Exhibit 10(i)
NORTHWESTERN PUBLIC SERVICE COMPANY
PHANTOM STOCK UNIT PLAN
1. Objectives
The objective of the Northwestern Public Service Company Phantom Stock
Unit Plan (the "Plan") is to assist officers and directors ("Eligible
Individuals") in building financial security through capital accumulation
by providing them with deferred remuneration based upon the award of
Phantom Stock Units, the value of which is related to the value of the
common stock ("Common Stock") of Northwestern Public Service Company
("Company"). The Plan is also intended to: (1) create incentives to
participating Eligible Individuals related to the long-term performance of
the Common Stock, (2) encourage continued employment with, or service on
the Board of Directors ("Board") of, the Company, and (3) promote awareness
of the performance of the Common Stock.
2. Administration
The Plan shall be administered by the Company. Subject to the
provisions of the Plan, the Board shall have exclusive power to select the
Eligible Individuals to be granted Phantom Stock Units, to determine the
number of Phantom Stock Units to be granted as described in Section 3, to
determine the time or times when Phantom Stock Units will be granted and to
determine such terms and conditions, in addition to the terms and
conditions set forth in the Plan, that shall apply to the grant of Phantom
Stock Units. The authority granted to the Board by the preceding sentence
will be exercised based upon annual recommendations received from the
Nominating and Compensation Committee ("Committee") of the Board. In
determining the number of Phantom Stock Units to be granted to an Eligible
Individual, the Board shall consider an Eligible Individual's position and
responsibilities, the nature and value to the Company of an Eligible
Individual's services, an Eligible Individual's present and potential
contribution to the Company's success, and the Company's financial
performance. Determinations by the Board shall be made by majority vote
and shall be final and binding on all parties with respect to all matters
relating to the Plan.
The Committee shall have authority to interpret the Plan, to adopt and
revise rules and regulations relating to the Plan, and to make any other
determinations which it believes necessary or advisable for the
administration of the Plan.
3. Grants
Eligible Individuals to whom Phantom Stock Units are granted shall
hereafter be referred to as "Participants." Phantom Stock Units shall be
granted at the meeting of the Board in May, each year to Participants who
are Executive Officers of the Company in such amounts as the Board shall
determine based on the recommendations of the Committee. The Committee
shall recommend awards, in amounts based upon the criteria set forth in
paragraph 2 above, up to a maximum of 35% of base salary for the Chairman
of the Board, the President and Chief Executive Officer and the Executive
Vice President and up to a maximum of 15% of base salary for the other
Executive Officer Participants. The award shall be made in Phantom Stock
units at the closing price of the Company's Common Stock on the date of the
award. Annual awards of 200 units shall be made to each of the Director
Participants who are not Executive Officers of the Company.
4. Phantom Stock Units and Dividend Equivalents
(a) Phantom Stock Units granted to a Participant shall be credited to
a Phantom Stock Unit Account ("Account") established and maintained for
such Participant on the books of the Company. The Account of a
Participant, which shall be the record of Phantom Stock Units granted to
him under the Plan, and dividend equivalents related thereto, is solely for
accounting purposes and shall not require a segregation of any Company
assets. Each grant of Phantom Stock Units under the Plan to a Participant
shall be communicated by the Board in writing to the Participant within
thirty (30) days after the date of grant.
(b) Additional credits will be made to each Participant's Account in
amounts equal to the dividends the Participant would have received from
time to time had he been the owner on the record dates with respect thereto
of the number of shares of Common Stock equal to the number of Phantom
Stock Units in his Account on such dates. Such dividend credit amounts
shall be converted to Phantom Stock Units at the closing price of the
Common Stock on the New York Stock Exchange on the date that dividends are
paid.
5. Vesting
(a) A Participant shall have a nonforfeitable right to the Phantom
Stock Units granted in a given year and dividend equivalents thereon on May
1st of the year five years following the date that such Phantom Stock Units
were granted (the "Fifth Anniversary Date").
(b) A Participant shall have a nonforfeitable right to one hundred
percent (100%) of the Phantom Stock Units and other amounts credited to his
Account upon the Participant's termination of employment with the Company
due to death, permanent disability or retirement on or after the age of
sixty-five (65) years or such earlier date as the Board, in its discretion,
shall designate. The Participant or his Beneficiary may choose vesting
under paragraph 5(a) or the full vesting under the preceding sentence.
