Exhibit 10(s)
NEW ENGLAND ELECTRIC COMPANIES'
INCENTIVE COMPENSATION PLAN III
Adopted - November 29, 1988
Amended - May 23, 1990
Amended - December 1, 1991
Amended - January 1, 1994
Amended - March 1, 1994
Amended - January 1, 1995
Amended - January 1, 1996
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 Change in Control . . . . . . . . . . . . . . . .1
2.05 Continuing Directors. . . . . . . . . . . . . . .5
2.06 Corporate Targets . . . . . . . . . . . . . . . .5
2.07 Fund. . . . . . . . . . . . . . . . . . . . . . .5
2.08 Incentive Compensation. . . . . . . . . . . . . .5
2.09 Low Return Target . . . . . . . . . . . . . . . .6
2.10 A Major Transaction . . . . . . . . . . . . . . .6
2.11 Management Committee. . . . . . . . . . . . . . .7
2.12 New England Electric System . . . . . . . . . . .7
2.13 Participant . . . . . . . . . . . . . . . . . . .8
2.14 Person. . . . . . . . . . . . . . . . . . . . . .8
2.15 Plan Year . . . . . . . . . . . . . . . . . . . .8
2.16 SBU . . . . . . . . . . . . . . . . . . . . . . .8
2.17 SBU Head. . . . . . . . . . . . . . . . . . . . .8
2.18 Senior Incentive Compensation Plan. . . . . . . .9
III. ADMINISTRATION. . . . . . . . . . . . . . . . . . . . .9
3.01 Administration and Interpretation.. . . . . . . .9
3.02 Amendment or Termination. . . . . . . . . . . . .9
3.03 No Segregation of Assets; No Assignment.. . . . .9
3.04 Participant List. . . . . . . . . . . . . . . . 10
3.05 Accounting. . . . . . . . . . . . . . . . . . . 10
IV. PARTICIPATION. . . . . . . . . . . . . . . . . . . . . 10
4.01 Selection.. . . . . . . . . . . . . . . . . . . 10
4.02 Notification. . . . . . . . . . . . . . . . . . 10
4.03 Goals.. . . . . . . . . . . . . . . . . . . . . 10
V. PARTICIPANTS' COMPENSATION . . . . . . . . . . . . . . 11
5.01 Base Compensation and Incentive Compensation. . 11
VI. BASE COMPENSATION. . . . . . . . . . . . . . . . . . . 11
6.01 Performance Evaluation. . . . . . . . . . . . . 11
VII. INCENTIVE COMPENSATION. . . . . . . . . . . . . . . . 11
7.01 Incentive Compensation Amounts. . . . . . . . . 11
7.02 Criteria for Determining Incentive
Compensation. . . . . . . . . . . . . . . . . . 12
7.03 Notification of Award.. . . . . . . . . . . . . 12
7.04 Cooperation of Others.. . . . . . . . . . . . . 12
VIII. INCENTIVE COMPENSATION FUND . . . . . . . . . . 12
8.01 Calculation.. . . . . . . . . . . . . . . . . . 12
8.02 Scaling.. . . . . . . . . . . . . . . . . . . . 13
8.03 Minimum Performance Requirement.. . . . . . . . 13
IX. PAYMENT UPON CHANGE OF CONTROL . . . . . . . . . . . . 14
9.01 Change of Control.. . . . . . . . . . . . . . . 14
X. GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . 14
10.01 Other Benefit Plans.. . . . . . . . . . . . . . 14
10.02 Termination of Participation;
Interplan Transfer. . . . . . . . . . . . . . . 15
10.03 Future Employment.. . . . . . . . . . . . . . . 15
10.04 Headings. . . . . . . . . . . . . . . . . . . . 15
10.05 Gender and Number.. . . . . . . . . . . . . . . 15
10.06 Governing Law.. . . . . . . . . . . . . . . . . 16
10.07 Effective Date. . . . . . . . . . . . . . . . . 16
SIGNATURE
NEW ENGLAND ELECTRIC COMPANIES'
INCENTIVE COMPENSATION PLAN III
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I. PURPOSE
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The purpose of this Incentive Compensation Plan III (the
Plan) is to achieve and maintain a high level of corporate
performance by making it possible for executives whose efforts
and responsibilities have an influence on corporate earnings to
earn compensation rewards in proportion to (i) measured
corporate performance and (ii) the individual executive's
contribution.
