Nicor Inc.
                                                                 Form 10-K
                                                                 Exhibit 10.21


                                     2000
                       NICOR INCENTIVE COMPENSATION PLAN

A.  The 2000 Nicor Incentive  Compensation  Plan is designed to link participant
    incentive  compensation to the accomplishment of important  objectives--both
    financial goals and defined  strategic  plans. It ties the pay an individual
    receives to his performance  and that of the company.  This plan is intended
    to provide a flexible framework for a performance bonus program for Nicor.

B.  Purpose

    The  purpose  of this Plan is to  provide  an annual  incentive  plan  which
    supports the longer-term strategic planning process. This is done by linking
    pay to the  performance  of tasks which  focus on  objectives  of  strategic
    importance.

C.  Eligible Group

    Officers of Nicor are eligible for  participation.  Participation  should be
    limited  to  those   employees  in  positions  which  enable  them  to  make
    significant contributions to the performance and growth of the company.

D.  Components of Plan

    Compensation Objective
    Bonus Targets
    Performance Targets
    Goal Setting Guidelines
    Program Schedule
    Form of Payment

    Compensation Objective

    Base Salary + Bonus Target = Short-Term Compensation Objective

    An individual's  short-term  compensation  objective will be based on salary
    plus a bonus,  expected to be earned if agreed-upon  performance targets are
    met.  Under  certain  conditions,  short-term  compensation  above  or below
    targets may be paid.





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    Base  salaries  will  be  managed  at the  industry  average  which  will be
    determined  annually by survey data.  Bonus targets will be set based on the
    individual's  grade  level  and  compensation  objective,  such  that  total
    compensation  objectives  are  managed  at the  level as  determined  by the
    Compensation Committee to remain competitive with industry.

    Bonus Target

    The bonus target amount varies according to pay, salary grade and ability to
    impact the organization.  The higher  responsibility  and impact levels, the
    greater the dollars at risk.

    Performance Targets

    Performance  criteria focus on the achievement of agreed-upon and documented
    strategic  goals.  Performance  targets  may include  measures of  financial
    performance,  the  ability to meet  budget  levels and  individual  or group
    performance  objectives.  An individual's target may include all three types
    of goals,  weighted by the grade level and responsibilities  involved.  Each
    particular  performance  target will be assigned  weighting  reflected  as a
    percentage of compensation objective.

    Goal Setting Guidelines

    The most  important  aspect of this Plan will be in  establishing  effective
    goals. In addition to the goals which will be measured by company  financial
    performance,  realistic, operational management goals may be established and
    agreed  upon  by  both  the  participant  and his  supervisor  for  company,
    division, project or individual performance. As well as being realistic, the
    goals should be measurable  wherever  possible by  quantifiable  performance
    criteria.  It is  recognized  that  measurement  of some goals will  require
    subjective assessments on criteria mutually agreed between an individual and
    his/her supervisor.  Goals must be consistent with the longer-term strategic
    plan.

    A set of guidelines will be devised by the Nicor Human Resources  Department
    to aid in this process.  These guidelines will provide  direction as to goal
    formulation and reporting.

    Amount of bonus  payment for  financial/budget  related goals can vary above
    and below target based upon results achieved.  For targets met, bonus amount
    will be 100% of target. When targets are exceeded or are not reached,  bonus
    will be proportionately more or less than the target.


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    Project or individual goals which are not quantifiable  will be evaluated by
    the  participant's  superior based on performance  and will fall into one of
    five  categories of  achievement:  unsatisfactory;  less than expected,  but
    acceptable given facts and circumstances;  expected; more than expected, but
    less than outstanding; and outstanding performance. Accordingly, performance
    at, below or above expected  performance  will result in awards  relative to
    performance.

    The  Compensation   Committee  may  make  appropriate   upward  or  downward
    adjustments  if,  after  taking  into  consideration  all of the  facts  and
    circumstances of the performance  period, it determines that adjustments are
    warranted.

    Plan Schedule

    The 2000 Nicor  Incentive  Compensation  Plan runs on a calendar year basis,
    with the strategic  planning cycle and budgeting process the primary link to
    performance and bonus targets. Responsibility for determination of financial
    results will be with the Accounting Department. A program for review will be
    established and individual,  project,  division or company goal  performance
    will be reviewed at least twice each performance year.

    Year-end  results  should be  available  and  evaluated  in  January  of the
    following year.  Following approval of the Compensation  Committee and Board
    at the January meeting, bonuses will be payable to participants.

