Exhibit 10.1

 

2006 IDACORP, Inc.
EXECUTIVE INCENTIVE PLAN
Revised February 6, 2006

 

PURPOSE

The purpose of the 2006 IDACORP Executive Incentive Plan (the "Plan") is to
reinforce IDACORP, Inc.'s (the "Company") goals for profitable growth and
continuation of a sound overall financial condition by providing incentive
compensation opportunities to selected key employees.  The Plan is designed to:

 

attract, retain, and motivate key employees;

 

relate compensation to performance and financial results; and

 

provide a portion of compensation in a variable rather than a fixed form.

 

 

ADMINISTRATION

 

The Compensation Committee of the Board of Directors (the "Committee") has
authority to:

 

select employees of the Company and its subsidiaries who are eligible to
participate as Plan Participants; and

 

establish award opportunities for Plan Participants.

 

An award opportunity is the opportunity of a Participant to earn specified
dollar amounts based on performance of the Company, its subsidiaries, and/or its
business units during a given calendar year.  Award opportunities include terms
specifying:

threshold, target, maximum, and/or other amounts that potentially may be earned
by each Plan Participant; and

 

annual performance goals for the Company as a whole and/or for subsidiaries or
business units, which goals are pre-conditions to the earning of an incentive
award at the threshold, target, maximum, or other specified level.

 

The Committee will report on its actions to the Company's Board of Directors
(the "Board").  All actions of the Committee concerning the Plan or its
administration are subject to the ratification of the Board if requested by the
Committee or required by the Board, the Securities and Exchange Commission,
applicable law, or by the rules or regulations of the securities exchange on
which the Company's shares are listed.

 

The Plan will be administered by the Committee, which is authorized to interpret
the Plan, to establish rules and regulations necessary to administer the Plan,
and to take all other actions it determines are required for the proper
administration of the Plan.  All actions, determinations, interpretations, and
decisions made by the Committee and/or the Board regarding the plan or its
administration will be final, conclusive, and binding upon all parties
concerned.  No member of the Committee or the Board shall incur any liability by
reason of any action or determination made with respect to the Plan.

 

PARTICIPATION

 

Employees that may be selected for participation in the Plan in a given calendar
year are those in a position to directly and significantly affect revenues,
profits or losses, or operating efficiencies of the Company and/or its
subsidiaries.  Employees selected for participation ("Participants") will be
notified and provided a copy of the performance measures and other criteria for
award determination.

 

Participants may be added to the Plan or removed from the Plan at any time
during the calendar year based on participation criteria previously approved by
the Committee, by virtue of promotion or new hire following the initial
eligibility designation or upon approval of the Committee.  Participation in the
Plan during a particular calendar year shall not entitle a Participant to
participation in the Plan in future years.

 

EFFECT OF TERMINATION OF EMPLOYMENT

 

Upon the termination of a Participant's employment with the Company or its
subsidiaries prior to completion of the calendar year, (i) if termination is for
reasons other than Retirement, Death or Disability, unless otherwise determined
by the Committee, the Participant's award opportunity will be cancelled and the
Participant will not be eligible to receive a final incentive award, and (ii) if
termination is due to Retirement, Death or Disability, the Participant's award
opportunity will remain in effect, subject to the terms of the Plan. 
"Retirement" shall mean a Participant's termination from employment with the
Company or its subsidiaries, as applicable, if the date of termination occurs on
or after age 62 or if the termination is otherwise determined by the Committee
to qualify as a Retirement.  "Disability" shall mean termination of a
Participant's employment with the Company or its subsidiaries, as applicable, if
the Participant is eligible to receive benefits under the Long-Term Disability
Program maintained by the Company or its subsidiaries.

 

DETERMINATION OF INCENTIVE AWARDS

 

Incentive award opportunities will be based upon Company and subsidiary
performance measures as described in the Exhibit attached hereto.  This Plan
does not permit the payment of awards to IDACORP/Idaho Power Executives if there
is no payment of awards to employees under the IDACORP/Idaho Power Company
Employee Incentive Plan.  Similarly, no payment of awards under this Plan will
be made to Subsidiary Executives if there is no payment of awards to employees
under Subsidiary Employee Incentive Plans.  Award opportunities need not be
uniform among Participants and may vary from year to year.  Because payments of
dividends to shareholders is an important value to the Company, no awards under
the plan will be paid if the operational and/or customer service goals are met
at some level but the net income is less than the Board approved dividend for
IDACORP Common Stock for 2006.

 

Within a reasonable time after the end of each calendar year, the Committee
shall determine the extent to which the performance goals have been achieved and
the payout level of the resulting award that is potentially payable to
Participants.  The Committee then shall determine whether such potential award
shall be paid out as a final award.  The Committee may adjust any potential
award upward or downward, accelerate or defer payment of any final award, or
determine to pay no amount as an award, in its sole discretion, in light of such
considerations as the Committee may deem relevant. An award shall be deemed
earned and vested only at such time as the Committee has determined that the
award has become final.

 

If the amount of an award opportunity that may be earned and become payable will
be calculated by multiplying an incentive percentage corresponding to specified
levels of performance, that percentage will be multiplied by the base salary
paid to a Participant during the Plan year, exclusive of any amounts earned
under any incentive, bonus, or benefit plans.

 

The Committee retains the discretion to authorize an individual performance
payout for extraordinary results on the part of a Participant regardless of the
level of achievement of the Company performance goal and other performance goals
and/or to modify performance goals to take into account extraordinary and
unexpected events.

