EXHIBIT 10.12
INTERCOAST ENERGY COMPANY
PERFORMANCE INCENTIVE PLAN
1996
INTERCOAST ENERGY COMPANY
PERFORMANCE INCENTIVE PLAN
- --------------------------------------------------------------------------------
Plan Purposes: Focus the efforts of key employees primarily on
- -------------- performance criteria that can be quantitatively
measured and that meet InterCoast Energy Company's
expectations.
Recognize differences in the performance of
individual participants.
Plan Year: The fiscal year (January through December).
- ----------
Participants: Those individuals recommended by the President,
- ------------- InterCoast Energy Company and approved by the
Compensation Committee.
Compensation Those individuals appointed by the InterCoast Board
- ------------ of Directors to comprise the Compensation Committee.
Committee: The Committee will be responsible for Plan
- ---------- administration.
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Award Opportunities: Participating positions will be grouped by incentive
- -------------------- award categories.
Each incentive category will have a target award
level assigned to it.
. The target award will be paid if a stated
performance goal(s) is achieved.
. Minimum and maximum performance/award levels will
be built around the target performance/award
levels.
A mega-maximum award opportunity applicable only to
the President & CEO Continential Power Exchange and
the SVP Energy Marketing will be established for each
performance criteria. The mega-maximum award
opportunity will be to encourage an ever increasing
performance effort while assuring a minimum
performance level for all criteria. Percentage
amounts earned between the maximum and mega-maximum
will be reduced by the target percentage award for
any performance criteria that does not meet target.
In no event, however, shall the mega-maximum award be
less than zero.
The incentive categories, with their respective award
opportunities, are set forth below:
Incentive Award Opportunity
--------- -----------------
Category (as % of Salary)
-------- ----------------
Minimum Target Maximum
------- ------ -------
A 20 40 80
B1 10 20 40
B2 10 20 40
C 5 10 20
Category A shall initially include the following
position:
. President & CEO, Continential Power Exchange
. Senior Vice President Energy Marketing
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Award Opportunities: Category B1 shall initially include the following
- -------------------- positions:
. Senior Vice President & COO, Continental Power
Exchange
. Vice President & General Manager, InterCoast Power
Marketing
Category B2 shall initially include the following
positions:
. Vice President, Finance
. General Counsel & Corporate Secretary
. General Manager, Human Resources
. Executive Director of Marketing, Continental Power
Exchange
Category C shall initially include the following
positions:
. Manager, Accounting
. Manager, Treasury
. Vice President, Marketing & Business Development
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Performance/Award Each Participant's award opportunity will be
- ----------------- segmented into two components as illustrated below.
Components:
- -----------
Weighting of Award
Opportunity/Performance Factors
-------------------------------
Incentive Financial Non-Financial
Category Goals Goals
--------- --------- -------------
A, B1 50% 50%
B2, C 40% 60%
One component's performance will not directly affect
the portion of the award opportunity earnable from
another one, except as noted below in the "Threshold
Corporate Performance" requirement.
A Participant's final award amount will be determined
as the sum of the awards earned based on the
performance of their pertinent award components.
Threshold Corporate If a threshold level of performance established for
- ------------------- the Financial Goals is not achieved, no part of the
Performance: incentive opportunity otherwise earned through the
- ------------ Non-Financial Goals component will be paid. Threshold
performance shall be set at 80% of budget.
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Performance Criteria: Normally, up to five performance criteria will be
- --------------------- established for the Non-Financial objectives.
Target, minimum, and maximum performance levels will
be established for each of the performance criteria.
These performance levels will coincide with the
target, minimum, and maximum award levels referred to
previously. These performance levels, together with
the weighting of each of the performance criteria,
will be established prior to each Plan Year, approved
by the Compensation Committee, and will be set forth
in an Appendix that will be attached to these Plan
specifications.
Interpolated performance/reward levels will be
established on a straight-line basis between each of
the above performance/reward levels. If actual
performance falls below the minimum level set forth
for the particular performance criterion, the portion
of the award related to that performance criterion
will be forfeited in its entirety.
Performance/Reward A Participant's final award will be calculated as the
- ------------------ sum of the amounts earned from each of the
Levels: performance/reward opportunities, each independent
- ------- from the others. However, in no event will any award
be payable unless the Financial Goal threshold is
met.
The Effect of In comparing actual performance against the
- ------------- performance goals, the CEO, InterCoast Energy
Extraordinary Items: Company, with the approval of the Compensation
- -------------------- Committee, may exclude from such comparison any
extraordinary gains, losses, charges, or credits
which appear on the Company's books and records as it
deems appropriate. An extraordinary item may include,
without limiting the generality of the foregoing, an
item in the Company's financial statements reflecting
an accounting rule, tax law, or major legislative
change not taken into consideration in the
establishment of the performance goals. In addition,
the impact of a material dislocation in the U.S.
economy or a substantive change in InterCoast Energy
Company's business plans also may be deemed to be
such an extraordinary item.
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Termination of If the Participant's employment is terminated during
- -------------- a plan year for reason of death, disability, or
Employment: normal or early retirement, a pro-rata award will be
- ----------- calculated (at year-end). The award will be
calculated by multiplying the award that would have
been earned if the Participant had remained employed
throughout the Plan Year by a proration factor.
If a Participant's employment is terminated during a
plan year for any other reason, an incentive award
normally will not be paid. However, the CEO,
InterCoast Energy Company with the approval of the
Compensation Committee, may exercise discretion in
this matter.
Form and Timing of All awards will be paid in cash and will be subject
- ------------------ to applicable withholdings.
Payments:
- --------- Payment of the full value of the final award will
follow the release of audited results after the end
of the Plan Year in which it is earned, but no later
than April 1.
Modification or This Plan may be amended, suspended, or terminated
- --------------- only in writing at any time for any reason by the
Termination of the CEO, InterCoast Energy Company, without the consent
- ------------------ of the Participants or any other person claiming a
Plan: right under the Plan.
- -----
Plan is Not an This Plan does not constitute an employment contract
- -------------- or right of continued employment. The Company
Employment reserves the right to dismiss a Participant at any
- ---------- time, with or without cause, free from any claim or
Contract: liability other than as provided under this Plan.
- ---------
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Other Miscellaneous The administration of this Plan is strictly at the
- ------------------- discretion of the Company and the CEO, InterCoast
Items: Energy Company.
- ------
With respect to this Plan, this document and
attachments covers all incentive award terms. There
are no other written or oral provisions and any and
all representations, warranties, covenants and
agreements with respect to the Plan are merged
herein.
No Participant shall have any claim or right to be
granted an award.
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