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EXHIBIT A 10.17

 

CENTRAL VERMONT PUBLIC SERVICE CORPORATION
MANAGEMENT INCENTIVE PLAN
2009
 

 

Execution Copy
April, 2009

 
 

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CENTRAL VERMONT PUBLIC SERVICE CORPORATION
MANAGEMENT INCENTIVE PLAN

Effective as of January 1, 2009

TABLE OF CONTENTS

ARTICLE I
INTRODUCTION AND PURPOSE
 
Page
 
1.1
Purpose of the Plan
1
 
ARTICLE II
DEFINITIONS
 
   
2.1
2.2
2.3
2.4
2.5
2.6
 
"Annual Incentive Award"
"Award Payment Date"
"Base Salary"
"Board" or "Board of Directors"
"Change in Control"
"Code"
2
2
2
2
2
2
 
 
2.7
2.8
2.9
2.10
2.11
"Committee"
"Company"
"Effective Date"
"Eligible Employees"
"For Cause"
 
2
2
3
3
3
 
2.12
2.13
2.14
2.15
2.16
"Participant"
"Performance Goals"
"Performance Period"
"Permanent and Total Disability"
"Plan"
 
3
3
3
4
4
 
 
2.17
"Target Potential"
 
4
 
ARTICLE III
PARTICIPATION
 
   
3.1
Participation
 
5
ARTICLE IV
PERFORMANCE GOALS AND AWARD OPPORTUNITIES
 
   
4.1
4.2
4.3
4.4
4.5
Performance Goals
Performance Levels
Participant Goals
Target Potential
Amount of Award
 
6
6
6
7
7
ARTICLE V
DETERMINATION AND PAYMENT OF ANNUAL INCENTIVE AWARDS
 
   
5.1
5.2
5.3
5.4
5.5
5.6
 
Timing and Determination of Annual Incentive Awards
Short Performance Year
Death or Permanent and Total Disability
Termination or Retirement
Change in Control
Limitation on Right to Payment of Award
 
9
9
10
10
10
10

 
 

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ARTICLE VI
ADMINISTRATION
 
   
6.1
6.2
6.3
 
Committee
Authority of the Committee
Costs
 
11
11
11
 
ARTICLE VII
MISCELLANEOUS
 
   
7.1
7.2
7.3
7.4
7.5
 
7.6
7.7
7.8
7.9
 
7.10
7.11
7.12
7.13
7.14
 
Amendment
Termination
Employment Rights
Nonalienation of Benefits
No Funding
 
Tax Withholding
Controlling Laws
Gender and Number
Action by the Company
 
Mistake of Fact
Severability
Effect of Headings
No Liability
Successors
 
12
12
12
13
13
 
13
13
13
13
 
13
14
14
14
14
 

 
 

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ARTICLE I
 
INTRODUCTION AND PURPOSE
 
1.1
Purpose of the Plan. The Central Vermont Public Service Corporation Management
Incentive Plan (the "Plan") is an incentive compensation program for eligible
officers of Central Vermont Public Service Corporation (the "Company”).  The
purpose of the Plan is to focus the efforts of the Executive Team on achieving
challenging and demanding annual performance objectives.  The Plan is designed
and intended to further the attainment of the customer service, financial,
process improvement and employee related objectives of the Company, to assist
the Company in attracting and retaining highly qualified executives, and to
enhance the mutual interest of customers, shareholders and eligible officers of
the Company.  In addition, this Plan supports the Company's performance oriented
culture.
 

 
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ARTICLE II
 
DEFINITIONS
 
2.1
"Annual Incentive Award" shall mean a cash incentive payable to a Participant
under the terms of this Plan.
 
2.2
"Award Payment Date" shall mean, for each Performance Period, the date that the
amount of the Annual Incentive Award for that Performance Period shall be paid
to the Participant under Article V of the Plan.
 
2.3
"Base Salary" shall mean a Participant's annualized salary for the Performance
Period for which the amount of an Annual Incentive Award is being determined.
 
2.4
"Board" or "Board of Directors" shall mean the Board of Directors of the
Company.
 
