Exhibit 10-a
Adopted by Board of Directors
July 30, 1991
PSI ENERGY, INC.
ANNUAL INCENTIVE PLAN
(As Amended and Restated Effective July 1, 1991)
INTRODUCTION
Effective January 1, 1987, PSI Energy, Inc. (formerly
Public Service Company of Indiana, Inc.) adopted a short-term
incentive compensation plan (Annual Incentive Plan) for the
exclusive benefit of its eligible employees. The Plan is an
incentive compensation plan in which certain employees are
granted awards payable in cash based upon the extent to which
certain predetermined goals are attained during the applicable
calendar year.
This document is a continuation of and complete restatement
of the Plan. The Plan, effective July 1, 1991, is set forth in
its entirety.
ARTICLE 1
DEFINITIONS
Whenever used in this document, the following terms shall
have the respective meanings set forth below, unless a different
meaning is plainly required by the context:
1.1 "Actual Incentive" means, with respect to each
Participant, the Minimum Incentive which when adjusted
in the manner set forth in Article 6 (Annual
Performance Award), constitutes the percentage applied
to a Participant's Earnings as of the applicable date
as determined by PSI's Committee which is the actual
amount of incentive compensation opportunity available
for a particular Performance Period. However, a
Participant's Actual Incentive may not exceed his
Maximum Incentive.
1.2 "Annual Performance Award" means, with respect to each
Participant, the short-term incentive compensation
award to which a Participant becomes entitled upon the
attainment of certain Corporate Target Goals and
Individual Goals for a particular Performance Period,
and which is calculated in the manner set forth in
Article 6 (Annual Performance Award).
1.3 "Beneficiary" means, with respect to each Participant,
the recipient designated by the Participant and, upon
the Participant's death entitled in accordance with
the Plan's terms to receive the benefits to be paid
with respect to the Participant.
1.4 "Chief Executive Officer" means the Employee elected
by PSI's Board of Directors to serve as the chief
executive officer of PSI.
1.5 "Corporate Target Goal" means an objective performance
criterion pertaining to PSI performance, efficiency,
or profitability such as, but not limited to, cash
flow, cost per kilowatt-hour, retained earnings, or
return on equity, used in determining whether a
Participant is entitled to receive an Annual
Performance Award at the end of a Performance Period.
1.6 "Earnings" means (a) with respect to an Exempt
Employee, the amount of the Employee's total annual
base salary (based on the Employee's monthly base
salary received as remuneration for services performed
for the Performance Period, exclusive of any
allowances, premiums, bonuses, overtime, or other
forms or types of compensation) for the Performance
Period; and (b) with respect to either a Non-Exempt
Employee or a Union Employee, the amount of the
Employee's total annual base wage (based on the
Employee's hourly base rate of pay received for
services performed for the Performance Period,
exclusive of any allowances, premiums, bonuses,
overtime, or other forms or types of compensation) for
the Performance Period.
1.7 "Employee" means any person in the employ of PSI at
any time on or after July 1, 1991.
1.8 "Employees' Life Insurance Plan" means PSI's general
employee life insurance plan known as the "PSI Energy,
Inc. Employees' Life Insurance Plan," and as the same
may be, from time to time, amended.
1.9 "Exempt Employee" means an Employee who is regularly
employed by his Employer for 30 or more hours per
week, whose pay is customarily computed on a monthly
basis, and whose employment is not subject to FLSA
overtime and record keeping provisions.
1.10 "FLSA" means the Fair Labor Standards Act of 1938, as
amended from time to time, and interpretive rulings
and regulations.
1.11 "Incentive Factor" means the numerical variable
assigned by PSI's Committee which corresponds to the
extent to which a Corporate Target Goal or an
Individual Goal has been met for a particular
Performance Period.
1.12 "Individual Goal" means an objective performance
criterion pertaining to individual performance or
achievement used in determining whether a Participant
is entitled to receive an Annual Performance Award at
the end of a Performance Period.
1.13 "Maximum Incentive" means, with respect to each
Participant, the percentage applied to a Participant's
Earnings as of the applicable date determined by PSI's
Committee to be the appropriate maximum incentive
compensation opportunity for a particular Performance
Period.
1.14 "Minimum Incentive" means, with respect to each
Participant, the percentage applied to a Participant's
Earnings as of the applicable date determined by PSI's
Committee to be the appropriate minimum incentive
compensation opportunity for a particular Performance
Period.
