HESS CORPORATION 2017 LONG-TERM INCENTIVE PLAN
Exhibit 10(1)
▇▇▇▇ CORPORATION 2017 LONG-TERM INCENTIVE PLAN
| Participant: | FIRST NAME - LAST NAME | ||||
| ▇▇▇▇▇ Date: | DATE | ||||
Number of Target Performance Shares | # OF TARGET PERFORMANCE SHARE UNITS | ||||
* * * * *
This PERFORMANCE AWARD AGREEMENT (this “Agreement”), dated as of the Grant Date specified above, is entered into by and between ▇▇▇▇ CORPORATION, a Delaware corporation (the “Corporation”), and the Participant specified above, pursuant to the Shareholder Value Program under the ▇▇▇▇ Corporation 2017 Long-Term Incentive Plan, as in effect and as amended from time to time (the “Plan”).
WHEREAS, it has been determined under the Plan that it would be in the best interests of the Corporation to grant the Performance Award provided for herein to the Participant as an inducement to remain in the employment of the Corporation (and/or any Subsidiary), and as an incentive for improved performance toward corporate goals during such employment;
WHEREAS, pursuant to the provisions of the Plan, the Committee has authorized the grant to the Participant of a Performance Award in accordance with the terms and conditions of this Agreement; and
WHEREAS, the Participant and the Corporation desire to enter into this Agreement to evidence and confirm the grant of such Performance Award on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and premises hereinafter set forth and for other good and valuable consideration, the parties hereto hereby mutually covenant and agree as follows.
1. Incorporation By Reference; Document Receipt. This Agreement is subject in all respects to the terms and provisions of the Plan (including, without limitation, any amendments thereto adopted at any time and from time to time unless such amendments are expressly not intended to apply to the grant of the Performance Award hereunder), all of which terms and provisions are made a part of and incorporated in this Agreement as if each were expressly set forth mutatis mutandis herein. Any capitalized term not defined in this Agreement shall have the same meaning as is ascribed thereto under the Plan. The Participant hereby acknowledges receipt of a prospectus describing the Plan and the Awards thereunder and that he has read it carefully and fully understands its content. In the event of any conflict between the terms of this Agreement and the terms of the Plan, the terms of the Plan shall control.
2. Grant of Performance Award. Pursuant to the provisions of the Plan, the Corporation as of the date set forth above (the “Grant Date”) has granted to the Participant, and hereby evidences the grant to the Participant of, subject to the terms and conditions set forth herein and in the Plan, a Performance Award consisting of the number of Performance Shares. A Performance Share is an unfunded and unsecured obligation to deliver up to one Share (or a portion thereof) or the cash equivalent thereof (determined in accordance with Section 3), subject to the terms and conditions of this Agreement and those of the Plan. The target number of Performance Shares is specified above (the “Target Performance Shares”), provided that up to 210% of the Target Performance Shares may be earned under this Agreement. References herein to Performance Shares are to the Performance Shares comprising such Performance Award granted pursuant to this Agreement.
3. Payment of Earned Performance Shares. Subject to the provisions of Section 5 and Section 6, after the end of the Performance Cycle described in Section 4(a), the Committee shall certify in writing on the date (the “Vesting Date”) of its first regular meeting following the end of the Performance Cycle whether, and to what extent, the performance goal set forth in Section 4(b) has been achieved and determine and certify in writing the number of Performance Shares earned pursuant to Section 4. The number of such Performance Shares so earned shall be paid by the Corporation as soon as administratively practicable after the Vesting Date; provided that in no event shall such payment be made later than March 15 of the calendar year that immediately follows the last day of the Performance Cycle. To the extent that the Performance Shares are not earned pursuant to Section 4, such Performance Shares shall be forfeited. Payments hereunder shall be made in Shares, unless the Committee, in its sole discretion, affirmatively determines that such payments shall be made in cash, or a combination 2 and cash. If a cash payment is made in lieu of delivering Shares, the amount of such payment shall be equal to the Fair Market Value of such Shares as of the trading date immediately prior to the date of such payment, less applicable tax withholdings in accordance with Section 12.03 of the Plan.
