Exhibit 10.1

 

PERFORMANCE INCENTIVE STOCK PLAN

 

The CMS Energy Corporation Performance Incentive Stock Plan, first effective
February 3, 1988, is hereby set forth as amended and restated effective
March 12, 2018.

 

Article I. Purpose

 

The CMS Energy Corporation Performance Incentive Stock Plan (hereinafter called
the “Plan”) is a Plan to provide incentive compensation to Eligible Persons,
based upon such Eligible Persons’ individual contributions to the long-term
growth and profitability of the Corporation, and in order to encourage such
Eligible Persons to identify with shareholder concerns and their current and
continuing interest in the development and financial success of the Corporation.
Because it is expected that the efforts of Officers, Employees or Directors
selected for participation in the Plan will have a significant impact on the
results of the Corporation’s operations in future years, the Plan is intended to
assist the Corporation in attracting and retaining Officers, Employees or
Directors of superior ability and in motivating their activities on behalf of
the Corporation.

 

Article II. Definitions

 

2.1 Definitions: When used in the Plan, the following words and phrases shall
have the following meanings:

 

a.              “Affiliate” has the meaning set forth in Rule 12b-2 under the
Exchange Act.

 

b.              “Appreciation Value” means the increase in the value of a
Phantom Share awarded to a Participant and as described in Section 8.1 of the
Plan.

 

c.               “Award” means the incentive compensation awarded or granted
under this Plan in the form of shares of Restricted Common Stock, Restricted
Common Stock Units, Unrestricted Common Stock, Stock Options, Stock Appreciation
Rights, Phantom Shares and/or Performance Units.

 

d.              “Award Document” means an agreement, certificate or other type
or form of document or documentation approved by the Committee which sets forth
the terms and conditions of an Award. An Award Document may be written,
electronic or other media, including a notation on the books and records of the
Corporation and, unless the Committee requires otherwise, need not be signed by
a representative of the Corporation or a Participant.

 

e.               “Award Period” means the period or periods of time relating to
any Restrictions imposed by the Committee with respect to Restricted Common
Stock or Restricted Common Stock Units awarded under Article VII of the Plan. 
Such period of time shall extend for a period of at least twelve months for
Directors (or, if earlier, the period from the date of award until the next
annual meeting of shareholders to occur after the date of the award) and for a
period of at least thirty-six months for Officers and Employees from and after
the date of the award provided that vesting may occur in full at the end of such
period, and further provided that the Committee may provide for early vesting
upon the death, Disability, Retirement or termination of service of the award
recipient, all as set forth in the Award Document.

 

f.                “Beneficial Owner” has the meaning set forth in Rule 13d-3
under the Exchange Act.

 

g.               “Beneficiary” means the beneficiary or beneficiaries designated
to receive the amount, if any, payable under the Plan upon the death of a
Participant.

 

h.              “Board” means the Board of Directors of CMS Energy Corporation
or Consumers Energy Company.

 

i.                  “Cause” shall have the meaning set forth in any written
agreement between the Participant and the Corporation and, if not defined, 
“Cause”  means the occurrence of any one or more of the following:

 

(a)            The continued failure by the Participant to substantially perform
his or her duties of employment (other than any such failure resulting from the
Participant’s Disability), after a demand for substantial performance is
delivered to the Participant that identifies the manner in which the Committee
believes that the Participant has not substantially performed his or her

 

--------------------------------------------------------------------------------

 

duties, and the Participant has failed to remedy the situation within a
reasonable period of time specified by the Committee which shall not be less
than 30 days; or

 

(b)            The Participant’s (i) indictment for a felony or (ii) a
conviction for a misdemeanor involving fraud, embezzlement, theft,
misappropriation or failure to be truthful; or

 

(c)             The Participant’s (i) gross negligence, (ii) failure or refusal,
on request or demand by the Corporation or any governmental authority, to
provide testimony to or cooperate with any governmental regulatory authority, or
any other similar non-cooperation by the Participant, (iii) willful engaging in
misconduct materially or demonstrably injurious to the business or reputation
(by adverse publicity or otherwise) of the Corporation, monetarily or otherwise,
or (iv) violation of a material provision of the Corporation’s code of conduct
and/or code of ethics, including but not limited to violations of the
Corporation’s policies relating to substance abuse and discrimination.

 

j.                 “Change in Control” for Participants who have a written
agreement with the Corporation including a change in control provision, shall
have the meaning as specified in such agreement.  For other Participants, the
phrase shall have the meaning provided in Attachment A hereto.

 

k.              “Code” means the Internal Revenue Code of 1986, as amended.

 

l.                  “Committee” means, as and to the extent specified in
Section 3.2 of this Plan, the Compensation and Human Resources Committee[s] of
the Board and/or the Governance and Public Responsibility Committee[s] of the
Board which shall each be comprised in such a manner intended to comply with the
requirements of the New York Stock Exchange or other applicable stock exchanges,
Rule 16b-3 (or any successor rule) under the Exchange Act and Code
Section 162(m), in each case, to the extent applicable.

 

m.          “Common Stock” means the common stock of CMS Energy Corporation as
authorized for issuance in its Articles of Incorporation at the time of an award
or grant under this Plan.

 

n.              “Corporation” means CMS Energy Corporation, its successors and
assigns, and each of its subsidiaries, or any of them individually.

 

o.              “Director” means any person who is a member of the Board.

 

p.              “Disability” means a determination by the insurer or third-party
administrator under an individual and/or group disability policy covering the
Participant that the Participant is totally and permanently disabled as defined
in the policy or if there is no such coverage, then a disability that satisfies
the requirements of total and permanent disability under Code Section 22(e).

 

q.              “Eligible Person” means an Officer, an Employee or Non-Employee
Director.

 

r.                 “Eligible Termination” means a termination (not involving
death, Disability, Retirement or Cause); pursuant to a notice of termination
delivered to the Participant by the Corporation or pursuant to a request that
the Participant submit a resignation as an employee.

 

s.                “Employee” means a non-Officer salaried employee of the
Corporation.

 

t.                 “Exchange Act” means the Securities Exchange Act of 1934, as
amended.

