As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 2/27/06  Xcel Energy Inc                   10-K       12/31/05   15:5.2M                                   Merrill Corp-MD/FA

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K        Annual Report Pursuant to Section 13 and 15(D)      HTML   3.07M 
 2: EX-4.13     Amendment to the Credit Agreement Dated Nov. 4,     HTML     97K 
                          2005 Between Xcel and Various Lenders                  
 3: EX-4.48     Amendment to the Credit Agreement Dated April 21,   HTML     94K 
                          2005 Between Nsp-Mn and Various Lenders                
 4: EX-4.64     $50,000,000.00 Revolving Line of Credit Note        HTML     38K 
                          Between Psc-Co and Wells Fargo Bank                    
                          12/1/2005                                              
 5: EX-4.65     Amendment to the Credit Agreement Dated April 21,   HTML    118K 
                          2005 Between Psc-Co and Various Lenders                
 6: EX-10.37    Material Contracts                                  HTML     35K 
 7: EX-10.38    Material Contracts                                  HTML     20K 
 8: EX-12.01    Statements of Computation of Ratio of Earnings to   HTML     32K 
                          Fixed Charges                                          
 9: EX-21.01    Subsidiaries of the Xcel Enegy, Inc.                HTML     27K 
10: EX-23.01    Consents of Independent Auditors                    HTML     19K 
11: EX-24.01    Written Consent Resolution of the Board of          HTML     30K 
                          Directors of Xcel Energy Inc., Adopting                
                          Power of Attorney                                      
12: EX-31.01    302 Certification                                   HTML     16K 
13: EX-31.02    302 Certification                                   HTML     16K 
14: EX-32.01    906 Certification                                   HTML     15K 
15: EX-99.01    Statement Pursuant to Private Securities            HTML     14K 
                          Litigation Reform Act of 1995                          

Exhibit 10.37

 

Executive Officer Compensation

 

On Dec. 13 and 14, 2005, the Governance, Compensation & Nominating Committee (the Committee) of the Xcel Energy Inc. board of directors took actions setting executives’ salaries, annual bonus targets and long-term compensation targets for 2006. Executive compensation was set by the Committee after consideration of, among other things, individual performance and market-based data on compensation for executives with similar duties. Payouts of 2006 annual bonus targets and long-term awards are dependent on achievement of specified goals set by the Committee, and no officer is assured of any payout. Set forth below is a description of the actions taken.

 

Salary

 

The Committee established the base salaries of its senior executive group for 2006. The salary of Mr. Richard Kelly, the Chairman of the Board and Chief Executive Officer increased 14 percent in the recognition of his assumption of additional duties as newly-elected Chairman of the Board. The salary increases for the other Xcel Energy officers who are expected to be named in the Summary Compensation Table in Xcel Energy’s 2006 Proxy Statement (the Named Executive Officers) ranged from 0 percent to 14 percent.

 

		2006 Base Salary
Richard C. Kelly		$	1,050,000
Gary R. Johnson		$	410,000
Paul J. Bonavia		$	515,000
Patricia K. Vincent		$	450,000
Benjamin G.S. Fowke III		$	500,000

 

Annual Bonus Targets

 

Annual incentive awards, expressed as a percentage of salary, were set by the Committee under the Xcel Energy Executive Annual Incentive Award Plan (effective May 25, 2005) (the Xcel Annual Incentive Plan), which was approved by Xcel Energy’s shareholders in 2005. Payouts of annual incentive awards are dependent on the level of achievement of corporate financial and operational goals and business unit operational goals approved by the Committee, with each individual having the opportunity to earn from 0 percent to 200 percent of his or her target annual incentive award based on the level of achievement in 2006 of the goals applicable to such individual.

 

Corporate goals for 2006 include targeted earnings per share, a customer service measurement, an environmental measurement, operations measurements related to generation availability, system reliability and safety, and an employee engagement measurement. Business unit goals are related to customer service, environmental responsibility, reliability, safety and management to budgeted financial results, measured at a business unit level.

 

Target annual incentive awards, as a percent of base salary, were set for all Xcel Energy officers, ranging from 100 percent of salary for Mr. Kelly to 55 percent to 65 percent of salary for the other Named Executive Officers. With the approval of the Committee, an award may be multiplied by a leadership-rating factor from zero to two.

 

Payout of the annual incentive award for Mr. Kelly is dependent entirely on attaining corporate goals. For the other executive officers, including Named Executive Officers, the formula is weighted 67 percent to attaining corporate goals and 33 percent to attaining business unit operational goals.

 

In order to encourage increased share ownership by executive officers, the Xcel Energy Annual Incentive Plan provides the option for executives to receive their payments in shares of common stock or shares of restricted common stock, which vests in equal annual installments over a three-year period, in lieu of cash. A 5 percent premium is added to amounts paid in shares of common stock, and a 20 percent premium is added to amounts paid in shares of restricted common stock. The terms of the annual incentive awards are subject to the Xcel Energy Annual Incentive Plan that is filed as Appendix C to Xcel Energy’s 2005 Proxy Statement.

