pre14a
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
Check the appropriate box:
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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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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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Fee paid previously with preliminary materials. |
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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 19, 2010
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 19, 2010. |
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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 listed herein for a term of
three years
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To amend the companys bylaws to eliminate
classification of terms of the board of directors
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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, 2010
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To consider two shareowner proposals, if properly
presented
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To consider such other business as may properly come
before the Annual Meeting and any adjournments or postponements
thereof.
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Record Date |
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You can vote if you are a shareowner of record on
February 26, 2010. |
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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 General
Information How do I vote? |
By Order of the Board of
Directors,
Robert J. Grey
Senior Vice President,
General Counsel and Secretary
April ,
2010
Important Notice
Regarding the Availability of Proxy
Materials for the Shareowner Meeting to Be Held on May 19,
2010:
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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Board Leadership Structure
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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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The Boards Role in Risk Oversight
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Compensation of Directors
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Annual Retainer
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One-time Grant of Restricted Stock Units
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Committee Retainers
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Presiding Director Retainer
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Other Fees
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Directors Deferred Compensation Plan
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2009 Director Compensation
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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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(i)
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Summary Compensation Table
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Grants of Plan-Based Awards During 2009
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Outstanding Equity Awards at Fiscal-Year End 2009
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Option Exercises and Stock Vested in 2009
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Pension Benefits in 2009
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Nonqualified Deferred Compensation in 2009
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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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Potential Payments upon Termination or Change in Control of PPL
Corporation
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PROPOSAL 2: COMPANY PROPOSAL TO AMEND THE
COMPANYS BYLAWS TO ELIMINATE CLASSIFICATION OF TERMS OF
THE BOARD OF DIRECTORS
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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 2009 and 2008
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Approval of Fees
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SHAREOWNER PROPOSALS
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PROPOSAL 4: SPECIAL SHAREOWNER MEETINGS
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PPLS STATEMENT IN RESPONSE TO PROPOSAL 4
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PROPOSAL 5: DIRECTOR ELECTION MAJORITY VOTE STANDARD
PROPOSAL
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PPLS STATEMENT IN RESPONSE TO PROPOSAL 5
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71
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ANNEX A
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A-1
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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 19, 2010
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 19, 2010, and at any
adjournment or postponement 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 , 2010.
GENERAL
INFORMATION
What am I
voting on?
There are five proposals scheduled to be voted on at the meeting:
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the election of three directors listed herein for a term of
three years;
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the amendment of the companys bylaws to eliminate
classification of terms of the board of directors;
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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,
2010; and
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consideration of two shareowner proposals, if properly presented
to the meeting.
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Who can
vote?
Holders of PPL Corporation common stock as of the close of
business on the record date, February 26, 2010, 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, 2009 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, 2009 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
1
instruction card included in their mailing or by following their
instructions for voting by telephone or on the Internet, if
offered. Under recent amendments to the rules of the New York
Stock Exchange, Proposal 1 Election of
Directors, is no longer a routine matter as to which
brokers, banks or other holders of record may vote in their
discretion on behalf of clients who have not furnished voting
instructions with respect to an uncontested director election.
The company urges you to instruct your broker, bank or other
holder of record on how to vote your shares.
How do I
vote?
If you are a shareowner of record, 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 telephone and Internet voting facilities for shareowners of
record will be available 24 hours a day, and will close at
11:59 p.m., Central Time, on May 18, 2010.
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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If you are a shareowner of record, 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. You may vote shares held in street name at the Annual
Meeting only if you obtain a signed proxy from the record holder
(broker or other nominee) giving you the right to vote the
shares. Please see the attendance requirements discussed under
Who can attend the Annual Meeting?
If you mail to us your properly completed and signed proxy card,
or vote by telephone or on the Internet, your shares of PPL
Corporation common stock will be voted according to the choices
2
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 listed herein for director;
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FOR the amendment of the companys bylaws to eliminate
classification of terms of the board of directors;
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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,
2010; and
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AGAINST the two shareowner proposals.
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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.
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 26, 2010 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 12:00 p.m. (noon), Central
Time, on May 14, 2010 if by mail, and if voting by
telephone or on the Internet, by 11:59 p.m., Central Time,
on May 14, 2010. 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 18, 2010;
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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. For
example, 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 the approval of
3
the companys proposal to amend the companys bylaws
to eliminate classification of terms of the board of directors
and for the ratification of the appointment of Ernst &
Young LLP, as these matters are considered routine under the
applicable rules. The election of directors is no longer
considered a routine matter as to which a broker, bank or other
holder of record may vote in their discretion on behalf of
clients who have not furnished voting instructions with respect
to an uncontested director election. The company urges you to
instruct your broker, bank or other holder of record on how to
vote your shares.
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 377,933,654 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 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, broker
non-votes and votes withheld from director nominees will
be counted as shares present and entitled to vote at the meeting
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?
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Election of Directors (Proposal 1)
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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.
In any uncontested election of directors (an election in which
the number of nominees is the same as the number of directors to
be elected), any incumbent director nominee who receives a
greater number of votes withheld from his or her
election than votes for such election must promptly
tender his or her resignation following the final tabulation of
shareowner votes. Your Board of Directors will decide whether to
accept the resignation within 90 days following the final
vote tabulation, through a process managed by the Compensation,
Governance and Nominating Committee, excluding the director in
question. Thereafter, your Board of Directors promptly will
disclose its decision whether to accept the directors
resignation (and the reasons for rejecting the resignation, if
applicable) in a
Form 8-K
filed with the Securities and Exchange Commission.
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Amendment of the Companys Bylaws to Eliminate
Classification of Terms of the Board of Directors
(Proposal 2)
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In order to approve the amendment of the companys bylaws
to eliminate classification of the Board of Directors, the
proposal must receive a majority of the votes cast, in person or
by proxy, by the shareowners voting as a single class.
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Ratification of the Appointment of Ernst & Young
LLP (Proposal 3)
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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.
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Shareowner Proposals (Proposals 4 and 5)
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In order to approve either shareowner proposal, the proposal
must receive a majority of the votes cast, in person or by
proxy, by the shareowners voting as a single class.
Proposal 1 is no longer considered a routine matter as to
which a broker, bank or other holder of record may vote in their
discretion on behalf of clients who have not furnished voting
instructions with respect to an uncontested director election.
Because the company has a plurality voting standard, broker
non-votes and abstentions will not affect the outcome of the
vote on this proposal.
Proposals 2 and 3 are routine matters under New
York Stock Exchange rules, and brokers, banks or other holders
of record may vote in their discretion on behalf of clients that
have not furnished voting instructions. Abstentions will not be
treated as votes cast and will have no effect on the outcome of
the vote on these proposals.
Proposals 4 and 5 are non-routine matters under
New York Stock Exchange rules and brokerage firms, banks or
other holders of record are prohibited from voting on each of
these proposals without receiving instructions from the
beneficial owners of the shares. In the case of Proposals 4
and 5, broker non-votes will not be considered as votes cast and
will have no effect on the outcome of the vote. Abstentions will
likewise not be treated as votes cast for purposes of
Proposals 4 and 5 and will have no effect on the outcome of
the vote.
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, plus reimbursement for
out-of-pocket
expenses. 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.
5
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 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
now or in the future from PPL promptly upon request to the
address and phone number for PPL listed on the back cover page
of this Proxy Statement. If beneficial owners sharing an address
wish to receive single copies of such materials in the future,
they should contact their broker, banker or other holder of
record.
When are the
2011 shareowner proposals due?
To be included in the proxy material for the 2011 Annual
Meeting, any proposal intended to be presented at that Annual
Meeting by a shareowner must be received by the Secretary of the
company in writing no later than December 10, 2010:
Corporate Secretarys Office
PPL Corporation
Two North Ninth Street
Allentown, Pennsylvania 18101
To be properly brought before the Annual Meeting, any other
proposal must be received not later than 75 days in advance
of the date of the 2011 Annual Meeting.
PROPOSAL 1:
ELECTION OF DIRECTORS
We have a classified Board of Directors, currently consisting of
11 directors divided into three classes. These classes
consist of four directors whose terms will expire at the 2010
Annual Meeting, four directors whose terms will expire at the
2011 Annual Meeting, and three directors whose terms will expire
at the 2012 Annual Meeting.
The nominees this year are Stuart E. Graham, Stuart Heydt and
Craig A. Rogerson. The nominees are currently serving as
directors. Messrs. Graham and Rogerson and Dr. Heydt
were elected by the shareowners at the 2007 Annual Meeting. W.
Keith Smith also serves in this class, but in compliance with
the companys current Guidelines for Corporate
Governance, Mr. Smith will retire prior to the 2010
Annual Meeting of Shareowners, which follows his
75th birthday. If elected by the shareowners,
Messrs. Graham and Rogerson and Dr. Heydt would serve
until the 2013 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 2011 Annual Meeting, three directors whose terms
would expire at the 2012 Annual Meeting, and three directors
whose terms would expire at the 2013 Annual Meeting. If the
shareowners approve Proposal 2 contained in this proxy
statement to declassify the Board of Directors, all terms would
expire at the 2011 Annual Meeting and all 10 directors
would be up for elections at that time.
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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STUART E. GRAHAM, 64, retired in April 2008 as President
and Chief Executive Officer of Sweden-based Skanska AB, an
international project development and construction company. He
continues to serve as chairman of Skanska USA Inc., a U.S.
subsidiary. Mr. Graham was named President and CEO of Skanska AB
and was elected to its board of directors in 2002. Prior to
that, Mr. Graham served as executive vice president of Skanska
AB and oversaw Skanskas business units in the United
States, the United Kingdom, Hong Kong and South America. Mr.
Graham served in a number of positions at Sordoni Construction
Company from 1970 until 1990, when its New Jersey operations
were acquired by Skanska. He is past chairman of the Engineering
and Construction Governors Council of the World Economic Forum
and founder of the Engineering and Construction Risk Institute.
He also serves as a member of the board of directors of Harsco
Corporation, Securitas AB and Skanska AB. Mr. Graham graduated
from Holy Cross College with a B.S. in economics. He is a member
of the Compensation, Governance and Nominating Committee, as
well as the Nuclear Oversight Committee. He has been a director
since July 2008.
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STUART HEYDT, 70, 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.
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CRAIG A. ROGERSON, 53, is Chairman, President and Chief
Executive Officer of Chemtura Corporation, a position he has
held since December 2008. Chemtura, located in Philadelphia,
Pennsylvania, is a global manufacturer and marketer of specialty
chemicals, crop protection and pool, spa and home care products.
Chemtura filed for protection under Chapter 11 of the United
States Bankruptcy Code in March 2009. Mr. Rogerson served as
President, Chief Executive Officer and director of Hercules
Incorporated until its acquisition by Ashland, Incorporated in
November 2008, a position he held since December 2003. Located
in Wilmington, Delaware, Hercules was a global 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. In May 2000, Mr. Rogerson rejoined Hercules
and was named President of its BetzDearborn Division in August
2000. Prior to being named CEO of Hercules in December 2003, Mr.
Rogerson held a variety of senior management positions with the
company, including president of the FiberVisions and Pinova
Divisions, Vice President of Global Procurement and Chief
Operating Officer. Mr. Rogerson serves on the boards of the
American Chemistry Council and the Society of Chemical
Industries. 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 2005.
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FREDERICK M. BERNTHAL, 67, is President of Universities
Research Association (URA), a position he has held
since 1994. Located in Washington, D.C., URA is a
consortium of 87 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; his term expires in 2011.
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JOHN W. CONWAY, 64, is Chairman of the Board, President
and Chief Executive Officer of Crown Holdings, Inc. of
Philadelphia, Pennsylvania, a position he has held since 2001.
Prior to that time, he served as President and Chief Operating
Officer. Crown is an 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 2012.
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E. ALLEN DEAVER, 74, 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 and is a former United
States Army officer. He began his Armstrong career in 1960 and
served as Executive Vice President for 10 years. Prior to
that time, he gained experience in a variety of engineering and
manufacturing positions in the United States and abroad. 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. While
his term is set to expire in 2012, he is expected to retire
prior to the 2011 Annual Meeting of Shareowners, which follows
his 75th birthday.
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LOUISE K. GOESER, 56, is President and Chief Executive
Officer of Grupo Siemens S.A. de C.V. and is responsible for
Siemens Mesoamérica. Siemens Mesoamérica is the
Mexican, Central American and Caribbean unit of multinational
Siemens AG, a global engineering company operating in the
industry, energy and healthcare sectors. Before accepting this
position in March 2009, Ms. Goeser served as President and Chief
Executive Officer of Ford of Mexico from January 2005 until
November 2008. 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 also serves as a director of MSC
Industrial Direct Co., Inc. She is a member of the Compensation,
Governance and Nominating Committee and has been a director
since 2003; her term expires in 2011.
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JAMES H. MILLER, 61, 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 2005;
his term expires in 2012.
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NATICA VON ALTHANN, 59, retired in June 2008 as the
Senior Credit Risk Management Executive for Bank of America, and
Chief Credit Officer of U.S. Trust, an investment management
company. Prior to being appointed to the Bank of America
position in 2007 after U.S. Trust was acquired by Bank of
America, Ms. von Althann served as Chief Credit Officer of U.S.
Trust since 2003. Prior to joining U.S. Trust in 2003, Ms. von
Althann served as managing director at IQ Venture Partners, an
investment banking boutique. Previously, she spent 26 years
at Citigroup, including in a number of senior management roles.
During her time at Citigroup, among other positions, she served
as managing director and co-head of Citicorps U.S.
Telecommunications-Technology group, managing director and
global industry head of the Retail and Apparel group and
division executive and market region head for Latin America in
the Citigroup private banking group. Ms. von Althann earned a
bachelors degree in political science from Bryn Mawr
College and completed masters-level work in Iberian and
Latin American history at the University of Cologne, Germany.
She serves as a director of TD Bank, N.A., and also serves on
the boards of two nonprofit organizations, YWCA of the City of
New York and Neighbors Link in Mt. Kisco, New York. She is a
member of the Audit and Finance Committees and has been a
director since December 2009; her term expires in 2011.
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KEITH H. WILLIAMSON, 57, is Senior Vice President,
Secretary and General Counsel of Centene Corporation, a position
he has held since 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 2005; his term expires
in 2011.
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GOVERNANCE OF THE
COMPANY
Board of
Directors
Attendance. The Board of
Directors met seven times during 2009. 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 2009 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 2009 Annual Meeting of Shareowners.
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), the Board
considers all relevant facts and circumstances in making an
independence determination. At its January 2010 meeting, the
Board determined that the following 10 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, Graham, Rogerson, Smith and
Williamson, and Mss. Goeser and von Althann.
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 Mr. Conway and Mr. Graham were officers at
companies with which PPL has engaged in business transactions in
the ordinary course. The Board reviewed all transactions with
each of these companies and determined that the annual amount of
sales to PPL in each fiscal year was significantly below
1 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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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.
10
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 $120,000 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
payments from, our 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.
Board Leadership Structure. The
positions of Chairman and Chief Executive Officer, or CEO, are
held by Mr. Miller. Mr. Deaver has served as a strong
independent lead director for a number of years. The
Board believes that the responsibilities delegated to the lead
director are substantially similar to many of the functions
typically fulfilled by a board chairman. The Board believes that
its lead director position balances the need for effective and
independent oversight of management with the need for strong,
unified leadership. Of our 11 directors, only
Mr. Miller is not independent from the company. All of our
committees, with the exception of the Executive Committee on
which Mr. Miller serves, are composed entirely of
independent directors and the agendas are driven by the
independent chairs through discussions with designated
management liaisons. Each independent director is encouraged to,
and does, regularly contact management with questions or
suggestions for agenda items. The Board does not believe that
the establishment of an independent Chairman is necessary or
recommended at the present time. The Board continues to have the
right to separate those roles if it were to determine that such
a separation would be in the best interest of the company, its
shareowners and other stakeholders.
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The lead director serves in the following roles:
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presides at all meetings of the Board at which the Chairman and
CEO is not present, including executive sessions of the
independent directors that occur at each Board meeting;
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serves as an adviser to the Chairman and CEO, as well as a
non-exclusive liaison between the independent directors and the
Chairman and CEO;
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responds directly to shareowner and other stakeholder questions
that are directed to the presiding or lead director, as well as
to the independent directors as a group;
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periodically reviews or suggests meeting agendas and schedules
for the Board and at least annually solicits suggestions from
the Board on meeting topics, such as strategy, management
performance and governance matters;
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leads the process for evaluating the performance of the CEO,
through his role as the Chair of the Compensation, Governance
and Nominating Committee; and
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fulfills such other responsibilities as the Board may from time
to time request.
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The Corporate Secretarys Office, together with any other
key employees requested by the lead director, provides support
to the lead director in fulfilling his role.
The Lead Director or the Board of Directors
c/o Corporate
Secretarys Office
PPL Corporation
Two North Ninth Street
Allentown, Pennsylvania 18101
The Corporate Secretarys Office 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).
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).
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 2009. 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 and the
companys standards of independence described above under
the heading 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, as amended, or the
Exchange Act, and is an outside director as defined
in Section 162(m) of the Internal Revenue Code. This
committee met five times in 2009. The members of the CGNC are
Mr. Deaver (chair), Mr. Conway, Ms. Goeser,
Mr. Graham 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 our executive compensation plans, including the design of,
performance measures and award opportunities for, the executive
incentive programs, and some employee benefits. The CGNC has
delegated the ability to authorize stock awards to
non-executive
officers within the terms of a stock plan to the Corporate
Leadership Council, composed of the top four senior executive
officers.
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
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 Watson (known prior to January 2010
as Towers Perrin), a nationally known executive compensation and
benefits consulting firm, to advise it on a regular basis on
executive compensation and benefit
13
programs. Towers Watson 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 Watson
regularly participate in CGNC meetings and provide advice as to
compensation trends and best practices, plan design and
competitive market comparisons.
The CGNC regularly engages Towers Watson to provide the
following information and analyses:
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Utility Industry Executive Compensation Trends
Presentation provides a report on current trends in
utility industry executive compensation.
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Director Pay Analysis reviews the pay program for
PPLs non-employee directors relative to a group of utility
companies and to a broad spectrum of general industry companies.
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Executive Compensation Analysis provides a review of
compensation for the top 25 executive positions of PPL,
including all of the executive officers. This review includes
both utility and general industry medians and
75th percentile data and it results in a report on the
compensation of executive officers and competitive market data.
A detailed discussion of the competitive market comparison
process is provided below, in Compensation Discussion and
Analysis-Compensation Elements-Direct Compensation.
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Change in Control Analysis conducted annually to
prepare calculations of severance benefit and tax
gross-up
values for named executive officers for disclosure in the proxy
statement (see Termination Benefits on page 58
and Potential Payments upon Termination or Change in
Control of PPL Corporation table on page 62).
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Additionally, management may request analyses or information
from Towers Watson in order to assist it in the administration
of the executive compensation programs, including competitive
analysis on new executive positions and valuation support for
the companys stock award program such as
Black-Scholes calculations for stock options and the valuation
of performance unit grants for accounting purposes.
The vice president of Human Resources and Services is
managements liaison to the CGNC, and his staff provides
support for the CGNC and regularly interacts with Towers Watson.
