Document:

EX-10.22

  Exhibit 10.22

   

   

   

   

  AVISTA CORPORATION

  PERFORMANCE AWARD AGREEMENT

   

  This Performance Award Agreement (the “Agreement”) is made by and between Avista Corporation, a Washington Corporation (the “Company”) and the individual named in section 1 (the “Participant”) as designated by the Avista Corporation Compensation and Organization Committee (the “Plan Administrator”).

   

  WHEREAS, Performance Awards are granted under the January 19, 2016 amended and restated Avista Corporation Long-Term Incentive Plan (the “Plan”). The terms and conditions of the Performance Awards are set forth below and in the Plan, which is incorporated into this Agreement by reference.

   

  NOW, THEREFORE, in consideration of the premises contained herein and in the Plan, it is agreed as follows:

   

  1.Terms of Performance Awards. The terms of the Performance Awards are set forth as follows:

   

  a.The "Participant" is «Employee_First_Name» «Employee_Last_Name»

   

  b.The "Grant Date” is February 4, 2021.

   

  c.The	total	target	number	of	eligible	"Performance	Awards"	shall	be (# of) units. “Performance Awards” granted under this Agreement are units that will be reflected in a book account maintained by the Company or a third party administrator during the Performance Cycle, and that will be settled in cash or shares of Avista Corporation Common Stock (“Common Stock”) to the extent provided in this Agreement and the Plan.

   

  d.The "Performance Cycle" is the period beginning on January 1, 2021 and ending on December 31, 2023.

   

  2.Conditions to Award. Pursuant to this Award, the number of Performance Awards earned will depend upon the Company’s performance against specific performance metrics. The performance metrics are (i) Relative Total Shareholder Return, which accounts for (#of) units of the total target award as set forth in section 1(c), and (ii) Cumulative Earnings Per Share (“CEPS”) which accounts for (# of) units of the total target award set forth in section 1(c). The total number of shares of Stock that will be issued in the settlement of this Award, based upon the Company’s satisfaction of the metrics, will be determined by multiplying the Target Number of units allocated for each metric set forth in this section 2 by the applicable Payout Factor in accordance with the provisions of Exhibit 1 and Exhibit 2, which is attached to and forms a part of this Agreement.

   

  3.Settlement of Performance Awards. The Company shall deliver to the Participant one share of Common Stock (or cash equal to the Fair Market Value of one share of Common Stock) for each Performance Award earned by the Participant, as determined in accordance with the provisions of Exhibit 1 and Exhibit 2, which is attached to and forms a part of this Agreement. The earned Performance Award payable to the Participant shall be paid in shares of Common Stock or in cash (based on the Fair  Market Value of the Common Stock as of the date the Plan Administrator 

   

  

   

  certifies the attainment of the performance goals), or in a combination of the two, as determined by the Plan Administrator in its sole discretion, except that cash may be distributed in lieu of any fractional share of Common Stock.

   

  All Performance Awards and any Dividend Equivalents (as described in Section 5 below) earned by a Participant under this Agreement are subject to the Recoupment Policy adopted by the Company’s Board of Directors as amended from time to time (“Recoupment Policy”). If a Participant becomes subject to the Recoupment Policy any Performance Award and associated Dividend Equivalent may be forfeited in whole or in part and all or part of any distribution payable to a Participant or his or her beneficiary under this Agreement may be recovered by the Company pursuant to the Recoupment Policy.

   

  4.Time of Payment. Except as otherwise provided in this Agreement, payment of Performance Awards earned will be delivered as soon as feasible after the end of the Performance Cycle and after the Plan Administrator certifies the attainment of the performance goals.

   

  5.Dividend Equivalent Rights. Any Performance Awards may, in the Plan Administrator’s discretion, earn Dividend Equivalent Rights. In respect of any Performance Award that is outstanding on the dividend record date for Common Stock, the Participant may be credited with an amount equal to the cash distributions that would have been paid on the shares of Common Stock covered by such Award had such covered shares been issued and outstanding on such dividend record date. Dividend Equivalent Rights are to be paid in cash based on the total number of Performance Awards earned at the end of the Performance Cycle and delivered as soon as feasible after the Performance Cycle and after the Plan Administrator certifies the attainment of the performance goals. Dividend Equivalent Rights are subject to all applicable taxes, which are the responsibility of the Participant. The Dividend Equivalent Rights in respect of any Performance Awards that are not earned as of the end of a Performance Cycle, shall be forfeited as of the end of the Performance Cycle.

   

  6.Termination of Employment during Performance Cycle. Except as otherwise provided in section 7, this section 6 shall apply if the Participant’s employment terminates during a Performance Cycle. If the Participant’s employment with the Company and/or Subsidiaries terminates during the Performance Cycle because of Retirement, Disability, or Death, the Participant shall be entitled to a prorated value of the Performance Award earned in accordance with Exhibit 1 and Exhibit 2, determined at the end of the Performance Cycle, and based on the ratio of the number of whole months the Participant was employed during the Performance Cycle to the total number of months in the Performance Cycle (36). If a Participant's employment or services with the Company and/or Subsidiaries terminate on or as of the last day of a Performance Cycle, such Participant will be deemed to have terminated after the end of such Performance Cycle. If the Participant’s employment with the Company and/or Subsidiaries terminates during the Performance Cycle for any reason other than Retirement, Disability, or Death, the Performance Award granted under this Agreement will be forfeited on the Date of Termination (as defined in section 9(b)); provided, however, that in such circumstances, the Plan Administrator, in its sole discretion, may determine that the Participant will be entitled to receive a prorated or other portion of the Performance Award. In case of termination for Cause, the Performance Award granted shall automatically terminate upon first notification to the Participant of such termination, unless the Plan Administrator determines otherwise. If a Participant’s employment with the Company is suspended pending an investigation of whether the Participant shall be terminated for Cause, all the Participant’s rights under any Award likewise shall be suspended during the period of investigation. The effect of a Company-approved leave of absence on the terms and conditions of an Award shall be determined by the Plan Administrator, in its sole discretion.

