Tennessee Valley Authority (Form: 8-K, Received: 10/01/2015 14:18:42)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13, 15(d), or 37 of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): September 28, 2015

TENNESSEE VALLEY AUTHORITY

(Exact name of registrant as specified in its charter)




A corporate agency of the United States created by an act of Congress (State or other jurisdiction of incorporation or organization)	000-52313 (Commission file number)	62-0474417 (IRS Employer Identification No.)

400 W. Summit Hill Drive Knoxville, Tennessee (Address of principal executive offices)		37902 (Zip Code)

(865) 632-2101

(Registrant's telephone number, including area code)

None

(Former name or former address, if changed since last report)

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)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR

240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR

240.13e-4(c))

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

On September 28, 2015, TVA amended and restated its Executive Annual Incentive Plan and Retention Incentive Plan and adopted a Long-Term Incentive Plan.

Executive Annual Incentive Plan

The Executive Annual Incentive Plan is designed to provide officers and other participants with incentive opportunities based on successful achievement of established financial and/or operational goals measured over a one-year period. Awards under the plan are equal to the product of (1) base salary, (2) the annual incentive opportunity, (3) the percent of opportunity achieved, (4) a corporate multiplier between 0 and 1.0 that the TVA Board of Directors (“Board”) determines based on a qualitative assessment of goals and measures that the Board establishes for the corporate multiplier, and (5) an individual multiplier that a participant’s supervisor may apply to adjust an award up or down based on an evaluation of the participant’s individual achievements and performance over the performance cycle. Awards may be adjusted further by the Board or the Chief Executive Officer at their discretion for any reason. The amended and restated Executive Annual Incentive Plan becomes effective as of October 1, 2015. A copy of the plan is filed as Exhibit 10.1.

Retention Incentive Plan

The Retention Incentive Plan is designed to provide a retention incentive to select employees in critical positions where the loss of their services may adversely impact TVA operations. Participation is limited to situations where it is in TVA’s best interest to retain the services of an employee for a specified period of time in order to facilitate the transition of responsibilities or accomplish specific objectives necessary for the continued business performance of TVA. The retention incentive period may extend from six months to thirty-six months. Performance measures and performance goals are established specifically for each participant in a retention agreement and are measured over the specified period of the performance cycle. Payment of a retention incentive award is contingent on successful achievement of the stated performance measures and performance goals. Awards will be paid as a lump-sum payment at the conclusion of the performance cycle set forth in the retention agreement. The amended and restated Retention Incentive Plan becomes effective as of October 1, 2015. A copy of the plan is filed as Exhibit 10.2.

Long-Term Incentive Plan

The Long-Term Incentive Plan combines and replaces both the TVA Executive Long-Term Incentive Plan and the TVA Long-Term Retention Incentive Plan. The purpose of the Long-Term Incentive Plan is to provide a targeted level of total long-term compensation that is comprised of both (1) a variable, at-risk performance-based component (the “Performance Component”) and (2) a retention component (the “Retention Component”).

The Performance Component is designed to provide officers and other participants with time-vested incentive opportunities based on successful achievement of established financial and/or operational goals measured over a three-year period. Awards under the Performance Component are equal to the product of (1) base salary, (2) the long-term incentive opportunity, and (3) the percent of opportunity

achieved. The Board may adjust awards based on the evaluation of the participant’s individual achievements, peer group comparisons, and performance results over the performance cycle.

The Retention Component is designed to provide officers and other participants with time-based incentive opportunities designed to encourage them to remain with TVA. The Retention Component has a prorated vesting period covering three years. Awards will be granted on October 1 and will become 1/3 vested on each subsequent September 30, provided the participant remains employed through that date.

The Long-Term Incentive Plan becomes effective as of October 1, 2015. A copy of the plan is filed as Exhibit 10.3.

Item 9.01 Financial Statements and Exhibits.



EXHIBIT NO.	DESCRIPTION OF EXHIBIT
10.1	Executive Annual Incentive Plan
10.2	Retention Incentive Plan
10.3	Long-Term Incentive Plan

SIGNATURES

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.




September 30, 2015	Tennessee Valley Authority
	(Registrant)



	/s/ John M. Thomas, III
	John M. Thomas, III
	Executive Vice President and
	Chief Financial Officer

EXHIBIT INDEX

Exhibits 10.1, 10.2, and 10.3 are filed pursuant to Item 5.02 hereof.



EXHIBIT NO.	DESCRIPTION OF EXHIBIT
10.1	Executive Annual Incentive Plan
10.2	Retention Incentive Plan
10.3	Long-Term Incentive Plan

EXHIBIT 10.1

EXECUTIVE ANNUAL INCENTIVE PLAN

Amended and Restated – October 1, 2015

Prepared by: /s/ Christoper L. Hinton 9/28/15

Christopher L. Hinton, VP Compensation & Benefits Date

Validation Date: 09/25/2015

Review Frequency: 5 years

Validated By: Donna Golden

TABLE OF CONTENTS



	Page

SECTION 1

PURPOSE AND SCOPE.......................................................................................	4
1.1 Establishment........................................................................................	4
1.2 Purpose.................................................................................................	4

SECTION 2

DEFINITIONS...................................................................................................................	4
2.1 Authorized Parties.................................................................................	4
2.2 Corporate Multiplier...............................................................................	4
2.3 Corporate Performance Goals..............................................................	4
2.4 Corporate Performance Measures........................................................	4
2.5 EAIP Award...........................................................................................	4
2.6 EAIP Incentive Opportunity..................................................................	5
2.7 Individual Performance Multiplier..........................................................	5
2.8 Participant.............................................................................................	5
2.9 Performance Cycle................................................................................	5
2.10 Plan Year...............................................................................................	5
2.11 SBU.......................................................................................................	5
2.12 SBU Performance Goals.......................................................................	5
2.13 SBU Performance Measures................................................................	5
2.14 Section 409A.........................................................................................	5
2.15 Separation from Service........................................................................	5
2.16 Total Cash Compensation.....................................................................	5

SECTION 3

PARTICIPATION...............................................................................................................	5

SECTION 4

PERFORMANCE CYCLE.....................................................................................	5

SECTION 5

PERFORMANCE MEASURES AND GOALS.......................................................	6
5.1 Corporate Performance Measures and Goals......................................	6
5.1 Corporate Performance Measures and Goals......................................\	6



SECTION 6

DETERMINATION OF AWARDS...........................................................................	6
6.1 Eligibility................................................................................................	6
6.2 EAIP Opportunity...................................................................................	7
6.3 Scorecard Achievement........................................................................	7
6.4 Corporate Multiplier...............................................................................	7
6.5 Individual Performance Multiplier..........................................................	8
6.6 Award Calculation.................................................................................	8
6.7 Award Adjustment.................................................................................	8
6.8 Change in Position................................................................................	8
6.9 Termination Prior to End of Performance Cycle....................................	8

SECTION 7

PAYMENT OF AWARDS.......................................................................................	9

SECTION 8

DEFERRAL ELECTION OPTION..........................................................................	9
8.1 Eligibility for Deferral for Existing Employees........................................	9
8.2 Eligibility for Deferral for New Hires......................................................	10

SECTION 9

PLAN ADMINISTRATION......................................................................................	11
9.1 Authority of Plan Administrator..............................................................	11
9.2 Determinations by Plan Administrator...................................................	12

SECTION 10

ADMENDMENT OR TERMINATION OF THE PLAN............................................	12

SECTION 11

GENERAL PROVISIONS......................................................................................	12
11.1 TVA Compensation Plan.......................................................................	12
11.2 Non-Transferability of Rights and Interests...........................................	12
11.3 Sources of Payments............................................................................	13
11.4 Severability............................................................................................	13
11.5 Limitations of Rights..............................................................................	13
11.6 Titles......................................................................................................	13
11.7 Governing Law......................................................................................	14
11.8 Authorized Representatives..................................................................	14
11.9 Certain Rights and Limitations..............................................................	14
11.10 Compliance with Section 409A.............................................................	14
11.11 Tax Withholding.....................................................................................	15


1.	PURPOSE AND SCOPE

1.1

Establishment . The Tennessee Valley Authority (“TVA”) hereby amends and restates in its entirety its short-term incentive program for officers and executives, which shall be known as the “Executive Annual Incentive Plan” (“EAIP” or “Plan”). The Plan supports TVA’s Compensation Philosophy, which is designed to attract, retain, and engage employees needed to accomplish TVA’s broad mission.


1.2	Purpose . The Plan is designed to encourage and reward TVA officers and other Participants for their performance and contribution to the successful achievement of financial, operational, and individual goals.

This is accomplished by linking a significant element of variable annual compensation to the accomplishment of selected short-term financial, operational, and individual performance standards. The Plan, in conjunction with salary, provides total annual compensation opportunities similar to those found at competing companies, thus assisting TVA in retaining and recruiting executive talent critical to TVA’s success.


