8-KMaterial Agreements

EVERSOURCE ENERGY 8-K Report, Material Agreement (Mar 7, 2005)

Filed March 7, 2005For Securities:ES

Summary

Northeast Utilities (now Eversource Energy) filed this Form 8-K on March 7, 2005, to report on executive compensation decisions made by its Compensation Committee on March 1, 2005. The report details the approval of discretionary annual incentive awards for 2004, the establishment of the 2005 Annual Incentive Program, and the approval of the 2005-2007 Long-Term Incentive Program. These programs are designed to reward executive officers based on the performance of the company and its various business segments. For 2004, cash awards were paid to executive officers, with significant reductions applied to some executives' payouts due to underperformance in certain competitive business segments. The 2005 Annual Incentive Program has been revised to more closely align individual payouts with the performance of the specific business units each executive manages. The 2005-2007 Long-Term Incentive Program introduces a mix of restricted share units and performance cash units, with payouts tied to financial, strategic, and operational goals over a three-year period, and includes provisions for deferred vesting and long-term shareholder value creation.

Key Highlights

  • 1The Compensation Committee approved 2004 discretionary annual incentive awards for executive officers, recognizing strong performance in regulated operations but reducing awards for some due to underperformance in competitive segments.
  • 2Awards for 2004 were set at 45% of the target pool, with a note that some executive payments might not be tax-deductible for the company.
  • 3The 2005 Annual Incentive Program was revised to more directly link executive payouts to the performance of their specific business impact areas.
  • 4The 2005-2007 Long-Term Incentive Program was approved, featuring awards of restricted share units and three-year performance cash units.
  • 5Restricted share units under the new long-term program vest over three years, with half deferred an additional four years to promote executive share ownership.
  • 6Performance cash units will be valued at the end of 2007 based on cumulative adjusted net income, return on equity, credit ratings, and total shareholder return relative to peers.

Frequently Asked Questions

The primary purpose of this 8-K filing was to report on material decisions made by Northeast Utilities' Compensation Committee regarding executive compensation, specifically the payment of 2004 incentive awards and the approval of new incentive programs for 2005 and beyond.

The 2004 incentive awards were discretionary and paid out at 45% of the target pool. While executive officers received awards in recognition of strong performance in regulated operating companies, some awards were significantly reduced due to underperformance in certain competitive business segments.

The 2005 Annual Incentive Program was significantly revised to more directly tie an individual executive's incentive payout to the performance of the specific business segment they can directly influence. It also includes established financial performance thresholds that must be met before an executive is eligible for an award.

The 2005-2007 Long-Term Incentive Program includes awards of restricted share units and three-year performance cash units. The value of these awards is contingent on corporate and individual performance over the three-year period.