MGE
ENERGY, INC.
______________________________________________________________________
2006 PERFORMANCE
UNIT PLAN
______________________________________________________________________
1.
Purpose
The
purpose of the 2006 Performance Unit Plan of MGE Energy, Inc. and
its subsidiaries and affiliates (the “ Company
”) is to attract, retain and motivate key employees by
providing those employees incentives and reward for performance at
the Company. Capitalized terms not defined herein shall have
the meanings ascribed to them in Section 2 below.
2.
Definitions
The
following terms used in the Plan shall have the meanings set forth
below:
“
Administrator ” means the person or persons, if
any, to whom the Committee has delegated authority to administer
the Plan.
“
Award
”
means
an award of Performance Units made to a Participant.
“
Award
Agreement ”
means
a written agreement setting forth the terms and conditions of the
Award made under the Plan.
“
Board
”
means
the Company’s Board of Directors.
“Cause”
means
“cause” as defined in the Participant’s
employment agreement, or in the absence of such definition, shall
mean Participant’s: (i) continued failure to obey
reasonable instructions of the person(s) to whom the Participant
reports; (ii) continued neglect of duties and responsibilities;
(iii) willful misconduct or other actions in bad faith which are to
the Company’s detriment; (iv) breach of any material covenant
with the Company by which employee is bound, including without
limitation any confidentiality, intellectual property or
non-solicitation agreements with the Company (including without
limitation the provisions contained herein), or (v) violation of
any provision of the Company’s written code of conduct.
“Committee”
means
the Compensation Committee appointed by the Board to administer the
Plan pursuant to the provisions of Section 3 of the Plan.
“Disability”
means
the definition of Disability in the Company’s Long–Term
Disability Plan, or in the absence of such a definition, the
Participant’s inability, due to mental or physical
incapacity, to substantially perform the duties of
Participant’s employment for 180 consecutive days, and which
impairment is determined to be total
and
permanent by a physician selected by Company or its insurers and
reasonably acceptable to the Participant or the Participant’s
legal representative.
"
Dividend Equivalent " means a right, granted under this
Plan, to receive the cash equivalent of all or a specified portion
of the dividends declared and paid with respect to one share of the
Company’s Stock during the Vesting Period which applies to an
award of Performance Units. Dividend Equivalents shall not be
deemed reinvested in the Company’s Stock, and shall be paid
to Participants on the appropriate Settlement Date.
"
Fair Market Value " means the fair market value of Stock as
determined in good faith by the Committee or under procedures
established by the Committee. Unless otherwise determined by
the Committee, the Fair Market Value of Stock shall be the
officially-quoted closing selling price of the stock or if no
selling price is quoted the bid price on the NASDAQ or other
principal stock exchange or market on which Stock is traded on the
day immediately preceding the day as of which such value is being
determined or, if there is no sale on that day, then on the last
previous day on which a sale was reported.
“ Grant
Date ” means the date upon which an award of Performance
Units are granted to a Participant.
“Performance
Period” means any relevant
period designated by the Committee with respect to any
Award.
“
Performance Unit ” or “ Unit ”
means a right granted to Participant to receive a cash settlement
equal to the Unit Value, as determined by the Committee.
"Plan"
means
this MGE 2006 Performance Unit Plan.
“Retirement”
means
any normal (or approved early retirement) by a Participant pursuant
to the terms of any pension, profit sharing or 401(k) plan, or
Company policy applicable to a Participant on the Termination
Date.
“
Settlement Date” means the date upon which cash is
paid to a Participant in full settlement of vested Performance
Units for which the relevant Vesting Period has been completed.
The Committee shall use reasonable efforts to ensure that the
Settlement Date occurs within a reasonable time period following
the completion of the relevant Vesting Period.
"
Stock " means the Company's common stock, par value $1.00
per share as traded on the NASDAQ or other principal stock exchange
or market on which Stock is traded.
“Termination
Date” means, with
respect to a Participant, the final date of Participant’s
employment with the Company.
“ Unit
Value ” means, as calculated on the Measurement Date, the
sum of (i) the Fair Market Value of the Company’s Stock, plus
(ii) an amount equal to the aggregate value of all Dividend
Equivalents declared on the Stock during the relevant Vesting
Period.
2
“ Vesting
Period ” means the duration of time over which a
Performance Award becomes 100% vested.
3.
Administration
3.1
Committee
Authority . Unless
otherwise determined by the Board and subject to the provisions of
the Plan, the Committee and the Administrator (subject to the
Committee’s ability to restrict the Administrator) shall have
the authority and full discretionary power to: (i) establish
eligible Participants, and make Awards; (ii) determine the size of
Awards as specified herein; (iii) administer, construe and
interpret the Plan; (iv) prescribe, amend and rescind rules and
regulations, agreements, terms, and notices hereunder (but not
unilateral modifications to existing awards without
Participant’s written consent); and (v) make all other
determinations necessary or advisable in its discretion for the
administration of the Plan. Any actions of the Committee with
respect to the Plan shall be conclusive and binding upon all
persons interested in the Plan. The Committee and Administrator may
each appoint agents and delegate authority as advisable to
administer the Plan.
3.2
Administrator
.
An Administrator may be appointed by, shall remain in office
at the will of, and may be removed with or without reason by, the
Committee. The Administrator may resign at any time.
The Administrator shall not be entitled to act on or decide
any matter relating solely to himself or herself or any of his or
her rights or benefits under the Plan. The Administrator
shall not receive any special compensation for serving in his or
her capacity as Administrator but shall be reimbursed for any
reasonable expenses incurred in connection therewith. No bond
or other security need be required of the Administrator in any
jurisdiction.
3.3
Limitation of
Liability . In the
exercise of authority under the Plan, each Committee member (or
Administrator) shall be entitled in good faith to rely or act upon
any report or other information furnished to him or her by any
employee of the Company, the Company’s independent certified
public accountants, or any executive compensation consultant, legal
counsel, or other professional retained by the Company to assist in
the administration of the Plan. No Committee member,
Administrator, or executive shall be personally liable to the
Company or to any participant in the Plan for any action,
determination, or interpretation taken or made in good faith with
respect to the administration of this Plan, and each such person
shall be fully indemnified and the Company and the participants in
the Plan waive their rights with respect to any such
liability.
3
4.
Participation
Participants must
be Company employees to be eligible to participate in the Plan
(“ Participants ”). The Committee shall
have sole discretion to designate eligible employees who may
participate in the Plan, which shall be determined based on a
Participant’s performance against goals established by the
Committee and the CEO for the immediately preceding year.
Participation in this Plan in one Performance Period neither
guarantees nor precludes participation in any subsequent
Performance Period.
5.
Performance
Awards
5.1
General
.
Awards may be
granted on the terms and conditions set forth in this Section 5.
In addition, the Committee may impose on any Award or the
exercise thereof, at the date of grant or thereafter, such
additional terms and conditions, not inconsistent with the
provisions of the Plan, as the Committee shall determine, including
terms requiring forfeiture of Awards in the event of termination of
employment or service by the Participant and terms permitting a
Participant to make elections relating to his or her Award.
The Committee shall retain full power and discretion with
respect to any term or condition of an Award that is not mandatory
under the Plan. The Committee shall require the payment of
lawful consider
