EXHIBIT 10.(a)
FLORIDA PROGRESS CORPORATION
MANAGEMENT INCENTIVE COMPENSATION PLAN
Amended and Restated
February 20, 1997
FLORIDA PROGRESS CORPORATION
MANAGEMENT INCENTIVE COMPENSATION PLAN
Article 1. General Provisions
1.1 Purpose The purpose of the Management Incentive Compensation Plan is to
benefit the shareholders and customers of the Company by offering
annual award opportunities to management for their achievement of
financial and value added individual goals.
1.2 Term of the Plan The Plan, as amended and restated, shall be effective
as of January 1, 1997 (the "Effective Date"). The Plan shall remain in
effect until such time as the Company's Board of Directors elects to
terminate the Plan.
Article 2. Definitions
The following definitions shall be established within the Plan text, and unless
the Plan text indicates otherwise, shall have the meanings set forth below:
2.1 "Base Salary Rate" shall mean the Participant's annual base salary in
effect as of December 31 of each Plan Year.
2.2 "Board" shall mean the Board of Directors of Florida Progress
Corporation.
2.3 "Chief Executive Officer" shall mean the Chief Executive Officer
Florida Progress Corporation.
2.4 "Company" shall mean the Florida Progress Corporation and its
subsidiaries.
2.5 "Compensation Committee" or "Committee" shall mean the Compensation
Committee of the Board.
2.6 "Disability" shall have the meaning ascribed to such term in the
Participant's Company sponsored tax-qualified retirement plan, or if no
such plan exists, the following definition will apply.
Shall mean any physical or mental disability arising out of natural or
accidental causes, or both, which originate subsequent to the date of
this Plan which prevents the Participant from engaging in and
performing all of the duties assigned to him and such Disability shall
have been in existence for a period of at least six months.
2.7 "Effective Date" means the date the Plan becomes effective, as set
forth in Section 1.2 herein.
2.8 "Employee" shall mean a person who is a full-time, active employee of
Florida Progress Corporation or a Subsidiary.
2.9 "Financial Goal(s)" shall mean the annual financial goal(s) established
for the Company or Subsidiary.
2.10 "Individual Goals" shall mean the established annual performance goals
and objectives for each Participant which will be used to determine the
Participant's Performance Award pursuant to the Plan.
2.11 "Participant" shall mean an Employee who is actively participating in
the Plan during any Plan Year.
2.12 "Performance Award" shall mean the amount of the cash award payable to
a Participant based on achievement of certain preestablished
performance goals during the applicable Plan Year.
2.13 "Plan" shall mean the Management Incentive Compensation Plan for the
Company as described and set forth herein.
2.14 "Plan Year" shall mean a calendar year beginning on January 1 and
ending on December 31.
2.15 "Pool" shall mean the total Performance Awards which are created and
funded based on the achievement of Financial Goal(s) with respect to
either the Company or a particular Subsidiary.
2.16 "Prorated Award" shall mean the amount of a Performance Award paid to a
Participant for participating in the Plan less than the full Plan Year
or change of Target Incentive, as provided in Article 9 hereof.
2.17 "Retirement" shall have the meaning ascribed to such term in the
Participant's Company sponsored tax-qualified retirement plan, or if no
such plan exists, under that company's retirement policy.
2.18 "Subsidiary" shall mean any operating company or other corporate entity
which is affiliated with the Company and designated by the Board to be
included in the Plan.
2.19 "Supervisor" shall mean the immediate supervisor of Participant to whom
the latter reports on a day-to-day basis for operational and
administrative direction.
2.20 "Target Incentive" shall mean the percentage of Base Salary Rate at
risk by a Participant for 100% or full achievement of the applicable
Financial Goal(s).
