Document:

exv10w4

Exhibit 10.4

Restricted Stock Unit Award Agreement

Schedule A

Notice of Restricted Stock Unit Award

	 	 	 
	Company:
	 	Apache Corporation
	 
	 	 
	Participant:
	 	G. Steven Farris
	 
	 	 
	Notice:
	 	You have been granted an Award of Restricted Stock Units in accordance with the terms of the Plan and the attached Restricted Stock Unit Award Agreement.
	 
	 	 
	Type of Award:
	 	Restricted Stock Units
	 
	 	 
	Number of Units:
	 	250,000
	 
	 	 
	Restriction:
	 	Except as set forth in Section 3 of the attached Restricted Stock Award Agreement, the Shares received in settlement of Restricted Stock Units pursuant to this Award are not eligible for sale by the Participant until such time as the Participant retires from his duties as CEO.
	 
	 	 
	Vesting:
	 	50,000 Units July 1, 2009
	 
	 	50,000 Units the first business day of 2010
	 
	 	50,000 Units the first business day of 2011
	 
	 	50,000 Units the first business day of 2012
	 
	 	50,000 Units the first business day of 2013
	 
	 	 
	Plan:
	 	Apache Corporation 2007 Omnibus Equity Compensation Plan
	 
	 	 
	Award Date:
	 	May 8, 2008
	 
	 	 
	Acceptance:
	 	Please execute the attached Restricted Stock Unit Award Agreement.  By accepting your Restricted Stock Unit Award, you will have agreed to the terms and conditions set forth in this Agreement and the Plan.  If you do not accept your Award by executing this Agreement, you will be unable to receive your shares.

 

 

Restricted Stock Unit Award Agreement

          This Restricted Stock Unit Award Agreement (this “Agreement”), dated as of the Award Date set
forth in the Notice of Restricted Stock Unit Award attached as Schedule A hereto (the
“Award Notice”) is made between Apache Corporation (the “Company”) and the Participant named in the
Award Notice. The Award Notice is included in and made part of this Agreement.

Definitions

          All capitalized terms contained in this Agreement shall have the meanings assigned to those
terms by the Plan, unless otherwise indicated herein.

Terms

          1. Award of Restricted Stock Units. Subject to the provisions of this Agreement and
the provisions of the Apache Corporation 2007 Omnibus Equity Compensation Plan (the “Plan”), the
Company hereby awards to the Participant, pursuant to the Plan, a right to receive the number of
shares of $0.625 par value Common Stock of the Company (“Shares”) set forth in the Award Notice.

          2. Evidence of Units. The Participant’s right to receive the Restricted Stock Units
shall be evidenced by book entry registration (or by such other manner as the Committee may
determine).

          3. Restrictions. 30,000 of the Shares vesting each year pursuant to this Agreement and
the Plan shall be subject to the restriction that none of such 30,000 shares shall be eligible to
be sold by the Participant until such time as the Participant retires or otherwise terminates
employment with the Company. The remaining 20,000 Shares vesting each year shall
vest free of restrictions, except those, if any, required by applicable securities laws, and
may be sold at any time to pay taxes or for other reasons. Certificates representing the 30,000
restricted Shares issued each year will bear all legends required by law or by the Company or its
counsel as necessary or advisable to effectuate the provisions of the Plan and this Award including
the following restrictive legend:

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
RESTRICTIONS CONTAINED IN A RESTRICTED STOCK UNIT AWARD AGREEMENT
DATED AS OF MAY 8, 2008, BY AND BETWEEN APACHE CORPORATION AND G.
STEVEN FARRIS, A COPY OF WHICH IS ON FILE AT THE OFFICE OF THE
CORPORATE SECRETARY OF THE COMPANY.

          4. Certificates. The Company may place a “stop transfer” order against shares of the
Common Stock issued pursuant to this Award until all restrictions and conditions set forth in the
Plan or this Agreement and in the legends referred to in Section 3 have been complied with. The
stock transfer records of the Company will reflect stock transfer instructions with respect to such
shares.