   

  7.Change in Control. If a Change in Control occurs during the Performance Cycle, and the Participant’s Date of Termination (as defined in section 9(b)) does not occur before the Change in Control date, the Participant shall be entitled to a prorated value of the Performance Award that would have been earned by the Participant in accordance with Exhibit 1 and Exhibit 2, determined as of the date of the Change in Control, prorated based on the ratio of the number of whole months the Participant is employed during the Performance Cycle through the date of the Change in Control, to the total number of months in the Performance Cycle; provided, however, 

   

  

   

  that a Payout Factor of at least 100% as set forth in Exhibit 1 and Exhibit 2 for the Performance Cycle shall be deemed to have been achieved as of the date of the Change in Control. Notwithstanding the provisions of sections 3 (with the exception of the application of the Recoupment Policy), 4, and 5, the value of the Performance Award, and any Dividend Equivalent Right, earned in accordance with the foregoing provisions of this section shall be delivered to the Participant in a lump sum cash payment as soon as feasible after the occurrence of a Change in Control, with the value of a Performance Award equal to the Fair Market Value of a share of Common Stock determined under the provision of section 3 as of the date of the Change in Control. Distributions to the Participant under sections 3 and 5 shall not be affected by payments under this section, except that the number of Performance Awards and Dividend Equivalent Rights earned by and payable to the Participant shall be reduced by the number of Performance Awards and Dividend Equivalent Rights with respect to which payment was made to the Participant under this section.

   

  8.Taxes. The Participant is liable for any and all taxes, including withholding taxes, arising out of the grant, vesting, payment or settlement of any Performance Awards and Dividend Equivalent Rights. The Company shall have the right to require the Participant to remit to the Company, or to withhold awarded shares of Common Stock, or from any Dividend Equivalent Rights or other amounts due to the Participant, as compensation or otherwise, an amount sufficient to satisfy all federal, state and local withholding tax requirements.

   

  9.Definitions. For purposes of this Agreement, the terms used in this Agreement shall be subject to the following:

   

  (a)Change in Control. The term "Change in Control" is defined in section 2.4 of the amended and restated Avista Corp. Long Term Incentive Plan.

  (b)Date of Termination. The Participant’s "Date of Termination" shall be the first day occurring on or after the Grant Date on which the Participant is not employed by the Company or any Subsidiary, regardless of the reason for the termination of employment; provided that a termination of employment shall not be deemed to occur by reason of a transfer of the Participant between the Company and a Subsidiary or between two Subsidiaries; and further provided that the Participant’s employment shall not be considered terminated while the Participant is on a leave of absence from the Company or a Subsidiary approved by the Participant’s employer. If, as a result of a sale or other transaction, the Participant’s employer ceases to be a Subsidiary (and the Participant’s employer is or becomes an entity that is separate from the Company), and the Participant is not, at the end of the 30-day period following the transaction, employed by the Company or an entity that is then a Subsidiary, then the occurrence of such transaction shall be treated as the Participant’s Date of Termination caused by the Participant being discharged by the employer.

  (c)Disability. ‘‘Disability’’ means ‘‘disability’’ as that term is defined for purposes of the Company’s Long Term Disability Plan or other similar successor plan applicable to employees.

  (d)Retirement. "Retirement" of the Participant shall mean retirement as of the individual’s retirement date under the Retirement Plan for Employees of Avista Corporation or other similar successor plan applicable to employees.

   

  10.Assignability. No Performance Award or Dividend Equivalent Right granted or awarded under the Plan may be assigned or transferred by the Participant other than by will or by the applicable laws of descent and distribution, and, during the Participant’s lifetime, settlements of such Awards may be payable only to the Participant or a permitted assignee or transferee of the Participant (as provided below). Notwithstanding the foregoing, the Plan Administrator, in its sole discretion, may permit such assignment or transfer and may permit a Participant of such Performance Awards or Dividend Equivalent Rights to designate a beneficiary who may receive compensation settlement under the Performance Award after the Participant’s death; provided, however, that any amount so assigned or transferred shall be subject to all the same terms and conditions contained in this Agreement.

   

  11.General.

   

  

   

   

  11.1 Award Agreements. Performance Awards granted under the Plan shall be evidenced by a written agreement that shall contain such terms, conditions, limitations and restrictions as the Plan Administrator shall deem advisable and that are not inconsistent with the Plan.

   

  11.2 Continued Employment or Services; Rights in Awards. Nothing contained in this Agreement, the Plan, or any action of the Plan Administrator taken under the Plan or this Agreement shall be construed as giving any Participant or employee of the Company any right to be retained in the employ of the Company or any Subsidiary or to limit the Company’s or any Subsidiary’s right to terminate the employment or services of the Participant.

   

  11.3 Registration. At the present time, the Company has an effective registration statement with respect to the shares. The Company intends to maintain this registration but has no obligation to do so. In the event that such registration ceases to be effective, the Participant will not receive a Performance Award settlement or payment unless exemptions from registration under federal and state securities laws are available; such exemptions from registration are very limited and might be unavailable. By accepting the Agreement, the Participant hereby acknowledges that he/she has read the section of the Plan and this Agreement entitled Registration.

   

  11.4 No Rights as a Shareholder. No Award under this Agreement shall entitle the Participant to any dividends (except to the extent provided in an award of Dividend Equivalent Rights), voting or any other right of a shareholder unless and until the date of issuance under the Plan of the shares that are the subject of such Performance Award, are free of all applicable restrictions.

   

  11.5 Compliance with Laws and Regulations. Notwithstanding anything in the Plan to the contrary, the Board of Directors, in its sole discretion, may bifurcate the Plan so as to restrict, limit or condition the use of any provision of the Plan to Participants who are officers or directors subject to Section 16 of the Exchange Act without so restricting, limiting or conditioning the Plan with respect to other Participants.

   

  11.6 Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity and enforceability of any other provision of this Agreement. If any provision of the Agreement is determined to be invalid, illegal or unenforceable in any jurisdiction, or as to any person, or would disqualify any Performance Award under any law deemed applicable by the Plan Administrator, such provision shall be construed or deemed amended by the Plan Administrator to conform to applicable laws, or, if the Plan Administrator determines that the provision cannot be so construed or deemed amended without materially altering the intent of the Plan or the Performance Award, such provision shall be stricken as to such jurisdiction, person or Performance Award, and the remainder of the Agreement and any such Performance Award shall remain in full force and effect.

   

  12.Administration. The authority to manage and control the operation and administration of this Agreement shall be vested in the Plan Administrator, and the Plan Administrator shall have all powers with respect to this Agreement as it has with respect to the Plan. Any interpretation of the Agreement by the Plan Administrator and any decision made by it with respect to the Agreement are final and binding.