Annually, the CGNC requests Towers Watsons Utility
Industry Executive Compensation Trends report at its July
meeting and continues with a detailed analysis of competitive
pay levels and practices at its year-end meeting. The CGNC uses
this analysis to provide a general understanding of current
market practices 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 long-term incentive program for the upcoming year, based
on industry and market conditions and other factors. All of the
incentive 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 Exchange Act,
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: (1) the executive officers
who report directly to him; (2) the presidents of the major
business lines who report to the chief operating officer, or
COO, with input from the COO; and (3) the treasurer and the
controller, with input from the chief financial officer. The CEO
presents his compensation recommendations to the CGNC and, based
in large part on such recommendations, the CGNC approves the
annual compensation, including salary, incentive compensation
and other remuneration of such executive officers. In preparing
his recommendations, the CEO may discuss his evaluations and
potential recommendations with the vice president of Human
Resources and Services and representatives of Towers Watson. The
CEO does not discuss his own compensation with Towers Watson.
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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
Watson also assists the CGNC with this determination.
Towers Watson also regularly provides the company with other
services, such as actuarial valuation of pension plans and
retiree welfare plans, due diligence reviews of acquisition
opportunities and workforce management and human resource
consulting services. Additionally, during 2009, Towers Watson
also assisted the company with a review of its risk management
processes and procedures. The CGNC annually reviews, but does
not formally approve, total expenditures paid to Towers Watson,
and specifically approves expenditures for executive
compensation consulting. Management reviews and approves all
other expenses. In 2009, the aggregate amount paid to Towers
Watson for executive compensation consultant services to the
CGNC was $329,000, and the amount paid for all other services
was $1,370,000.
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 candidates who have certain prior
experience relevant to serving 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. The CGNC
believes that while diversity and variety of experiences and
viewpoints represented on the board should always be considered,
a director nominee should not be chosen nor excluded solely or
largely because of race, color, gender, national origin or
sexual orientation or identity. In selecting a director nominee,
the CGNC focuses on skills, expertise or background that would
complement the existing board, recognizing that the
companys businesses and operations are diverse and global
in nature. Our directors come from diverse backgrounds including
industrial, financial, non-profit and healthcare. 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 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, the chair of
the CGNC, and other members of the CGNC if available, then
interview the prospective candidates in person. After completing
the interview and evaluation process, which includes evaluating
the prospective nominee against the standards and
15
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 nominee
after considering the recommendation and report of the CGNC.
When considering whether the Boards directors and nominees
have the experience, qualifications, attributes and skills,
taken as a whole, to enable the Board to satisfy its oversight
responsibilities effectively in light of the companys
business and structure, the Board focused primarily on the
information discussed in each of the Board members or
nominees biographical information set forth on
pages 7 to 10. In particular, with regards to
Dr. Bernthal, the Board considered his service with the
U.S. Nuclear Regulatory Commission and his governmental and
leadership experience. With regards to Mr. Conway, the
Board considered his general business background and his
leadership expertise as a CEO of a publicly traded company. With
regards to Mr. Deaver, the Board considered his engineering
and general business background, as well as his senior executive
experience. With regards to Ms. Goeser, the Board
considered her leadership and business experience in a variety
of industry positions. With regards to Mr. Miller, the
Board considered his operating and nuclear experience. With
regards to Ms. von Althann, the Board considered her financial
and risk management experience, as well as senior management
experience. With regards to Mr. Williamson, the Board
considered his general business, finance and legal background.
In connection with the nominations of Messrs. Graham and
Rogerson and Dr. Heydt for election as directors at the
2010 Annual Meeting of Shareowners, the Board considered their
contributions to the companys success during their
previous years of Board service. In addition, the Board
considered Mr. Grahams international construction and
development experience, as well as his leadership skills from
serving as a CEO of a publicly traded company. The Board
considered Dr. Heydts business experience and
leadership expertise from serving as CEO of a large healthcare
system and Mr. Rogersons general business background
and his leadership expertise as a CEO of several publicly traded
companies.
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 2011 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).
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to review and approve annually the business plan for the company;
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to approve 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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16
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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 six times in 2009. The members of the Finance
Committee are Mr. Smith (chair), Messrs. Conway,
Deaver and Williamson and Ms. von Althann.
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to assist the Board of Directors in the fulfillment of its
responsibilities for oversight of the companys nuclear
operations;
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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 operations.
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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 2009. The members of the
Nuclear Oversight Committee are Dr. Bernthal (chair),
Messrs. Deaver, Graham and Rogerson and Dr. Heydt.
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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 identification and management of risk;
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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). The Audit Committee
met eight times during 2009. 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 rules
of 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. von Althann. Our Board of Directors has determined that
Mr. Smith and Ms. von Althann are audit committee financial
experts as defined by the rules and regulations of the SEC.
Mr. Smith, who currently is a member of the Audit
Committee, has reached the Boards mandatory retirement age
and, therefore, has not been renominated for re-election.
Mr. Smith will retire from the Board prior to the Annual
Meeting.
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 registered public accounting firm, or
independent auditor, is responsible for auditing the
companys annual financial statements, expressing an
opinion as to whether the financial
17
statements present fairly, in all material respects, the
companys financial position and results of operations in
conformity with U.S. 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
(PCAOB). 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.
In its capacity as a Committee of the Board of Directors, the
Audit Committee is directly responsible for the appointment,
compensation, retention and oversight of the work of the
independent auditor. The independent auditor reports directly to
the Audit Committee and the Audit Committee is responsible for
preapproving all audit and permitted non-audit services to be
provided by the independent auditor. 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 applicable Auditing
Standards as periodically adopted or amended, including the
appropriateness and application of accounting principles.
The Audit Committee has received the written disclosures and the
letter from its independent auditor required by applicable
requirements of the PCAOB and the American Institute of
Certified Public Accountants (AICPA) regarding the independent
auditors communications with the Audit Committee
concerning independence, 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 together with
management and the independent auditor, managements
assessment of internal controls relating to the adequacy and
effectiveness of financial reporting. The Audit Committee has
also discussed with company management and the internal 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 and
managements assessment of the effectiveness of the
companys internal control over financial reporting be
included in the companys Annual Report on
Form 10-K
for the year ended December 31, 2009.
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). Also, the
Audit Committees procedures and practices comply with the
requirements of the SEC and the NYSE applicable to corporate
audit committees.
The Audit Committee
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Stuart Heydt, Chair
Frederick M. Bernthal
W. Keith Smith
Natica von Althann
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The Boards
Role in Risk Oversight
The Board provides oversight of the companys risk
management practices. The Board reviews material risks
associated with the companys business plan periodically as
part of its consideration of
18
the ongoing operations and strategic direction of the company.
At meetings of the Board and its committees, directors receive
periodic updates from management regarding risk management
activities. Outside of formal meetings, the Board, its
committees and individual Board members have full access to
senior executives and other key employees, including the CFO,
the COO, and the chief risk officer, or CRO.
Each of the committees of the Board, other than the Executive
Committee, reports regularly to the full Board on risk-related
matters. The committees also oversee the management of material
risks that fall within such committees areas of
responsibility. In performing this function, each committee has
full access to management, as well as the ability to engage
advisors. The CRO communicates key risks to the Audit and
Finance Committees. This communication includes the
identification of key risks, emerging risks and how these risks
are being managed.
A primary function of the Audit Committee is to assist the Board
in the oversight of the identification and management of risk.
More specifically, the Audit Committee is responsible for the
review of the companys process for identifying, assessing
and managing business risks and exposures and discussing related
guidelines and procedures. The Audit Committee regularly reviews
risk management activities related to the financial statements,
legal and compliance matters, information technology and other
key areas. The Audit Committee also periodically meets in
executive session with representatives from the companys
independent registered public accounting firm, the Executive
Director-Corporate Audit Services and the Senior
Director-Business Ethics and Compliance.
The Audit Committee also oversees the companys enterprise
risk management process. The CRO has responsibility for leading
the Companys enterprise risk management process. The
companys Risk Management group and Corporate Audit
Services department report to the Audit Committee regarding key
risk matters. The Executive Director-Corporate Audit Services
directly reports to the Audit Committee.
The Finance Committee is responsible for, among other items
provided in its Charter, reviewing, approving and monitoring the
policies and practices to be followed by the company and its
subsidiaries in managing market risk, credit risk, liquidity
risk and currency risk. The companys internal Risk
Management Committee is chaired by the CRO. The Risk Management
Committee and the CRO serve at the direction of the Finance
Committee for providing oversight of risk management activities
related to buying and selling electric energy and gas, fuel
procurement and the issuance of corporate debt.
The Compensation, Governance and Nominating Committee considers
various risks including those related to the attraction and
retention of talent, the design of compensation programs,
succession planning, governance matters and the identification
of qualified individuals to become board members. The company
has determined that any risks arising from its compensation
policies and practices for its employees are not reasonably
likely to have a material adverse effect on the company.
The Nuclear Oversight Committee considers risks in connection
with its responsibilities for oversight of the companys
nuclear function, including various risks related to ensuring
the company has appropriate systems in place to protect the
health and safety of the public and maintain compliance with
applicable laws and regulations.
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 2009, directors who were not employees of
PPL, except for Messrs. Rogerson and Williamson, received
an annual retainer of $141,400, of which a minimum of $96,400
was mandatorily allocated to a deferred stock account under the
Directors Deferred Compensation Plan, or DDCP.
Messrs. Rogerson and Williamson, for the reasons explained
below, received an annual retainer of $110,000, of which $65,000
was mandatorily allocated to a deferred stock account under the
DDCP. The remaining $45,000 portion of the annual retainer for
all directors was paid in cash in monthly installments to each
director, unless
19
voluntarily deferred to their stock account or to their deferred
cash account (as discussed below), and the stock portion was
allocated in monthly installments to each directors
deferred stock account.
In June 2008, the Board revised the terms of the annual retainer
paid to directors for service on the Board. As described below
in One-time Grant of Restricted Stock
Units, prior to the effective date of this revision, upon
a directors first-time election to the Board, the director
received a one-time award of 7,000 deferred restricted stock
units, or Special Stock Units, mandatorily allocated
to the directors deferred stock account in the DDCP.
Special Stock Units are subject to a five-year restriction
period and forfeiture in the event a director leaves the Board
before the five-year restriction period lapses. Effective
June 16, 2008, the award of Special Stock Units to newly
elected directors was eliminated, and the annual retainer was
increased to $141,400, of which $96,400 is mandatorily allocated
to the directors deferred stock account in the DDCP. The
remaining $45,000, which is paid in cash, did not change. The
new retainer terms are applicable (1) to all new directors
who join the Board on or after June 16, 2008, including
Mr. Graham and Ms. von Althann, and (2) to ongoing
directors serving on our Board as of June 16, 2008,
beginning on January 1 of the year immediately following the
year in which the restrictions on their Special Stock Units
lapse. Because Messrs. Rogerson and Williamson joined the
Board after most of the other Board members, except
Mr. Graham and Ms. von Althann, their Special Stock Units
will not vest until September 1, 2010 and they will not
receive the increased retainer until January 1, 2011. The
increase to the portion of the annual retainer that is
mandatorily allocated to a deferred stock account is to replace
the loss in value of the Special Stock Units as they vest.
Each deferred stock unit represents the right to receive a share
of PPL common stock and is fully vested upon grant, except for
the Special Stock Units, but does not have voting rights.
Deferred stock units accumulate quarterly dividend-equivalent
payments, which are reinvested in additional deferred stock
units.
Effective January 1, 2010, the annual retainer increased by
$10,000 for all directors, with a $5,000 increase to the cash
portion and a $5,000 increase to the portion mandatorily
allocated to a deferred stock account.
One-time Grant of Restricted Stock
Units. Each non-employee director who was on the
Board on January 1, 2004 received Special Stock Units as a
one-time additional retainer equal to 7,000 deferred restricted
stock units (which reflect the
2-for-1
common stock split completed in August 2005), which were
mandatorily allocated to such directors deferred stock
account under the DDCP. Any new director joining the Board of
Directors after that time, but before June 2008, also received
this one-time additional retainer of Special 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 five-year restriction period ends. The
five-year restriction period for all directors, except for
Messrs. Rogerson and Williamson, lapsed on
December 31, 2008. Messrs. Rogerson and Williamson did
not receive their one-time awards until September 1, 2005,
when they joined the Board, so their restrictions will lapse on
September 1, 2010. They will start receiving the same
mandatory deferral into their stock accounts as all of the other
directors as of January 1, 2011. In June 2008, the Board
eliminated the award of any new Special Stock Units to newly
elected directors. As a result, no such award was granted to
Mr. Graham when he joined the Board on July 1, 2008 or
to Ms. von Althann when she joined the Board on December 1,
2009, but each such director received the higher adjusted
retainer.
Committee Retainers. During
2009, 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 during 2009. Effective
January 1, 2010, the Audit Committee Chair receives an
annual cash retainer of $15,000, while all other committee
chairs receive an annual cash retainer of $10,000.
Presiding Director Retainer. The
presiding director, who is also our lead independent
director, receives an annual cash retainer of $30,000, which is
paid in monthly installments.
20
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. Effective
January 1, 2010, the fee for participating in meetings held
by telephone conference call increased to $1,000 per call. PPL
also reimburses each director for usual and customary travel
expenses.
Directors Deferred Compensation
Plan. Pursuant to the 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 the deferred
stock account. The deferred cash account earns a return as if
the funds had been invested in one or more of the core
investment options offered to employees as part of PPLs
401(k) plans, including publicly available mutual funds,
institutionally managed funds and lifestyle funds
available from a mutual fund provider (for 2009, the lifestyle
funds were Fidelity Investments Freedom Funds). The
brokerage account option that is available to employees is not
available to directors. For 2009, only two directors elected to
defer any of their cash retainer or fees into a deferred cash
account. The first director deferred cash into a stable value
fund managed by Fidelity, which had a rate of return of 2.89%
for 2009. The second director deferred cash into the Fidelity
Investments Freedom Fund 2020, which had a rate of
return of 28.86% for 2009. 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.
The following table summarizes all compensation earned during
2009 by our non-employee directors.
2009 DIRECTOR
COMPENSATION
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Fees Earned
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or Paid
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in Cash
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Deferred into
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Paid in
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Restricted
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Stock
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All Other
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Name of Director
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Cash(3)
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Stock
Units(4)
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Awards(5)
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Compensation(6)
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Total
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Frederick M. Bernthal
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$
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0
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$
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72,700
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$
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96,400
|
|
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$
|
485
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$
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169,585
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John W. Conway
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0
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60,800
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96,400
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|
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485
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157,685
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E. Allen Deaver
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105,500
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0
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96,400
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485
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202,385
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Louise K. Goeser
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58,900
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0
|
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96,400
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|
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485
|
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155,785
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Stuart E. Graham
|
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65,100
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0
|
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96,400
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|
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485
|
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161,985
|
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Stuart Heydt
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82,600
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0
|
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96,400
|
|
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485
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179,485
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Craig A. Rogerson
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58,700
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0
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65,000
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485
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124,185
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W. Keith Smith
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0
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70,100
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96,400
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485
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166,985
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Susan M.
Stalnecker(1)
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0
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0
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0
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0
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0
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Natica von
Althann(2)
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6,750
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0
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8,033
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40
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14,823
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Keith H. Williamson
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58,400
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0
|
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65,000
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|
|
|
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485
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|
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123,885
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|
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(1) |
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Ms. Stalnecker resigned from the Board on January 12,
2009 due to scheduling conflicts and did not receive any
director compensation for 2009. |
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(2) |
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Ms. von Althann joined the Board on December 1, 2009. |
21
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(3) |
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This column reports the amount of retainers and fees actually
paid in cash or deferred into cash accounts in 2009 for Board
and committee service by each director, including a $30,000
annual cash retainer for Mr. Deaver for serving as
presiding director and the cash retainers for the committee
chairs: Dr. Heydt (Audit $11,000),
Dr. Bernthal (Nuclear Oversight $6,000) and
Messrs. Deaver (CGNC $6,000) and Smith
(Finance $6,000). Messrs. Deaver and Rogerson
voluntarily deferred $75,500 and $58,700, respectively, of cash
fees into their deferred cash accounts under PPLs DDCP and
these amounts are included in this column for each such director. |
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(4) |
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This column reports the dollar amount of retainers and fees
voluntarily deferred into restricted stock accounts under the
DDCP. Dr. Bernthal and Messrs. Conway and Smith
voluntarily deferred all of their cash retainers and fees into
their deferred stock accounts under the DDCP. |
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(5) |
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This column represents the grant date fair value of mandatorily
deferred stock units granted during 2009 as calculated under ASC
Topic 718 as of the date of grant. For additional information on
PPLs accounting methods and assumptions for stock-based
awards, refer to Notes 1 and 11 of the PPL financial
statements in the Annual Report on Form 10-K for the year
ended December 31, 2009, as filed with the SEC. The grant
date fair value for the deferred stock units was calculated
using the mean of the high and low sales prices of PPL stock on
the date of grant. |
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As of December 31, 2009, 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 of Messrs. Rogerson and
Williamson. Their one-time awards will vest on September 1,
2010. |
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(6) |
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This column shows the dollar value of life insurance premiums
paid by the company during 2009 for each director. The company
provides life insurance to each director equal to twice the
amount of the annual retainer fee. |
22
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 5, 2010 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.
