Exhibit 10.8
BOSTON EDISON COMPANY
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PERFORMANCE SHARE PLAN
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SECTION 1 AMENDMENT AND RESTATEMENT OF PLAN
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1.1 Amendment and Restatement of Plan. Boston Edison Company herewith
amends and restates its Performance Share Plan, originally established
effective January 1, 1989 as the Executive Long-Term Incentive Compensation
Plan, and amended and restated effective January 1, 1991. This amendment
and restatement is applicable to Plan Performance Periods commencing
January 1, 1994. The terms and provisions of the Plan as in effect prior
to January 1, 1994 remain effective for Performance Periods commencing
prior to January 1, 1994.
1.2 Purpose. The purpose of the Plan is as follows:
To enhance Participant's focus on business directions beyond the
annual budget cycle and to promote the achievement of long-term,
strategic Company objectives.
To motivate Participants to take actions that will enhance long-
term shareholder value and minimize costs to customers.
To strengthen team spirit through a vehicle that offers financial
reward opportunities to Participants over a multi-year period.
SECTION 2 DEFINITIONS
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2.1 Definitions. Whenever used herein, the following terms shall have
the meanings set forth below, unless expressly otherwise provided. When the
defined meaning is intended, the term is capitalized.
(a) The term "Award" means the allocation to a Participant at the
beginning of a Performance Period of a Target Incentive Award that
may be earned at the completion of the Performance Period. The Award
is expressed in terms of a dollar amount.
(b) The term "Base Salary" means a Participant's annual rate of pay in
effect on the first day of the Performance Period or such other date
specified by the Committee.
(c) The term "Beneficiary" means the person or persons entitled to receive
the interest of a Participant under the Plan in the event of the
Participant's death as provided in Section 6 hereof.
(d) The term "Board" means the Board of Directors of the Company,
provided, however, that in the event of a Change in Control, the term
"Board" shall mean the Board of Directors as constituted immediately
prior to the Change in Control.
(e) The term "Change in Control of the Company" shall mean and be deemed
to have occurred if any one of the following events should take place:
(i) the acquisition, other than from the Company, by any individual,
entity or group (within the meaning of Section 13(d)(3) or 14(d)(2)
of the Exchange Act) of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of 30% or more of
combined voting power of the then outstanding voting securities of
the Company entitled to vote generally in the election of
directors, but excluding, for this purpose, any such acquisition
by (i) the Company or any of its subsidiaries, (ii) any employee
benefit plan (or related trust) of the Company or its subsidiaries,
or (iii) any corporation with respect to which, following such
acquisition, more than 50% of the combined voting power of the then
outstanding voting securities of such corporation entitled to vote
generally in the election of directors is then beneficially owned,
directly or indirectly, by individuals and entities who were the
beneficial owners of voting securities of the Company immediately
prior to such acquisition in substantially the same proportion as
their ownership, immediately prior to such acquisition, of the
combined voting power of the then outstanding voting securities
of the Company entitled to vote generally in the election of
directors; or
(ii) individuals who, as of May 2, 1991, constitute the Board of
Directors of the Company (the "Incumbent Board") cease for any
reason to constitute at least a majority of such Board; provided
that any individual becoming a director subsequent to May 2, 1991,
whose election, or nomination for election by the Company's
stockholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered
as though such individual were a member of the Incumbent Board; or
(iii) approval by the stockholders of the Company of a reorganization,
merger or consolidation, in each case, with respect to which all
or substantially all the individuals and entities who were the
respective beneficial owners of the voting securities of the
Company immediately prior to such reorganization, merger or
consolidation do not, following such reorganization, merger or
consolidation, beneficially own, directly or indirectly, more
than 50% of the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of
directors of the corporation resulting from such reorganization,
merger or consolidation.
(f) The term "Chief Executive Officer" means the Chief Executive Officer
of the Company.
(g) The term "Committee" means the Executive Personnel Committee of the
Board, provided, however, that in the event of a Change in Control,
the term "Committee" shall mean the Executive Personnel Committee
of the Board as constituted immediately prior to the Change in
Control.
(h) The term "company" means Boston Edison Company and any successor
thereto that adopts the Plan.
(i) The term "Disability" means total disability as defined in the long-
term disability plan in effect for the Company.
(j) The term "Employee" means any person (including any officer) employed
by the Company on a regular, active, full-time salaried basis who is
in a position meeting the defined eligibility criteria for
participation in the Plan.
(k) The term "Layoff" means the involuntary termination caused by the
elimination of the Participant's position.
