WPS RESOURCES CORPORATION PERFORMANCE STOCK RIGHT AGREEMENT
Exhibit
10.2
WPS
RESOURCES CORPORATION
THIS
AGREEMENT is
entered into as of December 7, 2005, (the “Grant Date”), by and between WPS
RESOURCES CORPORATION (the “Company”), and __________________
____________________ (the “Participant”). This Agreement sets forth the terms,
rights and obligations of the parties with respect to the grant of Performance
Stock Rights to the Participant. This agreement shall not become effective
until
the Participant signs and returns the “Acknowledgement Form” attached
hereto.
The
Performance
Stock Rights are granted under, and are subject to, the terms of the WPS
Resources Corporation 2005 Omnibus Incentive Compensation Plan (the “Plan”),
which are specifically incorporated by reference in this Agreement. Any
capitalized terms used in this Agreement which are not defined shall have the
meaning set forth in the Plan.
The
parties to this
Agreement covenant and agree as follows:
1. Grant
of
Performance Stock Rights.
(a)
Subject to the
terms of this Agreement, the Company grants to the Participant Performance
Stock
Rights representing the right to receive ______ shares (“Target Award”), of the
common stock of the Company, par value $1.00 (“Stock”), in the event certain
Performance Goals specified herein are satisfied. The Participant obtains no
ownership interest in the Company and will not be considered a shareholder
of
the Company by virtue of the grant of Performance Stock Rights hereunder until
such time as Stock may be issued to the Participant as a Final
Award.
(b) In
the event
of certain corporate transactions described in Section 12 of the Plan, the
number of Performance Stock Rights may be adjusted by the Compensation Committee
of the Board of Directors of the Company (the “Committee”). The Committee’s
determination as to any adjustment shall be final.
2. Performance
Period.
Subject to the
provisions of Section 7, the period from January 1, 2006 to December 31,
2008.
3. Performance
Measures.
(a) Total
Shareholder
Return (“TSR”).
The quotient
obtained by dividing (1) the Shareholder Return with respect to a share of
common stock, by (2) the Beginning Market Price of a share of common stock.
For
this purpose:
(1) The
Shareholder
Return means the cash dividends paid on a share of common stock during the
Performance Period, increased by (if positive) or reduced by (if negative)
the
change in stock price from the Beginning Market Price of a share of common
stock
to the Ending Market Price of a share of common stock.
(2) The
Beginning Market
Price of a share of common stock is the average closing market price of a share
of common stock for the 30 trading days immediately preceding the first day
of
the Performance Period as reported by the securities exchange on which such
stock is principally traded.
(3) The
Ending Market
Price of a share of common stock is the average closing market price of a share
of common stock for the 30 trading days immediately preceding the last day
of
the Performance Period as reported by the securities exchange on which such
stock is principally traded.
(b) Comparison
Group.
All major
publicly traded electric power companies.
4. Determination
of
Final Awards.
(a) Presumptive
Award.
As soon as
practicable following the completion of the Performance Period, the Committee
will determine the TRS of the Company and of each company in the Comparison
Group. The Committee’s determination will be final and binding on all persons.
The Participant’s presumptive award shall be determined in accordance with the
following table; provided that any fractional share of Stock that would
otherwise result from the foregoing calculation shall be
disregarded.
|
Company
TSR
In Relation to
TSR
of All
Comparison Group
Companies
|
Presumptive
Award Equal to
the
Following
Percentage of
the
Target
Award
|
|
90th
Percentile
or Greater
80th
Percentile
70th
Percentile
60th
Percentile
50th
Percentile
45th
Percentile
40th
Percentile
35th
Percentile
Below
the
35th
Percentile
|
200%
175%
150%
125%
100%
75%
50%
25%
0%
|
The
presumptive
award will be interpolated for Company TSR that is above the 35th
percentile and
below the 90th
percentile and
that is between the percentiles enumerated in the forgoing table.
(b) Final
Award.