2.5
"Change in Control" shall have, in the case of each Participant under the Plan,
the meaning provided for in the Change in Control Agreement, if any, between
each Participant and the Company.  In the absence of a Change in Control
Agreement with a Participant, Change in Control shall have, with respect to such
Participant, the meaning provided for in the standard Change in Control
Agreement approved by the Board as the same may be amended from time to time.
 
2.6
"Code" shall mean the Internal Revenue Code of 1986, as amended, and references
to particular provisions of the Code shall include any amendments thereto or
successor provisions and any rules and regulations promulgated thereunder.
 
2.7
"Committee" shall mean the Compensation Committee of the Board of Directors of
the Company or any other duly established committee or subcommittee appointed by
the Board for purposes of this Plan.
 
2.8
"Company" shall mean Central Vermont Public Service Corporation, a Vermont
corporation.

 
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2.9
"Effective Date" shall mean January 1, 2009.  The Plan shall be effective for
the Performance Period beginning on January 1, 2009.
 
2.10
"Eligible Employee" shall mean the Chief Executive Officer (CEO) of Central
Vermont Public Service Corporation and other executive officers of the Company.
 
2.11
"For Cause" shall mean, but is not limited to, (i) the willful failure by
Executive substantially to perform Executive’s duties with Company or a
Subsidiary, (other than any failure resulting from Executive’s incapacity due to
Executive’s Disability, or any actual failure after the issuance of a Notice of
Termination for Good Reason by Executive that continues for at least 30 calendar
days after the Board delivers to Executive a written demand for performance that
identifies specifically and in detail the manner in which the Board believes
that Executive willfully has failed substantially to perform Executive’s duties,
 
(ii) a conviction, guilty plea or plea of nolo contendere of Executive for any
felony,
 
(iii) the willful engaging by Executive in misconduct that is demonstrably and
materially injurious to Company or any Subsidiary, monetarily or otherwise,
 
(iv) a material violation by Executive of the corporate governance guidelines
and code of ethics of Company or any Subsidiary; or
 
(v) a material violation by Executive of the requirements of the Sarbanes-Oxley
Act of 2002 or other federal or state securities law, rule or regulation.
 
2.12
"Participant" for a Performance Period shall mean each Eligible Employee who is
an Eligible Employee for that Performance Period.
 
2.13
"Performance Goals" shall mean the measures of the Company's performance as
defined in Section 4.1 of this Plan that must be met for any Participant to
receive any Annual Incentive Award under this Plan, as provided in Section 4.1.
 
2.14
"Performance Period" shall mean the taxable year of the Company or any other
period designated by the Committee with respect to which an Annual Incentive
Award may be granted.
 

 
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2.15
"Permanent and Total Disability" shall mean any disability that would qualify as
permanent and total disability under any long term disability policy sponsored
by the Company.
 
2.16
Plan shall mean this Central Vermont Public Service Corporation Management
Incentive Plan, as it may be amended from time to time.
 
2.17
Target Potential shall mean the targeted percentage of Base Salary for each
Participant.

 
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ARTICLE III
 
PARTICIPATION
 
3.1
Participation. An Eligible Employee will become a Participant in this Plan as of
the later of the Effective Date, the Eligible Employee's date of hire or the
date the individual becomes an Eligible Employee.
 
An Eligible Employee who is a Participant for the entire length of a Performance
Period shall be eligible for consideration for an Annual Incentive Award with
respect to that Performance Period.
 
The Committee may provide a prorated Annual Incentive Award for an Eligible
Employee who becomes a Participant during the Performance Period.
 

 
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ARTICLE IV
 
PERFORMANCE GOALS AND AWARD OPPORTUNITIES
 
4.1
Performance Goals. The measures of Performance Goals are established as follows:
 
(a) Company Balanced Business Performance.  Measures the overall company
performance, through a balanced set of measures established annually, including
customer satisfaction, financial performance, process improvement and employee
measures.
 
(b) Individual Performance. Based on advice and recommendation from the Chief
Executive Officer (CEO) for those reporting to him, the Committee and Board
evaluate each Participant’s individual performance compared to performance
objectives set early in the year.  The Chairman of the Board and Committee
evaluate the CEO’s performance versus his performance objectives.  This
individual performance measure is at the full discretion of the Board.
 
