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HomeMy WebLinkAbout20170724Attachment 10A.pdf2016 EMPLOYEE (Non-Officer) ANNUAL CASH INCENTIVE PLAN PLAN PROVISIONS Purpose: The Employee Incentive Plan (Plan) is designed to help motivate and focus employees on the stated goals while recognizing and rewarding their contributions towards achieving those goals. The Plan is also an important element of the overall compensation of our employees which provides a compensation structure that is competitive with companies within the energy/utility industry and ensures the Company can attract and retain quality employees to work in a complex business. Plan Year: January 1, 2016 – December 31, 2016 Eligibility:  All regular full-time (F), regular scheduled part-time (P), regular seasonal and long-term (>6mo) temporary (T) employees hired prior to October 1st and actively employed on December 31st of the plan year, are eligible to participate  Subsidiary employees, Subsidiary President (1100051), Manager Steam Plant Operations (1200110), short-term (<6mo) temporary (C, Q or O), students (S), rehired retirees (R), contract services and contractor employees are not eligible to participate  Other details available in section Exceptions to Eligibility and Circumstances for Proration Performance Measurements: The Plan focuses on the customer by controlling costs through driving efficiencies while paying close attention to our customers’ voices regarding the products and services we provide. The Plan incorporates Operating & Maintenance Cost per Customer (O&M CPC) as a financial performance measurement plus three non-financial measurements: Customer Satisfaction Rating (Customer Satisfaction), Reliability Index (Reliability), and Dispatched Gas Emergency Response Time (Response Time). These performance goals help to maintain safe and reliable cost-effective service levels essential for our customers and for the long-term success of the Company. 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. Staff_PR_010 Attachment A Page 1 of 13 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 four 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. O&M CPC makes up 60 percent of the total incentive award opportunity while customer satisfaction and reliability are each 15 percent, and response time 10 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 10% for response time. If the Company fails to meet the target, employees receive no award related to the metric. For example, if the Company achieves Customer Satisfaction with a 90% or better rating, employees would receive 15% 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 15% for customer satisfaction, 15% reliability and 10% response time. Financial metric: The O&M CPC metric works a little differently due to the various performance levels that can be met. Depending on the Company’s level of performance, employees may earn more or less than 100% of the award percentage related to the financial metric. Increasing levels of performance are established between threshold and maximum by using a sliding scale. The following graph represents the relationship between the Company’s performance targets and the award opportunity. Performance levels were rounded up for graphing purposes only. Staff_PR_010 Attachment A Page 2 of 13 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 graph. For employees to receive 100% of their award percentage related to the 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 183% (rounded) of the award percentage for O&M CPC. Performance below threshold results in no award payment for the O&M CPC portion of the total incentive. For example, if the Company achieves O&M CPC of $389.33 which is a performance level of 62% (rounded), employees would receive approximately 37% (60% multiplied by 62.0504% = 37.2302%) rather than 60% of their award opportunity related to CPC. If the Company achieves $380.30 which exceeds target performance, employees would receive approximately 99% (60% multiplied by 165.7544% = 99.45264%) rather than 60%. If the Company achieves an amount below threshold such as $392.54, employees would receive no award related to the O&M CPC metric. The maximum an employee may earn under the O&M CPC portion of their total incentive award opportunity is 110% (60% multiplied by 183.3333% = 109.99998%). 