WESTERN RESOURCES, INC.
SHORT-TERM INCENTIVE PLAN
The purpose of the Western Resources, Inc. Short-Term
Incentive Plan (Plan) is to motivate key executives, directors,
managers, and select exempt employees to achieve the highest
level of performance to further the achievement of Western
Resources' (WR's) goals, objectives, and strategies. This Plan
is designed to reward exceptional performance using financial
incentives to supplement base compensation. Also, the Plan will
enhance the ability of WR to attract new executive talent when
needed. Finally, the Plan is intended to benefit WR in the
pursuit of its goals and objectives by stimulating and motivating
the President's Council (PC), the Senior Management Council (SMC)
and select exempt employees, which will in turn enhance
productivity and promote the retention of experienced and
qualified executive talent in a cost effective and efficient
manner.
1. Definitions. As used herein the following words and
phrases shall have the following respective meanings unless the
context clearly indicates otherwise:
(a) Award: A grant of a percentage of the total
incentive award made to a Participant under the terms of the
Plan.
(b) Award Criteria: The criteria described in Section
4, consisting of financial, individual, and discretionary
criteria, the satisfaction of which shall determine the
Participant's percentage entitlement to an Incentive Award.
(c) Beneficiary: The person or persons designated by
a Participant pursuant to Section 7 to receive any payment
which under the terms and conditions of the Plan may be made
on behalf of the Participant on or after the Participant's
death.
(d) Board of Directors: The Board of Directors of the
Company.
(e) Company: Western Resources, Inc. a Kansas
corporation, and its successors and assigns.
(f) Discretionary Criteria: Criteria based solely on
the Participant's Supervisor's discretion.
(g) Financial Criteria: Criteria which is based on
the overall company profitability as compared to budget.
(h) Incentive Award: That percentage of a
Participant's base compensation which the Board of Directors
shall, from time to time, determine to be available to a
Participant under the Plan. As an example, a PC member may
be entitled to earn up to 20% of their base compensation as
an Award. The Incentive Award may apply to a class of
employees or to individual employees, at the discretion of
the Board of Directors or the Committee.
(i) Individual Criteria: Criteria which is based on
financial or nonfinancial criteria or both, as determined by
the Participant and the Participant's Supervisor.
(j) Individual Agreement: An agreement developed
during the strategic and financial planning process at the
beginning of each WR fiscal year, which outlines a
Participant's participation in the Plan. Goals and
objectives critical to the successful implementation of the
WR Strategic Plan are the basis for developing the detail
components of each Agreement.
(k) Participant: An employee with whom an Individual
Agreement has been made, but which has not been paid,
canceled, or otherwise terminated or satisfied under the
terms of the Plan.
(l) Plan: The Plan herein set forth, and as from time
to time amended.
(m) Select Exempt Employees: WR executive employees
in pay grades 30 and above.
(n) Participant's Supervisor: The officer, director
or manager to whom the Participant directly reports. The
CEO's Supervisor shall mean the Board of Directors. A PC
member's supervisor is the CEO . A SMC member's supervisor
is the member of the PC to whom that member directly
reports. A Select Exempt Employee's Supervisor shall be the
member of the PC or the SMC to whom that Exempt Employee
reports.
(o) Committee: The committee which may be established
by the Board of Directors pursuant to Section 2 to
administer the Plan.
2. Administration. The Board of Directors, or if one
shall be appointed by the Board of Directors, a committee of at
least three directors, a majority of whom are not eligible to be
Participants (the "Committee"), shall be responsible for
establishing the overall Plan, administering the Plan,
determining whether actual individual compensation awards will be
paid, and approving the amount of the actual individual
compensation awards.
The individual PC members, SMC members, or named exempt
employees are responsible for the preparation of all forms and
reports for reporting regarding their respective Plan
accomplishments.
The members of the Board of Directors and all agents,
officers, fiduciaries, and employees of the Company shall not be
liable for any act, omission, interpretation, construction, or
determination made in good faith in connection with their
responsibilities with respect to the Plan; and the Company hereby
agrees to indemnify the members of the Board of Directors and all
agents, officers, fiduciaries, and employees of the Company in
respect to any claim, loss, damage, or expense (including counsel
fees) arising from any such act, omission, interpretation,
construction, or determination to the full extent permitted by
law.
