EXHIBIT 10(m)7
ALLETE 2006 Form 10-K
ALLETE
EXECUTIVE LONG-TERM INCENTIVE COMPENSATION PLAN
PERFORMANCE SHARE GRANT
EFFECTIVE 2007
[ELIGIBLE EXECUTIVE EMPLOYEES]
Name
SS #
In accordance with the terms of ALLETE's Executive Long-Term Incentive
Compensation Plan (the "Plan"), as determined by and through the Executive
Compensation Committee of ALLETE's Board of Directors, ALLETE hereby grants to
you (the "Participant") Performance Shares, as set forth below, subject to the
terms and conditions set forth in this Grant (including Annexes A and B hereto
and all documents incorporated herein by reference):
Number of Performance Shares Granted:
Date of Grant:
Performance Period:
Performance Goals: See Annex B
This Grant is made in accordance with the Plan, which was approved by ALLETE's
shareholders at the 2005 Annual Meeting.
Further terms and conditions of the Grant are set forth in Annex A hereto and
Performance Goals are set forth in Annex B hereto, which are integral parts of
this Grant.
All terms, provisions and conditions applicable to the Performance Shares set
forth in the Plan and not set forth herein are incorporated by reference. To the
extent any provision hereof is inconsistent with a provision of the Plan, the
provisions of the Plan will govern.
IN WITNESS WHEREOF, ALLETE has caused this Grant to be executed by its Chairman,
President and Chief Executive Officer as of the date and year first above
written.
ALLETE
By:
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Chairman, President and CEO
Attachments: Annex A and Annex B
ANNEX A
TO
ALLETE
EXECUTIVE LONG-TERM INCENTIVE COMPENSATION PLAN
PERFORMANCE SHARE GRANT
EFFECTIVE 2007
[ELIGIBLE EXECUTIVE EMPLOYEES]
1. FURTHER TERMS AND CONDITIONS OF PERFORMANCE SHARES. The Grant of
Performance Shares evidenced by the Grant to which this is annexed is subject to
the following additional terms and conditions:
(a) DIVIDEND EQUIVALENTS. The Participant shall receive Dividend
Equivalents with respect to the number of Performance Shares subject to the
Grant. Dividend Equivalents shall be calculated and credited to the Participant
at the end of the Performance Period. The Dividend Equivalents shall be in the
form of additional Performance Shares, which shall be added to the number of
Performance Shares subject to the Grant, and which shall equal the number of
Shares (including fractional Shares) that could be purchased on the dividend
payment dates, based on the closing sale price as reported in the consolidated
transaction reporting system on that date, with cash dividends that would have
been paid on Performance Shares, if such Performance Shares were Shares.
(b) SATISFACTION OF GOALS. At the end of the Performance Period, the
Executive Compensation Committee (the "Committee") shall determine the extent to
which the Performance Goals have been met. The Participant will not be credited
with any Performance Shares if the threshold level has not been met. Subject to
the provisions of subsection (d) hereof and to provisions in the Plan for change
in control, percentages of the Performance Share grant shall be credited to the
Participant as follows: If the threshold level has been met, 50% of the
Performance Shares (as increased by the Dividend Equivalents) shall be credited
to the Participant. If the target level has been met, 100% of the Performance
Shares (as increased by the Dividend Equivalents) shall be credited to the
Participant. If the superior level has been met, 200% of the Performance Shares
(as increased by the Dividend Equivalents) shall be credited to the Participant.
Straight line interpolation will be used to determine earned awards based on
achievement of goals between the threshold, target and superior levels.
(c) PAYMENT. Subject to the provisions of subsection (d) hereof and to
provisions in the Plan for change in control, Performance Shares as determined
by the Committee according to subsection (b) hereof shall be paid out 100% (as
increased by the Dividend Equivalents) within two and one half months after the
end of the Performance Period and after the Committee has determined the extent
to which Performance Goals have been met. Payment shall be made, after
withholding Performance Shares equal in value to the Participant's income tax
obligation via a deposit of ALLETE common stock into an Invest Direct account.
Performance Share awards shall not vest until paid.
(d) PAYMENT UPON DEATH, RETIREMENT OR DISABILITY; FORFEITURE OF UNVESTED
SHARES UPON DEMOTION, UNSATISFACTORY JOB PERFORMANCE OR OTHER TERMINATION OF
EMPLOYMENT.
