Exhibit 10
DOMINION RESOURCES,
INC.
2005 INCENTIVE COMPENSATION
PLAN
Originally Effective May 1,
2005
As Amended and Restated Effective
May 5, 2009
1.
Purpose. To support a pay-for-performance
compensation program, this Dominion Resources, Inc. 2005 Incentive
Compensation Plan (the “Plan”) is the primary component
that ties compensation to the long-term performance of Dominion
Resources, Inc. The Plan seeks to further the long-term
stability and financial success of Dominion Resources, Inc. by
attracting and retaining employees through the use of cash and
stock incentives; rewarding employees for the achievement of
certain performance goals that may be attached to the incentives;
and further aligning the interests of employees with those of
Dominion Resources, Inc. shareholders.
2. Definitions. As
used in the Plan, the following terms have the meanings
indicated:
(a) ‘‘Act’’
means the Securities Exchange Act of 1934, as amended.
(b) ‘‘Applicable
Withholding Taxes’’ means the aggregate amount of
federal, state and local income and payroll taxes that an Employer
is required to withhold in connection with any Performance Grant,
any lapse of restrictions on Restricted Stock, dividends paid on
Restricted Stock, any grant of Goal-Based Stock, or any exercise of
a Nonstatutory Stock Option or Stock Appreciation Right.
(c) ‘‘Beneficiary’’
means the individual, individuals, entity, entities or the estate
of a Participant entitled to receive the amounts payable under an
Incentive Award, if any, upon the Participant's death
(d) ‘‘Change
of Control’’ means the occurrence of any of the
following events:
(i) any
person, including a ‘‘group’’ as defined in
Section 13(d)(3) of the Act becomes the owner or beneficial owner
of Dominion securities having 20% or more of the combined voting
power of the then outstanding Dominion securities that may be cast
for the election of Dominion’s directors (other than as a
result of an issuance of securities initiated by Dominion, or open
market purchases approved by the Dominion Board, as long as the
majority of the Dominion Board approving the purchases is also the
majority at the time the purchases are made);
(ii) as
the direct or indirect result of, or in connection with, a cash
tender or exchange offer, a merger or other business combination, a
sale of assets, a contested election, or any combination of these
transactions, the persons who were directors of Dominion before the
transactions cease to constitute a majority of the Dominion Board,
or any successor’s board, within two years of the last of the
transactions; or
(iii) with
respect to a particular Participant, an event occurs with respect
to the Employer that employs that Participant such that, after the
event, the Employer is no longer a Dominion Company.
(e) ‘‘Code’’
means the Internal Revenue Code of 1986, as amended.
(f) ‘‘Committee’’
means the Compensation, Governance and Nominating Committee of the
Dominion Board (or any successor Board committee designated by the
Board to administer this plan), provided that, if any member of the
Compensation, Governance and Nominating Committee does not qualify
as both an outside director for purposes of Code section 162(m) and
a non-employee director for purposes of Rule 16b-3, the remaining
members of the committee (but not less than two members) shall be
constituted as a subcommittee to act as the Committee for purposes
of the Plan.
(g) ‘‘Company
Stock’’ means common stock of Dominion. In
the event of a change in the capital structure of Dominion (as
provided in Section 15), the shares resulting from the change shall
be deemed to be Company Stock within the meaning of the
Plan.
(h) ‘‘Date
of Grant’’ means (i) with respect to an Option or Stock
Appreciation Right, the date on which the Committee completes the
corporate action necessary to create an offer of stock for sale to
a Participant under the terms and conditions of, or to create a
legally binding right constituting, the Option or Stock
Appreciation Right; and (ii) with respect to an Incentive Award
other than an Option or Stock Appreciation Right, the date on which
the Committee grants the Incentive Award. With respect
to any Incentive Award, the Committee may specify a future date on
which the Incentive Award is to be granted or become
effective.
(i) ‘‘Disability’’
or ‘‘Disabled’’ means, as to an Incentive
Stock Option, a Disability within the meaning of Code section
22(e)(3). With respect to an Incentive Award
that provides for a deferral of compensation within the meaning of
Code section 409A and that is payable under its terms on a
Participant’s Disability, Disability shall mean having
received long-term disability benefits under the
Corporation’s long-term disability plan (or successor
thereto) for a period of 3 consecutive months by reason of a
medically determinable physical or mental impairment that can be
expected to result in death or can be expected to last for a
continuous period of not less than 12 months. As to all
other Incentive Awards, the Committee shall determine whether a
Disability exists and the determination shall be
conclusive.
(j) ‘‘Dominion
Company’’ means any corporation in which Dominion owns
stock possessing at least 50% of the combined voting power of all
classes of stock or which is in a chain of corporations with
Dominion in which stock possessing at least 50% of the combined
voting power of all classes of stock is owned by one or more other
corporations in the chain.
