Exhibit 10.4
WBI Holdings, Inc.
Executive Incentive Compensation Plan
Exhibit 10.4
WBI HOLDINGS, INC
EXECUTIVE INCENTIVE COMPENSATION PLAN
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I. PURPOSE
The purpose of the Executive Incentive Compensation Plan (the "Plan") is to
provide an incentive for key executives of WBI Holdings, Inc. and any
subsidiaries participating in the Plan (the "Company") to focus their efforts on
the achievement of challenging and demanding corporate objectives. The Plan is
designed to reward successful corporate performance as measured against
specified performance goals as well as exceptional individual performance. When
corporate performance reaches or exceeds the performance targets and individual
performance is exemplary, incentive compensation awards, in conjunction with
salaries, will provide a level of compensation which recognizes the skills and
efforts of the key executives.
II. BASIC PLAN CONCEPT
The Plan provides an opportunity to earn annual incentive compensation
based on the achievement of specified annual performance objectives. A target
incentive award for each individual within the Plan is established based on the
position level and actual base salary, provided, however, that the Compensation
Committee of the Board of Directors (the "Committee") in its sole discretion,
may, instead of actual base salary, use the assigned salary grade market value
(midpoint) ("Salary"). The target incentive award represents the amount to be
paid, subject to the achievement of the performance objective targets
established each year. Larger incentive awards than target may be authorized
when performance exceeds targets; lesser or no amounts may be paid when
performance is below target.
It is recognized that during a Plan Year major unforeseen changes in
economic and environmental conditions or other significant factors beyond the
control of management may substantially affect the ability of the Plan
Participants to achieve the specified performance goals. Therefore, in its
review of corporate performance the Committee, in consultation with the Chief
Executive Officer of MDU Resources Group, Inc., may modify the performance
targets.
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However, it is contemplated that such target modifications will be necessary
only in years of unusually adverse or favorable external conditions.
III. ADMINISTRATION
The Plan shall be administered by the Committee with the assistance of the
President of the Company. The Committee shall approve annually, prior to the
beginning of each Plan Year, the list of eligible Participants, and the target
incentive award level for each position within the Plan. The Plan's performance
targets for the year shall be approved by the Committee no later than its
regularly scheduled February meeting during that Plan Year. The Committee shall
have final discretion to determine actual award payment levels, method of
payment, and whether or not payments shall be made for any Plan Year.
The Board of Directors of the Company may, at any time and from time to
time, alter, amend, supersede or terminate the Plan in whole or in part,
provided that no termination, amendment or modification of the Plan shall
adversely affect in any material way an award that has met all requirements for
payment without the written consent of the Participant holding such award,
unless such termination, modification or amendment is required by applicable
law.
IV. ELIGIBILITY
Executives who are determined by the Committee to have a key role in both
the establishment and achievement of Company objectives shall be eligible to
participate in the Plan.
Nothing in the Plan shall interfere with or limit in any way the right of
the Company to terminate any Participant's employment at any time, for any
reason or no reason in the Company's sole discretion, or confer upon any
Participant any right to continue in the employment of the Company. No executive
shall have the right to be selected to receive an award under the Plan, or,
having been so selected, to be selected to receive a future award.
V. PLAN PERFORMANCE MEASURES
Performance measures shall be established that consider shareholder and
customer interests. These measures shall be evaluated annually based on
achievement of specified goals.
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The performance measure reflective of shareholder's interest will be the
percentage attainment of corporate goals, as determined each year by the
Committee. This measure may be applied at the corporate level for individuals,
such as the Chief Executive Officer, or at the business unit level for
individuals whose major or sole impact is on business unit results.
Individual performance will be assessed based on the achievement of
annually established individual objectives.
Threshold, target and maximum award levels will be established annually for
each performance measure and business unit. The Committee will retain the right
to make all interpretations as to the actual attainment of the desired results
and will determine whether any circumstances beyond the control of management
need to be considered.
VI. TARGET INCENTIVE AWARDS
Target incentive awards will be expressed as a percentage of each
Participant's Salary. These percentages shall vary by position and reflect
larger reward opportunity for positions having greater effect on the
establishment and accomplishment of the Company's or business unit's objectives.
An exhibit showing the target awards as a percentage of Salary for eligible
positions will be attached to this Plan at the beginning of each Plan Year.
VII. INCENTIVE FUND DETERMINATION
The target incentive fund is the sum of the individual target incentive
awards for all eligible Participants. Once the incentive targets have been
determined by the Committee, a target incentive fund shall be established and
accrued ratably by the Company. The incentive fund and accruals may be adjusted
during the year.
