UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): FEBRUARY 22, 2006
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CENTERPOINT ENERGY, INC.
(Exact name of registrant as specified in its charter)
TEXAS 1-31447 74-0694415
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
1111 LOUISIANA
HOUSTON, TEXAS 77002
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 207-1111
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Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On February 22, 2006, the Compensation Committee ("Compensation
Committee") of the Board of Directors of CenterPoint Energy, Inc. (the
"Company") determined certain matters related to the awards to Mr. McClanahan,
the Chief Executive Officer, and the four other most highly compensated
executive officers of the Company, Messrs. Whitlock, Rozzell, Standish and
Kelley (collectively referred to as the "named executive officers"), in
connection with the CenterPoint Energy, Inc. Short Term Incentive Plan for
fiscal year 2006 and in connection with goals and stock awards under the
Company's Long-Term Incentive Plan for the 2006-2008 performance cycle. Further,
the Compensation Committee recommended to the Board of Directors and on February
23, 2006, the Board of Directors approved the base salaries of the Company's
named executive officers for 2006.
CenterPoint Energy, Inc. Short Term Incentive Plan
Cash bonuses are payable pursuant to the Short Term Incentive Plan
based on the achievement of certain performance objectives approved in
accordance with the terms of the Plan at the commencement of the year. On
February 22, 2006, the Compensation Committee approved the target amount and
performance objectives for the Chief Executive Officer under the Short Term
Incentive Plan for fiscal year 2006. Additionally, on the same date, after
review of his proposals with the Compensation Committee, the Chief Executive
Officer of the Company approved the target amount and performance objectives for
awards to the other named executive officers under that Plan for fiscal year
2006.
In order for any amounts to be payable under the Plan with respect to
2006, after-tax income from continuing operations, excluding certain impacts
related to the Company's Zero-Premium Exchangeable Subordinated Notes, must
exceed the common dividend paid to shareholders, and operating income must equal
or exceed $850 million. Target annual incentives for the named executive
officers of the Company for 2006 range from 50% to 85% of base salary earned in
2006. The maximum payout for any named executive officer is two times his target
award, except for Mr. McClanahan and Mr. Kelley, whose maximum payouts are 1.5
and 2.5 times their target awards, respectively. Plan funding is determined by
measuring achievement of the performance criteria. Individual named executive
officer payouts are subject to discretionary adjustment by the Compensation
Committee above or below the funding level, taking into account the Chief
Executive Officer's assessment of certain individual performance measures. The
payout to the Chief Executive Officer may be decreased below the level
determined by measuring achievement but not increased.
The performance goals for the named executive officers of the Company
under the Plan for 2006 are based on the criteria summarized on Exhibit 10.1
hereof, which is incorporated by reference herein. As used in Exhibit 10.1,
"Operating Income" refers to the reported operating income of the Company,
adjusted to include income reported as other income from any partnerships in
which the Company holds an equity interest and to exclude the impacts on
operating income of certain regulatory actions related to the Company's stranded
cost recovery and any variances in severance costs budgeted by the Company.
Long-Term Incentive Plan of CenterPoint Energy, Inc.
On February 22, 2006, the Compensation Committee approved performance
goals and grants under the Long-Term Incentive Plan of the Company consisting of
(i) performance shares for the 2006-2008 performance cycle and (ii) stock awards
to the named executive officers. Distributions pursuant to the performance share
awards are based on a total shareholder return measure of the Company compared
to companies in the S&P utility index, weighted at 70%, and improvement in the
Company's operating income, weighted at 30%. For purposes of the Company's goals
for the 2006-2008 performance cycle, "Operating Income" means reported operating
income of the Company adjusted to (i) include income reported as other income
from any partnerships in which the Company holds an equity interest and (ii)
exclude (A) income related to the Company's stranded cost recovery, (B) the
impacts of any acquisitions, mergers and divestitures and (C) the impacts of any
changes in accounting standards. The stock awards vest three years from the date
of grant if a minimum of $1.80 per share in cash dividends has been declared on
the Company's common stock during the three-year period.
Target amounts for these awards range from 90% to 200% of base salary.
The named executive officers will receive 70% of their awards in performance
shares and 30% in stock awards. Payouts of the performance share awards can
range from 0% to 150% based on achievement of the applicable performance goals.
