exv10w2



 



Exhibit 10.2




NEWFIELD EXPLORATION COMPANY

SECOND AMENDED AND RESTATED 2003 INCENTIVE COMPENSATION PLAN




     This Second Amended and Restated 2003 Incentive Compensation (this “Plan”) of Newfield
Exploration Company (the “Company”) was adopted by the Board of Directors (the “Board”) of the
Company effective as of July 26, 2007.



Recitals:




     WHEREAS, effective for the Performance Period beginning on January 1, 1993, the Board adopted
the 1993 Plan, which plan had a purpose substantially similar to this Plan;



     WHEREAS, upon adoption of this Plan, the Board terminated the 1993 Plan effective as of
December 31, 2002;



     WHEREAS, notwithstanding such termination of the 1993 Plan, Awards were granted for the
Performance Period that ended on December 31, 2002 pursuant to and in accordance with the 1993
Plan;



     WHEREAS, except as specifically provided in this Plan, such termination of the 1993 Plan will
have no effect on unpaid Deferred Incentive Compensation Awards (as defined in, and granted
pursuant to, the 1993 Plan), which Awards will continue to be governed by the terms of the 1993
Plan, as amended;



     WHEREAS, in considering the termination of the 1993 Plan and the adoption of this Plan, the
Board took into account the value of the overriding royalty interests dedicated to the Employee
Incentive Override Pool (as defined in the 1993 Plan) under the 1993 Plan from and after the date
of termination of the 1993 Plan (the “1993 ORRI Value”) and determined that such value was
incorporated into this Plan;



     WHEREAS, effective January 1, 2005, the Board adopted Amendment No. 1 to this Plan to provide
for the termination of this Plan upon a change of control, to conform this Plan to legislation
affecting deferred compensation arrangements and to amend this Plan in other respects and amended
and restated this Plan;



     WHEREAS, in considering the amendment to this Plan to provide for its termination upon a
change of control, the Board took into account the remaining 1993 ORRI Value from and after the
adoption of such amendment and determined that such value has been incorporated into other plans
and benefits, including this Plan as amended and the Change of Control Severance Agreements to be
entered into with certain executives in connection with the amendment to this Plan and the Change
of Control Severance Plan for employees in general to be adopted in connection with the amendment
to this Plan; and



     WHEREAS, having had further consultations with legal counsel, the Board now desires to further
amend and restate this Plan to incorporate certain further changes to comply with Section 409A of
the Internal Revenue Code of 1986 and to conform the definition of Change of Control in this Plan
to the definition used in other arrangements;



 









 





     NOW, THEREFORE, in consideration of the foregoing and for the purpose described below,
effective as of the date first written above, the Board hereby amends and restates this Plan as set
forth herein.



I.

Purpose




     This Plan is intended to provide a means whereby employees of the Company and its Subsidiaries
may develop a sense of proprietorship and personal involvement in the development and financial
success of the Company and its Subsidiaries, to attract and retain employees of outstanding
competence and ability and to encourage them to remain with and devote their best efforts to the
business of the Company and its Subsidiaries, and to reward such employees for outstanding
performance, thereby advancing the interests of the Company and its stockholders.



II.

Definitions




     Where the following words and phrases appear in this Plan, they shall have the respective
meanings set forth below unless their context clearly indicates to the contrary:



     (a) “1993 Plan” means the Newfield Employee 1993 Incentive Compensation Plan, as amended.



     (b) “Adjusted Net Income” means, with respect to a particular Performance Period, the
consolidated net income of the Company and its Subsidiaries determined in accordance with generally
accepted accounting principles, except (i) without reduction for (A) income taxes and (B) Awards
granted or to be granted pursuant to this Plan (ii) without the effects of unrealized gains or
losses associated with SFAS No. 133 and (iii) as adjusted for extraordinary or other unusual items
and other items not contemplated at the time this Plan was adopted by the Board (such as changes in
generally accepted accounting principles, ceiling test writedowns and other non-recurring items) as
determined by the Committee in its sole discretion.



