Document:

nicorincexhibit10-3.htm

    
      Nicor Inc.

      Form 8-K

    

    Exhibit 10.3

      NICOR INC. 2008 LONG-TERM
INCENTIVE PROGRAM

       

      This 2008
Long-Term Incentive Program was approved at the March 2008 meeting of the
Compensation Committee, along with the program participants and
awards.

       

      Following
is a description of the 2008 Long-Term Incentive Program.  Nicor Inc.
(the “Company”) will make use of a combination of performance units and
restricted stock units.  The Company may also provide awards of stock
options and restricted stock in select circumstances.  Grants of
performance units and restricted stock units for the 2008 Long-Term Incentive
Program will be made from, and are subject to the terms of, the 2006 Long Term
Incentive Plan.

       

      Award
Agreements

       

      All
awards will be evidenced by an agreement between the Company and the award
recipient in a form approved by the Compensation Committee.  In the
event of a conflict between the description of the awards contained herein and
the terms of the form award agreements approved by the Compensation Committee,
the terms of the agreements shall govern.

       

      Description of Restricted
Stock Units

       

      
        	
                ·  

              	
                Restricted
      stock units give the employee the right to receive shares of stock at a
      designated time or event in the future.  The participant holding
      restricted stock units will have the right to receive dividend equivalent
      rights, which are equal to the amount of dividends that would be paid on
      the restricted shares, as if such shares were
  outstanding.

              

      

       

      
        	
                ·  

              	
                Restricted
      stock units will vest and the shares of Nicor stock will be delivered on
      the fourth anniversary of date of
grant.

              

      

       

      Description of Performance
Units

       

      
        	
                ·  

              	
                Each
      performance unit equals $1.00 and total units are a percentage of base
      salary at the time of the award.

              

      

       

      
        	
                ·  

              	
                Performance
      units pay out based on total shareholder return over a three-year
      performance period.

              

      

       

      
        	
                ·  

              	
                Performance
      units will pay out in cash, unless a participant in the Stock Deferral
      Plan elects to defer up to 50% of their payout into that
      plan.  Deferral elections must meet the guidelines and timing of
      the Stock Deferral Plan to be
effective.

              

      

       

      How Performance Unit Payouts
are Determined

       

      
        	
                ·  

              	
                All
      performance units pay out at the end of a three-year performance
      period.  Payouts generally will be made as soon as practicable
      following the end of the performance period, but not later than
      December 31 of the calendar year following the end of the performance
      period.

              

      

       

      
        	
                ·  

              	
                The
      payout is based on a measure of relative total shareholder return
      (TSR).  Nicor’s TSR will be measured as the change in share
      price over the three-year period plus dividends granted over
    

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        	
                 

              	
                that
      period.  For the measurement of Nicor share price, rather than
      focusing on a single-day’s price, the average of the closing share prices
      over a 20-day period will be used for the base and ending
      TSRs.

              

      

       

      
        	
                ·  

              	
                The
      performance measure and multiplier (described below) is based on the Nicor
      TSR over the performance period, as compared to the performance of the
      companies in a utility industry peer group (S&P MidCap 400 Utility
      group).

              

      

       

      
        	
                ·  

              	
                The
      following schedule shall be used to determine the Performance
      Multiplier:

              

      

       

      
        	
                Performance Unit
      Multiplier Schedule

              
	 	 
	
                Nicor TSR
      Ranking*

              	
                Payout
      Multiple

              
	
                90th
      Percentile or higher

              	
                200%

              
	
                50th
      Percentile

              	
                100%

              
	
                25th
      Percentile

              	
                25%

              
	
                Below
      25th
      Percentile

              	
                0%

              

      

       

      * Values
between the data points will be interpolated.

       

      Description of Stock Options
(granted under special circumstances only)

       

      
        	
                ·  

              	
                Option
      exercise price set at the fair market value on date of
    grant.

              

      

       

      
        	
                ·  

              	
                Options
      vest after one year and are generally exercisable at the end of three
      years.

              

      

       

      
        	
                ·  

              	
                Options
      expire ten years from date of
grant.

              

      

       

      
        	
                ·  

              	
                Options
      will be non-qualified stock
options.

              

      

       

      Description of Restricted
Stock (granted under special circumstances only)

       

      
        	
                ·  

              	
                Restricted
      Stock – actual shares of common stock, which are subject to restrictions
      on receipt and transfer and are forfeitable in the event the employee
      leaves the Company prior to vesting.  The participant holding
      restricted stock shall have all of the rights of a common shareholder,
      including the right to vote the shares and receive all dividends paid on
      such shares.

              

      

       

      
        	
                ·  

              	
                Restricted
      stock and deferred restricted stock will vest at the end of four years of
      employment from the date of grant.