Forms of agreement for performance share awards and stock awards with
performance goals under the Long-Term Incentive Plan of the Company are attached
hereto as Exhibits 10.2 and 10.3, respectively, and are incorporated by
reference herein.
Executive Officer Base Salaries
On February 23, 2006, the Board of Directors of the Company approved
the following base salaries for the named executive officers of the Company
effective April 1, 2006: David M. McClanahan, $980,000; Gary L. Whitlock,
$445,000; Scott E. Rozzell, $425,000; Thomas R. Standish, $405,000; and Byron R.
Kelley, $313,000.
Continuing Service of Directors
Under the Company's Bylaws, a member of the Board of Directors must
step down from the Board at the annual meeting after he or she reaches 70 years
of age, unless the Board determines that the member has special skill,
experience or distinction having value to the Company that is not readily
available or transferable. Both directors John T. Cater and Thomas S. Madison
will have reached 70 years of age by the expected date of the Company's annual
meeting in May 2006. However, on February 23, 2006, the Board of Directors
determined that their service should be extended until the expiration of their
current terms, which would expire in 2007 for Mr. Cater and 2008 for Mr.
Madison. In conjunction with this decision, Mr. Cater has agreed to waive during
the last year of his current term the interest that would be earned by him on
deferrals he made prior to 1989 under the Company's 1985 Deferred Compensation
Plan. The 1985 Deferred Compensation Plan provides for interest accruals at
rates substantially above current market rates and was designed to begin payment
status at the later of when a director retires or reaches age 70. Instead of the
rate prescribed under that plan, the interest rate earned by Mr. Cater on those
deferrals during the last year of his current term will be reduced to Mr.
Cater's applicable interest rate paid under the Company's present deferred
compensation plan (8.08%), and the amount of interest accrued during the last
year of his term will accrue interest at the 8.08% rate over the 15 year payout
period. Mr. Cater is the only current director who has balances under the 1985
Deferred Compensation Plan. Otherwise, Messrs. Cater and Madison will receive
the compensation payable to directors until the expiration of their current
terms.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
The exhibits listed below are filed herewith.
(d) Exhibits.
10.1 Summary of Performance Goals and Objectives under the
CenterPoint Energy, Inc. Short Term Incentive Plan.
10.2 Form of Performance Share Award Agreement for the
20XX-20XX Performance Cycle under the Long-Term
Incentive Plan of CenterPoint Energy, Inc.
10.3 Form of Stock Award Agreement (With Performance
Goals) under the Long-Term Incentive Plan of
CenterPoint Energy, Inc.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CENTERPOINT ENERGY, INC.
Date: February 28, 2006 By: /s/ James S. Brian
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James S. Brian
Senior Vice President and
Chief Accounting Officer
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
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10.1 -- Summary of Performance Goals and Objectives under the CenterPoint Energy, Inc. Short Term
Incentive Plan.
10.2 -- Form of Performance Share Award Agreement for the 20XX-20XX Performance Cycle under the Long-Term
Incentive Plan of CenterPoint Energy, Inc.
10.3 -- Form of Stock Award Agreement (With Performance Goals) under the Long-Term Incentive Plan of
CenterPoint Energy, Inc.
.
.
.
EXHIBIT 10.1
SUMMARY OF PERFORMANCE GOALS AND OBJECTIVES UNDER THE CENTERPOINT ENERGY, INC.
SHORT TERM INCENTIVE PLAN
2006 PERFORMANCE GOALS
OFFICER GOALS
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David M. McClanahan Operating Income
Gary L. Whitlock Operating Income
Scott E. Rozzell Operating Income
Thomas R. Standish Operating Income
Operating Income from the Regulated Operations Group
Achievement of certain financial and operational
performance goals for each of the regulated units:
- Houston Electric
- Southern Gas Operations
- Minnesota Gas
Byron R. Kelley Operating Income
Achievement of certain financial and
operational performance goals for each of the Pipeline
and Field Services units:
- Interstate Pipelines
- Pipeline Services
- Field Services
EXHIBIT 10.2
LONG-TERM INCENTIVE PLAN OF
CENTERPOINT ENERGY, INC.
