Document:

ex99-1.htm

    

    EXHIBIT
10.2

    

    CALPINE
CORPORATION

    

    2009
Calpine Incentive Plan

    

    

    I.            
Effective
Date

    

    The 2009
Calpine Incentive Plan (the “CIP” or the “Plan”) is effective as of
January 1, 2009.

    

    II.           Plan
Purpose

    

    The CIP
is a key element of Calpine Corporation’s (“Company”) total compensation program
and is designed to attract, motivate, retain and reward eligible employees. The
plan rewards eligible employees by allowing them to receive bonuses based upon
how well the Company performs against certain financial objectives, how an
individual personally performs and how well the individual’s plant/department
performs (when applicable).  In order for any bonuses to be earned and
paid, the Company must meet minimally acceptable performance
targets.  If those targets are not met, no bonuses will be
paid.  If those targets are met, then bonuses will be paid based on a
combination of Company performance, individual performance and the individual’s
plant/department performance (when applicable).

    

    III.          Plan
Eligibility

    

    All
regular full time (working 30 or more hours per week), non-collective bargaining
unit employees who will not receive a benefit from another Company incentive
plan during 2009 are eligible to participate in the Plan.

    

    IV.          Bonus Pool
Determination

    

    The
aggregate CIP bonus pool amount approved by the Compensation Committee of the
Board of Directors (the “Committee”), is determined in the following
steps:

     

    1.
   Prior to
the start of, or early in each performance period, the Company shall confirm the
business/performance goals for the Company (“Corporate Goals”) and/or for
various plant/departments (“Plant/Department Goals”) for that
period.  For the current performance period, Exhibit A attached hereto
provides specific Corporate Goals and the areas in which Corporate Goals and
Plant/Department Goals will be evaluated.

     

    2.   
During
the fiscal quarter following the performance period (which is the entire
calendar year), the Plan Administrator shall review how the actual results for
the

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    period
compared to the Corporate Goals and Plant/Department Goals for that period and
determine the level of achievement of the various goals, expressed as a
percentage.  As required, the Committee will review and approve,
modify, adjust or cancel the achievement in its sole discretion.

     

    3.    The sum
each participant’s “Annual Cash Bonus Target” which is each participant’s Target
Percentage (described in Section V (1) below) multiplied by his or her
Compensation (as defined in Section V(2) below), for the calendar year to which
Corporate Goals and/or Plant/Department Goals (as defined in Section IV(1)
above) and Individual Goals (as defined in Section V(3)) apply, establishes the
target aggregate CIP bonus pool (“Aggregate Target CIP Bonus
Pool”).

     

    4.    The
percentage of goal achievement shall be applied to the Aggregate Target CIP
Bonus Pool, and may result in a final actual aggregate CIP bonus pool (“Final
Aggregate CIP Bonus Pool”) greater than, or less than, the sum each
participant’s Annual Cash Bonus Target.  As a general rule, the level
of the Final Aggregate CIP Bonus Pool shall be consistent with the Company’s
level of Corporate Goal and/or Plant/Department Goals achievement.

    

    Based
upon the achievement of the Corporate Goals and/or Plant/Department Goals, the
Committee may adjust the Aggregate Target CIP Bonus Pool up or down based on
unplanned circumstances or events.

    

    V.           Participant Bonus
Determination

    

    Although
participant bonus determinations are completely at the discretion of the Plan
Administrator and subject to the achievement of Corporate Goals and/or
Plant/Department Goals, many factors are taken into consideration in determining
an individual participant’s bonus under the Plan.

    

    The bonus
amount allocated to a participant (“Bonus”) is generally determined by the
following factors:

     

    1.    Position – Each
eligible position is associated with a job code that is assigned a target
percentage based on the level of responsibility and market practices for the
position (“Target Percentage”).  The Target Percentage, which is based
on market data and internal/Calpine discretion (provided that a 16B officer’s is
based on market data and the discretion of the Board of Directors of Calpine),
will be communicated to each participant upon hire, placement in, or promotion
to any CIP eligible position.

     

    2.    Compensation – The
amount of a participant’s Compensation, which is a participant’s base salary and
overtime pay, earned in a CIP eligible position during a performance period is
directly related to a participant’s Bonus.  The “Compensation” for a
participant shall be prorated for any partial service on account of disability,
leaves, promotions or any other position changes.

    
      
      

    

    

    
      
      

    

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    “Compensation”
does not include step up pay, time off for leave of absences or supplemental
payments, including but not limited to bonuses, awards and vacation
payouts.

     

    3.    Participant Job Performance – An
additional component in calculating a participant’s Bonus is the attainment of
specific individual goals and objectives, which are established by the
participant along with the participant’s respective manager at the beginning of
the measurement period (“Individual Goals”).  Individual Goals may be
inapplicable in some circumstances.

