IOWA-ILLINOIS GAS AND ELECTRIC COMPANY
KEY EMPLOYEE SUSTAINED PERFORMANCE PLAN
Adopted October 28, 1993
A. Effective Date and Plan Continuance.
1. The Key Employee Sustained Performance Plan (the SPP
or the Plan) is effective January 1, 1993, with
initial Award opportunities covering performance
during fiscal year 1993 (1/1/93 - 12/31/93).
2. It is the intent of Iowa-Illinois Gas and Electric
Company (the Company) to continue this Plan
indefinitely with new performance goals and Award
opportunities established for each fiscal year
subsequent to fiscal year 1993. However, the
Committee reserves the right to amend or discontinue
the Plan at any time should such action be deemed
appropriate by the Committee for the best interests of
the Company and its shareholders.
B. Definitions
1. Award(s) shall mean annually determined dollar amounts
credited to Participant Accounts under the Plan.
2. Award Date shall mean April first of each calendar
year.
3. CEO shall mean the Chief Executive Officer of the
Company.
4. Change of Control shall mean either (a) approval by
the shareholders of Iowa-Illinois of a reorganization,
merger or consolidation, unless at least sixty percent
(60%) of the members of the board of directors of the
corporation resulting from the reorganization, merger
or consolidation were members of the Incumbent Board;
or (b) such other event as designated by a majority
vote of the directors of the Incumbent Board who are
not also employees of Iowa-Illinois.
5. Committee shall mean the Compensation Committee of the
Company's Board of Directors as constituted from time
to time.
6. Company shall mean Iowa-Illinois Gas and Electric
Company or its successor organization.
7. Incumbent Board shall mean the members of the Board of
Directors of Iowa-Illinois Gas and Electric Company on
October 28, 1993. For this purpose, an individual who
becomes a member of the Board subsequent to October
28, 1993 and who has been nominated for election by
the Company's shareholders and by resolution adopted
by a vote of at least two-thirds of the directors then
comprising the Incumbent Board at a duly convened
meeting thereof shall be deemed to be a member of the
Incumbent Board.
8. Participant shall mean a key employee of the Company
designated to participate in the Plan by the
Committee.
9. Participant Account shall mean the deferred incentive
account established to receive annually determined
Awards for each Participant.
10. Payout shall mean the distribution of cash from
Participant Accounts.
11. Personal Performance shall mean the individual
contributions to Company success demonstrated by each
Participant.
12. Plan or SPP shall mean this Key Employee Sustained
Performance Plan.
13. Qualifying Termination shall occur when, within
twenty-four (24) full calendar months after a Change
of Control, a Participant's employment with the
corporation which results from such Change in Control
is terminated either (a) involuntarily for any reason;
or (b) voluntarily, provided that the Participant
shall have furnished six (6) full months prior written
notice of the intent to voluntarily terminate
employment to the President of such corporation.
14. Retirement shall mean the cessation of employment with
the Company on or after attaining age 55. For
purposes of this Plan a Participant's Retirement shall
be deemed to be effective as of the first of the month
next following the Participant's last day of active
employment including, if applicable, vacation or
holiday days.
15. Stock shall mean the Common Stock of the Company as
traded on applicable public exchanges.
16. Total Return shall mean the sum of the change in the
fair market value (trading price) of the Company's
Common Stock plus the total amount of dividend paid
thereon over a specific period of time, expressed as a
rate of return on the initial trading price for such
period.
17. Total Disability shall mean a physical or mental
impairment qualifying a Participant for the
commencement of payments under the Company's Long Term
Disability (LTD) Plan. For purposes of the SPP, Total
Disability shall be deemed to commence coincident with
the date such LTD payments would become effective if
the Participant elected LTD coverage.
18. Value Change Percentage shall mean the adjustment
applied to Participant Accounts each Award Date which
shall change the dollar value of such Accounts in a
manner reflective of Company and Personal Performance
in the preceding fiscal year.
C. Plan Purpose and General Description
1. The main purposes of the Plan are:
a. To motivate Participants to develop and
successfully execute those sustained performance
objectives which will assure the continuous
delivery of reliable energy to customers at a
competitive price, and maximize the Company's
prospects for achieving a sustainable competitive
return for its shareholders over the long term.
b. To focus Participants on key annual goals
representing progress toward longer term
strategic objectives.
c. To recognize and reward superior performance on
both an individual and a team basis.
d. To help retain and attract superior talent at the
senior executive level and to do so with pay-for-
performance, variable cost incentive award
dollars where the level of award is linked to
sustained successful Participant performance,
Company performance and the returns to the
Company's shareholders.
2. Personal Performance shall be evaluated each fiscal
year. Awards and other opportunities otherwise
applicable under this Plan shall be reduced or
eliminated for any Participant if his or her Personal
Performance is less than the level expected for a key
employee of the Company.
3. Exhibit A provides an overview of the Plan in
operation.