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          5. Custody. Any stock certificates issued pursuant to this Agreement shall be held by
the Corporate Secretary of the Company until all restrictions thereon have lapsed or until the
Committee authorizes the release.

          6. Vesting and Settlement. Subject to earlier settlement or forfeiture as provided in
Section 9 and any deferral election under Section 8, Restricted Stock Units awarded hereunder shall
vest in accordance with the following table.

	 	 	 	 	 	 	 	 	 
	Tranche	 	Number of Units	 	Vesting Date
	I
	 	50,000 Units	 	July 1, 2009
	II
	 	50,000 Units	 	first business day of 2010
	III
	 	50,000 Units	 	first business day of 2011
	IV
	 	50,000 Units	 	first business day of 2012
	V
	 	50,000 Units	 	first business day of 2013

The Restricted Stock Units shall be settled in an equivalent number of shares of Common Stock on
the date on which such Restricted Stock Units vest. The Company shall not be obligated to deliver
any shares of Common Stock if counsel to the Company determines that such sale or delivery would
violate any applicable law or any rule or regulation of any governmental authority or any rule or
regulation of, or agreement of the Company with, any securities exchange or association upon which
the Common Stock is listed or quoted. The Company shall
in no event be obligated to take any affirmative action in order to cause the delivery of shares of
Common Stock to comply with any such law, rule, regulation or agreement.

          7. Dividend Equivalent Payments. The Company will pay to the Participant an amount
equivalent to any cash dividends declared on the Common Stock as soon as administratively
practicable after the payment date for such dividend, in proportion to the number of unvested
Restricted Stock Units as of the record date for such dividend, with the following exception. Any
such payments that would be made before June 8, 2009 shall instead be accumulated and paid as soon
as administratively practicable after on the earliest of the following dates, but only if the
Participant is still employed by the Company on such date: June 8, 2009; the date of the
Participant’s death; the date the Committee determines the Participant is Disabled; or the date of
a Change of Control that is described in Section 409A(a)(2)(A)(v) of the Internal Revenue Code. If
the Participant is not employed by the Company on such date, the accumulated payments shall be
forfeited.

          8. Deferral Election. The Participant may, within 30 days of the Award Date and in
accordance with the terms and conditions of the Deferred Plan, elect to defer receipt of Shares
that would otherwise be issued on a Vesting Date in settlement of all or any part of a Tranche of
Restricted Stock Units. If the Participant makes such an election, effective as of the applicable
Vesting Date, each Restricted Stock Unit so deferred shall thereafter be a Stock Unit

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(as defined in the Deferred Plan) and settlement of the Stock Units shall be in accordance with the Deferred
Plan except that the restrictions in Section 3 shall continue to apply to any shares of Common
Stock issued in settlement of the Stock Units until such restrictions would have expired had such
shares been issued in settlement of the Restricted Stock Units. Any such deferral of less than 100
percent of the Shares shall apply on a pro rata basis to both Shares subject to the restriction
against sales and those Shares not subject to restriction.

          9. Termination of Employment, Death, Disability, etc. Except as set forth below, this
Agreement and each Award shall be subject to the condition that the Participant has remained an
Eligible Employee from the initial award of an Award until the applicable Vesting Date as follows:

          (a) If the Participant voluntarily leaves the employment of the Company (but not for
Good Reason) or is terminated by the Company for Cause before an applicable Vesting Date,
all Restricted Stock Units not already vested shall be immediately cancelled.

          (b) If the Participant dies or becomes Disabled before an applicable Vesting Date, the
Restricted Stock Units that would have vested at the next Vesting Date shall thereupon vest,
the restrictions in Section 3 shall lapse and the then vested Restricted Stock Units shall
be settled as soon as administratively practicable following the date the Participant dies
or becomes Disabled. Any Restricted Stock Units not already vested or vested by reason of
death or Disability shall be immediately cancelled. If the Participant dies before
settlement, settlement shall be made to the beneficiary designated for this purpose in the
manner prescribed by the Committee, or, if there is no such beneficiary, to the estate of
the Participant.

