Trauschke, it was grossed-up for taxes, consistent
with the Company’s relocation policy for all employees, resulting in a monthly
payment by the Company of approximately $6,800.  The Company also paid
Mr. Trauschke’s expenses in moving his family and belongings to Oklahoma City,
which aggregated approximately $3,800.  Since this amount was not
taxable to Mr. Trauschke, it was not grossed-up for taxes.  Thus, for
2009, the aggregate amount paid to Mr. Trauschke for relocation and related
benefits was approximately $76,450, of which approximately $23,450 represented
gross-up payments for taxes. The Committee and the Company believe that this
practice of paying actual relocation expenses, including, where applicable,
gross-ups for taxes incurred, for newly-hired executives is preferable to paying
the executive at hiring a lump sum intended to compensate the executive for
relocation expenses.   In recognition of Mr. Trauschke’s
performance in 2009 and the depressed housing market, the Committee at its
meeting in December 2009 extended Mr. Trauschke’s relocation benefits until the
earlier to occur of June 30, 2010, or the sale of his house in North
Carolina.exhibit1040.htm

     

     

    
      Exhibit
10.40

      

      Amendment
No. 1

      OGE
Energy Corp. Restoration of Retirement Income Plan

      (As
Amended and Restated Effective January 1, 2005)

      

      OGE
Energy Corp., an Oklahoma corporation (the “Company”), in accordance with the
authority reserved to the Company under Section 9 of the OGE Energy Corp.
Restoration of Retirement Income Plan (As Amended and Restated Effective January
1, 2005) (the “Plan”), hereby amends the Plan, effective as of January 1, 2010,
in the following respect:

      
         

        
          	
                  1.     

                	
                  By
      adding at the end of the definition of “Compensation” in Section 2 of the
      Plan a new sentence to read
as follows:

                

        

         

      

      “Notwithstanding
any provision of the Plan, with respect to any Participant who for the first
time becomes a participant in the Retirement Plan on or after January 1, 2010,
Compensation shall not, for purposes of Section 5(a) or for any other purpose of
the Plan, include any amounts paid to such Participant for any period of service
with the Company or other Employer before January 1, 2010 (including any bonus
paid in 2010 for such service).”

       

      
        	
                2.     

              	
                By
      deleting the first sentence of the first paragraph of Section 5 of the
      Plan and inserting in lieu thereof a new sentence to read as
      follows:

              

      

       

      “The benefits payable to a Participant
or his beneficiary or beneficiaries under this Plan shall be equal to the
excess, if any, of:

       

      (a)           the
benefits which would have been paid on or after July 14, 1987, to such
Participant, or on his behalf to his beneficiary or beneficiaries, under the
Retirement Plan, if the provisions of the Retirement Plan were administered (i)
using the definition of Compensation contained in Section 2 of the Plan and (ii)
without regard to the 415 Limit or the 401(a)(17) Limit, over

       

      (b)           the
benefits which are payable to such Participant, or on his behalf to his
beneficiary or beneficiaries, under the Retirement Plan; provided, however,
that, with respect to a Participant who for the first time becomes a participant
in the Retirement Plan on or after January 1, 2010, the benefit payable under
the Retirement Plan shall be determined for purposes of this subsection (b) as
if under the Retirement Plan the Participant had accrued no benefits
attributable to compensation for any periods of service with the Company or
other Employer before January 1, 2010 (including any bonus paid in 2010 for such
service).”

      
         

        
          
            	
                    3.     

                  	
                    

                      By
      deleting the phrase “with the objective that such recipient” where it
      appears in the first sentence of the second paragraph of Section 5 of the
      Plan and inserting in lieu thereof the phrase “with the objective that,
      except as provided in the preceding paragraph, such
      recipient”.

                    

                  

          

           

        

      

      
        
          
            	
                    4.     

                  	
                    

                      Except
      as provided herein, the Plan remains in full force and
      effect.

                    

                  

          

           

        

      

      IN
WITNESS WHEREOF, OGE Energy Corp. has caused this instrument to be executed in
its name by a member of its Benefits Oversight Committee as of the 16th day of
December 2009.

      

      OGE
ENERGY CORP.

      

      By:  Its
Benefits Oversight Committee

      

      

      By: /s/ Carla D.
Brockman 

      Title:
Vice President –
Administration / Corporate Secretary

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