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Elk River <br /> Municipal Utilities COMMISSION POLICY <br /> Section: Category: <br /> Governance Delegation to Management Policies <br /> Policy Reference: Policy Title: <br /> G.4g1 Performance Metrics and Incentive <br /> Compensation <br /> 1.0 PURPOSE AND SUMMARY <br /> The successful performance of the ERMU is measured in terms of the Utilities' ability to meet <br /> our strategic goals and mission. By improving our efficiency and level of performance in <br /> meeting our strategic goals and mission we can improve the delivery of value to our customers. <br /> To create incentives for employees to take personal responsibility for accomplishment of the <br /> Utilities' strategic goals and mission, the Utilities has established a Utilities Performance <br /> Metrics-based Incentive Compensation system("UPMIC"). Through UPMIC the employees of <br /> ERMU will have an opportunity, as a group, to earn annual incentive compensation for each <br /> qualifying employee by contributing individually to the overall success of ERMU on a daily <br /> basis. <br /> Under UPMIC, either all qualifying employees will earn an incentive compensation distribution <br /> in a given year, or none will. And not only will incentive compensation under UPMIC in that <br /> sense be an all or nothing proposition each year,but there will be an equal percentage share basis <br /> for all on which the incentive compensation will be paid out if earned. This appropriately reflects <br /> the reality that we all succeed, or fall short, together as a team. <br /> To administer the UPMIC and measure objectively the level of performance that must be <br /> achieved for qualifying employees to earn incentive compensation, the attached UMPIC <br /> Performance Metrics Policy Score Card ("Score Card")has been created. The Score Card will be <br /> subject to revision annually based on the performance metrics adopted by the Commission <br /> annually for the coming year("Performance Metrics"). By tracking and measuring the <br /> Performance Metrics and creating incentive for employees to achieve the goals the Metrics <br /> embody, the Utilities believes it will be better able to focus efforts and resources on becoming <br /> more efficient and successful in meeting our strategic goals and mission and delivering improved <br /> value to our customers. <br /> Page 1 of 3 <br /> 45 <br />