4. Vesting Criteria Applicable to Performance Shares.
(a) Performance Cycle. The Performance Cycle for the Performance Award granted pursuant to this Agreement shall commence on January 1, 2023, and shall end on December 31, 2025.
(b) Performance Goal. The performance goal for the Performance Cycle is the ▇▇▇▇ Total Shareholder Return (TSR) Compound Annual Growth Rate (CAGR) per Share to the Corporation’s shareholders, inclusive of dividends paid, during the Performance Cycle (the “▇▇▇▇ Total Shareholder Return (CAGR)”) in comparison to the XOP index (S&P® Oil & Gas Exploration & Production ETF) Total Shareholder Return (TSR) Compound Annual Growth Rate (CAGR) (the “XOP Total Shareholder Return (CAGR)”) and a modifier comparing the ▇▇▇▇ Total Shareholder Return (CAGR) against the S&P® 500 Total Shareholder Return (TSR) Compound Annual Growth Rate (CAGR) (the “S&P 500 Total Shareholder Return (CAGR)”). For purposes of this Agreement, total shareholder return (CAGR) (“Total Shareholder Return CAGR”) shall mean the year-over-year growth rate of an investment over the 3-year
2
Performance Cycle determined by (1) dividing the Ending Average Market Value by the Beginning Average Market Value, and (2) raising the resulting quotient to the power of 1/3 and (3) subtracting one from the resulting number and (4) multiplying the resulting number by 100. For purposes of determining “▇▇▇▇ Total Shareholder Return (CAGR)” under this Agreement, (i) “Ending Average Market Value” shall be the (A) the sum of (1) the dividends paid (regardless of whether paid in cash or property) on a Share during the Performance Cycle, assuming reinvestment of such dividends in such stock (based on the closing price of such stock on the date such dividend is paid), plus (2) the average closing price of a Share on the principal United States exchange on which the common stock of the Corporation trades for the 60 trading days immediately prior to and including the last day of the Performance Cycle (appropriately adjusted for any stock dividend, stock split, spin-off, merger or other similar corporate events) and (ii) “Beginning Average Market Value” shall be the average closing price of a Share on the principal United States exchange on which the stock trades for the 60 trading days occurring immediately prior to the first day of the Performance Cycle. For the avoidance of doubt, it is intended that the foregoing calculation of ▇▇▇▇ Total Shareholder Return (CAGR) shall take into account not only the reinvestment of dividends in a share of common stock of the Corporation but also capital appreciation or depreciation in the shares deemed acquired by such reinvestment. For purposes of determining “XOP Total Shareholder Return (CAGR)” and “S&P 500 Total Shareholder Return (CAGR)” under this Agreement, (i) “Ending Average Market Value” shall be the average closing price of a share of the index on the principal United States exchange on which the index trades for the 60 trading days immediately prior to and including the last day of the Performance Cycle and (ii) “Beginning Average Market Value” shall be the average closing price of a share of the applicable index on the principal United States exchange on which the applicable index trades for the 60 trading days occurring immediately prior to the first day of the Performance Cycle. The Ending Average Market Value for the XOP Total Shareholder Return (CAGR) and the S&P 500 Total Shareholder Return (CAGR) shall include both the capital gains of its underlying securities but also assumes that all distributions, such as dividends, are reinvested back into the index. All determinations under this Section 4 shall be made by the Committee in its sole discretion.
(c) Percentage of Performance Shares Earned. As soon as practicable after the completion of the Performance Cycle, the ▇▇▇▇ Total Shareholder Return (CAGR), the XOP Total Shareholder Return (CAGR) and the S&P 500 Total Shareholder Return (CAGR) shall be calculated by the Corporation. The percentage of Target Performance Shares earned shall be determined by subtracting the XOP Total Shareholder Return (CAGR) from the ▇▇▇▇ Total Shareholder Return (CAGR) with such positive or negative result providing for the percentage of Target Performance Shares that will be earned and payable under this Agreement in accordance with the chart set forth on Exhibit A (the “XOP Calculation”). See Exhibit C for an example of the XOP Calculation. The percentage of Target Performance Shares earned in accordance with the XOP Calculation will then be subject to an upward or downward adjustment of up to 10% of the Target Performance Shares determined by subtracting the S&P 500 Total Shareholder Return (CAGR) from the ▇▇▇▇ Total Shareholder Return (CAGR) with such positive or negative result providing for an adjustment to the percentage of Target Performance Shares earned under the XOP Calculation determined in accordance with
3
the chart set forth on Exhibit B (the “S&P Calculation”). See Exhibit D for an example of the S&P Calculation. Notwithstanding the foregoing provisions of this Section 4(c) to the contrary, if the ▇▇▇▇ Total Shareholder Return (CAGR) during the Performance Cycle is negative, the Percentage of Target Performance Shares Earned shall not exceed 100%.