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Shares of
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Common Stock
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Name
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|
Owned(1)
|
|
|
F. M. Bernthal
|
|
|
76,907
|
(2)
|
J. W. Conway
|
|
|
56,481
|
(3)
|
E. A. Deaver
|
|
|
74,483
|
(4)(5)
|
D. G. DeCampli
|
|
|
117,549
|
(6)
|
P. A. Farr
|
|
|
335,212
|
(7)
|
L. K. Goeser
|
|
|
24,731
|
(8)
|
S. E. Graham
|
|
|
10,208
|
(9)
|
R. J. Grey
|
|
|
326,088
|
(10)
|
S. Heydt
|
|
|
69,721
|
(5)(11)
|
J. H. Miller
|
|
|
983,253
|
(12)
|
C. A. Rogerson
|
|
|
16,767
|
(13)
|
W. K. Smith
|
|
|
58,438
|
(14)
|
W. H. Spence
|
|
|
298,849
|
(15)
|
N. von Althann
|
|
|
822
|
(16)
|
K. H. Williamson
|
|
|
16,767
|
(17)
|
All 19 executive officers and directors as a group
|
|
|
2,907,622
|
(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 76,907 shares credited to
Mr. Bernthals deferred stock account under the DDCP. |
|
(3) |
|
Includes 53,685 shares credited to Mr. Conways
deferred stock account under the DDCP. |
|
(4) |
|
Includes 65,437 shares credited to Mr. Deavers
deferred stock account under the DDCP. |
|
(5) |
|
Includes additional deferred stock credited to their accounts in
connection with the termination of the Directors Retirement Plan
in 1996, as follows: Mr. Deaver
5,002 shares and Dr. Heydt
3,729 shares. |
|
(6) |
|
Includes 30,000 shares of restricted stock, 29,920
restricted stock units and 50,039 shares of common stock
that may be acquired within 60 days upon the exercise of
stock options granted under the ICP. |
23
|
|
|
(7) |
|
Includes 40,000 shares of restricted stock, 57,390
restricted stock units and 207,206 shares of common stock
that may be acquired within 60 days upon the exercise of
stock options granted under the ICP. |
|
(8) |
|
Includes 24,731 shares credited to Ms. Goesers
deferred stock account under the DDCP. |
|
(9) |
|
Includes 5,208 shares credited to Mr. Grahams
deferred stock account under the DDCP. |
|
(10) |
|
Includes 38,520 restricted stock units and 286,803 shares
of common stock that may be acquired within 60 days upon
the exercise of stock options granted under the ICP. |
|
(11) |
|
Includes 65,991 shares credited to Dr. Heydts
deferred stock account under the DDCP. |
|
(12) |
|
Includes 153,000 restricted stock units and 804,526 shares
of common stock that may be acquired within 60 days upon
the exercise of stock options granted under the ICP. |
|
(13) |
|
Includes 16,767 shares credited to Mr. Rogersons
deferred stock account under the DDCP. |
|
(14) |
|
Includes 57,138 shares credited to Mr. Smiths
deferred stock account under the DDCP. |
|
(15) |
|
Includes 86,860 restricted stock units and 196,713 shares
of common stock that may be acquired within 60 days upon
the exercise of stock options granted under the ICP. |
|
(16) |
|
Includes 822 shares credited to Ms. von Althanns
deferred stock account under the DDCP. |
|
(17) |
|
Includes 16,767 shares credited to
Mr. Williamsons deferred stock account under the DDCP. |
|
(18) |
|
Includes 70,000 shares of restricted stock, 439,760
restricted stock units, 1,844,287 shares of common stock
that may be acquired within 60 days upon the exercise of
stock options granted under the ICP, 8,731 additional shares
credited to directors accounts in connection with the
termination of a retirement plan, and 383,452 shares
credited to the directors deferred stock accounts under
the DDCP. |
Principal
Shareowners
Based on filings made under Sections 13(d) and 13(g) of the
Exchange Act, as of February 16, 2010, the only persons
known by the company to be beneficial owners of more than 5% of
PPLs common stock are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount and Nature
|
|
|
|
|
|
|
|
|
|
|
of Beneficial
|
|
|
|
|
|
|
|
Name and Address of Beneficial Owner
|
|
|
Ownership
|
|
|
|
Percent of Class
|
|
|
|
BlackRock,
Inc.(1)
40 East
52nd
Street,
New York, NY 10022
|
|
|
|
22,192,647
|
|
|
|
|
5.89%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital World
Investors(2)
333 South Hope Street,
Los Angeles, CA 90071
|
|
|
|
29,100,000
|
|
|
|
|
7.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Based solely on a review of the Schedule 13G filed by
BlackRock, Inc. with the SEC on January 29, 2010. As
reported on the Schedule 13G, as of December 31, 2009,
BlackRock, Inc. had sole voting and dispositive power with
respect to 22,192,647 shares held by BlackRock Asset
Management Japan Limited, BlackRock Advisors (UK) Limited,
BlackRock Institutional Trust Company, N.A., BlackRock
Fund Advisors, BlackRock Asset Management Canada Limited,
BlackRock Asset Management Australia Limited, BlackRock
Advisors, LLC, BlackRock Financial Management, Inc., BlackRock
Investment Management, LLC, BlackRock Investment Management
(Australia) Limited, BlackRock Investment Management (Dublin)
Ltd, BlackRock (Luxembourg) S.A., BlackRock Fund Managers
Ltd, BlackRock International Ltd, and BlackRock Investment
Management UK Ltd. |
|
(2) |
|
Based solely on a review of the Schedule 13G/A filed by
Capital World Investors with the SEC on February 10, 2010.
As reported on the Schedule 13G/A, as of December 31,
2009, Capital World Investors, a division of Capital Research
and Management Company, had sole dispositive power |
24
|
|
|
|
|
with respect to 29,100,000 shares and had disclaimed
beneficial ownership of the shares pursuant to
Rule 13d-4
under the Exchange Act. |
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
To our knowledge, our directors and executive officers met all
filing requirements under Section 16(a) of the Exchange Act
during 2009.
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 to identify 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. We also review any payments made
by the company or its subsidiaries to, or any payments received
by the company and its subsidiaries from, any shareowner who
owns more than 5% of any class of PPL Corporations voting
securities. 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,
review and consider the relevant facts and circumstances and
determine whether to approve, deny or ratify the related-person
transaction.
BlackRock, Inc. filed a Schedule 13G in January 2010
stating that it holds 5.89% of PPLs common stock. As a
result of beneficially owning more than 5% of PPLs common
stock, BlackRock is currently considered a related
person under PPLs related-person transaction policy.
After conducting a review of any relationships between BlackRock
and its subsidiaries and our company and its subsidiaries, the
company determined that the company invests its short-term cash
overnight in money market funds managed by BlackRock
Institutional Management Corporation, which received fees in the
amount of approximately $244,000 during 2009. Certain affiliates
of BlackRock also provided asset management investment services
for the companys U.S. retirement plan trust and one
of the companys legacy pension trusts in the United
Kingdom, both of which are separate from the company and are
managed by independent trustees. These relationships were
reviewed and ratified by the Board of Directors in compliance
with the companys related-person transaction policy.
25
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 the year ended December 31, 2009 and included in this
Proxy Statement.
Compensation, Governance and Nominating Committee
|
|
|
|
|
E. Allen Deaver, Chair
John W. Conway
Louise K. Goeser
Stuart E. Graham
Stuart Heydt
|
Compensation
Discussion and Analysis (CD&A)
2009
Summary
|
|
|
|
|
Total direct compensation awarded to our executive officers is
composed of base salary, annual short-term cash incentives, and
mid- and long-term stock-based incentives. Over 80% of total
direct compensation of the chief executive officer each year is
at risk, while over 70% of total direct compensation
of all the executive officers each year is at risk.
|
|
|
|
Our compensation program reflects the companys ongoing
commitment to a
pay-for-performance
philosophy, where executive compensation is linked to company
performance and, in some instances, to individual performance.
For example, in 2008, the prior reporting period, net income and
earnings from ongoing operations fell short of targeted goals
and no annual short-term cash incentive awards were made to
those named executive officers who serve on the companys
Corporate Leadership Council.
|
|
|
|
Despite a difficult operating environment, 2009 net income
and earnings from ongoing operations substantially exceeded
target performance and executive officers received annual cash
incentive awards rewarding that performance.
|
|
|
|
A mix of equity-based awards will continue to play an important
role in this difficult economic environment, because they reward
named executive officers for the achievement of long-term
business objectives and provide incentives for the creation of
shareowner value.
|
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. Because
executive officer performance has the potential to affect the
companys profitability, the elements of our executive
compensation program are intended to further the companys
business objectives 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 total direct
compensation salary and a combination of annual cash
and stock-based incentive awards which is intended
to provide an appropriate, competitive level of compensation, to
reward recent performance results and to motivate longer-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 regularly
salary
26
with 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 PPLs executive compensation program
provide: the ability for executives to accumulate capital,
predominantly in the form of equity to align executive interests
with those of our 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, regularly
reviews the executive compensation program and each of its
components.
Compensation
Elements
Our executive compensation program consists of: (1) direct
compensation; (2) indirect compensation; and
(3) special compensation.
Direct
Compensation
The direct compensation program includes salary, an annual cash
incentive award and stock-based, long-term incentive awards.
Stock-based incentive awards are granted in three forms of
equity: restricted stock units, performance units and stock
options.
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
objectives;
|
|
|
|
Achievement of sustained financial results through
performance-based restricted stock unit awards;
|
|
|
|
Medium-term financial performance through peer-group relative
performance-based performance unit awards; and
|
|
|
|
Stock price growth through awards of stock options.
|
In general, we offer a direct compensation program that is
intended, in the aggregate, to be competitive with 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 provided by the Committees compensation consultant,
Towers Watson (prior to January 1, 2010, known as Towers
Perrin), based on companies of similar size in terms of revenue
scope, both in the energy services industry and general industry
companies other than energy services or financial services
companies. In providing these competitive data, Towers Watson
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 90 corporate participants) and Benchmark
Compensation Survey of Energy Trading and Marketing Positions
(approximately 70 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. We do
not generally review specific pay levels of individual survey
companies but rather review the statistical median of a large
group of companies in order to better understand the market for
27
executive-level
positions with minimal
year-to-year
volatility that might exist when surveying a smaller group of
companies. The result of these analyses produces a market median
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 purposes of maintaining
internal equity across business lines and corporate positions
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 in conjunction with the respective
executive officers performance, expertise and experience
for evaluating salary levels to ensure that PPL direct
compensation remains competitive in the aggregate, as well as to
set target incentive levels for different levels of executives.
For example, salary amounts for a particular position are based
on the chief executive officers assessment (other than
with respect to his own compensation), with input from the chief
operating officer and the chief financial officer, as
appropriate, and the Committees assessment of the
individuals performance, expertise and experience. Total
direct compensation in relation to other executives, as well as
prior year individual performance and performance of the
business line for which the executive is responsible, are also
taken into consideration in determining any adjustment in pay
level. Pay levels are reviewed based on the PPL competitive data
provided by the compensation consultants analyses to
ensure competitive pay is maintained to retain incumbent talent
and to attract required expertise. The PPL competitive data are
also used to ensure that recommended compensation levels provide
competitive compensation for PPL executives over time.
In addition to assessing competitive trends and general pay
levels, Towers Watson reports to the Committee regularly, and in
particular at each July meeting, on recent and emerging
compensation 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 and
performance 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 2009, 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
compensation annual and long-term is
targeted to represent more than 80% of our CEOs direct
pay, with over 60% stock-based and linked to longer-term
financial performance.
TABLE 1
Elements of
Targeted Compensation as a Percentage of Total Direct
Compensation
2009(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of Total Direct Compensation
|
|
|
|
|
|
Chief Executive
|
|
|
Chief Financial
|
|
|
Other Executive
|
|
|
Direct Compensation
Element
|
|
|
Officer
|
|
|
Officer
|
|
|
Officers(2)
(average)
|
|
|
Salary
|
|
|
17.9%
|
|
|
25.3%
|
|
|
30.5%
|
|
|
|
Target Annual Cash Incentive Award
|
|
|
19.6%
|
|
|
19.0%
|
|
|
18.7%
|
|
|
|
Target Long-term Incentive Awards
|
|
|
62.5%
|
|
|
55.7%
|
|
|
50.8%
|
|
|
|
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
|
|
|
|
(1) |
|
Percentages based on target award levels as a percentage of
total direct compensation. Values of restricted stock units,
performance units and stock option awards shown in the Summary |
28
|
|
|
|
|
Compensation Table in this Proxy Statement for 2009 reflect
equity awards granted in 2009. Restricted stock unit awards
granted in 2009 are based on company performance prior to 2009. |
|
(2) |
|
Includes the positions of Chief Operating Officer; Senior Vice
President, General Counsel and Secretary; and three 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, they are paid regularly and are not contingent on
attainment of specific objectives. Salaries are established
annually based on the expertise and experience of each executive
and sustained individual performance and performance of the
business line for which the executive is responsible, if
applicable. In determining individual performance, we review
individual effectiveness, business line results, if applicable,
and conformity with expected behavior based on PPLs
corporate values. Additionally, the critical need for a
particular executives skill and an overall assessment of
an executives pay in relation to others within the company
are considered in determining an individuals base salary.
Once pay levels are established using this criteria, we review
the level of pay relative to the PPL competitive data.
Generally, we expect to pay salaries at the median of the PPL
competitive data. Salaries are considered paid competitively if
they are within 15% of the PPL competitive data median, or
within the PPL competitive range for a particular position. For
example, if the median of 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. An executives salary would
be expected to be within this competitive range over
time there is no established policy to
prescriptively align with any particular market position.
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.
29
At its meeting on January 22, 2009, the Committee approved
base salaries for the named executive officers as described
below:
TABLE 2
2009 Salary
Adjustments by Position
(effective
January 1, 2009 unless otherwise noted)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PPL Competitive
|
|
|
|
|
|
|
|
|
Name and Position
|
|
|
Prior Salary
|
|
|
Range
|
|
|
2009 Salary
|
|
|
% Change
|
|
|
J. H. Miller
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chairman, President and Chief
Executive Officer
|
|
|
$
|
1,145,000
|
|
|
|
|
$922,000-$1,248,000
|
|
|
|
$
|
1,145,000
|
|
|
|
0.0%
|
|
|
|
W. H. Spence
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Vice President and Chief Operating Officer
|
|
|
$
|
660,000
|
|
|
|
|
$582,000-$788,000
|
|
|
|
$
|
660,000
|
|
|
|
0.0%
|
|
|
|
P. A. Farr
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
$
|
500,000
|
|
|
|
|
$493,000-$667,000
|
|
|
|
$
|
535,000
|
|
|
|
7.0%
|
|
|
|
R. J. Grey
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior Vice President, General Counsel and Secretary
|
|
|
$
|
425,900
|
|
|
|
|
$374,000-$506,000
|
|
|
|
$
|
425,900
|
|
|
|
0.0%
|
|
|
|
D. G. DeCampli*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President of PPL Electric
Utilities Corporation
|
|
|
$
|
350,000
|
|
|
|
|
$361,000-$489,000
|
|
|
|
$
|
400,000
|
|
|
|
14.3%
|
|
|
|
|
|
|
* |
|
Mr. DeCamplis salary was set at $380,000 in January 2009.
Effective May 18, 2009, his salary was increased to
$400,000. |
For 2009, in light of the challenges experienced by the company
during 2008, the Committee generally made no change in salaries
for the Corporate Leadership Council, or CLC, members, which
includes Messrs. Miller, Spence, Farr and Grey. The CLC
also received no annual cash incentive awards in early 2009 for
the 2008 performance year. A salary adjustment, however, was
approved for Mr. Farr as discussed below. Other executive
officers, including presidents of major operating subsidiaries,
including Mr. DeCampli, were considered for salary
increases based on their individual expertise and experience,
their performance, their pay relative to other executives and
the PPL competitive data.
Mr. Farr was promoted to the role of chief financial
officer, or CFO, in 2007, and, as a result of his salary being
in the lower half of the PPL competitive range, the Committee
adjusted his salary in 2007 and did so again in 2008.
Mr. Farr effectively performed his role particularly during
2008 in a difficult financial environment generally and during a
difficult financial year for PPL. In light of
Mr. Farrs contribution and continued effective
performance in his role on the executive team, the Committee
thought it appropriate to increase Mr. Farrs salary
to just below the mid-point of the competitive range.
A salary increase for Mr. DeCampli of $30,000 was approved
in January 2009 and reflects continued effective performance,
particularly in his role of managing his business line through
the Pennsylvania rate-cap expiration process, and that his
salary and total direct compensation were low in the competitive
range. With this adjustment, the Committee brought
Mr. DeCamplis salary to just under the mid-point of
the competitive salary range with total direct compensation, at
target, at about 5% above the mid-point and squarely in the
middle of the competitive range.
In May 2009, the Committee further increased
Mr. DeCamplis salary by $20,000 at the time it
implemented a retention package for Mr. DeCampli that
included retention shares (further discussed under
Retention Agreements on page 58) and additional
pension service (further discussed under Pension Benefits
in 2009 on page 51).
30
Annual Cash
Incentive Awards
The annual cash incentive award program is designed to reward
annual performance compared to business objectives 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% of
the target opportunity) to the threshold or minimum payment of
50% of target or to the program maximum of 200% of target
established for each position. No payment will be made if the
corporate financial performance results are below the 50%
payment threshold.
The Committee makes annual cash incentive awards to executive
officers under the shareowner-approved PPL Corporation
Short-Term Incentive Plan, or the Short-Term Incentive Plan. The
awards are based on objective corporate financial and
operational measures. Specific written performance objectives
and business objectives 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, targeted at
the approximate median of the PPL competitive data and based on
an internal comparison of executive positions.
The Committee set the following target award levels for the
positions listed for the 2009 annual cash incentive awards under
the Short-Term Incentive Plan, which did not change from 2008:
TABLE 3
Annual Cash
Incentive Targets by Position for 2009
|
|
|
|
|
|
|
Targets as %
|
Position
|
|
|
of Salary
|
Chief Executive Officer
|
|
|
110%
|
|
|
|
|
Executive Vice President and Chief Operating Officer
|
|
|
85%
|
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
75%
|
|
|
|
|
Senior Vice President, General Counsel and Secretary, and
President of PPL EnergyPlus, LLC
|
|
|
65%
|
|
|
|
|
Presidents of other principal operating subsidiaries, including
PPL Electric Utilities Corporation
|
|
|
50%
|
|
|
|
|
At its December 2008 and January 2009 meetings, the Committee
conducted a review of the incentive compensation program design
in light of the challenges experienced by the company during
2008. The Committee concluded that the incentive compensation
program was operating appropriately. The absence of any annual
cash incentive award for 2008 performance for the named
executive officers who serve on the Corporate Leadership Council
demonstrated that our program design appropriately responds to
our business results.
At its March 2009 meeting, in addition to approving the
performance goals for 2009, the Committee approved two changes
to the annual cash incentive program effective for the 2009
performance period. The Committee (1) extended the
performance range of the program to provide for a 200%
potential, maximum payout if performance is proportionately
higher than the prior maximum payout of 150% of the target, and
(2) implemented a program cutoff, eliminating awards if
certain corporate goals are not met. The change to the payment
range aligns the program with competitive practice where the
typical payment range is 50% to 200% of the target. The cutoff
will eliminate any annual cash incentive payments for executives
and employees for operating unit performance if performance on
the corporate financial or earnings per share, or EPS, goal is
20% or more lower than the target for the 2009 performance
period. Previously, even if EPS goal performance did not exceed
the threshold, operating
31
unit results may have produced an annual cash incentive award
for executives and employees other than the members of the
Corporate Leadership Council.
The corporate financial goal for 2009, which was a fully diluted
EPS target described in detail below, represented 100% of the
total award for the Corporate Leadership Council members and 60%
of the total award for presidents of principal operating
subsidiaries, including the President of PPL Electric Utilities
Corporation. The remaining portion of the presidents award
opportunity is composed of business line operating results (20%)
and individual performance (20%). Various measures make up
operational objectives, 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, those of which
apply to Mr. DeCampli are described in detail below in
Table 6.
The following table summarizes the weightings allocated to
financial and operational results, by named executive officer
position, for determining 2009 annual cash incentive awards:
TABLE 4
Annual Cash
Incentive Weightings Applied to Financial and Operational
Results
|
|
|
|
|
|
|
|
|
|
CEO;
|
|
|
PPL Electric
|
|
|
|
COO; CFO;
|
|
|
Utilities
|
Category
|
|
|
SVP(1)
|
|
|
President
|
Financial Results
|
|
|
100%
|
|
|
60%
|
|
|
|
|
|
|
|
Operational Results
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PPL Electric Utilities Corporation
|
|
|
|
|
|
20%
|
|
|
|
|
|
|
|
Individual Performance
|
|
|
|
|
|
20%
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Annual cash incentive awards for members of the Corporate
Leadership Council are based solely on the corporate financial
results or EPS for the year and are not further adjusted for
individual performance. |
At its January 2010 meeting, the Committee reviewed 2009
performance results to determine whether the named executive
officers had met pre-established 2009 performance objectives.
Annual cash incentive awards are determined as summarized below
by multiplying the financial results, and where applicable,
operational results and individual performance, 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,
2009, the end of the performance period.
In determining individual performance for the annual cash
incentive awards for the presidents of major business lines,
including the President of PPL Electric Utilities Corporation,
the Committee considers the recommendations of the CEO. In
developing his recommendations, the CEO consults with the chief
operating officer, or COO, who establishes individual objectives
at the beginning of the year and conducts a performance review
at the end of the performance year on each executive. The
performance review includes an assessment conducted by the COO
with input from the Corporate Leadership Council members and the
vice president-Human Resources and Services. The assessment
contains two dimensions an assessment of attainment
of overall objectives for the year, as well as an assessment of
values behaviors and key attributes.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
annual
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
target award
|
|
|
|
|
year-end
|
|
|
|
|
|
|
cash
|
|
results
|
|
|
|
×
|
|
|
|
weights
|
|
|
|
×
|
|
|
%
|
|
×
|
|
|
salary
|
|
|
|
=
|
|
|
incentive
|
|
|
|
|
|
|
|
|
|
(Table 4
|
)
|
|
|
|
|
|
(Table 3)
|
|
|
|
|
(Table 2
|
)
|
|
|
|
|
|
award
|
32
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 Plan Compensation.
