Exhibit 10.12
WISCONSIN ENERGY CORPORATION
SHORT-TERM PERFORMANCE PLAN
As amended and restated as of August 15, 2000
WISCONSIN ENERGY CORPORATION
SHORT-TERM PERFORMANCE PLAN
This Plan ("the Wisconsin Energy Corporation Short-Term
Performance Plan") succeeds to and constitutes an amendment and
restatement of the Wisconsin Energy Corporation Short-Term
Performance Plan, effective January 1, 1992; such amendment and
restatement is effective as of August 15, 2000. All the
provisions of this amended and restated Plan, as subsequently
amended, shall apply to all active employee Participants.
I) Purpose and Objectives
The purpose of this Plan is to provide an annual incentive
compensation plan which permits the awarding of annual cash
bonuses to eligible employees of Wisconsin Energy
Corporation (the "Company") and/or its subsidiaries, based
on the achievement of pre-established performance goals
which promote the achievement of shareholder, customer and
employee-focused objectives while recognizing individual
performance.
II) Eligibility
1) Definition of a "Participant"
The term "Participant" as used in this Plan refers to
any key employee of the Company and/or its subsidiaries
who is designated for participation in the Plan
annually by the Chief Executive Officer of the Company,
the Company's Board of Directors (the "Board") or the
Compensation Committee of the Board (the "Committee").
An employee can be designated as a "Participant" for
either Benefit A or Benefit B as described in the Plan.
Employees designated as Participants in either
Benefit A or Benefit B of the Plan shall be so notified
in writing, and shall be apprised of the performance
goals and related target awards for the relevant plan
year.
2) Partial Plan Year Participation
Generally, Participants will be in the active employ of
the Company prior to the first day of any plan year,
but an individual who becomes employed after that date
may be designated as a Participant.
In that event, such employee's final award shall be
prorated based upon the number of full months of
eligibility during such plan year. The Chief Executive
Officer, the Board or the Committee shall have full
discretion to determine the proper calculation for such
proration, or adjust the target and/or performance
awards.
III) Award Determination
1) Target Award Level
Prior to the beginning of each plan year or as soon as
practicable thereafter, the Chief Executive Officer,
the Board or the Committee shall approve a target award
for each Participant. The established target award
shall vary in relation to the Participant's
responsibilities and influence on achievement of
short-term goals. In the event a Participant's
responsibilities change during a plan year, the
Participant's target award may be adjusted to reflect
the level of responsibility at the end of the plan
year.
2) Performance Goals
Prior to the beginning of each plan year, or as soon as
practicable thereafter, performance goals for that plan
year shall be established with the approval of the
Chief Executive Officer, the Board or the Committee.
The goals may be based on any combination of corporate,
subsidiary, divisional, and/or individual goals. More
than one performance goal may be established, and
multiple goals may have the same or different
weightings. Various achievement levels of performance
for each performance goal may be established.
The Chief Executive Officer, the Board or the Committee
may also establish one or more Company-wide performance
goals which must be achieved for any Participant to
receive an award for that plan year.
3) Adjustment of Performance Goals
The Chief Executive Officer, the Board or the Committee
may make an adjustment to the performance goals and the
target awards (either up or down) during a plan year if
it determines that external changes or other
unanticipated business conditions have materially
affected the fairness of the goals and have unduly
influenced the Company's ability to meet them.
Further, in the event of a plan year of less than
twelve (12) months, the Chief Executive Officer, the
Board or the Committee may make an adjustment to the
performance goals and the target awards accordingly, at
his or its discretion.
4) Final Award Determinations
At the end of each plan year, final awards shall be
computed for each Participant as approved by the Chief
Executive Officer, the Committee or the Board. Final
award amounts may vary above or below the target
awards, based on achievement of the pre-established
corporate, subsidiary, divisional, and/or individual
performance goals.
5) Award Cap
The Chief Executive Officer, the Committee or the Board
may establish guidelines governing the maximum final
awards that may be earned by Participants (either in
the aggregate, by employee groups established for this
purpose, or among individual Participants) in each plan
year. The guidelines may be expressed as a percentage
of Company-wide goals or financial measures, or such
other measures.
6) Pro Rata Target Award Upon a Change in Control
Notwithstanding any other provision of this Plan, upon
the occurrence of a "change in control" of the Company
as defined in paragraph 11 of the Company's Omnibus
Stock Incentive Plan (which is hereby incorporated by
reference), each Participant in the employ of the
Company or a subsidiary on the effective date of such
change in control shall become entitled to the target
award established for such Participant for the plan
year in which the change in control occurs, but only to
the extent that such Participant is not already
entitled to a special bonus payout under the provisions
of any other agreement. Such target award shall be
prorated based on the number of full months of service
completed by such Participant during such plan year
prior to the occurrence of such change in control.