2.	DEFINITIONS

Wherever used herein, the following terms have the meanings set forth below, unless a different meaning is clearly required by the context:


2.1	Authorized Parties – The TVA Board of Directors (“Board”), the Chief Executive Officer (“CEO”), or the delegates of either the Board or the CEO.


2.2	Corporate Multiplier – Adjustment to EAIP Award based on the consideration of certain corporate factors and events that are significant during the Performance Cycle but not included or captured by the Corporate Performance Measures and Goals.


2.3	Corporate Performance Goals – The annual goals established for each Corporate Performance Measure.


2.4	Corporate Performance Measures – The specific metrics used to measure performance at the corporate level.


2.5	EAIP Award – Actual dollar amount awarded to a Participant under the EAIP.


2.6	EAIP Incentive Opportunity – Award opportunity expressed as a percent of the Participant’s salary.


2.7	Individual Performance Multiplier – Adjustment to the EAIP Award based on the Participant’s individual achievements and performance.


2.8	Participant – TVA employees eligible to receive an award under the EAIP.


2.9	Performance Cycle – The period of time over which performance is measured for the purpose of awarding incentives.


2.10	Plan Year – TVA’s fiscal year (October 1 through September 30).


2.11	SBU – A Strategic Business Unit within TVA.


2.12	SBU Performance Goals – The annual goals established for each SBU Performance Measure.


2.13	SBU Performance Measures – The specific metrics used to measure performance at the SBU level.


2.14	Section 409A – Internal Revenue Code Section 409A and the regulations and other binding guidance thereunder.


2.15	Separation from Service – This term and like phrases has the meaning set forth in 26 C.F.R. §1.409A-1(h), as such provision may be amended from time to time.


2.16	Total Cash Compensation – Term used by TVA that includes salary plus EAIP Award.


3.	PARTICIPATION

An Authorized Party shall approve individual employees as Participants.

Eligibility is limited to officers and key managers serving in jobs within the Officer/Executive pay band.


4.	PERFORMANCE CYCLE

The EAIP performance cycle follows TVA’s fiscal year (October 1 through September 30).


5.	PERFORMANCE MEASURES AND GOALS

The Plan incorporates the use of performance measures that focus primarily on the achievement of TVA’s short-term financial and/or operational goals which focus on key areas essential for the achievement of TVA’s strategic objectives. Performance measures and goals are evaluated over the one-year period of the Performance Cycle. Performance measures, performance measure weighting, and the identification of performance goals for each performance measure will be established for each Performance Cycle in accordance with reservations and delegations of authority under the TVA Compensation Plan and communicated by an Authorized Party.

Performance measures, goals, and metrics must be set within the first 90 days of the Performance Cycle and cannot change after the first 90 days of the Performance Cycle. Performance measures and goals, and the results of the performance measures and goals, are approved for each Performance Cycle by the TVA Board.

5.1

Corporate Performance Measures and Goals . The Plan uses Corporate Performance Measures and Goals, which focus on key areas essential for the achievement of TVA’s strategic objectives. Participants who are employed in organizations which are not tied to a specific set of SBU Performance Measures and Goals, will have EAIP Awards determined based on the achievement of Corporate Performance Measures and Goals.

5.2

SBU Performance Measures and Goals . The Plan also uses SBU Performance Measures and Goals, which focus on key areas essential for top performance in identified SBUs. These measures will be focused on a balance among responsibility, rates, and reliability. Achievement of the SBU Performance Measures and Goals is used in the determination of EAIP Awards for all Participants in TVA organizations which have SBU Performance Measures and Goals. The SBU Performance Measures and Goals for each SBU will vary depending on the type of organization and its particular goals within TVA’s strategic objectives.


6.	DETERMINATION OF AWARDS


6.1	Eligibility . To be eligible for an EAIP Award, the Participant must (1) be a TVA employee at the end of the Performance Cycle and (2) have been employed for a minimum of 90 consecutive days during the Performance Cycle. Participants with an annual performance review rating of “Unsatisfactory” are not eligible for an award.

Participants who meet eligibility requirements and fall into one of the following categories will receive a pro-rated award:


•	Employed for less than the full Plan Year


•	Leave Without Pay (“LWOP”) for more than 30 days during the Plan Year (unless LWOP is due to a service-related injury or active military duty)


•	Part-time/hourly

Participants who change their full-time/part-time status during the Performance Cycle will receive an EAIP Award based on their status at the end of the Performance Cycle.

6.2

EAIP Opportunity . Annual EAIP Opportunities for each Participant are established based on market data, level of responsibility, and relationship with other TVA positions in order to ensure a consistent approach among TVA organizations. Annual EAIP Opportunities under the Plan are designed to align each position’s Total Cash Compensation with relevant labor market practices. EAIP Opportunities for each Participant are approved in accordance with the TVA Compensation Plan and the delegations thereunder.

6.3

Scorecard Achievement . Corporate scorecards have goals that are essential to TVA success and may include goals around performance of fleet assets, reliability to customers, TVA’s impact on the environment, and overall financial performance. SBU level scorecards will generally reflect common goals as stated on corporate scorecards at the organization level as well as additional measures specific to the work of the SBU. Each scorecard can result in a payout ranging from 0% to 150% depending on overall TVA and SBU performance.

6.4

Corporate Multiplier . The overall incentive payout may be adjusted based on the consideration of certain corporate factors and events that are significant during the Performance Cycle but not included or captured by the Corporate Performance Measures and Goals. The Board will establish performance goals and measures for the Corporate Multiplier. The Board and CEO will jointly qualitatively assess performance on the Corporate Multiplier measures and determine the final Corporate Multiplier, which will range from zero (0) to one (1), after the end of each fiscal year. The Corporate Multiplier will then be multiplied by the performance results of the Corporate Performance Goals and each set of SBU Performance Goals to determine the EAIP Award payouts for Participants.

6.5

Individual Performance Multiplier . Actual EAIP Awards for each Participant may be adjusted, up or down, by an individual’s supervisor/manager based on an evaluation of the Participant’s individual achievements and performance over the Performance Cycle within a range of 0% to 150%. Final awards for all Participants (other than the CEO) will be approved by the CEO and final awards for the CEO will be approved by the Board.

The total amount spent on EAIP Awards may not increase as a result of applying Individual Performance Multipliers. As a result, for supervisors to modify and increase the EAIP Awards of some Participants, they also must modify and decrease the EAIP Awards of other Participants.


6.6	Award Calculation


6.6.1	EAIP Awards for Participants are calculated as follows:



EAIP Award	=	Salary	X	Position’s EAIP Opportunity %	X	% Corporate/ SBU Achievement (0% - 150%)	X	Corporate Multiplier (0-1.0)	X	Individual Performance Multiplier (0% - 150%)


6.7	Award Adjustment . EAIP Awards may be adjusted further by the Board or the CEO (1) as a result of any unusual or nonrecurring event affecting TVA or the financial statements of TVA, or (2) as a result of changes in business conditions or the business strategy of TVA.

6.8

Change in Position . Awards are based on the Participant’s base salary, the EAIP Opportunity assigned to the Participant’s position, and the scorecard performance of the Participant’s organization. Participants who have a change in salary, incentive opportunity, or scorecard during a Performance Cycle as a result of a change in position or reclassification will have their EAIP Award calculated based on time in each position, salary, incentive opportunity, and/or scorecard during the Performance Cycle.


6.9	Termination Prior to End of Performance Cycle .


6.9.1	Employees who are terminated before the end of the Performance Cycle for the following reasons are not eligible for an EAIP Award :


•	Discharge (DSC)


•	No Fault Separation (NFS)


•	Resignation (RES)


•	Resign in Lieu of Termination (RSL)


•	Retire in Lieu of Termination (RTL)


•	Termination (TER)


6.9.2	Employees who terminate employment with TVA before the end of the Performance Cycle for the following reasons and who meet the other eligibility requirements for an EAIP Award (e.g., employed 90 consecutive days during the Performance Cycle) will receive a pro-rated EAIP Award :


•	Disability Retirement (DIS)


•	Death (DEA)


•	Transfer to Another Federal Agency (FED)


•	Layoff (LAY)


•	Military (MIL)


•	Retirement (RET)


•	Service Related (SRV)


•	End of Temporary Appointment (TMP)


•	Involuntary Reduction-In-Force (IRIF)


•	Voluntary Reduction-In-Force (VRIF)


7.	PAYMENT OF AWARDS

Except in the case of deferral, EAIP Awards will be paid in a lump sum during the first quarter of the next fiscal year following the Plan Year in which the awards are earned, typically late November to early December, but in no event will the EAIP Awards be paid later than December 15. EAIP Awards will be approved by an Authorized Party prior to payment in accordance with the TVA Compensation Plan and the delegations thereunder. Each EAIP Award shall be paid in cash after deducting the amount of applicable federal, state, and local withholding taxes of any kind required by law to be withheld by TVA.


