EXHIBIT 10.4

 

Murphy Oil Corporation

Stock Plan for Non-Employee Directors

 

I. Plan Purpose.

 

The purpose of the Stock Plan for Non-Employee Directors (the “Plan”) is to
advance the interests of Murphy Oil Corporation (the “Company”) by enhancing the
ability of the Company to attract and retain directors who are in a position to
make significant contributions to the success of the Company and to reward
directors for such contributions.

 

II. Definitions.

 

For purposes of the Plan, the following terms shall be defined as set forth
below:

 

  (1) “Board” means the Board of Directors of the Company.

 

  (2) “Change in Control” shall be deemed to have occurred if (i) any “person”,
including a “group” (as such terms are used in Sections 13(d) and 14(d)(2) of
the Exchange Act, but excluding the Company, any of its subsidiaries or any
employee benefit plan of the Company) is or becomes the “beneficial owner” (as
defined in Rule 13(d)(3) under the Exchange Act), directly or indirectly, of
securities of the Company representing 25 percent or more of the combined voting
power of the Company’s then outstanding securities; or (ii) the stockholders of
the Company shall approve a definitive agreement (1) for the merger or other
business combination of the Company with or into another corporation a majority
of the directors of which were not directors of the Company immediately prior to
the merger and in which the stockholders of the Company immediately prior to the
effective date of such merger own less than 50 percent of the voting power in
such corporation or (2) for the sale or other disposition of all or
substantially all of the assets of the Company.

 

  (3) “Code” means the Internal Revenue Code of 1986, as amended, together with
the published rulings, regulations, and interpretations duly promulgated
thereunder.

 

  (4) “Committee” means the Committee referred to in Section III of the Plan
which has been designated by the Board to administer the Plan.

 

  (5) “Common Stock” or “Common Share” means the Common Stock of the Company,
with a par value of $1.00 per share.

 

  (6) “Company” means Murphy Oil Corporation and any successor organization.

 

  (7) “Disability” means a physical or mental condition that prevents the
Participant from performing his duties as a member of the Board for a period
expected to exceed six consecutive months.

 

  (8) “Exchange Act” means the Securities Exchange Act of 1934, as amended from
time to time, and any successor thereto.

 

Ex. 10.4-1

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  (9) “Fair Market Value” of a share of Common Stock is the mean of the highest
and lowest prices per share on the New York Stock Exchange Consolidated Tape, or
such service as the Board may select, on the appropriate date, or in the absence
of reported sales on such day, the most recent previous day for which sales were
reported.

 

  (10) “Non-Employee Director” means a person who, as of any applicable date, is
a member of the Board of Directors and is not an employee of the Company or any
of its subsidiaries.

 

  (11) “Non-Qualified Stock Option” means a Stock Option granted under Section
VI below which is not intended to be an incentive stock option within the
meaning of Section 422 of the Code.

 

  (12) “Option Price” means the price specified in Section VI below.

 

  (13) “Participant” means the recipient of a Stock Option or Restricted Stock
Award granted under the Plan.

 

  (14) “Person” means an individual, corporation, partnership, association,
trust, or any other entity or organization.

 

  (15) “Restricted Period” means the period designated by the Committee during
which Restricted Stock may not be sold, assigned, transferred, pledged, or
otherwise encumbered and during which such stock is subject to forfeiture.

 

  (16) “Restricted Stock” means those shares of Common Stock issued pursuant to
a Restricted Stock Award, which are subject to the restrictions, terms, and
conditions specified by the Committee pursuant to Section VII.

 

  (17) “Restricted Stock Award” means an award of restricted stock pursuant to
Section VII.

 

  (18) “Retirement” means retirement from the Board of Directors in accordance
with the retirement policy then applicable to Board members, as determined from
time to time.

 

  (19) “Stock Option” or “Option” means any Non-Qualified Stock Option to
purchase shares of Common Stock granted pursuant to Section VI below.

 

  (20) “Subsidiary” means (i) any corporation in an unbroken chain of
corporations beginning with the Company, if each of the corporations other than
the last corporation in the unbroken chain owns stock possessing a majority of
the total combined voting power of all classes of stock in one of the other
corporations in the chain, (ii) any limited partnership, if the Company or any
corporation described in item (i) above owns a majority of the general
partnership interest and a majority of the limited partnership interests
entitled to vote on the removal and replacement of the general partner, and
(iii) any partnership or limited liability company, if the partners or members
thereof are composed only of the Company, any corporation listed in item (i)
above or any limited partnership listed in item (ii) above. “Subsidiaries” means
more than one of any such corporations, limited partnerships, partnerships or
limited liability companies.

