Document:

exv10wr

EXHIBIT 10.R

PERSONAL AND CONFIDENTIAL

Dear                     ,

     This award letter is to inform you of your annual long-term equity award. This grant is
designed to align your interests and efforts with the long-term interests of the company’s
stockholders, and to provide you with a direct incentive to achieve the company’s strategic and
financial goals. This grant is subject to all terms and conditions of the El Paso Corporation 2005
Omnibus Incentive Compensation Plan, as amended and restated (the “Plan”), the summary (prospectus)
of the Plan and the provisions of this letter. The Plan summary is available via the El Paso
Intranet at the following address:

[prospectus link]

Restricted Stock

     Your restricted stock grant of                      shares of EP common stock vests over a period of
time. Provided you remain continuously employed within the El Paso organization until such dates,
one-third of the restricted stock will vest and the restrictions will lapse on                     , one-third
on                     , and the remaining one-third on                     .

     If you voluntarily terminate your employment, or in the event you are terminated for cause,
all unvested shares of restricted stock will be forfeited. Please refer to the Plan summary for
further information regarding the effect of a termination of employment upon the shares of
restricted stock that have been granted to you.

     Generally, the restrictions mean that the shares of restricted stock may not be sold,
transferred, or used as collateral until the end of the vesting period. During the restriction
period, or vesting period, however, you may vote your shares and receive any dividends and
distributions on those shares. Your restricted stock will be held in an account at Computershare
Trust Company, N.A., EP’s stock transfer agent. At the end of the vesting period, unrestricted
stock (net of the number of whole shares required to be withheld to satisfy applicable payroll
withholding taxes) will be credited to your account at Morgan Stanley Smith Barney (MSSB).
Thereafter, the remaining shares of stock are yours to keep or sell, subject to any insider trading
restrictions.

     Unless you make an election under Section 83(b) of the Internal Revenue Code at the date of
grant, you will be taxed on the value of the shares when the restrictions lapse. Dividends you
receive during the restriction period will be taxed as compensation. Your holding period for
capital gain purposes begins when the shares become taxable to you. Please consult with your
personal tax advisor with respect to your particular situation.

Stock Options

     A grant of non-qualified stock options for                      shares of EP common stock, at an exercise
price of $                     per share, the FMV on the date of grant, was awarded to you                     . Provided you
remain continuously employed within the El Paso organization until such dates, one-third of the
award will vest and become exercisable on                     , one-third on                     , and the remaining
one-third on                     . Thereafter, the options may be exercised, in whole or in part, through
                    .

     Subject to applicable restrictions under the Company’s Insider Trading Policy, if you
voluntarily terminate your employment with the Company, you will be able to exercise your vested
options for up to three months following termination unless such options expire sooner by their own
terms. Please refer to the Plan summary for further information regarding the effect of a
termination of employment upon the stock options that have been granted to you.

     Currently, cashless stock option exercises must be made through MSSB. If this is your first
grant, you will receive an email/packet from MSSB in the next few weeks that explains the program
features. You may also call MSSB at 1-800-367-4777 during market hours to exercise any of your
vested options. You can access your stock option and restricted stock information on-line at
https://www.benefitaccess.com. Regular exercises (exercise and hold) of stock options should still
be done through the Corporate Secretary’s office. Please call Alan Bishop at (713) 420-5429 or
Marguerite Woung-Chapman at (713) 420-4018 to obtain the necessary forms.

     Pursuant to the terms of the Plan, if you knowingly engage in, or are grossly negligent with
respect to, misconduct that causes El Paso to prepare an accounting restatement due to material
noncompliance with any financial reporting requirement under the securities laws, you will be
required to reimburse El Paso the amount of any payment in settlement of an award granted to you
under the Plan and earned during the 12-month period following the first public issuance or filing,
whichever first occurred, of the financial document that is required to be restated.

     If you disagree with any of the terms of this award or choose not to accept this
award, please contact Alan Bishop at 713-420-5429> within 30 days of the grant date. Otherwise,
you will be deemed to have accepted this award under the terms and conditions set forth in this
award letter and the Plan.

     If you have any questions regarding this grant, please give me a call.