Article 3. Administration
3.1 Compensation Committee. The Compensation Committee shall have the final
authority with respect to all matters pursuant to the Plan. Based upon
recommendations submitted by the Chief Executive Officer, and subject
to the terms of the Plan, the Compensation Committee shall have the
authority to:
(a) Review, and either accept, reject, or modify any or all of the
annual Financial Goals;
(b) Review, and either approve, reject, or modify the recommended
Performance Awards designated for the Chief Executive Officer
and Participants who are one, two and three levels removed
from the Chief Executive Officer;
(c) Subject to Article 14 hereof, revise, amend, or otherwise
change in any manner, the terms, provisions, or other features
of the Plan as the Compensation Committee sees fit from time
to time;
(d) Review, and either approve, reject or modify the total amount
of each Pool, and achievement of Financial Goals.
3.2 Chief Executive Officer. As permitted by applicable law, and subject to
the terms of the Plan, the Chief Executive Officer or designee of his
choice, is vested with authority to manage the day-to-day activities of
the Plan. The Chief Executive Officer shall make recommendations to the
Compensation Committee as to the establishment of Financial and
Individual Goals for the Plan Year, and other administrative matters
which may evolve pursuant to the Plan from time to time. Specific
authorities of the Chief Executive Officer shall be to:
(a) Determine the eligible Employees who are designated
Participants;
(b) Prepare, review and recommend to the Compensation Committee
the Performance Awards for Participants who are one, two and
three management levels removed from him;
(c) Review and recommend to the Compensation Committee the total
expenditures for all Performance Awards according to each
Subsidiary, and achievement of Financial Goals; and
(d) Designate, at his discretion, an executive to administer the
Plan within the Company or any of its Subsidiaries.
Article 4. Eligibility and Participation
4.1 Eligibility. Eligibility for participation in the Plan will be limited
to those Employees who as members of management have responsibility for
decision-making and actions which significantly influence the Company's
annual performance. The nomination of Participants will be left to the
discretion of the President of each Subsidiary with the approval of the
Chief Executive Officer.
4.2 No Right of Employment. Nothing in the Plan shall imply any right of an
Employee to continue in the employ of the Company, or shall interfere
with the right of the Company to terminate such Employee's employment
at any time.
Article 5. Performance Measurement Period
The Plan measures and rewards performance achieved by the Company over the
course of the Plan Year.
Article 6. Performance Criteria
6.1 Financial Goals. The Plan's performance criteria for funding
Performance Awards shall be established each Plan Year consistent with
the Company's annual Financial Goal(s) and objectives.
6.2 Weighting of Financial Goals. Each Financial Goal established with
respect to Florida Progress Corporation and each Subsidiary shall be
weighted to reflect its relative importance in determining the size of
the Pool. The weighting of the Financial Goals by organizational entity
shall be as set forth below:
Organizational Entity Weighting of Financial Goals
Florida Progress Corporation 85% Florida Power
15% EFC (Corporate)
Subsidiary Companies 100% Subsidiary Company
Article 7. Determination of Individual Performance Awards
7.1 Size of Individual Performance Awards. The size of individual
Performance Awards shall be based upon the achievement of financial
goals the assessment of the Participant's achievement of Individual
Goals during the Plan Year. All Performance Awards are distributed from
available funds in the applicable Pool(s).
7.2 Target Award Opportunities. Each Participant will be assigned a Target
Incentive as determined by management to be commensurate with the
responsibility and impact of their position on the Strategic, Annual
Profit Plan, and Operations Goals of the Company.
The range of Participant Target Incentives, as determined by the
Committee, shall be from 10% up to 60% of the Participant's Base Salary
Rate.
7.3 Performance Award Pool. A Pool shall be established separately with
respect to the Company and each Subsidiary, and funds are not
transferrable between Pools. The amount of each Pool shall be
determined based on the level of achievement of the applicable
Financial Goal. As set forth below, at 100% achievement, the amount of
the Pool shall equal the TOTAL of the Participant Target Incentives; at
the Threshold achievement level, the amount of the Pool shall be 50% of
the TOTAL; and at the Maximum achievement level, the amount of the Pool
shall be equal to 150% of the TOTAL. Results between achievement levels
shall produce interpolated funding levels.