   

  13.Construction. This Agreement is subject to and shall be construed in accordance with the Plan, the terms of which are explicitly made applicable hereto. Unless otherwise defined herein, capitalized terms in this Agreement shall have the same definitions as set forth in the Plan. In the event of any conflict between the provisions hereof and those of the Plan, the provisions of the Plan shall govern.

   

  14.Amendment. This Agreement may be amended by written agreement of the Participant and the Company, without the consent of any other person.

   

  15.Governing Law. The validity, construction, interpretation and enforceability of this Agreement shall be determined and governed by the laws of the State of Washington without giving effect to the principles of conflicts of laws. For the purpose of litigating any dispute that arises under this Agreement, the parties hereby consent to exclusive jurisdiction in Washington State and agree 

   

  

   

  that such litigation shall be conducted in the courts of Spokane County, Washington or the federal courts of the United States for the eastern district of Washington.

   

  16.Successors. The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Company) to agree in writing to assume the Company’s obligations under this Agreement and to perform such obligations in the same manner and to the same extent that the Company is required to perform them. As used in this Agreement, “Company” shall mean the Company and any successor to its business and/or assets that assumes and agrees to perform the Company’s obligations under the Agreement by operation of law or otherwise.

   

   

  IN WITNESS WHEREOF, the Participant has executed this Agreement, and the Company has caused these presents to be executed in its name and on its behalf, all effective as of the Grant Date.

   

   

  AVISTA CORPORATION

   

  By:        Dennis Vermillion

  President and Chief Executive Officer

   

  EXHIBIT 1

   

  Performance Award Plan

  Relative Total Shareholder Return Metric and Goals 

  2021 - 2023 Performance Cycle

   

  The following graph and table represent the relationship between the Company’s relative three-year Total Shareholder Return (“TSR”) commencing January 1, 2021 and ending December 31, 2023 and the target award opportunity. The number of shares delivered at the end of the three-year Performance Cycle can range from zero to 200% of the target number of units allocated under this metric. The actual issuance of shares depends on Avista’s three-year TSR performance compared to the returns of the peer companies reported in the S&P 400 Utilities Index and how we rank among them. To receive 100% of the Award allocated under this metric, Avista must perform at the 50th percentile among the companies in the S&P 400 Utilities Index. To receive 200% of the Award, Avista must rank at the 90th percentile. If Avista ranks below the 30th percentile, no stock awards or cash Dividend Equivalent Rights will be earned. Dividend Equivalent Rights are calculated and paid out in cash when and to the extent the Performance Awards are issued. The following graph demonstrates the relationship between TSR ranking and various payout factors. Performance Awards are interpolated on a straight line for performance results between the figures shown.

   

   

   

  

   

   

   

  			
	 
	TSR Percentile Ranking
	Payout (% of Target)

	Maximum
	90th
	200%

	Target
	50th
	100%

	Threshold
	30th
	50%

	 
	<30th
	0%

   

  TSR is calculated using S&P’s Research Insight software and reflects share price appreciation plus the impact of dividend distributions and the reinvestment of such dividends. TSR is calculated daily based on stock price changes and dividend payments, and then accumulated over the measurement period. Dividends are calculated using ex-date dividends per share. Beginning and ending share prices for the performance period reflect the average of closing share prices on the last 20 trading days ending on December 31st for both Avista and the peers.

   

  From one year to the next, if S&P drops a company out of the index and adds another, the new company will be included in the ranking and the dropped company will be excluded. When a new company is added to the index, they will be added to the ranking as if they had been in the ranking from the beginning – provided that there is pricing and dividend data at the beginning of the cycle. When a company is dropped

   

  everything related to that company will be excluded from the ranking as if the company was never part of the ranking.

   

  Settlement Formula Example:

  Assuming that 1,000 Performance Award units were allocated under this metric at the beginning of the three-year Performance Cycle and Avista’s TSR ranked at the 45th percentile after the three-year Performance Cycle, the Participant would receive 87.5% of 1,000 or 875 shares of Avista common stock plus cash dividend equivalents.

   

  					
	Payout Factor (% of Target)
	Target Number of Performance Awards Granted
	 
	Final Number of Common Stocks Issued

	87.5%
	X
	1,000
	=
	875 shares plus cash dividends

   

  Percentile Ranking Methodology:

  The percentile rank is calculated using the PERCENTRANK function in MS Excel, initially excluding Avista from the list. The results are rounded to the nearest whole percentile after Avista has been ranked.

   

  The calculation can be replicated by arranging the TSR data from highest to lowest for all peers except Avista. A percentile ranking is calculated for each data point assuming 100.0th percentile for the highest data point, 0.0 percentile for the lowest data point, and the corresponding percentile for every other data point with an equal difference in percentile ranking for each data point. The TSR for Avista is calculated by determining Avista’s rank in the list and interpolating between the percentile rankings for the companies immediately above and below based on the differences in TSR. An example, based on sample data is as follows:

   

  			
	Company Ranking
	TSR
	Percentile Rank

	1
	63.6%
	100.0%

	2
	62.8%
	92.8%

	11 (ABC Corp)
	32.0%
	28.5%

	12(XYZ Corp)
	10.0%
	21.4%

	14
	4.4%
	7.1%

	15
	-11.6%
	0.0%

   

  If a company’s TSR is 29.1%, the resulting percentile ranking would be 27.6%, calculated as follows: 27.6%

  = 21.4% + [(29.1% - 10.0%) / (32.0% - 10.0%) * (28.5% - 21.4%)]

   

   

  

   

  Total Shareholder Return (TSR) Methodology:

  For purposes of this Agreement, a methodology for calculating a total return to shareholder with dividend reinvestment was established. Returns are calculated daily based on stock price changes and dividend payments and then accumulated over the Performance Cycle. Below are additional assumptions used in Avista’s calculation for TSR.

   

  General Assumptions:

  The starting share price for the Performance Cycle is determined by averaging the closing stock price on the last 20 trading days ending on December 31st prior to the first day of Performance Cycle. The ending share price is determined by averaging the closing stock price on the last 20 trading days ending on December 31st at the end of the Performance Cycle. For demonstration purposes, the example below uses January 1, 2018 – December 31, 2020 as the Performance Cycle.