 

u.              “Grant Period” means the period or periods of time relating to
any restrictions imposed by the Committee with respect to Stock Options or Stock
Appreciation Rights granted under Article VI of the Plan.  Such period(s) of
time shall extend for a period of at least thirty-six months from and after the
date of the grant provided that vesting may occur in full at the end of such
period, and further provided that the Committee may provide for early vesting
upon the death, Disability, Retirement or termination of service of the award
recipient, all as set forth in the Award Document.

 

v.              “Immediate Family” means a Participant’s spouse, child,
step-child, grandchild, sibling or parent.

 

2

--------------------------------------------------------------------------------

 

w.            “Incentive Option” means an option to purchase Common Stock that
meets the requirements of the Plan and Code Section 422, or any successor
provision, and which is intended by the Committee to constitute an Incentive
Option.

 

x.              “Non-Employee Director” means a member of the Board who is not
currently an employee of the Corporation.

 

y.              “Nonqualified Option” means an option to purchase Common Stock
that meets the requirements of the Plan and which is not an Incentive Option.

 

z.               “Officer” means an employee of the Corporation in salary grade
E-3 or higher.

 

aa.       “Optionee” means any person to whom a Stock Option or Stock
Appreciation Right has been granted or who becomes a holder under Article VI of
the Plan.

 

bb.       “Participant” means a person to whom an Award has been made which has
not been paid, exercised, forfeited, canceled, expired or otherwise terminated
or satisfied under the Plan.

 

cc.         “Performance Criteria” are the factors used by the Committee (on an
absolute or relative basis) to establish goals to track business measures.  To
the extent necessary for an award to be qualified performance-based compensation
under Code Section 162(m) and the regulations thereunder, the Committee shall
use one or more of the following business criteria, which may be based on
corporate-wide or subsidiary, division, operating unit or individual measures:  
net earnings; operating earnings or income; earnings growth; net income; cash
flow (including operating cash flow, free cash flow, discounted cash flow return
on investment, and cash flow in excess of cost of capital); earnings per share;
earnings per share growth; stock price; total shareholder return; absolute
and/or relative return on common shareholders equity; return on shareholders
equity; return on capital; return on assets; economic value added (income in
excess of cost of capital); independent customer satisfaction studies or
indices; expense reduction; sales; or ratio of operating expenses to operating
revenues.  The established Performance Criteria may be applied on a pre- or
post-tax basis and may be adjusted to include or exclude objectively
determinable components of any Performance Criteria, including, without
limitation, special charges such as restructuring or impairment charges, debt
refinancing costs, extraordinary or noncash items, unusual, nonrecurring or
one-time events affecting the Corporation or its financial statements or changes
in law or accounting principles (each an “Adjustment Event”). In the sole
discretion of the Committee, unless such action would cause an Award to a Code
Section 162(m) Employee to fail to qualify as qualified performance-based
compensation under Code Section 162(m), the Committee may amend or adjust the
Performance Criteria or other terms and conditions of an outstanding Award in
recognition of any Adjustment Event.

 

dd.       “Performance Unit” means a contractual right granted to a Participant
pursuant to Article VIII of the Plan to receive a designated dollar value equal
to the value established by the Committee and subject to such terms and
conditions as are set forth in this Plan and the applicable Award Document.

 

ee.         “Person” shall have the meaning ascribed to such term in
Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and
14(d) thereof, including a “group” as provided in Section 13(d) of the Exchange
Act.

 

ff.           “Plan Administrator” has the meaning set forth in Section 3.2 of
the Plan.

 

gg.         “Phantom Share” means a contractual right granted to a Participant
pursuant to Article VIII of the Plan to receive an amount equal to the
Appreciation Value at such time, and subject to such terms and conditions as are
set forth in this Plan and the applicable Award Document.

 

hh.       “Restricted Common Stock” means Common Stock delivered subject to the
Restrictions described in Article VII of the Plan.

 

ii.               “Restricted Common Stock Unit” means a right to receive one
share of Common Stock or, in lieu thereof and to the extent provided in the
applicable Award Document, the fair market value of such share of Common Stock
in cash, which shall be subject to the Restrictions described in Article VII of
the Plan.

 

jj.             “Restrictions” for purposes of Article VII of the Plan includes
any time-based and/or performance-based conditions to vesting.

 

3

--------------------------------------------------------------------------------

 

kk.       “Retirement” means retirement of a Participant from active employment
or service with the Corporation on or after age 55.

 

ll.               “Shareholder(s)” means the shareholder(s) of CMS Energy
Corporation stock.

 

mm.           “Stock Appreciation Right” shall mean a right to receive the
appreciation in value of the optioned shares over the option price, granted
pursuant to Article VI of the Plan.

 

nn.       “Stock Option” means an option to purchase shares of Common Stock at a
specified price, granted pursuant to Article VI of the Plan, which includes
Incentive Options and Non-qualified Options.

 

oo.       “Unrestricted Common Stock” shall mean Common Stock which is not
subject to Restrictions or Performance Criteria.

 

pp.       “Valuation Date” means the date or dates established by the Committee
at the time of grant of Phantom Shares, when the Appreciation Value is
determined.

 

Article III. Effective Date, Duration, Scope and Administration of the Plan

 

3.1 Effective Date:  This restatement of the Plan shall be effective June 1,
2014, conditioned upon approval of the Shareholders, and shall continue until
May 31, 2024.

 

3.2 Administration:  The Compensation and Human Resources Committees shall be
the Plan Administrator for Officers and Employees, including any Award or any
Award Document with respect to Officers and Employees, and the Governance and
Public Responsibility Committees shall be the Plan Administrator for
Non-Employee Directors including any Award or any Award Document with respect to
Non-Employee Directors.

 

The Committee shall have full power and authority to construe, interpret and
administer the Plan. All decisions, actions or interpretations of the Committee
shall be final, conclusive and binding upon all parties. If any Participant
objects to any such interpretation or action formally or informally, the
expenses of the Committee and its agents and counsel shall be chargeable against
any amounts otherwise payable under the Plan to or on account of the
Participant.