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 four (4) decimals (ex. 183.3333%). See Calculation of Awards section for more details on how payments are calculated. Establish Targets: The executive officers of the Company in conjunction with management reviews and reestablishes the targets for each measurement on an annual basis. The computations for this Plan are described below: 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 Staff_PR_010 Attachment A Page 3 of 13 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). Achieving maximum payout would result in an additional pre-tax expense of $3.14M of incentive plus an additional $3.14M in savings. Therefore $6.28M in combined savings is required to achieve the maximum payout. The chart above illustrates the concept. Denominator: The target uses a customer growth factor of 7,220, which is slightly higher than both our 4 and 5 year averages, but aligns with our recent customer growth experience. Variability in the final customer count will impact the amount of O&M savings necessary to achieve an incentive payment. For example, missing the growth target by 1,000 customers would require an additional savings of approximately $387K to achieve the target level payout. Customer Satisfaction: For this measure, the Company uses the ratings from question Q3 from 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 Staff_PR_010 Attachment A Page 4 of 13 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 21 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 1.11 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 6.9% 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 Staff_PR_010 Attachment A Page 5 of 13 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 2016: O&M Cost per Customer Customer Satisfaction Reliability Index Response Time % of Total Opportunity 60% 15% 15% 10% Sliding Scale Meet/Not Meeting Goals Minimum 50% $390.00 Target 100% Maximum 183.33%* $378.45 *rounded for display or communication purposes only Individual Target Award Opportunities: Non-union and union local 659 employees: Each eligible employee has an incentive target award opportunity expressed as a percentage of their base salary. Target opportunities range from 5% to 17% of base salary and are assigned based on position and union/non-union status. The percentage varies by market level and union contract as indicated in the table below. 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). 2016 Individual Target Award Opportunity % of Base Pay by Market Level or Union Contract Levels 1-5 Levels 6-8 Levels 9-10 Levels 11-12 Levels 13 & over Union #659 Union #77 Union local 77 employees: Each eligible Local 77 bargaining unit employee has a target award opportunity expressed as a flat dollar amount rather than a percentage of annual base salary as indicated in the table above. 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 to ensure no overpayments or underpayments occur, the final performance results will be extended out four (4) Staff_PR_010 Attachment A Page 6 of 13 decimals (ex. 149.9323%) for Cost per Customer and rounded based on accounting rules. The following table shows how an underpayment can occur if the final performance level is rounded to two decimals and used to calculate the final payment. 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 (ex. $2,855.27) 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) Cost per Customer = 183.3333% on the sliding scale 2) Customer Satisfaction = 100% = met/pass 3) Reliability = 100% = met/pass 4) Response Time = 0% = fail to meet Non-Union employee, level 7 Earnings = $60,700 Target Opportunity = 7% = $4,249 Goal Opportunity Weighting % Results Amount Cost per Customer $4,249 x 60% x 183.3333% = $4,673.89 Customer Satisfaction $4,249 x 15% x 100% = $637.35 Reliability $4,249 x 15% x 100% = $637.35 Response Time $4,249 x 10% x 0% = $0 Total Payout = $5,948.59 or 140.00% of Target Local 77 employee Target Opportunity = $666.67 Goal Opportunity Weighting % Results Amount Cost per Customer $666.67 x 60% x 183.3333% = $733.34 Customer Satisfaction $666.67 x 15% x 100% = $100.00 Reliability $666.67 x 15% x 100% = $100.00 Response Time $666.67 x 10% x 0% = $0.00 Total Payout = $933.34 or 140.00% of Target Communication: When communicating the results of the financial metric 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%. Metric Target Opportunity Metric Allocation Maximum Results Maximum % Allowed Dollar Value Maximum CPC $ 4,249.00 60%183.3333% 110.0000% 4,673.90$ Under payment CPC $ 4,249.00 60%183.3300%109.9980%4,673.82$ Staff_PR_010 Attachment A Page 7 of 13 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. Administration of Plan: The top executive officers are responsible for administering the Plan and may delegate specific administrative tasks to corporate staff, as appropriate. The top executive officers have 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 the financial targets due to extraordinary occurrences and/or significant reorganizations  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 12/28/2015 – 1/10/2016 which is paid on pay date 1/15/2016. Changes effective during this pay period will count towards the 2016 plan since the earnings and pay date are part of 2016. Changes effective during the dates 12/26/2016 – 1/08/2017 are not included in the 2016 Plan because the earnings and pay date are part of 2017. Pay