Exhibit (10)-10
Unicom Corporation
Form 10-K File No. 1-11375
Commonwealth Edison Company
Form 10-K File No. 1-1839
UNICOM CORPORATION
1996 VARIABLE COMPENSATION AWARD FOR MANAGEMENT EMPLOYEES
UNDER THE UNICOM CORPORATION LONG-TERM INCENTIVE PLAN
Unicom Corporation, an Illinois corporation (the "Company"), hereby
grants to each employee described in Section 1 hereof (each, an "Employee"), as
of January 1, 1996 (the "Grant Date"), in accordance with the provisions of the
Unicom Corporation Long-Term Incentive Plan (the "Plan"), a performance unit
award (each, an "Award"), expressed as a number of performance units, in the
amount and upon and subject to the restrictions, terms and conditions set forth
below and in Appendices A and B attached hereto. Capitalized terms not defined
herein shall have the meanings specified in the Plan.
1. Recipients of Awards. Subject in all respects to the provisions
hereof, recipients of Awards hereunder shall consist of each employee of
Commonwealth Edison Company ("ComEd") (other than (i) the Chairman, the Vice
Chairman and the President and (ii) temporary employees) and of Commonwealth
Edison Company of Indiana, Inc. ("ComEd/Indiana," and, together with ComEd, the
"Employers") who is on the management or executive payroll during calendar year
1996.
2. Base Unit. The Base Unit for each Award shall be the number which
is equal to the number of dollars determined by multiplying the Base Pay (as
defined herein) of the Employee receiving the Award by the conversion factor of
1.25% and rounding up to the nearest whole dollar. For purposes of calculating
the Base Unit, "Base Pay" shall mean the sum of (i) the product of an Employee's
monthly scheduled rate of pay, determined as of the close of the final pay
period for calendar year 1996 (or such earlier pay period during 1996 in which
the Employee's employment terminates), multiplied by 12, plus (ii) the income
from such Employee's Deferred Compensation Units (whether such Units were
granted by the Company or by ComEd) if such Employee is in the "Group" or
"Executive" categories of employment.
3. Payment Amount. The total amount payable in connection with an
Award (the "Payment Amount") may consist solely of a cash payment (the "Cash
Payment Amount") or may consist of a Cash Payment Amount and a payment of Common
Stock (the "Stock Payment Amount"), as determined below. Interpolation shall
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be used in determining the number of performance units earned for goal
achievement between the "Threshold" level and the "Distinguished" level.
a. Cash Payment Amount. The Cash Payment Amount shall be the dollar
amount computed by multiplying the Employee's Base Unit by the applicable
performance unit set forth (i) in the cases of the "Rated" and "Group"
categories of Employees, below under the column titled "Cash" that
corresponds to such Employee's category of employment and the level of
performance goals achieved as set forth in Appendix A attached hereto that
are applicable to such Employee or (ii) in the case of the "Executive"
category of Employees, in Appendix B under the column titled "Cash" that
corresponds to (1) such Employee's name, if such Employee is named on
Appendix B, or the line entry "Other Executive," if such Employee is not
named on Appendix B, and (2) level of performance goals achieved as set
forth in Appendix A attached hereto that are applicable to such Employee.
b. Stock Payment Amount. The Stock Payment Amount shall be the
dollar amount computed by multiplying the Employee's Base Unit by the
applicable performance unit set forth (i) in the cases of the "Rated" and
"Group" categories of Employees, below under the column titled "Stock" that
corresponds to such Employee's category of employment and the level of
performance goals achieved as set forth in Appendix A attached hereto that
are applicable to such Employee, or (ii) in the case of the "Executive"
category of Employees, in Appendix B under the column titled "Stock" that
corresponds to (1) such Employee's name, if such Employee is named on
Appendix B, or the line entry "Other Executive," if such Employee is not
named on Appendix B, and (2) level of performance goals achieved as set
forth in Appendix A attached hereto and that are applicable to such
Employee.
