Exhibit 10.92bd
Summary of 2006 CEO Variable Incentive Plan and Officer Variable Incentive Plan
On December 13, 2005, the Human Resources Committee (the "Committee") of
the Company's Board of Directors approved the 2006 Chairman and CEO Variable
Incentive Plan (the "CEO Incentive Plan"). The Company's Chairman of the Board
and CEO, William J. Post, is eligible to receive an incentive award under the
CEO Incentive Plan. Incentive award funding under the CEO Incentive Plan is
triggered by the attainment of specified 2006 Company earnings. The amount of
the award to Mr. Post is in the sole discretion of the Committee. Accordingly,
the Committee may consider factors other than 2006 Company earnings to measure
Mr. Post's performance.
On December 14, 2005, the Company's Board of Directors, acting on the
recommendation of the Committee, approved the 2006 Officer Variable Incentive
Plan (the "Officer Incentive Plan"). Each of the Company's officers, as well as
the officers of APS, are eligible to participate in the Officer Incentive Plan,
including the following four most highly-compensated current executive officers
(excluding the CEO) named in the Company's proxy statement relating to its May
18, 2005 annual meeting: Jack E. Davis, President and Chief Operating Officer of
the Company; Donald E. Brandt, Executive Vice President and Chief Financial
Officer of the Company; James M. Levine, Executive Vice President, Generation of
APS; and Steven M. Wheeler, Executive Vice President, Customer Service and
Regulation of APS (the "Named Executive Officers").
The Officer Incentive Plan is composed of two components, one of which is
based on the Company's 2006 earnings and the other on the achievement of
specified business unit results. Once a specified earnings threshold is met, the
achievement of the level of earnings and business unit results generally
determines what award, if any, the officer receives. However, the amount of the
award, if any, to each officer under the Officer Incentive Plan is in the sole
discretion of the Committee. Accordingly, the Committee may consider factors
other than Company earnings and the achievement of business unit results to
measure performance, including input from the CEO about each officer's 2006
achievements.
Subject to the foregoing, award opportunities (expressed as a percentage of
the officer's base salary) for the Chairman and CEO and the Named Executive
Officers will be based on the following performance measures (weighted according
to the indicated percentages):
Officer Performance Measure(s) Award Opportunity
- ------------------------- ------------------------------------- --------------------------------
William J. Post Company Earnings Threshold (63%)
Midpoint (125%)
Maximum (200%)
Jack E. Davis Company Earnings Threshold (37.5%)
Midpoint (75%)
Maximum (150%)
James M. Levine - Company Earnings (50%) - Company Earnings:
- Fossil Business Unit Results Threshold (0%)
(Preventable Recordable Injuries; Coal Midpoint (25%)
Production Cost; Gas and Coal Units' Maximum (50%) - Business
Annual Equivalent Availability Factor; Unit Results (up to 50%)
Coal Units' Capacity Factor; O&M and
Capital Costs; and Environmental) (25%)
- Palo Verde Business Unit Results
(Nuclear Safety; Preventable Recordable
Injuries; Human Performance Events; Plant
Improvement Plan Performances; Nuclear
Capacity Factor; Equipment Reliability;
and O&M and Capital Costs) (25%)
Steven M. Wheeler - Company Earnings (50%) - Company Earnings:
- Delivery Unit Results Threshold (0%)
(Preventable Recordable Injuries; Midpoint (25%)
Customer Outcome Satisfaction; Business Maximum (50%) - Delivery
Performance Trends; Customer Reliability; Business Unit Results (up to
and Environmental Incidents) (50%) 50%)
Donald E. Brandt - Company Earnings (50%) - Company Earnings:
- Shared Services Business Unit Threshold (0%)
Results (Combined Fossil Business Unit, Midpoint (25%)
Palo Verde Business Unit, and Delivery Maximum (50%) - Shared
Business Unit Performance; Meeting or Services Business Unit
Exceeding Budget Targets; and Preventable Results (up to 50%)
Recordable Injuries) (50%)
Award opportunities for other executive vice presidents and senior vice
presidents are up to 100% of base salary (up to 50% based on Company earnings
and up to 50% based on the achievement of business unit results). Award
opportunities for other officers are up to 70% of base salary (up to 35% based
on Company earnings and up to 35% based on the achievement of business unit
results).