 

3.3 Indemnification:  No member of the Committee shall be personally liable by
reason of any contract or other instrument executed by him or on his behalf in
his capacity as a member of the Committee nor for any mistake of judgment made
in good faith, and the Corporation shall indemnify and hold harmless each member
of the Committee and each other Officer, employee of the Corporation or Director
to whom any duty or power relating to the administration or interpretation of
the Plan may be allocated or delegated, against any cost or expense (including
counsel fees) or liability (including any sum paid in settlement of a claim with
the approval of the Board) arising out of any act or omission to act in
connection with the Plan, unless arising out of such person’s own fraud or bad
faith.  To the extent that any payment or reimbursement of any liability, cost
or other expense of a Committee member or other person pursuant to this
Article III (each, an “indemnitee”) is subject to the requirements of Code
Section 409A, the following conditions shall apply: (a) the indemnitee shall
only be entitled to the payment or reimbursement of expenses incurred during the
indemnitee’s lifetime; (b) the amount of expenses paid or reimbursed during one
taxable year of the indemnitee shall not affect the amount of expenses eligible
for payment or reimbursement in any other taxable year; (c) any reimbursement of
an expense shall be made on or before the last day of the indemnitee’s taxable
year following the taxable year in which the expense was incurred; and (d) the
right to payment or reimbursement of expenses shall not be subject to
liquidation or exchange for another benefit.

 

Article IV. Participation, Awards and Grants

 

4.1 Participation:  Each year the Committee shall designate as Participants in
the Plan those Eligible Persons who, in the opinion of the Committee, have
significantly contributed to the Corporation.

 

4.2 Awards and Grants:  Each year, the Committee may award shares of Restricted
Common Stock and/or Unrestricted Common Stock and may grant Restricted Common
Stock Units, Phantom Shares, Performance Units, Stock Options and/or Stock
Appreciation Rights to each Eligible Person whom it has designated as a
Participant in such year. No Incentive Option will be granted to an Eligible
Person who is not a full or part-time employee of the Corporation.

 

4

--------------------------------------------------------------------------------

 

The Committee, at its sole discretion, may give authorization to the chief
executive officer of the Corporation to award a specified number of shares of
Common Stock and/or grant Restricted Common Stock Units, Phantom Shares,
Performance Units, Stock Options and/or Stock Appreciation Rights to Employees
designated as Participants; provided, however, such authorization shall not be
given with regard to the selection for participation in this Plan of an Officer,
Director or other person subject to Section 16 of the Exchange Act or decisions
concerning the timing, pricing or amount of an award to such an Officer,
Director or other person subject to Section 16 of the Exchange Act.

 

4.3 Awards and Grants to Foreign Nationals:  Awards of Common Stock and grants
of Stock Options (with or without Stock Appreciation Rights), Restricted Common
Stock Units, Phantom Shares or Performance Units may be made, without amending
the Plan, to Eligible Persons who are foreign nationals or employed outside the
United States or both, on such terms and conditions different from those
specified in the Plan as may, in the judgment of the Committee, be necessary or
desirable to further the purposes of the Plan or to accommodate differences in
local law, tax policy or custom. Moreover, the Committee may approve such
supplements to or alternative versions of the Plan as it may consider necessary
or appropriate for such purposes without thereby affecting the terms of the Plan
as in effect for any other purpose; provided, however, no such supplement or
alternative version shall: (a) increase the number of available shares of Common
Stock under Section 5.1 of the Plan; or (b) increase the limitations contained
in Section 5.3 of the Plan; or (c) increase the individual compensation limit in
Section 8.2 of the Plan.

 

Eligible Persons who are subject to United States of America taxes are not
eligible to receive a Stock Option or Stock Appreciation Right that does not
meet the requirements for exemption from Code Section 409A.

 

4.4 Terms and Conditions:  The Committee may impose such terms and conditions on
each Award, set forth in an Award Document, as it deems necessary or
appropriate, including without limitation the vesting, the timing and method of
payment, the right to earn dividend or dividend equivalents and termination
provisions. Any such Awards either shall be structured in such a manner as to be
exempt from the requirements of Code Section 409A or shall be structured to meet
the requirements of Code Section 409A. Grants of Stock Options or Stock
Appreciation Rights are in all cases intended to meet the requirements for
exemption from Code Section 409A.  Awards shall be made in accordance with
applicable legal requirements of federal and state securities laws, and in
making determinations of legal requirements the Committee may rely on an opinion
of counsel for the Corporation.

 

4.5 Deferral of Payment:  The provisions of this Plan regarding payment of
Awards shall be subject to and interpreted in accordance with, in all respects,
the deferral elections, if any, that are made from time to time by a Participant
who is salary grade 19 or above and in accordance with the Award Document. The
Committee may at its discretion impose mandatory deferral for an Officer or
Director to comply with stock ownership requirements outside of this Plan.
However, no such deferral election shall be made to the extent that the deferral
would cause adverse consequences under Code Section 409A, and to the extent that
an Award is subject to Code Section 409A and such deferral causes an Award to be
paid on account of a separation from service thereunder, payment shall be
delayed to the extent required by Code Section 409A(a)(2)(B)(i).

 

4.6 Dividends and Dividend Equivalents for Awards with Performance Criteria: 
Dividend equivalents with respect to shares subject to performance-based vesting
conditions shall be subject to the same vesting conditions as the underlying
shares.  Payment of dividends and dividend equivalent rights, as prescribed in
the Award Document, may occur only upon the achievement of Performance Criteria
and payment is not permitted during the performance period.

 

Article V. Shares Reserved Under the Plan

 

5.1 Shares Reserved: There is hereby reserved for award under this Plan 6.5
million whole shares of Common Stock. All shares available under the Plan may be
granted as Incentive Options. To the extent permitted by law or the rules and
regulations of any stock exchange on which the Common Stock is listed, shares of
Common Stock with respect to which payment or exercise is in cash may thereafter
again be awarded or made subject to grant under the Plan. Shares of Common Stock
which are not issued by reason of expiration, cancellation, termination or
forfeiture under the terms of the Award Document and the Plan are permitted to
again be awarded or made subject to grant under the Plan.  The number of shares
made available for option and sale under Article VI of the Plan plus the number
of shares awarded under Article VII of the Plan plus the number of shares
granted or purchased under Article VIII of the Plan will not exceed, at any
time, the number of shares of Common Stock reserved pursuant to this Article V.

