First Amendment to Performance Award Agreement R E C I T A L S:
EXHIBIT
10.7
First
Amendment to Performance Award Agreement
R
E C I T A L S:
WHEREAS, pursuant to the
Dynegy Inc. 2002 Long Term Incentive Plan (the “LTIP”), Dynegy Inc. (“Dynegy”)
granted performance units (“Performance Awards”) to certain employees as of
March 4, 2009;
WHEREAS, the terms of such
Performance Award grants, including the performance goals and metrics applicable
to such awards, were set forth in written performance award agreements by and
between Dynegy and each Performance Award grantee (the “Performance Award
Agreements”);
WHEREAS, with respect to
one-third of each Performance Award, payment is based on Dynegy’s Adjusted
EBITDA over the three-year award period;
WHEREAS, the Board of
Directors of Dynegy has appointed the Compensation and Human Resources Committee
(the “Committee”) to administer the LTIP, and Section 2 of the Performance Award
Agreements provide that the Committee has the discretion to adjust the
performance goals to reflect actions undertaken in the best interest of Dynegy
and its shareholders (including, but not limited to, strategic transactions
affecting the performance goals as well as recapitalizations, reorganizations,
mergers, consolidations, split-ups, split-offs, spin-offs, exchanges or other
relevant changes in capitalization or structure of Dynegy);
WHEREAS, Dynegy sold certain
revenue-generating assets to certain LS Power entities effective as of November
30, 2009 (the “LS Power Transaction”), which revenues were included in the
Performance Awards’ Adjusted EBITDA assumptions; and
WHEREAS, given the sale of
such revenue-generating assets in the LS Power Transaction, the Committee
desires to adjust the Adjusted EBITDA assumptions used in determining the
“threshold,” “target,” and “maximum” Adjusted EBITDA levels for 2010 and 2011
and to make a corresponding modification to such “threshold,” “target,” and
“maximum” Adjusted EBITDA levels for the award period;
NOW THEREFORE, effective as of
March 2, 2010, the Committee hereby amends, subject to approval by the Board of
Directors of Dynegy, each Performance Award Agreement by deleting Exhibit 1 of
each Performance Award Agreement and substituting the following Exhibit 1
therefor:
Exhibit
1
Performance Unit Award
Summary
For 2009
Long Term Incentive grants made to those at the Managing Director and above
level, the Compensation and Human Resources Committee decided to base two-thirds
of the performance unit awards on long-term stock price performance and
one-third of the performance units awards on accumulated Adjusted EBITDA, each
over a three year period. The Committee believes these metrics
provide a simple, transparent and meaningful measure of Dynegy’s performance
relative to its long-term goal of creating value for
stockholders. The material terms of the performance units are
summarized below:
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·
|
Denominated
in $100 units, which are payable in the form of cash or stock, at the
Compensation and Human Resources Committee’s
discretion;
|
|
·
|
With
respect to two-thirds of the award, payment (if any) will be made in
accordance with Section 3 of the Agreement based on Dynegy’s three-year
stock price performance;
|
|
·
|
Starting share price is
the average closing price of Dynegy’s Class A common stock for the month
February 2009 ($1.67); the Compensation and Human Resources Committee
determined the starting share price after reviewing and taking into
account various factors, including: (1) Dynegy's share price
and the total shareholder return of similarly sized general industry
companies over a three year period from December 2005 through December
2008; (2) the underlying value of Dynegy’s power generation portfolio
based on various valuation methodologies; and (3) potential growth
opportunities that may be available to
Dynegy;
|
|
·
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Ending
share price will be the average closing price of Dynegy’s Class A common
stock during the month of February 2012;
and
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·
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Awards
are payable at threshold, target, and maximum levels as illustrated in the
table below.
|
Stock
Price Performance Goals for Performance Period
(March
4, 2009 — March 4, 2012)
|
Threshold
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Target
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Maximum
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||
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Performance
Goals
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Achieved
Share Price*
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$2.50
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$4.00
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$6.00
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Payment
Levels**
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%
of each $100 Performance Unit
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0%
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100%
|
200%
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*Achieved
Share Price shall be the ending Share price equal to the average closing Share
price for the month of February 2012 or, if applicable, the ending Share price
determined in accordance with Section 5 of the Agreement in the event of a
Change in Control.
**Payment
levels will be based upon the actual Achieved Share Price and will be
interpolated between Achieved Share Price goals.
|
·
|
With
respect to one-third of the award, payment (if any) will be made in
accordance with Section 3 of the Agreement based on Dynegy’s Adjusted
EBITDA over the three year award
period;
|
|
·
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For
purposes of this Agreement, the term Adjusted EBITDA shall be determined
based on the “Adjusted EBITDA” public guidance construction disclosed to
the investing community in December 2008;
and
|
|
·
|
Awards
are payable at threshold, target, and maximum levels as illustrated in the
table below.
|
Adjusted
Performance Goals for Performance Period
(March
4, 2009 — March 4, 2012)
|
Threshold
|
Target
|
Maximum
|
|
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Adjusted
EBITDA+
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$2.1
billion
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$2.4
billion
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$3.0
billion
|
|
Payment
Levels++
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0%
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100%
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200%
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+Calculated
based on Adjusted EBITDA as determined for the fiscal years ending December 31,
2009, December 31, 2010 and December 31, 2011.
++Payment
levels will be based upon the Adjusted EBITDA and will be interpolated between
Adjusted EBITDA goals.
[Signature
Page Attached]
IN WITNESS WHEREOF, Dynegy has
caused this Performance Award Agreement to be amended by this First Amendment
this 2nd day
of March, 2010, to be effective as stated herein.
| By: | /s/ J. Xxxxx Xxxxxxxx |
| Title: | General Counsel & EVP, Administration |
| Date: | March 3, 2010 |
