EXHIBIT 10-50
As Amended and Restated
Effective May 1, 1998
NEW YORK STATE ELECTRIC & GAS CORPORATION
LONG-TERM EXECUTIVE INCENTIVE SHARE PLAN
I. Plan Objective
The objective of the Long-Term Executive Incentive Share
Plan (the "Plan") is to attract and motivate current and
future executives of New York State Electric & Gas
Corporation ("NYSEG") by providing them with the opportunity
to receive, in addition to current compensation, long-term
incentives which are tied directly to the creation of
shareholder value.
II. Definitions
Wherever used in the Plan, unless the context clearly
indicates otherwise, the following words and phrases shall
have the meanings set forth below:
A. "Plan" shall mean the NYSEG Long-Term Executive
Incentive Share Plan as embodied herein and as amended
from time to time.
B. "Participant" shall mean an individual who has
satisfied the eligibility requirements of Article IV
hereof.
C. "Performance Cycle" shall mean a consecutive three-year
period over which performance is measured. A new
Performance Cycle begins January 1 of each calendar
year.
D. "Performance Shares" shall mean the "phantom" (not
corporate) shares that are granted to Participants at
the beginning of each Performance Cycle and as
otherwise provided in Article VI hereof.
E. "Dividend Performance Shares" shall mean the "phantom"
(not corporate) shares that accrue in accordance with
Article V hereof during the Performance Cycle.
F. "Salary Grade Midpoint" shall mean the midpoint of each
Plan Participant's salary grade level as of the first
day of the Performance Cycle.
[Effective January 1, 1999, Item F will read as
follows: "Base Salary" shall mean the Participant's
annual base salary as of the first day of the
Performance Cycle.]
G. "Total Shareholder Return (TSR)" shall mean Energy
East's average annual shareholder return for the three
years of a Performance Cycle including change in stock
price, dividends and other distributions to
shareholders.
H. "NYSEG Board" shall mean the Board of Directors of
NYSEG.
I. "Energy East Board" shall mean the Board of Directors
of Energy East Corporation ("Energy East").
III. Administration
The Plan shall be administered by the Executive Compensation
and Succession Committee (the "Committee") of the Board of
Directors of Energy East composed of such members as shall
be appointed from time to time by the Energy East Board. No
member of the Committee while serving as such shall be
eligible for participation in the Plan.
Except as otherwise provided in this Plan, decisions and
determinations by the Committee shall be final and binding
upon all parties. The Committee shall have the authority to
interpret the Plan, to establish and revise rules and
regulations relating to the Plan, and to make any other
determinations that it believes necessary or advisable for
the administration of the Plan.
IV. Eligibility
Eligibility for participation in the Plan is limited to
officers of NYSEG holding the positions set forth below.
Each Plan Participant has an incentive level assigned by
Class based on the Class's potential impact on NYSEG's
performance which will be used in determining initial awards
of Performance Shares.
Participants shall be divided into the following Classes for
purposes of initial awards of Performance Shares:
Incentive
Class Position Level
I Chairman and President 40%
II Executive Vice Presidents & Senior Vice Presidents 30%
III Vice Presidents 20%
V. Performance Shares and Dividend Performance Shares
All Performance Shares granted to a Participant shall be
credited to a Performance Share Account which shall be
maintained for the Participant. On each common stock
dividend payment date of Energy East, Dividend Performance
Shares, including fractional Dividend Performance Shares
computed to four decimal places, shall be credited to each
Participant's Performance Share Account. The number of
Dividend Performance Shares to be credited shall be
calculated by first determining the amount of dividends that
would be paid by Energy East upon all Performance Shares and
Dividend Performance Shares held for the Participant as if
such shares actually were issued and outstanding common
stock of Energy East. The amount of dividends so determined
shall then be divided by the price per share paid by Energy
East's dividend reinvestment plan for common stock that was
purchased by said plan with respect to the common stock
dividend payment date for which the Dividend Performance
Shares are being credited. The quotient of said division is
the number of Dividend Performance Shares which shall be
credited to a Participant's Performance Share Account.
An award of Performance Shares or Dividend Performance
Shares under the Plan shall not entitle the recipient to any
actual dividend or voting rights or any other rights of a
shareholder with respect to such Performance Shares or
Dividend Performance Shares.
VI. Initial Plan Grants
An initial grant of Performance Shares will be made to a
Participant at the beginning of each Performance Cycle. The
initial grant will be determined by multiplying a
Participant's Salary Grade Midpoint on the first day of the
Performance Cycle by an incentive factor based on a
Participant's Class as set forth in Article IV and then
dividing said product by the average of the last five
trading days closing prices of NYSEG s common stock in the
preceding calendar year.
