def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by
the Registrant þ
Filed by a Party other than the Registrant o
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to §240.14a-12 |
PPL CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2)
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PPL Corporation
Notice of
Annual Meeting
May 21, 2008
and
Proxy Statement
PPL
CORPORATION
Two North Ninth Street
Allentown, Pennsylvania 18101
Notice of Annual Meeting of
Shareowners
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Time and Date |
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10:00 a.m., Eastern Daylight Time, on Wednesday,
May 21, 2008. |
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Place |
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Holiday Inn Conference Center
7736 Adrienne Drive
Fogelsville, Pennsylvania |
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Items of Business |
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To elect three directors for a term of three years
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To amend and restate PPL Corporations Articles
of Incorporation to eliminate the supermajority voting
requirements
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To ratify the appointment of Ernst & Young
LLP as the companys independent registered public
accounting firm for the year ending December 31, 2008
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Record Date |
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You can vote if you are a shareowner of record on
February 29, 2008. |
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Proxy Voting |
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It is important that your shares be represented and voted at the
Annual Meeting. You can vote your shares by completing and
returning your proxy card or by voting on the Internet or by
telephone. See details under the heading How do I
vote? |
By Order of the Board of
Directors,
Robert J. Grey
Senior Vice President,
General Counsel and Secretary
April 10, 2008
Important Notice
Regarding the Availability of Proxy
Materials for the Shareowner Meeting to Be Held on May 21,
2008:
This Proxy Statement and the Annual Report to Shareowners are
available at
http://www.pplweb.com/PPLCorpProxy
TABLE OF
CONTENTS
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PROXY STATEMENT
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1
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GENERAL INFORMATION
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1
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PROPOSAL 1: ELECTION OF DIRECTORS
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Nominees for Directors
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Directors Continuing in Office
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GOVERNANCE OF THE COMPANY
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Board of Directors
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Attendance
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Independence of Directors
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Executive Sessions; Presiding and Lead Director
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Guidelines for Corporate Governance
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Communications with the Board
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Code of Ethics
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Board Committees
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Executive Committee
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Compensation, Governance and Nominating Committee
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Compensation Processes and Procedures
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Director Nomination Process
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Compensation Committee Interlocks and Insider Participation
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Finance Committee
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Nuclear Oversight Committee
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Audit Committee
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Report of the Audit Committee
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Compensation of Directors
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Annual Retainer
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Committee Retainers
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Presiding Director Retainer
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One-time Grant of Restricted Stock Units
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Other Fees
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Directors Deferred Compensation Plan
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2007 Director Compensation
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2007 Director Fees
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STOCK OWNERSHIP
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Directors and Executive Officers
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Principal Shareowners
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE
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TRANSACTIONS WITH RELATED PERSONS
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EXECUTIVE COMPENSATION
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Compensation Committee Report
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Compensation Discussion and Analysis (CD&A)
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Executive Compensation Tables
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Summary Compensation Table
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(i)
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Grants of Plan-Based Awards During 2007
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Outstanding Equity Awards at Fiscal-Year End 2007
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Option Exercises and Stock Vested In 2007
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Pension Benefits in 2007
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Nonqualified Deferred Compensation in 2007
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Change-in-Control
Arrangements
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Retention Agreements
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Termination Benefits
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Severance
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SERP and ODCP
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Annual Cash Incentive Awards
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Long-term Incentive Awards
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Termination Benefits for Mr. Biggar
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Potential Payments upon Termination or Change in Control of PPL
Corporation
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PROPOSAL 2: COMPANY PROPOSAL TO AMEND AND RESTATE
THE
COMPANYS ARTICLES OF INCORPORATION TO ELIMINATE
SUPERMAJORITY VOTING REQUIREMENTS
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PROPOSAL 3: RATIFICATION OF THE APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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Fees to Independent Auditor for 2007 and 2006
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Approval of Fees
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OTHER MATTERS
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Shareowner Proposals for the Companys 2009 Annual Meeting
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ANNEX A: Amended and Restated Articles of Incorporation
of PPL Corporation
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DIRECTIONS TO ANNUAL MEETING
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Inside
back cover
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(ii)
PPL
CORPORATION
Two North Ninth Street
Allentown, Pennsylvania 18101
Proxy
Statement
Annual Meeting of
Shareowners
May 21, 2008
10:00 a.m. (Eastern Daylight Time)
We are providing these proxy materials in connection with the
solicitation by the Board of Directors of PPL Corporation of
proxies to be voted at the companys Annual Meeting of
Shareowners to be held on May 21, 2008, and at any
adjournment of the Annual Meeting. Directors, officers and other
company employees may also solicit proxies by telephone or
otherwise. Brokers, banks and other holders of record will be
requested to solicit proxies or authorizations from beneficial
owners and will be reimbursed for their reasonable expenses. We
first released this Proxy Statement and the accompanying proxy
materials to shareowners on or about April 10, 2008.
GENERAL
INFORMATION
What am I
voting on?
There are three proposals scheduled to be voted on at the
meeting:
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the election of three directors for a term of three years;
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the amendment and restatement of PPL Corporations Articles
of Incorporation to eliminate the supermajority voting
requirements; and
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the ratification of the appointment of Ernst & Young
LLP as the companys independent registered public
accounting firm for the year ending December 31, 2008.
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Who can
vote?
Holders of PPL Corporation common stock as of the close of
business on the record date, February 29, 2008, may vote at
the Annual Meeting, either in person or by proxy. Each share of
PPL Corporation common stock is entitled to one vote on each
matter properly brought before the Annual Meeting.
What is the
difference between holding shares as a shareowner of record and
as a beneficial owner?
If your shares are registered directly in your name with PPL
Corporations transfer agent, Wells Fargo Bank, N.A., you
are considered, with respect to those shares, the
shareowner of record. The Notice of Annual Meeting,
Proxy Statement, 2007 Annual Report, proxy card and accompanying
documents have been sent directly to you by PPL Corporation.
If your shares are held in a stock brokerage account or by a
bank or other holder of record, you are considered the
beneficial owner of shares held in street name. The
Notice of Annual Meeting, Proxy Statement, 2007 Annual Report,
proxy card and accompanying documents have been forwarded to you
by your broker, bank or other holder of record who is
considered, with respect to those shares, the shareowner of
record. As the beneficial owner, you have the right to direct
your broker, bank or other holder of record on how to vote your
shares by using the voting instruction card included in their
mailing or by following their instructions for voting by
telephone or on the Internet, if offered.
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How do I
vote?
You can vote by mail, by telephone, on the Internet or in person
at the Annual Meeting.
Be sure to complete, sign and date the proxy card and return it
in the postage-paid envelope we have provided. If you are a
shareowner of record and you return your signed proxy card but
do not indicate your voting preferences, the persons named in
the proxy card will vote the shares represented by that proxy as
recommended by the Board of Directors.
If you are a shareowner of record, and the postage-paid envelope
is missing, please mail your completed proxy card to PPL
Corporation,
c/o Shareowner
Servicessm,
P.O. Box 64873, St. Paul, Minnesota
55164-0873.
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By telephone or on the Internet
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The telephone and Internet voting procedures we have established
for shareowners of record are designed to authenticate your
identity, to allow you to give your voting instructions and to
confirm that those instructions have been properly recorded.
By telephone: You can vote by calling the toll-free
telephone number on your proxy card. Please have your proxy card
and the last four digits of your Social Security Number or Tax
Identification Number available when you call. Easy-to-follow
voice prompts allow you to vote your shares and confirm that
your instructions have been properly recorded.
On the Internet: The Web site for Internet voting is
at www.eproxy.com/ppl/. Please have your proxy card and
the last four digits of your Social Security Number or Tax
Identification Number available when you go online. As with
telephone voting, you can confirm that your instructions have
been properly recorded.
The availability of telephone and Internet voting facilities for
shareowners of record will be available 24 hours a day, and
will close at 12:00 p.m. (noon), Central Time, on
May 20, 2008.
The availability of telephone and Internet voting for beneficial
owners will depend on the voting processes of your broker, bank
or other holder of record. Therefore, we recommend that you
follow the voting instructions in the materials you receive from
them.
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In person at the Annual Meeting
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You may come to the Annual Meeting and cast your vote there,
either by proxy or by ballot. Please bring your admission ticket
with you to the Annual Meeting.
If you mail to us your properly completed and signed proxy card,
or vote by telephone or Internet, your shares of PPL Corporation
common stock will be voted according to the choices that you
specify. If you sign and mail your proxy card without marking
any choices, your proxy will be voted:
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FOR the election of all nominees for director;
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FOR the amendment and restatement of PPL Corporations
Articles of Incorporation to eliminate the supermajority voting
requirements; and
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FOR the ratification of the appointment of Ernst &
Young LLP as the companys independent registered public
accounting firm for the year ending December 31, 2008.
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Abstentions and broker non-votes are not counted as either
yes or no votes.
We do not expect that any other matters will be brought before
the Annual Meeting. By giving your proxy, however, you appoint
the persons named as proxies as your representatives at the
meeting. If an issue comes up for vote at the Annual Meeting
that is not included in the proxy material, the proxy holders
will vote your shares in accordance with their best judgment.
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As a
participant in the PPL Corporation Employee Stock Ownership
Plan, how do I vote shares held in my plan
account?
If you are a participant in our Employee Stock Ownership Plan,
you have the right to provide voting directions to the plan
trustee, Fidelity Investments, by submitting your ballot card
for those shares of our common stock that are held by the plan
and allocated to your account. Plan participant ballots are
treated confidentially. Full and fractional shares credited to
your account under the plan as of February 29, 2008 will be
voted by the trustee in accordance with your instructions.
Participants may not vote in person at the Annual Meeting.
Similar to the process for shareowners of PPL Corporation common
stock, you may vote by mail, telephone or on the Internet. To
allow sufficient time for voting by the trustee of the plan,
your ballot must be returned by May 19, 2008 if by mail,
and if voting by telephone or on the Internet, by 12:00 noon
Central Time on May 16, 2008. Please follow the ballot
instructions specific to the participants in the Employee Stock
Ownership Plan.
If you do not return your ballot, or return it unsigned, or do
not vote by phone or on the Internet, the plan provides that the
trustee will vote your shares in the same percentage as shares
held by participants for which the trustee has received timely
voting instructions. The plan trustee will follow
participants voting directions, and the plan procedure for
voting in the absence of voting directions, unless it determines
that to do so would be contrary to the Employee Retirement
Income Security Act of 1974.
May I change
or revoke my vote?
Any shareowner giving a proxy has the right to revoke it at any
time before it is voted by:
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giving notice in writing to our Corporate Secretary, provided
such statement is received not later than the close of business
on May 20, 2008;
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providing a later-dated vote using the telephone or Internet
voting procedures; or
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attending the Annual Meeting and voting in person.
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Will my shares
be voted if I do not provide my proxy?
It depends on whether you hold your shares in your own name or
as the beneficial owner in the name of a broker, bank or other
holder of record. If you hold your shares directly in your own
name, they will not be voted unless you provide a proxy or vote
in person at the Annual Meeting. Brokerage firms, banks or other
holders of record generally have the authority to vote
customers unvoted shares on certain routine matters. If
your shares are held in the name of a brokerage firm, bank or
other holder of record, such firm can vote your shares for all
three proposals this year, as these matters are considered
routine under the applicable rules.
Who can attend
the Annual Meeting?
If you are a shareowner of record, your admission ticket is
enclosed with your proxy card. If you hold shares through the
Employee Stock Ownership Plan, your admission ticket is attached
to your ballot card. You will need to bring your admission
ticket, along with picture identification, to the meeting. If
you own shares in street name, please bring your most recent
brokerage statement, along with picture identification, to the
meeting. PPL will use your brokerage statement to verify your
ownership of PPL common stock and admit you to the meeting.
What
constitutes a quorum?
As of the record date, there were 372,677,359 shares of
common stock outstanding and entitled to vote, and no shares of
preferred stock of the company were outstanding. In order to
conduct the Annual Meeting, a majority of the outstanding shares
entitled to vote must be present, in
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person or by proxy, in order to constitute a quorum. If you
submit a properly executed proxy card or vote by telephone or on
the Internet, you will be considered part of the quorum.
Abstentions and broker non-votes will be counted as
present and entitled to vote for purposes of determining a
quorum. A broker non-vote occurs when a broker, bank
or other holder of record who holds shares for another person
has not received voting instructions from the beneficial owner
of the shares and, under New York Stock Exchange, or NYSE,
listing standards, does not have discretionary authority to vote
on a proposal.
What vote is
needed for these proposals to be adopted?
The nominees receiving the highest number of votes, up to the
number of directors to be elected, will be elected. Authority to
vote for any individual nominee can be withheld by writing the
number, which is beside that persons name in the list of
nominees, in the box provided to the right of such list on the
accompanying proxy or by following the instructions if voting by
telephone or on the Internet.
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Amendment and Restatement of PPL Corporations Articles
of Incorporation to Eliminate the Supermajority Voting
Requirements
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In order to approve this proposal, the proposal must receive an
affirmative vote of the shareowners, in person or by proxy,
entitled to cast at least two-thirds of the votes that all
shareowners are entitled to cast.
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Ratification of the Appointment of Ernst & Young
LLP
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In order to approve the ratification of the appointment of
Ernst & Young LLP as our independent registered public
accounting firm, the proposal must receive a majority of the
votes cast, in person or by proxy, by the shareowners voting as
a single class.
Who conducts
the proxy solicitation and how much will it cost?
PPL Corporation will pay the cost of soliciting proxies on
behalf of the Board of Directors. In addition to the
solicitation by mail, a number of regular employees may solicit
proxies in person, over the Internet, by telephone or by
facsimile. We have retained Innisfree M&A Incorporated to
assist in the solicitation of proxies for the Annual Meeting,
and we expect that the remuneration to Innisfree for its
services will not exceed $12,500. Brokers, dealers, banks and
other holders of record who hold shares for the benefit of
others will be asked to send proxy material to the beneficial
owners of the shares, and we will reimburse them for their
expenses.
How does the
company keep voter information confidential?
To preserve voter confidentiality, we voluntarily limit access
to shareowner voting records to certain designated employees of
PPL Services Corporation. These employees sign a confidentiality
agreement that prohibits them from disclosing the manner in
which a shareowner has voted to any employee of PPL affiliates
or to any other person (except to the Judges of Election or the
person in whose name the shares are registered), unless
otherwise required by law.
What is
householding, and how does it affect me?
Beneficial owners of common stock in street name may receive a
notice from their broker, bank or other holder of record stating
that only one Proxy Statement
and/or other
shareowner communications and notices will be delivered to
multiple security holders sharing an address. This practice,
known as householding, will reduce PPLs
printing, shipping, and postage costs. Beneficial owners who
participate in householding will continue to receive separate
proxy forms. If any beneficial owner wants to revoke consent to
this practice and wishes to receive his or her
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own documents and other communications, however, then he or she
must contact the broker, bank or other holder of record with a
notice of revocation. Any shareowner may obtain a copy of such
documents from PPL at the address and phone number listed on the
back cover page of this Proxy Statement.
PROPOSAL 1:
ELECTION OF DIRECTORS
We have a classified Board of Directors, currently consisting of
10 directors divided into three classes. These classes
consist of three directors whose terms will expire at the 2008
Annual Meeting, four directors whose terms will expire at the
2009 Annual Meeting, and three directors whose terms will expire
at the 2010 Annual Meeting.
The nominees this year are Frederick M. Bernthal, Louise K.
Goeser and Keith H. Williamson. The nominees are currently
serving as directors. Dr. Bernthal and Ms. Goeser were
elected by the shareowners at the 2005 Annual Meeting, and
Mr. Williamson was elected by the Board of Directors
effective September 1, 2005. If elected by the shareowners,
Dr. Bernthal, Ms. Goeser and Mr. Williamson would
serve until the 2011 Annual Meeting and until their successors
are elected and qualified. Following the election of these three
nominees, there will be 10 members of the Board of Directors,
consisting of three classes: four directors whose terms would
expire at the 2009 Annual Meeting, three directors whose terms
would expire at the 2010 Annual Meeting, and three directors
whose terms would expire at the 2011 Annual Meeting.
The Board of Directors has no reason to believe that any of the
nominees will become unavailable for election, but, if any
nominee should become unavailable prior to the Annual Meeting,
the accompanying proxy will be voted for the election of such
other person as the Board of Directors may recommend in place of
that nominee.
The Board of
Directors
recommends that shareowners vote FOR Proposal 1
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Nominees for
Directors:
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FREDERICK M. BERNTHAL, 65, is President of Universities
Research Association (URA), a position he has held
since 1994. Located in Washington, D.C., URA is a
consortium of 89 leading research universities engaged in the
construction and operation of major research facilities on
behalf of the U.S. Department of Energy and the National Science
Foundation. Dr. Bernthal served from 1990 to 1994 as Deputy
Director of the National Science Foundation, from 1988 to 1990
as Assistant Secretary of State for Oceans, Environment and
Science, and from 1983 to 1988 as a member of the U.S. Nuclear
Regulatory Commission. He received a Bachelor of Science degree
in chemistry from Valparaiso University and a Ph.D. in nuclear
chemistry from the University of California at Berkeley.
Dr. Bernthal is chair of the Nuclear Oversight Committee
and a member of the Audit and Executive Committees. He has been
a director since 1997.
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LOUISE K. GOESER, 54, is President and Chief Executive
Officer of Ford of Mexico, a position she has held since January
2005. Ford of Mexico manufactures cars, trucks and related parts
and accessories. Prior to this position, she served as Vice
President, Global Quality for Ford Motor Company, a position she
had held since 1999. In that position, she was responsible for
ensuring superior quality in the design, manufacture, sale and
service of all Ford cars, trucks and components worldwide. Prior
to 1999, she served as Vice President for Quality at Whirlpool
Corporation, and served in various leadership positions with
Westinghouse Electric Corporation. Ms. Goeser received a
bachelors degree in mathematics from Pennsylvania State
University and a masters degree in business administration
from the University of Pittsburgh. She is a member of the
Compensation, Governance and Nominating Committee and has been a
director since 2003.
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KEITH H. WILLIAMSON, 55, is Senior Vice President,
Secretary and General Counsel of Centene Corporation, a position
he has held since November 2006. Centene Corporation is located
in St. Louis, Missouri and is a multi-line healthcare
enterprise that provides programs and related services to
individuals receiving benefits under Medicaid, including
Supplemental Security Income and the State Childrens
Health Insurance Program. He previously served as President of
the Capital Services Division of Pitney Bowes Inc., a position
he held since 1999. Pitney Bowes is a global provider of
integrated mail, messaging and document management solutions
headquartered in Stamford, Connecticut. Mr. Williamson
joined Pitney Bowes in 1988 and held a series of positions in
the companys tax, finance and legal operations, including
oversight of the treasury function and rating agency activity.
Mr. Williamson earned a B.A. from Brown University, a J.D.
and M.B.A. from Harvard University and an LL.M. in taxation from
New York University Law School. He is a member of the Finance
Committee and has been a director since September 2005.
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6
Directors
Continuing in Office:
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JOHN W. CONWAY, 62, is Chairman of the Board, President
and Chief Executive Officer of Crown Holdings, Inc. of
Philadelphia, Pennsylvania, a position he has held since
February 2001. Prior to that time, he served as President and
Chief Operating Officer. Crown is a leading international
manufacturer of packaging products for consumer goods.
Mr. Conway joined Crown in 1991 as a result of its
acquisition of Continental Can International Corporation. Prior
to 1991, he served as President of Continental Can and in
various other management positions. Mr. Conway is the
past-Chairman of the Can Manufacturers Institute. He received
his B.A. in Economics from the University of Virginia and his
law degree from Columbia Law School. He is a member of the
Compensation, Governance and Nominating Committee, as well as
the Finance Committee. He has been a director since 2000; his
term expires in 2009.
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E. ALLEN DEAVER, 72, retired in 1998 as Executive Vice
President and a director of Armstrong World Industries, Inc., of
Lancaster, Pennsylvania. He is a director of the Geisinger
Health System. He graduated from the University of Tennessee
with a B.S. in Mechanical Engineering. Mr. Deaver is chair
of the Compensation, Governance and Nominating Committee and a
member of the Executive, Finance and Nuclear Oversight
Committees. He also serves as the lead director and presiding
director who chairs executive sessions of the independent
directors. He has been a director since 1991; his term expires
in 2009.
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STUART HEYDT, 68, retired in 2000 as Chief Executive
Officer of the Geisinger Health System, a position he held since
1991. He is past president and a Distinguished Fellow of the
American College of Physician Executives. Dr. Heydt
attended Dartmouth College and received an M.D. from the
University of Nebraska. He is chair of the Audit Committee and a
member of the Compensation, Governance and Nominating Committee,
as well as the Executive and Nuclear Oversight Committees.
Dr. Heydt has been a director since 1991; his term expires
in 2010.
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JAMES H. MILLER, 59, is Chairman, President and Chief
Executive Officer of PPL Corporation. Prior to his current
appointment in October 2006, Mr. Miller was named President
in August 2005; Chief Operating Officer in September 2004, a
position he held until the end of June 2006; Executive Vice
President in January 2004; and also served as President of PPL
Generation, LLC, a PPL Corporation subsidiary that operates
power plants in the United States. He also serves on the boards
of PPL Electric Utilities Corporation and PPL Energy Supply,
LLC. Mr. Miller earned a bachelors degree in
electrical engineering from the University of Delaware and
served in the U.S. Navy nuclear program. Before joining PPL
Generation in February 2001, Mr. Miller served as Executive
Vice President and Vice President, Production of USEC, Inc. from
1995, and prior to that time as President of ABB Environmental
Systems, President of UC Operating Services, President of ABB
Resource Recovery Systems and in various engineering and
management positions at the former Delmarva Power and Light Co.
He is chair of the Executive Committee and chair of the
Corporate Leadership Council, an internal committee comprised of
the senior officers of PPL Corporation. Mr. Miller has been
a director since August 2005; his term expires in 2009.
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CRAIG A. ROGERSON, 51, is President and Chief Executive
Officer of Hercules Incorporated, a position he has held since
December 2003. He also serves as a director of Hercules. Located
in Wilmington, Delaware, Hercules is a leading manufacturer and
marketer of specialty chemicals and related services for a broad
range of business, consumer and industrial applications.
Mr. Rogerson joined Hercules in 1979 and served in a number
of management positions before leaving the company to serve as
President and Chief Executive Officer of Wacker Silicones
Corporation in 1997. He returned to Hercules in 2000 as
President of the BetzDearborn Division. Following the sale of
that business to General Electric in 2002, he remained with
Hercules as President of the FiberVisions and Pinova divisions
until he was named President and Chief Executive Officer of
Hercules in December 2003. Mr. Rogerson also serves on the
boards of the American Chemistry Council, the Delaware Business
Roundtable and First State Innovation. He holds a chemical
engineering degree from Michigan State University. He is a
member of the Nuclear Oversight Committee and has been a
director since September 2005; his term expires in 2010.
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W. KEITH SMITH, 73, served as the Chief Executive Officer
of West Penn Allegheny Health System, which is a healthcare
network of five affiliated hospitals that serve Pittsburgh and
the surrounding five-state area, from July 2007 to March 2008.
He previously served as Vice Chairman of Mellon Financial
Corporation and Senior Vice Chairman of Mellon Bank, N.A., of
Pittsburgh, Pennsylvania, as well as a director of both
organizations, until his retirement in December 1998.
Mr. Smith is a director of DENTSPLY International Inc. as
well as Baytree Bancorp., Inc., Baytree National Bank and
Trust Co. and LED Medical Diagnostics, Inc. Mr. Smith
received a Bachelor of Commerce degree from the University of
Saskatchewan, his M.B.A. from the University of Western Ontario,
and is a Chartered Accountant. He is chair of the Finance
Committee and a member of the Audit Committee. Mr. Smith
has been a director since 2000; his term expires in 2010.
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SUSAN M. STALNECKER, 55, is Vice President and Treasurer
of E. I. du Pont de Nemours and Company, of Wilmington,
Delaware. Before being named to her current position in
September 2006, she served as Vice President, Risk Management
since June 2005, Vice President Government and
Consumer Markets, DuPont Safety & Protection since
January 2003, and as Vice President Finance and
Treasurer since 1998. DuPont delivers science-based solutions
for markets that make a difference in peoples lives in
food and nutrition; healthcare; apparel; home and construction;
electronics; and transportation. Ms. Stalnecker serves on
the board of Duke University. Ms. Stalnecker received a
bachelors degree from Duke University and her M.B.A. from
the Wharton School of Graduate Business at the University of
Pennsylvania. She is a member of the Audit and Finance
Committees. She has been a director since December 2001; her
term expires in 2009.
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GOVERNANCE OF THE
COMPANY
Board of
Directors
Attendance. The Board of Directors met six
times during 2007. Each director attended at least 75% of the
meetings held by the Board and the committees on which they
served during the year. The average attendance of directors at
Board and Committee meetings held during 2007 was 95%. Directors
are expected to attend all meetings of the Board, the Committees
on which they serve and shareowners. All of our directors
attended the 2007 Annual Meeting of Shareowners.
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Independence of Directors. The Board has
established guidelines to assist it in determining director
independence, which conform to the independence requirements of
the NYSE listing standards. In addition to applying these
guidelines, which are summarized below and are available in the
Corporate Governance section of our Web site
(www.pplweb.com/about/corporate+governance.htm), the
Board considers all relevant facts and circumstances in making
an independence determination. At its January 2008 meeting, the
Board determined that the following nine directors (constituting
all of PPLs non-employee directors) are independent from
the company and management pursuant to its independence
guidelines: Drs. Bernthal and Heydt, Messrs. Conway,
Deaver, Rogerson, Smith and Williamson, and Mss. Goeser and
Stalnecker.
In reaching this conclusion, the Board considered transactions
and relationships between each director or any member of his or
her immediate family and the company and its subsidiaries. From
time to time, our subsidiaries have transacted business in the
ordinary course with companies with which several of our
directors are or were affiliated. In particular, with respect to
each of the most recent three completed fiscal years, the Board
evaluated the following relationships:
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Each of Ms. Goeser, Ms. Stalnecker and
Mr. Williamson were officers at companies with which PPL
has engaged in ordinary course of business transactions. The
Board reviewed all transactions with each of these companies and
determined that the annual amount of sales to PPL, as well as
purchases by these companies from PPL in each fiscal year, was
significantly below one percent of the consolidated gross
revenues of PPL and each of these companies. As part of its
determination, the Board also considered that most of the
transactions were competitively bid.
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Mr. Conway is an executive officer of a company, which,
through a Bolivian affiliate, has purchased electricity from a
former PPL affiliate in Bolivia that is a public utility. The
Board determined that the amount of purchases in each fiscal
year was significantly below 1 percent of the consolidated gross
revenues of each such company and PPL and that the rates or
charges were fixed in conformity with governmental authority.
PPL sold its Bolivian affiliate in May 2007.
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The Board determined that all of these relationships were
immaterial. Under the categorical standard of independence that
the Board adopted for the company, business transactions between
the company (and its subsidiaries) and a directors
employer or the employer of the directors immediate
family member, as defined by the rules of the NYSE, not
involving more than 2 percent of the employers
consolidated gross revenues in any fiscal year, will not impair
the directors independence. All of the transactions
considered were significantly below 1 percent of the
consolidated gross revenues of any of the companies involved.
Also, pursuant to NYSE standards, a director is not independent
from the company and management if, within the last three years,
the director or an immediate family member of the director:
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is or has been an employee of the company (and its
subsidiaries), in the case of the director, or is or has been an
executive officer of the company (and its subsidiaries), in the
case of an immediate family member of the director;
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has received more than $100,000 in direct compensation from the
company (and its subsidiaries) during any
12-month
period (excluding director or committee fees);
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is or was a partner or employee of any of the auditors of the
company, subject to certain exceptions;
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is or was employed as an executive officer of another company
where any of the companys present executive officers at
the same time serves or served on the other companys
compensation committee; or
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is a current employee, in the case of the director, or is a
current executive officer, in the case of an immediate family
member, of a company that has made payments to, or received
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payments from, the company for property or services in an amount
which exceeds the greater of $1 million, or 2 percent
of such other companys consolidated gross revenues.
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In addition to the independence requirements set forth above,
the Board evaluates additional independence requirements under
applicable Securities and Exchange Commission, or SEC, rules for
directors who are members of the audit committee. If a director
is considered independent pursuant to the standards set forth
above, the director also will be deemed to be independent for
purposes of being a member of our Audit Committee if:
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the director does not directly or indirectly, including through
certain family members, receive any consulting, advisory or
other compensatory fee from the company (and its subsidiaries)
except in such persons capacity as a director or committee
member; and
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the director is not an affiliated person of the
company (or any of its subsidiaries), meaning that the director
does not directly or indirectly (through one or more
intermediaries) control, is not controlled by or is not under
common control with the company (and its subsidiaries), all
within the meaning of applicable securities laws.
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Executive Sessions; Presiding and Lead
Director. The independent directors meet in regular
executive sessions during each Board meeting without management
present. The Board has designated Mr. Deaver as the
presiding director to chair these executive sessions.
Mr. Deaver also serves as the lead director of
the Board.
Guidelines for Corporate Governance. You can
find the full text of our Guidelines for Corporate Governance
in the Corporate Governance section of our Web site
(www.pplweb.com/about/corporate+governance.htm). The
Guidelines are available in print, without charge, to any
shareowner who requests a copy.
Communications with the Board. Shareowners or
other parties interested in communicating with the presiding
director, with the Board or with the independent directors as a
group may write to the following address:
The Presiding Director or the Board of Directors
c/o Corporate
Secretarys Office
PPL Corporation
Two North Ninth Street
Allentown, Pennsylvania 18101
The Secretary of the company forwards all correspondence to the
respective Board members, with the exception of commercial
solicitations, advertisements or obvious junk mail.
Concerns relating to accounting, internal controls or auditing
matters are to be brought immediately to the attention of the
companys Office of Business Ethics and Compliance and are
handled in accordance with procedures established by the Audit
Committee with respect to such matters.
Code of Ethics. We maintain our Standards
of Conduct and Integrity, which are applicable to all Board
members and employees of the company and its subsidiaries,
including the principal executive officer, the principal
financial officer and the principal accounting officer of the
company. You can find the full text of the Standards in
the Corporate Governance section of our Web site
(www.pplweb.com/about/corporate+governance.htm). The
Standards are also available in print, without charge, to
any shareowner who requests a copy.