PERFORMANCE UNITS
-----------------
THRESHOLD TARGET DISTINGUISHED
--------- ------ -------------
CATEGORY CASH STOCK CASH STOCK CASH STOCK
RATED 2.4 0 6 0 8.4 1.2
GROUP 2.4 0 8 4 8 8
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4. Reduction of Payment Amount in Certain Instances. In the event
that:
(a) an Employee (i) is first placed on the management or executive
payroll after January 1, 1996, (ii) is on a leave of absence during 1996,
(iii) retires under the pension plan of any one of the Employers during
1996, or (iv) dies during 1996, or
(b) an Employee's employment with the Employers is terminated during
1996 as a result of (i) the sale of ComEd/Indiana's State Line generating
plant located in Hammond, Indiana, (ii) the sale of ComEd's Kincaid
generating plant located in Kincaid, Illinois, or (iii) ComEd's decision to
have a third party provide the services provided by the functional group
that includes such Employee,
each of the Cash Payment Amount and the Stock Payment Amount will be a reduced
amount equal to each of the amounts determined in Section 3 above multiplied by
a fraction, the numerator of which is the number of days the Employee worked for
one of the Employers during 1996 and the denominator of which is 366. In
addition, in the event that an Employee is or becomes a participant in, or is
eligible or becomes eligible to participate in, The ComEd Pension Fund
Management Incentive Pay Plan or The ComEd Bulk Power Marketing Incentive Plan
(such incentive plans are collectively referred to herein as the "Other
Incentive Plans") during 1996, then each of the Cash Payment Amount and the
Stock Payment Amount will be a reduced amount equal to each of the amounts
determined in Section 3 above (subject to any adjustment required by the first
sentence of this Section 4) multiplied by a fraction, the numerator of which is
the number of days during which the Employee worked during 1996 and was not a
participant in, or eligible to participate in, the Other Incentive Plans and the
denominator of which is the number of days the Employee worked during 1996.
Further, in the event that an Employee's hourly or salary compensation is paid
or reimbursed by the Mid-America Interconnected Network ("MAIN") during 1996,
then each of the Cash Payment Amount and the Stock Payment Amount will be a
reduced amount equal to each of the amounts determined in Section 3 above
(subject to any adjustment required by the first sentence of this Section 4)
multiplied by a fraction, the numerator of which is the number of days during
1996 in respect of which such Employee's hourly or salary compensation was not
paid or reimbursed by MAIN and the denominator of which is the number of days
the Employee worked during 1996. For purposes of the preceding sentences, the
number of days an Employee worked in 1996 shall include, solely in the cases of
an Employee who retires under the pension plan of any one of the Employers or
who dies, the full month in which the Employee retires or dies. For an Employee
who is a part-time Employee described in clause (a) or (b) of the first sentence
of this Section, the reduction provided in this Section shall be made after the
reduction set forth in Section 5 is made.
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5. Reduction of Payment Amount for Part-Time Employees. For an
Employee who is a part-time Employee, each of the Cash Payment Amount and the
Stock Payment Amount will be a reduced amount equal to the amount determined
above multiplied by a fraction, the numerator of which is the number of hours
the Employee was scheduled to work during 1996 and the denominator of which is
2080 hours.
6. Transfer of Employee from One Business Unit to Another Business
Unit. In the event that an Employee is transferred from one Business Unit (as
hereinafter defined) to another Business Unit during 1996, each of the Cash
Payment Amount and the Stock Payment Amount will be determined on a prorated
basis from each Business Unit. For purposes of this Section, "Business Unit"
means the following corporate functions of the Employers: (a) commercial, (b)
financial, (c) human resources, (d) corporate relations, (e) corporate
resources, (f) law, (g) fuel/diversity/ethics, (h) fossil energy production, (i)
nuclear energy production and (j) quality improvement programs.
7. Stockholder Protection. Notwithstanding anything herein to the
contrary, no amount shall be paid hereunder unless the following four conditions
are satisfied:
(a) The Company maintains regular quarterly cash dividends of at
least $.40 per share of Common Stock during calendar year 1996 (adjusted
for any stock-split, stock dividend or other similar event).
(b) The aggregate amount actually incurred by the Employers for
operations and maintenance expenditures for calendar year 1996 (calculated
as provided in Section 12.5(b)) is less than $2,020 million.
