Document:

exhibit10-3.htm

Exhibit 10.3

 

 

OVERSEAS SHIPHOLDING GROUP, INC.

 

2004 Stock Incentive Plan

 

_______________________________

 

Performance Award Agreement

______________________________

 

You are hereby awarded a Performance Award with respect to shares of Overseas Shipholding Group, Inc. (the “Company”) common stock, $1.00 par value per share (“Common Stock”) subject to the terms and conditions set forth in this Performance Award Agreement (this “Agreement”) and in the Overseas Shipholding Group, Inc. 2004 Stock Incentive Plan, as amended and restated as of June 2, 2010 and as subsequently amended from time to time (the “Plan”).  All determinations, interpretations, or other actions respecting the Plan, your Performance Award and this Agreement will be made by the Committee appointed under the Plan, and will be final, conclusive and binding on all parties, including you and your successors in interest.

 

Specific Terms.  Your Performance Award has the following terms:

 

	
Name of Participant

	  
	
Grant Date

	
February 23, 2011

	
Number of Shares of Common Stock Payable at Target Performance as set forth on Exhibit A (the “Target Award”)

	
A number of shares of Common Stock equal to the sum of (i) ____________ shares of Common Stock plus (ii) a number of shares of Common Stock equal to the cash value of any dividends paid during the Performance Period on the shares of Common Stock set forth in (i) and any shares of Common Stock previously calculated pursuant to this sub-section (ii), based on the closing price of a share of Common Stock on the dividend payment date as reported on the principal national securities exchange on which the Common Stock is then traded, subject to adjustment pursuant to Section 5 hereof.

	
Performance Period

	
February 23, 2011 through February 22, 2014

	
Performance Metric

	
See Exhibit A

1. Payment.  Subject to your not incurring a Termination during the Performance Period (except as otherwise specifically set forth in this Agreement), upon the Committee determining and certifying the level of achievement of the performance metric set forth on Exhibit A attached hereto with respect to the Performance Period, the Company will award to you a number of shares of Common Stock based on the level of attainment of the performance metric in accordance with Exhibit A (the “Awarded Shares”).  The Committee will certify the level of achievement of the performance metric during the Company’s first fiscal quarter in 2014, but in no event later than March 15, 2014, and on the date of such certification (the “Settlement Date”) the Company will award to you the applicable number of Awarded Shares, if any.

 

2. Termination of Employment.  In the event of your involuntary Termination during the Performance Period due to your death, by the Company by reason of your Disability or as the result of a reduction in force or job elimination, or due to your voluntary Termination on or after your attainment of age sixty-five (65), then on the Settlement Date you will receive a pro rated portion of the Awarded Shares that you would have received if you had not incurred such Termination, based on the actual level of achievement of the performance metric for the Performance Period.  Your pro rated portion will be determined by multiplying the number of Awarded Shares that you would have received if you had not incurred such Termination by a fraction, the numerator of which is the number of days during the Performance Period prior to your Termination date and the denominator of which is 1,095.  In the event of your Termination for any other reason during the Performance Period, your Performance Award will be immediately forfeited and automatically cancelled without further action of the Company, unless the Committee determines otherwise in its sole discretion.  For the avoidance of doubt, a reduction of your employment status with the Company or any of its Affiliates during the Performance Period to below Level 21 will not be deemed a Termination.

 

3. Change in Control. Notwithstanding anything herein to the contrary, in the event a Change in Control occurs during the Performance Period, then the Performance Period will end on the date of the Change in Control and on such date (i) the Committee will certify the level of achievement of the performance metric as of such date in accordance with Exhibit A and (ii) the Company will award to you the applicable number of Awarded Shares, if any, earned as of such date in accordance with Exhibit A.

 

4. Restrictions on Transfer.  You may not sell, pledge, assign, hypothecate, transfer, or dispose of your Performance Award in any manner.

 

5. Adjustments.  In the case of any change in corporate structure as contemplated under Section 4.2(b) of the Plan, an equitable adjustment of the Performance Award may be deemed necessary and will be made in accordance with such Section 4.2(b).