5. Termination of Employment. Except as provided in this Section 5, the Participant shall not have any right to any payment hereunder unless the Participant is employed by the Corporation or a Subsidiary on the Vesting Date pursuant to Section 3.
(a) Death, Permanent Total Disability or Full Retirement. If (i) the Participant’s employment with the Corporation or any Subsidiary terminates prior to the Vesting Date pursuant to Section 3 by reason of the Participant’s death, permanent total disability or “Full Retirement” (as defined below), the Participant shall be entitled to receive the same payment, if any (without pro-ration), in respect of the Performance Shares as would have been payable, and at the same time and subject to the same conditions, had the Participant’s employment continued until such Vesting Date. The existence and date of permanent total disability shall be determined by the Committee and its determination shall be final and conclusive. For purposes of this Agreement, “Full Retirement” shall mean voluntary retirement after attaining at least age 65 with at least five years of continuous service with the Corporation or any Subsidiary prior to the date of such retirement.
(b) Other than Death, Permanent Total Disability or Full Retirement. If the Participant’s employment with the Corporation or any Subsidiary terminates prior to the Vesting Date pursuant to Section 3 for any reason other than the Participant’s death, permanent total disability or Full Retirement, all of the Performance Shares and the Participant’s rights with respect thereto shall be immediately forfeited and cancelled without further action by the Corporation or the Participant as of the date of such termination of employment.
(c) Early Retirement/Termination other than Cause. Notwithstanding Section 5(b), if (i) the Participant’s employment with the Corporation or any Subsidiary terminates prior to the Vesting Date pursuant to Section 3 by reason of the Participant’s “Early Retirement” (as defined below) or on account of a termination by the Corporation or a Subsidiary other than for Cause, the Participant shall be entitled to receive the same payment, if any, in respect of the Performance Shares as would have been payable, and at the same time and subject to the same conditions, had the Participant’s employment continued until such Vesting Date, provided that such payment shall be pro-rated based on the number of calendar days of the Performance Cycle elapsed through the date of such Early Retirement or termination other than for Cause. For purposes of this Agreement, “Early Retirement” shall mean voluntary retirement after attaining at least age 55 with at least ten years of continuous service with the Corporation or any Subsidiary prior to the date of such retirement.
(d) Forfeiture Following Early Retirement or Termination other than Cause. Notwithstanding any other provision of this Agreement to the contrary, if, following termination of the Participant’s employment with the Corporation or any Subsidiary due to Early Retirement or a termination other than for
4
Cause, as described in Section 5(c), the Committee determines in its good faith discretion that the Participant shall have engaged in any Prohibited Activity (as hereinafter defined) at any time during the time through the otherwise applicable Vesting Date with respect to the Performance Cycle, all of the Performance Shares and the Participant’s rights with respect thereto shall be immediately forfeited and cancelled without further action by the Corporation or the Participant as of the date on which the Participant shall have first entered into such Prohibited Activity. This Section 5(d) shall not constitute the Corporation’s exclusive remedy for the Participant’s engagement in any Prohibited Activity, and the Corporation may seek any additional legal or equitable remedy, including injunctive relief, in any such circumstances. If any provision contained in this Section 5(d) shall be held by any court of competent jurisdiction to be unenforceable, void or invalid, the parties intend that such provision be modified to make it valid and enforceable to the fullest extent permitted by law. If any such provision cannot be modified to be valid and enforceable, such provision shall be severed from this Agreement and the invalidity or unenforceability of such provision shall not affect the validity or enforceability of the remaining provisions. Notwithstanding any other provision of this Section 5(d) to the contrary, upon the occurrence of a Change of Control, the foregoing provisions of this Section 5(d) shall automatically terminate and cease to apply with respect to any Performance Shares that are outstanding and have not previously been forfeited under this Section 5(d). For purposes of this Agreement:
(i) “Prohibited Activity” shall mean either Competitive Activity or Interference.
