INTEGRYS ENERGY GROUP, INC. PERFORMANCE STOCK RIGHT AGREEMENT
Exhibit
10.5
THIS
AGREEMENT is entered into as of May
17, 2007, (the “Grant
Date”), by and between INTEGRYS ENERGY GROUP, INC.(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 Integrys Energy Group, Inc.
2007Omnibus 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 willbe
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 April 1, 2007to December 31, 2009.
3. Performance
Measures.
(a) Total
Shareholder Return (“TSR”). The quotient obtained
by
dividing (1) the Shareholder Return with respect to a share of common
stockof the
Company, by (2) the
Beginning Market Price of a share of common stockof the Company. 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 of
the companies included in the Towers Xxxxxx database of 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*
|
| 90thPercentile or Greater | 200% |
| 75thPercentile | 150% |
| 50thPercentile | 100% |
| 25thPercentile | 50% |
| Below the 25thPercentile |
0%
|
*
The Presumptive Award for performance
between points on the payout schedule would be interpolated.
(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 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 Final Award is intended to comply
with Section 162(m) of the Internal Revenue Code and if the Participant is
a
Covered Executive (as defined in the Plan) for purposes of Section 162(m) of
the
Internal Revenue Code.
-2-
Except
with respect to the portion (if
any) of the Final Award payment of which is deferred in accordance with the
Integrys Energy Group, Inc.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..
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 Integrys Energy Group,
Inc. 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.
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. Except with respect to
the portion (if
any) of the Final Award payment of which is deferred in accordance with the
Integrys Energy Group, Inc. Deferred Compensation Plan, 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
separation if Participant qualifies as a “specified 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.
-3-
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 modifythe 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;
provided that the Committee need not obtain written consent of the Participant
for a modification of the Performance Stock Right to the extent that the Plan
specifically permits the Committee action or to the extent that the Committee
deems such modification necessary to comply with any applicable law, the listing
requirements of any principal securities exchange or market on which the shares
underlying the
-4-
Performance
Stock Right are then traded,
or to preserve favorable accounting or tax treatment of the Performance Stock
Right for the Company; and provided further, that unless the Committee
determines that a Performance Stock Right is not intended to comply with the
requirements of Section 162(m) of the Internal Revenue Code, 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 Illinois, without regard
to the
principle of conflict of laws, 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 (or reasonably should
have 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, or Xxxx County,
Illinois, 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. Such
action or other legal proceeding shall be heard pursuant to a bench trial,
and 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.
By:/s/
Xxx
Xxxxx
Title:
Senior VP
& Chief HR Officer
-5-
ACKNOWLEDGEMENT
FORM
I
have read the terms of the
Integrys Energy Group,
Inc.
Performance Stock Right
Agreement, dated May 17, 2007, 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 THE GREEN BAY HUMAN
RESOURCES DEPARTMENT. YOUR PERFORMANCE STOCK RIGHT WILL NOT BECOME
EFFECTIVE UNTIL THE COMPANY RECEIVES THIS ACKNOWLEDGMENT
FORM.
