EXHIBIT 10.5
UIL HOLDINGS
CORPORATION
PERFORMANCE SHARE
AGREEMENT
FOR
TSR PERFORMANCE
SHARES
THIS
AWARD AGREEMENT (the
“Award Agreement”), made as of March 28, 2005, by and
between UIL HOLDINGS CORPORATION , a Connecticut
corporation, having its principal place of business in New Haven,
Connecticut (the “Company” or "UIL"), and
Richard J. Nicholas (the
“Executive”).
WHEREAS, the
Company has adopted the UIL Holdings Corporation CEO/CFO Long Term
Incentive Program (“CEO/CFO LTIP”), a copy of which is
annexed hereto, pursuant to the terms of the UIL Holdings
Corporation Senior Executive Incentive Compensation Plan (the
“SEICP”) and UIL Holdings Corporation 1999 Amended and
Restated Stock Plan (the “1999 Plan”);
WHEREAS,
pursuant to the terms of the CEO/CFO LTIP, the SEICP, and the 1999
Plan, the Compensation and Executive Development Committee of the
Company’s Board of Directors (the “CEDC”) has
granted to the Executive an Award of Performance Shares, payment of
which is linked to total shareholder return achieved through
December 31, 2006; and
WHEREAS, the
Company and the Executive wish to evidence the terms and conditions
governing the Performance Awards in this Award
Agreement;
NOW THEREFORE,
in consideration of the mutual covenants and promises hereinafter
set forth and for other good and valuable consideration, the
parties hereto mutually covenant and agree as follows:
1.
Grant of Performance
Shares . The CEDC hereby
makes a preliminary award to the Executive of 3,700 Performance
Shares ("Target Shares"), payment of which is dependent upon the
Company’s achievement, at 100% of ‘target’, of
certain Performance Goals more fully described in Section 2 of this
Award Agreement and under the terms of the CEO/CFO LTIP, with a
maximum Award of up to 7,400 Performance Shares possible based upon
the Company's achievement of the Performance Goals at or above the
designated maximum level. The actual number of Performance Shares
finally awarded to the Executive, if any, shall be determined by
the CEDC, in accordance with the terms and conditions of the
CEO/CFO LTIP, and its determination shall be conclusive and
binding.
2.
Performance Goals
. The final number of Performance
Shares to be awarded to the Executive (the “Final
Payout”), if any, under this Award Agreement shall be
determined based on the relative total shareholder return
percentile achieved by the Company as compared against an
established group of comparable companies selected by the CEDC (the
“Pre-Set TSR Goal”) for the period extending from
January 1, 2005 through December 31, 2006 (the “Performance
Period”). Achievement of the Pre-Set TSR Goal will authorize
the CEDC to award a maximum Final Payout at 135% of the Presumed
Payout specified in the following grid, but not in excess of 200%
of the target number of Performance Shares, with the minimum final
payout to be no less than 65% of the Presumed Payout set forth in
the following grid:
|
UIL TSR Percentile Achieved
|
Minimum Award Payable as % of Target
Shares
|
Presumed Payout as % of Target Shares
|
Maximum Award Authorized as % of Target
Shares
|
|
Less than 20th
|
0%
|
0%
|
0%
|
|
40 th
|
52%
|
80%
|
108%
|
|
50 th
|
65%
|
100%
|
135%
|
|
60 th
|
78%
|
120%
|
162%
|
|
80 th
|
130%
|
200%
|
200%
|
Interim
percentages to be interpolated.
In determining
the Final Payout, the CEDC shall have the discretion to increase or
decrease the Presumed Payout by up to 35%, but the Final Payout may
not exceed the applicable percentages specified in the
“Maximum” column based on actual achievement of the
Pre-Set TSR Goal. The CEDC will exercise this discretion in
determining the Final Payout based on its assessment of the
Company's performance as compared to the general stock market
and/or comparable companies, business conditions affecting such
performance, and other considerations deemed relevant by the CEDC.
It is understood that there is no promise or commitment, express or
implied, that the Final Payout will exceed or equal the Presumed
Payout. In no event will the aggregate value of the Performance
Shares that have become earned and payable hereunder (after giving
effect to any forfeiture applicable under Section 3 below) exceed
the limit set forth in Section 4.5 of the CEO/CFO LTIP document and
all other applicable limits thereunder and under the 1999 Plan and
SEICP.
3.
Vesting; Payment
. Except as otherwise provided in
this Section, the Executive must remain continuously employed by
the Company or one of its subsidiaries at all times during the
Performance Period to earn any Performance Shares under this Award
Agreement.
3.1. If the Executive remains continuously employed
by the Company (or one of its subsidiaries) through December 31,
2006, and no Change in Control has occurred by that date, then the
Executive shall fully vest in his Performance Shares as of the last
day of the Performance Period. The CEDC shall determine the extent
of achievement of the Pre-Set TSR Goal as of such date, and shall
determine the final award of Performance Shares to be paid to the
Executive in accordance with Section 2 of this Agreement.
!
3.2. If the Executive’s employment with the
Company and all of its subsidiaries terminates prior to December
31, 2006 due to his death, disability or retirement on or after age
65, and prior to a Change in Control, actual performance will be
measured up to and including the date of the Executive’s
termination of employment, and the Final Payout determined in
accordance with Section 2 (but using the termination date for
measuring the extent of achievement of the Pre-Set TSR) will be
prorated by multiplying the number of Performance Shares so
determined by a fraction the numerator of which is the number of
days that have elapsed from January 1, 2005 through the Executive's
date of termination and the denominator of which is 730. In such
case, the Executive's right to receive any Performance Shares in
excess of the pro rata portion determined under this Section 3.2
will be forfeited as of the date of such termination.
For purposes of this Award Agreement, the
Executive shall be considered “disabled” if he or she
is entitled to a disability pension or allowance under the
Company’s disability plan.
3.3. If the Executive’s employment with the
Company and its subsidiaries terminates prior to the end of the
Performance Period for any reason other than his death, disability
or retirement on or after age 65, and prior to a Change in Control,
the Executive shall forfeit the right to receive any Performance
Shares under this Award Agreement as of the date of such
termination.
3.4. Notwithstanding any provision of this Agreement
to the contrary, in the event of a Change in Control of the Company
or The United Illuminating Company during the Performance Period,
the Executive will be deemed to be fully vested a