The Presumptive
Award is used as a guideline for the Committee in determining the Final Award
to
be made to the Participant, and the Participant obtains no rights as a result
of
the determination of the Presumptive Award. In determining the
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Final
Award to be
made to the Participant, the Committee, in its sole discretion, may increase
or
decrease the amount of the Presumptive Award; provided that the Committee will
not increase the amount of the Presumptive Award applicable to the Participant
if the Participant is a Covered Executive (as defined in the Plan) for purposes
of Section 162(m) of the Internal Revenue Code. Except with respect to the
portion (if any) of the Final Award payment of which is deferred in accordance
with the WPS Resources Corporation Deferred Compensation Plan, the Final Award
will be distributed to the Participant by March 15 of the calendar year
following the calendar year in which the Performance Period ends, or as soon
thereafter as is administratively practicable.
5. Dividend
Equivalents.
The Participant
shall not receive any cash or other consideration to reflect dividends that
would have been paid or accrued had the Performance Stock Rights been actual
shares of Stock during the Performance Period.
6. Effect
of
Termination of Employment.
(a) Except
as set forth
in subsection (b) below and Section 8 below, or as otherwise determined by
the
Committee, the Performance Stock Rights will be cancelled immediately and
without notice to the Participant, and no Final Award will be made, in the
event
of the Participant’s termination of employment from the Company and its
Affiliates prior to the last day of the Performance Period.
(b) The
Participant’s
Performance Stock Rights will not be cancelled upon termination of employment,
and the Participant (or the Participant’s estate) may be eligible to receive a
Final Award, determined in accordance with Section 4 and this Section 6(b)
following the conclusion of the Performance Period, if: (i) the Participant’s
termination of employment is on account of death or disability (as defined
in
the Company’s long-term disability plan), or (ii) the Participant terminates
employment on or after December 31 of the calendar year in which the Performance
Period began and such termination is on account of retirement on or after age
fifty-five. Except with respect to the portion (if any) of the Final Award
payment of which is deferred in accordance with the WPS Resources Corporation
Deferred Compensation Plan, the Final Award will be distributed to the
Participant by March 15 of the calendar year following the calendar year in
which the Performance Period ends, or as soon thereafter as is administratively
practicable.
7. Change
in
Control.
Upon the
occurrence of a Change of Control (as defined in the Plan), the Performance
Period shall be terminated, and the Participant will be entitled to a Final
Award based upon the Target Award (or, if greater, the then projected Final
Award) prorated for the portion of the Performance Period that has been
completed as of the date of the Change in Control. Distribution will be made
as
soon as is administratively practicable following the Change of Control;
provided, that if distribution following the Change of Control would result
in
the Participant being subject to imposition of an additional tax under Code
Section 409A, distribution of the Final Award will be made (without interest)
as
soon as administratively practicable following the earlier to occur of (i)
the
date on which the Participant separates from the service of the Company and
all
affiliates (six months following the date of
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separation
if
Participant qualifies as a “key employee” as that term is defined for purposes
of Section 409A of the Internal Revenue Code), or (ii) the date that
distribution would otherwise have been made under Section 4 had the Change
of
Control not occurred.
8. Tax
Withholding.
Upon the issuance
of Stock pursuant to a Final Award, the Company may satisfy its withholding
obligations in any manner determined by the Committee, including by withholding
a portion of the Participant’s compensation or by withholding a number of the
shares of Stock included in any Final Award that have a Fair Market Value,
as
determined by the Committee, equal to the amount required to be withheld. The
Fair Market Value of fractional shares of Stock remaining after the withholding
requirements are satisfied will be paid to the Participant in cash. The Company
may also require the Participant to deliver a check for the Company’s
withholding tax obligation prior to effecting the transfer of shares pursuant
to
a Final Award.
9. Miscellaneous.
(a) The
Participant (or
his legal representatives, the executor of his estate or his heirs) shall not
be
deemed to be a shareholder of the Company with respect to any of the Performance
Stock Rights until shares of Stock have been issued pursuant to a Final Award
and the Company’s withholding tax liability has been satisfied, to the
Committee’s satisfaction.