IV) Payment of Final Awards
1) Form and Timing of Payments
Final award payments shall be paid as soon as
practicable after award amounts are approved.
2) Awards Under Benefit A
a) Deferral of Award
A Participant may elect to defer a portion or all
of the final award under Benefit A pursuant to the
terms and conditions set forth in the Company's
Executive Deferred Compensation Plan, which are
hereby incorporated by reference.
b) Retirement Income Consideration
Final awards under Benefit A shall be excluded
from the compensation used for calculating
retirement income under the qualified defined
benefit retirement plan of the Company. In
consideration of this exclusion, there is a
"make-whole" pension supplement applicable to
Participants in this Plan regarding final awards
under Benefit A. For such Participants who are
also participants in the Company's Supplemental
Executive Retirement Plan, which is hereby
incorporated by reference (the "SERP"), the
pension supplement will be provided pursuant to
the terms and conditions of the SERP. For such
Participants who are not also participants in the
SERP, the pension supplement will be the
additional pension benefit to which such
Participant would have become entitled under the
terms of the qualified defined benefit retirement
plan of the Company had the entire amount of each
final award under Benefit A been taken into
account as pension eligible earnings (without
regard to any limitations imposed by the Internal
Revenue Code on benefits or compensation) at the
time when such award would have been regularly
paid (disregarding any deferral election).
Further, for such non-SERP Participants, the
additional pension benefit shall be paid in a lump
sum form at the same time as the benefit payable
to the Participant under the Company's qualified
defined benefit plan. However, if such a non-SERP
Participant leaves employment in connection with
the Participant's immediate transfer to and
acceptance of employment with another employer
which is providing services essential to the
utilities business conducted by the Company or its
subsidiaries, then such Participant will not be
considered to have terminated employment for
purposes of determining the time when such
Participant will be deemed to have commenced
benefits under the Company's qualified defined
benefit pension plan. Instead such Participant
will be deemed to have continued in employment for
as long as such Participant remains in the employ
of such other employer and such employer continues
to provide such services and will be deemed to
have commenced benefits under the Company's
qualified defined benefit plan only when such
Participant's termination of service from such
deemed continuing employment occurs, without
regard to when actual payment of benefits under
the Company's qualified defined benefit plan
commences. For such non-SERP Participants, the
terms and conditions of the Company's qualified
defined benefit plan shall provide the governing
principles as to the calculation and payment of
the additional pension benefit arising under this
Plan.
3) Awards Under Benefit B
Final awards for employees designated as Participants
under Benefit B are not subject to any "make-whole"
pension supplement and such awards may not be deferred
under the Company's Executive Deferred Compensation
Plan.
4) Unsecured Interest
No Participant or any other party claiming an interest
in amounts earned under the Plan shall have any
interest whatsoever in any specific asset of the
Company. To the extent that any party acquires a right
to receive payments under the Plan, such right shall be
equivalent to that of an unsecured general creditor of
the Company.
V) Termination of Employment
1) Termination of Employment Due to Death, Disability or
Retirement
In the event a Participant's employment is terminated
by reason of death, "Disability," or "Retirement," the
final award determined in accordance with Section
III(4), shall be reduced to reflect participation prior
to termination only. For purposes of this Plan,
"Retirement" shall have occurred if the Participant
terminates service either on or after age 55 with at
least 10 years of service, at or after age 65, or at
time when such Participant is eligible for an employer
provided retiree medical plan and "Disability" shall
have the same meaning as in the Company's long-term
disability plan. The reduced award shall be determined
by multiplying said final award by a fraction, the
numerator of which is the number of full months of
employment in the plan year and the denominator of
which is twelve (12). In the case of a Participant's
Disability, the employment termination shall be deemed
to have occurred on the date the Chief Executive
Officer, the Board or the Committee determines the
definition of Disability to have been satisfied.
The final award thus determined shall be paid as soon
as practicable following the end of the plan year in
which employment termination occurred.
2) Termination of Employment for Other Reasons
In the event a Participant's employment is terminated
for any reason other than death, Disability, or
Retirement (of which the Chief Executive Officer, the
Board or the Committee shall be the sole judge), all of
the Participant's rights to a final award for the plan
year then in progress shall be forfeited. However,
except in the event of an employment termination for
"Cause," the Chief Executive Officer, the Board or the
Committee may waive such provisions and allow a
prorated award for the portion of that plan year that
the Participant was employed by the Company.