          (c) If, before June 8, 2009, the Participant is terminated by the Company without Cause
and not by reason of becoming Disabled or if the Participant terminates his employment for Good Reason, then all unvested Restricted Stock Units
shall be cancelled. If, after June 7, 2009 the Participant is terminated by the Company
without Cause and not by reason of becoming Disabled or if the Participant terminates his
employment for Good Reason, then all Restricted Stock Units shall thereupon vest, the
restrictions in Section 3 shall lapse, and, subject to the terms of the Deferred Plan, if
applicable, the Restricted Stock Units shall be settled as soon as administratively
practicable following the date the Participant’s employment is terminated.

          (d) Notwithstanding Section 12 of the Plan or subsections 9(a), 9(b), or 9(c), if the
Participant is employed by the Company when a Change of Control that is described in Section
409A(a)(2)(A)(v) of the Internal Revenue Code occurs, any unvested Restricted Stock Units
shall vest, the restrictions in Section 3 shall lapse, and settlement of the newly vested
Restricted Stock Units shall occur on the date of such Change of Control or as soon
thereafter as is administratively practicable.

For purposes of this Agreement,

          “Cause” means the Participant’s willful failure to perform his duties after a demand for
performance is delivered to him by the Company’s board of directors that specifically states the
manner in which the board believes the Participant has not performed his

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duties; the Participant’s willful gross misconduct materially injurious to the Company; or the Participant’s violation of a
direct order of the board of directors or the executive committee of the board. An act or omission
is “willful” if it is done in bad faith or without reasonable belief that the act or omission was
in the Company’s interests.

          “Disabled” means the Participant is expected by the Committee to both (i) become entitled to
long-term disability payments under the Company’s long-term disability plan then in effect and (ii)
be unable to engage in any substantial gainful activity by reason of any medically determinable
physical or mental impairment that is expected to result in death or is expected to last for a
continuous period of at least one year.

          “Good Reason” means a material diminution in the Participant’s responsibilities or duties or a
material diminution in the Participant’s base compensation unless the base compensation of other
senior officers of the Company is also reduced proportionately.

          10. Payment and Tax Withholding. The Committee may make such provisions as it may
deem appropriate for the withholding of any taxes that it determines is required in connection with
this Award. The Participant may pay all or any portion of the taxes required to be withheld by the
Company or paid by the Participant in connection with all or any portion of this Award by
delivering cash or by electing to have the Company withhold shares of Common Stock that would have
otherwise been delivered to Participant having a Fair Market Value determined by the Committee in
accordance with the Plan, equal to the amount required to be withheld or paid.

          11. No Ownership Rights Prior to Issuance of Shares. Neither the Participant nor any
other person shall become the beneficial owner of the Shares underlying the Restricted Stock Units,
nor have any rights of a shareholder (including, without limitation, dividend and voting rights)
with respect to any such Shares, unless and until and after such Shares have vested.

          12. Non-Transferability of Restricted Stock Units. Subject to the conditions and
exceptions set forth in Deferred Plan, if elected, and Section 14.2 of the Plan, the Restricted
Stock Units (and, while subject to the restrictions in Section 3, the Shares) shall not be
transferable otherwise than by will or the laws of descent and distribution or to a trust for
estate planning purposes or a family partnership.

          13. No Right to Continued Employment. Neither the Restricted Stock Units nor any
terms contained in this Agreement shall confer upon the Participant any express or implied right to
be retained in the employment or service of the Company or any Affiliate for any period, nor
restrict in any way the right of the Company or any Affiliate, which right is hereby expressly
reserved, to terminate the Participant’s employment or service at any time for any reason. The
Participant acknowledges and agrees that any right to have restrictions on the Restricted Stock
Units lapse is earned only by continuing as an employee of the Company or an Affiliate at the will
of the Company or such Affiliate, or satisfaction of any other applicable terms and conditions
contained in the Plan and this Agreement, and not through the act of being hired, being Awarded the
Restricted Stock Units or acquiring Shares hereunder.