   

  				
	Date
	Closing Price
	Date
	Closing Price

	12/29/2017
	51.49
	12/31/2020
	40.14

	12/28/2017
	51.56
	12/30/2020
	39.66

	12/27/2017
	51.53
	12/29/2020
	39.74

	12/26/2017
	51.47
	12/28/2020
	40.42

	12/22/2017
	51.51
	12/24/2020
	39.92

	12/21/2017
	51.45
	12/23/2020
	39.68

	12/20/2017
	51.27
	12/22/2020
	39.34

	12/19/2017
	51.25
	12/21/2020
	38.3

	12/18/2017
	51.47
	12/18/2020
	38.85

	12/15/2017
	51.48
	12/17/2020
	39.52

	12/14/2017
	51.42
	12/16/2020
	39.61

	12/13/2017
	51.61
	12/15/2020
	39.78

	12/12/2017
	51.4
	12/14/2020
	39.11

	12/11/2017
	51.58
	12/11/2020
	38.96

	12/8/2017
	51.58
	12/10/2020
	38.86

	12/7/2017
	51.55
	12/9/2020
	38.57

	12/6/2017
	51.67
	12/8/2020
	37.75

	12/5/2017
	51.71
	12/7/2020
	37.8

	12/4/2017
	51.83
	12/4/2020
	37.38

	12/1/2017
	51.94
	12/3/2020
	37.42

	Average
	51.5385
	Average
	39.0405

   

  The example below reflects share price appreciation plus the impact of dividend distributions and the reinvestment of such dividends. Dividends are reinvested on a daily basis. For this example, a fictional ex- date for dividends per share is used. Daily returns are calculated over the performance cycle and added together resulting in the Cumulative TSR for the performance cycle.

   

  				
	Date
	Closing Price
	Dividend
	Daily TSR

	11/19/2019
	47.03
	0
	NA

	11/20/2019
	46.92
	0.388
	0.5911%*

	11/21/2019
	46.65
	0
	(0.5609%)

	11/22/2019
	46.41
	0
	(0.5190%)

	11/25/2019
	46.80
	0
	0.8392%

	11/26/2019
	46.91
	0
	0.2427%

	Cumulative TSR 11/19/2019 to 11/26/2019
	0.5978%

  * [(46.92 + 0.388) / 47.03] -1

   

  EXHIBIT 2

   

  Performance Award Plan

  Cumulative Earnings Per Share Metric and Goals

  –2021-2023 Performance Period

   

  

   

   

  The following graph and table represent the relationship between the Company’s Cumulative Earnings Per Share (“CEPS”) commencing January 1, 2021 and ending December 31, 2023 and the target award opportunity. The number of shares delivered at the end of the three-year Performance Cycle can range from zero to 200% of the target number of units allocated under this metric. The actual issuance of shares depends on Avista’s CEPS over the three-year Performance Cycle. To receive 100% of the Performance Award allocated under this metric, Avista must achieve CEPS $6.87 over the three-year cycle. To receive 200% of the Award, Avista must achieve CEPS of $7.42. If Avista’s CEPS is less than $6.35, no stock awards or cash Dividend Equivalent Rights will be earned. Dividend Equivalent Rights are calculated and paid out in cash when and to the extent the Performance Awards are issued. The following graph demonstrates the relationship between CEPS and various payout factors. Performance Awards are interpolated on a straight line for performance results between the figures shown.

   

   

   

   

  			
	 
	3-Year CEPS
	Payout Factor

	Maximum
	$7.52
	200%

	Target
	$6.87
	100%

	Threshold
	$6.35
	40%

	 
	<$6.35
	0%

   

  Performance is tracked over a three-year Performance Cycle thereby focusing on sustainability.

   

  Cumulative EPS is fully diluted earnings per share determined in accordance with generally accepted accounting principles, and may be adjusted to remove the effects of such items as regulatory charges, income tax legislative changes and/or items of a non-routine or items of an extraordinary nature as determined by the Plan Administrator.

   

  Settlement Formula Example:

  Assuming that 1,000 Performance Award units were allocated under this metric at the beginning of the Performance Cycle and Avista’s cumulative EPS was $7.03 over three years, the Participant would receive 125% of 1,000 or 1,250 shares of Avista common stock plus dividend equivalents in cash.

   

   

  

   

  					
	Payout Factor (% of Target)
	Target Number of Performance Awards Granted
	 
	Number of Common Stocks Issued

	125%
	X
	1,000
	=
	1,250 shares plus cash dividends

   

  Using the example formulas in Exhibit 1 and Exhibit 2, the Participant would receive in total 106.3% of 2,000 (total target # of Performance Awards granted) or 2,125 Shares of Common Stock plus cash dividend equivalents.

   

  						
	 
	Payout Factor (% of Target)
	Target Number of Performance Awards Granted
	 
	Number of Common Stocks Issued

	TSR
	87.5%
	X
	1,000
	=
	875

	CEPS
	125%
	X
	1,000
	=
	1,250

	Total
	106.3%
	X
	2,000
	=
	2,125

   

  ACCEPTANCE AND ACKNOWLEDGMENT

   

   

  I, a resident of the state of                  , accept the Performance Award described in this Agreement and in the Plan, and acknowledge that I have received a copy of this Agreement and the Plan. I have read and understand the Plan, and I hereby make the representations, warranties and acknowledgments, and undertake the indemnity and other obligations, therein specified.

   

  				
	Dated:
	 
	 
	 

	 
	 
	 
	 

	 
	 
	 
	Signature of Employee

	 
	 
	 
	 

	 
	 
	 
	Printed NameEX-10.23

  Exhibit 10.23

   

   

  2021 EXECUTIVE OFFICER

  ANNUAL CASH INCENTIVE PLAN – Revised February 2022

   

  PLAN PROVISIONS

  Approved by Board

   

  Purpose: The Executive Officer Annual Cash Incentive Plan (Plan) is designed to align the interests of our NEOs and senior management with both shareholder and customer interests to achieve overall positive financial and operational performance for the Company. The Plan is an important element of the overall compensation of our executives which provides a compensation structure that is competitive with compensation paid to comparable executives of companies within the energy/utility industry and ensures the Company can attract and retain quality employees in key positions to lead the Company.

