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MAINE & MARITIMES CORPORATION
2010 Executive Compensation Plan
 
 
Preface
 
This plan outlines the components of an Executive Compensation Plan for Maine &
Maritimes Corporation (“MAM” or the “Company”).   Executive compensation shall
consist of three components:
 
1.  
Base pay which will be reviewed and may be adjusted annually based on market
conditions as well as corporate and executive performance,

2.  
Short-term incentive award (STIA) based on the short term objectives of the
Company as well as individual goals, and

3.  
Long-term incentive award (LTIA) based on corporate performance.

 
In addition the Company’s Performance and Compensation Committee (the
“Committee”) may enhance the Executive’s benefits as part of enhancing the
overall performance package. The Committee recognizes its responsibility to
inform each Executive of these requirements and provide appropriate feedback and
review accordingly.
 
Base Pay
 
The base salary shall be market-based for similar positions and responsibilities
there-in. A nominal adjustment may be awarded to align the Executive’s salary
with the market and adjust for inflation.
 
Short Term Incentive Award
 
The Short Term Incentive Award (STIA) includes performance goals and award
factors based on individual targeted compensation levels as well as the
following three factors: a plan level award factor (financial overlay goals),
achievement of Corporate Goals and achievement of individual goals.  The
Compensation committee, however, retains final discretion to assess senior
management performance and to determine award amounts, taking into consideration
extraordinary events or circumstances.
 
The 2010 Plan Award Factor:  In order to capture both internal and external
measures of performance, the award potential under the Annual Incentive Plan is
tied to three overlay financial goals: MAM share price (50% weight), return on
Common Equity for Maine Public Service Company (“MPS”) (25% weight), and Net
Income for MAM Utility Services Group (“USG”) (25%weight).  The award factor for
each goal may range from a minimum of 50% to a maximum of 200%, depending on the
level of achievement. The overall award plan –level award factor is the sum of
the three weighted award factors. The table below illustrates the potential
range for the three goals.
 
 
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Annual STIA Target Incentive: Each executive has an Annual Target Incentive,
based on position and expressed as a percent of salary.  For all Vice
Presidents, the factor is 25% of base salary and for the President/ CEO the
factor is 40%.
 
Corporate Goals:  Each corporate goal is assigned a weighting, with the overall
achievement equal to the sum of the individual components. For 2010, the
following are suggested Corporate Goals and weighting.
 

 
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2010 Short Term Incentive Objectives
                                       
Weighting
      50%           25%          25%                   
MAM
           
USG
         
Award
   
Share
   
MPS
   
Net
         
Factor
   
Price
   
ROE
   
Income
     
Threshold
    50 %   $ 36       8 %   $ 0                                            
Target
    100 %   $ 40       10 %   $ 100,000                                        
   
Maximum
    200 %   $ 44       12 %   $ 200,000                                        
   
      Actual Performance for Thresholds
                                                                               
                               
MAM
 
Weighting
   
Achieved %
                     
1.  Increase Net income by 15% over 2009 actual
    20 %                            
     Total MAM
    20 %                                                                  
MPS
                                   
2.  Earn allowed Rate of Return on Equity (net income
     = $3.0M)
    20 %                            
3.  Execute agreement for a Transmission Project
    20 %                            
4.  Reduce budgeted controllable 2010 O&M by $300,000
    20 %                            
     Total MPS
    60 %                                                                  
USG
                                   
5.  Contribute $100,000 in Net Income to MAM
    20 %                            
     Total USG
    20 %                                                                        
100 %                                                                  

 
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75% of the STIA will be paid in cash.  The remaining 25% will be paid in MAM
stock to be issued under the Company’s 2008 Stock Plan.  These Stock Grants will
be fully vested, with taxes due on the fair market value of the stock, at the
end of the year during which the performance is measured.  If the Executive
leaves the Company or is terminated with cause during that year, the Executive
will forfeit the award.

Long Term Incentive Award (LTIA)

Executives may be awarded common stock for achieving long-term goals as set by
the Board of Directors. Common Stock equivalent up to 80% of the chief executive
officer’s base salary and 50% of the other executive officer’s base salary may
be awarded for achieving long-term goals. The awards will be fully vested, with
taxes due on the fair market value of the stock, on the third anniversary of the
award.  Executives will have unrestricted access to the stock at the end of
three years.  If there is a change of control or the Executive is terminated
without cause during the three-year period, the award will vest at that
time.  If the Executive leaves the Company or is terminated with cause during
the three-year period, the Executive will forfeit the stock award.

The Company’s LTIA is designed to align executive compensation with the
long-term performance of the Company. Starting in 2010, all of the LTIA is
delivered in the form of contingent performance shares of the Company’s Common
Stock, to emphasize the performance culture of the Company. The LTIA is measured
based on the “Total Shareholder Return” (“TSR”) percentile targets over a
three-year cycle versus a peer group of publicly traded and combination
utilities.

TSR is the combined return from the sum of calculating the annual dividend yield
plus the annual increase in the value of the stock price.  The peer group
averages will be used to measure MAM’s performance against.  The peer group used
is presented in the table below:
 

               Company Name
 
  Ticker
Central Vermont Public Service Co
CV
Cleco
CNL
El Paso Electric
EE
Empire District Electric
EDE
Florida Public Utilities
FPU
Great Plains Energy
GXP
IdaCorp
IDA
Northeast Utilities
NU
NSTAR
NST
Otter Tail
OTTR
Portland General Electric
POR
UIL Holdings
UIL
Unitil
UTL

The LTIA will have a range of weightings which depend on how MAM’s performance
was relative to its peer group as follows:
 
 
 
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  TSR Comparison Award
 
 
Award
Factor
Relative Performance
Threshold
50%
30th percentile of peer group
     
Target
100%
50th percentile of peer group
     
Maximum
200%
80th percentile of peer group

 
Other Plan Features

The Committee has sole discretion to determine awards based on extenuating
factors such as normal executive retirements and or changes in control or any
other unforeseen issue.

 

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