8-KLeadership ChangesExhibits & Filings

CENTERPOINT ENERGY INC 8-K Report, Executive Changes (Feb 25, 2008)

Filed February 25, 2008For Securities:CNP

Summary

CenterPoint Energy, Inc. (CNP) filed an 8-K on February 25, 2008, detailing adjustments to its executive compensation plans for the upcoming performance cycle. The Compensation Committee approved modifications to both the Short-Term Incentive Plan and the Long-Term Incentive Plan, including increased target awards for several named executive officers. A key change in the Long-Term Incentive Plan is the addition of modified cash flow as a performance metric alongside total shareholder return and operating income for performance share awards. Furthermore, the company adopted the CenterPoint Energy 2005 Deferred Compensation Plan, effective January 1, 2008, to replace the prior plan and ensure compliance with Section 409A of the Internal Revenue Code. This new plan largely mirrors the terms of the previous one, allowing eligible employees and directors to defer compensation. The prior deferred compensation plan has been frozen for new participation and contributions, with existing obligations transferred to the new plan.

Key Highlights

  • 1Compensation Committee adjusted performance targets and potential payouts for the 2008 Short-Term Incentive Plan, increasing target awards for key executives.
  • 2Long-Term Incentive Plan for the 2008-2010 performance cycle saw modified cash flow added as a third performance metric for performance share awards.
  • 3Target awards under the Long-Term Incentive Plan were increased for Messrs. Whitlock, Rozzell, Standish, and Kelley.
  • 4CenterPoint Energy adopted a new Deferred Compensation Plan (2005) effective January 1, 2008, to comply with Section 409A.
  • 5The new Deferred Compensation Plan replaces the previous plan, with largely similar terms for eligible employees and directors regarding compensation deferral.
  • 6The prior Deferred Compensation Plan has been frozen for new participation and contributions as of December 31, 2007.
  • 7Obligations and earnings deferred under the prior plan after December 31, 2004, were transferred to the new 2005 Deferred Compensation Plan.

Frequently Asked Questions

For the Short-Term Incentive Plan, the target award percentages for several executives were increased. For the Long-Term Incentive Plan, modified cash flow was added as a new performance metric for performance share awards, and target award percentages were also increased for some executives.

The company adopted the CenterPoint Energy 2005 Deferred Compensation Plan primarily to ensure compliance with Section 409A of the Internal Revenue Code. It replaced the previous plan and became effective January 1, 2008.

The prior Deferred Compensation Plan was frozen for new participation and contributions as of December 31, 2007. Obligations for compensation deferred under the prior plan after December 31, 2004, along with all associated earnings, were transferred to the new 2005 Deferred Compensation Plan.

The Long-Term Incentive Plan for the 2008-2010 cycle now uses three performance metrics for performance share awards: total shareholder return, operating income, and modified cash flow. The modified cash flow metric was added to provide an additional measure of business performance.