 

PAYMENT OF AWARD

 

As promptly as practicable after final awards for a given calendar year have
been determined, such awards shall be paid out in cash by the Company to
Participants who are active employees (i.e., other than those who have died or
terminated due to Retirement or Disability during the calendar year) as of
December 31 of the calendar year to which the award relates.  The pay out date
for any other Participant entitled to a payout shall be determined by the
Committee.

 

The Company or subsidiary shall deduct from all payments made under the Plan an
amount necessary to satisfy federal, state, and or local tax withholding
requirements.  Amounts paid under the Plan will be considered in the calculation
of benefits under the Idaho Power Company Retirement Plan and the Idaho Power
Company Employee Savings Plan for eligible participating employees.

 

 

PLAN IS NOT A CONTRACT

 

No provision of the Plan nor any document describing the Plan or establishing
rules or regulations regarding the Plan's administration shall be deemed to
confer on any Participant the right to continue in the Company's or subsidiary's
employ nor shall any such provision or document affect the right of the Company
or any subsidiary to terminate any Participant's employment. 

 

 

AMENDMENT AND TERMINATION OF THE PLAN

 

The Board reserves the right to amend, suspend, or terminate the Plan and any
award opportunities under the Plan at any time in whole or in part, for any
reason, and without the consent of any Participant or beneficiary.  Company
subsidiaries reserve the right to suspend or terminate their participation in
the Plan at any time, for any reason, and without the consent of any Participant
or beneficiary.

 

 

PLAN BINDING ON SUCCESSORS

 

All obligations of the Company or any subsidiary under the Plan shall be binding
on any successor to the Company or any subsidiary, respectively, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, reorganization, or other transaction involving all or
substantially all of the business and/or assets of the Company or any
subsidiary.

 

 

EFFECTIVE DATE

 

The Plan shall become effective January 1, 2006, and if not terminated by action
of the Board of Directors, shall expire December 31, 2006.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXHIBIT A

 

IDACORP and Idaho Power Executive Participants 2006 Goals

HOW THE PLAN WORKS

The plan consists of a combination of Operational and Customer Service goals for
Idaho Power Company, Net Income targets for Idaho Power Company and Net Income
targets for IDACORP.  The intent of the plan is to focus on key areas management
can impact while maintaining a means of additional profit sharing should Net
Income exceed expected performance.

The weightings for the three areas are as follows:

Operational/Customer Service Goals - 40%

Net Income at Idaho Power Company - 30%

IDACORP Consolidated Net Income - 30%

 

The total payout will be based on predetermined participation levels approved by
the Board of Directors.  The amount of incentive to be awarded each participant
will be calculated by multiplying the approved incentive percentage by the
combined multiplier times the base salary.

I.          Operational/Customer Service Goals

A.         Customer Satisfaction

The Customer Relationship Index (CRI) details the company's performance through
the eyes of the customer and is based on a rolling 4-quarter average for the
period beginning January 1, 2006 through December 31, 2006.  The index consists
of 5 specific questions asked of our customers by an independent survey company
and addresses issues such as overall satisfaction, quality, value, advocacy, and
loyalty.  The CRI goal for 2006 is as follows:

 

Performance Level

CRI Goal

Qualifying Multiplier

Threshold

%

7.5%

Target

%

15%

Maximum

%

30%

 

 

 

 

 

 

 

B.        Total Operation and Maintenance (O&M) Expense

Operational and strategic goals help management focus on effective use of assets
and capital.  The operational target will be to manage to budgeted levels of
forecasted amounts.  For 2006 the goal is as follows:

 

Performance Level

Total O&M
Expenditures

Qualifying Multiplier

Threshold

 

7.5%

Target

 

15%

Maximum

 

30%

 

Total O&M will be non-fuel O&M less two areas of "non-discretionary" expenses. 
The two areas of exclusion are pension expense and third party transmission
expense.  All other expenses are included in the determination of total O&M.

C.        Network Reliability

This goal will be measured using the number of interruptions greater than 5
minutes in duration experienced by Small and Large General Service Customers
(Customers).  In addition to the required performance levels below, this metric
contains a hurdle of no more than 10% of Customers subjected to more than 6
interruptions.  If this hurdle is not passed, the payout for the Network
Reliability goal will be zero.

Performance Level

Interruptions

Qualifying Multiplier

Threshold

 

5%

Target

 

10%

Maximum

 

20%

 

 

 

 

 

 

 

 

 

II.         Idaho Power Company Net Income

Performance Level

Idaho Power Company Net Income

Qualifying Multiplier

Threshold

 

15%

Target

 

30%

Maximum

 

60%

Net Income is defined as Net Income reported in the audited year-end financial
statements.  The target amounts are those amounts reported after considering all
applicable incentive amounts.

III.        IDACORP Consolidated Net Income

Because all of the subsidiaries ultimately contribute to the success of IDACORP,
if IDACORP Net Income exceeds predetermined rate of return levels, management
will be eligible to earn an additional payout as follows:

Performance Level

Consolidated IDACORP Net Income

Qualifying Multiplier

Threshold

 

15%

Target

 

30%

Maximum

 

60%

Consolidated Net Income is defined as Net Income reported in the audited
year-end financial statements.  The target amounts are those amounts reported
after considering all applicable incentive amounts.