TABLE 5
Annual Cash
Incentive Awards for 2009 Performance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary Basis for
|
|
|
Total Goal
|
|
|
2009 Annual Cash
|
|
|
Name
|
|
|
Award
|
|
|
Results
|
|
|
Award
|
|
|
J. H. Miller
|
|
|
$
|
1,145,000
|
|
|
|
|
200
|
%
|
|
|
$
|
2,519,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W. H. Spence
|
|
|
|
660,000
|
|
|
|
|
200
|
%
|
|
|
|
1,122,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
P. A. Farr
|
|
|
|
535,000
|
|
|
|
|
200
|
%
|
|
|
|
802,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. J. Grey
|
|
|
|
425,900
|
|
|
|
|
200
|
%
|
|
|
|
553,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
D. G. DeCampli
|
|
|
|
400,000
|
|
|
|
|
179.7
|
%
|
|
|
|
359,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As noted above, the total goal results are based on corporate
financial results and, in the case of Mr. DeCampli,
operational results and individual performance. The financial
objectives, described in detail below, are based on PPLs
business plan, which is approved annually by the Finance
Committee of the Board of Directors. The operational objectives
are established to support financial results for both the short
and longer term.
Awards for the positions of the named executive officers over
the most recent five years have ranged from 0% to 200% of target
for the corporate executive officers (including the CEO and CFO).
Financial Results. Target EPS for the
annual cash incentive program was $1.75 for 2009, with a 200%
payout maximum at $1.93 and a 50% payout threshold at $1.58.
Results below $1.58 result in a zero payout for Corporate
Leadership Council members and a zero payout on this portion of
the incentive goal for presidents of principal operating
subsidiaries. The target EPS used for goal purposes is earnings
per share from ongoing operations. No annual cash incentive
awards, including those to presidents based on operating unit
results, would have been paid if EPS results were less than
$1.40.
The EPS achieved for purposes of the annual cash incentive
program for 2009 was $1.95, which is slightly above the goal
resulting in the 200% payment maximum.
Operational Results. Operating objectives
are detailed, quantifiable objectives set specifically for each
business line annually. The operational objectives 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, many of the supporting operational objectives
require
difficult-to-reach
elements in order to produce operating results that render the
target EPS. Specific operating objectives applied to the
business line presidents during 2009, including
Mr. DeCampli. The specific operational target objectives
and weights for PPL Electric Utilities Corporation that produced
the total goal results in Table 5 for Mr. DeCampli are
detailed in Table 6, below.
33
TABLE 6
Annual Cash
Incentive Goals and Results
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
D. G. DeCampli
|
|
|
|
|
|
|
WEIGHT
|
|
|
|
|
|
|
|
|
WEIGHT
|
|
|
|
|
|
|
|
|
|
WITHIN
|
|
|
|
|
|
|
|
|
IN
|
|
|
TOTAL
|
|
|
|
|
|
|
OPERATING
|
|
|
|
|
|
OBJECTIVE
|
|
|
TOTAL
|
|
|
AWARD
|
GROUP
|
|
|
OBJECTIVE SUMMARY STATEMENTS
|
|
|
UNIT
|
|
|
RESULTS
|
|
|
SCORE
|
|
|
AWARD
|
|
|
RESULT
|
FINANCIAL
RESULTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PPL
Corporation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Achieve PPL Corporation Earnings Per Share from Ongoing
Operations
³
$1.75.
|
|
|
n/a
|
|
|
200.0%
|
|
|
200.0%
|
|
|
60%
|
|
|
120%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATIONAL
RESULTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PPL Electric
Utilities
Corporation
|
|
|
1. Achieve earnings before interest and taxes (EBIT)
³
$514.7 million.
|
|
|
50%
|
|
|
103.0%
|
|
|
51.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2. Limit capital spending
£
$286.4 million.
|
|
|
30%
|
|
|
70.7%
|
|
|
21.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3. Fulfill regulatory and legislative requirements
resulting from rate settlements and Act 129 with regard to
customer education programs, energy efficiency and demand side
management.
|
|
|
10%
|
|
|
150.0%
|
|
|
15.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4. Achieve compliance for all North American Electric
Reliability Corporation and ReliabilityFirst Corporation (RFC)
electric reliability standards and successfully complete the RFC
audit.
|
|
|
10%
|
|
|
110.0%
|
|
|
11.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100%
|
|
|
|
|
|
98.7%
|
|
|
20.0%
|
|
|
19.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCIAL/OPERATIONAL GOAL
SUB-TOTAL
|
|
|
|
|
|
|
|
|
|
|
|
80%
|
|
|
139.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INDIVIDUAL PERFORMANCE GOAL ACHIEVEMENT
|
|
|
|
|
|
|
|
|
|
|
|
20%
|
|
|
40.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100%
|
|
|
179.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Achievement of objectives that are not easily quantifiable is
measured by the attainment of agreed- upon milestones and
Corporate Leadership Council review and determination. If the
milestones are not met, the Corporate Leadership Council does
not have the discretion to waive the goal requirements.
In determining achievement on the individual component of the
annual cash incentive award for Mr. DeCampli, the COO
assessed Mr. DeCamplis performance based on a variety
of corporate values, as well as personal and operational goals,
not one of which is material to the determination of his overall
compensation. The COO reviewed his assessment with the CEO to
arrive at a recommendation for the Committee that Mr. DeCampli
achieved maximum performance or 200% of this 20% portion of his
total award.
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.
34
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;
|
|
|
|
Performance unit awards for three-year performance relative to
our industry peers based on total shareowner return
stock price growth and dividends; and
|
|
|
|
Stock option awards for stock price growth.
|
General
We grant restricted stock unit awards based on the achievement
of targeted business results, which is currently the most recent
three-year average of corporate financial results as determined
for the annual cash incentive program. 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 200%
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 granted in 2010, based on company
performance prior to 2009, have a three-year restriction period,
with restrictions scheduled to lapse in 2013. 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 or depreciation in line with PPL shareowners.
Performance units are a total shareowner return-based
performance unit award under which executives receive a target
number of performance units at the beginning of the performance
period, with the actual amount of shares of common stock earned
at the end of the performance period dependent on the three-year
total shareowner return results of the company compared to the
total return of companies in the S&P Electric Utilities
Index. Total shareowner return reflects the combined impact of
changes in stock price plus dividends paid over the performance
period. The performance unit awards provide executives the right
to receive a number of shares of PPL common stock based on PPL
total shareowner return relative to industry peers. Performance
units are granted at the beginning of a three-year performance
period and are payable in shares of PPL common stock following
the performance period. Cash or stock dividend equivalent
amounts payable on PPL common shares are converted into
additional performance units and are payable in shares of PPL
common stock at the end of the performance period based on the
determination by the Committee of whether the performance goals
have been achieved. These grants are at risk because
total shares distributed at the end of the performance period,
including shares distributed in respect of the performance unit
grant itself and all reinvested cash or stock dividend
equivalents, may vary from zero to the program maximum of 200%
of target and are subject to potential forfeiture. The ultimate
value realized by the executives is directly related to
PPLs total shareowner return relative to its industry
peers and to PPLs stock price performance. The Committee
has no discretion to provide for payment of the performance
units absent attainment of the stated target levels.
We also grant stock options. Stock options provide the holder
the right to purchase PPL stock at a future time at an exercise
price equal to the closing price of PPL stock on the grant date.
Stock options normally will 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 2009 become exercisable over three
years one-third at the end of each anniversary of
the grant date and are exercisable for ten years
from the grant date, subject to earlier expiration following
specified periods after termination of employment.
35
Under the terms of the companys Incentive Compensation
Plan, restricted stock units, performance 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 Benefits Long-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. In 2009, additional restricted stock was granted to
Mr. DeCampli as a retention measure. See Retention
Agreements on page 58 for previous additional
restricted stock awards granted to Messrs. Miller and Farr.
Structure of
Awards
The Committee introduced the performance unit component of the
long-term incentive program in 2008. At the same time, the
Committee also rebalanced the value of the three stock-based
components to the following percentages of an executives
total long-term incentive opportunity: 40% restricted stock
units; 20% performance units; and 40% stock options. This
decision was based on changes recognized in market practice and
on the Committees view of the appropriate balance of the
three forms of stock-based compensation. The Committee made no
changes to this balance for 2009.
Target award levels for each component of the long-term
incentive program seek to balance executive focus on the
companys business objectives, 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 2009
and are provided below:
At its December 2008 and January 2009 meetings, the Committee
conducted a review of the incentive compensation program design
in light of the challenges experienced by the company during
2008. The Committee generally concluded that the incentive
compensation program was performing appropriately. At its
January 2009 meeting, the Committee increased
Mr. Millers long-term incentive target to 350% of
salary from 325% after review of the PPL competitive data.
TABLE 7
Long-term
Incentive Award Targets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Targets as % of Salary)
|
|
|
|
Restricted
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Performance
|
|
|
Stock
|
|
|
|
Position
|
|
|
Units
|
|
|
Units
|
|
|
Options
|
|
|
Total
|
Chief Executive Officer
|
|
|
140%
|
|
|
70%
|
|
|
140%
|
|
|
350%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Vice President and Chief Operating Officer
|
|
|
100%
|
|
|
50%
|
|
|
100%
|
|
|
250%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
88%
|
|
|
44%
|
|
|
88%
|
|
|
220%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior Vice President, General Counsel and Secretary and
President of PPL EnergyPlus, LLC
|
|
|
64%
|
|
|
32%
|
|
|
64%
|
|
|
160%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Presidents of other principal operating subsidiaries, including
PPL Electric Utilities Corporation
|
|
|
58%
|
|
|
29%
|
|
|
58%
|
|
|
145%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36
Restricted
Stock Unit Awards
A restricted stock unit award is made by the Committee after the
end of each year, based on the most recent three-year average
financial results of the annual cash incentive program. Grants
are subject to a three-year restriction period:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
target
award
%
|
|
×
|
|
salary
|
|
×
|
|
3-year
average
EPS
results
|
|
¸
|
|
market price of
PPL stock as
of award date
|
|
=
|
|
number
of units
granted
|
This award is designed to reward sustained financial performance.
Performance
Unit Awards
A grant of performance units is made each year at each
executives target award level:
|
|
|
|
|
|
|
|
|
|
|
|
|
target
award
%
|
|
×
|
|
salary
|
|
¸
|
|
market price of
PPL stock as
of award date
|
|
=
|
|
number
of units
granted
|
At the end of the performance period, PPL total shareowner
return, or TSR, for the three-year period will be compared to
the total return of companies in the S&P Electric Utilities
Index. The Committee will determine whether the performance
goals are satisfied. Upon certification that the performance
goals have been satisfied, the performance units and reinvested
dividend equivalents will vest and will be paid based on the
following table. Percentile ranks falling between the thresholds
listed below will result in a payout calculated on a linear
basis between payout thresholds (for example, a percentile rank
of 45% would result in a payout at 75% of target).
|
|
|
|
Percentile Rank
|
|
|
|
(PPL TSR performance,
relative to
|
|
|
Payout
|
companies in Index)
|
|
|
(Expressed as a % of Target Award)
|
|
|
|
|
85th
Percentile or above
|
|
|
200% (the Maximum Award)
|
|
|
|
|
50th
Percentile
|
|
|
100% (the Target Award)
|
|
|
|
|
40th
Percentile
|
|
|
50%
|
|
|
|
|
Below
40th
Percentile
|
|
|
0%
|
|
|
|
|
This award is designed to reward performance relative to our
industry peers. Performance units are payable in shares of PPL
common stock and the reinvested cash dividend equivalents and
any stock dividend equivalents are payable in additional shares
of PPL common stock, each after the three-year performance
period and after the Committee has determined that the
performance goals are satisfied.
Stock Option
Awards
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
|
This award is designed to promote stock price growth.
The value of the long-term incentive awards as of the grant
date, based on the targets, delivers a level of total direct
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 return
stock price growth and dividends. To the extent total shareowner
value increases, executives may realize values that exceed the
values as determined
37
on the grant date. Similarly, should shareowner value decline,
executive compensation levels for these awards could fall below
the grant values, possibly to zero.
Awards for
2009
At its January 2009 meeting, the Committee approved performance
unit and stock option awards for 2009.
At its meeting in January 2010, the Committee reviewed and
certified the performance results for the 2009 cash incentive
compensation award. These results impact the following
restricted stock unit award granted in January 2010 for 2009
performance:
|
|
|
|
|
Restricted stock unit award for sustained financial results: the
2009 annual cash incentive results for executives were averaged
with similar results for 2008 and 2007, which were based solely
on EPS achievement and formed the basis for the award made in
2010 for performance over the preceding three years. The average
results were 113.2%, which represents the average of
2009-200.0%;
2008-0%, and
2007-139.6%.
|
The Committee also approved restricted stock unit awards for
2009 performance of the named executive officers. These awards
are set forth in the table below. The restricted stock unit
awards included in the Summary Compensation Table for 2009 were
granted in January 2009, but were part of the 2008 compensation
package for the named executive officers. The awards for 2009
performance below will be included in the Summary Compensation
Table for 2010 because they were granted in 2010.
TABLE 8
Long-Term
Incentive Awards for 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Awards in Dollars)
|
|
|
|
Restricted
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Performance
|
|
|
Stock
|
Name
|
|
|
Units(1)
|
|
|
Units(2)
|
|
|
Options(2)
|
J. H. Miller
|
|
|
$
|
1,814,600
|
|
|
|
$
|
801,500
|
|
|
|
$
|
1,603,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W. H. Spence
|
|
|
|
747,100
|
|
|
|
|
330,000
|
|
|
|
|
660,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
P. A. Farr
|
|
|
|
532,900
|
|
|
|
|
220,000
|
|
|
|
|
440,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. J. Grey
|
|
|
|
308,600
|
|
|
|
|
136,300
|
|
|
|
|
272,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
D. G. DeCampli
|
|
|
|
262,600
|
|
|
|
|
101,500
|
|
|
|
|
203,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Includes restricted stock awards granted in January 2010 as part
of the 2009 compensation package for the named executive
officers. The restricted stock unit awards in the Summary
Compensation Table were granted in 2009, but were part of the
2008 compensation package for the named executive officers. |
|
(2) |
|
Includes performance units and stock options granted in January
2009. |
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
38
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 for 2009 is summarized 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 Executive Compensation
Tables Pension Benefits in 2009.
The companys 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.
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 2009,
included savings through the tax-qualified employee 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
and lifestyle funds available from a mutual fund
provider (for 2009, 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. For additional details on
the Officers Deferred Compensation Plan, see Executive
Compensation Tables Nonqualified Deferred
Compensation in 2009 table on page 55. 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 maximum
statutory limits 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 the
Officers Deferred Compensation 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.
39
The company also 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. 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. There is no vesting
period for contributions made under the ESOP. The participant
has the option of receiving the actual shares of common stock or
the cash equivalent of such shares at the time of withdrawal or
distribution.
Special
Compensation
In addition to the annual direct and indirect compensation
described above, the company provides special compensation under
certain 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.
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 prorated for
the period of service during the executives initial year
of employment and made after the end of the year. 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.
In limited circumstances, generally involving mid-career
hirings, the company may enter 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 after a period
of time that may vary on a
case-by-case
basis. During the term of the restrictions, the executive
receives dividends or dividend equivalents. 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 on 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
40
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 Benefits
below at page 58.
Change-in-Control
Protections. The company believes executive officers who are
terminated without cause 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.
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 awards granted 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
accelerate in other words, restrictions on all
outstanding restricted stock units lapse, a pro rata portion of
performance units become payable 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
DDCP, 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 a 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.
41
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 for
performance-based cash and restricted stock unit awards and
early in the year for forward-looking performance unit and stock
option awards. 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 2009, the market price for restricted equity
award grants was the closing price of PPL common stock on the
date of grant. The exercise prices for stock option awards are
determined as 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.
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. If an executive does not attain the
guideline level within the applicable period, he or she must not
sell any shares and will be required to retain shares acquired
upon the exercise of stock options or upon the lapsing of
restrictions on shares of restricted stock, restricted stock
units or performance units, in each case net of required tax
withholding, in PPL common stock until the guideline level is
achieved. In addition, annual cash incentives awarded after that
date may be in restricted stock unit grants until actual
ownership meets or exceeds the guideline level.
To assist executive officers in achieving or surpassing their
minimum ownership amount, the Committee previously adopted the
Cash Incentive Premium Exchange Program (Premium Exchange
Program), which expired in January 2009. Under this
program, executives could elect to defer all or a portion of
their annual cash incentive award and 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. Executive officers forfeit the 40%
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.
42
The Equity Guidelines 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
December 31, 2009.
Tax and
Accounting Considerations
Section 162(m). Section 162(m) of the Internal
Revenue Code 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 principal
financial officer). 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 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.
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 equal or exceed three times the
executives base amount, a five-year average compensation
as defined by the IRS, in order to be considered excess
parachute payments, and then the lost deduction and 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 of 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. The Company has
amended its executive compensation plans in a manner intended to
comply with IRS final regulations under Section 409A.
ASC Topic 718. Under the guidance of Financial Accounting
Standards Board (FASB) Accounting Standards Codification (ASC)
Topic 718, Stock Compensation (formerly, FASB Statement of
Financial Accounting Standards No. 123 (revised 2004),
Share-Based
Payment, which was known as SFAS 123(R)), the
following methods are used by PPL to determine the aggregate
grant date fair
43
value of PPLs stock based awards: (1) the market
price of its common stock at the date of grant is used to value
its restricted stock and restricted stock unit awards;
(2) a Monte Carlo pricing model that considers historic
volatility over three years using daily stock price observations
for PPL and all companies that are in the S&P Electric
Utilities Index is used to determine the fair value of each of
its performance unit awards; and (3) the Black-Scholes
stock option pricing model is used to determine the fair value
of its stock option awards.
In addition, because the restricted stock unit awards granted
for 2009 performance of the named executive officers were not
granted until January 2010, these awards will be included in
next years, and not this years, Summary Compensation
Table and next years, and not this years, Grants of
Plan-Based Awards table, and the amounts in this years
Summary Compensation Table will not tie directly to the values
determined by our compensation grant methodology.
Executive
Compensation Tables
The following table summarizes all compensation for our chief
executive officer, our chief financial officer, and our next
three most highly compensated executives, or named
executive officers, for the last three fiscal years, for
service for PPL and its subsidiaries. Mr. Miller also
served as a director but received no compensation for board
service.