              

      

       

      Transferability

       

      With
Committee approval, restricted stock units, performance units, stock options and
restricted stock may be transferred for no consideration to or for the benefit
of the participant’s immediate family as defined in the plan.  All
terms and conditions remain applicable after transfer.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Termination
Provisions

       

      In the
case of death, disability or retirement:

       

      
        	
                ·  

              	
                Unvested
      performance units held for more than one year (as of the date of death,
      disability or retirement) will be eligible for payout at the end of the
      performance period based on the normal per-unit performance/pay out
      guidelines.  The award will not be
  prorated.

              

      

       

      
        	
                ·  

              	
                Unvested
      restricted stock units held for more than one year (as of the date of
      death, disability or retirement) will vest and the stock will be paid on
      the earlier of separation from service or the fourth anniversary of grant
      date.

              

      

       

      
        	
                ·  

              	
                All
      stock options held for more than one year (as of the date of death,
      disability or retirement) will be immediately
      exercisable.  Stock options held less than one year will be
      forfeited.

              

      

       

      
        	
                ·  

              	
                Stock
      options will remain exercisable for ten years after the date of
      grant.

              

      

       

      
        	
                ·  

              	
                Unvested
      restricted stock held for more than one year from date of grant will vest
      upon death or disability, but not
retirement.

              

      

       

      
        	
                ·  

              	
                Unvested
      restricted stock at retirement will be forfeited, unless the Committee
      chooses to exercise discretion and accelerate vesting for all or part of
      the unvested award.

              

      

       

      In the
case of termination of employment for any other reason, unvested awards will be
forfeited unless the Compensation Committee chooses to override this
policy:

       

      
        	
                     
      ·  

              	
                Unvested
      restricted stock units held for less than four years are immediately
      forfeited.

              

      

      

      
        	
                     
      ·  

              	
                Performance
      units held less than three years are immediately
  forfeited.

              

      

      

      
        	
                     
      ·  

              	
                Stock
      options held less than one year are immediately
  forfeited.

              

      

      

      
        	
                     
      ·  

              	
                Stock
      options held for one year or longer will be exercisable, with the
      remaining term limited to three months after the date of
      termination.  After this date, all unexercised options will
      expire and be immediately
cancelled.

              

      

      

      
        	
                     
      ·  

              	
                Restricted
      stock held for less than four years are immediately
    forfeited.

              

      

      

      

      

      

      Nicor
Human Resources

      March
2008nicorincexhibit10-4.htm

    
      Nicor Inc.

      Form 8-K

    

    Exhibit 10.4

      TROPICAL
SHIPPING COMPANY

      LONG-TERM PERFORMANCE
INCENTIVE PLAN

      

      

      Purpose

      

      The
Tropical Shipping Company Long-Term Performance Incentive Plan (“Plan”) is
designed to:

      

      
        	
                A.  

              	
                Provide
      an incentive to optimize long-term shareholder value through increasing
      the underlying value of Tropical Shipping and Construction Company
      Limited, a Cayman Islands company (“Tropical
  Shipping”).

              

      

      

      
        	
                B.  

              	
                Balance
      the impact of short-term incentives on annual operating decision-making
      with incentives for the accomplishment of long-term objectives and
      strategy requirements.

              

      

      

      
        	
                C.  

              	
                Reward
      for achieving high performance
levels.

              

      

      

      
        	
                D.  

              	
                Provide
      an opportunity to earn income which can be accumulated to supplement
      retirement.

              

      

      

      
        	
                E.  

              	
                Retain
      the services of the participant.

              

      

      

      

      Effective
Date

      

      The
effective date of this Plan is January 1, 2008.  The program shall
continue in effect unless terminated or amended by the Compensation Committee of
the Board of Directors of Nicor Inc. (“Committee”).

      

      

      Administration

      

      The Plan
will be administered by the Committee.  The Committee shall, subject
to the provisions of the Plan, have sole and complete authority and discretion
to interpret the Plan and make all determinations necessary or advisable for the
administration of the Plan.

      

      

      Eligibility

      

      The Plan
is reserved for the President of Tropical Shipping.

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      Target Incentive
Award

      

      The
target incentive award is an award for which the participant may receive value
at the end of a Performance Period.  The value of the target incentive
award is contingent on the level of achievement of performance objectives which
are established at the time of the initial award.

      

      

      Terms and Conditions of
Awards

      

      The
Committee will determine the timing and size of the target incentive award; the
performance objectives used for determining whether the target incentive award
is earned; the performance period during which the performance objectives apply;
and the relationship between the level of achievement of the performance
objectives and the degree to which the target incentive award is
earned.  Prorating shall occur between each incremental step within
the index.