Board
Committees
The Board of Directors has five standing committees:
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the Executive Committee;
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the Compensation, Governance and Nominating Committee;
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the Finance Committee;
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the Nuclear Oversight Committee; and
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the Audit Committee.
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Each non-employee director usually serves on one or more of
these committees. All of our committees, with the exception of
the Executive Committee, are composed entirely of independent
directors. The charters of all of the committees are available
in the Corporate Governance section of the companys Web
site (www.pplweb.com/about/corporate+governance.htm), and
are available in print, without charge, to any shareowner who
requests a copy.
Executive Committee. During
periods between Board meetings, the Executive Committee may
exercise all of the powers of the Board of Directors, except
that the Executive Committee may not elect directors, change the
membership of or fill vacancies in the Executive Committee, fix
the compensation of the directors, change the Bylaws, or take
any action restricted by the Pennsylvania Business Corporation
Law or the Bylaws (including actions committed to another Board
committee). The Executive Committee met six times in 2007. The
members of the Executive Committee are Mr. Miller (chair),
Drs. Bernthal and Heydt and Mr. Deaver.
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to review and evaluate at least annually the performance of the
chief executive officer and other senior officers of the company
and its subsidiaries, and to set their remuneration, including
incentive awards;
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to review managements succession planning;
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to identify and recommend to the Board of Directors candidates
for election to the Board;
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to review the fees paid to outside directors for their services
on the Board of Directors and its Committees; and
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to establish and administer programs for evaluating the
performance of Board members.
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Another principal committee function is to develop and recommend
to the Board corporate governance guidelines for the company.
All of the members of the CGNC are independent within the
meaning of the listing standards of the NYSE, the rules of the
SEC and the companys standards of independence described
above under the heading of Independence of
Directors. In addition, each member of the CGNC is a
Non-Employee director as defined in
Rule 16b-3
under the Securities Exchange Act of 1934 and is an
outside director as defined in Section 162(m)
of the Internal Revenue Code. This committee met four times in
2007. The members of the CGNC are Mr. Deaver (chair),
Mr. Conway, Ms. Goeser and Dr. Heydt.
Compensation
Processes and Procedures
Decisions regarding the compensation of our executive officers
are made by the CGNC. Specifically, the CGNC has strategic and
administrative responsibility for a broad range of issues,
including ensuring that we compensate executive officers
effectively and in a manner consistent with our stated
compensation strategy. The CGNC also oversees the administration
of executive compensation plans, including the design,
performance measures and award opportunities for the executive
incentive programs, and certain employee benefits. Our Board of
Directors appoints each member of the CGNC and has determined
that each is an independent director.
The CGNC periodically reviews executive officer compensation to
ensure that compensation is consistent with our compensation
philosophies, company and personal performance, changes in
market practices, and changes in an individuals
responsibilities. At the CGNCs first regular in-person
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meeting each year, which it holds in January, the CGNC reviews
the performance of executive officers and makes awards for the
just-completed fiscal year.
To assist in its efforts to meet the objectives outlined above,
the CGNC has retained Towers Perrin, a nationally known
executive compensation and benefits consulting firm, to advise
it on a regular basis on executive compensation and benefit
programs. Towers Perrin provides additional information to the
CGNC so that it can determine whether the companys
executive compensation programs are reasonable and consistent
with competitive practices. Representatives of Towers Perrin
regularly participate in CGNC meetings and provide advice as to
compensation trends and best practices, plan design and peer
group comparisons.
Annually, the CGNC requests Towers Perrin to develop an analysis
of current competitive compensation practices and levels. This
analysis begins with a general review at the committees
July meeting and continues with a detailed analysis of
competitive pay levels and practices at its year-end meeting.
The CGNC uses this analysis when it assesses performance and
considers salary levels and incentive awards at its January
meeting following the performance year.
Senior management develops the business plan and recommends to
the CGNC the related goals for the annual cash incentive program
and the strategic goals for the long-term incentive program for
the upcoming year, based on industry and market conditions and
other factors. All of the incentive and strategic goals are
reviewed and approved by the CGNC.
The CGNC has the authority to review and approve annually the
compensation structure, including goals and objectives, of the
chief executive officer, or CEO, and other executive officers
who are subject to Section 16 of the Securities Exchange
Act of 1934, including all of the executive officers named in
this Proxy Statement. The CEO reviews with the CGNC his
evaluation of the performance and leadership of the executive
officers who report directly to him and, with input from the
Chief Operating Officer, evaluates the presidents of the major
business lines who report to the Chief Operating Officer. The
CGNC approves the annual compensation, including salary,
incentive compensation and other remuneration of such executive
officers.
The CGNC manages a process for the Board of Directors to
evaluate our CEO. Each director, other than the CEO, completes
an evaluation of the CEO and submits the evaluation to the Chair
of the CGNC, who is also the lead director. The evaluation is
presented to the outside directors of the Board and discussed at
the January meeting. A summary evaluation is compiled by the
Chair of the CGNC, who then discusses the evaluation with the
CEO. The CGNC determines the CEOs salary and incentive
awards at its January meeting, based on the Boards
evaluation.
The Board of Directors, with recommendations from the CGNC,
determines the amount and form of director compensation. Towers
Perrin also assists the CGNC with this determination.
Director
Nomination Process
The CGNC establishes guidelines for new directors and evaluates
director candidates. In considering candidates, the CGNC seeks
individuals who possess strong personal and professional ethics,
high standards of integrity and values, independence of thought
and judgment and who have senior corporate leadership
experience. The company believes that prior business experience
is valuable, and it seeks to have certain prior experience on
the Board, such as financial, operating and nuclear.
In addition, the CGNC seeks individuals who have a broad range
of demonstrated abilities and accomplishments beyond corporate
leadership. These abilities include the skill and expertise
sufficient to provide sound and prudent guidance with respect to
all of the companys operations and interests. Finally, the
CGNC seeks individuals who are capable of devoting the required
amount of time to serve effectively, including preparation time
and attendance at Board, committee and shareowner meetings.
Nominations for the election of directors may be made by the
Board of Directors, the CGNC or any shareowner entitled to vote
in the election of directors generally. The CGNC screens all
candidates in
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the same manner regardless of the source of the recommendation.
The CGNCs review is typically based on any written
materials provided with respect to the candidate. The CGNC
determines whether the candidate meets the companys
general qualifications and specific qualities and skills for
directors and whether requesting additional information or an
interview is appropriate.
If the CGNC or management identifies a need to add a new Board
member to fulfill a special need or to fill a vacancy, the CGNC
usually retains a third-party search firm to identify a
candidate or candidates. The CGNC seeks prospective nominees
through personal referrals, independent inquiries by directors
and search firms. Once the CGNC has identified a prospective
nominee, it generally requests the third-party search firm to
gather additional information about the prospective
nominees background and experience. The CEO and at least
one member of the CGNC then interview the prospective candidates
in person. After completing the interview and evaluation
process, which includes evaluating the prospective nominee
against the standards and qualifications set out in the
companys Guidelines for Corporate Governance, the
CGNC makes a recommendation to the full Board as to the persons
who should be nominated by the Board. The Board then votes on
whether to approve the nominees after considering the
recommendation and report of the CGNC.
Shareowners interested in recommending nominees for directors
should submit their recommendations in writing to:
Secretary
PPL Corporation
Two North Ninth Street
Allentown, Pennsylvania 18101
In order to be considered, we must receive nominations by
shareowners at least 75 days prior to the 2009 Annual
Meeting. The nominations must also contain the information
required by our Bylaws, such as the name and address of the
shareowner making the nomination and of the proposed nominees
and certain other information concerning the shareowner and the
nominee. The exact procedures for making nominations are
included in our Bylaws, which can be found at the Corporate
Governance section of our Web site
(www.pplweb.com/about/corporate+governance.htm).
Compensation Committee Interlocks and
Insider Participation. None of the members of the
CGNC during 2007 or as of the date of this Proxy Statement is or
has been an officer or employee of the company, and no executive
officer of the company served on the compensation committee or
board of any company that employed any member of the CGNC or the
companys Board of Directors.
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to review and approve annually the business plan for the company;
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to approve specific company financings and corporate financial
policies;
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to authorize certain capital expenditures;
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to authorize acquisitions and dispositions in excess of
$25 million; and
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to review, approve and monitor the policies and practices of the
company and its subsidiaries in managing financial risk.
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All of the members of this committee are independent within the
meaning of the listing standards of the NYSE and the
companys standards of independence described above under
the heading Independence of Directors. The Finance
Committee met five times in 2007. The members of the Finance
Committee are Mr. Smith (chair), Messrs. Conway,
Deaver and Williamson and Ms. Stalnecker.
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to assist the Board of Directors in the fulfillment of its
responsibilities for oversight of the companys nuclear
function;
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to advise company management on nuclear matters; and
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to provide advice and recommendations to the Board of Directors
concerning the future direction of the company and management
performance related to the nuclear function.
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All of the members of this committee are independent within the
meaning of the listing standards of the NYSE and the
companys standards of independence described above under
the heading Independence of Directors. The Nuclear
Oversight Committee met three times in 2007. The members of the
Nuclear Oversight Committee are Dr. Bernthal (chair),
Messrs. Deaver and Rogerson and Dr. Heydt.
Audit Committee. The primary
function of the Audit Committee is to assist the companys
Board of Directors in the oversight of:
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the integrity of the financial statements of the company and its
subsidiaries;
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the effectiveness of the companys internal control over
financial reporting;
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the companys compliance with legal and regulatory
requirements;
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the independent auditors qualifications and independence;
and
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the performance of the companys independent auditor and
internal audit function.
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The Charter of the Audit Committee, which specifies the Audit
Committees responsibilities, is available on our Web site
(www.pplweb.com/about/corporate+governance.htm). The
Audit Committee met eight times during 2007. The members of the
Audit Committee are not employees of the company, and the Board
of Directors has determined that each of its Audit Committee
members has met the independence and expertise requirements of
the NYSE, the SEC and the companys independence standards
described above under the heading Independence of
Directors. The members of the Audit Committee are
Dr. Heydt (chair), Dr. Bernthal, Mr. Smith and
Ms. Stalnecker. Our Board of Directors has determined that
Mr. Smith is an audit committee financial expert as defined
by the rules and regulations of the SEC.
Report of the
Audit Committee
The Audit Committee assists the Board of Directors in fulfilling
its oversight responsibilities with respect to, among other
items, the integrity of the companys financial statements.
Company management is responsible for the preparation and
integrity of the companys financial statements, the
financial reporting process and the associated system of
internal controls. Ernst & Young LLP, the
companys independent auditor, is responsible for auditing
the companys annual financial statements, expressing an
opinion as to whether the financial statements present fairly,
in all material respects, the companys financial position
and results of operations in conformity with generally accepted
accounting principles, and expressing an opinion as to the
effectiveness of internal control over financial reporting in
accordance with the Standards of the Public Company Accounting
Oversight Board. The Audit Committees responsibility is to
monitor and review these processes. The Audit Committee has
reviewed and discussed the audited financial statements with
management and the independent auditor.
The independent auditor is ultimately accountable to the Audit
Committee, which has the sole authority to select, evaluate and
replace the independent auditor and to approve all audit
engagement fees and terms. The Audit Committee has a policy to
solicit competitive proposals for audit services from
independent accounting firms at least once every seven years.
The Audit Committee has discussed with the independent auditor
the matters required to be discussed by Statement on Auditing
Standards No. 61, Communication with Audit
Committees, as it may be modified or supplemented,
including the appropriateness and application of accounting
principles.
The Audit Committee has received the written disclosures and the
letter from its independent auditor pursuant to Independence
Standards Board Standard No. 1, Independence
Discussions with Audit
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Committees, as it may be modified or supplemented, and has
had discussions with Ernst & Young LLP about its
independence. The Audit Committee also considered whether the
provision of non-audit services by Ernst & Young LLP
is compatible with maintaining the independence of such
independent auditor.
In the performance of its responsibilities, the Audit Committee
met periodically with the internal auditor and the independent
auditor, with and without management present, to discuss the
results of their examinations, their evaluations of the
companys internal controls, and the overall quality of the
companys financial reporting.
The Audit Committee has reviewed and discussed managements
assessment of internal controls relating to the adequacy and
effectiveness of financial reporting. The Audit Committee has
also discussed with company management, the internal auditor and
the independent auditor the process utilized in connection with
the certifications of the companys principal executive
officer and principal financial officer under the Sarbanes-Oxley
Act of 2002 and related SEC rules for the companys annual
and quarterly filings with the SEC.
Based on the reviews and discussions referred to above, the
Audit Committee recommended to the Board of Directors, and the
Board approved, that the audited financial statements be
included in the companys Annual Report on
Form 10-K
for the year ended December 31, 2007.
The Audit Committee has a Committee Charter that specifies its
responsibilities. The Committee Charter, which has been approved
by the Board of Directors, is available on the companys
Web site (www.pplweb.com/about/corporate+governance.htm).
The Audit Committees procedures and practices comply with
the requirements of the SEC and the NYSE applicable to corporate
audit committees.
The Audit Committee
Frederick M. Bernthal
W. Keith Smith
Susan M. Stalnecker
Compensation of
Directors
Annual Retainer. Directors who
are company employees do not receive any separate compensation
for service on the Board of Directors or committees of the Board
of Directors. During 2007, directors who are not employees of
PPL received an annual retainer of $105,000, of which a minimum
of $65,000 was mandatorily allocated to a deferred stock account
under the Directors Deferred Compensation Plan. Effective
January 1, 2008, the annual retainer increased to $110,000,
of which $65,000 is mandatorily allocated to a deferred stock
account. The cash portion of the annual retainer is paid in
monthly installments to each director, unless voluntarily
deferred to their stock account or to their deferred cash
account (as discussed below), and the stock portion is allocated
in monthly installments to each directors deferred stock
account. Each deferred stock unit is equal in value to a share
of PPL common stock and is fully vested upon grant, but does not
have voting rights. Deferred stock units accumulate quarterly
dividend-equivalent payments, which are reinvested in additional
deferred stock units.
Committee Retainers. During
2007, each committee chair, except for the Audit Committee
Chair, received an annual cash retainer of $6,000, which was
paid in monthly installments. The Audit Committee Chair received
an annual cash retainer of $11,000.
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units (which reflects the
2-for-1
common stock split completed in August 2005), which was
mandatorily allocated to such directors deferred stock
account under the Directors Deferred Compensation Plan. Any new
director joining the Board of Directors after that time also
receives this one-time additional retainer fee of deferred stock
units. These deferred stock units have a
five-year
restriction period and are subject to forfeiture if the director
leaves the Board of Directors before the end of the
five-year
restriction period.
Other Fees. Each non-employee
director also receives a fee of $1,500 for attending each Board
of Directors meeting, committee meeting and other meetings at
the companys request, and a fee of $200 for participating
in meetings held by telephone conference call. PPL also
reimburses each director for usual and customary travel expenses.
Directors Deferred Compensation
Plan. Pursuant to the Directors Deferred
Compensation Plan, or DDCP, non-employee directors may elect to
defer all or any part of the fees and any retainer that is not
part of the mandatory stock unit deferrals. Under this plan,
directors can defer compensation other than the mandatory
deferrals into a deferred cash account or deferred stock
account. The deferred cash account earns a return as if the
funds had been invested in the Stable Value Fund of PPLs
401(k) plans, which is managed by Fidelity Investments. For
2007, the total rate of return for this fund was 4.76%. Payment
of the amounts allocated to the deferred cash account and
accrued earnings, together with the deferred stock units and
accrued dividend equivalents, is deferred until after the
directors retirement from the Board of Directors, at which
time they receive the deferred cash and stock in one or more
annual installments for a period of up to ten years as
previously elected by the director.
16
The following table summarizes all compensation earned during
2007 by our directors who are not employees.
2007 DIRECTOR
COMPENSATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
or Paid
|
|
|
Stock
|
|
|
|
|
|
|
|
|
|
|
|
in Cash
|
|
|
Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SFAS 123(R)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortizations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incremental
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred into
|
|
|
Grant Date
|
|
|
Adjustments to
|
|
|
|
|
|
|
|
|
|
|
|
Paid in
|
|
|
Restricted
|
|
|
Fair Value of
|
|
|
Deferred Stock
|
|
|
All Other
|
|
|
|
|
|
Name of Director
|
|
|
Cash(1)
|
|
|
Stock
Units(2)
|
|
|
2007
Awards(3)
|
|
|
Account(4)
|
|
|
Compensation(5)
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
65,000
|
|
|
|
$
|
859,536
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frederick M. Bernthal
|
|
|
$
|
0
|
|
|
|
$
|
66,200
|
|
|
|
$924,536
|
|
|
$
|
360
|
|
|
|
$
|
991,096
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
65,000
|
|
|
|
|
530,949
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John W. Conway
|
|
|
|
0
|
|
|
|
|
56,000
|
|
|
|
595,949
|
|
|
|
360
|
|
|
|
|
652,309
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
65,000
|
|
|
|
|
850,525
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
E. Allen Deaver
|
|
|
|
99,000
|
|
|
|
|
0
|
|
|
|
915,525
|
|
|
|
360
|
|
|
|
|
1,014,885
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
65,000
|
|
|
|
|
175,166
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Louise K. Goeser
|
|
|
|
52,000
|
|
|
|
|
0
|
|
|
|
240,166
|
|
|
|
360
|
|
|
|
|
292,526
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
65,000
|
|
|
|
|
839,905
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stuart Heydt
|
|
|
|
77,200
|
|
|
|
|
0
|
|
|
|
904,905
|
|
|
|
360
|
|
|
|
|
982,465
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
65,000
|
|
|
|
|
96,647
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Craig A. Rogerson
|
|
|
|
52,200
|
|
|
|
|
0
|
|
|
|
161,647
|
|
|
|
360
|
|
|
|
|
214,207
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
65,000
|
|
|
|
|
577,001
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W. Keith Smith
|
|
|
|
0
|
|
|
|
|
62,400
|
|
|
|
642,001
|
|
|
|
360
|
|
|
|
|
704,761
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
65,000
|
|
|
|
|
237,815
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Susan M. Stalnecker
|
|
|
|
51,400
|
|
|
|
|
0
|
|
|
|
302,815
|
|
|
|
360
|
|
|
|
|
354,575
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
65,000
|
|
|
|
|
96,647
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Keith H. Williamson
|
|
|
|
51,500
|
|
|
|
|
0
|
|
|
|
161,647
|
|
|
|
360
|
|
|
|
|
213,507
|
|
|
|
|
|
|
|
|
|
(1) |
|
This column reports the amount of retainers and fees paid in
cash in 2007 for Board and committee service by each director,
including a $30,000 annual cash retainer for Mr. Deaver for
serving as presiding director. Mr. Deaver and
Ms. Stalnecker deferred $69,000 and $51,400, respectively,
of cash fees into their deferred cash account under PPLs
Directors Deferred Compensation Plan, or DDCP, and these amounts
are included in this column for each such director. |
17
|
|
|
(2) |
|
This column reports the dollar amount of retainers and fees
deferred into restricted stock accounts under the DDCP.
Dr. Bernthal and Messrs. Conway and Smith deferred all
of their cash retainers and fees into their deferred stock
accounts under the DDCP. |
|
(3) |
|
This column represents the dollar amount recognized for
financial statement reporting purposes for the fair value of
mandatorily deferred stock units granted during 2007. The fair
value for the deferred stock units is initially calculated using
the closing sale price of PPL stock on the date of grant. |
|
(4) |
|
This column includes the expense recognized by PPL for the
incremental increase in value during 2007 of all the stock
allocated to each directors stock account, whether
allocated prior to or during 2007, as well as the expense
recognized by PPL in 2007 for a previous one-time additional
retainer fee of 7,000 deferred stock units having a
five-year
restriction period. As required by SFAS 123(R) (see
description at the end of CD&A Tax and
Accounting Considerations SFAS 123(R) at
page 42), the deferred stock units are evaluated at the end
of each quarterly reporting period and adjusted to reflect the
then-current closing stock price at the end of the quarter. This
fair value calculation for the incremental market change is made
for the total amount of deferred stock in each directors
stock account as of the end of each quarterly reporting period
and not just the stock allocated during 2007. The companys
stock increased in value from a closing price of $35.84 at the
end of 2006 to $52.09 at the end of 2007. The differences in the
amounts shown among Board members largely reflect individual
length of service and the amount of fees deferred into the
respective deferred stock accounts. The values in this column
merely reflect the incremental market adjustments made during
2007 for each directors deferred stock account to reflect
then-current market prices. No additional deferred stock units
were allocated to any directors account as a result of the
quarterly market adjustment. |
|
|
|
As of December 31, 2007, all deferred stock units held in
each directors deferred stock account were vested, with
the exception of the one-time restricted stock unit award of
7,000 units held by each director. |
|
(5) |
|
This column shows the dollar value of life insurance premiums
paid by the company during 2007 for a death benefit of $210,000
for each director, which is equal to twice the amount of the
annual retainer fee. |
18
The 2007 Director Compensation Table provided above
reflects the 2007 total expense recorded by your company for
each director under applicable accounting rules. The following
table illustrates the actual fees earned by each director during
2007, including the annual retainer (both cash and cash
equivalent of deferred stock portion), annual committee
retainers, the presiding director annual cash retainer and
meeting fees for in-person and telephonic meetings.
2007 DIRECTOR
FEES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Committee
|
|
|
Presiding
|
|
|
|
|
|
In-Person
|
|
|
|
|
|
|
|
|
|
|
|
Annual
|
|
|
Annual
|
|
|
Chair
|
|
|
Director
|
|
|
|
|
|
Committee
|
|
|
|
|
|
|
|
|
|
|
|
Retainer
|
|
|
Retainer
|
|
|
Annual
|
|
|
Annual
|
|
|
Board
|
|
|
Meeting
|
|
|
|
|
|
Total
|
|
|
|
|
|
Fee
|
|
|
Fee
|
|
|
Cash
|
|
|
Cash
|
|
|
Meeting
|
|
|
Fees
|
|
|
Conference
|
|
|
2007
|
|
|
Director Name
|
|
|
(cash)
|
|
|
(stock)
|
|
|
Retainer
|
|
|
Retainer
|
|
|
Fees
|
|
|
(all)
|
|
|
Call Fees
|
|
|
Fees
|
|
|
F. M. Bernthal
|
|
|
$
|
40,000
|
|
|
|
$
|
65,000
|
|
|
|
$
|
6,000
|
|
|
|
$
|
|
|
|
|
$
|
9,000
|
|
|
|
$
|
9,000
|
|
|
|
$
|
2,200
|
|
|
|
$
|
131,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. W. Conway
|
|
|
|
40,000
|
|
|
|
|
65,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,000
|
|
|
|
|
6,000
|
|
|
|
|
1,000
|
|
|
|
|
121,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
E. A. Deaver
|
|
|
|
40,000
|
|
|
|
|
65,000
|
|
|
|
|
6,000
|
|
|
|
|
30,000
|
|
|
|
|
9,000
|
|
|
|
|
12,000
|
|
|
|
|
2,000
|
|
|
|
|
164,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
L. K. Goeser
|
|
|
|
40,000
|
|
|
|
|
65,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,500
|
|
|
|
|
4,500
|
|
|
|
|
|
|
|
|
|
117,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S. Heydt
|
|
|
|
40,000
|
|
|
|
|
65,000
|
|
|
|
|
11,000
|
|
|
|
|
|
|
|
|
|
9,000
|
|
|
|
|
15,000
|
|
|
|
|
2,200
|
|
|
|
|
142,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
C. A. Rogerson
|
|
|
|
40,000
|
|
|
|
|
65,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,000
|
|
|
|
|
3,000
|
|
|
|
|
200
|
|
|
|
|
117,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W. K. Smith
|
|
|
|
40,000
|
|
|
|
|
65,000
|
|
|
|
|
6,000
|
|
|
|
|
|
|
|
|
|
9,000
|
|
|
|
|
6,000
|
|
|
|
|
1,400
|
|
|
|
|
127,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S. M. Stalnecker
|
|
|
|
40,000
|
|
|
|
|
65,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,000
|
|
|
|
|
3,000
|
|
|
|
|
2,400
|
|
|
|
|
116,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
K. H. Williamson
|
|
|
|
40,000
|
|
|
|
|
65,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,000
|
|
|
|
|
1,500
|
|
|
|
|
1,000
|
|
|
|
|
116,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
19
STOCK
OWNERSHIP
Directors and
Executive Officers
All directors and executive officers as a group hold less than
1 percent of PPLs common stock. The table below shows
the number of shares of our common stock beneficially owned as
of March 7, 2008 by each of our directors and each named
executive officer for whom compensation is disclosed in the
Summary Compensation Table, as well as the number of shares
beneficially owned by all of our directors and executive
officers as a group. The table also includes information about
stock options, stock units, restricted stock, restricted stock
units granted to executive officers under the companys
Incentive Compensation Plan, or ICP, and stock units credited to
the accounts of our directors under the Directors Deferred
Compensation Plan, or DDCP.
|
|
|
|
|
|
|
Shares of
|
|
|
|
Common Stock
|
|
Name
|
|
Owned(1)
|
|
|
F. M. Bernthal
|
|
|
62,004
|
(2)
|
J. R. Biggar
|
|
|
26,887
|
(3)
|
J. W. Conway
|
|
|
43,837
|
(4)
|
E. A. Deaver
|
|
|
64,103
|
(5)(6)
|
P. A. Farr
|
|
|
218,645
|
(7)
|
L. K. Goeser
|
|
|
18,054
|
(8)
|
R. J. Grey
|
|
|
243,146
|
(9)
|
S. Heydt
|
|
|
59,694
|
(6)(10)
|
J. H. Miller
|
|
|
706,139
|
(11)
|
C. A. Rogerson
|
|
|
11,823
|
(12)
|
B. L. Shriver
|
|
|
189,989
|
(13)
|
W. K. Smith
|
|
|
48,254
|
(14)
|
W. H. Spence
|
|
|
133,058
|
(15)
|
S. M. Stalnecker
|
|
|
22,255
|
(16)
|
K. H. Williamson
|
|
|
11,823
|
(17)
|
All 20 executive officers and directors as a group
|
|
|
2,484,146
|
(18)
|
|
|
|
(1) |
|
The number of shares owned includes: (a) shares directly
owned by certain relatives with whom directors or officers share
voting or investment power; (b) shares held of record
individually by a director or officer or jointly with others or
held in the name of a bank, broker or nominee for such
individuals account; (c) shares in which certain
directors or officers maintain exclusive or shared investment or
voting power, whether or not the securities are held for their
benefit; and (d) with respect to executive officers, shares
held for their benefit by the Trustee under PPLs Employee
Stock Ownership Plan, or ESOP. |
|
(2) |
|
Consists of 62,004 shares credited to
Mr. Bernthals deferred stock account under the DDCP. |
|
(3) |
|
Includes 14,330 restricted stock units. |
|
(4) |
|
Includes 41,249 shares credited to Mr. Conways
deferred stock account under the DDCP. |
|
(5) |
|
Includes 55,729 shares credited to Mr. Deavers
deferred stock account under the DDCP. |
|
(6) |
|
Includes additional deferred stock credited to their accounts in
connection with the termination of the Directors Retirement Plan
in 1996, as follows: Mr. Deaver4,630 shares and
Dr. Heydt3,452 shares. |
|
(7) |
|
Includes 40,000 shares of restricted stock, 58,510
restricted stock units and 94,014 shares of common stock
that may be acquired within 60 days upon the exercise of
stock options granted under the companys Incentive
Compensation Plan, or ICP. |
|
(8) |
|
Includes 18,054 shares credited to Ms. Goesers
deferred stock account under the DDCP. |
20
|
|
|
(9) |
|
Includes 49,660 restricted stock units and 192,254 shares
of common stock that may be acquired within 60 days upon
the exercise of stock options granted under the ICP. |
|
(10) |
|
Includes 56,242 shares credited to Dr. Heydts
deferred stock account under the DDCP. |
|
(11) |
|
Includes 60,000 shares of restricted stock, 129,220
restricted stock units and 516,857 shares of common stock
that may be acquired within 60 days upon the exercise of
stock options granted under the ICP. |
|
(12) |
|
Includes 11,823 shares credited to Mr. Rogersons
deferred stock account under the DDCP. |
|
(13) |
|
Includes 44,030 restricted stock units and 84,427 shares of
common stock that may be acquired within 60 days upon the
exercise of stock options granted under the ICP. |
|
(14) |
|
Includes 44,254 shares credited to Mr. Smiths
deferred stock account under the DDCP. |
|
(15) |
|
Includes 94,140 restricted stock units and 37,907 shares of
common stock that may be acquired within 60 days upon the
exercise of stock options granted under the ICP. |
|
(16) |
|
Includes 21,979 shares credited to
Ms. Stalneckers deferred stock account under the DDCP. |
|
(17) |
|
Includes 11,823 shares credited to
Mr. Williamsons deferred stock account under the DDCP. |
|
(18) |
|
Includes 200,000 shares of restricted stock, 538,505
restricted stock units, 1,208,648 shares of common stock
that may be acquired within 60 days upon the exercise of
stock options granted under the ICP, 8,082 additional shares
credited to directors accounts in connection with the
termination of a retirement plan, and 323,157 shares
credited to the directors deferred stock accounts under
the DDCP. Does not include Mr. Biggars shares since
he retired prior to March 7, 2008. |
Principal
Shareowners
Based on filings made under Section 13(d) and 13(g) of the
Securities Exchange Act of 1934, as of February 14, 2008,
the only person known by the company to be a beneficial owner of
more than 5% of PPLs common stock is as follows:
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
Amount and Nature
|
|
|
|
|
|
|
|
|
|
|
of Beneficial
|
|
|
|
|
|
|
|
Name and Address of Beneficial Owner
|
|
|
Ownership
|
|
|
|
Percent of Class
|
|
|
|
FMR LLC and related parties
82 Devonshire Street
Boston, MA 02109
|
|
|
|
22,739,639
|
*
|
|
|
|
6.11
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
According to a Schedule 13G, dated February 14, 2008,
jointly filed by FMR LLC (FMR), its chairman Edward
C. Johnson 3d, and Fidelity Management & Research
Company (Fidelity), a wholly owned subsidiary of
FMR: (a) FMR beneficially owns 22,739,639 shares of
common stock and has sole voting power with respect to 4,451,066
of such shares and sole dispositive power with respect to all of
such shares; (b) Mr. Johnson beneficially owns
22,739,639 shares of common stock and has sole dispositive
power with respect to all of such shares; and (c) Fidelity
beneficially owns 18,732,207 shares of common stock as a
result of acting as investment adviser to various investment
companies registered under the Investment Advisers Act of 1940.