1.15 "1934 Act" means the Securities Exchange Act of 1934,
as amended from time to time, and interpretive rulings
and regulations.
1.16 "Non-Exempt Employee" means an Employee who is
regularly employed by his Employer for 30 or more
hours per week, whose pay is customarily computed on
an hourly, weekly, or bi-weekly basis, whose
employment is subject to FLSA overtime and record
keeping provisions, and who is not assigned to an
employment position covered by a collective bargaining
agreement to which his Employer is a party.
1.17 "Participant" means any Exempt Employee, Non-Exempt
Employee, or Union Employee selected by PSI's Board of
Directors to participate in the Plan pursuant to
Article 5 (Eligibility).
1.18 "Performance Period" means the period of time over
which performance with respect to a Corporate Target
Goal or an Individual Goal is measured. Each
Performance Period shall consist of a one year period
beginning on January 1 of each calendar year and
ending on December 31 of the same calendar year.
1.19 "Plan" means the short-term incentive compensation
plan known as the "PSI Energy, Inc. Annual Incentive
Plan," and as the same may be, from time to time,
amended. Effective July l, l991, this document sets
forth the Plan.
1.20 "PSI" means PSI Energy, Inc., an Indiana corporation,
and any corporation which shall succeed to the
business of that corporation as described in Article
17 (Continuance By a Successor).
1.21 "PSI's Board of Directors" means PSI's duly
constituted Board of Directors on the applicable date.
1.22 "PSI's Committee" means the duly designated
Compensation and Nominating Committee of PSI's Board
of Directors.
1.23 "Resources" means PSI Resources, Inc., an Indiana
corporation, or any other corporation whose common
stock is registered and traded on the New York Stock
Exchange and which owns all of the issued and
outstanding common stock of PSI.
1.24 "Resources' Board of Directors" means the duly
constituted board of directors of Resources on the
applicable date.
1.25 "Total Disability" means, with respect to any
Participant, a mental or physical condition as result
of an illness or injury which, in the judgment of
PSI's Committee, based upon medical reports and other
evidence satisfactory to PSI's Committee, prevents the
Participant from engaging in any gainful occupation
for which the Participant is reasonably qualified by
reason of education, training, or experience.
1.26 "Union Employee" means an Employee who is regularly
employed by his Employer for 30 or more hours per
week, whose pay is customarily computed on an hourly,
weekly, or bi-weekly basis, whose employment is
subject to FLSA overtime and record keeping
provisions, and who is assigned to an employment
position covered by a collective bargaining agreement
to which his Employer is a party.
The uses of singular and masculine words are for practical
purposes only and shall be deemed to include the plural and
feminine, respectively, unless the context plainly indicates a
distinction. Certain other definitions, as required, appear in
the following Articles of the Plan.
ARTICLE 2
EFFECTIVE DATE OF PLAN
The Plan's provisions, as originally adopted, were
effective January 1, 1987. The Plan's provisions, as amended
and set forth in this document, are effective July 1, 1991.
ARTICLE 3
PURPOSE OF PLAN
One of the Plan's purposes is to benefit shareholders and
ratepayers by the accomplishment of specific challenging and
demanding corporate and personalized goals, enhancement of
teamwork, motivation, high achievement, and the attraction and
retention of qualified Employees. Upon the accomplishment of
these corporate and personalized goals, the Plan provides a
reward for performance and maximum effort by Employees who
contribute to PSI's success. The Plan is an annual incentive
compensation plan in which an Exempt Employee, a Non-Exempt
Employee, or a Union Employee who is selected to participate in
the Plan is granted an award payable in cash, but only to the
extent that certain predetermined goals are attained during the
applicable calendar year used to measure performance.
ARTICLE 4
ADMINISTRATION
(a) The Plan shall be administered by PSI's Committee which
shall consist of members of PSI's Board of Directors who are
disinterested persons under Rule 16b-3 promulgated under the
1934 Act and successor rules. PSI's Committee is authorized to
establish all rules and regulations and to appoint any agents as
it deems appropriate for the Plan's proper administration and to
make any determinations under and to take any steps in
connection with the Plan for the benefits provided under the
Plan as it deems necessary or advisable. PSI's Committee may
require PSI to enter into agreements with each Participant as it
deems appropriate to reflect each Participant's interests under
the Plan.
(b) PSI's Committee shall have exclusive discretionary
authority and right to determine eligibility for participation
in the Plan and to interpret, construe, and regulate the Plan.
