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EXHIBIT 10-56
THE DETROIT EDISON COMPANY ("COMPANY")
SHAREHOLDER VALUE IMPROVEMENT PLAN - A
OFFICIAL PLAN DOCUMENT
(POSITIONS OF VICE PRESIDENT AND ABOVE)
- A PART OF THE COMPANY-WIDE PROGRAM TO INCREASE SHAREHOLDER VALUE.
AS AMENDED AND RESTATED EFFECTIVE JANUARY 23, 1995
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SHAREHOLDER VALUE IMPROVEMENT PLAN-A
AS AMENDED AND RESTATED EFFECTIVE JANUARY 23, 1995
OVERVIEW
The Shareholder Value Improvement Plan - A (Plan) is designed to encourage
continued improvement in performance and operating results. The Plan's
ultimate objective is to increase shareholder value. It provides a method for
senior levels of management to share in the added value that they create by
contributing to corporate performance improvement.
The Plan provides for possible financial awards to eligible members of senior
management if specified annual corporate and organizational unit goals are
achieved and is intended to motivate senior levels of management toward taking
actions that have long-term performance outcomes which improve shareholder
value. For Plan years 1991, 1992 and 1993, a portion of approved awards was
deferred for a specified period of time. Commencing with the 1996 Plan Year,
recipients of Plan awards will be permitted, under specified conditions, to
defer the payment of awards.
The Plan measures calendar year performance. The current year's standards and
requirements will be communicated annually.
ADMINISTRATION
The Organization and Compensation Committee (Committee) of the Board of
Directors is Plan Administrator with responsibility for the administration of
the Plan. The Committee has the authority to interpret the provisions of the
Plan and prescribe any regulations relating to its administration. The
decisions of the Committee with respect thereto shall be conclusive.
The Committee, on an annual basis, will review and if appropriate, recommend to
the Board of Directors for approval, the specific criteria for eligibility, the
type and timing of awards and the manner of payment of awards (current and/or
deferred), the performance measures and related weights to be used in computing
award amounts for Plan Years 1991, 1992, 1993 and 1994 and the Performance Fund
for Plan year 1995 and thereafter and the performance levels for each
performance measure. The Board of Directors reserves the right to amend,
suspend or terminate the Plan at any time (See "Awards").
Current awards calculated under the terms of the Plan are not payable until
such time as the Board's approval has been granted. The Board of Directors
reserves the right to reduce or cancel any awards that might otherwise be made
if in its sole discretion it determines that the performance achieved is not
indicative of an
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improvement in shareholder value. If such a determination is made, the Plan
may be canceled or substantially modified with the result of terminating or
decreasing any awards that might otherwise be made hereunder.
The Treasurer will be responsible for making award payments, for establishing
and maintaining the equity and deferred accounts for award recipients, and for
maintaining all necessary records regarding the valuation and payment of
awards.
The Vice President-Human Resources will assist the Committee in the
development, administration and communication of the Plan.
ELIGIBILITY
Only those individuals that hold and actively perform (where "hold and actively
perform" excludes all temporary assignments, all step-up assignments and
lengthy periods of absences) in positions of Vice President or above who
receive at least a "satisfactory" or "solid" performance appraisal for the
applicable calendar year will be eligible to participate in the Plan. The
Board of Directors may at any time specify additional positions that may be
eligible to participate in the Plan.
Any person who is elected to an eligible position in The Detroit Edison Company
will become eligible to participate in the Plan provided, however, that any
such participant must hold, and actively perform in, one or more eligible
positions for a total of at least seven months during a Plan year to receive
any award under the Plan. Employes are not eligible to participate in the Plan
if they are eligible to participate in any other Company incentive program
(other than the Long Term Incentive Plan to be submitted to Common Shareholders
for approval in April 1995).
Exceptions to the eligibility criteria may be authorized by the Board of
Directors.
Participation in the Plan does not guarantee continued employment with the
Company.
AWARD OPPORTUNITY
For Plan years 1991, 1992, 1993 and 1994, awards were calculated as a percent
of pay based on the achievement of specific performance measures. Each
performance measure was assigned performance levels and weights. The amount of
an award was dependent upon the achieved level of performance, the associated
weight and the applicable award opportunity percentage.
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For Plan years 1991, 1992, 1993 and 1994, the award opportunity percentage that
applied to participants was determined by the eligible position that each
applicable participant held and actively performed for at least seven months
during the calendar year (Plan year). If during a calendar year participants
held and actively performed in different eligible positions for a total of at
least seven months, their award was calculated at the award level for the
lowest eligible position they held provided that they did not hold and actively
perform in a single eligible position for at least seven months, in which event
the eligible position held for seven months was used for purposes of the Plan.