Financial Goal Achievement
--------------------- ------------------ ------------------
Threshold Target Maximum
--------------------- ------------------ ------------------
% of Target
Incentive 50% 100% 150%
7.4 Development of Individual Goals. During the first quarter of each Plan
Year, all Participants will develop Individual Goals which set forth
annual goals and objectives of the Participant. The Individual Goals
are to be developed as the result of discussions between the
Participant and Supervisor. These Individual Goals may be either
quantitative or qualitative and should be consistent with the Company
or Subsidiary, Strategic, Annual Profit Plan or Operations Goals for
the Plan Year.
7.5 Measurement Against the Individual Performance Plan. Following the last
quarter of the Plan Year, management will assess the performance and
recommend a Performance Award based upon the achievement of each
Participant.
7.6 Funds Not Allocated As Performance Awards. Any funds which are not
allocated to Participants shall be returned to the Company's operating
profits for the applicable Plan Year.
Article 8. Timing and Payment of Awards
8.1 Timing of Award Payments. Subject to deferrals made pursuant to
Articles 10 and 11 hereof, Participants in the Plan will receive their
Performance Awards, if any, as soon as practical after the completion
of the Plan Year.
8.2 Awards Payable in Cash. All Performance Awards payable under the Plan
shall be paid in cash. All Performance Awards shall be subject to the
Company's obligation to withhold the required amount of any Social
Security, federal, state, or local taxes attributed to any amounts
payable pursuant to the Plan.
Article 9. Limited Participation and Change in Target Incentive during Plan
Year
9.1 Partial Plan Year Eligibility. Subject to Section 9.2 hereof, a
Participant must be an Employee of the Company or a Subsidiary as of
the last day of the Plan Year in order to be eligible to receive any
Performance Award pursuant to the Plan. In the event that an Employee
is a Participant in the Plan for less than a full Plan Year, the
following provisions shall apply:
(a) An Employee who becomes eligible for participation in the Plan
due to initial employment, transfer, or promotion during the
Plan Year will be eligible to receive a Prorated Award based
upon the Participant's Target Incentive at the time of
induction. In no event, however, will Prorated Awards be made
for any employment period of time less than three months
participation during the Plan Year by the Participant.
(b) The size of the Prorated Award payable pursuant to Section
9.1(a) hereof shall be determined by multiplying the
Performance Award which would have been earned by the
Participant for a full Plan Year's participation by the
fraction that reflects the number of months of active service
during the Plan Year, as follows:
Prorated = Annual x Number of Months of Active
Award Performance Service During Plan Year
Award 12
9.2 Termination of Employment Due to Retirement, Disability or Death. A
Plan Participant who is not an Employee on the last day of the Plan
Year as a direct result of Retirement, Disability, or death (in which
case the rights would pass to the Participant's beneficiary), will be
eligible to receive a Prorated Award. The Prorated Award will be
determined by multiplying the Performance Award which would have been
earned by the Participant for a full year's participation by the
fraction that reflects the number of months of active service during
the Plan Year, as set forth below:
Prorated = Annual x Number of Months of Active
Award Performance Service During Plan Year
Award 12
9.3 Proration of Target Incentives. In the event a Participant's Target
Incentive changes during the Plan Year, the Performance Award shall be
determined as follows:
12/31 x Former x # of + 12/31 x New Target x # of
Base Target Months Base Incentive Months
Salary Incentive 12 Salary 12
Rate Rate
Article 10. Deferral Opportunity
10.1 Eligibility. The Chief Executive Officer may permit any eligible
Participant to defer all or a portion of his or her Performance Award
which may become payable under the terms of the Plan for any Plan Year.
It is the intent of the Company to extend eligibility to defer receipt
of Performance Awards only to those individuals who are deemed to
comprise a select group of management or highly compensated employees
such that the Plan will qualify for treatment as a "top hat" plan under
the Employee Retirement Income Security Act of 1974, as amended from
time to time or any successor act thereto.