(l) The term "Participant" means an Employee of the Company who has been
selected to participate in the Plan for a stipulated Performance Period
by the Committee.
(m) The term "Payout" means the actual cash payment to the Plan Agent on
behalf of the Participant at the end of a Performance Period based on
the attainment of Performance Goals and the Performance Payout Formula.
(n) The term "Performance Payout Formula" means the specific relationship
between the degree to which Performance Goals are attained over the
term of the Performance Period and the Payout as a percent of the
Target Incentive Award. The Performance Payout Formula will vary by
Performance Goal, as designated by the Committee at the beginning of
each Performance Period. However, in no event shall the Payout exceed
150% of the original Target Incentive Award.
(o) The term "Performance Goals" means the specified long-term performance
objectives that, if all are fully attained, shall result in a 100%
payment of the Target Incentive Award in accordance with the
Performance Payout Formula. In general, Performance Goals shall
reflect performance of the Company as a whole. However, some
participants (e.g., Nuclear executives) may be assigned goals specific
to their particular business unit.
(p) The term "Performance Period" means a multi-year period of consecutive
years beginning with the year in which a Target Incentive Award is
granted. The Committee will designate the duration of each Performance
Period provided, however, that no Performance Period shall be less than
two years nor more than five years in length.
(q) The term "Plan Agent" means the First National Bank of Boston or such
other individual or entity as shall be selected by the Committee.
(r) The term "Retirement" means retirement as defined in the retirement
plan in effect for the Company.
(s) The term "Stock" means the Common Stock of the Company.
(t) The term "Target Incentive Award" means the anticipated individual
incentive Award to be paid to a Participant in the event Performance
Goals are fully achieved. Such Target Incentive Award shall be
determined by the Committee and shall be expressed as a percentage of
the Participant's Base Salary.
(u) The term "Weighting" means the assignment to different Performance
Goals in a Performance Period of relative importance and influence on
the Payout. For example, one Performance Goal may be weighted at 40%
and the other at 60%. This will mean that 40% of the Payout will be
determined by achievement of the first Performance Goal.
2.2 Gender and Number. Except when otherwise indicated by the context,
any masculine terminology used herein shall also include the feminine, and
the definition of any term in the singular may include the plural.
SECTION 3 ELIGIBILITY AND PARTICIPATION
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3.1 Eligibility and Participation. Eligibility for participation in the
Plan shall be limited to those Employees grade 45 and above who, by the
nature and scope of their position, regularly and directly make, influence,
or implement policy decisions which significantly impact the overall long-
term results or success of the Company. Specific criteria for participation
will be determined by the Committee prior to the beginning of each
Performance Period and nominations for participation in accordance with
such criteria will be reviewed by the Committee at the beginning of each
Performance Period. Employees approved for participation shall be
notified of their selection as soon as practical following approval.
3.2 Termination of Employment. No Payout shall be made for a Performance
Period for a Participant whose employment with the Company is terminated
during the Performance Period for reasons other than death, Layoff,
Retirement, or Disability, unless his termination was due to a cause
approved by the Committee. In the event of termination of employment for
reasons of death, Layoff, Retirement, or Disability, or an approved cause,
a prorated payment may be made on the basis of the Participant's actual
employment and achievement of Performance Goals during the Performance
Period, as determined by the Committee at its sole discretion.
3.3 No Rights Conferred. Selection for participation in the Plan in any
one Performance Period shall not confer on the Participant the right to
participate in the Plan for any other Performance Period. Furthermore,
nothing in the Plan or in any Award under the Plan shall confer on any
Participant any right to continue in the employ of the Company or
affect the right of the Company to terminate a Participant's employment
at any time.
SECTION 4 AWARD GRANTS AND PAYOUT DETERMINATION
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4.1 Award Grants. The Committee in its sole discretion may grant Awards
to eligible Participants on an annual basis. It is intended that Performance
Periods will overlap. However, Awards do not necessarily have to be granted
on an annual basis. Awards will be earned by Participants during the
Performance Period if and to the extent the Performance Goals are met.
