UIL HOLDINGS CORPORATION PERFORMANCE SHARE AGREEMENT FOR TSR PERFORMANCE SHARES
EXHIBIT
10.5
UIL
HOLDINGS CORPORATION
FOR
TSR
PERFORMANCE SHARES
THIS
AWARD AGREEMENT
(the
“Award Agreement”), made as of March 28, 2005, by and between UIL
HOLDINGS CORPORATION,
a
Connecticut corporation, having its principal place of business in New Haven,
Connecticut (the “Company” or "UIL"), and Xxxxxxx
X. Xxxxxxxx (the
“Executive”).
WHEREAS,
the Company has adopted the UIL Holdings Corporation CEO/CFO Long Term Incentive
Program (“CEO/CFO LTIP”), a copy of which is annexed hereto, pursuant to the
terms of the UIL Holdings Corporation Senior Executive Incentive Compensation
Plan (the “SEICP”) and UIL Holdings Corporation 1999 Amended and Restated Stock
Plan (the “1999 Plan”);
WHEREAS,
pursuant to the terms of the CEO/CFO LTIP, the SEICP, and the 1999 Plan, the
Compensation and Executive Development Committee of the Company’s Board of
Directors (the “CEDC”) has granted to the Executive an Award of Performance
Shares, payment of which is linked to total shareholder return achieved through
December 31, 2006; and
WHEREAS,
the Company and the Executive wish to evidence the terms and conditions
governing the Performance Awards in this Award Agreement;
NOW
THEREFORE, in consideration of the mutual covenants and promises hereinafter
set
forth and for other good and valuable consideration, the parties hereto mutually
covenant and agree as follows:
1. Grant
of Performance Shares.
The
CEDC hereby makes a preliminary award to the Executive of 3,700 Performance
Shares ("Target Shares"), payment of which is dependent upon the Company’s
achievement, at 100% of ‘target’, of certain Performance Goals more fully
described in Section 2 of this Award Agreement and under the terms of the
CEO/CFO LTIP, with a maximum Award of up to 7,400 Performance Shares possible
based upon the Company's achievement of the Performance Goals at or above the
designated maximum level. The actual number of Performance Shares finally
awarded to the Executive, if any, shall be determined by the CEDC, in accordance
with the terms and conditions of the CEO/CFO LTIP, and its determination shall
be conclusive and binding.
2. Performance
Goals.
The
final number of Performance Shares to be awarded to the Executive (the “Final
Payout”), if any, under this Award Agreement shall be determined based on the
relative total shareholder return percentile achieved by the Company as compared
against an established group of comparable companies selected by the CEDC (the
“Pre-Set TSR Goal”) for the period extending from January 1, 2005 through
December 31, 2006 (the “Performance Period”). Achievement of the Pre-Set TSR
Goal will authorize the CEDC to award a maximum Final Payout at 135% of the
Presumed Payout specified in the following grid, but not in excess of 200%
of
the target number of Performance Shares, with the minimum final payout to be
no
less than 65% of the Presumed Payout set forth in the following
grid:
|
UIL TSR Percentile Achieved |
Minimum Award Payable as % of Target Shares |
Presumed Payout as % of Target Shares |
Maximum Award Authorized as % of Target Shares |
|
Less than 20th |
0% |
0% |
0% |
|
40th |
52% |
80% |
108% |
|
50th |
65% |
100% |
135% |
|
60th |
78% |
120% |
162% |
|
80th |
130% |
200% |
200% |
Interim percentages to be interpolated.
