EXHIBIT(10)(q)
NEW ENGLAND ELECTRIC COMPANIES'
SENIOR INCENTIVE COMPENSATION PLAN
Adopted - March 14, 1988
Amended - May 23, 1990
Amended - November 26, 1991
Amended - January 1, 1993
Amended - January 1, 1994
Amended - January 1, 1995
TABLE OF CONTENTS
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Page
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I. PURPOSE. . . . . . . . . . . . . . . . . . . . . . . . .1
II. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . .1
2.01 Base Compensation. . . . . . . . . . . . . . .1
2.02 Beneficial Owner . . . . . . . . . . . . . . .1
2.03 Board. . . . . . . . . . . . . . . . . . . . .1
2.04 Bonus Award. . . . . . . . . . . . . . . . . .1
2.05 Change in Control. . . . . . . . . . . . . . .1
2.06 Committee. . . . . . . . . . . . . . . . . . .4
2.07 Continuing Directors . . . . . . . . . . . . .4
2.08 Duff and Phelps Universe . . . . . . . . . . .5
2.09 Low Equity Return Target . . . . . . . . . . .5
2.10 A Major Transaction. . . . . . . . . . . . . .5
2.11 New England Electric System. . . . . . . . . .6
2.12 New England/New York Regional Universe . . . .7
2.13 New England Utilities. . . . . . . . . . . . .7
2.14 Participant. . . . . . . . . . . . . . . . . .7
2.15 Person . . . . . . . . . . . . . . . . . . . .7
2.16 Plan Year. . . . . . . . . . . . . . . . . . .8
2.17 System . . . . . . . . . . . . . . . . . . . .8
III. ADMINISTRATION . . . . . . . . . . . . . . . . . . . . .8
3.01 Administration and Interpretation. . . . . . .8
3.02 Amendment or Termination.. . . . . . . . . . .8
3.03 No Segregation of Assets; No Assignment. . . .8
IV. CORPORATE TARGETS. . . . . . . . . . . . . . . . . . . .9
4.01 Targets. . . . . . . . . . . . . . . . . . . .9
4.02 Cents per Kilowatthour.. . . . . . . . . . . 10
4.03 Determination of Target Achievement. . . . . 10
V. BONUS AWARD. . . . . . . . . . . . . . . . . . . . . . 11
5.01 Components . . . . . . . . . . . . . . . . . 11
5.02 Return on Equity Targets.. . . . . . . . . . 11
5.03 Cents Per Kilowatthour Award . . . . . . . . 11
5.04 Minimum Performance Requirement. . . . . . . 12
5.05 Distribution Date. . . . . . . . . . . . . . 12
VI. BASE COMPENSATION. . . . . . . . . . . . . . . . . . . 12
6.01 Performance Evaluation . . . . . . . . . . . 12
VII. PAYMENT UPON CHANGE OF CONTROL . . . . . . . . . . . . 13
7.01 Change in Control. . . . . . . . . . . . . . 13
VIII. GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . 13
8.01 Other Benefit Plans. . . . . . . . . . . . . 14
8.02 Rate Making. . . . . . . . . . . . . . . . . 14
8.03 Future Employment. . . . . . . . . . . . . . 14
8.04 Headings . . . . . . . . . . . . . . . . . . 14
8.05 Gender and Number. . . . . . . . . . . . . . 14
8.06 Governing Law. . . . . . . . . . . . . . . . 14
8.07 Effective Date.. . . . . . . . . . . . . . . 15
SIGNATURE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
APPENDIX A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
APPENDIX B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ii
NEW ENGLAND ELECTRIC COMPANIES'
SENIOR INCENTIVE COMPENSATION PLAN
I. PURPOSE
The Senior Incentive Compensation Plan (the Plan) is intended
to achieve and maintain a high level of corporate performance
reflecting both ratepayer and shareholder interests by linking a
significant component of compensation to earnings and rates as
measured against an electric utility marketplace environment.
II. DEFINITIONS
2.01 Base Compensation means the compensation referred to
in Section 6.01 and includes all salary, whether received or
deferred.
2.02 Beneficial Owner shall have the meaning defined in
Rule 13d-3 under the Securities Exchange Act of 1934.
2.03 Board means the Board of Directors of New England
Electric System.
