EXHIBIT 10(a)(7)
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NORTHWESTERN PUBLIC SERVICE COMPANY
NorthSTAR PLAN
I. OBJECTIVE
The Northwestern Public Service Company NorthSTAR Plan ("Plan")
is established to accomplish the following objectives: (1) to
motivate and reward outstanding performance by Northwestern Public
Service Company (the "Company") and its employees by providing
additional compensation to eligible employees who influence the
profitability of the Company; (2) to compare the Company's performance
to established annual objectives; (3) to compare individual
performance to established annual objectives; (4) to focus on
stockholder and ratepayer interests and (5) to support long-term
objectives by achieving short-term goals.
II. ADMINISTRATION
The Plan shall be administered by the Company. The Nominating
and Compensation Committee ("Committee") of the Company's Board of
Directors ("Board"), shall have responsibility and authority with
respect to the Plan, including the following: (1) approving
performance measures and the measurement scale used; (2) reviewing
eligibility for Plan participation; (3) approving the size of the
performance fund ("Performance Fund"); and (4) reviewing and approving
awards for all Executive Officers.
III. ELIGIBILITY FOR PARTICIPATION
Employees eligible to participate in the Plan are those full-time
employees who have completed one year of service with the Company and
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who have been selected for participation by Company management. To be
eligible for an award, an employee must be employed with the Company
on December 31st of the year for which the award is based, except as
hereafter provided in Subsection (b).
All Participants will be eligible to participate in the Plan for
that calendar year unless any of the following circumstances occur:
(a) The Participant at any time is discharged from employment
with the Company for cause ("Cause"). "Cause" shall mean (i) a
Participant's conviction of any criminal violation involving
dishonesty, fraud, or breach of trust, or (ii) a Participant's willful
engagement in any misconduct in the performance of his duty that
materially injures the Company, or (iii) failure to adequately perform
his duties; or
(b) The Participant's employment with the Company has terminated
for any reason other than death, permanent disability, or retirement
on or after the age of sixty- two (62) years or such earlier date as
the Board, in its discretion, shall designate. For the purposes of
this Section, a Participant will be considered to terminate employment
by reason of "permanent disability" if, in the determination of the
Board, he is subject to a physical or mental condition which is
expected to render the Participant unable to perform his usual duties
or any comparable duties for the Company.
IV. DETERMINATION OF PERFORMANCE AWARD AMOUNTS
(a) A Performance Award ("Award") shall be awarded under the
Plan to each Participant based on performance for the applicable
calendar year which shall be determined by reference to the measures
of performance for that year. Company management will develop
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schedules for translating results of objectives (i), (ii), and (iii)
into threshold, target, and maximum achievement levels. These
schedules must be approved by the Committee.
(i) Company Performance as Measured by Customer Satisfaction
(25% weight)
The Company will measure customer satisfaction through the
use of transaction surveys conducted during the year.
(ii) Performance vs. Operating Budget (25% Weight)
The Company will measure the net income of the electric
and gas operations, as compared to the operating budget.
(iii) Company Performance vs. Annual Objective (25% Weight)
Under this objective, Earnings Per Share, will be the
primary earnings per share of the Company as it appears in the
approved budget for the Company.
(iv) Performance vs. Individual Objectives (25% Weight)
Each year, Participants will establish several major
individual and department goals for review and approval by their
supervisor and by the Manager - Human Resources. At the end of
each year, Participants will provide to their supervisor and to
the Manager - Human Resources an explanation regarding the degree
to which each goal has been achieved. The supervisor and the
Manager - Human Resources will review the Participant's
explanations and will then recommend the achievement level for
each Participant to the Chief Executive Officer, who will
determine the achievement level eligible for an Award.
(b) At the end of each calendar year, percentages will be
computed and totaled for each Participant for each of the Measures of
Performance. Each Participant will receive an Award for the
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applicable calendar year equal to a percentage of his base salary on
December 31st, less any applicable taxes. Threshold is defined as a
composite twenty-five percentage level, Target as a composite fifty
percentage level, and Maximum as a composite one hundred percentage
level.
The total amount of all awards made to Participants shall not
exceed seven percent (7%) of the Company's net after tax income for
that year.
(c) All Executive Officer Awards shall be reviewed, and must be
approved, by the Committee. All Awards for other Company employees
shall be reviewed, and must be approved, by the Chief Executive
Officer of the Company.
(d) Annual base salary adjustments, as appropriate, will
continue to be made by the Company to individual employees predicated
on merit, performance, cost-of-living and such other factors as the
Company normally has considered without regard to Awards awarded under
the Plan.
(e) Awards shall be paid to each Participant in a single sum as
promptly as practicable after approved.
V. PARTICIPANT'S DEATH
(a) In the event of the death of the Participant, any unpaid
Award held for the Participant shall be paid as promptly as
practicable in a single sum to the Participant's designated
Beneficiary.
(b) In the event the Participant has not designated a
Beneficiary, or if no designated Beneficiary is living at the date of
death of the Participant, the unpaid Award shall be paid as promptly
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as practicable in a single sum to the duly appointed executor or
administrator of the Participant's estate.
(c) For purposes of this Section, "Beneficiary" shall mean any
individual, corporation, partnership, association, trust or
unincorporated organization designated by a Participant in writing
filed with the Company as the recipient of the Participant's Award in
the event of the Participant's death prior to its payment. Such
designation may be changed by the Participant at any time in writing
filed with the Company without the consent of or notice to any
Beneficiary previously designated.
VI. CONTINUITY OF THE PLAN
Although it is the present intention of the Company to continue
the Plan in effect for an indefinite period of time, the Board
reserves the right to terminate the Plan in its entirety as of the end
of any calendar year or other fiscal year of the Company or to modify
the Plan as it exists from time to time, provided that no such action
shall adversely affect any Awards previously awarded under the Plan.
VII. MISCELLANEOUS PROVISIONS
(a) No Award payable under the Plan shall be subject in any
manner to transfer, assignment, pledge, or hypothecation in any manner
by operation of law or otherwise, other than by will or by the laws of
descent and distribution nor be subject to execution, attachment or
similar process.
(b) Neither the Plan nor any action taken hereunder shall be
construed as giving any Participant any right to be retained in the
employ of the Company.
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(c) The Plan shall at all times be entirely unfunded and no
provision shall at any time be made with respect to segregating assets
of the Company for payment of any Awards hereunder. No Participant or
any other person shall have any interest in any particular assets of
the Company by reason of the right to receive an Award under the Plan
and any such Participant or any other person shall have only the
rights of a general unsecured creditor of the Company with respect to
any rights under the Plan.
(d) Except when otherwise required by the context, any masculine
terminology in this document shall include the feminine, and any
singular terminology shall include the plural.
(e) This Plan shall be governed by the laws of the State of
South Dakota.
IN WITNESS WHEREOF, the Company has executed this revised
NorthSTAR Plan as of the 4th day of February, 1998.
NORTHWESTERN PUBLIC SERVICE COMPANY
By__________________________________________
M. D. Lewis
Chairman, President & CEO
By__________________________________________
Herman Lerdal, Chairman
Nominating and Compensation Committee