(ii) “Competitive Activity” shall mean that the Participant, directly or indirectly, in any manner or capacity, shall be employed by, serve as a director or manager of, act as a consultant to or maintain any material ownership interest in, any E&P Company or M&R Company that competes with the business of the Corporation or any Subsidiary or affiliate thereof in geographical areas in which the Participant is aware that the Corporation or any Subsidiary or affiliate is engaged, or is considering engaging, unless the Committee agrees to such activity of the Participant in writing; provided, however, that the Participant’s ownership solely as an investor of less than 1% of the outstanding securities of any publicly-traded securities of any E&P Company or M&R Company shall not, by itself, be considered to be Competitive Activity.
(iii) “Interference” shall mean that the Participant shall, directly or indirectly, interfere with the relationship between the Corporation or any Subsidiary or affiliate of the Corporation and any person (including, without limitation, any business or governmental entity) that to the Participant’s knowledge is, or was, a client, customer, supplier, licensee or partner of the Corporation or any Subsidiary, or had any other business relationship with the Corporation or any Subsidiary.
(iv) “E&P Company” shall mean any business which is engaged in the business of exploring for, or developing or producing, crude oil or natural gas.
(v) “M&R Company” shall mean any business which is
5
engaged in the manufacture, generation, purchase, marketing or trading of refined petroleum products, natural gas or electricity.
6. Change of Control. Notwithstanding anything in Section 3, 4, 5(a) or 5(c) to the contrary, in the event a Change of Control occurs during the Performance Cycle, the ▇▇▇▇ Total Shareholder Return (CAGR)”), XOP Total Shareholder Return (CAGR)”) and S&P 500 Total Shareholder Return (CAGR)”) shall be determined in accordance with Section 4 for the portion of the Performance Cycle that ends on the date immediately prior to the date of the Change of Control. Provided that the Performance Shares have not been forfeited pursuant to Section 5 prior to the date of the Change of Control, the percentage of Target Performance Shares earned shall be the sum of (a) the product of the number of Target Performance Shares set forth in Section 2, multiplied by a fraction, the numerator of which is the number of calendar days of the Performance Cycle that elapse through the date immediately prior to the date of the Change of Control and the denominator of which is the full number of calendar days during the Performance Cycle, multiplied by the percentage of Target Performance Shares Earned in accordance with Section 4, plus (b) the product of the number of Target Performance Shares set forth in Section 2, multiplied by a fraction, the numerator of which is the number of calendar days remaining in the Performance Cycle on and following the date of the Change of Control and the denominator of which is the full number of calendar days during the Performance Cycle. The amount payable subject to the terms and conditions hereof in respect of such earned Performance Shares shall be equal to the product of such number of earned Performance Shares multiplied by the Change of Control Price, without interest or other additional earnings (such amount, the “CoC Earned Performance Share Amount”). Except as otherwise provided in this Section 6, the CoC Earned Performance Share Amount shall be paid in a cash lump-sum during, and no later than March 15 of, the calendar year that immediately follows the date of the Change in Control. If, following a Change of Control, the Participant’s employment with the Corporation or any Subsidiary terminates prior to payment of the CoC Earned Performance Share Amount by reason of (w) termination by the Corporation or such Subsidiary without Cause, (x) resignation by the Participant for Good Reason, (y) the Participant’s death or permanent total disability (determined as described in Section 5(a)) or (z) the Participant’s Full Retirement, the Participant shall be entitled to receive payment of the CoC Earned Performance Share Amount in a cash lump-sum not later than 5 business days after the effective date of such termination of employment, provided that if such payment would result in accelerated or additional taxes under Section 409A of the Code then such payment shall be made at the time specified in the immediately preceding sentence as if the Participant’s employment had not so terminated. If, following a Change of Control, the Participant’s employment with the Corporation or any Subsidiary terminates under any circumstances other than those described in the immediately preceding sentence, then the Participant shall not have any right to any payment in respect of the Performance Shares, whether or not earned.