PERFORMANCE SHARE AWARD AGREEMENT
20XX -- 20XX PERFORMANCE CYCLE
Pursuant to this Award Agreement, CENTERPOINT ENERGY, INC. (the "Company")
hereby grants to -FIRST_NAME- -LAST_NAME- (the "Participant"), an employee of
the Company, -PBRS- performance shares of Common Stock (the "Target Performance
Shares"), such number of shares being subject to adjustment as provided in
Section 14 of the Long-Term Incentive Plan of CenterPoint Energy, Inc. (the
"Plan"), conditioned upon the Company's achievement of the Performance Goals
over the course of the 20XX -- 20XX Performance Cycle pursuant to the Plan, and
subject to the following terms and conditions:
1. RELATIONSHIP TO THE PLAN; DEFINITIONS. This grant of Performance Shares
is subject to all of the terms, conditions and provisions of the Plan and
administrative interpretations thereunder, if any, which have been adopted by
the Committee and are in effect on the date hereof. Except as defined herein,
capitalized terms shall have the same meanings ascribed to them under the Plan.
To the extent that any provision of this Award Agreement conflicts with the
express terms of the Plan, it is hereby acknowledged and agreed that the terms
of the Plan shall control and, if necessary, the applicable provisions of this
Award Agreement shall be hereby deemed amended so as to carry out the purpose
and intent of the Plan. References to the Participant herein also include the
heirs or other legal representatives of the Participant. For purposes of this
Award Agreement:
"20XX -- 20XX PERFORMANCE CYCLE" means the period from January 1, 20XX
to December 31, 20XX.
"ACHIEVEMENT PERCENTAGE" means the percentage of achievement
determined by the Committee at the end of the Performance Cycle in
accordance with Section 3 that reflects the extent to which the Company
achieved the Performance Goals during the Performance Cycle applicable to
this Award Agreement.
"DISABILITY" means that the Participant is both eligible for and in
receipt of benefits under the Company's long-term disability plan.
"EMPLOYMENT" means employment with the Company or any of its
Subsidiaries.
"PERFORMANCE GOALS" means the standards established by the Committee
to determine in whole or in part whether the Performance Shares shall be
earned, which are attached hereto and made a part hereof for all purposes.
"PERFORMANCE SHARES" means the shares of Common Stock potentially
deliverable to Participant pursuant to this Award Agreement.
"RETIREMENT" means termination of Employment on or after attainment of
age 55 and with at least five years of service with the Company.
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"TARGET PERFORMANCE SHARES" means the actual number of Performance
Shares initially granted to the Participant pursuant to this Award
Agreement, with such number of Performance Shares to be awarded to the
Participant at the close of the 20XX -- 20XX Performance Cycle if the
Company attains an Achievement Percentage of 100%.
"VESTED PERFORMANCE SHARES" means the shares of Common Stock awarded
to Participant following Participant's satisfaction of the vesting
provisions of Section 4 and, if applicable, the determination by the
Committee of the extent to which the Company has achieved the Performance
Goals for the 20XX -- 20XX Performance Cycle pursuant to Section 3.
2. ESTABLISHMENT OF PERFORMANCE SHARE ACCOUNT. The grant of Target
Performance Shares pursuant to this Award Agreement shall be implemented by a
credit to a bookkeeping account maintained by the Company evidencing the accrual
in favor of the Participant of the unfunded and unsecured right to receive
shares of Common Stock of the Company, which right shall be subject to the
terms, conditions and restrictions set forth in the Plan and to the further
terms, conditions and restrictions set forth in this Award Agreement.
3. AWARD OPPORTUNITY. The Performance Goals established for the 20XX --
20XX Performance Cycle are attached hereto and made a part hereof for all
purposes. Except as otherwise provided in Sections 4 and 5, the number of
Performance Shares awarded to Participant shall be the product of the number of
Target Performance Shares and the Achievement Percentage that is based upon the
Committee's determination of whether and to what extent the Company achieves the
Performance Goals during the 20XX -- 20XX Performance Cycle.
As soon as practicable after the close of the 20XX -- 20XX Performance
Cycle, the Committee shall determine the extent to which the Company has
achieved each Performance Goal. If the Company has performed at or above the
threshold level of achievement for a Performance Goal, the Achievement
Percentage shall be between 50% and 150%, with a target level of achievement
resulting in an Achievement Percentage of 100%. In no event shall the
Achievement Percentage exceed 150%. The combined level of achievement is the sum
of the weighted achievements of the Performance Goals as approved by the
Committee. Upon completing its determination of the level at which the
Performance Goals have been achieved, the Committee shall notify the Participant
of the number of Vested Performance Shares that will be issued to the
Participant pursuant to Section 6.
