Document:

EXHIBIT 10.39

 Exhibit 10.39 

ELECTION OF TAX WITHHOLDING FOR SERVICE BASED AND 
 PERFORMANCE BASED RESTRICTED STOCK AWARDS 
 As a Participant in the Pepco Holdings, Inc.
Long-Term Incentive Plan (the “Plan”), I was granted Service-Based and Performance-Based Restricted Stock Awards in January 2009 for the performance cycle 2009 to 2011. I understand that minimum statutory withholdings for certain
federal, state, local or other taxes are required for Restricted Stock Awards to which I may be entitled under the Plan, which in the case of Performance-Based Awards will be determined after the Board of Directors has determined if, and to what
extent, the goals of the Plan have been met. I elect to use the following method to meet the minimum statutory withholding requirements (please check one of the boxes below). 

I hereby elect that the Company retain from any Restricted Stock Awards to which I may be entitled under the Plan, that number of shares
of Stock having a Fair Market Value equal to the minimum statutory requirement for federal, state and local withholding and other taxes due upon vesting. 
 I will satisfy the minimum statutory requirement for taxes due by the payment of cash immediately upon notification by the Company of the minimum statutory requirement for federal, state and local
withholding and other taxes due upon vesting. 
 I will satisfy the minimum statutory requirement for taxes due by delivery to
the Company, immediately upon its notification to me, the number of shares I own (other than the shares I receive under the Restricted Stock Award) having a Fair Market Value equal to the minimum statutory requirement for federal, state and local
withholding and other taxes due upon vesting. 
 Capitalized terms used herein, which are not defined herein, have the meanings given in the
Plan. 
  

					
			
	Date:
                                        
	 		 	 
		 		 	Signature
			
		 		 	 
		 		 	Print NameEXHIBIT 10.40

 Exhibit 10.40 

NAMED EXECUTIVE OFFICER COMPENSATION DETERMINATIONS 
 2012 Named Executive Officer Compensation Determinations 
 The following is
a description of certain compensation decisions made in 2012 by the Pepco Holdings, Inc. (“PHI”) Board of Directors or the Compensation/Human Resources Committee (the “Committee”) with respect to the compensation payable to the
PHI executive officers identified below, each of whom is an named executive officer to be listed in the Summary Compensation Table in PHI’s proxy statement for its 2012 Annual Meeting (a “Named Executive Officer”). As to each Named
Executive Officer listed below, the decisions consisted of (i) the establishment of base salary for 2012, (ii) the establishment of the executive’s 2012 annual cash incentive award opportunities under the Amended and Restated
Executive Incentive Compensation Plan (the “EICP”) and (iii) long-term equity and incentive awards under the Pepco Holdings, Inc. Long-Term Incentive Plan (the “LTIP”). 

 

																					
	 Name
	  	 Title
	  	2012 Base
Salary	 	  	Target 2012
Annual Cash
Incentive Award
Opportunity as a
Percentage of
Base Salary
(1)	 	LTIP Awards (2)	 
	  	  	  	 	Performance-Based RSU
Award (# of RSUs) (3)	 	  	Time-Based
RSU Award (#
of RSUs) (4)	 
	 Joseph M. Rigby (5)
	  	 Chairman, President and Chief Executive Officer
	  	$	985,000	  	  	100%	 	 
  
 
	Threshold
 Target
Maximum
	  
   
  
	  	 
  
  
	20,054
 80,218

160,436
	  
  

  
	  	 	40,109	  
	 Anthony J. Kamerick
	  	 Senior Vice President and Chief Financial Officer
	  	$	513,000	  	  	  60%	 	 
  
 
	Threshold
 Target
Maximum
	  
   
  
	  	 
  
  
	5,222
 20,889

41,778
	  
  

 
	  	 	10,445	  
	 David M. Velazquez
	  	 Executive Vice President
	  	$	503,000	  	  	  60%	 	 
  
 
	Threshold
 Target
Maximum
	  
   
  
	  	 
  
  
	5,120
 20,482

40,964
	  
  

 
	  	 	10,241	  
	 Kirk J. Emge
	  	 Senior Vice President and General Counsel
	  	$	400,000	  	  	  60%	 	 
  
 
	Threshold
 Target
Maximum
	  
   
  
	  	 
  
  
	3,258
 13,030

26,060
	  
  

 
	  	 	6,515	  
	 John U. Huffman
	  	 President and Chief Executive Officer, Pepco Energy Services
	  	$	383,000	  	  	  60%	 	 
  
 
	Threshold
 Target
Maximum
	  
   
  
	  	 
  
  
	3,119
 12,477

24,954
	  
  

 
	  	 	6,238	  

  

	(1)	An executive can earn from 0 to 180% of this percentage of his base salary in the form of a cash incentive award under the EICP depending on the extent to which the
pre-established performance goals are achieved. See “Amended and Restated Executive Incentive Compensation Plan” below for 2012 performance goals. 

 

	(2)	The shares of PHI common stock, $.01 par value (“Common Stock”) constituting (i) performance-based awards of restricted stock units and
(ii) time-based awards of restricted stock units in the aggregate had a market value on December 30, 2011 equal to the following percentage of the executive’s 2012 base salary: 250% for Mr. Rigby; 125% for Messrs. Velazquez
and Kamerick; and 100% for Messrs. Emge and Huffman. 

  

	(3)	See “Long-Term Incentive Plan Awards—Performance-Based Restricted Stock Unit Awards” below for a description of the performance-based restricted stock
unit awards issued under the LTIP. 