 

6. Amendment.  Except as otherwise provided in the Plan, no modification or waiver of any of the provisions of this Agreement will be effective unless in writing and signed by the party against whom it is sought to be enforced.

 

7. Taxes.  Although the Company does not guarantee the tax treatment of any payment under this Agreement, it is intended that any payment under this Agreement comply with, or be exempt from, the requirements of, Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and the regulations and guidance promulgated thereunder and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in compliance therewith.

 

8. Severability.  The provisions of this Award and the Plan are intended to be severable, and any illegal or invalid term will not affect the validity or legality of the remaining terms.

 

9. Notices.  Any notice or communication required or permitted to be given by any provision of this Agreement or the Plan shall be in writing and shall be delivered personally or sent by certified mail, return receipt requested, addressed as follows: (i) if to the Company or the Committee, at: Overseas Shipholding Group, Inc., 666 Third Avenue, New York, New York 10017, Attention: Robert Mozdean, Vice President and Head of Worldwide Human Resources; and (ii) if to you, at the address the Company has on file for you.  Any such notice shall be deemed to be given as of the date it is personally delivered or properly mailed.

 

10. Rights as a Stockholder.  You will have no rights as a stockholder with respect to any shares of Common Stock covered by your Performance Award unless and until you have become the holder of record of such Common Stock.

 

11. Investment Purposes.  Any Common Stock awarded to you pursuant to this Agreement will be awarded by the Company with the understanding that you may not sell or distribute the Common Stock unless it is registered for sale or the sale is in accordance with an available exemption from registration.

 

12. Miscellaneous.  This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, personal legal representatives, successors, trustees, administrators, distributees, devisees and legatees.  The Company may assign to, and require, any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company or any Affiliate by which you are employed to expressly assume and agree in writing to perform this Agreement.  Notwithstanding the foregoing, you may not assign this Agreement.  This Agreement shall be construed, interpreted and governed and the legal relationships of the parties determined in accordance with the internal laws of the State of Delaware without reference to rules relating to conflicts of law.  This Agreement contains the entire understanding of the parties with respect to the subject matter hereof (other than any other documents expressly contemplated herein or in the Plan) and supersedes any prior agreements between the Company and you with respect to the subject matter hereof.  This Agreement may be executed in one or more counterparts (including via facsimile or PDF), all of which taken together shall constitute one contract.  The headings of the sections of this Agreement have been inserted for convenience of reference only and shall in no way restrict or modify any of the terms or provisions hereof.

 

13. Provisions of Plan Control.  This Agreement is subject to all the terms, conditions and provisions of the Plan, including, without limitation, the amendment provisions thereof, and to such rules, regulations and interpretations relating to the Plan as may be adopted by the Committee and as may be in effect from time to time.  The Plan is incorporated herein by reference.  A copy of the Plan has been delivered to you.  If and to the extent that this Agreement conflicts or is inconsistent with the terms, conditions and provisions of the Plan, the Plan shall control, and this Agreement shall be deemed to be modified accordingly.  Unless otherwise indicated, any capitalized term used but not defined herein shall have the meaning ascribed to such term in the Plan.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Grant Date set forth above.

 

OVERSEAS SHIPHOLDING GROUP, INC.

By: ____________________________________

Name:  Morten Arntzen

Title:  President and Chief Executive Officer

_________________________________________

Signature of Participant

_________________________________________

Name of Participant and Date

  

  

  

Exhibit A

Performance Metric

Performance Metric and Number of Shares

 

The performance metric established for purposes of the grant of the Performance Award is the closing price of a share of Common Stock on February 23, 2011, $34.90.  The actual performance measure/score will be determined by taking the average closing price for a share of Common Stock for the 20 trading days ending on the last trading day of the Performance Period (1) (the “Ending Average Stock Price”) February 22, 2013, and dividing it by the price per share of a share of Common Stock on the first day of the Performance Period, $34.90.  If the stock price doubles or exceeds double (result is greater than or equal to 2.0 per the formula above) the payout will be capped at 200%.  If the stock falls by more than 50% (result is less than 0.5) there will be 0% payout.  If the stock price stays flat (result is 1.0) there will be a payout of 100%.  The number of shares of Common Stock awarded to the Participant on the Settlement Date (i.e., Awarded Shares) will be determined by multiplying the Target Award by the Performance Payout Percentage determined as follows:

