Exhibit
10.3
 
 LACLEDE
GAS COMPANY
 Incentive
Compensation Plan
 (Amended
and Restated, Effective as of January 1, 2005)
 
 
 I.           Establishment
and Purposes
 
 In
order to give officers and managerial employees of the Company an increased
incentive to outstanding performance, to reward such performance, and to attract
and retain highly qualified persons as officers and for managerial positions,
there was established the Laclede Gas Company Incentive Compensation Plan, which
amounts earned and vested thereunder as of December 31, 2004 are not subject to
Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”)
(“Plan”).  As a result of the enactment of Code Section 409A, the
Company adopted as of the effective date hereof the Laclede Gas Company
Incentive Compensation Plan II (“Plan II”), which governs benefits earned and
vested on January 1, 2005 and thereafter.  Effective as of January 1,
2005, no additional Share Units shall be awarded under the Plan.
 
 II.           Definitions
 
 The
following terms, as used in this Plan, shall have the meaning set forth
below:
  “Company”--
for the sake of clarity, the Laclede Gas Company
  “Employee”--an
officer or managerial employee of the Company.
  “Laclede--The
Laclede Group, Inc.1
  “Share
Unit”--an incentive compensation unit.  No stock certificate will be
issued for a Share Unit.
 No voting power
resides in a Share Unit.
  “Dividend
Equivalent”--an amount in cash equivalent to the cash dividend paid on each
 share of Laclede’s
common stock.
  “Aggregate
Annual Dividend Equivalent”--an amount computed, at the time of the award of a
Share
 Unit, at the then
current annual cash dividend
rate on Laclede’s common stock.
  “Awardee”--an
Employee awarded a Share Unit.
  “Spouse”--a
spouse is that person who on the date of the Awardee’s death is lawfully
 married to the
Awardee.
 
 1           The
Laclede Group is a result of a reorganization described in Amendment No. 1 to
the Form S-4
 of The
Laclede Group, Inc. filed on December 14, 2000.
  1
  “Consolidated
Retained Earnings”--consolidated retained earnings as stated in Laclede’s annual
report to stockholders for the fiscal year next preceding the date of any
calculation pursuant to Section VI hereof.
 
 “Consolidated
Earnings”--consolidated earnings (or loss) applicable to common stock as stated
in Laclede’s annual report to stockholders for the fiscal year next preceding
the date of any calculation hereunder, subject to any adjustments thereto
pursuant to Paragraph VI hereof.
 
 “Disability”--disability
is when, based on competent medical evidence, the Awardee is unable, by reason
of any medically determinable physical or mental impairment, to perform the
duties required by Awardee’s job; and Awardee is unable to perform any other
work available to Awardee within the Company, whether or not Awardee is eligible
for any other Company disability program.
 
 “Deferred
Compensation”--an amount, allocable to each Share Unit outstanding at the end of
a fiscal year, equal to the per common share net increase, or decrease in
Consolidated retained Earnings for that fiscal year.  However, no
Deferred Compensation Credits shall accrue on Share Units held by an Awardee
after the fiscal year in which his employment has terminated due to retirement,
disability, death or the election of the Awardee following a hostile Change in
Control.
 
 “Change
of Control”--When any person, as such term is used in Sections 13(d) and
14(d)(2) of the Securities Act of 1934 becomes a beneficial owner, directly or
indirectly, of Laclede’s securities representing more than fifty percent (50%)
of the combined voting power of Laclede’s then outstanding securities, or when
any such person becomes a beneficial owner, directly or indirectly, of at least
thirty percent (30%) and no more than fifty percent (50%) of such securities and
a majority of the outside members of Laclede’s Board of Directors decides that a
de facto Change in Control has occurred.  Change in Control approved
by a majority of the outside members of Laclede’s Board of Directors as
constituted immediately prior to the Change in Control is hereinafter referred
to as a friendly Change in Control and a Change in Control not approved by a
majority of the outside members of Laclede’s Board of Directors as constituted
immediately prior to the Change in Control is heretofore and hereinafter
referred to as a hostile Change in Control.
 
 III.        
Eligibility
  No Awardee whose
employment with the Company shall be terminated other than by retirement,
disability, death or at his election following a hostile Change in Control or
who shall engage in any business which is competitive with the public utility
business of the Company shall be eligible to receive any payments under the
Plan.  All Deferred Compensation accrued prior to such termination or
such competitive activity shall be forfeited.
  2
  
 
 IV.         Administration
  The Compensation
Committee of Laclede’s Board of Directors shall have authority to recommend to
the Board from time to time the award of Share Units to selected
Employees.  Upon such recommendation, the Board of Directors,
exclusive of any Directors who are eligible to participate in the Plan, may
award Share Units to any or all such Employees.  The Board of
Directors shall otherwise administer the Plan in all respects, and any decision
of the Board with respect to any question arising as to the Employees selected
for awards, the amount and form of awards and interpretations of the Plan shall
be final, conclusive, and binding.
 