      

      

      Payment

      

      After
completion of the performance period, the Committee will compare the actual
performance to the established performance objectives for the performance period
and determine the value of the incentive award earned.

      

      Subject
to the provisions of the “Incentive Payment Deferral” section below, incentive
awards will be paid to the participant in a single lump sum.  Payment
will be made no later than the date two and one-half (2 1⁄2) months after the end
of the performance period in which the services were performed (or, in the event
that payment by such date is administratively impracticable, no later than
December 31).  Incentive payments under this Plan are intended to
satisfy the short-term deferral exemption under Treas. Reg. Sec.
1.409A-1(b)(4).  All awards will be paid in cash, except as provided
below.

       

       

      Incentive Payment
Deferral

      Deferral under the Nicor Stock
Deferral Plan.  A participant in the Nicor Stock Deferral Plan
may elect to defer up to 50% of his incentive award into that
plan.  All such elections must be made in accordance with the terms of
the Nicor Stock Deferral Plan in order to be effective.  In the event
of conflict between the terms of the Nicor Stock Deferral Plan and this Plan,
the terms of the Nicor Stock Deferral Plan shall control.  Appropriate
taxes for the entire incentive award amount will be withheld from the portion of
the incentive award being paid in cash.

       

      Deferral under this
Plan.  Notwithstanding anything contained herein to the
contrary, if any portion of any incentive award which would otherwise be payable
to a “covered individual” (within the meaning of Section 162(m) of the Code) is
not deductible by reason of Section 162(m) of the Code, such portion shall
automatically be deferred under this Plan.  All such deferred amounts
shall be credited with compounded interest equal to the prime rate, applied on
the last day of each calendar quarter.  The deferred incentive award
amounts and interest shall be paid to the covered individual in a lump sum on
the first regularly scheduled payroll date of 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Tropical
Shipping following the six month anniversary of the covered individual’s
separation from service.

      
        
 

      

      Retirement, Death or
Termination

      

      The
participant whose employment with the Company terminates by reason of
retirement, death or disability during a performance period shall be entitled to
the prorated value of the earned incentive for that performance period
determined by the Committee at the conclusion of the defined performance
period.  The proration will be based on the ratio of the calendar
months employed during the period to the total months of the performance
period.

      

      If the
participant separates from service with the Company during a performance period
for any reason other than retirement, death or disability, no target incentive
award will be made to the participant for that performance period, unless
otherwise determined by the Committee in its sole discretion.  The
Company will have no further obligation to the employee under the terms of this
Plan, other than for any previously deferred amounts and related interest in
accordance with the provisions in the “Deferral under this Plan”
section above.

      

      

      Taxes

      

      Under
current tax laws, the participant will be liable to pay income tax at ordinary
income tax rates at the time he receives a payment under the Plan.

      

      

      Plan Amendments and
Administration

      

      The Plan
may be amended or terminated at any time by the Committee except that no such
change shall affect any target incentive award earned in part or in total but
not yet distributed.

      

      Notwithstanding
the foregoing, in its sole discretion, the Committee may change the performance
objectives for any performance period at any time during the performance period,
under such circumstances as the Committee determines, including, but not limited
to, the following:

      

      
        	
                1.  

              	
                Recapitalizations.

              

      

      

      
        	
                2.  

              	
                Changes
      in laws, regulations and accounting practices which distort the
      relationship between actual performance and established performance
      objectives.

              

      

      

      
        	
                3.  

              	
                Changes
      which result from significant changes in strategy compared to the business
      and financial plan on which the Plan is based, such as size or mix of
      capital expenditures, or a major acquisition or certain reserve
      adjustments, and which are deemed necessary or desirable to carry out the
      intent of the Plan by the
Committee.

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      General
Provisions

      

      The
general provisions of the Plan are as follows:

      
        	
                1.  

              	
                The
      grant of a long-term performance target incentive award shall not affect
      Tropical Shipping’s right to terminate the participant’s employment at any
      time with or without cause.

              

      

      

      
        	
                2.  

              	
                The
      participant’s right under the grant of a long-term performance target
      incentive award shall not be
assignable.

              

      

      

      
        	
                3.  

              	
                The
      Participant shall be permitted to designate, in a manner and form
      prescribed by the Committee, a beneficiary who will receive the prorated
      award and any deferred amounts and related interest in the event of the
      participant’s death.

              

      

      

      
        	
                4.  

              	
                The
      grant of a long-term performance target incentive award in any year shall
      not imply a right to participate in the Long-Term Performance Incentive
      Plan in future years.

              

      

       

      
        	
                5.  

              	
                All
      determinations of the Committee shall be final and binding on the
      participant and Tropical
Shipping.

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