At the close of each Plan Year, the Company will prepare an analysis
showing the Company's or business unit's performance in relation to each of the
performance measures employed. This will be provided to the Committee for review
and comparison to threshold, target and maximum performance levels. In addition,
any recommendations of the President will be presented at this time. The
Committee will then determine the amount of the target incentive fund earned.
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VIII. INDIVIDUAL AWARD DETERMINATION
Each individual Participant's award will be based first upon the level of
performance achieved by the Company and secondly based upon the individual's
performance. The criteria applicable for assessing individual performance will
be established at the beginning of each Plan Year. The assessment by the
Committee, after consultation with the President, of achievement relative to the
established criteria, as determined by a percentage from 0 percent to 200
percent, will be applied to the Participant's target incentive award which has
been first adjusted for Company or business unit performance.
IX. PAYMENT OF AWARDS
Except as provided below or as otherwise determined by the Committee, in
order to receive an award under the Plan, the Participant must remain in the
employment of the Company or business unit for the entire Plan Year. If a
Participant terminates employment with MDU Resources Group, Inc. pursuant to
Section 5.01 of the Company's Bylaws which provides for mandatory retirement for
certain officers on their 65th birthday (or terminates employment with a
subsidiary of the Company pursuant to a similar subsidiary Bylaw provision) and
if the Participant's 65th birthday occurs during the Plan Year, determination of
whether the performance measures have been met will be made at the end of the
Plan Year, and to the extent met, payment of the award will be made to the
Participant, prorated. Proration of awards shall be based upon the number of
full months elapsed from and including January to and including the month in
which the Participant's 65th birthday occurs.
An individual Participant who transfers between the Company and business
units may receive a prorated award at the discretion of the Committee. Payments
made under this Plan will not be considered part of compensation for pension
purposes. Payments when made will be in cash. Incentive awards may be deferred
if the appropriate elections have been executed prior to the end of the Plan
Year. Deferred amounts will accrue interest at a rate determined annually by the
Committee.
In the event of a "Change in Control" (as defined by the Committee in its
Rules and Regulations) then any award deferred by each Participant shall become
immediately payable to the Participant in cash, together with accrued interest
thereon to the date of payment. In the
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event the Participant files suit to collect the Participant's deferred award
then all of the court costs, other expenses of litigation, and attorneys' fees
shall be paid by the Company in the event the Participant prevails upon any of
the Participant's claims for payment of a deferred award.
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Plan adopted October 15, 1985
Plan amended November 4, 1986
Plan amended July 9, 1996, effective January 1, 1996
Plan amended November 8, 1996, effective January 1, 1997
Plan amended August 5, 1999, effective January 1, 1999
Plan amended November 8, 2001, effective January 1, 2001
Plan amended by Written Consent February 25, 2002, effective January 1, 2002
Plan amended by Written Consent November 17, 2003, effective January 1, 2003
Plan amended by Written Consent August 24, 2004, effective January 1, 2004, per
Written Consent dated December 29, 2004
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WBI HOLDINGS, INC.
EXECUTIVE INCENTIVE COMPENSATION PLAN
RULES AND REGULATIONS
The Board of Directors of WBI Holdings, Inc. (formerly known as Williston
Basin Interstate Pipeline Company) (the "Company") hereby amends the Rules and
Regulations for the administration of the Executive Incentive Compensation Plan
(the "Plan") and the Plan first adopted at a Board of Directors meeting of the
Company on October 15, 1985.
I. DEFINITIONS
The following definitions shall be used for purposes of these Rules and
Regulations and for the purpose of administering the Plan:
1. The "Company" shall refer to WBI Holdings, Inc. and any subsidiaries
participating in the Plan. No member of the Committee shall
participate in a decision as to the member's own eligibility for, or
award of, an incentive award payment.
2. "Participants" for any Plan Year shall be those executives who have
been approved by the Compensation Committee as eligible for
participation in the Plan for such Plan Year.
3. "Payment Date" shall be the date set by the Compensation Committee for
payment of awards, other than those awards deferred pursuant to
Section IX of the Plan and Section VII of these Rules and Regulations.
