EXHIBIT 10.3.13
Calpine Corporation
2003 Management Incentive Plan
April 18, 2003
I. Purpose of the Plan
The purpose of Calpine's ("Calpine" or the "Company") Management Incentive
Plan ("MIP") is to reward and motivate Calpine employees for their
contribution to the achievement of predetermined corporate business
objectives, consistent with corporate values.
II. Plan Eligibility
All regular employees of the Company, except for Operations and
Maintenance hourly employees, are eligible to participate in the Plan.
Construction site employees who participate in the Construction Completion
Bonus Program will be eligible for MIP program in years where no
construction completion bonuses are payable.
III. Administration
Calpine's President and CEO, who may delegate certain elements of the
program administration to other staff, will administer the Plan. The
Office of the Chairman must approve any modifications, amendments, or
adjustments to the plan or any of its key provisions and all award
payments. The President and CEO shall have broad authority to interpret
the Plan, subject to the following decisions reserved for the Compensation
Committee of the Board of Directors of the Company (the "Committee"):
1. The approval of the Company's financial and non-financial goals
discussed in Section V of this document
2. The approval of the funding of the MIP bonus pool
3. Interpretation of the Plan on any matters in which the President and
CEO is not a disinterested party
Any decisions of the President and CEO in the interpretation of the Plan
may be appealed in writing to the Committee. However, any decision of the
majority of the Committee is final and binding on all parties.
IV. Plan Effective Date
The MIP is effective January 1, 2003.
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2003 Management Incentive Plan
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V. The Bonus Pool Funding
The total Bonus Pool amount, which is approved by the Committee, is
determined in four steps.
1. The sum of all participants' bonus targets as described in Section VI
(2), establishes the target bonus pool.
2. At the beginning of each calendar year, the Company establishes
financial and non-financial performance goals that are approved by the
Committee.
3. The first quarter of the following year, the Committee reviews how the
actual results compare to the performance goals and determines the MIP
bonus pool, based on its judgment of the overall Company achievements and
goal attainment. The intent is for the bonus pool funding to be consistent
with the percentage of goal achievement. For example, 100% achievement of
established goals will generally result in 100% funding of the bonus pool.
4. The percentage of goal achievement is applied to the target bonus pool,
and may result in a final pool greater than, or less than, the sum of the
participants' target bonus amounts.
VI. Individual Bonus Determination
Many factors are taken into consideration in determining an individual
employee's bonus. Foremost are our overriding principles of ethical
conduct and integrity. It is expected that each employee will conduct our
business in an open and honest fashion and actions and decisions will
represent the Company with honor and distinction in the face of public
scrutiny. An employee's compliance with all applicable company policies,
procedures and standards, including but not limited to the Code of
Conduct, is an essential consideration in determining bonus eligibility
and amount.
The bonus amount an employee actually receives is based on four factors:
1. The level of funding as approved by Committee as described in Section V
(3).
2. Position - Each position is assigned a target bonus based on the level
of responsibility and market practices for the position. The target bonus
is expressed as a percentage of base salary, assuming 100% funding of the
bonus pool, and will be communicated to each participant upon hire or
placement in
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2003 Management Incentive Plan
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any MIP eligible position. The target bonus award will be adjusted by the
same percentage as the target bonus pool as described in Section V (4),
above.
3. Company Performance - A portion of an employee's individual MIP bonus
is in recognition of his/her contribution to corporate goal attainment,
and is fixed at 30% of his/her "adjusted target" award.
4. Individual Job Performance - Seventy percent (70%) of an employee's
individual MIP bonus is based on individual contribution, as determined
through the Company's performance review system. An individual employee's
bonus may be adjusted up or down based on an individual's contribution so
long as the business unit does not exceed its total approved bonus pool.
VII. Business Unit Incentive Plans
Each year certain business units within the Company may establish business
unit incentive plans to complement the overall objectives of the Company.
The performance results within these business unit incentive plans will
impact the overall success of corporate goals. Business unit incentive
plans must be approved by the President and CEO of the Company and other
members of senior management team.
The degree to which the MIP bonus comprises a portion of an employee's
overall annual incentive bonus is dependent upon the employee's business
unit. MIP funding is adjusted for those business units that have
business-specific incentive plans, based on the desired weight the Company
places on corporate goals compared with business specific goals. Weighting
may vary from one business unit to another. For example, fifty percent
(50%) of a business unit's funding may be derived from the corporate MIP
and fifty percent (50%) from the business unit. In this example, the
corporate MIP portion, of the employees' target bonuses will be adjusted
by the same weighting, 50%.
Funding for business unit plans is independent of the corporate results
and based on specific business unit performance measures. Employees who
work in corporate functional departments - such as Legal, Information
Services, Credit, Facilities Planning and Human Resources - but who
support a business unit, are eligible to receive a supplemental incentive
bonus out of the business unit pool on a discretionary basis, subject to
joint approval by the business unit and corporate functional heads.
VIII. Bonus Checks
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Bonus checks are calculated and distributed following the close of the
calendar year and are usually paid in March of the following year.
Employees are eligible to participate in this plan provided they are still
employed on the day bonus checks are awarded (subject to earlier death,
long term disability or retirement as described below). Bonus amounts will
be subject to all applicable taxes and any applicable and appropriate
deductions for garnishments, Employee Stock Purchase Plan, 401(k)
Retirement Savings Plan, Non-Qualified Deferred Compensation Plan, and
other deductions or withholdings.
For employees of Calpine's non-U.S. locations, MIP bonus checks are
calculated and distributed following the close of the calendar year. Bonus
amounts will be subject to all appropriate and applicable national taxes
and deductions for Employee Stock Purchase Plan, Group Retirement Savings
Plan or other deductions.
IX. Transfers and New Hires
In the event that a participant transfers from one position to another
during the course of the year, or is a new hire, his/her award for the
year will be calculated on a pro-rated basis to reflect the actual number
of months spent in each position during the year.
X. Retirements And Terminations
In the event of a participant's retirement, long-term disability or death,
his/her award will be pro-rated to reflect the actual number of months of
service during the plan year. If a plan participant dies, retires or
becomes subject to long-term disability after the conclusion of a plan
year, but prior to the bonus pay-out for such year, the plan participant
will still be eligible to participate in the plan for such year.
No payments will be made to employees who are terminated for cause.
XI. Company Discretion
Distribution and payout of all MIP bonus amounts are at the sole
discretion of Company management. The Company reserves the right to revise
or rescind the plan at any time.
XII. Employment Rights
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The selection of an employee of the Company as a participant will in no
way enhance the employee's right to continued employment with the Company
nor limit the Company in its right to terminate or otherwise change the
employment relationship with the employee.
XIII. Governing Law
The Plan shall be administered in accordance with California law, unless a
superseding Federal law is applicable or, in the case of Canada, unless a
superseding law under Canadian jurisdiction is applicable.