4.2 Establishment of Performance Goals, Weightings, and Performance Payout
Formulas. In advance of each Performance Period, the Committee shall
establish the appropriate Performance Goals, Weightings, and
Performance Payout Formulas for purposes of the Plan. Performance Goals,
Weightings, and Performance Payout Formulas may vary by Participant in
the Plan and Performance Period. The degree to which Awards are earned
by achievement of one Performance Goal shall have no direct effect on
the determination of Awards earned by achievement of other Performance
Goals. To establish the Performance Goals, Weightings, and Performance
Payout Formulas for each Performance Period, the Committee will use any
information it considers relevant regarding the likely performance of
the Company. The Performance Goals, Weightings, and Performance Payout
Formulas will be communicated to Participants as soon as practicable
following their determination by the Committee. If during a Performance
Period the Committee determines a change in the Company's business,
operations, corporate or capital structure, the manner in which it conducts
business or any other change to be extraordinary and material and determines
that, as a result of such change, the established Performance Goals,
Weightings, and Performance Payout Formulas are no longer appropriate, the
Committee may make modifications as it deems appropriate and equitable in the
Committee's sole and absolute discretion.
4.3 Assignment of Target Incentive Awards. For each Performance Period,
the Committee shall determine and assign the Target Incentive Award for each
Participant. Such determination shall be based on the assessed impact the
Participant's position exerts on overall Company results.
4.4 Determination of Payouts. Payouts may vary above and below the Target
Incentive Awards as determined in Section 4.2 preceding, dependent
upon the achievement of the established Performance Goals, in accordance with
the Weightings and Performance Payout Formulas prescribed by the Committee.
The Payouts on behalf of a non-officer or a Participant below the level of
Senior Vice President must be approved by the Committee. Payment of the
Payout on behalf of the Chief Executive Officer and any other Participant who
is a Senior Officer of the Company will be approved by the Board. The
Committee's determination of the Payouts shall be final, binding, and
conclusive.
4.5 Limitation on Amounts Available for Payouts. The aggregate amount
available each Plan Year for Payouts shall be limited to 3% of annual
net income of the Company. The Committee may, at its discretion, set
any limit on the aggregate dollar amount available for Payouts during
any Performance Period. To the extent Payouts need to be limited in a
Performance Period, Awards will be reduced on a prorated basis.
SECTION 5 PAYOUT
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5.1 Payout. A Participant's Payout shall be paid to the Plan Agent on
behalf the Participant no later than 90 days after publication of the
Company's audited financial statements reflecting the last fiscal year
of the Performance Period (the "Payout Date") and, subject to Sections
5.3 and 5.5, shall be applied by the Plan Agent to the purchase of
Stock in accordance with Section 7.3.
5.2 Payment on Death, Layoff, Disability, and Retirement. Prorated
payments that are made pursuant to Section 3.2 shall be paid to the
Plan Agent on behalf of the Participant, or in the event of death, on
behalf of the Participant's Beneficiary, as soon as practicable after
termination of employment. The payments to be prorated shall be
restricted to those payable for the performance cycle ending with the
calendar year in which the employee terminates employment. Prorated
payments, subject to Section 5.5, shall be applied by the Plan Agent
to the purchase of Stock in accordance with Section 7.3.
5.3 Deferral of Payouts. Notwithstanding any provisions of the Plan
to the contrary, Payouts may be deferred at the election of the
Participant in accordance with the applicable provisions of the
Company's Deferred Compensation Plan. In the event of such election,
all aspects of Payouts shall be governed by the applicable provisions
of the Company's Deferred Compensation Plan.
5.4 Payment Upon Change in Control. In the event of a Change in Control
of the Company, each Award theretofore granted will be paid by the
Company in cash directly to the Participants in a prorated amount
based on performance to date as designated by the Committee in its
sole and absolute discretion. Payments shall be made within 60 days
of the Change in Control of the Company.
5.5 Maximum Number of Shares: Stockholder Approval. The aggregate number
of shares of Stock purchased by the Plan Agent on behalf of
Participants who are officers (within the meaning of Section 16(b) of
the Securities Exchange Act of 1934, as amended) ("Officers") shall
not exceed 1,500,000. In the event that prior to the first Payout
Date under the Plan the Plan has not been approved by the stockholders
of the Company, or the Plan Agent has purchased the maximum number of
shares of Stock available under the Plan, all Payouts for Participants
who are Officers shall be paid in the form of cash paid directly to
the Participant or Participant's Beneficiary.