          14. The Plan. In consideration for this award of Restricted Stock Units, the
Participant agrees to comply with the terms of the Plan and this Agreement. This Agreement is

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subject to all the terms, provisions and conditions of the Plan, a copy of which is attached hereto
and incorporated herein by reference, and to such regulations and administrative interpretations
thereunder as may from time to time be adopted by the Committee. Unless defined herein,
capitalized terms are used herein as defined in the Plan. In the event of any conflict between the
provisions of the Plan and this Agreement, the provisions of the Plan shall control, and this
Agreement shall be deemed to be modified accordingly.

          15. Notices. All notices by the Participant or the Participant’s assignees may be
made only in the following manner, using such forms as the Company may from time to time provide:

          (a) by first class registered or certified United States mail, postage prepaid, to
Apache Corporation, Attn: Corporate Secretary, 2000 Post Oak Boulevard, Suite 100, Houston,
Texas 77056;

          (b) by hand delivery to or Apache Corporation, Attn: Corporate Secretary, 2000 Post Oak
Boulevard, Suite 100, Houston, Texas 77056; or

          (c) by such other means, including by electronic means or by facsimile, as provided by
the Committee.

          All notices to the Participant shall be addressed to the Participant at the Participant’s
address in the Company’s records.

          Any notices provided for in this Agreement or in the Plan shall be deemed effectively
delivered or given upon receipt of such notice.

          16. Other Plans. The Participant acknowledges that any income derived from the
Restricted Stock Units shall not affect the Participant’s participation in, or benefits under, any
other benefit plan or other contract or arrangement maintained by the Company or any Affiliate.

          17. Terms of Employment. The Plan is a discretionary plan. The Participant hereby
acknowledges that neither the Plan nor this Agreement forms part of his terms of employment and
nothing in the Plan may be construed as imposing on the Company or any Affiliate a contractual
obligation to offer participation in the Plan to any employee of the Company or any Affiliate. The
Company or any Affiliate is under no obligation to award further Shares to any Participant under
the Plan.

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          18. Section 409A of the Internal Revenue Code. Notwithstanding any provision of this
Agreement to the contrary, this Agreement is intended to provide for a grant of deferred
compensation that is exempt from or compliant with Section 409A of the Internal Revenue Code and
related regulations and United States Department of the Treasury pronouncements (“Section 409A”).
Any ambiguous provisions will be construed in a manner so that this Award is either compliant with
or exempt from the application of Section 409A. If a provision of this Agreement would result in
the imposition of an applicable tax under Section 409A, such provision may be reformed to avoid
imposition of the applicable tax.

          IN WITNESS WHEREOF, the Company and Participant have executed this Agreement on May 8, 2008.
The Agreement is effective as of May 8, 2008.

	 	 	 	 	 	 	 
	Attest:	 	 	 	APACHE CORPORATION
	 
	 	 	 	 	 	 
	/s/ Cheri L. Peper

	 	 	 	By
	 	/s/ Margery M. Harris
	 	 	 	 	 	 	 
	Cheri L. Peper

	 	 	 	 	 	Margery M. Harris
	Corporate Secretary

	 	 	 	 	 	Vice President, Human Resources
	 
	 	 	 	 	 	 
	 	 	 	 	PARTICIPANT:
	 
	 	 	 	 	 	 
	 	 	 	 	/s/ G. Steven Farris
	 	 	 	 	 
	 	 	 	 	G. Steven Farris

 Page 6exv10w1

Exhibit 10.1

Quanta Services, Inc.

Term Sheet

Annual Incentive Plan 2008 – Corporate

Participants

Employees will be selected to participate in the
Annual Incentive Plan at the discretion of the CEO
with the approval of the Compensation Committee.