 

	
Ending Average Stock Price

 

	
Performance Payout Percentage

 

	
$69.80 and above (Maximum Performance)

	
200%

	
$34.90 (Target Performance)

	
100%

	
$17.45 (Threshold Performance)

	
50%

	
less than $17.45

	
0%

Dividends will be paid in the form of additional performance share units at the same time dividends are paid on the Common Stock in an amount equal to the result obtained by dividing (i) the product of (x) the amount of performance share units owned by the Reporting Person on record date for the dividend on the Common Stock times (y) the dividend per share on the Common Stock by (ii) the closing price of a share of Common Stock on the payment date of the dividend on the Common Stock.  The performance share units resulting from reinvested dividends will convert into the number of shares of Common Stock and the Performance Payout Percentage will be applied and vest on the close of business on February 22, 2014.

The Committee shall interpolate the Performance Payout Percentage for the achievement of an Ending Stock Price between each applicable target level, which percentage shall be calculated to the nearest one-hundredth percent.  Fractional shares of Common Stock payable based on the calculation shall be eliminated by rounding-down for fractions less than one-half and rounding-up for fractions equal to or greater than one-half.  No cash settlements shall be made with respect to fractional shares of Common Stock eliminated by rounding.

 

If the Participant is a “covered employee” as defined in Treasury Regulation Section 1.162-27(c)(ii)(2), then (i) the performance metric is intended to be “performance-based” under Section 162(m) of the Code, (ii) the terms and conditions governing the Performance Award will be construed and interpreted in a manner consistent with Section 162(m) of the Code, (iii) without limiting the generality of the foregoing, the Committee will certify the attainment of the level of Target Performance achieved to the extent and in the manner required by Section 162(m) of the Code and (iv) with respect to the Performance Period, to the extent any provision contained herein creates impermissible discretion under Section 162(m) of the Code, such provision will be of no force or effect.

(1) As reported on the principal national securities exchange on which the Common Stock is then traded.pdcperfshareagmt.htm

PETROLEUM DEVELOPMENT CORPORATION

 

2010 LONG-TERM EQUITY COMPENSATION PLAN

 

PERFORMANCE SHARE AGREEMENT

 

This Performance Share Agreement (hereinafter referred to as the "Agreement") dated __________ ___, 20___ is by and between Petroleum Development Corporation, a Nevada Corporation (hereinafter referred to as the "Company") and______________________________ (hereinafter referred to as "Executive").

 

ARTICLE 1                      

 

 

PURPOSE OF AGREEMENT

 

1.1 Purpose of Grant.  Pursuant to the Company's 2010 Petroleum Development Corporation Long-Term Equity Compensation Plan (hereinafter referred to as the "Plan") and subject further to the terms and conditions herein set forth, the Company and Executive enter into this Agreement pursuant to which the Executive may earn Performance Shares.  Each Performance Share represents the value of one share of $0.01 par value common stock of the Company.  Upon the Company's achievement of pre-determined objectives for a specified performance period (hereinafter referred to as the "Performance Period"), the Company will distribute to the Executive those Performance Shares earned by the Executive for the Performance Period.

 

1.2 Committee Authority.  The Plan is administered by the Compensation Committee of the Board (hereinafter referred to as the "Committee").  Under the Plan, the Committee has, among its other powers, the authority to determine the final payout under the Agreement.

 

ARTICLE 2                      

 

 

PERFORMANCE CONDITIONS

 

2.1 Performance Period.  Pursuant to this Agreement, the three year period beginning January 1, 2011 and ending on December 31, 2013 will be the Performance Period.

 

2.2 Performance Award.  Executive may earn a target of                                                                                      Performance Shares (hereinafter referred to as the "Target Award") for the Performance Period.  The range of Performance Shares which may be earned by the Executive for the Performance Period is -0- to __________.

 

2.3 Performance Metric.  Subject to Section 2.7, Awards of Performance Shares will be paid out to the Executive, if at all, following the close of a Performance Period based upon Total Shareholder Return ("TSR") of the Company relative to TSR for the Peer Group for such Performance Period (the "Performance Metric").

