Exhibit 10.01(r)


 


EQT CORPORATION


2010 EXECUTIVE PERFORMANCE
INCENTIVE PROGRAM


 


 


EQT CORPORATION (the “Company”) hereby establishes
this EQT CORPORATION 2010 EXECUTIVE PERFORMANCE INCENTIVE PROGRAM (the
“Program”), in accordance with the terms provided herein.


 


WHEREAS, the Company maintains certain long-term
incentive award plans including the EQT Corporation 2009 Long-Term Incentive
Plan (the “2009 Plan”) for the benefit of its directors and employees, of which
the Program is a subset; and


 


WHEREAS, in order to further align the interests of
executives and key employees with the interests of the shareholders, the
Company desires to provide long-term incentive benefits through the Program, in
the form of awards qualifying as “Performance Awards” under the 2009 Plan.


 


NOW, THEREFORE, the Company hereby provides for
incentive benefits for executives and key employees of the Company and adopts
the terms of the Program on the following terms and conditions:


 


Section 1.  Purpose.  The main purpose of the Program is to provide
long-term incentive opportunities to executives and key employees to further
align their interests with those of the Company’s shareholders and with the
strategic objectives of the Company. 
Awards granted hereunder may be earned by achieving relative performance
levels against a pre-determined peer group, are forfeited if defined
performance levels are not achieved and are subject to negative adjustment if,
among other things, other absolute  performance
measures are not attained.  By placing a
portion of the employee’s compensation at risk, the Company has an opportunity
to reward exceptional performance or reduce the compensation opportunity when
performance does not meet expectations. 
As a subset of the 2009 Plan, this Program is subject to and shall be
governed by the terms and conditions of the 2009 Plan.  Capitalized terms used herein and not
otherwise defined shall have the meanings given such terms in the 2009
Plan.  The Share Units (as defined in
Section 4 below) granted under this Program are intended to meet the
performance-based compensation exemption under Section 162(m) of the Code.


 


Section 2.  Effective Date.  The effective date of this Program is January
1, 2010.  The Program will remain in
effect until the earlier of December 31, 2012 or the closing date of a Change
of Control event defined in Section 5 unless otherwise amended or terminated as
provided in Section 17 (“Termination Date”).


 


Section 3.  Eligibility.  The Chief Executive Officer of the Company
(the “CEO”) shall, in his or her sole discretion, select the employees of the
Company who shall be eligible to participate in the Program from those
individuals eligible to participate in the 2009 Plan.  The CEO’s selections will become participants
in the Program (the


 

















 


“Participants”) only upon approval by the Committee, comprised in
accordance with the requirements of the 2009 Plan, to the extent such
individuals are, or are expected to be, Covered Employees.  In the event that an employee is hired by the
Company during the Performance Period, as defined below, the CEO shall, in his
or her sole discretion, determine whether the employee will be eligible to
participate in the Program, provided that the Committee must approve all new
participants to the Program who are Covered Employees; provided further that,
individuals who are Covered Employees may only become eligible during the first
90 days of the Performance Period.


 


Section 4. 
Performance Incentive Share Unit Awards.  Awards under the Program are designated in
the form of performance incentive share units (as adjusted from time to time in
accordance with Section 12, the “Share Units”) , which are awards to be settled
in stock, the amount per unit of which is determined by reference to one share
of the Company’s Common Stock.  Upon
being selected to participate in the Program, each Participant shall be awarded
a number of Share Units, which award shall be proposed by the CEO and approved
by the Committee.  The aggregate maximum
number of Share Units, excluding accrued Dividend Units (as defined in Section
12), that may be awarded under the Program is 900,000, subject to adjustment as
provided in Section 12.   Unless
otherwise indicated herein in a particular context, the term “Share Units”
includes any Dividend Units accumulated with respect to an award of Share
Units, as provided in Section 12.


The Share Units
shall be held in book entry form by the Company until settled as described
herein.  Share Units do not represent
actual shares of stock.  A Participant
shall have no right to exchange the Share Units for cash, stock or any other
benefit and shall be a mere unsecured creditor of the Company with respect to
such Share Units and any future rights to benefits.