 

Ex. 10.4-2

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III. Administration.

 

The Plan shall be administered by a Committee of the Board of Directors,
designated by the Board and to be comprised of not less than two members of the
Board. Each director, while serving as a member of the Committee, shall be
considered to be acting in his capacity as a director of the Company. Members of
the Committee shall be appointed from time to time for such terms as the Board
shall determine, and may be removed by the Board at any time with or without
cause. Subject to the provisions of the Plan, the Committee shall have sole and
complete authority to construe and interpret the Plan, to establish, amend, and
rescind appropriate rules and regulations relating to the Plan, to determine the
Persons to whom and the time or times at which to grant Stock Options and
Restricted Stock Awards thereunder, to administer the Plan, and to take all such
steps and make all such determinations in connection with the Plan and the Stock
Options and Restricted Stock Awards granted thereunder as it may deem necessary
or advisable to carry out the provisions and intent of the Plan. All
determinations of the Committee shall be by a majority of its members, and its
determinations shall be final and conclusive for all purposes and upon all
Persons, including but without limitation, the Company, the Committee, the Board
of Directors of the Company, the Participants, and their respective successors
in interest.

 

IV. Shares Subject to the Plan.

 

Subject to any adjustment as provided in Section XI, an aggregate of 400,000
shares of Common Stock shall be available for issuance of grants under the Plan
however, no more than fifty percent (50%) of the shares available under the Plan
shall be issued in respect to Restricted Stock. The shares of Common Stock
deliverable upon the exercise of Stock Options or the award of Restricted Stock
may be made available from authorized but unissued Common Shares or Common
Shares reacquired by the Company, including Common Shares purchased in the open
market. If any grants under the Plan shall expire or terminate for any reason
without having been exercised in full, the Common Shares subject to, but not
delivered under, such grants may again become available for the grant of other
Stock Options or Restricted Stock under the Plan. No Common Shares deliverable
to the Company in full or partial payment of the purchase price payable pursuant
to Section VI of the Plan shall become available for the grant of other Stock
Options or Restricted Stock under the Plan.

 

V. Eligibility.

 

Only Non-employee Directors are eligible to be granted Stock Options or
Restricted Stock under the Plan.

 

VI. Stock Options.

 

Each Stock Option granted under this Plan shall be evidenced by a written
agreement which shall comply with and be subject to the following terms and
conditions.

 

  (1) Grant. Subject to the provisions of the Plan, the Committee shall have
sole and complete authority to determine the persons to whom Stock Options may
be granted, the number of shares to be covered by each Stock Option, and the
conditions and limitations, if any, in addition to those set forth in this
Section VI, applicable to such Stock Options. Each such grant shall be confirmed
by an

 

Ex. 10.4-3

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agreement executed by the Company and the Participant, which agreement shall
contain such provisions as the Committee determines to be necessary or
appropriate to carry out the intent of the Plan with respect to such grant.
Unless otherwise determined by the Committee, each grant agreement shall provide
that the Stock Option is not transferable by the Participant otherwise than by
will or by the laws of descent and distribution, and is exercisable, during the
Participant’s lifetime, only by such Participant.

 

  (2) Grant Price. The Committee shall establish the grant price at the time
each Stock Option is granted, which price shall not be less than 100 percent of
the Fair Market Value of the Common Stock on the date of grant.

 

  (3) Exercisability and Term. Each Stock Option granted under the Plan will
become exercisable and mature in three equal annual installments commencing on
the first anniversary of the date of grant and annually thereafter. Each Stock
Option granted under the Plan shall expire ten years from the date of grant,
except as otherwise set forth in Section VIII of the Plan.

 

  (4) Payment Upon Exercise. Stock Options may be exercised only upon payment to
the Company in full of the grant price of the Common Shares to be delivered.
Such payment shall be made in cash or in Common Stock, or in a combination of
cash and Common Stock, or such other considerations as shall be approved by the
Committee. The sum of the cash and the Fair Market Value of such Common Stock or
other consideration shall be at least equal to the aggregate grant price of the
Common Shares to be delivered.

 

VII. Restricted Stock Awards.

 

  (1) Grant. Subject to the provisions of the Plan, the Committee shall have
sole and complete authority to determine the persons to whom Restricted Stock
may be granted, the number of shares to be covered by each such grant of
Restricted Stock, and the conditions and limitations, if any, in addition to
those set forth in this Section VII, applicable to such Restricted Stock. Each
such grant shall be confirmed by an agreement executed by the Company and the
Participant, which agreement shall contain such provisions as the Committee
determines to be necessary or appropriate to carry out the intent of the Plan
with respect to such grant. Unless otherwise determined by the Committee, each
grant agreement shall provide that the Restricted Stock is not transferable by
the Participant otherwise than by will or by the laws of descent and
distribution during the Restricted Period.

