Exhibit 10.2

 

2005 Administrative Guidelines for the

Copano Energy, L.L.C.

Management Incentive Compensation Plan

 

The Copano Energy, L.L.C. Management Incentive Compensation Plan (the “Plan”) is
established by the Board of Directors of Copano Energy, L.L.C. (the “Company”)
to encourage and reward significant contributions to the successful and
profitable operation of the enterprise by (i) management employees of the
Company or a subsidiary thereof or (ii) employees of an Affiliate who performs
services in a management capacity on behalf of the Company or a subsidiary
thereof.  The Compensation Committee of the Board, which oversees executive
compensation matters on behalf of the Board, approves the Administrative
Guidelines for the Plan each Plan Year.  Terms capitalized in these
Administrative Guidelines but not defined herein shall have the meaning
attributed to such terms in the Plan.

 

Participation

 

Participants eligible for the Plan effective January 1, 2005 for the 2005 Plan
Year shall be those employees of the Company and its Affiliates named in Exhibit
A to these Guidelines.  Upon the recommendation of the CEO, the Committee may
approve the entry of additional Participants in the Plan effective on the first
day of any month of the Plan Year following their promotion or employment date. 
Participants who enter the Plan during the Plan Year shall be eligible for an
Award under the Plan but, in the discretion of the CEO and Committee Chairman,
may only be eligible for an Award calculated pro rata based upon the period of
actual service during the Plan Year.

 

Bonus Opportunities

 

The 2005 Target Bonus level for each proposed Participant is set forth in
Exhibit A. The Target Bonus is defined as a specific percentage of the
Participant’s base salary as of July 1 of the Plan Year that may be earned if,
in the opinion of the Committee, the objectives upon which the opportunity is
contingent are fully achieved.

 

Each Participant’s 2005 bonus is contingent upon 1) the Financial Objectives
specified in Exhibit B to these Guidelines, and 2) the Participant’s individual
objectives, which shall include Personal Objectives and any applicable
Operational Objectives, each as established in accordance with these
Guidelines.  The CEO and the Committee shall assess the relative significance of
the Financial Objectives and each Participant’s individual objectives (including
Personal Objectives and Operational Objectives) and shall assign to each
objective a percentage so that for each Participant, the percentages assigned to
the Financial Objectives shall equal fifty percent (50%) of the Target Bonus and
the percentages assigned to the individual objectives shall equal fifty percent
(50%) of the Target Bonus.

 

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Financial and Operational Objectives

 

For each Financial Objective and Operational Objective, the Committee and the
CEO shall approve the following performance levels:  1) a Threshold Level, 2) a
Target Level, and 3) a Maximum Level, which levels shall be subject to final
approval by the Board.

 

A.           If performance is less than the Threshold Level, the amount of the
Target Bonus contingent upon that objective will not be paid.

 

B.             If performance is equal to the Threshold Level, fifty percent
(50%) of the amount of the Target Bonus contingent upon that objective will be
paid.

 

C.             If performance equals the Target Level, one hundred percent
(100%) of amount of the Target Bonus contingent upon that objective will be
paid.

 

D.            If performance equals or exceeds the Maximum Level, one hundred
and fifty percent (150%) of the amount of the Target Bonus contingent upon that
objective will be paid.

 

E.              When performance falls between the Threshold Level and the
Target Level or between the Target Level and the Maximum Level, the amount of
the bonus shall be determined by straight-line interpolation.

 

F.              In no circumstances will any bonus be paid from this Plan if
cash distributions paid to unit holders of the Company in regard to any quarter
of the Plan Year are less than $0.40 per unit.

 

When the Committee and the CEO deem it appropriate but subject to Board
approval, the Threshold Level, Target Level, and Maximum Level of any Financial
or Operational Objective approved at the beginning of the Plan Year may be
adjusted to reflect significant changes in the operational environment or in the
strategic direction of the Company or such other factors as the Committee and
the CEO may determine.