8.	DEFERRAL ELECTION OPTION

Participants may defer the payment of EAIP Awards under the Plan in accordance with the criteria set forth below:


8.1	Eligibility for Deferral for Existing Employees

Participants who are employed by TVA before the performance measures and performance goals for a Performance Cycle have been established may be eligible to elect to defer all or a portion of any eligible EAIP Award for a Performance Cycle to the TVA Deferred Compensation Plan under the following conditions:


8.1.1	The deferral election must be made before the first day of the Performance Cycle;


8.1.2	The deferral election is irrevocable as of the date set forth in Section 8.1.1 above;


8.1.3	The deferral must be made in 25 percent increments of the actual EAIP Award;


8.1.4	Before the deferral election becomes irrevocable, the participant must elect to have deferred amounts paid out upon the Participant’s Separation from Service either (i) in a lump sum or (ii) in 5 or 10 equal annual installments. The first installment will be paid upon the Participant’s Separation from Service, and subsequent installments will be paid on each anniversary thereof; and


8.1.5	The Participant performs services at TVA continuously from the date the Participant’s performance measures and performance goals are established through the date the deferral election is made.

8.2

Eligibility for Deferral for New Hires . Participants who are hired after the performance measures and performance goals for a Performance Cycle have been established and who have not at any time previously been eligible to participate in the Plan or in any other plan required to be aggregated and treated with the Plan as a single plan under Section 409A of the Internal Revenue Code and he regulations and other binding guidance thereunder (“Section 409A”) may be eligible to elect to defer a portion of any eligible EAIP Award for that Performance Cycle to the TVA Deferred Compensation Plan under the following conditions:


8.2.1	The deferral election must be made within thirty (30) days after the date the Participant becomes eligible to participate in the Plan;


8.2.2	The deferral is irrevocable as of the date set forth in Section 8.2.1 above;


8.2.3	The deferral must be made with respect to 25 percent increments of the actual EAIP Award;


8.2.4	The deferral election applies only with respect to compensation paid for services to be performed after the election is made; and

8.2.5

Before the deferral election becomes irrevocable, the Participant must elect to have deferred amounts paid out upon the Participant’s Separation from Service, either (i) in a lump sum or (ii) in 5 or 10 equal annual installments, as elected by the Participant. The first installment will be paid upon the Participant’s Separation from Service, and subsequent installments will be paid on each anniversary thereof.


9.	PLAN ADMINISTRATION

9.1

Authority of Plan Administrator . The Plan shall be administered by the CEO or the designee of the CEO (the “Plan Administrator”) unless otherwise delegated by the Board. Subject to the express provisions of the Plan, the Plan Administrator shall have the power, authority, and sole and exclusive discretion to construe, interpret and administer the Plan, including without limitation, the power and authority to make factual determinations relating to, and correct mistakes in, EAIP Awards and to take such other action in the administration and operation of the Plan as the Plan Administrator deems appropriate under the circumstances, including but not limited to the following:


9.1.1	The Plan Administrator may, from time to time, prescribe forms and procedures for carrying out the purposes and provisions of the Plan.

The Plan Administrator shall have the authority to prescribe the terms of any communications made under the Plan, to interpret and construe the Plan, any rules and regulations under the Plan and to the terms and conditions of any EAIP Award, and answer all questions arising under the Plan, including questions on the proper construction and interpretation of the Plan.


9.1.2	The Plan Administrator may (1) notify each Participant that he or she has been selected as a Participant and (2) obtain from each Participant such agreements and powers and designations of beneficiaries as the Plan Administrator shall reasonably deem necessary for the administration of the Plan.


9.1.3	To the extent permitted by law, the Plan Administrator may at any time delegate such powers and duties to one or more other executives or managers, whether ministerial or discretionary, as the Plan Administrator may deem appropriate, including but not limited to, authorizing the Plan Administrator’s delegate to execute documents on the Plan Administrator’s behalf.

9.2

Determinations by Plan Administrator . All decisions, determinations, and interpretations by the Plan Administrator regarding the Plan, any rules and regulations under the Plan, and the terms and conditions of or operation of any EAIP Award, shall be final and binding on all Participants, beneficiaries, heirs, or other persons holding or claiming rights under the Plan or any EAIP Award. The Plan Administrator shall consider such factors as it deems relevant, in its sole and absolute discretion, in making such decisions, determinations, and interpretations including, without limitation, the recommendations or advice of an Authorized Party or any other employee of TVA and such consultants and accountants as it may select.


10.	AMENDMENT OR TERMINATION OF THE PLAN

The Board or the CEO may at any time amend or terminate the Plan without the consent of any Participant, beneficiary, or other person; provided that TVA and the Plan Administrator, after any such termination, shall continue to have full administrative powers to take any and all action contemplated by the Plan which is necessary or desirable and to make payment of any outstanding awards earned by Participants in accordance with the terms of the Plan. No amendment or termination of the Plan may adversely affect, other than as specified in the Plan, any right acquired by any Participant or any beneficiary under an EAIP Award granted before the effective date of such amendment or termination. Upon termination of the Plan, distribution of vested EAIP Awards shall be made to Participants and beneficiaries in the manner and at the time described in Section 7, unless an Authorized Party determines in its sole discretion that all such amounts shall be distributed upon termination of the Plan.


11.	GENERAL PROVISIONS


11.1	TVA Compensation Plan . Approvals regarding awards under the Plan for each Participant, such as the target award opportunity and the amount of actual awards, will be made in accordance with the TVA Compensation Plan and the delegations thereunder.

11.2

Non-Transferability of Rights and Interests . Neither a Participant nor a beneficiary may alienate, assign, transfer or otherwise encumber his or her rights and interests under the Plan. Nor such interest or right to receive a distribution may be taken, either voluntarily or involuntarily, for the satisfaction of the debts of, or other obligations or claims against, such person, and any attempt to do so shall be null and void. In the event of a Participant’s death, the Plan Administrator shall authorize payment of any EAIP Award due a Participant under the Plan to the Participant’s beneficiary.

11.3

Sources of Payments. All EAIP Awards shall be payable out of TVA’s general assets. Each Participant’s or beneficiary’s claim, if any, for the payment of an EAIP Award shall not be superior to that of any general and unsecured creditor of TVA. Nothing contained in the Plan and no action taken pursuant to the provisions of the Plan shall create or be construed to create a trust of any kind or a fiduciary relationship between TVA and any Participant, beneficiary, or other person. If an error or omission is discovered in any of the determinations, the Plan Administrator shall cause an appropriate equitable adjustment to be made in order to remedy such error or omission.


11.4	Severability . In the event that any provision or portion of the Plan shall be determined to be invalid or unenforceable for any reason, the remaining provisions and portions of the Plan shall be unaffected thereby and shall remain in full force and effect to the fullest extent permitted by law.

11.5

Limitation of Rights . Nothing in the Plan shall be construed to give any employee any right to be selected as a Participant or to receive an EAIP Award or to be granted an EAIP Award other than as is provided in this document. Nothing in the Plan or any EAIP Award issued pursuant to the Plan shall be construed to limit in any way the right of TVA to terminate a Participant’s employment at any time, without regard to the effect of such termination on any rights such Participant would otherwise have under the Plan, or give any right to a Participant to remain employed by TVA in any particular position or capacity or at any particular rate of remuneration. During the lifetime of the Participant, only the Participant (or the Participant’s legal representative) may exercise the rights and receive the benefits of any EAIP Award.

11.6

Titles . The titles of the sections herein are included for convenience of reference only and shall not be construed as part of the Plan or have any effect upon the meaning of the provisions hereof. Unless the context requires otherwise, the singular shall include the plural and the masculine shall include the feminine. Such words as “herein,” “hereafter,” “hereof,” and “hereunder” shall refer to this instrument as a whole and not merely to the subdivision in which such words appear.


11.7	Governing Law . TVA is a corporate agency and instrumentality of the United States and the Plan shall be governed by and construed under federal law. In the event federal law does not provide a rule of decision for any matter or issue under the Plan, the law of the State of Tennessee shall apply; provided, however, in no event shall Tennessee’s choice of law provisions apply.


11.8	Authorized Representatives . Whenever TVA under the terms of the Plan is permitted or required to do or to perform any act or matter or thing, it shall be done and performed by a duly authorized representative of TVA.


11.9	Certain Rights and Limitations . The establishment of the Plan shall not be construed as conferring any legal rights upon any employee or other person for a continuation of employment, nor shall it interfere with the rights of TVA to discharge any employee and to treat any employee without regard to the effect that such treatment might have upon that employee as a Participant in the Plan.

11.10

Compliance with Section 409A . At all times, to the extent Section 409A applies to amounts deferred under the Plan: (i) the Plan shall be operated in accordance with the requirements of Section 409A; (ii) any action that may be taken (and, to the extent possible, any action actually taken) by an Authorized Party and the Participants or their beneficiaries shall not be taken (or shall be void and without effect), if such action violates the requirements of Section 409A; (iii) any provision in the Plan that is determined to violate the requirements of Section 409A shall be void and without effect; and (iv) any provision that is required by Section 409A to appear in the Plan that is not expressly set forth shall be deemed to be set forth herein, and the Plan shall be administered in all respects as if such provision were expressly set forth herein. The payments of EAIP Awards, to the extent no deferral election is made, are intended to be interpreted, operated, and administered in a manner consistent with the short-term deferral exemption from Section 409A.