     (c) “Awards” means Current Awards and Deferred Awards.



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



     (e) “Cause”
means (i) with respect to Awards granted prior to January 1, 2005, termination of
employment because of (A) conviction of a felony or of a misdemeanor involving moral turpitude
(which, through lapse of time or otherwise, is not subject to appeal); (B) willful refusal without
proper legal cause to perform the duties and responsibilities of the employee to the Company or any
Subsidiary; (C) willful conduct which the employee has reason to know is materially injurious to
the Company or Subsidiary; or (D) gross negligence or willful misconduct in the performance of the
employee’s duties and responsibilities with respect to the Company or any Subsidiary and (ii) with
respect to Awards granted on or after January 1, 2005, any termination of employment because of (A)
conviction of or entering of a plea of nolo contendre to a felony or a misdemeanor involving moral
turpitude; (B) willful refusal without proper legal cause to perform the duties and
responsibilities of the employee to the Company or any Subsidiary; (C) willful conduct which the
employee has reason to know is materially injurious to



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the Company or any Subsidiary; (D) gross negligence or willful misconduct in the performance
of the employee’s duties and responsibilities with respect to the Company or any Subsidiary; or (E)
material breach of any material policy of the Company or any Subsidiary.



     (f) “Change of Control” means the occurrence of any of the following:




	 	(i)	 	the Company is not the surviving Person in any merger,
consolidation or other reorganization (or survives only as a subsidiary of
another Person);
	 
	 	(ii)	 	the consummation of a merger or consolidation of the Company
with another Person pursuant to which less than 50% of the outstanding voting
securities of the surviving or resulting corporation are issued in respect of
the capital stock of the Company;
	 
	 	(iii)	 	the Company sells, leases or exchanges all or substantially
all of its assets to any other Person;
	 
	 	(iv)	 	the Company is to be dissolved and liquidated;
	 
	 	(v)	 	any Person, including a “group” as contemplated by
Section13(d)(3) of the Securities Exchange Act of 1934, acquires or gains
ownership or control (including the power to vote) of more than 50% of the
outstanding shares of the Company’s voting stock (based upon voting power); or
	 
	 	(vi)	 	as a result of or in connection with a contested election of
directors, the Persons who were directors of the Company before such election
cease to constitute a majority of the Board.




Notwithstanding the foregoing, the definition of “Change of Control” shall not include (A) any
merger, consolidation, reorganization, sale, lease, exchange, or similar transaction involving
solely the Company and one or more Persons that were wholly owned, directly or indirectly, by the
Company immediately prior to such event and (B) any event that is not a “change in control” for
purposes of Section 409A.




     (g) “Code”
means the Internal Revenue Code of 1986, as amended.



     (h) “Committee” means the Compensation Committee of the Board.



     (i) “Company” means Newfield Exploration Company and its successors.



     (j) “Current Award” means an Award granted to an Eligible Employee pursuant to Article V that
is payable on or before the March 1 following the Performance Period.



     (k) “Deferred Award” means an Award granted to an Eligible Employee pursuant to Article V the
payment of which is deferred and subject to forfeiture as provided in Article VII.



     (l) “Deferred Award Account” means the account maintained on the books of the Company for each
employee who has been granted a Deferred Award under this Plan.



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     (m) “Designated Rate” means simple interest at an initial rate per annum equal to 6%. Each
February, beginning February 2004, the Committee may, in its sole discretion, set a different rate
that shall be effective beginning on the March 1 immediately following such determination and shall
remain in effect until such time as the Committee sets a different rate pursuant this sentence.



     (n) “Effective Date” means January 1, 2003.



     (o) “Eligible Employee” means, with respect to a particular Performance Period, each employee
of the Company or a Subsidiary who was (i) employed by the Company or a Subsidiary on both October
1 and December 31 of such Performance Period and (ii) recommended by the Chief Executive Officer of
the Company to receive an Award.



     (p) “Exchange Act” means the Securities Exchange Act of 1934, as amended.