Section 5.  Performance Condition.  Subject to Section 7, the amount to be
distributed to a Participant will be based on the Company’s total shareholder
return relative to the peer group’s (Attachment A) total shareholder return
calculated as described in (a) below (the “Performance Condition”), for the
period of January 1, 2010 to the Termination Date (the “Performance Period”),
and subject to the Committee’s negative discretion based upon the Company’s
revenues as described in (b) and (c) below. 



 


(a)       Total Shareholder
Return.  For purposes of this
Program, total shareholder return will be calculated as follows:


 


Step 1


 


The “Beginning Point” for
the Company and each company in the peer group is defined as one share of
common stock with a value equal to the average closing stock price as reported
in the Nationally Recognized Reporting Service for the ten (10) consecutive
business day period ending on and including the date of the commencement of the
Performance Period, for each company. 
All references in this Program to the “Nationally Recognized 


 


2

















 


Reporting Service” shall be references to either the
print or electronic version of a nationally recognized publication that reports
the daily closing stock price of EQT and each member of the peer group.


 


Step 2


 


Dividends paid for each
company from the beginning of the Performance Period will be cumulatively added
to the Beginning Point as additional shares of such company’s common
stock.  The closing price on the last
business day of the month in which the record date for the dividend occurs will
be used as the basis for determining the number of shares to be added.  The resulting total number of shares
accumulated during the Performance Period is referred to as the Total Shares
Held at Ending Point.


 


Step 3


 


Except as provided in the
following sentence, the “Ending Point” for each company in the peer group is
defined as Total Shares Held at Ending Point for that company times the average
of the closing price of such company’s common stock as reported in the Nationally
Recognized Reporting Service for the last ten (10) business days of the
Performance Period for that company.  In
the event of a change of control (as then defined in the 2009 Plan) of the
Company (a “Change of Control”), the “Ending Point” for each company in the
peer group is defined as Total Shares Held at Ending Point for that company
times the average of the closing price of such company’s common stock as
reported in the Nationally Recognized Reporting Service for the ten (10)
business days preceding the closing of the Change of Control transaction.


 


Step 4


 


Total Shareholder Return
(“TSR”) will be expressed as a percentage and is calculated by dividing the
Ending Point by the Beginning Point and then subtracting 1 from the
result.  Each company including the
Company will be ranked in descending order by the TSR so calculated.


 


If the common stock of any company in the peer
group ceases to be publicly traded during the Performance Period, such company
shall be assigned a TSR value of negative 100% for purposes of the
Program.  


(b)      Revenues.  For purposes of this Program, revenues shall
be measured as the Sales Price (as specified below) multiplied by the aggregate
Total Sales Volume (as specified below) for the eleven (11) calendar quarters
within the Performance Period beginning January 1, 2010 and ending September
30, 2012.  If a Change of Control shall
occur prior to September 30, 2012, then revenues shall be measured as the Sales
Price multiplied by the aggregate Total Sales Volume for the calendar quarters
completed prior the date of the Change of Control.  


 


3

















 


(i)                                   Sales
Price shall equal $6.00/mcf.  


 


(ii)                                Total
Sales Volume for each quarter equals the sum of the production total sales
volumes (mmcfe) reported in the applicable Form 10-Q for each quarter and, in
the case of the fourth quarter of any year, the volumes calculated for the
fourth quarter by reducing the annual total sales volume reported in the Form
10-K by the quarterly total sales volumes reported in the Form 10-Q for the
first three quarters of such year.  For
the avoidance of doubt, (a) Total Sales Volume is determined solely by the
volumes reported, regardless of any subsequently identified prior period
adjustment, (b) Total Sales Volume represents the Company’s interest in gas and
oil sales during the applicable period and (c) gathered volumes are not
included.  Total Sales Volume shall be
measured on a basis consistent with current practice on the date of adoption of
the Program.


