Exhibit 10.1


 


Draft of
February 16, 2006


 


DPL INC.


EXECUTIVE
INCENTIVE COMPENSATION PLAN


EFFECTIVE
JANUARY 1, 2006


 


ARTICLE I  - PURPOSE


 


The purpose of the DPL Inc. Executive Incentive
Compensation Plan is to attract and retain key executives for DPL Inc. and its
Subsidiaries and to provide such persons with incentives for superior
performance.


 


ARTICLE II  - DEFINITIONS


 


Section 2.1.                                “Board”
means the Board of Directors of the Company.


 


Section 2.2.                                “Committee”
means the Compensation Committee of the Board or any other committee appointed
by the Board to administer the Plan.


 


Section 2.3.                                “Company”
means DPL Inc., an Ohio corporation, and any entity that succeeds DPL Inc. by
merger, consolidation, reorganization or otherwise.


 


Section 2.4.                                “Eligible
Executive” means the Company’s Chief Executive Officer and each other
officer of the Company that the Committee determines should be an Eligible
Executive hereunder.


 


Section 2.5.                                “Incentive
Bonus” shall mean, for each Eligible Executive, a bonus opportunity
amount determined by the Committee pursuant to Article V below.


 


Section 2.6.                                “Management
Objectives” means the measurable performance objective or objectives
established pursuant to this Plan for Eligible Executives who have received an
award pursuant to this Plan.  Management
Objectives may be described in terms of Company-wide objectives or objectives
that are related to the performance of the individual Eligible Executive or of
the Subsidiary, division, department, region or function within the Company or Subsidiary
in which the Eligible Executive is employed. 
The Management Objectives may be made relative to the performance of
other companies.  The Management
Objectives applicable to an award under this Plan will be based on specified
levels of or growth in one or more criteria such as the following, and other
individual performance criteria specific to the Eligible Executive’s position
with the Company:


 


(a)                                  Appreciation
in value of shares;


 


(b)                                 Total
shareholder return;


 


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(c)                                  Earnings
per share;


 


(d)                                 Operating
income;


 


(e)                                  Net
income;


 


(f)                                    Pretax
earnings;


 


(g)                                 Earnings
before interest, taxes, depreciation and amortization;


 


(h)                                 Pro
forma net income;


 


(i)                                     Return
on equity;


 


(j)                                     Return
on designated assets;


 


(k)                                  Return
on capital;


 


(l)                                     Economic
value added;


 


(m)                               Revenues;


 


(n)                                 Expenses;


 


(o)                                 Operating
cash flow;


 


(p)                                 Free
cash flow;


 


(q)                                 Cash
flow return on investment;


 


(r)                                    Operating
margin or net profit margin; or


 


(s)                                  Any
of the above criteria as compared to the performance of a published or a
special index deemed applicable by the Board, including, but not limited to,
the Standard & Poor’s Utility Index.


 


Section 2.7.                                “Participation
Agreement” means an agreement between the Company and each Eligible Executive
that must be executed as a condition of the Eligible Executive’s eligibility
for this Plan.


 


Section 2.8.                                “Plan”
means the DPL Inc. Executive Incentive Compensation Plan, as hereinafter set
forth and as the same may from time to time be amended or restated.


 


Section 2.9.                                “Subsidiary”
means a corporation, partnership, joint venture, unincorporated association or
other entity in which the Company has a direct or indirect ownership or other
equity interest.


 


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ARTICLE III  - ADMINISTRATION OF
THE PLAN


 


The Plan shall be administered by the Committee, which
shall have full power and authority to construe, interpret and administer the
Plan and shall have the exclusive right to establish Management Objectives and
the amount of Incentive Bonus payable to each Eligible Executive upon the
achievement of the specified Management Objectives.


 


ARTICLE IV  - ELIGIBILITY


 


  Eligibility
under this Plan is limited to Eligible Executives designated by the Committee
in its sole and absolute discretion who have each executed a Participation
Agreement.


 


ARTICLE V  - AWARDS


 


 Not later than
the 90th day of each fiscal year of the Company, the Committee shall establish
the Management Objectives and the relative weight assigned thereto for each
Eligible Executive and the amount of Incentive Bonus payable (or formula for
determining such amount) upon full achievement of the specified Management
Objectives.  Guidelines for the weighting
of the Management Objectives and the formula for determining the amount of the
target bonus are set forth on Schedule A
attached hereto.  The Committee may
further specify in respect of the specified Management Objectives a minimum
acceptable level of achievement below which no Incentive Bonus payment will be
made and/or a maximum level of achievement above which no additional Incentive
Bonus payments will be made, and shall set forth a formula for determining the
amount of any payment to be made if performance is at or above the minimum
acceptable level but falls short of full achievement of the specified
Management Objectives, or if performance is at or above full achievement of the
specified Management Objectives but below the maximum level of achievement.  The Committee may
modify the terms of awards established pursuant to this Article V in its sole
discretion to achieve the purposes of the Plan.