11.11	Tax Withholding . TVA is authorized to withhold from any EAIP Award taxes due or potentially payable in connection with any transactions involving the Plan, and to take any other actions TVA may deem advisable to allow TVA to satisfy obligations for the payment of withholding taxes and other tax obligations related to any EAIP Award.

IN WITNESS WHEREOF, this instrument has been executed as of the 28th day of September, 2015.

Tennessee Valley Authority

By: /s/ William D. Johnson

William D. Johnson

President and Chief Executive Officer

EXHIBIT 10.2

RETENTION INCENTIVE PLAN

Amended and Restated October 1, 2015

Prepared by: /s/ Christoper L. Hinton 9/28/15

Christopher L. Hinton, VP Compensation & Benefits Date

Validation Date: 09/25/2015

Review Frequency: 5 years

Validated By: Donna Golden

TABLE OF CONTENTS



	Page

SECTION 1

PURPOSE AND SCOPE.......................................................................................	4
1.1 Establishment........................................................................................	4
1.2 Purpose.................................................................................................	4

SECTION 2

DEFINITIONS...................................................................................................................	4
2.1 Performance Cycle................................................................................	4
2.2 Performance Goals...............................................................................	4
2.3 Performance Measures.........................................................................	4
2.4 Section 409A.........................................................................................	4
2.5 TVA Senior Management......................................................................	4

SECTION 3

PARTICIPATION...............................................................................................................	4
3.1 Eligibility to Participate..........................................................................	4
3.2 Cost Benefit Analysis............................................................................	5
3.3 Identification of Participants..................................................................	5

SECTION 4

PERFORMANCE CYCLE.....................................................................................	5

SECTION 5

PERFORMANCE MEASURES AND PERFORMANCE GOALS..........................	5

SECTION 6

AWARD ELIGIBILITY AND CALCULATION..........................................................	5
6.1 Award Determination.............................................................................	5
6.2 Award Payable for Change in Role.......................................................	6
6.3 Award Payable for Early Achievement of Objectives............................	6
6.4 Award Payable for Unsatisfactory Performance...................................	6
6.5 Termination of Agreement.....................................................................	6



SECTION 7

DETERMINATION OF AWARDS...........................................................................	6
7.1 Communication of Agreement...............................................................	6
7.2 Required Information.............................................................................	7
7.3 Confidentiality........................................................................................	7
7.4 Process.................................................................................................	7

SECTION 8

PAYMENT OF AWARDS.......................................................................................	8

SECTION 9

PLAN ADMINISTRATION......................................................................................	9
9.1 Plan Administrator.................................................................................	9
9.2 Exceptional Business Needs.................................................................	9
9.3 Determinations by Plan Administrator...................................................	9

SECTION 10

ADMENDMENT OR TERMINATION OF THE PLAN............................................	10

SECTION 11

GENERAL PROVISIONS......................................................................................	10
11.1 TVA Compensation Plan.......................................................................	10
11.2 Non-Transferability of Rights and Interests...........................................	10
11.3 Severability............................................................................................	10
11.4 Limitations of Rights..............................................................................	11
11.5 Titles......................................................................................................	11
11.6 Governing Law......................................................................................	11
11.7 Authorized Representatives..................................................................	11
11.8 Certain Rights and Limitations..............................................................	11
11.9 Tax Withholding.....................................................................................	12


1.	PURPOSE AND SCOPE

1.1

Establishment . The Tennessee Valley Authority (“TVA”) hereby amends and restates in its entirety its Retention Incentive Plan which was created in 1999 and updated in 2003. The amended and restated plan will hereafter be referred to as the Retention Incentive Plan (the “Plan”). The Plan supports TVA’s Compensation Philosophy, which is designed to attract, retain, and engage employees needed to accomplish TVA’s broad mission.


1.2	Purpose . The Plan is designed to provide a retention incentive to select employees in critical positions where the loss of their services may adversely impact TVA operations. Unless covered under another approved plan within the overall TVA compensation program, no other compensation related agreements may be entered into with employees outside the Plan.


2.	DEFINITIONS

Wherever used herein, the following terms have the meaning set forth below, unless a different meaning is clearly required by the context:


2.1	“Performance Cycle” means the period of time over which performance is measured for the purpose of determining the award of the retention incentive.


2.2	“Performance Goals” means the goals established for each Performance Measure used to determine the award of the retention incentive.


2.3	“Performance Measures” means the specific metrics used to measure performance.


2.4	“Section 409A” means Internal Revenue Code Section 409A and the regulations and other binding guidance thereunder.


2.5	“TVA Senior Management” means the Chief Executive Officer (“CEO”), the Chief Operating Officer (“COO”), and other officers reporting directly to the CEO or COO.


3.	PARTICIPATION


3.1	Eligibility to Participate . Participation is limited to Manager and Specialist (M&S), including executives and excluded employees, who have a minimum of one year employment with TVA. Only employees who are not covered by another long-term incentive or retention

incentive under an approved compensation plan may be eligible to receive a retention incentive under the Plan unless approved by the CEO. Eligibility based on the Plan guidelines does not entitle an individual to receive a retention incentive. Retention incentives are at the sole discretion of TVA Senior Management, and participation in the Plan is determined on a case-by-case basis based on the business needs and other factors provided by business leaders.

3.2

Cost Benefit Analysis . Participation is limited to situations where it is in TVA’s best interest to retain the services of an employee in a critical position for a specified period of time in order to facilitate the transition of responsibilities or accomplish specific objectives necessary for the continued business performance of TVA. The benefits of retaining the employee should exceed the cost of the retention incentive.


3.3	Identification of Participants . TVA Senior Management identifies the individuals or group of individuals that are recommended for participation.


4.	PERFORMANCE CYCLE

The retention incentive period may extend from 6 months to 36 months.


5.	PERFORMANCE MEASURES AND PERFORMANCE GOALS

Performance Measures and Performance Goals are established specifically for each participant in a retention agreement (the “Agreement”) and are measured over the specified period of the Performance Cycle. Payment of a retention incentive award is contingent on successful achievement of the stated Performance Measures and Performance Goals.


6.	AWARD ELIGIBILITY AND CALCULATION


6.1	Award Determination . The total amount of the retention incentive payment will be based on the employee’s position (pay band/ grade/classification) and a percentage of the employee’s annual salary on the effective date of the Agreement. Guidelines for payments are as follows:



Position	Length of Agreement
Position	6-12 months	13-24 months	25-36 months
OE	Up to 75%	Up to 100%	Up to 200%
Grades 15-16	Up to 50%	Up to 75%	Up to 100%
Grades 11-14	Up to 30%	Up to 40%	Up to 50%
Grades 8-10	Up to 20%	Up to 25%	Up to 35%
Grades 1-7	Up to 15%	Up to 20%	Up to 25%
Excluded	Up to 10%	Up to 15%	Up to 20%

6.2

Award Payable for Change in Role . An Agreement is for the specific position the employee holds at the time the Agreement is approved. If an employee changes positions at TVA’s request, the Vice President (VP), Compensation & Benefits, will determine the amount (if any) to be paid to the employee. Should the employee voluntarily change positions, resign, or be terminated for cause prior to the fulfillment of the Agreement in its entirety, the employee forfeits the award in its entirety. In all cases, the Agreement is ended upon change of position.

6.3

Award Payable for Early Achievement of Objectives . In some instances, TVA Senior Management may determine that the employee has satisfactorily achieved the agreed upon objectives prior to the expiration date of the Agreement. In such cases, the VP Compensation & Benefits may decide to permit or require the employee to leave prior to the expiration date in the Agreement and receive up to full payment of the retention incentive.

6.4

Award Payable for Unsatisfactory Performance . In the event the employee does not satisfactorily fulfill the objectives specified in the Agreement or if the participant’s performance is rated as “Inconsistent” or “Unsatisfactory”, TVA Senior Management may elect to reduce, up to the total amount of the Agreement, any payments made to the participant. No additional payments will be provided in such cases

6.5

Termination of Agreement . TVA Senior Management has the right to terminate the Agreement with an employee at any time and make appropriate payment based on time worked and accomplishment of objectives. The VP Compensation & Benefits has the authority to evaluate unique situations that may arise and make the most effective business decision regarding changes to the Agreement with the employee on a case-by-case basis.


7.	PLAN GUIDELINES


7.1	Communication of Agreement . The provisions of the Agreement shall not be discussed by TVA managers, Human Resources (HR) or

Compensation with the participating employee until all TVA required approvals have been obtained.


7.2	Required Information . The following information must be included in the Agreement between TVA and an employee covered by the Plan:


•	Effective date of the Agreement


•	Expiration date of the Agreement


•	Payment amount and date


•	Objectives and metrics for evaluating the objectives the participant is to accomplish


•	Confidentiality statement


•	Signatures as stated in Section 7.4.5 below


7.3	Confidentiality . Participants should not disclose except with family, financial advisors or as required by law, their participation in the Plan and/or the terms and conditions of their Agreement or retention incentive. Disclosure may result in forfeiture and/or reimbursement of up to the full amounts paid under the Agreement.


