exv10w1
Exhibit-10.1
Commonwealth Edison
Company Long-Term Incentive Plan
(Effective January 1, 2007)
Commonwealth
Edison Company Long-Term Incentive Plan
(Effective
January 1, 2007)
1. Establishment. The Commonwealth
Edison Company Long-Term Incentive Plan (the “Plan”)
is established by Commonwealth Edison Company, an Illinois
corporation (the “Company”), effective January 1,
2007.
2. Purpose. The purpose of the
Plan is to reward achievement of key goals over three-year
performance cycles, to enhance the Company’s ability to
attract, motivate, reward and retain certain officers and
executive employees, to align and strengthen their commitment to
the success of the Company, and to promote the long-term
objectives of the Company.
3. Definitions.
(a) Affiliate means any person or entity
(including Exelon and each Subsidiary) that directly or
indirectly controls, is controlled by, or is under common
control with, the Company.
(b) Award means the incentive award payable
to a Participant hereunder with respect to a Performance Cycle
and each Plan Year within such Performance Cycle.
(c) Board means the Board of Directors of the
Company.
(d) Cause means, with respect to any Employee:
(1) the refusal to perform or habitual neglect in the
performance of the Employee’s duties or responsibilities,
or of specific directives of the officer or other executive of
the Company or any of its Affiliates to whom the Employee
reports which are not materially inconsistent with the scope and
nature of the Employee’s employment duties and
responsibilities;
(2) the Employee’s willful or reckless commission of
act(s) or omission(s) which have resulted in or are likely to
result in, a material loss to, or material damage to the
reputation of, the Company or any of its Affiliates, or that
compromise the safety of any employee or other person;
(3) the Employee’s commission of a felony or any crime
involving dishonesty or moral turpitude;
(4) the Employee’s material violation of the
Company’s or any Affiliate’s Code of Business Conduct
(including the corporate policies referenced therein) which
would constitute grounds for immediate termination of
employment, or of any statutory or common law duty of loyalty to
the Company or any of its Affiliates; or
(5) any breach by the Employee of any one or more
restrictive covenants for the benefit of the Company or any of
its Affiliates.
(e) Code means the Internal Revenue Code of
1986, as amended, and all applicable regulations and rulings
thereunder as in effect from time to time.
(f) Company means Commonwealth Edison
Company, an Illinois corporation, and any successor thereto.
(g) Disability means a physical or mental
condition on account of which benefits under the long-term
disability plan of the Company or one of its Affiliates,
whichever covers the Participant, have commenced.
(h) Eligible Executive means an Employee
whose level is Vice-President (or any equivalent successor
level) or higher.
(i) Employee means an employee of the Company
or a Subsidiary employed in an executive or officer level
position.
(j) Exelon means Exelon Corporation, a
Pennsylvania corporation and the sole shareholder of the Company.
(k) Incentive Pool means an amount, expressed
either as a dollar value or pursuant to an objective formula or
performance measure, that is designated by the Board as
available to pay Awards for a Performance Cycle and each Plan
Year within such Performance Cycle, pursuant to
Section 6(a).
(l) Participant means an Eligible Executive
who has been selected by the Board to participate in the Plan
for a particular Performance Cycle, including Eligible
Executives who are selected after a Performance Cycle has
commenced, pursuant to Section 4(b).
(m) Performance Cycle means a three-year
performance cycle beginning on January 1 of any year designated
by the Board.
(n) Performance Goals means the objective
performance goal(s) designated by the Board pursuant to
Section 6(b) with respect to an Incentive Pool.
(o) Plan means this Commonwealth Edison
Company Long-Term Incentive Plan as set forth herein and as
amended from time to time.
(p) Plan Year means each of the three
calendar years within a Performance Cycle.
(q) Retirement means a Participant’s
termination of employment other than for Cause after attaining
age 50 with 10 years of service under any defined
benefit pension plan maintained by the Company or one of its
Affiliates for the benefit of the Participant (including for
this purpose any deemed pension service granted to the
Participant under an employment or change in control agreement
to the extent any applicable vesting or other conditions to such
deemed service have been satisfied upon such termination of
employment).
(r) Subsidiary means a business which is
affiliated through common ownership with the Company, and which
is designated by the Board as an employer whose employees may be
eligible to participate in the Plan, but only with respect to
such period of affiliation.