In the event a Participant no longer meets the eligibility requirements
for making deferrals of a Performance Award under the Plan, as
determined by the Chief Executive Officer, such Participant shall
become ineligible to make further deferrals, retaining all the rights
described in Articles 10 and 11 hereof, except the right to make any
further deferrals, until such time that the Participant again becomes
eligible to make deferrals.
10.2 Participation. The Chief Executive Officer shall determine the
Participants who are eligible to make deferrals for any Plan Year
pursuant to this Article 10 based on the criteria set forth in this
Section 10.1. Participants who are deemed eligible to defer a
Performance Award for any Plan Year shall be so notified in writing.
10.3 Mandatory Deferral of Awards. The Company shall defer paying any
Performance Award, including a Performance Award previously deferred by
a Participant, to the extent it would otherwise be disallowable as a
deduction under Section 162(m) of the Internal Revenue Code, as may be
amended from time to time, until such time as the payment will be
allowed as a deduction. Such deferral shall be subject to all of the
terms and provisions set forth in Articles 10 and 11 hereof, except to
the extent that any such terms or provisions are inconsistent with this
Section 10.3, as determined by the Chief Executive Officer. In
determining the extent that such payment would be disallowable, all
other remuneration to a Participant shall first be taken into account
for purposes of the limit imposed by Section 162(m).
10.4 No Right to Defer. No Participant shall have the right to be selected
to defer a Performance Award under this Article 10 nor, having been so
selected for any given Plan Year, to be selected for any other Plan
Year.
10.5 Amount Which May Be Deferred. An eligible Participant may elect to
defer up to one hundred percent (100%) of his or her Performance Award
payable for any Plan Year. An election to defer a Performance Award for
any Plan Year shall be expressed by each Participant in increments of
ten percent (10%) of the Performance Award which may become payable
under the Plan.
10.6 Deferral Election. Eligible Participants shall make their elections to
defer the Performance Awards which may become payable under the Plan
for a given Plan Year prior to the beginning of that Plan Year, or such
earlier date as may be specified by the Chief Executive Officer. All
deferral elections shall be irrevocable, and shall be made on a
"Performance Award Deferral Election Form," as described herein.
Eligible Participants shall make the following irrevocable elections on
each "Performance Award Deferral Election Form":
(a) The percentage amount of the Performance Award to be deferred
for the Plan Year;
(b) The length of the deferral period, pursuant to the terms of
Section 10.7 herein; and
(c) The form of payment to be made to the Participant upon
Retirement, pursuant to the terms of Section 10.8 herein.
10.7 Length of Deferral. The deferral period elected by each Participant for
any Plan Year shall be either (a) until the Participant's Retirement;
or (b) for a period at least equal to one (1) year following the end of
the Plan Year in which the Performance Award is earned and no greater
than ten (10) years following such date; provided, however, that each
Participant may have only one (1) deferral period under this Section
10.7(b) outstanding at any one time. Notwithstanding the foregoing, no
deferral period selected pursuant to Section 10.7(b) may extend beyond
a Participant's Retirement.
Notwithstanding the deferral periods elected by a Participant, payment
of deferred amounts and accumulated interest thereon shall be made to
the Participant in a single lump sum in the event the Participant's
employment with the Company terminates for any reason other than
Retirement at a time prior to full payment of deferred amounts and
interest thereon. Such payment following employment termination shall
be made in cash as soon as practicable following the termination of the
Participant's employment.
10.8 Payment of Deferred Amounts. Amounts, together with interest earned
thereon, which are deferred to a date which occurs prior to a
Participant's Retirement shall be paid, in cash, in one lump sum as
soon as practicable following such date. With respect to amounts
deferred until Retirement, Participants shall be entitled to elect to
receive payment of such deferred amounts, together with earnings
thereon, in cash, commencing upon the effective date of their
Retirement, in a single lump-sum or in installments.
(a) Lump-Sum Payment. Such payment shall be made in cash as soon as
practicable following the Participant's Retirement.
