8-KLeadership Changes

EVERSOURCE ENERGY 8-K Report, Executive Changes (Sep 11, 2008)

Filed September 11, 2008For Securities:ES

Summary

Eversource Energy (formerly Northeast Utilities) filed this Form 8-K on September 11, 2008, to report significant amendments to its executive compensation plans, specifically the Deferred Compensation Plan for Executives (DCPE), Incentive Plan, Special Severance Program (SSP), and Supplemental Executive Retirement Plan (SERP). These amendments were primarily driven by the need to comply with Section 409A of the Internal Revenue Code, aiming to avoid excise taxes and interest charges for its Named Executive Officers (NEOs) due to non-compliance with the tax code's regulations on deferred compensation. The key changes involve modifications to the timing and form of payments. Notably, distribution elections in the DCPE are now generally irrevocable with limited exceptions, and accelerated distributions are restricted. Payments upon termination of employment under the Incentive Plan and potentially other plans will now be delayed by six months, with interest or dividends continuing to accrue, unless certain conditions are met. The SSP also saw revisions, particularly concerning severance triggered by a change of control, requiring specific material adverse changes and a cure period for certain executives. These adjustments are crucial for ensuring the company and its executives remain in good standing with tax regulations.

Key Highlights

  • 1Eversource Energy (Northeast Utilities) amended its executive compensation plans (DCPE, Incentive Plan, SSP, SERP) on September 9, 2008.
  • 2The primary purpose of these amendments is to ensure compliance with Section 409A of the Internal Revenue Code.
  • 3Amendments aim to prevent excise taxes and interest charges for Named Executive Officers (NEOs) related to deferred compensation.
  • 4Distribution elections in the Deferred Compensation Plan for Executives (DCPE) are now largely irrevocable, with restricted accelerated distributions.
  • 5Payments upon termination of employment for NEOs will be delayed by six months, with continued accrual of interest or dividends, to comply with Section 409A.
  • 6The Special Severance Program (SSP) was amended to tighten conditions for severance benefits upon a change of control for participating NEOs.
  • 7Amendments to the SSP also specify the provision of post-termination health coverage and associated tax gross-ups, though specific amounts are not yet determinable.

Frequently Asked Questions

Northeast Utilities amended its executive compensation plans to comply with Section 409A of the Internal Revenue Code. This is crucial to avoid penalties, such as excise taxes and interest charges, that could be imposed on the company's Named Executive Officers (NEOs) if their deferred compensation arrangements did not meet the specific requirements of Section 409A.

The most significant changes include making distribution elections in the Deferred Compensation Plan for Executives (DCPE) generally irrevocable, restricting accelerated distributions, and implementing a six-month delay for payments upon termination of employment under certain plans. Additionally, severance benefits under the Special Severance Program (SSP) related to a change of control have stricter triggering conditions for participating NEOs.

In general, payments related to termination of employment will be delayed by six months to comply with Section 409A. While this impacts the timing of when executives receive certain deferred compensation, it is a necessary measure to avoid tax penalties. There are exceptions for payments not subject to Section 409A or if paid out by a specific deadline.

The amendments primarily affect the company's Named Executive Officers (NEOs), which include senior executives such as the Chairman, President and CEO, CFO, COO, General Counsel, and VP of Human Resources. However, the Special Severance Program (SSP) amendments specifically apply only to Mr. Olivier and Ms. LaVecchia.