PACIFICORP
EXECUTIVE INCENTIVE PROGRAM
PACIFICORP
EXECUTIVE INCENTIVE PROGRAM AS AMENDED
AMENDED NOVEMBER 13, 1996
PURPOSE
The purpose of the Executive Incentive Program is to provide a means for
rewarding officers for their success in increasing shareholder value.
ELIGIBILITY
All PacifiCorp executive officers are eligible participants. A participant
must be employed in an incentive-eligible position for at least three months and
must be actively employed on December 25 of the plan year to be eligible to
receive an award. Individuals with at least three months of service but less
than twelve months will receive prorated awards. Employment of less than one
plan year due to retirement, termination following displacement, disability or
death of a participant may result in a prorated award regardless of the
three-month requirement. Participants who change incentive target percentages
during the year will receive prorated awards based on the appropriate target
percentage. Participants in this program are not eligible to participate in any
other Annual Incentive Program.
PLAN TERM
This program will begin on January 1, 1996 and continue from year to year
thereafter unless otherwise amended or terminated. Each calendar year is a new
plan year for the purpose of this program and Exhibits A, B and C, which
describe weighting factors and performance measures, will be revised for
approval by the Personnel Committee of the Board of Directors.
TARGET INCENTIVE
Each participant in the Program has a target incentive opportunity which is
assigned by the Personnel Committee. Each participant's target incentive
opportunity is calculated as a percentage of year-end annual salary, including
any merit and promotional lump sums.
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PERFORMANCE GOALS
Participants will have all or part of their incentive award determined
based upon PacifiCorp's Earnings Per Share (EPS) performance. Some participants
may have their incentive award partially determined based upon Business Unit
performance against profitability goals. The proportion, if any, which will be
determined based upon Business Unit performance will be approved by the
Personnel Committee for each new plan year as displayed in Exhibit A.
EPS COMPONENT
The EPS Component will be calculated using the formula displayed in
Exhibit B for the plan year as approved by the Personnel Committee.
BUSINESS UNIT COMPONENT
The Business Unit Component will be determined based upon business unit
profitability or another objective measure as approved for each business unit by
the CEO and the Personnel Committee. Exhibit C for the plan year describes the
approved Business Unit goals and measures for the current plan year.
INDIVIDUAL PERFORMANCE MODIFIER
Individual performance is determined by measuring year-end performance
against specific goals as established and approved by the participant's superior
or, in the case of the Chief Executive Officer, the Personnel Committee of the
Board of Directors. The participant's superior must assign the participant an
individual performance modifier between 0% and 120% depending upon performance
against goals. A rating between 0-80% represents less than satisfactory
performance. A rating around 100% indicates the participant met or exceeded
goals and a rating around 120% indicates the participant greatly exceeded goals.
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AWARD FORMULA
The award formula is provided below:
GUIDELINE EPS EPS BUSINESS BU INDIVIDUAL FINAL
AWARD(1) X [ ( COMPONENT X WEIGHTING ) + ( UNIT X WEIGHTING ) ] X PERFORMANCE = AWARD
FACTOR COMPONENT FACTOR MODIFIER
Participants are limited to a maximum final award equal to 150% of the
guideline.
(1)Guideline Award is Participant's Annualized Year-End Salary multiplied
by the Target Incentive Percentage assigned by the Personnel Committee.
AWARD EXAMPLES
EXAMPLE 1
Participant Position: Business Unit Head
EPS Component: 115%
EPS Weighting Factor: 75%
Business Unit Component: 125%
Business Unit Weighting Factor: 25%
Individual Performance Modifier: 100%
Annualized Salary: $200,000
Incentive Target: 40%
Guideline Award: $80,000
EXAMPLE 1 - CALCULATION
GUIDELINE EPS EPS BUSINESS BU INDIVIDUAL FINAL
AWARD X [ ( COMPONENT X WEIGHTING ) + ( UNIT X WEIGHTING ) ] X PERFORMANCE = AWARD
FACTOR COMPONENT FACTOR MODIFIER
$80,000 X [ ( 1.15 X 0.75 ) + ( 1.25 X 0.25 ) ] X 1.00 = $94,000
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EXAMPLE 2
Participant Position: Business Unit Participant
EPS Component: 115%
EPS Weighting Factor: 50%
Business Unit Component: 100%
Business Unit Weighting Factor: 50%
Individual Performance Modifier: 110%
Annualized Salary: $140,000
Incentive Target: 30%
Guideline Award: $42,000
EXAMPLE 2 - CALCULATION
GUIDELINE EPS EPS BUSINESS BU INDIVIDUAL FINAL
AWARD X [ ( COMPONENT X WEIGHTING ) + ( UNIT X WEIGHTING ) ] X PERFORMANCE = AWARD
FACTOR COMPONENT FACTOR MODIFIER
$42,000 X [ ( 1.15 X 0.50 ) + ( 1.00 X 0.50 ) ] X 1.10 = $49,665
AUDIT AND APPROVAL OF AWARDS
The financial calculations necessary to determine the Earnings Per Share
Component and Business Unit Component, as well as other steps in determining the
award for each individual, will be reviewed by the corporate auditing staff
before incentive payments are made. The Personnel Committee of the Board of
Directors will approve awards prior to payout.
If minor errors are identified after audit or approval have occurred which
result in nonmaterial adjustments to individual awards, the Vice President of
Human Resources will have the authority to approve adjusted awards according to
the procedures defined in the administrative guidelines.
PAYMENT
Awards will be paid as soon as practicable following the completion of the
plan year and approval by the Personnel Committee. Awards will be paid in cash
unless the participant has elected to defer part or all of the payment
consistent with the provisions of the PacifiCorp Compensation Reduction Plan.
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ADMINISTRATIVE GUIDELINES
Administrative issues not specifically included in the program document
will be included in the administrative guidelines to the program. The CEO will
approve these guidelines and has authority to amend them.
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