 V.         Payment
of Dividend Equivalents
  When Laclede pays a
cash dividend on its common stock, it shall, subject to the provisions of
Section III., pay a Dividend Equivalent to each Awardee for each Share Unit held
on the date of such payment.  Dividend Equivalents will be paid to
each Awardee until his death. Upon the death of an Awardee leaving a Spouse
surviving, Dividend Equivalents shall be paid to such Spouse for
life.
  Notwithstanding the
provisions of the final two sentences of the immediately preceding unnumbered
paragraph of this Section V, with respect to awards made on or after January 26,
1995, an Awardee who later retires before attaining the age of 65 years (other
than by reason of death or Disability, or following a hostile Change of Control)
shall not be entitled to post-retirement Dividend Equivalents payable at any
time after such Awardee’s retirement, unless the Awardee remains employed by the
Company for at least the following respective periods (based on the Awardee’s
age at the date of the award of the Share Units in question) subsequent to the
date upon which the Share Units are awarded:
 
 Age
      at Date of Award
                  
                  Number
      of Years of Service
                    Required
      Following the
                    Date
      of Such Award61 and older
                  
                  2
      yearst least 55, but less than 61
                  
                  4
      yearsless than 55
                  
                  5
      years
 
  3
  
 VI.         Calculation
and Payment of Deferred Compensation
  Each year, the
Company shall, subject to the provisions of Section III., credit or debit the
applicable Deferred Compensation amount to each Awardee for each Share Unit held
during such year; provided that with regard to Share Units awarded on or after
January 26, 1995 the Deferred Compensation amount reflecting the change in
Consolidated Retained Earnings for the first fiscal year taken into account in
computing the Deferred Compensation amount shall in no event be less than
zero.  The calculation of Deferred Compensation shall be subject to
the power of Laclede’s Board of Directors from time to time to (i) adjust the
amount of Consolidated Retained Earnings to reflect events or transactions which
have a significant relation to the efforts and performance of any or all
Awardees, or (ii) exclude from the computation of Consolidated Retained Earnings
all or any portion of Consolidated Earnings deemed to reflect events or
transactions (including the effect of weather conditions) which have no
significant relation to the efforts and performance of any or all
Awardees.  The aggregate of the annual Deferred Compensation amounts,
if any, credited to an Awardee shall accrue interest at a rate equal to the
prime rate charged by US Bank National Association at the time such interest
accrues, but only from and not before the date of retirement, disability, death
or the election of the Awardee to terminate employment following a hostile
Change in Control, and shall be payable in ten equal annual installments to the
Awardee or, if he dies before all such payments have been made, to his surviving
beneficiaries designated in writing, and filed with the Company, or if none,
then to his estate.  Payments shall commence on the first day of the
fifth month following the month in which the earlier of the Awardee’s
retirement, disability, death or the election of the Awardee to terminate
employment following a hostile Change in Control occurs.
  Notwithstanding any
of the other provisions of this Section VI, with respect to awards made on or
after January 26, 1995, an Awardee who later retires before attaining the age of
65 years (other than by reason of death or Disability, or following a hostile
Change of Control) shall not be entitled to post-retirement Deferred
Compensation payable at any time after such Awardee’s retirement, unless the
Awardee remains employed by the Company for at least the following respective
periods (based on the Awardee’s age at the date of the award of the Share Units
in question) subsequent to the date upon which the Share Units are
awarded.
 
 Age at Date of Award
                  
                  Number
      of Years of Service
                    Required
      Following the
                    Date
      of Such Award61 and older
                  
                  2
      yearst least 55, but less than 61
                  
                  4
      yearsless
      than 55
                  
                  5
      years
 
  4
  
 VII.        Adjustments
  In the event of any
stock dividend or stock split, the Board of Directors shall increase
proportionately each Awardee’s Share Units.  In the event of any
combination of shares, reclassification of shares, or other similar change in
capitalization, or any distribution other than cash dividends to holders of
shares of Laclede common stock, the Board of Directors may make such
adjustments, in the light of the change in distributions, as it deems equitable
both to the Awardees and the Company, in the number of share Units outstanding
and in the calculation of Deferred Compensation amounts.
 
 VIII.       Nonassignability
  All Share Units
awarded and all Dividend Equivalents and Deferred Compensation payable hereunder
shall be nonassignable.  Neither any Share Unit awarded hereunder nor
any Dividend Equivalents or Deferred Compensation amounts payable hereunder
shall be subject to the debts or obligations of any person entitled thereto,
nor, except as provided herein, may any Share Units or the proceeds therefrom,
voluntarily or involuntarily, be transferred or assigned to, or availed of by,
any person other than the Awardee.
 
 IX.         Effective
Date and Termination
  The Plan as amended
and restated shall be effective as of January 1, 2005 although no further awards
will be made under this Plan I on and after such date.  The Board of
Directors shall have the right at any time and from time to time to discontinue
and reinstate the Plan in whole or in part or amend the Plan provided that no
share unit previously awarded nor any deferred compensation amount theretofore
accrued shall be diminished or forfeited by any discontinuance, reinstatement,
or amendment of the Plan except pursuant to the forfeiture provision in Section
III.
 
