1997 LONG-TERM INCENTIVE PROGRAM
At the April 1997 meeting of the Compensation Committee, the Committee approved the 1997 Long-Term
Incentive Program, participants and awards. Shown below is a full description of the Long-Term Program for
Summary of 1997 Long-Term Incentive Program
- - Combination of Stock Options (SOs) and Dividend Performance Units (DPUs).
- Annual grants of both, generally on a one-for-one basis.
- Nothing prevents the Committee from granting either freestanding stock options or dividend performance units.
- - SOs have a ten-year term and would vest after three years.
- - DPUs would accumulate dividend equivalents over at least a three-year period, and would pay out based on
total shareholder return over the period.
- - SOs and DPUs would be freestanding.
- - The company will also continue to make selected use of restricted stock.
Description of Stock Options
- - Option exercise price set at fair market value on date of grant.
- - Options vest after three years (100% in year three).
- - Options expire ten years from date of grant.
- - Options can be NQSOs or ISOs; NICOR plans to grant NQSOs in 1997.
Description of Dividend Performance Units
- - Each dividend performance unit accumulates all of the dividends paid on one share of NICOR stock during
the three-year period. As an example, if NICOR's annual dividend grows at $0.08 per year from its current level
of $1.40, each unit would be worth $4.38 at the end of three years:
- - Accrued dividend equivalents are not reinvested in company stock, nor is any interest paid on accrued
- - Dividend performance units accumulate no additional value after the end of the three-year period.
- - Dividend performance units will pay out in cash, except that a participant in the Stock Deferral Plan may elect
to defer up to 50% of their payout into that plan. Deferral elections must meet the guidelines and timing of the
Stock Deferral Plan to be effective.