The decision of PSI's Committee with respect to any questions
arising as to the Employees selected to participate in the Plan,
the amount, and time of payment of benefits under the Plan or
any other matters concerning the Plan, including its
interpretation, construction, or regulation, shall be final,
conclusive and binding on PSI, Employees, Participants, and
Beneficiaries.
ARTICLE 5
ELIGIBILITY
(a) The group of Employees eligible to participate in the
Plan shall consist of Exempt Employees, Non-Exempt Employees,
and Union Employees who have the potential to contribute to
PSI's future success.
(b) From time to time, the Chief Executive Officer may
recommend to PSI's Committee that any eligible Employee
participate in the Plan. After reviewing the recommendations,
and after considering the duties of each recommended Employee,
his present and potential contribution to PSI's success, his
other compensation provided by PSI and any other factors as it
deems relevant, PSI's Board of Directors shall select those
Employees who will participate in the Plan. When an eligible
Employee becomes a Participant in the Plan at other than the
beginning of a Performance Period, the amount of any Annual
Performance Award to which he may become entitled shall be
adjusted to reflect his actual time of service as a Participant
during the Performance Period.
ARTICLE 6
ANNUAL PERFORMANCE AWARD
The Annual Performance Award, with respect to each
Participant, for each Performance Period shall be calculated in
the following manner:
(a) The appropriate weight for achieving a particular
Corporate Target Goal shall be determined by multiplying the
Incentive Factor attributable to the extent to which the
particular Corporate Target Goal has been met for the
Performance Period times the weight (expressed as a percentage)
assigned to that Corporate Target Goal. If there are two or
more Corporate Target Goals for a particular Performance Period,
then the weight for achieving each Corporate Target Goal shall
be calculated in the manner set forth in the immediately
preceding sentence;
(b) The appropriate weight for achieving a particular
Individual Goal shall be determined by multiplying the Incentive
Factor attributable to the extent to which the particular
Individual Goal has been met for the Performance Period times
the weight (expressed as a percentage) assigned to that
Individual Goal. If there are two or more Individual Goals for
a particular Performance Period, then the weight for achieving
each Individual Goal shall be calculated in the manner set forth
in the immediately preceding sentence;
(c) After the weight for achieving each Corporate Target
Goal and Individual Goal for the particular Performance Period
has been calculated in the manner set forth in Paragraphs (a)
and (b), the resulting percentages shall be added and the total
sum shall be multiplied by the Participant's Minimum Incentive
in order to determine the Participant's Actual Incentive; and
(d) The Participant's Actual Incentive shall then be
multiplied by the Participant's Earnings for the applicable
Performance Period. The resulting number, expressed in terms of
the nearest whole dollar, is the Participant's Annual
Performance Award.
ARTICLE 7
CORPORATE TARGET GOALS AND INDIVIDUAL GOALS
(a) The Corporate Target Goal for each Performance Period,
which Corporate Target Goal shall be applicable to all
Participants, shall be determined by PSI's Committee. When
there are more than one Corporate Target Goal for a particular
Performance Period, PSI's Committee may, but is not required to,
assign each goal equal weight and PSI's Committee may, but is
not required to, condition the entitlement to an Annual
Performance Award upon the attainment of one or more Corporate
Target Goals.
(b) PSI's Committee may, but is not required to, establish
one or more Individual Goals for a Participant for each
Performance Period in addition to establishing one or more
Corporate Target Goals. When there are more than one Individual
Goal for a Participant for a particular Performance Period,
PSI's Committee may, but is not required to, assign each goal
equal weight.
ARTICLE 8
DISTRIBUTION
After a determination has been made by PSI's Committee as
to the amount of Annual Performance Award to which a Participant
is entitled at the end of a Performance Period, the resulting
Annual Performance Award shall be paid to the Participant in
cash in one lump sum on the first business day of March
following the end of the Performance Period for which the
Performance Award was made.
ARTICLE 9
CONDITIONS TO ANNUAL PERFORMANCE AWARDS
9.1 Government Regulations
The Plan shall be subject to all applicable laws, rules,
and regulations and to all approvals by any governmental
agencies as may be required.
9.2 Continued Employment
(a) A Participant whose employment terminates by reason of
a quit, resignation, or discharge prior to the end of the
particular Performance Period shall be automatically divested of
any interest in or to any Annual Performance Award for that
Performance Period. If a Participant who has quit, resigned, or
who has been discharged is re-employed by PSI prior to the end
of the Performance Period in which the quit, resignation, or
discharge occurred, the Employee shall be reinstated as a
Participant for that Performance Period, but any Annual
Performance Award shall be adjusted to reflect the actual time
of service of the re-employed Participant during the Performance
Period.
