Exhibit 10.4

THE AES CORPORATION

PERFORMANCE INCENTIVE PLAN

(As Amended and Restated April 22, 2010)

 

1. Purpose of the Plan

The purpose of The AES Corporation Performance Incentive Plan (the “Plan”) is to
advance the interests of the Company and its stockholders by providing
incentives to key employees with significant responsibility for achieving
performance goals critical to the success and growth of the Company. The Plan is
designed to: (i) promote the attainment of the Company’s significant business
objectives; (ii) encourage and reward management teamwork across the entire
Company; and (iii) assist in the attraction and retention of employees vital to
the Company’s long-term success. The Plan has been amended to comply with
Section 409A.

 

2. Definitions

For the purpose of the Plan, the following definitions shall apply:

(a) “Board” means the Board of Directors of the Company.

(b) “Code” means the Internal Revenue Code of 1986, as amended, including any
successor law thereto.

(c) “Committee” means the Compensation Committee of the Board, or such other
committee as is appointed or designated by the Board to administer the Plan, in
each case which shall be comprised solely of two or more “outside directors” (as
defined under Section 162(m) of the Code and the regulations promulgated
thereunder).

(d) “Company” means The AES Corporation and any subsidiary entity or affiliate
thereof, including subsidiaries or affiliates which become such after adoption
of the Plan.

(e) “Forfeit,” “Forfeiture,” “Forfeited” means the loss by a Participant of any
and all rights to an award granted under the Plan, including the loss to any
payment of compensation by the Company under the Plan or any award granted
thereunder.

(f) “Participant” means any person: (1) who satisfies the eligibility
requirements set forth in Paragraph 4; (2) to whom an award has been made by the
Committee; and (3) whose award remains outstanding under the Plan.

(g) “Performance Goal” means, in relation to any Performance Period, the level
of performance that must be achieved with respect to a Performance Measure.

(h) “Performance Measures” means any one or more of the following performance
criteria, either individually, alternatively or in any combination, and subject
to such modifications or variations as specified by the Committee, applied to
either the Company as a whole or to a business unit or subsidiary entity
thereof, either individually, alternatively or in any combination, and measured
over a period of time including any portion of a year, annually or cumulatively
over a period of years, on an absolute basis or relative to a pre-established
target, to previous years’ results or to a designated comparison group, in each
case as specified by the Committee: cash flow; cash flow from operations;
earnings (including, but not limited to, earnings before interest, taxes,
depreciation, and amortization or some variation thereof); earnings per share,
diluted or basic; earnings per share from continuing operations; net asset
turnover; inventory turnover; capital expenditures; debt; debt reduction;
working capital; return on investment; return on sales; net or gross sales;
market share; economic value added; cost of capital; change in assets; expense
reduction levels; productivity; delivery performance; safety record and/or
performance; stock price; return

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on equity; total stockholder return; return on capital; return on assets or net
assets; revenue; income or net income; operating income or net operating income;
operating income adjusted for management fees and depreciation, and
amortization; operating profit or net operating profit; gross margin, operating
margin or profit margin; and completion of acquisitions, business expansion,
product diversification, new or expanded market penetration and other
non-financial operating and management performance objectives.

To the extent consistent with Section 162(m) of the Code and the regulations
promulgated thereunder, the Committee may determine at the time the performance
goals are established that certain adjustments shall apply, in whole or in part,
in such manner as specified by the Committee, to exclude the effect of any of
the following events that occur during a Performance Period: the impairment of
tangible or intangible assets; litigation or claim judgments or settlements;
changes in tax law, accounting principles or other such laws or provisions
affecting reported results; business combinations, reorganizations and/or
restructuring programs, including but not limited to reductions in force and
early retirement incentives; currency fluctuations; and any extraordinary,
unusual, infrequent or non-recurring items, including, but not limited to, such
items separately identified in the financial statements and/or notes thereto in
accordance with generally accepted accounting principles.

(i) “Performance Period” means, in relation to any award, the calendar year or
other period of 12 months or less for which a Participant’s performance is being
calculated, with each such period constituting a separate Performance Period.

(j) “Section 409A” shall mean Section 409A of the Code, the regulations and
other binding guidance promulgated thereunder.

(k) “Retirement” means retirement of an employee as determined and authorized by
the Committee.

(l) “Total and Permanent Disability” means: (1) if the Participant is insured
under a long-term disability insurance policy or plan which is paid for by the
Company, the Participant is totally disabled under the terms of that policy or
plan; or (2) if no such policy or plan exists, the Participant shall be
considered to be totally disabled as determined by the Committee.

 

3. Administration of the Plan

(a) The management of the Plan shall be vested in the Committee; provided,
however, that all acts and authority of the Committee pursuant to this Plan
shall be subject to the provisions of the Committee’s Charter, as amended from
time to time, and such other authority as may be delegated to the Committee by
the Board. The Committee may, with respect to Participants whom the Committee
determines are not likely to be subject to Section 162(m) of the Code, delegate
such of its powers and authority under the Plan to the Company’s officers as it
deems necessary or appropriate. In the event of such delegation, all references
to the Committee in this Plan shall be deemed references to such officers as it
relates to those aspects of the Plan that have been delegated.