7.4	Process


7.4.1	TVA Senior Management, in collaboration with HR business partners, assesses the need to provide Agreements to an individual or group of individuals. The following criteria will be used to determine eligibility for participation in the Plan:


•	The employee provides a service or serves in a capacity critical to TVA’s business performance and public service that cannot be immediately and adequately replaced


•	The employee possesses unique qualifications that cannot be immediately and adequately replaced


•	Special business needs of the organization


7.4.2	If it is determined that retention of an employee is critical to TVA, a member of TVA Senior Management, in collaboration with HR business partners, may request approval from the VP Compensation & Benefits to enter into an Agreement with the employee.


7.4.3	TVA Compensation will work with HR and the requesting member of TVA Senior Management to determine the appropriate amount and length of the Agreement. Upon final determination of length and amount of payment, Compensation will prepare the Agreement.

7.4.4

HR will work with TVA Senior Management to obtain approval signatures and employee signature on a final Agreement. The “Delegation of Approval Authority for Compensation Actions” matrix specifies the highest level of management approval and HR approval required to process retention agreements based on the amount of the award. Additional approvals may be added as required by specific business units. All approvals must be obtained prior to presentation of details to the employee.


7.4.5	The Agreement, must, at a minimum, contain the following signatures:


•	Requestor of Agreement (TVA Senior Management)


•	VP, Compensation & Benefits or delegate


•	Participant


7.4.6	Copies of the approved Agreement are distributed to the following:


•	Requestor of Agreement


•	Participant


•	HR Generalist


•	Compensation


•	HR Deployment & Support


7.4.7	Thirty days prior to scheduled payment, HR Deployment & Support will contact the employee’s management and request documentation supporting and describing how the Performance Goals and Measures have been met. The participant’s management must provide Compensation and HR Deployment & Support this documentation prior to the payment request being sent to Disbursement Services.


7.4.8	HR Deployment & Support coordinates with Disbursement Services to provide details for payments.


8.	PAYMENT OF AWARD

Awards will be paid as a lump-sum payment at the conclusion of the Performance Cycle set forth in the Agreement.

Each award shall be paid in cash after deducting the amount of applicable federal, state, and local withholding taxes of any kind required by law to be withheld by TVA. Payments under these Agreements will be made as soon as administratively practical but no later than 30 days from the date of the conclusion of the Performance Cycle set forth in the Agreement.


9.	PLAN ADMINISTRATION

9.1

Plan Administrator . The Plan shall be administered by TVA’s CEO or his or her delegate (the “Plan Administrator”) unless otherwise delegated by the Board or the CEO. Subject to the express provisions of the Plan, the Plan Administrator shall have the power, authority, and sole and exclusive discretion to construe, interpret and administer the Plan, including without limitation, the power and authority to make factual determinations relating to, and correct mistakes in, awards, and to take such other action in the administration and operation of the Plan as the Plan Administrator deems appropriate under the circumstances, including but not limited to the following:


9.1.1	The Plan Administrator may, from time to time, prescribe forms and procedures for carrying out the purposes and provisions of the Plan.


9.1.2	The Plan Administrator shall have the authority to prescribe the terms of any communications made under the Plan, to interpret and construe the Plan, any rules and regulations under the Plan, and the terms and conditions of any award, and to answer all questions arising under the Plan, including questions on the proper construction and interpretation of the Plan.


9.1.3	The Plan Administrator may (a) notify each participant that he or she has been selected as a participant and (b) obtain from each participant such agreements and powers and designations of beneficiaries as the Plan Administrator shall reasonably deem necessary for the administration of the Plan.


9.1.4	To the extent permitted by law, the Plan Administrator may at any time delegate such powers and duties to one or more other executives or managers, whether ministerial or discretionary, as the Plan Administrator may deem appropriate, including but not limited to, authorizing the Plan Administrator’s delegate to execute documents on the Plan Administrator’s behalf.


9.2	Exceptional Business Needs . TVA Senior Management may propose, and the Senior Vice President, Human Resources and Communications has the authority to approve payment options, payment amounts, and/or time periods that fall outside the guidelines in the Plan if exceptional business needs dictate that this is required to retain the services of an employee.


9.3	Determinations by Plan Administrator . All decisions, determinations and interpretations by the Plan Administrator regarding the Plan, any rules and regulations under the Plan, and the terms and conditions of

or operation of any Plan award, shall be final and binding on all participants, beneficiaries, heirs, assigns, or other persons holding or claiming rights under the Plan or any award. The Plan Administrator shall consider such factors as it deems relevant, in its sole and absolute discretion, in making such decisions, determinations, and interpretations including, without limitation, the recommendations or advice of the Board, CEO or any other employee of TVA and such consultants and accountants as he or she may select.


10.	AMENDMENT OR TERMINATION OF THE PLAN

The Board, the CEO, or the delegate of the Board or CEO, may at any time amend or terminate the Plan without the consent of any participant, beneficiary or other person; provided, that TVA and the Plan Administrator, after any such termination, shall continue to have full administrative powers to take any and all action contemplated by the Plan which is necessary or desirable and to make payment of any outstanding awards earned by participants in accordance with the terms of the Plan. No amendment or termination of the Plan may adversely affect, other than as specified in the Plan, any right acquired by any participant or any beneficiary under an award granted before the effective date of such amendment or termination. Upon termination of the Plan, distribution of vested awards shall be made to participants and beneficiaries in the manner and at the time described herein, unless the Board, the Board’s delegate, or the CEO determines in his or her sole discretion that all such amounts shall be distributed upon termination of the Plan.


11.	GENERAL PROVISIONS


11.1	TVA Compensation Plan . Approvals regarding awards under the Plan for each participant will be made in accordance with the TVA Compensation Plan and the delegations thereunder

11.2

Non-Transferability of Rights and Interests . Neither a participant nor a beneficiary may alienate, assign, transfer, or otherwise encumber his or her rights and interests under the Plan. No such interest or right to receive a distribution may be taken, either voluntarily or involuntarily, for the satisfaction of the debts of, or other obligations or claims against, such person, and any attempt to do so shall be null and void. In the event of a participant’s death, the Plan Administrator shall authorize payment of any award due a participant under the Plan to the participant’s beneficiary.


11.3	Severability . In the event that any provision or portion of the Plan shall be determined to be invalid or unenforceable for any reason, the remaining provisions and portions of the Plan shall be unaffected

thereby and shall remain in full force and effect to the fullest extent permitted by law.

11.4

Limitation of Rights . Nothing in the Plan shall be construed to give any employee any right to be selected as a participant or to receive an award or to be granted an award other than as is provided in this document. Nothing in the Plan or any award issued pursuant to the Plan shall be construed to limit in any way the right of TVA to terminate a participant’s employment at any time, without regard to the effect of such termination on any rights such participant would otherwise have under the Plan, or give any right to a participant to remain employed by TVA in any particular position or capacity or at any particular rate of remuneration. During the lifetime of the participant, only the participant (or the participant’s legal representative) may exercise the rights and receive the benefits of any award.

11.5

Titles . The titles of the articles and sections herein are included for convenience of reference only and shall not be construed as part of the Plan or have any effect upon the meaning of the provisions hereof. Unless the context requires otherwise, the singular shall include the plural and the masculine shall include the feminine. Such words as ”herein,” “hereafter,” “hereof,” and “hereunder” shall refer to this instrument as a whole and not merely to the subdivision in which such words appear.

11.6

Governing Law . TVA is a corporate agency and instrumentality of the United States and the Plan shall be governed by and construed under federal law. In the event federal law does not provide a rule of decision for any matter or issue under the Plan, the law of the State of Tennessee shall apply; provided, however, in no event shall Tennessee’s choice of law provisions apply. The Plan and payment of awards are intended to be interpreted, operated, and administered in a manner consistent with the short-term deferral exemption from Section 409A.


11.7	Authorized Representatives . Whenever TVA under the terms of the Plan is permitted or required to do or to perform any act or matter or thing, it shall be done and performed by a duly authorized representative of TVA.


11.8	Certain Rights and Limitations . The establishment of the Plan shall not be construed as conferring any legal rights upon any employee or other person for a continuation of employment, nor shall it interfere with the rights of TVA to discharge any employee and to treat any employee without regard to the effect that such treatment might have upon that employee as a participant in the Plan.


11.9	Tax Withholding . TVA is authorized to withhold from any payment under the Plan taxes due or potentially payable in connection with any transactions involving the Plan, and to take any other actions TVA may deem advisable to allow TVA to satisfy obligations for the payment of withholding taxes and other tax obligations related to payments under the Plan.

IN WITNESS WHEREOF, this instrument has been executed as of the 28th day of September, 2015.

