Exhibit (10)-3
WISCONSIN ENERGY CORPORATION
SHORT-TERM PERFORMANCE PLAN
As amended and restated as of June 2, 1999
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 June 2, 1999. 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.
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, pursuant to the terms and
conditions set forth in the Company's
Supplemental Executive Retirement Plan, which
are hereby incorporated by reference.
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 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.