Dominion Resources, Inc. Performance Grant Agreement
Exhibit
10.2
Dominion
Resources, Inc.
THIS
AGREEMENT, dated April 1, 2006, between DOMINION RESOURCES, INC., a Virginia
Company (the "Company") and _________ ("Participant"),
is made pursuant and subject to the provisions of the Dominion Resources, Inc.
2005 Incentive Compensation Plan (the "Plan") to the extent provided below.
All
terms used herein that are defined in the Plan have the same meaning given
them
in the Plan. The Performance Grant will be administered by the Organization,
Compensation and Nominating Committee (“OCN Committee”) of the Company’s Board
of Directors.
| 1. |
Performance
Grant.
Pursuant to the Plan, the Participant is granted a Performance Award
at a
Target Amount of _______ on
April 1, 2006, subject further to the terms and conditions set forth
herein. The actual payout may be from 0% to 200% of the Target Amount.
Payment will be made by March 15, 2008.
|
| 2. |
TSR
Performance Conditions
|
Total
Shareholder Return Performance (“TSR Performance”) shall determine fifty percent
(50%) of the Target Amount (“TSR Percentage”). TSR Performance is defined in
Exhibit A. The Performance Period for the TSR Performance is the period
beginning April 1, 2006 and ending December 31, 2007. The portion of the 50%
of
the Target Amount that will be paid out, if any, is based on the following
table.
|
Relative
TSR Performance
|
Percentage
Payout
of
TSR Percentage
|
|
Top
Quartile - 75 % to 100%
|
150%
- 200%
|
|
2nd
Quartile - 50% to 74.9%
|
100%
- 149.9%
|
|
3rd
Quartile - 25% to 49.9%
|
50%
- 99.9%
|
|
4th
Quartile -
below 25%
|
0%
|
To
the
extent that the Company’s TSR Performance ranks in a percentile within the 1st,
2nd or 3rd Quartiles of Relative TSR Performance, then the TSR Percentage Payout
shall be interpolated between the top and bottom of the Percentage Payout of
TSR
Percentage range for that Quartile.
No
payment will be made if the TSR Performance is in the 4th Quartile, except
that
a payment of 25% of the TSR Percentage shall be made if the Company’s TSR
Performance was at least ___% on a compounded annual basis for the Performance
Period.
| 3. |
ROIC
Performance Conditions
|
Return
on
Invested Capital Performance (“ROIC Performance”) shall determine fifty percent
(50%) of the Target Amount (“ROIC Percentage”). ROIC Performance is defined in
Exhibit A. The Performance Period for the ROIC Performance is the period
beginning January 1, 2006 and ending December 31, 2007. The portion of the
50%
of the Target Amount that will be paid out is based on the following
table.
|
ROIC
Performance
|
Percentage
Payout
of
ROIC Percentage
|
|
___%
or greater
|
200%
|
|
___%
- ___%
|
150%
- 199.9%
|
|
___%
-
___%
|
100%
- 149.9%
|
|
___%
-
___%
|
50%
- 99.9%
|
|
Below
___%
|
0%
|
To
the
extent that the Company’s ROIC Performance is between ___% and ___%, then the
ROIC Percentage payout shall be interpolated between the top and bottom of
the
applicable Percentage Payout of ROIC Percentage range set forth
above.
The
ROIC
Performance in the table is based on the Company’s actual 2006 budget and the
projected 2007 budget at the date of grant. The ROIC Performance may be adjusted
by the OCN Committee based on the Company’s actual 2007 budget. Any adjustments
to the ROIC Performance will be communicated to the Participant when made.
| 4. |
Terms
and Conditions.
|
| a. |
Employment.
Except as provided in paragraphs 5 or 6, the Participant's rights
in the
Performance Award shall be forfeited if his employment with the Company
or
a Dominion Company terminates before December 31, 2007.
|
| b. |
Nontransferability.
No
rights in the Performance Award are transferable.
|
| 5. |
Retirement,
Death, Disability and Termination without Cause.
|
| a. |
Retirement.
If
the Participant Retires and would have been eligible for a payment
under
paragraphs 2 or 3 if the Participant had remained employed until
December
31, 2007, the Participant shall receive the amount determined under
paragraphs 2 and/or 3 as if the Participant had remained employed
times
the fraction of (A) the number of completed months from April 1,
2006 to
the Participant’s Retirement divided by (B) 21 months. Payment shall be
made at the time provided in paragraph 1.
|
| b. |
Death,
Disability or Termination Without Cause.
If
the Participant dies, becomes Disabled or is terminated without Cause
as
defined in the Participant’s Employment Continuity Agreement, the
Participant shall receive a lump sum cash payment equal to the total
compensation cost recognized by the Company for this Performance
Award
from the Date of Grant through the latest financial statement filed
with
the Company’s Annual Report on Form 10-K or Quarterly Report on Form 10-Q
immediately prior to the event. Payment shall be made within 30 days
of
the termination, provided that payment shall be made six months after
the
termination if the payment is subject to Section 409A of the Code
and the
Executive is a Specified Employee (within the meaning of Section
409A(a)(2)(B)(i) of the Code).
|
| 6. |
Change
of Control.
