This excerpt taken from the EGN DEF 14A filed Mar 22, 2007.
Type of Awards
Performance Shares. A performance share is the value equivalent of one share of the Companys Common Stock. The Plan Committee may grant performance share awards which become payable at the end of an award period upon attainment of one or more performance goals determined by the Plan Committee. Except as otherwise determined by the Plan Committee at the time of grant, an award period consists of four full fiscal years of the Company. The Plan Committee may establish performance goals using one or more of the following criteria: (i) return on shareholders equity; (ii) return on assets; (iii) net income; (iv) earnings per common share; (v) total shareholder return; (vi) oil and/or gas reserve additions; (vii) utility customer number, volume and/or revenue growth; and (viii) such other criteria as the Plan Committee may establish in writing and which meet the requirements of the performance-based exception to Section 162(m) of the Code. Performance share awards do not entitle participants to receive dividends or dividend equivalents on performance shares or to exercise voting or other shareholder rights.
According to the performance condition guidelines that have been adopted by the Plan Committee and are currently in effect under the plan, payment of a performance share award will be based on the Companys percentile ranking with respect to total shareholder return among a comparison group of companies as measured for the applicable award or interim period.
Performance share awards are payable in shares of Common Stock. Payment for performance share awards shall be made as promptly as possible following determination by the Plan Committee that payment has been earned.
If a participants employment by the Company or a subsidiary terminates prior to the close of an award period, then any unpaid portion of such participants performance share award shall be terminated unless the termination is a Qualified Termination. In the event of a Qualified Termination, the participant shall remain entitled to payment for any outstanding performance share awards at the end of the award period in
accordance with the terms of the Stock Plan; provided, however, if the Qualified Termination is due to the retirement of a participant during the first twelve months of an award period, the participants award shall be reduced in accordance with the terms of the Stock Plan. A Qualified Termination is defined as one of the following events: (i) involuntary termination of employment by the Company or a subsidiary, other than for Cause (as defined in the Stock Plan); (ii) an express written agreement that the termination constitutes a Qualified Termination for purposes of the Stock Plan; (iii) the death or disability of the participant; (iv) retirement under the Companys Retirement Income Plan; or (v) with respect to awards granted prior to a change in control, a voluntary termination for good reason entitling the participant to severance compensation under a written change in control severance compensation agreement. The amendments to the Stock Plan delete from the definition of Qualified Termination (i) voluntary termination by a participant due to reduction in base salary, or termination or material adverse modification of the AICP, and (ii) voluntary termination by a participant during a thirty-six month window period following a change in control.
Stock Options. The Stock Plan provides for the granting of both incentive stock options within the meaning of Section 422 of the Code and non-qualified stock options. The Plan Committee will (a) determine and designate from time to time those employees to whom options are to be granted; (b) determine the number of shares subject to each option; (c) authorize the granting of incentive stock options, non-qualified stock options, or a combination thereof; (d) determine the time or times when each option shall become exercisable and the duration of the exercise period; and (e) determine the time or times when and the manner in which each option shall contain stock appreciation rights and/or dividend equivalents.
The purchase price of the shares as to which an option shall be exercised shall be paid to the Company at the time of exercise either: (i) in cash, (ii) in stock already owned by the optionee having a total fair market value equal to the purchase price, (iii) through an election to have the Company withhold from stock to be delivered to the optionee on the exercise of the option shares of stock having a fair market value equal to the purchase price or (iv) a combination of such forms of consideration having a total fair market value equal to the purchase price. The use of the consideration described in clauses (ii), (iii) and (iv) of the preceding sentence is subject to approval by the Plan Committee, which approval has been granted. In addition, the Plan Committee in its discretion may accept such other consideration or combination of other consideration as the Plan Committee shall deem to be appropriate and to have a total fair market value equal to the purchase price.
