EXHIBIT 10.1

 

PORTLAND GENERAL ELECTRIC COMPANY

2008 ANNUAL CASH INCENTIVE MASTER PLAN

FOR EXECUTIVE OFFICERS

 

 

 

 

 

 

 

 

TABLE OF CONTENTS

Page

SECTION 1 Purpose 1

SECTION 2 Definitions 1

SECTION 3 Administration 2

SECTION 4 Eligibility and Participation 3

SECTION 5 Establishment and Calculation of Awards 3

SECTION 6 Payment of Awards Earned 4

SECTION 7 Termination of Employment 4

SECTION 8 Section 162(m) Awards 5

SECTION 9 Adjustments Upon Changes in Capitalization 6

SECTION 10 General Provisions 8

SECTION 11 Amendment, Suspension, or Termination of Plan 9

SECTION 12 Effective Date 9

 

PORTLAND GENERAL ELECTRIC COMPANY

2008 ANNUAL CASH INCENTIVE MASTER PLAN

FOR EXECUTIVE OFFICERS

SECTION 1

Purpose

The purpose of the Portland General Electric Company 2008 Annual Cash Incentive
Master Plan for Executive Officers is to recognize and reward executive officers
of the Company for achieving individual, department and/or corporate goals and
objectives.

SECTION 2

Definitions

2.1 "Affiliate" means any entity that controls, is controlled by or is under
common control with the Company.

2.2 "Annual Incentive Program" means the terms and conditions pursuant to which
a Participant may receive an Award under the Plan in a particular Award Year
based upon achievement of pre-established performance goals and/or assessment of
individual contribution.

2.3 "Award" means a contingent right to receive cash at the end of an Award
Year.

2.4 "Award Year" means any fiscal year of the Company for which the Company
adopts an Annual Incentive Program under this Plan.

2.5 "Board" means the Board of Directors of the Company.

2.6 "Code" means the Internal Revenue Code of 1986, as amended.

2.7 "Company" means Portland General Electric Company.

2.8 "Committee" means the Compensation and Human Resources Committee of the
Board.

2.9 "Covered Executive" means an Employee who (i) would be treated as a "covered
employee" under Code section 162(m), (ii) holds a position with the Company at
the level of vice president or above, or (iii) would be treated as an executive
officer of the Company under applicable SEC reporting rules.

2.10 "Disability" means a disability under the Company's long-term disability
program, or if no such program exists, a disability as determined by the
Committee.

 

2.11 "Employee" means any employee of the Company or an Affiliate, excluding any
person characterized on the Company's or an Affiliate's payroll records as a
temporary or contract employee.

2.12 "Participant" means a Covered Executive selected to participate in the
Annual Incentive Program for an Award Year.

2.13 "Plan" means the Portland General Electric Company 2008 Annual Cash
Incentive Master Plan for Executive Officers as set forth herein, as amended
from time to time.

2.14 "Retirement" means a Participant's termination of employment after meeting
the requirements for retirement under the Company's qualified pension plan.

 

SECTION 3

Administration

3.1. Duties. The Committee shall be responsible for the administration of the
Plan according to the terms and provisions hereof and shall have the sole
discretionary authority and all powers necessary to accomplish these purposes,
including without limitation, the right, power, authority and duty to:

(a) make rules, regulations and procedures for the administration of the Plan
which are not inconsistent with the terms and provisions hereof;

(b) construe and interpret all terms, provisions, conditions and limitations of
the Plan; and

(c) correct any defect, supply any omission, construe any ambiguous or uncertain
provisions, or reconcile any inconsistency that may appear in the Plan, in such
manner and to such extent as it shall deem expedient to carry the Plan into
effect.

All decisions, determinations, and interpretations of the Committee will be
final and binding.

3.2. Liability. No member of the Board, officer of the Company, or designee of
any thereof shall be personally liable for any action, failure to act,
determination, or interpretation made in good faith with respect to the Plan or
any transaction under the Plan.

