What is the primary purpose of the new Stock Ownership Requirement Plan?

The primary purpose is to further align the financial interests of key employees, particularly executives, with those of AEP shareholders by ensuring they hold a significant amount of company stock.

Who is affected by this Stock Ownership Requirement Plan?

The plan affects approximately 50 eligible employees of AEP who have been assigned minimum stock ownership requirements. These are typically senior employees or executives.

How can employees meet their stock ownership requirements?

Employees can meet their requirements through the mandatory deferral of earned performance units granted under the AEP Long-Term Incentive Plan into 'AEP Career Shares'. They may also be required to commit to retaining AEP shares or share equivalents they would otherwise hold. Additional measures, such as bonus deferrals or retaining stock option gains, are applicable if ownership targets are not met within the specified timeframe.

What are 'AEP Career Shares' and how do they perform?

'AEP Career Shares' are unfunded share equivalents used for deferring compensation. They earn a rate of return equivalent to the total return on AEP common stock, including reinvested dividends, and become payable in cash or shares upon the employee's termination of employment.

AEP 8-K: Material Agreements

Summary

This 8-K filing by AMERICAN ELECTRIC POWER CO INC (AEP) on June 1, 2006, details the adoption of a new Stock Ownership Requirement Plan, effective May 30, 2006. This plan mandates specific minimum stock ownership levels for approximately 50 eligible employees, primarily executives, intended to align their financial interests more closely with those of AEP shareholders. The plan requires participants to achieve these ownership targets within five years, utilizing mandatory deferrals of performance units and committed retention of AEP shares or equivalents.

Key Highlights

1Adoption of a Stock Ownership Requirement Plan impacting approximately 50 eligible employees.
2The plan aims to enhance executive alignment with shareholder interests by requiring minimum stock ownership.
3Participants have a five-year timeframe to meet assigned stock ownership requirements.
4Meeting requirements involves mandatory deferral of earned performance units into 'AEP Career Shares'.
5Participants not meeting requirements within five years face mandatory deferral of 50% of their annual bonus.
6Additional requirements for participants who have not met ownership targets include retaining realized shares from stock option exercises.
7'AEP Career Shares' are unfunded share equivalents that accrue a rate of return tied to AEP's total stock performance with reinvested dividends.

AMERICAN ELECTRIC POWER CO INC 8-K Report, Material Agreement (Jun 1, 2006)

Summary

Key Highlights

Frequently Asked Questions