Document:

exv10wxky

 

Exhibit 10(k)

Description of Equity and other Long-term Award Grant Practices

for Employees and Officers

     Prior to December 2005, our only long-term incentive grants were stock options, except
for one grant of restricted stock to each officer (8 individuals) and non-employee director (6
individuals) between August 2004 and January 2005. At our December 15, 2005 board meeting, we
modified this practice and beginning January 1, 2006 replaced stock options with a combination of
deferred-payment cash bonuses made outside our 2004 Stock and Omnibus Plan (the “Plan”), stock
appreciation rights payable in stock (“SARs”), and time-denominated shares of restricted stock
issued pursuant to the Plan. We selected SARs as one of the types of awards to specifically
replace stock options because SARs are less dilutive to our stockholders and provide an employee
essentially the same economic benefits as stock options. This combination of deferred cash, SARs
and restricted stock paid or issued in January 2006 was a Company-wide program for all employees,
including officers, and was generally allocated based on bonus levels and amounts as determined by
the Compensation Committee of our Board of Directors (the “Committee”).

     Our new employees receive long-term incentive awards comprised of single or multiple
components of a combination of deferred-payment cash bonuses, SARs and restricted stock (the
“Awards”) on their date of hire with the components of their award depending on their bonus level
as described below, with additional Awards to be granted each year as part of the annual review of
compensation by the Committee. An employee’s initial Award generally vests 25% per year over a
period of four years, while annual Awards generally cliff vest 100% four years from the grant date.
The goal of our long-term incentive program for all employees is to provide each employee with
Awards that vest each year.

     On a periodic basis (generally once or twice each year), the Committee reviews the overall
value of the long-term incentives based on Black-Scholes pricing. Since the price of our stock has
generally increased over time, the Black-Scholes pricing model suggests that the number of Awards
granted to each employee should decrease correspondingly, assuming that other variables that are
part of the Black-Scholes computation remain constant. Historically, the Committee, following a
practice generally used since 1999, has reduced the number of annual grants to each employee by
approximately one-half of what the Black-Scholes formula would suggest is necessary to maintain a
consistent level of long-term incentive compensation for each employee, as they believe that other
factors should also be taken into consideration, such as the perceived value to the employee and
the compensation being paid by our peer companies.

     In January 2006 and 2007, for the first level of employees (see “Exhibit 10(j) of this Report
regarding our cash bonus compensation arrangements for discussion of our five levels of employees
for compensation purposes), the Awards consist solely of deferred-payment cash bonuses. No funds
are segregated from our other assets and these bonuses are general unsecured obligations of the
Company to pay such cash Awards at the time such Awards vest. For the second level of employees,
the Awards are equally split between cash and SARs. For all employees in the third level or above,
the Awards are equally split one-third cash, one-third SARs

 

 

and one-third restricted stock. In determining Award values for the purpose of allocating
Awards among SARs, cash and restricted stock, the Committee determines formulas at their sole
discretion, which generally relate to relative Black-Scholes values, discounted somewhat to account
for the reduced risk associated with cash or restricted stock. All SARs are granted at the
prevailing closing market price for our common stock on the date of grant and only have value if
the market price of our common stock increases after the date of grant. All of the SARs granted
under our plan expire ten years from the date of grant.

     For 2006 and prior periods, our corporate officers participated in the Awards discussed above,
generally relative to other employees in proportion to the relative bonuses. For 2007, our
Committee discontinued this practice and granted to the executive officers only restricted stock
awards, 50% of which were time vesting restricted stock and 50% of which were performance-based
restricted stock both vesting 39 months from the date of grant (see Exhibits 10(y) and 10(z)
for a form of these two awards). These awards, the appropriate performance measures and the value
and quantity of the awards were determined by the Committee primarily based upon a comparison of
the executives’ compensation as compared to their peers. Future grants of such awards to the
officers and the performance measures contained therein will be made at the subjective
determination by the Committee.exv10wxly

 

Exhibit 10(l)

Directors’ Compensation Arrangements

     At its meeting on December 6, 2006, our Board of Directors, at the recommendation of the
Compensation Committee, approved an increase to the annual retainer fee for our non-employee
directors to $40,000 from $35,000, effective January 1, 2007. In addition, our non-employee
directors receive $2,000 per board meeting attended and $1,000 per telephone conference attended,
including, as of the fourth quarter of 2005, a $1,000 fee for meetings or conferences attended as
part of their duties as a board or committee member. The Chairman of the Compensation Committee is
also paid an additional fee of $5,000 per year, and effective January 1, 2007, the additional fee
for the non-executive Chairman of the Board was increased from $5,000 per year to $20,000 per year.
The Chairman of the Audit Committee is paid an additional fee of $20,000 per year and the other
Audit Committee members are paid an additional annual retainer of $5,000 for serving on the Audit
Committee. The members of the Audit Committee may also receive an additional $5,000 per year fee
for performing special services. The only such award to date has been to Mr. Heather, who performs
review work on our annual reserve report and began receiving this additional fee in the fourth
quarter of 2002.

