EXHIBIT 10.1


PUBLIC
SERVICE ENTERPRISE GROUP INCORPORATED


MANAGEMENT
INCENTIVE COMPENSATION PLAN


Effective
January 1, 2009






TABLE
OF CONTENTS


	
 

	
 

	
 

	
 


	
I.

	
PURPOSE

	
1

	
 


	
 

	
 

	
 

	
 


	
II.

	
DEFINITIONS

	
1

	
 


	
 

	
 

	
 

	
 


	
III.

	
ADMINISTRATION

	
5

	
 


	
 

	
 

	
 

	
 


	
IV.

	
ELIGIBILITY

	
5

	
 


	
 

	
 

	
 

	
 


	
V.

	
TARGET INCENTIVE AWARDS

	
6

	
 


	
 

	
 

	
 

	
 


	
VI.

	
PERFORMANCE GOALS

	
7

	
 


	
 

	
 

	
 

	
 


	
VII.

	
DETERMINATION OF FINAL INCENTIVE AWARDS

	
8

	
 


	
 

	
 

	
 

	
 


	
VIII.

	
DISTRIBUTION

	
10

	
 


	
 

	
 

	
 

	
 


	
IX.

	
TERMINATION OF EMPLOYMENT

	
10

	
 


	
 

	
 

	
 

	
 


	
X.

	
LIMITATIONS

	
11

	
 


	
 

	
 

	
 

	
 


	
XI.

	
LIMITATION OF ACTIONS

	
12

	
 


	
 

	
 

	
 

	
 


	
XII.

	
CLAIMS PROCEDURES

	
13

	
 


	
 

	
 

	
 

	
 


	
XIII.

	
PLAN AMENDMENT, SUSPENSION OR TERMINATION

	
13

	
 


	
 

	
 

	
 

	
 


	
XIV.

	
OTHER COMPENSATION PLANS

	
13

	
 


	
 

	
 

	
 

	
 


	
XV.

	
MISCELLANEOUS

	
14

	
 





i






PUBLIC
SERVICE ENTERPRISE GROUP INCORPORATED


MANAGEMENT
INCENTIVE COMPENSATION PLAN


I. PURPOSE


          The
purposes of this Plan are to foster attainment of the financial and operating
objectives of the Company and its Participating Affiliates, which are important
to customers and stockholders by providing incentive to certain key officers
and executive-level employees who contribute to attainment of these objectives.
This Plan is designed to provide for awards to selected salaried employees in
executive or other important positions, who, individually or as members of a
group, contribute in a substantial degree to the success of the Company and its
Participating Affiliates, and who are in a position to have a direct and
significant impact on the growth and success of the Company and its
Participating Affiliates, thus affording to them a means of participating in that
success and an incentive to contribute further to that success. This Plan also
serves to supplement the Company’s and Participating Affiliates’ salary and
benefit programs so as to provide overall compensation for such executive-level
employee that is competitive with corporations with which the Company and its
Participating Affiliates must compete for executive talent and to assist the
Company and its Participating Affiliates in attracting and retaining executives
who are important to their continued success.


II. DEFINITIONS


          The
following words and phrases shall have the meanings set forth below:


	
 

	
 


	
 

	
          (a)
 “Affiliate”
 shall mean any organization which is a member of a controlled group of
 corporations (as defined in Code section 414(b), as modified by Code section 





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415(h)) which includes the Company; or any trades or
 businesses (whether or not incorporated) which are under common control (as
 defined in Code section 414(c), as modified by Code section 415(h)) with the
 Company; or a member of an affiliated service group (as defined in Code
 section 414(m)) which includes the Company or any other entity required to be
 aggregated with the Company pursuant to regulations under Code section
 414(o).


	
 

	
 


	
 

	
          (b)
 “Award” shall mean the amount determined by the Committee pursuant to Section
 VII hereof.


	
 

	
 


	
 

	
          (c)
 “Award Fund” shall mean the aggregate amount made available in any Plan Year
 pursuant to Section V hereof from which awards determined under Section VII
 hereof may be made.


	
 

	
 


	
 

	
          (d)
 “Cash Balance Plan” shall mean the Cash Balance Pension Plan of Public
 Service Enterprise Group Incorporated.


	
 

	
 


	
 

	
          (e)
 “CEO” shall mean the Chief Executive Officer of the Company. If the Board of
 Directors has not designated a Chief Executive Officer, “CEO” shall mean the
 President of the Company.


	
 

	
 


	
 

	
          (f)
 “Code”
 shall mean the Internal Revenue Code of 1986, as amended, or as it may be
 amended from time to time.


