Document:

Annual Incentive Compensation Plan for TECO Energy and Subsidiaries

 Exhibit 10.2 
  
  
  
  
  
  
  
  
  
  

  
  
 TECO ENERGY, INC. 
 ANNUAL INCENTIVE COMPENSATION PLAN 
 REVISED AS OF November 1, 2007 
  
  

 

  

 ANNUAL INCENTIVE COMPENSATION PLAN 
 BASIC PLAN CONCEPT 
 The Annual Incentive Compensation Plan provides a consistent framework for applying annual
incentive pay to officers of TECO Energy and each of its operating units. Each participant is assigned a target award amount, expressed as a percentage of annual salary, which will represent an appropriate incentive payment when performance is at
the targeted level. Smaller awards may be earned when performance is below target, and larger awards may be earned when performance exceeds target. 
 Performance for each participant will be measured, in part, against a combination of one or more quantifiable profit and operational goals. These goals will be set at the corporate and operating levels, and most participants will have a
portion of their awards related to each. The remaining portion of each participant’s performance that is not measured by the quantified goals mentioned above will be evaluated on a subjective basis considering overall contribution level and
achievement of other individual goals. Each participant will have a “Business Plan” goal, which will reflect the participant’s contribution to (i) achieving initiatives in support of the business plan and (ii) overcoming any
“business challenges” by: (a) mitigating the impact of unexpected adverse business or regulatory developments on the business unit or (b) enhancing profitability or capacity for profit, through effective management initiatives
beyond those in the business plan. 
 ELIGIBILITY 
 All
officers that are approved by the Chief Executive Officer of TECO Energy and the Compensation Committee of the TECO Energy Board (the “Compensation Committee”) will be eligible to participate. 
 TARGET AWARD LEVELS 
 Target award levels are established at a level
that, when combined with each participant’s base salary, will provide a fully competitive total cash compensation opportunity. The incentive portion of the total compensation opportunity reflects compensation “at risk” which is
directly related to performance and results achieved. Generally, the portion of compensation “at risk” (i.e., the target award level) is influenced by the level of the participant’s accountability for contributing to bottom-line
results, the degree of influence the participant has over results and competitive practice. 
 ESTABLISHING PERFORMANCE GOALS AND WEIGHTINGS

 For each plan year, profit, growth and/or operational effectiveness goals will be established for TECO Energy and each of its operating units.
Financial goals may measure performance relative to other companies over periods of one-year or longer. 
 For each financial goal the target level of
performance, as well as threshold and maximum levels, will be approved by the Compensation Committee. Threshold performance represents the minimum performance that still warrants incentive recognition for that particular goal (paid at 50 percent of
the 

 
target award level), and maximum performance represents the highest level likely to be attained (paid at 150 percent of the target award level for all goals,
except the Business Plan goal which can be paid up to 200 percent). Regardless of the degree of achievement of each established goal, the payout to all participants will be zero if TECO Energy’s income threshold set for that year by the
Compensation Committee is not achieved. 
 A determination will be made for each participant regarding their portion of the award that will be based on
corporate, operating unit or individual performance. Generally, the weightings among these three measurement groups will vary by organizational level. 
 APPLICATION OF DISCRETION 
 While not anticipated to be a common occurrence, the Compensation Committee may occasionally decide that the plan
formula would unduly penalize or reward management. In such cases, award funds may be increased or decreased to better meet the plan’s intent of relating rewards to management performance. 
 AWARD DETERMINATION 
 At the end of each plan year, a four-step
process will be followed in determining actual incentive awards. 
  

			
	 Step 1:
	  	The actual degree of achievement for each goal at the corporate, operating unit and individual level is determined. Levels of achievement can range up to 200 percent for the Business Plan
goal and up to 150 percent for all other goals.
		
	 Step 2:
	  	Corporate, operating unit and individual performance factors are determined by multiplying levels of goal achievement by the weightings assigned to each goal.
		
	 Step 3:
	  	The total of all performance factors is multiplied by the target award, producing the calculated award.
		
	 Step 4:
	  	The calculated award may be adjusted up or down by the Compensation Committee with respect to the senior officers and by the Chief Executive Officer of TECO Energy with respect to other
officers, based on the participant’s total performance during the plan year. The actual award, as so adjusted, may not exceed 150 percent of the target award level and will be approved by the Compensation Committee.

 PLAN ADMINISTRATION 
 The Compensation Committee and the Chief Executive Officer of TECO Energy shall perform the respective functions set forth in this plan. The Compensation Committee may elect to fulfill its responsibility in the form of recommendations to
the TECO Energy Board. The Chief Human Resources Officer of TECO Energy is responsible for administering the plan. 