If an optionees employment by the Company or a subsidiary shall terminate for Cause (as defined in the Stock Plan), then all options held by the optionee shall immediately terminate and cease to be exercisable. In the event of a Qualified Termination, all options held by the optionee become fully vested and, subject to the following, may be exercised on or prior to the applicable expiration dates. With respect to options issued on or after October 25, 2006, (i) in the event of a Qualified Termination due to retirement, options may be exercised on or prior to the earlier of the applicable expiration dates or the fifth (5th) anniversary of the termination date; and (ii) in the event of any other Qualified Termination, options may be exercised on or prior to the earlier of the applicable expiration dates or the third (3rd) anniversary of the termination date. If an optionees employment by the Company or a subsidiary shall terminate for any reason other than Cause or a Qualified Termination, then all unvested options shall expire as of the termination date, and all vested options shall expire ninety days following the date of termination of employment, provided the Plan Committee shall have the authority to extend such option expiration date. The Plan Committee shall have full authority to accelerate the vesting schedule of all or any part of any option issued under the Stock Plan and held by an employee who has terminated or plans to terminate his or her employment, such that a terminated employee or his or her heirs or personal representatives may exercise (at such time or times on or prior to the applicable expiration dates as may be specified by the Plan Committee) any part or all of any unvested option under the Stock Plan held by such employee at the date of his or her termination of employment.
An option may include stock appreciation rights. To the extent that an option includes stock appreciation rights, the optionee may elect to cancel the option and receive cash in an amount equal to the excess, if any, of the fair market value at the time of cancellation of the shares subject to the option over the aggregate exercise price for such shares, or, if mutually agreed by the Plan Committee and the optionee, either (i) the issuance or transfer to the optionee of shares of stock with a fair market value equal to any such excess or (ii) a combination of cash and shares of stock with a combined value equal to any such excess. An option may
also include dividend equivalents. To the extent an option includes dividend equivalents, upon (i) exercise of all or part of an option, (ii) cancellation of such option in exchange for stock appreciation rights or (iii) the normal expiration of such option, the optionee shall be paid an additional amount equal to the aggregate amount of cash dividends which would have been paid on the shares of stock purchased upon such exercise or with respect to which such cancellation or expiration occurs, if such shares had been issued and outstanding during the period commencing with the option grant date and ending on the date of option exercise, cancellation, or expiration, plus an amount equal to the interest that such dividends would have earned from the respective dividend payment dates if deposited in an interest-bearing account. Such additional amount will be paid in cash, or if mutually agreed by the Plan Committee and the optionee, (i) by the issuance of stock having a fair market value equal to any such excess or (ii) in a combination of cash and shares of stock having a combined fair market value equal to any such excess.
With respect to the grant of incentive stock options, the Stock Plan contains certain additional provisions and restrictions consistent with those of the Code.
Restricted Stock. In addition to providing for performance shares and stock options, the Stock Plan provides for the grant of restricted stock. No shares of restricted stock may be sold or pledged until the restrictions on such shares have lapsed or have been removed. The Plan Committee shall establish as to each award of restricted stock the terms and conditions upon which the restrictions shall lapse, which terms and conditions may include a required period of service or individual or corporate performance conditions. The Plan Committee may select from the following performance measures in order to qualify grants of restricted stock as qualified performance-based compensation under Section 162(m) of the Code (as discussed below): (i) return on shareholders equity; (ii) return on assets; (iii) net income; (iv) earnings per common share; (v) total shareholder return; (vi) oil and/or gas reserve additions; (vii) utility customer number, volume and/or revenue growth; and (viii) such other criteria as may be established by the Plan Committee in writing and which meet the requirements for qualified performance-based compensation under Section 162(m). In its sole discretion, the Plan Committee may accelerate the time at which any or all restrictions on an award of restricted stock shall lapse, or the Plan Committee may remove any and all such restrictions; however, the Plan Committee may not accelerate the lapse or remove restrictions that require the attainment of a performance measure, except as may be permitted by the exception for qualified performance-based compensation under Section 162(m) of the Code described below.
In the event of a Qualified Termination, all restrictions on the participants outstanding restricted stock (subject to the pre-change in control grant date limitation in the definition of Qualified Termination) shall immediately lapse. If a participants employment by the Company or a subsidiary shall terminate for any reason other than a Qualified Termination, then all shares of Company Common Stock held by the participant which remain subject to restrictions shall be forfeited and returned to the Company. The foregoing notwithstanding, the Plan Committee shall have full authority to provide at the time of grant for different or supplemental terms and conditions with respect to termination of employment and any such terms and conditions expressly provided in the written restricted stock agreement shall be controlling with respect to that grant of restricted stock.
Upon acceptance by a person of an award of restricted stock, subject to the restrictions noted above, the person shall have all the rights of a shareholder with respect to such shares of restricted stock, including the right to vote such shares of restricted stock and the right to receive all dividends and other distributions paid on such restricted stock. Certificates representing restricted stock shall be held by the Company until the restrictions lapse and shall bear such restrictive legends as the Company shall deem appropriate.