 

  (2) Restricted Period. Unless otherwise determined by the Committee,
Restricted Stock will have its restrictions lifted three (3) years from the date
of grant.

 

  (3) Voting Rights. Unless otherwise determined by the Committee at the time of
grant, Participants holding shares of Restricted Stock granted here under may
exercise full voting rights with respect to those shares during the Restricted
Period.

 

Ex. 10.4-4

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  (4) Dividends. Unless otherwise determined by the Committee at the time of
grant, Participants holding shares of Restricted Stock shall be eligible to
receive all dividends and other distributions paid with respect to those shares
during the Restricted Period, provided that if any such dividends or
distributions are paid in shares of Common Stock or other securities, such
shares or securities shall be subject to the same restrictions on
transferability as apply to the Restricted Stock with respect to which they were
paid.

 

VIII. Change in Control.

 

Upon the occurrence of a Change in Control (as defined herein), all outstanding
Stock Options and Restricted Stock Awards granted to Participants shall become
immediately vested, exercisable and nonforfeitable, and shall remain vested,
exercisable and nonforfeitable during their remaining terms.

 

IX. Stock Options in the Event of Termination.

 

Unless otherwise determined by the Committee, the following shall apply to Stock
Option grants under Section VI of the Plan.

 

  (1) Termination of Board Membership Because of Retirement or Disability. If a
Participant’s membership on the Board of Directors terminates because of
Retirement or Disability, any Stock Option held by the Participant may be
exercised, in whole or in part, to the extent not previously exercised, only
during the period (i) beginning on the later of (A) one year after the date of
grant of such Stock Option or (B) the date of termination of Board membership
due to Retirement or Disability; and (ii) ending on and including the earlier of
(A) the last day of the original exercise period remaining under the applicable
award agreement or (B) the third anniversary of the date of termination of Board
membership due to Retirement or Disability.

 

  (2) Termination of Board Membership Because of Death. If a Participant’s
membership on the Board of Directors terminates because of death, any Stock
Option held by the Participant may be exercised, in whole or in part, to the
extent not previously exercised, only during the period (i) beginning on the
date of death; and (ii) ending on and including the earlier of (A) the last day
of the original exercise period remaining under the applicable award agreement
or (B) the third anniversary of the date of death.

 

  (3) Death After Termination of Board Membership Because of Retirement or
Disability. If a Participant dies after the Participant’s membership on the
Board of Directors has terminated because of Retirement or Disability, any Stock
Option held by the Participant may be exercised, in whole or in part, to the
extent not previously exercised, only during the period (i) beginning on the
date of death; and (ii) ending on and including the earlier of (A) the last day
of the original exercise period remaining under the applicable award agreement
or (B) the third anniversary of the date of termination of Board membership due
to Retirement or Disability.

 

Ex. 10.4-5

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  (4) Termination of Board Membership for Reasons other than Retirement,
Disability, Death or a Change in Control. If a Participant’s membership on the
Board of Directors terminates for any reason other than Retirement, Disability,
Death or a Change in Control, the Stock Options held by such Participant, to the
extent not previously exercised, shall be forfeited at the time of such
termination of Board membership.

 

X. Restricted Stock in the Event of Termination.

 

  (1) Termination of Board Membership because of Retirement, Disability or
Death. If a Participant’s membership on the Board of Directors terminates
because of Retirement, Disability or death, the restrictions shall be lifted on
all Restricted Stock held by the Participant.

 

  (2) Termination of Board Membership for Reasons other than Retirement,
Disability, Death or a Change in Control. If a Participant’s membership on the
Board of Directors terminates for any reason other than Retirement, Disability,
Death or a Change in Control, the Restricted Stock held by such Participant, to
the extent not previously realized, shall be forfeited at the time of such
termination of Board membership.

 

XI. Adjustments Upon Changes in Common Stock.

 

If there shall be any change in the Common Stock subject to the Plan or to any
Stock Option or Restricted Stock granted thereunder through merger,
consolidation, reorganization, recapitalization, stock dividend, stock split,
exchange of stock, or other change in the corporate structure, appropriate
adjustments shall be made in the aggregate number and kind of shares or other
securities or property subject to the Plan, and the number and kind of shares or
other securities or property subject to outstanding and to subsequent Stock
Option or Restricted Stock grants and in the purchase price of outstanding Stock
Options to reflect such changes.