 X.          Limitations
  The Board of
Directors shall not award, in any fiscal year, Share Units yielding Aggregate
Annual Dividend Equivalents which would reduce Consolidated Earnings by more
than 1⁄2%.  The Board of Directors also shall not award, in any fiscal
year, Share Units yielding Aggregate Annual Dividend Equivalents which, with
Aggregate Annual Dividend Equivalents on outstanding Share Units plus any
Deferred Compensation payments made in the next preceding fiscal year, would
reduce Consolidated Earnings by more than 2 1⁄2%.  The Board of
Directors shall not award to any Employee a number of Share Units which would
cause the Aggregate Annual Dividend Equivalents on Share Units held by him to
exceed 25% of his then current annual salary from the Company.
  5
  
 XI.       
General
  Payments made to any
Awardee shall constitute special incentive compensation and will not be taken
into account in determining the amount of any pension under any pension or
retirement plan of the Company and will not affect the amount of any life
insurance coverage available to beneficiaries under any group life insurance
plan of the Company.
 
 XII.      Effect
of Change in Control
 
 (a)           In
the event of any Change in Control, the regular quarterly Dividend Equivalent
payments shall be continued to be made to each eligible Awardee until his death
and thereafter to his surviving spouse, and each quarterly Dividend Equivalent
payment shall be no less than the amount determined by applying the highest
quarterly Dividend Rate applicable to the Company’s common stock during the
twelve (12) months preceding such Change in Control, multiplied by not less than
the number of Share Units each Awardee had immediately preceding such Change in
Control.  If a Change in Control occurs, then the annual Deferred
Compensation to be credited to each Awardee shall be no less than the per common
share change in the Company’s Consolidated Retained Earnings during the lower of
the last two (2) full fiscal years preceding such Change in Control applied to
the number of the Awardee’s Share Units existing immediately before such Change
in Control.
 
 (b)           After
any Change in Control an eligible Awardee who has elected to terminate his
employment or a retired or disabled Awardee, or a surviving spouse of an
Awardee, any of whom has elected in writing either: (i) within thirty days after
the employee became an Awardee under the Plan, or (ii) by September 22, 1990, in
the case of all Awardees who have received awards prior to August 23, 1990, to
be paid his or her benefits in a lump sum following a Change in Control, shall
be paid the present value of the future amounts due as Dividend Equivalent
payments in a lump sum, based on his and his spouse’s life expectancy, or a
surviving spouse’s life expectancy, as the case may be, utilizing the Pension
Benefit Guaranty Corporation rate and the Pension Benefit Guaranty Corporation
Mortality Tables existing at the time of such election, and/or, in the case of
Deferred Compensation, to receive the full amount due undiscounted but with
interest as heretofore provided to the date of payment.
 
 XIII.     Miscellaneous
 
 (a)           The
Plan shall be unfunded and payments hereunder shall be made solely from the
general assets of the Company.  To the extent any person acquires the
right to receive payments hereunder, such right shall be no greater than that of
an unsecured general creditor of the Company.  Notwithstanding the
foregoing, the Company may contribute to the Trust Fund established under the
Trust Agreement entered into as of the 7th day of
December, 1989, between the Company and Boatmen’s Trust Company and payments
under the Plan may be made from said Trust Fund.
  6
  
 (b)           No
right or benefit under the Plan shall be subject to anticipation, alienation,
sale, assignment, pledge, or encumbrance, and any attempt to anticipate,
alienate, sell, assign, pledge or encumber the same shall be void.
 
 (c)           Notwithstanding
anything herein to the contrary, to the extent, if any, that any payment or
distribution of any portion of the benefit described above (together with any
other benefit under any other plan, policy or arrangement) would trigger any
adverse tax consequences under Section 280G of the Code, or Section 4999 of said
Code, such as loss of deductions to the Company, or the payment of an additional
excise tax by the Awardee, or both, then the benefit hereunder (and to the
extent necessary, under any other plan, policy, or arrangement providing for
“parachute payments” as defined under Code Section 280G) shall be reduced (on a
pro rata basis for all such plans, policies, or arrangements) to $1 less than
that extent, and to no greater extent.  Parachute payments and/or any
cutback amount and any other determination with respect to Code Section 280G
shall be determined by the Company in good faith.
  7
  DESIGNATION
OF BENEFICIARY FOR CERTAIN BENEFITS UNDER
 
 THE
LACLEDE GAS COMPANY INCENTIVE COMPENSATION PLAN
 
 I
      hereby designate that my primary beneficiary under the Incentive
      Compensation Plan for any "DeferredCompensation"
      amounts payable after my death shall be:
 
 In
      the event my primary beneficiary is not alive at the time of my death or,
      in the case of a trust, has beenterminated,
      then the remaining "Deferred Compensation" benefits payable under the Plan
      shall be paid to:
 
 I
understand that the Incentive Compensation Plan does not allow me to designate a
beneficiary for “Dividend Equivalents”
but that they will be paid to my spouse, if my spouse survives me, for my
spouse’s life.
 Date: