STATEMENT OF COMPENSATION OF THE BOARD OF DIRECTORS

Exhibit 10.16

STATEMENT OF

COMPENSATION OF THE BOARD OF DIRECTORS

Effective January 1, 2004, Wisconsin Energy Corporation’s (WEC or the Company) Board of Directors approved a change in director compensation practices in order to align WEC’s director compensation with director compensation practices at WEC’s peer companies and to reflect emerging governance and compensation trends with regard to equity compensation. In addition, the Board adopted stock ownership guidelines to further align the Board’s interests with stockholders. Under these guidelines, directors are generally expected, over time (generally within five years of commencement of Board service), to acquire and hold WEC common stock with a fair market value equal to five times the director’s annual retainer.

During 2004, each non-employee director received an annual retainer fee of $36,000 paid in cash. Non-employee chairs of Board committees received a quarterly retainer of $1,250. Non-employee directors received a fee of $1,500 for each Board or committee meeting attended. In addition, each non-employee director received a per diem fee of $1,250 for travel on Company business for each day on which a Board or committee meeting was not also held, and the Company reimbursed non-employee directors for all out-of-pocket travel expenses (including the travel expenses of spouses if they were specifically invited to attend the event and approved in advance by the Chairman of the Board). Non-employee directors were