(k) ‘‘Dominion’’
means Dominion Resources, Inc.
(l) ‘‘Dominion
Board’’ means the Board of Directors of Dominion
Resources, Inc.
(m) ‘‘Employer’’
means, with respect to a Participant, Dominion or the Dominion
Company that employs the Participant.
(n) ‘‘Fair
Market Value’’ means the closing price of a share of
Company Stock, as reported in the Wall Street Journal or other
financial reporting service selected by the Company, as of the last
day on which Company Stock is traded preceding the Date of Grant or
preceding any other date for which the value of Company Stock must
be determined under the Plan.
(o) ‘‘Goal-Based
Stock’’ means Company Stock awarded when performance
goals are achieved pursuant to an award as provided in Section
8.
(p) ‘‘Incentive
Award’’ means, collectively, a Performance Grant or the
award of Restricted Stock, Goal-Based Stock, Option or Stock
Appreciation Right under the Plan.
(q) ‘‘Incentive
Stock Option’’ means an Option intended to meet the
requirements of, and qualify for favorable federal income tax
treatment under, Code section 422.
(r) ‘‘Mature
Shares’’ means shares of Company Stock for which the
holder thereof has good title, free and clear of all liens and
encumbrances and which the holder has held for at least six
months.
(s)
‘‘Nonstatutory Stock Option’’ means an
Option that does not meet the requirements of Code section 422, or,
even if meeting the requirements of Code section 422, is not
intended to be an Incentive Stock Option and is so
designated.
(t) ‘‘Option’’
means a right to purchase Company Stock granted under the Plan, at
a price determined in accordance with the Plan.
(u) ‘‘Participant’’
means any employee of Dominion or a Dominion Company who receives
an Incentive Award under the Plan.
(v) ‘‘Performance
Criteria’’ means the performance of Dominion or any
subsidiary, division, business unit or individual using one of the
following measures, either on an operating or GAAP basis where
applicable, and including measuring the performance of any of the
following relative to a defined peer group of companies: total
shareholder return; book value (including on a per share basis);
return on capital (including invested capital); environmental
considerations; safety; reliability; customer earnings (including
on a per share basis); earnings growth rate (including on a per
share basis); profitability; return on equity; cash flow, including
free cash flow; cost savings under the Six Sigma discipline, or
other cost savings or process improvement goals; and capital
expenditures.
(w) ‘‘Performance
Goal’’ means an objectively determinable performance
goal established by the Committee with respect to a given
Performance Grant or grant of Restricted Stock that relates to one
or more Performance Criteria.
(x) ‘‘Performance
Grant’’ means an Incentive Award made pursuant to
Section 6.
(y) ‘‘Plan
Year’’ means January 1 to December 31.
(z) “Qualifying
Change of Control” means an event which meets the
requirements for a Change of Control (as defined in Section 2(d)
above) and which, in addition, constitutes either a change in
ownership of Dominion (as described in paragraph (i)), a change in
effective control of Dominion (as described in paragraph (ii), or,
with respect to an individual Participant, a change in ownership of
the Participant’s Employer (as described in paragraph
(iii)):
(i) Any
person or more than one person acting as a group acquires
beneficial ownership of Company Stock that, together with the
Company Stock already held by such person or group, represents more
than 50 percent of the total voting power of Company Stock;
provided, however, that if any one person or more than one person
acting as a group is considered to own more than 50 percent of the
total fair market value or total voting power of Company Stock, the
acquisition of additional Company Stock by the same person or
persons is not considered to cause a change in the ownership of
Dominion for purposes of this paragraph (i);
(ii) Any
person or more than one person acting as a group acquires (or has
acquired during the twelve-consecutive-month period ending on the
date of the most recent acquisition by such person or persons)
beneficial ownership of Company Stock possessing 30 percent or more
of the total voting power of Company Stock; or (2) a majority of
members of the Board is replaced during a twelve-consecutive-month
period by directors whose appointment or election is not endorsed
by a majority of the members of the Board before the date of the
appointment or election; provided, however, that if any one person
or more than one person acting as a group is considered to
effectively control Dominion for purposes of this paragraph (ii),
the acquisition of additional Company Stock by the same person or
persons is not considered to cause a change in the effective
control for purposes of this paragraph (ii); or
(iii) Any
person or more than one person acting as a group acquires
beneficial ownership of stock of the Employer that, together with
the Employer stock already held by such person or group, represents
more than 50 percent of the total voting power of the Employer
stock; provided, however, that if any one person or more than one
person acting as a group is considered to own more than 50 percent
of the total fair market value or total voting power of the
Employer stock, the acquisition of additional Employer stock by the
same person or persons is not considered to cause a change in the
ownership of the Employer for purposes of this paragraph
(iii).