SUMMARY
COMPENSATION TABLE
|
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|
|
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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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|
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|
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|
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|
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|
|
|
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and
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonqualified
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
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Deferred
|
|
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|
|
|
|
Name and Principal
|
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|
|
|
|
|
|
|
|
|
Stock
|
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Option
|
|
|
Incentive Plan
|
|
|
Compensation
|
|
|
All Other
|
|
|
|
Position
|
|
|
Year
|
|
|
Salary(3)
|
|
|
Bonus
|
|
|
Awards(4)
|
|
|
Awards(5)
|
|
|
Compensation(6)
|
|
|
Earnings(7)
|
|
|
Compensation(8)
|
|
|
Total
|
James H. Miller
|
|
|
|
2009
|
|
|
|
$
|
1,189,039
|
|
|
|
|
|
|
|
|
$
|
2,383,142
|
|
|
|
$
|
1,475,801
|
|
|
|
$
|
2,519,000
|
|
|
|
$
|
4,119,866
|
|
|
|
$
|
103,579
|
|
|
|
$
|
11,790,426
|
|
Chairman, President
|
|
|
|
2008
|
|
|
|
|
1,141,106
|
|
|
|
|
|
|
|
|
|
3,214,364
|
|
|
|
|
1,200,192
|
|
|
|
|
0
|
|
|
|
|
1,549,956
|
|
|
|
|
59,109
|
|
|
|
|
7,164,728
|
|
and Chief Executive Officer
|
|
|
|
2007
|
|
|
|
|
1,041,154
|
|
|
|
|
|
|
|
|
|
1,333,858
|
|
|
|
|
1,811,560
|
|
|
|
|
1,604,700
|
|
|
|
|
3,850,553
|
|
|
|
|
32,308
|
|
|
|
|
9,674,133
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William H. Spence
|
|
|
|
2009
|
|
|
|
|
685,385
|
|
|
|
|
|
|
|
|
|
1,024,106
|
|
|
|
|
609,612
|
|
|
|
|
1,122,000
|
|
|
|
|
632,953
|
|
|
|
|
44,110
|
|
|
|
|
4,118,166
|
|
Executive Vice President and Chief
|
|
|
|
2008
|
|
|
|
|
657,664
|
|
|
|
|
|
|
|
|
|
1,704,142
|
|
|
|
|
530,100
|
|
|
|
|
0
|
|
|
|
|
382,460
|
|
|
|
|
48,279
|
|
|
|
|
3,322,645
|
|
Operating Officer
|
|
|
|
2007
|
|
|
|
|
597,116
|
|
|
|
|
|
|
|
|
|
901,497
|
|
|
|
|
805,138
|
|
|
|
|
712,000
|
|
|
|
|
287,172
|
|
|
|
|
39,877
|
|
|
|
|
3,342,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul A.
Farr(1)
|
|
|
|
2009
|
|
|
|
|
553,828
|
|
|
|
|
|
|
|
|
|
682,386
|
|
|
|
|
405,095
|
|
|
|
|
802,500
|
|
|
|
|
354,433
|
|
|
|
|
29,650
|
|
|
|
|
2,827,891
|
|
Executive Vice President and Chief
|
|
|
|
2008
|
|
|
|
|
498,054
|
|
|
|
|
|
|
|
|
|
1,106,857
|
|
|
|
|
349,828
|
|
|
|
|
0
|
|
|
|
|
79,202
|
|
|
|
|
27,015
|
|
|
|
|
2,060,956
|
|
Financial Officer
|
|
|
|
2007
|
|
|
|
|
437,669
|
|
|
|
|
|
|
|
|
|
410,622
|
|
|
|
|
389,422
|
|
|
|
|
471,200
|
|
|
|
|
124,790
|
|
|
|
|
16,562
|
|
|
|
|
1,859,589
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert J. Grey
|
|
|
|
2009
|
|
|
|
|
442,282
|
|
|
|
|
|
|
|
|
|
422,915
|
|
|
|
|
250,971
|
|
|
|
|
553,700
|
|
|
|
|
1,162,661
|
|
|
|
|
28,597
|
|
|
|
|
2,861,126
|
|
Senior Vice President, General Counsel
|
|
|
|
2008
|
|
|
|
|
425,110
|
|
|
|
|
|
|
|
|
|
761,897
|
|
|
|
|
229,368
|
|
|
|
|
0
|
|
|
|
|
342,362
|
|
|
|
|
27,776
|
|
|
|
|
1,786,513
|
|
and Secretary
|
|
|
|
2007
|
|
|
|
|
405,000
|
|
|
|
|
|
|
|
|
|
383,954
|
|
|
|
|
398,746
|
|
|
|
|
368,000
|
|
|
|
|
642,759
|
|
|
|
|
22,875
|
|
|
|
|
2,221,333
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David G.
DeCampli(2)
|
|
|
|
2009
|
|
|
|
|
405,424
|
|
|
|
|
|
|
|
|
|
1,271,883
|
|
|
|
|
186,869
|
|
|
|
|
359,400
|
|
|
|
|
190,731
|
|
|
|
|
22,335
|
|
|
|
|
2,436,642
|
|
President-PPL Electric Utilities Corporation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Mr. Farr was elected Executive Vice President and Chief
Financial Officer on April 1, 2007, when the person
previously in that position retired. |
|
(2) |
|
Mr. DeCampli was not a named executive officer during 2008
and 2007, so no information is included for 2008 and 2007. |
|
(3) |
|
Salary includes cash compensation deferred to the PPL Officers
Deferred Compensation Plan. The following executive officers
deferred salary in the amounts indicated: Miller ($35,671 in
2009, $34,233 in 2008 and $31,235 in 2007); Spence ($20,562 in
2009, $19,730 in 2008 and $17,914 in 2007); Farr ($55,383 in
2009, $49,805 in 2008 and $43,767 in 2007); Grey ($13,268 in
2009, $12,753 in 2008, and $52,000 in 2007); and DeCampli
($60,814 in 2009). |
|
(4) |
|
This column represents the aggregate grant date value as
calculated under ASC Topic 718 as of the date of grant. This
column also includes the value of the premium restricted stock
units granted in January for 2009 associated with the exchange
made by Mr. DeCampli of his cash incentive |
44
|
|
|
|
|
compensation awarded in January 2009 for 2008 performance. This
column also includes the value of the premium restricted stock
units granted in January for 2008 and 2007 associated with the
exchanges made by Messrs. Farr, Spence and Grey of their
cash incentive compensation awarded in January 2008 for 2007
performance, and in January 2007 for 2006 performance,
respectively, under the Premium Exchange Program. See
description of the Premium Exchange Program in
CD&A Ownership Guidelines.
Aggregate grant date fair value is calculated using the closing
sale price on the date of grant. For additional information on
the assumptions made in the valuation, refer to Note 11 to
the PPL financial statements in the Annual Report on
Form 10-K
for the year ended December 31, 2009, as filed with the
SEC. See the Grants of Plan-Based Awards During 2009
table below for information on awards made in 2009. |
|
(5) |
|
This column represents the aggregate grant date value as
calculated under ASC Topic 718 as of the date of grant. For
additional information on the valuation assumptions with respect
to the 2009 stock option grants, refer to Note 11 to the
PPL financial statements in the Annual Report on
Form 10-K
for the year ended December 31, 2009, as filed with the
SEC. See the Grants of Plan-Based Awards During 2009
table for information on options granted in 2009. |
|
(6) |
|
This column represents cash awards made in January 2010, 2009
and 2008 under PPLs Short-Term Incentive Plan for
performance under the companys annual cash incentive award
program in 2009, 2008 and 2007, respectively. The following
named executive officers elected to exchange a portion of their
cash incentive compensation awarded in January 2008, for 2007
performance, for restricted stock units under the Premium
Exchange Program: Spence ($712,000); Farr ($424,080); and Grey
($368,000). See description of the Premium Exchange Program in
CD&A Ownership 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 award
foregone by Mr. DeCampli in January 2009 for 2008
performance is reflected in the Grants of Plan-Based
Awards During 2009 table. |
|
(7) |
|
This column represents the sum of the changes in the present
value of accumulated benefit in the PPL Retirement Plan and PPL
Supplemental Executive Retirement Plan during 2009, 2008 and
2007 for each of the named executive officers, as well as the
Subsidiary Retirement Plan for Mr. Farr.
Mr. Farrs Subsidiary Retirement Plan values decreased
by $1,567 in 2007. See the Pension Benefits in 2009
table on page 51 for additional information. No
above-market earnings under the Officers Deferred Compensation
Plan are reportable for 2009, 2008 or 2007. See the
Nonqualified Deferred Compensation in 2009 table on
page 55 for additional information. |
|
(8) |
|
The table below reflects the components of this column for 2009,
which include the companys matching contribution for each
individuals 401(k) plan contributions under the PPL
Deferred Savings Plan and the companys matching
contribution for each individuals contributions under the
Officers Deferred Contribution Plan, annual allocations under
the PPL Employee Stock Ownership Plan, and the perquisites of
financial planning and tax preparation services and security
monitoring. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ODCP Employer
|
|
|
|
ESOP
|
|
|
|
Financial
|
|
|
|
Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
|
401(k) Match
|
|
|
|
Contributions
|
|
|
|
Allocation
|
|
|
|
Planning
|
|
|
|
Paid
|
|
|
|
Other(b)
|
|
|
|
Board
Fees(c)
|
|
|
|
Total
|
|
J. H. Miller
|
|
|
|
$7,350
|
|
|
|
|
$28,321
|
|
|
|
|
$403
|
|
|
|
$
|
12,565
|
|
|
|
|
|
|
|
|
$
|
940
|
|
|
|
$
|
54,000
|
|
|
|
$
|
103,579
|
|
W. H. Spence
|
|
|
|
7,350
|
|
|
|
|
13,212
|
|
|
|
|
356
|
|
|
|
|
10,500
|
|
|
|
$
|
12,692
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
44,110
|
|
P. A. Farr
|
|
|
|
7,350
|
|
|
|
|
11,634
|
|
|
|
|
377
|
|
|
|
|
|
|
|
|
|
10,289
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,650
|
|
R. J. Grey
|
|
|
|
7,350
|
|
|
|
|
10,408
|
|
|
|
|
539
|
|
|
|
|
10,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,597
|
|
D. G. DeCampli
|
|
|
|
7,350
|
|
|
|
|
4,788
|
|
|
|
|
347
|
|
|
|
|
9,850
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,335
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45
|
|
|
(a) |
|
Payment to Messrs. Spence and Farr for vacation earned but
not taken. |
|
(b) |
|
Cost of installing and testing one-time dual
monitoring capability of home alarm system at
Mr. Millers residence, permitting the company to
receive an alarm signal at any time such a signal is received by
Mr. Millers external monitoring company. |
|
(c) |
|
Fees earned by Mr. Miller for serving as a director of
Nuclear Electric Insurance Limited, of which an affiliate of PPL
is a member. |
46
GRANTS OF
PLAN-BASED AWARDS DURING 2009
The following table provides information about equity and
non-equity awards granted to the named executive officers in
2009, specifically: (1) the grant date; (2) estimated
possible payouts under the 2009 annual cash incentive award
program; (3) estimated future payouts for performance units
awarded to the named executive officers in 2009; (4) the
number of shares underlying all other stock awards, which
consist of restricted stock units awarded to the named executive
officers in 2009 for their 2008 performance under PPLs
Incentive Compensation Plan, as well as the full number of
restricted stock units granted pursuant to the Premium Exchange
Program described in the CD&A Ownership
Guidelines; (5) a
one-time
retention restricted stock award granted to Mr. DeCampli in
May 2009; (6) the number of shares underlying stock
options awarded to the named executive officers; (7) 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 (8) the grant date fair value of each equity award
computed under ASC Topic 718.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
|
All Other
|
|
|
|
|
|
|
|
Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
|
Option
|
|
|
|
Exercise
|
|
|
|
Fair
|
|
|
|
|
|
|
|
|
Estimated Possible Payouts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
|
Awards:
|
|
|
|
or Base
|
|
|
|
Value of
|
|
|
|
|
|
|
|
|
Under Non-Equity Incentive
|
|
|
|
Estimated Future Payouts Under
|
|
|
|
Number of
|
|
|
|
Number of
|
|
|
|
Price of
|
|
|
|
Stock
|
|
|
|
|
|
|
|
|
Plan
Awards(1)
|
|
|
|
Equity Incentive Plan
Awards(2)
|
|
|
|
Shares of
|
|
|
|
Securities
|
|
|
|
Option
|
|
|
|
And
|
|
|
|
|
Grant
|
|
|
|
|
|
|
|
|
|
|
|
Stock or
|
|
|
|
Underlying
|
|
|
|
Awards(5)
|
|
|
|
Option
|
|
Name
|
|
|
Date
|
|
|
|
Threshold
|
|
|
|
Target
|
|
|
|
Maximum
|
|
|
|
Threshold
|
|
|
|
Target
|
|
|
|
Maximum
|
|
|
|
Units(3)
|
|
|
|
Options(4)
|
|
|
|
($/Sh)
|
|
|
|
Awards(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. H. Miller
|
|
|
|
3/26/2009
|
|
|
|
$
|
629,750
|
|
|
|
$
|
1,259,500
|
|
|
|
$
|
2,519,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/22/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,344,253
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/22/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
265,910
|
|
|
|
|
31.93
|
|
|
|
|
1,475,801
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/22/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,550
|
|
|
|
|
25,100
|
|
|
|
|
50,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,038,889
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W. H. Spence
|
|
|
|
3/26/2009
|
|
|
|
|
280,500
|
|
|
|
|
561,000
|
|
|
|
|
1,122,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/22/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,670
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
596,133
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/22/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
109,840
|
|
|
|
|
31.93
|
|
|
|
|
609,612
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/22/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,170
|
|
|
|
|
10,340
|
|
|
|
|
20,680
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
427,973
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
P. A. Farr
|
|
|
|
3/26/2009
|
|
|
|
|
200,625
|
|
|
|
|
401,250
|
|
|
|
|
802,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/22/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,440
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
397,209
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/22/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
72,990
|
|
|
|
|
31.93
|
|
|
|
|
405,095
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/22/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,445
|
|
|
|
|
6,890
|
|
|
|
|
13,780
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
285,177
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. J. Grey
|
|
|
|
3/26/2009
|
|
|
|
|
138,418
|
|
|
|
|
276,835
|
|
|
|
|
553,670
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/22/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,710
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
246,180
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/22/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45,220
|
|
|
|
|
31.93
|
|
|
|
|
250,971
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/22/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,135
|
|
|
|
|
4,270
|
|
|
|
|
8,540
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
176,735
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
D. G. DeCampli
|
|
|
|
3/26/2009
|
|
|
|
|
100,000
|
|
|
|
|
200,000
|
|
|
|
|
400,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/22/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
290,563
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/22/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,670
|
|
|
|
|
31.93
|
|
|
|
|
186,869
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/22/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,590
|
|
|
|
|
3,180
|
|
|
|
|
6,360
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
131,620
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/21/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
927,600
|
|
|
|
|
|
(1) |
|
These columns show the potential payout range under the 2009
annual cash incentive award program. For additional information,
see CD&A Compensation
Elements Direct Compensation Annual Cash
Incentive Awards at page 60. The cash incentive
payout range is from 50% to 200% of target; however, if the
actual performance falls below the 50% level, the payout would
be zero. The actual 2009 payout is found in the Summary
Compensation Table on page 44 in the column entitled
Non-Equity Incentive Plan Compensation. |
|
(2) |
|
These columns show the potential payout range for the
performance units granted in 2009. For additional information,
see CD&A Compensation
Elements Direct Compensation Long-term
Incentive Awards (Equity Awards) at page 60. The
payout range for performance unit awards is from 50% to 200% of
target; however, if the actual performance falls below the 40%
level, the payout would be zero. The performance period is three
years. At the end of the performance period, PPL total
shareowner return for the three-year period is compared to the
total return of the |
47
|
|
|
|
|
companies in the S&P Electric Utilities Index. The
Compensation, Governance and Nominating Committee will determine
at the end of the performance period whether the performance
goals are satisfied. Upon certification that the performance
goals have been satisfied, the applicable number of performance
units, as well as stock or reinvested cash dividend equivalents,
will vest and will be paid according to the achievement of the
performance goals. |
|
(3) |
|
This column shows the number of restricted stock units granted
on January 22, 2009 to the named executive officers. In
general, restrictions will lapse on January 22, 2012, 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. Mr. DeCampli also
received a retention award on May 21, 2009 of 30,000
restricted shares of which 15,000 vest on December 1, 2012
and 15,000 vest on December 1, 2017. |
|
|
|
This column also shows the number of restricted stock units
granted to Mr. DeCampli as a result of his participation in
the Premium Exchange Program. Mr. DeCampli exchanged
$77,900 of his cash incentive compensation awarded in January
2009 for his 2008 performance under the Premium Exchange Program
in the amount of 2,400 Exchanged Units, and received additional
premium restricted stock units granted in January 2009 as result
of the Exchanges made in the amount of 960 Premium Units. The
Exchanged Units are not reflected in the 2009 Stock
Awards column of the Summary Compensation Table because
the cash incentive award was earned in 2008 and would have been
reflected in full in the Summary Compensation Table for 2008 had
Mr. DeCampli been a named executive officer that year. The
Premium Units are included in the Stock Awards
column of the Summary Compensation Table for 2009. |
|
(4) |
|
This column shows the number of stock options granted in 2009 to
the named executive officers. These options vest and become
exercisable in three equal annual installments, beginning on
January 22, 2010, which is one year after the grant date. |
|
(5) |
|
This column shows the exercise price for the stock options
granted in 2009, which was the closing sale price of PPL common
stock on the date the Compensation, Governance and Nominating
Committee granted the options. |
|
(6) |
|
This column shows the full grant date fair value, as calculated
under ASC Topic 718, of performance units, restricted stock
units and stock options granted to the named executive officers.
For restricted stock units, grant date fair value is calculated
using the closing sale price of PPL stock on the grant date of
$31.93 for awards granted on January 22, 2009. For the
retention restricted stock awards granted to Mr. DeCampli on
May 21, 2009, the grant date fair value is calculated using
the closing sale price of PPL stock on the grant date of $30.92.
For performance units, grant date fair value is calculated using
a Monte Carlo pricing model value on the grant date of $41.39.
