Exhibit 10.37

Executive Officer Compensation

The Governance, Compensation & Nominating Committee (the Committee) of the Xcel
Energy Inc. board of directors sets executives’ salaries, annual bonus targets
and long-term compensation targets. Executive compensation was set by the
Committee for 2007 after consideration of, among other things, individual
performance and market-based data on compensation for executives with similar
duties. Payouts of 2007 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 by
the Committee with respect to 2007 compensation.

Salary

The Committee established the base salaries of its senior executive group for
2007. The salaries for the Xcel Energy officers who are currently serving as
officers and who were named in the Summary Compensation Table in Xcel Energy’s
2006 Proxy Statement (the Named Executive Officers) are set forth below.

 

 

2007 Base Salary

 

Richard C. Kelly

 

 

$

1,100,000

 

Gary R. Johnson

 

 

$

410,000

 

Paul J. Bonavia

 

 

$

535,000

 

Patricia K. Vincent

 

 

$

390,000

 

Benjamin G.S. Fowke III

 

 

$

535,000

 

 

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
approved by the Committee, with each individual having the opportunity to earn
from 0 percent to approximately 150 percent of his or her target annual
incentive award based on the level of achievement in 2007 of the applicable
goals .

Corporate goals for 2007 include targeted earnings per share, an environmental
measurement, and safety.

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.

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,
2007, 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. 3, 2007. For Mr. Kelly, his target long-term
award for 2007 was set at 300 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

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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, 2006 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 $0.89 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, 2008. 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, 2008. 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 10.30, 10.31 and 10.32 to this Form 10-K.

The following table shows the number of performance-based restricted stock units
and performance shares granted, effective Jan. 1, 2007, to Named Executive
Officers:

Named Executive Officer

 

 

 

Performance-based
Restricted Stock Units

 

Performance Shares

 

Richard C. Kelly

 

 

86,478

 

 

95,211

 

Gary R. Johnson

 

 

11,819

 

 

13,012

 

Paul J. Bonavia

 

 

18,927

 

 

20,838

 

Patricia K. Vincent

 

 

11,242

 

 

12,377

 

Benjamin G.S. Fowke III

 

 

18,927

 

 

20,838

 

 

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
2006 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 2006 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. In 2006, the Company undertook a thorough review of
perquisites provided to executive officers. The Company compared the perquisites
to those being offered to executive officers in other companies and evaluated
the value the perquisites provided in attracting and retaining executive
officers. Based on this evaluation the Company substantially changed the
perquisites that will be provided to executive officers, including the Named
Executive Officers in 2007. The Company also evaluated the perquisites offered
to the executive officers as compared to the benefits available to other
employees of the Company. Based on this review, the Company eliminated most
perquisites for executive officers. The Company has increased the cash
perquisite allowance to partially offset the elimination of the perquisites.
Effective January 1, 2007, the Committee

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eliminated all of these executive perquisites other than the cash allowance,
which was increased to $30,000 for the CEO and $25,000 for other NEO’s to
partially offset the elimination of the perquisites.

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. In
October 2006, the Committee amended the 2003 Policy to reduce the separation
benefits payable to an executive officer other than in the event of a change in
control to the following: (i) a lump sum severance benefit equal to one times my
annual salary and target annual incentive; (ii) a lump sum payment equal to the
actuarial equivalent of the additional benefits accrued under the Company’s
retirement plans as the executive officer had continued in employment for one
additional year; (iii) a lump sum payment equal to the additional employer
contributions that the executive officer would have received under the Company’s
savings plans if the executive officer’s employment had continued for one
additional year; and (iv) for a period of one year following termination,
continued medical, dental and life insurance benefits, and perquisite cash
allowance. This change will be effective October 2009.

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