UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date
of
Report (Date of earliest event reported): January 25,
2007
Commission
File
Number
|
Registrant;
State of Incorporation;
Address
and Telephone Number
|
IRS
Employer
Identification
No.
|
|
|
|
1-905
|
PPL
Electric Utilities Corporation
(Exact
name of Registrant as specified in its charter)
(Pennsylvania)
Two
North Ninth Street
Allentown,
PA 18101-1179
(610)
774-5151
|
23-0959590
|
|
|
|
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
[ ]
|
|
Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
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[ ]
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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[ ]
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act
(17 CFR
240.14d-2(b))
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[ ]
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act
(17 CFR
240.13e-4(c))
|
Section
5 - Corporate Governance and Management
Item
5.02 Departure of Directors or Principal Officers; Election of Directors;
Appointment of Principal Officers
Named
Executive Officer Compensation Matters
At
its
meeting on January 25, 2007, the Compensation, Governance and Nominating
Committee (“CGNC”) of the Board of Directors of PPL Corporation approved the
2007 base salary changes and cash and equity incentive awards for PPL Electric
Utilities Corporation’s (“PPL Electric”) “named executive officers” (as defined
in Item 402(a)(3) of Regulation S-K and as identified in PPL Electric’s 2006
Notice of Annual Meeting and Information Statement on file with the Securities
and Exchange Commission), and for William H. Spence, who became PPL Electric’s
President as of January 2, 2007,
and
Matt
Simmons who became PPL Electric’s Vice President and Controller as of January
30, 2006. Messrs. Spence and Simmons, along with the named executive officers
of
PPL Electric other than John F. Sipics, also are officers of PPL Corporation
and
are not paid separately as officers of PPL Electric.
The
2007
base salary change and cash and equity incentive awards for David G. DeCampli,
who became PPL Electric’s Senior Vice President-Transmission
and Distribution Engineering and Operations as of December 4, 2006,
are
expected to be approved by PPL Corporation’s Corporate Leadership Council
(“CLC”) on February 12, 2007, after a review of performance and competitive
market data.
As
previously disclosed, John F. Sipics, who had been serving as PPL Electric’s
President and as a member of its Board of Directors, retired as of January
1,
2007 for health reasons. Mr. Spence, PPL Corporation’s Executive Vice President
and Chief Operating Officer and a member of PPL Electric’s Board of Directors,
was elected as PPL Electric’s President as of January 2, 2007, and will serve in
such capacity pending decisions regarding Mr. Sipics’ permanent successor. Prior
to its meeting on January 25, 2007 at which it approved the various compensation
matters described below, the CGNC approved an enhanced retirement benefit
for
Mr. Sipics equal to the difference between what his benefit would have been
under PPL Corporation’s Supplemental Executive Retirement Plan (the “SERP”) if
he had completed 30 Years of Service (as defined in the SERP) and retired
at age
60 and what his benefit actually was under the current terms of the SERP
and the
PPL Retirement Plan at his retirement date of January 1, 2007. On his retirement
date, Mr. Sipics was 58 years old and he had completed approximately 28.5
Years
of Service. This enhanced retirement benefit will be paid in the same form
and
at the time as benefits payable under the SERP. The CGNC also approved treating
Mr. Sipics as if he had retired at age 60 for purposes of determining his
eligibility for retaining restricted stock units granted to him as the premium
component of prior grants made under PPL Corporation’s Cash Incentive Premium
Exchange Program. (Pursuant
to this program, an executive officer may elect to exchange all or any portion
of his cash incentive compensation for restricted stock units equal in value
at
the time of the grant to 140% of the cash so exchanged.) As a result of this
enhanced retirement arrangement, Mr. Sipics retained 3,920 shares of PPL
Corporation common stock that he otherwise would have forfeited.
Base
Salary Changes
At
its
meeting on January 25, 2007, the CGNC approved the annual base salaries,
effective as of January 1, 2007, of the named executive officers and Messrs.
Spence and Simmons after a review of performance and competitive market data.
The following table sets forth the annual base salary levels of PPL Electric's
named executive officers and Messrs. Spence and Simmons for 2007 and 2006,
except that the table excludes Mr. Sipics.
Name
and Position
|
Year
|
Salary
($)
|
William
H. Spence
President
|
2007
2006
|
600,000
525,000
|
Paul
A. Farr
Senior
Vice President-Financial
|
2007
2006
|
409,900
390,000
|
Matt
Simmons
Vice
President and Controller
|
2007
2006
|
250,000
225,000
|
James
E. Abel
Treasurer
|
2007
2006
|
275,100
265,774
|
Short-term
Incentive Cash Awards for 2006 Performance
At
its
meeting on January 25, 2007, the CGNC authorized an annual incentive cash
(i.e.,
bonus) award to the named executive officers and Messrs. Spence and Simmons
for
2006 performance, as indicated in the following table. The annual incentive
cash
awards were made pursuant to PPL Corporation's Short-term Incentive Plan.
The
incentive cash awards were made to these executive officers for the achievement
of specific, independent goals established by the CGNC in March 2006 (as
previously disclosed by PPL Electric) and measured by the Committee at its
January 2007 meeting.
