8-KLeadership Changes

DTE ENERGY CO 8-K Report, Executive Changes (Feb 9, 2010)

Filed February 9, 2010For Securities:DTEDTKDTBDTGDTW

Summary

DTE Energy Company (DTE) filed an 8-K report on February 9, 2010, detailing the approved performance measures for its 2010 Annual Incentive Plan (AIP) and Long-Term Incentive Plan (LTIP). These plans are designed to align executive compensation with the company's financial and operational performance, as well as shareholder interests. The AIP for 2010 focuses on metrics such as operating earnings per share, cash flow, customer satisfaction, MPSC complaints, employee engagement, safety, and diversity. The LTIP, a shareholder-approved plan rewarding long-term growth, will utilize performance shares with a three-year measurement period (2010-2012) and will be based on metrics including balance sheet health, total shareholder return relative to peers, and for one executive, MichCon's return on equity.

Key Highlights

  • 1DTE Energy's Organization and Compensation Committee approved the 2010 performance measures, weightings, and metrics for both the Annual Incentive Plan (AIP) and the Long-Term Incentive Plan (LTIP).
  • 2The AIP measures for named executive officers (NEOs) include DTE Energy Operating Earnings Per Share (25%), DTE Energy Cash Flow (25%), and several operational and customer-focused metrics.
  • 3Specific measures for Gerardo Norcia under the AIP include Michigan Consolidated Gas Company (MichCon) Operating Net Income (20%) and MichCon Cash Flow (20%), reflecting his role.
  • 4Executive incentive awards under the AIP are determined by base salary, a performance payout percentage (0-175%), and an individual performance modifier (0-150%).
  • 5The LTIP, designed for long-term growth and profitability, uses restricted stock, stock options, and performance shares, with target awards for officers ranging from 115% to 300% of base salary.
  • 6Performance shares for the 2010 LTIP award (2010-2012) are based on balance sheet health (50%) and relative total shareholder return (50%) for most NEOs.
  • 7Gerardo Norcia's LTIP performance shares also incorporate MichCon's 3-year average return on equity (40%) along with balance sheet health and relative total shareholder return.

Frequently Asked Questions

The AIP and LTIP are designed to incentivize and reward executive officers based on the company's financial and operational performance. The AIP focuses on annual performance, while the LTIP is geared towards long-term growth and profitability, directly linking executive compensation to shareholder value.

The primary financial metrics for most named executive officers under the 2010 AIP are DTE Energy Operating Earnings Per Share (weighted at 25%) and DTE Energy Cash Flow (weighted at 25%).

The final award is calculated in four steps: first, the target award is determined by multiplying the executive's base salary by their AIP target percentage. Second, an overall performance payout percentage (0% to 175%) is established based on company performance against set objectives. Third, the target award is multiplied by this payout percentage. Finally, the calculated award can be adjusted by an individual performance modifier (0% to 150%) to determine the final payout.

For most named executive officers, the 2010 LTIP performance shares are based on 'balance sheet health' (50%) and 'total shareholder return versus peer group companies' (50%) over a three-year period (2010-2012). For Gerardo Norcia, the metrics also include MichCon's 3-year average return on equity (40%), alongside the other two measures.