Effective with the 1995 Plan year, awards, if any, will be payable from a fund
("Performance Fund") established by multiplying the base salary (including
applicable amounts deferred under Company-sponsored benefit plans) of otherwise
eligible members of senior management by a percent based upon the achievement
of specific performance measures. (For purposes of the Performance Fund, base
salary is defined as being the sum of the base salary of all otherwise eligible
members of senior management who performed in one or more senior management
positions for a total of at least seven months during the applicable calendar
year which is also a Plan year.)
PERFORMANCE MEASURES, LEVELS AND WEIGHTS
The measures of performance and weight applicable to each Plan year will be
communicated annually to all eligible employes.
AWARDS
Award amounts for 1991, 1992, 1993 and 1994 were calculated with reference to
the base salary paid during the applicable calendar year including certain
amounts deferred under Company-sponsored benefit plans. Effective with the
1995 Plan year, award amounts will be payable from the Performance Fund and
will be granted, in the sole discretion of the Board of Directors, to otherwise
eligible members of senior management, in such amounts, if any, as are
determined to be appropriate by the Board of Directors.
For Plan years 1991, 1992, 1993 and 1994, if an otherwise eligible participant
met the eligibility criteria but terminated employment and the termination was
due to disability (where disability is defined as being eligible to receive a
benefit under the Company's Long Term Disability Plan) or retirement (where
retirement is defined as a resignation at age 55 or older and with at least 10
years of Company service or at age 65 or older) or died, such otherwise
eligible participant remained eligible for a prorated award for the applicable
Plan year.
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Awards under the Plan are not considered compensation for purposes of the
Company's qualified and non-qualified savings plans, the Company's qualified
and non-qualified retirement plans, insurance or any other Company-sponsored
qualified or non-qualified employe benefit programs.
See "Forfeiture" herein.
AWARD CALCULATION
For Plan years 1991, 1992, 1993 and 1994, award amounts were calculated by
multiplying a participant's base salary (as defined previously in "Awards") by
the award percentage approved by the Board of Directors. Effective with the
1995 Plan year, awards, if any, will be payable from the Performance Fund in
such amounts as deemed appropriate by the Board of Directors.
AWARD PAYMENT
For Plan years 1991, 1992 and 1993, fifty percent (50%) of annual awards were
paid as soon as practicable following approval by the Board of Directors.
Effective with the 1994 Plan year, annual awards, if any, will be paid as soon
as practicable following approval by the Board of Directors unless deferred as
permitted herein.
Effective with the 1996 Plan year, members of senior management will be
permitted to defer the payment of 50% to 100% of an approved award for a period
of from one to five years ("Deferred Awards"). A Deferred Award Account will
be established for each award recipient with a timely Deferral Notice on file
with the Company. Deferrals must be irrevocably submitted prior to the
commencement of the Plan year during which the services giving rise to the
award will be performed on a form ("Deferral Notice") to be furnished by the
Company. For example, a Deferral Notice for an award to be based on 1996
performance must be filed with the Company by the end of 1995. Once filed with
the Company, the Deferral Notice may not be changed or revoked.
For Plan years 1991, 1992 and 1993, fifty percent (50%) of the annual awards
were converted to equity units and deferred for a three-year period. This
deferred portion of the approved award was deemed to be invested in Company
Common Stock by converting the award into equity units equal in value to the
average of the high and low sales prices of Detroit Edison Common Stock as
listed in the Wall Street Journal for the New York Stock Exchange Composite
Tape, on the last business day on which such stock was traded in the Plan year
to which the award related. Equity units were credited to each participant's
unfunded equity account as described in the section entitled "Equity Units".
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See "Forfeiture" herein.
EQUITY UNITS
For Plan years 1991, 1992 and 1993, unfunded equity accounts were created for
each participant and fifty percent (50%) of the approved award was converted
into equity units. Subsequently, as dividends were and are paid on the
Company's Common Stock, a dividend was and will be deemed to be paid on each
equity unit in an amount equal to the dividend which is declared and paid on
the Company's Common Stock. Deemed dividends have been and will be converted
to equity units equal in value to the average of the high and low sales prices
of Detroit Edison Common Stock as listed in the Wall Street Journal for the New
York Stock Exchange Composite Tape on the dividend payment date, or if such day
was not or is not a business day, on the business day immediately preceding the
dividend date. Equity units created as a result of deemed dividends have been
and will be credited to each participant's unfunded equity account as of the
dividend payment date, or if such day was or is not a business day, on the
business day immediately preceding the dividend date.
The value of equity units is subject to appreciation and depreciation depending
upon the trading price of the Company's Common Stock as listed in the Wall
Street Journal for the New York Stock Exchange Composite tape.
DEFERRED AWARD ACCOUNTS
Effective for Plan Year 1996 and thereafter, Deferred Award Accounts will be
established for each recipient with a timely Deferral Notice on file as soon as
practicable following Board approval of an award. Amounts in Deferred Award
Accounts will be deemed to earn interest at a rate calculated on the last
business day of each month with reference to the Five-Year United States
Treasury Bond rate, as reported in a nationally-recognized financial service.
