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EXHIBIT 10.6
THE DETROIT EDISON COMPANY ("COMPANY")
EXECUTIVE INCENTIVE PLAN
OFFICIAL PLAN DOCUMENT
(POSITIONS OF VICE PRESIDENT AND ABOVE)
EFFECTIVE JANUARY 27, 1997
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EXECUTIVE INCENTIVE PLAN
EFFECTIVE JANUARY 27, 1997
OVERVIEW
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The Executive Incentive Plan ("Plan") supplements possible annual financial
incentives provided under the Shareholder Value Improvement Plan - A for
eligible members of Detroit Edison Company's ("Company") senior management. It
rewards such employees for the accomplishment of financial and strategic
objectives that improve DTE Energy Company's ("DTE") operating results and
positions DTE for long term profitability. Recipients of Plan awards may,
under specified conditions, defer the payment of awards.
The Plan measures calendar year performance. The current year's targets,
measures and weights will be communicated annually following approval.
ADMINISTRATION
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The Organization and Compensation Committee ("Committee") of the Detroit Edison
Board of Directors ("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 and amounts in the Performance Fund, as defined
herein, 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 of Directors' 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 improvement in DTE's overall
performance. 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 deferred accounts for award recipients, and for maintaining
all necessary records regarding the valuation and payment of awards.
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The Vice President-Human Resources will assist the Committee in the
development, administration and communication of the Plan.
ELIGIBILITY
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Any person who is elected to the position of Vice President and above at
Detroit Edison (i.e., senior management) and who holds and actively performs in
one or more such eligible positions for a total of at least seven months during
the Plan year will become eligible to participate in the Plan. "Hold and
actively perform" excludes all temporary assignments. Any key employee of
Detroit Edison may be designated by the Committee to become a participant in
the Plan. Participants' performance must be considered at least satisfactory
or equivalent for the applicable calendar year to be eligible to receive an
award under the Plan.
Employees of the Company 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 and the Shareholder Value Improvement Plan - A.
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.
PLAN YEAR
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The Plan year will be a calendar year.
AWARD OPPORTUNITY
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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 each otherwise eligible participant as of
the last day of the payroll year by a target percent of salary by position and
then by a percent based upon the achievement of specific performance measures
and combining such individual amounts into one collective fund.
PERFORMANCE MEASURES, LEVELS AND WEIGHTS
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The target percentages, measures of performance and weights applicable to each
Plan year will be communicated annually to all eligible employees.
AWARDS
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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
participants, in such amounts, if any, as are determined to be appropriate by
the Board of Directors.
Awards under the Plan are not considered basic 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 employee benefit programs.
AWARD PAYMENT
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No awards will be paid under this Plan if no awards are paid under the
Shareholder Value Improvement Plan - A regardless of whether other terms and
conditions are met.
Annual awards, if any, will be paid as soon as practicable following approval
by the Board of Directors unless deferred as permitted herein.
Eligible participants 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. For the calendar year during
which this Plan is adopted, deferrals must be irrevocably submitted within 30
calendar days of the date of adoption. Thereafter, 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 1998 performance must be filed with the Company by the end
of 1997. Once filed with the Company, the Deferral Notice may not be changed
or revoked.
DEFERRED AWARD ACCOUNTS
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Deferred Award Accounts will be established for each recipient with a timely
Deferral Notice on file as soon as practicable following the Board of
Directors' 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 (commencing with the first month following the deferral of an award) 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 with the Company and its Affiliates 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. For
purposes of the Plan, the term "Affiliate" shall mean any parent of the Company
or any entity in which the Company or any parent of the Company directly or
indirectly beneficially owns more than 50% of the voting securities.
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The Committee may, in its discretion, terminate any Deferral and immediately
pay out such award in cash.
FORFEITURE
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Otherwise eligible participants who are discharged or resign from the Company
and its Affiliates prior to the end of the Plan Year (December 31) will forfeit
an annual award unless the termination is the result of disability (where
disability is defined as being eligible to receive a benefit under a long-term
disability plan of the Company or an Affiliate), death or retirement (where
retirement is defined as a resignation at age 55 or older and with at least 10
years of service with the Company and its Affiliates or at age 65 or older).
Deferred Accounts are not subject to forfeiture.
FUNDING STATUS
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Benefits under the Plan, including any 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.
NON-ALIENABILITY AND NON-TRANSFERABILITY
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The right of a participant and 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 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 employee. Any attempted assignment,
pledge, levy or similar process shall be null and void and without effect.
BENEFICIARY DESIGNATION
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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. Each
designation will revoke all prior designations by the
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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 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.
GOVERNING LAW
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The Plan shall be governed by the laws of the State of Michigan and, to the
extent that may be applicable, the Federal laws of the United States.
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