CMS Energy Chairman and CEO Ken Whipple, at his own request, will have most of his compensation linked to the company’s performance long-term, under a package ratified by the CMS Board of Directors. Whipple had initially asked that all his compensation be linked to performance when he took over in May 2002.

More than 80% of Whipple’s annual compensation package is tied to the company’s future performance. John B. Yasinsky, chairman of the board’s Organization and Compensation Committee, said the new package is “more in line with traditional compensation agreements, yet retains the feature that the majority of Ken’s compensation is deferred and at risk.”

Presiding director Earl D. Holton said CMS Energy was fortunate that Whipple, a former top executive at Ford Motor Co., was willing to take the chairman and CEO’s post during a difficult time.

“Over the past 16 months, Ken Whipple has helped form and guide a new management team that has led CMS Energy through some extremely difficult challenges and implemented a new business strategy that continues to improve the company’s financial flexibility,” Holton said.

Under the performance plan Whipple will receive an annual salary of $400,000 in cash and $850,000 in “stock units,” which equal the current price per share of the company’s stock and will vary with the stock’s market price. He also will be eligible for a $1 million annual bonus in “stock units,” provided the company meets cash flow and earnings targets. The package also provides a long-term compensation award of 125,000 “stock units.” The board may make similar awards in the future at its discretion. No stock options, restricted stock or other similar benefits are included in the package.

In 2002, Whipple earned $2,125 in cash and $636,935 in deferred “stock units,” and received no stock options, restricted stock or any form of long- term compensation.

The performance-based package is along the lines of one approved for himself by Richard Kinder, chairman of Kinder Morgan, who with a $1 annual salary and a 20% ownership in the company he founded, points out that his interests are directly in line with those of shareholders.

Kinder, who also has limited salaries of other company executives, has explained his action is aimed at the “crisis of trust right now in corporate America and specifically in the midstream energy area. This crisis was caused by the acts of a few people, but I think it has cast a shadow over virtually all corporate managements and particularly in our area.

Kinder Morgan’s 2002 annual report explained, “We carry our ‘acting as owners’ philosophy across the organization. We limit base salaries for the rest of senior management to $200,000 a year, well below industry medians. We don’t own corporate jets or pay for first-class air travel, we don’t do any advertising or produce expensive annual reports, and we don’t own suites or tickets to sporting events or buy naming rights to sports facilities. In short, we try to run the company like a prudent person would run his or her own personal affairs.”

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