	 	 	 	 	 
	 	Sincerely,exv10wrw1

	 	 	 	 	 

EXHIBIT 10.R.1

PERSONAL AND CONFIDENTIAL «First_Name» «Middle_Name» «Last_Name»

PERFORMANCE SHARE AWARD LETTER

	 	 	 

	TARGET AWARD:

	 	«SHARES_GRANTED»
	PERFORMANCE PERIOD:

	 	[_______________]
	DATE OF GRANT:

	 	[_______________]
	SETTLEMENT DATE

	 	Within 75 days following the last day of the
Performance Period, provided you have remained in the
employment the Company or its Subsidiaries through
such date (except for a termination of employment or
service due to death, disability, retirement or
termination without cause, as provided below)

Dear «First_Name»,

     This letter is to inform you of a long-term equity grant of Performance Shares. This award is
designed to align your interest and efforts with the long-term interests of the Company’s
stockholders, and to provide you with a direct incentive to achieve the Company’s strategic and
financial goals. This award is subject to all terms and conditions of the El Paso Corporation 2005
Omnibus Incentive Compensation Plan, as amended and restated (the “Plan”), the summary (prospectus)
of the Plan and the provisions of this letter. All capitalized terms that are used in this letter
and not otherwise defined herein shall have the meanings ascribed to them in the Plan and/or Plan
summary. The Plan summary is available via the El Paso Intranet at the following address:

[prospectus link]

Performance Shares

	1.	 	Grant of Performance Shares. The Company hereby grants to you the Target Award set
forth above, payment of which is dependent upon the achievement of certain performance goals
described in Sections 2 and 3 of this letter.
	 
	2.	 	Nature and Settlement of Award. The Performance Shares awarded pursuant to this
letter represent the opportunity to receive shares of Common Stock of the Company, and
dividend equivalents on such shares. Except for dividend equivalents, which are paid in cash
pursuant to Section 4 of this letter, Performance Shares shall be settled in shares of Common
Stock. The Company shall deliver to you one share for each Performance Share earned, less any
            shares withheld in accordance with the provisions of Section 6 of this letter. Settlement
shall occur on a date chosen by the Plan Administrator, which date shall be within
seventy-five (75) days following the last day of the applicable Performance Period (the
“Settlement Date”), and except as specifically provided in Section 5 of this Agreement,
provided you have remained in the employment of the Company or its Subsidiaries through the
Settlement Date.
	 
	3.	 	Determination of Number of Performance Shares Earned.

	 	a.	 	The number of Performance Shares earned, if any, for the Performance Period shall
be determined in accordance with the following formula:

# of Performance Shares = Payout Percentage X Target Award

 

 

	 	 	The “Payout Percentage” is based on the Company’s total shareholder return (“TSR”)
relative to that of the Peer Group for the applicable Performance Period, determined in
accordance with the following table:

	 	 	 	 	 
	 	 	Payout	 
	 	 	Percentage (% of	 
	TSR	 	Target Award)	 
	<25th percentile
	 	 	0	%
	25th percentile
	 	 	25	%
	50th percentile
	 	 	100	%
	75th percentile and above
	 	 	200	%

	 	 	 	Payout Percentage shall be interpolated for TSR results between the
25th and 50th percentile and the 50th and 75th percentile.
	 
	 	 	 	All Performance Shares that are not earned for the applicable Performance Period shall be forfeited.

	 	b.	 	TSR for the Performance Period shall be calculated using the following formula:

average 20 day closing stock price at the beginning of the Performance Period

minus 

average 20 closing stock price at the end of the Performance Period

plus 

dividends paid per share over the Performance Period

total above divided by 

average 20 day closing stock price at the beginning of the Performance Period

	 	 	 	For purposes of the foregoing formula, the average 20 day closing stock price includes
the 10 days before the applicable measurement date, the measurement date, and the nine
days after the measurement date. The measurement date for the beginning of the period is
the first trading day of the Performance Period. The measurement date for the end of the
period is the last trading day of the Performance Period.
	 
