Exhibit (10)-12
Unicom Corporation and Commonwealth Edison Company
Form 10-K File Nos. 1-11375 and 1-1839
Unicom Corporation
1998 Annual Incentive Award for Management Employees
Under the Unicom Corporation Long-Term Incentive Plan
Unicom Corporation, an Illinois corporation (the "Company"), hereby grants
to each Employee (as hereinafter defined), as of January 1, 1998 or, if later,
the date of the commencement of such Employee's employment with an Employer (as
hereinafter defined) (the later of such dates being referred to herein as the
"Grant Date"), in accordance with the provisions of the Unicom Corporation Long-
Term Incentive Plan (as in effect from time to time, the "Plan"), an incentive
award (each, an "Award") in the amount and upon and subject to the restrictions,
terms and conditions set forth below. 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:
(a) each employee of Commonwealth Edison Company ("ComEd") (other than (i)
the Chairman, President, and Chief Executive Officer of Unicom and (ii)
temporary employees) who is on the management or executive payroll during
calendar year 1998, provided such employee is placed on such payroll prior to
December 1, 1998; and
(b) each employee of any other Subsidiary/1/ selected from time to time by
the Committee/2/ to receive an Award hereunder.
Each such employee is referred to herein as an "Employee," and the term
"Employer" shall mean the employer of an Employee.
2. Award Amount. (a) The total amount payable to each Employee in
connection with an Award (the "Total Award Amount") shall be determined in
accordance with the following formula:
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/1/A "Subsidiary" is defined in the Plan as being 51% or more owned.
/2/"Committee" means the Incentive Compensation Sub-committee of the Corporate
Governance and Compensation Committee of the Board of Directors.
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Individual
Total Employee's Payout Performance Performance
Award = Base X Opportunity X Payout X Payout
Amount Salary Percentage Percentage Percentage
"Employee's Base Salary" 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 1998 (or such earlier pay period during
1998 in which the Employee's employment terminates), multiplied by 12, plus
(ii) if an Employee is in the "Group" or "Executive" categories of employment,
the income from such Employee's Deferred Compensation Units, if any, (whether
such Units were granted by the Company or by ComEd).
"Payout Opportunity Percentage" shall mean the percentage taken from the
following table based upon the Employee's grade level and level of achievement
of the goal in question:
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Threshold Target Maximum
Grade Level Payout Payout Payout
Percentage Percentage Percentage
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Rated -- Grade 1-9 1.875 7.5 15.0
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Rated -- Grade 10-11 2.500 10.0 20.0
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Group -- Grade 12 3.750 15.0 30.0
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Group -- Grade 13/14 5.000 20.0 40.0
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Executive -- Grade 15/16/17 6.250 25.0 50.0
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Executive -- Grade 18 7.500 30.0 60.0
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Executive -- Grade 19 8.750 35.0 70.0
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Executive -- Grade 20 10.000 40.0 80.0
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Executive -- Grade 21 11.250 45.0 90.0
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Executive -- Grade 22 12.500 50.0 100.0
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Percentage deviation from the Target Payout Percentage shall be used in
determining the applicable Payout Opportunity Percentage for goal achievement
between zero and the Maximum Payout Percentage level. With respect to any
Employee referred to in Section 1(b), the Payout Opportunity Percentage shall
mean such percentage(s) as may be established by the Committee at the time of
such Employee's selection by the Committee to receive an Award hereunder.
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"Performance Payout Percentage" shall mean for each Employee, the sum of
the weighted payout percentages for each assigned goal, as determined by the
Committee, based on the relative achievement of such goals.
"Individual Performance Payout Percentage" shall mean (i) in the case of an
Employee who is rated as performing in the "A" category, 120%, (ii) in the
case of an Employee who is rated as having performed in the "B" category,"
100%, and (iii) in the case of an Employee who is rated as performing in the
"C" category, 0%.
The Total Award Amount as so determined for an Employee shall be subject to
adjustment as provided in Sections 4, 5, and 6 (as so adjusted, the "Adjusted
Total Award Amount").
(b) Subject to Section 8, the Adjusted Total Award Amount for an Employee
shall be paid (i) in the case of a Rated Employee, after the application of
Section 10.2, 100% in cash, and (ii) in the case of all other Employees, 25% in
shares of Common Stock (the amount payable in shares of Common Stock being
referred to herein as the "Stock Payment Amount"), and after application of
Section 10.2, the remainder in cash.
