8-KMaterial Agreements

DTE ENERGY CO 8-K Report, Material Agreement (Mar 3, 2006)

Filed March 3, 2006For Securities:DTEDTKDTBDTGDTW

Summary

DTE Energy Company (DTE) filed a Form 8-K on March 3, 2006, detailing the approval of 2006 performance measures and targets for its executive officers. This filing is crucial for investors as it outlines how executive compensation, both short-term (Annual Incentive Plan) and long-term (Stock Incentive Plan), will be determined and aligned with company performance and shareholder interests. The Annual Incentive Plan for 2006 focuses on a mix of financial and operational metrics, including earnings per share (core and synfuels), cash flow, customer satisfaction, safety, and diversity. The Stock Incentive Plan, which includes performance shares, uses a three-year measurement period (2006-2008) and emphasizes balance sheet health, total shareholder return relative to the S&P Electric Utility Index, and employee engagement. These plans are designed to incentivize executives to drive sustainable growth and maximize shareholder value.

Key Highlights

  • 1DTE Energy approved 2006 performance measures and targets for executive officers under its Annual Incentive Plan and Stock Incentive Plan.
  • 2The Annual Incentive Plan for 2006 uses a weighted combination of earnings per share (core and synfuels), cash flow, customer satisfaction, safety, and diversity for most named executives.
  • 3Specific performance measures and weightings differ for Robert Buckler under the Annual Incentive Plan, including electric utility-specific metrics.
  • 4The Annual Incentive Plan allows for performance multipliers ranging from 0% to 175% of target, adjusted by an individual performance modifier of 0% to 150%.
  • 5The Stock Incentive Plan rewards long-term growth and profitability, linking executive compensation to shareholder interests through stock-based awards.
  • 6Performance shares under the Stock Incentive Plan have a three-year performance period (2006-2008) and are measured by balance sheet health (15%), total shareholder return versus S&P Electric Utility Index peers (70%), and employee engagement (15%).
  • 7Executive award sizes for the Stock Incentive Plan can range from 40% to 275% of base salary, determined by factors like executive level, responsibility, retention, and market competitiveness.

Frequently Asked Questions

The main purpose of this 8-K filing is to inform investors that DTE Energy Company's Board of Directors has approved the performance measures and targets for executive compensation for the 2006 fiscal year under its Annual Incentive Plan and Stock Incentive Plan.

Under the Annual Incentive Plan, executive bonuses will be determined based on a weighted average of performance measures including earnings per share (core and synfuels), cash flow, customer satisfaction, safety, and diversity. A corporate performance factor (0-175% of target) and an individual performance modifier (0-150%) will be applied to the target award.

For performance shares, the long-term Stock Incentive Plan uses a three-year performance period (2006-2008). The key metrics are balance sheet health (15% weighting), total shareholder return relative to the S&P Electric Utility Index (70% weighting), and employee engagement (15% weighting).

The company links executive compensation to shareholder value by incorporating financial metrics like earnings per share and cash flow into short-term incentives, and by using total shareholder return relative to peers and balance sheet health as key performance indicators for long-term stock-based compensation. This structure aims to align executive interests with those of DTE Energy shareholders.