Exhibit 10.4
PRIDE INTERNATIONAL, INC.
ANNUAL INCENTIVE PLAN (AIP)
(Amended and Restated Effective January 1, 2008)

1.   Purpose

The success of Pride International, Inc. (the “Company”) is a result of the
efforts of its key employees. In order to focus each employee’s efforts on
optimizing the Company’s overall results, the Company maintains this Annual
Incentive Plan (the “Plan”) to reward employees for the successful achievement
of specific company, business unit, and country performance measures.

2.   Administration of the Plan

The Plan shall be administered by the Compensation Committee (the “Committee”)
of the Board of Directors of the Company (the “Board of Directors”). The
Committee and/or Senior Management shall designate the eligible employees, if
any, to be granted awards under the Plan and the type and amount of such awards.
The Committee shall have the sole and absolute discretionary authority to
interpret conclusively the provisions of the Plan, to adopt such rules and
regulations for carrying out the Plan as it may deem advisable, to decide
conclusively all questions of fact arising in the application of the Plan, to
determine eligibility for Plan awards, and to make all other determinations
necessary or advisable for the administration of the Plan; provided, however,
that Senior Management shall have the same foregoing discretion and authority
with respect to Plan Participants other than Senior Management. The Committee
and/or Senior Management have the full discretion to adjust or terminate any
Participant’s eligibility and/or award at any time, regardless of the
eligibility for or the amount of an award stated elsewhere herein. The Committee
and/or Senior Management also has full discretion to waive any eligibility,
performance, or other criteria.
All decisions made by the Committee and/or Senior Management regarding Plan
eligibility, determining who shall be granted awards under the Plan and the
amount thereof, and in interpreting the Plans provisions or the determination of
any award shall be final and binding upon all affected Plan Participants.

3.   Definitions

Change in Control: The term “Change in Control” shall have the same meaning for
each participant as the definition for the substantially similar term contained
in the Participant’s employment agreement with the Company.  Should a
Participant not have an employment agreement with the Company, such term shall
mean, and shall be deemed to have occurred on the date of the first to occur of
any of the following:

  A.   A change in control of the Company of the nature that would be required
to be reported in response to item 6(e) of Schedule 14A of Regulation 14A or
Item 1 of Form 8(k) promulgated under the Exchange Act as in effect on the date
of this Agreement, or if neither item remains in effect, any regulations issued
by the Securities and Exchange Commission pursuant to the Exchange Act which
serve similar purposes;

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  B.   Any “person” (as such term is used in Sections 12(d) and 14(d)(2) of the
Exchange Act) is or becomes a beneficial owner, directly or indirectly, of
securities of the Company representing twenty percent (20%) or more of the
combined voting power of the Company’s then-outstanding securities;     C.   The
individuals who were members of the Board of Directors of the Company
immediately prior to a meeting of the shareholders of the Company involving a
contest for the election of Directors shall not constitute a majority of the
Board of Directors following such election;     D.   The Company shall have
merged into or consolidated with another corporation, or merged another
corporation into the Company, on a basis whereby less than fifty percent (50%)
of the total voting power of the surviving corporation is represented by shares
held by former shareholders of the Company prior to such merger or
consolidation; or     E.   The Company shall have sold, transferred or exchanged
all, or substantially all, of its assets to another corporation or other entity
or person.

Committee: The Compensation Committee of the Pride International Board of
Directors.
Company: Pride International, Inc.
Disability: A Participant shall be considered to have terminated employment by
reason of Disability if such Participant satisfies the requirement for being
totally disabled under the Company’s Long Term Disability Plan. If a Participant
is not enrolled in the Company’s Long Term Disability Plan, then the Participant
shall be considered to have terminated by reason of Disability if the Committee
determines in its sole and absolute discretion, based upon a written medical
opinion unless waived by the Committee, that such Participant will be
permanently incapable of performing his or her job for physical or mental
reasons. A Participant not enrolled in the Company’s Long Term Disability Plan
but who may be considered to have a Disability under this definition shall be
provided with the Plan’s claims procedures relating to determination of a
benefit hereunder due to a Disability.
Participant: Any employee eligible to participate in the Plan pursuant to
Section 4.
Plan: Pride International, Inc., Annual Incentive Plan.
Plan year: The Plan year shall be January 1st through December 31st.
Retirement: A termination of employment with the Company on a voluntary basis by
a person if, immediately prior to such termination of employment, the sum of the
age and the number of years of continuous service of such person with the
Company is equal to or greater than 65.
Salary: An employee’s actual annual base earnings during the Plan year,
excluding all other forms of compensation.
Senior Management: The Chief Executive Officer, all Executive Vice Presidents
and all Senior Vice Presidents, collectively.