(b) Subject to the terms of the Plan, the Committee shall, among other things,
have full authority and discretion to determine eligibility for participation in
the Plan, make awards under the Plan, establish the terms and conditions of such
awards (including the Performance Goal(s) and Performance Measure(s) to be
utilized) and determine whether the Performance Goals applicable to any
Performance Measures for any awards have been achieved. The Committee’s
determinations under the Plan need not be uniform among all Participants, or
classes or categories of Participants, and may be applied to such Participants,
or classes or categories of Participants, as the Committee, in its sole and
absolute discretion, considers necessary, appropriate or desirable. The
Committee is authorized to interpret the Plan, to adopt administrative rules,
regulations, and guidelines for the Plan, and may correct any defect, supply any
omission or reconcile any inconsistency or conflict in the Plan or in any award.
All determinations by the Committee shall be final, conclusive and binding on
the Company, the Participant and any and all interested parties.

(c) Subject to the provisions of the Plan, the Committee will have the authority
and discretion to determine the extent to which awards under the Plan will be
structured to conform to the requirements applicable to performance-based
compensation as described in Section 162(m) of the Code, and to take such
action, establish such

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procedures, and impose such restrictions at the time such awards are granted as
the Committee determines to be necessary or appropriate to conform to such
requirements. Notwithstanding any provision of the Plan to the contrary, if an
award under this Plan is intended to qualify as performance-based compensation
under Section 162(m) of the Code and the regulations issued thereunder and a
provision of this Plan would prevent such award from so qualifying, such
provision shall be administered, interpreted and construed to carry out such
intention (or disregarded to the extent such provision cannot be so
administered, interpreted or construed).

(d) The benefits provided under the Plan are intended to comply with
Section 409A or an exception thereunder and shall be construed accordingly.
Notwithstanding any provision of the Plan to the contrary, if any benefit
provided under this Plan is subject to the provisions of Section 409A and the
regulations issued thereunder (and not excepted therefrom), the provisions of
the Plan shall be administered, interpreted and construed in a manner necessary
to comply with Section 409A and the regulations issued thereunder (or
disregarded to the extent such provision cannot be so administered, interpreted,
or construed.)

 

4. Participation in the Plan

Officers and key employees of the Company shall be eligible to participate in
the Plan. No employee shall have the right to participate in the Plan, and
participation in the Plan in any one Performance Period does not entitle an
individual to participate in future Performance Periods.

 

5. Incentive Compensation Awards

(a) The Committee may, in its discretion, from time to time make awards to
persons eligible for participation in the Plan pursuant to which the Participant
will earn cash compensation. The amount of a Participant’s award may be based on
a percentage of such Participant’s salary or such other methods as may be
established by the Committee. Each award shall be communicated to the
Participant, and shall specify, among other things, the terms and conditions of
the award and the Performance Goals to be achieved. The maximum amount of an
award that may be earned under the Plan by any Participant for any Performance
Period shall not exceed USD $5,000,000.

(b) With respect to awards that are intended to be performance-based
compensation under Section 162(m) of the Code, each award shall be conditioned
upon the Company’s achievement of one or more Performance Goal(s) with respect
to the Performance Measure(s) established by the Committee. No later than ninety
(90) days after the beginning of the applicable Performance Period, the
Committee shall establish in writing the Performance Goals, Performance Measures
and the method(s) for computing the amount of compensation which will be payable
under the Plan to each Participant if the Performance Goals established by the
Committee are attained; provided however, that for a Performance Period of less
than one year, the Committee shall take any such actions prior to the lapse of
25% of the Performance Period. In addition to establishing minimum Performance
Goals below which no compensation shall be payable pursuant to an award, the
Committee, in its discretion, may create a performance schedule under which an
amount less than or more than the target award may be paid so long as the
Performance Goals have been achieved.

(c) The Committee, in its sole discretion, may also establish such additional
restrictions or conditions that must be satisfied as a condition precedent to
the payment of all or a portion of any awards. Such additional restrictions or
conditions need not be performance-based and may include, among other things,
the receipt by a Participant of a specified annual performance rating, the
continued employment by the Participant and/or the achievement of specified
performance goals by the Company, business unit or Participant. Furthermore and
notwithstanding any provision of this Plan to the contrary, the Committee, in
its sole discretion, may reduce the amount of any award to a Participant if it
concludes that such reduction is necessary or appropriate based upon: (i) an
evaluation of such Participant’s performance; (ii) comparisons with compensation
received by other similarly situated individuals working within the Company’s
industry; (iii) the Company’s financial results and conditions; or (iv) such
other factors or conditions that the Committee deems relevant. Notwithstanding
any provision of this Plan to the contrary, the Committee shall not use its
discretionary authority to increase any award that is intended to be
performance-based compensation under Section 162(m) of the Code.

