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CENTRAL VERMONT PUBLIC SERVICE CORPORATION
MANAGEMENT INCENTIVE PLAN
Adopted As Of January 1, 1997
The Company's executive officers participate in the core utility
Management Incentive Plan (the "Incentive Plan"). The purpose of the
Incentive Plan is to focus the efforts of the executive team on the
achievement of challenging and demanding corporate objectives. When
corporate performance attains the specified annual performance
objectives, an award is granted. A well-directed incentive plan, in
conjunction with competitive salaries, provides a level of compensation
which fully rewards the skills and efforts of the executives.
The Incentive Plan will be administered by the Compensation Committee
of the Board of Directors (the "Committee"). All Committee actions will be
subject to review and approval by the full Board of Directors (the "Board").
At the beginning of each year ("Plan Year"), the Committee will submit
to the Board its recommendations for that Plan Year as to (i) the Incentive
Plan's Corporate Performance Goals, and (ii) the eligible participants.
After the end of each Plan Year, the Committee will report to the Board with
respect to achievement of the approved Corporate Performance Goals and
individual performance measures for that Plan Year, and will submit to the
Board its recommendations as to the appropriate award payment levels for each
eligible participant. Recommendations of the Committee, with such
modifications as may be made by the Board, will be binding on all
participants in the Incentive Plan.
III. THE PLAN
There is established a financial performance threshold, below which no
incentive awards will be paid. The threshold is calibrated against the
allowed return on equity. The degree to which the allowed return on equity
is achieved generates a pool which is available to fund incentive payouts.
The pool funds awards, but performance measures must also be met in
the following areas to receive an award. Each measure is equally weighted.
Return on equity. While this measure is used to establish the
incentive pool, it is also one of the measures which is assessed in
determining distribution of the pool.
Customer satisfaction. Measures the degree of satisfaction of
customers who have had a recent service interaction. The measurement
is conducted by an external firm.
Individual performance. Based on advice and recommendation from the
Chief Executive Officer for those reporting to him. The Committee
evaluates the Chief Executive Officer's performance.
If the maximum payout on all of the standards were to be achieved, the
total award would represent 30% of base salary for the Chief Executive
Officer, 25% of base salary for the Chief Operating Officer, 20% for Senior
Vice Presidents and Vice Presidents, and 15% for other designated officers.
IV. Any annual incentive award will consist of cash (50%) and Central Vermont
Public Service Corporation stock (50%) which will have a three year vesting
restriction. Applicable dividends will be paid on awarded restricted stock
prior to vesting.
The Board may choose to make awards of non-qualified stock options
to designated officers consistent with Plan design and intent.
The Board reserves the right to amend, modify or terminate the Incentive
Plan at any time.