Exhibit 10.2


 


2005 Administrative Guidelines for the


Copano Energy, L.L.C.


Management Incentive Compensation Plan


 


The Copano Energy, L.L.C.
Management Incentive Compensation Plan (the “Plan”) is established by the Board
of Directors of Copano Energy, L.L.C. (the “Company”) to encourage and reward
significant contributions to the successful and profitable operation of the
enterprise by (i) management employees of the Company or a subsidiary thereof
or (ii) employees of an Affiliate who performs services in a management
capacity on behalf of the Company or a subsidiary thereof.  The Compensation Committee of the Board,
which oversees executive compensation matters on behalf of the Board, approves
the Administrative Guidelines for the Plan each Plan Year.  Terms capitalized in these Administrative
Guidelines but not defined herein shall have the meaning attributed to such
terms in the Plan.


 


Participation


 


Participants eligible for the Plan effective January 1, 2005 for the
2005 Plan Year shall be those employees of the Company and its Affiliates named
in Exhibit A to these Guidelines.  Upon
the recommendation of the CEO, the Committee may approve the entry of
additional Participants in the Plan effective on the first day of any month of
the Plan Year following their promotion or employment date.  Participants who enter the Plan during the
Plan Year shall be eligible for an Award under the Plan but, in the discretion
of the CEO and Committee Chairman, may only be eligible for an Award calculated
pro rata based upon the period of actual service during the Plan Year.


 


Bonus Opportunities


 


The 2005 Target Bonus level for each proposed Participant is set forth
in Exhibit A. The Target Bonus is defined as a specific percentage of the
Participant’s base salary as of July 1 of the Plan Year that may be earned if,
in the opinion of the Committee, the objectives upon which the opportunity is
contingent are fully achieved.


 


Each Participant’s 2005 bonus is contingent upon 1) the Financial
Objectives specified in Exhibit B to these Guidelines, and 2) the Participant’s
individual objectives, which shall include Personal Objectives and any
applicable Operational Objectives, each as established in accordance with these
Guidelines.  The CEO and the Committee
shall assess the relative significance of the Financial Objectives and each
Participant’s individual objectives (including Personal Objectives and
Operational Objectives) and shall assign to each objective a percentage so that
for each Participant, the percentages assigned to the Financial Objectives
shall equal fifty percent (50%) of the Target Bonus and the percentages
assigned to the individual objectives shall equal fifty percent (50%) of the
Target Bonus.


 





















 


Financial and Operational Objectives


 


For each Financial Objective and Operational Objective, the Committee
and the CEO shall approve the following performance levels:  1) a Threshold Level, 2) a Target Level, and
3) a Maximum Level, which levels shall be subject to final approval by the
Board.


 


A.           If
performance is less than the Threshold Level, the amount of the Target Bonus
contingent upon that objective will not be paid.


 


B.             If
performance is equal to the Threshold Level, fifty percent (50%) of the amount
of the Target Bonus contingent upon that objective will be paid.


 


C.             If
performance equals the Target Level, one hundred percent (100%) of amount of
the Target Bonus contingent upon that objective will be paid.


 


D.            If
performance equals or exceeds the Maximum Level, one hundred and fifty percent
(150%) of the amount of the Target Bonus contingent upon that objective will be
paid.


 


E.              When
performance falls between the Threshold Level and the Target Level or between
the Target Level and the Maximum Level, the amount of the bonus shall be
determined by straight-line interpolation.


 


F.              In
no circumstances will any bonus be paid from this Plan if cash distributions
paid to unit holders of the Company in regard to any quarter of the Plan Year
are less than $0.40 per unit.


 


When the Committee and the CEO deem it appropriate but subject to Board
approval, the Threshold Level, Target Level, and Maximum Level of any Financial
or Operational Objective approved at the beginning of the Plan Year may be
adjusted to reflect significant changes in the operational environment or in the
strategic direction of the Company or such other factors as the Committee and
the CEO may determine.


 


Personal Objectives


 


Prior to or immediately following the commencement of any Plan Year,
the CEO may require that one or more Participants (and the Committee may
require that the CEO) propose such Personal Objectives for Committee approval
that, together with any Operational Objectives approved for such Participant by
the CEO and the Committee (and for the CEO, by the Committee) will determine
the extent to which the percentage of the Target Bonus contingent upon
individual objectives has been earned by such Participant.  To the extent practical, the objectives will
be specific, measurable, and represent the contributions required of the
Participant if the Company is to meet or achieve its business plan.  During the Plan Year, Personal Objectives
will be reviewed routinely and may be revised by the Committee and the CEO to
reflect changes in job responsibilities or business objectives.