(c) For purposes of this Section 5 a Participant will be considered
to terminate employment by reason of "permanent disability" if, in the
determination of the Board, he is subject to a physical or mental condition
which is expected to render the Participant unable to perform his usual
duties or any comparable duties for the Company.
6. Payment for Phantom Stock Units
(a) Upon a Fifth Anniversary Date the Participant shall be entitled
to receive from the Company an amount equal to the sum of (1) the total
value (as determined by the Board pursuant to Section 7) of the Phantom
Stock Units credited to his Account that vest on such Date and (2) related
reinvested dividend equivalents credited to his Account pursuant to Section
4 as of such Date. Upon the date the Participant vests in 100% of the
Phantom Stock Units and related amounts credited to his Account pursuant to
paragraph 5(b) (the "Automatic Vesting Date"), the Participant shall be
entitled to receive from the Company an amount equal to the sum of (1) the
total value (as determined by the Board pursuant to Section 7) of the
Phantom Stock Units credited to the Participant's Account as of the
Automatic Vesting Date, and (2) the value of dividend equivalents thereon
credited to his Account pursuant to Section 4, as of the Automatic Vesting
Date.
(b) Payment to a Participant of any amount set forth in paragraph
6(a) shall be made in cash in a lump sum within thirty (30) days after the
applicable Fifth Anniversary Date and, unless otherwise elected by the
Participant or his Beneficiary, after the Automatic Vesting Date.
(c) Notwithstanding any other provision of the Plan, all Phantom
Stock Units and other amounts credited to the Account of a Participant, and
all right to any payment hereunder to the Participant, will be forfeited,
and the Company will have no further obligation hereunder to such
Participant, if any of the following circumstances occur:
(i) The Participant at any time is discharged from employment
with the Company for cause ("Cause"). "Cause" shall mean (A) a
Participant's conviction of any criminal violation involving dishonesty,
fraud, or breach of trust, or (B) a Participant's willful engagement in any
misconduct in the performance of his duty that materially injures the
Company, or (C) failure to adequately perform his duties; or
(ii) The Participant at any time prior to the Fifth Anniversary
Date or the Automatic Vesting Date voluntarily terminates employment with
the Company.
The Board shall have sole discretion with respect to the application
of the provisions of this paragraph (c) and such exercise of discretion
shall be conclusive and binding upon the Participant, and all other
persons.
(d) Notwithstanding any other provision of the Plan, one-half of the
payment under paragraph 6(a) for Participants who are active Executive
Officers of the Company will be used to purchase Common Stock of the
Company. Those Participants may elect to make such purchase in a lump sum
at the time of award payout each year, through payroll deduction during the
year, or a combination thereof.
7. Valuation of Phantom Stock Units
For all purposes of the Plan other than for the purposes of paragraph
4(b), the value of a Phantom Stock Unit upon a Fifth Anniversary Date or
the Automatic Vesting Date for purposes of Section 6 will be an amount
equal to the average of the closing prices of the Common Stock on the
Composite Tape of the New York Stock Exchange for the ten (10) consecutive
trading days immediately preceding such Date; or
8. Changes in Capital and Corporate Structure
In the event of any change in the outstanding shares of Common Stock
of the Company by reason of an issuance of additional shares,
recapitalization, reclassification, reorganization, stock split, reverse
stock split, combination of shares, stock dividend or similar transaction,
the Board shall proportionately adjust, in an equitable manner, the number
of Phantom Stock Units held by Participants under the Plan. The foregoing
adjustment shall be made in a manner that will cause the relationship
between the aggregate appreciation in outstanding Common Stock and earnings
per share of the Company and the increase in value of each Phantom Stock
Unit granted hereunder to remain unchanged as a result of the applicable
transaction.
9. Non-Transferability
Phantom Stock Units granted under the Plan, and other amounts credited
to a Participant's Account, and any rights and privileges pertaining
thereto, may not be transferred, assigned, pledged or hypothecated in any
manner, by operation of law or otherwise, other than by will or by the laws
of descent and distribution, and shall not be subject to execution,
attachment or similar process.