Target Incentive

	§	 	Target incentive ranges have been or will
be developed for each participant in the Plan.
	 
	§	 	Management will make recommendations to
the Compensation Committee regarding the target
incentive for each participant based on a
competitive range.

Performance Measures

	§	 	The annual incentive will be based on an
operating income target to be determined annually
by the Compensation Committee. This target will
be adjusted, as appropriate, at the discretion of
the Compensation Committee to take into account
any business acquisitions or divestitures during
the Plan year.
	 
	§	 	For purposes of the plan, operating income
will be operating income less interest expense,
net of interest income.
	 
	§	 	There will be no discretionary portion for
the annual incentive.

Incentive Determination

	 	 	 
	Percentage of Target /	 	Incentive as a % of
	Objective Obtained	 	Target Incentive
	Less than 75%
	 	0%
	75%
	 	25%
	80%
	 	40%
	85%
	 	55%
	90%
	 	70%
	95%
	 	85%
	100%
	 	100%
	150%
	 	150%
	200% or greater
	 	200%

	§	 	The amount of incentive earned will be
based on the table above.
	 
	§	 	The salary to be used in the calculation
will be the base salary in effect on the December
31 immediately preceding the date of the
calculation.
	 
	§	 	When performance falls between the
designated points in the table, the incentive will
be determined by interpolation.

 

 

Limitations

	§	 	Any calculated incentive will be subject
to (i) assessment of overall company performance
to ensure that payout of calculated incentives
will not jeopardize the financial stability of the
company and (ii) approval by the Compensation
Committee.

	§	 	A participant must be employed by the
company on the date the bonus is paid. Any
participant not employed by the company on the
payment date forfeits any and all rights to such
bonus. It is the company’s intention to pay
bonuses earned under the plan in March following
the end of the calculation period.
	 
	§	 	A new participant added to this Plan
during the Plan year will be pro-rated from their
date of hire. In any event, a new participant must
be employed by October 1 to be eligible for
incentives in the current plan year

Incentive Payout

Any incentive earned under the Annual Incentive
Plan is intended to be paid in cash.

2

 

Quanta Services, Inc.

Term Sheet

Supplemental Incentive Plan 2008 – Corporate

Participants

	§	 	Employees will be selected to participate
in the Supplemental Incentive Plan annually at the
discretion of the CEO with the approval of the
Compensation Committee.
	 
	§	 	For purposes of the supplemental
incentive, Corporate participants will be
classified annually into two categories: Stock
Eligible or Cash-only Eligible participants, at
the discretion of the CEO with the approval of the
Compensation Committee.

Performance Measures

Performance Award

Fifty percent of a participant’s supplemental
incentive value will be based on return on equity
after eliminating the effects of goodwill (ROE)
versus the target for the year. This target will
be determined annually by the Compensation
Committee. The target will be adjusted as
appropriate, at the discretion of the Compensation
Committee, to take into account any business
acquisitions or dispositions during the Plan year.

Individual Performance Award

The remaining fifty percent of a participant’s
supplemental incentive value will be determined on
a discretionary basis. The Individual Performance
Award will be based on obtaining pre-established
objectives established for each participant for
the year and on exhibiting ethical behavior and
compliance with the Code of Ethics and Business
Conduct.

Incentive Determination

	 	 	 
	Percentage of Target /	 	Incentive as a % of
	Objective Obtained	 	Target Incentive
	Less than 75%
	 	0%
	75%
	 	25%
	80%
	 	40%
	85%
	 	55%
	90%
	 	70%
	95%
	 	85%
	100%
	 	100%
	150%
	 	150%
	200% or greater
	 	200%

	§	 	The Performance Award will be determined
according to the table above.

	§	 	When performance falls between the
designated points in the table, the incentive will
be determined by interpolation.

3

 

Limitations

	§	 	Any calculated incentive will be subject
to (i) assessment of overall company performance
to ensure that payout of calculated incentives
will not jeopardize the financial stability of the
company and (ii) approval by the Compensation
Committee.

