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Compensation and Corporate Governance Committee Charter

Revised January 27, 2006

The purpose of the Compensation and Corporate Governance Committee (the "Committee") is: (i) to carry out the Board of Directors' responsibility relating to compensation of the Company's executives; (ii) to assist the Board in identifying qualified individuals to become board members; (iii) to recommend to the Board the director nominees for the next annual meeting of shareowners; and (iv) to develop and recommend to the Board corporate governance guidelines for the Company.


The Committee shall consist of at least two members, all of whom shall be "independent directors" as that term is used in the listing standards of the New York Stock Exchange and shall satisfy such additional criteria as set forth in the rules of the Securities and Exchange Commission. The Vice President-Human Resources of PPL Services Corporation shall be the Staff Liaison assigned to the Committee.


The Committee shall hold annually three regular meetings, normally in January, July and December. In addition, the Committee shall hold such other meetings at such times and places as it may deem appropriate or necessary.

Principal Functions

The principal functions of the Committee are:



To review and approve annually the corporate goals and objectives with respect to the compensation of the chief executive officer. The Committee shall evaluate at least annually the performance and leadership of the chief executive officer in light of these established goals and objectives. Based on these evaluations, the Committee shall set the chief executive officer's annual compensation, including salary and incentive compensation.


To review and approve annually the compensation structure for the Company's senior executive officers who are members of the Corporate Leadership Council and the presidents of the major operating subsidiaries of the Company. The Committee shall review with the chief executive officer his or her evaluation of the performance and leadership of such senior executive officers and shall approve the annual salary ranges, salaries and other remuneration of such senior executive officers.


To review at least annually the goal achievements of each individual eligible to receive awards under the incentive compensation program and to make appropriate incentive compensation awards pursuant to that program.


To review the Company's incentive compensation plans, including all equity-based plans and recommend such changes to the Board as appropriate.


To prepare the annual report on executive compensation to be included in the Company's proxy statement.

Nominations and Corporate Governance


To review annually with the chairman and chief executive officer the plan of succession for the chief executive officer and other senior officers and to review the process within the Company to identify potential senior managers of the Company and its subsidiaries.


To develop and review criteria for the qualifications of potential and incumbent members of the Board and methods of recommendation of candidates to the Board of Directors, to identify and evaluate candidates for consideration as members of the Board, including incumbent directors whose terms are expiring, and to make such recommendations as it deems appropriate for director nominees for the next annual meeting of shareowners and in the event a vacancy in the Board occurs or the number of directors is increased.


To review the amount and the basis of fees and other compensation paid to outside directors and to recommend changes in such compensation whenever necessary.


To monitor and make changes to director compensation plans, including stock plans, whenever necessary.


To establish and administer programs for evaluating the performance of the Board and its committees.


To review the Board retirement policies applicable to members.


To develop and recommend to the Board for its approval corporate governance guidelines. The Committee shall review the guidelines, at least annually, and recommend changes as necessary.


To review and approve all requests for indemnification by officers of the Company who are members of the Company’s Corporate Leadership Council.

The Committee shall have the sole authority to: (i) retain and terminate such compensation consultants it deems appropriate to assist in the evaluation of director, chief executive officer or senior executive compensation, and (ii) retain and terminate such search firms it deems appropriate to identify director candidates. The Committee shall have the sole authority to approve related fees and other retention terms of such consultants and firms.

Review of Committee Function and Charter

The Committee shall ensure that there is an annual performance evaluation of the Committee. Also, the Committee shall review and reassess the adequacy of this Charter on an annual basis and recommend any changes to the Board of Directors.