(1) During a Performance Period (i) if the Participant retires pursuant to
the terms of a tax qualified retirement plan of ALLETE or a Subsidiary
or upon such other retirement as may be approved by the Committee,
(ii) in the event of the death of the Participant while in the employ
of ALLETE or a Subsidiary, or (iii) in the event of the termination of
the employment of the Participant due to Disability (as defined in
Section 22(e)(3) of the Code), the Participant (or the Participant's
beneficiary or estate) shall receive a payment of any Performance
Shares (as increased by the Dividend Equivalents) after the end of the
Performance Period, promptly after the Committee has determined the
extent to which Performance Goals have been met. The payment shall be
prorated based upon the number of whole calendar months within the
Performance Period which had elapsed as of the date of death,
retirement or termination due to Disability in relation to the number
of calendar months in the full Performance Period. A whole month is
counted in the calculation if the Participant was in the position as
of the 15th of the month.
(2) After the end of a Performance Period, but before any or all
Performance Shares have been paid, if as specified in subsection
(d)(1) above, a Participant retires, dies or Participant's employment
is terminated due to Disability, the Participant (or the Participant's
beneficiary or estate) shall be entitled to a full payout of all
Performance Shares (as increased by the Dividend Equivalents), which
shall be paid out at the next scheduled performance share payment
date.
(3) If prior to payment of all Performance Shares, the Participant is
demoted, or ALLETE or a Business Unit determines, in its sole
discretion, that the Participant's job performance is unsatisfactory,
ALLETE reserves the right to cancel or amend the Participant's grant
relating to any unpaid Performance Shares, with the result that some
portion or all of the Participant's unpaid Performance Shares are
forfeited.
(4) If the Participant's employment with ALLETE or any Subsidiary
terminates for any reason other than death, Disability or retirement,
as specified in subsection (d)(1) hereof, all Performance Shares and
related Dividend Equivalents to the extent not yet paid shall, except
as otherwise provided by the Committee, be forfeited on the date of
such other termination of employment.
2. RATIFICATION OF ACTIONS. By receiving the Grant or other benefit under
the Plan, the Participant and each person claiming under or through Participant
shall be conclusively deemed to have indicated the Participant's acceptance and
ratification of, and consent to, any action taken under the Plan or the Grant by
ALLETE, the Board or the Committee.
3. NOTICES. Any notice hereunder to ALLETE shall be addressed to its
office, 30 West Superior Street, Duluth, Minnesota 55802, Attention: Manager -
Executive Compensation and Employee Benefits, Human Resources, and any notice
hereunder to the Participant shall be
2
directed to the Participant's address as indicated by ALLETE's records, subject
to the right of either party to designate at any time hereafter in writing some
other address.
4. DEFINITIONS. Capitalized terms not otherwise defined herein shall have
the meanings given them in the Plan.
5. GOVERNING LAW AND SEVERABILITY. To the extent not preempted by the
Federal law, the Grant will be governed by and construed in accordance with the
laws of the State of Minnesota, without regard to conflicts of law provisions.
In the event any provision of the Grant shall be held illegal or invalid for any
reason, the illegality or invalidity shall not affect the remaining parts of the
Grant, and the Grant shall be construed and enforced as if the illegal or
invalid provision had not been included.
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ANNEX B
TO
ALLETE
EXECUTIVE LONG-TERM INCENTIVE COMPENSATION PLAN
PERFORMANCE SHARE GRANT
EFFECTIVE 2007
[ELIGIBLE EXECUTIVE EMPLOYEES]
Financial Measure:
- ------------------
Total Shareholder Return (TSR) computed over the three-year period.
Performance Share Award:
- ------------------------
If ALLETE's TSR ranking is 3rd or higher among a peer group of 16 companies
(superior performance), 200% of the Performance Share grant will be awarded. If
ALLETE's TSR performance ranks 7th among the peer group (target performance),
100% of the Grant will be awarded. If ALLETE's TSR performance ranks 10th
(threshold performance), 50% of the Grant will be awarded. If TSR performance is
below threshold, no Performance Shares will be awarded. Straight-line
interpolation will be used to determine earned awards based on the TSR ranking
between threshold, target and superior.
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TSR RANK PERF. LEVEL PAYOUT %
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1 [Graphic Omitted - 200.0%
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2 Arrow Pointing Up] 200.0%
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3 Superior 200.0%
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4 [Graphic Omitted - 175.0%
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5 Arrow Pointing Up] 150.0%
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6 125.0%
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7 Target 100.0%
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8 [Graphic Omitted - 83.3%
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9 Arrow Pointing Up] 66.7%
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10 Threshold 50.0%
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11 0%
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12 0%
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13 0%
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14 0%
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15 0%
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16 0%
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17 0%
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