The day-to-day administration of the Plan with regard to
specific classes of employees shall be carried out as follows:
(a) CEO: The Board, or the Committee if one is
appointed, is responsible for the day-to-day supervision of
the Plan, including designation of the CEO's personal goals,
determination of the achievement of such goals,
determination of the award size relating to the CEO's goals,
and the determination of the amount of the discretionary
award.
(b) PC Members and Presidents: The CEO is responsible
for the day-to-day supervision of the Plan, as it relates to
a PC member and the two Presidents of WR's subsidiary and/or
divisions, Kansas Gas and Electric Company and Gas Service
Company ("Presidents"), including the designation of the PC
member's and Presidents' personal goals, determination of
the achievement of such goals, determination of the award
size relating to the PC member's and Presidents' goals, and
the determination of the amount of the discretionary award.
(c) SMC Members/Executive Vice Presidents: The
Participant's Supervisor is responsible for the day-to-day
supervision of the Plan, as it relates to a SMC member and
WR Executive Vice President (EVP), including designation of
the SMC member's and EVP's personal goals, determination of
the achievement of such goals, determination of the award
size relating to the SMC member's and EVP's goals, and the
determination of the amount of the discretionary award.
(d) Select Exempt Employees: The Participant's
Supervisor is responsible for the day-to-day supervision of
the Plan, as it relates to a select exempt employee,
including designation of the exempt employee's personal
goals, determination of the achievement of such goals,
determination of the award size relating to the exempt
employee's goals, and the determination of the amount of the
discretionary award.
3. Eligibility to Participate. Only employees who are
members of WR's President's Council, members of WR's Senior
Management Council, and WR exempt employees in pay grades 30 and
above shall automatically be eligible to participate in the Plan.
The Board of Directors, or the Committee if one shall be
appointed, shall determine, from time to time, whether the
benefits of the Plan should be extended to other groups of
employees of the Company.
4. Award Criteria. This Plan incorporates three types of
criteria: financial, individual, and discretionary. The
detailed measurement methods for PC members and Presidents, SMC
members/EVP, and select exempt employees are as follows:
(a) PC Members and Presidents.
(1) Financial Criteria (50%). The individual PC
member and Presidents are eligible to receive up to 50%
of the total incentive award based on the overall
company profitability as compared to budget. In other
words, the individual may receive up to an additional
15% of base compensation if certain company standards
are met when actual profitability is compared to
budgeted profitability. However, an additional award
may be available if certain financial criteria is met.
% of Actual Profitability Financial
Criteria
to Budgeted Profitability Award
110% or more of Budget 70%
105% to 109% of Budget 60%
100% to 104% of Budget 50%
95% to 99% of Budget 40%
90% to 94% of Budget 30%
Less than 90% of Budget 0%
The percentage of actual to budgeted profitability is
rounded to the nearest whole percent.
(2) Individual Criteria (30%). The individual PC
member and Presidents and the CEO design the specifics
of this criteria, except for the CEO's individual
criteria, which is designed by the CEO and the Board.
The individual and the CEO may settle on financial
criteria or nonfinancial criteria or both. They must
annually agree on the specific criteria. They may also
determine how to use the criteria and measure the PC
member and President's performance. Under this
criteria, the individual is eligible to receive up to
30% of the total incentive award or an additional 9% of
base compensation. The CEO is eligible to receive up
to 30% of the total incentive award or an additional 9%
of base compensation.
(3) Discretionary Criteria (20%). The individual
PC member and Presidents are eligible to receive up to
20% of the total incentive award or an additional 6% of
base compensation. This criteria is solely at the
CEO's discretion, except for the CEO's award, which is
at the Board's discretion.
(b) SMC Members/EVP.
(1) Financial Criteria (40%/50%). The individual
SMC member is eligible to receive up to 40% of the
total incentive award based on the overall Company
profitability as compared to budget. In other words,
the SMC member may receive up to an additional 4% of
base compensation if certain Company standards are met
when actual profitability is compared to budgeted
profitability. However, an additional award may be
available if certain financial criteria is met.