For purposes of
this Section 2(z), the term “group” shall have the
meaning provided in U.S. Treasury Regulation 1.409A-3(i)(5)(v)(B),
(vi)(D) or (vii)(C), as applicable. The term
“beneficial ownership” shall have the meaning provided
in U.S. Treasury Regulation
1.409A-3(i)(5)(v)(iii). Notwithstanding anything in this
Section 2(z) to the contrary, an event which does not constitute a
change in the ownership or a change in the effective control of
Dominion or, with respect to an individual Participant, a change in
the ownership of the Participant’s Employer, each as defined
in U.S. Treasury Regulation 1.409A-3(i)(5), shall not constitute a
Qualifying Change of Control for purposes of this Plan.
(aa) ‘‘Restricted
Stock’’ means Company Stock awarded upon the terms and
subject to the restrictions set forth in Section 7.
(bb) ‘‘Rule
16b-3’’ means Rule 16b-3 of the Securities and Exchange
Commission promulgated under the Act. A reference in the
Plan to Rule 16b-3 shall include a reference to any corresponding
rule (or number redesignation) of any amendments to Rule 16b-3
enacted after the effective date of the Plan’s
adoption.
(cc) “Separation
from Service” means a Participant’s termination of
employment (within the meaning of U.S. Treasury Regulation
1.409A-1(h), applying the default terms thereof) with the
Participant’s Employer and all other persons that would be
treated as a single employer with the Participant’s Employer
under Code sections 414(b) or (c); provided that, in applying Code
sections 1563(a)(1), (2) and (3) for purposes of determining a
controlled group of corporations, or in applying U.S. Treasury
Regulation 1.414(c)-2 for purposes of determining trades or
businesses under common control, the phrase “at least
50%” shall replace the phrase “at least 80%” each
time it appears in those sections.
(dd) “Stock
Appreciation Right” or “SAR” means a right to
receive Company Stock or cash from the Company granted under
Section 10.
(ee) ‘‘Taxable
Year’’ means the fiscal period used by Dominion for
reporting taxes on income under the Code.
3.
General. The following types of Incentive
Awards may be granted under the Plan: Performance Grants,
Restricted Stock, Goal-Based Stock, Options, or Stock Appreciation
Rights. Options granted under the Plan may be Incentive
Stock Options or Nonstatutory Stock Options.
4.
Stock .
(a) Subject
to Section 15 of the Plan, there shall be reserved for issuance
under the Plan an aggregate of thirty-six million (36,000,000)
shares of Company Stock, which shall be authorized but unissued
shares. All of the shares of Company Stock that may be
issued under this Plan may be issued upon the exercise of Options
that qualify as Incentive Stock Options. No more than
eighteen million (18,000,000) shares may be issued as Restricted
Stock, Goal-Based Stock or Performance Grants, provided that any
shares of Restricted Stock, Goal-Based Stock or shares that are
issuable under Performance Grants that are forfeited shall not
count against this limit. No more than three million six
hundred thousand (3,600,000) shares may be allocated to the
Incentive Awards, including the maximum amounts payable under a
Performance Grant, that are granted to any individual Participant
during any single Taxable Year.
(b) Shares
allocable to Options, Restricted Stock or portions thereof granted
under the Plan that expire, are forfeited, or otherwise terminate
unexercised may again be subjected to an Incentive Award under the
Plan. The Committee is expressly authorized to make an
Incentive Award to a Participant conditioned upon the surrender for
cancellation of an Option granted under an existing Incentive
Award, provided that, without prior shareholder approval, the
Committee is expressly prohibited from repricing an Option or SAR
if the exercise price of the new Option or SAR would be less than
the exercise price of the Option or SAR under the existing
Incentive Award surrendered for cancellation. Any shares
of Company Stock tendered or exchanged by a Participant as full or
partial payment to the Company of the exercise price under an
Option or SAR and any shares retained or withheld by the Employer
in satisfaction of an Employee’s obligations to pay
Applicable Withholding Taxes with respect to any Incentive Award
shall not be available for issuance, subjected to new awards or
otherwise used to increase the share reserve under the Plan. The
cash proceeds from Option or SAR exercises shall not be used to
repurchase shares on the open market for reuse under the
Plan. Reload Options issued on the exercise of an Option
or otherwise are expressly prohibited.
(c) Since
the original approval of the Plan by shareholders at the 2005
Annual Meeting of shareholders of Dominion, no additional grants of
incentive awards have been made under the Dominion Resources, Inc.
Incentive Compensation Plan or under the Dominion Resources, Inc.
