Adopted by the Cinergy Corp.
Board of Directors on January 25, 1996
JANUARY 1, 1996 AMENDMENT TO THE
CINERGY CORP. ANNUAL INCENTIVE PLAN
The Cinergy Corp. Annual Incentive Plan, as adopted
effective October 24, 1994, is hereby amended, effective as
of January 1, 1996, with respect to certain provisions of
the Plan pertaining to distribution of awards and the
maximum amount of award available to executive officers.
(1) Explanation of Amendment.
On January 25, 1996, the Compensation Committee of the
board of directors of Cinergy Corp. recommended that the
board adopt the Cinergy Corp. Nonqualified Deferred
Compensation Plan which will permit the Compensation
Committee to allow participants to defer the receipt of
awards otherwise payable under Cinergy Corp.'s various
incentive compensation plans, including its Annual Incentive
Plan. The proposed amendment to Article 9 of the Plan
provides that, unless the Participant defers receipt of an
award under the Plan in accordance with the provisions of
the Cinergy Corp. Nonqualified Deferred Compensation Plan,
the award will be payable to the Participant on the first
business day of March of the year following the year in
which the award was earned. The proposed amendment to
Article 1 defines the Cinergy Corp. Nonqualified Deferred
Compensation Plan.
On December 20, 1995, the Internal Revenue Service
promulgated final regulations relating to the disallowance
of deductions for employee remuneration in excess of one
million dollars. Consistent with the final regulations, the
proposed amendment to Article 20 states as to objective
corporate and objective individual goals the maximum dollar
amount of compensation that can be paid to a "covered
employee" under the Plan. Previously, the maximum award was
expressed as a percentage of annual base salary. The term
"covered employee" includes the chief executive officer and
the four highest compensated officers for the applicable
year.
(2) Article 9, As Amended.
Article 9, as hereby amended, reads as follows:
"Article 9
Distribution
After the determination and approval have been made
under Article 7 (Annual Performance Award) as to the amount
of Annual Performance Award to which a Participant is
entitled at the end of an Employer's Performance Period, the
resulting Annual Performance Award shall be paid to the
Participant in cash in one lump sum on the first business
day of March following the end of the Performance Period for
which the Annual Performance Award was made unless the
Participant has previously elected in writing to defer the
receipt of all or a portion of the award in accordance with
the provisions of the Cinergy Nonqualified Deferred
Compensation Plan."
(3) Section 1.30, As Added.
Section 1.30, as added, hereby reads as follows:
"Nonqualified Deferred Compensation Plan" means the
nonqualified deferred compensation arrangement known as the
`Cinergy Corp. Nonqualified Deferred Compensation Plan,' as
amended from time to time, and any successor plan thereto."
(4) Article 20, As Amended.
Article 20, as hereby amended, reads as follows:
"ARTICLE 20
EXECUTIVE OFFICERS
Notwithstanding any provision of the Plan to the contrary,
this Article will govern the terms of the Annual Performance
Awards granted to Executive Officers. This Article is designed
to comply with Code Subsection 162(m) to the extent applicable.
All provisions in this Article, and any other applicable
provision of the Plan shall be construed in a manner to so
comply.
(a) With respect to Executive Officers, the Plan shall be
administered by a committee (the "AIP Committee") consisting of
two or more persons each of whom is an "outside director" for
purposes of Code Subsection 162(m). The AIP Committee and
CINergy's Committee may be the same committee provided that the
membership of CINergy's Committee satisfies the conditions set
forth in the preceding sentence.
(b) With respect to Participants who are Executive
Officers as of the beginning of a Performance Period, the AIP
Committee shall establish the Corporate Target Goals and
Individual Goals for each Performance Period within the time
necessary to satisfy the requirements of Code Subsection 162(m).
Corporate Target Goals shall be based on objective performance
criteria pertaining to an Employer's performance, efficiency, or
profitability including, but without limitation, stock price,
total shareholder return, market share, sales, earnings per
share, costs, net operating incomes, cash flow, fuel cost per
million BTU, costs per kilowatt hour, retained earnings, or
return on equity. Individual Goals shall be based on objective
or, with respect to separate awards under the Plan, subjective
performance criteria pertaining to an Executive Officer's
individual effort as to enhancement of either individual
performance or achievement or attainment of Corporate Target
Goals or other Individual Goals. Further, in the case of
Participants who are Covered Employees as of the end of the
Performance Period, unless otherwise determined by the AIP
Committee, or unless otherwise designated as separate awards
based on subjective performance criteria, payments shall be made
only after achievement of the applicable performance goals has
been certified by the AIP Committee. In no event shall payment
in respect of Annual Performance Awards based on Corporate
Target Goals and objective Individual Goals granted for a
Performance Period be made to a Participant who is a Covered
Employee as of the end of a Performance Period in an amount that
exceeds one million dollars."
IN WITNESS WHEREOF, Cinergy Corp. has caused this document
to be executed and approved by its duly authorized officers,
effective as of January 1, 1996.
CINERGY CORP.
By: JAMES E. ROGERS
James E. Rogers
Vice Chairman, President and
Chief Executive Officer
Dated: October 25, 1996
Approved:
By: JEROME A. VENNEMANN
Jerome A. Vennemann
Associate General Counsel and
Assistant Corporate Secretary
Dated: October 25, 1996