   

  Plan Year:  January 1, 2021 – December 31, 2021

   

  Eligibility:

  •All executive officers hired prior to October 1st and actively employed on December 31st of the plan year, are eligible to participate

  •Subsidiary officers are not eligible to participate

  •Other details available in section Exceptions to Eligibility and Circumstances for Proration

   

  Performance Measurements: The Plan focuses on shareholders and customers by creating value through sound financial performance and controlling costs through driving efficiencies while paying close attention to our customers’ voices regarding the products and services we provide. The Plan incorporates Consolidated Earnings Per Share (EPS), Operating & Maintenance Cost per Customer (O&M CPC), and measurement of our Non-Regulated activity as financial performance measurements. There are also three non-financial measurements: Customer Satisfaction Rating (Customer Satisfaction), Reliability Index (Reliability), and Dispatched Gas Emergency Response Time (Response Time). These performance goals help increase shareholder value, gain financial strength and maintain safe and reliable cost-effective service levels essential for our customers and for the long-term success of the Company, and, with the exception of the earnings per share and non-regulated activity goal, are identical to performance metrics used in the Company’s annual cash incentive plan for non-officer employees. The Compensation Committee believes that having similar metrics for both the officer plan and the non-officer plan encourages employees at all levels of the organization to focus on common objectives.

   

  Consolidated Diluted EPS - This metric reflects the financial strength and alignment of interests between officers and shareholders. Consolidated EPS includes Alaska Electric Light & Power (AEL&P) and other non-utility businesses within the corporation.

   

   

  

   

  O&M CPC - The O&M CPC is a measure that focuses on controlling costs and driving efficiencies in order to keep our costs reasonable for our customers. The metric is based on targeted O&M expense and number of customers. These components are combined to create the O&M CPC metric.

   

  Non-Regulated Activity – This is a measure that identifies the Company’s non-regulated business for continued focus on innovation and development of the new business pipeline ultimately with the intent to positively impact EPS. The metric is based on achieving a set of activity based milestones.

   

  Customer Satisfaction - This measure is derived from a Voice of the Customer survey, which is conducted each quarter by an independent agency. The rating measures the customer’s overall satisfaction with the service they received during a recent contact with the Company’s contact center and/or service center.

   

  Reliability - This measure tracks how quickly the Company restores outages, how frequently customers are affected by outages and what percent of customers experience more than three sustained outages per year. The Company combined three common industry indices in order to balance our focus.

   

  Response Time - This measure tracks how quickly the Company responds to dispatched natural gas emergency calls. The primary objective is customer and public safety while consistently treating customers the same throughout our service territory.

   

  Award Opportunity: The Plan has six independent metrics, each having their own goal to achieve. The Plan is sliced into pieces – like a pie. Each piece or component makes up a portion of the employee’s total incentive award opportunity as represented in the graph.

  Consolidated EPS makes up 55 percent of the total incentive award opportunity while O&M CPC is 20 percent, non-regulated activity is 5 percent, customer satisfaction and reliability each 8 percent, and response time 4 percent.

   

   

  Non-financial metrics: The non-financial pieces of the award (customer satisfaction, reliability, and response time) are all-or-nothing goals. If the Company meets or exceeds the target goal for any one of the metrics, employees receive 100% of the incentive award percentage related to the metric such as 4% for response time. If the Company fails to meet the target, employees would receive no award 

   

  

   

  related to the metric. For example, if the Company achieves Customer Satisfaction with a 90% or better rating, employees would receive 8% of their total incentive award opportunity. If the Company achieves 88% which is below the target, employees would receive no award related to the metric. This works the same for each non- financial measurement. The maximum amount an employee could receive related to the non-financial metrics is 8% for customer satisfaction, 8% reliability and 4% response time.

   

  Financial metrics: The Consolidated EPS and O&M CPC metrics work a little differently due to the various performance levels that can be met. Depending on the Company’s level of performance under each metric, employees may earn more or less than 100% of the award percentage related to each financial metric. Increasing levels of performance are established between threshold and maximum by using a sliding scale. The following graphs represent the relationship between the Company’s performance targets and the award opportunity. Performance levels were rounded up for graphing purposes only.

  

   

  

   

   

  Figure 1

   

  For employees to receive at least 50% of their award percentage related to the metric the Company must achieve or surpass the minimum or threshold level of performance. The better the Company performs, the more employees may earn as seen in the graphs to the right. For employees to receive 100% of their award percentage related to a financial metric, the Company must achieve the level of performance selected for target. If the Company performs above target level, employees may earn up to a maximum of 172% (rounded up) for Consolidated EPS and 150% (rounded up) for O&M CPC. Performance below threshold results in no award payment for the related metric.

   

  For ease of communication and display purposes performance levels may be rounded using the accounting rules such as to the nearest whole number or up to two decimals. To calculate actual payments and to ensure no overpayments occur the performance levels within the sliding scale actually extend out six (6) decimal places (ex. 166.666666%) for Consolidated EPS and four (4) decimals (ex. 149.9430%) for Cost per Customer. See Calculation of Awards section for more details on how payments are calculated.

   

  

   

   

  Figure 3

   

  The non-regulated activity metric is based on the achievement of two milestones, each of which awards 50% of the incentive goal. If the Company achieves both milestones, employees receive 100% of the incentive award percentage related to the metric, or 5%. Achievement of only one of the two milestones would result in a 50% payout of the non-regulated activity metric, or 2.5%

   

  Establish Targets: The Compensation and Organization Committee of the Board (Committee) in conjunction with management reviews and reestablishes the targets for each measurement on an annual basis. The computations for this Plan are described below:

   

  Consolidated Earnings per Share: To determine the Consolidated EPS goal for the Plan, the Committee, in conjunction with the Finance Committee of the Board and management, considered and incorporated the EPS target range contained in the Company’s original publicly disclosed earnings guidance and reviewed this in light of the budgeted EPS numbers. The earnings guidance for the Consolidated EPS excludes the earnings impact associated with changes in the Energy Recovery Mechanism (ERM). The target in the Plan is Diluted Earnings per Share and includes executive incentive payout/accrual-pro-forma and net of taxes. The actual Consolidated EPS results will be affected by positive or negative changes in the ERM when computing the Plan payout. Occasionally, adjustments to actual results may be deemed necessary. An example of such an adjustment was in 2017 when the Tax Cuts and Job Act became effective.

   

  The Company’s original 2021 guidance for EPS is $1.96 to $2.16.

   

  Since the portion of the incentive related to EPS indirectly benefits the customer it is charged below the line to account 417

   

  O&M CPC: For this measurement the Company uses the total budget for O&M expense (numerator) plus customer growth (denominator).

   

  Numerator: The numerator of the formula is derived from the Company’s total budget for O&M expense. Certain items are excluded from the total O&M budget such as, Pacesetters and certain accounting adjustments. For each performance level, the Company estimates the potential payout for the incentive 

   

  

   

  which includes payroll taxes and subtracts the result from the total O&M budget. The estimation is based on budgeted labor costs, employee job levels and the corresponding individual target award opportunities.