Leadership Stock Option Plan for Salaried Employees, and no
additional grants of incentive awards may be made under such plans
in the future. At that time, all outstanding obligations
under the Dominion Resources, Inc. Incentive Compensation Plan for
payments of Company Stock, including Company Stock from reinvested
dividends, related to the Dominion Resources, Inc.
Executives’ Deferred Compensation Plan were assumed by the
Plan and were treated for purposes of Section 4(a) based on the
nature of the original award.
5.
Eligibility .
(a) All
present and future employees of Dominion or a Dominion Company
(whether now existing or hereafter created or acquired) whom the
Committee determines to have contributed or who can be expected to
contribute significantly to Dominion or a Dominion Company shall be
eligible to receive Incentive Awards under the Plan. The
Committee shall have the power and complete discretion, as provided
in Section 16, to select eligible employees to receive Incentive
Awards and to determine for each employee the nature of the award
and the terms and conditions of each Incentive Award.
(b) The
grant of an Incentive Award shall not obligate an Employer to pay
an employee any particular amount of remuneration, to continue the
employment of the employee after the grant or to make further
grants to the employee at any time thereafter.
6.
Performance Grants .
(a) Each
Performance Grant shall contain the Performance Goals for the
award, including the Performance Criteria, the target and maximum
amounts payable and any other terms and conditions as are
applicable to the Performance Grant. The terms of a
Performance Grant may be set in an annual bonus plan or other
similar document. Each Performance Grant shall be
granted and administered to comply with the requirements of Code
section 162(m). The aggregate maximum cash amount
payable under the Plan to any Participant in any Plan Year shall
not exceed 0.5% of Dominion’s consolidated operating income,
before taxes and interest, as reported on its annual financial
statements for the prior Plan Year. In the event of any
conflict between a Performance Grant and the Plan, the terms of the
Plan shall govern.
(b) The
Committee shall establish the Performance Goals for Performance
Grants. The Committee shall determine the extent to
which any Performance Criteria shall be used and weighted in
determining Performance Grants. The Committee may vary
the Performance Criteria, Performance Goals and weightings from
Participant to Participant, Performance Grant to Performance Grant
and Plan Year to Plan Year. The Committee may increase,
but not decrease, any Performance Goal during a Plan
Year.
(c) The
Committee shall establish for each Performance Grant the amount of
cash or Company Stock payable at specified levels of performance,
based on the Performance Goal for each Performance
Criteria. Any Performance Grant shall be made not later
than 90 days after the start of the period for which the
Performance Grant relates and shall be made prior to the completion
of 25% of the period. All determinations regarding the
achievement of any Performance Goals will be made by the
Committee. The Committee may not increase during a Plan
Year the amount of cash or Common Stock that would otherwise be
payable upon achievement of the Performance Goal or Goals but may
reduce or eliminate the payments as provided in a Performance
Grant.
(d) The
actual payments to a Participant under a Performance Grant will be
calculated by applying the achievement of a Performance Criteria to
the Performance Goal as established in the Performance
Grant. All calculations of actual payments shall be made
by the Committee and the Committee shall certify in writing the
extent, if any, to which the Performance Goals have been
met.
(e) Performance
Grants will be paid in cash, Company Stock or both, at the time or
times as are provided in the Performance Grant. A
Performance Grant payable in cash may allow a Participant to elect
to receive a payment in Company Stock that has a greater Fair
Market Value than the cash award, and the Performance Grant may
impose restrictions on the Company Stock issued under the
election.
(f) Nothing
contained in the Plan will be deemed in any way to limit or
restrict any Employer or the Committee from making any award or
payment to any person under any other plan, arrangement or
understanding, whether now existing or hereafter in
effect.
(g) A
Participant who receives a Performance Grant payable in Company
Stock shall have no rights as a shareholder until the Company Stock
is issued pursuant to the terms of the Performance
Grant. The Company Stock may be issued without cash
consideration.
(h) A
Participant’s interest in a Performance Grant may not be
sold, assigned, transferred, pledged, hypothecated, or otherwise
encumbered.
(i) Whenever
payments under a Performance Grant are to be made in cash, the
Employer will withhold therefrom an amount sufficient to satisfy
any Applicable Withholding Taxes. Each Participant shall
agree as a condition of receiving a Performance Grant payable in
the form of Company Stock, to pay to the Employer, or make
arrangements satisfactory to the Employer regarding the payment to
the Employer of, Applicable Withholding Taxes. Until the
amount has been paid or arrangements satisfactory to the Employer
have been made, no stock certificate shall be issued to the
Participant. As an alternative to making a cash payment
to the Employer to satisfy Applicable Withholding Taxes, if the
Performance Grant so provides, the Partici