Deferred Awards, including deemed earnings thereon, will be payable as soon as
practicable in the calendar year selected by an award recipient in the Deferral
Notice. In the event that a participant with a Deferred Account dies, retires
or terminates employment prior to the time established for payment in the
Deferral Notice, such participant's Deferred Account, plus earnings thereon,
shall be paid to such participant or participant's designated beneficiary as
soon as possible thereafter.
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EQUITY ACCOUNT PAYMENTS
The value of the equity units established for Plan Years 1991, 1992 and 1993
will be paid to the eligible participant in a lump sum cash payment after the
end of the third year following the year to which the award relates provided
the participant is actively employed by the Company at the end of the third
year (December 31) of the three-year award deferral period. (For example, the
value of an equity account that is based on the 1992 Plan year is payable as
soon as practicable during 1996.) In the event that the participant terminates
employment prior to the end of the third year following the year to which the
award relates, and the termination is due to disability (where disability is
defined as being eligible to receive a benefit under the Company's Long Term
Disability Plan) or retirement (where retirement is defined as a resignation at
age 55 or older and with at least 10 years of Company service or at age 65 or
older), the total value of any or all unfunded equity accounts will be
converted to cash and paid as soon as practicable in a lump sum cash payment to
the participant. In the event that the participant dies, the total value of
all unfunded equity account balances will be paid as soon as practicable in a
lump sum cash payment.
The value of the unfunded equity account will be determined by multiplying the
number of equity units in the account by the average of the high and low sales
prices of Detroit Edison Common Stock, as listed in the Wall Street Journal for
the New York Stock Exchange Composite Tape, on (1) the day the three-year
period ends; (2) the day the employe terminates employment due to disability
(last day of employment); (3) the day the employe dies (official date of
death); or (4) the day the employe retires (last day of employment), as
applicable. If the day the three-year period ends or the last day of
employment or date of death is not a business day, the deferred award will be
valued on the preceding business day. If the date of a participant's
termination of employment due to disability or retirement as defined herein or
death or the day after such three-year period ends falls within the record date
and the associated dividend payment date for the Company's Common Stock, then
such dividend will be deemed to be paid on the equity units in the
participant's unfunded account. The value of such deemed dividend will be paid
in cash.
FORFEITURE
Eligible participants who are discharged or resign (except for terminations due
to disability or retirement as defined herein or death) prior to the end of the
third year following the year to which an award required to be deferred by the
Company relates will forfeit the value of the equity units.
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Unless the termination is the result of disability, death or by normal or early
retirement as defined herein, a participant will forfeit an annual award
required to be deferred by the Company if the participant is not actively
employed by the Company at the end of the Plan year (December 31).
Deferred Accounts are not subject to forfeiture.
FUNDING STATUS
Benefits under the Plan including any equity accounts and Deferred Accounts are
payable solely from the general assets of the Company and shall remain unfunded
and unsecured (under federal income tax laws and Title I of the Employee
Retirement Income Security Act of 1974, as amended) during the entire period of
the Plan's existence. The participant, the participant's spouse or beneficiary
are merely general creditors of the Company and the obligations of the Company
hereunder are purely contractual and shall not be funded or secured in any way.
If and to the extent the Company chooses to actually invest in any Detroit
Edison Common Stock, assets acquired by the Company shall remain the sole
property of the Company, subject to the claims of its general creditors, and
shall not be deemed to form part of the participant's unfunded equity account.
NON-ALIENABILITY AND NON-TRANSFERABILITY
The right of a participant, participant's spouse or beneficiary to payment of
any benefit or deferred compensation hereunder shall not be alienated,
assigned, transferred, pledged or encumbered and shall not be subject to
execution, attachment or similar process. No participant may borrow against
the unfunded equity or deferred account established for his or her benefit
hereunder. No account shall be subject in any manner to alienation, sale,
transfer, assignment, pledge, encumbrance, charge, garnishment, execution or
levy of any kind, whether voluntary or involuntary, including but not limited
to any liability which is for alimony or other payments for the support of a
spouse or former spouse, or for any other relative of any employe. Any
attempted assignment, pledge, levy or similar process shall be null and void
and without effect.
BENEFICIARY DESIGNATION
Each eligible participant may name any beneficiary to whom awards under the
Plan are to be paid in case of the eligible participant's death before he/she
receives an award hereunder. Each designation will revoke all prior
designations by the eligible participant and shall be on a form prescribed by
the Plan Administrator and will be effective only when filed by the eligible
participant with the Treasurer. In the absence of any such designation, awards
due
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shall be paid to the participant's (1) life insurance beneficiary designated by
the participant with respect to life insurance maintained by the Company for
the benefit of the participant, or, in the absence of a designated life
insurance beneficiary, (2) to the participant's estate.
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