(b) The
Performance Stock
Rights shall not be transferable by the Participant; provided that following
the
Participant’s death, any Final Award made with respect to the Participant will
be paid to the Participant’s estate or to such person as the executor of the
estate certifies as being entitled to such payment as a result of the operation
of the Participant’s last will and testament or as a result of the laws of
intestate succession.
(c) It
is fully
understood that nothing contained in this Agreement or the Plan shall interfere
with or limit in any way the right of the Company or any Affiliate to terminate
the Participant’s employment at any time nor confer upon the Participant any
right to continue in the employ of the Company or any Affiliate.
(d) As
a condition of the
granting of Performance Stock Rights under this Agreement, the Participant
agrees, for himself and his legal representatives, the executor of his estate,
and his heirs, that the Plan and this Agreement shall be subject to
discretionary interpretation by the Committee and that any interpretation by
the
Committee of the terms of the Plan and this Agreement shall be final, binding
and conclusive on the Participant, his legal representatives, the executor
of
his estate and his heirs. The Participant, his legal representatives, the
executor of his estate and his heirs shall not challenge or dispute the
Committee’s decisions.
(e) The
Committee may
modify, extend or renew the Performance Stock Rights at any time. However,
no
modification, extension or renewal shall (i) confer on the Participant any
right
or benefit which he would not be entitled to if new Performance Stock Rights
were granted under the Plan at such time or (ii) alter, impair or adversely
affect the Performance Stock Rights or this Agreement without the written
consent of the Participant;
-4-
provided
that the
Committee shall not take any such action with respect to a Participant who
is a
Covered Executive (as defined in the Plan) if such action would cause any Final
Award granted to the Participant to cease to qualify as “qualified
performance-based compensation” for purposes of Section 162(m) of the Internal
Revenue Code.
(f) No
shares of Stock
will be issued pursuant to a Final Award unless and until the Company has
determined to its satisfaction that such issuance complies with all relevant
provisions of applicable law, including the requirements of any stock exchange
on which the Stock may then be traded.
10. Governing
Law.
This Agreement
shall be governed by the internal laws of the State of Wisconsin as to all
matters, including, but not limited to, matters of validity, construction,
effect, performance and remedies. No legal action or proceeding may be brought
with respect to this Agreement more than one year after the later of (a) the
last date on which the act or omission giving rise to the legal action or
proceeding occurred; or (b) the date on which the individual bringing such
legal
action or proceeding had knowledge of such act or omission. Any such action
or
proceeding must be commenced and prosecuted in its entirety in the federal
or
state court having jurisdiction over Xxxxx County, Wisconsin, and each
individual with any interest hereunder agrees to submit to the personal
jurisdiction thereof, and agrees not to raise the objection that such courts
are
not a convenient forum. At the Company’s election, such action or other legal
proceeding shall be heard pursuant to a bench trial and, if so elected, the
parties to such proceeding shall waive their rights to a trial by
jury.
11. Severability.
In the event any
provision of the Agreement is held illegal or invalid for any reason, the
illegality or invalidity will not affect the remaining provisions of the
Agreement, and the Agreement shall be construed and enforced as if the illegal
or invalid provision had not been included.
12. Terms
of Plan
Govern.
All parties
acknowledge that this option is granted under and pursuant to the Plan, which
shall govern all rights, interests, obligations and undertakings of both the
Company and the Participant.
WPS
RESOURCES
CORPORATION
By:
________________________________
Title:
Senior VP -
Human Resources
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ACKNOWLEDGEMENT
FORM
I
have read the
terms of the WPS Resources Corporation Performance Stock Right Agreement, dated
December 7, 2005, and I hereby declare that I understand and agree to be bound
by the terms and conditions of the Agreement.
_________________________________________
Participant
Print
name:
______________________________
PLEASE
DETACH THIS
ACKNOWLEDGEMENT FORM FROM THE PERFORMANCE STOCK RIGHT AGREEMENT AND RETURN
IT TO
XXXXXXX XXXX IN HUMAN RESOURCES. YOUR PERFORMANCE STOCK RIGHT WILL NOT BECOME
EFFECTIVE UNTIL THE COMPANY RECEIVES THIS ACKNOWLEDGMENT FORM.
