Pepco Holdings,
Inc.
Annual Executive Incentive
Compensation Plan
Plan Document
Pepco Holdings,
Inc. ("PHI"; the "Company"), pursuant to authority granted by its
Board of Directors, hereby establishes and adopts the PHI Executive
Incentive Compensation Plan (the "Plan").
1.
Purpose of the Plan . The PHI Annual Executive Incentive
Compensation Plan is a cash-based incentive program designed to
accomplish the following objectives:
|
|
|
Link annual
corporate and business priorities and group performance
goals.
|
|
|
|
Reinforce a
high performance culture tying rewards to measurable
accountabilities and achievement.
|
|
|
|
Recognize and
reward individual performance and differentiate award levels based
on absolute and relative contributions.
|
|
|
|
Provide a
variable award opportunity as part of total compensation that
enables the Company to attract, retain and motivate key
executives.
|
2.
Definitions. The following terms where used in this Plan,
shall have the meanings set forth below:
|
|
"Award" shall
mean an incentive payment made in accordance with the terms of this
Plan.
|
"Board of
Directors" or "Board" shall mean the Board of Directors of the
Company.
"Business Unit"
shall mean a discrete segment of the Company which has a separate
incentive plan approved by the Committee.
"Chairman"
shall mean Chairman of the Board of Directors of the
Company.
"Compensation/Human Resources Committee" or
"Committee" shall mean the Compensation/Human Resources Committee
of the Board of Directors of the Company.
"Maximum Award
Opportunity" shall mean an amount established annually for each
Participant in the Plan which represents the maximum incentive
payment which may be given under the Plan to that Participant for
performance during the Plan Year.
"Participant"
shall mean an executive selected to participate in the
Plan.
"Performance
Goals" shall mean goals which are established for the purpose of
assisting the Chairman and the Committee in determining the amount,
if any, of Awards to be made for performance during a Plan year and
may include:
|
|
|
Annual
performance objectives for the Company as a whole ("Corporate
Performance Goals");
|
|
|
|
Business unit
performance objectives for the business units of the Company
("Business Unit Performance Goals"); and
|
|
|
|
Individual
performance goals for individual executives participating in the
Plan ("Individual Performance Goals").
|
"Plan Year"
shall mean a calendar year during which the Plan is in
effect.
"Target Award
Level" shall mean an amount established annually for each
Participant in the Plan which represents the incentive opportunity
which may be available to that Participant if all established
Corporate, Business Unit and Individual Performance Goals are met,
expressed as a percentage of base earnings, including deferred
compensation (other than deferred Awards under the
Plan).
3.
Plan Administration
|
|
|
The Plan shall
be administered in accordance with the terms of this Plan Document
by the Compensation/Human Resources Committee upon the
recommendations of the Chairman. All decisions of the Committee
shall be binding and conclusive on the Participants in the Plan,
and upon any party claiming an interest in the Plan through or on
behalf of a Participant or former Participant, or on any other
basis. Notwithstanding any other provision of the Plan, the
Committee shall have the discretion to adjust or eliminate awards
within any Participant's Maximum Award Opportunity. A Participant's
participation in the Plan shall not be deemed to create a
contractual relationship or any other form of obligation between
the Participant and the Company, and shall not establish
entitlement to any Award.
|
|
|
|
The Human
Resources/Compensation Committee, upon recommendation of the
Chairman, shall have the authority to do all such things as are
appropriate to ensure the proper administration of this Plan
according to its terms, including but not limited to:
|
(i) Approval
of the Participants in the Plan;
(ii) Approval
of Corporate Performance Goals;
(iii) Approval
of Business Unit Performance Goals;
|
|
|
Approval of (a)
Target Award Levels, (b) Maximum Award Opportunities, and (c)
allocation of the proportion of Awards to be based on Corporate,
Business Unit and Individual Goals;
|
|
|
|
Determination
of the Award, if any, that may be made to each Participant, such
determination to be reported to the Board at its next regularly
scheduled meeting after the determination is made; and
|
|
|
Establishment
of any policies, rules or regulations necessary for the proper
administration of the Plan.
|
|
|
|
Establishment
of any future service requirements which must be met as a condition
to the full vesting of an Award.
|
4.
Participation . Participants in the Plan for a Plan Year
shall be key executives of the Company, selected by the Chairman
and approved by the Compensation/Human Resources Committee. The
decision as to selection of participants shall normally be made for
a Plan Year prior to the beginning of that Plan Year. The Committee
may, however, upon the recommendation of the Chairman, add
additional participants during the Plan Year.
If a
Participant in the Plan retires, dies or becomes disabled prior to
the determination of Awards for a Plan Year, the Participant, or
his or her beneficiary, may be given an Award for that
Pla
