Exhibit
10.2


MARATHON
OIL CORPORATION

2007 INCENTIVE COMPENSATION PLAN

NONQUALIFIED STOCK OPTION AWARD AGREEMENT


[GRANT
DATE]


Officer


Pursuant to this Award Agreement, MARATHON OIL
CORPORATION (the “Corporation”) hereby grants to [NAME] (the “Optionee”), an employee of the Corporation or a
Subsidiary, on [DATE] (the “Grant Date”), a right
(the “Option”) to purchase from the Corporation [NUMBER] shares of Common Stock of the Corporation at a grant
price of $[PRICE] per share (the “Grant
Price”), pursuant to the Marathon Oil Corporation 2007 Incentive Compensation
Plan (the “Plan”), with such number of shares and such price per share being
subject to adjustment as provided in Section 16 of the Plan, and further
subject to the following terms and conditions:


1.             Relationship
to the Plan.  This
Option 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 (including in Paragraph 11 of this
Award Agreement), 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 Optionee also include the heirs or other legal
representatives of the Optionee.


2.             Exercise and Vesting Schedule.


(a)          This
Option shall become exercisable in three cumulative annual installments, as
follows:


(i) one-third of the Option Shares shall
become exercisable on the first anniversary of the Grant Date;


(ii) an additional
one-third of the Option Shares
shall become exercisable on the second anniversary of the Grant Date; and


(iii) the
remaining one-third of the
Option Shares shall become exercisable on the third anniversary of the Grant
Date;


provided, however,
that the Optionee must be in continuous Employment from the Grant Date through
the date of exercisability of each installment in order for the Option to
become exercisable with respect to additional shares of Common Stock on such
date.  If the Employment of the Optionee
is terminated for any reason other than death or Retirement, any Option Shares
that are not exercisable as of the date of such termination of Employment shall
be forfeited to the Corporation.



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(b)           This
Option shall become fully exercisable, irrespective of the limitations set
forth in subparagraph (a) above, upon:


(i)  termination of the Optionee’s Employment due
to death;


(ii)  termination of the Optionee’s Employment due
to Retirement; or


(ii) a Change in
Control of the Corporation, provided that as of such Change in Control the
Optionee had been in continuous Employment since the Grant Date.


3.             Expiration
of Option.


(a)               Expiration
of Option Period. The Option Period shall expire on the tenth anniversary
of the Grant Date.


(b)               Termination
of Employment Due to Death or Retirement. If Employment of the Optionee is
terminated due to death or Retirement, the Option shall expire upon the earlier
of (i) five years following the date of termination of Employment or (ii)
expiration of the Option Period.  The
death of the Optionee following Retirement but prior to the expiration of the
Option shall have no effect on the expiration of the Option.


(c)               Termination
of Employment by the Corporation for Cause or Due to Resignation. If
Employment of the Optionee is terminated by the Corporation or any of its
Subsidiaries for Cause or due to voluntary resignation by the Optionee, the
Option shall expire upon the termination of Employment.


(d)            Termination
of Employment by the Corporation Other Than For Cause.  If Employment of the Optionee is terminated
by the Corporation or any of its Affiliates for any reason other than Cause,
the Option shall expire upon the earlier of (i) 90 days following the date of
termination of Employment or (ii) expiration of the Option Period.


(e)             Termination
of Employment Following Change in Control. 
If Employment of the Optionee is terminated following a Change in
Control and, as a result, the Optionee is eligible for severance benefits under
a Change in Control Agreement, the Option shall remain exercisable throughout
the Option Period.


4.             Employment
with a Competitor. 
Notwithstanding anything herein to the contrary, in the event the
Committee, the Chief Executive Officer, or an authorized officer determines
that the Optionee has accepted or intends to accept employment with a
competitor of any business unit of the Corporation, the Committee, the Chief
Executive Officer, or the authorized officer may cancel the Option by written
notice to the Optionee.


5.             Exercise
of Option. Subject to the limitations set forth herein and in
the Plan, this Option may be exercised in whole or in part by providing notice
to the Committee or its designated representative of the number of Option
Shares to be exercised.  Such notice
shall be accompanied by payment of the 



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Grant Price of
such Option Shares in cash or, at the election of the Optionee, in shares of
Common Stock or any combination thereof. For purposes of determining the
amount, if any, of the purchase price satisfied by payment in Common Stock,
such Common Stock shall be valued at its Fair Market Value on the date of
exercise.  Upon receipt of the purchase
price, the Corporation or its designated representative shall issue or cause to
be issued to the Optionee a number of shares of Common Stock equal to the
number of Option Shares then exercised.