4. The "Plan" shall refer to the Executive Incentive Compensation Plan.
5. The "Plan Year" shall be the calendar year.
6. "Change in Control" shall mean the earliest of the following to occur:
(a) the sale or other disposition of all or substantially all of the
assets of the Company, other than to a subsidiary of MDU Resources
Group, Inc. or to a subsidiary of the Company; or (b) the sale or
other disposition of voting stock of the Company, other than to a
subsidiary of MDU Resources Group, Inc. or to a subsidiary of the
Company, such that, immediately following such sale or other
disposition, MDU Resources Group, Inc. and/or its subsidiaries would
own less than 50 percent of the outstanding voting stock of the
Company; or (c) the sale or other disposition of voting stock of the
Company, other than to a subsidiary of MDU Resources Group, Inc. or to
a subsidiary of the Company, such that, immediately following such
sale or other disposition, MDU Resources Group, Inc, and/or its
subsidiaries
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would no longer possess the ability to elect a majority of the Board
of Directors of the Company; or (d) any other event which shall be
deemed by a majority of the Compensation Committee of the Board of
Directors of the Company to constitute a "Change in Control" of the
Company; and provided, further, that the Compensation Committee of the
Board of Directors of the Company shall have the right to deem any
event to constitute a "Change in Control" of any particular subsidiary
of the Company, even if no Change in Control shall have occurred with
regard to the Company.
7. The "Prime Rate" shall be the base rate on corporate loans posted by
at least 75 percent of the nation's 30 largest banks as reported daily
in The Wall Street Journal.
8. "Retirement" means the later of the day the Participant attains age 55
or the day the Participant ceases to be an employee of the Company or
any of its subsidiary corporations.
II. ADMINISTRATION
1. The Chairman of the Board (the "Chairman") shall not participate in
the Plan. No member of the Committee shall participate in a decision
as to the member's own eligibility for, or award of, an incentive
award payment.
2. The Compensation Committee shall have the full power to construe and
interpret the Plan and to establish and to amend these Rules and
Regulations for its administration.
3. Prior to the beginning of each Plan Year, the Compensation Committee
shall approve a list of eligible officers and notify those so approved
that they are eligible to participate in the Plan for such Plan Year.
4. Prior to the beginning of each Plan Year, the Committee shall approve
an Annual Operating Plan. The Annual Operating Plan shall include the
Plan's performance measures, a list of individuals to be included in
the Plan and the target incentive award levels for each salary grade
covered by the Plan for the following Plan Year. The Plan's
performance targets for the year shall be approved by the Committee no
later than its regularly scheduled February meeting during the Plan
Year. The Annual Operating Plan, insofar as it is relevant to each
individual Participant, shall be made available by the President to
each Participant in the Plan at the beginning of each Plan Year.
5. The Compensation Committee shall have final discretion to determine
actual award payment levels and whether or not payments shall be made
for any Plan Year. However, unless the Plan's performance objectives
are met for the Plan Year, no award shall be made for that Plan Year.
Performance targets modified pursuant to Section II of the Plan will
be deemed performance targets for purposes of determining whether or
not the targets have been met.
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III. PLAN PERFORMANCE MEASURES
1. The Committee shall establish the percentage attainment of corporate
performance measure and the percentage attainment of individual goals
measure. The Committee may establish more or fewer performance
measures as it deems necessary.
2. The corporate performance measure may be set by reference to earnings,
return on invested capital or any other measure or combination of
measures deemed appropriate by the Committee. It may be established
for the Company or for the individual business unit.
3. Individual performance will be assessed based on the achievement of
annually established individual objectives.
4. Plan performance measures may be applied at the corporate level for
individuals such as the Chief Executive Officer whose major or sole
impact is Company-wide, or at the business unit level for individuals
whose major or sole impact is on the business unit results. The Annual
Operating Plan shall contain a list of individuals to whom the Plan
performance measures will be applied at the corporate level and a list
of those individuals for whom the Plan performance measures will be
applied at the business unit level. The relevant business unit for
each individual will be identified.
5. The Committee shall set threshold, target and maximum award levels for
the performance measures, for each business unit, and for the Company.
Those levels shall be included in the Annual Operating Plan.
6. The Committee will retain the authority to determine whether or not
the actual attainment of these measures has been made.
IV. TARGET INCENTIVE AWARDS
1. Target incentive awards will be a percentage of each Participant's
Salary, as defined in the Plan.
2. Target incentive awards shall be set by the Committee annually and
will be included in the Annual Operating Plan.
V. INCENTIVE FUND DETERMINATION
1. The target incentive fund is the sum of the individual target
incentive awards for all eligible Participants.
2. Once individual incentive targets have been determined, a target
incentive fund shall be established and accrued ratably by the
Company. The incentive fund and accruals may be adjusted during the
year.
