Senior Officer Employment and Non-Compete Agreement (46K)
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SENIOR OFFICER EMPLOYMENT AND NON-COMPETE AGREEMENT
THIS AGREEMENT is made as of June 20, 2003 between WISCONSIN
ENERGY CORPORATION (the "Company") and Allen Leverett (the
"Executive").
WHEREAS, the Company wishes to employ the Executive as its Chief
Financial Officer and the Executive wishes to accept such
employment on the terms and conditions provided in this
Agreement;
NOW, THEREFORE, in consideration of their mutual promises, the
parties agree as follows:
1. Defined Terms. All of the capitalized terms not otherwise
defined in this Agreement are defined in the attached Appendix.
2. Employment. Effective as of July 1, 2003 (the "Employment
Starting Date"), the Company employs the Executive as the Chief
Financial Officer and the Executive hereby accepts such
employment with the Company and agrees to serve in such position
and to perform such other executive duties and serve in such
other executive capacities not inconsistent with the position of
Chief Financial Officer as the Board of Directors of the Company
may request. The Executive's employment is not for any fixed
term and the Executive acknowledges that he is an employee
at-will. Further:
(a) Base Salary, Signing Bonus and Bonus Opportunity. Effective
as of the Employment Starting Date, the Executive's annual base
salary is hereby established at an annual rate of $460,000. The
Executive will receive a special lump sum signing bonus of
$250,000, with $150,000 of this amount payable promptly after the
Employment Starting Date and the balance of $100,000 payable six
months later, provided the Executive then remains in the
Company's employ. The Executive's target bonus opportunity for
2003 under the Company's Short-Term Performance Plan (the "STPP")
is fixed at 80% of base salary, with a minimum guaranteed bonus
of $368,000 for 2003 and a maximum bonus opportunity of 160% of
base salary. The Executive's target bonus opportunity under the
STPP for 2004 and subsequent years will not be less than 80% of
base salary, except under circumstances described in the next
sentence. Circumstances under which an adjustment below the 80%
target could take place would be limited to a general "Board
Action" resulting in the lowering of targets for the entire
senior executive group.
(b) Stock Based Incentives. Effective as of the Employment
Starting Date, the Executive will receive a grant of non-
qualified options for 200,000 shares of the Company's common
stock (the "Stock") at an exercise price per share equal to the
average of the lowest and highest reported sale prices for the
Stock on the Employment Starting Date, and on other terms and
conditions as specified for other senior officers in the grants
made to such officers in January of 2003. Additionally,
effective as of the Employment Starting Date, the Executive will
be granted an award of restricted stock, with the number of
shares awarded to be determined by dividing $750,000 by the lower
of the average of the lowest and highest reported sale prices for
the Stock on such date, or $26.00, and then rounding the number
of shares to the nearest 10. Two-thirds of such restricted stock
(rounded to the nearest whole share) will vest on the second
anniversary of the Employment Starting Date and the remainder
will vest at the rate of 20% for each year of service thereafter
(i.e., starting with second anniversary of the Employment
Starting Date) until 100% vesting of such remainder occurs on the
seventh anniversary of the Employment Starting Date, provided
further that 100% vesting of all such restricted Stock shall
occur upon the Executive's death or disability while in the
Company's employ.
3. Other Benefits and Special Additional Pension Benefit. The
Executive will be entitled to five weeks of vacation per year, to
participate in all retirement and welfare benefit plans and
programs generally available to employees in accordance with the
terms of such plans and programs and to participate on a basis
commensurate with other senior officers of the Company in any
benefit plans and programs available to such officers, including
the opportunity to participate in the Company's Executive
Deferred Compensation Plan (the "EDCP"). Additionally, the
Executive shall be entitled to (i) participate in the Company's
Supplemental Executive Retirement Plan (the "SERP") with respect
to monthly benefit "A," which is designed to make up for any
limitations imposed on the amount of Executive's accrued benefit
under the Company's tax-qualified defined benefit plan (the
"Retirement Account Plan") because of statutory or regulatory
limits relating to the Internal Revenue Code and shall vest in
monthly benefit "A" concurrent with vesting in the Retirement
Account Plan, and (ii) receive a special additional pension
benefit. Such special additional pension benefit, provided the
Executive's retirement occurs at or after age 60, will be equal
to the difference between (a) and (b) below, less the monthly
lifetime retirement benefits payable to the Executive from all
qualified and non-qualified defined benefit pension plans of
previous employers of the Executive, calculated as if starting on
the same date as the special additional pension benefit, where
(a) and (b) are as follows:
a) equals the monthly lifetime retirement benefit payable from
the Company's Retirement Account Plan, plus any amount payable
under the SERP monthly benefit "A", and
b) equals the monthly lifetime retirement benefit
that would have been payable from the Management
Employees' Retirement Plan of the Company as in
effect on December 31, 1995 (the "1995 Management
Plan") had the defined benefit formula then in
effect continued until the Executive's retirement,
calculated without regard to Internal Revenue Code
limits, and as if the Executive had started
participation in the 1995 Management Plan on
January 1, 1989 and as if any deferrals elected by
the Executive under the EDCP and any bonuses were
all included in the Executive's compensation base
for calculating benefits under the 1995
Management Plan.
4. Additional Preretirement Spouse's Benefit. In the event of
the Executive's death while in the Company's employ, the Company
will pay to the Executive's surviving spouse, if any, a monthly
benefit equal to the difference between (a) and (b) below, but
reduced as provided below to reflect the vested value of all
qualified and nonqualified defined benefit pension plans of
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