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6. Payment of Individual Incentive Awards

(a) After the end of the Performance Period, the Committee shall certify in
writing the extent to which the applicable Performance Goals and any other
material terms have been achieved. Subject to the provisions of the Plan, earned
Awards shall be paid in the first calendar year immediately following the end of
the Performance Period and within the applicable 2 1/2 month period specified in
Treas. Reg. § 1.409A-1(b)(4) (“Payment Date”). For purposes of this provision,
and for so long as the Code permits, the approved minutes of the Committee
meeting in which the certification is made may be treated as written
certification.

(b) Unless otherwise determined by the Committee, Participants who have
terminated employment with the Company prior to the actual payment date of any
award for any reason other than death, Retirement or Total and Permanent
Disability, shall Forfeit any and all rights to payment under any awards then
outstanding under the terms of the Plan and shall not be entitled to any cash
payment for such period. If a Participant’s employment with the Company should
terminate during a Performance Period by reason of death, Retirement or Total
and Permanent Disability or the Committee determines that an award is not
Forfeited, the Participant’s award shall be prorated to reflect the period of
service prior to his/her termination, death, Retirement or Total and Permanent
Disability, and shall be paid either to the Participant or, as appropriate, the
Participant’s estate, subject to the Committee’s certification that the
applicable Performance Goals and other material terms have been met.

(c) The Committee shall determine whether, to what extent, and under what
additional circumstances amounts payable with respect to an award under the Plan
shall be deferred either automatically, at the election of the Participant, or
by the Committee. All deferrals under The AES Corporation Restoration
Supplemental Retirement Plan shall be made in accordance with terms and
procedures of such plan.

 

7. Amendment or Termination of the Plan

While the Company intends that the Plan shall continue in force from year to
year, the Company reserves the right to amend, modify or terminate the Plan, at
any time; provided, however, that no such modification, amendment or termination
shall, without the consent of the Participant, materially adversely affect the
rights of such Participant to any payment that has been determined by the
Committee to be due and owing to the Participant under the Plan but not yet
paid. Any and all actions permitted under this Section 7 may be authorized and
performed by the Committee in its sole and absolute discretion.

Notwithstanding the foregoing or any provision of the Plan to the contrary, the
Committee may at any time (without the consent of the Participant) modify, amend
or terminate any or all of the provisions of this Plan to the extent necessary
to conform the provisions of the Plan with Section 409A or Section 162(m) of the
Code, the regulations promulgated thereunder or an exception thereto regardless
of whether such modification, amendment, or termination of the Plan shall
adversely affect the rights of a Participant under the Plan. Notwithstanding,
(i) Section 409A may impose upon the Participant certain taxes or other charges
for which the Participant is and shall remain solely responsible, and nothing
contained in this Plan shall be construed to obligate the Company for any such
taxes or other charges, and (ii) in no event shall the Committee or Board (or
any member thereof), or the Company (or its employees, officers, directors or
affiliates) have any liability to any Participant (or any other person) due to
the failure of the Plan to satisfy the requirements of Section 409A or any other
applicable law.

 

8. Rights Not Transferable

A Participant’s rights under the Plan may not be assigned, pledged, or otherwise
transferred except, in the event of a Participant’s death, to the Participant’s
designated beneficiary, or in the absence of such a designation, by will or by
the laws of descent and distribution.

 

9. Funding/Payment

The Plan is not funded and all awards payable hereunder shall be paid from the
general assets of the Company. No provision contained in this Plan and no action
taken pursuant to the provisions of this Plan shall create a trust of any kind
or require the Company to maintain or set aside any specific funds to pay
benefits hereunder. To the extent a Participant acquires a right to receive
payments from the Company under the Plan, such right shall be no

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greater than the right of any unsecured general creditor of the Company. If any
earned Award is not paid by the Payment Date due to administrative
impracticability, such earned Award will be paid, without earnings, as soon as
administratively practicable thereafter.

 

10. Withholdings

The Company shall have the right to withhold from any awards payable under the
Plan or other wages payable to a Participant such amounts sufficient to satisfy
federal, state and local tax withholding obligations arising from or in
connection with the Participant’s participation in the Plan and such other
deductions as may be authorized by the Participant or as required by applicable
law.

 

11. No Employment or Service Rights

Nothing contained in the Plan shall confer upon any Participant any right with
respect to continued employment with the Company (or any of its affiliates) nor
shall the Plan interfere in any way with the right of the Company (or any of its
affiliates) to at any time reassign the Participant to a different job, change
the compensation of the Participant or terminate the Participant’s employment
for any reason.

 

12. Other Compensation Plans

Nothing contained in this Plan shall prevent the Corporation from adopting other
or additional compensation arrangements for employees of the Corporation,
including arrangements that are not intended to comply with Section 162(m) of
the Code.

 

13. Governing Law

The Plan shall be governed by and construed in accordance with the laws of the
State of Delaware, without giving effect to its conflict of law provisions.

 

14. Effective Date

The Plan’s material terms have been approved by the Company’s stockholders. This
amendment and restatement of The AES Corporation Performance Incentive Plan has
been duly executed by the undersigned and is effective this 22 day of April
2010.

 

The AES Corporation By:  

/s/ Rita Trehan

  Rita Trehan, Vice President, Human Resources