Exhibit 10.4
LACLEDE GAS COMPANY
Incentive Compensation Plan II
(Effective as of January 1, 2005)
I. Establishment
and Purposes
In order to give officers and managerial
employees of the Company an increased incentive to outstanding
performance, to reward such performance, and to attract and retain
highly qualified persons as officers and for managerial positions,
there was established the Laclede Gas Company Incentive
Compensation Plan, which amounts earned and vested thereunder as of
December 31, 2004 are not subject to Section 409A of the Internal
Revenue Code of 1986, as amended (the “Code”)
(“Plan I”). As a result of the
enactment of Code Section 409A, the Company adopted as of the
effective date hereof this Laclede Gas Company Incentive
Compensation Plan II (“Plan II”), which governs
benefits earned and vested on January 1, 2005 and
thereafter. Effective as of January 1, 2005, no
additional Share Units shall be awarded under Plan
I. Unless otherwise stated, all references herein to the
“Plan” shall mean this “Plan II.”
II. Definitions
The following terms, as used in the Plan,
shall have the meaning set forth below:
“Company” -- The Laclede Gas Company
“Employee” -- an officer or managerial employee of the
Company.
“Laclede” -- The Laclede Group, Inc.
“Share
Unit” -- an incentive compensation unit. No stock
certificate will be issued for a Share Unit. No voting
power resides in a Share Unit.
“Dividend
Equivalent” -- an amount in cash equivalent to the cash
dividend paid on each share of Laclede’s common stock.
“Aggregate
Annual Dividend Equivalent” -- an amount computed, at the
time of the award of a Share Unit, at the then current annual cash
dividend rate on Laclede’s common stock.
“Awardee” -- an Employee awarded a Share Unit.
“Spouse” -- a spouse is that person who on the date of
the Awardee’s death is lawfully married to the Awardee.
“Consolidated
Retained Earnings” -- consolidated retained earnings as
stated in Laclede’s annual report to stockholders for the
fiscal year next preceding the date of any calculation pursuant to
Section VI hereof.
“Consolidated
Earnings” -- consolidated earnings (or loss) applicable to
common stock as stated in Laclede’s annual report to
stockholders for the fiscal year next preceding the date of any
calculation hereunder, subject to any adjustments thereto pursuant
to Paragraph VI hereof.
“Disability” -- disability is when the Employee is
unable to engage in any substantial gainful activity by reason of
any 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; or the Employee is,
by reason of any 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, receiving income replacement benefits for a period of not
less than three months under an accident and health plan covering
employees of the Company, whether it be offered through the Company
or an affiliate of the Company.
“Deferred
Compensation” -- an amount, allocable to each Share Unit
outstanding at the end of a fiscal year, equal to the per common
share net increase, or decrease in Consolidated retained Earnings
for that fiscal year. However, no Deferred Compensation
Credits shall accrue on Share Units held by an Awardee after the
fiscal year in which his employment has terminated due to
Retirement, Disability, death or the election of the Awardee
following a hostile Change in Control.
“Change of
Control” -- When any person, as such term is used in Sections
13(d) and 14(d)(2) of the Securities Act of 1934, as amended,
becomes a beneficial owner, directly or indirectly, of
Laclede’s securities representing more than fifty percent
(50%) of the combined voting power of Laclede’s then
outstanding securities, or when any such person becomes a
beneficial owner, directly or indirectly, of at least thirty
percent (30%) and no more than fifty percent (50%) of such
securities and a majority of the outside members of Laclede’s
Board of Directors decides that a de facto Change in Control has
occurred. Change in Control approved by a majority of
the outside members of Laclede’s Board of Directors as
constituted immediately prior to the Change in Control is
hereinafter referred to as a friendly Change in Control and a
Change in Control not approved by a majority of the outside members
of Laclede’s Board of Directors as constituted immediately
prior to the Change in Control is heretofore and hereinafter
referred to as a hostile Change in Control.
“Retirement” -- the Awardee’s termination of
employment with the Company on or after the attainment of age
55.