 

For purposes of determining the number of shares that remain available for
issuance under this Plan, (i) the number of shares of Common Stock that are
tendered by a Participant or withheld by the Corporation to pay the exercise
price of a Stock Option or to

 

5

--------------------------------------------------------------------------------

 

satisfy the Participant’s tax withholding obligations in connection with the
exercise or settlement of an Award and (ii) the number of shares of Common Stock
covered by a stock-settled Stock Appreciation Right to the extent exercised,
shall be deemed to have been released or delivered for purposes of determining
the maximum number of shares of Common Stock available under the terms of this
Plan and will not be available for new grants or awards.

 

5.2 Adjustments.  In the event of any equity restructuring (within the meaning
of Financial Accounting Standards Board Accounting Standards Codification Topic
718, Compensation—Stock Compensation) that causes the per share value of shares
of Common Stock to change, such as a stock dividend, stock split, spinoff,
rights offering or recapitalization through an extraordinary dividend, the
number and class of securities available under this Plan, the terms of each
outstanding Stock Option and Stock Appreciation Right (including the number and
class of securities subject to each outstanding Stock Option or Stock
Appreciation Right and the purchase price or base price per share), the terms of
each outstanding Restricted Common Stock Award and Restricted Common Stock Unit
Award (including the number and class of securities subject thereto), the terms
of each outstanding Phantom Share Award and Performance Unit Award (including
the number and class of securities subject thereto), the maximum number of
securities with respect to which Awards may be granted during any calendar year
under Section 5.3 to any one grantee, shall be appropriately adjusted by the
Committees. In the event of any other change in corporate capitalization,
including a merger, consolidation, reorganization, or partial or complete
liquidation of the Corporation, such equitable adjustments described in the
foregoing sentence may be made as determined to be appropriate and equitable by
the Committee to prevent dilution or enlargement of rights of Participants.  In
either case, the decision of the Committee regarding any such adjustment shall
be final, binding and conclusive.  Any such adjustment with respect to each
Stock Option or Stock Appreciation Right shall be consistent with the
requirements applicable to exempt stock rights under Code Section 409A and
applicable regulations.  Any adjustment with respect to Incentive Options shall
also conform to the requirements of Code Section 422.

 

5.3 Limits: The maximum shares awarded or granted for any one Officer or
Employee for any one calendar year under this Plan, excluding any Performance
Units granted under Section 8.2, will not exceed 500,000 shares of Common Stock
in the aggregate. The limits applicable to Performance Units are set forth in
Section 8.2.  The maximum shares awarded or granted for any one Non-Employee
Director for any one calendar year under this Plan, excluding any Performance
Units granted under Section 8.2, will not exceed the lesser of 10,000 shares of
Common Stock or a value of $250,000 in the aggregate.  Not more than 10% of the
total shares reserved for grant or award under this Plan shall be granted or
awarded to Non-Employee Directors.

 

5.4 Tax Withholding Payments: Each vesting and payment of Common Stock under the
Plan shall be made subject to applicable federal, state and local tax
withholding requirements. For this purpose, the Committee may provide for the
withholding of shares of Common Stock or allow a Participant to pay to the
Corporation funds sufficient to satisfy such withholding requirements. Each
vesting and payment under Article VIII shall be made subject to such federal,
state and local tax withholding requirements as apply on the relevant date. For
this purpose, if a payout is made under Section 8.2 of the Plan in Common Stock,
the Committee may provide for the withholding of shares of Common Stock or allow
a Participant to pay to the Corporation funds sufficient to satisfy such
withholding requirements.

 

If upon the exercise of a Nonqualified Option and/or a Stock Appreciation Right
or as a result of a disqualifying disposition (within the meaning of Code
Sections 422 and 424) of shares acquired upon exercise of an Incentive Option,
there shall be payable by the Corporation any amount for income tax withholding,
either the Corporation shall appropriately reduce the amount of stock or cash to
be paid to the Optionee or the Optionee shall pay such amount to the Corporation
to reimburse it for such income tax withholding.

 

Article VI. Stock Options and Stock Appreciation Rights

 

6.1 Options:  The Committee may from time to time authorize a grant of Stock
Options, which may consist in whole or in part of authorized and unissued Common
Stock. Exercises of grants of Stock Options are restricted by the Grant Period.

 

6.2 Optionees: The Committee shall determine and designate from time to time, in
its sole discretion, those Eligible Persons to whom Stock Options and Stock
Appreciation Rights are to be granted and who thereby become Optionees under the
Plan.

 

6.3 Allotment of Shares: The Committee shall determine and fix the number of
shares of Common Stock subject to options to be offered to each Optionee.

 

6

--------------------------------------------------------------------------------

 

6.4 Option Price: The Committee shall establish the option price at the time any
Stock Option is granted at not less than 100% of the fair market value of the
Common Stock on the date on which such option is granted; provided, however,
that with respect to an Incentive Option granted to an employee who at the time
of the grant owns (after applying the attribution rules of Code Section 425(d))
more than 10% of the total combined voting power of the Corporation (or any
parent or subsidiary corporation within the meaning of Code Section 422), the
option price shall not be less than 110% of the fair market value of the Common
Stock subject to the Incentive Option on the date such Incentive Option is
granted. Other than as contemplated in Section 5.2, in no event shall Stock
Options previously granted under this Plan be re-priced by reducing the exercise
price thereof, nor shall Stock Options previously granted under this Plan be
bought out or canceled and replaced by a subsequent re-grant under this Plan of
Stock Options having an exercise price lower than the Stock Options so canceled.

 

6.5 Stock Appreciation Rights: At the sole discretion of the Committee, any
Stock Option granted under this Plan may, at the time of such grant, include a
Stock Appreciation Right. A Stock Appreciation Right shall pertain to, and be
granted only in conjunction with, a related underlying Stock Option, and shall
be exercisable only at the time and to the extent the related underlying Stock
Option is exercisable and only if the fair market value of the Common Stock
exceeds the Stock Option price in the related underlying Stock Option. An
Optionee who is granted a Stock Appreciation Right may elect to surrender the
related underlying Stock Option with respect to all or part of the number of
shares subject to the related underlying Stock Option and exercise in lieu
thereof the Stock Appreciation Right with respect to the number of shares as to
which the Stock Option is surrendered.

