8-KMaterial Agreements

EVERSOURCE ENERGY 8-K Report, Material Agreement (May 31, 2006)

Filed May 31, 2006For Securities:ES

Summary

This 8-K filing by Northeast Utilities (ES) on May 31, 2006, primarily details the approval and implementation of a new executive compensation benefit, the 'K-Vantage Make-Whole Benefit.' This benefit is designed to offset limitations imposed by the Internal Revenue Code on contributions to qualified retirement plans for certain executives. It is specifically targeted at officers hired after 2005 and existing officers who opt-in by forgoing additional accruals in the existing retirement plan. The K-Vantage benefit ensures these executives receive the full company contribution they would have otherwise earned, irrespective of federal compensation limits. The approval of this new benefit by the Compensation Committee is a significant event for the company's senior leadership. Investors should note that this is a non-qualified deferred compensation plan, meaning it is not subject to the same regulatory requirements as qualified plans. The benefit is subject to a five-year vesting schedule, aligning executive interests with long-term company performance.

Key Highlights

  • 1Northeast Utilities (ES) approved a new executive compensation benefit called the 'K-Vantage Make-Whole Benefit'.
  • 2This benefit aims to compensate executives for limitations imposed by IRS rules on qualified retirement plan contributions.
  • 3The K-Vantage benefit is available to officers hired after 2005 and existing officers who choose to participate.
  • 4Participation for existing officers requires forgoing additional benefit accruals under the current Northeast Utilities Retirement Plan.
  • 5The benefit supplements the company's 401k plan contributions, which are otherwise capped by federal regulations.
  • 6The K-Vantage Make-Whole Benefit has a five-year vesting period.
  • 7This is a non-qualified deferred compensation plan, managed through an amendment to the Northeast Utilities Deferred Compensation Plan for Executives.

Frequently Asked Questions

The K-Vantage Make-Whole Benefit is a new non-qualified executive compensation benefit approved by Northeast Utilities. It's designed to provide executives with the full company contribution they would have received under the 401k plan, without being limited by Internal Revenue Code compensation caps that affect qualified plans.

Eligibility is extended to officers hired by Northeast Utilities after 2005. Current officers can also participate if they choose to opt-in and, in doing so, agree to forego additional benefit accruals from the existing Northeast Utilities Retirement Plan.

As a non-qualified deferred compensation plan, the K-Vantage benefit will likely be reflected as a liability on the company's balance sheet. The costs associated with this benefit will be recognized over time as they are accrued. Investors should monitor future financial statements for details on the financial impact and accounting treatment.

The K-Vantage Make-Whole Benefit is subject to a five-year vesting schedule. This means that executives must remain with the company for five years from the date they become eligible for the benefit to be fully vested and receive the full amount.