Period Schedule for 2016: Pay Period Date Range Pay Date Pay Period Date Range Pay Date 1 12/28/2015 – 1/10/2016 1/15 14 6/27 – 7/10 7/15 2 1/11 – 1/24 1/29 15 7/11 – 7/24 7/29 3 1/25 – 2/7 2/12 16 7/25 – 8/7 8/12 4 2/8 – 2/21 2/26 17 8/8 – 8/21 8/26 5 2/22 – 3/6 3/11 18 8/22 – 9/4 9/9 6 3/7 – 3/20 3/25 19 9/5 – 9/18 9/23 7 3/21 – 4/3 4/8 20 9/19 – 10/2 10/7 8 4/4 – 4/17 4/22 21 10/3 – 10/16 10/21 9 4/18 – 5/1 5/6 22 10/17 – 10/30 11/4 10 5/2 – 5/15 5/20 23 10/31 – 11/13 11/18 11 5/16 – 5/29 6/3 24 11/14 – 11/27 12/2 12 5/30 – 6/12 6/17 25 11/28 – 12/11 12/16 13 6/13 – 6/26 7/1 26 12/12 – 12/25 12/30 Staff_PR_010 Attachment A Page 8 of 13 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 5/10 and remains employed through the end of the year. The date 5/10 falls in the date range associated with pay period 11 which is paid on pay date 5/22. 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 21 and is associated with pay date 10/9. 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 12/6. The transfer date of 5/20 falls within pay period 12 which is associated with pay date 6/5. The returning date of 12/6 falls within pay period 26 which is associated with pay date 12/18. Count the number of pay dates starting with 6/5 and end with 12/4 which is the pay date prior to the next COS date of 12/6. 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 4/20 – 5/3 5/8 11 5/4 – 5/17 5/22 1 12 5/18 – 5/31 6/5 1 1 13 6/1 – 6/14 6/19 1 1 14 6/15 – 6/28 7/3 1 1 15 6/29 – 7/12 7/17 1 1 16 7/13 – 7/26 7/31 1 1 17 7/27 – 8/9 8/14 1 1 18 8/10 – 8/23 8/28 1 1 19 8/24 – 9/6 9/11 1 1 20 9/7 – 9/20 9/25 1 1 21 9/21 – 10/4 10/9 1 1 1 22 10/5 – 10/18 10/23 1 1 1 23 10/19 – 11/1 11/6 1 1 1 24 11/2 – 11/15 11/20 1 1 1 25 11/16 – 11/29 12/4 1 1 1 26 11/30 – 12/13 12/18 1 1 Total Pay Periods 16 6 14 Staff_PR_010 Attachment A Page 9 of 13 Regular Earnings: Regular earnings will be used in calculating the final awards for non-union and union local 659 employees. The earnings to be used in the calculation are as follows: earnings designated regular (earnings code 01, 02, 32), light duty (29), Swing Shift (31), alternative/dual (20), relief pay (08), retro pay (70), One Leave (10, 14, 15, 16), short-term disability 100% and 60% (18, 80), workers compensation (19, 19A, 85, 85c, 86, 87, 88), holiday (25, 75), jury duty (35), and military pay (36, 36c). Overtime earnings are not included in the calculation. For union local 77 employees, incentive awards will be calculated using the flat dollar amount of $666.67. 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. Transfers between Union Local 77 and Non-union or Union Local 659 Positions: Eligible employees who transfer between union local 77/local 659 positions and non- union positions may receive a prorated award for each type of position based on the number of pay periods paid in each eligible job. In order to calculate the revised individual target award opportunity for these transfers, use the 2016 Incentive Calculator – Special Calculations excel spreadsheet. Collect documentation for auditing purposes. Union employees must pay union dues while in the non-union position to be eligible for this provision. The local 77 portion of the award is calculated using the Proration methodology to determine the number of pay periods paid while in the union position and the flat rate target amount of $666.67. The local 659 portion of the award is calculated using the Proration methodology to determine the number of pay periods and the associated earnings paid while in the union position and the individual target opportunity of 5%. The non-union portion of the award is calculated using the Proration methodology to determine the number of pay periods, the associated earnings paid and the individual target opportunity based on the last recorded market level while in the non-union position. To determine the new individual target award opportunity for these transfers, collect the last recorded market level, the number of pay periods and the associated earnings paid while in the non-union position.  Market level – go to Ultipro Job History and click on the last effective date of the non-union position to confirm market level. Then print the job history page for the employee.  Pay periods – On the Job History page find the starting effective date and ending date (if applicable), then find the effective date on the Pay Period Schedule for 2016. Use the Proration methodology to figure out the number of pay periods for each position.  