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TVC > SEC Filings for TVC > Form 8-K on 27-Aug-2013All Recent SEC Filings

Show all filings for TENNESSEE VALLEY AUTHORITY

Form 8-K for TENNESSEE VALLEY AUTHORITY


27-Aug-2013

Change in Directors or Principal Officers


Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On August 22, 2013, the Board of Directors (the "Board") of the Tennessee Valley Authority ("TVA") approved the following items related to compensation: (i) changes to the design of the Winning Performance Team Incentive Plan ("WPTIP") and Executive Annual Incentive Plan ("EAIP") beginning in fiscal year ("FY") 2014, (ii) changes to the Executive Long-Term Incentive Plan ("ELTIP") performance measures for the FY 2011-2013 performance cycle, (iii) changes to the ELTIP performance measures for the FY 2012-2014 and FY 2013-2015 performance cycles, and (iv) establishment of the ELTIP performance measures for the FY 2014-2016 performance cycle. Each of these items is discussed in more detail below.

WPTIP and EAIP Changes

The Board replaced the enterprise-wide performance measures and corporate modifier for the WPTIP and EAIP with a Corporate Multiplier. The Board will establish performance goals and measures for the Corporate Multiplier, and the Board and the Chief Executive Officer ("CEO") will jointly assess TVA's performance and determine the final Corporate Multiplier, which will range between 0 and 1.0, after the end of each fiscal year. The Corporate Multiplier will then be multiplied by the performance results for each set of strategic business unit ("SBU") and business unit ("BU") goals, which will range from 0% to 150%, to determine the incentive award payouts for participants under the WPTIP and EAIP. The CEO will set and approve the performance measures and goals for each SBU and BU for FY 2014.

The Board approved the following performance measures for the Corporate Multiplier for FY 2014: (i) safe workplace, (ii) operating cash flow, (iii) net income, (iv) total financing obligations, (v) jobs created/retained, and (vi) Board level significant events. These measures are described in more detail in the table below:

 Performance Measure                Description                       Target
Safe workplace        The number of recordable injuries per            Zero
                      200,000 employee-hours worked by TVA
                      employees and contractors filling TVA
                      positions (excluding hearing events)
Operating cash flow   Net cash provided by operating           FY 2014 Business Plan
                      activities as shown on TVA's
                      Consolidated Statements of Cash Flows
Net income            Net income as shown on TVA's             FY 2014 Business Plan
                      Consolidated Statements of Operations
Total financing       The total amount of net debt and other   FY 2014 Business Plan
obligations           financing obligations as shown on TVA's
                      Consolidated Balance Sheets
Jobs created and      The number of new or retained jobs in           50,000
retained              TVA's service area which TVA assisted in
                      creating or retaining
Board level           Items (both favorable and unfavorable)           Zero
significant events    that the Board deems materially
                      significant and that affect TVA's
                      reputation, organizational health, or
                      the public at large

The CEO retains the authority to modify individual incentive awards under the EAIP based on a subjective assessment of individual performance during the year.


Changes to ELTIP Performance Measures for the FY 2011-2013 Performance Cycle

The Board approved the use of the 2013 TVA Pulse Survey results instead of the Organizational Health Index results when calculating the Organizational Health Index measure for the FY 2011-2013 performance cycle. The Pulse Survey is an internal TVA survey used to provide a snapshot of TVA's organizational health during a given period.

Changes to ELTIP Performance Measures for the FY 2012-2014 and FY 2013-2015
Performance Cycles

The Board modified the ELTIP performance measures for the FY 2012-2014 and FY
2013-2015 performance cycles by (1) replacing the Organizational Health Index
measure with an External Measures metric and (2) replacing the Retail Rates
measure with a Wholesale Rate Excluding Fuel measure. The External Measures
metric is designed to maintain and enhance TVA's reputation and is derived from
the following items:


           Performance Measure             Weight    Threshold    Target    Maximum
External performance indicators for the     25%        80.0        83.0      86.0
TVA nuclear fleet
Percent of positive and balanced TVA news   25%        80.0        84.0      85.0
coverage
compared to all TVA news coverage
Survey of public opinion of TVA             10%        81.0        81.5      82.0
Survey of TVA customers                     10%        48.0        49.0      50.0
Board level significant events              30%   Two Unfavorable  Zero  Two Favorable
                                                       (80)       (100)      (120)
Composite score for external measures                  76.9        84.8      92.0