4. Participation.
(a) Generally. Not later than
three months after the beginning of each Performance Cycle, the
Board shall designate the Participants (if any) for such
Performance Cycle. Any individual who is an Eligible Executive
as of the first day of the Performance Cycle may be designated
as a Participant.
(b) Individuals Who Become Eligible Executives During
a Performance Cycle. An individual who
becomes an Eligible Executive after the first day of a
Performance Cycle may be designated as a Participant for the
remainder of the Plan Year in which such participation commences
and any subsequent Plan Year within such Performance Cycle. Any
Award for the Plan Year in which such participation commences
shall be prorated pursuant to Section 7(a).
5. Administration.
(a) The Board shall administer the Plan.
(b) The Board shall have full and complete authority to
establish any rules and regulations it deems necessary or
appropriate relating to the Plan, to interpret and construe the
Plan and those rules and regulations, to correct defects and
supply omissions, to determine the Eligible Executives who shall
become Participants for any Performance Cycle, to determine the
Performance Goals and other terms and conditions applicable to
each Award, to determine the achievement of Performance Goals
and approve all Awards, to determine whether and to what extent
Awards may be paid on a deferred basis, to make all factual and
other determinations arising under the Plan, and to take all
other actions the Board deems necessary or appropriate for the
proper administration of the Plan.
(c) The Board may from time to time delegate the
performance of its ministerial duties under the Plan to any
officers or employees of the Company or any of its Affiliates, a
committee of such officers or employees, or such other person or
persons as the Board may select.
(d) The Board’s administration of the Plan, including
all such rules and regulations, interpretations and construals,
selections, factual and other determinations, approvals,
decisions, delegations, amendments, terminations and other
actions as the Board shall see fit shall be final and binding on
the Company and its Subsidiaries, stockholders and all
employees, including Participants and their beneficiaries. Any
decision made by the Board in good faith in connection with its
administration of or responsibilities under the Plan shall be
conclusive on all persons.
(e) The Board may engage and rely on the advice of such
advisors, consultants or data as it considers necessary or
desirable in selecting eligible key employees, in designating
applicable Performance Goals, and in determining attainment of
Performance Goals and the amount of incentive awards under the
Plan, and in performing its other duties under the Plan.
(f) The Company
and/or its
participating Subsidiaries shall pay the costs of Plan
administration.
6. Performance Goals.
(a) Establishment of Incentive
Pool(s). Not later than three months after
the beginning of each Performance Cycle, the Board shall
establish in writing an Incentive Pool which shall be equal to
the sum of the annual target awards specified by the Board for
each Plan Year within the Performance Cycle, and from which
Awards (if any) will be paid with respect to each such Plan
Year. The Board shall designate the Participants who are
eligible to share in each such Incentive Pool (subject to the
Board’s right to add new Participants during the
Performance Cycle in accordance with Section 4(b) above).
The amount payable with respect to each Incentive Pool (or
portion thereof) shall be based on the attainment of one or more
specified Performance Goals, weighted in such manner as the
Board determines, and based on or contingent upon the level of
achievement of threshold, target and maximum performance (as set
by the Board) of the stated Performance Goals. The amount
payable for any Plan Year within the Performance Cycle upon the
achievement of the maximum level of Performance Goals shall not
exceed 200% of the amount payable upon the achievement of the
target level of Performance Goals.
(b) Performance Goals. The
Performance Goals for each Performance Cycle shall be based on
three-year financial, operational, regulatory, legislative and
any other goals of the Company established by the Board. With
respect to each such goal, the Board shall specify desired
levels of improvement and annual targets for each Plan Year
within such Performance Cycle. Each Performance Goal may be
expressed on an absolute or relative basis and may include
comparisons based on current internal targets, the past
performance of the Company, its Subsidiaries or business units
or the past or current performance of other companies (including
industry or general market indices), or a combination of any of
the foregoing, and may be applied at various organizational
levels.
(c) Impact of Extraordinary
Items. The Board may, in its sole discretion,
adjust or modify any Performance Goals on account of any
extraordinary changes or events which occur during a Plan Year
or Performance Cycle, including without limitation,
extraordinary corporate transactions or changes in accounting
practices or the law.
7. Determination of Award Amounts for Any Plan
Year.