Neither FMR nor Mr. Johnson has the sole power to vote or
direct the voting of the shares owned directly by Fidelity
funds, which power resides with the funds boards of
trustees. Members of the family of Mr. Johnson are the
predominant owners, directly or through trusts, of Series B
voting common shares of FMR, representing 49% of the voting
power of FMR. FMR is the parent holding company of each of
Strategic Advisers, Inc., Pyramis Global Advisors, LLC, and
Pyramis Global Advisors Trust Company, which beneficially
own 6,907 shares, 306,300 shares and
1,423,614 shares, respectively, of common stock. In
addition, according to the Schedule 13G, FMR made the
filing on a voluntary basis as if shares owned by FMR and
Fidelity International Limited (FIL), which
beneficially owns 2,270,611 shares of common stock, are
beneficially owned by FMR and FIL on a joint basis. |
21
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
To our knowledge, our directors and executives met all filing
requirements under Section 16(a) of the Securities Exchange
Act of 1934 during 2007.
TRANSACTIONS WITH
RELATED PERSONS
The Board of Directors adopted a written related-person
transaction policy in January 2007 to recognize the process the
Board will use in identifying potential conflicts of interest
arising out of financial transactions, arrangements or relations
between PPL and any related persons. This policy applies to any
transaction or series of transactions in which PPL Corporation
or a subsidiary is a participant, the amount exceeds $120,000
and a related person has a direct or indirect
material interest. A related person includes not only the
companys directors and executive officers, but others
related to them by certain family relationships, as well as
shareowners who own more than 5% of any class of PPL
Corporations voting securities.
Under the policy, each related-person transaction must be
reviewed and approved or ratified by the disinterested
independent members of the Board, other than any employment
relationship or transaction involving an executive officer and
any related compensation, which must be approved by the
Compensation, Governance and Nominating Committee, or CGNC. We
collect information about potential related-person transactions
in annual questionnaires completed by directors and executive
officers. We also review any payments made by the company or its
subsidiaries to each director and executive officer and their
immediate family members, and to or from those companies that
either employ a director or an immediate family member of any
director or executive officer. The companys Office of
General Counsel determines whether a transaction requires review
by the Board or the CGNC. Transactions that fall within the
definition of the policy are reported to the Board or the CGNC.
The disinterested independent members of the Board, or the CGNC,
as applicable, reviews and considers the relevant facts and
circumstances and determines whether to approve, deny or ratify
the related-person transaction. Since January 1, 2007,
except for compensation for executive officers that has been
approved by the CGNC, there have been no related-person
transactions that were required either to be approved under the
policy or reported under the SEC related-person transaction
rules.
EXECUTIVE
COMPENSATION
Compensation
Committee Report
The Compensation, Governance and Nominating Committee has
reviewed the following Compensation Discussion and Analysis and
discussed that Analysis with management. Based on its review and
discussions with management, the committee recommended that the
Compensation Discussion and Analysis be incorporated by
reference into the companys Annual Report on
Form 10-K
for 2007 and included in this Proxy Statement.
Compensation, Governance and Nominating Committee
John W. Conway
Louise K. Goeser
Stuart Heydt
Compensation
Discussion and Analysis (CD&A)
Objectives of
PPLs Executive Compensation Program
PPLs executive compensation program is designed to
recruit, retain and motivate executive leadership and align
compensation with the companys performance. Since
executive officer performance has the potential to affect the
companys profitability, the elements of our executive
compensation program are
22
intended to further the companys business goals by
encouraging and retaining leadership excellence and expertise,
rewarding our executive officers for sustained financial and
operating performance, and aligning executive rewards with value
creation for our shareowners over both the short and long term.
A key component of the program is direct
compensationsalary and a combination of annual cash and
equity incentive awardswhich is intended to provide an
appropriate, competitive level of compensation, to reward recent
performance results and to motivate long-term contributions to
achieving the companys strategic business objectives. We
evaluate the direct compensation program as a whole and seek to
deliver a balance of current cash compensation and stock-based
compensation. The program also balances a level of fixed
compensation paid regularlysalarywith incentive
compensation that varies with the performance of the company.
The incentive compensation program focuses executive awards on
annual and longer-term performance and, for executive officers
including the named executive officers in the Summary
Compensation Table on page 44, provides the major portion
of direct compensation in the form of PPL stock, ensuring that
management and shareowner interests are aligned.
Other elements of the total compensation program provide: the
ability for executives to accumulate capital, predominately in
the form of equity to align executive interests with those of
the shareowners; a level of retirement income; and, in the event
of special circumstances like termination of employment in
connection with a change in control of PPL, special severance
protection to help ensure executive retention during the change
in control process and to ensure executive focus on serving the
company and shareowner interests without the distraction of
possible job and income loss.
To ensure appropriate alignment with business strategy and
objectives and shareowner interests, the Compensation,
Governance and Nominating Committee of the Board of Directors,
referred to throughout this section as the Committee, reviews
the executive compensation program and each of its components
regularly.
Compensation
Elements
Our executive compensation program consists of: (1) direct
compensation; (2) indirect compensation; and
(3) special compensation.
Direct
Compensation
Broadly stated, the direct compensation program is intended to
reward:
|
|
|
|
|
Expertise and experience through competitive salaries;
|
|
|
|
Short-term financial and operational performance through annual
cash incentive awards, which are tied to specific, measurable
goals;
|
|
|
|
Achievement of annual strategic objectives through
performance-based restricted stock and stock unit awards;
|
|
|
|
Long-term financial and operational performance through
performance-based restricted stock or stock unit awards; and
|
|
|
|
Stock price growth through awards of stock options.
|
The direct compensation program includes salary, an annual cash
incentive award and long-term incentive awards. Long-term
incentive awards are granted in two forms of equity: restricted
stock units and stock options.
In general, we offer a competitive direct compensation program
that is intended to be similar to that of companies of similar
size and complexity, which are also the companies with which we
compete for talent. The Committee and the company target direct
compensation to be generally at the median of the competitive
market. Each year, competitive data are developed by the
Committees compensation consultant, Towers Perrin, based
on companies of similar size in terms of revenue scope both in
the
23
energy services industry and general industry companies other
than energy services or financial services companies. In
developing this competitive data, Towers Perrin uses its
published compensation surveys (typically their current-year
Executive Compensation Database and Long-Term Incentive Report
(approximately 800 corporate participants), Energy Services
Industry Executive Compensation Database (approximately 100
corporate participants), and Benchmark Compensation Survey of
Energy Trading and Marketing Positions (approximately 65
corporate participants)). When possible and appropriate,
analyses are performed to size-adjust the survey data to achieve
a closer correlation with the appropriate revenue scope for the
applicable PPL business position. The result of these analyses
produces a competitive market reference point we refer to as the
PPL competitive data, which we believe appropriately
reflects the competitive marketplace in which we compete for
executive talent. General industry data determine the PPL
competitive data used for staff positions and for setting
incentive levels; energy industry data are used as the PPL
competitive data reference point for salaries of business line
positions.
PPL competitive data are used as a tool for evaluating salary
levels as well as to set target incentive levels. For example,
salary amounts are determined based on the PPL competitive data
provided by the compensation consultants analyses for a
particular position and the CEOs and Committees
assessment of the individuals expertise and experience.
Total direct compensation in relation to other executives, as
well as prior year individual performance and performance of the
business lines for which the executive is responsible, are also
taken into consideration in determining any adjustment.
In addition to assessing competitive pay levels, Towers Perrin
reports to the Committee each July on recent industry trends and
emerging trends they perceive in the energy services industry.
The majority of direct compensation for executive officers
consists of incentive compensation that varies with the
performance of the company. A portion of incentive compensation
is intended to reward annual or short-term
performance; the rest consists of restricted stock units, which
are intended to promote medium-term performance, and stock
options, which are intended to promote longer-term stock price
growth.
Table 1 below illustrates our allocation of direct compensation
for our executive officers for 2007, which is shown as a
percentage of total direct compensation. For example, the salary
of the chief executive officer, or CEO, is targeted to represent
less than 20% of total direct compensation. Incentive
compensationannual and long-termare targeted to
represent more than 80% of our CEOs direct pay, with about
60% stock-based and linked to long-term financial performance.
TABLE 1
Elements of
Compensation as a Percentage of Total Direct
Compensation2007(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of Total Direct Compensation
|
|
|
|
|
|
Chief Executive
|
|
|
Chief Financial
|
|
|
Other Executive
|
|
|
Direct Compensation
Element
|
|
|
Officer
|
|
|
Officer
|
|
|
Officers(2)
(average)
|
|
|
Salary
|
|
|
|
18.7
|
%
|
|
|
|
25.3
|
%
|
|
|
|
31.4
|
%
|
|
|
|
Target Annual Cash Incentive Award
|
|
|
|
20.6
|
%
|
|
|
|
19.0
|
%
|
|
|
|
18.2
|
%
|
|
|
|
Target Long-term Incentive Awards
|
|
|
|
60.7
|
%
|
|
|
|
55.7
|
%
|
|
|
|
50.4
|
%
|
|
|
|
|
|
|
(1) |
|
Percentages based on target award levels as a percentage of
total direct compensation. Values of restricted stock unit and
stock option awards shown in the Summary Compensation Table in
this Proxy Statement reflect compensation expense recognized in
2007 for financial reporting purposes rather than fair market
values calculated using the number of shares or options actually
awarded. |
24
|
|
|
|
|
See Tax and Accounting
ConsiderationsSFAS 123(R) at the end of this
CD&A at page 42 for further details on how equity
awards are expensed. |
|
(2) |
|
Includes the positions of Chief Operating Officer; Senior Vice
President, General Counsel and Secretary; and five presidents of
major business lines. |
Base
Salary
We set base salaries to reward expertise and experience.
Salaries are not at risk in the sense that, once
established annually based on individual and, where applicable,
business line performance and market comparisons, they are paid
regularly and are not contingent on attainment of specific
goals. We adjust executive salaries based on the expertise and
experience of each executive, prior year individual performance
and performance of the business lines for which the executive is
responsible. Additionally, the critical need for a particular
executives skill, overall assessment of an
executives pay in relation to others within the company
and level of pay relative to the PPL competitive data are
considered in determining an individuals base salary.
Generally, we seek to align salaries to the median of the
market. Salaries are considered paid competitively if they are
within 15% of the PPL competitive data, or within the PPL
competitive range for a particular position. For example, if the
PPL competitive data for the CEO position is $1,000,000, we
consider appropriate market compensation for this position as
ranging between $850,000 and $1,150,000, or 15% less than and
15% greater than the market reference point of $1,000,000.
Because target incentive award levels are set as a percentage of
base salary, increases in salary also affect annual cash
incentive award and equity incentive award opportunities.
In January of each year, the Committee reviews base salary
levels for all executive officers, including the named executive
officers.
25
At its meeting on January 25, 2007, the Committee approved
base salaries for the named executive officers as follows:
TABLE 2
2007 Salary
Adjustments by Position
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PPL Competitive
|
|
|
|
|
|
|
|
|
Name and Position
|
|
|
Prior Salary
|
|
|
Range
|
|
|
2007 Salary
|
|
|
% Change
|
|
|
J. H. Miller
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chairman, President and Chief Executive Officer
|
|
|
$
|
945,000
|
|
|
|
|
$914,000-$1,236,000
|
|
|
|
$
|
1,045,000
|
|
|
|
|
10.6
|
%
|
|
|
|
W. H. Spence
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Vice President and Chief Operating Officer
|
|
|
|
525,000
|
|
|
|
|
$561,000-$759,000
|
|
|
|
|
600,000
|
|
|
|
|
14.3
|
%
|
|
|
|
J. R.
Biggar(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Former Executive Vice President and Chief Financial Officer
|
|
|
|
520,000
|
|
|
|
|
$438,000-$592,000
|
|
|
|
|
543,400
|
|
|
|
|
4.5
|
%
|
|
|
|
P. A.
Farr(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior Vice President-Financial
|
|
|
|
390,000
|
|
|
|
|
$353,000-$477,000
|
|
|
|
|
409,900
|
|
|
|
|
5.1
|
%
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
409,900
|
|
|
|
|
$438,000-$592,000
|
|
|
|
|
450,000
|
|
|
|
|
9.8
|
%
|
|
|
|
R. J. Grey
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior Vice President, General Counsel and Secretary
|
|
|
|
390,000
|
|
|
|
|
$361,000-$489,000
|
|
|
|
|
405,600
|
|
|
|
|
4.0
|
%
|
|
|
|
B. L. Shriver
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President of PPL Generation, LLC
|
|
|
|
390,000
|
|
|
|
|
$319,000-$431,000
|
|
|
|
|
390,000
|
|
|
|
|
0.0
|
%
|
|
|
|
|
|
|
(1) |
|
Mr. Biggar served in this position through March 31,
2007, after which he retired. |
|
(2) |
|
Mr. Farr served as Senior Vice President-Financial until
his election as Executive Vice President and CFO as of
April 1, 2007. At the time of his election, the Committee
re-evaluated his salary for the new position and increased it as
shown. |
The Committee increased Mr. Millers salary to reflect
his effective leadership of the company and the initiatives
undertaken during a portion of 2006, while Mr. Miller was
COO and for his successful transition to CEO following
Mr. Hechts retirement, for establishing an excellent
leadership team, and for appropriately delegating responsibility
for day-to-day operations to Mr. Spence. The company was
able to improve earnings, despite significant challenges
presented by unplanned outages at several power plants, and
Mr. Miller put in place an important process to identify
future growth opportunities for the company. The Committee set
Mr. Millers salary toward the lower end of the PPL
competitive range upon his election as Chairman, President and
CEO. The salary adjustment in 2007 increased
Mr. Millers salary to just below the mid-point of the
PPL competitive range and reflects his successful transition
into his new role.
Mr. Spence joined PPL in mid-2006 and was paid toward the
lower end of the PPL competitive range. He has successfully
assumed the COO role, and the salary adjustment reflects
Mr. Millers recommendation and the Committees
approval to increase Mr. Spences salary to about 90%
of the PPL competitive range mid-point.
The salaries of Messrs. Biggar and Grey reflect continued
effective performance and the Committees interest in
compensating consistent with the PPL competitive range.
Mr. Farr was promoted to CFO on April 1, 2007. The
January increase reflected reward for his contributions during
2006 and the Committees intent to properly compensate the
successor CFO.
26
Upon election as CFO in April, the Committee recognized the new
responsibilities and approved a salary at the lower end, or 87%,
of the PPL competitive range mid-point.
PPL Generation, LLC performance during 2006 was less than
planned, primarily due to certain generation issues and an
unplanned nuclear outage. It was determined that
Mr. Shriver was paid appropriately relative to his
performance and the competitive market, and therefore the
Committee did not change his salary for 2007.
Annual Cash Incentive Awards
The annual cash incentive award program is designed to reward
annual performance compared to business goals established at the
beginning of the year. Unlike salary, where payment is a fixed
amount paid regularly, this compensation element is
at-risk because awards are based on achievement of
prescribed business results. Awards may vary from the target
award (that is, the result at which payouts would be at 100%)
from zero to the program maximum of 150% of target established
for each position.
The Committee makes annual cash incentive awards to executive
officers under the shareowner-approved PPL Corporation
Short-Term Incentive Plan. The awards are based on objective
corporate financial and operational measures. Specific written
performance objectives and business goals are established by
management and approved by the Committee during the first
quarter of each calendar year. The Committee establishes target
award levels, set as a percentage of salary for each executive,
based on a review of the PPL competitive data and an internal
comparison of executive positions.
The Committee set the following target award levels for the
positions listed for the 2007 annual cash incentive awards under
the Short-Term Incentive Plan:
TABLE 3
Annual Cash
Incentive Targets by Position for 2007
|
|
|
|
|
|
|
Targets as %
|
Position
|
|
|
of Salary
|
Chief Executive Officer
|
|
|
110%
|
|
|
|
|
Chief Operating Officer
|
|
|
85%
|
|
|
|
|
Executive Vice President and Chief Financial Officer*
|
|
|
65%/75%
|
|
|
|
|
Senior Vice Presidents and President of PPL EnergyPlus, LLC
|
|
|
65%
|
|
|
|
|
Presidents of other principal operating subsidiaries
|
|
|
50%
|
|
|
|
|
|
|
|
* |
|
The annual cash incentive target for the CFO was 65% at the
beginning of 2007. At its March 2007 meeting, the Committee
approved an increase in the target to 75% and also adjusted the
long-term incentive target to 220% from 240% as also noted in
Table 7 below. |
The corporate financial goal for 2007, which was a fully diluted
earnings per share, or EPS target described in
detail below, represented 60% of the total award for the CEO,
COO and CFO and other PPL Corporation executive officers and 40%
of the total award for business line presidents. Various
measures make up operational goals, including business line net
income, marketing and trading gross margin, generation
availability, operation and maintenance expense and capital
expenditure amounts, safety and environmental performance and
other measures critical to the success of the business lines,
all of which are described in detail below.
27
The following table summarizes the weightings allocated to
financial and operational results, by executive officer
position, for determining 2007 annual cash incentive awards:
TABLE 4
Annual Cash
Incentive Weightings Applied to Financial and Operational
Results*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PPL
|
|
|
|
|
|
|
|
|
PPL Energy
|
|
|
|
CEO;
|
|
|
PPL
|
|
|
Electric
|
|
|
PPL
|
|
|
PPL
|
|
|
Services
|
|
|
|
COO; CFO;
|
|
|
Generation
|
|
|
Utilities
|
|
|
EnergyPlus
|
|
|
Global
|
|
|
Group
|
Category
|
|
|
SVPs
|
|
|
President
|
|
|
President
|
|
|
President
|
|
|
President
|
|
|
President
|
Financial Results
|
|
|
|
60%
|
|
|
|
|
40%
|
|
|
|
|
40%
|
|
|
|
|
40%
|
|
|
|
|
40%
|
|
|
|
|
40%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operational Results
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PPL Generation
|
|
|
|
9%
|
|
|
|
|
50%
|
|
|
|
|
|
|
|
|
|
10%
|
|
|
|
|
|
|
|
|
|
10%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PPL EnergyPlus
|
|
|
|
9%
|
|
|
|
|
10%
|
|
|
|
|
|
|
|
|
|
50%
|
|
|
|
|
|
|
|
|
|
10%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PPL Electric Utilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PPL Gas Utilities
|
|
|
|
9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PPL Global
|
|
|
|
9%
|
|
|
|
|
|
|
|
|
|
10%
|
|
|
|
|
|
|
|
|
|
50%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PPL Energy Services Group
|
|
|
|
4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
Annual cash incentive awards for executive officers are based on
the financial and operational results for the year and are not
further adjusted for individual performance. |
At its January 2008 meeting, the Committee reviewed 2007
performance results to determine whether the named executive
officers had met or exceeded pre-established 2007 performance
goals. Annual cash incentive awards are determined as summarized
below by multiplying the results for financial and operational
measures by the weightings in Table 4 above to determine the
total performance result for each position. The total
performance result is then multiplied by the target award
opportunity as detailed in Table 3 above and then multiplied by
salary as of December 31, 2007, the end of the performance
period.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
annual
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
target award
|
|
|
|
|
year-end
|
|
|
|
|
|
|
cash
|
|
results
|
|
|
|
×
|
|
|
|
weights
|
|
|
|
×
|
|
|
%
|
|
×
|
|
|
salary
|
|
|
|
=
|
|
|
incentive
|
|
|
|
|
|
|
|
|
|
(Table 4
|
)
|
|
|
|
|
|
(Table 3)
|
|
|
|
|
(Table 2
|
)
|
|
|
|
|
|
award
|
28
As a result, the Committee approved the following annual cash
incentive awards, which are reflected in the Summary
Compensation Table in the column headed Non-Equity
Incentive Compensation Plan Earnings:
TABLE 5
Annual Cash
Incentive Awards for 2007 Performance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary Basis for
|
|
|
Total Goal
|
|
|
2007 Annual Cash
|
|
|
Name
|
|
|
Award
|
|
|
Results
|
|
|
Award
|
|
|
J. H. Miller
|
|
|
$
|
1,045,000
|
|
|
|
|
139.6%
|
|
|
|
$
|
1,604,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W. H. Spence
|
|
|
|
600,000
|
|
|
|
|
139.6%
|
|
|
|
|
712,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. R. Biggar (Retired)
|
|
|
|
543,400
|
|
|
|
|
139.6%
|
|
|
|
|
250,300
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
P. A. Farr
|
|
|
|
450,000
|
|
|
|
|
139.6%
|
|
|
|
|
471,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. J. Grey
|
|
|
|
405,600
|
|
|
|
|
139.6%
|
|
|
|
|
368,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B. L. Shriver
|
|
|
|
390,000
|
|
|
|
|
134.7%
|
|
|
|
|
262,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
Based on three months in the position before retirement plus an
additional three months. Please see discussion under
Termination BenefitsTermination Benefits for
Mr. Biggar on page 60. |
29
The following table provides further detail for the weighting
applied to goals established for the CEO and other PPL
Corporation executive officers, including Messrs. Miller,
Spence, Biggar, Farr and Grey. For Mr. Shriver, results
differ from the weightings in the following table due to the
weightings applied to his position as detailed in Table 4 above.
TABLE 6
Annual Cash
Incentive Awards for Corporate-level Executive Officers*
(executive
officers other than presidents of major business
lines)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Results
|
|
|
Weight
|
|
|
Attainment
|
|
|
PPL Corporation EPS (60% weight)
|
|
|
150.0
|
%
|
|
|
60
|
%
|
|
|
90.0
|
%
|
Operational:
|
|
|
|
|
|
|
|
|
|
|
|
|
PPL Generation (9% weight)
|
|
|
|
|
|
|
|
|
|
|
|
|
Generation East Fossil/Hydro (50)%
|
|
|
124.2
|
%
|
|
|
4.5
|
%
|
|
|
5.6
|
%
|
Susquehanna (30)%
|
|
|
110.5
|
%
|
|
|
2.7
|
%
|
|
|
3.0
|
%
|
Generation West Fossil/Hydro (20)%
|
|
|
123.5
|
%
|
|
|
1.8
|
%
|
|
|
2.2
|
%
|
PPL EnergyPlus (9% weight)
|
|
|
|
|
|
|
|
|
|
|
|
|
EnergyPlus Energy Marketing Center
|
|
|
147.2
|
%
|
|
|
9.0
|
%
|
|
|
13.2
|
%
|
Utility Operations (9% weight)
|
|
|
|
|
|
|
|
|
|
|
|
|
PPL Electric Utilities (95)%
|
|
|
82.6
|
%
|
|
|
8.6
|
%
|
|
|
7.1
|
%
|
PPL Gas Utilities (5)%
|
|
|
120.1
|
%
|
|
|
0.5
|
%
|
|
|
0.5
|
%
|
PPL Global (9% weight)
|
|
|
|
|
|
|
|
|
|
|
|
|
Global
|
|
|
148.7
|
%
|
|
|
9.0
|
%
|
|
|
13.4
|
%
|
PPL Energy Services Group (4% weight)
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy Services (30)%
|
|
|
133.3
|
%
|
|
|
1.2
|
%
|
|
|
1.6
|
%
|
Synfuels (20)%
|
|
|
80.0
|
%
|
|
|
0.8
|
%
|
|
|
0.6
|
%
|
Telcom (15)%
|
|
|
141.3
|
%
|
|
|
0.6
|
%
|
|
|
0.8
|
%
|
PPLSolutions (15)%
|
|
|
117.8
|
%
|
|
|
0.6
|
%
|
|
|
0.7
|
%
|
Development (20)%
|
|
|
100.8
|
%
|
|
|
0.8
|
%
|
|
|
0.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Weight & Attainment
|
|
|
|
|
|
|
100.0
|
%
|
|
|
139.6
|
%
|
|
|
|
* |
|
Includes performance results for Messrs. Miller, Spence,
Biggar, Farr and Grey. |
As noted above, the total goal results are based on a blend of
corporate, financial and operational results. The financial and
operational goals are based on PPLs business plan. The
financial goals are set to meet managements objectives and
financial market expectations, and the operational goals are
established to support financial results for both the short and
longer term.
Although awards may range from zero to 150% of target, we
generally expect awards, in the aggregate, to range from 80% to
120% of target. Awards for the positions of the named executive
officers over the last five years have ranged from 90.0% to
139.6% of target, with an average award of 118.5% of target for
the corporate executive officers (including the CEO and CFO).
Financial Results. Target EPS for the annual cash
incentive program was $2.35 per share for 2007, with a 150%
payout goal of $2.47 and a 50% payout goal of $2.23. Results
below $2.23 would result in a zero payout on this portion of the
incentive goal.
30
The target EPS used for goal purposes is corporate reported
earnings, net of specific items excluded at the beginning of the
year as approved by the Committee in March 2007. The excluded
items for 2007 were:
|
|
|
|
|
Any impact from changes in accounting resulting from FASB or SEC
determinations that, as of January 31, 2007, were not
scheduled to become applicable to current year financial
statements, or if the financial statement impact was not
determinable based on the issued or proposed guidance.
|
|
|
|
Costs associated with the refinancing of debt or senior equity
securities where refinancing results in a positive net present
value.
|
|
|
|
Asset impairments related to or resulting from a decision to
sell assets or discontinue operations where such sale or
discontinued operations results in a positive net present value.
|
|
|
|
Gains related to or resulting from the sale of an asset or an
affiliated company that are treated as unusual credits to
income. Any income (or loss) included in the 2007 business plan
for such asset or affiliated company for the balance of the year
following the closing date for such sale will be included in the
calculation of the 2007 Corporate Financial Goal.
|
|
|
|
Any mark-to-market, or MTM, impact on earnings from energy
marketing and trading activities. The MTM changes of forward
commitments are not reflective of the ultimate profitability of
the MTM transactions. The ultimate financial impact of MTM
transactions, as well as related transactions that do not
receive MTM accounting, will be reflected in earnings as
contracted products and services are delivered.
|
|
|
|
Other-than temporary impairments of
available-for-sale investment securities held in the Nuclear
Decommissioning Trust Fund, as provided in the SECs
Staff Accounting Bulletin topic 5.m.
|
|
|
|
The outcome of the legal proceedings relating to a PJM billing
dispute at the Federal Energy Regulatory Commission. PJM, or PJM
Interconnection, L.L.C., is the independent operator of the
electric transmission network for the region in which PPL
Electric Utilities Corporation provides transmission service.
|
After adjusting PPLs reported corporate earnings for the
above excluded items, the EPS achieved for purposes of the
annual cash incentive program was $2.77 per share which is above
the maximum of 150% of the target EPS for 2007. (Reported EPS
(GAAP) of $3.39 reduced by excluded items.)
Operational Results. Operating goals are detailed,
quantifiable goals set specifically for each business unit
annually. The operational goals are structured to attain the
target EPS for the year, while at the same time promoting
near-term activities that benefit the operating assets in future
years. Because the target EPS is a challenging goal relative to
the previous years target, many of the supporting
operational goals require difficult-to-reach elements in order
to produce operating results that render the target EPS.
Operating goals in 2007 included the following:
|
|
|
|
|
Safety goals (limits on Occupational Safety and Health
Administration reportable events and motor vehicle accidents)
are included in all units.
|
|
|
|
Gross margin, net income or net operating profit after tax
(NOPAT) goals are included in each business lines goals.
Gross margin is a goal for PPL Generation and PPL EnergyPlus.
Net income is a goal for the delivery companiesPPL
Electric Utilities and PPL Globaland our smaller business
lines. NOPAT is used by PPL Energy Services Group. PPL Global
has a free cash flow goal for international operations. PPL
Generation, PPL Electric Utilities and PPL Gas Utilities also
have specific operations and maintenance and capital expenditure
goals that support their margin or income goals.
|
31
|
|
|
|
|
Station generation goals are included for PPL Generation units,
including specific commercial availability and system-wide,
fleet initiative goals.
|
|
|
|
PPL Generation has specific goals pertaining to the Montour and
Brunner Island scrubber projects.
|
|
|
|
PPL Generations nuclear unit has specific goals pertaining
to outage refueling metrics.
|
|
|
|
PPL Energy Services Groups business development unit has
goals pertaining to asset growth.
|
|
|
|
Environmental compliance goals are included for the fossil and
hydro generating units. Nuclear Regulatory Commission
Performance Indicators and Inspector Findings and Institute of
Nuclear Power Operations rating goals are included for our
nuclear business unit.
|
|
|
|
Customer service goals are included for the delivery
companiesPPL Electric Utilities, PPL Gas Utilities and PPL
Globals subsidiariestaking the form of customer
satisfaction surveys, interruption limits, lost minute limits
and non-storm lost minute measures.
|
|
|
|
Community impact goals are included for our fossil and hydro
units in the form of a favorable public perception evaluation.
|
Changes to the
Annual Cash Incentive Program for 2008
At its November 2007 meeting, the Committee conducted a
comprehensive review of the incentive compensation program and
considered a recommendation from management to make certain
changes. The Committee believes that the program should be
adjusted in two ways: (1) the goals should be more focused
on quantifiable measures with a greater emphasis for executive
officers on EPS achievement and (2) the weighting of the
corporate EPS, unit and individual goals should be restructured.
At its meeting in January 2008, the Committee revised the
weighting of goal results in determining 2008 cash incentive
awards. The CEO, CFO and other corporate officer awards will now
be based 100% on EPS attainment compared to the current mix of
60% EPS and 40% business unit results. Awards for presidents of
principal operating subsidiaries will be weighted 60% EPS, 20%
on the results of their business unit and 20% based on
individual performance. As described above, in 2007, awards for
presidents were based on 40% EPS and 60% on business unit
results based on the results of all units with their unit more
heavily weighted than other business units with no individual
factor.