Company and Individual Performance Goals will be established in writing for each
Performance Period by no later than the first quarter of the Performance
Period.  The Company Balanced Business Performance is weighted 80%, and
Individual Performance has a 20% weight.
 
4.2
Performance Levels.  Company measures described in Section 4.1 will be
established for three performance levels: threshold, target and maximum.  To the
extent possible, these levels are set based on the following probabilities:  90%
probability of achieving the threshold level; 50% probability of achieving
target level; and 10% probability of achieving the maximum level.
 
4.3
Participant Goals. Participants will have a combination of Company Balanced
Business Performance and Individual Performance measured goals used in
determining any Annual Incentive Award as described in 4.1 above.

 
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4.4
Target Potential.  For each Performance Period, the Committee and Board set the
target potential measured as a percentage of Base Salary for each eligible
employee.  The target level of incentive award for the Plan is as follows:
 
· 50% of Base Salary for the Company’s CEO;
· 30% of Base Salary for the Company’s Senior Vice Presidents;
· 25% of Base Salary for the Company’s Vice Presidents, and
· 20% of Base Salary for the Company’s Assistant Vice Presidents.
 
The maximum payout is capped at two times Target Potential.
 
4.5
 
Amount of Award.  Following the completion of the Performance Period, the
Committee shall undertake or direct a calculation of actual performance for each
of the Company and individual measures for such Performance Period, based on
criteria used in the measures.  The actual award opportunity for each
Participant will be determined as follows:
 
(a) For each measure in the scorecard for the Company Balanced Business
Performance threshold, target and maximum performance levels are
defined.  Actual performance is determined and linear interpolation is used
between three points where achieving the threshold level of performance results
in no payout; the target level of performance results in 100% of the target
payout and achieving the maximum level of performance results in a 200% of the
target payout.  The individual performance rating between one and five is
translated where three is the threshold, four is target and five is the maximum.
 
(b) A weighted average of the target incentive multiplier for each component of
the Company Balanced Business Performance measure will be determined.  A
weighted average rating for each component of the Individual Performance measure
will also be determined.
 
A weighted average of the target incentive multiplier for the Company and
individual performance measures will be determined, based on the weightings
described in

 
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Section 4.1 for Eligible Employees.
 
(c) The final target incentive multiplier will be multiplied by the
Participant's Target potential to determine the Annual Incentive Award
percentage.  Unless the average of the financial measures of the Company
Balanced Business Performance meet at least 50% between the threshold and
target, the final incentive multiplier cannot exceed 100% of the target
incentive multiplier overall.
 
(d) The Annual Incentive Award percentage will then be multiplied by the
Participant's Base Salary as of at the end of the prior year to determine the
Participant's Annual Incentive Award, prior to any further reductions as
described in this Plan, including Sections 5.2, 5.3, 5.4, 5.5, 5.6 and 6.2.
 

 
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ARTICLE V
 
DETERMINATION AND PAYMENT OF ANNUAL INCENTIVE AWARDS
 
5.1
Timing and Determination of Annual Incentive Awards.  Following the completion
of a Performance Period, the Committee shall undertake or direct an evaluation
of performance results as compared to the appropriate performance criteria
established for the Performance Period as determined in Article IV.  The
Committee will report to the Board with respect to achievement of previously
approved Company and individual performance targets for that Performance Period,
and will submit to the Board its recommendations as to the appropriate award
payment levels for each eligible participant.
 
Recommendations of the Committee, with such modifications as may be made by the
Board, will be binding on all Participants.
 
No Annual Incentive Award may be paid without the prior approval of the
Committee.
 
Any Annual Incentive Awards will be paid on the Award Payment Date, which shall
be no later than March 15th following the Performance Period.
 