   

  To establish the performance levels between threshold and target, the Company assumes a 1:1 ratio between O&M spend (solid line) and threshold and target (dash line). Cost sharing occurs once we exceed target at 100%. Performance levels between target and maximum assumes a 2:1 ratio between O&M spend and target and maximum (disregarding the impact of customer growth).

   

  Denominator: The target uses a net customer growth of 10,193. Variability in the final customer count will impact the amount of O&M savings necessary to achieve an incentive payment.

   

  Non-Regulated Activity: The purpose of this metric is to align the Officers with our core value of Invent, and to facilitate non-utility growth. The three milestones that are measured are New Business Launches, completion of Startup Avista exercises, and Avista Edge Total Customer Metric. A New Business Launch is defined as the creation of a new distinct entity (tax id) that has dedicated staff (at least 2 FTE) and an Officer approved business plan. A Startup Avista exercise is a business ideation process which must include Design Thinking Training, a customer engagement exercise, completion of a Business Model Canvas, development of a prototype if applicable, and opportunity evaluation culminating in a presentation to the Officers of the potential for a New Business Launch. This process is also referred to as the Startup Avista exercise. The third milestone is for Avista Edge to reach 1,953 total retail customers in 2021. In this Plan, the target is set at achieving two milestones. Each milestone (a New Business Launch, completion of two Startup Avista events, or Avista Edge achieving the target number of retail customers) results in a 50% payout of the award opportunity, and completion of two or more milestones would result in 100% payout of the 5% award opportunity.

   

  Examples of this calculation methodology would be:

  New Business Launch (50%) + 2 Startup Avista Exercises (50%) = 100% payout

   

  Startup Avista Exercises (50%) + 0 New Business Launches = 50% payout

   

  2 Startup Avista Exercises (50%) + 2 Startup Avista Exercises (50%) = 100% payout

   

  Customer Satisfaction: For this measure, the Company uses the ratings from question three of the Voice of the Customer survey which measures the customer’s Overall Satisfaction with the service they 

   

  

   

  received in a recent contact through the Avista contact center and/or service center. The Overall Satisfaction question from surveys such as this is widely used in the industry for external reporting purposes. Rather than using the standard “satisfied” rating, which is typically used in the industry, the Company uses the average of the combined “satisfied” and “very satisfied” ratings. By combining these two ratings the target is more difficult to achieve and more emphasis is placed on serving the customer. In this Plan, the target is set at 90% very satisfied/satisfied for the customer’s Overall Satisfaction rating.

   

  Reliability: This index combines Customer Average Interruption Duration Index (CAIDI), System Average Interruption Frequency Index (SAIFI) and Customer Experiencing Multiple Interruptions (CEMI3). CEMI3 measures the percentage of customers that experience more than three sustained outages in the year. The Company chose this level of outages over others because industry data received from JD Power’s customer service surveys indicate that customers are more apt to be dissatisfied after three outages. Providing safe and reliable energy to our customers is the backbone of our business, therefore, it makes good sense to focus on service levels for our customers. By focusing on these measurements it enables the Company to direct our resources appropriately and efficiently in order to contain costs and plan for future infrastructure upgrades that will benefit the customer.

   

  To determine the target for the Reliability portion of the Plan, the Company sets a separate target for each metric, weighs them equally and combines them into one metric (see the formula below). In this Plan the target is set at 1.00.

   

  Index = CAIDI Target / CAIDI Actual + SAIFI Target / SAIFI Actual + CEMI3 Target / CEMI3 Actual 

  3	                                              3	                                    3

   

  The formula used to set the target for each metric is described below:

  •Customer Average Interruption Duration Index (CAIDI): outage duration multiplied by the number of customers affected for all sustained outages (> 5 minutes), divided by the number of customers which had sustained outages. Per industry practice Major Event Days (MEDs) are excluded from this metric. In this Plan the Company uses a 5 year average with a standard deviation of 0.72 (76% probability) to set the target which is 2 hours and 34 minutes restoration time.

  •System Average Interruption Frequency Index (SAIFI): the number of customers which had sustained outages (> 5 minutes), divided by the number of customers served. Per industry practice MEDs are excluded from this metric. In this Plan the Company uses a 5 year average and a standard deviation of 0.72 (76% probability) to set the target which is 1.05 outages per customer.

  •Customers Experiencing Multiple Sustained Interruptions more than 3 (CEMI3): the total number of customers that experience more than 3 sustained outages per year, divided by total number of customers served. To be consistent with the other two indices, MEDs are excluded from this metric. In this Plan the Company uses a 5 year average with a standard deviation of 0.72 (76% probability) to set the target at 5.99% of our customers.

   

  Response Time: This metric measures how quickly the Company responds to natural gas system emergency calls. The Company tracks the average response time between the receipt of the emergency call to the time our crew or serviceman arrives on-site, assesses the situation and reports back to dispatch. The Company wants crews and/or serviceman to respond within the targeted response time goal. To be consistent with other service metrics, response times in excess of 24 hours are excluded from the metric. A “natural gas system emergency” is defined as an event when there is a natural gas explosion or fire, fire in the vicinity of natural gas facilities, police or fire are standing by, leads identified 

   

  

   

  in the field as “Grade 1”, high or low gas pressure problems identified by alarms or customer calls, natural gas system emergency alarms, carbon monoxide calls, natural gas odor calls, runaway furnace calls, or delayed ignition calls. In this Plan the Company aligns the response time with the Service Reliability Target negotiated with the Washington Utility Commission and set the target goal to respond within an average of, and not to exceed, 55 minutes.

   

  Incentive Targets for 2021:

   

  							
	 
	Earnings Per Share
	O&M Cost per Customer
	Customer Satisfaction Rating
	Reliability Index
	Average Response Time Minutes
	Non Regulated Activity

	% of Total Opportunity
	55%
	20%
	8%
	8%
	4%
	5%

	 

	Threshold 50%
	$1.96
	$419.87
	 
	 
	 
	 

	Target 100%
	$2.06
	$417.26
	90%
	1.00
	<55 Min
	≥ 2  milestones achieved

	Maximum 172%
	$2.16
	 
	 
	 
	 
	 

	Maximum 150%
	 
	$407.52
	 
	 
	 
	 

   

  *rounded for display or communication purposes only

   

  Individual Target Award Opportunities: During the February Board meeting, the Committee and the Chief Executive Officer (CEO) jointly review and approve the individual target award opportunities for the participants of the Plan. Each eligible employee has an incentive target award opportunity expressed as a percentage of their base salary. Target opportunities range from 40% to 100% of base salary and are assigned based on position. Actual award payments are calculated based on the employee’s target award opportunity in effect as of December 31st and year-end regular earnings unless otherwise noted in the Plan document (see provisions under Exceptions to Eligibility and Circumstances for Proration section).