 


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At the end of the Plan Year, the degree to which each Participant
accomplished his or her Personal Objectives will be reviewed by the CEO (or, in
the case of the CEO, by the Committee), and a score of 0% to 150% will be assigned
based upon the CEO’s subjective opinion of the performance of the Participant
with respect to the Personal Objectives and upon other factors that the CEO may
deem relevant and appropriate.  The
percentage that represents the Participant’s score on Personal Objectives shall
be multiplied by the weight assigned to the Personal Objective component of the
Target Bonus to determine the amount of the bonus earned through the Personal
Objectives component of the opportunity.


 


Bonus Determinations


 


The Participant’s Financial Objectives result will be combined with the
Participant’s individual objectives result (including Personal Objectives and
Operational Objectives) to determine the amount of his or her Award.  The CEO’s recommendations for award payments will
be presented to the Committee at its first meeting immediately following the
end of the applicable Plan Year, at which time the Committee shall review
performance and consider and approve bonuses, if any, for all Participants
including the CEO.  Awards shall be paid
as soon as reasonably practicable following the Committee’s approval of awards,
but in no case shall awards be paid later than March 15.


 


Participant’s Termination


 


Participants who terminate their employment by reason of death,
disability (as determined by the Committee in its sole discretion) or
retirement on or after reaching age 65 or, if prior to age 65, if approved by
the Committee, and Participants whose employment with the Company or an
Affiliate is terminated without “cause” shall be eligible for an award based on
a pro rata portion of their Target Bonus and payable at the same time as all
other award payments for the applicable Plan Year.  The pro rata portion of such Target Bonus
shall be equal to the amount of the Participant’s Target Bonus multiplied by a
fraction, the numerator of which is the number of full weeks the participant
was actively employed during the Plan Year and the denominator of which
is 52.


 


Notwithstanding
anything to the contrary herein, in the event of (i) the termination of a
Participant’s employment by the Company or an Affiliate without “cause” or (ii)
the termination of employment by the Participant for Good Reason, in either
case within one year of a Change of Control, such Participant shall be entitled
to a pro rata portion of his or her Target Award based upon the termination
date and payable within 30 days following termination.


 


If a Participant’s employment terminates for any other reason, he or
she will not be entitled to any portion of a Target Award.  Participants who voluntarily terminate
employment or are terminated for “cause” before the payment date of awards
earned in a prior Plan Year shall forfeit such Awards.


 


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Conflicts


 


Any conflicts between the Plan and these Administrative Guidelines
shall be resolved in favor of the Plan. 
Notwithstanding the preceding sentence, it is the intention of the Board
and the Committee that the Plan shall be construed broadly to accommodate the
provisions and concepts embodied in these Administrative Guidelines to the
extent reasonably possible.


 


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Exhibit A


 


Copano Energy, L.L.C.


2005 Management Incentive Compensation Plan


 




	
  Name

  	
   

  	
  Title

  	
   

  	
  Recommended

  Target

  Bonus

  	
   

  
	
  Eckel

  	
   

  	
  Chairman
  and CEO

  	
   

  	
  60

  	
  %

  
	
  Northcutt

  	
   

  	
  President
  and COO

  	
   

  	
  50

  	
  %

  
	
  Assiff

  	
   

  	
  SVP
  & CFO

  	
   

  	
  35

  	
  %

  
	
  Paradee

  	
   

  	
  VP
  and Controller

  	
   

  	
  30

  	
  %

  
	
  Eckhart

  	
   

  	
  SVP
  Transportation & Supply

  	
   

  	
  35

  	
  %

  
	
  Gibson

  	
   

  	
  VP
  Processing

  	
   

  	
  30

  	
  %

  
	
  White

  	
   

  	
  VP
  Operations

  	
   

  	
  30

  	
  %

  
	
  Lawing

  	
   

  	
  VP
  & General Counsel

  	
   

  	
  30

  	
  %

  
	
  DeYoung

  	
   

  	
  VP
  Gov’t & Reg. Affairs

  	
   

  	
  15

  	
  %

  
	
  Casey

  	
   

  	
  Director
  Personnel

  	
   

  	
  15

  	
  %

  
	
  Theisen

  	
   

  	
  Director
  Tax

  	
   

  	
  15

  	
  %

  






 


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