  

	(4)	See “Long-Term Incentive Plan Awards—Time-Based Restricted Stock Unit Awards” below for a description of the time-based restricted stock unit awards
issued under the LTIP. 

	(5)	In addition to the awards listed in the table above, pursuant to the terms of his employment agreement, Mr. Rigby is eligible to receive a series of three
performance-based awards of 36,945 restricted stock units, each of which shall vest at the end of each year of the contract term provided that Mr. Rigby remains continuously employed during such year and that certain performance goals with
respect to such yearly performance period are met, which goals shall be established by the Committee and shall be based on criteria including: (i) reliability of electric service to customers; (ii) residential customer satisfaction;
(iii) “Smart Grid” deployment and customer benefits; (iv) PHI reputation within its service territories; and (v) management recruitment and talent development. 

Mr. Rigby is also eligible to receive a time-based award of 73,891 restricted stock units, one third of which vests on
January 1, 2013 and the remaining two-thirds of which vest pro rata on a daily basis over the two-year period beginning on January 1, 2013, in each case provided that Mr. Rigby remains employed by the Company, subject to certain
exceptions as provided for in his employment agreement. 
 Amended and Restated Executive Incentive Compensation Plan 

Each of the executive officers listed in the table above is a participant in the PHI Amended and Restated Executive Incentive
Compensation Plan (subject to stockholder approval of such plan at the PHI 2012 Annual Meeting of Stockholders (the “2012 Annual Meeting”)). On January 26, 2012, the Committee established the following performance objectives to be used for
the determination of 2012 cash bonus awards for the executive officers (subject to such stockholder approval). 
  

	 	•	 	 Messrs. Rigby, Kamerick and Emge: (1) net earnings relative to net budgeted earnings, (2) cash flow, (3) electric system reliability,
(4) customer satisfaction, (5) diversity, (6) safety, and (7) key operational project completion. 

  

	 	•	 	 Mr. Velazquez: (1) Power Delivery net earnings relative to net budgeted earnings, (2) capital expenditures, (3) operation and
maintenance spending, (4) electric system reliability, (5) customer satisfaction, (6) diversity, (7) safety, and (8) key operational project completion. 

 

	 	•	 	 Mr. Huffman: (1) Pepco Energy Services net earnings relative to net budgeted earnings (less power plant earnings), (2) value of
contracts executed, (3) bad debt, (4) power plant net income, (5) diversity, and (6) safety. 

Long-Term Incentive Plan Awards 
 On January 26, 2012, the Committee granted awards of performance-based restricted stock units and made awards of time-based restricted stock units under the LTIP (subject to approval by PHI
stockholders at the 2012 Annual Meeting of the performance goal criteria under the LTIP, in the case of grants to certain executives). Participants in the LTIP are key employees and officers of PHI and its subsidiaries selected by the Chairman of
the Board of PHI and approved by the Committee, including each of the executive officers listed in the table above. 

Performance-Based Restricted Stock Unit Awards 
 A performance-based restricted stock unit award accounts for two-thirds of each executive’s aggregate 2012 LTIP award. Depending on the extent to which the pre-established performance goal, which is
based on PHI’s total shareholder return relative to a group of peer companies over a three-year period beginning on January 1, 2012 and ending on December 31, 2014, an amount of each award ranging from 25% to 200% of the target number
of shares subject to the award may vest in the form of shares of Common Stock. If during the course of the three-year performance period, a significant event occurs, as determined in the discretion of the Committee, which the Committee expects to
have a substantial effect on total shareholder return during the period, the Committee may revise such measures, other than with respect to awards to “covered employees” subject to Section 162(m) under the Internal Revenue Code. No
adjustment shall be made that causes an award to fail to comply with Section 162(m) of the Code. The target and maximum vesting amounts (representing 200% of the target award opportunity) of each performance-based award of restricted stock
units for each listed executive officer are shown in the table above. 
 Subject to certain exceptions provided for in the LTIP
or in the award agreement, performance-based awards are subject to forfeiture if (i) the employment of the executive terminates before the end of the three-year performance period, subject to certain exceptions provided under the LTIP or
(ii) the performance goals associated therewith have not been achieved as of the end of the three-year performance period. When a dividend is paid on the Common Stock, the executive’s restricted stock unit balance is credited with
additional restricted stock units 

 
equal to the number of shares that could be purchased with the cash amount of the dividend at the then current market price. Additional restricted stock units credited as dividend equivalents
will vest only to the extent the underlying restricted stock units vest. 
 Time-Based Restricted Stock Unit Awards

 Each listed executive officer has received a grant of time-based restricted stock units, which accounts for one-third of
the executive’s aggregate 2012 LTIP award. The time-based restricted stock units are subject to forfeiture if the employment of the executive terminates before January 26, 2015 (the “Settlement Date”) except that, unless the
Committee determines otherwise (and except as otherwise provided in the LTIP, the requisite award agreement or in Mr. Rigby’s employment agreement), in the event of the death or disability of the executive or if the employment of the
executive is terminated or the executive terminates employment for “good reason” within 12 months following a “change in control” (as each such term is defined in the LTIP) (each, a “Qualifying Termination”), the award
will be pro-rated as provided in the LTIP. On the Settlement Date or, if earlier, on the date of a Qualifying Termination, each restricted stock unit that has not been forfeited will be settled by the delivery of one share of Common Stock. When a
dividend is paid on the Common Stock, the executive’s restricted stock unit balance is credited with additional restricted stock units equal to the number of shares that could be purchased with the cash amount of the dividend at the then
current market price. Additional restricted stock units credited as dividend equivalents will vest only to the extent the underlying restricted stock units vest.

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