	§	 	In any year, stock awarded under this and
all other plans shall not exceed 1% of the
outstanding stock. The Compensation Committee and
the Board of Directors will review this limitation
annually.

	§	 	A participant must be employed by the
company on the date the bonus is paid. Any
participant not employed by the company on the
payment date forfeits any and all rights to such
bonus. It is the company’s intention to pay
bonuses earned under the plan in March following
the end of the calculation period.

	§	 	A new participant added to this Plan
during the Plan year will be pro-rated from their
date of hire. In any event, a new participant must
be employed by October 1 to be eligible for
incentives in the current plan year

	 	 	Incentive Payout

	§	 	Stock Eligible participants, at the
election of the CEO with approval by the
Compensation Committee, may receive any incentive
earned under the Supplemental plan in cash,
restricted stock or a combination thereof.
Subject to the above limitations, the portion of
the incentive awarded in restricted stock will be
multiplied by 1.10 and then that amount will be
divided by the current stock price to determine
the number of shares. Any shares awarded will
vest ratably over a three-year period following
the date of grant. A participant receiving
restricted stock must be employed by the company
at each vesting date. If a participant leaves the
employment of the company, all unvested restricted
stock awards are forfeited.

	§	 	Cash-only Eligible participants will
receive any incentive earned for the year in cash.

4

 

Quanta Services, Inc.

Term Sheet

Annual Incentive Plan 2008 – Operating Units

Participants

Employees will be selected to participate in the
Annual Incentive plan annually at the discretion
of the CEO with the approval of the Compensation
Committee.

Target Incentive

	§	 	Target incentive ranges have been or will
be developed for each participant in the Plan.
	 
	§	 	Management will make recommendations to
the Compensation Committee regarding the target
incentive for each participant based on a
competitive range.

Performance Measures

	§	 	The Annual Incentive for each Operating
Unit will be based on an operating income target
to be approved by the Compensation Committee
annually.

	§	 	For purposes of the plan, operating income
will be defined as operating income before
goodwill, plus/minus insurance true-up, plus/minus
intercompany interest income or expense, less
external interest expense, and excluding gains or
losses on sales of property and equipment.

	§	 	There will be no discretionary portion for
the annual incentive.

Incentive Determination

	 	 	 
	Percentage of Target /	 	Incentive as a % of
	Objective Obtained	 	Target Incentive
	Less than 75%
	 	0%
	75%
	 	25%
	80%
	 	40%
	85%
	 	55%
	90%
	 	70%
	95%
	 	85%
	100%
	 	100%
	150%
	 	150%
	200% or greater
	 	200%

	§	 	Subject to the limitations described
below, the amount of incentive will be determined
based on the table above.
	 
	§	 	The salary to be used in the incentive
calculation will be the base salary in effect on
the December 31 immediately preceding the date of
the calculation.
	 
	§	 	When performance falls between the
designated points in the table, the incentive will
be determined by interpolation.

5

 

Limitations

	§	 	The bonus calculation is subject to the
following limitations; sequenced as follows:
	 
	 	 	Step 1:
	 
	 	 	Is target bonus pool > 10% of the operating
income before goodwill and after insurance true-up
(before consideration of intercompany interest
income or expense, interest expense, and gains or
losses on the sale of property and equipment)?

     If Yes, Go to Step 2.

     If No, use the Incentive Determination chart
above. Any bonus earned (for the aggregate pool)
is limited to 10% of operating income (as
defined). Further, any individual bonuses are
capped at 200% of the target bonus.