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Subsidiary: Any corporation, limited liability company or similar entity of
which the Company directly or indirectly owns shares representing more than 50%
of the voting power of all classes or series of equity securities of such
entity, which have the right to vote generally on matters submitted to a vote of
the holders of equity interests in such entity.

4.   Eligibility

All full-time, regular employees in salary grades 205 through 212 and 314
through 318, as well as all officers of the Company regardless of salary grade,
are eligible for consideration of an award under the Plan, subject to the
discretion of the Committee and/or Senior Management.
To be eligible for consideration of an award with respect to a Plan year, the
Participant must:

  A.   Be actively employed on December 31st of the Plan year and must continue
to be employed through the date on which award payments for such Plan year are
made. Participants not actively employed on the date on which the award payments
are made will forfeit their award. The Committee and/or Senior Management will
have complete discretion to override this provision based on individual
circumstances surrounding a Participant’s termination or resignation of
employment.     B.   Set three to five individual performance goals that are
specific and measurable. Plan Participants must review these individual
performance goals with their supervisor. Once the Participant’s award goals for
the current Plan year have been approved by the Participant’s supervisor they
must be submitted to the Corporate Human Resources (“HR”) department. Once
submitted, this eligibility requirement will be considered to have been met.    
C.   Complete in-person and online training, in each case approved in advance by
the Chief Compliance Officer, on the Company’s Code of Business Conduct and
Ethical Practices and on the Foreign Corrupt Practices Act (FCPA).

All of the eligibility criteria must be completed in full in order for the
employee to be considered eligible for an award payout during any Plan year.
In the event of death, disability or retirement, the employee or estate of the
former employee may receive a pro-rated payment from the Plan at the discretion
of the Committee and/or Senior Management. If approved, this payment will be
made no later than March 15th of the year following the date of death.

5.   Participation Effective Dates

The effective date of Plan participation will be January 1st of the Plan year,
or the date of hire for all eligible new hires.
Employees promoted from an ineligible salary grade into an eligible salary grade
will have an effective date equal to the date of promotion; however, no new
additions to the Plan will be made after September 1st of the Plan year. Any new
hires or promotions occurring on or after September 1st of the Plan year will
not take effect in regards to eligibility for the Plan until the following Plan
year.

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Notwithstanding the foregoing, an employee who is a new hire or who is promoted
from an ineligible salary grade into an eligible salary grade can enter the plan
anytime if agreed upon by contract with the Company or if approved by the
Committee and/or Senior Management.
Employees demoted from an eligible salary grade into an ineligible salary grade
will receive a pro-rated award for the time spent in the eligible position.

6.   Award Payout

Award payouts will be made through payroll in the form of a cash payment on or
before March 15th of the year immediately following the Plan year. All
applicable state, federal, and local taxes will apply to award payments.
Individual goals are an important piece of the Plan and are critical in
determining the level of each individual’s achievement for the Plan year. As a
result, approved award payments for the prior Plan year will be held until the
Plan Participant submits his/her goals for the current Plan year to HR. Once the
Participant’s goals for the current Plan year have been received and approved by
the applicable department head, the award payment for the prior Plan year will
be distributed to the Plan Participant, which shall take place no later than
March 15th of the current Plan year.
The Committee and/or Senior Management have the full discretion to adjust or
terminate any Participant’s eligibility and/or award at any time, regardless of
the eligibility for or the amount of an award stated elsewhere herein.
Notwithstanding anything to the contrary in this Plan, if the Participant is a
“specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the
Internal Revenue Code (“Code”) at the time of his termination, any award payment
that constitutes nonqualified deferred compensation under Section 409A of the
Code shall be payable only in a lump sum and shall be delayed until the earlier
to occur of (i) the Participant’s death or (ii) six months, or such earlier time
as permitted under Section 409A of the Code, after the Participant has incurred
a separation from service within the meaning of Section 409A(a)(2)(A)(i) of the
Code. Further, in the event that any provision of this Plan would cause any
compensation or benefits to the Participant to become subject to an additional
tax under Section 409A of the Code, if the Committee and/or Senior Management
determine a benefit is payable then such benefit shall be paid to the extent
possible without adverse economic effect to the Participant.