   

  				
	Individual Target Award Opportunity
% of Base Pay by Position Type

	CEO
	EVP
	Senior VP
	VP

	100%
	65%
	60%
	40%

   

  Distribution of Awards: If earned, incentive award payments will be distributed as soon as feasible usually in February after the Compensation Committee of the Board certifies and approves the achievement of the performance goals.

   

  Calculation of Awards: In most instances actual amounts will be calculated using the participant’s regular year-end earnings (as defined in the provisions section of the Plan), individual target award opportunity and employment status in effect as of December 31st of the Plan year. See the section Exceptions to Eligibility and Circumstances for Proration for definitions and exceptions.

   

   

  

   

  For purposes of calculating the actual payments and ensure no overpayments or underpayments occur, the final performance results will be extended out six decimal places (ex. 166.666666%) for Consolidated EPS and four decimals (ex. 149.9323%) for Cost per Customer and rounded based on accounting rules. The following table shows how an overpayment can occur if the final performance level is rounded to two decimals and used to calculate the final payment.

   

  							
	 
	 
Metric
	Target Opportunity
	Metric Allocation
	Maximum Results
	Maximum % Allowed
	 
Maximum Dollar Value

	Maximum
	Net Income
	$    152,248.39
	60%
	166.666666%
	100.000000%
	$  152,248.39

	Over Payment
	Net Income
	$    152,248.39
	60%
	166.670000%
	100.002000%
	$  152,251.43

   

  Figure 4

   

  Since the non-financial metrics have only two performance levels, 0% or 100%, rounding the final results is not an issue.

   

  Once the total incentive amount is calculated, all cash payments will be rounded to the nearest penny based on accounting rules.

   

  Example Award Calculation: Below is an example of the methodology the Company will use to calculate final payments.

   

  The Company achieved the targets indicated below:

  1) Consolidated EPS = 166.666666% on the sliding scale

  2) Cost per Customer = 148.6468% on the sliding scale

  3) Customer Satisfaction = 100% = met/pass

  4) Reliability = 100% = met/pass

  5) Response Time = 100% = met/pass

  6) Non-Regulated Activity = 100% = 2 milestones met

   

  								
	Non-CEO Average Earnings = $314,335	Average Target Opportunity = 48% or $150,881

	Goal
	Opportunity
	 
	Weighting
	 
	% Results
	 
	Amount

	Consolidated EPS
	$  150,880.58
	x
	55%
	x
	166.666666%
	=
	$ 138,307.20

	Cost per Customer
	$  150,880.58
	x
	20%
	x
	148.6468%
	=
	$	44,855.83

	Customer  Satisfaction
	$  150,880.58
	x
	8%
	x
	100%
	=
	$	12,070.45

	Reliability
	$  150,880.58
	x
	8%
	x
	100%
	=
	$	12,070.45

	Response Time
	$  150,880.58
	x
	4%
	x
	100%
	=
	$	6,035.22

	Non-Regulated
	$  150,880.58
	x
	5%
	 
	100%
	 
	$	7,544.03

	Total Payout = $220,883  or  146.4% of Target

   

  Figure 4

   

  

   

   

  Communication: When communicating the results of the financial metrics and the payout, the Company will round results to the nearest 100th percent based on accounting rules. For example, if the O&M CPC result is 148.6468%, the Company will communicate the results using 148.65%.

   

  When communicating the results of the non-financial metrics, the Company will round results to the nearest whole number or, in the case of reliability, out two decimal points based on accounting rules. For example, customer satisfaction would be rounded to 93% from 92.8% and reliability would be 1.23 from 1.232.

   

  Recoupment Policy: All incentive awards earned by a participant under this Plan are subject to the Recoupment Policy adopted by the Company’s Board of Directors as amended from time to time (“Recoupment Policy”). If a participant becomes subject to the Recoupment Policy any award may be forfeited in whole or in part and all or part of any distribution payable to a participant or his or her beneficiary under this Plan may be recovered by the Company pursuant to the Recoupment Policy.

   

  Administration of Plan: The Committee is responsible for administering the Plan and may delegate specific administrative tasks to corporate staff, as appropriate. The Committee has the authority to:

  •Terminate, amend or modify this Plan in whole or in part for any reason at any time without prior notice to participants

  •Modify or adjust financial targets due to extraordinary occurrences and/or significant reorganizations

  •Grant discretionary awards up to 15% of the individual target award opportunity

  •May pay incentive amounts in excess of 100% (up to 150%) of an individual’s target opportunity in the form of non-cash equivalents

   

  Participation in this Plan should in no way be construed as a contract or promise of employment and/or compensation.

   

  Exceptions to Eligibility and Circumstances for Proration:

   

  Pay Periods: There are 26 pay periods and pay dates during the Plan year. A pay period (pp) is made up of two pay weeks. Each pay week typically starts 12:00am Monday and ends 11:59pm Sunday. Employees are paid on the pay date on the following Friday, after the end of the pay period. The first pay period of the year consists of the date range 12/21/2020 – 1/3/2021 which is paid on pay date 1/8/2021. Changes effective during this pay period will count towards the 2021 plan since the earnings and pay date are part of 2021. Changes effective during the dates 12/20/2021 – 1/2/2022 are not included in the 2021 Plan because the earnings and pay date are part of 2022.

