OG&E 2012 Annual Report Download - page 77

OGE Energy Corp. 75
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 recognition awards
and lump-sum merit awards included in compensation for determining
the amount of participant contributions. Once made, 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 the 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 $13.4 million, $12.3 million and
$11.4 million in 2012, 2011 and 2010, 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 mem-
bers 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 in the
qualified 401(k) Plan 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 three years or, if earlier, on retirement,
disability, death, a change in control of the Company or termination of
the plan. Deferrals, plus any Company match, are credited to a record-
keeping account in the participant’s name. Earnings on the deferrals are
indexed to the assumed investment funds selected by the participant.
In 2012, those investment options included a Company Common Stock
fund, whose value was determined based on the stock price of the
Company’s Common Stock, and various money market, bond and
equity funds. 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 limitations of the Code.
15. Report of Business Segments
Previously, the Company’s business was divided into four segments
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. During the third quarter of 2012, the
operations and activities of EER were fully integrated with those of
Enogex through the creation of a new commodity management organi-
zation. The operations of EER, including asset management activities,
have been included in the natural gas transportation and storage seg-
ment and have been restated for all prior periods presented. As a result
of this change, the Company’s business is now divided into three seg-
ments for financial reporting purposes as follows: (i) electric utility,
(ii) natural gas transportation and storage and (iii) natural gas gathering
and processing. 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 operating 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, 2012, 2011 and 2010.