 

Personal Objectives

 

Prior to or immediately following the commencement of any Plan Year, the CEO may
require that one or more Participants (and the Committee may require that the
CEO) propose such Personal Objectives for Committee approval that, together with
any Operational Objectives approved for such Participant by the CEO and the
Committee (and for the CEO, by the Committee) will determine the extent to which
the percentage of the Target Bonus contingent upon individual objectives has
been earned by such Participant.  To the extent practical, the objectives will
be specific, measurable, and represent the contributions required of the
Participant if the Company is to meet or achieve its business plan.  During the
Plan Year, Personal Objectives will be reviewed routinely and may be revised by
the Committee and the CEO to reflect changes in job responsibilities or business
objectives.

 

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At the end of the Plan Year, the degree to which each Participant accomplished
his or her Personal Objectives will be reviewed by the CEO (or, in the case of
the CEO, by the Committee), and a score of 0% to 150% will be assigned based
upon the CEO’s subjective opinion of the performance of the Participant with
respect to the Personal Objectives and upon other factors that the CEO may deem
relevant and appropriate.  The percentage that represents the Participant’s
score on Personal Objectives shall be multiplied by the weight assigned to the
Personal Objective component of the Target Bonus to determine the amount of the
bonus earned through the Personal Objectives component of the opportunity.

 

Bonus Determinations

 

The Participant’s Financial Objectives result will be combined with the
Participant’s individual objectives result (including Personal Objectives and
Operational Objectives) to determine the amount of his or her Award.  The CEO’s
recommendations for award payments will be presented to the Committee at its
first meeting immediately following the end of the applicable Plan Year, at
which time the Committee shall review performance and consider and approve
bonuses, if any, for all Participants including the CEO.  Awards shall be paid
as soon as reasonably practicable following the Committee’s approval of awards,
but in no case shall awards be paid later than March 15.

 

Participant’s Termination

 

Participants who terminate their employment by reason of death, disability (as
determined by the Committee in its sole discretion) or retirement on or after
reaching age 65 or, if prior to age 65, if approved by the Committee, and
Participants whose employment with the Company or an Affiliate is terminated
without “cause” shall be eligible for an award based on a pro rata portion of
their Target Bonus and payable at the same time as all other award payments for
the applicable Plan Year.  The pro rata portion of such Target Bonus shall be
equal to the amount of the Participant’s Target Bonus multiplied by a fraction,
the numerator of which is the number of full weeks the participant was actively
employed during the Plan Year and the denominator of which is 52.

 

Notwithstanding anything to the contrary herein, in the event of (i) the
termination of a Participant’s employment by the Company or an Affiliate without
“cause” or (ii) the termination of employment by the Participant for Good
Reason, in either case within one year of a Change of Control, such Participant
shall be entitled to a pro rata portion of his or her Target Award based upon
the termination date and payable within 30 days following termination.

 

If a Participant’s employment terminates for any other reason, he or she will
not be entitled to any portion of a Target Award.  Participants who voluntarily
terminate employment or are terminated for “cause” before the payment date of
awards earned in a prior Plan Year shall forfeit such Awards.

 

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Conflicts

 

Any conflicts between the Plan and these Administrative Guidelines shall be
resolved in favor of the Plan.  Notwithstanding the preceding sentence, it is
the intention of the Board and the Committee that the Plan shall be construed
broadly to accommodate the provisions and concepts embodied in these
Administrative Guidelines to the extent reasonably possible.

 

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Exhibit A

 

Copano Energy, L.L.C.

2005 Management Incentive Compensation Plan

 

Name

 

Title

 

Recommended
Target
Bonus

 

Eckel

 

Chairman and CEO

 

60

%

Northcutt

 

President and COO

 

50

%

Assiff

 

SVP & CFO

 

35

%

Paradee

 

VP and Controller

 

30

%

Eckhart

 

SVP Transportation & Supply

 

35

%

Gibson

 

VP Processing

 

30

%

White

 

VP Operations

 

30

%

Lawing

 

VP & General Counsel

 

30

%

DeYoung

 

VP Gov’t & Reg. Affairs

 

15

%

Casey

 

Director Personnel

 

15

%

Theisen

 

Director Tax

 

15

%

 

5

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