 

The exercise of the underlying Stock Option shall terminate the related Stock
Appreciation Right to the extent of the number of shares purchased upon exercise
of the underlying Stock Option. The exercise of a Stock Appreciation Right shall
terminate the related underlying Stock Option to the extent of the number of
shares with respect to which the Stock Appreciation Right is exercised. Upon
exercise of a Stock Appreciation Right, an Optionee shall be entitled to
receive, without payment to the Corporation (except for applicable withholding
taxes), an amount equal to the excess of (i) the then aggregate fair market
value of the number of shares with respect to which the Optionee exercises the
Stock Appreciation Right, over (ii) the aggregate Stock Option price per share
for such number of shares. Such amount may be paid by the Corporation, in cash,
Common Stock or any combination thereof.

 

Notwithstanding the above, the Committee may grant Stock Appreciation Rights
that are not in conjunction with a related underlying Stock Option.  The basis
used in determining any increase in the value of the Common Stock under such
Stock Appreciation Right shall be not less than 100% of the fair market value of
the Common Stock on the date of grant. To the extent, if any, that the Committee
elects to grant such Stock Appreciation Rights, then such Stock Appreciation
Rights shall in all respects be intended to be exempt from Code Section 409A.
Other than as contemplated in Section 5.2, in no event shall Stock Appreciation
Rights previously granted under this Plan be re-priced by reducing the exercise
price thereof, nor shall Stock Appreciation Rights previously granted under this
Plan be bought out or canceled and replaced by a subsequent re-grant under this
Plan of Stock Appreciation Rights having an exercise price lower than the Stock
Appreciation Rights so canceled.

 

6.6 Granting and Exercise of Stock Options and Stock Appreciation Rights: Each
Stock Option and Stock Appreciation Right granted hereunder shall be exercisable
at any such time or times or in any such installments as may be determined by
the Committee at the time of the grant. However, the aggregate fair market value
of shares underlying Incentive Options (determined as of the date of option
grant) that become exercisable for the first time by any Optionee during any
calendar year may not exceed $100,000 (or such other amount as may be reflected
in the limits imposed from time to time by Code Section 422(d) or any successor
provision).  This limitation shall be applied by taking Stock Options into
account in the order in which they were granted and, to the extent a Stock
Option exceeds this limitation; it shall be treated as a Nonqualified Option and
not as an Incentive Option.

 

6.7 Payment of Stock Option Price: Notice of exercise of a Stock Option must be
accompanied by payment in full of the exercise price for all shares so
purchased.  Payment shall be made by the Optionee either in cash or in Common
Stock, including but not limited to (i) check, (ii) tendering (either actually
or by attestation) shares owned by a Participant or directing the Corporation to
withhold shares in each case, having a fair market value at the date of exercise
equal to such exercise price, (iii) a third-party exercise procedure, including
the use of broker-assisted cashless exercise or (iv) a combination of the
foregoing. No Optionee shall have any of the rights of a Shareholder under any
such Stock Option until the actual issuance of shares to said Optionee, and
prior to such issuance no adjustment shall be made for dividends, distributions
or other rights in respect of such shares, except as provided in Section 5.2 of
the Plan.

 

6.8 Term of Stock Options and Stock Appreciation Rights: If not sooner
terminated, each Stock Option and Stock Appreciation Right granted hereunder
shall expire not more than ten years from the date of the granting thereof;
provided, that with respect to an Incentive Option and a related Stock
Appreciation Right granted to an Optionee who, at the time of the grant, owns
(after applying

 

7

--------------------------------------------------------------------------------

 

the attribution rules of Code Section 425(d)) more than 10% of the total
combined voting power of all classes of stock of the Corporation (or any parent
or subsidiary corporation within the meaning of Code Section 422), such
Incentive Option and Stock Appreciation Right shall expire not more than five
years after the date of granting thereof.

 

6.9 Restrictions on Sale of Shares: If, at the time of exercise of any Stock
Option or Stock Appreciation Right granted hereunder, the Corporation is
precluded by any legal, regulatory or contractual restriction from selling
and/or delivering shares pursuant to the terms of such Stock Option or Stock
Appreciation Right, the sale and delivery of the shares may be delayed until the
restrictions are resolved and only cash may be paid upon exercise of the Stock
Appreciation Right. At any time during such delay, the Committee, in its sole
discretion, may permit the Optionee to revoke a Stock Option exercise, in which
event any corresponding Stock Appreciation Right shall be reinstated. This
provision shall be interpreted in such a manner as to preserve the exemption of
the Stock Option or Stock Appreciation Right from Code Section 409A.

 

Article VII. Restricted Common Stock, Restricted Common Stock Units and
Unrestricted Common Stock

 

7.1 Awards: Subject to the terms of this Plan, the Committee may from time to
time award Restricted Common Stock, Restricted Common Stock Units or
Unrestricted Common Stock to any Eligible Person it has designated as a
Participant and in accordance with such rules as the Committee may prescribe.
The Committee may also award Restricted Common Stock or Restricted Common Stock
Units conditioned on the attainment of a performance goal measured by
Performance Criteria as determined by the Committee and set forth in the Award
Document and subject to such other restrictions as the Committee deems
advisable.

 

7.2 Terms of Restricted Common Stock Awards:

 

a.              Stock Awarded:  Whenever shares of Restricted Common Stock are
awarded to a Participant, such shares shall be outstanding, and the Award
Document shall bear language stating that the shares have been issued subject to
the restrictions set forth in the Plan and the Award Document. All shares of
Restricted Common Stock awarded under the Plan shall be deposited for the
benefit of the Participant with the Secretary of the Corporation as custodian
until such time as the shares are vested and transferable.

 

b.              Voting Rights: A Participant who is awarded shares of Restricted
Common Stock under the Plan shall have full voting rights on such shares,
whether or not the shares are vested or transferable.

 

c.               Dividend Rights:  Shares of Restricted Common Stock awarded to
a Participant under the Plan, whether or not vested or transferable, may have
full dividend rights as determined by the Committee and set forth in the Award
Document.  If shares of Common Stock or other securities are issued as a result
of a merger, consolidation or similar event, such shares shall be issued in the
same manner, and subject to the same deposit requirements, vesting provisions
and transferability restrictions as the shares of Restricted Common Stock which
have been awarded.