Upon a Change of Control, the Participant shall receive a lump sum
cash
payment, within 15 days of the Change of Control, equal to the greater
of
(A) the Target Amount or (B) the total payout that would be made
at the
end of the Performance Period if the predicted performance used for
determining the compensation cost recognized by the Company for this
Performance Award for the latest financial statement filed with the
Company’s Annual Report on Form 10-K or Quarterly Report on Form 10-Q
immediately prior to the Change of Control was the actual performance
for
the Performance Period.
|
| 7. |
Retirement.
For purposes of this Agreement, the term Retire or Retirement means
termination when the Participant is eligible for early, normal or
delayed
retirement as defined in the Dominion Pension Plan, or would be eligible
if any crediting of deemed additional years of age or service applicable
to the Participant under the Company’s Benefit Restoration Plan or New
Benefit Restoration Plan were applied under the Pension Plan, as
in effect
at the time of the determination.
|
| 8. |
No
Right to Continued Employment.
This Performance Award does not confer upon the Participant any right
with
respect to continuance of employment by the Company or a Dominion
Company,
nor shall it interfere in any way with the right of the Company or
a
Dominion Company to terminate the Participant's employment at any
time.
The Committee reserves the right to reduce the amount paid to a
Participant below the calculated amount earned under this Performance
Award or pay no amount at all to the Participant.
|
| 9. |
Tax
Withholding.
The Company will withhold from any payment the aggregate amount of
federal, state and local income and payroll taxes that the Company
is
required to withhold on the
payment.
|
| 10. |
Application
of the Plan.
The portions of the Performance Award relating to TSR Performance
are
subject to the terms and conditions of the Plan. It is intended that
payments for TSR Performance under this Performance Award to a Participant
who is a “covered employee” constitute “qualified performance-based
compensation” within the meaning of section 1.162-27(e) of the Income Tax
Regulations. The Committee will certify the TSR Performance. To the
maximum extent possible, this Performance Award and the Plan shall
be
interpreted and construed consistent with this paragraph 10.
|
| 11. |
Governing
Law.
This Agreement shall be governed by the laws of the Commonwealth
of
Virginia.
|
| 12. |
Conflicts.
In
the event of any conflict between the provisions of the Plan as in
effect
on the date of the award and the provisions of this Agreement, the
provisions of the Plan shall govern. All references herein to the
Plan
shall mean the Plan as in effect on the date of the Performance Grant,
as
it may be amended from time to
time.
|
| 13. |
Participant
Bound by Plan.
The Participant hereby acknowledges receipt of a copy of the Plan
and
agrees to be bound by all the terms and provisions
thereof.
|
| 14. |
Binding
Effect.
Subject to the limitations stated above and in the Plan, this Agreement
shall be binding upon and inure to the benefit of the legatees,
distributees, and personal representatives of the Participant and
the
successors of the Company.
|
IN
WITNESS WHEREOF the Company has caused this Agreement to be signed by a duly
authorized officer.
|
Dominion
Resources, Inc.
|
|
By:
|
|
▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, ▇▇
President
and Chief Executive Officer
|
EXHIBIT
A
Total
Shareholder Return
The
TSR
Performance will be measured based on where the Company’s total shareholder
return during the Performance Period ranks in relation to the total shareholder
returns of the Comparison Companies during such period. In general, Total
Shareholder Return consists of the difference between the value of a share
of
common stock at the beginning and end of the Performance Period, plus the value
of dividends paid as if reinvested in stock and other appropriate adjustments
for such events as stock splits. For purposes of TSR Performance, the total
shareholder return of the Company and the Comparison Companies will be the
total
shareholder return as calculated by Bloomberg L.P. As soon as practicable after
the completion of the Performance Period, the total shareholder returns of
the
Comparison Companies will be obtained from Bloomberg L.P. and ranked from
highest to lowest. The Company’s total shareholder return will then be ranked in
terms of which percentile it would have placed in among the Comparison
Companies.
The
Comparison Companies are:
[list
of
companies]
Return
on Invested Capital
ROIC
shall mean Total Return divided by Average Invested Capital for the two-year
Performance Period.
Total
Return is Operating Earnings (as disclosed on the Company’s earnings report
filed on Form 8-K) + After-tax Interest & PSST Expenses + Preferred
Dividends, all determined for the two-year Performance Period.
Average
Invested Capital is the Average Balances for Long & Short-term Debt + PSST +
MC + Preferred Equity + (Common Equity excluding AOCI). The Average Balances
for
a year are calculated by performing the calculation at the end of each month
during the fiscal year plus the last month of the prior fiscal year and then
averaging those amounts over 13 months. For the final calculation, the Average
Invested Capital for 2006 and 2007 are combined.
PSST
is
the preferred securities of subsidiary trusts shown as junior subordinated
notes
payable to affiliated trusts (five subsidiary capital trusts) on the Company’s
financial statements.
MC
is
mandatory convertible debt.
AOCI
is
accumulated other comprehensive income as shown on the Company’s financial
statements.