II. DEFINITIONS
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2.01 Base Compensation means the compensation referred
to in Section 6.01.
2.02 Beneficial Owner shall have the meaning defined in
Rule 13d-3 under the Exchange Act.
2.03 Board means the Board of Directors of New England
Electric System.
2.04 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) 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.
2.05 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).
2.06 Corporate Targets means the same return on common
equity targets and cents per kilowatthour targets found in
Article IV of the Senior Incentive Compensation Plan for the
Plan Year.
2.07 Fund means the fund established for each SBU for
each year as provided in Section 8.01.
2.08 Incentive Compensation means the award made from
the Fund to each Participant in accordance with Section 7.01.
2.09 Low Return Target means the same low equity return
target provided in the Senior Incentive Compensation Plan 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 Management Committee means the Management Committee
established in accordance with the New England Electric System
Companies' Incentive Compensation Plan I.
2.12 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.
2.13 Participant means an individual who has been
selected, in accordance with Section 4.01, or an equivalent
prior provision, to be a participant in the Plan.
2.14 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.
2.15 Plan Year means a calendar year.
2.16 SBU means the business unit (administrative
services, retail business, or wholesale business) in which the
Participant is employed. If the Participant joins a different
SBU during the Plan Year, the Participant's service will be
allocated on a proportional basis to each of said SBUs.
2.17 SBU Head means the New England Electric System Vice
President responsible for the SBU.
2.18 Senior Incentive Compensation Plan means New
England Electric Companies' Senior Incentive Compensation Plan,
as amended from time to time.
III. ADMINISTRATION
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3.01 Administration and Interpretation. The Plan shall
be administered by the Management Committee, and
interpretations of the Plan by the Management Committee shall
be final and binding by all parties.
3.02 Amendment or Termination. The Management Committee
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 Incentive Compensation previously granted; and
provided, further, the provisions of Article IX and Sections
2.04 and 2.05 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
permited by law, nonassignable and nontransferable, whether
voluntarily or involuntarily.
3.04 Participant List. The Management Committee shall
be responsible for maintaining an up-to-date list of the
Participants in the Plan.
3.05 Accounting. The Manager of Internal Audits and the
Controller will be responsible to the Management Committee for
accounting matters directly affecting the Plan.
IV. PARTICIPATION
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4.01 Selection. The participants in the Plan will be
selected by the Management Committee.
4.02 Notification. It is anticipated (but not binding)
that the Management Committee shall notify by December 1 of
each year those executives who for the following year have been
included in the Plan and those that may be subsequently dropped
from the Plan.
4.03 Goals. The SBU Head, or his or her designees,
shall establish individual goals for each Participant for each
Plan Year and shall advise each Participant what goals have
been so established.
V. PARTICIPANTS' COMPENSATION
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5.01 Base Compensation and Incentive Compensation. The
compensation for each Participant will consist of two parts:
Base Compensation and Incentive Compensation.
VI. BASE COMPENSATION
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6.01 Performance Evaluation. A Participant's
performance will be evaluated and his/her compensation,
including any merit or promotional increase, will be set in
accordance with the New England Electric Salary Management
Program. A Participant's Base Compensation may be set anywhere
within the salary range.
VII. INCENTIVE COMPENSATION
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7.01 Incentive Compensation Amounts. When the books are
closed at the end of a Plan Year and the amount of the Fund for
that year is determined in accordance with Article VIII, the
SBU Head will recommend to the Management Committee and the
Management Committee will determine the appropriate amount to
be awarded each Participant, and this money will be distributed
to the Participants by the end of March following the Plan
Year.