4. VESTING OF PERFORMANCE SHARES.
(a) Unless earlier forfeited or vested in accordance with paragraph
(b) or Section 5, Participant's right to receive Performance Shares shall
vest upon Participant's receipt of written notice from the Committee, as
required by Section 3, of the level at which the Performance Goals
established for the 20XX -- 20XX Performance Cycle have been achieved. Such
notice shall be given by the Committee as soon as practical after the close
of the 20XX -- 20XX Performance Cycle in accordance with the terms of the
Plan and this Award Agreement.
(b) If Participant's Employment is terminated prior to the close of
the 20XX -- 20XX Performance Cycle:
(i) by the Company or any of its Subsidiaries for any reason or
due to voluntary resignation by the Participant, Participant's right
to receive Performance
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Shares shall be forfeited in its entirety as of such termination.
(ii) due to death, Disability, or Retirement, Participant's right
to receive the Target Performance Shares shall vest at the time of
such termination in the proportion of the number of days elapsed in
the 20XX -- 20XX Performance Cycle as of the date of such termination
of Employment by the total number of days in the 20XX -- 20XX
Performance Cycle and shall be delivered to Participant as soon as
possible following such termination. Participant's right to receive
additional Performance Shares shall be forfeited at such time.
5. DISTRIBUTION UPON A CHANGE OF CONTROL. Notwithstanding anything herein
to the contrary, upon or immediately prior to the occurrence of any Change of
Control of the Company, and without regard to the Performance Goals, the
Participant's right to receive the Performance Shares shall be settled by the
distribution to the Participant of (a) shares of Common Stock equal to 150% of
the Target Performance Shares, plus (b) shares of Common Stock (rounded up to
the nearest whole share) having a Fair Market Value equal to the amount of
dividends that would have been declared on the number of such shares determined
under clause (a) above during the period commencing at the beginning of the
Performance Cycle and ending on the date immediately preceding the date on which
the Change of Control occurs, with such shares of Common Stock registered in the
name of the Participant and certificates representing such Common Stock to be
delivered to the Participant as soon as practicable after the date the Change of
Control occurs. In lieu of the foregoing distribution in shares, the Committee,
in its sole discretion, may direct that such distribution be made to the
Participant in cash equal to (x) the product of (i) the Fair Market Value per
share of Common Stock on the date immediately preceding the date on which the
Change of Control occurs and (ii) 150% of the Target Performance Shares, plus
(y) the amount of dividends that would have been declared on the number of
shares of Common Stock determined under clause (a) above during the period
commencing at the beginning of the Performance Cycle and ending on the date
immediately preceding the date on which the Change of Control occurs, with such
cash payment to be made as soon as practicable after the date the Change of
Control occurs. Such distribution, whether in the form of shares of Common Stock
or, if directed by the Committee, in cash, shall satisfy the rights of the
Participant and the obligations of the Company under this Award Agreement in
full.
6. PAYMENT OF AWARD.
(a) If Participant's right to receive Performance Shares has vested
pursuant to Section 4, a number of shares of Common Stock equal to the
number of Vested Performance Shares shall be registered in the name of the
Participant and certificates representing such Common Stock shall be
delivered to the Participant as soon as practical after the date upon which
the Participant's right to such shares vested according to the provisions
of Section 4. The Company shall have the right to withhold applicable taxes
from any such payment of Vested Performance Shares or from other
compensation payable to the Participant at the time of such vesting and
delivery pursuant to Section 11 of the Plan.
(b) Upon delivery of the Vested Performance Shares pursuant to
paragraph (a), above, Participant shall also be entitled to receive a cash
payment equal to the sum of all dividends, if any, declared on the Vested
Performance Shares after the commencement of the 20XX -- 20XX Performance
Cycle but prior to the date the Vested Performance Shares are delivered to
the Participant.
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7. CONFIDENTIALITY. The Participant agrees that the terms of this Award
Agreement are confidential and that any disclosure to anyone for any purpose
whatsoever (save and except disclosure to financial institutions as part of a
financial statement, financial, tax and legal advisors, or as required by law)
by the Participant or his or her agents, representatives, heirs, children,
spouse, employees or spokespersons shall be a breach of this Award Agreement and
the Company may elect to revoke the grant made hereunder, seek damages, plus
interest and reasonable attorneys' fees, and take any other lawful actions to
enforce this Award Agreement.