Earnings paid – go to Ultipro Pay and print the last pay statement of the Plan year. The earnings from the last pay statement will be entered into the 2016 Incentive Staff_PR_010 Attachment A Page 10 of 13 Calculator – Special Calculations excel spreadsheet (see detailed instructions in spreadsheet). Find and print the pay statement from the pay date prior to the COS effective date pay date. Sometimes employees start and return during the same Plan year. If this occurs, make sure to print both pay statements for both effective dates. For example, if the employee starts a non-union position on 5/20, print the pay statement from pay date 5/22 not 6/5 (see Pay Period Schedule). If the employee returns to union status on 9/26, print the pay statement from pay date 9/25 not 10/9.  Once all the data is collected and number of pay periods are determined go to the 2016 Incentive Calculator – Special Calculations excel spreadsheet to calculate the new individual target award opportunity. Transfers between Eligible and Non-eligible Positions or Status: As long as no break in service has occurred and the employee has at least 6 pay periods of active service in the eligible position or status, the employee may receive an award on a prorated basis. Awards will be calculated based on the Proration provision detailed above and the eligible position type, union or non-union. Non-union 12 hour Shift Workers: Non-union employees working a 12 hour shift have a unique situation where 8 hours of their normal pay period is scheduled over- time. Due to this situation, the awards are calculated differently. These positions are: Distribution Dispatchers (1400094), System Operators (1400195, 1400196, and 1400197), Shift Schedulers (1400158), Real-time Assistant Schedulers (1400157) and CSR 24 hour (1400079). A composite rate/salary will be established in order to calculate the final awards for these employees. Each change in the annual base rate for an employee counts as a separate amount and is prorated based on the number of pay periods paid under the annual base rate. The Company will use the Proration methodology to count the number of pay periods associated with each new annual base rate for the Plan year. In order to calculate the composite rate, use the 2016 Incentive Calculator – Special Calculations excel spreadsheet and collect documentation for auditing purposes. To determine the composite rate for these employees, collect the information for the Plan year.  Annual Rate/Salary – go to Ultipro Job History and click on the effective date for each change made to the employee’s job history and print the job history page. Only print the pages that reflect pay increases or job changes that impact eligibility. Print the page reflecting the rate for the beginning of the Plan year. Sometimes the page is dated in the prior year like 10/07/2015. Occasionally employees start the year in a different position like a union position. If this is the case, follow the instructions for calculating a prorated union or a non-union award.  Once the data is collected use the 2016 Incentive Calculator – Special Calculations excel spreadsheet for 12 hour Shift Workers to calculate the new individual target award opportunity (see detailed instructions in spreadsheet). Staff_PR_010 Attachment A Page 11 of 13 Example calculation for establishing a composite rate:  The first 5 pp (12/28/15 through 3/6/16) of the year are paid at an annual base rate of $59,366.94. Divide $59,366.94 by 26 pp multiply by 5 pp equals $11,416.72  On 3/12/16 the employee receives a pay increase to an annual rate of $60,431.70. There are 17 pp until the next pay increase. Divide $60,431.70 by 26 pp multiply by 17 pp equals $39,513.03  On 11/6/16 the employee receives another pay increase to an annual rate of $75,000.00. There are 4 pp left till the end of the year. Divide $75,000 by 26 pp multiply by 4 pp equals $11,538.46  Add the prorated rates together to create the composite rate/salary of $62,468.21 ($11,416.72 + $39,513.03 + $11,538.46) to calculate the new individual target award opportunity (see detailed instructions in spreadsheet). Temporary Employees: Temporary (T) employees on a long-term (> 6mo) assignment must have at least 6 full pay periods of active service to be eligible to receive awards. Awards will be calculated based on the provisions detailed above. Temporary employees on short-term (< 6mo) assignments (C, Q or O) are not eligible to participate or receive an award under this Plan. Seasonal Unemployment/Reemployment: During situations of seasonal unemployment/reemployment, employees will be eligible to receive awards even if the unemployment period is in effect on December 31st. Awards will be 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 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 Staff_PR_010 Attachment A Page 12 of 13 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. 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, top management 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. Employees in the following positions: Subsidiary President (1100051), Manager Steam Plant Operations (1200110) are not eligible for this plan. They are eligible for different plans. Staff_PR_010 Attachment A Page 13 of 13