[Effective January 1, 1999, the above sentence will read as
follows: The initial grant will be determined by
multiplying a Participant's Base Salary on the first day of
the Performance Cycle by an incentive factor based on a
Participant's Class as set forth in Article IV and then
dividing said product by the average of the last five
trading days' closing prices of Energy East's common stock
in the preceding calendar year.]
Individuals who become eligible to participate in the Plan
while one or more Performance Cycles are in progress will
receive an initial grant of Performance Shares only for the
Performance Cycle that began in the same calendar year that
the individual became a Participant. The initial grant
shall be based on the Salary Grade Midpoint that was in
effect for the Participant's new salary grade on the first
day of the Performance Cycle multiplied by an incentive
level based on the Participant's Class as set forth in
Article IV with the product then divided by the average of
the last five trading days closing prices of NYSEG's common
stock prior to the beginning of the Performance Cycle.
[Effective January 1, 1999, the above sentence will read as
follows: The initial grant shall be based on the
Participant's new Base Salary on the first day of the
Performance Cycle multiplied by an incentive level based on
the Participant's Class as set forth in Article IV with the
product then divided by the average of the last five trading
days' closing prices of Energy East's common stock prior to
the beginning of the Performance Cycle.] The initial grant
will then be prorated based on the number of full months
remaining out of a possible 36 months in the Performance
Cycle that the Participant is eligible to participate in the
Plan.
A Participant who is promoted into a higher Class, or salary
grade within a Class, while one or more Performance Cycles
are in progress will receive a grant of additional
Performance Shares only for the Performance Cycle that began
in the calendar year of the promotion. As of the effective
date of the promotion, a Participant shall receive
additional Performance Shares based on the Participant's new
Class and/or Salary Grade Midpoint calculated pursuant to
the following formula: First, the Participant's Salary
Grade Midpoint as of the effective date of the promotion
shall be multiplied by an incentive level based on the
Participant's Class as set forth in Article IV as of the
effective date of the promotion. [Effective January 1,
1999, the above sentence will read as follows: As of the
effective date of the promotion, a Participant shall receive
additional Performance Shares based on the Participant's new
Class and/or Base Salary calculated pursuant to the
following formula: First, the Participant's Base Salary as
of the effective date of the promotion shall be multiplied
by an incentive level based on the Participant's Class as
set forth in Article IV as of the effective date of the
promotion.] From this product shall be subtracted the
product of the Participant's Salary Grade Midpoint at the
beginning of the calendar year of the promotion (or if the
Participant received a prior promotion in the same calendar
year, the Participant's Salary Grade Midpoint as of the
effective date of the prior promotion) multiplied by an
incentive level based on the Participant's Class as set
forth in Article IV at the beginning of the calendar year of
the promotion (or in the case of a prior promotion in the
same calendar year, the effective date of the prior
promotion). [Effective January 1, 1999, the above sentence
will read as follows: From this product shall be subtracted
the product of the Participant's Base Salary at the
beginning of the calendar year of the promotion (or if the
Participant received a prior promotion in the same calendar
year, the Participant's Base Salary as of the effective date
of the prior promotion) multiplied by an incentive level
based on the Participant's Class as set forth in Article IV
at the beginning of the calendar year of the promotion (or
in the case of a prior promotion in the same calendar year,
the effective date of the prior promotion).] This
difference shall then be divided by the average of the last
five trading days' closing prices of either NYSEG's or
Energy East's common stock, as applicable, prior to the
effective date of the promotion. The resulting quotient
shall then be prorated based on the number of full months
remaining out of a possible 36 months in the Performance
Cycle that the Participant is eligible to participate in the
Plan. Such grant of additional Performance Shares will be
in addition to shares granted at the beginning of the
Performance Cycle that began in the calendar year of the
promotion. No additional Performance Shares will be granted
in connection with Performance Cycles which may be running
concurrently but which began in prior years.
VII. Termination of Employment
If during the term of the Plan, a Participant ceases to be
an employee of NYSEG by reason of death, retirement,
disability (as defined in NYSEG's long-term disability
plan), or termination without cause, the Participant (or his
or her successor in interest) shall remain a Participant in
the Plan and eligible for incentive award payments pursuant
to Article IX for all Performance Cycles which were in
progress while the Participant was an employee. All
Performance Shares and Dividend Performance Shares in such
Participant's Performance Share Account will continue to
accrue Dividend Performance Shares in accordance with
Article V. At the conclusion of each Performance Cycle any
incentive award payments to be made under the Plan will be
prorated based on the number of full months that the
Participant was an employee during the Performance Cycle;
provided, however, that if a Participant ceases to be an
employee for the reasons set forth above at any time during
1996, the Participant will be deemed to have been an
employee for all of 1996.