% of Actual Profitability Financial
Criteria
to Budgeted Profitability Award
110% or more of Budget 60%
105% to 109% of Budget 50%
100% to 104% of Budget 40%
95% to 99% of Budget 30%
90% to 94% of Budget 20%
Less than 90% of Budget 0%
The individual EVP is eligible to receive up to 50% of
the total incentive award based on the overall Company
profitability as compared to budget. In other words,
the EVP may receive up to an additional 10% of base
compensation if certain Company standards are met when
actual profitability is compared to budgeted
profitability. However, an additional award may be
available if certain financial criteria is met.
% of Actual Profitability Financial
Criteria
to Budgeted Profitability Award
110% or more of Budget 70%
105% to 109% of Budget 60%
100% to 104% of Budget 50%
95% to 99% of Budget 40%
90% to 94% of Budget 30%
Less than 90% of Budget 0%
The percentage of actual to budgeted profitability is
rounded to the nearest whole percent.
(2) Individual Criteria (40%/30%). The
individual SMC member and EVP and the PC contact design
the specifics of this criteria. The individual and the
PC contact may settle on financial criteria or
nonfinancial criteria or both. They must annually
agree on the specific criteria. They must also
determine how to use the criteria and measure the SMC
member's and EVP's performance. Under this criteria,
the individual SMC member is eligible to receive up to
40% of the total incentive award or an additional 4% of
base compensation. The individual EVP is eligible to
receive up to 30% of the total incentive award or an
additional 6% of base compensation.
(3) Discretionary Criteria (20%). The individual
SMC member is eligible to receive up to 20% of the
total incentive award or an additional 2% of the base
compensation. The EVP is eligible to receive up to 20%
of the total incentive award or an additional 4% of
base compensation. This criteria is solely at the PC
contact's discretion.
(c) Select Exempt Employees.
(1) Financial Criteria (30%). The select exempt
employee is eligible to receive up to 30% of the total
incentive award based on the overall Company
profitability as compared to budget. In other words,
the exempt employee may receive up to an additional
1.5% of base compensation if certain Company standards
are met when actual profitability is compared to
budgeted profitability. However, an additional award
may be available if certain financial criteria is met.
% of Actual Profitability Financial
Criteria
to Budgeted Profitability Award
110% or more of Budget 50%
105% to 109% of Budget 40%
100% to 104% of Budget 30%
95% to 99% of Budget 20%
90% to 94% of Budget 10%
Less than 90% of Budget 0%
The percentage of actual to budgeted profitability is
rounded to the nearest whole percent.
(2) Individual Criteria (50%). The select exempt
employee and the PC or SMC contact design the specifics
of this criteria. The individual and PC or SMC contact
may settle on financial criteria or nonfinancial
criteria or both. They must annually agree on the
specific criteria. They must also determine how to use
the criteria and measure the exempt employee's
performance. Under this criteria, the individual is
eligible to receive up to 50% of the total incentive
award or an additional 2.5% of base compensation.
(3) Discretionary Criteria (20%). The select
exempt employee is eligible to receive up to 20% of the
total incentive award or an additional 1% of base
compensation. This criteria is solely at the PC or SMC
contact's discretion.
5. Payment of Awards.
(a) Generally. The incentive compensation award,
if adopted for the year, is payable annually. The
payment shall be made in February following the Plan
year for which the award was approved.
(b) Termination of Employment. A Participant who
ceases to be continually employed by the Company (other
than as a result of a Company-approved leave of absence
or the Participant's death, disability, or retirement
under the Company pension plan's early or normal
retirement provisions) shall forfeit all rights to an
annual incentive award for the year not yet ended.
(c) Payment in the Event of Death, Disability, or
Retirement. If a participant dies, becomes disabled,
or retires under the Company pension plan's early or
normal retirement provisions, his or her actual
incentive compensation award for the year, determined
in accordance with the provisions of the Plan, shall be
reduced to reflect only participation prior to
termination. This reduction is based on the number of
months the individual was an active Participant in the
Plan in the year of termination. In the event of the
Participant's death while the Plan is in effect,
payments of any amounts due under such Plan shall be
made to the Participant's designated beneficiary or to
the Participant's estate.
6. Withholding for Taxes. The Company will provide for
the withholding of any taxes required by any governmental
authority with respect to any payment that is to be made under
the Plan. The amount withheld shall be paid over by the Company
to such governmental authority for the account of the Participant
entitled to the payment.