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In
determining the Final Payout, the CEDC shall have the discretion to increase
or
decrease the Presumed Payout by up to 35%, but the Final Payout may not exceed
the applicable percentages specified in the “Maximum” column based on actual
achievement of the Pre-Set TSR Goal. The CEDC will exercise this discretion
in
determining the Final Payout based on its assessment of the Company's
performance as compared to the general stock market and/or comparable companies,
business conditions affecting such performance, and other considerations deemed
relevant by the CEDC. It is understood that there is no promise or commitment,
express or implied, that the Final Payout will exceed or equal the Presumed
Payout. In no event will the aggregate value of the Performance Shares that
have
become earned and payable hereunder (after giving effect to any forfeiture
applicable under Section 3 below) exceed the limit set forth in Section 4.5
of
the CEO/CFO LTIP document and all other applicable limits thereunder and under
the 1999 Plan and SEICP.
3. Vesting;
Payment.
Except
as otherwise provided in this Section, the Executive must remain continuously
employed by the Company or one of its subsidiaries at all times during the
Performance Period to earn any Performance Shares under this Award
Agreement.
3.1. If
the
Executive remains continuously employed by the Company (or one of its
subsidiaries) through December 31, 2006, and no Change in Control has occurred
by that date, then the Executive shall fully vest in his Performance Shares
as
of the last day of the Performance Period. The CEDC shall determine the extent
of achievement of the Pre-Set TSR Goal as of such date, and shall determine
the
final award of Performance Shares to be paid to the Executive in accordance
with
Section 2 of this Agreement.
3.2. If
the
Executive’s employment with the Company and all of its subsidiaries terminates
prior to December 31, 2006 due to his death, disability or retirement on or
after age 65, and prior to a Change in Control, actual performance will be
measured up to and including the date of the Executive’s termination of
employment, and the Final Payout determined in accordance with Section 2 (but
using the termination date for measuring the extent of achievement of the
Pre-Set TSR) will be prorated by multiplying the number of Performance Shares
so
determined by a fraction the numerator of which is the number of days that
have
elapsed from January 1, 2005 through the Executive's date of termination and
the
denominator of which is 730. In such case, the Executive's right to receive
any
Performance Shares in excess of the pro rata portion determined under this
Section 3.2 will be forfeited as of the date of such termination.
For
purposes of this Award Agreement, the Executive shall be considered “disabled”
if he or she is entitled to a disability pension or allowance under the
Company’s disability plan.
3.3. If
the
Executive’s employment with the Company and its subsidiaries terminates prior to
the end of the Performance Period for any reason other than his death,
disability or retirement on or after age 65, and prior to a Change in Control,
the Executive shall forfeit the right to receive any Performance Shares under
this Award Agreement as of the date of such termination.
3.4. Notwithstanding
any provision of this Agreement to the contrary, in the event of a Change in
Control of the Company or The United Illuminating Company during the Performance
Period, the Executive will be deemed to be fully vested as of the CIC Vesting
Date, and shall be awarded that number of Performance Shares that shall be
determined by the CEDC in accordance with Section 2, but using the Change in
Control Vesting Date for measuring the extent of achievement of the Pre-Set
TSR
and, for this purpose, using for the final value of a Company Share the higher
of the per share price actually paid in the transaction constituting the Change
in Control or the average of the high and low sales prices of the Company Shares
on the Change in Control Vesting Date, provided that the Executive is
continuously employed by the Company or one of its Subsidiaries at all times
from the date of this Award Agreement through the date of the Change in Control.
3.5. The
final
number of Performance Shares to which the Executive is entitled pursuant to
this
Award Agreement, if any, shall be paid and settled in actual Shares of Company
stock (at a rate of one Share for each Performance Share to be paid out), up
to
a maximum of 7,400 Performance Shares, such Shares to be drawn from the 1999
Plan and deemed also to be awarded under the SEICP, with any excess Performance
Shares being paid in cash as amounts awarded under the SEICP. In the case of
any
non-deferred Performance Shares, such payments will be made as soon as
practicable following the CEDC’s determination of the applicable number of
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Performance
Shares earned by the Executive pursuant to Section 2 and 3 hereof, but in
no
event later than thirty (30) days following the applicable Entitlement Date.