6.             Taxes.  The Corporation or its designated
representative shall have the right to withhold applicable taxes from the
shares of Common Stock otherwise payable to the Optionee upon exercise of the
Option or from compensation otherwise payable to the Optionee at the time of
exercise pursuant to Section 13 of the Plan.


7.             Shareholder
Rights. The Optionee shall have no rights of a shareholder
with respect to the Option Shares unless and until such time as the Option has
been exercised and shares of Common Stock have been issued to the Optionee in
conjunction with the exercise of the Option.


8.             Nonassignability.  During the Optionee’s
lifetime, the Option may be exercised only by the Optionee or by the Optionee’s
guardian or legal representative.  Upon
the Optionee’s death, the Option shall be transferred to the Optionee’s
estate.  Otherwise, the Optionee may not
sell, transfer, assign, pledge or otherwise encumber any portion of the Option,
and any attempt to sell, transfer, assign, pledge, or encumber any portion of
the Option shall have no effect.


9.             No
Employment Guaranteed. Nothing in this Award Agreement shall
give the Optionee 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 Optionee.


10.          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 Optionee, adversely affect
the rights of the Optionee hereunder.


11.          Definitions.  For purposes of this Award Agreement:


“Cause”
means termination from Employment by the Corporation or its
Subsidiaries due to unacceptable performance, gross misconduct, gross
negligence, material dishonesty, material acts detrimental or destructive to
the Corporation or its Subsidiaries, employees or property, or any material
violation of the policies of the Corporation or its Subsidiaries.


“Change
in Control,” unless
otherwise defined by the Committee, means a change in control of a nature that
would be required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act 



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of
1934, as amended, whether or not the Corporation is then subject to such
reporting requirement; provided, that, without limitation, such a change in
control shall be deemed to have occurred if:


(i)          any person (as defined
in Sections 13(d) and 14(d) of the Exchange Act) (a “Person”) is or becomes the
“beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Corporation (not including in the amount of
the securities beneficially owned by such person any such securities acquired
directly from the Corporation or its affiliates) representing twenty percent
(20%) or more of the combined voting power of the Corporation’s then
outstanding voting securities; provided, however, that for purposes of this
Plan the term “Person” shall not include (A) the Corporation or any of its
subsidiaries, (B) a trustee or other fiduciary holding securities under an employee
benefit plan of the Corporation or any of its subsidiaries, (C) an underwriter
temporarily holding securities pursuant to an offering of such securities, or
(D) a corporation owned, directly or indirectly, by the stockholders of the
Corporation in substantially the same proportions as their ownership of stock
of the Corporation; and provided, further, however, that for purposes of this
paragraph (i), there shall be excluded any Person who becomes such a beneficial
owner in connection with an Excluded Transaction (as defined in paragraph (iii)
below);


(ii)         the following
individuals cease for any reason to constitute a majority of the number of
Directors then serving:  individuals who,
on the date hereof, constitute the Board and any new Director (other than a
Director whose initial assumption of office is in connection with an actual or
threatened election contest including but not limited to a consent
solicitation, relating to the election of Directors of the Corporation) whose
appointment or election by the Board or nomination for election by the
Corporation’s stockholders was approved or recommended by a vote of at least
two-thirds (2/3) of the directors then still in office who either were
Directors on the date hereof or whose appointment, election or nomination for
election was previously so approved; or


(iii)        there is
consummated  a merger or consolidation of
the Corporation or any direct or indirect subsidiary thereof with any other
corporation, other than a merger or consolidation (an “Excluded Transaction”)
which would result in the holders of the voting securities of the Corporation
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving corporation or any parent thereof) at least 50% of the combined
voting power of the voting securities of the entity surviving the merger or
consolidation (or the parent of such surviving entity) immediately after such
merger or consolidation, or the stockholders of the Corporation approve a plan
of complete liquidation of the Corporation, or there is consummated the sale or
other disposition of all or substantially all of the Corporation’s assets.


Notwithstanding any other provision to the contrary, in no event shall
the transfer of ownership interests in the Corporation in and of itself
constitute a Change in Control under this Award Agreement.


“Change
in Control Agreement” means any plan, program, agreement, or 



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arrangement under which
the Corporation or a Subsidiary agrees to provide benefits to the Optionee in
the event he or she is terminated following a Change in Control, as applicable
to the Optionee at the relevant time.


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


“Option
Period” means the period commencing upon the Optionee’s
receipt of this Award Agreement and ending on the date on which the Option
expires pursuant to Paragraph 3(a).


“Option
Shares” means the shares of Common Stock covered by this
Option.


 


	
  

  	
   

  	
  Marathon Oil Corporation

  
	
   

  	
   

  	
  By

  	
   

  	
  

  
	
   

  	
   

  	
   

  	
   

  	
  Authorized
  Officer

  



 



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