5.2
Short Performance Year.  In the event that a determination of an Annual
Incentive Award must be made for a Performance Period of less than 12 months,
and the year of termination of employment, the determination shall be made in
accordance with the provisions of this Plan, except that:
 
(a) In the year of hire, if hired after the first date a Performance Period
begins, or the year of death or permanent and total disability, the amount
otherwise determined under the Plan shall be prorated to reflect the period of
time during which the Participant was a Participant in the Plan compared to the
total period of time of the Performance Period. In the event of termination or
retirement of a Participant during the Performance Period, such Participant will
not be eligible for a

 
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prorated Annual Incentive Award with respect to that Performance Period, unless
the Committee deems appropriate.
 
(b)   In the year of a Change in Control, the Company will be assumed to have
achieved a target performance level prorated by time.
 
5.3
Death or Permanent and Total Disability. In the event of the death or Permanent
and Total Disability of a Participant during a Performance Period, such
Participant will be eligible for a prorated Annual Incentive Award with respect
to that Performance Period.
 
5.4
Termination or Retirement. In the event of the termination or retirement of a
Participant during the Performance Period, such Participant will not be eligible
for a prorated Annual Incentive Award with respect to that Performance Period,
unless the Committee deems appropriate.
 
5.5
Change-in-Control (CIC).  In the event of a CIC, a Participant shall receive the
benefit, if any, as provided for in the CIC Agreement between the Participant
and the Company. In the absence of a CIC Agreement, a Participant whose
employment is terminated following a CIC shall be entitled to receive an Annual
Incentive Award at the target performance level prorated, if necessary, to
reflect termination of employment prior to the conclusion of the Performance
Period all as more specifically provided for in the standard Change in Control
Agreement approved by the Board as the same may be amended from time to time.  
 
5.6
Limitation on Right to Payment of Award. Notwithstanding any other Plan
provision to the contrary, no Participant shall have a right to receive payment
of an Annual Incentive Award under the Plan if, subsequent to the commencement
of the Performance Period and prior to the date any award would otherwise be
payable, is terminated For Cause.

 
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ARTICLE VI
 
ADMINISTRATION
 
6.1
Committee.  The Plan shall be operated and administered by the Committee.
 
6.2
Authority of the Committee.  The Committee shall have full power except as
limited by it’s Charter, the bylaws of the Company or any restrictions or
directions imposed by the Board and subject to the provisions herein, to
determine the Performance Goals during each Performance Period, to determine the
terms, conditions and amounts of Annual Incentive Awards in a manner consistent
with the Plan, and to establish, amend or waive rules and regulations as it
deems appropriate for the Plan's administration in a manner consistent with the
terms of this Plan. Further, the Committee shall make all other determinations
that may be necessary or advisable for the administration of the Plan. The
Committee's determinations and interpretations with respect to this Plan shall
be binding on all parties. While the Committee may appoint individuals to act on
its behalf in the administration of this Plan, the Committee will have the sole,
final and conclusive authority to administer, construe and interpret this Plan.
 
The Committee may, for reasons it deems appropriate, in its discretion,
determine to disapprove, reduce or eliminate any Participant's Annual Incentive
Award as it deems warranted by extraordinary circumstances.
 
6.3
Costs.  The Company shall pay all costs of administration of the Plan.
 

 
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ARTICLE VII
 
MISCELLANEOUS
 
7.1
Amendment. The Committee or the Board may at any time alter or amend any
provision of the Plan, provided that no such amendment that would require the
consent of the stockholders of the Company pursuant to the Code, or any other
applicable law, rule or regulation, shall be effective without such consent. No
such amendment shall adversely affect in any material way a Participant's rights
to, or interest in, an Annual Incentive Award earned through the end of the
Performance Period in which such amendment is adopted or becomes effective
unless the Participant shall have agreed thereto in writing, unless such
amendment is required by applicable law.
 
7.2
Termination. The Board may suspend or terminate this Plan at any time, and in
the case of such termination, the following provisions of this Section shall
apply notwithstanding any other provisions of the Plan to the contrary. No such
suspension or termination shall adversely affect in any material way a
Participant's rights to, or interest in, an Annual Incentive Award earned
through the end of the Performance Period in which such suspension or
termination is adopted or becomes effective unless the Participant shall have
agreed thereto in writing.
 
