Exhibit 10.1

 

FORM OF PERFORMANCE AWARD AGREEMENT

 

THIS PERFORMANCE AWARD AGREEMENT (this “Agreement”) is made as of the 8th day of
March, 2016, between DYNEGY INC., a Delaware corporation (“Dynegy”), and all of
its Affiliates (collectively, the “Company”), and Named Employee (“Employee”). 
A copy of the Dynegy Inc. 2012 Long Term Incentive Plan (the “Plan”) is annexed
to this Agreement and shall be deemed a part of this Agreement as if fully set
forth herein.  Unless the context otherwise requires, all terms that are not
defined herein but which are defined in the Plan shall have the same meaning
given to them in the Plan when used herein.

 

1)             The Plan.  Employee acknowledges receipt of a copy of the Plan,
and agrees that this Performance Award shall be subject to all of the terms and
provisions of the Plan, including future amendments thereto, if any, pursuant to
the terms thereof, and to all of the terms and conditions of this Agreement.

 

2)             The Grant.  The Compensation and Human Resources Committee of the
Board of Directors (the “Committee”) granted to Employee on March 8, 2016
(“Effective Date”), a Performance Award of a designated number of performance
units, each of which has a designated value equivalent to Dynegy’s Stock Price
as of the Effective Date.  No portion of the Performance Units will be earned if
the Company’s performance is below the Minimum level of performance.  The
performance criteria are designated in Section 3 and on Exhibit 1 to this
Agreement.

 

3)             Performance Period and Performance Goals.  Subject to the
provisions of Sections 5 and 6 of this Agreement, the performance period for
purposes of determining whether the Performance Award will be paid shall be
January 1, 2016 through December 31, 2018 (the “Performance Period”).  The
Performance Criteria for purposes of determining whether, and the extent to
which, the Performance Award will be paid are set forth in Exhibit 1 to this
Agreement, which Exhibit is made a part of this Agreement.

 

4)             Payment.  Subject to the provisions of Sections 5 and 6 of this
Agreement, following the end of the Performance Period, Employee shall be
entitled to receive the payment of an amount not exceeding the maximum value of
the Performance Award, based on the achievement of the Performance Criteria set
forth in Exhibit 1 for such Performance Period, as determined and certified in
writing by the Committee.  Payment of the Performance Award may be made in a
lump sum in Dynegy Common Stock and shall be made no earlier than January 22,
2018 and not later than March 15, 2018 or such other time as complies with Code
Section 409A.

 

5)             Termination.  The Performance Award shall terminate if Employee
does not remain continuously in the employ of the Company or does not continue
to perform services as a Consultant or Director for the Company at all times
during the Performance Period, except that:

 

a)             if the Employee is determined to be disabled (as defined in the
Company’s long term disability program or plan in which the Employee is a
participant or, if the Employee does not participate in any such plan, as
defined in the Dynegy Inc. Long Term Disability Plan, as amended, or the
successor plan thereto) or in the event of the death of the

 

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Employee, all Performance Units shall become vested at Target level of
performance.  In such case, Employee or Employee’s legal representative, or the
person, if any, who acquired the Performance Award by bequest or inheritance or
by reason of the death of Employee, shall be entitled to receive any payment
with respect to the Performance Award in accordance with this Agreement, or

 

b)             if the Employee’s employment with the Company terminates by
reason of Involuntary Termination, then the Performance Units shall not be
forfeited upon termination of employment and instead shall become vested upon
completion of the performance period based solely upon the actual level of
performance of the Company, or

 

c)              if the Employee’s employment with the Company terminates by
reason of retirement following the date on which such Employee has (I) reached
sixty (60) years of age and (II) completed at least ten (10) years of service as
an employee of the Company, then the Performance Unites shall become vested upon
completion of the performance period based upon actual level of performance;

 