 

d.              Vesting: If a Participant has received an Award of Restricted
Common Stock pursuant to the provisions of the Plan, (i) is employed by the
Corporation or remains a Non-Employee Director at the end of the Award Period
and (ii) for shares with performance-based restrictions, the performance goals
have been met, then the Participant shall vest at the end of the Award Period in
the shares of Common Stock awarded to the Participant for that Award Period, in
each case, to the extent provided in the applicable Award Document.

 

e.               Forfeiture: A forfeiture of shares of Restricted Common Stock
pursuant to the terms of the Award Document and the Plan shall affect a complete
forfeiture of voting rights, dividend rights and all other rights relating to
the Award as of the date of forfeiture.

 

7.3 Terms of Restricted Common Stock Unit Awards:

 

a.              Number of Shares and Other Terms: The number of shares of Common
Stock subject to a Restricted Common Stock Unit Award and the Award Period and
performance-based restrictions (if any) applicable to a Restricted Common Stock
Unit Award shall be determined by the Committee.

 

b.              Vesting: If a Participant has received an Award of Restricted
Common Stock Units pursuant to the provisions of the Plan, (i) is employed by
the Corporation or remains a Non-Employee Director at the end of the Award
Period and (ii) for Restricted Common Stock Units subject to performance-based
vesting restrictions, the performance goals have been met, then the Participant
shall vest at the end of the Award Period in the Award, in each case, to the
extent provided in the applicable

 

8

--------------------------------------------------------------------------------

 

Award Document.

 

c.               Settlement of Vested Restricted Common Stock Unit Awards: The
Award Document relating to a Restricted Common Stock Unit Award shall specify
(i) whether such Award may be settled in shares of Common Stock or cash or a
combination thereof and (ii) whether the Participant shall be entitled to
receive, on a current or deferred basis, dividend equivalents, and, if
determined by the Committee, interest on, or the deemed reinvestment of, any
deferred dividend equivalents, with respect to the number of shares of Common
Stock subject to such Award.  Any dividend equivalents with respect to
Restricted Common Stock Units that are subject to performance-based restrictions
shall be subject to the same Restrictions as such Restricted Common Stock
Units.  Prior to the settlement of a Restricted Common Stock Unit Award, the
Participant shall have no rights as a shareholder of the Corporation with
respect to the shares of Common Stock subject to such Award.

 

d.              Forfeiture: A forfeiture of a Restricted Common Stock Unit Award
pursuant to the terms of the Award Document and the Plan shall affect a complete
forfeiture of all rights relating to the Award as of the date of forfeiture.

 

7.4  Terms of Unrestricted Common Stock Awards.  The number of shares of Common
Stock subject to an Unrestricted Common Stock Award shall be determined by the
Committee.  Unrestricted Common Stock Awards shall not be subject to any
Restrictions or Performance Criteria; provided, however, Unrestricted Common
Stock Awards shall not be granted to Officers.  Upon the grant of an
Unrestricted Common Stock Award, subject to the Company’s right to require
payment of any taxes in accordance with Section 5.4, shares shall be transferred
to the holder in book entry form.

 

7.5  Transferability of Restricted Common Stock and Restricted Common Stock
Units: Shares subject to a Restricted Common Stock Award or Restricted Common
Stock Unit Award granted to a Participant will become freely transferable by the
Participant only at the end of the Award Period established with respect to such
Award.

 

Article VIII. Phantom Shares and Performance Units.

 

8.1 Phantom Shares:

 

a.    Grants of Phantom Shares: The Committee may from time to time grant
Phantom Shares, the value of which is determined by reference to a share of
Common Stock on terms and conditions as the Committee, in its sole discretion,
may from time to time determine. Each grant of Phantom Shares shall specify the
number of Phantom Shares granted, the initial value of such Phantom Shares which
shall not be less than 100% of the fair market value of the Common Stock as of
the date of grant, the Valuation Dates, the number of Phantom Shares whose
Appreciation Value shall be determined on each such Valuation Date, any
applicable vesting schedule for such Phantom Shares, and any applicable
limitation on payment for such Phantom Shares.  In the event of any adjustments
as described in Section 5.2 of the Plan, any outstanding Phantom Shares shall be
also subject to the same adjustment as provided for in Section 5.2 of the Plan.

 

b.     Appreciation Value:

 

(i)                           Valuation Dates; Measurement of Appreciation
Value: The Committee shall provide for one or more Valuation Dates on which the
Appreciation Value of the Phantom Shares granted shall be measured and fixed,
and shall designate the number of such Phantom Shares whose Appreciation Value
is to be calculated on each such Valuation Date.

 

(ii)                        Payment of Appreciation Value: Except as otherwise
provided in this Section 8.1, the Appreciation Value of a Phantom Share shall be
paid to a Participant in cash in a lump sum as soon as practicable following the
Valuation Date applicable to such Phantom Share. The Committee may in its sole
discretion, establish and set forth a maximum dollar amount payable under the
Plan for each Phantom Share granted.

 

8.2 Performance Units: The Committee may, in its sole discretion, grant
Performance Units to Eligible Persons. Each Performance Unit will have an
initial value that is established by the Committee at the time of grant and
credited to a bookkeeping account established for the Participant, but no
Participant shall be granted Performance Units during any one calendar year that
will provide for payment in excess of $2.5 million. The Committee will set
performance periods and objectives and other terms and conditions of the grant
based upon Performance Criteria as determined by the Committee that, depending
upon the extent to which they are met, will determine the value of Performance
Units that will be paid out to the Participant. The Committee may pay earned
Performance Units in cash, Common Stock or a combination thereof.

 

9

--------------------------------------------------------------------------------

 

Article IX. Amendment, Duration and Termination of the Plan

 

9.1 Duration of Plan:  No grants or awards may be made under this Plan after
May 31, 2024. Any Award effective on or prior to May 31, 2024 will continue to
vest and otherwise be effective after the expiration of this Plan in accordance
with the terms and conditions of this Plan as well as any requirements set forth
in the Award Document relative to such Award.