At its meeting in March 2008, the Committee reduced the number
of goals to be used for purposes of calculating amounts
available to pay annual cash incentive awards, with a
predominate emphasis on EPS achievement. The calculated,
company-wide and business line results will continue to
determine the awards for the CEO, COO, CFO and Senior Vice
President, General Counsel and Secretary. A new individual
performance factor was introduced for the presidents of major
business lines. A more complete set of goals will be considered
when assessing individual performance and award allocation for
presidents of principal subsidiaries and other staff.
The introduction of an individual performance component for
determining cash incentive awards allows more discretion for
Committee and CEO judgment and provides a means to reward or
penalize presidents for safety and environmental performance,
corporate initiatives or strategic goal attainment.
(Simultaneously with changes to the weighting of goal results
for the annual cash incentive program, the Committee made
certain changes to the long-term incentive program, noted below
at Long-term Incentive Awards (Equity Awards)Changes
to the Long-term Incentive Program for 2008 on
page 36, including elimination of a strategic goal-based
award. Performance against strategic initiatives can be the
basis for all or a portion of the individual component of the
annual cash award.) The company currently uses an individual
performance component for vice president-level executives and is
extending this concept to president-level executives in 2008.
32
Long-term
Incentive Awards (Equity Awards)
We grant long-term incentive awards to align the interests of
the executive officers with those of our shareowners. Long-term
incentive awards for executive officers are made annually under
the shareowner-approved PPL Corporation Incentive Compensation
Plan.
The long-term incentive program is designed to reward mid- and
long-term performance and is composed of three awards:
|
|
|
|
|
Restricted stock unit awards for sustained financial and
operational performance;
|
|
|
|
Restricted stock unit awards for performance on specific,
strategic goals; and
|
|
|
|
Stock option awards for stock price growth.
|
General
We grant restricted stock unit awards based on the achievement
of targeted business results. Restricted stock unit awards
provide executives the right to receive an equivalent number of
shares of PPL common stock after a restriction or holding
period. These grants are therefore at-risk because
awards may vary from zero to the program maximum of 150% of
target. Restricted stock unit awards are also
at-risk compensation because the awards are
denominated in shares of PPL stock and are subject to vesting
and potential forfeiture, and the ultimate value realized by the
executives is directly related to PPLs stock price
performance.
Restricted stock unit awards made in 2008 for 2007 performance
have a three-year restriction period, with restrictions
scheduled to lapse in 2011. During the restriction period, each
restricted stock unit entitles the executive to receive
quarterly payments from the company equal to the quarterly
dividends on one share of PPL stock, thereby recognizing both
current income generation and stock price appreciation in line
with PPL shareowners.
We also grant stock options. Stock options are granted at an
exercise price equal to the market value of PPL stock on the
grant date and will normally not be exercised by the holder if
the stock price does not increase after the grant date. As a
result, stock option awards are designed to reward executives
for increases in PPLs stock price.
Stock options granted in 2007 become exercisable over three
yearsone-third at the end of each year following
grantand are exercisable for ten years from the grant
date, subject to earlier expiration following specified periods
after termination of employment.
Under the terms of the companys Incentive Compensation
Plan, restricted stock units and unvested stock options are
forfeited if the executive voluntarily leaves PPL and generally
become vested if the executive retires from the company prior to
the scheduled vesting date. However, any stock options granted
within 12 months prior to an executive officers
retirement date will be forfeited. See Termination
BenefitsLong-term Incentive Awards for a description
of conditions of the provisions and expiration dates applicable
to awards.
From time to time, as an additional incentive to encourage and
reward an executives superior performance and service with
PPL and to retain key talent, we may also grant additional
restricted stock under our companys Incentive Compensation
Plan. No such additional awards were made to the named executive
officers in 2007. See Retention Agreements on
page 58 for previous additional restricted stock
awards granted to Messrs. Miller, Farr and Shriver.
Structure of
Awards
At its January 2007 meeting, the Committee decided to rebalance
the value of restricted stock units as compared with stock
options to 65% restricted stock units and 35% options, from the
prior 50%-50% mix. This decision was based on changes noted in
market practice and on the Committees view that stock
options should receive less weight. The restricted stock unit
portion of the long-term
33
incentive program is further split, with 50% of the award tied
to sustained financial and operational results and 50% of the
award tied to strategic goals. Equity awards are intended to
balance incentive pay with performance toward specific business
goals based on the companys multi-year business plan.
Target award levels for each component of the long-term
incentive program seek to balance executive focus on the
companys business goals, to balance the internal
compensation levels of executive positions and to reflect the
PPL competitive data.
The target award levels for the named executive officers were
set as a percentage of salary for 2007 and are provided below:
TABLE 7
Long-term
Incentive Award Targets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock Units
|
|
|
|
Stock Options
|
|
|
|
|
|
|
|
|
(Targets as % of Salary)
|
|
|
|
|
|
|
|
|
Sustained
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial and
|
|
|
|
Strategic
|
|
|
|
|
|
|
|
|
|
|
|
|
Operational
|
|
|
|
Objective
|
|
|
|
Stock Price
|
|
|
|
|
|
Position
|
|
|
Results
|
|
|
|
Results
|
|
|
|
Performance
|
|
|
|
Total
|
|
Chief Executive Officer
|
|
|
|
105.625
|
%
|
|
|
|
105.625
|
%
|
|
|
|
113.75
|
%
|
|
|
|
325%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief Operating Officer
|
|
|
|
81.25
|
%
|
|
|
|
81.25
|
%
|
|
|
|
87.5
|
%
|
|
|
|
250%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief Financial Officer (prior to April 1, 2007) (J.R.
Biggar)
|
|
|
|
78
|
%
|
|
|
|
78
|
%
|
|
|
|
84
|
%
|
|
|
|
240%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief Financial Officer (after March 31, 2007) (P.A. Farr)
|
|
|
|
71.5
|
%
|
|
|
|
71.5
|
%
|
|
|
|
77
|
%
|
|
|
|
220%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior Vice Presidents and President of PPL EnergyPlus, LLC
|
|
|
|
52
|
%
|
|
|
|
52
|
%
|
|
|
|
56
|
%
|
|
|
|
160%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Presidents of other principal operating subsidiaries
|
|
|
|
47
|
%
|
|
|
|
47
|
%
|
|
|
|
50.75
|
%
|
|
|
|
145%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A restricted stock unit award is made by the Committee after the
end of each year, based on the most recent three-year average
results of the annual cash incentive program:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
target
|
|
|
|
|
|
|
|
3-year
|
|
|
|
market price of
|
|
|
|
number
|
award
|
|
×
|
|
salary
|
|
×
|
|
average
|
|
¸
|
|
PPL stock as
|
|
=
|
|
of units
|
%
|
|
|
|
|
|
|
|
result
|
|
|
|
of award date
|
|
|
|
granted
|
This award is designed to reward sustained financial and
operational performance.
A second restricted stock unit award is made after the end of
each year based on the achievement level of annually determined,
objective strategic goals developed by the company and approved
by the Committee:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
target
|
|
|
|
|
|
|
|
strategic
|
|
|
|
market price of
|
|
|
|
number
|
award
|
|
×
|
|
salary
|
|
×
|
|
objective
|
|
¸
|
|
PPL stock as
|
|
=
|
|
of units
|
%
|
|
|
|
|
|
|
|
goal result
|
|
|
|
of award date
|
|
|
|
granted
|
This award is designed to reward actions that drive achievement
of the companys strategic objectives.
34
The strategic goals for 2007 included the following:
|
|
|
|
|
Proactively influence federal and state policies regarding
continued transition to competitive markets and responsible
environmental regulation:
|
|
|
|
|
|
Promote PPLs position on the benefits of competitive
markets in the regulatory arenas by active involvement in the
federal and state regulatory process.
|
|
|
|
Effectively respond to any state-level efforts to re-regulate
generation or wholesale markets or otherwise impede the
transition to competitive markets, through our legislative and
regulatory relations efforts and in cooperation with industry
associations and other groups.
|
|
|
|
Effectively promote PPLs principles for climate change
legislation or regulations, with specific focus on achieving
cap-and-trade
programs or other mechanisms that provide cost-effective options
for compliance.
|
|
|
|
|
|
Establish and begin implementation of a comprehensive energy
supply hedge strategy.
|
|
|
|
Complete a strategic review of PPL with input from the Board,
senior management and outside advisors.
|
A grant of stock options is made each year at each
executives target award level:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
target
|
|
|
|
|
|
|
|
|
|
|
|
|
|
option value
|
|
|
|
number
|
award
|
|
|
×
|
|
|
|
salary
|
|
|
|
¸
|
|
|
as of award
|
|
=
|
|
of options
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
date
|
|
|
|
granted
|
The value of the long-term incentive awards as of the grant
date, based on the targets, delivers a level of compensation
intended to pay executive officers at a level that compares to
the median of the PPL competitive data. The ultimate value of
long-term incentive awards to executives is tied to the future
value of PPLs total shareowner returnstock price
growth and dividends. To the extent total shareowner value
increases, executives may realize values that exceed the values
as determined on the grant date. Similarly, should shareowner
value deteriorate, executive compensation levels for these
awards could fall below the grant values, possibly to zero.
Awards for
2007
At its meeting in January 2008, the Committee reviewed and
certified the performance results for the 2007 cash incentive
compensation award. These results impact the following
restricted stock unit award:
|
|
|
|
|
Restricted stock unit award for sustained financial and
operational results: the 2007 annual cash incentive results for
executives were averaged with similar results for 2006 and 2005
and formed the basis for the award made in 2008 for performance
over the preceding three years. The average results were 126.9%
which represent the average of 2007-(139.6%),
2006-(131.3%)
and 2005-(109.9%).
|
In addition, the Committee reviewed and certified the
performance results for the 2007 strategic goal; the results
impact the following restricted stock unit award:
|
|
|
|
|
The restricted stock unit award for strategic goal attainment:
goal attained at 100%.
|
At its January 2007 meeting the Committee approved stock option
awards for 2007. At its meeting in January 2008, the Committee
approved restricted stock unit awards for 2007 performance.
These awards are set forth in the table below. The cost of the
stock option awards expensed by the company in 2007 is included
in the Summary Compensation Table. However, because the
restricted stock unit awards for 2007 performance were not
expensed by the company until beginning after they were granted
in January 2008, any amount expensed will not be included until
next years Summary Compensation Table and the grants will
not be reflected in the Grants of Plan-Based Awards table until
next year. See Tax and Accounting
ConsiderationsSFAS 123(R) at the end of this
CD&A at page 42 for further details on how equity
awards are expensed.
35
TABLE 8
Long-Term
Incentive Awards for 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock Units
|
|
|
Stock Options
|
|
|
|
|
|
(Awards in Dollars)
|
|
|
|
|
|
Sustained
|
|
|
|
|
|
|
|
|
|
|
|
Financial and
|
|
|
Strategic
|
|
|
|
|
|
|
|
|
Operational
|
|
|
Objective
|
|
|
Stock Price
|
|
|
Name
|
|
|
Results
|
|
|
Results
|
|
|
Performance
|
|
|
J. H. Miller
|
|
|
$
|
1,401,067
|
|
|
|
$
|
1,103,782
|
|
|
|
$
|
1,417,500
|
|
|
|
|
W. H. Spence
|
|
|
|
618,801
|
|
|
|
|
487,501
|
|
|
|
|
630,000
|
|
|
|
|
J. R. Biggar (Retired)
|
|
|
|
144,849
|
|
|
|
|
114,114
|
|
|
|
|
0
|
|
|
|
|
P. A. Farr
|
|
|
|
408,410
|
|
|
|
|
321,751
|
|
|
|
|
312,000
|
|
|
|
|
R. J. Grey
|
|
|
|
267,718
|
|
|
|
|
210,912
|
|
|
|
|
312,000
|
|
|
|
|
B. L. Shriver
|
|
|
|
233,288
|
|
|
|
|
183,788
|
|
|
|
|
312,000
|
|
|
|
|
Mr. Biggar did not receive a stock option award since it
was expected he would retire during 2007, and the Committee
views stock options as a forward-looking incentive to promote
stock price growth and not as an effective means of compensating
a retiring executive.
The Committee granted Mr. Biggar a transition restricted
stock unit award of 8,880 restricted stock units, in addition to
the above annual awards, in lieu of stock options in addition to
the above annual awards. The unit grant was determined based on
25% of the total long-term incentive target, or 60% of salary,
converted to units as noted above. The restrictions on the stock
unit award, unlike other restricted stock unit grants, do not
lapse upon retirement; the restrictions instead lapse one year
following retirement.
Changes to the
Long-term Incentive Program for 2008
At its January 2008 meeting, the Committee amended the long-term
incentive program for 2008 by (1) eliminating the strategic
goal-based restricted stock unit award, (2) introducing a
performance unit award based on relative, total shareowner
return, and (3) rebalancing the value of each form of
equity award.
Based on the Committees assessment of market practice,
particularly the prevalence of relative, total shareowner
return-based programs in the industry and the Committees
view that the balance of three types of equity awards properly
focused executives on internal and external performance factors
as well as medium-term and longer-term performance, the
Committee decided to rebalance the mix of long-term incentives
from the prior 65% restricted stock unit and 35% stock option
mix. Under the revised mix, restricted stock units based on
sustained financial and operational performance represent 40% of
an executives total long-term incentive opportunity; the
performance unit award represents 20% of the award opportunity;
and stock options represent 40% of the award opportunity. As
pertains to the new total shareowner return-based performance
unit award, executives will receive a target number of
performance units and the actual amount earned at the end of the
performance period will depend on the three-year total
shareowner return results of the company versus a peer group.
Total shareowner return reflects the combined impact of changes
in stock price plus re-invested dividends over the performance
period.
36
The revised equity award weighting is reflected below:
TABLE 9
Long-term
Incentive Award Targets for 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted
|
|
|
|
Performance
|
|
|
|
Stock
|
|
|
|
|
|
|
|
|
Stock Units
|
|
|
|
Units
|
|
|
|
Options
|
|
|
|
|
|
|
|
|
(Targets as % of Salary)
|
|
|
|
|
Sustained
|
|
|
|
Relative
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial and
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
Operational
|
|
|
|
Shareowner
|
|
|
|
Stock Price
|
|
|
|
|
|
Position
|
|
|
Results
|
|
|
|
Return
|
|
|
|
Performance
|
|
|
|
Total
|
|
Chief Executive Officer
|
|
|
|
130%
|
|
|
|
|
65%
|
|
|
|
|
130%
|
|
|
|
|
325%
|
|
|
Chief Operating Officer
|
|
|
|
100%
|
|
|
|
|
50%
|
|
|
|
|
100%
|
|
|
|
|
250%
|
|
|
Chief Financial Officer
|
|
|
|
88%
|
|
|
|
|
44%
|
|
|
|
|
88%
|
|
|
|
|
220%
|
|
|
Senior Vice President, General Counsel and Secretary and the
President of PPL EnergyPlus
|
|
|
|
64%
|
|
|
|
|
32%
|
|
|
|
|
64%
|
|
|
|
|
160%
|
|
|
Presidents of other principal operating subsidiaries
|
|
|
|
58%
|
|
|
|
|
29%
|
|
|
|
|
58%
|
|
|
|
|
145%
|
|
|
Perquisites and Other Benefits
Officers of the company, including the named executive officers,
are eligible for company-paid financial planning services. These
services include financial planning, tax preparation support and
a one-time payment for estate documentation preparation. These
services are provided in recognition of time constraints on busy
executives and their more complex compensation program that
requires professional financial and tax planning. We believe
that good financial planning by experts reduces the amount of
time and attention that executive officers must spend on such
issues and maximizes the net financial reward to the employee of
compensation received from the company. Such planning also helps
ensure that the objectives of our compensation programs are met
and not frustrated by unexpected tax or other consequences.
The value of all perquisites is summarized for 2007 in
Note 8 to the Summary Compensation Table.
Indirect
Compensation
Officers of the company, including the named executive officers,
participate in benefit programs offered to all company
employees. In addition, officers are eligible for the executive
benefit plans described below.
The companys retirement income benefits are designed to
provide a competitive level of income replacement in retirement
for career executives. The primary retirement income program for
executives consists of two plans: (1) the PPL Retirement
Plan, a tax-qualified, defined benefit pension plan available to
employees of the company generally and, (2) the
Supplemental Executive Retirement Plan, or SERP, a nonqualified
defined benefit pension plan available for officers of the
company.
We have established a retirement income target for the PPL
Retirement Plan and SERP for executives at 55% of pay (defined
as five-year average total cash compensation) for a career
employee with 30 years of service. Additional details on
these plans are provided under Pension Benefits in
2007.
The company believes that its SERP benefits are competitive
relative to companies with which it competes for talent and are
necessary to retain executives and to recruit new executives to
join the company.
37
The primary capital accumulation opportunities for executives
are: (1) stock gains under the companys long-term
incentive program and employee stock ownership plan; and
(2) voluntary savings opportunities that, for 2007,
included savings through the tax-qualified deferred savings
plan, which is a 401(k) plan (our PPL Deferred Savings Plan),
and the Officers Deferred Compensation Plan, which is a
nonqualified deferred compensation arrangement.
Under the PPL Deferred Savings Plan, the company provides
matching cash contributions of up to 3% of the participating
employees pay (defined as salary plus annual cash
incentive award) up to contribution limits imposed by federal
tax rules. Participating employees are vested in the company
matching contributions after one year of service. This plan
provides a selection of core investment options, including
publicly available mutual funds, institutionally managed funds,
including the Stable Value Fund managed by Fidelity Investments
during 2007, and lifestyle funds available from a
mutual fund provider (for 2007, the lifestyle funds were
Fidelity Investments Freedom Funds). The plan investment
options also include a brokerage account option that allows
participants to select from a broad range of publicly available
mutual funds, including those of the plan trustee as well as
competitor funds. Participants may request distribution of their
accounts at any time following termination of employment.
Our Officers Deferred Compensation Plan permits participants to
defer up to all but $75,000 of their base salary and up to all
of their annual cash incentive awards. A hypothetical account is
established for each participant who elects to defer, and the
participant selects one or more investment choices that
generally mirror those that are available generally to employees
under the PPL Deferred Savings Plan, except for any brokerage
account options. For additional details on the Officers Deferred
Compensation Plan, see Executive Compensation
TablesNonqualified Deferred Compensation in 2007
table on page 54. Matching contributions are made under
this plan on behalf of participating officers to make up for
matching contributions that would have been made on behalf of
such officers under the PPL Deferred Savings Plan but for the
imposition of certain maximum statutory limits imposed on
qualified plan benefits (for example, annual limits on eligible
pay and contributions). Executive officers who reach the maximum
limits in the PPL Deferred Savings Plan are generally eligible
for matching contributions under this plan. There is no vesting
requirement for the company matching contributions. Retirement
benefits and capital accumulation contributions under the
Officers Deferred Compensation Plan are not affected by any
long-term incentive or equity awards.
The company has a tax-qualified employee stock ownership plan,
the PPL Employee Stock Ownership Plan, or ESOP, to which the
company makes an annual contribution. Historically, the company
has contributed a dollar amount to the ESOP that is equal to the
tax benefit it receives for a tax deduction on dividends paid on
PPL common stock held by the trustee of the ESOP. Contributions
are then allocated among the ESOP participants based on the
following two measures: (1) the amount of total dividends
paid on the participants account, and (2) a pro rata
amount based on salary up to a median salary amount. The total
allocation cannot exceed 5% of a participants
compensation. The ESOP trustee invests exclusively in the
companys common stock. All named executive officers
participate in the ESOP, as well as employees of the
companys major business lines. There is no vesting period
for contributions made under the ESOP. Shares held for a minimum
of 36 months are available for withdrawal, and participants
may request distribution of their account at any time following
termination of employment. The participant has the option of
receiving the actual shares of common stock or the cash
equivalent of such shares.
Special
Compensation
In addition to the annual direct and indirect compensation
described above, the company provides special compensation with
respect to specific situations.
Hiring and Retention. As part of the executive recruiting
process, the company makes offers of employment to new executive
candidates that will attract talent to the company and
compensate these candidates for compensation they may lose when
terminating employment with their prior employer.
38
Generally, annual compensation for new executive officers is
consistent with that of current executives in similar positions.
Incentive awards for the year of hire are generally pro-rated
for the period of service during the executives initial
year of employment and made after the close of the year, when
awards are made for other executives. Annual, long-term
incentive awards have not typically been granted upon hire;
however, one-time awards may be made in restricted stock or
restricted stock units to replace awards a new executive may be
losing from a former employer or as part of a sign-on award to
encourage an executive to join the company. Effective in 2008,
forward-looking incentive awards, including performance unit and
stock option awards, will be made to new hires for the year of
hire on a pro rata basis.
In limited circumstances, generally involving mid-career
hirings, the company enters into retention agreements with key
executives to encourage their long-term employment with the
company. These agreements typically involve the grant of
restricted stock on which the restrictions lapse upon the
attainment of age 60, but may vary on a
case-by-case
basis. During the term of the restrictions, the executive
receives dividends. The intention is to retain key executives
for the long-term and to focus the executives attention on
stock price growth during the retention period.
Individual awards vary based on an executives level,
company service and the need for retention
and/or the
market demand for an executives talent. The amount of an
award is typically a multiple of salary converted to restricted
stock as of the grant date. For specific details on retention
agreements that are outstanding for named executive officers,
see Retention Agreements on page 58.
Severance. We have not entered into traditional
employment agreements with executives, including the named
executive officers. There are no specific agreements pertaining
to length of employment that would commit the company to pay an
executive for a specific period. All executives are
employees-at-will
whose employment is conditioned on performance and subject to
termination by the company at any time.
We do not maintain a general severance policy for executives.
Separation benefits are determined, as needed, on a
case-by-case
basis. However, as discussed below, there is a structured
approach to separation benefits for involuntary (and select
voluntary or good reason as defined in
Change-in-Control
Arrangements below at page 56) terminations of
employment in connection with a change in control of PPL
Corporation.
The company has entered into agreements with certain executives,
typically in connection with a mid-career hiring situation and
as part of our offer of employment, in which we have promised a
years salary in severance pay in the event the executive
is terminated by the company for reasons other than cause.
Severance benefits payable under these arrangements are
conditioned on the executive agreeing to release the company
from any liability arising from the employment relationship.
Additional details on current arrangements for named executive
officers are discussed under Termination
BenefitsSeverance below at page 58.
Change-in-Control Protections. The company believes
executive officers who are terminated or who resign for
good reason (as defined in
Change-In-Control
Arrangements below at page 56) in connection with a
change in control of PPL Corporation should be provided
separation benefits. These benefits are intended to ensure that
executives focus on serving the company and shareowner interests
without the distraction of possible job and income loss.
The major components of the companys change in control
protections are:
|
|
|
|
|
accelerated vesting of outstanding equity awards in order to
protect executives equity-based award value from an
unfriendly acquirer;
|
|
|
|
severance benefits; and
|
|
|
|
trusts to fund promised obligations in order to protect
executive compensation from an unfriendly acquirer.
|
The companys
change-in-control
benefits are consistent with the practices of companies with
whom PPL competes for talent and assist in retaining executives
and recruiting new executives to the company.
39
Accelerated Vesting of Equity Awards. As of the
close of a transaction that results in a change in control of
PPL Corporation, all outstanding equity grants awarded as part
of the companys compensation program (excluding restricted
stock and restricted stock units issued pursuant to retention
agreements) become available to executives. As a result, the
vesting and exercisability of stock awards and option awards
granted as part of the long-term incentive program
acceleratein other words, restrictions on all outstanding
restricted stock units lapse, and all unexercisable stock
options become exercisable. Stock options granted prior to 2007
are exercisable for 36 months following a qualifying
termination of employment in connection with a change in
control; options granted in 2007 and after are, after a change
in control, exercisable for the remaining term of the stock
option.
Severance Benefits. The company has entered into
severance agreements with each of the named executive officers
that provide benefits to the executives upon specified
terminations of employment in connection with a change in
control of PPL Corporation. The benefits provided under these
agreements replace any other severance benefits provided to
these officers by PPL Corporation or any prior severance
agreement. Additional details on the terms of these severance
agreements are described in
Change-in-Control
Arrangements at page 56.
Rabbi Trust. The company has entered into trust
arrangements that currently cover the SERP, the Officers
Deferred Compensation Plan, the severance agreements and the
Directors Deferred Compensation Plan, and provide that specified
trusts are to be funded when a change in control
occurs. See
Change-in-Control
Arrangements at page 56 for a description of
change-in-control
events.
The trusts are currently unfunded but would become funded upon
the occurrence of a potential change in control. The trust
arrangements provide for immediate funding of benefits upon the
occurrence of potential change in control, and further provide
that the trusts can be revoked and the contributions returned if
a change in control in fact does not occur. There are no current
plans to fund any of the trusts.
Timing of
Awards
The Committee determines the timing of incentive awards for
executive officers.
Incentive awards for executive officers, including annual cash
incentive awards and long-term incentive awards, are made as
soon as practical following the performance period. It has been
the companys long-time practice to make annual cash
incentive awards and stock-based grants at the January Committee
meeting, which occurs the day before the January Board of
Directors meeting on the fourth Friday of January.
We do not have, nor do we plan to have, any program, plan or
practice to time equity grants with the release of material
non-public information other than the practice of making such
awards annually and regularly at the January Committee meeting.
For awards made in 2007, the market price for restricted equity
award grants was the closing price of PPL common stock on the
date of grant. The market price for shares issued when the
restrictions lapse is determined at the closing price on the
date the restrictions expire. The exercise prices for stock
option awards are determined at the closing price on the day of
the grant.
Off-cycle restricted stock, restricted stock unit, performance
unit or stock option grants, if provided to newly hired
executives as part of the hiring package, are made from time to
time, normally as of the new executives hiring date.
Prices for such stock awards are determined as of the day of
hire or, if later, the day the Committee approves the grant,
based on the closing price as of the date of grant.
Restricted stock and stock option grants to eligible employees
other than executive officers are made in conjunction with our
annual salary review process, which is usually conducted in
January and February each year. Employee salary adjustments and
annual cash incentive award payments are made in the first
paycheck in March. Restricted stock units grants are made
effective March 1. The number of stock units granted to
eligible employees is determined as the employees target
40
percentage times salary divided by the PPL stock market price
determined the same as for executive officer awards. Stock
options granted to employees other than executive officers are
granted at the same time and same exercise price as determined
for executive officers.
Ownership
Guidelines
Meaningful ownership of PPL common stock by executives has
always been an important part of the companys compensation
philosophy. In 2003, the Committee adopted specific ownership
requirements under the Executive Equity Ownership Program
(Equity Guidelines). The Equity Guidelines provide
that executive officers should maintain levels of ownership of
company Common Stock ranging in value from two times to five
times base salary, as follows:
|
|
|
|
|
|
|
Multiple of
|
|
|
|
Base
|
|
Executive Officer
|
|
Salary
|
|
|
Chairman, President and CEO
|
|
|
5x
|
|
Executive Vice Presidents
|
|
|
3x
|
|
Senior Vice Presidents
|
|
|
2x
|
|
Presidents of major operating subsidiaries
|
|
|
2x
|
|
Executive officers at a particular guideline level must attain
their minimum Equity Guidelines level by the end of their fifth
anniversary at that level. Until the minimum ownership amount is
achieved, executive officers are required to retain in common
stock (or common stock units) 100% of the gain realized from the
vesting of restricted stock and restricted stock units and the
exercise of stock options (net of taxes and, in the case of
options, the exercise price). If an executive does not attain
the guideline level within the applicable period, annual cash
incentives awarded after that date may be in restricted
stock/restricted stock unit grants (without a premium) until
actual ownership meets or exceeds the guideline level.
To assist executive officers in achieving or surpassing their
minimum ownership amount, the Committee adopted the Cash
Incentive Premium Exchange Program (Premium Exchange
Program). Under this program, executives may elect to
defer all or a portion of the annual cash incentive award to
which they would be otherwise entitled and to receive instead
restricted stock units equal to 140% of the amount so deferred
(an Exchange). The restricted stock units are
subject to a three-year vesting period, with only the 40%
premium portion subject to forfeiture during the restriction
period. Executive officers forfeit the premium amount if they
terminate employment during the restriction period. A pro rata
portion of the premium is payable for executive officers who
retire after attaining age 60. The full premium is payable
if employment is terminated during the restriction period due to
the death or disability of the executive officer. The full
premium is also payable in connection with a change in control
of PPL Corporation. The Premium Exchange Program will expire
after Exchanges for the 2008 annual cash incentive performance
period.
The Equity Guidelines and the Premium Exchange Program encourage
increased stock ownership on the part of the executive officers,
which further aligns the interests of management and
shareowners. All named executive officers were in compliance
with the Equity Guidelines as of the end of 2007.
Tax and
Accounting Considerations
Section 162(m). Section 162(m) of the Internal
Revenue Code of 1986 generally provides that publicly held
corporations may not deduct in any taxable year specified
compensation in excess of $1,000,000 paid to the CEO and the
next three most highly compensated executive officers (excluding
the CEO and CFO). Performance-based compensation in excess of
$1,000,000 is deductible if specified criteria are met,
including shareowner approval of applicable plans. In this
regard, the PPL Corporation Short-term Incentive Plan is
designed to enable us to make cash awards to officers that are
deductible under Section 162(m). Similarly, the PPL
Corporation Incentive Compensation Plan enables us to make stock
option awards that are deductible under Section 162(m).
Restricted stock awards granted
41
based on sustained financial and operational results may also
qualify as performance-based compensation under the terms of
Section 162(m). The Committee generally seeks ways to limit
the impact of Section 162(m). However, the Committee
believes that the tax deduction limitation should not compromise
our ability to establish and implement incentive programs that
support the compensation objectives discussed above.
Accordingly, achieving these objectives and maintaining required
flexibility in this regard may result in compensation that is
not deductible for federal income tax purposes.