6)             Corporate Change. If a Corporate Change occurs during the
Performance Period, provided the ending share would entitle Employee to receive
a Performance Award based upon the performance goals set forth in Exhibit 1 to
this Agreement Employee shall receive a payment with respect to the Performance
Award, which shall be determined by using either, as applicable (a) the agreed
price per share received by the shareholders of Dynegy as a result of the
Corporate Change, or if there is no agreed price per Share, then (b) the average
closing Dynegy Inc. share price for the twenty (20) consecutive trading days
immediately preceding the effective date of the Corporate Change, as the ending
Share price for the Performance Period.  Such payment, if any, shall be made
regardless of whether Employee’s employment with the Company is terminated
(other than for Cause) on or after the effective date of such Corporate Change,
and shall be made in stock or cash to Employee as soon as administratively
feasible but no later than the later of December 31 of the calendar year in
which the Corporate Change occurs or the 15th day of the third month following
the effective date of the Corporate Change.  The Performance Period shall end as
of the effective date of a Corporate Change, and any Performance Award payments
hereunder shall only be made in accordance with this Section.  Notwithstanding
anything contained herein to the contrary, any Corporate Change within the first
twelve (12) months of the Performance Period would entitle Employee to receive a
Performance Award at Target level of performance.

 

7)             Status of Stock.  Employee agrees that any Shares distributed
pursuant to this Agreement will not be sold or otherwise disposed of in any
manner which would constitute a violation of any applicable federal or state
securities laws.  Employee also agrees that (a) the certificates representing
the Shares may bear such legend or legends as the Committee in its sole
discretion deems appropriate in order to assure compliance with applicable
securities laws and (b) the Company may refuse to register the transfer of the
Shares on the stock transfer records of the Company, and may give related
instructions to its transfer agent, if any, to stop registration of such
transfer, if such proposed transfer would in the opinion of counsel satisfactory
to the Company constitute a violation of any applicable securities law.

 

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8)             Employment Relationship.  For purposes of this Agreement,
Employee shall be considered to be in the employment of the Company as long as
Employee remains an employee of the Company or an Affiliate (as such term is
defined in the Plan).  Nothing in the adoption of the Plan or the grant of the
Performance Award thereunder pursuant to this Agreement shall confer upon
Employee the right to continued employment by the Company or affect in any way
the right of the Company to terminate such employment at any time.  Unless
otherwise provided in a written employment agreement or by applicable law,
Employee’s employment by the Company shall be on an at-will basis, and the
employment relationship may be terminated at any time by either Employee or the
Company for any reason whatsoever, with or without cause.  Any question as to
whether and when there has been a termination of such employment, and the cause
of such termination, shall be determined by the Committee in its sole
discretion, and its determination shall be final and binding on all parties.

 

9)             Withholding of Tax.  To the extent that payment of the
Performance Award results in compensation income to Employee for federal or
state income tax purposes, the Company is authorized to withhold from any cash
or Stock distributable to the Employee under this Agreement then or thereafter
payable to Employee any tax required to be withheld by reason of such resulting
compensation income.

 

10)      Code Section 409A.  If it is subsequently determined by the Committee,
in its sole discretion, that the terms and conditions of this Agreement and/or
the Plan are not compliant with Code Section 409A, or any Treasury regulations
or Internal Revenue Service guidance promulgated thereunder, this Agreement
and/or the Plan may be amended accordingly.

 

11)      Miscellaneous.

 

a)             This grant is subject to all the terms, conditions, limitations
and restrictions contained in the Plan.  In the event of any conflict or
inconsistency between the terms hereof and the terms of the Plan, the terms of
the Plan shall be controlling.  In the event of any conflict or inconsistency
between the terms hereof and the terms of the Dynegy Inc. Severance Plan,
including any amendments or supplements thereto, the terms hereof shall be
controlling.

 

b)             Any notices or other communications provided for in this
Agreement shall be sufficient if in writing. In the case of Employee, such
notices or communications shall be effectively delivered when hand delivered to
Employee at his or her principal place of employment or when sent by registered
or certified mail to Employee at the last address Employee has filed with the
Company. In the case of the Company, such notices or communications shall be
effectively delivered when sent by registered or certified mail to the Company
at its principal executive offices.

 

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IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by
an officer thereunto duly authorized, and the Employee has agreed to and
accepted the terms of this Agreement*, all as of the date first above written.

 

 

DYNEGY INC.

 

 

 

By:

 

 

Name:

Julius Cox

 

Title:

Executive Vice President and CAO

 

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*Employee has agreed to and accepted the terms of this Agreement utilizing
online grant acceptance capabilities with E*Trade Financial, the Company’s
restricted stock administrator.