 

9.2 Right To Amend, Suspend or Terminate Plan: Except as provided in Section 9.5
below, the Board reserves the right at any time to amend, suspend or terminate
the Plan in whole or in part and for any reason and without the consent of any
Participant or Beneficiary; provided, that no such amendment shall:

 

a.    Change the Stock Option price or adversely affect any Stock Option or
Stock Appreciation Right outstanding under the Plan on the effective date of
such amendment or termination, or

 

b.     Adversely affect any Award then in effect or rights to receive any amount
to which Participants or Beneficiaries have become entitled prior to such
amendment, or

 

c.     Unless approved by the Shareholders, increase the aggregate number of
shares of Common Stock reserved for award or grant under Section 5.1 of the
Plan, change the group of Eligible Persons under the Plan or increase the
compensation limits of Section 5.3 and 8.2 of the Plan.

 

Notwithstanding anything contained in this Plan or any Award Document to the
contrary, the Corporation shall have the unilateral right to amend this Plan and
the Awards and Award Documents thereunder at any time to the extent deemed
necessary or advisable by the Corporation to ensure compliance with, or
exemption from, the requirements of Section 409A.

 

9.3 Periodic Review of Plan: In order to assure the continued realization of the
purposes of the Plan, the Committee shall periodically review the Plan, and the
Committee may suggest amendments to the Board as it may deem appropriate.

 

9.4 Amendments May Be Retroactive: Subject to Section 9.1 and 9.2 above, any
amendment, modification, suspension or termination of any provisions of the Plan
may be made retroactively.

 

9.5 Change in Control Under an Agreement: Notwithstanding any other provisions
in the Plan, in the event of a Change in Control and a qualifying termination as
defined under any written employment contract or agreement between the
Corporation and an Officer, Awards granted under this Plan shall vest to the
extent, if any, provided for in the written employment agreement or contract or
in such separate contractual arrangement relating to such an award or grant as
may exist from time to time.

 

9.6 Change in Control Without an Agreement: Except as otherwise may be provided
by the Committee, in the event of a Change in Control and an Eligible
Termination, a Participant not covered by a written employment contract or
agreement containing a change in control provision will have any portion of an
Award awarded or granted under this Plan subject to time based only restrictions
vest fully and subject to a performance-based restriction vest on a pro rata
basis to the change in control date using the target number of shares as the
basis for the pro ration.

 

9.7 Compliance With Section 409A:  Notwithstanding anything in Section 9.5 or
9.6, or in any individual agreement to the contrary, to the extent required for
compliance with Code Section 409A, if applicable, an award granted under this
Plan shall not be paid or settled on an accelerated basis solely as a result of
a Change in Control unless such Change in Control is a “change in control
event”, as defined for purposes of Code Section 409A.

 

Article X. General Provisions

 

10.1 Rights to Continued Employment, Award or Option: Nothing contained in the
Plan or in any Award under this Plan shall give any employee the right to be
retained in the employment of the Corporation or affect the right of the
Corporation to terminate the employee’s employment at any time. The adoption of
the Plan shall not constitute a contract between the Corporation and any
employee. No Eligible Person who is an employee shall receive any right to be
granted an option, right or award hereunder nor shall any such option, right or
award be considered as compensation under any employee benefit plan of the
Corporation.

 

10.2 Nontransferability:  No Award shall be transferable other than by will, the
laws of descent and distribution or pursuant to

 

10

--------------------------------------------------------------------------------

 

beneficiary designation procedures approved by the Corporation or, to the extent
expressly permitted in the Award Document relating to such Award, to the
holder’s Immediate Family members, a trust or entity established by the holder
for estate planning purposes or a charitable organization designated by the
holder, in each case, without consideration. Except to the extent permitted by
the foregoing sentence or the Award Document relating to an Award, each Award
may be exercised or settled during the holder’s lifetime only by the holder or
the holder’s legal representative or similar person. Except as permitted by the
second preceding sentence, no Award may be sold, transferred, assigned, pledged,
hypothecated, encumbered or otherwise disposed of (whether by operation of law
or otherwise) or be subject to execution, attachment or similar process. Upon
any attempt to so sell, transfer, assign, pledge, hypothecate, encumber or
otherwise dispose of any Award, such Award and all rights thereunder shall
immediately become null and void.

 

10.3 Clawback:

 

a.              If, due to a restatement of CMS Energy Corporation’s or an
Affiliate’s publicly disclosed financial statements or otherwise, an Eligible
Person is subject to an obligation to make a repayment or return of benefits to
CMS Energy Corporation or an Affiliate pursuant to a clawback provision
contained in this Plan, a supplemental executive retirement plan, a bonus plan,
or any other benefit plan (a “benefit plan clawback provision”) of the
Corporation, the Board or Committee may determine that it shall be a
precondition to the vesting of any unvested Award of the Eligible Person under
this Plan,  that the Eligible Person fully repay or return to the Corporation
any amounts owing under such benefit plan clawback provision taking into account
the requirements of Code Section 409A, to the extent applicable.  Any and all
Awards under this Plan are further subject to (i) any provision of law which may
require the Eligible Person to forfeit or return any benefits provided
hereunder, in the event of a restatement of the CMS Energy Corporation’s or an
Affiliate’s publicly disclosed accounting statements or other illegal act,
whether required by Section 304 of the Sarbanes-Oxley Act of 2002, federal
securities law (including any rule or regulation promulgated by the Securities
and Exchange Commission), any state law, or any rule or regulation promulgated
by the applicable listing exchange or system on which CMS Energy Corporation or
Consumers Energy Company lists its traded securities or (ii) any clawback policy
of the Corporation, as it may exist from time to time.

 

b.              To the degree any benefits hereunder are not otherwise
forfeitable pursuant to the preceding sentences of this Section 10.3, the Board
or Committee may require the Eligible Person to return to the Corporation any
amounts granted, awarded or paid under this Plan,  or may determine that all or
any portion of an Award shall not vest, if:

 

(1)         the award or grant of such compensation or the vesting of such
compensation, or profit realized on the exercise or sale of securities obtained
pursuant to the Plan, was predicated upon achieving certain financial results
which were subsequently the subject of a substantial accounting restatement of
the Corporation’s financial statements filed under the securities laws (a
“financial restatement”),

 

(2)         a lower Award, a lower vesting result, or a lower profit on the
exercise or sale of securities obtained pursuant to the Plan (“reduced financial
results”), would have occurred based upon the financial restatement, and

 

(3)         in the reasonable opinion of the Board or the Committee, the
circumstances of the financial restatement justify such a modification of the
Award or its vesting.  Such circumstances may include, but are not limited to,
whether the financial restatement was caused by misconduct,  whether the
financial restatement affected more than one period and the reduced financial
results in one period were offset by increased financial results in another
period,  the timing of the financial restatement or any required repayment, and
other relevant factors.