(a) Determination of Attainment of Performance
Goals. As soon as practicable following the
end of each Plan Year, the Board shall evaluate the extent to
which the applicable Performance Goals have been met for the
Plan Year, and determine the amount of the Incentive Pool and
the amount of the Award to be payable to each Participant for
such Plan Year. An Award payable with respect to a Participant
whose participation commenced after the first day of a Plan
Year, in accordance with Section 4(b), shall be prorated
based on the actual achievement of Performance Goals for such
Plan Year and the number of days within such Plan Year during
which the Participant participated in the Plan.
(b) Board Discretion to Determine Amount of
Award. The Board shall have absolute
discretion to increase or reduce the amount of the Award
otherwise payable to any Participant for a Plan Year pursuant to
Section 7(a), and the Board may decide not to pay any Award
to a Participant for the Plan Year, based on such criteria,
factors and measures as the Board in its sole discretion may
determine, including but not limited to individual performance
or impact and financial and other performance or financial
criteria of the Company, a Subsidiary or other business unit in
addition to those listed in Section 6(b).
8. Vesting and Timing of Payments.
(a) Timing of Payments —
General. One-third of the amount of each
Award approved by the Board with respect to a Plan Year shall be
payable to the Participant as soon as administratively
practicable after the date of such approval. The remaining
portion of such Award shall vest and become payable in equal
installments on the first and second anniversaries of the date
of such approval, provided that the Participant remains in
continuous employment with the Company or one of its Affiliates
as of the date of such payment, or otherwise becomes vested in
such payments pursuant to Section 8(b). No portion of an
Award shall be treated as earned by a Participant prior to the
date on which it is paid.
(b) Effect of Termination of Employment or Change in
Position.
(1) Retirement, Death,
Disability. If a Participant’s
employment terminates during a Plan Year on account of
Retirement, death or Disability, such Participant (i) shall
become fully vested in any Awards approved by the Board for any
prior Plan Year and (ii) shall be entitled to a prorated
Award, if any, for the Plan Year in which such termination
occurs, based on the actual achievement of Performance Goals for
such Plan Year and the number of days within such Plan Year
during which the Participant was an Eligible Executive.
(2) Separation Under Severance
Plan. If a Participant’s employment
terminates during a Plan Year under circumstances which entitle
the Participant to severance benefits under an executive
severance plan maintained by the Company or one of its
Affiliates, including an involuntary termination by the Company
without Cause, and the Participant is eligible for and satisfies
all of the conditions to the receipt of such severance benefits,
then to the extent provided in such severance plan the
Participant (i) shall become fully vested in any Awards
approved by the Board for any prior Plan Year and
(ii) shall be entitled to a prorated Award, if any, for the
Plan Year in which such termination occurs, based on the actual
achievement of Performance Goals for such Plan Year and the
number of days within such Plan Year during which the
Participant was an Eligible Executive.
(3) Termination for Cause, Voluntary
Resignation. If a Participant’s
employment terminates during a Plan Year for any reason other
than as described in Section 8(b)(1) or 8(b)(2), including
a termination of employment by the Company for Cause or, except
as provided in Section 8(b)(2), a resignation by the
Participant for a reason other than Retirement, such Participant
(i) shall forfeit any unvested Awards approved by the Board
for any prior Plan Year and (ii) shall not be entitled to
an Award for the Plan Year in which such termination occurs.
(4) Change in Employment
Position. If a Participant’s employment
position within the Company changes during a Plan Year, then
(i) any Awards approved by the Board for any prior Plan
Year shall continue to vest subject to the continued employment
of the Participant, in accordance with Section 8(a), and
(ii) the Participant shall be eligible for an Award, if
any, for the Plan Year in which his or her employment position
changes, based on the actual achievement of Performance Goals
for such Plan Year and determined by prorating the amount of the
Award that would be payable with respect to each of the
Participant’s employment positions, based on the number of
days within such Plan Year during which the Participant was
employed in such position.
(5) Leave of Absence. If during a
Plan Year a Participant commences a leave of absence that is
approved by the Board, then (i) any Awards approved by the
Board for any prior Plan Year shall continue to vest subject to
the continued employment of the Participant, in accordance with
Section 8(a), and (ii) the Participant shall be
eligible for a prorated Award, if any, for that Plan Year and
any subsequent Plan Year during which such leave of absence
continues, based on the actual achievement of Performance Goals
for such Plan Year and the number of days within such Plan Year
during which the Participant was actively employed.
