EXHIBIT 10.1
June 29, 2004
Mr. Stephen R. Wood
7107 Cove Pointe Place
Prospect KY 40059-9680
Dear Steve:
On behalf of the Board of Directors, I am pleased to offer you employment as
Vice President, Human Resources and Support Services. Your work location will be
at Sierra Pacific - Nevada Power headquarters in Las Vegas, Nevada. You will
report directly to me in this position. We expect that you will assume your
duties as soon as possible. The job will involve business travel, especially
within Nevada, California, and the Western U.S.
Your starting base salary in this position will be $260,000. You will also be
eligible for an annual cash Short-Term Incentive Program (STIP) of 45% (target)
of your base salary. Payment of the Short-Term Incentive is at the discretion of
the Board of Directors and is based on corporate, business unit, and personal
performance. Actual payout may vary from 0% to 150% of target. Your
participation for 2004 will be prorated from your start date. Except for
retirement, death, or disability, an employee must be employed on the date STIP
is paid to be eligible to receive it.
Long-term incentives for this position are in accordance with the plan approved
by the shareholders and administered by the Board of Directors. For your
position, the long-term incentive is targeted at 75% of your base salary. At
this time, long-term incentives consist of a 2004-2006 grant of Restricted
Stock, which vests one-third per year beginning December 31, 2004. Vesting may
be accelerated if the Board of Directors determines that the company's
performance warrants it. Your 2004-2006 grant is prorated at 5/6 for your
participation during that portion of the performance/retention period (21,000
shares). You are also eligible to participate in the 2003-2005 grant of
restricted stock, prorated at 1/2. This grants you 13,000 shares.
As a special inducement for you to join SPR, the Board has also authorized the
following incentives. A one-time cash payment of $40,000, gross amount before
taxes. In addition, you will receive a special stock option grant of 25,000
NQSO's at a strike price to be set based on the closing stock price on the day
you accept this offer by signing it and informing me that you have done so.
These options will vest after 6 months, or upon change of control if such an
event were to occur prior to that time.
As a Vice President, you will be expected to achieve and maintain one and a half
times your annual compensation in SPR stock. You will have five years to achieve
this level. (Restricted stock grants count toward meeting the requirement.)
In addition to the benefits described above, in the event you are terminated for
reasons other than (1) reasons relating to moral turpitude, (2) conviction of
any crime amounting to a felony, or (3) on your own volition and without
actually being requested to resign by the Board, you will be eligible to receive
one year's base pay plus target incentive, within 30 days of termination. This
payment shall be conditioned on the execution of appropriate
releases in favor of the Company for any and all claims connected with or
arising out of your employment or termination and will require continued
maintenance of confidential and proprietary information, a non-compete for one
year, and agreement not to disparage the Company. This payment would not be made
if you otherwise receive any other severance, disability, or retirement payments
from the Company, including a change in control plan payment.
You will be eligible to participate in the Company's Supplemental Executive
Retirement Plan (SERP) and eligible for benefits under this Plan. For purposes
of calculating SERP, 2 years will be added to your years of service if you
continue to be employed with SPR until age 65 or beyond. In the event of a
change in control, prior to SERP vesting, your SERP benefit will be deemed to
have vested and you will be deemed to have 5 years of service. After your second
anniversary of service, and until your fifth anniversary of service, you will be
deemed for SERP purposes in the event of change in control to be vested and to
have your actual years of service plus additional service granted by the Change
in Control action.
You will be eligible for the normal Sierra Pacific Resources Senior Officer
change in control protection as has been put in place for company senior
officers by the Board of Directors. The current plan expires on December 31,
2004 and the board will be considering soon how to replace that plan.
The Company will also provide you executive life insurance coverage of $400,000.
This will be in addition to a $1,000,000 policy in the event that you die while
traveling on Company business and Company-provided group life insurance
equivalent to 1.5 times your annual salary.
You will be eligible for all regular employee benefits including a 401K plan
that matches employee contributions dollar for dollar up to 6% (subject to IRS
limitations), and SPR's Deferred Compensation Plan. You will receive a
perquisite allowance of $9,900 to cover such expenses as a car, tax preparation
and club memberships. You will receive paid time off (PTO) based on your years
of professional work experience (currently 34). Your annual paid time off
allowance will be 33.4 days, plus 11 paid holidays. For the remainder of 2004,
you will be granted 17 days PTO.
You are eligible to receive executive relocation benefits to allow you and your
spouse to move your house to Las Vegas.
As is Sierra's policy, all hiring offers are contingent on a drug analysis test.
We can arrange for you to have this test at a time and place convenient for you.
Also you will need to provide us proof of U.S. Citizenship on your first day of
work. This could include a copy of your Birth Certificate, Driver's License or
Social Security Card.
The position being offered to you is one of trust and confidence. In accepting
the position you are agreeing that, in addition to any other limitation and
regardless of the circumstances or any future limitation of your employment, you
will not communicate to any person, firm or other entity any knowledge relating
to documents, transactions or any other confidential knowledge which you might
acquire with respect to the business of Sierra Pacific Resources or any of its
affiliated companies.
To indicate acceptance of this offer, please sign below and return one signed
original of this letter to me as soon as possible. If you have questions about
elements of this offer, you may call me.
On behalf of the board and the senior officers of the company, I am delighted
that you have accepted the opportunity to join Nevada Power and the Sierra
Pacific team. We believe, with your leadership, expertise and dedication we will
accomplish great results for our shareholders, customers, employees and
communities. Welcome!
Sincerely,
Accepted:
______________________________
Stephen R. Wood
Date _________________________