For a Participant that ceases to be an employee by reason of
transfer in employment to another subsidiary of Energy East,
the Participant will continue to participate in the Plan at
the position level held by the individual prior to the
transfer in employment, with employment by the subsidiary
treated for purposes of the Plan as employment by NYSEG for
all Performance Cycles which were in progress in the year in
which the transfer in employment occurred. Such
Participant, however, shall not be eligible for awards for
any Performance Cycles that commence after the transfer of
employment occurs.
If a Participant leaves the employ of NYSEG (or in the case
of an individual described in the prior paragraph, the
subsidiary of Energy East) voluntarily or involuntarily, for
any reason other than retirement, disability, death,
termination without cause, the Participant shall forfeit any
payment opportunity for the Performance Cycles in progress
and the Performance Shares and Dividend Performance Shares
in the Participant's Performance Share Account shall be
forfeited and canceled, unless the NYSEG Board determines
otherwise.
VIII.Performance Measurement and Criteria
The Plan uses one comparative performance measure as the
basis for determining incentive award payments to
Participants. This measure compares Energy East's average
TSR for the three year period of a Performance Cycle to the
average total shareholder return for such three year period
of each of the top 100 utilities (including any utility
holding companies) by revenue in the United States, such
utilities to include electric, gas and combination utilities
("top 100 utilities"). The NYSEG Board may adopt any other
measurers to define the top 100 utilities. Energy East's
performance is based on Energy East's percentile ranking of
TSR for the Performance Cycle ("Percentile Ranking"). The
top 100 utilities shall be determined for each Performance
Cycle at the commencement of each Performance Cycle. For
all periods prior to May 1, 1998, the TSR of NYSEG shall be
deemed to be Energy East's TSR.
Each Performance Cycle is three years in length, with a new
Performance Cycle beginning on January 1 of each calendar
year and ending on December 31 of the third year. Cash
payments payable under the Plan shall be paid only at the
end of a Performance Cycle. A Participant is not entitled
to receive any payments prior to the completion of a
Performance Cycle.
The following Performance Schedule sets forth an Award
Percentage ( Award Percentage") for Energy East's
achievement of various Percentile Rankings (where 100% is
the worst percentile ranking and 1% is the best percentile
ranking). The Award Percentage shall be used to calculate
the amount of incentive award payments in accordance with
Article X.
Energy East Energy East
Percentile Award Percentile Award
Ranking Percentage Ranking Percentage
Below 65% 0%
65% 25.0% 42% 113.3%
64% 30.0% 41% 115.0%
63% 35.0% 40% 116.7%
62% 40.0% 39% 118.3%
61% 45.0% 38% 120.0%
60% 50.0% 37% 121.7%
59% 55.0% 36% 123.3%
58% 60.0% 35% 125.0%
57% 65.0% 34% 126.7%
56% 70.0% 33% 128.3%
55% 75.0% 32% 130.0%
54% 80.0% 31% 131.7%
53% 85.0% 30% 133.3%
52% 90.0% 29% 135.0%
51% 95.0% 28% 136.7%
50% 100.0% 27% 138.3%
49% 101.7% 26% 140.0%
48% 103.3% 25% 141.7%
47% 105.0% 24% 143.3%
46% 106.7% 23% 145.0%
45% 108.3% 22% 146.7%
44% 110.0% 21% 148.3%
43% 111.7% 20% or better 150.0%
IX. Determination of Payments
At the conclusion of each Performance Cycle, a determination
will be made by the NYSEG Board of Energy East's Percentile
Ranking within the top 100 utilities. The Performance
Schedule will then be used to determine the applicable Award
Percentage. Interpolation will be applied between those
ranges listed in the Performance Schedule rounded to the
nearest four decimal places. The Award Percentage will then
be used to determine the incentive award payments in
accordance with Article X. Final determination of incentive
award payments will be approved by the NYSEG Board and will
be made not later than the end of February following the end
of each Performance Cycle. Distribution of incentive award
payments will be made as soon thereafter as practical.
X. Incentive Award Payments
Incentive award payments will be made only in cash.