For stock options, grant date fair value is calculated using the
Black-Scholes value on the grant date of $5.55. For additional
information on the valuation assumptions for stock options, see
Note 11 to the PPL financial statements in the Annual
Report on
Form 10-K
for the year ended December 31, 2009, as filed with the SEC. |
48
OUTSTANDING
EQUITY AWARDS AT FISCAL-YEAR END 2009
The following table provides information on all unexercised
stock option awards, as well as all unvested restricted stock
and restricted stock unit awards and unearned and unvested
performance units for each named executive officer as of
December 31, 2009. Each stock option grant, as well as each
grant of unearned performance units that have not vested and the
performance units that are unearned and unvested is shown
separately for each named executive officer, 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, stock award or
performance unit award grant date. The market value of the stock
awards is based on the closing market price of PPL stock as of
December 31, 2009, which was $32.31. For additional
information about the stock option and stock awards, see
CD&A Compensation Elements
Direct Compensation Long-term Incentive Awards
(Equity Awards) at page 60.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
|
Market or
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
Payout
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unearned
|
|
|
|
Value of
|
|
|
|
|
Option Awards
|
|
|
|
|
|
|
|
|
|
|
|
Shares,
|
|
|
|
Unearned
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
|
Units or
|
|
|
|
Shares,
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
Value of
|
|
|
|
Other
|
|
|
|
Units or
|
|
|
|
|
|
|
|
|
Securities
|
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
|
Shares or
|
|
|
|
Rights
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
Underlying
|
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
|
|
|
Units of
|
|
|
|
Units of
|
|
|
|
That
|
|
|
|
Rights
|
|
|
|
|
|
|
|
|
Unexercised
|
|
|
|
Unexercised
|
|
|
|
Option
|
|
|
|
|
|
|
|
Stock That
|
|
|
|
Stock That
|
|
|
|
Have
|
|
|
|
That
|
|
|
|
|
|
|
|
|
Options
|
|
|
|
Options
|
|
|
|
Exercise
|
|
|
|
Option
|
|
|
|
Have Not
|
|
|
|
Have Not
|
|
|
|
Not
|
|
|
|
Have Not
|
|
|
|
|
Grant
|
|
|
|
(#)
|
|
|
|
(#)
|
|
|
|
Price
|
|
|
|
Expiration
|
|
|
|
Vested(3)
|
|
|
|
Vested
|
|
|
|
Vested(4)
|
|
|
|
Vested
|
|
Name
|
|
|
Date(1)
|
|
|
|
Exercisable(2)
|
|
|
|
Unexercisable(2)
|
|
|
|
($)
|
|
|
|
Date
|
|
|
|
(#)
|
|
|
|
($)
|
|
|
|
(#)
|
|
|
|
($)
|
|
J. H. Miller
|
|
|
|
1/27/05
|
|
|
|
|
155,800
|
|
|
|
|
|
|
|
|
|
26.66
|
|
|
|
|
1/26/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/26/06
|
|
|
|
|
198,940
|
|
|
|
|
|
|
|
|
|
30.14
|
|
|
|
|
1/25/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/25/07
|
|
|
|
|
170,580
|
|
|
|
|
85,290
|
|
|
|
|
35.12
|
|
|
|
|
1/24/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/24/08
|
|
|
|
|
52,640
|
|
|
|
|
105,280
|
|
|
|
|
47.55
|
|
|
|
|
1/23/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/22/09
|
|
|
|
|
|
|
|
|
|
265,910
|
|
|
|
|
31.93
|
|
|
|
|
1/21/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
132,760
|
|
|
|
|
4,289,476
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/24/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,633
|
|
|
|
|
246,590
|
|
|
|
|
|
1/22/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,959
|
|
|
|
|
838,735
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W. H. Spence
|
|
|
|
1/25/07
|
|
|
|
|
75,813
|
|
|
|
|
37,907
|
|
|
|
|
35.12
|
|
|
|
|
1/24/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/24/08
|
|
|
|
|
23,250
|
|
|
|
|
46,500
|
|
|
|
|
47.55
|
|
|
|
|
1/23/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/22/09
|
|
|
|
|
|
|
|
|
|
109,480
|
|
|
|
|
31.93
|
|
|
|
|
1/21/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
103,280
|
|
|
|
|
3,336,977
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/24/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,373
|
|
|
|
|
108,982
|
|
|
|
|
|
1/22/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,694
|
|
|
|
|
345,523
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
P. A. Farr
|
|
|
|
1/27/05
|
|
|
|
|
33,980
|
|
|
|
|
|
|
|
|
|
26.66
|
|
|
|
|
1/26/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/26/06
|
|
|
|
|
61,890
|
|
|
|
|
|
|
|
|
|
30.14
|
|
|
|
|
1/25/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/25/07
|
|
|
|
|
37,546
|
|
|
|
|
18,774
|
|
|
|
|
35.12
|
|
|
|
|
1/24/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/24/08
|
|
|
|
|
15,343
|
|
|
|
|
30,687
|
|
|
|
|
47.55
|
|
|
|
|
1/23/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/22/09
|
|
|
|
|
|
|
|
|
|
72,990
|
|
|
|
|
31.93
|
|
|
|
|
1/21/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
96,720
|
|
|
|
|
3,125,023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/24/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,223
|
|
|
|
|
71,825
|
|
|
|
|
|
1/22/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,126
|
|
|
|
|
230,241
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. J. Grey
|
|
|
|
1/22/04
|
|
|
|
|
63,760
|
|
|
|
|
|
|
|
|
|
22.59
|
|
|
|
|
1/21/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/27/05
|
|
|
|
|
66,100
|
|
|
|
|
|
|
|
|
|
26.66
|
|
|
|
|
1/26/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/26/06
|
|
|
|
|
65,430
|
|
|
|
|
|
|
|
|
|
30.14
|
|
|
|
|
1/25/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/25/07
|
|
|
|
|
37,546
|
|
|
|
|
18,774
|
|
|
|
|
35.12
|
|
|
|
|
1/24/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/24/08
|
|
|
|
|
10,060
|
|
|
|
|
20,120
|
|
|
|
|
47.55
|
|
|
|
|
1/23/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/22/09
|
|
|
|
|
|
|
|
|
|
45,220
|
|
|
|
|
31.93
|
|
|
|
|
1/21/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42,400
|
|
|
|
|
1,369,944
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/24/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,459
|
|
|
|
|
47,140
|
|
|
|
|
|
1/22/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,416
|
|
|
|
|
142,681
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
D. G. DeCampli
|
|
|
|
1/25/07
|
|
|
|
|
16,740
|
|
|
|
|
8,370
|
|
|
|
|
35.12
|
|
|
|
|
1/24/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/24/08
|
|
|
|
|
6,853
|
|
|
|
|
13,707
|
|
|
|
|
47.55
|
|
|
|
|
1/23/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/22/09
|
|
|
|
|
|
|
|
|
|
33,670
|
|
|
|
|
31.93
|
|
|
|
|
1/21/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
55,870
|
|
|
|
|
1,805,160
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/24/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
994
|
|
|
|
|
32,116
|
|
|
|
|
|
1/22/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,289
|
|
|
|
|
106,268
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
49
|
|
|
(1) |
|
For a better understanding of this table, we have included an
additional column showing the grant date of the outstanding
stock options and the unearned and unvested performance units. |
|
(2) |
|
Under the terms of PPLs Incentive Compensation Plan, all
stock options for the named executive officers vest, or become
exercisable, in three equal annual installments over a
three-year period from the grant date. As of December 31,
2009, the vesting dates of unvested stock option awards for the
named executive officers are as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vesting Dates
|
|
|
|
|
|
|
|
|
2010
|
|
|
|
2011
|
|
|
|
|
|
|
|
|
Grant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
|
Date
|
|
|
|
1/22
|
|
|
|
1/24
|
|
|
|
1/25
|
|
|
|
1/22
|
|
|
|
1/24
|
|
|
|
1/22/12
|
|
J. H. Miller
|
|
|
|
1/25/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
85,290
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/24/08
|
|
|
|
|
|
|
|
|
|
52,640
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
52,640
|
|
|
|
|
|
|
|
|
|
|
1/22/09
|
|
|
|
|
88,636
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
88,637
|
|
|
|
|
|
|
|
|
|
88,637
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W. H. Spence
|
|
|
|
1/25/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,907
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/24/08
|
|
|
|
|
|
|
|
|
|
23,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,250
|
|
|
|
|
|
|
|
|
|
|
1/22/09
|
|
|
|
|
36,493
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,493
|
|
|
|
|
|
|
|
|
|
36,494
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
P. A. Farr
|
|
|
|
1/25/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,774
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/24/08
|
|
|
|
|
|
|
|
|
|
15,343
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,344
|
|
|
|
|
|
|
|
|
|
|
1/22/09
|
|
|
|
|
24,330
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,330
|
|
|
|
|
|
|
|
|
|
24,330
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. J. Grey
|
|
|
|
1/25/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,774
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/24/08
|
|
|
|
|
|
|
|
|
|
10,060
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,060
|
|
|
|
|
|
|
|
|
|
|
1/22/09
|
|
|
|
|
15,073
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,073
|
|
|
|
|
|
|
|
|
|
15,074
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
D. G. DeCampli
|
|
|
|
1/25/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,370
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/24/08
|
|
|
|
|
|
|
|
|
|
6,853
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,854
|
|
|
|
|
|
|
|
|
|
|
1/22/09
|
|
|
|
|
11,223
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,223
|
|
|
|
|
|
|
|
|
|
11,224
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3) |
|
The dates that restrictions lapse for each restricted stock or
restricted stock unit award granted to the named executive
officers are as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dates Restrictions Lapse
|
|
|
|
|
|
|
|
|
2010
|
|
|
|
|
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
Grant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
|
Date
|
|
|
|
1/25
|
|
|
|
3/1
|
|
|
|
1/24/11
|
|
|
|
1/22
|
|
|
|
12/1
|
|
|
|
12/1/17
|
|
|
|
4/27/27
|
|
J. H. Miller
|
|
|
|
1/25/07
|
|
|
|
|
37,980
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/24/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
52,680
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/22/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W. H. Spence
|
|
|
|
1/25/07
|
|
|
|
|
40,390
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/24/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
44,220
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/22/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,670
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
P. A. Farr
|
|
|
|
4/22/02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,600
|
|
|
|
|
|
1/27/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,400
|
|
|
|
|
|
1/25/07
|
|
|
|
|
16,430
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/24/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,850
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/22/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,440
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. J. Grey
|
|
|
|
1/25/07
|
|
|
|
|
13,780
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/24/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,910
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/22/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,710
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
D. G. DeCampli
|
|
|
|
3/01/07
|
|
|
|
|
|
|
|
|
|
4,370
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/24/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/22/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/21/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
|
|
15,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50
|
|
|
(4) |
|
The number of performance units disclosed in the table for each
named executive officer represents the threshold amount for 2008
awards and the target amount for 2009 awards. The threshold
amount is used for the 2008 awards because PPLs total
relative shareowner return was below the 40th percentile as
compared to its industry peers for the time period of 2008
through 2009, the first two years of the three-year performance
period. The target amount is used for the 2009 awards because
PPLs total relative shareowner return was within the 70th
percentile as compared to its industry peers during 2009, the
first year of the three-year performance period. These
performance units are payable in shares of PPL common stock
following the performance period. While the performance period
ends on December 31, 2010 for 2008 awards and
December 31, 2011 for 2009 awards, the performance units do
not vest until the Compensation, Governance and Nominating
Committee certifies that the performance goals have been
achieved. The number of performance units that vest at the time
of certification may be more or less than the number of
threshold or target awards reflected in this table, depending on
whether or not the performance goals have been achieved. |
OPTION EXERCISES
AND STOCK VESTED IN 2009
The following table provides information, for each of the named
executive officers, on (1) stock option exercises during
2009, including the number of shares acquired upon exercise and
the value realized and (2) the number of shares acquired
upon the vesting during 2009 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
|
|
|
|
70,940
|
|
|
|
$
|
644,412
|
|
|
|
|
38,560
|
|
|
|
$
|
1,247,416
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W. H. Spence
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,530
|
|
|
|
|
312,584
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
P. A. Farr
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,230
|
|
|
|
|
460,341
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. J. Grey
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,970
|
|
|
|
|
484,280
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
D. G. DeCampli
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,060
|
|
|
|
|
191,678
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 shares of common stock
underlying the restricted stock units on the day the
restrictions lapsed. |
PENSION BENEFITS
IN 2009
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 5,751 active employees as of December 31,
2009. 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.
|
51
|
|
|
|
|
The second is a final average pay formula as follows:
|
1.3% of final average earnings up to the average Social
Security Wage Base ($56,628 for 2009)
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 2009, $56,628. The executives annual earnings
taken into account under each formula include 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 ($245,000
for 2009).
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 2009 is $195,000 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,
2009, including the named executive officers, 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. Final average
earnings is the average of the highest 60 months of
earnings during the last 120 months of credited service.
Earnings include base salary and annual cash
incentive awards.
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
52
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 remained employed by the company until he is
60 years old, which occurred on October 1, 2008. The
CGNC also granted Mr. Spence an additional year of service
for each year of employment under the SERP as a retention
mechanism. Mr. DeCampli has been granted additional service
for purposes of determining his eligibility for a SERP
retirement benefit equal to four years of additional service
upon reaching age 55, and additional service for
determining his benefit upon retirement equal to five years of
additional service upon reaching age 56. 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, 2009.
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, 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
|
|
|
|
8.8
|
|
|
|
$
|
366,386
|
|
|
|
|
|
|
|
|
|
SERP
|
|
|
|
30
|
(4)
|
|
|
|
14,129,884
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W. H. Spence
|
|
|
PPL Retirement Plan
|
|
|
|
3.5
|
|
|
|
|
94,713
|
|
|
|
|
|
|
|
|
|
SERP
|
|
|
|
7
|
(5)
|
|
|
|
1,340,567
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
P. A. Farr
|
|
|
PPL Retirement Plan
|
|
|
|
5.3
|
|
|
|
|
116,491
|
|
|
|
|
|
|
|
|
|
PPL Subsidiary Retirement Plan
|
|
|
|
4.8
|
|
|
|
|
23,991
|
|
|
|
|
|
|
|
|
|
SERP
|
|
|
|
11.6
|
|
|
|
|
666,578
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. J. Grey
|
|
|
PPL Retirement Plan
|
|
|
|
14.8
|
|
|
|
|
497,766
|
|
|
|
|
|
|
|
|
|
SERP
|
|
|
|
29.3
|
(6)
|
|
|
|
4,142,931
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
D. G. DeCampli
|
|
|
PPL Retirement Plan
|
|
|
|
3.1
|
|
|
|
|
80,402
|
|
|
|
|
|
|
|
|
|
SERP
|
|
|
|
3.7
|
(7)
|
|
|
|
231,412
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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, 2009. The present value
has |
53
|
|
|
|
|
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 12 to the PPL financial statements in the Annual
Report on
Form 10-K
for the year ended December 31, 2009, as filed with the
SEC. As described in such Note, the interest assumption is 6.0%.
The post-retirement mortality assumption is based on the
retirement plan table published by the Society of Actuaries,
known as RP 2000 projected to 2015, which is a table used for
determining accounting obligations of pension plans. Only
Messrs. Miller and Grey are vested in the SERP as of
December 31, 2009. |
|
(3) |
|
The present values in the table above are theoretical figures
prescribed by the SEC for disclosure and comparison purposes.
The table below illustrates the actual benefits payable under
the listed events assuming termination of employment occurred as
of December 31, 2009. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SERP Payments upon Termination
|
|
as of December 31,
2009(a)
|
|
Named
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Officer
|
|
|
Retirement
|
|
|
|
Death
|
|
|
|
Disability
|
|
J. H. Miller
|
|
|
$
|
15,086,385
|
|
|
|
$
|
6,652,256
|
|
|
|
$
|
15,086,385
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W. H.
Spence(b)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
P. A.
Farr(b)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. J. Grey
|
|
|
|
4,525,786
|
|
|
|
|
1,919,350
|
|
|
|
|
4,525,786
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
D. G.
DeCampli(b)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Each named executive officer 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, 2009 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, Farr and DeCampli are not eligible to
retire nor are they vested under the SERP. Messrs. Spence
and DeCampli are also not vested in the PPL Retirement Plan,
meaning that if they had left the company on December 31,
2009, under any circumstance, neither would be eligible for any
benefit. If Mr. Farr had left the company on
December 31, 2009, 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 21.2 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, 2009 under the SERP of
$9,985,118. |
|
(5) |
|
Includes 3.5 additional years 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, 2009 under the SERP of
$670,284. |
|
(6) |
|
Includes 15.5 additional 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, 2009 under the SERP of $2,191,653. |
|
(7) |
|
Includes a pro rata portion of 4 years of additional
eligibility service as of Mr. DeCamplis 55th birthday
and a pro rata portion of 5 years of additional credited
service as of Mr. DeCamplis 56th birthday or
.6 years of credited service. 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. DeCampli as of December 31, 2009
under the SERP of $5,094. |
54
NONQUALIFIED
DEFERRED COMPENSATION IN 2009
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 2009 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 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. This plan is
unfunded and is not qualified for tax purposes. All benefits
under this plan are subject to the claims of the companys
creditors in the event of bankruptcy. 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.
During 2009, the named executive officers notionally invested in
one or more of the following Fidelity funds, with the annual
return shown for each fund: Fidelity Freedom 2015 (25.62%);
Fidelity Freedom 2020 (28.86%); Fidelity Overseas (25.19%);
Fidelity Growth Company Fund (41.15%); MSIFT Value Adviser Fund
(38.18%); Spartan International Index Fund (28.48%); Spartan
Total Market Index (28.39%); Spartan US Equity Index Fund
(26.51%); Templeton Foreign A (49.73%); and a stable value fund
managed by Fidelity (2.89%).
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 of 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
2009.
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|
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|
|
Executive
|
|
|
Registrant
|
|
|
Aggregate
|
|
|
Aggregate
|
|
|
|
|
|
|
Contributions in
|
|
|
Contributions in
|
|
|
Earnings in
|
|
|
Withdrawals/
|
|
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Aggregate Balance
|
Name
|
|
|
Last
FY(1)
|
|
|
Last
FY(2)
|
|
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Last
FY(3)
|
|
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Distributions
|
|
|
at Last
FYE(4)
|
J. H. Miller
|
|
|
|
$35,671
|
|
|
|
|
$28,321
|
|
|
|
|
$53,244
|
|
|
|
|
|
|
|
|
|
$260,286
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
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|
|
|
|
|
|
W. H. Spence
|
|
|
|
20,562
|
|
|
|
|
13,212
|
|
|
|
|
21,095
|
|
|
|
|
|
|
|
|
|
97,864
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
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P. A. Farr
|
|
|
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55,383
|
|
|
|
|
11,634
|
|
|
|
|
51,711
|
|
|
|
|
|
|
|
|
|
364,019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. J. Grey
|
|
|
|
13,268
|
|
|
|
|
10,408
|
|
|
|
|
91,839
|
|
|
|
|
|
|
|
|
|
402,930
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
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|
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|
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|
|
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D. G. DeCampli
|
|
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60,814
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|
|
|
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4,788
|
|
|
|
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30,672
|
|
|
|
|
|
|
|
|
|
158,415
|
|
|
|
|
|
|
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(1) |
|
All amounts deferred by Messrs. Miller, Spence, Farr, Grey
and DeCampli during 2009 are included in the Salary
column of the Summary Compensation Table. |
|
(2) |
|
Amounts in this column are company matching contributions during
2009 and are included in the Summary Compensation Table under
the heading All Other Compensation. |
|
(3) |
|
Aggregate earnings for 2009 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, 2009. Of the
totals in this column, the following amounts have previously
been reported in the Summary |
55
|
|
|
|
|
Compensation Table for previous years. No amounts are reported
for Mr. DeCampli, as he previously has not been a named
executive officer. |
|
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|
|
|
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|
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|
|
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Executive
|
|
|
Registrant
|
|
|
|
Name
|
|
|
Contributions
|
|
|
Contributions
|
|
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Total
|
J. H. Miller
|
|
|
$
|
65,468
|
|
|
|
$
|
51,407
|
|
|
|
$
|
116,875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W. H. Spence
|
|
|
|
37,644
|
|
|
|
|
23,527
|
|
|
|
|
61,171
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
P. A. Farr
|
|
|
|
93,572
|
|
|
|
|
16,526
|
|
|
|
|
110,098
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. J. Grey
|
|
|
|
116,753
|
|
|
|
|
15,614
|
|
|
|
|
132,367
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 the 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, 2011, and the agreements generally are
automatically extended for additional one-year periods. If a
change in control occurs during the agreements respective
terms, 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
|
56
|
|
|
|
|
year in which the change in control occurs, or if higher, the
fiscal year immediately prior to the fiscal year in which an
event or circumstance constituting good reason first
occurs;
|
|
|
|
|
|
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;
|
|
|
|
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, except for performance units;
|
|
|
|
all performance units outstanding calculated on a pro rata basis
of months of completed service, assuming achievement at the
maximum (200% of target), but off-set by the value of
performance units required to be paid pro rata at target upon a
change in control in accordance with the performance unit
agreement;
|
|
|
|
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, 2009 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);
|
|
|
|
the performance period applicable to any outstanding performance
unit awards will be deemed to conclude prior to the change in
control and a pro rata portion of all unvested units will become
immediately vested as though there had been achievement of goals
satisfying the target award;
|
|
|
|
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.
57
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.