7. Dividend Equivalents. With respect to the number of Target Performance Shares set forth in Section 2, the Participant shall be credited with Dividend Equivalents with respect to each such Target Performance Share equal to the amount per Share of any ordinary cash dividends declared by the Board with record dates during the period beginning on the first day of the Performance Cycle and ending on the earliest to
6
occur of: (a) the last day of the Performance Cycle; (b) the date of a Change of Control and (c) the date such Target Performance Share terminates or is forfeited under Section 3 or Section 5. The Corporation shall pay in cash to the Participant an amount equal to the product of (i) sum of the aggregate amount of such Dividend Equivalents credited to the Participant, multiplied by (ii) the percentage of Target Performance Shares earned in accordance with Section 4, such amount to be paid as and when the related Performance Shares are paid in accordance with Section 3 or Section 6, as applicable. Any Dividend Equivalents shall be forfeited as and when the related Performance Shares are forfeited in accordance with Section 3, Section 5 or Section 6.
8. No Rights as a Shareholder. Until Shares are issued, if at all, in satisfaction of the Corporation’s obligations under this Agreement, in the time and manner specified in Section 3 or 6, the Participant shall have no rights as a shareholder as to the Shares underlying the Performance Shares.
9. Beneficiary. The Participant may designate the beneficiary or beneficiaries to receive any payments which may be made in respect of the Performance Shares after the Participant’s death. Any such designation shall be made by the Participant in writing on a beneficiary designation form provided by or on behalf of the Corporation and (unless the Participant has waived such right) may be changed by the Participant from time to time by filing a new beneficiary designation form as provided therein. If the Participant does not designate a beneficiary or if no designated beneficiary survives the Participant, the Participant’s beneficiary shall be the legal representative of his estate.
10. Tax Withholding. No payment of Shares or cash in respect of the Performance Shares shall be made unless and until the Participant (or his or her beneficiary or legal representative) shall have made arrangements satisfactory to the Committee for the payment of any amounts required to be withheld with respect thereto under all present or future federal, state, local and non-United States tax laws and regulations and other laws and regulations in accordance with Section 12.03 of the Plan. The Corporation shall have the right to deduct from all amounts paid to the Participant in cash in respect of Performance Shares any such amounts. In the case of any payments of Performance Shares in the form of Shares, unless the Participant elects otherwise in advance in writing or is prohibited by law, upon payment of such Shares, such number of such Shares as shall be necessary to pay such amounts shall be sold by the Corporation or its designee on the Participant’s behalf, and the proceeds thereof shall be delivered to the Corporation for remittance to the appropriate governmental authorities. In the event the Committee determines that any amounts are required to be withheld in respect of the Performance Shares prior to payment of such Performance Shares, the Participant shall thereupon pay to the Corporation in cash the full amount so required to be withheld.
11. Limitations; Governing Law. Nothing herein or in the Plan shall be construed as conferring on the Participant or anyone else the right to continue in the employ of the Corporation or any Subsidiary. The rights and obligations under this Agreement are governed by and construed in accordance with the laws of the State of Delaware, without reference to the principles of conflict of laws thereof.
7
12. Non-transferability. Except as otherwise provided by Section 8, the Performance Shares, and any rights and interests with respect thereto, may not be sold, exchanged, transferred, assigned or otherwise disposed of in any way by the Participant (or the Participant’s beneficiary), and may not be pledged or encumbered in any way by the Participant (or the Participant’s beneficiary), and shall not be subject to execution, attachment or similar legal process.