8. NOTICES. For purposes of this Award Agreement, notices to the Company
shall be deemed to have been duly given upon receipt of written notice by the
corporate secretary of the Company at 1111 Louisiana, Houston, Texas 77002, or
to such other address as the Company may furnish to the Participant.
Notices to the Participant shall be deemed effectively delivered or given
upon personal, electronic, or postal delivery of written notice to the
Participant, the place of Employment of the Participant, the address on record
for the Participant at the human resources department of the Company, or such
other address as the Participant hereafter designates by written notice to the
Company.
9. SHAREHOLDER RIGHTS. The Participant shall have no rights of a
shareholder with respect to the Performance Shares, unless and until the
Participant is registered as the holder of shares of Common Stock.
10. SUCCESSORS AND ASSIGNS. This Award Agreement shall bind and inure to
the benefit of and be enforceable by the Participant, the Company and their
respective permitted successors and assigns except as expressly prohibited
herein and in the Plan. Notwithstanding anything herein or in the Plan to the
contrary, the Performance Shares are transferable by the Participant to
Immediate Family Members, Immediate Family Members trusts, and Immediate Family
Member partnerships pursuant to Section 13 of the Plan.
11. NO EMPLOYMENT GUARANTEED. Nothing in this Award Agreement shall give
the Participant any rights to (or impose any obligations for) continued
Employment by the Company or any Subsidiary thereof or successor thereto, nor
shall it give such entities any rights (or impose any obligations) with respect
to continued performance of duties by the Participant.
12. COMPLIANCE WITH SECTION 409A. It is the intent of the Company and the
Participant that the provisions of the Plan and this Award Agreement comply with
Section 409A of the Internal Revenue Code and related regulations and Department
of the Treasury pronouncements ("Section 409A"). If any provision provided
herein would result in the imposition of an excise tax under the provisions of
Section 409A, the parties agree that any such provision will be modified as the
Company determines is appropriate to avoid imposition of such excise tax. In
certain circumstances the Company may delay the payment of the Performance
Shares until a date which is six months after the date of the Participant's
separation from service.
13. MODIFICATION OF AWARD AGREEMENT. Any modification of this Award
Agreement shall be binding only if evidenced in writing and signed by an
authorized representative of the Company.
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EXHIBIT 10.3
LONG-TERM INCENTIVE PLAN OF
CENTERPOINT ENERGY, INC.
STOCK AWARD AGREEMENT
(WITH PERFORMANCE GOAL)
Pursuant to this Award Agreement, CENTERPOINT ENERGY, INC. (the
"Company") hereby grants to -FIRST_NAME- -LAST_NAME- (the "Participant"), an
employee of the Company, on [GRANT DATE] (the "Grant Date"), -RS- shares of
Common Stock of the Company (the "Stock Award"), pursuant to the LONG-TERM
INCENTIVE PLAN OF CENTERPOINT ENERGY, INC. (the "Plan"), conditioned upon the
Company's achievement of the Performance Goals established by the Committee over
the course of the Vesting Period, with such number of shares being subject to
adjustment as provided in Section 14 of the Plan, and further subject to the
terms, conditions and restrictions described in the Plan and as follows:
1. RELATIONSHIP TO THE PLAN; DEFINITIONS. The Stock Award is subject to
all of the terms, conditions and provisions of the Plan and administrative
interpretations thereunder, if any, which have been adopted by the Committee and
are in effect on the date hereof. Except as defined herein, capitalized terms
shall have the same meanings ascribed to them under the Plan. To the extent that
any provision of this Award Agreement conflicts with the express terms of the
Plan, it is hereby acknowledged and agreed that the terms of the Plan shall
control and, if necessary, the applicable provisions of this Award Agreement
shall be hereby deemed amended so as to carry out the purpose and intent of the
Plan. References to the Participant herein also include the heirs or other legal
representatives of the Participant. For purposes of this Award Agreement:
"DISABILITY" means that the Participant is both eligible for and in
receipt of benefits under the Company's long-term disability plan.
