CMS INCENTIVE COMPENSATION PLAN FOR CMS ENERGY AND ITS SUBSIDIARIES

I.

GENERAL PROVISIONS

(a)

Provide an equitable and competitive level of compensation that will permit CMS Energy (“Company”) and its subsidiaries to attract, retain and motivate officers and employees.

(b)

No payments to Officers or Employees in the form of incentive compensation shall be made unless pursuant to a plan approved by the Committee on Compensation and Human Resources of the Board of Directors of CMS Energy and after express approval of the Committee. This plan shall be administered by the President and CEO of CMS Energy and the Benefit Administration Committee.

(a)

“Annual Award” means an annual incentive award granted under the CMSICP Plan.

(b)

“Base Salary” means the base salary on January 1 of a Performance Year, except as impacted by a Change in Status as defined in Article V. For purposes of the Plan, an Officer’s Base Salary must be subject to annual review and annual approval by the Committee.

(c)

“CMS Energy” means CMS Energy Corporation.

(d)

“Code” means the Internal Revenue Code of 1986, as amended.

(e)

“Code Section 162(m) Employee” means an employee whose compensation is subject to the “Million Dollar Cap” under Code Section 162(m). Generally, this is the CEO and the three highest paid executive officers of the Company (other than the CEO and the CFO).

(f)

“Committee” means the Committee on Compensation and Human Resources of the Board of Directors of CMS Energy Corporation.

(g)

“Company” means CMS Energy.

(h)

“Deferred Annual Award” means the amount deferred pursuant to Section 4.2.

(i)

“Disability” means that a participant has terminated employment with the Company or a Subsidiary and is disabled, as that term is defined under Code Section 409A and any applicable regulations.

(j)

“Leave of Absence” for purposes of this CMSICP Plan means a leave of absence that has been approved by the Plan Administrator.

(k)

“Officer” means an employee of the Company or a Subsidiary in Salary Grade “E-3” or higher.

(l)

“Payment Event” means the time at which a Deferred Annual Award may be paid pursuant to Section 4.2.

(m)

“Payment Term” means the length of time for payment of a Deferred Annual Award under Section 4.2.

(n)

“Pension Plan” means the Pension Plan for Employees of Consumers Energy and Other CMS Energy Companies.

(o)

“Performance Year” means the calendar year prior to the year in which an Annual Award is made by the Committee.

(p)

“Plan Administrator” for Officer participants means the President and Chief Executive Officer of CMS Energy, under the general direction of the Committee. For all other participants and for purposes of administering Deferred Amounts under Section 4.2, the Plan Administrator is the Benefits Administration Committee appointed by the Chief Executive Officer and the Chief Financial Officer as authorized by the Board of Directors.

(q)

“Retirement” means that a 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. For a participant ineligible for coverage under the Pension Plan and covered instead under the Defined Company Contribution Plan, retirement occurs when there is a Separation from Service on or after age 55 with 5 or more years of service.

(r)

“Separation from Service” means an Employee retires or otherwise has a separation from service from the Company as defined under Code Section 409A and any applicable regulations. The Plan Administrator will determine, consistent with the requirements of Code Section 409A and any applicable regulations, to what extent a person on a leave of absence, including on paid

sick leave pursuant to Company policy, has incurred a Separation from Service. Notwithstanding the above, a Separation from Service will occur consistent with the Regulation 1.409A-1(h) when it is reasonably anticipated that the level of service provided by the Employee will be no more than 45% of the average level of bona fide service performed by the Employee over the immediately preceding 36 month period.

(s)

“Subsidiary” means any direct or indirect subsidiary of the Company.

(a)

The Plan is administered by the President and Chief Executive Officer of CMS Energy under the general direction of the Committee.

(b)

The Committee, will normally approve performance goals in January of the Performance Year, but no later than March 30 ^th of the Performance Year.

(c)

The Committee, no later than March 1st of the calendar year following the Performance Year, will review for approval proposed Annual Awards for the total of all CMSICP Officer participants, as recommended by the President and CEO of CMS Energy. All proposed Annual Awards are subject to approval of the Committee. Before the payment of any Annual Awards, the Company’s outside auditors and 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 CMSICP Plan, provided that such discretion will be to decrease or eliminate, not increase, Annual Awards in the case of any Code Section 162(m) Employees. The Committee also reserves the right in its discretion to not pay Annual Awards for a Performance Year. All decisions of the Committee are final.

2.1

In General . Corporate performance goals are established in two areas: (1) the adjusted net income per outstanding CMS Energy share (EPS); and (2) the Corporate Free Cash Flow of CMS Energy (CFCF).

2.2

Plan Performance Factor. The plan performance factor used to calculate an Annual Award is based on the results of the corporate performance goals and is capped at two times the standard award amount. The Plan Performance Factor is established in a table relating specific performance results in the areas of EPS and CFCF to specific performance goals. This table shall be created by the Committee for each Performance Year.

3.1

Officers’ Annual Awards . Annual Awards for each eligible Officer will be based upon a percentage of the Officer’s Base Salary for the Performance Year times the Plan performance factor for the year as determined under 2.2 above. The standard award percentages are set forth in the table below. The maximum amount that can be awarded under this Plan for any Code Section 162(m) Employee will not exceed $2.5 Million in any one Performance Year. The total amount of an CMSICP participant Officer’s Annual Award shall be computed according to the annual award formula set forth in Section 3.2.

Salary

Percentage

Position

Grade

of Base Salary

E-9

100

%

E-8

60

%

E-7

55

%

E-6

50

%

E-5

45

%

E-4

40

%

E-3

35

%

3.2

Calculation of Award. Annual Awards for Officer, CMSICP participants will be calculated and made as follows:

In addition, each Annual Award for Officers of Consumers Energy Company may be modified based on the results achieved for the Consumers Energy Annual Employee Incentive Compensation Plan. If the Consumers Energy Annual Employee Incentive Compensation Plan does not pay out an award for the same Performance Year, then the Annual Award, if any, earned under this Plan will be reduced by 10%. If the Consumers Energy Annual Employee Incentive Compensation Plan pays out an award for the same Performance Year based on achievement of some, but not all, of the established objectives, then there is no modification of awards under this Plan. If however, the Consumers Energy Annual Employee Incentive Compensation Plan pays out an award for the same Performance Year based on achievement of 100% of the established objectives, then the Annual Award, if any, earned under this Plan will

be increased by up to 10%, provided, however, that no such increase will cause the Annual Award to exceed the maximum of two times the standard award amount.

3.3

Employees’ Annual Awards . Annual Awards for eligible Employee, CMSICP participants will be based upon a standard award as set forth in the table below. The total amount of an Employee Annual Award shall be computed according to the annual award formula set forth in Section 3.4.

Salary

Standard Award Amount

Grade

Full time

Part time

$

37,000

$

36,500

$

22,500

$

22,000

$

13,500

$

13,000

$

12,500

$

2,000

$

1,000

$

1,750

$

875

$

1,500

$

750

$

1,350

$

675

$

1,200

$

600

$

1,150

$

575

$

1,100

$

550

$

1,050

$

525

$

1,000

$

500

$

950

$

475