     The Company’s Director Plan allows each non-employee director to make a quarterly election to
receive his or her compensation either in cash or in shares of our common stock (see Exhibit 10(g)
to this Report).

     During the period between August 2004 and January 2005, we issued to each non-employee
director 20,000 shares of restricted stock that vest over a period of five years, 20% per annum.
As per the terms of the agreement, the Company retains 60% of the shares as they vest, with such
shares to be released when the director separates from the Company. The remaining 40% are issued
to the director on the vesting dates.

     During 2005 and 2006, we granted each non-employee director stock options or stock appreciation
rights payable in common stock (“SARs”). These awards cliff vest four years from the date of grant
and have an exercise price equal to the closing market price on the date of grant. Each director
received 6,000 stock options in January 2005 and 3,000 SARs in February 2006 as part of their
annual grants for that year. In January 2007, we gave each non-employee director 2,000 additional
shares of restricted stock that cliff vest three years from the date of grant in lieu of any
additional stock options or SARs. As per the terms of the restricted stock agreements, the Company
retains 60% of the shares when they vest, with such shares to be released when the director
separates from the Company. The remaining 40% are issued to the director on the vesting date.exv10wxyy

 

EXHIBIT 10(Y)

			
	 	 	 
	                  
    Shares
	 	Date of Grant: January 2, 2007          
	 	 	 

RESTRICTED STOCK AWARD

CLIFF VESTING AWARDS

2004 OMNIBUS STOCK AND INCENTIVE PLAN

FOR DENBURY RESOURCES INC.

     RESTRICTED STOCK AWARD (“Award”) made effective January 2, 2007 (“Date of Grant”) between
Denbury Resources Inc. (the “Company”) and                      (“Holder”).

     WHEREAS, the Company desires to grant to the Holder                      Restricted Shares under and for
the purposes of the 2004 Omnibus Stock and Incentive Plan for Denbury Resources Inc. (the “Plan”);

     WHEREAS, in accordance with the provisions of Section 16(d) of the Plan, the Restricted Shares
will be issued by the Company in the Holder’s name and be issued and outstanding for all purposes
(except as provided below or in the Plan) but held by the Company (together with the stock power
set forth below) until such time as such Restricted Shares are Vested by reason of the lapse of the
applicable Restrictions, after which time the Company shall make delivery of the Vested Shares (but
not Retained Vested Shares, as described in Section 5) to Holder; and

     WHEREAS, the Company and Holder understand and agree that this Award is in all respects
subject to the terms, definitions and provisions of the Plan, and all of which are incorporated
herein by reference, except to the extent otherwise expressly provided in this Award.

     NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other
good and valuable consideration, the parties agree as follows:

1. Restricted Share Award. The Company hereby sells, transfers, assigns and delivers to
the Holder an aggregate of                      Restricted Shares (“Award Restricted Shares”) on the terms
and conditions set forth in the Plan and supplemented in this Award, including, without limitation,
the restrictions more specifically set forth in Section 2 below, subject only to Holder’s execution
of this Award agreement.

2. Vesting of Award Restricted Shares. The Restrictions on the Award Restricted Shares
shall lapse (Award Restricted Shares with respect to which Restrictions have lapsed being herein
referred to as “Vested Shares”) and become non-forfeitable on the occurrence of the earliest of the
dates (“Vesting Date”) set forth in (a) through (e) immediately below:

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	 	(a)	 	March 31, 2010
	 
	 	(b)	 	the date of Holder’s death or Disability;
	 
	 	(c)	 	the date of a Change in Control;
	 
	 	(d)	 	the date of a Post-Separation Change in Control;
	 
	 	(e)	 	the date of Holder’s Separation if such Separation occurs after Holder’s
Retirement Vesting Date.

     For purposes of this Award, the term “Post-Separation Change in Control” means a Change in
Control which follows the Holder’s Separation, but results from the Commencement of a Change in
Control that occurs prior to the Holder’s Separation. For all purposes of this Award, the term
“Commencement of a Change in Control” shall mean the date on which any material action, including
without limitation through a written offer, open-market bid, corporate action, proxy solicitation
or otherwise, is taken by a “person” (as defined in Section 13(d) or Section 14(d)(2) of the 1934
Act), or a “group” (as defined in Section 13(d)(3) of the 1934 Act), or their affiliates, to
commence efforts that, within 12 months after the date of such material action, leads to a Change
in Control as defined in Section 2(h)(2), (3) or (4) of the Plan involving such person, group, or
their affiliates.

3.
Restrictions — Forfeiture of Award Restricted Shares. The Award Restricted Shares are
subject to the Restriction that, except as provided in the following sentence, all rights of Holder
to any Award Restricted Shares which have not become Vested Shares automatically, and without
notice, shall terminate and shall be permanently forfeited on the date of Holder’s Separation. The
exception referred to in the preceeding sentence is that, if there is a Post-Separation Change in
Control, the previously forfeited Award Restricted Shares shall be reinstated as Vested Shares and,
for all purposes of this Award, Holder will be deemed to have Separated on the day after such
Post-Separation Change in Control.