	
 

	
 


	
 

	
          (g)
 “Committee” shall mean the Organization and Compensation Committee of the
 Board of Directors of the Company, the membership on which shall be limited
 to directors of the Company who are not Employees.





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          (h)
 “Company” shall mean Public Service Enterprise Group Incorporated, a New
 Jersey corporation, or any successor thereto.


	
 

	
 


	
 

	
          (i)
 “Disability” for the purposes of this Plan, a Participant shall be deemed to
 have terminated employment on account of “Disability “if such Participant
 qualifies for a disability pension under the Pension Plan or the Cash Balance
 Plan.


	
 

	
 


	
 

	
          (j)
 “Employee”
 shall mean any person not included in a unit of employees covered by a
 collective bargaining agreement who is an employee (such term having its
 customary meaning) of the Company or a Participating Affiliate, whether
 full-time or part-time, and whether or not an officer or director, and who is
 receiving remuneration for personal services rendered to the Company or
 Participating Affiliate other than (i) solely as a director of the Company or
 a Participating Affiliate, (ii) as a temporary employee, (iii) as a
 consultant or (iv) as an independent contractor (regardless of whether a
 determination is made by the Internal Revenue Service or other governmental
 agency or court after the individual is engaged to perform such services that
 the individual is an employee of the Company or Participating Affiliate for
 the purposes of the Code or otherwise).


	
 

	
 


	
 

	
          (k)
 “Lay Off” shall mean an involuntary termination of employment, other than for
 cause.


	
 

	
 


	
 

	
          (l)
 “Participant” shall mean an Employee who has been designated by the Committee
 to participate in the Plan pursuant to Sections IV and V hereof.


	
 

	
 


	
 

	
          (m)
 “Participating
 Affiliate” shall mean any Affiliate of the Company that adopts this Plan with
 the approval of the Board of Directors of the Company. As a 





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condition to participating in this Plan, such
 Affiliate shall authorize the Board of Directors of the Company and the
 Committee to act for it in all matters arising under or with respect to this
 Plan and shall comply with such other terms and conditions as may be imposed
 by the Board of Directors of the Company.


	
 

	
 


	
 

	
          (n)
 “Pension Plan” shall mean the Pension Plan of Public Service Enterprise Group
 Incorporated.


	
 

	
 


	
 

	
          (o)
 “Plan” shall mean this Public Service Enterprise Group Incorporated
 Management Incentive Compensation Plan, as it may be amended from time to
 time.


	
 

	
 


	
 

	
          (p)
 “Plan Year” shall mean the calendar year.


	
 

	
 


	
 

	
          (q)
 “Retirement” – the voluntary termination of employment under circumstances
 entitling the Participant to an immediately payable periodic retirement
 benefit under the Pension Plan or the Cash Balance Plan. Retirement shall not
 include termination of service with a right to a deferred pension under the
 Pension Plan or a deferred retirement benefit or early commencement of a
 Participant’s cash balance account under the Cash Balance Plan; 


	
 

	
 


	
 

	
          (r)
 “Subsidiary” shall mean any corporation, limited liability company or other
 entity, domestic or foreign (other than the Company), 50% or more of the
 total voting power of which is held by the Company and/or a Subsidiary or
 Subsidiaries.


	
 

	
 


	
 

	
          (s)
 “Target Incentive Awards” shall mean the amounts determined by the Committee
 pursuant to Section V hereof.





4






III. ADMINISTRATION


          (a)
The Committee shall administer the Plan. Subject to the provisions of the Plan,
the Committee shall have full and final authority to select Participants, to
designate Target Incentive Awards for each Participant and to determine the
performance objectives and the amount of all Awards under this Plan. The
Committee shall also have, subject to the provisions of the Plan, full and
final authority to interpret the Plan, to establish and revise such
administrative regulations as it deems necessary for the proper administration
of the Plan and to make any other determinations that it believes necessary or
advisable for the administration of the Plan. The Committee may delegate such
responsibilities, other than final approval of Awards or appeals of alleged
adverse determinations under the Plan, to the CEO or to any other officer of
the Company or any Participating Affiliate.


          (b)
All decisions and determinations by the Committee shall be final and binding
upon all parties, including stockholders, Participants, legal representatives
and other Employees.


          (c)
The Committee may rely conclusively on the determinations made by the Company’s
independent public accountants.


IV. ELIGIBILITY


          (a)
Those Employees who are key officers or executive-level Employees of the
Company, a Subsidiary or an Affiliate who, in the opinion of the Committee, are
in a position to have a direct and significant impact on achieving the
Company’s long-term objectives are eligible to participate in the Plan. 