7.   Termination

If a Participant’s employment with the Company or any Subsidiary is terminated
during the Plan year for any reason, such termination shall cause the
Participant to forfeit any award to be paid to such Participant under the Plan,
subject to other provisions of this Plan providing otherwise.
If a Participant’s employment with the Company or any Subsidiary is terminated
due to the Participant’s Retirement after the end of the Plan year but prior to
the award payout, the Participant shall be entitled to receive the full
calculated award payout at the time all other payments are made.
The Committee and/or Senior Management will have complete discretion to override
this provision based on individual circumstances surrounding a Participant’s
termination or resignation of employment.

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8.   Target Bonus

“Target bonus” refers to the award payment opportunity given 100% achievement of
predetermined performance measures set forth by the Committee at the beginning
of the Plan year. The relative weighting assigned to each performance measure
will be determined by the Committee at the beginning of the Plan year and is
subject to annual review and adjustment. Notwithstanding the above, the
Committee and/or Senior Management shall have full discretion to eliminate or
modify a benefit hereunder at any time.
The “target bonus” opportunity is an amount equal to the Participant’s Salary,
as defined herein, for the Plan year multiplied by the target bonus percentage
assigned to such Participant’s salary grade level.
For each measure, a minimum threshold must be achieved before any award payout
will occur. Once the threshold is attained, the minimum payout is 25% with the
maximum payout being 200% of the Participants target bonus percentage. Target
bonus percentages for each officer participating in the Plan shall be
established annually by the Committee. Target bonus percentages for non-officers
range from 5% to 40% based on salary grade, as follows:

                          Corporate Salary Grades   Operations Salary Grades
Grade Level   Target Award   Grade Level   Target Award
205
    5 %                
206
    10 %     314       15 %
207
    15 %     315       20 %
208
    20 %     316       25 %
209
    25 %     317       30 %
210
    30 %     318       35 %
211
    35 %                
212
    40 %                

9.   Adjustment of Target Award

In addition to potential adjustments provided for elsewhere herein, a
Participant’s “target bonus” opportunity for a Plan year is subject to
adjustment as set forth in this section to reflect the levels of achievement of
the specific, predetermined goals for such Plan year. Any award multiplier
achieved will be applied to the stated goals, pursuant to the terms of the Plan.
Notwithstanding the above, the Committee and/or Senior Management have the full
discretion to adjust at any time any individual employee award target and/or
related payout above or below the actual Plan calculation, up to and including
elimination of the employee award.
Adjustments Related to Safety
The Committee and/or Senior Management have the full discretion to adjust the
safety performance measure as they determine based upon annual safety
performance metrics and results.
Total Adjustments
Targets may be adjusted at the discretion of the Committee for:

  •   Revenue and earning loss due to the sale of an asset     •   Gain or loss
on asset sales     •   Asset impairment

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  •   Other adjustments

10.   Change in Control

Upon the occurrence of a Change in Control (as defined in Section 3), a
Participant shall be deemed to have fully attained all performance measures. The
extent to which an award shall be deemed to have been earned shall be determined
by multiplying the maximum amount of the award which could have been earned
assuming maximum attainment of all performance measures by a fraction, the
numerator of which is the number of full calendar months in the Plan year prior
to the Change in Control and the denominator of which is the total number of
full calendar months in the Plan year. The product of this formula is then
multiplied by the Participant’s Salary to determine the total award payout in
the event of a Change in Control.
Following a Change in Control the Committee shall not adjust the performance
measures or other terms specified in the Plan in effect immediately prior to the
Change in Control in a manner adverse to the Participant.
If the Participant remains in the employ of the Company or one of its
Subsidiaries following a Change in Control, the Participant shall be entitled,
subject to the Committee’s and/or Senior Management’s discretion, to receive any
additional portion of the awards hereunder which are earned during the portion
of the Plan year occurring after the Change in Control.