4. Withholding. On the date Award Restricted Shares become Vested Shares, the minimum
withholding required to be made by the Company shall be paid by Holder to the Administrator in
cash, or by delivery of Shares, which Shares may be in whole or in part Vested Shares, based on the
Fair Market Value of such Shares on the date of delivery. The Holder, in his sole discretion, may
direct that the Company withhold at any rate which is in excess of the minimum withholding rate
described in the preceding sentence, but not in excess of the highest incremental tax rate for
Holder, and such additional directed withholding will be made in the same manner as described in
the preceding sentence except that no portion of such additional directed withholding may be paid
in Shares which have not Vested, or which have not been purchased and held by Holder for, at least
six (6) months prior to the date of delivery.

5. Issuance of Shares. Without limitation, Holder shall have all of the rights and
privileges of an owner of the Award Restricted Shares (including voting rights) except

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 that Holder
shall not be entitled to delivery of the certificates evidencing any of the Shares unless and until
they become Vested Shares, nor shall Holder be entitled to receive Restricted Share Distributions
(i.e. dividends) unless and until Holder is entitled either (i) to receive the certificates for the
related Vested Shares, or (ii) such Award Restricted Shares become Retained Vested Shares, as
defined below. Notwithstanding the foregoing, as soon as reasonably possible after the date Award
Restricted Shares become Vested Shares, the Administrator shall deliver to the Holder two-thirds
(66 2/3%) of such Vested Shares (reduced by the number of Vested Shares delivered to the
Administrator to pay required withholding under Section 4 above), and shall retain the other
one-third (33 1/3%) of the Vested Shares (“Retained Vested Shares”) in escrow until the date of
Holder’s Separation, and as soon as reasonably possible after such Separation, shall deliver all
such Retained Vested Shares to Holder. During the period in which the Company holds the Retained
Vested Shares, Holder is entitled to receive what would be Restricted Share Distributions if Holder
was in possession of such Retained Vested Shares, except Holder shall not be entitled to receive a
Restricted Share Distribution made in the form of Shares, but rather such Shares will be retained
by the Company as additional Retained Vested Shares. 

7. No Transfers Permitted. The rights under this Award are not transferable by the Holder
otherwise than by will or the laws of descent and distribution, and so long as Holder lives, only
Holder or his or her guardian or legal representative shall have the right to receive and retain
Vested Shares.

8. No Right To Continued Employment. Neither the Plan nor this Award shall confer upon
the Holder any right with respect to continuation of employment by the Company, or any right
to provide services to the Company, nor shall they interfere in any way with Holder’s right to
terminate employment, or the Company’s right to terminate Holder’s employment, at any time.

9. Governing Law. without limitation, This Award shall be construed and enforced in
accordance with and governed by the laws of delaware. 

10. Binding Effect. This Award shall inure to the benefit of and be binding upon the
heirs, executors, administrators, successors and assigns of the parties hereto.

11. Severability. If any provision of this Award is declared or found to be illegal,
unenforceable or void, in whole or in part, the remainder of this Award will not be affected by
such declaration or finding and each such provision not so affected will be enforced to the fullest
extent permitted by law.

     IN WITNESS WHEREOF, the Company has caused these presents to be executed on its behalf and its
corporate seal to be affixed hereto by its duly authorized representative and the Holder has
hereunto set his or her hand and seal, all on the day and year first above written.

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     Dated as of this 2nd day of January, 2007.

	 	 	 	 	 
	 	 	DENBURY RESOURCES INC.

 
	 	By:  	 	 
	 	 	Gareth Roberts 	 
	 	 	President and CEO 	 
	 

	 	 	 	 	 
	 	 	 
	 	By:  	
 	 
	 	 	Phil Rykhoek 	 
	 	 	Sr. VP, CFO and Secretary 	 
	 

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Assignment Separate From Certificate

     FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto Denbury
Resources Inc. the                      Shares subject to this Award, standing in the undersigned’s name on the
books of said Denbury Resources Inc., represented by Certificate No.                      herewith and do hereby
irrevocably constitute and appoint the corporate secretary of Denbury Resources Inc. as attorney to
transfer the said stock on the books of Denbury Resources Inc. with full power of substitution in
the premises.

	 	 	 	 	 	 	 	 	 
	 

	 	Dated	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Holder

ACKNOWLEDGMENT

     The undersigned hereby acknowledges (i) my receipt of this Award, (ii) my opportunity to
review the Plan, (iii) my opportunity to discuss this Award with a representative of the Company,
and my personal advisors, to the extent I deem necessary or appropriate, (iv) my understanding of
the terms and provisions of the Award and the Plan, and (v) my understanding that, by my signature
below, I am agreeing to be bound by all of the terms and provisions of this Award and the Plan.

     Without limitation, I agree to accept as binding, conclusive and final all decisions or
interpretations (including, without limitation, all interpretations of the meaning of provisions of
the Plan, or Award, or both) of the Administrator upon any questions arising under the Plan, or
this Award, or both.

     Dated as of this                      day of                     , 200___.

	 	 	 
	 

	 	 
	 

	 	Holder

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