     Step 2:

	 	 	Has the Operating Income Goal been met or
exceeded? If Yes, go to b., If No, go to a.

	 	a.	 	Use the Incentive Determination chart above
with the following limitations: Bonuses earned
under this section ( for the pool) are limited to
10% of actual operating income (as defined).
	 
	 	b.	 	Use the Incentive Determination chart above
with the following limitations:
	 
	 	 	 	Up to 10% of the operating income goal (as
defined) can be earned by the pool participants.
For every dollar of operating income (as defined)
in excess of the operating income goal, $.25 will
be contributed to the bonus pool. Add this amount
to the results of the Incentive Determination
chart. The total contribution under this
paragraph b. is limited to 100% of the target
bonus for each of the pool participants.

	§	 	Any calculated incentive will be subject
to (i) assessment of overall company performance
to ensure that payout of calculated incentives
will not jeopardize the financial stability of the
company and (ii) approval by the Compensation
Committee.

6

 

	§	 	A participant must be employed by the
company on the date the bonus is paid. Any
participant not employed by the company on the
payment date forfeits any and all rights to such
bonus. It is the company’s intention to pay
bonuses earned under the plan in March following
the end of the calculation period.
	 
	§	 	A new participant added to this Plan
during the Plan year will be pro-rated from their
date of hire. In any event, a new participant must
be employed by October 1 to be eligible for
incentives in the current plan year.

Incentive Payout

Any incentive earned under the Annual Incentive
Plan is intended to be paid in cash.

7

 

Quanta Services, Inc.

Term Sheet

Supplemental Incentive Plan

2008 — Operating Units

Participants

	§	 	Employees will be selected to
participate in the Supplemental Incentive
Plan annually at the discretion of the CEO
with the approval of the Compensation
Committee.
	 
	§	 	For purposes of the supplemental
incentive, Field Unit participants will be
classified into two categories: Stock
Eligible or Cash-only Eligible participants,
at the discretion of the CEO with the
approval of the Compensation Committee.

Target Incentive

Each participant will be assigned a target
supplemental incentive expressed as a dollar
value annually.

Performance Measures and

Incentive Determination

Performance
Award:

	§	 	Fifty percent of a participant’s
supplemental incentive value will be based
on Modified Return on Asset (MROA)
performance versus target.
	 
	§	 	MROA will be calculated by dividing
net operating income by total assets.
Operating Income is defined as operating
income before goodwill, after insurance
true-up (before consideration of
intercompany interest income or expense,
interest expense, and gains or losses on the
sale of property and equipment).. Total
assets will be based on the quarterly
average for the fiscal year excluding
inter-company accounts and cash on hand.
	 
	§	 	The Performance Award will be
determined according to the table below:

	 	 	 	 	 
	Percentage of Target /	 	Incentive as a % of
	Objective Obtained	 	Target Incentive
	Less than 75%

	 	 	0	%
	75%

	 	 	25	%
	80%

	 	 	40	%
	85%

	 	 	55	%
	90%

	 	 	70	%
	95%

	 	 	85	%
	100%

	 	 	100	%
	150%

	 	 	150	%
	200% or greater

	 	 	200	%

8

 

When performance falls between the
designated points in the table, the
incentive will be determined by
interpolation.

Discretionary
Award

For 2008, the remaining fifty percent of the
supplemental incentive will, in lieu of a
discretionary component, be based on the
following two safety measurements, each of
which will be equally weighted:

	§	 	Total Incident Injury Rate:

	 	Ø	 	 Each Operating Unit has a “Total
Incident Injury Rate” (“TIIR”) calculated
for the prior year. Subject to each
participant’s ethical behavior and
compliance with the Code of Ethics and
Business Conduct, one-half of the
discretionary award will be based on
improvements in TIIR performance. The
baseline for measuring current year
performance is the respective actual TIIR
for the prior year expressed as a percentage
of hours worked. The following Bonus
Eligibility Scale will be used to measure
the amount of bonus earned as a result of
improvement in the TIIR rate from the prior
year to the current year:

	 	 	 	 	 
	If TIIR rate is	 	Bonus earned
	Reduced by:	 	will be:
	Less than 5%

	 	 	0	%
	5%

	 	 	25	%
	10%

	 	 	50	%
	15%

	 	 	75	%
	20%

	 	 	100	%
	Greater than 35%

	 	 	125	%

	 	Ø	 	 When performance falls between the
designated points in the table, the
incentive will be determined by
interpolation.
	 
