Xcel Energy 2006 Annual Report Download - page 141

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Exhibit 10.37
Executive Officer Compensation
The Governance, Compensation & Nominating Committee (the Committee) of the Xcel Energy Inc. board of directors sets
executives’ salaries, annual bonus targets and long-term compensation targets. Executive compensation was set by the Committee for
2007 after consideration of, among other things, individual performance and market-based data on compensation for executives with
similar duties. Payouts of 2007 annual bonus targets and long-term awards are dependent on achievement of specified goals set by the
Committee, and no officer is assured of any payout. Set forth below is a description of the actions taken by the Committee with
respect to 2007 compensation.
Salary
The Committee established the base salaries of its senior executive group for 2007. The salaries for the Xcel Energy officers who are
currently serving as officers and who were named in the Summary Compensation Table in Xcel Energy’s 2006 Proxy Statement (the
Named Executive Officers) are set forth below.
2007 Base Salary
Richard C. Kelly................................................................ $ 1,100,000
Gary R. Johnson ................................................................ $ 410,000
Paul J. Bonavia................................................................. $ 535,000
Patricia K. Vincent.............................................................. $ 390,000
Benjamin G.S. Fowke III......................................................... $ 535,000
Annual Bonus Targets
Annual incentive awards, expressed as a percentage of salary, were set by the Committee under the Xcel Energy Executive Annual
Incentive Award Plan (effective May 25, 2005) (the Xcel Annual Incentive Plan), which was approved by Xcel Energy’s shareholders
in 2005. Payouts of annual incentive awards are dependent on the level of achievement of corporate financial and operational goals
approved by the Committee, with each individual having the opportunity to earn from 0 percent to approximately 150 percent of his or
her target annual incentive award based on the level of achievement in 2007 of the applicable goals .
Corporate goals for 2007 include targeted earnings per share, an environmental measurement, and safety.
Target annual incentive awards, as a percent of base salary, were set for all Xcel Energy officers, ranging from 100 percent of salary
for Mr. Kelly to 55 percent to 65 percent of salary for the other Named Executive Officers. With the approval of the Committee, an
award may be multiplied by a leadership-rating factor from zero to two.
In order to encourage increased share ownership by executive officers, the Xcel Energy Annual Incentive Plan provides the option for
executives to receive their payments in shares of common stock or shares of restricted common stock, which vests in equal annual
installments over a three-year period, in lieu of cash. A 5 percent premium is added to amounts paid in shares of common stock, and a
20 percent premium is added to amounts paid in shares of restricted common stock. The terms of the annual incentive awards are
subject to the Xcel Energy Annual Incentive Plan that is filed as Appendix C to Xcel Energy’s 2005 Proxy Statement.
Long-Term Awards
The Committee also approved target long-term incentive grants, effective Jan. 1, 2007, pursuant to the Xcel Energy 2005 Omnibus
Incentive Plan, which was approved by shareholders in 2005. As explained below, payout of long-term incentive grants is dependent
on achievement of performance goals set by the Committee. Long-term incentive grants were made 50 percent in the form of
performance-based restricted stock units and 50 percent in the form of performance shares. The amounts of the awards for each
individual were established by the Committee and expressed as a percentage of such individual’s base salary. The actual number of
performance-based restricted stock units and performance shares awarded to an individual were determined by dividing the dollar
value of such percentage of base salary by the expected value of each award type as determined on Jan. 3, 2007. For Mr. Kelly, his
target long-term award for 2007 was set at 300 percent of his salary. For the other Named Executive Officers, the percentage ranged
from 110 percent to 135 percent.
Performance-based restricted stock units (“Units”) will represent an equal number of shares of Xcel Energy common stock. Prior to
the expiration of the restricted period, the Units may not be sold or otherwise transferred by the recipients. Units are credited during
the restricted period at the same rate as dividends paid on all other shares of outstanding common stock. The dividend equivalents are
subject to all terms of the original grant.
Payout of the Units and the lapsing of restrictions on the transfer of Units are based on two separate performance criteria. Seventy-five
percent of awarded Units plus associated earned dividend equivalents shall be settled, and the restricted period will lapse, after Xcel