(b) Installment Payments. Participants may elect payment of deferred
amounts in installments, with a minimum of two (2) installments
and a maximum of ten (10) installments. The initial payment shall
be made, in cash, as soon as practicable following the effective
date of the Participant's Retirement. The remaining installment
payments shall be made, in cash, during the first quarter of each
Plan Year thereafter, until the Participant's entire deferred
compensation account has been paid.
The amount of each installment payment shall be equal to the
balance remaining in the Participant's deferred compensation
account immediately prior to each such payment, multiplied by a
fraction, the numerator of which is one (1), and the denominator
of which is the number of installment payments.
10.9 Financial Hardship. The Committee shall have the authority to alter the
timing or manner of payment of deferred amounts in the event that the
Participant establishes, to the satisfaction of the Committee, "severe
financial hardship." In such event, the Committee may, in its sole
discretion:
(a) Authorize the cessation of deferrals by such Participant under
the Plan; or
(b) Provide that all, or a portion, of the amount previously deferred
by the Participant shall immediately be paid in a lump-sum cash
payment; or
(c) Provide that all, or a portion, of the installments payable over
a period of time shall immediately be paid in a lump-sum cash
payment; or
(d) Provide for such other installment payment schedule as deemed
appropriate by the Committee under the circumstances.
For purposes of this Section 10.9, "severe financial hardship" shall
mean any financial hardship resulting from extraordinary and
unforeseeable circumstances arising as a result of one or more recent
events beyond the control of the Participant. In any event, payment may
not be made to the extent such emergency is or may be relieved: (i)
through reimbursement or compensation by insurance or otherwise; (ii)
by liquidation of the Participant's assets, to the extent the
liquidation of such assets would not itself cause severe financial
hardship; and (iii) by cessation of deferrals under the Plan.
Withdrawals of amounts because of a severe financial hardship may only
be permitted to the extent reasonably necessary to satisfy the
hardship. Examples of what are not considered to be severe financial
hardships include the need to send a Participant's child to college or
the desire to purchase a home. The Participant's account will be
credited with interest in accordance with the Plan up to the date of
distribution.
The severity of the financial hardship shall be judged by the
Committee. The Committee's decision with respect to the severity of
financial hardship and the manner in which, if at all, the
Participant's future deferral opportunities shall be ceased, and/or the
manner in which, if at all the payment of deferred amounts to the
Participant shall be altered or modified, shall be final, conclusive,
and not subject to appeal.
Article 11. Participant's Accounts
11.1 Participants' Accounts. The Company shall establish and maintain an
individual bookkeeping account for deferrals made by each Participant
under Article 10 herein. Each account shall be credited as of the date
the amount deferred otherwise would have become due and payable to the
Participant.
11.2 Interest on Deferred Amounts. Amounts deferred under Article 10 shall
accrue interest as established by the Corporation based on the
investment return of the Stable Value Fund of the Savings Plan for
Employees of Florida Progress Corporation. Each Participant's deferred
compensation account shall be credited on the last day of each calendar
quarter, with interest computed on the beginning quarterly balance in
the account. Interest on deferred amounts shall be paid out to
Participants at the same time and in the same manner as the underlying
deferred amounts.
11.3 Charges Against Accounts. There shall be charged against each
Participant's deferred compensation account any payments made to the
Participant or to his or her beneficiary.
Article 12. Designation of Beneficiary.
Each Participant shall designate a beneficiary or beneficiaries who, upon the
Participant's death, will receive the amounts that otherwise would have been
paid to the Participant under the Plan. All designations shall be signed by the
Participant, and shall be in such form as prescribed by the Committee. Each
designation shall be effective as of the date delivered to the Vice
President-Human Resources of Florida Power Corporation by the Participant.
Participants may change their designations of beneficiary on such form as
prescribed by the Vice President - Human Resources of Florida Power Corporation.
The payment of amounts deferred under the Plan shall be in accordance with the
last unrevoked written designation of beneficiary that has been signed by the
Participant and delivered by the Participant to the Vice President - Human
Resources of Florida Power Corporation prior to the Participant's death.