 

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Exhibit 1

 

Performance Criteria

 

The following Performance Criteria shall apply to the Performance Award
described in the attached PERFORMANCE AWARD AGREEMENT, dated as of the 8th day
of March, 2016 between DYNEGY INC., a Delaware corporation (“Dynegy”), and all
of its Affiliates (collectively, the “Company”), and the Employee.

 

1.              Performance Period: January 1, 2016 through December 31, 2018.

 

2.              Performance Criteria:

 

(a)         Total Shareholder Return — For one-half (50%) of the Award, the
performance criteria shall be calculated utilizing a volume-weighted average
price (VWAP) by comparing the cumulative total stockholder return (“TSR”) for
Dynegy’s common stock relative to the TSR for the Designated Peer Group and
assuming that any dividends paid by Dynegy or the Designated Peer Group are
reinvested on a daily basis.  For this purpose, TSR is calculated based on
(a) the average stock price for a share of common stock during the 10 trading
days both before and after January 1, 2016 and (b) the average stock price for a
share of common stock during the 10 trading days both before and after
December 31, 2018.

 

(b)         Free Cash Flow — For one-half (50%) of the Award, the performance
criteria shall be based on Dynegy’s Free Cash Flow (“FCF”) over the Performance
Period.  FCF is defined as cash flow from operations less non-discretionary
maintenance and environmental capital expenditures, the cash impact of
acquisition-related fees and financing costs plus the return of restricted
cash.  FCF also includes receipts or payments related to interest rate swaps and
excludes the impact of changes in collateral and working capital.  FCF will
exclude capital costs related to compliance with environmental requirements.

 

3.              Designated Peer Group: Any member of the Designated Peer Group
(see Exhibit 2) that undergoes a “change of control event”, or significant
change in business direction, prior to the end of the Performance Period may be
removed from the Designated Peer Group at the discretion of the Human Resources
and Compensation Committee.  A “change of control event” shall mean: (i) when a
company completes the sale of assets having a gross sales price which exceeds
50% of the consolidated total capitalization of the company (consolidated total
stockholders’ equity plus consolidated total long-term debt as determined in
accordance with generally accepted accounting principles) as at the end of the
last full fiscal quarter prior to the date such determination is made; or
(ii) any corporation, person or group within the meaning of Section 13(d)(3) and
14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Act”), becomes
the beneficial owner (within the meaning of Rule 13d-3 under the Act) of voting
securities of the company representing more than 30% of the total votes eligible
to be cast at any election of directors of the company.

 

4.              Award Level for TSR: The Award Level for TSR shall be determined
based on the percentile rank of Relative TSR.  For this purpose, the following
shall apply:

 

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Percentile Rank(1)

 

Award Level(2)

 

90th% or better: (Maximum)

 

200

%

75th%

 

175

%

50th% (Target):

 

100

%

25th% (Minimum)

 

50

%

Below 25th%

 

0

%

 

5.              Award Level for FCF:  The Award Level for FCF shall be
determined based on the achievement of the following cumulative FCF amounts over
the Performance Period:

 

Performance Level

 

FCF Amount

 

% of Target PSUs
Earned(3)

 

Maximum

 

 

 

200

%

Target

 

 

 

100

%

Threshold

 

 

 

50

%

<Threshold

 

 

 

0

%

 

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(1)  If absolute TSR is negative across the Designated Peer Group, award payouts
will be capped at 100%, regardless of relative TSR positioning.

(2)  Linear interpolation will be applicable to the percentages between 25% and
50%, 50% and 75%, and 75% and 90%.

(3)  Linear interpolation will be applicable to the percentages between the
Performance Levels.

 

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Exhibit 2

 

Designated Peer Group

 

o            Public Service Enterprise Group (PSEG)

 

o            Exelon Corporation (EXC)

 

o            FirstEnergy (FE)

 

o            Entergy Corporation (ETR)

 

o            NRG Energy Inc. (NRG)

 

o            AES Corporation (AES)

 

o            Calpine Corporation (CPN)

 

o            Talen Energy (TLN)

 

o            Capital Power Corporation (CPX)

 

o            TransAlta Corporation (TAC)

 

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