 


(c)       Application
of Performance Condition and Negative Adjustment.  A Participant’s “Awarded Value” shall be
calculated by multiplying (A) the sum of such Participant’s Share Units, by (B)
the Payout Multiple identified on the payout matrix (Attachment B) that corresponds
to the Company’s relative TSR ranking on the payout matrix for the Performance
Period (after taking into account any discretionary reduction of the Payout
Multiple by the Committee as provided in Attachment B), by (C) the closing
price of the Company’s Common Stock at the end of the Performance Period or, in
the case of a Change of Control, the average of the closing price of the
Company’s Common Stock for the ten (10) business days preceding the Change of
Control transaction, in each case as reported in the Nationally Recognized
Reporting Service.   Share Units will be
cumulatively credited with cash dividends that are paid on the Company’s Common
Stock on or after January 1, 2010 in the form of additional Share Units, which
shall be referred to as the “Dividend Units.” 
These Dividend Units shall be deemed to have been purchased on the last
business day of the month in which the record date for the dividend occurs,
using the closing stock price for the Company as reported in the Nationally
Recognized Reporting Service.


 


Payments under the Program are expressly contingent
upon achievement of the Performance Condition. 


 


Section 6.  Issuance and Distribution.  Subject to Section 7 and except as provided
in the remainder of this Section 6, each Participant’s Awarded Value will
be distributed in stock no later than March 15, 2013.  Subject to Section 7, in the event of a
Change of Control, the Awarded Value will be distributed in stock on the
closing date of the transaction. 
Notwithstanding the foregoing, to the extent required under Section 409A
of 


 


4

















 


the Code or the
regulations thereunder, no distributions may be made earlier than the time
permitted under such regulations to any affected Participant.  Notwithstanding the first sentence of this
Section 6, the Committee may determine, in its discretion and for any reason,
that the Awarded Value will be issued in whole or in part in cash.  If a Participant receives payment in the form
of Company stock, the number of shares of stock shall be based on the closing
price of the Company’s stock (or, in the case of a Change of Control,  the value per share of Common Stock
distributed to holders of the Company’s Common Stock) at the Termination
Date.  The maximum amount payable to any
one Participant under the Program with respect to any one calendar year within
the Performance Period shall be the amount set forth and as calculated in the
2009 Plan with respect to Performance Awards, which limit has been approved by
the shareholders of the Company.  No
elections shall be permitted with respect to the timing of any payments.


            Section 7.  Change of Status; Overall Limit.  In making decisions regarding employees’
participation in the Program and the extent to which awards are payable in the
case of an employee whose employment ceases prior to payment, the Committee may
consider any factors that it may consider relevant.  Unless otherwise determined by the Committee,
the following shall apply in the case of a Participant whose employment ceases
prior to payment of the Awarded Value:


 


(a)       Retirement and
Resignation.  Share Units shall be
forfeited.


 


(b)      Death and Disability.  Share Units shall be retained by the
Participant or his or her estate or beneficiary, contingent upon achievement of
the Performance Condition set forth in Section 5, as follows, and the remainder
shall be forfeited:


 


	
  Date of Death or Disability

  	
   

  	
  Percent Retained

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Prior to January
  1, 2011

  	
   

  	
  0%

  	
   

  	
   

  
	
  January 1, 2011
  – December 31, 2011

  	
   

  	
  25%

  	
   

  	
   

  
	
  January 1, 2012
  – December 31, 2012

  	
   

  	
  50%

  	
   

  	
   

  



 


(c)       Termination.  If the termination is for reasons of
misconduct, failure to perform, or other cause, Share Units shall be
forfeited.  If the termination is due to
reasons such as reorganization, and not due to the fault of the employee, the
employee will retain his or her Share Units, contingent upon achievement of the
Performance Condition set forth in Section 5, as follows, and the remainder
shall be forfeited:


 


	
  Termination Date

  	
   

  	
  Percent Retained

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Prior to January 1, 2011

  	
   

  	
  0%

  	
   

  	
   

  
	
  January 1, 2011 – December 31, 2011

  	
   

  	
  25%

  	
   

  	
   

  
	