Sections 280G and 4999. We have entered into
separation agreements with each of the named executive officers
that provide benefits to the executives upon specified
terminations of employment in connection with a change in
control of PPL Corporation. The agreements provide for tax
protection in the form of a
gross-up
payment to reimburse the executive for any excise tax under
Internal Revenue Code Section 4999 as well as any
additional income and employment taxes resulting from such
reimbursement. Code Section 4999 imposes a 20%
non-deductible excise tax on the recipient of an excess
parachute payment, and Code Section 280G disallows
the tax deduction to the payor of any amount of an excess
parachute payment. Payments as a result of a change in control
must exceed three times the executives base amount in
order to be considered excess parachute payments, and then the
excise tax is imposed on the parachute payments that exceed the
executives base amount. The intent of the tax
gross-up is
to provide a benefit without a tax penalty to our executives who
are displaced in the event of a change in control. We believe
the provision of tax protection for the adverse tax consequences
imposed on the executive under these rules is consistent with
market practice, is an important executive retention component
of our program and is consistent with our compensation
objectives.
Section 409A. The Committee also considers the
impact of Section 409A of the Internal Revenue Code on the
companys compensation programs. Section 409A was
enacted as part of the American Jobs Creation Act of 2004 and
substantially impacts the federal income tax rules applicable to
nonqualified deferred compensation arrangements, as defined in
the Section. In general, Section 409A governs when
elections for deferrals of compensation may be made, the form
and timing permitted for payment of such deferred amounts, and
the ability to change the form and timing of payments initially
established. Section 409A imposes sanctions for failure to
comply, including inclusion in current income, a 20% penalty tax
and interest on the recipient employee. The company operates its
covered arrangements in a manner intended to avoid the adverse
tax treatment under Section 409A. Certain amendments have
already been made to the covered arrangements in this regard,
and it is likely that the company will make additional
amendments to its covered arrangements as future guidance is
issued.
SFAS 123(R). In December 2004, the Financial
Accounting Standard Board issued Statement on Financial
Accounting Standards 123 (revised 2004), Share-Based
Payment, which is known as SFAS 123(R) and prescribes
the accounting for all stock-based awards. PPL adopted
SFAS 123(R) effective January 1, 2006.
SFAS 123(R) requires the company to recognize compensation
cost for stock-based awards over the applicable service period
using a fair value method. PPL uses the market price of its
common stock at the date of grant to value its restricted stock
and restricted stock unit awards and uses the Black-Scholes
stock option pricing model to determine the fair value of its
stock option awards. The adoption of SFAS 123(R) did not
have a significant impact on the accounting for PPLs
stock-based awards, as PPL began expensing stock options on
January 1, 2003 under the fair value method and the expense
recognition for restricted stock and restricted stock units was
not significantly changed.
For additional information on PPLs accounting methods and
assumptions for stock-based awards, refer to Notes 1 and 12
of the PPL financial statements in the Annual Report on
Form 10-K
for the year ended December 31, 2007, as filed with the SEC.
PPLs stock-based compensation plans allow for accelerated
vesting upon an employees retirement. As a result, PPL
recognizes the expense immediately for employees who are
retirement eligible when stock-based awards are granted. For
employees who are not retirement eligible when stock-based
42
awards are granted, PPL amortizes the awards on a straight-line
basis over the shorter of the vesting period or the period up to
the employees attainment of retirement age. PPL considers
retirement eligible as the early retirement age of
55.
Because the SEC requires that the value of stock-based awards
that are included in the Summary Compensation Table in this
Proxy Statement be based on SFAS 123(R) expense
recognition, and because of the accelerated vesting that is
based on an employees age as described above, amounts
disclosed in these tables will differ from amounts calculated
for compensation purposes and described in this CD&A.
In addition, because the restricted stock unit awards granted
for 2007 performance were not granted until January 2008, any
expense for these awards will be reflected beginning in next
years and not this years Summary Compensation Table
and next years and not this years Grants of
Plan-Based Awards table, and will not tie directly to the values
determined by our compensation grant methodology. For example,
the restrictions on an annual grant of restricted stock units
lapse after three years. The grant value is determined using the
methodology described as of the award date. Under
SFAS 123(R), the grant is accounted for as an expense over
the period of time the restrictions are in place. Therefore,
unless the executive officer is considered retirement eligible,
only a portion of the annual grant value is expensed in the
grant year. Even though the grant is for 2007 performance,
because it was granted in January 2008, no expense related to
the awards will appear in the Summary Compensation Table until
next year. Also expensed in the grant year is a portion of prior
grants on which restrictions have not lapsed. If the executive
officer who receives the award is age 55 or older, 100% of
the award is expensed in the year of the grant because the
officer is eligible for retirement.
43
Executive
Compensation Tables
The following table summarizes all compensation for our Chief
Executive Officer, our former Chief Financial Officer, our
current Chief Financial Officer, and our next three most highly
compensated executives, or named executive officers,
for the last two fiscal years, for service for PPL and its
subsidiaries. Messrs. Miller and Biggar also served as
directors but received no compensation for board service.
Mr. Biggar retired as Executive Vice President and Chief
Financial Officer as of March 31, 2007.
SUMMARY
COMPENSATION TABLE
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|
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|
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|
|
Change in
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|
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|
|
|
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Pension Value
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and
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|
|
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|
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Nonqualified
|
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|
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|
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|
|
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Non-Equity
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Deferred
|
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Name and Principal
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
Incentive Plan
|
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|
Compensation
|
|
|
All Other
|
|
|
|
Position(1)
|
|
|
Year
|
|
|
Salary(2)
|
|
|
Bonus(3)
|
|
|
Awards(4)
|
|
|
Awards(5)
|
|
|
Compensation(6)
|
|
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Earnings(7)
|
|
|
Compensation(8)
|
|
|
Total
|
James H. Miller
|
|
|
|
2007
|
|
|
|
$
|
1,041,154
|
|
|
|
|
|
|
|
|
$
|
1,333,858
|
|
|
|
$
|
1,811,560
|
|
|
|
$
|
1,604,700
|
|
|
|
$
|
3,850,553
|
|
|
|
$
|
32,308
|
|
|
|
$
|
9,674,133
|
|
Chairman, President and Chief Executive Officer
|
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|
|
2006
|
|
|
|
|
828,750
|
|
|
|
|
|
|
|
|
|
1,007,413
|
|
|
|
|
966,848
|
|
|
|
|
1,005,000
|
|
|
|
|
1,766,248
|
|
|
|
|
12,151
|
|
|
|
|
5,586,410
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William H. Spence
|
|
|
|
2007
|
|
|
|
|
597,116
|
|
|
|
|
|
|
|
|
|
127,877
|
|
|
|
|
246,014
|
|
|
|
|
712,000
|
|
|
|
|
287,172
|
|
|
|
|
39,877
|
|
|
|
|
2,010,057
|
|
Executive Vice President and Chief Operating Officer
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|
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|
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|
|
|
|
|
|
|
|
John R. Biggar
|
|
|
|
2007
|
|
|
|
|
155,850
|
|
|
|
$
|
135,850
|
|
|
|
|
1,044,118
|
|
|
|
|
|
|
|
|
|
250,300
|
|
|
|
|
316,339
|
|
|
|
|
84,888
|
|
|
|
|
1,987,344
|
|
Former Executive Vice President and Chief Financial Officer
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|
|
|
2006
|
|
|
|
|
519,038
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|
|
|
|
|
|
|
|
|
659,354
|
|
|
|
|
638,118
|
|
|
|
|
443,800
|
|
|
|
|
389,471
|
|
|
|
|
8,930
|
|
|
|
|
2,658,711
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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|
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|
|
|
|
|
|
|
|
Paul A. Farr
|
|
|
|
2007
|
|
|
|
|
437,669
|
|
|
|
|
|
|
|
|
|
266,182
|
|
|
|
|
289,422
|
|
|
|
|
471,200
|
|
|
|
|
124,790
|
|
|
|
|
16,562
|
|
|
|
|
1,605,825
|
|
Executive Vice President and Chief Financial Officer
|
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|
|
|
|
|
|
|
|
Robert J. Grey
|
|
|
|
2007
|
|
|
|
|
405,000
|
|
|
|
|
|
|
|
|
|
383,862
|
|
|
|
|
398,746
|
|
|
|
|
368,000
|
|
|
|
|
642,759
|
|
|
|
|
22,875
|
|
|
|
|
2,221,241
|
|
Senior Vice President, General Counsel and Secretary
|
|
|
|
2006
|
|
|
|
|
389,231
|
|
|
|
|
|
|
|
|
|
351,073
|
|
|
|
|
317,990
|
|
|
|
|
256,000
|
|
|
|
|
335,658
|
|
|
|
|
16,887
|
|
|
|
|
1,666,839
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bryce L. Shriver
|
|
|
|
2007
|
|
|
|
|
390,000
|
|
|
|
|
|
|
|
|
|
380,350
|
|
|
|
|
398,746
|
|
|
|
|
262,700
|
|
|
|
|
690,255
|
|
|
|
|
17,855
|
|
|
|
|
2,139,905
|
|
PresidentPPL Generation, LLC
|
|
|
|
2006
|
|
|
|
|
389,231
|
|
|
|
|
|
|
|
|
|
376,688
|
|
|
|
|
317,990
|
|
|
|
|
228,200
|
|
|
|
|
451,436
|
|
|
|
|
9,883
|
|
|
|
|
1,773,428
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Mr. Spence did not join the company as Executive Vice
President and Chief Operating Officer until June of 2006 and did
not become a named executive officer until 2007. Mr. Biggar
retired effective April 1, 2007 and Mr. Farr was
elected Executive Vice President and Chief Financial Officer on
that same date. |
|
(2) |
|
Salary includes cash compensation deferred to the PPL Officers
Deferred Compensation Plan. The following executive officers
deferred salary in the amounts indicated: Miller ($31,235 in
2007); Spence ($17,914 in 2007); Farr ($43,767 in 2007); Grey
($52,000 in each of 2007 and 2006); and Shriver ($11,700 in 2007
and $13,000 in 2006). |
|
(3) |
|
Reflects a one-time cash payment to Mr. Biggar equal to
three months salary. |
|
(4) |
|
This column represents the compensation expense recognized for
financial statement reporting purposes on all outstanding shares
of restricted stock and restricted stock units in accordance
with SFAS 123(R), other than restricted stock unit awards
granted in lieu of the annual cash incentive award foregone by
the named executive officer. See Note 5 below. Pursuant to
SEC rules, the amounts shown exclude the impact of estimated
forfeitures related to service-based vesting conditions. No
forfeitures of restricted stock or restricted stock units
actually occurred during 2007 or 2006. Because
Messrs. Miller, Biggar, Grey and Shriver were eligible for
retirement, the fair values of their awards have been fully
expensed. This column also includes the value of the premium
restricted stock units granted in January 2007 and January 2006
and associated with the exchanges made by Messrs. Miller,
Biggar, Grey and Shriver of their cash incentive compensation
awarded in January 2007 for 2006 performance and in January 2006
for 2005 performance, respectively, under the Premium Exchange
Program. See description of the Premium |
44
|
|
|
|
|
Exchange Program in CD&AOwnership
Guidelines. For shares of restricted stock and restricted
stock units granted in 2006 and earlier years, fair value is
calculated using the average of the high and low sale prices of
PPLs common stock on the date of grant. Beginning in 2007,
fair value is calculated using the closing sale price on the
date of grant. For additional information, refer to Note 12
to the PPL financial statements in the Annual Report on
Form 10-K
for the year ended December 31, 2007, as filed with the
SEC. See the Grants of Plan-Based Awards During 2007
table below for information on awards made in 2007. These
amounts reflect the companys accounting expense for these
restricted stock and restricted stock unit awards, and do not
correspond to the actual value that will be recognized by the
named executive officers. |
|
(5) |
|
This column represents the compensation expense recognized for
financial statement reporting purposes for stock options granted
to each of the named executive officers in the indicated year as
well as prior fiscal years, in accordance with SFAS 123(R).
Pursuant to SEC rules, the amounts shown exclude the impact of
estimated forfeitures related to service-based vesting
conditions. No forfeitures of any stock options actually
occurred during 2007 or 2006. As Messrs. Miller, Biggar,
Grey and Shriver were eligible for retirement, the fair values
of their stock option awards have been fully expensed. For
additional information on the valuation assumptions with respect
to the 2007 stock option grants, refer to Note 12 to the
PPL financial statements in the Annual Report on
Form 10-K
for the year ended December 31, 2007, as filed with the
SEC. For information on the valuation assumptions with respect
to option grants made prior to 2007, refer to the Note entitled
Stock-Based Compensation in the PPL financial
statements in the Annual Report on
Form 10-K
for the respective year-end. See the Grants of Plan-Based
Awards During 2007 table for information on options
granted in 2007. These amounts reflect the companys
accounting expense for these stock option awards and do not
correspond to the actual value that will be recognized by the
named executive officers. |
|
(6) |
|
This column represents cash awards granted in January 2008 and
2007 under PPLs Short-Term Incentive Plan for performance
in 2007 and 2006, respectively. The following named executive
officers elected to exchange a portion of their cash awarded in
January 2008, for 2007 performance, for restricted stock units
under the Premium Exchange Program: Spence ($712,000); Farr
($424,080); Grey ($368,000); and Shriver ($131,350). The
following named executive officers elected to exchange a portion
of their cash awarded in January 2007, for 2006 performance, for
restricted stock units under the Premium Exchange Program:
Biggar ($110,950); Grey ($100,000); and Shriver ($91,280). See
description of the Premium Exchange Program in
CD&AOwnership Guidelines. The value of
these awards is included in this column and not in the
Stock Awards column. The grants of restricted stock
units under the Premium Exchange Program for the cash awards
foregone by these executive officers in 2008 will be reflected
in next years Grants of Plan-Based Awards
table. |
|
(7) |
|
This column represents the sum of the changes in value in the
PPL Retirement Plan and PPL Supplemental Executive Retirement
Plan during 2007 and 2006 for each of the named executive
officers. Mr. Biggars pension plan values decreased
by $41,758 in 2007, and Mr. Farrs Subsidiary Savings
Plan values decreased by $1,567 in 2007. See the Pension
Benefits in 2007 table for additional information. No
above-market earnings under the Officers Deferred Compensation
Plan are reportable for 2007 or 2006. See the Nonqualified
Deferred Compensation in 2007 table for additional
information. |
45
|
|
|
(8) |
|
The table below reflects the components of this column for 2007,
which include the companys matching contribution for each
individuals 401(k) plan contributions under the PPL
Deferred Savings Plan, annual allocations under the PPL Employee
Stock Ownership Plan, and certain perquisites, including
financial planning and tax preparation services. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ODCP Employer
|
|
|
ESOP
|
|
|
Financial
|
|
|
PGG
|
|
|
Benefits
|
|
|
|
Name
|
|
|
401(k) Match
|
|
|
Contributions
|
|
|
Allocation
|
|
|
Planning
|
|
|
Gift(a)
|
|
|
Paid
|
|
|
Total
|
J. H. Miller
|
|
|
$
|
6,750
|
|
|
|
$
|
24,021
|
|
|
|
$
|
375
|
|
|
|
$
|
1,105
|
|
|
|
$
|
57
|
|
|
|
|
|
|
|
|
$
|
32,308
|
|
W. H. Spence
|
|
|
|
6,750
|
|
|
|
|
10,697
|
|
|
|
|
334
|
|
|
|
|
10,500
|
|
|
|
|
57
|
|
|
|
$
|
11,538
|
(b)
|
|
|
|
39,877
|
|
J. R. Biggar (Retired)
|
|
|
|
4,676
|
|
|
|
|
|
|
|
|
|
792
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
79,420
|
(c)
|
|
|
|
84,888
|
|
P. A. Farr
|
|
|
|
6,750
|
|
|
|
|
6,403
|
|
|
|
|
352
|
|
|
|
|
3,000
|
|
|
|
|
57
|
|
|
|
|
|
|
|
|
|
16,562
|
|
R. J. Grey
|
|
|
|
6,750
|
|
|
|
|
5,478
|
|
|
|
|
490
|
|
|
|
|
10,100
|
|
|
|
|
57
|
|
|
|
|
|
|
|
|
|
22,875
|
|
B. L. Shriver
|
|
|
|
6,750
|
|
|
|
|
4,950
|
|
|
|
|
394
|
|
|
|
|
3,000
|
|
|
|
|
57
|
|
|
|
|
2,704
|
(d)
|
|
|
|
17,855
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Reflects cost of thank-you gift received from People for Good
Government, PPL Corporations Political Action Committee. |
|
(b) |
|
Payment to Mr. Spence for vacation earned but not taken. |
|
(c) |
|
Payment for vacation earned but not taken when Mr. Biggar
retired. |
|
(d) |
|
Each non-union employee receives an annual allocation of funds
that can be used to purchase health and welfare benefits, such
as health insurance, life insurance and additional vacation up
to 40 hours. If an employee does not use all of the
allocated funds for company benefits, the employee can elect to
receive the remaining amount in cash or, for employees with a
Health Savings Account (HSA), into their HSA. This amount
represents such a payment into Mr. Shrivers HSA. |
46
GRANTS OF
PLAN-BASED AWARDS DURING 2007
The following table provides information about equity and
non-equity awards granted to the named executive officers in
2007, specifically: (1) the grant date; (2) estimated
possible payouts under the 2007 annual cash incentive award
program; (3) the number of shares underlying all stock
awards, which consist of restricted stock units awarded to the
named executive officers in 2007 for 2006 performance under
PPLs Incentive Compensation Plan, as well as restricted
stock units granted pursuant to the Premium Exchange Program
described in the CD&AOwnership
Guidelines; (4) all option awards, which consist of
the number of shares underlying stock options awarded to the
named executive officers; (5) the exercise price of the
stock option awards, which was calculated using the closing sale
price of PPL stock on the date of grant; and (6) the grant
date fair value of each equity award computed under
SFAS 123(R).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Possible Payouts
|
|
|
Awards:
|
|
|
Awards:
|
|
|
Exercise or
|
|
|
|
|
|
|
|
|
|
Under Non-Equity Incentive
|
|
|
Number of
|
|
|
Number of
|
|
|
Base Price of
|
|
|
Grant Date Fair
|
|
|
|
|
|
|
Plan
Awards(1)
|
|
|
Shares of
|
|
|
Securities
|
|
|
Option
|
|
|
Value of Stock
|
|
|
|
Grant
|
|
|
|
|
|
Stock or
|
|
|
Underlying
|
|
|
Awards(4)
|
|
|
and Option
|
Name
|
|
|
Date
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Units(2)
|
|
|
Options(3)
|
|
|
($/Sh)
|
|
|
Awards(5)
|
J. H. Miller
|
|
|
|
3/23/2007
|
|
|
|
$
|
574,750
|
|
|
|
$
|
1,149,500
|
|
|
|
$
|
1,724,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/25/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,980
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,333,858
|
|
|
|
|
|
1/25/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
255,870
|
|
|
|
$
|
35.12
|
|
|
|
|
1,811,560
|
|
|
W. H. Spence
|
|
|
|
3/23/2007
|
|
|
|
|
255,000
|
|
|
|
|
510,000
|
|
|
|
|
765,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/25/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,390
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,418,497
|
|
|
|
|
|
1/25/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
113,720
|
|
|
|
|
35.12
|
|
|
|
|
805,138
|
|
|
J. R. Biggar
|
|
|
|
3/23/2007
|
|
|
|
|
54,863
|
|
|
|
|
109,725
|
|
|
|
|
164,558
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Retired)
|
|
|
|
1/25/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,890
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,155,097
|
|
|
P. A. Farr
|
|
|
|
3/23/2007
|
|
|
|
|
168,750
|
|
|
|
|
337,500
|
|
|
|
|
506,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/25/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,430
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
577,022
|
|
|
|
|
|
1/25/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
56,320
|
|
|
|
|
35.12
|
|
|
|
|
398,746
|
|
|
R. J. Grey
|
|
|
|
3/23/2007
|
|
|
|
|
131,820
|
|
|
|
|
263,640
|
|
|
|
|
395,460
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/25/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,780
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
483,954
|
|
|
|
|
|
1/25/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
56,320
|
|
|
|
|
35.12
|
|
|
|
|
398,746
|
|
|
B. L. Shriver
|
|
|
|
3/23/2007
|
|
|
|
|
97,500
|
|
|
|
|
195,000
|
|
|
|
|
292,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/25/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,430
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
471,662
|
|
|
|
|
|
1/25/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
56,320
|
|
|
|
|
35.12
|
|
|
|
|
398,746
|
|
|
|
|
|
(1) |
|
This column shows the potential payout range under the 2007
annual cash incentive award program. For additional information,
see CD&ACompensation ElementsDirect
CompensationAnnual Cash Incentive Awards at
page 27. The cash incentive payout range is from 50% to
150%, however, if the actual performance falls below the 50%
level, the payout would be zero. The actual 2007 payout is found
in the Summary Compensation Table on page 44 in the column
entitled Non-Equity Incentive Plan Compensation. Mr.
Biggars Target and Maximum amounts
reflect that he only worked seven pay periods, or 14 weeks,
before he retired on March 31, 2007. |
|
(2) |
|
This column shows the number of restricted stock units granted
in 2007 to the named executive officers. In general,
restrictions will lapse on January 24, 2010, three years
from the date of grant. During the restricted period, each
restricted stock unit entitles the individual to receive
quarterly payments from the company equal to the quarterly
dividends on one share of PPL stock. As a result of
Mr. Biggars retirement and under the terms of
PPLs Incentive Compensation Plan, the restrictions on the
following restricted stock units lapsed as follows: (1) on
October 1, 2007 for 79,090 units granted in January
2007 for 2006 performance, which is six months after his |
47
|
|
|
|
|
retirement; and (2) on April 1, 2008 for
8,880 units granted in lieu of stock options, which is one
year after his retirement. |
|
|
|
This column also shows the number of restricted stock units
granted to the following named executive officers who exchanged
a portion of their cash incentive compensation awarded in
January 2007 for 2006 performance under the Premium Exchange
Program (called Exchanged Units) and the number of premium
restricted stock units granted in January 2007 as result of the
Exchanges made (called Premium Units): Spence (14,720 Exchanged
Units and 5,890 Premium Units); Biggar (3,160 Exchanged Units
and 1,260 Premium Units); Farr (4,740 Exchanged Units and 1,900
Premium Units); Grey (2,850 Exchanged Units and 1,140 Premium
Units); and Shriver (2,600 Exchanged Units and 1,040 Premium
Units). The Exchanged Units are not included in the Stock
Awards column of the Summary Compensation Table because
the company accrued their expense during 2006 in lieu of the
equivalent cash incentive award. The Premium Units are included
in this years Summary Compensation Table to the extent
they were expensed during 2007. |
|
(3) |
|
This column shows the number of stock options granted in 2007 to
the named executive officers. These options vest and become
exercisable in three equal annual installments, beginning on
January 25, 2008, which is one year after the grant date. |
|
(4) |
|
This column shows the exercise price for the stock options
granted in 2007, which was the closing sale price of PPL common
stock on the date the Compensation, Governance and Nominating
Committee granted the options. |
|
(5) |
|
This column shows the full grant date fair value of restricted
stock units and stock options granted to the named executive
officers under SFAS 123(R). Generally, the full grant date
fair value is the amount that the company would expense in its
financial statements over the awards vesting schedule.
Because Messrs. Miller, Biggar, Grey and Shriver were
eligible for retirement, the full grant date fair value of their
stock awards was expensed in 2007. For restricted stock units,
fair value is calculated using the closing sale price of PPL
stock on the grant date of $35.12. For stock options, fair value
is calculated using the Black-Scholes value on the grant date of
$7.08. For additional information on the valuation assumptions
for stock options, see Note 12 to the PPL financial
statements in the Annual Report on
Form 10-K
for the year ended December 31, 2007, as filed with the
SEC. These amounts reflect the companys accounting
expense, and do not correspond to the actual value that will be
recognized by the named executive officers when restrictions
lapse on the restricted stock units or when the options are
exercised. |
48
OUTSTANDING
EQUITY AWARDS AT FISCAL-YEAR END 2007
The following table provides information on all unexercised
stock option awards, as well as all unvested restricted stock
and restricted stock unit awards for each named executive
officer. Each stock option grant is shown separately for each
named executive, and the restricted stock or restricted stock
units that have not vested are shown in the aggregate. The
vesting schedule for each grant is shown following this table,
based on the option or stock award grant date. The market value
of the stock awards is based on the closing market price of PPL
stock as of December 31, 2007, which was $52.09. For
additional information about the stock option and stock awards,
see CD&ACompensation ElementsDirect
CompensationLong-term Incentive Awards (Equity
Awards) at page 33.
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|
Option Awards
|
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|
Equity Incentive
|
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|
|
|
|
|
Stock Awards
|
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|
|
|
Number of
|
|
|
Number of
|
|
|
Plan Awards:
|
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|
|
|
|
|
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|
|
|
|
Securities
|
|
|
Securities
|
|
|
Number of
|
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|
|
|
|
Number of
|
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|
Market Value
|
|
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|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
Securities
|
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|
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|
Shares or
|
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|
of Shares or
|
|
|
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
Units of
|
|
|
Units of
|
|
|
|
|
|
|
Options
|
|
|
Options
|
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|
Unexercised
|
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|
Option
|
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|
Option
|
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|
Stock That
|
|
|
Stock That
|
|
|
|
Grant
|
|
|
(#)
|
|
|
(#)
|
|
|
Unearned
|
|
|
Exercise
|
|
|
Expiration
|
|
|
Have Not
|
|
|
Have Not
|
Name
|
|
|
Date(1)
|
|
|
Exercisable(2)
|
|
|
Unexercisable(2)
|
|
|
Options
|
|
|
Price
|
|
|
Date
|
|
|
Vested(3)
|
|
|
Vested
|
J. H. Miller
|
|
|
|
1/24/02
|
|
|
|
|
72,520
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
16.75
|
|
|
|
|
1/23/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/23/03
|
|
|
|
|
72,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18.12
|
|
|
|
|
1/22/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/22/04
|
|
|
|
|
70,940
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22.59
|
|
|
|
|
1/21/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/27/05
|
|
|
|
|
103,867
|
|
|
|
|
51,933
|
|
|
|
|
|
|
|
|
|
26.66
|
|
|
|
|
1/26/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/26/06
|
|
|
|
|
66,314
|
|
|
|
|
132,626
|
|
|
|
|
|
|
|
|
|
30.14
|
|
|
|
|
1/25/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/25/07
|
|
|
|
|
|
|
|
|
|
255,870
|
|
|
|
|
|
|
|
|
|
35.12
|
|
|
|
|
1/24/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
162,260
|
|
|
|
$
|
8,452,123
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W. H. Spence
|
|
|
|
1/25/07
|
|
|
|
|
|
|
|
|
|
113,720
|
|
|
|
|
|
|
|
|
|
35.12
|
|
|
|
|
1/24/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
49,920
|
|
|
|
|
2,600,333
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. R. Biggar (Retired)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,880
|
|
|
|
|
462,559
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
P. A. Farr
|
|
|
|
1/27/05
|
|
|
|
|
16,987
|
|
|
|
|
16,993
|
|
|
|
|
|
|
|
|
|
26.66
|
|
|
|
|
1/26/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/26/06
|
|
|
|
|
20,630
|
|
|
|
|
41,260
|
|
|
|
|
|
|
|
|
|
30.14
|
|
|
|
|
1/25/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/25/07
|
|
|
|
|
|
|
|
|
|
56,320
|
|
|
|
|
|
|
|
|
|
35.12
|
|
|
|
|
1/24/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
83,360
|
|
|
|
|
4,342,222
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. J. Grey
|
|
|
|
1/22/04
|
|
|
|
|
63,760
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22.59
|
|
|
|
|
1/21/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/27/05
|
|
|
|
|
44,067
|
|
|
|
|
22,033
|
|
|
|
|
|
|
|
|
|
26.66
|
|
|
|
|
1/26/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/26/06
|
|
|
|
|
21,810
|
|
|
|
|
43,620
|
|
|
|
|
|
|
|
|
|
30.14
|
|
|
|
|
1/25/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/25/07
|
|
|
|
|
|
|
|
|
|
56,320
|
|
|
|
|
|
|
|
|
|
35.12
|
|
|
|
|
1/24/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45,210
|
|
|
|
|
2,354,989
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B. L. Shriver
|
|
|
|
1/27/05
|
|
|
|
|
|
|
|
|
|
22,033
|
|
|
|
|
|
|
|
|
|
26.66
|
|
|
|
|
1/26/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/26/06
|
|
|
|
|
21,810
|
|
|
|
|
43,620
|
|
|
|
|
|
|
|
|
|
30.14
|
|
|
|
|
1/25/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/25/07
|
|
|
|
|
|
|
|
|
|
56,320
|
|
|
|
|
|
|
|
|
|
35.12
|
|
|
|
|
1/24/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
104,670
|
|
|
|
|
5,452,260
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
For a better understanding of this table, we have included an
additional column showing the grant date of the stock options. |
|
(2) |
|
Under the terms of PPLs Incentive Compensation Plan, all
of Mr. Biggars unvested outstanding stock options
vested as of the first day of his retirement, which was
April 1, 2007. All stock options for the other named
executive officers vest, or become exercisable, over three
yearsone-third at the end of each year following grant. As
of December 31, 2007, the vesting dates of |
49
|
|
|
|
|
unvested stock option awards for the named executive officers
other than Mr. Biggar are as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vesting Dates
|
|
|
|
|
|
|
2008
|
|
|
2009
|
|
|
2010
|
|
|
|
Grant
|
|
|
|
|
|
|
|
|
|
Name
|
|
|
Date
|
|
|
1/25
|
|
|
1/26
|
|
|
1/27
|
|
|
1/25
|
|
|
1/26
|
|
|
1/25
|
J. H. Miller
|
|
|
|
1/27/05
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
51,933
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/26/06
|
|
|
|
|
|
|
|
|
|
66,313
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
66,313
|
|
|
|
|
|
|
|
|
|
|
1/25/07
|
|
|
|
|
85,290
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
85,290
|
|
|
|
|
|
|
|
|
|
85,290
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W. H. Spence
|
|
|
|
1/25/07
|
|
|
|
|
37,907
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,906
|
|
|
|
|
|
|
|
|
|
37,907
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
P. A. Farr
|
|
|
|
1/27/05
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,993
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/26/06
|
|
|
|
|
|
|
|
|
|
20,630
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,630
|
|
|
|
|
|
|
|
|
|
|
1/25/07
|
|
|
|
|
18,774
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,773
|
|
|
|
|
|
|
|
|
|
18,773
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. J. Grey
|
|
|
|
1/27/05
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,033
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/26/06
|
|
|
|
|
|
|
|
|
|
21,810
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,810
|
|
|
|
|
|
|
|
|
|
|
1/25/07
|
|
|
|
|
18,774
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,773
|
|
|
|
|
|
|
|
|
|
18,773
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B. L. Shriver
|
|
|
|
1/27/05
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,033
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/26/06
|
|
|
|
|
|
|
|
|
|
21,810
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,810
|
|
|
|
|
|
|
|
|
|
|
1/25/07
|
|
|
|
|
18,774
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,773
|
|
|
|
|
|
|
|
|
|
18,773
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
|
|
|
|
|
|
|
|
|
(3) |
|
Under the terms of a special transition stock unit award granted
to Mr. Biggar in lieu of stock options, the restrictions on
his January 25, 2007 award lapsed on April 1, 2008,
one year following the date of retirement. See
CD&ACompensation ElementsDirect
CompensationLong-term Incentive Awards (Equity
Awards)Awards for 2007 at page 35. |
The dates that restrictions lapse for each restricted stock or
restricted stock unit award granted to the named executive
officers are as follows:
|
|
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|
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|
|
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|
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|
|
|
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|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
Dates Restrictions Lapse
|
|
|
|
|
|
|
2008
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
Grant
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
|
Date
|
|
|
1/27
|
|
|
1/28
|
|
|
3/1
|
|
|
10/1
|
|
|
1/26
|
|
|
6/26
|
|
|
1/25/10
|
|
|
4/27/27
|
J. H. Miller
|
|
|
|
10/26/01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/27/05
|
|
|
|
|
25,720
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/26/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38,560
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/25/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,980
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W. H. Spence
|
|
|
|
6/26/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,530
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/25/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,390
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
P. A. Farr
|
|
|
|
4/22/02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,600
|
|
|
|
|
|
1/27/05
|
|
|
|
|
8,420
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/01/05
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,280
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/26/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,230
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/27/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,400
|
|
|
|
|
|
1/25/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,430
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. J. Grey
|
|
|
|
1/27/05
|
|
|
|
|
16,460
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/26/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,970
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/25/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,780
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B. L. Shriver
|
|
|
|
1/28/00
|
|
|
|
|
|
|
|
|
|
52,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/27/05
|
|
|
|
|
20,780
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/26/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,960
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/25/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,430
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50
OPTION EXERCISES
AND STOCK VESTED IN 2007
The following table provides information, for each of the named
executive officers, on (1) stock option exercises during
2007, including the number of shares acquired upon exercise and
the value realized and (2) the number of shares acquired
upon the vesting of stock awards in the form of restricted stock
units and the value realized, each before payment of any
applicable withholding tax and broker commissions.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
Number of Shares
|
|
|
|
|
|
|
Number of Shares
|
|
|
Value Realized
|
|
|
Acquired
|
|
|
Value Realized
|
Name
|
|
|
Acquired on Exercise
|
|
|
on
Exercise(1)
|
|
|
on Vesting
|
|
|
on
Vesting(2)
|
J. H. Miller
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,420
|
|
|
|
$
|
640,095
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W. H. Spence
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. R. Biggar (Retired)
|
|
|
|
400,446
|
|
|
|
$
|
6,460,927
|
|
|
|
|
95,950
|
|
|
|
|
4,342,660
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
P. A. Farr
|
|
|
|
24,427
|
|
|
|
|
598,156
|
|
|
|
|
5,200
|
|
|
|
|
199,836
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. J. Grey
|
|
|
|
81,380
|
|
|
|
|
2,475,580
|
|
|
|
|
7,860
|
|
|
|
|
273,135
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B. L. Shriver
|
|
|
|
66,447
|
|
|
|
|
1,521,523
|
|
|
|
|
7,820
|
|
|
|
|
300,523
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Amounts reflect the difference between the exercise price of the
stock option and the market price at the time of exercise. |
|
(2) |
|
Amounts reflect the market value of the restricted stock units
on the day the restrictions lapsed. Mr. Biggar acquired
79,090 shares of common stock on October 1, 2007 when
restrictions lapsed, due to his retirement. |
PENSION BENEFITS
IN 2007
The following table sets forth information on the pension
benefits for the named executive officers under each of the
following pension plans:
|
|
|
|
|
PPL Retirement Plan. The PPL Retirement Plan is a funded
and tax-qualified defined benefit retirement plan that covers
approximately 5,822 active employees as of December 31,
2007. As applicable to the named executive officers, the plan
provides benefits based primarily on a formula that takes into
account the executives earnings for each fiscal year.