 

Unless otherwise required by law, the provisions of this Subsection 10.3b.
relating to the return of previously vested Plan benefits shall not apply unless
a claim is made therefore by the Corporation within three years of the vesting
of such benefits.

 

c.               The Committee shall also have the sole discretion to require a
clawback in the event of a mistake or accounting error in the calculation of a
benefit or an Award that results in a benefit to an Eligible Person to which
he/she was not otherwise entitled.  The rights set forth in this Plan concerning
the right of the Corporation to a clawback are in addition to any other rights
to recovery or damages available at law or equity and are not a limitation of
such rights.  Any Award will be subject to the Corporation’s clawback policy, as
may be modified from time to time in conformance with securities laws, rules and
regulations.

 

11

--------------------------------------------------------------------------------

 

10.4 Governing Law: The provisions of this Plan and all rights thereunder shall
be governed by and construed in accordance with the laws of the State of
Michigan.

 

IN WITNESS WHEREOF, execution is hereby effected.

 

ATTEST:

 

CMS ENERGY CORPORATION

 

 

 

/s/ Melissa M. Gleespen

 

By:

/s/ Patricia K. Poppe

Secretary

 

Chief Executive Officer

 

12

--------------------------------------------------------------------------------

 

Attachment A

 

“Change in Control” means a change in control of CMS Energy Corporation, and
shall be deemed to have occurred upon the first to occur of any of the following
events:

 

(a)                           Any Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of CMS Energy Corporation (not including
in the securities beneficially owned by such Person any securities acquired
directly from CMS Energy Corporation or its Affiliates) representing thirty
percent (30%) or more of the combined voting power for the election of directors
of CMS Energy Corporation’s then outstanding equity securities with the power
under ordinary circumstances to vote for the election of directors, excluding
any Person who becomes such a Beneficial Owner in connection with a transaction
described in clause (i) of paragraph (c) below; or

 

(b)                                 The following individuals cease for any
reason to constitute a majority of directors then serving:  individuals who, on
the effective date of the Plan (here after called the “Effective Date”),
constitute the Board and any new director (other than a director whose initial
assumption of office is in connection with an actual or threatened election
contest, including but not limited to a consent solicitation, relating to the
election of directors of CMS Energy Corporation) whose appointment or election
by the Board or nomination for election by CMS Energy Corporation’s stockholders
was approved or recommended by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors on the Effective Date
or whose appointment, election or nomination for election was previously so
approved or recommended; or

 

(c)                                  The consummation of a merger or
consolidation of CMS Energy Corporation or any direct or indirect subsidiary of
CMS Energy Corporation with any other corporation or other entity, other than:
(i) any such merger or consolidation which involves either CMS Energy
Corporation or any such subsidiary and would result in the voting securities of
CMS Energy Corporation outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity or any parent thereof), in combination with
the ownership of any trustee or other fiduciary holding securities under an
employee benefit plan of CMS Energy Corporation or its Affiliates, at least
fifty one percent (51%) of the combined voting power of the voting securities of
CMS Energy Corporation or the surviving entity or any parent thereof outstanding
immediately after such merger or consolidation and immediately following which
the individuals who comprise the Board immediately prior thereto constitute at
least a majority of the board of directors of CMS Energy Corporation, the entity
surviving such merger or consolidation or, if CMS Energy Corporation or the
entity surviving such merger is then a subsidiary, the ultimate parent thereof;
or (ii) a merger or consolidation effected to implement a recapitalization of
CMS Energy Corporation (or similar transaction) in which no Person is or becomes
the Beneficial Owner, directly or indirectly, of securities of CMS Energy
Corporation (not including in the securities beneficially owned by such Person
any securities acquired directly from CMS Energy Corporation or its Affiliates)
representing thirty percent (30%) or more of the combined voting power of CMS
Energy Corporation’s then outstanding securities; or

 

(d)                                 Either (1) the stockholders of CMS Energy
Corporation approve a plan of complete liquidation or dissolution of CMS Energy
Corporation and such plan is consummated, or (2) there is consummated an
agreement for the sale, transfer or disposition by CMS Energy Corporation of all
or substantially all of CMS Energy Corporation’s assets (or any transaction
having a similar effect).  For purposes of clause (d)(2), (i) the sale, transfer
or disposition of a majority of the shares of common stock of Consumers Energy
Company shall constitute a sale, transfer or disposition of substantially all of
the assets of CMS Energy Corporation and (ii) the sale, transfer or disposition
of subsidiaries or affiliates of CMS Energy Corporation, singly or in
combinations, or their assets, only qualifies as a Change in Control if it
satisfies the substantiality test contained in that clause and the Board of CMS
Energy Corporation’s determination in that regard is final.  In addition, for
purposes of clause (d)(2), the sale, transfer or disposition of assets has to be
in a transaction or series of transactions closing within six (6) months after
the closing of the first transaction in the series, other than with an entity in
which at least fifty-one 51% of the combined voting power of the voting
securities is owned by stockholders of CMS Energy Corporation in substantially
the same proportions as their ownership of CMS Energy Corporation immediately
prior to such transaction or transactions and immediately following which the
individuals who comprise the Board immediately prior thereto constitute at least
a majority of the board of directors of the entity to which such assets are
sold, transferred or disposed or, if such entity is a subsidiary, the ultimate
parent thereof.

 

13

--------------------------------------------------------------------------------

 

Attachment A

 

Notwithstanding the foregoing clauses (a), (c) and (d), a “Change in Control”
shall not be deemed to have occurred by virtue of the consummation of any
transaction or series of integrated transactions closing within six (6) months
after the closing of the first transaction in the series immediately following
which the record holders of the common stock of CMS Energy Corporation
immediately prior to such transaction or series of transactions continue to have
substantially the same proportionate ownership in an entity which owns all or
substantially all of the assets of CMS Energy Corporation immediately following
such transaction or series of transactions.

 

14

--------------------------------------------------------------------------------