    Form of Payment

    All awards  will be paid in cash,  except  that a  participant  in the Stock
    Deferral  Plan may elect to defer up to 50% of their  award  into that plan.
    Deferral elections must meet the guidelines and timing of the Stock Deferral
    Plan to be effective.  Appropriate taxes for the entire award amount will be
    withheld from the portion of the award being paid in cash.

    A participant  may elect by writing to the  Compensation  Committee prior to
    the end of the fiscal year to have all or a portion of the following  year's
    incentive  award deferred and paid in no more than five annual  installments
    beginning  either with the date of termination  or retirement,  or in a lump
    sum within six months after  termination  of  employment or  retirement.  In
    addition,  with the consent of the Compensation  Committee,  the participant
    may, at the time of making such election,  designate some other date for the
    commencement of such deferred payment. Further, the participant may submit a
    request  to  change  the  original  deferral  period.  The  request  must be
    submitted  in  writing  to the  Compensation  Committee  who will  take into
    consideration   the  particular   facts  and   circumstances  in  its  final
    determination.


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    An amount which is deferred shall be credited with compounded interest equal
    to the prime rate applied on a quarterly basis.

E.  Integration with Existing Programs

    Base salaries will be managed with range  standards at the industry  average
    for comparable positions,  with total compensation  objectives to be managed
    at a level  appropriate with the performance of the company within industry,
    as determined by the Compensation Committee. Salaries will be monitored each
    year and increases granted based on merit and range standard.  Bonus targets
    will be set as a percentage of base salary. A change,  other than the annual
    salary review,  in the compensation  objective will customarily occur during
    the year only through  promotion to various  levels,  at which time the base
    salary and bonus target are also likely to change.

    Promotion of an employee during the year or reassignment to responsibilities
    in which new  performance  objectives  apply will result in proration of the
    existing  performance  objectives  and bonus  target and  assignment  of new
    performance  objectives  as  the  Compensation  Committee  shall  determine.
    Promotion  into  the  Plan  would  involve  a  promotional   increase,   but
    eligibility  for bonus would be delayed  unless the  participant  is able to
    produce  positive  results  in the  remaining  time,  as  determined  by the
    Compensation Committee.

    If a participant  voluntarily terminates or is terminated for cause prior to
    the end of the performance  period,  then no award shall be granted.  In the
    event a  participant  shall die,  become  disabled,  retire or is terminated
    without  cause  before  the  end  of  the  performance   period,   then  the
    Compensation   Committee  will   authorize   payment  of  an  award  to  the
    participant,   or  beneficiary,  in  such  amount  as  the  Committee  deems
    appropriate.

F.  Responsibility

    Acceptance  and  success of this Plan will depend on  documented,  realistic
    goals that are fair, understandable and measurable.  Considerable management
    focus  and  involvement  will  be  required  for  goals  to be  established,
    communicated and monitored.

    The Human Resources Department will be responsible for the administration of
    the system for the company. This will include:

    1)  monitoring industry salary and total compensation levels,

    2)  recommending   structural   changes  in  base  salary  and  compensation
        objective adjustments,


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    3)  reviewing eligibility and performance targets,

    4)  monitoring performance targets through the Accounting Department,

    5)  communicating progress report to participants, and,

    6) progress and exception reporting to Compensation Committee.

    The 2000 Nicor  Incentive  Compensation  Plan and changes to its performance
    targets  and  measurement  criteria  will be  reviewed  and  approved by the
    Compensation Committee.

    In  establishing  the  actual  bonus  awards  to be made,  the  Compensation
    Committee  may take into  account all of the facts and  circumstances  which
    exist during the year and may make appropriate  upward or downward revisions
    in performance  criteria,  add or delete objectives,  or change the relative
    percentages assigned to the various performance objectives.

G.  Amendment and Termination

    The Board of Directors  may amend or terminate  the Plan at any time without
    the consent of the  participants.  No such  amendment or  termination  shall
    negatively  impact any  participant's  amount which  accrued  under the Plan
    prior to the calendar year in which the amendment is made.

    Summary

    The primary focus of this Plan is to link  employee and company  performance
    and  performance  bonus through an incentive plan. It provides the necessary
    emphasis on  accountability  for actions and decisions and enables people to
    gain  personally  through   significant  efforts  which  contribute  to  the
    company's present and future success.




                                                Nicor Human Resources
                                                       February 2000