CH Energy Group Inc, et al. · 10-K · For 12/31/04 · EX-10.(III).(32)
Filed On 2/17/05 4:19pm ET · SEC Files 1-03268, 333-52797 · Accession Number 1169232-5-1060
As Of Filer Filing As/For/On Docs:Pgs Issuer Agent
2/17/05 CH Energy Group Inc 10-K 12/31/04 13:236 1169232
Central Hudson Gas & Electric Corp
Annual Report · Form 10-K
Filing Table of Contents
Document/Exhibit Description Pages Size
1: 10-K Annual Report 185 757K
2: EX-10.(III).(32) 2004 Executive Annual Incentive Plan 11 30K
3: EX-10.(III).(33) 2005 Executive Annual Incentive Plan 11 30K
4: EX-12.(I) Ratio of Earnings 2± 18K
5: EX-12.(I).(I) Ratio of Earnings 3± 19K
6: EX-23.1 Consents of Experts and Counsel 1 7K
7: EX-23.2 Consents of Experts and Counsel 1 7K
8: EX-24.(I).(1) Power of Attorney 10 35K
9: EX-24.(I).(2) Power of Attorney 6 26K
10: EX-31.1 Ceo Certification 2 12K
11: EX-31.2 Cfo Certification 2 12K
12: EX-32.1 Ceo Certification 1 9K
13: EX-32.2 Cfo Certification 1 9K
EX-10.(III).(32) · 2004 Executive Annual Incentive Plan
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Exhibit 10(iii)(32)
CH Energy Group, Inc.
Executive Annual Incentive Plan
March 16, 2004
Table of Contents
Section I. Objectives 3
II. Overview 4
III. Establishing Financial and Operating Goals 7
IV. Individual Contributor Evaluation 9
V. Calculating the Annual Incentive Payment 10
2
I. Objectives
The policy of the Board of Directors is to
establish that executive compensation which
includes direct base compensation, long term
incentives, retirement benefits and short term
cash incentives at a level which is equal to the
median (P50) of the market.
The purpose of this plan is to provide annual
short term cash incentives for executives that are
based on achieving key financial and operational
goals .
This plan is designed to pay annual cash
incentives as a percent of base salary. Overall it
is expected that a properly designed incentive
system will achieve a payout in any given year
ranging from zero to 150% of the target amount,
depending on each year's circumstances. Over a
period of time, the average overall payout should
range between 80% and 100% of the target amount if
aggressive but still realistic goals have been
set. Longer term average payouts much above or
below this level indicate goal setting that is
inconsistent with market realities and other
comparable executive incentive programs.
Administration The plan shall be administered by CHEG management
under the direct supervision and approval of
Central Hudson's Board of Directors.
The plan is based on annual performance and
requires that the participant be an active
employee of Central Hudson Energy Group, Inc.
("CHEG") or its subsidiaries or properties at the
end of the calendar year during which performance
goals have been set and results have been
evaluated, except in the case of death, disability
or normal retirement, the incentive opportunity
will be prorated and the evaluation of performance
against both quantitative goals and subjective
goals will be at the sole discretion of Board of
Directors and the CEO.
Goals shall be agreed upon the Board of Directors
and be documented in writing no later than
February 1 of each year.
Performance evaluations and incentive award
payments shall be completed and delivered to the
participant no later than March 15 of the
following year.
3
II. Overview of the Plan
Incentive Opportunity This plan offers the participant the opportunity
to earn an incentive expressed as a percentage of
his/her annual salary which was in effect at the
beginning of the fiscal year.
It is the intent of this plan's design that a
target incentive amount would be paid for full
attainment of all quantitative goals and a
subjective evaluation which found the
participant's performance to be at an expected
level in all areas of performance. It should
further reflect the individual's contribution or
response to unplanned opportunities or challenges.
Incentive payments beyond the targeted performance
levels should be as a result of performance above
targeted goals and expectations. There is no
minimum incentive guarantee under this plan.
Additionally, the plan limits the overall payment
amount.
Notwithstanding the above statement, the board, at
its sole discretion, may increase the calculated
incentive amount or reduce it to zero. The
calculated maximum amount may be exceeded should
the directors deem that the participant's or
company's performance should merit additional
compensation.
The board, at its sole discretion, may eliminate
any or all of the annual awards under this plan in
response to a major employee or public safety
occurrence that resulted in a death or serious
injury or a major public incident that reflected
poorly on the company's image or public trust.
Target and Maximum The following chart specifies the targeted and
Incentive Schedule maximum incentive opportunity as a percent of base
salary for each participant.
----------------------
Percent of Base Salary
------------------------------------------------------------
Officer Level Target Maximum
Incentive Incentive
------------------------------------------------------------
CEO 45% 67.5%
------------------------------------------------------------
COO's 30% 50%
------------------------------------------------------------
SVPs, CFO and CHEC President 25% 40%
------------------------------------------------------------
Other Officers 20% 35%
------------------------------------------------------------
4
Allocation of Incentive The incentive opportunity is divided various
Opportunities segments with varying weights for each segment
depending on the participant's business unit
affiliation. Executives at CHEG or one of the
business units may have their incentive
opportunity tied to some or all of the following
categories. The categories are:
1. Corporate Financial Performance: Total
Earnings per Share against a goal approved
by The Board Of Directors for CHEG as
measured by (including reported earnings per
share from CHGE and CHEC) or CHGE or CHEC.
2. The operational of CHGE against goals
approved by the Board of Directors.
3. The operational performance of CHEC against
milestones approved by the Board of
Directors.