 

SECTION 4

Eligibility and Participation

4.1. Selection of Participants. The Committee will select the Employees who will
participate in the Annual Incentive Program for an Award Year at the beginning
of each Award Year, in its discretion. To the extent the Committee deems it
appropriate during an Award Year, the Committee may designate additional
Participants to participate in the Annual Incentive Program for the Award Year.
Participants must be current Covered Executives who have a direct, significant,
and measurable impact on the attainment of the Company's goals and objectives.
The Committee or its delegate will notify Participants of their selection in
writing. The Committee will not be bound to select individuals who have been
Participants in prior Award Years.

4.2. Persons Ineligible. Members of the Board who are not Employees are not
eligible to participate in the Plan.

4.3. Participation in Other Annual Incentive Plans. Participants in an Annual
Incentive Program for an Award Year are not eligible to participate in any other
annual incentive plan of the Company for such Award Year without the specific
approval of the Committee.

 

SECTION 5

Establishment and Calculation of Awards

5.1. Establishment of Annual Incentive Program. At the beginning of an Award
Year, the Committee will establish in writing the material terms and conditions
applicable to the Annual Incentive Program, including, without limitation, the
relevant performance goals, Award amounts payable based on the extent to which
the performance goals are met, and the potential effect of individual
Participant contributions during the Award Year, for the Employees selected to
participate in the Annual Incentive Program for the Award Year.

5.2. Determination at Year End. Following the end of each Award Year the
Committee shall determine the extent to which performance goals were met for the
Award Year for each Participant. In making such determination, the Committee may
include or exclude the impact of any nonrecurring, unusual events that occur
during the Award Year including without limitation (i) asset write-downs;
(ii) litigation or claim judgments or settlements; (iii) the effect of changes
in tax laws and other laws, accounting principles, or provisions affecting
reported results; (iv) any reorganization or restructuring programs;
(v) extraordinary, nonrecurring items as described in Accounting Principles
Board Opinion No. 30 or in management's discussion and analysis of financial
condition and results of operations appearing in the Company's annual report to
shareholders for the applicable year; (vi) acquisitions or divestitures; and
(vii) foreign exchange gains and losses.

5.3. Calculating Award Amounts. The Committee shall calculate the Award amounts
payable at the end of an Award Year for each Participant based on the extent to
which the relevant performance goals were achieved during the Award Year. The
Committee, in its discretion, may further adjust an Award to reflect individual
Participant contributions during the Award Year. If minimum performance goals
are not achieved for an Award, no payment will be made under the Award;
provided, however, that the Board, in its sole discretion, may establish a
separate discretionary amount distributable as Awards to Participants under the
Plan which shall be allocated at the discretion of the Committee.

SECTION 6

Payment of Awards Earned

6.1. Timing of Payment. Awards earned by each Participant shall be paid in cash
as soon as administratively possible following the date the amounts are
determined but in no event later than two and one-half months after the end of
the Award Year (or, if later, two and one-half months after the end of the
calendar year containing the end of the Award Year).

6.2. Set-Off. The Company shall have the right to set off against any Award
payable hereunder, the amount of any loan or advance made by the Company or an
Affiliate to the Participant.

 

SECTION 7

Termination of Employment

7.1. Forfeiture of Award. In the event of a Participant's termination of
employment for any reason other than the Participant's death, Disability, or
Retirement prior to payment being made under an Award, the Participant will
forfeit all rights to any payment under the Award.

7.2. Death, Disability and Retirement. If a Participant's employment terminates
prior to payment being made under an Award due to the Participant's death,
Disability, or Retirement, the Company shall pay an Award to the Participant or
the Participant's estate at such time as Awards are payable generally to other
Participants, pro-rated, to the extent necessary to reflect the number of full
and partial months during the Award Year which the Participant was employed by
the Company.

 

SECTION 8

Section 162(m) Awards

8.1. Generally. The Committee may determine that an Award granted to a Covered
Executive will be granted in a manner such that the Award qualifies for the
performance-based compensation exemption of Section 162(m) of the Code
("Performance-Based Awards"). Such Performance-Based Awards shall be based on
achievement of hurdle rates and/or growth rates in one or more business criteria
that apply to the individual participant, one or more business units, or the
Company as a whole. In addition, Performance-Based Awards may include
comparisons to the performance of other companies, such performance to be
measured by one or more business criteria.

