Document:

Exhibit 10.01

EQUITABLE
RESOURCES, INC.

2005 SHORT-TERM INCENTIVE PLAN

EQUITABLE
RESOURCES, INC. (the “Company”) hereby establishes this EQUITABLE RESOURCES,
INC 2005 SHORT-TERM INCENTIVE PLAN (the “Plan”) as of this 1st day of January,
2005, in accordance with the terms provided herein.

 

WHEREAS,
the Company desires to establish an incentive plan which describes the goals of
the Company and the methodology for awarding incentive amounts; NOW, THEREFORE,
the Company hereby adopts the terms of the Plan as follows:

Section 1.  Incentive Program Purposes.  The Company’s main purpose in providing the
incentive programs described within the Plan (collectively, the “Incentive
Programs”) is to maintain a competitive level of total cash compensation and to
align the interests of the Company’s employees with those of the Company’s
shareholders, customers, and with the strategic objectives of the Company.  By placing a portion of employee compensation
at risk, the Company can reward performance based on the overall performance of
the Company, the business segment and the individual contribution of each
employee.

Section 2.  Effective Date.  The effective date of this Plan is
January 1, 2005.  The Plan will
remain in effect from year to year (each calendar year shall be referred to
herein as a “Plan Year”) until formally amended or terminated in accordance
with Section 17.

Section 3.  Eligibility.  Specific eligibility requirements for each
Incentive Program shall be proposed by the President of each business segment
or corporate officer, as applicable, and approved by the Company’s Vice
President-Human Resources.  Based upon
such eligibility requirements, the Company’s Vice President-Human Resources or
the Company’s Director of Compensation and Benefits, as applicable, may
designate any eligible employee for participation in the Plan in his or her
complete and sole discretion.  Eligible
employees who are designated to participate in an Incentive Program will be
notified in writing of their participation and given a Plan document for their
reference.

Section 4.  Administration of the Plan.  The Equitable Resources Headquarters
Short-Term Incentive Program (the “Headquarters Incentive Program”), and any
other Incentive Program that covers the officers of the Company, shall be
administered by the Compensation Committee of the Board of Directors (the
“Committee”).  The Company’s Director of
Compensation and Benefits shall administer all other Incentive Programs under
the general direction of the Company’s Vice President-Human Resources; provided, however, that the Committee shall at all times
retain the discretion with respect to all Incentive Programs to reduce,
eliminate, substitute or determine the source of any payment or award hereunder
without regard to any particular factors specified in the Plan.  On an annual basis, the Committee must review
and approve (a) the Plan, (b) the Headquarters Incentive Program, and other
Incentive Programs covering officers of the Company, (c) the Incentive Targets,
as defined in Section 8 of the Plan, for officers of the Company, (d) the
methodology for determining the incentive pools, including the Financial
Measures and the Value Drivers, as defined in Section 7 of the Plan, and
(e) the projected payout under the Plan and under each Incentive Program.  The Committee must also review and approve
all incentive payments under the Headquarters Incentive Program and other
Incentive Programs covering officers of the Company, as well as any proposed
amendments to the Plan throughout the Plan Year.

 

 

 

Section 5.  Incentive
Programs.  The following Incentive
Programs shall be administered under the Plan:

•                  Equitable Resources Headquarters Short-Term Incentive
Program (including the shared services sub-programs);

•                  Equitable Utilities Short-Term Incentive Program
(including any collectively bargained sub-programs);

•                  Equitable Supply Short-Term Incentive Program; and

•                  NORESCO Short-Term Incentive Program.

Section 6.  Definitions.  The following provides the definition of
certain Financial Measures, identified in Section 7 of the Plan, as may be
used in the Incentive Programs:

(a)                                  Net Income After Tax. 
Net Income After Tax, if used in the Headquarters Incentive Program, is
calculated as follows:

Total
Revenue of the Company minus Total Expenses of the Company for the Plan Year.

