Exhibit 10.34


 





 


Cascade Natural Gas 

Team Performance Incentive Plan

2005


 


Cascade Natural Gas has
an incentive plan designed to reward for outstanding, company performance. The
objectives of this plan are to:


•                  Reward
for performance


•                  Shift
to a performance-based, financially-driven organization


•                  Establish
a strong line of sight between pay and performance


•                  Establish
a profitable customer focus


•                  Encourage
team orientation and environment


•                  Increase
profit margin and profitability


•                  Link
to Company’s objectives


•                  Attract,
retain and motivate teams and employees


•                  Motivate
higher levels of performance


•                  Focus
employees on company direction (in their actions)


 


TEAM PERFORMANCE
INCENTIVE PLAN


 


All salaried employees in
the company are eligible to participate in this plan. The Team Performance
Incentive Plan is outlined in detail below:


 


Performance Measures


 


The incentive plan is
based on the Company achieving the Earnings per Share goals and incorporates
five other measures each weighted as indicated by the percentage next to the
measure. The incentive program will
generate a payout after the Company meets the threshold earnings level of  $1.20 per share on Earnings per Share as
publicly reported. Each measure will have regional and general office
targets of achievement: 


 


1.               Operating
Expense Total operating expenses
represents the expenses found in the budget process such as; Operating
Expenses, Labor, Benefits Expense Office and Plant Maintenance. This amount is
then compared to the monthly budgeted operating expense at the end of each
month.


 


2.               Safety
20% The safety measure is our
accident factor maintained in Safety & Engineering. It is determined by
adding the average preventable occupational accident frequency rate and
preventable vehicle frequency rate as determined by Safety and Training and
dividing by two. 


 


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3.               Customer
Satisfaction 20%  Customer satisfaction is determined by
customer’s responses to the annual customer satisfaction survey.  


 


4.               Number
of Meters Set 20% Number of
meters set as compared to the corporate goal of 10,000.


 


5.               Other
Service Revenues 20% Gross
Revenue generated from all non distribution programs such as Service Plus.


 


Two additional measures
will be tracked that focus on Pipeline Safety and Regional Profit Margin. Both
measures are key to the Company’s focus of safety and being profitable but will
not be factored into any payouts achieved under the plan. 


 


Communication of Measures


 


Measures will be
communicated by the beginning of December.


 


Award Potentials


 


Employees participating
in the plan are eligible for an incentive payout. The payout is calculated as a
percentage of the employee’s base pay (as defined below) and is dependent upon
the achievement of the incentive plan goals and company performance. The
details of this target payout are described below:


•                  The
incentive payout midpoint is 4% of base pay for all salaried employees eligible
to participate in the plan. 


•                  The
plan outlines three levels of performance for each measure:


•                  Threshold:
represents the minimum acceptable level of performance for the measure; this
level of performance generates a minimal incentive payout.


•                  Plan
Mid Point: represents the level of performance that generates an incentive
payout of 100% of plan mid point (4% of base pay).


•                  Outstanding:
represents the maximum level of performance for the measure; this level of
performance generates an incentive payout of 200% of target (8% of base pay).


•                  The
level of achievement in the earnings per share measure will determine the
funding level of the plan.  For example
funding at the mid-point EPS will result in a pool equal to 4% of eligible
pay.  Payouts cannot exceed the funding
pool. 


•                  Payouts
will be calculated by each region and the Seattle Office.  Payouts are first calculated based on
performance, in each area, up to the level of EPS achievement.  Then, if additional


 


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funds are available,
areas with achievement greater than 100% will receive an additional allocation
based on the level of overachievement.


 


Timing
of Payout


 


Awards will be paid out annually. Payments will be made to employees by
December 1st, 2004


 


Eligibility


 


Employee’s
performance must meet expectations for their job by attaining a performance
rating of 3.0 or better to receive the full award for which they are eligible
under the plan.  Awards for employees
with a performance rating between 2.81 to 2.99 shall be eligible to receive a reduced
award as shown in the table below:


 




	
  Performance Rating

  	
   

  	
  Percentage of Award

  	
   

  
	
  3.00 or greater

  	
   

  	
  100

  	
  %

  
	
  2.95 to 2.99

  	
   

  	
  87.5

  	
  %

  
	
  2.90 to 2.94

  	
   

  	
  75.0

  	
  %

  
	
  2.85 to 2.89

  	
   

  	
  62.5

  	
  %

  
	
  2.81 to 2.84

  	
   

  	
  50.0

  	
  %

  
	
  2.8 or below.

  	
   

  	
  0

  	
   

  






 


Employees
receiving a 2.8 performance rating or less will not be eligible to receive an
award under this plan.  


 


All
awards will be pro-rated based on the length of service in that plan year.  Employees must have a minimum of three months
of service with Cascade in order to be eligible to participate in the plan.


 


Base
Pay Definition


 


For the purposes of calculating incentive awards, earned base pay and
actual overtime earnings will be used for non-exempt employees and earned
annual base pay will be used for exempt employees. Base pay calculations do not
included bonuses, merit awards, incentive earnings or other pay that would be
reflected in W-2 earnings.


 


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Benefits


 


Incentive pay is included in the definition of pay for the purpose of
matching and employer contributions in the 401(k).


 


Terminations


 


Individuals must be employed at the end of the fiscal year in order to
be eligible to receive a payout. Pro-rated awards will be paid to those who
terminate due to retirement, disability or death.


 


The company reserves the right to alter, amend or cancel this program
at any time.


 


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