	 	Ø	 	 Regardless of the percentage
decrease, if an operating unit has a TIIR
below 1.75 at the end of 2007 then 100% of
the target bonus is earned.
	 
	 	Ø	 	 Regardless of the percentage
decrease, if an operating unit has a TIIR
above the industry standard of 5.6; it is
ineligible for this incentive component.

9

 

	§	 	Safety Severity Rating:

	 	Ø	 	 Each Operating Unit’s performance
will also be measured based on Severity of
claims. Subject to each participant’s
ethical behavior and compliance with the
Code of Business Conduct, one-half of the
discretionary award will be based on the
Operating Unit’s Safety Severity Rate. The
baseline for measuring current year
performance is the respective actual Total
Incurred Loss Amount for the prior year
expressed as a percentage of payroll. The
following Bonus Eligibility Scale will be
used to measure the amount of bonus earned
as a result of improvement in the Total
Incurred Rate from the prior year to the
current year.:

	 	 	 	 	 
	If Total Incurred	 	 
	Loss Rate	 	Bonus earned
	Reduced by:	 	will be:
	Less than 5%

	 	 	0	%
	5%

	 	 	25	%
	10%

	 	 	50	%
	15%

	 	 	75	%
	20%

	 	 	100	%
	Greater than 35%

	 	 	125	%

	 	Ø	 	When performance falls between the
designated points in the table, the
incentive will be determined by
interpolation.
	 
	 	Ø	 	Regardless of the percentage
decrease, if an operating unit has a Total
Incurred amount below $5,000 at the end of
the current year then 100% of the target
bonus is earned.

Limitations

	§	 	Any calculated incentive will be
subject to (i) assessment of overall company
performance to ensure that payout of
calculated incentives will not jeopardize
the financial stability of the company and
(ii) approval by the Compensation Committee.

10

 

	§	 	In any year, stock awarded under
this and all other plans shall not exceed 1%
of the outstanding stock. The Compensation
Committee and the Board of Directors will
review this limitation annually.
	 
	§	 	A participant must be employed by
the company on the date the bonus is paid.
Any participant not employed by the company
on the payment date forfeits any and all
rights to such bonus. It is the company’s
intention to pay bonuses earned under the
plan in March following the end of the
calculation period.
	 
	§	 	A new participant added to this Plan
during the Plan year will be pro-rated from
their date of hire. In any event, a new
participant must be employed by October 1 to
be eligible for incentives in the current
plan year

Incentive Payout

	§	 	Stock Eligible participants, at the
election of the CEO with approval by the
Compensation Committee, may receive any
incentive earned under the Supplemental plan
in cash, restricted stock or a combination
thereof. Subject to the above limitations,
the portion of the incentive awarded in
restricted stock will be multiplied by 1.10
and then that amount will be divided by the
current stock price to determine the number
of shares Any shares awarded will vest
ratably over a three-year period following
the date of grant. A participant receiving
restricted stock must be employed by the
company at each vesting date. If a
participant leaves the employment of the
company, all unvested restricted stock
awards are forfeited.
	 
	§	 	Cash-only Eligible participants will
receive any incentive earned for the year in
cash.

11

 

Quanta Services, Inc.

Term Sheet

Discretionary Incentive Plan 2008 – All

Discretionary Payout

Annually, the Compensation Committee shall establish
a discretionary incentive pool that will be available
to reward exceptional performance. This pool will be
awarded at the discretion of the CEO, with the
Compensation Committee’s approval, in cash,
restricted stock, or a combination thereof. A
participant must be employed by the company on the
date the bonus is paid. Any participant not employed
by the company on the payment date forfeits any and
all rights to such bonus. It is the company’s
intention to pay bonuses earned under the plan in
March following the end of the calculation period.

12

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