2.04 Bonus Award means the compensation referred to in
Article V.
2.05 Change in Control occurs when:
(a) Through March 15, 1995:
(i) any person, firm, corporation, organization, or
association of persons or organizations acting in
concert (excluding any qualified employee benefit
plan of the System) acquires more than 20% of the
outstanding Shares, whether in whole or in part,
by means of an offer made publicly to the holders
of all, or substantially all, of the outstanding
Shares to acquire Shares for cash, other property,
or a combination thereof or by any other means,
unless the transaction is consented to by vote of
a majority of the Continuing Directors;
(ii) New England Electric System transfers all or a
substantial part of its assets to another person,
firm, corporation, organization, or association of
persons or organizations acting in concert
(excluding a subsidiary controlled by New England
Electric System itself), unless the transaction
is consented to by vote of a majority of the
Continuing Directors;
(iii) New England Electric System consolidates or merges
with or into any person, firm, corporation,
organization, or association of persons or
organizations, unless the transaction is consented
to by vote of a majority of the Continuing
Directors; or
(iv) during any period of 24 consecutive months,
individuals who at the beginning of such 24-month
period were directors of New England Electric
System shall cease to constitute a majority of the
Board, unless (a) the remaining directors who were
directors at the beginning of such period, and (b)
any other directors whose election was approved in
advance by directors representing a majority of
the directors then in office who were directors at
the beginning of such period constitute a majority
of the Board; and
(b) Awarded after January 1, 1995, the conditions set forth
in either of the following paragraphs shall have been
satisfied:
(i) any Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of New
England Electric System (not including in the
securities beneficially owned by such Person any
securities acquired directly from New England
Electric System or its affiliates) representing
20% or more of the combined voting power of New
England Electric System's then outstanding
securities; or
(ii) during any period of not more than two consecutive
years on or after January 1, 1995, individuals who
at the beginning of such period constitute the
Board and any new director (other than a director
designated by a Person who has entered into an
agreement with New England Electric System to
effect a transaction described in clause (i) of
this paragraph) whose election by the Board or
nomination for election by New England Electric
System's shareholders was approved or recommended
by a vote of at least two-thirds of the directors
then still in office who either were directors at
the beginning of the period or whose election or
nomination for election was previously so approved
or recommended cease for any reason to constitute
a majority of the Board.
2.06 Committee means the Compensation Committee of the Board.
2.07 Continuing Directors means, as of the date of
determination, any director who was a member of the Board on
January 1, 1990, or who was recommended for his initial term of
office by a majority of the Continuing Directors in office at the
time of such recommendation, but excludes any director who,
together with his affiliates, is the beneficial owner of 20% or
more of the outstanding Shares (excluding securities beneficially
owned by reason of being a trustee of any employee benefit plan
of the System).
2.08 Duff and Phelps Universe means the Duff and Phelps Inc.,
Utility Investment Research Services electric utility universe or
some other electric utility rating service universe as designated
by the Committee.
2.09 Low Equity Return Target means achievement of both (i)
either Target B or Target D and (ii) net income after bonuses
otherwise payable exceeding dividends declared for the Plan Year.
2.10 A Major Transaction shall be deemed to have occurred if
the conditions set forth in any one of the following paragraphs
shall have been satisfied:
(a) the shareholders of New England Electric System approve
a merger or consolidation with any corporation or
business trust, other than (i) a merger or consolidation
which would result in the individuals who prior to such
merger or consolidation constitute the Board
constituting at least two-thirds of the board of
directors of New England Electric System or the
surviving or succeeding entity immediately after such
merger or consolidation, or (ii) a merger or
consolidation effected to implement a recapitalization
(or similar trasaction) in which no Person acquires more
than 20% of the combined voting power of New England
Electric System's then outstanding securities;
(b) the shareholders of New England Electric System approve
a plan of complete liquidation thereof; or
(c) the shareholder of New England Electric System approve
an agreement for the sale or disposition of all or
substantially all of New England Electric System's
assets, other than a sale or disposition which would
result in the individuals who prior to such sale or
disposition constitute the Board constituting at least
two-thirds of the board of directors of the Person
purchasing such assets immediately after such sale or
disposition.
