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EXHIBIT 10(W)
ANNUAL MANAGEMENT INCENTIVE
COMPENSATION PLAN FOR CMS ENERGY CORPORATION
AND ITS SUBSIDIARIES
Effective January 1, 2004
Approved by Committee on February 27,
2004
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ANNUAL MANAGEMENT INCENTIVE
COMPENSATION PLAN FOR CMS ENERGY CORPORATION AND ITS
SUBSIDIARIES
I.
GENERAL PROVISIONS
1.1 PURPOSE.
The purpose of the Annual Management Incentive
Compensation Plan ("MIC 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 certain highly competent Management and
Professional Employees.
(b) No
payments to Management and Professional 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 initial effective date of the Plan is
January 1, 2004. The Plan as described herein, is amended and
restated effective January 1, 2004.
1.3
DEFINITIONS. As used in this MIC Plan, the following terms
have the meaning described below:
(a) "Annual
Award" means an annual incentive award
granted under the MIC 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)
"Disability" means that a participant has terminated
employment with the Company or a Subsidiary and is
entitled to disability payments under the Pension
Plan.
(h) "Earnings
Per Share" (EPS) means the amount of
ongoing net income per outstanding CMS Energy Share.
(i) "GCR
Recovery" means actual/forecast incremental GCR
recovery during January and February calculated as
actual/forecast GCR cycle billed sales times above
budget GCR factor.
(j) "Leave of
Absence" for purposes of this MIC Plan
means a leave of absence that has been approved by
the Plan Administrator.
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(k)
"Management and Professional Employee" means an
employee of the Company or a Subsidiary in the salary
grades specified in the table contained in Article
III of the MIC Plan.
(l) "MIC Plan"
means the Annual Management Incentive
Compensation Plan for CMS Energy Corporation and Its
Subsidiaries, as effective January 1, 2004 and any
amendments thereto.
(m)
"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).
(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" means the Sr. Vice President -
Human Resources of CMS Energy, under the general
direction of the Outside Directors on the Committee.
(q)
"Retirement" means that an MIC 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.
(r)
"Subsidiary" means any direct or indirect subsidiary
of the Company.
1.4
ELIGIBILITY. Certain Management and Professional Employees are
eligible for participation in the MIC Plan.
1.5
ADMINISTRATION OF THE PLAN.
(a) The MIC
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
MIC 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
MIC 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 ongoing net
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 75% is achieved. Each Component as well as
the composite Plan Performance Factor to be used for payouts
will be capped at a maximum of 200%. A table containing the
composite
Plan Performance Factors shall be created by the
Committee for each Performance Year. The table for Performance
Year 2004 is set forth below.
(a) EPS
COMPONENT. EPS performance shall constitute 40%
of the composite Plan Performance Factor. The 100%
EPS goal for the 2004 performance year is $.85 per
share, and the EPS component shall increase or
decrease by 25% for each $.05 per share change in
performance. (Mathematical extrapolation shall be
used for actual results not shown in the table.)
There will be no payout under the plan unless at
least $.80 per share is achieved (regardless of CFCF
performance).
(b) CFCF
COMPONENT. CFCF performance shall constitute 60%
of composite Plan Performance Factor. The 100% CFCF
goal for the 2004 performance year is $ (100)
