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

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

EX-10.(III).(32)
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                                                             Exhibit 10(iii)(32)

CH Energy Group, Inc.                                                           
Executive Annual Incentive Plan                                                 

March 16, 2004                                                                  

EX-10.(III).(32)
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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

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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

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      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

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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

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                             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                                                       

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                            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

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                        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

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                   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

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                   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                                      
---------------------------------------------------------------------------------------------------------

Dates Referenced Herein   and   Documents Incorporated By Reference

				Referenced-On Page
This 10-K Filing		Date		First		Last			Other Filings
		3/16/04		1					4
For The Period Ended		12/31/04							11-K, 8-K, U-3A-2
Filed On / Filed As Of		2/17/05
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