10. Death of a Participant
In the event of a Participant's death, payment of any amount due under
the Plan shall be made to the Participant's designated Beneficiary. In the
event the Participant has not designated a Beneficiary, or if no designated
Beneficiary is living at the date of death of the Participant, payment of
any amount due under the Plan shall be paid as promptly as practicable to
the duly appointed and qualified executor or administrator of the
Participant's estate. "Beneficiary" shall mean the individual,
corporation, partnership, association, trust or unincorporated organization
designated by a Participant in writing filed with the Company as the
recipient of any payment to be made to a Participant hereunder in the event
of the Participant's death prior to payment. Such designation may be
changed by a Participant at any time by writing filed with the Company
without the consent of or notice to any Beneficiary previously designated.
11. Withholding
The Company shall have the right to deduct from all amounts paid
pursuant to the Plan any taxes required by law to be withheld with respect
to such amounts.
12. Voting and Dividend Rights
Except as provided in Sections 4, 6, and 8, no Participant shall be
entitled to any voting rights or to receive any dividends or other
distributions with respect to the Common Stock of the Company as a result
of his participation in the Plan.
13. Miscellaneous Provisions
(a) No Participant or other person shall have any claim or right to
be granted an award under the Plan. Neither the Plan nor any action taken
hereunder shall be construed as giving any Participant any right to be
retained in the employ of the Company or to continue to serve as a member
of the Board.
(b) The Plan shall at all times be entirely unfunded and no
provisions shall at any time be made with respect to segregating assets of
the Company for payment of any benefits hereunder. No Participant or other
person shall have any interest in any particular assets of the Company by
reason of the right to receive a benefit under the Plan and any such
Participant or other person shall have only the rights of a general
unsecured creditor of the Company with respect to any rights under the
Plan.
(c) Except when otherwise required by the context, any masculine
terminology in this document shall include the feminine, and any singular
terminology shall include the plural.
(d) This Plan shall be governed by the laws of the State of South
Dakota.
14. Effectiveness and Term of Plan
The effective date of the Plan shall be May 3, 1989, and the Plan
shall terminate with awards made in May, 1999. No Phantom Stock Units
shall be granted pursuant to the Plan after the date of termination of the
Plan, although after such date payments shall be made with respect to
Phantom Stock Units granted prior to the date of termination.
IN WITNESS WHEREOF, the Company has executed this Plan as of the 1st
day of May, 1996.
NORTHWESTERN PUBLIC SERVICE COMPANY
By /s/ M. D. Lewis
______________________________________
M. D. Lewis
President & CEO
By /s/ Aelred J. Kurtenbach
______________________________________
Aelred J. Kurtenbach, Chairman
Nominating and Compensation Committee
RESOLUTION
NORTHWESTERN PUBLIC SERVICE COMPANY
PHANTOM STOCK PLAN
AMENDMENT NO. 1
WHEREAS, the Board of Directors of Northwestern Public Service Company
("Company") did on May 1, 1996, amend and restate the Phantom Stock Plan
("Plan"); and
WHEREAS, the Board of Directors wishes to further revise the Plan;
NOW THEREFORE, the Plan is further amended, effective May 7, 1997 by
amending Section 3 as follows:
3. Grants
Eligible individuals to whom Phantom Stock Units are granted shall
hereafter be referred to as "Participants". Phantom Stock Units shall be
granted at the meeting of the Board in May, each year to Participants who
are Executive Officers of the Company in such amounts as the Board shall
determine based on the recommendations of the Committee. The Committee
shall recommend awards, in amounts based upon the criteria set forth in
paragraph 2 above and other plan opportunities for long term equity
incentives. The award shall be made in Phantom Stock units at the closing
price of the Company's Common Stock on the date of the award. Annual
awards of 200 units shall be made to each of the Director Participants who
are not Executive Officers of the Company.
IN WITNESS WHEREOF, the Company has executed this Amendment No. 1 of
the Plan as of the 7th day of May, 1997.
NORTHWESTERN PUBLIC SERVICE COMPANY
By /s/ M. D. Lewis
______________________________________
M. D. Lewis
Chairman, President & CEO
By______________________________________
Chairman
Nominating and Compensation Committee