Incentive award payments will be calculated by multiplying
the Award Percentage as determined in Article VIII by the
number of Performance Shares and Dividend Performance Shares
in a Participant's Performance Share Account accumulated for
that Performance Cycle and multiplying the product by the
closing price of Energy East's common stock calculated as
the average of the last five trading days closing prices of
the Performance Cycle.
If on the basis of the Performance Schedule, a cash payment
for only a portion of the Performance Shares and Dividend
Performance Shares accumulated during a Performance Cycle is
to be made, then the remaining portion of the Performance
Shares and Dividend Performance Shares accumulated for that
Performance Cycle will be forfeited and canceled.
XI. Dilution and Other Adjustments
In the event of any change in the outstanding shares of
common stock of Energy East by reason of any stock dividend
or split, recapitalization, merger, consolidation, spin-off,
reorganization, combination or exchange of shares or other
similar corporate change, if the Committee shall determine,
in its sole discretion, that such change equitably requires
an adjustment in the number of Performance Shares then held
in Participants' Performance Share Accounts or which may be
awarded to any employee, or an adjustment in the number of
Dividend Performance Shares then held in Participants'
Performance Share Accounts, such adjustments shall be made
by the Committee and shall be conclusive and binding for all
purposes of the Plan. Notwithstanding anything to the
contrary contained herein, in connection with a binding
share exchange between NYSEG and Energy East on the
effective date of the binding share exchange, the
Performance Shares and Dividend Performance Shares held in
each Participant's Performance Share Account will, without
further action, be deemed to be converted into the
equivalent number of Performance Shares and Dividend
Performance Shares of Energy East, with the same terms and
conditions as set forth herein.
XII. Amendments and Termination
The NYSEG Board may at any time suspend, terminate, modify
or amend this Plan.
XIII.Miscellaneous Provisions
A. In the case of a Participant's death, payments with
respect to Performance Shares and Dividend Performance
Shares shall be made to his or her designated
beneficiary, or in the absence of such designation, by
will or the laws of descent and distribution.
B. Except as set forth in A. above, a Participant's rights
and benefits under the Plan shall not be subject in any
manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, charge, garnishment,
attachment, execution or levy of any kind, either
voluntary or involuntary, including any such liability
which arises from the Participant's bankruptcy or for
the support of a spouse or former spouse or for any
other relative of the Participant prior to incentive
award payments actually being received by the person
eligible to benefit under the Plan. Any attempt at such
prohibited anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, charge, garnishment,
attachment, execution or levy, shall be void and
unenforceable except as otherwise provided by law.
C. No Participant shall have any claim or right to be
granted an award under this Plan. Neither this Plan nor
any action taken hereunder shall be construed as giving
a Participant any right to be retained in the employ of
NYSEG.
D. NYSEG shall have the right to deduct from the cash
payments made pursuant to Article X any taxes required
by law to be withheld with respect to such cash
payments.
E. The NYSEG Board or the Committee may adopt procedures
allowing Participants to defer any payments they will be
entitled to receive under this Plan.
F. Payments with respect to Performance Shares and Dividend
Performance Shares will not be considered as a component
of regular earnings or base compensation for any
purpose.
XIV. Effective Date
The Plan shall be effective as of January 1, 1996.
XV. Payments upon and after a Change in Control
A. Calculation of Payments. Notwithstanding any other
provisions of this Plan (including, without limitation,
Article XIII(E) hereof), if a Change in Control (as
defined in Section C of this Article XV) shall occur,
the following shall be paid, in cash, no later than the
tenth (10th) day following such Change in Control:
(i) amounts which have already been determined to be
payable pursuant to Article IX hereof, based on Energy
East's Percentile Ranking for any completed Performance
Cycle which preceded the Change in Control, which
amounts have not yet been paid (or deferred pursuant to
procedures established in accordance with Article
XIII(E) hereof),
(ii) if, at the time of the Change in Control, the NYSEG
Board has not yet determined Energy East's Percentile
Ranking with respect to the Performance Cycle ending on
the December 31 immediately preceding the Change in
Control, amounts determined by the NYSEG Board to be
payable, based on its calculation (in accordance with
the provisions of the preceding Articles hereof) of
Energy East's Percentile Ranking with respect to the
Performance Cycle ending on the December 31 immediately
preceding the Change in Control, and
(iii) amounts, which might otherwise subsequently be
determined by the NYSEG Board to be payable for the
Performance Cycles existing on the date on which the
Change in Control occurs, calculated based on an assumed
Percentile Ranking of 50%.