     

    4.    Mix of Corporate Goals,
Plant/Department Goals and Individual Goals – Bonuses are determined
based on a combination, or mix, of the achievement of Corporate Goals,
Plant/Department Goals and Individual Goals (as applicable).

     

    5.    Other Factors
Considered:

     

    

    
      	
              ·  
        

            	
              Foremost
      are Calpine’s overriding principles of ethical conduct and
      integrity.  It is expected that each participant will conduct
      Calpine’s business in an open and honest fashion and actions, and that
      decisions will represent the Company with honor and distinction in the
      face of public scrutiny.

            

    

    

    
      	
              ·  
        

            	
              Furthermore,
      a participant’s compliance with all applicable laws and Company policies,
      procedures and standards (including, but not limited to, the Code of
      Conduct, the Risk Management Procedures Manual, the Antitrust Policy, the
      Safety and Health Policy, the Equal Employment Opportunity Policy and
      NERC, FERC and any other regulatory laws, rules or regulations) is an
      essential consideration in determining bonus eligibility and
      amount.  In addition, a participant’s Bonus under the Plan may
      be adjusted for his or her individual performance and contribution, as
      determined by the participant’s
manager.

            

    

    

    VI.          Payment of
Bonus

    

    Each
Bonus under the Plan will be calculated based on attainment of goals and paid as
follows:

    

    
      	
              ·  
        

            	
                
      Provided the Corporate Goals and/or Department Goals are achieved as set
      forth in Exhibit A, it is intended that the Bonus will be paid between
      January 1, 2010 and March 15, 2010, but it will be paid no later than
      December 31, 2010.

            

    

    

    
      	
              ·  
        

            	
                
      Participants in the Transition Incentive Award program of the
      CIP:  The CIP also provides a limited number of awards to
      participants under the Transition Incentive Provision (“Exhibit
      B”).  These employees are engaged in activities such as asset
      sales, plant closings, etc. which may, by the nature of the activity,
      result in the elimination of their jobs. Employees in this classification
      will be

            

    

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

           
advised of their respective participation based on criteria determined by the
Company from time to time.

    

    
      	
              ·  
        

            	
                
      In all cases, bonus payments will be subject to all applicable taxes and
      any applicable and appropriate deductions for garnishments, 401(k)
      Retirement Savings Plan, and other deductions or
    withholdings.

            

    

    

    VII.        Transfers and New
Hires

    

    In the
event that a participant transfers from one position to another during the
course of the performance period, or is a new hire, his/her Plan bonus for the
year will be calculated on a pro-rated basis to reflect the actual time spent in
each position and the bonus target for each position during the performance
period.  An employee hired on or after November 1 is not eligible to
participate in the CIP for the calendar year in which he or she was
hired.

    

    VIII.       Retirements, Disability,
Death and Terminations

    

    Except as
provided below, participants are eligible to receive a bonus under this Plan
provided they remain actively employed on the day bonus payments are
paid.  Participants in the Transition Incentive Award program of the
CIP are exempt from this provision.

    

    Notwithstanding
the foregoing, in the event of a participant’s retirement (provided such
participant qualified under the Company’s retirement policy), short-term or
long-term disability or death during a Plan year, his/her Bonus will be
pro-rated to reflect the actual time in active service during the Plan year. If
a Plan participant dies, retires or becomes subject to short-term or long-term
disability after the conclusion of a performance period, but prior to the bonus
payout for such period, he or she will still be eligible to receive the entire
Bonus under the Plan for such period.

    

    Except as
otherwise provided hereunder, any participant whose employment is terminated by
the Company for any reason (including such termination by the Company after a
participant becomes eligible for retirement) or who voluntarily resigns (except
for retirement) prior to the Bonus payout is not eligible to receive a bonus
payment under such program.

    

    IX           Administration

    

    The Plan
will be administered by the Plan Administrator who shall be Calpine’s Chief
Executive Officer, or the Company officer designated by the Chief Executive
Officer from time to time (i.e., SVP Human Resources, etc.).  The Plan
Administrator shall have broad authority to interpret the terms and conditions
of the Plan, subject to the following decisions reserved for the
Committee:

    

    
      
         

      

      
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    1.   As
required, the approval of the Company’s financial and non-financial goals
discussed in Section IV above; and

    

    2.   Interpretation
of the Plan on any matters in which the Chief Executive Officer or the Plan
Administrator is not a disinterested party.

    

    Furthermore,
the Plan Administrator must approve any modifications, amendments, or
adjustments to the Plan or any of its key provisions and all bonus
payments.  In addition, all bonus payments under this Plan are subject
to the review and the approval of the Chief Executive Officer. Any decisions
of the Plan Administrator in the interpretation of the Plan may be appealed in
writing to the Committee.  However, any decision of the majority of
the Committee is final and binding on all parties.