  January 1, 2012 – December 31, 2012

  	
   

  	
  50%

  	
   

  	
   

  



 


5

















 


(d)      Change of Position.  A Participant whose position within the
Company changes to a non-Program eligible position as determined by the
Committee but who remains employed through the date of payment of the Awarded
Value will retain his or her Share Units, contingent upon achievement of the
Performance Condition set forth in Section 5, as follows, and the remainder
shall be forfeited:


 


	
  Change of Position Date

  	
   

  	
  Percent Retained

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Prior to January 1, 2011

  	
   

  	
  0%

  	
   

  	
   

  
	
  January 1, 2011 – December 31, 2011

  	
   

  	
  25%

  	
   

  	
   

  
	
  January 1, 2012 – December 31, 2012

  	
   

  	
  50%

  	
   

  	
   

  



 


In such events, any Share Units that are retained shall be payable at
the time specified in Section 6 except that, in the event such amounts are
conditioned upon a separation from service and not compensation the Participant
could receive without separating from service, then no such payments may be made
to a Participant who is a “specified employee” under Section 409A of the Code
until the first day of the seventh month following the Participant’s separation
from service.  Notwithstanding any other
provisions of the Program, Participants shall have no vested rights to any
Share Units prior to payment.


 


Section 8.  Responsibilities of the Committee.  The Committee has responsibility for all
aspects of the Program’s administration, including:


 


·                Determining and
certifying in writing, the extent to which the Performance Condition has been
achieved prior to any payments under the Program,


 


·                Ensuring that the
Program is administered in accordance with its provisions,


 


·                Approving Program
Participants,


 


·                Authorizing Share
Unit awards to Participants,


 


·                Adjusting Share
Unit awards  to account for extraordinary
events,


 


·                Ruling on any
disagreement between Program Participants, Company management, Program
administrators, and any other interested parties to the Program, and


 


·                Maintaining final
authority to amend, modify or terminate the Program at any time.


 


The interpretation and construction by the Committee of any provisions
of the Program or of any adjusted Share Units shall be final.  No member of the Committee shall be liable
for any action or determination made in good faith on the Program or any Share 


 


6

















 


Units thereunder.  The Committee
may designate another party to administer the Program, including Company
management or an outside party to the extent permitted under Code Section
162(m).  All conditions of the Share
Units must be approved by the Committee. 
As early as practicable prior to or during the Performance Period, the
Committee shall approve the number of Share Units to be awarded to each
Participant.  The associated terms and
conditions of the Program will be communicated to Participants as close as
possible to the date an award is made. 
The Participants will sign and return a participant agreement to the
Committee.


 


Section 9.  Tax Consequences to Participants.  It is intended that:  (i) until the Performance Condition is
satisfied, a Participant’s right to payment for an award under this Program
shall be considered to be subject to a substantial risk of forfeiture in
accordance with those terms as defined or referenced in Sections 83(a), 409A
and 3121(v)(2) of the Code; (ii) the Awarded Value shall be subject to
employment taxes only upon the satisfaction of the Performance Condition; and
(iii) until the Awarded Value is actually paid to the Participant, the
Participants shall have merely an unfunded, unsecured promise to be paid the
benefit, and such unfunded promise shall not consist of a transfer of
“property” within the meaning of Code Section 83.  It is further intended that Participants will
not be in actual or constructive receipt of compensation with respect to the
Share Units within the meaning of Code Section 451 until the Awarded Value is
paid.


 


Section 10.  Nonassignment.  A Participant shall not be permitted to
assign, alienate or otherwise transfer his or her Share Units and any attempt
to do so shall be void.


 


Section 11.  Impact on Benefit Plans.  Payments under the Program shall not be
considered as earnings for purposes of the Company’s qualified retirement plans
or any such retirement or benefit plan unless specifically provided for and
defined under such plans.  Nothing herein
shall prevent the Company from maintaining additional compensation plans and
arrangements, provided however that no payments shall be made under such plans
and arrangements if the effect thereof would be the payment of compensation
otherwise payable under this Program regardless of whether the Performance
Condition was attained.


