8-KMaterial Agreements

AMERICAN ELECTRIC POWER CO INC 8-K Report, Material Agreement (Dec 20, 2005)

Filed December 20, 2005For Securities:AEP

Summary

This 8-K filing from American Electric Power Company, Inc. (AEP) details changes to its non-employee director compensation structure, effective January 1, 2006. The company's Board of Directors, based on recommendations from its Committee on Directors and Corporate Governance, has adjusted both stock-based and cash compensation for its directors. These changes are intended to position director compensation within the second highest quartile compared to a peer group of companies. Specifically, the annual award of AEP stock units will increase from $80,000 to $82,500, and the annual cash retainer will rise from $60,000 to $67,500. The target mix for director compensation is set at 45% cash and 55% AEP stock equivalents. This adjustment reflects a strategic decision to align director compensation with industry benchmarks and incentivize long-term alignment with shareholder interests through stock ownership.

Key Highlights

  • 1AEP's Board of Directors approved changes to non-employee director compensation.
  • 2The compensation changes are effective January 1, 2006.
  • 3Director compensation will be targeted within the second highest quartile of a peer group.
  • 4The annual AEP stock unit award for non-employee directors will increase from $80,000 to $82,500.
  • 5The annual cash retainer for non-employee directors will increase from $60,000 to $67,500.
  • 6The target compensation mix is 45% cash and 55% AEP stock equivalents.

Frequently Asked Questions

This 8-K filing announces changes to American Electric Power Company, Inc.'s (AEP) compensation for its non-employee directors, effective January 1, 2006. The adjustments aim to align director pay with industry peers and a specific target compensation mix.

The annual award of AEP stock units will increase from $80,000 to $82,500, and the annual cash retainer will increase from $60,000 to $67,500. This results in a new target mix of 45% cash and 55% AEP stock equivalents.

The Board of Directors, upon recommendation from its Committee on Directors and Corporate Governance, determined that director compensation should be targeted to fall within the second highest quartile of a peer group of companies. The changes also aim to ensure a balanced mix of cash and stock equivalents to align director interests with those of AEP shareholders.