11.   Leave of Absence

Except to the extent prohibited by the Family and Medical Leave Act of 1993
(“FMLA”), the Uniformed Services Employment and Reemployment Rights Act
(“USERRA”) or any other applicable law, an employee on Company paid leave
greater than 30 days but less than 90 days will receive a pro-rated award payout
based on the time they were physically working for the Company, and an employee
on paid or un-paid leave of absence greater than 90 days will forfeit their
participation in the Plan for each applicable Plan year that the Participant is
on leave.

12.   Qualified Performance-Based Awards

The Committee may designate an award under this Plan as a qualified performance
award intended to comply with the requirements of Section 162(m) of the Code
pursuant to Section 8(a)(vi)(B) of the Pride International, Inc. 2007 Long-Term
Incentive Plan. If so designated, the maximum award to any one Participant shall
not exceed $7,000,000. The Committee shall have the discretion to reduce, but
not increase, an award granted under this Section 12. If Committee makes an
award under this Section 12, any provisions of the Plan that are in conflict
with the requirements of Section 162(m) of the Code and Section 8(a)(vi)(B) of
the Pride International, Inc. 2007 Long-Term Incentive Plan shall not apply,
including but not limited to Section 2 discretion to adjust awards or waive
performance, Section 4 with respect to performance goals that are not
objectively determinable, Section 5, Section 6 with respect to performance goals
that are not objectively determinable and Committee discretion to adjust awards,
Section 7 with respect to full award payouts upon Retirement and the Committee’s
discretion to override forfeiture of the award based on individual
circumstances, Section 8, Section 9, Section 11 and Section 13.

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13.   Plan Exceptions

The Committee and/or Senior Management reserve the right under the Plan to make
exceptions and determinations that include, but are not limited to,
determinations of the persons to receive awards, the form, amount and timing of
such awards; the terms and provisions of such awards and the agreements
evidencing the same; and determinations with respect to terminations of
employment.
Furthermore, at the time all other Participants are paid, one time awards
approved by the Committee and/or Senior Management, subject to their sole
discretion, may be granted to those employees who are not in eligible pay grades
but who exhibit performance that goes beyond management expectations.

14.   Employment Rights

Nothing contained in this Plan shall (a) confer upon any Participant any right
to continue in the employ of the Company, its successor or any affiliate
thereof, (b) constitute any contract or agreement of employment, (c) interfere
in any way with the right of the Company, its successor or any affiliate thereof
to terminate a Participant’s employment at any time, with or without cause, or
(d) affect in any way a Participant’s rights under any other plan or agreement
with the Company, including, without limitation, any employment or severance
agreement between the Participant and the Company. Furthermore, an award under
the Plan shall not constitute an assurance of continued employment for any
period.
Participation in any given Plan year should not be misconstrued as a guarantee
of participation in subsequent Plan years. Participation is at the sole
discretion of the Committee and/or Senior Management.

15.   Assignability

No award under the Plan shall be assignable or transferable by the holder
thereof except by will or by the laws of descent and distribution.

16.   Employee Benefit Plans

Compensation received through this Plan shall not be taken into account when
calculating the benefits under any salary-related benefit plans offered by the
Company, unless the terms of those plans so provide.

17.   Miscellaneous

  A.   The Company shall be under no obligation to require any successor to all
or substantially all of the business and/or assets of the Company to expressly
assume this Plan and all obligations of the Company hereunder.     B.  
Participants and their beneficiaries, heirs, successors and assigns shall have
no legal or equitable rights, interests or claims in any property or assets of
the Company. For purposes of any payment indicated hereunder, any and all of the
Company’s assets shall be, and remain, the general, unpledged unrestricted
assets of the Company. The

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      Company’s obligations under the Plan shall be merely that of an unfunded
and unsecured promise to pay money in the future.     C.   The Plan shall be
construed, interpreted and the rights of the parties determined solely in
accordance with the laws of the State of Texas without regard to the conflicts
of laws principles thereof.     D.   This Plan may be amended, modified, waived
or terminated at any time by action of the Committee, provided however that the
benefits under this Plan payable to a Participant before the Plan is amended or
terminated shall not be adversely affected.     E.   Award payments under this
Plan are made from the general assets of the Company; provided, however, that
following any assignment of this Plan to another entity, all payments will be
made from the general assets of the assignee and the Company shall have no
further liability for payments of awards after such assignment.     F.   The
Plan was originally effective on January 1, 2006. This amendment and restatement
of the Plan is effective as of January 1, 2008.

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