 OTHER CONSIDERATIONS 
 For any year in which a participant’s employment is terminated or an officer first becomes eligible for participation in the plan, whether any incentive award shall be granted for that year and the amount of any such award shall be
determined by the Compensation Committee with respect to senior officers and by the Chief Executive Officer of TECO Energy with respect to other officers. Any such determination by the Chief Executive Officer will be reported to the Compensation
Committee at its next meeting. 
 Notwithstanding the foregoing, for any year in which a participant’s employment terminates for any reason following a
change in control of TECO Energy, as defined in the TECO Energy 2004 Equity Incentive Plan (or its successor), such participant shall be entitled to receive an incentive award equal to (a) the number of days employed during that year divided by
365 multiplied by (b) the greater of (i) the participant’s target award for the year in which the change in control occurred or (ii) the participant’s target award for the year immediately preceding the year in which the
termination of employment occurred. 
 DISTRIBUTIONS 
 Distribution of annual incentive payments will be made to eligible officers (as defined under ELIGIBILITY above) who either remain actively employed at date of payment, are determined to be eligible for an incentive as described
under OTHER CONSIDERATIONS above, or who have died. Payments shall be made in the taxable year of TECO Energy, Inc. following the year in which it was earned. Notwithstanding the foregoing: 
  

	 	(1)	If any participant who is entitled to receive a distribution of annual incentive payments experiences a separation from service and is a “specified employee” as defined in
Internal Revenue Code Section 409A and the regulations and guidance thereunder, such individual shall not receive any annual incentive payments until the date that is six months following the participant’s separation from service with TECO
Energy, Inc. and all its affiliates. 

  

	 	(2)	Payment of benefits for a deceased participant will be made to the designated beneficiary of the deceased participant (as designated on a form provided by TECO Energy, Inc.) or, if
no beneficiary is designated, to the estate of the deceased participant. 

 AMENDMENT AND TERMINATION 
 TECO Energy, Inc. reserves the right to amend this Annual Incentive Compensation Plan at any time, provided that any such amendment shall not reduce a benefit already
accrued under the Plan and further provided that any such amendment shall comply with the requirements of applicable law including, but not limited to, Internal Revenue Code Section 409A. The Plan will be amended as necessary to comply with
applicable law, including Section 409A. TECO Energy, Inc. may terminate the Plan prospectively but may not accelerate payment of benefits accrued hereunder except in the limited circumstances specifically allowed by Section 409A including,
but not limited to, termination within 30 days prior to or 12 months following a change in control of the company. 
 COMPLIANCE WITH SECTION 409A 

 This Plan shall be administered in accordance with Internal Revenue Code Section 409A.TECO Energy Directors' Deferred Compensation Plan

 Exhibit 10.3 
 TECO ENERGY DIRECTORS’ DEFERRED 
 COMPENSATION PLAN 
 ARTICLE I 
 GENERAL 

1.1 Establishment of Plan. TECO Energy, Inc. (“TECO Energy”) established the TECO Energy Directors’ Deferred Compensation Plan
(the “plan”), effective as of January 1, 1984, to allow each outside director of TECO Energy to defer receipt of all or a portion of the cash compensation, including annual retainers, committee fees, and meeting fees, payable to him
as a director of any company in the TECO Energy group (the “companies”) until the later of his separation from service as a director or a date specified by him. This amended and restated plan is effective as of January 1, 2005 and
shall apply to all amounts deferred under the plan, including those amounts deferred prior to January 1, 2005. 
 1.2 No Right to
Corporate Assets. This plan is unfunded and the companies will not be required to set aside, segregate, or deposit any funds or assets of any kind to meet their obligations hereunder. Nothing in this plan will give a participant, a
participant’s beneficiary or any other person any equity or other interest in the assets of the companies, or create a trust of any kind or a fiduciary relationship of any kind between the companies and any such person. Any rights that a
participant, beneficiary or other person may have under this plan will be solely those of a general unsecured creditor of the companies. 
 1.3 Limitation on Rights Created by Plan. Nothing in this plan will give a participant any right to continue as a director of TECO Energy or of any of the companies. 
 1.4 Nonalienation of Benefits. The rights and benefits of a participant in this plan are personal to the participant. No interest, right or claim
under this plan and no distribution therefrom will be assignable, transferable or subject to sale, mortgage, pledge, hypothecation, anticipation, garnishment, attachment, execution or levy, except by designation of beneficiary as provided in
Section 3.5. 
 1.5 Binding Effect of Plan. This plan will be binding upon and inure to the benefit of participants and
designated beneficiaries and their heirs, executors and administrators, and to the benefit of the companies and their assigns and successors in interest. 
 1.6 Administration. This plan will be administered by the Secretary of TECO Energy who will have sole responsibility for its interpretation. 
 1.7 Interpretation. This plan will be construed, enforced and administered according to the laws of the State of Florida. 

