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EXHIBIT 10b
ANNUAL MANAGEMENT INCENTIVE
COMPENSATION PLAN FOR CMS ENERGY CORPORATION AND
ITS SUBSIDIARIES
Effective January 1, 2004
Approved by Committee on March 23, 2005
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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, 2005.
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 Compensation and Human
Resources 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 and Administrative Services 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 and Administrative Services 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 the total of all MIC Plan
participants, as recommended by the President 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 2005 is set forth below.
(a) EPS
COMPONENT. EPS performance shall constitute 40% of the
composite Plan Performance Factor. The 100% EPS goal for the
2005 performance year is $.90 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 g
