OG&E 2011 Annual Report Download - page 80

78 OGE Energy Corp.
for participants whose employment or re-employment date occurred
before February 1, 2000 and who have 20 or more years of service,
as defined in the 401(k) Plan. For participants whose employment or
re-employment date occurred on or after February 1, 2000 and before
December 1, 2009, under the 401(k) Plan (prior to it being amended),
the Company contributes 100 percent of the participant’s contributions
up to six percent of compensation. For participants hired on or after
December 1, 2009, the Company contributes, effective January 1,
2010, 200 percent of the participant’s contributions up to five percent
of compensation. No Company contributions are made with respect to
a participant’s Catch-Up Contributions, rollover contributions, or with
respect to a participant’s contributions based on overtime payments,
pay-in-lieu of overtime for exempt personnel, special lump-sum recog-
nition awards and lump-sum merit awards included in compensation for
determining the amount of participant contributions. Prior to January 1,
2010, the Company’s contribution, which was initially allocated for
investment to the OGE Energy Corp. Common Stock Fund, was made
in shares of the Company’s common stock or in cash which was used
to invest in the Company’s common stock. Once made, the Company’s
contribution could be reallocated, on any business day, by participants
to other available investment options. The 401(k) Plan was amended
effective January 1, 2010, whereby the Company’s contribution may
be directed to any available investment option in the 401(k) Plan. The
Company match contributions vest over a three-year period. After two
years of service, participants become 20 percent vested in their Company
contribution account and become fully vested on completing three years
of service. In addition, participants fully vest when they are eligible for
normal or early retirement under Pension Plan, in the event of their
termination due to death or permanent disability or upon attainment of
age 65 while employed by the Company or its affiliates. The Company
contributed $12.3 million, $11.4 million and $9.3 million in 2011, 2010
and 2009, respectively, to the 401(k) Plan.
Deferred Compensation Plan
The Company provides a nonqualified deferred compensation plan
which is intended to be an unfunded plan. The plan’s primary purpose
is to provide a tax-deferred capital accumulation vehicle for a select
group of management, highly compensated employees and non-employee
members of the Board of Directors of the Company and to supplement
such employees’ 401(k) Plan contributions as well as offering this plan
to be competitive in the marketplace.
Eligible employees who enroll in the plan have the following deferral
options: (i) eligible employees may elect to defer up to a maximum of
70 percent of base salary and 100 percent of annual bonus awards or
(ii) eligible employees may elect a deferral percentage of base salary
and bonus awards based on the deferral percentage elected for a year
under the 401(k) Plan with such deferrals to start when maximum defer-
rals to the qualified 401(k) Plan have been made because of limitations
in that plan. Eligible directors who enroll in the plan may elect to defer
up to a maximum of 100 percent of directors’ meeting fees and annual
retainers. The Company matches employee (but not non-employee
director) deferrals to make up for any match lost in the 401(k) Plan
because of deferrals to the deferred compensation plan, and to allow
for a match that would have been made under the 401(k) Plan on that
portion of either the first six percent of total compensation or the first
five percent of total compensation, depending on the option the partici-
pant elected under the choice provided to eligible employees discussed
above, deferred that exceeds the limits allowed in the 401(k) Plan.
Matching credits vest based on years of service, with full vesting after
six years or, if earlier, on retirement, disability, death, a change in control
of the Company or termination of the plan. The deferred compensation
plan was amended, effective January 1, 2012, to provide for full vesting
after three years. In addition, the Benefits Committee may award dis-
cretionary employer contribution credits to a participant under the plan.
The Company accounts for the contributions related to the Company’s
executive officers in this plan as Accrued Benefit Obligations and the
Company accounts for the contributions related to the Company’s
directors in this plan as Other Deferred Credits and Other Liabilities in
the Consolidated Balance Sheets. The investment associated with these
contributions is accounted for as Other Property and Investments in the
Consolidated Balance Sheets. The appreciation of these investments is
accounted for as Other Income and the increase in the liability under
the plan is accounted for as Other Expense in the Consolidated
Statements of Income.
Supplemental Executive Retirement Plan
The Company provides a supplemental executive retirement plan in
order to attract and retain lateral hires or other executives designated
by the Compensation Committee of the Company’s Board of Directors
who may not otherwise qualify for a sufficient level of benefits under
the Company’s Pension Plan and Restoration of Retirement Income
Plan. The supplemental executive retirement plan is intended to be an
unfunded plan and not subject to the benefit limits imposed by the Code.
15. Report of Business Segments
The Company’s business is divided into four segments for financial
reporting purposes. These segments are as follows: (i) electric utility,
which is engaged in the generation, transmission, distribution and sale
of electric energy, (ii) natural gas transportation and storage, (iii) natural
gas gathering and processing and (iv) natural gas marketing. Other
Operations primarily includes the operations of the holding company.
Intersegment revenues are recorded at prices comparable to those of
unaffiliated customers and are affected by regulatory considerations. In
reviewing its segment operating results, the Company focuses on oper-
ating income as its measure of segment profit and loss, and, therefore,
has presented this information below. The following tables summarize
the results of the Company’s business segments for the years ended
December 31, 2011, 2010 and 2009.