ANNUAL OFFICER INCENTIVE COMPENSATION PLAN FOR OFFICERS OF CMS ENERGY CORPORATION AND ITS SUBSIDIARIES

Executive Compensation Plan Agreement

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CMS ENERGY CORPORATION

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Title: ANNUAL OFFICER INCENTIVE COMPENSATION PLAN FOR OFFICERS OF CMS ENERGY CORPORATION AND ITS SUBSIDIARIES
Governing Law: Michigan Date: 2/21/2008

ANNUAL OFFICER INCENTIVE
COMPENSATION PLAN FOR OFFICERS OF CMS ENERGY CORPORATION
AND ITS SUBSIDIARIES, Parties: cms energy corporation

Exhibit (10)(j)

ANNUAL OFFICER INCENTIVE
COMPENSATION PLAN FOR CMS ENERGY CORPORATION
AND ITS SUBSIDIARIES

ANNUAL OFFICER INCENTIVE
COMPENSATION PLAN FOR OFFICERS OF CMS ENERGY CORPORATION
AND ITS SUBSIDIARIES

GENERAL PROVISIONS

1.1

Purpose . The purpose of the Annual Officer Incentive Compensation Plan (“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 highly competent Officers.

	(b)		No payments to Officers 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 (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 as of January 1, 2007.

	1.3		Definitions . As used in this Plan, the following terms have the meaning described below:

	(a)		“Adjusted Net Income” means generally accepted accounting practices income excluding asset sale cost, accounting changes, large restructuring and severance, legal and settlement cost for round-trip trading and gas price reporting, regulatory recovery for prior year changes, mark to mark greater than +/- $.05 of budget, and early debt retirement option premiums.

	(b)		“Annual Award” means an annual incentive award granted under the Plan.

	(c)		“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.

	(d)		“CMS Energy” means CMS Energy Corporation.

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

	(f)		“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).

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

	(h)		“Company” means CMS Energy Corporation.

	(i)		“Corporate Free Cash Flow” (CFCF) means CMS Consolidated Cash Flow from operating activities, excluding restricted cash flow, common dividends, financing and adjusted for GCR Recovery.

	(j)		“Deferred Annual Award” means the amount deferred by an Officer pursuant to Section 4.2

	(k)		“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.

	(l)		“Earnings Per Share” (EPS) means the amount of adjusted net income per outstanding CMS Energy Share.

	(m)		“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.

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

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

	(p)		“Payment Event” means the date a Deferred Annual Award may be paid pursuant to Section 4.2.

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

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

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

	(t)		“Plan Administrator” means 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.

	(u)		“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.

	(v)		“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.

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

	1.4		Eligibility . Officers are eligible for participation in the Plan.

	1.5		Administration of the Plan .

	(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, no later than March 30 ^th of the Performance Year, will approve performance goals for 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 all Officer participants, taking into account the recommendations of the Chief Executive Officer 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 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.

II.

CORPORATE PERFORMANCE GOALS

2.1

In General . The composite Plan Performance Factor will depend on corporate performance 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). 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 2007 is set forth below.

	(a)		EPS Component . EPS performance shall constitute 50% of the composite Plan Performance Factor. The 100% EPS goal for the 2007 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 EPS Component unless at least $.80 per share is achieved.

	(b)		CFCF Component . CFCF performance shall constitute 50% of composite Plan Performance Factor. The 100% CFCF goal for the 2007 performance year is $1,250 million, and the CFCF component shall decrease by 1% for each $2 million change in performance. The CFCF component shall increase by 1% for each $2 million increase in performance from $1,250 million. (Mathematical extrapolation shall be used for actual results not shown in the table.) There will be no payout under the CFCF component unless at least $1,150 million is achieved.

Composite Performance Factors for 2007 Performance Year


CFCF
Component
(Millions)	<$1150			$1150			$1200			$1250			$1300			$1350			$1400			$1450
EPS
Component
$.79	No Payout				25	%		38	%		50	%		63	%		75	%		88	%		100	%
$.80		38	%		63	%		75	%		88	%		100	%		113	%		125	%		138	%
$.85		50	%		75	%		88	%		100	%		113	%		125	%		138	%		150	%
$.90		63	%		88	%		100	%		113	%		125	%		138	%		150	%		163	%
$.95		75	%		100	%		113	%		125	%		138	%		150	%		163	%		175	%
$1.00		88	%		113	%		125	%		138	%		150	%		163	%		175	%		188	%
$1.05		100	%		125	%		138	%		150	%		163	%		175	%		188	%		200	%

Notes: Mathematical extrapolation shall be used for actual results not shown in the table.
Target Award is Bolded 100% and Maximum Award is Bolded 200%

III.

ANNUAL AWARD FORMULA

3.1

Officers’ Annual Awards . Annual Awards for each eligible Officer will be based upon a standard award percentage of the Officer’s Base Salary for the Performance

Year. 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 Officer’s Annual Award shall be computed according to the annual award formula set forth in Section 3.2.


	Salary		Std Award as a
Position	Grade		% of Base Salary

President & CEO		E-9		65	% ¹
President, Subsidiary — Ex Vice Pres		E-7		55	% ²
President, Subsidiary — Ex Vice Pres		E-6		50	%
Senior Vice President		E-5		45	%
Vice President		E-4		40	%
Vice President		E-3		35	%

3.2

Annual Awards for Officers will be calculated and made as follows:

Individual Award = Base Salary times
Standard Award % times Performance Factor %

In addition, each Annual Award for Officers of Consumers Energy Company will 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 pays out an award for the same Performance Year, then there is no modification of awards under this plan. If however, there is no award under the Consumers Energy Annual Employee Incentive Compensation Plan, then whatever Annual Award, if any, earned under this plan will be reduced by 25%.

IV.

PAYMENT OF ANNUAL AWARDS

4.1

Cash Annual Award . All Annual Awards for a Performance Year will be paid in cash after certification by the outside auditors of the Company that the performance goals have been satisfied, but not later than March 15 ^th of the calendar year following the Performance Year provided that the Annual Award for a particular Performance Year has not been deferred voluntarily pursuant to Section 4.2. The amounts required by law to be withheld for

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