For
purposes of the foregoing calculation, Total Revenue shall mean revenue from
continuing operations.  Income from
unusual items, as determined by the Company’s Chief Financial Officer, will be
excluded.  Expenses shall include
interest, taxes, corporate overhead and the accrual charge for the Incentive
Program funding.  Expenses from unusual
items, as determined by the Company’s Chief Financial Officer, will be
excluded.  The Company’s Chief Financial
Officer is responsible for determining this Financial Measure under the general
direction of the Committee.

Net
Income After Tax, if used in all other Incentive Programs, is calculated as
follows:

Total
Revenue of the applicable business segment minus Total Expenses of the applicable
business segment for the Plan Year.

This
calculation will be completed by the President of the respective business
segment and submitted to the Company’s Chief Financial Officer for review and
approval.  The Company’s Chief Financial
Officer will determine, for purposes of the Plan, the final business segment
Net Income After Tax under the general direction of the Committee.

(b)                                 Return on Total Capital. 
The Company’s Return on Total Capital is calculated as follows:

Net Income After Tax + (Interest x (1 — Effective
Tax Rate) 

(Debt +
Book Equity-Cash)

For
purposes of the foregoing calculation, all factors in the denominator shall be
calculated by determining each specific factor at the end of each of the four
quarters of the Plan Year and at the end of December of the previous year.  The average of those five numbers shall be
the value used for each factor.  The
Company’s Chief Financial Officer is responsible for determining this Financial
Measure under the general direction of the Committee.

 

2

 

(c)                                  Earnings per Diluted Share Growth Rate. 
The Company’s Earnings per Diluted Share Growth Rate is calculated as
follows:

The
positive difference between the Company’s actual earnings per diluted share for
the Plan Year and the year immediately preceding the Plan Year, divided by the
Company’s earnings per diluted share for the year immediately preceding the
Plan Year.

For
purposes of the foregoing calculation, actual earnings per share shall be as
reported in the Company’s published financial statements for the subject year
on a fully-diluted basis; provided, however, that any changes in tax laws, the
effects of acquisitions and extraordinary items as defined by generally
accepted accounting principles, including divestitures and Financial Accounting
Standards Board accounting changes, may be excluded in the discretion of the
Company’s Chief Financial Officer under the general direction of the Committee.

(d)                                 Total Shareholder Return. 
The Company’s Total Shareholder Return (“TSR”) is calculated as follows:

                                                                                (B + C) – A

                                                                                        A

                                                For purposes of the foregoing
calculation:

                                                A is the average closing price of the
Company’s common stock for the first ten trading days of the Plan Year.

                                                B is the average closing price of the
Company’s common stock for the last ten trading days of the Plan Year.

                                                C is the dividends per share paid on the
Company’s common stock in the plan year.

                                                The Company’s Chief Financial Officer is
responsible for determining this Financial Measure under the general direction
of the Committee.

 

(e)                                Peer Group. 
The Committee will establish a Peer Group for purposes of peer
comparative performance measures used in the Plan.  This Peer Group is listed in Attachment A.  Any changes to the Peer Group must be
approved by the Committee.

Section 7.  Determination
of Incentive Pools.

(a)                                  All Incentive Programs provide for
incentive payments that are funded based on incentive pools.  An incentive pool is created for each
Incentive Program.  The base amount of
each incentive pool shall be determined by the extent to which one or more
specific and defined financial measures (the “Financial Measures”) are achieved
for the Plan Year.  One or more
additional, defined operational measures (“Value Drivers”) may affect the
determination of the incentive pools, in the discretion of the Company’s Chief
Executive Officer (the “CEO”).  The Value
Drivers for each of the incentive pools are attached hereto as
Attachment B.

 

3

 

(b)                                 The following chart provides the specific
Financial Measures for each of the Incentive Programs.

