Nicor Gas Company
Form 10-K
NICOR GAS ANNUAL INCENTIVE
COMPENSATION PLAN FOR OFFICERS
Nicor Gas (the
“Company”) has established the Nicor Gas Annual
Incentive Compensation Plan for Officers (the “Plan”)
to link participant incentive compensation to the accomplishment of
corporate and operating unit financial performance as well as to
non-financial measures of operating performance across the Company
and operating units. It ties the pay an individual
receives to Company performance and non-financial
goals. This plan is intended to provide a framework for
a performance-based bonus program for Nicor Gas, and is effective
January 1, 2008.
The purpose of
this Plan is to provide meaningful annual incentive award
opportunity to the participants. Awards will be directly
tied to the achievement of corporate financial and operating goals
and non-financial objectives. The Plan has been
structured to encourage teamwork among business units and encourage
the achievement of both shareholder and ratepayer oriented
goals.
Officers of
Nicor Gas in Salary Bands 1 or higher are eligible for
participation. As such, participation is limited to
employees in positions which enable them to make significant
contributions to the performance and growth of the
Company.
Compensation Objective
Base Salary +
Bonus Target = Short-Term Compensation Objective
An individual's
short-term compensation objective will be based on salary plus a
bonus, expected to be earned if established performance targets are
met. Short-term compensation above (or below) target
levels may be paid in the event performance exceeds (or falls short
of) goals.
Standards for
base salaries will be targeted to the 50 th percentile of the appropriate industry survey
data. Base salaries are reviewed annually by the
Compensation Committee of the Board of Directors (the
“Compensation Committee”).
Bonus Targets
The bonus
target amount varies according to pay, job responsibilities and
ability to impact the organization and is consistent with the bonus
opportunity ranges set by officer salary bands. Higher
responsibility and impact levels result in greater dollars at
risk.
Performance
criteria focus on the achievement of established and documented
strategic goals. Performance targets may include
measures of corporate financial and operating performance, defined
group objectives or individual performance
objectives. Each particular
performance target will be assigned weighting reflected as a
percentage of bonus target.
Goal Setting Guidelines
The most
important aspect of this Plan will be the establishment of
effective goals. In addition to measures of corporate
financial and operating performance, other non-financial measures
of performance will also be established. The goals
should be realistic and measurable wherever possible by
quantifiable performance criteria. It is recognized that
measurement of some goals will require subjective assessments of
performance. Goals must be consistent with the
longer-term strategic plan.
A set of
guidelines will be devised by the Nicor Human Resources Department
to aid in this process. These guidelines will provide
direction as to the formulation and reporting of non-financial
goals.
Amount of bonus
payment for financial/budget related goals can vary above and below
target based upon results achieved. For targets met,
bonus amount will be 100% of bonus target. When targets
are exceeded or are not reached, bonus will be proportionately more
or less than the target.
The
Compensation Committee may make appropriate upward or downward
adjustments if, after taking into consideration all of the facts
and circumstances of the performance period, it determines that
adjustmen