Retention
Agreements
PPL had entered into a retention agreement with Mr. Miller
that granted 60,000 shares of restricted PPL common stock
on which the restrictions lapsed effective October 1, 2008,
Mr. Millers 60th birthday. PPL has entered into
retention agreements with Messrs. Farr and DeCampli that
grant 60,000 shares and 30,000 shares, respectively,
of restricted PPL common stock. The restriction period will
lapse on April 27, 2027 for Mr. Farr. The restrictions
on 15,000 shares will lapse for Mr. DeCampli on
December 1, 2012, his 55th birthday and restrictions will
lapse on the remaining 15,000 shares on December 1,
2017, his 60th birthday. 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. Farr is terminated for cause or
he terminates his employment with all PPL-affiliated companies
prior to April 27, 2027, all shares of his restricted stock
will be forfeited. In the event Mr. DeCampli is terminated
for cause or he terminates his employment with all
PPL-affiliated companies prior to December 1, 2012, all
shares of his restricted stock will be forfeited; if he is
terminated for cause after December 1, 2012 and
prior to December 1, 2017, the remaining 15,000 shares
of his restricted stock will be forfeited.
Mr. Millers agreement also included a grant of
additional years of service under the SERP, as described above
in Pension Benefits in 2009 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 vary 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, 2009, for reasons of voluntary termination,
retirement,
58
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 salaried
employees. Also, the following table does not repeat information
disclosed in the Pension Benefits in 2009 table, the
Nonqualified Deferred Compensation in 2009 table or,
except to the extent that vesting or payment may be accelerated,
the Outstanding Equity Awards at Fiscal-Year End
2009 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 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. The company also agreed at the time of hiring
Mr. DeCampli 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. DeCampli
became re-employed during the 52-week period. In addition, for a
period equal to the severance payment period the company would
continue active employee health, dental and basic life insurance
benefits.
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
2009 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
2009 table available as a result of the circumstances of
termination of employment.
59
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 2009 table on page 55 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. Only Messrs. Miller and Grey are eligible
to retire. In the event Messrs. Spence, Farr and DeCampli
were to die or terminate employment due to a disability, the
CGNC has the power to consider an award. If Messrs. Spence,
Farr and DeCampli 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, Farr and
DeCampli, the annual cash incentive awards discussed in the
CD&A and detailed for the 2009 performance 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
Messrs. Miller and Grey, 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 prorated in
the event of retirement or termination of employment without
cause on or after age 60, 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, includes the
value, as of December 31, 2009 (based on a PPL stock price
of $32.31), of accelerated restricted stock units under each
termination event.
Performance units that have not yet vested as a result of the
completion of the performance period remain outstanding and
eligible for pro rata vesting through the conclusion of the
performance period upon retirement, disability or death. Upon
completion of the performance period, a pro rata portion of the
total of the performance units, reinvested cash dividend
equivalent amounts and any dividends on shares of common stock
in the form of stock become payable. Otherwise, performance
units are generally forfeited in the event of voluntary
termination. In the table below for executives eligible to
retire (Messrs. Miller and Grey), 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, performance units for executives
eligible to retire remain outstanding subject to future pro rata
vesting. For all executives, we have assumed disability or death
as of December 31, 2009. In all events, we have illustrated
the future pro rata value based on performance achievement at
target.
60
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 (Messrs. Miller
and Grey), 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
maximum 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 prior to termination
of employment are normally forfeited. In the event of a change
in control, all options, including those granted within the
preceding 12 months, become exercisable upon the closing 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
2009 and after, the exercise periods in the event of a change in
control were extended to the full term.
61
POTENTIAL
PAYMENTS UPON TERMINATION OR
CHANGE IN CONTROL OF PPL CORPORATION
The following table, Potential Payments upon Termination
or Change in Control of PPL Corporation, includes the
value (based on a PPL stock price of $32.31) of options that are
not yet exercisable, assuming the options were
in-the-money
and exercised as of December 31, 2009 under each
termination event. Many of the options did not have value as of
December 31, 2009 because the exercise price was greater
than the market price for PPL stock at that time (in other
words, the options were under water rather than
in-the-money).
In footnote 7 following the table, the options are identified
and those that have no value as of December 31, 2009, may
be exercised in the future. Also, for the death and disability
events if an executive were eligible to retire
(Messrs. Miller and Grey) as of the event date, we have
assumed the executive elected to retire. 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 2009
table above.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement or
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
Change in
|
|
|
|
Voluntary
|
|
|
|
|
|
|
|
|
Termination
|
|
|
Change in
|
|
|
Control
|
|
Named Executive
Officer
|
|
Termination
|
|
|
Death
|
|
|
Disability
|
|
|
Not for
Cause(8)
|
|
|
Control
|
|
|
Termination
|
|
|
J. H. Miller
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance payable in
cash(1)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
1,145,000
|
|
|
|
0
|
|
|
$
|
10,992,000
|
|
Other separation
benefits(2)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
170,774
|
|
Tax gross-up
amount
payable(3)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
10,826,106
|
|
SERP(4)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
4,570,000
|
|
Restricted
stock/units(5)
|
|
|
4,289,476
|
|
|
|
4,289,476
|
|
|
|
4,289,476
|
|
|
|
4,289,476
|
|
|
$
|
4,289,476
|
|
|
|
4,289,476
|
|
Performance
units(6)
|
|
|
608,397
|
|
|
|
608,397
|
|
|
|
608,397
|
|
|
|
608,397
|
|
|
|
608,397
|
|
|
|
1,216,795
|
|
Stock
options(7)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
101,046
|
|
|
|
101,046
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W. H. Spence
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance payable in
cash(1)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
1,320,000
|
|
|
|
0
|
|
|
|
5,346,000
|
|
Other separation
benefits(2)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
149,090
|
|
Tax gross-up
amount
payable(3)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
5,954,720
|
|
SERP(4)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
1,880,000
|
|
Restricted
stock/units(5)
|
|
|
959,284
|
|
|
|
3,336,977
|
|
|
|
3,336,977
|
|
|
|
959,284
|
(9)
|
|
|
3,336,977
|
|
|
|
3,336,977
|
|
Performance
units(6)
|
|
|
0
|
|
|
|
260,419
|
|
|
|
260,419
|
|
|
|
0
|
(9)
|
|
|
260,419
|
|
|
|
520,837
|
|
Stock
options(7)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
(9)
|
|
|
41,602
|
|
|
|
41,602
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
P. A. Farr
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance payable in
cash(1)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
2,720,100
|
|
Other separation
benefits(2)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
138,550
|
|
Tax gross-up
amount
payable(3)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
4,479,095
|
|
SERP(4)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
1,830,000
|
|
Restricted
stock/units(5)
|
|
|
441,355
|
|
|
|
3,125,023
|
|
|
|
3,125,023
|
|
|
|
1,733,755
|
(9)
|
|
|
3,125,023
|
|
|
|
3,125,023
|
|
Performance
units(6)
|
|
|
0
|
|
|
|
172,535
|
|
|
|
172,535
|
|
|
|
0
|
(9)
|
|
|
172,535
|
|
|
|
345,071
|
|
Stock
options(7)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
(9)
|
|
|
27,736
|
|
|
|
27,736
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. J. Grey
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance payable in
cash(1)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
2,938,800
|
|
Other separation
benefits(2)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
135,001
|
|
Tax gross-up
amount
payable(3)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
SERP(4)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
630,000
|
|
Restricted
stock/units(5)
|
|
|
1,232,950
|
|
|
|
1,369,944
|
|
|
|
1,369,944
|
|
|
|
1,232,950
|
|
|
|
1,369,944
|
|
|
|
1,369,944
|
|
Performance
units(6)
|
|
|
141,841
|
|
|
|
110,500
|
|
|
|
110,500
|
|
|
|
110,500
|
|
|
|
110,500
|
|
|
|
221,000
|
|
Stock
options(7)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
17,184
|
|
|
|
17,184
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
D. G. DeCampli
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance payable in
cash(1)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
400,000
|
|
|
|
0
|
|
|
|
2,278,200
|
|
Other separation
benefits(2)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
4,500
|
(10)
|
|
|
0
|
|
|
|
126,355
|
|
Tax gross-up
amount
payable(3)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
2,636,497
|
|
SERP(4)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
480,000
|
|
Restricted
stock/units(5)
|
|
|
205,492
|
|
|
|
1,805,160
|
|
|
|
1,805,160
|
|
|
|
1,174,792
|
(9)
|
|
|
1,805,160
|
|
|
|
1,805,160
|
|
Performance
units(6)
|
|
|
0
|
|
|
|
78,513
|
|
|
|
78,513
|
|
|
|
0
|
(9)
|
|
|
78,513
|
|
|
|
157,027
|
|
Stock
options(7)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
(9)
|
|
|
12,795
|
|
|
|
12,795
|
|
|
|
|
(1) |
|
Mr. Miller has an agreement with us under which he is
entitled to receive 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. |
62
|
|
|
|
|
Mr. Spence also has an agreement with us under which he is
entitled to receive up to 24 months of pay following
involuntary termination for reasons other than cause. The full
24 months are illustrated as Severance payable in
cash under the Involuntary Termination Not for
Cause column. Mr. DeCampli has an agreement with us
under which he is entitled to receive 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. |
|
|
|
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 agreement. |
|
|
|
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 do
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, 2009, 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. |
|
(5) |
|
Total outstanding restricted stock and restricted stock unit
awards are illustrated in the Outstanding Equity Awards at
Fiscal-Year End 2009 table above at page 49. The
table above illustrates the value of the restricted stock and
stock units as of December 31, 2009 that would become
immediately vested as a result of each event as of
December 31, 2009. 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, 2009, would be distributed based on a PPL
stock price of $32.31. For purposes of the table below, the
total number of shares is illustrated without regard for the tax
impact. |
|
|
|
For Messrs. Farr and DeCampli, 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
|
|
Change in
|
|
Control
|
Named Executive Officer
|
|
Termination
|
|
Death
|
|
Disability
|
|
Not for Cause
|
|
Control
|
|
Termination
|
|
J. H. Miller
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated
|
|
|
132,760
|
|
|
|
132,760
|
|
|
|
132,760
|
|
|
|
132,760
|
|
|
|
132,760
|
|
|
|
132,760
|
|
Forfeited
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
W. H. Spence
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated
|
|
|
29,690
|
|
|
|
103,280
|
|
|
|
103,280
|
|
|
|
26,690
|
|
|
|
103,280
|
|
|
|
103,280
|
|
Forfeited
|
|
|
73,590
|
|
|
|
0
|
|
|
|
0
|
|
|
|
73,590
|
(9)
|
|
|
0
|
|
|
|
0
|
|
P. A. Farr
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated
|
|
|
13,660
|
|
|
|
96,720
|
|
|
|
96,720
|
|
|
|
53,660
|
|
|
|
96,720
|
|
|
|
96,720
|
|
Forfeited
|
|
|
83,060
|
|
|
|
0
|
|
|
|
0
|
|
|
|
43,060
|
(9)
|
|
|
0
|
|
|
|
0
|
|
R. J. Grey
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated
|
|
|
38,160
|
|
|
|
42,400
|
|
|
|
42,400
|
|
|
|
38,160
|
|
|
|
42,400
|
|
|
|
42,400
|
|
Forfeited
|
|
|
4,240
|
|
|
|
0
|
|
|
|
0
|
|
|
|
4,240
|
(9)
|
|
|
0
|
|
|
|
0
|
|
D. G. DeCampli
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated
|
|
|
6,360
|
|
|
|
55,870
|
|
|
|
55,870
|
|
|
|
36,360
|
|
|
|
55,870
|
|
|
|
55,870
|
|
Forfeited
|
|
|
49,510
|
|
|
|
0
|
|
|
|
0
|
|
|
|
19,510
|
(9)
|
|
|
0
|
|
|
|
0
|
|
|
|
|
(6) |
|
Total outstanding performance unit awards are illustrated in the
Outstanding Equity Awards at Fiscal-Year End 2009
table above at page 49. The table above illustrates the
value of the performance units as of December 31, 2009 that
would become payable as a result of each event as of
December 31, 2009 assuming target performance was achieved
(the value of these units for Change in Control
Termination are Miller-$608,397; Spence-$260,419;
Farr-$172,535; Grey-$100,500; and DeCampli-$78,513). In the case
of Change in Control Termination, this value is
comprised of units that become payable upon a change in control
of PPL Corporation plus an amount payable under the severance
agreements to provide payment for the maximum payout value less
the value of the units that become payable at target
performance. In the table below, the number of units accelerated
and payable as of the event, or the number of units that become
payable after the performance period is completed, 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, 2009, would be distributed based
on a PPL stock price of $32.31. For purposes of the table below,
the total number of shares is illustrated without regard to the
tax impact. |
64
Performance
Units
(#)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement or
|
|
|
|
|
|
Involuntary
|
|
|
|
Change in
|
|
|
Voluntary
|
|
|
|
|
|
Termination
|
|
Change in
|
|
Control
|
Named Executive
Officer
|
|
Termination
|
|
Death
|
|
Disability
|
|
Not for Cause
|
|
Control
|
|
Termination
|
|
J. H. Miller
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
18,830
|
|
|
|
18,830
|
|
Forfeited
|
|
|
22,393
|
|
|
|
22,393
|
|
|
|
22,393
|
|
|
|
22,393
|
|
|
|
0
|
|
|
|
0
|
|
Available after performance period completed
|
|
|
18,830
|
|
|
|
18,830
|
|
|
|
18,830
|
|
|
|
18,830
|
|
|
|
0
|
|
|
|
0
|
|
W. H. Spence
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
8,060
|
|
|
|
8,060
|
|
Forfeited
|
|
|
17,439
|
|
|
|
9,379
|
|
|
|
9,379
|
|
|
|
17,439
|
|
|
|
0
|
|
|
|
0
|
|
Available after performance period completed
|
|
|
0
|
|
|
|
8,060
|
|
|
|
8,060
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
P. A. Farr
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
0
|
|
|
|
5,340
|
|
|
|
5,340
|
|
Forfeited
|
|
|
11,573
|
|
|
|
6,233
|
|
|
|
6,233
|
|
|
|
11,573
|
|
|
|
0
|
|
|
|
0
|
|
Available after performance period completed
|
|
|
0
|
|
|
|
5,340
|
|
|
|
5,340
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
R. J. Grey
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
3,420
|
|
|
|
3,420
|
|
Forfeited
|
|
|
3,914
|
|
|
|
3,914
|
|
|
|
3,914
|
|
|
|
3,914
|
|
|
|
0
|
|
|
|
0
|
|
Available after performance period completed
|
|
|
3,420
|
|
|
|
3,420
|
|
|
|
3,420
|
|
|
|
3,420
|
|
|
|
0
|
|
|
|
0
|
|
D. G. DeCampli
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
2,430
|
|
|
|
2,430
|
|
Forfeited
|
|
|
5,277
|
|
|
|
2,847
|
|
|
|
2,847
|
|
|
|
5,277
|
|
|
|
0
|
|
|
|
0
|
|
Available after performance period completed
|
|
|
0
|
|
|
|
2,430
|
|
|
|
2,430
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
(7) |
|
Total outstanding stock options are illustrated in the
Outstanding Equity Awards at Fiscal-Year End 2009
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, 2009. Note that most options
were under water, or the exercise price of the
option was greater than the market value, as of
December 31, 2009, and therefore had no value. Exercisable
options as of December 31, 2009 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 event 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, 2009, based on a PPL stock
price of $32.31. In the event of death or disability,
unexercisable options become exercisable in the future and no
value is anticipated for these options. |
65
Stock Options Not
Yet Exercisable
(#)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement or
|
|
|
|
|
|
Involuntary
|
|
|
|
Change in
|
|
|
Voluntary
|
|
|
|
|
|
Termination
|
|
Change in
|
|
Control
|
Named Executive
Officer
|
|
Termination
|
|
Death
|
|
Disability
|
|
Not for Cause
|
|
Control
|
|
Termination
|
|
J. H. Miller
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated
|
|
|
190,570
|
|
|
|
190,570
|
|
|
|
190,570
|
|
|
|
190,570
|
|
|
|
456,480
|
|
|
|
456,480
|
|
Forfeited
|
|
|
265,910
|
|
|
|
265,910
|
|
|
|
265,910
|
|
|
|
265,910
|
(9)
|
|
|
0
|
|
|
|
0
|
|
W. H. Spence
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
(9
|
)
|
|
|
193,887
|
|
|
|
193,887
|
|
Forfeited
|
|
|
193,887
|
|
|
|
193,887
|
|
|
|
193,887
|
|
|
|
(9
|
)
|
|
|
0
|
|
|
|
0
|
|
P. A. Farr
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
(9
|
)
|
|
|
122,450
|
|
|
|
122,450
|
|
Forfeited
|
|
|
122,450
|
|
|
|
122,450
|
|
|
|
122,450
|
|
|
|
(9
|
)
|
|
|
0
|
|
|
|
0
|
|
R. J. Grey
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated
|
|
|
38,893
|
|
|
|
38,893
|
|
|
|
38,893
|
|
|
|
38,893
|
|
|
|
84,113
|
|
|
|
84,113
|
|
Forfeited
|
|
|
45,220
|
|
|
|
45,220
|
|
|
|
45,220
|
|
|
|
45,220
|
(9)
|
|
|
0
|
|
|
|
0
|
|
D. G. DeCampli
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
(9
|
)
|
|
|
55,747
|
|
|
|
55,747
|
|
Forfeited
|
|
|
55,747
|
|
|
|
55,747
|
|
|
|
55,747
|
|
|
|
(9
|
)
|
|
|
0
|
|
|
|
0
|
|
|
|
|
(8) |
|
In addition to any amounts provided in this column, in the event
of involuntary termination for reasons other than for cause, any
severance payable in cash and/or other separation benefits, if
any, would be determined as of the date of termination on a
case-by-case basis and would require the approval of the
Committee. |
|
(9) |
|
In the event of involuntary termination for reasons other than
for cause, Messrs. Spence, Farr and DeCampli would forfeit
all outstanding restricted stock units, performance units and
stock options because they are not eligible to retire.
Messrs. Miller and Grey would forfeit stock options granted
within 12 months of termination of employment.
Mr. Grey would forfeit any premium units granted under the
Premium Exchange Program. Any exceptions to the automatic
forfeitures would require the approval of the Committee.
Messrs. Farr and DeCampli would be eligible to receive the
40,000 shares and 30,000 shares, respectively, of
restricted stock that each holds under his Retention Agreement. |
|
(10) |
|
Under the terms of Mr. DeCamplis employment offer, in
the event of involuntary termination for reasons other than for
cause, for a period equal to the severance payment period,
assumed here to be one year, the company will continue active
employee health, dental and basic life insurance benefits. |
PROPOSAL 2:
COMPANY PROPOSAL TO AMEND THE COMPANYS BYLAWS TO
ELIMINATE CLASSIFICATION OF TERMS OF THE BOARD OF
DIRECTORS
Our bylaws currently provide that members of our Board of
Directors be divided into three classes, with staggered
three-year terms. Under the current bylaws, a directors
term of office generally continues until the third annual
meeting of shareowners following his or her election to office,
and not more than one class of directors is elected at any
annual meeting of shareowners.
In response to a favorable vote by shareowners at the 2009
annual meeting on a proposal to provide for the annual election
of all directors, the Board of Directors carefully considered
the advantages and disadvantages of the classified board
provisions in the companys bylaws. While our Board of
Directors believes that a classified board structure provides
continuity and stability in pursuing our strategies, enhances
Board independence and increases the Boards negotiating
leverage when dealing with a potential acquirer, the Board has
concluded that, after taking into account the level of
shareowner support for the proposal at last years meeting
and considering the current corporate governance environment,
our classified board structure should be eliminated, subject to
shareowner approval. Accordingly, the Board of Directors now
unanimously recommends that our shareowners approve amendments
to Article IV, Sections 4.03 and 4.04 of the
Companys bylaws.