Tennessee Valley Authority

By: /s/ William D. Johnson

William D. Johnson

President and Chief Executive Officer

EXHIBIT 10.3

LONG-TERM INCENTIVE PLAN

October 1, 2015

Prepared by: /s/ Christopher L. Hinton 9/28/15

Christopher L. Hinton, VP Compensation & Benefits Date

Validation Date: 09/25/2015

Review Frequency: 5 years

Validated By: Donna Golden

TABLE OF CONTENTS



	Page

SECTION 1

PURPOSE AND SCOPE.......................................................................................	5
1.1 Establishment........................................................................................	5
1.2 Purpose.................................................................................................	5

SECTION 2

DEFINITIONS...................................................................................................................	5
2.1 Beneficiary.............................................................................................	6
2.2 Disability................................................................................................	6
2.3 Long-Term Performance Incentive Award.............................................	6
2.4 Long-Term Performance Incentive Grant..............................................	6
2.5 Long-Term Performance Incentive Opportunity.....................................	6
2.6 Long-Term Retention Incentive Award..................................................	6
2.7 Percent of Opportunity Achieved...........................................................	6
2.8 Performance Cycle................................................................................	6
2.9 Performance Goals...............................................................................	7
2.10 Performance Measures.........................................................................	7
2.11 Section 409A.........................................................................................	7
2.12 Separation from Service........................................................................	7

SECTION 3

PARTICIPATION...............................................................................................................	7
3.1 Performance Component......................................................................	7
3.2 Retention Component...........................................................................	7

SECTION 4

PERFORMANCE MEASURES AND GOAL..........................................................	8



SECTION 5

DETERMINATION OF GRANTS AND AWARDS..................................................	8
5.1 Grant Frequency...................................................................................	8
5.2 Calculation of Grants and Awards.........................................................	9
5.3 Vesting..................................................................................................	10
5.4 Awards Payable for Termination Prior to Vesting..................................	10

SECTION 6

PAYMENT OF AWARDS.......................................................................................	11
6.1 Performance Component......................................................................	12
6.2 Retention Component...........................................................................	12
6.3 Death.....................................................................................................	12
6.4 Disability................................................................................................	12

SECTION 7

DEFERRAL ELECTION OPTION..........................................................................	12
7.1 Eligibility for Deferral for Existing Employees........................................	12
7.2 Eligibility for Deferral for New Hires......................................................	13
7.3 Acceleration of Payments in the Event of the Death of a Participant....	13

SECTION 8

PLAN ADMINISTRATION......................................................................................	14
8.1 Authority of Plan Administrator..............................................................	14
8.2 Determinations by Plan Administrator...................................................	14

SECTION 9

AMENDENT OR TERMINATION OF THE PLAN..................................................	15



SECTION 10

GENERAL PROVISIONS......................................................................................	15
10.1 TVA Compensation Plan.......................................................................	15
10.2 Non-Transferability of Rights and Interests...........................................	15
10.3 Source of Payments..............................................................................	15
10.4 Severability............................................................................................	15
10.5 Limitation of Rights................................................................................	16
10.6 Titles......................................................................................................	16
10.7 Governing Law......................................................................................	16
10.8 Authorized Representatives.................................................................	16
10.9 Compliance with Section 409A............................................................	16
10.10 Tax Withholding.....................................................................................	17


1.	PURPOSE AND SCOPE

1.1

Establishment . The Tennessee Valley Authority (“TVA”) hereby establishes this Long-Term Incentive Plan (“the "Plan") which combines and replaces both the TVA Executive Long-Term Incentive Plan (the “ELTIP”) and the TVA Long-Term Retention Incentive Plan (the “LTRIP”). No new participants will be added to the ELTIP and no additional grants will be made under the LTRIP upon approval of the Plan. The Plan supports TVA’s compensation philosophy, which is designed to attract, retain, and engage employees needed to accomplish TVA’s broad mission.


1.2	Purpose . The purpose of the Plan is to provide a targeted level of total long-term compensation that is comprised of both (1) a variable, at-risk performance-based component (the “Performance Component”) and (2) a retention component (the “Retention Component”). The Plan is designed to provide a competitive level of total compensation to eligible participants (each, a “Participant”).

Participants may be selected for enrollment in one or both components of the Plan. For a Participant who is enrolled in both components, the Performance Component will typically be targeted at 70 percent to 80 percent of the Participant’s total targeted long-term compensation. The remaining 20 percent to 30 percent will be provided under the Retention Component.


1.2.1	Performance Component . The Performance Component is designed to provide Participant’s with time-vested incentive opportunities based on successful achievement of established financial and/or operational goals measured over a three-year period.


1.2.2	Retention Component . The Retention Component is designed to provide Participants with time-based incentive opportunities designed to encourage them to remain with TVA. This component is intended to provide retention incentives to Participants similar to the retention incentive provided by restricted stock or restricted stock units in publicly-traded companies.


2.	DEFINITIONS

Wherever used herein, the following terms have the meanings set forth below, unless a different meaning is clearly required by the context:

2.1

“Beneficiary” means the Participant’s surviving spouse, unless the Participant designates one or more persons or entities to be the Participant’s Beneficiary. The Participant may make, change, or revoke a Beneficiary designation at any time before his or her death without the consent of the Participant’s spouse or anyone the Participant previously named as a Beneficiary, and the Participant may designate primary and secondary Beneficiaries. A Beneficiary designation must comply with procedures established by the Plan Administrator (as defined below) and must be received by the Plan Administrator before the Participant’s death. If the Participant dies without a valid Beneficiary designation (as determined by the Plan Administrator) and has no surviving spouse, the Beneficiary shall be the Participant’s estate.

2.2

“Disability” means that the Participant has any medically determinable physical or mental impairment resulting in the Participant’s inability to perform the duties of his or her position or any substantially similar position that can be expected to result in death or can be expected to last for a continuous period of not less than six months. Disability shall be determined by the Plan Administrator, in his or her sole discretion.


2.3	“Long-Term Performance Incentive Award” means the amount awarded to a Participant under the Performance Component.


2.4	“Long-Term Performance Incentive Grant” means the grant to a Participant under the Performance Component.


2.5	“Long-Term Performance Incentive Opportunity” means the award opportunity under the Performance Component expressed as a percentage of the Participant’s base salary.


2.6	“Long-Term Retention Incentive Award” means the amount granted to a Participant under the Retention Component.


2.7	“Percent of Opportunity Achieved” means the percent of the Long-Term Performance Incentive Opportunity achieved with respect to a Participant based on achieved level of performance compared to the established Performance Measures and Performance Goals over the Performance Cycle.


2.8	“Performance Cycle” means a period of three consecutive TVA fiscal years. A new Performance Cycle begins at the start of each TVA fiscal year (October1). An example showing how the three year cycles overlap is illustrated below:



Plan Cycle	FY 2015	FY 2016	FY 2017	FY 2018	FY 2019
Cycle 1	ü	ü	ü
Cycle 2		ü	ü	ü
Cycle 3			ü	ü	ü


2.9	“Performance Goals” means the long-term strategic goals established for each Performance Measure used to determine awards under the Performance Component.


2.10	“Performance Measures” means the specific metrics used to measure performance under the Performance Component.


2.11	“Section 409A” means Internal Revenue Code Section 409A and the regulations and other binding guidance thereunder.


2.12	“Separation from Service” and like phrases have the meaning set forth in 26 C.F.R. §1.409A-1(h) as such provision may be amended from time to time.


3.	PARTICIPATION

The TVA Board of Directors (the “Board”), or its designee(s) (collectively, the “Authorized Parties”), shall approve individual employees as Participants. Each Participant approved for participation shall be enrolled in the Performance Component, the Retention Component, or both. Participation is generally limited to key positions that have the ability to significantly impact the long-term financial and/or operational objectives critical to TVA’s overall success (“Key Positions”).

Eligibility based on the Plan guidelines does not entitle an individual to receive an award under the Plan. An employee’s eligibility and participation in one year does not guarantee eligibility or participation for any subsequent year. No other long-term incentive may be provided that is inconsistent with the Plan.

3.1

Performance Component . Effective October 1, 2015, eligibility to participate in the Performance Component shall be limited to officers and employees serving in Key Positions within the Officer/Executive pay band. Individuals serving in Key Positions within the Management & Specialist pay band may be eligible for participation in the Performance Component under limited circumstances and with approval by the CEO.


3.2	Retention Component . Effective October 1, 2015, eligibility to participate in the Retention Component shall be limited to:


•	Officers and employees serving in Key Positions within the Officer/Executive pay band; and


•	Employees serving in Manager and Specialist (M&S) positions that:


•	are at or above TVA Pay Grade 12 and


•	report no more than two levels below a Vice President or


•	approved by the CEO.

Participation in the Plan, as well as the terms of each award granted under the Plan, is at the discretion of the Authorized Parties based on, among other things, recruiting needs and review of benchmark data.