5






          (b)
The Committee may select such Employees of the Company or Participating
Affiliate (individually or by position) for participation in the Plan upon such
terms as it deems appropriate, due to the Employee’s responsibilities and
his/her opportunity to contribute substantially to the attainment of financial
and operating objectives of the Company or Participating Affiliate. A
determination of participation for a Plan Year shall be made no later than the
beginning of that Plan Year; provided, however, that newly hired Employees may
be added and an Employee whose duties and responsibilities change significantly
during a Plan Year may be added or deleted as a Participant by the Committee. The Committee may prorate the
Incentive Award of any Participant if appropriate to reflect any such change in
duties and responsibilities during a Plan Year.


          (c)
Any Employee who has been selected as a Participant in the Public Service Enterprise Group
Incorporated Key Executive Incentive Compensation Plan for any Plan Year may
not participate in this Plan for the same Plan Year. 


          (d)
Participation in the Plan in one Plan Year shall not guarantee or require
participation in another Plan Year.


          (e)
The Committee shall have sole discretion as to whether to suspend operation of
the Plan for any period of time.


V. TARGET
INCENTIVE AWARDS


          (a) For each Plan Year, the Committee shall determine:


	
 

	
 

	
 


	
 

	
 (i)

	
Whether or not the Plan shall be in operation for
 such Plan Year.





6







	
 

	
 

	
 


	
 

	
 (ii)

	
The names or positions of those Employees who will
 participate in the Plan for such Plan Year.


	
 

	
 

	
 


	
 

	
 (iii)

	
The Target Incentive Award for each Participant,
 expressed as a percentage of the Participant’s rate of base salary in effect
 as of the last day of the Plan Year to which such Target Incentive Award
 relates. 


	
 

	
 

	
 


	
          (b)

	
 

	
At any time after the
 commencement of a Plan Year, but prior to the close thereof, the Committee
 may, in its discretion, eliminate or add Participants or increase or decrease
 the Target Incentive Award of any Participant based upon such criteria as it
 shall deem appropriate.





VI. PERFORMANCE
GOALS


          For
each Plan Year, within 90 days of the beginning of the Plan Year (or, for
Participants joining the Plan during a Plan year, within 90 days of
participation), the CEO shall approve performance goals for each Participant
which shall be performance measures or objectives, whether quantitative or
qualitative, which must be achieved in order to earn an Award under this Plan.
The CEO shall approve the specific targets for any such selected performance
goals. These targets may be set at a specific level or may be expressed as
relative to the comparable measure at comparison companies or to a defined
index. Such performance goals shall include a corporate goal or goals related
to the performance of the Company and may include (i) an employer goal or goals
related to the performance of a Subsidiary or organizational business unit and
(ii) an individual goal or goals related to the individual performance of the
Participant in his/her position.


7






          The
CEO shall determine the substance and weighting of each goal of a subsidiary
president. The CEO may determine the substance and weighting of each of the
goals of other Participants or may delegate the determination of the substance
and weighting of these goals to the Subsidiary presidents with their respective
business units and direct reports. 


          Notwithstanding
the foregoing, however, for any Plan Year, the Committee or the CEO may, as
deemed to be appropriate, elect to adjust the applicable weightings of the
corporate goal(s), the employer goal(s) and the individual goal(s) as part of
the criteria for determining Awards for any Participant or group of
Participants in this Plan.


VII. DETERMINATION
OF FINAL INCENTIVE AWARDS


          A
Participant’s Final Incentive Award will be determined as follows:


	
 

	
 

	
 


	
 

	
(a)

	
Within 60 days of the end of each Plan Year, the CEO
 shall certify, subject to confirmation by the Committee, the achievement of
 the corporate goal(s), the several employer goals and the several individual
 goals for the Plan Year. 


	
 

	
 

	
 


	
 

	
(b)

	
The result of such certifications shall be the
 Corporate Factor, the Employer Factor and the Individual Performance Factor,
 respectively. 