(b) A Participant whose employment terminates by reason of
retirement or death prior to the end of the particular
Performance Period shall not necessarily be totally divested of
his interest in or to any Annual Performance Award for that
Performance Period. Instead, a determination shall be made by
PSI's Committee with respect to the retired or deceased
Participant as to the amount of the Annual Performance Award to
which he would have been entitled had he been a Participant on
the last day of the applicable Performance Period as though the
retirement or death had not occurred. However, any
determination shall be adjusted to reflect the actual time of
service of the retired or deceased Participant during the
Performance Period prior to the effective date of his retirement
or the date of his death.
(c) A Participant who during an applicable Performance
Period has incurred Total Disability shall not necessarily be
totally divested of his interest in or to any Annual Performance
Award for that Performance Period. Instead, a determination
shall be made by PSI's Committee with respect to the totally
disabled Participant as to the amount of the Annual Performance
Award to which he would have been entitled had he not been
totally disabled during the applicable Performance Period.
However, any determination shall be adjusted to reflect the
actual time of service of the totally disabled Participant
during the Performance Period.
ARTICLE 10
BENEFICIARY
If a Participant dies prior to the date on which an Annual
Performance Award or any installment thereof, is distributed,
the Annual Performance Award shall be paid to the highest
priority person or persons surviving at the time distribution is
actually paid or commences. Distribution priorities are as
follows:
(a) The Participant's Beneficiary
designated under the Participant's
last will and testament;
(b) The Participant's Beneficiary
designated under PSI's Employees'
Life Insurance Plan;
(c) The Participant's surviving spouse;
(d) The Participant's surviving
children, including adopted
children;
(e) The Participant's surviving parents;
(f) The Participant's surviving brothers
and sisters; or
(g) The Participant's estate.
Distribution of the Annual Performance Award to a Beneficiary
shall be made on the same date or dates as the Annual
Performance Award would have been made to the Participant as if
then living.
ARTICLE 11
NON-ALIENATION OF BENEFITS
The Plan shall not in any manner be liable for, or subject
to, the debts or liabilities of any Participant or Beneficiary.
No payee may assign any payment due him under the Plan. No
benefits at any time payable under the Plan shall be subject in
any manner to anticipation, alienation, sale, transfer,
assignment, pledge, attachment, garnishment, levy, execution, or
other legal or equitable process, or encumbrance of any kind.
ARTICLE 12
FUNDING POLICY AND METHOD
The Plan shall be totally unfunded. No benefit or promise
under the Plan shall be secured by any specific assets of PSI,
nor shall any assets of PSI be designated as attributable or
allocated to the satisfaction of PSI's obligations under the
Plan.
ARTICLE 13
CHANGE IN CONTROL
If a Change in Control of Resources occurs, each Corporate
Target Goal and Individual Goal shall be deemed to have been
fully satisfied at the Maximum Incentive level and each
Participant shall be entitled to receive an Incentive Award in
the same manner as though the Maximum Incentive level had been
obtained for the full Performance Period.
A Change in Control of Resources shall occur if (a) any
"person" or "group" (within the meaning of Sections 13(d) and
14(d)(2) of the 1934 Act) becomes the "beneficial owner" (as
defined in Rule 13d-3 under the 1934 Act) of more than 50
percent of the then outstanding voting stock of Resources,
otherwise than through a transaction arranged by, or consummated
with the prior approval of, Resources' Board of Directors, (b)
Resources' shareholders approve a definitive agreement to merge
or consolidate Resources with or into another corporation in a
transaction in which neither Resources nor any of its
subsidiaries or affiliates will be the surviving corporation, or
to sell or otherwise dispose of all or substantially all of
Resources' assets to any person or group other than Resources or
any of its subsidiaries or affiliates, other than a merger or a
sale which will result in the voting securities of Resources
outstanding prior to the merger or sale continuing to represent
at least 50 percent of the combined voting power of the voting
securities of the corporation surviving the merger or purchasing
the assets; or (c) during any period of two consecutive years,
individuals who at the beginning of that period constitute
Resources' Board of Directors (and any new director whose
election by the Board of Directors or whose nomination for
election by Resources' shareholders was approved by a vote of at
least two-thirds of the directors then still in office who
either were directors at the beginning of that period or whose
election or nomination for election was previously so approved)
cease for any reason, with the exception of the exercise of the
voting rights conferred upon the record holders of Resources'
cumulative preferred stock pursuant to the provision of
subparagraph (iii) of Article V(B)(iii) of Resources' Articles
of Incorporation, to constitute a majority of Resources' Board
of Directors.