(iv) for purposes of the incentive awards payable
pursuant to paragraph (iii) of this Section A, the
calculation of the payments shall be made using the
"Change-in-Control Price" of Energy East's common stock.
For this purpose, "Change-in-Control Price" means the
higher of (x) the highest reported sales price, regular
way, of a share of Energy East's common stock in any
transaction reported on the New York Stock Exchange
Composite Tape or other national exchange on which such
shares are listed or on the NASDAQ during the 60-day
period prior to and including the date of a Change in
Control or (y) if the Change in Control is the result of
a tender or exchange offer or approval of a merger or
consolidation, the highest price per share of common
stock paid or to be paid in such tender or exchange
offer or merger or consolidation. To the extent that
the consideration paid in any such transaction described
above consists all or in part of securities or other
non-cash consideration, the value of such securities or
other non-cash consideration shall be determined based
on the public trading value of such property or, if such
property is not publicly traded, by the NYSEG Board
based on reasonable assumptions.
B. Forfeitures After a Change in Control. Notwithstanding
anything contained herein to the contrary, following a
Change in Control, the Plan shall continue in full force
and effect, and a Participant shall be entitled to
receive incentive award payments for outstanding
Performance Shares and Dividend Performance Shares with
respect to any Performance Cycle that begins before and
ends after the Change in Control, equal to the excess of
(i) the amount determined in accordance with Articles IX
and X hereof over (ii) the amount previously paid with
respect to such Performance Cycle pursuant to paragraph
(iii) of Section A above.
C. Definition of a Change in Control. A "Change in
Control" shall be deemed to have occurred if the
conditions set forth in any one of the following
paragraphs shall have been satisfied:
(i) any Person (as defined in this Section C) is or
becomes the Beneficial Owner (as defined in this Section
C), directly or indirectly, of securities of Energy East
(not including in the securities beneficially owned by
such Person any securities acquired directly from Energy
East or its affiliates) representing 25% or more of the
combined voting power of Energy East's then outstanding
securities; or
(ii) during any period of two consecutive years (not
including any period prior to May 1, 1998), individuals
who at the beginning of such period constitute the
Energy East Board and any new director (other than a
director designated by a Person who has entered into an
agreement with Energy East to effect a transaction
described in paragraph (i), (iii) or (iv) of this Change
in Control definition or a director whose initial
assumption of office occurs as a result of an actual or
threatened election contest with respect to the election
or removal of directors or other actual or threatened
solicitations of proxies or consents by or on behalf of
a Person other than the Energy East Board) whose
election by the Energy East Board or nomination for
election by Energy East's stockholders was approved by a
vote of at least two-thirds (2/3) 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, cease for any
reason to constitute a majority thereof; or
(iii) the shareholders of Energy East approve a merger
or consolidation of Energy East with any other
corporation, other than (x) a merger or consolidation
which would result in the voting securities of Energy
East outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being
converted into voting securities of the surviving
entity), in combination with the ownership of any
trustee or other fiduciary holding securities under an
employee benefit plan of Energy East or any of its
subsidiaries, at least 75% of the combined voting power
of the voting securities of Energy East or such
surviving entity outstanding immediately after such
merger or consolidation, or (y) a merger or
consolidation effected to implement a recapitalization
of Energy East (or similar transaction) in which no
Person acquires more than 50% of the combined voting
power of Energy East's then outstanding securities; or
(iv) the shareholders of Energy East approve a plan of
complete liquidation of Energy East or an agreement for
the sale or disposition by Energy East of all or
substantially all of Energy East's assets.
For purposes of the definition of Change in Control in this
Section C:
"Beneficial Owner" shall have the meaning defined in
Rule 13d-3 under the Exchange Act.
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended from time to time.
"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) Energy East or any of its subsidiaries, (ii)
a trustee or other fiduciary holding securities under an
employee benefit plan of Energy East or any of its
subsidiaries, (iii) an underwriter temporarily holding
securities pursuant to an offering of such securities,
or (iv) a corporation owned, directly or indirectly, by
the stockholders of Energy East in substantially the
same proportions as their ownership of stock of Energy
East.
XVI. Plan Administration After a Change in Control
Notwithstanding any other provisions of the Plan (including,
without limitation, Articles III and XII hereof), upon and
after the occurrence of a Change in Control, neither the
NYSEG Board, nor the Committee, shall be authorized to, and
no termination, suspension, modification or amendment of the
Plan shall be permitted to, amend or modify the terms and
provisions (including, without limitation, the payment
provisions) of any awards theretofore made to Participants
in any way which adversely affects the rights of such
Participants.