4.	PERFORMANCE MEASURES AND GOALS

The Board establishes both Performance Measures and Performance Goals. Performance Measures focus primarily on the achievement of TVA’s long-term financial and/or operational goals, and Performance Goals are established for each Performance Measure. Performance Measures and Performance Goals cover the three-year period of the Performance Cycle. The Board will establish Performance Measures and Performance Goals in writing within the first 90 days of the Performance Cycle, provided that their outcome is substantially uncertain at the time such Performance Measures and Performance Goals are established. Performance Measures and Performance Goals will not change after the first 90 days of the Performance Cycle.


5.	DETERMINATION OF GRANTS AND AWARDS

5.1

Grant Frequency . Long-Term Performance Incentive Grants will typically be made annually as of the first day of each Performance Cycle. Long-Term Retention Incentive Awards will typically be granted annually as of the first day of each fiscal year. Grants must be formally approved by an Authorized Party prior to being communicated to Participants. Approval will generally be part of the compensation review. Formal communication of approved grants shall be provided to Participants as soon as practicable after approval.

5.1.1

Performance Component . If, after the first day of a Performance Cycle, an individual is hired and becomes eligible/approved during that first fiscal year to participate in the Performance Component or is promoted or transferred into a position that is covered by the Performance Component (or would provide for an increase in the grant amount), the employee may become a Participant effective as of the next October 1 with respect to the two full fiscal years that remain in such Performance Cycle. The grant amount will be

effective as of and calculated based solely on the last two full fiscal years of the Performance Cycle. For the avoidance of doubt, except in the case of death or Disability, participation is for full fiscal year increments only, and there will be no prorated grant amounts for less than a full year.


5.1.2	Retention Component . In the event an individual becomes eligible/approved during a fiscal year or is promoted or transferred into a position that is covered by the Retention Component (or would provide for an increase in the award amount) the employee will be eligible for an award or an increase in the award amount, as applicable, on the first day of the following fiscal year.


5.2	Calculation of Grants and Awards . Grants represent the right of a Participant to receive a cash award, subject to vesting, in the amount determined by an Authorized Party, as set forth below.


5.2.1	Performance Component . Long-Term Performance Incentive Grants are based on a Participant’s base salary and Long-Term Performance Incentive Opportunity on the grant date, and are calculated as follows:



Long-Term Performance Incentive Grant	=	Base Salary at Grant Date	X	Long-Term Performance Incentive Opportunity at Grant Date

Long-Term Performance Incentive Awards are based on achieved level of performance compared to the established Performance Measures and Performance Goals over the Performance Cycle and are calculated as follows:



Long-Term Performance Incentive Award	=	Base Salary at Grant Date	X	Long-Term Performance Incentive Opportunity at Grant Date	X	Percent of Opportunity Achieved

For each Participant, the maximum Long-Term Performance Incentive Award allowed under the Plan is 150 percent of the Long-Term Performance Incentive Opportunity unless a different maximum is approved by an Authorized Party. The final Long-Term Performance Incentive Award may be adjusted by the Board based on the evaluation of the Participant’s individual achievements, peer group comparisons, and performance results over the Performance Cycle.


5.2.2	Retention Component . Long-Term Retention Incentive Awards will be fixed on the date of grant.


5.3	Vesting . A Participant will vest in his or her award as set forth below.

5.3.1

Performance Component . Except as provided in Section 5.4, Participants will become fully vested in their Long-Term Performance Incentive Awards if they remain employed through the end of the Performance Cycle. Long-Term Performance Incentive Grants will be made as of October 1 and will vest three years later on September 30. For example, a Long-Term Performance Incentive Grant made for the Performance Cycle beginning on October 1, 2015, will become fully vested on September 30, 2018.

5.3.2

Retention Component . The Retention Component shall have a prorated vesting period covering three years. Long-Term Retention Incentive Awards will be granted on October 1 and will become 1/3 vested on each subsequent September 30, provided the Participant remains employed through that date. For example, a Long-Term Retention Incentive Award of $75,000 granted on October 1, 2015, will vest as follows: $25,000 on September 30, 2016; $25,000 on September 30, 2017; and $25,000 on September 30, 2018.


5.4	Awards Payable for Termination Prior to Vesting . Except as otherwise determined by an Authorized Party or provided in the subsections below, if a Participant’s employment with TVA terminates for any reason, the unvested portion of any award shall be completely forfeited on the date of such termination of the Participant's employment.

5.4.1

Death. If a Participant dies while employed, the Beneficiary shall be entitled to the sum of (1) any Long-Term Performance Incentive Awards that have already vested at the time of the Participant’s death and have not yet been paid to the Participant, (2) any Long-Term Performance Incentive Awards that have not vested at the time of the Participant’s death and that cover a Performance Cycle for which the Participant has received a Long-Term Performance Incentive Grant, provided that the amount of any such Long-Term Performance Incentive Award (a) will be calculated assuming that the Percent of Opportunity Achieved is 100 percent and (b) will be prorated based on the number of whole months the Participant was participating in the Plan during the applicable Performance Cycle, (3) any portion of a Long-Term Retention Incentive Award that has already vested at the time of the Participant’s death and

has not yet been paid, and (4) any portion of a Long-Term Retention Incentive Award that would have vested at the end of the fiscal year during which the Participant dies or at the end of either of the two subsequent fiscal years, provided that the award for each such fiscal year will be prorated based on the number of whole months the Participant was employed by TVA during the fiscal year during which he or she died (such sum being hereinafter referred to as the “Beneficiary Award”). The Beneficiary Award shall be paid to the Beneficiary in accordance with Section 6.3 or Section 7.3, as applicable.

5.4.2

Disability. If a Participant Separates from Service due to a Disability, the Participant shall be entitled to the sum of (1) any Long-Term Performance Incentive Awards that have already vested at the time the Participant Separates from Service due to a Disability and have not yet been paid to the Participant, (2) any Long-Term Performance Incentive Awards that have not vested at the time of the Participant’s Separation from Service due to a Disability and that cover a Performance Cycle for which the Participant has received a Long-Term Performance Incentive Grant, provided that the amount of any such Long-Term Performance Incentive Award (a) will be calculated assuming that the Percent of Opportunity Achieved is 100 percent and (b) will be prorated based on the number of whole months the Participant was employed by TVA during the applicable Performance Cycle, (3) any portion of a Long-Term Retention Incentive Award that has already vested at the time that the Participant Separates from Service due to a Disability and has not yet been paid, and (4) any portion of a Long-Term Retention Incentive Award that would have vested at the end of the fiscal year during which the Participant Separates from Service due to a Disability or at the end of either of the two subsequent fiscal years, provided that the award for each such fiscal year will be prorated based on the number of whole months the Participant was employed by TVA during the fiscal year during which he or she Separated from Service due to a Disability (such sum being hereinafter referred to as the “Disability Award”). The Disability Award shall be paid to such Participant in accordance with Section 6.4 below.


6.	PAYMENT OF AWARDS

Each award shall be paid in cash after deducting the amount of applicable federal, state, and local withholding taxes of any kind required by law to be withheld by TVA or any amounts due to be paid to

TVA. All awards will be approved by an Authorized Party prior to payment. The awards will be paid as follows:


6.1	Performance Component . Except in the case of death or Disability or in the case of deferral, Long-Term Performance Incentive Awards will be paid in a lump sum within two months of the end of each Performance Cycle.

6.2

Retention Component . Except in the case of death or Disability, Long-Term Retention Incentive Awards will be paid in a lump sum within two months of vesting. For example, a Long-Term Retention Incentive Award of $75,000 granted on October 1, 2015, will be paid as follows to the extent the Participant remains employed as of the applicable vesting date: $25,000 within two months after September 30, 2016; $25,000 within two months after September 30, 2017; and $25,000 within two months after September 30, 2018.


6.3	Death . The Beneficiary Award will be paid as soon as administratively practicable but in no event later than the last day of the second full calendar month following the Participant’s death.


6.4	Disability. The Disability Award will be paid as soon as administratively practicable but in no event later than the last day of the second full calendar month following the Participant’s Separation from Service due to Disability.


7.	DEFERRAL ELECTION OPTION

Participants are not eligible to defer the payment of Long-Term Retention Incentive Awards. Participants may defer the payment of Long-Term Performance Incentive Awards in accordance with the rules set forth below .


7.1	Eligibility for Deferral for Existing Employees. Employees and Participants who are eligible to participate in the Performance Component before the Performance Measures and Performance Goals for a Performance Cycle have been established may defer Long-Term Performance Incentive Awards under the following conditions:


7.1.1	The deferral election must be made before the first day of the Performance Cycle;


7.1.2	The deferral election is irrevocable as of the date set forth in Section 7.1.1 above;


7.1.3	The deferral must be made with respect to 25 percent increments of the actual Long-Term Performance Incentive Award;


7.1.4	Before the deferral election becomes irrevocable, the Participant must elect to have deferred amounts paid out upon the Participant’s Separation from Service, either (i) in a lump sum, or (ii) in 5 or 10 equal annual installments. The first installment will be paid upon the Participant’s Separation from Service, and subsequent installments will be paid on each anniversary thereof; and


7.1.5	The Participant performs services at TVA continuously from the date the Performance Measures and Performance Goals are established through the date the deferral election is made.