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3. As soon as practicable following the close of each Plan Year, the
President will provide the Committee with an analysis showing the
Company's performance in relation to the performance measures. The
Committee will review the analysis and determine, in the Committee's
sole discretion, the amount of the actual incentive fund.
4. In determining the actual incentive fund, the Committee may consider
any recommendations of the President.
VI. INDIVIDUAL AWARD DETERMINATION
1. The Compensation Committee shall have the sole discretion to determine
each individual Participant's award. The Committee's decision will be
based first upon the level of performance achieved by the Company and
second upon the individual's performance.
2. The Committee, after consultation with the President, shall set the
award as a percentage from 0 percent to 200 percent of the
Participant's target incentive award, adjusted for Company
performance.
VII. PAYMENT OF AWARDS
1. On the date the Compensation Committee determines the awards to be
made to individual Participants, it shall also establish the Payment
Date.
2. Except as provided below or as the Committee otherwise determines, in
order to receive an award under the Plan, a Participant must remain in
the employment of MDU Resources Group, Inc., its Utility Division or a
Subsidiary Company for the entire Plan Year.
3. If a Participant terminates employment with the Company pursuant to
Section 5.01 of the Company's Bylaws which provides for mandatory
retirement for certain officers on their 65th birthday (or terminates
employment with a subsidiary of the Company pursuant to a similar
subsidiary Bylaw provision) and if the Participant's 65th birthday
occurs during the Plan Year, determination of whether the performance
measures have been met will be made at the end of the Plan Year, and
to the extent met, payment of the award will be made to the
Participant, prorated. Proration of awards shall be based upon the
number of full months elapsed from and including January to and
including the month in which the Participant's 65th birthday occurs.
4. Payment of the award shall be made in cash. Payments shall be made on
the Payment Date unless the Participant has deferred, in whole or in
part, the receipt of the award by making an election on the deferral
form attached hereto, prior to the end of the Plan Year immediately
preceding the Payment Date.
5. In the event a Participant has elected to defer receipt of all or a
portion of the award, the Company shall set up an account in the
Participant's name. The
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amount of the Participant's award to the extent deferred will be
credited to the Participant's account on the Payment Date.
6. The balance credited to an account of a Participant who has elected to
defer receipt of an award will be an unsecured, unfunded obligation of
the Company.
7. Interest shall accrue on the balance credited to a Participant's
account. The rate of interest shall be the Prime Rate plus 1
percentage point as reported on the last Friday in January of each
year. Interest on the balance in an account shall accrue at the rate
so determined from the Payment Date immediately following the
determination to the Payment Date of the following year.
8. Interest shall be credited to the account on the day preceding Payment
Date and shall be calculated on the balance in the Participant's
account as of that date.
9. A Participant may elect to defer any percentage, not to exceed l00, of
an annual award.
10. A Participant electing to defer any part of an award must elect one of
the following dates for payment:
(1) Payment Date next following termination of employment with the
Company or an affiliated company; or
(2) Payment Date of the fifth year following the year in which the
award may be made.
11. A Participant may elect to receive the deferred amounts accumulated in
the Participant's account in monthly installments, not to exceed 120.
In the event the Participant elects to receive the amounts in the
Participant's account in more than one installment, interest shall
continue to accrue on the balance remaining in their account at the
applicable rate determined by the Committee.
12. In the event of the death of a Participant in whose name a deferred
account has been set up, the Company shall, within six months
thereafter, pay to the Participant's estate or the designated
beneficiary the entire amount in the deferred account.
13. In the event of a "Change in Control" then any award deferred by each
Participant shall become immediately payable to the Participant. In
the event the Participant files suit to collect a deferred award then
all of the Participant's court costs, other expenses of litigation,
and attorneys' fees shall be paid by the company in the event the
Participant prevails upon any of the claims for payment.
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Rules and Regulations adopted October 15, 1985
Rules and Regulations amended September 3, 1987
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Rules and Regulations amended July 31, 1989
Rules and Regulations amended July 9, 1996, effective January 1, 1996
Rules and Regulations adopted November 8, 1996, effective January 1, 1997
Rules and Regulations amended January 30, 1997, effective January 1, 1997
Rules and Regulations amended August 5, 1999, effective January 1, 1999
Rules and Regulations amended November 8, 2001, effective January 1, 2001
Rules and Regulations amended by Written Consent February 25, 2002, effective
January 1, 2002
Rules and Regulations amended by Written Consent November 17, 2003, effective
January 1, 2003
Rules and Regulations amended by Written Consent August 24, 2004, effective
January 1, 2004, per Written Consent dated December 29, 2004
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