     (q) “Final Financial Information” means, with respect to a particular Performance Period, the
financial information filed by the Company with the Securities and Exchange Commission pursuant to
the Exchange Act with respect to such Performance Period.



     (r) “Grandfathered Employee” means an employee who (i) commenced employment with the Company
prior to January 1, 1993 and (ii) has been continually employed by the Company or a Subsidiary
since such date.



     (s) “Incentive Pool” means the aggregate amount to be awarded with respect to a particular
Performance Period as determined pursuant to Article IV.



     (t) “Participation Agreement” means an agreement by and between the Company or a Subsidiary
and a third party that defines terms on which the party participates in one or more of the
Company’s or a Subsidiary’s exploration and acquisition activities if such agreement provides for
Overriding Royalty Interests, as defined therein, or with the approval of the Committee, some other
promote or financial consideration, to fund the Incentive Pool.



     (u) “Performance Period” means any calendar year beginning on or after January 1, 2003.



     (v) “Permanent Disability” of an employee means that such employee has become disabled within
the meaning of Section 409A(a)(2)(C) of the Code.



     (w) “Person” means any individual, partnership, corporation, limited liability company, trust,
incorporated or unincorporated organization or association or other legal entity of any kind.



     (x) “Plan” means the 2003 Incentive Compensation Plan, as amended from time to time.



     (y) “Qualified Retirement” means an employee (i) is at least age 55, (ii) has at least 10
years of Qualified Service and (iii) provides the Requisite Notice.



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     (z) “Qualified Service” means, with respect to a particular employee, a period of time equal
to (i) the period of time such employee was continuously employed by (A) the Company or (B) a
Subsidiary (for so long as such Person remains a Subsidiary) plus (b) any additional service credit
granted to such employee (or a group of employees of which such employee is a member) by the Board.



     (aa) “Redetermined Incentive Pool” means, with respect to a particular Performance Period, (i)
if the Committee used financial information other than Final Financial Information to determine the
Incentive Pool for such Performance Period, the amount the Incentive Pool would have been if the
Committee had used Final Financial Information to determine the Incentive Pool for such Performance
Period and (ii) if the Committee used Final Financial Information to determine the Incentive Pool
for such Performance Period, the amount the Incentive Pool as so determined.



     (bb) “Requisite Notice” means (a) with respect to an officer of the Company, six months prior
written notice to the Board and (b) with respect to all other employees, three months prior written
notice to the chief executive officer of the Company.



     (cc) “Retiring Employee” means an employee of the Company or a Subsidiary whose employment is
being terminated by reason of Qualified Retirement.



     (dd) “SFAS No. 133” means SFAS No. 133, “Accounting for Derivative Instruments and Hedging
Activities,” as amended (i) by SFAS No. 137, “Accounting for Derivative Instruments and Hedging
Activities – Deferral of the Effective Date of FASB Statement No. 133, an amendment of FASB
Statement No. 133,” (ii) by SFAS No. 138, “Accounting for Certain Derivative Instruments and
Certain Hedging Activities, an amendment of FASB Statement No. 133,” and (iii) from time to time
after the Effective Date.



     (ee) “Section 409A” means Section 409A of the Code and any applicable regulations or rulings
thereunder.



     (ff) “Subsidiary” means any entity that is consolidated with the Company for financial
accounting purposes in accordance with generally accepted accounting principles.



III.

Administration of Plan




     This Plan shall be administered by the Committee. The Committee is authorized to interpret
this Plan and may from time to time adopt such rules and regulations, consistent with the
provisions of this Plan, as it may deem advisable to carry out this Plan. All determinations made
by the Committee under this Plan, and all interpretations of this Plan by the Committee, shall be
final and binding on all interested parties.



IV.