	
  Incentive Program

  	
   

  	
  Financial Measures

  
	
   

  	
   

  	
   

  
	
  Equitable Resources Headquarters

  	
   

  	
  •           Return on Total Capital

  (Peer Comparison)

  
	
   

  	
   

  	
  •           Earnings per Diluted Share Growth Rate

  (Peer Comparison)

  
	
   

  	
   

  	
  •           Earnings per Diluted Share Growth Rate (EQT Year to
  Year Comparison)

  
	
   

  	
   

  	
  •           Business Unit Value Driver Performance

  
	
   

  	
   

  	
   

  
	
  Equitable Utilities

  	
   

  	
  Net Income After Tax

  
	
   

  	
   

  	
   

  
	
  Equitable Supply

  	
   

  	
  Net Income After Tax and Volume

  
	
   

  	
   

  	
   

  
	
  NORESCO

  	
   

  	
  Net Income After Tax

  
	
   

  	
   

  	
   

  

 

(c)                                  Each incentive pool is determined based
on the Financial Measures listed above, any minimum threshold amounts
established therefor, and, if applicable, the Value Drivers, in accordance with
the weightings assigned to each as listed on Attachment C.  Attachment D to this Plan specifies the
base amount for each incentive pool, expressed as a multiple of the total of
all Incentive Targets, as defined in Section 8 of the Plan, of those
participants in each particular Incentive Program.  The CEO may, in his sole and absolute
discretion, adjust the determination of the base amount of any business segment
incentive pool (i) by any amount up to fifty (50%) percent based on the Value
Drivers applicable to the particular business segment incentive pool and
(ii) by an amount up to twenty-five percent (25%) based on the impact of
weather, the prices of gas, oil and liquids, and/or any acquisitions or
divestitures.  The Committee may, in its
sole and absolute discretion, adjust the determination of the base amount of
the Headquarters Incentive Program by an amount of up to twenty-five percent
(25%) based on the impact of weather, the prices of gas, oil and liquids,
acquisitions or divestitures and any peer group or performance factors
determined by the Committee.  Such adjustments by the CEO or the Committee
may be either positive or negative.

Section 8.  Incentive Targets.  Each participant under the Plan shall be
given an incentive target (an “Incentive Target”) that shall be determined
based on market competitive levels. 
Incentive Targets for all corporate officers shall be determined within
90 days of the commencement of each Plan Year and approved by the Committee.  All other Incentive Targets shall be
determined within 90 days of the commencement of each Plan Year by the
Company’s Director of Compensation and Benefits, in consultation with the
appropriate business segment President or corporate officer, as applicable, and
approved by the Company’s Vice President-Human Resources.  Actual incentive awards payable (“Incentive
Awards”), subject to adjustments as provided in the Plan, shall be based on the
overall determination of the incentive pools and on individual performance.

 

4

 

Section 9.  Performance
Goals.

(a)                                  Each participant shall have specific
performance goals (the “Performance Goals”) determined for his or her position
for the subject Plan Year.  These
Performance Goals must support the approved business plan of the Company, affiliate
or business unit, as applicable, and should identify how the participant will
support any specific Value Drivers established.

(b)                                 A copy of each participant’s Performance
Goals and objectives shall be determined in writing, and kept on file with the
appropriate business segment Human Resources Department, by February 28 of the
Plan Year to which they relate.

(c)                                  Following the determination of the
incentive pools as described in Section 7, an evaluation of each
participant’s actual performance relative to his or her individual Performance
Goals for the Plan Year shall be completed. 
Performance can be rated as Exceptional, Successful, Marginal, Fails to
Meet Expectations and Not Rated.  The
definition of each rating is as follows: 

	
  Performance Level

  	
   

  	
  Performance Definition

  
	
   

  	
   

  	
   

  
	
  Exceptional

  	
   

  	
  Makes
  significant contributions to department, business unit, and/or Company’s
  business results. Overall performance far exceeds all requirements necessary
  to fulfill the principal duties, responsibilities, objectives and
  expectations of the position.