 

 

Long-Term Awards

 

The Committee also approved target long-term incentive grants, effective Jan. 1, 2006, pursuant to the Xcel Energy 2005 Omnibus Incentive Plan, which was approved by shareholders in 2005. As explained below, payout of long-term incentive grants is dependent on achievement of performance goals set by the Committee. Long-term incentive grants were made 50 percent in the form of performance-based restricted stock units and 50 percent in the form of performance shares. The amounts of the awards for each individual were established by the Committee and expressed as a percentage of such individual’s base salary. The actual number of performance-based restricted stock units and performance shares awarded to an individual were determined by dividing the dollar value of such percentage of base salary by the expected value of each award type as determined on Jan. 2, 2006. For Mr. Kelly, his target long-term award for 2006 was set at 260 percent of his salary. For the other Named Executive Officers, the percentage ranged from 110 percent to 135 percent.

 

Performance-based restricted stock units (“Units”) will represent an equal number of shares of Xcel Energy common stock. Prior to the expiration of the restricted period, the Units may not be sold or otherwise transferred by the recipients. Units are credited during the restricted period at the same rate as dividends paid on all other shares of outstanding common stock. The dividend equivalents are subject to all terms of the original grant.

 

Payout of the Units and the lapsing of restrictions on the transfer of Units are based on two separate performance criteria. Seventy-five percent of awarded Units plus associated earned dividend equivalents shall be settled, and the restricted period will lapse, after Xcel Energy achieves a specified earnings per share (EPS) growth (adjusted for corporate-owned life insurance) measured against Dec. 31, 2005 EPS (adjusted for corporate-owned life insurance). The forms of performance-based restricted stock unit agreements are filed as Exhibits 10.30 and 10.32 to this Form 10-K.

 

Additionally, Xcel Energy’s annual dividend paid on its common stock must remain at $0.86 per share or greater. EPS growth will be measured annually at the end of each fiscal year. However, in no event will the restrictions lapse prior to Dec. 31, 2007. If the performance criteria have not been met within four years of the date of grant, all associated Units shall be forfeited.

 

The remaining 25 percent of awarded Units plus associated earned dividend equivalents shall be settled, and the restricted period will lapse, after the average of actual performance results for the three components of an environmental index (measured as a percent of target performance) meets or exceeds 100 percent. The environmental index will be measured annually at the end of each fiscal year. However, in no event will the restrictions lapse prior to Dec. 31, 2007. If the performance criteria have not been met within four years of the date of grant, all associated Units shall be forfeited.

 

The separate awards of performance shares also will represent an equal number of shares of Xcel Energy common stock. Performance shares may not be sold or otherwise transferred. Payout of the performance share award will be dependent entirely on a single measure, total shareholder return (TSR). Xcel Energy’s TSR will be measured over a three-year period. Xcel Energy’s TSR is compared to the TSR of other companies in the Edison Electric Institute’s Electrics Index as a peer group. At the end of the three-year period, potential payouts of the performance shares range from 0 percent to 200 percent, depending on Xcel Energy’s TSR compared to the peer group.

 

The terms of the foregoing grants are consistent with the 2005 Omnibus Incentive Plan and terms of award agreements filed as Appendix B to Xcel Energy’s 2005 Proxy Statement and Exhibits 10.04, 10.05 and 10.07 to Xcel Energy’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2005, with the following exceptions: the Committee reserved the discretion to reduce or pro-rate awards to an individual who is not actively employed by Xcel Energy on the last day of the performance cycle, and 200% of the target for performance shares earned will be achieved with 90^th percentile relative total shareholder return vs. 75^th percentile relative total shareholder return performance

 

 

The following table shows the number of performance-based restricted stock units and performance shares granted, effective Jan. 1, 2006, to Named Executive Officers:

 

Named Executive Officer		Performance-based Restricted Stock Units		Performance Shares
Richard C. Kelly		90,218		100,073
Gary R. Johnson		14,904		16,532
Paul J. Bonavia		22,976		25,486
Patricia K. Vincent		16,358		18,145
Benjamin G.S. Fowke III		22,307		24,743

 

Other Perquisites and Benefits

 

Other perquisites and benefits provided to executives generally are not tied to the Company’s financial performance, but are primarily designed to attract and retain executives. Among the perquisites and benefits provided by the Company in 2005 to its executives are Company-paid life insurance in an amount equal to four times base pay, reduced to two times base salary post retirement (which, in general, the executives can  purchase upon termination by repaying to the Company the greater of the cash surrender value or the aggregate premiums paid by the Company), and benefits provided under the Xcel Energy Inc. Nonqualified Deferred Compensation Plan and the Xcel Energy Supplemental Executive Retirement Plan that make up for retirement benefits that cannot be paid under the Company’s qualified retirement plans due to Internal Revenue Code limitations and the exclusion of certain elements of pay from pension-covered earnings. Other perquisites and benefits provided by the Company in 2005 to its executives include reimbursement for financial planning services and home security systems, cash perquisite allowance, executive medical insurance and physicals, aircraft usage and club dues.

 

Certain executive officers, including four of the Named Executive Officers, may receive severance benefits in accordance with the Xcel Energy Senior Executive Severance and Change in Control Policy, which is filed as Exhibits 10.15 and 10.28 to this form 10-K. Mr. Bonavia may receive severance benefits under his employment agreement, which is filed as Exhibit 10.25 to this Form 10-K. Mr. Wayne Brunetti, former Chairman and Chief Executive Officer, retired in December 2005 and received benefits under his employment agreement, which is filed as Exhibit 10.35 to this Form 10-K.