66
The proposed amendments to the bylaws, which are set forth in
Annex A, would eliminate the classified structure of the
companys Board of Directors and provide for the annual
election of all directors beginning at the 2011 annual meeting.
Consequently, directors standing for election in 2011 would be
elected to one-year terms. Directors who would normally be
subject to re-election in 2012 and 2013 have agreed to resign
prior to the 2011 annual meeting, if Proposal 2 is
approved. If this Proposal 2 is not approved by our
shareowners, our current classified board structure will remain
in place, and the directors to be elected at the 2011 annual
meeting will be elected for a three-year term.
Vote Required for Approval. The affirmative vote of a
majority of the votes cast by all shareowners entitled to vote
thereon is required to approve the proposed amendments to our
bylaws.
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 2009 and 2008
For the fiscal years ended December 31, 2009 and 2008,
Ernst & Young LLP (E&Y) served as our independent
registered public accounting firm, or independent
auditor. The following table presents fees billed,
including expenses, by E&Y for the fiscal years ended
December 31, 2009 and 2008, for professional services
rendered for the audit of our companys annual financial
statements and for fees billed for other services rendered.
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
|
(In thousands)
|
|
|
Audit
fees(a)
|
|
$
|
5,239
|
|
|
$
|
5,508
|
|
Audit-related
fees(b)
|
|
|
915
|
|
|
|
691
|
|
Tax
fees(c)
|
|
|
|
|
|
|
|
|
All other
fees(d)
|
|
|
14
|
|
|
|
73
|
|
|
|
|
(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. |
|
(b) |
|
Fees for due diligence work, review of internal controls,
performance of specific
agreed-upon
procedures, consultation on new accounting standard, a review of
eXtensible Business Reporting Language tags assigned to
financial statement line items and services provided in
connection with various business and financing transactions.
Also includes approximately $394,000 of 2008 fees and
approximately $3,900 of 2009 fees that were reimbursed to PPL by
UGI Utilities, Inc. for services performed in connection with
the sale of PPL Gas Utilities Corporation to UGI Utilities, Inc. |
|
(c) |
|
The independent auditor did not provide tax services to the
company or any of its affiliates. |
|
(d) |
|
Fees relating to access to an E&Y online accounting
research tool, miscellaneous regulatory consulting services, an
audit of grant applications relating to network connections,
consultation with outside counsel regarding U.K. GAAP and
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 pre-approved specific
categories of services. All services outside of the specified
67
categories and all amounts exceeding the authorized levels are
reviewed and pre-approved 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 2009 and 2008 services
provided by E&Y.
* * * * * *
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
SHAREOWNER
PROPOSALS
There are two shareowner proposals included in this years
proxy statement for shareowner consideration, if properly
presented at the Annual Meeting. A third shareowner proposal
submitted by Charles H. Ballard to declassify the Board by
2014 was voluntarily withdrawn because of the companys
decision to submit Proposal 2 to shareowners.
A shareowner, Emil Rossi, whose address is
P.O. Box 249, Boonville, California
95415-0249,
has advised the company that his proxy, John Chevedden or his
designee, plans to introduce the following resolution at the
Annual Meeting. We have been notified that Mr. Rossi is the
beneficial owner of 2,000 shares of PPLs common stock.
PROPOSAL 4:
SPECIAL SHAREOWNER MEETINGS
RESOLVED, Shareowners ask our Board to take the
steps necessary to amend our bylaws and each appropriate
governing document to give holders of 10% of our outstanding
common stock (or the lowest percentage allowed by law above 10%)
the power to call a special shareowner meeting. This includes
that a large number of small shareowners can combine their
holdings to equal the above 10% of holders. This includes that
such bylaw
and/or
charter text will not have any exception or exclusion conditions
(to the fullest extent permitted by state law) that apply only
to shareowners but not to management
and/or the
board.
A special meeting allows shareowners to vote on important
matters, such as electing new directors, that can arise between
annual meetings. If shareowners cannot call a special meeting
investor returns may suffer. Shareowners should have the ability
to call a special meeting when a matter merits prompt attention.
This proposal does not impact our boards current power to
call a special meeting.
This proposal topic won more than 60% support at the
following companies in 2009: CVS Caremark (CVS), Sprint Nextel
(S), Safeway (SWY), Motorola (MOT) and R. R. Donnelley (RRD).
William Steiner and Nick Rossi sponsored these proposals.
The merit of this Special Shareowner Meeting proposal
should also be considered in the context of the need for
improvement in our companys 2009 reported corporate
governance status:
The Corporate Library www.thecorporatelibrary.com,
independent investment research firm rated our company
Moderate Concern in executive pay. CEO James
Millers $1.2 million in stock options raised concerns
over the link between executive pay and company performance
since small increases in our companys share price can
result in large windfalls. These options came on top of nearly
$7.4 million earned on the exercise of options and vesting
of restricted stock for Mr. Miller. Mr. Miller
68
received $7 million in pension benefits (which includes an
additional 22 years of credited services) since 2006.
Compare this to the pension plan of some of our
10,000 employees.
Frederick Bernthal, Allen Deaver (our Lead Director) and
Stuart Heydt each had 12 to
18-years
long-tenure independence concern. Plus these
directors were assigned to 4 of the 8 seats on our audit
and combination committee of executive pay and nominations.
Mr. Heydt also received our most withheld votes.
The 2009 shareholder proposal for annual election of
each director received our 78%-support and this even exceeded
53%-support from all shares outstanding. We had no shareholder
right to act by written consent, cumulative voting, an
independent chairman or elect directors by our majority vote (in
spite of our 70%-support for this in 2007). Shareholder proposal
to address all or some of these topics have received majority
votes at our companies and each would be an excellent topic for
our next annual meeting.
The above concerns show there is need for improvement.
Please encourage our board to respond positively to this
proposal: Special Shareowner Meetings Yes on 4.
PPLS
STATEMENT IN RESPONSE TO PROPOSAL 4
Your Board of Directors opposes this proposal for the following
reasons:
The shareowner proposal requests that your Board of Directors
take the steps necessary to amend PPLs governing documents
to allow holders of 10% of PPLs outstanding common stock
the power to call a special shareowner meeting. Your Board of
Directors has carefully considered this proposal and the
arguments for and against the proposal. We have concluded that
modifying our governing documents to permit a relatively small
minority of shareowners to call special meetings is unnecessary
and could result in a counterproductive use of PPLs
resources.
We fully recognize the importance of providing our shareowners
with an effective means of making their voices heard in the
governance of PPL and ensuring that their interests are at all
times protected. We believe, however, that the interests of our
shareowner base as a whole are best served by adopting
procedures that allow shareowners to exercise their rights in an
efficient and orderly manner, without causing an undue burden on
the operations and management of PPL. Under our Bylaws, a
special meeting of shareowners may be called at any time by the
Chairman of the Board or by resolution of your Board of
Directors. This provision conforms to the requirements of the
Pennsylvania Business Corporation Law and is an appropriate
corporate governance provision because it (1) enables the
orderly conduct of our business, (2) affords your Board of
Directors ample notice and opportunity to respond to proposals
and (3) allows your directors, according to their fiduciary
obligations, to exercise their business judgment to determine
when it is in the best interests of shareowners to convene a
special meeting.
Moreover, the governing documents of PPL include a number of
procedures by which shareowners may participate in the
governance of PPL. For example, our shareowners have the ability
to present proposals at our annual meetings and make director
nominations, in accordance with our Bylaws or the requirements
of the Securities Exchange Act of 1934, as applicable.
Shareowners also have the ability to recommend director nominees
to the Compensation, Governance and Nominating Committee of the
Board and to communicate concerns to the Board outside of the
framework of the annual meeting. See Communications with
the Board on page 12. We believe these avenues of
participation in the governance of PPL provide an effective
voice for shareowners in an efficient and cost-effective manner.
For a company with as many shareowners as PPL, a special meeting
of shareowners is both expensive and time-consuming. PPL must
prepare the required disclosure documents and distribute the
information to all shareowners. In addition, your Board of
Directors and members of senior management must dedicate a
significant amount of time to prepare for and conduct the
meeting time that would otherwise be spent in the
operation of our business. Because of the substantial costs to
all of our shareowners, we believe special meetings should be
called only when the interests of a substantial number of
shareowners are implicated. In contrast, the proposal
effectively allows a
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relatively small minority of shareowners to unilaterally direct
company resources and management attention to an agenda that
could very well be of limited importance and interest to the
entire shareowner body. Furthermore, the proposal includes no
limit on the number of special meetings such a small minority of
shareowners could call, which could significantly distract
management and disrupt the conduct of our business.
Your Board of
Directors recommends that
you vote AGAINST Proposal 4
The second shareowner proposal is submitted by the United
Association S&P 500 Index Fund, located
c/o United
Association of Journeyman and Apprentices of the Plumbing and
Pipe Fitting Industry of the United States and Canada, Three
Park Place, Annapolis, Maryland 21401. The Fund has advised the
company that its proxy, ProxyVote Plus, LLC or its designee,
plans to introduce the following resolution at the Annual
Meeting. We have been notified that the Fund is the beneficial
owner of 8,577 shares of PPLs common stock.
PROPOSAL 5:
DIRECTOR ELECTION MAJORITY VOTE STANDARD PROPOSAL
Resolved: That the shareholders of PPL Corporation
(Company) hereby request that the Board of Directors
initiate the appropriate process to amend the Companys
governance documents (articles of incorporation or bylaws) to
provide that director nominees shall be elected by the
affirmative vote of the majority of votes cast at an annual
meeting of shareholders, with the plurality vote standard
retained for contested director elections, that is, when the
number of director nominees exceeds the number of board seats.
Supporting Statement: In order to provide
shareholders a meaningful role in director elections, the
Companys director election vote standard should be changed
to a majority vote standard. A majority vote standard would
require that a nominee receive a majority of the votes cast in
order to be elected. The standard is particularly well-suited
for the vast majority of director elections in which only board
nominated candidates are on the ballot. We believe that a
majority vote standard in board elections would establish a
challenging vote standard for board nominees and improve the
performance of individual directors and entire boards. The
Company presently uses a plurality vote standard in all director
elections. Under the plurality standard, a board nominee can be
elected with as little as a single affirmative vote, even if a
substantial majority of the votes cast are withheld
from the nominee.
In response to strong shareholder support for a majority
vote standard, a strong majority of the nations leading
companies, including Intel, General Electric, Motorola, Hewlett
Packard, Morgan Stanley, Home Depot, Gannett, Marathon Oil and
Pfizer, have adopted a majority vote standard in company bylaws
or articles of incorporation. Additionally, these companies have
adopted director resignation policies in their bylaws or
corporate governance policies to address post-election issues
related to the status of director nominees that fail to win
election. Other companies have responded only partially to the
call for change by simply adopting post election director
resignation policies that set procedures for addressing the
status of director nominees that receive more
withhold votes than for votes. At the
time of this proposal submission, our Company and its board had
not taken either action.
We believe that a post election director resignation
policy without a majority vote standard in company governance
documents is an inadequate reform. The critical first step in
establishing a meaningful majority vote policy is the adoption
of a majority vote standard. With a majority vote standard in
place, the board can then take action to develop a post election
procedure to address the status of directors that fail to win
election. A majority vote standard combined with a post election
director resignation policy would establish a meaningful right
for shareholders to elect directors, and reserve for the board
an important post election role in determining the continued
status of an unelected director. We urge the Board to take this
important step of establishing a majority vote standard in the
Companys governance documents.
70
PPLS
STATEMENT IN RESPONSE TO PROPOSAL 5
Your Board of Directors opposes this proposal for the following
reasons:
The shareowner proposal requests that your Board of Directors
initiate the appropriate process to amend PPLs governance
documents to provide that director nominees shall be elected by
the affirmative vote of the majority of votes cast at an annual
meeting of shareowners, with a plurality vote standard retained
for contested director elections. Your Board of Directors has
carefully considered this proposal and the arguments for and
against the proposal. After careful consideration, your Board of
Directors has determined that implementing the majority vote
standard advanced in this shareowner proposal would not enhance
shareowner value and would not be in the best interests of PPL
and its shareowners.
PPL Has Already Addressed the Concerns Expressed in the
Proposal. PPLs current director election policies are
provided for under its Bylaws and Guidelines for Corporate
Governance. PPLs Bylaws provide that directors are elected
under a plurality vote standard, meaning that the nominees who
receive the most affirmative votes will be elected to your
Board. Plurality voting is the default standard under the law of
the Commonwealth of Pennsylvania, where PPL is incorporated, and
has long been the accepted standard among large public
companies. Consequently, the rules governing plurality voting
are well-established and understood.
Notwithstanding the foregoing, in order to address concerns
about the plurality standard, in January 2010, the Board adopted
an amendment to its Guidelines for Corporate Governance to
include a director resignation policy (the Director
Resignation Policy). Your Board believes that this policy
serves the interests of PPLs shareowners by establishing
direct and effective consequences for any director who does not
receive a majority vote in a non-contested election. The
Director Resignation Policy, the full text of which can be found
in our Guidelines for Corporate Governance on the Corporate
Governance section of PPLs Web site
(www.pplweb.com/about/corporate+governance),
provides that:
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In any uncontested election of directors, any incumbent director
nominee who receives a greater number of votes
withheld from his or her election than votes
for such election shall promptly tender his or her
resignation to your Board of Directors following the final
tabulation of the shareowner vote.
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The Compensation, Governance and Nominating Committee, which
consists entirely of independent directors, will consider the
directors resignation and will make a recommendation for
consideration by your Board of Directors. Within 90 days
following the final vote tabulation, your Board of Directors
will act on the tendered resignation and the recommendation of
the Compensation, Governance and Nominating Committee.
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Thereafter, your Board of Directors will promptly disclose its
decision-making process and decision regarding whether to accept
the directors resignation (or the reason(s) for rejecting
the resignation, if applicable) in a
Form 8-K
furnished to the Securities and Exchange Commission.
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Your Board of Directors believes that the Director Resignation
Policy promotes a good balance between providing shareowners a
meaningful and significant role in the process of electing
directors and allowing the Board flexibility to exercise its
independent judgment on a
case-by-case
basis.
History of Strong Directors under the Plurality Vote
Standard. The Companys plurality vote standard has
resulted in an excellent history of electing strong and
independent directors. The average of the highest withhold vote
for any director for the past 10 years is only 4.45% of the
shares voted with respect to such directors. As a result,
changing our current voting requirement to majority voting would
have had no effect on the outcome of our election process during
the past ten years. Moreover, your Board of Directors has
historically been comprised of highly qualified directors from
diverse backgrounds, substantially all of whom have been
independent within the meaning of standards adopted
by the New York Stock Exchange. Accordingly, your Board of
Directors believes that PPLs current standards and
policies continue to promote the best interests of PPLs
shareowners.
Your Board of
Directors recommends that
you vote AGAINST Proposal 5
71
Proposed
Amendments to Sections 4.03 and 4.04
of the Companys Bylaws
Section 4.03. Number and Term of Office.
(c) Classification of Directors
Term of Office.--Except as otherwise provided in
or fixed by or pursuant to the articles of incorporation, the
board of directors shall be divided into three classes as nearly
equal in number as may be. The initial term of office of each
director in the first class shall expire at the annual meeting
of shareholders in 1996; the initial term of office of each
director in the second class shall expire at the annual meeting
of shareholders in 1997; and the initial term of office of each
director in the third class shall expire at the annual meeting
of shareholders in 1998. At each annual election commencing at
the annual meeting of shareholders in 1996 and thereafter, the
successors to the class of directors whose term expires at that
time shall be elected to hold office for a term of three years
to succeed those whose term expires, so that the term of one
class of directors shall expire each year .Beginning
with the 2011 annual meeting of shareholders, all directors,
including any directors previously elected for three-year terms,
must stand for election on an annual basis. Each director
elected at or after the 2011 annual meeting of shareholders
shall be elected for a one-year term. Each director shall
hold office for the term of which he or she is elected
or appointed until the next annual meeting and
until a successor has been selected and qualified or until his
or her earlier death, resignation or removal. In the
event of any increase or decrease in the authorized number of
directors, (a) each director then serving as such shall
nevertheless continue as a director of the class of which he or
she is a member until the expiration of his or her current term,
or his or her earlier death, resignation or removal, and
(b) the newly created or eliminated directorships resulting
from such increase or decrease shall be apportioned by the board
of directors among the three classes of directors so as to
maintain such classes as nearly equal in number as may be.
Section 4.04. Vacancies.
(a) General Rule Vacancies in the
board of directors, including vacancies resulting from an
increase in the number of directors, may be filled by a majority
vote of the remaining members of the board though less than a
quorum, or by a sole remaining director, and each person so
selected shall be a director to serve until the next
selection of the class for which such director has been
chosen annual meeting, and until a successor has
been selected and qualified or until his or her earlier death,
resignation or removal.
A-1
PPL Shareowner News and Information Line
(800-345-3085)
Shareowner Inquiries:
PPL Shareowner
Services
Wells Fargo Bank, N.A.
161 North Concord Exchange
South St. Paul, MN
55075-1139
Toll Free:
1-800-345-3085
Outside U.S.:
651-453-2129
FAX:
651-450-4085
www.wellsfargo.com/shareownerservices
Online Account Access: Registered shareowners
can access account information by visiting
www.shareowneronline.com.
For questions about PPL Corporation or its subsidiaries:
Manager
PPL Investor Services
Two North Ninth Street (GENTW13)
Allentown, PA 18101
FAX:
610-774-5106
Via e-mail:
invserv@pplweb.com
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 2009 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
COMPANY # 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. INTERNET www.eproxy.com/ppl Use the Internet to vote your proxy 24 hours a day, 7
days a week, until 11:59 p.m. (CT) on May 18, 2010. 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. PHONE 1-800-560-1965 Use any
touch-tone telephone to vote your proxy 24 hours a day, 7 days a week, until 11:59 p.m. (CT) on May
18, 2010. 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. 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 3 Please detach here 3 The
Board of Directors Recommends a Vote FOR Items 1, 2 and 3. 1. Election of directors: 01 Stuart E.
Graham 03 Craig A. Rogerson Vote FOR Vote WITHHELD 02 Stuart Heydt all nominees from all
nominees (except as marked) (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.) 2. Company Proposal to
Amend the Companys Bylaws to Eliminate Classification For Against Abstain of Terms of Board of
Directors 3. Ratification of the Appointment of Independent Registered Public Accounting Firm For
Against Abstain The Board of Directors Recommends a Vote AGAINST Items 4 and 5. 4. Shareowner
Proposal Special Shareowner Meetings For Against Abstain 5. Shareowner Proposal Director
Election Majority Vote Standard Proposal For Against Abstain Address Change? Mark Box Indicate
changes below: Date 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. |
PPL CORPORATION ANNUAL MEETING OF SHAREOWNERS WEDNESDAY, MAY 19, 2010 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 PPL Corporation Two
North Ninth Street Allentown, PA 18101 proxy This proxy is solicited by the Board of Directors for
use at the Annual Meeting on May 19, 2010. 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 19, 2010, and any adjournments or postponements thereof, and in
their discretion to vote and act upon any other matters as may properly come before said meeting
and any adjournments or postponements 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 and AGAINST Items 4 and 5. 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 properly come before the Annual Meeting and all adjournments
or postponements thereof. See reverse for voting instructions. |