"EMPLOYMENT" means employment with the Company or any of its
Subsidiaries.
"PERFORMANCE GOALS" means the standards established by the Committee to
determine in whole or in part whether the shares of Common Stock under the Stock
Award shall be earned, which are attached hereto and made a part hereof for all
purposes.
"RETIREMENT" means termination of Employment on or after attainment of
age 55 and with at least five years of service with the Company.
"VESTING DATE" means [DATE]
"VESTING PERIOD" means the period commencing on the Grant Date and
ending on the Vesting Date.
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2. ESTABLISHMENT OF STOCK AWARD ACCOUNT. The grant of shares of Common
Stock of the Company pursuant to this Stock Award shall be implemented by a
credit to a bookkeeping account maintained by the Company evidencing the accrual
in favor of the Participant of the unfunded and unsecured right to receive such
shares of Common Stock, which right shall be subject to the terms, conditions
and restrictions set forth in the Plan and to the further terms, conditions and
restrictions set forth in this Award Agreement. Except as otherwise provided in
Section 10 of this Award Agreement, the shares of Common Stock credited to the
Participant's bookkeeping account may not be sold, assigned, transferred,
pledged or otherwise encumbered until the Participant has been registered as the
holder of such shares of Common Stock on the records of the Company, as provided
in Section 5 or 6 of this Award Agreement.
3. VESTING OF STOCK AWARD. Unless earlier forfeited or vested in
accordance with Section 4 below or receipt of a distribution pursuant to Section
5 below, the Participant's right to receive 100% of the shares of Common Stock
under this Stock Award shall vest on the Vesting Date if the Performance Goals
established in connection with the grant of, and as a requirement to receive
the, Common Stock are determined by the Committee to have been achieved during
the Vesting Period. If the Committee determines that the Performance Goals have
been achieved, the Participant's right to receive the Common Stock under this
Award Agreement shall vest upon the Participant's receipt of written notice from
the Committee of such determination. The Participant must be in continuous
Employment during the Vesting Period in order for the Common Stock to vest;
otherwise, all such shares shall be forfeited as of the Participant's
termination date.
4. ACCELERATED VESTING AND FORFEITURE. If, prior to the end of the
Vesting Date pursuant to Section 3 above and prior to the Participant's receipt
of any distribution pursuant to Section 5 below, the Participant's Employment is
terminated due to (a) death, (b) Disability, or (c) Retirement, then, without
regard to the Performance Goals, the Participant shall vest in the right to
receive a number of the shares of Common Stock determined by multiplying (i) the
total number of shares of Common Stock granted under this Award Agreement by
(ii) a fraction, the numerator of which is the number of days that have elapsed
from the Grant Date, and the denominator of which is the total number of days in
the Vesting Period. Such vested shares of Common Stock shall be delivered to the
Participant as soon as practicable following the Participant's termination date.
All remaining unvested shares of Common Stock as of the Participant's
termination date shall be forfeited as of such date.
5. DISTRIBUTION UPON A CHANGE OF CONTROL. Notwithstanding anything
herein to the contrary, upon or immediately prior to the occurrence of any
Change of Control of the Company, and without regard to the Performance Goals,
the Participant's right to receive the unvested shares of Common Stock under
this Award Agreement shall be settled by a distribution to the Participant of
(a) all shares of Common Stock not previously vested or forfeited pursuant to
Section 3 or Section 4 above, plus (b) shares of Common Stock (rounded up to the
nearest whole share) having a Fair Market Value equal to the amount of dividends
that would have been declared on the number of shares of Common Stock determined
under clause (a) above during the period commencing on the Grant Date and ending
on the date immediately preceding the date on which the Change of Control
occurs, with such shares of Common Stock registered in the name of the
Participant and certificates representing such Common Stock to be delivered to
the
2
Participant as soon as practicable after the date the Change of Control occurs.
In lieu of the foregoing distribution in shares, the Committee, in its sole
discretion, may direct that such distribution be made to the Participant in cash
equal to (i) the product of (x) the Fair Market Value per share of Common Stock
on the date immediately preceding the date on which the Change of Control occurs
and (y) the number of shares of Common Stock not previously vested or forfeited
pursuant to Section 3 or Section 4 above, plus (ii) the amount of dividends that
would have been declared on the number of shares of Common Stock determined
under clause (a) above during the period commencing on the Grant Date and ending
on the date immediately preceding the date on which the Change of Control
occurs, with such cash payment to be made as soon as practicable after the date
the Change of Control occurs. Such distribution, whether in the form of shares
of Common Stock or, if directed by the Committee, in cash, shall satisfy the
rights of the Participant and the obligations of the Company under this Award
Agreement in full.