 ARTICLE II 
 DEFERRAL OF COMPENSATION 
 2.1 Deferral Agreement. Any active member of the Board of Directors
of TECO Energy who is not an employee of one of the companies in the TECO Energy group (an “outside director,” herein referred to as a “director”) is eligible to participate in this plan. If a director elects to become a
participant and defer fees upon initial election to the Board, such participant must execute an election to defer fees within 30 days after first becoming a director. Such election shall apply with respect to fees earned beginning on the date the
director is initially elected to the Board and ending on the last day of that calendar year. Otherwise, elections to become a participant and defer fees for a year must be made prior to the first day of the calendar year and will be irrevocable for
the year. The “year” for election purposes is the calendar year. If a participant fails to make an election within 30 days of the date the individual is initially elected to the Board, the individual will not be eligible to participate
until the following year. If a participant fails to make a deferral election change prior to the beginning of a year, the participant’s current deferral election shall remain in effect for the year. Once a year begins, the participant’s
deferral election or deemed deferral election is irrevocable for the year. 
 2.2 Amount of Deferral. Each participant may elect in
his deferral agreement to defer 25 percent, 50 percent, 75 percent or 100 percent of the total cash compensation, including annual retainers, committee fees and meeting fees, paid to the participant as an outside director of the companies.

 2.3 Deferral Account. For bookkeeping purposes only, the Secretary will establish and maintain an account (the “deferral
account”) for each participant which documents the compensation deferred by the participant, earnings credited to the account and payments from the account. The deferral account will consist of a subaccount for amounts earning interest which
will be denominated on a dollar basis (the “cash account”) and an account for amounts invested in hypothetical shares of TECO Energy common stock (the “common stock”) which will be denominated on a share basis (the “stock
account”). Each participant will indicate in his deferral agreement the percentage of future deferrals to be invested in the cash account and the stock account. Amounts may not be transferred between the cash account and the stock account.

 2.4 Cash Account. As of the first day of each calendar quarter, the Secretary will credit to the participant’s cash account an
amount equal to the amount of compensation otherwise payable to the participant in the preceding calendar quarter which the participant has elected to defer and invest in the cash account. As of the last day of each calendar quarter, the Secretary
will credit interest on the balance in the cash account at that date at the rate paid on 90-day Treasury bills purchased on the first day of the applicable calendar quarter. For a participant receiving installment payments, interest will be credited
as provided in this Section 2.4 on the balance remaining in the cash account until the account has been completely paid. 
 2.5 Stock
Account. As of the first day of each calendar quarter, the Secretary will credit to the participant’s stock account a number of shares equal to the amount of compensation 

  

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otherwise payable to the participant in the preceding calendar quarter which the participant has elected to defer and invest in the stock account divided by
the applicable stock price. As of the date of payment of any cash dividend on common stock, the Secretary will credit to the stock account a number of shares equal to the cash dividend per share times the number of shares credited to the stock
account as of the dividend record date divided by the applicable stock price. The applicable stock price is the mean of the high and low trading prices per share of common stock on the New York Stock Exchange as of the trading day immediately
preceding the date of the transaction. As of the date of payment of any stock dividend on common stock, the Secretary will credit to the stock account a number of shares equal to the stock dividend declared times the number of shares credited to the
stock account as of the dividend record date. In the event of any stock split, recapitalization, reorganization, merger, consolidation, split-up, spin-off, exchange of shares or similar change affecting the common stock, appropriate adjustment will
be made in the number of shares credited to the stock account. The stock account is maintained for bookkeeping purposes only. Shares credited to the stock account are not considered actual shares of common stock of TECO Energy for any purpose and a
participant will have no rights as a stockholder with respect to such shares. Shares will include fractional shares computed to three decimal places. 
 ARTICLE III 
 PAYMENT OF DEFERRED COMPENSATION 
 3.1 Commencement of Payment. Each participant will elect in his deferral agreement the year during which payments will commence and the form of
payment (as set forth in Section 3.2, either a lump sum as provided in Section 3.3 or installment payments as provided in Section 3.4), and will designate a beneficiary as provided in Section 3.5. Payments will commence in the
later of the calendar year following the director’s separation from service as a director or the specified calendar year elected by the participant, provided in the case of a specified year, however, that payments must commence by the calendar
year following the participant’s attainment of age 71. As provided in Sections 3.2 and 3.3, any payment due to be made in a calendar year will be made on or before March 1 of such calendar year. Such distribution election is
irrevocable for the benefits deferred for the year, and any subsequent distribution election for a later year shall not apply to amounts deferred in prior years. If a participant fails to make a new distribution election prior to the beginning of a
year, the participant’s current distribution election shall remain in effect for the subsequent years for all amounts deferred in such years until a new distribution election is made (effective the first day of the next year). Once a year
begins, the participant’s distribution election or deemed distribution election is irrevocable for the year. 
 Any distribution
election must be submitted in writing using a deferral agreement form and received by the Secretary before the first day of the year for which it is intended to be effective. A participant may change the designation of his beneficiary/beneficiaries
at any time by completing a new deferral agreement (provided that, only the change of beneficiary designation may be made mid-year and only a change in designation of beneficiary may apply to amounts previously deferred). The new beneficiary
designation shall apply to all amounts deferred under the plan for all years both prior to and subsequent to the designation (not just the year for which the deferral agreement is made) and shall be effective when received by the Secretary of TECO