13. Entire Agreement; Amendment. This Agreement (including the Plan which is incorporated herein by reference) contains the entire agreement between the parties hereto with respect to the subject matter contained herein, and supersedes all prior agreements or prior understandings, whether written or oral, between the parties hereto relating to such subject matter. The Board has the right, in its sole discretion, to amend, alter, suspend, discontinue or terminate the Plan, and the Committee has the right, in its sole discretion, to amend, alter, suspend, discontinue or terminate this Agreement from time to time in accordance with and as provided in the Plan; provided, however, that no such amendment, alteration, suspension, discontinuance or termination of the Plan may materially impair the Participant’s previously accrued rights under this Agreement or the Plan without the Participant’s consent, except as otherwise provided in Section 11 of the Plan. This Agreement may also be modified, amended or terminated by a writing signed by the Participant and the Corporation.
14. Notices. Any notice which may be required or permitted under this Agreement shall be in writing and shall be delivered in person, or via facsimile transmission, overnight courier service or certified mail, return receipt requested, postage prepaid, properly addressed as follows:
(a) If the notice is to the Corporation, to the attention of the Secretary of ▇▇▇▇ Corporation, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at such other address as the Corporation by notice to the Participant may designate in writing from time to time.
(b) If the notice is to the Participant, at the Participant’s address as shown on the Corporation’s records, or at such other address as the Participant, by notice to the Corporation, may designate in writing from time to time.
15. Compliance with Laws. The issuance of any Shares pursuant to this Agreement shall be subject to, and shall comply with, any applicable requirements of federal and state securities laws, rules and regulations (including, without limitation, the provisions of the Securities Act of 1933, as amended, the Exchange Act and the respective rules and regulations promulgated thereunder), any applicable rules of any exchange on which the common stock of the Corporation is listed (including, without limitation, the rules and regulations of the New York Stock Exchange), and any other law, rule or regulation applicable thereto. The Corporation shall not be obligated to issue any of the common stock subject to this Agreement if such issuance would violate any such requirements and if issued shall be deemed void ab initio.
16. Binding Agreement; Further Assurances. This Agreement shall inure to the benefit of, be binding upon, and be enforceable by the Corporation and its successors and assigns. Each party hereto shall do and perform (or shall cause to be done
8
and performed) all such further acts and shall execute and deliver all such other agreements, certificates, instruments and documents as any other party hereto reasonably may request in order to carry out the intent and accomplish the purposes of this Agreement and the Plan and the consummation of the transactions contemplated thereunder.
17. Counterparts; Headings. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same instrument. The titles and headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of this Agreement.
18. Severability. The invalidity or unenforceability of any provisions of this Agreement in any jurisdiction shall not affect the validity, legality or enforceability of the remainder of this Agreement in such jurisdiction or the validity, legality or enforceability of any provision of this Agreement in any other jurisdiction, it being intended that all rights and obligations of the parties hereunder shall be enforceable to the fullest extent permitted by law.
19. Terms of Employment. The Plan is a discretionary plan. The Participant hereby acknowledges that neither the Plan nor this Agreement forms part of the Participant’s terms of employment and nothing in the Plan may be construed as imposing on the Corporation or any Subsidiary a contractual obligation to offer participation in the Plan to any employee of the Corporation or any Subsidiary. Neither the Corporation nor any Subsidiary is under any obligation to grant any further Awards to the Participant under the Plan. If the Participant ceases to be an employee of the Corporation or any Subsidiary for any reason, the Participant shall not be entitled by way of compensation for loss of office or otherwise howsoever to any sum or other benefit to compensate the Participant for the loss of any rights under this Agreement or the Plan. The Participant also acknowledges that the Corporation has adopted a policy prohibiting recipients of equity awarded from the Corporation, including the Performance Shares, from trading in equity derivative instruments to hedge the economic risks of holding Corporation common stock or interests therein. The Participant hereby acknowledges that he will abide by such policy in all respects.
20. Data Protection. By signing this Agreement, the Participant hereby consents to the holding and processing of personal data provided by the Participant to the Corporation for all purposes necessary for the operation of the Plan. These include, but are not limited to:
(a) administering and maintaining the Participant’s records;
(b) providing information to any registrars, brokers or third party administrators of the Plan; and
(c) providing information to future purchasers of the Corporation or the business in which the Participant works.
