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Terms and Conditions

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2007
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EDISON INTERNATIONAL 2007 Long-Term Incentives Terms and Conditions 1. LONG-TERM INCENTIVES The long-term incentive awards granted in 2007 ("LTI") for eligible persons (each, a "Holder") employed by Edison International ("EIX") or its participating affiliates (the "Companies", or individually, the "Company") include the following: o Nonqualified stock options to purchase shares of EIX Common Stock ("EIX Options") as described in Section 3; o Contingent EIX performance units ("Performance Shares") as described in Section 4; and o With respect to certain eligible persons, restricted EIX stock units ("Restricted Stock Units") as described in Section 5. Each of the LTI awards will be granted under the Equity Compensation Plan (the "ECP") or, after the 2007 annual meeting of the Company's shareholders (the "Annual Meeting"), the 2007 Performance Incentive Plan (the "2007 Plan" and, together with the ECP, the "Plans"); provided, however, that no award shall be granted under the 2007 Plan unless and until such plan is approved by the Company's shareholders or such award is expressly granted subject to approval of the 2007 Plan by the Company's shareholders. The LTI shall be subject to these 2007 Long-Term Incentives Terms and Conditions (these "Terms"). The LTI shall be administered by the Compensation and Executive Personnel Committee of the EIX Board of Directors (the "Committee"). The Committee shall have the administrative powers with respect to the LTI set forth in Section 3.2 of the ECP or Section 3.2 of the 2007 Plan, as applicable. In the event EIX grants LTI to a Holder, the number of EIX Options, Performance Shares and Restricted Stock Units (if any) granted to the Holder will be set forth in a written award certificate delivered by EIX to the Holder. 2. VESTING OF LTI 2.1 EIX Options. The EIX Options will vest over a four-year period as described in this Section 2 (the "Vesting Period"). The effective "initial vesting date" will be January 2 of the year following the date of the grant, or six months after the date of the grant, whichever date is later. The EIX Options will vest as follows: o On the initial vesting date, one-fourth of the award will vest. o On January 2, 2009, an additional one-fourth of the award will vest. o On January 2, 2010, an additional one-fourth of the award will vest. o On January 2, 2011, the balance of the award will vest. 2.2 Performance Shares. The Performance Shares will vest and become payable to the extent earned as determined at the end of the three-calendar-year period commencing on January 1, 2007, and ending December 31, 2009 (the "Performance Period"), subject to the provisions of Section 4. 2.3 Restricted Stock Units. The Restricted Stock Units will vest and become payable on January 2, 2010. 2.4 Continuance of Employment/Service Required. The vesting schedule requires continued employment or service through each applicable vesting date as a condition to the vesting of the applicable installment of the LTI and the rights and benefits thereunder. Employment or service for only a portion of the vesting period, even if a substantial portion, will not entitle the Holder to any proportionate vesting or avoid or Page 1 mitigate a termination of rights and benefits upon or following a termination of employment or services except as provided in Section 8 below. 3. EIX OPTIONS 3.1 Exercise Price. The exercise price of an EIX Option stated in the award certificate is the closing price (in regular trading) of a share of EIX Common Stock on the New York Stock Exchange for the effective date of the award. 3.2 Cumulative Exercisability; Term of Option. The vested portions of the EIX Options will accumulate to the extent not exercised, and be exercisable by the Holder subject to the provisions of this Section 3 and Sections 8 and 9, in whole or in part, in any subsequent period but not later than January 3, 2017. 3.3 Method of Exercise. The Holder may exercise an EIX Option by providing written notice to EIX on the form prescribed by the Committee for this purpose, or completion of such other EIX Option exercise procedures as EIX may prescribe, accompanied by full payment of the applicable exercise price. Payment must be in cash or its equivalent acceptable to EIX. At the discretion of the Holder, EIX Common Stock valued on the exercise date at a per share price equal to the closing price of EIX Common Stock on the New York Stock Exchange may be used to pay the exercise price, provided the Company can comply with any legal requirements. A broker-assisted "cashless" exercise may be accommodated for EIX Options at the discretion of EIX. Until payment is accepted, the Holder will have no rights in the optioned stock. The provisions of Section 11 must be satisfied as a condition precedent to the effectiveness of any purported exercise. 4. PERFORMANCE SHARES 4.1 Performance Shares. Performance Shares are EIX Common Stock-based units subject to a performance measure based on the percentile ranking of EIX total shareholder return ("TSR") among the TSRs for the stocks comprising the Comparison Group (as defined below) over the entire Performance Period. TSR is calculated using the average closing stock price for the relevant stock for the 20-trading-day period ending with the measurement date (or the immediately preceding trading day if the measurement date is not a trading day). A target number of contingent Performance Shares will be awarded on the initial grant date. The target number of contingent Performance Shares will be increased by any additional Performance Shares created by "reinvestment" of dividend equivalents as provided in Section 4.4. The actual amount of Performance Shares to be paid will depend on EIX's TSR percentile ranking on the measurement date. If EIX's TSR is below the 40th percentile, no Performance Shares will be paid. Twenty five (25%) of the target number of Performance Shares will be paid if EIX's TSR percentile ranking is at the 40th percentile. The target number of Performance Shares will be paid if EIX's TSR rank is at the 50th percentile. Two times the target number of Performance Shares will be paid if EIX's TSR percentile ranking is at the 75th percentile or higher. The payment multiple is interpolated for performance between the points indicated in the preceding three sentences on a straight-line basis. The "Comparison Group" consists of the stocks comprising the Philadelphia Utility Index as the index is constituted on the measurement date, but deleting AES Corporation and adding Sempra Energy (in each case, if such stock is publicly traded on the measurement date), and adjusted as described below if there are less than 20 companies in such index as so adjusted on the measurement date. If the Comparison Group consists of less than 20 stocks on the measurement date, the stock with the median TSR for the entire Performance Period (or, if there are an even number of stocks in the Comparison Group before giving effect to this sentence, a stock deemed to have a TSR equal to the average TSR of the two stocks in the Comparison Group that fall in the middle of such group when ranked based on TSR
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