    

    X           Disputes

    

    If a Plan
participant disputes a Bonus payment or the absence of a payment under such
program, he or she must submit a claim in writing describing the claim to the
Plan Administrator.  The Plan Administrator will respond to the claim
within a reasonable time.  Any decisions of the Plan Administrator may
be appealed in writing to the Committee.  However, any decision of a
majority of the Committee is final and binding on all parties.

    

    XI           Discretion in
Amendment/Termination

    

    Distribution
and payout of all Bonus amounts under the CIP are at the sole discretion of the
Plan Administrator. The Plan Administrator may at any time and for any reason,
amend, alter, suspend or terminate this Plan, subject to the approval of the
Committee.  Any amendment, supplement, or exception to this Plan must
be in writing and will be communicated to all eligible
participants.  Likewise, any superseding management incentive plan
must be in writing and expressly state that it supersedes this
Plan.  The Committee may in its discretion suspend any and all
payments under the Plan.

    

    XII         No Employment
Rights

    

    Notwithstanding
anything to the contrary herein, each Plan participant’s employment with the
Company is and shall continue to be at-will.  A participant’s
employment with the Company may be terminated at any time by the participant or
the Company, with or without cause and with or without notice, as permitted by
law.

    

    XIII        Governing
Law

    

    The
validity, interpretation, construction and performance of this Plan shall be
governed in accordance with Texas law, except for its conflict of laws
provisions, unless a superseding federal law is applicable or, in the case of
Canada, unless a superseding law under Canadian jurisdiction is
applicable.

    
      
         

      

      
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    XIV        No
Assignment

    

    Without
the written consent of the Plan Administrator, no participant may assign any
right or obligation under this Plan to any other person or
entity.  Notwithstanding the foregoing, the terms of this Plan and all
rights of the participant hereunder shall inure to the benefit of, and be
enforceable by, the participant’s personal and legal representatives, executors,
administrators, successors, heirs, distributes, devisees or
legatees.

    

    XV          Integration

    

    This
document and each exhibit hereto represent the entire agreement and
understanding between the Company and the participants in the Plan as to the
subject matter herein, and therefore supersede all prior or contemporaneous
agreements, whether written or oral.

    

    XVI         Severability

    

    The
invalidity of unenforceability of any provision or provisions of this Plan shall
not affect the validity or enforceability of any other provision hereof, which
shall remain in full force and effect.

    

    
      
         

      

      
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    EXHIBIT
A

    2009

    

    Pool Funding and CIP Bonus
Plan Goals/Metrics

    

    

    

    Pool
Funding

    

    
      	
              ·   
        

            	
              Each
      plan participant has an Annual Cash Bonus Target that equals the product
      of his/her Compensation times the Target Percentage associated with
      his/her job level.  The Aggregate Target CIP Bonus Pool equals
      the sum of the participants’ Annual Cash Bonus
  Targets.

            

    

    

    
      	
              ·  
        

            	
              Based
      upon results, the Bonus Pool may be adjusted upward or downward based on
      unplanned extra ordinary events.

            

    

     

    

    *
* * * *

    

    

    
      	
              ·
          

            	
              Corporate
      Goal:  The Company must meet a minimum threshold
      performance of at least 80 percent of projected adjusted EBITDA in order
      for the CIP program to be funded in 2009.  For 2009, the
      projected adjusted EBITDA target is $1,687 million
      dollars.  Eighty percent of this target is $1,349
      million.

            

    

    

    

    
      	
              · 
         

            	
              Corporate and Plant/Department
      Goal Performance:  Performance at the Corporate and
      Plant/Department levels will directly relate to how the Company and
      Plant/Department (where applicable) satisfy performance measure targets in
      the following areas: Economic Commodity Margin and Other Income, Expenses,
      CAPEX/Major Maintenance Expenses and Strategic
      Initiatives.  (See attached Addendum to Exhibit A for more
      details.)  Some Plant/Departments will affect all of the areas,
      while others will affect as few as one area.  This will be
      accounted for.  Plant performance will include, but not be
      limited to, evaluation of safety, environmental compliance and
      controllable expenses.

            

    

    

    

    With the
exception of awards paid under the Transition Incentive program (Exhibit B) that
may involve the elimination of a participant’s own position, participants must
be actively employed on the date of the payment of the Bonus in order to receive
payment.

    

    

    * * * *
*

    
      
         

      

      
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    EXHIBIT
B

    2009

    Transition Incentive
Plans

    

    

    

    In
connection with activities necessary to the successfully disposition of assets,
closing of plants and similar activities designed to support the restructuring
of Calpine, there may be a number of employees who, by the nature of their
activities, eliminate their respective jobs.  The Transition Incentive
Plans provide a program that rewards these participants for their work in
completing assignments and specific transactions that enhance Calpine’s
value.