7.3
Employment Rights. The Plan does not constitute a contract of employment and
participation in this Plan will not give an Eligible Employee the right to be
rehired or retained in the employ of the Company, nor will participation in this
Plan give any Eligible Employee any right or claim to any benefit under this
Plan, unless such right or claim has specifically accrued under the terms of
this Plan. This Plan is not a contract between the Company and its Eligible
Employees or Participants. No Participant or other person shall have any claim
or right to be granted an Annual Incentive Award under this Plan until such
Annual Incentive Award is actually granted. Neither the establishment of this
Plan, nor any action taken hereunder, shall be construed as giving any
Participant any right to be retained in the employ of the

 
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Company. Nothing contained in this Plan shall limit the ability of the Company
to make payments or awards to Participants under any other plan, agreement or
arrangement. To the extent any provision of this Plan conflicts with any
provision of a written agreement between an Employee and the Company, the
provisions of the employment agreement shall control.
 
7.4
Nonalienation of Benefits. A Participant's right and interest under the Plan may
not be assigned or transferred and any attempted assignment or transfer shall be
null and void and shall extinguish, in the Company's sole discretion, the
Company's obligation under the plan to pay Annual Incentive Awards with respect
to the Participant.
 
7.5
No Funding. The Plan shall be unfunded. The Company shall not be required to
establish any special segregation of assets to assure payment of Annual
Incentive Awards.
 
7.6
Tax Withholding. The Company shall have the right to deduct from Annual
Incentive Awards paid any taxes or other amounts required by law to be withheld.
 
7.7
Controlling Laws. All questions pertaining to the construction, regulation,
validity and effect of the provisions of the plan shall be determined in
accordance with the laws of the State of Vermont, except to the extent
superseded by laws of the United States.
 
7.8
Gender and Number. Where the context admits, words in the masculine gender shall
include the feminine gender, the plural shall include the singular and the
singular shall include the plural.
 
7.9
Action by the Company. Any action required of or permitted by the Company under
this Plan shall be by written resolution of the Board or by a person or persons
authorized by written resolution of the Board.
 
7.10
Mistake of Fact. Any mistake of fact or misstatement of fact shall be corrected
when it becomes known and proper adjustment made by reason thereof.

 
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7.11
Severability. In the event any provision of this Plan shall be held to be
illegal or invalid for any reason, such illegality or invalidity shall not
affect the remaining parts of this Plan, and this Plan shall be construed and
endorsed as if such illegal or invalid provision had never been contained in
this Plan.
 
7.12
Effect of Headings. The descriptive headings of the Articles and Sections of
this Plan are inserted for convenience of reference and identification only and
do not constitute a part of this Plan for purposes of interpretation.
 
7.13
No Liability. No member of the Board or the Committee or any officer or employee
of the Company or an affiliate shall be personally liable for any action,
omission or determination made in good faith in connection with this Plan. The
Company shall indemnify and hold harmless the members of the Committee, the
Board and the officers and employees of the Company and any affiliates, and each
of them, from and against any and all loss which results from liability to which
any of them may be subjected by reason of any act or conduct (except willful
misconduct or gross negligence) in their official capacities in connection with
the administration of this Plan, including all expenses reasonably incurred in
their defense, in case the Company fails to provide such defense. By
participating in this Plan, each Eligible Employee agrees to release and hold
harmless each of the Company and any affiliates (and their respective directors,
officers and employees), the Board and the Committee, from and against any tax
or other liability, including without limitation, interest and penalties,
incurred by the Eligible Employee in connection with his participation in the
plan.
 
7.14
Successors. All obligations of the Company under the plan with respect to Annual
Incentive Awards granted hereunder shall be binding on any successor to the
Company, whether the existence of such successor is a result of a direct or
indirect purchase, merger, consolidation or otherwise, of all or substantially
all of the business and/or assets of the Company.

 
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IN WITNESS WHEREOF, the Employer has caused this instrument to be executed by
its duly authorized officer as of the 7th day of April, 2009.

CENTRAL VERMONT PUBLIC
SERVICE CORPORATION

By:   /s/ Joan F. Gamble     
        Title: Vice President

Attest:

By:   /s/ Mary Marzec     
             Mary Marzec

(Corporate Seal)

 
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