Benefits under the PPL Retirement Plan for eligible employees
are determined as the greater of the following two formulas:
|
|
|
|
|
|
The first is a career average pay formula of 2.25%
of annual earnings for each year of credited service under the
plan.
|
|
|
|
The second is a final average pay formula as follows:
|
1.3% of final average earnings up to the average Social
Security Wage Base ($51,348 for 2007)
plus
1.7% of final average earnings in excess of the average
Social Security Wage Base
multiplied by
the sum of years of credited service (up to a maximum of
40 years).
Under the final average pay formula, final average earnings
equal the average of the highest 60 months of pay during
the last 120 months of credited service. The Social
Security Wage Base is the average of the taxable social security
wage base for the 35 consecutive years preceding an
employees retirement date or, for employees retiring at
the end of 2007, $51,348. The executives annual earnings
taken into account under each formula include
51
base salary, plus cash incentive awards, less amounts deferred
under the PPL Officers Deferred Compensation Plan, but may not
exceed an IRS-prescribed limit applicable to tax-qualified plans
($225,000 for 2007).
The benefit an employee earns is payable starting at retirement
on a monthly basis for life. Benefits are computed on the basis
of the life annuity form of pension, with a normal retirement
age of 65. Benefits are reduced for retirement prior to
age 60 for employees with 20 years of credited
service, and reduced prior to age 65 for other employees.
Employees vest in the PPL Retirement Plan after five years of
credited service. In addition, the plan provides for joint and
survivor annuity choices, and does not require employee
contributions.
Benefits under the PPL Retirement Plan are subject to the
limitations imposed under Section 415 of the Internal
Revenue Code. The Section 415 limit for 2007 is $180,000
per year for a single life annuity payable at an IRS-prescribed
retirement age.
|
|
|
|
|
PPL Supplemental Executive Retirement Plan. The company
offers the PPL Supplemental Executive Retirement Plan, or SERP,
to approximately 24 active officers as of December 31, 2007
to provide for retirement benefits above amounts available under
the PPL Retirement Plan described above. The SERP is unfunded
and is not qualified for tax purposes. Accrued benefits under
the SERP are subject to claims of the companys creditors
in the event of bankruptcy.
|
The SERP formula is 2.0% of final average earnings for the first
20 years of credited service plus 1.5% of final average
earnings for the next 10 years. Earnings
include base salary and annual cash incentive awards.
Final average earnings is the average of the highest
60 months of earnings during the last 120 months of credited
service.
Benefits are computed on the basis of the life annuity form of
pension, with a normal retirement age of 65. Generally, absent a
specifically authorized exception, such as upon a qualifying
termination in connection with a change in control, no benefit
is payable under the SERP if the executive officer has less than
10 years of service. Benefits under the SERP are paid, in
accordance with a participants advance election, as a
single sum or as an annuity, including choices of a joint and
survivor or years-certain annuity. At age 60, or at
age 50 with 10 years of service, accrued benefits are
vested and may not be reduced by an amendment to the SERP or
termination by the company. After the completion of
10 years of service, participants are eligible for death
benefit protection.
The company does not have a policy for granting additional years
of service but has done so under the SERP in individual
situations. A grant of additional years of service to any
executive officer must be approved by the Compensation,
Governance and Nominating Committee, or the CGNC.
Mr. Miller has been credited with five years additional
service under the SERP and pursuant to the terms of a retention
agreement, the CGNC also granted Mr. Miller additional
service up to a maximum of 30 years if he remains employed
by the company until he is 60 years old. The CGNC also
granted Mr. Spence an additional year of service for each
year of employment under the SERP and Mr. Shriver an
additional 10 years of service under the SERP if he remains
employed until January 28, 2008, as a retention mechanism.
The total SERP benefit cannot increase beyond 30 years of
service for any participant. The following table reflects a pro
rata portion of the additional service amounts based on service
as of December 31, 2007.
Mr. Grey is credited with service under the SERP commencing
as of age 30, based on plan provisions in effect prior to
January 1, 1998.
|
|
|
|
|
PPL Subsidiary Retirement Plan. The PPL Subsidiary
Retirement Plan, in which Mr. Farr became a participant
before he became an officer of the company, is a defined benefit
plan that utilizes a hypothetical account balance to determine a
monthly retirement annuity when an individual retires (known as
a cash balance plan). Age 65 is the normal
retirement age,
|
52
|
|
|
|
|
but an individual may receive a reduced benefit as early as
age 50 if the participant has at least five years of
service.
|
The benefit formula for yearly increases to the hypothetical
account balance is an increasing scale, based on age plus years
of service. A participant whose age, plus years of service, is
32 or lower receives the minimum yearly credit of 5% of
compensation plus 1.5% of compensation that is in excess of 50%
of the Social Security Wage Base (defined above under PPL
Retirement Plan). Compensation generally means
base pay. The amount credited increases as age plus years of
service increases, up to a maximum credit, at age plus years of
service of 75 or above, of 14% of compensation plus 6% of
compensation that is in excess of 50% of the Social Security
Wage Base.
A participant has a vested right to a benefit under this plan
after five years of service. Benefits are paid as a monthly
annuity amount for life, or as a joint and survivor annuity. The
amount of the annuity is determined by converting the
hypothetical account balance, plus an assumed rate of interest,
into a monthly annuity for life or joint lives. The amount
payable is actuarially reduced if the participant elects to
commence payment at an age younger than 65.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Present Value of
|
|
|
|
|
|
|
|
|
|
Number of Years
|
|
|
Accumulated
|
|
|
Payments During
|
Name
|
|
|
Plan Name
|
|
|
Credited
Service(1)
|
|
|
Benefit(2)(3)
|
|
|
Last Fiscal Year
|
J. H. Miller
|
|
|
|
PPL Retirement Plan
|
|
|
|
|
6.8
|
|
|
|
$
|
233,276
|
|
|
|
|
|
|
|
|
|
|
SERP
|
|
|
|
|
27.5
|
(4)
|
|
|
|
8,593,172
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W. H. Spence
|
|
|
|
PPL Retirement Plan
|
|
|
|
|
1.5
|
|
|
|
|
32,131
|
|
|
|
|
|
|
|
|
|
|
SERP
|
|
|
|
|
2.5
|
(5)
|
|
|
|
387,736
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. R. Biggar
|
|
|
|
PPL Retirement Plan
|
|
|
|
|
37.5
|
|
|
|
|
1,274,271
|
|
|
|
$
|
89,327
|
|
|
|
|
|
SERP
|
|
|
|
|
30
|
|
|
|
|
0
|
|
|
|
|
4,075,022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
P. A. Farr
|
|
|
|
PPL Retirement Plan
|
|
|
|
|
3.3
|
|
|
|
|
56,368
|
|
|
|
|
|
|
|
|
|
|
PPL Subsidiary Plan
|
|
|
|
|
4.8
|
|
|
|
|
18,971
|
|
|
|
|
|
|
|
|
|
|
SERP
|
|
|
|
|
9.6
|
|
|
|
|
298,086
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. J. Grey
|
|
|
|
PPL Retirement Plan
|
|
|
|
|
12.8
|
|
|
|
|
347,914
|
|
|
|
|
|
|
|
|
|
|
SERP
|
|
|
|
|
27.3
|
(6)
|
|
|
|
2,787,760
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B. L. Shriver
|
|
|
|
PPL Retirement Plan
|
|
|
|
|
8.3
|
|
|
|
|
280,027
|
|
|
|
|
|
|
|
|
|
|
SERP
|
|
|
|
|
18.2
|
(7)
|
|
|
|
2,061,376
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
See PPL Supplemental Executive Retirement Plan above
for a description of the years of service that have been granted
under the SERP. |
|
(2) |
|
The accumulated benefit is based on service and earnings (base
salary and annual cash incentive award) considered by the plans
for the period through December 31, 2007. The present value
has been calculated assuming that the named executive officers
will remain in service until age 60, the age at which
retirement may occur without any reduction in benefits,
provided, for the PPL Retirement Plan, the employee has at least
20 years of service, and that the benefit is payable under
the available forms of annuity consistent with the assumptions
as described in Note 13 to the financial statements in PPL
Corporations Annual Report on
Form 10-K
for the year ended December 31, 2007. As described in such
Note, the interest assumption is 6.39%. The post-retirement
mortality assumption is based on the most recently available
retirement plan table published by the Society of Actuaries,
known as RP 2000, which is a widely used table for determining
accounting obligations of pension plans. Only
Messrs. Miller, Biggar and Grey are vested in the SERP as
of December 31, 2007. |
|
(3) |
|
The present values in the table above are theoretical figures
prescribed by the SEC for disclosure and comparison. The table
below illustrates the actual benefits payable under the listed
events assuming termination of employment occurred as of
December 31, 2007, with the exception of Mr. Biggar,
who retired prior to that date. The following table does not
include any pending |
53
|
|
|
|
|
additional service years for Messrs. Miller and Shriver
because neither executive was eligible as of December 31,
2007, as described above. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SERP Payments upon Termination
|
as of December 31,
2007(a)
|
Named
|
|
|
|
|
|
|
|
|
|
Executive Officer
|
|
|
Retirement
|
|
|
Death
|
|
|
Disability
|
J. H. Miller
|
|
|
|
$4,639,860
|
|
|
|
|
$1,906,949
|
|
|
|
|
$4,639,860
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W. H.
Spence(b)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
P. A.
Farr(b)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. J. Grey
|
|
|
|
3,405,364
|
|
|
|
|
1,359,520
|
|
|
|
|
3,405,364
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B. L. Shriver
|
|
|
$
|
8,455 per month
|
|
|
|
$
|
3,840 per month
|
|
|
|
$
|
8,455 per month
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Each named executive officer, other than Mr. Shriver, has
elected to receive benefits payable under the SERP as a lump-sum
payment, subject to applicable law. The amounts shown in this
table represent the values that would have become payable based
on a December 31, 2007 termination of employment. Actual
payment would be made following December 31, subject to
plan rules and in compliance with Section 409A of the
Internal Revenue Code. |
|
(b) |
|
Messrs. Spence and Farr are not eligible to retire and are
not vested under the SERP. Mr. Spence is also not vested in
the PPL Retirement Plan, meaning that if he left the company on
December 31, 2007, under any circumstance, he would not be
eligible for any benefit. If Mr. Farr had left the company
on December 31, 2007, voluntarily or as a result of a
disability or death, he, or his spouse, would have been vested
in a deferred benefit under the PPL Retirement Plan and PPL
Subsidiary Retirement Plan. The PPL Retirement Plan benefit is
first payable at age 55 on a reduced basis. The PPL
Subsidiary Retirement Plan is first payable at age 50 on a
reduced basis, but the death benefit is payable at the surviving
spouses chosen date of commencement. |
|
|
|
(4) |
|
Includes 20.7 additional years of service provided to
Mr. Miller. The years of credited service in excess of
actual years of service provided to the company resulted in an
increase to the present value of accumulated benefits for Mr.
Miller as of December 31, 2007 under the SERP of
$6,594,087. Includes a prorated portion of the additional years
of service that Mr. Miller will receive when he reaches
age 60. |
|
(5) |
|
Includes one additional year of service provided to
Mr. Spence. The years of credited service in excess of
actual years of service provided to the company resulted in an
increase to the present value of accumulated benefits for Mr.
Spence as of December 31, 2007 under the SERP of $176,931. |
|
(6) |
|
Includes 14.5 years of service provided to Mr. Grey. The years
of credited service in excess of actual years of service
provided to the company resulted in an increase to the present
value of accumulated benefits for Mr. Grey as of
December 31, 2007 under the SERP of $1,672,432. |
|
(7) |
|
Includes 10 additional years of service that Mr. Shriver
received as of January 28, 2008. The years of credited
service in excess of actual years of service provided to the
company resulted in an increase to the present value of
accumulated benefits for Mr. Shriver as of December 31, 2007
under the SERP of $1,383,675. |
NONQUALIFIED
DEFERRED COMPENSATION IN 2007
Our Officers Deferred Compensation Plan allows participants to
defer all but $75,000 of their base salary and up to all of
their annual cash incentive awards. In addition, the company
made matching contributions to this plan during 2007 of up to 3%
of an executives cash compensation (salary plus annual
cash incentive award) to match executive contributions that
would have been made to PPLs
54
tax-qualified deferred savings plan, which is a 401(k) plan,
also known as the Deferred Savings Plan, except for certain
Internal Revenue Service imposed limitations on those
contributions. A hypothetical account is established for each
participant who elects to defer, and the participant selects one
or more deemed investment choices that generally mirror those
that are available generally to employees under the PPL Deferred
Savings Plan at Fidelity Investments. Earnings and losses on
each account are determined based on the performance of the
investment funds selected by the participant. The company
maintains each account as a bookkeeping entry.
In general, the named executive officers cannot withdraw any
amounts from their deferred accounts under this plan until they
either leave or retire from the company. The companys
Corporate Leadership Council, which consists of the chief
executive officer, chief financial officer, chief operating
officer, and general counsel, has the discretion to make a
hardship distribution if there is an unforeseeable
emergency that causes a severe financial hardship to the
participant. Participants may elect one or more annual
installments for a period up to 15 years, provided the
participant complies with the election and timing rules of
Section 409A of the Internal Revenue Code. No withdrawals
or distributions were made by the named executive officers in
2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
|
Registrant
|
|
|
Aggregate
|
|
|
Aggregate
|
|
|
|
|
|
|
Contributions in
|
|
|
Contributions in
|
|
|
Earnings in
|
|
|
Withdrawals/
|
|
|
Aggregate Balance
|
Name
|
|
|
Last
FY(1)
|
|
|
Last
FY(2)
|
|
|
Last
FY(3)
|
|
|
Distributions
|
|
|
at Last
FYE(4)
|
J. H. Miller
|
|
|
$
|
31,235
|
|
|
|
$
|
24,021
|
|
|
|
$
|
15,237
|
|
|
|
|
|
|
|
|
$
|
141,463
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W. H. Spence
|
|
|
|
17,914
|
|
|
|
|
10,697
|
|
|
|
|
1,251
|
|
|
|
|
|
|
|
|
|
29,861
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. R. Biggar (Retired)
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
P. A. Farr
|
|
|
|
43,767
|
|
|
|
|
6,403
|
|
|
|
|
20,508
|
|
|
|
|
|
|
|
|
|
260,012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. J. Grey
|
|
|
|
52,000
|
|
|
|
|
5,478
|
|
|
|
|
18,567
|
|
|
|
|
|
|
|
|
|
439,375
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B. L. Shriver
|
|
|
|
11,700
|
|
|
|
|
4,950
|
|
|
|
|
33,191
|
|
|
|
|
|
|
|
|
|
481,168
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
All amounts deferred by Messrs. Miller, Farr, Grey and
Shriver during 2007 are included in the Salary
column of the Summary Compensation Table. |
|
(2) |
|
Amounts in this column are company matching contributions and
are included in the Summary Compensation Table under the heading
All Other Compensation. |
|
(3) |
|
Aggregate earnings for 2007 are not reflected in the Summary
Compensation Table because such earnings are not deemed to be
above-market earnings. |
|
(4) |
|
Represents the total balance of each named executive
officers account as of December 31, 2007. Of the
totals in this column, the following amounts have previously
been reported in the Summary Compensation Table for this year
and for 2006, if applicable. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
|
Registrant
|
|
|
|
Name
|
|
|
Fiscal Year
|
|
|
Contributions
|
|
|
Contributions
|
|
|
Total
|
J. H. Miller
|
|
|
|
2007
|
|
|
|
$
|
31,235
|
|
|
|
$
|
24,021
|
|
|
|
$
|
55,256
|
|
|
|
|
|
2006
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W. H. Spence
|
|
|
|
2007
|
|
|
|
|
17,914
|
|
|
|
|
10,697
|
|
|
|
|
28,611
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
P. A. Farr
|
|
|
|
2007
|
|
|
|
|
43,767
|
|
|
|
|
6,403
|
|
|
|
|
50,170
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. J. Grey
|
|
|
|
2007
|
|
|
|
|
52,000
|
|
|
|
|
5,478
|
|
|
|
|
57,478
|
|
|
|
|
|
2006
|
|
|
|
|
52,000
|
|
|
|
|
|
|
|
|
|
52,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B. L. Shriver
|
|
|
|
2007
|
|
|
|
|
11,700
|
|
|
|
|
4,950
|
|
|
|
|
16,650
|
|
|
|
|
|
2006
|
|
|
|
|
13,000
|
|
|
|
|
|
|
|
|
|
13,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
55
Change-in-Control
Arrangements
The company has entered into severance agreements with each of
the named executive officers, which provide benefits to these
officers upon qualifying terminations of employment in
connection with a change in control of the company. A
change in control is defined as the occurrence of
any five specific events. These events are summarized as follows:
|
|
|
|
|
a change in the majority of the members of our Board of
Directors occurs through contested elections;
|
|
|
|
an investor or group acquires 20% or more of the companys
common stock;
|
|
|
|
a merger occurs that results in less than 60% control of the
company or surviving entity by the current shareowners;
|
|
|
|
shareowner approval of the liquidation or dissolution of the
company; or
|
|
|
|
the Board of Directors declares that a change in control is
anticipated to occur or has occurred.
|
A voluntary termination of employment by the named executive
officer would only result in the payment of benefits if there
was good reason for leaving. Good reason
includes a number of circumstances where the named executive
officer has a substantial adverse change in the employment
relationship or the duties assigned. For example, a reduction in
salary, a relocation of the place of work more than
30 miles away, or a cutback or exclusion from a
compensation plan, pension plan, or welfare plan would be
good reason. The benefits provided under these
agreements replace any other severance benefits that the company
or any prior severance agreement would provide to these named
executive officers.
There is no benefit payable before or after a change in control
if the officer is discharged for cause.
Cause generally means willful conduct that can be
shown to cause material injury to the company or the willful
refusal to perform duties after written demand by the Board of
Directors.
Each of the severance agreements continues in effect until
December 31, 2009, and the agreements generally are
automatically extended for additional one-year periods. If a
change in control occurs, the agreements will expire no earlier
than 36 months after the month in which the change in
control occurs. Each agreement provides that the named executive
officer will be entitled to the severance benefits described
below if, in connection with a change in control, the company
terminates the named executive officers employment for any
reason other than death, disability, retirement or
cause, or the officer terminates employment for
good reason.
These benefits include:
|
|
|
|
|
a lump-sum payment equal to three times the sum of (1) the
named executive officers base salary in effect immediately
prior to the date of termination, or if higher, immediately
prior to the first occurrence of an event or circumstance
constituting good reason, and (2) the highest
annual bonus in respect of the last three fiscal years ending
immediately prior to the fiscal year in which the change in
control occurs, or if higher, the fiscal year immediately prior
to the fiscal year in which first occurs an event or
circumstance constituting good reason;
|
|
|
|
a lump-sum payment having an actuarial present value equal to
the additional pension benefits the officer would have received
had the officer continued to be employed by the company for an
additional 36 months;
|
|
|
|
the continuation of welfare benefits for the officer and his or
her dependents for the
36-month
period following separation (reduced to the extent the officer
receives comparable benefits from another employer);
|
|
|
|
unpaid incentive compensation that has been allocated or awarded
for a previous performance period;
|
56
|
|
|
|
|
all contingent incentive compensation awards for all then
uncompleted periods, calculated on a prorated basis of months of
completed service, assuming performance achievement at 100% of
the target level;
|
|
|
|
outplacement services for up to three years;
|
|
|
|
a gross-up
payment for any excise tax imposed under the golden parachute
provisions of the Internal Revenue Code; and
|
|
|
|
post-retirement health care and life insurance benefits to
officers who would have become eligible for such benefits within
the 36-month
period following the change in control.
|
See the Potential Payments upon Termination or Change in
Control of PPL Corporation table on page 62 for the
estimated value of benefits to be paid if a named executive
officer was terminated on December 31, 2007 after a change
in control of PPL for qualifying reasons.
In addition to the benefits that the severance agreements
provide, the following events would occur in the event of a
change in control under the companys compensation
arrangements:
|
|
|
|
|
the restriction period applicable to any outstanding restricted
stock or restricted stock unit awards lapses for those awards
granted as part of the companys compensation program
(excluding restricted stock granted under our retention
agreements);
|
|
|
|
all restrictions on the exercise of any outstanding stock
options lapse;
|
|
|
|
all participants in the SERP immediately vest in their accrued
benefit, even if not yet vested due to age and service; and
|
|
|
|
upon a qualifying termination, the SERP benefit improves by a
pro rata portion of the additional years of service granted to
the officer, if any, that otherwise would not be earned until a
specified period of years had elapsed or the officer had reached
a specified age.
|
The value of the SERP enhancements is included under the
Change in Control Termination column of the
Potential Payments upon Termination or Change in Control
of PPL Corporation table provided below at page 62.
PPL has trust arrangements in place to facilitate the funding of
benefits under the SERP, the Officers Deferred Compensation
Plan, severance agreements and the Directors Deferred
Compensation Plan if a change in control were to occur.
Currently, the trusts are not funded. The trusts provide for the
company to fund the trusts at the time a potential change
in control occurs. The funds are refundable to the company
if the change in control does not actually take place.
A potential change in control is triggered when:
|
|
|
|
|
the company enters into an agreement that would result in a
change in control;
|
|
|
|
the company or any investor announces an intention to enter into
a change in control;
|
|
|
|
the Board of Directors declares that a potential change in
control has occurred; or
|
|
|
|
an investor obtains 5% or more of the companys common
stock and intends to control or influence management (requiring
a Schedule 13D to be filed by the investor with the SEC).
|
Within 60 days of the end of each year after the change in
control occurs, PPL is required to irrevocably deposit
additional cash or property into the trusts in an amount
sufficient to pay participants or beneficiaries the benefits
that are payable under terms of the plans that are being funded
by the trusts as of the close of each year. Any income on the
trust assets would be taxed to PPL and not to the beneficiaries
of the trusts, and such assets would be subject to the claims of
general creditors in the event of PPLs insolvency or
bankruptcy.
57
Retention
Agreements
PPL has executed retention agreements with Messrs. Miller,
Farr and Shriver that grant 60,000 shares of restricted PPL
common stock to Mr. Miller, 40,000 shares to
Mr. Farr and 52,500 shares to Mr. Shriver. The
restriction period will lapse on October 1, 2008 for
Mr. Miller and April 27, 2027 for Mr. Farr. The
restriction period lapsed on January 28, 2008 for
Mr. Shriver. In the event of death or disability, the
restriction period on a prorated portion of these shares will
lapse immediately. In the event of a change in
control of PPL, the restriction period on all of these
shares will lapse immediately if there is an involuntary
termination of employment that is not for cause. In
the event Mr. Miller is terminated for cause or
he terminates his employment with all PPL-affiliated companies
prior to October 1, 2008, all shares of this restricted
stock will be forfeited. In the event Mr. Farr is
terminated for cause or he terminates his employment
with all PPL-affiliated companies prior to April 27, 2027,
all shares of this restricted stock will be forfeited.
Mr. Millers agreement also includes a grant of
additional years of services under the SERP, as described above
in Pension Benefits in 2007 PPL
Supplemental Executive Retirement Plan.
Termination
Benefits
The named executive officers are entitled to various benefits in
the event of a termination of employment, but the value of that
benefit and its components varies depending upon the
circumstances. A qualifying termination in connection with a
change in control of PPL Corporation triggers contractual
benefits under the severance and equity agreements described
above. A retirement provides benefits and payments in cash or
stock that are set forth in various executive plans referred to
above. A termination resulting from death or disability also has
a number of benefit consequences under various benefit plans.
The following table, Potential Payments upon Termination
or Change in Control of PPL Corporation, sets forth best
estimates of the probable incremental value of benefits that are
payable assuming a termination of employment as of
December 31, 2007, for reasons of voluntary termination,
retirement, death, disability or qualifying termination in
connection with a change in control. However, as permitted by
SEC disclosure rules, the table does not reflect any amount
provided to a named executive officer that is generally
available to all
non-union
employees. Also, the following table does not repeat information
disclosed in the Pension Benefits in 2007 table, the
Nonqualified Deferred Compensation in 2007 table or,
except to the extent that vesting or payment may be accelerated,
the Outstanding Equity Awards at Fiscal-Year End
2007 table. If a named executive officer does not yet
qualify for full retirement benefits or other benefits requiring
longer service, that additional benefit is not reflected below.
If a named executive officer has the ability to elect retirement
and thereby avoid a forfeiture or decreased benefits, the tables
assume that retirement was elected and is noted as such in the
footnotes to the table.
In the event that an executive is terminated for
cause by the company, no additional benefits are due
under the applicable plans and agreements.
Severance. See
CD&A Compensation Elements
Special Compensation Severance for a
discussion of the companys practice on severance benefits.
PPL has entered into agreements with certain executives,
typically in connection with a mid-career hire situation and as
part of our offer of employment, in which we have promised a
years salary in severance pay in the event the executive
is terminated by the company for reasons other than
cause. Severance benefits payable under these
arrangements are conditioned on the executive agreeing to
release the company from any liability arising from the
employment relationship.
Specifically, with regard to the named executive officers, the
company agreed at the time of hiring Mr. Miller to provide
up to 52 weeks of salary should he be terminated after one
year of employment. Payment during the 52-week timeframe would
stop if Mr. Miller became re-employed during the
52-week
period. The company also agreed at the time of hiring
Mr. Spence to provide up to 24
58
months of salary should he be terminated after one year of
employment. Payment during the 24-month timeframe would stop if
Mr. Spence became re-employed during the 24-month period.
As discussed above in
Change-In-Control
Arrangements, there is a structured approach to separation
benefits for involuntary and select good reason
terminations of employment in connection with a change in
control of PPL Corporation. PPL has entered into agreements with
each of the named executive officers that provide benefits to
the officers upon qualifying terminations of employment in
connection with a change in control of PPL Corporation. The
benefits provided under these agreements replace any other
severance benefits provided to these officers by PPL
Corporation, or any prior severance agreement.