	 	c.	 	For purposes of this award, the Peer Group for the Performance Period shall
include: [Anadarko Petroleum Corp., CenterPoint Energy, Inc., Dominion Resources, Inc.,
Enbridge Inc., Energen Corp., EQT Corporation, National Fuel Gas Co., Newfield
Exploration Co., NiSource, Inc., Noble Energy, Inc., ONEOK, Inc., Pioneer Natural
Resources, Questar Corporation, Sempra Energy, Southern Union Co., Spectra Energy Corp.,
TransCanada Corp. and Williams Companies]. Notwithstanding the above, should any member
of this Peer Group cease to provide a meaningful comparison for purposes of this award
as a result of mergers, acquisitions, bankruptcies, changes in business or other
extraordinary or unforeseeable events, the Plan Administrator in its sole and absolute
discretion may eliminate and/or replace such member.

	4.	 	Dividend Equivalents. No dividend equivalents will be paid on the Performance Shares
until such time as the applicable Performance Period has ended and the number of Performance
Shares earned under this award has been certified by the Plan Administrator based on the
actual performance of the Company during the Performance Period. On or prior to the Settlement
Date, the Company will pay you a lump-sum cash amount in payment of dividend equivalents based
on the number of Performance Shares earned under the award multiplied by the per share
quarterly dividend payments made to shareholders of the Company’s Common Stock during the
Performance Period (without any interest or compounding). Notwithstanding the foregoing, any
accumulated and unpaid dividend equivalents attributable to Performance Shares that are
cancelled or forfeited will not be paid and shall be immediately forfeited upon cancellation
of the Performance Shares.
	 
	5.	 	Termination of Employment. Except as set forth in the Plan or otherwise provided
below, if your employment with the Company and its Subsidiaries is terminated for any reason
prior to the Settlement Date, all Performance Shares subject to this letter shall be
immediately forfeited.

2

 

	 	a.	 	Termination due to Death or Disability. If your termination of employment
is due to death or Disability (as defined below), the Performance Shares shall vest on a
pro rata basis based on target, and will be paid within seventy-five (75) days following
the termination event. For purposes of this letter, your employment shall be deemed to
have
terminated due to Disability if you are entitled to long-term disability benefits under
the Company’s long-term disability plan, as in effect on the date of termination of your
employment.
	 
	 	b.	 	Termination due to Retirement or Involuntary Termination without Cause.
If your termination of employment is due to Retirement (as defined below) or your
employment is involuntarily terminated by the Company and its Subsidiaries without
Cause, the Performance Shares shall vest on a pro rata basis, and will be paid upon
completion of the Performance Period based on the level of performance achieved as of
the end of such Performance Period; provided, however, that this provision shall not
apply in the event your employment is terminated for Cause. The amount of the vested
award shall be computed under the following formula: Target Award times (number of days
elapsed in Performance Period divided by number of days in Performance Period) times
Payout Percentage. For purposes of this letter, the term Retirement shall be defined as
age 55 years or older with ten (10) years of service with the Company or its
Subsidiaries.

	6.	 	Taxes. Pursuant to Section 17.10 of the Plan, the Plan Administrator shall have the
power and the right to deduct or withhold, or require you to remit to the Company, an amount
sufficient to satisfy any applicable tax withholding requirements applicable to this award.
	 
	7.	 	Compensation Recovery. Pursuant to the terms of the Plan, if you knowingly engage
in, or are grossly negligent with respect to, misconduct that causes El Paso to prepare an
accounting restatement due to material noncompliance with any financial reporting requirement
under the securities laws, you will be required to reimburse El Paso the amount of any payment
in settlement of an award granted to you under the Plan and earned during the 12-month period
following the period subject to the restatement.

          Please sign and return a copy of this agreement to Alan Bishop, Director Shareholder
Relations, indicating your agreement to the terms of this letter and the award granted hereby.
Your signature will also acknowledge that this letter reflects our final agreement regarding the
award granted hereunder, and that you have received and reviewed the Plan and that you agree to
abide by the applicable terms of these documents as provided herein.

          If you have any questions on this grant, please give me a call.

Sincerely,

	 	 	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 

ACKNOWLEDGED AND ACCEPTED

________________________________

Dated: __________________________

3

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