8.2. Business Criteria. The business criteria to be used for Performance-Based
Awards shall be as follows, individually or in combination: (1) net earnings;
(2) earnings per share; (3) net sales growth; (4) market share; (5) operating
profit; (6) earnings before interest and taxes (EBIT); (7) earnings before
interest, taxes, depreciation and amortization (EBITDA); (8) gross margin; (9)
expense targets; (10) working capital targets relating to inventory and/or
accounts receivable; (11) operating margin; (12) return on equity; (13) return
on assets; (14) planning accuracy (as measured by comparing planned results to
actual results); (15) market price per share; (16) total return to stockholders;
(17) cash flow and/or cash flow return on equity; (18) recurring after-tax net
income; (19) gross revenues; (20) return on invested capital; (21) safety; (22)
cost management; (23) productivity ratios; (24) operating efficiency; (25)
accomplishment of mergers, acquisitions, dispositions or similar extraordinary
business transactions; (26) bond ratings; (27) economic value added; (28) book
value per share; (29) strategic initiatives; (30) employee satisfaction; (31)
cash management or asset management metrics; (32) regulatory performance; (33)
dividend yield; (34) dividend payout ratio; (35) pre-tax interest coverage; (36)
P/E ratio; (37) capitalization targets; (38) customer value/satisfaction; (39)
inventory; (40) inventory turns; (41) availability and/or reliability of
generation; (42) outage duration; (43) outage frequency; (44) trading floor
earnings; (45) budget-to-actual performance; (46) customer growth; (47) funds
from operations; (48) interest coverage; (49) funds from operations/average
total debt; (50) funds from operations/capital expenditures; (51) total
debt/total capital; (52) electric service power quality and reliability, (53)
resolution and/or settlement of litigation and other legal proceedings, (54)
corporate responsibility, (55) power supply, (56) total equity/ total capital,
and (57) economic strength.

8.3. Establishment of Performance Goals. With respect to Performance-Based
Awards, the Committee shall establish in writing (i) the applicable performance
goals, and such performance goals shall state, in terms of an objective formula
or standard, the method for computing the amount of an Award if such performance
goals are obtained, and (ii) the individual Employees or class of Employees to
which such performance goals shall apply, in each case no later than ninety (90)
days after the commencement of the Award Year.

8.4. Certification of Performance. No Performance-Based Awards shall be payable
to any Participant until the Committee certifies in writing that the applicable
performance goals (and any other material terms) have been satisfied.

8.5. Other Requirements. With respect to any Awards intended to qualify as
Performance-Based Awards, after establishment of a performance goal, the
Committee shall not revise such performance goal or increase the amount payable
thereunder upon the attainment of such performance goal (in accordance with the
requirements of Section 162(m) of the Code and the regulations thereunder).
Notwithstanding the preceding sentence, (i) the Committee may adjust downward,
but not upward, the amount payable pursuant to such Award upon attainment of the
performance goals, (ii) the Committee may waive the achievement of the
applicable performance goals in the case of the death or Disability of the
Participant, or under such other conditions where such waiver will not
jeopardize the treatment of other Awards as "qualified performance-based
compensation" under Section 162(m), and (iii) the Committee shall disregard or
offset the effect of any "Extraordinary Items" in determining the attainment of
performance goals. For this purpose, "Extraordinary Items" means extraordinary,
unusual and/or non-recurring items, including but not limited to, (i) regulatory
disallowances or other adjustments, (ii) restructuring or restructuring-related
charges, (iii) gains or losses on the disposition of a business or major asset,
(iv) changes in regulatory, tax or accounting regulations or laws, (v)
resolution and/or settlement of litigation and other legal proceedings or (vi)
the effect of a merger or acquisition. Performance-Based Awards shall otherwise
comply with the requirements of Section 162(m) of the Code, or any successor
provision thereto, and the regulations there under.