 


ARTICLE VI  - COMMITTEE
DETERMINATIONS


 


As soon as reasonably
practicable after the end of each fiscal year of the Company, but in any event
at a time that will permit payment by the date specified in Article VII, the
Committee shall determine for such fiscal year whether the Management
Objectives have been achieved, each Eligible Executive’s individual
contribution factor and the amount of the Incentive Bonus to be paid to each
Eligible Executive who remains employed by the Company as of the last date of
such fiscal year, provided, however, in no event shall any Incentive Bonus be
payable for any fiscal year in which the Company has reduced dividends payable
on its shares.  The Committee may make


 


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such adjustments in its determination of Incentive Bonus amounts as it
determines to be appropriate in its discretion.


 


ARTICLE VII  - PAYMENT OF INCENTIVE
BONUSES


 


Subject to a valid election made by an Eligible
Executive with respect to the deferral of all or a portion of his or her
Incentive Bonus pursuant to a deferred compensation plan maintained by the
Company, an Incentive Bonus earned during a fiscal year shall be paid in cash
on March 15 of the fiscal year following the fiscal year in which such
Incentive Bonus is earned.


 


ARTICLE VIII  - MISCELLANEOUS


 


Section 8.1.                                Amendment
of Plan.  The Committee may at any
time amend any or all of the provisions of this Plan. A proper amendment of
this Plan automatically shall effect a corresponding amendment to all
Participants’ rights hereunder.


 


Section 8.2.                                No
Right to Bonus or Continued Employment. 
Neither the establishment of the Plan, the provision for or payment of
any amounts hereunder nor any action of the Company, the Board or the Committee
with respect to the Plan shall be held or construed to confer upon any person
(a) any legal right to receive, or any interest in, an Incentive Bonus or any
other benefit under the Plan or (b) any legal right to continue to serve as an
officer or employee of the Company or any Subsidiary of the Company.


 


Section 8.3.                                Withholding.  The Company shall have the right to withhold,
or require an Eligible Executive to remit to the Company, an amount sufficient
to satisfy any applicable federal, state, local or foreign withholding tax
requirements imposed with respect to the payment of any Incentive Bonus.


 


Section 8.4.                                Nontransferability.  Except as expressly provided by the
Committee, the rights and benefits under the Plan shall not be transferable or
assignable other than by will or the laws of descent and distribution.


 


Section 8.5.                                Effective
Date.  This Plan shall become
effective for bonuses earned in years beginning with the year 2006.


 


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Schedule A


 


The
following are guidelines to be followed by the Committee in establishing the
Management Objectives and their relative weightings, the target bonuses, and
the individual contribution factors for the Eligible Executives:


 


(a)                                  Establishment
of Management Objectives and their Relative Weightings: The Management
Objectives selected by the Committee shall fall under two broad categories: (i)
corporate objectives (“Corporate Objectives”) and (ii) business unit and
functional objectives (“Functional Objectives”).  The Committee shall assign a relative
weighting of 75% to Corporate Objectives and 25% to Functional Objectives.  The Committee shall develop a
performance/payout schedule for the Corporate Objectives and the Functional
Objectives that specifies performance targets and their corresponding payouts
at threshold, target and maximum levels, with threshold payouts set at 50% of
target and maximum payouts set at 200% of target.


 


(b)                                 Determination
of Target Bonus:  The amount of an
Eligible Executive’s target bonus shall be based on a percentage of the
Eligible Executive’s base salary for the fiscal year.  In no event will the percentage be less than
the factor set forth below:


 


	
  Participant’s Position

  	
   

  	
  Factor

  	
   

  
	
  President and Chief
  Executive Officer

  	
   

  	
  75

  	
  %

  
	
  President, Power
  Production

  	
   

  	
  40

  	
  %

  
	
  Vice President,
  Operations

  	
   

  	
  40

  	
  %

  
	
  Vice President,
  Commercial Operations

  	
   

  	
  50

  	
  %

  
	
  Senior Vice President
  and Chief Financial Officer

  	
   

  	
  50

  	
  %

  
	
  Vice President, General
  Counsel and Corporate Secretary

  	
   

  	
  35

  	
  %

  
	
  Vice President

  	
   

  	
  35

  	
  %

  
	
  Treasurer

  	
   

  	
  35

  	
  %

  
	
  Controller

  	
   

  	
  25

  	
  %

  



 


(c)                                  Determination
of Individual Contribution Factor: Each year the Committee will assign an
individual contribution factor to each Eligible Executive, which shall range
from 0.5 to 1.50.  The individual
contribution factor assigned to each Eligible Executive for a year will be such
so that the application of the individual contribution factors does not result
in an increase in the total amount of Incentive Bonuses paid for the year over
the total amount of Incentive Bonuses that would be paid without the
application of the individual contribution factors.  If the Company must reduce dividends in a
fiscal year, the Company will not pay any portion of an award for that
particular year.


 


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