Exhibit 10.2
TECO ENERGY, INC.
ANNUAL INCENTIVE COMPENSATION PLAN
REVISED JANUARY, 1993
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SUMMARY OF INCENTIVE COMPENSATION PLAN
BASIC PLAN CONCEPT
The Annual Incentive Compensation Plan provides a consistent framework for
applying incentive pay to officers of TECO Energy and each of its operating
subsidiaries. Each participant is assigned a target award amount,
expressed as a percentage of salary range midpoint, which will represent an
appropriate incentive payment when performance is judged to be at an
outstanding level. Smaller awards (or none at all) may be earned when
performance is below target and larger awards (up to 150 percent of target)
can be earned when performance exceeds target.
While not anticipated to be a common occurrence, the Board may occasionally
decide that the plan formula would unduly penalize or reward management for
results over which they had little or no influence. In such cases, award
funds may be increased or decreased to better meet the plan's intent of
relating rewards to management performance.
Performance for each participant will be measured, in part, against a
combination of one or more quantifiable profit and operational goals.
These goals will be set at the corporate and operating levels, and most
participants will have a portion of their awards related to each. The
remaining portion of each participant's performance that is not measured by
the quantified goals mentioned above, will be evaluated on a judgmental
basis considering overall contribution level and achievement of other
individual goals.
ELIGIBILITY
Officers are recommended by the respective President of their organization
and approved by the President and Chief Executive Officer of TECO Energy
for participation in the incentive plan each year. All nominated employees
who are approved by the President and Chief Executive Officer and the
Compensation Committee of the TECO Energy Board, will be eligible to
participate.
TARGET AWARD LEVELS
Target award levels are established at a level which, when combined with
each participant's base salary midpoint, will provide a fully competitive
total cash compensation opportunity. The incentive portion of the total
compensation opportunity reflects compensation "at risk" which is directly
related to performance and results achieved. Generally, the portion of
compensation "at risk" (i.e., the target award levels) is influenced by the
level of each participant's accountability for contributing to bottom-line
results, the degree of influence the participant has over results and
competitive practice.
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ESTABLISHING PERFORMANCE GOALS AND WEIGHTINGS
For each plan year, profit, growth and/or operational effectiveness goals
will be established for TECO Energy and each of the operating subsidiaries.
The number of goals set for each unit and each operating subsidiary should
not normally exceed five or six so as not to dilute plan focus.
Once goals have been established that represent the target or stretch level
of performance, threshold and maximum levels should also be established.
Threshold performance represents the minimum acceptable performance that
still warrants incentive recognition (at 50 percent of the target award
level), and maximum performance represents the highest level likely to be
attained and rewarded (at 150 percent of the target award level).
Regardless of the degree of achievement of each established goal, there
will not be any plan payout to any company unless a corporate "shareholder
protection" threshold, i.e., TECO Energy's net earnings be at least 80% of
the current year's after tax earnings, is achieved.
Additionally, a further performance threshold of 90% of operating income
target must be achieved by each operating subsidiary for its plan
participants to be eligible for an award. TECO Energy participants must
achieve 90% of net income target to be eligible.
A determination will be made for each participant regarding their portion
of the award that will be based on corporate, subsidiary or individual
performance. Generally, the weightings among these three measurement
groups will vary by organizational level.
AWARD DETERMINATION
At the end of each plan year, a three step process will be followed in
determining actual incentive awards.
Step 1: The actual degree of achievement for each goal at the
Corporate, Subsidiary and Individual level must be
determined.
Step 2: Corporate, Subsidiary and Individual performance
factors must be determined by multiplying levels of
goal achievement by the weightings assigned to each
goal and summing the results. Performance factors can
range between 0 and 150 percent.
Step 3: Total of all performance factors are multiplied by the
target award.
PLAN ADMINISTRATION
The Vice President, Human Resources, TECO Energy, Inc., is responsible for
administering the plan.
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OTHER CONSIDERATIONS
If a participant's employment is terminated due to death, total disability,
or retirement during a plan year, the participant or beneficiary may be
entitled to receive a pro rata share of the incentive award. The TECO
Energy Board Compensation Committee will determine if any award will be
paid, and if so, the amount of the award.
If a participant is transferred or promoted to another position within
TECO Energy, that individual may be eligible to receive a pro rata share
of the award, as determined by the TECO Energy Board Compensation
Committee.
If a participant's employment is terminated for reasons not described
above, the TECO Energy Board Compensation Committee will have complete
discretion in determining if an award will be paid.
Notwithstanding the foregoing, in the event of a participant's termination
of employment for any reason following a change in control of TECO Energy,
Inc., as defined in the TECO Energy, Inc. 1990 Stock Option and
Appreciation Rights Plan, such participant shall be entitled to receive an
incentive award equal to a pro rata share of the greater of (i) the target
bonus for the year in which the change in control occurs or (ii) the bonus
actually paid with respect to the previous year.
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