Determination of Incentive Pool




     (a) The amount of the Incentive Pool for a particular Performance Period shall be equal to:



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               (i) 5% of Adjusted Net Income for the Performance Period; plus



               (ii) an amount equal to the revenues or other amounts that have been designated for the
Incentive Pool pursuant to each Participation Agreement; plus



               (iii) the amount of any Deferred Awards forfeited during the Performance Period pursuant to
paragraph (b) of Article VII; plus



               (iv) the amount of any Deferred Incentive Compensation Awards (as defined in the 1993 Plan)
forfeited pursuant to Article VIII of the 1993 Plan after December 31, 2002; plus



               (v) the amount, if any, by which the Redetermined Incentive Pool for the immediately preceding
Performance Period exceeded the aggregate amount of Awards granted with respect to such immediately
preceding Performance Period; minus



               (vi) in the discretion of the Committee, the amount (or any portion thereof) by which the
aggregate amount of Awards granted with respect to any previous Performance Period exceeded the
amount of the Redetermined Incentive Pool for such Performance Period, but only if any such amount
has not previously reduced an Incentive Pool pursuant to this clause (vi).



     (b) As soon as administratively feasible after the end of a Performance Period, the Committee
shall determine the amount of the Incentive Pool with respect to such Performance Period. If the
financial information for such Performance Period is not final at the time that the Committee meets
to determine the amount of the Incentive Pool, the Committee may use the then best available
estimates of such financial information to determine the amount of the Incentive Pool. Such
determination shall be in writing and shall be filed with the appropriate records of the Company.



V.

Grant of Awards




     (a) Subject to Article VIII(a), the aggregate amount of Awards granted to Eligible Employees
with respect to a particular Performance Period shall be equal to the lesser of (i) the amount of
the Incentive Pool for such Performance Period and (ii) an amount recommended by the Chief
Executive Officer of the Company that is no less than 85% of the amount of the Incentive Pool for
such Performance Period.



     (b) At any time and from time to time after the determination of the Incentive Pool with
respect to a Performance Period and prior to the February 28 following the end of the such
Performance Period, the Committee shall grant Awards to those Eligible Employees that the
Committee, in its discretion, determines should receive Awards. Subject to paragraph (a) above,
the amount of such Awards shall be determined by the Committee in its discretion. The Committee
shall consider the recommendations of the Chief Executive Officer of the Company in making such
determinations.



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     (c) Each Award shall be designated as a Current Award or a Deferred Award. An Eligible
Employee may be granted both a Current Award and a Deferred Award with respect to a single
Performance Period.



VI.

Deferred Award Accounts




     (a) The Company shall maintain a separate Deferred Award Account for each employee who has
been granted a Deferred Award under this Plan. If an employee receives more than one Deferred
Award, a separate Deferred Award Account shall be maintained for each Award. An employee’s
Deferred Award Account shall be debited and credited as provided in this Article VI and in Article
VII.



     (b) Promptly after the determination by the Committee of the amount of any Deferred Award to
an Eligible Employee, there shall be credited to the Deferred Award Account of such employee the
amount of such award.



     (c) The balance in each Deferred Award Account shall accrue interest, beginning on the March 1
following the Performance Period for which the related Deferred Award was granted and continuing
for so long as any balance remains in such Deferred Award Account, at the Designated Rate from time
to time in effect. Interest shall be computed on a daily basis using a 365 or 366 day year, as the
case may be, applied to the balance in such Deferred Award Account. Interest shall be credited to
Deferred Award Accounts as of November 30 of each year unless otherwise provided by this Plan.



VII.

Payment of Deferred Awards




     (a) Subject to paragraph (b) below, each Deferred Award shall be paid in four annual
installments, with each installment consisting of 25% of such Deferred Award plus interest credited
to the applicable Deferred Award Account with respect to such amount. The first installment shall
be paid on the next December 1 following the end of the Performance Period with respect to which
the Award was granted (the “First Installment Date”). The second, third and fourth installments
shall be paid on the first, second and third anniversaries, respectively, of the First Installment
Date. The applicable Deferred Award Account shall be debited for all amounts paid pursuant to this
paragraph (a).



