This excerpt taken from the AEE DEF 14A filed Mar 15, 2006.
Upon approval by the Companys shareholders, the Plan will be effective on May 2, 2006 and will terminate on May 2, 2016, unless terminated earlier by the Board of Directors. The Board may amend the Plan as it deems advisable, except that it may not amend the Plan without shareholder approval where the absence of such approval would cause the Plan to fail to comply with any requirement of applicable law or regulation. Employees who will participate in the Plan in the future and the amounts of their allotments are to be determined by the Committee subject to any restrictions outlined in the Plan.
The Company expects that stock options and performance awards under the Plan will qualify as performance-based compensation that is exempt from the $1,000,000 annual deduction limit (for federal income tax purposes) of compensation paid by public corporations to each of the corporations chief executive officer and four other most highly compensated executive officers in each fiscal year, which limit is imposed by Section 162(m). Because of ambiguities and uncertainties as to the application and interpretation of Section 162(m) and the regulations issued thereunder, no assurance can be given, notwithstanding the Companys efforts, that compensation intended by the Company to satisfy the requirements for deductibility under Section 162(m) will in fact do so.
The closing price per share on the NYSE of the Companys Common Stock on February 1, 2006 was $51.21. The Company intends to register the shares issuable under the Plan under the Securities Act of 1933, as amended, after it receives shareholder approval.
The Board believes it is in the best long-term interests of both shareholders and employees of the Company to maintain a progressive stock-based incentive program in order to attract and retain the services of outstanding directors and personnel and to encourage such directors and personnel to have a greater financial investment in the Company. Although the success of the Company over the past eight years cannot be attributed solely to the adoption of the Prior Plan, the Board firmly believes it contributed to the Companys success.
Passage of the proposal requires the affirmative vote of a majority of the shares entitled to vote on the proposal and represented in person or by proxy at the meeting at which a quorum is present.