   

  Pay Period Schedule for 2021:

   

  

   

  						
	 
Pay Period
	 
Date Range
	Pay Date
	 
Pay Period
	 
Date Range
	Pay Date

	1
	12/21/20 – 01/03/2021
	1/8
	14
	6/21 – 7/4
	7/9

	2
	1/4 – 1/17
	1/22
	15
	7/5 – 7/18
	7/23

	3
	1/18 – 1/31
	2/5
	16
	7/19 – 8/1
	8/6

	4
	2/1 – 2/14
	2/19
	17
	8/2 – 8/15
	8/20

	5
	2/15 – 2/28
	3/5
	18
	8/16 – 8/29
	9/3

	6
	3/1 – 3/14
	3/19
	19
	8/30 – 9/12
	9/17

	7
	3/15 – 3/28
	4/2
	20
	9/13 – 9/26
	10/1

	8
	3/29 – 4/11
	4/16
	21
	9/27 – 10/10
	10/15

	9
	4/12 – 4/25
	4/30
	22
	10/11 – 10/24
	10/29

	10
	4/26 – 5/9
	5/14
	23
	10/25 – 11/7
	11/12

	11
	5/10 – 5/23
	5/28
	24
	11/8 – 11/21
	11/26

	12
	5/24 – 6/6
	6/11
	25
	11/22 – 12/5
	12/10

	13
	6/7 – 6/20
	6/25
	26
	12/6 – 12/19
	12/23

   

  Proration: Prorating an employee’s award is based on the number of pay dates associated with a change. Each change of status (COS) has an effective date. The date determines which pay period and pay date is to be counted as part of the proration.

   

  Use the Pay Period Schedule above to count the pay dates. Using the effective date from the COS, search through the date ranges to find the pay period and pay date associated with it. Count the pay dates to the end of the Plan year or to the next COS effective date whichever comes first. The employee receives 1 pay period credit for each pay date counted.

   

  For example:

  Employee #1 is hired on 5/7 and remains employed through the end of the year. The date 5/7 falls in the date range associated with pay period 10 which is paid on pay date 5/14. Since employee #1 worked till the end of the year count the number of pay dates till the end of the year. The employee receives 17 pay periods towards his award.

  Employee #2 is hired on 9/22 and remains employed through the end of the year. Her date falls in pay period 20 and is associated with pay date 10/1. She receives 7 pay periods towards her award.

  Employee #3 receives credit for his time working in a non-union position. He transfers temporarily from a union position to a non-union position on 5/20 and returns to his regular union position on 12/4. The transfer date of 5/20 falls within pay period 11 which is associated with pay date 5/28. The returning date of 12/4 falls within pay period 25 which is associated with pay date 12/10. Count the number of pay dates starting with 5/28 and end with 11/26 which is the pay date prior to the next COS date of 12/4. He receives 14 pay periods of credit towards the non-union portion of his incentive award. Remember you only count the pay periods until the next COS date or until the end of the year whichever comes first. He also receives 12 pay periods credited (26-14=12) toward his union incentive award.

   

   

  

   

  												
	Pay Period
	Date Range
	 
	Pay Date
	EE #1
	EE #2
	EE #3

	10
	 
	4/26 – 5/9
	5/14
	1
	 
	 

	11
	5/10 – 5/23
	5/28
	1
	 
	1

	12
	5/24 – 6/6
	6/11
	1
	 
	1

	13
	6/7 – 6/20
	6/25
	1
	 
	1

	14
	6/21 – 7/4
	7/9
	1
	 
	1

	15
	7/5 – 7/18
	7/23
	1
	 
	1

	16
	7/19 – 8/1
	8/6
	1
	 
	1

	17
	8/2 – 8/15
	8/20
	1
	 
	1

	18
	8/16 – 8/29
	9/3
	1
	 
	1

	19
	8/30 – 9/12
	9/17
	1
	 
	1

	 
	20
	 
	9/13 – 9/26
	 
	 
	10/1
	 
	1
	1
	1

	21
	9/27 – 10/10
	10/15
	1
	1
	1

	22
	10/11 – 10/24
	10/29
	1
	1
	1

	23
	10/25 – 11/7
	11/12
	1
	1
	1

	24
	11/8 – 11/21
	11/26
	1
	1
	1

	25
	11/22 – 12/5
	12/10
	1
	1
	 

	26
	12/6 – 12/19
	12/23
	1
	1
	 

	 
	Total Pay Periods
	 
	17
	7
	14

   

  Regular Earnings: Regular earnings will be used in calculating the final awards. The earnings to be used and their associated codes are as follows:

   

  		
	Earnings Type
	Earnings Codes

	Regular
	01, 02, 32, 32B

	1.5x Overtime
	04, 21, 23, 76, 78, 83

	Light Duty
	29

	Swing Shift
	31

	Alternative/dual
	20

	Relief Pay
	08

	Retro Pay
	70

	One Leave/PTO
	10, 14, 14B, 15, 16, 16PFM, 34C, 61

	Short-term Disability 100% & 60%
	18, 80

	Workers Compensation
	19, 19A, 85, 85C, 86, 87, 88

	Holiday
	25, 26, 75

	Jury Duty
	35

	Military Pay
	36, 36C

   

  New Hires: Employees hired on or after October 1st will not be eligible for an award under this Plan. Employees hired prior to October 1st will have their awards calculated based on the provisions detailed above.

   

  Leave of Absence: Eligible employees on approved unpaid leave of absence must have at least 6 full pay periods of active service during the Plan year to receive an award. Awards will be calculated based 

   

  

   

  on the provisions detailed above. Short- term disability leave does not affect an eligible employee’s award and is excluded from this provision.

   

  Resignation/Termination: Any eligible employee who resigns or is terminated for reasons other than retirement, disability or death prior to December 31st will not be eligible to receive an award under this Plan. Eligible employees who terminate after the Plan year may receive an award at the time of distribution unless reason for termination is due to poor performance or for cause, see section on Discipline or Poor Performance below.

   

  Death, Long-term Disability & Retirement: In the case of death, total disability (as defined under the Company’s Long-term Disability Plan) or retirement (as defined under the Retirement Plan for Employees), an eligible employee or estate must have at least 6 pay periods of active service within the Plan year to be eligible to receive an award. Awards will be calculated based on the provisions detailed above.

   

  Discipline or Poor Performance: Employees who receive a fails to meet performance rating for the Plan year or a Last Chance Agreement under the Company’s formal discipline program and effective as of December 31st are not eligible to receive an award under this Plan. Any employee who is terminated for poor performance or for cause by the Company after December 31st and up to the time of distribution, will not be eligible to receive an award under this Plan.

   

  Transfers from Subsidiaries to Corp/Utilities: Eligible employees who transfer from a subsidiary will be treated as a new hire to the Company and all Plan criteria apply as is. Prorated awards are at the discretion of the Committee and CEO.

   

  Other Company Short-term Incentive Plans: Employees can only participate under one formal incentive plan a year. If the employee becomes eligible for a different plan during the year, the Committee and CEO has full discretion to determine which plan the employee may receive an award under. Status and/or time in position may be factors in determining whether the employee receives a prorated award from both plans or from one plan based on the employee’s position and/or status as of December 31st.

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