     (b) If an employee (x) terminates employment with the Company or any Subsidiary or (y) is
employed only by one or more Subsidiaries that cease to be Subsidiaries, in each such case, prior
to receiving payment of all Deferred Awards granted to such employee (together with any interest
credited with respect thereto) (a “Terminating Employee”), the following provisions shall govern
the payment or forfeiture of such amounts:



               (i) Each Grandfathered Employee who voluntary terminates employment or who is involuntarily
terminated other than for Cause shall be vested in the full amount (including interest to the date
of payment) remaining, if any, in all Deferred Award Accounts for such employee at the time of such
employee’s termination of employment.



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               (ii) Each Retiring Employee shall be vested in the full amount (including interest to the date
of payment) remaining, if any, in all Deferred Award Accounts at the time of such employee’s
Qualified Retirement.



               (iii) Unless otherwise expressly provided by the Committee, each Terminating Employee (A) who
is not a Grandfathered Employee or a Retiring Employee, (B) whose termination of employment was not
by reason of death or Permanent Disability or (C) who is a Grandfathered Employee who is
involuntarily terminated for Cause shall forfeit any and all Deferred Awards remaining to be paid
to such employee under this Plan and any credited but unpaid interest in any Deferred Award Account
for such employee and such employee shall not be entitled to receive any further payments under
this Plan.



               (iv) If an employee dies or experiences a Permanent Disability, the Company shall pay to the
estate of such employee or to such employee, as the case may be, the full amount (including
interest to the date of payment of such amount) remaining, if any, in all Deferred Award Accounts
for such employee at the time of such employee’s death or Permanent Disability. Such payment shall
be made on the 90th day after the date of such employee’s death or termination of
employment as a result of Permanent Disability or, if such date is not a business day, on the first
business day that is at least 90 days following the employee’s death or termination of employment
as a result of Permanent Disability.



               (v) If a former employee dies while still eligible to receive payment for Deferred Awards, the
Company shall pay to the estate of such former employee the full amount (including interest to the
date of payment of such amount) remaining, if any, in all Deferred Award Accounts for such employee
at the time of such employee’s death. Such payment shall be made on the 90th day after
the Company is notified of such employee’s death or, if such date is not a business day, on the
first business day that is at least 90 days following the date on which the Company is notified of
such employee’s death.



               (vi) A leave of absence authorized by the Company or any Subsidiary shall not be considered a
termination of employment for purposes of this Article VII or the definition of Grandfathered
Employee.



               (vii) All affected Deferred Award accounts shall be debited for all amounts paid or forfeited
pursuant to this paragraph (b).



               (viii) Any amount remaining in any Deferred Award Account for a former employee not forfeited
pursuant to clause (iii) above shall be paid at the same time that such amount would have been paid
pursuant to paragraph (a) above.



     (c) All amounts (including interest to the date of payment of such amounts) remaining, if any,
in each Deferred Award Account at the time of a Change of Control shall (i) automatically vest,
(ii) not be subject to forfeiture pursuant to paragraph (b) above and (iii) be paid to the employee
to which each such Deferred Award Account relates at the time of such Change of Control.



     (d) An employee may provide the Company with a written designation, on a form acceptable to
the Company, of a beneficiary or beneficiaries to receive any payments of Awards



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that would otherwise be paid to such employee’s estate hereunder. Any such designation may be
changed or revoked by written notice to the Company.



VIII.

Duration, Amendment and Termination




     (a) The Board shall have the right to amend this Plan from time to time, to terminate it
entirely or to direct the discontinuance of Awards either temporarily or permanently. The Board
may make any amendment to any outstanding Award that it believes is necessary or helpful to comply
with any applicable law including, without limitation, Section 409A. However, no amendment,
discontinuance or termination of this Plan shall operate to annul an outstanding Award unless
otherwise provided by the terms of this Plan. The term of this Plan shall be from its Effective
Date until terminated by the Board.