2.11 New England Electric System means the trustee or
trustees for the time being (as trustee or trustees but not
personally) under an agreement and declaration of trust dated
January 2, 1926, as amended, which is hereby referred to, and a
copy of which as amended has been filed with the Secretary of The
Commonwealth of Massachusetts. Any agreement, obligation, or
liability made, entered into or incurred by or on behalf of New
England Electric System binds only its trust estate, and no
shareholder, director, trustee, officer, or agent thereof assumes
or shall be held to any liability therefor.
2.12 New England/New York Regional Universe means the
utilities listed in Appendix A hereto.
2.13 New England Utilities means the utilities listed in
Appendix B hereto.
2.14 Participant means the Chairman and the President of New
England Electric System, if they are employees of a System
company, and such other individuals as the Board may select.
2.15 Person shall have the meaning given in Section 3(a)(9)
of the Exchange Act, as modified and used in Sections 13(d) and
14(d) thereof; however, a Person shall not include (i) New
England Electric System or any subsidiary thereof, (ii) a trustee
or other fiduciary holding securities under an employee benefit
plan of New England Electric System or any subsidiary thereof,
(iii) an underwriter temporarily holding securities pursuant to
an offering of such securities, or (iv) a corporation owned,
directly or indirectly, by the shareholders of New England
Electric System in substantially the same proportions as their
ownership of shares of New England Electric System.
2.16 Plan Year means a calendar year.
2.17 System means the New England Electric System holding
company system.
III. ADMINISTRATION
3.01 Administration and Interpretation. The Plan shall be
administered by the Committee, and interpretations of the Plan by
the Committee shall be final and binding on all parties.
3.02 Amendment or Termination. The Board may amend or
terminate the Plan at any time; provided, however, that no such
action shall affect any right or obligation with respect to any
Bonus Award previously granted; and provided, further, the
provisions of Article VII and Sections 2.05 and 2.07 may not be
amended without the written consent of any Participant affected.
3.03 No Segregation of Assets; No Assignment. New England
Electric System is not required to set aside or segregate any
assets of any kind to meet obligations under this Plan. A
Participant has no rights under this Plan to any specific assets
of New England Electric System. A Participant may not commute,
sell, assign, transfer, or otherwise convey the right to receive
any payments under this Plan, which payments and the right
thereto shall be, to the fullest extent permitted by law,
nonassignable and nontransferable, whether voluntarily or
involuntarily.
IV. CORPORATE TARGETS
4.01 Targets. The corporate targets for providing a
favorable return on common equity shall be:
Target A - New England Electric System's return on common
equity being at or above the 75th percentile of all electric
utilities listed in the Duff and Phelps Universe.
Target B - New England Electric System's return on common
equity being at or above the 50th percentile of all electric
utilities listed in the Duff and Phelps Universe.
Target C - New England Electric System's return on common
equity being at or above the 75th percentile of electric
utilities listed in the New England/New York Regional Universe.
Target D - New England Electric System's return on common
equity being at or above the 50th percentile of all electric
utilities listed in the New England/New York Regional Universe.
4.02 Cents per Kilowatthour. The corporate targets for
providing low cost electricity, expressed in cents per
kilowatthour, shall be:
Target A - New England Electric System's cents per
kilowatthour being ranked first or second among New England
Utilities; or
Target B - New England Electric System's cents per
kilowatthour being at or above the 66th percentile for cents per
kilowatthour among New England Utilities.
4.03 Determination of Target Achievement. The determination
as to whether or not corporate targets have been achieved shall
be based upon twelve month data which ends on a quarter and which
is available to the company when the determination is made in
February following the Plan Year to which the award applies. New
England Electric System's actual return on common equity for the
Plan Year for which the award applies shall be used in
determining whether the return on common equity target has been
reached, whether or not available in February.
V. BONUS AWARD
5.01 Components. The Bonus Award has two components: a
return on common equity award and a cents per kilowatthour award.
5.02 Return on Equity Targets. The return on equity award
will be based on the sum of the percentages for the targets
reached multiplied by the Participant's Base Compensation for the
Plan Year in respect of which the award is made, namely:
Target A 17.5%
Target B 12%
Target C 17.5%
Target D 12%
Results will be scaled using straight line interpolation between
the return on common equity Targets A and B and between return on
common equity Targets C and D. In determining whether the return
on common equity targets are met, the Board may enhance or
curtail the actual return on equity in response to extraordinary
events or other factors relevant to performance of New England
Electric System companies.