  
	
   

  	
   

  	
   

  
	
  Successful

  	
   

  	
  Overall performance
  meets all and may exceed some of the requirements necessary to fulfill the
  principal duties, responsibilities, objectives and expectations of the
  position.

  

 

 

5

 

	
   

  	
   

  	
   

  
	
  Marginal

  	
   

  	
  Overall performance
  meets most of the requirements necessary to fulfill the principal duties,
  responsibilities, objectives and expectations of the position.  Performance Improvement Plan is required.

  
	
   

  	
   

  	
   

  
	
  Fails to Meet
  Expectations

  	
   

  	
  Overall performance
  fails to meet all or most of the requirements necessary to fulfill the
  principal duties, responsibilities, objectives and expectations of the
  position.

  
	
   

  	
   

  	
   

  
	
  Not Rated

  	
   

  	
  Appropriate only for
  employees who have been in their current position less than three months.

  

 

Based on the
evaluation of the employee’s performance relative to his or her Performance
Goals, individual performance adjustments can be made by the business segment
President or appropriate corporate officer, as applicable, ranging from
elimination of the Incentive Target to 150% of the Incentive Target.  The CEO must approve all individual
performance adjustments under the Plan and may make individual performance adjustments
in excess of 150%.

Section 10.
 Distributing the Incentive Pool.  Incentive Awards may be earned based on the
determination of the incentive pools and individual performance as follows:

(1)                                  The incentive pool is determined as
described in Section 7.  If the
established Financial Measures for the incentive pool are not achieved, the
process to calculate Incentive Awards for the related Incentive Program is
terminated.

(2)                                  The performance of each employee is
reviewed by the business segment President or appropriate corporate officer, as
applicable, and the individual performance adjustment described in
Section 9, if any, is applied as appropriate to the employee’s original
Incentive Target.

(3)                                  The Incentive Targets for each employee
within an incentive pool, after giving effect to the individual performance
adjustments described in Section 9, are totaled.  Each employee’s adjusted Incentive Target is
then calculated as a percent of the total adjusted Incentive Targets for all
employees within the incentive pool.

(4)                                  The percent assigned to each employee in
step 3 is multiplied by the total incentive pool generated, resulting in
the amount of the employee’s actual Incentive Award payable, subject to
reduction, elimination or substitution by the Committee as provided in
Section 4.

(5)                                  Additional or substituted distributions,
if any, may be paid in cash or other forms from the Plan or other source as
determined by the Committee, in its discretion.

Except as provided in Sections 10(5), 11 and 14 of the Plan, the
amount of the Incentive Awards payable from the Plan, as calculated in Section
10(4), above, shall be paid in cash to participants 

 

6

 

as promptly as practicable following the end of a Plan Year and after
determination of the incentive pools and the achievement of the Performance
Goals.  An Incentive Award shall not be
earned and a participant shall have no vested interest or entitlement to any
Incentive Award hereunder prior to its actual payment.

Section 11.  Incentive
Pool Calculation and Distribution for Selected Employees.

(a)                                  Employees who directly report to the CEO
or those who are Chief Operating Officers of the Company’s business segments
will have eighty percent (80%) of their Incentive Award tied to the funding
multiple of the Headquarters Incentive Program incentive pool and twenty
percent (20%) of their Incentive Award tied to the funding multiple of their
specific business segment incentive pool. 
Employees who directly report to Chief Operating Officers of the
Company’s business segments will have twenty percent (20%) of their Incentive
Award tied to the funding multiple of the Headquarters Incentive Program
incentive pool and eighty percent (80%) of their Incentive Award tied to the
funding multiple of the appropriate business segment incentive pool.

(b)                                 In accordance with the Company’s Stock
Ownership Guidelines adopted on January 30, 2003, the CEO may elect to pay all
or some of an individual’s Incentive Award in stock if the individual has not
satisfied the Guideline.