Cause shall be defined as:
a) the willful and continued failure of the
Participant to substantially perform the
Participant's duties (other than failure resulting
from incapacity due to physical or mental
illness), after a written demand for substantial
performance is delivered to the Participant by the
Board, the Committee or an elected officer of the
Company which specifically identifies the manner
in which the Board, the Committee or the elected
officer believes that the Participant has not
substantially performed the Participant's duties,
or
b) the willful engaging by the Participant in illegal
conduct or gross misconduct which is materially
and demonstrably injurious to the Company.
However, no act, or failure to act, on the
Participant's part shall be considered "willful"
unless done, or omitted to be done, by the
Participant not in good faith and without
reasonable belief that his or her action or
omission was in the best interest of the Company.
VI) Rights of Participants
1) Employment
Nothing in the Plan shall interfere with or limit in
any way the right of the Company or employing
subsidiary to terminate any Participant's employment at
any time, nor confer upon any Participant any right to
continue in the employ of the Company or any
subsidiary.
2) Nontransferability
No right or interest of any Participant in the Plan
shall be assignable or transferable, or subject to any
lien, directly, by operation of law, or otherwise,
including, but not limited to, execution, levy,
garnishment, attachment, pledge, and bankruptcy.
VII) Beneficiary Designation
Each Participant under the Plan may, from time to time,
name any beneficiary or beneficiaries (who may be named
contingently or successively) to whom any benefit under
the Plan is to be paid in case of his or her death
before he or she receives any or all of such benefit.
Each designation will revoke all prior designations by
the same Participant, shall be in a form prescribed by
the Company and will be effective only when filed in
writing with the Company during the Participant's
lifetime. In the absence of any such designation, or
if the beneficiary predeceases the Participant,
benefits remaining unpaid at the Participant's death
shall be paid to the Participant's estate.
VIII) Amendments
The Board or the Committee, in its sole discretion,
without notice, at any time and from time to time, may
modify or amend, in whole or in part, any or all of the
provisions of the Plan, or suspend or terminate it
entirely; provided, however, that no such modification,
amendment, suspension, or termination may, without the
consent of a Participant (or his or her beneficiary in
the case of the death of the Participant), reduce the
right of a Participant (or his or her beneficiary as
the case may be) to a payment or distribution hereunder
of a final award to which he or she is entitled. The
Chief Executive Officer may also make amendments to the
Plan at any time, consistent with the authority
delegated to the Chief Executive Officer by the Board
regarding such amendments.
IX) Miscellaneous
1) The Chief Executive Officer, the Board or the Committee
may establish, amend or rescind from time to time rules
and regulations which are necessary or desirable in
connection with the Plan. The Chief Executive Officer
may not act on any matter involving his own
participation in this Plan. The Company shall have the
right to withhold from any amounts payable under this
Plan any taxes or other amounts required to be withheld
by any governmental authority.
2) Every person receiving or claiming payments under this
Plan shall be conclusively presumed to be mentally
competent until the date on which the Company receives
a written notice, in form and manner acceptable to it,
that such person is incompetent and that a guardian,
conservator, or other person legally vested with the
care of such person's estate has been appointed. In
the event a guardian or conservator of the estate of
any person receiving or claiming payments under this
Plan shall be appointed by a court of competent
jurisdiction, payments may be made to such guardian or
conservator provided that proper proof of appointment
and continuing qualification is furnished in a form and
manner acceptable to the Company. Any such payment so
made shall be a complete discharge of any liability
therefor.
3) Participation in this Plan, or any modifications
thereof, or the payment of any benefits hereunder,
shall not be construed as giving to the Participant any
right to be retained in the service of the Company or
its subsidiaries, limiting in any way the right of the
Company or its subsidiaries to terminate the
Participant's employment at any time, evidencing any
agreement or understanding, express or implied, that
the Company or its subsidiaries will employ the
Participant in any particular position or at any
particular rate of compensation and/or guaranteeing the
Participant any right to receive a salary increase in
any year, such increase being granted only at the sole
discretion of the Compensation Committee of the Board.
4) The Company, or its subsidiaries, or their Boards of
Directors or any committees thereof, or any officer or
director of the Company or its subsidiaries or any
other person shall not be liable for any act or failure
to act hereunder, except for fraud.
5) This Plan shall be governed by and construed in
accordance with the laws of the State of Wisconsin, to
the extent not preempted by federal law, without
reference to conflicts of law principles.