Name
and Position
|
Bonus
($)
|
William
H. Spence
President
|
517,000
(1)
|
John
F. Sipics
Former
President
|
207,900
|
Paul
A. Farr
Senior
Vice President-Financial
|
256,000
(1)
|
Matt
Simmons
Vice
President and Controller
|
107,500
|
James
E. Abel
Treasurer
|
135,100
|
(1)
|
|
Includes
$517,000 and $166,400 that Messrs. Spence and Farr, respectively,
exchanged for restricted stock units under the terms of PPL Corporation's
Cash Incentive Premium Exchange Program.
|
Long-term
Incentive Equity Awards for 2006 Performance
At
its
meeting on January 25, 2007, the CGNC authorized grants to PPL Electric’s named
executive officers and Messrs. Spence and Simmons of long-term incentive
equity
awards pursuant to PPL Corporation's Incentive Compensation Plan, as indicated
in the following table. These grants consisted of (i) two restricted stock
unit
awards with a three-year restriction period, based on the achievement of
criteria established by the CGNC in March 2006 (as previously disclosed by
PPL
Electric) and measured by the Committee at its January 2007 meeting, and
(ii)
one stock option award.
|
Restricted
Stock Units (1)
|
Stock
Options (2)
|
(Targets
as % of Salary)
|
Name
and Position
|
Sustained
Financial and Operational Results
|
Strategic
Objective Results
|
Stock
Price Performance
|
William
H. Spence (3)
President
|
10,810
|
8,970
|
113,720
|
John
F. Sipics
Former
President
|
4,800
|
3,990
|
0
|
Paul
A. Farr (3)
Senior
Vice President-Financial
|
5,350
|
4,440
|
56,320
|
Matt
Simmons
Vice
President and Controller
|
1,850
|
1,540
|
21,320
|
James
E. Abel
Treasurer
|
2,390
|
1,990
|
25,190
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(1)
|
|
The
number of restricted stock units awarded are equivalent to the
dollar
value of the award divided by $35.12, the closing price of PPL
Corporation's common stock on The New York Stock Exchange on the
date of
grant.
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(2)
|
|
The
exercise price of the stock option awards is $35.12, the closing
price of
PPL Corporation's common stock on The New York Stock Exchange on
the date
of grant. The stock options become exercisable over a three-year
period
from the date of grant in equal installments and expire no later
than
January 24, 2017.
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(3)
|
|
Messrs.
Spence and Farr also were granted 20,610 and 6,640 restricted stock
units,
respectively, pursuant to the terms of PPL Corporation's Cash Incentive
Premium Exchange Program.
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Incentive
Award Targets for 2007 Performance
At
its
meeting on January 25, 2007, the CGNC established the short-term and long-term
incentive award targets for 2007 performance for the named executive officers
and Messrs. Spence and Simmons. The CGNC plans to establish the performance
goals and business criteria for these incentive awards in March 2007, and
it
will measure the achievement of the performance goals and business criteria
and
determine any resulting incentive awards for the executive officers in January
2008.
Targets
for Short-term Incentive Cash Awards
For
the
annual incentive cash awards to be made pursuant to PPL Corporation’s Short-term
Incentive Plan, the following award targets as a percentage of base salary
have
been established: William H. Spence-85%; Paul A. Farr-50%; Matt Simmons-40%;
and
James E. Abel-40%. The annual incentive cash awards will be made by applying
these target percentages to the percentage of goal attainment as determined
by
the CGNC.
Targets
for Long-term Incentive Equity Awards
For
the
annual long-term incentive equity awards to be made pursuant to PPL
Corporation’s Incentive Compensation Plan, the following award targets as a
percentage of base salary have been established: William H. Spence-250%;
Paul A.
Farr-160%; Matt Simmons -105%; and James E. Abel-105%. The total awards will
be
allocated (i) 65% to two restricted stock unit awards with a three-year
restriction period, based on the achievement of criteria to be established
and
measured by the CGNC, and (ii) 35% to one stock option award. The exercise
price
of the stock option awards will be the closing price of the Company’s common
stock on The New York Stock Exchange on the date of grant. The following
table
provides the award targets, based on a percentage of base salary.
Long-term
Incentive Program
|
Restricted
Stock Units
|
Stock
Options
|
(Targets
as % of Salary)
|
Position
|
Sustained
Financial and Operational Results
|
Strategic
Objectives Results
|
Stock
Price Performance
|
William
H. Spence
President
|
81.25%
|
81.25%
|
87.5%
|
Paul
A. Farr
Senior
Vice President-Financial
|
52%
|
52%
|
56%
|
Matt
Simmons
Vice
President and Controller
|
34.1%
|
34.1%
|
36.8%
|
James
E. Abel
Treasurer
|
34.1%
|
34.1%
|
36.8%
|
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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PPL
ELECTRIC UTILITIES CORPORATION
|
|
|
|
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By:
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/s/
Matt Simmons
Matt
Simmons
Vice
President and Controller
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Dated: January
31, 2007