     (b) In furtherance, and not in limitation, of paragraph (a) above, at any time determined by
the Board, this Plan may be restructured by the Board to, among any other alterations or changes
determined by the Board in its sole discretion, (i) alter the eligibility requirements for awards
under such plan, (ii) provide for a Performance Period that is shorter or longer, (iii) change the
provisions regarding the forfeiture of Deferred Awards, (iv) change the definition of Adjusted Net
Income, (v) change the percentage of Adjusted Net Income included in the Incentive Pool or (vi)
provide that less than 85% of the Incentive Pool must be paid in Awards to Eligible Employees.



     (c) Notwithstanding any provision of this Plan to the contrary, on the date of a Change of
Control, (i) all Plan bonus obligations accrued to such date on the books of the Company that are
not the subject of previous Awards shall be paid in cash to such employees of the Company and its
Subsidiaries, and in such amounts with respect to each such employee, as the Committee shall
determine in its sole discretion based upon recommendations from the Chief Executive Officer of the
Company and (ii) upon payment of all such Plan obligations, this Plan shall terminate.



IX.

Miscellaneous




     (a) Neither this Plan nor any grant of Awards under this Plan shall confer on any employee the
right to continued employment by the Company or any Subsidiary, or affect in any way the right of
the Company or such Subsidiary to terminate the employment of such employee at any time. Any
question as to whether and when there has been a termination of an employee’s employment and the
cause of such termination shall be determined by the Committee, and its determination shall be
final.



     (b) Except to the extent set forth herein as to the rights of the estates or beneficiaries of
employees to receive payments, Awards under this Plan are non-assignable and non-transferable and
are not subject to anticipation, adjustment, alienation, encumbrance, garnishment, attachment or
levy of any kind.



     (c) None of the establishment of this Plan, the granting of Awards or the establishment of
Deferred Award Accounts shall be deemed to create a trust. This Plan and all



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unpaid awards shall constitute an unfunded, unsecured liability of the Company to make
payments in accordance with the provisions of this Plan, and no Person shall have any security or
other interest in any assets of the Company, in any Deferred Award Account or otherwise.



     (d) The existence of this Plan and the Awards granted hereunder shall not affect in any way
the right or power of the Board or the stockholders of the Company to authorize or consummate any
merger or consolidation of the Company, the dissolution or liquidation of the Company or any sale,
lease, exchange or other disposition of all or any part of its assets or business or any other
corporate act or proceeding.



     (e) Neither the officers nor the directors of the Company nor the members of the Committee
shall under any circumstances have any liability with respect to this Plan or its administration
except for gross and intentional malfeasance. The officers and directors of the Company and the
members of the Committee may rely upon opinions of counsel as to all matters, including the
creation, operation and interpretation of this Plan.



     (f) No portion of this Plan shall be effective at any time when such portion violates an
applicable state or federal law, regulation or governmental order or directive which is subject to
sanctions, whether direct or indirect.



X.

Compliance with Section 409A




     (a) Delay of Payments Under Certain Circumstances. To the extent permitted by Section
409A, the Committee, in its discretion, may delay payment to a date after the payment date
designated in Article VII if:



               (i) such payment will be made as soon as practicable after the date specified in Article VII
and in any event within the same calendar year or, if later, by the fifteenth day of the third
calendar month following the date specified in Article VII; or



               (ii) the Committee reasonably anticipates that the making of such payment will violate federal
securities laws or other applicable law; provided that the delayed payment is made at the earliest
date at which the Committee reasonably anticipates that the making of such payment will not cause
such violation.



     (b) Construction. The Company intends that this Plan by its terms and in operation
meet the requirements of Section 409A so that compensation deferred under this Plan (and applicable
investment earnings) shall not be included in income under Section 409A. Any ambiguities in this
Plan shall be construed to effect this intent. If any provision of this Plan is found to be in
violation of Section 409A, then such provision shall be deemed to be modified or restricted to the
extent and in the manner necessary to render such provision in conformity with Section 409A, or
shall be deemed excised from this Plan, and this Plan shall be construed and enforced to the
maximum extent permitted by Section 409A as if such provision had been originally incorporated in
this Plan as so modified or restricted, or as if such provision had not been originally
incorporated in this Plan, as the case may be.




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