In the event that all the beneficiaries named by a Participant pursuant to this
Article 12 predecease the Participant, the amounts that would have been paid to
the Participant or the Participant's beneficiaries shall be paid to the
Participant's estate. In the event a Participant does not designate a
beneficiary, or for any reason such designation is ineffective, in whole or in
part, the amounts that otherwise would have been paid to the Participant or the
Participant's beneficiaries under the Plan shall be paid to the Participant's
estate.
Article 13. Forfeiture
13.1 Forfeiture of Participation. Participants in the Plan are expected to
provide vision and leadership in the strategic management of the
Company, exhibit the corporate philosophies and maintain trusteeship of
corporate culture. Significant activity which, by its nature, impedes
the achievement of Company goals or damages the reputation of the
Company, shall result in the immediate forfeiture of participation, as
determined by the Committee in its sole discretion.
13.2 Forfeiture of Payment. As a condition of receiving benefits under this
Plan, a Participant shall not, directly or indirectly, after the
termination of his or her employment with the Company:
(a) use or disclose any financial or business information of the
Company obtained by the Participant during the course of his or
her employment, other than information that has been previously
made available to the public through normal, authorized business
channels, in a manner that would be prejudicial to the interests
of the Company. Notwithstanding the preceding requirements of
this subsection (a), a Participant may disclose information if
required by legal process or if the disclosure is protected by
the Florida Whistle-blower's Act of 1986, or any similar
applicable federal or state statute; or
(b) render any services of an advisory nature or become employed by
or participate or engage in any business in competition with the
Company, without the prior written consent of his or her
employer. A Participant shall be considered as engaging in a
business if he or she is a shareholder or other owner, or
partner, director, officer, or employee of, or consultant to,
the business; provided, that a Participant shall not be
prohibited from owning securities of a competitor if (1) the
securities owned constitute less than 2% of the competitor's
total outstanding securities of the same class and (2) the
Participant does not have the power to control, direct or
substantially influence the competitor's management or policies.
Article 14. Amendment and Termination
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 the Plan entirely; provided, however, that
no such modification, amendment, suspension or termination may, without the
consent of a Participant (or beneficiary, as applicable), materially and
adversely affect the right of a Participant (or beneficiary, as applicable) to a
payment or distribution hereunder with respect to an outstanding Performance
Award or previously deferred amounts.
Article 15. Miscellaneous
15.1 Severability. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall
not affect the remaining parts of the Plan and the Plan shall be
construed and enforced as if the illegal or invalid provision had not
been included.
15.2 Costs of the Plan. All costs of administering the Plan shall be borne
by the Company out of the Company's general assets. Although not
prohibited from doing so, the Company is not required, in any way, to
segregate assets in any manner or to specifically fund any benefits
provided under this Plan.
15.3 Contractual Obligation. The Plan shall create a contractual obligation
on the part of the Company to make payments from the Participants
accounts when due. Payment of account balances shall be made out of the
general funds of the Company.
15.4 Unsecured Interest. No Participant or party claiming an interest in
deferred amounts under a Participant 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.
The Company may establish one or more trusts, with such trustee as the
Committee may approve, for the purpose of providing for the payment of
deferred amounts. Such trust or trusts may be irrevocable, but the
assets thereof shall be subject to the claims of the Company's general
creditors. To the extent any deferred amounts or contributions under
the Plan are actually paid from any such trust, the Company shall have
no further obligation with respect thereto, but to the extent not so
paid, such deferred amounts shall remain the obligation of, and shall
be paid by, the Company.
15.5 Nontransferability: In no event shall the Company or any Employer make
any payment under this plan to any assignee or creditor of a
Participant or of a beneficiary. Prior to the time of a payment
hereunder, a participant or a beneficiary shall have no right by way of
anticipation or otherwise to assign (including without limitation in
connection with a divorce) or otherwise dispose of any interest under
this Plan nor shall rights be assigned or transferred by operation of
law.
Article 16. Choice of Law
The validity, interpretation, and administration of the Plan and the rights of
any and all persons having or claiming to have an interest therein, shall be
determined exclusively in accordance with the laws of the State of Florida.
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