 

2.4 Total Shareholder Return (TSR).  For purposes of the Performance Metric, except as otherwise provided in Sections 2.8 and 2.9(a) below, TSR for a company, including the Company, will be:

 

(a) Average Share Price for the last twenty (20) business days of the Performance Period, minus

 

(b) Average Share Price for the twenty (20) business days preceding the beginning of the Performance Period, plus

 

(c) Dividends (cash or stock based on ex-dividend date) paid per share of company common stock over the Performance Period, the total of (a), (b) and (c) is divided by

 

(d) Average Share Price for the twenty (20) business days preceding the beginning of the Performance Period.

 

2.5 Average Share Price.  For purposes of the TSR used in the Performance Metric, the "Average Share Price" means the average daily closing price of the shares on the NASDAQ Global Select Market (or if the company is not listed on the NASDAQ Global Select Market, then on the principal securities exchange on which such shares are tracked) as published by a reputable source over the relevant measuring period.

 

2.6 Peer Companies.  For purposes of the Performance Metric for the relevant Performance Period, the "Peer Companies" means the companies listed on Schedule A.  Any Peer Company that ceases to be publicly traded entity on a recognized stock exchange during the Performance Period will be removed from the Peer Company list for the Performance Period.  The Committee may evaluate for inclusion or exclusion any Peer Company that merges with or is acquired by another Peer Company during the Performance Period.  For the Performance Period no companies may be added to the list during the Performance Period.

 

2.7 Award Determination.  At the end of the Performance Period, the Peer Companies and the Company shall be ranked together based on their TSR for the Performance Period from the highest TSR being number 1 to the lowest TSR being the number of Peer Companies, including the Company, remaining in the group at the end of the Performance Period.  Based on the Company's relative TSR rank among the Peer Companies for the Performance Period, Executive will have earned Performance Shares as determined by the Company's percentile rank as follows:

 

	
·  

	
If the Company is ranked number 1, 200% of the Target Award

 

 

	
·  

	
If the Company is ranked at the 75th percentile of the Peer Companies, including the Company, 150% of the Target Award

 

 

	
·  

	
If the Company is ranked at the 50th percentile or median of the Peer Companies, including the Company, 100% of the Target Award

 

 

	
·  

	
If the Company is ranked at the 25th percentile of the Peer Companies, including the Company, 50% of the Target Award

 

 

	
·  

	
If the Company is ranked below the 25th percentile of the Peer Companies, including the Company, no award will be paid

 

If the Company is ranked between any of these payout levels, the percentage multiple of the Target Award will be interpolated based on the actual ranking of the Company and the actual percentile that ranking represents.  Notwithstanding the preceding, if the Company's TSR is negative, no more than one hundred percent (100%) of the Target Award will be paid to the Executive.  Any partial shares will be rounded up to the next whole number.

 

2.8 Termination of Employment or Change in Control Prior to End of Performance Period.

 

(a) Voluntary or Involuntary Termination Prior to Change in Control.  If the Executive voluntarily terminates employment or if the Company terminates the Executive's employment during the Performance Period, either of which occurs before a Change in Control, all Performance Shares will be immediately forfeited.

 

(b) Death or Disability.  Notwithstanding Section 2.8(a), in the event of the death or Disability of the Executive during the Performance Period, either of which occurs before a Change in Control, the Executive (or estate) will receive a pro-rata payment (based on the number of completed months during the Performance Period compared to the total number of months in the Performance Period) based on actual results at the end of the Performance Period.  Notwithstanding, if the triggering event is due to a death that occurs during the first two (2) years of the Performance Period, payment will be based on actual results through the date of death with the Performance Metric calculated with reference to the Average Share Price for the twenty (20) business days prior to the date of death.

 

(c) Change in Control.  In the event of a Change in Control then:

 

(1) If less than one-half of the Performance Period has elapsed with respect to an Award of Performance Shares, then one hundred percent (100%) of the Target Award for the Performance Period will be paid to the Executive.