Section 12.  Impact on Benefit Plans.  Payments under the Plan shall not be
considered as earnings for purposes of the Company’s qualified retirement plans
or any such retirement or benefit plan unless specifically provided for and
defined under such plans.

Section 13.  Tax Consequences.  It is intended that nothing in the Plan shall
change the tax consequences of the Plans under Federal or State law and
specifically shall not cause the participants in the Incentive Programs to be
taxed currently under the Constructive Receipt or Economic Benefit Doctrines
and as expressed in Sections 451 and 83 of the Internal Revenue Code of 1986,
as amended.

Section 14.  Change of Status.  In making decisions regarding employees’
participation in the Plan, the Company’s Vice President-Human Resources or
Director of Compensation and Benefits, as applicable, may consider any factors
that he or she may consider relevant in their sole discretion.  The Company shall have no obligation to
exercise its discretion to make an award to any employee affected by the
described status changes.  The following
guidelines are provided as general information regarding employee status
changes upon the occurrence of the events described below, provided that the recommendation
to include an employee in the Plan must originate from the business segment
President or appropriate corporate officer, as applicable:

(a)                                  New Hire, Transfer, Promotion. 
A newly hired employee will participate in the Plan Year following the
year in which they are hired, unless otherwise specified in their employment
offer.  An employee who is promoted or
transferred during the Plan Year to a position qualifying for participation may be recommended for a pro rata Incentive Award based
on the level of participation in his or her previous program and the percentage
of the Plan Year the employee is in the participating position.  This includes employees who leave positions
that qualify for incentive payments in other Company business segments.

(b)                                 Demotion.  No Incentive
Award shall be paid to an employee who has been demoted during the Plan Year
because of performance.

 

7

 

(c)                                  Termination. 
No Incentive Award shall be paid to any employee whose services are
terminated by the Company prior to payment of an Incentive Award.

(d)                                 Resignation. 
No Incentive Award shall be paid to an employee who resigns for any
reason, including retirement, before Incentive Awards are paid.

(e)                                  Death and Disability. 
An employee whose status as an active employee is changed prior to
payment of an Incentive Award because of death or disability, may be considered for a pro rata Incentive Award,
provided the employee would have otherwise qualified for payment of an
Incentive Award.  In the event that an
Incentive Award is paid on behalf of an employee who has terminated employment
by reason of death, any such payments or other amounts due shall be paid to the
employee’s estate.

Nothing in the Plan, in any Program or in any Incentive Target or
Incentive Award shall confer any right on any employee to continue in the
employ of the Company.

Section 15.  Change
of Control.  In the event of a Change
of Control of the Company, as then defined under the Company’s 1999 Long-Term
Incentive Plan, Incentive Awards shall be paid, on a pro-rata basis for the
portion of the Plan Year elapsed through the date of the Change of Control, to
all Plan participants as if the target Financial Measures and Value Drivers
were achieved and without adjustment to any individual Incentive Targets, but
subject to the Committee’s overall discretion as provided in
Section 4.  The pro-rata Incentive
Awards payable pursuant to the foregoing sentence shall be paid immediately
prior to consummation of such Change of Control or at such other time and subject
to such other conditions as the Committee shall in its sole discretion
determine, contingent upon consummation of such Change of Control.