4. Reduction of Total Award Amount in Certain Instances.
4.1 Partial Year of Employment. In the event that:
(a) an Employee (i) is first placed on the management or executive payroll
after January 1, 1998 and prior to December 1, 1998, (ii) is on a voluntary
leave of absence or long-term disability during 1998, (iii) retires under the
pension plan of any of the Employers during 1998, or (iv) dies during 1998, or
(b) an Employee's employment with the Employers is terminated during 1998
as a result of (i) the sale, permanent closure or other disposition of any
generation facility, (ii) the sale or other disposition of any business unit
or functional group (or portion thereof) that includes such Employee, or (iii)
the Employer's decision to have a third party provide the services provided by
the functional group that includes such Employee,
then the Total Award Amount with respect to such Employee will be prorated by
multiplying it by a fraction, the numerator of which is the number of days the
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Employee worked for an Employer (or Employers) during 1998 and the denominator
of which is 365.
4.2 Other Incentive Plans. In the event that during 1998, an Employee
participates in or is or becomes eligible to participate in, any sales or group
incentive plan that precludes receipt of an Award hereunder (such incentive
plans collectively referred to herein as "Other Incentive Plans"), then the
Total Award Amount with respect to such Employee will be prorated (after any
adjustment required by Section 4.1) by multiplying it by a fraction, the
numerator of which is the total number of days during 1998 that the Employee
worked for an Employer (or Employers) and was not a participant in, or eligible
to participate in, the Other Incentive Plans, and the denominator of which is
the total number of days the Employee worked for an Employer (or Employers)
during 1998.
For purposes of this Section 4, the number of days an Employee worked for an
Employer (or Employers) during 1998 shall include, solely in the case of an
Employee who retires under the pension plan of any Employer or who dies, the
total number of days in the calendar month in which such Employee retires or
dies.
5. Part-Time Employees. For an Employee who is a part-time Employee (as
determined in accordance with his or her Employer's personnel practices), the
Total Award Amount will be prorated by multiplying it by a fraction, the
numerator of which is the number of hours the Employee was scheduled to work for
an Employer (or Employers) during 1998 and the denominator of which is 2080.
This Section 5 shall be applied prior to the application of Section 4.1 for any
Employee who is described therein.
6. Transfer of Employee from One Business Unit or Production Facility to
Another Business Unit or Production Facility. In the event that an Employee is
transferred from one business unit to another business unit or production
facility during 1998, the Total Award Amount for such Employee will equal the
sum of the amounts determined on a prorated basis from each business unit.
7. Settlement of Awards. Payment of the Adjusted Total Award Amount, if
any, will be made to an Employee as soon as practicable after the Company's
audited financial results are available for calendar year 1998. The number of
shares of Common Stock payable as part of any Stock Payment Amount to an
Employee shall be computed by dividing the Stock Payment Amount by the value of
one share of Common Stock; provided, however, that shares that may
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become payable to an Employee hereunder shall not be issued if the aggregate
number of shares payable to such Employee does not exceed 25 (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 25 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 1998 (appropriately adjusted for any stock-split, stock
dividend or other similar event).
8. Termination of Employment. An Employee whose employment with all
Employers terminates on or prior to December 31, 1998 for any reason other than
those described in Section 4.1 shall not be entitled to payment of any Award
hereunder.
9. 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.
10. Additional Terms and Conditions of Award.
10.1. Non-Transferability of Award. In accordance with Section 13.5 of the
Plan, except as otherwise specifically provided by the Plan or by law, no Award
may be transferable in any manner other than by will or the laws of descent and
distribution, and any attempt to transfer any such Award 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 of
the Adjusted Total Award Amount. In accordance with Section 13.5 of the Plan,
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 nor shall
they be subject to attachment or legal process for or against such person.
10.2. 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 of
the Adjusted Total Award Amount) payable then or thereafter payable by the
Company to the Employee, or may request the Employee to pay to
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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.
10.3. 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.
10.4. Award Subject to the Plan. This Award is subject to the provisions of
the Plan, and shall be interpreted in accordance therewith.
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