The table below includes the severance payments, the value of
continued welfare benefits and outplacement benefits as
Other separation benefits, and the value of
gross-up
payments for required Federal excise taxes on excess parachute
payments as Tax
gross-up
amount payable. The value of additional pension benefits
provided under the severance agreements is discussed above in
Change-in-Control
Arrangements and is included as SERP in the
table below.
SERP and ODCP. See Pension
Benefits in 2007 above for a discussion of the SERP and
Change-in-Control
Arrangements for a discussion of enhanced benefits that
are triggered if the named executive officer is terminated in
connection with a change in control of PPL. The Potential
Payments upon Termination or Change in Control of PPL
Corporation table below only includes enhancements to
benefits previously disclosed in the Pension Benefits in
2007 table available as a result of the circumstances of
termination of employment.
Account balances under the Officers Deferred Compensation Plan
become payable as of termination of employment for any reason.
Current balances are included in the Nonqualified Deferred
Compensation in 2007 table on page 54 above and
are not included in the table below.
Annual Cash Incentive Awards. It
is PPLs practice to pay a pro rata portion of the accrued
but unpaid annual cash incentive award to executives who retire
or who are eligible to retire and (1) die while employed or
(2) terminate employment due to a disability during the
performance year. All named executive officers are eligible to
retire except for Messrs. Spence and Farr. In the event
Messrs. Spence and Farr were to die or terminate employment
due to a disability, the Compensation, Governance and Nominating
Committee has the power to consider an award. If
Messrs. Spence and Farr were to leave voluntarily, they
would not be entitled to an annual cash incentive award.
In the event of a qualifying termination in connection with a
change in control, annual cash incentive awards that have been
determined, but not yet paid, are payable under the terms of the
severance agreements. Also in the case of a change in control,
if a termination under the severance agreement occurs during the
performance year, accrued incentive cash awards are payable on a
pro rata basis for the period worked during the year using the
assumption that performance goals were attained at target.
Except as noted above for Messrs. Spence and Farr, the
annual cash incentive awards discussed in the CD&A and
detailed for the 2007 year would be payable, without
enhancement, in the event of retirement, death, disability,
involuntary termination for reasons other than cause or in the
event of a qualifying termination in connection with a change in
control and are not included in the table below.
Long-term Incentive
Awards. Restrictions on restricted stock units
generally lapse upon retirement, death or termination of
employment due to disability or in the event of a change in
control. Restricted stock units are generally forfeited in the
event of voluntary termination; however, for executives eligible
to retire, which includes all named executive officers except
Messrs. Spence and Farr, we have assumed for the table
below that the executive retires and restrictions lapse.
Likewise, in the table below we have assumed that, in the event
of involuntary termination for reasons other than
cause for executives eligible to retire, the
restrictions lapse. Premium units granted under the Premium
Exchange Program are forfeited in the event of voluntary
termination or retirement prior to age 60, are pro-rated in
the event of retirement or termination of employment without
cause on or after age 60,
59
and in the event of death or disability all restrictions lapse.
Premium units are included in the table below based on these
assumptions.
For those executives who have retention agreements, the
restrictions on the retention shares lapse if the
executives employment is terminated:
(1) involuntarily for reasons other than for cause;
(2) for qualifying reasons in connection with a change in
control; or (3) in the event of death or disability. The
value of these units is included in the appropriate column.
The following table, Potential Payments upon Termination
or Change in Control of PPL Corporation, represents the
value, as of December 31, 2007 (based on a PPL stock price
of $52.09), of accelerated restricted stock units under each
termination event.
Stock options that are not yet exercisable, other than those
granted 12 months before termination of employment, become
exercisable upon retirement. In the event of death or
termination of employment due to disability, stock options not
yet exercisable continue to become exercisable in accordance
with the vesting schedule (in one-third increments on each
anniversary of the grant). Options that are not yet exercisable
are generally forfeited in the event of voluntary termination;
however, for executives eligible to retire (all named executive
officers except Messrs. Spence and Farr), we have assumed
the executive retires. Likewise, in the table below we have
assumed that in the event of involuntary termination for reasons
other than cause, options not yet exercisable for
executives eligible to retire become exercisable. In the event
of voluntary termination of employment for reasons other than
noted above, all executives have a minimum of 60 days to
exercise options that are exercisable but that have not yet been
exercised before they are forfeited.
Stock options granted within 12 months of termination of
employment are normally forfeited. In the event of a change in
control, all options, including those granted within the last
12 months, become exercisable upon close of the transaction
that results in the change in control.
The term of all PPL stock options is 10 years. In the event
of retirement, the executive has the full term to exercise the
options. In the event of termination of employment as a result
of death or disability, the term is reduced to the earlier of
the remaining term of the option or 36 months. In the event
of a qualifying termination of employment in connection with a
change in control, the term is reduced to 36 months for all
outstanding options. Effective for grants of options made in
2007 and after, the exercise periods in the event of a change in
control will be extended to the full term.
The following table, Potential Payments upon Termination
or Change in Control of PPL Corporation, represents the
value (based on a PPL stock price of $52.09) of options that are
not yet exercisable, assuming the options were exercised as of
December 31, 2007 under each termination event. For the
table below, options already exercisable as of the termination
event are excluded. The value of these options is provided in
the Outstanding Equity Awards at Fiscal-Year End
2007 table above.
Termination Benefits for Mr. Biggar.
Mr. Biggar retired effective April 1, 2007. The
following summarizes the benefits for which he became eligible
as of his retirement date.
As authorized by the Compensation, Governance and Nominating
Committee, or CGNC, a payment equal to three months of salary
was paid to Mr. Biggar as of April 1, 2007. In January
2007, for 2006 performance, the CGNC granted Mr. Biggar an
annual cash award and restricted stock unit awards as described
in the 2006 proxy statement and CD&A. In January 2008, for
2007 performance, the CGNC granted Mr. Biggar an annual
cash incentive award and restricted stock unit awards as
described in the CD&A. The 2008 annual cash incentive award
is included in the Summary Compensation Table. The restricted
stock unit awards granted in 2007 were expensed in 2007. The
restricted stock unit awards granted in 2008 will be expensed in
2008.
Mr. Biggar elected to receive his SERP benefit in the form
of a lump-sum payment. The company paid Mr. Biggars
SERP benefits in two installments in order to avoid adverse tax
consequences under Section 409A of the Internal Revenue
Code. He received the first payment of $3,265,734 as of
April 1, 2007, the day he retired. He received the second
payment of $790,668 as of October 1, 2007,
60
six months after his retirement date, with interest of
$18,620 as determined by the interest rate applicable to the
Stable Value Fund of the PPL Deferred Savings Plan for the
period from April 1, 2007 to October 1, 2007.
As of his retirement, Mr. Biggar received a total of 87,970
restricted stock units. Restrictions lapsed on 79,090 units
six months following his retirement on October 1, 2007, at
which time the value was determined to be $3,756,775 based on
the closing price for PPL shares of common stock as of that date
of $47.50 per share. Restrictions on an additional
8,880 units will lapse 12 months following his
retirement on April 1, 2008, at which time the value will
be determined based on the closing price for PPL shares of
common stock as of that date. At its January 2008 meeting, the
CGNC granted an additional 5,450 units, a pro rata award
for the 2007 performance period. As of his retirement, 1,370
Premium Units, some of which were granted in 2005, 2006 and
2007, were forfeited under the Premium Exchange Program. All
Premium Units are forfeited upon retirement unless the retiring
officer is 60 years old. Mr. Biggar was entitled to a
pro rata portion of these Premium Units because he was over
60 years old.
As of his retirement, Mr. Biggar had a total of 268,533
exercisable stock options, which are exercisable for their
stated terms. An additional 131,913 options (granted in 2005 and
2006) became exercisable as of his retirement.
Mr. Biggar subsequently exercised these options, and the
results of this exercise are included on the Option
Exercises and Stock Vested in 2007 table on page 51.
61
POTENTIAL
PAYMENTS UPON TERMINATION OR
CHANGE IN CONTROL OF PPL CORPORATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement or
|
|
|
|
|
|
Involuntary
|
|
Change in
|
|
|
Voluntary
|
|
|
|
|
|
Termination
|
|
Control
|
Named Executive
Officer
|
|
Termination
|
|
Death
|
|
Disability
|
|
Not for Cause
|
|
Termination
|
|
J. H. Miller
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance payable in cash(1)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
1,045,000
|
|
|
$
|
7,949,101
|
|
Other separation
benefits(2)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
(7)
|
|
|
|
167,762
|
|
Tax gross-up
amount
payable(3)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
17,274,111
|
|
SERP(4)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
12,420,000
|
|
Restricted
stock/units(5)
|
|
|
5,288,177
|
|
|
|
8,413,577
|
|
|
|
8,413,577
|
|
|
|
8,413,577
|
|
|
|
8,452,123
|
|
Stock
options(6)
|
|
|
4,231,797
|
|
|
|
|
|
|
|
|
|
|
|
4,231,797
|
|
|
|
8,573,911
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W. H. Spence
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance payable in
cash(1)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
1,200,000
|
|
|
|
3,936,000
|
|
Other separation
benefits(2)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
(7)
|
|
|
|
146,078
|
|
Tax gross-up
amount
payable(3)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
4,104,320
|
|
SERP(4)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
930,000
|
|
Restricted
stock/units(5)
|
|
|
0
|
|
|
|
2,600,333
|
|
|
|
2,600,333
|
|
|
|
496,418
|
(9)
|
|
|
2,600,333
|
|
Stock
options(6)
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
(8)
|
|
|
|
1,929,828
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
P. A. Farr
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance payable in
cash(1)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
(7)
|
|
|
|
2,763,605
|
|
Other separation
benefits(2)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
(7)
|
|
|
|
138,989
|
|
Tax gross-up
amount
payable(3)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
4,686,942
|
|
SERP(4)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
990,000
|
|
Restricted
stock/units(5)
|
|
|
0
|
|
|
|
4,342,222
|
|
|
|
4,342,222
|
|
|
|
2,083,600
|
(8)
|
|
|
4,342,222
|
|
Stock
options(6)
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
(8)
|
|
|
|
2,292,014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. J. Grey
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance payable in
cash(1)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
(7)
|
|
|
|
2,320,800
|
|
Other separation
benefits(2)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
(7)
|
|
|
|
131,993
|
|
Tax gross-up
amount
payable(3)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
2,879,101
|
|
SERP(4)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
1,800,000
|
|
Restricted
stock/units(5)
|
|
|
2,286,751
|
|
|
|
2,354,989
|
|
|
|
2,354,989
|
|
|
|
2,286,751
|
|
|
|
2,354,989
|
|
Stock
options(6)
|
|
|
1,517,758
|
|
|
|
|
|
|
|
|
|
|
|
1,517,758
|
|
|
|
2,473,509
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B. L. Shriver
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance payable in
cash(1)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
(7)
|
|
|
|
1,958,100
|
|
Other separation
benefits(2)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
(7)
|
|
|
|
137,942
|
|
Tax gross-up
amount
payable(3)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
3,370,867
|
|
SERP(4)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
2,340,000
|
|
Restricted
stock/units(5)
|
|
|
2,630,545
|
|
|
|
5,452,260
|
|
|
|
5,452,260
|
|
|
|
5,365,270
|
|
|
|
5,452,260
|
|
Stock
options(6)
|
|
|
1,517,758
|
|
|
|
|
|
|
|
|
|
|
|
1,517,758
|
|
|
|
2,473,509
|
|
|
|
|
(1) |
|
Mr. Miller has an agreement to provide up to 52 weeks
of pay following involuntary termination for reasons other than
cause. The full 52 weeks of pay are illustrated as
Severance payable in cash under the
Involuntary Termination Not for Cause column.
Mr. Spence also has an agreement to provide up to 24 months
of pay following involuntary termination for reasons other than
cause. The full 24 months of pay are illustrated as
Severance payable in cash under the
Involuntary Termination Not for Cause column. |
|
|
|
In the event of termination of employment in connection with a
change in control, the named executive officers are eligible for
severance benefits if termination occurs within 36 months
of a change in control (a) due to termination by the
company for reasons other than cause or (b) by the
executive on the basis of good reason as that term
is defined in the severance agreement. |
62
|
|
|
|
|
For purposes of the illustration, we have assumed executives are
eligible for benefits under the severance agreements. Amounts
illustrated as Severance payable in cash under the
Change in Control Termination column are three times
the executives annual salary as of the termination date
plus three times the highest annual cash incentive payment made
in the last three years as provided under the agreements. |
|
(2) |
|
Under the terms of each named executive officers severance
agreement, the executive is eligible for three years of
continued medical and dental benefits, life insurance and
disability protection, and outplacement benefits. The amounts
illustrated as Other separation benefits are the
estimated present values of these benefits. |
|
(3) |
|
In the event excise taxes become payable under Section 280G
and Section 4999 of the Internal Revenue Code as a result
of any excess parachute payments, as that phrase is
defined by the Internal Revenue Service, the severance
agreements provide that the company will pay the excise tax as
well as
gross-up the
executive for the impact of the excise tax payment. (The tax
payment and
gross-up
does not extend to normal income taxes due on any separation
payments.) The amounts illustrated as Tax
gross-up
amount payable include the companys best estimate of
the excise tax and
gross-up
payments that would be made if each named executive officer had
been terminated on December 31, 2007, under the terms of
the severance agreement. |
|
(4) |
|
Amounts illustrated as SERP under the Change
in Control Termination column include the value of the
incremental benefits payable under the terms of the severance
agreements each named executive officer is eligible
for a severance payment equal to the value of the SERP benefit
that would be determined by adding an additional three years of
service. For Messrs. Miller and Shriver, the additional
three years of service cause the SERP benefit to be determined
assuming the executive attained age 60 and, as a result,
the benefit is based on 30 years of SERP service for
Mr. Miller, and an additional 10 years of SERP service
for Mr. Shriver. For details on additional years of
service, see the discussion under Pension Benefits in
2007 above. |
|
(5) |
|
Total outstanding restricted stock and restricted stock unit
awards are illustrated in the Outstanding Equity Awards at
Fiscal-Year End 2007 table above at page 49. The
table above illustrates the value of the restricted stock and
stock units that would become payable as a result of each event
as of December 31, 2007. In the table below, the number of
units accelerated and payable as of the event, as well as the
number forfeited, is illustrated. The gross value in the above
table would be reduced by the amount of taxes required to be
withheld; and the net shares, determined based on the stock
price as of December 31, 2007, would be distributed based
on a PPL stock price of $52.09. For purposes of the table below,
the total number of shares is illustrated without regard for the
tax impact. |
|
|
|
For Messrs. Miller, Farr and Shriver, the totals shown
below for death, disability, involuntary termination not for
cause and change in control termination include the acceleration
of outstanding retention shares. |
63
Restricted Stock
and Restricted Stock Units
(#)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement or
|
|
|
|
|
|
Involuntary
|
|
Change in
|
|
|
Voluntary
|
|
|
|
|
|
Termination
|
|
Control
|
Named Executive
Officer
|
|
Termination
|
|
Death
|
|
Disability
|
|
Not for Cause
|
|
Termination
|
|
J. H. Miller
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
accelerated
|
|
|
101,520
|
|
|
|
162,260
|
|
|
|
162,260
|
|
|
|
161,520
|
|
|
|
162,260
|
|
forfeited
|
|
|
60,740
|
|
|
|
0
|
|
|
|
0
|
|
|
|
740
|
|
|
|
0
|
|
W. H. Spence
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
accelerated
|
|
|
0
|
|
|
|
49,920
|
|
|
|
49,920
|
|
|
|
9,530
|
(9)
|
|
|
49,920
|
|
forfeited
|
|
|
49,920
|
|
|
|
0
|
|
|
|
0
|
|
|
|
40,390
|
(8)
|
|
|
0
|
|
P. A. Farr
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
accelerated
|
|
|
0
|
|
|
|
83,360
|
|
|
|
83,360
|
|
|
|
40,000
|
(8)
|
|
|
83,360
|
|
forfeited
|
|
|
83,360
|
|
|
|
0
|
|
|
|
0
|
|
|
|
43,360
|
(8)
|
|
|
0
|
|
R. J. Grey
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
accelerated
|
|
|
43,900
|
|
|
|
42,210
|
|
|
|
42,210
|
|
|
|
43,900
|
|
|
|
45,210
|
|
forfeited
|
|
|
1,310
|
|
|
|
0
|
|
|
|
0
|
|
|
|
1,310
|
|
|
|
0
|
|
B. L. Shriver
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
accelerated
|
|
|
50,500
|
|
|
|
104,670
|
|
|
|
104,670
|
|
|
|
103,000
|
|
|
|
104,670
|
|
forfeited
|
|
|
54,170
|
|
|
|
0
|
|
|
|
0
|
|
|
|
1,670
|
|
|
|
0
|
|
|
|
|
(6) |
|
Total outstanding stock options are illustrated in the
Outstanding Equity Awards at Fiscal-Year End 2007
table. The table above illustrates the value of the options not
yet exercisable that would become exercisable as a result of
each event as of December 31, 2007. Exercisable options as
of December 31, 2007 are excluded from this table. The
table below details the number of options that accelerate and
become exercisable as of the termination event, the number of
options that become exercisable in the future in the events of
death or disability and the number forfeited.
For illustrative purposes, it is assumed that all options not
yet exercisable that become exercisable as of the event are
exercised as of December 31, 2007, based on a PPL stock
price of $52.09. |
64
Stock Options Not
Yet Exercisable
(#)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement or
|
|
|
|
|
|
Involuntary
|
|
Change in
|
|
|
Voluntary
|
|
|
|
|
|
Termination
|
|
Control
|
Named Executive
Officer
|
|
Termination
|
|
Death
|
|
Disability
|
|
Not for Cause
|
|
Termination
|
|
J. H. Miller
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated
|
|
|
184,559
|
|
|
|
0
|
|
|
|
0
|
|
|
|
184,559
|
|
|
|
440,429
|
|
Forfeited
|
|
|
255,870
|
|
|
|
0
|
|
|
|
0
|
|
|
|
255,870
|
|
|
|
0
|
|
Become exercisable over next 36 months
|
|
|
0
|
|
|
|
440,429
|
|
|
|
440,429
|
|
|
|
0
|
|
|
|
0
|
|
W. H. Spence
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
(8)
|
|
|
|
113,720
|
|
Forfeited
|
|
|
113,720
|
|
|
|
0
|
|
|
|
0
|
|
|
|
(8)
|
|
|
|
0
|
|
Become exercisable over next 36 months
|
|
|
0
|
|
|
|
113,720
|
|
|
|
113,720
|
|
|
|
0
|
|
|
|
0
|
|
P. A. Farr
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
(8)
|
|
|
|
114,513
|
|
Forfeited
|
|
|
114,513
|
|
|
|
0
|
|
|
|
0
|
|
|
|
(8)
|
|
|
|
0
|
|
Become exercisable over next 36 months
|
|
|
0
|
|
|
|
114,513
|
|
|
|
114,513
|
|
|
|
0
|
|
|
|
0
|
|
R. J. Grey
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated
|
|
|
65,653
|
|
|
|
0
|
|
|
|
0
|
|
|
|
65,653
|
|
|
|
121,973
|
|
Forfeited
|
|
|
56,320
|
|
|
|
0
|
|
|
|
0
|
|
|
|
56,320
|
|
|
|
0
|
|
Become exercisable over next 36 months
|
|
|
0
|
|
|
|
121,973
|
|
|
|
121,973
|
|
|
|
0
|
|
|
|
0
|
|
B. L. Shriver
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated
|
|
|
65,653
|
|
|
|
0
|
|
|
|
0
|
|
|
|
65,653
|
|
|
|
121,973
|
|
Forfeited
|
|
|
56,320
|
|
|
|
0
|
|
|
|
0
|
|
|
|
56,320
|
|
|
|
0
|
|
Become exercisable over next 36 months
|
|
|
0
|
|
|
|
121,973
|
|
|
|
121,973
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
(7) |
|
In the event of involuntary termination for reasons other than
for cause, any severance payable in cash (except for
Mr. Miller) and/or other separation benefits, if any, would
be determined as of the date of termination and would require
the approval of the Compensation, Governance and Nominating
Committee. |
|
(8) |
|
In the event of involuntary termination for reasons other than
for cause, Messrs. Spence and Farr would forfeit all
outstanding restricted stock units (except as noted for Mr.
Spence in footnote 9 below) and stock options because they are
not eligible to retire. Any exceptions to the automatic
forfeitures would require the approval of the Compensation,
Governance and Nominating Committee. The exception for
Mr. Farr would be the 40,000 shares of restricted
stock that he holds under his Retention Agreement. |
|
(9) |
|
In the event of involuntary termination for reasons other than
cause, pursuant to the terms of Mr. Spences
employment offer, the restrictions on restricted stock units
granted upon hire would lapse, subject to compliance with any
legal requirements. |
PROPOSAL 2:
COMPANY PROPOSAL TO AMEND AND RESTATE THE COMPANYS
ARTICLES OF INCORPORATION TO ELIMINATE SUPERMAJORITY VOTING
REQUIREMENTS
The Board of Directors has unanimously approved, and recommends
that our shareowners approve, Amended and Restated Articles of
Incorporation (Articles), including amendments to
Articles VIII, IX
and X, to eliminate all supermajority voting requirements from
our current Articles. In response to a favorable vote by
shareowners at the 2006 and 2007 annual meetings on a proposal
to reduce supermajority voting requirements, the Board of
Directors carefully considered the advantages and disadvantages
of the supermajority voting provisions in the companys
Articles and Bylaws. We are
65
now asking our shareowners to vote to approve the amendment and
restatement of the Articles to eliminate all of the
supermajority provisions in the Articles. Effective upon the
approval by our shareowners of this proposal, our Board has also
approved amending Section 4.05 of our Bylaws to eliminate a
supermajority voting requirement to remove directors for cause.
All supermajority voting requirements would then be eliminated
from both of our Articles and Bylaws.
We propose the following changes to our Articles:
|
|
|
|
|
Deletion of Article VIII of the Articles in its entirety,
which currently provides that, unless a business combination is
approved by the affirmative vote of either a majority of
disinterested directors or the holders of at least two-thirds of
the voting power of all shares of the companys voting
stock, voting together as a single class, then, in addition to
any vote of shareowners otherwise required by law or the
Articles, the consummation of any business combination requires
that additional conditions shall have been met.
|
|
|
|
Removal of the two-thirds vote requirement in Article IX of
the Articles, which relates to the ability of our shareowners to
amend, alter or repeal, or to adopt any provision inconsistent
with, Articles VI, VII, VIII, IX and X of the companys
Articles.
|
|
|
|
Removal of the two-thirds vote requirement in Article X of
the Articles, which relates to the ability of our shareowners or
directors to amend, alter or repeal, or to adopt any provision
inconsistent with, Sections 3.05(b), 3.16, 3.17, 4.03(a),
4.03(c), 4.04 or 4.05(a) of the companys Bylaws.
|
Effective upon shareowner approval of this proposal, our Board
has adopted the following amendment to our Bylaws:
|
|
|
|
|
Removal of the two-thirds vote requirement contained in
Section 4.05 of our Bylaws, which relates to the ability of
our shareowners to remove directors for cause.
|
Removal of these requirements would eliminate all supermajority
voting requirements from our Articles and Bylaws. The proposed
amendments to the Articles are set forth in Annex A, with
deleted language stricken through with a line and new language
underscored.
Vote Required for Approval. The affirmative vote of
the shareowners entitled to cast at least two-thirds of the
votes which all shareowners are entitled to cast is required to
approve the proposed amendments. (This two-thirds vote is
required under our current Articles, but will not be required
for any action in the future if this company proposal is
approved.) This management proposal will qualify for the broker
routine vote under NYSE Rule 452. This permits
brokers to vote FOR the proposal on behalf of any of their
customers who do not return instructions. If the amendment and
restatement of the Articles is approved, then it will become
effective upon the filing with the Department of State of the
Commonwealth of Pennsylvania, which filing would be made
promptly after the annual meeting.
The Board of
Directors
recommends that shareowners vote FOR Proposal 2
PROPOSAL 3:
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
Fees to
Independent Auditor for 2007 and 2006
For the fiscal years ended December 31, 2007 and 2006,
Ernst & Young LLP (E&Y) served as our independent
registered public accounting firm, or independent
auditor. The following table presents fees billed by
E&Y for the fiscal years ended December 31, 2007 and
2006, for professional services
66
rendered for the audit of our companys annual financial
statements and for fees billed for other services rendered.
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
|
(In thousands)
|
|
|
Audit
fees(a)
|
|
$
|
5,835
|
|
|
$
|
5,501
|
|
Audit-related
fees(b)
|
|
|
660
|
|
|
|
173
|
|
Tax
fees(c)
|
|
|
|
|
|
|
|
|
All other
fees(d)
|
|
|
50
|
|
|
|
24
|
|
|
|
|
(a) |
|
Includes estimated fees for audit of annual financial statements
and review of financial statements included in our
companys Quarterly Reports on
Form 10-Q
and services in connection with statutory and regulatory filings
or engagements including comfort letters and consents for
financings and filings made with the SEC. Also includes
approximately $1.8 million in 2007 and $1.8 million in
2006 of fees for audits relating to internal control over
financial reporting as required by Section 404 of the
Sarbanes-Oxley Act of 2002. Additionally, in 2006, fees of
$119,000 were paid to PricewaterhouseCoopers LLP
(PwC) for completion of the 2005 financial audit,
the last year for which they served as independent auditor. |
|
(b) |
|
Fees for review of internal controls, performance of specific
agreed-upon
procedures and services provided in connection with various
business and financing transactions. |
|
(c) |
|
The independent auditor does not provide tax consulting and
advisory services to the company or any of its affiliates. |
|
(d) |
|
Fees relating to access to accounting research tools licensed by
E&Y and PwC. Also includes fees relating to training on
financial accounting and reporting topics. |
Approval of Fees. The Audit
Committee has procedures for pre-approving audit and non-audit
services to be provided by the independent auditor. These
procedures are designed to ensure the continued independence of
the independent auditor. More specifically, the use of our
companys independent auditor to perform either audit or
non-audit services is prohibited unless specifically approved in
advance by the Audit Committee. As a result of this approval
process, the Audit Committee has established specific categories
of services and authorization levels. All services outside of
the specified categories and all amounts exceeding the
authorization levels are reviewed by the Chair of the Audit
Committee, who serves as the Committee designee to review and
approve audit and non-audit related services during the year.
A listing of the approved audit and non-audit services is
reviewed with the full Audit Committee no later than its next
meeting.
The Audit Committee approved 100% of the 2007 and 2006 audit and
non-audit related fees.
* * * * * *
Representatives of E&Y are expected to be present at the
Annual Meeting and will have the opportunity to make a statement
if they desire to do so and are expected to be available to
respond to appropriate questions.
The Board of Directors has determined that it would be desirable
to request an expression of opinion from the shareowners on the
appointment of E&Y. If the shareowners do not ratify the
selection of E&Y, the selection of the independent auditor
will be reconsidered by the Audit Committee.
The Board of
Directors
recommends that shareowners vote FOR Proposal 3
OTHER
MATTERS
Shareowner Proposals for the Companys
2009 Annual Meeting. To be included in the proxy
material for the 2009 Annual Meeting, any proposal intended to
be presented at that Annual Meeting by a shareowner must be
received by the Secretary of the company no later than
December 11, 2008. To be properly brought before the Annual
Meeting, any proposal must be received not later than
75 days in advance of the date of the 2009 Annual Meeting.
67
Annex A
AMENDED AND
RESTATED
ARTICLES OF INCORPORATION
OF
PPL CORPORATION
Article I.
The name of the Corporation is PPL Corporation.
Article II.
The address of the registered office of the Corporation in this
Commonwealth is Two North Ninth Street, Allentown, Lehigh
County, Pennsylvania
18101-1179.
Article III.
The Corporation is incorporated under the provisions of the
Business Corporation Law of 1988.
Article IV.
The aggregate number of shares which the Corporation shall have
the authority to issue is 790,000,000 shares, divided into
10,000,000 shares of Preferred Stock, par value $.01 per
share, and 780,000,000 shares of Common Stock, par value
$.01 per share.
Article V.
The designations, preferences, qualifications, limitations,
restrictions, and the special or relative rights in respect of
the shares of each class shall be as follows:
DIVISION A-PREFERRED
STOCK
Section 1. General. To
the extent permitted by these Amended and Restated Articles of
Incorporation, the Board of Directors, by majority vote of a
quorum, shall have the authority to issue shares of Preferred
Stock from time to time in one or more classes or series, and to
fix by resolution, at the time of issuance of each of such class
or series, the distinctive designations, terms, relative rights,
privileges, qualifications, limitations, options, conversion
rights, preferences, and voting powers, and such prohibitions,
restrictions and qualifications of voting or other rights and
powers thereof except as they are fixed and determined in this
Article V. The dividend rate or rates, dividend payment
dates or other terms of a class or series of Preferred Stock may
vary from time to time dependent upon facts ascertainable
outside of these Amended and Restated Articles of Incorporation
if the manner in which the facts will operate to fix or change
such terms is set forth in the express terms of the class or
series or upon terms incorporated by reference to an existing
agreement between the Corporation and one or more other parties
or to another document of independent significance or otherwise
to the extent permitted by the Business Corporation Law of 1988.
Section 2. Dividends. The
holders of shares of each class or series of Preferred Stock
shall be entitled to receive, when and as declared by the Board
of Directors, out of any funds legally available for the purpose
under 15 Pa.C.S. § 1551 (relating to distributions to
shareholders) or any superseding provision of law subject to any
additional limitations in the express terms of the class or
series, cash dividends at the rate or rates and on the terms
which shall have been fixed by or pursuant to the authority of
the Board of Directors with respect to such class or series and
no more, payable at such time or times as may be fixed by or
pursuant to the authority of the Board of Directors. If and to
the extent provided by the express terms of any class or series
of Preferred Stock, the holders of the class or series shall be
entitled to receive such other dividends as may be declared by
the Board of Directors.