5.03 Cents Per Kilowatthour Award. The cents per
kilowatthour award will be based on the percentage for the target
reached multiplied by the Participant's Base Compensation for the
Plan year in respect of which the award is made, namely:
Target A = 15%
Target B = 7.5%
Results will not be scaled between targets for the cents per
kilowatthour award. If the lower target is not achieved, there
will be no cents per kilowatthour award for the Plan Year.
5.04 Minimum Performance Requirement. If the Low Equity
Return Target is not achieved, there will be no Bonus Award for
the Plan year.
5.05 Distribution Date. The Bonus Award shall be distributed
to the Participants by the March 15 following the Plan Year.
VI. BASE COMPENSATION
6.01 Performance Evaluation. A Participant's performance
will be evaluated and his/her compensation, including any merit
or promotional increase, will be set by the Board in accordance
with the New England Electric Salary Management Program. A
Participant's Base Compensation may be set anywhere within
his/her salary range.
VII. PAYMENT UPON CHANGE OF CONTROL
7.01 Change in Control. In the event of a Change in Control
or a Major Transaction, each Participant will receive, within 30
days, a cash payment equal to the average of the bonus
percentages for this Plan for the last three years for this Plan
prior to the Change in Control or Major Transaction times the
Participant's annualized Base Compensation. If the Change in
Control or Major Transaction occurs prior to the determination
and payment of the Bonus Award for the prior Plan Year, the
Participant will also receive within 30 days a cash payment equal
to said percentage times the Participant's Base Compensation
received in the prior Plan Year; provided, however, if it is
determined that the sum of the percentages calculated in
accordance with Sections 5.02 and 5.03 for said prior Plan Year
would have been greater, such higher percentage will be used. No
further benefits will be payable from this Plan.
VIII. GENERAL PROVISIONS
8.01 Other Benefit Plans. Bonus Awards will not be used in
determining a Participant's benefit under any group insurance
plan or any other incentive program, other than New England
Electric Companies' Incentive Share Plan.
8.02 Rate Making. Bonus Awards shall not be included for
rate-making purposes.
8.03 Future Employment. Neither the Plan nor the making of
awards hereunder shall be construed to create any obligation to
continue the Plan or to give any present or future employee any
right to continued employment.
8.04 Headings. The headings of articles and sections of the
Plan are for convenience of reference only.
8.05 Gender and Number. Unless the context requires
otherwise, the singular shall include the plural; the masculine
gender shall include the feminine; and such words as "herein,"
"hereinafter," "hereof," and "hereunder" shall refer to this
instrument as a whole and not merely to the subdivisions in which
such words appear.
8.06 Governing Law. Except as otherwise required by law, the
Plan and all matters arising thereunder shall be governed by the
laws of The Commonwealth of Massachusetts.
8.07 Effective Date. This Amendment shall be effective
January 1, 1995.
Date:
s/ George M. Sage
________________________________
Chairman Compensation Committee
Pursuant to Vote of February 28,
1995 of the Board of Directors
Appendix A
NEW ENGLAND/NEW YORK UTILITIES
(to be used in measuring the
return on common equity target)
Boston Edison Company
Central Hudson Gas & Electric Corporation
Central Maine Power Company
Central Vermont Public Service Company
Commonwealth Energy (Holding Company System)
Consolidated Edison Company of New York, Inc.
Eastern Utilities Associates (Holding Company System)
Long Island Lighting Company
New England Electric System (Holding Company System)
New York State Electric & Gas Corporation
Niagara Mohawk Power Corporation
Northeast Utilities (Holding Company System)
Orange & Rockland Utilities, Inc.
Rochester Gas & Electric Corporation
United Illuminating Company
Appendix B
NEW ENGLAND UTILITIES
(to be used in measuring the cents
per kilowatthour target)
Boston Edison Company
Central Maine Power Company
Central Vermont Public Service Company
Commonwealth Energy (Holding Company System)
Eastern Utilities Associates (Holding Company System)
Municipal Composite (weighted average)
New England Electric System (Holding Company System)
Northeast Utilities (Holding Company System)
Public Service Company of New Hampshire
The United Illuminating Company