6. PAYMENT OF AWARD. Upon the vesting of the Participant's right to
receive the shares of Common Stock pursuant to Section 3 or Section 4 of this
Award Agreement, a number of shares of Common Stock equal to the number of
vested shares of Common Stock under this Award Agreement shall be registered in
the name of the Participant and certificates representing such Common Stock
shall be delivered to the Participant as soon as practicable after the date upon
which the Participant's right to such shares vested according to the provisions
of Section 3 or Section 4 above. The Company shall have the right to withhold
applicable taxes from any such payment of the Common Stock (including, but not
limited to, from any amounts payable as provided in the following paragraph with
respect to dividends) or from other compensation payable to the Participant at
the time of such vesting and delivery pursuant to Section 11 of the Plan.
If the Common Stock became vested pursuant to Section 3 or Section 4
above, upon delivery of shares of Common Stock pursuant to the foregoing
paragraph of this Section 6, the Participant shall also be entitled to receive a
cash payment equal to the sum of all dividends, if any, declared on such shares
of Common Stock after the Grant Date but prior to the date such shares of Common
Stock are delivered to the Participant.
7. CONFIDENTIALITY. The Participant agrees that the terms of this Award
Agreement are confidential and that any disclosure to anyone for any purpose
whatsoever (save and except disclosure to financial institutions as part of a
financial statement, financial, tax and legal advisors, or as required by law)
by the Participant or his or her agents, representatives, heirs, children,
spouse, employees or spokespersons shall be a breach of this Award Agreement and
the Company may elect to revoke the grant made hereunder, seek damages, plus
interest and reasonable attorneys' fees, and take any other lawful actions to
enforce this Award Agreement.
8. NOTICES. For purposes of this Award Agreement, notices to the
Company shall be deemed to have been duly given upon receipt of written notice
by the Corporate Secretary of CenterPoint Energy, Inc., 1111 Louisiana, Houston,
Texas 77002, or to such other address as the Company may furnish to the
Participant.
Notices to the Participant shall be deemed effectively delivered or
given upon personal, electronic, or postal delivery of written notice to the
Participant, the place of
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Employment of the Participant, the address on record for the Participant at the
human resources department of the Company, or such other address as the
Participant hereafter designates by written notice to the Company.
9. SHAREHOLDER RIGHTS. The Participant shall have no rights of a
shareholder with respect to the shares of Common Stock granted under this Stock
Award, unless and until the Participant is registered as the holder of such
shares of Common Stock.
10. SUCCESSORS AND ASSIGNS. This Award Agreement shall bind and inure
to the benefit of and be enforceable by the Participant, the Company and their
respective permitted successors and assigns except as expressly prohibited
herein and in the Plan. Notwithstanding anything herein or in the Plan to the
contrary, the shares of Common Stock are transferable by the Participant to
Immediate Family Members, Immediate Family Member trusts, and Immediate Family
Member partnerships pursuant to Section 13 of the Plan.
11. NO EMPLOYMENT GUARANTEED. Nothing in this Award Agreement shall
give the Participant any rights to (or impose any obligations for) continued
Employment by the Company or any Subsidiary, or any successor thereto, nor shall
it give such entities any rights (or impose any obligations) with respect to
continued performance of duties by the Participant.
12. COMPLIANCE WITH SECTION 409A. It is the intent of the Company and
the Participant that the provisions of the Plan and this Agreement comply with
Section 409A of the Internal Revenue Code and related regulations and Department
of the Treasury pronouncements ("Section 409A"). If any provision provided
herein would result in the imposition of an excise tax under the provisions of
Section 409A, the parties agree that any such provision will be modified as the
Company determines is appropriate to avoid imposition of such excise. In certain
circumstances the Company may delay the payment of the Stock Award until a date
which is six months after the date of the Participant's separation from service.
13. MODIFICATION OF AWARD AGREEMENT. Any modification of this Award
Agreement shall be binding only if evidenced in writing and signed by an
authorized representative of the Company.
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