EXHIBIT 10.1


 


2004
BONUS PROGRAM OF EDGE PETROLEUM CORPORATION


 


Under
the Company’s bonus program, the annual bonus of the executive officers is
determined by recommendation of the Compensation Committee, after reviewing
recommendations of the Chairman and Chief Executive Officer, which is then
submitted to the full Board for approval. 
The amount of bonus that may be earned is based on a targeted percentage
of the executive officer’s annual salary, subject to a maximum-targeted
percentage.  The bonuses of the executive
officers for 2004 were based 80% on achievement of the Company’s overall
performance objectives as established by the Compensation Committee and 20% on
achievement of the individual’s performance objectives. The Company’s overall
performance objectives are measured by certain operational and financial
objectives.  The operational objectives
for the Company for 2004 consisted of targeted annual increases in reserves
(weighted 40%) and production (weighted 30%), competitive finding and development
costs (weighted 15%) and operating expenses (weighted 15%).  These are then compared to the prior year and
with those projected in the Company’s annual budget for the applicable period.
The financial objectives for the Company for 2004 were to ensure that funds
were available to execute the Company’s capital spending program as projected
in its approved 2004 annual budget and plan while maintaining a prudent
financial structure with a debt-to-total capital ratio of less than 30%,
subject to adjustment due to acquisitions.


 


Individual
performance is assessed by a performance management process based on mutually
defined expectations for each employee, including executive officers. The
process includes individual appraisal components that are both objective and
subjective. The objective components include quantifiable objectives and the
subjective performance components include roles and accountabilities,
performance attributes and behaviors. Individual performance of the executive
officers, except the Chief Executive Officer, is first assessed by the Chief
Executive Officer, who makes recommendations to the Compensation Committee for
its consideration.  Bonus opportunities
for Messrs. Long and Tugwell for 2004 ranged from 0% to 80% of base
salary. Mr. Elias’ employment agreement provides a bonus opportunity
ranging from 0% to 100% of his base salary subject to the achievement of
specific objective and subjective performance criteria established mutually
between the Compensation Committee and Mr. Elias on an annual basis. For
2004, the Board determined that a bonus for Mr. Elias would be determined
based 80% on the achievement of the same Company performance criteria
applicable to the other executive officers and 20% on the achievement of
certain individual performance objectives as determined by the Compensation
Committee and approved by the full Board.


 


In
determining competitive compensation levels, including bonus awards and long
term stock-based incentive awards, the Company analyzes data that includes
information regarding compensation levels and programs in the energy sector and
more specifically in the oil and natural gas exploration and production
segment.  This data is provided by an
independent human resource consultant that compiles annual energy compensation
information on a comparative basis for 277 different positions.  There are currently 199 energy companies,
including the Company, that are represented in this survey.


 


Under
the bonus program, the 2004 bonuses were paid in cash on April 1, 2005.