  

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Energy. The most recent deferral agreement form designating the participant’s beneficiary/beneficiaries shall control the payment of all benefits under
the plan in the event of a participant’s death. 
 3.2 Election of Form of Payment. Each participant will elect in his deferral
agreement to have his deferral account paid in either a lump sum or in annual installments for a period specified by him but not to exceed five years. 
 3.3 Lump Sum Payments. A participant who elects to have his deferral account paid in a lump sum will receive the lump sum payment in cash on or before March 1 of the year specified in the deferral
agreement for commencement of payment. The lump sum will equal the sum of (a) the amount credited to his cash account, plus (b) the number of shares credited to his stock account times the applicable stock price. 
 3.4 Installment Payments. A participant who elects to have his deferral account paid in annual installments will receive an installment payment in
cash on or before March 1 of each year that installments are due commencing with the year specified in his deferral agreement. Each installment will equal the sum of (a) the amount credited to his cash account on the date of payment
divided by the number of annual installments remaining to be paid, plus (b) the number of shares credited to his stock account times the applicable stock price divided by the number of annual installments remaining to be paid. 
 3.5 Beneficiaries. A participant may designate in his deferral agreement a beneficiary or beneficiaries (which may be an entity other than a
natural person) to receive any payments to be made upon his death. A participant may elect to have payments to beneficiaries paid in a lump sum or in annual installments for a period not to exceed five years, commencing on the date provided in
Section 3.6. A participant may change or revoke his designation of beneficiary without the consent of any beneficiary. Any such designation, change or revocation must be made in writing and filed with the Secretary as provided in
Section 3.1. If the participant designates more than one beneficiary, any payments to beneficiaries will be made in equal percentages unless the participant designates otherwise. Any portion of a participant’s deferral account that is not
disposed of by designation of beneficiary upon the participant’s death will be paid to his estate. 
 3.6 Payments on Death. If a
participant dies before the full payment of his deferral account, the companies will make payments to the participant’s designated beneficiary or beneficiaries, or to his estate, of the amount remaining in the deceased participant’s
deferral account. Such payments will be in the form designated by the participant, as provided in Section 3.5, and will commence on the first day of the calendar quarter following the death of the participant and, in the case of annual
installments, will be paid on or before March 1 of each succeeding year. 
 3.7 Unforeseeable Emergency Distributions from
Accounts. In the event a participant experiences an unforeseeable emergency, the participant may apply to the Compensation Committee of the TECO Energy Board of Directors for the distribution of all or any part of his or her cash account. An
“unforeseeable emergency” is a severe financial 

  

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hardship to the participant resulting from an illness or accident of the participant, the participant’s spouse or dependent (as defined in Internal
Revenue Code Section 152(a)); loss of the participant’s property due to casualty; or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the participant. The amount distributed
may not exceed the amount necessary to satisfy the emergency plus amounts necessary to pay taxes reasonably anticipated as a result of the distribution, after taking into account the extent to which such hardship is or may be relieved through
reimbursement or compensation by insurance or otherwise or by liquidation of the participant’s assets (to the extent such liquidation would not cause severe financial hardship). The Compensation Committee shall have sole discretion to determine
whether such conditions are satisfied. Unforeseeable emergency distributions cannot be made from a participant’s stock account. 
 ARTICLE IV 
 AMENDMENT AND TERMINATION 
 4.1 Amendment. TECO Energy may, without the consent of any participant, beneficiary or other person, amend the plan at any time and from time to time; provided, however, that no amendment will reduce the amount
credited to the deferral account of any participant, and further provided that any such amendment shall comply with applicable laws. 
 4.2
Termination. TECO Energy reserves the right to discontinue the plan within 30 days prior to or twelve (12) months following a change of control of the company as defined in Code Section 409A and the regulations thereunder or in any
other circumstance allowed by Code Section 409A and the regulations thereunder. Upon such a termination of the plan, all remaining assets of the plan will be distributed to participants in accordance with the requirements of Section 409A.

 IN WITNESS WHEREOF, this amended and restated plan has been adopted on this ___ day of ____________, 2007, effective as provided herein.

  

			
	TECO ENERGY, INC.
		
	By:	 	 
		
	Its:	 	 

  

			
	ATTEST:
		
	By:	 	 
		
	Its:	 	 

  

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