7. Designation of Beneficiary. A Participant shall
designate a Beneficiary or Beneficiaries on the Beneficiary
Designation form in the appendix (which may be designated
contingently and which may be an entity other than a natural
person) to receive any amounts which under the terms of the Plan
may become payable on or after the Participant's death. Any such
designation may, unless the Participant has waived such right,
from time to time and at any time, be changed or canceled by the
Participant without the consent of a Beneficiary. Any such
designation must be in writing and filed with the Board of
Directors . If a Participant designates more than one
Beneficiary, any payments under the Plan to such Beneficiaries
shall be made in equal shares unless the Participant has
designated otherwise, in which case the payments shall be made in
the shares designated by the Participant. If a Participant does
not designate a beneficiary or there is no proper designation of
a Beneficiary or no person designated as a Beneficiary shall
survive the Participant by 30 days, the Participant's Beneficiary
shall be his or her estate.
8. No Rights to Corporate Assets. Nothing contained herein
shall be construed as giving a Participant, his or her
Beneficiary, or any other person any equity or other interest of
any kind in any assets of the Company or creating a trust of any
kind or a fiduciary relationship of any kind between the Company
and any such person. As to any claim for any unpaid amounts
under the Plan, a Participant, his or her Beneficiary, and any
other person having a claim for payments shall be unsecured
creditors.
9. Non-Assignability. Except as provided in Section 7,
neither a Participant nor a Participant's Beneficiary shall have
the power or right to transfer, assign, anticipate, mortgage, or
otherwise encumber his or her interest in the Plan; nor shall
such interest be subject to seizure for the payment of a
Participant's or Beneficiary's debts, judgments, alimony, or
separate maintenance or be transferable by operation of law in
the event of a Participant's or Beneficiary's bankruptcy or
insolvency.
The Company's obligations under the Plan are not assignable
or transferable except to a Company which acquires all or
substantially all of the assets of the Company or to any
corporation into which the Corporation may be merged or
consolidated.
10. Amendment and Termination. The Board of Directors may
from time to time and at any time alter, amend, suspend,
discontinue, or terminate the Plan. Nothing contained in the
Plan shall be construed to prevent the Company from taking any
corporate action which is deemed by the Company to be appropriate
or in its best interest, whether or not such action would have an
adverse effect on the Plan or any Participant's interest in the
Plan. Neither any Participant nor any other person shall have
any claim against the Company as a result of any such action.
Notwithstanding the foregoing, the Company may not modify (or
terminate) the Plan to the extent doing so would adversely affect
the rights of Participants to an Incentive Award at the time of
the modification.
11. No Right of Employment. Nothing contained in the Plan
shall be construed as conferring upon a Participant the right to
continue in the employ of the Company.
12. Governing Law. All rights and obligations under the
Plan shall be governed by, and the Plan shall be construed in
accordance with the laws of the State of Kansas.
13. Titles and Headings. Titles and headings to sections
herein are for purposes of reference only and shall in no way
limit, define, or otherwise affect the meaning or interpretation
of any provisions of the Plan.
14. Effective Date. The Plan shall become effective
January 1, 1990.
__________________________________
Secretary
BENEFICIARY DESIGNATION
Pursuant to Section 7 of the Western Resources' Short-Term
Incentive Plan, the Participant hereby designates as Primary
Beneficiary under this Plan:
_________________________________________________________________
_____________
_________________________________________________________________
_____________
and, Participant hereby designates as Secondary Beneficiary under
this Plan:
_________________________________________________________________
_____________
_________________________________________________________________
_____________
The term "Beneficiary" as used herein shall mean the Primary
Beneficiary if such Primary Beneficiary shall survive Participant
by at least 30 days, and shall mean the Secondary Beneficiary if
Primary Beneficiary does not survive Participant by at least 30
days, and shall mean the Estate of the Participant, if neither
Primary nor Secondary Beneficiary survives the Participant by at
least 30 days. Participant shall have the right to change
Participant's designation of Primary and/or Secondary Beneficiary
from time to time in such manner as shall be required by the
Board of Directors or the Committee, it being agreed that no
change in beneficiary shall be effective until acknowledged in
writing by the Company.
IN WITNESS WHEREOF, Participant has executed this
designation this __________ day of _______________________,
19____.
PARTICIPANT:
_________________________________
(signature)
_________________________________
(type or print name)