4. A subjective evaluation, recommended by the
CEO and approved by the Board, of the
participant's overall contribution to the
corporation's performance as well as the
participant's response to unplanned business
or operational opportunities or to unplanned
challenges such as storms, other natural or
man made disasters, regulatory changes,
significant changes in interest rates, etc.
5
Each of the incentive opportunities are measured,
evaluated and rewarded independently although
there are interconnections between each of them.
The allocation and weighting of the targeted
incentive opportunity is as follows. The sum of
each column on the following chart is 100% of the
bonus weight allocation.
--------------------------------------------------------------------------------
COO
CH Energy &
Performance Category Group CHG&E CHEC
-------------------- ----- ----- ----
--------------------------------------------------------------------------------
Corporate Financial
Performance 100% 0% 0%
EPS - CH Energy Group
--------------------------------------------------------------------------------
CHG&E Performance 0% 100% 0%
--------------------------------------------------------------------------------
Central Hudson Energy 0% 0% 100%
Services Performance
--------------------------------------------------------------------------------
Response To Unplanned +/-50% +/-50% +/-50%
Opportunities, Problems &
Integration of Results
Within Each Business Unit
III. Establishing Financial and Operating Goals
and Milestones
Agreeing on and Defining Prior to the beginning of the fiscal year, the CEO
Operating Goals and the Board will agree on one or several
critical financial and/or operating goals to be
achieved in the coming year by Central Hudson
Energy Group, Inc., CHGE and/or CHEC.
The Goal Definition Annually, the CEO and the board or its designated
Process committee will reach an agreement on several
parameters for each goal or goals specified:
o The definition of the measurement involved
o The relative weight assigned to that goal
for each category of executive.
o Three performance benchmarks for each goal:
o Threshold performance
o Targeted (or expected) performance
o Superior performance
Wherever possible, goals should be as definitive
and quantitative as possible.
The current year's Goals are attached as Exhibit
I.
Calculating a Weighted Each of the goal-based performances would be
Performance Grade evaluated at the end of the year and evaluation %
approved by the committee. The relationship
between performance and % award is as follows:
o Below "Threshold" -- 0 %
o "Threshold" -- 50%
o "Targeted' -- 100%
o "Superior" -- 150%
o Above "Superior" -- 150%
7
For performances between these benchmarks, a
fractional % would be given based on a linear
interpolation of the measurement and the % award.
For example, if the performance were exactly
midway between Targeted and Superior, then 125% of
Target (midway between 100 and 150 %) would be
awarded.
Converting Earned Points Each performance category has been assigned a
to Weighted Earned Points weighting. These have been specified in Section II
of this document. For purposes of calculating an
incentive, the % earned in each category is then
weighted based on the weighting assigned to the
category.
8
IV. Individual Contributor Evaluation
For Response to Unforeseen Problems and
Opportunities and Unusual Circumstances.
Intent of this Element This incentive opportunity is intended to provide
the CEO and board with flexibility to reflect the
participant's performance in areas other than
those directly quantified in the previous
incentive elements. Included in the considerations
for this incentive would be the following:
o Contribution to the business drivers
encountered during the past year.
o Effectiveness of response to unplanned
business or market opportunities.
o Quality of response to unforeseen operating
difficulties during the year.
o Success in recruiting, developing and
retaining senior operating company
management talent and planning for
management succession.
o Success in anticipating and then alerting
the CEO and board to problems and issues or
opportunities in any aspect of CHEG's or any
of its business units' operations or
interests
o Identification and acquisition of new
business opportunities.
o Effectiveness in integrating the various
business units' interests in the best
interests of Central Hudson Energy Group,
Inc. as a whole.
Calibration of the For all employee groups the weighting for this
Incentive Award segment is +/- 50% of the incentive opportunity.
The targeted evaluation is 0%.
9
V. Calculating the Incentive Payment
The steps used to convert the various weighted
average % earned are as follows:
1. Calculate the evaluation % for each
performance category.
2. Convert the evaluation % based on the
weighting for each category.
3. Add the weighted evaluation percentages for
all categories to determine the award
percentage.
4. Adjust the award percentage by +/- 50 % for
the individual contribution evaluation and
apply this amount to the incumbent's salary
at the beginning of the year to arrive at
the incentive payment to be made.
An example of this calculation method is attached
as Exhibit II.
10
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2004: Exhibit I
CH ENERGY GROUP, INC.
2004 EXECUTIVE COMPENSATION
ANNUAL VARIABLE COMPENSATION PROGRAM TARGETS
All four performance categories were maintained. New objectives
established for the 2004 short-term incentives tied to the operational and
financial performance of CH Energy Group and its subsidiaries were developed as
set forth below:
· Enlarge/Download Table
---------------------------------------------------------------------------------------------------------
Category Description of Target Weighting Threshold Target Superior
---------------------------------------------------------------------------------------------------------
I CH Energy Group EPS 100%
---------------------------------------------------------------------------------------------------------
II CHGE EPS 60%
Percent of Highly Satisfied 20%
Customers
Three-Year Rolling Average of 20%
Equivalent Minutes of Interruption Per
Customer
---------------------------------------------------------------------------------------------------------
III Realization of CHEC EPS vs. Plan(e) 50%
Specific Milestone Completions (f) 50% Consistent with business
plan for CHEC
---------------------------------------------------------------------------------------------------------
IV Individual Problem and Opportunity +/- 50% of
Contribution earned N/A N/A N/A
incentive
from
Categories
I - III
---------------------------------------------------------------------------------------------------------
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