4. Performance goals shall be established by the
Committee for the Plan each fiscal year and shall
focus on a few very key results. These goals shall be
set forth on an Exhibit B each year, which shall be
amended by the Committee from time to time, as
appropriate. Performance in areas not set forth in
such Exhibit B can also be recognized by the Committee
on a subjective basis each year.
5. A Trigger, as detailed in F. below, shall be
established each fiscal year. Awards and other
opportunities otherwise applicable shall be reduced or
eliminated unless the related corporate performance
threshold(s), as set forth in the Trigger, are
satisfied.
6. Awards earned for each fiscal year, if any, shall be
credited to individually maintained Participant
Accounts. Beginning April 1, 1995 the dollar value of
such Accounts shall fluctuate up or down each year (as
reflected by the Value Change Percentage) - based on
Company and Personal Performance and shareholder
returns.
7. Each Participant shall receive a Payout of a portion
of the dollar value of his or her Participant Account
on the first two of every three Award Dates beginning
on April 1, 1996. Payouts shall be in cash.
8. In the event of a Participant's death, Total
Disability, Retirement, or Qualifying Termination, the
then dollar value of such Participant's Account shall
become immediately vested and shall then be paid out
in cash to the Participant or his or her beneficiary
as designated by the Plan. For the fiscal year in
which such an event occurs, the Participant's Annual
Award shall be paid in cash and prorated for the
period of participation up to the date of death, Total
Disability, Retirement, or Qualifying Termination.
9. In the event a Participant's employment with the
Company terminates for any reason other than death,
Total Disability, Retirement, or Qualifying
Termination, such Participant shall forfeit the entire
amount of his or her Participant Account as in effect
at such termination. In addition, such a termination
occurring before Annual Awards are actually credited
for any fiscal years performance shall result in the
total and complete forfeiture of such Participant's
right in any such Annual Awards credited for such
fiscal year.
D. Participation in the SPP
1. Participation in the SPP shall be limited to key
employees so designated on an Exhibit C as
Participants by the Committee each fiscal year.
2. Participation in one fiscal year does not guarantee
participation in any subsequent year. Should a former
Participant be judged by the Committee to be
ineligible for continued participation and is so
informed in writing by the Company, such Participant
shall immediately cease to be eligible for any
subsequent Annual Award, and shall also immediately
surrender all rights to his or her Participant Account
in exchange for three annual payments equal to one-
third of the dollar value of such Account as of the
date of the notice of non-participation sent by the
Company plus interest at a rate determined by the
Company for the second and third installments. At the
Company's sole option, such payments may be made in a
single lump sum.
3. Prorata participation during a fiscal year may be
authorized by the Committee.
E. Incentive Opportunity
1. Incentive opportunity consists of three distinct
items:
a. Annual Awards;
b. Dollar value enhancement for Participant
Accounts; and
c. Dollar gains realized due to the appreciation in
Stock price as utilized in the Payout
calculation.
2. Annual Award opportunity shall be expressed as a
percentage of each Participant's annual salary rate as
in effect at the end of the fiscal year for which
performance was measured. The Annual Award
opportunity shall be set forth on an Exhibit C each
year, as amended.
F. Trigger Element
1. Each fiscal year the Committee shall establish a
Trigger element for the Plan. The Trigger shall be
set forth on an Exhibit D each year, as amended.
2. This Trigger shall consist of a specified base level
of financial or other performance which must be
satisfied if the full, otherwise generated, Annual
Award opportunity under the Plan is to be realized by
the Participants.
G. Determining Annual Awards
1. Annual Awards shall be determined by the Committee as
of each Award Date.
2. This determination shall be a two-step process using a
"100 point system" as described below:
a. Formal Award: The Committee shall award from 0 -
100 points on the basis of actual, demonstrated
Company performance against the specific
performance goals established for the fiscal year
to which such awards relate.
b. Discretionary Award: The Committee may also
award from 0 - 30 points on a discretionary basis
to recognize and reward other outstanding
performance results not, in the Committee's sole
judgment, adequately recognized or rewarded by
the Formal Award above.
c. The two point awards shall then be added together
and the sum, not to exceed 100, used in
conjunction with this Annual Award table:
If Total Points Annual Award Annual Awards As
Awarded Are: Level Is: % Salary Are:
less than 35 None 0
35 Threshold Level As Set By
70 Target Level Committee For
100 Maximum Level Fiscal Year
Annual Awards prorated for results between
Threshold and Target or Target and Maximum
d. Exhibit E sets forth the specific performance
goals, and examples of total point awards and the
resulting percentage of salary Annual Awards set
for the current fiscal year for a hypothetical
participant.
e. Once determined, Annual Awards, if any, shall be
credited to Participant Accounts each year as of
the Award Date.
H. Value Changes for Participant Accounts
1. The dollar value of all Participant Accounts shall be
adjusted in an identical manner as of each Award Date
beginning April 1, 1995.
2. This adjustment shall be from a 20% loss to a 30% gain
with such adjustment being applicable to:
a. the full dollar value of each Participant Account
prior to any Payout due on such Award Date; but
b. excluding the Annual Award, if any, being
credited to each Participant Account on such
Award Date.
