Exhibit 10.2
ANADARKO PETROLEUM CORPORATION
1999 STOCK INCENTIVE PLAN
PERFORMANCE UNIT AGREEMENT
     THIS PERFORMANCE UNIT AGREEMENT (the “Agreement”) dated ___, 200_, is by
and between Anadarko Petroleum Corporation (the “Company”) and
                     (“Employee”).
W I T N E S S E T H:
ARTICLE 1
GRANT
     1.1 Grant. Pursuant to the Company’s 1999 Stock Incentive Plan (the “Plan”)
and subject further to the terms and conditions herein set forth, the Company
and Employee enter into this Agreement pursuant to which Employee may earn up to
{2 * Target} Performance Units. Each Performance Unit represents the value of
one share of the $0.10 par value common stock of the Company (“Performance
Units”). Upon the Company’s achievement of pre-determined objectives for a
specified performance period, the Company will pay out to Employee some or all
of the Performance Units as hereinafter described. The Compensation and Benefits
Committee of the Company’s Board of Directors (the “Committee”) reserves the
right, in its sole discretion, to make such payment in cash, shares of Company
common stock, or a combination of both.
ARTICLE 2
PRE-DETERMINED PROVISIONS
     2.1 Performance Period. Pursuant to this Agreement, the three-year period
beginning on January 1, 2007 and ending on December 31, 2009 will be the
performance period (the “Performance Period”).
     2.2 Performance Awards. Employee may earn a target of (a) {1/2 * Target}
Performance Units, up to a maximum of {Target} Performance Units during the
Performance Period with respect to the First Performance Objective, and (b) {1/2
* Target} Performance Units, up to a maximum of {Target} Performance Units
during the Performance Period with respect to the Second Performance Objective.
In no circumstances may Employee earn more than {2 * Target} Performance Units
during the Performance Period.
     2.3.1 First Performance Objective. The number of Performance Units to be
earned by Employee for the Performance Period with respect to the First
Performance Objective will be determined at the end of the Performance Period by
comparing the Company’s total shareholder return (“TSR”) over the Performance
Period to the TSRs of the Peer Companies’ for the same Performance Period. For
purposes of such comparison, TSR will be calculated as follows:
Average per share Stock Price for the last 60 Business Days of the Performance
Period

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minus
Average per share Stock Price for the 60 Business Days preceding the beginning
of the Performance Period
plus
Dividends (cash or stock) paid per share over the Performance Period
the above total of which is divided by
Average per share Stock Price for the 60 Business Days preceding the beginning
of the Performance Period
     “Stock Price” is defined as the average of the high and low prices for one
share of the Company’s common stock in one trading day and shall be adjusted for
stock splits, spin-offs, mergers or any other corporate securities transaction
affecting Stock Price, as determined by the Committee.
     “Business Days” are defined as any days the New York Stock Exchange is open
and shares of stock are actively traded.
     2.3.2 Peer Companies. For the Performance Period, the following companies
are the peer companies (“Peer Companies”) to be used in the award determination
with respect to the First Performance Objective. Any Peer Company that ceases to
be a publicly traded entity on a recognized stock exchange during the
Performance Period will be removed from the Peer Company list and will be
replaced with one of the following “Alternate Peer Companies”: Chevron
Corporation, Chesapeake Energy Corporation, and XTO Energy Inc. When an
Alternate Peer Company is added to the Peer Company list pursuant to this
paragraph, such company will be added to the Peer Company list in the order set
forth above. The Committee may evaluate for inclusion or exclusion any Peer
Company that merges with or is acquired by another Peer Company during the
Performance Period. No company, other than an Alternate Peer Company, may be
added to the list during the Performance Period.
Apache Corporation
ConocoPhillips
Devon Energy Corporation
EnCana Corporation
EOG Resources, Inc.
Hess Corporation
Marathon Oil Corporation
Noble Energy, Inc.
Occidental Petroleum Corporation
Pioneer Natural Resources Company
Talisman Energy Inc