(c) The aggregate amount actually incurred by the Employers for
capital expenditures for calendar year 1996 is less than $920 million
(excluding (i) any capitalized charges associated with awards made or paid
under the Plan, The ComEd Pension Fund Management Incentive Pay Plan, The
ComEd Bulk Power Marketing Incentive Plan and any company-wide incentive
pay plan or arrangement generally applicable to bargaining unit employees
within ComEd and/or ComEd/Indiana, (ii) one half of any capitalized charges
associated with any signing bonus and/or adders paid to members of Local 15
of the International Brotherhood of Electrical Workers in connection with
the execution of their most recent collective bargaining agreement with
ComEd, (iii) any capital expenditures associated with ComEd's accelerated
nuclear expenditures (improvement program), and (iv) any additional capital
expenditures due to the acceleration of ComEd's steam generator replacement
program).
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(d) The earnings per share of Common Stock of the Company (calculated
as provided in Section 12.5(a)) are not less than $3.00.
8. Failure to Achieve "Meeting All Expectations" Rating. An Employee
who fails to receive at least a "meeting all expectations" rating under the
Performance Evaluation, Career Development and/or Succession Planning (or the
equivalent thereof) with respect to performance in 1996 shall not receive any
amount hereunder.
9. Settlement of Awards. The Payment Amount, if any, will be paid to
an Employee as soon as practicable after the Company's audited financial results
are available for calendar year 1996. The number of shares of Common Stock
payable to an Employee with respect to an Award shall be computed by dividing
the Stock Payment Amount by the value of one share of Common Stock; provided,
however, that shares that may become payable to an Employee hereunder shall not
be issued if the aggregate number of shares payable to such Employee does not
exceed five (and, in such case, cash shall be paid in an amount equal to the
value of the shares that would have been issued but for this proviso).
Fractional shares of Common Stock that may become payable to an Employee
hereunder shall be awarded if the shares awarded to such Employee exceed five
and are held in non-certificated, book-entry or electronic form; otherwise, any
such fractional shares shall be paid in cash. For purposes of this Section, the
value of a share of Common Stock shall be the average of the closing prices of a
share of Common Stock as reported in The Wall Street Journal as New York Stock
Exchange Composite Transactions during the last calendar quarter of 1996
(appropriately adjusted for any stock-split, stock dividend or other similar
event).
10. Termination of Employment. An Employee whose employment with the
Employers is terminated prior to December 31, 1996 for any reason other as
specified in clauses (a)(iii), (a)(iv), (b)(i), (b)(ii) or (b)(iii) of Section 4
shall not be entitled to any payment under the Plan.
11. Rights as a Stockholder. No Employee shall have any rights as a
stockholder of the Company with respect to any shares of Common Stock that may
be payable hereunder unless and until such shares shall have been issued to such
Employee or otherwise credited to an account for the benefit of such Employee.
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12. Additional Terms and Conditions of Award.
12.1. Nontransferability of Award. In accordance with Section 13.5
of the Plan, no Award or other related benefit may, except as otherwise
specifically provided by the Plan or by law, be transferable in any manner other
than by will or the laws of descent and distribution, and any attempt to
transfer any such Award or other benefit shall be void; provided, however, that
the foregoing shall not restrict the ability of any Employee to transfer any
cash or Common Stock received as part of the Payment Amount. In accordance with
Section 13.5 of the Plan, Awards or other benefits payable under Awards shall
not in any manner be subject to the debts, contracts, liabilities, engagements
or torts of any person who shall be entitled to such Award or benefits, nor
shall they be subject to attachment or legal process for or against such person.
12.2. Withholding Taxes. As a condition precedent to the delivery to
the Employee of cash or Common Stock hereunder and in accordance with Section
13.4 of the Plan, the Company may deduct from any amount (including any Payment
Amount) payable then or thereafter payable by the Company to the Employee, or
may request the Employee to pay to the Company in cash, such amount as the
Company may be required, under all applicable federal, state, local or other
laws or regulations, to withhold and pay over with respect to the Award.
12.3. Compliance with Applicable Law. Each Award is subject to the
condition that if the listing, registration or qualification of the shares of
Common Stock subject to the Award upon any securities exchange or under any law,
or the consent or approval of any governmental body, or the taking of any other
action is necessary or desirable as a condition of, or in connection with, the
vesting or delivery of such shares hereunder, such shares may not be delivered,
in whole or in part, unless such listing, registration, qualification, consent
or approval shall have been effected or obtained.