7.02 Criteria for Determining Incentive Compensation.
In arriving at each Participant's Incentive Compensation, the
SBU Head and the Management Committee shall be governed by the
degree of success achieved by the Participant in reaching
his/her individual goals which were established prior to the
Plan Year. Their decision will be binding. The money
remaining in the Fund will be allocated among all the
Participants based upon their total individual performances
during the Plan Year.
7.03 Notification of Award. The SBU Head shall be
responsible for seeing that each Participant is told the basis
for the size of his/her Incentive Compensation.
7.04 Cooperation of Others. To achieve any of the
established goals will require the close cooperation of all the
Participants. If the SBU Head or the Management Committee
feels in any instance that lack of such cooperation by others
is making it difficult for a Participant to achieve his/her
individual goals, the dollars not paid to this Participant will
not be distributed to the other members of the Plan.
Otherwise, all money in the Fund will be distributed.
VIII. INCENTIVE COMPENSATION FUND
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8.01 Calculation. The Fund for each SBU Plan will be
based on the sum of the percentages for the Corporate Targets
reached multiplied by the sum of the Base Compensation for all
Participants in that SBU, namely:
Return on
Common Equity - Target A 6%
Return on
Common Equity - Target B 2 1/2%
Return on
Common Equity - Target C 6%
Return on
Common Equity - Target D 2 1/2%
Cents Per
Kilowatthour - Target A 3%
Cents Per
Kilowatthour - Target B 2%
8.02 Scaling. 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 Management Committee 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.
8.03 Minimum Performance Requirement. If the Low Return
Target is not achieved, there will be no Incentive Compensation
for the Plan Year.
IX. PAYMENT UPON CHANGE OF CONTROL
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9.01 Change of Control. In the event of a Change in
Control or Major Transaction, each Participant will receive,
within 30 days, a cash payment equal to the average of the
bonus percentages for the last three years (or, if less than
three years, the number of full calendar years since December
31, 1995) for this Plan prior to the Change in Control or Major
Transaction times the Participant's Base Compensation. If the
Change in Control or Major Transaction occurs prior to the
determination and payment of the Incentive Compensation 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 determind that the Fund
percentage calculated in accordance with Sections 8.01 and 8.02
for said prior Plan Year would have been greater, such higher
percentage will be used. No further benefits will be payable
from this Plan.
X. GENERAL PROVISIONS
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10.01 Other Benefit Plans. A Participant's
Incentive Compensation will not be used in determining a
Participant's benefits under any group insurance plan or any
incentive program other than New England Electric Companies'
Incentive Share Plan.
10.02 Termination of Participation; Interplan
Transfer. If, for any reason, a Participant should cease to be
actively employed by a subsidiary of New England Electric
System prior to July 1 of a Plan Year, that person will not be
deemed a Participant for that year unless the SBU Head
determines there are extraordinary circumstances which justify
inclusion. A Participant who ceases to be so actively employed
during the last six months of a Plan year will be deemed a
Participant for that year on a proportional basis. The SBU
Head will also determine the extent, if any, of participation
by the person replacing a Participant. If a Participant
becomes a participant in another incentive compensation plan
during the Plan Year, the Participant will be deemed to be a
Participant for that year on a proportional basis in each of
the Plans, respectively.
10.03 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.
10.04 Headings. The headings of articles and
sections of the Plan are for convenience of reference only.
10.05 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.
10.06 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.
10.07 Effective Date. This Amendment shall be
effective January 1, 1996.
s/John W. Rowe
Date:
J.W. Rowe
s/J.T. Bok
Date: April 20, 1995
J.T. Bok
The Management Committee
In accordance with votes of the New
England Electric System Compensation
Committee of October 24, 1995