AMERICAN ELECTRIC POWER CO INC

The HR Committee oversees and determines AEP’s executive compensation, except the Chair, President and CEO position, for which the independent members of the Board perform that function based on recommendations from the HR Committee.

AEP’s executive compensation program is designed to:

•Attract, retain, motivate, and reward an outstanding leadership team with market-competitive compensation and benefits to achieve both excellent individual and Company performance.

•Reflect AEP’s financial and operational size as well as the complexity of its multi-state operations.

•Provide a substantial portion of executive officers’ total compensation opportunity in the form of short-term and long-term performance-based incentive compensation.

•Align the interests of the Company’s named executive officers with those of AEP’s shareholders by:

◦Providing a majority of their compensation opportunity in the form of stock-based compensation with a value that is linked to the total return on AEP’s common stock; and

◦Requiring significant AEP stock ownership by executives.

•Support the implementation of the Company’s business strategy by tying annual incentive awards to a balanced scorecard of objectives based on our core principles in our annual incentive compensation program; and

•Promote the stability of the management team by creating strong retention incentives with multi-year vesting schedules for long-term incentive compensation.

The HR Committee’s independent compensation consultant, Meridian Compensation Partners, LLC (Meridian), participates in HR Committee meetings, assists the HR Committee in developing the compensation program, and regularly meets with the HR Committee in executive session without management present.