 

XII. Plan Amendments and Termination.

 

The Board may amend, alter, or discontinue the Plan at any time, but no
amendment, alteration, or discontinuation shall be made which would impair the
rights of a Participant under a Stock Option or Restricted Stock theretofore
granted, without the Participant’s consent, or which would cause the Plan not to
continue to comply with Rule 16b-3 under the Exchange Act, or any successor to
such Rule. Subject to the above provisions, the Board shall have broad authority
to amend the Plan to take into account changes in applicable securities and tax
laws and accounting rules, as well as other developments.

 

XIII. Limitations.

 

Unless otherwise stated herein, the following limitations shall be applicable to
Participants and their rights as stockholders.

 

  (1) No Right to Continue as a Director. Neither the Plan, nor the granting of
Stock Options or Restricted Stock nor any other action taken pursuant to the
Plan, shall constitute or be evidence of any agreement or understanding, express
or implied, that the Participant has a right to continue as a director for any
period of time, or at any particular rate of compensation.

 

Ex. 10.4-6

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  (2) No Shareholders’ Rights for Stock Options. A Participant granted a Stock
Option hereunder shall have no rights as a shareholder with respect to the
Common Shares covered by Stock Options granted hereunder until the date of the
issuance of a stock certificate therefor, and no adjustment will be made for
dividends or other rights for which the record date is prior to the date such
certificate is issued.

 

XIV. Notice.

 

Any written notice to the Company required by any of the provisions of this Plan
shall be addressed to the Secretary of the Company and shall become effective
when it is received.

 

XV. General Provisions.

 

The following general provisions are applicable to the Plan.

 

  (1) The Committee may require each Person purchasing Common Shares pursuant to
a Stock Option or realizing Common Stock pursuant a grant of Restricted Stock to
represent to and agree with the Company in writing that such Person is acquiring
the Common Shares without a view to distribution thereof. The certificates for
such Common Shares may include any legend which the Committee deems appropriate
to reflect any restrictions on transfer. All certificates for shares of Common
Stock or other securities delivered under the Plan shall be subject to such
stock-transfer orders and other restrictions as the Committee may deem advisable
under the rules, regulations, and other requirements of the Securities and
Exchange Commission, the New York Stock Exchange, and any applicable federal or
state securities law, and the Committee may cause a legend or legends to be put
on any such certificates to make appropriate references to such restrictions.

 

  (2) Nothing contained in this Plan shall prevent the Board from adopting other
or additional compensation arrangements, subject to shareholder approval if such
approval is required; and such arrangements may be either generally applicable
or applicable only in specific cases.

 

  (3) No later than the date as of which an amount first becomes includible in
the gross income of the Participant for federal income tax purposes with respect
to a Stock Option or Restricted Stock award under the Plan, the Participant
shall pay to the Company, or make arrangements satisfactory to the Company
regarding the payment of, any federal, state, local, or foreign taxes of any
kind required by law to be withheld with respect to such amount. Subject to the
consent of the Committee and to such limitations as the Committee may impose,
withholding obligations may be settled with Common Stock, including Common Stock
that is part of the grant that gives rise to the withholding requirement. The
obligations of the Company under the Plan shall be conditioned on such payment
or arrangements and the Company shall, to the extent permitted by law, have the
right to deduct any such taxes from any payment of any kind otherwise due to the
Participant.

 

Ex. 10.4-7

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  (4) Agreements with respect to awards pursuant to the Plan may contain, in
addition to terms and conditions prescribed in the Plan, such other terms and
conditions as the Committee may deem appropriate provided such terms and
conditions are not inconsistent with the provisions of the Plan.

 

  (5) It is the Company’s intent that the Plan comply in all respects with Rule
16b-3 under the Exchange Act, and any successor rule thereto.

 

  (6) In the event any provision of the Plan shall be held illegal or invalid
for any reason, the illegality or invalidity shall not affect the remaining
parts of the Plan, and the Plan shall be construed and enforced as if the
illegal or invalid provision had not been included.

 

  (7) The Plan and all awards made and actions taken thereunder shall be
governed by the laws of the State of Arkansas, without regard to the conflict of
law provisions of any state, and shall be construed accordingly.

 

XVI. Effective Date and Termination of Plan.

 

The Plan shall become effective immediately following approval by the
stockholders of the Company at the 2003 Annual Meeting of Stockholders. The Plan
shall terminate on the fifth anniversary of the date of the Plan’s approval by
stockholders.

 

Ex. 10.4-8