Nicor Inc.
                                                        Form 10-Q
                                                        Exhibit 10.01


                  2003 LONG-TERM INCENTIVE PROGRAM

To be approved at the March 2003 meeting of the Compensation Committee, along
with approving the participants and awards. Shown below is a full description of
the Long-Term Program for 2003.

Summary of 2003 Long-Term Incentive Program
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o  Combination of Stock Options (SOs) and Performance Units (PUs).

o  SOs have a ten-year term.

o  PUs are a percentage of base salary at the time of the award and would pay
   out based on a combination of total shareholder return and earnings per share
   over at least a three-year performance period.

o  SOs and PUs are independent of each other.

o  The company will also make selected use of restricted stock.

Description of Stock Options
----------------------------
o  Option exercise price set at fair market value on date of grant.

o  Options vest after one year and are generally exercisable after three years
   (100% in year three).

o  Options expire ten years from date of grant.

o  Options can be non-qualified stock options (NQSOs) or Incentive Stock Options
   (ISOs); Nicor plans to grant NQSOs in 2003.

Description of Performance Units
--------------------------------
o  Each performance unit equals $1.00 and total units are a percentage of base
   salary at the time of the award. As an example, if the participant's base
   salary is $150,000 and their long-term target percentage attributable to
   Performance Units is 20%, their target award would be $30,000 or 30,000
   Performance Units.

o  Performance units will pay out in cash, except that a participant in the
   Stock Deferral Plan may elect to defer up to 50% of their payout into that
   plan. Deferral elections must meet the guidelines and timing of the Stock
   Deferral Plan to be effective.

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THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING SECURITIES THAT HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
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How Performance Unit Payouts are Determined
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o  All performance units pay out at the end of at least three years.

o  The payout is based 50% on each of two performance measures. Each half is
   modified by a performance multiplier which ranges from 0% to 200%.

o  The performance measurers and multipliers are based on the Nicor total
   shareholder return (TSR) over the performance period, as compared to the
   performance of a utility industry peer group (S&P utility group), and the
   three-year earnings per share of the company.

o  The following schedules show the proposed performance unit multipliers:

                Performance Unit Multiplier Schedules
                -------------------------------------

                              Payout         Earnings            Payout
   Nicor TSR*                Multiple        Per Share*         Multiple
   ---------                 --------        ----------         ---------
 90th Percentile or higher     200%              30%               200%
   75th Percentile             150%              27%               175%
   60th Percentile             100%              24%               150%
   50th Percentile              75%              21%               125%
   40th Percentile              50%              18%               100%
   25th Percentile              25%              15%                75%
 Below 25th Percentile           0%              12%                50%
                                                  9%                25%
                                        Below     9%                 0%

*Values between the data points will be interpolated.

Transferability
---------------
With Compensation Committee approval, stock options and performance units may be
transferred, for no consideration, to or for the benefit of the participant's
immediate family as defined in the plan. All terms and conditions remain
applicable after transfer.

Termination Provisions
----------------------
In the case of death, disability or retirement:

o  Nonexercised options and performance units held for more than one year (as of
   the date of death, disability or retirement) will be exercisable and/or will
   be eligible for payout at the end of the period.

o  The full number of performance units will pay out at the end of the
   performance cycle, based on the normal per-unit performance/pay out
   guidelines.


o  Vested options will remain exercisable for ten years after the date of grant.

o  The Compensation Committee can override these provisions at its discretion.

In the case of termination of employment for any other reason, there will be no
accelerated vesting of unvested options and performance units. Options held less
than one year and performance units held less than three years are immediately
cancelled. Options held for one year or longer will become exercisable for three
months after the date of termination. The Compensation Committee can override
these provisions at its discretion.




                                               Nicor Human Resources
                                                        March 2003