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EXHIBIT 10(dd)
ANNUAL EMPLOYEE INCENTIVE
COMPENSATION PLAN FOR CMS ENERGY CORPORATION
AND ITS SUBSIDIARIES
Effective January 1, 2003
Approved by Committee on May 23, 2003
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ANNUAL EMPLOYEE INCENTIVE
COMPENSATION PLAN FOR CMS ENERGY CORPORATION
AND ITS SUBSIDIARIES
I. GENERAL PROVISIONS
1.1 PURPOSE.
The purpose of the
Annual Employee Incentive
Compensation Plan ("EIC Plan") is to:
(a) Provide an equitable and competitive level of compensation
that will permit CMS Energy Corporation ("Company") and its
subsidiaries to attract, retain and motivate their Employees.
(b) No payments to Employees in the form of incentive
compensation shall be made unless pursuant to a plan approved
by the Committee and after express approval of the Committee.
1.2 EFFECTIVE
DATE. The predecessor
to the EIC Plan was initially
effective as of January 1, 1986 and that predecessor, as
amended,
is hereby terminated. The EIC Plan as described herein, is
effective as of January 1, 2003.
1.3 DEFINITIONS.
As used in this EIC
Plan, the following terms have
the meaning described below:
(a) "Annual Award"
means an annual incentive award granted under
the EIC Plan.
(b) "CMS Energy" means
CMS Energy Corporation.
(c) "Committee" means
the Committee on Organization and
Compensation of the Board of Directors of CMS Energy.
(d) "Common Stock"
means the common stock of CMS Energy.
(e) "Company" means
CMS Energy Corporation.
(f) "Corporate Free
Cash Flow" (CFCF) means CMS Consolidated
Cash Flow from operating activities, excluding pension
contributions and adjusted for GCR Recovery, plus Cash Flow
from Investing Activities.
(g) "Earnings Per
Share" (EPS) means the amount of ongoing net
income per outstanding CMS Energy Share.
(h) "Disability" means
that a participant has terminated
employment with the Company or a Subsidiary and is entitled
to disability payments under the Pension Plan.
(i) "EIC Plan" means
the Annual Employee Incentive Compensation
Plan for CMS Energy Corporation and Its Subsidiaries, as
effective January 1, 2003 and any amendments thereto.
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(j) "Employee" means a
regular fulltime employee of the
Company or a Subsidiary in the salary grades specified in
the table contained in Article III of the EIC Plan.
(k) "GCR Recovery"
means actual/forecast incremental GCR
recovery during January and February of 2004 calculated
as actual/forecast GCR cycle billed sales times above
budget GCR factor.
(k) "Leave of Absence"
for purposes of this EIC Plan means a
leave of absence that has been approved by the Company or a
Subsidiary.
(l) "Outside
Directors" means directors of CMS Energy who are
not employed by CMS Energy or a Subsidiary and satisfy the
requirements of an "Outside Director" under Code Section
162(m).
(m) "Pension Plan"
means the Pension Plan for Employees of
Consumers Energy and Other CMS Energy Companies.
(n) "Performance Year" means the
calendar year prior to the year
in which an Annual Award is made by the Committee.
(o) "Plan
Administrator" means the Sr. Vice President - Human
Resources of CMS Energy, under the general direction of the
Outside Directors on the Committee.
(p) "Retirement" means
that an EIC Plan participant is no
longer an active employee and qualifies for a retirement
benefit other than a deferred vested retirement benefit
under the Pension Plan.
(q) "Subsidiary" means
any direct or indirect subsidiary of the
Company.
1.4
ELIGIBILITY. Regular
fulltime employees are eligible for
participation in the EIC Plan.
1.5
ADMINISTRATION OF THE PLAN.
(a) The EIC Plan is
administered by the Sr. Vice President -
Human Resources of CMS Energy under the general direction of
the Outside Directors who are members of the Committee.
(b) The Committee, no
later than March 30th of the Performance
Year, will approve performance goals for the Performance
Year.
(c) The Committee, no
later than March 30th of the calendar year
following the Performance Year, will review for approval
proposed Annual Awards for all EIC Plan participants, as
recommended by the Chairman and CEO of the Company. All
proposed Annual Awards are subject to approval of the
Committee. Before the payment of any Annual Awards, the
Committee will certify in writing that the performance goals
were in fact satisfied in accordance with Code Section
162(m).
(d) The Committee
reserves the right to modify the performance
goals with respect to unforeseeable circumstances or
otherwise exercise discretion with respect to proposed
Annual Awards as it deems necessary to maintain the spirit
and intent of the EIC Plan. The Committee also reserves the
right in its discretion to not pay Annual Awards for a
Performance Year. All discretionary decisions of the
Committee are final.
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II. CORPORATE PERFORMANCE
GOALS
2.1 IN GENERAL. The composite Plan Performance Factor will depend
on
corporate performance in two areas: (1) the net ongoing income
per
outstanding CMS Energy share (EPS); and (2) the Corporate Free Cash
Flow
of CMS Energy (CFCF). There will be no payout under the Plan unless
a
composite Plan Performance Factor of at least 60% is achieved.
The
composite Plan Performance Factor to be used for payouts will be
capped
at a maximum