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     2.3.3 Award Determination for First Performance Objective. At the end of
the Performance Period, the Peer Companies and the Company shall be ranked
together based on their TSR for the Performance Period from the highest TSR
being number 1 to the lowest TSR being the number of Peer Companies, including
the Company, remaining in the group at the end of the Performance Period. Based
on the Company’s relative TSR rank amongst the Peer Companies for the
Performance Period, Employee will have earned Performance Units as determined by
the Company’s percentile rank as follows:
          (A) If the Company’s relative TSR rank is equal to or above the 50th
percentile of the Peer Companies, Employee will have earned and the Company will
issue to Employee a number of Performance Units equal to {1/2 * Target}
multiplied by two times the Company’s percentile rank as determined under the
matrices of Exhibit I.
          (B) If the Company’s relative TSR rank is equal to or greater than the
50th percentile and the Company’s TSR is less than the TSR of the Peer Company
immediately above the Company in the relative ranking by not more than one
percentage point, then the payouts for both rankings (the Company’s ranking, as
determined under the matrices of Exhibit I, and the ranking of the Peer Company
immediately above the Company in the relative ranking, as determined under the
matrices of Exhibit I) will be averaged to determine the number of Performance
Units which will be earned by Employee.
          (C) If the Company’s relative TSR rank falls directly below the
relative TSR rank of a Peer Company whose rank represents the first payout level
for the Performance Period in which the number of shares earned is greater than
zero (as depicted in the matrices of Exhibit I, based on the number of Peer
Companies included under Section 2.3 of this Agreement), and the Company’s TSR
is less than the TSR of such Peer Company by not more than five percentage
points, then the Company will issue to Employee a number of Performance Units
equal to {1/2 * Target} multiplied by two times the percentile rank of the first
payout level. The Committee may reduce such award in its discretion, but in no
event may it increase the award above the first payout level.
     2.4.1 Second Performance Objective. The number of Performance Units
Employee may earn for the Performance Period with respect to the Second
Performance Objective will be determined at the end of the Performance Period by
calculating the Company’s Reserve Replacement Efficiency (“RRE”) ratio for the
three-year period beginning on January 1, 2007 and ending on December 31, 2009,
calculated as follows:
“Margin” per Barrels of Oil Equivalent (“BOE”) where Margin equals Revenues
minus Cash Costs, Interest Expenses and Cash Income Taxes
divided by
“Finding and Development Cost” (“F&D”) per BOE where F&D equals Oil & Gas
Segment Capital Expenditures (adjusted for changes in future development costs
discounted at 10%) divided by Total Reserve Adds (which includes Discoveries,
Extensions, Revisions and Acquisitions)

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     2.4.2 Award Determination for Second Performance Objective. At the end of
the Performance Period, the Company will determine the RRE ratio during the
Performance Period. Employee will have earned and the Company will issue to
Employee a number of Performance Units equal to {1/2 * Target} multiplied by the
applicable payout percentage, as determined under Exhibit II. For purposes of
this Section 2.4.2, the RRE ratio, as determined by the Company, will be rounded
to two decimal places.
     2.5 Payout of Award. Performance Units earned for the Performance Period
shall only be issued to Employee as soon as practicable following the
Committee’s formal review and certification of the actual TSR and RRE
performance results for the Performance Period.
     2.6 Retirement. If Employee’s employment is terminated prior to the end of
the Performance Period by reason of Retirement, the Company will issue to
Employee, at the end of the Performance Period and subject to Section 2.5 of
this Agreement, the number of Performance Units as determined under
Sections 2.3.3 and 2.4.2 of this Agreement multiplied by a fraction, the
numerator of which is the total number of completed and partial calendar months
of employment (rounded to the next whole month) with the Company during the
Performance Period and the denominator of which is 36. For purposes of this
Section 2.6, “Retirement” shall have the meaning ascribed to it in the Anadarko
Retirement Plan.
     2.7 Involuntary Termination. Notwithstanding Section 2.6 of this Agreement,
if Employee’s employment is terminated by the Company prior to the end of the
Performance Period, and Employee is eligible for and receives severance benefits
either (a) under the Anadarko Petroleum Corporation Officer Severance Plan, or
(b) pursuant to an individual employment, retention or similar agreement, then
Section 2.6 of this Agreement shall not apply and the Company shall issue to
Employee {Target} Performance Units as soon as practicable following the
Employee’s termination of employment.
     2.8 Change of Control. If a Change of Control, as defined in the Plan,
occurs prior to the end of the Performance Period, the Company shall issue to
Employee {Target} Performance Units as soon as practicable following the
effective date of the Change of Control.
     2.9 Death or Disability. If Employee’s employment terminates due to death
or Disability (as defined herein) prior to the end of the Performance Period,
the Company shall issue to Employee {Target} Performance Units as soon as
practicable following the Employee’s termination of employment as a result of
such death or Disability.
For purposes of this Agreement, “Disability” shall mean any termination as a
result of the Employee’s disability under circumstances entitling him to
benefits under the Company’s long-term disability plan.
Notwithstanding the foregoing, the Committee may, in its sole discretion,
increase the number of Performance Units to be transferred to Employee pursuant
to this Section 2.9 up to a total of {2 * Target} Performance Units.
     2.10 Other Termination. Upon a termination of employment prior to the end
of the