 


Section 12.  Successors; Changes in Stock.  The obligation of the Company under the
Program shall be binding upon the successors and assigns of the Company.  If a dividend or other distribution shall be
declared upon the Company’s Common Stock payable in shares of Company Common
Stock, each Participant’s Share Units shall be adjusted by adding thereto the
number of shares of Company Common Stock that would have been distributable
thereon if such units had been actual Company shares and outstanding on the
date fixed for determining the shareholders entitled to receive such stock
dividend or distribution.  In the event
of any spin-off, split-off or split-up, or dividend in partial liquidation,
dividend in property other than cash or Company Common Stock, or extraordinary
distribution to shareholders of the Company’s Common Stock, each Participant’s
Share Units shall be appropriately adjusted to prevent dilution 


 


7

















 


or enlargement of the rights of Participants that would otherwise
result from any such transaction, provided such adjustment shall be consistent
with Section 409A of the Code.


 


In the case of a Change of Control, any obligation
under the Program shall be handled in accordance with the terms of Section 6
hereof.  In any case not constituting a
Change of Control in which the Company’s Common Stock is changed into or
becomes exchangeable for a different number or kind of shares of stock or other
securities of the Company or another corporation, or cash or other property, whether
through reorganization, reclassification, recapitalization, stock split-up,
combination of shares, merger or consolidation, then (i) the Awarded Value
shall be calculated based on the closing price of such common stock on the
closing date of the transaction on the principal market on which such common
stock is traded, and (ii) there shall be substituted for each Share Unit
constituting an award, the number and kind of shares of stock or other
securities (or cash or other property) into which each outstanding share of the
Company’s Common Stock shall be so changed or for which each such share shall
be exchangeable.  In the case of any such
adjustment, the Share Units shall remain subject to the terms of the Program.


 


Section 13.  Dispute Resolution.  The Participant may make a claim to the
Committee with regard to a payment of benefits provided herein.  If the Committee receives a claim in writing,
the Committee must advise the Participant of its decision on the claim in
writing in a reasonable period of time after receipt of the claim (not to
exceed 120 days).  The notice shall set
forth the following information:


 


(a)       The specific basis for its
decision,


 


(b)      Specific reference to
pertinent Program provisions on which the decision is based,


 


(c)       A description of any
additional material or information necessary for the Participant to perfect a
claim and an explanation of why such material or information is necessary, and


 


(d)      An explanation of the
Program’s claim review procedure.


 


Section 14.  Applicable Law.  This Program shall be governed by and
construed under the laws of the Commonwealth of Pennsylvania without regard to
its conflict of law provisions.


 


Section 15.  Severability.  In the event that any one or more of the
provisions of this Program shall be held to be invalid, illegal or
unenforceable, the validity, legality or enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.


 


Section 16.  Headings.  The descriptive headings of the Sections of
this Program are inserted for convenience of reference only and shall not
constitute a part of this Program.


 


8

















 


Section 17.  Amendment or Termination of this Program.  This Program may be amended, suspended or
terminated by the Company at any time upon approval by the Committee and
following a determination that the Program is no longer meaningful in relation
to the Company’s strategy.  Any
suspension or termination shall automatically cause a Termination Date
effective as of the date of the Committee’s approval.  Notwithstanding the foregoing, (i) no
amendment, suspension or termination shall adversely affect a Participant’s
rights to his or her award after the date of the award; provided, however, that
to the extent an award is determined with respect to a Termination Date,
including a Termination Date pursuant to the preceding sentence, Participants’
rights to awards are deemed not to be adversely affected thereby, and the
Company may amend this Program from time to time without any participant’s
consent to the extent deemed necessary or appropriate, in its sole discretion,
to effect compliance with Sections 409A or any other provision of the Code,
including regulations and interpretations thereunder, which amendments may
result in a reduction of benefits provided hereunder and/or other unfavorable
changes to participants, (ii) no amendment may alter the time of payment as
provided in Section 6 of the Program, and (iii) no amendment may be made
following a Change of Control.


