exv10w4



 





Exhibit
10.4




	 	 	 
	HANOVER COMPRESSOR COMPANY



AWARD NOTICE

PERFORMANCE-VESTED RESTRICTED STOCK

	 	





Hanover Compressor Company (the “Company”), has granted to you, [NAME] (“the Participant”), shares
of restricted stock under the Hanover Compressor Company 2006 Stock Incentive Plan (the “Plan”).
All capitalized terms in this Notice have the same meaning ascribed to them in the Plan.



The main terms of your Award are as follows:




     1. Award. You have been granted [NUMBER] shares of Company restricted stock (the “Award” or
“Restricted Stock”). This Award is stated at maximum payout and the actual Award earned
and paid may be less.



     2. Grant Date. The date of this Restricted Stock Award is July 21, 2006 (the “Grant Date”).



     3. Vesting. The Award will vest on July 21, 2009 (the “Vesting Date”) and will be paid at 0%
to 200% of the Target Award, subject to the achievement of a pre-determined performance objective
(the “Performance Measure”) over a three-year period (the “Performance Period”). The “Target
Award” is the number of shares that would be earned and paid if the Performance Measure is met at
the target level.



     Exhibit A provides (i) the Performance Period over which performance will be measured, (ii) an
explanation of the Performance Measure, and (iii) the percentage of the Award that will vest based
on the achievement of the Performance Measure at threshold, target and maximum levels.



     As soon as administratively practicable following the Vesting Date, and in no event later than
September 30, 2009, the Company will notify you, based upon the performance achieved at the
conclusion of the Performance Period, of the portion of your Award that will vest and will no
longer be subject to the restrictions on transfer described in Section 6 below. Any portion of
your Award that does not vest will be forfeited. Contact Wachovia at (866) 311-5694 or (713)
853-2400 with any questions concerning the vesting of your Award.



     4. Termination of Employment. If your employment with the Company or a subsidiary terminates
for any reason (other than as a result of death, Disability or a Corporate Change) during the
Performance Period and up to the Vesting Date, your Award will be automatically forfeited on the
date of such event unless the Compensation Committee directs otherwise. If your employment with
the Company terminates as a result of your death, Disability or a Corporate Change, your Award will
immediately vest at 100% of the Target Award and all restrictions applicable to your Award will
cease as of that date.



     5. Stockholder Rights. You will have the right to vote your shares of Restricted Stock and
receive dividends, if any, with respect to your Restricted Stock, regardless of vesting; however,
the Company will withhold delivery of your Restricted Stock shares until they are vested.



     6. Non-Transferability. Before you are vested in your Award, you cannot sell, transfer,
pledge exchange or otherwise dispose of your shares of Restricted Stock (except by will or the laws
of descent and distribution).



     7. No Right to Continued Employment. Nothing in this Notice guarantees your continued
employment with the Company or its subsidiaries or interferes in any way with the right of the
Company or its subsidiaries to terminate your employment at any time.



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     8. Withholding. Your Award is subject to applicable income tax, social insurance, or social
security withholding obligations. If necessary, the Company reserves the right to withhold from
your regular earnings an amount sufficient to meet the withholding obligations.



     9. Plan Governs. This Notice is subject to the terms of the Plan, a copy of which is
available on the Company’s website or which will be provided to you upon written request addressed
to Hanover Compressor Company, Compensation and Benefits Department, 12001 N. Houston Rosslyn,
Houston, Texas 77086. In the event of a discrepancy between this Notice and the Plan, the Plan
shall govern.



     10. Participant Acceptance. If you do not accept the Award or the terms of the Award, you
must notify the Company in writing at the address provided above within thirty (30) days of
delivery of this Notice. Otherwise, the Company will deem the Award and the terms of the Award
accepted by you.



	 	 	 	 	 
	 	ON BEHALF OF HANOVER COMPRESSOR

COMPANY AND ITS SUBSIDIARIES

 
	 	By:  	/s/ John E. Jackson
 	 
	 	 	John E. Jackson 	 
	 	 	President and Chief Executive Officer 	 



 









 






	 	 	 	 	 



	 	 	 
	HANOVER COMPRESSOR COMPANY



AWARD NOTICE – EXHIBIT A

2006 PERFORMANCE-BASED OBJECTIVES AND CONDITIONS

	 	






	 	 	 
	Performance Period

	 	July 1, 2006 through June 30, 2009
	 
	 	 
	Performance Measure

	 	Average Return on Capital Employed (“ROCE”) over the Performance Period

	 
	 	 
	 

	 	ROCE is calculated as follows: (1) earnings before interest and taxes,
divided by (2) short-term debt plus, current maturities of long-term debt
plus, long-term debt plus, minority interest plus, stockholders’
equity less, cash.

	 
	 	 
	 

	 	The intent of the Performance Measure is to provide an incentive for
managers to effect significant improvements in the Company’s operational
performance. Upon the occurrence of material non-operational events
during the Performance Period, the Compensation Committee may, in its
discretion, adjust the incentive formula to exclude such event.






	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Threshold	 	Target	 	Maximum
	ROCE Performance Objectives	 	6.0%	 	7.5%	 	9.5%
	Payout (expressed as a
percentage of the Award at
target performance)

	 	 	50	%	 	 	100	%	 	 	200	%
	 	 	     The actual Award payout will range from 0% to 200%
of the Award that would have been earned at target performance.