SECTION 6 DESIGNATION OF BENEFICIARIES
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A Participant may designate a Beneficiary or Beneficiaries who in the
event of the Participant's death are to receive the Stock that otherwise
would have been delivered to the Participant. All designations shall be
in writing and shall be effective only if and when delivered to the Committee
during the lifetime of the Participant. A Participant may, from time to time
during his lifetime, change his Beneficiary or Beneficiaries by a written
instrument delivered to the Committee. If a Participant designates a
Beneficiary without providing in the designation that the Beneficiary
must be living at the time of each Payout, the designation shall vest in the
Beneficiary all of the Payouts whether payable before or after the
Beneficiary's death, and any Payouts remaining upon the Beneficiary's
death shall be made to the Beneficiary's estate. In the event a
Participant shall not designate a Beneficiary or Beneficiaries as
aforesaid, or if for any reason such designation shall be ineffective,
in whole or in part, the Stock that otherwise would have been delivered
to such Participant shall be paid to the Participant's beneficiary as
designated by the Participant in the Company's group life insurance
program. In the event the Participant's beneficiary as designated in
the Company's group life insurance program is ineffective, in whole or
in part, the Stock shall be delivered to the Participant's estate and in
such event the term "Beneficiary" shall include his estate.
SECTION 7 ADMINISTRATION
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7.1 The Committee. This Plan shall be administered by the Committee in
accordance with rules that it may establish from time to time that are
not inconsistent with the provisions of the Plan. The Committee shall
be responsible for the following:
7.1.1 Selecting the Performance Period.
7.1.2 Approving the Participants for each Performance Period.
7.1.3 Approving appropriate Performance Goals, Weightings, and
Performance Payout Formulas. Making adjustments in
extraordinary situations.
7.1.4 Approving the Target Incentive Awards and Payouts.
7.1.5 Ruling on the inclusion of any extraordinary profit and loss items
for the purposes of accounting for payments.
7.2 The Corporate Staff Departments. Corporate staff departments shall
be responsible for providing support to the Committee in carrying out its
responsibilities. These tasks include, but are not necessarily limited to,
the following:
7.2.1 Maintain and updating plan documentation and administration
guides.
7.2.2 Designing the necessary forms for ongoing plan administration.
7.2.3 Maintaining a database of Participants, Awards, and Payouts for
control purposes.
7.2.4 Preparing periodic tax guidelines for circulation to Participants.
7.3 The Plan Agent. On each Award Date, or as soon thereafter as
possible, the Company shall provide the Plan Agent with cash in an
amount equal to the Payouts for each Participant in the Plan net of
of any applicable withholding taxes. The Plan Agent shall use such
funds to purchase on behalf of each Participant the maximum number
whole shares of Stock on the open market as promptly as possible.
The Plan Agent shall submit all shares purchased pursuant to the
Plan to a transfer agent (the "Transfer Agent") for the Stock,
and arrange to have new certificates issued in the names of the
Participants entitled thereto. Any funds from Payouts on behalf
of a Participant remaining after the purchase of the maximum number
of whole shares of Stock which can be purchased with such Payout
shall be paid directly to the Participant. All expenses of the Plan
Agent and the Transfer Agent, including brokerage and similar costs,
shall be paid by the Company.
SECTION 8 AMENDMENTS
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The Board and the Committee, in its absolute discretion, without notice,
at any time and from time to time, may modify or amend, in whole or in part,
any or all of the provisions of this Plan, or suspend or terminate it
entirely, provided that no such modification, amendment, suspension, or
termination may without the consent of a Participant, or his Beneficiary
in the case of the death of the Participant, reduce the right of a
Participant, or his Beneficiary as the case may be, to a Payout or
distribution hereunder to which he is otherwise entitled in accordance
with the provisions contained in Section 5 of this Plan.
SECTION 9 APPLICABLE LAWS
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This Plan shall be construed, administered, and governed in all respects
under and by the laws of the Commonwealth of Massachusetts.
SECTION 10 MISCELLANEOUS
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10.1 Nontransferability. A Participant's rights and interest under the
Plan, including Payouts, may not be assigned, pledged, or transferred
except, in the event of a Participant's death, to his or her
designated Beneficiary as provided in the Plan, or in the absence of
such designation, by will or the laws of descent and distribution.
10.2 Holding Period. Shares of Stock purchased by the Plan Agent under
the Plan on behalf of Participants who are Officers may not be sold,
assigned, transferred, pledged or otherwise encumbered or disposed
of for a period of six months from the date of issuance of the
certificate thereof to such Participants.
10.3 Relationship to Other Benefits. No Payout or other payment under the
Plan shall be taken into account in determining any benefits under
any pension, retirement, group insurance, or other benefit plan of the
Company.
10.4 Expenses. All expenses of administering the Plan shall be borne by
the Company and shall not be charged to any Participant or to any
payments due any Participant.
Boston Edison Company
By: /s/ Marc S. Alpert
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Vice President and Treasurer
Date: October 24, 1994
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