8.6. Dollar Limit. No Performance-Based Award to a Participant for an Award Year
shall result in a payment in excess of $2 million.

 

SECTION 9

Adjustments Upon Changes in Capitalization

9.1. Changes to Company. In the event of a reorganization, merger, or
consolidation of which the Company is not the surviving corporation, or upon the
sale of substantially all the assets of the Company to another entity, or upon
the dissolution or liquidation of the Company, the Award Year will terminate on
the effective date of such transaction and the Company or its successor shall
determine the amount, if any, payable with respect to such Award Year, unless
the documents effecting such event provide for the continuance of the Plan and
the assumption of such Awards or the substitution of such Awards for awards of
equivalent value under a program of the successor.

9.2. Changes to Subsidiary. In the event of the reorganization, merger,
consolidation, or sale of substantially all of the assets of a subsidiary of the
Company to another entity not related to the Company, any Award to a Participant
that is an employee of such subsidiary shall be treated in the manner determined
by the Board in its discretion.

9.3. Authority Under this Section. Adjustments under this Section 9 will be made
by the Board, whose determination as to what adjustments will be made and the
extent will be final, binding, and conclusive.

 

SECTION 10

General Provisions

10.1. No Right to Participate or Receive an Award. Nothing in the Plan or in any
communication evidencing an Award shall be deemed to give a Participant or a
Participant's legal representative or any other person or entity claiming under
or through a Participant any contract or right to receive an Award or any
payment under the Plan.

10.2. No Employment Right. The Plan does not constitute or imply the existence
of an employment contract between the Company or an Affiliate and any person.
Participation in the Plan shall not be construed as constituting a commitment,
guarantee, agreement, or understanding of any kind that the Company or an
Affiliate will continue to employ any individual.

10.3. Nontransferability. Neither a Participant nor any other person has any
right to assign, transfer, attach, or hypothecate any benefits or payments under
the Plan. Payments held by the Company before distribution shall not be liable
for the debts, contracts, or obligations of any Participant or any other person,
or be taken in execution by attachment or garnishment, or by any other legal or
equitable proceeding

10.4. Withholding. The Company has the right to deduct any sums which federal,
state, or local tax law requires to be withheld with respect to the payment of
any Award.

10.5. Plan Unfunded. To the extent that any person acquires a right to receive
payment under the Plan, such right shall be no greater than the right of an
unsecured general creditor of the Company. All payments to be made hereunder
shall be paid from the general funds of the Company and no special or separate
fund shall be established and no segregation of assets shall be made to assure
payment of such amounts. The Plan is not subject to the Employee Retirement
Income Security Act of 1974, as amended from time to time.

10.6. Severability. If any provision of the Plan or any Award is or becomes or
is deemed to be invalid, illegal, or unenforceable in any jurisdiction, or as to
any Participant or Award, or would disqualify the Plan or any Award under any
law deemed applicable by the Committee, such provision shall be construed or
deemed amended to conform to applicable laws, or if it cannot be so construed or
deemed amended without, in the determination of the Committee, materially
altering the intent of the Plan or the Award, such provision shall be stricken
as to such jurisdiction, Participant, or Award, and the remainder of the Plan
and any such Award shall remain in full force and effect.

10.7. Choice of Law. The Plan shall be interpreted under the laws of the State
of Oregon notwithstanding any conflict of law principles. Venue for all claims
and actions related to or arising under the Plan shall be exclusively in the
courts of the State of Oregon.

SECTION 11

Amendment, Suspension, or Termination of Plan

The Board may amend, suspend, or terminate the Plan at any time. In addition,
the Board may amend, suspend, or terminate any or all unpaid Awards under the
Plan upon a finding of current or threatened financial hardship for the Company,
which shall be final and binding upon all Participants.

 

SECTION 12

Effective Date

This Plan is effective commencing with the January 1, 2008 Award Year.

 

 

Executed as of the 25th day of October, 2007.

 

 

PORTLAND GENERAL ELECTRIC COMPANY

 

 

By: /s/ Arleen Barnett

Name: Arleen Barnett

Title: Vice President, Administration