The performance measures for the FY 2012-2014 and FY 2013-2015 ELTIP performance cycles, along with their associated weights and goals, are set forth below:

                      FY 2012-2014 ELTIP Performance Cycle

                                      Threshold           Target            Maximum
  Performance Measure      Weight       (50%)             (100%)             (150%)
Wholesale Rate Excluding    40%      Target + 2%   FY 2014 Business Plan  Target - 2%
Fuel(1)
System Reliability          30%          7.8                6.8               3.3
Load Not Served(2)
Responsibility              30%          76.9              84.8               92.0
External Measures(3)

Notes
(1) The Wholesale Rate Excluding Fuel measure represents TVA's electric sales revenue excluding fuel divided by electric power sales. For the FY 2012-2014 ELTIP performance cycle, the Wholesale Rate Excluding Fuel measure will be calculated using the FY 2014 results.
(2) Load Not Served is equal to the product of (i) the percentage of total load not served and (ii) the number of minutes in the period (excluding events during declared major storms). Value is expressed in system minutes and is the average of the three years within the ELTIP performance cycle.
(3) For the FY 2012-2014 ELTIP performance cycle, the External Measures metric will be calculated using the FY 2014 results.


                      FY 2013-2015 ELTIP Performance Cycle

                                         Threshold             Target            Maximum
  Performance Measure      Weight          (50%)               (100%)             (150%)
Wholesale Rate Excluding    40%         Target + 2%     FY 2014 Business Plan  Target - 2%
Fuel(1)                                                  (FY 2014-2015 Rate)
System Reliability          30%     99.999% reliability     Top quartile        Top decile
Load Not Served(2)
Responsibility              30%            77.9                 85.8               92.9
External Measures(3)

Notes
(1) The Wholesale Rate Excluding Fuel measure represents TVA's electric sales revenue excluding fuel divided by electric power sales. For the FY 2013-2015 ELTIP performance cycle, the Wholesale Rate Excluding Fuel measure will be calculated using an average of the FY 2014 and FY 2015 results.
(2) Load Not Served is equal to the product of (i) the percentage of total load not served and (ii) the number of minutes in the period (excluding events during declared major storms). Value is expressed in system minutes and is the average of the three years within the ELTIP performance cycle.
(3) For the FY 2013-2015 ELTIP performance cycle, the External Measures metric will be calculated using an average of the FY 2014 and FY 2015 results, except for the external performance indicators for the TVA nuclear fleet, which will be based only on FY 2015 results.

Establishment of ELTIP Performance Measures for the FY 2014-2016 Performance Cycle

The Board approved ELTIP performance measures for the FY 2014-2016 performance cycle. These performance measures, along with their associated weights and goals, are as follows:

                      FY 2014-2016 ELTIP Performance Cycle

                                         Threshold             Target            Maximum
  Performance Measure      Weight          (50%)               (100%)             (150%)
Wholesale Rate Excluding    40%         Target + 2%     FY 2014 Business Plan  Target - 2%
Fuel(1)                                                  (FY 2014-2016 Rate)
System Reliability          30%     99.999% reliability     Top quartile        Top decile
Load Not Served(2)
Responsibility              30%            78.8                 86.7               93.9
External Measures(3)

Notes
(1) The Wholesale Rate Excluding Fuel measure represents TVA's electric sales revenue excluding fuel divided by electric power sales. For the FY 2014-2016 ELTIP performance cycle, the Wholesale Rate Excluding Fuel measure will be calculated using an average of the FY 2014, FY 2015, and FY 2016 results.
(2) Load Not Served is equal to the product of (i) the percentage of total load not served and (ii) the number of minutes in the period (excluding events during declared major storms). Value is expressed in system minutes and is the average of the three years within the ELTIP performance cycle.
(3) For the FY 2014-2016 ELTIP performance cycle, the External Measures metric will be calculated using an average of the FY 2014, FY 2015, and FY 2016 results, except for the external performance indicators for the TVA nuclear fleet, which will be based only on FY 2016 results.


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