3. The adjustment in dollar value shall be based upon the
Value Change Percentage determined as set forth in (4)
below.
4. The Value Change Percentage shall be set by the
Committee for each Award Date based on this two step
process:
a. First, the total points already established for
the Annual Awards for such Award Date shall be
applied to this table to determine a Value Change
Percentage:
Points Used For Annual Awards Value Change
less than 35 Minus 10%
35 Plus 5%
70 Plus 10%
100 Plus 20%
Prorate Percentage for points between 35 and 70
or 70 and 100
b. Second, the Percentage from the above table shall
be increased or reduced by up to ten percentage
points by comparing the Total Return to the
Company's Shareholders for the prior fiscal year
to the Median Total Return for all Utility
Companies included in the Solomon Brothers
Utility Group for the period to which the value
change relates. A percentage increase shall be
used if the Total Return to Company Shareholders
is higher than such Median, and a decrease if
lower.
c. The following is an example of this two step
process in operation:
Points First Step Company Stock Median Final
Earned Percentage Total Return Total Return Percentage
30 (10%) 6.0% 8.0% (12%)
35 5% 8.0% 8.0% 5%
70 10% 10.0% 8.0% 12%
85 15% 12.0% 8.0% 19%
100 20% 19.0% 8.0% 30% (max)
5. Should the Annual Awards to which Participants would
otherwise be entitled on a given award date be reduced
or eliminated as a result of the operation of the
Trigger Element, the Committee may, at its discretion,
modify the Value Change Percentage.
I. Payouts - Active Participants
1. No Payouts shall occur prior to April 1, 1996.
2. Subject to the Trigger, periodic Payouts shall be made
on the first two out of every three Award Dates on and
after April 1, 1996.
3. Effective April 1, 1996 and every third year
thereafter (April 1, 1999, April 1, 2002, etc.), each
Participant shall receive a cash payment equal to two-
thirds of the dollar value of his or her Participant
Account with such dollar value being equal to:
a. The dollar value of the Account from the prior
Award Date increased or reduced by the Value
Change Percentage applied for the current Award
Date; plus
b. The Annual Award credited to the Participant
Account as of the current Award Date.
4. Effective April 1, 1997 and every three years
thereafter (April 1, 2000, April 1, 2003, etc.), each
Participant shall receive a payment in cash equal to:
a. One-half of the dollar value of his or her
Participant Account with such "dollar value"
determined as set forth in (3)(a) and (b) above;
divided by
b. $22.13 (Stock price on 12/31/92); and
c. Multiplied by the Stock price as of the close of
business on the March 15 immediately preceding
the Award Date.
5. The following is an example of this calculation if the
Stock price referred to in 4.c. above is $25.00:
Dollar Value One-Half Divided by Multiplied by
of Account of This $22.13 $25.00
$20,000 $10,000 451.88 $11,297
$46,004 $23,002 1,039.40 $25,985
6. The actual dollar value of this payment will be more
than one-half of the dollar value of the Participant
Account if the actual market value of Company Stock is
over $22.13, and less than such amount if the Stock
price is under $22.13.
7. Exhibit F is a sample Participant Account illustrating
both Payouts.
J. Personal Performance
1. The CEO shall evaluate the Personal Performance of
every Participant, other than himself (or herself),
each fiscal year, and the Committee shall do the same
for the CEO. The evaluations of performance made by
the CEO shall be reviewed with the Committee.
2. Should the Personal Performance of any Participant be
less than that expected from a key employee, the
Committee (acting on a recommendation from the CEO in
respect to any Participant other than the CEO) may,
not withstanding any other provision of the Plan,
eliminate or reduce any Annual Award otherwise
payable.
K. Performance Goals and Unusual Events
1. Specific performance goals established for any fiscal
year shall not normally be altered or otherwise
adjusted. However, in the event of highly unusual
circumstances or significant events which render
established goals totally inconsistent with the
purposes an intents of the Plan, the Committee may
adjust such goals during a fiscal year.
L. Miscellaneous and Administrative Provisions
1. All calculated amounts under the Plan shall be rounded
to the next higher whole dollar amount.
2. All Payouts shall be subject to all applicable
Federal, State, and local taxation and shall be
subject to all applicable withholding for such
taxation.
3. Payouts shall not count as "compensation" for the
purpose of any benefit plan of the Company including
the Supplemental Retirement Plan.
4. Voluntary, irrevocable deferral of any or all Payouts
may be elected by Participants on terms approved by
the Committee.
5. Participation in the SPP does not guarantee employment
rights to any employee, and participation in the SPP
in one fiscal year does not automatically result in
participation in any subsequent year.
6. Each Participant shall be required to provide the
Company with a written beneficiary designation for
Plan purposes, and maintaining such designation shall
be the sole responsibility of the Participant. In the
event the beneficiary of record does not survive the
Participant, any payments otherwise due shall be made
to the Participant's estate.
7. The Company shall establish appropriate accounting
reserves to recognize the liability of Annual Awards
and periodic Payouts under the Plan.