3.6. The
settlement of any Performance Shares that become payable upon or after the
Executive’s death shall be paid to the Executive’s beneficiary or beneficiaries
if any have been designated for the receipt of such Performance Awards
(“Beneficiary” or “Beneficiaries”, as applicable), otherwise to the legal
representative of the Executive’s estate.
3.7. The
Company is authorized to withhold from the settlement made for any Performance
Shares earned under this Award Agreement the amount (in cash, Shares, other
securities, other Awards, or other property) of all applicable withholding
taxes
due in respect of the Shares payable in settlement of such Performance Shares,
and to take such other action as may be necessary in the opinion of the Company
to satisfy all obligations for the payment of such taxes. The Company will
withhold cash amounts payable in settlement of Performance Shares to the
extent
such cash is available to fully satisfy any mandatory withholding obligations,
and will then withhold Shares deliverable in settlement of Performance Shares,
except that Executive may elect, at least 90 days before the applicable
withholding date, to pay the withholding amount that would be satisfied by
withholding of Shares by making other arrangements satisfactory to the Company
to meet the mandatory withholding obligations.
4. Retention
of Performance Shares.
All
Shares paid to the Executive in settlement of the Performance Shares earned
under this Award Agreement will be subject to retention requirements set forth
in this Section. The Executive will be required to retain ownership of a number
of Shares having a value equal to fifty percent (50%) of the aggregate after-tax
value of all Shares and cash received by him in settlement of Performance Shares
under this Award Agreement or which would have been received but for an election
to defer, for a period of at least three years from the date he receives such
Shares. For this purpose, after-tax value will be calculated as though no
deferral took place. This requirement will lapse upon the Executive’s retirement
or termination of service. For purposes of this Section 4, all values will
be
determined as of the date the Executive receives payment of the Shares in
settlement of the Performance Shares earned hereunder. The Company may affix
a
restrictive legend to share certificates and retain custody of share
certificates to give effect to this restriction, and the CEDC may take into
consideration any failure to abide by this restriction in determining future
incentive awards and other discretionary compensation of the Executive.
5. Incorporation
by Reference.
This
Award Agreement is subject in all respects to the terms and provisions of the
SEICP, 1999 Plan and CEO/CFO LTIP (the “formal program documents”), all of which
terms and provisions are made a part of and incorporated in this Award Agreement
as if they were each expressly set forth herein. The Executive hereby
acknowledges receipt of a true copy of the formal program documents, and that
he
has read these documents carefully and fully understands their content. In
the
event of any conflict between the terms of this Award Agreement and the terms
of
the formal program documents, the formal program documents shall
control.
6. Definitions.
Any
capitalized term not defined in this Award Agreement shall have the same meaning
as is ascribed thereto under the Plan. For purposes of this Award Agreement,
the
following terms shall have the meanings set forth below:
6.1. “Board”
shall mean the Board of Directors of the Company.
6.2. “Breach
by the Company” and “Cause” shall each have the same meanings ascribed thereto
in the Employment Agreement by and between the Executive and The United
Illuminating Company, as amended from time to time.
6.3. “Change
in Control” shall have the same meaning ascribed thereto in the UIL Holdings
Corporation Change in Control Severance Plan II.
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6.4. “CIC
Vesting Date” shall mean the closing date of the transaction that will
constitute a Change in Control.
6.5. “Entitlement
Date” shall mean the earliest of the following dates: (a) the Executive’s
termination due to death, disability or retirement on or after age 65; or (b)
the CIC Vesting Date; or (c) December 31, 2006.
6.6. “Performance
Period” shall mean the period commencing on January 1, 2005 and ending on
December 31, 2006.
6.7. “Shares”
mean shares of UIL Holdings Corporation common stock.
7. No
Shareholder or Dividend Rights.
Prior
to the date Shares are paid in settlement of any Performance Shares, the
Executive will have no right to dividends and will have no voting or other
rights on account of the Performance Shares awarded by this Award Agreement.