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Performance Period other than as contemplated by Sections 2.6 (“Retirement”),
2.7 (“Involuntary Termination”) or 2.9 (“Death or Disability”), this Agreement
shall immediately terminate and all Performance Units shall be forfeited upon
termination of employment.
ARTICLE 3
MISCELLANEOUS
     3.1 Tax Withholding. Employee may be required to pay to the Company, and
the Company shall have the right and is hereby authorized to withhold from any
payment made under this Agreement or from any other compensation or other amount
owing to Employee, the amount (in cash, Performance Units, other securities,
other Awards or other property) of any applicable withholding taxes due in
connection to any Performance Units granted hereunder and to take such other
action as may be necessary in the opinion of the Company to satisfy all
obligations for the payment of such taxes. In the case of payments made
hereunder in the form of Performance Units, at the Committee’s discretion,
Employee may be required to pay to the Company the amount of any taxes required
to be withheld with respect to such Performance Units or, in lieu thereof, the
Company shall have the right to retain (or Employee may be offered the
opportunity to elect to tender in accordance with rules established by the
Committee) the number of Performance Units whose aggregate Fair Market Value
equals the amount required to be withheld.
     3.2 No Assignment. The right of Employee or any other person claiming under
Employee to payments, issuance of Performance Units or other benefits under this
Agreement may not be assigned, transferred, pledged, anticipated, commuted or
encumbered nor shall said payments, Performance Unit issuance rights or other
benefits be subject to seizure for payments of any debts or judgments of
Employee or any person claiming under Employee or be transferable by operation
of law in advance of any payment or issuance of Performance Units hereunder.
Notwithstanding the foregoing there are no restrictions on the assignment,
alienation, pledge, attachment, sale, transfer or encumbrance of any Performance
Units that have been issued to Employee.
     3.3 Ownership and Possession. Employee shall not have any rights as a
stockholder with respect to any Performance Units granted hereunder.
     3.4 Binding Effect. This Agreement shall be binding upon and inure to the
benefit of any successor to the Company and all persons lawfully claiming under
Employee.
     3.5 No Rights to Continued Employment. Neither this Agreement nor the Plan
shall be construed as giving Employee any right to continue in the employ of the
Company or any of its Affiliates.
     3.6 Governing Law. This Agreement and the legal relations between the
parties shall be governed by and construed in accordance with the laws of the
State of Texas and applicable Federal law without regard to conflicts of laws
principles.

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IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by
an officer thereunder duly authorized, and Employee has executed this Agreement,
as of the day and year first above written.

                          ANADARKO PETROLEUM CORPORATION            
 
                   
 
  By:                                  
 
  Name:           Date    
 
  Title:                
 
                   
 
  EMPLOYEE                
 
                                 
 
  Name           Date    

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