9. Source, Time and Manner of Payment,
Interest. Each Participant’s Award for a
Plan Year shall be paid in cash, solely from the general assets
of the Company or its Subsidiaries, without interest, as soon as
reasonably practicable after the Award becomes vested and
payable pursuant to Section 8. Any Award for a Plan Year
which becomes vested and payable to a Participant whose
employment terminates pursuant to Section 8(b)(1) or
8(b)(2) shall be payable at the same time such Award would have
been payable if the Participant had continued in employment with
the Company. This Plan is intended to comply with the
requirements of section 409A of the Code, and shall be
interpreted and construed accordingly, and the timing of any
payments under the Plan shall be automatically modified to the
extent necessary to comply with such requirements.
10. Designation of
Beneficiaries. Each Participant from time to
time may name any person or persons (who may be named
concurrently, contingently or successively) to whom the
Participant’s Award under the Plan is to be paid if the
Participant dies before receipt of the Award. Each such
beneficiary designation will revoke all prior designations by
the Participant, shall not require the consent of any previously
named beneficiary, shall be in a form prescribed or permitted by
the Company and will be effective only when filed with the
Company during the Participant’s lifetime. If a Participant
fails to so designate a beneficiary before death, or if the
beneficiary so designated predeceases the Participant, any Award
payable after the Participant’s death shall be paid to the
Participant’s estate.
11. No Assignment of Rights. No
Participant or other person shall have any right, title or
interest in any Award under this Plan prior to the payment
thereof to such person. The rights or interests of Participants
under this Plan shall not be subject in any manner to
anticipation, alienation, sale, transfer, assignment pledge,
encumbrance, charge, garnishment, execution or levy of any kind,
either voluntarily or involuntarily, and any attempt to
anticipate, alienate, sell, transfer, assign, pledge, encumber,
charge, garnish, execute on, levy or otherwise dispose of any
right to an Award or any payment hereunder shall be void.
12. No Greater Employment
Rights. The establishment or continuance of
this Plan shall not affect or enlarge the employment rights of
any Participant or constitute a contract of employment with any
Participant, and nothing herein shall be construed as conferring
upon a Participant any greater rights to employment than the
Participant would otherwise have in the absence of the adoption
of this Plan.
13. No Right to Ongoing
Participation. The selection of an individual
as a Participant in the Plan for any Performance Cycle shall not
require the selection of such individual as a Participant for
any subsequent Performance Cycle, or, if such individual is
subsequently so selected, shall not require that the same
opportunity for an incentive award provided the Participant
under the Plan for an earlier Performance Cycle be provided such
Participant for the subsequent Performance Cycle.
14. No Personal Liability. None of
the Company, its Affiliates or any Board member or delegate
shall be personally liable for any act done or omitted to be
done in good faith in the administration of the Plan.
15. Unfunded Plan. No Participant
or other person shall have any right, title or interest in any
property of the Company or its Affiliates, and nothing herein
shall require the Company or any Affiliate to segregate or set
aside any funds or other property for the purpose of making any
payment under the Plan.
16. Facility of Payment. When a
person entitled to an incentive award under the Plan is under
legal disability, or, in the Board’s opinion, is in any way
incapacitated so as to be unable to manage such person’s
affairs, the Board may direct the payment of an incentive award
directly to or for the benefit such person, to such
person’s legal representative or guardian, or to a relative
or friend of such person. Any payment made in accordance with
the preceding sentence shall be a full and complete discharge of
any liability for such payment under the Plan, and none of the
Board, the Company or any Affiliate shall be under any duty to
see to the proper application of such payment.
17. Withholding for Taxes and
Benefits. The Company or any of its
Affiliates may withhold from any payment to be made under the
Plan all appropriate deductions for employee benefits, if
applicable, and such amount or amounts as may be required for
purposes of complying with the tax withholding obligations under
federal, state and local income and employment tax laws.
18. Amendment and Termination. The
Board may amend the Plan at any time and from time to time, in
whole or in part, and may terminate the Plan at any time, which
amendment or termination may include the modification, reduction
or cancellation of any prospective Award hereunder which has not
been approved by the Board pursuant to the terms of the Plan
prior to the time of any such amendment or termination, provided
that no such amendment or termination shall change the terms and
conditions of payment of any Award the final amount of which the
Board has approved for payment to a Participant without such
Participant’s consent.
19. Applicable Law. The Plan shall
be construed under the laws of the State of Illinois, other than
its laws with respect to choice of laws.