A-1
Section 3. Liquidation
of the Corporation. In the event of voluntary or
involuntary liquidation, dissolution or winding up of the
Corporation, the holders of shares of Preferred Stock shall be
entitled to receive from the assets of the Corporation (whether
capital or surplus), an amount per share, prior to the payment
to the holders of shares of Common Stock or of any other class
of stock of the Corporation ranking as to liquidation
subordinate to the Preferred Stock, which shall have been fixed
and determined by the Board of Directors with respect thereto.
For the purposes of this section, the terms involuntary
liquidation, dissolution or winding up shall include,
without being limited to, a liquidation, dissolution or winding
up of the Corporation resulting in the distribution of all of
the net proceeds of a sale, lease or conveyance of all or
substantially all of the property or business of the Corporation
to any governmental body including, without limitation, any
municipal Corporation or political subdivision or authority.
Section 4. Conversion
Privileges. In the event any class or series of
the Preferred Stock is issued with the privilege of conversion,
such stock may be converted, at the option of the record holder
thereof, at any time or from time to time, as determined by the
Board of Directors, in the manner and upon the terms and
conditions stated in the resolution establishing and designating
the class or series and fixing and determining the relative
rights and preferences thereof.
Section 5. Redemption. The
Corporation, at its option to be exercised by its Board of
Directors, may redeem the whole or any part of the Preferred
Stock or of any class or series thereof at such time or times as
may be fixed by the Board, at the applicable price for each
share, and upon the terms and conditions which shall have been
fixed and determined by the Board with respect thereto.
Section 6. Voting
Rights. Each holder of record of shares of
Preferred Stock shall have full, limited, multiple, fractional,
conditional or no voting rights as shall be stated in the
resolution or resolutions of the Board of Directors providing
for the issue of such shares. Unless provided in such resolution
or resolutions, no holder of shares of Preferred Stock shall
have cumulative voting rights.
DIVISION B-COMMON
STOCK
Section 1. Dividends
and Shares in Distribution on Common
Stock. Subject to the rights of the holders of
the Preferred Stock and subordinate thereto, the Common Stock
alone shall receive all further dividends and shares upon
liquidation, dissolution, winding up or distribution.
Section 2. Voting
Rights. At any meeting of the shareholders, each
holder of Common Stock shall be entitled to one vote per share.
Article VI.
The shareholders of the Corporation shall not have the right to
cumulate their votes for the election of directors of the
Corporation.
Article VII.
The following provisions of the Business Corporation Law of 1988
shall not be applicable to the Corporation: 15 Pa.C.S.
§ 2538 (relating to approval of transactions with
interested shareholders) and 15 Pa.C.S. Subchapter 25G (relating
to control-share acquisitions).
Article VIII. [Reserved]
Business
Combinations.
Section 1. Definitions. For the
purposes of this Article VIII, the following terms shall
have the meanings hereinafter set forth:
(A) Affiliate or Associate
shall have the respective meanings ascribed to such terms in the
General Rules and Regulations under the Securities Exchange Act
of 1934 as in effect from time to time.
A-2
(B) A person shall be a Beneficial
Owner of any Voting Stock:
(i) which such person or any of its Affiliates or
Associates (as herein defined) beneficially owns, directly or
indirectly; or
(ii) which such person or any of its Affiliates or
Associates has (A) the right to acquire (whether such right
is exercisable immediately or only after the passage of time),
pursuant to any agreement, arrangement or understanding or upon
the exercise of conversion rights, exchange rights, warrants or
options, or otherwise, or (B) the right to vote pursuant to
any agreement, arrangement or understanding, except that a
person shall not be deemed the Beneficial Owner of any Voting
Stock under this paragraph (B) if the agreement,
arrangement or understanding to vote such Voting Stock
(X) arises solely from a revocable proxy or consent given
in response to a proxy or consent solicitation made in
accordance with the applicable rules and regulations under the
Securities and Exchange Act of 1934 as in effect from time to
time, and (Y) is not then reportable on a Schedule 13D
under the Securities and Exchange Act of 1934 as in effect from
time to time (or any comparable or successor report); or
(iii) which is beneficially owned, directly or
indirectly, by any other person with which such person or any of
its Affiliates or Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or
disposing of any shares of Voting Stock.
(C) Business Combination shall mean any
of the following:
(i) any merger or consolidation of the Corporation
or any Subsidiary with (A) any Interested Shareholder, or
(B) any other Corporation (whether or not itself an
Interested Shareholder) which is, or after such merger or
consolidation would be, an Affiliate of an Interested
Shareholder; or
(ii) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition (in one transaction or a series of
transactions) to or with any Interested Shareholder or any
Affiliate of any Interested Shareholder of any assets of the
Corporation or any Subsidiary having an aggregate Fair Market
Value of $25,000,000 or more; or
(iii) the issuance or transfer by the Corporation
or any Subsidiary (in one transaction or a series of
transactions) of any securities of the Corporation or any
Subsidiary to any Interested Shareholder or any Affiliate of any
Interested Shareholder in exchange for cash, securities or other
property (or a combination thereof) having an aggregate Fair
Market Value of $25,000,000 or more; or
(iv) the adoption of any plan or proposal for the
liquidation or dissolution of the Corporation proposed by or on
behalf of an Interested Shareholder or any Affiliate of any
Interested Shareholder; or
(v) any reclassification of securities of the
Corporation (including any reverse stock split), or
recapitalization of the Corporation, statutory share exchange,
or any merger or consolidation of the Corporation with any of
its Subsidiaries or any other transaction (whether or not with
or into or otherwise involving an Interested Shareholder),
exclusive of any repurchase or redemption of securities of the
Corporation in accordance with or solely in anticipation of the
terms of any mandatory sinking fund or redemption provisions
thereof, which has the effect, directly or indirectly, of
increasing the proportionate share of the outstanding shares of
any class of equity or convertible securities of the Corporation
or any Subsidiary which is directly or indirectly owned by an
Interested Shareholder or any Affiliate of any Interested
Shareholder.
(D) Disinterested Director shall mean
any member of the Board of Directors of the Corporation (the
Board) who is unaffiliated with, and not a nominee
of, the Interested
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Shareholder (as such term is used in the context of a
particular proposed Business Combination) and was a member of
the Board prior to the time that the Interested Shareholder
became an Interested Shareholder and any successor of a
Disinterested Director who is unaffiliated with, and not a
nominee of, the Interested Shareholder and is designated to
succeed a Disinterested Director by a majority of Disinterested
Directors then on the Board.
(E) Fair Market Value means:
(i) in the case of stock, the highest closing sale
price during the
thirty-day
period immediately preceding the date in question of a share of
such stock on the Composite Tape for the New York Stock
Exchange Listed Stocks, or, if such stock is not
quoted on the Composite Tape for the New York Stock Exchange,
or, if such stock is not listed on such exchange, on the
principal United States securities exchange registered under the
Securities Exchange Act of 1934 on which such stock is listed,
or, if such stock is not listed on any such Exchange, the
highest bid quotation with respect to a share of such stock
during the
thirty-day
period preceding the date in question on the National
Association of Securities Dealers, Inc. Automated Quotations
Systems (NASDAQ) or the NASDAQ National Market
System or, if NASDAQ and the NASDAQ National Market System are
not then in use, any other system then in use, or, if no such
quotations are available, the fair market value on the date in
question of a share of such stock as determined by a majority of
the Disinterested Directors in good faith; and
(ii) in the case of property other than cash or
stock, the fair market value of such property on the date in
question as determined by a majority of the Disinterested
Directors in good faith.
(F) Privately Held Stock shall mean any
class or series of the Preferred Stock which has not been
registered pursuant to Section 12 of the Securities
Exchange Act of 1934.
(G) Interested Shareholder shall mean
any person (other than the Corporation, any Subsidiary or any
benefit plan for the employees of the Corporation or any
subsidiary) who or which:
(i) is the Beneficial Owner, directly or
indirectly, of more than ten percent of the voting power of the
then outstanding Voting Stock; or
(ii) is an Affiliate of the Corporation and at any
time within the two-year period immediately prior to the date in
question became the Beneficial Owner, directly or indirectly, of
ten percent or more of the voting power of the then outstanding
Voting Stock; or
(iii) is an assignee of or has otherwise succeeded
to any shares of Voting Stock which were at any time within the
two-year period immediately prior to the date in question
beneficially owned by any Interested Shareholder, if such
assignment or succession shall have occurred in the course of a
transaction or series of transactions not involving a public
offering within the meaning of the Securities Act of
1933.
For the purpose of determining whether a person is an
Interested Shareholder pursuant to this paragraph (G), the
number of shares of Voting Stock deemed to be outstanding shall
include shares deemed owned by such person through application
of paragraph (B) of this Section 1, but shall not
include any other shares of Voting Stock which may be issuable
pursuant to any agreement, arrangement or understanding, or upon
exercise of conversion rights, warrants or options, or
otherwise. An Interested Shareholder as defined in this
paragraph (G) shall not include a person engaged in
business as an underwriter of securities who acquires the shares
directly from the Corporation or any Affiliate or Associate of
the Corporation through such persons participation in good
faith in a firm commitment underwriting registered under the
Securities Act of 1933 as in effect from time to time.
A-4
(H) In the event of any Business Combination in
which the Corporation survives, the phrase consideration
other than cash to be received as used in
Sections (A) and (B) of Section 2 of this Article
VIII shall include the shares of Common Stock
and/or the
shares of any other class of outstanding Voting Stock retained
by the holders of such shares.
(I) A person shall mean any individual,
firm, partnership, trust, Corporation or other entity.
(J) Subsidiary means any Corporation of
which a majority of any class of equity security is owned,
directly or indirectly, by the Corporation; provided, however,
that for the purposes of the definition of Interested
Shareholder set forth in paragraph (G) of this
Section 1, the term Subsidiary shall mean only
(1) PPL Electric Utilities Corporation for so long as the
Corporation owns, directly or indirectly, equity securities
entitling it to cast a majority of the votes generally entitled
to be cast in elections of PPL Electric Utilities Corporation
directors and (2) each other corporation of which a
majority of each class of equity security is owned, directly or
indirectly, by the Corporation.
(K) Voting Stock shall mean each share
of stock of the Corporation generally entitled to vote in
elections of directors.
A majority of the Disinterested Directors of the
Corporation shall have the power and duty to determine, for the
purposes of this Article VIll on the basis of information
known to them after reasonable inquiry, all facts necessary to
determine the applicability of the various provisions of this
Article VIII. Any such determination made in good faith
shall be binding and conclusive on all parties.
Section 2. Unless
a Business Combination shall have been approved by the
affirmative vote of either a majority of Disinterested Directors
or the holders of at least two-thirds of the voting power of all
shares of Voting Stock, voting together as a single class, then,
in addition to any vote of shareholders otherwise required by
law or these Amended and Restated Articles of Incorporation, the
consummation of any Business Combination shall require that all
of the following conditions shall have been met:
(A) The aggregate amount of the cash and the fair
market value as of the date of the consummation of the Business
Combination of consideration other than cash to be received per
share by holders of Common Stock in such Business Combination
shall be at least equal to the highest of the following:
(i) (if applicable) the highest per share price
(including any brokerage commissions, transfer taxes and
soliciting dealers fees) paid by the Interested
Shareholder for any shares of Common Stock acquired by it
(A) within the two-year period immediately prior to the
first public announcement of the proposal of the Business
Combination (the Announcement Date) or (B) in
the transaction in which it became an Interested Shareholder,
whichever is highest;
(ii) the fair market value per share of Common
Stock on the Announcement Date or on the date on which the
Interested Shareholder became an Interested Shareholder (such
later date is referred to in this Article VIII as the
Determination Date), whichever is higher;
and
(iii) (if applicable) the price per share equal to
the fair market value per share of Common Stock determined
pursuant to paragraph (ii) above, multiplied by the ratio
of (A) the highest per share price (including any brokerage
commissions, transfer taxes and soliciting dealers fees)
paid by the Interested Shareholder for any shares of Common
Stock acquired by it within the two-year period immediately
prior to the Announcement Date to (B) the fair market value
per share of Common Stock on the first day in such two-year
period upon which the Interested Shareholder acquired any shares
of Common Stock.
(B) The aggregate amount of the cash and the fair
market value as of the date of the consummation of the Business
Combination of consideration other than cash to be received per
share by holders of shares of any class or series of outstanding
Voting Stock other than Common
A-5
Stock (and other than any series or class of Privately
Held Voting Stock), shall be at least equal to the highest of
the following (it being intended that the requirements of this
paragraph (B) shall be required to be met with respect to
every such class or series of outstanding Voting Stock, whether
or not the Interested Shareholder has previously acquired any
shares of a particular class or series of Voting Stock):
(i) (if applicable) the highest per share price
(including any brokerage commissions, transfer taxes and
soliciting dealers fees) paid by the Interested
Shareholder for any shares of such class or series of Voting
Stock acquired by it (A) within the two-year period
immediately prior to the Announcement Date, or (B) in the
transaction in which it became an Interested Shareholder,
whichever is higher;
(ii) (if applicable) the highest preferential
amount per share to which the holders of shares of such class or
series of Voting Stock are entitled in the event of any
voluntary or involuntary liquidation, dissolution or winding up
of the Corporation or, If higher, the voluntary redemption price
per share for such class or series;
(iii) the fair market value per share of such class
or series of Voting Stock on the Announcement Date or on the
Determination Date, whichever is higher; and
(iv) (if applicable) the price per share equal to
the fair market value per share of such class or series of
Voting Stock determined pursuant to paragraph (iii) above,
multiplied by the ratio of (A) the highest per share price
(including any brokerage commissions, transfer taxes and
soliciting dealers fees) paid by the Interested
Shareholder for any shares of such class or series of Voting
Stock acquired by it within the two-year period immediately
prior to the Announcement Date to (B) the fair market value
per share of such class or series of Voting Stock on the first
day in such two-year period upon which the Interested
Shareholder acquired any shares of such class or series of
Voting Stock.
(C) The consideration to be received by holders of
a particular class or series of outstanding Voting Stock
(including Common Stock) shall be in cash or in the same form as
the Interested Shareholder has previously paid for shares of
such class or series of Voting Stock. If the Interested
Shareholder has paid for shares of any class or series of Voting
Stock with varying forms of consideration, the form of
consideration for such class or series of Voting Stock shall be
either cash or the form used to acquire the largest number of
shares of such class or series of Voting Stock previously
acquired by it.
(D) After such Interested Shareholder has become an
Interested Shareholder and prior to the consummation of such
Business Combination except as approved by a majority of the
Disinterested Directors:
(i) There shall have been no failure to declare and
pay at the regular date therefor any full quarterly dividends
(whether or not cumulative) on any outstanding Preferred
Stock;
(ii) there shall have been (A) no reduction in
the annual rate of dividends paid on the Common Stock (except as
necessary to reflect any subdivision of the Common Stock) and
(B) an increase in such annual rate of dividends as
necessary to reflect any reclassification (including any reverse
stock split), recapitalization, reorganization or any similar
transaction which has the effect of reducing the number of
outstanding shares of the Common Stock, unless the failure so to
increase such annual rate is approved by a majority of the
Disinterested Directors; and
(iii) such Interested Shareholder shall have not
become the beneficial owner of any additional shares of Voting
Stock except as part of the transaction which results in such
Interested Shareholder becoming an Interested
Shareholder.
(E) After such Interested Shareholder has become an
Interested Shareholder, such Interested Shareholder shall not
have received the benefit, directly or indirectly (except
proportionately
A-6
as a shareholder), of any loans, advances, guarantees,
pledges or other financial assistance or any tax credits or
other tax advantages provided by the Corporation, whether in
anticipation of or in connection with such Business Combination
or otherwise.
(F) A proxy or information statement describing the
proposed Business Combination and containing the information
specified for proxy or information statements under the
Securities Exchange Act of 1934 and the rules and regulations
thereunder (or any subsequent provisions replacing such Act,
rules or regulations) shall be mailed to shareholders of the
Corporation at least thirty days prior to the consummation of
such Business Combination (whether or not such proxy or
information statement is required to be mailed pursuant to such
Act or subsequent provisions).
Section 3. Nothing
contained in this Article VIll shall be construed to
relieve any Interested Shareholder from any fiduciary obligation
imposed by law.
Article IX.
Amendment of Articles. These Amended and
Restated Articles of Incorporation may be amended in the manner
from time to time prescribed by statute and all rights conferred
upon shareholders herein are granted subject to this
reservation; provided, however, that, notwithstanding
the foregoing (and in addition to any vote that may be required
by law, these Amended and Restated Articles of Incorporation or
the bylaws), the affirmative vote of the shareholders entitled
to cast at least two-thirds of the votes which all shareholders
are entitled to cast shall be required to amend, alter or
repeal, or to adopt any provision inconsistent with,
Articles VI, VII, VIII, IX and X of these Amended and
Restated Articles of Incorporation; provided further that such
two-thirds vote shall not be required for any such amendment,
alteration or repeal of, or adoption of any provision
inconsistent with, Article VIII which is recommended to the
shareholders by a majority of the Disinterested Directors (which
shall mean all the directors then in office when there is no
Interested Shareholder).
Article X.
Amendment of Bylaws. Except as otherwise
provided in the express terms of any class or series of
Preferred Stock, the bylaws may be amended or repealed, or new
bylaws may be adopted, either (i) by vote of the
shareholders at a duly organized annual or special meeting of
shareholders, or (ii) with respect to those matters that
are not by statute committed expressly to the shareholders and
regardless of whether the shareholders have previously adopted
or approved the bylaw being amended or repealed, by vote of a
majority of the board of directors of the Corporation in office
at any regular or special meeting of directors;
provided, however, that any amendment, alteration or repeal of,
or the adoption of any provision inconsistent with,
Sections 3.05(b), 3.16, 3.17, 4.03(a), 4.03(c), 4.04 or
4.05(a) of the bylaws, if by action of the shareholders, shall
be only upon the affirmative vote of the shareholders entitled
to cast at least two-thirds of the votes which all shareholders
are entitled to cast and, if by action of the directors, shall
be only upon the approval of at least two-thirds of the
directors of the Corporation in office.
Article XI.
Uncertificated Shares. Any or all classes and
series of shares of the Corporation, or any part thereof, may be
represented by uncertificated shares to the extent determined by
the Board of Directors, except as required by applicable law,
including that shares represented by a certificate that is
issued and outstanding shall continue to be represented thereby
until the certificate is surrendered to the Corporation. Within
a reasonable time after the issuance or transfer of
uncertificated shares, the Corporation shall send to the
registered owner thereof a written notice containing the
information required by applicable law to be set forth or stated
on certificates. Except as otherwise expressly provided by law,
the rights and obligations of the holders of shares represented
by certificates and the rights and obligations of the holders of
uncertificated shares of the same class and series shall be
identical.
A-7
PPL Investor Services: For questions about PPL
Corporation or its subsidiaries, or information concerning:
Lost Dividend
Checks
Bond Interest Checks
Direct Deposit of Dividends
Bondholder Information
Please contact:
Manager
PPL Investor Services
Two North Ninth Street (GENTW8)
Allentown, PA 18101
Toll Free:
1-800-345-3085
FAX:
610-774-5106
Via e-mail:
invserv@pplweb.com
Wells Fargo Shareowner Services: For information
concerning:
PPLs Dividend
Reinvestment Plan
Stock Transfers
Lost Stock Certificates
Certificate Safekeeping
Please contact:
Wells Fargo Bank,
N.A.
Shareowner
Servicessm
161
North Concord Exchange
South St. Paul, MN
55075-1139
Toll Free:
1-866-280-0245
Outside U.S.:
651-453-2129
PPL, PPL Energy Supply, LLC and PPL Electric Utilities
Corporation file a joint
Form 10-K
Report with the Securities and Exchange Commission. The
Form 10-K
Report for 2007 is available without charge by writing to the
Investor Services Department at the address printed above, by
calling
1-800-345-3085,
or by accessing it through the Investor Center page of
PPLs Internet Web site identified below.
Whether you plan to attend the Annual Meeting or not, you may
vote over the Internet, by telephone or by returning your proxy.
To ensure proper representation of your shares at the Annual
Meeting, please follow the instructions at the Web site address
on your proxy or follow the instructions that you will be given
after dialing the toll-free number on your proxy. You may also
mark, date, sign and mail the accompanying proxy as soon as
possible. An envelope, which requires no postage if mailed in
the United States, is included for your convenience.
For the latest information on PPL Corporation,
visit our location on the Internet at
http://www.pplweb.com
PPL CORPORATION
ANNUAL MEETING OF SHAREOWNERS
WEDNESDAY, MAY 21, 2008
10 A.M.
HOLIDAY INN CONFERENCE CENTER
FOGELSVILLE, PA
If you have consented to access the annual report and proxy information electronically, you may
view it by going to PPL Corporations Web site. You can get there by typing in the following
address: http://www.pplweb.com/PPLCorpProxy
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PPL Corporation
Two North Ninth Street
Allentown, PA 18101
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proxy |
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This proxy is solicited by the Board of Directors for use at the Annual Meeting on May 21, 2008.
James H. Miller and E. Allen Deaver, and each of them, are hereby appointed proxies, with the power
of substitution, to vote the shares of the undersigned, as directed on the reverse side of this
proxy, at the Annual Meeting of Shareowners of PPL Corporation to be held on May 21, 2008, and any
adjournments thereof, and in their discretion to vote and act upon any other matters as may
properly come before said meeting and any adjournments thereof.
The shares of stock you hold in your account or in a dividend reinvestment account will be voted as
you specify on the reverse side.
If no choice is specified, the proxy will be voted FOR Items 1, 2 and 3.
By signing the proxy, you revoke all prior proxies and appoint James H. Miller and E. Allen Deaver,
and each of them, with full power of substitution, to vote your shares on the matters shown on the
reverse side and any other matters which may come before the Annual Meeting and all adjournments.
See reverse for voting instructions
There are three ways to vote your Proxy
Your telephone or Internet vote authorizes the Named Proxies to vote your shares in the same manner
as if you marked, signed and returned your proxy card.
VOTE BY PHONE TOLL FREE 1-800-560-1965 QUICK ««« EASY ««« IMMEDIATE
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Use any touch-tone telephone to vote your proxy 24 hours a day, 7 days a week, until 12:00
noon (CT) on May 20, 2008. |
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Please have your proxy card and the last four digits of your Social Security Number or Tax
Identification Number available. Follow the simple instructions the voice provides you. |
VOTE BY INTERNET www.eproxy.com/ppl QUICK ««« EASY ««« IMMEDIATE
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Use the Internet to vote your proxy 24 hours a day, 7 days a week, until 12:00 noon (CT) on
May 20, 2008. |
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Please have your proxy card and the last four digits of your Social Security Number or Tax
Identification Number available. Follow the simple instructions to obtain your records and
create an electronic proxy. |
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope weve provided or
return it to PPL Corporation, c/o Shareowner ServicesSM, P.O. Box 64873, St. Paul, MN
55164-0873.
If you vote by telephone or Internet, please do NOT mail your Proxy Card
ò Please detach here ò
The Board of Directors Recommends a Vote FOR Items 1, 2 and 3.
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1.
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Election of directors:
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Frederick M. Bernthal
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Keith H. Williamson |
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02 |
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Louise K. Goeser |
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(Instructions: To withhold authority to vote for any
indicated nominee, write the number(s) of the nominee(s) in
the box provided to the right.)
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Company Proposal to Amend and Restate the Companys Articles of
Incorporation to Eliminate Supermajority Voting Requirements |
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Ratification of the Appointment of Independent Registered Public Accounting Firm |
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Vote FOR
all nominees
(except as marked)
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Vote WITHHELD
from all nominees |
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Abstain |
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Address Change? Mark Box o Indicate changes below:
Signature(s) in Box
Please sign exactly as your name(s) appears
on Proxy. If held in joint tenancy, all
persons must sign. Trustees,
administrators, etc., should include title
and authority. Corporations should provide
full name of corporation and title of
authorized officer signing the proxy.
Admission Ticket
PPL Corporation Annual Meeting of Shareowners
10 a.m., May 21, 2008
Holiday Inn Conference Center
Fogelsville, Pennsylvania
April 10, 2008
Dear ESOP Participant,
It is a pleasure to invite you to attend the 2008 Annual Meeting of Shareowners, which will be held
at 10 a.m. on Wednesday, May 21, 2008. The Annual Meeting will be held at the Holiday Inn
Conference Center, in Fogelsville, near the intersection of I-78 and Route 100, west of Allentown.
For your convenience, a map showing our meeting location, along with written directions, is
included on the back inside cover of the accompanying Proxy Statement.
Detailed information as to the business to be transacted at the meeting is contained in the
accompanying Notice of Annual Meeting and Proxy Statement. We will conclude the formal portion of
the meeting with a discussion of the companys operations, and a question-and-answer period will
follow.
We hope you will be able to attend in person. If you plan to attend the meeting, please detach and
bring this admission ticket with you to the meeting. Please follow the instructions on the ballot
card for voting over the Internet, by telephone or by detaching and returning your ballot. If you
are unable to attend the meeting but have any questions or comments on the companys operations, we
would like to hear from you.
Your vote is important. Whether you hold one share or many, please vote as soon as possible so that
you will be represented at the meeting in accordance with your wishes.
Sincerely,
James H. Miller
Chairman, President and Chief Executive Officer
ò FOLD AND DETACH HERE ò
PPL CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN (ESOP)
CONFIDENTIAL BALLOT
This is a ballot for voting your shares of PPL Corporation Common Stock held in the ESOP. Please
complete the ballot card and return in the envelope provided or vote by telephone or the Internet.
Fidelity Investments, as Trustee of the ESOP, will vote shares held in your ESOP Account as
directed on the ballot at the Annual Meeting of Shareowners of PPL Corporation to be held on May
21, 2008.
If you do not return your ballot card, or return it unsigned, or do not vote by telephone or
Internet, the ESOP provides that the Trustee will vote your shares in the same percentage as shares
held by participants for which the Trustee has received timely voting instructions.
Please review the information carefully and indicate how you wish your shares to be voted at the
Annual Meeting. Mark, sign, date and use the return envelope for mailing your ballot (if you do not
vote by telephone or Internet) to Fidelity Investments agent for tabulation. Timely receipt of
your instructions on a signed ballot card or by telephone or Internet is extremely important.
This ballot, if sent by mail, must be received by the close of business on May 19, 2008 in order
for your vote to be counted. If you wish to vote by telephone or on the Internet, please follow the
attached instructions.
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Comments (Mark the corresponding box on the reverse side) |
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See reverse for voting instructions
THIS BALLOT WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE
VOTED FOR PROPOSALS 1, 2 AND 3.
There are three ways to vote your Ballot
Your telephone or Internet vote authorizes the PPL Employee Stock Ownership Plan (ESOP) Trustee
to vote your shares in the same manner as if you marked, signed and returned your ballot card.
VOTE BY PHONE TOLL FREE 1-800-560-1965 QUICK ««« EASY ««« IMMEDIATE
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Use any touch-tone telephone to vote your Ballot 24 hours a day, 7 days a week, until 12:00
noon (CT) on May 16, 2008. |
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Please have your ballot card and the last four digits of your Social Security Number or Tax
Identification Number available. Follow the simple instructions the voice provides you. |
VOTE BY INTERNET www.eproxy.com/ppl QUICK ««« EASY ««« IMMEDIATE
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Use the Internet to vote your Ballot 24 hours a day, 7 days a week, until 12:00 noon (CT) on
May 16, 2008. |
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Please have your ballot card and the last four digits of your Social Security Number or Tax
Identification Number available. Follow the simple instructions to obtain your records and
create an electronic ballot. |
VOTE BY MAIL
Mark, sign and date your ballot card and return it in the postage-paid envelope weve provided or
return it to PPL ESOP Trustee, c/o Shareowner ServicesSM, P.O. Box 64873, St. Paul, MN
55164-0873.
If you vote by telephone or Internet, please do NOT mail your Ballot Card
ò Please detach here ò
The Board of Directors Recommends a Vote FOR Items 1, 2 and 3.
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1.
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Election of directors:
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01 |
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Frederick M. Bernthal
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03 |
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Keith H. Williamson |
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02 |
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Louise K. Goeser |
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(Instructions: To withhold authority to vote for any
indicated nominee, write the number(s) of the nominee(s) in
the box provided to the right.)
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Company Proposal to Amend and Restate the Companys Articles of
Incorporation to Eliminate Supermajority Voting Requirements |
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Ratification of the Appointment of Independent Registered Public Accounting Firm |
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o
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Vote FOR
all nominees
(except as marked)
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o
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Vote WITHHELD
from all nominees |
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o
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For
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o
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Against
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o
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Abstain |
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o
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For
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o
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Against
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Abstain |
Comments? Mark Box o Provide comments on reverse.
Signature(s) in Box
Signature(s) in Box
Please sign exactly as your name(s) appears on the ballot. If
held in joint tenancy, all persons must sign. Trustees,
administrators, etc., should include title and authority. Corporations
should provide full name of corporation and title of authorized
officer signing the ballot.
Admission
Ticket
PPL Corporation
Annual Meeting of Shareowners
10 a.m., May 21, 2008
Holiday Inn Conference Center
Fogelsville, Pennsylvania
April 10, 2008
Dear Shareowner,
It is a pleasure to invite you to attend the 2008 Annual Meeting
of Shareowners, which will be held at 10 a.m. on Wednesday,
May 21, 2008. The Annual Meeting will be held at the
Holiday Inn Conference Center, in Fogelsville, near the
intersection of I-78 and Route 100, west of Allentown. For your
convenience, a map showing our meeting location, along with
written directions, is included on the inside back cover of the
accompanying Proxy Statement.
Detailed information as to the business to be transacted at the
meeting is contained in the accompanying Notice of Annual
Meeting and Proxy Statement. We will conclude the formal portion
of the meeting with a discussion of the companys
operations, and a
question-and-answer
period will follow.
We hope you will be able to attend in person. If you plan to
attend the meeting, please bring this admission ticket with you
to the meeting. Please follow the instructions on the enclosed
proxy card for voting over the Internet, by telephone or by
returning your proxy card. If you are unable to attend the
meeting but have any questions or comments on the companys
operations, we would like to hear from you.
Your vote is important. Whether you own one share or many,
please vote as soon as possible so that you will be represented
at the meeting in accordance with your wishes.
Sincerely,
James H. Miller
Chairman, President and Chief Executive Officer