 


9

















 


Attachment A


 


 


2010 Executive Performance Incentive Program


 


Peer
Group


 


 


Cabot Oil & Gas Corp.


Chesapeake Energy Corp.


CNX Gas Corp.


El Paso Corp.


Enbridge Inc.


Energen Corp.


EOG Resources, Inc.


EXCO Resources, Inc.


Markwest Energy Partners LP


MDU Resources Group Inc.


National Fuel Gas co.


Oneok Inc.


Penn Virginia Corp.


Petroleum Development Corp.


Questar Corp.


Range Resources Corp.


REX Energy Corp.


Sempra Energy


Southern Union Co.


Southwestern Energy Co.


Spectra Energy Corp.


Transcanada Corp.


Williams Cos. Inc.


XTO Energy, Inc.


 


10

















 


Attachment B


 


 


2010
Executive Performance Incentive Program


 


Payout
Matrix


 


 


	
  Company’s Position in

  	
   

  	
   

  	
   

  	
   

  
	
  TSR Ranking

  	
   

  	
   

  	
  Payout Multiple

  	
   

  
	
  1

  	
   

  	
   

  	
   

  	
  3.00

  	
   

  
	
  2

  	
   

  	
   

  	
   

  	
  3.00

  	
   

  
	
  3

  	
   

  	
   

  	
   

  	
  3.00

  	
   

  
	
  4

  	
   

  	
   

  	
   

  	
  2.80

  	
   

  
	
  5

  	
   

  	
   

  	
   

  	
  2.60

  	
   

  
	
  6

  	
   

  	
   

  	
   

  	
  2.40

  	
   

  
	
  7

  	
   

  	
   

  	
   

  	
  2.20

  	
   

  
	
  8

  	
   

  	
   

  	
   

  	
  2.00

  	
   

  
	
  9

  	
   

  	
   

  	
   

  	
  1.80

  	
   

  
	
  10

  	
   

  	
   

  	
   

  	
  1.60

  	
   

  
	
  11

  	
   

  	
   

  	
   

  	
  1.40

  	
   

  
	
  12

  	
   

  	
   

  	
   

  	
  1.20

  	
   

  
	
  13

  	
   

  	
   

  	
   

  	
  1.00 median

  
	
  14

  	
   

  	
   

  	
   

  	
  0.75

  	
   

  
	
  15

  	
   

  	
   

  	
   

  	
  0.75

  	
   

  
	
  16

  	
   

  	
   

  	
   

  	
  0.75

  	
   

  
	
  17

  	
   

  	
   

  	
   

  	
  0.50

  	
   

  
	
  18

  	
   

  	
   

  	
   

  	
  0.50

  	
   

  
	
  19

  	
   

  	
   

  	
   

  	
  0.50

  	
   

  
	
  20

  	
   

  	
   

  	
   

  	
  0.25

  	
   

  
	
  21

  	
   

  	
   

  	
   

  	
  0.25

  	
   

  
	
  22

  	
   

  	
   

  	
   

  	
  0.25

  	
   

  
	
  23

  	
   

  	
   

  	
   

  	
  0.00

  	
   

  
	
  24

  	
   

  	
   

  	
   

  	
  0.00

  	
   

  
	
  25

  	
   

  	
   

  	
   

  	
  0.00

  	
   

  



 


 


The Committee retains the discretion to reduce the
corresponding Payout Multiple.  In
exercising such discretion, the Committee shall consider reducing the Payout
Multiple by up to 0.75 if the Company does not attain the revenue target
specified below; provided, however, that if the Company’s relative TSR ranking
is median or above, the Payout Multiple should not be decreased below
1.00.  The revenue target for the period
January 1, 2010 to September 30, 2012 is listed below:


 


Total Sales Volume (mmcfe)                 Production Revenue ($000,000)


      
460,000                                                2,760.0


 


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In the event of a Change of Control prior to September
30, 2012, then the revenue target shall be adjusted proportionately based upon
the number of calendar quarters actually completed prior to the closing date of
the Change of Control.  


 


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