7.2

Eligibility for Deferral for New Hires. Participants who are hired by TVA after the Performance Measures and Performance Goals for a Performance Cycle have been established and who have not at any time previously been eligible to participate in the Plan or in any other plan required to be aggregated and treated with the Plan as a single plan under Section 409A may defer their Long-Term Performance Incentive Awards under the following conditions:


7.2.1	The deferral election must be made within 30 days after the date the Participant becomes eligible to participate in the Plan and will be effective with respect to participation in the Performance Component as of the next October 1;


7.2.2	The deferral election is irrevocable as of the date set forth in Section 7.2.1 above;


7.2.3	The deferral must be made with respect to 25 percent increments of the actual Long-Term Performance Incentive Award;


7.2.4	The deferral election applies only with respect to compensation paid for services to be performed after the election is made; and

7.2.5

Before the deferral election becomes irrevocable, the Participant must elect to have deferred amounts paid out upon the Participant’s Separation from Service, either (i) in a lump sum, or (ii) in 5 or 10 equal annual installments, as elected by the Participant. The first installment will be paid upon the Participant’s Separation from Service, and subsequent installments will be paid on each anniversary thereof.

7.3

Acceleration of Payments in the Event of the Death of a Participant. If a Participant elects to have amounts paid out upon the Participant’s Separation from Service in 5 or 10 equal annual installments and the Participant dies before all of the payments are made, TVA will pay all of the remaining payments to the Participant’s Beneficiary in a lump sum as soon as administratively practicable after the death of the Participant but

in no event later than the last day of the second full month following the death of the Participant.


8.	PLAN ADMINISTRATION

8.1

Authority of Plan Administrator . The Plan shall be administered by the CEO or the designee of the CEO (the “Plan Administrator”) unless otherwise delegated by the Board. Subject to the express provisions of the Plan, the Plan Administrator shall have the power, authority, and sole and exclusive discretion to construe, interpret, and administer the Plan, including without limitation the power and authority to make factual determinations relating to, and correct mistakes in, awards and to take such other action in the administration and operation of the Plan as the Plan Administrator deems appropriate under the circumstances, including but not limited to the following:


8.1.1	The Plan Administrator may, from time to time, prescribe forms and procedures for carrying out the purposes and provisions of the Plan;


8.1.2	The Plan Administrator shall have the authority to prescribe the terms of any communications made under the Plan and to interpret and construe the Plan, any rules and regulations under the Plan, and the terms and conditions of any award, and answer all questions arising under the Plan, including questions on the proper construction and interpretation of the Plan;


8.1.3	The Plan Administrator may (1) notify each Participant that he or she has been selected as a Participant and (2) obtain from each Participant such agreements and powers and designations of Beneficiaries as the Plan Administrator shall reasonably deem necessary for the administration of the Plan; and.


8.1.4	To the extent permitted by law, the Plan Administrator may at any time delegate such powers and duties to one or more other executives or managers, whether ministerial or discretionary, as the Plan Administrator may deem appropriate, including but not limited to authorizing the Plan Administrator’s delegate to execute documents on the Plan Administrator’s behalf.


8.2	Determinations by Plan Administrator . All decisions, determinations, and interpretations by the Plan Administrator regarding the Plan, any rules and regulations under the Plan, and the terms and conditions of or operation of any Plan award shall be final and binding on all Participants, Beneficiaries, heirs, assigns, or other persons holding or claiming rights under the Plan or any award.


9.	AMENDMENT OR TERMINATION OF THE PLAN

The Board or the CEO may at any time amend or terminate the Plan without the consent of any Participant, Beneficiary, or other person; provided that, no amendment or termination of the Plan may adversely affect, other than as specified in the Plan, any right acquired by any Participant or any Beneficiary under an award vested before the effective date of such amendment or termination. Upon termination of the Plan, distribution of vested awards shall be made to Participants and Beneficiaries in the manner and at the time described in Sections 6 and 7, unless an Authorized Party determines in his or her sole discretion that all such amounts shall be distributed upon termination of the Plan, in accordance with Section 409A to the extent applicable. TVA and the Plan Administrator, after such amendment or termination, shall continue to have full administrative powers to take any and all action contemplated by the Plan which is necessary or desirable and to make payment of any outstanding awards earned by Participants in accordance with the terms of the Plan.


10.	GENERAL PROVISIONS


10.1	TVA Compensation Plan. Approvals regarding awards granted under the Plan for each Participant, and the amount of actual awards, will be made in accordance with the TVA Compensation Plan and the delegations thereunder.

10.2

Non-Transferability of Rights and Interests. Neither a Participant nor a Beneficiary may alienate, assign, transfer, or otherwise encumber his or her rights and interests under the Plan, nor may such interest or right to receive a distribution be taken, either voluntarily or involuntarily, for the satisfaction of the debts of, or other obligations or claims against, such person, and any attempt to do so shall be null and void.

10.3

Source of Payments. All awards shall be payable out of TVA’s general assets. Each Participant’s or Beneficiary’s claim, if any, for the payment of an award shall not be superior to that of any general and unsecured creditor of TVA. Nothing contained in the Plan and no action taken pursuant to the provisions of the Plan shall create or be construed to create a trust of any kind or a fiduciary relationship between TVA and any Participant, Beneficiary, or other person. If an error or omission is discovered in any of the determinations, the Plan Administrator, in his or her sole discretion, shall cause an appropriate equitable adjustment to be made in order to remedy such error or omission.


10.4	Severability. In the event that any provision or portion of the Plan shall be determined to be invalid or unenforceable for any reason, the

remaining provisions and portions of the Plan shall be unaffected thereby and shall remain in full force and effect to the fullest extent permitted by law.

10.5

Limitation of Rights. Nothing in the Plan shall be construed to give any employee any right to be selected as a Participant or to receive an award or to be granted an award other than as is provided in this document. Nothing in the Plan or any grant or award issued pursuant to the Plan shall be construed to limit in any way the right of TVA to terminate a Participant’s employment at any time, without regard to the effect of such termination on any rights such Participant would otherwise have under the Plan, or give any right to a Participant to remain employed by TVA in any particular position or capacity or at any particular rate of remuneration. During the lifetime of the Participant, only the Participant (or the Participant’s legal representative) may exercise the rights and receive the benefits of any award.

10.6

Titles. The titles of the articles and sections herein are included for convenience of reference only and shall not be construed as part of the Plan or have any effect upon the meaning of the provisions hereof. Unless the context requires otherwise, the singular shall include the plural and the masculine shall include the feminine. Words such as “herein,” “hereafter,” “hereof,” and “hereunder” shall refer to this instrument as a whole and not merely to the subdivision in which such words appear.

10.7

Governing Law. TVA is a corporate agency and instrumentality of the United States and the Plan shall be governed by and construed under federal law. In the event federal law does not provide a rule of decision for any matter or issue under the Plan, the law of the State of Tennessee shall apply, without taking into account conflict of law principles. By participating in the Plan, each Participant agrees that the jurisdiction for any action with respect to the Plan shall lie in the United States District Court for the Eastern District of Tennessee. Any such action must commence no later than the date an award is paid or was to be paid, as applicable.


10.8	Authorized Representatives. Whenever TVA under the terms of the Plan is permitted or required to do or to perform any act or matter or thing, it shall be done and performed by a duly authorized representative of TVA.

10.9

Compliance with Section 409A. At all times, to the extent Section 409A applies to amounts deferred under the Plan, (a) the Plan shall be operated in accordance with the requirements of Section 409A; (b) any action that may be taken (and, to the extent possible, any action actually taken) by an Authorized Party and the Participants or their Beneficiaries shall not be taken (or shall be void and without effect), if

such action violates the requirements of Section 409A; (c) any provision in the Plan that is determined to violate the requirements of Section 409A shall be void and without effect; and (d) any provision that is required by Section 409A to appear in the Plan that is not expressly set forth shall be deemed to be set forth herein, and the Plan shall be administered in all respects as if such provision were expressly set forth herein. The Performance Component (to the extent no deferral election is made) and the Retention Component and the payment of awards thereunder are intended to be interpreted, operated, and administered in a manner consistent with the short-term deferral exemption from Section 409A. TVA may at any time amend the Plan with respect to Section 409A but is not required to do so. No provision of the Plan is intended or shall be interpreted to create any right with respect to the tax treatment of the amounts paid hereunder, and TVA shall not, under any circumstances, have any liability to a Participant or Beneficiary for any taxes, penalties, or interest due on amounts paid or payable under the Plan, including taxes, penalties, or interest imposed under Section 409A.


10.10	Tax Withholding . TVA is authorized to withhold from any Award taxes due or potentially payable in connection with any transactions involving the Plan, and to take any other actions TVA may deem advisable to allow TVA to satisfy obligations for the payment of withholding taxes and other tax obligations related to any Award.

IN WITNESS WHEREOF, this instrument has been executed as of the 28 ^th day of September, 2015.

Tennessee Valley Authority

By: /s/ William D. Johnson

William D. Johnson

President and Chief Executive Officer