	
 

	
 

	
 


	
 

	
(c)

	
The respective portions (employer and individual) of
 each Participant’s Target Incentive Amount shall then be multiplied by the
 Employer Factor and the Individual Performance Factor, as appropriate, added
 together. The result of those calculations shall be then multiplied by the
 Corporate Factor to determine the Participant’s Incentive Award. For example,
 assume (i) a Target Incentive Amount of 50.0%, (ii) a Corporate Factor of
 0.95, (iii) an employer goal 





8







	
 

	
 

	
 


	
 

	
 

	
weighting of 70%, (iv) an Employer Factor of 1.20,
 (v) an individual Goal weighting of 30% and (vi) an Individual Performance
 Factor of 0.80:








	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
          1.
 Employer Portion =

	
1.20

	
x

	
.70

	
x

	
50.0%

	
=

	
42.00%


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
          2.
 Individual Portion =

	
0.80

	
x

	
.30

	
x

	
50.0%

	
=

	
12.00% 





          INCENTIVE AWARD  =  42.00%  +
  12.00%  =  54.00%  x  0.95  =  51.30%  x  Salary


	
 

	
 

	
 


	
 

	
(e)

	
Notwithstanding anything contained in this Plan to
 the contrary, unless the CEO shall specifically so determine and the
 Committee affirm, a Participant’s Final Incentive Award shall not exceed 1.5
 times such Participant’s Target Incentive Amount for the Plan Year to which
 it relates.


	
 

	
 

	
 


	
 

	
(f)

	
Unless otherwise determined by the Committee or the
 CEO, the Employer Factor to be applied in determining a Participant’s Final
 Incentive Award shall be that of the Subsidiary/ Business Unit of which the
 Participant was a member on the last day of (or, for terminated Participants
 eligible for Awards, on the last day of employment in) the Plan Year to which
 the Award relates.


	
 

	
 

	
 


	
 

	
(g)

	
Unless otherwise determined by the CEO, to the
 extent that the Target Incentive Amount applicable to any Participant is
 changed during a Plan Year (e.g., downgrade of incumbent position, change in
 position, promotion to new position), such Participant’s Final Incentive
 Award shall be prorated on the basis of the Participant’s service in his/her
 respective positions. 


	
 

	
 

	
 


	
 

	
(h)

	
Also notwithstanding anything contained in this Plan
 to the contrary, the Committee or CEO may adjust a Participant’s Final
 Incentive Award based upon any criteria it/he/she may determine to be
 reasonable.





9






VIII. DISTRIBUTION


	
 

	
 

	
 


	
 

	
(a)

	
All distributions of a Participant’s Final Incentive
 Award shall be made as of a distribution date which shall be no later than
 the 15th day of the third month following the close of the Plan
 Year to which such award relates.


	
 

	
 

	
 


	
 

	
(b)

	
All distributions shall be in one lump sum in money
 by check.





IX. TERMINATION
OF EMPLOYMENT


	
 

	
 

	
 


	
 

	
(a)

	
If the employment of a Participant is terminated on
 account of the Participant’s death, Disability, Lay-Off or Retirement, and if
 the Committee determines that Awards under this Plan may be earned for the
 Plan Year of termination, such Participant’s Award shall be prorated for that
 part of the Plan Year in which the Participant was participating prior to
 such termination and the Company shall pay such prorated Award as soon as
 practicable after determination of the Final Incentive Award in accordance
 with Section VII, unless otherwise determined by the Committee; provided,
 however, that any Participant who has received a benefit under the Key
 Employee Severance Plan of Public Service Enterprise Group Incorporated shall
 not be entitled to a prorated payment provided for under this subsection.


	
 

	
 

	
 


	
 

	
(b)

	
If, prior to the payment of any Award under this
 Plan, the employment of a Participant is terminated for any reason other than
 death, Disability, Lay-Off or Retirement, the Participant shall forfeit the
 right to payment of such Award, unless otherwise determined by the Committee.





10







	
 

	
 

	
 


	
 

	
(c)

	
If a Participant becomes a Participant during a Plan
 Year, any Award under this Plan to the Participant may be appropriately
 prorated from the time the Participant entered the Plan to the end of the
 Plan Year, as determined by the CEO.


	
 

	
 

	
 


	
 

	
(d)

	
In the case of a Participant’s death, any payment
 under this Plan shall be made to the Participant’s estate. Such payment shall
 be made as a lump sum as soon as practicable after determination of the Final
 Incentive Award in accordance with Section VII.





X. LIMITATIONS


          Neither
the action of the Company in establishing the Plan, nor any action taken by it
or by the Committee under the provisions hereof, nor any provision of the Plan,
shall be construed as giving to any Employee the right to be retained in the
employ of the Company, its Subsidiaries or its Affiliates.


          The
Company may offset against any payments to be made to a Participant or his/her
beneficiary under this Plan any amounts owing to the Company, its Subsidiaries
or its Affiliates from the Participant for any reason.


          The
invalidity or unenforceability of any provision of this Plan shall in no way
affect the validity or enforceability of any other provision hereof.