Section 16.  Dispute
Resolution.  The following is the
exclusive procedure to be followed by all participants in resolving disputes
arising from participation in and payments made under the Plan.  All disputes relative to a given Plan Year
must be presented to the Director of Compensation and Benefits within thirty
(30) days following the payment date of the Incentive Award for that Plan Year,
or the participant’s right to dispute a payment will be irrevocably
waived.  Once the Director of
Compensation and Benefits has been notified of a dispute, he or she will
assemble a Compensation Review Committee (the “CRC”) to review the issue.  The CRC will consist of the following: the
Director of Compensation and Benefits, the manager of the employee with the
dispute, the human resources director or vice president of the business
segment, and a peer chosen by the employee with the dispute.  The employee with the concern will be given
an opportunity to present his or her issues to the CRC.  A decision will be rendered by the CRC within
thirty (30) business days of the meeting. 
The Director of Compensation and Benefits will be responsible for
preparing a written version of the decision. 
This decision may be appealed to the Vice President-Human Resources of
the Company.  Appealed decisions will be
reviewed by the Vice President-Human Resources with information requested from
the appropriate parties as he or she may determine in his or her sole
discretion.  The decision made by the
Vice President-Human Resources regarding the matter is final and binding on all
Plan participants.

Section 17.  Amendment or
Termination of this Plan.  The Company shall have the
right to amend or terminate the Plan at any time by written action approved by
the Committee, provided that any amendment or termination shall not affect any
amounts deferred into the Company’s Deferred Compensation Plan and that no
employee or participant shall have any vested right to payment of any Incentive
Award hereunder prior to its payment. 
The Company shall notify affected employees in writing of any amendment
or Plan termination.

 

8Exhibit 10.26

 

Director Compensation

 

The Company’s senior management assists the
Compensation Committee on a biennial basis in assessing the compensation of the
Company’s directors measured against comparable companies.

 

Director Compensation

 

Employee directors, including the President
and Chief Executive Officer, receive no compensation for their service as Board
members.  Compensation for independent
directors is a mix of cash and equity-based compensation. Independent directors
do not receive consulting, advisory or other compensatory fees from the
Company.

 

Our Chairman of the Board receives no
compensation, cash or stock, for his service as a Board member, committee
chairman, or for his service as Chairman of the Board.  Each Vice Co-Chairman of the Board receives
$200,000 annually for their services as Co-Vice Chairmen of the Board, plus
reimbursement for travel and incidental expenses.  The Co-Vice Chairmen of the Board do not
receive any stock-based compensation.

 

Each of the other independent directors is
paid an annual retainer fee of $60,000. The chairman of the Audit Committee
receives an additional $20,000 per year, and other committee chairs each
receive an additional $15,000 per year.  They
are also entitled to receive $60,000 of stock-based units. The number of
stock-based units is calculated quarterly by dividing $15,000 by the trailing
five-day average of the high and low price of the Class A Common Stock at the
end of each fiscal quarter. Dividend equivalents in the form of additional
units representing Class A Common Stock are credited to each independent
directors’ account on each dividend payment date equal to (i) the per-share
cash dividend divided by the average of the high and low price of the Company’s
Class A Common Stock on the dividend payment date, multiplied by (ii) the
number of units reflected in the independent director’s account on the day
before the dividend payment date. The value of each of the independent director’s
stock-based units will be payable only in cash when the independent director
ceases to serve as a member of the Board of Directors of the Company. The
stock-based units will be valued for payment by multiplying the applicable
number of units by the average of the high and low price of the Company’s Class
A Common Stock during the last ten trading days before the date on which the
value of the units is to be paid. These stock-based units do not carry voting
or dispositive rights.

 

Independent directors are offered the right
to elect to receive all or a part of the cash portion of their fees on a
deferred basis. If the deferred basis is elected, it may be in the form of cash
with interest calculated at a rate equal to the average of the top rates paid
by major New York banks on three-month negotiable certificates of deposit as
quoted in the Wall Street Journal
on the last business day of the fiscal quarter, or in the form of stock-based
units, calculated on the basis of the trailing five-day average of the average
of the high and low price of the Class A Common stock at the end of each fiscal
quarter. Plan participants must irrevocably elect to receive the deferred funds
either in a lump sum or in equal installments (not to exceed 10). Each cash
installment (other than the first) shall accrue interest from the date of the
first installment to the date on which such installment is paid, compounded
quarterly.

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