    

    

    A.  Transaction/Transition
Bonus

    

    To be
paid to CIP eligible employees who are working on a specific assignment with a
targeted end date.  In the majority of cases, the completion of the
assignment will result in the affected employee’s lay-off.  Generally,
the Transaction/Transition Bonus for an affected employee will be calculated
based upon his/her Annual Cash Bonus Target.  Any
Transaction/Transition Bonus may be paid during the assignment or specific
transaction, upon the assignment’s or transaction’s completion, or
both.  The Transaction/Transition bonus is paid in lieu of a CIP
bonus.  A Transaction/Transition Bonus shall be paid within 21⁄2 months
following the assignment’s or transaction’s completion date.

    

    Subject
to a written agreement, an employee who voluntarily resigns or is terminated by
the Company for any reason prior to successful completion of the specified
assignment will not be eligible for a Transaction/Transition bonus
payout.

    

    B.  Construction
Completion Bonus

    

    To be
paid to construction, engineering and commissioning employees at the level of
Director and below assigned to specific capital or construction
projects.  Each specified project will have a construction completion
bonus pool assigned to it.  A Construction Completion Bonus will be made on a
discretionary basis by management based upon an employee’s contribution to that
project.  A Construction Completion Bonus may be paid during
the project, upon completion of the construction project or
both.  Each Construction Completion Bonus may be paid to
employees who are no longer employed with Calpine at the time the entire
construction project is completed as long as management deems their services to
have been satisfactorily completed and no longer needed at some time prior to
the project’s completion date.

    

    Subject
to a written agreement, an employee who voluntarily resigns or is terminated by
the Company for any reason prior to completion of the construction project will
not be eligible for a Construction Completion Bonus payout.

     

    8hme10q1q2009ex10-1.htm

    
      Exhibit
10.1

      

      

      

      CHANGES
TO COMPENSATION ARRANGEMENTS FOR NAMED EXECUTIVE OFFICERS

      Adopted
by the Compensation Committee of the Board of Directors on May 4, 2009
and,

      with
respect to Edward J. Pettinella, by the Board of Directors on May 5,
2009

      

      

      
        	
                Edward J. Pettinella – President and Chief
      Executive Officer

              
	
                Option
      to Purchase Common Stock - value

              	
                $594,000
      (1)

              
	
                Shares
      of Restricted Stock - value

              	
                $726,000
      (2)

              
	 
      	 
      
	
                David P. Gardner – Executive Vice President and
      Chief Financial Officer

              
	
                Option
      to Purchase Common Stock - value

              	
                $226,350
      (1)

              
	
                Shares
      of Restricted Stock - value

              	
                $276,650
      (2)

              
	
                Base
      Salary

              	
                $338,888
      (3)

              
	 
      
	
                Ann M. McCormick – Executive Vice President and
      General Counsel

              
	
                Option
      to Purchase Common Stock - value

              	
                $185,400
      (1)

              
	
                Shares
      of Restricted Stock - value

              	
                $226,600
      (2)

              
	
                Base
      Salary

              	
                $285,000
      (3)

              
	 
      	 
      
	
                Scott Doyle – Senior Vice
      President

              	 
      
	
                Option
      to Purchase Common Stock - value

              	
                $117,000
      (1)

              
	
                Shares
      of Restricted Stock - value

              	
                $143,000
      (2)

              
	 
      	 
      
	
                John E. Smith – Senior Vice
      President

              	 
      
	
                Option
      to Purchase Common Stock - value

              	
                $128,250
      (1)

              
	
                Shares
      of Restricted Stock - value

              	
                $156,750
      (2)

              

      

      

      
        	
                (1)  

              	
                In
      all cases, the grant date will be May 11, 2009 and the exercise price will
      be the closing price of a share of the Common Stock of Home Properties,
      Inc. (the “Company”) as reflected on the New York Stock Exchange on May
      11, 2009 (the “Closing Price”).  The number of options to be
      granted will be calculated by dividing the awarded value by the value of
      each option determined using the Black-Scholes formula.  The
      options will be granted pursuant to the Company’s 2008 Stock Benefit Plan,
      as amended, vest 20% on each of the first five grant date anniversaries
      (May 11 of 2010, 2011, 2012, 2013 and 2014) and terminate 10 years after
      grant date.

              

      

      

      
        	
                (2)  

              	
                In
      all cases, the shares of restricted stock will be granted on May 11, 2009
      and the number of shares of restricted stock to be granted will be
      calculated by dividing the awarded value by the Closing
      Price.  The restricted shares will be granted pursuant to the
      Company’s 2008 Stock Benefit Plan, as amended, and the restrictions will
      lapse 25% on each of the first four grant date anniversaries (May 11 of
      2010, 2011, 2012 and 2013).

              

      

      

      
        	
                (3)  

              	
                Retroactive
      to March 16, 2009

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