XI. LIMITATION
OF ACTIONS


          Every
asserted right of action by or on behalf of the Company or by or on behalf of
the stockholder against any past, present or future member of the Committee or
director, officer or Employee of the Company or any Subsidiary or Affiliate
thereof, arising out of or in connection 


11






with this Plan, shall, irrespective of the place where
such right of action may arise or be asserted and irrespective of the place of
residence of any such member director, officer or Employee, cease and be barred
upon the expiration of three years (i) from the date of the alleged act or
omission in respect of which such right of action arises or (ii) from the date
upon which the Company’s Annual Report to Stockholders setting forth the
aggregate amount of the awards to all or any part of which such action may
relate is made generally available to stockholders, whichever date is earlier;
and every asserted right of action by or on behalf of any Employee, past,
present or future, or any beneficiary, spouse, child or legal representative
thereof, against the Company or any Subsidiary or Affiliate thereof, arising
out of or in connection with this Plan, shall, irrespective of the place where
such right of action may arise or be asserted, cease and be barred by the
expiration of three years from the date of the alleged act or omission in
respect of which such right of action arises.


XII. CLAIMS
PROCEDURE


          In
the case of any Participant (whether active, retired or terminated) or
beneficiary whose claim for an award under this Plan has been denied, the
Company shall provide adequate notice in writing of such adverse determination
setting forth the specific reasons for such denial in a manner calculated to be
understood by the recipient thereof. Such Participant or beneficiary shall be
afforded a reasonable opportunity for a full and fair review of the decision
denying the claim by the Committee.


12






XIII. PLAN
AMENDMENT, SUSPENSION OR TERMINATION


          The
Board of Directors may discontinue the Plan at any time and may, from time to
time, amend or revise the terms of the Plan as permitted by applicable
statutes; provided, however, that no such discontinuance, amendment or revision
shall materially adversely affect any right or obligation with respect to any
award theretofore made. The Plan will continue in operation until discontinued
as herein provided.


XIV. OTHER
COMPENSATION PLANS


          The
adoption of this Plan shall not affect any other incentive compensation plan,
stock option plan or any other compensation plan in effect for the Company or
any Affiliate, nor shall the Plan preclude the Company or any Affiliate from
establishing any other form of incentive compensation plan, stock option plan
or any other compensation plan.


XV. MISCELLANEOUS


          (a)
The costs and expenses of administering the Plan shall be borne by the Company
and its Affiliates and shall not be charged against any Award or to any
Participant receiving an Award.


          (b)
To the extent not preempted by Federal law, this Plan and actions taken in
connection herewith shall be governed and construed in accordance with the laws
of the State of New Jersey without reference to its Conflict of Laws principles.


          (c)
The captions and section numbers appearing in this Plan are inserted only as a
matter of convenience. They do not define, limit or describe the scope or
intent of the provisions of the Plan. In this Plan, words in the singular
number include the plural and in the plural 


13






include the singular; and words of the masculine
gender include the feminine and the neuter, and when the sense so indicates,
words of the neuter gender may refer to any gender. The invalidity or
unenforceability of any provision hereof shall in no way affect the validity or
enforceability of any other provision.


          (d)
Every direction, revocation or notice authorized or required by the Plan shall
be deemed delivered to the Company (a) on the date it is personally delivered
its principal executive offices to the attention of the Compensation Manager of
PSEG Services Corporation or (b) three business days after it is sent by
registered or certified mail, postage prepaid, addressed to the Company (attn:
Compensation Manager of PSEG Services Corporation) at such offices; and shall
be deemed delivered to a Participant (a) on the date it is personally delivered
to him or her, or (b) three business days after it is sent by registered or
certified mail, postage prepaid, addressed to him or her at the last address
shown for him or her on the records of the Company.


          (e)
Except as otherwise provided herein, this Plan shall inure to the benefit of
and be binding upon the Company, its successors and assigns, including but not
limited to any corporation which may acquire all or substantially all of the
Company’s assets and business or with or into which the Company may be
consolidated or merged.


          (f)
Failure by the Company or the Committee to insist upon strict compliance with
any of the terms, covenants or conditions hereof shall not be deemed a waiver
of any such term, covenant or condition, nor shall any waiver or relinquishment
of any right or power hereunder at any one or more times be deemed a waiver or relinquishment
of any such right or power at any other time or times.


14






          (g)
The Company shall have the right to deduct from any Award payment any sum
required to be withheld by federal, state, or local tax law. There is no
obligation hereunder that any Participant or other person be advised in advance
of the existence of the tax or the amount so required to be withheld.


          (h) This
Plan was originally adopted effective as of January 1, 2009.


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