III. Eligibility
No Awardee whose employment with the Company
shall be terminated other than by Retirement, Disability, death or
at his election following a hostile Change in Control or who shall
engage in any business which is competitive with the public utility
business of the Company shall be eligible to receive any payments
under the Plan. All Deferred Compensation accrued prior
to such termination or such competitive activity shall be
forfeited. It is intended that the Plan constitute an
unfunded deferred compensation arrangement for the benefit of a
select group of management or highly compensated employees (and
other service providers) of the Company and its designated
subsidiaries and affiliates for purposes of the federal income tax
laws and the Employee Retirement Income Security Act of 1974, as
amended (“ERISA”) and all documents, agreements or
instruments made or given pursuant to the Plan shall be interpreted
so as to effect such intent.
IV. Administration
The Compensation Committee of Laclede’s
Board of Directors shall have authority to recommend to the Board
from time to time the award of Share Units to selected
Employees. Upon such recommendation, the Board of
Directors, exclusive of any Directors who are eligible to
participate in the Plan, may award Share Units to any or all such
Employees. The Board of Directors shall otherwise
administer the Plan in all respects, and any decision of the Board
with respect to any question arising as to the Employees selected
for awards, the amount and form of awards and interpretations of
the Plan shall be final, conclusive, and binding.
V. Payment
of Dividend Equivalents
When Laclede pays a cash dividend on its
common stock, it shall, subject to the provisions of Section III,
pay a Dividend Equivalent to each Awardee for each Share Unit held
on the date of such payment. Dividend Equivalents will
be paid to each Awardee until his death. Upon the death of an
Awardee leaving a Spouse surviving, Dividend Equivalents shall be
paid to such Spouse for life, after which no such Dividend
Equivalents shall be payable with respect to such Awardee.
Notwithstanding the provisions of the final
two sentences of the immediately preceding unnumbered paragraph of
this Section V, with respect to awards that are made on or after
January 1, 2005 or that were made prior to such date but are
unvested as of such date, an Awardee who separates from service on
account of his or her Retirement before attaining the age of 65
years (other than by reason of death or Disability, or following a
hostile Change of Control) shall not be entitled to post-Retirement
Dividend Equivalents payable at any time after such Awardee’s
Retirement, unless the Awardee
remains employed by the Company for at least
the following respective periods (based on the Awardee’s age
at the date of the award of the Share Units in question) subsequent
to the date upon which the Share Units are awarded:
|
|
|
Number of Years of Service
|
|
|
|
|
|
|
|
2
years
|
t
least 55, but less than 61
|
|
4
years
|
|
|
|
5
years
|
VI. Calculation
and Payment of Deferred Compensation
Each year, the Company shall, subject to the
provisions of Section III, credit or debit the applicable Deferred
Compensation amount to each Awardee for each Share Unit held during
such year; provided that with regard to Share Units that are made
on or after January 1, 2005 or that were made prior to such date
but are unvested as of such date, the Deferred Compensation amount
reflecting the change in Consolidated Retained Earnings for the
first fiscal year taken into account in computing the Deferred
Compensation amount shall in no event be less than
zero. The calculation of Deferred Compensation shall be
subject to the power of Laclede’s Board of Directors from
time to time to (i) adjust the amount of Consolidated Retained
Earnings to reflect events or transactions which have a significant
relation to the efforts and performance of any or all Awardees, or
(ii) exclude from the computation of Consolidated Retained Earnings
all or any portion of Consolidated Earnings deemed to reflect
events or transactions (including the effect of weather conditions)
which have no significant relation to the efforts and performance
of any or all Awardees. The aggregate of the annual
Deferred Compensation amounts, if any, credited to an Awardee shall
accrue interest at a rate equal to the prime rate charged by US
Bank National Association at the time such interest accrues (or
such other reasonable rate as the Board of Directors determines),
but only from and not before the date of Retirement, Disability,
death or the election of the Awardee to terminate employment
following a hostile Change in Control, and shall be payable in ten
equal annual installments to the Awardee or, if he dies before all
such payments have been made, to his surviving beneficiaries
designated in writing, and filed with the Company, or if
