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EXHIBIT 10.15
SHAREHOLDER VALUE IMPROVEMENT PLAN-A
AS AMENDED AND RESTATED EFFECTIVE OCTOBER 27, 1997
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 to the administration of the Plan made
prior to the occurrence of a Change in Control, as defined herein, 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"); provided,
however, that on or after the occurrence of a Change in Control, as defined
herein, no amendment, suspension or termination of the Plan may be made that
adversely affects the rights of any person without his or her prior written
consent.
Current awards calculated under the terms of the Plan are not payable
until such time as the Board's approval has been granted; provided, however,
that notwithstanding the foregoing or any other provision of the Plan, after a
Change in Control, as defined herein, such approval is not required with
respect to awards thereafter payable in respect of any Plan year ending prior
to the occurrence of the Change in Control. 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 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.
Notwithstanding the foregoing or any other provision of the Plan, no award in
respect of a Plan year ending prior to the occurrence of a Change in Control,
as defined
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herein, may be reduced or cancelled, nor may the Plan be so cancelled or
substantially modified, following the occurrence of a Change in Control.
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. Employees 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 submitted to Common
Shareholders for approval in April 1995 and the Executive Incentive Plan).
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.
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.)
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PERFORMANCE MEASURES, LEVELS AND WEIGHTS
The measures of performance and weight applicable to each Plan year
will be communicated annually to all eligible employees.
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.
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 employee 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 that is
payable prior to the occurrence of a Change in Control, as defined herein, 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.
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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, prior to
January 1, 1996, in Company Common Stock, and, effective January 1, 1996, in
the common stock of DTE Energy Company (the common stock of the Company and of
DTE Energy Company, as applicable, are referred to herein as "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".
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
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 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 the 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 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 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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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 or an Affiliate 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 a
long-term disability plan of the Company or an Affiliate) 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),
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 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 employee terminates employment due to disability
(last day of employment); (3) the day the employee dies (official date of
death); or (4) the day the employee 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 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 from the Company
and its Affiliates (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.
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, including any portion required to be deferred by the Company, if the
participant is not actively employed by the Company or an Affiliate 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
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to actually invest in any 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. Nothing herein, however, shall preclude the Company from
segregating assets which are intended to be a source of payment of benefits
under the Plan.
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 employee. 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 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.
CHANGE IN CONTROL
A change in control ("Change in Control") for purposes of the Plan shall have
occurred if at any time on or after October 1, 1997 any of the following events
shall occur:
(1) DTE Energy Company ("DTE") is merged, consolidated or
reorganized into or with another corporation or other legal
person, and as a result of such merger, consolidation or
reorganization less than 55% of the combined voting power of
the then-outstanding securities of such corporation or person
immediately after such transaction is held in the aggregate
by the holders of the then-outstanding securities entitled to
vote generally in the election of directors (the "Voting
Stock") of DTE immediately prior to such transaction;
(2) DTE sells or otherwise transfers all or substantially all of
its assets to another corporation or other legal person, and
as a result of such sale or transfer, less 55% of the
combined voting power of the then-outstanding Voting Stock of
such corporation or person immediately after such sale or
transfer is held in the aggregate (directly or through
ownership of Voting Stock of DTE or a Subsidiary (as
hereinafter defined)) by the holders of Voting Stock of DTE
immediately prior to such sale or transfer;
(3) There is a report filed on Schedule 13D or Schedule 14D-1 (or
any successor
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schedule, form or report), each as promulgated pursuant to
the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), disclosing that any person (as the term
"person" is used in Section 13(d)(3) or Section 14(d)(2) of
the Exchange Act) has become the beneficial owner (as the
term "beneficial owner" is defined under Rule 13d-3 or any
successor rule or regulation promulgated under the Exchange
Act) of securities representing 20% or more of the combined
voting power of the then-outstanding Voting Stock of DTE;
(4) If, during any period of two consecutive years, individuals
who at the beginning of any such period constitute the
directors of DTE cease for any reason to constitute at least
a majority thereof; provided, however, that for purposes of
this paragraph (4) each director who is first elected, or
first nominated for election, by DTE's stockholders, by a
vote of at least two-thirds of the directors of DTE (or a
committee thereof) then still in office who were directors of
DTE at the beginning of any such period will be deemed to
have been a director of DTE at the beginning of such period;
or
(5) The approval of the shareholders of DTE of a complete
liquidation or dissolution of DTE.
Notwithstanding the foregoing provisions of paragraph (3)
above, unless otherwise determined in a specific case by
majority vote of the Board of Directors of DTE, a "Change in
Control" shall not be deemed to have occurred for purposes of
paragraph (3) solely because (i) DTE, (ii) an entity in which
DTE directly or indirectly beneficially owns 50% or more of
the outstanding Voting Stock (a "Subsidiary"), or (iii) any
DTE-sponsored employee stock ownership plan or any other
employee benefit plan of DTE or any Subsidiary either files
or becomes obligated to file a report or a proxy statement
under or in response to Schedule 13D or Schedule 14D-1 (or
any successor schedule, form or report or item therein) under
the Exchange Act disclosing beneficial ownership by it of
shares of Voting Stock, whether in excess of 20% or
otherwise.
In the event a Change in Control occurs during a Plan year, then,
notwithstanding anything to the contrary in the foregoing provisions of the
Plan, including but not limited to the Section entitled "Administration", no
payments of Awards shall be made under the foregoing provisions of the Plan for
such Plan year, but instead,
(a) each Vice President and above at The Detroit Edison Company
during the Plan year employed by the Company or an Affiliate
immediately prior to the date on which the Change in Control
occurs,
(b) and each Vice President and above at The Detroit Edison
Company who had terminated employment with the Company and
its Affiliates during the Plan year by reason of retirement
or disability (as such terms are defined above under
"Awards") or death prior to the occurrence of the Change in
Control but after having held and actively performed in one
or more such positions for a total of at least seven months
during the Plan year,
shall have a right (or, in the case of the person's death, his or her
beneficiary shall have the right) to an immediate cash payment of an amount
determined by multiplying (i) the individual's actual base salary
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(including applicable amounts deferred under Company-sponsored benefit plans)
earned during the Plan year while a Vice President and above at The Detroit
Edison Company prior to the occurrence of the Change in Control or earlier
termination by retirement, disability or death, by (ii) the individual's
applicable target percent of salary by position for the Plan year based on the
assumption that established performance targets were met. Such payments shall
be made within 30 days after the date on which the Change in Control occurs
without the necessity of approval of the Board of Directors.
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