 

(2) If at least one-half of the Performance Period has elapsed with respect to an Award of Performance Shares, then the Executive will receive the greater of (A) one hundred percent (100%) of the Target Award or (B) the percentage corresponding to the actual performance level achieved as of the date of the Change in Control.

 

2.9 Payment of Performance Shares.

 

(a) Performance Shares earned for the Performance Period will be issued to the Executive only following the Committee's formal review and certification of the actual TSR performance results for the Performance Period.

 

(b) Performance Shares payable to an Executive pursuant to Section 2.3 following the last day of a Performance Period will be paid in a lump sum distribution of Shares to the Executive on the seventy-fifth (75th) day following the last day of the Performance Period.

 

(c) Performance Shares payable to an Executive pursuant to Section 2.8(b) following a termination of employment prior to the completion of a Performance Period will be paid in a lump sum distribution of Shares to the Executive on the seventy-fifth (75th) day following the last day of the Performance Period, except that in the case of a death during the first two (2) years of the Performance Period, payment will be made on the seventy-fifth (75th) day following the date of death.

 

(d) Performance Shares payable to an Executive pursuant to Section 2.8(c) following a Change in Control will be paid in a lump sum distribution of Shares to the Executive on the seventy-fifth (75th) day following the date of the Change in Control.

 

2.10 Share Withholding.  The Committee shall withhold such amount of Shares from Shares paid to Executives as is necessary to satisfy any tax withholding obligations.

 

2.11 Dividends.  Dividends declared on Performance Shares payable to an Executive prior to the date that such Performance Shares are paid to the Executives, will accrue and be paid in a lump sum to the Executive, on the seventy-fifth (75th) day following the last day of the Performance Period.

 

2.12 Voting Rights.  An Executive will not have any voting rights on any Performance Shares prior to the date such Performance Shares are payable pursuant to Section 2.9.

 

2.13 Fractional Shares.  The Company will not be required to issue any fractional Shares pursuant to this Agreement.  The Committee may provide for the elimination of fractions or for the settlement of fractions in cash.

 

ARTICLE 3                      

 

 

GENERAL

 

3.1 Capitalized Terms.  All capitalized terms shall have the meeting ascribed to them under this Agreement or, if not otherwise defined in this Agreement, then such capitalized terms will have the meaning ascribed to them under the Plan.

 

3.2 Construction.  The provisions of this Agreement will be construed in a manner consistent with the Plan.  In the event of any inconsistency between the terms of the Agreement and the terms of the Plan, the terms of the Plan will control.

 

3.3 Compliance with Section 409A of the Internal Revenue Code.  Notwithstanding anything in this Agreement to the contrary, to the extent that this Agreement constitutes a nonqualified deferred compensation plan to which Internal Revenue Code Section 409A applies, the administration of this Agreement (including time and manner of payments under the Agreement) shall comply with Section 409A.

 

 

 

  

  

  

 

IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by its Officers thereunto duly authorized, and the Executive has hereunto set his hand and seal, all on the day and year first above written.

 

ATTEST:

 

[Corporate Seal]                                                                PETROLEUM DEVELOPMENT

 

CORPORATION

 

 

By:                                                                           

 

Daniel W. Amidon                                                                Richard W. McCullough, Chief Executive Officer

 

 

EXECUTIVE

 

 

 

Witness                                                                Signature

 

 

Date:                                                      

 

 

Please sign, date and return the signed agreement immediately to Daniel W. Amidon.  If you are not in the office, please fax or email by PDF immediately to Daniel W. Amidon.

 

 

 

  

  

  

SCHEDULE A

 

PEER COMPANIES

 

The following 11 companies compromise the Peer Companies for the 2011 – 2013 Performance Period:

 

	
·  

	
Berry Petroleum

 

	
·  

	
Bill Barrett

 

	
·  

	
Cabot Oil & Gas

 

	
·  

	
Carrizo Oil & Gas

 

	
·  

	
Comstock Resources

 

	
·  

	
Goodrich Petroleum

 

	
·  

	
Penn Virginia

 

	
·  

	
PetroQuest Energy

 

	
·  

	
Rosetta Resources

 

	
·  

	
SM Energy

 

	
·  

	
Venoco

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