Notwithstanding the provisions of Article 16 (Amendment and
Termination), the provisions of this Article may not be amended
by an amendment to the Plan effected within three years
following a Change in Control.
ARTICLE 14
MISCELLANEOUS
14.1 No Enlargement of Employee Benefits
This Plan is strictly a voluntary undertaking on the part
of PSI and shall not be deemed to constitute a contract between
PSI and any Participant or to be consideration for, or an
inducement to, or a condition of, the employment of any
Participant. Nothing contained in the Plan shall be deemed to
give any Participant the right to be retained in the service of
PSI or to interfere with the right of PSI to discharge any
Participant at any time. No Participant shall have any right to
benefits except to the extent provided in the Plan. Nothing
contained in the Plan shall be deemed to give any Participant a
continued entitlement to receive an Annual Performance Award for
any Performance Period. Any award under this Plan shall not be
deemed compensation for purposes of computing benefits or
contributions under any retirement plan of PSI unless otherwise
provided by that plan, and shall not affect any benefits under
any other PSI benefit plan of any kind or subsequently in effect
under which the availability or amount of benefits is related to
the level of compensation.
14.2 Notice of Address
Each Participant and Beneficiary entitled to benefits under
the Plan must file with the Company's Committee, in writing, his
post office address and each change of post office address. Any
communication, statement, or notice addressed to a person at his
latest post office address as filed with PSI's Committee will,
upon deposit in the United States mail with postage prepaid, be
binding upon that person for all purposes of the Plan.
14.3 No Individual Liability
It is the Plan's express purpose and intention that, except
as otherwise required by law, no individual liability whatever
shall attach to, or be incurred by, the shareholders, officers,
or members of PSI's Board of Directors, or any representatives
appointed by PSI, under or by reason of any of the terms or
conditions of the Plan. Each Participant shall be legally bound
by the Plan's provisions.
14.4 Delegation of Administrative Duties
Administrative duties imposed by this Plan may be delegated
by PSI's Committee to a PSI Employee charged with those duties.
14.5 Governing Laws
The Plan shall be construed and administered according to
the laws of the State of Indiana to the extent that those laws
are not preempted by the laws of the United States of America.
14.6 Risk of Participation
Nothing contained in the Plan shall be construed either as
a guarantee by PSI, or shareholders, officers, employees or
members of PSI's Board of Directors, of the value of any assets
of the Plan or as an agreement by the Plan or PSI, or its
shareholders, officers, employees or members of PSI's Board of
Directors, to indemnify anyone for any losses, damages, costs
and/or expenses resulting from participation in the Plan or any
investment, reinvestment, sale, distribution or retention of any
Plan assets.
14.7 Headings
The headings of articles, sections, subsections, paragraphs
or other parts of the Plan are for convenience of reference only
and do not define, limit, construe or otherwise affect the
contents of the Plan.
ARTICLE 15
CONTRIBUTIONS
No contributions to the Plan by Participants shall be
required or permitted under the Plan.
ARTICLE 16
AMENDMENT AND TERMINATION
PSI, by resolution of PSI's Board of Directors, shall have
the right, authority and power to alter, amend, modify, revoke
or terminate the Plan, and PSI, by resolution of PSI's Board of
Directors, shall also have the right, authority and power to
discontinue or suspend the payment of benefits under the Plan.
ARTICLE 17
CONTINUANCE BY A SUCCESSOR
If PSI is reorganized by way of merger, consolidation,
transfer of assets or otherwise, so that another corporation,
partnership or person shall succeed to all or substantially all
of PSI's business, the successor may be substituted for PSI
under the Plan by adopting the Plan.
IN WITNESS WHEREOF, PSI Energy, Inc. by action of its
shareholders has caused this master plan document to be executed
and approved by its duly authorized officers effective as of
July 1, 1991.
BY:/s/ James E. Rogers, Jr.
(James E. Rogers, Jr.) Chairman
APPROVED:/s/ Cheryl M. Foley
(Cheryl M. Foley)
Vice President and
General Counsel