21. Code Section 409A. Payment of the Performance Shares and this
9
Agreement are intended to comply with Section 409A of the Code, and shall be administered and construed in accordance with such intent. Accordingly, the Corporation shall have the authority to take any action, or refrain from taking any action, with respect to this Agreement that it determines is necessary or appropriate to ensure compliance with Code Section 409A (provided that the Corporation shall choose the action that best preserves the value of payments provided to the Participant under this Agreement that is consistent with Code Section 409A). In furtherance, but not in limitation, of the foregoing, notwithstanding any other provisions of this Agreement to the contrary:
(a) in no event may the Participant designate, directly or indirectly, the calendar year of any payment to be made hereunder;
(b) if at the time of the Participant’s separation from service, the Corporation determines that the Participant is a “specified employee” within the meaning of Code Section 409A, payments, if any, hereunder that constitute a “deferral of compensation” under Code Section 409A and that would otherwise become due on account of such separation from service shall be delayed and all such delayed payments shall be paid in full upon the earlier to occur of (i) a date during the thirty-day period commencing six months and one day following such separation from service and (ii) the date of the Participant’s death, provided that such delay shall not apply to any payment that is excepted from coverage by Code Section 409A, such as a payment covered by the short-term deferral exception described in Treasury Regulations Section 1.409A-1(b)(4); and
(c) notwithstanding any other provision of this Agreement to the contrary, a termination or retirement of Participant's employment hereunder shall mean and be interpreted consistent with a “separation from service” within the meaning of Code Section 409A with respect to any payments hereunder that constitute a “deferral of compensation” under Code Section 409A that become due on account of such separation from service.
10
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be executed by its duly authorized officer, and the Participant has also executed this Agreement and acknowledged receipt of other related materials including the Plan prospectus, all as of the Grant Date.
▇▇▇▇ CORPORATION
/s/ ▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇
Chief Executive Officer
Acknowledged and Agreed to:
____________________________
11
Exhibit A
Payout Schedule vs XOP Index
| Achievement Level | ▇▇▇▇ TSR CAGR vs. XOP TSR CAGR | % of Target Performance Shares Earned | ||||||
| Maximum | ≥20% | 200% | ||||||
| Target | 0% | 100% | ||||||
| Threshold | -20% | 50% | ||||||
| Below Threshold | <-20% | 0% | ||||||
Payouts between “Threshold”, “Target”, and “Maximum” are linearly interpolated (e.g., in a scenario where ▇▇▇▇’ 3-year TSR CAGR is +10% above the XOP, would result in 150% of target shares being earned)
Exhibit B
Payout Schedule vs S&P 500
| Achievement Level | ▇▇▇▇ TSR CAGR vs. S&P 500 TSR CAGR | Modifier Impact (as a % of Target Performance Shares) | ||||||
| Maximum | ≥20% | +10% | ||||||
| Target | 0% | 0% | ||||||
| Minimum | ≤-20% | -10% | ||||||
Modifier impact is linearly interpolated (e.g., in a scenario where ▇▇▇▇’ 3-year TSR CAGR is +10% above the S&P 500, would result in a modifier impact of +5%)
Exhibit C
Example of XOP Calculation
For example, if the ▇▇▇▇ Total Shareholder Return (CAGR) is 8% and the XOP Total Shareholder Return (CAGR) is 2%, subtracting 2% from 8% results in a positive difference of 6% resulting in 130% of the Target Performance Shares being earned and payable in accordance with the chart on Exhibit A.
Exhibit D
Example of S&P Calculation
For example, consider the same facts in the example in Exhibit C above which resulted in 130% of the Target Performance Shares being earned based on a ▇▇▇▇ Total Shareholder Return (CAGR) of 8%. In the event the S&P 500 Total Shareholder Return (CAGR) is 10%, the adjustment under the S&P Calculation will be determined by subtracting 10% from 8% which results in a difference of negative 2%. In accordance with the chart set forth on Exhibit B, a (-2%) difference results in a negative adjustment of 1% to the percentage of Target Performance Shares earned under the XOP Calculation. Accordingly, the final percentage of Target Performance Shares that will be earned under the XOP Calculation (as adjusted by the S&P Calculation) will be 129% (i.e., 130% minus 1%).
12