EXHIBIT 10.24

MARATHON OIL CORPORATION

2003 INCENTIVE COMPENSATION PLAN

PERFORMANCE UNIT AWARD AGREEMENT

2005-2007 PERFORMANCE CYCLE

Pursuant to this Award Agreement and the Marathon Oil Corporation 2003 Incentive
Compensation Plan (the “Plan”), MARATHON OIL CORPORATION (the “Corporation”)
hereby grants to [NAME] (the “Participant”), an employee of the Corporation or
an Affiliate, on May 25, 2005, [NUMBER] performance units (“Performance Units”),
conditioned upon the Corporation’s TSR Percentile Ranking for the 2005-2007
Performance Cycle. The Performance Units are subject to the following terms and
conditions:

1.     Relationship to the Plan; Definitions.

This grant of Performance Units is subject to all of the terms, conditions and
provisions of the Plan and administrative interpretations thereunder, if any,
that have been adopted by the Committee. Except as defined herein, capitalized
terms shall have the same meanings ascribed to them under the Plan. To the
extent that any provision of this Award Agreement conflicts with the express
terms of the Plan, the terms of the Plan shall control and, if necessary, the
applicable provisions of this Award Agreement shall be hereby deemed amended so
as to carry out the purpose and intent of the Plan. References to the
Participant also include the heirs or other legal representatives of the
Participant. For purposes of this Award Agreement:

“2005-2007 Performance Cycle” means the period from January 1, 2005 to
December 31, 2007.

“Beginning Stock Price” means the average of the daily closing price of the
Corporation’s Common Stock for each trading day of the calendar month preceding
the commencement of the 2005-2007 Performance Cycle.

“Cumulative Dividends” means the sum of (i) all cash dividends and (ii) the Fair
Market Value of all Common Stock dividends as of the payment date for such
Common Stock dividends paid on a share of Common Stock during the 2005-2007
Performance Cycle. The Participant shall not be entitled to receive any dividend
payments in conjunction with this award of Performance Units.

“Employment” means employment with the Corporation or any of its Affiliates. For
purposes of this Award Agreement, Employment shall also include any period of
time during which the Participant is on Disability status.

“End Stock Price” means the average of the daily closing price of the
Corporation’s Common Stock for each trading day of the calendar month ending on
the last day of the 2005-2007 Performance Cycle.

 

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“Payout Percentage” means the percentage (between 0% and 200%) determined by the
Committee in accordance with the procedures set forth in Paragraph 2, which
shall be used to determine the value of each Performance Unit.

“Payout Value” means, for each Performance Unit, the product of the Payout
Percentage and $1.00.

“Peer Group” means the companies that are members of the AMEX Oil Index as of
the last business day of the 2005-2007 Performance Cycle, or such other group of
companies as selected by the Committee at its discretion.

“Total Shareholder Return” or “TSR” means the number derived using the following
formula:

(End Stock Price – Beginning Stock Price) + Cumulative Dividends

Beginning Stock Price.

“TSR Percentile Ranking” means the relative ranking of the Corporation’s Total
Shareholder Return for the 2005-2007 Performance Cycle as compared to the Total
Shareholder Return of the Peer Group companies during the 2005-2007 Performance
Cycle, expressed as a percentile ranking.

2.     Determination of Payout Percentage. As soon as practical following the
close of the 2005-2007 Performance Cycle, the Committee shall determine the TSR
Percentile Ranking. Thereafter, the Committee shall determine the Payout
Percentage as follows:

(a)     If the TSR Percentile Ranking is below the 25th percentile, the Payout
Percentage shall be zero.

(b)     If the TSR Percentile Ranking is at or above the 25th percentile, the
Payout Percentage shall be equal to the TSR Percentile Ranking multiplied by 2.

(c)     Notwithstanding anything herein to the contrary, the Committee has sole
and absolute authority and discretion to reduce the Payout Percentage as it may
deem appropriate.

3.     Vesting of Performance Units. Unless the Participant’s right to the
Performance Units is previously forfeited or vested in accordance with
Paragraphs 4, 5 or 6, following the Committee’s determinations pursuant to
Paragraph 2, the Participant shall vest in and be entitled to receive a cash
payment equal to the product of (i) the number of Performance Units granted
hereunder and (ii) the Payout Value. Such cash payment shall be made as soon as
administratively feasible following the Committee’s determination under
Paragraph 2. If, in accordance with the Committee’s determination under
Paragraph 2, the Payout Value is zero, the Participant shall immediately forfeit
any and all rights to the Performance Units. Upon the vesting and/or forfeiture
of the Performance Units pursuant to this Paragraph 3 and the making of the
related cash payment, if any, the rights of the Participant and the obligations
of the Corporation under this Award Agreement shall be satisfied in full.

4.     Termination of Employment. If Participant’s Employment is terminated
prior to the close of the 2005-2007 Performance Cycle for any reason other than
death, the Participant’s right to the Performance Units shall be forfeited in
its entirety as of such termination, and the rights of the Participant and the
obligations of the Corporation under this Award Agreement shall be terminated.

5.     Termination of Employment due to Death. If Participant’s Employment is
terminated by

 

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reason of death prior to the close of the 2005-2007 Performance Cycle, the
Participant’s right to receive the Performance Units shall vest in full as of
the date of death and the Payout Percentage shall be 100%. As soon as
administratively feasible thereafter, a cash payment shall be made in accordance
with Paragraph 3. Such vesting shall satisfy the rights of the Participant and
the obligations of the Corporation under this Award Agreement in full.

6.     Vesting Upon a Change of Control. Notwithstanding anything herein to the
contrary, upon the occurrence of a Change in Control prior to the end of the
2005-2007 Performance Cycle, the Participant’s right to receive the Performance
Units, unless previously forfeited pursuant to Paragraph 4, shall vest in full
and the Payout Percentage shall be 100%. As soon as administratively feasible
thereafter, a cash payment shall be made in accordance with Paragraph 3. Such
vesting shall satisfy the rights of the Participant and the obligations of the
Corporation under this Award Agreement in full.

7.     Taxes. Pursuant to Section 14 of the Plan, the Corporation or its
designated representative shall have the right to withhold applicable taxes from
the cash otherwise payable to the Participant, or from other compensation
payable to the Participant, at the time of the vesting and delivery of such cash
payment.

8.     No Shareholder Rights. The Participant shall in no way be entitled to any
of the rights of a shareholder as a result of this Award Agreement.

9.     Nonassignability. Upon the Participant’s death, the Performance Units may
be transferred by will or by the laws governing the descent and distribution of
the Participant’s estate. Otherwise, the Participant may not sell, transfer,
assign, pledge or otherwise encumber any portion of the Performance Units, and
any attempt to sell, transfer, assign, pledge, or encumber any portion of the
Performance Units shall have no effect.

10.     No Employment Guaranteed. Nothing in this Award Agreement shall give the
Participant any rights to (or impose any obligations for) continued Employment
by the Corporation or any Affiliate thereof or successor thereto, nor shall it
give such entities any rights (or impose any obligations) with respect to
continued performance of duties by the Participant.

11.     Modification of Agreement. Any modification of this Award Agreement
shall be binding only if evidenced in writing and signed by an authorized
representative of the Corporation, provided that no modification may, without
the consent of the Participant, adversely affect the rights of the Participant
hereunder.

 

Marathon Oil Corporation By       /s/ Eileen M. Campbell  

Authorized Officer

 

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