The
Executive's rights to dividend equivalents on deferred Shares, if any, will
be
as specified under the Deferred Compensation Plan.
8. Transferability.
The
Performance Shares awarded pursuant to this Award Agreement, and any rights
or
interests therein may not be sold, exchanged, transferred, assigned or otherwise
disposed of in any way at any time by the Executive (or any Beneficiary(ies)
of
the Executive), other than by designation of Beneficiary(ies) as permitted
hereunder or by testamentary disposition by the Executive or the laws of descent
and distribution. The
Performance Shares shall not be pledged, encumbered or otherwise hypothecated
in
any way at any time by the Executive (or any Beneficiary(ies) of the Executive)
and shall not be subject to execution, attachment or similar legal process.
Any
attempt to sell, exchange, pledge, transfer, assign, encumber or otherwise
dispose of or hypothecate the Performance Shares, or the levy of any execution,
attachment or similar legal process upon the Performance Shares, contrary to
the
terms of this Award Agreement and/or the Plan shall be null and void and without
legal force or effect.
9. Adjustments. The
CEDC
is authorized to make adjustments in the number, terms and conditions of the
Performance Shares and related Performance Goals in recognition of unusual
or
nonrecurring events, including stock splits, stock dividends, reorganizations,
mergers, consolidations, large, special and non-recurring dividends, and
acquisitions and dispositions of businesses and assets, affecting the Company
("Company Transactions") and its subsidiaries or other business unit, or the
financial statements of the Company or any subsidiary, or in response to changes
in applicable laws, regulations, accounting principles, tax rates and
regulations or business conditions or in view of the CEDC's assessment of the
business strategy of the Company; provided, however, that no such adjustment
shall be authorized or made if and to the extent that the existence or exercise
of such authority (i) would cause the Performance Shares hereunder to fail
to
qualify as performance-based compensation under Section 162(m) of the Internal
Revenue Code and regulations thereunder, or (ii) would cause the CEDC to be
deemed to have authority to change the targets, within the meaning of Treasury
Regulation 1.162-27(e)(4)(vi), under the Performance Goals relating to an
authorized Performance Award. The number and kind of Performance Shares subject
to this Award Agreement and relevant information relating to the determination
of the Pre-Set TSR Goal shall be adjusted upon the occurrence of a Company
Transaction that affects the Shares in order to prevent dilution and enlargement
of the rights of the Executive under the Program.
10. Entire
Agreement.
This
Award Agreement contains the entire agreement between the parties hereto with
respect to the subject matter contained herein, and supersedes all prior
agreements or prior understandings, whether written or oral, between the parties
relating to such subject matter.
11. Governing
Law.
This
Award Agreement shall be governed by and construed in accordance with the laws
of the State of Connecticut and applicable federal law.
12. Binding
Effect.
The
provisions of this Award Agreement are binding upon and inure to the benefit
of
the Company, its successors and assigns, and the Executive and the Executive’s
guardians and Beneficiary(ies).
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IN
WITNESS WHEREOF, the parties have executed this Award Agreement on the dates
set
forth below.
UIL
HOLDINGS CORPORATION
|
Date:
|
July
8, 2005
|
Attest:
|
/s/
Xxxxx X. Xxxxx
|
By:
|
/s/
Xxxxxxxxx X. Xxxxxxx
|
|
|
Xxxxx
X. Xxxxx
|
Xxxxxxxxx
X. Xxxxxxx
|
||
|
Vice
President Investor Relations, Corporate Secretary &
Treasurer
|
Its
Chairman, President and Chief Executive
Officer
|
Grant
of
Performance Shares on
foregoing
terms acknowledged.
|
Date:
|
July
8, 2005
|
/s/
Xxxxxxx X. Xxxxxxxx
|
|
|
Xxxxxxx
X. Xxxxxxxx
|
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