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EXHIBIT 10.3
WASHINGTON GAS LIGHT COMPANY
EXECUTIVE INCENTIVE COMPENSATION PLAN
AS AMENDED THROUGH SEPTEMBER 25, 1985
As further amended November 26, 1986
As further amended December 18, 1996
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WASHINGTON GAS LIGHT COMPANY
EXECUTIVE INCENTIVE COMPENSATION PLAN
1. OBJECTIVE OF THE PLAN
To promote achievement of corporate goals and increase the Company's
profits by recognizing a participant's contribution to the attainment of the
Company's goals and profits. An additional objective is to attract and retain
outstanding executive officers.
2. ELIGIBILITY
Executive officers eligible each year to participate in the Plan are
those serving in positions for which the Board of Directors approves
remuneration. Other executive employees may, upon recommendation of the Chief
Executive officer and approval of the Board of Directors, participate in the
Plan in any year.
3. DETERMINATION OF INCENTIVE COMPENSATION POOL
All payments will be payable out of an incentive compensation pool.
Each year, the Board of Directors will fix a target percentage return on
average common stock equity. No compensation pool will be generated unless the
target percentage .is reached. After the Company's financial results for the
year are available, the Board of Directors will determine the amount of the
compensation pool, which will be based, in part, upon the extent to which the
target percentage for the year has been exceeded.
"Common stock equity" is to be determined in accordance with generally
accepted accounting principles.
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4. DETERMINATION OF INDIVIDUAL AWARDS
After the Company's financial results for the year have been
determined, the Chief Executive officer will recommend to the Compensation
Committee and it will recommend to the Board of Directors the award, if any, to
be paid to each participant. The Board of Directors, however, will make the
final determination of the award to be paid to any participant and may
determine that no award shall be paid to any participant. The aggregate awards
payable will not exceed the compensation pool, but the entire compensation pool
need not be paid. The award of each participant will be based upon whether the
participant has met or the degree to which individual performance has exceeded
objectives established at the outset of the Plan year. A participant who
becomes eligible to participate in the Plan during the year or who, because of
retirement or other factors, is not employed during the entire year, shall be
eligible to participate, but the extent of participation shall take into
account the period of service as well as other factors.
5. PAYMENT OF AWARDS
The awards will be paid in cash as soon as possible after the
determination of the amount to be paid unless the participant has made a
deferred compensation election in accordance with Schedule A hereto, or unless
the Board determines to change the timing of payments according to the best
interests of the Company.
6. AMENDMENT AND TERMINATION
The Board of Directors may amend or terminate the Plan at any time,
except that any award previously approved or determined by it shall be paid.
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SCHEDULE A
TO
WASHINGTON GAS LIGHT COMPANY
EXECUTIVE INCENTIVE COMPENSATION PLAN
A. Deferral of Payment(1)
(1) A Participant may apply to defer payment of all or part of any
award for which the Participant may become eligible. An applicant may request:
(a) a deferral for a four year Period or for a greater
period; and
(b) deferral of an award in twenty-five percent
increments (25%, 50%, 75% air 100%) or payment of a
specific cash amount with a twenty-five percent
increment (25%, 50%, 75% or 100%) applied to the
balance.
(2) A participant my apply to re-defer all accumulated interest
and the amount deferred previously. Partial re-deferrals are
not permitted. Also, a re-deferral must be for a four year
period or for a greater period.
(3) To be effective, an application under Paragraph A(l) or A(2)
must be submitted to the Company and approved on or before
November 30th:
(i) of the year with respect to which there may be an
award, or
(ii) of the year prior to expiration of a current deferral
period.
(4) An approved application to defer or re-defer can not be
modified or revoked.
B. Method of Payment.
(1) Payment of a deferred amount will be in the form of a lump sum
at the expiration of the
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1/ Provisions regarding deferrals have been amended--see page following
Schedule A.
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relevant deferral period, unless the participant applies to
receive the amount in one to ten (1-10) equal annual
installments beginning at the expiration of the deferral
period. An application to be paid annual installments must be
made and approved on or before November 30th prior to
expiration of the deferral period.
(2) If a participant's employment with the Company is terminated
due to death, disability or retirement, all deferral periods
are canceled. Payment shall be in a lump sum, unless an
application is made pursuant to Paragraph B(l) or a request
has been approved pursuant to Paragraph B(5).
(3) If a participant's employment with the Company is terminated
for any reason other than death, disability or retirement, all
deferral periods are canceled and payment shall be in a lump
sum.
(4) Payments shall be made within thirty (30) days of the
applicable event and shall be made to the participant;
provided that a participant may file with the Company a
written designation of beneficiary which may be revoked or
modified by the participant at any time. If no beneficiary
has been designated or the designated beneficiary does not
survive the participant, payment shall be made on the
participant's behalf to the participant's surviving spouse and
if there is no surviving spouse, payment shall be in equal
proportions to the participants surviving children. If the
participant is not survived by a designated beneficiary, by a
spouse or by children, payments shall be made on the
participant's behalf to the estate of the participant as
established by law.
(5) If requested by the participant in writing on the designation
of beneficiary form, and approved by the Company, payments to
the designated beneficiary of a deceased
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participant may begin at the time requested on the form, and
may include a method of payment under Paragraph B(l).
(6) The Company may permit early payment of an amount needed
because of an unforeseeable emergency beyond the control of
the participant or beneficiary which would result in
substantial financial hardship unless early payment were
permitted.
C. Terms and Conditions.
(1) Deferred amounts shall include all or part of a deferred award
and interest compounded quarterly. The quarterly interest
rate shall be the weekly average yield to maturity for
five-year U.S. Treasury fixed interest rate securities
(adjusted to a constant maturity of five years) as published
by the Federal Reserve Board in its Statistical Release H.15
published on or prior to December 31 of the immediately
preceding year.
(2) The terms of this Schedule A, including without limitation,
"plan", "participant", "beneficiary", and "deferred amount"
shall not mean, nor be construed to mean, under any
circumstance, that any person or entity shall have any right,
title or interest in or to any specific asset of the Company.
To the extent that any person acquires a right to receive
payments under the Plan, such right shall be no greater than
the right of any unsecured creditor of the Company.
(3) Rights to receive payments under the Plan may not be assigned,
alienated or pledged.
D. Administration.
(1) The Company may from time to time establish conditions and
procedures for the administration of provisions of this
Schedule A.
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(2) The terms "disability" and "retirement", are used herein as
defined in the Washington Gas Light Company Employees' Pension
Plan, as amended from time to time.
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AMENDMENT TO DEFERRAL PROVISIONS OF EXECUTIVE INCENTIVE COMPENSATION PLAN
(Amendments adopted November 26, 1986):
1. Deferral periods may be for a minimum of one year (in lieu of
four years as previously provided).
2. The provision for redeferrals is eliminated for any amounts
deferred after December 31, 1986.
3. Elections to defer payments under the Plan may be made on or
before December 31 of the year preceding the year in which any
amount under the Plan is determined and awarded (in lieu of
November 30, as previously provided).
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