12.4. Award Subject to the Plan. This Award is subject to the
provisions of the Plan, and shall be interpreted in accordance therewith.
12.5. Certain Computations. (a) For the purposes of Section 7(d)
above and Appendix A hereto, "earnings per share" shall mean the earnings per
share of Common Stock of the Company calculated without giving effect to (i) any
charges associated with any early retirement program adopted by the Employers or
any severance payments made by the Employers, (ii) any write-off (as opposed to
depreciation charges) associated with any plant, property or equipment of the
Employers, (iii) any accelerated depreciation on any nuclear generating stations
under ComEd's "ENERGY Partnership Program," (iv) the effect of any unanticipated
accounting reclassifications or adjustments
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or inter-company cost allocation adjustments that may be required by the Federal
Energy Regulatory Commission or the Illinois Commerce Commission ("ICC"), (v)
any accounting effects resulting from any subsequent ICC or judicial proceeding
relating to any order entered by the ICC in Docket No. 94-0065, (vi) any
investment tax credit related to certain investments in nuclear fuel and other
miscellaneous electric utility property permitted under the 1986 Tax Reform Act
and not previously taken, (vii) any "finder's fee" or similar compensation paid
in connection with the realization of the investment tax credit referred to in
the preceding clause (vi), (viii) any gain, loss or other charges (including,
without limitation, increases or decreases in related operations and maintenance
expenditures) associated with the disposition of ComEd/Indiana's State Line
generating plant, (ix) any gain, loss or other charges (including, without
limitation, increases or decreases in related operations and maintenance
expenditures) associated with the disposition of ComEd's Kincaid generating
plant, (x) one half of any charges associated with any signing bonus and/or
adders paid to members of Local 15 of the International Brotherhood of
Electrical Workers in connection with the execution of their most recent
collective bargaining agreement with ComEd, (xi) any expenditures associated
with ComEd's accelerated nuclear expenditures (improvement program), and (xii)
any charges associated with necessary increases in pension provisions for the
Service Annuity Systems of the Employers which are determined after January 1,
1996; and shall be adjusted for any stock splits, stock dividends or other
similar event.
(b) For the purposes of Section 7(b) above and Appendix A hereto, the
computation of "operations and maintenance expenditures" shall exclude (i)
charges associated with any early retirement program adopted by the Employers or
any severance payments made by the Employers, (ii) any charges associated with
awards made or paid under the Plan, The ComEd Pension Fund Management Incentive
Pay Plan, The ComEd Bulk Power Marketing Incentive Plan and any company-wide
incentive pay plan or arrangement generally applicable to bargaining unit
employees within ComEd and/or ComEd/Indiana, (iii) any write-off (as opposed to
depreciation charges) included in operation and maintenance expenditures that
relates to any plant, property or equipment of the Employers, (iv) the effect
of any unanticipated accounting reclassifications or adjustments or inter-
company cost allocation adjustments that may be required by the Federal Energy
Regulatory Commission or the ICC, (v) any accounting effects resulting from any
subsequent ICC or judicial proceeding relating to any order entered by the ICC
in Docket No. 94-0065, (vi) any "finder's fee" or similar compensation paid in
connection with the realization of the investment tax credit referred to Section
12.5(a)(vi) above, (vii) any gain, loss or other charges (including, without
limitation, increases or decreases in related operations and maintenance
expenditures) associated with the disposition of ComEd/Indiana's State Line
generating plant, (viii) any gain, loss or other charges (including, without
limitation, increases or decreases in related operations and maintenance
expenditures) associated with the disposition of ComEd's Kincaid generating
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plant, (ix) one half of any charges associated with any signing bonus and/or
adders paid to members of Local 15 of the International Brotherhood of
Electrical Workers in connection with the execution of their most recent
collective bargaining agreement with ComEd, (x) any expenditures associated with
ComEd's accelerated nuclear expenditures (improvement program), and (xi) any
charges associated with necessary increases in pension provisions for the
Service Annuity Systems of the Employers which are determined after January 1,
1996.
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